HR Management & Compliance

NLRB Vacates Employer-Friendly Joint-Employment Decision

When the National Labor Relations Board (NLRB) issued a decision on joint employment on December 14, 2017, many employers breathed a sigh of relief as the Board reinstated an old employer-friendly standard on what’s considered joint employment. But now employers find themselves once again judged by the previous, less friendly standard after the NLRB took the unusual step of vacating the December decision in the wake of conflict-of-interest accusations against Board Member William J. Emanuel.joint employer

On February 26, the Board issued an order vacating the Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. decision “in light of the determination by the Board’s Designated Agency Ethics Official that Member Emanuel is, and should have been, disqualified from participating in this proceeding.”

The action comes after reports that the NLRB’s inspector general asserted that Emanuel should have recused himself because his former law firm was involved in the Board’s 2015 Browning-Ferris decision, which was overruled by Hy-Brand.

Browning-Ferris broadened what could be considered a joint-employment relationship. Under Browning-Ferris, employers that had even indirect control over employees of another employer could be considered joint employers.

The 3-2 party line Hy-Brand decision reinstated an old standard on joint employment favored by employers using temporary staffing agencies and employers using a franchisor-franchisee business model. That standard said joint employment occurs only when there is proof that one entity has exercised control rather than merely having reserved the right to exercise control.

Troublesome Tactic

Kevin C. McCormick, an editor of Maryland Employment Law Letter and attorney with Whiteford, Taylor & Preston L.L.P. in Baltimore, Maryland, finds the latest development troubling. He said unions are doing everything they can to keep the Board from revisiting decisions that came through during the Obama administration, when the Board had a Democratic majority.

Currently, the Board has two Republicans—Emanuel and Chairman Marvin E. Kaplan—and two Democrats—Mark Gaston Pearce and Lauren McFerran. There is one vacancy, the seat vacated by Republican Philip A. Miscimarra on December 16.

Republican John Ring has been nominated for the vacant seat. His confirmation hearing in the Senate is set for March 1.

McCormick points out that like Emanuel, Ring is from a large law firm that represents employers in employment matters. Ring is with Morgan, Lewis & Bockius LLP. If the Hy-Brand decision was a problem for Emanuel, McCormick is concerned that Ring will face the same problem if the standard is that a Board member with a history at a big global firm can’t participate in cases if someone in a part of the member’s old firm had any involvement in the issue.

“I’m disappointed they’ve gotten traction on this issue,” McCormick said of unions. They’ve seen that the strategy can be successful, “so they’ll do it again.”

Maybe Just a Hiccup

Ryan J. Funk, an editor of Indiana Employment Law Letter and attorney with Faegre Baker Daniels LLP in Indianapolis, Indiana, pointed out that the Board issued “monumental decisions in very quick succession” late last year while Republicans held a 3-2 majority on the Board. “It was so decisive it seemed unstoppable,” he said.

Although the latest development is “a surprising twist,” Funk is not convinced returning to the Browning-Ferris standard is going to affect many employers—maybe ultimately just those who were parties to Browning-Ferris.

“As of today, we are technically exactly where we were on December 13, 2017, the day before the NLRB issued its decision in Hy-Brand,” Funk said. That makes Browning-Ferris law again, meaning it’s much easier for the NLRB to find that two legal entities are joint employers together.

“What we lawyers do is try to predict what a decision-maker is going to say about our client’s particular situation,” Funk said. Since the Board has returned to the Browning-Ferris standard, it would be reasonable to think that the Board will apply that standard going forward. “But this time it’s different,” he said.

“This is a hiccup on the Board’s obvious march toward loosening the joint[-]employer standard. This Board showed us in Hy-Brand where it wants to go. So if I’m trying to predict how the NLRB is going to rule in my client’s case, I am still looking to Hy-Brand, even though for now it is not officially the law,” Funk said.

Questions on Board-Union Ties

Burton J. Fishman, a contributor to Federal Employment Law Insider and senior counsel with Fortney & Scott, LLC, in Washington, D.C., was surprised by the Board’s decision to vacate Hy-Brand, and he questions whether Democrats would take the same position with respect to Board members with union backgrounds being forced to recuse themselves from cases affecting union rights. He points out that former NLRB General Counsel Richard Griffin, a Democrat, served on the AFL-CIO Lawyers Board “right until he was nominated.”

Tammy Binford writes and edits news alerts and newsletter articles on labor and employment law topics for BLR web and print publications.