Employers' Consent Not Required for Bargaining Units Comprised of Both Solely- and Jointly-Employed: NLRB | Practical Law

Employers' Consent Not Required for Bargaining Units Comprised of Both Solely- and Jointly-Employed: NLRB | Practical Law

In Miller & Anderson, Inc., the National Labor Relations Board (NLRB) held that employer consent is not required for bargaining units that contain both solely- and jointly-employed employees. The NLRB restores the short-lived principles of M.B. Sturgis, which facilitated union organizing of temporary and contingent workers between 2000 and 2004.

Employers' Consent Not Required for Bargaining Units Comprised of Both Solely- and Jointly-Employed: NLRB

by Practical Law Labor & Employment
Published on 19 Jul 2016 • USA (National/Federal)
In Miller & Anderson, Inc., the National Labor Relations Board (NLRB) held that employer consent is not required for bargaining units that contain both solely- and jointly-employed employees. The NLRB restores the short-lived principles of M.B. Sturgis, which facilitated union organizing of temporary and contingent workers between 2000 and 2004.
On July 11, 2016, in Miller & Anderson, Inc., the NLRB overruled Oakwood Care Center (343 N.L.R.B. 659 (2004)), and held that employer consent is not required for bargaining units that contain both solely- and jointly-employed employees. (364 N.L.R.B. No. 39 (July 11, 2016).)

Background

A union petitioned to represent a bargaining unit comprised of employees working for a heating, ventilation and air conditioning contractor, Miller & Anderson, Inc., and skilled trades staffing company, Tradesmen International. Some of the employees were solely employed by Miller & Anderson, and some were jointly employed by Miller & Anderson and Tradesmen International. The employers did not consent to the combined bargaining unit. An NLRB regional director dismissed the union's petition relying on H.S. Care, L.L.C. (343 N.L.R.B. 659 (2004) (Oakwood Care Center)). The union appealed the Regional Director's dismissal to the panel (Board) heading the NLRB's judicial and election functions, asking that the Board overrule Oakwood Care Center, which requires employers' consent to a multi-employer bargaining arrangement before the NLRB would approve a bargaining unit containing both solely- and jointly-employed employees.

Outcome

A majority of the Board (Chairman Pearce and Members Hirozawa and McFerran) reversed the regional director's dismissal and overruled Oakwood Care Center. The majority held that employers' consent to a multi-employer bargaining arrangement is not required for bargaining units that contain both solely- and jointly-employed employees and announced that the Board will determine the appropriateness of such units by using the traditional community of interest test.
The majority noted that:
  • Before the Board's decision in Lee Hospital, employers' consent was not required for bargaining units containing both solely and jointly employed employees (300 N.L.R.B. 947 (1990). The Board allowed bargaining units combining employees solely employed by a "user" employer with employees jointly-employed by that user employer and a supplier employer (such as a staffing agency). The Board certified bargaining units combining these sorts of employees if the employees shared a community of interest (for example, see S.S. Kresge Co., 169 N.L.R.B. 442 (1968), enf'd. 416 F.2d 1225 (6th Cir. 1969)).
  • In the NLRA:
    • Section 9(b) provides that "The Board shall decide in each case whether, in order to assure to employees the fullest freedom in exercising the rights guaranteed by this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof" (29 U.S.C. § 159(b));
    • there is no definition for "employer unit" in Section 9(b);
    • there is no express prohibition against the NLRB certifying a bargaining unit of solely- and jointly-employed employees as appropriate for collective bargaining, as there is, for example, for a bargaining unit of guard and non-guard employees (29 U.S.C. § 159(b)(3)); and
    • the terms "employer" and "employee" are broadly defined in Sections 2(2) and 2(3) (29 U.S.C. §§ 152(2) and (3)).
  • In multi-employer bargaining, employers on their own initiative join an employer association and bargain through a mutually selected agent. An agency relationship cannot be compelled, so employers must consent to multi-employer bargaining. (See NLRB v. Truck Drivers Local Union No. 449, IBT, 353 U.S. 87, 94–96 (1957); Florida Power & Light Co. v. NLRB, 417 U.S. 790, 798, 803 & n.14 (1974); Charles D. Bonanno Linen Service, Inc. v. NLRB, 454 U.S. 404, 412 (1982)).
  • Lee Hospital:
    • did not address Board precedent permitting bargaining units that combined solely and jointly employed workers; and
    • stated a general rule that employer consent was required for employees from different employers to be included in the same bargaining unit.
    (300 N.L.R.B. 947 (1990).)
  • After Lee Hospital, the Board applied its rule to require employer consent for bargaining units with both solely and jointly employed employees.
  • In M.B. Sturgis, Inc. the Board:
    • read "employer unit" in Section 9(b) broadly to include a unit of employees performing work for one user employer;
    • distinguished a multi-employer bargaining unit (which would require employers' consent) from a bargaining unit comprised of workers employed solely by the user employer and workers jointly-employed by the user employer and supplier employer. The work in the latter situation was for one employer, the user employer; and
    • overruled Lee Hospital and held that employer consent was not required to certify bargaining units with both solely- and jointly-employed employees.
    (331 N.L.R.B. 1298 (2000).)
  • In Oakwood Care Center, the Board overruled Sturgis, and returned to the rule announced in Lee Hospital, requiring employers' consent to bargaining units comprised of a mix of solely- and jointly-employed employees (343 N.L.R.B. 659 (2004)).
  • The Board has the "responsibility to adapt the Act to the changing patterns of industrial life" (NLRB v. J. Weingarten, Inc., 420 U.S. 251, 266 (1975)).
  • The use of contingent and temporary workers has increased in recent years.
The majority overruled Oakwood Care Center and announced a return to Sturgis. It reasoned that:
  • The NLRA's text supports:
    • a broad interpretation of "employer unit;"
    • defining "employer unit" in Section 9(b) to include all employees who perform work for and are employed by a user employer, whether they are employed solely or jointly; and
    • assuring employees have the fullest freedom to exercise their NLRA rights. Applying the traditional multi-employer bargaining rubric (requiring consent in selecting a bargaining agent among entirely independent businesses, often in competition with each other) to temporary and contingent workers runs against that statutory aim.
  • The need for the NLRB to keep-up with modern staffing relationships between entities that are joint-employers of temporary and contingent under Browning-Ferris Industries of California, Inc. further supports the NLRB considering employees of user and supplier employers as an "employer unit" under the NLRA. (For more on Browning-Ferris, see Legal Update, NLRB Issues New Joint Employer Standard, Blends Economic Realities Elements into Control Test).
  • Sturgis:
    • more adeptly than Oakwood creates a framework for representation elections and collective bargaining for solely- and jointly-employed temporary and contingent employees for interrelated supplier and user businesses, such as a staffing agency and a user employer;
    • properly distinguishes solely- and jointly-employed temporary and contingent employees for interrelated supplier and user businesses from employees in a multi-employer bargaining unit who do not share a common user employer;
    • better "assure[s] to employees the fullest freedom in exercising the rights guaranteed by [the] Act" (Gallenkamp Stores Co. v. NLRB, 402 F.2d 525, 532 (9th Cir. 1968) (quoting Section 9(b))); and
    • is more consistent with the premise of national labor policy "that by pooling their economic strength and acting through a labor organization freely chosen by the majority, the employees of an appropriate unit have the most effective means of bargaining for improvements in wages, hours, and working conditions" (NLRB v. Allis-Chalmers Mf'g Co., 388 U.S. 175, 180 (1967)).
  • The increase in the temporary and contingent workforce exacerbates Oakwood's negative effects, which include the following:
    • restricting employees' freedom of association by requiring employer consent to units with both solely and jointly employed employees;
    • limiting the opportunity for contingent employees to be represented by a union; and
    • creating obstacles to employees' freedom to organize and bargain collectively.
The majority responded to arguments from Tradesman International, amici, and the dissent. It reasoned that:
  • If Oakwood remained the standard, joint employers of temporary or contingent workers would have the same bargaining conflicts invoked by the opponents of Sturgis. Each employer, the user employer and the supplier employer, "is obligated to bargain only over the employees with whom it has an employment relationship an only with respect to such terms and conditions which it possesses the authority to control" (Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186, slip op. at 2, 16 (Aug. 27, 2015)).
  • Any complexity in collective bargaining about bargaining units comprised of solely- and jointly-employed employees is not a consequence of Browning-Ferris or this decision; it is the consequence of the staffing and business relationships the user and supplier employers voluntarily created for themselves.
  • Returning to Sturgis does not:
    • undermine the prohibitions of Section 8(b) of the NLRA by interfering with an employer's right to select its collective bargaining agent and its grievance adjustor. Each joint employer may negotiate and administer any negotiated collective bargaining agreement free from union interference;
    • require an employer to bargain with respect to non-employees;
    • obligate the NLRB to approve of every petitioned-for bargaining unit combining solely- and jointly-employed employees. Solely- and jointly-employed employees must share a sufficient community of interest for the Board to approve of a combined bargaining unit and any conflicting interests of solely- and jointly-employed employees will bear out in in representation proceedings before they might prevent effective bargaining; or
    • create an unprecedented situation when laid-over the NLRB's analysis of joint-employment created in Browning-Ferris. Browning-Ferris was based on the NLRB's traditional joint-employment test which applied during much of the period leading up to Lee Hospital, when employer consent was not required for combined bargaining units.
In dissent, Member Miscimarra asserted, among other things, that:
  • The majority's holding, combined with the Browning-Ferris decision, creates an unprecedented and unworkable bargaining situation for employers who never previously would have been considered joint-employers. The majority ignores that:
    • Browning-Ferris expanded joint-employer status beyond what had existed any time before (see Browning-Ferris, 362 N.L.R.B. No. 186, slip op. at 25-26);
    • for the few years that Sturgis applied, joint-employment under the NLRA required actual, direct, and immediate control over material and non-routine employment terms and conditions; and
    • Section 9(b) caps the scope of an appropriate bargaining unit as one covering an "employer unit" and none of the early NLRB precedent cited for mixed solely- and jointly-employed units considered that issue.
  • The NLRA and policy considerations prevent the NLRB from approving a multi-employer bargaining unit without the employers' consent if one or more of the employers do not have an employment relationship with some of the employees in the unit.
  • The majority's contextual argument for expanding the definition of "employer unit" to something greater than an employer-wide bargaining unit, fails to acknowledge that its holding would require the so-called supplier employer to bargain with a bargaining unit comprised in part with workers with which it has no employment relationship. Even under Browning-Ferris's expanded concept of joint-employment, the supplier employer is not a joint-employer of workers solely employed by the user employer.
  • The majority exceeded its statutory mandate by issuing an advisory opinion. Shortly after the Board requested amici briefs, Tradesman International filed a motion to dismiss the petition, stating that it no longer:
    • performed work for Miller & Anderson, or
    • employed any employees within the proposed bargaining unit's geographical boundaries.

Practical Implications

Miller & Anderson revives a short-lived union-friendly precedent, Sturgis, as modified by a more recent union-friendly test for joint-employment status under Browning-Ferris. Based on Miller & Anderson, the NLRB will hold elections in petitioned-for-bargaining units comprised of both solely- and jointly-employed employees of a so-called user employer at a union's request if those employees share a community of interest. Previously, the NLRB would hold elections for proposed bargaining units of this kind only if the purported joint employers consented to the multi-employer bargaining that would result from a union victory in that election.
The holding has implications on union organizing and representation elections, including permitting unions to be more tactical when selecting:
  • Workers to organize and petition to represent.
  • How visible their organizing efforts may be to one or more prospective joint employers.
  • Which employer or employers to identify on election petitions.
The revised NLRB representation election procedures expedite the petition to election period. The "ambush" elections will be even more of an ambush for purported joint-employers that learn:
  • The NLRB considers it a joint employer.
  • A union petitioned for an election to represent workers it perceived to be employed solely by another employer.
Unions will undoubtedly name more purported joint-employers in petitions for elections. The decision provides unions with assurances that entities with "deeper pockets" will be made part of any resulting collective bargaining if the union wins the election.
The holding worsens the confusion and complications Browning-Ferris adds to collective bargaining. Employers held to be joint-employers under Browning-Ferris:
  • Must decipher the scope of their bargaining obligations, including the NLRB's murky explanation of control. They generally must identify which employment terms and conditions:
    • they possess the authority to control;
    • their counterpart joint employers possess the authority to control; and
    • they and their counterpart joint employers both possess the authority to control.
  • Must figure out ways to coordinate their collective bargaining in three or more directions or consent to multi-employer bargaining.
  • Will likely be embroiled in lengthy refusal-to-bargain unfair labor practice litigations tied to questions about which entity has authority to control which terms and conditions.
In light of Miller & Anderson, a subset of the joint employers will now be required to engage in some degree bargaining with a union about workers they do not employ, at least to the extent that negotiated terms for the solely employed workers affect or are tied to terms of the jointly employed workers. The decision effectively forces those employers to select a bargaining agent and engage in multi-employer bargaining or face multi-tiered bargaining in three (or more) directions.
The Board majority provides an advisory opinion that will not directly affect any of the petitioned-for employees in this case, but provides no guidance about how the collective bargaining necessitated by its decision could possibly bolster the institution of collective bargaining or, much less, work.