NFIB: Joint-Employer Final Rule from NLRB Provides Guidance and Clarity to Small Businesses

Date: February 26, 2020

Washington, D.C. (Feb. 26, 2020) – NFIB issued the following statement from Karen Harned, Executive Director of the NFIB Small Business Legal Center in response to the National Labor Relation Board’s final rule, governing the joint-employer status under the National Labor Relations Act:

“Uncertainty costs small businesses precious time and money, and NLRB’s rule articulates a clear standard for small businesses to follow when determining who is and is not a joint-employer. The new, simpler rule will likely reduce compliance costs for small businesses.”

The final rule becomes effective April 27, 2020 and restores the joint-employer standard that the NLRB applied for over 30 years before its 2015 decision in Browning v. Ferris. This rule provides clarity, and guidance regarding who is and is not a joint-employer under the National Labor Relations Act.

Under the rule, an employee of one company may be found to be the joint-employee of a second, independent company, depending on the control over the employee’s work exerted by the second business. In order to be a joint-employer, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.

The DOL issued its own version of a joint-employer rule in January 2020, which clarified that to be a joint-employer under the Fair Labor and Standards Act (FLSA), a second employer must actually exercise—directly or indirectly—one or more of the four control factors. Together, the rules by both the DOL and the NLRB will provide small business employers and employees clarity on when liability will attach to a business for labor violations. This will now minimize additional liability for companies that subcontract out services and for franchisees.

NFIB filed comments in support of the NLRB’s proposal to simplify the test for determining joint-employer status.

The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court. 

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