- Frazer Capital & Co.
- Sale of Back Bay portfolio
- The Hoffman Companies
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- Massachusetts Clean Energy Technology Center
- Series A Preferred Stock Investment in 7AC Technologies, Inc.
Joint Employer Test Continues to Negatively Evolve for Employers
March 7, 2018
On February 26, 2018, the National Labor Relations Board unanimously vacated its own December 2017 joint employment ruling in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017), after a member of the Board was criticized for not recusing himself.
The joint employment concept is significant for many different types of employers, unionized or not. If proven, joint employment expands employer liability making certain employers vulnerable to suit in cases where they might otherwise be immune. For example, a franchisor with no direct control over its franchisees may still incur liability on behalf of a franchisee, which is exactly how the NLRB ruled (by 3-2 vote) in its 2015 decision in Browning-Ferris Industries.
In Browning-Ferris, the Board abandoned many years of precedent by relaxing the standard for joint employment to one turning on whether the employer exhibited “indirect control” over employees. This means that employers who exercise even indirect control over another entity may be liable for employment claims made against those entities. Previously, an employee needed to show that the alleged joint employer exercised direct and immediate control over the essential employment terms of another entity. Browning-Ferris dramatically increased the potential for employers to be deemed “joint employers,” thus expanding their potential liability.
In Hy-Brand, the Board overturned the liberal Browning-Ferris test (again, by 3-2 vote) in favor of the more difficult to prove "direct and immediate" control standard. This meant that for an employee to succeed on a joint employment claim, he or she would have need to prove that the employer had "direct and immediate control" over another entity, thus making it harder for a plaintiff to prove the existence of joint employment. Despite this, NLRB Inspector General David Berry took issue with the fact that Board Member Bill Emanuel, a former member of a firm that represented a party to the Browning-Ferris decision, had participated in the Hy-Brand case. According to Mr. Berry, Hy-Brand represented a continuation of issues related to Browning-Ferris, such that Member Emanuel should have recused himself.
In light of the Board’s decision to vacate Hy-Brand due to Member Emanuel’s improper participation, the Browning-Ferris standard is once again in effect. Employers should be aware that even indirect control of another entity’s employees leaves them vulnerable to suit. We will continue to monitor the situation and anticipate that when an appropriate case arises, the Board will reinstate its holding in the Hy-Brand case, which would be a welcome relief for employers.
If you have any questions or need additional information concerning this topic, please contact Valerie Samuels or any other attorney in our Employment Group.
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