The National Labor Relations Board (NLRB) recently released a final rule that expands the standard for determining when two employers that conduct business together are considered to be joint employers, thus being liable for each other’s unfair labor practices and labor law violations. Under the old rule, an employer could be considered a joint employer if it had “direct and immediate control” over the essential terms and conditions of employment, such as wages, benefits, work hours, hiring, firing, discipline, direction and supervision. The new rule provides that two entities are considered joint employers if they share or co-determine an employee’s essential terms and conditions of employment.
An example of the potential consequences of the new rule would be a business using a temp or staffing agency to place workers in the business. Typically, the workers are employed by the temp agency, with the temp agency paying the employees’ wages and any benefits. Usually, however, the company that actually uses the workers as part of its workforce will determine many of the terms and conditions of employment, such as work hours, direction and supervision. If, for example the company using a worker requires the worker to work overtime, and the temp agency fails to pay the overtime premium, both companies could be liable for that violation. Another example would be the company using the worker dismissing the worker in retaliation for the worker reporting a safety violation. Again, both companies could be liable.
In determining whether a business should make any changes in response to the new NLRB rule, the key question is whether the business would ever need to control another employer's workers. If the business does not foresee the need to control them, changes to its contracts, policies and practices may be in order, so that there is not a joint employer relationship. However, if the business needs to control another employer's workers and is resigned to the possibility of being a joint employer, no changes may be needed.
John Falcone and Luke Malloy handle employment law matters at PLDR Law. Feel free to contact us if you have questions about this matter.
