Some time ago, the Biden administration advanced a joint employer favored by labor unions. By way of a brief, over-simplified example, if a building owner contracts janitorial services to a contractor, and the building owner has the power to control the hours, pay, or other terms of employment, the building owner might be found to be the joint employer with their contractor. A coalition of business groups led by the U.S. Chamber of Commerce argued that the National Labor Relations Board (NLRB) overstepped its authority and impermissibly expanded the definition of employer for the purposes of the joint employer regulation. A Texas federal court agreed and struck down the regulation, which was then appealed by the NLRB. On July 19, 2024, the NLRB voluntarily dismissed its appeal.
Prior to the Trump Administration’s 2020 regulation, the NLRB handled the joint employer rule by issuing individual decisions. Under the Trump Administration’s 2020 regulation, a joint employer could be found only when the putative joint employer exercised direct and immediate control over the most important aspects of an employee’s job. The Biden Administration’s 2023 regulation did not require direct and immediate control, or that the putative employer even exercise such control. As it stands now, individual decisions will guide employers.
Employers should work with their attorneys to ensure their contracts do not give rise to a joint employer issue. Of equal importance, companies should train supervisors and managers who oversee contracted work so they do not overstep their authority and give rise to any appearance that the company is a joint employer.