Labor and Employment Law Blog

In 2015, the NLRB adopted a more relaxed standard for determining when an entity could be considered a joint employer and thus liable for alleged workplace wrongs along with a direct employer. Of course the result of the loosening of the reins meant an increase in the number of defendants listed on complaints as potentially liable for various and sundry employment claims. As one example, the relaxed standards left franchisors that are required by law to have standards that protect their brand gnashing their teeth when they would be dragged into litigation because they had included brand recognition features that dealt with the look, feel and implementation of employee service standards. The new rules will reinstate the former rules that clarify that a business is only a joint employer if it has “substantial direct and immediate control” over another company’s workers. There are still plenty of business relationships that will come under this definition of joint employer, staffing companies and the organizations that use them being a primary example, but now the definition presumably is not as broad and vague. One caveat to note is that while the NLRB may have injected some rational reasoning into its standard, certain states may have definitions that will continue to create risks of liability for franchisors and what has been referenced as affiliated businesses to direct employers.