In an expected but significant legal development, the National Labor Relations Board (NLRB) has issued a final rule set to become effective from December 26, 2023. This rule modifies the criteria for determining joint employer status under the National Labor Relations Act (NLRA). The new guidelines revealed by the NLRB marks a return to the broader Obama-era interpretation of what constitutes a joint employer.
As per the newly adopted interpretation, the emphasis is given to an employer’s potential control over the vital terms of employment. This concept of potential control applies regardless of whether such control is actually exerted on a regular basis.Read more about this development here.
This particular change puts businesses that work closely with contractors and franchisees at risk of being considered joint employers. This suggests a significant shift in legal obligations for many enterprises, potentially affecting their liability in labor and employment issues.
The NLRB’s decision is in line with previous discussions of potential regulatory changes. It calls for enhanced attention from corporates to ensure compliance with the updated definitions and the potential legal ramifications of said definitions.
Prudent businesses and legal professionals need to be aware of these changes. They should review their practices and agreements as part of an effort to minimize the potential risks associated with this wider interpretation of joint employment.