The National Labor Relations Board (NLRB) on Friday rolled back yet another Obama-era decision. The 2011 "micro-units" decision, Specialty Healthcare & Rehabilitation Center of Mobile (Specialty Healthcare), had expanded the "community-of-interest" test to define an appropriate bargaining unit in union representation cases. In PCC Structurals, Inc., however, the Board has now reinstated the traditional community-of-interest standard, limiting the power of unions to determine the makeup of bargaining units.

The application of Specialty Healthcare resulted in the NLRB approving smaller "micro-units," which were much easier for unions to organize. Many commentators pointed to the combination of Specialty Healthcare (which was broadly applicable to all industries) and the Board's 2014 "quickie election" rules (29 C.F.R. § 101-03) to explain unions' historically high win rate of more than 70 percent in elections held in calendar year 2016.

Before Specialty Healthcare, the Board determined an "appropriate" bargaining unit by analyzing whether the employees in a petitioned-for group shared a community of interest sufficiently distinct from the interests of other workers.

In doing so, the Board applied a multi-factor test, examining whether the employees are organized into a separate department; have distinct skills and training; have discrete job functions and work; are functionally integrated with other workers; have frequent contact and/or interchange with other employees; have separate terms and conditions of employment, such as benefits and wage rates; and are separately supervised.

Specialty Healthcare liberalized this standard, holding that a petitioned-for unit is "appropriate" merely if the employees are readily identifiable as a group and share a community of interests. Thus, a smaller and easier-to-organize unit would be inappropriate only if the employer could meet the relatively heavy burden of proving that that a larger group shared an "overwhelming community of interest" with the union-defined unit.

The Board has now reversed course in PCC Structurals, Inc., abandoning the "overwhelming community of interest" requirement and reinstating the traditional test. In doing so, the Board explained that "there are sound policy reasons for returning to the traditional community-of-interest standard that the Board has applied throughout most of its history, which permits the Board to evaluate the interests of all employees—both those within and those outside the petitioned-for unit—without regard to whether these groups share an 'overwhelming' community of interests."

PCC Structurals, Inc., will make union organizing more difficult, as labor organizers will have to persuade larger groups of workers to "go union." However, Specialty Healthcare has generally had a warm reception in the Courts of Appeals, so it remains to be seen whether the courts will endorse the Board's change of heart and fully enforce PCC Structurals, Inc.

Ballard Spahr's Labor and Employment Group monitors changes in law and policy of the National Labor Relations Board and routinely assists clients in navigating and preparing for compliance with new labor decisions and policy.

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