NLRB Once Again Overrules Precedent to Expand its Reach Over Joint Employers

by Judd Lees and Nate Bailey

In our October 2015 Employment Law Note, we discussed the National Labor Relations Board’s activism in expanding “joint employer” liability to the employer-subcontractor relationship in its Browning Ferris Industries decision. In that case, a recycling facility that used a subcontractor’s workers was found to be a joint employer with the subcontractor based on the supervision and direction of the subcontractor’s employees. In Miller & Anderson, Inc., 364 NLRB No. 39, decided on July 11, 2016, the Board has taken this concept further in expanding joint employer bargaining obligations with respect to staffing agencies’ workers.

In Miller & Anderson, the Board considered a union election petition involving a bargaining unit containing both fulltime employees and temporary employees sent by a staffing agency. Under controlling case law, the Board should have required both the “user” employer’s and the “staffing” employer’s written consent before permitting a bargaining unit combining full-time and the staffing agency’s temporary employees. The Board, however, solicited comment from the labor and employer communities to determine whether it should revert to its previously overruled precedent in the 2000 case of M.B. Sturgis, Inc., which held that written consent by both employers was unnecessary for such a combined unit. Ultimately, the NLRB overruled existing precedent and returned to the Sturgis analysis.

Now, a union seeking to represent a bargaining unit consisting of both the user employer’s employees and temporary employees provided by a staffing agency need not obtain consent of both employers to proceed. The Board’s analysis in responding to such an election petition is therefore limited to determining whether the two groups share a sufficient “community of interest” to constitute a single appropriate unit or whether the two should have separate elections. The “community of interest” analysis turns on the level of integration of the two groups with regard to pay and benefit issues, supervision, and other terms and conditions of employment. If the two groups share a sufficient community of interest, the Board will proceed with a single election; if not, the NLRB will proceed with two elections—provided there is a sufficient showing of interest in representation by both employee groups.

If a single bargaining unit of permanent and temporary employees elects the union as its representative, the “user” employer must bargain with the union regarding all terms and conditions for its own employees and must bargain jointly with the “staffing” employer and the union regarding those terms and conditions each employer controls. Thus, if the “user” employer sets the hours but not the pay of the temporary employees, its bargaining responsibility is limited to hours and not pay; the “supplier” agency would be responsible for bargaining over pay.

According to the Board, the reversion to Sturgis was necessitated by the growth in employer use of staffing agencies and the need for the NLRB to remain “relevant.” The complications presented by the Board’s activism are obvious. First, employees who have never sought outside representation may find themselves outvoted by employees who have little or no stake in their temporary work assignment. Second, a resulting duty to bargain will be complicated by the necessity that both the “user” employer and the “supplier” employer be at the bargaining table despite potentially different—or incompatible—bargaining interests. Third, both employers will have to agree on the scope of each other’s control over employment terms to determine their respective bargaining obligations because each employer will have a duty to bargain over only those terms and conditions it has the authority to control. Determining the scope of each employer’s control may be easier said than done and could result in a contentious showdown at the bargaining table involving the two employers and the union. Finally, a subsequent business decision by the “user” employer to no longer employ the unionized temporary agency employees could be met with an unfair labor practice charge alleging either discrimination or retaliation based on union status.

Based on the Miller & Anderson decision, coupled with the Browning Ferris decision, employers need to be more vigilant than ever to avoid inadvertently creating a joint employer relationship. Thus, with subcontractors, employers should ensure that subcontracts do not grant the employer control over the terms and conditions of employment of the subcontractor’s employees. Similarly, with temporary staffing agencies, the staffing agreement should clearly delineate the relative employment terms controlled by the staffing agency as well as the corresponding absence of such control by the “user” employer. There should also be an effort by employers to treat the temporary staffing employees differently than the employers’ fulltime employees to prevent the two groups from sharing a “community of interest.” While this may no longer forestall a union election under the Miller & Anderson decision, it may decrease the risk that the two groups will be found to constitute an “appropriate” bargaining unit. This might dissuade a union unhappy with a “half a loaf” result.

This Employment Law Note is written to inform our clients and friends of developments in labor and employment relations law. It is not intended nor should it be used as a substitute for specific legal advice or opinions since legal counsel may be given only in response to inquiries regarding particular factual situations. For more information on this subject, please call Sebris Busto James at (425) 454-4233.