# Standard for Determining Joint Employer Status

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2023-23573

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** October 27, 2023
- **Citation:** 88 FR 73946

## Text

NATIONAL LABOR RELATIONS BOARD
29 CFR Part 103
RIN 3142-AA21
Standard for Determining Joint Employer Status

AGENCY:

National Labor Relations Board.

ACTION:

Final rule.

SUMMARY:

The National Labor Relations Board has decided to issue this final rule for the purpose of carrying out the National Labor Relations Act (NLRA or Act) by rescinding and replacing the final rule entitled “Joint Employer Status Under the National Labor Relations Act,” which was published on February 26, 2020, and took effect on April 27, 2020. The final rule establishes a new standard for determining whether two employers, as defined in the Act, are joint employers of particular employees within the meaning of the Act. The Board believes that this rule will more explicitly ground the joint-employer standard in established common-law agency principles and provide guidance to parties covered by the Act regarding their rights and responsibilities when more than one statutory employer possesses the authority to control or exercises the power to control particular employees' essential terms and conditions of employment. Under the final rule, an entity may be considered a joint employer of another employer's employees if the two share or codetermine the employees' essential terms and conditions of employment.

DATES:

Effective December 26, 2023. This rule has been classified as a major rule subject to Congressional review. However, at the conclusion of the congressional review, if the effective date has been changed, the National Labor Relations Board will publish a document in the
Federal Register
to establish the new effective date or to withdraw the rule.

FOR FURTHER INFORMATION CONTACT:

Roxanne L. Rothschild, Executive Secretary, National Labor Relations Board, 1015 Half Street SE, Washington, DC 20570-0001, (202) 273-1940 (this is not a toll-free number), 1-866-315-6572 (TTY/TDD).

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Background

Section 2(2) of the National Labor Relations Act defines an “employer” to include “any person acting as an agent of an employer,
directly or indirectly.
” 29 U.S.C. 152(2) (emphasis added). In turn, the Act provides that the “term `employee' shall include any employee, and shall not be limited to the employees of a particular employer, unless [the Act] explicitly states otherwise . . . .” Id. 152(3). Section 7 of the Act provides that employees shall have the right

to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection and to refrain from any or all such activities.

Id. 157. Section 9(c) of the Act authorizes the Board to process a representation petition when employees wish to be represented for collective bargaining. Id. 159(c). And Section 8(a)(5) makes it an unfair labor practice for an employer to refuse to bargain collectively with the representatives of its employees. Id. 158(a)(5).

The Act does not specifically address situations in which statutory employees are employed jointly by two or more statutory employers (
i.e.,
it is silent as to the definition of “joint employer”), but, as discussed below, the Board, with court approval, has long applied common-law agency principles to determine when one or more entities share or codetermine the essential terms and conditions of employment of a particular group of employees.

B. The Development of Joint-Employment Law Under the National Labor Relations Act

As set forth more fully in the Board's September 4, 2022 notice of proposed rulemaking (the NPRM), in
Boire
v.
Greyhound Corp.,
376 U.S. 473, 481 (1964), a representation case involving the relationship between a company operating a bus terminal and its cleaning contractor, the Supreme Court explained that the question of whether Greyhound “possessed sufficient control over the work of the employees to qualify as a joint employer” was “essentially a factual question” for the Board to determine.
1

On remand, the Board held that Greyhound and the cleaning contractor were joint employers of the employees at issue because they “share[d], or codetermine[d], those matters governing essential terms and conditions of employment.”
Greyhound Corp.,
153 NLRB 1488, 1495 (1965), enfd. 368 F.2d 776 (5th Cir. 1966). For nearly two decades following the Board's decision in
Greyhound,
the Board regarded the right to control employees' work and their terms and conditions of employment as determinative in analyzing whether entities were joint employers of particular employees. Board precedent from this time period generally did not require a showing that both putative joint employers actually or directly exercised control.
2

The

Board's reliance on reserved or indirect control in joint-employer cases during this period was well within the mainstream of both Board and judicial treatment of such control in the independent contractor context, including in non-labor-law settings, and reviewing courts broadly endorsed the Board's consideration of forms of reserved and indirect control as probative in the joint-employer analysis.
3

1
See
Standard for Determining Joint-Employer Status,
87 FR 54641 (Sept. 7, 2022).

2
See,
e.g., Globe Discount City,
209 NLRB 213, 213-214 & fn. 3 (1974) (finding joint employer based on license agreements, without reference to any exercise of authority);
Lowery Trucking Co.,
177 NLRB 13, 15 (1969) (finding joint employer based in part on unexercised right to reject other employer's employee), enfd. sub nom.
Ace-Alkire Freight Lines
v.
NLRB,
431 F.2d 280 (8th Cir. 1970) (observing that “[w]hile [putative joint employer] never rejected a driver hired by [supplier], it had the right to do so”);
United Mercantile, Inc.,
171 NLRB 830, 831-832 (1968) (finding joint employer based on license agreements, without reference to any exercise of authority);
Floyd Epperson,
202 NLRB 23, 23 (1973) (finding joint employer based in part on indirect control over wages and discipline), enfd. 491 F.2d 1390 (6th Cir. 1974);
Buckeye Mart,
165 NLRB 87, 88 (1967) (finding Buckeye joint employer of employees of Fir Shoe based solely on contractually reserved authority over, inter alia, discharge decisions and rules and regulations governing employee conduct), enfd. 405 F.2d 1211 (6th Cir. 1969);
Jewel Tea Co.,
162 NLRB 508, 510 (1966) (finding joint employer based on contractually reserved, unexercised power to effectively control hire, discharge, wages, hours, terms, “and other conditions of employment” and observing: “That the licensor has not exercised such power is not material, for an operative legal predicated for establishing a joint-employer relationship is a reserved right in the licensor to exercise such control”);
Value Village,
161 NLRB 603, 607 (1966) (finding joint employer based on operating agreement and observing “[s]ince the power to control is present by virtue of the operating agreement, whether or not exercised, we find it unnecessary to consider the actual practice of the parties regarding these matters as evidenced by the record.”);
Spartan Department Stores,
140 NLRB 608, 608-610 & fn. 1, 4 (1963) (finding joint employer based solely on uniform license agreements);
Taylor's Oak Ridge Corp.,
74 NLRB 930, 938 (1947) (finding joint employer based solely on contractually reserved authority over numerous essential terms and conditions of employment, and observing: “That the Employer's power of control may not in fact have been exercised is immaterial, since the right to control, rather than the actual exercise of that right, is the touchstone of the employer-employee relationship.”);
General Motors Corp. (Baltimore, MD),
60 NLRB 81 (1945) (finding joint employer based on contractually reserved authority, despite testimony that entity exercised no control in practice);
Anderson Boarding & Supply Co.,
56 NLRB 1204, 1206 (1944) (finding joint employer based on unexercised contractual authority);
Bethlehem-Fairfield Shipyard, Inc.,
53 NLRB 1428, 1431 (1943) (finding joint employer based on reserved rights to dismiss employees and set wage scales, despite crediting testimony entity actually exercised no control).

Our colleague observes that a number of these cases involve department store licensing relationships. He argues that the Board did not purport to apply general common-law agency principles in these cases but instead applied a distinctive analysis focused on “whether the department store was in a position to influence the licensee's labor relations policies.” We disagree. The cases we cite above, including the department store cases, ultimately rest on early post-Taft-Hartley Board decisions that are consistent with the

final rule's approach. For example, in one early case, the Board held that “an employer-employee relationship is established where the [entity] for whom services are rendered possesses the right of control over such fundamental matters as the employees' day-to-day operations and their basic working conditions.”
Franklin Simon & Co.,
94 NLRB 576, 579 (1951). In that case, the Board found that a department store and its licensee were joint employers because “a substantial right of control over matters fundamental to the employment relationship is retained and exercised by
both
[entities].” Id. (emphasis in original). We find these statements instructive and see no indication that the Board intended such statements to apply solely in the department store context, as our colleague implies. As for
Buckeye Mart,
supra, which our colleague suggests is at odds with the broader principles we argue animated the Board's early decisions, we note that in that case the Board found a department store to jointly employ the employees of one of its licensees but not the other. At most, this case shows that the Board applied the relevant standard to find one joint-employment relationship but not another based on the particular language of the license agreements at issue. It does not call the relevant standard or its underlying principles into question.

3
See,
e.g., Carrier Corp.
v.
NLRB,
768 F.2d 778, 781 (6th Cir. 1985) (finding joint employer based in part on entity's consulting about wages and benefits with direct employer and reserved authority to request removal or dismissal of employees);
International Chemical Workers Union Local 483
v.
NLRB,
561 F.2d 253, 255 (D.C. Cir. 1977) (“Whether Cabot and P & K were joint employers depends upon the amount of actual
and potential
control that Cabot had over the replacement employees. This in turn, to a certain extent, is dependent upon the amount and nature of control that Cabot exercised
and was authorized to exercise
under the contract.”) (emphasis added);
Vaughn Bros.,
94 NLRB 382, 383 (1951) (“Under this [common-law] test an employment relationship exists where the person for whom the services are performed reserves the right, even though not exercised, to control the manner and means by which the result is accomplished.”);
Alaska Salmon Industry, Inc. (Seattle Wash),
81 NLRB 1335, 1338 (1949) (“[A]n employee relationship . . . is found to exist where the person for whom the services are performed reserves the right (even if not exercised) to control the manner and means by which the result is accomplished.”);
San Marcos Telephone Co.,
81 NLRB 314, 317 (1949) (“Under [common-law] doctrine, an employee relationship, rather than that of an independent contractor, exists where the person for whom the services are performed reserves the right (even if not exercised) to control the manner and means by which the result is accomplished.”);
Steinberg and Co.,
78 NLRB 211, 220-221, 223 (1948) (“Under [common-law] doctrine it has been generally recognized that an employer-employee relationship exists where the person for whom the services are performed reserves the right to control the manner and means by which the result is accomplished.”), enf. denied 182 F.2d 850 (5th Cir. 1950). See also judicial decisions discussed in Sec. I.D., below.

In
NLRB
v.
Browning-Ferris Industries of Pennsylvania, Inc.,
691 F.2d 1117, 1123 (3d Cir. 1982), enfg. 259 NLRB 148 (1981), the United States Court of Appeals for the Third Circuit endorsed the Board's “share or codetermine” formulation of the joint-employer standard. While later Board decisions continued to adhere to this formulation, they also began imposing new requirements that the Board now believes lacked a clear basis in established common-law agency principles or prior Board or judicial decisions. See
TLI, Inc.,
271 NLRB 798 (1984);
Laerco Transportation,
269 NLRB 324 (1984). In particular, these decisions began requiring (1) that a putative joint employer “actually” exercise control, (2) that such control be “direct and immediate,” and (3) that such control not be “limited and routine.” See,
e.g., AM Property Holding Corp.,
350 NLRB 998, 999-1003 (2007), enfd. in relevant part sub nom.
Service Employees International Union, Local 32BJ
v.
NLRB,
647 F.3d 435 (2d Cir. 2011);
Airborne Express,
338 NLRB 597, 597 (2002);
Flagstaff Medical Center,
357 NLRB 659, 666-667 (2011).

In 2015, the Board restored and clarified its traditional, common-law based standard for determining whether two employers, as defined in Section 2(2) of the Act, are joint employers of particular employees within the meaning of Section 2(3) of the Act. See
Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery,
362 NLRB 1599 (2015) (
BFI
). Consistent with established common-law agency principles, and rejecting the control-based restrictions that the Board had previously established without explanation, the Board announced that it would consider evidence of reserved and indirect control over employees' essential terms and conditions of employment when analyzing joint-employer status.

While
BFI
was pending on review before the United States Court of Appeals for the District of Columbia Circuit, and following a change in the Board's composition, a divided Board issued a notice of proposed rulemaking with the goal of establishing a joint-employer standard that departed in significant respects from
BFI.
4

During the comment period, the District of Columbia Circuit issued its decision in
Browning-Ferris Industries of California, Inc.
v.
NLRB,
911 F.3d 1195, 1222 (D.C. Cir. 2018), upholding “as fully consistent with the common law the Board's determination that both reserved authority to control and indirect control can be relevant factors in the joint-employer analysis,” and remanding the case to the Board to refine the new standard.
5

4
See
The Standard for Determining Joint Employer Status,
83 FR 46681 (Sept. 14, 2018). Then-Member McFerran dissented.

5
The court specifically required that on remand the Board clarify its “articulation and application of the indirect-control element” of the
BFI
joint-employer standard to the extent that the Board had not “distinguish[ed] between indirect control that the common law of agency considers intrinsic to ordinary third-party contracting relationships, and indirect control over the essential terms and conditions of employment.” 911 F.3d at 1222-1223. The court further instructed the Board on remand to more explicitly apply the second part of the
BFI
standard (“whether the putative joint employer possesses sufficient control over employees' essential terms and conditions of employment to permit meaningful collective bargaining”), and specifically, to clarify “which terms and conditions are `essential' to permit `meaningful collective bargaining,' ” and what such bargaining “entails and how it works in this setting.” Id. at 1221-1222 (quoting 362 NLRB at 1600). After accepting the court's remand, a newly constituted Board declined to clarify the
BFI
standard in any respect, instead finding that “retroactive application of any clarified variant of [that standard] in this case would be manifestly unjust.”
Browning-Ferris Industries of California, Inc.,
369 NLRB No. 139, slip op. 1 (2020), vacated and remanded, 45 F.4th 38 (D.C. Cir. 2022). As discussed below, and contrary to the view of our dissenting colleague, the instant rule fully explicates the indirect-control element in Section IV and V.

Thereafter, on February 26, 2020, the Board promulgated a final rule that again introduced control-based restrictions that narrowed the joint-employer standard.
6

In light of the District of Columbia Circuit's decision in
BFI
v.
NLRB,
the Board modified the proposed rule to “factor in” evidence of indirect and reserved control over essential terms and conditions of employment, but only to the extent such indirect and/or reserved control “supplements and reinforces” evidence that the entity also possesses or exercises direct and immediate control over essential terms and conditions of employment.
7

The final rule also explained that establishing that an entity “shares or codetermines the essential terms and conditions of another employer's employees” requires showing that the entity “possess[es] and exercise[s] such substantial direct and immediate control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningfully affects matters relating to the employment

relationship with those employees.”
8

In turn, the final rule defined “substantial direct and immediate control” to mean “direct and immediate control that has a regular or continuous consequential effect on an essential term or condition of employment of another employer's employees” and “substantial” to exclude control that is “only exercised on a sporadic, isolated, or de minimis basis.”
9

The final rule set forth an “exhaustive” list of essential terms and conditions of employment comprised of “wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction” and discussed some examples of conduct that would or would not rise to the level of direct and immediate control of each term or condition on the list.
10

6
See
Joint Employer Status Under the National Labor Relations Act,
85 FR 11184 (Feb. 26, 2020).

7
Id. at 11185-11186, 11194-11198 & 11236. The final rule defined “indirect control” as “indirect control over essential terms and conditions of employment of another employer's employees but not control or influence over setting the objectives, basic ground rules, or expectations for another entity's performance under a contract.” Id. at 11236.

8
Id. at 11235.

9
Id. at 11236.

10
Id. at 11235-11236.

C. The Notice of Proposed Rulemaking

On September 7, 2022, the Board issued a new joint-employer NPRM. 87 FR 54641, 54663 (September 7, 2022). In the NPRM, the Board detailed recent developments in its joint-employer law. The Board noted that the Board's 2020 final rule (2020 rule) marked the first occasion when the Board addressed joint-employer doctrine through rulemaking. The NPRM stated the Board's preliminary view, subject to comments, that the 2020 rule's embrace of control-based restrictions unnecessarily narrowed the common law and threatened to undermine the goals of Federal labor law. The NPRM invited comments on these issues and on all aspects of the proposed rule, seeking input from employees, employers, and unions regarding their experience in workplaces where multiple entities have authority over the workplace.

The Board set an initial comment period of 60 days with 14 additional days allotted for reply comments. Thereafter, the Board extended these deadlines to allow interested parties to comment for an additional 30 days.
11

11
The NPRM set the deadline for initial comments as November 7, 2022, and comments replying to comments submitted during the initial comment period were due November 21, 2022. 87 FR at 54641. On October 14, 2022, the Board extended the deadlines for submitting initial and reply comments for 30 days, to December 7, 2022, and December 21, 2022, respectively. 87 FR 63465 (October 19, 2022).

D. Relevant Common Law Principles

As discussed in more detail below, the Board has concluded, after careful consideration of relevant comments, that the 2020 rule must be rescinded because it is contrary to the common-law agency principles incorporated into the Act when it was adopted and, accordingly, is not a permissible interpretation of the Act.
12

Although we believe that the Board is required to rescind the 2020 rule, we would do so even if that rule were valid because it fails to fully promote the policies of the Act, as explained below.

12
Our dissenting colleague suggests that the 2020 rule is defensible, as a discretionary choice, to decline to exert joint-employer jurisdiction over entities who might be statutory employers by virtue of reserved but unexercised control, but who have not actually exercised their authority to control terms and conditions of employment of another entity's employees. Assuming arguendo that the Board could exercise its discretion to decline jurisdiction in this manner, the 2020 rule nowhere presents that rationale as underlying its actual-exercise requirement. Moreover, any such claim is inconsistent with our dissenting colleague's additional assertion, discussed further below, that the current final rule goes “beyond the boundaries of the common law” by eliminating the 2020 rule's actual-exercise requirement.

First, it is well established—and our dissenting colleague agrees—that the statutory terms “employer” and “employee” have their common-law meaning, and that the common law accordingly governs the Board's joint-employer analysis. See,
e.g., BFI
v.
NLRB,
911 F.3d at 1207-1208. In the preamble to the proposed rule, the Board (quoting the District of Columbia Circuit, id. at 1208-1209) acknowledged that “Congress has tasked the courts, and not the Board, with defining the common-law scope of `employer' ” and that “the common-law lines identified by the judiciary” thus delineate the boundaries of the “policy expertise that the Board brings to bear” on the question of whether a business entity is a joint employer of another employer's employees under the Act. 87 FR at 54648. Accordingly, in defining the types of control that will be sufficient to establish joint-employer status under the Act, the Board looks for guidance from the judiciary, including primary articulations of relevant principles by judges applying the common law, as well as secondary compendiums, reports, and restatements of these common law decisions, focusing “first and foremost [on] the `established' common-law definitions at the time Congress enacted the National Labor Relations Act in 1935 and the Taft-Hartley Amendments in 1947.” Id. at 1209 (citations omitted).
13

13
Our dissenting colleague implicitly criticizes us for citing “a plethora of decisions (including state law cases more than a hundred years old), the majority of which focus on independent contractor, workers' compensation, and tort liability matters.” We find it entirely appropriate, however, to seek guidance on the meaning of common-law terms in the Act in judicial opinions where common-law issues most frequently arise, written by state judges primarily responsible for applying the common law, from time periods that shed light on the meaning of those terms when Congress used them.

After consideration of relevant comments, the Board has concluded that the actual-exercise requirement reflected in the 2020 rule is (as described in relevant detail below) is contrary to the common-law agency principles that must govern the joint-employer standard under the Act and that the Board has no statutory authority to adopt such a requirement. The Board has further concluded that the policies of the Act, consistent with the common-law principles governing the Act's interpretation, make it appropriate for the Board to give determinative weight to the existence of a putative joint employer's authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect, such as through an intermediary.
14

14
Contrary to our dissenting colleague, apart from recognizing that the Board must follow common-law agency principles in determining who is an “employer” and an “employee” under Sec. 2 of the Act, we do not conclude that the common law dictates the specific details of the joint-employer standard we articulate herein. Rather, as discussed in more detail above and below, the final rule reflects our policy choices, within the bounds of the common law, in furtherance of the policy of the United States, as set forth in Sec. 1 of the Act, to encourage the practice and procedure of collective bargaining, including by providing a mechanism by which an entity's rights and obligations under the Act may be accurately aligned with its authority to control employees' essential terms and conditions of employment.

1. Reserved Control

First, as previously set forth in the NPRM,
15

long before the 1935 enactment of the Act, the Supreme Court recognized and applied a common-law rule that “the relation of master and servant exists whenever the employer
retains the right
to direct the manner in which the business shall be done, as well as the result to be accomplished, or, in other words, `not only what shall be done, but how it shall be done.' ”
Singer Mfg. Co.
v.
Rahn,
132 U.S. 518, 523 (1889) (emphasis added) (quoting
Railroad Co.
v.
Hanning,
82 U.S. 649, 657 (1872)). The Court in
Singer
affirmed the holding below that a worker was an employee
16

of a company because the Court concluded that the company had contractually reserved such control over

the performance of the work that it “might, if it saw fit, instruct [the worker] what route to take, or even what speed to drive.” Id. at 523. In reaching this conclusion, the Court relied solely on the parties' contract and did not discuss whether or in what manner the company had ever actually exercised any control over the terms and conditions under which the worker performed his work. In other words, the Court found a common-law employer-employee relationship based on contractually reserved control without reference to whether or how that control was exercised.
17

15
87 FR at 54648-54650.

16
As we explained more fully in the NPRM, a “servant” is an employee. 87 FR at 54645 fn. 28. See,
e.g.,
30 C.J.S.
Employer—Employee
sec. 1 (2022) (“The terms `servant' and `employee' are interchangeable.”); Horace Gray Wood,
A Treatise on the Law of Master and Servant; Covering the Relation, Duties and Liabilities of Employers and Employees
(1877).

17
See also
Chicago Rock Island & Pac. Ry. Co.
v.
Bond,
240 U.S. 449, 456 (1916) (worker was not employee of railroad company where contract provided “company
reserves and holds no control
over [worker] in the doing of such work other than as to the results to be accomplished,” and Court found company “did not
retain the right
to direct the manner in which the business should be done, as well as the results to be accomplished, or, in other words, did not
retain control
not only of what should be done, but how it should be done.”) (emphasis added);
Little
v.
Hackett,
116 U.S. 366, 376 (1886) (“[I]t is this
right to control
the conduct of the agent which is the foundation of the doctrine that the master is to be affected by the acts of his servant.”) (emphasis added) (quoting
Bennet
v.
New Jersey R.R. & Transp. Co.,
36 N.J.L. 225 (N.J. 1873)).

We are puzzled by our colleague's suggestion that
Singer
somehow fails to support the proposition that contractual authority to control can establish a joint-employer relationship because the company engaged the worker and compensated him for his work. As discussed further below, ordinary contract terms providing generally for engaging workers and setting general price terms are common features of any independent-contractor arrangement, and are, accordingly, not relevant to either the joint-employer analysis or the common-law employer-employee analysis.

Between the Court's decision in
Singer
and the relevant congressional enactments of the NLRA in 1935 and the Taft-Hartley amendments in 1947, Federal courts of appeals and State high courts consistently followed the Supreme Court in emphasizing the primacy of the right of control over whether or how it was exercised in decisions that turned on the existence of a common-law employer-employee relationship, including in contexts involving more than one potential employer. For example, in 1934, the Supreme Court of Missouri examined whether a worker was an “employee” of two companies under a State workers' compensation statute—the terms of which the court construed “in the sense in which they were understood at common law”—and affirmed that “the essential question is not what the companies did when the work was being done, but whether they had a right to assert or exercise control.”
18

And, in 1945, the Court of Appeals for the District of Columbia Circuit explained that, in distinguishing employees from independent contractors, “it is the right to control, not control or supervision itself, which is most important.”
19

18

Maltz
v.
Jackoway-Katz Cap Co.,
82 SW2d 909, 912, 918 (Mo. 1934). See also
McDermott's Case,
186 NE 231, 232-233 (Mass. 1933) (“One may be a servant though far away from the master, or so much more skilled than the master that actual direction and control would be folly, for it is the right to control, rather than the exercise of it that is the test.”);
Larson
v.
Independent School Dist No. 11J of King Hill,
22 P.2d 299, 301 (Idaho 1933) (“It is not necessary that control be exercised, if the right of control exists.”);
Gordon
v.
S.M. Byers Motor Car Co.,
164 A. 334, 335-336 (Pa. 1932) (“The control of the work reserved in the employer which makes the employee a mere servant . . . means a power of control, not necessarily the exercise of the power.”) (internal quotation and citation omitted);
Brothers
v.
State Industrial Accident Commission,
12 P.2d 302, 304 (Or. 1932) (“[T]he true test of the relationship of employer and employee is not the actual exercise of control, but the right to exercise control.”) (internal quotation and citation omitted);
Murrays Case,
154 A. 352, 354 (Me. 1931) (“Authorities are numerous and uniform that the vital test is to be found in the fact that the employer has or not retained power of control or superintendence over the employee or contractor. The test of the relationship is the right to control. It is not the fact of actual interference with the control, but the right to interfere that makes the difference between an independent contractor and a servant or agent. There is no conflict as to this general rule”) (internal quotation and citation omitted);
Van Watermeullen
v.
Industrial Commission,
174 NE 846, 847-848 (Ill. 1931) (“One of the principal factors which determine whether a worker is an employee or an independent worker is the matter of the right to control the manner of doing the work, not the actual exercise of that right.”);
Norwood Hospital
v.
Brown,
122 So. 411, 413 (Ala. 1929) (“[T]he ultimate question . . . is not whether the employer actually exercised control, but whether it had a right to control.”).

19

Grace
v.
Magruder,
148 F.2d 679, 681 (D.C. Cir. 1945). See also
Industrial Commission
v.
Meddock,
180 P.2d 580, 584 (Ariz. 1947) (“It is the right to control rather than the fact that the employer does control that determines the status of the parties, and this right to control is, in turn, tested by those standards applicable to the facts at hand.”);
D.M. Rose & Co.
v.
Snyder,
206 SW 2d 897, 904 (Tenn. 1947) (internal quotations and citations omitted) (“[The] right of control is the distinguishing mark which differentiates the relation of master and servant from that of employer and independent contractor . . . . Wherever the defendant has had such right of control, irrespective of whether he exercised it or not, he has been held to be the responsible principal or master.”);
Green Valley Coop. Dairy Co.
v.
Industrial Comm'n,
27 NW 2d 454, 457 (Wis. 1947) (citation omitted) (“It is quite immaterial whether the right to control is exercised by the master so long as he has the right to exercise such control.”);
Bobik
v.
Industrial Comm'n,
64 NE 2d, 829, (Ohio 1946) (“[I]t is not, however, the actual exercise of the right by interfering with the work but rather the right to control which constitutes the test.”);
Cimorelli
v.
New York Cent. R. Co.,
148 F.2d 575, 578 (6th Cir. 1945) (“The fact of actual interference or exercise of control by the employer is not material. If the existence of the right or authority to interfere or control appears, the contractor cannot be independent.”);
Dunmire
v.
Fitzgerald,
37 A.2d 596, 599 (Pa. 1944) (in determining “who was the controlling master of the borrowed employe[e], . . . . The criterion is not whether the borrowing employer in fact exercised control, but whether he had the right to exercise it.”);
Bush
v.
Wilson & Co.,
138 P.2d 457, 461 (Kan. 1943) (“[W]hether a person is an employee of another depends upon whether the person who is claimed to be an employer had a right to control the manner in which the work was done. It has been pointed out many times that this means not actually the exercise of control, but does mean the right to control.”);
Ross
v.
Schneider,
27 SE 2d 154, 157 (Va. 1943) (quoting
Murray's Case,
154 A. 352, 354 (Me. 1931)) (“Authorities are numerous and uniform that the vital test is to be found in the fact that the employer has or not retained power of control or superintendence over the employee or contractor. `The test of the relationship is the right to control. It is not the fact of actual interference with the control, but the right to interfere that makes the difference between an independent contractor and a servant or agent.'
Tuttle
v.
Embury-Martin Lumber Co.,
[158 NW 875, 879 (Mich. 1916)].”);
Jones
v.
Goodson,
121 F.2d 176, 179 (10th Cir. 1941) (“[T]he legal relationship of employer and employee . . . exists when the person for whom services are performed has the right to control and direct . . . the details and means by which [the service] is accomplished. . . . it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so.”);
S.A. Gerrard Co.
v.
Industrial Accident Comm'n,
110 P.2d 377 (Cal. 1941) (“[T]he right to control, rather than the amount of control which was exercised, is the determinative factor.”).

Unsurprisingly, early twentieth century secondary authority similarly distills from the cases a common-law rule under which the right of control establishes the existence of the common-law employer-employee relationship, without regard to whether or how such control is exercised. For example, in 1922, an American Law Report (A.L.R.) annotation states as black-letter law that:

In every case
which turns upon the nature of the relationship between the employer and the person employed, the essential question to be determined is
not whether the former actually exercised control
over the details of the work,
but whether he had a right to exercise that control.
20

20

General discussion of the nature of the relationship of employer and independent contractor,
19 A.L.R. 226 at sec. 7 & fn. 1 (1922) (emphasis added) (citations omitted). A 1931 A.L.R. annotation similarly reports that “[i]t is not the fact of actual interference or exercise of control by the employer which renders one a servant rather than an independent contractor, but the existence of the right or authority to interfere or control.”
Tests in determining whether one is an independent contractor,
75 A.L.R. 725 (1931).

Other, earlier secondary authority was also consistent with this view. For example, the second edition of
The American & English Encyclopedia of Law,
published over several years spanning the turn of the century, explains that “[t]he relation of master and servant exists where the employer has
the right
to select the employee;
the power
to remove and discharge him; and
the right
to direct both what work shall be done and the way and manner in which it shall be done.” 20 The American & English Encyclopedia of Law 12
Master and Servant
(2d ed. 1902) (emphasis added) (citations omitted). Likewise, in 1907, the Cyclopedia of Law and Procedure defines “master,” inter alia, as “[o]ne who not only prescribes the end, but directs,
or at any time may direct,
the means and methods of doing the work.” 26
Cyclopedia of Law and Procedure
966 fn. 2
Master and Servant
(1907) (emphasis added) (citations omitted). The 1925 first edition of
Corpus Juris
echoes the same definitions set forth in the

Cyclopedia,
and additionally notes state high court common-law authority holding that “
where the master has the right of control, it is not necessary that he actually exercise such control
.” 39 C.J. Master and Servant sec. 1 Definitions 33 fn. 8 (1st ed. 1925) (emphasis added) (quoting
Tucker
v.
Cooper,
158 P. 181 (Cal. 1916)).

And, the first Restatement of Agency, published in 1933, defines “master,” and “servant,” thus:

(1) A master is a principal who employs another to perform service in his affairs and who controls
or has the right to control
the physical conduct of the other in the performance of the service.

(2) A servant is a person employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled
or is subject to the right of control
by the master.
21

21
Restatement (First) of Agency sec. 2 (Am. Law Inst. 1933) (emphasis added). See also id. at sec. 220 (“A servant is a person employed to perform a service for another in his affairs and who, with respect to his physical conduct in the performance of the service, is subject to the other's control
or right to control.”
) (emphasis added). As noted above, the District of Columbia Circuit observed in
BFI
v.
NLRB,
911 F.3d at 1211, that “the `right to control' runs like a
leitmotif
through the Restatement (Second) of Agency,” which, though published in 1958, is relevantly similar to the first Restatement.

Finally, the first edition of
American Jurisprudence,
published between 1936 and 1948, states that “the really essential element of the [employer-employee] relationship is
the right of control
—the right of one person, the master, to order and control another, the servant, in the performance of work by the latter, and the right to direct the manner in which the work shall be done,” and “[t]he test of the employer-employee relation is
the right of the employer to exercise control
of the details and method of performing the work.”
22

22
35 Am. Jur.
Master and Servant
sec. 3 (1st ed. 1941) (emphasis added).

The Board believes, after careful consideration of relevant comments as discussed further below, and based on consultation of this and other judicial authority, that when Congress enacted the NLRA in 1935 and the Taft-Hartley Amendments in 1947, the existence of a putative employer's reserved authority to control the details of the terms and conditions under which work was performed sufficed to establish a common-law employer-employee relationship without regard to whether or in what manner such control was exercised.

From 1947 to today, innumerable judicial decisions and secondary authorities examining the common-law employer-employee relationship have continued to emphasize the primacy of the putative employer's authority to control, without regard to whether or in what manner that control has been exercised. For example, in 2014, the Supreme Court of California affirmed that “what matters under the common law is not how much control a hirer
exercises,
but how much control the hirer retains the
right
to exercise.”
23

As noted above, the
Restatement (Second) of Agency
relevantly echoes the First Restatement's emphasis on the right of control.
24

Corpus Juris Secundum
provides that “[a]n employee/servant is a type of agent whose physical conduct is controlled
or is subject to the right to control
by the master; the servant's principal, who controls
or has the right to control
the physical conduct of the servant, is called the master.”
25

And, the second edition of
American Jurisprudence
provides that “the principal test of an employment relationship is whether the alleged employer has
the right to control
the manner and means of accomplishing the result desired.”
26

Based on its examination of this and other judicial and secondary authority, the Board agrees with the District of Columbia Circuit that “for what it is worth [the common-law rule in 1935 and 1947] is still the common-law rule today.”
27

The Board also notes that, as set forth in greater detail above, this view is in keeping with the Board's prior treatment of reserved control in the period following the
Greyhound
decision and before the Board began imposing additional control-related restrictions in
TLI/Laerco
and their progeny.

23

Ayala
v.
Antelope Valley Newspapers, Inc.,
327 P.3d 165, 169, 172 (Cal. 2014); see also,
e.g., Garcia-Celestino
v.
Ruiz Harvesting, Inc.,
898 F.3d 1110, 1121 (11th Cir. 2018) (“We emphasize that `it is the
right
to control, not the actual exercise of control that is significant.' ”);
Mallory
v.
Brigham Young Univ.,
332 P.3d 922, 928-929 (Utah 2014) (“If the principal has the right to control the agent's method and manner of performance, that agent is a servant whether or not the right is specifically exercised.”);
Shatto
v.
McLeod Regional Medical Center,
753 SE2d 416, 419, 420 (S.C. 2013) (“While evidence of actual control exerted by a putative employer is evidence of an employment relationship, the critical inquiry is whether there exists the
right and authority
to control and direct the particular work or undertaking.”);
Anthony
v.
Okie Dokie Inc.,
976 A.2d 901, 906 (D.C. 2009) (quoting
Safeway Stores Inc.
v.
Kelly,
448 A.2d 856, 860 (D.C. 1982)) (“The determinative factor `is whether the employer has the
right
to control and direct the servant in the performance of his work and the manner in which the work is to be done . . . and not the actual exercise of control or supervision.' ”);
Universal Am-Can Ltd. V. WCAB,
762 A.2d 328, 332-333 (Pa. 2000) (“[I]t is the existence of the
right
to control that is significant, irrespective of whether the control is actually exercised.”);
Reed
v.
Glyn,
724 A.2d 464, 466 (Vt. 1998) (“It is to be observed that actual interference with the work is unnecessary—it is the right to interfere that determines.”);
JFC Temps, Inc.
v.
W.C.A.B. (Lindsay),
620 A.2d 862, 864-865 (Pa. 1996) (“The law governing the “borrowed” employee is well-established. . . . The entity possessing the right to control the manner of the performance of the servant's work is the employer, irrespective of whether the control is actually exercised.”);
Harris
v.
Miller,
438 SE 2d 731, 735 (N.C. 1994) (“The traditional test of liability under the borrowed servant rule [provides that] a servant is the employe (sic) of the person who has the
right
of controlling the manner of his performance of the work, irrespective of whether he actually
exercises
that control or not.”) (internal quotation and citation omitted);
Beddia
v.
Goodin,
957 F.2d 254, 257 (6th Cir. 1992) (“The test is whether the employer retained control, or the right to control, the modes and manner of doing the work contracted for.
It is not necessary that the control ever be exercised
.”);
Ex parte Curry,
607 S.2d 230, 232 (Ala. 1992) (“In the last analysis, it is the reserved right of control rather than its actual exercise that provides the answer.”);
ARA Leisure Services, Inc. v NLRB,
782 F.2d 456, 460 (4th Cir. 1986) (“It is the right to control, rather than the actual exercise of control, that is significant.”);
NLRB
v.
Associated Diamond Cabs, Inc.,
702 F.2d 912, 920 (11th Cir. 1983) (“[I]t is the
right
to control, not the actual exercise of control, that is significant.”);
Glenmar Cinestate Inc.
v.
Farrell,
292 SE2d 366, 369 (Va. 1982) (“It is not the fact of actual interference with the control, but the right to interfere, that makes the difference between an independent contractor and a servant or agent.”);
Baird
v.
Sickler,
433 NE 2d 593, 594-595 (Ohio 1982) (“For the relationship to exist, it is unnecessary that such right of control be exercised; it is sufficient that the right merely exists.”);
Seafarers Local 777 (Yellow Cab)
v.
NLRB,
603 F.2d 862, 874 (D.C. Cir. 1978) (quoting
Williams
v.
U.S.,
126 F.2d 129, 132 (7th Cir. 1942)) (“[I]t is the right and not the exercise of control which is the determining element.”);
Combined Insurance Co. of America
v.
Sinclair,
584 P.2d 1034, 1042 (Wyo. 1978) (“The base determining factor is whether [putative employer] retained [t]he right of control of the manner that [putative employee] operated his vehicle and not whether such control was in fact exercised.”);
NLRB
v.
Deaton Inc.,
502 F.2d 1221, 1225 (5th Cir. 1974) (“It is the right and not the exercise of control which is the determining element”);
Dovell
v.
Arundel Supply Corp.,
361 F.2d 543, 545 (D.C. Cir. 1966) (quoting
Grace
v.
Magruder,
148 F.2d 679, 681 (D.C. Cir. 1945)) (“[I]t is the right to control, not control or supervision itself, which is most important.”);
United Ins. Co. of America
v.
NLRB,
304 F.2d 86, 89 (7th Cir. 1962) (“[I]t is the right and not the exercise of control which is the determining element.”);
Cohen
v.
Best Made Mfg. Co.,
169 A.2d 10, 11-12 (R.I. 1961) (“The final test is the right of the employer to exercise power of control rather than the actual exercise of such power.”);
Fardig
v.
Reynolds,
348 P.2d 661, 663 (Wash. 1960) (“It is well settled in this state that . . . [it] is not the actual exercise of the right of interference with the work, but the right to control, which constitutes the test.”).

24
See Restatement (Second) of Agency secs. 2, 220 (Am. Law Inst. 1958).

25
30 C.J.S.
Employer—Employee
sec. 1 (2022) (emphasis added) (citations omitted).

26
27 Am. Jur. 2d.
Employment Relationship
sec. 1 (2022) (emphasis added) (citations omitted).

27

BFI
v.
NLRB,
911 F.3d at 1210 & fn. 6.

Finally, because the facts of many cases do not require distinguishing between contractually reserved and actually exercised control, many judicial decisions and other authorities spanning the last century have articulated versions of the common-law test that do
not
expressly include this distinction. But the Board is not aware of any common-law judicial decision or other common-law authority directly supporting the proposition that, given the existence of a putative employer's

contractually reserved authority to control, further evidence of direct and immediate exercise of that control is necessary to establish a common-law employer-employee relationship.

For these reasons, the Board believes that in light of controlling common-law agency principles, it does not have the statutory authority to require a showing of actual exercise of direct and immediate control in order to establish that an entity is a joint employer of another entity's employees. We would not choose to do so, as a matter of policy, in any case.

Our dissenting colleague faults us, in turn, both for seeking authority on relevant common-law principles in sources examining the distinction between employees and independent contractors and for failing to pay sufficient attention to judicial decisions examining joint-employer issues under other federal statutes in light of common-law principles derived from independent-contractor authority. In support of the first criticism, our colleague quotes selectively from
BFI
v.
NLRB,
in which the court rejected a party's contention that the joint-employer and independent-contractor tests were “virtually identical.” 911 F.3d at 1213-1215. We recognize, as did the court there, that several of the factors that guide the employee-or-independent-contractor determination, as articulated in primary judicial authority like
Darden

28

and
Reid

29

and in secondary compendiums, reports, and restatements of the common law of agency bearing on independent-contractor determinations will “shed no meaningful light” on joint-employer questions, which involve workers who are clearly
some entity's
employees. 911 F.3d at 1214-1215. Nevertheless, we agree with the court that “both tests ultimately probe the existence of a common-law master-servant relationship, [a]nd central to establishing a master-servant relationship—whether for purposes of the independent-contractor inquiry or the joint-employer inquiry—is the nature and extent of a putative master's control.” Id. at 1214. The final rule is thus consistent with
NLRB
v.
BFI
in seeking guidance from common law material bearing on the independent-contractor determination to examine, as a threshold matter under Section 103.40(a), whether a common-law employer-employee relationship exists between a putative joint employer and particular employees.
30

Once the party seeking to demonstrate joint-employer status establishes the existence of a threshold common-law employment relationship, the final rule appropriately provides for an examination, under Section 103.40(c), of whether the character and objects of such control.
i.e.,
who may exercise it, when, and how, extends to essential terms and conditions of employment that are the central concern of the joint-employer analysis within the specific context of the NLRA.
31

28

Nationwide Mutual Insurance Co.
v.
Darden,
503 U.S. 318, 322-324 (1992).

29

Community for Creative Non-Violence
v.
Reid,
490 U.S. 730, 751 (1989).

30
Our dissenting colleague argues that judicial precedent distinguishing between independent contractors and employees is “ill-suited to fully resolve joint-employer issues” in part because, he contends, the principal in an independent-contractor relationship “necessarily exercises direct control of at least two things that . . . constitute essential terms and conditions,” by engaging the worker and deciding upon the compensation to be paid for the work. This argument proves too much, because an entity that actually determined which particular employees would be hired and actually determined the wage rates of another entity's employees would be a joint employer of those employees for the purposes of the Act under any joint-employer standard, including the 2020 rule. See 85 FR at 11235-11236. Because every contract for the performance of work includes price terms and provides for engaging at least one worker, if such provisions alone were, as our colleague asserts, the equivalent of exercising direct control over hiring and wages—essential terms and conditions of employment under the Act—then no joint-employer standard could distinguish between control sufficient to establish a joint-employer relationship and control
insufficient
to establish a common-law employment relationship when considering only a single principal and a single worker. From this it is clear that, contrary to our colleague's assertion, ordinary contract terms providing generally for engaging workers and setting general price terms do
not
constitute an exercise of direct control over the essential terms and conditions of employment of hiring and wages. As discussed further below, Sec. 103.40(f) expressly incorporates this distinction by providing that evidence of an entity's control over matters that are immaterial to the existence of a common-law employment relationship and that do not bear on the employees' essential terms and conditions of employment is not relevant to the determination of whether an entity is a joint employer. Recognizing this commonsense distinction in no way undermines our examination of independent-contractor authority for guidance on the common-law employment relationship.

31
See
BFI
v.
NLRB,
911 F.3d at 1195 (“[E]mployee-or-independent-contractor cases can . . . be instructive in the joint-employer inquiry to the extent that they elaborate on the nature and extent of control necessary to establish a common-law employment relationship. Beyond that, a rigid focus on independent-contractor analysis omits the vital second step in joint-employer cases, which asks, once control over workers is found,
who
is exercising that control,
when,
and
how
.”) (emphasis in original).

Our dissenting colleague faults us for failing to pay sufficient heed to judicial decisions examining joint-employer questions under other statutes, especially Title VII of the Civil Rights Act of 1964,
32

that he claims are materially similar to the NLRA.
33

As a threshold matter, because many of the decisions our colleague cites take independent-contractor authority as the starting point for their analysis of joint-employer questions, these cases support the Board's similar examination of articulations of common-law principles in independent-contractor authority for guidance on the joint-employer analysis under the NLRA.
34

32
42 U.S.C. 2000e
et seq.

33
We need not decide whether the statutes our colleague refers to are “materially similar” to the NLRA, because, as discussed below, courts' discussion and application of common-law principles in the cases cited by our colleague fully support the Board's position. We note, however, that these statutes define “employer” and “employee” differently from the Act and examine the relationship in different contexts. For instance, Title VII excludes entities that would clearly be statutory employers under the NLRA by defining “employer” as “a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year, and any agent of such a person,” subject to exclusions that also differ from the exclusions provided under Sec. 2 of the Act. Compare 42 U.S.C. 2000e(b) with 29 U.S.C. 152. Moreover, joint-employer questions under Title VII and similar statutes primarily arise in the context of assigning liability for workplace discrimination in violation of employees' individual rights. Under the NLRA, by contrast, such questions arise in an additional forward-looking context: in order to correctly allocate prospective bargaining rights and obligations in support of employees' collective right to bargain. Assuming that Title VII and similar statutes, like the Act, require reference to the content of the common-law terms “employer” and “employee,” the necessity under the Act of prospectively defining bargaining obligations may tend to focus the common-law inquiry on questions involving reserved or indirect control more frequently than is likely under primarily backward-looking individual-rights-protecting statutes.

34
See,
e.g., Felder
v.
U.S. Tennis Assn.,
27 F.4th 834, 843 (2d Cir. 2022) (relying, inter alia, on
Reid
and Restatement (Second) of Agency § 220);
Garcia-Celestino
v.
Ruiz Harvesting, Inc.,
843 F.3d 1276, 1286-1287 (11th Cir. 2016) (relying on
Darden
and
Reid
);
Al-Saffy
v.
Vilsack,
827 F.3d 85 (D.C. Cir. 2016) (relying, inter alia, on “traditional agency law principles” citing
Darden
);
Faush
v.
Tuesday Morning, Inc.,
808 F.3d 208 (3d Cir. 2015) (“the common-law test outlined in
Darden
governs”);
Plaso
v.
IJKG, LLC,
553 Fed. Appx. 199, 203-204 (3d Cir. 2015) (considering
Darden
factors).

Some of the decisions our colleague cites are less clearly relevant, because they employ an “economic realities” test, or a hybrid test that incorporates elements of both a common-law control test and an economic-realities test. See,
e.g., Perry
v.
VHS San Antonio, LLC,
990 F.3d 918, 928-929 (5th Cir. 2021) (applying “hybrid economic realities/common law control test”);
Frey
v.
Hotel Coleman,
903 F.3d 671, 676 (7th Cir. 2018) (applying “an `economic realities' test which is, in essence, an application of general principles of agency law to the facts of the case”);
Al-Saffy
v.
Vilsack,
827 F.3d at 96 (noting one of two recognized “articulations of the test for identifying joint-employer status. . . . speaks in terms of the `economic realities' of the work relationship”). Of course, as we note elsewhere, the Board is precluded by Supreme Court decisions interpreting the Taft-Hartley amendments from applying an economic-realities test. See,
e.g., NLRB
v.
United Insurance Co. of America,
390 U.S. 254, 256 (1968). Given that our colleague elsewhere

expresses his agreement with our view that the Board must apply common-law agency principles in making joint-employer determinations under the Act, we find his observation that
NLRB
v.
Hearst Publications,
322 U.S. 111 (1944), involved a question of employee-or-independent-contractor status rather than a question of joint-employer status to be something of a non sequitur.

Finally, some of the cases our colleague relies upon are at best attenuated sources of authority on the content of the common law to the extent that they articulate a joint-employer standard ultimately derived from Board decisions—including Board decisions imposing an actual-exercise requirement without reference to any common-law authority. See,
e.g., Nethery
v.
Quality Care Investors, L.P.,
814 Fed. Appx. 97 (6th Cir. 2020) (applying “share-or-codetermine” standard derived from
NLRB
v.
Browning-Ferris Industries of Pennsylvania, Inc. (NLRB v. BFI of Pennsylvania),
691 F.2d 1117, 1124 (3d Cir. 1982), via
Carrier Corp.
v.
NLRB,
768 F.2d 778, 781 (6th Cir. 1985));
Al-Saffy
v.
Vilsack,
827 F.3d at 96 (noting one of two recognized “articulations of the test for identifying joint-employer status. . . . borrows language from”
NLRB
v.
BFI of Pennsylvania,
above);
Plaso
v.
IJKG, LLC,
553 Fed. Appx. at 204 (relying in part on
NLRB
v.
BFI of Pennsylvania
for “significant control” formulation);
Whitaker
v.
Milwaukee County,
772 F.3d 802, 810 (7th Cir. 2014) (discussed further below, noting “joint employer concept derives from labor law,” and citing post-
TLI
/
Laerco
NLRA precedent);
Graves
v.
Lowery,
117 F.3d 723, 727 (3d Cir. 1997) (drawing guidance from Board “cases which have found joint employment status when two entities exercise significant control over the same employees”) (citing
NLRB
v.
BFI of Pennsylvania
and post-
TLI
/
Laerco
NLRA precedent).

Moreover, far from supporting our colleague's claim that the Board has “gone beyond the boundaries of the common law” by eliminating the 2020 rule's actual-exercise requirement, none of the decisions he cites articulates a common-law principle that would preclude finding a joint-employer relationship based on evidence of reserved unexercised control or indirectly exercised control. To the contrary, several of the cited cases affirmatively support the Board's conclusion that the common law permits the finding of a joint-employer relationship based solely upon reserved, unexercised control or upon control exercised indirectly, such as through an intermediary.
35

35
In
Garcia-Celestino
v.
Ruiz Harvesting, Inc.,
for example, the court concluded that, under the common-law standard applicable to the joint-employer question before it—which it derived from Supreme Court independent-contractor precedent—“the proper focus is on the hiring entity's
right to control
the manner and means by which the product is accomplished.” 843 F.3d at 1292-1293 (quotation omitted) (emphasis added). After remand to a district court to apply the common-law analysis, the court later emphasized that under the applicable common-law control test “it is the
right
to control, not the actual exercise of control, that is significant.” 898 F.3d 1110, 1121 (11th Cir. 2018) (quoting
NLRB
v.
Associated Diamond Cabs,
702 F.2d 912, 919-920 (11th Cir. 1983)) (emphasis in original). See also discussion of
Butler
v.
Drive Automotive Industries of Am.,
793 F.3d 404 (4th Cir. 2015) and
EEOC
v.
Global Horizons, Inc.,
915 F.3d 631 (9th Cir. 2019), infra.

To begin, several of the cases our colleague cites articulate a version of the joint-employer analysis that provides that an entity is a common-law employer if it “exercises significant control” over certain terms and conditions of workers' employment.
36

We agree that an entity's actual exercise of control may be
sufficient
to establish an employment relationship, but nothing about this formulation entails or supports our colleague's further contention that the actual exercise of control is
necessary.
As discussed above, the facts of many cases do not require distinguishing between reserved control and actually exercised control, or between control that is exercised directly or indirectly. Where no question of reserved or indirect control is presented, it is unsurprising that judges articulate the test in a manner that does not make such distinctions, and such articulations, absent a specific claim that actual exercise of control is a necessary component of the analysis, have little to say to the specific disagreement between the Board and our dissenting colleague.

36
See
Adams
v.
C3 Pipeline Constr. Inc.,
30 F.4th 943, 961 (10th Cir. 2021) (quoting
Knitter
v.
Corvias Mil. Living, LLC,
758 F.3d 1214, 1226 (10th Cir. 2014) (“Both entities are employers if they both exercise significant control over the same employees.”) (internal quotation and citation omitted);
Plaso
v.
IJKG, LLC,
553 Fed. Appx. at 204 (3d Cir. 2015) (“a joint employment relationship exists when `two entities exercise significant control over the same employees.' ”) (quoting
Graves,
above);
Bristol
v.
Bd. of Cnty. Comm'rs of Cnty. of Clear Creek,
312 F.3d 1213, 1218 (10th Cir. 2002) (“Courts applying the joint-employer test . . . look to whether both entities `exercise significant control over the same employees.' ”) (quoting
Graves,
above).

Relatedly, our colleague cites
Felder
v.
U.S. Tennis Association
for its statement that, under a common-law analysis drawn from the Supreme Court's decision in
Reid,
“the exercise of control is the guiding indicator.” But he fails to acknowledge the
Felder
court's explanation that sharing significant control under common-law principles “means that an entity other than the employee's formal employer
has power to
pay an employee's salary, hire, fire, or otherwise control the employee's daily employment activities, such that we may properly conclude that a constructive employer-employee relationship exists.” 27 F.4th 834, 844 (2d Cir. 2022) (emphasis added).
37

Our colleague further asserts that
Felder
“quoted with approval cases from other circuits requiring proof that the putative joint employer `exercise[d] significant control.' ” However, a closer examination of the cases cited by
Felder
reveals that they similarly support only the proposition that the exercise of control is
sufficient
to establish the relationship, not that the exercise of control is
necessary
to establish the relationship.
38

As we have explained, the final rule is entirely consistent with the proposition that, as these cases hold, a joint-employment relationship exists when two entities exercise significant control over the same employees.
39

Moreover, each of the cases cited in
Felder
that our colleague relies upon—and many others—
also
discussed the requisite control in terms of the putative joint-employer's “right,” “ability,” “power,” or “authority” to control terms and conditions of employment, consistent with the common-law principle consistently articulated in the primary judicial authority discussed

above, that it is the authority to control that matters, without respect to whether or how such control is exercised.
40

37
Significantly, because
Felder
involved a Title VII claim of discriminatory denial of credentials necessary to perform certain work, the alleged discriminatee never performed work for the putative joint employer, and the court's analysis necessarily examined whether the putative joint employer “
would have exerted control
over the terms and conditions of [the employee's] anticipated employment, by, for example, training, supervising, and disciplining [the employee]”—in other words, whether it had the power, though never exercised, to exert the requisite control under appropriate circumstances. Id. at 845. The court concluded that the court below had not erred in dismissing the discriminatee's Title VII claims with respect to the putative joint employer because the alleged discriminatee failed to allege that the putative joint employer “would have significantly controlled the manner and means” of his work so as to establish an employment relationship.

38
See
Knitter,
above, 758 F.3d at 1226 (quoting
Bristol,
above, 312 F.3d at 1218 (“Under the joint employer test, two entities are considered joint employer . . . if they both `exercise significant control over the same employees.' ”)), and
Plaso,
above, 553 Fed. Appx. at 204 (quoting
Graves,
above, 117 F.3d at 727 (“[A] joint employment relationship exists when `two entities exercise significant control over the same employees.' ”)).

39
As we have noted above, courts focused on particular factual records that do not turn on the precise role of reserved or indirect control have frequently and reasonably refrained from articulating versions of a common-law employer-employee or joint-employer standard that expressly address whether such control can suffice alone to establish the relationship. See,
e.g., BFI
v.
NLRB,
above, 911 F.3d at 1213 (“[B]ecause the Board relied on evidence that Browning-Ferris both had a right to control and had exercised that control, this case does not present the question whether the reserved right to control, divorced from any actual exercise of authority, could alone establish a joint-employer relationship.”). In crafting a Final Rule of general prospective applicability, however, our task is different. We must, accordingly, seek guidance from those judicial articulations of common-law standards that
have
expressly addressed the question of whether or how authority to control must be exercised in order to establish the relevant relationship. No number of cases holding only that the direct exercise of control is
sufficient
can rationally establish that the direct exercise of control is
necessary.
Conversely, though, the large body of authority expressly stating that the direct exercise of control is
not
necessary, and, in many cases finding the relevant relationship
without
any direct exercise of control, weighs heavily in favor of our conclusion that the Board may not, consistent with controlling common-law agency principles, impose such a requirement as part of a joint-employer standard.

40
See
Knitter,
758 F.3d at 1226 (considering “
right
to terminate” employment, and “
ability
to promulgate work rules and assignments, and set conditions of employment including compensation, benefits, and hours”) (emphasis added) (quotations and citations omitted);
Bristol,
312 F.3d at 1215 (holding putative joint employer “
lack[ed] the power
to control the hiring, termination, or supervision of [undisputed employer's] employees, or otherwise control the terms and conditions of their employment) (emphasis added);
Plaso,
553 Fed. Appx. at 204 (considering, inter alia, putative joint employer's “
authority
to hire and fire employees promulgate work rules and assignments, and set conditions of employment, including compensation, benefits and hours”) (emphasis added);
Graves,
117 F.3d at 728 (“when an employer
has the right to control
the means and manner of an individual's performance . . . an employer-employee relationship is likely to exist.”) (emphasis added) (citation omitted); see also,
e.g., Adams,
30 F.4th at 961, (considering “
right
to terminate” employment relationship, and “
ability
to promulgate work rules and assignments, and set conditions of employment, including compensation, benefits, and hours”) (quoting
Knitter,
above);
Perry,
990 F.3d at 929 (“The
right to control
the employee's conduct is the most important component of determining a joint employer. . . . [including a] focus on the
right
to hire and fire, the
right
to supervise, and the
right
to set the employees' work schedule.”) (citations omitted).

The single case cited by our colleague that arguably articulates a standard under which the exercise of control would be
necessary
to find a joint-employer relationship,
Whitaker
v.
Milwaukee County,
does not purport to draw this principle from the common law, but rather applies a standard derived from decisions under the NLRA at a time that the Board had, as we have explained above, adopted an actual-exercise requirement that was unsupported by and insupportable under the common law.
41

Thus,
Whitaker
drew its articulation of the standard from
G. Heileman Brewing Co.
v.
NLRB,
which enforced a Board Decision and Order that had adopted, without relevant comment, an administrative law judge's finding that two entities were joint employers under
Laerco
based on their direct negotiation of a contract that set the overall framework of terms and conditions of employment of the employees.
42

Because the Board is not a primary source of authority for the common-law of agency, and did not, in any case purport to draw the control-based restrictions imposed by
Laerco
and related decisions from the common law,
Whitaker'
s statement of the joint-employer standard has little to say regarding the common-law principles applicable to the final rule.
43

41
See
Whitaker
v.
Milwaukee County,
772 F.3d 802, 810 (7th Cir. 2014) (“An entity other than the actual employer may be considered a `joint employer' `
only if
it exerted significant control over' the employee.”) (emphasis added) (quoting
G. Heileman Brewing Co.
v.
NLRB,
879 F.2d 1526, 1530 (7th Cir. 1989), enfg. 290 NLRB 991 (1988)).

42
See
G. Heileman Brewing Co.,
290 NLRB 991, 999 (1988), enfd. 879 F.2d 1256 (7th Cir. 1989).

43
In any case, the court in
Whitaker
concluded, relying in part on an EEOC Compliance Manual, that the ultimate question of liability at issue in that case did not turn on the “technical outcome of the joint employer inquiry,” but on whether the putative joint employer had “participated in the alleged discriminatory conduct or failed to take corrective measures within its control” which the court found it had not. 772 F.3d at 811-812. The court's suggestion that liability might have been found based on the putative joint employer's failure to take corrective measures within its control supports the final rule's treatment of reserved control. For example, under the final rule, but not under the 2020 rule, an entity that had contractually reserved but never exercised a right to veto another entity's disciplinary actions could plausibly be held jointly responsible if it failed to prevent the second entity's issuance of unlawful discriminatory discipline to discourage conduct protected by the Act. Cf.
EEOC
v.
Global Horizons, Inc.,
915 F.3d 631, 640-641 (9th Cir. 2019) (discussed further below, holding two fruit growers could be liable for discrimination in labor supplier's provision to workers of certain non-wage benefits based on growers' never-exercised authority to control the manner in which benefits were provided).

Our dissenting colleague further seeks support from the court's statement in
Butler
v.
Drive Automotive Industries of America
that “the [joint-employer] doctrine's emphasis on determining which entities
actually exercise control
over an employee is consistent with Supreme Court precedent interpreting Title VII's definitions.” 793 F.3d 404, 409 (4th Cir. 2015) (emphasis added). In context, though, it is clear that the
Butler
court's discussion of which entity “actually exercised” control meant something entirely different from what our colleague means by the phrase. At issue in
Butler
was whether a manufacturer was a joint employer of a worker supplied to it by a temporary employment agency. The court found that the agency discharged the employee after the manufacturer requested that she be replaced. An agency manager also testified that he could not recall an instance when the manufacturer requested that an agency employee be disciplined or discharged and it was not done. Based primarily on this evidence that the manufacturer thus exercised
indirect
control over discipline and tenure of employment of the agency's employees, the court held, as a matter of law, that the manufacturer was a joint-employer of the discharged employee.
44

The court's observation, in this context, that the joint-employer doctrine emphasizes “which entities actually exercise control” had nothing to do with any question involving reserved,
unexercised
control, but rather with the question of whether, despite the appearance that the agency was responsible for the discharge, the manufacturer had
actually,
though indirectly, brought it about. The court observed that the joint-employer test “specifically aims to pierce the legal formalities of an employment relationship to determine the loci of effective control over an employee . . . . Otherwise, an employer who
exercises actual control
could avoid Title VII liability by hiding behind another entity.” 793 F.3d at 415. In other words, far from suggesting that reserved, unexercised control can never suffice to establish a joint-employment relationship under the common law,
Butler
tends rather to support the final rule's treatment of indirect control, discussed further below.

44
As discussed further below, we disagree with our colleague and the 2020 rule's characterization of control exercised through an intermediary as direct and immediate rather than as indirect or mediated.

Our colleague further claims that “[n]ot a single circuit has held or even suggested that an entity can be found to be the joint employer of another entity's employees based solely on a never-exercised contractual reservation of right to affect essential terms . . .
i.e.,
conduct other than actually determining (alone or in collaboration with the undisputed employer) employees' essential terms and conditions of employment.” But the Court of Appeals for the Ninth Circuit did just that in
EEOC
v.
Global Horizons, Inc.,
915 F.3d 631 (9th Cir. 2019).

Global Horizons
involved an EEOC Title VII enforcement action against two agricultural employers (the Growers) alleged to be joint employers of certain foreign workers (the Thai workers) supplied to the Growers by a labor contractor, Global Horizons, under the H-2A guest worker program. Global Horizons and the Growers contracted for Global Horizons to pay the workers and provide certain nonwage benefits required under Department of Labor regulations governing the H-2A program in exchange for the Growers' agreement to compensate Global Horizons for the workers' wages and benefits and pay Global Horizons an additional fee for its services. 915 F.3d at 634-635. The workers sought to hold the Growers responsible as joint employers for alleged unlawful discrimination in Global Horizons' provision of nonwage benefits, including housing, meals, and transportation. Id. at 636.

The court analyzed the joint-employer question under a common-law agency test derived from
Darden
and
Clackamas Gastroenterology Associates, P.C.
v.
Wells,
538 U.S. 440, 448-449 (2003). 915 F.3d at 638-639. The court

concluded that, while most of the factors it would typically consider in applying the common-law agency test under
Darden
did not apply on the specific facts before it, “the common law's `principal guidepost'—the element of control—[was] determinative.” 915 F.3d at 640-641. Because the Growers were legally obligated, under H-2A regulations, to provide the workers with wages and the nonwage benefits at issue, the court concluded that the Growers “possessed ultimate authority over those matters,” and their “power to control the manner in which housing, meals, transportation, and wages were provided to the Thai workers,
even if never exercised,
[was] sufficient to render the Growers joint employers” of those workers. Id. at 641 (emphasis added) (citing
BFI
v.
NLRB,
911 F.3d 1195 (D.C. Cir. 2018)).
45

Global Horizons
is thus consistent with the large body of common-law authority discussed above in strongly supporting the Board's conclusion that the 2020 rule's actual-exercise requirement is inconsistent with the common law governing the Board's joint-employer standard.

45
Contrary to our dissenting colleague's suggestion, the court in
Global Horizons
expressly applied a common-law agency test, not a test derived from the definition of “employer” in the H-2A regulation, to the Title VII joint-employer issue. See 915 F.3d at 639. The fact that the Growers' authority derived from regulation, not contract, does not undermine the impact of the court's conclusion that the existence of that authority, even if never exercised, sufficed to render the Growers joint employers. In any case,
Global Horizons
is far from unique: in fact, numerous federal and state high courts have long concluded, in non-NLRA contexts, that an entity was or could be a common-law employer of another employer's employees based solely on the entity's reserved right of control over those employees. See,
e.g., Mallory
v.
Brigham Young University,
332 P.3d 922, 928-929 (Utah 2014) (city was common-law employer of university's employee performing traffic control, despite absence of evidence of actual exercise of control by city, where city retained right to control the manner in which workers performed city's “nondelegable duty of traffic control” because “[i]f the principal has the right to control the agent's method and manner of performance, the agent is a servant whether or not the right is specifically exercised”) (citation omitted);
Rouse
v.
Pitt County Memorial Hosp., Inc.,
470 SE 2d 44, 52-53 (N.C. 1996) (attending physicians could be found employers of resident physicians employed by hospital based on evidence that hospital contractually delegated to attending physicians its responsibility to supervise and control resident physicians' performance of duties, despite absence of evidence of specific instances of attending physicians' control of resident physicians' performance because “[w]here the parties have made an explicit agreement regarding the right of control, this agreement will be dispositive;”) (citation omitted);
Dunn
v.
Conemaugh & Black Lick RR,
267 F.2d 571, 577 (3d Cir. 1959) (railroad was employer of manufacturer's employee based on railroad's right to command employee's performance without reference to any instance of exercise of that right because “the person is the servant of him who has the right to control the manner of performance of the work, regardless of whether or not he actually exercises that right;”) (citation omitted);
S.A. Gerrard Co.
v.
Industrial Accident Comm'n,
110 P.2d 377, 378 (Cal. 1941) (landowner was joint employer of farmer's employee based on contract provision that picking should be done under the supervisions of and in accordance with landowner's direction without reference to whether such direction was ever given because “the right to control, rather than the amount of control which was exercised, is the determinative factor.”) (citation omitted).

2. Indirect Control, Including Control Exercised Through an Intermediary

After careful consideration of relevant comments, as discussed in more detail below, the Board has concluded that evidence that an employer has actually exercised control over essential terms and conditions of employment of another employer's employees, whether directly or indirectly, such as through an intermediary, also suffices to establish the existence of a joint-employer relationship. As the District of Columbia Circuit has recognized, “[t]he common law . . . permits consideration of those forms of indirect control that play a relevant part in determining the essential terms and conditions of employment.”
BFI
v.
NLRB,
911 F.3d at 1199-1200. In addition, the District of Columbia Circuit has explained that the definition of “employer” set forth in Section 2(2) of the Act “textually indicates that the statute looks at all probative indicia of employer status, whether exercised `directly or indirectly' ” and therefore that the Act “expressly recognizes that agents acting `indirectly' on behalf of an employer could also count as employers.” Id. at 1216.

Judicial decisions and secondary authorities addressing the common-law employer-employee relationship confirm that indirect control, including control exercised through an intermediary, can establish the existence of an employment relationship. The
Restatement (Second) of Agency
explicitly recognized the significance of indirect control, both in providing that “the control or right to control needed to establish the relation of master and servant may be very attenuated” and in discussing the subservant doctrine, which deals with cases in which one employer's control may be exercised indirectly, while a second entity directly controls employees.
46

As the District of Columbia Circuit explained in
BFI
v.
NLRB,
“the common law has never countenanced the use of intermediaries or controlled third parties to avoid the creation of a master-servant relationship.”
47

Similarly, as discussed in more detail above, the Fourth Circuit has held that an entity was a joint employer of another employer's employees based primarily on the entity's exercise of indirect control over the employees' discipline and discharge by recommending discipline and discharge decisions which were implemented by the employees' direct employer.
Butler,
above, 793 F.3d at 415.
48

46

Restatement (Second) of Agency
sections 5(2), comments e, f, and illustration 6; 220(1), comment d; 226, comment a (1958).

47
911 F.3d at 1217 (citing
Nicholson
v.
Atchison, T. & S. F. Ry. Co.,
147 P. 1123, 1126 (Kan. 1915) (use of a “branch company” as a “mere instrumentality” “did not break the relation of master and servant existing between the plaintiff and the [putative master]”). The 2020 Rule, and our dissenting colleague, seek to avoid the District of Columbia Circuit's endorsement of considering indirect control exercised through an intermediary as probative of joint-employer status by recharacterizing such control as direct and immediate. But an action taken through an intermediary is, by definition,
mediated,
that is,
not
immediate or direct. We accordingly join the District of Columbia Circuit in characterizing such control as indirect. See 911 F.3d at 1216-1217 (“[C]ommon-law decisions have repeatedly recognized that indirect control over matters commonly determined by an employer can, at a minimum, be weighed in determining one's status as an employer or joint employer, especially insofar as indirect control means control exercised through an intermediary.”) (internal quotation and citation omitted).

48
See also
Al-Saffy,
above, 827 F.3d 85, 97 (District of Columbia Circuit in Title VII context relying in part on evidence that officials working for putative joint-employer had recommended employee's dismissal as evidence supporting reversal of summary judgment on the joint-employer issue).

Consistent with these longstanding common-law principles, the Board has concluded, after careful consideration of comments as discussed further below, that evidence showing that a putative joint employer wields indirect control over one or more of the essential terms and conditions of employment of another employer's employees can establish a joint-employer relationship. Ignoring relevant evidence of indirect control over essential terms and conditions of employment would, in the words of the District of Columbia Circuit, “allow manipulated form to flout reality,”
49

contrary to the teachings of the common law. Under the final rule, for example, evidence that a putative joint employer communicates work assignments and directives to another entity's managers or exercises detailed ongoing oversight of the specific manner and means of employees' performance of the individual work tasks may demonstrate the type of indirect control over essential terms and conditions of employment that is sufficient to

establish a joint-employer relationship.
50

49

NLRB
v.
BFI,
911 F.3d at 1219.

50
Cf.
Cognizant Technology Solutions U.S. Corp. & Google LLC,
372 NLRB No. 108, slip op. at 1 (2023) (finding joint-employer relationship based in part on Google's exercise of authority over supervision through intermediary employees of Cognizant, treated as direct and immediate control under the terms of the 2020 rule).

Our dissenting colleague contends that the final rule fails adequately to “distinguish evidence of indirect control that bears on workers' essential terms and conditions of employment from evidence that simply documents the routine parameters of company-to-company contracting,” as required by the D.C. Circuit in
BFI
v.
NLRB.
51

To the contrary, Section 103.40(f) of the final rule expressly provides that evidence of an entity's control over matters that are immaterial to the existence of an employment relationship under common-law agency principles and that do not bear on the employees' essential terms and conditions of employment is not relevant to the determination of whether the entity is a joint employer. Pursuant to this provision, the Board will, in individual cases arising under the rule, examine any proffered evidence of indirect control and determine, as necessary, whether that evidence is indicative of a kind of control that is an ordinary incident of company-to-company contracting or is rather indicative of a common-law employment relationship. If the former, the rule provides that the Board will not consider that evidence as probative of the existence of a joint-employer relationship. Specifically, pursuant to Section 103.40(f) and consistent with the court's instruction in
BFI
v.
NLRB,
the Board will not consider any evidence of indirect control that the common law would see as part of an ordinary true independent-contractor relationship as evidence of a common-law employer-employee relationship.
52

If, on the other hand, such evidence shows that a putative joint employer is actually exercising (or has reserved to itself) a kind of control that the common law takes to be indicative of an employer-employee relationship, the Board will consider such evidence in the course of its joint-employer analysis.
53

51
Id. at 1226. The court's discussion and its instruction to the Board to draw this distinction on remand suggests, as we conclude, that it will be possible to determine, in future adjudications on specific factual records, that an entity's exercise of certain kinds of indirect control, such a through an intermediary, would be independently probative of its joint-employer status. See id. at 1219 (“If . . . a company entered into a contract . . . under which that company made all of the decisions about work and working conditions, day in and day out, with [the workers' direct employer's] supervisors reduced to ferrying orders from the company's supervisors to the workers, the Board could sensibly conclude that the company is a joint employer.”).

52
See
BFI
v.
NLRB,
above, 911 F.3d at 1221 (The Board's fleshing out the operation of the joint-employer standard through case-by-case adjudication “depends on the Board's starting with a correct articulation of the governing common-law test. Here, that legal standard is the common-law principle that a joint employer's control—whether direct or indirect, exercised or reserved—must bear on the essential terms and conditions of employment and not on the routine components of a company-to-company contract.”) (internal quotation and citation omitted).

53
Cf.
Butler,
above, 793 F.3d at 415 (considering testimony from temporary employment agency manager that he could not recall an instance when manufacturer requested an agency employee to be disciplined or terminated and it was not done as evidence that manufacturer was joint employer of agency's employees).

Our colleague also criticizes us for failing exhaustively to define, ex ante, what factual circumstances will evidence indirect control that is relevant to the joint-employer analysis. But, as discussed above, the joint-employer inquiry is essentially factual and requires examining all of the incidents of a particular relationship on a particular record. Small differences in
how
control has been indirectly exercised,
when,
and
over what
will predictably determine whether the exercise of such control in individual cases counts, under the common law, as an ordinary incident of a company-to-company or true independent-contractor relationship or as evidence of the existence of a common-law employer-employee relationship. Because of the innumerable variations in the ways that companies interact with each other, and with each other's employees, it would be impossible for the Board to provide a usefully comprehensive and detailed set of examples of when an entity's exercise of indirect control over another company's employees will count as evidence of a common-law employment relationship. We decline to try to do so as part of this rulemaking.
54

Instead, we expect the contours of the Board's application of this rule in particular scenarios to be defined through the future application of the final rule to specific factual records.
55

54
Cf. 85 FR at 11187 (2020 rule omitting previously proposed hypothetical scenarios illustrating specific applications of the Board's joint-employer standard). For similar reasons, we decline to speculate about the application of the final rule to the various hypothetical scenarios proposed by our dissenting colleague.

55
See
BFI
v.
NLRB,
911 F.3d at 1221 (“In principle, there is nothing wrong with the Board fleshing out the operation of a legal test that Congress has delegated to the Board to administer through case-by-case adjudication.”) (citing
Eastex, Inc.
v.
NLRB,
437 U.S. 556, 574-575 (1978) (“[T]he nature of the problem, as revealed by unfolding variant situations, requires an evolutionary process for its rational response, not a quick definitive formula as a comprehensive answer.”) (internal quotation and citation omitted)).

Finally, our colleague claims that courts which have examined the common-law employer-employee relationship in a joint-employer context in decisions under Title VII and similar statutes, discussed above, have applied a significantly more demanding standard than the final rule articulates. We disagree. Thus far, our discussion has primarily been concerned with what common-law principles have to say to the role of reserved or indirect control in the joint-employer test. Of course, however, the common-law cases are also concerned with, and provide authority about, the objects of that control. We recognize that “whether [an entity] possess[es] sufficient indicia of control to be an `employer' is essentially a factual issue,”
56

that “factors indicating a joint-employment relationship may vary depending on the case,” and that “any relevant factor[ ] may . . . be considered so long as [it is] drawn from the common law of agency.”
57

Where courts articulating relevant common-law principles have identified an entity's authority to control specific elements of the working relationship as relevant to the analysis, such articulations are primary authority to which the Board will look in deciding, in individual cases, whether “all of the incidents of the relationship”
58

indicate that the entity is a common-law employer of particular employees.
59

Furthermore, the final rule requires the Board to inquire specifically into whether a putative joint employer possesses the authority to control or exercises the power to control one or more of the employees' essential terms and conditions of employment implicated by the Act's protection of employees' forward-looking collective right to bargain with each employer that can control their terms and conditions of employment. Thus, the final rule both incorporates the common law's broad focus on all of the incidents of the relationship in examining whether an entity is a common-law employer of particular employees and narrows the focus of the Board's inquiry to essential

terms and conditions of employment in the context of the specific rights and obligations provided by the plain language of Section 8(a)(5) and 8(d) of the Act.
60

56

Boire
v.
Greyhound,
376 U.S. at 481.

57

Felder,
above, 27 F.4th at 844 (alternations in original) (internal quotation omitted). See also
NLRB
v.
United Insurance Co.,
above, 390 U.S. at 258 (“What is important is that the total factual context is assessed in light of the pertinent common-law agency principles.”).

58

NLRB
v.
United Insurance Co.,
above, 390 U.S. at 258.

59
See,
e.g., Felder,
above 27 F.4th at 838 (“[F]actors drawn from the common law of agency, including control over an employee's hiring, firing, training, promotion, discipline, [and] supervision . . . are relevant to [the joint-employer] inquiry.”).

60
See 29 U.S.C. 158(a)(5) (“It shall be an unfair labor practice for an employer—to refuse to bargain collectively with the representatives of his employees.”); 29 U.S.C. 158(d) (“[T]o bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.”).

II. Summary of Changes to the Proposed Rule

In this section, we provide a summary overview of changes to the proposed rule.

A. Overview

The final rule, like the proposed rule, recognizes that common-law agency principles define the statutory employer-employee relationship under the Act and affirms the Board's traditional definition of joint employers as two or more common-law employers of the same employees who share or codetermine those matters governing those employees' essential terms and conditions of employment. Consistent with primary judicial statements and secondary authority describing the common-law employer-employee relationship, the final rule, like the proposed rule, provides that a common-law employer of particular employees shares or codetermines those matters governing employees' essential terms and conditions of employment if the employer possesses the authority to control (whether directly, indirectly, or both) or exercises the power to control (whether directly, indirectly, or both) one or more of the employees' essential terms and conditions of employment, regardless of whether the employer exercises such control or the manner in which such control is exercised.

However, as described below and in response to comments, the Board has modified the proposed rule (1) to clarify the definition of “essential terms and conditions of employment,” (2) to identify the types of control that are necessary to establish joint-employer status and the types that are irrelevant to the joint-employer inquiry, and (3) to describe the bargaining obligations of joint employers.

B. Definition of “Essential Terms and Conditions of Employment”

The proposed rule provided an illustrative, rather than exclusive, list of essential terms and conditions of employment. The Board has modified this definition, for the reasons discussed below and in response to comments, to provide an exhaustive list of seven categories of terms or conditions of employment that will be considered “essential” for the purposes of the joint-employer inquiry. These are: (1) wages, benefits, and other compensation; (2) hours of work and scheduling; (3) the assignment of duties to be performed; (4) the supervision of the performance of duties; (5) work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; (6) the tenure of employment, including hiring and discharge; and (7) working conditions related to the safety and health of employees.

C. Type of Control Sufficient To Establish Joint-Employer Status

The proposed rule provided that a common-law employer's possession of unexercised authority to control or exercise of the power to control indirectly, such as through an intermediary, one or more terms or conditions of employment would be sufficient to establish status as a joint employer. For the reasons discussed below and in response to comments, the Board has modified this provision to clarify that, in each instance, the relevant object of control must be an
essential
term or condition of employment as defined by the rule. The Board has also reformatted and streamlined this portion of the proposed rule to avoid surplusage.

D. Type of Control Not Relevant to Joint-Employer Status

The proposed rule provided that evidence of an employer's control over matters that are immaterial to the existence of a common-law employment relationship or control over matters not bearing on employees' essential terms and conditions of employment is not relevant to the joint-employer inquiry. For the reasons discussed below and in response to comments, the Board has modified this provision to make it clear that the provision excludes only evidence that is immaterial to both the common-law employment relationship
and
an employer's control over employees' essential terms and conditions of employment, and that the Board does not presuppose the “employer” status of an entity—such as the principal in a true independent-contractor relationship—that possesses or exercises only such immaterial forms of control.

E. Bargaining Obligations of Joint Employers

The proposed rule did not specifically address or delineate the bargaining obligations of joint employers in the proposed regulatory text.
61

For the reasons discussed below and in response to comments, the Board has modified the final rule to provide that a joint employer of particular employees must bargain collectively with the representative of those employees with respect to any term or condition of employment that it possesses the authority to control or exercises the power to control (regardless of whether that term or condition is deemed to be an essential term or condition of employment under the rule). However, such entity is not required to bargain with respect to any term or condition of employment that it does not possess the authority to control or exercise the power to control.

61
The NPRM stated the Board's initial views in supplementary information, subject to comments, that (1) the proposed rule would only require a putative joint employer to bargain over those essential terms and conditions of employment it possesses the authority to control or over which it exercises the power to control, and (2) the Act's purposes are best served when two or more statutory employers that each possess some authority to control or exercise the power to control employees' essential terms and conditions of employment are parties to bargaining over those employees' working conditions. 87 FR at 54645 & fn. 26.

III. Justification for Using Rulemaking, Rather Than Adjudication, To Revise the Joint-Employer Standard

A. Authority To Engage in Rulemaking

Section 6 of the Act provides that “[t]he Board shall have authority from time to time to make, amend, and rescind, in the manner prescribed by the Administrative Procedure Act, such rules and regulations as may be necessary to carry out the provisions of this Act.” 29 U.S.C. 156. See also
NLRB
v.
Bell Aerospace Co.,
416 U.S. 267, 294 (1974) (“[T]he choice between rulemaking and adjudication lies in the first instance within the Board's discretion.”);
NLRB
v.
Wyman-Gordon Co.,
394 U.S. 759 (1969). In the past, the Board has exercised its discretion to use the authority delegated by Congress to engage in substantive rulemaking. See
American Hospital Assn.
v.
NLRB,
499 U.S. 606 (1991).

Section 6 authorizes the final rule as necessary to carry out Sections 2, 7, 8, 9, and 10 of the Act, 29 U.S.C. 152, 157, 158, 159, and 160, respectively. Specifically, as set forth above, Section 2(2) of the Act defines “employer,” and Section 2(3) defines “employee.” Section 7 sets forth employees' rights

under the Act, including the right to bargain collectively through representatives of employees' own choosing, the right to engage in concerted activities for the purpose of mutual aid or protection, and the right to refrain from these activities. Section 8 of the Act defines unfair labor practices under the Act, and Section 8(a)(5) makes it an unfair labor practice for an employer to refuse to bargain collectively with employees' bargaining representative. Section 9 of the Act describes the Board's responsibilities when conducting representation elections. Section 10 of the Act authorizes the Board to investigate, prevent, and remedy unfair labor practices. The Board's joint-employer doctrine bears on each of these provisions of the Act, and Section 6 permits the Board to promulgate rules carrying out these provisions.

B. The Preference for Rulemaking Over Adjudication

In the NPRM, we expressed our preliminary belief that rulemaking in this area of the law is desirable for several reasons. First, the NPRM set forth the Board's preliminary view that the 2020 rule departed from common-law agency principles and threatened to undermine the goals of Federal labor law. Second, the NPRM stated that, in the Board's preliminary view, establishing a definite, readily available standard would assist employers and labor organizations in complying with the Act. Finally, the NPRM expressed the Board's view that because the joint-employer standard has changed several times in the past decade, there was a heightened need to seek public comment and input from a wide variety of interested stakeholders.
62

62
87 FR at 54644-54645.

After carefully considering nearly 13,000 comments, the Board believes that it is necessary and appropriate to rescind the 2020 rule, which was contrary to the Act insofar as it was inconsistent with the common law of agency. The 2020 rule's approach to defining joint-employer status again incorporated the control-based restrictions that deviated from common-law agency principles between the 1980s and the Board's 2015 decision in
Browning-Ferris.
Not only was this approach inconsistent with relevant court decisions, including the District of Columbia Circuit's 2018 decision in
Browning-Ferris Industries of California, Inc.
v.
NLRB (BFI v. NLRB),
911 F.3d 1195 (D.C. Cir. 2018), as many commenters have persuasively argued, it also undermines the goals of Federal labor law. Accordingly, we rescind the 2020 rule in its entirety.
63

Although we believe that the Board is required to rescind the 2020 rule, we would do so even if that rule were valid because it fails to fully promote the policies of the Act.

63
As discussed at greater length below, we note that even if we had not decided to promulgate a new standard through rulemaking, we would nevertheless have chosen to rescind the 2020 rule in its entirety because of these infirmities. See Sec. IV.C., J., K., and V, below.

The Board also believes that setting forth a revised joint-employer standard through rulemaking is desirable. The NPRM offered a proposal to restore the Board's focus on whether a putative joint employer possesses the authority to control or exercises the power to control particular employees' essential terms and conditions of employment, consistent with the common law and relevant judicial decisions. The Board received many helpful comments from individuals and entities with considerable legal expertise and relevant experience. Having considered those comments, the Board has refined the proposed rule in several ways, as outlined above in Section II and discussed more fully below in Sections IV and V. We believe the proposed rule, as modified, appropriately defines the essential elements of a joint-employer relationship and will reduce uncertainty and litigation over the basic parameters of joint-employer status.

IV. Response to Comments

The Board received almost 13,000 comments from interested organizations, labor unions, trade associations, business owners, United States Senators and Members of Congress, State Attorneys General, academics, and other individuals. The Board has carefully reviewed and considered these comments, as discussed below.

A. Comments Regarding the Definitions of “Employer” and “Joint Employer” and Basing These Definitions on Common-Law Agency Principles

The Board received numerous comments regarding the role of common-law agency principles in the Board's joint-employer analysis and on the development of joint-employer doctrine under the Act. In general, the comments acknowledge the accuracy of the Board's description of the role common-law agency principles have played in determining joint-employer status, as briefly summarized above in Section I.

Some commenters criticize the Board's preliminary view that the common law of agency is the primary guiding principle in its joint-employer analysis.
64

These commenters argue that because the Taft-Hartley amendments did not specify that the common law limits the joint-employer standard, Congress did not intend such a constraint, and the Board may establish a joint-employer standard guided solely by the policies of the Act. Contrary to these comments, authoritative or relevant judicial decisions establish that common-law agency principles must guide the Board's joint-employer inquiry. See,
e.g., NLRB
v.
Town & Country Electric, Inc.,
516 U.S. 85, 92-95 (1995) (where Congress uses the term “employee” in a statute without clearly defining it, the Court assumes that Congress “intended to describe the conventional master-servant relationship as understood by common-law agency doctrine”);
BFI
v.
NLRB,
911 F.3d at 1206 (“[U]nder Supreme Court and circuit precedent, the National Labor Relations Act's test for joint-employer status is determined by the common law of agency.”).
65

64
Comments of Los Angeles County Federation of Labor AFL-CIO & Locals 396 and 848 of the International Brotherhood of Teamsters; Professors Sachin S. Pandya, Andrew Elmore, and Kati Griffith.

65
See also
Clackamas Gastroenterology Associates, P.C.
v.
Wells,
538 U.S. 440, 448-449 (2003);
Nationwide Mutual Insurance Co.
v.
Darden,
503 U.S. 318, 322-324 (1992);
Community for Creative Non-Violence
v.
Reid,
490 U.S. 730, 740, 752 fn. 31 (1989);
Kelley
v.
Southern Pacific Co.,
419 U.S. 318, 323-324 (1974);
NLRB
v.
United Insurance Co. of America,
390 U.S. 254, 256-258 (1968).

Most commenters confirm that it is appropriate and desirable for the Board to rely on common-law agency principles in defining the terms “employer” and “joint employer” under the Act.
66

Certain of these commenters note that by acting to overrule the Supreme Court's decision in
NLRB
v.
Hearst Publishing,
322 U.S. 111 (1944), Congress evinced its intention to make

common-law agency principles the cornerstone of the definition of “employee” under the Act.
67

These commenters also emphasized post-Taft-Hartley judicial decisions interpreting the term “employee” in statutes that do not provide more specific definitions using common-law agency principles.
68

Some commenters note that common-law agency principles play an important functional role in the Board's definition of the terms “employer” and “employee,” observing that making an agency relationship the first step of the joint-employer analysis ensures that the appropriate entities are included while properly excluding entities who neither possess nor exercise sufficient control over employees' essential terms and conditions of employment.
69

These commenters generally agree with the proposed rule's view that appropriate sources of common-law agency principles include the
Restatement (Second) of Agency
and other compendiums, reports, and restatements, along with judicial decisions applying the common law.
70

66
Comments of American Federation of Labor and Congress of Industrial Organizations (AFL-CIO); Americans for Prosperity Foundation; American Federation of State, County & Municipal Employees (AFSCME); American Hotel & Lodging Association; Center for Law and Social Policy; Communications Workers of America, AFL-CIO (CWA); Congressman Robert C. “Bobby” Scott, Chairman of the House of Representatives Committee on Education and Labor, and 52 other Members of Congress (Congressman Scott et al.); Economic Policy Institute (EPI); General Counsel Abruzzo; Independent Bakers Association; Nicholas Crawford; McGann, Ketterman & Rioux; National Federation of Independent Business (NFIB); National Partnership for Women & Families; North Carolina Justice Center; Public Justice Center; Restaurant Law Center and National Restaurant Association; Southern Poverty Law Center (SPLC); TechEquity Collaborative; The Washington Center for Equitable Growth; United States Chamber of Commerce; Washington Legal Foundation; William E. Morris Institute for Justice.

67
See,
e.g.,
comments of American Hotel & Lodging Association.

68
Comments of NFIB; Washington Legal Foundation.

69
See,
e.g.,
comments of AFSCME.

70
See,
e.g.,
comments of General Counsel Abruzzo; Michigan Regional Council of Carpenters and Millwrights.

Some commenters urge the Board to clarify what common-law sources it will consult in the final rule. Others ask the Board to limit its consideration to particular sources, arguing that because the common law is vast, amorphous, or vague, failing to impose such a limitation prevents the rule from functioning as self-contained guidance.
71

Other commenters dispute the enduring relevance of the
Restatement (Second) of Agency.
72

In particular, some of these commenters take the position that because the
Restatement (Second) of Agency
primarily focuses on assigning liability in tort or contract matters, it is inapposite or poorly adapted to resolving questions related to the employment relationship.
73

Some commenters propose instead that the Board solely consult judicial decisions applying common-law principles,
74

or the
Restatement of Employment Law.
75

71
Comments of Americans for Tax Reform; Coalition for a Democratic Workplace (CDW); Freedom Foundation; International Franchise Association (IFA); McDonald's USA, LLC; Promotional Products Association International (PPAI); Texas Public Policy Foundation.

72
Comments of Washington Legal Foundation; IFA; U.S. Chamber of Commerce.

73
Comments of IFA; U.S. Chamber of Commerce.

74
Comments of Washington Legal Foundation.

75
Comments of U.S. Chamber of Commerce.

As we preliminarily indicated in the proposed rule, relevant sources of common-law agency principles are not difficult to find. We respond to commenters seeking more definitive guidance that some relevant sources of common-law agency principles include articulations of these principles by common-law judges, compendiums, reports, and restatements of common-law decisions, and early court decisions addressing “master-servant relations.”
76

Contrary to those commenters who suggest the common law is too vast or amorphous to give effect to the terms “employer” and “employee” in the final rule, we find it persuasive that the Supreme Court has viewed common-law agency principles as sufficiently familiar and tractable to assist parties in interpreting and complying with other labor and employment statutes that use these terms.
77

76
As we explained more fully in the NPRM, the employer-employee relationship under the Act is the common-law employer-employee relationship. Beginning in the late 19th century, American legal commentators began using the terms “master-servant” and “employer-employee” interchangeably. See,
e.g.,
Horace Gray Wood,
A Treatise on the Law of Master and Servant; Covering the Relation, Duties and Liabilities of Employers and Employees
(1877). The
Restatement (Second) of Agency
uses both sets of terms synonymously. We therefore refer elsewhere in the NPRM to “employer-employee” relations and the “employer-employee relationship.”

77
See,
e.g., Clackamas Gastroenterology Associates,
538 U.S. at 448-449 (Americans with Disabilities Act);
Darden,
503 U.S. at 322-324 (Employee Retirement Income Security Act of 1974);
Kelley,
419 U.S. at 323-324 (Federal Employers' Liability Act).

Contrary to some commenters, we adhere to the view preliminarily set forth in the NPRM that the
Restatement (Second) of Agency
(1958) is a particularly persuasive source of common-law agency principles. As we explained in the NPRM, the Supreme Court has acknowledged the persuasiveness of the
Restatement (Second) of Agency
when construing the common-law definition of “employer.”
78

So, too, has the District of Columbia Circuit, acknowledging this controlling Supreme Court precedent.
79

Finally, we follow the District of Columbia Circuit in rejecting the view set forth by some commenters that the
Restatement
was developed to address issues of liability for tort matters and breaches of contract and is therefore inapposite.
80

Further, we dispute these commenters' premise. Many early common-law decisions that helped define the common-law relationship in
The Restatement (Second) of Agency
emerged in cases involving rights and duties under state workers' compensation laws.
81

More importantly, all common-law cases, whether involving tort or contract liability or statutory rights and obligations, focus on whether a common-law agency relationship exists, and control is the touchstone of that inquiry under the common law.

78
See,
e.g., Clackamas Gastroenterology Associates,
538 U.S. at 448;
Kelley,
419 U.S. at 323-324.

79
See
BFI
v.
NLRB,
911 F.3d at 1213 (“[C]ontrolling precedent makes the
Restatement (Second) of Agency
a relevant source of traditional common-law agency standards in the National Labor Relations Act context.”).

80
See id.

81
See,
e.g., Maltz
v.
Jackoway-Katz Cap Co.,
82 SW2d 909, 912, 918 (Mo. 1934).

Some commenters argue that by assessing whether an entity possesses the authority to control or indirectly controls essential terms and conditions of employment, the Board's proposed definition of “employer” exceeds common-law boundaries.
82

While we will address commenters' arguments regarding the role reserved and indirect control play in the proposed rule's definition of “joint employer” at length below, at the outset we simply note our agreement with the District of Columbia Circuit's view that these forms of control bear on the common-law employer-employee inquiry,
BFI
v.
NLRB,
911 F.3d at 1216.
83

Accordingly, we respectfully disagree with those commenters who suggest the proposed rule's definition of “employer” exceeds common-law boundaries.

82
Comments of American Hotel & Lodging Association; Bicameral Congressional Signatories; Council on Labor Law Equality (COLLE); Independent Bakers Association; National Lumber & Building Material Dealers Association; National Waste & Recycling Association; North American Meat Institute; Restaurant Law Center and National Restaurant Association; U.S. Chamber of Commerce.

83
The court also stated that Sec. 2(2) of the Act “textually indicates that the statute looks at all probative indicia of employer status” because it “expressly recognizes that agents acting `indirectly' on behalf of an employer could also count as employers.” 911 F.3d at 1216 (quoting 29 U.S.C. 152(2)).

Finally, some of these commenters argue that the proposed rule's definition of “employer” is inappropriate because direct supervision over an employee is a necessary prerequisite to a finding of an employment relationship for purposes of the Act, citing the Supreme Court's decision in
Allied Chemical & Alkali Workers of America, Local Union No. 1
v.
Pittsburgh Plate Glass Co.,
404 U.S. 157, 167-168 (1971).
84

Respectfully, we find
Allied Chemical,
which concluded that retired workers were not “employees” because the Act's legislative history and policies

contemplate individuals who are currently “active” in the workplace, inapposite. Nothing in the Court's decision in
Allied Chemical
or subsequent cases applying it suggests that the Court thereby attempted to modify ordinary common-law agency principles or engraft additional “direct supervision” requirements onto the statutory meaning of “employer.”

84
Comments of Restaurant Law Center and National Restaurant Association; Retail Industry Leaders Association (RILA).

B. Comments Regarding the Definition of “Joint Employer”

The proposed rule set forth a definition of “joint employer” that, like the definition provided in the 2020 rule, would apply in all contexts under the Act, including both the representation-case and unfair-labor-practice case context. No commenter has suggested that any joint-employer standard the Board adopts should only apply in one context or the other. We therefore find it appropriate to apply the new standard set forth in the final rule in both the representation-case and unfair-labor-practice case contexts.

Our dissenting colleague and several commenters argue that, although the Board is properly guided by common-law agency principles when determining joint-employer status, the proposed rule's definition of “joint employer” exceeds the boundaries of the common law of agency.
85

These commenters generally contend that defining “joint employer” to include entities who possess but do not exercise control over essential terms and conditions of employment or entities who do not exercise direct control over essential terms and conditions of employment is beyond the permissible scope of the common law.
86

As these arguments primarily relate to the treatment of reserved and indirect control in proposed paragraphs (c), (e), and (f), we discuss them in greater detail below. However, as noted above, we agree with the District of Columbia Circuit's view that the common law requires the Board to evaluate “all probative indicia of employer status” in determining whether entities are “employers” or “joint employers” under the Act, including forms of indirect and reserved control.
87

85
Comments of Americans for Prosperity Foundation; Associated Builders and Contractors (ABC); Contractor Management Services, LLC; Independent Bakers Association; Independent Lubricant Manufacturers Association; LeadingAge; The Mackinac Center for Public Policy; National Retail Federation; Taxpayers Protection Alliance.

86
Comments of Americans for Prosperity Foundation; National Retail Federation; Washington Legal Foundation.

87
See
BFI
v.
NLRB,
911 F.3d at 1216.

A group of United States Senators and Members of Congress suggests that by seeking to define “joint employer” in the manner set forth in the proposed rule, the Board is effectively legislating and thereby usurping the role of Congress.
88

This commenter also mentions that the broader definition of “joint employer” set forth in the Protecting the Right to Organize Act of 2021 (PRO Act), H.R. 842, failed to secure Senate approval.
89

With respect, the standard set forth in the proposed rule and the final rule we announce today represents a faithful attempt to exercise the authority Congress has delegated to the Board in Section 6 of the Act. Further, as discussed previously, we are guided by Supreme Court decisions instructing the Board to consult the common law of agency when interpreting the term “employer” in Section 2(2) of the Act. We do not see the definition of “joint employer” in the PRO Act as relevant to our task, which is to interpret the term “employer” that appears in the current ver

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2023-23573. Public record. Not legal advice.