In a busy (and divided) week for the National Labor Relations Board (“NLRB” or “the Board”), the Board issued a 3-2 decision in American Steel Construction, Inc., 372 NLRB No. 23 (Dec. 14, 2022), reverting the test for determining an appropriate bargaining unit during an initial union election to the principles defined in Specialty Healthcare. Why should employers care about this development? It just became easier for unions to “cherry pick” a so-called “micro-bargaining-unit” during a representation election.

Bargaining Units

In the context of a union representation election, a bargaining unit is the group of employees that will vote on whether to unionize. While, at first, the union defines the bargaining unit, an employer can challenge the appropriateness of the petitioned-for unit. If an employer challenges the union’s petitioned-for unit, typically, the employer asserts that the unit members are not sufficiently distinct from excluded employees (i.e., the union-defined unit does not make sense without the inclusion of other employees -- who were most likely excluded because the union was not confident in their support).

The Changing Tides of the Board

The recent history on this issue begins with the Board’s decision in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011). The Specialty Healthcare Board purported to clarify the Board’s precedent in defining an “appropriate” bargaining unit. Under Specialty Healthcare, the adjudicator firsts analyzes the “community of interests” within the petitioned-for unit. The community of interest factors ask whether employees in the petitioned-for unit:

• Are organized into a separate department;
• Have distinct skills and training;
• Have distinct job functions and perform distinct work, including inquiry into 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.

If the members of the petitioned-for unit share a community of interest, then an employer disputing the unit’s appropriateness must show excluded employees share an “overwhelming” community of interest with the petitioned-for unit. The Board notes that this constitutes a heightened standard: to satisfy its burden under the “overwhelming community of interest” standard, an employer must show the interests between the petitioned-for and excluded employees “overlap almost completely.”

Then, in PCC Structurals, Inc., 365 NLRB No. 160 (2017), and The Boeing Co., 368 NLRB No. 67 (2019), the Board held that Specialty Healthcare misinterpreted the traditional principles of defining an appropriate bargaining unit. As a result, the PCC-Boeing Board overruled Specialty Healthcare and defined a new three-part framework under (what it deemed) the correct interpretation of the traditional principles. The PCC-Boeing three-part standard entails:

1. Identifying the community of interests among the members of the petitioned-for unit;
2. Comparing the community of interests between the members of the petitioned-for unit and the excluded employees; and
3. Factoring in Board precedent regarding specific facility, industry, or employer standards

While Board members admit that the first and third factors of the PCC-Boeing framework are consistent with Specialty Healthcare, the ideological divide arises in phase two of each standard. On one hand, the Specialty Healthcare standard requires a heightened showing to alter the petitioned-for unit. And, on the other hand, the PCC-Boeing framework takes a more balanced approach.

Rationale for Reinstating Specialty Healthcare

The majority and dissenting opinions in American Steel accentuate the ideological divide on this issue. The majority members began their discussion defining the overarching policy of the National Labor Relations Act as “encourag[ing] the practice and procedure of collective bargaining and to protect the exercise by workers of full freedom of association, self-organization, and designation of the representatives of their own choosing.” In contrast, the dissenting members note that “the purpose of collective bargaining is inseparable from the primary goal of the Act itself, which is to ‘achieve industrial peace by promoting stable collective-bargaining relationships.’” (emphasis in original).

Both opinions also acknowledge that no reviewing court has overturned either Specialty Healthcare or PCC-Boeing. That fact demonstrates the deference that these reviewing courts provide to the Board on this issue. Therefore, the standard for determining whether a petitioned-for bargaining unit is appropriate will most likely ebb and flow with the ideological viewpoint that has a majority on the Board. At this time, the former has a majority, so the heightened “overwhelming community of interest” standard will define appropriate bargaining units for the foreseeable future.

What Employers Need to Know

On December 14, 2022, the Board reinstated the Specialty Healthcare standard in its entirety and without modification. The Board also announced that the Specialty Healthcare standard will apply retroactively to all pending cases. So, if an employer is currently litigating this issue at any stage, the new standard will apply.

The other likely consequence of the American Steel decision will be an uptick in so-called micro-bargaining-unit petitions. Put differently, in workforces where unions do not believe they have wide support, a union can target small groups of employees to file an election petition. Examples of micro-units have included maintenance-only bargaining units, specific departments within a manufacturing business, and the like.

It is important that employers understand how labor law (and continuing developments in this area) could affect their rights and responsibilities. Now may be the time to evaluate your workplace under the lens of this new community of interest standard. If you have any questions, we encourage you to consult with us.