The National Labor Relations Board (NLRB) unveiled a final rule on October 26, 2023, which substantially broadens the standard for determining joint-employer status under the National Labor Relations Act (NLRA). This new regulation paves the way for the board to more efficiently identify a joint employer relationship. This development could potentially have significant implications for a wide array of legal professionals and corporations globally.
Typically, a corporation is considered a joint employer along with its subcontractor if they both have substantial control over the terms and conditions of the workers’ employment. With the new NLRB rule, however, the range of corporations that could be deemed joint employers has expanded substantially. This is due to the fact that the revised standard does not require the corporation to exercise its authority of control, simply to possess the potential ability to exercise control, whether direct or indirect.
Legal experts from Sheppard Mullin Richter & Hampton LLP suggest that companies may need to thoroughly rethink their current and future contractual relationships to accommodate this new rule. It may force businesses to reconsider the degree of control they have over their employees under the NLRA to avoid potential joint employer liability.
The full report from Sheppard Mullin Richter & Hampton LLP on this crucial development can be accessed here. This change in definition is undoubtedly of profound importance to a broad array of global corporations and businesses, requiring a potentially significant legal evaluation of their labor and employment policies. Therefore, it is crucial to stay informed and prepared for these ongoing and significant legal changes.