Trump Board Invokes Formal Rulemaking Process to Undo Employee-Friendly Standard on Joint Employer Status

When one entity has sufficient control over another entity’s employees, the entities are “joint employers” under the National Labor Relations Act (“NLRA” or “Act”)[1].  Joint employers have an obligation to bargain over the terms and conditions of employment and each entity can be held liable for the other’s unfair labor practices.  The Trump Board in Hy-Brand Industrial Contractors, LTD.,[2] attempted to overturn the employee-friendly joint employer standard established by the Obama Board in Browning-Ferris Industries of California, Inc.[[3]    The ruling in Hy-Brand was derailed, however, when the NLRB Inspector General found that Board member Emanuel should have recused himself due to a significant conflict of interest.  As a result, on February 26, 2018, the Trump Board vacated its decision in Hy-Brand and reinstated Browning-Ferris.  

Under the Browning-Ferris standard, two or more entities are joint employers of a single work force if they share control over “essential terms and conditions of employment.”  The phrase “essential terms and conditions of employment” is broadly interpreted to include hiring, firing, discipline, supervision, direction, and wages and hours.  The Board further clarified that the alleged joint employer need not actually exert control over essential terms and conditions of employment.  Instead, the Board held that mere authority to do so is enough to demonstrate the requisite control to establish joint employer status.

On September 14, 2018, the Trump Board, once again sought to undo Browning-Ferris, this time through the formal rulemaking process.  The Board’s proposed rule effectively seeks to codify the joint employer standard set forth in Hy-Brand.[4] The proposed rule requires proof that one entity actually exercises control over another entity’s employees’ essential terms and conditions of employment in a manner that is “direct and immediate” and is not limited in scope.  Conversely, an entity is not a joint employer under the Board’s proposal if it: (1) retains the right to control the employees, but does not exercise that right; (2) exercises control indirectly by controlling the employee through an intermediary; or (3) exercises “limited or routine” control by, for example, telling a worker where and when to perform certain work, but not telling the worker how to perform it. 

[1]           NLRA, 29 U.S.C. §§ 151 et seq.

[2]           Hy-Brand Industrial Contractors, LTD, 365 NLRB No. 156, 210 LRRM (BNA) 1261 (Dec. 14, 2017).

[3]           Browning-Ferris Industries of California, Inc., 362 NLRB No. 186, 204 LRRM (BNA) 1154 (Aug. 27, 2015).

[4]           The Standard for Determining Joint Employer Status, 83 Fed. Reg. 46,681 (Sept. 14, 2018).