Last April, in Executive Order No. 14025 on worker organizing, President Joe Biden echoed former President Barack Obama's 2009 Executive Order No. 13496 on employee rights when he stated, "[I]t is the policy of my Administration to encourage worker organizing and collective bargaining."

Implementing this policy, Biden then moved aggressively to place pro-union activists on the National Labor Relations Board and as General Counsel[1]. 

This board and general counsel have laid out an extensive agenda to tilt the board’s application of the National Labor Relations Act to favor organized labor and union organizing. Many of these contemplated changes will outlaw some of the most successful methods used by employers to convince their employees that union representation is not in their best interests, such as captive audience speeches. 

Employers that wish to remain union-free must plan for these changes and develop new strategies.  What they do now will no longer be good enough or may be prohibited. 

The resurrection of micro-units is likely to be the first of the major changes, and it is most likely to occur within the next several months.  This article reviews the ongoing battle at the board over this issue and offers some suggestions for avoiding micro-units.

Background

A union can only represent employees in a unit appropriate for bargaining.[2]  From its beginning, the board has been required by Section 9(b) of the NLRA to decide whether the unit sought by the petitioning union constitutes an appropriate unit for bargaining. 

In this context, the board is often faced with employer arguments that the unit sought by the union is inappropriate for bargaining because it either includes or excludes other classes or groups of employees. 

Generally, the larger the unit the more difficult it is for a union to organize it.  Consequently, the most common unit dispute is one in which the employer wishes to expand the number of employees who may be eligible to vote in a representation election.  Unions fight to have a smaller unit, often driven by the extent of its employee support. 

For most of its existence, the NLRB has used a multifactor test to determine whether the unit proposed by the union shares a community of interest with a larger group of employees such that it would be appropriate for the proposed unit and the larger unit to be combined for purposes of collective bargaining.  These factors include whether the employees

• Are organized into a separate department;
• Have distinct skills and training;
• Have distinct job functions and perform distinct work, including the extent to which their work overlaps between classifications;
• Are functionally integrated with the other employees;
• Have frequent contact with other employees;
• Interchange  with the other employees;
• Have distinct terms and conditions of employment, including rates and methods of compensation and type of fringe benefits, and
• Are separately supervised.[3]

An Obama-Era Shift

In 2011, the Obama board departed from the traditional analysis and held in Specialty Healthcare[4] that the unit sought by a union is presumptively valid if the employees have a distinct identity and internally share a community of interest. 

The presumption can be overcome only if the employer seeking to include more employees can prove that the excluded employees share an overwhelming community of interest with the proposed unit. 

Using the analysis created in Specialty Healthcare, the board then began to find small units to be appropriate for bargaining.  Micro-units were born. 

In 2014, for example, in Macy’s Inc.,[5] a union-proposed unit made up of only the employees in the cosmetic and fragrances department was found appropriate, even though it was only one of 11 sales departments in the store. 

This finding ignored the long history of the board of applying special rules to the retail industry to avoid the fractionalization of a workforce that was already highly departmentalized.   

Inherent in micro-units are divisions in an employer’s workforce, creating the possibility of multiple small groups, each with its own union, raising the specter of multiple union contracts, even though there may be a broader group of employees that share a community of interest. 

Employers with several unionized micro-units may be continually at the bargaining table and under constant strike threats. 

Even if there were only one union representing the employees in a single micro-unit, an employer would have to deal with an onsite union seeking to organize the excluded employees at the same time it’s protecting its own turf by resisting change and employee flexibility.  

The Trump Board Reverses

In 2017, the Trump board in PCC Structurals Inc.[6]. overturned Specialty Healthcare and reinstated the traditional community-of-interest standard and analysis used before Specialty Healthcare, making micro-units something of the past. 

Of great significance is that the board removed the presumption that the unit proposed by the union is appropriate for bargaining and restored the traditional multifactor test to be used by a neutral board. 

With the removal of the presumption, the employer’s burden to prove that the employees in its proposed unit share an overwhelming community of interest with the employees in the micro-unit evaporated. 

Also, in a subsequent case, The Boeing Company,[7] the board in 2019 emphasized the importance of functional integration of the employees in the micro-units and broader units.   

The Current Case

On Dec. 7, 2021, the Biden board announced that, in connection with deciding a case now before it, American Steel Construction Inc.,[8] it will consider [10] returning to the standard announced in Specialty Healthcare and asked the parties and interested others for briefs on the micro-unit issue.  The decision in American Steel Construction is expected imminently. 

Since Chairman Lauren McFerran wrote a robust dissent in PCC Structurals in which she defended the Specialty Healthcare standard, it is highly probable that this board will revive micro-units. 

Consequently, employers that may be subject to Balkanization by micro-units should take no chances and begin creating the factual basis to substantiate arguments that their preferred unit shares an overwhelming community of interest with the employees in the micro-unit, rendering the micro-units inappropriate for bargaining.

Strategies to Avoid Micro-Units

A successful strategy to avoid a workplace fractured by one or more micro-units has, at its driving objective, the blurring of the distinctions between the micro-units and the broader group as a whole. 

This may be difficult, depending on the nature of the business.  A business that manufactures highly technical and sophisticated products consisting of parts each made by singular groups of skilled employees, for example, will find the integration of employees from outside one of these groups much more complicated and difficult than a retail store consisting of employees with different but largely fungible skills. 

The manufacturer may do better to focus on the interdependence and interlocking nature of the manufacturing of the product, while the store could focus on the integration of the employees through transfers into different departments.

When developing a micro-unit strategy, an employer starts by first identifying its optimal bargaining unit.  The unit should be both hard for a union to organize and possess the most potential for having an overwhelming community of interest with the employees in the micro-unit.  

Because unions find it more difficult to organize large units, the optimum unit should have as many employees as possible. 

In determining whether a unit has the requisite potential to be found appropriate for bargaining, the employer should have familiarity with what the board has done when presented with a large unit – that is, the groups or skills the board has traditionally included, and which groups it has usually excluded. 

Quality control employees who spend all or nearly all of their time in a laboratory, for example, are often cut out of a proposed wall-to-wall unit of production workers.  However, quality control employees who spend most of their time interacting with the production employees on the floor and who participate in problem-solving have a better chance of being included. 

The employer should then identify the possible micro-units within the optimum unit.  These will be small groups that have a recognized internal identity and common interests.  Certified welders working in a defined area – i.e., a welding department – would be an example.  Truck jockeys at a large warehousing operation may be another.  

Once identified, the employer needs to find ways to blur individual identity of the micro-unit.  That is, the internal community of interest of the micro-unit must be merged with the community of interests of the whole. 

Keying off the revision by the board in Boeing, the most important thing an employer can do is ensure that there is functional integration throughout the entire desired unit.  If an employer has the functional integration of employees, it likely will have most of the remaining factors the board uses in making unit determinations – i.e., multiplicity of supervision, employee interchange, overlapping of work, duplication of skills and training and significant employee contact.. 

Functional integration in a workplace that has a linear workflow of products passing through several micro-units until finished or ready for shipping can be relatively straightforward, both as to the work and the employees.  Even if the work itself does not lend itself to functional integration, it is possible to integrate employees. 

Integrating employees, however, is not easy, especially when one or more possible micro-units derives its identity from skills requiring specialized training and, in some cases, certifications, such as welders and forklift drivers. 

Even then, the functional integration of employees is possible, although the employer may have to take extraordinary measures, such as paying for certification programs or protecting the wage rate of an employee who fills in for an absent employee with a lower-rated position. 

This extra effort may be expensive and may cause disruption in the workforce, but the stakes are high – if nothing is done, or things are done imperfectly, the employer could find itself with a patchwork of multiple union contracts with many different unions.  The disruptions in the workforce may even, spawn unit activity.   

There are some baseline requirements if a workforce is to be integrated.  All of the employees in the desired unit, including the employees in the micro-units, must have the same personnel policies and benefit programs.  In addition, all employees should be governed by the same wage administration and performance evaluation program.

Rather than having a wage administration program known only to managers or others in charge of its implementation, the program should be published to all employees so that they can see that they are part of a single workforce. 

Employers may wish to consider using a single ladder of high and low bands, with all classifications placed in comparable bands. 

Likewise, providing for a promotional ladder that enables employees to move into micro-units will reinforce integration, in addition to instilling in employees the potential for a career path.   By being on the same ladders or lists, the employees in the micro-units will be viewed as a single entity.  Optics will make a difference. 

Perhaps the most important part of an integration program would be a robust cross-training program to enable employees to replace or fill in for absent employees in the micro-units or to enable employees from the micro-units to fill in for absent employees in the broader unit. 

Again, the difficulty of implementing a cross-training program is particularly acute when the micro-unit has employees with specialized skills and certifications.  It may be necessary to include support for those employees who wish or need to enroll in external education, working as apprentices in a micro-unit while going to school. 

Where the skills are not specialized, cross-training should produce enough employees with the necessary flexibility to perform work across departments or work classifications so that the integration of the workforce is credible.  Even if the program produces only a few employees with the necessary capabilities, it is worth doing. 

One of the more significant factors used by the board is whether the employees share supervisors.  Supervisors typically supervise the same workers.  A micro-unit avoidance program should expand supervisory responsibilities to include supervising employees in multiple areas, especially the employees in micro-units. 

This can be done either through a regular rotation system or as fill-ins for absent supervisors.  While rotating supervisors through the micro-units with specialized skill or certification may seem to be undoable, it should not be as difficult as it may appear.  Supervisory skills involve much more than having technical knowledge.  Technical problem-solving can be delegated to lead employees or others: supervisory skills cannot. 

A basic understanding of how the work is to be done and how to marshal the resources to solve problems are things an employer should be able to teach a supervisor in a relatively short time. 

Supervisors also should participate in – and not just observe –work-related meetings of employees, particularly those of the employees in the micro-units.  To the extent possible, general employee meetings should have a mix of employees and include the employees from the micro-units. 

The supervisors from other areas should have enough day-to-day exposure to the employees in the potential micro-units to permit them to participate, and to communicate performance evaluations and discipline. 

In short, supervisors could be fungible throughout the entire workforce, especially in the micro-units.

Exposure of employees from micro-units to other employees could be enhanced by having combined lunch areas, break rooms and times, parking lots, entry and exit ways, time clocks, etc.

The context in which the micro-unit arises cannot be overlooked – it is part of the NLRB’s process, either after the filing of a petition or in response to a card check in which a union seeks to represent a micro-unit. 

The board’s process will require an employer to prove that the petitioned-for unit is inappropriate because it has an overwhelming community of interest with excluded employees. 

To meet its burden, an employer must be able to produce documents and records that support its claim.  A rotation system for supervisors, for example, may be disregarded by the board if the employer cannot show contemporaneous records proving the actual movement of supervisors from the excluded employees to micro-unit employees.  For that reason, employers must be able to document the reality of its claims. 

Conclusion

These are only some things for employers to consider.  Every strategy may not work in every company, but the principles should still apply and, with ingenuity, may be the key to an employer’s avoidance of micro-units. 

While the cost of a micro-unit program may be significant, the cost of a fractured workforce with multiple unions and union contracts will be more.  

Since the board will decide American Steel Construction soon, an employer may not yet have a complete micro-unit avoidance program up and running.  The initial focus, therefore, should be on doing the easy things, such as enhancing training programs and supervisory rotations and fill-ins. 

Also, a micro-unit avoidance program can be confusing and disruptive to the workforce.  Advertising or promoting a complete micro-unit avoidance program or its purpose may make some employees upset, sending them to a union agent for help. 

Care must be taken not to spawn union activity in the process of implementation.  Asking for volunteers to try something new may attract attention, but could be used to reduce the risk of wholesale disruption. 

James R. Redeker is a partner at Duane Morris LLP.

Notes

Reprinted with permission of Law360.