Employment Law Daily NLRB overturns Specialty Healthcare and its ‘micro-units,’ eliminates ‘overwhelming community of interest’ standard
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Wednesday, December 20, 2017

NLRB overturns Specialty Healthcare and its ‘micro-units,’ eliminates ‘overwhelming community of interest’ standard

By Ronald Miller, J.D.

Granting an employer’s request to review a regional director’s direction of election, which found that a petitioned-for unit of approximately 100 full-time and regular part-time welders was an appropriate bargaining unit, the NLRB redefined the applicable standard for determining whether a proposed bargaining unit constitutes an appropriate unit when the employer contends that the smallest appropriate unit must include additional employees. In a 3-2 decision, the Board overruled Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011) (Specialty Healthcare) and reinstated the traditional community-of-interest standard for determining an appropriate bargaining unit in union representation cases. Members Pearce and McFerran filed a separate dissenting opinion (PCC Structurals, Inc., December 15, 2017).

The employer’s operations consisted of three “profit and loss centers” located within five-miles of one another. The manufacturing process was the same at all three facilities. That process involved two stages. The employees in the petitioned-for unit worked in the “back end” stage of the production process. For its part, the employer contended that the smallest appropriate bargaining unit was a wall-to-wall unit of 2,565 production and maintenance employees.

Specialty Healthcare standard. To determine the appropriateness of the petitioned-for unit, the regional director applied the standard set forth in Specialty Healthcare. Under Specialty Healthcare, if a union petitioned for an election among a particular group of employees, those employees shared a community of interest among themselves, and the employer took the position that the smallest appropriate unit had to include employees excluded from the proposed unit, the Board would not find the petitioned-for unit inappropriate unless the employer proved that the excluded employees shared an “overwhelming” community of interest with the petitioned-for group.

Petitioned-for units. The Board pointed out that it is well-established it may not certify petitioned-for units that are “arbitrary” or “irrational.” Moreover, it appears clear that Congress did not intend that the petitioned-for unit would be controlling in all but those extraordinary cases when the evidence of overlapping interests between included and excluded employees is overwhelming, nor did Congress anticipate that every petitioned-for unit would be accepted unless it is “arbitrary” or “irrational.”

The Board traditionally has determined whether the employees in the petitioned-for group share a community of interest sufficiently distinct from the interest of employees excluded from the petitioned-for group to warrant finding that the proposed group constitutes a separate appropriate unit. When making that determination, the Board has applied a multi-factor test assessing whether employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work; are functionally integrated with other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised.

According to the Board, the Specialty Healthcare standard improperly detracts from the Board’s statutory responsibility to make appropriate bargaining unit determinations. The Board determined that Specialty Healthcare gives all-but-conclusive deference to every petitioned-for “subdivision” unit without attaching any weight to the interests of excluded employees in potential “employer unit,” “craft unit,” “plant unit,” or alternative “subdivision” units unless the employer proves the existence of “overwhelming” interests shared between the petitioned-for employees and those outside the petitioned-for “subdivision.” It further concluded that Specialty Healthcare effectively made the extent of union organizing “controlling,” or at the very least gives greater weight to that factor that statutory policy warrants.

By its current ruling, the Board abandoned the “overwhelming” community-of-interest standard of Specialty Healthcare. It stated that “there are sound policy reasons for returning to the traditional community-of-interest standard that the Board has applied throughout most of its history, which permits it 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 interests.” Expressing no opinion as to whether the petitioned-for unit here was appropriate, the Board remanded the case to the regional director for further appropriate action consistent with its order.

Dissent. In a dissenting opinion, Members Pearce and McFerran noted that when workers seeking a representative have selected a bargaining unit in which they seek to organize, the role of the Board in reviewing that selection is to determine whether the selected unit is an appropriate one under the statute, not the unit the Board would prefer or the unit the employer would prefer. Part of ensuring workers the “fullest freedom” in exercising their rights to organize is acknowledging that they can associate with coworkers with whom they determine that they share common goals and interests. In this instance, the welders were a group of highly-skilled, highly paid employees performing a distinct function, who had no significant interchange with other employees. Thus, the dissent concluded that the regional director’s decision was unquestionably correct—that the welders shared a community of interest under any standard ever applied by the Board. According to the dissent, the majority mistakenly insists that the Board cannot retain Specialty Healthcare, and then adopts an inferior standard.

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