On December 14, 2017, the NLRB issued a decision in Hy-Brand Industrial Contractors, which overruled the Board’s controversial 2015 decision in Browning-Ferris Industries.
In Browning-Ferris, the Board drastically expanded the National Labor Relations Act’s (NLRA) standard for determining joint employer status. The Board uses the standard to determine whether one business is considered a joint employer with another and therefore shares responsibility for bargaining with any union representing the jointly employed workers and liability for violations of the NLRA as it pertains to the jointly employed workers.
Under the original joint employer standard, the NLRB considered an entity to be a joint employer only if it exercised direct and immediate control over essential terms and conditions of employment of another business’s employees, including having the ability to hire, fire, discipline, supervise, or direct an individual. Browning-Ferris expanded the standard to include indirect or even unexercised potential control over the terms and conditions of employment, drastically expanding the number of business relationships that could come under the new standard. Since Browning-Ferris was issued, the Department of Labor has also pursued a looser joint employer standard under other federal labor laws, including the Fair Labor Standards Act, and issued a sweeping 2016 guidance significantly compounding the uncertainty created by the Board.
The Hy-Brand decision reinstated the original standard; an entity could only be a joint employer if it exercises direct and immediate control over the essential terms and conditions of employment. The decision restored much needed certainty regarding liability companies may face in business-to-business relationships. Additionally, the General Counsel of the NLRB, Peter Robb, issued a memorandum (Memorandum GC 18-02) on December 1, 2017, instructing all Regional Offices to submit for review all cases involving “significant legal issues” to the NLRB’s Division of Advice. The memo specifically included cases that deal with the joint employer standard and the application of the Browning-Ferris decision.
Regardless of this progress, Congress, President Trump, and the NLRB should move to codify into law the original joint employer standard in order to protect against attempts by future Boards or administrations to expand the standard and harm the vitally important business relationships that create jobs, strengthen the American economy, and provide avenues for the American Dream. CDW will continue to fight against expansions to joint employer liability.
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