Hunton Employment & Labor Perspectives

On September 7, 2022, the NLRB released a Notice of Proposed Rulemaking (“NPRM”) and request for public comment regarding its latest iteration of the joint employer rule.  The NPRM proposes to rescind and replace the current final rule, entitled “Joint Employer Status Under the National Labor Relations Act,” which took effect on April 27, 2020.

The proposed rule would revise the standard for determining whether two employers, as defined in section 2(2) of the National Labor Relations Act (“Act”), are joint employers of particular employees within the meaning of section 2(3) of the Act.  Section 2(2) of the Act defines an “employer” to include “any person acting as an agent of an employer, directly or indirectly.”  The Act itself is silent regarding the definition of joint employer.

The proposed rule seeks to reinstate the previously overruled Browning-Ferris decision. 362 NLRB 1599 (2015). Under the NLRB’s proposal, employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” including wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules.  In addition to direct evidence of control, the Board will consider evidence of reserved and indirect control over terms and conditions of employment when analyzing joint employer status.

The proposed rule, absent changes pursuant to comments, would read as follows:

§ 103.40 Joint Employers.

• An employer, as defined by section 2(2) of the National Labor Relations Act (the Act), is an employer of particular employees, as defined by section 2(3) of the Act, if the employer has an employment relationship with those employees under common-law agency principles.

• For all purposes under the Act, two or more employers of the same particular employees are 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 for an employer to 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.

• “Essential terms and conditions of employment” will generally include, but are not limited to: wages, benefits, and other compensation; hours of work and scheduling; hiring and discharge; discipline; workplace health and safety; supervision; assignment; and work rules and directions governing the manner, means, or methods of work performance.

• Whether an employer possesses the authority to control or exercises the power to control one or more of the employees' terms and conditions of employment is determined under common-law agency principles. Possessing the authority to control is sufficient to establish status as a joint employer, regardless of whether control is exercised. Exercising the power to control indirectly is sufficient to establish status as a joint employer, regardless of whether the power is exercised directly. Control exercised through an intermediary person or entity is sufficient to establish status as a joint employer.

• Evidence of an employer's control over matters that are immaterial to the existence of an employment relationship under common-law agency principles or control over matters that do not bear on the employees' essential terms and conditions of employment is not relevant to the determination of whether the employer is a joint employer.

• A party asserting that an employer is a joint employer of particular employees has the burden of establishing, by a preponderance of the evidence, that the entity meets the requirements set forth in paragraphs (a) through (f) of this section.

• The provisions of this section are intended to be severable. If any paragraph of this section is held to be unlawful, the remaining paragraphs of this section not deemed unlawful shall remain in effect to the fullest extent permitted by law.

Chairman Lauren McFerran was joined by Board Members Gwynne A. Wilcox and David M. Prouty in proposing the new rule, and Board Members Marvin E. Kaplan and John F. Ring dissented.  The proposed rule is still subject to comment and revision, and the deadline to submit initial comments is on or before November 7, 2022.  Reply comments must be received by November 21, 2022.