The NLRB Issues Final Rule On Joint Employment

Key Points

• On February 26, 2020, the NLRB issued a final rule tightening the standard for joint employment under the NLRA.
• The joint-employer standard is important because if two entities are joint employers, both must bargain with the union that represents the jointly employed employees, both are liable for unfair labor practices committed by the other and both are subject to economic pressure in labor disputes with the union.
• The new rule will have the most significant impact on businesses that were most vulnerable to a joint employer finding under the NLRB’s prior test based on their indirect control over other entities. These include franchisors, companies that utilize contractors for any number of tasks, and private equity firms in their relationships with portfolio companies. The requirement in the new rule clarifies that these businesses will not be viewed as joint employers unless they have direct control over wages, hours, or other terms or