All Commentary
Wednesday, August 1, 2001

Unions Draft Temporary Workers

The NLRB Makes Up the Rules As It Goes Along

Under the doctrine that the Constitution is a “living document” that must constantly be reinterpreted to keep up with the times, the Supreme Court often ignores its plain text and imposes what it considers to be good results. Last August, in a consolidated decision involving two cases—M.B. Sturgis, Inc., and Jeffboat Division—the National Labor Relations Board (NLRB) showed it wants to play the same game with respect to the National Labor Relations Act (NLRA).

One way that employers have learned to adapt efficiently to rapid technological and market changes is to contract with other firms to provide temporary employees to fill various jobs. “Supplier firms” specialize in recruiting, evaluating, training, and deploying workers where they are needed, and handling all the paperwork involved. “User firms” contract with supplier firms for the services of the employees. Often the supplier firm charges the user firm and then pays the workers. Sometimes a user firm will pay a flat per diem fee per worker to the supplier and pay the temporary workers directly. Legally both supplier and user firms are “employers” for at least some aspects of the employment relationship.

Unions have found it difficult to organize the employees of supplier firms. One reason is that there is no well-defined community of interest among such workers. They have different skills, levels of education, workplace experiences, and interests. It makes little sense for such workers to submit to a uniform collective-bargaining agreement, and it makes even less sense for a supplier employer to agree to any one-size-fits-all compensation scheme for its diverse employees.

Although temporary workers in user firms often work alongside permanent workers and do the same work, unions have hitherto found it impossible to organize them as employees of user firms. In the case of a union-free user firm (for example, M.B. Sturgis), a union could try to organize the permanent workers in the usual way, but the temporary workers could not legally be included in the same bargaining unit. The same is true in the case of an already-organized user firm (such as Jeffboat Division). Temporary workers could not be included in the same unit as the permanent employees.

Section 9(b) of the NLRA specifies that the NLRB determines bargaining units on the basis of “whether the unit appropriate for collective bargaining shall be the employer unit, craft unit, plant unit or subdivision thereof.” No units consisting of employees of more than one employer are permissible. For example, the assembly line workers at GM must be in a separate bargaining unit from the assembly line workers at Ford. There can be multi-employer bargaining with a union that has organized the workers of two or more employers, but only if all the employers involved agree to it.

Until this decision, it was well established that since temporary workers deployed to user firms by supplier firms legally have two employers, both employers had to agree to collective bargaining with a union before bargaining could take place. Multi-employer bargaining involving supplier and user firms is inherently more problematic from the employers’ view than when the employers are competitors and the bargaining takes labor costs out of competition. The interests of supplier and user firms are not so easily aligned.

For example, if a union could organize the temporary workers at a user firm and obtain a collective-bargaining contract with the user, the supplier firm would be bound by the terms of the contract without having anything to say about it. The NLRA is supposed to facilitate agreement among employers and unions. It was never intended as a means to impose collective bargaining or its terms on third parties. In the words of J. Robert Brame, the lone dissenter in the NLRB decision and no longer a member of the Board, “An employer’s bargaining obligation under Section 8(d) of the [NLRA] requires only that the employer meet and bargain in good faith with the union, not that it adopt wholesale the agreement that the union has negotiated with another employer.”

Rules Changes

The majority decision of the Board changed the rules by an interpretive sleight of hand: Since temporary and permanent employees of a user firm have “a common” employer, that is equivalent to having “the same” employer. Therefore they can be in the same bargaining unit and the union can bargain for them all with both the user and the supplier firm whether that firm likes it or not. Thus temporary workers, even against their will, may be automatically included in existing bargaining units at already-unionized user firms, and temporary workers deployed to hitherto union-free firms must be included as voters in any certification elections at those firms.

John Sweeney, president of the AFL-CIO, hailed the decision, claiming that temporary workers had been “relegated to second class status and rights” by being excluded from collective bargaining. This is a bit duplicitous because in the Sturgis case the union wanted the temporary workers excluded from the bargaining unit in order to increase the probability it would win a certification election. The union realized that most workers in the temporary employment market are not interested in unions. In the Jeffboat case the union wanted to have the temporary workers added to the bargaining unit against their will simply because they became additional dues payers. So much for the myth of union solidarity.

Although the Washington Post proclaimed that “Temporary Workers Win Benefits Ruling,” the truth is that some unions, not workers, won. Even this may be a Pyrrhic victory because unless this ruling is reversed supplier firms are going to avoid doing business with unionized and likely-to-become-unionized firms. In the private sector there are many securely union-free user firms to take their place. This will be yet another handicap imposed by the market on firms that unionize.

The most disturbing aspect of this decision is that it shows that the NLRB no longer feels bound by the provisions of the NLRA as they were originally understood by Congress. The only reason the majority gave for its willingness to reverse the long-standing rules on multi-employer bargaining was that the temporary employment market has grown. Since the market is bigger, the NLRA, a living document, had to be reinterpreted to keep up with the times. The NLRB has thus declared that it will not be limited to enforcing the statute as written. It has claimed the right to make up the law as it goes along. I suppose this is not too surprising because if the Supreme Court adhered to the Constitution as it was understood by those who wrote it, the NLRA would have been declared unconstitutional long ago.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.