The National Labor Relations Board (NLRB) has issued its final rule on determining whether two or more entities might be given joint employer status for a specific employee. The rule, which is set to go into effect on December 26, will significantly expand the number of people who may be considered to have joint employment. This may have significant consequences for many employees when it comes to issues like compensation, labor organizing, or holding employers accountable for labor or employment law violations.
What is a Joint Employer?
Joint employment is when a single employee shares their duties with, and is supervised by, two or more employers for the same job. In other words, joint employers share responsibilities and control over a single employee. Common examples of these include employees who work at staffing agencies, or employees who work at multiple restaurants in the same franchise.
What is the New Joint Employer Rule?
The new joint employer rule passed by the NLRB redefines the term to be more broadly inclusive. In effect, when there are two or more employers who have an employment relationship with an employee or group of employees, they will be considered joint employers if they “share or codetermine” one or more of the employees’ essential terms. They may be considered joint employers so long as they have any control over the employees in question, even if that control is indirect and even if that control is never explicitly exercised.
How Does This Differ From the Old Rule?
This is a significant departure from the previous rule, which was more limiting in terms of which employers could be considered joint employers. In particular, it is noteworthy for including employers that exert “indirect” control over employees, as well as those who never effectively exert control at all. For example, under the old rule, franchisors were typically not considered joint employers of their franchisees’ employees, because they never exerted direct control over those employees. That is not the case for the new rule, where a franchisor may be considered a joint employer of their franchisee’s employees.
Why Does This Matter?
There are three major reasons this decision matters. First, it allows victims of labor or employment law violations to potentially hold franchisors and other joint employers responsible for the harm they’ve suffered. Second, it can make it easier for employees to organize labor unions, since they can organize alongside workers with whom they are jointly employed. Finally, it will likely encourage franchisors to exercise greater control over their franchisees to ensure compliance with NLRB rules.
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