## Facts

- Macy’s operated a department store in Saugus, Massachusetts with multiple sales departments, including cosmetics and fragrances.
- A union petitioned for an election in a bargaining unit limited to employees in the cosmetics and fragrances department, including counter managers, beauty advisors, and other selling employees assigned to that department.
- The cosmetics/fragrances employees worked in spatially distinct selling areas, had vendor-focused selling structures, and performed specialized work (including brand-specific training and customer-focused promotional activity).
- The NLRB Regional Director found the petitioned-for cosmetics/fragrances unit appropriate, and the Board affirmed under the *Specialty Healthcare* framework.
- The union won the election and was certified as bargaining representative for the unit.
- Macy’s refused to bargain, contending a store-wide unit of all selling employees was required and that *Specialty Healthcare* unlawfully enabled “micro-units.”
- The NLRB found Macy’s refusal to bargain an unfair labor practice and ordered Macy’s to bargain; Macy’s sought judicial review, and the Board sought enforcement.

## Issues

1. Whether the NLRB’s *Specialty Healthcare* “overwhelming community of interest” standard violates NLRA § 9(c)(5)’s prohibition on making the extent of employee organization controlling in unit determinations.
2. Whether approving a cosmetics/fragrances-only unit in a retail store was arbitrary, unreasonable, or an abuse of discretion in light of prior retail unit-determination precedent.
3. Whether substantial evidence supported the Board’s finding that other store selling employees did not share an “overwhelming community of interest” with cosmetics/fragrances employees such that a larger store-wide unit was required.

## Decision

- The Fifth Circuit denied Macy’s petition for review and granted the NLRB’s cross-application for enforcement.
- The court held that *Specialty Healthcare* is a permissible interpretation of the NLRA and does not make the extent of organization controlling within the meaning of § 9(c)(5).
- The court held the Board did not abuse its discretion in certifying a cosmetics/fragrances department unit at the Saugus store.
- Because the unit certification was valid, Macy’s refusal to bargain supported the NLRB’s unfair-labor-practice order, which the court enforced.

## Legal Principles

- The NLRB has broad discretion to determine an “appropriate” bargaining unit; reviewing courts uphold the determination unless it is arbitrary, unreasonable, or an abuse of discretion, and uphold factual findings if supported by substantial evidence.
- Under *Specialty Healthcare*, the Board first decides whether the petitioned-for employees are readily identifiable and share a community of interest under traditional factors (departmental structure, skills, supervision, working conditions, functional integration, interchange, and location).
- If the petitioned-for unit is appropriate, an employer seeking to enlarge the unit bears the burden to show excluded employees share an “overwhelming community of interest,” meaning the relevant factors overlap almost completely and there is no legitimate basis to exclude them.
- NLRA § 9(c)(5) prohibits using the extent of organization as a controlling factor, but permits considering a petitioned-for grouping when the Board independently applies traditional community-of-interest analysis.

## Conclusion

The Fifth Circuit upheld the NLRB’s application of *Specialty Healthcare* to approve a cosmetics/fragrances departmental bargaining unit at a Macy’s store, rejected challenges grounded in § 9(c)(5) and retail “store-wide” preferences, and enforced the Board’s order requiring Macy’s to bargain after its refusal to bargain with the certified unit.


Macy’s, Inc. v. Nat’l Labor Relations Bd., 824 F.3d 557 (5th Cir. 2016)