NLRB's Final Joint-Employer Rule
On February 26, 2020, the National Labor Relations Board (the “Board”) published its long awaited final joint-employer rule. Similar to the final Department of Labor (“DOL”) joint-employer rule, released in January 2020 (see here for our coverage of the DOL’s final rule), the Board’s final rule returns to its prior “direct control” standard.
The final rule is a welcome change for employers, as it vacates the Board’s 2015 Browning-Ferris decision. In Browning-Ferris, the Board found that a joint-employer relationship could be established through indirect control or the ability to exert control. In contrast, the Board’s final joint-employer rule, which takes effect on April 27, 2020, focuses on direct control and provides a clear and more predictable standard. Under the new rule, franchisors and other businesses must have “substantial direct control” over the essential terms and conditions of employment before they can be deemed a joint-employer under federal labor law. Moreover, the final rule clarifies that control exercised on a sporadic, isolated, or de minimis basis is not “substantial.” Therefore, indirect control or the ability to exert control by itself can no longer result in a finding of a joint employment relationship.
Given the change in the standard, the Board’s final rule will most likely become subject to a legal challenge. We will continue to provide updates on this subject. If you have any questions, please contact one of Honigman’s Labor and Employment attorneys.