NLRB Clarifies Single Employer Status

                         Two nominally separate employers can be a single employer for NLRA purposes. The significance is that each separate company that is in reality a single employer are jointly and severally liable. Shane Steel Processing, 353 NLRB No. 58  (Nov. 28, 2008) recently reviewed the criteria for finding a single employer status. As the Board explained:

First, the judge initially found single employer status
under the Board’s established analytical framework,
which considers four factors: (1) interrelation of operations;
(2) common management; (3) centralized control
of labor relations; and (4) common ownership. See, e.g.,
RBE Electronics of S.D., 320 NLRB 80 (1995). The
General Counsel and the Charging Party agree with that
finding, but argue that the judge erroneously failed to
find that the fourth factor, common ownership, is present
and supports a single employer finding. We find merit in
that argument, inasmuch as John Hartley held an 80-
percent ownership interest in Shane and a 50-percent
ownership interest in J&J. See Cimato Bros., Inc., 352
NLRB No. 99, slip op. at 2 (2008).
Second, although the judge found single employer
status under the Board’s traditional four-factor test, he
then analyzed that issue under what he described as “the
alternate one-factor test, concerning the presence or absence
of an arm’s length relationship.” The judge derived
this alternate test from a footnote in Lebanite
Corp., 346 NLRB 748 (2006). In that footnote, the
Board observed that “[v]iewing the single employer
analysis more globally,” certain Board decisions describe
single employer status as being characterized by, or synonymous
with, the absence of an arm’s-length relationship
among unintegrated companies. Id. at 748 fn. 5.
Unlike the judge, we do not read this observation as establishing
an alternate test for single employer status.
Rather, we think the Board in Lebanite was merely acknowledging
its occasional use of a generalized description
for the traditional four-factor test. Significantly, the
Board pointed out that evidence indicating the absence of
an arm’s-length relationship is often treated as bearing on
the traditional factor of interrelation of operations, and
expressly endorsed that approach. Id. Accordingly, we
do not rely on the judge’s alternate analysis in affirming
his finding that Shane and J&J constitute a single employer.
We do agree, however, with the judge’s factual
finding that there was no arm’s-length relationship between
Shane and J&J, and that this absence further supports
his finding that the interrelation of operations factor
strongly favors a single employer finding in this case.

Mitchell H. Rubinstein