Fragmented Workforces: Specialty Healthcare and the Advent of “Micro-Units”

The National Labor Relations Board recently made it easier for unions to win representation elections by allowing unions to fragment workforces and cherry-pick the unit of employees most likely to support unionization. On March 20, 2013, this happened to a plumbing contractor’s workforce in Fraser Engineering Company, 359 NLRB No. 80 (2013), where the Board recognized a smaller unit of plumbers and pipefitters after having approved a larger unit only two years prior (when the union lost the election). Such “micro-units” were made possible by the Board’s decision in Specialty Healthcare, 357 NLRB No. 83 (2011). There, the Board substantially altered its traditional community-of-interest analysis for unit determinations, which considered factors such as:

•    similarity of wages and working conditions;
•    similarity of skills and training;
•    common management and supervision;
•    interchange and frequency of contact between employees;
•    similarity of job functions; and
•    the bargaining history in the particular unit and industry.

The traditional community-of-interest standard held that the interests of the employees in the unit sought must be “sufficiently distinct” from those of other employees to warrant the establishment of a separate unit. Specialty Healthcare reversed this long-standing precedent. The Board’s new standard holds that a unit composed of employees performing the same job at the same facility is presumptively appropriate, and the burden is on the employer to demonstrate that the excluded employees share an “overwhelming community of interest” with the included employees. As framed by the Board, this “overwhelming community of interest” burden will be very difficult to overcome. 

Specialty Healthcare Spares No Industry

Even though Specialty Healthcare arose in the non-acute health care industry, the ruling has no discernible boundaries so that it can be extended to just about any industry, including maritime, retail food and grocery, television and radio, newspaper, construction, and manufacturing. This ignores that unit determinations in other industries are based on different considerations and patterns of decision-making. In the utility industry, for instance, there is a presumption in favor of system-wide bargaining units (see, for example, Alyeska Pipeline Serv. Co., 348 NLRB 808 (2006)). Industry-specific standards rest not only on community-of-interest factors, but also on the fundamental policy objective of the National Labor Relations Act—minimizing interruptions to commerce resulting from labor disputes.

The Board’s recent recognition of a “micro-unit” at a single Macy’s retail store in Massachusetts demonstrates how extending Specialty Healthcare to all industries is problematic. In November 2012, a Board Regional Director determined that a unit consisting only of employees from a Macy’s cosmetics and fragrances department was appropriate under Specialty Healthcare. In disagreement with the Board’s refusal to apply the previously-established presumption of “wall-to-wall” units in the retail industry, two retail trade groups—the Retail Industry Leaders Association and the Retail Litigation Center—filed an amicus brief supporting Macy’s contention that the single department unit would balkanize the structure of its business. “The introduction of multiple bargaining units in a single store would set employees against each other, prompt competition for benefits, impair employee morale, and increase the risk for disruptive labor disputes ostensibly involving small pockets of employees, but which would envelop all store employees,” argued the trade groups. The Board has not yet issued a decision in response to Macy’s election objections.

In the food/manufacturing industry, the Board recently recognized a unit of only maintenance employees at a Nestle’s manufacturing facility. Several trade groups, including the Chamber of Commerce, filed an amicus brief on behalf of Nestle’s. The trade groups’ concerns apply to all industries:

The “chaos” the [Board’s prior precedent] sought to avoid is not theoretical or speculative; rather, it represents the real, negative consequences that naturally flow from unit proliferation that carves up an employer’s workplace. Specialty Healthcare permits multiple smaller bargaining units, drawn along discrete groupings such as job title, department or similar lines, instead of larger units reflecting the employer’s functional integration and the resulting community of interests shared by its employees. The employer’s bargaining obligations are thus diffused among different groups that bear no relation to the way in which the employer has organized its operations.

And the Board’s most recent announcement on unit determination, Fraser Engineering, implicates the construction industry. There, the Board re-affirmed that employers might never be able to establish an “overwhelming community of interest” when trying to prove that excluded employees should be included in the unit, as the Board rejected a larger unit of plumbers and pipefitters after approving that same unit only two years prior. The union in Fraser Engineering actually had lost an election two years earlier, but under the guise of Specialty Healthcare, it won the more recent election after carving out a smaller group of employees who favored the union. The irony of Fraser Engineering is that in the construction industry the Board has historically viewed units composed only of specific crafts (e.g., carpenters) to be appropriate. In Fraser Engineering, however, the unit was limited to a single craft (plumbers and pipefitters). But the Board saw fit to limit the unit even further based on the geographic boundaries within which the employees worked even though it was undisputed that the same wage and benefit policies and work rules applied to all employees, and there was some evidence of functional integration of the craft employees. 

A grocery store would present a particularly compelling example of the potential for the “balkanization” of an employer’s workforce. Within 50 feet of each other at a grocery store, there could easily be a cashier checking out customers, a bagger helping with the groceries, a produce employee weighing and sorting fruit, a maintenance employee cleaning a spill, a sales employee checking inventory, someone working at the deli, someone working in the bakery, and someone stocking shelves. Under Specialty Healthcare, this could lead to eight separate bargaining units, with eight collective bargaining agreements, eight wage scales, eight seniority lists, eight attendance policies, and eight workplace safety rules. All of this, even though the grocery store may have historically had a single unified organizational structure associated with its wage and benefit programs, work rules, supervision, etc. 

Congress Reacts to Prevent Proliferation of “Micro-Units”

Some members of Congress have introduced a bill to fix the perceived problems created by Specialty Healthcare. The Workforce Democracy and Fairness Act (WDFA), H.R. 3094, would statutorily codify the “sufficient community-of-interest” test, using eight delineated factors (e.g., similarity of wages, working conditions, and skills) for unit determinations. The WDFA would also shift the burden, so the Board would be instructed to not exclude employees from the unit unless the interests of the group sought are sufficiently distinct from those of included employees to warrant establishment of a separate unit. 

But the WDFA is unlikely to pass any time soon, if at all. For the foreseeable future, employers can expect little relief from Congress or the Board as unions continue to have the ability to gerrymander workforces in search of the most favorable “micro-units.”

Conclusion

The Board is ultimately charged with minimizing interruptions to commerce resulting from labor disputes. But workforces fragmented by “micro-units” only invite interruption, regardless of the industry. The Board’s recent decision in Fraser Engineering exemplifies how unions that lost elections prior to Specialty Healthcare may now attempt to hand-pick smaller units and carve up workforces to win elections at those same employers. Thus, employers across all industries could find themselves in this predicament, organized by smaller units with multiple collective bargaining agreements at facilities where a larger and perhaps more representative sample of employees had previously voted against unionization.

What are employers to do in the face of the Specialty Healthcare framework? No doubt this decision presents challenges since the Board seems intent on finding that employees who share a single job classification can constitute a separate and appropriate bargaining unit. One suggestion to consider is the implementation of cross training and a human resources structure dedicated to allowing movement between jobs within an organization. To the extent an employer can show that employees are called upon to perform numerous tasks or must be able to cross over job classifications or that there is a practice of internal transfers from job class to job class, the employer might be able to argue that a separate unit based on a specific job title is not appropriate. That may not be possible in all workplaces, but in organizations that have emphasized cross training as a hallmark of lean and efficient operations, demonstrated adherence to such programs may prove useful in the post-Specialty Healthcare arena.