Volume 41 | Issue 35
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In 2015, a sharply divided NLRB replaced its decades-old standard for determining joint employer status with a far more expansive one in Browning-Ferris Industries of California. In December 2017, the board overruled that decision in Hy-Brand Industrial Contractors but subsequently reversed course. At least for now, businesses that use temporary or contingent worker, franchising and outsourcing arrangements remain at risk of being deemed joint employers for collective bargaining and other purposes, even when they have never exercised direct control over the workers involved.
Background
From 1984 until 2015, the National Labor Relations Board (NLRB) applied a standard that required a business to exercise direct and significant control over another entity’s workers in order to be deemed a joint employer. In its 2015 Browning-Ferris Industries of California, Inc. decision, the Obama board adopted a new, expansive standard for determining whether two employers are joint employers for purposes of the National Labor Relations Act (NLRA), including in representation cases and unfair labor practice cases. Under the Browning-Ferris standard, employers that have only indirect control (or the ability to exercise such control) over the essential terms and conditions of another entity’s employees are joint employers, with joint bargaining obligations, potential joint liability for unfair labor practices and breaches of collective bargaining agreements, and increased exposure to strikes and picketing. (See our September 25, 2015 For Your Information.) Browning-Ferris appealed the decision to the D.C. Circuit.
NLRB Overturns Browning-Ferris Standard
On December 14, 2017, the board overturned Browning-Ferris in its Hy-Brand Industrial Contractors decision. Post-Hy-Brand, joint employment status once again rested on one entity’s exercise of actual, direct, and immediate control over one or more essential employment terms and conditions of another entity’s employees. Shortly after the Hy-Brand decision, the NLRB asked the D.C. Circuit to remand the Browning-Ferris appeal so it could take appropriate action in light of its new precedent. On December 22, the court remanded the appeal to the agency “for further consideration in light of Hy-Brand,” and subsequently denied a motion for reconsideration.
The Hy-Brand decision faced immediate challenge, as the charging parties moved the board to reconsider, recuse and strike that decision. Among other things, the motion argued that NLRB Member William Emanuel — a member of the majority in the 3-2 Hy-Brand decision — had an obligation to recuse himself from participating in the case because his former law firm represented Leadpoint, a party in Browning-Ferris.
On February 9, while the motion was pending, the NLRB inspector general issued a report finding that “the Board’s deliberation in Hy-Brand, for all intents and purposes, was a continuation of the Board’s deliberative process in Browning-Ferris.” The report concluded that Emanuel should have recused himself from participating in the Hy‑Brand deliberations given his former law firm’s representation of a party in the Browning-Ferris case. Finally, it recommended that the board consult with the designated agency ethics official to determine what action to take in light of the report’s findings.
And Then Reverses Itself
Citing the inspector general’s determination that Member Emanuel should have been disqualified from participating in the Hy-Brand decision, a three-member panel of the board vacated the decision on February 26. It also made clear that “the overruling of the Browning-Ferris decision is of no force or effect.” Member Emanuel did not participate in the decision to vacate. Hy-Brand has since moved to have that ruling reversed, arguing that Member Emanuel was improperly excluded from participation, and the NLRB’s inspector general erred in concluding that Member Emanuel should have recused himself from participating in the Hy-Brand deliberations.
Meanwhile Back at the D.C. Circuit
After the board vacated the Hy-Brand decision, it asked the D.C. Circuit to reinstate the Browning-Ferris appeal and continue processing the case. Citing “extraordinary circumstances,” a split panel of the appeals court agreed on April 6 to recall the remand mandate and reinstate the appeal to its docket. However, the court decided to hold the Browning-Ferris appeal “in abeyance pending prompt disposition by the Board of the pending motion for reconsideration in Hy-Brand.” The court also ordered the NLRB to update the court every 21 days on the case status.
NLRB Returns to Full Strength
Last month, the NLRB returned to full strength as management-side attorney John Ring was sworn in as chairman. Ring’s addition to the board ended the 2-2 Republican-Democrat split that had been in place since December 2017.With a Republican majority restored, the board is expected to look for opportunities to revisit the issue of joint employment. Notably, in his confirmation hearing, Chairman Ring testified that it’s “very important for the integrity of the Board to have some finality and clarity on the joint employment issue as soon as possible.” Stay tuned. (See our April 20, 2018 Legislate.)
As the Board Looks to Rulemaking
While the new Republican majority board was expected to revisit Browning-Ferris, it was unclear when and through what vehicle that would happen. On May 9, the NLRB announced that it is considering rulemaking to address the standard for determining joint-employer status under the NLRA, and has included the proposal in the agency’s regulatory agenda. The move underscores Chairman Ring’s view of the critical need to remove uncertainty over the joint-employer standard and to work toward a proposed rule as soon as possible.
In Closing
While the issues surrounding Hy-Brand remain unresolved, the Obama board’s Browning-Ferris joint employer standard remains board law. The more business-friendly Trump board is expected to change that, and use notice-and-comment rulemaking to consider views on what the joint employer standard should be. In the meantime, a business may still be deemed a joint employer, regardless of whether it actually exercises direct control over essential employment terms of another entity’s employees.