On August 15, 2013, the Sixth Circuit Court of Appeals affirmed the National Labor Relations Board’s (NLRB or the Board) controversial ruling in Specialty Healthcare, 357 NLRB No. 83 (2011), which has allowed the proliferation of what some term “micro-bargaining units.”  This decision makes it easier for unions to organize employees from all industries into smaller units than in the past and makes it challenging for employers to successfully challenge smaller bargaining units.

The Board’s Specialty Healthcare decision overruled its decision in Park Manor Care Center, 305 NLRB 135 (1991), which set forth the Board’s previous test for determining the appropriateness of a bargaining unit in non-acute healthcare facilities.  Park Manor Care established a “pragmatic and empirical community of interest” approach that considered traditional community-of-interest factors, as well as evidence considered relevant by the Board during rulemaking concerning acute-care hospitals and the Board’s prior experience involving the types of facilities in dispute or units sought.  In Specialty Healthcare, the Board ruled that an employer claiming that the proposed bargaining unit should include additional employees must be able to show that the excluded employees share an “overwhelming community of interest” with the employees in the proposed bargaining unit.  Under Specialty Healthcare, numerous decisions have found small units appropriate that would not have been approved under previous Board law.

In Kindred Nursing Ctrs. E., LLC v. NLRB, Case No. 12-1027 (6th Cir. Aug. 15, 2013), the successor in interest to Specialty Healthcare’s facility in Mobile, Alabama challenged the Board’s ruling that a bargaining unit of Certified Nursing Assistants “constituted an appropriate unit.”  Pursuant to Specialty Healthcare, the Board had found a unit of fifty-three CNAs to be an appropriate bargaining unit, while Kindred Nursing argued that the bargaining units should have included an “additional eighty-six non-supervisory, non-professional service and maintenance employees.”  In its attack on the Specialty Healthcare decision, Kindred Nursing argued that the Board had abused its discretion because it

“adopt[ed] a new approach and [did] not return to applying the traditional community-of-interest approach; (2) [did] not ‘reiterate and clarify’ the law by adopting the overwhelming-community-of-interest test, but inappropriately imports this test from another area of labor law; (3) violat[ed] section 9(c)(5) of the National Labor Relations Act in its application of the traditional community of interest test and adoption of the overwhelming-community-of-interest test; and (4) [made] all of these changes through adjudication instead of rulemaking.”

In rejecting Kindred Nursing’s arguments, the Sixth Circuit first stated that it must uphold both the Board’s bargaining unit determination and its interpretation of the National Labor Relations Act (“NLRA”) unless the Board had abused its discretion.  The Court noted that in exercising its discretion, the “Board must cogently explain why it has exercised its discretion in a given manner.”  Citing oft-quoted precedent that the Board must select an appropriate unit and is not required to select the most appropriate unit, as well as the principle that the Board has the discretion to develop standards for determining the appropriateness of a bargaining unit, the Sixth Circuit found that it was in the Board’s discretion to overrule its own precedent and adopt a test based on prior Board precedent – even if it represented a material change in the law.  Furthermore, the Court found that the Board had not departed substantially from prior law as it had previously relied upon the overwhelming-community-of-interest test in prior cases, and that it had explained its reasons for adopting its new standard.  The Court noted that the Board’s new test had been approved by the District of Columbia Circuit prior to the Board’s holding in Specialty HeatlhcareSee Blue Man Vegas, LLC v. NLRB, 529 F.3d 417 (D.C. Cir. 2008).

The Court also rejected Kindred Nursing’s arguments that the Board improperly changed its bargaining unit standards by adjudication rather than by rulemaking, and that Specialty Healthcare violated Section 9(c)(5) of the NLRA.  The Court first noted that the Supreme Court had specifically held in NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974), that the Board is not precluded from choosing adjudication as a method of developing new standards.  As for Kindred Nursing’s Section 9(c)(5) argument, the Court held the Board’s decision did not violate this Section 9(c)(5) because it does not assume that a requested bargaining unit is per se appropriate; rather, Specialty Healthcare requires an employer to make the showing of an overwhelming community of interest only after the proposed bargaining unit is deemed appropriate.[1]

In light of the approval of the District of Columbia and Sixth Circuits, it is likely that Specialty Healthcare’s “overwhelming-community-of-interest” test will be the rule unless or until the make-up of the Board changes sufficiently, which is unlikely during the remainder of President Obama’s second term, or it is reversed by the U.S. Supreme Court.  Moreover, it has been applied in industries beyond non-acute healthcare facilities.  With the increased risk of targeted organizing campaigns aimed at small units of sympathetic employees, the need for employers in all industries to proactively consider union avoidance strategies has never been more important.