The Outlook for Hotel and Resort Operators Post-BFI
Waiting to Exhale
By Dana Kravetz Managing Partner, Michelman & Robinson, LLP | March 2017
Eighteen months since the National Labor Relations Board (NLRB) revised its standard for the imposition of joint employer liability, and hoteliers remain in a state of legal limbo, unsure what 2017 and beyond have in store on the issue. For those hotel and resort operators whose best response to the question, "how should we continue to move forward in the wake of BFI?" is a shrug of the shoulders, a current scorecard for your consideration.
The BFI Decision
The NLRB shook the hotel franchisor/franchisee landscape with its jaw-dropping Browning-Ferris Industries of California (BFI) decision back in August 2015, which drastically eased the criteria for a company to be considered a joint employer. In lieu of the longstanding and traditional joint employer test that focused on governance, wage and supervision decisions and control, the NLRB in BFI adopted a new and much more lenient standard requiring that a business merely exercise "indirect" (or potential) control over workers to be held liable for labor violations committed by franchisors and contractors. While BFI involved a waste management company and its interaction with a contractor hired to clean and sort recycled products, the implications of the NLRB's ruling are far-reaching and apply to all relationships in which tasks and responsibilities are outsourced. After BFI, Plaintiffs' attorneys are left licking their chops.
The BFI Appeal
Not surprisingly, BFI promptly appealed the NLRB's decision, seeking review by the United States Court of Appeals for the District of Columbia Circuit. The appeal is scheduled to be heard on March 9, 2017, though it is anybody's guess when a ruling will be handed down, hopefully by year's end. In the meantime, executives in a range of industries, including hospitality, sit at the edge of their seats, hoping the D.C. Circuit Court accepts the following argument as set forth in BFI's reply brief:
"The board's decision ignores the longstanding rule that joint employment does not exist absent the exercise of substantial direct and immediate control by the putative joint employer, improperly holds that 'indirect' or 'reserved' control are sufficient standing alone to establish joint-employer status under the common law, and interprets the concepts of 'indirect' and 'reserved' control to include notions of economic influence which the board is prohibited from considering under the distinctive history of the NLRA."