NLRB proposing rule restoring joint-employer status standard

The National Labor Relations Board on Thursday said it is proposing a new rule on the controversial issue of joint-employer status that will restore the standard that was overturned during the Obama Administration.

The NLRB said it is publishing a Notice of Proposed Rulemaking on Friday in the Federal Register. The proposed rule will make it more difficult to establish there is a joint employer relationship.

In its 2015, 3-2 decision in Browning Ferris Industries of California Inc., a Democrat-controlled NLRB overturned the standard in place since 1984 that firms must have “immediate and direct” control over a worker to be considered a joint employer. It held instead that a company need have only indirect control of a worker and not even exercise that control to be considered a joint employer.

Under the proposed rule, an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises “substantial, direct and immediate control” over the essential terms and conditions of employment “and has done so in a manner that is not limited and routine,” said the NLRB in its statement. 

“Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint- employee relationship,” the statement said.

The proposed new rule was expected. Chairman John F. Ring wrote in a letter to three U.S. Senators in June that the agency planned to issue such a rule. Browning-Ferris was briefly discarded last year by a Republican-controlled board, but it was restored because of a possible conflict of interest.

In its statement Thursday, the NLRB said “rulemaking in this important area of the law would foster predictability, consistency and stability in the determination of joint-employer status.

“The proposed rule reflects the Board majority’s initial view, subject to potential revision in response to public comments, that the National Labor Relations Act’s intent is best supported by a joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.”

Mr. Ring, along with other Trump appointees Marvin E. Kaplan and William J. Emanuel, voted in favor of the proposed rule, while Obama-appointed board member Lauren McFerran dissented.

The NLRB is accepting comments on the proposed new rule for 60 days.

Mark G. Kisicki, a partner with Ogletree Deakins Nash Smoak & Stewart P.C. in Phoenix, who represented Browning-Ferris, said the proposed rule would establish certainty. 

The current rule “encompasses almost all employers,” and the agency “refused to provide any specific guidelines as to how that standard should apply.”

It was a “sweeping standard that created incredible uncertainty for employers,” he said. 

Rep. Virginia Foxx, R-N.C., chairwoman of the House Committee on Education and the Workforce, issued a statement saying, “We are pleased that the NLRB is working to clear up the confusion caused by the convoluted and extreme decision the Obama board made.”