The “joint employer” standard of the National Labor Relations Board is still in play.
On May 9, in a rarely-seen development, the NLRB Office of Information and Regulatory Affairs published an announcement by Chairman John F. Ring that the Board may use the regulatory rulemaking process to decide the joint employer standard. Through rulemaking, the Republican-majority Board may be able to avoid Member conflict allegations such as those that engulfed Member William Emanuel in Hy-Brand. On May 29, supporters of organized labor, including Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), and Kirsten Gillibrand (D-N.Y.), sent a letter expressing their concern over the proposal.
On June 5, Chairman Ring responded that the rulemaking would take place and that the Senators’ politically motivated questioning and attacks on the process were not persuasive to him. His letter is worth the read:
... a majority of the Board believes that "notice-and-comment” rulemaking offers the best vehicle to fully consider all views on what the [joint-employer] standard ought to be. Although we could have invited briefing in connection with our traditional case-by-case adjudication, rulemaking on this topic opens an avenue of communication with the Board for — we hope — thousands of commenters. I look forward to hearing from all interested parties, including individuals and small businesses that may not be able to afford to hire a law firm to write a brief for them, yet have valuable insight to share from hard-won experience.
Rulemaking is appropriate for the joint-employer subject because it will permit the Board to consider and address the issues in a comprehensive manner and to provide the greatest guidance. Although legal standards of general applicability can be announced in a decision of a specific case, case decisions are often limited to their facts. With rulemaking, by contrast, the Board will be able to consider and apply whatever standard it ultimately adopts to selected factual scenarios in the final rule itself. In this way, rulemaking on the joint-employer standard will enable the Board to provide unions and employers greater "certainty beforehand as to when [they] may proceed to reach decisions without fear of later evaluations labeling [their] conduct an unfair labor practice," as the Supreme Court has instructed us to do.
In addition, whereas standards adopted through case adjudication may apply either retroactively or prospectively, final rules issued through notice-and-comment rulemaking are required by law to apply prospectively only. Thus, by establishing the standard for determining joint-employer status through rulemaking, the Board immediately frees its stakeholders from any concern that actions they take today may wind up being evaluated under a new legal standard announced months or years from now.
If the three Republicans on the Board do indeed support new rulemaking as indicated in Chairman Ring’s letter, the Board by the end of the summer is likely to issue proposed regulations. That will begin a period of public comment regarding the proposed regulations. The Board can hold public hearings but is not required to do so.
In 2015, while Democrats were in the Board majority, the NLRB relaxed and expanded the Board’s joint-employment standard in Browning-Ferris. After Republicans regained the majority, the Board issued Hy-Brand Industrial Contractors, Ltd., which returned to the traditional standard. But then, Republican Member William Emanuel came under attack for failing to recuse himself from the Hy-Brand case. In February 2018, the Board excluded Member Emanuel from the case and then vacated the Hy-Brand decision entirely. (Hy-Brand the employer filed a motion for reconsideration of the decision to vacate the Hy-Brand decision.)
In the meantime, the Browning-Ferris case, which had been at the U.S. Court of Appeals for the District of Columbia Circuit, had been sent back to the Board because of the change of the applicable standard under Hy-Brand.
In June, the Board denied Hy-Brand’s request for reconsideration, and the Board requested that the D.C. Circuit take Browning-Ferris "out of abeyance and continue processing it in the regular course." Not to be outflanked, Browning-Ferris (the employer) asked the D.C. Circuit to remand the case to the Board, given the Board’s announcement to pursue rulemaking on the appropriate joint employer standard. According to Browning-Ferris (the employer), “Although the joint-employer rules developed would not apply directly to this case... the reasoning underlying those rules presumably would bear upon this case if it is remanded...Given that the NLRB has undertaken definite measures to reconsider the standard governing its treatment of this case, the better outcome is to not have this case be an outlier in relation to the Board's new policy.” That motion apparently is pending.
Keep an eye out for developments regarding the proposed rulemaking and the D.C. Circuit’s handling of the Browning-Ferris case, as well as new developments in the well-publicized McDonald’s joint employment case. The McDonald’s case also involves joint employment, but with franchisees and franchisors. The parties had reached a settlement, but an NLRB Administrative Law Judge recently rejected the settlement.