The National Labor Relations Board (NLRB) issued a long-anticipated final rule that substantially increases the number of employers who may be deemed joint employers. The new rule rescinds a 2020 rule that required an employer to possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment to be considered a joint employer. Now, the NLRB will consider the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect.

If two or more employers are joint employers under the National Labor Relations Act (NLRA), they are required to bargain with a union that represents the shared employees and are jointly liable for any unfair labor practices. While the final rule establishes a standard for determining joint employers, the NLRB will conduct a fact-specific analysis, looking at the totality of circumstances on a case-by-case basis to determine whether the employers involved meet the standard.

Defining Essential Terms and Conditions of Employment
The final rule provides an exhaustive list of seven essential terms and conditions of employment:

1. Wages, benefits and other compensation;
2. Hours of work and scheduling;
3. Assignment of duties;
4. Supervision of the performance of duties;
5. Work rules and directions governing the manner, means and methods of performing duties and the grounds for discipline;
6. Tenure of employment, including hiring and discharge; and
7. Working conditions related to the safety and health of employees.

Under the final rule, a joint employer is only required to bargain on the particular essential terms and conditions and other mandatory subjects of bargaining for which it possess or exercises the authority to control.

Next Steps
Employers with various types of third-party agreements including, but not limited to, staffing agencies (including temporary), franchises, subcontracts, and employer service providers should carefully examine their agreements and practices to assess whether a joint employer situation might exist. Especially in situations where employees of different employers are working together, managers should be trained to understand how their control of another employer’s employees may create joint employer liability, and vice versa.

The final rule was published in the Federal Register on October 27, 2023 and will take effect 60 days later on December 26, 2023. To assist employers, the NLRB has also issued a fact sheet on the final rule.