Labor Board Back to Five Member Composition – What Obama-Era Precedent Is Next on the Chopping Block?

by Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP

On April 11, 2018, former management lawyer John Ring was confirmed via a 50-48 party-line vote to serve on the five-member National Labor Relations Board (“Board”). Ring will replace Chairman Marvin Kaplan, another member of the Board’s Republican majority appointed by President Trump. Ring’s confirmation sets the stage for undoing many Obama-era rulings that have sparked controversy within the employer community. However, not all Obama-era cases may be fair game.

Joint Employer Test Still In Standstill Despite Republican Controlled Board

In Browning-Ferris Industries, 362 NLRB No. 186 (2015) (“BFI”), the Board overruled decades of precedent and announced a broad definition of “joint employer,” imposing liability and requiring bargaining in situations where a business possesses only potential and indirect control over the employees in question. In Hy-Brand Industrial Contractors Ltd., 365 No. 156 (December 14, 2017) (“Hy-Brand”), the Board’s Republican majority overturned the controversial standard set forth in BFI. However, that decision was vacated on February 27, 2018, due to a report from the Inspector General that Board Member William Emanuel should have been disqualified from participating in the Hy-Brand decision. Littler Mendelson P.C., Emanuel’s former law firm, represented one of the alleged joint employers in BFI when that case was before the Board. The Inspector General found that the deliberations that led to the Hy-Brand ruling were essentially a direct continuation of the BFI case, and thus should have precluded Emanuel’s involvement. In light of the ethics report, the Board exercised its discretion to vacate and set aside the Board’s Hy-Brand decision. Hy-Brand subsequently filed a motion for reconsideration of the Board’s decision, which is still pending before the Board.

Early this month, the D.C. Circuit Court of Appeals recalled its mandate to remand the appeal of BFI to the Board based on extraordinary circumstances. The case will be held in abeyance pending disposition by the Board of Hy-Brand’s pending motion for reconsideration. Thus, if the Board grants the pending motion for reconsideration vacating Hy-Brand, BFI would be in the same posture as it was when the Court of Appeals remanded it to the Board. On the other hand, if the Board denies the reconsideration motion, the Board would again have before it the question whether BFI should be overruled.

At this point, it seems relatively unlikely the Board will grant the motion for reconsideration in light of the recusal/conflict-of-interest issue looming over the Board, which would thus put the matter back in the hands of the D.C. Circuit Court of Appeals.

In any event, even if the D.C. Circuit Court of Appeals eventually affirms the BFI decision, the new Board would likely have the power to shift back to a more restricted, employer-friendly joint employment test in another test case. The biggest question is when? There are a number of other pending cases that could serve as vehicles to undo BFI, including Worldwide Flight Services, Inc. (ALJD May 31, 2017), Orchids Paper Products, Co. (ALJD September 15, 2017), and Preferred Building Services, Inc. (ALJD September 9, 2016) – all of which center on allegations of unfair labor practices of alleged joint employers. However, the Inspector General’s ethics report, which promoted Hy-Brand’s reversal, may create a potential roadblock at least for the time being. Although the Inspector General’s report applied only to the circumstances surrounding Emanuel and Hy-Brand, the Inspector General took an expansive view of what should require a recusal. The Emanuel controversy is testing the limits of an executive order and White House ethics pledge that requires presidential appointees to recuse themselves from matters involving their previous employers or their own former clients for two years. Some union advocates are even demanding that the Inspector General’s ethics report be read to altogether block Emanuel from ruling on any cases that challenge BFI’s joint employment analysis.

Many Other Obama-Era Rulings Likely Will Be Overruled

While the fate of BFI remains uncertain, a number of other Obama-era rulings are likely to change, including the following:

The Board’s 3-2 Republican majority will likely lead to overturning some of the sweeping decisions of the Obama Board. However, reexamination of these precedents will be highly dependent on the specific case and the composition of the Board deciding the case. While cases overturning prior Board precedent are typically decided by a full five-member panel, many cases are decided by a three-member panel.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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