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NLRB Overrules Browning-Ferris Joint Employer Decision


Earlier this month, the National Labor Relations Board ("NLRB") overruled an Obama era NLRB decision, Browning-Ferris Industries of California, Inc., that expanded the definition of joint employer and placed a larger number of employers on the hook for labor law violations that were committed by their subcontractors.  In the NLRB's 3 - 2 decision in Hy-Brand Industrial Contractors, Ltd., a "traditional" test will now be applied when considering whether an employer is jointly liable with a subcontractor for a labor law violation.  Under the traditional test, it must be shown that the employer had direct and immediate control over essential employment terms to support a finding that multiple entities (the employer, a subcontractor, etc.) are joint employers. 

For those unfamiliar with Browning-Ferris, the joint employer tests, etc., this has been a somewhat hot button issue since the Browning-Ferris decision was issued in 2015.  In that decision, issued during President Barack Obama's administration, joint employer liability could be established by showing proof of indirect control, contractually reserved control that had never been exercised, or control that is limited and routine.  Since the Browning-Ferris decision was issued, Republicans and pro-business groups have railed against the new "indirect control test" and claimed that it created uncertainty in day to day operations of many businesses.  An appeal had been filed with the D.C. Circuit Court of Appeals to appeal the NLRB's 2015 decision (although with the NLRB's decision in Hy-Brand Industrial Contractors, Ltd., the Court remanded the case back to the NLRB on December 22nd...in effect rendering the appeal moot.)  

Perhaps in an effort to circumvent future NLRB decisions that could undermine Hy-Brand Industrial Contractors, Ltd., Republican backed legislation was introduced in Congress recently which sought to reverse the decision and permanently change the definition of "employer" as defined in the National Labor Relations Act and the Fair Labor Standards Act.  The legislation, the Save Local Business Act, has managed to clear the House and is now under consideration in the Senate.  With a Republican controlled Congress (at least through the mid term elections next year), it appears that if Republicans can rally around this legislation, they could manage to pass it without any Democratic support.



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