The National Labor Relations Board has released a final rule that expands the definition of a “joint-employer” under the National Labor Relations Act. Unions praised the new rule, but construction groups say that it does not realistically consider how the industry operates and could be disruptive to projects.
The rule, which was published in the Oct. 26 Federal Register and takes effect Dec. 26, rescinds the five-member panel’s more narrow joint-employer definition from 2020 and reverts to the interpretation set by the board in the Obama administration in the 2015 Browning-Ferris decision. The new rule places more weight on an employer’s authority to control essential terms and conditions of employment, whether or not that control is actually exercised, the NLRB says.
Under the new rule, firms are considered joint employers if they have an employment relationship with employees of multiple companies, and they share or co-determine one or more of the employees’ essential terms and conditions of employment, which include safety and health rules; wages and benefits; hours worked and schedules; and supervision of duties that are performed.
In a statement, board Chair Lauren McFerran, a Democrat, said the new joint-employer standard "reflects both a legally correct return to common-law principles and a practical approach to ensuring that the entities effectively exercising control over workers’ critical terms of employment respect their bargaining obligations under the NLRA.” She noted, however, that the board would continue to adjudicate its decisions on alleged violations of the law on a case-by-case basis to determine whether two or more employers meet the standard.
AFL-CIO President Liz Shuler said in a statement that “too many employers use intermediaries like staffing firms or temp agencies to evade their responsibilities under the law” and that the new rule “ensures that union members can bargain with each company that has the power to make changes in the workplace.”
But in an email to ENR, Karen Livingston, senior director of policy for the Associated Builders and Contractors said the change "will result in massive confusion for construction contractors as well as increased liability and risk, making them less likely to hire subcontractors, most of which are small businesses, and will ultimately cause needless delays and cost inflation on taxpayer-supported infrastructure projects."
Other industry groups say the rule doesn’t consider the fact that multiple companies often work side-by-side on construction jobsites.
“Due to the nature of the work and well-established practices, the reservation and exercise of some control by one company over another is inherent to the industry,” said Denise Gold, Associated General Contractors America general counsel, in comments submitted to the board in response to the proposed version of the rule released in 2022. “A contractor should be able to use and direct subcontractors without taking on joint-employer-status provided that the contractors does not directly and excessively control essential terms and conditions of employment of the subcontractors’ employees and unless its participation in collective bargaining is essential to meaningful bargaining.”
The U.S. Chamber of Commerce says it is considering its options, including litigation.
A fully-staffed board consists of five members who are presidentially nominated and must be approved by the U.S. Senate, and a general counsel. The current board has four members, three of whom are Democrats. Republican Marvin Kaplan dissented in the release of the new rule.