On September 13, the National Labor Relations Board (NLRB) announced intent to propose agency regulations to formally change the joint-employer standard. This is good news for employers, as the proposed rule contains language that would limit the application of a “joint-employer” relationship to the traditional standard.  

Under the NLRB’s proposed rule, a company would have to possess and exercise “substantial, direct and immediate control” over the hiring, firing, discipline, supervision and direction of another company’s employees to be considered a joint-employer. The rule further states that control cannot be limited or routine.  This is in-line with how employers viewed the joint-employer standard for decades, prior to 2015.

Industry Update readers will remember that the recent battle over joint-employer dates to 2015, when the NLRB overturned the traditional joint-employer standard in a case known as “Browning-Ferris Industries,” or “BFI.”  In the BFI decision, the NLRB found that two companies could be “joint-employers” if one company, such as a franchisor, has “indirect” control over the terms and conditions of another employer’s employees, such as a franchisee. A case against McDonald’s over whether it can be held liable for the labor law violations of its franchisees is still being litigated.

In 2017, new members were appointed to the Board, and the NLRB vacated the BFI decision.  These proposed rules will clear up the joint-employer standard and provide future stability for employers.

THLA, through our partnership with American Hotel & Lodging Association and Coalition for a Democratic Workplace, will be offering supportive commentary to the NLRB in the rulemaking process.  We can expect the NLRB to enact the rule sometime in Spring 2019