As part of the National Labor Relations Board’s spate of recent decisions reversing Obama-era Board precedent, on December 15, 2017, the Board in PCC Structurals, Inc., 365 NLRB No. 160 (2017) overturned Specialty Healthcare, 357 NLRB No. 83 (2011), reinstating the Board’s prior standard for determining the appropriateness of a petitioned-for bargaining unit. The Board explicitly rejected Specialty Healthcare’s “overwhelming community of interest” standard, effectively rebalancing the scales and removing the heightened burden placed on employers attempting to demonstrate that other excluded employees belong in a petitioned-for bargaining unit.

Background

Before 2011, when an employer challenged the appropriateness of a petitioned-for bargaining unit, the Board applied a “community of interest” test. This test involved weighing several factors: (1) whether the employees are organized into a separate department; (2) have distinct skills and training; (3) have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; (4) are functionally integrated with the employer’s other employees; (5) have frequent contact with other employees; (6) interchange with other employees; (7) have distinct terms and conditions of employment; and (8) are separately supervised.”1 Based on those factors, the Board determined, on a case-by-case basis, “whether the petitioned-for employees share[d] a community of interest sufficiently distinct from employees excluded from the proposed unit to warrant a separate appropriate unit.”2

“Overwhelming Community of Interest” Standard

The Board’s 2011 Specialty Healthcare decision fundamentally changed the calculus.3 There, the Board adopted a new standard, holding that if the petitioned-for unit shared a community of interest, the Board deemed the unit appropriate, even if employees in the petitioned-for unit also shared a community of interest with a larger group of employees who were not included in the requested unit. Employers seeking to challenge the scope of the unit had to “demonstrate that the additional employees the proponent [sought] to include share[d] an overwhelming community of interest with the petitioned-for employees, such that there is no legitimate basis upon which to exclude certain employees from the petitioned-for unit because the traditional community-of-interest factors overlap[ped] almost completely.”4

Specialty Healthcare’s heightened burden proved exceedingly difficult for employers to meet, leading to a dramatic increase in “micro units” consisting of small subsets of employees within an employer’s facility instead of more traditional bargaining units. For example, in a 2014 decision, the Board determined as appropriate a bargaining unit comprising employees working in only one of a department store's 11 departments. The Board held the store had failed to show that employees outside of the cosmetics and fragrances department shared an “overwhelming community of interest” with the petitioned-for unit.5

Overturning Specialty Healthcare

In PCC Structurals, the union petitioned for a unit of approximately 100 re-work welders and rework specialists working on the “back end,” or second stage of the employer’s two-part manufacturing process. In response, the employer argued that the appropriate unit included all 2,565 production and maintenance employees. The NLRB regional director applied the “overwhelming community of interest standard,” and concluded that the excluded employees lacked an “overwhelming community of interest” with the petitioned-for unit, even though all employees were functionally integrated in the production process and worked similar hours, were paid under the same wage structure, received the same benefits, wore the same attire and were subject to the same rules and policies.

Under its new Republican majority, the Board, in a 3-2 decision, held that Specialty Healthcare was “fundamentally flawed,” citing several strong policy considerations necessitating a return to the traditional community of interest standard. Citing Chairman Miscimarra’s dissent in Specialty Healthcare, the majority stated that the “overwhelming community of interest” standard had represented “an unwarranted departure” from the traditional test and explained that Specialty Healthcare’s progeny upended decades of industry-specific precedent concerning bargaining unit preferences. The majority found that Specialty Healthcare’s deference to the union’s petitioned-for unit, and higher burden for employers, substantiality limited the Board’s ability to carry out its statutory duty to take an active role in deciding the appropriate bargaining unit “in each case.” Moreover, the Board noted that the “overwhelming community of interest” standard improperly ignored the Section 7 rights of excluded employees by focusing only on the Section 7 rights of the petitioned-for unit, except in rare cases where the employees shared “overwhelming” interests.

In a dissent opinion, Members Pearce and McFerran argued that the Board’s role 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.” The dissent further objected to the majority’s refusal to allow briefing on the case and its failure to follow the eight circuit courts that have upheld the Specialty Healthcare standard.

Going Forward

PCC Structurals represents a return to the traditional community of interest standard. Employers, therefore, should expect to face a substantially lesser burden when challenging the scope of a union’s petitioned-for unit. While this certainly appears to benefit employers by decreasing the risk of “micro-units,” it remains to be seen how circuit courts will respond to the Board’s return to its prior standard. Given the complex, evolving, and sometimes contradictory nature of the principles governing the appropriateness of bargaining units, we recommend that employers work with experienced employment counsel to ensure their policies, and the implementation of those policies, comply with applicable law.