Hy-Brand Industrial Overrules Browning-Ferris and Sets New NLRB Standard for Determining Joint-Employer Status
As part of the Board’s larger trend of scaling back some of the Obama Board’s more radical departures for traditional precedent, in Hy-Brand Industrial Contractors, 365 NLRB No. 156 (2017), issued on December 14, 2017, the Board returned to its traditional joint-employer test. In so doing, the Board scrapped the controversial test for joint employers set forth in Browning-Ferris Industries of California, 362 NLRB No. 186 (2015). In its Hy-Brand decision, the Board summarizes the joint-employer standard under Browning-Ferris as providing that “even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not direct and immediate, the two entities will still be joint employers based on the mere existence of reserved joint control, or based on indirect control or control that is limited and routine.” Hy-Brand alters the standard by requiring that the putative joint employer actually exercise (rather than merely reserve) “direct and immediate” control over its putative employees. And Hy-Brand goes on to specify that joint-employer status will not result from control that is “limited or routine.”
The NLRB’s reasoning in the Hy-Brand decision signals the Board’s increasing emphasis on legal certainty and predictability. An important criticism of the Browning-Ferris standard was its tendency to punish customers with detailed or demanding product specifications and to overlook the reality that many employers are constrained by competitive pressures. For example, many firms enforce corporate social responsibility policies, which require suppliers to abide by minimum standards, such as providing employees paid leave. Unions representing the supplier’s employees used Browning-Ferris to argue that, by including minimum workplace standards in their product specifications, these customers should be treated as joint employers of their suppliers’ employees.
In Hy-Brand, the Board specifically focuses on returning predictability to its jurisprudence and expresses a refreshing willingness to consider issues from the perspective of employers as well as employees. The Board sets out to provide a standard that permits employers to enter into contracts with one another without the risk of unpredictable legal consequences. This trend is not limited to Hy-Brand but is a common feature of many of the Board’s recent decisions. For example, the Board’s decision in The Boeing Co., 365 NLRB No. 154 (2017), focuses heavily on an employer’s need to prospectively know which workplace rules will, and will not, run afoul of the NLRA.
Despite these promising developments, employers should be vigilant in monitoring future developments in this area of the law. The Board announced its decision in Hy-Brand while the U.S. Court of Appeals for the District of Columbia Circuit was still considering the appeal of Browning-Ferris. The Board asked the DC Circuit to remand the case to be redecided under the Hy-Brandstandard, but the International Brotherhood of Teamsters (the union in the Browning-Ferris case) as well as other unions and pro-union groups still hope to have the DC Circuit decide the case in a manner that will compel the Board to return to the Browning-Ferris standard.