This post was coauthored by Inna Shelley.

The National Labor Relations Board decision in the Specialty Healthcare case has continued paving the way for the certification of increasingly fragmented micro bargaining units. On May 4th, the director of NLRB Region 2 approved a collective bargaining unit of full-time and part-time salespersons in the women’s shoe departments on the 2nd (Designer Shoes) and 5th (Contemporary Shoes) floors of a Bergdorf Goodman department store. The approved unit would likely consist of less than 12% of the store’s sales associates and an even lesser percentage of the store’s non-supervisory workers. The full text of this Neiman Marcus Group decision is available here.

Neiman Marcus Group continues the recent Board trend of allowing fragmented micro-units. Such units allow unions to gain a foothold by organizing only an increasingly small subset of employees. Unions no longer have to expend resources to organize the bulk of an employer’s workforce as long as they can identify any group of employees who share an alleged “community of interest” under the traditional criteria. This analysis is often quite subjective and considers whether employees (1) are organized into separate departments (2) have distinct skills and training (3) have distinct job functions or whether there is job overlap (4) are functionally integrated with other employees (5) have frequent contact with other employees (6) interchange with other employees, and (7) have distinct terms and conditions of employment.

Under Specialty Healthcare, if a unit is found appropriate under the above standard, it will be recognized even though a larger unit would be even more appropriate. To successfully challenge a smaller unit, the employer must demonstrate that employees in a petitioned-for, smaller unit share an “overwhelming community of interest” with other employees in a larger unit.

In approving a unit of women’s shoe sales associates on two store floors, Neiman Marcus Group emphasized that salespersons in the shoe departments were paid on a different wage scale than salespersons in other departments. It also distinguished the sale of shoes from that of other merchandise, claiming that shoe salespersons needed different skills and training and that many of them had significant prior experience selling shoes before their hire. Shoe salespersons also made minimal sales of other merchandise and transfers of salespersons from other departments to shoes were uncommon.

It did not matter that sales employees across all departments were subject to the same personnel policies, including health benefits, vacation and holiday policies, evaluations, probation, or use of a common cafeteria. Interestingly, the regional director concluded that salespersons of men’s shoes should not be in the unit because men’s shoes were sold in the men’s section of the department store located across the street and there was allegedly little association between the men’s and women’s shoe salespersons despite access to a common cafeteria.

The decision also analyzed Specialty Healthcare’s Footnote 29, which stated that Specialty Healthcare was not meant to disturb special industry presumptions and occupational rules. There is, of course, a longstanding presumption in the retail industry that the appropriate unit is store-wide. While recognizing that industry presumptions must still be followed after Specialty Healthcare, the regional director rejected the retail industry presumption. Instead, the director relied upon isolated retail cases, including those with stipulated units and those finding that appropriate units consisted of all salespersons, as opposed to only those who sell particular merchandise. Thus, as long as an exception allowing a smaller unit can be identified in a particular industry, even via voluntary approval, employers may not be able to successfully rely on long-established industry practice to challenge a proposed fragmented unit.

Neiman Marcus Group also affirms that in the post Specialty Healthcare world, it is now increasingly difficult for employers to challenge a proposed micro-unit by claiming that there is an “overwhelming community of interest” with a larger employee group. Such an “overwhelming community of interest” exists only where almost every community of interest factor overlaps almost completely. Any perceived difference in job functions or other terms or conditions of employment may justify a bargaining unit of a small employee group.

As a result, employers may find themselves under the obligation to engage in collective bargaining with a multitude of splintered employee groups, in spite of vastly overlapping interests that do not quite rise to “overwhelming” by the Board’s assessment. Cases like Neiman Marcus Group demonstrate that when the Board said in Specialty Healthcare that its decision did not presage any major changes, it wasn’t quite telling the truth, the whole truth and nothing but the truth.

The United States District Court for the District of Columbia ruled that the NLRB’s new rules on extremely fast union elections had not been properly issued, due to lack of a quorum. While Member Brian Hayes participated in earlier portions of the rulemaking process, he did not participate in the final deliberations or vote upon the rule itself.  With only two other members of the Board in office at the time, that meant only two members acted.  Since a quorum for the Board to conduct business is three members, U.S. District Judge James Boasberg found the rule invalid.  He did not reach the other arguments raised by the plaintiffs in the case (the U. S. Chamber of Commerce and the Coalition for a Democratic Workplace).  In light of the nature of the ruling, the Board can elect to appeal, or it can take action upon the rulemaking record with a quorum, which it now can muster (at least assuming that the recess appointments made by President Obama are found to be valid.)  The order of Judge Boasberg is below.


The rule recently promulgated by the National Labor Relations Board requiring employers to post on bulletin boards and on their websites notices of employee rights partially survived a court challenge.  The U.S. District Court in Washington, DC permitted the Board to require the posters, but vacated the portions of the rule creating a new unfair labor practice of failure to post the notice and providing that the statute of limitations for filing unfair labor practice charges is extended if the employer did not properly post the notice.NLRB-Notice-Posting-Decision 03-02-2012.pdf  In the words of Judge Amy Berman Jackson:

The Court holds that the NLRA granted the Board broad rulemaking authority to implement the provisions of the Act, and that the Board did not exceed its statutory authority in promulgating Subpart A of the challenged rule – the notice posting provision. But it also holds that the provision of Subpart B that deems a failure to post to be an unfair labor practice, and the provision that tolls the statute of limitations in unfair labor practice actions against employers who have failed to post, do violate the NLRA and are invalid as a matter of law.

The decision is subject to appeal, of course, and the likelihood is that both sides will appeal certain aspects of the decision.  At this point, it does appear that employers will be required to comply with the basic posting requirement as of April 30, 2012.  It is not clear that there will be any effective penalty for failing to do so, however.

The Office of the General Counsel for the NLRB has recently updated its memo summarizing recent social media decisions.  The memo provides a reference for employers regarding the limitations on disciplining or terminating employees based on comments they make on FaceBook and other social media sites.

The first case summary in the memo is telling.  The Board held that a collections agency violated the National Labor Relations Act when it terminated an employee for an expletive-filled FaceBook rant disparaging the company and its decisions.  The Board reasoned that the termination was unlawful, along with the company’s policy, which prohibited:

“[m]aking disparaging comments about the company through any media, including online blogs, other electronic media or through the media.”

The Board noted that the company’s written policy did not provide an exception for engaging in Section 7 rights (the rights of employees to engage in protected, concerted activity).

Of course, it remains to be seen how courts would regard a similar set of facts. Nonetheless, the memo serves as yet another reminder of the Board’s take:  An employee may have a federally-protected right to badmouth her employer.   Here, a key factor was that several of the employee’s co-worker FaceBook friends joined in the rant.  Hence, the exchange amounted to concerted activity according to the Board.

Earlier today the White House announced recess appointments to the Consumer Financial Protection Bureau and the National Labor Relations Board. The appointments were asserted to be recess appointments despite the fact that the Senate has not technically been in recess under the historical understanding of that term.  Indeed, Congress has gone out of its way to avoid being in recess specifically to prevent recess appointments being made. 

While the specific individuals appointed have not been objected to (and, in the case of two of the Board nominees, have not even been considered by any of the Senate Committees since their nominations were only recently announced), the positions must be filled for the agency to operate with full effectiveness.  Rich Cordray, a friend of mine and fellow Michigan State alum, is a very qualified person.  However, the Republicans do not want anyone to serve as Director of the CFPB because they oppose the broad, unchecked power of that agency.  As to the NLRB, without at least three members, the Board cannot take any official action. Since its recent actions have been opposed by most Republicans, they would prefer it be dormant.  It is certain that there will be challenges to this unprecedented assumption of appointment power by President Obama.  How soon the challenges will be resolved remains to be seen.  It is also certain that 2012 will continue to feature more fireworks.

While most Americans were out preparing for Christmas last week, the NLRB had some presents of its own.  For employers, the Board postponed its posting rule (which created a new unfair labor practice and potentially extended the statute of limitations) from January 31 to April 30, 2012.  For unions, the Board issued a decision that allows persons who write up employees for discipline and issue it to the employees to engage in pro-union electioneering.  The case, DirecTV U.S. DirecTV Holdings, LLC, was decided by a 2-1 margin.  The majority found that the three-tier review of recommended discipline, conducted by the employer to ensure conformity with company procedures and various laws, meant that the alleged supervisors did not “responsibly recommend” discipline.  This was true even though the percentage of recommendations adjusted during the reviews was very small (less than 10%).  They did not give any weight to the fact that the alleged supervisors actually administered the discipline.  The dissenter found that, based on a number of previous Board decisions, a review of recommendations initiated by alleged supervisors does not mean that they fail to meet the statutory test.  From a practical standpoint, there would be few modern employers who do not subject disciplinary recommendations from anyone in their organization to a  thorough review.  Failure to do so would result in needless mistakes in our complex employment system.

Finally, the Board itself received a “present” of sorts, when President Obama nominated two individuals to the Board. Sharon Block is a Democrat presently serving with the Department of Labor on its Congressional Affairs. She formerly worked for Senator Kennedy on the HELP Committee in the Senate.  Richard Griffin is the General Counsel of the International Union of Operating Engineers, and serves on the Board of the AFL-CIO Lawyers Coordinating Committee.

The NLRB has postponed the effective date for its new union organization rights posting requirement until January 31, 2012.  In its press release, the Board states that it decided to postpone the requirement, “in order to allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses.”  Further, the Board stated:

The decision to extend the rollout period followed queries from businesses and trade organizations indicating uncertainty about which businesses fall under the Board’s jurisdiction, and was made in the interest of ensuring broad voluntary compliance. No other changes in the rule, or in the form or content of the notice, will be made.

Although not mentioned in the press release, the postponement comes in the wake of the filing of at least three separate lawsuits pending in which organizations and interested parties have sought to block the posting requirement and challenge its legality, including the Chamber of Commerce, the National Federal of Independent Business and the National Association of Manufacturers.

The NLRB published today its new poster regarding employees rights to form labor unions under the NLRA, mentioned in our prior blog posting.  A copy is available here

Meanwhile, the National Association of Manufacturers has filed a lawsuit in federal court challenging the rule, stating that “[t]he Board’s promulgation of the Rule is in excess of the Board’s statutory jurisdiction, authority, limitation and rights.”  The case is pending in the United States District Court for the District of Columbia.

The Los Angeles Times reported today that a mob of hundreds of International Longshore and Warehouse Union members, alerted by a posting on the Union’s Facebook page, overpowered police and attacked a train carrying grain to a new storage facility in Longview, Washington.  According to the article, the union members cut brake lines on the train, dumped cargo and held the outnumbered law enforcement personnel at bay while they attacked the grain terminal.  The Union had already been subject to a temporary restraining order after the NLRB found that it had engaged in illegal activities, including dumping a bag of manure on the site from an airplane. The work at the grain terminal had been assigned by the operator to the General Construction and Operating Engineers Local 701, which has been criticized by the local branch of the AFL-CIO for accepting the work. The ILWU claimed to have been unaware of what had occurred at the terminal, saying it was looking into the matter.  Union violence is apparently not a thing of the past, at least in the Northwest.  Whether this incident will have any effect on the NLRB’s case against Boeing for electing to expand in another area of the country rather than Washington State remains to be seen.

Yesterday, the NLRB published the final version of its new rule requiring most private employers to post a notice to employees informing workers about their rights to form a labor union.  The posting is similar to the one that government contractors are already required to post. (See DOL Fact Sheet). 

The new rule is significant for several reasons.  First, this is the first time that the Board has extended its reach to the private sector in requiring this type of posting.  Second, the penalty for failing to comply is that the employer will be deemed to have committed an unfair labor practice.  While the rule does not authorize a monetary penalty, the issuance of an unfair labor practice is still significant, especially for an employer that is facing a union organizing campaign.  This is because the Board may use a failure-to-post ULP as a means to extend the 6-month statute of limitations for filing charges involving other alleged unfair labor practices against the employer, as well as grounds for establishing “unlawful motive” in cases involving other alleged violations of the National Labor Relations Act.  Consequently, it is foreseeable that the failure to post—in combination with other alleged unfair labor practices—could result in the issuance of a bargaining order, in which the Board would require an employer to bargain with a union even when the union has not established majority support. The failure to post would also serve as a blocking charge to stop a decertification vote.

Not surprisingly, employers and business groups dislike this rule, and for good reason.  The US Chamber of Commerce views the action as making it appear that the government is encouraging workers to form labor unions. (See Editorial in Las Vegas Review-Journal)  Nathan Koppel of The Wall Street Journal’s Law Blog details the strong reactions from employers regarding the new rule.  

More details on the new rule: 

  • Employers must post the new notice beginning November 14, 2011
  • The new posting will be available from the Board beginning November 2, 2011
  • Employers who post policies on-line must include this notice on-line
  • Employers do not have to keep records showing that they have posted the notice
  • Certain very small employers and the US Postal Service are exempt; otherwise, all employers subject to the NLRA must post
  • The notice must be posted in English and other languages if 20% or more of the workforce speaks another language

Interestingly, the administration just last week announced its new regulatory simplification effort, in which simplifying Department of Labor warnings would purport to save employers more than $2.5 billion over the next five years.  (See Christi Parson’s article in the LA Times).  Ironically, however, this new posting requirement will cost each of the roughly 6 million subject employers at least $64 in just the first year to comply.