Recent NLRB Decisions Provide Further Guidance on “Micro-Unions”

August 1, 2014

As we previously reported, the National Labor Relations Board’s (NLRB’s) controversial August 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile opened the door to “micro” bargaining units that could make it easier for unions to organize parts of employers’ operations. Two recent NLRB decisions provide further clarification on appropriate bargaining units under the new Specialty Healthcare standard.

  • On July 22, 2014, the NLRB endorsed a bargaining unit of cosmetics and fragrance employees at a Macy’s store in Massachusetts.
  • On July 28, 2014, a unanimous NLRB reversed a regional director’s decision and dismissed a union’s petition for a micro-bargaining unit of employees only in the Bergdorf Goodman New York store’s “salon” and contemporary women’s shoes areas.

Prior to the NLRB’s Specialty Healthcare decision, the NLRB had long recognized a strong presumption of wall-to-wall bargaining units in the retail industry. To organize a retail store, unions had to obtain the support of a majority of all hourly retail employees in a store and not just a majority of employees in a particular department or part of a department within the store. However, as we reported at the time, the Specialty Healthcare decision not only overturned healthcare unit presumptions but also threatened to eliminate long standing presumptions in other industries. In so doing, the decision paved the way for “micro” or “mini” units that significantly increase the likelihood of union organizing and also an employer’s administrative difficulties should a union successfully organize a micro-unit.

The NLRB’s recent rulings in Neiman Marcus Group, Inc. d/b/a Bergdorf Goodman and Macy’s, Inc. show the effect of the Specialty Healthcare decision and provide employers with examples of the types of micro-units they now may face. In Macy’s, Inc., the NLRB upheld a regional director’s decision that a proposed bargaining unit of employees in a Macy’s cosmetics and fragrance department – as opposed to all sales employees in the Macy’s store – was appropriate. In so doing, the NLRB majority relied on, among other things, the following factual issues:

  • The employer treated the cosmetics and fragrance area as one of the 11 different and separate departments within the store.
  • The cosmetics and fragrance department had its own manager who had primary responsibility for managing the department with little involvement from the overall store manager.
  • The cosmetics and fragrance department employees were hired differently, were trained differently, had different pay practices, and utilized different sales practices than employees in the other store departments.
  • There was relatively little interaction between the cosmetics and fragrance department employees and other store employees (basically a 15-minute morning store rally and incidental daily contact).
  • Cosmetics and fragrance employees did not periodically work in other departments and vice versa.

In its Bergdorf Goodman decision issued on July 28, 2014 (several days after the decision in Macy’s, Inc.), the NLRB reversed a regional director’s decision and held that a petitioned-for bargaining unit comprised of women’s shoe sales associates in two different departments did not constitute an appropriate unit. One group of sales associates worked in “salon” shoes, which constituted its own department, while the other group worked in the “contemporary sportswear” department. The two groups not only worked in two different departments but also were located on different floors, had different floor managers and sales directors, and did not regularly interchange or interact. Consequently, although the NLRB found that the women’s shoe associates shared the same terms and conditions of employment, it concluded that this factor was “ultimately outweighed, on these facts, by the lack of any relationship between the contours of the proposed unit and any of the administrative or operational lines drawn by the Employer.” The NLRB found it especially noteworthy that, while “salon” shoes was itself a separate department, “contemporary” shoes was part of a larger “contemporary sportswear” department.

Taken together, these two recent decisions provide employers with important guidance on the NLRB’s future treatment of the propriety of petitioned-for bargaining units. Although the NLRB stated in Specialty Healthcare that historical industry presumptions would continue to have relevance, its decision in Macy’s, Inc. establishes that any such relevance is greatly diminished. The NLRB particularly has placed increased emphasis on an employer’s own grouping of its employees (e.g., into departments or other clearly defined groups). Unions now have significant flexibility in petitioning for bargaining units that give them the greatest chance of success. Oftentimes, smaller hand-selected-units provide unions with an advantage.

Employers should be aware of these changes at the NLRB and should respond accordingly. Among other things, they should review the grouping of their employees into departments or other separate groups carefully and should understand that such groups could constitute appropriate bargaining units. Where employers want to prevent such subsets from being deemed appropriate units, they should consider integrating management of departments, increasing interaction of employees among departments, and moving employees between departments.

Please reach out to your McGuireWoods contact or the firm’s traditional labor team with any questions you have regarding these decisions and their potential effect on your employees.