The NLRB Seeks to Expand the Joint Employer Rule: What the Proposal Means and Five Practical Considerations for Employers

September 16, 2022 by

Last week the National Labor Relations Board (NLRB) announced that it is proposing a new rule governing joint employer status, which would increase risk and expand potential liability for many employers. The proposed 2022 rule would replace the recently enacted 2020 rule.

The Proposed Rule

The NLRB’s existing rule instructs that proof of a business’s “direct and immediate” control over another employer’s workers is necessary to impose joint employer status on the business.  The proposed 2022 rule provides that businesses are joint employers if they “share or co-determine” essential job terms, such as wages, benefits, and other compensation, even if one party only has “reserved” or “indirect” control. In a rather vague expansion within the proposed rule, an employer could face liability if it “indirectly” possesses the “authority to control.”

Under the existing rule, the NLRB considers control over limited factors like wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.  In contrast, the newly proposed rule provides that the list is not exhaustive, and new factors like control over workplace health and safety, assignments, and “work rules and directions governing the manner, means or methods of work performance” are added.  The ambiguity and opportunity for interpretation is concerning, as smart attorneys and regulatory authorities will have broad latitude to suggest an employer’s actions, direct or indirect, fall under the newly proposed regulation.

It’s clear that the implementation of this rule will expand the range of liability for employers.  Employers may comment on the proposed rule until November 7, 2022, and reply to the comments for a short time after that.  Employers should also be prepared to think through their current employment and corporate strategies, making modifications, where necessary.

Five Considerations for Employers if the NLRB Proposal is Enacted:

  1. Review Contract Language.  The question an employer should ask is whether their existing contracts show new liability or risk on their face when considering the newly enacted rule. In at-risk situations, employers should amend contracts whenever possible. Employers should also revise contract templates to be used in the future.
  2. Review Company Policies.  These changes are easier than seeking to amend existing contracts and should be done promptly following the implementation of the rule.
  3. Identify and Eliminate Unnecessary Control Over Non-Employee Workers.  Whenever possible, employers should avoid retaining or engaging in control over any aspect of the working conditions of their (sub)contractor’s employees or temporary staffers.  The business also should avoid imposing informal rules or conditions that influence others’ employees, even if the influence is well-intended (e.g., requiring diversity in staffing, equality in wages and benefits, masks/social distancing).
  4. Train Supervisors/Managers.  A wise employer will immediately train their supervisors and managers about forbidden activities and statements on the jobsite to avoid exhibiting this newly expanded level of control or the perception of same.
  5. Consider Strategy at 50,000 Feet. It’s never a bad idea for a new rule like this to spur deeper thought on risk management and implementation of best practices to avoid liability.

The Brown Fox team will continue to monitor this proposed rule change.

Russ Brown is the Managing Partner of Brown Fox and focuses his practice on labor and employment guidance for employers and executives.  Margaret Mead is a Partner at Brown Fox, and a board-certified labor and employment attorney who specializes in guiding employers and executives with labor and employment matters and litigation.  Learn more about Mr. Brown by clicking here and Ms. Mead by clicking here.

Russ Brown
russ@brownfoxlaw.com

Russ Brown represents businesses and executives, with a focus on labor and employment law. He is regularly recognized for his legal acumen, with numerous honors as a Super Lawyer and Rising Star, and other business leadership awards from Dallas Business Journal and D Magazine. Mr. Brown co-founded Brown Fox and serves as the firm’s Managing Partner.

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Margaret Mead
margaret@brownfoxlaw.com

Margaret Mead is a board-certified labor and employment attorney, with over two decades of experience. As a fierce litigator, she has represented clients in Texas State and federal courts and before state and federal agencies (EEOC, TWC, Department of Labor). Originally from Kansas and a KU Alumni, Ms. Mead is a Jayhawks basketball enthusiast. She enjoys attending local musical and dance performances. She also enjoys travel and scuba-diving.

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Founded in 2010, Brown Fox is a business boutique law firm focused on serving businesses, executives and entrepreneurs in practice areas most commonly needed to advance business growth, manage risk, and defend from attack. The firm’s representative clientele includes companies ranging from start-ups to publicly traded companies. The firm has offices in Dallas and Frisco.

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