Executive Summary: The National Labor Relations Board (“NLRB” or “Board”) has vacated its decision in Hy-Brand Industrial Contractors, Ltd., (“Hy-Brand”), thereby reinstating the joint employer standard created by the Obama Board in the Browning-Ferris Industries of California, Inc. (“BFI”) decision. The Board’s reversal was due to an apparent conflict of interest created by Board Member William Emanuel’s participation in the Hy-Brand decision.
BFI
On August 27, 2015, the Board issued its decision in BFI. In that decision, the Board set forth a new standard to determine whether a joint-employment relationship existed. Under that standard, a joint-employer relationship will be found if the alleged joint-employers possess, exercise or simply retain the right, directly or indirectly, to control essential terms and conditions of employment, even if that control is not exercised.
Hy-Brand
In Hy-Brand, the Board, by a 3-2 vote on December 14, 2017, reversed its decision in BFI and restored the joint-employment standard used by the Board for determining joint-employment for decades prior to BFI. Under the Hy-Brand standard, an entity is a joint employer only where it has actually exercised “direct and immediate” control over the essential terms and conditions of employment of the other entity’s employees, such as hiring, discipline, termination, suspension and direction. FordHarrison’s legal alert on this decision is available here.
Decision to Vacate
The charging parties in Hy-Brand filed a motion for “reconsideration, recusal, and to strike,” asking the Board to reconsider its decision and order in Hy-Brand and seeking the recusal of Member Emanuel on the basis that he should not have participated in the Hy-Brand decision due to a conflict of interest. Specifically, they argued Emanuel should have recused himself from the decision in Hy-Brand to overrule BFI because, prior to his appointment to the NLRB, he was a shareholder in a law firm that represented a party in BFI. On February 26, 2018, a three-member panel of the Board (which did not include Emanuel) granted the charging parties’ motion for reconsideration and vacated its decision in Hy-Brand. The decision is available at 365 NLRB No. 156.
Effect on Employers
The Board has effectively reinstated the BFI standard by vacating Hy-Brand. However, this reinstatement is likely temporary. There is little doubt that the Board will revisit (and overrule) BFI in the near future. Immediately following the Hy-Brand decision, the term of Chairman Miscimarra expired, reducing the Board to four members with a 2-2 partisan split. Trump nominee John Ring awaits a confirmation vote in the Senate. In the meantime, NLRB General Counsel Peter Robb has ordered all Regional Directors to send any joint employer cases that address the issues in BFI to the Division of Advice.
If you have any questions regarding this decision or other labor or employment issues, please feel free to contact the authors of this Alert, Rick Warren, rwarren@fordharrison.com, or Henry Warnock, hwarnock@fordharrison.com, both of whom are partners in our Atlanta office. Of course, you may also contact the FordHarrison attorney with whom you usually work.