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Divided 5-member NLRB upholds “micro-unit” of Macy’s cosmetic employees

July 28th, 2014  |  Joy Waltemath

In a five-member decision last week, a divided National Labor Relations Board affirmed that a petitioned-for departmental unit of 41 cosmetics and fragrances employees was appropriate and upheld, in a 4-1 decision, the so-called “micro” bargaining unit under Specialty Healthcare. The Board majority concluded that the employees in the petitioned-for unit were a readily identifiable group who shared a community of interest and that the employer had not met its burden of demonstrating that the other selling and nonselling employees it sought to include in the unit shared an overwhelming community of interest with the petitioned-for employees so as to require their inclusion in the unit. Member Hirozawa filed a separate concurring opinion, while Member Miscimarra dissented (Macy’s, Inc, July 22, 2014).

Cosmetics and fragrances. In November 2012, the acting regional director of Region 1 issued a decision that a petitioned-for departmental unit of cosmetics and fragrances employees, including counter managers, at a Massachusetts store was appropriate. Of 150 total employees at the store, 120 are selling employees, and of these, just 41 work in cosmetics and fragrances. The sales manager for cosmetics and fragrances had no regular responsibilities for the other sales departments, nor did other sales managers have any regular responsibilities for the cosmetics and fragrances department.

All selling employees? Macy’s argued that the only appropriate unit must include all other employees of the store, or at least all of the selling employees. But evidence about the selling employees of other departments was less specific than that for the cosmetics and fragrances employees. The record revealed only that the other selling employees had their own sales manager and that some of them were divided into subdepartments. There was no indication that the other sales departments had the equivalent of counter managers, and the record also was unclear as to whether the other departments utilized the equivalent of on-call employees. Not all selling employees were paid on the base-plus commission formula used in cosmetics and fragrances, either.

There was some incidental contact between cosmetics and fragrances employees and other selling employees. All employees participated in daily morning rallies that reviewed the previous day’s sales figures and any in-store events. Selling employees were expected to help each other out and to assist customers; this could lead to contact between the petitioned-for unit and other selling employees. But otherwise, there was little evidence of even temporary interchange between the petitioned-for employees and other selling employees. Both groups of employees (cosmetic/fragrances and other selling employees) worked shifts during the same time periods, used the same entrance, had the same clocking system, and used the same break room. There was no bargaining history at the store.

Specialty Healthcare framework. Applying Specialty Healthcare, the acting regional director first found that the employees in the petitioned-for unit were readily identifiable as a group. They shared a community of interest because the petitioned-for employees worked in one of two distinct areas of the store and worked in one of two job classifications. He further found that the unit tracked a departmental line drawn by the employer; this departmental line reflected differences between the petitioned-for unit and other selling employees. Although the petitioned-for employees shared some common interests with other selling employees, the acting regional director determined that the employer had not established that they shared an overwhelming community of interest because there were “meaningful differences” between the petitioned-for employees and other selling employees.

Specialty Healthcare sets forth the principles that apply in cases in which a party contends that the smallest appropriate bargaining unit must include additional employees beyond those in the petitioned-for unit. When a union seeks to represent a unit of employees “who are readily identifiable as a group (based on job classifications, departments, functions, work locations, skills, or similar factors), and the Board finds that the employees in the group share a community of interest after considering the traditional criteria, the Board will find the petitioned-for unit to be an appropriate unit … .” If the petitioned-for unit satisfies that standard, the burden is on the proponent of a larger unit to demonstrate that the additional employees it seeks to include share an “overwhelming” community of interest with the petitioned-for employees, such that there “is no legitimate basis upon which to exclude certain employees from” the larger unit because the traditional community of interest factors “overlap almost completely.”

Community of interest factors. Applying this framework to these facts, the Board majority found that the petitioned-for “micro” unit was appropriate. First, the majority found that the cosmetics and fragrances employees were “readily identifiable as a group” and shared a community of interest. The cosmetic employees were all in three nonsupervisory classifications and performed the same selling function. Although there were some differences among the petitioned-for employees, they worked in the same selling department and performed their functions in two connected, defined work areas. They had common supervision, and their work also had a shared purpose and functional integration. Employees in the petitioned-for unit were the only store employees selling cosmetics and fragrances, and they had only limited contact with other employees.

In Specialty Healthcare, the Board held that two groups share an overwhelming community of interest when their community-of-interest factors “overlap almost completely.” But here the employer failed to establish that the petitioned-for employees and nonselling employees shared an overwhelming community of interest. Additionally, it failed to meet its burden that the petitioned-for employees shared an overwhelming community of interest with the other selling employees. It was undisputed that the petitioned-for employees worked in a separate department from all other selling employees, and it was particularly significant to the Board majority that the petitioned-for unit tracked a dividing line drawn by the employer.

Also important was the fact that the cosmetics and fragrances department was structured differently than other primary sales departments. The petitioned-for employees were separately supervised and worked in their own distinct selling areas. Likewise, the record did not show significant interchange between the petitioned-for employees and other selling employees. Moreover, the significance of functional integration was reduced where, as here, there was limited interaction between the petitioned-for employees and those that the employer sought to add. Taken together, the Board found that these facts supported its finding that the petitioned-for employees did not share an overwhelming community of interest with other selling employees.

Dissent. In his dissent, Member Miscimarra suggested that the petitioned-for unit was not appropriate and that the smallest potential appropriate unit would consist of all salespeople store-wide. He argued that the result in this case was contrary to the Board’s traditional standards governing retail operations. According to Miscimarra, the record revealed that all salespeople store-wide had the same or similar working conditions, employment policies, job responsibilities, performance criteria, benefit plans, and commission and compensation arrangements. As applied in this case, the Specialty Healthcare standard, said the dissent, highlighted important shortcomings that rendered that decision inappropriate and contrary to the NLRA.

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