NLRB announces new employee-friendly joint-employer test

On October 26, 2023, the National Labor Relations Board (NLRB) issued a final rule addressing the standard for determining joint-employer status under the National Labor Relations Act (NLRA). The new standard will make it more likely one entity can be held liable for unfair labor practices of another entity when some element of employment interrelation exists.

Out with the old rule

In 2020, the NLRB issued a rule stating that to be considered a joint employer, a company must exercise “actual and substantial direct and immediate control” over another employer’s employees’ essential terms of employment.

Terms and conditions of employment under the 2020 rule were defined as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. The rule also required that the company must exercise control over the terms and conditions in such a way that it “meaningfully affects matters relating to the employment relationship with those employees.”

In with the new

The 2023 final rule announces a new standard and rescinds the old one. Under the new rule an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or codetermine one or more of the employees’ essential terms and conditions of employment. It defines terms and conditions exclusively as: