On February 26, 2020, the National Labor Relations Board (NLRB) issued its final rule governing joint-employer status under the National Labor Relations Act (NLRA) in the federal register. The final rule will undo a more relaxed Obama-era joint-employer test by reinstating the joint-employer standard that the Board followed for several decades prior to its 2015 decision in Browning-Ferris Industries of California, Inc. According to the Board, its ruling provides “greater precision, clarity, and detail that rulemaking allows,” as to what constitutes a joint employer.
The Browning-Ferris decision held that a company could be deemed a joint employer if “its control over the essential terms and conditions of another business’s employees was merely indirect, limited and routine, or contractually reserved but never exercised.” However, with its final rule, the Board will reinstate a pre-Browning-Ferris test which holds that a business is only a joint employer if it “has substantial direct and immediate control” of one or more essential terms or condition of a worker’s job such that the business “meaningfully affects matters” pertaining to the employment relationship. In its ruling, the NLRB defined those “essential terms and conditions of employment” as “wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.” It also defined “substantial” direct control as actions that have “a regular or continuous consequential effect” on one of the eight core aspects of a worker’s job that the Board listed, while pointing out that any direct control that is “sporadic, isolated, or de minimus” is insufficient to warrant a finding of joint employment.