NLRB Issues Final Joint Employer Rule
Today, the National Labor Relations Board (NLRB) issued its final rule on the standard for determining joint employers under the National Labor Relations Act (the Act). In January 2019, SWACCA submitted a public comment on the proposed rule, advocating that the NLRB retain a standard that considers both (1) the control an employer exercises over workers, whether direct or indirect; and (2) the employer’s contractually reserved but unexercised right to control workers’ essential terms and conditions of employment. SWACCA’s concern was the potential for (and increasingly common practice of) unscrupulous employers misclassifying employees as independent contractors (for example, by utilizing labor brokers) to avoid obligations under the Act and other applicable law. In SWACCA’s opinion, such a practice penalizes law-abiding employers who honor obligations such as paying overtime and workers’ compensation and unemployment insurance.
The NLRB decided not to retain the two-prong standard that SWACCA advocated for. Under the new rule, an employer may be considered a joint employer (and thus jointly liable) for purposes of the Act “only if two employers share or codetermine the employees’ essential terms and conditions of employment.” Evidence of a contractually reserved but unexercised right to control workers’ essential terms and conditions of employment – for example, in a company-to-company contract – may be “probative” of joint-employer status, “but only to the extent it supplements and reinforces evidence of the entity’s possession or exercise of direct or immediate control over a particular essential term and condition of employment.” The potential for a dishonest employer to enter into a labor broker arrangement and avoid liability as a joint employer remains under this standard.
SWACCA remains committed to calling attention to and, ultimately, helping to remedy, the problem of misclassifying employees in the construction industry. You can read the full text of the rule here.
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