NLRB's Final Joint-Employer Rule Expands Employer Liability Under the National Labor Relations Act

Date: October 31, 2023

Final rule complicates the joint-employer standard for franchise owners, contractors, and small businesses.

The National Labor Relations Board (NLRB) came out with a final joint-employer rule that will rescind and replace the previous joint-employer standard enacted in 2020. The Board’s new standard significantly expands when employers are deemed a joint-employer under the National Labor Relations Act.    

“NFIB is extremely disappointed by the Board’s new joint-employer rule,” said Elizabeth Milito, Executive Director of the NFIB Small Business Legal Center. ”It is one more onerous regulatory change for small businesses to navigate.” 

NFIB supported the U.S. Department of Labor’s previous joint-employer rule in 2020, which simplified the determination of joint-employer status. It focused on the actual exercise of control over workers to determine joint-employer status. The new standard is much broader, permitting employers who have indirect control or unexercised control to be classified as joint-employers.  

“The arbitrary standards outlined in this rule will make compliance a nightmare for small business owners who do not have the teams of lawyers, accountants, and compliance staff needed to navigate these vague and subjective definitions,” added Milito. “Also concerning is that the rule expressly declined to exempt franchises and small businesses. Independent franchisees may lose control over their workforce under the new standard.” 

Milito continues: “NFIB agrees with dissenting member Kaplan that this new joint-employer standard is ‘catastrophic’ and urges the NLRB to seek a standard that provides the clarity and consistency that small businesses need.” 

The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court.    

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