NLRB Recent Ruling Against Macy’s Stinks

In 2011 there was a case called Specialty Healthcare that permitted micro bargaining units in the healthcare industry. Micro bargaining units exist when just a few people in a department, instead of all people in the company, are allowed to be in a union. In a grocery store, this means the frozen food employees can be in one union, the produce boys in another, the cashiers in a third, etc. Specialty Healthcare micro-units have recently crept into the retail industry, in the Bergdorf Goodman and Macy’s cases.

In Bergdorf Goodman, only the full-time and regular part-time women’s shoes associates in a second-floor designer shoes department and a fifth-floor contemporary shoes department sought to unionize. According to the Board, the designer shoe department made up their whole department, but the contemporary shoe employees were carved out from a department called contemporary sportswear. This carve out did not comport with Specialty Healthcare’s appropriate unit requirements. Without the carve out it is likely that just the designer shoe department clerks maintained the right community of interest to satisfy the micro-unit test. Specialty Healthcare’s “community of interest” test looks almost exclusively at how the employer has chosen to structure its workplace. The Bergdorf decision makes it clear that management can set up operations in ways that avoid unions organizing departmental units. While there is no one-size-fits-all solution, companies need to look at their operations and organizational structures and be aware of the potential consequences that come with different approaches.

For a contrary decision, and one that stinks, just the cosmetic and fragrance department of a Macy’s store sought to unionize. These workers accounted for 41 of 150 store workers. Historically, all 150 employees would have constituted an appropriate bargaining unit, but under Specialty Healthcare, these 41 are appropriate and admittedly larger than a true micro-unit. The Board determined that just the cosmetic and fragrance employees (a) had the same first level supervisor (even though the second level manager and store supervisor exercised control over everyone); (b) worked in connected defined work areas (though on different floors and adjacent to other employees); (c) had limited interaction with other employees (despite having daily all-employee meetings); and (d) they were paid on commission.

Challenging narrowly defined micro-units appears to be almost impossible. Companies that have employees in distinct fields should be diligent to eliminate the types of unique, department-specific management and sales practices that sways the NLRB to permit a small group to organize within the larger workforce. Further, companies should place a premium on how businesses are structured administratively and how employees are integrated in their work functions.