Hunton Employment & Labor Perspectives

The National Labor Relations Board issued a much-anticipated decision on Thursday, overruling its controversial 2015 Browning-Ferris decision that unions and employees argued drastically expanded the definition and scope of the Board’s joint-employer doctrine.  In Browning-Ferris, the Board departed from decades of precedent and held that entities who merely possessed—as opposed to directly and immediately exercised—control over workers would be deemed joint employers for purposes of assessing liability under the National Labor Relations Act.  The Board used the Browning-Ferris decision to expand its reach under the joint-employer doctrine to include, for example, companies that relied on staffing agencies and in some cases, parent companies that did not exercise immediate or direct control over a subsidiary’s workers, but had the potential authority to affect certain terms and conditions of employment.  The Browning-Ferris decision faced heavy criticism from employers as well as an appeal of the decision itself to the D.C. Circuit Court of Appeals.

Calling the Browning-Ferris standard “a distortion of common law as interpreted by the Board and the courts” and “ill-advised as a matter of policy,” the NLRB on Thursday resurrected the pre-Browning-Ferris standard for determining joint-employer liability.  Under the newly-resurrected standard, two or more entities will be deemed joint employers if one entity has “actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control)” and the control is “‘direct and immediate’ (rather than indirect)” and exercised in a manner that is not “limited and routine.”

In a 3-2 decision, Chairman Philip A. Miscimarra was joined by Members Marvin E. Kaplan and William J. Emanuel.  The decision comes only months after President Trump’s nominations of Kaplan and Emanuel were approved by the Senate.  Chairman Miscimarra announced in August 2017 that he will not seek reappointment when his term expires on December 16, 2017, leaving the vacancy open for another Trump appointee.  Meanwhile, employers and their attorneys may view the decision to return to the pre-Browning-Ferris joint employer standard as an attempt by the new Board to restore some measure of balance to the spate of anti-business decisions during the previous administration.