On December 14, 2017, in Hy-Brand Industrial Contractors, Ltd., the National Labor Relations Board (“NLRB”) overturned an Obama-era rule that held employers potentially liable for labor-law violations committed by their franchisees and subcontractors absent direct control over the terms and conditions of employment. Prior to the decision in Hy-Brand, a corporate employer could be held liable as a joint employer for labor law violations committed by a franchisee, even when the corporate employer did not exercise control (direct or indirect) over the terms and conditions of employment. The NLRB returned to its past standard, and found that the “essential element” for determining whether two entities are joint employers, thus jointly and severally liable for labor law violations, is whether they exercised joint control over the essential terms and conditions of employment, and whether the control was direct and immediate.
While the new rule is much more employer friendly, employers should still take precaution in addressing whether they are joint employers for purposes of labor law violations.
Attorneys from Carr Allison’s employment team are available to assist with any questions about how this new ruling applies to your company, as well as steps to take to proactively protect your company from joint employment claims.
