Recent NLRB Retail Rulings Muddy the Micro-Unit Waters

by Stinson Leonard Street

At the end of July, the National Labor Relations Board (NLRB) issued two decisions under its controversial Specialty Healthcare standard, approving of one “micro unit” and disavowing another in the retail context. The NLRB’s contrary rulings in cases with similar factual situations may muddy the waters of this already volatile area of labor law.

Since it was issued, employers have been concerned that the National Labor Relations Board’s controversial Specialty Healthcare decision would allow unions to fracture seemingly similar groups of employees into discrete “micro units.” (We previously discussed the ramifications of the Specialty Healthcare decision: NLRB's Controversial Specialty Healthcare Ruling Affirmed and NLRB’s One, Two Punch – A Challenging Landscape Ahead for Non-Union Employers.)

NLRB's View of Micro-Units

Specialty Healthcare announced that employers would have to show that “the excluded employees share an overwhelming community of interest with the included employees” before the NLRB would decide that the proposed bargaining unit was too narrow. Over the past several years, the NLRB approved discrete units among similar groups of employees in various industries. For example, in one case, the NLRB approved a unit including a dog breeding employer’s canine welfare technicians and instructors, but excluding its breeding, puppy-raising, kennel and veterinary employees. Until late July, however, the NLRB has not indicated whether it would approve of such fractured units in the retail industry where it has traditionally presumed that only “wall-to-wall” units are appropriate.

In its first decision, the NLRB endorsed a “micro unit” consisting of 41 cosmetics and fragrance sales employees working on two separate floors at a Macy’s that excluded the store’s other 79 sales employees. In doing so, the NLRB rejected Macy’s reliance on the strong presumption that only wall-to-wall bargaining units were appropriate in the retail industry, instead concluding that the cosmetics and fragrances employees were a readily identifiable group. The facts that all of these employees had the same manager (who did not manage any other sales employees), were housed in a separate department from the other sales employees, sold the same merchandise, worked in defined areas in the store, and had limited contact with the other sales employees were all keys to the NLRB’s conclusion.

In rejecting Macy’s argument that the other sales employees shared an “overwhelming community of interest” with the cosmetics and fragrances employees, the NLRB noted that they worked in different departments, that the cosmetics and fragrances department was structured differently than other departments within the store, the employees worked in their own distinctive areas, reported to different supervisors and the other sales employees had minimal contact with the cosmetics and fragrances employees. According to the NLRB, these facts were enough to defeat the presumption of a wall-to-wall unit, even though all of the employees performed similar selling duties in the same store.

Contrarily, in the second decision, the NLRB rejected a fractured unit consisting of 35 “Salon Shoe” employees (in a distinct department with their own manager) and 11 “Contemporary Footwear” employees (who reported to a different manager and were part of a larger “Contemporary Sportswear” department) at a Bergdorf Goodman. The NLRB concluded that the petitioned-for unit was inappropriate because sales associates in Salon shoes and Contemporary shoes lacked a community of interest given that the unit would depart from the employer’s organizational structure of the departments.

Key to its decision—and unlike in the Macy’s case—the Salon Shoe employees and Contemporary Footwear employees were part of different departments located on separate floors. Despite its reliance on the Bergdorf Goodman’s departmental structure in this case, the NLRB noted that had the workers shared common supervisors or the shoe departments interchanged employees, a community of interest could have been found despite the employer’s organizational structure.

What Are Employers to Do?

As we have noted in the past, one course employers concerned about “micro unit” proliferation may wish to take is a thorough review of their organizational structures. The practicality of such a review is highlighted by the NLRB’s divergent decisions in these factually similar cases. It appears that, while not definitive, the NLRB will give significant weight to an employer’s organizational decisions when applying Specialty Healthcare.

Along with understanding how an employer’s organizational structure may guide the NLRB’s unit decisions, it is also important for employers wishing to remain union-free to understand how to create positive employee relations and stop the organizing process before it starts.

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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