NLRB Proposes Tougher Standards for Plaintiffs Claiming Joint Employer Liability
The joint employer question has been a hot topic in franchise and employment litigation for the last few years. You may remember the Browning-Ferris decision of 2015, in which the National Labor Relations Board (NLRB, or Board) determined that two or more entities can be considered joint employers if they “share or co-determine essential terms and conditions of employment.”
The NLRB recently submitted a Proposed Rule to change that standard, intending to facilitate more consistency when determining an entity’s status as a potential joint employer. The intent of the proposed rule is to foster predictability and consistency regarding determinations of joint-employer status in a variety of business relationships, thereby promoting labor-management stability. The key points of the Proposed Rule include:
- Entities could be considered joint employers if they share or codetermine essential terms and conditions of employment (hiring, firing, discipline actions, supervision, direction).
- Workers cannot claim a business is a joint employer solely based on the business’s indirect influence, unexercised contractual reservation of authority, or exercise or routine or limited authority.
- An entity found to be a joint employer may be held liable for another employer’s unfair business practices, and may be compelled to bargain over terms and conditions of workers’ employment by the NLRB.
- Entities that do not affect decisions about a business partner’s setting of wages, benefits or other major conditions of employment will not be subject to joint employer liability.
The NLRB Proposed Rule, if enacted, could have franchisors breathing a sigh of relief. But before that happens, the Board has submitted its proposal for a comment period, which means anyone may chime in regarding this proposal. Franchisors and others affected may submit comments online via the regulations.gov website.
Many franchisors already have very limited control and rights regarding their franchisees’ employees as a consequence of the 2015 Browning Ferris decision. To stay safe, franchisors who haven’t taken action to loosen controls should still do so.