The National Labor Relations Board (NLRB) is responsible for overseeing relations between labor and employers for both unionized and non-unionized workplaces and for administering the National Labor Relations Act (NLRA). Yesterday, the NLRB issued a proposed rule that will massively impact franchise businesses, staffing firms, and companies that use contractors to help operate their businesses.

Currently, to be considered the “employer” under the NLRA, an entity must exercise “direct and immediate” control over workers. The NLRB’s new test would lower that standard and result in more entities being considered a co- or joint employer for individuals. Under the proposed rule, a business would be considered a co- or joint employer for any workers with whom they “share or codetermine” terms and conditions of employment, such as hiring, task assignment, compensation or discipline. Under this test, companies who exercise direct or indirect control over workers could be considered a joint employer with a staffing company, contractor or franchisor for purposes of the NLRA. That means a company could be sued for labor law violations and could conceivably be required to recognize and bargain with unionized workers they use through a contracting or staffing business.

Employer comments due to NLRB by November 7

If put into place, the proposed rule will change the workplace substantially and alter how businesses utilize contractors and staffing companies going forward. Comments to the NLRB on the proposed rule are due by November 7, 2022, and a final version is anticipated for 2023. In the meantime, we will continue monitoring the progress of this newly proposed joint-employer standard and its impact on businesses.