On October 26, 2023, the National Labor Relations Board (NLRB) issued a final rule that significantly broadens the definition of “joint employment” under the National Labor Relations Act (NLRA). This marks the fifth change to the board’s joint employer standard since 2015, according to a report from McGuireWoods LLP.
The new rule by the NLRB is momentous for many businesses and corporations as it stipulates changes in the interpretation and enforcement of “joint employment”. This could potentially impact key business decisions revolving around the type of labor engagements – directly hired, outsourced, or through independent contractors – to be entered into.
It is paramount that legal professionals and businesses are versed in these changing dynamics as ignorance or non-compliance can have severe implications. The changes have a far-reaching potential. They could transform management practices and models, redefine employer and worker relationships, and risk increasing labor-related liabilities and disputes.
Given this, professionals in corporate law and organizations should deeply scrutinize these changes. They need to assess how these modifications influence their current and future labor relations practices and carefully redesign labor contractual agreements and relationships to align with the benevolently enlarging perspective of “joint employment”.
It is important to remain updated and carry out regular reviews of the regulations to understand implications of changes as per the NLRB rulings. ‘Joint employment’ has long been a point of debate, often forming a complex legal web to navigate. This recent change emphasizes the need for businesses to take a proactive approach and work closely with their internal legal teams or external legal counsel to ensure compliance.