In a much-anticipated decision, the National Labor Relations Board has held a union’s petitioned-for micro-bargaining unit of retail store employees was appropriate, rejecting the employer’s argument that the employees the union sought to represent shared an “overwhelming community of interest” with other store employees, a standard articulated in the Board’s controversial decision on bargaining-unit composition, Specialty Healthcare, 357 NLRB No. 83 (2011). Macy’s Inc., 361 NLRB No. 4 (July 22, 2014). (For details of Specialty Healthcare, see NLRB Announces New Standard for Bargaining Units in Non-Acute Healthcare Facilities; Allows Single-Classification Unit Consisting Only of CNAs.)

The union petitioned to represent a departmental unit of 41 cosmetic and fragrance employees, including counter managers, employed at a Macy’s store in Saugus, Massachusetts. The employer argued an appropriate unit must include all 150 employees at the Saugus store or, in the alternative, all 120 selling employees at the store. 

The Board applied the standard it announced in Specialty Healthcare, restated as follows: 

[W]hen a union seeks to represent a unit of employees who are readily identifiable as a group (based on job classifications, departments, functions, work locations, skills or similar factors), and the Board finds that the employees in the group share a community of interest after considering the traditional criteria, the Board will find the petitioned-for unit to be an appropriate unit. . . . If the petitioned-for unit satisfies that standard, the burden is on the proponent of a larger unit to demonstrate that the additional employees it seeks to include share 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 larger unit because the traditional community of interest factors overlap almost completely. 

The Board determined the 41 cosmetic and fragrance department employees share a community of interest with one another, relying heavily on the following factors:

  • They work in the same selling department and perform their functions in two connected, defined work areas; 
  • Their work has a shared purpose and functional integration (i.e., selling cosmetic and fragrance); 
  • The unit sought is coextensive with a departmental line that the employer has drawn; 
  • The employees do not have regular contact with other store employees and do not routinely ring up merchandise from another department; 
  • There had been only nine instances of permanent transfers into, or out of, the department over the past two years; and
  • All of the department's employees are paid on a base-plus-commission basis, receive the same benefits and are subject to the same employer policies. 

The Board then determined the employer failed to demonstrate the petitioned-for unit was arbitrarily limited and improper by establishing that the entire sales force at the store shared an “overwhelming community of interest” with cosmetic and fragrance employees. It relied on the following in so concluding: 

  • The petitioned-for unit employees work in a separate department from all other selling employees; 
  • The cosmetic and fragrance employees' jobs are structured differently from the jobs of other primary sales department employees (i.e., no evidence other departments have the equivalent of on-call employees); 
  • The petitioned-for unit is separately supervised by a single Sales Manager (the Board discounted that all sales employees at the store are commonly supervised at the second level by the Store Manager); 
  • The employees in the petitioned-for unit work in their own distinct selling areas; 
  • The record did not establish any significant contact between the petitioned-for employees and other selling employees; and 
  • Cosmetic and fragrance employees are never asked to sell in other departments. Other selling employees are not asked to sell in the cosmetic and fragrance department. (The Board noted evidence of permanent interchange is a less significant indicator of whether a community of interest exists than is evidence of temporary interchange.)

Employers, especially retailers, are encouraged to review the Board's analysis in this case. Given the Specialty Healthcare “overwhelming community of interest” standard for adding employee classifications to a petitioned-for bargaining unit, employers should consider structuring their workforces to enhance their position that larger units of employees are the only ones appropriate for bargaining. For example, employers may consider realigning job functions and reporting structures, cross-training and increasing the temporary interchange of employees between work groups, making departmental groupings less rigid, reconfigure work spaces and the like. The more overlap that exists, the greater the chance the employer’s position that a larger unit is appropriate will be accepted.