codetermine the employees’ essential
terms and conditions of employment,”
as demonstrated by the actual exercise
of “substantial direct and immediate
control over one or more essential
terms or conditions” of employment.
In other words, joint employer liability
will not exist when an entity exerts
merely indirect authority over the direct
employer’s workers, or contractually
reserves the right to control the terms
of workers employed by another
entity, but never exercises that right. In
addition, the quality of control exercised
matters once again, with joint employer
liability limited to those actions that
tangibly and substantially impact the
workers in question, such as hire, fire,
benefits, and pay-setting decisions, as
well as determinations about what work
the employee is to perform, how, and
when.
The new rule is slated to go into effect
on April 27, 2020 — unless after a
mandated congressional review the
NLRB is required to “establish the new
effective date or to withdraw the rule.”
Joint Employer Liability Under the
NLRA
The term “joint employer” is not defined
in the NLRA. Rather, the standard for
evaluating when two business entities
are joint employers in the labor-
management context derives from
common law principles developed
over years of NLRB adjudications
and case decisions. In general, two
or more separate entities may be
considered joint employers if they
share some tangible control or authority
to determine the working conditions
or other terms of an individual’s
employment.
For at least three decades before
2015, the NLRB consistently held
that indirect control over a worker’s
employment conditions, or direct and
immediate supervision that is “limited
and routine,” is not enough to impose
joint employer liability on the business
entity in question. In Browning-Ferris
Industries of California, however, a
divided NLRB held that joint employer
status may be established even when
the putative employer’s control over
another entity’s employees was indirect,
limited and routine, or contractually
reserved, but unexercised. The NLRB
majority’s view at the time was that the
new, relaxed standard more accurately
captured the “economic realities” of
the workers’ relationships with these
entities and would allow for “meaningful
collective bargaining” over the terms
and conditions of their employment.
The Browning-Ferris joint employer
standard was roundly criticized by the
business community as replacing what
had been a reasonably administrable
standard with one that was bound to
cause confusion and spur litigation over
its meaning. Although the D.C. Circuit
ultimately allowed the NLRB’s new test
to stand, it sharply criticized the NLRB’s
lack of clarity, especially with respect
to what kinds of decisions over which a
putative employer possesses reserved
authority or indirect control would
be sufficient to trigger joint employer
liability.
Rather than address those issues in a
new case decision, the NLRB elected
instead to exercise its rulemaking
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