March 26, 2019

March 26, 2019

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March 25, 2019

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NLRB Developments Raise Questions About New Joint Employer Test (US)

The National Labor Relations Board experienced a setback on Monday, just two months after it overturned its predecessors’ employee-friendly test for determining when entities constitute joint employers. These developments create some uncertainty and, at a minimum, delay the Board from implementing the new test it created last December.

As background, in 2015, the Board changed its test for determining when two entities constitute joint employers under the National Labor Relations Act. This Browning-Ferris decision raised concerns for employers – particularly those with franchise or staffing agreements – because it significantly expanded the situations when an entity can constitute an “employer” and potentially have liability for workers it does not control.

Two years later, the Trump Administration appointed labor attorney William Emanuel to serve as one of the Board’s five members. Before Emanuel began his Board tenure, he practiced law with a national firm. This firm has represented a party in Browning-Ferris and a subsequent appeal. There is no indication, however, that Emanuel himself worked on the Browning-Ferris case.

Shortly after Emanuel joined the Board, he participated in a decision to overturn Browning-Ferris. In this Hy-Brand Industrial Contractors decision, the Board implemented a joint employer test that better considers employers’ interests and assesses whether an entity actually controls the workers at issue. Emanuel did not recuse himself from Hy-Brand, even though his prior firm had litigated the same underlying issues in Browning-Ferris.

Then, earlier this month, several events raised questions about Hy-Brand and the joint employer test it implemented. This began earlier in February when the Board’s Inspector General opined that Emanuel should have recused himself from Hy-Brand.Several prominent Democrats cited this opinion to further criticize Emanuel (and likely will continue pursuing this matter). On Monday, the Board arguably succumbed to this pressure, and announced that it had vacated Hy-Brand.

These events created uncertainty about the Board’s joint employer test, at least in the short term. By vacating Hy-Brand, the Board returned to the Browning-Ferris test, at least technically. This will preclude lower ranking Board agents from applying the more balanced Hy-Brand test for the time being.

Nevertheless, this is likely just a setback. The Board’s Republican majority will continue working to overturn Browning-Ferris, and it can do so even without Emanuel’s involvement. At the same time, Congress is working to legislatively overturn Browning-Ferris and implement a more balanced test for the purpose of the NLRA and several other federal laws.

In the meantime, it is unlikely that lower ranking Board agents will aggressively apply the prior Browning-Ferris test. The Trump Administration has significantly reduced the Board’s resources, thus discouraging Board agents from pursuing borderline cases. Further, the extent any lower ranking Board agent desires to apply Browning-Ferris, that agent should know that the Board’s Republican majority could overrule the decision. At the same time, the Board’s Trump-appointed General Counsel also should control how zealously Board agents pursue questionable joint employer cases.

In short, these developments have muddied the waters, delayed a final resolution, and created a stage for Democrats to continue combating the Board’s new agenda. The Board likely will return to the Hy-Brand test at some point, but employers should monitor the situation in order to know when that ultimately occurs.

© Copyright 2019 Squire Patton Boggs (US) LLP

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Of Counsel

Will represents employers in matters involving employees and labor unions. Will litigates a broad variety of labor and employment cases, including labor arbitrations, National Labor Relations Board (NLRB) proceedings involving unfair labor practice charges and representation issues, Section 301 lawsuits, wage and hour actions, wrongful discharge cases and lawsuits involving other labor and employment issues. Will also assists employers with collective bargaining negotiations, union avoidance, employee and supervisor training and other labor and employment counseling matters.

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