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Today’s Labor Updates, January 6, 2019

What Are The Top 3 Issues To Watch At The NLRB In 2019?

Article By: David J. Pryzbylski

2018 was a busy year at the National Labor Relations Board (NLRB), and we saw many significant developments, such as class action waivers being green lighted in the wake of a U.S. Supreme Court decision. It appears more significant change is on the horizon at the labor board in 2019, so here are – in my opinion – the top three issues to watch at the agency this year.

1. Changes To The “Ambush Election Rule”

Few developments at the NLRB over the last decade caused as much consternation for employers as the agency’s 2015 “ambush election rule.” That rule significantly truncated the amount of time a company has to express an opinion on potential unionization to its workforce prior to an election. The NLRB announced on Dec. 12, 2017, however, that it was seeking input from the public regarding the rule. According to the agency’s press release, the NLRB specifically is evaluating whether the rule should remain as is, be modified, or be rescinded in its entirety. The board extended the deadline for public feedback several times in 2018. The agency has yet to issue a proposed rule or formally announce what course of action it is considering on this front. I anticipate we will have clarity, and potentially even a final new rule, by the end of 2019. Rescission or changes to the ambush election rule that restore some balance to the process would be a huge win for U.S. private sector employers.

2. The Joint-Employer Rule

The board’s infamous Browning-Ferris decision in August 2015 significantly altered its standard for evaluating joint employment. In that case, the NLRB stated that it will no longer require that a company actually exercise control over a workforce’s terms and conditions of employment in order to be deemed a joint employer; rather, “reserved” or “indirect” (i.e., potential) control is sufficient. This caused much concern among employers using contingent workforces and those under franchise business models, as it has made it easier for the NLRB to find companies in those contexts to be joint employers. In 2018, the NLRB released a draft joint-employer rule that would change its current standard regarding when two or more companies can be considered joint employers under the National Labor Relations Act (NLRA). If the proposed rule by the agency passes in its current form, it likely will make it more difficult for the board to impose joint employment on businesses. The board has extended the deadline for public comments on its proposed rule several times, but it is virtually certain we’ll have finality on the new rule in 2019. A finding of joint employment under the NLRA on two or more companies with respect to a workforce can have significant consequences, such as shared liability for unfair labor practices as well as collective bargaining obligations, so this will continue to be a hot issue.

3. Unfinished Business From Peter Robb’s Dec. 1, 2017 Memo.

Shortly after being confirmed at the end of December 2017, NLRB General Counsel Peter Robb issued a memo identifying various categories of cases issued by the agency under the prior administration for which he may seek to overturn precedent. Virtually all of the cases noted in the memo are “pro-union” and harmful and/or burdensome to employers. For example, Robb identified an Obama-board decision granting employees the right to use employer-owned email for unionization purposes as a case that potentially should be revisited among many others. Many of the cases flagged in the memo have yet to be formally revisited, but that will likely change in 2019. Reversals of any or all of the cases noted in Robb’s memo would be a huge victory for companies.

2019 should be an interesting (and potentially good) year for employers on the labor law front. Stay tuned to the blog to see what the year has in store on these and other happenings at the NLRB. Happy New Year!

D.C. Circuit decision on “joint employment” standard clarifies little

By David Phippen Washington DC Metro Office

On December 28, the majority of a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit for the most part upheld an expansive “joint employment” standard adopted by the National Labor Relations Board during the Obama Administration. But the panel’s 2-1 decision has arguably made murky waters even murkier.


The background of the joint employment issue is long and convoluted. Before 2015, the NLRB had said that an entity was not a “joint employer” of another entity’s workers for purposes of the National Labor Relations Act unless, at a minimum, it exercised “direct and immediate control” over the other entity’s workers.

That changed in 2015. In Browning-Ferris Industries, the Board voted 3-2 along party lines to adopt a new standard, deciding that an entity was a joint employer if it had indirect or potential (“reserved”) control over the other entity’s employees, even if the control was not exercised. The new standard means that more entities are “employers” subject to Board power. More “employers” means more targets for effective union organizing, leveraging union bargaining power, and increasing the scope of unfair labor practice responsibility and liability. Status as an “employer” can make the entity a lawful target of various types of picketing, boycotts, or other protected concerted activity that would not be lawful if it were “secondary” activity directed at a third party that is a neutral in the labor dispute.

In late 2017, after it returned to a Republican majority, the Board overruled Browning-Ferris in Hy-Brand Industrial Contractors, but the action was short-lived: The Inspector General of the NLRB found that Board Member William Emanuel should have recused himself because his former law firm had represented one of the parties to the Browning-Ferris case. As a result of the Inspector General’s ruling, the Board vacated Hy-Brand, putting Browning-Ferris back in place.

In the late spring of 2018, NLRB Chairman John Ring announced that the Board would issue regulations addressing the “joint employer” issue. The proposed regulations, issued in September, would restore the pre-2015 standard, which required that the entity exercise “direct and immediate control” over the other entity’s workers before it would be considered a joint employer. (The comment period on the proposed regulations has been extended several times. Comments are currently due January 14, and replies to comments are due January 22.)

While all of this was taking place, Browning-Ferris Industries of California, Inc., was seeking court review of the 2015 Board decision, resulting in the D.C. Circuit decision issued last week.

The D.C. Circuit decision  

The panel majority, in an opinion written by Judge Patricia A. Millett and joined by Judge Robert L. Wilkins, held that because the NLRA does not define “employer,” the common law of agency controls who is a joint employer. Under the common law, Judge Millett said, unexercised reserved control and indirect control are relevant to the joint employer inquiry, and the Board can weigh those factors as it wants. Thus, to an extent, the 2015 Board decision was proper.

However, the panel majority also found that the 2015 Board had failed to distinguish between indirect control over essential terms and conditions of employment – which is relevant to the joint employer inquiry – and indirect control over routine matters related to contracting, which is not. According to the majority opinion, the Board needed to distinguish between types of indirect control that affect employees’ “essential terms and conditions of employment,” in contrast to those that are “intrinsic to ordinary third-party contracting relationships between companies.” Thus, the majority remanded the case to the NLRB, directing it to make the proper application of the relevant factors.

Unfortunately for employers, labor unions, and labor practitioners, the majority did not decide whether unexercised reserved or indirect control – standing alone – would be enough for a finding of joint employer status. Judge A. Raymond Randolph, dissenting, argued that the majority opinion was both “confused and confusing,” at least in part because it did not address this critical issue.

Judge Randolph also argued that the court should have sent the case back to the NLRB to allow the current Board to complete its rulemaking process related to the joint employment issue. Finally, he argued that the majority opinion misinterpreted the common law of agency.

What now?

The D.C. Circuit decision can be read to restrict the Board’s ability, either through case adjudication or rulemaking, to restore the prior standard for finding that an entity is a joint employer for NLRA purposes. The majority seems to be saying that the Board must follow the common law of agency, which (according to the majority) could result in a joint employer situation when the entity had unexercised reserved or indirect control over the employees of another entity. The court’s decision may provide more ammunition to those who disagree with the current Board’s proposed interpretation.

Next steps may include a request from either the Board or Browning-Ferris for en banc review by all of the D.C. Circuit judges. In the alternative, or after an en banc decision, the unsuccessful party could request review by the U.S. Supreme Court. In the meantime, the Board is likely to press forward with its joint employment rulemaking.

Legislative action is unlikely while Congress is divided.

Status as a “joint employer” can arise under the NLRA in various contract and ownership situations, potentially including contracting-out of operations, employee leasing, staffing agencies and their clients, parent corporations and subsidiaries, joint ventures, franchising, subcontracting, licensing, creditor-debtor, and trustee in control relationships. Any company in one of these relationships may find itself caught up in the “joint employment” jumble at some point. We will continue to follow this issue and will provide updates as developments occur.

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