The standard for determining joint employment status has been in a state of near-constant flux for more than 3 years. Both the National Labor Relations Board and the U.S. Dept. of Labor are interested in settling the joint-employer debate through rule making. What many believe would be smooth sailing could be heading towards rough tides now that Democrats have seized control of the House of Representatives. This will likely grind any progress to a halt.
The NLRB decided to address the much-maligned joint employer standard through rarely used notice and comment rulemaking instead of the more typical course of ruling on a specific case. On September 14, 2018, it formally proposed its new standard for determining joint employer status; if adopted, the proposed rule would bring the joint employer standard back in line with its pre-Obama-era standard.
The U.S. Dept. of Labor announced plans to tackle the same issue through rule making, although it’s not quite as far in the process as the NLRB.
Even if either or both of the agencies successfully complete the notice and comment rule making process to narrow the joint employer standard, there could be more legal battles to come. Rulemaking is a drawn-out and difficult process that usually sparks legal challenges along the way. If opponents of either joint employment rule challenge them through the courts, the NLRB and the U.S. Department of Labor will have to defend the reasonableness of its actions – and judges may want to see more than just antidotal evidence to support the new rule.
Once the comment period closes, the NLRB will begin the process of sifting through what will presumably be thousands of comments from various stakeholders. In the meantime, to prepare for the expected return to a more balanced standard, employers should begin to reassess their staffing and related third-party relationships with an eye toward the actual exercise of substantial (as opposed to limited and routine), direct (versus indirect), and immediate (versus potential) control over the employment terms of the workers involved.
To ensure your company is ready to hit the ground running, employers are encouraged to work closely with labor counsel to: 1) develop a plan for recapturing an appropriate, limited, modicum of control and operating efficiency that may have been lost while operating under the Browning-Ferris standard; 2) draft contract and policy language adhering to the balance standard we expect to see once a final rule is implemented; and 3) continue to vigilantly evaluate your day-to-day practices for joint employment liability under the new standard.
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.