Joint-employer reversal forces industry to take pause
Joint-employer reversal forces industry to take pause
01 MARCH 2018 9:28 AM

The National Labor Relations Board reversed its recent decision establishing direct control as the standard for joint-employer status, much to the frustration of the U.S. hotel industry.

REPORT FROM THE U.S.—The U.S. hotel industry celebrated a National Labor Relations Board ruling on joint-employer status in December 2017 that was more favorable to employers. But when a conflict of interest issue regarding a board member caused the NLRB to reverse that ruling earlier this week, hoteliers went back into wait-and-see mode.

Hotel industry sources say they hope the reversal, which takes the joint-employer standard back to what it was under the Obama administration, is only temporary and that a new case will have the same result as the one in December.

The NLRB’s December decision overruled the 2015 Browning-Ferris case, which set the standard that indirect control was enough to establish joint-employer status. The ruling in December—on a case brought by Hy-Brand Industrial—set the standard that one company must establish direct control over another for there to be joint-employer status.

However, the NRLB announced 26 February one of its board members should have recused himself from the Hy-Brand Industrial decision because of his past employment at a law firm involved in the Browning-Ferris case, which was before his appointment to the board.

“Because we vacate the board’s earlier decision and order, the overruling of the Browning-Ferris decision is of no force or effect,” the board wrote in its decision, meaning the Hy-Brand Industrial decision is “vacated and set aside for the purpose of further proceedings before the board.”

The American Hotel & Lodging Association did not release a statement regarding this decision, referring all questions to the Coalition to Save Local Businesses. As of press time, the Coalition to Save Local Businesses has not released a statement or responded to inquiries from Hotel News Now.

In a statement from the Asian American Owners Association, President and CEO Chip Rogers said: “The NLRB’s decision to revert to the unclear Browning-Ferris joint employer standard represents an appalling return to the uncertainty that stagnated job growth in franchised hotels and is yet another reminder of the job-killing effect of arbitrary regulatory overreach. AAHOA calls on the Senate to take up H.R. 3441, the Save Local Business Act, that will cement the historical definition of joint employer into statute and return certainty and stability to the franchise industry.”

What the reversal means
There’s strong hope in the business community that the NLRB’s reversal on Hy-Brand Industrial will be temporary, said Andria Ryan, partner at Fisher & Phillips. It’s possible the board member could be cleared of the conflict of interest, she said, as the member has stated he was not involved in the Browning-Ferris case at the law firm. The U.S. Senate also is scheduled to vote 7 March on a NLRB appointee put forth by President Donald Trump, so it’s likely only make it a matter of time before the board votes on another joint-employment status case, she said.

“There are probably several (cases) waiting to be accepted,” she said.

Until then, the indirect control standard set under the Browning-Ferris case is the law, under which companies wrote new contracts as well as reassessed and rewrote agreements already in place to avoid being considered joint employers, Ryan said.

The hotel industry is pretty well educated about the rules under Browning-Ferris, she said, and it’s likely most employers haven’t had enough time since December to make many changes that would put them in danger of being considered joint employers.

For the time being, she said, the industry should just hold tight and revert to what they likely already had in place under Browning-Ferris until the NLRB “loosens the reins again.”

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