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Temps May Have Right to Unionize with Your Regular Employees

NLRB ruling means another risk for employers using contingent workers

By Kenneth R. Plumb (KPLUMB@BMD-LAW.COM)
Attorney in the labor and employment law practice of Berchem, Moses & Devlin PC in Milford, CT; www.bmd-law.com
(Reprinted from the Nov. 2000 CBIA News)

This article is intended to provide general information only. It is not intended as legal advice or as a solution to an individual problem. You are encouraged to consult with appropriate legal counsel prior to relying on this document in whole or in part.

     The use of temporary employees has never been without risk. Just ask Microsoft, which unsuccessfully sought to exclude temporary workers and independent contractors from various employee benefits during the past few years. Using temps, however, has just become riskier for employers.

     The National Labor Relations Board (NLRB) recently ruled, in the case of M.B. Sturgis Inc., that temporary employees who are jointly employed by a "user" employer and a "supplier" employer may be included in the same bargaining unit with employees who are solely employed by the user employer.

Ruling addresses rise of contingent workforce
Employers have increasingly turned to temporary employment agencies to supply a significant portion of their staffing needs, whether to deal with the current shortage of skilled and experienced workers or to reduce their employment costs, minimize employee liability or satisfy business fluctuations. Indeed, in reaching its decision in the Sturgis case, the NLRB cited a recent study by the Bureau of Labor Statistics that "contingent" and "alternative employment arrangements" accounted for as much as 4.3% of all employment in February 1999, or 5.6 million employees.

     During the past several years, therefore, the courts and administrative agencies have had to grapple with the application of federal and state labor laws to the so-called "contingent workforce." The Equal Employment Opportunity Com-mission (EEOC) issued a 1997 policy guidance that generally confirmed that both the supplier and user employer could be liable for any violation of federal employment discrimination statutes, such as Title VII. It was only a matter of time before the NLRB addressed the rights of temporary employees under the National Labor Relations Act.

Combined bargaining unit not always appropriate
     The NLRB’s decision actually arose from two cases in which the board had to evaluate the appropriateness of proposed bargaining units involving temporary employees. In one case, a regional director found appropriate a proposed unit consisting of all employees employed by an employer (M.B. Sturgis) with the exception of 10 to 15 temps used by the company and supplied by a temporary employment agency. In the other case, an acting regional director dismissed a petition by a local Teamsters’ union that wanted an employer’s bargaining unit to include employees of a temporary agency that had provided services to the employer.

     Consolidating the cases, the NLRB ruled that temporary employees of an employment agency (the "supplier") may unionize with full-time employees of a customer (the "user"). As a rationale for this position, the NLRB noted that all of the work is being performed for the user employer, and that all of the employees in the unit are employed either solely or jointly by the user employer.

     The NLRB, however, acknowledged that a combined bargaining unit is not appropriate in every situation where temporary employees are used. To determine if a combined unit is appropriate, the NLRB must first determine whether both the supplier and the user entities are "joint employers" of the temporary workers or whether the temps are solely employed by the temporary employment agency. This determination hinges on various factors, such as who assigns and directs the work to be done, who oversees the work, and who has the authority to discipline the temporary employees.

     In the consolidated cases, the NLRB concluded that both employers were joint employers of the temporary employees. Having decided this, the majority then overruled prior NLRB precedent by ruling that the consent of the two employers is not a prerequisite for including their respective employees in the same bargaining unit. The board said, however, that if a requested bargaining unit involves temporary workers assigned to several different user employers, it would not be considered appropriate without employer consent.

     In its decision, the NLRB also rejected the contention that "meaningful bargaining" could not take place because employers would be compelled to bargain at the table over employees with whom they have no employment relationship. The board said that each of the employers would be obligated to bargain only over the employees with whom it has an employment relationship and only to the extent it controls or affects their terms and conditions of employment. The board also expressed confidence that any bargaining conflicts among the solely employed and jointly employed employees, or even among the user and supplier employers, can be resolved at the bargaining table.

     Finally, the NLRB said that even though it is now possible for temporary employees of a supplier employer to be included with employees of the user employer, a petitioned-for bargaining unit must still constitute an appropriate bargaining unit under the board’s traditional community-of-interest test.

     Consequently, the NLRB sent the cases back to their respective regional boards so that the community-of-interest test could be applied.

Implications for employers
     Temporary employees have always had the opportunity to unionize the agency for which they work. Now, temporary employees and employees working solely for the user employer can be included in the same bargaining unit. This significantly increases the likelihood of either group of employees becoming unionized.

     Temporary employees can now seek union representation with the employees of the user employer, either by joining with these employees to petition for a union or by being added to an existing unit. In either case, the result could significantly increase union membership in the workplace.

In addition, the Sturgis decision could play havoc with existing contracts between employment agencies and their customers. In light of the decision, you may want to review any such contracts you have.

     It’s important to note that the NLRB’s Sturgis decision is unlikely to be the last word on this issue. The decision was issued by only a 3-1 majority, with a fifth board member abstaining due to a conflict with one of the parties. Thus, as is often the case, a change in the board’s membership could result in a different outcome. In addition, the NLRB decision may be appealed to the Circuit Courts of Appeals, and circuit courts have often disagreed with the NLRB on significant issues. Finally, given the increased significance of the contingent workforce, it is quite likely that the U.S. Supreme Court will ultimately address the issue.

For the time being, however, the NLRB has identified yet another potential risk for employers relying on the contingent workforce to meet their production and operational needs.

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