NLRB greatly expands joint-employer standard

The National Labor Relations Board (NLRB) adopted a new standard for evaluating joint employers that takes effect February 26, 2024. The rule greatly expands when two or more entities may be considered joint entities. As a result, certain employers will now be mandated to participate in collective bargaining and can be found liable for unfair labor practices. This new standard will be particularly troublesome to franchisors and staffing agencies.

How does the 2023 standard differ from the 2020 standard?

The final rule rescinds and replaces the 2020 final rule that was published by the prior Board and which took effect on April 27, 2020.

The new standard considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised and without regard to whether any such exercise of control is direct or indirect.

By contrast, the 2020 rule made it easier for employers to avoid a finding of joint-employer status because it set a higher threshold of “substantial direct and immediate control” over essential terms and conditions of employment.

Essential terms and conditions of employment under final rule

Under the final rule, essential terms and conditions of employment are defined as: