The pendulum has swung once again. On Dec. 14, 2022, the National Labor Relations Board (NLRB or Board) issued a decision in American Steel Construction, Inc., 372 NLRB No. 23 (2022), modifying the framework applied in bargaining unit determination cases where a labor union seeks to represent only a subgroup of employees, which the employer asserts improperly excludes other employees who share a community of interest. The decision returns the Board to the prior test governing such determinations, as set forth in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011) (decided by the Obama Board), and overrules PCC Structurals, 365 NLRB No. 160 (2017) and The Boeing Co., 368 NLRB No. 67 (2019) (both decided by the Trump Board).

The result is that the door again is opened to unions organizing and securing collective bargaining rights in small, carefully selected units of employees (sometimes referred to as "micro-units") in which they have been able to gain support even though other employees who share similar interests are excluded and a majority of employees in the larger unit that the employer claims to be appropriate may not want union representation. The two dissenting Board members' principal concern with American Steel and its return to the Specialty Healthcare standard is that its motivating purpose appears to be "making it easier for unions to win elections" rather than determining an appropriate unit for collective bargaining.

Background

Prior to Specialty Healthcare, the NLRB's longstanding approach to appropriate-unit determinations turned on whether the employees in a particular unit share a "community of interest." The traditional community-of-interest factors considered by the Board in making this determination include whether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work (including 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. At bottom, the determination to be made is whether the interests of the employees in the petitioned-for unit are sufficiently distinct from those of other employees to warrant a separate unit. The Board analyzed both 1) whether the employees in the proposed unit shared an internal community of interest and 2) whether the excluded employees had meaningfully distinct interests that outweighed similarities with the unit members.

In Specialty Healthcare (2011), a Democrat-controlled Board changed the application of these traditional principles in cases in which a party asserts that the petitioned-for unit is inappropriate and that the smallest appropriate unit must include additional employees. Rather than affording comparable weight to a petitioned-for unit's internal community of interest and to the distinctness of those interests from those of the excluded employees, the Specialty Healthcare standard gave overriding weight to whether the petitioned-for employees have a community of interest with each other. If those employees are readily identifiable as a group (based on job classifications, departments, functions, work locations, skills or similar factors) and share a community of interest with each other, then Specialty Healthcare compels a finding that the unit is appropriate unless the party asserting that the unit should include additional employees shows that those employees "share an overwhelming community of interest" with the petitioned-for employees "such that there is no rational basis for the exclusion." This is a "heightened showing" that requires the interests of the petitioned-for and excluded employees to "overlap almost completely" to mandate inclusion.

Applying the Specialty Healthcare standard, the NLRB has allowed unions to secure elections in internally homogenous, identifiable and separate units that exclude other employees who have a shared community of interest, but not one sufficient to constitute an "overwhelming community of interest." For example, in Specialty Healthcare, the Board approved a unit of certified nurse assistants in a non-acute care nursing home, which excluded other employees who also provided care to residents. In other cases, the Board found appropriate 1) a unit of 31 rental service agents working at a car rental facility, which excluded other employees working in the same car rental operation, and 2) a unit of 41 cosmetics and fragrance employees, which excluded all of the other sales employees in the store. These units almost certainly would not have been approved under the traditional "community of interest" standard. One of the principal criticisms of Specialty Healthcare by the dissenting Republican NLRB members was that the "overwhelming community of interest" standard was too deferential to the petitioned-for unit. The union's choice of unit would control in all but narrow and highly unusual circumstances.

Trump Era: Community of Interest Standard Reinstated

In PCC Structurals, Inc. (2017), as revised in The Boeing Co. (2019), a Republican-controlled Board overruled Specialty Healthcare and returned to the traditional "community of interest" standard, which "permits the Board to evaluate the interests of all employees—both those within and those outside the petitioned-for unit— without regard to whether these groups share an ‘overwhelming’ community of interest.”

The Board in PCC Structurals explained that it would no longer be constrained by the extraordinary deference that Specialty Healthcare afforded to the petitioned-for unit. Rather, applying the Board's traditional community-of-interest factors, it would determine whether the petitioned-for employees share a community of interest sufficiently distinct from employees excluded from the proposed unit. In so doing, the Board could find that the exclusion of certain employees renders the petitioned-for unit inappropriate even when the excluded employees do not share an "overwhelming" community of interest with the employees in the petitioned-for unit.

Another Swing with American Steel

As often is the case under the National Labor Relations Act, all it took for the pendulum to swing back was another change in administration and corresponding change in which party controls the Board. In American Steel (2022), the newly comprised Biden Board overruled PCC Structurals/Boeing and reinstated the Specialty Healthcare standard. According to the American Steel Board, imposing the heightened "overwhelming community of interest" burden on the party challenging the appropriateness of the petitioned-for unit properly protects the statutory rights being exercised by employees seeking representation, while also requiring that the petitioned-for unit have a rational basis and the requisite community of interest to engage in effective collective bargaining. However, according to the two dissenting Board members, the return to Specialty Healthcare would not help to ensure that the unit organized by the union would facilitate efficient and stable collective bargaining. Rather, it appeared to be designed "for the purpose of making it easier for unions to win elections" conducted in carefully selected micro-units in which they have been able to secure employee support.

How and why the applicable unit-determination standard makes a difference is demonstrated by American Steel itself. There, the union sought to represent all journeymen and apprentice field ironworkers working for the employer. The employer asserted that the petitioned-for unit was inappropriate because the smallest appropriate unit must contain additional employees: specifically, the painters, drivers and inside fabricators who work at the employer's shop. Applying PCC Structurals/Boeing, the NLRB Regional Director agreed that the petitioned-for unit was not appropriate because there was insufficient evidence to establish that the employer's field ironworkers possessed a community of interest that was "sufficiently distinct" from the employer's remaining employees. Because the petitioning union was not willing to proceed to an election in any unit other than the petitioned-for unit, the Regional Director dismissed the petition. Based on the return to the Specialty Healthcare standard, however, the union (on remand) will be able to secure an election unless the employer can satisfy the heightened "overwhelming community of interest" showing.

Considerations for Employers

For employers, the return to Specialty Healthcare brings with it all of the same concerns associated with the original decision itself, including the time, expense and disruption of responding to organizing campaigns in discrete micro-units of pro-union employees; the possibility of being required to negotiate multiple union contracts for different groups of employees in the same facility; and the potential for "competitive bargaining" among the various micro-units.

This may be a good time for employers to undertake a union organizing risk assessment, as well as consider operational and structural changes that could minimize susceptibility to micro-unit organizing. Changes that could help employers meet the "overwhelming community of interest" test include: expanding the supervisory span of control to a larger number of departments or job classifications; combining departments or job classifications; cross-training employees in multiple classifications and jobs; rotating employees among classifications or jobs; and increasing the degree of interchange among departments and classifications.