On February 26, 2018, the National Labor Relations Board (the “Board”) vacated its recent determination in Hy‑Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017).  Hy‑Brand overruled an Obama‑era interpretation of the joint employer doctrine that had greatly expanded potential liability for violations of the National Labor Relations Act (the “Act”).  In vacating Hy‑Brand, the Board returns to the indirect control test for determining joint employment liability articulated in Browning‑Ferris Industries of California, Inc. d/b/a/ BFI Newby Island Recyclery, 362 NLRB No. 186 (2015).  Browning‑Ferris eliminated the requirement that a joint employer exercise actual, direct control over workers and instead held the mere right to control was sufficient to establish joint employer liability, even if that right was never exercised.

The Board vacated Hy‑Brand on the basis that Member William Emmanuel was ethically prohibited from participating in that decision due to his former law firm’s involvement in the Browning‑Ferris case.  Even though Member Emmanuel’s former law firm did not represent parties in the Hy‑Brand decision, the Board’s inspector general found that Hy‑Brand involved the same legal arguments as Browning‑Ferris.  The inspector general found the Board’s deliberation in Hy‑Brand “for all intents and purposes, was a continuation of the Board’s deliberative process in Browning‑Ferris.” 

Given that Member Emmanuel is effectively precluded from determining the issue of joint employment, it is unlikely the Board will be able to overturn Browning‑Ferris, as the remaining members will result in a tie.  However, other options exist for returning to the direct control test.  The pending challenge to the Browning‑Ferris decision now returns to the U.S. Court of Appeals for the District of Columbia Circuit.  Additionally, Congress could enact the Save Local Business Act, which would amend the Act and the Fair Labor Standards Act to establish a direct control standard for joint employer liability.  Finally, Hy-Brand recently filed a motion asking the Board to reconsider the order vacating the decision, arguing the Board violated its rules when it vacated the decision.

Unless the D.C. Circuit overturns the Browning‑Ferris decision, or Congress enacts the Save Local Business Act, employers are once again subject to the indirect control test for determining joint employment.   

If your organization has questions regarding the impact of this ruling, please contact your Kutak Rock attorney or members of our National Labor and Employment Practice Group.