The National Labor Relations Board (NLRB) announced yesterday that it was vacating its December 14, 2017, ruling in Hy-Brand Industrial Contractors, Ltd, that overturned the Board’s 2015 decision in Browning Ferris. Employers will remember that under Browning-Ferris, entities could be considered “joint employers” for purposes of federal labor law, including collective bargaining and unfair labor practices, based only on “indirect control” of another entity’s employees. Hy-Brand was the Board’s effort to restore the joint employer standard to the pre-Browning-Ferris standard of “direct control.”
While employers nationwide cheered the Hy-Brand decision, in a February 9, 2018, report to the Board, the NLRB Inspector General opined that Board Member William Emanuel, a Trump appointee to the board, “should have been recused from participation in Hy-Brand” due to potential conflicts of interest. Emanuel’s former law firm had represented one of the entities in Browning-Ferris. The Inspector General argued that because the ruling in Hy-Brand incorporated elements from the dissent in Browning-Ferris “the Board’s deliberation in Hy-Brand, for all intents and purposes, was a continuation of the Board’s deliberative process in Browning-Ferris.”
The vacation of Hy-Brand could result in the Browning-Ferris standard controlling for the foreseeable future. The Board is currently split 2-2 between Republican and Democratic appointees. While President Trump has nominated business lawyer John Ring to fill the fifth seat, even if Ring is confirmed by the Senate, Emanuel may face future pressure to recuse himself in any case that could overturn Browning-Ferris, which would leave the Board potentially deadlocked.
In the meantime, companies may once again find themselves potentially liable for federal labor law violations or obligations in situations in which the companies had no direct control. Industries particularly susceptible to Browning-Ferris claims of joint employer status include franchises, staffing agencies, and employers utilizing temporary employees.