Hunton Employment & Labor Perspectives

Yesterday, the National Labor Relations Board (“Board” or “NLRB”) in American Steel Construction, Inc., 372 NLRB No. 23 (2022) decided that employers must meet a heightened burden to expand a voting unit sought by a union in a union election. The decision is a significant development because it makes it easier for unions to organize workforces. And it marks yet another reversal of precedent by the Board to the benefit of unions. (We’ve discussed prior reversals here and here.)

Background on Union Elections and Board Precedent

In order to petition the NLRB for a union election, a union must demonstrate that 30 percent of more of the employees in the unit it seeks to represent are interested in unionizing. Despite the 30 percent threshold, the election ultimately is decided by a majority of votes cast so unions prefer to have a supermajority of employees express an interest in unionizing before asking the Board to hold an election. Practically speaking, the smaller the unit sought by the union, the less number of employees the union needs to get the union election process started.

As one might suspect, it is not uncommon for a union to propose a voting unit of employees that the union believes will best position it to win an election. Throughout most of the Board’s history, an employer could expand the voting unit sought by a union by showing that employees not in the union’s proposed unit share a sufficiently close “community of interest” with the petitioned-for unit. The community of interest analysis examines a number of factors, including: work departments; employee skills and training; employee job classifications and functions; functional integration among employees; frequency of contact among employees; interchange among employees; terms and conditions of employment; and employee supervision.

The standard for challenging the voting unit proposed by a union briefly changed in 2011 when the NLRB in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011), enfd. sub nom. Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013) enhanced the employer’s burden by requiring an employer to demonstrate that the employees it sought to add to the voting unit shared an “overwhelming” community of interest with the employees the union seeks to represent. Six years later, the Board returned to the traditional standard in PCC Structurals, Inc., 365 NLRB No. 160 (2017). A few years after that, the NLRB set forth a three-step process in The Boeing Co., 368 NLRB No. 67 (2019) to elaborate upon the traditional community of interest test, explaining:

First, the proposed unit must share an internal community of interest. Second, the interests of those within the proposed unit and the shared and distinct interests of those excluded from that unit must be comparatively analyzed and weighed. Third, consideration must be given to the Board’s decisions on appropriate units in the particular industry involved.

A Summary of the American Steel Construction Decision

In American Steel Construction, a union sought to represent journeymen and apprenticeship field ironworkers. The employer argued that the voting unit should include painters, drivers, and inside fabricators who worked in the employer’s shop. The regional director agreed with the employer, finding that the field ironworkers did not “possess a community of interest that is ‘sufficiently distinct’ from the [e]mployer’s remaining employees.” The union requested review of the regional director’s decision from the Board. The NLRB granted the request and invited interested parties to weigh-in on whether the Board should adhere to the PCC-Boeing standard, return to the Specialty Healthcare standard, or use some other standard to analyze whether employees should be added to a voting unit sought by a union.

In deciding the case, the NLRB proceeded to reinstate the “overwhelming” community of interest standard first announced in Specialty Healthcare. It remanded the case to the regional director for a new decision under that standard. In so ruling, the Board opined that step two as articulated in Boeing was incorrect.

At the second step, . . . the PCC-Boeing test diverges significantly from Specialty Healthcare in terms of what it means for a petitioned-for unit to be “sufficiently distinct.” While Specialty Healthcare holds that a petitioned-for unit is sufficiently distinct unless the excluded employees share an “overwhelming community of interest” with the petitioned-for employees, PCC-Boeing holds that the petitioned-for unit is sufficiently distinct only if the “excluded employees have meaningfully distinct interests in the context of collective bargaining that outweigh similarities with the unit members.” The distinction between these two standards lies at the heart of PCC-Boeing, which focuses almost exclusively on the “overwhelming community of interest” standard and the supposedly undue deference it gave to petitioned-for units.

The NLRB explained that a petitioned-for unit of a “subdivision” of employees is appropriate if that subdivision: (1) shares an internal 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 Board added that, if an employer contends the petitioned-for unit is not sufficiently distinct, the NLRB will apply the traditional community of interest factors to determine whether the employees the employer seeks to add to the unit share an overwhelming community of interest with the petitioned-for unit.

In a dissent, the minority Board members criticized the reinstatement of the overwhelming community of interest standard. They noted that the decision departs from the traditional standard used by the NLRB for most of its history and disregards two central policies of the National Labor Relations Act: “ensuring to employees their rights to self-organization and freedom of choice,” and “fostering industrial peace and stability through collective bargaining.” The National Labor Relations Act “requires the Board to determine an appropriate unit for the purpose of collective bargaining—not, as out colleagues appear to believe, for the purpose of making it easier for unions to win elections,” explained the dissent.

Conclusion

The decision in American Steel Corporation provides unions with a key organizing advantage at a time when the American labor movement is poised for a resurgence. This past year, NLRB election petition filings have increased by 57 percent. A recent Gallup poll shows the approval rating of union is at its highest point since 1965. Employers should be proactively working with labor counsel to understand what they can and should be doing at this very moment to protect themselves and their employees from unwelcomed union organizing efforts.