NLRB Proposes New Definition of Joint Employer; 60-Day Comment Period Starts Now

NLRB logoWhen seeking musical inspiration for a post on the NLRB’s joint employment standard, look no further than the Barenaked Ladies’ 1994 album, Maybe You Should Drive. Like an on-again, off-again relationship, the Board keeps changing its joint employment standard. Between 2015 and today, the test has been, at various times:

  • Direct control (pre-Browning-Ferris, 1984-2015),
  • Indirect control (Browning-Ferris, 2015-Dec. 2017),
  • Direct control (Hy-Brand overrules Browning-Ferris, Dec. 2017-Feb. 2018), and
  • Indirect control (Board vacates Hy-Brand, restoring Browning-Ferris, Feb 2018-present).

But with this newest change coming in the form of a proposed regulation, the proposed change can be expected, once it’s enacted, to remain in effect long term.

Cue the Barenaked Ladies, in “Everything Old Is New Again” (1994):

Everything old is new again, everything under the sun.

Now that I’m back with you again,

We hug and we kiss, we sit and make lists,

We drink and I bandage your wrists.

The proposed new standard would make it much more difficult to establish that a business is a joint employer.

The new test will help franchisors, who need to protect their brand and marks, but do not exercise day-to-day control over hiring and scheduling of a franchise owner’s employees. The new test will help businesses that subcontract labor and that want to ensure certain tasks are performed but do not exercise day-to-day control over how the work is performed or over how subcontractor hires, schedules, and supervises its employees.

In a Notice of Proposed Rulemaking released late last week, the NLRB proposes a new regulation to interpret the National Labor Relations Act. New 29 CFR §103.40,which would define joint employer.

Under the proposed regulation, an employer may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

There’s a lot packed into that definition:

  • The proposed joint employer must share or codetermine the workers’ terms and conditions of  employment;
  • These terms have to be essential terms of employment, such as hiring, firing, discipline, supervision, and direction;
  • It is not enough to have the right to control these terms; the proposed joint employer must actually exercise this control;
  • The control must be direct, substantial, and immediate; and
  • It is not sufficient to exert control that is limited and routine.

“Limited and routine” control means directing another business’s employees as to what work to perform, or where and when to perform it. Under the new rule, that will not be enough to show joint employment. Control that is not “limited and routine” would include providing direction on how to do the work — in other words, supervision.

For those of you asking, “So what? Who cares?” (my parents, for example), here’s why the change matters.

Under the new rule, a business that retains another company to perform work but has no control over that company’s hiring, compensation, scheduling, or supervision:

  • Will no longer be obligated to collectively bargain with that other company’s unionized workers;
  • Will no longer be held jointly liable for that other company’s unfair labor practices; and
  • Will no longer be drawn into collective bargaining or unfair labor practice disputes with that other company’s employees.

It’s a big deal. Unions won’t like it since the new rule will reduce their influence, but the new rule is a common sense, pro-business proposal that will add predictability and certainty to economic and legal relationships.

So what’s next?

There is a now a 60-day period for comment. The Board will then have the opportunity to consider the comments and revise or reject the proposed rule.  The soonest the rule can be implemented is late 2018 but more likely early 2019.

Then, assuming the rule is implemented, we go back to the standard that existed before Browning-Ferris, but with a lot more clarity and permanence. Everything old is new again. But this time, the change should be long-term since it will be memorialized in a  federal regulation.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Is It Legal to Subcontract Out Union Work? (Ask a Song Title)

Subcontract union workI like similar but contradictory song titles. Pink Floyd has Wish You Were Here. But REO Speedwagon has Wish You Were There.

For one Puerto Rican company in the injection-molded products business, the message to its union was Wish You Were Gone (that’s Cosmo Pyke, 2017).  The company decided to outsource a portion of its injection mold production to a subcontractor but otherwise stayed in the business. The union filed an unfair labor practice charge.

The union won. The NLRB recently ruled that the company could not subcontract out work that had traditionally been performed by the union — at least not until the company had bargained over it and reached impasse. The Board ruled that once the union is performing a certain kind of work, a company’s decision to reconsider who performs this work is a mandatory subject of bargaining, so long as the company was remaining in the business. (The result likely would have been different if the company was getting out of that line of work.)

The Board noted that the company “remained an active participant in the production of injection-molded products, owned the machinery that manufactured the product, and continued to sell the product directly to the customers it served prior to its transfer of production to Alpla [the subcontractor].”

The moral of the story here is that — whether you wish the union were here, there, or gone — you need to bargain with it before subcontracting out its work. Exceptions may apply, depending on the facts and circumstances, but be cautious.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Pink Floyd or The Who?: NLRB Extends Deadline for Public Input on Important Misclassification Decision

pf photo 1 for nlrb post velox

Roger Waters & the boys, smiling pretty for the camera

Pink Floyd or The Who? Tough call for me, but I generally go with Pink Floyd, unless we’re listening to Tommy. Songs from both bands came to mind last week as I read the NLRB’s update on an important issue relating to independent contractor misclassification.

Who Are You (The Who, 1978)? In this post, we discussed a 2017 ruling, in which an ALJ found that the misclassification of independent contractors, by itself, is a violation of the federal labor law. This decision rejected the pickup basketball rule, “no harm, no foul.” Misclassification was deemed to be an unfair labor practice.

Join Together (The Who, 1990). The full Board then decided to reconsider that decision and invited public input on the question. Non-parties were asked to submit briefs to assist the Board in making its decision. Trade associations and labor groups are filing briefs on both sides of the issue.

Wish You Were Here (Pink Floyd, 1975). The Board temporarily lost its 3-2 Republican majority after Member Miscimarra stepped down, but earlier this month, the Senate confirmed John Ring as the third Republican member, restoring a majority and a pro-business slant.

Time (Pink Floyd, 1973). Last week the Board extended the deadline for briefing to April 30th. Any business or trade organization that wishes to provide input to the NLRB on this important issue still has an opportunity. Here are instructions for filing.

Careful with that Axe, Eugene (Pink Floyd, 1969). This is an important issue for businesses using independent contractors. If misclassification by itself violates the NLRA — even with no actual harm to the worker — then businesses may face unfair labor practice charges, even where there’s no union and, even stranger, those ULP charges can come from workers you didn’t even think were your employees.

Take It Back (Pink Floyd, 1994). Hopefully for businesses, the full Board will reverse the ALJ and reinstate the pickup basketball rule. I have High Hopes (Pink Floyd, 1994).

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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NLRB Roller Coaster Ride on Joint Employment Rolls On

roller-coaster-NLRB joint employment test

I used to go to summer camp in Georgia, and the highlight of the summer was always a trip to Six Flags, where we would ride the Mindbender roller coaster. My coaster days are over, thanks to two back surgeries and a desire to remain upright and mobile, but watching the NLRB lately brings back memories of the sharp turns, fast drops, and tight spirals.

Yesterday, the Senate approved John Ring’s nomination as the third NLRB member, returning the Board to a Republican majority. (The vote was 50-48, like halftime in the NBA.)

With three Republican members, we can expect the Board to quickly find another opportunity to overturn Browning-Ferris and return the joint employment test to a more rational standard that requires a finding of direct, material control before a company can be deemed a joint employer.

There are a few ways this might happen.

Plan A is that the D.C. Circuit Court of Appeals could help. In an unusual move, the Court of Appeals agreed late last week to re-open the Browning-Ferris appeal.

The Court of Appeals had dismissed the appeal several weeks ago as moot, after the NLRB issued its Hy-Brand decision, which overturned Browning-Ferris. But after the NLRB said “my bad” and vacated its Hy-Brand decision, the Board asked the Court of Appeals to take the case back and to issue a ruling on what the proper joint employment standard should be. On Friday, the Court of Appeals re-opened the case and will soon issue a decision.

If the Court of Appeals says the Browning-Ferris case was wrongly decided by the Obama Board, then the newly constituted NLRB can hop on that bandwagon and decide to adopt that decision as its new test.

On the other hand, if the Court of Appeals affirms Browning-Ferris, the NLRB will just ignore the decision and move to Plan B or C.

Plan B would be to get Hy-Brand back on the books as good law. That would mean reinstating the Hy-Brand test as the proper standard for determining joint employment. The Hy-Brand test would require direct and material control before a business can be deemed a joint employer under labor law. The NLRB’s General Counsel recently chastised the Board for vacating its own Hy-Brand decision without following the usual rules for recusal.

If that fails, there’s Plan C, which seems more viable now that John Ring has restored the NLRB to a 3-2 Republican majority. The Board can find a new case — other than Hy-Brand — and adopt the revised business-friendly joint employment test that the NLRB tried to adopt in Hy-Brand.

Plan C would require finding a case that allows Board Members Ring and Emanuel to dodge any conflict issues, as they both come from large law firms with lengthy client lists, which is precisely the problem that led to Hy-Brand being vacated in the first place. Too many potential conflicts. They will need to find a clean case with no apparent conflicts, but that can be done.

Meanwhile, this has been a roller coaster ride. The NLRB will eventually settle on a new joint employment standard (I expect), just like the Mindbender eventually settles back down on a straightaway and slows down to let off the riders — who, like NLRB-watchers, are now dizzy and disoriented.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Will Recusals Sink the NLRB’s Pro-Business Agenda?

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“Recuse.” Verb, meaning to cuse again.

Sorry, it doesn’t mean that at all. We’ve heard a lot about recusal in the news lately, relating to a certain Attorney General and one of the former Soviet Republics (the big one).

The NLRB is dealing with recusals too. And recusals within the Board may affect your business.

Of the soon-to-be-majority Republican Board members, two are from big defense firms. The Board recently vacated its important Hy-Brand decision that attempted to restore sanity to the joint employment test, after the NLRB’s Inspector General determined that Member Emanuel should have recused himself. That conclusion was based on the fact that his prior law firm, Littler, represented a party in the Browning-Ferris case, which Hy-Brand tried to reverse. Littler’s extensive client list of big businesses means this issue is likely to come up again. Emanuel could find himself disqualified from participating in other important Board cases, including other joint employment cases.

And he’s not the only one.

John Ring, the third Republican appointee to the Board (scheduled for confirmation hearings shortly), is from the large law firm Morgan Lewis, which also represents many large businesses. Ring recently submitted his potential conflicts list. It’s long, and it includes lots of well-known corporate names.

So he could find himself disqualified too.

The newly reconsitituted Trump-appointed Board is expected to issue plenty of 3-2 party-line pro-business decisions, reversing Obama-era decisions. Is that still possible, if two of the three Republican members could be conflicted out of the most significant cases?

It’s a tough question, and the answer remains to be seen. Trump could have appointed pro-business Board members from small employer defense boutique firms instead of choosing lawyers from two of the largest firms in the U.S. Had lawyers from smaller firms been selected instead, the likelihood of recusals would have been much smaller.

With important decisions to be made at the NLRB about the test for joint employment and other significant union-management issues, the Trump Administration’s decision to appoint two big firm lawyers could threaten its anticipated pro-business agenda.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Go Carts or Bumper Cars? NLRB Asks Court to Fix Its Browning-Ferris Blunder

Browning-Ferris joint employment go cartThe two most fun activities at amusement parks (aside from skee-ball) are Go Carts and Bumper Cars. This is scientific fact. Go Carts are fun because you can go fast, weave around, and drive in circles — all without getting honked at. Bumper Cars are fun because, well, you get to bump people.

The NLRB seems stuck on the Go Cart track, going round and round, when it would rather be in the Bumper Cars.

Last week, we reported on the Board’s sudden decision to vacate its important Hy-Brand decision, issued in December 2017. Hy-Brand was important to businesses because the decision restored sanity and workability to the NLRA’s test for joint employment.

But by vacating the Hy-Brand decision, the dreadful Browning-Ferris standard went back into effect, Continue reading

Browning-Ferris Is Back! NLRB Flip-Flops Again, Reinstates 2015 Joint Employment Decision!

989BD1FE-B520-4198-87E3-1A61F3AD50E0Holy smokes, Batman! This morning I wrote that the NLRB’s new joint employment test, from its December 2017 decision in Hy-Brand, was safe.  I was completely wrong.

A few hours ago, the NLRB reversed itself, vacated its order in Hy-Brand, and reinstated Browning-Ferris.  Whaaaaaat?

The NLRB issued this press release today:

The National Labor Relations Board (3-0, Member Emanuel did not participate) today issued an Order vacating the Board’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017), in light of the determination by the Board’s Designated Agency Ethics Official that Member Emanuel is, and should have been, disqualified from participating in this proceeding. Because the Board’s Decision and Order in Hy-Brand has been vacated, the overruling of the Board’s decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015), set forth therein is of no force or effect.

The sudden self-reversal was prompted Continue reading