October 20, 2019

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Stuck With It: Labor Board Forces Employers to Recognize Bargaining Units that Contain Employees of Two or More Separate Employers

Returning to a decision it made 16 years ago (but was overturned just 4 years after that), the National Labor Relations Board has once again ruled that it will certify a bargaining unit containing individuals from two or more separate employers without those employers’ consent. In Miller & Anderson, Inc., Case 05–RC–079249 (July 11, 2016), the Board returns to the standard that it created in 2000, in M. B. Sturgis, Inc., 331 NLRB 1298 (2000) (“Sturgis”) and then quickly overturned in Oakwood Care Center, 343 NLRB 659 (2004).

Except for the four years when Sturgis applied, the Board has consistently held that both employers must consent for the creation of bargaining units that combine employees of the two organizations.  This issue most commonly arises in joint employer situations, where a union seeks to represent  a group of similarly situated employees, but some of the employees are solely employed by a single employer and others are deemed to be jointly employed by two employers.    For example, a union could seek a bargaining unit comprised of both regular employees of a company and individuals engaged through a staffing agency.  This may also arise where a company subcontracts out certain services but may have employees on staff who share a community of interest with the individuals employed by the subcontractor.

In its decision, the Board gave two primary reasons for returning to Sturgis.  First, the Board concluded that a unit of both joint and single employed employees “logically falls within the ambit of a 9(b) employer unit” given the breadth of the statutory definition of the terms “employer” and “employee” and the Board’s statutory obligation to “to assure to employees the fullest freedom in exercising the rights guaranteed by th[e] Act[.]” Second, it found that the Sturgis rule does more to effectuate the fundamental policies of the Act. Among other things, the Board noted that the Sturgis rule is “manifestly more responsive . . . to assure to employees the fullest freedom in exercising the rights guaranteed by the Act.” The Sturgis rule, it reasoned, allows employees to best exercise their right to self-organization because it does not require them to obtain employer permission before organizing in their desired unit.

Member Miscimarra penned a passionate dissent. After renewing his objection to the Board’s recent expansion of the joint-employer doctrine in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (August 27, 2015) (“BFI”) generally, he outlined several concerns with the majority opinion. He posited that Sturgis units will result in confusion and instability, pose significant administrability problems, and runs contrary to the Act’s requirements and sound policy considerations. He was especially concerned that a return to Sturgis would result in employers being forced to engage in multi-employer bargaining without their consent and without taking into account any potential conflicts of interest. Additionally, he was disturbed by the fact that the Board, under Sturgis, could force employers to bargain with individuals with whom they have no real employment relationship.

The majority decision attempted to address some of the dissent’s concerns, suggesting that Sturgis units are different than traditional multi-employer bargaining units because in multi-employer bargaining units there is “no common user employer,” so conflicts of interest, and other concerns, should not be significant.

The decision is the Board’s logical, yet troubling, progression after the Board’s holding last year in BFI which broadened the standard for assessing joint-employer status under the National Labor Relations Act.  Between BFI and Miller, all companies that supply or purchase services from another entity with absolutely no expectation of creating any potential bargaining relationships, could easily be subjected to unexpected long-term obligations with unions and their business partners – a factor that should be taken into consideration in entering into, renewing, or continuing any such relationships.

© 2019 Proskauer Rose LLP.

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About this Author

Michael J Lebowich, Labor, Employment, Attorney, Proskauer, Law Firm
Partner

Michael Lebowich is a Partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He...

212-969-3217
Corinne Osborn, Proskauer, labor lawyer, employment attorney, state litigation, wage hour audits
Associate

Corinne M. Osborn is an associate in the Labor & Employment Law Department and a member of the Labor-Management Relations and Employment Law Counseling & Training Groups. She represents clients in federal and state litigations, arbitrations, and administrative proceedings, and counsels employers on a wide range of labor and employment matters.

Corinne acts as the primary spokesperson in collective bargaining negotiations, and counsels clients on labor strategy, day-to-day contract administration and labor issues. She also has significant experience conducting wage/hour audits and investigations. Corinne has counseled clients with respect to a variety of employment matters, including employment discrimination, wage and hour issues and reductions in force. Her clients encompass a wide variety of industries, including newspaper and publishing, television, performing arts, financial services, higher education, and utilities.

212-969-3342
Rebecca Sivitz, Proskauer Rose, Discrimination Attorney, Workplace Harassment,
Associate

Rebecca Sivitz is an associate in the Labor & Employment Law Department. She represents and advises employers in a wide range of employment matters, including discrimination, class action, wage and hour disputes, and traditional labor law. She also has considerable experience with complex restrictive covenant cases on both the plaintiff and defense sides.

As part of her practice, Rebecca represents employers in federal and state courts, before administrative agencies such as the Massachusetts Commission Against Discrimination, Equal...

617-526-9600