NLRB Issues Mixed Decisions When Applying Specialty Healthcare to Retail Industry

by Ballard Spahr LLP

In two separate decisions, the National Labor Relations Board (NLRB) has extended to the retail industry the standard for recognizing what is an “appropriate” bargaining unit that it established in Specialty Healthcare and Rehabilitation Center of Mobile with mixed results. On July 22, 2014, the NLRB recognized a bargaining unit consisting of cosmetic and fragrance department employees at a Massachusetts Macy’s store in Macy’s, Inc. and Local 1445, United Food and Comm. Workers. Days later, however, the NLRB reached a different conclusion in a case involving the Bergdorf Goodman department store in Manhattan. In The Neiman Marcus Group d/b/a Bergdorf Goodman and Local 1102 Retail, Wholesale Department Store Union, the NLRB determined that a group of women’s shoe sales workers was not an appropriate bargaining unit.

In Specialty Healthcare, the NLRB overruled its well-established standard in Park Manor Care Center. The NLRB announced that a petitioned-for unit of employees who are readily identifiable as a group and share a community of interests is an appropriate bargaining unit unless the employer can show that employees it seeks to include in the proposed unit share an “overwhelming community of interests” with the petitioned-for unit. Specialty Healthcare (which became Kindred Nursing) challenged the Board’s decision, which the Sixth Circuit upheld last year.

In returning to a traditional community of interests rule for determining an appropriate bargaining unit, the NLRB in Specialty Healthcare noted that there can be more than one appropriate grouping of employees for purposes of collective bargaining. Consequently, the fact that a larger unit also shares a community of interests is not determinative.

The NLRB’s decision in Macy’s validates employer fears that the Specialty Healthcare decision would be expanded outside the health care field. Similar to the nursing home in Specialty Healthcare, Macy’s argued that the bargaining unit should include all employees of the Massachusetts store or, at minimum, all “selling employees” of that location. Prior to the Macy’s decision, the Board typically held that a wall-to-wall unit of all store employees was the appropriate bargaining unit.

In Macy’s, the Board departed from this precedent and determined that the cosmetic and fragrance employees are a readily identifiable group that shares a community of interests. Further, the Board determined that Macy’s failed to demonstrate other groups of employees shared an overwhelming community of interests with the petitioned-for group because there were meaningful differences between the cosmetic/fragrance employees and other employees, such as the method of hiring, training, uniforms, and supervisory structure. Moreover, the NLRB noted that the cosmetic/fragrance employees were not functionally integrated with other groups of employees.

Applying these same principles in Bergdorf Goodman, the NLRB concluded that the subset of employees in the petitioned-for unit did not share a community of interest because the group did not follow any administrative or operational lines established by Bergdorf Goodman. The unit in Bergdorf Goodman was composed of “Salon Shoe” employees, a separate department, and “Contemporary Footwear” employees, which was part of a larger “Contemporary Sportswear” department.

The employers’ departmental designations played a prominent role in both decisions. However, the Board cautioned that it may have reached a different decision in Bergdorf Goodman if there was evidence that the departmental organization did not track the employer’s operation structure, such as if both sets of employees had common supervision or there was significant employee interchange between the groups.

Despite the mixed results in applying Specialty Healthcare, the NLRB’s enforcement of the traditional community of interests test will undoubtedly embolden unions to seek representation of small subdivisions of an employer’s workforce along employer-organized departmental lines to secure a foothold. Such tactics will increase the risk of the creating several bargaining units, possibly represented by different unions, within one facility. This is particularly true as the NLRB defines an “overwhelming community of interests” as nearly overlapping interests, or where there is no rational basis for excluding the workers at issue. Employers must be mindful of this issue when conducting campaigns in response to union organizing activity.

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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