Labor Advisory




Labor Board Proposes New Joint Employer Rule
A National Labor Relations Board move to ease the legal standard for deciding when one company
jointly employs another firm’s workers is a big step toward undoing the employer- friendly rule
minted during the Trump administration.

The looser standard the board proposed could allow workers for app-based companies like Uber
Technologies Inc. and Instacart—now considered independent contractors—to unionize for higher wages
and better benefits.

It also could mean legal exposure for national franchise companies such as McDonald’s Corp.,
largely shielded from labor violations by individual store owners and third-party contractors. The
NLRB’s proposed rule would expand the factors that can establish a joint employment relationship to
include indirect and unexercised control over the terms and conditions of a job.

Employers would be considered joint employers if they co-determine “essential terms and
conditions of employment,” such as scheduling, wages, and benefits. It would rescind the Trump- era
joint employer rule that took effect in April 2020.

The potential for extending labor law obligations across companies is a concern in the franchising
industry and for companies that source labor through contracting, temporary staffing, and other
business-to-business arrangements. Employers have long argued that doing so would make it harder
for workers to set their own schedules—a cornerstone of gig companies’ business model.

Link to the proposed rule: proposed rule