LABOR POLICY - December 15, 2017 - Roundtable Weekly

NLRB Reinstates Employer Liability Test to “Direct and Immediate Control” Over Workplace Matters, Overturning Obama-Era “Joint Employer” Standard  

The National Labor Relations Board (NLRB) issued a decision on Dec. 14 that restored a traditional workplace liability standard – deeming employers responsible only where they have “direct and immediate control” for wage, benefit, safety and other labor matters.

NLRB logo

The National Labor Relations Board (NLRB) issued a decision yesterday that restored a traditional workplace liability standard – deeming employers responsible only where they have “direct and immediate control” for wage, benefit, safety and other labor matters.

After President Trump recently appointed two Republican members to the NLRB (giving the agency a Republican majority), it was expected that a 2015 Obama-era decision in Browning-Ferris Industries of California, Inc. may be overturned.  Browning-Ferris had replaced the “direct and immediate control” standard for determining joint employer liability with an expanded, vague test – based on “indirect” and “potential” control over workers’ terms and conditions of employment.  The more generalized standard made it easier to hold companies liable for labor violations committed by their franchisees or contractors.  (Wall Street Journal, Dec. 14.)
 
With the new conservative majority, NLRB's 3-2 ruling yesterday in Hy-Brand Industrial Contractors, Ltd., returned this labor policy to its historic status quo.  The NLRB decided that franchisors, general contractors, and other companies are not responsible for labor law violations committed by franchise operators, subcontractors, or staffing agencies where they do not share immediate authority over workplace environments. (POLITICO, Dec. 15)
 
Nor would “parent companies” be required to bargain with unions under Hy-Brand if their corporate influence is simply indirect and remote, they do not jointly set terms of employment, and they lack responsibility for hiring and firing actions.  “Browing-Ferris fosters substantial instability by requiring the nonconsensual presence of too many entities with diverse and conflicting interests on the employer side of the table,” and encourages “disputes over whether the ‘correct’ employer parties were present” in the context of collective bargaining, the NLRB majority opined. 

 Capitol Dome off kilter

Last month, the GOP-led House of Representatives passed a bill (H.R. 3441, with a smattering of Democrats in favor) to legislatively overrule Browning-Ferris and effectively codify Hy-Brand’s majority ruling.

Two Democratic NLRB appointees dissented in Hy-Brand.  They believed the board’s majority should never had reached joint-employer principles in the first place, because the two employers at issue in the case were only “nominally separate companies that were commonly owned” by the same family “which exercised centralized control over labor policy and personnel decisions” relating to firing, payroll, and benefits. “There is no genuine occasion here to issue re-visit the … [Browning-Ferris] joint-employer standard” because “this is a single-employer case,” the dissent wrote.

Last month, the GOP-led House of Representatives passed a bill (H.R. 3441, with a smattering of Democrats in favor) to legislatively overrule Browning-Ferris and effectively codify Hy-Brand’s majority ruling.  (Roundtable Weekly, Nov. 10)
 
As the NLRB’s Thursday decision demonstrates, only a congressional fix would definitively address the joint employer standard and insulate the issue from whichever party has enough appointees to swing the majority on the highly politicized labor board.  The Coalition to Save Local Businesses plans to continue leading efforts in the Senate to take up the House-passed bill – generally considered a steeper climb in the upper chamber where the Republican majority is slim, and became narrower this week with the victory of Doug Jones (D-AL) in the Alabama special election. 

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