United States: NLRB Makes Up More New Rules On Joint Employment

Remember that kid in elementary school who, whenever you were winning at some made-up playground game, would change the rules in the middle? "Kids can be so unfair," your parent might have said, trying to console you. "But when you get older, there are laws and rules, and they're written down. Everyone knows what the rules are, and everyone has to play by those rules."

Fast-forward to adulthood and the business world. The law is written down. When there are ambiguities, the courts rule. Their decisions can be relied upon. The American economy requires predictability. Businesses know the rules and can operate within the bounds of those rules.

And then there's labor law. Hahahahaha!

The National Labor Relations Board doesn't care about your rules and predictability. The NLRB has expressed its frustration with the composition of the modern workforce and the increasing use of staffing agencies and contingent workers. The NLRB believes that these arrangements – a cornerstone of the modern economy – decrease unionization. "But who cares what the NLRB thinks about contingent workers?" you might say. "The rules are the rules, and the 21st-century economy requires the flexibility that a contingent workforce allows."

Like that kid in elementary school, the Board is again trying to change the rules. Last year, in Browning-Ferris, the Board overruled 30 years of precedent and changed the rules for determining when joint employment exists under labor law. The Board created a new standard that permits a finding of joint employment even when a company exercises minimal control over a staffing agency's workers. The dissent in Browning-Ferris warned of massive uncertainty and confusion, which the majority dismissed as hypothetical nonsense, the product of an overactive imagination.

Last week, the Board took the hypothetical powderkeg it created in Browning-Ferris and lit a match.

In Miller & Anderson, decided July 11, the Board overturned 12 years of precedent to find that it is proper to combine employees and staffing agency workers into a single bargaining unit, without the consent of their respective employers, and without regard to the daunting real world problems that this type of combined unit creates. All that is needed is a "community of interest" among the workers. From now on, the Board held, "Employer consent is not necessary for units that combine jointly employed and solely employed employees of a single user employee."

Under the Board's new interpretation of labor law, companies can now be required to bargain with a unit that includes staffing agency workers they do not hire, do not supervise, do not schedule, do not pay, do not discipline, do not evaluate and do not assign.

Conversely, a staffing agency employer can now be forced to bargain with a unit that includes not only its staffing agency employees but also the full-time employees of its client company, when the staffing agency has no control whatsoever over any aspect of the client company's operation, much less its full-time employees.

As anticipated by the dissent in Browning-Ferris, the Board's approach creates (and does not answer) many questions about the roles of the user company and staffing agency when negotiating and administering collective bargaining agreements and when dealing with unions representing workplace employees. For example:

  • What is the bargaining strategy when the staffing company and the user company may have different objectives?
  • Which entity takes the lead in implementing contractual terms, and how will differences in implementation be addressed?
  • Is a uniform grievance response and settlement strategy desirable or not?
  • What obligations will the two employers have to disclose financial information to the union, when they don't even share that information with each other?
  • What happens when a company uses multiple, competing staffing agencies at the same job site?
  • How can the staffing agency employer be held responsible for a unit of workers that includes the user company's full-time employees, over whom the staffing agency has no control whatsoever?

As in its Browning-Ferris decision, the Board justified its new interpretation as a response to what it calls the "troubling" prevalence of contingent workers in the modern economy. But there is nothing troubling about the prevalence of contingent workforce relationships in the modern economy. Contingent worker arrangements reduce unemployment, expand opportunities for skilled and unskilled workers, and allow user companies to maintain flexibility to adjust for ebbs and flows in orders and workload.

While the business world moves forward, the NLRB looks backward, changing the rules in the middle of the game in an effort to revive the decades-long decline in union membership. That kid from the playground is alive and well. He's just a little older now.

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