Employment And Labor Alert: NLRB's Controversial Specialty Healthcare Ruling Affirmed

by Stinson Leonard Street

Last week, the U.S. Court of Appeals for the Sixth Circuit granted the National Labor Relations Board's (NLRB) petition to enforce its controversial ruling in Specialty Healthcare, 357 NLRB No. 174 (2011). By leaving Specialty Healthcare intact, the decision gives unions the green light to organize discrete groups of employees in a single workplace, and thus invites the proliferation of "micro units."

Specialty Healthcare and the Sixth Circuit's Decision

In Specialty Healthcare, the Board altered its test for deciding whether a proposed collective bargaining unit was too narrow. The Board held an employer challenging the appropriateness of a unit on the basis that it does not include certain employees must show that "the excluded employees share an overwhelming community of interest with the included employees."

On appeal, the Sixth Circuit rejected the employer's arguments that Specialty Healthcare adopted a new approach to unit determinations, inappropriately imported the "overwhelming community of interest" test from another area of labor law, violated the National Labor Relations Act by making it impossible for an employer to challenge the appropriateness of the proposed unit, and made all of these changes through adjudication rather than rulemaking.

The court's decision means that the NLRB and union organizers can continue to rely on Specialty Healthcare's "overwhelming community of interest" standard.

Specialty Healthcare in Practice

In practice, Specialty Healthcare has been used to approve of discrete "micro" bargaining units among employees who seemingly have much in common.

Most recently, in Guide Dogs for the Blind, 359 NLRB No. 151 (2013), the Board relied on Specialty Healthcare to approve a proposed unit consisting solely of canine welfare technicians and instructors, to the exclusion of breeding, puppy-raising, kennel, and veterinary employees at a dog breeding center. The employer in that case argued that the other employees needed to be included in the unit—citing the fact that the excluded employees shared numerous overlapping tasks with the included employees—but the Board concluded that, despite their similarities, the employees did not share an overwhelming community of interest. Likewise, in Fraser Engineering Company, 359 NLRB No. 80 (2013), the Board recognized a discrete unit of an employer's plumbers and pipefitters as an appropriate unit, even though two years earlier it had concluded that a larger unit including the same employees as a subset was appropriate. 

Two of the most striking examples of micro units approved under the Specialty Healthcare test occurred in the retail industry. In a case involving Macy's, an NLRB Regional Director approved a unit consisting solely of a department store's cosmetic and fragrances department, despite the Board's presumption favoring "wall-to-wall" units in the retail industry. And in a case involving Bergdorf Goodman, a Regional Director agreed that a bargaining unit comprised solely of women's shoe sales associates was appropriate. Rejecting the retailer's effort to include, among others, men's shoe sales associates at a store on the same street, the NLRB Regional Director explained that, "although all sales associates in the store work toward a common goal of selling merchandise, the women's shoe department associates have the unique goal of selling shoes in particular [and t]he sales associates in other departments do not have the same background and experience in selling shoes."

Looking Forward

Union attempts to organize evermore discrete units of employees are likely to increase now that the Sixth Circuit has upheld Specialty Healthcare. In anticipation of such attempts, employers may want to review their organizational structures to increase the chances that the Board would find a larger unit shares "an overwhelming community of interest" with the smaller, proposed unit. For example, an employer may want to consolidate job titles, cross-train employees or have different classes of employees report to the same supervisors.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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