NLRB Vacates Recent Joint Employer Decision

On February 26, 2018, the National Labor Relations Board (NLRB) rescinded its recent 3-2 decision in Hy-Brand Indus. Contractors, Ltd., 365 NLRB No. 156 (2017), which had restored the traditional standard for determining when multiple entities are joint employers under the National Labor Relations Act (NLRA). The Board’s action stemmed from a determination by the NLRB’s Designated Agency Ethics Official that one of the Board Members who voted in favor of the Hy-Brand decision should not have participated in that decision.

The vacatur of the Hy-Brand decision is a setback for the business community. As we previously reported, the Hy-Brand decision overruled the NLRB’s controversial joint employer decision in Browning-Ferris Indus. of Cal., Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015) and restored the decades-old standard that required an entity to actually exercise direct and immediate control over another entity’s essential employment conditions and terms to be a joint employer. In Browning-Ferris, the Board decided that two or more entities could be jointly liable under the NLRA if one of the entities merely reserves the right to indirectly control essential employment conditions and terms of another entity. Once again, this funky joint employer standard as set forth in Browning-Ferris is NLRB law.

In a memorandum dated February 9, 2018, the Board’s Inspector General, David P. Berry, opined that one of the NLRB Members who voted in favor of the Hy-Brand decision should not have participated in the decision because that Board Member’s prior employer represented one of the parties in Browning-Ferris. The NLRB’s Inspector General wrote that Executive Order 13770 “prohibits an appointee from participating in a ‘particular matter involving specific parties’ when the appointee’s former employer or client is a party or represents a party.” In light of the Executive Order, the Board’s Inspector General concluded that “[t]he wholesale incorporation of the dissent in Browning-Ferris into the Hy-Brand majority decision consolidated the two cases into the same ‘particular matter involving specific parties,’” thereby rendering it problematic for the NLRB Member whose former employer represented a party in Browning-Ferris to participate in the Hy-Brand decision. The Inspector General recommended that the Board “consult with the Designated Agency Ethics Official . . . ,” which led to last week’s order vacating the Hy-Brand decision.

It is not clear when the NLRB will have an opportunity to revisit the joint employer standard set forth in Browning-Ferris again. The Board currently is comprised of four Members, two of whom were appointed by the prior administration and are proponents of the Browning-Ferris decision, namely, Lauren McFerran and Mark Gaston Pearce. Because a majority rules at the NLRB, even putting Executive Order 13770 aside, the other two Board Members who were appointed by the current administration and supported the Hy-Brand decision, namely, Chairman Marvin E. Kaplan and William J. Emanuel, presently do not have the votes they would need to overturn Browning-Ferris in a subsequent, conflicts-free case. The President has nominated a fifth Member to the final NLRB seat, namely, John F. Ring, who still is awaiting Senate confirmation. Assuming Mr. Ring would vote to overturn the joint employer standard set forth in Browning-Ferris if/when he is sworn in, the Board still would need the appropriate joint employer case to make its way to the NLRB before the joint employer standard could be changed.

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Employers with questions about the ongoing changes at the National Labor Relations Board should contact an attorney in the Gibbons Employment & Labor Law Department.

James J. La Rocca is a Director in the Gibbons Employment & Labor Law Department.
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