NLRB Issues Final Rule on Determining Joint Employer Status

Effective December 26, 2023, the National Labor Relations Board has issued a final rule creating a new standard for determining joint employer status. Under the new standard, an entity may be considered a joint employer of another employer’s employees if it possesses the authority to control or exercises the power to control one or more essential terms and conditions of employment. The previous standard required the showing of “actual exercise of direct and immediate control” to establish a joint employer relationship.

The “essential” terms and conditions of employment for purposes of establishing a joint employer status fall into one of the following seven categories:

1. wages, benefits, and other compensation; 
2. hours of work and scheduling; 
3. the assignment of duties to be performed;
4. the supervision of the performance of duties; 
5. work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; 
6. the tenure of employment, including hiring and discharge; and 
7. working conditions related to the safety and health of employees.

The rule notes that some kinds of control, including some of those commonly embodied in a contract for the provision of goods or services by a true independent contractor, are not relevant to the determination of whether the entity possessing such control is a joint employer, and that an entity’s control over matters that do not bear on workers’ essential terms and conditions of employment are not relevant to the determination of whether that entity is a joint employer. 

Importantly, the rule provides that a joint employer of particular employees must bargain collectively with the representative of those employees with respect to any term and condition of employment that it possesses the authority to control or exercises the power to control, regardless of whether that term and condition is deemed to be an essential term and condition of employment, but is not required to bargain with respect to any term and condition of employment that it does not possess the authority to control or exercise the power to control.

Click here to access the full text of the new rule.