In a significant shift, the National Labor Relations Board (NLRB) introduced a final rule on joint employment, upending its prior standard set in 2020. This new rule, issued on October 26, 2023, has important implications for numerous businesses, particularly in sectors with intricate labor relations, including staffing agencies, client companies, and entities in vendor-client relationships, as well as contractors, subcontractors, and franchisors. Those that potentially hold control or influence over another organization’s employees should take note.
As detailed by legal experts at Quarles & Brady LLP, the importance of understanding this new joint employment standard cannot be overstated. Any employers who have not yet initiated contingency measures to meet the requirements of the new standard may find themselves at risk of potential litigation or regulatory enforcement action.
The new standard puts forth a robust framework for defining joint employers and articulates clear parameters for determining when an entity retains sufficient control over another’s employees to qualify as a joint employer. With numerous businesses operating in complex labor arrangements, the number of employers falling under the ‘joint employers’ category under the new standard is expected to rise.
Consequently, it becomes crucial for such entities to examine their current labor relationships, review their existing contracts, and consider whether it would be necessary to revise their practices to fall in line with the new rule. Ignoring such changes could lead to dire consequences — from penalties to potential class-action suits by employees falling under the joint employment classification.
To sum up, the revised NLRB joint employment standard calls for a new approach to managing labor relations, both for staffing agencies and employers. With careful planning and informed legal advice, potentially affected businesses can successfully navigate this new terrain.