The National Labor Relations Board doesn’t often get mixed up in notice-and-comment rulemaking—instead using cases to set workplace standards companies must follow. Business advocates are cheering chairman John Ring’s announcement last week that the agency would explore such a move to look at revising the Obama-era joint-employer standard.
The notice-and-comment process—a staple in the federal bureaucracy—can take months, even years, to complete. Interested parties get a chance to provide input. Some agency proposals—and the joint-employer issue could soon become one of them—generate tens of thousands of comments. And there’s always a possible court challenge after everything is said and done.
“Rulemaking has been the exception to the rule, not the rule,” Michael Sullivan, chair of Goldberg Kohn’s labor and employment group, told The National Law Journal in a recent interview.
“For complex, multifaceted issues, such as those presented by the joint-employer issue, rulemaking might better allow the board to consider and decide how the rule should apply in various situations—not just those that are presented in the particular case being decided,” Sullivan said. “In theory, board rules are procedurally harder to reverse than case decisions. Flip-flopping legal standards from administration to administration can be tremendously difficult for employers to implement.”
In his statement, Ring said “notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be.” He called the dispute over the joint-employer standard—when one company is on the hook for the employees of another—”one of the most critical issues in labor law today.”
How did the NLRB get to this point? Board member William Emanuel’s vote last year in a joint-employer case set off a firestorm of controversy and would put restrictions on how and when he could participate in joint-employment matters. The NLRB’s inspector general concluded Emanuel, a former Littler Mendelson attorney, should not have participated in the case because of his law firm’s connections to a party in a related case.
Emanuel’s recusal in any case would leave the board split 2-2 between Democrat and Republican appointees. Enter, then, the rulemaking process.
Here are some considerations as the board thinks about rulemaking:
➤➤ Rulemaking is more difficult to change by future boards. Sullivan said the move could give employers more certainty. “It might signal just the fact that yes, we’re going to engage. It will give the employers a wink,” Sullivan said. “It’s been a messy process so far. This might bring a more sophisticated approach and feel to the process.”
The board’s swings between presidential administrations make it hard to advise clients, said Steven Suflas, managing partner of Ballard Spahr‘s Denver and Boulder, Colorado, offices. Suflas said he’s had a case pending at the agency since 2013—and he can’t predict how it will be resolved. “The board swung wildly one direction, and now maybe the new board will swing even more,” Suflas said. “At the end of the day, I can’t make promises either way.”
➤➤ Is there a downside? Rulemaking can be slow, and the courts can still review the whole process. “Rulemaking is a long and tedious process. It’s a lot more work than just deciding a case. They are embarking on a major undertaking,” said Wilma Liebman, former Democratic Obama-era NLRB chair. Liebman said Ring’s announcement appears to be one way to bypass the potential conflict issues associated with Emanuel’s vote last year in the case Hy-Brand. The rulemaking process could also be stymied by a judicial challenge.
➤➤ Without rulemaking, the board would need to resolve Emanuel’s ethics conflict or find another case to address the joint employment question. Emanuel’s lawyer, Dwight Bostwick, a Zuckerman Spaeder partner in Washington, disputed that Emanuel violated any ethics pledge in his vote last year. It’s unclear whether and how a new case might come to the board and present a clean path forward to overturn the Obama-era joint-employer standard.
“It’s a clever way to sidestep all of these ethical issues, which have clouded the board’s attempt to overrule Browning-Ferris,” said Suflas of Ballard Spahr. Suflas said the attempt might also signal to companies that a somewhat stable solution to the joint-employer question is coming, even if it takes longer to do so.
➤➤ What’s next? Look out for the formal notice of rulemaking. But will a court challenge impede the path forward? The board will then engage in a formal process that includes receiving and considering comments from interested parties and members of the public before officially establishing a new rule. This process could take months because it is finalized. “No doubt critics of the rule would seek to block or delay it through the courts,” Fisher & Phillips attorneys Richard Meneghello and John Polson said in a blog post. “Still, this may be an easier fix than awaiting congressional action.” Seyfarth Shaw associate Andrew Cockroft in Chicago wrote in a recent blog post, “While the board rarely has used rulemaking to establish standards under the NLRA, the importance of the joint-employer standard to businesses’ ability to function in the modern economy makes the issue a prime candidate for this seldom exercised power.”
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