A “joint employer” is when different entities exercise enough control over a worker that they have each formed an employment relationship with that worker. Thus, one worker could be an employee of multiple entities, even if those entities are not associated with one another (think, for instance, the maintenance crew vendor employees who take direction from the customer about what to do/when/how, etc.).

In an effort to clarify “joint employer,” the National Labor Relations Board (“NLRB”) published its new highly anticipated final rule on the “Standard for Determining Joint Employer Status.”  The 2020 rule is out; this 2023 rule is it now.  The 2020 rule said that to prove a joint employer relationship, the worker would have to show proof of “direct and immediate control” being exercised over the “essential terms and conditions” of that person’s employment.  Now, a joint employer relationship can be established if “the employer possesses the authority to control (whether directly, indirectly or both) or exercises the power to control (whether directly, indirectly or both) one or more of the employees’ essential terms and conditions of employment, regardless of whether the employer exercises such control or the manner in which such control is exercised (emphasis added).”  This obviously significantly broadens the risk of a company being designated as a joint employer.

The “essential terms and conditions” are broken into seven categories:

1) wages, benefits and other compensation;

2) hours of work and scheduling;

3) assignment of duties to be performed;

4) supervision of the performance of duties;

5) work rules and directions governing the manner, means and methods of the performance of duties and the grounds for discipline;

6) tenure of employment, including hiring and discharge; and

7) working conditions related to the safety and health of employees.

This rule will affect the business community, particularly companies that oversee the day-to-day work, including, for instance a professional employer organization (“PEO”), companies that share control over workers, franchisors/franchisees, etc.  McDonalds was sued as a joint employer based on the franchise agreement documents giving parameters and guidance about maintaining “brand integrity,” because this would affect workers’ hours, performance, number of workers hired, uniforms, safety protocols and other items.

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