On July 11, 2016, the National Labor Relations Board (the “NLRB” or “the Board”) upended more than a decade of precedent and held that a single bargaining unit may be comprised of an employer’s direct hires and the temporary workers provided by a “joint employer” without prior consent from either employer. In the case, Miller & Anderson, Inc. (364 NLRB 39), the Board expressly rejected standing precedent and prescribed the return to a standard that makes it easier for unions to organize employees working for joint employers into a single bargaining unit. The Miller & Anderson decision reflects the NLRB’s increased commitment to expand the joint employer doctrine. Employers who provide or use temporary workers and/or are in engaged in joint employer relationships should take note.

In Miller & Anderson, the NLRB addressed the Sheet Metal Workers International Association’s petition to represent a bargaining unit of all sheet metal workers employed by Miller & Anderson (a mechanical and electrical contractor) in a particular area. Members of the proposed bargaining unit fell into two categories: (1) workers directly employed by Miller & Anderson (the so-called “user employer”), and (2) temporary workers technically employed by a staffing company, Tradesmen International (the so-called “supplier employer”) who worked on Miller & Anderson job sites and who were allegedly jointly employed by Miller & Anderson. Miller & Anderson and Tradesmen International qualified as “joint employers” by the Board’s definition because the two codetermined the terms and conditions of the employment for the temporary workers. Under precedent established by the NLRB in the 2004 case Oakwood Care Center (343 NLRB 659), consent of the alleged joint employers (Miller & Anderson and Tradesmen International) was required for direct hires and temporary workers to form a single bargaining unit. Because neither employer consented, the NLRB Regional Director reviewing the case dismissed the union’s petition.

The matter was brought before the NLRB and the Board reversed the Oakwood Care Center rule, overturned the Regional Director’s decision, and remanded the case for further proceedings. In doing so, the NLRB reinstated a test predating Oakwood Care Center to determine whether direct hires and joint employees can comprise a single bargaining unit. The test stemmed from the 2000 case M.B. Sturgis, which held that both direct hires and jointly employed workers of an employer (in this case, Miller & Anderson) can combine to form a single bargaining unit without the consent of the user or supplier employer if the unit comprises a satisfactory “community of interest.” Whether the employees create a “community of interest” is determined using several factors, including functional integration into the work of the employer, similarity of the type of work performed, interaction and interchange between the workers, similarity of working conditions, wages and benefits, and common supervision.

The NLRB emphasized the need for return to the Sturgis standard because the test more soundly guaranteed similarly situated employees the ability to freely exercise rights granted to them under the National Labor Relations Act (“NLRA”). The Board was particularly concerned about avoiding marginalization of the jointly employed workers. According to the Board, the use of jointly employed workers is growing in the changing American economy and these workers are vulnerable to a loss of bargaining power because they are more likely to be isolated from their employers and one another. A return to the Sturgis standard, the NLRB concluded, was both consistent with the NLRA and necessary to “permit[] employees in an otherwise appropriate unit to pool their economic strength and act through a union freely chosen by the majority so that they can effectively bargain for improvements in their wages, hours and working conditions.”

Employers who might qualify as “user” or “supplier” employers and/or are in engaged in joint employer relationships should be particularly aware of the implications of Miller & Anderson. The decision means that unions may petition to organize a primary workforce and the workforce of a staffing employer together, potentially imposing a duty to bargain with the union for both the user and supplier employer. The case also places added significance on a “joint employer” determination. Employers should be especially critical when analyzing the pros and cons of entering into similar relationships. We will continue to monitor the subsequent interpretation of Miller & Anderson and provide further updates as appropriate.