NLRB Reinstates Joint Employer Standard

February 28, 2018

On Feb. 26, the National Labor Relations Board (NLRB) withdrew its December decision overturning the Obama-era joint employment standard — a stunning reversal set in motion by questions of ethical misconduct surrounding one of the board’s newest members.

The decision to withdraw the Dec. 14 Hy-brand ruling came after an Inspector General (IG) report said that board member William Emanuel had a conflict of interests when he participated in Hy-brand because of the involvement of his former law firm in Browning-Ferris, the 2015 decision that Hy-brand reversed. Browning-Ferris made it easier to hold companies liable for labor violations committed by their franchisees or contractors. The IG’s probe was prompted by an inquiry Democratic lawmakers including Sen Patty Murry (D-Wash.) and Sen. Elizabeth Warren (D-Mass.), had made to Emanuel in late January regarding whether he should have recused himself.

“The National Labor Relations Board (3-0, Member Emanuel did not participate) today issued an Order vacating the Board’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co… 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 board said in a statement.

Joint employer refers to when one business is so intertwined with a second one that it can be held legally responsible the second business’s workplace policies. Until 2015, that required one business to have “direct control” over the other’s policies. However, in a 2015 case called Browning-Ferris, the then-Democratic majority appointee NLRB changed the standard to the much vaguer “indirect control.” The move was highly controversial with the business community, which argued the new standard was far too broad and ambiguous. In December’s Hy-Brand case, the NLRB, now with a Republican majority, overturned Browning-Ferris and restored the standard back to “direct control.”

However, in a Feb. 9 report to the board, NLRB Inspector General David Berry said that Emanuel, a Trump appointee to the board, “should have should have been recused from participation in Hy-Brand” due to potential conflicts of interest. Emanuel’s former management-side law firm, Littler Mendelson, had represented one of the clients in Browning-Ferris. Berry argued that because the ruling in Hy-Brand incorporated elements from the dissent in Browning-Ferris that linked the two cases. “The Board’s deliberation in Hy-Brand, for all intents and purposes, was a continuation of the Board’s deliberative process in Browning-Ferris,” he argued.

The vacation of the Hy-Brand case means the Obama-era joint employer standard may stay in place for a while. The board, which operates by simple majority, is currently split 2-2 between Republican and Democratic appointees. President Trump has nominated business lawyer John Ring to fill the fifth seat. Even if that pick is confirmed by the Senate, Emanuel may find himself under pressure to recuse himself from any other case that would overturn Browning-Ferris, leaving the board without a Republican majority in that situation.