• National Labor Relations Board Deviates from Typical Practice and Announces that it is Considering Rulemaking to Address Joint Employer Standard
  • May 30, 2018 | Authors: Bryanne Lewis; John S. Bolesta
  • Law Firms: Sheppard, Mullin, Richter & Hampton LLP - Washington Office; Sheppard, Mullin, Richter & Hampton LLP - Costa Mesa Office
  • On May 9, 2018, the National Labor Relations Board (“NLRB”) announced it is considering rulemaking to address the standard for determining joint-employer status under the National Labor Relations Act (“NLRA”). As Chairman of the NLRB John Ring explained in the NLRB’s press release:

    “The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be. I am committed to working with my colleagues to issue a proposed rule as soon as possible, and I look forward to hearing from all interested parties on this important issue that affects millions of Americans in virtually every sector of the economy.”

    By way of background, the “current uncertainty,” as described by Chairman Ring, over the joint employment standard stems from the NLRB’s recent reversal of its decision in Hy-Brand Industrial Contractors, Ltd, 365 NLRB No. 156 (December 14, 2017) (“Hy-Brand”). In Hy-Brand, the NLRB overruled the controversial joint employer standard that was announced in Browning-Ferris Indus. of California, et al. v. Sanitary Truck Drivers, 362 NLRB No. 186 (2015) (“BFI”), which held an employer could be considered a joint employer as long as it exercised “indirect control” over working conditions or had “reserved authority” to do so. By overruling BFI, the NLRB returned to the joint-employer standard that existed prior to BFI, which required an employer to exercise direct and actual control to be considered a joint employer. The Hy-Brand decision, however, was vacated on February 26, 2018 for an alleged conflict of interest due to Board Member Emanuel’s participation in the decision. (A detailed discussion of Hy-Brand and BFI, and the NLRB’s decision to vacate Hy-Brand can be found here.)
    Now, in obvious response to the rescission of the Hy-Brand decision, the NLRB has announced that it will consider rulemaking on the joint employer standard and that the internal process necessary to do so is already underway. Because any proposed rule will only require approval by a majority of the five-member Board, the Republican-appointed majority will likely be successful in overturning the BFI standard again, albeit through a far slower and less traveled process. The current Board is likewise continuing to monitor new cases that present an opportunity to revisit the joint employer standard. We will continue to provide updates as developments occur.
    The NLRB’s announcement came as part of the Spring 2018 Unified Agenda of Federal Regulatory and Deregulatory Actions, which compiles information about upcoming regulations that are being developed by administration agencies. Other notable developments listed in the Agenda from the U.S. Department of Labor (“DOL”) and the U.S. Equal Employment Opportunity Commission (“EEOC”) include the following:
    • The DOL’s notice of proposed rulemaking to determine the salary level for the executive, administrative and professional employee exemptions is scheduled for January 2019.
    • The DOL intends to rescind the “Persuader Rule,” which would have required employers and their labor relations consultants to publicly disclose confidential information about efforts taken in response to union organizing drives, in May 2018. (The Persuader Rule was first preliminary enjoined and later permanently enjoined by the U.S. District Court for the Northern District of Texas before ever having taken effect.)
    • The DOL’s notice of proposed rulemaking to clarify, update, and define regular rate requirements for overtime compensation is scheduled for September 2018.
    • The EEOC’s notice of proposed rulemaking to amend regulations under the ADA regarding incentives and employer-sponsored wellness programs is scheduled for January 2019.