Confusion on the Horizon: NLRB’s About-Face on Organizing Staffing Firm Workers

CLIENT ALERT – July 11, 2016NLRB

Earlier today, the National Labor Relations Board (“NLRB”) issued a significant decision that reverses long-standing NLRB precedent and affects both temporary staffing companies and employers that partner with temporary staffing companies. Miller & Anderson, NLRB Case 05-RC-079249. Prior to today’s decision, if a union wanted to represent workers that were employed by a staffing firm (the so-called “supplier employer”) and workers that were employed by the staffing firm’s client (the so-called “user employer”) in the same bargaining unit and under the terms of the same union contract, then the union needed both employers to consent to such a model.

After today’s decision, unions will no longer need employer consent when seeking to represent workers in a single bargaining unit that combines W-2 employees of the “user employer” and W-2 employees of the “supplier employer” as long as the user employer has any authority to control the terms and conditions of the supplier employer’s workers. Under the NLRB’s recently broadened definition of joint employment in Browning-Ferris, most traditional temporary staffing arrangements will result in the user employer/client being found a joint employer of the staffing firm workers because the client no longer needs to actually exercise authority over the workers.

In such situations, both the client/user employer and the staffing firm/supplier employer will have a legal obligation to engage in collective bargaining with the union over the wages, benefits and other terms and condition of employment for such workers. The NLRB’s majority opinion seeks to downplay the confusion such multiple-employer bargaining will cause by noting that “each employer is only obligated to bargain over the terms and conditions which it has the authority to control”.

Despite the NLRB’s assurance that no confusion will result from this decision, we believe the contrary to be true. As stated in the dissenting opinion, it is very unclear how the various employers involved in such arrangements will: (1) determine which entity will be required to bargain over which subjects regarding which employees; (2) resolve disputes when the employer entities cannot agree; (3) apply terms of existing union contracts to temporary staffing workers; and (4) determine how existing contracts between the employer entities will affect or control union bargaining. If, for example, workers from the staffing firm are willing to give up flexibility on certain work rules in exchange for higher wages, the staffing firm and its client will likely have conflicting responses and priorities.

Employers and Employment Models Most Likely Affected: We expect unions to first focus on employers that already have union-represented employees and that partner with staffing firms to provide additional workers in similar positions. We also expect unions to explore organizing efforts at locations where a staffing firm client without union-represented workers relies on a significant number of temporary staffing workers. Staffing firms and their clients in either scenario should carefully review today’s decision and monitor for signs of organizing activity.

Aside from the confusion generated by this decision, staffing firms will experience new compliance and/or legal expenses related to these new employer obligations and these union-represented employees, including the costs of collective bargaining, grievance and arbitration proceedings and similar matters.
Coupled with the NLRB’s Browning-Ferris decision last year, in which the NLRB dramatically expanded the circumstances in which the client of a staffing firm will be found a “joint employer” of the staffing firm’s workers, this decision is very significant.

Clark & Gotzler attorneys stand ready to discuss any concerns or questions that you may have.