Welcome

House Democrats Subpoena NLRB Over Joint-Employer Records (3)

Sept. 15, 2020, 4:17 PM; Updated: Sept. 16, 2020, 12:16 AM

House Democrats issued a subpoena Tuesday for National Labor Relations Board documents related to its joint-employer rulemaking and a massive unfair labor practice case against McDonald’s Corp., after agency officials refused to hand them over.

The House Committee on Education and Labor seeks four types of documents. The first two relate to member William Emanuel’s participation in the McDonald’s case, which was settled in the fast-food giant’s favor in December, and in helping to craft a rule restricting when franchisers and businesses that use workers hired by third parties can be jointly liable for labor law violations.

The panel also wants information on the categories the agency used to sort public comments it received on its proposed joint-employer rule and the instructions it gave to contractors hired to process those comments.

NLRB Chairman John Ring has refused to provide the documents, arguing that doing so would set an unworkable precedent for the board and discourage labor board staff from giving candid advice. In a statement, the board said it had offered to let congressional staff review the documents in a secure location instead of sending copies to Capitol Hill, but talks with the committee fell through.

“The NLRB has been fully cooperative with the House Education and Labor Committee,” Ring said in the statement. “The Committee knows it is not entitled to the documents it is demanding. No Board, regardless of political party, has allowed the disclosure of such deliberative matter-specific documents. This is a made-up controversy solely for political theatre.”

The NLRB claimed attorney-client privilege and executive deliberations as grounds for refusing the committee’s request, Education and Labor Committee Chairman Bobby Scott (D-Va.) told Ring in a letter accompanying the subpoena. That argument is without merit, Scott said, because the committee doesn’t have to accept common law assertions of legal privilege.

“The Committee would have preferred to resolve these issues voluntarily,” Scott said in the letter. But after stonewalling by the board, the labor panel “is left to conclude that the NLRB’s sole motivation for refusing to produce the requested documents is to cover up misconduct.”

Long-Simmering Conflict

The subpoena is the latest development in a battle between congressional Democrats and the Republican-controlled NLRB that dates to 2018.

The conflict began when the board vacated an earlier decision in Hy-Brand Industrial Contractors, a high-profile ruling that softened joint liability for businesses by making it harder for companies to be made liable for labor violations committed by franchisees and contractors. It overturned an Obama-era decision in Browning-Ferris Industries that said that companies—including large chains like McDonald’s—need only have indirect control over key aspects of a worker’s job to be considered that worker’s employer.

Emanuel participated in Hy-Brand despite the fact that his former law firm, Littler Mendelson, represented one of the companies involved in the Browning-Ferris case. That created the perception that Emanuel’s government work indirectly benefited a client of Littler Mendelson, where he was previously a senior partner and shareholder.

The board’s inspector general concluded that Emanuel had violated a White House ethics pledge by participating in Hy-Brand, prompting fierce backlash from management-side attorneys, who argued that Emanuel was being held to a different standard than previous board members.

The labor board instead opted to write a rule to the same effect as its ruling in Hy-Brand. It required that a company exercise “substantial direct and immediate” control over the most important elements of a worker’s job—discipline and hiring and firing, for example—to be considered the worker’s employer.

Emanuel’s involvement in the rulemaking was said to have been cleared by the agency’s internal ethics officer. Ring, at the time, told Bloomberg law that members are required to sit out cases involving their former clients and law firms for two years, but they generally don’t have to recuse themselves from drafting regulations that apply broadly across the country.

That was followed by a long-awaited ethics audit in which the NLRB gave members of its leadership panel authority to overrule the internal ethics officer on whether to participate in a case.

Earlier Document Requests

Democrats were critical of that move and a $170,000 settlement with McDonald’s late last year that absolved the company from direct responsibility as a joint employer.

The Education and Labor Committee in 2019 requested documents related to the internal ethics officer’s written opinion on Emanuel’s participation in the joint employer rule and the McDonald’s case.

The committee also asked for documents related to a private contractor hired to sift through public comments—a move Democrats argued was a conflict of interest, given the rule’s focus on contractors.

In a Sept. 1 letter, Scott accused Ring of backing out of an agreement to send the committee documents. According to Scott, Ring initially expressed a willingness to provide the information, only to flatly deny his request in a May 14 phone call.

“The NLRB’s failure to produce the requested documents is an obstruction of the Committee’s constitutional authority and duty to conduct oversight of the NLRB’s expenditures and activities,” Scott wrote. “Furthermore, this change in position and the continued refusal to give the Committee certain documents indicate that the NLRB has something to hide regarding decisions that are likely tainted by a defective process, such as the McDonald’s case and the joint employer rulemaking.”

(Updated with details after delivery of subpoena in first, sixth, and seventh paragraphs. )

To contact the reporters on this story: Ian Kullgren in Washington at ikullgren@bloombergindustry.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.