NLRB Decision Complicates Joint Employer Issues

by Baker Donelson
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Baker Donelson

Employers are left more confused than ever after the National Labor Relations Board (NLRB) issued an Order on February 26, 2018 vacating its opinion in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. (Hy-Brand) citing ethical concerns regarding the participation of Board Member William Emanuel in that decision. The Hy-Brand case overturned the controversial joint employer test set out in Browning-Ferris Industries (Browning-Ferris). By rejecting the Hy-Brand decision, the NLRB returned to the Browning-Ferris standard, an older, more lenient version of the joint employer test.

In the Browning-Ferris opinion, which was released on August 27, 2015, the NLRB re-established the old joint employer test. Under the Browning-Ferris standard, two or more entities are joint employers if: (1) they are both employers within the meaning of the common law, and (2) they share or co-determine those matters governing the essential terms and conditions of employment. In assessing whether an employer retains sufficient control over employees to qualify as a joint employer under Browning-Ferris, the NLRB focused on whether an employer exercised control over terms and conditions of employment indirectly or through an intermediary, or whether the employer reserved the authority to do so. Interestingly, this older standard was also articulated by the Third Circuit Court of Appeals in another case involving Browning-Ferris, NLRB v. Browning-Ferris Industries.

In 2017, however, the NLRB's Hy-Brand decision overturned Browning-Ferris and reinstituted a more employer-friendly standard. Under Hy-Brand, a finding of joint-employer status requires proof that putative joint employer entities have actually exercised joint control over essential employment terms, as opposed to merely having reserved the right to exercise control. This control must be direct and immediate, and joint employer status will not result from control that is "limited and routine."

The decision to vacate Hy-Brand was based in part on a ruling by the NLRB's Designated Agency Ethics Official with the Office of the Inspector General that Board Member Emanuel should be disqualified from participating in the Hy-Brand proceedings because he would have been ethically prohibited from participating in the Browning-Ferris case due to the involvement of his former law firm. It is important to note that although Emanuel's former firm was involved in Browning-Ferris, the firm did not represent Browning-Ferris, but rather another entity involved in the case.

In vacating Hy-Brand, the Board effectively resurrected the Browning-Ferris standard as the appropriate test for identifying joint employers. However, a challenge to the Browning-Ferris decision remains pending and will now proceed back to the U.S. Court of Appeals for the District of Columbia Circuit.

Member Emanuel remains an active member of the Board but is completely barred from all proceedings involving the Browning-Ferris decision, and as a result, Hy-Brand is no longer controlling precedent. In the meantime, the NLRB is also waiting for Congress to confirm John Ring to fill the vacant position on the Board formerly held by Philip A. Miscimarra, whose term ended December 16, 2017. Thus, the Board is currently comprised of only three members who can rule on the Hy-Brand issue – Mark Gaston Pearce (Democrat), Lauren McFerran (Democrat), and Marvin E. Kaplan (Republican). Members Pearce and McFerran dissented in the original Hy-Brand decision in December 2017, and they have not indicated that their positions will change. Accordingly, a vote by the current board would likely uphold the Browning-Ferris standard for joint employers. Furthermore, even if Mr. Ring is confirmed as a member of the Board, his vote would presumably be in favor of overturning Browning-Ferris, resulting in a 2-2 split because of Member Emanuel's recusal from future decisions on this issue.

The next vacancy on the Board will occur when Member Pearce's term expires on August 27, 2018. If prior practice is continued, the vacancy will be filled by a Democrat, who would likely support Browning-Ferris. Consequently, Browning-Ferris will likely remain the prevailing standard on joint employers, absent legislative action on this issue.

 

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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