Hunton Employment & Labor Perspectives

Recently, the NLRB created significant uncertainty as to the joint employer test under the NLRA when it vacated a December 2017 decision that resurrected the standard that existed prior to 2015.  Such a standard determines the existence of a joint employer relationship by assessing whether one entity has “actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control)” and the control is “’direct and immediate’ (rather than indirect)” and exercised in a manner that is not “limited and routine.”

On May 9, 2018, the NLRB indicated that it is considering rulemaking to address the joint employer test under the NLRA through a submission contained in the Agency’s filing in the Unified Agenda of Federal Regulatory and Deregulatory Actions.  In a Board press release, Chairman John Ring stated that “[t]he current uncertainty over the  [joint employer] standard . . . undermines employers’ willingness to create jobs” and the “notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be.”  The press release further provides that the NLRB has begun the internal process necessary to consider rulemaking on the joint employer standard and that the inclusion of the proposal in the regulatory agenda does not reflect the participation of Board Members Pearce and McFerran.

Considering that rulemaking is not typically how the Board shapes policy, and that rulemaking requires a long public comment process with the risk of immediate legal challenges, employers should continue to keep apprised of joint employer developments and carefully monitor their relevant business conduct.