Hy-Brand Industrial Contractors, Ltd. & Brandt Construction Co (2017)
The NLRB reels back National Labor Relations Act standard for employer status.
Among the recent cases in franchising law is Hy-Brand Industrial Contractors, Ltd. & Brandt Construction Co. (December 2017), which further developed the standard for employer status. Two businesses are considered joint employers when they share control over a worker’s terms and conditions of employment, according to the Economic Policy Institute. Since the 1930’s, when the National Labor Relations Act (NLRA) was instituted, the National Labor Relations Board’s (NLRB) understanding of “employer” has both narrowed and broadened.
NLRB reeled back National Labor Relations Act standard for employer status.
Facts of the Case
Due to concerns regarding wages, benefits and workplace safety, five Hy-Brand employees and two Brandt employees began to engage in work stoppages (similar to strikes). The employees were terminated shortly after, despite that stoppages were considered a protected activity under the National Labor Relations Act (NLRA).
Decision of the Case
The National Labor Relations Board (NLRB) held that the employees’ termination violated Section 8(a)(1)of the NLRA, which prevents employer interference in employees’ right to self-organize. The decision also held that Hy-Brand and Brandt are in fact joint employers in this case, however, the judges disagreed with the legal standard used to reach that decision.
This legal standard stems from the widely criticized decision made in Browning-Ferris Industries of California, Inc. This case established an expansive standard for determining when two separate legal entities are considered joint employers of a group of workers. According to the NLRB, the standard established in Browning-Ferris over expanded the common law definition of “employer,” often associated with control over terms and conditions of employment (power to hire or fire). For the first time, the Board used Browning-Ferris Industries’ indirect control and reserved contractual authority, as opposed to the terms and conditions of employment, to establish employer status. This new standard, the dissenting opinion argued, was sure to substantially impact the economy, promoting bargaining instability due to the introduction of conflicting interests.
The Board used Hy-Brand Industrial Contractors, Ltd. & Brandt Construction Co. to overrule the controversial decision made in Browning-Ferris. The NLRB argued that the Board’s expansion of the common law definition of “employer” exceeded the Board’s statutory authority. The authority to alter the agency standard, as it is called, belongs to Congress alone, the decision states.
The Decision in Action
The NLRB decided to vacate its decision in Hy-Brand Industrial Contractors, Ltd. & Brandt Construction Co. in February 2018, reinstating the Browning-Ferris decision. The decision to reinstate the Browning-Ferris standard stems from ethical concerns. According to the NLRB, Member William Emanuel should have been disqualified from participating in the proceeding due to a conflict of interest. The Browning-Ferris decision will now proceed to the U.S. Court of Appeals for the District of Columbia Circuit however given Member Emanuel’s inability to participate, the Board will likely be unable to again overturn the decision.