In a major policy announcement, on Friday, September 14, 2018, the National Labor Relations Board (the “Board”) proposed a new regulation establishing the standard for determining whether two employers, as defined in Section 2(2) of the National Labor Relations Act (the “NLRA”), are a joint employer of a group of employees under the NLRA.

Under the regulation proposed by the Board, an employer may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. More specifically, to be deemed a joint employer under the proposed regulation, an employer must possess and actually exercise substantial direct and immediate control over the essential terms and conditions of employment of another employer’s employees in a manner that is not limited and routine.

This proposed rule will overrule the Browning-Ferris decision, under which a company could be deemed a joint employer even if its “control” over the essential working conditions of another business’s employees was indirect and limited, or contractually reserved but never exercised. The Board, in its proposed rule, explains that Browning-Ferris’ relaxation of the concept that both of the putative employers of an employee must have “direct and immediate” control over the employee to be particularly troubling.  In what it calls an attempt to “clarify” the proposed standard, the proposed rule also includes a number of examples.

There was a dissent from one member of the Board.  The dissent essentially argues that the proposed standard of “direct and immediate” is no more clear that the Browning-Ferris standard, and that the Board is interfering with the natural development of the NLRA through the common law.  I think it is fair to criticize the proposed rule due to the the proposed standard of “direct and immediate” being less than clear, and I expect that it will be further developed in the rulemaking process.  Any proposed rule, however, is intended to short circuit the common law, and so I find that criticism to be extremely weak.

Comments, of course, are a key element of the rulemaking process. They must be received by no later than November 13, 2018.  Reply comments to initial comments must be received by November 20, 2018.  Comments may be submitted electronically through http://www.regulations.go or sent by mail or hand delivery to: Roxanne Rothschild, Associate Executive Secretary, National Labor Relations Board, 1015 Half Street SE, Washington, DC 20570-0001.  The Board cautions that comments sent via mail are often delayed due to security concerns.

This is THE time for the franchising community to be heard on the joint employer question. Comment now. Let your voice be heard.

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