Federal Labor Board Reverses Browning-Ferris Joint-Employer Standard
On December 14, 2017, the National Labor Relations Board reversed the Browning-Ferris joint-employer policy established in 2015, marking the first of many significant policy changes that are expected from the Board over the next few years. Newly minted Board members Marvin Kaplan and William Emmanuel, whose appointments by President Trump gave the Board its first Republican majority since 2007, joined with Chairman Philip Miscimarra in issuing the opinion in Hy-Brand Industrial Contractors, LTD. And Brandt Construction Co. (Case No. 25-CA-163189).
The 2015 Browning-Ferris decision revised the standard by which the Board finds two companies to be “joint-employers” of employees that performed work for both companies. Traditionally, whether or not an “employer-employee” relationship exists turns on how much control an employer has over its workers. Where there are multiple employers directing or controlling the same workers, determining whether an employment relationship exists between the parties becomes more difficult. For example, if McDowell’s, Inc. owns a fast-food restaurant chain but contracts with a local company that controls the day-to-day operations of a particular restaurant, it might not be immediately clear if either company is the direct employer of the people who work there, or if both companies are joint-employers. Therefore, only one of the companies may be required to bargain with a union or employee representative.
Prior to Browning-Ferris, for two companies to be considered joint-employers, each would have to possess and exercise authority in controlling employees’ terms and conditions of employment. In Browning-Ferris, the Board removed the exercise requirement, bringing companies that simply possessed control over terms and conditions of employment to the table to bargain with the union over those terms and conditions, even if they did not exercise that control “directly and immediately.”
Thursday’s ruling in Hy-Brand Industrial Contractors revived the old rule, reinstating the requirements that an employer must both possess and exercise control to be considered a joint-employer, and that the control must be “direct and immediate.” The Board called the Browning-Ferris standard a “distortion of common law” and “ill-advised as a matter of policy.” The Board argued that the definition of a joint-employer was “confused” and that it produced “wide-ranging instability in bargaining relationships.”
In their dissent, Board members Mark Gaston Pearce and Lauren McFerran harshly criticized the reasoning and result of their colleagues’ decision. They first took issue with the “indefensible” process carried out by the Board in arriving at its decision, arguing that the Board disregarded “basic principles of reasoned decisionmaking” and “longstanding Agency norms in favor of public participation.” They called the Board’s “unwillingness to let the parties and the public participate” in the fact-finding process “particularly curious,” referring to the Board’s abandonment of the usual practice of soliciting briefs from the parties and the public prior to overturning a significant policy decision. “It is reasonable to infer,” they wrote, “that our colleagues do not want to engage the public for fear of what they might learn – namely, that none of the predicted effects of [Browning-Ferris] have actually come to pass.”
The dissenting members further opined that the decision demonstrated “a willful misunderstanding of the joint-employer standard,” and that it “violates the explicit policy of the National Labor Relations Act: to ‘encourag[e] the practice and procedure of collective bargaining.’” It is clear that this decision, by design, will lead to fewer parties at the bargaining table.
Chairman Miscimarra’s term expired on Saturday, December 16, leaving the Board ideologically split 2-2. President Trump has not yet nominated a candidate for his replacement.
You can read the Hy-Brand decision here, and the Browning-Ferris decision here.