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NLRB Issues Favorable Joint Employer Rule

March 3, 2020

The National Labor Relations Board (“NLRB”) has issued a final rule changing the standard for when one company may be deemed a joint employer of another company’s employees.  Like the proposed rule, the final rule establishes that a company is a joint employer if it actually exercises substantial direct and immediate control over essential terms and conditions of employment.  However, consistent with AGC of America’s comments to the proposed rule, the final rule adds clarification as to what constitutes “substantial direct and immediate control,” “essential terms and conditions of employment,” and other key terms. 

A finding of joint-employer status is significant, as a joint employer may be held jointly responsible for any unfair labor practices and collective bargaining obligations of the other employer and may be jointly subject to picketing or other economic pressure by labor.

The final rule elucidates several important points, including:

  • Joint-employer status is determined on the totality of the relevant facts in each particular employment setting.
     
  • Evidence of any of the following may be considered in the determination, but only to the extent that it supplements and reinforces evidence of the putative joint employer’s possession or exercise of direct and immediate control over essential terms and conditions of employment:
     
    • indirect control over essential terms and conditions of employment;
       
    • contractually reserved but unexercised authority over terms and conditions of employment; and
       
    • control over mandatory subjects of bargaining other than essential terms and conditions of employment.
       
  • The party asserting that an entity is a joint employer has the burden of proof.
     
  • What types of control over wages, benefits, hours, hiring, discharge, discipline, supervision, and direction of another company’s employees will be considered “direct and immediate control.”

The rule reverses the Obama NLRB’s 2015 decision in the Browning-Ferris Industries case, which AGC actively opposed.  AGC is also actively opposing legislation that would codify the standard set in that case.

For more information on the final rule, see the full text of the rule or the NLRB’s fact sheet on the rule, or contact Denise Gold, Associate General Counsel, at denise.gold@agc.org or (703) 837-5326.

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