Here We Go Again: Browning-Ferris Revisited

As a result of recent activity at the D.C. Circuit and the National Labor Relations Board (the “NLRB”), the joint employer standard is in a state of flux. On April 6, 2018, the D.C. Circuit decided that it will review the NLRB’s ruling in Browning-Ferris Industries of California, Inc. (“Browning-Ferris”), a controversial decision concluding that a company and its contractor could be found to be joint employers even if the company did not exert overt control over workers’ terms and conditions of employment. In December 2017, the D.C. Circuit remanded the case in light of the NLRB’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. (“Hy-Brand”), which overruled the broad Browning-Ferris standard for joint employment and returned to a more employer-friendly standard. But, the NLRB recently vacated its Hy-Brand decision based on a conflict regarding one of its Members. Now, the D.C. Circuit likely will weigh in on the appropriate scope of the joint employer standard.

Hy-Brand promised to be a watershed case, narrowing joint employer status to require “proof that the alleged joint employer entities have actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’” The NLRB’s Hy-Brand decision overruled its previous ruling in Browning-Ferris, which broadened the definition such that an entity’s reserved authority to control terms and conditions of employment, even if not exercised, was indicative of joint employer status. Further, the NLRB ruled that joint employer status could be established through indirect control, such as through an intermediary.

However, following an investigation, the NLRB Inspector General David Berry authored a memo finding that NLRB Member William Emanuel should have recused himself from the Hy-Brand case because his former law firm represented a party in Browning-Ferris. Executive Order 13770 prohibits an appointee from participating in a “particular matter involving specific parties” when the appointee’s former employer or client is a party or represents a party. Berry concluded that “the practical effect of the Hy-Brand deliberative process was a ‘do over’ for the Browning-Ferris parties,” since “the deliberations of the Hy-Brand case involved and affected the legal rights of the parties of Browning-Ferris.” The NLRB’s Designated Agency Ethics Official also determined that Member Emanuel should have been disqualified from participating in Hy-Brand. As a result, the NLRB issued an order vacating its Hy-Brand decision, thus restoring the Browning-Ferris joint employer standard.

Following the NLRB’s vacatur order, the NLRB moved to recall the D.C. Circuit’s remand of the Browning-Ferris appeal, in the hopes that the court would deny enforcement of the NLRB’s Browning-Ferris decision. In December 2017, the court remanded Browning-Ferris to the NLRB for reconsideration following Hy-Brand. In its recent decision, the D.C. Circuit held that “recalling the mandate is appropriate only because this case presents ‘extraordinary circumstances.’”

Meanwhile, Hy-Brand filed a motion for reconsideration of the NLRB’s vacatur order, arguing that Inspector General Berry wrongly concluded that Member Emanuel should have recused himself from the initial decision. Further, Hy-Brand contends that Member Emanuel was improperly excluded from participating in the vacatur decision of the panel. The D.C. Circuit ordered that Browning-Ferris be held in abeyance pending the outcome of Hy-Brand’s motion for reconsideration before the NLRB.

For now, Browning-Ferris remains good law, and courts do not need proof that multiple entities have actually exercised joint control over essential terms and conditions of employment to make a finding of joint employment. If the NLRB denies Hy-Brand’s motion for reconsideration, the D.C. Circuit will rule on the Browning-Ferris standard, which has been much-criticized by employers. In the unlikely event that the NLRB reinstates the Hy-Brand decision, the D.C. Circuit may again remand Browning-Ferris back to the NLRB. In any event, given the ongoing controversy regarding the Hy-Brand decision, the case should have long-lasting effects on ethics rules for NLRB members.