Recuse Me? Why the NLRB’s Order Vacating the Hy-Brand Decision Should Not Stand

By Gary L. Simpler - Shawe Rosenthal LLP

March 22, 2018

Practitioners of labor law know that the 5-member panel comprising the National Labor Relations Board is appointed by the President of the United States. The Board majority (three members) are from the President’s party and the remaining two members are from the other party. As the administration changes, so does the Board majority.

During the eight-year Obama administration, his Board made many historic changes to long-standing legal precedents, including the creation of micro-bargaining units (Specialty Healthcare),  allowing graduate students to unionize (Columbia University), and the watershed 2015 Browning-Ferris Industries decision finding employers that have indirect control over workers of another employer to be a joint employer. The Browning-Ferris decision in particular overturned 30 years of precedent.

Not surprisingly, the Trump Board (minus one open seat) immediately set to work on overturning the most controversial decisions issued by the Obama Board. The Browning-Ferris decision was chief among them. This opportunity occurred in a case called Hy-Brand Industrial Contractors, Ltd., issued by the Board on December 14, 2017.  Hy-Brand returned to the pre-Browning-Ferris standard that joint employer status will be found only where one entity has exercised actual control over the essential employment terms of another entity’s employees. No longer would contractually reserved control, indirect control, or control that is limited and routine be sufficient to establish joint employer status.

The reversal of Browning-Ferris, however was short lived. On February 26, a three-member panel (excluding Trump-appointed Board member William Emanuel) vacated the Hy-Brand decision. The reasons behind the decision to vacate as well as the process used in reaching this decision raise many troubling issues.

The reason for the order vacating the Hy-Brand decision was a determination by the NLRB’s Inspector General that Board Member Emanuel should have been recused from the Hy-Brand decision. The IG conducted his investigation on his own initiative, not based on a motion or request by any of the parties in the Hy-Brand case.  More troubling is the fact that the IG concluded recusal was required despite the fact neither Member Emanuel nor his former firm represented any of the parties in the Hy-Brand case. Rather, the IG focused on the firm’s representation of Leadpoint, a company that was found to be a joint employer with Browning-Ferris in the Browning-Ferris case (a company, by the way, that Member Emanuel never personally represented).

Many if not most Board members have had prior careers in representing management or labor unions. Therefore, potential conflicts of interest can arise when the Board member or his/her firm has directly represented a Company or Union with a pending case. In the Hy-Brand case, the Board appears to have departed from standard protocol in determining when recusal is required. As argued in its Motion for Reconsideration of the Board’s Order Vacating Decision and Order, Hy-Brand and Brandt Construction referenced several prior cases in which Board members considered whether to recuse themselves.  For instance in SEIU, Local 122RN, Member Becker (a former Union attorney who represented the SEIU) concluded that recusal was a personal decision. He declined to recuse himself in that case despite his personal representation of the SEIU. Another example cited in the Motion for Reconsideration involved a decision by Board Member Hirozawa (also a Union attorney and Obama appointee) not to recuse himself.  In New Vista Nursing & Rehabilitation, Member Hirozawa took the position that his recusal was not required because “[his] participation under the present circumstances would not ‘cause a reasonable person with knowledge of the relevant facts to question [my] impartiality.’” In the Hy-Brand case, by contrast, Member Emanuel was not given an opportunity to participate in the recusal decision process.

The involvement of the Inspector General, his departure from established precedent on recusal and the Board’s action in vacating the Hy-Brand decision evidence a disturbing departure from the decision-making process I have experienced over my 33 years of practice. Applying new and overly broad standards for recusal, as was done in the Hy-Brand case will have a far reaching impact on all Board members, no matter which side they represented in their careers. I have great respect for the Board and its mission and I hope the processes and procedures that have made the Board an effective agency for administering and enforcing our labor laws will be followed without the unnecessary partisan gamesmanship we have witnessed in the Hy-Brand case.