Court Limits Workers’ Rights to Form Micro Units for Collective Bargaining Purposes

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November 20, 2020
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The D.C. Circuit overturned a decision that allowed Chicago-area hotel workers (housekeepers and food and beverage staff) to form extremely narrow bargaining units. In its decision, the D.C. Circuit held that the NLRB failed to consider all prior precedent – precedent which declined hotel workers the opportunity to create several, small bargaining units based on the type of work each worker performed at the hotel. The D.C. Circuit criticized the NLRB for only citing precedent that permitted hotel workers the opportunity to form as many units as they wanted, even if two or more separate units shared a “community of interest.” The effect of the D.C. Circuit’s decision is a limit on the use of micro units during union elections and collective bargaining, which makes the bargaining process more efficient and manageable for companies and avoids cumbersome negotiations with very small units of employees. The D.C. Circuit reminds us that NLRB precedent is still binding even as its policies “oscillate” according to the political ideologies of those in office in Washington.

Housekeepers, as well as food and beverage staff, at a hotel owned by Davidson Hotel Company in Chicago sought to form a bargaining unit within the union, UNITE HERE Local 1, in March 2018. The unit would have been small – “micro units” as they are colloquially called. Davidson Hotel Company argued that front desk employees should also have been able to join the unit that those workers were forming. The Hotel Company’s reasons for wanting all workers to belong to the same bargaining unit was simply to make it easier on the company to bargain with all of the workers at the same time, and to develop the same terms and conditions of employment that applied equally to all workers performing essentially the same functions despite their position.

As background, when petitioning to form a bargaining unit, workers get the first say in how they want to set the parameters for who will and will not be included in the unit. Employers can then resist the makeup of the bargaining unit by pushing back on who rightly belongs to the unit. The NLRB only requires that members of the proposed bargaining unit share a “community of interest.” Many factors, however, are considered when examining whether a group of workers share a “community of interest.”

This past October, upon petition to the NLRB, the NLRB’s Chicago Office Head, Peter Ohr, found that although each type of hotel worker had similar interests, each different type of hotel worker could organize separately. The union thereafter filed petitions seeking to organize separate units – housekeepers encompassed in one unit and food and beverage in another. Nevertheless, the Davidson Hotel Company refused to bargain with each unit individually. The union complained to the NLRB, who instructed the Davidson Hotel Company to bargain with each unit separately. The Davidson Hotel Company appealed to the D.C. Circuit.

On appeal, the D.C. Circuit vacated the Chicago-area NLRB’s decision, ordering the NLRB to take another look at the dispute. The D.C. Circuit found that the NLRB’s analysis was flawed in that the NLRB failed to distinguish prior rulings which held that hotel workers were not permitted to form “micro units” and exclude front desk staff from those “micro units.”

The precedent that the D.C. Circuit refers to are a couple decisions from the 1980s where the NLRB had agreed that front desk employees needed to be included in the bargaining unit with housekeepers and other hotel staff. However, the NLRB, when presented with the present issue, ignored and failed to distinguish – let alone cite – the cases from the 1980s which were presented and argued by the Davidson Hotel Company. Additionally, the D.C. Circuit found that the NLRB failed to explain why “the same factors that counseled against excluding the front desk [staff] in the first decision did not govern the second petition as well.”

The D.C. Circuit’s Reminder to Follow Precedent

Union officials claim that the D.C. Circuit’s decision attacks workers’ right to organize. They argue that the decision makes it harder for workers to organize simply because the NLRB must adhere to prior precedent that is not directly on point or contains a different factual scenario. For example, critics contend that it is onerous that the NLRB was required to explain why it reached a different conclusion based on different facts at two different hotels in the 1980s.

The attorney for the union, Andrew Strom, complained that the NLRB’s inherently subjective ability to assess the “community of interest” factor facilitates a business’ ability to challenge the makeup of any bargaining unit.

Of note, however, the NLRB has always been tasked with reckoning with prior precedent to analyze the factor of “community of interest” based on precedent that turns on different facts. And, these decisions have always been influenced by politics. The NLRB is particularly vulnerable to “policy oscillation,” i.e., applying different legal standards that comport with the party-line affiliations in Washington based upon the makeup of the NLRB and the White House. Of course, depending on the makeup of the NLRB at the time, NLRB policy may be more favorable to businesses in certain years and workers in others.

To Sum It Up

The D.C. Circuit’s decision is a reminder that past legal precedent cannot be ignored – even if the past is stained with different political viewpoints, agendas, and circumstances. The “community of interest” decisions are sure to garner even more attention with President-Elect Biden and the transition of the NLRB coming in August 2021.