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NLRB Decision In Oakwood Healthcare, Inc., 348 NLRB No. 37, Clarifies Definition Of “Supervisor” Under Section 2(11)–Class Action Defense Issues

The NLRB issued a broad and long-awaited decision on September 29, 2006 which affects the definition of “supervisor” under the National Labor Relations Act (the “Act”). Oakwood Healthcare, Inc., 348 NLRB NO. 37, and two other companion cases, impact all industries and could undermine the power of labor unions as millions of employees could potentially be re-classified as “supervisors.” As “supervisors,” these employees would be precluded from joining unions and would no longer be covered by collective bargaining agreements. Not surprisingly, labor unions are in an uproar over the Oakwood Healthcare decisions. They have called them “outrageous” and are threatening strikes against employers who re-classify employees under the new decisions.

Section 2(11) of the Act defines a supervisor as an employee who has the authority to perform any of 12 tasks in the interest of the employer while using independent judgment. In 2001, the U.S. Supreme Court provided general guidance on the definition of “supervisor” under Section 2(11) in NLRB v. Kentucky River Community Care, 532 U.S. 706 (2001). Using Kentucky River‘s guiding principles, the NLRB clarified the definition of “supervisor” under Section 2(11). In a well-written and thorough decision, the NLRB defines previously ambiguous terms such as “assign,” “responsibly to direct,” and “independent judgment” as used in Section 2(11).

Using these new definitions, the NLRB found that 12 permanent charge nurses were supervisors under the meaning of Section 2(11) and, therefore, not included within the protection of the Act and properly excluded from the bargaining unit. The NLRB arrived at its conclusion through a fact-specific analysis of the charge nurses’ day to day duties and responsibilities.

Oakwood Healthcare, Inc. has broad implications for the healthcare industry. Nationwide, there are an estimated 400,000 nurses represented under collective bargaining agreements. If some of these nurses qualify as “supervisors” under Oakwood Healthcare, they could potentially be excluded from joining unions, from collective bargaining agreements, and from the protections of the Act.

These decisions affect not just the healthcare industry. Oakwood Healthcare‘s clarification of the “supervisor” definition under the Act will affect virtually all industries. Unions may no longer argue that certain employees are automatically included in bargaining units. Rather, under Oakwood Healthcare, a fact-specific inquiry is now required, providing employers with additional bargaining power during labor negotiations. The impact and breadth of Oakwood Healthcare clearly signifies that it is one of the most important NLRB decisions of this decade.