In December, we wrote that the NLRB had issued a decision overturning Browning-Ferris’ joint employer test and returning to the previous standard for determining joint employment. That decision in Hy-Brand Industrial Contractors was seen as a return to sanity by employers and pro-business groups.
Unfortunately, the NLRB announced today that it had vacated the Hy-Brand decision due to the fact that one of its members who heard the case had a conflict. Member William Emmanuel’s law firm had participated in the Browning-Ferris case. Since Hy-Brand directly addressed the Browning-Ferris standard, the NLRB Inspector said that Emmanuel should not have participated in the Hy-Brand case.
The Browning-Ferriss case set forth a standard for joint employment that noted that businesses could be joint employers simply because they reserved the right to control the actions of the other entity’s employees, even if they never actually exercised that authority. That, of course, created great consternation in the franchise setting as franchisor agreements may typically have a broad right to address franchisees’ employee issues that may never actually be exercised. Franchisors, conscious of protecting their brand’s image, usually inserted such clauses to insure that a franchisee’s employees would not denigrate the brand.
It is not clear at this point when Hy-Brand will be reheard or if the issue will come before the Board in another case. In the meantime, employers are stuck with Browning-Ferriss. To the extent that employers revised franchise agreements after the Hy-Brand decision was issued, they should have those agreements reviewed by legal counsel.