September 7, 2022

The National Labor Relations Board (NLRB) published a proposed rule to revise the standard for determining whether two employers are “joint employers” of a group of employees under the National Labor Relations Act.

Under the proposed rule, and consistent with the NLRB’s “longstanding” approach, an employer would be a joint employer of particular employees if: (1) the employer has an employment relationship with those employees under established common-law agency principles; and (2) the employer shares or codetermines those matters governing at least one of the employees' essential terms and conditions of employment. 

The proposed rule would define “share or codetermine” to mean “for an employer to possess the authority to control (whether directly, indirectly, or both), or to exercise the power to control (whether directly, indirectly, or both), one or more of the employees' essential terms and conditions of employment.”  This definition incorporates the view that evidence of the authorized or reserved right to control, as well as evidence of the exercise of control (whether direct or indirect, including control through an intermediary) is probative evidence of the type of control over employees’ essential terms and conditions of employment that is necessary to establish joint-employer status.  As a result, the proposal clarifies that evidence that a putative joint employer possesses the authority or exercises the power to control one or more of the employees’ essential terms and conditions of employment is relevant to the joint-employer inquiry, regardless of whether such control is direct or indirect. 

In addition, under the proposed rule, “essential terms and conditions of employment” would generally include, but not be limited to: (1) wages, benefits, and other compensation; (2) hours of work and scheduling; (3) hiring and discharge; (4) discipline; (5) workplace health and safety; (6) supervision; (7) assignment; and (8) work rules and directions governing the manner, means, or methods of work performance.  The NLRB asserts that in most workplaces, the proposed rule offers a set of useful benchmarks for identifying essential terms and conditions of employment.  Moreover, the NLRB states that both the NLRA and the common law offer support for generally treating these terms and conditions of employment as essential.  The NLRB adds that its “inclusive” approach to defining the set of essential terms and conditions of employment is meant to ensure that the joint-employer standard can encompass changing circumstances in the workplace over time, as well as the particularities of certain industries or occupations. 

Finally, the proposed rule includes provisions clarifying that: (1) an employer’s control over matters that are immaterial to the existence of an employment relationship under established common-law agency principles, or that otherwise do not bear on the employees’ essential terms and conditions of employment, is not relevant to the joint employer inquiry; (2) the party asserting that an employer is a joint employer of particular employees has the burden of establishing that relationship by a preponderance of the evidence; and (3) the provisions of the rule are intended to be severable in the event any provision of the rule is held to be unlawful.

Comments on this proposed rule are due by November 7, 2022 and reply comments are due by November 21, 2022. All comments should be submitted here identified using RIN 3142-AA21.

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