The National Labor Relations Board (NLRB) has issued a final rule (effective April 27, 2020) on joint employer status. The new rule applies to private employers of any size and narrows the imposition of joint employment.
Under the National Labor Relations Act (NLRA) the joint-employer standard determines when two or more entities are jointly responsible for the terms and conditions of employment over the same group of employees.
Joint liability can attach under the joint employer liability doctrine where "separate legal entities have chosen to handle certain aspects of their employer-employee relationship jointly."
The final rule clarifies that an employer is a joint employer of another organization's employee if both employers codetermine the employee's essential terms or conditions of employment. For that to be the case, the employer must exercise enough control over one or more essential terms or conditions of employment to meaningfully affect the employment relationship.
Under the NLRA, essential terms and conditions means "wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction."
Direct and immediate control over one of these areas is necessary, but not necessarily sufficient. Contractually reserved control over an essential term or condition of employment proves direct and immediate control.
In addition, control over a nonessential term or condition, if it is a mandatory subject of bargaining, may prove substantial direct and immediate control over an essential term or condition of employment. National Labor Relations Board "Joint Employer Status Under the National Labor Relations Act" federalregister.gov (Feb. 26, 2020).