Specialty Healthcare Is Valid, NLRB Has Wide Discretion to Set Bargaining Units for Union Elections: Sixth Circuit | Practical Law

Specialty Healthcare Is Valid, NLRB Has Wide Discretion to Set Bargaining Units for Union Elections: Sixth Circuit | Practical Law

In Kindred Nursing Centers East v. NLRB, the US Court of Appeals for the Sixth Circuit upheld the National Labor Relations Board's (NLRB) 2011 decision in Specialty Healthcare and Rehabilitation Center of Mobile, which required an employer seeking to enlarge a bargaining unit for a union election to prove that the excluded employees shared an overwhelming community of interest with employees in the preliminarily approved unit.

Specialty Healthcare Is Valid, NLRB Has Wide Discretion to Set Bargaining Units for Union Elections: Sixth Circuit

by Practical Law Labor & Employment
Law stated as of 14 Dec 2022 • USA (National/Federal)
In Kindred Nursing Centers East v. NLRB, the US Court of Appeals for the Sixth Circuit upheld the National Labor Relations Board's (NLRB) 2011 decision in Specialty Healthcare and Rehabilitation Center of Mobile, which required an employer seeking to enlarge a bargaining unit for a union election to prove that the excluded employees shared an overwhelming community of interest with employees in the preliminarily approved unit.
On August 15, 2013, in Kindred Nursing Centers East v. NLRB, the US Court of Appeals for the Sixth Circuit issued an opinion upholding the NLRB's 2011 decision in Specialty Healthcare and Rehabilitation Center of Mobile, which required an employer seeking to enlarge a bargaining unit for a union election to prove that the excluded employees shared an overwhelming community of interest with employees in the preliminarily approved unit. The Sixth Circuit held that the NLRB did not abuse its wide discretion over determining appropriate bargaining units.
In Specialty Healthcare and Rehabilitation Center of Mobile, the panel (Board) heading the NLRB's election processes and judicial functions overturned long-standing precedent regarding determining appropriate bargaining units for union elections in the nonacute health care industry (see Legal Update, NLRB Changes Standard for Determining an Appropriate Bargaining Unit). The Board held that when employees in a nonacute health care facility petition for a smaller bargaining unit rather than another unit which may also be appropriate, and where the smaller unit includes employees who are "readily identifiable as a group," the burden is on the employer to show that the employees in the larger unit "share an overwhelming community of interest with those in the petitioned-for-unit." The Board has since applied its new standard across all industries.
Under the NLRA, an employer cannot directly appeal Board decisions concerning bargaining unit determinations or election matters. Instead, an employer must refuse to bargain with the elected union and, in appealing the resulting Board decision that its refusal to bargain was an unfair labor practice (ULP), raise the issue of unit appropriateness to a US court of appeals. The employer (as Kindred Nursing Centers East) followed this procedure and petitioned the US Court of Appeals for the Sixth Circuit for review of the Board's ULP and bargaining unit decisions. The employer asserted that the Board abused its discretion because Specialty Healthcare:
  • Adopts a new approach and does not, as the opinion suggests, return to applying the traditional community of interest analysis.
  • Does not, as the opinion suggests, clarify the law about determining appropriate bargaining units by adopting the overwhelming community of interest test. The decision inappropriately imports this test from another area of labor law and materially changes the law.
  • Violates Section 9(c)(5) of the NLRA by making the extent to which employees have been organized by the union controlling when determining whether a unit is appropriate for an election (29 U.S.C. § 159(c)(5)).
  • Changes the Board's standards for evaluating appropriate bargaining units and challenges to proposed bargaining units through adjudication instead of agency rulemaking.
The Sixth Circuit denied the employer's petition for review and granted the NLRB's cross-petition for enforcement of its order requiring the employer to bargain with the approved bargaining unit's elected union.
First, the Sixth Circuit held that the Board did not abuse its discretion by overruling its standard for appropriate bargaining units in the nonacute health care industry or adopt a new approach different from its traditional community of interest standard. The Sixth Circuit:
  • Noted that:
    • the NLRA gives the Board broad discretion to determine appropriate bargaining units and that judicial review of those determinations is limited;
    • the Board's standard for defining bargaining units appropriately focuses on whether the employees share a community of interest;
    • it is within the Board's discretion to choose to follow one precedent or reject another precedent; and
    • an agency may reexamine its prior decisions and may depart from its precedents provided the departure is explicitly and rationally justified.
  • Found that the Board adequately explained that it modified its approach to bargaining unit determinations because the prior standards were a source of unnecessary litigation.
Second, the Sixth Circuit held that the Board did not abuse its discretion by requiring an employer seeking a larger bargaining unit to show that the excluded employees share an overwhelming community of interest with employees in the preliminarily approved unit. The Sixth Circuit:
  • Noted that:
    • the Board has applied an overwhelming community of interest test before. This test is just one variation of several heightened standards it has applied when a party argues that a prima facie appropriate bargaining unit should include more employees (for example, see Jewish Hosp. Ass'n of Cincinnati); and
    • the US Court of Appeals for the District of Columbia Circuit approved of the Board's use of the overwhelming community of interest standard in Blue Man Vegas, LLC v. NLRB.
  • Found that:
    • the Board clarified, rather than materially changed its interpretation, by adopting a test used in earlier precedent; and
    • the Board soundly explained that it was clarifying its interpretation of the NLRA. It had used heightened standards in the past but did not always articulate the standards clearly.
Third, the Sixth Circuit held that the Board did not violate Section 9(c)(5) of the NLRA. The Sixth Circuit:
  • Noted that:
    • Section 9(c)(5) of the NLRA prohibits the Board from using the extent that a union has organized employees of an employer as the "controlling" factor for determining whether employees comprise an appropriate bargaining unit; and
    • the DC Circuit has interpreted Section 9(c)(5) as requiring the Board to consider other substantial factors in defining collective bargaining units besides the results of union organization to decide whether a unit is appropriate. However, the extent of organization can be used as a factor in close cases.
  • Found that the Board applied the community of interest test to find that there were substantial factors showing that the employees in the prima facie appropriate bargaining unit shared a community aside from the finding that the union had organized the group of employees comprising the unit.
Fourth, the Sixth Circuit held that the Board appropriately used adjudication rather than rulemaking to change its standards regarding bargaining unit determinations. The Sixth Circuit:
  • Noted that:
    • the Board is not precluded from announcing new principles in an adjudicative proceeding;
    • the choice between using rulemaking and adjudication lies in the Board's discretion; and
    • according to the Supreme Court, there are situations where the Board's reliance on adjudication could be an abuse of discretion.
  • Found that:
    • the employer failed to explain how the Board's use of adjudication amounted to an abuse of discretion or violation of the NLRA; and
    • even though the adjudication process was used, it used an equivalent to the notice and comment application that is part of rulemaking under the Administrative Procedure Act.
This decision is not surprising given the broad discretion that the NLRA and precedent provide the Board to:
  • Fashion standards for determining appropriate bargaining units for union elections.
  • Decide challenges to bargaining units preliminarily found appropriate.
Now approved by an appellate court, Specialty Healthcare:
  • Will likely continue to help unions to gain elections for small bargaining units limited to persons in a particular job classification or title.
  • Will likely continue to encourage unions to organize an employer's facilities incrementally.
  • Could result in multiple unions and multiple bargaining units at an employer's facilities, which would significantly complicate employer's ability to manage its employees and operate its business.
Employers should consider the practical implications of Specialty Healthcare that Practical Law noted when the Board issued the decision (see Legal Update, NLRB Changes Standard for Determining an Appropriate Bargaining Unit).
UPDATE: The US Court of Appeals for the Eighth Circuit, relying heavily on Kindred Nursing Centers East¸ also accepted the Board's overwhelming community of interest test (FedEx Freight, Inc. v. NLRB, (8th Cir. Mar. 7, 2016)).
UPDATE: On December 15, 2017 in PCC Structurals, Inc., the Board overruled the test for determining whether a petitioned-for unit constitutes an appropriate unit for union representation elections set out by Specialty Healthcare (365 N.L.R.B. No. 160 (Dec. 15, 2017)
UPDATE: On December 14, 2022, in a 3-2 decision (Chairman McFerran and Members Wilcox and Prouty), the Board reinstated the standard articulated in Specialty Healthcare & Rehabilitation Center of Mobile for determining whether additional employees must be included in a petitioned-for bargaining unit to render it an appropriate unit under the National Labor Relations Act, overruling PCC Structurals, Inc. and Boeing Co. (357 N.L.R.B. 934 (2011); 365 N.L.R.B. No. 160 (Dec. 15, 2017); 368 N.L.R.B. No. 67 (Sept. 9, 2019)). Under the restored Specialty Healthcare standard, a party challenging the appropriateness of a petitioned-for unit on the ground that it is not sufficiently distinct must show that the excluded employees share an "overwhelming community of interest" with the included employees such that there is no rational basis for their exclusion. The decision will apply retroactively to all pending cases. Members Kaplan and Ring dissented. (Am. Steel Constr., Inc., 372 N.L.R.B. No. 23 (Dec. 14, 2022); for more information, see 2022 Traditional Labor Law Developments Tracker: Appropriate Bargaining Unit Determinations.)
Court documents: