In a notable decision, the National Labor Relations Board (NLRB or Board), in Macy’s, Inc., 361 NLRB No. 4 (July 22, 2014), recently applied its controversial Specialty Healthcare decision, Specialty Healthcare & Rehabilitation Ctr. Of Mobile, 357 NLRB No. 83 (2011), to direct an election for a small group of cosmetics and fragrance sales employees at a Macy’s retail operation in Saugus, Mass. Macy’s had argued, among other things, that the proposed unit was inappropriate because the petitioned for unit was not “readily identifiable as a group,” did not share a “community of interest,” and that the unit would create a “fractured” workforce. However, a majority of the NLRB panel, ruling 3-1, rejected those arguments and found the  unit appropriate under Specialty Healthcare, and the Board’s existing rules for proposed bargaining units in the retail sector.

While 120 selling employees and 150 total workers were employed at the Saugus store, the NLRB approved a 41-person “micro-unit.” Macy’s argued that the only appropriate unit would include all the other employees, or at least all of the selling employees at the Saugus store. Macy’s also argued that the Board should overrule Specialty Healthcare, or at least should not apply it to the retail industry, because its application would allow “a proliferation of micro- units” based solely on the product sold by employees, which would in turn lead to “competitive” bargaining among these small units, potentially leading to “chaos and disruption of business.”

In Specialty Healthcare, the Board held that it would find a petitioned-for unit appropriate if employees in the unit constitute a “readily identifiable” group sharing a “community of interest.” The Board stated that if the petitioned-for unit satisfies this standard, it can be overcome only if the party arguing for a larger unit demonstrates that the “micro-unit” excludes other workers who share an “overwhelming community of interest,” such that there “is no legitimate basis upon which to exclude certain employees from” the larger unit. In Macy’s, the Board majority found that the petitioned-for unit of cosmetics and fragrances employees are a readily identifiable group sharing a community of interest. The Board majority further found that Macy’s did not meet its burden to demonstrate that the other employees also shared an overwhelming community of interest.

In dissent, Board Member Philip Miscamarra argued that the Specialty Healthcare standard affords too much deference to the party seeking the smaller unit. Further, he argued Specialty Healthcare was inconsistent with the Board’s statutory responsibility under Section 9(b) of the National Labor Relations Act (NLRA) to determine “in each case” whether a unit was appropriate.” Arguing that the Specialty Healthcare’s “overwhelming community of interest standard” focuses on the NLRA rights of employees in a petitioned-for unit without regard to the rights of other employees in most cases, Miscimarra said “the Act requires the Board to approach unit determinations with vigilance and some reasonably broad range of vision regarding alternative unit configurations.” Miscimarra further stated that he, “would not apply Specialty Healthcare here or in any other decision.” In this case, Miscimarra said, the smallest appropriate unit at the Massachusetts store would include all of the 120 sales employees who work at the facility.

This case is significant for several reasons. First, it reinforces the high (some would argue impossible) burden that an employer faces in trying to overcome a proposed “micro-unit” under the Specialty Healthcare test. This heightened standard, could give unions an advantage in organizing micro-units where they are not able to gain widespread support from larger groups of workers. Second, it shows that the Board will not hesitate to apply Specialty Healthcare outside the industry (i.e., healthcare) where that case arose. In fact, there is nothing in the reasoning of Specialty Healthcare that arguably limits its application to any other industries.