Standard for determining joint-employer status 'will likely have unintended consequences'
The National Labor Relations Board (NLRB)’s recent proposal for determining joint-employer status may hurt both employers and employees, according to one employment lawyer.
“Under the notice of proposed rulemaking, the NLRB proposes to reinstate the board’s overruled Browning-Ferris standard, which departed from decades of precedent and established a sweeping test that threatened to upend business relationships across all industries,” says Kurt G. Larkin, labor and employment partner at Hunton Andrews Kurth LLP.
On Sept. 6, the NLRB issued a notice that it’s proposing to rescind and replace the joint-employer rule that took effect on April 27, 2020. The proposed changes are intended to explicitly ground the joint-employer standard in “established common-law agency principles,” consistent with precedent and guidance that the board has received from the U.S. Court of Appeals for the DC Circuit, according to the NLRB.
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Under the proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment and work rules.
When analyzing joint-employer status, the NLRB says it would consider both direct evidence of control and evidence of reserved and/or indirect control over these essential terms and conditions of employment.
“Unfortunately, the board's joint-employer standard has been subject to a great deal of uncertainty and litigation in recent years,” said NLRB Chairman Lauren McFerran. “In an economy where employment relationships are increasingly complex, the board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the goals of the National Labor Relations Act. Part of that task is providing a clear standard for defining joint employment that is consistent with controlling law.”
Under the proposed rule, merely possessing the authority to affect the employment terms of another business’ workers (even indirectly) can make you their employer, according to Larkin.
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“This means a company could be forced to collectively bargain or otherwise deal with a union that doesn’t represent the company’s own employees, lose the protections against union picketing of neutral employers and share in liability for labor and employment violations committed by another business,” Larkin says.
Based in Richmond, VA, Larkin counsels employers on all aspects of labor-management relations, litigating cases in federal and state trial and appellate courts around the country, as well as before the NLRB and Equal Employment Opportunity Commission (EEOC).
“If adopted, the standard is likely to have unintended consequences,” Larkin says. “Many businesses require supply-chain partners to adhere to responsible contractor and other corporate social responsibility policies. If merely asking your business partners to follow the law and treat their own employees fairly is going to make you a joint employer, you might scale back or eliminate those requirements of your partners. That’s not good for anyone.”
The NLRB is asking for input from members of the public on whether this proposal should pass. Employers have until Nov. 7 to submit reactions, comments and questions to the NLRB, according to the notice.