Federal Appeals Court Upholds NLRB’s ‘Micro-unit’ Rule

A U.S. appeals court in Cincinnati has upheld the National Labor Relations Board’s decision in Specialty Healthcare and Rehabilitation Center, 357 NLRB No. 83 (2011), allowing unions to organize in small units of employees, where their likelihood of success is heightened. Kindred Nursing Centers East f/k/a Specialty Healthcare and Rehabilitation Center of Mobile v. NLRB, Nos. 12-1027/12-1174 (6th Cir. Aug. 15, 2013). The Board’s win is seen as giving encouragement to unions attempting to gain footholds in industries and businesses where inroads for organized labor have been difficult in the past.

In Specialty Healthcare, the Board agreed with a petitioning union to conduct an election in a unit comprised solely of that nursing home’s Certified Nursing Assistants (CNAs). Prior to this case, the Labor Board almost always determined the composition of a bargaining unit using a “community-of-interest” standard that resulted in the inclusion of other positions, such as dietary aides and housekeepers, that reflected the working interrelationship of these employees in the facilities’ operations. Such “service and maintenance units” became the norm. In 2011 decision, however, the Board adopted a new standard that would apply across all industries. From then on, the NLRB would approve whatever unit the union requested (assuming it had some rational basis) unless the employer could show that the jobs excluded had an “extraordinary community of interest” with those covered in the request. It was (and still is) unclear exactly how this test can be met, but it is clear that it is a very high threshold.

Why was this important? Because unions can more readily win elections if they can “cherry pick” the job classifications allowed to vote. Employers objected strenuously. The Board’s new standard, they said, could easily result in a company having many unions and collective bargaining agreements at a single location, making peaceful labor relations uncertain and smooth operations much more difficult. The term “micro-units” gained currency.

The employer in Specialty Healthcare sought judicial review in the U.S. Court of Appeals for the Sixth Circuit. Numerous employers and business organizations appeared as friends of the court (contributors to this blog represented some of them) and filed briefs. In its opinion, however, the Court rejected every argument pressed by the employer and its supporters, finding:

  • The NLRB’s “clarification” of the community-of-interest standard was not arbitrary, unreasonable, or an abuse of discretion.
  • The Board did not abuse its discretion by adopting a general rule through adjudication instead of rulemaking — the Board is not precluded from announcing new principles in an adjudicative proceeding.
  • The new standard is not a “material change in the law” — it has been used by the Board before, but in an exceedingly small number of cases. The Court also said the Board may overrule its precedents, provided that it explains why, which it did in this case.
  • The National Labor Relations Act specifically prohibits the NLRB from determining unit composition based on the extent to which the union is successful in organizing. Although this new standard may sound perilously close to just that, the Court assures us it is not, because the Board does not simply rely on the union’s requested unit, but on its application of this new separate standard (albeit one that appears insurmountable to many employers).

The employer may seek review before the U.S. Supreme Court. However, review is discretionary and most requests are rejected. An appeal is more likely to be heard by the Supreme Court if there are differing results among the circuit courts. At present, there is no conflict.