On December 14, 2017, many employers probably celebrated when they learned that the Browning-Ferris standard for joint-employer liability had finally been overruled. In the 2015 Browning-Ferris decision, the National Labor Relations Board (the “NLRB”) greatly expanded the standard for joint-employer liability, and found that indirect control and even control that is reserved, but not exercised, may establish joint-employer status. For employers, Browning-Ferris muddied the waters and created much uncertainty concerning the existence of joint-employer relationships as a result of their business dealings.
In December 2017, however, the NLRB abandoned the broad Browning-Ferris standard in Hy-Brand Indus. Contractors, Ltd. Under Hy-Brand, joint-employer status could only be established with evidence of the exercise of “direct and immediate control” over an entity’s employees. Furthermore, “limited and routine” control over employees was insufficient to establish a joint-employer relationship. Little did we all know that this victory would soon be rescinded.
On February 26, 2018, in a 3-0 Order, the NLRB unanimously vacated the Hy-Brand decision. The NLRB’s conclusion was based on a general report by NLRB Inspector General, David Berry, that disapproved of board member, Bill Emanuel’s, participation in the case. Apparently, Emanuel’s former law firm had represented Browning Ferris Industries before the NRLB in 2015 in the Browning-Ferris case. After examining the issue, the NRLB determined that Emanuel should have been disqualified from the proceeding due to his conflict of interest, and that his participation in the case called into question the ruling’s overall validity.
Why should employers care if they are joint-employers with another entity? For one thing, employers that use subcontracted employees may be subjected to unwanted union-organizing campaigns or other labor disputes regarding those subcontracted employees if they are found to be joint-employers with the contracting agency. This is why the loose Browning-Ferris standard has been so controversial in industries that rely heavily on staffing agencies to supply labor. Now that Hy-Brand has been vacated, Browning-Ferris remains to be the law of the land regarding joint-employer liability, and employers who routinely use subcontracted employees will be scrutinized under this standard. This is clear from the NLRB’s statement that “the overruling of the board’s decision in Browning-Ferris Industries . . . is of no force or effect.” In reaction to the vacated ruling, perhaps businesses will place more pressure on Congress to amend the National Labor Relations Act to explicitly establish a direct control standard of joint-employer liability. Until that happens, however, employers must continue to follow Browning-Ferris, and wait until the NLRB has the opportunity to revisit this issue in the future.