United States: NLRB Strikes Down Employer Veto Of Combined Leased And Regular Employee Bargaining Units: What Should Employers Do Now?

Last Updated: July 15 2016
Article by Daniel Altchek

One year after the National Labor Relations Board's ("NLRB" or the "Board") major expansion of its joint employer standard in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015) ("BFI"), the NLRB has issued yet another decision that could have a dramatic impact on employers who engage workers through staffing companies, employee leasing companies, temporary agencies and the like. The latest decision, Miller & Anderson, Inc., 364 NLRB No. 39 (July 11, 2016) ("Miller & Anderson"), will further enhance unions' ability to organize workers supplied by staffing companies and could place many employers in unexpected and unintended bargaining relationships.

Background

Miller & Anderson concerned an employer that had its own employees (the "user" employer) and also was an undisputed joint employer of workers supplied by a staffing company (the "supplier" employer). The question presented by the case was whether the user's solely employed workers and those workers it jointly employed (along with the supplier) must obtain employer consent if they wish to be represented in a single unit for purposes of collective bargaining.

The relevant background for Miller & Anderson starts with the Board's decision in M.B. Sturgis, 331 NLRB 1298 (2000) ("Sturgis"). In Sturgis, the Board reviewed a somewhat convoluted line of its own precedent and held that the National Labor Relations Act ("NLRA") did not require employer consent for the solely and jointly employed workers to be combined in a single bargaining unit, provided that both groups of employees shared a community of interest with one another under the Board's traditional test for determining appropriate units.

Four years later, the Board reversed course in Oakwood Care Center, 343 NLRB 659 (2004) ("Oakwood"), overturning Sturgis as a matter of both statutory interpretation and sound national labor policy. Essentially, the Board held that the NLRA did not permit elections in units encompassing the employees of more than one employer (i.e., a user employer and a supplier employer) absent the employers' consent, and that the bargaining structure contemplated by Sturgis was highly impractical, leading to conflicts among the various employer and employee groups involved in the process. Thus, from 2004 until now, a union could not seek to represent a single bargaining unit combining both a user employer's solely employed workers and those workers it jointly employed with a supplier unless the employer consented.

In Miller & Anderson, the Board overruled Oakwood and effectively returned to the Sturgis rule. As a result, employer consent is no longer necessary for a union to represent both solely employed and jointly employed workers in a single bargaining unit (again, provided both groups of employees meet the NLRB's traditional community of interest test). The Board also addressed the scope of the respective bargaining obligations for the user employer and the supplier employer in a combined unit. The Board held that the user employer has an obligation to bargain over all terms and conditions of the employees it solely employs, while its bargaining obligation for the jointly employed workers extends only to those terms and conditions which it possesses the authority to control. Similarly, for the supplier employer, the duty to bargain covers only the jointly employed workers and extends only to the terms and conditions that it possesses the authority to control. The Board also noted that its decision would not disturb the ability of the solely and jointly employed workers to organize separately, if they choose to do so.

In explaining the rationale for its decision, the Board reaffirmed its remarks in BFI about the explosive growth in the use of contingent workforces and the "massive changes" experienced by the temporary staffing and permanent employee leasing industry since 1990. Interestingly, one of the justifications offered by the Board for its decision was the increased bargaining power of a combined unit of solely and jointly employed workers, compared to the diminished economic strength that the employees would have in separate units despite their shared community of interest.

Implications for Employers

Whether one views this as another instance of a partisan NLRB tilting the playing field to facilitate unions' organizing efforts, or as another step in updating the law to reflect the increasing prevalence of "fragmented" workplaces in today's economy, there is no questioning the significance of the changes wrought by BFI and now Miller & Anderson. The former decision greatly expanded the scope of the NLRB's joint employer standard, exposing a broad swath of companies to joint employer status under the NLRA. Now, under Miller & Anderson, any company ensnared by the expansive BFI joint employer standard – i.e., companies with joint employer relationships with their labor suppliers – could be compelled to bargain with unions representing both their own employees and the supplied employees in a single unit.

This stunning new reality begs the question – what is an employer to do? While the full extent of BFI's impact remains to be seen, the Board's latest decision emphasizes the importance of reviewing all prospective and existing business arrangements that could give rise to a joint employer determination, and giving consideration to modifying the terms of those arrangements to mitigate that risk. Of course, in many instances operational and other business realities make it impossible to avoid a joint employer relationship. In those circumstances, both employers should focus on the community of interest issue because even under Miller & Anderson the combined unit of solely and jointly employed workers will not be permitted if there is not a community of interest between the two groups. Employers who seek to avoid a combined unit should consider whether it would be possible, and/or desirable, to structure their operations and the terms and conditions of employment for the employees in question in an attempt to prevent a community of interest finding between the solely employed and jointly employed workers. User and supplier employers subject to joint bargaining obligations under Miller & Anderson should also identify which areas of the employment relationship fall under either party's control and begin to evaluate whether those arrangements should be modified to enhance their positions at the bargaining table.

As noted, this is a very recent decision and we will keep you apprised as this area of the law develops.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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