National Labor Relations Board Proposes Change to Joint-Employer Liability


Picture of Employer word The National Labor Relations Board (NLRB) has proposed a new rule with the Federal Register that would change the standard for determining joint-employer relationships.

What is the current joint-employer standard?

Under current law, a joint-employer relationship refers to two or more employers that possess direct or indirect control and responsibilities over the same employees.Examples of joint employers include parent companies, franchisors, staffing companies and companies who subcontract work. A franchisor is considered a joint employer of a franchisee’s employees, even if the franchisor did not take part in the employee hiring process. The franchisor is considered a joint-employer because they may technically have a contractual right to exercise authority over a franchisee’s employees and workplace.

What is joint-employer liability?

Joint-employer liability means all parties within the joint-employer relationship share responsibilities for labor law violations and workplace accidents. If an employee is injured in the workplace, then an employee could file a worker’s compensation claim with their direct employer and have a viable claim against their indirect employer if they can prove negligence.

What is different about this new rule?

The NLRB is concerned with the current standard in place that determines whether an employer has a joint-employer relationship with another employer. The board claims it is too vague, confusing to employers and employees and leaves too much room for interpretation. The proposed rule will set a new standard to determine a joint-employer relationship. Under this new rule, the NLRB states a company must “possess and exercise substantial, direct and immediate control” over the terms and conditions of employment of a hired employee in order to be considered a joint-employer.

How could it affect you once the new rule becomes final?

If the NLRB’s proposed rule becomes final, then employers will not be liable for any employees outside of their direct control. Generally, the new joint-employer rule will reduce legal liability for parent companies, franchisors or companies that subcontract work.Opponents of the rule claim the new standard would restrict employees’ rights to collective bargaining and fair representation in the workplace. In addition, it could be more difficult to hold parent companies, franchisors or contractors accountable for negligence. Even though they may technically have control over your direct employer and over your workplace, as an employee, the law would not see them as your employer.


The public can comment on the proposed rule until November 13, 2018 online or by mail sent or hand-delivered to the address provided by the NLRB. After November 13th, the rule may be amended and finalized.If you have questions or concerns about the joint-employer rule and how it could affect your case, contact our workers’ compensation attorneys at Cramer & Martinez, LLP. You can reach us at (408) 848-1113 or through our online form.

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