The National Labor Relations Board, after finally smoothing over confusion last year about who is designated as a joint employer and why, is right back at the drawing board with an administrative move that puts the Browning-Ferris standard for joint employment back into effect.

Earlier this week, the NLRB issued an Order vacating the Board's “decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017), in light of the determination by the Board’s Designated Agency Ethics Official that Member William J. Emanuel is, and should have been, disqualified from participating in this proceeding.”

 “Because the Board's Decision and Order in Hy-Brand has been vacated, the overruling of the Board's decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015), set forth therein is of no force or effect,” the announcement added.

The decision comes after NLRB's inspector general questioned the validity and standing of the Hy-Brand decision based on Emanuel's former employment with Littler Mendelson, a law firm involved with Leadpoint, a company connected to the original Browning-Ferris case.

In a 3-2 decision on Dec. 14, the National Labor Relations Board overruled its 2015 decision related to Browning-Ferris Industries, which could make joint-employer rules less onerous and complex. For franchise operations, this could be a real shot in the arm.

The NLRB declared Browning-Ferris Industries, a California-based recycling company, to be a “joint employer” with Leadpoint, a staffing services company. The decision, critics say, ignored more than 30 years of regulatory and legal precedent and retroactively adopted a far broader definition of “joint employer” than had ever been contemplated.

The ruling covers every company that contracts out for services rendered by those who are not the company’s own employees. The headquarters of a fast food chain, for example, could be held liable for the unfair labor practices of an otherwise independent franchisee.

Under Hy-Brand, it became significantly less likely that the typical franchisor-franchisee relationship will result in being considered joint employers, as they would under the BFI standards.

Complicating (and otherwise cementing matters), on Nov. 8, 2017, the House of Representatives, by a vote of 242-181, approved a bill that seeks to overturn the NLRB ruling that redefined longstanding policies regarding joint employer status.

The Save Local Business Act was sponsored by Rep. Bradley Byrne (R-Ala.). The legislation now resides with the Senate.

The legislation clarifies what constitutes a “joint employer” under federal labor law.

Now, a surprise twist comes from the Board’s Office of Inspector General

The subject header in and of itself let us know the IG means business: “Notification of a Serious and Flagrant Problem and/or Deficiency in the Board's Administration of its Deliberative Process and the National Labor Relations Act with Respect to the Deliberation of a Particular Matter.”

“I have determined that there is a serious and flagrant problem and/or deficiency in the Board's administration of its deliberative process and the National Labor Relations Act with respect to the deliberation of a particular matter involving specific parties,” wrote NLRB Inspector General David Berry.

The necessity arises because Leadpoint, a party in Browning-Ferris, was represented Emanuel's former law firm. Executive Order 13770, the President's ethics pledge, prohibits an appointee from participating in a "particular matter involving specific parties" when the appointee's former employer or client is a party or represents a party.

The U.S. Office of Government Ethics has provided guidance for the determination of whether two proceedings are in fact the same "particular matter:"

Using that guidance, “I determined that, given the totality of the circumstances, the Hy-Brand and Browning-Ferris matters are the same "particular matter involving specific parties,"  Berry said.

“Although the two cases started out as two distinct and separate matters, the manner in which the former Chairman marshaled Hy-Brand through the Board's deliberative process effectively resulted in a consolidation of the two matters into one ‘particular matter involving specific parties,’” he added.  In short, the practical effect of the Hy-Brand deliberative process was a ‘do over’ for the Browning-Ferris parties.”

A section of the IG’s letter is devoted to “corrective actions.”

“Member Emanuel's participation in the Hy-Brand decision, when he otherwise should have been recused as outlined above, calls into question the validity of that decision and the confidence that the Board is performing its statutory duties,” Berry wrote. “I recommend that the Board consult with the Designated Agency Ethics Official to determine the appropriate action to take to resolve that issue and restore confidence in the Board's deliberative process.”

Also noted: “Member Emanuel's participation in the Hy-Brand decision demonstrates that the Board's current practice of highlighting and addressing recusal issues should be reviewed to determine if it is adequate to protect the Board's deliberative process from actual conflicts of interest and the appearance of such.”

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