U.S. DEPARTMENT OF LABOR – U.S. NATIONAL ADMINISTRATIVE OFFICE
Workshop On
THE RIGHT TO ORGANIZE AND BARGAIN COLLECTIVELY
IN CANADA AND THE UNITED STATES:
Sutton Place Hotel
Toronto, Canada
February 1-2, 2001
The U.S. Staffing Services Industry: Collective Bargaining and Other Issues
By
Edward A. Lenz
Senior Vice President for Public Affairs and General Counsel
American Staffing Association
Alexandria, Virginia
Introduction
Until a few years ago, there was no such thing as the “staffing services” industry, at least not one that
the public knew by that name. There was a “temporary help” industry—firms that supplied short-term
workers to businesses that needed people to fill in for employees who were sick or on vacation or to
help with peak production or sales periods.
“Staffing” suggests a less transient function. Indeed, the practice of contracting with staffing firms to
provide workers with the skills necessary to perform non-core functions on an ongoing basis has
become a fixed star in almost every business's economic constellation—a vital tool to achieve greater
flexibility, productivity and competitiveness.
In its 1999 Report On The American Workforce, the U.S. Department of Labor compared the “just-intime” concept of inventory control in manufacturing with the use of flexible staffing arrangements to
provide just-in-time labor and concluded that:
Employers that have flexibility in adjusting labor requirements to meet product and
service demands have a competitive edge over those with less flexible human resource
policies.

Material portions of this paper were adapted from an article by the author entitled “The Staffing Services Industry: Myth
and Reality” to be published in Global Competition and the American Employment Landscape—As We Enter the 21st
Century, Proceedings of the New York University 52nd Annual Conference on Labor. ©2000 Klewer Law International
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Flexible staffing arrangements undeniably increase business competitiveness. But have workers
benefited? Critics argue that workers have suffered. By most objective measures, however, workers
benefit significantly from those arrangements.
Myths vs. Realties
Three great myths persist regarding the quest for labor market flexibility. The first myth is that
America is becoming a “nation of contingent workers.” The second is that the growth in flexible work
arrangements is creating a permanent, second-tier workforce with low pay and no benefits. The third is
that contingent workers, especially temporary workers, are not protected under the nation's labor and
employment laws. Each of these is without basis.
Myth 1: the contingent workforce is large and growing rapidly
Reality: the contingent workforce comprises less than 5 percent of jobs and since 1995 has decreased
slightly as a percentage of the workforce
The decade of the 90s saw a growing number of reports regarding its alarming growth and the negative
impact on workers. In 1993, Time magazine ran a banner headline on its cover warning about the
“disposable” workforce and predicting that such workers would outnumber permanent employees by
the end of the decade. U.S. Congresswoman Pat Schroeder (D-CO) regularly introduced legislation to
mandate benefits for temporary and part-time workers. Senator Howard Metzenbaum (D-OH) opened
U.S. Senate hearings in 1994 asserting that contingent workforce threatened the “entire free enterprise
system.”
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A September, 1999 CBS Evening News report decried the growing use of so-called “perma-temps,”
citing lawsuits like Vizcaino v. Microsoft.
Unions have been relentless in their criticism. At its last biennial convention, the AFL-CIO passed a
resolution stating that “U.S. workers and their communities continue to be devastated by the
degradation of family-sustaining full-time jobs into temporary, contract and contingent positions.”
Fortunately, the Bureau Of Labor Statistics (BLS), as sober and non-partisan a government agency that
you are likely to find in Washington, decided to weigh in on the contingent worker debate.
It was the first objective effort to examine the composition and size of the contingent workforce. BLS
conducted its first contingent workforce survey in 1995, and issued follow up reports in 1997 and
1999.
BLS began by offering a useful definition of contingency, i.e., workers who do not have an “implicit or
explicit contract for long-term employment” and who therefore view their tenure as unpredictable. BLS
found that in 1999 contingent workers—mainly independent contractors, on-call workers, temporary
agency workers, and workers provided by contract firms—comprised between 1.9 and 4.3 percent of the
total workforce. This was down slightly from 1995.
Staffing Firm Employees Make Up A Small Fraction Of The U.S. Workforce
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Workers employed by staffing firms are a small percentage of the total workforce and those who view
their jobs as contingent make up an even smaller percentage. The 1999 BLS data shows workers
employed by temporary help and contract firms together comprised just 1.5 percent of the total
workforce, about 3.0 million on any given day. The number who viewed their jobs as contingent was
considerably smaller—about 800,000 at most—or about 6 tenths of one percent of the total workforce.
Myth 2: contingent work is creating a permanent “second-tier” workforce
Reality: the great majority of contingent workers either prefer their arrangement over traditional
employment or use it as a bridge to a permanent job
Much of the recent news coverage of contingent work has created the false impression that millions of
workers who want permanent jobs are trapped in temporary ones as a result of what they allege is a
widespread business effort to off-load employees onto the payroll of staffing firms to cut wage and
benefit costs.
The perception that temporary work is creating a permanent “two-tier” workforce rests on the
erroneous assumption that the temporary labor force is static—that the same people are stuck in the
same jobs for years. The reality is that the great majority of staffing firm employees work for short
periods of time and then move on.
Although 33 percent of temporary employees now prefer temporary work, up from 26 percent four
years ago according to the Department of Labor, for most such work remains highly transitional. The
temporary workforce turns over at the extraordinary rate of over 400 percent annually, which means
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that about 12 million of the estimated 15 million people who worked temporarily in 1999 found new
permanent jobs, retired, or went back to school.
Who are these workers? They can be loosely grouped into three categories: traditional temporary
workers, transitional workers, and long-term workers.
Traditional Temporary Workers
Millions of students, teachers, retirees, parents with young children and others choose temporary work
because they are either unable or unwilling to make a permanent commitment to a single employer.
They work for staffing firms on a short-term or intermittent basis, generally a few weeks or months,
primarily to supplement their incomes.
As a group, traditional temporary employees are disproportionately young, not focused on saving for
retirement, and very often are covered by the health insurance policy of a parent or spouse. Retirees
generally are covered by Medicare. Their primary objectives are flexibility, independence, and
maximizing their cash income.
We estimate that about 20 percent of staffing firm employees are made up of such traditional
temporary workers.
Transitional Workers — A Bridge To Permanent Employment
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About 55 percent of all temporary employees use temporary work as a bridge to permanent
employment. Individuals looking for their first job, reentering the labor force after an absence, looking
for work after being laid-off, transitioning from welfare-to-work, or simply quitting their current job
with the expectation of finding a better one, all use temporary work to get new experience and
showcase their skills to potential new employers.
The Department of Labor reports that “the practice of auditioning permanent employee candidates as
temporaries first is the fastest growing segment of the staffing industry, reflecting the desires by
employers to observe candidates for a trial period before deciding whether they are the right fit for the
job.”
In 1998 alone an estimated 8.5 million temporary employees found permanent jobs, more than 2.5
million of them directly with the staffing firm customers to which they were assigned.
The bridge function has had a dramatic impact on U.S. unemployment rates. According to a new study
by economists at Harvard and Princeton, the ready availability of temporary jobs, coupled with staffing
firms’ expertise in matching individuals and their skills to available work assignments, accounts for
fully half of the drop in unemployment.
Longer-Term Workers—“The Perma-Temp” Myth
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The last category are longer-term workers. Studies show that these workers tend to be better educated,
higher paid, more likely to have benefits, and prefer the flexibility and independence such work affords.
If we use Employment Policy Foundation numbers and define “long term” as more than two years, we
are talking about one tenth of one percent of American workers. So much for the perma-temp scare.
Myth 3: temporary employees are not protected under labor and employment laws
Reality: staffing firm employees are protected under the same laws applicable to traditional workers
The third great myth regarding contingent workers is that temporary employees employed by staffing
firms are not protected by U.S. civil rights laws, worksite safety requirements, minimum wage and
overtime provisions, laws relating to collective bargaining, workers’ compensation and unemployment
insurance and myriad other labor and employment laws. Again, the reality is very different.
Courts and government agencies have, for example, held that temporary employees may bring Title
VII actions for discrimination, that businesses must maintain a safe worksite for employees assigned to
them, that temporary workers with a sufficient “community of interest” can be included in the worksite
employer’s collective bargaining unit and that staffing firms and their customers may be held liable for
unfair labor practices directed against staffing firm employees, and may be held jointly liable under the
fair labor standards act.
NLRB Temp Ruling—Less Than Meets The Eye
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The recent National Labor Relations Board ruling in the M.B. Sturgis case addresses whether and
under what circumstances staffing firm employees may join unions at customer worksites. We believe
the NLRB decided the case incorrectly and has unwisely imposed new regulations on a segment of the
workforce that has made major contributions to the nation’s remarkable economic growth over the past
decade, but the ruling is unlikely to have a significant impact on the use of staffing services.
Ruling involves narrow issue
Contrary to reports in the mass media, the ruling focuses on a very narrow issue. It does not create a
brand new right of temporary workers to join unions. They have always had that right, although
relatively few have been organized. The board’s ruling involves only the technical issue of whether
they can be combined into a single collective bargaining unit with the customer’s employees without
the consent of both the staffing firm and the customer. A 3-1 majority held that they can, provided:

The staffing firm and customer are “joint employers” of the temporary employees and that

The temporary employees share a “community of interest” with the customer’s employees, e.g.,
by working side-by-side at the same facility, under the same supervision, and under common
working conditions.
The decision overturns a 1990 NLRB ruling in a case called “Lee Hospital” which the board now says
misconstrued its 1973 ruling in the “Greenhoot case.” Greenhoot was a building management firm that
had contracted to supply maintenance workers to 14 separate office buildings. The workers were
jointly employed by Greenhoot and the various building owners and the union petitioned for a
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bargaining unit consisting of the workers at all 14 buildings. The NLRB ruled that this was a “multiemployer” unit that required the consent of each of the employers.
Lee Hospital involved somewhat different facts. Instead of 14 customers as in Greenhoot, only one
customer was involved in Lee Hospital, namely the hospital. The employees involved were nurse
anesthetists employed by an anesthesiologist group. The hospital and the anesthesiologist group jointly
employed the nurses. Applying the Greenhoot rule, the NLRB, held that the jointly employed nurses
could not be included in a bargaining unit with the hospital’s other professionals without the consent of
both employers. This, the NLRB now says, was wrong. It now says that where all of the workers in a
bargaining unit are employed, either solely or jointly, by a single customer, it is not a “multiemployer” unit and the consent requirement does not apply.
Board member Brame dissented, arguing that the facts in Lee Hospital were not materially different
from the Greenhoot case so as to justify abandoning the consent requirement. Member Brame said that
staffing firms and their customers, even if they are joint employers, are still separate employers and
therefore any bargaining unit composed of the employees of both is still a "multi-employer" unit
requiring the consent of both employers
Impact of ruling
Some news reports have given the misleading impression that the NLRB ruling will have a sweeping
detrimental impact on the use of staffing services. Even assuming that the Sturgis principle is not
ultimately overturned by the courts, we believe that the overall impact of the ruling is likely to be
minimal for the following reasons.
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
The ruling will primarily affect customers that are already organized. At most, only 10 percent
of private-sector American workers belong to unions. ASA estimates that the percentage of
temporary workers assigned to union worksites is about 6 percent. So the number of
temporary employees who are even potentially affected by the ruling is very small. Unions are
likely to focus their attention primarily on longer-term temporaries, which reduces the size of
the affected group even further

The ruling is not self-executing. Unions seeking to accrete temporary employees into existing
bargaining units will have to file a unit clarification petition, and, assuming past rulings are
given effect, will be required to meet a stringent community of interest standard. In any case,
only a small fraction of the temporary workforce would be involved.

Implications where customers are already organized. Where the union is successful in getting
temporary workers accreted, some staffing firm customers could face higher costs relating to
their use of temporary help if the union bargaining agreement compels payment of higher
wages and benefits. They also could face increased pressure to reduce their use of temporary
help, or to transition more temporary workers into regular positions. Collective bargaining
issues could become greatly confused with staffing firms forced to bargain with their customers
regarding diverse groups of workers with different wage and benefit packages and work
interests.

Implications for customers that are not organized. We do not see any significant impact from
the ruling in cases where the worksite is not currently organized. Some have suggested that
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temporary workers could be used to spearhead organizing efforts at non-union worksites. This
seems unlikely given most temporary employees’ short tenure. Even longer-term temporaries,
whom we believe are mostly higher-paid and higher-skilled workers have shown little interest
in union membership.
Case in point: Washtech, the Washington Alliance For Technology Workers, despite several years
effort represents only about 200 workers and does not represent any workers in collective
bargaining. Washtech president Marcus Courtney said in response to the Sturgis ruling “it is
unclear how the new rule will impact high-tech temporary workers that seek collective bargaining
rights, because few if any high-tech companies have any significant union presence.” We agree
with that assessment.
Union membership has declined in large part because employers are providing better jobs with better
working conditions. This is certainly true of temporary employees. ASA surveys show that the great
majority of temporary workers are satisfied with their temporary work experience. Thus, unions are not
likely to be successful in expanding their membership rolls to any significant degree by signing up
temporary employees.
Conclusion
In conclusion, let me reiterate that flexible labor arrangements have played a key role in the remarkable
economic growth of the past decade. The last thing that should be done is to mandate benefits or
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restrict the use of staffing services. Rigid labor rules in Europe have stunted jobs growth and led to
double-digit unemployment rates.
The U.S. has thus far wisely embraced flexibility and the jobs growth has been spectacular: staffing
firms alone have created millions of new jobs, and will continue to play a key role in the economy by
providing a highly diverse group of workers with jobs, training, flexibility, and a bridge to permanent
employment—helping millions of Americans find the right job at the right time in an increasingly
complex and rapidly changing workplace.
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