In a blow to employers, a court of appeals has affirmed (pdf) the NLRB’s union-friendly decision in Specialty Healthcare and Rehabilitation Center. The NLRB’s decision in Specialty Healthcare required the employer, if it wanted to add employees to the union's proposed bargaining unit that the union wanted to exclude, to prove that the excluded employees shared “an overwhelming community of interest” with the employees included in the proposed unit. Applying these standards, Specialty Healthcare approved a bargaining unit consisting solely of Certified Nursing Assistants (“CNA”) and rejected the employer’s argument that this unit should be expanded to include other non-supervisory, non-professional service and maintenance employees. This decision was widely interpreted as opening the door to “micro-unions” – that is, union representation of a subset of an employer’s workforce, rather than the entirety of that workforce.

In its analysis, the court of appeals reiterated the NLRB’s broad discretion in determining an appropriate bargaining unit and emphasized that an NLRB bargaining unit determination will be upheld “unless the employer establishes that it is arbitrary, unreasonable, or an abuse of discretion.” The court concluded that the NLRB did not abuse its discretion.

The court rejected the employer’s argument that the NLRB abused its discretion by adopting a new approach instead of the traditional “community-of-interest” approach. The NLRB can choose to depart from its precedents if the departure is explicit and rationally justified. In this case, the NLRB explained its decision to modify its approach to initial bargaining unit determinations by emphasizing the rights of employees to self-organize and noting that it is directed to make appropriate unit determinations to ensure that employees have the fullest freedom to exercise their rights under the NLRA. Therefore, the court concluded that the NLRB “did not abuse its discretion in applying a version of its traditional community-of-interest test to find a CNA-only bargaining unit to be appropriate,” nor did the NLRB abuse its discretion by clarifying the community-of-interest test.

In rejecting the employer’s argument that the NLRB abused its discretion by adopting the overwhelming-community-of-interest test for excluded employees, the court concluded that this standard is not new, but has been used before by both the NLRB and another court of appeals. The NLRB had also used a similar test with different terminology in the past, and the NLRB did not abuse its discretion by taking “an earlier precedent that applied a certain test and [clarifying] that the Board will adhere to [that] test going forward.”

The employer’s final two arguments—that the NLRB violated the NLRA by making it impossible for an employer to challenge the petitioned-for unit and that the NLRB “abused its discretion by making policy through adjudication rather than through notice-and-comment rulemaking”—were also rejected.

In light of the court’s decision, labor professionals working for employers will want to:

  • Watch for the NLRB to expand Specialty Healthcare. The stamp of approval the court’s decision provides to the NLRB’s reasoning opens the door to greater reliance on the decision in many different industries.
  • Assess in a pro-active manner whether the employer’s workforce is susceptible to the type of division that Specialty Healthcare would permit in a union organizing drive.
  • Be prepared for unions to expand their reliance on smaller bargaining units in future organizing efforts.