• An Update on the National Labor Relations Board's "Micro Unit" Rule
  • July 24, 2015 | Authors: J. Gregory Grisham; Martin D. Trimiew
  • Law Firm: Leitner, Williams, Dooley & Napolitan, PLLC - Nashville Office
  • A threshold issue in union representation proceedings is the determination of the appropriate bargaining unit. Whether or not a unit is “appropriate” is decided by the National Labor Relations Board (the “NLRB” or “Board”). The Board’s longstanding rule has been to look for a “community of interest” among employees, determined by factors such as whether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised. See United Operations, Inc., 338 NLRB 123, 123 (2002).

    Unions seeking to organize employers covered by the National Labor Relations Act (the “Act”) have previously been constrained to attempting facility-wide communications with employees, since broader units, such as production and maintenance units, have typically been found to be appropriate. In 2011, however, the NLRB shook the foundation of this model in Specialty Healthcare & Rehabilitation Center of Mobile (Specialty Healthcare), 357 NLRB No. 83 (Aug. 26, 2011).

    1. Specialty Healthcare & Rehabilitation Center of Mobile (Specialty Healthcare)

    In Specialty Healthcare, a nursing home and rehabilitation center employed various groups of employees, including registered nurses, nurse assistants, cafeteria workers, maintenance workers, housekeeping, laundry and social services/rehabilitation staff. Id. at *2. Under prior law, the appropriate bargaining unit likely would have consisted of all of the above referenced employees (with the exception of the professional registered nurses). However, in Specialty Healthcare, the Board approved a “micro unit” consisting solely of nursing assistants, creating potential for the other small employee groups to organize separately. Id. at *20.

    Under the standard articulated in Specialty Healthcare, the first issue to determine is whether the “micro unit” defined by the union is “appropriate.” This inquiry begins with the Board analyzing whether the employees in the proposed unit share a “community of interest.” If the unit is found to be appropriate, the burden shifts to the employer to prove that the unit inappropriately excludes other employees who share an “overwhelming community of interest” with the employees included in the unit. This standard requires proof that there is “no rational basis” for excluding the employees from the unit.

    In Specialty Healthcare, the Board created a pathway for unions to subdivide an employer’s workforce through “micro units” of representation in the workplace. Critics of the rule argue, among other things, that it significantly disrupts the core tenet of the National Labor Relations Act (the “Act”): promoting industrial peace through collective bargaining. Critics further argue that unions now have wide berth to organize employees in almost any bargaining unit of its choice, regardless of whether the collective bargaining in that micro unit will effectuate industrial peace. Further, though Specialty Healthcare was decided in the context of the health care industry, the Board intended the micro unit concept to have broad application to all industries covered by the Act. The Board’s decision was later enforced by the Sixth Circuit Court of Appeals in Kindred Nursing Centers East (f/k/a Specialty Healthcare) v. NLRB, &under;&under; F.3d &under;&under; (Nos. 12-1027/1174, Aug. 15, 2013).

    2. Recent Micro Unit Cases

    Two recent decisions outline the parameters of micro units in the retail industry, although the implications of these cases extend to employers in all industries. First, in Macy’s, Inc., 361 N.L.R.B. No. 4 (July 22, 2014) the Board approved a micro unit comprised only of the cosmetic and fragrance department employees at a Macy's store located in Saugus, Massachusetts. Id. at *1-2. In response, Macy's asserted that the appropriate unit must include all sales floor personnel. Id. at *4. The NLRB rejected the employer’s argument and upheld the unit determination of the Regional Director. Id. at *23. The Board found that the cosmetic department employees did not work in other departments and their pay structure was substantially different from all other store employees. Id. Consequently, the NLRB held that the union met the Specialty Healthcare standard for the petitioned for unit of cosmetic and fragrance employees. Id.

    One week after its decision in Macy’s, Inc., the Board rejected a petitioned-for “micro unit” of women's shoes employees in the Salon shoes and Contemporary shoes departments at the Neiman Marcus Store in New York City. See The Neiman Marcus Group, Inc. d/b/a Bergdorf Goodman (Bergdorf Goodman), 361 N.L.R.B. No. 11, at *1 (July 28, 2014). Here, the union failed to prove a “community of interest” specific to the women's shoes employees because the employer did not have clear department lines already established (as did the employer Macy's). Id. at *3-4. Specifically, the petitioned for unit in Bergdorf Goodman included other employees from a second department, Contemporary Sportswear, but excluded Contemporary Sportswear’s other sales associates. Id. The Board viewed this subdivision as a departure from the Employer's organizational structure and outside the Specialty Healthcare standard for an appropriate unit. Id. The Board concluded, however, that it would likely have approved the unit had the following factors been present: i) the petitioned-for employees shared a common supervisor; ii) there was significant personnel interchange between the two departments; iii) contact among the petitioned-for employees was not limited to storewide meeting attendance and incidental contact in the locker room, cafeteria, etc.; and iv) shared skills and training for the employees from the different departments. Id.

    3. What do “Micro-Units” mean for Employers?

    Over time, employers can expect to see increased attempts to fracture their workforce into multiple bargaining units with various bargaining agreements that potentially contain fluctuating pay scales, benefits, work rules, bargaining schedules, and grievance processes for employees who used to work side by side. Nevertheless, Employers can take some proactive measures to avoid what could become a crippling occurrence in employer/employee labor relations.

    First, Employers must understand the new paradigm of micro units and acknowledge that the boundaries of its workforce can potentially be gerrymandered under the new caselaw. Relying on past measures and ignoring the importance of structuring employee divisions can result in easy targeting by unions seeking to organize a micro unit. Further, Employers must discard any belief that micro units union organization is limited to healthcare and retail industries, as the Board has made it clear that this applies across industry sectors.

    Second, Employers must consider arranging departments, supervisors, and workplace structure in line with the factors outlined in Bergdorf Goodman. Employers should consider more integration between employees, supervisors, department interchange, job classifications, pay structure, employee rotation, and policy implementation. Taking these measures in advance can better prepare Employers should they be tested by unions and required to meet their burden of proof to demonstrate “overwhelming community of interest.”

    Third, Employers must continue to maintain policies and strategies which make employee organization unnecessary and union involvement moot. Even in situations where a union is successful in organizing a micro unit, a lack of success in expanding representation to employees in other departments may lead the union to eventually abandon the micro unit given the costs associated with collective bargaining and grievance handling especially in Right to Work States.