Labor Board Shifts Tone on Joint Employer Rule in Court


• NLRB attorney signals caution on timing of new joint employer liability regulation
• Issue could affect businesses, workers in franchise and other contract relationships


The National Labor Relations Board July 3 took a more cautious tone in a federal court hearing about its plans to issue a rule on the controversial joint employment issue.

Board Chairman John Ring (R) has said the agency will release a proposal for a regulation to clarify joint employer liability for multiple businesses this summer. But NLRB attorney Ruth Burdick told a federal appeals court that the court shouldn’t wait for that to happen before ruling on an ongoing case testing the limits of when one business can be considered a joint employer of another’s workers.

Burdick observed that Ring has said a board majority is “committed” to revising the board’s approach to the closely watched issue via rulemaking and has already begun the “internal process” to do so. But she seemed to leave room for the possibility that the regulation process may not be carried out as smoothly as Ring’s comments on the matter, including a couple of tweets, might have suggested.

The chairman’s statements in a letter to Congress, in which Ring said a notice of proposed rulemaking would be issued “certainly by this summer,” were his own and not the entire board’s or the Republican majority’s, Burdick told a panel of appeals judges in Washington.

The exchange highlights the continuing uncertainty over when one business can be held responsible for workplace law violations against employees at a different business. Ring decided to tackle that question through a new regulation after conflicts-of-interest concerns halted the Republican-majority board’s efforts to undo an Obama-era decision making it easier to tag multiple businesses as joint employers.

The NLRB didn’t immediately respond to a request for comment.

Big Implications

Some observers say Ring, who hasn’t previously worked at the board and made his comments on the rulemaking less than a month after being sworn in, may have overlooked the often-convoluted and drawn-out process of issuing a federal rule.

Michael Lotito, co-chair of Littler Mendelson’s Workplace Policy Institute, told Bloomberg Law he wouldn’t speculate on the chairman’s motivations and said he’s taking Ring at his word “until proven otherwise.”

How the board eventually sorts out the joint employer issue could have significant implications for workers and businesses in franchise, staffing, and a wide range of other contract relationships.

A Democratic-majority NLRB ruled in 2015 in the Browning-Ferris Industries case that a business can be considered a joint employer if it exerts even indirect control over the workers. The board’s current Republican majority is widely expected to use a new regulation to revert to a more limited test requiring direct control.

Business advocates and mostly Republican lawmakers have been urging the board to reverse course on joint employer liability since President Donald Trump took office last year. Supporters say expanded joint employer liability would cut through complicated franchise, staffing, and other arrangements to give workers a voice and adequate protections on the job.

Judge: NLRB ‘Suggesting’ No Rulemaking?

The NLRB had already started the internal process for rulemaking, Ring said in April when he announced the new regulation. The board “will work to issue a proposed rule ASAP,” and the Republican majority “intends to get the job done,” the chairman said.

Burdick seemed to call the judges’ attention to the general uncertainty involved in the federal rulemaking process. Any new rule will be subject to the public notice-and-comment process and will require approval by at least three of the board’s five members. The rule would then be subject to judicial challenges and appeals of those rulings.

“I want to make clear though that Chairman Ring’s letter, although he stated clearly that the majority of the board is committed to going to rulemaking, and is in process of going through internal preparations to do so, the statements in his letter were his own,” Burdick said.

Judge A. Raymond Randolph of the U.S. Court of Appeals for the District of Columbia Circuit questioned the implications for the rulemaking process.

“Are you suggesting there might not be a rulemaking?” he asked.

Burdick replied that the board is “committed to rulemaking.”

“As his letter stated, they anticipate issuing a notice of proposed rule sometime this summer,” she added.

Craig Becker, a former board member and a lawyer for a union that intervened in the case, said during the hearing that “we don’t know the opinions of anyone other than the Chairman.”

When Randolph restated Burdick’s answer that the board says a notice will be issued this summer, Becker suggested she was simply being “respectful of the Chairman’s statement.”

The board’s four other members—two Republicans and two Democrats—haven’t been as vocal on the rulemaking. Democrat Lauren McFerran expressed some concern about using rulemaking to address the issue in a tweet after Ring’s own comments.

The board’s press release also noted that she and Mark Gaston Pearce (D) didn’t participate in the inclusion of the proposal in the board’s regulatory agenda.

(Updated to include additional reporting throughout.)

To contact the reporter on this story: Hassan A. Kanu in Washington at hkanu@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com