Article Kirkland & Ellis LLP

Unionization of Temporary Workers

In two cases that have received substantial media attention, the National Labor Relations Board recently issued a consolidated decision that is significant for employers who use or supply temporary workers. M. B. Sturgis, Inc. and Jeffboat Division, American Commercial Marine Services Co., 331 NLRB No. 173 (August 25, 2000). Reversing established precedent, the Board in a split decision decided that temporary employees who are jointly employed by temporary service suppliers and their user-customers may be included in union-represented bargaining units of employees employed solely by the user-customers. In the past, the NLRB has barred such employee combinations as "multi-employer" bargaining units without the consent of both employers, i.e., both supplier and user. The Board majority now reasons that multi-employer bargaining does not result from combinations of "joint" employers. In Sturgis, the union sought to exclude temporary employees in a collective bargaining unit it was seeking to organize, and Sturgis sought to include them without the consent of the temporary service provider. In Jeffboat, a union sought to include automatically, i.e., sought to "accrete," temporary employees into an existing bargaining unit over the objection of Jeffboat and its temporary service provider.

The Board's policy reversal has been praised by unions as facilitating unionization of temporary workers. Management views the reversal as complicating the use of temporary workers that have provided needed flexibility in competitive job and product markets.

Ironically, the Board's attempt to balance competing interests is likely to bring more confusion than clarity. First, the Board's new approach will have to be tested in the courts, and probably ultimately the U.S. Supreme Court. This will take time, and in the meantime this area of labor law will remain unsettled. Second, the Board's decision is bound to complicate, not streamline, Board-conducted representation elections. Additional pre-election hearings will be required to determine joint employer status, as well as the degree of "community of interest" that exists between jointly-employed temporary employees and employees employed solely by user employers. Those pre-election hearings will take time with ample room for gamesmanship by employers and unions.

Third, and perhaps most important, combinations of jointly and singly employed workers create difficulties for management and union negotiators, and particularly for temporary service providers who have no employment relationship at all with their customer-employer's residual workforce. The NLRB envisions that employers so joined will be obligated to bargain only over employment terms and conditions of the employees each employs, either jointly or singly. This is bound to cause confusion at the bargaining table where disputes already are common over which subjects require bargaining and which do not. Similar confusion also will result over which of the respective employers a union may strike. It is unlawful for unions to compel employers to bargain over terms about which they have no obligation to bargain. Ironically, these practical difficulties may lead to more, not less, friction at the bargaining table, as well as to the undermining of secondary boycott protections since distinctions and separations between primary and secondary employers will be blurred.

The practical effects of the Board's decision for the majority of employers, those who are not unionized, probably will not be great. The Board decision does not permit unions to single out user-employers' temporary employees for representation. Unions will still have to organize the bulk of a non-union employer's workforce before temporaries, even those who are jointly employed, are likely to become a critical issue. And, if anything, the presence of temporaries is likely to make union organizing more complicated and difficult. Non-union employers certainly are in a position to determine the number and functions of temporaries, and to permit or prevent their joint employment. Trickiest for non-union employers will be last minute adjustments in the number and duties of temporaries after union organizing begins or after a union election petition has been filed. Such adjustments during the pre-election period could impermissibly interfere with an election and constitute an unfair labor practice that might prompt a rerun election or perhaps even a bargaining order

Unionized employers, like the employer in the Jeffboat case, may be confronted with union demands to include automatically, to "accrete," temporaries into existing bargaining units. Those unionized employers, whose employees make up only nine percent of the private sector workforce, will have to evaluate their employment relationships with temporaries and the extent to which temporaries may share the requisite "community of interest" with their unionized employees. If jointly employed temporaries are accreted into existing bargaining units, there will be collective bargaining difficulties while the respective bargaining obligations for singly and jointly employed employees are sorted out.

In any event, the impact of the Board's Sturgis decision for unionized and non-union employers will develop slowly, providing needed time for employers and unions to make adjustments. Those adjustments can be made without long-term detrimental impact on temporary employment opportunities, where market conditions and the need for hiring flexibility are likely to trump uncertainties caused by the Board's decision. It is possible, too, that the Board's new analysis will not survive judicial review, or even changes in Board membership composition. And, in the long run, unions may have won only a pyrrhic victory due to the new procedural difficulties they will face in getting to NLRB elections.

John S. Irving and R. Timothy Stephenson are partners in Kirkland & Ellis' Washington, D.C. office.

Copyright c 2000 KIRKLAND & ELLIS. All rights reserved.