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NLRB’s New Joint-Employer Rule

by Jennifer Shaw and Melissa Whitehead | | November 28, 2023

The National Labor Relations Board (“NLRB”) continued its busy year by recently finalizing a new joint employer rule under the National Labor Relations Act (“NLRA”). This rule is used to determine when multiple employers may share liability for unfair labor practices, or be jointly obligated to engage in the collective bargaining process. 

So, what does the new rule change? Currently, an entity may be a joint employer if it actually exercises direct, substantial control over another entity’s employees. But the new rule establishes joint employment even where an entity has only indirect control over “one or more essential terms and conditions of employment”—even if an entity does not actually exercise that control.  (“Essential terms and conditions” include compensation; hours of work and scheduling; assignment and supervision of job duties; work rules and discipline; hiring and firing; and working conditions.)

This change means that joint employment will be easier to establish between employers and their vendors, clients, contractors, and other business partners.  For example, if your organization places consultants at client sites who may indirectly control the working conditions of client employees, you could be jointly liable for your client’s labor violations.  Moreover, you might be obligated to bargain with your client’s employees.

This new rule is likely to be especially challenging for employers in industries relying on subcontracting, consulting, and temporary staffing needs, such as construction, healthcare, engineering, IT, and others. But, practically speaking, most employers should review their relationships and agreements with other entities with whom they work, to determine whether a joint employment relationship may exist.   

Contact your Shaw Law Group attorney with questions!

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