By: Hassan A. Kanu (legal editor)
A key test for deciding when multiple businesses are liable for violating federal labor laws seesawed quite a bit recently, leaving unclear how much longer an Obama-era standard that made it easier to hold companies liable as “joint employers” will be the law of the land.
The Obama-era test was briefly reversed in Dec. 2017, but ethics concerns later led the National Labor Relations Board to withdraw that decision. Another on-again-off-again federal court appeal that presents the same issue further murks the waters, at least for the time being.
The question of who is an “employer” carries huge legal implications because of the prevalence of third-party relationships in today’s workplace, such as those between a business and a contractor’s employees, or between a corporate parent and its franchisees’ workers.
The business community has been waiting since President Donald Trump was elected for the board to overturn Obama-era precedent allowing a company that exerts indirect control over another’s workers to be tagged as their joint employer. Although the board briefly returned to a more limited “direct control” standard in December, it quickly withdrew that decision after the NLRB inspector general said Member William Emanuel’s (R) shouldn’t have participated in the case.
That leaves the Obama board’s broader standard—making a business a joint employer even if it has only indirect control over workers—in place for now. That test could be cemented, the board could revert to the earlier standard, or the law could be modified otherwise. Changes could come via various avenues, including Congress, a federal court in Washington, D.C., and the board, on a do-over.
Some observers told Bloomberg Law that it looks like the federal courts will be the decider on the issue, though they cautioned that the situation remains in flux. The U.S. Court of Appeals for the D.C. Circuit hasn’t yet decided whether to take back a case in which Browning-Ferris Industries, a recycling business, is appealing a ruling against it under the Obama-era joint employer rule.
The board’s Trump-appointed general counsel asked the federal appeals court to send the Browning-Ferris case back to the board when it overturned the Obama-era standard in a separate case, Hy-Brand Industrial Contractors. NLRB lawyers later asked the court to ignore the request and take back Browning-Ferris after the board scrapped the Hy-Brand decision.
“I think BFI will become the vehicle to resolve this,” William Gould, a Stanford Law professor and former labor board chairman (D), told Bloomberg Law. The case has been “briefed and argued some time ago, so I would imagine this is getting to the front of the line.”
Court Seems Most Likely to Get First Dibs
“One of the balls is back in the D.C. Circuit’s court,” James Plunkett, a senior government relations counsel at Ogletree Deakins and former labor policy director at the Chamber of Commerce, told Bloomberg Law.
Plunkett noted that the case was far along before it was paused at the board’s request. “You’d think that they hopefully didn’t hit the delete button on a draft opinion, so maybe they’re already halfway down the road,” he said about the federal court.
Federal courts tend to allow agencies broad discretion to interpret statutes they administrate, which means that the court could lock in place the Obama-era rule for the foreseeable future if it upholds that board’s ruling that BFI is a joint employer. If so, the question is whether the court says the Obama joint employment is one of several permissible readings of federal labor law or the only appropriate interpretation.
“If the court of appeals affirms” what the Obama board did in BFI, “then I think the Trump board is checkmated,” Gould said. The board could just reverse course—again—in a different case, “but any reversal can be automatically appealed” to the same D.C. Circuit Court.
What About Hy-Brand?
The NLRB also has to redecide Hy-Brand after withdrawing its original opinion.
Most observers seem to think the board is unlikely to take another stab at establishing a different joint employment test in that case. The lawyer representing the employees who filed the complaint against Hy-Brand, James Faul of Hartnett Gladney Hetterman in Missouri, has asked that the case be decided without touching that question.
Faul said his original case could have been decided on a “single employer” theory without getting to the question about joint employership. He’s now moved for a reconsideration of the case, despite that his clients won, “because they were concerned that their concerted activity to improve working place for them and others like them was being used to take rights from other working people,” he said.
“My client’s primary concern is that the board seems to have gone out of its way to decide an issue to take rights away from other workers when it wasn’t necessary to the holding at all,” Faul said.
Emanuel, the board member who was found in violation of ethics rules, would arguably also have to recuse himself from the case. That would leave the board with a 2-2 partisan split, which makes another joint employer decision unlikely in that particular matter.
The board’s general counsel, Peter Robb, another Trump appointee, has filed a notice of intent to weigh in on what the board should do with Hy-Brand. Attorneys representing both sides in the case said they have no clues as to what Robb may do.
“I don’t have an idea but my guess is that notifying the board that he wants them to hold up would indicate he’s working as rapidly as he can,” Michael Avakian, an attorney at Wimberly, Lawson, Steckel, Schneider & Stine in Washington, D.C., who represents Hy-Brand, said.
Management Community Wants Legislative Fix
There’s also a bill in Congress to establish a nationwide joint employer rule that would restrict the circumstances under which joint employership can be found. That legislation was approved by the House but hasn’t seen action in the Senate.
The Save Local Business Act (H.R. 3441) would need the support of at least nine Democrats to avoid a filibuster. A similar bill died during the last Congress after Republican senators failed to drum up enough Democratic support.
“Folks in the business community still think Browning-Ferris is a lousy decision and are hoping it’ll get reversed by the board, maybe in the Hy-Brand case itself, maybe they need a new vehicle, but also in Congress,” Plunkett said. “I think they’re hopeful one of those venues can lead to a return to what the business community would say is the traditional joint employment standard.”
Unions and worker advocates, on the other hand, have celebrated the return to the more expansive Obama board standard. They’re likely hoping that any court, agency, or lawmaking body that weighs in will maintain the status quo.