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The Bargaining Table

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Below is a photo of the sun setting last week over the Tiber River, with St. Peter’s Basilica in the background. I’m not a great photographer, but it’s a nice record shot from my trip to Italy last week.

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The National Labor Relations Board (NLRB) last week created its own record shot, formally readopting its 2020 joint employer rule and sunsetting the never-implemented Biden administration rule from 2023.

The NLRB skipped the normal rulemaking process, which typically requires a proper review and comment period, jumping directly to the final rule. It was able to avoid these steps because the final rule isn’t actually changing anything. The 2020 rule applied before the Biden administration tried to change the rule in 2023, but a federal court rejected the 2023 rule, which the Biden administration then withdrew. The result of that withdrawal was that the 2020 rule was still in effect. Last week’s action by the NLRB formalizes that outcome by officially readopting the 2020 joint employer rule.

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Under the 2020/2026 rule, for joint employment to exist under the National Labor Relations Act (NLRA), the putative joint employer “must possess and exercise … substantial direct and immediate control over one or more essential terms or conditions” of the workers’ employment.

“Essential terms and conditions” means wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.

Substantial direct and immediate control requires that the putative joint employer directly makes the decisions. Merely exerting influence is not enough.

For example, with respect to wages, direct and immediate control means setting the wages. Entering a cost-plus contract is not enough to support joint employment.

With respect to hours of work, direct and immediate control means setting the schedule for particular employees. Merely establishing a facility’s operating hours or deciding when additional staffing is needed is not enough to support joint employment.

Regarding discharge, direct and immediate control means actually firing the worker from employment. Telling a staffing agency to remove a worker from an assignment is not enough to create joint employment.

Regarding direction, direct and immediate control means “assigning particular employees their individual work schedules, positions, and tasks.” Setting schedules for the completion of a project or describing the work to be completed is not enough.

“Substantial direct and immediate control” means control that “has a regular or continuous consequential effect on an essential term or condition.” Sporadic, isolated or de minimis control is not enough to create joint employment.

Avoiding joint employer status can be critically important in labor relations because a joint employer is obligated to bargain with the primary employer’s employees. The 2020/2026 rule provides better clarity and guidance for companies that wish to avoid joint employer status under the NLRA.

This rule applies only to the NLRA. Different tests for joint employment apply under the Fair Labor Standards Act and other federal and state employment laws.

The rule can be found at 29 CFR 103.40. Will the sun rise again on a new rule that makes joint employment more likely? Not under this administration. But the joint employer standard tends to change with each new administration, so what happens in three years or seven years is anyone’s guess.

Please contact the author of this blog or your BakerHostetler attorney contact if you have any questions.

sun setting last week over the Tiber River, with St. Peter’s Basilica in the background - credit Todd Lebowitz

NLRB Re-adopts 2020 Joint Employer Rule, Sunsets Biden Rule