The Back-and-Forth Continues: NLRB Once Again Seeks To Broaden Its Joint-Employer Standard

• Published date: 16 September 2022
• Subject Matter: Employment and HR, Contract of Employment, Employee Benefits & Compensation, Employee Rights/ Labour Relations
• Law Firm: Jones Day
• Author: Ms Elizabeth McRee, Aaron L. Agenboard, Wendy Butler, Noel Francisco, Michael Gray, Jonathan M. Linas, Alex Potapov, E. Michael Rossman, Yaakov M. Roth, Brett A. Shumate and Liat Yamini

In Short

The Situation: The National Labor Relations Board ("NLRB" or "Board") recently issued a Notice of Proposed Rulemaking to articulate the standard for determining joint-employer relationships under the National Labor Relations Act ("NLRA" or the "Act") and rescind the Board's current joint-employer regulation, which was finalized in 2020.

The Background: The NLRB's joint-employer standard has changed five times since 2015, broadening or narrowing depending on whether Democrat- or Republican-appointed members maintain majority control of the Board. The proposed rule seeks to broaden the joint-employer standard considerably, which would make companies in many industries subject to a heightened risk of joint-employer liability and bargaining obligations under the NLRA.

Looking Ahead: The proposed rule is subject to public comment for a period of 60 days, although the Board may extend the comment period as it did in connection with its 2020 joint-employer rule. Thereafter, based on the rulemaking record, the Board will determine whether to proceed with a final rule in its current form, in modified form, or not at all, with any final rule being subject to potential challenge through litigation or under the Congressional Review Act.

On September 6, 2022, the NLRB published a proposed rule designed to articulate the standard for determining joint-employer status under the NLRA. Even for an agency known to shift its legal positions when political control of the Executive Branch changes hands, the frequency with which the Board has changed its joint-employer standard in recent years is exceptional. If the proposed regulation becomes a final rule, this would mark the fifth change of the joint-employer standard by the agency since 2015.

The most recent proposed changes largely reflect a return to the broad joint-employer standard articulated by the Obama-era Board in Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery, 362 NLRB 1599 (2015) ("Browning-Ferris") and a repudiation of the Board's 2020 joint-employer regulation promulgated by a Republican-majority Board. Additionally, the proposed rule attempts to address concerns with the Browning-Ferris standard raised by the U.S. Court of Appeals for the District of Columbia in Browning-Ferris Industries of California, Inc. v. NLRB, 911 F.3d 1195, 1222 (D.C. Cir. 2018).

The proposed rule is the latest attempt to broaden coverage under the NLRA to impose liability and bargaining obligations on entities other than workers' direct employers. If the proposed rule is finalized without material changes after the comment period, companies in many industries'and particularly those in franchisor-franchisee, contractor-subcontractor, and staffing company-leased labor relationships'would face a heightened risk of being found a joint employer under the Act.

Comments regarding the proposed rule are due by November 7, 2022, with reply comments due November 21, 2022. Comments on the Board's last joint-employer regulation were extensive, and likely will be again, both because of the hotly contested nature of this issue and because the proposed rule is vague and expansive, subjecting far more entities to liability and bargaining obligations than historically has been the case. All interested parties should consider the value of commenting on the proposed rule.

Background

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