On October 26, 2023, the National Labor Relations Board (NLRB) set forth its final rule on the definition of joint employers, sparking significant implications for businesses nationwide on issues of affiliated businesses’ liabilities. Consequently, employers, franchisors, and staffing agencies have important, new changes to take note of.
The final rule states that affiliated businesses now face expanded liability. This means that corporations and their franchisors, shared by multiple employees or subcontracted labor units, will need to uphold responsibilities collectively under the National Labor Relations Act. This could lead to significant changes in how these businesses operate, impacting their relationships with employees and their management of labor relations.
Moreover, one of the consequential outcomes of this final rule is the potential for franchisors and staffing agencies being held accountable for unfair labor practices committed by the primary employer. This new definition of joint employers places liability onto these secondary business entities, which could result in facing legal consequences for actions that were traditionally only the responsibility of the primary employer.
The law may also bring about significant changes in how businesses contract out labor, given that staffing agencies now have increased susceptibility to legal issues coming from the primary employer. Such a situation could instigate agencies to reassess their employment contracts to include clauses that better protect them from potential legal exposure based on a client’s labor practices.
This update from the National Labor Relations Board represents one of the significant legal developments that businesses, franchisors, and staffing agencies need to be aware of as they navigate their labor relations and legal obligations. It urges them to stay informed and potentially consult with their legal teams to revise their practices accordingly.
To learn more about the NLRB’s final rule and its impacts, visit FordHarrison’s detailed report.