With American Steel, Micro-Units Are Again a Likely Possibility

  • As urged by unions, in American Steel Construction the NLRB overturned the unit determination standard of PCC Structurals and returned to its prior Specialty Healthcare approach.
  • As long as a union’s petitioned-for bargaining unit consists of a clearly identifiable group of employees who share a community of interest, the Board will presume the unit is appropriate.
  • Burden is on the employer to show a petitioned-for unit is inappropriate by demonstrating that the excluded workers “share an overwhelming community of interest” with workers in the proposed unit. 
  • Decision could lead to proliferation of “micro units.”

After a year of consideration including amicus briefs on the matter, the National Labor Relations Board (Board) revived another Obama-era precedent in a decision issued December 14, 2022.  In American Steel, 372 NLRB No. 23, the Board held that employers seeking to enlarge the scope of a petitioned-for bargaining unit must demonstrate that excluded employees share an “overwhelming” community of interest with the group the union seeks to represent. This places a significant burden on employers that seek to demonstrate that additional employees must be included to make the unit appropriate for bargaining.   

Writing for the three-member majority, Chair Lauren McFerran asserted that the Board should never have strayed from the 2011 Specialty Healthcare1 standard now restored in American Steel. McFerran wrote that the American Steel decision “reflects traditional Board precedent, and better promotes the policies of the Act.” McFerran emphasized, as she did in her previous dissent in the Trump-era decision PCC Structurals2 (which American Steel overturns), that the Board’s role is to determine “whether the selected unit is an appropriate one under the statute, not the unit the Board would prefer, or the unit the employer would prefer.”

PCC Structurals rejected the “overwhelming community of interest” standard adopted by a majority of Obama appointees in Specialty Healthcare and returned to the Board’s “traditional test,” which was further clarified by the Board’s decision in The Boeing Company, 368 NLRB No. 67 (2019).  Taken together, the decisions identify three parts to the “traditional test” for unit determination: (1) the proposed unit must share an internal community of interest; (2) the interests of those within the proposed unit and those excluded from that unit must be analyzed and weighed comparatively; and (3) consideration must be given to the Board’s decisions on appropriate units in the particular industry involved.

Under Specialty Healthcare, by contrast, as long as a union’s petitioned-for unit consists of a clearly identifiable group of employees who share a community of interest, the Board will presume the unit is appropriate. In returning to this standard, the Board has now placed the burden back on the employer to show that a petitioned-for unit is inappropriate by demonstrating that the excluded workers “share an overwhelming community of interest” with workers in the proposed unit.  As articulated by Chair McFerran, the employer must prove there is no “legitimate basis upon which to exclude certain employees from the petitioned-for unit.” The employer’s burden is not an easy one and may give rise, once again, to the proliferation of small unionized subsets of employees within an employer’s facility, referred to as “micro units.”

American Steel

In American Steel, the Ironworkers union (Union) filed a petition seeking to represent all journeymen and apprentice field ironworkers working for American Steel Construction, Inc. The employer asserted that the petitioned-for unit was inappropriate because the smallest appropriate unit must also contain painters, drivers and inside fabricators working for the company.

The regional director applied the unit determination test set forth in PCC Structurals and held that the petitioned-for unit was not appropriate because the field ironworkers did not share a community of interest “sufficiently distinct” from the remaining employees that the employer claimed must be included. Because the Union refused to proceed to an election with an expanded unit, the regional director dismissed the petition.  Subsequently, the Union filed a request for review of the regional director’s Decision and Order, which the Board granted.

The Return of Specialty Healthcare Standard

The Board majority overruled the regional director and reinstated the previous standard for unit determination set forth in Specialty Healthcare3 (thereby also overruling PCC Structurals).  Under American Steel, the Board will once again approve a petitioned-for subset of a classification of employees if the petitioned-for unit (1) shares a 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.  If a party contests the “sufficiently distinct” element and claims that the smallest appropriate unit should include additional employees, the party must show that there is an “overwhelming community of interest” between the petitioned-for unit and the excluded employees.  The Board will then apply its traditional community of interest factors to determine whether such an overwhelming community of interest exists “such that there is no rational basis for the exclusion.”  The Board will consider whether the employees are:

  • organized into a separate department;
  • have distinct skills and training;
  • have distinct job functions and perform distinct work, including the amount and type of overlap among classifications;
  • are functionally integrated with the employer's other employees;
  • have frequent contact with other employees;
  • interchange with other employees;
  • have distinct terms and conditions of employment; and
  • are separately supervised.

Board decisions using the Specialty Healthcare standard show that in practice demonstrating such an "overwhelming community of interest" is an extremely difficult burden for employers to meet. While employers experienced some reprieve from micro units with the adoption of PCC Structurals, that trend is likely to be reversed by the decision in American Steel.  When Specialty Healthcare was in force, it was generally followed by the courts of appeal and is likely to stay in place until the composition of the Board changes again.  

A dissent by Members Kaplan and Ring in American Steel argued that PCC Structurals supplied the balance needed to protect employer rights and maintain traditional bargaining units that are “appropriate for the purposes of collective bargaining.”  The dissent also argued that the Board’s deference to a Union’s requested unit, and placement of a higher burden on employers to contest the proposed unit, impede the Board’s ability to carry out its statutory duty to decide the appropriate bargaining unit in each petition.  Finally, the dissent points out that by requiring employers to show an “overwhelming community of interest,” the Board tips the scales in favor of unions by “effectively accord[ing] controlling weight to the extent of Union organization… because the Union will propose the unit it has organized.”4 

Practical Considerations

The decision in American Steel is not limited to one industry or area, so all types of employers may see a rise in union petitions for smaller sub-groups of employees.  Easier certification of such micro units by the Board favors union organizing efforts, as it is easier to gain majority support in a smaller unit.  The Board’s decision in American Steel is the latest of a series of changes generally favoring unions that have followed the Biden-era change in composition of the Board.

See Footnotes

1 357 NLRB 934 (2011).

2 365 NLRB No. 160 (2017).

3 The Board also held that the Specialty Healthcare standard will be applied retroactively to all pending cases.

4 Dissent at p. 17, citing NLRB v. Lundy Packing Co., 68 F. 3d 1557, 1581 (4th Cir. 1995).

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.