The Other Shoe Drops—The NLRB’s “Contingent Workforce” Activism Continues

The National Labor Relations Board (NLRB) will now permit a single bargaining unit to include employees who are solely employed by an employer along with other employees who are jointly employed by that employer and a staffing provider, all without the consent of either employer. The NLRB’s July 11, 2016 decision in Miller & Anderson, Inc. overturns more than a decade of precedent under the NLRB’s 2004 Oakwood Care Center decision, in which the NLRB previously held that jointly-employed employees could not be included in a bargaining unit with solely-employed employees unless both employers consent to the multi-employer bargaining arrangement. In overturning Oakwood Care Center, the NLRB expressly reverted to the NLRB’s rule set forth in its 2000 decision in M.B. Sturgis, Inc.

This decision continues the NLRB’s activism in seeking to empower “contingent workers,” and forms a predictable bookend to the NLRB’s August 2015 decision in Browning-Ferris Industries of California, Inc., which relaxed the NLRB’s standards for finding joint-employer status. Tellingly, in both Browning-Ferris and Miller & Anderson, the NLRB expressly claimed “responsibility to adapt the Act to the changing patterns of industrial life.” In its analysis of the NLRB’s historical treatment of this issue, the NLRB characterizes this move as merely restoring the proper order that existed under NLRB precedent rooted in the 1940s that stood until 1990, and not as a move that radically shifts the course of labor law. What the NLRB glosses over in this context is that a rule that arose from the retail store concessionaire arrangements of the 1940s very well may have disastrous consequences when applied to the industrial reality of 2016. While the NLRB claims “responsibility to adapt the Act to the changing patterns of industrial life,” it seems to celebrate taking the law backward 70 years.

The Underlying Case

In Miller & Anderson, the Sheet Metal Workers International Association, Local Union No. 19 filed a petition seeking to represent a bargaining unit of all sheet metal workers employed by Miller & Anderson, Inc., a mechanical and electric contractor, within a specific geographic area. Importantly, the petition expressly sought to include not only a group of sheet metal workers employed solely and directly by Miller & Anderson, but also an additional group of sheet metal workers provided by a staffing company (Tradesmen International), whom the union alleged were jointly employed by Miller & Anderson and the staffing company. The Regional Director for the NLRB applied the NLRB’s precedent in Oakwood Care Center, which required consent of all parties for such arrangements and dismissed the petition based upon the fact that the two alleged joint employers did not consent. 

A Return to the M.B. Sturgis Standard—Tweaked by Browning-Ferris

With its reversal of the Oakwood Care Center rule, the NLRB has remanded the case to the Regional Director for further proceedings. These further proceedings, under the reinstated M.B. Sturgis rule, necessarily would include a determination of:

• whether Miller & Anderson and the staffing company are, in fact, joint employers—a finding made much more likely by the Browning-Ferris decision issued in the interim; and
• whether the solely-employed workers and the jointly employed workers share a sufficient “community of interest” to be included in the same bargaining unit, applying the NLRB’s traditional community of interest factors.

Some of these traditional factors include functional integration in the work of the employer, similarity of the type of work performed, interaction and interchange between employees, similarity of working conditions, wages and benefits, and common supervision. In the few years following M.B. Sturgis, which was issued in 2000, the NLRB conducted “community of interest” analyses with regard to such units—which may provide some guidance for what is to be expected under Miller & Anderson. In one example, the NLRB found a sufficient community of interest between agency workers and employees of a primary employer where workers performed very similar work, and the primary employer controlled assignments, directions, discipline, and wages even though the agency employees had lower wages, lacked benefits, did not have seniority rights and worked under a different attendance policy. Under the community of interest standards, it can be challenging to exclude the jointly employed employees if they are used in a capacity that is functionally integrated into the existing workforce.

The bargaining obligation for each employer under M.B. Sturgis was to bargain over all terms of employment for those employees it solely employs, and also to bargain over jointly employed employees “to the extent it controls or affects their terms and conditions of employment.” Applying the broader joint employer standard established in Browning-Ferris, the NLRB now adjusts this standard to require each employer to bargain over the jointly employed employees “only with respect to such terms and conditions that it possesses the authority to control.”

Anticipated Consequences 

In nonunion workplaces utilizing contingent workforces, this new standard creates the opportunity for labor unions to petition to represent the primary workforce and the contingent workforce in a single bargaining unit—thereby binding the staffing employer and the client employer to a duty to bargain with the union over the terms and conditions of employment for both groups of employees simultaneously.

In the context of workplaces in which the employer’s primary workforce already is represented by a union, and that primary workforce is supplemented by a contingent workforce from a staffing provider, Miller & Anderson creates the opportunity for unit clarification petitions seeking to accrete the contingent workforce into the existing bargaining unit without an election, based upon an evidentiary showing that a smaller, unrepresented group of employees shares a community of interest with the larger, preexisting bargaining unit . Additionally, labor unions may seek to have a so-called Armour-Globe self-determination election, in which the contingent workforce would vote on whether to join the existing bargaining unit.

Miscimarra’s Dissent Notes Unanswered Questions

As NLRB Member Miscimarra’s dissent points out, the NLRB’s decision does not provide answers or guidance regarding how the conflicts inherent in such multi-party negotiations would be resolved. How will the multiple employers involved determine which employers have obligations to bargain over which subjects, or authority to establish bargaining positions with regard to which subjects? If there are disputes and disagreements on bargaining subjects between the management of the user and supplier employer, how will those disputes be resolved? Will the existing contracts between the user and the supplier be controlling on the bargaining process, or will the outcome of union negotiations require renegotiation of the user-supplier contracts? The majority’s response to these concerns is simply that this standard previously was the law for decades, and it did not seem to be so problematic in the past.

Key Employer Takeaways 

The NLRB’s recent activity is a clear threat to the efficiencies that employers have achieved through the appropriate use of contingent workforces. As the NLRB has added yet another significant consequence to its expanded definition of “joint employer,” both users and suppliers of staffing services and contingent workforces should continue to evaluate the nature of their relationships and, where possible, to refine their contracts to clearly define and allocate the respective authorities or rights of control—including potential rights of control. Users and suppliers should enter into and/or continue their relationships with eyes wide open, and seek to allocate rights of control in a way that may limit vulnerability to a finding to potential joint-employer status, union organizing campaigns targeting a joint unit, and potential joint bargaining obligations. Parties to these arrangements also may consider structuring the employment of the contingent workers with the community of interest factors in mind. Even in a joint employer relationship, it could be found that the jointly employed contingent workers do not share a community of interest with the solely-employed workers. While contingent workers typically already have different wages, benefits and other terms and conditions than permanent employees, the degree of community of interest can be reduced by limiting functional integration – common supervision, common job function, and interchange and interaction among employees. 

Employers with union-represented primary workforces and also a contingent workforce excluded from the current bargaining unit should evaluate their collective bargaining agreement’s treatment of the contingent workers and evaluate the potential vulnerabilities, including the possibility of accretion into the existing unit through unit clarification or an Armour- Globe election.