The National Labor Relations Board (NLRB) has issued a final rule that provides a significant revision of the Standards for Determining Joint-Employer Status under the National Labor Relations Act (NLRA). (Full text)
This important shift clarifies the circumstances in which two or more entities can be recognized as joint employers of a certain group of employees. This could have extensive implications for employers, especially within industries that regularly employ subcontractors or operate under franchising models.
Prior to this announcement, the determination of joint employer status was often nebulous and presented significant uncertainty for businesses. This new ruling offers a more concise and clear standard that may alleviate some of the complexity associated with establishing and maintaining such arrangements.
- The first element of the rule focuses on the employer’s authority to hire or fire the employee in question.
- The second aspect considers the employer’s supervision and control of the employee’s work schedules or conditions of employment.
- The third point reviews the employer’s determination of the employee’s rate and method of payment.
- Lastly, the rule assesses the employer’s maintenance of employment records.
After a thorough analysis of these factors, if an employer is found to have significant and direct control in these areas, they may be classified as a joint employer for the purposes of the NLRA.
As such, these new guidelines from the NLRB may lead to a broader interpretation of joint employer status, requiring companies to navigate a new legal landscape to ensure they are in compliance with the updated standards.