Industry Trends Popular December 7, 2023 4 min read

Understanding the New Joint Employer Rule: Everything You Need to Know

Understanding the New Joint Employer Rule: Everything You Need to Know

The National Labor Relations Board (NLRB) recently introduced a new Final Rule effective from December 26, 2023, reshaping the Joint-Employer Standard. This rule replaces the 2020 standard, now grounding the joint-employer status in common-law agency principles.

The Joint Employer Rule determines when two or more employers share responsibility for certain aspects of a worker’s employment. In simpler terms, it addresses situations where a worker may have two or more bosses, and these employers may be held accountable for certain work-related conditions.

Everything You Need to Know: 

What is a Joint Employer?
A joint employer scenario arises when two or more entities (employers) share control or influence over a worker’s terms and conditions of employment. This includes factors such as wages, work schedules, and other employment conditions.

Why Does it Matter?
It matters because it defines who is legally responsible for certain aspects of the worker’s employment. If an entity is considered a joint employer, it shares accountability for complying with labor laws and regulations.

How is it Determined?
The determination is based on whether an entity has the authority to control or influence key employment factors, even if that authority is not always exercised. Essential employment terms include wages, benefits, scheduling, duties, supervision, and more.

What’s Changed in the New Rule?
Effective from December 26, 2023, the NLRB’s new rule broadens the criteria for joint-employer status. Entities may now be considered joint employers if they possess the authority to control at least one of the key employment terms. This change is pivotal, making it easier to establish joint-employer status.

Who Does it Affect?
It affects various industries and business arrangements, such as franchisors and franchisees, contractors and subcontractors, and staffing agencies and user employers. The implications include potential increased liability and changes in business relationships.

How Does it Impact Workers?
For workers, the rule can influence their ability to unionize and bargain directly with the entities controlling their employment conditions. It may also impact workplace policies, support, and relationships between franchisors and franchisees.

In summary, the Joint Employer Rule defines when multiple entities share responsibility for a worker’s employment conditions. The recent modifications in the rule broaden the criteria for joint-employer status, significantly impacting how businesses structure their relationships and how workers engage with their employers.

Expert Perspectives on the New Rule

JacksonLewis Insights:

Employers may be held as joint employers if they have the authority to control essential employment terms and conditions. This broadened criterion raises concerns for various businesses, urging a careful review and potential revision of commercial agreements to mitigate risks. Read the full article here

Eater’s Take:

Franchisees express concerns about increased liability and reduced support from franchisors under the updated rule, potentially impacting small businesses and diverse entrepreneurs. The updated rule is seen as a potential catalyst for unionization efforts among fast-food workers. Read the full article here. 

National Restaurant Association’s Position:

The 2023 Joint Employer Rule significantly affects restaurant operators, especially in franchisor-franchisee relationships. The National Restaurant Association opposes the rule, advocating for the 2020 standard and supporting legislative efforts to block it. Read the full article here. 

Insights from Nations Restaurant News:

The new standard makes companies jointly liable with franchisees for labor terms and conditions, with franchisors expected to be more involved in workplace policies. NRN notes trade organizations, including the National Restaurant Association, oppose the ruling, citing concerns about creating chaos and legal questions in the industry. Read the full article here. 

Moving Forward:

As businesses and workers navigate this new landscape, the importance of staying informed, revisiting agreements, and adapting to the evolving standards cannot be overstated. The dynamic nature of these relations emphasizes the need for continuous monitoring of legal developments and strategic adjustments.

In conclusion, the updated Joint Employer Rule marks a pivotal shift in the employment landscape. Businesses and workers alike must remain vigilant, informed, and proactive to navigate the challenges and opportunities presented by this transformative regulatory framework.

Related posts