An employer that is engaged in double breasted operations has one legal entity with a unionized workforce and one without. This can be a useful tactic for employers because the employer can bid for union only contracts with its unionized company and have the other company perform work where a union is not necessary.
Some of my construction clients are double breasted operations. They have a unionized company when doing public, prevailing wage work. But when they are bidding for non-public jobs, i.e. construction projects that are not funded with taxpayer money, they submit a bid from the non-union company. Non-union construction companies are able to submit lower bids since their overhead and fix costs are generally lower because they do not have collective bargaining agreements to comply with.
The National Labor Relations Board and some courts look to the totality of the circumstances when deciding whether one of the companies is an “operational extension” of the other. Factors such as common ownership, premises, management and control over labor relations and daily activities are relevant to the determination of whether two companies are double breasted, joint employers, or alter egos.
An employer is required to disclose information regarding possible double-breasted operations if: 1) the union has a reasonable basis for suspecting the employer is diverting bargaining unit work, and 2) there is a reasonable basis for believing that this information will be helpful to collective bargaining efforts. But, in my experience, every union knows which companies are double breasted, so these disclosure requirements are somewhat superfluous.
Nonetheless, when a union receives information from the company’s president or from activity at separate jobsites that leads it to believe the company is engaging in double breasted activity, the Board usually determines that the company’s refusal to supply the union is a violation of the National Labor Relations Act.
Companies interested in setting up separate legal entities to avoid the detriments of unionization can do so only by taking specific, legally-required steps. Contact Austin Legal for guidance on how to set up a legal double breasted operation.
Matt Austin is a Columbus, Ohio employment lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can email Matt at Austin@LaborEmploymentOSHA.com or call him at 614.285.5342.