On Friday last week, the NLRB (in a 3-1 decision) carried through on its previous announcement and published a notice of proposed rulemaking that would address the hotly contested joint employer issue. “Joint employer” refers to the question of whether one business can be considered the employer of another business’ employees. Think of situations like subcontracting, franchising, and temporary employment agencies, to name just a few.
The Obama NLRB adopted an expansive rule in the BFI decision, making it fairly easy for two employers to be considered joint employers. In December 2017, the Trump NLRB overturned this decision in the Hy-Brand decision. But, this decision was itself vacated earlier this year after the NLRB Inspector General determined that one of the Republican nominees should have recused himself; a conclusion that has generated significant controversy.
In the published notice, the NLRB majority proposes to adopt the following rule regarding joint employment:
An employer…may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.
The NLRB majority goes further, and specifically addresses the concept of “indirect” or “potential” forms of control that BFI held could be used as indicators of a joint employer relationship:
A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.
The proposed rule also contains 12 “examples” of the application of the rule. The first can be found here, and the others follow on the linked page. Some of these examples will be particularly interesting for those involved in franchise agreements as well as labor subcontracting arrangements.
Member McFarren (D) opposed the proposed rulemaking. In a lengthy dissent, Member McFarren attacks not only the need to revisit the 2015 joint employer decision, but also the policy basis for the rule and the majority’s rulemaking process.
Labor professionals, especially those in industries where joint employment relationships are common, should review the rule. The deadline to submit comments is November 13, 2018.