NLRB Vacates Joint-Employer Decision

Member should have not voted, said inspector general

Allen Smith, J.D. By Allen Smith, J.D. February 27, 2018
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The National Labor Relations Board's (NLRB's) decision on what makes a business a "joint employer" was tainted by the participation of a board member who was too involved in the case, and the decision was vacated Feb. 26. The NLRB inspector general reached that conclusion in a Feb. 9 report that was recently made public. NLRB Chairman Marvin Kaplan wrote Congress on Feb. 15 that the agency was considering appropriate actions regarding the decision, Bloomberg reports, and the decision subsequently was vacated. We've gathered articles from SHRM Online and other trusted sources on the joint employer decision.

Inspector General's Finding

NLRB Member William Emanuel should not have participated in the December 2017 joint employer decision, which overruled the board's 2015 Browning-Ferris Industries opinion, according to the NLRB inspector general. In Browning-Ferris, the NLRB had decided that indirect control by one organization of another is enough to be considered a joint employer. Emanuel's old firm, Littler, had represented Browning-Ferris. The NLRB inspector general determined that this involvement meant he shouldn't have participated in the 2017 decision, Hy-Brand, which held by a 3-2 margin that indirect control isn't enough and direct control must be present for joint employment. Hy-Brand fell into doubt because of the inspector general's finding and ultimately was vacated, meaning that the Browning-Ferris standard now applies again. (Bloomberg)

[SHRM members-only HR Q&A: What is the function of the NLRA?]

Hy-Brand Ruling

In Hy-Brand, the NLRB determined that Browning-Ferris was "a distortion of common law as interpreted by the board and the courts." Moreover, it said that Browning-Ferris 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." (SHRM Online)

Teamsters' Challenge

Following the Hy-Brand decision, the Teamsters claimed that Emanuel violated the ethics rule prohibiting corporate lawyers from participating in cases involving former clients. A sensible person would conclude that Emanuel's objectivity was compromised in Hy-Brand, the Teamsters stated, even though his old firm did not represent anyone in Hy-Brand—just in Browning-Ferris. (SHRM Online)

Split Reaction to Hy-Brand

Employers praised the board's decision, maintaining the Obama board's policy under Browning-Ferris was a vast overreach that would force companies out of the business of franchising. But union groups claimed the change was a gift to business groups. Democrats on Capitol Hill wrote Emanuel in January asking whether he had participated in the Hy-Brand vote. He responded that he had and said there was no problem with that because the connection to his former law firm was remote. (Washington Examiner)

Procedural Violation Alleged

Sen. Elizabeth Warren, D-Mass., and Sen. Patty Murray, D-Wash., wrote letters Feb. 26 to Kaplan, saying the board had failed to comply with the Administrative Procedure Act when it overruled Browning-Ferris. They asked whether the board will reconsider its December ruling, which it now will. (Bloomberg)

Pendulum May Swing Back to Congress

The momentum may now swing back toward Congress to undo Browning-Ferris. Already the House of Representatives has passed legislation to do away with this decision's indirect-control standard. Whether the Senate acts on this bill, the Save Local Business Act, remains to be seen. (SHRM Online)

 

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