NLRB Decisions on “Micro Units” Provide Guidance for Employers Concerned With Union Organizing

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

In two recent decisions, the National Labor Relations Board (NLRB) reached different conclusions on whether unions can organize small groups of employees in a workplace. While the NLRB’s decisions in Macy’s, Inc. and The Neiman Marcus Group, Inc. d/b/a Bergdorf Goodman, both deal with retail employers, the principles articulated are applicable to employers in all industries. The decisions constitute a roadmap for unions seeking to gain representation rights over workers in single departments or within single job classifications. Employers concerned about union organizing need to understand the new paradigm that the NLRB created with these cases and take proactive steps to counter the expected surge in union organizing.

Moreover, employers must take these steps now. Employers do not have the luxury to delay thoughtful, advanced planning as the NLRB is likely to issue the ambush election rules shortly. The net effect of the proposed rules is

  • a significant reduction in the pre-election due process typically afforded employers in representation cases;
  • a substantial reduction in employers’ ability to have meaningful input regarding the size and scope of the bargaining unit; and
  • the creation of an environment in which employees will be required to vote without being fully informed of the critical facts.

The new rules effectively limit the opportunities for employers to educate employees about unions and unionization prior to voting.

Macy’s: NLRB Concludes a Unit Limited to Cosmetics and Fragrance Employees is Appropriate

In Macy’s, the United Food and Commercial Workers International Union unsuccessfully attempted in 2011 to organize all full-time and regular part-time employees at the company’s Saugus, Massachusetts store. In 2012, believing it would be more successful if a vote was conducted in a different bargaining unit, the union filed a petition seeking to represent a much smaller group of employees at the same store including both the employees working on the first floor in cosmetics and women’s fragrances and those employed on the second floor selling men’s fragrances. This group constituted about 41 of 150 total Macy’s employees at the Saugus store.

The employer contended that the appropriate bargaining unit needed to include all 150 employees in the 11 departments of the store or, alternatively, all selling employees at the store. It was undisputed that all store employees shared almost identical terms and conditions of employment; they were issued the same handbook, had the same fringe benefits, worked under a single dispute resolution procedure, were evaluated according to the same performance evaluation process, used the same time clock system and the same break room. Despite that strong evidence of common interest among all store employees, the employees in the petitioned-for micro unit were separately supervised and there were apparently few documented instances of interchange of employees between the 11 departments.

The NLRB agreed with the union and concluded that a bargaining unit of only employees in the first floor cosmetics and fragrance department and those on the second floor selling men’s fragrances was appropriate for collective bargaining. Applying its landmark decision in Specialty Healthcare and Rehabilitation Center of Mobile, the NLRB found that Macy’s did not meet its affirmative burden of proof to demonstrate that all store employees shared an “overwhelming community of interest” with the much smaller group of employees the union sought to represent. The NLRB focused on the fact that employees did not work in multiple departments and did not share common front-line supervision. The NLRB rejected the employer’s arguments that the bargaining unit should be composed of all store employees because the retail industry historically has been organized in wall-to-wall units and because the union represented significantly larger and more comprehensive bargaining units at other company stores.

The Neiman Marcus Group, Inc. d/b/a Bergdorf: NLRB Concludes a Unit of Second Floor and Fifth Floor Shoe Sales Associates is not Appropriate

The Board reached the opposite conclusion in The Neiman Marcus Group, Inc. d/b/a Bergdorf Goodman, perhaps setting the outer limits of the NLRB’s willingness to allow unions to organize “micro units” of employees. In Bergdorf, the union sought to organize employees working in the second floor “Salon Shoe Department” of the company’s multi-floor, Manhattan store as well as the “contemporary footwear” employees working on the fifth floor who themselves were a subset of the larger “Contemporary Sportswear Department.”

All employees at the store enjoyed identical working conditions; they were issued the same handbook, were offered the same health care plan, had the same holidays and vacations, and worked the same number of hours. Employees selling shoes on the second and fifth floors had separate direct supervisors who reported to different floor managers. Employees were not interchanged between the Salon Shoe and Contemporary Footwear departments.

The NLRB ruled that the two groups of employees did not share a community of interest and, therefore, did not constitute an appropriate bargaining unit. The Board observed that the unit the union sought to represent did not follow “any administrative or operational lines drawn by the employer,” had little contact, were separately supervised and otherwise did not share sufficient interests in working conditions to be grouped together for collective bargaining.

Understanding the NLRB’s Specialty Healthcare Decision

The Macy’s and Bergdorf decisions purport to apply the Board’s 2011 decision in Specialty Healthcare, which permits unions to organize small groups of employees such as single departments or single job classifications of workers within an employer’s overall operation. After the union has established that the unit they have requested is appropriate that decision places the burden of proof on the employer to establish that any employees sought to be added to the unit share an “overwhelming community of interest” with the group the union seeks to represent. Naturally, Specialty Healthcare makes it far easier for unions to collect authorization cards and get to elections due to their ability to organize the smallest possible unit. In Macy’s, for instance, the union only needed to secure authorization cards from 30 percent of the 41 employees in the unit (13 cards) rather than 45 cards from among the 150 total employees at the store.

The danger of unions’ use of micro-units is not limited to the ease with which they may be organized. Consider for example (i) the time, expense, and disruption caused by multiple union organizing campaigns; (ii) the possibility of negotiating multiple labor contracts; (iii) circumstances in which different unions may seek to represent various departments or job classifications within a single operation; (iv) competitive bargaining among the various micro units; and (v) the danger of unstable bargaining relationships.

As Macy’s demonstrates, under the Specialty Healthcare analysis it is extremely difficult for employers to defeat a micro unit by simply arguing that the appropriate bargaining unit should also include other groups of workers, even when those employees work in the same establishment under almost identical terms and conditions of employment. However, there are limits. A careful reading of Berfdorf and Macy’s provides employers key guidance on proactive steps to take to change the dynamic.

Proactive Steps for Employers to Develop the Optimal Bargaining Unit

Employers that desire to remain union-free need to consider the impact of the NLRB’s decisions paving the way for unions to organize small bargaining units. Employers have the ability to make changes now that help defeat attempts to organize micro units. According to the Board, the manner in which employers chose to structure their operations, including the manner in which the skills and training of employees are utilized throughout the operation and supervision of employees “is an important consideration in any unit determination.”

The Macy’s and Bergdorf decisions establish that the critical factors in the NLRB’s bargaining unit analysis are whether separate groups of employees have common supervision and have common or overlapping job duties as well as the degree of interchange between departments or job classifications. Dependent upon the particular operation or industry, employers can consider combining job classifications, cross-training employees in multiple job duties and rotating employees among classifications or jobs. Employers should make an individualized risk assessment and consider operational and structural changes based upon practical considerations unique to their businesses.

To meet the heightened burden of proof imposed by the NLRB, employers should document the degree of interchange between departments and across job classifications. As well, supervisor responsibilities should be structured so that oversight of multiple departments is shared among several individuals. Employees must also share common terms and conditions of employment such as wages, benefits, and training requirements. To be sure, these steps may not make sense for every business, but are worthy of consideration, particularly in light of the NLRB’s ambush election rules.

In conjunction with developing the optimal bargaining unit—which will be an asset in the event of a union campaign—employers should also implement strategies that make unions unnecessary. This includes insuring fair and equitable treatment of workers, establishing appropriate complaint procedures, workplace issue identification and resolution, instituting adequate supervisory training, and offering competitive wages and benefits. The NLRB’s obsession with micro units and ambush elections are reminders that the most successful campaign is the one employers never have to face.

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.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

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Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

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