The National Labor Relations Board established the new joint-employer standard under a rule that takes effect for all employers — including both those with and without union employees — on Feb. 26, 2024. Not only does the new joint-employer rule significantly broaden the board’s definition of “employer,” it also increases potential liability and exposure for facilities when they engage staffing agency caregivers or other third-party workers.

Critically, under the new rule, the board can find that a facility is a joint employer with another entity under many circumstances. This may include circumstances where a facility reserves some authority to determine an essential term or condition of employment for the outside caregivers or workers, even if the facility never exercised such authority, or where a facility exerts so-called “indirect control” over the workers’ working conditions.

The board will apply the new joint-employer rule when investigating unfair labor practice charges and union election petitions, as well as when determining whether an entity has any potential collective bargaining obligations. The board’s actions also are watched carefully by other state and federal agencies that investigate and address employment-related issues, such as agencies responsible for handling employee wage payment and unemployment compensation claims and employer tax collection. The board’s new rule may result in other agencies expanding their similar rules for finding joint employer liability.

The development of this new joint-employer rule is just the most recent step in a long history of back-and-forth changes that seem to happen under each change in presidential administrations.  

Most recently, the board under the Trump administration issued a formal rule in 2020 that included a more employer-friendly joint-employer test. That 2020 rule reestablished a narrower threshold for determining joint-employer status under the NLRA, requiring parties trying to prove such liability to show that an employer exercised “substantial direct and immediate control” over workers’ terms and conditions of employment. 

However, soon after changes to the board’s make-up that occurred under the current Biden administration, the board began taking steps that resulted in the new rule that goes into effect on Feb. 26 — assuming there are no successful legal challenges that stop its implementation.

How it works

Once in effect, the board will find a joint-employer relationship if the “employers share or codetermine those matters governing employees’ essential terms and conditions of employment.” 

Sharing or codetermining working conditions will include both reserving the right or having authority to control or actually controlling any of the employees’ essential terms and conditions of employment. Essential terms and conditions of employment include: wages, benefits and other compensation; hours of work and scheduling; assignment of duties to be performed; supervision of the performance of duties; work rules and directions governing the manner, means and methods of the performance of duties and the grounds for discipline; tenure of employment, including hiring and discharge; and working conditions related to the safety and health of employees.  

As you can see, under these very broad categories, for highly regulated long-term care facilities that are explicitly required to maintain minimum staffing levels and ensure all onsite workers comply with health, safety and other care requirements, joint-employer status might be found with practically any third-party worker who provides onsite services. 

Under the prior joint-employer standard, while a finding of joint-employer status between a facility and its agency or vendor workers was possible, the board looked for evidence of significant, direct control over the terms and conditions of the worker’s employment. 

This was still a real risk for long-term care facilities, particularly for onsite, agency-employed caregivers, where a facility inevitably must exercise authority to supervise or direct such workers. Under the new rule, a finding of joint-employer status may be as simple as proving that a facility has health and safety rules that apply to all onsite workers. 

Facilities of all sizes which are already the target of union organizing efforts may find themselves subject to brand new collective bargaining obligations and may have greater exposure for unfair labor practice violations. 

Now is the time for facilities to consider their third-party worker relationships and contracts with staffing agencies and other entities to look at potential joint-employer liability issues. Review your contracts and agreements with all entities that supply workers who work in your facilities.  Carefully consider whether services are necessary for current business operations, whether the services can be consolidated with fewer providers, whether work needs to be performed onsite or at the facility’s specific control or direction, etc. 

If control over the workers is unnecessary, consider eliminating open-ended contract language that reserves all rights to direct and control the workers to the facility. If the workers are necessary, make sure facility staff know whether direct or indirect control and direction of the workers’ tasks is required under the specific circumstances and train managers and supervisors accordingly. 

The risk of a joint-employer finding will be necessary under many circumstances involving onsite agency caregivers, but for other workers, it may not be and facilities should be considering the issue for all work performed onsite. Taking the time to do so now may help avoid major potential risk of a finding of joint employer status down the line.  

Neville M. Bilimoria is a partner in the Chicago office of the Health Law Practice Group and member of the Post-Acute Care And Senior Services Subgroup at Duane Morris LLP, as well as the Cannabis Law Practice at Duane Morris LLP; nmbilimoria@duanemorris.com.

Jennifer Long is a Special Counsel in the Chicago Office of the Employment, Labor, Benefits and Immigration Practice Group at Duane Morris LLP, JLong@duanemorris.com.  Neville M. Bilimoria is a partner in the Chicago Office of the Health Law Practice Group and member of the Post-Acute Care And Senior Services Subgroup at Duane Morris LLP.

The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.

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The Wednesday ruling by a judge in West Virginia, where Act Fast is based, means that more than 200 workers previously tagged as independent contractors can go after the pharmaceutical company and its delivery service for back wages they claim they are owed.

Omnicare had sought a summary motion to be released from the case. But U.S. District Judge Irene C. Berger favored the arguments by plaintiff Eric Young. She specifically noted in her ruling Omnicare’s extensively detailed contract, which mapped routes, scheduled timing and even gave Omnicare the power to recommend specific drivers be terminated.

“This amount of control exercised by Omnicare clearly amounts to the ability to direct and control the plaintiffs,” Berger wrote.

Young is joined by fellow delivery drivers who claim both companies violated the Federal Labor Standards Act by improperly classifying them as “independent contractors” to avoid paying overtime.

Another judge certified the class action lawsuit last August. In it, attorneys for the plaintiffs claim that when drivers began delivering medical and pharmaceutical products, they were required to sign “Independent Contractor Agreements.” Because of those agreements, the lawsuit alleges, the drivers were improperly classified as independent and paid per delivery or route rather than by the hour.

The drivers claim that under federal law they were actually employees who were entitled to minimum wage and overtime pay.

An Omnicare spokesman declined comment, citing the ongoing case. The company, however, argued in filings that it needed detailed contracts with Act Fast to ensure quality control and compliance and had not intended to act as an employer.