From Lexology, Zach Fashman reports that the National Labor Relations Board is proposing a new standard for determining if an entity is a joint employer. The new standard raises the standard for who can be found to be a joint employer which is good news for entities engaging with independent contractors because it is less likely that an entity hiring an independent contractor through an intermediary will be found to be a joint employer. Zach writes:
The National Labor Relations Board announced that it will publish a Notice of ProZaposed Rulemaking today, September 14, regarding its joint-employer standard.
The proposed rule will state that an employer may be considered a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment in a manner that is not limited and routine. Indirect influence and contractual reservations of authority will no longer be sufficient to establish a joint-employer relationship. The new rule, if adopted, will restore Board law to the traditional standard for determining joint employer status under the NLRA.
This proposed rule would reverse the controversial Obama Board decision in Browning-Ferris, 362 NLRB No. 186 (2015), appeal pending. Under the Browning-Ferris standard, two or more employers would be considered joint employers if they share or codetermine matters governing the essential terms and conditions of employment. The inquiry focuses on whether the alleged joint employer had the potential to control aspects of the workplace, either directly or indirectly, regardless of whether the employer ever exercised that authority. This standard was heavily criticized and was the subject of legislative correction that passed the House but was never considered by the Senate.
The NLRB press release states that the proposed rule reflects the Trump Board’s “majority initial view” that the intent of the National Labor Relations Act is “best supported by a joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.”
The Board previously attempted to reverse the Browning-Ferris joint-employer standard in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017) (which we blogged about here). The Board reversed and vacated Hy-Brand in February, 2018 based upon Member William Emanuel’s participation in the decision. Prior to joining the Board, Member Emanuel was a partner at Littler Mendelson, which had represented one of the unsuccessful parties in Browning-Ferris.
The public may submit comments to the Board on the proposed rule for sixty days following its publication on September 14.