The National Labor Relations Board (NLRB) announced a new rule Thursday that “has made it easier for multiple companies to qualify as joint employers that share liability for labor law violations and legal obligations to negotiate with unions,” Bloomberg Law reported.
The rule has shifted under different administrations and was more limited in scope under President Trump. In September of 2022, the NLRB announced its intention to rewrite the rule.
Jon Taets, NACS government relations director, explained at the time that the joint employer rule “is often most easily understood in the context of a franchisor/franchisee relationship, but in the convenience retailing world, even outside the franchise model, it can also include suppliers and/or contractors. If company A is determined to be a joint employer of company B’s worker, company A could be held jointly liable for labor violations committed by company B and or possibly required to enter into collective bargaining with company B’s workers.”
NACS wrote the NLRB arguing against the new rule, stating that the negative impacts would include “exposing innocent businesses to unwarranted joint employer liability for actions over which they have no direct or actual control and forcing them into another party’s labor dispute.”
The NLRB issued a press release summarizing the new rule. It stated:
Under the new standard, an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or codetermine one or more of the employees’ essential terms and conditions of employment, which are defined exclusively as: (1) wages, benefits, and other compensation; (2) hours of work and scheduling; (3) the assignment of duties to be performed; (4) the supervision of the performance of duties; (5) work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; (6) the tenure of employment, including hiring and discharge; and (7) working conditions related to the safety and health of employees.
The major change under the new rule is that control over the above essential terms and conditions need not be exercised. One business may be determined to be a joint employer of another’s workers even if the right to influence any one of those items is simply reserved in any agreement. This significant step rolls back the regulation to the Obama-era standard that was withdrawn in 2021.
The new rule will go into effect on December 16th. Businesses should work quickly to evaluate any franchise or supplier agreements for any potential joint employer liabilities they may create under the new rule. NACS labor counsels Fisher & Phillips LLC published this 10 Step Plan on what businesses should be doing in response to the rule.
NACS is examining the rule and will provide additional resources as necessary.