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NLRB REINSTATES OLD “JOINT EMPLOYER” TEST

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Posted on 12/21/2017 at 12:00 AM by Russell Samson

On December 14, 2017, the National Labor Relations Board gave businesses and lawyers representing and advising them a valuable holiday gift.  By a 3-2 majority in Hy-Brand Industrial Contractors, the NLRB reversed the new “joint employer” test announced in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), to “return to the principles governing joint-employer status that existed prior to [the Browning-Ferris] decision.”

In Hy-Brand Industrial Contractors, the NLRB took up an appeal from an administrative law judge’s decision finding a joint employer relationship using Browning-Ferris standards.  Under those standards, two entities are joint employers based on the mere existence of reserved joint control, or if there is some (essentially undefined) indirect control, or even control that is limited and routine. 

Browning-Ferris test put into question the continued viability of many businesses and business models (like franchising). Although Browning-Ferris appealed the NLRB’s ruling to the United States Circuit Court of Appeals for the District of Columbia, that court has issued no decision as of the date I am writing this. Oral argument was on held March 9, 2017.  A recording of that argument is available from uscourts.gov. Several commentators have noted that during the oral argument, the judges on the D.C. Circuit court panel assigned to the appeal – two of whom were appointed by President Obama – seemed to have a difficult time with the standards the Board adopted in Browning-Ferris.  See examples of such comments on the Hunton & Williams Labor Blog and on Law360.com.

With President Trump’s two appointees, Republicans commanded a majority on the Board – at least through December 16, 2017, when Chair Philip Miscimarra’s term ended.  (Miscimarra had announced earlier that he would not seek reappointment.)  In Hy-Brand, the Republican majority of the Board characterized the Browning-Ferris standards for determining joint employment as follows: “a distortion of common law as interpreted by the Board and the courts, it is contrary to the [National Labor Relations] Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”  This frontal attack on Browning-Ferris may provide a possible rationale for the D.C. Circuit panel to use decline to enforce the initial Browning-Ferris decision.

From December 14, 2017, forward, however, one thing is now certain. Three elements must be proven for the NLRB to find a joint employer status between two separate entities:

  • First, each must “have actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control).”
  • Second, “the “control must be ‘direct and immediate’ (rather than indirect).”
  • Third, the “joint-employer status will not result from control that is ‘limited and routine.’”

For those of us who practice in the Eighth Circuit Court of Appeals, there is ample, long-established precedent supporting the joint employment test reinstated by the Board. See, e.g., Pulitzer Publishing Co. v. NLRB, 618 F.2d 1275, 1280 (8th Cir. 1980) (refusing to enforce a Board decision finding a joint-employer relationship, distinguishing cases “where the companies share direct supervision of the employees involved and control hiring, firing, and disciplining”).

An ironic footnote for history:  Although different tests were applied, all five members of the Hy-Brand Industrial Contractors NRLB were unanimous in concluding that there actually was a joint employer relationship between Hy-Brand Industrial Contractors and Brandt Construction Co. Thus, both were found liable for illegally firing seven employees who had gone on strike to protest their wages and working conditions.  The majority’s opinion had a section – VIII – devoted to “The Joint-Employer Question Presented in This Case.” There was an extensive discussion of various elements which led to the ultimate conclusion that,“ Substantial evidence supports a finding that the two entities exercised joint control over essential employment terms involving Brandt and Hy-Brand employees, the control was direct and immediate, and it was not limited and routine.” [Italics in original.]  Hy-Brand’s appeal may have provided the vehicle for a return to the “old” joint employer standards.  However, the appeal was, as far as Hy-Brand was concerned, for naught.  

For any questions regarding Employment and Labor Law please contact Russ Samson

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed. 

- Russ Samson

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