The National Labor Relations Board today released its final rule covering joint-employer status. It’s aimed at reversing the 2015 Browning-Ferris ruling by the Obama-era NLRB. The new rule will go into effect on April 27.

George Reardon, an attorney who works with the staffing industry, said joint employment in this context hasn’t been a serious practical issue for staffing firms. However, Reardon commented more fully on the rule below.

Under the new rule, “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 order to be a joint employer.

If two companies are joint employers, both must bargain with union representatives for jointly employed workers and both are potentially liable for unfair labor practices committed by the other and subject to picketing, according to the NLRB.

The new NLRB rule will only apply to issues involving the National Labor Relations Act, said Diane Geller, a partner at law firm Fox Rothschild LLP.

“The reality is that most temporary staffing companies already are joint employers with clients. Unless the client is a union shop, the likelihood of affecting their staffing partners will also be limited.,” Geller said.

Some client companies may seek to renegotiate the terms of agreements to lessen their involvement in the day-to-day practices in order to try to avoid being a “joint employer” of the temporary workers retained for purposes of incurring legal liability, Geller said. “In reality, such renegotiation will usually not affect their joint employment relationship with their staffing providers. It will, however, provide some protections to franchisors from being joint employers by removing the ‘indirect control’ language.”

The 2015 NLRB decision, which the new rule reverses, had expanded the definition of joint employer. The board at the time ruled that a staffing firms’ workers at Browning-Ferris Industries’ recycling facility in Milpitas, California, were joint employees of both BFI and the staffing firm.

Its 2015 decision held that a company could be deemed a joint employer “if its control over the essential terms and conditions of another businesses’ employees was merely indirect, limited and routine, or contractually reserved but never exercised.”

Reardon provided further insight into the final joint-employer rule formally released today:

• The new NLRB rule on joint employment mostly affects its union oversight mission. It should stop the NLRB’s flip-flopping on whether clients’ union bargaining units may combine directly employed and assigned employees.
• Clients can be deemed joint employers of assigned employees only if they possess and exercise substantial direct and immediate control of any essential terms or conditions that meaningfully affect their employment.
• The rule generally helps contingent staffing firms and their clients avoid joint employer status for purposes of the National Labor Relations Act. Other laws and agencies (like OSHA, HIPAA, ACA, FLSA, IRS, EEOC, and others) also use joint employment concepts, however designated, and the NLRB rule may set a staffing-favorable pattern for refinement of their rules.
• The rule confirms that most staffing franchisors are not joint employers of their franchisees’ employees.
• Joint employment hasn’t been a serious practical issue for staffing firms, but they should be prepared to deal with baseless client concern about this favorable new rule.
• Staffing contracts can leverage the rule and give comfort to concerned clients by, among other things: avoiding client-set pay rates; rejecting client-imposed ACA benefit mandates; decoupling assignment termination from employment termination; channeling discipline through the staffing firm; eliminating the separate pricing, treatment, and labelling of payrollers; and discouraging client interviewing of potential assigned employees.