Rule Would Revert to Direct Control Standard

After pledging this summer to clarify its stance on what constitutes joint employment, the National Labor Relations Board on Sept. 14 published proposed rulemaking to reestablish a decades-old standard that was in place prior to 2015.

Under the proposed rule, an employer may be found to be a joint employer of another business’ employees only if the two companies share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. To be deemed a joint employer, a business would have to possesses and actually exercise direct and immediate control over the essential terms and conditions of another employer’s employees in a manner that is not limited and routine.

The rulemaking comes three years after the NLRB’s decision in Browning-Ferris Industries overturned precedent to widen the definition of a joint employer to include companies that had indirect control over another business’ workforce for the purposes of union organizing, workplace violations, and other labor issues. The indirect control standard became widely known as the McDonald’s issue because it would have made franchisers such as McDonald’s a joint employer with its franchisees even though the corporate entity had little control over individual restaurants’ operations. Likewise, wholesale distribution businesses could have seen themselves become joint employers to service providers such as staffing agencies.

In the past year, a newly-constituted NLRB has made several rulings that conflicted with the 2015 decision, prompting new Board Chairman John Ring to pursue rulemaking on the matter. FEDA will continue to work with its advocacy groups to promote its members interest during the 60-day public comment period.