Constangy, Brooks & Smith

REASON PREVAILS: NLRB Reverses Sturgis

For at least the second time this year, the National Labor Relations Board has overturned a Clinton-era decision that was causing migraine headaches for employers.

This summer, the Board held that non-union employees were not entitled to have a representative present for investigatory interviews. (See Constangy Client Bulletin No. 352).

Now the Board has held, in H.S. Care, L.L.C., d/b/a/Oakwood Care Center, that bargaining units consisting of both regular employees and temporary or contract employees are inappropriate unless the affected employers consent. This is a return to the law, as it existed before a problematic Board decision in M. B. Sturgis.

The Sturgis decision, issued in 2000, had reversed longstanding Board precedent by holding that regular and temporary employees could constitute an appropriate bargaining unit even though the company and the agency refused to consent.

This caused difficulties for employers who used contract or temporary employees. Legally speaking, contract or temporary employees are usually considered to have two employers: the placement agency, and the company to which the employees are assigned. In other words, the law considers the agency and the company to be “joint employers” of the employees.

The practical results of Sturgis were sometimes bizarre. In one case discussed in H.S. Care, a company was required to cover its temporaries under the regular employees’ collective bargaining agreement . . . but only with respect to the parts of the CBA that could apply to temporaries.

The new Board majority in H.S. Care was pointedly critical of the Sturgis decision, saying that Sturgis “severed [the concept of ‘employer unit’] from its statutory moorings” and was bad policy as well. Moreover, the majority said, it did not adequately protect the rights of employees.

For example, the majority said, wages for the “joint employees” are normally determined by both the agency and the company. But those wage rates could affect the wage rates of regular employees in the same bargaining unit. In addition, the company normally determines which days will be holidays for both regular and “joint employees,” and pays its regular employees for those days. However, the agency – not the company – normally determines whether the “joint employees” receive pay for those days.

“These are merely examples of how the bifurcation of bargaining regarding employees in the same unit hampers the give-and-take process of negotiation between a union and an employer,” the majority said.

As might be expected, the two holdover Board members from the Clinton era, who were in the majority in Sturgis, filed a strong dissent.

The H.S. Care decision should make bargaining unit determination, and contract negotiation and administration, much simpler for companies that use temporary or contract employees alongside their regular employees. If you have questions about the implications of this decision for your company, contact any member of Constangy’s Labor Relations practice group, or the Constangy attorney of your choice.