in traditional litigation of that issue on a case-by-case basis. See ANPR, 59 FR
28501 (June 2, 1994). The Board explained, inter alia, that it was publishing the
ANPR "to seek timely comments and suggestions from the public, labor
organizations, employer groups, and other interested organizations." The Board
specifically stated that:
Given the fact that the Board has made no decision on the
propriety of any form of rulemaking in this area, we invite all
interested parties to comment on (a) the wisdom of promulgating a
rule or rules on this issue . . . , and (b) the appropriate content of such
a rule or rules.
Board Members Stephens and Cohen attached a separate statement to the ANPR
explaining the reason they joined the Chairman and other Board Members in
promulgating the proposal:
Unlike case adjudication, an advance notice proceeding such as this
will enable the Board to solicit comments from a broad cross-section
of interested persons before making a final decision on the relevant
issues, including whether rulemaking is at all warranted, whether
(and how) the substantive law defining the pertinent factors that can
rebut the [single facility] presumption should be changed, and
whether indeed extensive (and perhaps unnecessary) resources are
being expended litigating this unit question
During the advance notice and comment period, the Board received 41
written comments from unions, employers, trade associations, policy organizations,
and individuals. After careful and lengthy consideration of the commentators'
suggestions and arguments, the Board, on September 22, 1995, issued the Notice of
Proposed Rulemaking (NPR) that is the subject of this hearing. See NPR, 60 FR
50146 (September 28, 1995).
In the NPR, the Board proposed,/or the specifically stated purpose of
obtaining comments and suggestions from all interested parties, to issue a rule
specifying the decisive factors that would determine the appropriateness of
requested single location bargaining units. The Board repeatedly, in approximately
20 separate references, solicited specific comments on the proposed factors, and
repeatedly stressed that the proposed factors advanced in the NPR were tentative
and subject to change after the various interested parties' comments were reviewed.
Indeed, in the prefatory Summary section of the NPR, 60 FR at 50146, the Board
explained that:
100
The Board is publishing this notice to seek timely comment and
suggestions from the public, labor organizations, employer groups,
and other interested organizations [W]e emphasize that the rule
we are proposing is just that-a proposal-and not a final decision on
what the rule, if any, should be. In som^ sections of this document we
are more tentative than others and have specifically invited
commentary or empirical information. In other sections we have not
expressly asked for comments but nonetheless welcome them.
The tentative nature of the NPR led Member Cohen to join me and other
Members' in soliciting public response to the specific rule being proposed. 60 FR at
50157.
The Substantive Provisions of the Rule
The proposed rule would apply to all employers except those in the
construction industry, public utilities, and crews on ocean-going vessels. The rule is
coextensive in scope of application with case precedent involving the Board's single
facility presumption. The Board currently applies a presumption that a requested
single location unit is an appropriate unit. The presumption is based on Board
decisions which note, inter alia, that the "plant unit" is listed as one type of unit that
is appropriate for collective bargaining in Section 9(b) of the Act. See, e.g., Kearfott
Company . 112 NLRB 979 (1955). To the extent that Board precedent '^prefers" a
single location unit over a multi-facility unit when the former is requested, this
presumption is not a result of this proposed rule; rather, it results from the
application of many decades of well-settled precedent emanating, in large part, from
the Act itself.
The proposed rule would deem appropriate single location bargaining units
only where all of the following requirements are satisfied: (1) no other facility of the
employer's is located within one mile of the requested facility; (2) there are 15 or
more employees employed at therequested facility; and (3) a supervisor (as defined
in Section 2(11) of the Act) is present at the requested facility for a regular and
substantial period. In addition, the proposed rule would not apply where the level
of interchange between employees at the requested facility and at other facilities of
the employer involves 10 percent or more of the requested facility's employees for 10
percent or more of those employees' time. If all of the above requirements are not
satisfied, the rule would not apply and the case would require litigation in the
traditional manner. Finally, even if all the foregoing requirements are met, the
proposed rule includes an "extraordinary circumstances" exception to allow for
adjudication or individual treatment of unique cases. This exception is modeled on
' Member Stephens' term on the Board expired prior to issuance of the NPR.
5
101
the similar provision in the Board's Health Care Rule. See Collective Bargaining
Units in the Health Care Industry . 54 FR 16336 (April 21, 1989).
Apart from those factors listed above, the Board proposed that the large
number of factors now ostensibly cited and applied by the Board in these cases
would not, under the proposed rule, be considered to establish that a single location
unit is appropriate. It was our view in the NPR that while many factors have been
cited and considered to some extent, only these few factors have made a material
difference in the outcome of the overwhelming majority of single location cases. The
elimination of these other factors was suggested in the ANPR and, as noted in the
NPR« 60 FR at 50154, virtually none of the industi7, policy organization, or trade
association commentators addressed the factors or language that was proposed as
part of the rule. The Board stated that it expected with the publication of the NPR
that more comments would be forthcoming as to the proposed rule's content, and
specifically invited comments as to what factors should and should not be included
in the rule. IdL Let me take this opportunity to again invite commentators to tell us
what factors should be in the rule and why.
Before addressing why the Board is proposing this rule, I wish to point out
that the proposed rule does not change the current statutory scheme that requires a
preelection hearing in representation cases unless the parties stipulate to all matters.
Section 9(c)(1) of the Act and Section 102.63(a) of the Board's Rules require that an
"appropriate hearing" be conducted if there is "reasonable cause to believe that a
question concerning representation afTecting commerce" exists. Angelica
Healthcare Services Group . 315 NLRB 1320 (1995). The scope of the unit,
therefore, may be governed by the rule but all other issues (including whether the
prerequisites to application of the rule are satisfied) would be decided by
adjudication. Hence, even if the proposed elements in the rule are satisfied for a
particular requested unit, a party will not be denied the opportunity for a hearing.
While much of our reasoning is greatly detailed in the ANPR and NPR, I will
briefly summarize it here. The Board selected the single location case area for
rulemaking because of the uniformity of the factors usually deemed determinative in
these cases; the litigation and Board resources that are expended on each case; the
need for greater predictability and consistency in outcomes of single location cases;
and the recognized benefits of deciding representation cases by rule. The Board
believes that the proposed rule will result in the parties knowing in advance the
relevant and decisive standards the Board will apply, and what types of evidence the
Board will look to; there will be more consistent and predictable results; a reduction
in single location litigation will occur; and savings to the Board, the labor bar of
union and management lawyers, and the public will accrue.
While the Board does not maintain overall statistics on the precise number of
cases raising single location unit issues, there is no question that they arise with
102
frequency at the Board. See, for instance, The Developing Labor Law . 468-72, P.
Hardin editor (3d ed. 1992).
And they continue to arise with frequency today. At the end of 1994, the
Board examined 26 of its most recent cases in which requests for review were
decided by the Board on issues involving single versus multi-location units. While
the purpose of the study was to examine the number of transcript pages in each
hearing (longest: 1,921 pages - shortest: 3 pages); the elapsed time in each case
between the Tding of the petition and the conduct of the election (longest: 552 days
— shortest: 62 days), and the number of employees in each requested unit (highest:
390 — lowest: 4), the study, as well as our experience, indicates that these cases
continue to arise regulariy before the Board. The list does not include the balance of
cases presenting single or multi location issues that arose in 1994, nor the number of
cases processed by each Regional OfTice in which review was not sought. Clearly,
these are not cases which arise once in a "blue moon." And, particularly in this
period of austerity when resources are in such desperate need of preservation, this is
a matter which causes particular concern to me, as Chairman, and to the Agency.
Further, while the Board may issue only a relatively small number of
published cases addressing single or multi location issues within a given year, that is
a false indicator of the time and resources which must be devoted to resolving these
disputes. Many representation cases are unpublished, either because they have not
been appealed to the Board (even though they may have involved lengthy litigation
at the Regional level) or because the Board simply denies a party's request for
review (the vast majority of which are not published) or otherwise deems its decision
to be routine and not worthy of the effort and expense of publication. Also, many
stipulation conferences are protracted because of disputes over the appropriateness
of single location units. The processing of all these cases involves the collective staff
time of clericals, stall attorneys. Regional Directors, and Board Members, among
others. It also includes the Board-incurred expenses for the court reporter and,
sometimes, interpreters and/or rental of a hearing room, and, frequently, travel
expenses for the Board's hearing officer.
We do not believe there is any question that the Board expends significant
personnel and monetary resources on the processing of single location cases.
Economy in these areas was one of the reasons the Board initiated this rulemaking,
as indicated in the ANPR (59 FR at 28501) and NPR (60 FR at 50149). Recent
events, concerning which I am sure the members of this Subcommittee are well
aware, have only emphasized the need for the Board to pursue aU possible measures
of economy. In this era of government downsizing and limited resources, it is
incumbent on the Board to examine its processes with a view to ''doing more with
less." The proposed rule is one, though far from the only, initiative undertaken by
the Board that would further these efforts.
103
We also believe that neither the public nor the labor bar should have to guess
the results in these cases. As a general proposition, there is too much labor law
guesswork which invites wasteful litigation and, in this situation, promotes a kind of
"crap shoot" — as I told the Senate Committee on Appropriations, Subcommittee on
Labor, Health and Human Services, Education and Related Agencies on
February 6, 1996.
More consistent and predictable outcomes could best be achieved through a
rule because unlike adjudication, the parties will know in advance the specific
evidence necessary for a requested unit to be appropriate. The rule will be of
greatest assisUnce in those close cases where the outcomes are controlled not only by
the factors to be applied, but in part by the Board Members' difTerent philosophies
and subjective views as to the correct results. For example, compare Dayton
Transport Corp. . 270 NLRB 1114 (1984), with Bowie Hall Trucking . 290 NLRB 41
(1988). These cases presented the same issue of whether the appropriate unit for
collective bargaining was the requested single location trucking terminal or a multi-
terminal unit, and involved similar (but not identical) facts. In Dayton Transport ,
the Board found that the presumption had been rebutted and that only the multi-
location terminal unit was appropriate, reversing a Regional Director's Decision
finding the single terminal unit appropriate. Only four years later, a panel from an
entirely new Board addressed the identical issue in Bowie Hall Truckin£ but
reached the opposite result, finding that the single location presumption had not
been rebutted and the single location terminal was appropriate, again reversing the
Regional Director.
Thus, difTerent panels of Board Members, sometimes even those appointed
by the same president (as in these cases), have sometimes decided cases differently,
even though the cases involved similar fact patterns and essentially the same issues.
The practical result of these different outcomes is unpredictability and an instability
in Board decision-making. We believe that the same unit should not be appropriate
under one set of Board Members yet inappropriate under another group of Board
Members. A rule would largely end these flip-flop decisions by the Board because
everyone will know, in advance, the evidence needed to find a unit appropriate.
I also wish to assure this committee that the Board b cognizant of and
intends to be responsive to concerns regarding the possibility that this rule would
unduly fragment employers' workforces. That is why the Board specifically asked
in the commentary to the rule for comments addressing any available empirical
evidence regarding the feasibility for bargaining in workforces which are organized
by single location versus those which are orgaiiized on a multi-location basis. NPR,
60 FR at 50149, Section H. A. 6. We continue to welcome those comments and any
others.
In conclusion, by citing many factors, while in practice relying principally on
only a few, the Board has invited litigation, and a form of crap shoot that a
104
particular Board or Board panel will decide s case a particular way. The average
business person, employee, and even the labor bar and academics find it difficult to
understand or reconcile the hundreds of cases involving this issue. But they will be
able to understand if the Board by rule sets forth, in simple and clear language,
what is necessary for a requested single location unit to be appropriate.
Perhaps having a clear, simple rule is not music to the ears of the litigators
who come back to the Board time and time again to reinvent the wheel (at the
expense of their clients). Our belief is that the current approach often wastes
Government and private resources on litigation by parties seeking improbable
outcomes. The Board believes it can save the taxpayers (and the litigators' clients)
money by clearly, rather than ambiguously, setting forth the circumstances under
which a single location unit will be appropriate, and, tentatively, that it is proper to
do so.
Finally, as the jurisdiction of this Subcommittee is regulation and paperwork
affecting small businesses, I would like to assure the Members of the Subcommittee
that we will be sensitive to the impact of this proposed rule on small businesses. Let
me say again that we welcome comments from all on this subject, including
comments from small businesses. It is my belief that this rule will save small
businesses attorney's fees and other litigation costs, not increase these expenditures.
Under the current treatment of these cases, a small business which faces a petition
often must hire a lawyer or consultant to litigate this issue at a hearing, analyze the
many cases on this subject, and prepare legal briefs to the Regional Director and,
possibly, the Board. The small business person will not know if the requested unit is
appropriate until after the final conclusion of all these proceedings. Under the rule,
however, in most cases, an employer should know in advance if a single location unit
is appropriate, without the need for this extended litigation and related
expenditures.
My colleagues and I at the Board look forward to receiving from any
interested party any comments that would be helpful to us in resolving the issues
posed in our rulemaking proceeding.
Thank you very much.
H U #
105
IN THE HOUSE COMMITTEE ON SMALL BUSINESS
REGULATION AND PAPERWORK SUBCOMMITTEE
MARCH 1. 1996
TESTIMONY OF THE INTERNATIONAL FRANCHISE ASSOCIATION
DELIVERED BY
HAUNANI SUE LIN KEKUNA
PRESIDENT AND FOUNDER
K & I MANAGEMENT/THE COFFEE BEANERY
Good morning Mr. Chairman and nr)embers of the subcommittee. My nar7>e is
Haunani Kekuna, and I am appearing here today on behalf of the International
Franchise Association.
The International Franchise Association is the oldest, largest and only trade
association which represents both franchisors and franchisees. IFA has nr)ore than
30,000 members operating in dozens of different industries. Since 1960, the IFA
has worked to promote a healthy and vibrant regulatory climate for the successful
expansion of franchising.
IFA's members include sorne of the niost recognized names in the retail and service
industries, who have proven that franchising provides unique advantages over
traditional methods of distributing goods and services. Franchising works in many
different industries because its unique flexibility allows franchise companies to
adapt quickly to changes in consumer needs in a competitive marketplace.
106
I am here to share IFA's opposition to the rule proposed by the National Labor
Relations Board.
Small businesses like mine are faced with countless challenges to their success.
To add another government burden like the proposed rule will further diminish our
chances for success. This proposal would deny small businesses like mine the
opportunity to show, at a hearing, the reasons why single unit organizing may not
be advantageous or fair for either the management or the employees in an
integrated, multi-unit business like many franchises. In addition, there appears to
be no compelling reason to change the current practice of evaluating single-unit
organizing requests on a case-by-case basis.
For any retail or service operation, labor costs are a major component of the total
costs of running the business. Increases in workers' and unemployment
compensation taxes, health care and health insurance costs and other employee
benefits already limit the ability of nr^ny U.S. small businesses to compete in a
global marketplace.
The proposed NLRB rule further threatens our ability to compete globally and to
maintain uniformity and consistency within the organization. This is especially
important in a franchised business, which depends on a seamless and transparent
set of relationships to deliver customers a consistent and reliable experience with
the brand, if enacted, this rule will expand the likelihood of increased costs.
107
limiting our ability to create jobs and opportunities for our current, and future,
employees and their families.
In addition, we oppose this rule because it implies that all situations fit neatly
within the confines of a single rule, and because it creates a rigid and inflexible
structure that ignores the realities of the marketplace in which we as sniall
businesses struggle daily to compete.
I am President and Founder of K & I Management, Inc., a company that operates
three gourmet coffee franchised units. We have been in business since 1988 and
annually employ 30 to nrK}re than 50 employees. Our experience is similar to that
of many thousands of snrtall businesses around the U.S.
Like many franchisees, I operate more than one location. During the course of any
business week, I may have employees and managers working at several different
units, depending on the time of the year, the level of activity at certain stores and
the travel and family schedules of my employees.
Though I operate several locations, the management and operational control for the
entire business is mine. I do not manage each unit independently, but rather
manage each unit as part of an integrated whole. The proposed rule would treat
each of my units as if it were an independently operated business, and ignores the
fact that while there are multiple locations, the centralized management function is
108
essential to the success of the enterprise.
Of the nearly 550,000 franchised businesses in the U.S., many are operated by
businessmen and women like nr>e who have more than one location. The proposed
rule is a threat to ali of these small businesses, who would no longer have an
opportunity to demonstrate at a hearing the similarity of skills, functions, and
working conditions of their employees, the centrality of control of their businesses
and the degree of employee interaction within those businesses.
All of these are factual determinations which potentially argue against single unit
organizing, but as questions of fact would not be adequately explored under the
NLRB's proposed rule, in the interests of time and expediency, the proposed rule
would deny me a fundamental right - the opportunity to state my case and explain
the essential nature of centralized management to a franchised business.
Small business in general, and franchising in particular, have consistently been job
creators during the past decade. As Fortune 500 companies lay off thousands of
employees, those of us who operate small, independent businesses have
successfully created employment opportunities and wealth for literally millions of
Americans and their families.
If our nation is to enjoy the blessings of this successful pattern of employment
opportunity and wealth creation, the federal government must not further burden
109
small businesses and their employees and families with costly and unnecessary
regulations.
On behalf of the members of the IFA, and the thousands of other small business
owners and operators around the country, I urge the committee to communicate
our opposition to this rule to the NLRB, and ask that the proposed rule be
withdrawn.
Thank you for the opportunity to be here today.
no
INTERNATIONAL MASS
RETAIL ASSOCIATION
1700 North Moors Street
TESTIMONY OF THE
INTERNATIONAL MASS RETAIL ASSOCIATION (IMRA)
BEFORE THE
SUBCOMMITTEE ON REGULATION AND PAPERWORK
COMMITTEE ON SMALL BUSINESS
U.S. HOUSE OF REPRESENTATIVES
ON
SINGLE-LOCATION BARGAINING UNIT RULES PROPOSED BY THE
NATIONAL LABOR RELATIONS BOARD (NLRB)
Presented by:
CURTIS L. MACK, ESQ.
MACK, WILLIAMS, HAYGOOD & McLEAN
MARCH 7, 1996
Phone: (703)841-2300 • Fax: (7031841-1184
Ill
Good morning, Mr. Chairman and fellow members of the Committee. I
want to thank you for the opportunity to answer your questions
concerning the National Labor Relations Board's ("the Board" or "NLRB")
proposed rule on the appropriateness of requested single location
bargaining units in representation cases.
With regard to my background, I am a founding partner in the law firm of
Mack, Williams, Haygood & McLean. The firm is composed of 15 lawyers
with offices in Atlanta, Georgia; Boca Raton, Florida; and West Palm
Beach, Florida.
I am a 1970 graduate of Akron Law School and I received an LLM degree
in labor from the University of Michigan Law School in 1973. In addition
to being in private practice since 1981, 1 taught at the University of Florida
Law School in 1973-1974; I was General Counsel for the Florida Public
Employees Relations Commission in 1974 and 1975; I was Regional Director
of the National Labor Relations Board in Atlanta, Georgia 1976-1981, and I
have been Chairman of the Human Relations Commission for the City of
Atlanta since 1981. I am admitted to the bar in Ohio, Michigan, Florida,
Illinois and Georgia.
I currently represent many growing enterprises in all aspects of labor and
employment law, as well as Fortune 500 companies. _
V
I am here testifying on behalf of the International Mass Retail Association^