The National Labor Relations Board (“NLRB”) once again and recently changed its standard to favor employers over employees. Specifically, the NLRB adopted a new rule to make it more difficult to prove that affiliated companies share culpability for legal violations or are otherwise legally responsible for employment terms and conditions. To that end, the NLRB’s new rule defines a joint employer under the National Labor Relations Act in a much more narrow way. Under the new NLRB standard, companies can only be considered a joint employer when they have “substantial” direct and immediate control over the employees’ “essential terms and conditions of employment.” “Substantial” means that the direct and immediate control must have “a regular or continuous consequential effect on an essential term or condition of employment.” In addition, the list of “essential” employment terms and conditions recognized by the rule is now exhaustive even though the nature of employment continues to change as the economy transforms. Although the new rule allows evidence of indirect or reserved control to be considered when deciding if companies are a joint employer, that evidence cannot be the sole basis for proving companies are a joint employer. Advocates for workplace fairness are already preparing to mount legal challenges to the altered rule.
Like the NLRB, the United States Department of Labor (“DOL”) has changed its standard in an effort to make it more difficult to prove that companies are a joint employer for purposes of wage claims under the Fair Labor Standards Act. The new rule restricts the focus to whether the companies in question hire and fire employees, supervise and control work schedules or other employment conditions, determine the method and amount of pay, and maintain employment records regarding the employees at issue. The DOL’s action seems designed to enable companies to avoid liability for wage theft, attorney’s fees, and litigation costs in class actions and other high-stakes cases even when those companies are at least partly responsible for the violations. Indeed, the DOL’s new rule conflicts with court precedent established around the country over decades. Accordingly, nearly 20 State attorneys general are now challenging the new rule in Federal court.
The United States Equal Employment Opportunity Commission (“EEOC”) is also seeking to revise the definition of joint employer for purposes of retaliation, harassment, and discrimination claims under employment law and civil rights statutes like Title VII. According to recent reports, the EEOC will narrow the scope of its definition of joint employer liability as both the NLRB and the DOL have – making it more difficult to hold culpable companies responsible for legal violations. If the EEOC makes the change as it appears poised to do, it would be contrary to decades of court precedent developed across the nation. Legal challenges to the altered rule will ensue.