On August 26, 2011, the National Labor Relations Board (Board) issued two decisions which drastically alter the unit determination rules for long-term acute care and nonacute care facilities. As Member Brian Hayes noted in one of his dissents, these rulings appear intended to reverse years of declining union representation in the United States, both within and outside the healthcare industry.

Section 9 of the NLRA and 1974 Amendments for the Healthcare Industry

Section 9 of the National Labor Relations Act (the Act) discusses employee representation by unions and recognition of employee bargaining units, including who may be in a bargaining unit, and what happens when the employer disagrees with the bargaining unit proposed by a union. The Board usually is the final arbiter of what is an "appropriate unit," subject to judicial review.

In 1974, Congress amended the Act to address concerns in the healthcare industry. The amendments did not alter the Board’s ability to make unit determinations, but the legislative history of the amendments noted concern about the undue proliferation of bargaining units in healthcare. Partly in response, in 1989, the Board promulgated Rule 103.30, which discusses appropriate bargaining units in acute care hospitals (the Healthcare Rule). The Healthcare Rule identifies eight appropriate bargaining units as the only units the Board may recognize, except in extraordinary circumstances or where there is an existing nonconforming unit.

The Board did not issue a similar rule for nonacute healthcare, but in a 1991 decision, Park Manor Care Center, the Board adopted a "pragmatic" or "empirical" "community of interest" standard for nonacute healthcare facilities. Specifically, the Board directed that unit determinations should consider not just the "community of interest" among the employees, but also information obtained about the long-term care industry when the Board issued the Healthcare Rule and in Board decisions issued before the Healthcare Rule (i.e., when the Board was looking into possible undue proliferation of bargaining units and the effect of unionization on the industry).

This was the backdrop for the Board’s August 2011 decisions.

Specialty Hospital of Washington Hadley, LLC: Union May Unilaterally "Perfect" Inappropriate Acute Care Unit

Specialty Hospital of Washington-Hadley, LLC, and 1199 SEIU, United Healthcare Workers East involved the acquisition of an acute care facility and the question of whether the entity acquiring the hospital had a duty to recognize, and bargain with, the union representing a unit of mostly technical employees at the facility. The successor, Specialty Hospitals of America, LLC, acquired the assets of Hadley Memorial Hospital in Washington, D.C., creating a successor entity, Specialty Hospital of Washington-Hadley (Specialty Hospital). Prior to the acquisition, the SEIU, United Healthcare Workers East (the Union) had been certified as the exclusive representative of a group of employees working at Hadley Memorial. In addition to technical workers, the unit included guards and pharmacists. Before the acquisition, the Union and Hadley Memorial had begun, but had not completed, negotiations for a collective bargaining agreement.

There was no dispute that Specialty Hospital was a successor employer under the Act; witness testimony and party stipulations established clear continuity of operations before and after the acquisition. In addition, there was no dispute that the bargaining unit certified before the acquisition was inappropriate under Section 9. The unit included guards, excluded by Section 9(b)(3), and it also included pharmacists, who are professional employees. Under Section 9(b)(1), professional employees may not be included in a bargaining unit with nonprofessional employees without first having been given the opportunity to vote separately on the question of representation.

Shortly after consummation of the sale, a representative of the Union spoke with the attorney for Specialty Hospital and informed the attorney that the Union was prepared to begin bargaining with the new owner. Approximately two weeks later, Specialty Hospital’s attorney responded in writing, stating that Specialty Hospital was not prepared to recognize the Union as the exclusive representative because it was an inappropriate bargaining unit under the Act. Three months later, the Union renewed its request to bargain, stating that it was willing to disclaim interest in representing the guards. The Union also was willing to disclaim its interest in representing the pharmacists or to give them the opportunity to vote on their inclusion in the unit.

Specialty Hospital declined the offer, and the Union filed an unfair practice charge alleging that the employer, by refusing to bargain, had violated Sections 8(a)(5) and (1) of the Act. The matter proceeded to hearing before an Administrative Law Judge (ALJ) who concluded that the Union had "perfected" the bargaining unit by disavowing any interest in representing the guards and the pharmacists or agreeing to afford the pharmacists the opportunity to decide whether they wanted to be part of the unit.

When an employer acquires only a portion of a predecessor’s operation, it may nonetheless be considered a "successor" under the Act and have a duty to bargain with the existing union. The ALJ found no "significant difference" between that situation and the case before him, where the Union unilaterally dropped certain positions from the predecessor employer’s unit.

Moreover, the ALJ rejected the employer’s argument that Section 9 and the Healthcare Rule precluded the NLRB from recognizing the new "perfected" unit. The ALJ determined that because the facility combined acute care and long-term care, the Healthcare Rule did not apply. And even if it did apply, it would not control here because the unit was an "existing nonconforming unit." The fact that the "perfected" unit was different than the unit that had been recognized by the predecessor employer was of no import.

Therefore, the ALJ found that the employer had violated Sections 8(a)(5) and 8(a)(1) of the Act when it refused to bargain with the Union.

In a 2-1 decision, with Member Hayes dissenting, the Board agreed. First, it found "no persuasive reason" why the Union’s alteration of the unit should be treated any differently from an employer’s acquisition of less than the entire operation of its predecessor. Therefore, the Board would presume that union representation reflected the will of the majority in the altered bargaining unit.

Second, the Board agreed that the perfected unit was an "existing nonconforming unit" and therefore one of the exceptions to the Healthcare Rule. Apart from its internal inconsistency, this portion of the ruling is difficult to understand as anything other than an abdication of the Board’s duties under Section 9. The Board did not address the ALJ’s ruling that the Healthcare Rule did not apply at all because the facility combined long-term care and acute care facilities.

The logic of the holding is difficult to follow. The "perfected" unit and the "existing" unit could not be the same, absent some "de minimis" exception not contained in the Act. What the Board seems to have done is allow the union to perform the Board’s obligations under Healthcare Rule 103.30 section (c). So, although the ALJ and the Board found the perfected unit to be appropriate, the process for determining exclusive representation set forth in Section 9 was not followed.

The majority expressed the view that its holding would promote industrial peace because employees would not be subject to the vagaries of corporate acquisitions. As the dissent pointed out, the decision seems to undermine industrial peace, raising a myriad of unanswered questions, such as what changes will "perfect" a nonconforming unit and under what circumstances the Board might allow unilateral "perfection."

NLRB Overturns Park Manor and Finds Overwhelming Community of Interest Necessary to Trump Presumptively Appropriate Unit Organized by Union

In Specialty Healthcare and Rehabilitation Center of Mobile and United Steelworkers, District 9, the Board overturned a 20-year-old precedent applicable to nonacute care facilities. In so doing, once again, the Board reflects a high level of deference to unions’ bargaining unit determinations.

Specialty Healthcare and Rehabilitation Center of Mobile (Specialty) operated a nursing home and rehabilitation center; the union sought recognition of a bargaining unit comprised solely of Certified Nursing Assistants (CNAs). In an acute care setting, CNAs typically would be included in a bargaining unit of technical employees. When the Regional Director sided with the union, Specialty petitioned the Board for reconsideration, arguing that the smallest appropriate unit included both CNAs and other technical employees at the facility. The Board affirmed the decision of the Regional Director, and the employer filed a petition for review.

Rather than simply deciding the issue at hand, the Board issued a notice and request for amici to respond to eight separate questions. The questions included whether the Board should reconsider the test in Park Manor and, ominously, "where there is no history of collective bargaining, should the Board hold that a unit of all employees performing the same job at a single facility is presumptively appropriate if...the employees in the proposed unit [share] a community of interest."

As foreshadowed by these questions, the resultant decision did away with Park Manor, which the Board expressly overruled. It also significantly raised the bar for employers who challenge bargaining units organized by unions, which the Board will consider "presumptively appropriate." Now, in all cases where the Healthcare Rule does not apply, the traditional community of interest test will apply, and the Board no longer will consider empirical evidence about the industry and the workplace. In addition, where the employer contends that the bargaining unit proposed by the union is inappropriate because it excludes certain employees, the employer will have to demonstrate an "overwhelming" community of interest between the unit organized by the union and the excluded employees.

Once again, it is difficult to square the Board’s stated rationale with its actual decision. For example, while the Board said that it overruled Park Manor and that it would look solely at the community of interest among putative unit members, the Board recited at length from amici briefs about significant differences between nonacute long-term care facilities and acute care hospitals, which can affect staffing patterns and duties. This harkens to the "empirical community of interest" standard the Board purports to reject.

In addition, the Board gave lip service to Section 9(c)(5) of the Act, which states that in determining appropriate units, "the extent to which the employees have organized should not be controlling." But when it concluded that a unit organized by a union is "presumptively" appropriate, the practical effect was to make the "extent to which employees have organized" controlling, unless the employer can show some "overwhelming" reason why that should not be the case.

It remains to be seen whether this decision will be limited in the future to nonacute care settings. In his dissent, Member Hayes expressed concern that all bargaining unit determinations now will be subject to the "overwhelming" community of interest standard where the employee believes a bargaining unit should include other employees. The breadth of the opinion suggests that this might indeed be the case.

Conclusion

The Board’s extreme deference to unions’ decisions about who belongs in a bargaining unit (and who does not) seems driven by a desire to lower barriers to organizing contained in the Act itself. That being the case, employers must look either to the courts or to Congress for relief. In the meantime, all employers acquiring entities with unions in place would be well advised to resolve bargaining unit questions during due diligence. For nonacute care facilities, Specialty Healthcare and Rehabilitation Center of Mobile suggests that it may too late to prevent CNAs from organizing separately from other technical employees.

The attention the Board has focused on unit determinations is all the more troubling in light of new rules the Board has proposed for union representation elections. If they become effective in their current form, these rules will defer resolution of most employer objections until after the election. The rare exception is for bargaining unit determinations. These two decisions suggest that such challenges now may be even more difficult for employers to win.