In a surprising reversal, the NLRB on February 26, 2018, vacated its decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017), and restored the Board’s union-friendly joint employer test set forth in Browning-Ferris Industries, 362 NLRB No. 186 (2015) which Hy-Brand had overruled.

The Board’s latest reversal came about as a result of a report from the Board’s Inspector General that Member William Emanuel should have recused himself from participating in the Hy-Brand decision. Emanuel’s former law firm, Littler Mendelson P.C., represented one of the joint employers involved in the Browning-Ferris decision. The Inspector General found that because Hy-Brand amounted to a “do over” for Browning-Ferris, which is still pending before the Board, Emanuel should not have participated.

Prior to 2015, the Board analyzed whether two employers were joint employers using a test that required that an entity must actually exercise direct and immediate joint control over essential employment terms and conditions of employment (such as hiring, firing, disciplining, or supervising employees) of employees at the separate entity, as opposed to merely reserving the right to exercise control, to be a joint employer. Limited and routine control (such as simply telling employees what work to perform, but not how or when to perform it) did not suffice.

In 2015, the Board reversed decades of joint employer precedent in Browning-Ferris. Under the new standard announced in that decision, the Board found that two or more statutory employers are joint employers of the same employees if they share or codetermine matters governing the essential terms and conditions of employment. The Board decided that indirect and reserved control would suffice. Thus, an employer that merely possessed the right to control the essential terms and conditions of employment for employees at another entity could be a joint employer – even if the alleged joint employer never exercised that control.

The matter appeared settled when the Board overruled Browning-Ferris in Hy-Brand. But the Board’s Inspector General found that the deliberations behind Hy-Brand, which included substantial re-analysis of Browning-Ferris, amounted to a “continuation of the Board’s deliberative process in Browning-Ferris” and thus should have precluded Emanuel’s involvement.

The Board is currently composed of two Democratic and two Republican appointees. President Donald Trump’s nominee for the vacant fifth seat, John Ring, has yet to be voted out of committee. (A hearing before the Senate Health, Education, Labor and Pensions Committee is scheduled to take place on March 1.) While the Inspector General made clear in his report that only the “very specific facts” of this matter required the recusal of Emanuel, the Board likely will take a more deliberative approach before issuing another joint employer decision.