In October, the National Labor Relations Board (“NLRB” or “Board”) employed a little-used procedural doctrine to issue a consolidated complaint against a parent company of a chain of hospitals located throughout the U.S. The NLRB issued the consolidated complaint, which included 29 unfair labor practice charges, against Community Health Systems, Inc. and seven wholly-owned subsidiary hospitals located in Ohio, Kentucky, West Virginia and California under the “single integrated employer” doctrine. The NLRB alleges that the hospital chain maintains rules that infringe on employees’ rights to discuss wages, hours and working conditions, that it retaliated against employees who participate in union activities, and that it failed to engage in good-faith collective bargaining with the union.
 
Parent and subsidiary companies are typically viewed as separate entities under the National Labor Relations Act (“NLRA”). There is longstanding legal precedence that parents and subsidiaries are not considered as a single employer for collective bargaining purposes. Dow Chemical, 326 NLRB 28 (1998). There have been occasions, however, when the NLRB has found that the particular relationship between the parent and subsidiary companies is so close as to constitute a single integrated enterprise or employer for purposes of determining joint liability for unfair labor practice charges or the imposition of a collective bargaining agreement negotiated by one entity on an affiliated entity.
 
There are four factors that the Board analyzes to determine whether a parent and subsidiary should be classified as a single integrated employer:
 

1. common ownership;
2. common management;
3. interrelationship of operations;
4. centralized control over labor relations. 

 
Of these, the centralized control over labor relations is the most important factor, while common ownership is the least important factor. Each situation is evaluated on the particular facts, however, and the Board will focus on whether the companies look to be two independent but related companies or two companies that have a top-down decision-making relationship.
 
With respect to examples of common management, two affiliated companies have been found to be a single integrated employer when the following three factors were present (in addition to others): 
 

• when a parent company officer is the subsidiary vice president,
• when a parent company manager is responsible for daily operations at the subsidiary, and
• when all financial decisions for the subsidiary are made by the parent company.

 
Examples of centralized control of labor relations include the following:
 

• When the parent company sets the agenda for collective bargaining negotiations for the subsidiary company;
• When the parent company makes labor relations decisions for the subsidiary company, including telling the subsidiary company what information to share or not share with the union;
• When the parent company directs the subsidiary with respect to staffing levels;
• When the parent company makes the decision as to which individuals or job titles should be included in a reduction in force; and
• When the parent company decides when and how to negotiate with the union.

 
Other factors that may play a role in the NLRB’s decision to treat two affiliated companies as one include:
 

• if the companies share a website or logo;
• if the companies use the same business cards or trucks; or
• if employees between the two companies are shared or frequently exchanged.   

 
Again, it is not the presence of any single example listed here, but a combination of several of the examples of interrelatedness in each of the four categories evaluated by the NLRB that is controlling.
 
The NLRB’s usage of the single integrated employer doctrine is another example of the Board’s recent efforts to expand its jurisdiction to cover as many employers and employees as possible and to extend its reach in new ways. All companies – whether currently unionized or not – should review its relationships with affiliated companies to ensure that they operate in an independent manner with respect to personnel, decision-making and negotiations with a union. Otherwise, the companies may be found to be a single integrated employer, which can lead to the imposition of a collective bargaining relationship or agreement on a company that thought it was union-free.
 
If you have any questions, please contact our Labor & Employment Practice Group.