NLRB Vacates 2017 Ruling on “Joint Employment” that Favored Employers

Legal News GavelEstablishing an employer-employee relationship is the first step in claims under most federal and New Jersey employment statutes, but that relationship is not always easy to identify. Multiple individuals or organizations can act in the capacity of an employer over a particular worker. They can cause the same harm that employment statutes were created to address, so courts have recognized the concept of “joint employment” for this type of situation. In 2015, the National Labor Relations Board (NLRB) expanded the earlier standard for determining joint employment in cases brought under the National Labor Relations Act (NLRA). Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015). Two years later, the NLRB reversed this ruling in Hy-Brand Industrial Contractors, Ltd. (“Hy-Brand I”), 365 NLRB No. 156 (Dec. 14, 2017), but this victory for employers was short-lived. The NLRB vacated its ruling after finding that one of the board members who voted in Hy-Brand I should have recused himself. Hy-Brand Industrial Contractors, Ltd. (“Hy-Brand II”), 366 NLRB No. 26 (Feb. 26, 2018).

In Browning-Ferris, the NLRB revised its standard for determining joint employment. The standard in place at the time looked at the extent of control actually exercised over an employee by an alleged joint employer. The NLRB found that this standard was too narrow. It held that an alleged joint employer does not need to exercise control “directly and immediately.” Browning-Ferris at 1. Instead, indirect control, “such as through an intermediary,” could suffice to establish joint employment. Id. The key was that an alleged joint employer had the authority to exercise control, and therefore it could do so at any moment.

In Hy-Brand I, the NLRB reversed Browning-Ferris by a 3-2 vote. It affirmed the finding by the administrative law judge (ALJ) that the companies at issue were joint employers under the NLRA, but it went on to address the legal standard that the ALJ used. It found the Browning-Ferris standard to be “a distortion of common law,” “contrary to the [NLRA],” and “ill-advised as a matter of policy.” Hy-Brand I at 2. It restored the earlier standard, holding that joint employers must “have actually exercised joint control over essential employment terms” and that “the control must be direct and immediate” rather than “limited and routine.” Id. at 35.

At the time of the Hy-Brand I ruling, an appeal of Browning-Ferris was pending in the D.C. Circuit Court of Appeals. The court remanded the case to the NLRB with instructions to reconsider its ruling in light of Hy-Brand I. Before this could happen, the Teamsters union filed a motion asking the D.C. Circuit to reconsider. They alleged that one of the NLRB members who voted with the majority in Hy-Brand I should have recused himself because one of the parties in Browning-Ferris was a client of his former law firm. The charging parties in Hy-Brand filed a similar motion with the NLRB. A three-member panel of the NLRB agreed and vacated Hy-Brand I, meaning that “the overruling of the Browning-Ferris decision is of no force or effect.” Hy-Brand II at 1.

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More Blog Posts:

NLRB Reverses 2016 Decision, Gives ALJs Greater Authority to Force Settlements in New Jersey Labor Disputes, The New Jersey Employment Law Firm Blog, February 2, 2018

NLRB Issues Important Ruling Regarding “Joint Employers”, The New Jersey Employment Law Firm Blog, October 15, 2015

NLRB Allows McDonald’s Employees to File Complaints Against McDonald’s and Individual Franchisees as “Joint Employers”, The New Jersey Employment Law Firm Blog, November 3, 2014

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