NLRB Vacates Joint Employer Decision
On February 26, 2018, the National Labor Relations Board (NLRB or Board) (3-0, Member Emanuel did not participate) issued an Order vacating the Board’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017), in light of the determination by the Board’s Designated Agency Ethics Official that Member Emanuel should have been disqualified from participating in the proceeding.
Because the Board’s decision and Order in Hy-Brand have been vacated, the overruling of the Board’s decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015) is of no force or effect.
On February 9, 2018, Inspector General David Berry issued a memorandum concluding that there was a “serious and flagrant problem and/or deficiency” in the Board’s deliberation process because Leadpoint, a party in Browning-Ferris, is represented by Member Emanuel’s former law firm.
In Browning-Ferris, the Board majority held that even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not “direct and immediate,” the two entities will still be considered joint employers if they merely exercise “reserved” joint control, indirect control, or control that is “limited and routine.”
As reported in a December Alert, the Hy-Brand majority asserted that the Browning-Ferris standard “is a distortion of common law as interpreted by the Board and the courts; it is contrary to the [National Labor Relations Act]; it is ill-advised as a matter of policy; and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”
The Hy-Brand majority overruled Browning-Ferris and restored the joint-employer standard that existed prior to that decision. According to the majority, “a finding of joint-employer status requires proof that the alleged joint-employer entities have actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), and the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”
But now, the overruling of Browning-Ferris is vacated, and the more expansive joint employer test is back in force, which is of great concern to many employers, particularly in the franchising industry. It may take a new case before the Board, or a legislative solution, to address the issue.
Arent Fox’s Labor & Employment group will continue to monitor developments in this area. If you have any questions, please contact Michael Stevens or the Arent Fox professional who usually handles your matters.
On February 9, 2018, Inspector General David Berry issued a memorandum concluding that there was a “serious and flagrant problem and/or deficiency” in the Board’s deliberation process because Leadpoint, a party in Browning-Ferris, is represented by Member Emanuel’s former law firm.
In Browning-Ferris, the Board majority held that even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not “direct and immediate,” the two entities will still be considered joint employers if they merely exercise “reserved” joint control, indirect control, or control that is “limited and routine.”
As reported in a December Alert, the Hy-Brand majority asserted that the Browning-Ferris standard “is a distortion of common law as interpreted by the Board and the courts; it is contrary to the [National Labor Relations Act]; it is ill-advised as a matter of policy; and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”
The Hy-Brand majority overruled Browning-Ferris and restored the joint-employer standard that existed prior to that decision. According to the majority, “a finding of joint-employer status requires proof that the alleged joint-employer entities have actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), and the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”
But now, the overruling of Browning-Ferris is vacated, and the more expansive joint employer test is back in force, which is of great concern to many employers, particularly in the franchising industry. It may take a new case before the Board, or a legislative solution, to address the issue.
Arent Fox’s Labor & Employment group will continue to monitor developments in this area. If you have any questions, please contact Michael Stevens or the Arent Fox professional who usually handles your matters.
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