A recently proposed joint employer rule issued by The National Labor Relations Board (NLRB) could significantly alter existing joint employer definitions, establishing new standards that would impact businesses across a variety of industries in 2023 and beyond.
In this article, we’ll outline the major changes that could take effect as soon as early 2023 and offer insights about which businesses and industries may be affected. We’ll also offer suggestions to inform your organization’s preemptive policy adjustments and share how you can submit public comments to NLRB.
Overview of Current Policy vs. Proposed Changes
In late April 2020, the NLRB’s established rule only defined an employer as the joint employer of another entity if it exercised “direct and immediate control over the essential terms and conditions of employment of the other entity’s workers.”
The newly proposed rule would modify these terms to consider two or more employers "joint employers" if the “essential terms and conditions of employment” are shared or co-determined.
The implications of this change (if enacted) are noteworthy. By broadening and blurring the definition of joint employment, it is likely that many more businesses will be defined as joint employers and made mutually liable for any unfair labor practices committed by the other entity. They will also be required to fulfill any bargaining/union-related obligations of the other entity in the event of labor disputes or unionization.
How (and Which) Employers Could Be Affected
Based on existing interpretations of the NLRB’s proposed rule, most experts believe that businesses using indirect employment staffing models, temporary staffing agencies, or a franchise model, are most likely to be impacted by these new rulings. Although these are the most readily identifiable business types that could be affected, some believe the new rule could extend to impact many other business types, including non-unionized entities. This is based on the NLRB’s updated terms and definitions, which differ from those established in 2020. Namely, in the new rule, those categorized as joint employers only need to “possess the authority to control” another entity’s terms and conditions of employment, even if that authority is never exercised.
How Employers Can Respond and Adapt
Employers using indirect employment staffing and the other models we’ve outlined above are the most susceptible to joint employer categorization if the new rule is enacted. Regardless of your business type, we recommend the following steps to prepare for possible changes:
- Eliminate contractual terms that empower your organization to dictate terms and conditions of employment to any other entity’s workforce, even if that right has not been exercised to date. This includes work hours, disciplinary action, and other forms of workforce influence.
- Educate and retrain managerial/supervisory staff to avoid directly supervising any employee of another company. Instead, your supervisors and managers must offer any employee-related feedback or reports directly to the staffing agency.
- Employers across all industries should assess the likelihood that they will be classified as joint employers of those employees who work for their vendors, contractors, franchises, or suppliers.
Where and How to Submit Comments to NLRB
The NLRB invites public comments on the newly proposed rule, which can be digitally submitted at Regulations.gov or by mail to the following address:
Roxanne Rothschild
Executive Secretary
National Labor Relations Board
1015 Half Street S.E.
Washington D.C.
20570-0001
Expected Timeline
Due to the contentious nature of this issue and potential policy change, the proposed NLRB rule is likely to attract commentary from a range of business leaders and industries. Most experts believe that a final rule will not be established until the first quarter of 2023.
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