On October 27, 2023, the National Labor Relations Board (NLRB) published its final rule for determining “joint-employer” status, greatly expanding the types of staffing relationships that may create joint-employment liability under the National Labor Relations Act (NLRA). Hospitals and other healthcare facilities now face a substantially increased likelihood they may be deemed the joint employer of temporary nurses provided by W-2 nurse agencies for labor relations purposes (e.g., union organizing and collective bargaining).
Joint-employer liability for hospitals and other healthcare facilities is nothing new. Healthcare facilities have long been exposed to joint-employer liability for W-2 nurses provided by nurse agencies, particularly on wage and hour matters. In an oft-cited case, Barfield v. New York City Health and Hosp. Corp., the Second Circuit found that a hospital was the joint employer of nursing professionals retained via W-2 healthcare agencies and was responsible for their unpaid overtime, liquidated damages, and attorneys’ fees and costs. 537 F.2d 132 (2d Cir. 2008). Last year, the California Supreme Court resolved a dispute that included this issue in Grande v. Eisenhower Medical Center and FlexCare LLC, 13 Cal.5th 313 (Cal. Supreme Court 2022). That California decision noted that nursing professionals were not barred from bringing a wage and hour class action against the hospital as their joint employer, even though the nursing professionals had settled similar claims with their W-2 staffing agency.
This final rule makes it substantially likelier under the NLRA that a healthcare facility is deemed the joint employer of contracted W-2 nurses. If deemed a joint employer, the healthcare facility is required to participate in the collective bargaining process along with other joint employers. The US Chamber of Commerce pointedly flagged this joint-employer risk to hospitals when this rule was initially proposed: “The potentially devastating impact of the proposed rule on hospitals and other health care facilities, and in turn on patient care, cannot be overstated. . . The proposed rule’s focus on reserved and indirect control could render hospitals joint employers of all their contract staff, particularly because hospitals’ health-related mission requires them to superintend all who work for them.”
This detrimental impact to hospitals was also discussed in the final rule by the NLRB’s dissenting member (page 74002):
[T]he final rule will negatively impact the healthcare sector. [T]he rule's unprecedented elevation of indirect control and reserved authority to control to dispositive status in the joint-employer analysis risks encroaching on a host of business relationships that hospitals rely on to provide lifesaving patient care. For instance, since the onset of the Covid–19 pandemic, many hospitals have utilized contracted labor in the form of travel nurses to fill critical staffing gaps. Travel nurses typically sign a contract with a staffing agency to occupy a temporary position at a hospital that can range in duration from several days to a few months. Under the final rule, a hospital that maintains (or merely has the authority to maintain) work rules and schedules for travel nurses on its premises will be their joint employer and duty-bound to bargain with the union that represents nurses directly employed by the staffing agency. Moreover, travel nurses are required to comply with the health and safety policies of the hospital where they work, which may impose more stringent requirements than those mandated by law. Again, under the final rule, the maintenance of these policies will make the hospital the joint employer of those nurses. The problematic consequences are not difficult to imagine.”
This new rule goes into effect on December 26, 2023. In preparation, healthcare facilities should evaluate their contingent nurse staffing options. A healthcare facility can help avoid the joint-employer issue by engaging independent healthcare professionals. Otherwise, healthcare facilities should work closely with legal counsel to ensure their W-2 staffing relationships and contracts comply with this new rule.