D.C. Circuit Again Sets Aside the NLRB’s Browning-Ferris Decision

August 3, 2022
On July 29, 2022 the D.C. Circuit issued the latest opinion in the long-running legal battle over the NLRB’s joint-employer standard.  The court concluded that it would not be “manifestly unjust” for the NLRB to use its administrative proceeding against Browning-Ferris Industries to apply a new test for joint-employer status, in which indirect control over workers is one factor in the analysis.  The Biden-era NLRB may rely on the D.C. Circuit’s analysis to buttress an expanded interpretation of joint-employment status in the proposed rule the NLRB is expected to issue this year. 
On August 27, 2015, the NLRB abandoned its long-standing test that an entity must possess and exercise direct control over employees’ terms and conditions of employment in order to be considered a joint employer, and found instead that the Board “may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.”  You can read our memorandum on the 2015 Browning-Ferris decision here.  (As described in our post here, the Browning-Ferris decision was subsequently vacated in December 2017, and reinstated in February 2018.)
In December 2018, the D.C. Circuit concluded that although the NLRB could lawfully consider an entity’s indirect control over workers’ essential terms and conditions of employment as part of a joint-employer analysis, the Board “provided no blueprint for what counts as ‘indirect’ control” over “essential terms and conditions of employment,” and remanded the case to the NLRB so it could do so[1]
In February 2020, while Browning-Ferris was on remand, the Trump-era NLRB issued a final rule scaling back the rule adopted in Browning-Ferris, providing that a person or entity will be considered a joint employer only if the person or entity “possess[es] and exercise[s] such substantial direct and immediate control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningfully affects matters relating to the employment relationship with those employees.”  The rule took effect in April 2020 and applies prospectively (not to actions taken prior to that date).  You can read our memorandum on the rule here.  (The NLRB, under the Biden administration, has announced that it will issue a new joint-employer rule this summer.)
In July 2020, on remand in the Browning-Ferris case, rather than provide a “blueprint” for identifying what forms of indirect control could justify a finding of joint-employer status in order to address the D.C. Circuit’s 2018 opinion, the NLRB held that it would be “manifestly unjust” to retroactively hold Browning-Ferris liable as a joint employer based on indirect control, because “for at least 30 years preceding” the Board’s 2015 decision “there was a clear rule of law requiring proof of direct and immediate control under the applicable joint-employer test.”[2]
The July 29, 2022 Decision
On July 29, 2022, the D.C. Circuit again reversed the NLRB, with two judges holding that the July 2020 decision was “erroneous” and “made multiple overlapping errors.”  (Then-Judge Ketanji Brown Jackson was on the three-member panel when the case was argued, but assumed her seat on the U.S. Supreme Court before the decision was issued and did not participate in the decision.)  For example, the court rejected the Board’s finding that prior to its 2015 decision there was a “clear rule” requiring direct control to find joint-employer status, explaining that “the Board’s precedent on the joint-employer standard was anything but static” and the February 2020 rule itself “explained that [the Board] has never actually ceased considering indirect and reserved control, even though it did not consider those factors dispositive standing alone.”  The court again remanded the case back to the NLRB.[3]
Although the joint-employer test articulated in Browning-Ferris was replaced in April 2020, the D.C. Circuit’s decision may be relied upon by the NLRB in expanding the scope of joint-employer liability.  The NLRB is likely to do so in the rule it is expected to propose later this summer.
[1]           Browning-Ferris Indus. of Cal., Inc. v. NLRB, 911 F.3d 1195, 1220 (D.C. Cir. 2018).
[2]           Browning-Ferris Indus., 369 NLRB No. 139 (2020).
[3]           Sanitary Truck Drivers & Helpers Local 350 v. NLRB, – F.4th –, 2022 WL 3008026, at *4–5 (D.C. Cir. July 29, 2022).