Contractors Beware: Browning-Ferris Stands as Law of the Land… for Now
Perhaps no issue has generated more buzz in labor law circles in recent months than the National Labor Relations Board’s (NLRB) stance on joint employer liability. The consequences of being deemed a joint employer can be dramatic for the unsuspecting employer. If present, a joint employer relationship will bind one entity to another entity’s collective bargaining obligations with the union. It can also mean that an entity will be held jointly liable for any unfair labor practices committed by the other entity in violation of the National Labor Relations Act (NLRA).
The decision as to who and under what circumstances an entity may qualify as a joint employer ultimately rests with the five-member adjudicative arm of the NLRB that sits in Washington D.C. and which is charged with interpreting the NLRA. The five members of the Board are appointed by the President of the United States and serve staggered terms. In 2015, the Board issued a ruling that greatly relaxed the standard for when a company can be considered a joint employer with its decision in Browning-Ferris Industries of California, d/b/a BFI Newby Island Recyclery (Browning-Ferris). The Board departed from decades of precedent holding that an entity could be considered a joint employer only if it exercised “direct and immediate” control over the essential employment terms and conditions of another entity’s employees. In Browning-Ferris, the Board endorsed a standard by which “indirect control” or a retained right to control is sufficient to confer joint employer status. This means that a contractor could be deemed a joint employer where its contract with another entity reserves a right of control over the other entity’s employees, regardless of whether the control is actually exercised.
With the recent appointment of several new members to the NLRB, employers gained a sense of hope that Browning-Ferris would be reversed. On December 14, 2017, that hope came to fruition, or so employers thought. The Board issued its decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) (Hy-Brand) in which it expressly overruled Browning-Ferris and announced a return to its prior test of “direct and immediate control.” But the relief for employers was short-lived. On February 26, 2018, the Board vacated Hy-Brand due to ethical concerns raised by Board Member William Emanuel’s participation in the case, after it was revealed that Emanuel’s old law firm had been involved in litigating Browning-Ferris. As a result, Browning-Ferris was restored as the law of the land.
It is important to know that the final word on Browning-Ferris has not yet been spoken. The Board’s decision was appealed to the United States Circuit Court for the District of Columbia. That appeal was returned to the D.C. Circuit after the Board vacated Hy-Brand. If the D.C. Circuit upholds Browning-Ferris, employers may be left waiting a long time to see its ultimate demise because Board Member Emanuel was in the 3-2 majority in Hy-Brand. With his preclusion from participating in any future decision that would overturn Browning-Ferris, the Board, as presently constituted, would most likely be deadlocked 2-2. It is worth mentioning that Congress recently proposed legislation, which is pending in the House, that would have the effect of rendering the “direct and immediate control” test as the law that could likely not be altered by the NLRB.
In light of where things presently stand, contractors should continue to be aware of the implications of mandating conditions of employment for the employees of any entity with whom the contractor does business. The “control factors” that may be viewed upon by the NLRB as giving rise to a joint employer relationship include control over wages, hours, assignment of job duties, and adherence to work rules and safety policies. A contractor that wishes to limit its risk of being found a joint employer should, to the extent practicable, limit the elements of actual control over another company’s employees and the illusion of such control that may be found based on the language of the contractor’s agreement with another entity.