In a landmark decision on Thursday, the National Labor Relations Board (“NLRB” or “Board”), by a 3-2 vote, determined that its long-standing “joint-employment jurisprudence” had grown “increasingly out of step with changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships, i.e., shift work, contract workers, and temporary employee relationships[,]” across the U.S.

The NLRB announced a new joint-employer rule in the case of a group of sanitation workers, writing that “the Board may find that two or more statutory employers are joint employers of the same statutory employees if they ‘share or codetermine those matters governing the essential terms and conditions of employment.’” An employer’s control over the employee need not be exercised “directly and immediately.” Joint employer status may now be established even where the employer’s control is indirect – such as through an intermediary. The Board’s previous approach, which was decades old, had been much narrower: one business could not be held responsible for employee-related conditions at another employer, unless the employer actually had direct control over the employees at issue.

The impact of the NLRB’s ruling is expected to be felt most acutely in business sectors that rely heavily on contract workers and employees of franchisees, such as the fast food and construction industries, and for temporary staffing agencies, and is expected to facilitate employee collective bargaining activity and make it easier for employees to claim the protections of federal workplace safety and other statutory protections. The Board is expected to apply the new joint-employer standard this fall in cases that are pending against McDonald’s Corp.