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NLRB Announces Final Joint Employer Rule

February 26, 2020

The National Labor Relations Board (“NLRB”) has issued its final rule for determining joint-employer status under the National Labor Relations Act (“NLRA”). The issuance of the rule makes the NLRB the second in a trio of federal agencies who recently declared their intent to clarify and update joint-employer tests under their respective governing laws. Earlier this year, the Department of Labor released its final rule to define joint-employer status, and the Equal Employment Opportunity Commission has indicated they will soon release guidance on defining joint-employer status. As anticipated, the final rule will return to the “direct and immediate control” standard. In basic terms, the direct and immediate control standard means that in order to be considered a “joint-employer” under the NLRA, and thus be required to comply with and be liable for any violations of that law, a company must have substantial direct control over the essential terms and conditions of employment of another employer’s employees, and that control must be actually used and not just potential. The essential terms of employment include: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. This standard narrows the definition of a joint-employer under the NLRA, making it less likely that a company will be found a joint-employer by the NLRB. The final rule will go into effect on April 27, 2020.