The National Labor Relations Board’s current joint employer standard received a mixed review from a federal circuit court late last month, providing some guidance on how courts may evaluate the Board’s ongoing rulemaking efforts.
Recently, the NLRB created significant uncertainty as to the joint employer test under the NLRA when it vacated a December 2017 decision that resurrected the standard that existed prior to 2015. Such a standard determines the existence of a joint employer relationship by assessing whether one entity has “actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control)” and the control is “’direct and immediate’ (rather than indirect)” and exercised in a manner that is not “limited and routine.”
When a franchisor provides a California franchisee with detailed instructions about how to operate the franchise business, but allows the franchisee to manage its own workforce, can the franchisor be held liable for the franchisee’s wage and hour violations? The California Court of Appeals found the answer to be no under the facts in Curry v. Equilon Enterprises, LLC, 2018 WL 1959472 (Cal. Ct. App. Apr. 26, 2018). There, the Court of Appeals concluded Equilon Enterprises, LLC, doing business as Shell Oil Products US (“Shell”), was not liable for the alleged wage and hour violations of the company that operated its Shell-branded gas stations throughout California. Continue Reading Are Franchisors Joint Employers in California Wage Cases?
On April 16, newly confirmed member John Ring was sworn in as the fifth member and Chairman of the National Labor Relations Board, establishing a Republican-controlled Board. While all has been relatively quiet with regard to rulings from the Board, we will likely see a rise in activity now that the NLRB (with a newly-minted majority) is poised to roll back some of the Obama-era rulings.
The National Labor Relations Board (the “NLRB”) and McDonald’s Corp. have reached a settlement agreement in the long-running employment retaliation case brought against McDonald’s that hinges on whether McDonald’s Corp., as a franchisor, has enough control over its franchisees to be considered a “joint employer” of the franchisees’ employees. The case stems from allegations that McDonald’s unlawfully retaliated against franchisee workers who joined the “Fight for $15” movement. In bringing this case against McDonald’s, the NLRB has argued that even having only “indirect control” over a worker is enough for a franchisor like McDonald’s to be held liable for the employment practices of its franchisees. The NLRB’s case against McDonald’s was bolstered by the Board’s 2015 Browning-Ferris decision, which departed from decades of legal precedent in holding that entities who merely possessed—as opposed to directly and immediately exercised—control over workers could be deemed joint employers for purposes of assessing liability under the National Labor Relations Act.
The National Labor Relations Board continues to undo its actions overruling the joint employer test of Browning-Ferris Industries, 362 NLRB No. 186 (2015). Earlier this week the Board vacated its decision in Hy-Brand Industries, the case which had overruled Browning-Ferris.
Shortly after the original Hy-Brand decision, the Board had asked the U.S. Court of Appeals for the District of Columbia Circuit to remand the Browning-Ferris case to the Board. At the time, the Browning-Ferris case was pending before the court of appeals on the Board’s petition for enforcement and Browning-Ferris’s petition for review, and had been fully briefed and argued.
We previously informed you of the National Labor Relations Board’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017), in which the Board overruled the controversial joint employer test which it had announced in Browning-Ferris Industries, 362 NLRB No. 186 (2015).
On February 26, 2018, the Board entered an order vacating the Hy-Brand decision, 366 NLRB No. 26 (2018). It did so in light of a determination by the Board’s Designated Agency Ethics Official, that Board Member William Emanuel “is, and should have been, disqualified from participating in the [Hy-Brand] proceeding.” Accordingly, Browning-Ferris is again the controlling Board law on joint employer status.
It remains to be seen when the Board might re-visit Browning-Ferris through another decision. In the meantime, employers who face joint employer concerns should evaluate their current practices in light of this development.
The National Labor Relations Board issued a much-anticipated decision on Thursday, overruling its controversial 2015 Browning-Ferris decision that unions and employees argued drastically expanded the definition and scope of the Board’s joint-employer doctrine. In Browning-Ferris, the Board departed from decades of precedent and held that entities who merely possessed—as opposed to directly and immediately exercised—control over workers would be deemed joint employers for purposes of assessing liability under the National Labor Relations Act. The Board used the Browning-Ferris decision to expand its reach under the joint-employer doctrine to include, for example, companies that relied on staffing agencies and in some cases, parent companies that did not exercise immediate or direct control over a subsidiary’s workers, but had the potential authority to affect certain terms and conditions of employment. The Browning-Ferris decision faced heavy criticism from employers as well as an appeal of the decision itself to the D.C. Circuit Court of Appeals.
In a press release issued this morning, the Department of Labor has announced that it is withdrawing two administrative interpretations issued by the Department of Labor under the Obama administration in 2015 and 2016 relating to misclassification of independent contractors and joint employment. These two administrative interpretations sought to expand the definition of employee, thereby increasing the possibility of misclassification cases, and, as some argued, expanding the concept of joint employer under the Fair Labor Standards Act. While this is a welcomed announcement for employers, the Department emphasized in the release that the withdrawal “does not change the legal responsibilities of employers under the Fair Labor Standards Act.” This is the first effort by the Department of Labor under the Trump administration to dismantle some of the more controversial policies issued by the Department in the Obama-era. The decision to withdraw these administrative interpretations may also signal that the Department intends to return to the opinion letter writing process, making compliance much simpler for employers.
At the request of the U. S. Court of Appeals for the Second Circuit, the New York Court of Appeals recently answered several questions regarding liability under the New York Human Rights Law Section 296(15)—which prohibits denying employment on the basis of criminal convictions when doing so violates New York Correction Law Article 23-A—and Section 296(6)—which prohibits aiding and abetting such discrimination.