NLRB Rejects Union’s Proposed Micro Bargaining Unit at Bergdorf Goodman, Finding the Petitioned-For Employees Lack a Community-of-Interests, Jones Day Labor Blog

On Monday, the National Labor Relations Board ("NLRB" or the "Board") issued a much anticipated ruling in The Neiman Marcus Group, Inc. d/b/a/ Bergdorf Goodman, 361 NLRB No. 11 (Case No. 02-RC-076954). The ruling came less than a week after the decision in Macy’s Inc., 361 NLRB. No. 4 (Case No. 01-RC-091163), where the Board approved a micro bargaining unit of store employees assigned to the cosmetics and fragrances department. In this second decision applying the standard set forth in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB No. 83 (2011), a unanimous (5-0) Board this time found the petitioned-for unit (which combined salon shoes salespeople with contemporary shoe salespeople) was not appropriate under the National Labor Relations Act because, on balance, the petitioned-for employees lacked a community of interest. As such, the Board dismissed the petition, and found it unnecessary to examine, as it did in Macy’s, whether any other store employees shared an overwhelming community of interest with those in the petitioned-for bargaining unit. While it is not clear whether the Board in this case would have upheld a micro unit consisting of salespeople in just one or the other shoe departments, the decision is helpful because it shows that the Board will reject certain petitioned-for micro units, and it provides further guidance on the factors the Board will assess when determining an appropriate unit.

The Bergdorf store employees in the petitioned-for unit included 35 women’s salon shoes sales associates and 11 women’s contemporary shoes sales associates. The two groups were organized into different departments and located on separate floors. The Board, citing Specialty Healthcare, reiterated that in determining the appropriateness of a petitioned-for unit it "weighs various community-of-interest factors, including whether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work; are functionally integrated with the [e]mployer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised." 361 NLRB No. 11, slip op. at 2. Here, the Board acknowledged the petitioned-for employees "share some community-of-interest factors," including a "common purpose," a common pay scheme as "the only employees in the store to be paid on a ‘draw against commission’ basis," and they share "along with all other employees" the same hiring criteria, employee handbook, and appraisal process. Id. at 2-3. However, the unanimous Board found "the balance of the community-of-interest factors weighs against finding that the petitioned-for unit is appropriate." In so holding, the Board emphasized that, unlike in Macy’s, here "[t]he boundaries of the petitioned-for unit do not resemble any administrative or operational lines drawn by the [e]mployer." Id. at 3.

The Board noted that while the women’s salon shoes sales employees constituted "the whole of their department," the petitioned-for unit also sought to carve out the women’s contemporary shoes sales employees from the larger contemporary sportswear department in which they worked. Id. The Board observed that while "[t]he petition’s departure from any aspect of the [e]mployer’s organizational structure might be mitigated or outweighed by other community-of-interest factors," such as if the petitioned-for employees "shared common supervision despite being located in different departments," which "would show that the departmental distinctions were relatively less important in the organization of the workforce," here "[n]o such facts" were present. Id. Instead, the petitioned-for women’s salon and contemporary shoe sales employees worked under "different department managers, different floor managers, and even different directors of sales," with the only shared supervision between the two groups being at the highest level of store management – the General Manager. Id. Similarly, the Board found there was not "significant interchange" between the salon and contemporary shoe sales employees in the petitioned-for unit; contact among the petitioned-for employees was "limited to attendance at storewide meetings and incidental contact related to sharing the same locker room, cafeteria, etc."; and while the record reflected the employer encouraged employees to sell merchandise outside their own department, referred to as "interselling," the Board noted this accounted for "less than one percent" of their overall sales. Id. at 4. Under these circumstances, the Board unanimously concluded the factors that favored finding a community of interests were outweighed "by the lack of any relationship between the contours of the proposed unit and any of the administrative or operational lines drawn by the [e]mployer (such as departments, job classifications, or supervision), combined with the complete absence of any related factors that could have mitigated or offset that deficit." Id.

The lesson for employers is the importance of carefully considering the organizational and supervisory structure of their operations, as well as the interchange of employees across departments. Now is the time for employers to examine their operations and seek legal advice on potential appropriate bargaining units, and to consider organizational as well as operational changes that can be made to build a stronger case for a larger unit in the event of a union organizing drive.

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Michael S. Ferrell

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