NLRB Reverses Misguided Obama-Era ‘Micro-Union’ Ruling

The era of partial workplace organizing is now in remission. And that’s a good thing for those concerned about the right not to be corralled into joining a union. On December 15, the National Labor Relations Board, by a 3-2 vote, ruled in PCC Structurals, Inc. that a small, unionized group of an otherwise nonunion workplace does not have standing as a separate collective bargaining unit. The group, the board concluded, shared a “community of interest” with the majority and hence cannot negotiate separately. The decision overturns the board’s ruling in Specialty Healthcare (2011), which dramatically expanded the basis for forming these miniature or “micro” bargaining units. Its also underscores the pivotal role of President Trump’s NLRB appointees, Marvin Kaplan and William Emanuel.

Labor unions in the private sector are hungry for members, and with good reason. According to data released this month by the U.S. Bureau of Labor Statistics, only 6.5 percent of all employees in private industry in 2017 belonged to a union. That’s way down from the peak (excluding agricultural workers) of roughly one-third during the mid-50s through the early-60s. It is also far lower than the 2017 public-sector membership figure of 34.4 percent. The long-term decline has been due to a variety of factors ranging from the rapid growth of service industries to the increase in labor market mobility to the globalization of the U.S. economy. In response, unions have resorted to ethically and legally questionable methods to expand their revenues, bargaining power and political influence.

One of the more prominent of these institution-building methods is ‘micro-unionism.’ The term refers to the practice of a union organizing a fraction of employees, rather than all employees, at a particular work site. In an insidious way, this incremental strategy is coercive. The following hypothetical example should suffice. Assume a nonunion work site of 200 employees of which only 40 desire to join a union. Ordinarily, a union would have little incentive to mount an organizing drive; even the best organizers aren’t likely to win over a majority facing that kind of odds. But let us assume that all 40 pro-unionization workers are in a division with 60 employees. In this context, rather than being outnumbered 160-40, the pro-union faction holds a 40-to-20 advantage. Suddenly the union has an incentive to organize. And if its campaign is successful, the 20 non-joiners effectively would be captive to union representation whereas they would not be if they were treated as part of the whole workplace. For organized labor, micro-union math works in its favor.

But is this practice legal? That depends on the degree of overlap of interests between workplace divisions. If what unites the divisions (i.e., the community of interest) is more powerful than what divides them, the union must secure the support of the entire site in order to become a bargaining agent. But if the divisions significantly differ, they are allowed to engage in fractional organizing. So how does one interpret “community of interest?” That’s where the National Labor Relations Board comes in. Over the years, the five-member board’s view on this issue has shifted. Back in 1991, the NLRB ruled in an Iowa case, Park Manor Care Center [305 NLRB 872 (1991)] that if a fractional bargaining unit is eligible to affiliate with a union, its rules and practices must be distinctly different from other sections of the work site. A Service Employees organizing campaign, the board ruled, did not meet this standard. Subsequent cases, especially United Operations Inc. [338 NLRB 123 (2002)], affirmed this standard.

With the coming of the Obama administration came a shift in the board’s majority viewpoint. Barack Obama, who explicitly stated during his 2008 campaign that he would fight for union interests, made appointments that went well beyond the standard pro-union view one would expect from a 3-2 Democratic majority (it is a longstanding custom that the board be composed of three members affiliated with the party in the White House). As this pertained to micro-unionism, a test came in an Alabama dispute, Specialty Healthcare and Rehabilitation Center of Mobile [357 NLRB 934 (2011)]. Here the board, by 3-1 (there was a vacancy at the time), ruled that certified nursing assistants at the facility, though constituting a minority of employees, qualified as a stand-alone bargaining unit. As such, they could seek representation by the United Steelworkers. The decision overturned Park Manor, which “has become obsolete, is not consistent with our statutory charge, and has not provided clear guidance to the interested parties or the Board.” It also expanded the basis for micro-union membership among new hires at the unionized division.

The decision was an unmistakable victory for organized labor. And what followed could have been predicted. Across a wide variety of industries, unions stepped up their micro-organizing. As a recent monograph published by the U.S. Chamber of Commerce revealed, the NLRB consistently sided with the unions in such disputes. Bergdorf Goodman, DTG Operations, Macy’s, Nestle, T-Mobile, and Volkswagen were among the employers at which micro-bargaining could take place. The report observed: “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 employers they want to organize, even if the majority of employees at a workplace do not in fact want union representation.”

Recognizing the capacity of micro-unionism to subvert workplace democracy, some members of Congress are pushing back. Last May, Sen. Johnny Isakson, R-Ga., and Rep. Francis Rooney, R-Fla., introduced a bill, the Representation Fairness Restoration Act (S. 1217, H.R. 2629), that would restore the Park Manor-era definition of an appropriate collective bargaining unit. No longer would minute job category distinctions be the basis for shrinking the scope of a community of interest. Sen. Isakson, who has sponsored such legislation before, declared: “Common sense would tell you, and now experience has shown, that ‘micro-unions’ are a mistake.”

For the time being, the Isakson-Rooney measure isn’t necessary. For on December 15, the reconstituted National Labor Relations Board voted by 3-2 in PCC Structurals Inc. [365 NLRB No. 160 (2017)] to reverse Specialty Healthcare. The employer, PCC Structurals, Inc., is a Portland, Ore.-based manufacturer of super-alloy, aluminum and titanium casting with commercial applications that include jet aircraft engines, industrial gas turbines and medical prosthesis. International Association of Machinists and Aerospace Workers District Lodge W24, recognizing that unionizing the entire site was not feasible given its more than 2,000 production workers, settled for representation of about 100 welders. By any reasonable assessment, this subset of employees shared a community of interest with other workers. The welding employees and the larger majority shared terms of scheduling, supervision, social contact, benefits, training, and wearing of protective equipment. Even going by the high hurdles for establishing a community of interest set by Specialty Healthcare, the case for recognition looked pretty thin.

Apparently, NLRB Regional Director Ron Hooks didn’t see it that way. Last July he determined that the welders did not share an overwhelming community of interest, and as such, a planned union election could proceed. PCC, promptly petitioned NLRB headquarters in Washington, D.C. for a review. Five months later, the board ruled on behalf of the employer. Chairman Philip Miscimarra, on the eve of the expiration of his tenure, along with new members Marvin Kaplan and William Emanuel, concluded that the board had an affirmative duty under Section 9(b) of the National Labor Relations Act to determine the appropriate coverage of a bargaining unit – discretion, in fact, that the Specialty Healthcare ruling explicitly restricted. The majority opinion called Specialty Healthcare “fundamentally flawed” and noted that the restoration of the earlier Park Manor standard would give the board the leeway needed to accurately determine unit size. Factors such as distinctiveness of skills, training, job functions, supervision and degree of social interaction with other employees, the majority ruled, must be considered.

Industry and union partisans, not surprisingly, are divided. David French, vice president of the National Retail Federation, praises the ruling, saying that Specialty Healthcare had “undermined retail operations and limited opportunities for hardworking employees for the sole purpose of empowering Big Labor.” By contrast, Marni von Wilpert, a labor specialist with the Left-leaning Economic Policy Institute, argues that the decision is anti-worker. “Why, then,” she asks, “were the Chamber of Commerce and other corporate interest groups committed to doing away with the Specialty Healthcare standard?” Her answer: “They simply wanted to make it easier for employers to defeat an organizing campaign by manipulating who is in a bargaining unit. By overturning this rule, the Trump administration has once again shown that it wants to make it harder for workers to organize and join unions.” She’s off the mark. Actually, what the Trump administration and the new NLRB want to do is make it easier for reluctant workers to say “no thanks.” That’s a matter of one’s right to choose. And if Congress passes the Isakson-Rooney measure, lawmakers will have gone a long way in protecting that right regardless of who occupies the White House in the future.

The decision is part of an overall shift at the National Labor Relations Board during the new Trump era. Under President Obama, the NLRB, when not short-handed, provided organized labor with a natural 3-2 majority. And that particular board often went well beyond established precedent even by Democrat standards. The ascent of Kaplan and Emanuel to the board is reversing the Obama legacy, and not just on micro-unionism. On December 14, just one day prior to the handing down of PCC Structurals, the board by 3-2 overturned its earlier decision in Browning-Ferris [362 NLRB No. 186 (2015)], which had expanded the basis for forcing a company to bargain alongside a subsidiary or contractor as a “joint employer.” Unions these days understandably are getting creative in attracting new members. But creativity is not a license to coerce. It is gratifying that the NLRB, as currently constituted, understands this.