NLRB Holds That Combined Bargaining Unit of Staffing Agency and Regular Employees Is Permitted Only with Consent of All Parties

The National Labor Relations Board (the "Board") has issued a decision with significant implications for staffing agencies and the companies that use them. In H.S. CARE L.L.C. d/b/a Oakwood Care Center, 343 N.L.R.B. No. 76 (Nov. 19, 2004), the Board decided that a bargaining unit containing both employees solely employed by Oakwood Care Center and employees jointly employed by Oakwood Care Center and a personnel staffing agency, N&W, constituted a multiemployer bargaining unit that was inappropriate absent the consent of all parties.

The Board’s 3-2 decision in Oakwood Care Center overruled its 2000 decision in M.B. Sturgis, Inc., 331 N.L.R.B. 1298 (2000). In the Sturgis decision, the Board concluded that individuals solely employed by one company and those jointly employed by that company and a staffing agency could properly be included in the same bargaining unit without invoking the prerequisites for multiemployer bargaining, which include the requirement that all parties consent to bargaining on a multiemployer basis.

In Oakwood Care Center, the Board concluded that Sturgis was based on a strained interpretation of the term "employer unit" and was inconsistent with the plain meaning of Section 9(b) of the National Labor Relations Act (the "Act") (providing the Board with the authority to determine appropriate collective bargaining units). The Board relied on pre-Sturgis opinions that had rejected similar units in the absence of the consent of all of the joint employers. It also found that the Sturgis decision inhibited the give and take of the negotiating process and provided incentives for the wages and benefits of jointly employed employees to be traded away for the sake of those solely employed by one company, or vice versa. In a strongly worded dissenting opinion, two Board members contested the majority’s statutory and policy rationales for overturning Sturgis and criticized the majority for taking the Act’s protections away from workers in nontraditional employment arrangements.

The Board’s decision means that temporary employees from a staffing company may not be added to a bargaining unit of a client company without the consent of all parties. The decision should greatly reduce the possibility that employers, other than the staffing companies themselves, will be required to engage in collective bargaining with staffing company employees. This likely will increase employers’ incentives to enter into outsourcing and other nontraditional employment arrangements.