NLRB broadens the standard for when two employers that work together are considered joint employers and may be held jointly responsible for any unfair labor practices and collective bargaining obligations.

The National Labor Relations Board (“NLRB” or “Board”) has issued its long-anticipated final rule addressing the Standard for Determining Joint-Employer Status under the National Labor Relations Act (“NLRA”). The final rule rescinds the more narrowly tailored standard adopted by the last Board in a 2020 final rule and reinstitutes a broader standard similar to the one established by the prior Board in its ill-fated 2015 Browning-Ferris Industries decision. The standard is significant, as companies that are joint employers may be held jointly responsible for any unfair labor practices and collective bargaining obligations related to jointly employed workers.

Under the new standard, an entity may be considered a joint employer of another company’s employees if it shares or codetermines one or more of the employees’ essential terms and conditions of employment. The new rule defines those terms and conditions as:

• wages, benefits, and other compensation;
• hours of work and scheduling;
• the assignment of duties to be performed;
• the supervision of the performance of duties;
• work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
• the tenure of employment, including hiring and discharge; and
• working conditions related to the safety and health of employees.

Most notably, the rule broadly defines to “share or codetermine” to include not only the direct exercise of control but also (a) indirect exercise of control and (b) mere possession of the authority to control (directly or indirectly) even if such authority is unexercised. As a result, many more employers may be deemed joint employers of another company’s employees.

The NLRB has published a Fact Sheet on the new rule, which is scheduled to take effect on December 26, 2023. However, AGC and others are exploring the potential for a legal challenge to the rule in court. AGC will provide updates as developments occur.

In comments filed in December 2022, AGC urged the Board to abandon its then-proposed rule, explaining how the rule would be unworkable, unfair, and unlawful as applied in the construction industry – particularly when applied to traditional construction contractor-subcontractor relationships. AGC also joined group comments filed by the Coalition for a Democratic Workplace arguing that the proposed rule was arbitrary and capricious, in conflict with the common-law standards on which it is purportedly based, lacked Congressional authorization, and would harm business and labor relationships.

For more information, contact Denise Gold at [email protected] or 703-837-5326.