authority and, in September 2018, published
a proposed rule establishing joint employer
liability when two employers “share or
codetermine the employees’ essential
terms and conditions of employment, such
as hiring, firing, discipline, supervision, and
direction.” It specified further that to be
considered a joint employer, a business
entity would have to possess “and actually
exercise substantial direct and immediate
control over the employees’ essential terms
and conditions of employment in a manner
that is not limited and routine.”
NLRB’s Final Rule on Joint Employer
Status
After receiving and considering more than
4,000 written comments submitted in
response to the proposed rule, the NLRB
published its final rule on joint employer
status on February 26, 2020. As noted in the
preamble, the NLRB “intends in this final rule
to return, with clarifying guidance, to the
carefully balanced law as it existed before
the Board’s departure in Browning-Ferris.”
The NLRB’s final rule aligns closely with
the proposed rule while providing some
important additional clarification. First, it
defines “share or codetermine” — a key
term in the new test — as possessing
and exercising “such substantial direct
and immediate control over one or more
essential terms or conditions” of another
entity’s employees such that the putative
employer “meaningfully affects matters
relating to the employment relationship with
those employees.”
Second, the final rule clarifies the extent
to which a putative employer’s indirect
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or reserved (but unexercised) control
over essential terms or conditions of
employment, or control over mandatory
subjects of bargaining involving non-
essential terms and conditions of
employment, may factor into the joint
employer analysis. Under the new joint
employer standard, the NLRB will consider
indirect control or bargaining authority only
to the extent that it bolsters evidence that
the putative employer exercises direct and
immediate control over the essential terms
and conditions of the worker’s employment.
Thus, indirect control alone will be
insufficient to establish a joint employer
relationship.
In addition, the NLRB explains that there
is a difference between exercising indirect
control — which along with other proof may
factor into a joint employer assessment —
and exerting control or influence over setting
contractual objectives, expectations, or
ground rules — which is excluded from the
definition of “indirect control” and thus never
plays a role in determining joint employer
liability. Moreover, distinguishing between
indirect control over an essential work term
or condition on the one hand, and setting
ground rules, conditions, or expectations as
to how a contract is to be performed on the
other, “is an issue of fact to be determined
on a case-by-case basis.”
As for reserved but unexercised control over
essential terms and conditions, the final
rule similarly notes that such authority will
be relevant (although not dispositive) only
when there is other evidence of the putative
employer’s direct and immediate control
over terms and conditions of employment.
Finally, the rule explains the meaning of
two additional key terms contained in the
NLRB’s new joint employer standard. The