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NLRB to Issue Rule on Joint Employer Standard

    Client Alerts
  • June 13, 2018

In recent U.S. Senate testimony, the National Labor Relations Board chair indicated his intent to begin a regulatory process to resolve the board’s position on the definition of joint employment under the NLRA. During the Obama administration, the NLRB’s Browning-Ferris decision upended decades of precedent, declaring that one company can be deemed a joint employer with another entity if it possesses the ability to control that entity’s labor practices, even if it never actually exercises such control. This decision resulted in concerns from franchisors and similar businesses that they would be held liable for their franchisees’ labor practices.
When the new NLRB majority took power last year, it quickly moved to reverse Browning-Ferris through its Hy-Brand decision. However, that decision was subsequently vacated based on questions over one board member’s conflict of interest. Without a clear avenue for resolving this issue through case precedent, the board majority appears ready to overrule Browning-Ferris through a rulemaking procedure. This process also has the benefit of preventing a subsequent board majority from simply reinstating Browning-Ferris by overruling it in subsequent cases.
The NLRB may issue a notice of proposed rulemaking as early as this summer. The board would gather comments before issuing any final rule. During the NLRB chair’s testimony, Democratic senators asked him to hold off on any rulemaking until the conflict of interest issue is resolved.