NLRB Issues Proposed Rule Clarifying Joint Employer Standard

September 14, 2018

The National Labor Relations Board issued a proposed rule that would replace the controversial Obama-era Browning-Ferris standard for joint employer liability, establishing instead that an alleged joint employer “must possess and actually exercise substantial direct and immediate control” over the essential terms and conditions of another company’s employees “in a manner that is not limited and routine.” 

HR Policy has joined other business groups in urging the Board and the Department of Labor to revise the standards for the National Labor Relations Act and the Fair Labor Standards Act.

Under the current Browning-Ferris standard, joint employer liability includes situations where one company has the “potential” to “indirectly” influence employment conditions in a separate company.

The proposal provides 12 examples of when two employers would and would not “share or codetermine the essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.”

  • For example, if a company requires a contractor to pay a specific wage rate and the contractor doesn’t have any discretion to depart from that rate, the company would be a joint employer of the contractor’s employees.

  • However, the proposal does not address what would happen in federal contracting situations when minimum wage rates and benefits are required to be paid by contractors.

The proposal also includes a dissent from Lauren McFerran, the sole Democrat on the NLRB, and Sen. Elizabeth Warren (D-MA) criticized the effort, while Rep. Virginia Foxx (R-NC), chair of the House Committee on Education and the Workforce, and Rep. Bradley Byrne (R-AL), applauded the move.

The Labor Department is also “giving serious consideration to writing a rule” to “provide a more clear and more permanent approach to joint employer” under the Fair Labor Standards Act, Secretary Alexander Acosta told a business group this week.

The proposal has a 60-day comment period that runs until November 13, 2018.  HR Policy will be submitting comments.