On June 6, 2018, the NLRB issued two Orders that put an end to the Hy-Brand case, which briefly changed the NLRB’s standard for determining whether two employers were jointly responsible for violations of federal labor law and collective bargaining. As we explained in previous posts (links), in December 2017 the Hy-Brand Board returned the joint employer standard back to require “direct and immediate” control over the terms and conditions of employment that existed prior to the Board’s 2014 decision in Browning-Ferris Industries. Hy-Brand was a relief to the business community because it ensured that a business would not become a joint employer without actually exercising control over the employment of employees of other companies.
Hy-Brand came crashing down, however, when the Board vacated the decision based on the failure of Board Member William Emanuel to recuse himself due to ethical issues. The NLRB’s Inspector General investigated Emanuel’s links, through his former law firm, to an employer in the Browning-Ferris Industries case and found that he should have recused himself in the matter. The IG’s report found that Emanuel’s participation in Hy-Brand affected the client of his former law firm by overruling Browning Ferris Industries. After vacating the decision, the Board remanded the case for further proceedings.
On remand, the Board found that the employers in Hy-Brand were jointly liable under federal labor law, but not on joint employer grounds. Instead, the Board found that the employers were single employers, meaning, essentially, that their corporate structure was so intertwined that they acted as a single company in terms of control over employment terms. Therefore, the result of the decision was basically the same as the original Hy-Brand decision, but it now has no effect on the Board’s joint employer standard. Thus, the broader and more labor-friendly “share or codetermine” test of Browning-Ferris Industries is still the law of the land.
The Board has now decided that rather than wait for the next case involving joint employment to come onto its docket, it will address this issue by way of rulemaking. For context, the Board rarely promulgates rules and it usually makes rulings on a case-by-case basis, but it does have the power to do so like any other administrative agency. Going forward, the Board will need to publish the rule after drafting it and allow for comment from the public on any new rule it announces before it takes effect. At this point, we will have to wait and see what happens. Stay tuned.
Andrew MacDonald is an associate in the firm’s Labor and Employment Department, resident in its Philadelphia office.