The American Supply Association applauds the National Labor Relations Board’s recent final rule establishing a federal regulation with a clear standard for determining joint-employer status under the National Labor Relations Act.
In its summary, the NLRB believes the rulemaking will foster predictability and consistency regarding determinations of joint-employer status in a variety of business relationships, thereby enhancing labor-management stability, the promotion of which is one of the principal purposes of the act. Under this final rule, an entity may be considered a joint employer of a separate employer’s employees only if the two share or codetermine the employee’s essential terms and conditions of employment, which are exclusively defined as wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.
The final rule retains the requirement that direct and immediate control over essential terms and conditions of employment be “substantial” to give rise to joint-employer status. The board decided, however, to define “substantial direct and immediate control” in the final rule. As defined, “substantial” direct and immediate control means direct and immediate control that has a regular or continuous consequential effect on an essential term or condition of employment of another employer’s employees. Such control, it noted, is not “substantial” if it is only exercised on a sporadic, isolated or de minimis basis. Thus, the exercise of even direct or immediate control may be so isolated, sporadic or de minimis that it fails to establish that the putative joint employer meaningfully affects matters relating to the employment relationship.
ASA, in comments written in December 2018 related to NLRB’s at-the-time proposed regulation, The Standard for Determining Joint Employer Status, noted NLRB is correct that this rulemaking will foster predictability and consistency regarding determinations of joint-employer status in a variety of business relationships, thereby promoting labor-management stability, one of the principal purposes of the act.
ASA noted this stability was upended by the NLRB’s controversial 2015 decision known as Browning-Ferris Industries (BFI decision), which created a nebulous new definition for joint employers involving “indirect” control over employees. ASA added that Republican members’ dissenting opinion summed up the confusion emanating from the BFI decision, stating: “The new joint-employer test fundamentally alters the law applicable to user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer business relationships under the act.”
Link to the final ruling