The National Labor Relations Board has gone back and forth on the issue of joint employment between client companies and staffing firms when it comes to union representation of temporary workers. The board is revisiting the issue again with a proposed rule, announced Sept. 6, that would ease the way for including temporary workers in union bargaining efforts alongside directly employed workers. Experts say it’s rare for contingents to be included in union bargaining, but it would raise huge issues if they were.
“There is no hiding that this is bad, and it’s going to be very difficult to manage if it happens,” said Eric Rumbaugh, a partner at law firm Michael Best.
Organizations using a contingent workforce would be in the position of having to bargain with workers employed by another company — workers with different retirement plans, health benefits, work policies, pay scales and more, according to Rumbaugh.
In last week’s “Notice of Proposed Rulemaking,” the NLRB stated its new rule would replace the current joint employer standard that took effect in April 2020 under the Trump administration. The current standard makes it more difficult to include temps in union bargaining agreements, while the NLRB’s new rule itself harkens back to the past. It would return to a more worker-friendly joint-employer standard established in the 2015 Browning-Ferris case, which involved a staffing buyer and contingent workers. The NLRB said the 2020 rule repeats the errors that the board corrected in Browning-Ferris. The NLRB announcement also follows a July 29 ruling by the US Circuit Court of Appeals for the DC Circuit that remanded the Browning-Ferris case back to the NLRB.
Under the proposed rule, “two or more employers would be considered joint employers if they ‘share or codetermine those matters governing employees’ essential terms and conditions of employment,’” according to the NLRB. These would include wages, benefits and other compensation; hours of work and scheduling; hiring and discharge; discipline; workplace health and safety; supervision; assignment; and work rules and directions governing the manner, means or methods of work performance.
In addition, the board proposes to consider “both direct evidence of control and evidence of reserved and/or indirect control over these essential terms and conditions of employment when analyzing joint-employer status.”
The proposed NLRB rule would confirm the fact that joint employment is endemic in staffing relationships, said George Reardon, an attorney with vast experience in the staffing industry.
“It may become a model for regulations in other legal areas, and it sets the stage for NLRB rulemaking to facilitate union bargaining units that combine the workforces of staffing firms and their clients,” Reardon said.
Joint employment can’t be nullified by contracts, he said.
“It springs from the working relationships of the parties,” Reardon continued. “Staffing firms and their clients should manage it by allocating their responsibilities. Clients shouldn’t use or take comfort from frequently used contract provisions that saddle staffing firms with liability for every consequence of joint employment. Those provisions may inspire neglect of employment issues and are unlikely to be honored by courts or government agencies.”
Rumbaugh said the proposed rule comes amid a slight uptick in private-sector unionization and a current presidential administration that is pro-union.
Still, collective bargaining with temps alongside directly employed workers has rarely happened in the past — even when the Browning-Ferris standard was in place, he said. However, the time to act is now for companies concerned they may face unionization efforts. The No. 1 reason workers join a union is the perception of arbitrary or unfair front-line management and discipline, not wages, according to Rumbaugh. Companies need to take stock of how workers are being treated and take action if necessary in order to cut the risk of unionization. The culture piece is the most important. And while unionized workers don’t necessarily receive higher pay, he said companies must also make sure they are not paying below market. This must be done now before management hears of someone handing out union cards.
“The time to fix the roof is now. If you wait until it’s already raining, it’s too late,” Rumbaugh said.
Increasingly Complex Relationships
NLRB Chairman Lauren McFerran promoted the proposed rule in last week’s announcement.
“In an economy where employment relationships are increasingly complex, the board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the goals of the National Labor Relations Act,” McFerran said.
“Part of that task is providing a clear standard for defining joint employment that is consistent with controlling law,” she continued. “Unfortunately, the board’s joint employer standard has been subject to a great deal of uncertainty and litigation in recent years. Rulemaking on this issue allows for valuable input from members of the public that will help the board in its effort to bring clarity and certainty to these significant questions.”
McFerran, along with board members Gwynne Wilcox and David Prouty, proposed the new joint-employer standard. Board members Marvin Kaplan and John Ring dissented.