National Labor Relations Board Announces New Standard for Determining Joint-Employer Status
- By Harri Insider Team | November 8, 2023
Overview
The National Labor Relations Board (NLRB) issued its ruling on October 26, 2023, addressing the Standard for Determining Joint-Employer Status under the National Labor Relations Act (NLRA). The final rule introduces a new standard for determining joint-employer status and rescinds the 2020 final rule established under the prior Board.
Under the new standard, an entity may be considered a joint employer if each entity shares or codetermines one or more of the employee’s essential terms and conditions of employment such as wages, benefits, hours of work, and the assignment of duties to be performed. The 2020 rule previously established a higher threshold, requiring joint employers to “possess and exercise…substantial direct and immediate control” over essential terms and conditions of employment. The new rule also provides detailed guidance to parties regarding their rights and responsibilities in cases where joint-employer status is established. The effective date of the new rule is December 26, 2023.
For more information and details about the new rule, please view the NLRB Fact Sheet or visit the NLRB Website.
Who is Affected
The Joint Employer relationship between franchisee owners and franchisors may result in increased shared responsibility between the franchisor and franchisee owner. In the event a legal claim is brought against a franchisee, a franchisor may also be held liable. To navigate this shift in liability, franchisors may take a more proactive approach in ensuring frontline practices and operational processes at individual franchise locations are compliant with federal, state, and local laws.
How to Succeed
Between the franchisor and franchisees, the following may be needed
- A unified risk management strategy that engages employees to strive for full compliance at every level of the business.
- Full identification and awareness of the compliance requirements franchisee owners are expected to meet, as set by local ordinances, state laws, and/or federal laws.
- Training to ensure understanding of the joint-employer standard, specifically reserved control and indirect control stipulations.
Harri Can Help
Harri offers:
- A technology suite of integrated solutions, ensuring business operational data flows seamlessly and is securely accessible by the relevant parties on a role basis for full awareness. The Harri suite can be managed from both the enterprise and unit level, allowing authorized system administrators full visibility into business practices at both the franchise and franchisee levels.
- A workforce management system, TeamLive, with automated workflows, notifications, and configurable settings to ensure franchisees operating out of different cities and/or states are able to maintain compliance with unique jurisdictional legal requirements.
Please consult your attorney for guidance and information on how best to equip your business for success following the implementation of the new standard for defining Joint-Employer status.
