Hy-Brand Industrial Contractors, Ltd., 25-CA-163189

• Court: National Labor Relations Board
• Parties: Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., as a single employer and/or joint employers and Dakota Upshaw and David Newcomb and Ron Senteras and Austin Hovendon and Nicole Pinnick.
• Docket Number: 25-CA-163297,25-CA-163376,25-CA-163317,25-CA-163208,25-CA-163189,25-CA-163373,25-CA-164945,25-CA-163414,25-CA-164941,25-CA-163398
• Decision Date: 14 December 2017

Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., as a single employer and/or joint employers and Dakota Upshaw and David Newcomb and Ron Senteras and Austin Hovendon and Nicole Pinnick.

Nos. 25-CA-163189, 25-CA-163208, 25-CA-163297, 25-CA-163317, 25-CA-163373, 25-CA-163376, 25-CA-163398, 25-CA-163414, 25-CA-164941, 25-CA-164945

United States of America, National Labor Relations Board

December 14, 2017

Chairman Miscimarra and Members Pearce, McFerran, Kaplan, and Emanuel.

DECISION AND ORDER ^[1]

PHILIP A. MISCIMARRA, CHAIRMAN.

This case involves a judge's finding that two entities- Hy-Brand Industrial Contractors, Ltd. (Hy-Brand) and Brandt Construction Co. (Brandt)-are collectively joint employers and/or a single employer for purposes of the

National Labor Relations Act (NLRA or Act). Five Hy-Brand employees and two Brandt employees were discharged after they engaged in work stoppages based on concerns involving wages, benefits, and workplace safety. We agree that the work stoppages constituted protected concerted activity under Section 7 of the Act, and the discharges constituted unlawful interference with the exercise of protected rights in violation of Section 8(a)(1) of the Act.

We agree with the judge that Hy-Brand and Brandt are joint employers, but we disagree with the legal standard the judge applied to reach that finding. The judge applied the standard adopted by a Board majority in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery (Browning-Ferris). ^[2] In Browning-Ferris, the Board majority held that, even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not “direct and immediate, ” the two entities will still be joint employers based on the mere existence of “reserved” joint control, ^[3] or based on indirect control ^[4] or control that is “limited and routine.” ^[5] We find that the Browning-Ferris standard is a distortion of common law as interpreted by the Board and the courts, it is contrary to the Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations. ^[6] Accordingly, we overrule Browning-Ferris and return to the principles governing joint-employer status that existed prior to that decision. See, e.g., Airborne Express, 338 NLRB 597 (2002); TLI, Inc., 271 NLRB 798 (1984), enfd. mem. sub nom. General Teamsters Local Union No. 26 v. NLRB, 772 F.2d 894 (3d Cir. 1985); and Laerco Transportation, 269 NLRB 324 (1984); see also Browning-Ferris, 362 NLRB No. 186, slip op. at 21-50 (dissenting opinion of Members Misci-marra and Johnson). By overruling Browning-Ferris, we also make the Board's treatment of joint-employer status consistent with the holdings of numerous Federal and state courts. ^[7]

Because we find that Hy-Brand and Brandt are joint employers, we do not reach or pass on whether, in the alternative, they constitute a single employer. ^[8]

I. OVERVIEW

The National Labor Relations Act (Act) establishes a comprehensive set of rules for labor relations in this country, and a primary function of the Board is to foster compliance with those rules by employees, unions, and employers. To comply with these rules as they have grown and evolved over the last eight decades, substantial planning is required. This is especially true in regard to collective bargaining, a process that is central to the Act. The Act's bargaining obligations are formidable- as they should be-and violations can result in significant liability. When it comes to the duty to bargain, resort to strikes or picketing, and even the basic question of “who is bound by this collective-bargaining agreement, ” there is no more important issue than correctly identifying who is the employer. Changing the test for identifying the employer, therefore, has dramatic implications for labor relations policy and its effect on the economy.

In Browning-Ferris, a Board majority rewrote the decades-old test for determining who is the employer. More specifically, the majority redefined and expanded the test that makes two separate and independent entities a “joint employer” of certain employees. This change subjected countless entities to unprecedented new joint bargaining obligations that most may not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have hereto fore been unlawful secondary strikes, boycotts, and picketing.

The Browning-Ferris majority was driven by a desire to ensure that collective bargaining is not foreclosed by business relationships that allegedly deny employees the right to bargain with employers that share control over essential terms and conditions of their employment. However well-intentioned the majority's decision in Browning-Ferris might have been, there are five major problems with that decision.

First, the Browning-Ferris test exceeds the Board's statutory authority. From the Browning-Ferris majority's perspective, the change their decision wrought in the joint-employer analysis was a necessary adaptation of Board law to reflect changes in the national economy. In making that change, they purported to operate within the limits of traditional common law principles, and they claimed to be returning to the law applied by the Board prior to 1984. In actuality, however, the Browning-Ferris majority relied on theories of “economic realities” and “statutory purpose” that extended the definitions of “employee” and “employer” far beyond the common law limits that Congress and the Supreme Court have stated must apply. ^[9] The Browning-Ferris decision represented a further expansion of changes in the law made in FedEx, ^[10] which revised the Board's longstanding definition of independent contractor status in a way that will predictably extend the Act's coverage to many individuals previously considered to be excluded from that coverage as independent contractors, and in CNN, ^[11] which imposed after-the-fact joint-employer obligations contrary to the parties' 20-year bargaining history, applicable collective-bargaining agreements (CBAs), relevant services contracts, and the Board's own prior union certifications.

Second, the Browning-Ferris majority's rationale for overhauling the Act's definition of “employer”-i.e., to protect bargaining from limitations resulting from the absence from the table of third parties that indirectly affect employment-related issues-relied in substantial part on the notion that present conditions are unique to our modern economy and represent a radical departure from simpler times when labor negotiations were unaffected by the direct employer's commercial dealings with other entities. However, such an economy has not existed in this country for more than 200 years. ^[12] Many forms of subcontracting, outsourcing, and temporary or contingent employment date back to long before the 1935 passage of the Act. Congress was obviously aware of the existence of third-party business relationships in 1935, when it limited bargaining obligations to the “employer”; in 1947, when it limited the definition of “employee” and “employer” to their common law agency meaning; and in 1947 and 1959, when Congress strengthened secondary boycott protection afforded to third parties who, notwithstanding their dealings with the employer, could not lawfully be required to suffer picketing and other forms of economic coercion based on their dealings with that employer. ^[13] This is not mere conjecture; it is the inescapable conclusion that follows from Supreme Court precedent recognizing that the Act did not confer “employer” status on third parties merely because commercial relationships made them interdependent with an employer and its employees. ^[14]

Third, courts have afforded the Board deference in this context merely as to its drawing of factual distinctions when applying the common law agency standard. ^[15] However, the Browning-Ferris majority mistakenly interpreted this as a grant of authority to modify the agency standard itself. It is not, and the change wrought in Browning-Ferris is solely within the province of Congress, not the Board. This was not the first time the Board overstepped its limits in this area. Thus, in Yellow Taxi Co. v. NLRB, ^[16] Judge MacKinnon of the D.C. Circuit denounced the Board majority's “thinly veiled defiance” of controlling precedent regarding the “common law rules of agency, ” adding that “[n]o court can overlook an agency's defiant refusal to follow well established law.” 721 F.2d at 382. The judge further observed:

[T]he Board here is acting in an area where it is called upon to apply common law principles that have been established since 1800 and where the application of that law under the National Labor Relations Act has been declared by Congress and settled by the courts, including the Supreme Court, for some 36 years. In this area, there is no dispute as to the governing principles of law; what is involved is the application of law to facts. “[S]uch a determination of pure agency law involve[s] no special administrative expertise that a court does not possess.” NLRB v United Ins. Co. of America, supra, 390 U.S. at 260

Id. at 383 fn. 39. To be specific, we understand the common law standard as codified by the Act to require direct control over one or more essential terms and conditions of employment to constitute an entity the joint employer of another en tity's employees. Our fundamental disagreement with the Brown ing-Ferris test is not that it treats indicia of indirect, and even potential, control to be probative of joint-employer status, but that it makes such indicia potentially...