New Joint-Employer Rule by NLRB: What You Need to Know

On October 27, 2023, the National Labor Relations Board (NLRB) published its final rule addressing the Standard for Determining Joint-Employer Status under the National Labor Relations Act (NLRA). The effective date of the new rule is February 26, 2024, and it will only be applied to cases filed after the effective date.

Under the new standard, an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or codetermine one or more of the employees’ essential terms and conditions of employment, which are defined exclusively as:

1. 1. wages, benefits, and other compensation;
   2. hours of work and scheduling;
   3. the assignment of duties to be performed;
   4. the supervision of the performance of duties;
   5. work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
   6. the tenure of employment, including hiring and discharge; and
   7. working conditions related to the safety and health of employees.

The joint-employer standard is only implicated if an entity employs the workers at issue and has authority to control at least one of these terms or conditions. Authority over other matters is not sufficient.

The NLRB’s final rule is completely separate from the Department of Labor (DOL) rule. The NLRB and DOL independently set joint-employer standards, consistent with their different governing statutes. The NLRB’s rule is thus grounded in the NLRA and longstanding common-law principles. By contrast, the DOL applies an economic-realities test to interpret “employer” for the purposes of the Fair Labor Standards Act. The NLRB does not use the economic-realities test.

The final rule can be accessed here.

A fact sheet can be accessed here.

Compliance Perspective

Issue

The final rule significantly broadens the NLRB’s definition of employer and increases potential liability and exposure for facilities when they use staffing agencies or other third-party workers. The NLRB can find that a facility is a joint employer with another entity under many circumstances such as when a facility reserves some authority to determine an essential term or condition of employment for the outside caregivers or workers, even if the facility never exercised such authority, or when a facility exerts so-called indirect control over working conditions. It is important for facilities to be aware of the final rule and its implications. They should also consider seeking legal advice to understand the full extent of their obligations under the new rule.

Discussion Points

• • Review your policies and procedures to ensure compliance with the new standard for determining joint-employer status. Update as needed.
  • Provide training for appropriate staff and ensure they demonstrate competence with the new requirements. Document that these trainings occurred, and file each signed document in the employee’s education file.
  • Periodically audit to ensure relationships with outside companies, agents, partners, and other third parties are in compliance with the new joint-employer rule. This includes reviewing the reservation of the contractual and practical right to control of essential terms and conditions of employment.

*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*