Sanity Has Returned To Joint-Employer Rules

Date: February 27, 2020

In a big win for small business, the federal government has finalized new joint-employer standards.

On February 26, the National Labor Relations Board issued its final rule governing joint-employer status under the National Labor Relations Act. This followed the Department of Labor’s January release of a similar rule under the Fair Labor Standards Act.

NFIB strongly supports both rules and submitted comments to both agencies. The final DOL rule cited NFIB’s work on this issue.

“The new joint-employer rules are based on common-sense and will provide millions of small businesses with the certainty and fair treatment they need to create jobs, grow wages, and do what they do best,” said Karen Harned, executive director of the NFIB Small Business Legal Center.

Karen continued: “These rules replace far more burdensome and expansive regulations issued under the previous administration. As our members made clear, the old versions were a compliance nightmare, requiring the help of outside lawyers and accountants. The new rules save Main Street job creators time and money, and NFIB was proud to advocate for them on behalf of our members.”

Under the NLRB rule, an employee of one company may be found to be the joint employee of a second company depending on its control over the employee’s work. A joint employer must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of the other company’s employees.

The DOL Rule establishes a four-factor balancing test for determining joint-employer status. It examines whether the potential joint-employer hires or fires the employee; supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; determines the employee’s rate and method of payment; and maintains the employee’s employment records.

The combination of these two rules will give small businesses the clarity and stability they need to thrive. Franchisees and small businesses that subcontract out services will benefit the most.

“Small businesses need simple and straightforward standards, and these new rules provide exactly that, said Karen Harned. “Once both are implemented, job creators across America will respond with action and investment in their workers and communities.”

The NLRB rule goes into effect on April 27th, while the DOL rule will be in force starting March 16th. If you have any questions about the new rules, please call the NFIB Small Business Legal Center at 800-NFIB-NOW.

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