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.”
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.
Recently the National Labor Relations Board invited interested parties and amici to submit briefs in Velox Express, Inc. (15-CA-184006) to address under what circumstances, if any, the Board should deem an employer’s misclassifying statutory employees as independent contractors constitutes a violation of Section 8(a)(1) of the National Labor Relations Act (“the Act”). Briefs from parties and interested amici must be submitted on or before April 16, 2018.
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.
We have reported on several Board decisions issued by a new Republican majority in the final days of 2017, but questions remain as to what issues the Board will address next to scale back on Obama-era precedent. In recent weeks, Republican Board Members have provided some hints in a pair of footnotes in two unpublished decisions.
Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017) (“Raytheon”), is one of several decisions issued this month by the National Labor Relations Board’s (the “Board”) new Republican majority which reverse Obama-era precedent. Raytheon overrules the Board’s decision E.I. du Pont de Nemours, 364 NLRB No. 113 (2016) (“DuPont”), which limited the changes employers can make unilaterally in a union environment. Raytheon clarifies the degree to which employers may rely on past practice to make unilateral changes to terms of employment once a collective bargaining agreement has expired, and, more specifically, offers welcome guidance to employers with regard to continuation of health benefits under those circumstances.
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.
On September 15, the White House announced that President Trump will nominate Peter B. Robb, a longtime labor and employment attorney, to become the National Labor Relation Board’s next general counsel. Assuming Robb is confirmed by the Senate, he would likely take over his position hopefully in early November following the end of the incumbent’s General Counsel’s term and Robb’s swearing in.
On August 3, 2017, the U.S. Senate confirmed Marvin Kaplan, a former Occupational Safety and Health Review Commission attorney, to fill one of the two vacant seats on the National Labor Relations Board. Kaplan’s confirmation moves the Board one step closer to a Republican majority. Kaplan was confirmed on a 50-48 party-line vote by the Republican-controlled Senate. Kaplan joins NLRB Board Chairman Philip Miscimarra on the Republican side of the NLRB. Mark Gaston Pearce and Lauren McFerran are the Democrat Board members.