A December 2017 ruling that was a victory for major corporations was vacated after the agency’s ethics official found the 3-2 vote had been tainted by a member’s potential conflict of interest.
The National Labor Relations Board (NLRB) threw out its most important ruling of 2017 — a 3-2 victory for major U.S. corporations — following an internal agency report that found a potential conflict of interest had tainted the vote.
The December ruling, called Hy-Brand, had reversed a controversial Obama-era “joint employer” decision empowering workers to pursue claims against, or seek collective bargaining with, major corporations that don’t sign their paychecks, such as franchisers or clients of contractors.
The vote overturning that 2015 case included support from Donald Trump-appointed William Emanuel, whose former law firm had represented one of the companies in the original case, Browning-Ferris.
In a report issued Feb. 9, NLRB Inspector General David Berry said Emanuel should not have cast a vote overturning Browning-Ferris. While Hy-Brand involved different companies, Berry wrote that the way the NLRB handled it amounted to a “do over” in which the new case was “merely the vehicle” to reconsider the old one — which at the time was still pending in federal court.
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Berry said the issue revealed “a serious and flagrant problem and/or deficiency” in the NLRB’s handling of conflict-of-interest issues.
The order vacating Hy-Brand was issued by a 3-0 vote in which Emanuel didn’t participate, according to a statement Monday from the agency, which said the move was made “in light of the determination by the board’s designated agency ethics official that member Emanuel is, and should have been, disqualified from participating in this proceeding.”
“This is, so far as I’m aware, unprecedented,” said former NLRB chair William Gould IV, a professor emeritus at Stanford’s law school. “There is no decision on a matter of such high import that has been vacated based upon a breach of conflict-of-interest rules.”
The inspector general’s report stirred denunciations from congressional Democrats, including Bobby Scott, ranking member of the House Committee on Education and the Workforce, who urged that hearings be held with Berry and NLRB members. Sens. Patty Murray and Elizabeth Warren also said in a letter to Emanuel on Monday morning that Berry’s findings “indicate that you directly participated in an extraordinarily consequential decision from which the law required your recusal.”
Berry will be issuing a separate report as to whether Emanuel’s actions constituted misconduct, according to the senators.
The new order spurred a swift response from the Fast Food Workers Organizing Committee, the Service Employees International Union-backed group whose allegations against McDonald’s were at the center of the NLRB’s highest-profile “joint employer” enforcement action in recent years.
Last month, the agency’s new general counsel, Peter Robb, cited the Hy-Brand ruling as a reason to delay the McDonald’s case in order to facilitate a settlement.
The labor group’s attorney argued that the settlement talks should be suspended since Browning-Ferris is back in effect, and the trial that was put on hold completed.
In a statement following the NLRB order, Rep. Virginia Foxx of North Carolina, a Republican who chairs the House committee overseeing the NLRB, described the original Browning-Ferris decision as “a gift” from “three former union attorneys appointed to the NLRB by President Obama,” and urged the Senate to take up a bill, already passed by the House, that would overturn Browning-Ferris.