There is another yet another development in saga of the NLRB’s joint employer standard. This issue, which has caused consternation in the business community, concerns the Board’s standards for finding that two entities are jointly responsible under federal labor law as the employers of a certain group of employees. Just before the New Year, the federal Court of Appeals for the District of Columbia upheld the joint employer standard issued by the Board in 2015 in the Browning-Ferris Industries case.
We’ve covered this topic here, and here, but a quick review of the background is in order: In 2015, the Board issued Browning Ferris Industries, 362 NLRB No. 186 (2015) (“BFI”), which loosened the standard from “direct and immediate control” to “share or codetermine,” which could lead to a joint employer finding based solely on indirect or reserved control over employees. In late 2017, the Board returned to the “direct and immediate control” standard in Hy-Brand Contractors Ltd., 365 NLRB No. 156 (2017). Then, only a few months later in February, 2018, the Board reversed Hy-Brand due to possible ethical concerns related to the representation of one of the parties in BFI by the former law firm of a Board member. After vacating Hy-Brand the Board announced that it would engage in rule-making to publish joint employer rules.
All the while, the appeal of the 2015 BFI case was pending before the D.C. Circuit, which held off on issuing a decision while the Board dealt with Hy-Brand. Now, the D.C. Circuit has issued its’ decision upholding the looser “share or codetermine” standard, including indirect control over employees, as a matter of law. Since the Board had been applying the BFI standard after it abandoned Hy-Brand, there will be no immediate impact on labor relations around the country. However, the D.C. Circuit partially remanded the case to the NLRB to clarify the application of the “share or codetermine” test to the facts of the case.
Even though the D.C. Circuit partially remanded the matter back to the NLRB, the Board may not be able to use BFI to change the joint employer standard back to the pre-BFI framework. On this issue, the Board is not just constrained by the fact that the case could be appealed to the Supreme Court and heard prior to the Board’s decision on remand.
While the Supreme Court may, of course, take the case and overrule BFI, the Board may be hampered in changing the BFI standard by decision or rulemaking because the D.C. Circuit made clear that the joint employer question is a matter of law, which is not subject to administrative agency interpretation. The Board may apply the legal joint employer test to distinct situations, but it cannot fundamentally change the joint employer standard (by decision or rulemaking). The meaning of “employer” is restricted, and subject to court review, because it is defined by traditional principles of agency under the common law. Therefore, unless the Supreme Court weighs in soon, it is likely that this issue will be debated by the Board, in case law and rulemaking, and the federal appeals courts around the country. Labor practitioners, brace yourselves accordingly.
Andrew MacDonald is an associate in the firm’s Labor and Employment Department, resident in its Philadelphia office.