In the latest twist of a long running joint employer saga between multiple Labor Boards and D.C. Circuit panels, the D.C. Circuit vacated a Trump Board decision that declined to apply a stricter test for joint employer liability developed by the Obama Board. The current Board, meanwhile, is expected to issue a proposed rule on joint employer liability by the end of the year.
The case, Browning-Ferris Industries, was originally used by the Obama Board in 2015 to create a new, stricter test for joint employer liability that more closely factored in one company’s indirect or unexercised control over another company’s workers. That decision was partially upheld and partially vacated in 2018 by the D.C. Circuit. In the meantime, the Trump Board issued a decision in Hy-Brand that overruled the Obama Board’s 2015 decision in Browning-Ferris and created its own joint employer liability standard based primarily on direct control. That decision was later withdrawn for conflict of interest issues related to then-Board Member Emanuel, with the new standard instead being issued through rulemaking. The Trump Board then issued the latest decision in Browning-Ferris in 2020 based on its new rule rather than the Obama Board’s test factoring in indirect or unexercised control.
The D.C. Circuit’s decision to vacate the 2020 Trump Board decision found that the Board’s refusal to retroactively apply the Obama-era test in that case was “unreasoned, illogical and inconsistent with the Board’s position in the 2020 rule.” The Court pointed to language in the 2020 rule that said it continued to consider, albeit to a lesser extent, indirect and unexercised control. The Court once again sent the case back to the Board after finding that the Trump Board failed to consider such factors in its 2020 Browning Ferris decision or give an explanation for not doing so. “...[T]he board must acknowledge when [it is changing its mind] and explain its reasoning,” said the Court.
Regulatory ping-pong: The long-running case demonstrates the seesaw effect that has plagued the Board over the last decade. One Board may institute a new change to labor law and policy that is later undone by the next Board, and vice versa. Mix in the circuit courts’ ability to nullify Board decisions in cases that may take years to fully unwind, and the regulated community is left with significant uncertainty that can make operational consistency extremely difficult.
Outlook: The current Board is expected to issue a proposed rule for joint employer liability by the end of the year that will likely place more primacy on indirect and unexercised control. The proposed rule would represent yet another seesaw on the issue that could be subjected to even more litigation, on top of the Board’s next decision in the still ongoing Browning Ferris case.