NLRB Issues Joint-Employer Final Rule

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The National Labor Relations Board (NLRB) final rule for the joint-employer standard under the National Labor Relations Act is intended to provide well-defined criteria that encourage important collective bargaining and promotes the purpose of the Act. The final rule, which takes effect on April 27, 2020, aims to provide detailed guidance.

The standard established by the final rule restores the joint-employer status that the NLRB applied for several decades before the 2015 decision in Browning-Ferris. The joint-employer standard under the NLRA is essential because it provides the framework by which the NLRB will determine whether a business is an employer of employees directly employed by another employer altogether.

Under the final rule, an employer may be considered a joint employer only if the two employers share or co-determine the employees’ terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. Additionally, the final rule establishes key terms, such as what is considered “essential terms and conditions of employment.” Specifically, noting that the employer must also possess and exercises such substantial and direct and immediate control and that it warrants a finding that it “meaningfully affects matters relating to the employment relationship.” 

During the announcement of the final rule, NLRB Chairman John F. Ring stated, that the final rule gives our joint-employer standard the clarity and stability that is essential to any successful labor-management relationship. Ring stated, “With the completion of today’s rule, employers will now have certainty in structuring their business relationships, employees will have a better understanding of their employment circumstances, and unions will have clarity regarding with whom they have a collective-bargaining relationship.”