Outsourcing Clients May Be Joint Employers Under NLRB Ruling

The National Labor Relations Board (NLRB) has recently changed the definition of joint employer — a change that has implications for the client-vendor outsourcing relationship. Prior to this ruling, the definition for joint employment was determined by the level of direct control over working conditions. Under the new ruling, a company that exerts indirect control over wages and terms and conditions of employment, such as in the case of outsourcing.

This means that a client could be held liable in the same way as a vendor for employment issues, such as improper layoffs.

In the latest episode of our podcast series, Nearshore Cafe, Prof. Michael Green from Texas A&M University discussed the implications of these changes to the outsourcing relationship and what clients and vendors can do to clarify their contractual relationship in light of this recent ruling.

Green is an elected fellow of The College of Labor and Employment Lawyers, an elected member of American Law Institute, a member of the executive of the ABA Labor Law Committee, and just been awarded the annual Paul Stephen Miller Memorial Award for his labor law stewardship.

Green said that clients outsourcing to US vendors from abroad may also be considered joint employers under this new ruling. Although he noted that the ruling may change, he advised that clients and vendors look closely at the terms of their relationship and how the NLRB regulations might apply in that situation.