On October 26, the NLRB released its final rule on determining joint employer status under the NLRA, which would radically expand the joint employer standard under the NLRA. By explicitly stating that either possessing the authority to control one or more essential terms and conditions of employment (regardless of whether it is exercised) OR exercising the power to control indirectly one or more essential terms and conditions of employment (regardless of whether the power is exercised directly) is sufficient to establish an entity’s status as a joint employer, the final rule expands upon the damaging policy adopted in the Obama-era Browning-Ferris Industries (BFI) decision.

The following statement can be attributed to CDW Chair Kristen Swearingen:

“Today, the NLRB finalized its latest policy designed to dramatically destabilize labor-management relations at the behest of labor unions and at the expense of workers, entrepreneurs, and businesses. The final joint employer rule represents a sweeping expansion to the standard used for determining when two or more employers are jointly responsible for a group of employees and flies in the face of federal law, congressional intent, and court precedent.

“Today’s final rule effectively holds that either indirect or reserved control may stand alone as basis for finding a joint employer relationship, and that the mere existence of either is a definitive indicator – and not merely probative – of joint employer status, making the policy more drastic in scope than the damaging Obama era-standard adopted in BFI. In his dissent, Member Kaplan rightly states that the final rule ‘is potentially even more catastrophic to the statutory goal of facilitating effective collective bargaining, as well as more potentially harmful to our economy, than the Board’s previous standard in BFI.’

“The Board has adopted a policy that will create widespread confusion for business operations and threaten nearly every contractual relationship nationwide by disincentivizing larger companies from contracting, franchising, or licensing with small and local businesses. In doing so, the final rule undermines the millions of workers that rely on the entrepreneurial and economic opportunities generated through these business models.

“Simply put, the Board must stop catering to the demands of organized labor and focus its efforts on supporting American workers, business owners, and economic growth by fulfilling the true intent of the NLRA.”