On February 26, the National Labor Relations Board (NLRB) decided unanimously to vacate its decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) (vacated at 366 NLRB No. 26). The decision comes after the NLRB’s Inspector General issued a report finding that one of its members, William Emanuel, had a conflict of interest and should have been disqualified from participating in the case. As we reported previously, in December 2017, the NLRB issued a 3-2 decision in Hy-Brand, in which it overruled the controversial joint-employer standard articulated in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015). The Browning-Ferris decision had significantly relaxed the standard for proving that two entities are joint employers, ruling that entities could be joint employers even if one had only indirect control or the unexercised right to control employees’ terms and conditions of employment. The Hy-Brand decision returned to the pre-Browning-Ferris standard for finding joint-employer status, under which entities are joint employers only if each has exercised direct and immediate control over employees.

After the NLRB issued its Hy-Brand decision, the charging parties filed a motion asking the NLRB to reconsider the decision and seeking the recusal of Board Member Emanuel based on an alleged conflict of interest. Emanuel came to the NLRB from a law firm that had represented a contractor of Browning-Ferris when the Browning-Ferris case was before the NLRB. The NLRB’s Inspector General determined that Emanuel should have been disqualified from participating in the Hy-Brand case because it was essentially a continuation of Browning-Ferris (to the point of incorporating language from the Browning-Ferris dissent). Based on the Inspector General’s conclusions, the NLRB unanimously decided to vacate and set aside the Hy-Brand decision. The board held that its overruling of the Browning-Ferris decision in Hy-Brand “is of no force or effect.”

This means that, at least for now, the Browning-Ferris standard is in effect, and it will be much easier for employees and unions to establish that two companies are joint employers. The Browning-Ferris case, which had been appealed to the D.C. Circuit, was remanded to the NLRB before the D.C. Circuit rendered an opinion so that the NLRB could reconsider it in light of its decision in Hy-Brand. Any decision the NLRB issues in that case will be without Emanuel’s participation, and will likely depend on when President Trump’s pending republican nominee to the NLRB is confirmed. Presently, there are two republican appointees to the NLRB (one being Emanuel) and two democrats. It may be that the next action on joint employment comes from Congress. The Save Local Business Act, which would establish a direct-control standard for finding joint employment under the National Labor Relations Act and the Fair Labor Standards Act, is pending in the Senate.