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How the NLRB's and DOL’s New Joint-Employer Rules Affect Employers

On April 1, the U.S. Department of Labor (DOL) published a notice of proposed rulemaking to define joint-employer status under the Fair Labor Standards Act (FLSA). Last September, the National Labor Relations Board (NLRB) published its proposed rule outlining joint-employment criteria as they relate to collective bargaining requirements.

Two government agencies have published two proposed rules in an effort to define one term: “joint employment.”

Sounds complicated.

Thankfully, for once, it isn’t.

Similar definitions

It appears the agencies have been working together to establish a consistent definition, because both proposed rules:

  • explore the joint-employment relationship through the lens of “essential matters of employment,” such as hiring, firing, directing, scheduling, rewarding and supervising
  • determine joint-employer liability in part by examining whether control of employees is “substantial and direct”
  • establish that merely reserving the right to exercise control over another entity’s employees does not increase the likelihood a joint-employment relationship exists between those entities

It’s important to note that while the proposed rules are similar, they cannot be interchangeably applied; the wage-and-hour rule doesn’t determine who should participate in union negotiations and vice versa. But the similarities could make it easier for employers – and potentially even employees – to develop a comprehensive understanding of what joint-employer relationships look like in the workplace.

Stronger foundations

The fact that both agencies engaged in the rulemaking process to clarify the definition is good news, too.

Previously, employers have relied on federal opinion letters, case law and precedent standards for guidance to understand joint-employer relationships. Not only can that patchwork be confusing and contradictory – particularly in the case of the DOL’s definition – it also is more likely to change.

Cases can be appealed, guidance can be rescinded and interpretations can be scrapped. And while rules certainly aren’t immune to change, it is tougher to change or reverse them. By engaging in the rulemaking process, the DOL and NLRB made it more difficult for opponents of the definition to change it. And because both agencies used the rulemaking process, one definition isn’t more susceptible to change than the other, increasing the chance that the consistency between both rules remains intact.

Compliance deadlines

The DOL rule is open for public comment 60 days after publication in the Federal Register, or until June 10. Once comments are closed, the DOL will review and allow them to influence their draft of its final rule. The NLRB closed the comment period for its proposed rule and is in the process of reviewing those comments in order to release a final draft. At this time, the NLRB has not released a date for publishing its final rule. In a March 22 letter responding to questions from members of Congress, the NLRB advised that nearly 29,000 comments had been received from interested parties.

Because both new rules are less restrictive than the current joint-employer standard, if you’re abiding by current standards and laws, complying with the new rules could be fairly straightforward. However, your best bet is to consult with legal counsel to ensure your policies and practices don’t expose your business to noncompliance risk.

Because the new rules will not be final for at least 60 days, employers should continue to abide by current wage-and-hour law and the standard as interpreted by the D.C. Circuit Court of Appeals in Browning-Ferris Industries of Cal., Inc. v. NLRB, Case No. 16-1028, on Dec. 28, 2018.

We’re keeping an eye on both and publishing important updates. To receive those updates in your inbox, subscribe.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.