As we had previously reported, in 2015 the then-Democrat controlled National Labor Relations Board (NLRB) in the Browning-Ferris case ruled that a joint employer relationship could be found if an entity had mere indirect or potential control over individuals employed by another entity. This decision reversed decades of precedent in which the NLRB held that a joint employer relationship would only be found if one entity had “direct and immediate control” over individuals employed by another entity.
However, in December 2017, the Republican majority on the NLRB in Hy-Brand Industrial Contractors, Ltd., expressly overruled Browning-Ferris. It returned to the Board’s previous stance that in order for a joint employer relationship to be found, proof must exist that the putative joint employer exercised direct and immediate control over essential employment terms, and that control that is merely limited and routine would not be sufficient to support a finding of joint employer status.
In an unexpected twist to this story, the union in the Hy-Brand case, supported by some Congressional Democrats, filed an appeal, claiming that one of the Republican NLRB members, William Emanuel, should not have participated in deciding the case due to a conflict of interest based upon his former law firm’s representation of the respondent in Browning-Ferris. The NLRB Inspector General concluded that Emanuel should have recused himself from any participation in Hy-Brand. Based upon the Inspector General’s findings, on February 26, 2018, the NLRB vacated its Hy-Brand decision, thereby reinstating – for the time being at least – the Browning-Ferris standard for joint employer status.
But the Browning-Ferris revival may be short-lived for a number of reasons. President Trump has nominated a Republican, John Ring, to fill the now-vacant fifth seat on the NLRB and if he is confirmed, the Republican majority will be reestablished. In addition, the NLRB’s General Counsel (also a Republican) has directed that any cases involving the joint employer issue be sent to him, and it is possible that he will not advance any such cases until the Republican majority is in place. Finally, the U.S. House of Representatives has passed (and sent to the Senate) the Save Local Business Act which would amend the National Labor Relations Act and the Fair Labor Standards Act to establish a direct control standard for joint employer liability.