The National Labor Relations Board (NLRB) issued its final joint employer rule on February 26. The final rule took effect April 27. NMHC and NAA strongly support the NLRB’s rule that overturns the Obama-era joint employer rule.
Many multifamily firms use contractors and subcontractors to execute various business functions. Depending on how employment relationships are structured and defined, one firm could be considered a joint employer of another entity’s employees.
Until 2015, entities were designated joint employers when both had “direct and immediate” control over “essential terms and conditions of employment.” This changed when the NLRB, in its Browning-Ferris Industries of California, Inc. decision, significantly expanded the definition of joint employer. Specifically, the NLRB ruled that it could impose joint employer liability when an entity has “indirect” control and “unexercised potential” of control over another entity’s employees.
According to the NLRB, the final rule among other things:
- Specifies that a business is a joint employer of another employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment; and
- Clarifies the list of essential terms and conditions: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.
NMHC and NAA long opposed the Obama-era rule. As noted in our comment letter supporting the NLRB’s proposed rule to overturn the Obama-era rule, the old rule could force multifamily firms to negotiate employment terms with employees of subcontractors, suppliers, vendors and temporary staff it does not itself employ. Moreover, the old rule could potentially and inappropriately make apartment firms liable for the actions of their subcontractors, suppliers, vendors and temporary staff. Apartment firms should not, for example, be left liable for fines for employees of suppliers who violate Federal labor laws.
For more information on the joint employer rule, please review the NLRB’s fact sheet on the final rule or visit NMHC’s advocacy page.
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