winning union representation for temps : an analysis of the nlrb's m.b. sturgis and jeffboat...

Winning Union Representation for Temps

WorkingUSA—Winter 2000–2001 37

WorkingUSA, vol. 4, no. 3, Winter 2000–2001, pp. 37–58.© 2001 M.E. Sharpe, Inc. All rights reserved.ISSN 1089–7011 / 2001 $9.50 + 0.00.

Winning UnionRepresentation for TempsAn Analysis of the NLRB’s M.B. Sturgisand Jeffboat Division Ruling

Chirag Mehta and Nik Theodore

This article examines the impact of the recent NLRBM.B. Sturgis and Jeffboat Division ruling on organizingopportunities for low-wage temporary workers. Whilethe ruling improves opportunities for “permatemps,”it may not benefit workers with the most tenuousemployment relationships.

THE economy is booming and workers are benefiting fromfull employment, or so the headlines read. Yet, behindthe glowing business reports, statistics reveal that a grow-

ing number of workers are turning to temporary staffing agen-cies as their primary source of employment. From 1982 to 1998,the number of jobs in the temporary-help supply industry rose

CHIRAG MEHTA is a research associate with the University of Illinois at Chicago Center for UrbanEconomic Development. His area of research includes low-wage labor market analysis, labor marketpolicy interventions, and welfare reform policy. NIK THEODORE is an assistant professor in theUrban Planning and Policy Program and research director in the Center for Urban Economic Devel-opment at the University of Illinois at Chicago.

Research for this article was funded by a grant from the Ford Foundation. The authors thank PeterSwanson of Cornfield and Feldman and Sam Smucker and Carl Rosen of the United Electrical, Radio,and Machine Workers of America for their careful review of an earlier draft of this paper. Thanks alsogo to all the individuals who were interviewed for this paper. Their input was invaluable.

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38 WorkingUSA—Winter 2000–2001

an astounding 577 percent, while the number of jobs in the overalleconomy increased by a robust, but in comparison still modest,41 percent (GAO 2000).

This is not good news for many temporary workers who findthemselves trapped in this growing segment of the workforce wherejobs are frequently low paying, unstable, and without fringe ben-efits. For approximately three-quarters of these workers, their jobsin production, construction, maintenance, and administrative sup-port occupations pay, on average, less than $10 per hour (authors’calculations from BLS 1999). Problems of low pay are compoundedby the instability that characterizes most temporary jobs. Approxi-mately 45 percent of temporary workers spend, on average, lessthan six months on any single job assignment, while 72 percent workfor less than one year on a single assignment (Cohany 1996). In thelight-industrial segment of the staffing industry, temporary work-ers—often referred to as day laborers—typically spend less thanfive days on a given assignment (Theodore 2000). In comparison,almost half of all workers hired permanently and directly by em-ployers spend four years or more on the job (Cohany 1996).

Most temporary workers have a tenuous relationship with anyworkplace or group of coworkers and often report that staffingagencies and user employers treat them as if they are expend-able (we use the term “user employer” to mean the employerwho contracts with the staffing agency for temporary workers).Yet despite widespread dissatisfaction with wages and workingconditions among low-wage temporary workers, unions haveencountered great difficulties in organizing these workers intocollective bargaining units. There are a number of reasons forthis, not least of which is that the National Labor Relations Board(NLRB) has erected substantial barriers that effectively deny mosttemporary workers full access to the right to union representa-tion under the National Labor Relations Act (NLRA).

Because the NLRB has restricted opportunities for union or-



ganizing of temporary workers to only the most rare cases, unionshave been uncertain about how to address the expanded role oftemporary workers in the economy. In lieu of a strong union pres-ence, community labor organizations have taken responsibility formost of the organizing of temporary workers and have been mod-erately successful in winning improved wages and working condi-tions through direct action and policy advocacy. However, as manyof these organizations would concede, community coalitions arein no way a replacement for unions that could play an impor-tant role in expanding the access of temporary workers to col-lective bargaining and other forms of worker representation.

In August 2000, the NLRB issued a long-awaited review of itsM.B. Sturgis and Jeffboat Division cases [331 NLRB no. 173] andmay have delivered temporary workers greater access to the rightto union representation. After nearly five years of deliberating itspolicy on temporary workers, the board overturned its rule requir-ing temporary workers to gain mutual consent from staffing agen-cies and user employers before they could elect to collectivelybargain (NLRB 2000a).

Historically, the NLRB has considered most temporary workersto be jointly employed by the staffing agency (which is responsiblefor payroll and other administrative matters related to the employ-ment contract) and the user employer (that contracts with the staff-ing agency and typically supervises the temporary worker at thejob site). Under this arrangement, as long as one of the “joint em-ployers” withheld consent to collective bargaining, temporary work-ers could not, under the National Labor Relations Act, gain acertified bargaining unit. This was a tough task, according toformer NLRB chair William Gould, who noted that he had not“heard of a case to date in which [temporary] employees hadobtained the consent of both employers” (quoted in Rahebi 2000).

The statistics on temporary workers in unions demonstratethe chilling effect that the NLRB’s previous policy has had on

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worker organizing. In 1996, only 8–11 percent of contingentworkers were covered by a union or employee association con-tract compared to nearly 20 percent for noncontingent workers(Polivka 1996). Included in the 8 percent are part-time workersand on-call workers, who are more likely to be covered by unioncontracts. Therefore, the number of workers employed by tem-porary staffing agencies covered by a union contract is, in alllikelihood, far less than 8 percent.

Now that the board has eliminated the requirement of em-ployer consent before employees in joint-employer relationshipscan organize, the challenge is to determine how best to take advan-tage of the ruling to promote the interests of all workers, both tem-porary and permanent. As those familiar with union organizingalready know, simply having the right to bargain collectively doesnot guarantee that this right will be accessible to all workers. In-deed, the case is no different here. While many in the labor move-ment are excited about the ruling, the reality is that, in practice, thenew NLRB rule toward organizing temporary workers will not af-ford all workers the same advantages. Chris Owens, assistant di-rector of public policy for the AFL-CIO, characterized the M.B.Sturgis and Jeffboat Division ruling as “an important win,” butcautioned, “It is not the case that temporary workers will auto-matically become part of collective bargaining units” (Owens inter-view 2000). Closer examination of how the ruling’s implicationsvary depending on workplace and job characteristics is thereforeneeded to understand the degree to which temporary workersand unions may be able to take advantage of this rule change.

Parameters of the Ruling and Options for Organizing

By eliminating the need for employer consent, the board’s rul-ing affords unions and jointly employed temporary workers the fol-lowing options for organizing:



• Accreting temporary workers into preexisting union-rep-resented collective bargaining units composed of perma-nent workers;

• Petitioning the user employer for a unit comprised solelyof temporary workers or a combination of permanent work-ers and temporary workers; or

• Petitioning the staffing agency for a unit comprised solelyof temporary workers. Unions have had some success peti-tioning staffing agencies for units of temporary workers incases where the board has considered the staffing agency thesole employer of the temporary workers. This ruling clarifiesthat in cases where the board may find that the temporaryworkers are jointly employed, regardless of which employeris petitioned, employer consent need not be obtained prior tocollective bargaining.

The degree to which labor organizations will be able to act onthese options will depend, in part, on the extent to which re-gional directors of the NLRB find a “community of interest”among temporary and permanent workers. In all petitions forunion representation, prior to authorizing any election, regionaldirectors decide which workers employed by the petitionedemployer comprise an appropriate bargaining unit. While theboard does not have a formal definition to judge whether a com-munity of interest exists between groups of workers, the stan-dard incorporates workplace characteristics such as occupation,supervision, wages and benefits, job tenure, and place of work.In practice, these matters are decided on a case-by-case basis.

In M.B. Sturgis and Jeffboat Division, the board explained that acommunity of interest could exist between permanent and tem-porary workers. The panel explained (NLRB 2000a):

a group of an employer’s employees working side by side at the samefacility, under the same supervision and under common working con-

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ditions, is likely to share a sufficient community of interest to consti-tute an appropriate [collective bargaining] unit. That some of the em-ployees working for that employer may have some differing termsand conditions of employment from those of their colleagues does notordinarily mean that those employees cannot be included in the sameunit, although it might under some circumstances permit them to berepresented in a separate unit.

According to former NLRB member and now managementattorney John Raudabaugh, before certifying bargaining unitsthat include temporary workers, the board will consider whetherthe inclusion of these workers in a unit might have a destabiliz-ing effect on bargaining relationships (Raudabaugh interview2000). Raudabaugh stressed that the board will heavily scruti-nize the combination of short-term temporary workers and per-manent workers employed at a work site so as to avoid thecreation of units where the churning of temporary workersthrough the unit produces instability during contract negotia-tions. For example, consider a bargaining unit comprised solelyof temporary workers that is entering contract negotiations withits staffing agency. If the NLRB has ruled that all temporary work-ers in the unit are jointly employed, each user employer thatprocures a bargaining unit worker from the unionized agencywould have the right to participate alongside the staffing agencyin contract negotiations.

Labor attorney Peter Swanson of Cornfield and Feldman inChicago agrees that the ruling may lead to more complicatedbargaining relationships (Swanson interview 2000). That is whythe board previously would not allow collective bargaining be-tween joint employers without the employers’ consent. By con-senting to an election, employers were presumably committingto bargaining with their jointly employed workers in an efficientmanner.

However, Swanson suggests that the board’s intent in this rul-ing is to clarify that if there is a community of interest between



workers and some of them are jointly employed, those workersshould have the right to collectively bargain with their employ-ers if they elect to do so, notwithstanding the potential for creat-ing complicated or inefficient bargaining processes. In the board’sown words (NLRB 2000a),

We are confident that bargaining in these units is feasible. Since em-ployers will be obligated to bargain only over those terms and condi-tions over which they have control, we believe . . . that employers andunions will be able to formulate appropriate and workable solutionsto logistical issues that may arise. We are confident that the collective-bargaining process encouraged by the [NLRA], which covers a widevariety of activity, is capable of meeting the changing conditions andchallenges posed by bargaining in these units.

“Permatemps” May Benefit Most from the Ruling

Until union petitions to organize temporary workers are filedand a consistent pattern of rulings develops, the parameters ofM.B. Sturgis and Jeffboat Division will remain unclear. Yet, mostanalysts agree that “permatemps”—temporary workers withlong-term assignments whose relationships with the user em-ployer resemble those of permanent workers—will be affordedthe broadest set of opportunities to immediately begin organiz-ing as a result of the new rules. Permatemps generally have acommon supervisor as well as similar wage-and-benefit scalesand job tenure relative to other long-term temporary workersand permanent workers at the job site. Permatemps will havemore success petitioning their employers because Regional Di-rectors will find that the similarities between the employmentcharacteristics of permatemps and permanent workers in tradi-tional employment relationships will tend to satisfy the com-munity of interest standard.

A Chicago-area manufacturer provides an example of wherelonger-term temporary workers may have the opportunity to

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collectively bargain with permanent workers. (The union repre-sentatives who related this case example to the authors haverequested that the name of the manufacturer and union remainconfidential.) The manufacturer employs more than 100 union-represented production workers. In addition, the companysupplements this permanent workforce with dozens of on-sitetemporary staffing agency employees performing the same workas the company’s unionized workforce. Among the reasons thecompany contracts with the staffing agency is that the agencyprovides a mechanism through which potential permanent em-ployees are screened. To facilitate the recruitment and placementof temporary workers on the job, the staffing agency has an on-site office. The staffing agency promises temporary workers thatafter three months, the user employer may hire them permanently.While the user employer has indeed hired most of its regular em-ployees through the staffing agency, in recent years it has notconverted large numbers of temporary workers into regular em-ployees. As a result, staffing agency workers remain on assign-ment at the user employer’s work site on a long-term basis.

If petitioned, the NLRB would likely find that a community ofinterest exists between the user employer’s regular employeesand the staffing agency’s employees based on the fact that thecompany: (1) uses temporary workers on a long-term basis andintends to hire temporary workers permanently, (2) has tempsdoing the same work as permanent workers, and (3) supervisesthe temporary workers on a daily basis. Prior to this ruling, theboard would have required consent from both the user employerand the staffing agency before accreting temporary workers intothe existing bargaining unit. Now, the NLRB could approveaccreting the temporary workers into the unit as long as a suffi-cient community of interest is found to exist among all the work-ers in the unit.

It is not known how many staffing agencies and user employ-



ers have relationships that resemble those in this particular ex-ample. There is, however, reason to believe that there are a sig-nificant number of long-term temporary workers in similarstaffing arrangements who could benefit from this ruling.Roughly one-quarter of temporary staffing agency workers hadjob assignments lasting one year or more (Cohany 1996). Ac-cording to a recent OfficeTeam survey, 82 percent of the nation’s1,000 largest companies have a permanent line item in their hu-man resources budgets for temporary workers—an indicationthat they permanently rely on temporary workers (“Temps HavePermanent Place in Staffing Budgets” 1998).

Short-Term Temps May Fall Through the Cracks

The degree to which short-term temporary workers are able totake advantage of this ruling is unclear because it may be moredifficult for them to demonstrate a community of interest witheither permanent or other temporary workers. Two characteris-tics of short-term temporary work complicate satisfaction of thecommunity of interest standard: (1) the high volume of tempo-rary workers churning through (permanent) job slots; and (2)the large number of seasonal or variable staffing assignmentswithout defined starting or ending dates. Management attor-neys and attorneys representing organized labor tend to agreeon this point. “It’s difficult for me to see how a temporary em-ployee has a community of interest with a permanent employeewhen he has different benefits and a different pay rate, espe-cially if he’ll only be in the workplace on an as-needed basis,”said one management attorney (Ward 2000).

Short-term temporary workers may have success petitioningstaffing agencies for a unit comprised entirely of temporaryworkers who are routinely sent out on similar assignments. Therehave been cases prior to M.B. Sturgis and Jeffboat Division where

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temporary workers have won elections for union representationand have engaged in collective bargaining with staffing agen-cies. In these cases, consent from both the staffing agency anduser employer was not required because the work performedwas trade-based or because the staffing agency was found to bethe sole employer (Swanson interview 2000). This ruling allowsjointly employed temporary workers who are not in the tradesto petition staffing agencies to establish collective bargainingunits regardless of whether agencies and user employers con-sent to an election.

While organizing staffing agencies may provide advantages,the benefits that may be gained from such units are not neces-sarily secure because user employers might simply terminatecontracts with the now-unionized staffing agencies. In marketswith a large number of staffing agencies, user employers wouldhave the option to choose nonunionized agencies and, in effect,drive unionized staffing agencies out of business. In Chicago,for example, user employers have their choice of more than 100staffing agencies serving manufacturing and construction indus-tries (authors’ calculations from Staffing Industry Analysts2000b). If day laborers organize one staffing agency, user em-ployers could elect to contract with a multitude of other agen-cies providing similar services. Dave Bentley, financial secretaryand business manager of the Atlanta and North Georgia Build-ing Construction Trades Council, explained it this way: “Even ifa union succeeds in organizing workers at a particular agency,the temp agency business is so nimble, so fly-by-night, they goout of business and 90 days later pop up with a new name, butwith the same management and customers as before” (quotedin “Will NLRB’s Recent Ruling on Temps Help or Hurt Organiz-ing, Bargaining?” 2000).

Under these circumstances, success in organizing staffing agen-cies will require a broader campaign to gain control of a larger



supply of labor. To this end, the Building and Construction TradesDepartment (BCTD) of the AFL-CIO has launched a nationwidecampaign called Temp Workers Deserve a Permanent Voice @ Workto expose the practices of these agencies in the construction in-dustry and to organize workers employed by temporary staff-ing agencies (BCTD 2000). In particular, BCTD has targeted LaborReady, the largest provider of temporary light-industrial andbuilding trade workers in the country.

Plumbers Local 12 in Boston also has experience organizingday laborers in the building trades. Several years ago, Local 12organized sixteen plumbers employed by TradeSource Staffing,a national staffing agency providing construction trade workersto nonunion contractors (Green interview 2000). While the elec-tion results are being appealed, in March 2000 the board orderedTradeSource Staffing to collectively bargain with the plumbers(NLRB 2000b).

As a result of the campaign, local councils in several stateshave begun recruiting temporary workers into the union. In At-lanta, the local trades council has already recruited 150 LaborReady workers.

In markets where one or two staffing agencies are highly spe-cialized and supply large numbers of workers to a small num-ber of user employers, it may be possible to successfully petitionstaffing agencies and negotiate meaningful contracts. ServiceEmployees International Union (SEIU) Local 100 was able to wina contract for temporary garbage collectors in New Orleans forprecisely this reason. Approximately five years ago, Local 100successfully petitioned a staffing agency supplying over 600 tem-porary garbage collectors to Waste Management. In this case,SEIU Local 100 first petitioned Waste Management. However,the regional director ruled that the staffing agency was the soleemployer of the temporary workers. These workers, known as“garbage hoppers,” load garbage onto trucks driven by Waste

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Management employees. Generally, the workers have part-timeassignments but receive consistent work from week to week.SEIU has significant leverage because the staffing agency can-not otherwise supply the 100 workers per day needed to satisfythe Waste Management contract. Moreover, Waste Managementcannot undermine the union by terminating its contract withthe staffing agency because, according to Wade Rathke, chieforganizer for SEIU Local 100, “[SEIU] controls the supply of gar-bage collectors, so Waste Management is mostly irrelevant”(Rathke interview 2000).

Highly skilled short-term temporary workers in small labormarkets may also have greater leverage and, therefore, betteropportunities to negotiate victories through collective bargain-ing. In a study of labor-market intermediaries addressing thenegative effects of employment flexibility, Laura Wolf-Powersof Rutgers University offers an analysis of several cases, includ-ing a hiring hall established by International Brotherhood of Elec-trical Workers (IBEW) Local 164 in Hackensack, New Jersey(Wolf-Powers 1999). Local 164 represents approximately 1,700electricians, most of whom do wiring and installation work forsmall contractors in the heavily unionized commercial construc-tion industry. In the 1970s, business agents for the union at-tempted to organize technicians working for contractors doingwiring and installation work for the rapidly deregulating anddownsizing telecommunications industry. Firms in this indus-try prefer to contract out wiring and installation work in orderto remain flexible rather than maintain a permanent unionizedworkforce of technicians. Electrical contractors that were alreadyparty to the IBEW multi-employer agreement were unwilling tobid for telecommunications projects, which forced the union toorganize small nonunion contractors. By 1980, the union orga-nized the technicians and subsequently entered into agreementswith twenty contractors to use the IBEW hiring hall and to pay



technicians a prenegotiated wage. A few years later, the contrac-tors formed an association and now jointly negotiate contractswith Local 164.

Local 164 was successful in negotiating this agreement becausethe hiring hall offered contractors a reliable source of technicians,eliminating the need to compete with other nonunion contrac-tors for skilled labor. Because the work was highly skilled, manycontractors would rather have a guaranteed source of labor at afixed price than risk facing labor shortages. In addition, the hir-ing hall offered enhanced flexibility. As with a staffing agency,contractors could hire technicians from the hiring hall on anas-needed basis.

Permanent Unionized Workforces Gain Leverage from Ruling

Permanent unionized workers probably have the most to gainfrom this ruling because it gives them, through collective bar-gaining, more control over the terms and conditions of workforcesubcontracting to temporary staffing agencies. Many unionshave negotiated language in their contracts to limit when useremployers may procure temporary workers to perform bargain-ing-unit work. Yet, because unions have not, in most cases, beenable to actually represent temporary workers, most unions havelacked the leverage necessary to hold employers accountable toagreements in the contract, or to control the wages, benefits, orlength of assignments of temporary workers. Statistics reflectthis unbalanced power relationship between unions and employ-ers. Surprisingly, the staffing industry has penetrated unionizedworkplaces at nearly the same rate as nonunionized workplaces.According to an American Management Association survey, inunionized firms, contingent workers average 9.9 percent of theworkforce, while in nonunionized firms they average 11.1 per-cent (AMA 2000). For the manufacturing sector, the differential

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Figure 1. Temporary Staffing Industry Penetration vs. Union Penetrationof Major Occupational Sectors, 1998

Source: Authors’ calculations from BLS (1999) and “Union Members in 1998.”

between contingent worker penetration in unionized versusnonunionized firms is 6.1 percent, according to the AMA. More-over, some of the most highly penetrated occupations, such asclerical, administrative, and production positions, are unionstrongholds (Figure 1). Of the top three unionized sectors, thestaffing industry has a lower rate of penetration in technical oc-cupations. However, the number of temporary employees in thissegment increased by 66 percent from 1990 to 1998.

According to Tom Ballanoff, president of SEIU Local 73 inChicago, permanent unionized workers who have not yet seenjobs in their units outsourced to temporary staffing agencies mayalso see immediate benefits if this ruling discourages employersfrom subcontracting bargaining-unit jobs (Ballanoff interview 2000).They may also benefit if the ruling neutralizes employers’ threatsto subcontract bargaining unit jobs as a tactic to force unionlocals to accept contracts that roll back wages and benefits.

From a cost perspective, the scales are tipped against orga-nized labor. As shown in Table 1, for many low-wage or typi-



Table 1

Staffing Agency Bill Rate and Direct Hire Wage Differential for TemporaryWorkers in Occupations with Above-Average Union Penetration

DifferentialDirect-hire Direct-hire Staffing (agency rate

overall average entry-level agency minus avg.Occupation hourly wage average wage rate internal wage)

Factory worker $17.11 $12.15 $9.35 ($7.76)Generalmaintenance $18.43 $12.59 $15.02 ($3.41)

Machinist $13.73 $13.08 $11.61 ($2.12)Janitor $8.18 $7.87 $8.64 $0.46Inventory/stockroom clerk $9.82 $9.97 $10.85 $1.03

Assembler $9.23 $8.82 $11.51 $2.28

Source: Authors’ calculations based on Vaitkus (1999) and BLS (1999).

cally unionized occupations, the cost of procuring temporaryworkers from staffing agencies (staffing agency rate) is gener-ally lower than the wages paid to direct-hire workers (direct-hire wage), especially considering that subcontracting to staffingagencies absolves user employers of a range of administrativecosts and legal obligations.

How Will Management React to the Ruling?

Just as temporary workers and unions will move to take advan-tage of new opportunities provided by this ruling, employersopposed to unionization will move even more quickly to limitthose opportunities. Assuming the ruling withstands any po-tential appeals, temporary workers and unions should expectthat the most vulnerable employers will attempt to restructuretheir staffing relationships so as to fall outside the new legalboundaries established by M.B. Sturgis and Jeffboat Division(Raudabaugh interview 2000).1

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Most legal analysts we interviewed agreed that it could takeyears before this ruling makes it to an appellate court and, evenstill, has little chance of being overturned.

The most vulnerable employers will tend to be: (1) user em-ployers with longer-term temps who will likely share a commu-nity of interest with on-site permanent employees and othertemporary workers; (2) user employers with longer-term tempswho could be accreted into bargaining units with unionized per-manent employees; and (3) specialized staffing agencies inunionized industries where temporary workers organized byunions could gain significant control over the supply of tempo-rary labor.

Vulnerable user employers will most likely restructure theirrelationships with staffing agencies in an attempt to avoid joint-employer status. The implication of this likelihood is that if theNLRB does not consider a user employer to be a joint employerof temporary workers, these workers will not be able to obligatethe user employer to bargain collectively (Rahebi 2000). Factorsthat the NLRB considers when determining employer status in-clude which employer (1) determines wages and benefits andwhether to discharge temporary workers, (2) supervises anddisciplines temporary workers on the job, and (3) is responsiblefor payroll. Traditionally, the NLRB has considered temporaryworkers to be jointly employed because user employers tend tosupervise temporary workers as well as recommend their dis-charge, while staffing agencies carry out administrative dutiesrelated to employment.

Former NLRB member John Raudabaugh suggests that em-ployers could “delegate an entire business function solely totemps, such as running a warehouse or a call center and havethe temporary agency handle on-site supervision” (quoted in“Will NLRB’s Recent Ruling on Temps Help or Hurt Organiz-ing, Bargaining?” 2000). By transferring supervisory functions



to staffing agencies, user employers would be in a position tocontend that staffing agencies have responsibility for all majoremployer functions and, therefore, should be considered soleemployers of temporary workers. Shedding employer status tomaximize benefits from the NLRB ruling is complicated by thefact that most states compel user employers to maintain joint-employment status in order to have immunity from legal ac-tions taken by temporary workers as a result of injuries sustainedat the user employer’s work site. Under most state workers’ com-pensation rules, employers that insure their employees are auto-matically granted legal immunity. In the case of temporary workers,staffing agencies insure their workers and subsequently are grantedimmunity. In most states, however, user employers must maintainresponsibility for supervising temporary workers supplied by staff-ing agencies before states will extend them legal immunity.

Shifting supervision to staffing agencies, however, is not asimple task. For most staffing agencies, it would not be cost-effective to supply an on-site supervisor to each customer. Largestaffing agencies, however, are frequently placing supervisorsat the work sites of their major clients. This service, referred toas vendor-on-premises, is generally offered to longer-term cli-ents to better manage the flow of temporary workers throughthe work site. As a proportion of total temporary staffing agencyrevenues, vendor-on-premises arrangements accounted for 12percent of total sales in the staffing industry in 1999. In the lastfive years, the use of vendor-on-premises has increased by 30percent and is expected to continue to grow an additional 10percent in the coming year (Staffing Industry Analysts 2000c).

It is likely that user employers will also restructure their rela-tionships with staffing agencies to limit contact and differenti-ate the working conditions between permanent and temporaryworkers so as to prevent any potential finding of community ofinterest between these groups of workers. Raudabaugh predicts,

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“Employers [of longer-term temporary workers] will draw athick line around workers supplied by staffing agencies andensure that there is no contact between the permanent workforceand the temporary workforce” (Raudabaugh interview 2000).Employers may also restrict the tenure of temporary employeesto demonstrate that temporary workers and permanent work-ers do not share a community of interest. In recent years, useremployers have shortened the tenure of the temporary workersin response to a series of federal agency rulings and court deci-sions that have upheld the claims of long-term temporary work-ers on the benefits their user employers provide to permanent,full-time employees. M.B. Sturgis and Jeffboat Division will onlyfurther encourage user employers to shorten and strictly definethe tenure of temporary workers.

Some user employers will benefit because the ruling may makeit more difficult for unions to win organizing drives where tem-porary workers are logistically tougher to organize or unwillingto support the union. In the case of a petitioned user employerwhere permanent and temporary workers share a communityof interest, the ruling requires unions to garner support fromtemporary workers. Short-term temporary workers, in particu-lar, may be difficult to recruit because they have little to gainfrom electing a union and may have much to lose if they fearretribution from their temporary staffing agency for voting withthe union. User employers facing organizing drives within theirpermanent workforces may also request that the board includetemporary workers in the bargaining unit. M.B. Sturgis, for ex-ample, urged the board to include temporary workers in thebargaining unit because management believed the union couldnot generate enough votes to win an election if temporary work-ers were included.

In an effort to disrupt organizing drives, user employers thatsubcontract less-skilled job assignments on a regular basis will



likely use multiple staffing agencies for their supply of tempo-rary workers. Many user employers already routinely use mul-tiple agencies, particularly for unskilled labor needs. A combi-nation of the fact that the jobs require little training, and fierceprice competition between temporary staffing agencies at thelow end of most labor markets, gives user employers a choicebetween many agencies. A further advantage to establishing apattern of alternating staffing agencies is that user employersmay be able to cancel contracts with staffing agencies whose tem-porary workers are involved in organizing drives with little riskof being charged with an unfair labor practice.

Staffing agencies whose temporary workers are involved inorganizing drives at the work site of their user employer may beable to undermine the voting eligibility of their temporary workersin an election by giving these workers specific termination dates fortheir job assignments. Even if the board rules that temporary work-ers are a part of a petitioned unit, many short-term temporary work-ers may not be eligible to vote if their staffing agency has giventhem a fixed termination date that falls before the election date orthey do not reasonably expect to be on the assignment at thetime of the election (Greenbaum Doll & McDonald 1998).

Conclusion

Ellen Bravo of the National Alliance for Fair Employment, a lead-ing national coalition of community and labor organizationsaddressing contingent work issues, summarized the impact ofM.B. Sturgis and Jeffboat Division in this way: “It’s a good rulingbecause it speaks to situations where a temp is no longer a temp.People in this position should be treated the same as other regu-lar employees” (quoted in Staffing Industry Analysts 2000a). TheNLRB did indeed make the right to union representation moreaccessible to permatemps because they are in staffing arrange-

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ments that closely resemble the traditional employment modelthat the NLRA is intended to address. On the other hand, theboard did little to broaden the scope of the NLRA to make theright to union representation more accessible to workers in em-ployment relationships that are categorically untraditional—aclass of short-term temporary workers that is growing faster thanworkers in traditional employment relationships.

Labor advocates should be careful not to misconstrue M.B.Sturgis and Jeffboat Division as a guaranteed victory for perma-temps. The extent to which this ruling will assist long-term andother temporary workers will depend upon how regional direc-tors apply the community of interest and joint-employer stan-dards. Therefore, it is imperative that labor unions, communitylabor organizations, and other associations representing tempo-rary workers begin collectively strategizing on how best to takeimmediate advantage of this ruling and win organizing driveswherever possible. The next few years will be critical for build-ing a set of successful cases that defines user employers as “jointemployers” and expands the interpretation of community ofinterest to be more inclusive of the relationships that short-termtemporary workers have with their co-workers.

It perhaps is only a matter of time before the most vulnerableuser employers and temporary staffing agencies react to theboard’s ruling by restructuring staffing arrangements to fall out-side the legal boundary set by M.B. Sturgis and Jeffboat Division.Therefore, unions and advocates for temporary workers shouldalso continue to pursue changes in other areas of employmentlaw to discourage employers from replacing permanent employ-ees with temporary employees as a means of avoiding legal ob-ligations. Unemployment insurance and worker’s compensationin particular appear to factor heavily in employer’s decisions tooutsource to temporary staffing agencies. In a recent survey ofemployers conducted by the American Management Associa-



tion, 63 percent of the respondents said that eliminating payrollobligations was one of the reasons they began using temporaryemployees (AMA 2000).

While employers have generally been able to outsource at will,the courts and federal administrative agencies are catching upand sending a message to employers that is not acceptable tooutsource labor needs in order to avoid legal obligations to em-ployees. Community labor organizations and some union localshave used policy advocacy and direct action to hold employersaccountable as well. M.B. Sturgis and Jeffboat Division will mostlikely prove to be one more tool for labor organizations to use tohold employers accountable to their obligations and to makethe terms and conditions of temporary employment more fairand equitable for temporary workers.

Note

1. The American Staffing Association, the association that lobbies on behalf of awide range of staffing agencies, said in a statement after the ruling was publiclyreleased, “ ‘The ruling is unlikely to have a significant impact,’ however, it wouldseek to challenge the ruling in court” (Staffing Industry Analysts 2000a).

References

American Management Association. 2000. “1999 AMA Survey of Contingent Work-ers.” www.amanet.org/research/pdfs/cngmtwrk.pdf.

Brogan, Timothy W. 1999. “Staffing Services Annual Update.” American StaffingAssociation.

Building and Construction Trades Department. 2000. “15 Unions Representing 3 Mil-lion Workers to Launch Campaign Aimed at Exposing Temp Agencies, Organiz-ing Temp Workers.” www.buildingtrades.org/news/news.releases.ap3.html.

Bureau of Labor Statistics. 1999. Occupational Employment Statistics Survey. Wash-ington, DC: U.S. Department of Labor.

Cohany, Sharon R. 1996. “Workers in Alternative Employment Arrangements.”Monthly Labor Review (October): 31–45.

Greenbaum Doll & McDonald, PLLC. 1998. “The Law and Temporary Employees.”Kentucky Employment Law Letter 8, no. 9 (June).

National Labor Relations Board. 2000a. M.B. Sturgis and Jeffboat Division, 331 NLRBNo. 173.

Mehta and Theodore


To order reprints, call 1-800-352-2210; outside the United States, call 717-632-3535.

———. 2000b. Tradesource Staffing and Plumbers and Gasfitters Local 12; 2000NLRB Lexis 206; 164 L.R.R.M. 1048; 330 NLRB No. 157 (March 31).

Polivka, Anne E. 1996. “A Profile of Contingent Workers.” Monthly Labor Review(October): 10–18.

Rahebi, Bita. 2000. “Rethinking the National Labor Relations Board’s Treatment ofTemporary Workers: Granting Greater Access to Unionization.” UCLA Law Re-view 47; UCLA L. Rev. 1105.

Staffing Industry Analysts. 2000a. “Ruling Eases Way for Temps to Join Unions.”Staffing Industry Report 11, no. 17 (September 8): 1–2.

———. 2000b. Staffing Industry Sourcebook. Los Altos, CA: Staffing Industry Analysts.———. 2000c. “Vendor on Premises Business Expected to Grow 10% in 2000.” Staff-

ing Industry Report 11, no. 15/16 (August 22): 14–15. “Temps Have Permanent Place in Staffing Budgets.” 1998. CPA Journal 68, no. 1

(January): 11.Theodore, Nikolas. 2000. A Fair Day’s Pay: Homeless Day Laborers in Chicago. Univer-

sity of Illinois at Chicago: Center for Urban Economic Development Report. “Union Members in 1998.” 1999. Bureau of Labor Statistics. Washington, DC.U.S. General Accounting Office. 2000. Contingent Workers: Incomes and Benefits Lag

Behind Those of Rest of Workforce. Washington, DC: GAO/HEHS-00-76.Vaitkus, Laime, ed. 1999. “Setting and Managing Hourly Compensation Reference

Guide.” New York: Institute of Management and Administration.Ward, Joe. 2000. “Ruling Gives Temps Bargaining Role: Labor Board Sides with Unions,

Agrees Employers Have No Say.” Courier-Journal (Louisville, KY), September 1. “Will NLRB’s Recent Ruling on Temps Help or Hurt Organizing, Bargaining?” 2000.

Union Labor Report 54, no. 36 (September 7): 281–88.Wolf-Powers, Laura. 1999. “Union-Sponsored Intermediaries in Regional Labor

Markets—Mitigating the Negative Effects of Employment Flexibility.” Paperpresented at ACSP Annual Conference, Chicago, October.

Interviews

Ballanoff, Tom. Service Employees International Union Local 1. September 28, 2000.Green, Joe. Plumbers and Gasfitters Local 12. September 27, 2000.Owens, Chris. AFL-CIO. September 20, 2000.Rathke, Wade. Service Employees International Union Local 100. September 25, 2000.Raudabaugh, John. Matkov, Salzman, Madoff, & Gunn. September 26, 2000.Swanson, Peter. Cornfield and Feldman. September 20, 2000.

winning union representation for temps : an analysis of the nlrb's m.b. sturgis and jeffboat...

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