Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The National Labor Relations Board (NLRB) in Oakwood Care Center, 343 NLRB No. 76 (Nov. 19, 2004), recently held, in a 3-2 decision, that bargaining units combining employees solely employed by a user employer with employees jointly employed by the user employer and a supplier employer (e.g., employees supplied by a temporary employment agency) are appropriate only upon the consent of all parties. This decision overruled M.B. Sturgis, 331 NLRB 1298 (2000), in which the board permitted “mixed” bargaining unit employees of jointly employed and solely- employed employees if the two groups had a “community of interest,” even over the objections of both employers, and returned to the long-standing pre- Sturgis precedent that such units constitute multiemployer units, which may be appropriate only upon the consent of all parties. See Greenhoot Inc., 205 NLRB 250 (1973) and Lee Hospital, 300 NLRB 947 (1990). Section 9(b) of the National Labor Relations Act (NLRA) provides that “the Board shall decide in each case whether, in order to assure the employees the fullest freedom in exercising their rights guaranteed by the Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plan unit, or subdivision thereof.” Of these permissible categories of units, the broadest is the “employer unit”; thus the text of the NLRA reflects that the board is not authorized to direct elections in units encompassing the employees of more than one employer. For decades prior to Sturgis, the board decisions in Greenhoot Inc. and Lee Hospital provided the controlling precedent regarding a unit that would combine groups of employees who had an employer in common but did not have identical employers because one or more groups had an additional, joint employer not shared by the others. In such a case, the board relied on the principle that involuntary combinations of those employees were inappropriate bargaining units. See Oakwood Care Center, 343 NLRB No. 76 slip op. at 1. Thus, in the period between Lee Hospital and Sturgis, the NLRB refused to combine jointly-employed employees with solely-employed employees, absent the consent of all parties, including both employers. ‘Sturgis’ ruling in 2000 allowed for mixed units In Sturgis, the board overturned these settled principles and held that unions can organize mixed units combining jointly-employed and solely-employed employees, even if neither the supplier nor the user employer consented to multiemployer bargaining. In a 3-1 decision, the board in Sturgis reasoned that, in situations involving a single supplier employer (e.g., a temporary agency) and a user employer, both jointly- and solely-employed employees performed all of their work for the user employer and all of the employees in the unit were employed, either solely or jointly, by the user employer. Thus, a unit of employees performing work for one user employer is not one involving a multiemployer unit, but simply “an employer unit” as that term is used in � 9(b) of the NLRA, even when some of the employees were jointly employed by the supplier employer and the user employer, while others were solely employed by the user employer. The majority in Sturgis emphasized that combined units of jointly- and solely- employed employees would not always be found appropriate. Rather, the board would apply its “community of interest” test to such proposed units to determine whether a sufficient mutuality of interest existed between jointly- and solely- employed employees to include them in the same unit. Then-member J. Robert Brame III dissented. Reviewing practical and business realities, the statutory language and the legislative history of the NLRA, Brame identified several problems inherent in the majority’s decision, including potential conflicts of interest between jointly- and solely-employed employees, conflicts of interest among the various employers and special problems in the accretion context. The latter problem identified by Brame actually arose in Gourmet Award Foods, 336 NLRB 872 (2001). There, a user employer expanded its use of jointly- employed temporary employees in response to increased business, and the union demanded that the employer apply the collective bargaining agreement (covering employees solely employed by the employer) to these temporary employees. The board agreed, and automatically added the jointly-employed temporary employees into the unit of solely-employed employees, without any vote by either employee group. While acknowledging that the employer had no reason to expect that the temporary employees supplied by other employers would be included in the existing bargaining unit, the board nevertheless proceeded to find that those temporary employees were included in the unit because the unit definition did not expressly exclude them. The board then held that the employer was required to apply its collective bargaining agreement to the temporary employees “only with respect to those terms that it [the user employer] controlled.” In Oakwood Care Center, Chairman Robert J. Battista and members Peter C. Schaumber and Ronald E. Meisburg found that solely-employed employees, on the one hand, and jointly-employed employees, on the other hand, are employees of different employers and that their inclusion in the same bargaining unit creates a multiemployer unit because one employee group has its terms set by the joint-employer entity and the other employee group has its terms set by only one of the employers. The majority found that the novel approach adopted in Sturgis, “however well intentioned, was misguided both as a matter of statutory interpretation and sound national labor policy.” 343 NLRB No. 76 slip op. at 4. As to the matter of statutory interpretation, the Oakwood Care Center majority reasoned that the critical point is that in the Sturgis unit, the jointly- employed group of employees had its terms set by some combination of two employers, the supplier and the user, while the solely-employed group of employees had its terms set only by the user employer. Board found that combined unit contravenes NLRA The majority stated that “the entity that the two groups of employees look to as their employer is not the same” and “no amount of legal legerdemain can alter this fact.” Id. Accordingly, they concluded that permitting a combined unit of solely- and jointly-employed employees contravenes � 9(b) by requiring different employers to bargain together regarding employees in the same unit. Recognizing Brame’s dissent in Sturgis, the majority also observed that the policy implications of Sturgis were “problematic” because the bargaining structures contemplated in that decision gave rise to significant conflicts among the various employers and groups of employees participating in the process, precisely the type of conflict that � 9(b) was designed to avoid. Id. In addition, they observed that Sturgis created the risk that jointly-employed employees can be accreted into an existing unit of employees solely employed by the user employer and be covered by an existing collective bargaining agreement that neither the supplier employer nor the jointly-employed employees had any input in negotiating. Members Wilma B. Liebman and Dennis P. Walsh dissented, arguing that the board “effectively bar[red] yet another group of employees-the sizeable number of workers in alternative work arrangements-from organizing labor unions.” Id. at 6. They argued that the Sturgis decision properly took economic realities into account and that the majority’s decision is contrary to the statutory language in � 9(b) “to assure to employees the fullest freedom in exercising the rights guaranteed by the [NLRA],” which in their view is especially problematic given the increased use of contingent labor. Id. at 11. The dissent also criticized the majority for not supporting its policy rationale with any empirical support. According to the dissent, there is no evidence that any Sturgis unit has created conflicts among the various employers and groups of employees or disrupted a bargaining process. Also, any such conflicts, they argued, would not differ from the conflicts that have always existed in any setting where joint or multiple employers bargain jointly or even (with respect to interemployee conflicts) in the setting of a single employer. The jointly employed can organize among themselves Contrary to the dissent, however, overturning Sturgis does not prevent jointly-employed employees from organizing because jointly-employed employees will normally constitute an appropriate unit separate from the solely- employed employees of one of the joint employers. Overturning Sturgis will, however, prevent jointly-employed employees from being organized based solely on the organizing efforts of the user-employer employees when the jointly- employed employees themselves do not desire representation. Maintaining these units as separate, as opposed to the mixed units previously permitted on Sturgis, will also simplify bargaining relationships because conflicts of interest between the solely- and jointly-employed employees, as well as those between the two employers, is eliminated. Also eliminated is the risk created by Sturgis that jointly-employed employees will be accreted into an existing unit of employees solely employed by the user, and be covered by an existing collective bargaining agreement that neither the supplier employer nor the supplier employees had any input in negotiating. Kenneth R. Dolin is a partner in the labor and employment practice group of Chicago’s Seyfarth Shaw.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.