The National Labor Relations Board has rewritten its joint employer standard, a move that would ease the rule's impact on companies including franchise owners and businesses that subcontract work to others.
The board last week proposed a rule that says a company can be considered a joint employer "only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment." A company's control over employment must not be limited, and it must be routine.
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The joint employer rule was on the list of Obama-era federal regulations the Trump administration wanted to eliminate. The proposal is a big shift away from a 2015 NLRB ruling that expanded the concept of joint employer; it said one company's indirect control over another's workers could make both joint employers.
After Trump was elected and began naming new members to the NLRB, the board reversed the 2015 rule and began writing its own standard. In a statement Thursday, the NLRB said the proposed rule "would foster predictability, consistency and stability in the determination of joint-employer status."
The definition of joint employers is an issue for franchise companies, staffing firms and businesses with subcontractors, all of which have relationships with other businesses that can involve interconnecting operations or, in the case of staffing companies, involves supplying employees to another business.
Business groups said they welcomed the proposed rule. The International Franchise Association said it ended a "vague and uncertain legal minefield" created by the 2015 rule. Small business owners including franchisees had opposed the 2015 ruling, saying it would take away their control of their companies.
The proposed rule won't become final until after the public has had a chance to comment on it; the period for comments ends Nov. 13. The proposal can be found at www.regulations.gov .
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