July 12, 2016

NLRB, Seeking to Connect to "Reality of Today's Workforce," Changes Organizing Standard

The National Labor Relations Board (NLRB) continues to change the rules governing the relationships between employers, employees and unions in an effort to give unions new ways of organizing. On July 11, 2016, the NLRB issued its decision in Miller & Anderson, Inc., which now allows a union to organize a group of employees where some employees are directly employed by an employer, but others are jointly employed with another employer (like a staffing agency). This change fits into what appears to be a long-range strategy at the NLRB to allow new forms of union organizing involving employees who are employed by more than one entity.

What Changed?

When a union seeks to organize employees at a particular employer, it must identify which classifications of employees will form an appropriate "bargaining unit" that the union can represent. Since 2004, the NLRB has not allowed unions to force organizing in a bargaining unit that mixes direct employees with employees who are employed by "joint employers" — two or more employers who each have some control over the employees. Doing so required the consent of all employers involved. Now, after Miller & Anderson, a union does not need employer consent to try to organize a unit that mixes direct employees with joint employees.

The Bigger Picture

The NLRB is concerned that workplaces have changed in ways that make its former interpretations of the National Labor Relations Act (NLRA) obsolete. In the Miller & Anderson decision, it cites statistics about the increasing number of workers who are employed through temporary agencies, and states that temporary employment has expanded into a much wider range of occupations. It claims that it has a "responsibility to adapt ... to the changing patterns of industrial life." That rationale draws a direct link between this case and the landmark 2015 decision Browning-Ferris Industries of California. In that case, citing the same concerns and statistics, the NLRB loosened the standard for finding a joint employer relationship. Before Browning-Ferris, companies were joint employers only if they each exercised direct and immediate control over the employees. Now, the NLRB may find a company to be a joint employer even if it does not exercise control in a direct and immediate way. The NLRB may also find a company to be a joint employer if in practice it does not exercise any authority at all, as long as it possesses the authority to control employees.

The NLRB's focus on joint employment is paralleling, or maybe prompting, changes to other federal regulations. In January, the Administrator of the Department of Labor Wage and Hour Division issued a new interpretation of joint employment under laws enforced by that agency, including the Fair Labor Standards Act. Under the Administrator's interpretation, joint employers are jointly and severally liable for violations of those laws. Additionally, an employee's activities at various joint employers are aggregated. Importantly, this means that the hours an employee works at two or more employers can be added together for purposes of calculating overtime owed to that employee.

What Is Next?

These are still live issues. The United States Court of Appeals for the District of Columbia Circuit is currently considering an appeal of the NLRB's Browning-Ferris decision. Miller & Anderson will likely also be appealed to the federal courts. In Congress, the House Appropriations Committee is marking up a proposal to prohibit the NLRB from using its funds to "change the interpretation or application of the standard to determine whether entities are ‘joint employers'" from what the standard was as of January 1, 2014.In the Senate, Lamar Alexander (R-TN) has introduced a bill to legislatively undo the Browning-Ferris decision. Meanwhile, the NLRB is litigating a high-profile case against a company that it claims is a joint employer: McDonald's. The NLRB alleges that McDonald's corporate is liable for violations of the NLRB, even where the alleged unlawful conduct occurred at local franchises. A finding that McDonald's and its franchises are joint employers, coupled with the new rule of Miller & Anderson, could aid in nationwide union organizing of the fast-food chain. Employees have already laid the groundwork for organizing — in fact many of the allegations of the current case against McDonald's involve the well-publicized fast food worker protests of recent years.

Future NLRB cases will likely extend the new standards to other forms of business relationships. Joint employment can come in many forms, including not just temporary agencies but also other staffing and subcontracting arrangements, and, as the NLRB argues in the McDonald's case, franchising. The NLRB is looking at a wide range of business relationships and using the joint employer doctrine as a way to apply the NLRA to any sort of arrangement where more than one entity has control over employees. As it stated in Miller & Anderson, "[t]o the extent that multiple employers will be required, as a practical matter, to cooperate or coordinate in bargaining, that is a function of the freely chosen business relationship between user and supplier employers that defines all joint-employer situations."

Employers may need to re-examine business relationships in which more than one entity has the authority to exercise some control over employees, regardless of whether the entities involved are currently unionized. We at Faegre Baker Daniels will continue to follow the NLRB's expanding use if its joint employer doctrine and assess the impact it has on employers.

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