Update on Joint Employer Legislation and NLRB Rulemaking

By Kent Franchise Law Group

Last November, H.R. 3441, the Save Local Business Act, passed in the House of Representatives and was sent to the Senate for consideration and vote. H.R. 3441 amends the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA). The law also rolls back the NLRB decision in Browning-Ferris Industries of California, Inc., et al. The bill is awaiting action from the Senate.

While action in Congress has stalled, the National Labor and Relations Board continues to grapple with the implications of its decision in the Browning-Ferris case, which modified the standard for determining a joint-employer. In 2015, the NLRB’s decision in Browning-Ferris Industries, held that an entity may be a joint-employer of another entity’s employees if it has reserved the right to control essential employment terms of the other entity’s employees. In December 2017, the NLRB overruled the Browning-Ferris Industries decision with the Hy-Brand Industrial Contractors decision, reverting to the former joint-employer standard, whereby an entity could only be considered a joint-employer if it actually exercised significant controls over another entity’s employees. However, the reversal was short lived. On February 26, 2018, the NLRB vacated its decision in Hy-Brand. The NLRB reinstated the Browning-Ferris standard after the NLRB Inspector General concluded that a board member, William Emanuel, had an ethics conflict. Mr. Emanuel’s former law firm had represented an adversely affected client in the Browning-Ferris case.

In addition to the NLRB vacating Hy-BrandBrowning-Ferris requested that the D.C. Circuit reinstate its appeal in early 2018. The court responded and added the case to its docket on April 6. In early June 2018, the NLRB decided it would not reconsider its decision to vacate Hy‑Brand.

As of June 8, 2018, Browning-Ferris remains the standard for what defines a joint-employer relationship. Under this standard, companies are ‘joint employers’ if they have indirect or contractually reserved control over workers, instead of the direct and immediate control standard that used to define the term in labor law.

Proposed Rulemaking

On May 9, 2018, the NLRB issued a press release regarding the use of notice-and-comment rulemaking for the joint-employer standard. The NLRB Chairman, John F. Ring, stated that the “notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be,” and that the NLRB had “begun the internal process necessary to consider rulemaking on the joint-employer standard.” The NLRB revised its statement in a June 5, 2018 letter to Senators Warren, Sanders, and Gillibrand. No longer just a consideration, the NLRB is now preparing the internal process necessary for an official Notice of Proposed Rulemaking on joint employment for this summer.

We will continue to monitor the progress regarding the joint-employer standard. If you have questions about how this may affect you or your business, please contact us.