Labor & Employment Law Daily It’s official: NLRB to issue ‘joint employer’ rule
Thursday, June 7, 2018

It’s official: NLRB to issue ‘joint employer’ rule

By Lisa Milam, J.D.

Stymied in its efforts to undo its Obama-era Browning-Ferris decision, which expanded the definition of “joint employer” and thereby increased potential liability under the NLRA for companies that utilize contingent workforce and franchise arrangements, the NLRB on May 9 announced it was considering resolving the matter through issuance of a proposed rule. That news prompted a May 29 letter to NLRB Chairman John F. Ring from three senators, pushing back against the news that the agency was toying with formal rulemaking.

Today, Chairman Ring issued a press release disseminating his response to their letter and confirming that, indeed, the Board plans to issue a formal notice this summer.

Hy-Brand leads to disarray. In 2017, as the impending departure of Board Chair Philip Miscimarra meant that it was about to lose its Republican-majority, the Trump Board issued Hy-Brand Industrial Contractors, Ltd., which overruled Browning-Ferris and roundly rejected its reasoning. The Board reinstated the traditional test for joint-employer status, which requires that an entity exercise actual and direct control over the “essential employment terms” of the employees in question in order to be held liable under the Act. But on February 26, 2018, the NLRB vacated Hy-Brand—effectively restoring the holding in Browning-Ferris—after its inspector general determined that Board member William Emanuel, who voted in the majority in the divided Hy-Brand decision, should have recused himself from the case.

The result was disarray and no clear path for undoing Browning-Ferris once and for all. Thus, the Republican-majority Board turned to a rulemaking fix, which would represent a more permanent solution. The submission, prepared at Chairman Ring’s request, was included in the agency’s filing in the Unified Agenda of Federal Regulatory and Deregulatory Actions.

Senators voice concerns. In their letter to Ring, Senators Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), and Kirsten Gillibrand (D-N.Y.) voiced their concerns about the plan to invoke the rulemaking process in an effort to solidify a more business-friendly joint-employer standard for posterity—one that would not be subject to the shifting winds of Board common law. The senators feared the Board was making an end run around the ongoing ethics quagmire that prompted the withdrawal of Hy-Brand, and that applies to Board case adjudications. The senators urged Ring to reconsider and to hold off on rulemaking on the joint employer standard.

Formal rulemaking on the way. However, Ring’s June 5 response to the senators does little to allay their fears. “Candor requires me to inform you that the NLRB is no longer merely considering joint-employer rulemaking,” Ring writes. “A majority of the Board is committed to engage in rulemaking, and the NLRB will do so. Internal preparations are underway, and we are working toward issuance of a Notice of Proposed Rulernaking (NPRM) as soon as possible, but certainly by this summer.”

“Greater certainty.” “Rulemaking is appropriate for the joint-employer subject because it will permit the Board to consider and address the issues in a comprehensive manner and to provide the greatest guidance,” according to Ring. “Although legal standards of general applicability can be announced in a decision of a specific case, case decisions are often limited to their facts. With rulemaking, by contrast, the Board will be able to consider and apply whatever standard it ultimately adopts to selected factual scenarios in the final rule itself. In this way, rulemaking on the joint-employer standard will enable the Board to provide unions and employers greater “certainty beforehand as to when [they] may proceed to reach decisions without fear of later evaluations labeling [their] conduct an unfair labor practice,” as the Supreme Court has instructed us to do.”

Not preordained … but not “devoid of opinion” either. Ring was careful to reject the notion that the Board members (or at least the narrow majority of Republican Board members eager to take on rulemaking) have already settled on a preordained outcome as to what the joint-employer rule will entail. Yet he also made clear that he and his colleagues, as they enter the process, are not “devoid of opinions” on the subject—”any more than my predecessors, then-Chairman Wilma Liebman and then-Members Mark Gaston Pearce and Craig Becker, were devoid of opinions when they embarked on rulemaking to change the Board’s representation-case procedures in 2011, or than then-Chairman Mark Gaston Pearce and then-Members Kent Hirozawa and Nancy Schiffer were when they repeated that enterprise in 2014.”

Rather, Ring said the Board is committed to gathering input from interested stakeholders and only then, to provide “clear and useful guidance” as to “‘the contours of a joint employment relationship,’ which many believe Browning-Ferris expressly left undefined.”

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