By:  Ashley K. Laken, Esq.

On July 28, 2104, the NLRB unanimously rejected a petitioned-for bargaining unit comprising shoe sales associates in two different departments at Bergdorf Goodman’s Manhattan retail store.  See The Neiman Marcus Group, Inc. d/b/a Bergdorf Goodman, 361 NLRB No. 11.  The Board found that the employees of the petitioned-for unit lacked a sufficient community of interest.  As a consequence, the Board vacated a previously-held union election.

However, the Board declined to address the Employer’s argument that an appropriate unit had to include, at a minimum, all selling employees within the entire store.  And the decision suggests that the Board would not have approved such a large unit.

Relevant Factual Background 

The union petitioned for a bargaining unit consisting of sales associates located in two separate departments within the store:  Salon shoes, which is located on the second floor and has 35 sales associates, and Contemporary shoes, which is located on the fifth floor and has 11 sales associates.  Sales associates in the two departments report to different department managers, who in turn report to different floor managers, who in turn report to different directors of sales.  Additionally, the Salon shoes department is its own department, while the Contemporary shoes department is part of the Contemporary sportswear department.

Sales associates in both groups nonetheless work the same number of hours per week, have the same vacation and holiday benefits, and are subject to the same employee handbook.  However, sales associates in Salon shoes earn a 9% commission while sales associates in Contemporary shoes earn a 10% commission.

All sales associates within the store engage in “interselling,” which includes escorting customers from one department to another and ringing up their transaction in that other department.  However, sales associates in Salon shoes and Contemporary shoes do not substitute for one another or otherwise interchange, and there have been no transfers between those two departments.

In May 2012, an NLRB Regional Director found that the petitioned-for bargaining unit was appropriate under the Board’s controversial Specialty Healthcare decision.  The Employer filed a timely request for review, which was granted, and the election ballots were impounded pending the Board’s decision.

The NLRB’s Analysis

The Board noted that in determining whether a petitioned-for unit is appropriate, it must weigh various community-of-interest factors, including whether the employees interchange with each other, are organized into a separate department, have distinct skills and perform distinct work, have distinct terms and conditions of employment, and are separately supervised.

In finding that the sales associates in Salon shoes and Contemporary shoes lacked a community of interest and that the petitioned-for unit was therefore inappropriate, the Board reasoned that the boundaries of the petitioned-for unit did not resemble any administrative or operational lines drawn by the Employer, such as departments or supervision.  Specifically, the Board noted that while the Salon shoes employees constituted the whole of their department, the petition carved the Contemporary shoes employees out of the Contemporary sportswear department.  The Board also noted that the Salon shoes and Contemporary shoes employees were located on a separate floor, did not share common supervision, and did not interchange with each other.

The Board distinguished its July 22nd Macy’s decision, which approved a bargaining unit made up of cosmetic and fragrance sales workers at a Macy’s store in Massachusetts (see our blog post about that decision here), noting that it found it particularly significant in that case that the unit at issue “conformed to the departmental lines established by the employer.”

Finally, the Board noted that because it found that the petitioned-for unit was not appropriate, it did not need to decide whether any of the other employees that the Employer proposed including in the unit were inappropriately excluded.  The Board also noted, citing to Specialty Healthcare, that 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 (but Member Miscimarra noted that he would not apply this standard and would instead ask whether the interests of the group sought are sufficiently distinct from those of other excluded employees to warrant establishment of a separate unit).

Concluding Thoughts

The contours of a bargaining unit can affect the outcome of a union election, and they also have important implications for collective bargaining negotiations.  As a consequence, employers often fight efforts by unions to gerrymander arbitrarily small bargaining units.

The decision provides some guidance on how the Board will analyze future challenges to so-called “micro-units,” and also gives some clues as to how an employer can structure its operations and organizational structure to try to avoid such units.  However, the decision also indicates that the Board will probably not be lowering its recently raised bar for challenging micro-units anytime soon.