Its Back to the Drawing Board on Browning-Ferris…Again

As the definition of a joint employer shifts with each change in Administration, so too does the holding of Browning-Ferris – a case that has been fluctuating between the National Labor Relations Board (“NLRB”) and the United States Court of Appeals for the District of Columbia (“D.C. Circuit Court”) for nearly ten years.

Court,Of,Law,And,Justice,Trial,Session:,Imparcial,Honorable,JudgeIn 2013, the Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters (the “Union”) kicked off this almost decade-long controversy by petitioning the NLRB for representation of workers that it asserted were joint employees of Leadpoint Business Services and Browning-Ferris Industries of California, Inc. (“BFI”). Since then, the NLRB and the DC Circuit Court have issued numerous and, more often than not, contradictory rulings, culminating with this most recent decision from the D.C. Circuit Court.  Here, the Court challenged the Trump Administration’s NLRB’s reasoning that BFI was not a joint employer using what the NLRB termed “a clear rule of law requiring proof of direct and immediate control” that had been in place “for at least 30 years.” Essentially, the D.C. Circuit Court vacated the NLRB’s ruling because “the [NLRB] made multiple overlapping errors” in its analysis, which the Court asserted failed to support the NLRB’s ultimate decision.

Timeline of the Case

To better understand the D.C. Circuit Court’s most recent decision, below is a timeline of the prior decisions and related action from the NLRB related to the joint employer standard:

  • August 2013: the Acting Regional Director for the NLRB found that BFI was not required to bargain with the Union as a joint employer because it did not exercise “direct and immediate” control over the essential terms and conditions of the workers of the petitioned-for unit.
  • August 2015: Upon granting the Union’s request for review, the Obama Administration’s NLRB reversed the Acting Regional Director’s decision and found that BFI was, in fact, a joint employer.  The NLRB characterized its decision as a “restatement” of the joint employer legal standard, explaining that two or more entities are joint employers if (1) they are both employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. We have a more thorough review of this NLRB decision, dubbed Browning Ferris I, here.
  • December 2017: After a change in Administration occurred shifting the NLRB’s makeup to a Republican majority, in the case of Hy-Brand Industrial Contractors, the NLRB overturned the joint employer test set forth in Browning-Ferris I and returned to its pre-Browning-Ferris standard (e.g., that an employer must exercise direct and immediate control over its workers to be considered a joint employer).
  • February 2018: Only three months later, the NLRB vacates its decision in Hy-Brand Industrial Contractors after it was decided that one member of the NLRB who participated in the decision should have recused himself. As a result, Browning-Ferris I once again became the accepted standard for the joint employer analysis for purposes of the National Labor Relations Act (“NLRA”).
  • December 2018: In response to BFI’s petition challenging Browning Ferris I, the D.C. Circuit issued a decision that mostly upheld the NLRB’s order in Browning-Ferris I, but remanded the case back to the NLRB to “rearticulate” the indirect-control element of its new joint employer test, “meaningfully apply” it, and consider whether its retroactive application to BFI was proper.
  • February 2020: Under President Trump the NLRB promulgated a new joint employer rule through the Notice and Comment Rulemaking process. Under this new rule, to be found a joint employer, an entity must have direct and immediate control over at least one essential term or condition of employment and then be evaluated based on “the totality of the relevant facts in each particular employment setting.”
  • July 2020: In response to the D.C. Circuit’s December 2018 remand, the NLRB issues its decision, dubbed Browning-Ferris II, which, similar to the Trump Administration’s newly promulgated Joint Employer Rule, focused on its historical standard of evaluating direct and immediate control to determine the joint employment relationship. Specifically, the NLRB found retroactive application of the Browning-Ferris I standard unjust and affirmed the original 2013 decision from the Acting Regional Director, which, in case you’ve forgotten amidst all this back and forth, found that BFI was not required to bargain with the Union as a joint employer because it did not exercise “direct and immediate” control over the essential terms and conditions of the relevant workers.

This takes us to the present, with the Union having petitioned the DC Circuit Court for review of the NLRB’s July 2020 Browning-Ferris II decision.

D.C. Circuit Court’ July 29th Decision

On July 29, 2022, the D.C. Circuit Court vacated the NLRB’s July 2020 decision in Browning-Ferris II and remanded the case back to the NLRB, giving  the NLRB yet another bite at the apple. In support of its decision, the D.C. Circuit Court cited a number of deficiencies in the NLRB’s underlying reasoning. For example, the Court determined that the NLRB “inexplicably overlooked the longstanding role of indirect control in its joint-employer inquiry,” including recent discussion of it in the rulemaking process for its February 2020 Joint Employer Rule. The D.C. Circuit Court also pointed out that the NLRB did not address how the standard adopted in Browing-Ferris I would be manifestly unjust as applied to BFI because it did not find that BFI had actually relied on the pre-Browning-Ferris I standard. Nor had the NLRB sufficiently addressed application of any variation or explanation from Browning-Ferris I that could be fairly applied in this case, particularly BFI’s reserved direct and indirect control which the Court explained had been a part of assessing joint employer status pre-Ferris Browning I. For these reasons, as well as others, the Court determined that the NLRB did not establish the needed justification for determining that its order in Browning-Ferris I should not apply retroactively.

The D.C. Circuit Court also determined that the NLRB failed to provide a “reasoned explanation” for adopting the 2013 decision of the Acting Regional Director. Specifically, the Court held that the Acting Regional Director’s decision did not comport with the common law standard for joint employment, which includes reserved and indirect control. The D.C. Circuit Court pointed out that it had clearly established that the joint employer test must fall within the confines of common law agency in its 2018 Decision and the NLRB had not sufficiently addressed that deficiency. The Court also found that the NLRB had disagreed with certain of the Acting Regional Director’s factual findings to support the 2015 decision, but the Agency had not addressed those contradictions when it simply adopted the Acting Regional Director’s decision in its July 2020 order.

Conclusion

This decision from the D.C. Circuit Court is impactful for a number of reasons. First, now that the Administration has flipped back again to a Democratic president and Democratic majority in the NLRB, it looks like the NLRB will have yet another bite at the apple to determine whether the standard it set out in Browning-Ferris I should be applied retroactively. Second, the reasons given by the D.C. Circuit Court for why it vacated the NLRB’s decision in Browning-Ferris II provide a roadmap on which the current NLRB could rely to support the conclusion that it should apply the decision retroactively, likely resulting in the determination that BFI was, in fact, a joint employer. Because of the current majority make-up of the NLRB, this change in course from Browning-Ferris II seems a likely outcome should the decision be made by the current NLRB. Third, this decision provides several bases upon which the NLRB could rely to support the rulemaking effort it has initiated to alter the current joint employer rule passed during the Trump Administration, which is currently at the Proposed Rulemaking stage.

We will be following the NLRB’s consideration of Browning-Ferris and the rulemaking process to revise the NLRB’s current Joint Employer Rule closely.

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