Democratic Senators Criticize Labor Rulemaking on Joint Employment

A group of Democratic senators recently took issue with the National Labor Relations Board’s announcement it may initiate a notice and comment rulemaking to clarify the definition of joint employer liability standards.

On May 29, Sens. Elizabeth Warren (D-MA), Bernie Sanders (I-VT) and Kirsten Gillibrand (D-NY) sent a letter to NLRB Chairman John Ring that expressed concerns that the agency is issuing a regulation on joint employer standards “in order to evade the ethical restrictions that apply to adjudications.”

The letter contends that the NLRB issuing a regulation is inappropriate because the agency has “prejudged” the issue and already knows the substantive outcome of the rule. This is a laughable argument to make. Do these senators really believe that the Obama NLRB did not have specific outcomes in mind when it issued rules? When the Obama NLRB issued a rule that overhauled how union elections take place, does Sen. Warren really think the agency would make it more difficult for unions to win elections? I doubt it.

Further, as has been pointed out by past Democratic NLRB members, the “President is entitled to appoint individuals to be Members of the Board who share his or her views on the proper administration of the Act and on questions of labor law policy left open by Congress. That process would be frustrated if the expression of views on such questions were considered disqualifying or grounds for recusal when cases raising those questions arose before the Board.”

The letter goes on to conclude:

It is obvious to all rational observers that it is the substance of the Board’s current standard—not any “uncertainty” about what it means—that troubles the new Board majority. Reinstating the tainted Hy-Brand standard through rulemaking would sweep significant conflict-of-interest concerns raised by multiple independent, nonpartisan officials under the rug and further damage the Board’s reputation. We therefore urge you to reconsider this decision and refrain from initiating a rulemaking process on the joint employer standard.

Here is a brief background on the NLRB joint employer saga. In 2015, the Obama administration overturned the traditional and decade’s-old joint employer precedent in favor of an indirect control standard that caused great uncertainty for independent business owners and contractors. During the Trump administration, in December 2017, the NLRB restored the traditional joint employer precedent, where a joint employer relationship is established when one company directly controls employees at a separate employer. This standard makes clear who is the boss and assumes liability for unfair labor practices and bargain responsibilities.

It is standard practice at the NLRB for precedent to flip-flop depending on which political party holds the executive office. However, here is where the joint employer saga gets interesting. The NLRB inspector general issued a report that claimed NLRB member William Emanuel should have recused himself from the joint employer decision. Emanuel previously worked at Littler Mendelson, the law firm that represented a party involved in the joint employer dispute. The inspector general alleges Emanuel should have recused himself from participating in the Hy-Brand decision, which overturned the Obama administration’s joint employer policy, because of his former firm’s work on the Browning-Ferris case.

Enforcing real conflict of interest and ethics rules is important, but the NLRB inspector general created a novel conflict of interest standard that is dubious at best (read more on the inspector general’s misinterpretation of ethics rules here and here). Further, as I wrote previously:

…it seems that these sort of conflict of interest complaints only apply to management-side attorneys who serve on the NLRB. In an excellent post, Raymond LaJeunesse, Legal Director at the National Right to Work Legal Defense Foundation, provides an example where former union lawyer and NLRB member Craig Becker was permitted to rule on a case that involved his past union employer.

Sens. Warren and Patty Murray (D-WA), and others, glommed onto this misguided inspector general report to pressure the Board to vacate its decision to restore the traditional joint employer standard. In February 2018, the NLRB ultimately succumbed to the public pressure and vacated its decision.

Then on May 9, 2018, the NLRB announced it may deal with the uncertainty caused by the joint employer fiasco by issuing a regulation.

This gets us back to the claim by the Democratic senators that the NLRB is only considering a rulemaking to avoid the conflict of interest concerns. This is partisanship at its worst. For decades, legal and labor experts from both sides of the aisle have implored the NLRB to utilize its ability to issue rules rather than create precedent via adjudication. Current Department of Labor Secretary Acosta published a law review article on this subject several years ago, which illustrates the benefits of rulemaking over adjudication. Acosta also notes the bipartisan support in favor of the NLRB utilizing its rulemaking authority to create policy. In a May statement, I described some of the benefits of rulemaking:

Though the NLRB historically relied on case by case dispute adjudication to set policy precedents, nothing prohibits the agency from issuing rules like any other regulatory agency. Rulemaking provides clear benefits that adjudication does not offer. For instance, the regulated community would receive advance notice of potential policy changes and have the opportunity to comment on the policy prior to implementation. A rulemaking is more likely to avoid the pitfalls of the controversial NLRB Browning-Ferris decision, which created an overly vague definition of a joint employer and failed to consider all the ways businesses could become ensnared in huge liability that comes with being suddenly deemed a joint employer.

As a former Republican NLRB general counsel told Bloomberg Law, “I think the senators are incorrect in saying the rulemaking is somehow a guise, or scheme to get around adjudication where one member may have a conflict.”

The motives of the senators are obvious. They wish to grind the NLRB to a halt until the next presidential election and preserve Obama-era NLRB precedent. They do not want the NLRB to adjudicate or issue rules, they want to obstruct the Board. Just because the current NLRB majority differs from the ideology of the senators doesn’t mean that its views on labor law policy are illegitimate. A Republican NLRB majority has as much authority to operate as a Democratic-controlled one.

For more background and analysis of this ongoing saga see here, here, here, here, here and here.