March 2, 2020

NLRB Issues Final Joint Employer Rule—Litigation To Come

On February 26, the National Labor Relations Board (NLRB) issued its final rule regarding how to determine joint-employer status under the National Labor Relations Act (NLRA), restoring the standard used for decades to determine when two or more businesses can be considered joint employers. The new regulation will go into effect on April 27, 2020. To be considered a joint employer under the new regulation, “a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.”

Importantly, the NLRB provided clarification and guidance to ensure compliance with the regulation, providing clear specifications for what is meant by “essential terms and conditions,” “direct and immediate control,” and what makes something “substantial.” Click here for NLRB’s fact sheet explaining the new regulation and the definition. This detail should provide the clarity and assurance businesses need to remain independent and free from unknown and unfair obligations.

The final rule does not mean the fight over this issue is over, however. Labor unions and activists are expected to file lawsuits regarding the new NLRB regulation, as they already have for a related rulemaking.

As Connecting the Dots readers will recall, last month the U.S. Department of Labor issued a final rule on joint-employer status under the FSLA, and, as Politico reported last week, a group of 17 states and the District of Columbia filed a lawsuit on February 26 seeking to overturn that regulation. That lawsuit argues DOL’s joint employer rule, which is set to take effect in March, would “impermissibly narrow” the scope of the Fair Labor Standards Act and leave workers “even more vulnerable to underpayment and wage theft.”

The Equal Employment Opportunity Commission (EEOC) also is considering this issue. The EEOC currently is working on a draft regulation to clarify when businesses can be considered joint-employers for the purposes of workplace discrimination laws, including the Civil Rights Act, the Americans with Disabilities Act, and the Pregnancy Discrimination Act. Stay tuned to Connecting the Dots for information about that rule as it becomes available.