On December 14, 2017, the National Labor Relations Board (“NLRB”) voted 3-2 to overrule its own August 2015 decision in Browning-Ferris Industries. Browning-Ferris had overturned the long-standing test of joint employment and expanded the definition of joint employment to include entities with the ability to “indirectly control” employees or the ability to exert such control over the employees of another business. The December 14 decision in Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co returns the joint employment standard to one of “direct and immediate control.”

Accordingly, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship. Under the revived, pre-Browning-Ferris standard, two or more entities will be deemed joint employers under the NLRA only if there is “proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”

The Hy-Brand decision comes after a change in the composition of the NLRB in 2017. Philip Miscimarra, who dissented in the Browning-Ferris decision, and the board’s two newest members, Bill Emanuel and Marvin Kaplan, now compose the majority, with the remaining Browning-Ferris majority, now in dissent. Miscimarra, speaking for the majority and echoing the sentiments from his Browning–Ferris dissent, held that there were five “major” problems with the Browning-Ferris decision, most significantly, that the Browning-Ferris decision exceeded the NLRB’s authority, and that definitions of employer were “solely within the province of Congress.” The majority also held that the Browning-Ferris decision was an attempt to correct a perceived inequality in bargaining leverage for workers but that inequality “was the wrong target, and expanding collective bargaining to an employer’s business partners was the wrong remedy,” noting that businesses have widely varying degrees of power when it comes to contracting with employees.

In the wake of Browning-Ferris, many employers reviewed their contracting relationships to address and improve compliance with the revised rule. Although the Hy-Brand decision returns the joint-employer test to its pre-Browning Ferris structure, employers can expect that the joint-employer issue will continue to be revisited by the Board with future changes in its composition, as well as by Congress at the Board’s invitation. We will continue to monitor these developments, and employers should continue to carefully consider the structure of relationships in which any level of control exists with regard to another entity’s employees.