New Report Highlights Dangers of Micro-Unions

Workplace organizing typically requires large amounts of time and money. Yet for more than five years, labor unions increasingly have been relying on a low-cost alternative: partial workplace organizing. A new monograph published by the U.S. Chamber of Commerce summarizes this trend and its enormous potential for harm. The 32-page report, “Trouble with the Truth:  Specialty Healthcare and the Spread of Micro-Unions,” explains how a National Labor Relations Board ruling in August 2011 has enabled unions to create miniature bargaining units within the workplace, all the better to conscript reluctant employees. These fractional or “micro” unions, argue the authors, constitute a genuine threat to worker liberty and the integrity of collective bargaining.

In relative numbers, organized labor in this country has seen a long-term decline in membership. In 2015, only 6.7 percent of all private-sector employees belonged to a union, a drop from the mid-50s/early-60s peak years (at least for non-farm employees) in which the rate exceeded 30 percent. To reverse this decline, labor leaders increasingly have been using law and public policy to gain an advantage in organizing and negotiation, and never more so than in the Obama era. The National Labor Relations Board (NLRB) is proving indispensable toward that end. Created under the National Labor Relations Act of 1935, the ostensibly nonpartisan NLRB supervises and certifies union elections, investigates allegations of unfair labor practices, and recommends sanctions where necessary. Over the last eight years, President Obama has used his power of appointment to achieve a highly partisan pro-union majority on the five-member board, even when operating short-handed. The result has been a series of landmark decisions favorable to unions – and unfavorable to employers and dissenting employees. Specialty Healthcare and Rehabilitation Center of Mobile, which addressed the issue of the appropriate size of a bargaining unit, is perhaps the most far-reaching.

The case originated in 2009 when the director of NLRB Region 15 ordered the election of a proposed collective bargaining unit at a nursing home in Mobile, Alabama. An affiliate of the United Steelworkers, frustrated in its attempt to organize the entire workplace, scaled down its goal. Now it would seek to unionize only certified nursing assistants there. The employer objected, and with good reason. The leading case on micro-unionism up until then was Park Manor Care Center [305 NLRB 872 (1991)]. The board, in rejecting a Service Employees International Union effort at establishing a micro bargaining unit at a non-acute care facility in Fort Dodge, Iowa, concluded that a bargaining unit of whatever size must include all employees who share a community of interest. The board in ensuing years affirmed this precedent, interpreting the phrase “community of interest” as broadly as possible, so as to discourage the proliferation of insular bargaining units at a single workplace.

Two decades later, with a union partisans on the board now a majority, the NLRB revisited the issue in Specialty Healthcare. United Steelworkers organizers had suggested forming a small bargaining unit at the facility. Management countered that there was no reason all employees could not organize as a single unit. The union responded by filing a complaint with the board. In December 2010, the board delivered a procedural victory for the union by sending out a request for amicus briefs. Eight months later, on August 26, 2011, just before the end of Chairman Wilma Liebman’s term, the board by a 3-1 margin – one seat was vacant – ruled that certified nursing assistants qualified as a stand-alone bargaining unit [357 NLRB 83 (2011)]. Indeed, the majority, consisting of Liebman, Mark Gaston Pearce and Craig Becker, went further.

The ruling consisted of three related parts. First, it overturned Park Manor as a basis for determining the proper size of a bargaining unit in the nursing home industry. The earlier 1991 case, concluded the board, “has become obsolete, is not consistent with our statutory charge, and has not provided clear guidance to interested parties or the Board.” In siding with the union, the board narrowed the definition of “community of interest,” thus facilitating the formation of micro-unions. Second, the ruling expanded the basis for considering a union as eligible for recognition as a bargaining agent. The board said that it was necessary to consider a range of factors, such as the nature of the work done and “the extent to which employees have organized,” in defining a community of interest. The board stated: “We thus consider the employees’ wishes, as expressed in the petition, a factor, although not a determinative factor here.” In other words, the extent of union organization, while not a factor in this case, could serve as a factor in others. Third, the board indicated that in the future it would consider situations in which an employer adds employees to an existing bargaining unit. An employer now would have to demonstrate that any additional employees must share an “overwhelming community of interest” with the initial group of employees. A proposed unit, emphasized the board, would not be rejected “simply because it is small.”

In its press release, the NLRB downplayed the importance of the decision. The text spoke of a “new approach,” one that merely “clarified” standards for approval of bargaining units outside of the health care industry. Over a year later, now-Chairman Mark Pearce still expressed this view. In an interview, he asserted, “Specialty Healthcare was not designed to create any difference in the size of bargaining units.” To his credit, Brian Hayes, the dissenter on the board, recognized the ruling as sweeping. He wrote: “Today’s decision fundamentally changes the standard for determining whether a petitioned for unit is appropriate in any industry subject to the Board’s jurisdiction.” By narrowing the “community of interest” standard, the board made “the relationship between petitioned-for-unit employees and excluded coworkers irrelevant in all but the most exceptional circumstances.” An attorney for Cincinnati-based litigator Dinsmore & Shohl similarly weighed in: “Significantly, the Board did not, as it could have done, limit the new standard to non-acute healthcare facilities. The practical effect of this decision is that, in the not-uncommon situation where a union is unable to garner widespread support, unions in all industries will be encouraged to organize the smallest units of employees possible.”

In short order, this is precisely what has happened. Across the nation, the Specialty Healthcare ruling prompted unions across a range of industries to form micro-unions even where efforts at organizing had failed earlier. In so doing, it provided the NLRB with a pretext for giving a green light to micro-union elections. The U.S. Chamber of Commerce report summarizes several such cases. One of them, summarized by Union Corruption Update at the time, includes the 108-44 vote in December 2015 by machine maintenance workers in favor of United Auto Workers representation at Volkswagen’s Chattanooga assembly plant. VW management appealed to the NLRB to reverse the regional director’s decision to hold the election, arguing that the union had created a fictional maintenance department for the sole purpose of undoing its defeat in a February 2014 election by a 712-626 margin for full plant representation (the company actually supported the union in that instance). The NLRB declined to overturn the regional director. Volkswagen this past September took its case to District of Columbia federal appeals court, where it remains active. Other cases include:

DTG Operations. At a rental car facility at Denver International Airport, 31 agents appealed to the NLRB for recognition as a collective bargaining unit after the board regional office had rejected their bid. The regional office had concluded that the smallest appropriate unit would be a “wall to wall” unit consisting of all 109 employees at the operation. In the aftermath of Specialty Healthcare, however, the NLRB had a rationale for overruling the regional office. And on December 30, 2011, the board concluded: “(T)he RSAs (rental service agents) and LRSAs (lead rental service agents) share a community of interest and…the Employer failed to demonstrate that the additional employees it seeks to include share an overwhelming community of interest.”

Macy’s. In March 2011, the United Food and Commercial Workers filed a petition with the NLRB to represent all roughly 120 sales associates at the Macy’s department store in Saugus, Mass. The board approved the application. The UFCW lost its representation election that May. The Specialty Healthcare ruling months later gave the union a new lease on life. And in October 2012, the union went small. It filed a representation petition with the NLRB regional office, proposing to represent only the 40 or so salespeople/consultants who worked at the store’s cosmetics and fragrance counters. The regional office certified the bid for the micro-bargaining unit and ordered an election held. Macy’s management appealed, citing the nearly half-century precedent covering the retail industry. But it was to no avail. The NLRB upheld the regional decision, and in language indicating Specialty Healthcare should apply to the broader economy.

Nestle Dreyer’s. A local of the International Union of Operating Engineers proposed organizing more than 110 maintenance workers at a Dreyer’s ice cream plant in Bakersfield, California. Dreyer’s management objected, saying that the campaign willfully prevented 578 production workers at the plant from having any say. Late in 2011, not long after the Specialty Healthcare ruling, the IUOE filed a complaint with the regional NLRB office. The office approved the proposed micro-bargaining unit. The company, in response, appealed to the National Labor Relations Board for a review of the approval. The board declined. Dreyer’s then took its case to court. Last April, the U.S. Court of Appeals for the Fourth Circuit upheld the NLRB’s decision.

These and similar rulings – First Aviation, T-Mobile, Bergdorf Goodman, Bread of Life (Panera) and Constellation – represent a genuine threat to worker liberty. By effectively treating a single workplace as an aggregation of small, fitfully overlapping workplaces, the National Labor Relations Board is enabling unions to win collective bargaining rights at workplaces where under normal (pre-Specialty Healthcare) circumstances it likely would not do so. Organized labor in turn has acquired more power to coerce workers into joining a union and paying requisite dues. The Chamber of Commerce’s Trouble with the Truth monograph explains:

As options to reverse the NLRB’s Specialty Healthcare precedent remain elusive, employers across numerous industries will continue to face the prospect of fragmented bargaining units. The most significant implication of this situation is that unions will be able to cherry-pick which groups of employees they want to organize, even if the majority of employees at a workplace do not in fact want union representation. With smaller potential bargaining units more likely to be composed of supportive workers, unions will have better chances of winning an election since fewer employees will need to be swayed to vote for representation.

This summation grasps the essence of the issue. If, for example, only 40 out of 200 employees at a given worksite want to unionize, any union is going to have enormous obstacles winning representation whether through secret ballot election or card check. But if those 40 pro-union employees constitute a majority within a division of 60 employees, under the Specialty Healthcare test they would win. And equally to the point,  the 20 employees who don’t wish to join would be outvoted and forced to join. That’s what the Specialty Healthcare decision is all about: increasing the odds for union organizing success by raising the bar for defining common employee interests at a given workplace.

Employers and their supporters are pushing back in Congress and in the courts. The House and Senate each have considered bills to revise the National Labor Relations Act so as to define “community of interest” in a way that would discourage NLRB from approving micro-unions. The original effort involved separate bills introduced in the fall of 2011 by Rep. John Kline, R-Minn., and Sen. Johnny Isakson, R-Ga. The House proposal passed; the Senate proposal didn’t. Supporters more recently introduced the Representation Fairness Restoration Act, which specifically targeted the Specialty Healthcare decision. The bill listed eight factors that the NLRB must use to determine whether there is a sufficient community of interest in a proposed bargaining unit, including wages, benefits, working conditions and required skill levels. Neither the House (113th Congress) nor Senate version (114th Congress) were enacted. The courts have produced frustration as well. As of last fall, five federal circuit court rulings had upheld the new NLRB standard. One of the employers on the losing side, fittingly, is Specialty Healthcare, which since has rebranded itself as Kindred Nursing Centers East. The company filed a challenge to the 2011 NLRB ruling with the U.S. Court of Appeals for the Sixth Circuit, which in 2013 ruled in favor of the board, citing its “wide discretion to determine an appropriate bargaining unit.”

Unions understandably want to boost membership, bargaining power and revenues. Lucky for them, the Obama administration has bequeathed to them a reliable ally in the National Labor Relations Board. The board’s current 3-2 majority virtually assures them victory on the issue of micro-unions. Such unions are not illegal. Yet the NLRB, in dramatically expanding the circumstances of their recognition, has handed organized labor the ability to coerce millions of reluctant workers into joining; NLRB dissenting member Brian Hayes, at the time of the Specialty Healthcare ruling, put the figure at around six million. The incoming Trump administration, by virtue of its appointments, hopefully will produce a shift in how the board views the collective bargaining process. In the meantime, Congress would do well to pass legislation to restore the older micro-union standard.