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In a time when our country desperately needs new jobs, the National Labor Relations Board (“the Board”) is making it harder for businesses to survive.  The Board recently delivered three blows to an employee’s right to choose and an employer’s right to be union-free.  Labor lawyers and employers had these cases on their radar, as they were worried the decisions would come down as they did.  These decisions have the potential to increase labor costs for businesses, as well as restrain a company’s flexibility. 

Micro-Unions Become a Reality 

In Specialty Healthcare, the Board allowed the creation of micro-unions in non-acute healthcare facilities and opened the door to this possibility in other sectors.  Previously there was a special test for deciding what the appropriate bargaining unit was for non-acute healthcare facilities, such as nursing homes and rehabilitation centers.  The units generally included all employees in the same general job category, such as all non-managerial staff.  Now, the Board has adopted a “community-of-interest” standard which is the standard normally applied in non-health care sectors.  Usually, unions want a smaller bargaining unit (because they are easier to unionize), while employers want to include as many employees as possible.  So once the micro-unit is selected, the burden is on the employer to show the union’s proposed unit shares an overwhelming community-of-interest with other employees who should therefore be included in the bargaining unit.  This standard will be very difficult for employers to overcome. 

This effectively allows for the creation of micro-unions; small unions which represent only a small subset of employees.  It allows the union to gerrymander bargaining units in order to win an election.  A nursing home could end up with three, four or more different unions representing different subsets of employees.  The ironic thing is, the parties in this case did not ask the Board to decide on this issue.  Rather, the Board felt the need to address the issue, and ended up making a huge change.  While this decision technically only applies to non-acute healthcare facilities, the Board’s logic relaxed the standard for determining the appropriateness of the bargaining unit for all employers. 

Employees Lose Freedoms in Choosing Unions

In another impactful decision, the Board overruled a 2007 Board decision and returned to previous precedent regarding bars to election petitions after voluntary recognition.  (Voluntary recognition means the employer voluntarily recognizes a majority of its employees have signed union authorization cards and the operation is therefore unionized.)  For forty years, after an employer voluntarily recognized a union, no election petition could be filed by a rival union for a “reasonable time period.”  However, in 2007, Dana Corp. held there could be an immediate challenge to voluntary recognition by either 30% of the employees or a rival union. 

Now, the Board in Lamons Gasket Co. returned to the old rule.  Once an employer voluntarily recognizes a union, the employees have no redress for a reasonable time period during which the employer must bargain.  The Board defined for the first time that a reasonable time period can be between six months and one year. 

This rule is important for both employees and employers but for different reasons.  Unions often use bullying tactics to get employees to sign union authorization cards.  If the cards are then used for voluntary recognition, the employee does not get a chance to vote in a secret ballot election.  Thus, employees can be stuck practically forever with an ill-advised momentary decision (signing a union card in the heat of the moment). 

In addition, it is possible for employers to unknowingly recognize a union by verifying a union’s authorization cards without realizing they’ve just unionized their operation.  In both these situations, once the union is in, it is much harder to remove them under the pre-Dana rule.  On the other hand, some employers use voluntary recognition tactically.  For these employers, Dana was a problem.  It made the results of voluntary recognition uncertain and invited other unions to try to set aside a voluntary recognition that an employer may have desired.  For this reason, Dana was not helpful to management.  So is this return to days of old good or bad?  It depends. 

Challenges to Incumbent Unions Restricted After Sales and Mergers

For the past nine years, if a unionized company was sold or merged with another company, an immediate challenge to the union’s status could be made by 30% of the employees, the new employer, or a rival union.  However, the Board in UGL-UNICCO Service Company decided to return to the old rule which bars a challenge to an incumbent union for a “reasonable period of time” after the sale or merger.  The Board defined a reasonable period of time to be six months if the new employer accepts the existing union contract, or one year if the new employer changes the terms and conditions of employment.  This is very similar to the ruling in Lamons Gasket Co. 

Again, the Board has put restraints on an employee’s right to choose not to be represented by a union as well as the employer’s right to challenge this.  This rule also can put significant strain on business transactions, as unionized companies are often unattractive to potential buyers because of their significant labor costs. An avenue that previously could have brought a unionized company to union-free status is now gone or at least delayed.   The pattern is clear; the Democratic Board is flexing its muscles and returning to its more liberal ways. 

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Member Brian Hayes, a Republican, was the lone dissenter in all three of these decisions.  He does not believe the Board articulated any reason for overturning existing precedent.  The future of the Board is in question again.  Democratic Member Wilma Liebman’s term already expired, and controversial Democratic Member Craig Becker’s term is up in December.  This would leave the Board with just two members, Hayes and Mark Pearce, a Democrat.  As we learned just a few years ago, the Board is unable to issue decisions with just two members.  If President Obama’s Democratic nominations to the Board are blocked, as seems to be the practice lately, the Board will not be able to function.  We will have to wait and see what will happen in the next few months. 

Brody and Associates regularly advises its clients on union-related matters and provides union-free training.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.