In the closing days of Chairman Miscimarra’s term, the Board has restored the longstanding rules for finding joint employment that were cast aside by the Obama Board in the 2015 Browning-Ferris decision. In Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017), the Board overruled Browning-Ferris Industries of California, Inc., dba BFI Newby Island Recyclery, 362 NLRB No. 186 (2015), and returned to the standard applied for decades prior to that decision:
Thus, a finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control), the control must be “direct and immediate” (rather than indirect), and joint-employer status will not result from control that is “limited and routine.”
As a result, companies which employ a variety of business models potentially targeted by Browning-Ferris may rely upon a clearer, more objective standard in determining whether they might have some responsibility for each other’s conduct or shared bargaining obligations.
For at least thirty years prior to 2015, the Board found a joint employer relationship if two or more separate entities “share[d] or codetermine[d] the essential terms and conditions of employment” of a group of employees. TLI, Inc., 271 NLRB 798, 798 (1984); Laerco Transportation, 269 NLRB 324, 325 (1984). Under this standard, the Board appropriately required “a showing that [each] employer meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction” and analyzed both “form” (i.e., the contractual relationship between the putative joint employers) and “substance” (i.e., the actual practice of the putative joint employers). Id.; AM Property Holding Corp., 350 NLRB 998, 1000 (2007) (“In assessing whether a joint employer relationship exists, the Board does not rely merely on the existence of such contractual provisions, but rather looks to the actual practice of the parties.”). As provided by common law, the “essential element” of joint employer status required “a putative joint employer’s control over employment matters [to be] direct and immediate.” Airborne Freight Co., 338 NLRB at 597 (emphasis supplied); see also AM Property Holding Corp., 350 NLRB at 1000-02.
In Browning-Ferris, the NLRB drastically expanded the standard for joint employment holding that the Board may find that two or more entities are joint employers of a single work force if they (1) are both employers within the meaning of the common law, and (2) “share or codetermine those matters governing the essential terms and conditions of employment.” The second factor tracked the language of the traditional test, but unlike the Board’s traditional joint employer test, the Board no longer required that the putative joint employer exercise control over the putative joint employees directly and immediately. As criticized by the Board in yesterday’s Hy-Brand ruling:
In Browning-Ferris, the Board majority held that, even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not “direct and immediate,” the two entities will still be joint employers based on the mere existence of “reserved” joint control,or based on indirect control or control that is “limited and routine.”
The majority decision in Hy-Brand expands in significant length upon the Browning-Ferris dissent filed by then Member Miscimarra and Member Harry Johnson. Applying the restored standard, however, the Board still found the employers at issue in the case to be joint employers:
Applying the joint-employer standard that existed prior to Browning-Ferris, we find that the record establishes that Brandt and Hy-Brand constitute a joint employer, which means they are jointly and severally liable for remedying the unfair labor practices committed in the instant case. Substantial evidence supports a finding that the two entities exercised joint control over essential employment terms involving Brandt and Hy-Brand employees, the control was direct and immediate, and it was not limited and routine. … [T]he record establishes that the joint control described above was actually exercised, not merely re- served, and that it had a direct and immediate impact on Brandt and Hy-Brand employees.
It remains to be seen what impact this ruling will have on the pending McDonald’s litigation, which has necessitated nearly 200 days of hearing to date, and is nowhere near resolution. In 2014, the Board undertook prosecution of 13 complaints involving 78 charges filed against McDonald’s and numerous franchisees as joint employers. At the commencement of the litigation, the General Counsel urged adoption of the standards eventually announced in Browning-Ferris. Now that there is a new General Counsel and restored legal standard, we might wonder whether the case will be discontinued.