This week, the National Labor Relations Board (NLRB) released a Notice of Proposed Rulemaking (NPRM) addressing the joint employer rule. Overall, the NPRM proposes to rescind and replace the joint employer rule that took effect on April 27th, 2020. In effect, the proposed changes would ground the rule in established common-law agency principles. It would be consistent with previous NLRB precedent and guidance if turned into a final rule. Previously, in June 2022, the NLRB altered its electronic posting requirements in circumstances where an employer is affected by COVID-19. As employers know, in the United States, all businesses with one or more employees must display specific state and federal labor law posters. The emergence of COVID-19 in 2020 led to the need for electronic posting requirements and created questions that the NLRB needed to answer.
Background of the Previous Rule
To summarize, effective March 2020, the original rule provided updated guidance for determining joint employer status in specific situations. Markedly, the rule applied when an employee performed work for their employer that simultaneously benefited another individual or entity. Additionally, the rule included guidance on identifying factors that would not be relevant when determining joint employer status.
Among other clarifications and provisions, the 2020 Joint Employer Rule:
- specified when a person who is not the employer is considered a joint employer;
- provided a four-factor test to determine when a person is acting directly or indirectly in the interest of an employer;
- clarified that an employee’s “economic dependence” does not determine joint employer status under the Fair Labor Standards Act (FLSA);
- specified that an employer’s business model or contractual agreements do not make joint employer status more or less likely; and
- provided several examples applying the DOL’s guidance for determining FLSA joint employer status in various factual situations.
2020 Joint Employer Rule Recision
After the 2020 election of President Joseph Biden, the Department of Labor (DOL) reviewed the 2020 Rule. As a result, the agency found that the rule included joint employment descriptions contrary to the statute and Congressional intent. Also, the rule failed to consider any DOL joint employment guidance issued before 2017. Additionally, the U.S. District Court for the Southern District of New York vacated most of the rule in 2020. In summary, as of October 5th, 2021, the DOL removed the 2020 rule and reinstated the previous rule.
Overview of 2022 Notice of Proposed Rulemaking
Comparatively, in the NLRB’s NPRM, two or more employers are labeled joint employers under a new definition. Accordingly, employers are joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment.” Chiefly, these “matters” include wages, benefits and other compensation, work schedules, hiring and discharge, discipline, and workplace health and safety. Other “matters” include supervision, assignment, and work rules. The NLRB proposes considering both direct evidence of control and proof of reserved or indirect control over these essential terms and conditions of employment when analyzing joint employer status.
In conclusion, public comments are invited on all aspects of the proposed rule and can be submitted electronically to regulations.gov. The NLRB must receive comments on this proposed rule on or before November 7th, 2022.