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Joint Employer Issued by NLRB

The National Labor Relations Board proposed a new rule to reinstate the Obama-era board’s joint employer standard, which could open up staffing firm clients and franchise operations like McDonalds to union organizing campaigns.

The joint employment framework determines whether more than one entity controls the wages and working conditions of employees. If that is found to be the case, for example, a franchisor like McDonalds can have to negotiate with a union instead of the union targeting individual franchises.

The proposed rule says, ‘two or more employers of the same particular employees are joint employers of those employees if the employers share or codetermine those matters governing employees’ essential terms and conditions of employment.”

The proposal also states that essential terms and conditions of employment “generally include, but are not limited to: wages, benefits, and other compensation, hours of work and scheduling; hiring and discharge; discipline; workplace health and safety; supervision; assignment; and work rules and directions governing the manner, means, or methods of work performance.”

The rule holds that exercising or merely reserving/possessing the right to directly or indirectly control workers’ essential terms and conditions of employment is sufficient to establish a joint employer relationship, note attorneys with the law firm of Sheppard Mullin Richter & Hampton.

“When ultimately adopted, the new rules requiring only the right to control employees and broadening the list of essential terms and conditions of employment will present a major issue for temporary staffing companies, companies that contract out labor and franchised businesses, among others,” they say.

Attorneys for the Proskauer Rose law firm, add it could expand the threat of labor litigation for employers that use outside organizations to handle certain aspects of their employees’ working conditions, such as payroll companies.

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