On February 26, 2020, the National Labor Relations Board (NLRB) announced a new rule governing joint-employer status under the National Labor Relations Act. Although the NLRB more frequently sets standards through decisions in contested cases, it decided to address joint-employer liability through its rulemaking authority in order to provide more clarity and certainty in the law.
The new rule restores the joint-employer standard applied by the NLRB for several decades prior to the 2015 Browning-Ferris decision. Under Browning-Ferris, simply reserving the right to exercise control over the terms of employment could render a company the joint-employer of a contracted worker, and thus require the company to bargain with the workers’ union, be subject to union picketing, and be liable for unfair labor practices committed by the other employer.
To be a joint-employer 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 for the workers at issue. In practical terms, a business is a joint-employer only if the two employers share or co-determine essential terms and conditions of employment such as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Joint-employer status cannot be based solely on indirect influence or contractual reservation of a right to control if it has never been exercised.
The new rule does not affect the application of joint and several liability under New Jersey law in other contexts. For example, New Jersey’s new Wage Theft Act makes employers and labor contractors jointly and severally liable for state wage and hour laws violations and tax law violations.
For more information, please contact our employment law practice group.