As we previously predicted, the National Labor Relations Board (“NLRB” or the “Board”) issued its decision in American Steel Construction, Inc. (available here) and yet again overruled another case decided under the Trump Administration.
This time, the Board reverted back to the Obama-era standard for evaluating the appropriateness of a petitioned-for unit under Section 9 of the National Labor Relations Act (the “Act”).
In American Steel, the Petitioner, Local 25 of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, AFL-CIO sought to represent all journeymen and apprentice field ironworkers working for the Employer, American Steel Construction, Inc. The Employer challenged the petitioned-for unit and asserted that the smallest appropriate unit was one that contained the additional classifications of the painters, drivers, and inside fabricators who also worked at the Employer’s shop. Applying the PCC-Boeing standard, the Regional Director determined that the petitioned-for unit was not appropriate because the evidence was insufficient to establish that the ironworker possessed a community of interest that is sufficiently distinct from the employees the Employer contended were inappropriately excluded from the unit. The Regional Director then dismissed the petition as the Petitioner was not willing to proceed to an election with a unit different from the petitioned-for unit. The Petitioner sought review of the Regional Director’s Decision and Order pursuant to Section 102.67 of the Board’s Rules and Regulations.
Shifts in Standard Applied to Determining Appropriateness of a Petitioned-for Unit
Prior to this decision, the standard the Board applied shifted between the Obama and Trump administrations as to what test should be used to evaluate the appropriateness of a petitioned-for bargaining unit.
In 2011, the Obama-era Board issued its decision in Specialty Healthcare and Rehabilitation, 357 NLRB 934 (2011) and established that a bargaining unit was appropriate if the petitioned-for unit was “readily identifiable” as a group and shared a community of interest. This standard essentially allowed unions to set the scope of the bargaining unit unless the employer could show that an “overwhelming community of interest” existed between the selected unit and the excluded employees.
Then, in 2017 and 2019, the Board under the Trump administration reversed Specialty Healthcare and returned to a traditional community of interest test for determining the appropriateness of a bargaining unit in PCC Structurals, Inc., 365 NLRB No. 160 (2017) and The Boeing Company, 368 NLRB No. 67 (2019) (decisions collectively referred to as the “PCC-Boeing” standard).
Board’s Majority Decision Reinstates the Specialty Healthcare Standard
Now, in a 3-2 majority decision, the Board has overturned the PCC-Boeing standard and reinstated the standard from Specialty Healthcare for use in evaluating the appropriateness of petitioned-for units.
Reiterating the standard under Specialty Healthcare, but with a slightly different construction, the majority stated the Board will approve a petitioned-for unit that is made up of a subdivision of employee classifications if said unit: 1) shares a community of interest; 2) is readily identifiable as a group based on job classifications, departments, functions, work locations, skills, or similar factors; and 3) is sufficiently distinct.
The challenge for parties who wish to challenge the petitioned-for unit lies in Specialty Healthcare’s reinstated heightened showing. If a party contends that the petitioned-for unit excludes additional employees, then that party must demonstrate that an “overwhelming community of interest” exists between the petitioned-for employees and excluded employees such that there is no rational basis for the exclusion. Due to this heightened showing, the Board will not mandate inclusion of additional employees unless the interests of the petitioned-for employees and the excluded employees overlap almost completely—such a showing will demonstrate that the petitioned-for unit is truly arbitrary and must include the excluded employees.
This heightened showing departs from the standard used in PCC-Boeing to compare and weigh the interests of the petitioned-for employees and the excluded employees.
In overruling PCC-Boeing and reinstating the standard under Specialty Healthcare, the Board repeatedly emphasized that its role with respect to unit determinations is “to permit employees to organize in an appropriate unit, not to ascertain or require employees to organize in an optimal unit” in the Board’s judgment. Thus, according to the Board, the standard under Specialty Healthcare better promotes the policies of the Act by affording the employees seeking representation the fullest freedom to organize under Section 9 of the Act, better reflects traditional Board precedent, and better achieves consistency with Supreme Court precedent.
Board Members Marvin Kaplan and John Ring dissented and criticized the return to the Specialty Healthcare standard, concluding that the standard gives inappropriate weight to the extent of union organization, effectively creates a presumption that a petitioned-for unit is appropriate if an internal community of interest is shown, and creates a burden shifting structure where a party objecting to the unit must prove that the interests of the employees excluded from the unit are not sufficiently different under the “overwhelming community of interest” standard.
This decision represents yet another step this Board has taken in support of President Biden’s pro-labor agenda.
The Board’s decision encourages unions to petition for smaller, gerrymandered units and makes it more difficult for employers to successfully challenge the appropriateness of those units by contending that the petitioned-for unit is too narrow and excludes certain employees.
More importantly, this decision demonstrates how rapidly the standards applied by the Board can change and will likely increase the number of petitioned-for units that are approved by the Board moving forward.
 In addition to reinstating the Specialty Healthcare standard, the Board remanded the Petition at issue to the Regional Director for action consistent with its decision and Specialty Healthcare standard and requires that the Specialty Healthcare standard apply retroactively to all pending cases.