The National Labor Relations Board on Monday retreated from its drive to overturn the Obama-era expanded “joint employment” standard, as questions mounted over whether a Trump-appointed member of the board violated ethics rules when he participated in a pending case.

The NLRB inspector general, David Berry, said in a report this month that William Emanuel should not have voted in the Hy-Brand case to overturn the Obama-era joint-employment standard. Berry said Emanuel's vote in the case revealed a “serious and flagrant” ethics problem at the agency. Emanuel's former law firm, Littler Mendelson, represented a party in the Obama-era case the Hy-Brand ruling overturned.

Chairman Marvin Kaplan, along with his Democratic colleagues Mark Gaston Pearce and Lauren McFerran, voted unanimously Monday to vacate the Hy-Brand decision. The move returns the board to the Obama-era precedent set in Browning-Ferris Industries, which opened a wider door for holding companies accountable for franchisees and contractors.

The NLRB's ruling Monday said the board's “designated ethics official” determined that Emanuel “is, and should have been” disqualified from participating in the Hy-Brand case. As part of a string of business friendly decision, Emanuel, Kaplan and then chair Philip Miscimarra voted to overturn the case in December. Miscimarra has since returned to Morgan, Lewis & Bockius.

The inspector general's report found that the decision to overturn Browning-Ferris—through the Hy-Brand case—was linked to the previous case, making it inappropriate for Emanuel to participate. Littler Mendelson represented one of the companies in the Browning-Ferris case.

Jim Faul, a St. Louis-based attorney at Hartnett Gladney Hetterman who represented the workers in Hy-Brand, welcomed the board's action Monday.

“The fired workers have still not been made whole from the employer's unfair labor practices, but their ability to stand up for other workers under the NLRA has been vindicated again,” Faul said. “This decision is an important reminder the NLRB is an independent agency that does indeed take its responsibilities and obligations seriously.”

Michael Avakian of Washington's Wimberly, Lawson, Steckel, Schneider & Stine, who represents Hy-Brand, did not immediately respond to a request for comment.

Democratic leaders and union representatives had called for the Hy-Brand decision to be overturned. Bloomberg reported Monday that Democratic Sens. Patty Murray and Elizabeth Warren indicated another inspector general report was imminent that would address Emanuel's misconduct.

Meanwhile, Morgan Lewis partner John Ring, Trump's pick to replace Miscimarra, is heading soon to the Senate for his confirmation hearing, where he is expected to face similar questions about ethics and recusals.

Monday's NLRB vote further complicates pending litigation challenging the Obama-era joint-employment standard.

The Browning-Ferris case had been pending review at the U.S. Court of Appeals for the D.C. Circuit when the Trump-led NLRB moved quickly to undo the decision. The appeals court, at the request of the NLRB, returned the case to the board. The D.C. Circuit had not yet issued a decision on whether the new standard in Browning-Ferris was lawful.

Susan Garea, who represents the union in Browning-Ferris, said Monday: “The board's decision, without Member Emanuel's participation, to vacate Hy-Brand was, simply, the right thing to do. It remains to be seen whether the board will take all necessary action to correct the harm done. But this is an important first step.”

Emanuel, in a Jan. 26 letter to members of the Senate Health, Education, Labor & Pensions Committee, addressed the alleged conflict. Emanuel said he was unaware Littler Mendelson represented a party in the Browning-Ferris case and would recuse himself in the case when it returned to the board.

Emanuel faced ethics scrutiny ever since he was confirmed to the board in September. On the day he was confirmed, Outten & Golden's Justin Swartz filed a motion urging him to recuse himself from several cases involving his former firm. Emanuel, responding to a letter from Senate Democrats, said he would recuse in dozens of cases.

The NLRB's order in Hy-Brand is posted below:

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