On Friday, the National Labor Relations Board ended a busy week by issuing two more significant decisions on the eve of the expiration of Chairman Miscimarra’s term. The first decision, Raytheon, restored the well-established past precedent that an employer need not provide the union with notice and opportunity to bargain when making certain unilateral changes consistent with past practice. In the second decision, PCC Structurals, the Board overruled the controversial Specialty Healthcare standard, which had permitted the establishment of “micro-units” of small clusters of employees, and reinstated the traditional “community-of-interest” standard in determining what is an appropriate bargaining unit for union representation.

No duty to bargain over unilateral changes consistent with past practice:

In Raytheon Network Centric Systems, the Board once again returned to pre-Obama Board precedent by holding that an employer was not required to provide the union with notice and an opportunity to bargain when it unilaterally modified employment conditions since such modifications were a continuation of its past practice.

The decision expressly overruled the 2016 E.I. du Pont de Nemours (DuPont) case in which the Board held that changes consistent with past practice may still be mandatory subjects of bargaining if the past practice was implemented under a management’s rights clause included in a CBA which has expired or if the changes involved management “discretion.” In Raytheon, the Board called DuPont “fundamentally flawed” because it “distort[ed] the long-understood, commonsense understanding of what constitutes a ‘change,’” noting that it clashed with well-established Board precedent.

Raytheon, like many other cases in this line of precedent, dealt with an employer’s ability to change employee healthcare benefits. Because the employer had made similar modifications (in kind and degree) to healthcare costs and benefits every year at the same time each year for over a decade, the Board found the challenged modification to be a continuation of past practice rather than a “change.” Therefore the employer did not violate the NLRA by failing to give the union notice and an opportunity to bargain.

Employers should take comfort in the Board’s refusal to find a Section 8(a)(5) violation for an employer’s unilateral change that is consistent with an established practice, regardless of whether a CBA was in effect at the time the past practice was created and whether the changes involve some degree of discretion.

Traditional “community-of-interest” standard for determining bargaining unit:

In PCC Structurals, Inc., the Board overruled the 2011 Specialty Healthcare & Rehabilitation Center of Mobile decision, returning to the traditional analysis of defining a “Community-of-Interest” for bargaining units. In Specialty Healthcare, the Board announced a new standard for delineating a bargaining unit when a union petitions for an election to represent a specified group of employees and the employer seeks to include those employees excluded from the proposed bargaining unit in order to create a wall-to-wall unit. Under that standard, the Board would not find the union’s proposed bargaining unit inappropriate unless the employer showed that the excluded employees had an “overwhelming” community of interest with those employees included in the proposed bargaining unit. Specialty Healthcare’s practical effect was to bolster the creation of “micro-units” made up of small groups of a company’s employees.

In PCC Structurals, the Board described the “overwhelming” Specialty Healthcare standard as “fundamentally flawed.” The Board held the original community-of-interest standard, which has been used throughout most of the Board’s history, was the appropriate standard. Under this standard, “the Board will determine whether the petitioned-for employees share a community of interest sufficiently distinct from employees excluded from the proposed unit to warrant a separate appropriate unit.” The Board does so by considering various factors, including interchangeability with other employees and whether the employees are separately supervised. The Board reasoned that the newly reinstated standard permits the Board to evaluate and protect the interests of all employees, both included and excluded from the proposed bargaining unit, without the need to prove an “overwhelming” shared interest.

The PCC Structurals decision reached the Board following a Regional Director’s decision finding that a 100-employee unit was appropriate despite the employer’s argument that its entire complement of over 2,500 employees was the smallest appropriate bargaining unit. The Board did not opine on the merits of the case, but rather remanded to the Regional Director to apply the traditional community-of-interest standard.

With this decision employers can be encouraged that the standard for choosing the appropriate bargaining unit has now returned to the familiar analysis, giving the Board more flexibility to consider the merits of each individual case and making it easier for employers to be heard on which employees should be included—and excluded—from the bargaining unit.