The National Labor Relations Board (“NLRB”) issued a proposed rule establishing the test for whether an employer is considered a “joint employer” under the National Labor Relations Act (“NLRA”).

What Are the Consequences of Joint-Employer Status?

The NLRB's determination that a joint-employment relationship exists has significant consequences for employers, unions, and employees.  For example:

• A joint employer may be required to bargain with a union representing jointly employed workers;
• A joint employer can be subject to joint and several liability for unfair labor practices committed by the other employer; and
• A joint employer may be subject to labor picketing that would otherwise be unlawful.

Current Joint-Employer Standard

As it stands today, the NLRB reviews joint employer questions under the Browning-Ferris standard.  Under this test, two or more entities are considered joint employers if (1) they are both employers within the meaning of the common law; and (2) they share or codetermine matters governing the essential terms and conditions of employment.  In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB will consider, among other factors, whether an employer has exercised control over terms and conditions of employment indirectly, or whether it has reserved the authority to do so.

Proposed Rule

Under the NLRB’s proposal, an employer may be considered a joint employer of another company’s employees only if:

• The employer possesses and actually exercises substantial direct and immediate control over the other company’s employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction; and
• Such control is not limited and routine.

Under this proposed rule, it is not enough to establish joint employer status where the employer affects only a single essential working condition or the employer only rarely exercises its control over the other company’s employees.  The proposed rule includes 12 examples illustrating its application to various scenarios.

Open For Public Comment

The proposed rule is open for public comment through November 13, and any replies to comments are due by November 20.  Electronic comments can be submitted at http://www.regulations.gov.