On October 26, 2023, the National Labor Relations Board (“NLRB”) issued a final rule addressing the standard for determining joint-employer status under the National Labor Relations Act (“NLRA”). The new rule is effective December 26, 2023.
Pursuant to the new rule, two or more employers of the same employees are considered joint employers of those employees if the employers share or codetermine those matters governing employees’ essential terms and conditions of employment. To share or codetermine those matters governing employees’ essential terms and conditions of employment means the employer must possess the authority to control (whether directly, indirectly, or both) or exercise the power to control (whether directly, indirectly, or both) one or more of the employees’ essential terms and conditions of employment.
The new rule defines the “essential terms and conditions of employment” as: (1) wages, benefits, and other compensation; (2) work hours and scheduling; (3) assignment of work duties; (4) supervision of performance of work duties; (5) work rules and directions on the manner, means, and methods of the performing work duties, and the grounds for discipline; (6) hiring and firing decisions; and (7) “working conditions related to the safety and health of employees.”
The final rule rescinds and replaces the 2020 final rule that was promulgated by the prior Board and which took effect on April 27, 2020. According to the NLRB, “the 2023 rule more faithfully grounds the joint-employer standard in established common- law agency principles. In particular, the 2023 rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect.”
The new rule will make it much easier for the NLRB to find there to be joint employer status which can have significant implications on employers, such joint liability for unfair labor practices and obligations to participate with labor unions in collective bargaining. Employers should review their existing relationships and agreements to determine whether they may be deemed joint employers under the New Rule. Should you have any questions regarding the new rule and how it might affect your business, please contact Ali Law Group.
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