NLRB rolls back Browning-Ferris joint employment standard

Dive Brief:

In a 3-2 decision, the National Labor Relations Board (NLRB) has overturned the infamous 2015 decision, Browning-Ferris Industries, 362 NLRB No. 186 (2015) (“Browning-Ferris”), and has returned to the standard set before that Obama-era decision.
According to the Browning-Ferris standard, indirect control of an employee could constitute a joint-employer relationship. Now, a company will only be deemed a joint employer if there is proof that it has exercised direct control over employment terms of that employee.
Browning-Ferris currently sits at the D.C. Circuit Court of Appeals, where a decision has been expected since the spring.

Dive Insight:

For construction, the rule's overturn means some subcontractors would be subject to the control and oversight of the general contractor. According to the Associated General Contractors of Washington, contractors that use employment agencies or contingent workers could be more susceptible to charges involving unfair labor practices involving other employees.

Contractors, the association said, can steer clear of joint employer status by ensuring that subcontractors do not dictate wages, staffing numbers or work processes of sub-subcontractors. Subcontractors should also be responsible for workers' evaluations, any disciplinary action or termination, though they should avoid too great an involvement with other sub-subcontractors that could be construed as "co-management" of those employees.

The NLRB promised to make a number of decisions this week while a Republican majority remained in play — and the overturning of Browning-Ferris, a highly controversial decision, was expected eventually, but perhaps not this soon. This move is the fourth so far this week, including potential rescission of the "quickie" election rule, a ruling on the "reasonableness standard," and the "employer handbook rules" case.

It's unclear whether the NLRB's change in position could make the D.C. appeals court case moot. Robert Loeb, partner at Orrick, said he would assume that NLRB would be letting the court know about the decision soon and they may ask that the case be vacated and remanded back to the agency. The possibility of "informal talks" about delaying the court decision, which has been waiting for some time, would be unusual but it "did cross my mind," he told HR Dive.

T he court was confused about the definition of "indirect control" and it questioned when and how such a definition could apply in terms of joint employment. The new position (really, the old position) relieves employers of such confusion and returns them to a standard that was well-accepted among most business groups. Loeb said business groups will be glad to see this has been clarified.

What does this mean for the Save Local Business Act, the joint employer bill that sits at the Senate? The NLRB's rejection of the Browning-Ferris standard will likely put this on the backburner for now, though the Senate could still pick it up to distinctly codify the "direct control" standard into law.

Next week, the Board returns to a 2-2 deadlock while it awaits another Trump appointee who will have to go through the Senate confirmation process, meaning there may be a delay before the Board can push any more change. More movement from the Board could still come Friday, as Chair Philip Miscimarra's term ends Saturday.