The Sixth Circuit Court of Appeals in Kindred Nursing Centers East, LLC v. NLRB recently upheld the National Labor Relations Board’s controversial 2011 Specialty Healthcare decision (discussed in our September 7, 2011, First Alert,“NLRB Clears Path for Unions to Certify Smaller Groups of Employees”) in which the NLRB essentially reversed 20 years of practice regarding how it determines what constitutes an appropriate bargaining unit for purposes of voting on union representation. Specifically, Specialty Healthcare permits unions to successfully petition for smaller “micro-units” -- for example, units that consist of only one department or even one job classification -- thus making it easier for unions to dictate the group of employees they wish to organize, which is often a critical factor in the outcome of union elections.

The Specialty Healthcare case began when a union petitioned for an election in a bargaining unit consisting of 53 certified nursing assistants (CNAs) at a nursing home. The employer objected to the proposed unit on the grounds that an additional 33 non-supervisory, non-professional service and maintenance employees shared a “community of interest” with the CNAs and should therefore be included in the voting unit. For more than 20 years, the Board applied the standard set forth in Park Manor Care Center, 305 NLRB 872 (1991), on this issue, considering whether the community of interest of the employees the employer sought to include was “sufficiently distinct from those of other employees” to justify excluding them from the bargaining unit. In Specialty Healthcare, the Board increased the burden on employers in these situations and held:

[I]n cases in which a party contends that a petitioned-for unit containing employees readily identifiable as a group who share a community of interest is nevertheless inappropriate because it does not contain additional employees, the burden is on the party so contending to demonstrate that the excluded employees share an overwhelming community of interest with the included employees.

This heightened standard gives great weight to the unit sought by a union and, as dissenting NLRB Member Brian Hayes pointed out, “obviously encourages unions to engage in incremental organizing in the smallest units possible.” After the Board found the petitioned-for unit to be appropriate, an election was held and the union won. The employer refused to bargain with the newly certified unit, and the union filed an unfair labor practice charge, which ultimately was appealed to the Sixth Circuit by Kindred Nursing Centers, which now operates the facility formerly known as Specialty Healthcare.

On appeal, the employer challenged the Board’s decision in Specialty Healthcare on four grounds, all of which were rejected by the Sixth Circuit. First, the employer argued that the Board abused its discretion by adopting a new approach to unit determination inconsistent with the traditional community-of-interest test. Recognizing that federal labor law gives the Board “wide discretion in determining the limits of an appropriate bargaining unit” and that “it is a general tenet of administrative law that ‘an agency’s interpretation of its own precedents receives considerable deference’ from a reviewing court,” the Sixth Circuit stated, “If the Board believes it can best fulfill its statutory duty by adopting a test from one of its precedents over another, then the Board does not abuse its discretion.” The court concluded that the Board “cogently explained” its decision to look to some of the Board’s prior precedents in clarifying its community-of-interest standard.

Second, the employer argued that Specialty Healthcare’s overwhelming-community-of-interest test did not merely “reiterate and clarify” the law as the Board asserted, but instead was a “material change in the law.” The Sixth Circuit rejected this claim on the basis that “[t]he Board has used the overwhelming-community-of-interest test before,” which was approved by the D.C. Circuit Court of Appeals in 2008. The court held that if, in adopting this test again, the Board overruled some of its precedents, the Board may do so provided that it explains why, which the court found it did:

The Board explained the need to clarify its law, acknowledging that it had used some variation of a heightened standard when a party (usually an employer) argues that the bargaining unit should include more employees. The Board explained that it “has sometimes used different words to describe this standard and has sometimes decided cases such as this without articulating any clear standard.”

Third, the employer also claimed that the Board’s adoption of the overwhelming-community-of-interest test in Specialty Healthcare makes it impossible for an employer to successfully challenge the voting unit proposed in a union’s election petition, thereby violating Section 9(c)(5) of the National Labor Relations Act, which prevents the Board from determining bargaining units based solely upon “the extent to which the employees have organized.” The Sixth Circuit disagreed with this contention and found that Section 9(c)(5) of the Act is not implicated by the Board’s approach because the Board did not assume that the bargaining unit preferred by unions or workers was per se appropriate; rather, Specialty Healthcare requires an employer to show that other employees share an overwhelming community of interest for inclusion in the unit only after the Board first finds that those included in the proposed bargaining unit share a community of interest and the proposed unit, therefore, is prima facie appropriate.

Last, the court rejected the employer’s argument that the Board was required to proceed through notice-and-comment rulemaking, rather than case adjudication, to create a general rule on how to approach bargaining unit determinations because the Supreme Court has specifically held that “the Board is not precluded from announcing new principles in an adjudicative proceeding and that the choice between rulemaking and adjudication lies in the first instance within the Board’s discretion.” Here, the court noted that the Board did take an interim step before reaching its decision and invited the public and other interested parties to weigh in regarding the potential impact if the Board overruled Park Manor.

In light of the Sixth Circuit’s decision, unions will likely be the beneficiaries of an increasing number of cases where the Board permits a union to attempt to organize a discrete subset or “micro-unit” of an employer’s workforce, as the “overwhelming community of interest” standard makes it difficult for employers to prevail in expanding the union’s chosen unit. These smaller units can significantly increase unions’ ability to win representation elections, as unions will be able to effectively select a voting unit that includes only those employee groups with strong support for unionization. In doing so, unions would be able to more easily establish a foothold presence in workplaces on which they could then work to expand. Alternatively, these smaller units can also lead to multiple unions organizing at a single facility, thereby causing significant operational headaches for employers, including the possibility of having multiple collective bargaining obligations and conflicting or overlapping obligations to different groups of employees.