A Limit on Micro-Unions for Now, but Long-Term Significance of Limitation Uncertain

On the heels of the much anticipated decision involving the Macy’s department store chain, discussed on this blog last week, the NLRB on Monday released its opinion in a similar case involving Neiman Marcus. Unlike the outcome in  the Macy’s case, however, the NLRB found the bargaining unit that the union sought to represent was not an appropriate one, dismissing the union’s representation petition. While the decision does place a limit on the NLRB’s “micro-unions” ruling in Specialty Healthcare, the actual significance of the limitation will only become clear with the passage of time. 

In the Neiman Marcus case, the union sought to represent a group of approximately 46 shoe sales associates in two different women’s shoe departments in the employer’s store on Fifth Avenue in New York City. One shoe department was the “Salon” shoes department and another was the “Contemporary” shoe area, which was part of a larger Contemporary Sportswear department. These two areas were located on two different, non-adjacent floors of the employer’s store. 

Given the structure the employer’s operation, the employees at issue had significantly different management. They had different directors, different floor managers, and different department managers. On the other hand, the employees had certain terms of employment that were in common with one another, such as vacation, holidays, and health insurance coverage. The employees in both departments were paid based on commission, although the rates were slightly different. There was no formal shoe sales training program after the initial employee orientation. The employees were encouraged to make sales in other departments.

On these facts, the NLRB unanimously held that while the group of employees the union sought to represent were “readily identifiable” – in that they were all the sales associates involved in selling women’s shoes – the employees were inappropriately grouped together because they lacked a “community of interest.” First, the proposed group did not follow any of the employer’s administrative or operational lines. In particular, the Contemporary shoe employees were part of a larger Contemporary Sportswear department and were being carved out to be included with the Salon shoe employees for organizational purposes. 

Second, there was no substantial interchange between the Salon shoe employees and the Contemporary shoe employees. They had only limited contact with one another and did not sell product in one another’s departments. Because the employees did not share a community of interest, the NLRB did not look at whether there was an “overwhelming” community of interest with a larger group of employees, in which the union election should have taken place. 

For the labor professional, the opinion is important for at least three reasons:

• It provides an example of a limitation on Specialty Healthcare and the “micro-units” that might otherwise be approved.  Thus, it suggests that there is at least some limit to the number of unions an employer’s workplace could support.
• At the same time, however, it provides a road map to unions on getting small units approved. The NLRB comments at various points in its opinion about the type of evidence that may have justified a finding that there was a community of interest. Thus, the decision may well ultimately advance the cause of micro-unions, rather than slow it down.
• Finally, it demonstrates that employers have the ability to influence, through their regular operations and structure, how their employees would be grouped together in the event of union organizing activity.  Employers that approach this issue proactively, therefore, should consult with qualified labor law counsel for advice.