Do you find collaboration to be important to your business? While joint ventures/teaming might be important for growth, they also can be a source of liability. At the end of last year, the National Labor Relations Board (NLRB) published its final rule on joint employer status. The final rule takes effect on February 26, 2024, and has applicability to all employers – not just unionized worksites.

The new rule modifies the NLRB’s 2020 final rule by casting a wider net on what relationships constitute a joint employer under the National Labor Relations Act (NLRA). More specifically, the final rule states that a joint employer includes those organizations that “share or codetermine those matters governing employees’ essential terms and conditions of employment.”

Sharing or codetermining essential terms and conditions is defined as the ability to “possess the authority to control (whether directly, indirectly, or both), or to exercise the power to control (whether directly, indirectly, or both), one or more of the employees’ essential terms and conditions of employment.” “Essential terms and conditions of employment” include:

(1) Wages, benefits, and other compensation;

(2) Hours of work and scheduling;

(3) The assignment of duties to be performed;

(4) The 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) The tenure of employment, including hiring and discharge; and

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

Joint employer status under the NLRA means that a misstep from one organization/employer is immediately imputed to the other organization/employer as it relates to unfair labor practices. For example, if one organization improperly limits the ability of an employee to speak about the terms and conditions of their employment – the other organization would also be required to pay any fines or related judgments. The NLRB’s final rule does not apply to joint employer issues existing in discrimination or wage and hour claims.

I recommend that businesses revisit existing relationships and perform an “accounting” to verify whether certain relationships may now constitute joint employer. If the relationship constitutes a joint employer, then clarifying the commitments/approach by each party to complying with labor practices/addressing complaints is likely advisable. For relationships that may be “on the fence,” I recommend emphasizing the separate nature of the relationship in a more clear manner via existing agreements (or creating an agreement if one does not exist). Reducing ambiguity now can likely result in less liability moving forward.

Questions about your business relationships? Freel free to reach out to me.