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An Obama-era National Labor Relations Board ruling on the issue of joint employer liability has been restored, at least for now, following a determination that an NLRB board member should have recused himself from another ruling that overturned it.
However, that change, which relates to the relationship between franchisors and their franchisees, may only be temporary.
In 2015, a Democrat-controlled NLRB overturned a standard that had been in place since 1984 and held in its Browning- Ferris ruling that a company need only have indirect control of a worker and not even exercise that control to be considered a joint employer.
But with a newly appointed Republican majority in place, the NLRB in December overturned the 2015 ruling on a 3-2 vote and returned to the pre-Browning-Ferris standard.
However, after an objection was raised against NLRB board member William J. Emanuel’s participation in the vote, NLRB Inspector General David P. Berry said in a Feb. 9 report that he had determined there is a “serious and flagrant problem” with the board’s vote.
He referred to Mr. Emanuel’s representation of a related party in the Browning-Ferris case — Hy-Brand Industrial Controls Ltd. — in his previous role as a shareholder in Littler Mendelson L.L.P.
He said the board’s “deliberate process effectively resulted in a consolidation” of the Hy-Brand and Browning-Ferris parties, and Mr. Emanuel “should have been recused from participation in deliberations leading to the decision to overturn Browning-Ferris.”
“Member Emanuel’s participation in the Hy-Brand decision demonstrates that the Board’s current practice in highlighting and addressing recusal issues should be reviewed to determine if it is adequate to protect the Board’s deliberative process from actual conflicts of interest and the appearance of such,” said the report.
In response to the report, three NRLB board members issued the order vacating the Hy-Brand ruling, which in effect restored the Browning-Ferris ruling.
Although, with former chairman John Miscimarra’s departure as of year-end, the NLRB board is now evenly split with two Democrats and two Republicans, President Donald Trump has nominated John F. Ring, a partner with Morgan Lewis & Bockius L.L.P. in Washington, to be a board member, which would restore a Republican majority. The Senate has not yet voted on the nomination.
This is not the end of the matter, said Rochelle Spandorf, a partner at Davis Wright Tremaine L.L.P. in Los Angeles. “It just sets the dial back,” she said, although she is not sure for how long.
A National Labor Relations Board ruling redefining what constitutes a “joint employer” creates considerable uncertainty for companies that could take years to resolve.