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Resarh Service
NLRB Rejects Former Standards Following
Appointment of New Members
January 18, 2018
With two new members appointed by President Trump, a newly constituted National Labor Relations
Board (NLRB or Board) issued a series of significant decisions in the waning days of 2017. These
decisions overturned several rulings issued during the Obama Administration that were heavily criticized
by the U.S. Chamber of Commerce and others in the business community. Two NRLB decisions in
particular - H,-Brand Industrial Contr'actor :, Ltd. and PCC Structura/s In. - are notable because they
reversed earlier rulings, which had prompted the introduction of legislation in the I 5th Congress - the
Save Local Business Act (H.R. 3441) and the Representation Fairness Restoration Act (S. 1217/H.R.
2629) - aimed at wiping out the Obama-era rulings. In light of these recent decisions, proponents of the
bills could conclude that further consideration of the measures is not needed. However, because the bills
would prescribe additional standards beyond what was addressed by the Board, some might contend that
enactment of the legislation is still warranted.
In Hy-Brand, the NLRB overturned its 2015 decision, Browning-Ferris Jndustrie, ojCati/brnia, which
held that two or more entities would be considered to be joint employers of a single work force if they
were employers at common law and they shared or codetermined matters governing the employees'
essential terms and conditions of employment. In Browning-Ferris, the NLRB indicated that joint
employer status could be established even if an entity's control over employment matters was indirect or
reserved by contract. In Hy-Brand, however, the Board maintained that the joint employer standard
established by Browning-Ferris was contrary to the National Labor Relations Act (NLRA) and distorted
the common law that had been developed by the NLRB and courts. In particular, the Board emphasized
that evidence of direct and immediate control is essential to a finding of joint-employer status under
common law.
In overruling Browning-Ferris, the Board indicated in Hy-Brand that it would use its prior standard to
determine whether two or more entities are joint employers: [A] finding of joint-employer status shall
once again require 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.' This standard is consistent with the one contemplated by the Save Local Business
Act (SLBA), a bill introduced in July 2017 in response to Browning-Ferris. The SLBA would amend the
NLRA, as well as the Fair Labor Standards Act (FLSA), to recognize an entity as a joint employer only if
Congressional Research Service
https://crsreports.congress.gov
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