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NLRB Gives Notice of Proposed Rulemaking on Joint-Employer Standard

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The National Labor Relations Board (NLRB) has embarked upon notice and comment rulemaking to replace the final rule concerning joint employer status that has been in place since April 2020.

Section 2(3) of the National Labor Relations Act (Act) generally provides that the term “employee” under the Act is not limited to an employee of a particular employer and section 2(2) of the Act states that the term “employer” can include “any person acting as an agent of an employer, directly or indirectly”.

According to a majority of the NLRB, the proposed rule would revise the standard for determining whether two employers jointly employ one or more employees (i.e. whether they can both be legally liable in labor relations matters concerning the same employee or employees).

Under the proposed rule, an employer will be found to be an employer of particular employees “if the employer has an employment relationship with those employees under common-law agency principles”.

Further, two or more employers of the same particular employees will be found to be joint employers of those employees “if the employers share or codetermine” matters governing the employees’ “essential terms of and conditions of employment”. This will non-exhaustively include such things as wages, hours, health and safety, supervision, discipline and discharge, among others.

More particularly, even if an employer does not have a direct employment relationship with an employee, but has authority to directly or indirectly set the employee’s terms and conditions of employment, it will be at risk of being found to be the employee’s employer for purposes of the Act. Significantly, an employer need not actually exercise such authority; it will suffice that it simply have the authority in order to be found to be a joint employer.

Perhaps not surprisingly, the NLRB’s proposed new rule is contentious. Members of the Board have split along party lines over the need for the new rule.

For those wishing to participate in the rulemaking process, comments must be received by the NLRB on or before November 7, 2022. Any replies to initial comments must be received by November 21, 2022.

We will continue to monitor and report on developments in this regard.

The full text of the proposed rule can be found here.

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