CONGRESS OF INDUSTRIAL ORGANIZATIONS
REGARDING THE NLRB'S PROPOSED RULE
ON SINGLE LOCATION BARGAINING UNITS
MARCH 7, 1996
My name is Peter Ford. I am Assistant General Counsel to
the United Food and Commercial Workers International Union, and am
appearing here today on behalf of the AFL-CIO. We thank you for
extending the opportunity to testify regarding the National Labor
Relations Board's proposed rule on single location bargaining
units.
At the outset, the AFL-CIO believes that the notice-and-
comment procedure of the Administrative Procedure Act provides an
adequate forum for persons seeking to influence the Board regarding
the merits of the proposed rule. The AFL-CIO itself hopes to
influence the Board to make certain changes in the rule through the
timely filing of written comments with the agency. Accordingly, we
do not appear here today with the intention of debating the merits
of the specific provisions of the proposed rule. We will, however,
briefly discuss the feasibility and desirability of the Board's use
of rulemaking to determine appropriate single-location bargaining
units.
The proposed rule is addressed to the question of the
circumstances under which a group of employees who work together at
the same facility should be allowed to obtain a representation
election at their workplace without including among the voting
group other employees working at other locations. It is the AFL-
CIO 's position that the Board's decision to proceed by rulemaking
86
on this question is both legally sound and eminently sensible.
In the first place, § 9(b) of the National Labor
Relations Act requires the Board to decide "whether, in order to
assure to employees the fullest freedom in exercising the rights
guaranteed by this Act, the unit appropriate for the purposes of
collective bargaining shall be the employer unit, craft unit, plant
unit, or subdivision thereof...." Under the statutory scheme, "the
initiative in selecting an appropriate unit resides with the
employees. .. [who] may seek to organize 'a unit' that is
'appropriate' — not necessarily the single most appropriate unit."
American Hospital Ass'n v. NLRB. 499 U.S. 606, 610 (1991) ("AM").
In determining whether a requested unit is appropriate, the Board's
task is "to insure to employees the full benefit of their right to
self-organization and to collective bargaining...." Id. at 611.
This task "involves of necessity a large measure of informed
discretion and the decision of the Board, if not final, is rarely
to be disturbed." Packard Motor Car Co. v. NLRB . 330 U.S. 485, 491
(1947).
Although S 6 of the Act authorizes the Board to "make,
amend, and rescind" rules to carry out the Act's provisions, until
recently the Board made unit determinations exclusively through
case-by-case adjudication, despite "broad. . .agreement in the legal
community. . .that the exercise of the Board's dormant substantive
rulemaking power [was] long overdue." American Hospital Assn. v.
NLRB . 899 F.2d 651, 655 (7th Cir. 1990) (collecting authorities),
aff 'd . 499 U.S. 606 (1991). The Board's first foray into
-2-
87
substantive rulemaking — its rule setting forth appropriate
bargaining units covering part of the health care industry — was
unanimously upheld by the Supreme Court in AHA . In sustaining the
Board's authority to determine units through rulemaking, the Court
quoted Professor Kenneth Davis' statement that "[sjensible men
could not refuse to use such instruments and a sensible Congress
would not expect them to." AHA . 499 U.S. at 612, quoting K. Davis,
Administrative Law Text § 6.04, p. 145 (3d ed. 1972). The Court
further observed:
in regard to the Act's underlying policy, the goal of
facilitating the organization and recognition of unions
is certainly served by rules that define in advance the
portions of the work force in which organizing efforts
may properly be conducted. [499 U.S. at 613.]
The Board's health care unit rule has met with well-
deserved praise, see Grunewald, The NLRB's First Rulemaking: An
Exercise in Pragmatism . 41 Duke L.J. 274 (1991), and prompted the
Administrative Conference of the United States to remark to the
Dunlop Commission that "the Board has finally joined the rest of
the government in seeing the merits of using rulemaking rather than
case-by-case adjudication to make policy in certain situations."
Brian C. Griffin, Chairman, to Dr. John T. Dunlop (June 14, 1993).
The merits of using rulemaking — which, as Judge Richard Posner
has observed, include "a gain in certainty, predictability,
celerity, and economy," American Hospital Assn. . 899 F.2d at 659 —
apply with equal force to the subject matter of the proposed rule.
Under the current regime of case-by-case adjudication,
the Board has "consistently found that a single-location unit in a
88
multi-location enterprise is a presumptively appropriate unit for
bargaining." Haaq Drug Co. . 169 NLRB 877, 878 (1969). In the
large majority of cases in which employees request an election in
a single-facility unit while their employer contends that only a
multi-facility location unit is appropriate, the Board finds the
requested unit appropriate, but often only after there has been
extensive litigation over the issue.
One reason why litigation may be viewed as a viable
option is that in determining whether the "single-location
presumption" has been rebutted, the Board incorporates a vague,
multi-factor "community of interests" analysis. This analysis
purportedly covers:
factors such as central control over daily operations and
labor relations, including the extent of local autonomy;
similarity of skills, functions, and working conditions;
degree of employee interchange; distance between locations;
and bargaining history, if any. J & L Plate. Inc. . 310 NLRB
429, 429 (1993) (citation omitted) .
(In practice, however, the Board has placed principal weight on
three factors: employee interchange; geographical proximity; and
local supervision.) This "Talmudist" method of adjudging the
appropriateness of requested bargaining units (Estreicher, Policy
Ogcii;ation ^t tne I,abor Board; A p;ea for Rulemaking, 37 Ad. L.
Rev. 163, 172 (1985)), under which the Board purports to review
"all the circumstances of the case," Sav-On Drugs . 138 NLRB 1032,
1033 (1962), may be familiar to experienced labor lawyers, but the
Board's method makes it "difficult for the outside world to know
which factors, if any, are critical." Subrin, Conserving Energv at
the Labor Board: T he Case for Making Rules on C ollective Bargaining
-4-
89
Units . 32 Lab. L.J. 105, 109 (1981).
Compounding the problems of delay and uncertainty
engendered by the Board's current approach to determining single
location units is that it invites "reviewing courts... to look over
the Board's shoulder and do their own weighing...." Id. at no.
The courts of appeals tend to demand that the agency "justify the
conclusion that the totality of the factors suggesting community of
interest preponderates over the opposing criteria" and explain
"exactly why the overall evidence favoring a [single location] is,
in the context of the immediate facts, less significant than
opposing evidence " NLRB v. Purnell's Pride. Inc.. 609 F.2d
1153, 1160 (5th Cir. 1980); see also NLRB v. Chicago Health &
Tennis Club. Inc. . 567 F.2d 331, 336-40 (7th Cir. 1977), in which
the court undertook its own weighing of the various community of
interest factors.
If adopted, the Board's proposed rule will have the
salutary effect of simplifying the single-location presumption in
the majority of situations. It cannot seriously be disputed that
"the factors of geographical proximity, employee interchange, and
managerial independence" — the "three crucial factors" which the
proposed rule places exclusive reliance on — "would almost
certainly outweigh any remaining relevant factors." Purnell's
Pride . 609 F.2d at 1160, 1161; see R. Gorman, Basic Text on Labor
Law 78 (1976) . Moreover, unusual cases otherwise covered by the
rule would continue to be adjudicated under an "extraordinary
circumstances" exception.
-5-
90
simply stated, the proposed rule would not affect the
outcome in the vast majority of unit determination cases in which
the appropriateness of a single-location unit is disputed. This is
because in all but a handful of those cases wherein the Board
purported to rely on such other factors as centralized control over
labor relations, the presence of one or more of the three crucial
factors — close geographical proximity, substantial employee
interchange and lack of local supervisory autonomy — served to
rebut the single-location presumption. E.g. . Davton Transport
Corp. . 270 NLRB 1114 (1984).^ Neither the statute nor logic
requires the Board to continue to make unit determinations based on
factors which, in its judgment, have rarely been — and should not
be — outcome determinative. The Board's "judgment [need not] be
supported by all, or even most, of the potentially relevant
factors," Electronic Data Systems Corp. v. NLRB . 938 F.2d 570, 573
(5th Cir. 1991) (citations omitted) ; indeed, "the weight assigned
by the agency to each factor it has fairly considered is a matter
for it to determine." NLRB v. Living and Learning Centers. Inc. .
652 F.2d 209, 214 (1st Cir. 1981) (citations omitted).
The claim asserted by some opponents of the proposed rule
that it would effect a wholesale overruling of Board precedent is
overblown. However, to the extent that some Board decisions would
be effectively overruled by the proposed rule, S 6 of the Act
In Haag Drug Co . . 169 NLRB at 879, the Board expressed the
view that "central administration is of little significance in
determining the [single-location unit] question."
91
plainly allows the Board to "amend" or "rescind" its rules
(including those rules established by adjudication) in a notice-
and-comment rulemaking proceeding, as long as the Board's action is
supported by a "reasoned analysis." AHA , 499 U.S. at 618-19
(citation omitted); NLRB v. Action Automotive. Inc. . 469 U.S. 490,
495 n.4 (1985) (Board's policy "not undermined by the fact that it
has modified and refined its position") . It is apparent that the
Board has solicited comments and supporting information from all
interested parties in the rulemaking proceeding so that its final
analysis regarding the proposed rule will be a reasoned one.
By clearly establishing that in a large class of cases
workers will be allowed to vote on a workplace basis if they so
choose, the proposed rule fosters what the Supreme Court in AHA
called the "central purpose" of the Act, namely, "to protect and
facilitate employees' opportunity to organize unions to represent
them in collective-bargaining negotiations." 499 U.S. at 609.
Accord . American Hospital Assn. . 899 F.2d at 654 (Act's "principal
purpose. . .was and is to protect workers who want to organize for
collective bargaining") . Given that the Act's primary purpose is
to foster union organizing, opposition to the proposed rule by
business groups premised on the mistaken claim that it "serves
only one purpose — to boost union organizing," B. Mower, Board
Proposal Favoring Single Facility Bargainin g Trigger s Business
Opposition . BNA DLR (January 29, 1996), p. A-1, is singularly
unpersuasive. Plainly, the Board is entitled to give "the interest
in employees to be represented by a representative of their own
92
choosing. . .greater weight than that accorded to the employer in
bargaining with the largest, and presumably most convenient
possible unit." NLRB v. W estern and Southern Life Ins. Co.. 391
F.2d 119, 123 (3d Cir. 1968).
Another benefit of the proposed rule is that it would
result in substantial cost savings to the Board, as well as to the
parties, by reducing the number and length of representation
hearings and by streamlining the Board's decision-making process.
In view of the House of Representatives' efforts to reduce the
Board's fiscal year 1996 budget by 30 %, the Board's judgment that
the proposed rule would conserve its increasingly limited and
declining resources surely has considerable force. Obviously,
Congress cannot have it both ways: if the Board must continue to
resolve disputes over single- versus multi-location bargaining
units on a case-by-case basis. Congress needs to provide the Board
with adequate funding to manage its case load.
Finally, the proposed rule should significantly reduce
the lengthy delays that inevitably result from protracted
litigation over the appropriateness of requests by workers to vote
for or against union representation on a single-location basis.
The problems that delay poses to workers' organizing efforts are
real and substantial. Commentators have pointed out the
deleterious effects that delays in the Board's administration of
the Act have on employee free choice. E.g. . Weiler, Promises to
Keep; Securing Workers' Rights to Sel f-Oraaniza tion Under the NLRA.
96 Harv. L. Rev. 1769 (1983). And such delays have led some AFL-
93
CIO affiliates — including my own, the UFCW — to adopt policies
of avoiding the Board's election procedures whenever possible. See
Grunewald, The NLRB's First Rulemaking: An Exercise in Pragroatism.
41 Duke L.J. 274, 316 & n.218 (1991).
The case of Manor Healthcare Corp. . 285 NLRB 224 (1985)
provides a graphic portrayal of the consequences of delay in the
determination of the appropriate unit. In April, 1983, UFCW Local
27 petitioned for a representation election to be held in a ur't of
140 service and maintenance employees at Manor Healthcare's nursing
home in Rossville, Maryland. The employer contended that the unit
must include the service and maintenance workers at two of its
other nursing homes, each located about 12 miles away.
The Board's Regional Director found the employees at the
Rossville home to be an appropriate unit. The employer requested
the Board to review the Regional Director's decision. On June 15,
1983, the day before the election, the Board agreed to review the
decision. However, instead of following its usual practice of
allowing the election to take place and impounding the voters',
ballots pending its decision, the Board stayed the election.
Nothing happened for over four years. Finally, on August
6, 1987, the Board unanimously affirmed the Regional Director's
decision. Applying its traditional community of interest criteria,
the Board concluded that the single-location presumption was
unrebutted. The Board directed the Regional Director to conduct
the election, but the election never took place. Only a handful of
the 140 workers employed at the Rossville home when the
-9-
23-316 96-4
94
representation petition was filed still worked there in August,
1987. Under the circumstances, the union reluctantly withdrew its
petition.
The Manor Healthcare case is an apt illustration of the
maxim: "Justice delayed is justice denied." Adoption of the
proposed rule would significantly reduce — if not completely
•eliminate — the chance of similar travesties from occurring in the
future .
95
STATEMENT OF CHAIRMAN WILLIAM B. GOULD IV
TO THE SUBCOMMITTEE ON REGULATION AND PAPERWORK
OF THE COMMITTEE ON SMALL BUSINESS
OF THE U.S. HOUSE OF REPRESENTATIVES
HEARING TO EXAMINE THE ISSUES SURROUNDING THE
NATIONAL LABOR RELATIONS BOARD'S RULEMAKING CONCERNING
SINGLE LOCATION BARGAINING UNITS IN REPRESENTATION CASES
Delivered by:
William B. Gould IV
Chairman
National Labor Relations Board
10:00 a.m.
March 7, 1996
Committee on Small Business
Hearing Room 2359
Raybum House Office Building
Washington, DC
96
Thank you, Chairman Talent, for your invitation to appear here today. I am
pleased to have this opportunity to testify to you about our rulemaking initiatives in
connection with disputes involving single versus multiple location matters in
representation proceedings. My appearance here today marks the second
anniversary of the date on which I was sworn in as Chairman of the National Labor
Relations Board in Stanford, California, March 7, 1994, and 1 regard our proposed
rule as one of a number of important initiatives through which federal labor policy,
as enunciated by Congress, can be implemented more effectively.
As you know, the Board, with the concurrence of all four of its then current
members,* is engaged in a rulemaking proceeding under the Administrative
Procedure Act concerning requested single location bargaining units. Rulemaking
by the Board is speciFically authorized by Section 6 of the National Labor Relations
Act, and the Board's use of rulemaking to determine appropriate bargaining units
in representation cases was recently approved by a unanimous Supreme Court in
American Hospital Association v. National Labor Relations Board , 499 U.S. 606
(1991).
One of the oft-cited advantages of this type of decision-making is that it
provides a forum for all affected parties to make their opinions known. Thus, it
enables the Board to hear from anyone who is interested in the subject under
consideration, not just the litigants to a single case who may be primarily, if not
solely, interested in the result in that case. In this rulemaking proceeding, there is a
prolonged period — until March 15 of this year ~ for employees, employers, labor
organizations, business organizations, academics ~ indeed anyone who might be
interested ~ to make known their views on the proposed rule. In this proceeding,
the Board actually took the extra step of providing an advanced notice of proposed
rulemaking on June 2, 1994, and even at that early stage received comments from
interested parties.
We ask for comments not only because that is the procedure established by
the Administrative Procedure Act, but because we genuinely want to know what our
clientele thinks, and which of our proposals they believe to be feasible or unfeasible,
desirable or undesirable. I assure you we will seriously consider those comments;
indeed, that is our obligation, if our rulemaking is to be upheld in the courts of
appeals.
In the health care rulemaking to which I have alluded, we received over ISOO
comments. After studying the comments, we made a number of important changes
to the rule initially proposed. For example, we responded to an AFL-CIO concern
about the deflnition of an "acute care hospital" by revising the rule to encompass an
Since the Proposed Rule was published last September, President Clinton has
appointed a new Board Member, Sarah M. Fox. She has not yet had an
opportunity to express her views on this subject.
97
alternative definition. 54 FR at 16344. We responded to employer concerns by
removing nursing homes, psychiatric hospitals and rehabilitation hospitals from the
coverage of the rule, because the comments persuaded us that these facilities were
not sufficiently uniform, and our knowledge not sufficiently developed, to enable us
to promulgate a rule concerning bargaining units in those types of facilities. 53 FR
at 33928-30; 54 FR at 16343. We responded to other employer concerns by
removing requested units of five or fewer employees from coverage of the rule. 54
FR at 16341-42.
I note that the health care rule has met with well-deserved praise from
practitioners representing both labor and management, academics, and others,
including the Administrative Conference of the United States. That rule has saved
the Board and many parties before it many thousands of dollars in resources which
otherwise would have been devoted to processing these cases. Prior to the Board's
adoption of the health care rule and its approval by the Supreme Court, the various
United States Courts of Appeal issued numerous, often conflicting, decisions that
resulted in the parties having no clear guidance as to what bargaining units
ultimately would be found appropriate. See, e.g., 52 FR at 25142-43. Since that
time, in contrast, court litigation has been virtually nonexistent. Indeed, since the
Supreme Court's ruling in American Hospital Association , only about two or three
cases directly involving that issue have resulted in litigation before the courts of
appeal. The health care rule was opposed by many, including two former Board
Members, but it has proven to be an efficient, and, indeed, preferable alternative to
handling health care cases by adjudication.
In the midst of the comment period, I feel somewhat uncomfortable coming
before you now to address any substantive concerns you might have about the
Board's current rulemaking effort. The Board has neither reviewed nor analyzed all
the over 100 comments received thus far. A little more than a week remains of the
thrice-extended comment period. The contents of the proposed rule will be the
subject of extensive and careful consideration by the Board Members after all
comments have been received and reviewed. Any observations by me now would in
my opinion be premature, to say the least, and perhaps even inappropriate.
In a letter of December 15 sent to my office. Chairman James M. Talent
responded to concerns that I had raised during a meeting of December 7 as follows:
While you are correct in your view that a rulemaking undertaken
pursuant to the Administrative Procedure Act can prove a forum for
the presentation of varying views, my experience has been that this is
often an inadequate forum for small businesses. It should come as no
surprise to you that the vast majority of small business owners are not
regular readers of the Federal Register . Because of this, it is often
helpful to focus small business attention on a potential regulatory
approach by making that proposal the subject or an oversight
hearing.
On January 3, 1996, 1 responded with a letter to Chairman Talent which
stated as follows:
In your letter [of December 15] you state that the 'vast
majority' of business owners are not regular readers of the Federal
Reeister . I would be grateful if you could supply me with the names
of such employers. I will personally undertake to send copies of our
notice to them so that they are able to participate in our procedures.
Alternatively, or in addition thereto, if you wish to send our notice to
such employers, I would be most grateful indeed.
I remain concerned with duplication of the quasi-judicial deliberative process
contemplated by the statute and the potential for inappropriate political
interference.
Some of you have previously requested, in your letter dated November 17,
1995, that the Board hold public hearings on the current rulemaking proposal.
That was a matter to which the Board gave considerable thought. There were
public hearings on the health care rulemaking, the Board's flrst substantive
rulemaking effort. However, a neutral observer, Professor Mark Grunewald of
Washington and Lee University School of Law, who was commissioned to study the
Board's rulemaking efTort, has expressed the opinion that "as a legal matter, . . . and
perhaps as a practical matter, the hearings were procedural overkill and the
burdens created by the number and structure of the hearings would have to be
considered as part of the overall cost-benefit evaluation of the rulemaking." 41 Duke
LJ 274, at 319-320. Moreover, prospects of a severe budget shortfall now make the
expense of public hearings, as opposed to, simply, the notice and comment period
required by the APA, even more problematic.
The Board's Notice of Proposed Rulemaking attempted to explain in detail
why at least three members of the Board were tentatively persuaded that
rulemaking was a good thing in this area, and what type of rule we were
considering. That proposal encompassed almost 50 typewritten pages when
submitted, and many pages in the Federal Register. I invite your attention to it, but
will briefly state what the rule as tentatively proposed provides. First, however, I
think it important to set forth an overview of the history and nature of the proposed
rule.
The Tentative Nature of the Rule
On May 27, 1994, following internal debate and study, the Board agreed to
begin a public examination of how it could best fulfill its statutory obligation to
99
determine an appropriate unit when a single location bargaining unit is sought. On
that date, the full flve-Member Board unanimously approved an Advanced Notice
of Proposed Rulemaking (ANPR) which proposed, for purposes of discussion only,
promulgation of a rule or rules to limit to the extent possible the necessity to engage