D.C. Circuit (Mostly) Approves of Browning-Ferris Joint-Employer Test

The D.C. Circuit has just ruled on the NLRB's Browning-Ferris joint-employer test, largely approving the standard that made many on the employer-side of things apoplectic. In Browning-Ferris v. NLRB, the court approved of the joint-employer rule, but remanded because it held that the Board didn't apply part of the rule correctly. This issue is becoming increasingly convoluted, so let me break down some of what's going on.

1. Why did the court decide this case in the first place? As we've been following, the Board has already reversed the Browning-Ferris test once, which they had to vacate because of a recusal issue. They are now in the process of reversing course via rulemaking. Despite that, the Board asked the court to decide the case, which the majority readily agreed to do, over a dissent. The reason the court did this brings me to the second point.
2. De novo review for the joint-employer test. The court emphasized that determination of the Board's joint-employer rule is reviewed de novo. Because the joint-employer standard is based in common law, according to the court, no deference to the agency is required (as opposed to application of the standard, which is a mixed question of law and fact). And because the court wasn't giving the Board any deference, the court determined that there was no need to wait for the Board's new rule. Note that this is not good news for the Board's draft joint-employer rule, although may be good news for those who prefer a more consistent rule over the long-term.
3. Reserved and indirect control is relevant to joint employment. As a reminder, the big argument is whether and to what extent the joint-employer test should consider reserved and indirect control. Browning Ferris said that actual and direct control is not required; the current Board disagrees. In this case, the court was crystal clear that the argument made by the employer and dissenters in Browning-Ferris that joint employment can be based only on exercised control and direct and immediate control are wrong. Full stop. As the court noted, the common law is riddled with examples and statements that reserved control and indirect control are relevant to joint employer determinations. So this extreme view--that joint employers must have actual and direct control--is currently dead in the D.C. Circuit. But there's a middle ground that may still available, which I'll get to in a moment. But first . . .
4. Remand. Despite uphold the Browning-Ferris test, the court held that the Board mis-stepped in this case. In particular, when applying the new rule in this case, the Board didn't make clear whether it relied on evidence on indirect control over essential terms and conditions of work (which is relevant) versus indirect control over "routine parameters of company-to-company contracting," like a cost-plus contract or advance description of tasks (which is not relevant). Thus, the court remanded to the Board to clarify whether there is enough relevant evidence to support a joint-employment finding.
5. Meaningful collective bargaining. The court also tacitly approved the Board's inquiry into whether a putative joint employer controls enough essential terms and conditions of employment to permit meaningful collective bargaining, but wanted the Board to define terms of that inquiry more in a case, unlike here, when the Board actually applies invokes that question. That's good news for folks, like yours truly, who have argued for a more collective-bargaining focused joint employer test.
6. Finally, the money question: What next? I was talking this morning to Robert Iofalla at Bloomberg News (I will link to his article when it comes out), who is exploring this question. One option is that the Board will press an extreme position during its rulemaking and thumb its nose at the court's admonition that reserved and indirect control is relevant (which could then lead to the Board's nonacquiescence policy, possible circuit split, and cert. petition). But my guess--and I stress guess--is that the Republican majority of the Board will go as far as it can without directly conflicting with the court's decision. In other words, as it did in Hy-Brand, the Board could acknowledge that evidence of reserved or indirect control can be relevant. And, then, it can answer the questions that the court expressly left open: whether only indirect and/or reserved control is enough to find joint employment. The current Board will obviously say "no," which will leave us with basically the same test we had before Bronwing-Ferris. The Board could still lose when the D.C. Circuit or another court takes up that question, but this seems to be a lower risk strategy than going the extreme route. The "relevant-but-not-sufficient" strategy still leaves plenty of room for a narrow joint employer test, especially when a Trump Board is applying it, while avoiding the time-consuming litigation that would result from defying the D.C. Circuit and seeking a circuit split. Avoiding these types of risks are especially important when the Board is doing something it rarely does by engaging in substantive, formal rulemaking.

Still plenty more to come, so stay tuned.

-Jeff Hirsch