December 16, 2022Client Alert

The NLRB Again Swings Pendulum Back Toward Unions

On December 14, 2022, the National Labor Relations Board in American Steel Construction, Inc., 372 NLRB (2022) overturned PCC Structurals, 365 NLRB No. 160 (2017), reinstating the Board’s union-friendly test for determining whether additional employees must be included in a petitioned-for bargaining unit. The American Steel decision returns the NLRB to its Obama-era test governing such determinations, as set forth in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011).

The Specialty Healthcare Standard

Between 2011 and 2017, the Board applied and “overwhelming community of interest” standard when an employer challenged the appropriate scope of a petitioned-for bargaining unit. Set forth in Specialty Healthcare, this progressive standard provided that the Board would deem a unit appropriate if it shared a community of interest, even if employees in the unit also shared a community of interest with a larger group of employees not included in the requested unit.

The Specialty Healthcare decision required employers wishing to challenge the scope of the unit to “demonstrate that the additional employees the [Employer sought] to include share[d] an overwhelming community of interest with the petitioned-for employees, such that there is no legitimate basis upon which to exclude certain employees from the petitioned-for unit because the traditional community-of-interest factors overlap almost completely.” Employers discovered it was difficult to meet this standard. It led to a significant increase in “micro units” comprised of small subsets of employees within an employer’s facility instead of more traditional bargaining units.

PCC Structurals And The Traditional “Community of Interest” Test

In 2017, the Trump-era Board in PCC Structurals concluded its decision in Specialty Healthcare was “fundamentally flawed.” The PCC Structurals decision restored the longstanding pre-Specialty Healthcare “community of interest” test. This test required the Board to weigh several factors, namely: (1) whether the employees are organized into a separate department; (2) have distinct skills and training; (3) have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; (4) are functionally integrated with the employer’s other employees; (5) have frequent contact with other employees; (6) interchange with other employees; (7) have distinct terms and conditions of employment; and (8) are separately supervised. Under PCC Structurals, the Board would apply these factors on a case-by-case basis to determine “whether the petitioned-for employees share[d] a community of interest sufficiently distinct” from employees excluded from the proposed unit to warrant a separate appropriate unit.” This was a welcomed change for employers.

Overturning PCC Structurals

In a 3-2 decision issued on Wednesday, the Board in American Steel overturned PCC Structurals and rejected the traditional “community of interest” test. It brought back the Obama-era standard—a more relaxed test unions may utilize to more specifically tailor the groups of employees they wish to represent, thereby avoiding the need to persuade unexpected additional employees.

What Employers Need To Know

With the NLRB’s return to the Specialty Healthcare standard, employers should expect to face a significantly greater burden when challenging the scope of a petitioned-for bargaining unit. Many employers now face increased risk of “micro-units” and a fractionalized workforce. With American Steel, it is again possible for each of these small employee groups to have their own bargaining unit, increasing the likelihood of employers needing to negotiate multiple union contracts. Employers should consider re-engaging its leadership to ensure its leaders understand how and which groups of employees are likely and able to dramatically alter the employment relationship by seeking union representation.

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