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On Feb. 26, the National Labor Relations Board issued its final rule on the standard for determining joint-employer status under the National Labor Relations Act. ABC is pleased that the final rule clearly delineates and limits the types of control that would be treated as creating joint-employer status under the NLRA. In 2019, ABC submitted comments in support of the NLRB’s proposed rule, as did the ABC-led Coalition for a Democratic Workplace.

In a press release announcing the final rule, NLRB Chairman John F. Ring said, “This final rule gives our joint-employer standard the clarity, stability and predictability that is essential to any successful labor-management relationship and vital to our national economy. With the completion of today’s rule, employers will now have certainty in structuring their business relationships, employees will have a better understanding of their employment circumstances and unions will have clarity regarding with whom they have a collective-bargaining relationship.”

According to the NLRB fact sheet, the final rule does the following:

  • - Specifies that a business is a joint employer of another employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment;
  • - Clarifies the list of essential terms and conditions: wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction;
  • - Provides that to be a joint employer, a business must possess and exercise such substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees as would warrant a finding that the business meaningfully affects matters relating to the employment relationship;
  • - Specifies that evidence of indirect and contractually reserved but never-exercised control over essential terms and conditions, and of control over mandatory subjects of bargaining other than essential terms and conditions, is probative of joint-employer status, but only to the extent that it supplements and reinforces evidence of direct and immediate control;
  • - Defines the key terms used in the final rule, including what does and does not constitute “substantial direct and immediate control” of each essential employment term;
  • - Makes clear that joint-employer status cannot be based solely on indirect influence or a contractual reservation of a right to control that has never been exercised.

ABC Vice President of Legislative and Political Affairs Kristen Swearingen issued the following statement about key provisions in the joint employer final rule:

“Associated Builders and Contractors and our 21,000 members applaud the National Labor Relations Board’s final rule on the joint employer standard under the National Labor Relations Act. The final rule reinstates the traditional joint employer standard and provides clear criteria for companies to apply when determining status, which is especially important for industries such as construction. With further clarification of the standard, contractors will be better able to work and coordinate with multiple employers without fear of being unexpectedly and unfairly found to be joint employers.”

The final joint-employer rule will go into effect April 27, 2020.

To learn more about the joint-employer final rule, read ABC general counsel, Littler Mendelson’s analysis. Employers assessing their potential status as joint employers are advised to consult with counsel.

Additional NLRB materials can be found here.

ABC was a vocal opponent of the expanded definition of joint employer that was created by the board’s 2015 BFI decision, and has supported legal and legislative efforts to restore the standard that was in place for more than 30 years.

This article is intended for informational purposes only and does not constitute legal advice or opinion.