NLRB Reverts Back to Broad Joint Employer Test Thumbnail

NLRB Reverts Back to Broad Joint Employer Test

On Monday, the NLRB unanimously vacated its December 2017 Hy-Brand Industrial Contractors decision, marking yet another abrupt reversal in the method for determining whether two employers can be held jointly liable for violations of labor and employment laws committed by either employer (See our December 20 alert here). In doing so, the Board effectively reinstated its 2015 Browning-Ferris Industries (“BFI”) decision, meaning that two businesses are joint employers when one has “indirect” or “reserved’ control over the other’s workers.

The Board’s decision in BFI was highly criticized by employers and business groups for expanding the joint employment standard, ultimately causing uncertainty regarding unionization, collective bargaining obligations, and labor and employment liability. Hy-Brand, issued just days before then-NLRB Chairman Phil Miscimarra’s term expired, returned to the 1985 standard under which two or more entities were deemed joint employers if one has direct and immediate control over the essential employment terms of the other’s employees and actually exercised that control in a manner that is not limited and routine.

The Board issued a 3-0 order unanimously vacating Hy-Brand in light of a memo sent by the NLRB’s Inspector General David Berry arguing that Board member Bill Emanuel improperly participated in the Hy-Brand decision. Berry noted that Emmanuel’s former law firm represented a contractor of BFI in the 2015 case before the Board and Hy-Brand was essentially a continuation of the deliberations in BFI. As a result of that memo, the Board consulted with their Designated Agency Ethics Official who determined that Emanuel is, and should have been, disqualified from participating in Hy-Brand.

Monday’s order puts greater pressure on Congress to pass 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 (See our November 7 alert here).

If you would like us to help you evaluate how this update may affect you, please contact one of Frantz Ward’s Labor and Employment Industry attorneys.

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