The NLRB’s Redefinition of Joint-Employer Status

On October 26, 2023, the National Labor Relations Board (the “Board”) unveiled a final rule that establishes new criteria for determining joint employer status.  This final rule replaces the Trump administration’s 2020 rule, which implemented a higher threshold and facilitated an easier path for employers to evade a finding of joint-employer status.  The new rule’s expansive definition of joint employment aligns with the pro-employee stance adopted by the Board during the Biden administration.

Since 2020, the focus for joint employer status has been on whether there is “direct and immediate control” over essential terms and conditions of employment.  Now, the final rule goes further, finding that joint employer status can exist where there is “indirect, reserved” control, whether or not that control is exercised.  Specifically, under the final rule, joint employer status can exist when two or more entities share or codetermine critical aspects of employees’ terms and conditions of employment.  The term “share or codetermine” is defined as having the authority to control, whether directly or indirectly, one or more of the employees’ essential terms and conditions of employment. The new rule also incorporates the following “essential” terms and conditions of employment that the Board will consider when determining joint employer status:

• Wages, benefits, and other compensation;
• Hours of work and scheduling;
• The assignment of duties to be performed;
• The supervision of the performance of duties;
• Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
• The tenure of employment, including hiring and discharge; and
• Working conditions related to the safety and health of employees.

Thus, under the final rule, an entity may be considered a joint employer if it has authority to control at least one of the above terms or conditions of employment.  When it comes to unions, a joint employer has a duty to engage in collective bargaining over the terms of employment that it possess or exercises the authority to control.

The new rule is set to become effective on December 26, 2023 and will only be applied to cases filed after the effective date.  The implications of joint-employer status are far-reaching for employers, particularly those with staffing, franchise, or similar arrangements.  As a result, employers should assess the impact of the final rule on their operations in the coming months.  

If you have any questions about the proposed regulations, please contact one of Honigman’s Labor and Employment attorneys.