NLRB Strikes Again: Employer Consent Unnecessary To Create a Mixed Bargaining Unit

July 26, 2016Alerts Labor & Employment Alert

In a decision that could complicate the hiring of workers through staffing agencies, the National Labor Relations Board has ruled that an employer’s consent is not necessary to establish a mixed bargaining unit that combines temporary or contingent workers who are jointly employed with those who are solely employed by the company contracting with the agency.

In its July 11, 2016 decision in Miller & Anderson, Inc., the NLRB overruled one of its own precedents to hold that such mixed units may be formed by workers who share a “community of interests.”

The decision overturns the NLRB’s 2004 decision in Oakwood Care Center, which held that such a mixed unit is appropriate only with the consent of both employers participating in the joint-employer agreement.

Under the new test, so long as the solely employed workers of the user employer and the jointly employed workers of the supplier employer share a “community of interests,” the NLRB will find the combined unit appropriate and require that the user and supplier employer bargain with the union for a collective bargaining agreement provided that the union wins an election and is certified as the collective bargaining representative.

This decision has the potential to significantly disrupt current business models that rely on third parties to supply contingent workers. First, it will make utilizing staffing agencies to supply temporary or other contingent workers potentially far more costly and complicated.

It is difficult enough for a single employer to negotiate a collective bargaining agreement with a union. Add an additional employer with potentially conflicting interests to the mix and it becomes harder and more costly to reach agreement. Under Miller, user employers will now be obligated to bargain not only over the terms and conditions of employment of those workers the user employer solely employs, but also the terms and conditions of employment of the supplier employer’s workers working for the user employer to the extent the user employer has the authority either directly or indirectly to share or co-determine the supplied employees terms and conditions of employment.

Given the reality that both user employers and supplier employers may have contracts with more than one supplier or user employer, respectively, these employers may need to negotiate and operate under more than one collective bargaining agreement with multiple employers, potentially greatly complicating operations.

Second, user and supplier employers under Miller may have significantly less protection under the secondary boycott provisions of the National Labor Relations Act (Act) if the NLRB concludes that a single bargaining unit comprised of workers solely employed by the user employer and workers shared by the user and supplier employer is appropriate. A union under such circumstances may be able to successfully argue that the employer in the combined unit with which the union does not have the labor dispute is not truly a neutral for purposes of the Act and therefore the union should be free to picket both employers.

Third, businesses will also run an increased risk of being held liable as a joint employer for unfair labor practice charges, wage and hour claims, safety violations or even harassment/discrimination claims arising from this newly found employment relationship. The union may successfully argue that since the two employers are part of a single bargaining unit, they must be joint employers for purposes of the Act or other employment statutes.

Fourth, Miller will encourage unions to organize temporary and other contingent workers now that they can combine them in a unit with a user employer’s workers. This is so because the unions will have less difficulty identifying the supplied workers’ employer for purposes of establishing a bargaining unit. Additionally, the combined units will be large, thereby offering the unions more dues, and making the temporary and contingent workers more attractive organizing targets.

Any employer using or considering using a third party to provide temporary or other contingent workers should evaluate its operations and attempt to structure contracts with third parties to limit, as much as possible, the number of the “community of interest” factors that the user and supplier employer’s workers share.

Employers — both users and suppliers — should take the following actions to the extent possible:

  • Avoid having the supplier employer’s workers work side-by-side with the user employer’s employees.
  • Limit interaction between the two groups of employees.
  • Ensure that the supplier employer’s employees are separately supervised. Better still, have the supplier employer supervise and responsibly direct the workers it supplies.
  • Avoid an interchange of the user and supplier employees on a short term or long term basis. For instance, avoid directly hiring the supplier employer’s employees after a month or two or having the user employer’s employees transfer to the supplier employer’s workforce.
  • Ideally, the user’s and supplier’s employees would work under different terms and conditions of employment (wage rates, benefits, work rules, etc.)
  • Ideally, they would also have different skills and training and perform distinct work without overlap.

For more information about this alert or if you have any questions or concerns, please contact Charles Zuver at 310.228.6997 or [email protected] or Daniel Berkley at 415.364.5555 or [email protected] or any member of Fox Rothschild’s Labor & Employment Department.