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D.C. Circuit Partially Upholds Obama-Era Joint Employer Test

    Client Alerts
  • January 14, 2019

Perhaps the top priority of the Trump-appointed National Labor Relations Board has been to reverse its predecessor’s decision in Browning-Ferris. This decision expanded the traditional notion of joint employment, giving the NLRB jurisdiction over not only the actual employer but also other entities that exert control or have the potential to exert control over the employment relationship. This potential-control inclusion meant that franchisors and other third parties could be liable for labor law compliance.   

The NLRB reversed Browning-Ferris in its 2017 Hy-Brand decision. However, this decision was in turn vacated due to concerns over a conflict of interest by one of the board members in the voting majority. Subsequent to this decision, the NLRB announced its intent to put a stake in the heart of Browning-Ferris through rulemaking that would define joint employment as requiring actual – and not merely potential – control by the third party. On December 28, the U.S. Court of Appeals for the District of Columbia Circuit further complicated this issue in a decision that upholds key reasoning used in the original Browning-Ferris decision.

In its new Browning-Ferris decision, the D.C. Circuit concluded that including potential control is consistent with the National Labor Relations Act. The common law definition of employment is broad enough to include indirect control over an employer’s policies and procedures. The court did not make a determination as to joint employment in this case. It remanded the matter to the NLRB for a better determination as to the degree of indirect control necessary to create a joint employment relationship.

The court refused to delay its decision until the NLRB rulemaking process is completed. The opinion said that the question of interpretation of the NLRA belongs to courts and not the board. For labor organizations, this opinion appears to provide an argument against any new NLRB rules that do not include potential or indirect control in the definition of joint employment. While federal courts may often defer to the board’s interpretation of its empowering statute, this decision indicates the judiciary’s intent to make an independent determination as to the definition of joint employment.