During the brief period in late 2017 when there was a 3-2 Republican majority on the National Labor Relations Board, the Board issued a few decisions undoing some of the most union- or employee-friendly decisions of the Obama-era NLRB. One of those decisions was Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017), in which the Board overruled the Obama Board’s dramatic expansion of the standard for joint employer status.
In Browning-Ferris Industries, 362 NLRB No. 186 (2015), the Democrat-majority NLRB under President Obama departed from decades of established precedent and held that one employer could be liable for another employer’s unfair labor practices, and subject to the other employer’s bargaining and other obligations under the National Labor Relations Act, if it exerted merely “indirect control” or “reserved authority” over the other employer’s employees. This joint employer standard would be met, moreover, if that control applied not only to hiring, firing, discipline, supervision, and direction (the “essential” aspects of the employment relationship that the joint employer test traditionally focused upon), but alternatively to a wide-range of new “essential” terms and conditions of employment such as the number of workers to be supplied; scheduling, seniority, and overtime, assigning work, and determining the manner and method of work performance. The seemingly limitless scope of this new standard was highly concerning to employers, because it potentially created joint employer relationships out of a host of business arrangements where joint employment had never been contemplated, including creditor-debtor, insured-insurer, lessor-lessee, creditor-consumer, and others. As a result of the new standard, a new level of caution and analysis became necessary to avoid an unintended joint employer relationship, and existing arrangements became an unforeseen source of risk.
Those concerns seemed to be alleviated by the Board’s decision in Hy-Brand, which overruled Browning-Ferris and restored the traditional joint employer standard requiring “direct and immediate control” over the traditional essential terms and conditions of employment.
Unfortunately, employers will need to step back and return to their Browning-Ferris mindset. As a result of a determination that one of the new members of the Board had a conflict of interest which should have disqualified him from participating in the Hy-Brand case, the Board has vacated Hy-Brand and that decision has no force or effect. That means Browning-Ferris remains binding precedent and the current state of the law. Despite this turn of events, employers will be happy to know that the long-term prospects for Browning-Ferris are not very good. First, there is a new Republican nominee for the vacant Board seat that is working his way through the Senate confirmation process and, once confirmed, it is likely that the 3-2 Republican majority will again overturn Browning-Ferris when an opportunity arises. Second, any new case involving an alleged joint employer relationship under Browning-Ferris will be reviewed by NLRB General Counsel Peter Robb. General Counsel Robb, also a President Trump appointee, has directed the Regional Offices to send him any cases that involve the joint employer standard under Browning-Ferris, and it is possible that he will not advance any new cases that would support the expanded standard until the pending nominee is confirmed, at which time the Board can once again overturn Browning-Ferris.
We will continue to monitor developments in this area and keep you apprised.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
[View source.]
