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NLRB’s ‘Joint Employer’ Standard Set for Regulatory Revamp (1)

Dec. 10, 2021, 8:45 PMUpdated: Dec. 10, 2021, 10:12 PM

The National Labor Relations Board announced that it will attempt to rework its legal standard for determining when one company jointly employs another firm’s workers, one of the most hotly contested issues in labor law over the past decade.

The NLRB plans to issue a notice of proposed rulemaking on joint employment in February, according to an item in the agency’s federal regulatory agenda released Friday. Jointly employing workers under federal labor law results in companies sharing both liability for unfair labor practices and responsibility for union bargaining.

An all-Republican NLRB issued a regulation setting an employer-friendly standard for joint employment in 2020. The agency is defending that rule against a union challenge in federal court, though the annouced rulemaking may prompt it to ask the court to stay that litigation.

Joint employment is a major issue in the franchising industry and for companies that source labor through contracting, temporary staffing, and other business-to-business arrangements.

The five-member board, which is controlled by a 3-2 Democratic majority, could take one of two approaches to revamping its joint employment standard through formal notice-and-comment rulemaking, said Wilma Liebman, a former Democratic NLRB chair.

The NLRB could rescind the Trump-era regulation and announce that it will go back to defining the legal test through case adjudication, Liebman said. Alternatively, the board could recalibrate the standard with a new rule, she said.

The 2020 regulation tightened the threshold for what’s necessary to find that a company is a joint employer, requiring that a business exercise “substantial direct and immediate” control over the most important elements of a worker’s job, like discipline or hiring and firing.

That rule replaced the broader standard from the NLRB’s 2015 ruling in Browning-Ferris Industries, which went beyond direct and immediate control to consider indirect or unexercised control.

The NLRB didn’t immediately respond to an email request for comment.

(Updated with additional reporting.)

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com