Franchise companies and businesses that rely on outsourced labor are keeping a close eye on the National Labor Relations Board’s proposal to broaden its legal test for determining whether one company jointly employs another’s workers.
The Democratic majority of the five-member NLRB issued a plan this week that would expand what factors can trigger a joint-employer finding beyond one business exerting direct and immediate control over another company’s employees. The new test would also take into account indirect and unexercised control.
The proposed rule would eliminate the stricter joint employment standard that an all-Republican NLRB issued in 2020. The two GOP members on the current board dissented from the proposal, saying it’s unnecessary to change the existing framework.
A business-to-business relationship that’s determined to be joint employment means that the companies involved share legal liability related to employees. Workplace laws for topics like wages, workplace safety, and anti-discrimination protections have their own tests for joint employment.
The NLRB administers the National Labor Relations Act, a New Deal-era law that governs labor-management relations in the private sector. Joint employers share liability for unfair labor practices as well as union bargaining obligations.
A looser legal test for joint employment is necessary to address the realities of the modern workplace, in which many companies use staffing agency...
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