New Terrain for Employers, Unions After ‘Micro Unit’ Test Repealed

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By Lawrence E. Dubé

The National Labor Relations Board has reset its standard for determining whether a proposed voting unit is appropriate for collective bargaining under federal labor law. Employers and unions now will have to adapt quickly to a changing landscape following the board’s decision in PCC Structurals, Inc.

Setting the clock back more than six years, the Republican-majority labor board overruled the 2011 decision in Specialty Healthcare and returned to a traditional community-of-interest standard for determining an appropriate bargaining unit in each union representation case.

Unions won’t have the same power to shape bargaining units to their advantage, management attorneys from Fisher & Phillips LLP told Bloomberg Law.

But union attorney Caren P. Sencer said organizers will continue “doing what they’ve been doing.” What the Dec. 15 ruling will do is encourage employers to fight union petitions in many cases by advocating for elections in “wall-to-wall” units that include all of a company’s employees, she said. Sencer, who is a shareholder at Weinberg, Roger & Rosenfeld in Alameda, Calif., represented the union in PCC Structurals.

Going forward, former NLRB member Harry I. Johnson said employers should consider how the organizational structure of their businesses may affect the NLRB’s bargaining unit determinations.

Johnson, who served as a Republican board member from August 2013 to August 2015 and now represents employers at Morgan, Lewis & Bockius LLP in Los Angeles, told Bloomberg Law he was “surprised but not shocked” that the board overruled the 2011 ruling, which had been affirmed by a number of appellate courts.

Debate over an appropriate bargaining unit is better handled as “one big question” in a representation case, rather than through the multi-step approach adopted in Specialty Healthcare, Johnson said.

Traditional Test Reinstated

The decision to overturn Specialty Healthcare came one day before Chairman Philip A. Miscimarra’s term on the board expired. Members Marvin E. Kaplan (R) and William J. Emanuel (R) joined Miscimarra in the 3-2 decision.

Employers advocating the inclusion of more employees in a proposed bargaining unit will no longer be required to show they have an “overwhelming” community of interest with the workers sought by a petitioning union, the board majority said in the Dec. 15 ruling in PCC Structurals.

The board’s decision in PCC Structurals came on review of an NLRB regional director’s decision to grant a union election at a Portland, Ore., manufacturing company that covered approximately 100 workers out of a workforce of about 2,500. The regional director applied the Specialty Healthcare test and found that the union was entitled to have an election limited to the roughly 100 welding employees, and excluding more than 2,400 other workers in the company’s non-union plants.

Under Specialty Healthcare, a union’s request for a small unit can be appropriate if it includes a readily identifiable group of employees who share some community of interest. The union’s proposal can be rebutted only if the employer shows that other workers shared an “overwhelming community of interest” that required allowing them to vote with the workers the union sought.

The International Association of Machinists won the election 54-38, but PCC requested the board review the case.

The board overruled Specialty Healthcare and remanded the case with instructions for the regional director to apply a traditional community-of-interest test that the NLRB had utilized prior to the 2011 Specialty Healthcare ruling.

Decision Removes ‘Impossible’ Standard

Fisher & Phillips lawyers who represented PCC Structurals told Bloomberg Law the board’s abandonment of Specialty Healthcare will make a major change in the roles of unions, employers, and the NLRB in union representation cases.

Rick Grimaldi, a Fisher & Phillips partner, said Specialty Healthcare allowed unions to organize small groups within larger workforces in an effort to “pick off” one sympathetic group in the hope of introducing a “Trojan horse” of union support that would later allow the union to expand its reach within a company.

Specialty Healthcare allowed unions “almost unilaterally” to determine the unit that would vote on union representation, Grimaldi said. The board usually approved such union proposals, allowing the unions to disregard or disenfranchise other employees who might have wanted to participate in a vote on union representation, he said.

Employers could counter a union’s demand for a small grouping, or “micro-unit,” by proposing the board include more jobs or workers. But Todd A. Lyon, a Fisher & Phillips partner in Seattle, said it was “almost impossible” to convince the board that the additional employees had an “overwhelming community of interest” with those targeted by a union.

Unions definitely tailored organizing drives to Specialty Healthcare, Lori Armstrong Halber, a Fisher & Phillips partner in Philadelphia, told Bloomberg Law.

And while the NLRB has reported that the size of units in NLRB elections has not changed significantly since 2011, Halber said the relevant metric is not the size of the units, but what share of a workforce is included in an NLRB election.

The example in PCC, where IAM organized 100 employees out of 2,500 workers in a plant where the welders worked alongside other workers is a classic example of a union attempting to carve out a small “micro-unit” in which it could prevail, Halber said.

Organizers Won’t Be Deterred

Sencer said the 3-2 decision was one of the “sad realities” that follow at the NLRB when the White House changes hands.

Sencer said that she doesn’t think unions will change their organizing tactics as a result of PCC Structurals. They will continue to function in the same way and will advocate for units they believe are appropriate under the NLRA, Sencer predicted.

It’s the NLRB, and particularly the agency’s regional directors, that may determine the impact of the board’s decision, Sencer said. “Regional directors have a lot of discretion,” and they may interpret the new board ruling in different ways.

Unions and employers should follow closely the decisions issued in local NLRB offices to get a sense of how a regional director may rule in a bargaining unit dispute, Sencer said. It’s possible that Regional Director Ronald K. Hooks will approve the PCC welders’ unit or an alternative unit smaller than the employer’s wall-to-wall proposal, she said.

Employers, Prepare for Unit Fights

Johnson said PCC Structurals offers two major takeaways for employers facing union organizing drives.

First, he said, employers need to examine how they organize departments and subdivisions within a company.

Under the traditional community-of-interest test that the board reaffirmed, such details may be critical in determining which employees can be combined in an appropriate unit for an NLRB election, he said.

Employers also should be attentive to the “supervisory wingspan” in a workplace, Johnson said. Identifying which employees report to particular supervisors can be key in determining which employees share a community of interest and constitute an appropriate bargaining unit under the NLRA.

To contact the reporter on this story: Lawrence E. Dubé in Washington, D.C. at ldube@bloomberglaw.com

To contact the editors responsible for this story: Terence Hyland at thyland@bloomberglaw.com

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