NLRB Approves Micro Bargaining Unit Limited to Cosmetics and Fragrances Department Employees at Macy’s

On Wednesday, the National Labor Relations Board ("NLRB" or the "Board") issued its decision in Macy's Inc., 361 NLRB. No. 4 (Case No. 01-RC-091163), affirming the finding of the Acting Regional Director below and approving the union's petitioned-for micro bargaining unit limited to 41 store employees assigned to the cosmetics and fragrances department. Applying the standard set forth in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB NO. 83 (2011), enfd. sub nom. Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013), the Board concluded that the cosmetics and fragrances department employees constituted "a readily identifiable group who share a community of interest, and that [Macy's] has not met its burden of demonstrating that the other selling and nonselling employees it seeks to include share an overwhelming community of interest with the petitioned-for employees so as to require their inclusion in the unit."  361 NLRB No. 4 at slip op. 1. As the Board majority explained, under Specialty Healthcare, once the petitioned-for unit satisfies the standard of being "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," then "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.'" Id. at 7 (quoting Specialty Healthcare, 357 NLRB No. 83, slip op. at 11-13). 

Here, in a 3-1 decision in which Member Harry Johnson was recused from participating, the Democratic Board majority found the petitioned-for cosmetics and fragrances department employees were "readily identifiable based on classifications and function" because they represent all the nonsupervisory employees in the department, which the majority noted as significant because it was a "primary selling department" as organized by Macy's, and  "not a sub-department" or an arbitrary segment of a department. Id. at 8-11. The Board majority noted the petitioned-for employees worked under the "common supervision" of a single department manager, had a similar pay structure of a base wage plus a percentage sales commission, and performed an integrated function with the shared purpose of selling cosmetic and fragrance products to customers in two "defined work areas," which though located on separate floors the majority concluded were "connected" by an escalator. Id.  The majority also found that apart from "brief" all employee morning meetings and "periodic inventory assistance," the daily interaction between those in the petitioned-for micro unit and other store employees was only "incidental" because no other department employees were assigned to sell cosmetic or fragrance products and the petitioned-for employees were not expected to sell products outside the cosmetics and fragrances department. As such, the majority concluded the community of interest factors of other store employees, and even those of selling employees in other departments, do not "overlap almost completely" with the petitioned-for employees in the cosmetics and frangrances department.

In so holding, the Board majority rejected the arguments raised by Macy's and numerous amici that it should decline to extend the Specialty Healthcare standard to the retail industry, and instead limit the application of Specialty Healthcare to the non-acute healthcare setting. Instead, the majority observed that "it is evident that the Board has moved away from any presumption favoring storewide units in retail department stores," and that "if the standard for deviating from a storewide unit was ever, as amicus [The National Retail Federation] suggests, 'fairly strenuous,' that is clearly no longer the case." Id. at 15.

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