The NLRB Does It Again: Reverses Rule Regarding Joint Employers

Sep 23, 2022 | Blog

So, what does a small region in Central Europe have to do with the National Labor Relations Board?

The Prekmurje region of Slovenia has been known by various names over the years. For over 1000 years it was called the Muravidék region of Hungary. After WWI, the Muravidék was incorporated into the Slovene portion of the Yugoslav Kingdom, but reverted to Hungary during WWII. After WWII, it again changed, this time to Yugoslavia, by then a Federal Republic. Finally (for now!), after the Yugoslav breakup, it has remained a part of Slovenia. The spoken language of the region is called “Windish” – some say it is because their nationality depends on “which way the wind is blowing.”

Which brings us to the National Labor Relations Board. The NLRB or “Board” as it is also called by those attorneys practicing labor law, is that five-member agency appointed by the President and confirmed by the Senate. Each member serves a four-year term and, by tradition, three of the Board members are of the same party as the one currently occupying the White House, with the remaining two members of the other party.

What does this all mean? What it means is that labor law is a constantly changing body of law, depending on who sits in the Oval Office. Thus, one easily can say that the status of national labor law depends on “which way the wind is blowing,” much like the people of the Prekmurje region of Slovenia!

For example, the issue of what constitutes “joint employers” was reversed by the Obama Board in 2015 in the Boeing-Ferris Industries of California, Inc. decision. In that case, the NLRB felt it was restoring the common law approach to determining when two or more separate companies could be considered “joint employers.” The importance of that determination will decide whether, for example, one employer can be held accountable for the unfair labor practices committed by the other employer; or whether a union attempting to organize the workforce of one employer will implicate the other employer. Think of the relationship between a company and its franchises or a business using the services of a staffing company. Under Boeing-Ferris, even if one company exercises only “reserved” or “indirect” control over the other company’s employees, that first company may be held equally liable for the alleged misconduct of the second – a standard not too difficult for a union to establish.

The “wind” changed directions under President Trump in 2020. On April 27 of that year, the Republican-controlled NLRB reversed course when it adopted a new rule on defining joint employers. Under that rule, for one employer to be liable for the actions of another, it needed to have “direct and immediate” control over the employees in question. Necessarily, that new rule was welcomed by companies.

Now, with a Democratic-controlled Board, the tide is turning once again. The NLRB bas proposed a new rule which will reinstitute the “reserved” and “indirect” standards, which are much easier to meet. Not surprisingly, employers are very concerned about this development (not that it was unexpected). Some critics say that this is just one more example where the Biden Board is heavily slanted in favor of unions, which should not be surprising since, during his candidacy, Biden promised to be the most union-friendly President ever.

Interested parties have until November 7, 2022, to offer their comments, which must be considered by the Board before formerly and finally adopting the new rule. With the current composition of the Board likely to remain unchanged for at least the next two years, one can fairly assume that the word “proposed” will be dropped and the rule will become the law – at least until the wind changes again!  The proactive employer should seriously review its current arrangements with other companies and consider whatever changes might be deemed necessary to protect its interests.

If you have questions about how the new joint employer rule might impact your business or you would like assistance in reviewing and perhaps revising your relevant contracts, please feel free to contact Phil Mortensen at Barton LLP.