The National Labor Relations Board’s new rule would reverse a 2020 Trump-era regulation

Like skinny jeans, side parts, and graphic tees, what’s old is new again. This month, the National Labor Relations Board (NLRB) proposed a rule that would reverse a 2020 Trump-era rule on how joint-employer status is determined. Should it go into effect, the rule could make employers who use third-party contractors liable for possible labor violations.

Zoom in. The current rule considers a joint employer to be one that must “exercise direct and immediate control” over workers’ terms and conditions. As such, most employers aren’t able to be held responsible for subcontractors’ labor violations. A hotel, for example, that hires an outside company to perform maintenance would not be liable for any wage violations they might commit.

Under the new (old?) rule, however—which considers a joint employer to be one with “indirect” control over employee working conditions—the hotel, or any contracting company, could be held responsible. While it’s a big reversal, the guidelines are largely aligned with those that were put in place during the Obama administration.

HR impact. The rule could affect oversight of wages, benefits, scheduling, hiring, and safety, according to the NLRB. Some responsibility may fall to HR in ensuring that subcontractors comply with company rules, as well as state and federal laws.

Mike Lebowich, a labor and employment lawyer at the law firm Proskauer, told HR Brew that HR professionals should speak with their legal counsel and look at, “Are we a direct employee joint employer? Are we not a joint employer?” He described how a non-union employer contracting work to a union employer “could then be as the purchaser or the user of the labor and not the supplier, those HR people have to understand the labor relations implications of that.”

Glenn Spencer, SVP of employment policy at the US Chamber of Commerce, told the Wall Street Journal that the rule will impact, “a whole range of things that businesses contract out for and to which by necessity they will exercise some degree of control.”

Getting ahead. HR pros whose companies rely on labor from outside parties may need to review their day-to-day working conditions, per the National Law Review, while legal blog JDSupra recommends employers “carefully evaluate contractual language and policies pertaining to rights to control these workers’ terms and conditions of employment, such as clauses requiring service providers to ensure that their workers maintain levels of quality, efficiency, safety, or performance.”

Mark Kisicki, an attorney at labor and employment law firm Ogletree Deakins, recommended to SHRM that HR encourage supervisors and managers to treat subcontractors as if they were their employees. After all, joint-employer regulations, added Charlie Morgan, a labor lawyer with Alston and Bird, can be “confusing.”—KP

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