nlrb joint employer rule 2020

3 min read 22-11-2024

Meta Description: The 2020 NLRB joint employer rule significantly altered the standard for determining joint employment. This comprehensive guide breaks down the changes, their impact on businesses, and what you need to know to stay compliant. Understand the complexities of joint employer liability and how this revised standard affects your business's labor relations. Learn about the key factors considered under the new rule and how to navigate this evolving legal landscape. This in-depth analysis will help you avoid potential pitfalls and maintain compliance with labor laws.

The National Labor Relations Board's (NLRB) 2020 joint employer rule marked a significant shift in how the agency determines joint employer status. This rule, officially titled "Joint Employer Status Under the National Labor Relations Act," reversed the stricter standard established in the 2015 Browning-Ferris decision, easing the burden on businesses facing potential joint employer liability.

Understanding the Joint Employer Standard

A joint employer relationship exists when two or more entities share the power to control employees' employment conditions. Before 2020, the Browning-Ferris decision broadened the definition of joint employment, leading to increased liability for companies indirectly involved in employment decisions. The 2020 rule aimed to clarify and narrow this definition.

Key Changes Introduced in the 2020 Rule

The 2020 rule emphasizes a more direct control standard. The NLRB shifted away from a "substantial" control test to a more stringent test focusing on whether an entity directly exercises control over essential terms and conditions of employment.

Direct Control: The revised rule focuses on whether the entity exercises direct control, rather than indirect or potential control.
Essential Terms and Conditions: The agency considers factors such as hiring, firing, discipline, supervision, and determining wages and benefits.
Actual Control vs. Potential Control: The rule prioritizes actual control exercised over the employees, not simply the potential to exercise control.

Factors Considered Under the 2020 Rule

The NLRB considers several factors when determining joint employer status. These include:

Hiring and Firing: Does the entity directly hire and fire employees?
Supervision and Discipline: Does the entity directly supervise employees and impose discipline?
Wage and Benefit Determination: Does the entity directly set wages, benefits, or other compensation?
Day-to-day Operations: Does the entity directly influence day-to-day operational decisions that affect employees?
Direct Contact with Employees: The extent of direct communication and interaction between the entity and the employees.

Implications for Businesses

The 2020 rule provides greater clarity and potentially reduces the risk of joint employer liability for many businesses. However, it's crucial to understand the nuances of the revised standard to avoid potential legal challenges.

Reducing Joint Employer Liability

The 2020 rule is more favorable for businesses because it narrows the scope of joint employment. It minimizes the risk of liability for companies that have indirect relationships with workers. This makes labor relations and compliance significantly simpler for many businesses.

Navigating the Legal Landscape

While the 2020 rule offers some relief, businesses should still carefully review their relationships with other entities involved in their workforce. Maintaining clear contracts and avoiding practices that could be interpreted as direct control is essential.

What to Do Now

The NLRB's joint employer rule is constantly evolving. Staying informed about changes and seeking legal counsel is crucial. Businesses should:

Review existing contracts: Examine agreements with other entities to ensure they clearly define responsibilities and avoid ambiguous language.
Implement clear policies and procedures: Maintain distinct lines of authority and communication to avoid misinterpretations.
Consult legal counsel: Seek expert advice to understand the implications of the rule on your specific business structure.
Stay updated: The legal landscape is dynamic. Keep informed about any changes in regulations and court decisions that could impact joint employer status.

The 2020 NLRB joint employer rule represents a notable change in labor law. Understanding this revised standard is essential for businesses to manage their risk, navigate labor relations, and maintain compliance. By proactively addressing the key factors outlined in this guide, businesses can mitigate potential joint employer liability and focus on their core operations. Remember, consulting with an experienced employment attorney is crucial to ensure your compliance with this ever-evolving area of law.