New Joint-Employer Rule Would Be a Reversal for NLRB

The NLRB looks to restore the "substantial direct and immediate control" standard.
By: | September 18, 2018 • 2 min read

The National Labor Relations Board recently issued a proposed rule revising the test for whether two employers are considered “joint employers” under the National Labor Relations Act, and legal experts say the revision could have a “significant” effect on companies.

According to an analysis written by Littler attorneys James A. Paretti, Jr., Michael Pedhirney and Michael J. Lotito, the proposed rule would make clear that an employer will be considered a joint employer of a separate company’s employees only where that employer possesses and exercises “substantial direct and immediate control” over the essential terms and conditions of employmentsuch as hiring, firing, discipline, supervision and directionof the second company’s employees. Even where an employer exercises direct control over another employer’s workers, it will not be held to be a joint employer if such control is “limited and routine.”

Joint-employer status can be significant for an employer, they write, because “a joint employer may be required to bargain with a union representing jointly employed workers; can be subject to joint and several liability for unfair labor practices committed by the other employer; and may be subject to labor picketing that would otherwise be unlawful.”

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“This contrasts starkly with the prior standard,” the authors write, “which required the putative joint employer to exercise actual control over essential employment terms, with such control being ‘direct and immediate’.”

The authors note the Browning-Ferris decision increased the number of potential joint employers and was the subject of “intense negative scrutiny,” including Congressional hearings geared toward overturning the decision, and its validity is currently being litigated before the U.S. Circuit Court of Appeals for the District of Columbia.

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In 2017, the Board reversed Browning Ferris in the case of Hy-Brand Industrial Contractors, Ltd., but that decision was subsequently withdrawn for reasons unrelated to the substance of the joint-employer issue.

Steve Bernstein, a partner at Fisher Phillips’ Tampa office, says the shifting sands of politics play a role in the timing of the proposed rule’s release.

“In the bigger picture, we have an NLRB that’s comprised of a majority of Republicans by the current administration, and its ideology is going to be different from the ideology of a Democrat-majority board,” he said. “We’re starting to see that play out now.”

With this revision, the NLRB is trying to bring the rule back to one of “common sense,” Bernstein said. “In a sense, the NLRB is saying they are less concerned with what could happen and more concerned with what is actually happening.”

While it remains to be seen whether the rule will be adopted without any changes, Bernstein said, he would encourage HR leaders monitor developments in this area carefully until the comment date ends.

The proposed rule, scheduled to be published in the Federal Register on Sept. 14, 2018, is open for public comment through Nov. 13, 2018. Comments can be submitted via hard copy or electronic filing at www.regulations.gov.

Web Editor Michael J. O’Brien has been with HRE for more than a decade and holds a degree in economics from Boston College. He can be reached at [email protected]

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