Skip to Main Content
Thought Leadership

The Labor Law Insider: Joint Employer Standard Changes: Beware, Part I



Husch Blackwell's Tom Godar of the Labor Law Insider welcomes two new experts as they discuss the shifting standards for joint employer status and the significant impact they can have upon employers, both union and union-free. Tyler Hibler, a labor and employment expert with significant litigation experience, shares his insights from the Husch Blackwell Kansas City office, while Tracy Wolf, a partner with the Husch Blackwell Dallas office, shares her extensive experience in labor and employment counsel and litigation. These two briefly describe joint employer analysis not only under the National Labor Relations Act, but in contrast to the different standards employed under the Fair Labor Standards Act, Title VII, and federal tax and other laws. The Insiders also remind employers that the joint employer review differs as well under various state laws, such as unemployment compensation and worker’s compensation. This sets a whole series of traps for the unwary employer which might think that it has no responsibility for those individuals performing services at the workplace, only to discover that the law deems those individual employees and agents of the business. 

Tyler emphasizes that all these laws start with the basic premise that some level of control by the reputed joint employer is the center piece of any analysis. However, it is at that point that special attention must be paid to the tests and standards under the National Labor Relations Act. Tracy offers a brief history of joint employment standards and brings us to the rulemaking of the Trump administration in 2020 which was seen largely as employee friendly and created a framework that called for actual control of activities by the joint employer. 

In contrast, the Biden Board has initiated rulemaking only two years later that would significantly change the landscape. The largest significant change would not rest on actual control maintained by the employer, but would assess the potential ability to control aspects of the individual’s work life, such as performance, evaluation or compensation. This new standard could significantly affect the identification of those who can be represented in collective bargaining, who can participate in union elections or whose concerted activity could be protected under the National Labor Relations Act. Individuals and unions could claim unfair labor practice by an employer who thought that these persons were only subcontractors or the employees of a temp-to-hire or temporary employment arrangement. In this podcast, our Insiders begin to share some of those consequences. 

In our follow-up Labor Law Insider podcast on this subject, Tracy and Tyler not only flesh out some of the significant consequences that will occur as a result of this change (and it is clear that this change will likely take place as the rule becomes adopted, probably with only very modest variations), but also what steps an employer might take to guard itself against the unintended consequences of being engaged in joint employer status. Enjoy this podcast, and please be sure to listen to Part II here.

Read the Transcript

This transcript has been auto-generated using Adobe Premier Pro.

00;00;03;29 - 00;00;26;15

Hello and welcome to Husch Blackwell's Labor Law Insider podcast. I'm your host, Tom Godar And together with my Husch Blackwell colleagues and thought leaders from around the country, we will discuss and explore the ever-changing issues in the world of labor law. President Biden will promise to be the most pro-union president ever, and he is fulfilling that promise.

00;00;27;02 - 00;00;51;11

The next four years promises to be a wild ride, so buckle up and join us on the Labor Law Insider podcast. Hello and welcome once again to the Labor Law Insider Podcast. This is your host Tom Godar and we are in for a great ride today. I've got a couple of new labor law insiders to join us and it's been fun to talk about.

00;00;51;11 - 00;01;19;29

The topic, which is also very interesting and honestly is going to affect a whole lot of our clients and friends. The changes that are going to affect those who are engaged in what we'll call joint employer situations and how it's going to affect you in labor law as well as some other areas. A lot of our clients have the opportunity to use temp to hire us or bring in contractors or associated in various ways with those who are not showing up directly on their employment rolls.

00;01;19;29 - 00;01;43;04

But you know what? Our our world of regulation and law sometimes sees those who are paid on two different payrolls as being part of the same employer. That creates all sorts of interesting questions under the FLSA and so forth. But as I said, we'll spend most of our time talking about the labor issues which relate to who can be organized by a union, who is represented by a union.

00;01;44;08 - 00;02;15;24

Those kinds of things. But we'll arrange around a little bit. But first, I want to introduce our to insiders. It's really going to be fun to talk with Tracy Wolf and Tyler Hibler today. And Tyler is coming to us from our Kansas City office where he comes with not only terrific experience in labor and employment law, but he also comes as the former captain of the Baker University Football team, where he was the strong safety.

00;02;15;24 - 00;02;40;21

And he's now been a strong safety for a lot of our clients as we've worked through Conundrums. And Tyler's led them and Tracy Tracy's joining us from North Texas, part of our Dallas office for Husch Blackwell. She is a product of both TCU as an undergrad and Baylor and is now counted wise and wonderful, largely because she steered her life to a place where she can finally be an empty nester.

00;02;40;21 - 00;03;09;10

Congratulations on that one. It's great to hear that, Tracy. So good afternoon, folks. Good afternoon. Thanks for having us. Tom Yeah, it's going to be fun. And as I said, this topic is really, you know, one of those things like with so many others, it gets changed without ever having Congress meet. And the president signed a law into into action.

00;03;09;21 - 00;03;44;21

These get changed with sometimes decisions by the National Labor Relations Board, which gets changed by those who are sitting on the National Labor Relations Board based on which administration is in power, Democrat or Republican, tend very much to tend pro union and pro employer respectively. And so with the change in administration and I call it three changes from the Obama administration to the Trump administration to the Biden administration, we've watched some of these things, almost like a yo yo going up and down.

00;03;45;27 - 00;04;06;00

And so one of the questions we're going to ask ourselves is, so what I always the lawyer's question, if there's a joint employee employer issue, so what? Who cares? And I think we're going to find out from Tracy and Tyler that you are going to have to care. So, first of all, why don't you start off and Tyler, maybe you could check this out.

00;04;06;08 - 00;04;38;29

What kind of circumstances give rise to concern that an employer on either side of the joint employer situation might be looking at one that's seen as a joint employer situation under the various ABC C soup of various laws and regulations we have. Absolutely. That's a great starting point in analyzing situations where a joint employer relationships typically arise, are often situations where there's joint control or the ability to have joint control over an employee.

00;04;39;14 - 00;05;05;22

So what are we looking at there, Tom? We're looking at staffing situations, whether it's a temp attempt to hire or permanent staffing. Relationships could also be situations where you're working with independent contractors or subcontractors based upon the level of involvement with the organization. I think about manufacturing facilities where perhaps you have a maintenance contractor or team who's onsite security officers who are on site.

00;05;06;08 - 00;05;36;29

Things like that. Additionally, there's also a section of joint employment that's referred to as horizontal joint employment. So you may have a common employer, whether it would be a franchise, a restaurant, something of that nature where employees may work at different times for multiple locations, which are multiple legal employers are different entities, but they're still subject to the same control by the same overarching entity.

00;05;36;29 - 00;06;19;14

So really joint employment can come up in a whole host and variety of situations, which makes the recent actions by the National Labor Relations Board so important when it comes to rulemaking authority and and how we define a joint employment relationship and the potential exposure it carries and it goes beyond the NLRB. I mean, I have worked with trucking companies that have some those who own their own equipment and then get routes delivered and have special arrangements to purchase fuel and special arrangements which are created by the trucking company to help them purchase insurance and so forth.

00;06;19;26 - 00;06;38;12

Are they really employees and if so, for what purposes? Help me out, Tracy. Tell me a little bit or tell our audience a little bit more about the different laws, all of which might have some sort of control and maybe even different tests related to a joint employment setting.

00;06;39;17 - 00;07;14;01

Yeah, that that is a very good question, Tom. And it's it's interesting from the standpoint that we're we're looking at essentially the issue of whether or not there is a joint employer relationship. But under the different areas of the law, it's going to be in oftentimes a very different test. You've got one standard for the Fair, State Fair Labor Standards Act, Title seven, and the other statutes that protect against discrimination have one standard and then a very unique standard from the National Labor Relations Board.

00;07;14;09 - 00;07;49;28

And that is something that's changing. And the law is changing in many areas. And oftentimes, too, particularly with employers who have a nationwide business, it's different from state to state. They're state tests that come into play. So it's often difficult to determine exactly where where one stands. And I know our focus today. We're going to talk about particularly how this relates in labor in labor issues, and particularly to to how the national Labor Relations Act comes into play.

00;07;50;07 - 00;08;16;29

It's it is very confusing because the standard is changing. It changes from administration to administration. And there's different factors that are going to be controlling it at times. Often it does very much connect to whatever party is is in power and power at the time, be it the Democrats or the Republicans. And often times it's a lot more friendly towards employers.

00;08;16;29 - 00;08;41;05

In times like right now, it's kind of there's a shift back to more of the labor unions and the focus in the favor going into that division. So it's it's complex and it's difficult to navigate and navigate for companies. And that's why it's important to have attorneys that understand the differences and can kind of shepherd you through these changes.

00;08;42;07 - 00;09;06;08

And you talked about a variety of federal law, and then you touched on state law workers and unemployment compensation. Each state sets its own tests. I can tell you, I've had folks who assign people to go out and do displays in retail, groceries and other stores. Are they independent contractors or employees and truckers? As I mentioned, and I've had this come up in a variety of applications.

00;09;06;08 - 00;09;26;22

And you know what? The sticker shock can be just enormous if you get it wrong. And if you've had it wrong for two or three years under the Fair Labor Standards Act, holy cow. Suddenly people should have been paid minimum wage and overtime and all that sort of jazz that you didn't even contemplate. But just a little tease.

00;09;26;23 - 00;09;57;29

We'll talk about this again towards the end, but sort of a practical thought just as we start. What kind of things are employers asked to look for when they're saying, hmm, might I have a joint employer setting and we'll use the National Labor Relations Act sort of interpretations as a jumping off place. But wherever you'd like to go with that, what kind of things are employers going to be looking at and have been looking at without regard to which administration's in power?

00;09;59;20 - 00;10;33;09

Yeah, Tom, I'll jump in here. Yeah, I'll jump in here on this is, you know, the primary and guiding light principle is the idea of control. And it doesn't matter if it's a Republican administration, Democrat administration, whether we're talking about the FLSA or we're talking about the National Labor Relations Act or Title seven, the underlying issue is who has the ability to control or who does exercise control over the employment relationship.

00;10;34;03 - 00;10;58;06

With the diverging point, the problem is that's the unifying message. The problem is it's also the diverging point. It's also where each of these laws takes a different approach over what constitutes control and whether an entity has to have the actual control over an employee and exercise that actual control, or if it is simply the potential to control the employment relationship.

00;10;59;03 - 00;11;54;14

And as Tracy talked about before, depending upon where you're at in the country and what law you're subject to at that specific time in regard to that employment circumstance, control can be defined and interpreted by a whole host of different factors. For example, under under Title seven, the EEOC has identified 15 factors that they typically like employers to look at, which range from the ability to hire and fire, which is universally looked at as an ability to control a discipline of employees, providing tools, all sorts of different aspects of an employment relationship, the FLSA and traditionally looks at the economic realities test and turning whether or not the alleged joint employer or a proposed joint

00;11;54;14 - 00;12;31;00

employer is essential to the employment in terms of the economic reality. So there's a whole host of tests that are out there and implications for employers as we are going to focus on the NLRA and the NLRB and we'll talk about the Shirley in further detail. Well, the biggest difference in terms of where we were and where we're going is the idea of whether or not an employer has to exercise that actual control or whether it rests simply in the ability to control an employee.

00;12;31;18 - 00;13;10;27

That's really a breaking off point between the two administrations, the Trump administration and the Biden administration. That is a great overview and start. Tracy Tyler, going to give us a quick because we don't want to get too far to share but a quick sort of history maybe over the past decade or so of what we've seen from the National Labor Relations Board regarding the joint employer standards and how various cases or pronouncements or the most recent sort of request for participation in rulemaking gives us a sense of the drift or the change in this joint employer standard.

00;13;10;28 - 00;13;12;18

I'd like to jump on that one.

00;13;12;22 - 00;13;44;16

I'd be happy. Glad to jump in on that. Well, I think this the best place to start is probably what a lot of employers are probably familiar with the 2015 Browning Farris NLRB decision. And that that particular decision, of course, back in 2015, I think, got a lot of attention because prior to that time it was there was kind of an established test that I think for most employers was somewhat easy to understand.

00;13;44;16 - 00;14;29;16

Of course, it's going to vary across the across the country when you go into court issues. But with regard to how the NLRB viewed things, this particular test was was seen prior to Browning for Ferris decision was kind of seen as a little more simplistic. And I think when Browning Ferris came to be the the standard, a lot of employers were particularly disappointed because it became less easy or less simple to ascertain whether or not there was a joint employment and as a result of that, we saw in 2020 a new rule that, you know, that's fairly recent, only a couple of years ago.

00;14;29;26 - 00;14;31;01

That a couple of years ago.

00;14;31;01 - 00;15;03;12

Yeah, exactly. We're looking at a different administration now. But in February 2020, we had a rule come into play. I think it became effective in April of 2020 and that was was seen by employers as being a lot more a lot more narrowed and able to able to define. And it looked as things at things such as wages, benefits, hours, hiring, discharge and supervision, direction and discipline.

00;15;03;20 - 00;15;35;29

And just as as Tyler had mentioned earlier in doing these things, it gave the employers kind of a a a view of it's not that any one factor was determinative of whether or not such a relationship, the joint employer relationship exists, but it gave some guidance in that direction. And now essentially where we're looking at now historically, it's looks like it's going to change back to how it was essentially during the Browning Ferris decision years.

00;15;36;08 - 00;16;17;18
Speaker 2
And it's something that is, you know, it's it's very important for employers to pay attention to because it there are a lot of important factors that come from determining this relationship for example, whether or not the employer would be required to participate in the collective bargaining process, whether or not they'd be subject to joint and several liability for unfair labor practices, and also whether or not they would be subject to unlawful targeting as a primary employer through tactics such as picketing or secondary boycotts, unless they satisfy the requirements of the joint employer and employer standards.

00;16;17;18 - 00;16;29;00

So it's it's a it's a very important time. We're in a lot of uncertainty and I think a lot of concern for a lot of employers.

00;16;29;00 - 00;16;45;09

This is the reason we're talking about this now is that it's very topical, was just announced by the board that they're looking at rulemaking. And I guess before we go too far, why don't you give me 2 minutes on rulemaking, Tyler, as opposed to making

00;16;45;15 - 00;16;50;20

Stations just through the process of decisions coming from the National Labor Relations Board.

00;16;52;02 - 00;17;24;18

Well, yeah, the one minute. Yeah, absolutely. Hell, let me try to make make this civics lesson very brief here. Essentially, the rulemaking process is a more drawn out, at least in my view, a process which requires the publication of a potential rule, a comment period, and then the initiation of a rule from the board following a vote. That what it does, though, is that the establishment of a rule carries a more widespread authority, in my view.

00;17;24;19 - 00;17;47;01

You may disagree and establishes a clear standard in which all employers are expected to operate under. It's a big deal and there's no way to cut around it. It is a big deal. And as Tracy talked about going through the history, what we're seeing here is the pendulum swinging. Following the Browning first decision, we had basically 30 years of precedent.

00;17;47;12 - 00;18;11;16

The pendulum swung following the Browning first decision, one direction. The Trump administration came back in, swung the pendulum back the other way. And now we're kind of going back to the future, so to speak, with the Biden administration, kind of going Obama. Plus, in terms of what its rulemaking authority is, one and two, what its role will be.

00;18;12;22 - 00;18;57;20

Well, in the reality, and correct me if I'm wrong, is that by asking for the rules and if you read the rulemaking sort of comment request, we've already been told what this board is going to approve with some perhaps modest changes. They're going to approve a test which is, you know, going back to the Browning class decision, maybe even plus in terms of not just looking at the direct indicia of co employment status, but indirect that if it might, if it could, if there's the potential for co employer authority to take place, even though no employer has ever exercised or thought that they were going to exercise the type of authority that might technically be

00;18;57;20 - 00;19;03;14

available, but I phrased that and to over broad a way or is that kind of what we're looking at?

00;19;04;11 - 00;19;35;17

And I think that's exactly what we're looking at. Exactly. And that is the difficult. TS Yeah, that's one of the difficulties that employers will have under the new rule is situations where perhaps you reserve the ability to make a decision or have involvement within a certain process of the employment relationship and how that will inherently place you at risk and will subject you to participation, for example, in the CBA process.

00;19;35;17 - 00;19;44;29

So in dealing with collective bargaining units, it is a a wide net I guess is the best way to say it under the new rule.

00;19;45;22 - 00;20;07;19

Tyler, thanks so much for that summary. That's really helpful and it really sets us up well for phase two of the podcast where we're going to do Dove much more deeply with you and Tracie to some of the practical responses that we can expect to take in light of this much more employee and union friendly standard of joint employer status.

00;20;08;08 - 00;20;25;13

I'm sure that that's going to be terrific. And I thank all of you for joining us today and hope you'll be with us in a couple of weeks when the labor law insider moves to the second. In this series of podcasts on joint employer status and its implications for you, our friends and clients.


Thomas P. Godar

Of Counsel

Tyler C. Hibler


Tracy Wolf