CLIENT UPDATE

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August 5, 2014

NLRB Applies Specialty Healthcare Ruling to Retail Sector

In two recent decisions, the National Labor Relations Board (the “Board”) applied its controversial Specialty Healthcare ruling – previously applied only in the healthcare industry – to retail establishments.  The decisions raise concerns among business groups that unions will now seek to organize “micro” bargaining units in retail and other industries, resulting in workplaces with multiple bargaining units represented by the same or different unions. 

Background

Prior to the Board’s Specialty Healthcare decision in 2011, a presumptively appropriate bargaining unit was a “wall-to-wall” unit of all similarly situated employees working in a business establishment.  In Specialty Healthcare, the Board overruled its existing standard and held that any “readily identifiable” group of employees sharing a community of interest is a presumptively appropriate bargaining unit.  It further held that an employer objecting to a proposed unit bears the heavy burden of proving that the excluded employees share “an overwhelming community of interest” with the employees in the proposed unit.  Prior to the recent decisions in Macy’s and Bergdorf, the Specialty Healthcare decision had not been applied outside of the healthcare industry.

A link to our previous client alert on the Specialty Healthcare decision can be found at https://www.putneylaw.com/cu_090211.html.

Macy’s Inc.

On July 22, 2014, in Macy’s Inc., the Board rejected Macy’s arguments that Specialty Healthcare should not be applied to the retail industry, where multiple bargaining units would be impractical and an impediment to providing a consistent level of customer service. 

In Macy’s Inc., the union petitioned for a unit comprising 41 full-time, part-time, and on-call employees employed in the store’s cosmetics and fragrances department, including counter managers, beauty advisors, and all selling employees in cosmetics, women’s fragrances, and men’s fragrances. 

The Board found that the petitioned-for employees were readily identifiable as a group and shared a community of interest based on the  following factors: the petitioned-for employees worked in the same selling department and performed their functions in two connected, defined work areas; they had common supervision under one direct sales manager; they shared purpose and functional integration, as they all sold cosmetics and fragrances products to customers; they were the only employees who sold cosmetics and fragrances; and they had only  incidental contact with other employees. 

Bergdorf Goodman

On July 28, 2014, the Board declined to certify a unit of Bergdorf Goodman shoe sales associates who worked in two separate departments.  The Board determined that the employees did not share a community of interest based in large part on distinctions between the structure and operations of the two departments.  Distinguishing factors noted by the Board included the fact that the departments were located on different floors, had different supervision and did not exchange employees.  In sum, the NLRB concluded that the two groups of employees in the petitioned-for unit did not share a community of interest because the group did not follow any administrative or operational lines established by the store.
 
Take Away for Employers

It is apparent that the Board will continue to apply the principles articulated in Specialty Healthcare to the retail sector and potentially to other industries.  Employers confronted with union election petitions seeking to represent a narrowly defined “micro” unit face an extremely heavy burden of proving that other employees excluded from the proposed unit share an overwhelming community of interest with the included employees.  Accordingly, to help avoid the proliferation of “micro” units, employers, particularly employers with multiple distinct departments as typical in many retail establishments, may wish to conduct a review of their operations to bolster the community of interest among larger groups of employees.  For example, cross-training employees and rotating employees through different counters or departments, centralizing supervision and reporting structures, and adopting more uniform pay and other practices may help employers establish the requisite community of interest necessary to defeat union efforts to organize “micro” units.

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If you have any questions regarding union organizing or related issues, please do not hesitate to contact us.