Following a decision last week by the National Labor Relations Board (NLRB), it is likely that all companies that use temporary staff workers will be considered a “joint employer” with the temporary staffing agency if efforts are made by a union to organize the temporary workers.

The use of temporary staff is a significant part of the business plan for many companies. Although it was in the past a strategy used primarily by manufacturing companies, temporary staffing is now common across many industries, including warehousing, logistics and service. The potential advantages to using temporary staff include off-loading human resource responsibilities, lowering unemployment and workers compensation expenses, tax withholding responsibility, and many of the other attendant costs of the employment relationship.

Companies who use temporary staff (I will call them “user” companies here) often take careful measures to limit the risk of being determined a joint employer with the company providing temporary staff. Those steps include having the temporary staffing company (I will call them “temporary staff providers” here) be responsible for all hiring, discipline, and termination decisions. In some cases, the user company relies on the temporary staff provider for on-site supervision and sometimes even human resources support on-site. In most cases, the user company has an indirect impact on wages of the temporary staff by virtue of the negotiated labor rate but, in almost all cases, all other employment benefits are provided solely by the temporary staff provider.

What if a union targets the temporary workers at a user company’s workplace for organization? If the union is successful, who is the “employer” required to recognize and bargain with the union? Until recently, the answer was pretty easy. As long as the user company was careful not to exert direct control over the terms and conditions of employment of the temporary workers, then the employer required to recognize and bargain with the union was the temporary staff supplier only. Efforts made by unions to argue for a joint employment determination were usually unsuccessful. All that has changed.

What does the case say?

Last Thursday, in Browning-Ferris Industries of California, Inc., the NLRB decided that the user company and the temporary staff supplier are a joint employer. The user company was Browning-Ferris (BFI), which operates a recycling facility. The temporary staff supplier was Leadpoint. The Teamsters Union tried to organize a group of 240 Leadpoint employees working at the BFI facility. The temporary staff performed work different than that performed by the BFI regular workforce. The BFI regular workforce was already unionized. Leadpoint provided on-site supervision and an on-site human resource representative. Leadpoint also kept control of hiring decisions, subject to certain broad criteria imposed by BFI. When there were on-site misconduct issues involving temporary staff people, BFI made Leadpoint aware and Leadpoint was responsible to investigate and take action, though BFI retained the right to discontinue the assignment of any of the temporary staffers. In other words, Browning-Ferris did all “right” things in its effort to remain separate from Leadpoint.Nevertheless, the NLRB found that BFI and the Leadpoint are a joint employer. A union representation election had already been conducted among the temporary staff workers, but the ballots were impounded, pending the outcome of this decision. Now, the ballots will be counted and if the Teamsters win the election, BFI will be required, together with Leadpoint, to recognize and bargain with the union as the representative of the temporary staff. So what went wrong?

The NLRB concluded that its earlier decisions on this issue were wrongly decided and are not appropriate for the current economic climate, where reliance on temporary staff is more common. In the past, the NLRB imposed joint employment only if the user company was exercising immediate and direct control over terms and conditions of employment of the temporary staff. In the Browning-Ferris case, the NLRB says all that is necessary is that the user employer have the authority to exercise control over terms and conditions of employment, even if it is not being exercised currently. The NLRB also took an expansive view of what it means to “control” terms and conditions of employment. For example, the NLRB considered that BFI controls the size of the temporary staff needed, the speed of work, and the method of operation. They considered also that BFI had initiated the need for disciplinary investigations by making Leadpoint aware of facts and circumstances and that BFI imposes broad standards for eligibility for hiring. The NLRB also determined that BFI controlled wages at least indirectly by imposing a maximum hourly rate that could be paid to the temporary workers.

What does it mean?

It will be very difficult for any user company to argue successfully that it is not a joint employer with the temporary staff provider. BFI did more than most companies to assure separateness, including having Leadpoint provide on-site direct supervision and human resource support. Consider that the NLRB looked at things like control of the size of staffing, speed of work, and method of operation in determining joint employment. It is unlikely that any employer will turn over those kinds of decisions to a temporary staff provider. To do so is tantamount to turning over the business operation, much like a subcontract arrangement. Because user companies will always retain the right to make basic business operation decisions, they will likely be considered joint employers with their temporary staff providers in the event of union organizing.

Before user companies panic, though, consider how infrequent it is that unions target temporary staff workforces for organizing. Temporary staff do not often make a good model for organizing and collective bargaining. But, the prospect for bringing the user company with a second pocketbook into the bargaining might make unions more inclined to target temporary service employees.

Also, the decision raises the possibility that unions might try in some cases to organize the temporary staff together with the user company’s regular work force. In BFI, the targeted group was just the temporary staff, which performed work different from that of the regular employees. In many workplaces, particularly in manufacturing and warehousing, the temporary staff workers perform the same work that is done by the regular workforce, sometimes under common supervision. In a situation like that, unions might now be successful arguing that the appropriate group for recognition is the regular workforce together with the temporary staff. Under prior NLRB precedent, the NLRB would not approve a bargaining unit combining temporary staff with regular workers unless both companies consented. But the Browning-Ferris joint employer decision certainly opens the door for that to be revisited.

It remains to be seen if BFI will refuse to bargain with the union and thereby try to get a review of the decision in federal court. Also, the decision has drawn immediate adverse reaction from business organizations and some in Congress who promise to consider an effort to reverse the ruling through legislation. Either of those tactics are long and difficult battles, so the Browning –Ferris decision promises to be the NLRB method of operating for at least some time.

What do you do?

The Browning-Ferris decision is one more incremental increase in the risk of union organizing. You can add it to the recent additions to the list that include expedited elections and micro-bargaining units. If your business is non-union and you prefer it remain so, this decision is one more reason to review your overall commitment to the management practices that make union organizing less likely to occur and less likely to succeed if it does occur:

  • effective communication with all workers;
  • fundamental fairness and consistency;
  • competitive wages and benefits; and
  • meaningful opportunity for employee input.

Too often a company’s commitment to assuring a desirable workplace stops short of considering the working conditions of the temporary employees. The Browning-Ferris decision suggests an additional reason to discuss with the temporary staff provider the measures they have in place to assure to the best extent possible that their workers are not vulnerable to union organizing efforts, being careful at the same time not to assume additional responsibility for their terms and conditions of employment, because doing so simply makes the joint employment argument harder to battle.