NLRB Ruling on Mixed Bargaining Units Leaves Questions

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By Lawrence E. Dubé

July 19 — The National Labor Relations Board made a major change in U.S. labor law when it decided that a single bargaining unit could encompass both a company’s own employees and workers provided by another organization, but the impact of the ruling remains to be seen, management lawyers told Bloomberg BNA.

In Miller & Anderson, Inc. , 2016 BL 201145, 364 N.L.R.B. No. 39 (2016), the board said it must adapt to changing patterns of industrial life.

But attorney Michael Lebowich told Bloomberg BNA July 15 the board majority took a “very impractical view of the world” in reaching a decision that will make bargaining more complicated for employers and unions.

He said the ruling should please labor unions by allowing them to get more companies “on the hook” for bargaining over labor terms for contingent workers. Lebowich is a partner in Proskauer Rose LLP and co-head of the firm's labor-management relations group.

But attorney James M. Stone told Bloomberg BNA July 15 it will likely take unions time to react to the ruling with strategies for organizing. Stone is managing principal of Jackson Lewis P.C.'s Cleveland office.

Ruling Represents 360-Degree Turn

The board's ruling represents a return to a decision that was overruled more than a decade ago.

In M.B. Sturgis, 331 N.L.R.B. 1298, 165 LRRM 1017 (2000), the NLRB held that it was permissible, without employer consent, to have a bargaining unit combining temporary workers jointly employed by a supplier employer and a user employer along with other workers who were solely employed by the user employer.

Four years later, in H.S. Care, L.L.C., d/b/a Oakwood Care Center, 343 N.L.R.B. 659, 176 LRRM 1033 (2004), a divided board voted to overrule Sturgis.

However, on July 11 in Miller & Anderson , Chairman Mark Gaston Pearce and Members Kent Y. Hirozawa and Lauren McFerran overruled Oakwood Care and returned to Sturgis, finding “it better serves the purposes” of the National Labor Relations Act. Member Philip A. Miscimarra dissented.

Board Majority Sees Feasible Bargaining

In Miller & Anderson, the board majority said requiring jointly employed workers and those solely employed by one company to organize separately “diminishes the bargaining power” of both employee groups.

The board said it was unpersuaded by arguments that bargaining by user employers and provider employees for a “ Sturgis unit” would be unworkable or would lead to inter-company disputes.

“Allowing jointly employed employees to be included in a bargaining unit with their solely employed coworkers imposes no additional burden on the supplier employer because its bargaining obligation extends only to the employees it jointly employs and only with respect to such terms and conditions which it possesses the authority to control,” Pearce, Hirozawa, and McFerran said.

The board majority found that the potential for disputes between employers “could be said to exist in every case involving joint employer bargaining, which has long been sanctioned by the Board and the court.”

Dissent Predicted ‘Uncertainty and Instability.'

Dissenting from the board's ruling, Miscimarra wrote a lengthy critique of the majority opinion.

Dismissing the majority's argument that the board followed Sturgis for four years without apparent problems in labor-management relations, he warned that because the board adopted “expansive joint-employer standards” in Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186, 204 LRRM 1154 (2015), parties will now find it difficult to predict “whether, when or where this new type of multi-employer/non-employer bargaining will be required by the Board.”

Miscimarra acknowledged the majority's argument that employers negotiating in a combined unit won't have an obligation to bargain with a union about employees who are outside their own actual or potential control. But there “will be greater uncertainty and instability based on each bargaining unit’s inclusion of some employees who lack any employment relationship (even an ‘indirect' one) with a business entity, or multiple business entities, that must nonetheless participate in negotiations,” he wrote.

The dissent said the NLRB is providing employers or unions with “no clear answer” on practical issues, including how the management entities will decide which has responsibility for bargaining about particular topics, and how they will resolve disputes on the management side of a bargaining relationship.

Contractor Relationships ‘Extremely Complicated.'

Lebowich said the potential for management conflict after Miller & Anderson isn't merely hypothetical.

Staffing companies and users of the labor they provide have “very, very different interests,” but now—just because they're doing business together—they have to bargain together, he said.

A contractor that does business in different locations with multiple users may find itself linked to multiple bargaining relationships between users and labor organizations, Lebowich said.

That kind of linkage will make it “extremely complicated” for contractors, in particular those that have counted on their freedom to move employees from assignment to assignment, he predicted.

Organizing May Be Easier, But Impact Unclear

The International Brotherhood of Teamsters issued a blog posting the day after the board's announcement of Miller & Anderson , stating the ruling will make it “easier to organize workers” and to counter “companies [that] have been tamping down on worker salaries and benefits by subcontracting some of their work out to outside firms.”

Several management lawyers told Bloomberg BNA they believe the board majority's goal was to make organizing easier, but that the impact of the ruling remains unclear.

Stone said the board clarified in Miller & Anderson and in Browning-Ferris that expanding collective bargaining to more employees is “part of their mission.”

When the NLRB decided M.B. Sturgis in 2000, “lots of people” expected an upturn in union organizing that never materialized, Stone said.

The American Staffing Association issued a statement on Miller & Anderson July 12 that appeared to support Stone's assessment. ASA's general counsel Stephen Dwyer said “prior NLRB decisions that effectively made it easier for temporary workers to unionize did not demonstrably result in increased unionization of such workers, and that largely remains the case today.”

Appropriate Unit Standards Still Key

Steven M. Bernstein, regional managing partner at Fisher & Phillips in Tampa, Fla., told Bloomberg BNA July 15 he believes the only employers threatened by the M.B. Sturgis decision during the four-year period before it was overruled were “sloppy” in their employment practices.

The board has done nothing to alter its long-standing community-of-interest analysis in representation cases, Bernstein said.

The agency's ruling in Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. No. 83, 191 LRRM 1137 (2011), was certainly significant, but that case is often cited to support an employer's argument for a union larger than one sought by a union, Bernstein said.

In a “ Sturgis unit,” the lawyer said, an employer will likely be arguing for a smaller unit, not a larger one.

Self-Audit Suggested for Employers

Patricia A. Smith, a partner in Ballard & Spahr's New Jersey office, told Bloomberg BNA July 15 that although she agrees the Miller & Anderson decision was part of an NLRB effort to make it easier for unions to succeed in organizing, “there is an opportunity for employers to review their employment practices” and show that a combined unit of jointly employed and solely employed workers is not appropriate.

There will likely be differences in the pay and benefits of employees who are solely employed by a “user” employer such as a manufacturer, and those provided by a staffing company or temporary agency, Smith said. Employers can certainly argue that those differences are relevant to determining whether a combined unit is appropriate, she said.

However, there are a number of other factors the board may consider in conducting the community-of-interest analysis that is required for a combined unit, Smith said. Those factors include the nature and type of supervision of the different groups; the degree and frequency of contact between employees; scheduling; and the types of job functions that a “user” employer assigns to its own employees and those it gives to workers it jointly employs with a labor provider.

Many of those factors are within management's control and can be adjusted before a legal dispute arises, Smith said.

The NLRB's traditional community-of-interest standards are “alive and well” after Miller & Anderson , but employers and unions will have to wait for more decisions to see how the board applies its standards to the increasing variety of multiemployer workplaces, Smith said.

To contact the reporter on this story: Lawrence E. Dubé in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

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