On October 26, 2023, the National Labor Relations Borad (“NLRB”) issued a new standard for determining when two employers are considered “joint employers” under the National Labor Relations Act (“NLRA”).  While the standard was issued in regard to the NLRA, businesses should expect that plaintiffs will use the new standard with regard to claims outside the NLRA to argue that businesses are joint employers.

When entities are deemed to be joint employers, both are responsible for any unfair labor practice committed by the other. Under the new rule, seven factors should be considered to determine if entities are joint employers: (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 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 new rule looks beyond the evidence of a company’s direct and immediate control of employees and allows for a joint employer finding based on indirect and unexercised control.

The NLRB stated the new rule is intended to impact contractors that retain subcontractors, franchises, temporary staffing agencies, businesses that use temporary staffing agencies, and labor unions.  For example, a company that utilizes temporary staffing agencies could be considered the temporary employees’ joint employer if it supervises the temporary employees and controls the hours of work and scheduling. 

While the final rule will not be implemented until December 26, 2023, the NLRB is already facing pushback from Congress and business advocacy groups. A group of Republican lawmakers and Democratic Senator Joe Manchin of West Virginia have introduced a bicameral Congressional Review Act to attempt to kill the new standard.   The US Chamber of Commerce was also joined by a coalition of business advocacy groups in a lawsuit challenging the new standard on November 9, 2023.  The Chamber’s lawsuit alleges that the law is overly broad and directly contradicts the well-established common-law definition that limits joint employment to relationships of actual and substantial control and argues that the new standard imposes liability on virtually every entity that collaborates with a third-party to achieve a common goal.