[Updated November 27th, 2023 to reflect the revised effective date.]
On October 26th, 2023, the National Labor Relations Board (NLRB or the Board) released its joint employer final rule. The final rule rescinds the previous 2020 final rule. According to the NLRB, the previous rule set a higher threshold and included joint employment descriptions contrary to the statute and Congressional intent. This made it easier for actual joint employers to avoid joint employer status. The new joint employer final rule follows recent employee-friendly decisions from the current NLRB. Originally scheduled to take effect in December 2023, the Board announced in November that the final rule will take effect February 26th, 2024. Earlier, in September 2023, the NLRB expanded protected concerted activity and other Section 7 protections as a result of two rulings.
Background and Rescission of the Previous Rule
In March 2020, the NLRB’s previous final rule provided updated guidance for determining joint employer status in specific situations. Specifically, 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. The 2020 final rule stated that a putative joint employer must “possess and exercise … substantial direct and immediate control” over essential terms and conditions of employment. Notably, the rule failed to consider any Department of Labor (DOL) joint employment guidance issued before 2017. The NLRB noted that the rule’s stipulations had no foundation in common law.
2023 Joint Employer Final Rule
In adopting the 2023 joint employer final rule, the NLRB has rescinded the prior 2020 final rule. The NLRB states that the new rule more faithfully grounds the joint employer standard in established common law principles under the Board. In particular, the 2023 final rule considers a possible joint employer’s authority to control essential terms and conditions of employment:
- whether or not it exercises that control; and
- regardless of whether such control is direct or indirect.
To further summarize, the joint employer standard establishes that an entity may be considered a joint employer of a group of employees if each entity meets two criteria. First, the entity has an employment relationship with the employees. Second, they share or codetermine one or more of the employees’ essential terms and conditions of employment. These terms and conditions of employment include the following:
- wages, benefits, and other compensation;
- work hours and scheduling;
- ability to assign duties;
- responsibility to supervise duties;
- work rules and directions governing the manner, means, and methods to perform duties, as well as discipline;
- the ability to hire and discharge employees; and
- control of working conditions related to workplace safety hazards.
Finally, the 2023 joint employer final rule provides guidance to parties regarding their rights and responsibilities under an established joint employer status. Additionally, employers may access further guidance on the final rule through the NLRB’s fact sheet. The 2023 final rule was originally scheduled to take effect on December 26th, 2023. On November 16th, 2023, the NLRB extended the effective date to February 26th, 2024. The NLRB will apply the new rule to cases filed after that effective date.