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Labor and Employment Policy

NAM Priority Issue Alert

NAM Members,

Today, the National Labor Relations Board (NLRB) issued its final rule on determining joint-employer status under the National Labor Relations Act (NLRA). The Board restored the standard used for decades to determine when two or more businesses can be considered joint employers as well as provided clarification and guidance to promote compliance. This announcement is an enormous win for manufacturers of all sizes and will protect established business models that promote innovation and defend workers.

According to the new rule, to be considered a joint employer, "a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer's employees." Additionally, the rule clearly defines key phrases such as, "essential terms and conditions," "direct and immediate control," and what makes something, "substantial." These definitions are necessary to provide manufacturers with the clarity and assurance they need to remain independent and free from unknown and unfair obligations.

Manufacturers affected by this rulemaking are not just those with unionized workplaces; any company that works with contractors, suppliers or logistical companies that are signatories to a union can be found liable under the NLRA. The new rule will ensure that only those companies that exercise substantial direct and immediate control over essential terms of employment of another company’s employees will be considered joint employers. 

The NLRB’s decision to go through a formal notice and comment period stems from the 2015 Browning-Ferris case which allowed for joint-employer classification even if one party did not exercise or control the essential terms and conditions of employment of another company’s employees; shockingly, the decision allowed for joint employment classification if there was a potential for control. The legal uncertainty this caused led to increased liability costs and would have forced manufacturers to be responsible for the employees and practices of their business partners. 

The NAM has worked with Congress, the White House and the federal courts to reverse the Browning-Ferris decision and restore the well-established joint-employer standard.  NAM helped to lead the comments submitted by the Coalition for a Democratic Workplace (CDW) on behalf of more than 80 state and national groups and worked to pass bipartisan legislation in the 115th Congress to restore the previous standard. The Manufacturers’ Center for Legal Action (MCLA) submitted an amicus brief in Browning-Ferris’ 2016 appeal in the D.C. Circuit.

Alongside the NLRB, the Department of Labor issued a favorable final rule on joint-employer status under the Fair Labor Standards Act (FLSA) last month.  Amongst other topics, the FLSA governs minimum wage, overtime pay and certain recordkeeping requirements.  Additionally, the Equal Employment Opportunity Commission (EEOC) is working on a rule to clarify when businesses can be considered joint-employers for the purposes of workplace discrimination laws, including the Civil Rights Act, the Americans with Disabilities Act and the Pregnancy Discrimination Act.  This three-pronged approach from the Administration is an effective strategy to solidify the joint-employer standard that has been used for generations rather than a back and forth dependent on which party is in the White House.

The NAM will continue to digest the new rule and apprise members of significant updates.

NLRB Fact Sheet
NLRB Press Release

Please do not hesitate to reach out to Drew Schneider [email protected] with questions or concerns.

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Please contact NAM Director, Labor and Employment Policy Drew Schneider at [email protected].

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