Following report of ethical misconduct, Trump Board decision making it harder to hold companies accountable for wages and working conditions struck down
Donald Trump appointed two new members of the National Labor Relations Board (“NLRB” or “Board”). When the second Trump-appointee, William Emanuel, was sworn in on September 26, 2017, a 3-2 Republican majority made up the Board. The newly-constituted Trump Board acted swiftly to reverse a number of Obama-era precedents.
On December 14, 2017, in Hy-Brand Industrial Contractors, Ltd., the Board voted 3-2 to overturn Browning-Ferris Industries. Browning-Ferris said that two or more companies are “joint employers” of a worker if the companies shared the ability to govern the worker’s terms and conditions of employment. In other words, if more than one company had the authority to control things like salary and working conditions, both companies could be held responsible as that worker’s employer. In turn, Browning-Ferris made it easier for working people to organize and bargain with the employer that actually has the authority to control the terms of their employment, regardless of the way the company chooses to structure its business.
The newly-constituted NLRB, joined by Trump-appointee Emanuel, did away with the Browning-Ferris standard in Hy-Brand. The Trump Board ruled that an entity would only be accountable as an employer if it actually exercised “direct and immediate control” over essential terms of employment. The Hy-Brand standard would make it harder to compel bargaining with or pursue complaints against parent companies that may only have indirect control or authority over a worker’s terms and conditions of employment.
Enter the NLRB’s independent inspector general. In February 2018, the inspector general issued a report finding “a serious and flagrant problem and/or deficiency” in how the Board handled conflict of interest issues. Specifically, the inspector general said that Board member Emanuel should have recused himself from participating in the Hy-Brand decision because Emanuel’s former law firm, Littler Mendelson, represented a party in Browning-Ferris. Because the Hy-Brand deliberation was a continuation of the Browning-Ferris deliberative proceedings and involved the application of the same facts to the same parties, Emanuel should have recused himself from participating in the deliberations that led to the decision overturning Browning-Ferris.
On February 26, 2018, in response to this report of ethical misconduct, the NLRB unanimously vacated the Hy-Brand decision. As a result, the Obama-era Browning-Ferris test for determining joint employment is once again the law of the land. Companies with indirect control over an employee’s terms and conditions of employment will once again be accountable for those wages and working conditions.
Undoubtedly, the Board will look for another opportunity to reverse Browning-Ferris. But since Republican Phil Miscimarra’s retirement from the Board on December 17, 2018, there is no longer a Republican majority. The Board is split 2-2 on party lines until a nominee is confirmed for the fifth seat. Trump has nominated former management-side lawyer John Ring, who has a background very similar to Emanuel. The tenor and questions at Ring’s confirmation hearing make clear that Senators are interested and paying attention to this evolving conflicts of interest issue.
For more information regarding joint-employer issues, contact your labor law counsel.