The Sixth Circuit Court of Appeals affirmed the National Labor Relations Board’s decision in Specialty Healthcare, 357 NLRB No. 83 (2011), in which the Board overruled 20 years of practice regarding how it determines the "appropriate unit" in non-acute health care facilities. In addition, and more importantly, Specialty Healthcare permits unions to petition for smaller units — such as units that consist of only one department, or perhaps even one job classification — thus eliminating the NLRB’s prior preference of favoring "wall to wall" units. 

The employer in Specialty Healthcare challenged the Board’s decision in Kindred Nursing Centers East, LLC v. NLRB, Case Nos. 12-1027/1174 (6th Cir. Aug. 15, 2013), primarily claiming that the Board abused its discretion by adopting a new unit determination approach inconsistent with the traditional community-of-interest test, and that Specialty Healthcare‘s "overwhelming-community-of-interest test" does not merely "reiterate and clarify" the law as the Board asserted. The employer also claimed that the Board’s test in Specialty Healthcare violates Section 9(c)(5) of the Act, which prevents the Board from determining bargaining units based solely upon the extent of organization. 

In reviewing the Board’s decision, the court noted that judicial review of the Board’s decision was limited as it must "uphold the Board’s interpretation of the Act if it is ‘reasonably defensible;’ [it] may not reject the Board’s interpretation ‘merely because the courts might prefer another view of the statute.’" 

If the Board believes that it can best fulfill its statutory duty by adopting a test from one of its precedents over another, then the Board does not abuse its discretion. Indeed, it is a general tenet of administrative law that "an agency’s interpretation of its own precedents receives considerable deference" from a reviewing court.

Finding that the Board’s decision was not arbitrary, unreasonable, or an abuse of discretion because the Board "cogently explained why it adopted the approach it did in Specialty Healthcare…," the court rejected the employer’s arguments and upheld the Board’s decision.

Specifically, the court determined that the Board adopted a community-of-interest test based on some prior Board precedents, and that requiring an employer to show that excluded employees have an "overwhelming community of interest" with the included employees was not  a material change in the law:

The Board explained the need to clarify its law, acknowledging that it had used some variation of a heightened standard when a party (usually an employer) argues that the bargaining unit should include more employees. The Board explained that it "has sometimes used different words to describe this standard and has sometimes decided cases such as this without articulating any clear standard."

Moreover, the court found that Section 9(c)(5) of the Act is not implicated by the Board’s new approach so long as the Board first finds the proposed unit is "prima facie appropriate" before applying the overwhelming community of interest standard.

The court also rejected the employer’s alternative argument that the Board could only change the community-of-interest test through notice-and-comment rulemaking:

"the Board is not precluded from announcing new principles in an adjudicative proceeding and that the choice between rulemaking and adjudication lies in the first instance within the Board’s discretion."

Despite the fact that Specialty Healthcare has been Board law for two years now, its full effect on union organizing efforts and unit determinations is still relatively unknown. Further, as we have noted previously, the Board could be primed to expand Specialty Healthcare‘s reach to eliminate special industry and occupation rules, such as the long-standing presumption for store-wide bargaining units in retail stores, used to determine appropriate bargaining units. Accordingly, please continue to follow Labor Relations Today, here at the blog, via Twitter (@LRToday), or via Flipboard for further developments on this and other labor law developments.