On February 26, 2020, the National Labor Relations Board issued a final rule regarding whether two entities will be considered a joint employer, restoring its pre-2015 standard, and providing greater precision, clarity, and detail by using its rulemaking power. The Board’s new rule becomes effective on April 27, 2020. To be considered a joint employer under the National Labor Relations Act, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees. In a Press Release, the Board noted that its new standard is a matter of consequence because if two entities are joint employers, both must bargain with the union that represents the jointly employed employees, both are potentially liable for unfair labor practices committed by the other, and both are subject to union picketing or other economic pressure if there is a labor dispute. In response to its request for input from the public, the Board received nearly 29,000 comments.
The Board’s new rule regarding joint employers comes on the heels of a final rule issued by the Wage and Hour Division of the U. S. Department of Labor on January 12, 2020, which will become effective on March 16, 2020. The DOL updated its regulations interpreting joint employer status under the Fair Labor Standards Act. Both rules narrow the scope of what defines joint employment under the NLRA and the FLSA, and both are welcome news to employers.
The law regarding “joint employer” status is less clear under California law, however, where the Supreme Court in Vazquez v. Jan-Pro Franchising issued an order on February 27, 2020, rejecting the parties’ request to consider whether the Court’s Dynamex “ABC test” should be used to determine if two or more businesses are joint employers.