United States: The Dawn Of "Micro-Unions": A Scary Proposition For Employers

Executive Summary: Unions can be difficult enough to manage, even for experienced employers. Imagine taking your workforce of 100 employees and dividing them up into 10 different collective bargaining units... represented by 10 different unions... and 10 different collective bargaining agreements... with 10 different effective dates. Sound like an administrative nightmare? Welcome to the brave new world of "micro-unions." Recent National Labor Relations Board (NLRB) decisions have legitimized the use of such micro bargaining units and, by so doing, have thrust unparalleled confusion into the already murky waters of collective bargaining. This article discusses how the concept of micro-unions came about and how employers can best prepare and protect themselves from having micro-unions form in their workplaces.

Background Regarding Micro-Unions

Most people have never heard of the term "micro-union" or "mini-union," and for good reason. Until recently, they did not exist in practice in this country. The historical view of the National Labor Relations Act (NLRA) by the courts and the NLRB has been that the statute gives employees in a bargaining unit the right to elect (by majority vote) an exclusive representative (i.e., a union) to advocate their collective employment interests to management. The elected union then has exclusive bargaining rights for all employees in the bargaining unit – even those who are not members of the union. Some union supporters have advocated that employees in the minority who are not members of the union should have the freedom to organize under another union's banner. This scenario, however, contradicts the NLRA's grant of exclusive bargaining rights to a prevailing union and is, therefore, not likely to be adopted. Less settled, though, was the question of what happens if an employer's workforce is not unionized and therefore has no exclusive bargaining representative, as contemplated by the NLRA?

As it stands, the vast majority of our country's workforce is not unionized. In fact, only about 7 percent of private employers nationwide have a unionized workforce (a figure that has decreased dramatically in the past several decades). Many union advocates have pointed to micro-unions as a way to reintroduce unionization into the labor market. By definition, a micro-union is simply a small group of employees (two or more) that unionizes, but does not represent a majority of an employer's workforce. Under this concept, a single employer could have several micro-unions representing various smaller sections of its workforce, which would trigger an obligation on the part of the employer to collectively bargain with each individual union – a process that could prove to be an expensive administrative nightmare. Supporters of the micro-union concept point out that under the NLRA, employees who comprise only a minority percentage of the workforce are nonetheless entitled to collectively bargain, so long as no exclusive bargaining representative has been selected by a majority of the employees. In other words, in the absence of a traditional majority-supported union, smaller micro-unions would be free to come in and unionize smaller, multiple factions of an employer's workforce.

Should micro-unions gain a significant foothold among the American workforce, it would have a truly profound effect on the way employers operate. Instead of trying to deal with a single union, employers could face the unenviable task of dealing with several at the same time. One example is "sympathy strikes." Assume an employer with 50 total employees has 10 micro-unions comprised of five employees each. If one micro-union goes on strike, the members of the remaining micro-unions often will honor the picket line of the single striking union and not report to work. Thus, a micro-union comprised of only five employees could wield the ability to shut down the employer's entire operation. Organized labor has just been waiting for is one good decision from the NLRB to make micro-unions a reality. Regrettably, the NLRB recently granted that wish.

The NLRB Recognizes Micro-Union at National Retailer

In July of this year, the NLRB held that a petitioned for micro-unit of Macy's employees was appropriate, rejecting Macy's argument that the micro-unit employees represented an "overwhelming community of interest" with other store employees. The petitioned for micro-unit consisted of 41 cosmetic and fragrance employees, including counter managers, employed at a Macy's store in Massachusetts. Macy's opposed the formation of the micro-unit, arguing that it should include all 150 employees at that store or, at a minimum, the 120 selling employees at the store.

The Board applied the standard it enunciated in one of its earlier decisions, Specialty Healthcare. This is the traditional standard for determining whether a group of employees constitutes an appropriate bargaining unit, which evaluates whether the proposed unit is "readily identifiable" as a group and whether the employees in the group share a "community of interest." If the proposed unit satisfies these criteria, the employer (or proponent of the larger unit) must show that the unit has an "overwhelming community of interest" with other employees outside the proposed unit.

The Board concluded that the Macy's cosmetic and fragrance employees shared a community of interest for several reasons, including that they worked in the same department, shared the same job purpose, did not have regular contact with employees outside the department, and were paid on the same base-plus commission basis. The Board went on to conclude that Macy's failed to demonstrate that the proposed micro-unit shared an overwhelming community of interest with other store employees because, among other things, the unit employees worked in an entirely separate department from other selling employees, their jobs were structured differently, and they never sold in other departments.

Further Complication:NLRB Rejects A Different Proposed Micro-Union

Adding more complexity to an already confusing landscape, a few days following its Macy's decision, a unanimous NLRB dismissed a union petition seeking to represent 46 shoe sales associates at a Bergdorf Goodman store in New York. The proposed micro-unit consisted of shoe sales associates selling women's shoes in two different departments (Salon Shoes & Contemporary Footwear), on different floors of the same multi-floor department store. The two shoe sales departments had different directors and, because they were located on different floors of the building, they had different floor managers. Employees in both groups were paid on a "draw versus commission basis," providing that at the end of each week, the employee received either the appropriate commission on sales made or a draw, whichever was higher. Salon employees earned a 9 percent commission, while Contemporary Footwear employees earned a 10 percent commission. Salon Shoes had a department manager (in addition to the floor manager), while Contemporary Shoes did not.

Despite the relative similarity in job duties (i.e., selling women's shoes in the same building for the same employer), the NLRB ultimately decided that the proposed micro-unit did not share a necessary "community of interest" to constitute a bargaining unit. The crucial difference for the Board here was apparently that, unlike with the Macy's employees, the shoe sales associates were assigned to two separate departments: Salon Shoes and Contemporary Footwear, which was part of a larger Contemporary Sportswear department. Furthermore, in Macy's the proposed micro-unit was organized along the employer's organizational lines and administrative hierarchy, while the proposed Bergdorf unit was a group of employees who were carved out from the normal structure of the department store. Additionally the Bergdorf unit had separate supervisors, one responsible each department, and separate floor managers. In the final analysis, the NLRB disliked that the proposed Bergdorf's unit was a "carve out" from the employer's existing departmental structure.

Recommendations to Help Avoid Formation of Micro-Unions

Unfortunately, we are only two decisions into the new era of micro-unions; thus, setting out clear guidelines at this point is impossible. Employers should expect the NLRB to continue its trend of favoring employees and unionization. However, the NLRB's opposing conclusions regarding the Macy's and Bergdorf's employees provide at least some guidance on how employers can structure their business to make the formation of micro-unions less likely.

First, it seems clear at this point that the NLRB dislikes proposed bargaining units that pluck employees from different departments or areas within the employer's defined structure or hierarchy. Instead, the Board likely will tend to recognize separate, self-contained, separately managed, differently paid groups of employees who work at least somewhat independently from other departments and who may only interact with other company employees on an irregular basis. Thus, it will be to an employer's advantage to mesh its operations and employees into one large group of employees. Utilizing practices such as (1) having common management, (2) common pay structures (even though not necessarily the same pay amount), (3) working in the same space or rotating employees so that they are exposed to other departments and other employees doing jobs different from their own, (4) creating a clear organizational chart that shows overlapping chains of command or management, and (5) for multi-location employers, creating an organizational structure that emphasizes employee interaction, common management, and shared job responsibilities across multiple departments and locations. In short, do not try to carve out each different type of job into its own unit or department with different managers and a different organizational structure. The more distinct and independent a particular department becomes, the more likely it is that the NLRB will view the employees in that department as a legitimate micro-unit capable of forming their own bargaining unit.

Employer's Bottom Line: This is by no means an exhaustive list of criteria, and the criteria will surely change as the NLRB decides more micro-union cases in the coming months and years. But for now, employers should strive to create an uninviting environment for micro-unions by moving more toward centralization and away from compartmentalization of their operations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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