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Joint Employment Liability For Family Employers

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).

 

Commentary and Checklist

Joint employment liability is the product of a case-by-case determination.

One example of a situation that raises the joint employment status issues for family employers might be a housekeeper, hired by a family employer through a staffing agency.

Employers like family employers are allowed to do the following under the new rule without becoming a joint employer as a result:

·      Set minimal hiring standards;

·      Set minimal standards of performance or conduct;

·      Bring misconduct or poor performance to the employer's attention;

·      Establish work hours;

·      Set deadlines for services;

·      Refuse to allow another employer's worker to continue performing work under a contract; and

·      Maintain standards that are required by government regulation.

 

The new rule also places the burden of proving joint employer status on the worker who, for example, might try to sue both the actual employer, and the employer’s client, for which the worker provided services. In this example, that means a housekeeper trying to sue the family employer, who is the client of the staffing agency (the housekeeper’s actual employer).

This new NLRA rule is just one affecting joint employment.

The U.S. Department of Labor (“DOL”) also recently (Jan. 12, 2020) updated its joint employer rule under the Fair Labor Standards Act (“FLSA”), so a wage dispute under the FLSA, for example, would be analyzed under the new standard issued by the DOL.

In the DOL’s final rule, there is a four-factor balancing test for determining FLSA joint employer status in situations where an employee performs work for one employer that simultaneously benefits another entity or individual. No single factor is dispositive, but there is a balancing test to examine 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 DOL rule included example situations. Here is one:

A worker works for a cleaning company hired by a restaurant. The restaurant has no authority to fire, hire, or supervise cleaning company employees. The restaurant does give general instructions to a team leader from the cleaning company each workday and monitors the performance of the work, while a team leader from the cleaning company provides detailed supervision. The cleaning company can terminate a worker at the restaurant’s request. The worker was fired by the cleaning company when the restaurant requested this action based on a worker’s violation of a safety requirement and endangerment of a customer.

Under these facts, the DOL found the restaurant not to be a “joint employer” of the cleaning company’s worker.

Because each situation is determined on a case-by-case basis, family employers should consult with their legal counsel before engaging in a contractual relationship with another business, like a staffing agency.

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