NLRB vacates Hy-Brand joint employment liability standard


On Feb. 26, the NLRB vacated its recent ruling in the Hy-Brand Industrial Contractors case, which overruled the National Labor Relations Board's controversial Browning-Ferris decision.

The ruling was vacated because the NLRB inspector general stated that Board Member William Emanuel should not have participated in the case, since his former law firm represented a subcontractor in the Browning-Ferris case. This subcontractor was not "directly" or "substantially" involved in the Browning-Ferris case. It should be noted that the inspector general issued his report due to complaints filed by Democratic Senators Patty Murray and Elizabeth Warren.

With the Hy-Brand case vacated, the controversial Browning-Ferris standard once again controls. Browning-Ferris requires only that an entity exercise "indirect control" over the terms and conditions of employment at the other entity for the two entities to be considered "joint employers" – and thus, jointly liable for any labor violations and jointly subject to collective bargaining.

The reinstatement of Browning-Ferris is hopefully only temporary. There is currently a vacancy on the NLRB. President Trump has nominated management lawyer John Ring to fill that position. Once Ring is confirmed, I believe that, when the opportunity is presented, Browning-Ferris will be overruled once again.

I do not believe it was a conflict for Member Emanuel to participate in the Hy-Brand case. His former firm did not represent one of the parties in the Hy-Brand case itself. Rather, Emanuel's former firm represented a subcontractor in the Browning-Ferris litigation who was not "directly" or "substantially" involved in that case.

It should be noted that controversial Obama Board appointee Craig Becker refused to recuse himself in 2010, involving cases of his former employer, the Service Employee International Union. In refusing to recuse himself, then-Member Becker stated, "Under federal labor law, the President is entitled to appoint individuals to be Members of the Board who share his or her views."

Union strikes before contract expiration
The company and the union were negotiating a successor collective bargaining agreement, and the union went on strike before the expiration of the current contract. The company filed suit, seeking damages for breach of the "no-strike" clause.

The U.S. District Court for the Eastern District of Pennsylvania honed in on the language of the no-strike clause, focusing on whether the language of the clause constituted a waiver of the union's right to strike over non-arbitrable issues, such as the terms of a future CBA.

The court determined the contract showed that the no-strike clause was explicitly tied to the agreed contractual grievance and arbitration procedure; that is, strikes are prohibited only "until the grievance procedure has been exhausted." The parties agreed that the grievance procedure was not available to resolve disputes over the terms of a future CBA.

The court ruled that the no-strike clause issue did not "clearly and unmistakably" waive the union's right to strike during the term of the CBA over anything other than arbitrable issues.

Contract drafting is critical here. The company would have prevailed if the contract language had provided, "There shall be no strikes, picketing, slow downs, deliberate curtailment of production, work stoppages of any kind, or other interruptions of the company's operations." The no-strike obligations should not be tied to the grievance procedure.

GrubHub delivery driver is an independent contractor
On Feb. 8, the U.S. District Court for the Northern District of California ruled that a delivery driver for GrubHub was an independent contractor and not an employee, for purposes of California's minimum wage, overtime and employee expense reimbursement laws.

The plaintiff driver had filed the action as a class action. The court denied class action status and proceeded to hold a hearing on the independent contractor issue.

The court stated that, while some factors weighed in favor of an employment relationship, "GrubHub's lack of all necessary control over [plaintiff's] work, including how he performed deliveries and even whether or for how long, along with other factors, persuade the Court that the contractor classification was appropriate."

The court relied upon the following facts:

  • The written agreement evidenced an intention on the part of both parties to create an independent contractor relationship.
  • The delivery driver had the right to deliver for other delivery services, even those that compete with GrubHub.
  • GrubHub did not require the driver to attend any mandatory training.
  • The delivery driver chose when he wanted to deliver.
  • The delivery driver was not reimbursed for expenses and incurred costs for gas and his cell phone.
  • The delivery driver was allowed to choose the area in which he delivered.
  • GrubHub did not require that the delivery driver take a particular route to the restaurants.
  • GrubHub exercised little control over the details of the delivery driver's work.
  • GrubHub did not control how plaintiff made the deliveries – whether by car, motorcycle, scooter or bicycle.
  • GrubHub did not control the delivery driver's appearance, nor did it require him to wear a uniform.
  • GrubHub did not control how and when plaintiff delivered the restaurant orders he chose to accept.
  • GrubHub did not prepare performance evaluations of delivery drivers.

GrubHub had the right to terminate the contract without cause on 14 days' notice. Under the circumstances of this case, that did not give GrubHub the right to control the manner and means of delivery; this right to terminate was viewed as neutral.

The court concluded by stating, "Of primary significance, GrubHub did not control the manner or means of [plaintiff's] work, including whether he worked at all or for how long or how often, or even whether he performed deliveries for GrubHub's competitors at the same time he had agreed to deliver for GrubHub."

This case is important for several reasons. First, the judicial forum was U.S. District Court, not the California state courts. Companies are going to get a much fairer treatment in federal court. Second, class action status was denied. There is an epidemic of class action lawsuits in California. This is an example of a court refusing to certify the class.

Finally, when analyzing the factors relied upon by the court, newspaper publishers will recognize that these same factors are present in the independent contractor distribution agreements they have with newspaper carriers.

L. Michael Zinser is the founding partner of The Zinser Law Firm in Nashville, Tenn. The firm, which has a heavy concentration of clients in communications media, represents management in the area of labor and employment. Zinser can be reached at (615) 244-9700 or mzinser@zinserlaw.com.

Zinser, NLRB, independent contractor
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