Labor & Employment Law Daily NLRB’s Browning-Ferris joint-employer test upheld to some extent on ‘indirect control’
Monday, December 31, 2018

NLRB’s Browning-Ferris joint-employer test upheld to some extent on ‘indirect control’

By Lisa Milam, J.D.

A divided D.C. Circuit panel has upheld the NLRB’s Browning-Ferris joint-employer standard—in particular, the consideration of a putative joint employer’s reserved right to control the workers in question, and the indirect control it exercises over those workers, as key factors to determine joint-employer status. These factors are rooted in the common law definition of “employer,” the appeals court explained, affirming the Board’s joint-employer test (on de novo review) “as including consideration of both an employer’s reserved right to control and its indirect control over employees’ terms and conditions of employment.” In short, “the Board’s conclusion that it need not avert its eyes from indicia of indirect control—including control that is filtered through an intermediary—is consonant with established common law. And that is the only question before this court.” However, the NLRB did not sufficiently articulate “the scope of the indirect-control element’s operation,” the appeals court said, remanding the case to allow the Board to more fully flesh out this aspect of its joint-employer analysis (Browning-Ferris Industries of California, Inc., dba BFI Newby Island Recycling, December 28, 2018, Millett, P.).

Which facts? The court could not discern what specific facts in the record proved dispositive to the Board in finding that Browning-Ferris was indeed a joint employer alongside Leadpoint, the staffing contractor that provides labor to the company, and it noted its concern that some of those facts relied on in the agency’s deliberations “veered beyond the orbit of the common law.” Therefore, the appeals court granted the putative joint employer’s petition for review in part, and denied the Board’s cross-application for enforcement.

Indirect control is relevant. “This case decides only whether indirect control can be a relevant factor in identifying a joint employer.” That’s how the majority framed the issue before it, answering in the affirmative. “A categorical rule against even considering indirect control—no matter how extensively the would-be employer exercises determinative or heavily influential pressure and control over all of a worker’s working conditions—would allow manipulated form to flout reality,” the majority found.

But what is “indirect control?” However, in analyzing the factual record below, the Board had “failed to differentiate between those aspects of indirect control relevant to status as an employer, and those quotidian aspects of common-law third-party contract relationships.” The Board had “provided no blueprint for what counts as ‘indirect’ control.” So the appeals court remanded to the Board for further proceedings.

Rulemaking didn’t moot the point. The Trump NLRB had already largely denounced its own Obama-era Browning-Ferris ruling and attempted to undue the controversial decision through its ill-fated 2017 opinion in Hy-Brand Industrial Contractors, Ltd. But Hy-Brand was vacated due to a rather confounding turn of events: The NLRB’s inspector general determined that Board Member William Emanuel, whose previous firm had represented Leadpoint in the Browning-Ferris proceedings, ought to have recused himself from the case that would reverse it. So the Board announced it would undertake formal rulemaking to articulate a joint-employer standard—one that would essentially revert to a pre-Browning-Ferris test.

Court review sought by the Board. That didn’t moot this case, though, as the Board was quite emphatic that it wanted the D.C. Circuit to decide the pending petitions for review nonetheless. In June 2018, the NLRB expressly asked the appeals court to proceed despite having announced its intentions to promulgate a rule, the appeals court noted, and the Board did so again even after publishing its proposed rule in September 2018.

But the Browning-Ferris ball was rightly in the D.C. Circuit’s court anyhow, the majority said, because it was the courts, and not the Board, that were tasked with defining “employer” under the common law—and the common law definition was implicated by the Board’s joint-employer test, both as set forth in the case at hand and in the Board’s prospective final rule to come. The Board’s rule, the appeals court advised, “must color within the common-law lines identified by the judiciary.” (The dissent urged the court to wait, but “we see no point to waiting for the Board to take the first bite of an apple that is outside of its orchard,” the majority countered.).

Other points. A few other point-of-law takeaways:

  • The Board hadn’t finished the job. There was a second component to its stated joint-employer test, one which was overlooked below. The NLRB had said that even if an entity were likely a joint employer under the common law, the Board would not deem them a joint employer under the NLRA unless that entity had sufficient control over the terms and conditions of employment for the workers in question to an extent that would permit “meaningful collective bargaining.” But the Board largely dodged this inquiry, simply stating that Browning-Ferris was only obligated to bargain “with respect to those terms and conditions over which it possesses sufficient control for bargaining to be meaningful.”
  • Browning-Ferris had argued to no avail that the critical inquiry was whether the workers in question were independent contractors—a test that turned on “the extent of the actual supervision exercised.” The independent contractor test was “virtually identical” on the joint employer question, the company asserted, so actual supervision should matter most when determining joint-employer status. On this point, the petitioner found cold comfort in Judge Randolph’s dissent, which agreed that Leadpoint’s independent contractor status resolved the matter. But “controlling precedent says otherwise,” according to the majority, which soundly rejected the notion that these inquiries were one and the same, noting this contention “lacks any precedential grounding.” As the court saw it, “using the independent-contractor test exclusively to answer the joint-employer question would be rather like using a hammer to drive in a screw: it only roughly assists the task because the hammer is designed for a different purpose.”
  • In responding to the D.C. Circuit’s prodding that the Board had not sufficiently fleshed out the “indirect control” factors, the Board responded it would do so, per usual, through case-by-case adjudication. In theory, there was nothing wrong with this approach, the appeals court said—when interpreting the NLRA, of which the Board is charged with particular expertise. But “the Board has no administrative expertise when it comes to discerning the traditional common-law meaning of ‘employer,’” the court noted, so “that step-by-step approach depends on the Board starting with a correct articulation of the governing common-law test.”
  • The D.C. Circuit tabled, for now, the question whether the Board’s retroactive application of its newly minted test was “manifestly unjust.”

Leadpoint had not petitioned for review of the NLRB’s order, and made no appearance in the circuit court. However, the relief ordered by the Board was “inextricably bound up” in Leadpoint’s joint-employer status with Browning-Ferris, the appeals court noted, and so it dismissed the application for enforcement as to Leadpoint without prejudice as well.

Amicus briefs. A number of employers and/or industry groups filed amicus briefs in support of Browning-Ferris, including the U.S. Chamber of Commerce, National Association of Manufacturers, Associated Builders and Contractors, The Retail Litigation Center, HR Policy Association, and Microsoft Corp., as well as the Washington Legal Foundation and the Governor of Texas. The EEOC had weighed in on the NLRB’s behalf.

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