NLRB proposes new standard that will greatly expand scope of “joint employment”

On September 6, 2022, the US National Labor Relations Board (NLRB) published a proposal to once again revise its standard for determining joint-employer status under the National Labor Relations Act (NLRA) to substantially expand the scope of joint employment.

The NLRB’s proposal effectively returns to the joint employment standard as it existed in the wake of the 2015 Browning-Ferris decision, which considerably broadened the definition of joint employer for purposes of the NLRA.  Under Browning-Ferris, two entities were deemed joint employers based on the existence of reserved joint control, indirect control, or control that was limited and routine.  The previous standard required putative joint employers to exercise actual control over essential employment terms, with such control being “direct and immediate.” 

In February 2020, barely a year after the US Court of Appeals for the District of Columbia Circuit upheld some – but not all – of the Browning-Ferris standard, the NLRB repudiated the Browning-Ferris standard and promulgated a final rule (which became effective on April 27, 2020) stating that joint-employer status may only be established where a company exercises “substantial direct and immediate control” over the essential terms and conditions of another company’s employees.

The NLRB’s new proposed rule – endorsed by the three Democratic appointees to the Board but opposed in a dissent by its two Republican-appointed members – rejects the 2020 rule’s emphasis on “direct and immediate control” and largely restores the Browning-Ferris standard, requiring only reserved or indirect joint control.  Notably, by establishing that indirect or reserved control alone may be sufficient to prove joint-employer status, the proposed rule arguably expands the scope of joint employment beyond the Browning-Ferris standard.

The proposed rule provides that two or more employers of the same particular employees will be found to be joint employers of those employees if the employers “share or codetermine those matters governing employees’ essential terms and conditions of employment.”  For purposes of the proposed rule, “share or codetermine” means “possess the authority to control (whether directly, indirectly, or both) or to exercise the power to control (whether directly, indirectly, or both) one or more of the employees’ essential terms and conditions of employment.”

Should the final rule even resemble the proposed version, it will have significant consequences for employers, who may be required to bargain with a union representing jointly employed workers and/or may be subject to joint and several liability for unfair labor practices committed by the other joint employer(s).

The NLRB will accept public comments on the proposed rule through November 7, 2022, and replies to comments filed during the initial comment period must be filed by November 21, 2022.  The NLRB will review these comments, then issue a final rule, likely in the first half of 2023.  Irrespective of whether, and how, the final rule changes from its current form, prudent employers will be prepared for the possibility that even limited or attenuated control over terms and conditions of employment could impose labor obligations and liability based on joint employer status.