Big — but not unexpected — news out of the National Labor Relations Board (NLRB).  The Board has adopted a new, and significantly broader, standard for “joint employer.”

In a nutshell, under the old test a company was only a joint employer for purposes of the National Labor Relations Act (NLRA, or union law) if it “exercised” the authority to control a third-parties’ terms and conditions of employment.  NEW TEST– now if a company merely “possesses” such authority, even if it does not actually exercise control over employees, it will likely be deemed a joint employer.

In other words, if a franchisor, staffing company or general/prime contractor reserves the right to control the terms and conditions of employment, for example:

  •      imposes safety requirements;
  •      identifies applicant criteria;
  •      is permitted to require termination of an employee;
  •      controls – even indirectly – wages paid to employees;
  •      controls how equipment is used…

then that franchisor, staffing company or general/prime contractor might be deemed a joint employer under the NLRA.

What does all this mean?  Franchisors, staffing companies and general/prime contractors beware — if a union is targeting an entity with which you contract, YOU may be subject to a union bargaining obligation.

All of this will be challenged and further explained in time.  But for now, the key takeaway is that if you are not already sensitive to union issues you need to get up to speed FAST.  Call your labor lawyer.