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SE/The Labor Relations Process, 11th Edition ISBN-13: 978-1-305-57620-9 ©2017 Designer: LD Text & Cover printer: Edward Brothers Binding: CB Trim: 8” x 10” CMYK

THE LABOR RELATIONS PROCESS

Holley | Ross | Wolters

11th Edition

THE LABOR RELATIONS PROCESS

Holley | Ross | Wolters

11th Edition

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T H

E L

A B

O R

R E

L A

T IO

N S

P R

O C

E S

S

Holley Ross

Wolters

11th Edition

76209_cvr_ptg01_hires.indd 1 14/03/16 4:06 PM

The Labor Relations Process

ELEVENTH EDITION

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The Labor Relations Process, Eleventh Edition

William H. Holley, Jr., William H. Ross, and Roger S. Wolters

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Brief Contents

Preface xiii Acknowledgements xvi About the Authors xvii

Part 1 Recognizing Rights and Responsibilities of Unions and Management

Chapter 1 Union Management Relationships in Perspective 4

Chapter 2 The History of Labor Management Relations 43

Chapter 3 Legal Influences 89

Chapter 4 Unions and Management: Key Participants in the Labor Relations Process 134

Chapter 5 Why and How Unions Are Organized 197

Part 2 The Bargaining Process and Outcomes

Chapter 6 Negotiating the Labor Agreement 266

Chapter 7 Economic Issues 325

Chapter 8 Administrative Issues 387

Chapter 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 437

Part 3 Administering the Labor Agreement

Chapter 10 Contract Administration 496

Chapter 11 Labor and Employment Arbitration 537

Chapter 12 Employee Discipline 600

Part 4 Applying the Labor Relations Process to Different Labor Relations Systems

Chapter 13 Labor Relations in the Public Sector 650

Chapter 14 Labor Relations in Multinational Corporations and in Other Countries 701

Appendix A Collective Bargaining Negotiations Exercise 756

Author Index 759

Subject Index 762

iii

Contents

Preface xiii Acknowledgements xvi About the Authors xvii

Part 1 Recognizing Rights and Responsibilities of Unions and Management

Chapter 1 Union Management Relationships in Perspective 4

Phases in the Labor Relations Process 5 Elements in the Labor Relations Process 6

Focal Point of Labor Relations: Work Rules 6 Key Participants in the Labor Relations Process 10

Three Basic Assumptions Underlying U.S. Labor Relations 13 Constraints or Influences Affecting Participants Negotiation and Administration of Work Rules 14 State of the Economy: National, Industrial, and Firm-Specific Indicators 14 International Forces 19

Labor Relations in Action: Getting Online with Labor Relations Research 21 Public Opinion 22

Union Membership 24 Labor Relations in Action: Unions and Worker Centers 25

Labor Relations in Action: Are Unions Still Relevant? 28

Case Study 1-1: Was a Troublemaker Laid Off for Sharing Wage Information? Or for Business Reasons? 37

Case Study 1-2: Discharge for Whistleblower Activity 38

Classroom Exercise 1.1: Work Rules 41

Classroom Exercise 1.2: Union Membership Trend 41

Classroom Exercise 1.3: Word Association 41

Chapter 2 The History of Labor Management Relations 43

1869 to World War I 44 Early Legal Developments Involving Labor Management Relationships (1806 1931) 45 Civil Conspiracy Doctrine 47 Application of Antitrust Legislation to Labor Unions 47 Emergence of National Labor Organizations 49

Labor Relations in Action: Labor History Time Line: Selected Events 50 The Knights of Labor (KOL) 52 Strategies to Accomplish the KOL s Goals 53 Reasons for the KOL s Failure and Demise 54 The Eight-Hour Workday Movement and the Haymarket Riot 55 Origin and Goals of the American Federation of Labor 56 Strategies and Tactics of the AFL 58 Organization of the AFL 58 The Homestead Incident 59 The Pullman Strike 60

iv

Labor Relations in Action: Unions and the Civil Rights Movement 61 The Industrial Workers of the World 63

World War I to World War II 66 Union Organizing after World War I: Problems and Prospects 66

Labor Relations in Action: The American Labor Movement as Portrayed in Fiction 67

Opposition from Employers 68 Labor s Inability to Overcome Anti-Union Sentiment 70 Rise of the CIO and Industrial Unionism 71 Strong CIO Leadership 72 Realistic Goals 72 The Effective Use of Sit-Down Strikes 73 Passage of the National Labor Relations (Wagner) Act 73 Changes in Employees Attitudes 74

World War II to the Present 74 Developments in Organized Labor since World War II 75 New Collective Bargaining Issues 75 Increased Organization of Women, Minorities, Younger Age Employees, and Professionals in the Public-Sector and Private-Sector Service Industries 77 Merger of the AFL and CIO 77 Formation of the Change to Win Federation 78 Aspects of Organized Labor Unchanged since World War II 79 Unions and Politics 79 Difficulty in Achieving Consensus among Unions and among Members 79 Pursuit of Short-Range Economic and Job Security Goals Instead of Long-Range Reform 80

Chapter 3 Legal Influences 89

Origin of Labor Relations Law 91 The Norris La Guardia Act 93 The National Industrial Recovery Act of 1933 94 The National Labor Relations (Wagner) Act of 1935 95

Changes under the Labor Management Relations (Taft Hartley) Act 96 Labor Management Reporting and Disclosure (Landrum Griffin) Act 98 National Labor Relations Board 99 Labor Relations in Action: Selected Labor Relations Cases Decided by the U.S. Supreme Court and the NLRB 101

Employer and Employee Coverage under the LMRA, as Amended 104 Concerted and Protected Employee Activity 107 NLRB Unfair Labor Practice Procedure 108 Unfair Labor Practice Remedies 110 Assessment of the LMRA, as amended, and NLRB Administration 112

Transportation-Related Labor Relations Law (Railway and Airlines) 114 Assessment of the RLA 116 Deregulation Legislation in Railroads and Airlines 117 Promising Developments Regarding the RLA 117 Additional Laws That Affect Labor Relations 118 Employee Retirement Income Security Act of 1974 118 The Americans with Disabilities Act of 1990 119 Bankruptcy Act 119 Worker Adjustment and Retraining Notification Act 119 Racketeer Influenced and Corrupt Organizations Act of 1970 120 Employment Discrimination Laws and Executive Orders 120 Other Related Labor Relations Laws 121

Case Study 3-1: The Great Temperature Debate 128

Case Study 3-2: Independent Contractors? Or Employees? 128

Case Study 3-3: NLRB Jurisdiction over a Private Charter School 131

Case Study 3-4: Determination of Supervisory Status 132

Contents v

Chapter 4 Unions and Management: Key Participants in the Labor Relations Process 134

Goals and Strategies: Management and Unions 135 Company Strategic Planning 136 Nonunion Companies Strategies 137

Labor Relations in Action: Post-Electromation: Tests to Determine Whether Teams and their Activities Are in Violation of 8(a)(2) of NLRA 142

Unionized Companies Strategies 142 Union Strategic Planning 145 Company Organization for Labor Relations Activities 149 Union Governance and Structure 151

The Local Union 154 Differences between Local Craft and Industrial Unions 155 Government and Operation of the Local Union 157 The National or International Union 159 Leadership and Democracy 161

Labor Relations in Action: Rules Governing Union Officer Elections (U.S. Department of Labor) 162

Profile of Union Leaders 162 Administration 163 Professional Staff Members 163 Services to and Control of Locals 164 Dues, Fees, and Distribution of Funds 165 Mergers of National Unions 166 Intermediate Organizational Units 167 Independent Unions 167 Employee Associations 168 The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) 168 Organizational Structure 169

Union Corruption and the Landrum Griffin Act 175 Union Security 177

Union Security Provisions 178 Closed Shop 178 Union Shop 178 Agency Shop 179 Contingency Union Shop 181 Union Hiring Hall 181 Preferential Treatment Clause 182 Dues Checkoff 182 Right-to-Work Laws: Controversy and Effects 182 Arguments for Right to Work Laws 185 Arguments for Abolishing Right-to-Work Laws 186 Recent U.S. Supreme Court Decision 187

Case Study 4-1: Employee Rights under the Landrum Griffin Act 194

Case Study 4-2: Financial Core Membership Rights under the Beck Decision 195

Chapter 5 Why and How Unions Are Organized 197

Why Unions Are Formed 198 Work and Job Conditions 198 Employees Backgrounds and Needs 200 Influences on Employees Votes for and against Unions 201 The Union s Challenge of Organizing the Diverse Workforce 203 Organizing Professional Employees 203 Activities of the Union in Organizing Employees 205 Activities of the Company in Union Organizing 209 Unintended Consequences of Anti-Union Behavior 212 Methods for Organizing Unions 212

Labor Relations in Action: Volkswagen and the United Auto Workers Chattanooga, Tennessee 216

Labor Relations in Action: Objections to Joining the Union 218

Labor Relations in Action: Examples of Employer Messages during a Representation Election Campaign 220

Labor Relations in Action: Interesting Comparison: FedEx and UPS (United Parcel Service) 224

Duties of the Exclusive Bargaining Agent and Employer 230 After Election Loss by the Union 230 Proposed Mandatory Secret Ballot Elections versus Employee Free Choice Act (EFCA) 230

vi Contents

Conduct of the Representation Election Campaign 233 Campaign Doctrines and NLRB Policies 233 Captive Audience 24-Hour Rule 234 Polling or Questioning Employees 234 Distribution of Union Literature and Solicitation by Employees on Company Property 235 Showing Films during Election Campaigns 235 Use of E-Mail, Internet, and Social Media 236 New Union Strategies 237

Removing a Labor Union 238 Labor Relations in Action: Union Salting: A New Union-Organizing Tactic 239

Case Study 5-1: Are These Employees Engaged in a Protected Concerted Activity? 251

Case Study 5-2: Are the Employees Involved in Activities That Are Legal? 251

Case Study 5-3: Are the Field Supervisors Supervisors under the National Labor Relations Act (NLRA)? 252

Case Study 5-4: Are These Employees Activities Legally Protected under the National Labor Relations Act? 253

Case Study 5-5: Did the Company Violate the Section 8(a)(1) of the LMRA When It Discharged the Employee? 255

Case Study 5-6: Bulletin Board Use 257

Case Study 5-7: Nonemployee Union Solicitation Activity 258

Case Study 5-8: Campaign Threats or Implied Promise of Benefit? 259

Case Study 5-9: The T-Shirt Offer and Picnic Photographs 261

Classroom Exercise 5.1: Designing Union Election Campaign Literature 263

Part 2 The Bargaining Process and Outcomes

Chapter 6 Negotiating the Labor Agreement 266

Collective Bargaining: Definition and Structure 267 Bargaining Structure 268 The Bargaining Unit 270

Negotiation Preparation Activities 274 Selection of the Negotiating Team and Related Bargaining Responsibilities 274 Proposal Determination and Assessment 276 Formulating Proposals 277 The Bargaining Range 279

Labor Relations in Action: Bargaining Goals for Registered Nurses 282 Costing Contract Proposals 283

Understanding Collective Bargaining Behavior: A Framework 285 Distributive and Integrative Bargaining: Two Different Approaches 285 Strategies and Tactics 286 The Bargaining Power Model 287 Factors Potentially Affecting Both Bargaining Power Equations 290 Factors Affecting a Union s Disagreement and Agreement Costs 290 Factors Affecting Management s Agreement and Disagreement Costs 291 Complexities Associated with the Bargaining Power Model 291 Attitudinal Structuring 292 Intraorganizational Bargaining 292

Ethical and Legal Considerations in Collective Bargaining 293 The Legal Duty to Bargain in Good Faith 295 Type of Bargaining Subject 295

Specific Bargaining Actions 297 Totality of Conduct 298 Bargaining over

Contents vii

Managerial Rights 300 Successor Employer Bargaining Obligations 303 Collective Bargaining under Bankruptcy Proceedings 303 Legal Remedies

Associated with Violations of the Duty to Bargain in Good Faith 304 Contract Ratification 306 Explanation of Voting Behavior 306

Labor Relations in Action: Contract Ratification Process Affecting East and Gulf Coast Ports 307

Reasons for Rejection of Tentative Contract Agreements 308 Case Study 6-1: The Funeral Leave Policy Proposal 317

Case Study 6-2: Classification of a Bargaining Subject 318

Case Study 6-3: The Influenza Work Rule 319

Case Study 6-4: Refusal to Furnish Requested Information 322

Case Study 6-5: The Mileage Reimbursement Policy 323

Chapter 7 Economic Issues 325

Industrial Wage Differentials 327 Occupational Wage Differentials and the Role of Job Evaluation and Wage Surveys 329

Evaluating Jobs within the Organization 329 Surveys to Compare Firms Wage Structures 331 Production Standards and Wage Incentives 332 Wage-Setting Criteria: Arguments Used by Management and Union Officials in Wage Determination 336

Labor Relations in Action: Living Wage Ordinances: What are They? What Are Their Effects? 337

Differential Features of the Work: Job Evaluation and the Wage Spread 338 Two-Tier Wage Plans 340

Labor Relations in Action: The Waxing and Waning of Two-Tier Wage Plans 342 Wage Comparability 343 Ability to Pay 344 Productivity 345 Cost of Living 348 Wage Adjustments during the Term or Duration of the Labor Agreement 349 Lump-Sum Pay Adjustments 351

Employee Benefits 351 Insurance and Health Benefits 352 Health Care Cost Containment 353 Income Maintenance 354 Premium Pay Overtime and Other Supplements 355 Pay for Time Not Worked Holidays, Vacations, and Rest Periods 357

Pensions 358 Family and Child-Care Benefits 362 Other Benefits 363 Union Effects on Wages and Benefits 363 Case Study 7-1: Adding Insult to Injury 378

Case Study 7-2: Unilateral Freeze of Defined Benefit Pension Plan 380

Case Study 7-3: A Change in the Medical Insurance Plan 381

Case Study 7-4: Does the Deputy Sheriff Deserve a Pay Raise? 383

Classroom Exercise 7.1: Employee Benefits 386

Chapter 8 Administrative Issues 387

Technological Change and Job Protection 388 Labor Relations in Action: High Performance Work Organization (HPWO) Partnership Principles 391

viii Contents

Benefits of Technological Change 391 Negative Effects of Technological Change 392

Job Security and Personnel Changes 393 Job Security and the Changing Psychological Contract 394 Job Security Work Rules 395 Plant Closures, Downsizing, and WARN 397 Subcontracting, Outsourcing, and Work Transfer 399

Labor Relations in Action: Creating Good Jobs Today and in the Future 402 Work Assignments and Jurisdiction 403 Work Scheduling 404

Labor Relations in Action: Computer Programming and Labor Relations 405 The Role of Seniority in Personnel Changes 406 Legal Issues Involving Seniority in Administrative Determinations 410

Employee Training 412 Work Restructuring 415 Safety and Health 416 Labor Relations in Action: Domestic Violence and Trade Unions 419

Case Study 8-1: Discharged for Facebook Comments 433

Case Study 8-2: The Outsourced Work 433

Case Study 8-3: The Disputed Safety Bonus 434

Case Study 8-4: Donning Safety Equipment? or Changing Clothes? 435

Chapter 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 437

Impasse Resolution Procedures Involving a Third-Party Neutral 439 Mediation 439 Fact-Finding 442 Interest Arbitration 442

Mediation-Arbitration (Med-Arb) 446 Other Third-Party Procedures 447

Arbitration-Mediation 447 Tri-Offer Arbitration 448 Double Final-Offer Arbitration 448 Night Baseball Arbitration 449

Strikes and Lockouts: The Use of Economic Pressure to Resolve Interest Disputes 449

Replacement Workers during Strikes and Lockouts 450 Types of Strikes 451 Labor Relations in Action: 2011 National Football League Contract Negotiations and Lockout 452

Reasons for Strikes 456 Strategic Purposes of a Strike 458 Strike Experiences and Preparation 459 Reinstatement Rights of Unfair Labor Practice and Economic Strikers 463 Unlawful Strike Misconduct 465 Employee Picketing Rights 466 Secondary Strikes, Boycotts, and Picketing 466

National Emergency Dispute Resolution Procedures 471 Case Study 9-1: An Interest Arbitration Hearing 485

Case Study 9-2: Legitimate Picketing? Or Illegal Secondary Boycott? 487

Case Study 9-3: The Aftermath of a Strike 489

Case Study 9-4: The Right to Strike 491

Case Study 9-5: Denial of Health Care Benefits to Striking Employees 492

Case Study 9-6: Product Picket Activity 493

Contents ix

Part 3 Administering the Labor Agreement

Chapter 10 Contract Administration 496

Labor Relations in Action: Rules Governing Workplace Investigations 499

Grievances: Definition, Sources, and Significance 499 Reasons for Employee Grievances 502 Significance of Employee Grievances 505 Preparation for Grievance Processing 506

Steps in the Grievance Procedure 508 First Step of Grievance Procedure 509 Second Step of Grievance Procedure 511 Third Step of Grievance Procedure 511 Fourth Step of Grievance Procedure: Alternative Dispute Resolution (ADR) 512 Different Approaches by Grievance Mediators 513 Administrative Complexities of Processing Grievances 515 Other Forms of ADR 516

Labor Relations in Action: Tough Contract Administration Questions 517

Grievance Resolution: Relationships and Flexibility 517 Codified Relationships 518

Power Relationships 518 Empathetic Relationships 520 Flexible Consideration in Processing Employee Grievances 520

The Union s Duty of Fair Representation 522 Case Study 10-1: Are These Grievances Arbitrable? 531

Case Study 10-2: Should the Union Represent Slick Willie Owens? 534

Classroom Exercise 10.1: Arbitration Scenario 536

Chapter 11 Labor and Employment Arbitration 537

Development of Labor Arbitration 538 Elements of a Typical Arbitration Proceeding 540

Selection and Characteristics of Arbitrators 541 Decision to Arbitrate 544 Prehearing Activities 545 The Arbitration Hearing 545

Labor Relations in Action: Improving Preparation for Arbitration Hearings 548

Comparison of Arbitration and Judicial Proceedings 549 Evidence in Arbitration vs. in Judicial Proceedings 550 Arbitration in the Railway and Airline Industries 552

The Arbitrator s Decision 552 Decision-Making Guidelines Used by Arbitrators 553

Labor Relations in Action: Example of Contract Language Ambiguity 556 Past Practice 558 Previous Labor Arbitration Decisions 559

Current Issues Affecting Arbitration 560 Legal Jurisdiction 560

Labor Relations in Action: Tenets of Labor Arbitration 561 Labor Arbitration and the National Labor Relations Board 564

Labor Relations in Action: National Football League v. National Football League Players Association (Tom Brady) 566

Labor Relations in Action: Things They Never Told Me before I Became an Arbitrator 567

x Contents

Appraising Labor Arbitration s Effectiveness 567 Procedural Problems 569 Employment Arbitration 571

Labor Relations in Action: How Employment Arbitration Differs from Arbitration Found in Labor Agreements 575

Public Policy Implications for the Future 578 Case Study 11-1: Whether the Employer Violated the Contract by Implementing Fleet Operation Changes on or about June 18, 2014? If so, What Is the Appropriate Remedy? 587

Case Study 11-2: Issue: Did the Company Violate the Collective Bargaining Agreement When It Reduced the Hours of Full-Time Employees to Less than 35 Hours per Week as This Action Relates to the NLRB Charge? 592

Case Study 11-3: Should Employee Be Penalized for On-the-Job Injury? 597

Chapter 12 Employee Discipline 600

The Changing Significance of Industrial Discipline 601 Historical Overview of Employer Disciplinary Policies 601 Employment-at-Will Doctrine and Wrongful Discharge Consideration for Nonunion Employees 603 Present-Day Significance of Employee Discipline 605

Labor Relations in Action: Disciplinary Possibilities on the Assembly Line 606

Elements of the Just Cause Principle in Employee Discipline 608 Discipline for Just Cause and Discipline s Legitimate Purpose 608 Degree of Proof in Disciplinary Cases: Nature of the Evidence and Witness Credibility 610 Labor Relations in Action: Employee Discipline and Social Media 612 Effect of Work Rules on Discipline 613 Progressive Discipline 616 Disciplinary Penalty and Mitigating Circumstances 617 Possible Collision between Discharge Decisions and Public Policy 620

Labor Relations in Action: Examples of Employee Misconduct and Mitigating Factors to Consider in Employee Discipline 621

Due Process 623 Case Study 12-1: Issue: Was Mr. Babcock s Termination for Just Cause? If Not, What Is the Remedy? 635

Case Study 12-2: Falsification of Application 641

Part 4 Applying the Labor Relations Process to Different Labor Relations Systems

Chapter 13 Labor Relations in the Public Sector 650

Significance of Public-Sector Labor Relations 651 Labor Legislation in the Public Sector 652 Current Challenges to Collective Bargaining Rights of Public Unions 654

Labor Relations in Action: States That Have Passed Laws Limiting Representational Rights for Public Sector Employees Since 2010 656

Federal-Sector Labor Relations Legislation 657 Labor Relations in Action: Privatization of the Public Sector 658

Appropriate Bargaining Units and Union Recognition in the Federal Sector 660 Negotiable Subjects in the Federal Sector 660 Unfair Labor Practices

Contents xi

in the Federal Sector 661 Grievance Procedures and Arbitration in the Federal Sector 662 Labor Management Forums in the Federal Government 662

Labor Relations in Action: Arbitration under the Federal Service Labor management Relations Statute 663

Homeland Security Act 663 Labor Relations in the U.S. Postal Service 665 Similarities between Private- and Public-Sector Bargaining 666 Differences between Private-Sector and Public-Sector Bargaining 668

The Market Economy Does Not Operate in the Public Sector 668 The Relationship between the Budget and Public-Sector Bargaining Processes 669 Employee Rights and Obligations 669

Collective Bargaining Structures and Decision-Making Processes 671 Negotiable Issues and Bargaining Tactics 672 Grievance Administration 675 The Right-to-Strike Controversy 675 Discipline of Public- Sector Employees 676

Labor Relations in Action: Douglas Factors in Deciding Disciplinary Punishment of Federal Employees 677

Interest Dispute Impasse-Resolution Procedures in the Public Sector 677 Mediation 678 Fact-Finding and Arbitration of Interest Disputes 678 Effectiveness of Fact-Finding and Arbitration of Interest Disputes 680 Referendum 681 Conclusions on Public-Sector Labor Relations 682 Challenges and Opportunities for Public-Sector Unions 684

Case Study 13-1: Unions Representing Public Employees 694

Case Study 13-2: Discharge for Off-Duty Conduct 695

Chapter 14 Labor Relations in Multinational Corporations and in Other Countries 701

Multinational Corporations and Transnational Collective Bargaining 702 Union Approaches to Multinational Bargaining and Employer Reactions 706 Labor Relations in Action: Core Labor Standards 707

Obstacles for Unions in Bargaining with Multinational Corporations 708 Effects of Unions on Multinational Corporations 709 Conclusions and Predictions on Transnational Bargaining 710

Globalization and Concerns about Free Trade 710 North American Agreement on Labor Cooperation (NAALC) 712

Unions in Other Countries 714 Canada 715 Mexico, Central America, and South America 719 Cuba 724

Labor Relations in Action: Two Views of Trade Unions in Cuba 725 Western Europe 725 European Union 727 Great Britain 730 Germany 731 Central and Eastern Europe Former Soviet Bloc Countries 733 Japan 734 South Korea 738 Australia 739 China 741

Classroom Exercise 14.1: Mobile Factory 755

Appendix A Collective Bargaining Negotiations Exercise 756

Author Index 759

Subject Index 762

xii Contents

Preface

This textbook is a culmination of more than 100 years of classroom teaching to more than 10,000 undergraduate and graduate college students. The eleventh edition of The Labor Relations Process reflects our original objective in writing the book: to provide stu- dents with a textbook that will generate an understanding of and appreciation for core elements of union management relationships. We have attempted to involve the student with the subject matter and to create an interest in related issues that will continue after the student completes the course. A model of the labor relations process (Exhibit 1.2) is presented in the first chapter and expanded in subsequent chapters through extensive references to academics and practitioners that focus on real-world situations and con- cerns. This provides a balance between concepts and applications for the reader.

The eleventh edition of The Labor Relations Process continues our long-standing tra- dition of being the most comprehensive text on the market.

Features of the Eleventh Edition

The objective of this text has always been to increase student involvement by focusing on applying the concepts being taught. This emphasis is unmatched by other textbooks in this area. This application generates student interest in the subject matter while enabling students to demonstrate their understanding of concepts and principles and apply this information to real-world situations. These opportunities and related efforts should sharpen readers communication skills, a desirable skill for any student, regardless of his or her academic major or intended occupation.

Application has been enhanced through Labor Relations in Action features; National Labor Relations Board (NLRB), court, or arbitration case studies at the end of most chapters; and class activity experiential exercises designed to promote active stu- dent participation in the learning process. There are updated Internet exercises called Exploring the Web at the end of each chapter to enhance student learning and appli-

cation and to create interest in independent research. The negotiation exercise with com- puter applications and the arbitration cases have been prepared for role-playing experience to promote the reality of union management relations. The book has also maintained many of the previous edition s features: a focus on currency, ethics, interna- tional issues, and real-world applications:

Chapter-Opening Vignettes. Each chapter begins with a short story or situation that prepares the reader for the chapter s subject. These encourage critical thinking and make the chapter s subject matter relevant to the student. Currency. This edition offers many opportunities for readers to become involved with the current applications of the labor relations process. For example, recent col- lective bargaining occurred with management and union officials in the auto indus- try and recent bargaining subjects such as health care costs and technological change are given expanded coverage in this edition. Ethics. Ethical issues concerning such topics as bargaining behavior, union organiz- ing, employee empowerment, and termination for union activities are addressed throughout the book.

xiii

International Labor. Chapter 14 has been updated and expanded to include changes that have occurred in Canada, Mexico, China, Australia, and the European Union, as well as the effects of the North American Free Trade (NAFTA) Agreement. Real-World Applications. The Labor Relations in Action boxes integrate current events in labor relations and have been updated with several new applications.

Key Chapter-by-Chapter Changes in the Eleventh Edition

Each chapter has been updated with current research, laws and judicial decisions, studies, and statistics. Additional attention has been given to explaining the labor relations pro- cess and influences. Following are some of the key updates to this edition:

Chapter 1 features updated information on mediators, the effect of the recent U.S. economic downturn, and its effect on the labor pool, and encourages online searches on current labor relations topics, supplemented by Internet exercises in every chapter. Chapter 2 has new information about early legal developments involving labor management relationships, the Knights of Labor, and the origin and goals of the American Federation of Labor. Chapter 3 presents recent key decisions of the NLRB and courts affecting labor rela- tions, such as classification of hospital interns and residents, graduate students in academic institutions, and supervisors for purposes of determining coverage as employees under the Labor Management Relations Act. The chapter also includes

expanded coverage of the NLRB s unfair labor practice procedure, and the concept of concerted and protected activity under the LMRA. Chapter 4 offers updates in the leadership of the American Federation of Labor- Congress of Industrial Organizations (AFL-CIO), expanded coverage of financial core membership, and right-to-work legislation. Chapter 5 covers modern union-organizing tactics, with the latest updates on union salting, card check, and neutrality agreements. This chapter addresses NLRB policies with changes from President Obama s appointees and new representation election rules. Chapter 6 explores collective bargaining preparation and behavior, including a com- parison of distributive bargaining versus mutual gain (interest-based) bargaining approaches and contract ratification procedures. There s also a new feature about the labor relations struggle for nurses and two new case studies. Chapter 7 features current information on wage and benefit trends and expanded coverage of wage incentive pay plans, such as skill-based pay, health care cost con- tainment, and pension plans. Chapter 8 covers technological change issues, efforts to foster more cooperative labor management relationships, safety and health issues, and the Americans with Disabilities Act. Chapter 9 reveals the role of the mediator as viewed through the eyes of one of the nation s prominent labor mediators. Coverage includes trends in strike activity; legal decisions affecting employees and employers rights during a work stoppage; and secondary strike, picket, and boycott activity. Chapter 10 provides the important actions for a successful workplace investigation, elements of grievance mediation, and coverage of a union s legal duty of fair representation.

xiv Preface

Chapter 11 provides insights to the real world of labor/employment arbitration; offers a critique of employment arbitration; compares employment arbitration to labor arbitration; explores the controversy over mandated employment arbitration as a condition of employment; explains Due Process Protocol; explains the guide- lines used in arbitrator decisions; and reveals the arbitrator decision s potential con- flict and accommodation with public policy and the new NLRB deferral policy. Chapter 12 provides guidelines used by arbitrators in determining just cause and their consideration of due process principles. This chapter features updates on Weingarten rights, such as the withdrawal of the NLRB s extension of Weingarten rights to nonunion (unrepresented) employees. Chapter 13 addresses dramatic changes in public sector bargaining, which have resulted from budget problems and politics. The subjects of public sector dispute resolution, privatization of public services, and homeland security issues are addressed. Chapter 14 focuses on the labor relations issues among multinational corporations in a global economy and characteristics of labor relations systems of America s major trading partners, including NAFTA members, European Union countries, Australia, China, Japan, and Korea. The chapter also covers major recent develop- ments in those countries.

Supplementary Materials

Instructor s Manual with Test Bank This supplement includes chapter outlines, answers to end-of-chapter discussion ques- tions, case notes, suggested student readings and term projects, and both instructors and students instructions for the Collective Bargaining Negotiations Exercise (available on our product support Web site). The Test Bank has been fully revised, updated, and expanded.

Holley/Ross/Wolters Product Support Website Our product support website is a robust learning and resource center for both instructors and students. The self-assessment exercises on the site include:

An Industrial Relations Orientation Self-Assessment that measures the degree of one s pro-union or anti-union sentiments. Bargaining Strategy Orientation Self-Assessment that measure one s preference for different bargaining strategies (e.g., distributive vs. mutual gain). Mediator Effectiveness Potential Self-Assessment measures the degree to which one possesses the personal characteristics attributed to successful mediators. Quizzes presented as multiple-choice and true false questions for download by the instructor allow self-assessments by students in understanding materials related to each chapters key terms and concepts.

Preface xv

Acknowledgments

We are especially grateful to the following professors for their reviews and suggestions on this revision:

Jeffrey Arthur, Virginia Tech James Benson, Boise State University Kristian F. Braekkan, Virginia Tech Richard J. Campbell, University of Rio Grande Kim Hester, Arkansas State University Dr. Miguel R. Olivas-Lujan, Clarion University of Pennsylvania Tony Vrba, Tarleton State University

We also extend our appreciation to those who made valuable suggestions for previ- ous editions: Todd Baker, John C. Bird, Mollie Bowers, Gene Brady, James F. Byers, Joseph M. Cambridge, Anthony Campagna, James Chambers, William Chase, Boyd Childress, Milton Derber, Satish Desphande, Victor Devinatz, James B. Dworkin, Randyl D. Elkin, Geraldine Ellerbrock, Art Finkle, Paul Gerhart, Dennis W. Gibson, Carol L. Gilmore, Thomas P. Gilroy, David Gray, Charles R. Greer, Marvin Hill, Jr., Wayne Hochwarter, Janis Holden, Denise Tanguay Hoyer, Thomas Hyclak, H. Roy Kaplan, Zeinrab A. Karake, Katherine Karl, Philip Kienast, John Kilgour, Toni S. Knechtges, Kenneth A. Kovach, Charles Krider, Thomas W. Lloyd, Eugene Lorge, Howard T. Ludlow, Karl O. Magnusen, Douglas M. Mahoney, Marick Masters, William Maloney, Pamela Marett, Douglas McCabe, Patrick McHugh, Frank Milman, Jonathan Monat, Roy Moore, William L. Moore, Thomas Noble, Carol Nowicki, Lou Parrotta, Dane M. Partridge, Robert Penfield, Alex Pomnichowski, Roy R. Reynolds, Robert Rodgers, Richard L. Rowan, Sue Schaefer, Machelle K. Schroeder, Peter Sherer, David Shulenber- ger, Donna M. Testa, Herman A. Theeke, Peter A. Veglahn, Suzanne M. Vest, Jeffrey L. Walls, William Werther, Elizabeth Wesman, and Carolyn Wiley.

We also wish to thank Sarah M. Philips, Cathy Wright, and Charlie T. Cook for their aid in the preparation of this book.

Finally, we would like to thank Cengage Learning for its fine work on this book. We are especially grateful to Erin Joyner, Vice President and General Manager; Michael Roche, Senior Product Manager; Brian Pierce, Content Developer; Jennifer Ziegler, Senior Content Project Manager; Kristina Mose-Libon, Art Director; Emily Horowitz, Marketing Manager; and Casey Binder, Marketing Coordinator.

William H. Holley, Jr. Auburn University

William H. Ross University of Wisconsin La Crosse

xvi

About the Authors

William H. Holley, Jr., has had research published in a variety of journals including Labor Law Journal, Arbitration Journal, Employee Responsibilities and Rights Journal, Journal of Construction Engineering and Management, and Industrial Relations. He has engaged in consulting with private and public organizations and served as an Administrative Hearing Officer in the grievance procedure of the City of Auburn, Alabama. Dr. Wolters is a mem- ber of the Labor and Employment Relations Association. Outside interests include golfing and motorcycling.

William H. Ross has taught labor relations, collective bargaining, and human resource management courses for 30 years. He teaches at the University of Wisconsin La Crosse, where he also serves as Chairperson of the Department of Management. He does research on third-party dispute resolution procedures, including mediation and arbitration, as well as the implications of technological innovations for human resource management. His research has been published in Academy of Management Review, Journal of Applied Psychol- ogy, Labor Law Journal, and Negotiation Journal. Dr. Ross is on the editorial board of The International Journal of Conflict Management and Negotiation and Conflict Management Research. He is a member of the Academy of Management, the Society for Industrial- Organizational Psychology, and other professional organizations. Dr. Ross received his B.A. from Auburn University and his M.A. and Ph.D. in Industrial-Organizational Psy- chology, with a minor in Labor and Industrial Relations, from the University of Illinois.

Roger S. Wolters is professor emeritus in the Department of Management at Auburn University, where his primary interests included labor law, collective bargaining, and dis- pute resolution. Coauthor of Labor Relations: An Experiential and Case Approach with William H. Holley, Jr., his research was published in Labor Law Journal, Arbitration Jour- nal, Employee Responsibilities and Rights Journal, Journal of Construction Engineering and Management, Industrial Relations, and other journals. Dr. Wolters has consulted to private and public organizations and served as an Administrative Hearing Officer for grievances with the City of Auburn, Alabama. He earned his B.B.A. and M.A. from the University of North Florida and his Ph.D. in Labor and Industrial Relations from the University of Illinois.

xvii

The Labor Relations Process

PART1 Recognizing Rights and Responsibilities of Unions and Management

Part 1 introduces the labor relations process that will be discussed throughout the book, placing it in historical and legal perspec- tives. It also examines the difference between union and management organiza- tions and their labor relations strategies.

Chapter 1 Union Management Relationships in Perspective

Chapter 2 The History of Labor Management Relationships

Chapter 3 Legal Influences

Chapter 4 Unions and Management: Key Participants in the Labor Relations Process

Chapter 5 Why and How Unions Are Organized

3

CHAPTER 1

Union Management Relationships in Perspective

BOB SAT IN his office staring out the window and thinking about the future. As the human resources manager of the firm, Bob had just finished preparing an announcement to be sent to all employees informing them that the company had just been sold to a larger competitor. After 20 years of service, Bob was very proud of the employee relations that existed at his company and wondered how things might change now that a larger corporation would be in charge. Although Bob s unit was not unionized, he knew that the new owner had a number of unionized facilities within its corporate structure. Bob had never thought much about what it would be like to manage in a unionized firm and whether the management strategies he had relied upon throughout his career would be as effective or even entirely legal. How might the labor relations process change if he had to deal with employees as a group through their selected union representative rather than as individuals? Would there be an effort to equalize employment terms and policies between union and nonunion facilities of the new owner? Would unions already representing employees at other similar facilities of the owner now seek to organize employees at Bob s unit? While Bob had more questions than answers about the immediate future, he did resolve to be proactive by attempting to expand his current level of knowledge about the labor relations process.

4

Questions 1. In your opinion, what is the biggest difference between managing

employees in a unionized versus nonunion firm?

2. In your opinion, does having other unionized facilities within a corpora- tion s operating units alter management s approach to labor relations at its nonunion facilities and, if so, give an example to illustrate what you mean.

Today s global economy presents many challenges and opportunities for both employersand employees. As organizations seek to use resources both efficiently and effectively, there will be inevitable tension over how best to manage those assets to benefit both ownership and employees. The effective management of human resources is critical to maintaining an organization s competitiveness. Recognition of and respect for the legitimate interests of both labor and management are an important step in building and maintaining work relationships capable of adapting to change in the competitive environment most organizations face. Stable work relationships are built upon trust between ownership and employees, which is reflected in both the actions and words of the parties.

Chapter 1 seeks to build a basic frame of reference for understanding the labor relations process by first defining the three phases of the labor relations process and then placing this process into an analytical perspective. Chapter 1 introduces the activities, focal point, participants, and influences of the labor relations process, which are discussed in detail in subsequent chapters. The chapter ends with a discussion of the current status of union membership and the relevance of labor organizations in today s economy.

Phases in the Labor Relations Process

The labor relations process involves managers (representing the ownership interests) and a labor organization (union), selected by employees as their exclusive bargaining agent to rep- resent their interests. Managers and union representatives jointly determine and administer work rules. Where employees are not represented by a union, work rules are typically deter- mined unilaterally by the employer with the opportunity for individual bargaining between an employee and his or her employer at the employer s discretion. The negotiation and administration of work rules demonstrate considerable variation across public- and private- sector organizations in the United States, reflecting unique aspects of each organization.

The labor relations process includes three basic phases:

1. Recognition of the legitimate rights and responsibilities of union and manage- ment representatives. Employees have a legal right to form and join a union or to refrain from doing so (see Chapters 3 and 5). Labor law also sets forth the rights and responsibilities of management and union officials to abide by applicable laws and labor agreement (contract) terms. From a union s perspective, phase 1 may be the most impor- tant phase because without gaining legal recognition as the exclusive bargaining represen- tative of a group of employees in phase 1, the process does not proceed to phases 2 and 3.

2. Negotiation of the labor agreement, including appropriate strategies, tactics, and impasse resolution techniques. Contract negotiation involves union and management

5

representatives jointly determining work rules (policies) governing the parties rights and responsibilities affecting wages, hours, or other terms and conditions of employ- ment (discussed in Chapters 6, 7, and 8). The outcomes of such negotiations have an important impact on a firm s labor costs, management s rights, and covered employees standard of living. Most interest disputes (i.e., a dispute over what the terms or condi- tions of employment or work rules will be) are resolved voluntarily by union and man- agement negotiators during the bargaining process. Strikes, lockouts, mediation, and interest arbitration are examples of impasse resolution techniques (discussed in Chapter 9) that can be used to resolve an interest dispute. Phase 2 of the labor relations process generally receives the most media attention even though phases 1 and 3 are equally essential.

3. Administration of the negotiated labor agreement the interpretation and applica- tion of labor contract terms on a daily basis. Once contract terms have been settled in phase 2, there is a need to apply those terms every day during the stated term or dura- tion of the labor agreement. The contract enforcement phase of the labor relations pro- cess is generally accomplished through daily union and management interactions and, when necessary, the use of a grievance-arbitration procedure to resolve rights disputes (i.e., disputes over the interpretation or application of a contract s terms, discussed in Chapters 10, 11, and 12). Resolving rights disputes accounts for the most time and energy spent by union and management officials in the labor relations process and usually involves a larger number of these officials than the preceding phases.

Of course, not all labor management relationships progress smoothly through these three phases. Indeed, employees and their chosen union representative at some public- and private-sector organizations have a difficult time moving from the recognition of an employee bargaining representative (phase 1) through the remaining two phases of the process.1

The phases of the labor relations process are subject to qualitative variation as well. In the first phase, for example, organizations vary in the amount of mutual trust and respect union and management officials have for each other s goals. In the second phase, negotiations are carried out with different levels of intelligence, preparation, and sincere desire to achieve results. The third phase may vary as to how well the negotiated labor agreement is understood and effectively administered in good faith by both parties. There are probably as many different relationships as there are union and management officials negotiating labor agreements.

Elements in the Labor Relations Process

Exhibit 1.1 provides a framework for the labor relations process. The elements shown can be applied to the labor relations activities at a single or multiple facilities owned by a single company, or in an entire industry. The exhibit cites three major elements: (1) the negotiation and administration of work rules, which are the focal point of labor relations; (2) the key participants in the process, who are the union and management organiza- tions, employees, third-party neutrals, and branches of government (administrative, leg- islative, and judicial); and (3) the constraints or influences affecting the parties in their negotiation and administration of work rules.

Focal Point of Labor Relations: Work Rules Any academic discipline needs a focal point so that research, investigation, and commen- tary can generate applicable insights. Labor or industrial relations can become a

6 PART 1 Recognizing Rights and Responsibilities of Unions and Management

broad topic including many academic concerns. For example, sociologists have examined employee alienation; psychologists have investigated causes of job satisfaction and work motivation; economists have studied wage determination; and political scientists have assessed the impact of union and management as interest groups attempting to influence government policy and legislative outcomes.

John Dunlop s book Industrial Relations Systems provides a useful focal point for these diverse academic approaches. Dunlop suggested that the center of attention in labor relations should be the work rules negotiated between management and union offi- cials. Work rules facilitate the implementation of operational plans designed to accom- plish an organization s strategic goals. Work rules determine employees standard of living and the work environment within which employees will spend a substantial por- tion of their time. Today external factors (e.g., state of the economy, technology, interna- tional forces) play an increased role in determining the substance and type of work rules created by union and management representatives.

It is important to understand the influences determining the creation and particular content of work rules.2 Work rules can be placed in two general categories: (1) rules governing compensation in all its forms (e.g., wages, overtime payments, vacations, holi- days, shift premiums) and (2) rules specifying the employees and employers job rights and obligations, such as no employee strike or employer lockout during the term of the labor agreement. This second category of rules may specify performance standards,

Work Rules

Exhibit 1.1 Elements in the Labor Relations Process

CHAPTER 1 Union Management Relationships in Perspective 7

promotion qualifications and procedures, job specifications, and layoff procedures. Addi- tional examples of work rules are furnished in Exhibit 1.2.

Compensation work rules, such as a negotiated wage rate, often capture the attention of employees and the media because they are negotiation outcomes that are easier for most people to understand and compare. Union and management officials, however, may attach equal or greater importance to work rules regarding the second work rule category, job rights, and obligations. Managers are often adamant about retaining control over key oper- ating decisions such as determining the number and types of employees, equipment and technology decisions, geographic location of company operations, and operating hours. In order to appreciate the importance of these rules, consider the following three examples: Managers at Company A are interested in obtaining a work rule that permits production employees to perform minor repairs, instead of requiring higher paid maintenance employees to do the tasks. At Company B the union wants to reduce forced overtime; they want workers to have the final decision about whether and when they will work over- time. About 39 percent of union contracts contain limitations on the right of management to require employees to work overtime. At Company C union leaders are seeking work rules that would change the standard work week to less than 40 hours required to earn full-time pay and benefits.3 Why would the union at Company C seek a shorter work week? Assuming the number of employee work hours required to meet a firm s workload is relatively stable, reducing the number of hours considered to be an employee s full work week would theoretically require additional employee positions (and potentially more due- paying union members) or create more overtime work opportunities for employees.

Work rules can vary depending upon whether they are common or unique in the sub- ject matter addressed and vague or specific in the wording used to express the rule. Because work rules are the outcome of joint negotiation between union and management represen- tatives, neither party typically gets the exact contract language it originally preferred. Com- promise language is often worded more generally, which allows room for interpretation. However, vague wording can lead to subsequent grievance disputes during the contract s term as management implements its interpretation of contract terms through job decisions and that interpretation is challenged by employees or their union representative through the grievance dispute process. The wording or interpretation of work rules can also change over time in response to changes in operating environments and the need for greater flexibility.

For example, the work rules for airline flight attendants today would most certainly dif- fer from the following three work rules formulated in the 1930s: (1) swat flies in the cabin after takeoff, (2) prevent passengers from throwing lighted cigar butts out the windows, and (3) carry a railroad timetable in case of plane trouble. Today, the flight attendants union is concerned with issues such as too much luggage stuffed into overhead compartments, which may fall and hit a passenger, and passenger use of cell phones during flights, which could pose a security risk by making it easier for terrorists to communicate with each other.4

An analysis of work rules helps to explain the complex output of the labor relations process. The formal labor agreement in this sense represents a compilation of jointly negotiated work rules. However, as discussed in Chapter 10, labor relations activities are not limited to the negotiation of work rules. The labor relations process also includes the everyday interpretation and application of work rules and the resolution of any disputes arising over such decisions.

Concern over health care workers exposure to H1N1 flu, the Ebola virus, and acquired immune deficiency syndrome (AIDS) represents working conditions that create a need for appropriate work rules to limit patients and health care workers exposure. A nurses union could seek to negotiate health and safety work rules aimed at protecting members from unnecessary occupational exposure or ensure the availability of appropri- ate treatment when exposure does occur.5

8 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Exhibit 1.2 Examples of Work Rules Job or Industry

Classification Work Rule

Government Installation

The employer agrees to furnish adequate protective clothing for employees required to work outside during rain, sleet, hail, or other atmospheric conditions detrimental to health or safety, provided the employee subjected to such assignments normally and historically performs the majority of his or her work assign- ment indoors. Employees who normally perform a majority of their work outdoors shall furnish their own protective clothing

Electricians Where the work assignment of employees who have been assigned a permanent reporting location requires travel to and between other work locations and/or return to their permanent reporting location, the time consumed by the employees in such travel shall be counted as time worked

Health Care In situations where a department head determines that it is necessary for an employee to use bilingual skills, those employees who have been previously determined to possess those skills at a level necessary for the assignment, and who are so assigned by the department head, shall be eligible to receive additional compensation of 3 percent above the applicable pay rate for the time period of the assignment

Communications The company subscribes to the principle that a well-informed union leadership promotes harmony and efficiency in union management relations. The company agrees to notify the union of any proposed changes affecting rates of pay, hours of work, and other conditions of employment. It is understood that the company has the sole right to institute all such changes as it may consider necessary, subject to the terms of this agreement. The union agrees to cooperate with the company at all times in maintaining a high degree of service to its customers and through conscientious endeavor and application of effort to strive for the lowest possible costs

Professional Baseball

The player and the club recognize and agree that the player s participation in certain other sports may impair or destroy his or her ability and skill as a baseball player. Accordingly, the player agrees that he or she will not engage in professional boxing or wrestling, and that except with the written consent of the club, he or she will not engage in skiing, auto racing, motorcycle rac- ing, sky diving or in any game or exhibition of football, soccer, professional league basketball, ice hockey, or other sport involv- ing a substantial risk of personal injury

Television The latest version of the script will be made accessible to the player in the casting office 24 hours in advance of a scheduled reading or immediately after the scheduling of the interview, whichever occurs last

Manufacturing When employees are called to work at a time other than their regular reporting time, and after having clocked out, they shall be paid two hours plus one and one-half their straight time rate for all hours worked, but in no event will less than four hours at the straight rate be paid

Cemeteries In all cases where a grave is dug straight down, a second person shall be assigned to assist the digger after a depth of five feet is reached

CHAPTER 1 Union Management Relationships in Perspective 9

Companies and unions are also negotiating no-smoking rules in the workplace both as a health benefit and a means of reducing health care costs associated with smoking- related insurance claims. In 1908, a Columbia University professor insisted that the dele- terious effects of tobacco are greatly exaggerated, a belief that prevailed for the next 70 years. Now, union and management officials and possibly arbitrators at thousands of facilities jointly determine whether the issuance of a no-smoking policy is reasonable and whether an employee was properly disciplined or discharged for violating the rule. For example, in Kansas City, an arbitrator ruled that a collective bargaining agreement between the fire department and the firefighters union that allowed smoking in designated areas of fire stations prevailed over a newer law banning smoking inside work facilities.6

A majority of employers engage in one or more forms of electronic monitoring of employee work performance. Computer monitoring software, bar code scanners, video cameras, and pressure-sensitive plates have enabled management to monitor employee performance in various ways, such as counting the number of key strokes made on com- puter keyboards, listening to employees telephone conversations with customers, following truck drivers via Global Positioning Satellite (GPS) signals, or viewing computer files, e-mail messages, and Internet connections on company computers. Employers have several legitimate interests for monitoring. These include evaluating employees work performance, seeking to eliminate illegal employee misconduct, protecting their company s trade secrets, and defending the firm s business reputation. Employees have a legitimate interest in ensuring that their union representatives negotiate appropriate work rules to govern the time, place, and method of such electronic monitoring as well as the use of such informa- tion to reward or penalize employees work performance. Employees also have a legitimate interest in discussing wages, hours, and working conditions among themselves electroni- cally (e.g., on social media Web sites) without fear that managers are electronically moni- toring their discussions in order to punish those who criticize the company.7

Key Participants in the Labor Relations Process Through the organization s structure, managers represent the interests of the ownership as well as their own self-interests. Under a legal doctrine known as agency theory, man- agers are delegated authority by the owners to make decisions required to operate the organization. Because managers represent the owners interests in employment relations matters, U.S. managers do not generally have a legally protected right to unionize.

Managers work at various levels within the organization from first-line supervisors or department heads to the highest ranking management official (e.g., chief executive officer). Labor relations managers are typically found at corporate, divisional, and plant levels. Companies with both represented (union) and unrepresented (nonunion) employees or facilities often prefer the term human resources manager rather than labor relations manager. Organizations that operate different facilities in different geographic locations may emphasize standardizing some work rules (e.g., management rights) at all locations while insisting that other work rules, such as a wage rate for a particular job classification, be based on local labor market conditions. Thus, wages would vary across facilities.

Plant-level labor relations managers implement these corporate directives, but they must also deal with other managers at each facility s location (particularly production and maintenance managers and first-line supervisors) who direct the daily work activities of hourly employees.

As will be further discussed in Chapter 10, first-line supervisors or department heads typically hear and attempt to resolve employees grievances on the production floor. In some cases, lower-level managers are surprised to learn that higher-level man- agement officials have overturned their decisions. Alert union leaders may use dissension

10 PART 1 Recognizing Rights and Responsibilities of Unions and Management

or lack of clear communication among different levels of management officials to influ- ence labor relations activities and the company s position toward unions.

Management consultants are individuals hired from outside the organization to provide some special service or expertise. The activities of management consultants in the labor relations process are varied and sometimes controversial, ranging from restruc- turing personnel practices in nonunion firms (in the absence of any active union- organizing campaign) to designing and presenting the employer s response throughout a formal union-organizing campaign. During an organizing campaign, both union sup- porters (often including professional union organizers) and union opponents (often including managers and managerial consultants) try to persuade employees to support (or oppose) forming a labor union; the campaign usually ends with a secret-ballot vote, supervised by the federal National Labor Relations Board (NLRB). One union estimate found that managerial consultants were involved in 75 percent of union-organizing cam- paigns.8 Employers who hire managerial consultants to thwart union-organizing efforts are more likely to engage in a number of legally and ethically questionable tactics. Employers who make threats of plant closings are more likely to hire outside consul-

tants, discharge union activists, hold captive audience meetings and supervisor one- on-ones, establish employee involvement committees during the organizing campaign, make unilateral changes in benefits and/or working conditions, use bribes and special favors, use electronic surveillance, threaten to report workers to the INS [U.S. Immigra- tion and Naturalization Service], and show anti-union films. 9 Controversy occurs over the consultants effectiveness. Research shows that the use of a management consultant can reduce the probability of a union win in very closely contested elections, but it does not appear to be as big an influence on union election outcomes as some other factors such as election-unit size (i.e., how many people will vote in a union representation elec- tion) or relevant labor market conditions.10

Effectively managing an organization s labor relations is an important part of the ownership goal of being competitive in the industry or market. Organizations with a quality labor management relationship may gain a competitive advantage over firms that lack the ability to gain cooperation and consensus from employees necessary to effectively implement change to meet new competitive pressures.

Union representatives, usually elected by the members to represent their employ- ment interests, are another key participant in the labor relations process. As elected representatives, union officials must consider the varied and sometimes conflicting inter- ests of individual employees within the bargaining unit seeking to build a consensus for decisions that benefit the majority of constituents. Unlike managers who are appointed by higher-level managers, union officials are subject to the political pressure of majority rule if they wish to be reelected to a union leadership position in the future. Unions as democratic organizations do experience internal differences of opinion on policies and priorities that union officials must learn to effectively manage. Every union has its own history, traditions, personalities, and accepted practices that can lead to observed differ- ences across union organizations as well as within a particular union. While different unions may share common interests and positions on many issues of common concern, each union tends to value maintaining its own independence and sense of self- determination in representing the interests of its membership.

Certainly some of the most significant participants in the labor relations process are nonmanagerial employees because they often determine whether a union is even present in an organization (representation elections and union-organizing drives are discussed in Chapter 5), whether a negotiated labor agreement is accepted or rejected, and the extent to which a threatened strike is actually carried out (see Chapter 9).

CHAPTER 1 Union Management Relationships in Perspective 11

Employees are treated here as a separate category because they may demonstrate dual loyalty to both their employer and union organization.11 Most employees want their organization to be successful but also value the ability of their union to voice employee concerns to managers or demand that employees be treated fairly both in com- pensation and work activities. For example, public employees such as firefighters, police, and teachers may feel torn between the critical or professional nature of their jobs and the strategic advantages of a strike. Auto workers may agree that operating costs, includ- ing labor costs, must be reduced for their employer to remain competitive. Yet they expect their union representative to ensure that when profitability improves employees will fairly share in that improvement. Employees varied interests help shape the exis- tence and content of particular work rules and thus employees are considered a third key participant in the labor relations process.

The government acting through its different branches executive, legislative, and judicial at the federal, state, and local levels represents another key participant in the labor relations process. As discussed in Chapters 2 and 3, the government s role in regulating labor relations has gradually increased over time as the importance of labor relations to the effective functioning of the economy has become more apparent. In the public sector, government officials also serve as managers in the labor relations process, representing both taxpayers and the general public s interests (discussed in Chapter 13).

In the private sector, the federal government has traditionally played an indirect role in determining the outcomes of work rule negotiations, preferring to allow union and management representatives to determine such work rules through the bargaining pro- cess. Governments in many other industrialized countries (see Chapter 14) take a much more active role in both regulating and determining the outcomes of specific work rules (e.g., amount of paid vacation time). The federal government s hands-off approach in most private-sector bargaining situations is based on the belief that most management and union officials are better equipped than their government counterparts to assess their needs and limitations and reach a mutually acceptable labor agreement.

Although the federal government does not dictate the terms of a negotiated labor agreement, laws, judicial decisions, and administrative agencies, such as the NLRB, can influence work rules and the ability to exercise legally granted rights. The following three examples illustrate this: First, legislation to deregulate the trucking and airline industries has contributed to reduced union membership and economic gains for employees.12 Sec- ond, the Age Discrimination in Employment Act prohibits union and management offi- cials from negotiating a mandatory retirement age of 60 years. Third, although some coal miners have long believed that females working in mines would be bad luck, union and management officials would be violating sexual discrimination aspects of the Civil Rights Act if they negotiated a provision prohibiting female employees from working in mines.

Third-party neutrals (i.e., mediators and arbitrators) represent a final key partici- pant in the labor relations process. Differences between union and management officials that arise in negotiating the terms of a labor agreement (interest disputes) or administer- ing its provisions (rights disputes) are often resolved with the aid of a third-party neu- tral. Mediators (discussed in Chapters 9 and 13), often supplied by the Federal Mediation and Conciliation Service (FMCS) or a state or private mediation agency, may be used to help resolve interest disputes during contract negotiations. The mediator assists the union and management officials to clarify and resolve their differences, thus promoting a voluntary settlement. The mediator does not possess any binding legal authority to require the parties to settle an interest dispute, but he or she will offer advice to help each party assess its own priorities and the costs or risks associated with failing to reach a voluntary agreement.

12 PART 1 Recognizing Rights and Responsibilities of Unions and Management

An arbitrator is a third-party neutral hired by union and management representa- tives to make a final and binding decision on a disputed issue. While final and binding arbitration may occasionally be used to resolve the terms of a new contract (an interest dispute ) (see Chapter 9), most often it is used to resolve grievances ( rights-type disputes ) arising during the term of a labor agreement over the interpretation or application of the contract s language (see Chapters 11 and 12).

Three Basic Assumptions Underlying U.S. Labor Relations

To better understand the U.S. labor relations system and the actions of its participants, it is helpful to bear in mind certain underlying assumptions that affect the thinking and behavior of most individuals within the system. Whereas the degree of support by some participants for these three basic assumptions has varied over the course of U.S. labor history, these assumptions have been the basis for a majority consensus for many years.

First, the free enterprise (capitalist) economic system in the United States creates an inherent conflict of interest between employers (owners) and employees. Both employees and employers seek to advance their own self-interests. Employers seek to maximize their return on capital invested, while employees seek to advance their pay, working con- ditions, and job security. Most of the interests employees seek to advance through the collective bargaining process represent an increased cost to the employer which, unless offset by cost savings elsewhere or higher productivity, may reduce the investment return desired by ownership. This creates a natural tension within a capitalist economic system between the pursuits of employees and employers legitimate interests. Such conflict should not be viewed in a negative light but rather as simply a reality of business opera- tion which must be managed effectively. The presence of some degree of inherent con- flict between employer and employee interests should also not be viewed as precluding opportunities for cooperation between the parties. Both employees and employers share a common interest in ensuring that the organization is competitive. Maintaining a suffi- cient number of qualified and motivated employees is necessary for an employer to attain desired organizational goals (e.g., productivity, product or service quality). Profits in turn permit an organization to provide competitive wages, benefits, and working con- ditions to help ensure the recruitment and retention of qualified employees. Ideally, employees perceive their own self-interest as best advanced by seeking to advance the interests of the organization as a whole.

A second underlying assumption of the U.S. labor relations system is that employees in a free and democratic society have a right to independently pursue their employment interests using lawful means. Employees should have a right to determine for themselves what is in their best interests and to pursue means of attaining such interests so long as the goals pursued and tactics used are legal. Only by allowing individuals to pursue their legitimate interests can a society foster the necessary support for prevailing economic, social, and political systems used to sustain the country. Employees may choose to pur- sue their legitimate interests on an individual basis or collectively by joining a labor organization. Managers may prefer to work with employees individually and avoid deal- ing with a union, in order to contain any wage disagreements to only a few people and to avoid negotiating widespread workplace rule changes. However, co-workers may see it as unfair when individual employees with unique skills negotiate special work arrange- ments or pay rates (sometimes called idiosyncratic deals). Further, perceived injustice has been shown to predict unionization. Therefore, such idiosyncratic deals can be chal- lenging to negotiate and implement for managers.13

CHAPTER 1 Union Management Relationships in Perspective 13

A third underlying assumption of the U.S. labor relations system is that collective bar- gaining provides a process for meaningful employee participation through independently chosen representatives in the determination of work rules. Employees in the U.S. labor relations system are not required to form or join a labor organization for the purpose of engaging in collective bargaining, but they are permitted to do so when a majority of the employee group expresses such a preference. In the absence of collective bargaining, indi- vidual bargaining may occur between an employer and his or her employee. Labor history suggests that most employees are at a relative bargaining power disadvantage in individual bargaining when confronted with the greater resources of their employer, but each employee is free to determine the degree of satisfaction that his or her own individual bar- gaining experience provides. Many unrepresented employees, for a variety of reasons, do not attempt to engage in individual or collective bargaining, thereby permitting the employer to unilaterally (without bargaining) establish work rules, setting the terms and conditions of employment. In limited cases, employment terms may be mandated by gov- ernment action (e.g., minimum wage law, safety, and health standards).

Exhibit 1.3 presents a list of some basic characteristics of the private-sector U.S. labor rela- tions system. These characteristics will be discussed in further detail throughout the text.

Constraints or Influences Affecting Participants Negotiation and Administration of Work Rules The labor relations participants who affect the development of work rules are influenced by external variables or constraints in their labor relations activities (see the outer circle of Exhibit 1.1). These constraints and influences can sometimes affect one another and may relate to a particular firm, local community, or society in general. The following discussion furnishes a few illustrations of how these constraints and influences can affect the existence and content of work rules.

State of the Economy: National, Industrial, and Firm-Specific Indicators The state of the economy is usually referred to by indicating movement among such quan- titative indicators as inflation, unemployment, and productivity. During the 1980s, the United States witnessed a rising inflation rate, which influenced the negotiation of work rules notably, union insistence that a labor agreement include provisions to increase wages if increases occur in the cost of living (see Chapter 7). In the early 1990s, the focus of negotiations was on wage increases, enhancing employee benefits, and containing rising health care costs. More recently, with slow economic growth, low inflation, and rising job losses, union and management negotiators returned to an emphasis on job security and other job protection issues. Many employers, citing competitive pressures, have successfully negotiated labor cost reductions involving wages, benefits (e.g., pensions, health care), and inefficient work rules (e.g., restrictive job descriptions).

Two economic indicators that can affect work rules are interest and unemployment rates. An increase in interest rates can slow home and industrial construction projects. The Federal Reserve Board voted to raise interest rates 17 times between June 2004 and June 2006 out of concern that too rapid economic growth might trigger an increase in consumer inflation.14 More recently, the Federal Reserve Board has cut interest rates to historically low levels in an effort to spur economic growth by making capital more available at reasonable cost. If employees wage gains do not at least match the rate of increase in consumer prices (inflation rate), the purchasing power of employees declines, adversely affecting employees standard of living. If interest rates are raised to fight

14 PART 1 Recognizing Rights and Responsibilities of Unions and Management

inflation, employees will pay more for consumer debt (e.g., credit cards, auto, or home loans). A union might respond to such a rising interest/inflation rate environment by seeking to negotiate pay improvements that exceed the rate of inflation as well as by offering group discount rates to members on benefits such as credit cards or various types of consumer loans. In a low interest/inflation rate environment, a union might focus more on job security issues knowing members are more likely to be satisfied with moderate wage and benefit improvements that match the low inflation rate.

The unemployment rate affects work rules that provide job protection. Chapter 6 discusses ways in which the unemployment rate can affect the bargaining power of union and management officials. If this and other economic measures pertaining to the gross national product, productivity, cost of living, compensation at all employee levels, and exports and imports are unfavorable, unions will be more likely to accept bargaining concessions. By the same token, strong product sales, economic growth, and low unemployment tend to strengthen union bargaining power as employers have more reason to compromise to avoid any disruption in the production of current products or services.

The National Bureau of Economic Research has determined that the most recent recession affecting the U.S. economy began in December 2007 when the national unem- ployment rate was 4.9 percent. By October 2009, the national unemployment rate had risen to 10.2 percent, representing 15.7 million individuals the highest rate since the recession in the early 1980s. By September 2014, the unemployment rate had declined to 5.9 percent, representing 9.3 million individuals. An additional 698,000 individuals were classified as discouraged workers who had given up searching for a job because they

Exhibit 1.3 Basic Characteristics of the U.S. Private-Sector Labor Relations System

Primarily a bilateral process (union and management) governed by a framework of labor laws. For example, LMRA, Labor Management Reporting and Disclo- sure Act (LMRDA), Railway Labor Act (RLA), OSHA, Family Medical Leave Act (FMLA), ERISA, ADA, Norris-LaGuardia Act, and anti-discrimination laws.

A highly decentralized bargaining structure that results in a large number of labor contracts negotiated most often between a single employer and a spe- cific union to cover a defined group of employees (bargaining unit) at a specific geographic location.

Recognition of the key legal principles of majority rule and exclusive bargaining representation. No union can gain the right to represent a group of employees for purposes of collective bargaining without first demonstrating the majority support (50 percent 1) of the employees in that group. Once recognized, the union is the only legal representative authorized to negotiate work rules with the employer to establish the work group s terms and conditions of employment.

Permits the use of economic pressure (e.g., strike, lockout, picketing, and boy- cott) to aid the parties (union and management) in reaching a voluntary negoti- ated settlement of interest disputes over what the terms and conditions of employment will be.

Encourages the use of final and binding arbitration, if voluntary grievance nego- tiation efforts fail, to resolve rights disputes that arise during the term of a con- tract over the interpretation or application of the labor agreement s terms.

Characterized by significant employer opposition to employee efforts to orga- nize and bargain collectively through representation by an independent labor union chosen by the employees themselves.

CHAPTER 1 Union Management Relationships in Perspective 15

believed no jobs were available for them.15 While unemployment rates are expected to continue to decline as economic recovery occurs, the decline is expected to be gradual, extending over several years, as employers are typically reluctant to add new jobs or fill existing vacancies until the recovery in product and service demand is well established.16

The skills, wage levels, and availability of employees in a relevant labor market can affect negotiated work rules. Management is often concerned with ensuring that an ade- quate supply of labor of the skill levels required to operate is available in a particular com- munity. For example, a firm needing skilled employees from a relatively low-skilled labor market supply would probably wish to negotiate work rules regarding apprenticeship pro- grams or other forms of job training. Management would also consider negotiating a rea- sonable employee probationary period (e.g., 60 120 days) within which it could terminate a union-represented employee who cannot learn the job and perform adequately, with no union right to protest the action through the labor contract s grievance procedure.

One example of a labor management cooperative effort to assist employees in adjust- ing to changes in labor market forces is the Alliance for Employee Growth and Develop- ment, Inc., created in 1986 as a joint enterprise by American Telephone & Telegraph (AT&T), the Communication Workers of America (CWA), and the International Brother- hood of Electrical Workers (IBEW) to help displaced workers. Today, the Alliance also includes employers Alcatel-Lucent, OFS Optical Fiber, and Avaya.17 The Alliance has pro- vided training and development services to more than 175,000 individuals, helping to pre- pare them to handle new technologies, job skills training (e.g., technical, customer service, teamwork), and career transition training. Other outstanding examples include the United Auto Workers (UAW)/General Motors Skills Centers and the joint training programs of Ford Motor Company and the UAW. The Service Employees International Union (SEIU) has partnered with Kaiser-Permanente in California to provide training to upgrade the skills of workers in entry-level jobs, such as housekeeping. Trainees can then move into health care related jobs such as medical assistant and acute care nursing assistant that offer higher pay and more career potential. The vacancies created in entry-level jobs are filled with those transferring from part-time positions and from newly hired unemployed and economically impoverished workers who have also received training. In the building trades, unions have played a major role in training skilled workers. Because workers move from employer to employer on a regular basis, single construction companies have less financial incentive to train employees who may end up working for a competitor. Therefore, the unions, through their training and apprenticeship programs, provide an obvious contribution to the general national welfare. In fact, unions and their contractors outspend their nonunion counterparts by a ratio of 50 to 1 in training investments.18

Both management and union representatives should share an interest in establishing competitive compensation rates for comparably skilled employees within a relevant external labor market and internally within the firm itself. Externally, when wages are increasing, both the firm and the union may want to pay comparable wage rates. Employees generally see this as fair and owners see it as a way to attract and retain good workers. In cases where the employer faces significant labor cost competition from nonunion or foreign employers, a union may have to agree to compensation reduc- tion that will permit a unionized employer to remain competitive in pricing goods or services sold in the firm s product or service markets. Internally, a job with higher skill or responsibility requirements should earn a higher compensation rate than jobs with less skill or job responsibility requirements.

The labor relations process can be affected by the product or service market where the company either sells its product or purchases key elements required for production of its products or services. Management would be more vulnerable if a strike occurred at

16 PART 1 Recognizing Rights and Responsibilities of Unions and Management

a time when major customer sales were anticipated or on-time delivery of promised goods was critical to meet a customer s needs. For example, management at a brewery would prefer to avoid a labor agreement expiring, possibly leading to a strike, during the summer months, when significant beverage sales are anticipated. A public school sys- tem would much prefer a contract expiration date in early summer after the regular school year has ended, rather than risk a possible work stoppage disruption if the con- tract expiration date coincided with the first day of the new school year.

A second dimension of the product market, the source of key elements for product manufacture, can be a factor affecting union members perceptions of job security. For example, the UAW union is concerned over the fact that many of the parts utilized in U.S. automobiles are being manufactured in other countries, creating job opportunities for foreign workers but not for UAW-represented employees.19

Another important consideration in the labor relations process is the financial market, the arena in which the employers (and unions) seek to borrow funds to finance their invest- ment strategies. Companies must consider exchange rate money value differences among countries, which affect the profitability of plant location and sales marketing decisions. Exchange rates between countries (see Chapter 14) can alter companies investment strategies because exchange rates affect comparative wage rates and, consequently, the comparative labor costs of production. As an example, when the peso in Mexico was devalued by as much as 50 percent of the U.S. dollar, the labor costs of production in Mexico declined dramatically and made producing goods in Mexico more attractive and economical for multinational corporations. A strong euro currency valuation in comparison to the U.S. dollar helped drive up labor production costs in European countries such as Germany, encouraging automakers such as Daimler AG (Mercedes) and Bavarian Motor Works (BMW) to build production plants in the United States.

When a company wants to expand its plant capacity and increase jobs, it often has to borrow money in the financial markets at the same time it may request wage conces- sions from a union (see Chapter 7) or request the elimination of work rule restrictions to improve productivity (see Chapter 8). Unions must be able to perform financial valuation analysis to support, for example, an employee stock option plan (ESOP) (see Chapter 7), or anticipate the advantages or disadvantages of the sale or merger of an existing employer s operations with another competitor or private equity fund from the perspective of union-represented employees.

Labor unions have been able to use their financial resources and become active in the financial markets as a source of capital. With U.S. employee pension funds valued in excess of $7 trillion, many unions believe that decisions on how to invest those funds ought to take into consideration the effect of capital investments on the economic and job security interests of union members.20 Thus, one goal of many unions is to invest pen- sion funds in firms that are already unionized. For example, the United Steelworkers have created a regional investment fund of $100 million called the Heartland Labor Capital Project, which has the following objectives: (1) invest in regional business and protect jobs, (2) promote economic awareness as well as training workers and unions and raising the level of influence on economic development, (3) stimulate regional economies, (4) encourage regional business enterprises by involving both labor and its allies to support institutional development, (5) provide capital to enterprises where unions have created more democratic and sustainable practices, and (6) provide prudent returns to investors.21

Other unions, including the American Federation of Labor-Congress of Industrial Organi- zations (AFL-CIO), have similar programs to promote jobs for union members.

Perhaps the most immediate and persistent influence on the creation of work rules is the technology of a particular workplace. Technology has four dimensions: (1) equipment

CHAPTER 1 Union Management Relationships in Perspective 17

used in the operation, (2) the pace and scheduling of work, (3) characteristics of the work environment and tasks to be performed, and (4) information exchange. Consider, for example, the major equipment found at a steel mill blast furnace, which requires a very high temperature for operation. Such a furnace cannot simply be turned on and off like a household oven. Often several days are required for either reaching the high operating temperature or for cooling the furnace for maintenance. This equipment characteristic affects the facility s work rules. In essence, steel mills must operate 24 hours a day, 7 days a week a situation prompting related work rules, such as wage premiums for working the night shift, weekends, or holidays. Other continuous operating organizations like hospitals, hotels, or large retail centers may face similar work rule issues.

In some cases, the introduction of equipment reduces or eliminates employees in a particular job classification. This situation occurs when industrial robots handle tasks formerly performed by employees. A rather common application occurs in the auto industry, where mechanically joined arms perform spot welding, spraying, machine unloading, and assembly. Unions faced with having membership replaced by robots have increased related bargaining demands to protect their members job security such as more paid time off; fewer hours comprising a regular work week (e.g., 35 or 38 hours versus a 40-hour week); or job transfer or retraining rights, enabling displaced workers to fill available vacant employment opportunities.

Technological advances in computer and communications have made many profes- sional jobs (e.g., accounting, engineering, and radiology) capable of being outsourced to workers at outside firms and even in different countries. Some workers benefit from new job opportunities, while others may lose their job as their employer seeks to reduce labor costs by outsourcing work formerly performed by its own employees.

Changes in technology have raised the level and type of skill requirements for many workers. While most competing firms have access to the same technology, the ability to apply that technology using the skills and brainpower of their employees ultimately determines whether any real competitive advantage is achieved. Technology improve- ments have created a greater demand for more highly skilled workers who are able to assume multiple responsibilities, while reducing the demand for strictly manual labor. Although, both profits and productivity growth have improved, average real hourly com- pensation for American workers has not changed significantly over the last 20 years, cre- ating increasing stress on workers seeking to maintain a middle class standard of living.22

Technological change can also result in certain jobs requiring fewer skills to perform. In the supermarket industry, electronic scanners are used to change item prices, record customers purchases, and maintain product inventory counts. Radio Frequency Identifica- tion (RFID) chips combined with smart shelf systems can send electronic signals to notify personnel when store shelves are depleted. These activities result in reduced skill requirements and compensation for cashiers as well as a need for fewer employees. Inter- estingly, self-service checkout stations in grocery stores, which allow one cashier to do the work of up to six, have met with some consumer resistance; many customers simply prefer to have their groceries scanned and bagged by grocery store employees.23

The pace and scheduling of the workday also affect the work rules of certain occupa- tions. For example, bus companies optimizing their productivity and revenue would concen- trate on rush-hour traffic (6:00 9:00 A.M., 3:00 7:00 P.M.) when buses are likely to be filled with passengers. However, problems would remain in scheduling work because many bus drivers might have a daily eight-hour work schedule of three hours on, three hours off, one hour on, two hours off, and four hours on. Because of the nature of the work, most labor agreements in related industries have provisions pertaining to the permissible number, length, and possible compensation of intervals (times off) between daily work assignments.

18 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Computer operations can help both union and management officials in their daily labor relations activities. Union officers can use computer applications to maintain mem- bership and dues records, as well as word processing for communication to the member- ship. Union and management officials can also use computer applications in the areas of contract negotiations (costing the various proposals, writing contract language) and administration (maintenance and research of grievances and arbitration decisions).24

Union officers also use computer applications for communicating with the union s cur- rent and prospective members. E-mail, Internet, weblogs ( blogs ), and social networking Web sites are used to keep union members and the public informed of progress during negotiations. Also, both union and management spokespersons frequently use these commu- nication tools during union-organizing campaigns. (See Chapter 4, which discusses how unions use computer technology.) For example, the United Food and Commercial Workers (UFCW) Local 21 in Washington state has used its own Web site (http://www.ufcw21.org/) and a Facebook page (https://www.facebook.com/2013GroceryBargainingUFCW21) to bring attention to its complaints about nonunion grocers, including Wal-Mart.

One survey of U.S., U.K., Irish, Australian, and New Zealand labor unions finds that 97 percent have a Web site, 78 percent have an e-mail newsletter, and about one-half use Facebook. Less than 10 percent of union leaders use UnionBook, a social media site for union organizations (http://www.unionbook.org/); 13 percent post YouTube videos. The AFL-CIO has an extensive Web site (http://www.aflcio.org/) which enables workers, union members, and students of labor and employment relations to become informed regarding current developments.25 Students needing to research current labor relations topics for a class assignment may find the Labor Relations in Action box in this chapter helpful.

International Forces As participants in the global economy, both labor and management must continuously monitor international developments and trends to determine how their respective inter- ests may be affected and how best to respond. Many U.S. firms are dependent on foreign sales or production to generate profits. The international financial crisis in recent years has affected U.S. and foreign currency values as well as the availability and costs of nec- essary operating capital. Economic cycles have differing effects: a weak U.S. dollar value may make U.S.-produced goods and services cheaper to export but drive up the cost of imported goods and services. A strong U.S. dollar has opposite consequences in that U.S.-produced goods are more expensive overseas and imported goods become cheaper. After several years of decline, the dollar had begun strengthening; at the end of 2014, the U.S. dollar was again considered strong against other currencies. Finally, a recession in other countries may reduce the demand for U.S. goods and services in those countries, thus adversely affecting employment levels at U.S. exporting firms.26

The wars in Iraq and Afghanistan have affected thousands of Americans, including union members called up as reservists. Although companies are required to retain the reservists positions, some companies may be reluctant to hire and train new employees who may have to be laid off upon return of the reservists. Instead, companies may require other employees to work more overtime or temporarily reclassify employees (through pro- motions or transfers) to fill the positions left vacant by the call-up of the reservists.

Unions are concerned about the job security and economic impact of free trade agreements such as the North American Free-Trade Agreement (NAFTA; discussed more in Chapters 2 and 14) involving the United States, Canada, and Mexico. While imports from Mexico have clearly increased the U.S. trade deficit with Mexico since the enactment of NAFTA, the effect of NAFTA on U.S. employment and wages tends to be less clear.27 Unions tend to stress fair trade rather than free trade in discussing ways

CHAPTER 1 Union Management Relationships in Perspective 19

to ensure that domestic companies can compete effectively in global markets. In addition to fostering more cooperation with foreign-based labor organizations, U.S. unions also seek to promote policies aimed at raising pay, working conditions, and environmental and safety standards applicable to workers in foreign countries.28 Not only does such an approach serve to raise the living standards of workers in their own countries, it also serves to reduce the labor cost advantage of moving work done by U.S. workers to those foreign countries, thus enhancing job security for U.S. workers.

International trade is a major influence in the labor relations process. Imports and exports, trade deficits, exchange rates, capital investments, and jobs are interconnected. As an example, the U.S. trade deficit with China increased from $6 million in 1985 to $318 billion in 2013.29 Using trade surplus funds to purchase U.S. Treasury notes, China has become the U.S. government s largest foreign creditor.30 Some economists believe that China s currency is undervalued by 25 to 40 percent.31 Coupled with a low-wage work- force, this provides China with a competitive advantage in trade with the United States.

Major retailers, such as Target, Best Buy, and Wal-Mart, depend on low-priced imports from China. These imports help to keep inflation rates low and have helped the Federal Reserve to keep interest rates in the United States at their lowest levels in four dec- ades.32 A strong U.S. dollar has made imports appear cheap and has contributed to the growing U.S. current account deficit (mainly comprising the trade deficit but including capital income and transfers). With large and persistent external deficits, the United States has swung from being the world s largest creditor nation to its largest debtor, with net for- eign liabilities now at about one-fourth of GDP (gross domestic product). 33

The trend toward globalization has been characterized as free-market capitalism, which places enormous competitive pressures on all firms that become part of the global economy. Multinational firms that sell globally are pressured to produce globally by seg- menting their production chains and outsourcing each segment to the country that can produce cheapest and most efficiently. Newly industrialized countries are able to com- pete in price-conscious markets by paying lower wages, offering fewer benefits, and pro- viding less ideal working conditions than those available in the United States. In addition, due to the diversity and customization made possible by computer-based tech- nology, the cost advantages of American-style mass production have been reduced.34

Labor unions have been active in the international arena since their beginning. American labor unions have a long history of resisting the importation of foreign pro- ducts. Over the last two centuries, organized labor has been one of the more protection- ist institutions in America. This position should not be a surprise because unions are democratic organizations that must reflect the interests and needs of their members, many of whom believe that their jobs are endangered by foreign imports. Most union members have little inclination to accept assurances that they will find another compara- ble job or that, in the long run, everyone will be better off. Organized labor unsuccess- fully opposed trade legislation such as NAFTA and has consistently encouraged Congress to ensure that trade agreements with other countries contain safeguards for workers rights and environmental protections applicable to foreign trading partners. North American unions continue to support positions of the International Labor Orga- nization (ILO), a United Nations-sponsored labor federation headquartered in Geneva, Switzerland, which has adopted core labor standards promoting basic workers rights such as freedom of association, collective bargaining, the right to earn a living wage in a safe workplace, and the prevention of forced child labor.35 Organized labor continues to press the World Trade Organization and the International Monetary Fund to forge links between international trading rights and labor standards.36

20 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION Getting Online with Labor Relations Research

The number of electronic sources for locating informa- tion on collective bargaining and labor relations is con- stantly increasing. The most efficient method for finding reports in journals, magazines, newspapers, and other periodical literature is through the use of online research databases, which are offered by most university and college libraries to their students, faculty, and staff members. You will choose your sources depending on the time period you want to cover, the amount of infor- mation you need, and the availability of resources in your area. Libraries still maintain a collection of print indexes, but most of these are being replaced by online versions, which allow for faster searching and less maintenance by the library.

Online databases have several advantages over print indexes, including currency, the ability to print in a variety of formats, the ability to combine terms and other ways to limit (e.g., date, language, and publication title) to broaden or narrow a search, generate biblio- graphic citations by style, and the ability to e-mail or download articles. Online databases that can be searched from college libraries can also usually be searched from a dorm room, home, or office with appro- priate user authentication. A few disadvantages are the commitment of time to become skilled in their use, the availability of only selected content in some databases, and overlapping titles from database to database.

Subscriptions to online databases that provide access to indexing or the full text of articles on business topics are sold by a number of vendors, including Lex- isNexis, ProQuest (formerly University Microfilms or UMI), OCLC (FirstSearch), Gale (part of Cengage Learn- ing), and EBSCO. Databases specifically devoted to labor relations cases and issues are provided by the Bureau of National Affairs (BNA) and Commerce Clear- ing House (CCH). Most of these databases are provided through the Internet, although there are a few that are available electronically only on CD-ROM.

General business indexes are extremely useful in locating articles on labor relations. Business Periodicals Index, originally published by the H.W. Wilson Com- pany, is a print index that is still found in most libraries and, for many years, was the only business index likely to be found in a small library. The online version of the current index is Wilson Business Abstracts with Full Text; earlier years are accessible via a separate data- base: Business Periodicals Index Retrospective: 1913 1982. Wilson merged with database provider EBSCO in 2011.

Other general business periodical databases that are useful for finding trade publications are ABI/ INFORM Trade & Industry (ProQuest), Business & Industry (Gale Cengage Learning) and the Business News portion of LexisNexis Academic. Both Lexis- Nexis and its competitor, WestLaw Next (Thompson Reuters) publish law-related information and court case summaries. Trade journals such as Automotive News, Supermarket News, Editor & Publisher, and Modern Healthcare can provide related insights into labor issues and unions such as the United Autowor- kers (UAW), UFCW, Newspaper Guild, and American Nurses Association, respectively.

ABI/INFORM Global, produced by ProQuest, was one of the first electronic databases to provide an index to both scholarly journals and practitioner maga- zines pertaining to business. EBSCO Business Source Complete is another comprehensive business periodical database that offers 2,300 journals and general busi- ness periodicals including Business Week, Forbes, For- tune, American Banker, and many others. EBSCO has exclusive rights to the electronic version of Harvard Business Review. Both ABI/INFORM and EBSCO data- bases feature several academic journals in the field of labor and employment relations. Leading academic jour- nals include Industrial Relations, Industrial & Labor Rela- tions Review (ILR Review), Journal of Labor Economics, British Journal of Industrial Relations, Labor Law Jour- nal, Employee Relations, Labor History, Journal of Col- lective Negotiations, and Journal of Labor Research.

Newspapers are an excellent source of business information because of the detailed analysis of events not often found in other periodical literature. Because newspapers are often published daily, they offer the latest news about ongoing labor negotiations or work stoppages. Citations to articles in leading newspapers may be found in print indexes, whereas a rapidly increasing number of electronic indexes provide the complete text and indexing of national and regional newspapers. Many major newspapers maintain online Web sites that offer free access to some stories (e.g., the Washington Post, USA Today, Detroit Free Press, and Los Angeles Times). The text of the Wall Street Journal is offered by several sources, such as Lexis- Nexis Academic and ABI/INFORM Complete.

LexisNexis Academic and Regional Business News (EBSCO) are reliable sources to consult for arti- cles from regional newspapers about a particular event published in the city or region where the event took

21

Public Opinion Public opinion is a factor that also affects the labor relations process. The mass media (television, radio, newspapers, movies, music) represent an important influence within a community, serving as both a generator and conduit of community opinion. Media sources often tend to perpetuate a negative stereotype of unions. When put together, the collective media image portrays unions as greedy and corrupt institutions, eager to strike, protective of unproductive workers, heedless of America s need to compete inter- nationally, and generally outmoded in a society that would have no disruptive class antagonisms were it not for a few self-aggrandizing union hot-heads. 37 The media are profit-making businesses, and at least one prominent union official contends that this orientation biases the reporting of labor relations activities:

The media tend to cover collective bargaining as if it were a pier six brawl. The intri- cate moves and trade-offs that really make up bargaining aren t as newsy as impas- sioned rhetoric or a picket line confrontation. Reporters are given little training in covering collective bargaining. They are told to look for the news the fist fight, the walkout, the heated exchange and, as a result, frequently miss the story, which is the settlement. Every union proposal is a demand, every management proposal is an offer. 38

An analysis of 40 years of New York Times columns concerning labor unions agreed with the preceding quotation, as it found that the newspaper had increasingly concen- trated on strike activities and had exaggerated the frequency of strikes.39 Media coverage of labor issues often treats the subject matter as a consumer issue, focusing on how con- sumer prices or the availability of goods or services may be affected rather than focusing on the concerns of the workers affected by the labor issue.40

From the 1930s through the mid-1970s, the percentage of Americans who approve of unions was 60 percent or higher. Between the mid-1970s and 2008, approval has

place. Regional publications often offer a different per- spective from that of a national newspaper.

The Daily Labor Report, published by BNA in both print and online versions, is extremely useful in research- ing current labor relations topics. Coverage includes leg- islation pending in Congress, discussion of court cases, bargaining settlements, statistical information, and other items relating to labor. BNA also publishes the Labor and Employment Law Resource Center online, providing the full text of labor and employment cases, sample contract clauses, and manuals for answering day-to-day labor and employment law questions.

Government sources and libraries can also prove valuable. NLRB cases and policies can be searched directly from the agency s Web site. FLRA.gov has descriptions of cases involving federal employees who are covered under the Federal Labor Relations Act. Sev- eral states have searchable databases for state public- sector grievance cases; for example, Wisconsin cases

can be found at the Wisconsin Employment Relations Commission Web site. Archived full-text collective bar- gaining agreements can be downloaded at the Institute for Research on Labor and Employment at the Uni- versity of California Berkeley (http://www.irle.berkeley. edu/library/CBA.html). A similar database of collective bargaining agreements is found at the Digital Com- mons of the Industrial & Labor Relations School at Cornell University. The Digital Commons also contains reports from groups such as the Fair Labor Association, an anti-sweatshop group, which monitors production facilities to assess their compliance with the organiza- tion s labor standards.

Exploring the Web Internet exercises at the end of each chapter in this book will give you a chance to use some of these resources. They can be helpful in exploring different labor relations topics further to enhance your understanding of labor and employment relations.

22

hovered between 55 and 65 percent. Public approval of labor unions declined at the start of the recent economic recession to an all-time low of 48 percent in August 2009, down from 59 percent one year prior; however, it has since climbed steadily to 54 percent in 2013.41 These results vary by political party affiliation with a majority of Democrats (75 percent) approving of unions in 2013 compared to 51 percent of Independents and 34 percent of Republicans. Approximately two-thirds of Americans believe that unions are helpful to their members, but less than 50 percent believe unions are helpful to the companies where workers are organized and to the U.S. economy in general. About one- third of those surveyed in 2013 desired to see unions exert the same or more influence in the United States in the future compared to today; 25 percent said that unions should have the same amount of influence and 39 percent said that they should have less influence.

Public opinion of institutions in general is low in the United States, with more than one-third of the public currently expressing confidence in only 5 out of 17 surveyed American institutions: the military (74 percent), small business (62 percent), the police (53 percent), the church or organized religion (45 percent) and the medical system (34 percent). Only 22 percent of the public expressed a lot of confidence in organized labor about the same as big business (21 percent). Confidence in unions did rank ahead of the public s opinion of Congress (7 percent), television news (18 percent), and news on the Internet (19 percent).42 In a separate 2009 Harris Poll, adults surveyed believed that a number of groups exerted too much power and influence over govern- ment in Washington, D.C., including big companies and political action committees (85 percent each), news media (75 percent), entertainment and sports celebrities (70 percent), and labor unions (54 percent).43

Public opinion, like other external influences, can affect one or more phases of the labor relations process, as well as the content of negotiated work rules. After experienc- ing a bitter, well-publicized strike between Caterpillar and the UAW, the mayor of Peoria, Illinois feared employers would not locate in his community: We had worked so hard to make this a city with the image of having a cohesive relationship between labor and management, a place [in which] people should think about expanding their businesses or opening new ones. Now comes this strike, which is going to damage our reputation. In some cases, a community may stress its low union membership level or the anti-union attitudes of citizens as a benefit to encourage business organizations to expand or relocate there. For example, commenting on UAW efforts to organize a Volkswagen plant in Chattanooga (see Chapter 5 for details), Tennessee Senator Bob Corker explained why he spoke against unionization, It was critical that workers knew the potential long-term economic consequences of this decision on the state. If the UAW came into our community, attracting suppliers and other prospective companies would be far more difficult . On Feb. 14, [2014] the workers made their voices heard, with 53% voting against allowing the UAW to represent them. I believe that the workers understood that they were nothing more than dollar signs for the UAW. 44

Union officials are aware of the significant influence that public opinion can have on the labor relations process. Albert Shanker, former president of the American Federation of Teachers, indicated why he wrote the first of 1,000 columns entitled Where We Stand. After strikes were conducted by his union, Shanker reflected,

I became one of the best-known figures in New York City, but people saw me only as a militant union leader urging teachers to strike, refusing to settle, going to jail. In late 1968, I became convinced that I had been dead wrong in believing that the pub- lic s opinion of me didn t matter. Public schools depend on public support. And the public was not likely to support the schools for long if they thought teachers were led

CHAPTER 1 Union Management Relationships in Perspective 23

by a powerful madman . I decided to devote some time and energy to letting the public know that the union s president was someone who read books and had ideals and ideas about how to fix the schools.45

Union officials seek to enhance public opinion in three general ways: (1) monitoring and reacting to negative comments made in the media, (2) getting organized labor s pos- itive message out to the community, and (3) forming alliances with various groups in the community. For example, the AFL-CIO supported a march sponsored by the Rainbow PUSH Coalition in New Orleans, Louisiana, to encourage faster government action to rebuild homes and communities devastated by Hurricanes Katrina and Rita.46 The AFL-CIO has created its own Gulf Coast Revitalization Program, committing $1 billion dollars over seven years to fund housing and economic development initiatives. Another example is the BlueGreen Alliance, which is a national strategic partnership between environmental groups (e.g., Sierra Club) and labor unions (e.g., SEIU, United Steel- workers, CWA, and the American Federation of Teachers).47 The Alliance s goal is to expand the number and quality of jobs in the green economy. Organized labor con- tinues to work with community-based religious, civil rights, and environmental groups on issues of shared interests, such as improving health care access and affordability, immigration reform, and ensuring economic and social justice on the job and within the communities in which workers live.48

Unions have also become more sophisticated in creating their own media campaigns to support union membership and bargaining activities. Some efforts such as WakeUpWalMart.com or WalMartWatch.com target a specific company, while others target a specific issue, such as the Health Care Hustle Web site sponsored by Working America, an affiliate of the AFL-CIO representing 1.5 million employees who currently are not members of an organized bargaining unit.49 Some form alliances with indepen- dent Worker Centers. For information about such alliances, see the appropriate Labor Relations in Action box.

In some cases, organized labor has cultivated alliances with business organizations. A coalition including Wal-Mart, AT&T Inc., Intel Corporation, the SEIU, and the CWA worked to encourage public policy changes that would provide affordable health care coverage to all Americans.50 Other examples include the Public Works Alliance, which involves labor unions and contractors cooperating to obtain federal funds for road and bridge improvements in the Long Island, New York, area and a labor management alliance in Rhode Island seeking to save the funding of a valued job train- ing program.51

Union Membership

Union membership in the United States has shown a steady, gradual decline as a propor- tion of the total labor force (i.e., all employed persons 16 years of age or older). In 2014, union membership was 14.6 million, or 11.1 percent of the 131 million wage and salary employees in the total U.S. labor force.52 In 1945, union membership was about 36 per- cent of the total labor force. One partial explanation of this trend is that while the num- ber of union members has declined slowly (e.g., from 16.1 million in 2002 to 14.6 million in 2014), the number of people in the workforce has risen (e.g., from 122 million in 2002 to 131 million in 2014). Thus, even if union membership had held constant, it would comprise a smaller percentage of an expanding workforce. Union density, the propor- tion of a total group (e.g., national labor force, industry, or geographic region) comprised of union members, is one measure of relative union strength or potential influence.

24 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION Unions and Worker Centers

During the past decade, over 200 Worker Centers have formed. These nonprofit organizations provide ser- vices for groups of workers in their communities or in specific types of low-paying jobs. For example, there are Worker Centers for taxi drivers, day laborers, undocu- mented workers, farm workers, and fast-food employ- ees. They are funded through charitable donations and grants, often obtaining financial support from religious, political, environmental, and civil rights groups.a Worker Centers typically educate low-income and immigrant workers about their legal rights and about social ser- vices; some also advocate that workers join labor unions. Thus, Worker Centers represent a hybrid between social work organizations, political action/advo- cacy groups, and union recruiting centers. As one Worker Center described its activities,

If, for example, we discover that the most common problem in the restaurant sector is employer fail- ure to pay extra for overtime work, we may suggest to the [Worker Center] Board that we make that failure the focal point of a [publicity] campaign. (p. 112) b

Many individual unions support Worker Centers financially, and through joint cooperative actions. In 2006 and again in 2013, the AFL-CIO endorsed the idea of cooperating with Worker Centers. This alliance has produced some notable successes. For example, since the 1980s, many New York taxi firms have reclas- sified their drivers from employees to independent contractors ; this change means that the drivers are unable to join a union. Instead, many of the taxi drivers have formed the New York City Taxi Workers Alliance (NYTWA), a type of Worker Center. In 2006, the group partnered with the AFL-CIO and began securing improved working conditions from individual firms. In 2012, the NYTWA negotiated a fare increase from the New York Taxi and Limousine Commission, with the increase designated for a new type of benefit: health coverage.c

Because Worker Centers do not negotiate labor contracts with businesses or have ongoing relationships with specific employers, legally, they are not labor unions. Therefore, they are free to use tactics that tradi- tional unions cannot use, such as a secondary boy- cott where the group attempts to convince the public to boycott one firm s goods in order to persuade that firm to either not do business with a second company or pressure the second company to change its labor pol- icies. Thus, Worker Centers are not subject to the reg- ulations of the Labor Management Relations Act.d

Neither are they required to abide by the Labor Management Reporting and Disclosure Act (LMRDA; also called the Landrum-Griffin Act); this means that they do not have to disclose financial information to the same degree as labor unions.e They do not even have to garner the support of a majority of workers in a firm. If the leaders of a Worker Center believe that there are, say, safety problems at a particular employer, they can immediately take action.

What sorts of actions do Worker Centers do? A few tactics are common:

(1) Publicizing problems in the media. Protests for higher wages for fast food workers in the summer of 2014 were largely organized by Worker Centers in major U.S. cities.

(2) Boycotts and picketing. Besides drawing the pub- lic s attention to issues of concern, these efforts can hurt a company financially. For example, a four-year boycott of Taco Bell in Florida by the Coa- lition of Immokalee Workers led to Taco Bell restau- rants agreeing to pay more for tomatoes, with the increase going into farm workers pay.

(3) Lobbying for government action. This has resulted in increases in the minimum wage in some cities as well as California and Washington State.

(4) Class-action lawsuits. Lawsuits filed on behalf of employees can sometimes result in out-of-court voluntary settlements that improve wages or work- ing conditions and sometimes these settlements include employer donations to the Worker Center.

(5) Union organizing. Sometimes Worker Centers help organizers get jobs within a nonunion firm with the primary goal of forming a union a tactic that is called salting.

Employers see this set of tactics as a form of harassment, led by outside groups who are not accountable to anyone. A union is accountable to its members who are employees of the company; if a majority of the members want the union to pursue a course of action, then they can encourage its leaders to do so. However, because Worker Centers are not unions, they do not need to have the support of a majority of the employees. Critics complain that the lack of legal regulation, accountability, and officially sanctioned union bargaining rights for Worker Centers means that employers cannot negotiate a compromise settlement. Many employers complain that their profit margins are too thin to afford some of the demands these groups make yet they can t afford to hire

25

One estimate predicts that unions would need to organize 1 million new members annually to increase the union density level in the total labor force by 1 percent.53

Exhibit 1.4 shows union membership data trends since 1975.

Exhibit 1.4 Union Membership Trends, 1975 2014 (in thousands)

Year Total Employment

Union Members

Percentage Union Members

Percentage Represented for Bargaining

1975 75,703.9 16,778 22.2

1980 87,479.5 20,095 23.0 25.7

1985 94,520.5 16,996 18.0 20.5

1990 103,904 16,740 16.1 18.3

1995 110,038.1 16,359 14.9 16.7

2000 110,038.1 16,258 14.9 14.9

2005 125,889.3 15,685 12.5 13.7

2010 124,073 14,715 11.9 13.1

2013 129,110 14,528 11.3 12.4

2014 131,431 14,576 11.1 12.3

Data set is based upon information in the Current Population Survey (CPS) compiled by the Bureau of Labor Statistics, U.S. Department of Labor.

SOURCES: U.S. Department of Labor, Union Members in 2010, News Release, January 21, 2011; U.S. Department of Labor, Union Members in 2013, News Release, January 24, 2014; Barry Hirsch and David Macpherson, Union Membership, Coverage,

Density, and Employment among All Wage and Salary Workers, 1973 2006, Unionstats.com, 2007, p. 1 at http://www.trinity. edu/bhirsch/unionstats/.

attorneys, lobbyists, and advertising agencies to fight these tactics either. Consequently, some owners, managers, and critics (like Worker Center Watch ) view Worker Center tactics with distain, likening them to extortion.f

Even within the labor movement, the alliance between Worker Centers and traditional unions is often tenuous. Some Worker Centers are dominated by activists who are suspicious of both capitalism and of what they see as overly bureaucratic unions. At others, leaders worry about being co-opted by traditional unions. Unions have criticized Worker Centers for refer- ring the unemployed to low-wage nonunion employers. Consequently, while both types of groups cooperate to improve poor workers wages and working conditions, such cooperation has not yet resulted in substantial membership gains for unions.g

It will be interesting to see how this develops over the upcoming years. Will Worker Centers remain a set

of minor players in the labor movement? Or will they grow and redefine the labor movement in the twenty- first century?

aRobert J. Grossman, Leading from Behind? HR Magazine, 58 (12), Dec., 2013, pp. 37 41. bAlice B. Gates, Integrating Social Services and Social Change: Lessons From an Immigrant Worker Center, Journal of Community Practice, 22(1), 2014, pp. 102 129. cAvendaño, Ana, and Jonathan Hiatt, Worker Self-Organization in the New Economy: The AFL-CIO s Experience in Movement Building with Community-Labour Partnerships, Labour, Capital & Society, 45(1), April, 2012, pp. 66 95. dEli Naduris-Weissman, The Worker Center Movement and Traditional Labor Law: A Contextual Analysis, Berkely Journal of Employment & Labor Law, 30(1), 2009, pp. 232 335. eMax Mihelich, Worker Centers Are Center of Attention, Workforce, 92(11), Nov., 2013, pp. 24 25. fRyan Williams, Worker Center Watch calls on Florida Attorney General to Investigate CIW, Worker Center Watch News, Nov., 2013. Accessed Oct. 28, 2014 at: http:// www.workercenterwatch.com/wcw-calls-on-fl-attorney-general-to-investigate-ciw/. gFine =Janice R. Fine, New Forms to Settle Old Scores: Updating the Worker Center Story in the United States, Relations Industrielles/Industrial Relations, 66(4), Fall, 2011, pp. 604 630.

26

Unions typically represent a higher number of employees than are actually union members because a simple majority of employees must support a union in order for that union to gain the legal right to represent the entire employee group (called a bar- gaining unit ) for purposes of collective bargaining. While no employee can legally be required to become a full active member of any union, if that employee is a member of an employee group whose majority has chosen to be represented by a union, then all members of that group would be covered by the labor agreement negotiated by that union and the employee group s employer. In 2014, 1.6 million employees had jobs cov- ered by a collective bargaining agreement (labor contract) but were not union members themselves.54 Almost half of these individuals were government employees.

In 2014, 7.3 million (6.6 percent) of over 111 million private-sector employees were union members, while 7.4 percent of private-sector employees were represented by a union for purposes of collective bargaining.55 A similar number of union members were employed in the public-sector (7.2 million), but the union density was greater, with union members comprising 35.7 percent of total public-sector employment. Approximately 39.2 percent were represented by a union for purposes of collective bargaining. The higher union representation among public-sector employees varies by level of public employment, with 45.5 percent of local government employees, 32.8 percent of state employees and 31.6 percent of federal employees represented by a union for purposes of collective bargaining. Union membership among these groups is 41.9 percent for local government employees, 29.8 percent for state employees, and 27.5 percent for federal employees. Public-sector labor relations issues and trends will be discussed further in Chapter 13.

The gradual decline or stagnation in union membership has been attributed to three broad factors: (1) structural changes in the labor force, (2) improved management prac- tices in business organizations, and (3) political and legal conditions governing the work- place. Of these three explanations, research suggests that changes in the structure of the labor force may be the most important.56 Since 2008, job losses due to the economic recession resulted in the loss of many union members, particularly in the manufacturing and construction industries.57

Structural Changes in the Economy Employment has shifted from traditionally unionized industries (manufacturing, rail- roads, and mining) to professional and service-related industries (e.g., health care, legal, education, food preparation, personal care and service, building and grounds cleaning and maintenance, and protective services).58 Many of the fastest growing occupations are at opposite ends of the level of education and skills continuum required for effective job performance. The problems of defending a shrinking number of high wage manufacturing jobs are different from organizing the growing ranks of lower-wage ser- vice workers. But what they have in common is the need to confront industry with one union that can bargain hard and solve problems. 59

Most business organizations in the United States are small, with 88 percent of firms having fewer than 20 employees and 98 percent of firms having fewer than 100 employ- ees.60 Union membership has traditionally been concentrated in the 2 percent of firms that account for 43 percent of all jobs in the economy. Efforts to increase union membership in small firms is both time consuming and more expensive for labor organizations.

Demographic trends affecting the size and composition of the labor force can also affect union membership trends. The proportion of the labor force comprised of individuals 55 years and older is expected to increase while the proportion of individuals in the 16 24 and 25 54 age groups is expected to decline.61 Over the period from 1992 to 2014, the proportion of the U.S. labor force comprising men declined from 54.6 percent to 51.7 percent, while

CHAPTER 1 Union Management Relationships in Perspective 27

women s proportion increased from 45.4 percent to 48.2 percent. These percentages are expected to remain virtually unchanged through 2022. The percentage of Whites in the work- force changed little, from 77.1 percent in 1992 to 79.2 percent in 2014; yet, it is expected to drop to 60 percent in 2022. In 2014, Black, Asian, and Hispanic workers comprised 12.0 per- cent, 5.7 percent, and 16.4 percent of the workforce. By 2022, groups of Black, Asian, and Hispanic origin groups will increase their representation in the labor force to an estimated 12.4 percent, 6.2 percent, and 19.1 percent of the labor force respectively. Unions will need to be able to attract and retain new members from these groups of employees to maintain or increase current union density levels in the future.

In 2014, 24.7 million part-time workers comprised about 19 percent of the total labor force.62 Unions represented 13.6 percent of full-time workers but only 6.6 percent of part-time workers for purposes of collective bargaining in 2014. Among these, 12.3 percent of full-time workers and 5.8 percent of part-time workers are union members.63

Research demonstrates that growth in part-time employment has a small, but significant, negative impact on union density, although this negative effect declines as the number of hours of work increases to 20 or more per week.64

LABOR RELATIONS IN ACTION Are Unions Still Relevant?

The answer to the provocative question of whether unions are still relevant in today s economy may depend on who you ask. Andrew Stern, past president of the SEIU believes the need for unions today may be greater than at any time in the past 75 years.

I think American workers want a voice on their job. The question is: Will unions change to become better partners with employers to respond to what is now a global economy where more people went to work in the U.S. in retail than in manufacturing? We want to find a 21st century new model that may look more like a European model, that is less focused on individual grievances, more focused on industry needs. We don t see our employers as enemies. We need to build successful employers [and] as a part of that you need to be involved and have a voice, and every- one needs to share in the success of an employer, not just the share-holders and executives.a

The AFL-CIO shares the belief that unions are just as important today as ever and views one important union role as safeguarding workers past gains while seeking a fair share of future prosperity.

Through unions, workers win better wages, bene- fits, and a voice on the job and good union jobs mean stronger communities. Unions have made life better for all working Americans by helping to pass laws ending child labor, establishing the eight-hour day, protecting workers safety and health and helping to create Social Security, unemployment insurance and the minimum wage, for example. Unions are continuing the fight today to improve life for all working families in

America.b A survey of Canadian employees reported the top three advantages of unions were that they made health and safety, job security, and benefits a lot better on the job.c While agreeing that it was important for workers to have a voice on the job, more Canadians preferred an employee association form of representa- tion that would take up problems on behalf of workers with management than the traditional Canadian union model.

Employers, particularly those who currently are non- union, are more likely to argue that unions today are no longer necessary. the protections unions used to seek, such as from unfair dismissal and dangerous work- places, have with labor s ardent support been taken over by government. d What were once considered sig- nificant employee pension and health care benefit gains under union contracts are now referred to as high legacy costs by unionized employers in industries such as air- lines and autos, making those employers less competi- tive and threatening job security.e

Ultimately, what matters is how employees will answer the question of whether unions are still relevant. The issue of why employees join a union will be explored further in Chapter 5.

aKris Maher, Are Unions Relevant? Wall Street Journal, January 22, 2007, p. R-5. bAFL-CIO, A Quick Study of How Unions Help Workers Win a Voice on the Job, Unions, 101 (accessed August 13, 2010), p. 1 at http://www.aflcio.org/joinaunion/ union101.cfm. cUyen Vu, Employees Want a Collective Voice, but Not Necessarily a Union, Survey Says, Canadian HR Reporter, 16(20), 2003, pp. 3, 11. dRobert J. Grossman, Do Unions Pay? HR Magazine, 50(5), May 2005, p. 49. eMichael Barone, Big Labor, RIP, Wall Street Journal, July 28, 2005, p. A-10.

28

Changing Management Practices Another reason often given for stagnant or declining union membership is that more organizations are learning how to operate their businesses on a nonunion basis. Some- times this entails moving some or all operations to less-unionized geographic areas of the United States (e.g., the Southwest and South). More firms are trying to be proactive in recognizing and addressing employee interests and concerns. Managers are also adopting human resource management practices, including aggressive anti-union cam- paigns (see Chapter 5), to keep their firms nonunion.

Some union officials indicate that employers often use labor law loopholes to fore- stall or negate free employee union choice through secret-ballot elections. For example, using pre-election procedural time delays, contesting election results, lengthy appeals, and delays in union attempts to negotiate a first contract settlement once union recogni- tion is granted are possible under the Labor Management Relations Act (LMRA) (see Chapter 3). One analyst makes a comparison with the political process: Suppose U.S. political elections were legally structured so that access to potential voters was denied to one political party (analogous to the union), while it was granted to the other one for eight hours a day at one s place of work. The second political party (analogous to man- agement) could force the electorate to listen to campaign speeches (captive audience meetings), while the opposing party was denied access.65

Changing Legal Environment Employment law changes that have expanded employees rights Passage of the Ameri- cans with Disabilities Act (ADA), Equal Employment Opportunity Act, Occupational Safety and Health Act (OSHA), Employee Retirement and Income Security Act (ERISA), Lilly Ledbetter Fair Pay Act, and other laws have helped employers to argue that unions are less necessary today. Indeed, many unions appear to be committing more of their resources to serving the needs of their current members than to organizing new members.

There is an ongoing debate within the union movement regarding the proportion of resources that ought to be devoted to organizing new members versus providing enhanced services (e.g., negotiating contracts; researching wage, benefit, and working condition issues; processing contract grievances; monitoring political issues) to currently represented members. Each union s membership must decide if organizing new employees is in their best interests when these efforts would require the use of scarce union organization funds earmarked for present members services. Mary Kay Henry, the president of the SEIU, has made union organizing the organization s primary goal, with the union investing $250 mil- lion annually in organizing activities.66 Because unions are political organizations and union leaders are elected by the current membership, the incentive to organize new mem- bers is often less than the incentive to provide services to current members.67

Although union membership has experienced a gradual decline as a percentage of the total labor force, many labor unions have responded by increasing their union- organizing activities. Unions are attempting to improve the ways in which they relate both to their own members and to employers with whom they have bargaining relation- ships.68 The social significance of unions can also be assessed in general terms by consid- ering what the consequences would be if unions were absent from our society. With no organized voice for workers interests to counterbalance the economic interests of employers to reduce labor costs, will the improvements gained over the previous century continue, or will they be subject to erosion and lax enforcement? Labor unions have his- torically functioned in the United States as a countervailing power necessary to maintain some balance between employer and employee rights and responsibilities.

CHAPTER 1 Union Management Relationships in Perspective 29

Summary Although unique to the particular labor management activities, attitudes, and relationships at each organiza- tion (discussed more in Chapter 4), the labor relations process includes three key phases or steps: recognition of the legitimate rights and responsibilities of union and management representatives, negotiation of a labor agreement, and daily administration of the terms of that negotiated labor agreement.

The labor relations process focuses on jointly nego- tiated and administered work rules that pertain to com- pensation and employees and employers rights and responsibilities. The labor relations process is flexible enough to permit negotiated work rules to vary, thus accommodating the unique characteristics of a particular industry, job classification, geographic setting, or exter- nal environmental conditions. The labor relations pro- cess is dynamic, which enables bargaining relationships to adapt to changing competitive conditions.

Union and management officials represent two key participants in the labor relations process along with employees, government, and certain third-party neu- trals such as mediators and arbitrators who aid in resolving interest and rights-type disputes. Employees are particularly important in the labor relations process

because they determine whether a union will be chosen to represent their employment interests. Employees typically demonstrate some degree of dual loyalty to both their union and employer, which helps to deter- mine the organizational effectiveness of each. However, there may be certain critical times in a bargaining relationship when each employee will have to decide which side they are on.

Participants in the labor relations process are influ- enced by several variables such as technology (equip- ment, pace and scheduling of work, the work environment and tasks to be performed, and informa- tion exchange); labor and product markets; international forces such as trade agreements or armed conflicts; public opinion; and prevailing economic conditions.

The current status of labor unions can be assessed from both statistical and general standpoints. A pro- longed decline in the proportion of the total labor force comprised of unionized employees has occurred in the United States. However, this trend and its related general explanations (employment shifts; business organizational practices; and economic, legal, and political conditions) do not indicate that unions have lost their societal significance.

Key Terms labor relations process, p. 5 interest disputes, p. 6 rights disputes, p. 6 work rules, p. 7 managers, p. 10 management consultants, p. 11 union representatives, p. 11 employees, p. 11

dual loyalty, p. 12 government, p. 12 third-party neutrals, p. 12 mediators, p. 12 arbitrator, p. 13 economy, p. 14 discouraged workers, p. 15 labor market, p. 16

product or service market, p. 16 financial market, p. 17 technology, p. 17 international forces, p. 19 public opinion, p. 22 Worker Centers, p. 24 union density, p. 24 employment-at-will, p. 39

Discussion Questions

1. Exhibit 1.1 illustrates the focal point of the labor relations process and many variables that affect the process. Select an academic discipline such as political science, economics, or sociology, and indicate three specific ways the discipline could add insights into the labor relations process.

2. Think about a job you have performed and dis- cuss some of the external variables (see the outer

circle of Exhibit 1.1) that influenced the work rules required on that job.

3. The text outlines three basic assumptions under- lying the labor relations process in the United States. To what extent do you agree or disagree with these assumptions? Does your response dif- fer depending on whether you think about the question from the perspective of an employer or an employee?

30 PART 1 Recognizing Rights and Responsibilities of Unions and Management

4. Discuss your opinion regarding whether unions are still relevant and necessary in today s work environment. What other means might be used to ensure employee voice in the workplace?

5. Can an individual be both pro-union and pro- employer, or does being pro-union mean one has to be anti-employer? Can an individual be anti- union and still legitimately claim to support pro- employee interests?

Exploring the Web

Labor Relations from Several Points of View

1. Public Opinion Polls Chapter 1 discusses the effect that public opinion may have on the labor relations process. Public opinion polls can provide an indication of the back- ing or support by the public during a strike.

The Gallup Organization s Web site provides abstracts of the results of polls the organization has conducted (a subscription is required to read most of the full reports). The abstracts can provide some insight into the attitudes of the public on labor issues. Go to the Gallup home page and determine how employees are reacting to the recent economic recession.

The Harris Poll provides portions of its reports without charge on the Harris Interactive Web page. Search the site for results of a recent poll on American adults attitudes toward gender equality.

2. Reports from Labor and Management Web Sites Good sources of information on labor relations can be found by searching the Web sites of labor unions and management organizations as well as reports from newspapers and newswires. Go to the Web site of the AFL-CIO and under Get Informed click on Health Care to find out what labor unions are thinking and doing to implement health care reform.

Go to the Web site of the U.S. Chamber of Com- merce and find out what the Chamber is doing to help employers implement health care reform legis- lation recently passed by Congress.

3. Newspapers The Library of Congress provides News & Periodical Resources on the Web, a Web page that provides links to online newspapers and news services. You may know of other free news services that you search on a daily basis. Search online news sources to find articles that discuss labor relations involving aircraft mechanics at American Airlines and/or Southwest Airlines in the Dallas Fort Worth, Texas area. For example, mechanics at Southwest are upset with increasing workloads and difficulty in negotiating a new contract. Some members at American have been unhappy with their current union representative, the Transport Workers Union, and are considering joining a new, indepen- dent union (the Association of Maintenance Profes- sionals). Pick one of these airlines and write about the main issues and current developments. For example, what might be the advantages or disadvan- tages of being represented by a smaller independent union versus a larger national union affiliated with the AFL-CIO (an organization discussed further in Chapter 4) at American Airlines? How do mergers or acquisitions affect labor relations? You may also want to consult union and industry weblogs (e.g., Sky Talk ) as you research your topic.

References 1. See, for example, Lance Compa, Workers Free-

dom of Association in the United States, in Workers Rights and Human Rights, ed. by James A. Gross (Ithaca, NY: Cornell University Press, 2003), pp. 23 52; AFL-CIO, The Silent War: The Assault on Workers Freedom to Choose a Union

and Bargain Collectively in the United States (Washington, D.C.: AFL-CIO, June 2002), pp. 1 24; Kate Bronfenbrenner et al., Introduc- tion in Organizing to Win: New Research on Union Strategies (Ithaca, NY: ILR Press, 1998), pp. 1 8; William N. Cooke, The Failure to

CHAPTER 1 Union Management Relationships in Perspective 31

Negotiate First Contracts: Determinants and Policy Implications, Industrial and Labor Rela- tions Review 38(2), January 1985, pp. 163 178.

2. John Dunlop, Industrial Relations Systems, rev. ed. (Boston: Harvard Business School Press, 1993), pp. 13 16.

3. 2010 Employer Bargaining Objectives, Collec- tive Bargaining Bulletin, 15(5), 2010, p. s23; John D. Boyd, Hours Rule Change Pits Railroads against Unions, Journal of Commerce (July 2, 2009), pp. 1 2; VW Wants 35-Hour Workweek, but Union Says No, Wall Street Journal, June 13, 2006, p. A-11.

4. AFA-CWA Applauds Anticipated FCC Decision to Keep Cell Phones Off Aircraft, News Release, March 22, 2007, p. 1 at http://www.afanet.org (accessed April 29, 2011); Nancy Keates, Rising Concern: Falling Luggage Inside Airplanes, Wall Street Journal, November 10, 1997, pp. B-1 & 10.

5. Service Employees International Union, Health- care Workers in Peril: Preparing To Protect Worker Health and Safety During Pandemic Influenza: A Union Survey Report, April 16, 2009, pp. 1 14 at http://www.seiu.org/Healthcare% 20Workers% 20in%20Peril%20April%202009.pdf; Bureau of National Affairs Inc., Daily Labor Report, September 10, 1992, p. A-12.

6. Sandra M. Tomkowicz and Susan K. Lessack, Where There s Smoke: Employer Policies on

Smoking, Employee Relations Law Journal, 32(3), 2006, pp. 48 65; Mollie H. Bowers, What Labor and Management Need to Know about Workplace Smoking Cases, Labor Law Journal 43(1), January 1992, pp. 40 49; Americans for Effective Law Enforcement, AELE Law Library of Case Summaries: Employment & Labor Law for Public Safety Agencies Smoking Rights/Restrictions & Air Quality. November 4, 2014, at http://www. aele.org/law/Digests/empl205.html

7. Dionne Searcey, Currents Labor Journal: Some Courts Raise Bar on Reading Employee E-mail, Companies Face Tougher Tests to Justify Moni- toring Workers Personal Accounts, Rulings Hinge on Expectation of Privacy , Wall Street Journal, November 19, 2009, p. A17; David Halpern, Patrick J. Reville, and Donald Grunewald, Management and Legal Issues Regarding Electronic Surveillance of Employees in the Workplace, Journal of Business Ethics, 80(2), 2008, pp. 175 180; William H. Ross,

Christopher J. Meyer, Jeng-Chung Victor Chen, and Paul Keaton, The Role of Human Resource Management in Protecting Information at Tele- communications Firms, Journal of Information Privacy and Security, 5(2), 2009, pp. 49 77; Donald E. Sanders, John K. Ross, and Patricia Pattison, Electronic Snoops, Spies, and Supervisory Surveil-

lance in the Workplace, The Southern Law Journal, 23(1), 2013, pp. 1 27; Margaret A. Lucero, Robert E. Allen, and Brian Elzweig, Managing Employee Social Networking: Evolving Views from the National Labor Relations Board, Employee Responsibilities and Rights Journal, 25(3), 2013, pp. 143 158.

8. The System for Forming Unions Is Broken, AFL-CIO, 2007, p. 1 at http://www.aflcio.org/ joinaunion/voiceatwork/brokensystem.cfm joinaunion/voiceatwork/brokensystem.cfm; Kris Maher, Unions New Foe: Consultants, Wall Street Journal, August 15, 2005, p. B1.

9. Kate Bronfenbrenner, Raw Power: Plant Closing Threats and the Threat to Union Organizing, Multinational Monitor, December 2000, p. 28.

10. John J. Lawler, The Influence of Management Consultants on the Outcome of Union Certifica- tion Elections, Industrial and Labor Relations Review, 38(1), 1984, pp. 38 51; Bruce E. Kaufman and Paula E. Stephan, The Role of Management Attorneys in Union Organizing Campaigns, Journal of Labor Research, 16(4), 1995, pp. 439 455; Bureau of National Affairs Inc., Special Report, Labor Relations Consultants: Issues, Trends, and Controversies (Washington, D.C.: Bureau of National Affairs Inc., 1985).

11. William A. Ward, Manufacturing Jobs, 2005 2010, Economic Development Journal, 5(1), 2006, pp. 7 15; Louis Uchitelle, A Missing Statistic: U.S. Jobs That Have Moved Overseas, New York Times, October 3, 2003, p. 21. For a more thorough discussion, see Erica L. Groshen and Simon Porter, Has Structural Change Contributed to a Jobless Recovery? Report of the Federal Reserve Bank of New York, 9(8), 2003, pp. 1 7 at http://www.ny.frb.org/research.

12. Therese Jefferson and Alison Preston, Negotiat- ing Fair Pay and Conditions: Low Paid Women s Experience and Perceptions of Labour Market Deregulation and Individual Wage Bargaining, Industrial Relations Journal, 41(4), 2010, pp. 351 366; Kevin E. Henrickson and Wesley

32 PART 1 Recognizing Rights and Responsibilities of Unions and Management

W. Wilson, Compensation, Unionization, and Deregulation in the Motor Carrier Industry, Journal of Law and Economics, 51(1), 2008, pp. 153 177; John Nevile and Peter Kriesler, Minimum Wages, Unions, the Economy and

Society, Economic and Labour Relations Review, 19(1), 2008, pp. 25 38; Pierre-Yves Cremieux, The Effects of Deregulation on Employee Earn-

ings: Pilots, Flight Attendants, and Mechanics, 1959 1992, Industrial and Labor Relations Review, 49(2), 1996, pp. 223 242.

13. Denise Rousseau, I-deals: Idiosyncratic Deals Employees Bargain for Themselves. (Armonk, NY: M. E. Sharpe, 2005); Steven L. Blader, What Leads Organizational Members to Collectivize? Injustice and Identification as Precursors of Union Certification, Organization Science, 18(1), 2007, pp. 108 126.

14. Interest Rates: How Soon and How Far will they Climb? ABA Banking Journal, 102(5), 2010, p. 38; Jon Hilsenrath, Fed Sees Slower Growth, Officials Debate How to Respond if Recovery Falters, Softer 2nd Half Is Seen, Wall Street Journal, July 14, 2010, p. A-1; Barbara Hagen- baugh, Fed Holds Rates Steady Again, USA Today, May 9, 2007, pp. 1 2 at http://www.usa today.com/money/2007-05-09-fed_N.htm.

15. Stephen F. Hipple, The Labor Market in 2009: Recession Drags On, Monthly Labor Review, 133(3), 2010, pp. 3 22; Ian D. Wyatt and Kathryn J. Byun, The U.S. Economy to 2018: From Recession to Recovery, Monthly Labor Review, 132(11), 2009, pp. 11 15; U.S. Department of Labor, The Employment Situation: October, 2009, News Release, November 6, 2009, pp. 1 29 at http://www.bls.gov/news.release/archives/emp- sit_11062009.pdf; U.S. Department of Labor, The Employment Situation: September, 2014,

News Release, October 3, 2014, pp. 1 38 at http:// www.bls.gov/news.release/pdf/empsit.pdf.

16. Catherine Rampell, With Positions to Fill, Employers Wait for Perfection, New York Times [online edition], March 6, 2013 at http://www. nytimes.com/2013/03/07/business/economy/ despite-job-vacancies-employers-shy-away-from- hiring.html?pagewanted=all&_r=0; Gregory W. Brown and Christian Landblad, The U.S. Economic Crisis: Root Causes and the Road to Recovery, Journal of Accountancy, 208(4), 2009, pp. 42 49.

17. The Alliance for Employee Growth and Devel- opment, Inc., About Us, August 5, 2010, pp. 1 2 at http://www.employeegrowth.com/ about_us.htm.

18. Workforce and Economic Development Program of the California Labor Federation, Working Together: Sectoral Lessons from Labor- Management Training Partnerships in Califor- nia, (Berkley, CA: Univ. of California Berkley Labor Center, 2007), pp. 11 16 at http://www. calaborfed.org/userfiles/doc/2011/Working TogetherHighRoadReport112111.pdf; Hoyt N. Wheeler, The Future of the American Labor Movement (Cambridge, U.K.: Cambridge University Press, 2002), pp. 80 81.

19. Laurie Harbour-Felax, Challenges for Industry Decision Makers, Automotive Design & Produc- tion, 120(2), 2008, p. 12; Kathy Jackson, UAW Fights GM Plan to Hire Suppliers to Prepare Parts, Automotive News, June 2, 1997, p. 1; James R. Healey, Tangled Web of Rules Obscures Autos Origins, USA Today, March 2, 1992, pp. B-1, 3.

20. Barry B. Burr, UAW s $45 Billion Vehicle Steers Towards a New Asset Allocation, Pensions & Investments, 38(5), 2010, pp. 2 4; Pensions at Work: Socially Responsible Investment of Union- Based Pension Funds, ed. by Jack Quarter, Isla Carmichael, and Sherida Ryan (Toronto: Univer- sity of Toronto Press, 2008); Jill Andresky Fraser, Capital: State of the Union, Inc. Magazine, July

2002, pp. 1 2 at http://www.heartlandnetwork. org/pressarticles/article9.htm; Emma Blackwell, Asset Managers Launch Labor-Friendly Private

Equity Vehicles, Corporate Financing Week, April 24, 2006, p. 1; Working Capital: The Power of Labor s Pensions, ed. by Archon Fung, Tessa Hebb, and Joel Rogers (Ithaca, NY: Cornell University Press, 2001).

21. Thomas Croft, Up from Wall Street: The Respon- sible Investment Alternative (New York: Cosimo Books, 2009); Wheeler, The Future of the Ameri- can Labor Movement, pp. 176 177; The Heart- land Labor Capital Network, at http://www. heartlandnetwork.org/ (accessed April 29, 2011).

22. Rebecca Keller, How Shifting Occupational Composition Has Affected the Real Average Wage, Monthly Labor Review, 132(6), 2009, pp. 26 38; David Wessel, Politics and Econom- ics, Capital: Fishing Out Facts on the Wealth

CHAPTER 1 Union Management Relationships in Perspective 33

Gap, Wall Street Journal, February 15, 2007, p. A-10; David Wessel, Fed Chief Warns of Widening Inequality, Wall Street Journal, February 7, 2007, p. A-6; Wheeler, The Future of the American Labor Movement, pp. 25 27.

23. Attaran, M. Keeping the promise of efficiency, Industrial Engineer, 41(3), 2009 (March), pp. 45 50. Ming-Hui Huang and Roland T. Rust, Should Your Business Be Less Productive? MIT

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24. Christopher M. Lowery, Nicholas A. Beadles II, and Larry H. Faulk II, Assessing the Usability of Union Web Sites, Communications of the IIMA, 8(3), 2008, pp. 49 56; Neil De Clereq, Alec Meiklejohn, and Ken Mericle, The Use of Microcomputers in Local Union Administration, Labor Studies Journal, 10(1), Spring 1985, pp. 3 45.

25. Jessica Miller-Merrell Research Reveals how Labor Unions Use Social Media Blogging4Jobs, [online weblog], Feb. 22, 2012, at http://www. blogging4jobs.com/social-media/labor-union- social-media/; Cynthia G. Wagner, Cyberunions: Organized Labor Goes Online, Futurist, 34(1), 2000, p. 7; Alex Bryson, Rafael Gomez, and Paul Willman, Online Social Networking and Trade Union Membership: What the Facebook Phe- nomenon Truly Means for Labor Organizers, Labor History, 51(1), 2010, pp. 41 53.

26. Charles Forelle, Nick Skrekas, and Bob Davis, Greece Gets Aid, Promises Austerity, Wall

Street Journal (Online), May 1, 2010, pp. 1 2 at http://proquest.umi.com/pdqweb? did=2023352491&sid=3&Fmt=3&client id=1997&RQT=309&VName=PQD; V. K Bhalla, Global Financial Turmoil: Containment and

Resolution, Journal of Management Research, 9(1), 2009, pp. 43 58; Andrew Dollard, The Dollar s Decline Offers Advantages Over Foreign Rivals, Rochester Business Journal, 24(19), 2008, p. 25; Paul R. LaMonica, The U.S. Dollar is Super Strong Now, CNN Money, Sept. 2, 2014, at http://money.cnn.com/2014/09/02/investing/ strong-us-dollar-euro-weak-ecb/

27. Ki Hee Kim and William Paterson, Is Free Trade Good for Working Americans: Lessons from North American Free Trade Agreement, Business Review, Cambridge, 15(1), 2010, pp. 33 38; Mihal

Nica, Ziad Swaidan, and Michael M. Grayson, The Impact of NAFTA on Mexican-American

Trade, International Journal of Commerce and Management, 16(3 4), 2006, pp. 222 233.

28. Marisa von Bulow, Networks of Trade Protest in the Americas: Toward a New Labor Internation- alism? Latin American Politics and Society, 51(2), 2009, pp. 1 27; Andrew Batson, How U.S. Labor Leaders Chart a Global Course, Wall Street Jour- nal, May 23, 2007, p. A-6; Anya Sostek, USW Joins Effort to Form Superunion, Knight Ridder Tribune Business News, April 19, 2007, p. 1.

29. Foreign Trade Division of the U.S. Census Bureau, Trade in Goods (Imports, Exports and Trade

Balance) with China, Foreign Trade Statistics, November 24, 2014, pp. 1 18 at https://www. census.gov/foreign-trade/balance/c5700.html.

30. David M. Dickson, Trade Deficit Cut by Half of 08 Levels in 09, McClatchy Tribune Business News, February 11, 2010, pp. 1 2 at http:// proquest.umi.com/pqdweb?did=1960355591& sid=2&Fmt=3&clientd=1997&RQT=309& VName=PQD.

31. Labeling China s Currency Undervalued Correct: USW Calls for More Action, PR Newswire, July 9, 2010, pp. 1 2 at http://proquest.umi.com/ pqdweb?did=2076839101&sid=1&Fmt= 3&clientid=1997&RQT=309&VName=PQD.

32. Sudeep Reddy, Bernanke Prepared, but Reluc- tant, to Act on Economy; Fed Chief Discusses Limited Options to Boost GDP, Calls Outlook Unusually Uncertain , Wall Street Journal (Online), July 21, 2010, pp. 1 2 at http://proquest. umi.com/pqdweb?did=2087363941&sid=4& Fmt=3&clientid=1997&RQT=309&VName= PQD; Jon Hilsenrath, Fed Sees Slower Growth, Officials Debate How to Respond if Recovery Falters, Softer 2nd Half Is Seen, Wall Street Journal, July 14, 2010, p. A-1.

33. William R Cline, Why the U.S. External Imbalance Matters, Cato Journal, 27(1), 2007, p. 53.

34. Wheeler, The Future of the American Labor Movement, p. 25.

35. Christopher Candland, Core Labour Standards under the Administration of George W. Bush, International Labour Review, 148(1 2), 2009, pp. 169 181; International Labor Organization, ILO Declaration on Fundamental Principles and Rights at Work, 1996 2003, pp. 1 2 at http:// www.ilo.org.

34 PART 1 Recognizing Rights and Responsibilities of Unions and Management

36. Wheeler, The Future of the American Labor Movement, pp. 81 82.

37. David Porreca, Through Jaundiced Eyes: How the Media View Organized Labor, Journal of Communications, 46(3), 1996, p. 198.

38. Lane Kirkland, Labor and the Press, American Federationist, 82, December 1975, p. 3; John A. Grimes, Are the Media Short Changing Orga- nized Labor? Monthly Labor Review, 110(8), August 1987, pp. 53 54.

39. Diane E. Schmidt, Public Opinion and Media Coverage of Labor Unions, Journal of Labor Research, 13(3), Summer 1992, pp. 151 165; William J. Puette, Through Jaundiced Eyes: How the Media View Organized Labor (Ithaca, NY: ILR Press, 1992); Paul Jarley and Sarosh Kuruvilla, American Trade Unions and Public Approval:

Can Unions Please People All of the Time, Journal of Labor Research, 15(2), Spring 1994, pp. 97 117; Geoff Walsh, Trade Unions and the Media, International Labour Review, 127(2), 1988, pp. 205 220.

40. Christopher R. Martin, Framed: Labor and the Corporate Media (Ithaca, NY: Cornell University Press, 1994).

41. Lydia Saad, Labor Unions See Sharp Slide in U.S. Public Support, Gallup Poll, August 6-9, 2009, pp. 1-6 at http://www.galluppoll.com/poll/ 122744/Labor-Unions-Sharp-Slide-Public- Support.aspx?version=print; Costas Panagopoulos and Peter L. Francia, The Polls-Trends: Labor Unions in the United States, Public Opinion Quarterly, 72(1), 2008, pp. 134 159; Andrew Dugan, In the U.S., Majority Approves of Unions but Say They ll Weaken Gallup Poll, August 30, 2013, at http://www.gallup.com/poll/ 164186/majority-approves-unions-say-weaken. aspx.

42. Rebecca Riffkin, Public Faith in Congress Falls Again, Hits Historic Low, Gallup Poll, June 19, 2014, at http://www.gallup.com/poll/171710/ public-faith-congress-falls-again-hits-historic-low. aspx.

43. Very Large Majorities of Americans Believe Big Companies, PACs, Political Lobbyists and the News Media Have Too Much Power and Influ- ence in D.C, Business Wire, March 12, 2009, pp. 1 3 at http://proquest.umi.com/pqdweb? did= 1660004401&sid=2 &Fmt=3&client= 1997&RQT=309&VName=PQD.

44. Jonathan P. Hicks, Dreams and City Image Put at Stake in Strike, New York Times, April 10, 1992, p. A-31; Bob Corker, Bob Corker: Now the Auto Union Wants to Muzzle Public Officials, Wall Street Journal [online edition], March 3, 2014, at http://online.wsj.com/articles/SB100014 24052702304360704579415431328820424.

45. Albert Shanker, Where We Stand, New York Times, December 16, 1990, p. 7; Sandra Feldman, The Big Lie, New York Times, June 7, 1998, p. 7.

46. Statement by AFL-CIO President John Sweeney on Rainbow PUSH Coalition Reclaiming Our Land March in New Orleans, News Release, April 27, 2007, p. 1.

47. About the BlueGreen Alliance, BlueGreen Alli- ance, August 11, 2010, pp. 1 2 at http://www. bluegreenalliance.org/about_us?id=0001.

48. Caroline Preston, Advocacy Groups Work to Strengthen Their Influence on Immigration Laws, Chronicle of Philanthropy, 22(11), 2010, p. 16; Robert Schmidt, Big Bank Nightmare on K Street, Bloomberg Businessweek, May 24, 2010, p. 30; Steve Early and Larry Cohen, Jobs with Justice: Mobilizing Labor Community Coalitions, Working USA, 1(4), 1997, pp. 49 57; James Craft, The Community as a Source of Union Power, Journal of Labor Research, 11(2), Spring 1990, pp. 145 160. For a detailed account of a community effort involving religious institu- tions in an attempt to restore closed steel mills as a community- and employee-owned enterprise, see Thomas G. Fuechtmann, Steeples and Stacks: Religion and Steel Crisis in Youngstown (New York: Cambridge University Press, 1989).

49. Why Wal-Mart Must Change, Wakeup WalMart.Com, August 11, 2010, p. 1 at http:// www.wakeupwalmart.com/change; Wal-Mart s Urban Problem, Wal-Mart Watch, August 8, 2010, pp. 1 9 at http://www.wakeupwalmart. com/change; Wal-Mart s Urban Problem, Wal-Mart Watch, August 8, 2010, pp. 1 9 at http://walmartwatch.com/pages/wal_mart_ urban_problem/.

50. Kris Maher, Politics and Economics: Wal-Mart Joins Health Care Call; Unlikely Coalition of Labor, Business Pushes for Overhaul, Wall Street Journal, February 8, 2007, p. A-6.

51. David Winzelberg, L.I. Labor, Management Forge New Alliance, Long Island Business News, June 9, 2010, p. 1 at http://proquest.umi.com/

CHAPTER 1 Union Management Relationships in Perspective 35

pqdweb?did=2058869961&sid=1&Fmt=3& client=1997&RQT=309&VName=PQD; Cynthia Needham, Diverse Group Rallies for R.I. Job-Training Program, McClatchy Tribune Business News, April 30, 2010, pp. 1 2 at http:// proquest.umi.com/pqdweb?did=2022057401& sid=1&Fmt=3&client=1997&RQT=309& VName=PQD.

52. United States Department of Labor, Union Members in 2014, News Release, January 23, 2015, pp. 1 12, at http://www.bls.gov/news. release/union2.nr0.htm.

53. Gary Chaison, The AFL-CIO Split: Does It Really Matter? Journal of Labor Research, 28(2), 2007, p. 305.

54. United States Department of Labor, Union Members in 2014, News Release, January 23, 2015, pg. 1, at http://www.bls.gov/news.release/ union2.nr0.htm.

55. United States Department of Labor, Union Members in 2014, News Release, January 23, 2015, Table 3, pp. 7 8, at http://www.bls.gov/ news.release/union2.nr0.htm.

56. John Godard, The Exceptional Decline of the American Labor Movement, Industrial and Labor Relations Review, 63(1), 2009, pp. 82 108; Arne L. Kalleberg, Precarious Work, Insecure Workers: Employment Relations in Transition, American Sociological Review, 74(1), 2009, pp. 1 22; Justice on the Job: Perspectives on the Erosion of Collective Bargaining in the United States, ed. by Richard N. Block, Sheldon Fried- man, Michelle Kaminski, and Andy Levin (Kala- mazoo, MI: W. E. Upjohn Institute for Employment Research, 2006); C. Timothy Koel- ler, Union Activity and the Decline in American Trade Union Membership, Journal of Labor Research, 15(1), Winter 1994, pp. 19 31.

57. Union Ranks Down in 2009 as Recession Elim- inated Jobs, BNA s Collective Bargaining Bulletin, January 28, 2010, p. 8.

58. T. Alan Lacey and Benjamin Wright, Occupa- tional Employment Projections to 2018, Monthly Labor Review, 132(11), 2009, pp. 82 99.

59. Rik Kirkland, The New Face of Labor, Fortune, 154(8), October 16, 2006, pp. 122 132.

60. Shail J. Butani, Richard L. Clayton, Vinod Kapani, James R. Spietzer, David M. Talan, and George S. Werking Jr., Business Employment Dynamics:

Tabulations by Employer Size, Monthly Labor Review, 129(2), 2006, p. 4; United States Census Bureau, Statistics about Business Size (Including Small Business), available at http://www.census. gov/econ/smallbus.html.

61. Mitra Toosi, Labor Force Projections to 2022: The Labor Force Participation Rate Continues to Fall, Monthly Labor Review, 136(12), Dec., 2013 [online edition] at http://www.bls.gov/opub/mlr/ 2013/article/labor-force-projections-to-2022-the- labor-force-participation-rate-continues-to-fall-1. htm; also see, U.S. Bureau of Labor Statistics, Employment Projections: Civilian Labor Force

by Age, Sex, Race, and Ethnicity at http://www. bls.gov/emp/ep_table_304.htm.

62. U.S. Department of Labor, Union Members Summary: 2014, News Release, January 23, 2015, Table 1, at http://www.bls.gov/news.release/ union2.t01.htm.

63. U.S. Department of Labor, Union Members Summary: 2014, News Release, January 23, 2015, at http://www.bls.gov/news.release/union2.nr0. htm.

64. Arleen Hernandez, The Impact of Part-Time Employment on Union Density, Journal of Labor Research, 16(4), 1995, pp. 485 491.

65. Bruce Nissen, The Recent Past and Near Future of Private Sector Unionism in the U.S.: An Appraisal, Journal of Labor Research, 26(2), 2001, p. 325.

66. Michelle Amber, Henry Pledges Innovative Organizing Efforts Along With Addressing U.S. Economic Crisis, Daily Labor Report, 93, 2010, pp. C-1 2.

67. Joseph B. Rose and Gary N. Chiason, New Measures of Union Organizing Effectiveness, Industrial Relations, 29(3), Fall 1990, pp. 457 468.

68. Andrew W. Martin, Resources for Success: Social Movements, Strategic Resource Allocation, and Union Organizing Outcomes, Social Problems, 55(4), 2008, pp. 501 524; Peter Fairbrother and Glynne Williams, Unions Facing the Future: Questions and Possibilities, Labor Studies Jour- nal, 31(4), 2007, pp. 31 53; Paul F. Clark and Lois S. Gray, Changing Administrative Practices in American Unions: A Research Note, Industrial Relations, 44(4), 2005, pp. 654 658.

36 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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1- 1 Was a Troublemaker Laid off for Sharing Wage

Information? Or for Business Reasons?

The American Restoration Contractors (ARC), Inc. was hired to reroof and fix cracks in the bricks of several buildings of a regional university. Because it was a large job, several new employees were hired. One was an experienced mason and bricklayer named Bruce Potts.* Potts had completed a four-year union appren- ticeship training program and another four years as a journeyman; subsequently, he had 12 years experience in both union and nonunion settings. ARC was a non- union contractor.

Potts testified before the federal NLRB that he had been led to believe by both his immediate supervisor, Gene Polizzi, and a co-worker who had been hired along with him, that the job would pay $44 per hour. However, upon arriving at the work site, Potts learned that it only paid $35 per hour, which made him angry, given the nature of the work.

He described the work as difficult. It required him to wash the building surface and the roof, removing any dirt. Next, employees inspected the bricks, caulk, and wood for needed repairs. Rotted caulk and other defec- tive building materials had to be removed and replaced. When the new caulk dried, the building was again sprayed with a high pressure hose. After the water dried, final waterproofing chemicals were applied. The caulk work was the most laborious, calling for the great- est expertise and precision. Much of this work took place on a 100° roof under the sweltering summer sun.

In recognition of the excellent work that Potts was doing, Polizzi recommended him for several pay raises: As the summer passed, Potts s pay went from $35 (the first week of June) to $36.13 (second week) to $37 (third week) to $39.21 (last week of June) to $40.13 throughout July and August, until he was laid off on in early September. As a result of these raises, Potts became the highest-paid non-managerial employee on the job site.

Potts often told his co-workers what his current pay rate was and he encouraged them to ask for more money. He said everyone was underpaid and all the workers should all be getting more. He also criticized some of the work methods they were asked to use. One employee quit soon after Potts discussed wage rates with him. The following week, the firm s Human

Resources Manager, Dixie Boxrud, hand-wrote the fol- lowing message on Potts s July 1st pay stub:

Please keep your pay rate to yourself. Thanks, Dixie B.

Further, when he distributed pay envelopes, Polizzi told Potts that he shouldn t be discussing his pay with his co-workers and stirring up trouble by encourag- ing them to complain.

At the end of the summer, Potts was laid off with four other workers, even though three others who did similar work kept their jobs. Potts accused ARC of lay- ing him off in retaliation for his complaining about the wages. Potts testified. I was telling everyone how they were getting short-changed and management was mak- ing a lot of money off of them and how they ought to do something about it threaten to quit or something to get what they deserved. Potts also indi- cated that Polizzi had told him that ARC had bid on another, similar job and that Potts offered to work at that site, even though it was several hours drive away. However, he was never called to work at that site, or any other ARC work sites.

The General Counsel (which often prosecutes cases involving allegations of unfair labor practices under the National Labor Relations Act, as amended by the Labor Management Relations Act [LMRA]), alleged that ARC was retaliating against Potts for his activities. Under federal labor law, employees, have the right to engage in concerted activities for the pur- pose of collective bargaining or other mutual aid or protection (Section 7); it is an unfair labor practice for employers to interfere with, restrain, or coerce employees in the exercise of [their] rights or to dis- criminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization (Sections 8 (a) (1) and 8 (a) (3) of the LMRA). The General Counsel argued that ARC s actions were illegal because (1) they interfered with Potts s actions aimed at mutual aid and protection (securing pay raises for all workers) and (2) ARC discriminated against Potts when making layoff and rehiring decisions because of his efforts to organize the workers to com- plain about their pay.

CHAPTER 1 Union Management Relationships in Perspective 37

Polizzi and other company officials denied the charges. They said that from the first day that he showed up at the job site Potts had been a trouble- maker. When he was hired, he had an erroneous impression as to what the pay for the work was worth. He was quite vocal about what he saw as low pay and other subjects, such as how the work should be done. I had to put up with his mouth, always com- plaining and whining, Polizzi said. However, he over- looked it because, he was a good caulker and he was productive. His outstanding productivity and excellent work resulted in several pay raises in the ensuing weeks. Still, his constant complaining bred dissatisfac- tion and caused one co-worker to quit. ARC had an informal (unwritten) policy that people not tell others their pay rate; such complaining leads to workers com- paring themselves to each other, breeding dissatisfac- tion. Potts went against that policy, even after he had been asked politely to keep your pay rate to yourself.

Ms. Boxrud testified that she wrote this on Potts s pay stub because he was causing issues on the job site telling people that, walk off and they will give you a raise. I wanted to keep an atmosphere of calm on the job. We already had one employee quit over it. Talking about pay was causing problems, so I wanted him to stop talking about it.

Managers also denied that their actions violated labor law. The workers had not formed a union, nor were they contemplating forming a union. The word union was never mentioned to ARC managers. Fur-

ther, workers were not bargaining collectively and they were not threatening to strike if wages stayed unchanged. Clearly, they were not joining together for

mutual aid and protection against an exploitive employer, given that they were all earning over $30 per hour. Thus, management at ARC was not interfer- ing with their rights under labor law.

Finally, ARC did not retaliate against Potts for his complaints. He was laid off near the end of the job, along with several other workers. He would have been laid off regardless of his statements to his co-workers: When a job neared completion, fewer workers were needed. Yes, it was true that Potts offered to work at another job site. However, what Polizzi did not know at the time that he mentioned that project was whether ARC would win the contract. It turned out that the firm did not have the low bid and the contract was awarded to another firm. The firm won other bids, but the work was not as difficult; thus, the company did not need to hire a caulker who commanded the high rate of pay that Mr. Potts earned. Consequently, ARC did not need his services. Potts s charges of retaliation are baseless.

* = All company and individual names and some minor facts are changed. This case is adapted from an NLRB case.

Questions 1. Given the facts of the case and the brief description

of the LMRA, did ARC violate labor law by telling Mr. Potts to Please keep your pay rate to yourself ? Explain your reasoning.

2. Did ARC retaliate against Mr. Potts when it laid him off and did not offer him work on other jobs? Did these actions constitute violations of the LMRA? Explain your reasoning.

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1- 2 Discharge for Whistleblower Activity

Janet Broom and Darla Miller were employed as a cer- tified medication aide and cook, respectively, at the employer s residential care facility located in Norman, Oklahoma. Both employees suspected another employee of stealing and using drugs, intended for use by residents of the facility, from the facility s medi- cation room. Broom and Miller decided to report the suspected employee based on their observation that she had falsified medical drug log books to conceal her theft from facility managers.

The facility s Employee Handbook clearly outlined a procedure employees were to follow when making com- plaints involving other employees. The Employee Hand- book called for the initial complaint to be filed with the accused employee s immediate supervisor. Because the two employees making the complaint believed that the immediate supervisor in this case, Sarah Dutton, was a close personal friend of the accused, Broom and Miller chose to make their complaint to another manager, who was the medication consultant at the facility.

38 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Upon learning of the complaint from the medica- tion consultant, supervisor Dutton discharged Broom and Miller for not following the proper chain of com- mand in raising an issue about another employee. Both Broom and Miller are nonunion employees unrepresented by a union. After being discharged, Broom and Miller s only recourse was to file a wrongful discharge state court claim, arguing that they were engaged in internal whistle blowing activity and thus protected from discharge as a matter of Oklahoma public policy.

The employer argued that Broom and Miller were subject to the Oklahoma common law employment- at-will (EAW) doctrine, which permits an employer to discharge an at-will employee at any time for any or no stated reason. The employer sought and received a summary judgment in state district court declaring Broom and Miller s discharge to be lawful under the state s common law, EAW doctrine.

Broom and Miller appealed the state district court s decision to a federal Court of Appeals, seeking to reverse the district court s decision.

In Groce v. Foster, 880 P.2d902 (Okla. 1994), the Oklahoma Supreme Court recognized five types of public policy exceptions to the common law, EAW doctrine. Under Oklahoma law, an at-will employee may not be lawfully discharged for (1) refusing to par- ticipate in an illegal activity; (2) performing an impor- tant public service (e.g., jury duty); (3) exercising a legal right or interest of the employee; (4) exposing some wrongdoing by his or her employer; and (5) perform- ing an act that public policy would encourage or refus- ing to perform an act that public policy would discourage, when the discharge action is coupled with a showing of bad faith, malice, or retaliation.

Broom and Miller argued that their discharge fell under the fifth public policy exception to the EAW doctrine. By reporting to management a co-worker who they honestly believed was engaged in stealing drugs intended for administration to residents of the facility, Broom and Miller believed they were engaging in conduct that Oklahoma public policy encourages.

The Oklahoma Supreme Court mandates that to be recognized and enforced, public policy exceptions must be clearly stated in state constitutional, regula- tory, or case decision law. To that end, Broom and Miller cited three statutory laws that they believed pro- vided a clear statement of public policy supporting their action.

The first law is the Nursing Home Care Act, which governs safeguards and procedures for the storage, safekeeping, monitoring, dispensing, and, when neces- sary, destruction of patient prescription drugs. The employer argued that the act specifically applies only to licensed nursing homes operating within the state. The employer s facility is licensed as a residential care facility and thus is excluded from coverage under the Nursing Home Care Act. The state of Oklahoma grants operating licenses for several different types of elder- care facilities, including nursing homes, assisted living homes, and residential care facilities.

The second law is the Residential Care Act, which the employer admitted does apply to the facility in this case. Broom and Miller noted that the law authorizes the Oklahoma State Department of Health to develop and enforce rules and regulations to implement the provisions of the Residential Care Act. Such rules and regulations shall include but not be limited to govern- ing temperature limits, lighting, ventilation, and other physical conditions which shall protect the health, safety, and welfare of the residents in the home. The employer argued that Broom and Miller did not raise the issue of the Residential Care Act s applicability to their case when the case was before the district court and therefore could not legally raise it as a supporting argument on appeal. It is a well-settled legal principle that issues or arguments not clearly presented and con- sidered at a prior legal proceeding cannot be subse- quently raised as a legal basis for argument on appeal. The employer also noted that the language referred to by Broom and Miller in the Residential Care Act is very general and not specific enough to rise to the level of a clear statement of public policy supporting intent to make an exception to the prevailing Oklahoma EAW doctrine.

The third law cited by Broom and Miller as a basis for their appeal is the Uniform Controlled Dangerous Substances Act. Although this law does make it a crim- inal offense to steal a controlled dangerous substance, Broom and Miller made no specific argument as to how this law established a clear mandate of public pol- icy applicable to their discharge case. The employer argued that Broom and Miller again failed to meet the required showing of a clear and compelling public policy in favor of restricting an employer s right to dis- charge an at-will employee for failing to follow the established procedure for bringing a serious complaint against a co-worker.

CHAPTER 1 Union Management Relationships in Perspective 39

Questions 1. Should the federal appeals court deny Broom and

Miller s appeal and enforce the decision of the state district court finding upholding the discharge of the two whistleblowers? Explain your reasoning.

2. How might this case have been handled differently if Broom and Miller had been members of a bargain- ing unit represented by a union for purposes of collective bargaining?

40 PART 1 Recognizing Rights and Responsibilities of Unions and Management

41

CLASSROOM EXERCISES

1.1 Work Rules

Directions: This activity can be performed as an individual or group assignment using either an oral or written report format. Select a recent (not more than one-year old) news story or article and explain how the information in the story could affect the nego- tiation or administration of a particular work rule. An appropriate news story or article should contain information on one or more of the possible constraints or influences affecting the negotiation or administration of work rules identified in the text (e.g., state of the economy, labor market conditions, product market conditions, financial mar- ket conditions, technology, and international forces or events).

1.2 Union Membership Trend

Directions: This activity can be performed as an individual or group assignment using either an oral or written report format. Select a recent (not more than one-year old) news story or article and explain how the information in the story could affect future union membership growth in a positive or negative manner. Your explanation should clearly indicate why or how you think the information in your story will have the pre- dicted effect on future union membership growth.

1.3 Word Association

Directions: Divide the class into groups of three to five students. Presented below are 25 words or phrases. Each group should classify each listed word or phrase as primarily applicable to UNIONS (U) or MANAGERS (M), BOTH U & M (B), or NEITHER U nor M (N). Groups may compare their results and discuss their reasoning for associating particular words or phrases with the terms Union or Management. Groups may also list additional descriptive terms or phrases that they would strongly associate with the terms Union or Management.

Words or phrases to classify

1. Powerful 2. Educated 3. Democratic 4. Profit-oriented 5. Productive 6. Fair 7. Violence 8. Trustworthy 9. Job security

10. Competitive 11. Political 12. Authority 13. Reasonable 14. Work stoppage 15. Professional 16. Employee compensation 17. Ethical 18. Innovative 19. Flexible 20. Quality improvement 21. Risk taker 22. Necessary 23. Job safety and health 24. Work rules 25. Growth-oriented

42 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CHAPTER 2

The History of Labor Management Relations

UNCLE BOB USED to try and explain to me what it meant to be a labor man. This was generally a part of his usual rant about how workers today, especially young workers, had no under- standing of or appreciation for what it took to achieve some of the working conditions they enjoyed today, such as the eight- hour work day, paid vacations and holidays, protection from unsafe working conditions, and so on. In Uncle Bob s view, every advancement made by American workers over the past 100 years occurred because workers learned to join together and fight for their right to enjoy the American dream. That fight often involved pressuring employers to make more improve- ments at a faster pace than employers would likely be inclined to do in the absence of such pressure. Sometimes it meant pres- suring politicians to support needed change or sometimes other societal institutions (religious, civic, and charitable organizations) as well. A strong union movement helped to ensure that as employers profited from economic growth, so too increased the prosperity of typical workers helping to create a strong middle class in this country. I suspect Uncle Bob s pro-labor views didn t do adequate justice to the history of the positive contribu- tions made by employers or other societal groups strongly sup- portive of a free enterprise system and economic growth. Still I must admit, I knew very little about the history of labor management relations in the United States and how personal- ities, events, environmental factors, and formal organizations interacted to create the type of labor management relations I experienced on the job today.

43

Questions 1. Some would argue that the middle class in America is shrinking

today. Do you agree or disagree and why?

2. To what extent do you think the decline in union membership in the United States has made it more or less difficult for individuals to maintain their standard of living?

3. Should labor history be a subject taught in public/private schools in the United States similar to required study of the free enterprise system and leading entrepreneurs (e.g., John D. Rockefeller, Andrew Carnegie, Bill Gates)?

The American labor movement, as we know it, has adjusted to changing social and eco-nomic events, employers attitudes and actions, and employee preferences for more than 100 years. A historical perspective is necessary to better understand current union behavior and help us predict how most unions might react to sudden and dramatic change.

There is no best way to obtain this perspective.1 Insights from many academic disci- plines (sociology, economics, political science, etc.) have to be considered, and many focal points can be assessed. Our discussion focuses on what has worked and not worked for organized labor through two interrelated historical dimensions: (1) relations between labor and management organizations and (2) organizational characteristics of labor organizations.

This second dimension is important to labor relations students and practitioners because current national union and labor federations have been historically affected by four major labor organizations: the Knights of Labor (KOL), the Industrial Workers of the World (IWW), the American Federation of Labor (AFL), and the Congress of Indus- trial Organizations (CIO).

The strength or likely continued success of any labor organization can be assessed by focusing on four criteria:

A labor organization s structural and financial stability. Its ability to work within the established political and economic system, particularly the wage system. The degree to which the broader social environment, such as laws, media, and pub- lic opinion, is supportive or opposed to a labor organization s goals and tactics. The ability of union leaders to identify and satisfy members goals and interests.

Readers can use these criteria to assess why some labor organizations failed in the past and to predict the likelihood of current unions posing a strong challenge to management. The chapter is organized into three time periods: from 1869 to World War I, World War I to World War II, and World War II to the present.

1869 to World War I

Unions as we know them today did not exist before 1800. There were some small guilds, joint associations of employers, and craftspeople, that pressed for professional standards

44

and restriction of outside competition.2 Such guilds typically pressed concerns that benefited employees and employers alike. By 1820, there had been only a few scattered strikes, usually over wages, because only two industries, shoemaking and printing, had even a semblance of collective bargaining. There was also no general labor philosophy or labor movement in the United States at this time, as labor organizations were princi- pally small groups of craft employees located in major metropolitan areas along the East- ern coast of the United States.3

The 1850s and 1860s saw development of the U.S. factory system (industrial revolu- tion), improved transportation, and increased product mobility, all factors that extended a company s (and potential unionized employees ) organization beyond the local com- munity. For example, an employer could produce shoes at lower wages in Baltimore and ship them to Boston, where they could be sold at a higher price. Negotiating similar terms and employment conditions for labor was viewed as a means to take wages out of competition; but to do so would require labor organizations capable of operating on a national rather than local basis. The Civil War (1861 1865) refined and encouraged mass production techniques, creating large concentrations of semiskilled and low-skilled employees under a single factory roof a situation that created conditions conducive to the organization of labor.

Early Legal Developments Involving Labor Management Relationships (1806 1931) Article I, Section 8, of the U.S. Constitution grants Congress the right to pass laws reg- ulating interstate and international commerce. Labor relation activities can affect inter- state commerce and therefore, since the late 1800s, they have been the focus of many statutory laws to regulate various aspects of the employment relationship. The First Amendment of the U.S. Constitution, which ensures the rights of peaceful assembly, freedom of association, and freedom of speech, usually has been interpreted as allowing employees to form and join unions and has provided the justification for union picketing (to communicate information to possible union members or supporters). The Fifth Amendment contains due process protections, and the Fourteenth Amendment prohibits state laws from depriving citizens of their constitutional rights, providing equal protec- tion under the law. These constitutional provisions play an important role in defining the basic framework of American labor law.

Few statutory labor laws were enacted prior to the late 1800s, so early U.S. history was governed by the application of common law. Common law is used to resolve a legal dispute only when no constitutional or statutory law applies to that dispute. In such situations, judges develop legal principles or procedures to resolve these types of dis- putes. Over time, these principles and procedures are adopted by other judges in similar disputes and come to represent the common law. Early U.S. common law was based upon English common law principles as modified by local custom and practice.

One example of a common law doctrine that is still often used today is the employment- at-will (EAW) doctrine. The EAW doctrine states that employment relationships established for an indefinite duration may be terminated by either the employer or the employee at any time for any or no stated reason. Arising from the English common law governing master servant relationships, employers have historically relied upon this common law doctrine as a basis for terminating employees for a wide variety of reasons without permitting the termi- nated individual to legally challenge whether management s decision or reasoning was correct or justified. Of course, if a group of employees were to join a union that bargained an employ- ment contract with their employer that established terms and conditions of employment, then such employees would no longer be considered employees-at-will, and their job rights

CHAPTER 2 The History of Labor Management Relations 45

and protections would be governed by the jointly negotiated and administered labor agree- ment. Thus for many employers, the question of whether their employees join a union and engage in collective bargaining directly affects the employer s ability to make decisions con- cerning specific employees and whether those decisions will be subjected to legal challenge through a grievance procedure contained in the applicable collective bargaining agreement. Over time the EAW doctrine has been modified by the passage of laws and court interpreta- tions intended to prohibit employers from discharging individuals for certain protected rea- sons (e.g., joining a union or an individual s race, sex, or religion). In many states, the EAW doctrine remains the primary protection of management s right to discharge employees. This doctrine is more thoroughly discussed in Chapter 12.

Early labor unions in the United States had to struggle for existence. The legal sys- tem was primarily focused on protecting employer property rights to advance the eco- nomic growth of the nation, with little importance placed on protecting the rights of employees within the emerging free enterprise economic system. Employer property rights were defined in broad terms to include both tangible property (e.g., right to con- trol plant, equipment, employees) as well as intangible property (e.g., right to engage in normal business, right to make a profit). Due to the absence of statutory laws regulating labor relations, the judicial system exerted great control over conflicts of interests between employers and employees from the early 1800s through the 1930s.

Under English common law, it was illegal for two or more workers to join together for the purpose of pressuring their employer to improve wages or working conditions. In 1806, one of the first major labor law cases in the United States, known as the Cordwai- ners case, occurred when a group of journeymen shoemakers in Philadelphia were indicted, convicted, and fined $8 each for forming an illegal criminal conspiracy. The shoemakers had joined together in an attempt to raise their wages and refused to work with nonmembers or at a wage rate less than they demanded. Twelve jurors (all busi- nessmen) found the shoemakers guilty of forming an illegal combination for the purpose of raising their own wages while injuring those who did not join the coalition.4 The pros- ecutor in the trial stated: Our position is that no man is at liberty to combine, conspire, confederate and unlawfully agree to regulate the whole body of workmen in the city. The defendants are not indicted for regulating their own individual wages but for undertak- ing by a combination, to regulate the price of labor of others as well as their own. It must be known to you, every society of people are affected by such confederacies; they are injurious to the public good and against the public interest. 5

The application of the common law criminal conspiracy doctrine to attempts by employees to organize unions aroused much public protest, not only from employees but also from factory owners who feared the closing of their factories if their employees dissat- isfaction grew too strong. These concerns were undoubtedly a consideration when the Supreme Judicial Court of Massachusetts in Commonwealth v. Hunt (1842) set aside the criminal conspiracy conviction of seven members of the Journeymen Bootmakers Society who had refused to work in shops where nonmembers were employed at less than their scheduled rate of $2 per pair of boots.6 While not rejecting the criminal conspiracy doctrine, the court instituted an ends/means test to be applied on a case-by-case basis to determine if the ends (goals) sought by the combination of workers were legal and if the means (tactics) used by the workers were also lawful. The court concluded it was not illegal for workers to seek to protect their own economic interests in maintaining a desired wage rate, nor was it illegal to refuse to work as a means of encouraging an employer not to hire an individual at a lower wage rate, thus undercutting the current established rate of pay for a particular type of labor. Of course, in order to continue normal business operations, the employer was free to replace any employee who refused to work.

46 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Civil Conspiracy Doctrine The Commonwealth v. Hunt decision virtually ended the use of the common law criminal conspiracy doctrine in labor relations. However, the courts continued to apply the civil conspiracy doctrine, which held that a group involved in concerted activities violated the law if it inflicted harm on other parties outside the disputants (e.g., customers or other employees) even though the workers were pursuing a valid objective in their own interest.7

In Vegelahn v. Guntner (Mass. S.Ct. 1896), an injunction was issued against a union that was picketing its employer to obtain higher wages and shorter hours.8 Although the court agreed that higher wages and shorter work hours were legitimate ends for workers to pur- sue, the court concluded that picketing, accompanied by threats of violence, could unlaw- fully intimidate individuals who desired to continue to work for the employer or customers who sought to do business with the employer and, therefore, was an unlawful means to accomplish an otherwise lawful end. Only where both the workers ends and their means were lawful would the concerted activity be permitted.

Around 1880, many states began loosening restrictions on who could serve on juries (e.g., removing property ownership requirements), which permitted more hourly workers to perform jury duty service. As a consequence, juries became less willing to convict workers of criminal or civil conspiracy charges. Employers turned to the courts for a quicker and more reliable means of restricting employee concerted activities, which the legal system provided in the form of a labor injunction.9 A labor injunction is a court order prohibiting or restricting certain activities in conjunction with a labor dispute. The advantage of a labor injunction over a jury trial was that a preliminary labor injunction could be issued by a judge without a formal jury hearing and was often based solely on statements or evidence provided by the employer to demonstrate the need for the labor injunction. It might be weeks or months before the labor organization enjoined might get a chance to challenge the credibility of the employer s evidence or offer alternative evidence at a hearing to show why a labor injunction was not necessary or appropriate. By that time the employer had often prevailed in ending the labor dispute on terms favorable to the employer s interest aided by the labor injunction s restrictions on work- ers ability to use effective economic pressure tactics against the employer.

The courts long-standing interest in enforcing the terms of contracts led many employ- ers to require their employees to sign a yellow-dog contract, an agreement stating that they would neither join a union nor assist in organizing one.10 Why would an employer use the yellow-dog contract if, under the EAW doctrine, it could already legally fire employees for virtually any reason including organizing a union? While motives varied, we believe that three reasons were predominant. First, asking employees to sign a yellow-dog contract sent a strong signal that a union would not be tolerated at the company. Second, because this contract was a condition of initial or continued employment, any violation would clearly allow the company to discharge the employee. Third, if any outside union organizer attempted to solicit employees to join a union or engage in other concerted activity (such as a strike to improve wages or working conditions), such activity could be enjoined by a judge on the grounds that it was an attempt to interfere with a legal contractual relationship between the employer and its employees. Union organizers who violated the court order could then be charged with contempt of court and fined and/or imprisoned.

Application of Antitrust Legislation to Labor Unions Another legal obstacle confronting labor organizations in the late 1800s was the applica- tion of antitrust law to restrict union-organizing and bargaining activities. Congress passed the Sherman Antitrust Act in 1890 to regulate the increasing power of large

CHAPTER 2 The History of Labor Management Relations 47

corporations to engage in anti-competitive practices (e.g., cutthroat pricing, restricting competitor s access to necessary raw materials), which tended to drive smaller firms out of the market.11 The Sherman Antitrust Act neither explicitly included nor excluded labor unions from coverage as an illegal combination in restraint of interstate commerce. The congressional debate and testimony leading to passage of the bill focused on the business practices of employers, not labor organizations.

The U.S. Supreme Court decided to apply the Sherman Antitrust Act to labor orga- nizations in the 1908 landmark decision Loewe v. Lawlor (better known as the Danbury Hatters case).12 The United Hatters of North America (UHU), having organized 70 of 82 firms in the hat manufacturing industry, wanted to organize Loewe & Co., one of the few remaining nonunion employers located in Danbury, Connecticut. As a part of the UHU s campaign to gain union recognition as the bargaining agent for employees at Loewe & Co., the union organized a nationwide boycott assisted by the AFL and directed at persuading all retailers, wholesalers, and customers not to buy, sell, or handle hats produced by Loewe & Co. The boycott was successful, which prompted Loewe & Co. to sue, alleging that the UHU s boycott interfered with Loewe & Co. s ability to engage in its normal interstate commerce of selling hats. The Supreme Court ruled that unions were covered under the Sherman Act and that the union s boycott did illegally obstruct Loewe & Co. s ability to engage in its normal interstate commerce. The court awarded the employer triple damages ($252,000) as provided for under the Sherman Antitrust Act and ruled that individual union members could be held liable for paying the damage award if the labor organization itself did not have sufficient funds to pay the claim.

The Loewe v. Lawlor decision had several important impacts on labor relations. First, the decision essentially eliminated the use of the boycott, which had previously been an effective union tactic for bringing economic pressure against an employer to persuade it to agree to union proposals. It also raised concerns in the minds of some union leaders as to whether the courts might extend the ruling on boycotts in future legal cases to include other union tactics (e.g., picketing, strikes, or handbilling) also intended to impose economic pressure on an employer s business operations. Second, the court s decision to hold individual union members personally liable for damages resulting from the actions of their labor organization dealt a serious blow to union- organizing efforts. Not only could an employee face discharge for participating in union-organizing activity, but if the organizing activity was declared to be an antitrust violation, the employee might also risk loss of personal assets acquired over the indivi- dual s work career, as some UHU members experienced.

One positive aspect for unions of the Loewe v. Lawlor decision was that it clearly demonstrated to AFL president Samuel Gompers and other labor leaders the need to expand state and local union political efforts to include Congress and other federal branches of government. An aggressive campaign led by the AFL to reverse the court s interpretation of the Sherman Antitrust Act led to the enactment of the Clayton Anti- trust Act in 1914. Included among the Clayton Act s amendments to the Sherman Anti- trust Act were the following provisions:

[The] labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and opera- tions of labor [unions] nor shall such organizations be held or construed to be illegal combinations or conspiracies in restraint of trade.

No restraining order or injunction shall be granted in any case between an employer and employees growing out of a dispute concerning terms or conditions of employment, unless necessary to prevent irreparable injury to property.

48 PART 1 Recognizing Rights and Responsibilities of Unions and Management

No such restraining order shall prohibit any person or persons from ceasing to perform work recommending, advising, or persuading others by peaceful means so to do peacefully persuading any person to work or abstain from working peacefully assembling in a lawful manner, and for lawful purposes.13

When AFL president Samuel Gompers read the provisions of the Clayton Act, he pro- claimed it U.S. labor s Magna Charta because it would free organized labor from the restraints of antitrust prosecution. Gompers s joy, however, was short-lived. A series of Supreme Court decisions in the 1920s left no doubt that the Clayton Act was not labor s Magna Charta.14 Rather than viewing the Clayton Act as a repudiation of the court s prior interpretation of the Sherman Antitrust Act, the Supreme Court interpreted Congress s intent in passing the Clayton Act as only reaffirming a labor organization s right to exist so long as it sought to achieve lawful ends using lawful means. In fact, the Clayton Act hurt union growth and development more than it helped. Under the Clayton Act employ- ers could directly seek a court order for a labor injunction rather than having to ask a U.S. district attorney to seek such a court order, as had been required under the Sherman Act.

Some states attempted to address perceived labor law deficiencies on their own by enacting state labor legislation to grant legal bargaining rights to employees or restrict the circumstances under which a state court judge could issue a labor injunction to ban employee activity during a labor dispute. For example, in 1921 the U.S. Supreme Court declared a law enacted by the Arizona legislature and upheld by the Arizona Supreme Court unconstitutional in violation of the Fifth and Fourteenth Amendments.15 The Ari- zona law sought to deny a judge the right to issue a labor injunction during a labor dispute to halt peaceful picketing. The Supreme Court majority declared that the Arizona law unlawfully denied the employer being picketed during a wage dispute its due process and equal protection right to obtain a labor injunction to prevent the picketing from damaging normal business operations. The dissenting opinion argued that states such as Arizona ought to be free to determine for themselves whether some restrictions on employer prop- erty rights (e.g., limiting access to injunctive relief) might be imposed if necessary to pro- tect other legitimate rights of employees to participate in bargaining over work conditions.

The 1920s were a difficult period for organized labor. Although this was a period of general economic growth and prosperity, unions confronted an environment where labor injunctions were easier to obtain; the court system strongly supported employer property rights; favorable legislation protecting employees right to organize and bargain collec- tively was absent; and employers commonly used anti-union tactics (such as goon squads, yellow-dog contracts, discharge, and blacklisting). Although the Railway Labor Act (discussed in Chapter 3), passed in 1926, granted bargaining rights to railroad employees, the 1920s was primarily a time of regrouping, self-analysis, and trying to preserve the status quo for most unions.

Emergence of National Labor Organizations During the period of 1869 to World War I, three national labor organizations emerged: the KOL, the AFL, and the IWW. Each of these organizations is discussed in terms of its philosophy and goals, organizational structure, and strategies and tactics. Reasons sug- gested for the demise of the KOL and decline of the IWW are discussed to illustrate the previously mentioned criteria for assessing the strength or success of a labor organi- zation. Three prominent labor episodes of this period are also discussed: the drive for an eight-hour workday (including the Haymarket Riot of 1886), the Homestead strike (1892), and the Pullman strike (1894). The Labor Relations in Action box highlights some of the key events that have helped to shape U.S. labor relations over time.

CHAPTER 2 The History of Labor Management Relations 49

LABOR RELATIONS IN ACTION Labor History Time Line: Selected Events

Year Event

Late 1700s Emergence of local craft unions in large East Coast cities (e.g., New York, Philadelphia). 1842 The Massachusetts Supreme Court in Commonwealth v. Hunt establishes a legal precedent

that workers have a right to combine together for the purpose of pursuing lawful end (goals) using lawful means (tactics).

1850 U.S. economy begins to shift from an agricultural base to a manufacturing (industrial) base. Regional and national product markets emerge with larger firms able to use new technology and improved transportation modes (roads, rail) to mass produce goods.

1869 Noble Order of the Knights of Labor organized. 1880s Use of the labor injunction to prohibit or restrict employees concerted activities replaces reli-

ance on criminal or civil conspiracy trials and emerges as a popular management legal strategy. 1886 Eight-hour day movement gains momentum; Haymarket Square Riot occurs in Chicago, Illinois;

American Federation of Labor (AFL) is organized, electing Samuel Gompers as president. 1892 The Homestead strike involving the Amalgamated Association of Iron, Steel and Tin Workers

and steel mills owned by Andrew Carnegie occurs. 1894 Eugene Debs leads the American Railway Union in a strike against the Pullman Company,

resulting in federal troop intervention in the labor dispute. 1905 The Industrial Workers of the World (IWW) organizes. 1908 U.S. Supreme Court declares a national product boycott by the United Hatters Union to be a

violation of the Sherman Antitrust Act. 1911 Triangle Waist Company fire in New York City leads to the death of 146 clothing workers. This

tragedy focuses national attention on the poor working conditions facing many industrial employees.

1913 Congress creates the U.S. Department of Labor, and the department s head (Secretary of Labor) is designated a member of the president s cabinet.

1926 Railway Labor Act enacted, granting employees in the private-sector railroad industry the right to form unions and bargain collectively.

1932 The Norris-LaGuardia Act enacted, placing restrictions on the issuance of labor injunctions dur- ing labor disputes and making yellow-dog contracts unenforceable in court.

1933 U.S. Secretary of Labor Frances Perkins becomes the first woman to serve as a member of the president s cabinet.

1935 National Labor Relations (Wagner) Act enacted, granting most private-sector employees the right to form unions and bargain collectively. The Committee for Industrial Organization created by several AFL unions to encourage efforts to organize workers in the mass production indus- tries (auto, steel, rubber, etc.).

1936 Railway Labor Act amended to add coverage of the airline industry. 1938 The Committee for Industrial Organization is reorganized as the Congress of Industrial Organi-

zations (CIO), electing John L. Lewis as its first president. Fair Labor Standards Act enacted, establishing a federal minimum wage of 25 cents per hour and requiring time and one-half pay for hours worked in excess of 40 hours in a regular work week.

1947 Labor Management Relations (Taft Hartley) Act enacted over the veto of President Truman. Retains NLRA protections for employee collective activity but adds protection for the right of individual employees not to engage in collective activity and imposed restrictions on union conduct similar to restrictions imposed on management conduct by the NLRA.

1952 Presidents of both the AFL and CIO die of natural causes in the same month, setting the stage for new leadership by AFL president George Meany and CIO president Walter Reuther.

50

Year Event

1955 AFL and CIO labor organizations merge to form the AFL-CIO, electing George Meany as presi- dent and Walter Reuther as vice president.

1959 Following Senate hearings on alleged organized crime infiltration of unions, the Labor Manage- ment Reporting and Disclosure (Landrum Griffin) Act enacted to regulate the internal affairs of unions and their relationship with individual union members.

1959 Wisconsin passes the first state law allowing collective bargaining by state and local govern- ment employees.

1962 President John F. Kennedy issues Executive Order 10988, permitting federal employees to organize and engage in collective bargaining.

1963 Equal Pay Act enacted, prohibiting different wage rates based on sex for workers performing the same job who are subject to coverage under the Fair Labor Standards Act.

1964 Civil Rights Act enacted, prohibiting discrimination based upon race, color, religion, sex, or national origin in hiring, apprenticeship, compensation, terms or conditions of employment, and union membership.

1967 Age Discrimination in Employment Act enacted, making it illegal to discriminate against indivi- duals 40 years of age or older in regard to hiring, discharge, or other employment decisions on the basis of the individual s age.

1968 Unrest leads to increased organizing, bargaining, and strikes by public employees (e.g., police, firefighters, and teachers). Martin Luther King Jr. is assassinated while helping to lead a sanita- tion workers strike in Memphis, Tennessee.

1970 Occupational Health and Safety Act enacted to provide a safe and healthy work environment for American workers. Congress passes the Racketeer Influenced and Corrupt Organizations Act (RICO) which allows the prosecution of organizational leaders for racketeering if two or more crimes have been committed by the organization in a ten-year period; used against crime syndicates involved with business firms and labor unions.

1974 Employee Retirement Income Security Act (ERISA) enacted to regulate defined-benefit pension plans; the goal of the law was to protect employee pensions.

1975 Economy begins to transition from industrial-based to service-based. 1978 Civil Service Reform Act enacted, converting previous presidential executive orders establish-

ing bargaining right for federal employees into permanent legislation. 1980 Increasing global competition ushers in a decade in which many U.S. firms are forced to

undergo dramatic change in order to remain competitive. Concession bargaining, flexible work rules, and labor management cooperation become common topics for negotiation.

1981 Members of the Professional Air Traffic Controllers Union (PATCO) engage in an illegal strike and are discharged by the Reagan administration. This act was widely interpreted by practitioners in the private and public sectors as evidence of a new employer get tough policy in labor rela- tions. Union avoidance consultants advised firms on how to become or remain union free.

1988 Worker Adjustment and Retraining Notification Act enacted. Requires employers who employ 100 or more employees to provide 60 days advance notice of any plant closing or major layoff.

1991 Americans with Disabilities Act enacted to protect persons with disabilities from discrimination in regard to hiring, discharge, or other terms and conditions of employment. Civil Rights Act of 1991 amended Title VII of the 1964 Civil Rights Act to permit (1) suits for punitive damages for violations involving intentional discrimination and (2) the use of alternative dispute resolution methods to resolve employment discrimination claims.

(Continues)

51

The Knights of Labor (KOL)

Goals and Organization of the KOL Founded by Uriah S. Stephens as a secret society in 1869, the Knights of Labor (KOL) operated in secrecy until 1882 so that the members would not be discharged by their employers for participating in a labor organization. There are two major reasons for dis- cussing the KOL. First, rather than limiting membership to a local geographic area, it was a national union that had a scope larger than any previous union in American his- tory. The KOL enjoyed steady growth in the early 1880s, reaching a membership of more than 100,000 in 1885. Between 1885 and 1886, the organization s membership increased dramatically to 700,000. The KOL achieved more power, prestige, and notoriety than any other previous labor organization.16 However, its goals and strategies also contributed to its demise as an effective organization. Therefore, the KOL served as an important nega- tive example to the AFL and other contemporary labor organizations that followed as they worked to establish goals, policies, and an organizational structure necessary to sur- vive and grow as a labor organization.

The Knights attracted members who were dissatisfied with many features of the new industrial revolution, which dramatically altered work practices and relationships begin- ning at the time of the Civil War. In response to workers concerns, the KOL established two major interrelated goals:

1. Change the existing labor management relationship so that the depersonalized and specialized aspects of mass production could be avoided.

2. Attain moral betterment for employees and society.

The KOL s goals can best be understood through the views of Terence Powderly, its leader and chief spokesman from 1879 to 1883. Powderly felt that mass production reduced employees feelings of pride and personal accomplishment.17 During the Agri- cultural Economy era, prior to 1850, work occurred in relatively small shops where employees often gained satisfaction and pride from their craftsmanship as they created high-quality customized products from beginning to end. The Industrial Economy (1850 1975) utilized mass production techniques and job specialization so that different

Year Event

1992 North American Free Trade Agreement enacted; intended to promote trade between the United States, Canada, and Mexico.

1993 The Family and Medical Leave Act enacted, permitting employees of employers who employ 50 or more employees to take up to 12 weeks of unpaid time off in the event of a birth, adop- tion, or foster care of a child; or to care for a child, parent, spouse, or themselves involving a serious health condition.

2005 Formation of the Change to Win labor federation to focus more resources on organizing unrep- resented employees.

2009 Lilly Ledbetter Fair Pay Act enacted to clarify the time limit within which a pay discrimination claim may be filed but limiting any potential employer liability for damages to a maximum of two years.

52

jobs focused only on a relatively few tasks which, when combined with other employees job output, could produce a complete product. Because the time and skill level required to learn and perform, a limited set of job tasks were less than previously required to pro- duce the entire product, less costly labor could be employed, and more easily replaced when necessary. Powderly placed this situation in perspective by considering the shoe- makers situation: The man who was called a shoemaker 30 years ago made shoes; the man who claims to be a shoemaker today makes only part of a shoe. What was once a trade in itself is a multiplicity of trades. Once there were shoemakers, now we have Bea- ters, Binders, Bottomers, Buffers, Burnishers, Channellers, Crimpers, Cutters, Dressers, Edge Setters and several other workers at the shoe trade, and they all consider them- selves shoemakers. 18

Employees working in these specialized classifications often did not obtain meaning or satisfaction from their fragmented work tasks. Powderly also felt that bankers and owners of gold were the villains of industrial society, causing higher taxes for employees and creating monopolies that further depersonalized the individual employee.19

The KOL believed that changing the existing industrial and societal system would help accomplish a second goal, moral betterment, and increased dignity for their mem- bers. Powderly claimed that members must place their concerns on a higher ground than material working conditions, as these physical effects were but stepping stones to a higher cause, of a nobler nature the more exalted and divine nature of man, his

high and noble capabilities for good. 20 The leadership of the KOL were continually con- cerned that its members would devote too much attention to improving working condi- tions and ignore the goal of moral betterment to make every man his own master.21

The moralistic overtones of the Knights guided their membership policies, organiza- tional structure, and strategies and tactics. Because moral betterment affected all mem- bers of society, the KOL adopted a One Big Union approach encouraging people of all job types and skill levels to join the organization except professional gamblers, stock- brokers, lawyers, bankers, and those who lived in whole or in part by the sale or manu- facture of intoxicating liquors.22 Employers were also encouraged to join the KOL, the rationale being that they along with employees were being duped by financiers and law- yers, and once educated to this fact would join hands with their employees to improve society.

The local assembly, the basic unit in the KOL, could consist of employers and employees from several different trades. By 1886, there were 1,100 KOL local assemblies. However, the formal authority and power of the KOL remained centralized in the hands of the General Executive Board headed by Powderly.23 As seen later in this section, the top-down pyramid structure of the KOL later led the AFL to adopt a dramatically differ- ent organizational structure.

Strategies to Accomplish the KOL s Goals The Knights used at least four strategies to accomplish their goals. First, political action was viewed as important, particularly because the Knights felt that previous legislation had led society down the wrong road. The Knights believed that politicians were moti- vated by self-interest and therefore required careful watching. However, the Knights believed in operating through existing political parties. The KOL actively lobbied for leg- islation to restrict the immigration of foreign labor. Employers often encouraged less restrictive immigration policies as a way to expand the labor supply, thereby reducing the cost (value) of labor. The KOL lobbied for increased funding of public school sys- tems to give every individual an opportunity to become better educated.

CHAPTER 2 The History of Labor Management Relations 53

They also lobbied against the use of prison labor. At that time, companies in some states could secure contracts to use prisoners as workers, who were often paid very little in wages. Because of the lower labor costs, firms with prison contracts could expand their market share at the expense of their competitors. Occasionally, prisoners were used as strikebreakers. Thus, labor leaders complained that prisoners were given work even as honest citizens lost their jobs. Some business and religious leaders also believed that the system gave some firms an unfair advantage over others and lobbied for change. Initially resistant, many states eventually passed laws limiting the use of prison labor in the private sector. Consequently, to keep prisoners from becoming idle, penitentiaries gave their prisoners public-sector work to do.24

A second strategy was the encouragement of producer and consumer cooperatives. Unlike the socialists, the Knights did not want the cooperatives to be owned by the state. Instead, the KOL wanted employees to save enough from their wages to either purchase established operations or create their own cooperative ventures. Because factories would then be owned by the employees, KOL leaders reasoned that conflict between employees and employers would cease. Cooperatives would also enable employees to become their own masters, granting them a voice in decision making, including the determination of a fair distribution of profits.

The Knights leadership believed cooperatives would affect the established wage profit system most directly; yet they made little attempt to establish cooperatives or to financially support the approximately 100 cooperatives that were established by KOL local or district assemblies during the mid-1880s. Most of these cooperatives failed because of inefficient managers, squabbles among shareholders, lack of capital, and inju- dicious borrowing of money at high rates of interest. 25

The KOL pursued a third strategy when it actively avoided the use of strikes to obtain its goals. Indeed, the KOL s leadership often actively discouraged strikes and, in some cases, demoralized local assembly members by failing to financially support local assembly strike actions.26 Some leaders viewed strikes as a last resort that could result in labor violence and lessen the common interests of employers and employees, serving to distract members from the major goal of moral betterment. The General Executive Board set up a complicated procedure that local assemblies had to follow before they could obtain strike funds.27 Powderly believed that no employee should be able to enter a strike that would result in other employees losing their jobs; therefore, a procedure was needed to ensure that every employee possibly affected by a strike would have a voice in the strike decision.28 Yet the red tape involved in obtaining strike funds caused great dis- sension between the KOL leaders and members.29 Local assemblies that conducted strikes were often left on their own to financially support work stoppages, or KOL- approved funds arrived too late to effectively support a strike.

The Knights leadership preferred a fourth strategy as an alternative to the strike: namely, the education of its members and general citizens as to the perceived evils of the existing industrial system, as well as the Knights goals for societal improvement. Usually the leaders would meet with members of local assemblies in private sessions to inform them of the organization s goals and objectives. The emphasis on education instead of job action efforts (strikes and boycotts) is further discussed in the next section.

Reasons for the KOL s Failure and Demise Despite tremendous growth, the KOL experienced a sudden demise. One reason for its growth was a successful strike initiated by local assemblies against Jay Gould s railroads in 1885, during which the Knights showed the public that an aggressive, well-disciplined

54 PART 1 Recognizing Rights and Responsibilities of Unions and Management

group could take on one of the most powerful financiers of the day and win. Yet the effect of this strike may have been limited because neither the Knights nor the newspa- pers highly publicized the events. Another reason for the KOL s growth was its identifi- cation with the eight-hour workday, an issue of growing importance to the nation s workforce.30 However, as discussed in the next section, the KOL s actions in support of the eight-hour workday were rather weak.

The KOL s leadership operated under several faulty assumptions. First, the advan- tage of hindsight makes it clear that the KOL s leadership erred in assuming that techno- logical advancement could be halted and possibly reversed. Second, the KOL overestimated the extent to which employers and employees share common interests. Although some common ground exists, each group is motivated by self-interest, which in a profit-oriented economic system makes labor gains a cost factor to be minimized by employers in order to enhance ownership s interest. Employers are concerned about increased operating efficiency, effectiveness, and profitability, whereas employees are more concerned about job security, fair treatment, and improving working conditions.

The KOL s third faulty assumption was that all types of employees shared identical employment interests. The KOL was ahead of its time in its attempt to organize less- skilled employees a goal eventually accomplished by unions within the CIO in the late 1930s. However, employees do not all have the same employment interests, particularly if they have different skills or work classifications, or if they are employed in different industries or occupations. The one big union approach (enrolling nearly anyone who expressed an interest in the Knights) was further complicated by many immigrant mem- bers whose differences in race, language, and religion presented barriers to effective com- munication and achieving consensus regarding goals and tactics.31

Fourth, the KOL s success was further hampered by a lack of legislation protecting the rights of employees to join unions and engage in collective bargaining. Suffice it to say that the Knights, as well as other labor organizations before 1935, did not have a legal right to engage in many of the collective activities necessary for effective represen- tation of workers interests.

Finally, the inability of the KOL s leadership (particularly Powderly) to identify with members goals also presented a problem. The Knights insisted on adopting a middle class program for the American labor force, which they refused to contemplate in indus- trial, working-class terms. Almost all local assembly meetings required the members to dress up after a day s work to engage in intellectual discourse. The preference for intel- lectual deliberation over immediate action is perhaps best illustrated by Powderly s approach to the eight-hour workday movement.

The Eight-Hour Workday Movement and the Haymarket Riot One of the more important reforms desired by many employees in the late 1800s was reduc- ing the prevalent ten-hour workday to eight hours. Samuel Gompers, who was a Knights member and an official of other labor organizations (Federation of Organized Trades and Labor Unions and the Cigar Makers Union), pressed Powderly to support a nationwide gen- eral strike on May 1, 1886, in support of the eight-hour workday. Powderly was receptive to the goal of an eight-hour workday, as it would give employees more leisure time to pursue intellectual activities. However, Powderly did not join Gompers s call to action because he did not believe the length of the workday was the major problem: To talk of reducing the hours of labor without reducing the power of machinery is a waste of energy. 32

Supporters of the eight-hour workday believed that, if instituted, employers would have to hire more employees to perform the current total hours worked, thereby reducing the unemployment problem. On May 3, 1886, some workers striking over this issue in Chicago

CHAPTER 2 The History of Labor Management Relations 55

were involved in a skirmish with the police, and at least four strikers were killed. A leader of this dispute published an inflammatory circular urging Revenge! and Workingmen to Arms! The circular also indicated that a mass rally would be held the next day at Haymarket Square in Chicago. The stage was set for an event (known later as the Haymarket Riot) that virtually eliminated the KOL s effectiveness.

On May 4, 1886, approximately 3,000 people attended the scheduled meeting, which began peacefully. Police who monitored the meeting were ordered by their chief to return to the station. However, Police Captain Bonfield, whom the governor of Illinois later charged as being responsible for the incident, ordered them back to the meeting. During a speech a bomb was thrown into the gathering of police, killing 7 and wounding 60. What happened next is uncertain. The Chicago Tribune reported that anarchists and rioters poured in a shower of bullets before the first action of the police was taken. 33 Yet another report in the same article stated that the police opened fire on the crowd imme- diately after the bomb exploded. Regardless of the order of events, the police did shoot into the crowd, killing several and wounding 200.

Eight individuals allegedly responsible for the incident were arrested. Four of the eight were hanged, one committed suicide in prison, and three were eventually pardoned by the governor of Illinois after serving some of their sentences. The trial of these eight individuals contained a number of irregularities. For example, the hand-picked jury included a relative of one of the bombing victims.34 The trial never did establish who threw the bomb; however, the accused were judged guilty by the Chicago Tribune before the trial took place. More specifically, the paper stressed that the mob was led by two wirey whiskered foreigners, 35 who were Nihilistic Agitators. 36

The Knights were not directly labeled in the immediate press accounts of the strike nor in the subsequent series of unsuccessful strikes over the eight-hour workday, which involved nearly 340,000 employees. However, the strikes contributed to the organization s demise for at least two paradoxical reasons. A substantial body of public opinion did label the Knights as being involved in the strikes. Yet many of the Knights own members criti- cized their leadership for not participating enough in the events during and after the Hay- market Riot.37 Indeed, Powderly strongly discouraged strikes over the eight-hour workday, believing instead that members should write essays on the subject. Thus, the Haymarket Riot dramatically reflected the split between the KOL and the newly formed AFL led by Samuel Gompers, a labor organization that was to flourish and endure.

Origin and Goals of the American Federation of Labor The American Federation of Labor (AFL) was formed in 1886 after some of its member national unions (most notably the Cigar Makers) were expelled from the KOL.38 As pre- viously mentioned, Samuel Gompers, a major founder of the AFL, was a member of the KOL until he became disenchanted with the KOL leadership s long-range social reform philosophy. Gompers was also upset about KOL activities involving his own craft union, the Cigar Makers. In particular, the KOL tried to persuade local cigar makers to join a KOL assembly and sometimes supplied its own members to act as strikebreakers to work for employers who were being struck by the Cigar Makers (Gompers s) union.

Gompers met with KOL leaders in December 1886 to discuss these problems, but the meeting did not resolve the situation. Indeed, Gompers became incensed when a pamphlet was circulated among KOL representatives attacked Gompers personally by indicating the General Executive Board has never had the pleasure of seeing Mr. Gom- pers sober. 39 Also, in retrospect, KOL leaders blundered when they focused on recruit- ing skilled craft employees already members of existing craft unions (e.g., Cigar Makers union), a move that resulted in bitter reactions from those trade unions. The Knights

56 PART 1 Recognizing Rights and Responsibilities of Unions and Management

might have been better off (and still consistent with their goals) if they had devoted more attention to recruiting other, less-skilled employees who were not eligible for member- ship in existing skilled craft unions.40

Unlike the KOL, the AFL was not established as one big union. AFL member unions were organized along skilled craft lines, where only employees who shared a skilled trade (e.g., painters) were in the same union. (The current organizational structure of the AFL- CIO is discussed in detail in Chapter 4.) The AFL represented a federation of national unions cooperating for mutual gain while permitting each national union to maintain independent control over its own identity and operations. Craft unions such as the Cigar Makers, dominated the early stages of the AFL. The AFL influenced its member unions through its services, particularly organizing activities, philosophies, and strategies.

It is impossible to discuss the AFL apart from Gompers because in the early years, the AFL existed only in the person of Gompers and in the annual conventions. 41 With the exception of 1895, Gompers was president of the AFL from its founding in 1886 until his death in 1924. Therefore, much of the discussion of the goals, strategies, and organization of the AFL is from the perspective of Gompers, a point of view that still relates strongly to the thinking of organized labor.

Gompers placed little emphasis on intellectual betterment, and he scorned other union leaders pretensions to show labor union members the course of action they should pursue.42 Gompers criticized the KOL as representing a hodgepodge with no basis for solidarity with the exception of a comparatively few trade assemblies. 43 Gom- pers believed that the goals and organization of unions should flow directly and naturally from the members needs, not from the pronouncements of top leaders who structured unions based on their views of what should have been, rather than what was.

Gompers particularly scorned those union leaders who tried to change the existing social system through revolutionary means.44 Although Gompers was a socialist in his early years, he grew to despise this philosophy, contending that it was economically unsound, socially wrong, and impossible to apply in an industrial setting.45 Gompers believed that union members should work for equitable treatment within industrial soci- ety rather than revolt against it.

Thus, the AFL s major goal was to improve the material conditions of members through the existing capitalistic system. This goal was attacked by critics of the AFL as representing pure and simple unionism. Gompers embraced this intended attack; indeed, he seemed to devote most of his attention to ensuring that the AFL s pure and simple approach to collective bargaining successfully differentiated it from other labor organiza- tions. What can also be called business unionism represented a philosophy that the union was an organization whose business was to represent the employees interests in their dealings with their employers, just as a lawyer s business was to represent the cli- ent s interests in the courtroom.46

Pure and simple unionism had two major objectives. The primary objective was eco- nomic betterment of the organization s members. Gompers believed the truth, or essence, of labor unions should be measured in terms of their economic accomplishments:

Economic betterment today, tomorrow, in home and shop, was the foundation upon which trade unions have been built. Economic power is the base upon which may be devel- oped power in other fields. It is the foundation of organized society. Whoever or whatever controls economic power directs and shapes development for the group or the nation.47

Thus, the AFL s notion of employee dignity equated with measured economic gains. This view differed from the KOL s contention that employee dignity is attained by participation as equals in meaningful work and in other societal concerns.48

CHAPTER 2 The History of Labor Management Relations 57

Gompers also stressed a second objective of pure and simple unionism the enhancement of the capitalistic system, which could benefit both employees and employ- ers. Workers could obtain more only if capitalism continued to flourish. Without capital- ism, neither employees nor employers would receive revenues. The AFL therefore believed labor and management shared some similar interests. However, Gompers did not agree with Powderly that this situation would lead to complete employer employee agreement on all issues. Gompers realized that major differences of opinion would occur over the distribution of revenues and that employees would probably have to pressure employers to receive their fair share.

Strategies and Tactics of the AFL This realization prompted the AFL to rely on using economic pressure tactics when nec- essary to support its collective bargaining efforts. Unlike the KOL, Gompers believed the strike was a viable collective bargaining tactic: A workman must convince his employer that he is entitled to an advance in wages . Why should the wage earner work for less than living wages, which he would have to do if he could not strike? The worker is expected to continue to work at whatever wages his employer is willing to give in order to save the public from inconvenience. 49

A second AFL tactic (particularly after its headquarters moved to Washington, D.C.) was that of involvement in the political arena. Gompers, an aggressive lobbyist, attempted to translate election votes of AFL members into rewards for political friends of labor and punishments for political enemies of labor. However, political efforts dur- ing Gompers s leadership were neither intense nor widespread throughout the AFL.50

AFL political efforts were directed at influencing the existing two-party system instead of forming a third political party. Gompers felt that establishing a third party would divert too much time from fundamental collective bargaining efforts, and he was con- cerned that any new political party might fall under the socialists control.51

A third AFL tactic was to enhance the public status and reputation of organized labor and the collective bargaining process. Gompers devoted much attention to the National Civic Federation (NCF), formed in 1899 to promote industrial peace through collective bargaining. The NCF was composed of prominent labor, management, and political officials and attempted to guide public opinion toward the positive aspects of collective bargaining, including improved wages and working conditions. For example, unionized coal mines tended to have far fewer fatalities than nonunion mines. However, at least one observer of industrial relations has questioned the success of this public rela- tions tactic, believing that the NCF s rhetoric surpassed its performance. 52

Organization of the AFL The AFL s organizational structure was based on two principles. The first principle, exclusive union jurisdiction, had two normative ideas: First, workers should only be members of one union they should not join multiple unions; second, when dealing with a specific employer, one union should represent everyone who worked in that skilled craft. The AFL avoided the concept of one big union, which had proven ineffec- tive for the KOL, and insisted on using the principle of exclusive union jurisdiction. This principle rested on the twofold observation that (1) each craft or trade had unique work- ing conditions and job interests and (2) combining members of different trades into one organization would jeopardize those interests and cause unnecessary dissension. The AFL believed in one union representing each identifiable skilled craft; for example, sepa- rate unions to represent carpenters, painters, and cigar makers. Because membership in the AFL was restricted to established skilled crafts, many semiskilled workers did not meet the qualifications for membership in an AFL-affiliated union.

58 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The second principle was that of decentralized authority. Gompers strongly believed the AFL was a voluntary organization held together by the mutual self- interests of its members. Unlike Powderly, who believed that centralized authority was necessary to achieve the Knights objectives, Gompers viewed the AFL as a rope of sand, dependent entirely on the acceptance of its members. Thus, the real authority rested with the AFL s affiliated national unions and their member locals. As is further discussed in Chapter 4, these principles continue to influence contemporary union organizations.

Gompers was a most active union organizer who claimed to have helped in organiz- ing 28 unions representing different crafts such as painters, papermakers, firefighters, and post office clerks.53 Much of this effort was due to Gompers s view of himself as one of the boys he took pride in his ability to socialize with the members on their

own terms. Despite Gompers s efforts, the AFL s early growth was not spectacular. Its original

membership of 150,000 had increased to only 250,000, six years later. The initial slow growth was due to the counterattack of industry (discussed in the section on World War I to World War II), the generally repressive attitude of the government and the courts toward collective employee activities, and the difficulties created by the depression of 1893. Yet Gompers could view these modest membership gains as a tribute to the AFL s powers of stability and permanency. 54

From its formation until World War I, the AFL was directly or indirectly involved in three prominent events: the Homestead and Pullman incidents and the formation and demise of the IWW.

The Homestead Incident The Carnegie Steel Works, located in Homestead, Pennsylvania, was ironically the scene of one of the more violent episodes in labor history. The founder of the works, Andrew Carnegie, was a renowned philanthropist who gave every indication of being receptive to organized labor. In one article, written before the Homestead Incident, Carnegie stated that a strike or a lockout was a ridiculous affair because it represented only a test of strength instead of determining what was fair and just. 55 Carnegie also believed that labor management problems would occur in large firms run by salaried managers instead of owners because the managers had no permanent interest in the desires of the employees.

Carnegie s remarks proved prophetic in the Homestead Incident of July 6, 1892. Although many have labeled the incident a strike, one labor historian has noted that no-strike vote was ever taken by the membership, and the employer prohibited the employees from working, which would be more consistent with an employer lockout.56

During negotiation between the mill and the Amalgamated Association of Iron, Steel, and Tin Workers (an affiliate of the AFL), a 15-foot-high solid board fence, topped with barbed wire, was constructed around the building. Andrew Carnegie was vacation- ing in Scotland during negotiations and had delegated construction of the fence to a manager named Henry Clay Frick. The union labeled the structure around the steel mill Fort Frick. Union members were undoubtedly aware that Frick was negotiating with Pinkerton detectives as a potential strike intervention force at the same time nego- tiations were being conducted with the union. Frick intended to use Pinkerton detectives inside the facility to protect the company s property and as strikebreakers to perform work should a strike occur.

On June 30, 1892, the company made its last offer, which represented a substantial reduction of previous wages; when it was rejected, the company locked out its 4,000

CHAPTER 2 The History of Labor Management Relations 59

employees.57 Workers then began an around-the-clock surveillance of the plant. One newspaper account indicated, The line of pickets covers the river, roads, and railways so tightly that no stranger can enter the town without being known to the strikers. 58 On the morning of July 5, 300 Pinkertons gathered at Ashtabula, Ohio, and proceeded by rail to Youngstown, Ohio. They then traveled up the Monongahela River by barge. On July 6, word had reached those in Homestead that the Pinkertons would be entering the plant from the river. Six thousand people lined the river banks at 2:00 A.M., and employees pre- pared two small cannons, one on each side of the river, to be used on the Pinkertons.59

The Pinkertons attempted to land by the company s beach at 5:00 A.M.; shots were exchanged, and three Pinkertons were killed. Shooting by both sides continued for 12 hours, with an additional seven townspeople killed and 50 wounded. The Pinkertons sur- rendered to the townspeople and were forced to run a bloody gauntlet before being locked up for their protection. The townspeople had taken weapons from the Pinkertons, a situation that resulted in 8,700 National Guard members being sent to secure the town. There were few further attempts to occupy the mill by Pinkertons or strikebreakers.60

The incident ended for all purposes approximately 5 months later (November 20, 1892) when the Amalgamated lifted its prohibition against returning to work.

Homestead has been labeled the Waterloo of unions in the steel industry. After the Homestead Incident, membership in the national union dropped from 24,000 in 1892 to 8,000 in 1894. On the local level, only 800 of the original Homestead employees were reinstated. Carnegie s mills showed a dramatic increase in profits when the union was eliminated, a fact that encouraged other employers to take an anti-union stance.61

Although Homestead represented a victory for management, the AFL and organized labor did benefit to some extent from the situation. First, Gompers demonstrated to existing and potential union members his very real concern about the Homestead situa- tion.62 The funds contributed by the AFL to help defray the employees legal expenses also demonstrated that the AFL was interested in helping its member unions in a mate- rial sense.63 Finally, the Homestead situation received more sympathetic newspaper cov- erage than did the Haymarket Riot. The press charged Carnegie with provoking the situation. For example, the Chicago Tribune strongly criticized the company s use of Pin- kerton guards and contended that Carnegie s company, as well as any large industrial organization, has duties and obligations toward society which it must not forget, and not the least of them is to do all in its power, and make all of the concessions it can, to preserve civil and industrial peace. 64

The Pullman Strike In the late 1800s and early 1900s strikes were common in the railroad industry. For example, the Great Upheaval of 1877 involved independent railroad employee associa- tions protesting wage cuts. It was a bitter and violent confrontation in which more than 100 employees were killed and several hundred were badly wounded.65

Yet the Pullman Strike of 1894 assumed significance because of the principal per- sonalities involved (Eugene Debs and George Pullman) and an organization (the Ameri- can Railway Union (ARU)) that had the potential to challenge the AFL for union members. It also approached being a revolutionary strike in the United States, progres- sing from a nationwide strike in one industry to nearly involving all industries.

First, some background: George Pullman recognized the need for comfortable rail cars suited to long distance travel and he decided to fill that need. Consequently, Pull- man, who had experience as a carpenter and refurbishing other firm s passenger cars, began making railroad cars. He improved upon existing sleeper cars and offered the first dining car in the late 1860s. However, instead of simply selling railroad cars, he

60 PART 1 Recognizing Rights and Responsibilities of Unions and Management

usually rented them to the railroads, complete with staff. Thus, conductors, cooks, wait- ers, and porters usually were not employed by the client railroads, but were employed by Pullman.66 For more about the African-American employees who worked for Pullman and the Civil Rights movement, see the Labor Relations in Action Box.

As a result of the 1893 depression, the Pullman Palace Car Company laid off 3,000 of its 5,800 employees and cut wages 25 to 40 percent. Both actions were important because they occurred in the milieu of Pullman, Illinois (now a part of Chicago) a company town where the factory was located. This town represented a paternalistic social experiment by George Pullman. The company owned all the buildings, and houses in the town, which were built to provide living space for company employees, who were not allowed to own their own homes in the town.67 After wages were cut, the company did not reduce housing

LABOR RELATIONS IN ACTION Unions and the Civil Rights Movement

When George Pullman sought workers for his passen- ger cars in the mid-to-late 1800s, he found a ready source of labor, already experienced in pleasing others: Former slaves. For these workers, employment at Pull- man was a position of some status, although low wages had to be supplemented with tips and White passengers were sometimes condescending.

Prior to the 1960s, work in many parts of the coun- try was segregated based on race. Some jobs (e.g., train conductors) were generally reserved for Whites, while other jobs were reserved for Blacks and other minorities (e.g., train porters, baggage handlers). Unions often reflected the social norms of their day: Some refused to admit minority-group members. Others established auxiliary unions for Blacks and/or women workers.

Some union leaders, particularly in the CIO, were more open to the idea of admitting minority-group members because they felt that segregating the races only allowed managers to pit one group against another (e.g., threatening White workers with layoff and replace- ment with lower paid Blacks; using minorities as strike- breakers when White unions went on strike). Even when national union leaders embraced the idea of equal opportunity, local unions occasionally thwarted their efforts, as happened with the United Automobile Workers (UAW) in the late 1940s: Whites in a few fac- tories walked off the job rather than allow Blacks to do White work.

One union leader who worked to bring about equal employment opportunity for African-Americans was A. Phillip Randolph. A Socialist in his youth, in 1925 he was elected president of a labor union called the Broth- erhood of Sleeping Car Porters, which consisted of Blacks who worked for the Pullman Co. The following year Congress passed the Railway Labor Act, which regulated labor relations in the railroad industry. How- ever, because Pullman employees technically did not

work for the railroads (who merely rented cars from Pull- man), these porters were not covered under this new law. Randolph lobbied successfully to get the law chan- ged (1934) and then successfully negotiated a contract with Pullman Co. (1937) that provided pay raises and a shorter work week.

By 1940, U.S. defense industries were boosting production out of concerns that the country might be dragged into World War II. Yet Blacks were ineligible for many jobs due to racial segregation, which prompted some protest marches in selected cities. Randolph and other Civil Rights leaders proposed a March on Washington, D.C., where African-Americans would argue for equal employment opportunity. The march was called off, however, because President Roosevelt issued an Executive Order forbidding racial discrimina- tion in defense industries. Later, Randolph and others persuaded President Truman to issue an executive order abolishing racial segregation in the armed ser- vices. In the 1950s, he lobbied to end segregated schools and to promote equal voting rights for all races, forming an alliance with Rev. Martin Luther King, Jr. In 1963, over 20 years after he had first pro- posed it, he helped organize the March on Washington, D.C., which promoted passage of the 1964 Civil Rights Act. This law forbade discrimination in employment, access to job training, union membership, and other aspects of society. Randolph s incessant efforts had finally brought the sweeping legal changes he had sought over a 40-year career.

SOURCES: Cornelius L. Bynum, A. Philip Randolph and the Struggle for Civil Rights (Urbana, IL: University of Illinois Press, 2010); Venus Green, Not your average frater- nal organization: the IBPOEW and labor activism, 1935 1950, Labor History, 53(4), 2012, pp. 471 494; Kevin Boyle, There are no Union Sorrows that the Union Can t Heal : The struggle for racial equality in the United Automobile Workers, 1940 1960, Labor History, 36, 1995, pp. 5 24; Jervis Anderson, A. Philip Randolph: A Biographical Portrait (New York: Harcourt, Brace, Jovanovich, 1973).

61

rents or charges for other services. The wage cuts resulted in some employees having a net two-week pay of $1 to $6 during the winter of 1893 to 1894.

This situation generated much hostility among employees, many of whom were members of the ARU, formed in 1893. The ARU was completely independent from the AFL and competed for members with the AFL-affiliated railway craft unions. The ARU accepted any white employee, regardless of specific job classification, so that railroad employees could present a unified front to the railroad companies.68 The ARU was attractive to many employees because its inclusion of all types of railway workers served to counter employers previously successful strategy of creating dissension among the dif- ferent specialized craft unions by playing one against the other in wage negotiations.

The ARU s local unions had sole authority to call a strike, and the Pullman strike began on May 11, 1894. Eugene Debs, the ARU s leader, came to Chicago fresh from a labor victory: The Great Northern Railroad in Minnesota and North Dakota had tried to impose substantial wage cuts, but Debs led an ARU strike and, in April, 1894, got most of the cuts rescinded. Debs informed the Pullman strikers that the strike should repre- sent a protest against philosophical issues rather than just for mere material betterment: The paternalism of Pullman is the same as the interest of a slave holder in his human

chattels. You are striking to avert slavery and degradation. 69

At first the strikers followed Debs orders not to damage railroad property. The ARU instead adopted a strategy of not operating any train that included a Pullman sleeping car the common practice was to cut these cars from the train and move them to the side tracks. If any employee was discharged for this action, then the entire crew would quit, leaving the train immobilized. This tactic, employed in 27 states and territo- ries, was intended to make railroad carriers put pressure on Pullman to agree with the ARU s bargaining position.

The railroad employers rallied behind Pullman and countered the union s strategy by hiring strikebreakers. Railroad employers also decided to include federal mail on nearly every train as a way of getting support from the federal government to ensure the mail was delivered. Owners were able to obtain a labor injunction on July 2, 1894 (subsequently upheld by the U.S. Supreme Court), to prevent any employee from inter- fering with the delivery of the mail. Employees could no longer engage in their strike strategy of rendering the trains inoperative. Some 16,000 troops, dispatched by President Cleveland to enforce the injunction, either delivered the mail and operated the trains or protected strikebreakers so that food and other perishable items could be delivered throughout the country.

The strike then took a particularly ugly turn when employees burned at least 700 railroad cars in Chicago on July 7, 1894. Management was also criticized for this incident for failing to take minimum security measures, such as guarding or locking the railroad cars, to prevent such damage. There were allegations that some management officials may have even provoked the incident to receive additional support from the government. This possibility is suggested because all the burned cars were old (the newer, more expensive Pullman sleeping cars were not on the property), and very few of the cars were loaded with any product.70

The resulting negative public opinion and increased action by federal troops forced Debs to seek Gompers s cooperation. Debs wanted Gompers to call a national strike to help enforce Debs s last offer to settle the strike, which was simply management s agree- ment to reinstate the striking employees. Gompers refused to support Debs, contending that he did not have the authority to call a general strike. Gompers also believed that the proposed settlement would, in effect, admit to the public that the ARU had failed to win material benefits for its members. Much of Gompers s reluctance was based on his view

62 PART 1 Recognizing Rights and Responsibilities of Unions and Management

of Debs as being a leader of irregular movements and lost causes. 71 However, Gom- pers s inaction might also have been caused by his desire to eliminate a potential rival to the AFL and bolster his reputation in the business community.

Debs was eventually convicted and sentenced to federal prison in Atlanta, Georgia, for failing to abide by the court s labor injunction. In prison, Debs read books on social- ism and began to advocate the election of a government that would be responsive to the working classes by taking control of major industries including railroads. Eventually, Debs ran for the U.S. president as the Socialist Party s candidate. Meanwhile, the ARU, which had grown to 150,000 members in one year, quickly faded from existence. Orga- nized labor did learn an important lesson from the Pullman strike: It would be difficult to alter existing terms and conditions of employment when confronted by a persistent, if not exceptionally stubborn, owner (Pullman), the federal government (troops, injunc- tions, legislation), and negative public opinion (fueled by exaggerated and dramatic newspaper articles).

The Industrial Workers of the World The Industrial Workers of the World (IWW) was formed as an alternative to the AFL on June 27, 1905. William Big Bill Haywood, one of the initial organizers of the IWW, proclaimed the organization s goals in calling the convention of 209 delegates to order with the following remarks:

Fellow Workers . We are here to confederate the workers of this country into a working class movement that shall have for its purpose the emancipation of the work- ing class from the slave bondage of Capitalism. The aims and objects of this organi- zation should be to put the working class in possession of the economic power, the means of life, in control of the machinery of production and distribution without regard to capitalist masters.72

The significance of the IWW as a labor organization is that it represents perhaps the most serious effort in U.S. labor history to organize workers on the basis of a radical political ideology. The initial goal of the IWW was to overthrow the existing capitalistic system by any means necessary, based on the belief that employers and employees had nothing in common. The IWW s radical political ideology was a marked departure from the pure and simple unionism approach advocated by the AFL, which extolled the vir- tues of the capitalist system. While the KOL had also stressed that the existing wage and profit system needed to be reformed, the KOL believed that employees and employers shared similar interests and that change should be peaceful and gradual. The IWW, on the other hand, had no reservations about advocating the use of any method that would result in the quick destruction of capitalism; thus, some IWW leaders saw the union as a stepping stone to a communist society where all private property would be abolished.

The IWW also opposed any group that supported capitalism. This approach placed the IWW in direct opposition to the AFL, not to mention most other established orga- nizations in society. The IWW regarded the AFL as an extension of the capitalist class because it advocated pure and simple unionism, which was dependent on capitalism.73

Haywood believed that Gompers had sold out the ARU when he failed to support Debs in the Pullman strike, and he viewed Gompers as an arrogant, power-hungry leader.74

Thus, the IWW appeared to have two general enemies. One was capitalism. The second was the AFL. Unlike IWW leaders, AFL officers did not divide society into a ruling class and laboring class dichotomy. Thus, the AFL did not embrace the idea of a working-class movement of hourly employees uniting to overthrow capitalism.

CHAPTER 2 The History of Labor Management Relations 63

An analysis of the IWW reveals that establishing goals can be an easier task than accomplishing them. The IWW never did establish an effective organization; in fact, its leaders never made up their minds about precisely what kind of organizational structure it should adopt.75 Most of the IWW officials agreed with Haywood s objective of orga- nizing every man that earns his livelihood either by his brain or his muscle. 76 This was similar to the One Big Union approach previously tried by the KOL. However, major differences arose among IWW leaders over how to organize one big union into an effec- tive organization. Some members felt that the IWW should work slowly, for example, infiltrate the established AFL unions and gradually persuade members that the IWW cause was best. Others felt that this temporary acceptance of collective bargaining with the capitalists made employees only better paid slaves and would hinder the quick and necessary overthrow of the capitalistic system.77 In addition to organizational differ- ences, there were at least four other reasons for the decline of the IWW, reasons that served as negative lessons for contemporary organized labor.

1. Lack of permanent membership and financial base. A large proportion of the IWW consisted of itinerants individuals who either were unemployed or traveled from job to job, particularly in the agriculture, mining, and lumber industries. This contributed to an unstable financial base. Many IWW leaders thought the members dues should not be mandatory but instead should be paid out of a voluntary inner conviction. For example, in 1907 only 10,000 members out of the total 31,000 members paid any dues. The lack of revenues resulted in meager strike funds, and by 1909 the organization was deeply in debt.

2. Inability of the IWW to appeal to members interests. The IWW did not consider the short-run material interests of its members. Its major emphasis on long-term political and philosophical goals and its focus on propaganda as a means to achieve these goals failed to demonstrate tangible signs of success on a continuous basis.78

The average trade unionist, inside or outside the IWW, had no strong desire to help the underdog. Most employees were too focused on trying to survive them- selves. For example, while many men worked full time and were considered family breadwinners, it was sometimes financially necessary for their wives and children to also hold jobs in factories, work at home (e.g., sewing, laundry), or sell produce from gardens. Such families had little time for radical rhetoric.79

3. Identification of the IWW with sabotage and violence. The relationship between the IWW and sabotage and violence was ambiguous. The IWW in 1914 became the only labor organization ever at its convention to officially endorse sabotage as a legitimate labor tactic. Yet no local, state, or federal authority could ever establish legal proof of any IWW-instigated violence. A strike in 1917 closed the logging camps and sawmills of the Pacific Northwest but did not record any violent acts of sabotage by the IWW.80 The IWW often stated that sabotage does not always equal destruction of equipment. For example, employees could sabotage a company by malicious obedience (following the work rules to the letter, thereby creating a

slowdown) and by informing customers that the company s product was of inferior quality. However, at least one article in the IWW s paper, the Industrial Worker, indicated how emery dust and ground-up glass could cause the destruction of machinery. Evidence suggests that the IWW s leadership did not generally advocate physical violence.81 Yet, there are some accounts of incidents in which IWW mem- bers and leaders pledged a life for a life or an eye for an eye. 82 At a minimum, it would appear that the IWW did not actively discourage its link with violence. Given the widespread reputation for violence and inflammatory rhetoric that accompanied many IWW strikes, many workers distanced themselves from the union.

64 PART 1 Recognizing Rights and Responsibilities of Unions and Management

4. Alienation of the news media and government officials. The newspapers enhanced the IWW s reputation for violence by labeling members as desperate villains who set fire to wheat fields, drove spikes into sawmill-bound logs, derailed trains, destroyed industrial machinery, and killed policemen. 83 Part of this negative image was enhanced by leaders of IWW factions who would damn one another in the press. The IWW also engaged in several free speech fights soapbox speeches in local communities. This strategy, which has since been copied by various protest groups, including students, relied upon there being more participants than there were available jail spaces. City officials, faced with such a situation, typically allowed the unlawful demonstration to continue.84 In many of these speeches, members of the IWW would shout anti-social comments such as There is no God. 85

The press, never enthusiastic about unions in general, reserved a special hatred for the IWW. One editorial against the IWW stated: They would be much better dead, for they are absolutely useless in the human economy; they are the waste material of crea- tion and should be drained off into the sewer of oblivion there to rot in cold obstruction like any other excrement. 86

The IWW also remained alienated from the government. It did not actively use the existing political system because many of its transient members could not meet voter registration requirements. The IWW also incurred the wrath of the federal government when it opposed American involvement in World War I, proclaiming instead that the war represented a plot to allow capitalists to profit from the sale of war materials. Mean- while, they said working-class individuals served as soldiers in the armed conflict. IWW- led strikes reduced lumber and copper production for the war effort.

Opposition to the war and the Soviet revolution in Russia in 1917 led to what was called the Red Scare: A general concern that a communist revolution would happen in the United States. Several states passed criminal syndicalism laws. These laws outlawed the promotion or use of organized violence, sabotage, or terrorism to accomplish indus- trial aims or social revolution. Sedition laws such as the federal Espionage Act of 1917 and the Sedition Act of 1918 prohibited interfering with the war effort, spreading false rumors, advocating revolution, or incitement to resist lawful authority. Red Scare fears were also fueled by an anarchist letter-bomb campaign, the Boston police strike and an IWW-led general strike in Seattle in 1919. The government responded to these activities by creating a Federal Bureau of Investigation that aided in the arrest of more than 100 IWW leaders for sedition. Many foreign nationals were deported and hundreds of U.S.-born IWW leaders were sentenced to prison terms ranging from 5 to 20 years. In effect, the IWW ceased to be a major player on labor s stage after World War I. The organization went into a steep decline in the 1920s. The IWW was rejuvenated during the 1960s, but today it has only a few thousand members.87

The onset of World War I found the AFL confronting several challenges. The AFL had been the first national labor organization to withstand a severe economic depression, a hostile press, reluctant or hostile employers, and three rival labor organizations (KOL, ARU, and IWW). Yet the AFL also faced internal pressures from at least three sources: (1) socialists and other related political groups that advocated independent political action and the organization of low-skilled industrial employees, (2) pacifist members who wanted the AFL to remain neutral or take a stand against the war, and (3) member unions that became involved in jurisdictional disputes caused by increased specialization and technological change (e.g., the plumber was no longer responsible for the complete installation of the water and heating system for a building). Perhaps the most lingering concern of the AFL was that the largest proportion of unrepresented workers in the labor force, low- or semiskilled industrial employees, remained essentially outside the ranks of organized labor.88

CHAPTER 2 The History of Labor Management Relations 65

World War I to World War II

The period from World War I to World War II witnessed several important trends:

1. The inability of unions, particularly the AFL, to make substantial membership gains in the 1920s.

2. The further development of employer strategies to minimize union growth. 3. Increased union concern over organizing semiskilled industrial employees, which led

to a bitter rivalry between the AFL and the CIO.

Union Organizing after World War I: Problems and Prospects The AFL overcame its initial reluctance toward participating in World War I and even- tually pledged its cooperation when the United States became directly involved in the war. The government, aware of the need to ensure uninterrupted production of war materials, responded to the AFL by attempting to meet some its concerns. Government agreements with the AFL provided for the enforcement of trade union standards in all government contracts; labor representatives were appointed to all government agencies, including the War Labor Board; and Gompers was made a member of the Advisory Commission of the National Council of Defense. In short, organized labor was elevated to a more prominent status than had ever been witnessed before. Accordingly, the AFL had a sizable growth in membership during this period (an increase from 2.37 million members in 1917 to 3.26 million members in 1919). Legislative gains also occurred. A long-time AFL goal of severely restricting the number of new immigrants entering the country was accomplished.

The rather sharp increase in the cost of living that followed World War I, coupled with the newly recognized status of labor, resulted in an unprecedented number of strikes such as the Seattle General Strike of 1919, along with other strikes by actors, New York waterfront employees, and coal miners. The most widespread strike in 1919 occurred in the steel industry, where some 367,000 employees walked off the job in 70 major cities.

This strike actually resulted in a setback to organized labor in the steel industry. Many possible factors contributed to the setback. Some were notably similar to those found in the Homestead and Pullman incidents, whereas others reflected a typical situa- tion unions faced in the 1920s and early 1930s. Of crucial importance to the outcome of the 1919 steel strike were internal union difficulties: an organizing campaign conducted by 24 unions instead of one common industrial union; improvised leadership rather than a consistent union approach to the issues; and poor financial resources. U.S. Steel was also successful in withstanding the strike by using strikebreakers and maintaining strong ties with other companies and social institutions, such as the press and church leaders. The strike ended without a labor agreement, and another 15 years would elapse before organized labor would make any significant progress in organizing the steel industry.89

Although the steel industry did not reflect all industrial reactions to collective bar- gaining, apparently many other unions were similarly powerless to organize companies such as U.S. Steel, who firmly believed unions were not in the firm s best interests. For example, another 1919 strike almost paralyzed the coal industry when no miners returned to work until President Wilson persuaded them to accept a temporary wage increase and submit all other issues to the newly appointed Bituminous Coal Commis- sion. In 1920, the commission awarded increases ranging from 20 to 30 percent, but this was the last victory for mine employees for several years.

66 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION The American Labor Movement as Portrayed in Fiction

One way to learn about U.S. labor history is through works of fiction: The Labor Novel. While fiction is rarely completely historically accurate, it can give a sense of the problems that working-class families went through and why workers embraced certain solutions (e.g., labor unions, socialism, or violence or all three). A textbook gives the broad sweep of history; a novel can show the rich details of particular historical events as seen through the eyes of the novel s central characters.

It is good to consider the historical setting of a work of fiction as well as the context in which the person created the work; sometimes, a novel says as much about the time in which it was written (e.g., a twenty- first-century feminist viewpoint) as it does about the time in which the novel was set (e.g., early 1900s). Also the use of a particular genre of fiction, such as a detective story, to discuss labor relations may reflect the popularity of the genre at the time it was written.

Works of fiction tend to follow a few broad themes. One theme is the struggle between the impoverished workers and the rich unsympathetic industrialist. Another theme is the conflict within the family of the industrialist, as some family members may sympathize with the working classes. A third common theme is that of the honest union member fighting corruption (or gangsters or communists or all three) within his or her own union. A fourth theme is that of a manager, detective, police officer, or consultant fighting to keep a corrupt union from coming into a business or town. A fifth theme is that violent strikes are either inevitable or futile and that only through reason and compromise can labor management disputes be resolved. Finally, in some novels, there is the rejection of conventional social norms (including the American dream of mar- riage, having employment, and owning one s home) in favor of life as a revolutionary labor leader and the con- sequences that such a decision brings, both profes- sionally and personally. Often works of fiction are thinly disguised descriptions of actual people, unions, or events. If you read one of the following novels, you might do a little research and ask yourself how closely it relates to actual labor events.

Here are a few titles that you may find interesting and informative (some older titles are available as full- text, free e-books at Web sites such as www.books. google.com/, http://onlinebooks.library.upenn.edu/, or http://www.classicreader.com/):

Auch, Mary Jane (2004). Ashes of Roses. Random House.

Bullard, Arthur [Evans, Arthur, pseud.] (1913). Comrade Yetta. New York: Macmillan. Cantwell, Robert (1934). The Land of Plenty. New York: Farrar & Rinehart. Coleman, Louis (1931). Lumber. Boston: Little, Brown. Coleman, Lynn A. (2005). Fighting for Bread and Roses. Kregel. Conroy, Jack (1933). The Disinherited. New York: Covici-Friede Press. Farrell, Mary Cronk (2004). Fire in the Hole! New York: Clarion Books. Fast, Howard (1962). Power. New York: Doubleday. Foote, Mary H. (1894). Coeur d Alene. Boston: Houghton Mifflin. Garland, Hamlin (1903). Hesper. New York: Harper. Gilfillan, Lauren (1934). I Went to Pit College. New York: Viking Press. Grey, Zane (1920). Desert of Wheat. New York: Grossett & Dunlop. Haddix, Margaret P. (2007) Uprising. NY: Simon & Schuster. Kemske, Floyd (2000). Labor Day. Catbird Press. McCardell, Roy L. (1899). The Wage Slaves of New York. New York: G. W. Dillingham Co. McKenney, Ruth (1939). Industrial Valley. New York: Harcourt, Brace. Merwin, Samuel (1901). Calumet K New York: Macmillan. Newell, Arthur (1905). A Knight of the Toilers. Philadel- phia: F. L. Marsh. Perez, Norah A. (1988). Breaker. Houghton Mifflin. Phelps, Elizabeth Stuart (1871). The Silent Partner. Boston: James R. Osgood. Pinkerton, Allan (1877). The Mollie Maguires and the Detectives. Reprint, 1973, New York: Dover. Scott, Leroy (1905). The Walking Delegate. New York: Doubleday. Sinclair, Upton (1917). King Coal. self-published. (396 pages). Steinbeck, John (1936). In Dubious Battle. New York: Covici, Friede. Weber, K. (1996). Triangle: A Novel. Farrar, Straus, & Giroux. Wright, Harold B. (1921). Helen of the Old House. New York: D. Appleton & Co.

For general essays and commentary on labor unions, workers lives, and strikes as portrayed in fic- tion, see one or more of the following books: (1) Andrew Lawson, Class and the Making of American

67

During the early 1920s, there was a series of rail strikes. Railroads played a vital role in society at that time, transporting both passengers and goods; thus, a major railroad strike could significantly harm the economy of a geographic region. Some strikes dealt with economic issues such as wages and pensions, while others were recognition strikes: Strikes undertaken to force management to accept and deal with ( recognize ) a labor union. Because of the importance of railroads to interstate commerce, members of Con- gress decided that a labor law was needed to regulate union-organizing and labor dis- putes. Therefore, representatives from the major railway lines and their unions met to negotiate over the terms of such a law. Consequently, in 1926 Congress passed the Rail- way Labor Act. The provisions of this law are discussed in Chapter 3.

Despite increased status and militancy, something went wrong for organized labor in the 1920s; the Golden Twenties for the majority in the United States was a dreary decade for labor both for hourly employees in terms of real income and for labor unions in terms of membership.90 Between 1920 and 1924, total union membership declined from 5.11 million to 3.6 million; membership in AFL unions dropped from 4.078 million to 2.866 million. By 1930 total union membership had declined to 3.4 mil- lion, and AFL membership dropped to 2.7 million.91 This decline was caused by at least two major factors: (1) aggressive opposition from employers and (2) organized labor s inability to overcome anti-union sentiment among potential union members.92

Opposition from Employers Concerned with the increased status given labor during the war, employers actively engaged in efforts to roll back union membership gains, beginning in the 1920s and con- tinuing through the 1930s. These tactics took the form of either (1) aggressive opposition toward established labor unions or (2) providing an acceptable nonunion alternative to independent unions.

Employers actively opposed unions by supporting the open-shop movement, which is discussed in more detail in Chapter 4. The stated purpose of the open shop was to ensure that each employee had the freedom to determine whether he or she would join a union. Thus, an open-shop arrangement prevents a union from negotiating a contract clause that forces workers to join the labor organization. Another rationale for this movement, also called the American Plan, was employers desire for employees to adhere to the traditional American value of rugged individualism instead of the foreign, subversive, and corrupt principles of labor unions. Many employers

equated the attainment of an open-shop status with the absence of an independent union controlled by employees.

Other tactics were also used by employers to prevent employees from joining or forming an independent union. For example, some employers would hire industrial spies to identify which employees had pro-union sentiments. Once identified, employees would then be discharged and possibly blacklisted, meaning that their names would be

Literature: Created Unequal (New York: Routledge, 2014); (2) Fay M. Blake, The Strike in the American Novel (Metuchen, NJ: Scarecrow Press, 1972); (3) Laura Hapke, Labor s Text: The Worker in American

Fiction (New Brunswick, NJ: Rutgers University Press, 2000); or (4) Eric Schocket, Vanishing Moments: Class and American Literature (Ann Arbor: University of Michi- gan Press, 2006).

68

placed on a list that was circulated to other employers in the area, who would then refuse to hire anyone whose name appeared on the list. Employer violence against participants in union-organizing drives was also a potential strategy to counter unions during this period.93

As employers gained experience using anti-union tactics, a refinement of the open shop or American Plan appeared in the 1930s, called the Mohawk Valley Formula. This approach formulated specific steps that could be used by any employer to defeat an orga- nizing drive or strike action by a union. The Mohawk Valley Formula consisted of the fol- lowing steps: (1) form a citizens committee in the community to support the employer s position in the labor dispute, (2) label the union leaders as outside agitators, (3) stir up violence or the fear of violence, (4) report union leaders and meetings to the police and/ or have a state of emergency declared by public authorities, (5) organize a back-to-work movement encouraging individuals to resume their normal work duties, and (6) have the back-to-work employees march into the plant protected by armed police.94

Employers also countered unions by providing an alternative model to unionism. The 1920s saw widespread employer paternalism, a management style in which the employer was viewed as the wise parent figure and employees were expected to rely upon the employer to know what was in their best interest and trust the employer to protect employees interests. Paternalistic practices implemented by some companies included free lunches, baseball fields, vacations, pensions, and employee counseling.95

Employers felt that employees receiving these benefits would be indebted to the employer and realize that a union would be unnecessary.

An employee representation plan (also called a company union), provided another substitute for an employee-controlled independent union. Employee representation plans (ERPs) covered as many as 1.5 million employees and appeared superficially similar to independent unions in that employee representatives (typically selected by the employer) would discuss working conditions with management officials. ERPs differed from inde- pendent unions in four major respects.

First, the employer typically controlled the type of subjects discussed with ERP leaders. Second, independent unions had more autonomy than ERPs. Employers strongly influenced the decisions of ERPs; provided the funding, space, and time for their operation; and management could veto any decision made by the joint labor management committee. Third, ERPs were usually limited to a single facility, and employees under ERPs could neither press for work rules that would remove unfair competition from other facilities nor push for legislation at the local, state, or federal level. Fourth, ERPs did not engage in economic pressure tactics such as strikes or boycotts to persuade the employer to modify decision outcomes.96

ERPs did provide employees more communication with management than existed in their absence and, most importantly, most employees did not fear discharge for partici- pating in an organization created by their own employer.

Another anti-union weapon used by employers was that of paying employees in company scrip (company-created currency) instead of U.S. currency. Scrip often emerged in isolated locations where one employer (e.g., a coal mining or lumber firm) owned the land and provided the infrastructure and most business services. In a com- pany town the scrip could be used at the employer-owned stores and to pay rent for employer-owned housing. How could scrip serve as an anti-union weapon? Imagine this scenario: managers suspected two employees of being union organizers. These

CHAPTER 2 The History of Labor Management Relations 69

workers received a triple punishment : (1) they lost their jobs, (2) their families had to move from their company-owned houses (leaving town because they were also black- listed), and (3) whatever modest savings they had accumulated in scrip became worth- less, because the company-owned stores would no longer do business with them and stores in other towns would not accept the scrip as legal tender. Thus, in this scenario, the two pro-union workers and their families would be forced to move away, penniless.

Independent merchants lobbied against company scrip and the practice was out- lawed in some states; it came under increasing federal scrutiny and skepticism by regu- lators in the 1930s after the National Industrial Recovery Act (NRA) and the Fair Labor Standards Acts were passed and by the end of the 1940s almost all such practices had ended in the United States.97

Labor s Inability to Overcome Anti-Union Sentiment The lack of organizing gains during the 1920s also has to be attributed to the anti-union sentiment of potential union members and the activities and attitudes of organized labor. The number workers in new types of industries was growing and these workers some of whom were white-collar sales clerks and office workers often felt that unions were irrelevant to their work experience. Part of this problem may have been caused by the relatively good economic conditions that prevailed throughout most of the 1920s: While job insecurity may have deterred some employees from joining unions in the

face of employer opposition, many of them apparently felt that unions were no longer as necessary as they had formerly believed them to be. What profit strikes or other agi- tation for collective bargaining when the pay envelope was automatically growing fatter and a more abundant life seemed to be assured with our rapid approach to the final tri- umph over poverty? 98

There was also a public perception fostered by employers and media accounts that much of organized labor was corrupt and subject to control by socialists and commu- nists, even though many AFL leaders were consistently anti-communist. Racketeering had become a feature of some local union employer relationships. For example, in one incident a union official signed a two-paragraph agreement with three major employers guaranteeing no wage increase for three years and requiring all employees to join the union or be discharged. None of the employees had ever contacted the union about join- ing, nor did they ever see a union official during the life of the contract. This type of sweetheart contract was often coupled with financial kickbacks from the employer to the union official, meaning the employer paid the union official a portion of the labor cost savings achieved by the employer.99

Some labor unions were also accused of harboring political radicals. Many promi- nent union leaders would occasionally accept help from almost any group that would devote time and effort in organizing employees, believing that they could control these political elements once the local union had been established. However, union leaders sometimes overestimated their ability to control such elements. One former president of the Steelworkers Union recalled how communists could dominate local union meetings by using the V technique, whereby the leader would find a seat at the center of the audi- torium in about the second or third row. Then the following would ensue: A few rows back, two of his associates would locate about ten seats apart, and this same pattern would be followed all the way to the rear of the hall. When the chief spokesman opened debate, his line would then be parroted all the way through the V behind him, giving an illusion of widespread strength. The radical groups would also wait until other union members, tired and bored, had gone home before trying to push through their own proposals. 100

70 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Organized labor, particularly the AFL, devoted much of its attention during the 1920s to overcoming its negative public image.101 These efforts detracted from active organizing efforts, particularly because Gompers had lost much of his former physical enthusiasm for this activity. In 1924 Gompers died, and his successor, William Green, did not revive any major organizing activities, as he focused on maintaining the status quo of the AFL s existing organization in an adverse atmosphere.102 The AFL s prefer- ence for simply maintaining the status quo among its member unions rather than seek- ing to actively grow the labor movement eventually led to the formation of the Congress of Industrial Organizations (CIO).

Rise of the CIO and Industrial Unionism Major disagreement occurred within the AFL over organizing the growing number of semiskilled employees in the labor force. Tremendous technological shifts occurred dur- ing and after World War I, reducing the demand for highly skilled employees. This increased the percentage of the labor force comprised of semiskilled or unskilled produc- tion workers. In 1926, for example, 85 percent of the hourly employees at Ford Motor Company required less than two weeks of training.103 Because craft employees no longer dominated the industrial scene, the AFL needed to organize production employees if it wanted to increase membership.

Many of the AFL unions did not want to enroll semiskilled production employees. Some AFL leaders believed these employees were inferior to craft employees and pos- sessed less bargaining power because they were easier to replace than skilled workers if they went on strike. Other AFL leaders thought the inclusion of production workers would confuse and distort the AFL s organization. Recall that AFL member unions were organized along skilled craft lines. William Green himself did not view industrial employees as being compatible with the AFL s organizational principle of exclusive juris- diction by skilled craft.

Some AFL leaders thought that if they were to try to organize semiskilled factory workers, a separate union would be needed for each company s or industry s products. Thus, if General Electric (GE) had 50 different products, then 50 different AFL unions (each having exclusive jurisdiction over its members interests) would be needed for effective collective bargaining. In other words, at least 50 separate collective bargaining agreements could be negotiated by GE and its unions. Both the craft approach and the product line stood in contrast to the industrial unionism approach, where everyone in the same industry could be represented by the same union (e.g., all the employees at GE might be in one electrical workers union). The president of one AFL union urged his members to stamp out the awful serpent of industrial trade unionism that would destroy this International and weaken the entire structure of the Labor Movement. 104

The issue came to a head in 1935 under the direction of John L. Lewis, president of the AFL s United Mine Workers Union. The AFL rejected the concept of industrial unionism at its 1935 convention.105 On November 9, 1935, the Committee for Industrial Organizations was formed. Its purpose was allegedly educational and advisory, but in reality it was intended to promote organizing among unrepresented employees, particu- larly those semiskilled workers in the mass production industries.106

In January 1936, AFL leaders were shocked to find that the Committee for Industrial Organizations had been formed by some AFL unions. AFL President Green thought the industrial unionism issue had been buried once and for all at the 1935 convention. AFL leaders ordered the Committee for Industrial Organizations to disband or get out. Per- sonalities intensified the issue. John L. Lewis, a powerful man in voice and action, sought and obtained power and publicity through his union activities.107 Lewis managed to

CHAPTER 2 The History of Labor Management Relations 71

provoke AFL leaders into a confrontation while at the same time whipping his United Mine Workers members into a lather of rage against the AFL.108 Lewis believed that the future success of the American labor movement was dependent on the ability to organize production workers in the fast growing mass production industries. The split over the industrial unionism issue resulted in seven unions with almost a million mem- bers being expelled from the AFL. These seven unions joined with newly established industrial unions in some of the mass production industries to quickly form a rival and completely independent labor federation, the CIO, electing John L. Lewis (then president of the United Mine Workers union) as the first CIO president.109

The development of the CIO coincided with a significant upsurge in union member- ship. By November 1937, the CIO s affiliated unions had already organized 75 percent of the steel industry, 70 percent of the automobile industry, 65 percent of the rubber indus- try, and about one-third of the maritime and textile industries.110 The AFL also saw rapid growth in membership during the late 1930s and the 1940s. The AFL organized the skilled trade employees in mass production industries into local labor unions and national councils assigned to various craft unions. The steady growth of the AFL during the late 1930s was also aided by employers preference to deal with the more conserva- tive organization instead of taking their chances with the new, unpredictable, and more politically radical CIO.111

Why did union membership increase dramatically in the 1930s and 1940s? At least five factors seem to account for the growth in unionism during this period: strong CIO leadership, the CIO s realistic goals, the CIO s effective use of the sit-down strike tactic, passage of the National Labor Relations (Wagner) Act of 1935, and changes in employ- ees attitudes toward a more favorable view of unions.

Strong CIO Leadership The aggressive and effective CIO leaders (John L. Lewis, Sidney Hillman, and David Dubinsky, among others) infused new life into a union movement previously content with resting on its laurels. Most of the CIO union leaders had extensive organizing expe- rience and prided themselves on keeping in touch with their membership.112 Union lea- ders accomplishments should not be overstated, however, because organizing drives involved the tireless efforts of many individuals who typed up circulars, contacted pro- spective members, and provided routine services that ensured union election victories. One biographer of John L. Lewis indicated he lacked involvement in many routine orga- nizing chores by noting that Lewis preferred arriving only in time for the triumphant finale. 113 Much organizing effort in the steel, mining, automobile, and other industries was effectively directed toward second-generation immigrants. Some 30 percent of the CIO leadership came from a new immigrant background. One historian notes, The success of the CIO was based on the mobilization of ethnic workers and on their willing- ness to join unions. 114

Realistic Goals Although all three unions favored organizing unskilled factory workers, the CIO shared only a superficial similarity with the KOL and IWW. First, the CIO did not embrace the KOL s and IWW s one big union approach to union membership. The CIO believed that grouping all employees by chartering one union for each particular industry (e.g., auto, steel) would still provide sufficient membership similarity to reflect the common interests of employees even though within that industry non-managerial employees of all skill levels were welcome to join. More importantly, the CIO dramatically differed

72 PART 1 Recognizing Rights and Responsibilities of Unions and Management

from the Knights and the IWW in its goal of focusing on short-run economic gains instead of long-range reform, which paralleled the AFL s pure and simple unionism approach, including support for the existing capitalist system. Although in its early years the CIO had some affiliate unions with communist officers, as a federation, the CIO rejected revolutionary goals. John L. Lewis remarked: I think most people have come to realize, that we cannot progress industrially without real cooperation between workers and management, and that this can only be brought about by equality in strength and bargaining power of labor and management. Labor is sincere in its desire to help. It looks forward to an industrial procedure which will increase productive effi- ciency and lower prices to the consumer. 115

The Effective Use of Sit-Down Strikes The CIO used a successful tactic for encouraging employer s to recognize and bargain with its member national unions the sit-down strike, in which employees stayed inside the plant instead of picketing outside. This technique was successful because employers were reluctant to physically remove the employees from the plant for fear that their equipment could be damaged in the confrontation.

The tactic was initially applied by the IWW at a GE facility in 1906, but the most famous use of this strike tactic occurred in December 1936 at a General Motors facility in Flint, Michigan. At one time, 26,000 General Motors employees had belonged to a union, but in early 1936, there were only 122 union members, many of whom were man- agement spies.116 A local grassroots organization was secretly established to build up the union at Flint. The sit-down strike was locally planned by autoworkers as Lewis and the CIO were focused on organizing the steel industry before launching any major effort to organize the automobile industry. The CIO, however, did lend its active support to auto- workers once the strike was under way.

The sit-down strike at Flint lasted 44 days and received widespread community sup- port while hindering GM s efforts to reverse its negative profit situation of previous years.117 The strike resulted in employer recognition of the union, a fact that was noticed by many employees in other trades. Sit down strikes at three tire manufacturers Firestone, Goodyear, and B.F. Goodrich effectively won recognition of the United Rub- ber Workers and better working conditions. During 1936 and 1937, some 500,000 employees in the rubber, glass, and textile industries engaged in sit-down strikes. Although effective, the sit-down strike was short-lived because public opinion eventually frowned on this tactic, and a subsequent decision by the U.S. Supreme Court declared such strikes represented an illegal seizure of the employer s property.118

Passage of the National Labor Relations (Wagner) Act Another (and perhaps the most significant) reason for the increased number of union members was the passage of the National Labor Relations Act (NLRA) of 1935 (dis- cussed more in Chapter 3). The federal government indicated through this law that collective bargaining was a public policy in the national interest. Private-sector employees covered by the law were granted a legal right to form or join unions, bargain collectively, or engage in other concerted acts for mutual aid or protection. Many previously common employer tactics used for preventing union growth became illegal (e.g., blacklisting, spies, discharging workers for union activity, and creating company unions). A supporting law, the Byrnes Act of 1936 prohibited the interstate transportation of strikebreakers for the purpose of using force or threats against union organizers, negotiators, or peaceful picketers as they exercised their rights under the NLRA.119 A new federal agency, the National Labor Relations Board (NLRB), was

CHAPTER 2 The History of Labor Management Relations 73

created to administer union representation elections, define employer unfair labor practices, and enforce the legal rights of employees to join independent unions and bargain collectively.

Changes in Employees Attitudes Many employees previously negative attitudes toward organized labor changed dramati- cally. Employees had experienced the Great Depression of the 1930s and realized that job security could not be achieved solely through hard work and loyalty to the employer. These employees now viewed unions as a mechanism to promote job security and pro- vide other material economic benefits.

By the onset of World War II, organized labor had reversed its membership decline of the 1920s, rising to almost 9 million members in 1940. Yet the rivalry between the CIO and the AFL was intense and sometimes violent as AFL and CIO organizers clashed over the right to represent mass production industry employees. James Hoffa, a former president of the International Brotherhood of Teamsters (then an AFL union), recalled violent organizing drives in 1941 between CIO affiliated unions and his union: Through it all the members wore two pins, putting on a Teamsters button when we were around and switching to a CIO button when those guys showed up. They were waiting to see which union was going to win the battle. You couldn t really blame them. They were scared out of their britches because they didn t want to get caught in the bloody middle. 120 The AFL and CIO rivalry existed in almost every industry and extended to the local level, where it was common for an employer to have both AFL and CIO unions representing the same employees. Even employers with the best intentions had difficulty in building an effective labor management relationship in such an environment.

World War II to the Present

The AFL at first did not want the United States to become involved in World War II; however, this attitude changed after the bombing of Pearl Harbor. Concern over provid- ing for the nation s defense prompted increased union management cooperation. For example, both union and management officials participated on War Production Board subcommittees. Such panels weighed employee suggestions, which saved 31 million work hours and $44 million during World War II.121

The cooperative spirit was not total, particularly when one considers the number of strikes that occurred during wartime. In February 1943, organized labor complained to President Roosevelt that the cost of living during wartime had increased far beyond wage increases permitted by the government under the 1942 government imposed wage con- trols known as the Little Steel Formula.122 In 1943 the United Mine Workers conducted a series of strikes to obtain wage increases of $2 a day. These actions resulted in Presi- dent Roosevelt seizing the mines to ensure continued production, but eventually a com- promise wage settlement was obtained.

The public viewed these and other strikes with anger and alarm, considering them violations of the no-strike pledge announced by organized labor in 1941. Negative public sentiment increased when some unions continued to call strikes. After 1942, the number of strikes increased every year of the war. In perspective, however, the number of employee days lost to strikes was estimated to be the equivalent of no more than one day per year per worker for the four war years.123 Yet, the mere act of participating in a strike was viewed by some as unpatriotic because it interfered with production of mate- rials needed for the war effort.

74 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Labor s collective bargaining concerns shifted at the end of the war to the issues of full employment and further wage increases in order to sustain national purchasing power and thereby create an expanding market for industrial goods. Labor, remembering the reconversion period following World War I, was concerned about employer policies aimed at restricting union growth and wage gains.

Unions backed their postwar concerns with strikes. During no period in the his- tory of the United States did the scope and intensity of labor management conflicts match those recorded in the year following VJ Day, August 14, 1945. 124 In this one- year period, more than 4,600 strikes, involving 5 million employees resulted in almost 120 million workdays of idleness that affected almost every major industry. These strikes were basically nonviolent, representing economic tests of strength and endur- ance. Employers recognized that the many returning soldiers would greatly expand the available supply of labor, thus creating little reason to pay more to obtain the labor needed to continue operations. Generally, both labor and management prefer to be free to resolve their differences through the collective bargaining process without the type of government interference and wage restrictions that were present during the war years.

However, the strikes did raise questions about the abuse of power by labor unions. The National Labor Relations Act (Wagner Act) of 1935 only listed unfair employer practices; it did not address the issue of similar actions by unions. In response, Congress passed the Labor Management Relations Act (Taft Hartley Act) in 1947. This law iden- tified unfair union practices and prohibited certain types of job actions. The law is dis- cussed in detail in Chapter 3.

One provision of the Taft Hartley Act merits mention in this chapter on labor his- tory: Union leaders were required to sign affidavits declaring that they were not commu- nists. This requirement led the CIO leadership to disaffiliate some member unions whose leaders refused sign such affidavits. In the atmosphere of the Cold War between the United States and the communist Soviet Union, the CIO had little difficulty creating rival unions and persuading members to switch their allegiance to the new unions. Con- cerns about communist and organized crime infiltration of organized labor throughout the 1950s also led to the passage of the Labor Management Reporting and Disclosure Act (Landrum Griffin Act) of 1959. This law, which regulates union operations and finances, is discussed in Chapter 3.125

Developments in Organized Labor since World War II Four major developments have occurred in organized labor since World War II: (1) increased concern over new collective bargaining issues; (2) organizing drives aimed at white-collar, service-, and public-sector employees; (3) the merger of the AFL and CIO in 1955; and (4) the formation of the Change to Win labor federation in 2005.

New Collective Bargaining Issues The return to peacetime after World War II and, particularly, the Korean War saw increased efforts to extend the provisions of the labor agreement to include all aspects of the collective bargaining relationship. In the late 1950s and early 1960s, the relative scarcity of jobs coincided with the need for price stability to ease the deficit in interna- tional payments. Unions directed their collective bargaining efforts toward (1) guarantee- ing members job security in the face of possible technological advances, (2) securing new types of benefits, and (3) securing wages that provided adequate compensation in fluctu- ating economic cycles. Organized labor s response toward technological change

CHAPTER 2 The History of Labor Management Relations 75

(discussed in more detail in Chapter 8) brought notable results during this period, including the Automation Fund Agreement between Armour and Company and the Packinghouse Workers and Meat Cutters unions (1959), the Mechanization and Modernization Agreement in the Pacific Coast longshore industry (1960), and the Long-Range Sharing Plan negotiated between Kaiser Steel and the United Steelworkers (1962).

Efforts to expand employer-provided employee benefits represented a second new bargaining area. Before World War II, labor cost was overwhelmingly comprised of straight-time hourly pay for time actually worked. Subsequent bargaining efforts by labor unions (and personnel policies of nonunion firms) have resulted in a substantial increase in the proportion of labor costs comprised of employee benefits (pensions, den- tal care, insurance plans, etc.), which are currently almost 41 percent of payroll costs for unionized employers and 29 percent for nonunionized employers.126 Wage and benefit issues will be discussed further in Chapter 7.

Responding to fluctuations in the economic cycle constituted a third area for bar- gaining. The trend toward multi-year labor agreements after World War II put pressure on union leaders to safeguard wage increases against the possibility of increases in the inflation rate because rising inflation erodes the purchasing power of earned wages. In 1948, General Motors and the United Auto Workers negotiated a long-term agreement with a cost-of-living adjustment (COLA) provision that adjusted wages for inflationary changes during the life of the contract. This contract provision spread to other labor management negotiations. In 1952, almost 3 million employees (approximately 20 per- cent of the employees covered by labor agreements) had cost-of-living provisions in their contracts.127 By contrast, when inflation is low, unions are less likely to have COLAs in their contracts.

Deflation, where wages and prices fall, is less common than inflation in the modern American economy (although deflation did occur during the recent Great Recession). Even in the absence of deflation downward pressure on union wages occurs. Since the mid-1970s, increased global competition from foreign companies and low-wage non- union organizations in the United States have produced periods of concession bargain- ing in some industries (e.g., auto, airline, steel, rubber), in which management seeks to obtain more flexible work-rule modifications or other labor cost reductions (wage rates, pension, or health care benefits). Work rule modifications include scheduling changes, fewer rest breaks, and combining job classifications to give management more flexibility in employee work assignments. Some employers (e.g., United Airlines, Delphi Automo- tive) have declared bankruptcy and sought to use the bankruptcy process as a means to pressure unions representing the firm s employees to agree to significant concessions as a part of management s reorganization plan, resulting in a lower, more competitive labor cost operating structure. Wage concessions represent the most significant organized labor development since World War II. Audrey Freedman of the Conference Board notes that, wages, even under union bargaining pressures, are responsive to economic conditions at the industry and firm level and even the product level . 128 Examples of wage flexibility include:

Two-tiered wage plans, where employees hired after a negotiated labor agreement takes effect receive a lower hourly pay rate (and/or benefits) than their counterparts for performing similar work. Lump-sum bonuses usually associated with a firm s economic performance for a given time period. This wage payment does not necessarily occur in every year of a contract s term and does not alter the employee s hourly wage rate, thus avoiding

76 PART 1 Recognizing Rights and Responsibilities of Unions and Management

any increase in employee benefit costs which use an employee s wage rate to calcu- late the size or amount of the benefit earned (e.g., holiday or vacation pay).

Thus, unions have sought to provide adequate income levels for their member in the face of two different types of economic conditions: inflation, which erodes purchasing power if wages do not increase correspondingly, and downward wage pressures (primar- ily brought about by globalization and nonunion competition) where labor and other costs must decrease for a unionized firm to remain competitive.

Increased Organization of Women, Minorities, Younger Age Employees, and Professionals in the Public-Sector and Private-Sector Service Industries A second major development in organized labor since World War II involves the orga- nization of different types of employees, more specifically, public-sector (government) employees (discussed in Chapter 13) and private-sector service and professional employees (discussed in Chapter 5). The growing number of women, minorities, and younger age workers (18 30 years) has received increased attention from union organizers as key components of recent and future union membership gains.

Merger of the AFL and CIO Perhaps the most dramatic postwar development in organized labor was the merger of the AFL and CIO in 1955. The presence of three influences during the 1950s resulted in the eventual merger of the rival organizations.129 First was the change in the presi- dents of the AFL and CIO. Phillip Murray of the steelworkers union became president of the CIO in 1940 when John L. Lewis resigned, and Murray continued the verbal feud against the AFL and its president, William Green. In November 1952 both Green and Murray died. Walter Reuther from the autoworkers union was elected to head the CIO, and George Meany from the plumbers union was elected president of the AFL. Although neither new leader had any particular fondness for the other, unlike Green and Murray, the new leaders had not previously gone on the record as being opposed to each other. Therefore, a merger could occur without either leader losing face.

Another influence contributing to the AFL-CIO merger was the recognition of the ineffectiveness of union raiding. The two labor organizations investigated employee representation elections in which the AFL tried to organize employees affiliated with CIO unions, and vice versa. During a two-year period (1951 1952), 1,245 such elections involved some 366,740 employees, with only 62,000 employees changing union affilia- tion. This figure overestimates the number affected because it does not consider the off- setting nature of elections. An AFL union could organize a CIO represented factory of 1,000 employees only to have a CIO union organize an AFL factory of 1,000 employees the net change being zero. In fact, the extensive raiding during 1951 and 1952 resulted in a net gain for the AFL of only 8,000 members, or only 2 percent of the total number of employees involved in the elections.130 Both the AFL and CIO finally realized that organized labor would benefit if the energies devoted to raiding each other were spent on organizing unrepresented employees. Accordingly, many of the AFL and CIO unions signed a no-raiding agreement in 1954. Instead of concentrating on differ- ences emphasized in raiding activities, the two major federations could now look at sim- ilar goals that might be more easily attained by a merger.

CHAPTER 2 The History of Labor Management Relations 77

One similar goal was the desire of both organizations to reward their political friends and punish political enemies.131 In many instances, the independent organiza- tions failed to achieve this goal. For example, the AFL and CIO were unable to defeat the re-election of Senator Taft (one of the authors of the Taft Hartley Act, who was per- ceived as being anti-labor) and failed to elect Adlai Stevenson (supporter of organized labor) over Dwight D. Eisenhower for U.S. president. Both organizations believed that a merger might increase their effectiveness in the political arena.

The AFL-CIO merger on December 12, 1955, involved 15.55 million members, mak- ing the new organization the largest trade union federation in the world. George Meany became the president of the merged organization due to the longer history of the AFL as an established organization. Walter Reuther, the former president of the CIO, became the vice president of the merged AFL-CIO. George Meany believed the merger would lead to more employees becoming unionized and to a greater political influence for labor within the American two-party system.132

The merger resulted in the continued reduction of union raiding. It also reduced the influence of union locals within the national unions because they could no longer threaten to affiliate with the rival national organization.133 However, as discussed in the next sec- tion, the AFL-CIO merger has not resulted in a tremendous increase in union membership or political influence. It did reduce the former divisiveness within organized labor, but it cannot be concluded that the merger was a significant impetus for growth and change.

Formation of the Change to Win Federation Reminiscent of the split among AFL unions that led to the formation of the CIO in the late 1930s, several national unions affiliated with the AFL-CIO voluntarily chose to leave in order to form a new federation of national unions called the Change to Win federation (discussed further in Chapter 4). After failing to achieve reforms within the AFL-CIO intended to focus more resources on organizing new union members, seven national unions representing approximately 6.4 million members, many of whom work in service- related industries, formed their own independent federation to foster more emphasis on organizing new union members.134 The Change to Win federation, although less formally structured than the AFL-CIO, still shares many of the same basic principles and philosophies as unions affiliated with the AFL-CIO. Member unions of the Change to Win federation are encouraged to devote 50 percent of their annual operating budget toward union-organizing activities compared to a goal of 30 percent for AFL-CIO affiliated unions. The Change to Win federation also plans to spend less time and money working through the established political parties (principally the Democratic Party) and instead focus more resources on grassroots direct political action by the member unions themselves.

Since its formation in 2005, the Change to Win labor federation has not been able to substantially alter the existing trend toward declining union membership as a percentage of the total U.S. labor force. It could be argued that without the new focus and energy devoted to union organizing since 2005, the decline would likely have been more severe.

There has been some movement in recent years to reunite the labor movement, and indeed some original Change to Win union affiliates (e.g., UNITE-HERE, Laborers International) have rejoined the AFL-CIO.135 Several key Change to Win labor federa- tion leaders have recently retired (e.g., Andrew Stern, former president of the Service Employees International Union). Currently, the Change to Win organization is led by James P. Hoffa of the International Brotherhood of Teamsters. In addition to the Team- sters, other affiliated unions include the Service Employees International Union, the United Food and Commercial Workers, and United Farm Workers of America; together they represent 5.5 million members.136

78 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Aspects of Organized Labor Unchanged since World War II Organized labor as it existed at the end of World War II compared with its present state appears to have more similarities than differences:137

Exclusive union representation, in which one union is selected by a majority of the employees to represent their employment interests. Collective bargaining agreements that embody a sharp distinction between the negotiation and contract administration phases of the labor relations process. Once the contract is negotiated, the no-strike, no-lockout, and grievance procedure clauses ensure that the parties will use an arbitrator instead of job action (e.g., strikes or boycotts) to resolve disputes that may arise over the interpretation or application of the labor agreement. Government policies that favor a basically hands-off or nonintervention role in the conduct of labor relations based on the principle that the parties involved, not gov- ernment, should decide bargaining outcomes for themselves.

Additional major labor relations similarities from World War II to the present are organized labor s continued effort to advance workers interests through the political process; difficulty in achieving consensus on key issues among unions and union mem- bers; and continued emphasis on economic gains and increased job security-related bar- gaining goals. Each of these topics will be briefly discussed.

Unions and Politics Samuel Gompers s political dictum of reward your friends and punish your enemies still conveys the political philosophy of organized labor today. Politicians or political parties that support the issues and outcomes favored by unions will be rewarded with support, while those who oppose union preferences will be denied such support. Historically the Democratic Party and its candidates have been more supportive of labor s agenda and have thus garnered the majority of union support.

Difficulty in Achieving Consensus among Unions and among Members Whether the subject is politics or bargaining issues, there has always been a diversity of opinions and responses within the U.S. labor movement. While many unions share some basic organizational and philosophical similarities, each union has its own unique history and membership characteristics that help to shape the organization s response to specific issues. Understandably, complete agreement among the diverse national unions within the AFL-CIO or Change to Win labor federations and among all members within a par- ticular national or local union is rare. This problem occurs in any large organization, particularly one that grants a large amount of autonomy to its members. A labor federa- tion is always subject to national unions withdrawing from it if they become dissatisfied. The federation also realizes that many national unions are strong enough to get along quite well without its support. For example, the expulsion of the Teamsters in the 1950s (for alleged mafia infiltration) and the disaffiliation of the United Auto Workers (UAW) from the federation in 1968 (over national policy and federation governance dis- agreements) did not hinder these organizations ability to increase their membership, grow in influence, and engage in collective bargaining. (Both the Teamsters and the UAW subsequently re-affiliated with the AFL-CIO, with the Teamsters voluntarily with- drawing in 2005 to participate in the Change to Win federation.)138

CHAPTER 2 The History of Labor Management Relations 79

Lack of consensus is also found at the local union level, especially when younger employees become members. Most labor unions have a long tradition of struggle and sacrifice; their leaders have risked physical hardships merely to gain employer recogni- tion of their union. However, many of the younger members have little appreciation for labor history and are more likely to be asking local leaders, What have you done for me lately?

Pursuit of Short-Range Economic and Job Security Goals Instead of Long-Range Reform The KOL and IWW likely taught organized labor a permanent lesson that goals should relate to members needs instead of being abstract attempts to change the existing socie- tal system. The period since World War II has witnessed tremendous economic growth and technological change; therefore, union leaders believe these issues deserve more attention than other societal concerns. Even when unions make bargaining concessions due to recessionary economic conditions, the concessions are viewed as short-term and economically related lower wages in exchange for enhanced job security, for example.

Summary To understand contemporary labor relations or make reasonably accurate predictions about the future, one must be aware of the changing nature of labor management relationships and the various labor orga- nizations, conditions, and events which have shaped those relationships. Current labor organizations are the product of the experiences of their historical coun- terparts. An assessment of any labor organization s effectiveness can be made by evaluating a union s struc- tural and financial stability; its ability to work within the established political and economic system; the pres- ence of supportive or disruptive features in the social environment, such as the public image portrayed by the mass media or the presence or lack of supportive labor legislation; and the ability of union leaders to identify and satisfy members goals and interests.

Organized labor did not exert much influence in the United States prior to 1869, although employees became increasingly concerned with working and mar- ket conditions associated with technological and prod- uct changes. The active years of organized labor can be grouped into three time periods: 1869 to World War I, World War I to World War II, and World War II to the present. Three major labor organizations developed in the period from 1869 to World War I: the KOL, the AFL under Gompers, and the IWW. These organiza- tions had different goals, strategies, organizational characteristics, which in part furnished reasons for the demise of the KOL and IWW. Events such as the

Haymarket Riot, the Homestead Incident, and the Pull- man Strike hurt organized labor, although AFL Presi- dent Gompers managed to derive some benefit from each of these events.

The period immediately following World War I saw limited growth in union membership. Factors con- tributing to this situation included several strategies used by employers to counter union-organizing cam- paigns. Internal differences occurred within the AFL s national union members regarding the advantages of organizing the heretofore unrepresented semiskilled employees increasingly employed in the nation s mass production industries. This disagreement led to the for- mation of a rival labor federation, the CIO, whose major objective was to organize industrial employees. The CIO achieved substantial membership gains in the late 1930s and 1940s, aided by the passage of key labor legislation protecting the right of employees to join unions and bargain collectively.

Three major developments have occurred in orga- nized labor since World War II. Concern has increased over new collective bargaining issues; organizing drives have targeted areas of employment growth such as public-sector employees, service and professional employees, women, minorities, and younger age work- ers; and the AFL and CIO labor federations merged and a new labor federation (Change to Win) resulted from differing views among national unions about the best strategy for attracting and retaining union members. It

80 PART 1 Recognizing Rights and Responsibilities of Unions and Management

is still too early to tell what lasting impact the Change to Win federation will have on union membership levels, but labor has enjoyed a stronger voice in the political process in recent years. More similarities than differ- ences are apparent when comparing the state of orga- nized labor at the end of World War II with its present

state. Despite representing a relatively small proportion of the total labor force, organized labor remains an influ- ential economic and social movement in U.S. society. The emphasis on advancing employees short-term eco- nomic and job security interests have remained the focus of organized labor since World War II.

Key Terms U.S. Constitution, p. 45 common law, p. 45 employment-at-will (EAW) doctrine,

p. 45 criminal conspiracy doctrine, p. 46 Commonwealth v. Hunt (1842), p. 46 civil conspiracy doctrine, p. 47 labor injunction, p. 47 yellow-dog contract, p. 47 Sherman Antitrust Act, p. 47 Loewe v. Lawlor, p. 48 Danbury Hatters, p. 48 Clayton Antitrust Act, p. 48 Knights of Labor (KOL), p. 52 Terence Powderly, p. 52 One Big Union, p. 53 Haymarket Riot, p. 56 American Federation of Labor (AFL),

p. 56

Samuel Gompers, p. 56 Pure and simple unionism, p. 57 exclusive union jurisdiction, p. 58 decentralized authority, p. 59 Homestead Incident, p. 59 Pullman Strike, p. 60 socialism, p. 63 Industrial Workers of the World

(IWW), p. 63 William Big Bill Haywood, p. 63 communist society, p. 63 Red Scare, p. 65 criminal syndicalism laws, p. 65 sedition laws, p. 65 recognition strikes, p. 68 open-shop movement, p. 68 American Plan, p. 68 industrial spies, p. 68 blacklisted, p. 68

Mohawk Valley Formula, p. 69 paternalism, p. 69 employee representation plan, p. 69 company union, p. 69 scrip, p. 69 sweetheart contract, p. 70 V technique, p. 70 Congress of Industrial Organizations

(CIO), p. 71 John L. Lewis, p. 72 sit-down strike, p. 73 National Labor Relations Act (NLRA)

of 1935, p. 73 Byrnes Act of 1936, p. 73 concession bargaining, p. 76 AFL-CIO, p. 77 Change to Win federation, p. 78

Discussion Questions

1. Discuss the similarities and differences between the Knights of Labor (KOL) and the Industrial Workers of the World (IWW).

2. Select an existing national union and use the four criteria mentioned in the introduction of this chapter for evaluating the strengths of that labor organization. Using the same criteria, discuss why the AFL survived and the IWW faded into obscurity.

3. Explain how the Haymarket Riot, Homestead Strike, and Pullman Strike helped as well as hurt the AFL.

4. Discuss some employer tactics used to prevent or minimize union membership growth prior to the passage of the National Labor Relations (Wagner)

Act in 1935. Which, if any, of these tactics would be lawful today? What anti-union tactics are used today?

5. Discuss some key similarities and differences between the AFL and the CIO.

6. In your opinion, does having two different exist- ing labor federations (AFL-CIO and Change to Win) strengthen or weaken the ability of orga- nized labor to represent the interests of employees today? Support your position.

7. Some experts predict that in the future there are likely to be fewer but larger labor organizations. Discuss some advantages and disadvantages of the so-called One Big Union approach to representing employees interests.

CHAPTER 2 The History of Labor Management Relations 81

Exploring the Web

History of the Labor Movement

1. Who am I? Using Google or some other search engine, select three of the names in the following list and find out what role each person played in the history of American labor management relations: Mary Harris Mother Jones, Sidney Hillman, George Meany,

Frances Perkins, Terence V. Powderly, Pearl Bergoff, Rose Schneiderman, Walter Reuther, Andrew Stern, Liz Shuler, William Tony Boyle, Esther Eggertson Peterson, Luisa Moreno, Cesar Chavez, Adolph Stras- ser, Leonora O Reilly, Harry Bridges, Richard L. Trumpka, William H. Sylvis, and Anna Burger.

2. IWW. Visit the official Web site of the Industrial Workers of the World to learn more about this labor organization and its activities today at http:// www.iww.org/.

3. The Pinkertons. Using search engines, explore the role that the Pinkerton Detective Agency played in labor history, including the Molly Maguires, the Homestead strike, the Great Hocking Valley Coal Strike, and the death of IWW leader Frank Little.

4. Pullman Strike. For a brief account of the Pullman Strike involving the American Railway Union (ARU), view the Ohio State University eHistory site at http://ehistory.osu.edu/exhibitions/1912/con- tent/pullman. For a somewhat different viewpoint on the strike, consult the Stan Iverson Memorial library at http://recollectionbooks.com/siml/library/ PullmanStrike.htm. Why was Eugene Debs ARU successful in reversing wage cuts with the Great Northern Railroad in April, 1894, and unsuccessful in reversing wage cuts with Pullman just a few weeks later?

5. Haymarket Riot. The Chicago Historical Society offers the Haymarket Digital Collection, composed of photographs and narrative related to the Hay- market Riot that occurred in Chicago on May 4, 1886. Enter the Dramas of Haymarket at http:// www.chicagohs.org/dramas/ and read about the sequence of events that ignited the Haymarket

bomb. Who were August Vincent Spies and Albert Parsons, and what part did they play in the events leading up to the riot?

References 1. Robert Ozanne, Trends in American Labor His-

tory, Labor History (Fall 1980), p. 521. See also Barry Goldberg, A New Look at Labor History, Social Policy, 12, Winter 1982, pp. 54 63; Robert H. Zieger, Industrial Relations and Labor His- tory in the Eighties, Industrial Relations, 22, Winter 1983, pp. 58 70.

2. Henry Pelling, American Labor (Chicago: Uni- versity of Chicago Press, 1960), pp. 12 13.

3. Edward B. Mittelman, Trade Unionism 1833 1839, in History of Labor in the United States, John R. Commons et al., eds. (1918; reprinted. New York: Augustus M. Kelly, Publishers, 1966), vol. 1, p. 430.

4. John R. Commons, and Eugene A. Gilmore, A Documentary History of American Industrial Society (Cleveland, OH: A. H. Clark, 1910), p. 68; Brian Greenberg, Class Conflict and the Demise of the Artisan Order: The Cordwainers 1805 Strike and 1806 Conspiracy Trial, Pennsylvania Legacies 14(1), 2014, pp. 6 11.

5. Quoted by John Fanning in The Balance of Labor Management Economic Power under Taft- Hartley, Proceedings of the 40th Annual Meeting of the Industrial Relations Research Association, ed. Barbara D. Dennis (Madison, WI: IRRA, 1988), p. 70.

6. Commonwealth v. Hunt, 45 Mass. 111 (1842). 7. E. E. Herman and G. S. Skinner, Labor Law (New

York: Random House, 1972), p. 21. 8. Vegelahn v. Guntner, 44 N.E. 1077(1896). Also

see Herbert L. Sherman, Jr., and William P. Murphy, Unionization and Collective Bargaining, 3rd ed. (Washington, D.C.: Bureau of National Affairs Inc., 1975), p. 3.

9. John R. Commons, History of Labour in the United States, vol. 2 (New York: The Macmillan Company, 1946), p. 504. See also Sherry v. Perkins, 147 Mass. 212 (1888).

10. Hitchman Coal & Coke Company v. Mitchell, 245 U.S. 229 (1917); Robert E. Weir, Workers in America: A Historical Encyclopedia, Revised

82 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Edition, Vol. 2 (Santa Barbara, CA: ABC-CLIO, 2013), pp. 872 873.

11. Sherman Antitrust Act, 26 Stat. 209 (1890). 12. Loewe v. Lawlor, 208 U.S. 274 (1908). 13. Clayton Anti trust Act, 38 Stat. 731 (1914). 14. Duplex Printing Press Co. v. Deering, 254 U.S. 443

(1921). 15. Truax v. Corrigan, 257 U.S. 312 (1921). 16. William C. Birdsall, The Problems of Structure

in the Knights of Labor, Industrial and Labor Relations Review, 6, July 1953, p. 546.

17. For a discussion of how the expansion of the markets affected unionization among the shoe- makers, see John R. Commons, Labor and Administration (New York: Macmillan, 1913), pp. 210 264.

18. T. V. Powderly, Thirty Years of Labor: 1859 1889 (Columbus, OH: Excelsior Publishing House, 1889), p. 21.

19. Ibid., pp. 58 59. 20. Ibid., p. 163. 21. Philip Taft, Organized Labor in American History

(New York: Harper and Row, 1964), p. 90. 22. Gerald N. Grob, Workers and Utopia (Evanston,

IL: Northwestern University Press, 1961), p. 35. Powderly was most concerned about the evils of drinking; for example, he spent almost 50 pages of his autobiography, Thirty Years of Labor, dis- cussing this issue.

23. Birdsall, The Problems of Structure, p. 533. 24. Terence V. Powderly, Thirty Years of Labor, 1859

to 1889 (Philadelphia: Terence Powderly, 1890), pp. 128 130; Rebecca M. McLennan, The Crisis of Imprisonment (New York: Cambridge University Press, 2008), pp. 150 161.

25. Joseph G. Rayback, A History of American Labor (New York: Macmillan, 1968), p. 174; Also see Melton Alonza McLaurin, The Knights of Labor in the South (Westport, CT: Greenwood Press, 1978), p. 39; John Curl, For All the People: Uncovering the Hidden History of Cooperation, Cooperative Movements, and Communalism in America, Second Edition (Oakland, CA: PM Press, 2012), pp. 86 110.

26. Joseph R. Buchanan, The Story of a Labor Agita- tor (1903; reprinted. Westport, CT: Greenwood Press, 1970), pp. 318 323.

27. For details of these procedures, see Taft, Orga- nized Labor, p. 91.

28. Powderly, Thirty Years of Labor, pp. 151 157.

29. It should be noted that local assemblies were somewhat responsible for this situation as they contributed only $600 to the General Assembly s strike funds in 1885 1886 (McLaurin, The Knights of Labor, p. 54). For more details of KOL strike activities, see Norman J. Ware, The Labor Movement in the United States, 1860 1895 (1929; reprinted. Gloucester, MA: Peter Smith, 1959), pp. 117 154. It should be further noted that the Knights made more effective use of boycotts than any previous union. However, as was true with strikes, the boycotts were instigated by the local assemblies and forced on the Knights national leaders (Grob, Workers and Utopia, p. 61).

30. Donald L. Kemmerer and Edward D. Wicker- sham, Reasons for the Growth of the Knights of Labor in 1885 1886, Industrial and Labor Rela- tions Review, 3, January 1950, pp. 213 220.

31. Foster Rhea Dulles, Labor in America: A History, 3rd ed. (New York: Thomas Y. Crowell, 1966), p. 127.

32. Powderly, Thirty Years of Labor, p. 514. It should also be noted that Powderly believed Gompers misled employees by advocating the eight-hour workday without telling them that their wages would be proportionately reduced. Most workers thought they would receive ten hours payment for eight hours of work.

33. A Hellish Deed! Chicago Tribune, May 5, 1886, p. 1.

34. For additional details of the rigged nature of the trial, see Samuel Yellen, American Labor Struggles (1936; reprinted. New York: Arno Press, 1969), pp. 60 65 or Philip Dray, There Is Power in a Union: The Epic Story of Labor in America (New York: Anchor Books, 2011).

35. A Hellish Deed! Chicago Tribune, May 5, 1886, p. 1.

36. Their Records, Chicago Tribune, May 5, 1886, p. 1. See also Paul Avrich, The Haymarket Trag- edy (Princeton, NJ: Princeton University Press, 1984).

37. Sidney Lens, The Labor Wars: From the Molly Maguires to the Sitdowns (Garden City, NY: Doubleday, 1973), p. 67.

38. The origination of the AFL was changed between 1881 and 1889 to include activities under the Federation of Organized Trade and Labor Unions. At least one historian has claimed that the revised date is regrettable because the organization (Fed- eration of Organized Trades and Labor Unions)

CHAPTER 2 The History of Labor Management Relations 83

had little similarity to the AFL in terms of effective organization and broad-based support (Ware, The Labor Movement, p. 251). See also Glen A. Gilde- meister, The Founding of the American Federa- tion of Labor, Labor History, 22, Spring 1981; Harold C. Livesay, Samuel Gompers and Organized Labor in America (Boston: Little, Brown and Company, 1978), pp. 75 86.

39. Samuel Gompers, Seventy Years of Life and Labor (New York: E. P. Dutton, 1925), p. 266.

40. Ware, The Labor Movement, pp. 70 71. 41. Norman J. Ware, Labor in Modern Industrial

Society (1935; reprinted. New York: Russell and Russell, 1968), p. 262.

42. Dulles, Labor in America, p. 155. 43. Gompers, Seventy Years of Life and Labor, p. 245. 44. Samuel Gompers, Labor and the Employer (1920;

reprinted. New York: Arno Press, 1971), pp. 33 34. 45. Stuart Bruce Kaufman, Samuel Gompers and the

Origins of the American Federation of Labor: 1848 1896 (Westport, CT: Greenwood Press, 1973), p. 173. For details of this relationship, see Gompers, Seventy Years of Life and Labor, pp. 381 427.

46. Louis Reed, The Labor Philosophy of Samuel Gompers (1930; reprinted. Port Washington, D.C., NY: Kennikat Press, 1966), p. 20. See also an editorial by Gompers in the American Fed- erationist, June 1924, p. 481; Sarah Lyon Watts, Order Against Chaos: Business Culture and Labor Ideology in America 1880 1915 (New York: Greenwood Press, 1991), pp. 9 10; William E. Forbath, Law and the Shaping of the American Labor Movement (Cambridge, MA: Harvard University Press, 1991).

47. Gompers, Seventy Years of Life and Labor, pp. 286 287, 381 427.

48. Alice Kessler-Harris, Trade Unions Mirror Society in Conflict between Collectivism and Individualism, Monthly Labor Review, 110, August 1987, p. 33.

49. Gompers, Labor and the Employer, p. 202. 50. Marc Karson, American Labor Unions and Politics:

1900 1918 (Carbondale, IL: Southern Illinois Uni- versity Press, 1968), p. 29; Julia Green, Strike at the Ballot Box: The American Federation of Labor s Entrance into Election Politics, 1906 1909, Labor History, 32, Spring 1991, pp. 165 192.

51. Reed, The Labor Philosophy of Samuel Gompers, pp. 106 110.

52. Milton Derber, The American Idea of Industrial Democracy: 1865 1965 (Urbana, IL: University of Illinois Press, 1970), p. 117; also see Christopher J. Cyphers, The National Civic Federation and the Making of a New Liberalism, 1900 1915 (West- port, CT: Praeger, 2002); William M. Boal, The Effect of Unionism on Accidents in U.S. Coal Mining, 1897 1929, Industrial Relations, 48(1), 2009, pp. 97 120.

53. Gompers, Seventy Years of Life and Labor, p. 342. For additional details regarding early AFL orga- nizing, see Philip Taft, The AF of L in the Time of Gompers (1957; reprinted. New York: Octagon Books, 1970), pp. 95 122.

54. Dulles, Labor in America, pp. 163 164. 55. Andrew Carnegie, An Employer s View of the

Labor Question, in Labor: Its Rights and Wrongs (1886; reprinted. Westport, CT: Hyperion Press, 1975), pp. 91 95. For a recent collection and analysis of material pertaining to the situation, see David P. Demarest Jr., ed., The River Ran Red (Pittsburgh: University of Pittsburgh Press, 1992).

56. Yellen, American Labor Struggles, p. 81. 57. For details of the wage package, see ibid., pp. 77 80.

See also E. W. Bemis, The Homestead Strike, Journal of Political Economy, 2, 1894, pp. 369 396; Linda Schneider, The Citizen Striker: Workers Ideology in the Homestead Strike of 1892, Labor History, 23, Winter 1982, pp. 47 66. For some additional insights into Frick s background, see Carol Aymowitz, Frick s Homey Mansion, Wall Street Journal, September 24, 1990, p. A-12.

58. Surrounded by Pickets, New York Times, July 4, 1892, p. 1.

59. Mob Law at Homestead, New York Times, July 7, 1892, p. 1.

60. Leader O Donnell Is Glad, New York Times, July 12, 1892, p. 2; and Bayonet Rule in Force, New York Times, July 13, 1892, p. 1.

61. Lens, The Labor Wars, p. 77. 62. A Talk with Gompers, New York Times, July 7,

1892, p. 2; Provoked by Carnegie, New York Times, July 7, 1892, pp. 2, 5.

63. Taft, The AF of L in the Time of Gompers, p. 136. 64. Arbitrate the Homestead Strike, Chicago Tri-

bune, July 8, 1892, p. 4. See also The Origin of the Trouble, New York Times, July 8, 1892, p. 2.

65. Yellen, American Labor Struggles, p. 3. 66. Lens, The Labor Wars, p. 81; Richard Schneirov,

George M. Pullman and the Sleeping Car Business,

84 PART 1 Recognizing Rights and Responsibilities of Unions and Management

2007 at http://dig.lib.niu.edu/gildedage/pullman/ events1.html. Liston E. Leyendecker, Palace Car Prince: A Biography of George Mortimer Pullman, Niwot: University Press of Colorado, 1992; Larry Tye, Rising From the Rails: Pullman Porters and the Making of the Black Middle Class, New York: Henry Holt, 2004, p. 3.

67. For additional details about the town, see Almont Lindsay, The Pullman Strike (Chicago: University of Chicago Press, 1967), pp. 38 60.

68. For more details regarding ARU s organization, see Philip S. Foner, History of the Labor Move- ment in the United States, vol. 2 (New York: International Publishers, 1955), p. 256.

69. Lindsay, The Pullman Strike, p. 124; Nick Salva- tore, Eugene Debs: Citizen and Socialist (Urbana, IL: University of Illinois Press, 1982).

70. Ibid., p. 215. 71. Gompers, Seventy Years of Life and Labor, p. 403. 72. Proceedings of the First Convention of the Indus-

trial Workers of the World (New York: Labor News Company, 1905), p. 1.

73. Ibid., p. 143. 74. Bill Haywood, Bill Haywood s Book: The Autobi-

ography of William D. Haywood (New York: International Publishers, 1929), p. 73.

75. Melvyn Dubofsky, We Shall Be All: A History of the Industrial Workers of the World (Chicago: Quadrangle Books, 1969), p. 481.

76. Haywood, Bill Haywood s Book, p. 181. 77. For additional details pertaining to these differences,

see Dubofsky, We Shall Be All, pp. 105 119; Joseph Robert Conlin, Bread and Roses Too (Westport, CT: Greenwood Publishing, 1969), pp. 97 117; and Lens, The Labor Wars, pp. 154 155.

78. David J. Saposs, Left-Wing Unionism (1926; rep- rinted. New York: Russell and Russell, 1967), p. 148.

79. Louis Adamic, Dynamite: The Story of Class Vio- lence in America (1934; reprinted. Gloucester, MA: Peter Smith, 1963), p. 174; Eileen DeVault, Family wages: The roles of wives and mothers

in U.S. working-class survival strategies, 1880 1930, Labor History, 54(1), 2013, pp. 1 20.

80. Robert E. Ficken, The Wobbly Horrors, Pacific Northwest Lumbermen, and the Industrial Workers of the World, 1917 1918, Labor His- tory, 24, Summer 1983, p. 329.

81. Conlin, Bread and Roses Too, pp. 97 117. See also Fred Thompson, The IWW: Its First Fifty Years

(Chicago: Industrial Workers of the World, 1955), pp. 80 87 or Eric Thomas Chester, The Wobblies in Their Heyday: The Rise and Destruction of the Industrial Workers of the World During the World War I Era (Santa Barbara, CA: ABC-CLIO, 2014).

82. Adamic, Dynamite, pp. 163 164. 83. Conlin, Bread and Roses Too, p. 96. 84. Philip S. Foner, ed., Fellow Workers and Friends: I.

W. W. Free Speech Fights as Told by Participants (Westport, CT: Greenwood Press, 1981), p. 15.

85. Foner, History of the Labor Movement, vol. 3, p. 465.

86. Conlin, Bread and Roses Too, p. 68. 87. Robert C. Sims, Idaho s Criminal Syndicalism

Act: One State s Response to Radical Labor, Labor History, 15(4), 1974, pp. 511 527; Melvin Dubofsky, We Shall Be All: A History of the Industrial Workers of the World (Urbana, IL: University of Illinois Press), p. 228; Nick Shepley, The Palmer Raids and the Red Scare, 1918 1920 (London: Andrews UK Limited, 2011); Kenneth D. Ackerman, Young J. Edgar Hoover and the Red Scare, 1919 1920 (Falls Church, VA: Viral His- tory Press, 2011).

88. For additional details, see Frank L. Grubbs, Jr., The Struggle for Labor Loyalty: Gompers, the AFL, and the Pacifists, 1917 1920 (Durham, NC: Duke University Press, 1968); James O. Morris, Conflict within the AFL: A Study of Craft versus Industrial Unionism, 1901 1938 (1958; reprinted. Westport, CT: Greenwood Press, 1974), pp. 9 10.

89. Taft, Organized Labor, pp. 355 358; Francis Fox Piven and Richard A. Cloward, Poor People s Movements (New York: Pantheon Books, 1977), p. 104. For details of this strike, see Lens, The Labor Wars, pp. 196 219.

90. Frank Stricker, Affluence for Whom? Another Look at Prosperity and the Working Classes in the 1920s, Labor History, 24, Winter 1983, pp. 5 34.

91. Lens, The Labor Wars, pp. 222, 296, 312. 92. Derber, The American Idea, p. 246. For an appli-

cation of these reasons to a specific industrial situation during this time period, see Stephen L. Shapiro, The Growth of the Cotton Textile Industry in South Carolina: 1919 1930 (Ph.D., diss., University of South Carolina, 1971), pp. 168 171.

93. For additional details regarding the use of com- pany spies, see Clinch Calkins, Spy Overhead: The Story of Industrial Espionage (1937; reprinted.

CHAPTER 2 The History of Labor Management Relations 85

New York: Arno Press, 1971). Violence was lim- ited neither to this time period nor to the employer. One of the more publicized episodes of employer violence was the Ludlow Massacre of 1914. The mining camps in Colorado were involved in a strike for union recognition when, on April 20, militiamen opened fire on a tent colony, killing two strikers and one boy. They then set fire to the tents, killing two women and eleven children. For details of this event, see Leon Stein, ed., Massacre at Ludlow: Four Reports (New York: Arno Press, 1971). Perhaps one of the more vivid examples of union violence occurred in Herrin, Illinois (1922), where miners tortured and killed at least 26 management officials and stri- kebreakers. For details of this episode, see Saul Alinsky, John L. Lewis: An Unauthorized Biogra- phy (New York: Vintage Books, 1970), pp. 43 50.

94. Richard C. Wilcock, Industrial Management s Policies toward Unionism, in Milton Derber and Edwin Young, eds., Labor and the New Deal (Madison: University of Wisconsin Press, 1957), p. 293.

95. For a case study of paternalism, see Welfare Work in Company Towns, Monthly Labor Review, 25, August 1927, pp. 314 321. For a more thorough discussion of employer counteractions during this time period, see Larry J. Griffin, Michael E. Wallace, and Beth A. Rubin, Capi- talist Resistance to the Organization of Labor before the New Deal: Why? How? Success? American Sociological Review (April 1986), pp. 147 167.

96. Derber, The American Idea, pp. 220 221; and Morris, Conflict within the AFL, pp. 40 41. For more details on ERPs, see Ware, Labor in Modern Industrial Society, pp. 414 435. For a contempo- rary assessment of the problems and prospects facing the single-firm, independent union, see Arthur B. Shostak, America s Forgotten Labor Organization (Princeton: Industrial Relations Section, Department of Economics, Princeton University, 1962).

97. Loren Gatch, Local Money in the United States During the Great Depression, Essays in Eco- nomic & Business History, 26(1), 2008, pp. 47 61; James P. Johnson, Drafting the NRA Code of Fair Competition for the Bituminous Coal Industry, Journal of American History, 53(3), 1966, pp. 521 541; Sean M. McGivern and Joseph

A. Schremmer The Fair Labor Standards Act: A Tool for Those Who Represent Employees, Clai- mants, and Plaintiffs, Journal of the Kansas Association for Justice, Jan. 2014, pp. 18 21.

98. Dulles, Labor in America, p. 245; also see Mark W. Robbins, Transitioning labor to the lean years : the middle class and employer repression of organized labor in post-World War I Chicago, Labor History, 54(3), 2013, pp. 321 342.

99. This example was drawn from a more detailed account of racketeering during this period found in Sidney Lens, Left, Right, and Center: Conflicting Forces in American Labor (Hinsdale, IL: Henry Regnery, 1949), pp. 86 108; also see Jennifer Luff, Commonsense Anticommunism: Labor and Civil Liberties Between the World Wars (Chapel Hill, NC: University of North Carolina Press, 2012).

100. David J. McDonald, Union Man (New York: E. P. Dutton, 1969), p. 185. See also Max Gordan, The Communists and the Drive to Organize Steel, 1936, Labor History, 23, Spring 1982, pp. 226 245. For further historical insights into the relation- ship between organized labor and communism, see Harvey A. Levenstein, Communism, Anticommunism and the CIO (Westport, CT: Greenwood Press, 1981).

101. James O. Morris, The AFL in the 1920s: A Strategy of Defense, Industrial and Labor Rela- tions Review, 11, July 1958, pp. 572 590.

102. See, for example, William Green: Guardian of the Middle Years, American Federationist, 88, February 1981, pp. 24 25.

103. Bruce Minton and John Stuart, Men Who Lead Labor (New York: Modern Age Books, 1937), pp. 14 15.

104. Morris, Conflict within the AFL, p. 216. 105. For additional details pertaining to the back-

ground of this historic convention, see Herbert Harris, Labor s Civil War (New York: Greenwood Press, 1969).

106. Lens, The Labor Wars, p. 284. 107. Cecil Carnes, John L. Lewis: Leader of Labor (New

York: Robert Speller Publishing, 1936), p. 299. 108. David Dubinsky and A. H. Raskin, David

Dubinsky: A Life with Labor (New York: Simon and Schuster, 1977), p. 226.

109. The seven unions were the United Mine Workers; the Amalgamated Clothing Workers; the Inter- national Ladies Garment Workers Union; United Hatters; Cap and Millinery Workers; Oil Field,

86 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Gas Well and Refinery Workers; and the Inter- national Union of Mine, Mill, and Smelter Workers.

110. Benjamin Stolberg, The Story of the CIO (1938; reprinted. New York: Arno Press, 1971), p. 28.

111. Milton Derber, Growth and Expansion, in Derber and Young, Labor and the New Deal, p. 13 and Steve Rosswurm, ed., The CIO s Left-Led Unions (New Brunswick, NJ: Rutgers University Press, 1992).

112. See, for example, John Hutchinson, John L. Lewis: To the Presidency of the UMWA, Labor History, 19, Spring 1978, pp. 185 203; Steven Fraser, Sidney Hillman and the Rise of American Labor (New York: The Free Press, 1991).

113. James Arthur Wechsler, Labor Baron: A Portrait of John L. Lewis (New York: William Morrow, 1944), p. 71; and Robert H. Zieger, Leadership and Bureaucracy in the Late CIO, Labor History, 31(3), 1990, pp. 253 270.

114. Thomas Gobel, Becoming American: Ethnic Workers and the Rise of the CIO, Labor History, 29, Spring 1988, p. 174.

115. S. J. Woolf, John L. Lewis and His Plan, in Melvyn Dubofsky, ed., American Labor since the New Deal (Chicago: Quadrangle Books, 1971), pp. 110 111.

116. Lens, The Labor Wars, p. 295. 117. Sidney Fine, Sit-Down: The General Motors Strike

of 1936 1937 (Ann Arbor: The University of Michigan Press, 1969), pp. 156 177. For another perspective of the sit-down strike, see Daniel Nelson, Origins of the Sit-Down Era: Worker Militancy and Innovation in the Rubber Industry, 1934 1938, Labor History, 23, Winter 1982, pp. 198 225.

118. National Labor Relations Board v. Fansteel Metal- lurgical Corporation, 306 U.S. 240 (1939); for a legal review, see Ahmed A. White, The Depression-Era Sit-Down Strikes and the Limits of Liberal Labor Law, Seaton Hall Law Review, 40, 2010, pp. 1 78; Maliha Safri, The economics of occupation, Economists Voice, 9(3), 2012, pp. 1 3.

119. Theodore J. St. Antoine, Charles B. Craver, Marion G. Crain, Labor Relations Law: Cases and Materials, 12th Edition (New York: Matthew Bender/LexisNexis, 2011).

120. James R. Hoffa and Oscar Fraley, Hoffa: The Real Story (New York: Stein and Day Publishers, 1975), p. 65. For a detailed account of the

AFL-CIO rivalries in several industries, see Walter Galenson, The CIO Challenge to the AFL (Cambridge, MA: Harvard University Press, 1960).

121. Richard B. Morris, ed., The U.S. Department of Labor Bicentennial History of the American Worker (Washington, D.C.: U.S. Government Printing Office, 1976), p. 236.

122. For details of this formula and the extent that cost-of-living estimates exceeded this formula, see Taft, Organized Labor in American History, pp. 549 553 and 557 559.

123. Dulles, Labor in America: A History, p. 334. 124. Arthur F. McClure, The Truman Administration

and the Problems of Postwar Labor, 1945 1948 (Cranburry, NJ: Associated University Press, 1969), p. 45.

125. Katherine G. Aiken, When I Realized how Close Communism was to Kellogg, I was Willing to Devote Day and Night : Anti-Communism, Women, Community Values, and the Bunker Hill Strike of 1960, Labor History, 36, 1995, pp. 165 186; Will Cooley, Communism, the Cold War, and a Company Town: The Rise and Fall of UE Local 709, Labor History, 55(1), 2014, pp. 67 96.

126. For historical information pertaining to compen- sation in the World War II era, see: George H. Hildebrand, American Unionism: An Historical and Analytical Survey (Reading: Addison-Wesley, 1979), pp. 36 37; for current information on the allocation of compensation among wages and benefits, see: U.S. Department of Labor, Employer Costs for Employee Compensation:

June, 2014, News Release, Sept. 10, 2014, Table 5 at http://www.bls.gov/news.release/ecec.t05.htm.

127. Robert M. MacDonald, Collective Bargaining in the Postwar Period, Industrial and Labor Rela- tions Review, 20, July 1967, p. 568.

128. Audrey Freedman, How the 1980s Have Chan- ged Industrial Relations, Monthly Labor Review, May 1988, p. 37.

129. For a more detailed discussion of historical attempts at the merger of the AFL and CIO, see Joel Seidman, Efforts toward Merger 1935 1955, Industrial and Labor Relations Review, 9, April 1956, pp. 353 370.

130. Document: AFL-CIO No-Raiding Agreement, Industrial and Labor Relations Review, 8, October 1954, p. 103.

131. A Short History of American Labor, American Federationist, 88, March 1981, p. 14.

CHAPTER 2 The History of Labor Management Relations 87

132. George Meany, Merger and the National Wel- fare, Industrial and Labor Relations Review, 9, April 1956, p. 349.

133. Richard A. Lester, As Unions Mature (Princeton, NJ: Princeton University Press, 1958), p. 25.

134. Aaron Bernstein, Is Labor Headed for Splits- ville? BusinessWeek, May 30, 2005, p. 32.

135. Kris Maher, U.S. News: AFL-CIO, Breakaway Unions Discuss Reuniting, Wall Street Journal, January 9, 2009, p. A-4; Michelle Amber, UNITE HERE Rejoins AFL-CIO, Wilhelm Gets Seat on Governing Bodies, Daily Labor Report, No. 179, September 18, 2009, pp. C1 2; Richard L. Trumpka, Statement by AFL-CIO President Richard L. Trumpka on LIUNA Reaffiliation with the AFL-CIO, Press Release, August 16, 2010, p. 1

at http://www.aflcio.org/mediacenter/prsptm/pr081 62010.cfm.

136. Holly Rosenkrantz, What Andy Stern Leaves Behind, Business Week, April 25, 2010, p. 23; About us Change to Win at http://www.

changetowin.org/about. 137. John T. Dunlop, Have the 1980s Changed

Industrial Relations? Monthly Labor Review, 111, May 1988, pp. 29 33.

138. Lichtenstein, Nelson, The Most Dangerous Man in Detroit: Walter Reuther and the Fate of American Labor. (Urbana, IL: University of Illi- nois Press, 1995); James B. Jacobs, Mobsters, Unions and Feds: The Mafia in the American Labor Movement (New York: New York Univer- sity Press, 2006).

88 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CHAPTER 3

Legal Influences

GRANTING EMPLOYEES a legal right to decide for themselves whether to form or join a labor organization and engage in col- lective bargaining over wages, hours, or other terms and condi- tions of employment has been described as a grand experiment in industrial democracy. It hasn t always been this way in U.S. history, as the discussion in Chapter 2 made clear. Because statutory laws are the product of a political process involving compromise wording and trade-offs among the competing interests of the parties affected, there will inevitably be differences of opinion over how the wording of a law is interpreted and applied to everyday decisions affecting the rights of employers, employees, labor organizations, and the general public. For legal rights to be meaningful, there must also be an effective process for enforcing those legal rights.

Susan pondered these words as she sat at her desk in the human resources (HR) department. As an HR manager at a resort, Susan rarely had time to ponder the big picture because she was always responding to situations and putting out fires. Often, these situations had legal implications for the firm. Just last week a female employee filed a discrimination complaint against the resort s hotel restaurant where she has been employed as a costumed storyteller for the past two years, entertaining children. The employee, a Muslim woman, had requested management to allow her to wear a head scarf (hijab) during work time. After consulting with higher manage- ment authority, her supervisor informed the employee that she could wear a head scarf but it would have to be one designed by the resort s costume department and in the interim period she could not wear her own head scarf. Two months later, after hearing no further word from her supervisor about the

89

issue, the employee chose to wear her own head scarf to work. Upon seeing the employee wearing her head scarf, her supervisor told her that she would have to remove it, change to a job which did not require direct customer contact, or go home. She refused to remove it and she refused to change jobs, asserting that she was protected by federal equal employ- ment opportunity law. So the manager suspended her. Typically, some- body in an on-stage position like hers wouldn t wear something like that, that s not part of the costume, the manager explained. We were trying to accommodate her with a backstage position that would allow her to work. We gave her a couple of different options and she chose not to take those and to go home. 1 The woman has not worked for the firm for the past week. The employee s union supported her decision to file a legal discrimination claim against the company and indicated it would be willing to file a contract grievance discrimination claim if she wanted to do so.

Susan, as the HR manager, was confident that the company had a good antidiscrimination policy in place. Susan thought that requiring every aspect of the employee s costume to conform to the resort s intended image was important to maintaining good customer relations. The accom- modations offered by the employer (e.g., transfer to a behind-the-scenes job, wearing a company-designed head scarf) were reasonable in Susan s view. Still it did concern her that two months had elapsed since the employee s initial request to wear a head scarf at work and while the com- pany had indicated she could do so if the scarf conformed to the com- pany s costume concept, no suitable scarf had yet been provided to the employee. Could the company be liable for reinstatement and back pay if the delay were found to be unreasonable, and the employee continued to refuse the transfer to a noncustomer contact job? Even if the company prevailed in getting the federal discrimination complaint dismissed, would the employee then file a contractual grievance seeking a similar remedy for lost time from work? Would an arbitrator likely take the same view as a court? What effect could the publicity surrounding the claim have on the company s business operations or the ongoing contract negotiations with the employee s union?

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Questions 1. Could the company be liable for reinstatement and back pay if the delay

were found to be unreasonable and the employee continued to refuse a transfer to a noncustomer contact job?

2. Even if the company prevailed in getting the federal discrimination complaint dismissed, do you think the employee would then file a con- tractual grievance seeking a similar remedy for lost time from work?

3. What effect could the publicity surrounding the discrimination claim have on the company s business operations or future contract negotia- tions with the employee s union?

4. In your opinion, is it the responsibility of government to pass laws designed to establish the working conditions of American workers? Or is the purpose of U.S. labor law to establish a framework whereby employees can group together to negotiate their own working condi- tions, tailoring them to the conditions that are important to the work- ers? Explain your reasoning.

Labor relations law provides a framework for defining the legal rights and responsibil-ities of the parties engaged in the labor relations process. This chapter introduces the basic legal foundation regulating the major phases of the labor relations process: organiz- ing unions, negotiating labor agreements, and ensuring employee rights in contract administration. It is essential today not only to know the law but to understand and appreciate the interrelationships between the law and the labor relations process. Practi- tioners should be aware that having a legal right to act does not always mean it is in one s practical best interest to exercise that legal right.

Chapter 3 logically follows the chapter on historical development of unions in the United States because labor relations law and union development go hand in hand. As unions grew in strength, they successfully lobbied to get labor laws passed by the U.S. Congress. This chapter focuses on key labor laws that pertain to most private firms today: the Norris La Guardia, Wagner, Taft Hartley, and Landrum Griffin Acts. Because these acts cover the major por- tion of private-sector U.S. industries and businesses, a substantial amount of space in this chapter is devoted to their content. The Railway Labor Act (RLA), which principally covers railroads and airlines, is also explained and assessed. A final section briefly considers several other employment laws that can affect the labor relations process.

Origin of Labor Relations Law

Modern U.S. labor relations law relies primarily on federal and state statutory laws or local government ordinances; judicial decisions interpreting and applying statutory laws and local ordinances; and decisions by administrative agencies (e.g., National Labor Relations Board [NLRB], U.S. Department of Labor [USDOL], Occupational Safety and Health Administration [OSHA]) responsible for administering specific labor laws. Congress has enacted numerous labor relations laws in the interest of employees and employers, public

91

welfare, and the furtherance of interstate commerce. Three major laws the Norris La Guardia Act, the Labor Management Relations Act (LMRA), as amended, and the RLA are discussed at length later in this chapter. Under the preemption doctrine, federal law takes precedent over state law or local ordinances whenever both seek to regulate the same conduct and there is a conflict between them.2 The preemption doctrine underscores the importance of labor relations as an area that affects the national economy and therefore benefits from the uniformity and stability that federal regulation of issues can provide. State legislatures may pass laws and local municipalities may enact ordinances to fill voids in federal laws or to extend regulation to issues not regulated by federal laws, such as the right of state and local public employees to engage in collective bargaining.

The judicial branch of government, with its court system at the federal, state, and local levels, functions to determine a law s constitutionality and conformity to legal stan- dards; to assess the accuracy of interpretations by administrative agencies; and to issue injunctions that restrict or require certain activities. In addition, the courts must decide issues not covered by existing laws and make rulings under the general guide of equity. These decisions constitute case law, which has developed over the years, establishing pre- cedents and providing guidance for future legal decisions.

The executive branch of government includes various administrative agencies cre- ated by Congress to interpret and administer some labor laws. These government agen- cies establish policies and make rules to guide the administration of specific labor laws. Although administrative agency decisions may be appealed to federal courts, the courts are encouraged by Congress to give great deference to the expertise of agencies in inter- preting and applying an applicable labor law. Some of the more important administrative agencies mentioned include the following:

National Labor Relations Board (NLRB): Administers the National Labor Relations (Wagner) Act as amended by the LMRA and certain aspects of the Labor Management Reporting and Disclosure (Landrum Griffin) Act; the NLRB is involved in the supervision of union representation elections and determination of unfair labor practice (ULP) charges. Note that ULP charges can be pressed against either employers or labor unions. Federal Mediation and Conciliation Service (FMCS): Provides mediation services to unions and employers engaged in collective bargaining. (A mediator is a third party who helps the negotiators find a voluntary resolution to their dispute). The FMCS also assists these parties in selecting arbitrators (third parties who issue binding decisions) in grievance administration. Finally, the FMCS provides training programs to encourage more cooperative labor management relations. U.S. Department of Labor (USDOL): Performs many employment-related services, such as research and data collection functions; administers federal wage and safety laws; and enforces federal contract compliance under equal employment opportunity requirements. In addition, the Secretary of Labor who heads the USDOL serves as a member of the president s cabinet, responsible for employment-related matters. National Mediation Board (NMB): Handles union representation issues under the RLA; provides mediation services to parties in negotiations; assists in resolving disputes over contract interpretation; and in cases involving emergency disputes, proposes arbitration and certifies to the president that a dispute does constitute an emergency. National Railroad Adjustment Board (NRAB): Hears and attempts to resolve railroad labor disputes growing out of grievances and interpretation or application of labor agreements. State and local administrative agencies: Are responsible for the enforcement and administration of state laws and local ordinances involving labor relations topics.

92 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The Norris La Guardia Act

The 1929 stock market crash and ensuing economic depression forced a reassessment of the extent to which private-sector employers should be trusted to manage the economic welfare of the country. As unemployment rose and individuals savings declined, political pressure mounted on Congress to take a more active role in regulating the economy, including providing more protection for basic workers rights. In 1932, Congress passed the Norris La Guardia Act (also called the Federal Anti-Injunction Act) to accomplish four public policy goals.3

First, to allow employees a greater voice in seeking to advance and protect their legitimate job interests, Congress limited the power of federal courts to issue labor injunc- tions. Activities that previously had been routinely enjoined (prohibited) by judges were now protected by law (e.g., peaceful picketing or publicity; encouraging employees to join a union; a union s provision of economic or legal aid to employees during a labor dispute). Under the Norris La Guardia Act, a temporary restraining order (TRO) obtained solely on the basis of an employer s statements to restrict some alleged unlawful employee conduct was limited in duration to only five days. During that time period, the judge was required to conduct a hearing at which both sides could present basic argu- ments and evidence as to whether the TRO should be converted to a temporary labor injunction after the initial five-day period expired. An employer seeking to have the court issue a labor injunction had the burden of proving that the following conditions existed: (1) Unlawful acts have been threatened or committed; (2) substantial and irrep- arable injury to the employer s property has or will likely occur as a result of such unlaw- ful acts; (3) greater injury would be inflicted on the employer by denial of an injunction than on the union (employees) by granting an injunction; (4) the employer had no other adequate legal remedy; (5) public safety officers were either unable or unwilling to ade- quately protect the employer s property; and (6) the employer had satisfied any existing legal duty to bargain in good faith in an effort to settle the labor dispute (including the offer of mediation) before going to court. Any labor injunction issued by a court was required to describe the specific conduct being enjoined, eliminating the previous abuse of general or vaguely worded blanket injunctions. 4

Second, the Norris La Guardia Act declared that a yellow-dog contract (previously discussed in Chapter 2) would be unenforceable in federal court and thus no longer valid as a basis for obtaining a labor injunction to prevent conduct which might breach such an employment contract.5 However, many employers continued to discharge or otherwise discriminate against employees for engaging in union activities.

A third public policy goal of the Norris La Guardia Act was to encourage the courts to adopt a more impartial or neutral role in seeking to protect and enforce the legitimate rights of employers and employees. Courts were encouraged to balance the legitimate rights of employers and employees, a difficult task in an economic system where the par- ties interests inevitably conflict to some extent. Acts for which a labor injunction was not obtainable under the Norris La Guardia Act were no longer considered to be anti- trust violations under the Clayton Antitrust Act.6 Rejecting the Supreme Court s inter- pretation and application of the antitrust laws during the 1920s, Congress reinstated the use of the economic boycott as a legitimate means of worker protest so long as it was used to pursue a lawful purpose in a lawful manner.

A fourth public policy goal of the Norris La Guardia Act was to express congressio- nal support for the process of collective bargaining as an appropriate means for employees to improve and protect their employment interests. Through the collective bargaining process, both labor and management could voice their concerns and present evidence

CHAPTER 3 Legal Influences 93

to support the adoption of reasonable work rules which fit the particular circumstances and resources of each bargaining relationship. While the potential for conflict was part of such a bargaining process, the presumption was that in most cases the parties would see it to be in their own self-interests to peacefully resolve disputes over what the terms and conditions of employment would be.

Although the passage of the Norris La Guardia Act signaled a change in U.S. labor relations policy, the act did not establish an independent administrative agency to enforce the act s provisions. This meant that organized labor had to pursue enforcement through the judicial system, which historically had not been responsive to labor s needs and interests. Another deficiency of the Norris La Guardia Act was that no specific employer ULPs were identified and prohibited. These deficiencies were not resolved until three years later.

The National Industrial Recovery Act of 1933

Franklin D. Roosevelt, who was backed strongly by labor unions, was elected president in 1932 along with a new Congress receptive to labor legislation as a means of ending a long economic depression. President Roosevelt promised Americans a new deal based upon a belief that market forces alone were incapable of putting the public s interests ahead of private ownership s interests. He argued that dire economic conditions created a need for more active government involvement in managing the economic welfare of the country. The historical debate over the proper and necessary role of government in helping to manage the economy has been a prominent part of efforts to address eco- nomic recessions ever since including the latest one.

One of the first acts of the Roosevelt administration was to encourage Congress to pass the National Industrial Recovery Act (NIRA, also abbreviated NRA), a law designed to stabilize economic activity by allowing businesses to form associations that would draw up codes of fair competition to standardize marketing, pricing, financial, and other practices. Upon approval of the codes by the National Recovery Administration, firms could display the Blue Eagle symbol that supposedly signified compliance and identified firms from which customers should purchase their goods and services.

Section 7 of the NIRA required the codes to guarantee employees the right to union- ize without employer interference, and a National Labor Board (NLB) was later estab- lished to help settle disputes and to determine violations under Section 7. Meanwhile, textile workers were dissatisfied with declining wages and miserable working conditions as the Great Depression (which began in 1929) continued. Encouraged by the legal pro- mises of the NIRA, between 300,000 and 400,000 textile workers, mostly in the South, went on strike. However, the strike was a failure: The union did not have the financial resources to feed or pay strike benefits to so many people. The industry board did not address employee grievances. A separate federally appointed mediation board merely issued a report calling for further study of industry and working conditions. Employers did not recognize textile unions, raise wages, or improve working conditions. Strike lea- ders were blacklisted and unions got a bad name in the South where union organizing has remained difficult.7

Because the NIRA did not require employers to bargain with unions, and the NLB could not enforce its orders effectively, the law was not very effective in protecting employees rights to organize and bargain collectively. In 1934, Congress issued a joint resolution calling for the president to establish an NLRB to investigate violations under Section 7, NIRA and to conduct elections to determine whether employees wanted

94 PART 1 Recognizing Rights and Responsibilities of Unions and Management

independent union representation.8 The new board, created like its predecessor by exec- utive order of the president, had trouble enforcing its orders and determining appropri- ate employee organizational units for conducting elections. In 1935, the Supreme Court ruled the NIRA unconstitutional when one of its codes of fair competition was applied to an employer engaged in intrastate commerce going beyond Congresses authority to reg- ulate interstate commerce.9

The National Labor Relations (Wagner) Act of 1935

One month after the NIRA was declared unconstitutional, Senator Robert Wagner, the chairman of the NLRB and an active participant in labor law matters, steered through Congress a separate labor relations law the National Labor Relations (Wagner) Act (NLRA).10 The NLRA established a new national labor policy that sought to ensure the free flow of commerce, labor peace and stability, and protection of the public s interests by encouraging the process of collective bargaining and preventing employer interference with the exercise of employee rights defined in the act. The NLRB was authorized to investigate and decide ULP charges and conduct representation elections (other provi- sions are covered later in the chapter).

This law provides the basic framework for private-sector labor relations for most employees in the United States. Congress perceived that without legal protection for employee rights, the economic power of employers far exceeded that of individual employees and inevitably led to labor unrest, which had a detrimental effect on eco- nomic growth and the public s interests. The Wagner Act is premised on an industrial relations model that there are two classes in the industrial world, labor and management, and that these two classes have very different, in fact opposing interests. 11

Section 7 Rights Perhaps the key provision of the NLRA was Section 7, which listed the rights of employ- ees under the law. These included the right to form or join a union, bargain collectively, and engage in other concerted activity for mutual aid and protection (see Exhibit 3.1). Note that while it takes at least two people to have a union, an individual can make statements or take actions that are protected under the law if it is done on behalf of a group of employees.

Unfair Labor Practices by Employers Section 8 of the Wagner Act specified that it was a ULP for employers to interfere with, restrain, or coerce employees as they exercised their Section 7 rights. Subsequent inter- pretation of this provision determined that the Wagner Act outlawed many employer tactics designed to discourage union activity such as

Exhibit 3.1 Rights of Employees Section 7 Employees shall have the right to self-organization, to form, join, or

assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 8(a)(3).

SOURCE: Labor-Management Relations Act, 1947, as amended.

CHAPTER 3 Legal Influences 95

discharging or refusing to hire union supporters, threatening pro-union workers with poor job assignments or termination, using company spies to learn who was organizing a union, blacklisting pro-union employees, creating company unions, bargaining in bad faith (discussed in Chapter 6), requiring applicants to sign yellow-dog contracts.

All of these were declared to be ULPs under the NLRA.

The Supreme Court Challenge Many employers believed the NLRA would be ruled unconstitutional like the NIRA.12

However, the Supreme Court declared the NLRA constitutional in 1937, recognizing the important impact labor relations can have on interstate commerce and endorsing Congress s right to regulate labor relations.13 With Supreme Court approval of the NLRA and improved economic conditions in the United States, unions experienced tre- mendous growth, almost tripling union membership to 8.4 million members by 1941.14

Employer Criticisms of the Wagner Act Union activities in the decade following passage of the NLRA caused many to believe that the labor relations pendulum had swung too far in favor of unions. Examples of union actions that precipitated much public concern were strikes over union representa- tion rights between competing AFL and CIO unions, union strikes or boycotts over bar- gaining issues, a union refusal in some cases to negotiate in good faith with an employer, and pressure on job applicants to become union members at companies where the employer and union negotiated a closed shop union security clause under which an employer agreed to hire only job applicants who were already members of a union repre- senting the firm s workers.

Changes under the Labor Management Relations (Taft Hartley) Act As a reaction to employer criticisms of the NLRA and growing public concern over orga- nized labor s actions, particularly during a wave of strikes that followed the end of World War II, in 1947 Congress amended the NLRA by enacting the LMRA.15 Leaving the original language of the NLRA virtually unchanged, the LMRA added language intended to address certain identified deficiencies and direct more attention to the legitimate rights of individual employees and employers involved in the labor relations process. Thus, the law protected anti-union individuals from retaliation by pro-union workers and union organizers. It also clearly gave owners and managers the right to speak in opposition to unionization by employees. However, the law did not universally expand free-speech rights. As noted in Chapter 2, the law required union officers to sign affidavits swearing that they were not communists (this last provision was declared unconstitutional by the U.S. Supreme Court in 1965). Calling it a slave labor act, labor groups immediately mounted a successful campaign to have President Truman veto the bill; however, Congress easily overrode Truman s veto.

Unfair Labor Practices by Unions To emphasize Congress s intent to fairly balance labor relations policy, the National Labor Relations Act (NLRA) was renamed the Labor Management Relations Act (LMRA). Similar to employer prohibitions included in the NLRA, a section of unfair

96 PART 1 Recognizing Rights and Responsibilities of Unions and Management

union labor practices was added to the LMRA, making it illegal for a union to engage in actions that discriminated against any employee s exercise of rights protected under Sec- tion 7 of the LMRA. Language was added to Section 7 granting individual employees a right to refrain from engaging in most forms of otherwise protected concerted activity.

Some union actions that have subsequently been determined to be illegal under the LMRA include the following:

threatening workers who refuse to join or support a labor union, paying people to support or vote for a union, pressuring an employer to discriminate against hiring an anti-union applicant, bargaining in bad faith, jurisdictional strikes, strikes against employers who are not involved in the labor dispute, political strikes striking in support of a political cause or candidate.

The Closed Shop vs. the Union Shop. Congress agreed that membership in a particu- lar labor organization should not be a precondition for employment and therefore made the closed shop union security clause illegal. However, Congress recognized that some level of union security was necessary to ensure that employees who desired union repre- sentation could achieve a reasonably permanent and effective voice in protecting their workplace interests. Employers and unions were permitted under the LMRA to negotiate certain types of voluntary union security clauses. One form was a union shop union security clause requiring a new employee join a union within 30 days after hire. A sec- ond form was an agency shop clause where the new employee did not have to join the union, but, because the union is the bargaining agent for everyone in certain unionized jobs, the employee had to pay a fee equivalent to regular union dues and initiation fees. Either of these clauses typically required payment for as long as the employee held a job in a bargaining unit represented by the union.

Some members of Congress supported legislation allowing labor contracts to contain union security clauses; others opposed such clauses. As a political compromise, Congress allowed individual states to ban union security agreements in their state (so-called right- to-work laws). Essentially, a right-to-work law allows only the open shop, where work- ers can choose to join a union or can choose not to; those who choose not to join the union do not pay anything to the union. Union security issues will be discussed further in Chapter 4.

Employer Opposition to Unionization The LMRA addressed employer criticism of an NLRB policy that severely restricted an employer s right to speak out on the question of union representation during an organiz- ing campaign. In 1941, the Supreme Court declared that NLRB policy to be an unconsti- tutional prohibition of employers First Amendment free-speech rights.16 Six years later, Congress essentially incorporated the court s decision into the language of Section 8(c), LMRA, which protects the expressing of any opinions or arguments about labor relations issues so long as such expression contains no threat of reprisal or promise of benefit.

Right to File a Lawsuit To encourage unions and employers to live up to negotiated contract terms, Section 301, LMRA permitted the parties to a collective bargaining agreement to sue in court for breach of contract if necessary to obtain the other party s compliance with the terms of the labor agreement. Prior to this change, an employer was forced to sue individual union members separately for violating a contractual no-strike agreement, which was

CHAPTER 3 Legal Influences 97

both time consuming and expensive. While permitting an employer to sue a union directly for economic damages under Section 301, LMRA, Congress removed the right to sue individual union members to recover economic damages for a breach of a labor contract s terms.

Managers and Unionization The Taft Hartley Act also clarified that managers did not have a legal right to unionize. Nor did managers have a right to keep their job if they publicly spoke out against an employer s labor policy or bargaining position. The law codified the assumption that managers acted as the agents for their employers when dealing with labor relations issues.

Since 1959, there have been two successful legislative attempts to expand employee coverage under the LMRA. The LMRA was first extended to cover the U.S. Postal Service in 1970 (see Chapter 13) and then to cover private-sector profit and nonprofit health care institutions in 1974.

Labor Management Reporting and Disclosure (Landrum Griffin) Act

In the late 1950s, a special Senate committee headed by Senator John McClellan vigor- ously pursued the abuses of power and corruption by some union leaders, particularly those of the Teamsters and specifically of Dave Beck and Jimmy Hoffa.17 Exposing shocking examples of union corruption and abuses of power, Congress reacted in 1959 by passing the Labor Management Reporting and Disclosure (Landrum Griffin) Act (LMRDA).18 The LMRDA is primarily designed to protect the rights of individual union members in their relations with their own union and to ensure that labor organi- zations operate in a democratic and financially responsible manner. Unlike the LMRA, which applies to both union and nonunion employees, the LMRDA covers only indivi- duals who are members of a labor organization.

For example, the LMRDA requires all local union officers to be elected by secret- ballot vote of union members at least once every three years and national union officers at least once every five years. Union members must approve any increase or decrease in the amount charged for union membership dues, initiation fees, or other special assess- ments. A union s constitution and by-laws approved by a vote of the membership is con- sidered to be a binding contract between the union and its members, enforceable in court. Unions are required to file annual reports with the USDOL available to the public containing information on union assets and liabilities, union officer salaries, and current union operating rules. Labor organizations are among the most regulated organizations in U.S. society today.

The Landrum Griffin Act also contains provisions that enhance and protect the rights of individual members. The law provides for equal voting rights in officer elections for all members, regardless of their position in the union or how long they have been in the union. The law grants members the right to run for union office, to nominate others for office, and to make speeches for candidates. Members also have the right to own a copy of their collective bargaining agreement.

Title VII of the LMRDA also contained some amendments to the LMRA. Most important was the addition of Section 303 to the LMRA, which granted neutral, second- ary employers harmed by unlawful secondary strike, boycott, or picket activity a right to sue a labor organization to recover economic damages.

98 PART 1 Recognizing Rights and Responsibilities of Unions and Management

National Labor Relations Board

One weakness of the 1933 1935 NIRA had been the lack of any effective enforcement mechanism. Confronted with a prior history of relatively weak court enforcement of employee rights, Congress took the extraordinary step of designating an independent federal administrative agency, the NLRB, to be the primary interpreter and administrator of the newly created NLRA. To ensure the constitutionality of the NLRA, Congress pro- vided that ULP decisions of the NLRB could be appealed for review to an appropriate federal circuit court of appeals. The courts were instructed by Congress to pay great def- erence to the policies of the NLRB in interpreting what Congress intended the law to accomplish.

The NLRB is headquartered in Washington, D.C., and headed by a five-member panel termed the Board.19 Board members are nominated by the president to serve a five-year term and must be confirmed by the U.S. Senate. Terms of Board members are staggered to ensure that not all vacancies occur at the same time, although due to delays in the nomination and confirmation process there have been periods where several Board seats were vacant at the same time, affecting the ability of the NLRB to function effectively.

As political appointees, Board members generally reflect the basic labor relations philosophy of the president who nominated them. The nomination process is subject to intense lobbying by employers, unions, and other outside interest groups (e.g., National Right to Work Committee) who recognize the important role the Board serves in deter- mining the balance between protection for employer and employee interests, particularly on legal issues where such interests may conflict. Interpretations of the facts and law governing union management relations is dependent in part on the makeup of the board. 20 One study reported finding an apparent pro-employer or pro-union bias in only 20 percent of Board case decisions.21

Increased political partisanship in the selection and confirmation of Board members has been a real problem in recent years. Frequent legal interpretation shifts among Board members makes it difficult for labor and management practitioners and covered employ- ees to know with some reasonable degree of certainty that lawful acts taken today will continue to be lawful in the future.22 Significant periods of time when the Board has fewer than its full five-member complement results in case delays and prevents signifi- cant legal questions regarding the LMRA s interpretation from being addressed. Since 1988 over 25 percent of Board nominees have failed to win Senate confirmation.23

From January 2008 through March 27, 2010, the Board functioned with only two members. The two Board members continued to render almost 600 ULP case decisions on the theory that two members constituted a majority quorum of a three-member panel. In a 5 4 decision in New Process Steel, L.P. v. NLRB (2010), the Supreme Court ruled that the LMRA requires that at least three Board members participate in every case decision in order to be lawful.24 At the time of the court s decision, there were 96 cases on appeal before the federal courts. The Board subsequently requested that all of these cases be remanded to the Board for further consideration by a three- member panel of Board members. (Most cases were re-heard with a proper quorum and resolved with a similar Board decision.) However, that was not the end of the political drama. Because the Senate would not confirm some of President Obama s nominees to the Board, in 2012 the president made three recess appointments while Congress was out of town during Christmas Break; the only problem was that the Sen- ate was technically not recessed, leaders held cursory sessions to prevent just such recess appointments. In 2014, the Supreme Court ruled in Noel Canning v. NLRB that

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the recess appointments were invalid. This decision meant that over 1000 NLRB decisions had to be reconsidered.25

The Board has two primary responsibilities. One responsibility is to prevent employer and union ULPs as defined by the LMRA, as amended, which interfere with the exercise of employee rights protected by the act. This responsibility is carried out primarily through the investigation, prosecution, and remedy of ULPs. The second responsibility is to determine if employees covered under the LMRA desire representation by an independent labor organi- zation for purposes of collective bargaining. The Board establishes and conducts certifica- tion procedures to determine if a majority of eligible employees desires a specific labor organization to represent them for purposes of collective bargaining. These secret-ballot elections are called union representation elections or certification elections. In FY 2012, of 24,275 total cases filed with the NLRB, 89 percent were ULP; the remainder of the cases involved union representation elections. Many were resolved by Administrative Law Judges (described below), but some were appealed to the Board. Typically, between 65 and 75 percent of the Board s case load involves ULP cases and 25 and 35 percent involves repre- sentation election cases.26 The Board exercises final administrative decision-making author- ity in all ULP and representation cases, although ULP decisions may be appealed for review by a federal court. Some recent decisions, shown in the Labor Relations in Action box, demonstrate the importance of Board decisions to workers and their employers.

The Board delegates authority to the General Counsel and staff attorneys to prosecute ULP charges. The General Counsel is nominated by the president to serve a four-year term and must be confirmed by the U.S. Senate. As with Board members, the General Counsel s nomination and confirmation process is subject to interest group politics.

A major responsibility of the General Counsel s office is to conduct a preliminary investigation of each ULP charge to determine if sufficient (prima facie) evidence exists to conclude a ULP may have occurred. If insufficient evidence of a violation is found, the General Counsel has the authority to dismiss a ULP charge, and there is no appeal of that decision. This gives the General Counsel tremendous influence in helping to deter- mine the policy making agenda of the Board because the Board announces new policies or alters existing policies through the issuance of ULP case decisions. The only cases in which the Board will have an opportunity to render a ULP decision are those cases in which the General Counsel s investigation concluded that evidence of a ULP existed.

The General Counsel is also responsible for representing the NLRB whenever a Board decision or order is appealed to a federal court or when the Board seeks a court order to enforce its decision. The General Counsel also serves as a legal advisor to Board members on matters pertaining to the interpretation or application of the LMRA or how past Board policies and procedures have fared upon review by the federal courts. The General Counsel relies upon staff attorneys located at the NLRB s headquarters in Washington, D.C., as well as each regional NLRB office to help carry out the responsibil- ities of the General Counsel s office.

For employees, a union, or management practitioner, contact with the NLRB typi- cally occurs at the regional or resident office level. The NLRB maintains 26 regional offices, with 25 additional satellite offices located throughout the country to handle ULP and union representation election cases. Each regional office is headed by a regional director, who also manages any sub regional or resident offices located within the regional office s geographic jurisdiction. The regional director and staff work with the General Counsel to investigate ULP charges and are delegated authority by the Board to administer all representation election procedures. Most meritorious ULP cases get resolved at the regional office level with the settlement rate ranging between 91.5 and 99.5 percent over the previous ten-year period. Among the cases that are litigated before

100 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION Selected Labor Relations Cases Decided by the U.S. Supreme Court and the NLRB

Back-Pay Remedy One remedy available to employees who have been ille- gally discharged (in violation of the LMRA) is that they can receive back pay for the period of time they were unemployed. However, what if the employee is an ille- gal immigrant? In a 5 4 decision, the U.S. Supreme Court ruled that the Immigration Reform and Control Act prevents the NLRB from awarding a back-pay rem- edy to an undocumented immigrant (a.k.a., illegal alien). This is so, even though an employer can be found guilty of committing an unfair labor practice in violation of the undocumented alien s employee rights under the LMRA. Requiring back pay is inappropriate, the Court reasoned, because the illegal immigrant is not allowed to work in the United States. However, the NLRB can impose other remedies for the employer s unfair labor practice such as a cease-and-desist order and an order to post notices admitting the unlawful conduct and informing company employees of their basic employee rights under the LMRA. Hoffman Plastic Compounds, Inc. v. NLRB, 122 S.Ct. 1275 (2002).

Determination of Supervisory Status Supervisors are excluded from coverage under the LMRA. However, it is not always obvious whether an employee is a supervisor. The party asserting that an employee is a supervisor bears the burden of proving the employee s supervisory status. To be a supervisor under the LMRA, an individual must (1) perform at least one of the 12 specified supervisory functions (e.g., hir- ing, performance evaluation); (2) use independent judg- ment that is not merely routine or clerical in nature; and (3) exercise authority in the interests of the employer. Supervisory status must be determined on a case- by-case basis. See: Oakwood Healthcare, Inc. and United Auto Workers of America, 348 NLRB 686 (2006); Beverly Enterprises-Minnesota, Inc. d/b/a Golden Crest Healthcare Center and United Steelwor- kers of America, 348 NLRB 727 (2006); Croft Metals, Inc. and International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, 348 NLRB 717 (2006); and NLRB v. Kentucky River Community Care, Inc., 121 S.Ct. 1861 (2001).

Unilateral Employer Withdrawal of Union Recognition Applying legal principles established by the U.S. Supreme Court in Allentown Mack Sales & Service v. NLRB, 522 U.S. 359 (1998), the Board held that an employer may unilaterally withdraw union recognition of the exclusive bargaining unit representative only if

the employer can prove the union has lost majority employee support as of the date of the employer s uni- lateral withdrawal of recognition. Alternatively, an employer may obtain an NLRB-supervised election to determine if the majority of bargaining unit employees supports the incumbent union if the employer can dem- onstrate a good faith reasonable uncertainty regarding the union s continued majority support. The Board would prefer employees directly express their desire for or against union representation through a secret- ballot representation election rather than have an employer act unilaterally to withdraw union recognition. Levitz Furniture Company of the Pacific, Inc., 333 NLRB 717 (2001)

Union Recognition What if an employer believes that a majority of the workers in the bargaining unit no longer support their union? Can the employer refuse to deal with that union? The U.S. Supreme Court unanimously held that an employer may not refuse to bargain with an incum- bent union on the grounds that the employer believed that the union had lost the support from a majority of the workers in the bargaining unit. Interestingly, the employer had made this determination shortly after entering into a contract with the union. Auciello Iron Works, Inc. v. NLRB, 116 S. Ct 1754 (1996).

Definition of Employees under LMRA Agricultural workers are not covered under the LMRA. Are the people who work as members of a live chicken catching crew considered agricultural workers? Most of their work was performed at chicken farms. They caught chickens for farmers who subcontracted with a chicken processing plant to raise the chickens to a mar- ketable age and size. The NLRB ruled that crew mem- bers were employees of the chicken processing plant and not excluded from coverage under the LMRA as agricultural laborers. Holly Farms Corp. v. NLRB, 116 S. Ct. 1396 (1996)

Union Organizers The Court unanimously upheld the NLRB s decision that paid union organizers are employees within the meaning of the LMRA when applying for a job or after being hired by the employer. Therefore, individuals act- ing as union salts (undercover union organizers) are protected against employer retaliation in the form of dis- charge or discipline for participating in any protected activity under Section 7 of the act, such as attempting to organize a union among employees. NLRB v. Town & Country, 116 S. Ct. 450 (1995)

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Partial Lockout What happens to employees who strike but then abandon their strike? Can their employer lock them out? That was the situation at one employer: Employ- ees had initiated a lawful economic strike on June 28, but abandoned that strike on August 31 and sought immediate reinstatement to their bargaining unit jobs. Still without a negotiated collective bargaining agree- ment, the employer initiated a lockout applicable to striking workers who had not abandoned the strike prior to August 31 in order to put pressure on those employees to agree to the employer s proposed contract terms. The 7th U.S. Circuit Court of Appeals prohibited the employer from locking out those employees. The court found no evidence supporting a legitimate business reason for the lockout and fur- ther found the lockout to be an unfair labor practice under the LMRA. Why? Because the lockout discrimi- nated against employees who had exercised their law- ful right to engage in an economic strike in furtherance of their bargaining interests. Local 15, International Brotherhood of Electrical Workers v. NLRB, 429 F.3d 651 (7th Cir. 2005)

Failure to Pay Required Union Dues Employees covered by a valid union security clause (e.g., a union shop clause) are subject to discharge for failing to pay the amount of union dues owed after proper notification by the union and a reason- able opportunity to meet the employee s dues obliga- tion. If employees do not pay their dues, must the employer fire them? Yes. A refusal by an employer to honor a union s request to discharge bargaining unit employees who have failed to meet their lawful union dues obligation represents an employer unfair labor practice violation under the LMRA. St. John s Health Systems v. NLRB, 436 F.3d 843 (8th Cir. 2006)

Successor Employer Bargaining Overruling a 1999 Board policy, the Board returned to the previous policy, which holds that an incumbent union in a successor employer situation is entitled to a presumption of continuing majority support. This policy also permits the following: (1) employees can file a valid decertification petition (to schedule a vote to get rid of the union), (2) another union can file a valid representa- tion petition (to try to replace the incumbent union), or (3) a successor employer can file an employer election petition challenging the union s presumption of continu- ing majority support. A successor employer s duty to

bargain with an incumbent union continues until the date on which a lack of majority employee support for the union can be established. MV Transportation, 337 NLRB 770 (2002)

Inclusion of Leased Employees in a Bargaining Unit with Regular Employees On a 3 2 vote, the Board held that it was not permis- sible to combine an employer s own employees in the same bargaining unit with employees performing similar job tasks obtained from another employer (e.g., company supplying leased labor) without the consent of both the user employer and the supplier employer. This will make it more difficult for leased or temporary agency employees to gain union repre- sentation rights at the firm where they actually per- form their job duties. Oakwood Care Center, 343 NLRB 659 (2004)

Duty to Bargain When an employer has been found guilty of bad faith bargaining and issued a remedial order to bargain in good faith, such bargaining must occur for a rea- sonable time before the union s majority status as bargaining representative can be challenged. Rea- sonable time refers to a period no less than six months nor longer than one year. The exact length time good faith bargaining would be required is deter- mined on a case-by-case basis based on several fac- tors including: whether the negotiations are for an initial contract or seek to amend an existing agree- ment, the complexity of the issues being negotiated and the parties bargaining procedures, the total amount of time elapsed since the start of bargaining and the number of bargaining meetings held, the amount of progress the parties have made and how close the parties appear to be to reaching a settle- ment, and whether the parties have reached a good- faith bargaining impasse. Lee Lumber and Building Material Corp., 334 NLRB 399 (2001)

Employer Use of Employees in Pro-Company Union Representation Election Campaign Videos Suppose an employer wants to make a video to show to employees as part of an anti-union campaign prior to a representation vote. Can the employer ask employees to appear in an anti-union video? The Board established four clear conditions which if met, would permit employers to solicit employees to appear in an anti- union election campaign video. To be lawful: (1) the

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solicitation to participate in the campaign video must be in the form of a general announcement, which discloses the purpose of filming and assures employees that par- ticipation is voluntary; no retaliation can occur against employees who do not voluntarily choose to participate and no rewards or benefits will be provided to those employees who do participate; (2) employees may not be pressured to make a decision regarding their partici- pation in the presence of a supervisor; (3) there can be no unlawful conduct connected with the employer s solicitation for voluntary participants; and (4) the solicita- tion cannot occur in a coercive atmosphere created by the employer s commission of other unfair labor practices. Allegheny Ludlum Corporation, 333 NLRB 734 (2001).

Coverage of Teaching and Research Graduate Assistants Graduate students take classes, but also work in laboratories and teach classes at many private univer- sities. Are they employees and thus eligible to unionize? The Board ruled that graduate student assistants do not meet the definition of employee and thus are not entitled to exercise protected employee rights under the LMRA. This reversed, by a 3 2 vote, a 2000 Board decision that had extended coverage to teaching and research graduate assis- tants at a private university. Compare Brown Univer- sity, 342 NLRB 483 (2004) to New York University, 332 NLRB 1205 (2000).

Coverage of Medical Interns, Residents, and Fellows (House Staff) Reversing previous policy, the Board ruled that hospital interns and residents in a private hospital are employees covered by the LMRA even though they are students. Therefore, these employees have the right to organize and join a union and participate in other protected concerted activities. Boston Medical Center Corp., 330 NLRB 152 (1999). (Note: If the Board follows its reason- ing in Brown University discussed previously, then the Boston Medical Center Corp. decision could be reversed in the future.)

Weingarten Rights Applied to Unrepresented Employees In 1975, the U.S. Supreme Court ruled that if a union- ized employee anticipates being disciplined by manage- ment, he or she has a right to have a union official present at the meeting. The right to obtain union coun- sel at such meetings is called Weingarten Rights. But

what about nonunion employees? Can a nonunion worker bring a co-worker to such a meeting? No. Con- tinuing a long running dispute over the interpretation of what constitutes protected activity for mutual aid or pro- tection, by a 3 2 vote, the Board reinstated a previous policy denying nonunion (unrepresented) employees covered by the LMRA a right to have a co-worker pres- ent during an investigatory interview with management where the employee had reason to believe that he or she might be subject to disciplinary or discharge. Exer- cise of such a right is viewed as a form of concerted activity for mutual aid or protection when exercised by union-represented employees but not when exercised by unrepresented employees. So-called Weingarten rights also permit a union-represented employee to know the general nature of the alleged violation being investigated and a reasonable opportunity to meet with his or her union representative prior to any investigatory meeting with management. Compare IBM Corporation, 341 NLRB 1288 (2004) to Epilepsy Foundation of North- east Ohio, 331 NLRB 676 (2000) enforced in part, Epi- lepsy Foundation of Northeast Ohio v. NLRB, 268 F.3d 1095 (D.C. Cir. 2002). See also NLRB v. Weingarten, 420 U.S. 251 (1975).

Enforcement of Agreement to Arbitrate Employment Discrimination Claim An arbitration clause in a collective bargaining agree- ment that clearly and unmistakably requires a bargaining unit member to submit employment discrimination claims covered by a federal antidiscrimination statute to arbitration is enforceable. The bargaining unit mem- ber may not submit a legal claim under the applicable antidiscrimination law through the court system. The contractual arbitration procedure is the bargaining unit member s exclusive remedy for his or her employment discrimination claim. 14 Penn Plaza, LLC v. Pyett, 129 S. Ct. 1456 (2009).

Minimum Number of NLRB Board Members Required to Make a Case Decision Section 3(b) of the LMRA requires the Board to have at least three of five members participating in order to exercise the delegated authority of the board. New Pro- cess Steel, L.P. v. National Labor Relations Board, 130 S. Ct. 2635 (2010).

Voluntary Employer Recognition Does Not Create an Election Bar If an employer grants voluntary recognition of a labor union, can workers who support a rival union still file a

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an ALJ or the Board, the General Counsel and prosecutorial staff typically win, in whole or in part, 75 90 percent of the time.27

Employer and Employee Coverage under the LMRA, as Amended To promote the public policy goals of the LMRA, as amended, Congress sought to include as many employers and employees as possible under the statute s coverage. The U.S. Constitution permits Congress to regulate private-sector employers whose operations have the potential to vitally affect interstate commerce. If an employer is subject to coverage under the statute, the employer s employees are also covered (protected) by the statute unless they fall into an employee category specifically excluded from coverage (e.g., agricultural workers). The term NLRB jurisdiction refers to those employers and employees to whom the NLRB can apply the language of the LMRA.

The NLRB may refuse to assert jurisdiction in cases where it believes the effect on interstate commerce is minor (de minimus). For example, the NLRB has refused to hear cases from state-regulated industries such as real estate, horse and dog racing. Individual states may assert jurisdiction over any case where the NLRB has declined to do so.28

From 1935 to 1950 the Board relied upon the judgment of individual regional direc- tors to determine an employer s ability to affect interstate commerce on a case-by-case basis. To reduce the inconsistencies inherent in this approach and improve the objectiv- ity of decisions, the Board adopted a set of monetary standards (guidelines) applicable to different types of employer operations (see Exhibit 3.2). In 1959 as part of the LMRDA, Congress prohibited the Board from refusing to apply or altering the monetary standards then in effect without congressional approval.

The standards measure the total dollar volume of an employer s operations (gross rev- enue) and the dollar value of products or services sold (outflow) or purchased (inflow) over a 12-month period (e.g., most recent calendar or business tax year or 12 months immedi- ately preceding the filing of a ULP charge or representation election petition). Meeting the specified dollar threshold using any one of the available measurements is sufficient to per- mit the NLRB to assert jurisdiction over the case and apply the terms of the LMRA.

Congress excluded some individuals from the definition of an employee subject to coverage under the LMRA, as amended. Specifically excluded by statutory language are as follows:

Agricultural laborers are employees whose primary duties involve ordinary farming operations performed prior to a product s readiness for initial sale.29 Some states (e.g., AZ, CA, HI, ID, KS, MA, WI) have enacted a collective bargaining law to cover agricultural laborers.

petition asking the NLRB to hold a representation elec- tion? In a 3 2 decision, the Board ruled that an employ- er s granting of a union s request for voluntary recognition as the exclusive bargaining representative of an employee group does not bar the filing of a rival union petition within 45 days of the date notice is

provided that voluntary employer recognition has been granted. The policy appears aimed at weakening the credibility of voluntary employer recognition based upon a showing of significant employee support for a rival union. Dana Corporation, 351 NLRB 434 (2007).

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Exhibit 3.2 NLRB Jurisdictional Standards Determining Employer Coverage under the LMRA

Nonretail Business Direct or indirect sales through others of goods to consu- mers in other states (called outflow) of at least $50,000 a year; or direct or indi- rect purchases through others of goods from suppliers in other states (called inflow) of at least $50,000 a year.

Retail Business At least $500,000 total annual volume of business.

Office Building Total annual revenue of $100,000, $25,000, or more of which is derived from organizations which meet any of the standards except the indi- rect outflow and indirect inflow standards for nonretail firms.

Public Utility At least $250,000 total annual volume of business, or $50,000 direct or indirect outflow or inflow.

Newspaper At least $200,000 total annual volume of business.

Radio, Telegraph, Television, and Telephone Firms At least $100,000 total annual volume of business.

Private Health Care Institutions (e.g., hospital, HMO, clinic, nursing home) At least $250,000 total annual volume of business for hospitals; at least $100,000 for nursing homes, visiting nurses associations, and related facilities; at least $250,000 for all other types of private health care institutions.

Hotel, Motel, Residential Apartment Houses At least $500,000 total annual volume of business.

Transportation Enterprises, Links, and Channels of Interstate Commerce (e.g., interstate bus, truck) At least $50,000 total annual income from furnish- ing interstate passenger and freight transportation services OR performing ser- vices valued at $50,000 or more for businesses which meet any of the jurisdictional standards except the indirect outflow and inflow standards estab- lished for nonretail firms. [NOTE: Airline and Railroad operations are covered under the Railway Labor Act (RLA), not the LMRA and thus are not subject to NLRB jurisdiction.]

Transit Systems At least $250,000 total annual volume of business.

Taxicab Companies At least $500,000 total annual volume of business.

Associations The annual business of each association member is totaled to determine whether any of the standards apply.

Private Universities and Colleges At least $1 million gross annual revenue from all sources (excluding contributions not available for operating expenses due to limitations imposed by the donor).

Any Firm with a Substantial Impact on National Defense.

U.S. Postal Service by enactment of the Postal Reorganization Act of 1970.

Symphony Orchestras At least $1 million gross annual revenue from all sources (excluding contributions not available for operating expenses due to limitations imposed by the donor).

Social Service Organizations Not Covered under Any Other Standard At least $250,000 gross annual revenue.

SOURCE: Office of the General Counsel, NLRB, A Guide to Basic Law and Procedures under the National Labor Relations Act (Washington, D.C.: U.S. Government Printing Office, 1997), pp. 33 35 at http://www.nlrb.gov/shared_files/brochures/basicguide.pdf.

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Individuals employed by an employer covered under the RLA (rail and airline industries). Individuals employed as a domestic by a private household (e.g., cook, nanny, butler, chauffeur, gardener, personal assistant). Individuals employed by a parent or spouse are excluded from coverage under the LMRA. On a case-by-case basis, other individuals may be excluded from a particular bargaining unit because evidence demonstrates their self-interests to be more closely aligned with that of ownership rather than other employees included in a bargaining unit. Individuals employed by a public-sector employer (federal, state, or local). Public- sector labor relations issues are discussed further in Chapter 13. U.S. Postal Service employees are the only exception to the public employee exclusion rule. As part of a settlement to end an illegal strike by postal workers, Congress enacted the Postal Reorganization Act of 1970, which placed postal workers under coverage of the LMRA, greatly expanding the number and types of issues over which workers could legally bargain. Unlike other private-sector employees covered by the LMRA, postal workers have no legal right to strike. However, if the negotiation process does not successfully produce a labor agreement they may invoke final and binding interest arbitration as a means of resolving the terms of the new contract. Interest arbitration will be discussed further in Chapter 9. Independent contractors are considered self-employed and thus are treated as an employer, not an employee under the LMRA. Thus, independent contractors cannot unionize. Merely calling someone an independent contractor is not sufficient evi- dence to establish their employment status. The Department of Labor has estab- lished some guidelines for whether someone is an independent contractor. In general, an independent contractor is an individual who offers a service for a fixed fee to provide a specified result. The wages of an independent contractor are at risk in the sense that any profit is dependent upon the contractor s ability to deliver the agreed-upon work product at a cost below the fixed fee agreed upon in advance. An independent contractor controls the manner in which work is performed and gen- erally furnishes his own training, tools, or other work materials. Supervisors were not originally excluded from coverage under the 1935 NLRA, but Congress added the exclusion as part of the LMRA (Taft Hartley) amendments in 1947. Section 2(11), LMRA defines a supervisor as any individual delegated man- agement authority to perform or effectively recommend one or more of the follow- ing functions affecting employees: to hire, transfer, suspend, lay off, recall, promote, discipline, discharge, adjust grievances, assign work, or reward employees so long as the exercise of such authority requires the use of independent judgment which is not merely routine or clerical in nature. 30 To be a supervisor the evidence must show that the individual (1) performs at least one of the specified supervisory functions, (2) has been delegated authority to perform such supervisory functions in the inter- ests of the employer (as opposed to performance as a routine part of the individual s professional responsibilities), and (3) exercises independent judgment when per- forming his or her supervisory duties (as opposed to merely carrying out the deci- sions of some other manager or applying established policies). The supervisory exclusion has since been extended to include any manager who participates in the formulation or execution of management policies and procedures so long as such activity involves the exercise of independent judgment or discretion.31

The mere fact that a professional employee (e.g., nurse, teacher, or engineer) exer- cises some independent judgment or discretion in performing their job duties does not

106 PART 1 Recognizing Rights and Responsibilities of Unions and Management

automatically exclude that individual from coverage under the LMRA. In Oakwood Healthcare Inc. (NLRB 2006), cited in the Labor Relations in Action section earlier in this chapter, the Board ruled that 12 permanent charge nurses met the definition of a supervisor, whereas 169 other registered nurses whom the employer had sought to exclude from a bargaining unit as supervisors were not supervisors even though on some occasions they were labeled as charge nurses by the employer.32

Concerted and Protected Employee Activity Concerted activity implies some action taken by or on behalf of two or more employees to express a complaint or grievance relating to conditions of employment under the employer s control, for example, work procedures, staffing levels, pay or benefits, safety conditions, hours of work, discipline or other matters affecting wages, hours, or other terms and conditions of employment. The LMRA does not protect complaints or grie- vances of a purely personal nature (i.e., of concern to a single employee). Nor does it protect concerns unrelated to employment, such as financial concerns an employee might have as owner of a firm s stock.

To be protected under the LMRA, the concerted activity must be for a protected purpose (described in Section 7 of the act) and engaged in using lawful means. For example, tactics used to form or join a union or engage in collective bargaining or other mutual aid or protection cannot involve violence, sabotage, or a disproportionate loss or disruption to the employer relative to the seriousness or importance of the employees complaint or grievance. On a case-by-case basis, the NLRB must decide if the act is taken on behalf of multiple employees and if so, is the act for a lawful purpose using lawful means?

Employees are not required to provide management with an opportunity to resolve a complaint or grievance prior to engaging in some form of concerted and protected activity to express a complaint or grievance.33 Nor are employees required to accept any management proposal for resolving a complaint or grievance even though manage- ment believes the proposed settlement terms are fair and appropriate. Although unrepre- sented (nonunion) employees covered under the LMRA have a right to engage in concerted and protected activity, they do not have a right to require their employer to engage in collective bargaining with them over a solution to the grievance dispute. The duty to bargain cannot be lawfully imposed until a labor organization has been legally certified as the exclusive bargaining representative of an employee group. The union rec- ognition (certification) step is discussed further in Chapter 5, and the duty to bargain in good faith is discussed in Chapter 6.

The Interboro doctrine represents an exception to the requirement that an employee be able to prove that he or she acted with or on the express authorization of one or more other employees in order to be considered engaged in concerted activity.34 A single bar- gaining unit member can be implied to be acting in concert with other bargaining unit members covered under the same contract terms whenever the individual acts alone to enforce a term or condition of a collective bargaining agreement. Even if an employee has not previously discussed the issue (e.g., safety concern, denial of pay, or promotion) with other employees or no other employee is present at the time when the employee expresses the grievance complaint to a member of management, no adverse action can be taken against the individual merely for expressing the grievance so long as the com- plaint concerned a term or condition of an existing collective bargaining agreement.

The exercise of Section 7 rights through concerted activities is not unlimited. For example, reasonable restrictions on the right to strike can occur based upon a strike s objective, its timing, or the conduct of the strikers. If a strike s purpose was to achieve

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a closed shop contract provision forcing the hiring of only union members, its purpose would be illegal; therefore, the strike would be illegal. If a strike occurs in violation of a no-strike provision in the contract, the timing of the strike is inappropriate, and all strik- ing employees may be disciplined. Further, strikers do not have the right to threaten or engage in acts of violence. Neither sit-down strikes nor refusals to leave a plant are pro- tected strike activities. Strikers also exceed their rights when they physically block per- sons from entering or exiting a struck plant or when threats of violence are directed against employees not on strike. Strike issues are further explained in Chapter 9.

NLRB Unfair Labor Practice Procedure The procedure for a ULP charge (Exhibit 3.3) starts when an employee, employer, labor union, or individual files a charge with an NLRB office within six months of the date the alleged violation occurred. The party filing the charge is termed the Charging Party and the party accused of committing the violation is termed the Respondent. Typically, a union files charges on behalf of one or more employees and the workers employer is named as Respondent. A refusal to bargain in good faith is typically the most common alleged employer ULP (accounting for about half of ULP cases) followed by alleged ille- gal discharge or other discrimination against employees (about 40 percent of cases). Of the ULP charges filed against unions, the two most common allegations were illegal restraint or coercion of employees (79 percent of cases in FY 2009).35

The General Counsel s office with the aid of the NLRB regional office staff will investigate the ULP charge to determine if sufficient evidence exists to believe a ULP vio- lation may have occurred. The investigation may involve interviews with potential wit- nesses, examination of documents, or other necessary steps. A ULP charge may be settled or withdrawn at any point in the ULP procedure prior to a final Board decision. If insufficient evidence to support the charge is found during the preliminary investiga- tion, the General Counsel will dismiss the ULP charge, and there is no further appeal of this decision. In cases alleging an unlawful boycott or strike, the NLRB must request a federal district court to issue a temporary restraining order while the case is investigated. The NLRB may seek a court injunction in other cases to limit the amount of damages a charging party might suffer if required to wait until a final ULP decision is reached. However, the Board has been reluctant to use this authority in most ULP cases.

If the General Counsel s investigation confirms the ULP charge has merit (i.e., there is sufficient evidence found to believe a ULP appears to have been committed), a reason- able effort will be made to get the Respondent to agree to a voluntary settlement of the charge. If no voluntary settlement is reached, a formal ULP complaint and notice to appear for a formal hearing before an Administrative Law Judge (ALJ) will be issued.

In a typical year, 20,000 25,000 ULP charges are filed (e.g., in FY 2014, there were 20,492 ULP charges); of these, 30 40% are typically found to have merit.36 Approximately 90 percent of ULP complaints issued involve alleged employer ULP. Of approximately 21,000 ULP cases closed in FY 2013, 34 percent were settled and closed before the issuance of an ALJ s decision, 35 percent were withdrawn voluntarily before a formal complaint was issued, and 28 percent were dismissed administratively by the General Counsel. The volun- tary settlement rate for ULP charges with merit has ranged between 91.5 and 99.5 percent each year over the past decade. The percentage of filed ULP charges that have been found to have merit has ranged from 32 to 40 percent since 1980.37

The ALJ presides over a formal ULP hearing conducted under federal court rules of evidence during which the General Counsel (representing the Charging Party) has the initial burden of proving by a preponderance of the evidence that a ULP was committed. The Respondent (typically an employer) would have an opportunity during the hearing

108 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Exhibit 3.3 Unfair Labor Practice Procedure

SOURCE: National Labor Relations Board.

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to present evidence and arguments attempting to prove that no ULP violation occurred. Based upon the evidence presented at the hearing, the ALJ sends a written report to the Board containing findings of fact regarding the alleged ULP charge and recommenda- tions on an appropriate remedy for any ULP violations found to have occurred.

The Board has final agency authority to decide all ULP charges. The ALJ s written report is sent to all parties involved in the case as well as the Board. The Board rarely hears oral arguments or testimony from any of the parties in a ULP case and therefore places a great deal of importance on the ALJ s findings regarding key issues such as the credibility and demeanor of witnesses who testified during the hearing.

ULP cases can be classified into two broad categories or types: routine or lead cases. A routine ULP case involves charges that do not raise any new or novel issues of labor law and can be determined by application of existing relevant Board policies and legal principles. Such cases are typically decided by a three-member panel of Board members and comprise 80 to 90 percent of all Board decisions. What are we to make of the high percentage of routine cases? From one perspective, this is evidence that the Board s cur- rent remedial powers are not adequate to prevent typical discriminatory acts involving supposedly protected employee rights under the Act; employers are allegedly willing to break the law because the penalties under the NLRA are so weak. A second perspective posits that sometimes unions file frivolous charges (that are subsequently withdrawn) as a way to harass and distract managers during elections or times of collective bargaining. A third perspective is that the NLRB needs to do a better job of informing managers about the law so that managers do not commit ULPs out of ignorance. Finally, one can argue that this is consistent with the base rate: Most alleged violations of a labor law that has been on the books for approximately 80 years would be expected to deal with issues that have been addressed in previous cases.38

A lead ULP case involves a charge that either raises a new or novel labor law issue or presents the Board with an opportunity to initiate a new policy or significantly change an established policy interpreting the LMRA, as amended. Because of the precedent- setting nature of lead cases, a decision requires the participation of all Board members. The Board adopts the recommended decision and order of the ALJ in approximately 85 percent of ULP cases but has the authority to reject or alter the ALJ s recommendations in every ULP case.

Unfair Labor Practice Remedies Section 10 (c), LMRA grants the Board broad authority to fashion an appropriate rem- edy for ULP violations.39 At a minimum, the Board will issue a cease-and-desist order, instructing the Respondent to stop committing the ULP violations immediately and in the future. It is common for the Board to order a Respondent to post written notices at places where employees will see them to inform employees about the ULP violations that have occurred, the Respondent s pledge not to commit such violations in the future, and the basic rights of employees protected by Section 7 of the LMRA. The Board has recently added the requirement that ULP remedy notices also be posted electronically (e.g., e-mail, text message) where the Charging Party normally uses such communication channels to disseminate information to employees.40 Posted notices must remain on dis- play for a period of time ranging from six weeks to six months.

Additional remedies fall under the heading of affirmative action necessary to pro- vide a make-whole type remedy to individuals adversely affected by the occurrence of a ULP. The goal is to restore the workers situation to what it was prior to the ULP occur- ring. Depending upon the specific type of ULP committed, affirmative action could include one or more of the following types of actions: reinstatement, back pay,

110 PART 1 Recognizing Rights and Responsibilities of Unions and Management

promotion, restoration of seniority rights, or other benefits to which the individual should have been entitled had the ULP not occurred, expunging any reference to the ille- gal action from an individual s personnel file, an order to bargain in good faith, an order to reopen an illegally closed plant or return illegally relocated work, decertification or disestablishment of a union as the employees exclusive bargaining representative, or union repayment of illegally withheld or overcharged dues or fines.

The Board has no authority to award punitive damages in any case no matter how many separate or intentional ULP violations were committed by a Respondent. An employee alleging unlawful discharge is under an affirmative duty to seek comparable employment to mitigate the Respondent s potential back-pay liability while awaiting a final determination of the merit of the ULP charge. Although the Board can order a party to bargain in good faith, the Board has no authority to order either union or man- agement representatives to accept any specific change in a term or condition of employ- ment. The Board could rule that a current employment policy or practice is unlawful and cannot continue to be enforced but could not order the guilty party to change the policy or practice in a way to make it lawful.

Parties may appeal a Board ULP decision to an appropriate federal appeals court as shown in Exhibit 3.3. While the Board relies primarily on voluntary compliance by Respondents with its ordered remedies, when necessary the Board may also petition an appropriate federal appeals court for an order enforcing the Board s ULP decision. A ULP decision can be appealed to either (1) the District of Columbia Circuit Court of Appeals, which has jurisdiction over the headquarters of the Board; an appeals court having jurisdiction over the location where the ULP occurred; or (2) an appeals court having jurisdiction over the location of the appealing party s principal residence or busi- ness headquarters. If the appealing party is aware of a difference of opinion among the federal courts having jurisdiction in the ULP case, this provides an opportunity to engage in so-called forum shopping whereby the party would choose to file the appeal under the court s jurisdiction whose prior interpretations would likely be most favorable to the appealing party s position in the current case.

Upon review of the Board s ULP decision, a court of appeals may enforce the order as written, modify the decision, remand the case back to the Board for further con- sideration, or refuse to enforce the Board s decision. Approximately 50 percent of final ULP Board decisions (or approximately 1 percent of all ULP charges filed) are appealed annually to federal courts, making the NLRB one of the most active federal agencies involved in federal court litigation.

A federal court must enforce the Board s ULP decision if (1) the decision is a rea- sonable interpretation of congressional intent as expressed in the language of the LMRA, as amended and (2) the decision is supported by substantial evidence (facts and reason- ing) contained in the case record.41 It is the lack of substantial evidence in the case record to support the Board s decision which is cited most frequently when a court refuses to enforce all or part of a Board ULP decision. The courts were encouraged by Congress to pay deference to the Board s interpretations of the LMRA and to witness credibility determinations by an ALJ during the ULP hearing. On balance, the NLRB has a successful track record of having its decisions enforced by federal appeals courts. In FY 2012, U.S. courts of appeal decided 73 ULP cases, of which 85 percent of Board decisions were enforced entirely; 10 percent were enforced in part; 4 percent were remanded to the Board for further consideration; and 1 percent of Board ULP case decisions were denied enforcement.42

A court of appeals decision in a ULP case can be appealed for possible review by the U.S. Supreme Court (petition for certiorari). To be reviewed, four of the nine Supreme

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Court justices must agree to hear a case. Cases most likely to be accepted for review are those that raise a new or novel labor law question not previously addressed by the court or which raise an issue on which lower courts of appeal having rendered different inter- pretations, thus creating a so-called legal split among the courts of appeal. Agreeing to hear such a case on appeal would allow the Supreme Court to resolve the legal question and establish a binding precedent which lower courts and administrative agencies (e.g., NLRB) would have to follow in deciding future similar cases. The Supreme Court agrees to review less than 1 percent of all petitions for certiorari it receives.

Assessment of the LMRA, as amended, and NLRB Administration The LMRA and its administration have critics in the academic community. Professor James Gross, an authority on the LMRA, has stated: The current national labor policy favors and protects the powerful at the expense of the powerless. In the essential moral sense, therefore, the current national labor policy is a failure. 43 Professor Janice Bellace has suggested that most labor commentators find the current application of labor laws has actually discouraged unionism:

Current labor law tolerates long delays in getting to an election and in having the election results certified. Labor supporters will also point out that even when there is a union at a work place, labor law permits the threatened and actual replacement of strikers from the first day of the strike. They will decry this, particularly because rules on the labor contract do not maintain the status quo when the contract expires, thus enabling employers demanding concessions to take back in a flash those contract items gained by the union over the years. Finally, labor supporters deride a statute with remedies so weak they do not deserve the label remedy .44

Because the U.S. President appoints members of the Board, labor relations policy can be thought of like a pendulum, swinging somewhat toward management when a Republican President is in office and somewhat toward labor unions when a Democrat is in the oval office. For example, while admitting that the Bush Board favored employer interest in decisions, management attorney Kenneth Dolin viewed policy changes as returning the Board to the mainstream and correcting the excesses of the Clinton-era Board. More recently, some observers have claimed that there is a pro-labor tilt to the Board under the Obama administration.45 Other commentators express concern that such frequent policy interpretation shifts may eventually cause the courts to pay less def- erence to the Board s interpretation of the LMRA, viewing the opinions as more reflec- tive of changing economic and political climates than a consistent view of congressional intent in passing the law.46

The language of the LMRA has remained relatively unchanged by congressional action since 1959, even though the labor relations environment has undergone substan- tial change over the same time period. The labor force has become substantially more diverse with increased labor force participation by women, and racial and ethnic minori- ties. The economy has transformed from a manufacturing base to a service-information technology base, creating a truly global economy where products, information, and mon- etary resources are easily transported across national boundaries, expanding product/ser- vice markets and increasing competitive pressures on both employers and employees. Emphasis by Congress and the legal system on protecting individual employees right to equal treatment and the establishment of minimum employment standards has also deemphasized the role of collective bargaining as a means of providing employees a voice in determining employment interests.47

112 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The lack of congressional action to address labor law reforms has been attributed to the fact that for many decades, both organized labor and especially employers have had enough support in Congress to block any significant amendment that either group strongly opposes. Enough support does not mean a majority; it means a minority that is big enough, well organized enough, and committed enough to tie up a bill through the arcane supermajority requirements of the Senate for example through filibuster or to sustain a presidential veto. 48

Labor union advocates would like to see several reforms of the LMRA enacted. Among desired reforms are the following:

Greater access by nonemployee union organizers to communicate with employees during organizing campaigns. Currently, employers can make anti-union speeches to employees, as long as they are paying them, while limiting access to union organi- zers. Labor advocates want to counter these so-called captive audience speeches (discussed further in Chapter 5). Stronger penalties for ULPs committed by employers against union supporters. For example, current Board policy states that if an employee has been unlawfully dis- charged for union activity, he or she is to be awarded back pay, minus any interim earnings from other jobs while unemployed (called an offset ); labor advocates want the policy changed so that employees get back pay without any reduction due to offsets. Union advocates have also sought unsuccessfully to eliminate management s right to permanently replace otherwise lawful economic strikers during a labor dispute.49

Some employer advocates seek changes also. Many favor an expansion of an employer s right to create work teams and have those teams deal with a wide range of employment issues involving work processes, compensation, productivity, safety, and other work rules. Currently, the LMRA contains Section 8(a)(2), which prohibits employer creation, domination, or interference with the operation of a labor organiza- tion. This prevents company unions, but some argue that it stifles nonunion employer attempts to create forums for improving productivity and employee involvement in work decisions.50 Employers also want to expand the application of so-called Beck rights; In the Beck case, the U.S. Supreme Court established the basic right of an employee not to be forced to pay for a union s political lobbying activities and to pay only for those regular charges associated with the duties of representing the bargaining unit. However, the specific procedures for implementing that right (e.g., opting in vs. opting out of political participation) are set by individual unions, who usually want plenty of funds available for lobbying purposes.51 Thus, employers argue that the procedure should be set by the government. Beck rights will be discussed further in Chapter 4.

The NLRB also has its critics among government officials. One area of concern over the years has been the amount of time required to complete ULP case decisions by the Board. Both ALJs and Board members share the responsibility for administrative delays which have occurred.52 The problem reached a crisis point in 1991 when the General Accounting Office (GAO) released a damaging report to Congress entitled Action Needed to Improve Case-Processing Time at Headquarters. This report revealed that between 1984 and 1989 only about 67 percent of the 5,000 cases appealed to the Board were decided within one year, and ten percent took 3 7 years.53 To its credit, the NLRB has worked to reduce the amount of time for ULP cases to be heard. In FY 2014, the NLRB processed almost 84 percent of cases within one year of charges being docketed and 72 percent were resolved within 120 days.54

A number of labor law reform proposals have been made over the past 50 years intended to correct perceived deficiencies in the current statutory language, alter Board

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procedures, or affect the scope of employees covered by the statute. For example, under the Obama administration, the NLRB has pursued changes aimed at reducing the amount of time that elapses between (a) when a valid petition is filed, requesting a union certification election, and (b) when the representation election vote actually occurs.55 Among other suggested changes are the following: strengthening the remedies for ULPs; making greater use of administrative rule-making to reduce shifts in Board policies; permitting voluntary union authorization card signatures to be used to establish proof of employee majority support for union representation; and ensuring that first contract negotiations do result in a labor agreement either through voluntary bargaining, mediation, or if necessary, final and binding interest arbitration.56 New forms of employee representation along the lines of European works councils to involve employ- ees who are not union members in decisions affecting their work lives have also been advocated and a plan to establish a works council has been explored by the United Auto Workers and Volkswagen in Chattanooga, Tennessee.57 Whether some or any of these proposed reforms will actually become reality remains to be seen but history would suggest that the road to meaningful reform is difficult and slow.

Transportation-Related Labor Relations Law (Railway and Airlines)

Because of the vital role that railroads played in interstate commerce, and because of the violence that characterized both the Great Railroad Strike of 1877 and the Pullman Strike of 1894, courts have historically given the federal government great latitude in regulating labor management relations in this industry. Congress tried to prevent disruption to the economy from rail disputes, but early legislation (e.g., the Arbitration Act of 1888 which allowed for nonbinding arbitration) proved ineffective. After a series of strikes in the early 1920s, the major rail lines and their employees unions negotiated a draft law that Congress enacted as the RLA in 1926.

Even today, rail and air transportation labor relations are covered by the Railway Labor Act (RLA) of 1926. Enacted with bipartisan labor and management support to apply only to the railway industry, the RLA was actually the first comprehensive collec- tive bargaining law. In 1936, the RLA was amended to extend coverage to a new and developing transportation industry airlines. The railroad and airline industries have the highest union density level of any private-sector U.S. industries, approximately 84 and 60 percent respectively.58 Similar to other labor laws, the RLA did not develop over- night; it resulted from years of employee efforts to gain union recognition and engage in collective bargaining, often resulting in disruptions in normal rail transportation opera- tions.59 The primary goal of the RLA is the avoidance of disruption in transportation services by encouraging collective bargaining.

Under the RLA, if a union and employer are unable to resolve their differences over negotiating terms of a labor agreement (termed a major dispute under the RLA), the dispute is subject to mandatory mediation through the NMB. If mediation does not suc- ceed, the parties have the option of proceeding to final and binding interest arbitration. If either party declines to submit the dispute to arbitration, there is a 30-day status quo period invoked during which the president may appoint an emergency board to investi- gate the dispute and make recommendations on a settlement.

Since the enactment of the RLA, over 97 percent of the collective bargaining disputes mediated by the NMB have been resolved without a strike or other form of interruptions of commerce. Historically, about 85 percent of presidential-appointed

114 PART 1 Recognizing Rights and Responsibilities of Unions and Management

emergency boards (PEB) established have dealt with disputes in the railroad industry. In recent years, there has been a dramatic drop in both strikes and in the use of emer- gency boards. Only two airline strikes occurred between 2008 and 2012; the last rail- road strike occurred in 1994. The most recent PEB in the airline industry convened in 2002. In the five-year period from FY 2008 FY 2012, only two presidential emer- gency boards were established for railroad labor disputes. No PEBs were established in either industry in FY 2013.60

The National Railroad Adjustment Board (NRAB), a bipartisan group of 17 union and 17 management representatives, was established to assist in resolving grievances arising during the term of a labor agreement over the interpretation or application of the contract s terms (termed a minor dispute under the RLA). Where the board cannot agree to a settle- ment, the grievance may be settled by an arbitrator selected by the parties.61

In FY 2013, the parties brought 6,576 grievances before the NMB for arbitration; 35 representation cases were filed and 35 more were resolved.62 The NMB is empowered to conduct representation elections and to help resolve interest disputes that develop during negotiations between union and management representatives over what the terms and conditions of employment will be as stated by contract language. Under the RLA, labor agreements never expire but do become amenable for negotiation of proposed changes as of a specified date.

There are several differences between the RLA and the LMRA:

1. The RLA covers the railway and airline industries, whereas the LMRA covers most other private-sector employers engaged in interstate commerce.

2. Because railroad and airline workers were geographically dispersed, NMB ballots for union certification elections were mailed to employees homes (employees completed them and mailed them back); by contrast, voting was done in-person via secret bal- lot at NLRB-supervised election sites within factories or office complexes. In 2002, the NMB began using Telephone Electronic Voting (TEV) for representation elec- tions, and in 2007 it began using Internet Voting. The NMB believes the system is very secure and will save the agency substantial time and expense in conducting representation elections; in most elections, it no longer uses mailed ballots.

3. Historically, union representation under the RLA required a showing of support from the majority of all employees in the particular craft or class who were eligible to vote, whereas the NLRB required only support from the majority of employees who actually voted. The NMB rule had the effect of requiring a larger number of yes union votes to gain bargaining rights because the rule treated eligible voters

who did not to vote as if they had voted no. If there were 100 eligible voters and 68 cast a valid ballot, historically under the RLA a union would need 51 yes votes for a union to be certified as the exclusive bargaining representative for the 100 employees. Under the LMRA, if 68 workers voted, a union would require only 35 yes union votes to be certified.

In May, 2010, the NMB adopted the same certification election voting rule for the RLA as that used under the LMRA. The NMB members believe that the rule change will provide a more reliable measure of employees preference on the ques- tion of union representation. As with other democratic election procedures used in U.S. society, eligible voters who choose not to cast a ballot are presumed to have no preference regarding the outcome of the election but are still bound by the resulting majority vote of those eligible voters who do choose to express their preference by casting a valid ballot. One study concludes that the NMB s procedural change has not resulted in a significant increase in union victories in certification elections.63

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4. A significantly higher percentage of employees in the railway and airline industries are organized by unions under the RLA compared to other private-sector employees covered under the LMRA. For example, approximately 85 percent of Class I (major railroad) employees are unionized and 60 percent of other railroad employees are unionized.64

5. Under the RLA, a union cannot strike and an employer cannot lock out until they have exhausted the impasse resolution procedures required by the NMB. Under the LMRA, the parties can engage in these self-help actions if (a) the dispute involves a mandatory subject of bargaining; (b) there is no current contract language barring the action; and (c) good-faith bargaining responsibilities have been met.

6. Under the RLA, arbitration of minor disputes (grievances) in the railway industry is mandatory, and the government pays the arbitrator s fee and expenses. Under the LMRA, grievance arbitration procedures are negotiated by the parties, and the par- ties pay for the arbitration (airline grievance arbitration is similar to arbitration under the LMRA).65

7. The LMRA, as amended, severely limits certain union activities, including feather- bedding (where minimum crew sizes that are mandated in the labor agreement far exceed those needed to do the work) and secondary strikes or boycotts where unions who have a dispute with one employer embroil a neutral, uninvolved employer in the dispute. The RLA does not contain the same limitations.

8. Both the LMRA and the RLA allow unions to negotiate union shop contract clauses, requiring new hires to join the union that represents them (or pay financial core sta- tus fees). However, the LMRA also allows states to prohibit union shops. The RLA does not give individual states the same leeway, and federal laws supersede state laws. Thus, if a railroad workers union negotiates a union shop clause under the RLA, and the railroad goes through a state with a law prohibiting union shops, then the contract clause remains in effect for those railroad workers, despite the state law.

Assessment of the RLA Faced with such problems as changing markets for freight transportation, severe compe- tition, increased merger activity, government regulation, and public interest in uninter- rupted rail and air service, labor relations in the railway and airline industries are somewhat unique. Complicating the situation further are the chronic financial instability of the numerous independent railroads; the presence of strong, competing craft unions; and tradition-bound work rules. These factors can affect labor relations in the following ways. First, because the public depends on rail transportation for many essential goods, much effort has been made to avoid strikes (including interventions by Congress). Sec- ond, due to different craft unions involved, the labor relations process takes much time and creates many opportunities for disputes. However, because of union mergers since 1970 there are now only 13 major freight-related rail unions. Finally, the tradition- bound work rules of the operating crafts strictly control not only how a particular job will be performed, but also which craft will be assigned the job. These work rules slow the introduction of new technology and magnify the problems of this industry.66

Any assessment of the RLA must be kept in proper perspective. There are thousands of labor agreements in the railroad and airline industries, with hundreds of agreements (mostly local) in negotiations during any given year. Further, any measure of the RLA s effectiveness must be made with reference to its objectives to promote free collective bargaining and pro- tect the public from interrupted flows of commerce which it has done effectively.

Regarding negotiations, mediation has been the most important method of interven- tion under the RLA; however, few nationwide railroad wage cases have been settled by

116 PART 1 Recognizing Rights and Responsibilities of Unions and Management

mediation since 1936. Its greatest success has been in settling minor controversies after the major issues have been resolved. This does not mean that mediation is unimportant minor disputes left unresolved could easily lead to major strikes in future negotiations.67

Deregulation Legislation in Railroads and Airlines Prior to 1978, the federal Civil Aeronautics Board tightly regulated which airlines could fly specific routes and it guaranteed a 12 percent return on flights that were 55 percent full. To insure that this threshold was met, competition was limited and airlines often had to wait years to add a new route. The Airline Deregulation Act of 1978 ended government con- trols of fares and routes, and the Motor Carrier Act of 1980 reduced the amount of eco- nomic regulation of the industry by the Interstate Commerce Commission. The Staggers Rail Act of 1980 gave railroads more flexibility in setting rates and service levels.68 Concerns that deregulation might result in only a relatively few large carriers, thereby reducing competition within the industry, initially proved unfounded. Prior to 1978, ten major air carriers controlled 90 percent of the market. Airline deregulation prompted the introduc- tion of 128 nonunion carriers, but by 1987 only 37 had survived. This was not unexpected: There is a high failure rate for start-ups in almost every industry.

Since the 1980s, there has been increased merger activity by the major airlines. This accelerated in the last ten years, to the point that now four major airlines control 85 per- cent of the market, prompting some to call for government intervention to prevent regional monopolies. Other developments include ticketing agreements between major carriers and regional and commuter airlines, hub-and-spoke airports, and frequent flier programs to promote airline customer loyalty.69 Deregulation also initially encour- aged price competition, with 90 percent of passengers traveling at discount prices aver- aging 60 percent below the coach price; however, airlines have attempted to make up lost revenue with ancillary fees. During the same time, accident rates have not increased, and service to many small communities has not deteriorated; however, there have been increased congestion at airports and in the airways, delays in departures and arrivals, price fluctuations due to volatile jet fuel prices, and a general decline in the quality of air service.70 Profitability in both the railroad and airline industry has been reduced by the slow pace of economic recovery, although large (Class 1) railroad operators appear to be making a faster recovery than most major airlines.

Most airlines have adopted a variety of cost cutting strategies, including significant employee layoffs, postponement or cancelation of equipment orders, reduced flight sche- dules, and negotiated economic concessions from employees. This has led to increasing ten- sions and employee complaints at many carriers.71 A study by the GAO reported that since airline industry deregulation in 1978, the average length of time to negotiate new contracts has increased, the number of strikes has declined, but the frequency of nonstrike work actions (e.g., employees all calling in sick on the same day) have increased.72

Promising Developments Regarding the RLA Despite problems, several events and developments provide the basis for some optimism:

Recent negotiations in railroads have been characterized by greater union management cooperation, resulting in fewer conflicts and outside interventions. Emergency board procedures have been drastically improved, and the ritualism and legalism so prevalent in the 1960s have been reduced. Encouraging progress has been made on some long-standing manning and workrule issues, such as combined road and yard service, and eliminating contract

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requirements that firemen (whose job originally involved shoveling coal into the fire box on steam engines) also work on diesel trains. New leadership has had a positive influence on both management and unions, and neutrals and government officials have provided capable assistance in the bargaining and dispute-resolution processes. With railroad industry consolidation, major Class I freight carriers have formed the National Railway Labor Conference. This group now negotiates national contracts with representatives of groups of unions, setting minimum wage and benefits. These are supplemented by company contracts addressing specific working conditions and other issues.

Critical issues remain to be resolved, including secondary picketing, bargaining sta- lemates, restrictive work rules in some agreements, crew size disputes (e.g., some carriers are seeking one-person rail crews), and the use of bankruptcy law to force labor cost concessions from employees, including the abandonment of traditional defined pension benefit plans.73

On balance, even in a deregulated environment, the RLA appears to have accom- plished its primary goal of facilitating cooperative labor relations in the airline and rail- road industries and avoidance of significant service disruptions. Whereas both labor and management might create their own wish list of labor law reforms, as a joint airline labor management committee concluded the potential for disruption far outweighs the marginal gain that any legislative refinements might provide. 74

Additional Laws That Affect Labor Relations Other statutes and executive orders, more narrow in scope, influence labor relations either directly or indirectly. The following section highlights only their major provisions; however, practitioners find that detailed knowledge of them is essential to most business operations. (Related legislation is summarized here, but its specific implications for labor relations activities and unions are discussed in the appropriate chapters.)

Employee Retirement Income Security Act of 1974 The Employee Retirement Income Security Act (ERISA) establishes minimum stan- dards for the operation of voluntarily established private-sector defined benefit pension (which specifies a retiree s benefit levels) and health benefit plans (covered further in Chapter 7). Standards define plan participation, vesting rights, benefit accrual and funding, fiduciary responsibilities of plan administrators, and guaranteed payments of benefits accrued under a defined benefit plan through a federally chartered corporation called the Pension Benefit Guaranty Corporation (PBGC), should the private plan be terminated. There are approximately 40 million U.S. employees currently enrolled in more than 26,000 defined benefit plans. There is a maximum monthly pension benefit adjusted by law each year, which the PBGC is allowed to pay to a beneficiary. This means that some private-sector employees covered under a generous defined benefit plan (e.g., airline pilots) may lose some portion of their expected benefits if their private employer-sponsored plan is terminated and their benefits are determined by the PBGC s mandated benefit cap. The PBGC is currently responsible for paying the pension benefits of 887,000 retirees previously covered under 4,500 terminated private- sector-defined benefit plans.75 The PBGC receives its funding from insurance premiums paid by employers whose plans are covered, investment revenues, and the remaining assets of pension plans, which are terminated and taken over by the PBGC.

118 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The Americans with Disabilities Act of 1990 The Americans with Disabilities Act (ADA) of 1990, which covers an estimated 40 mil- lion disabled Americans, went into effect in January 1992. Considered a Bill of Rights for Americans with a wide variety of disabilities, the act applies to employment, public accommodations, transportation, and telecommunications. The employment provisions cover virtually every aspect of the employment process. The act prohibits discrimination in advancement, discharge, compensation, training, and other terms and conditions of employment which are usually included in collective bargaining agreements. The act requires employers to make reasonable accommodations for disabled employees, except when doing so would subject the employer to undue hardship. This subject will be addressed more fully in Chapter 8.

Bankruptcy Act The Bankruptcy Act of 1984 includes standards for the rejection of collective bargaining agreements by companies seeking to alter terms of a current labor agreement. It requires companies to provide relevant information to unions and engage in good-faith efforts to reach an agreement, which could avoid the necessity to declare bankruptcy. In cases where no agreement can be reached, the act specifies the requirements for terminating or altering provisions of an existing labor agreement. (See Chapter 6 for more details.) Most importantly, a business cannot use bankruptcy to easily change from union to nonunion status.

Worker Adjustment and Retraining Notification Act In response to negative public opinion triggered by major plant closings without any advance notice to employees or community leaders, the Worker Adjustment and Retrain- ing Notification Act (WARN) was passed in 1988. WARN requires employers with 100 or more employees to give 60 days advance notice to employees (excluding those employed less than 20 hours per week) who will be affected by a plant closing or major layoff. Also, the union, the chief elected local government official, and the state government must be notified. The law permits a union and employer to negotiate language in their collective bar- gaining agreement that could require more than 60 days of advance notice be provided.

Situations where WARN Act notice requirements would apply include the following:

A plant closing resulting in an employment loss for 50 or more workers at one site within a 30-day period. A mass layoff of at least 33 percent of the workforce (minimum of 50 employees) within any 30-day period. A mass layoff involving at least 500 employees within any 30-day period (even if this is less than 33 percent of the workforce).

Remedies available to affected employees for employer violations include back pay and benefits for up to 60 days and payments (maximum of $500 per day) to local com- munities for a period of up to 60 days. One criticism of the statute is that no government agency will file a lawsuit on behalf of the workers if a violation occurs. The WARN Act requires the injured party to bear the economic cost of initiating enforcement action by hiring their own attorney and filing a lawsuit in a federal district court.

WARN ties in closely with the workforce innovation and opportunity Act of 1998, as amended, which provides funds to state and local governments for training and retraining. In cases of plant closing and mass layoff, state rapid response teams are available to work with labor and management officials to set up retraining and reemployment programs for the affected workers.

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Racketeer Influenced and Corrupt Organizations Act of 1970 The Racketeer Influenced and Corrupt Organizations Act (RICO), part of the Orga- nized Crime Control Act of 1970, forbids anyone involved in racketeering from investing in or controlling through racketeering activity any enterprise (business or labor union) engaged in interstate commerce. The law provides for penalties of up to $25,000, 20 years of imprisonment, and forfeiture of all relevant property. A person found guilty of a RICO violation may be required to divest himself of all interests in the organization and may be restricted from any future activities in that or a related organization. In addi- tion, any persons who suffered damages from the prohibited activities are entitled to recover triple the amount of damages.

Employment Discrimination Laws and Executive Orders Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991 prohibits any form of employment discrimination by companies, labor unions, and employment agencies on the basis of race, color, religion, sex, or national origin. The Equal Employment Opportunity Commission is a federal administrative agency created to enforce the statute through investigating complaints, attempts at conciliation, and law suits filed on behalf of the complainant.

The Age Discrimination in Employment Act of 1967, as amended in 1978, 1984, and 1986, prohibits employment discrimination against those over the age of 40; permits compulsory retirement for executives who are entitled to pensions of $44,000 per year or more; and authorizes jury trials in covered cases.

The Equal Pay Act of 1963 requires that men and women doing the same work receive the same rate of pay. However, pay differences are allowed based upon differ- ences in qualifications, seniority, and quality of job performance.

The Lilly Ledbetter Fair Pay Act of 2009 (FPA) is an amendment to Title VII of the 1964 Civil Rights Act and also applies to claims arising under the Age Discrimina- tion in Employment Act of 1967 and the Americans with Disabilities Act of 1990.76

Passed by Congress in response to a U.S. Supreme Court decision limiting the amount of time a victim had to bring a legal claim for alleged pay discrimination, the FPA states that each incidence of pay discrimination starts anew the time limit for filing a valid claim under the applicable statute. Thus, if an employer illegally discriminated against, say, women employees by giving them lower pay, and the employer paid them monthly, then each new paycheck would reset the clock for the 180-day statute of limitations for filing a discrimination claim.

Executive Order 11246, as amended by Executive Order 11375, prohibits employ- ment discrimination in the federal government and by federal government contractors and subcontractors receiving $50,000 or more. Those having contracts of $50,000 or more and employing 50 people or more are required to establish affirmative action plans that prescribe specific goals and procedures for increasing the percentage of minor- ity employees. Firms that fail to comply could lose part or all of their contracts.

The Vocational Rehabilitation Act of 1973 (Section 503) requires holders of federal government contracts in excess of $2,500 to take affirmative action to employ and advance in employment qualified physically and mentally disabled individuals. Further, if any disabled individual believes that a federal contractor has failed or refused to comply with the act, he or she may file a complaint with the Department of Labor, which will investigate the complaint and take any warranted action. In addition, Section 504 extends coverage to organizations receiving federal financial assistance and is enforced by the Department of Health and Human Services.

120 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Other Related Labor Relations Laws The Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994 clarifies and extends the Veterans Reemployment Rights Act of 1940 to protect the job rights of individuals called to perform military service on behalf of the United States. Also, the Vietnam Era Veteran Readjustment Assistance Act requires employers with government contracts of $10,000 or more to take affirmative action to employ and advance disabled veterans and qualified veterans of the Vietnam War.

The Social Security Act of 1935, as amended, established two national systems of social security for protection against loss of income resulting from unemployment, old age, disability, and death: (1) retirement, survivors, and disability insurance, and health insurance for persons over age 65; and (2) unemployment insurance, which operates under a state-administered, federal-state plan whose operating costs are paid by the fed- eral government. The Fair Labor Standards Act of 1938 administered by the USDOL covers a variety of employment issues including minimum wage and overtime pay requirements, child labor, and migrant and seasonal agricultural worker protections.

Other important laws include state wage laws, the federal Occupational Safety and Health Act of 1970 designed to promote workplace safety and prevent injuries (covered in Chapter 8), the Family and Medical Leave Act of 1993 that allows workers to take unpaid leave for the birth or adoption of children or for family medical reasons (covered in Chapter 7). There are also state laws and local ordinances that pertain to public-sector labor relations and equal employment opportunity.

Summary This chapter has presented the major provisions of fed- eral labor relations laws in the United States. These legal influences must be understood to fully appreciate the remaining chapters in this book because nearly all issues in labor relations are either directly or indirectly influenced by labor law. The legal question of whether one has a right to act is separate and distinct from the practical question of whether it is in one s best interest to exercise such a right under the prevailing circum- stances. Union and management practitioners should give consideration to the legal and practical costs, ben- efits, and risks of actions in making operational decisions.

Although many think of law in terms of statutes passed by the U.S. Congress or state legislatures, labor relations, and other types of law proceed not only from statutes but also from the U.S. Constitution, judicial decisions, and administrative decisions of government agencies. Similarly, case law and administrative law develop at the state and local government levels.

The 1930s, a decade during which the country confronted a severe economic depression, brought about major labor law changes. The enactment of the Norris La Guardia Act removed many legal

restrictions on the types of employee concerted activity that could be used to peacefully pressure employers to grant favorable employment improvements. Federal courts began to take a more neutral stance in labor disputes attempting to balance the legitimate exercise of employee and employer rights.

Congress passed the NLRA in 1935, which covered most private-sector employees, to control employer ULPs. It established the NLRB to enforce the right of employees to form and join unions, bargain collec- tively, and engage in other concerted activities for mutual aid or protection. Then, in 1947 and again in 1959, Congress amended the NLRA with passage of the LMRA and the Labor Management Reporting and Dis- closure (Landrum Griffin) Act, respectively. The LMRA s amendments added union ULPs and restric- tions on union security clauses. The LMRDA added regulations governing the internal operations of unions and restrictions on secondary strike, picketing, and boycott activities.

Starting in 1863, union activity in the railroad industry played a key role in the legislative arena. The RLA of 1926, whose major purpose is to provide for stable and effective labor relations without major

CHAPTER 3 Legal Influences 121

interruptions in commerce, established procedures for resolving labor disputes and created the NMB and NRAB to accomplish the act s purposes. The airline industry was added to coverage under the RLA in 1936.

While the legal rights of employers and employees to pursue their respective interests in a free enterprise system will inevitably create certain conflicts and stress, on balance the legal environment has provided

reasonable stability in U.S. labor relations, encouraging economic growth. The acceptance of collective bargain- ing, widespread use of no-strike or lockout clauses, final and binding arbitration of rights disputes, improved employer union cooperation on important issues, and infrequent need to use national emergency dispute procedures provide support for progress in protecting the legitimate rights of both employers and employees.

Key Terms Preemption doctrine, p. 92 National Labor Relations Board

(NLRB), p. 92 Labor Management Reporting and

Disclosure (Landrum Griffin) Act, p. 92

Federal Mediation and Conciliation Service (FMCS), p. 92

U.S. Department of Labor (USDOL), p. 92

National Railroad Adjustment Board (NRAB), p. 92

National Mediation Board (NMB), p. 92

Norris La Guardia Act, p. 93 closed shop union security clause, p. 96 National Labor Relations Act (NLRA),

p. 96 Labor Management Relations Act

(LMRA), p. 96 Union shop union security clause, p. 97 Agency shop union security clause, p. 97 right-to-work law, p. 97 The Board, p. 99 union salts, p. 101 Weingarten Rights, p. 103

NLRB jurisdiction, p. 104 Postal Reorganization Act of 1970,

p. 106 concerted and protected activity, p. 107 Interboro doctrine, p. 107 Charging Party, p. 108 Respondent, p. 108 merit, p. 108 Administrative Law Judge (ALJ), p. 108 routine ULP case, p. 110 lead ULP case, p. 110 cease-and-desist order, p. 110 post written notices, p. 110 affirmative action, p. 110 forum shopping, p. 111 petition for certiorari, p. 111 Railway Labor Act (RLA) of 1926,

p. 114 major dispute under the RLA, p. 114 minor dispute under the RLA, p. 115 Employee Retirement Income Security

Act (ERISA), p. 118 Pension Benefit Guaranty Corporation

(PBGC), p. 118 Americans with Disabilities Act

(ADA), p. 119

Bankruptcy Act of 1984, p. 119 Worker Adjustment and Retraining

Notification Act (WARN), p. 119 Racketeer Influenced and Corrupt

Organizations Act (RICO), p. 120 Civil Rights Act of 1964, p. 120 Civil Rights Act of 1991, p. 120 Age Discrimination in Employment

Act of 1967, p. 120 Equal Pay Act of 1963, p. 120 Lilly Ledbetter Fair Pay Act of 2009

(FPA), p. 120 Executive Order 11246, p. 120 Executive Order 11375, p. 120 Vocational Rehabilitation Act of 1973,

p. 120 Uniformed Services Employment and

Reemployment Rights Act (USERRA) of 1994, p. 121

Social Security Act of 1935, p. 121 Fair Labor Standards Act of 1938,

p. 121 Occupational Safety and Health Act of

1970, p. 121 Family and Medical Leave Act of 1993,

p. 121

Discussion Questions

1. Some union advocates have suggested that NLRB certification procedures are so cumbersome that unions would be better off if the LMRA was repealed. If labor laws discussed in this chapter were repealed, how might this affect (a) the for- mation of unions and (b) the terms and condi- tions of employment for employees? Discuss.

2. How were yellow-dog contracts and labor injunctions used to limit the activities of union organizers or slow union growth?

3. What was the intent or purpose of Congress in passing (a) the 1932 Norris La Guardia Act, (b) the 1935 National Labor Relations (Wagner) Act, (c) the 1947 Labor Management Relations

122 PART 1 Recognizing Rights and Responsibilities of Unions and Management

(Taft Hartley) Act, and (d) the Landrum Griffin Act of 1959?

4. Although the National Labor Relations Act gives employees certain rights, these rights are not unlimited. Discuss.

5. Is the selection process for determining members of the National Labor Relations Board too politi- cized? Does the current selection process lead to instability in interpretations of the LMRA and if so, is this a positive or negative for employers and employees covered by the law?

6. Why is there still a separate labor relations law for the railway and airline industries?

7. Should the LMRA be amended to cover agricul- tural laborers?

8. Should the NLRB s current jurisdictional stan- dards (i.e., monetary threshold for affecting interstate commerce) be adjusted to take into account the effects of inflation (which would have the effect of removing employees currently cov- ered by the law under existing jurisdictional standards)?

Exploring the Web

Labor Relations and the Law

1. Case Law. Find a recent Supreme Court or U.S. Court of Appeals decision concerning a labor law issue. What legal principles does the court rely upon in determining the case decision? Suggestions for searching: Cornell University s Law School offers the Supreme Court Collection through their Legal Information Institute. Findlaw Legal Information Center is a good commercial site. You may also use electronic databases offered by your university s library, for example, LexisNexis or Westlaw.

2. National Labor Relations Board. Go to the Web site for the National Labor Relations Board at http://www.nlrb.gov/ to see the NLRB s current organization, rules and regulations, decisions, and man- uals. Read the section that describes the National Labor Relations Act. Included also on the site are press

releases, public notices, and a weekly summary of cur- rent events. Who is the current chairman of the NLRB? What are three current activities of the NLRB and/or three recently decided cases?

3. U.S. Code. When legislation becomes law, it is incorporated into the U.S. Code in the appropriate sections. Identify sections of the Code affected by these acts related to labor relations: Railway Labor Act, Norris La Guardia Act, LMRA (Taft Hartley), and Labor Management Reporting and Disclosure Act (Landrum Griffin). Searching hints: Search by Popular Names of Acts in Cornell University s Law School U.S. Code Collection or the U.S. Code search provided by the U.S. House of Representatives. You may also use electronic databases offered by your university s library, for example, LexisNexis or Westlaw.

References 1. Muslim employee claims Disneyland banned her

from wearing head scarf in front of customers, Fox News [Online], August 18, 2010, at http:// www.foxnews.com/us/2010/08/18/muslim- employee-claims-disneyland-banned-wearing- head-scarf-customers/; Gilliam Flaccus, Muslim Employee: Disney Banned Her Head Scarf, FindLaw Legal News, August 19, 2010, pp. 1 2 at http://news.findlaw.com/; Deanne Katz, Disney- land Banned Muslim Woman s Head Scarf: Law- suit FindLaw Legal News Blog, August 15, 2012, pp. 1 2 at http://blogs.findlaw.com/injured/2012/

08/disneyland-banned-muslim-womans-head- scarf-lawsuit.html.

2. Walter E. Oberer, Kurt L. Hanslowe, and Timothy J. Heinsz, Labor Law: Collective Bargaining in a Free Society, 4th ed. (St. Paul, MN: West Publishing Co., 1994), pp. 358 359.

3. 47 Stat. 70 (1932). 4. A labor dispute was defined as any controversy

concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or

CHAPTER 3 Legal Influences 123

conditions of employment regardless of whether the disputants stand in the proximate relation of employer and employee. 47 Stat. 70 (1932).

5. United States v. Hutcheson, 312 U.S. 219 (1941). 6. Ibid. 7. Irving Bernstein, Turbulent Years: A History of

the American Worker, 1933 1941 (Boston: Houghton Mifflin, 1971), pp. 1 36. See also Bruce Nelson, Give Us Roosevelt: Workers and the New Deal Coalition, History Today, 40(1), 1990, pp. 40 48. Janet Irons, Testing the New Deal: The General Textile Strike of 1934 in the American South (Urbana: University of Illinois Press, 2000). John A. Salmond, The General Textile Strike of 1934: From Maine to Alabama (Columbia, MO: University of Missouri Press, 2002).

8. Alvin L. Goldman, The Supreme Court and Labor-Management Relations Law (Lexington, MA: D.C. Heath, 1976), pp. 22 28; Herbert L. Sherman, Jr., and William P. Murphy, Unioniza- tion and Collective Bargaining (Washington, D.C.: Bureau of National Affairs, Inc., 1975), pp. 7 9.

9. Schecter Poultry Corporation v. United States, 295 U.S. 495 (1935).

10. National Labor Relations Act, 49 Stat. 449 (1935). 11. Janice R. Bellace, The Future of Employee

Representation in America: Enabling Freedom of Association in the Workplace in Changing Times through Statutory Reform, University of Penn- sylvania Journal of Labor & Employment Law,5, Fall 2002, p. 5 at http://web.lexis-nexis.com. See also Bruce E. Kaufman and David Lewin, Is the NLRA Still Relevant to Today s Economy and Workplace? Labor Law Journal, 49, September 1998, pp. 1113 1126.

12. Goldman, The Supreme Court, pp. 28 31. 13. NLRB v. Jones & Laughlin Steel Corporation, 301

U.S. 1 (1937). 14. Bernstein, Turbulent Years, pp. 769 771. 15. Labor Management Relations Act, 61 Stat. 136

(1947). 16. NLRB v. Virginia Electric & Power Company, 314

U.S. 469 (1941). 17. Goldman, The Supreme Court, pp. 31 39. 18. Labor Management Reporting and Disclosure Act,

73 Stat. 519 (1959). 19. Fact Sheet on the National Labor Relations Board

(Washington, D.C.: NLRB Division of Informa- tion, 2010), pp. 1 2.

20. William N. Cooke and Frederick H. Gautschi III, Political Bias in NLRB Unfair Labor Practice

Decisions, Industrial and Labor Relations Review, 35, July 1982, p. 549.

21. William N. Cooke, Aneil K. Mishra, Gretchen M. Spreitzer, and Mary Tschirhart, The Determi- nants of NLRB Decision-Making Revisited, Industrial and Labor Relations Review, 48, Janu- ary 1995, pp. 254 256.

22. See, for example, the discussion of Board policy changes comparing the Clinton Board with the Bush II Board in Catherine L. Fisk and Deborah C. Malamud, Thirty-Ninth Annual Administra- tive Law Issue: Administrative Law Under the George W. Bush Administration: Looking Back and Looking Forward: Article: The NLRB in Administrative Law Exile: Problems with Its Structure and Function and Suggestions for Reform, Duke Law Journal, 58, May 2009, pp. 2013 2085.

23. Professor/Arbitrator Calls NLRA Pretty Sick, Recommends Fixes, Collective Bargaining Bulletin, 14, July 2, 2009, p. 83.

24. Howard S. Lavin and Elizabeth E. DiMichele, Circuits Split on Whether Two-Member NLRB

Decisions Are Binding, Employee Relations Law Journal, 35(3), 2009, pp. 82 87; New Process Steel, L.P. v. National Labor Relations Board, 130 S. Ct. 2635 (2010).

25. Amanda Becker, U.S. Supreme Court ruling seen unlikely to alter past NLRB decisions, Chicago Tribune [online edition], June 26, 2014, at http:// articles.chicagotribune.com/2014-06-26/news/ sns-rt-us-usa-courts-appointments-nlrb- 20140626_1_noel-canning-nlrb-national-labor- relations-board; Pamela C. Corley, Recess Appointments: National Labor Relations Board v. Noel Canning. Justice System Journal, 35(4), 2014, pp. 410 412.

26. Office of the General Counsel of the National Labor Relations Board, Summary of Operations, 2012, pp. 2 5 at http://www.nlrb.gov/reports- guidance/reports/summary-operations; NLRB Board Decisions Issued, at http://www.nlrb.gov/ news-outreach/graphs-data/decisions/board- decisions-issued.

27. Ibid., Office of General Counsel, pp. 4 5. 28. Bruce S. Feldacker, Labor Guide to Labor Law,

4th ed. (Upper Saddle River, NJ: Prentice-Hall, 2000), pp. 12 14.

124 PART 1 Recognizing Rights and Responsibilities of Unions and Management

29. Holly Farms Corporation v. NLRB, 116 S.Ct. 1396 (1996).

30. Section 2(11), LMRA 61 Stat. 136 (1947). See also NLRB v. Kentucky River Community Care, Inc., 532 U.S. 706 (2001).

31. NLRB v. Bell Aerospace Company, 416 U.S. 267 (1974).

32. Oakwood Healthcare Inc. and United Automobile Workers International Union, 348 NLRB No. 37 (2006).

33. NLRB v. City Disposal Systems, Inc., 465 U.S. 822 (1984); NLRB v. Washington Aluminum Com- pany, 370 U.S. 9 (1962).

34. NLRB v. City Disposal Systems, Inc., 465 U.S. 822 (1984).

35. Seventy-Fourth Annual Report of the National Labor Relations Board for the Fiscal Year Ended September 30, 2009 (Washington, D.C.: U.S. Government Printing Office, 2009), pp. 4 5.

36. National Labor Relations Board, Performance and Accountability Report, FY 2014, at http://www. nlrb.gov/reports-guidance/reports/performance- and-accountability.

37. Office of the General Counsel of the National Labor Relations Board, Summary of Operations, 2012, pp. 4 5; also see, National Labor Relations Board, Disposition of Unfair Labor Practice Charges, at http://www.nlrb.gov/news-outreach/ graphs-data/charges-and-complaints/disposition- unfair-labor-practice-charges.

38. Leonard R. Page, The NLRA at 70: Perspectives from the Office of the General Counsel, Labor Law Journal, 56(3), 2005, pp. 188 189; Fredrick L. Feinstein, The NLRA at 70: Perspectives from the Office of the General Counsel, Labor Law Journal, 56(3), 2005, pp. 192 195; Risa L. Lieberwitz, Labor Law in the United States: The Continuing Need for Reform, Managerial Law, 46(4/5), 2004, pp. 53 70.

39. H.K. Porter Company v. NLRB, 397 U.S. 99 (1970). See also BE & K Construction Company v. NLRB, 536 U.S. 516 (2002) and Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002).

40. Lawrence E. Dube, NLRB Rules 3 1 for Elec- tronic Posting of Notices to Remedy Unfair Labor Practice, Daily Labor Report, No. 205, October 25, 2010, pp. AA2 3.

41. Ford Motor Company v. NLRB, 441 U.S. 488 (1979); Charles D. Bonanno Linen Service v. NLRB, 454 U.S. 404 (1982).

42. Office of the General Counsel of the National Labor Relations Board, Summary of Operations, 2012, January 11, 2013, p. 6 at http://www.nlrb. gov/reports-guidance/reports/summary- operations.

43. James A. Gross, The Demise of the National Labor Policy: A Question of Social Justice, in Restoring the Promise of American Labor Law, ed. Sheldon Friedman et al. (Ithaca, NY: ILR Press, 1994), pp. 57 58.

44. Janice R. Bellace, Labor Law Reform for the Post Industrial Workplace, Labor Law Journal, 45, August 1994, p. 460.

45. Kenneth R. Dolin, Analyzing Recent Devel- opments at the National Labor Relations Board, Labor Law Journal, 56(2), 2005, pp. 120 138; James Gray Pope, Class Conflicts of Law II: Solidarity, Entrepreneurship, and the Deep Agenda of the Obama NLRB, Buffalo Law Review, 57, 2009, p. 653; Anonymous, Employers beware: Senate has confirmed pro-labor majority to NLRB, Management Report for Nonunion Organizations, 36(9), 2013, p. 1

46. Bush Labor Board Decisions: Pendulum Shift or Permanent Changes? Labor Law Journal, 56(3), 2005, p. 222.

47. James J. Brudney, The Changing Workplace: Reflections on Group Action and the Law of the Workplace, Texas Law Review, 74, June 1996, pp. 1563 1599.

48. Cynthia L. Estlund, The Ossification of American Labor Law, Columbia Law Review, 102, October 2002, p. 1540.

49. Estlund, The Ossification of American Labor Law, pp. 1536 1158. See also William B. Gould, Agenda for Reform: The Future of Employment Relationships and the Law (Cambridge, MA: MIT Press, 1993) and Paul C. Weiler, Governing the Workplace: The Future of Labor and Employment Law (Cambridge, MA: Harvard University Press, 1990).

50. Michael C. Harper, The Continuing Relevance of Section 8(a)(2) to the Contemporary Workplace, Michigan Law Review, 96(8), 1998, pp. 2322 2383.

51. Jeff Canfield, Note: What a Shame: The Broken Beck Rights System in the Real World Workplace, Wayne Law Review, 47, Fall 2001, 1049 1074; Peter Capelli, Old Laws Hobble the

CHAPTER 3 Legal Influences 125

New Economy Workplace, Sloan Management Review, 42(2), 2001, pp. 110 111.

52. Samuel Estreicher and Matthew T. Bodie, Review Essay: Administrative Delay at the NLRB: Some Modest Proposals, Journal of Labor Research, 23(1), 2002, pp. 87 105. See also Edward B. Miller, An Administrative Appraisal of the NLRB, 4th ed. (Fairfax, VA: John M. Olin Institute for Employment Practice and Policy at George Mason University, 1999).

53. U.S. General Accounting Office, National Labor Relations Board: Action Needed to Improve Case Processing Time at Headquarters (Washington, D.C.: Superintendent of Documents, 1991), pp. 1 7.

54. National Labor Relations Board, Performance and Accountability Report, FY 2014, pp. 46 47, at http://www.nlrb.gov/reports-guidance/reports/ performance-and-accountability.

55. Samuel Estreicher, Improving the Administra- tion of the National Labor Relations Act without Statutory Change, ABA Journal of Labor and Employment Law, 25(1), 2009, pp. 1 24; Melanie Trottman & Kris Maher. Plan to Ease Way for Unions Labor Board Proposes Speeding Up Organizing Votes; Employers, GOP Cry Foul. Wall Street Journal (Eastern Edition), June 22, 2011, p. A.1; Tim Devaney, Labor Board Speeds Up Union Elections, The Hill [Online edition], December 12, 2014, at http://thehill.com/ regulation/finance/226935-nlrb-speeds-up- union-elections.

56. William B. Gould IV, New Labor Law Reform Variations on Old Theme: Is the Employee Free Choice Act the Answer? Fall 2009, pp. 1 46.

57. Charles B. Craver, The National Labor Relations Act at 75: In Need of a Heart Transplant, Hofstra Labor and Employment Law Journal, 27, Spring 2010, pp. 311 356; Mike Pare, U.S. Secretary of Labor Thomas Perez cites Chattanooga s Volks- wagen plant in touting new approach, Chatta- nooga Times Free Press [online edition], October 23, 2014, at http://www.timesfreepress.com/news/ business/aroundregion/story/2014/oct/23/labor- secretary-supports-works-council/270231/.

58. National Mediation Board, Annual Performance and Accountability Report FY 2009 (Washington, D.C.: National Mediation Board, 2009), p. 2.

59. Lisa Catherine Tulk, Comment: The 1926 Rail- way Labor Act and the Modern American Airline

Industry: Changes and Chaos Outline the Need for Revised Legislation, Journal of Air Law and Commerce, 69, Summer 2004, pp. 615 645; Nancy Brown Johnson, Airlines: Can Collective Bargaining Weather the Storm? in Collective Bargaining in the Private Sector, ed. by Paul F. Clark, John T. Delaney, and Ann C. Frost (Champaign, IL: Industrial Relations Research Association, 2002), pp. 16 20; Charles M. Rehmus, Evolution of Legislation Affecting Collective Bargaining in the Railroad and Airline Industries, in The Railway Labor Act at Fifty, ed. Charles M. Rehmus (Washington, D.C.: U.S. Government Printing Office, 1977), p. 4.

60. National Mediation Board, Annual Performance and Accountability Report FY 2009, p. 34; National Mediation Board, NMB and RLA Fact Sheet, Sept. 30, 2012, at http://www.nmb.gov/ documents/mediation/Fact-Sheet_FY-2012.pdf; National Mediation Board, Annual Report FY 2013, at https://storage.googleapis.com/dakota- dev-content/2013annual-report/index.htm.

61. National Mediation Board, NRAB Board Members: FY 2010 February 4, 2010, p. 1, at http://www.nmb. gov/arbitration/nrab-board-members_fy-2010.pdf; Rehmus, Collective Bargaining, in The Railway Labor Act at Fifty, pp. 14 15.

62. National Mediation Board, Annual Performance and Accountability Report FY 2009, pp. 40, 45; National Mediation Board, Arbitration Highlights, FY 2013, at https://storage.googleapis.com/ dakota-dev-content/2013annual-report/mda/ arbitration.html; National Mediation Board, Representation Highlights, at https://storage. googleapis.com/dakota-dev-content/2013annual- report/rep/representation.html.

63. Larry Swisher, NMB Ends Longstanding Policy, Adopts Rule for Majority Vote in Representation Elections, Daily Labor Report, No. 89, May 11, 2010, pp. AA1 3; Jennifer Michels, Precedent Setting Case, Aviation Week and Space Technol- ogy, 172(20), 2010, p. 43; Seth Borden, National Mediation Board (NMB) Changes Union Election Rules, Easing Unionization Process, Labor Rela- tions Today [online edition], May 12, 2010, at http://www.laborrelationstoday.com/2010/05/arti- cles/rla/national-mediation-board-nmb-changes- union-election-rules-easing-unionization-process/; also see Doug Hall, NMB Announces Internet Voting, Venulex Legal Summaries, Q1, January,

126 PART 1 Recognizing Rights and Responsibilities of Unions and Management

2007, pg. 1 at http://connection.ebscohost.com/c/ articles/25046749/nmb-announces-internet-vot- ing; Michael Elsenrath, "Effect of NMB Voting Change on Airline Unionization." The Journal of Aviation/Aerospace Education & Research 23(2), 2014, pp. 41 56.

64. Association for American Railroads, Collective Bargaining in the Rail Industry, April, 2014, p. 1, at https://www.aar.org/BackgroundPapers/ Collective%20Bargaining.pdf.

65. Fact Finding Report, Commission on the Future of Worker-Management Relations (Washington, D.C.: U.S. Departments of Labor and Commerce, May 1994), pp. 99 100.

66. Charles M. Rehmus, Emergency Strikes Revis- ited, Industrial and Labor Relations Review, 43(2), 1990, pp. 175 190; Douglas M. McCabe, The Railroad Industry s Labor Relations Envi-

ronment: Implications for Railroad Managers, ICC Practitioners Journal, 49, September October 1982, pp. 592 602; Railroad Workers United, U.S. Unions in National Rail Bargaining, Updated July 25, 2012, at http://railroadworkersunited.org/us- unions-in-national-bargaining#.

67. Charles M. Rehmus, The First Fifty Years: And Then, in The Railway Labor Act at Fifty, ed. Rehmus, p. 246; Beatrice M. Burgoon, Mediation under the Railway Labor Act, in The Railway Labor Act at Fifty, ed. Rehmus, p. 23.

68. Deregulation in Three Transport Industries Has Produced Widely Diverse Labor Market Results, Daily Labor Report, May 13, 1986, p. A-13.

69. Mark Kahn, Introduction, in Cleared for Take- off: Airline Labor Relations since Deregulation, ed. Jean T. McKelvey (Ithaca, NY: ILR Press, 1988), p. 3; David Morris, Airline Deregulation: A Tri- umph of Ideology Over Evidence, The Huffing- ton Post [online edition], December 13, 2013, at http://www.huffingtonpost.com/david-morris/air- line-deregulation-ideology-over-evidence_b_ 4399150.html.

70. Alfred Kahn, In Defense of Deregulation, in Cleared for Takeoff: Airline Labor Relations since Deregulation, ed. Jean T. McKelvey (Ithaca, NY: ILR Press, 1988), pp. 344 345. Jan K. Brueckner, Darin Lee, & Ethan S. Singer, Airline Competi- tion and Domestic US airfares: A Comprehensive Reappraisal, Economics of Transportation, 2(1), 2013, pp. 1 17. For a legal analysis, see Beth

Adler, Comment: Deregulation in the Airline Industry: Toward a New Judicial Interpretation of the Railway Labor Act, Northwestern University Law Journal, 80, Winter 1986, pp. 1003 1006.

71. Greg J. Bamber, Jody Hoffer Gittell, Thomas A. Kochan, & Andrew Von Nordenflycht. Up in the air: How airlines can improve performance by engaging their employees. (Ithaca, NY: Cornell University/ILR Press, 2009); Bruce E. Kaufman, Keeping the Commitment Model in the Air

during Turbulent Times: Employee Involvement at Delta Air Lines, Industrial Relations, 52(Supplement 1), 2013, pp. 343 377.

72. U.S. General Accounting Office, Airline Labor Relations: Information on Trends and Impact of Labor Actions (Washington, D.C.: Government Accounting Office, 2003), pp. 3 4; Andrew von Nordenflycht and Thomas A. Kochan, Labor Contract Negotiations in the Airline Industry, Monthly Labor Review, 126 (7), 2003, pp. 18 28.

73. Johnathan E. Collins, Comment: Airlines Jettison Their Pension Plans: Congress Must Act to Save the PBGC and Protect Plan Beneficiaries, Journal of Air Law and Commerce, 70, Spring 2005, pp. 289 317; Daniel P. Rollman, Comment: Flying Low: Chapter 11 s Contribution to the Self-Destructive Nature of Airline Industry Economics, Emory Bankruptcy Developments Journal, 21, 2004, pp. 381 418; and Donald E. Cullen, Emergency Boards under the Railway Labor Act, in The Railway Labor Act at Fifty, ed. Rehmus, pp. 176 183; Alexandra Bradbury, Rail Workers Vote Down Single-Person Crews,

Labor Notes [online edition], September 11, 2014, at http://www.labornotes.org/2014/09/rail-workers- vote-down-single-person-crews.

74. Nancy Brown Johnson, Airlines: Can Collective Bargaining Weather the Storm? in Collective Bargaining in the Private Sector, eds. Clark, Delaney, and Frost, 2002, p. 20.

75. Pension Benefit Guaranty Corporation, Who We Are, 2014, pp. 1 2 at http://www.pbgc.gov/ about/who-we-are.html; U.S. Department of Labor, Retirement Plans, Benefits and Savings, 2014, p. 1 at http://www.dol.gov/dol/topic/ retirement/typesofplans.htm.

76. David A. Drachsler, Notes On: Year One of the Lilly Ledbetter Fair Pay Act, Labor Law Journal, 61(2), 2010, pp. 102 106.

CHAPTER 3 Legal Influences 127

CA SE

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3- 1 The Great Temperature Debate

The employer is a small, nonunion furniture manufacturer with 15 employees engaged in interstate commerce. Both of the employees involved in this case worked in the machine shop building as band-saw operators. Because the band saws were located near the shop s large overhead door, to facilitate the disposal of sawdust, the band-saw operators were often subject to lower temperatures and drafts on cool or cold days, whereas other employees farther from the overhead door often felt too warm. To resolve this long-standing problem, the plant manager established a rule that stated: The overhead door will remain open when the temperature in the shop exceeds 68 degrees and closed when the temperature is at or below 68 degrees.

On the day in question, employees Drake and Keeler, who were both band-saw operators, complained to the shop supervisor that they were too cold and requested that the overhead door be closed. When questioned by the shop supervisor, the majority of the other shop employees present responded that they thought the door should be left open. The thermometer on the wall of the shop supervisor s office, located in approximately the center of the machine shop building, read 72 degrees.

On this day, employee Drake was wearing a sleeve- less shirt and shorts. Employee Keeler was dressed in blue jeans, a short-sleeved shirt, a flannel shirt, and a heavy sweater. Both Keeler and Drake claimed it was too cold and drafty at their workstation near the open overhead door. The shop supervisor refused to close the overhead door because the majority of employees wanted it left open. During a scheduled lunch break,

Drake and Keeler discussed their problem and decided to walk off the job for the remainder of the day to protest the cold temperature at their workstation.

Upon returning to work the following morning, Drake and Keeler were informed by the plant manager that they had been fired for leaving work the previous day without management s permission. Drake and Kee- ler subsequently filed an unfair labor practice charge with the NLRB alleging their discharge represented unlawful discrimination of their right to engage in con- certed and protected activity under Section 7 of the LMRA. Drake and Keeler requested a remedy to include reinstatement with full back pay and restora- tion of any lost privileges.

Questions 1. Because Drake and Keeler s employer meets the

standard for coverage under the LMRA by engaging in interstate commerce, which specific employee right protected by Section 7 of the LMRA could Drake and Keeler argue they were engaged in which at least partially motivated the employer s decision to discharge them?

2. On what grounds might the employer try to argue that the discharge of Drake and Keeler was an appropriate (legal) exercise of management s rights?

3. Was the employer s discharge of Drake and Keeler an unfair labor practice under the LMRA, as amended? If so, what should be the appropriate remedy?

CA SE

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3- 2 Independent Contractors? Or Employees?

The employer publishes the South Texas Clarion daily newspaper, employing 726 carriers on 780 routes throughout the rural Rio Grande river valley. In addi- tion to the Clarion, the carriers also deliver seven other newspapers (e.g., The Wall Street Journal). The employer operates four distribution centers (ware- houses) where carriers pick up the papers to take on their routes. Each distribution center has a general

manager and several District Managers who super- vise the work of 30 50 carriers. A few carriers work multiple routes.

In order to become a carrier, an individual must submit proof from the state that they are a safe and licensed driver. They also sign a Contractor s Agree- ment and put down a $300 security deposit. Either party can terminate the Agreement with a 21-day

128 PART 1 Recognizing Rights and Responsibilities of Unions and Management

notice. District Managers usually show new carriers their routes, although sometimes the previous carrier trains his/her replacement.

District managers leave messages for carriers via dry- erase boards in the warehouse and small read-only com- puters, which carriers rent for $2 per week. These computers are updated daily at the distribution center with information about new/ending subscriptions, route suggestions, and special requests from subscribers.

Because most sections of the newspaper have been pre-printed, they are delivered to the Distribution Cen- ters when the facilities open at 1:00 A.M. each day. The front two sections, with the most current news, arrive by truck an hour later. Carriers arrive at 2:00 A.M. and assemble the papers at route tables, although they are free to assemble them in their vehicles or even at home. The employer provides free plastic bags on Sun- days and on mornings where rain is imminent. Carriers must purchase bags and/or rubber bands on other days (the carriers are free to choose which to use). Once assembled, the carriers deliver the newspapers. By contract, all papers must be delivered to residences by 6:00 A.M, and to organizations by 8:00 A.M.

Many carriers occasionally use helpers (e.g., to assemble papers) or substitute drivers (e.g., if a carrier goes on vacation). These workers are paid by the carriers, not by the newspaper; the newspaper only requires that substitutes have a valid driver s license and vehicle insur- ance. Carriers are paid weekly from the Accounts Pay- able department, whereas Clarion employees are paid from the Payroll Department. Both types of paychecks originate from the same office. Carriers are paid 30 cent per delivery of the Clarion plus 5 cent for each full-sized advertising supplement. For other papers, the rate is 10 cent per delivery. The newspaper does not deduct payroll taxes or workmen s compensation for carriers and at the end of the year, they are issued a 1099 form rather than a W-2 form. They receive no health insurance or other fringe benefits from the employer.

The question before the ALJ is whether the carriers are employees of the publisher of the South Texas Clar- ion newspaper or whether the carriers are independent contractors. Section 2(3) of the National Labor Relations Act (also called the Labor Management Relations Act or the Act ) indicates that, the term employee shall not

include any individual having the status of independent contractor. [for full text, see http://www.nlrb.gov/ resources/national-labor-relations-act]. If carriers are employees they are free to unionize if they wish; if

they are independent contractors then they are not.

The employer maintains that the carriers are inde- pendent contractors and not employees and that a sim- ilar newspaper case, St. Joseph News-Press (2005) supports this position. The employer argues that case differs from a superficially similar case the Roadway

Package System, 326 NLRB 842 [159 LRRM 1153] (1998), and is similar to the Dial-A-Mattress Operating System, 326 NLRB 884 [159 LRRM 1166] (1998) case where workers were found to be independent contrac- tors. The employer concedes that a few factors raised in the St. Joseph New-Press case may suggest employee status for the Clarion carriers (e.g., the work is unskilled, yet is essential to the operation of the newspaper). How- ever, the majority of the factors indicate that the carriers at the Clarion are independent contractors. These include the following reasons:

1. Control of work. As independent contractors, car- riers maintain great control over the details of how they complete their work. For example, while the District Managers can suggest routes, the carriers are free to deviate from those suggestions. Carriers can also decide whether to use rubber bands or bags and where to assemble newspapers.

2. Supervision. The newspaper does not subject car- riers to any sort of progressive discipline system for problems with deliveries. It is true that the employer relays customer complaints to its carriers and may follow a carrier on his or her route if complaints persist. But the employer does not take any adverse action against a carrier for failure to adequately perform his or her duties, other than terminating the contract. Moreover, although the carriers are subject to Safety Standards rules, the employer disagrees with the union s character- ization of these as employee work rules. The standards apply to anyone who enters the distribu- tion center, including carriers, employees, and visi- tors. The rules state that no alcohol, drugs, or weapons are allowed on employer property; also closed-toed shoes must be worn. The Safety Stan- dards do contain some carrier-specific rules. How- ever, these rules simply ensure the safe operation of the distribution center; they do not dictate how the carrier is to perform his or her duties.

3. Entrepreneurial potential. Carriers have more than a paycheck; they are, in essence, small business owners. They are free to hire full-time substitutes, hold multiple routes, and deliver other papers in addition to those distributed by the employer.

CHAPTER 3 Legal Influences 129

They can work as substitutes for other carriers. Many also hold other day jobs.

4. Provision of tools, supplies, and a place to work. Carriers own, control, and maintain their own vehicles. They buy supplies and are free to work anywhere.

5. Parties intent. The parties intend to have a contractor client relationship. The parties Con- tractor s Agreement clearly states the type of agreement that the carrier and newspaper are forming. Also, the carriers are not subject to employee pay and benefits, but are paid in the same manner as other outside vendors.

By contrast, the union calls attention to the work relationship of the carriers and the employer. Based on their economic dependence on the newspaper, together with other relevant factors, we submit that the carriers are statutory employees, and not indepen- dent contractors. But even considering only the factors management listed in the common-law test, we would reach the conclusion that the carriers are employees.

The union argues that four of the nine factors mentioned in the St. Joseph News-Press case indisput- ably weigh in favor of finding employee status :

1. The distribution of newspapers is an integral part of the Employer s business.

2. The carriers are performing unskilled work 3. Carriers are hired for an indefinite period (inde-

pendent contractors, such as construction contrac- tors, usually have a deadline whereby a project must be completed; these carriers have no such deadline)

4. Other employees perform work that is similar to the work performed by the carriers (it is not uncom- mon for newspaper employees or District Managers to deliver newspapers if a carrier is ill or no carrier has been hired to serve a particular route)

The further union contends that the remain- ing factors tip the balance in favor of finding that the carriers are employees:

5. Control of Work. The employer exercises more control over the carriers details of work than did the employer in News-Press. The Clarion requires carriers to deliver to all subscribers on their routes. Unlike New-Press carriers, Clarion carriers, more- over, do not issue bills, extend credit, or collect payments. Instead, the Clarion s circulation depart- ment bills subscribers. Clarion carriers have been subjected to discipline that went beyond merely

threatening to terminate the contract (e.g., two- week suspensions). Carriers are subject to a list of work rules specified in their employment agree- ment and to ad hoc rules developed by District Managers. One District Manager prohibits pets in carrier vehicles during delivery and even pre- approves carriers Christmas cards.

6. Supervision. District managers relay customer complaints to carriers and sometimes terminate contracts if complaints are excessive. But District Managers will sometimes take the additional step of following carriers on their routes. District Man- agers will also call carriers if they are late arriving at the distribution center. Two carriers in the pres- ent case have testified that carriers will be offi- cially reprimanded if they receive too many customer complaints. Thus, a formal progressive discipline system for carriers exists.

7. Provision of tools, supplies, and a place to work. It is also clear that the employer provides supplies and a place of work. The employer furnishes compu- ters, albeit it charges the carriers a nominal weekly rental fee. The employer also maintains distribu- tion centers complete with route tables, cubby holes, and downloading facilities for the compu- ters. The carriers must report to a distribution cen- ter to obtain newspapers.

8. Entrepreneurial potential. The employer requires carriers to deliver newspapers at a nonnegotiable piece rate. This inability to negotiate rates limits entrepreneurial potential. Although carriers also can hire substitutes, Clarion managers control sub- stitutes terms and conditions of employment. Some District Managers will not give more routes to carriers whom they believe do not have time for another route. Together, these facts suggest Clarion carriers are employees and not entrepreneurs.

9. Parties intent. Finally, the parties contract implies an independent contractor client agreement. But the carriers have no choice in whether they are considered independent contractors or employees; rather, the employer simply labels them contractors. To say that this contract reflects

the carriers intent is therefore dubious. Further, in the Rio Grande valley, many carriers speak Spanish, but the contract is written in English! Such a contract is not negotiated by two inde- pendent equals; it is simply is the dictation of terms by one side and is not reflective of mutual interests.

130 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Questions 1. Go to www.NLRB.gov/ and search for the precedent

cases (Roadway, Dial-a-mattress, and St. Joseph News-Press. How does this case parallel and differ from those cases?

2. Which of the company s arguments for indepen- dent contractor status are most compelling?

3. Which of the union s arguments for employee status are most compelling?

4. Is this simply a case of who wins more of the nine factors? Or are some factors inherently more important than others? If so, which ones in this case are more important?

5. If you were an Administrative Law Judge working for the NLRB, how would you rule in this case and why?

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3- 3 NLRB Jurisdiction over a Private Charter School

The key issue in this case is whether the employer, a private for profit corporation that contracted with a government entity to operate a school, is exempt from Board jurisdiction as a political subdivision of the state of Michigan within the meaning of Section 2(2) of the LMRA. Section 2(2) of the LMRA excludes from the definition of a covered employer any state or political subdivision thereof.

This case began when the Michigan Education Association filed a representation election petition with the NLRB seeking to become the representative for a proposed bargaining unit consisting of teachers and counselors employed at the Academy of Waterford (the Academy), a public charter school under the pro- visions of the Michigan Revised School Code. To deter- mine if the representation petition was valid, one question the NLRB must determine is whether the employer (Charter Schools Professional Management Inc.) meets the definition of a covered employer under the LMRA as noted previously.

The Academy was first created as a public charter school by the Blue Springs Community College (BSCC) under provisions of the Michigan revised School Code. BSCC retains oversight authority of the Academy and is responsible to the Michigan Department of Educa- tion for ensuring the operation and performance of the Academy complies with its charter and all applica- ble laws. BSCC appoints a board of directors to oversee the Academy and disburses funds received from the state of Michigan to the Academy to fund its opera- tions. In return for administering oversight authority, BSCC receives a fee equal to 3 percent of all funds the Academy receives from the state of Michigan. The

Academy was incorporated as a nonstock, nonprofit, tax exempt corporation under Michigan s Non-Profit Corporation Act. The Academy is considered a govern- ment agency under the Michigan revised School Code and board members, officers, and employees have gov- ernment immunity from lawsuits. As a government agency, the Academy must comply with Michigan s Open Meetings Act, Freedom of Information Act, and Public Employment Relations Act in addition to sub- mitting numerous reports regarding educational, finan- cial, and operating matters to BSCC annually.

The Academy s Board of Directors decided to enter into a services contract with Charter Schools Professional Management Inc. (CSPMI) to operate the Academy. CSPMI is a private, for profit organization incorporated under the Michigan Business Corporation Act to provide educational management services to public charter schools. CSPMI as a private corporation is not subject to Michigan s Open Meetings Act or Freedom of Informa- tion Act. CSPMI is controlled by a board of directors that is elected by the ownership of the corporation. The cor- poration s financial records are not available to the public nor is there any state requirement that the corporation s financial transactions be subjected to any audit. CSPMI receives an annual fee of 12 percent of all state and federal funds received by the Academy as payment for the man- agement services it provides.

CSPMI (the employer) is solely responsible for hir- ing, training, and disciplining all teachers or other staff employees of the Academy. The employer solely deter- mines the rates of pay or other benefits employees receive, performs all performance evaluations, and determines disciplinary or discharge actions to be

CHAPTER 3 Legal Influences 131

taken against employees. The day-to-day operations of the Academy are the responsibility of the principal and staff, who are each employed by CSPMI. Neither the Academy s board of directors nor anyone affiliated with BSCC has any involvement in personnel matters affecting Academy employees. The Academy s teachers as employees of a private corporation are not eligible to participate in the Michigan Public School Retirement System. The employer is responsible for the operation and maintenance of the Academy s school building and all aspects of the Academy s business administration including reports the Academy is required to submit to the state and an annual operating budget submitted to the Academy s board of directors.

The NLRB has formulated a standard test to deter- mine if an entity such as the employer in this case is a political subdivision of the state and thus exempt from coverage under the definition of an employer contained in Section 2(2), LMRA. To be exempt from NLRB jurisdiction as a political subdivision of a state, the

employer must either (1) be created directly by the state so as to constitute a department or administrative arm of the government, or (2) administered by indivi- duals who are responsible to public officials or to the general electorate.

Questions 1. Applying the standard test outlined previously, does

the employer (CSPMI) meet the definition of an employer as stated in Section 2(2), LMRA and therefore, the board may assert jurisdiction and conduct a representation election? Explain your reasoning.

2. In the debate over whether charter public schools should be created, are the potential bargaining rights of charter school employees a relevant issue which should be part of the public debate over whether charter schools are more advantageous than existing public schools? Explain your reasoning.

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3- 4 Determination of Supervisory Status

The union sought to become the exclusive bargaining representative for a group of five harbor pilots employed by Pacific Coast Docking Pilots (the employer). The union won a National Labor Relations Board (NLRB) supervised secret-ballot election by a vote of 5 0. The employer refused to recognize and bargain with the union in an effort to force a federal court to determine if the five harbor pilots who com- posed the bargaining unit were supervisors or employ- ees. The union filed an unfair labor practice against the employer for a refusal to bargain in good faith. The Board granted summary judgment in favor of the union, which the employer then appealed to a federal court of appeals for review.

The employer argued that the harbor pilots should be classified as supervisors and therefore excluded from the definition of an employee covered under the LMRA, as amended. The burden of proving the supervisory status of an employee is on the party asserting such a status. Section 2(11), LMRA defines a supervisor as any individual having authority, in the interests of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or

discipline other employees, or responsible to direct them, or to adjust their grievances, or effectively to rec- ommend such action, if in conjunction with the fore- going the exercise of such authority is not of a merely routine or clerical nature, but requires the use of inde- pendent judgment.

The Supreme Court has established a three-part test for determining the supervisory status of an indi- vidual under the LMRA, as amended (NLRB v. Health Care & Retirement Corp., 511 U.S. 571 [1994]). First, an employee must perform at least one of the 12 spe- cific functions outlined in the statutory definition of a supervisor under Section 2(11) of the LMRA. Second, in performing one of the 12 specified supervisory func- tions, the individual must be required to exercise inde- pendent judgment. Third, the exercise of independent judgment in performing one or more of the 12 listed supervisory functions must be in the interest of the employer. The third test is typically the easiest to prove because virtually any action related to the attain- ment of a legitimate business goal or purpose of the firm will be considered an act in the interest of the employer. Most cases involving the determination of

132 PART 1 Recognizing Rights and Responsibilities of Unions and Management

supervisory status will rest on an analysis of the evi- dence related to parts one and two of the three-part supervisory status test.

The employer maintains that the docking pilots make recommendations on hiring and promotion deci- sions, assign work to employees, and are responsible for directing employees work during the docking process. More specifically, the employer states that the advice of docking pilots is almost always followed in making deci- sions regarding who to hire or promote into a docking pilot position or relief docking pilot position. U.S. Coast Guard regulations require that docking pilot trainees make trips with licensed docking pilots before becoming eligible to obtain a docking pilot s license. Docking pilots are required to evaluate the performance of trainees on such trips and provide a recommendation as to the suit- ability of each trainee for the job position of docking pilot. Docking pilots do not discipline other employees, adjust employee grievances, or evaluate the job perfor- mance of nontrainee pilots. The final authority for all hiring and promotion decisions rest with the president and vice president of the employer.

When a large ship enters a port, it requires the assis- tance of tugboats to maneuver into a position to dock or undock. The docking pilot receives from the employer a list of the ships scheduled to arrive or depart the port on a given day. The information provided by the employer includes such items as the current location and dimen- sions of each ship. The docking pilot uses this informa- tion together with current information on other factors (e.g., current wind speed, water current speed, existing navigation hazards in the channel) to determine the number of tugboats required to accomplish the docking procedure. Once a ship s captain has entered the port, a tugboat delivers the docking pilot to the ship. The dock- ing pilot then assumes command of the ship from the ship s captain and directs the docking procedure. The docking pilot communicates directly with the captain of each tugboat involved to ensure that each tugboat will render the necessary assistance to ensure a safe and accurate docking experience. Essentially, the docking pilot communicates what must be accomplished to each tugboat captain, who then determines what actions his tugboat crew must take to accomplish the defined objective. Each tugboat captain is responsible for direct- ing his or her own boat crew to carry out the instructions of the docking pilot. Tugboat captains have been previ- ously determined by the NLRB to be supervisors under

the LMRA. Once the docking procedure is completed, the docking pilot returns control of the ship to the ship s captain and reboards one of the tugboats to pre- pare for the arrival or departure of the next ship on the daily schedule.

The employer argued that the docking pilot s determination of how many tugboats will be required to perform a particular docking operation constitutes an assignment of work using independent judgment, which is a supervisory function under the LMRA s def- inition of a supervisor. The employer also notes that a docking pilot responsibly directs others during the docking procedure by giving orders to the tugboat cap- tains regarding the number and placement of towing lines to ensure a safe and efficient docking procedure.

The union argued that the five docking pilots were professional employees covered by the LMRA, not supervisors. The docking pilots have no authority to hire anyone, although they may be asked to give a pro- fessional opinion regarding the qualifications of an applicant for a vacant docking pilot position. Compli- ance with Coast Guard regulations, which require less- experienced pilots to ride along with a more experi- enced pilot to learn information about a particular port before assuming responsibility for docking proce- dures in that port, represents a discharge of profes- sional responsibility, which is a job duty of being a docking pilot. The docking pilots do not discipline other employees, handle grievances, or formally evalu- ate other employees job performance.

The union further argued that instructions given by docking pilots to other tugboat captains (who are supervisors) during docking procedures are part of the job duties of a professional docking pilot. The docking pilot has no authority to order members of a tugboat captain s crew to perform any specific job duties. The determination of the number of tugboats required to perform docking procedures is a function of the size of the ship to be docked and prevailing sea and weather conditions. This determination does not require the exercise of significant independent judg- ment on the part of the docking pilot.

Question 1. Should the docking pilots be classified as supervisors

and thus excluded from participating in a bargain- ing unit for purposes of collective bargaining? Explain your reasoning.

CHAPTER 3 Legal Influences 133

CHAPTER 4

Unions and Management: Key Participants in the Labor Relations Process

YESTERDAY, BOB BOYCE, my department s Shop Steward, came up to me and told me that I ought to join the union like so many of my fellow employees. My hunting buddies, David Hunt, Jim McBride, Larry Tate, and Bill Ikerd, have already joined and are taking an active role in the union by going to meetings. I realize that a lot of folks put it on the line to get the union in during the organizing campaign and during the negotiations. After several months of negotiations, the union finally got a huge contract that gave employees a nice pay raise, a pension program, and guaranteed health insurance. Also, gone are the days where the supervisors can simply make favorable work assignments and offer overtime to their cronies; they now have to go by provisions in the labor agree- ment. I have been thinking about joining, but I get all the bene- fits that union members get and I don t have to pay anything to receive these benefits.

Questions 1. Why should he join? Are there other benefits?

2. How similar is this situation to others in American society?

3. What would you do? Why?

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As noted in Chapter 1, two key participants in the labor relations process are the union,which as the exclusive bargaining agent represents employees in the bargaining units, and management, which represents the owners or stockholders of the company. This chapter first provides a general explanation of the goals, strategies, and organizational structure of the company and the union for labor relations purposes. Because companies and unions are organized differently to meet different purposes, basic goals, strategies, and organizational structures will be presented that may be adjusted to meet respective differences. The second part of the chapter focuses on union governance and structure by describing the characteristics of unions, union government at the various levels, organizational structure, and problems with corruption and misuse of power within a few unions. The final section covers union security, a subject vital to the union s role in gaining bargaining strength and meeting members expectations.

Goals and Strategies: Management and Unions

Unions and management of companies have goals that are similar; they also have goals which at times conflict. These goals provide direction and serve as the basis for the orga- nization s strategies, plans, and organizational structure. Exhibit 4.1 displays some major goals for both companies and unions, which in several cases are similar and consistent, and in other cases, the goals have potential for conflict. The areas of potential conflict cre- ate possibilities for an adversarial relationship, and the areas of agreement create possibilities for cooperation and labor peace. As will be noted, most of the time unions and management are able to settle their differences without resorting to a work stoppage (0.0002 of total man- days per year are lost due to work stoppages). The collective bargaining process itself is a

Exhibit 4.1 Goals of the Company and the Union

The Company Wants The Union Wants

To survive and remain competitive The company to survive and remain competitive as well as for the union to survive and remain secure

To grow and prosper The company, as well as the union, to grow and prosper

To achieve a favorable return on its investment

The company to achieve a favorable return on its investment and return fair wages to employees

To effectively use human resources The company to effectively use human resources within the rules and policies of the agreement and to achieve job security and employment opportunities for members

To attract, retain, and motivate employees

The company to attract, retain, and motivate employees within the rules and policies of the agreement

To protect management s rights to make decisions and retain flexibility

To protect union and employee rights that were negotiated and included in the labor agreement

To obtain a commitment from the union that there will be no strike for the duration of the agreement

To obtain a commitment from the company that there will be no lockout for the duration of the agreement

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 135

mechanism designed by the parties and adopted by the U.S. Congress as the preferred method for resolving differences between unions and management.

Both the company and the union want the company to survive and remain compet- itive. Union agreement with this goal is logical because the employees would lose their jobs and the union would not survive without the company. Likewise, the union wants to survive as the representative of the employees of the company and will take steps to retain this designation. When a company wishes to remain nonunion or to have the union decertified, an inevitable conflict occurs.

The company wants to grow and prosper a sign of its management s success. The union agrees with this goal and supports it because it creates more opportunities and ben- efits for employees, adds union members, allows more funds for union activities, and strengthens the union as an institution. Likewise, both the company and the union want the company to achieve a favorable return on its investment. Although they may disagree on what is meant by favorable, both parties understand the mechanics of the financial side of the business. However, the union also wants to achieve a favorable or fair return for the employees efforts, input, and contribution. Here, there may be a disagreement over what is a favorable return to the investors and a fair return to the employees.

Two related goals of the company are to achieve the effective use of its human resources and to attract, retain, and motivate employees. The union accepts these com- pany goals as long as the company abides by the provisions that were negotiated and included in the collective bargaining agreement. For example, the company may wish to have the most productive employee work on an overtime assignment to be able to ship a rush order; however, the agreement may require that overtime be offered on a rotating basis. The presence of the union does not prevent making overtime assignments to the most productive employee; however, the overtime provision is a negotiable subject, and the parties must live by the provisions that they agree on.

The company wants to protect its rights to make decisions and retain the flexibility to operate the business. The union accepts the philosophy that some decisions are best made by management, including the type of products, the price of products, financial policies, customer relations, advertising and promotion decisions, product design, and plant layout. At the same time, the union represents the interests of employees and attempts to provide job protection and guarantee job opportunities for them by negoti- ating provisions in the labor agreement, such as limits on contracting out work and use of seniority in layoff decisions to provide job security.1

The company wants a union commitment to have no work stoppage for a specified period; this guarantees a stable workforce and allows the company to make production promises to customers. This commitment comes in the form of a no-strike clause in the labor agreement. The union may want a commitment from the company that employees have the right to have their grievances heard by management and may appeal them to a third-party neutral (arbitrator) when necessary to resolve differences.

Once the union and the company decide on their respective goals, they determine the appropriate strategies to reach these goals. Companies have been involved in strategic planning much longer than unions, and their strategic plans are usually more detailed and sophisticated. Only in recent times have unions started to think and operate in terms of strategic planning.

Company Strategic Planning A company s strategy in labor relations is determined by its managerial philosophy, the ethics of its management, its economic condition, the composition of the workforce, competition in the industry, the time in the life of the company, and the capabilities of

136 PART 1 Recognizing Rights and Responsibilities of Unions and Management

management. Management has choices about its strategy. It may believe that the com- pany is better off remaining nonunion and may devote much time and effort to ensuring positive human resources management. Some employers resist unions bitterly to ward off the large wage gap between union and nonunion employees (weekly earnings aver- aged $907 for union members versus $753 for nonunion workers in 2014, according to the Bureau of Labor Statistics). Management members who are in a highly competitive industry may be willing to do almost anything to keep unions out. Management at other companies may choose to change from a hard-bargaining approach to one of labor management cooperation after it finally accepts the philosophy that both parties would gain more by cooperating than by conflicting. Exhibit 4.2 shows the range of company strategies in labor relations, from union suppression to labor management cooperation.2

Nonunion Companies Strategies Some authorities believe that profound changes in labor relations began in the 1980s and were brought on by forces external to union management relationships. These forces include competition from abroad, deregulation, and competition from nonunion compa- nies. More and more companies are finding that their labor relations strategies are driven by economic choices and their need to adapt to new, more competitive business conditions. Because union-suppression, union-avoidance, and union-substitution strate- gies have existed in different forms since the Industrial Revolution, a company may choose to attempt to maintain its nonunion status by preventing or supplanting unions. Another company may choose one of the nonunion strategies as a legitimate response that has been forced on it to cut costs, innovate, enter new markets, and devise flexible labor force strategies. This latter approach focuses on costs and productivity of human resources and the management of human resources.3

A company may use a more aggressive approach, called the union-suppression strat- egy, to maintain its nonunion status or to destroy the union. Human Rights Watch con- ducted research on Wal-Mart labor relations by interviewing 41 former employees; meeting with labor lawyers and union organizers; analyzing cases against Wal-Mart, which charged the company with violating U.S. labor laws; and reviewing company publications that addressed working conditions at the company. Human Rights Watch concluded: Wal-Mart employs a sophisticated and multifaceted strategy to prevent union

Exhibit 4.2 Company Strategies in Labor Relations

Nonunion Companies Strategies Union Companies Strategies

Union Suppression

Union Avoidance Union Substitution

Codified Businesslike

Accommodation or Labor-Management Cooperation

Union busting Illegal acts Refusal to Bargain Decertification

Positive human resources management

Double-breasting

Company paternalism Company-Sponsored

employee organizations

Forms of employee participation and employee involvement

Neutral in union campaign

Straight-forward approach

Union involvement Employee

Empowerment

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 137

activity at its U.S. stores and, when that strategy fails, quashes organizing wherever it starts. 4

Another company, Smithfield Packing Company in Wilson, North Carolina, was found by the NLRB to have committed multiple unfair labor practices in its attempt to keep the United Food and Commercial Workers from representing its employees. See Exhibit 4.3.5

In 2014, the NLRB ordered the Southern Bakeries, LLC, to recognize the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and bargain with the union after it found multiple unfair labor practices. These included:

1. Making unilateral changes in employees wages, hours, and other terms of employment 2. Refusing to allow union representatives access to the company s facility 3. Interrogating employees about their union activities 4. Threatening employees with discharge, job loss, and plant closure 5. Making disparaging comments about the union 6. Creating the impression that the union is under surveillance.6

Other extreme and in some cases illegal tactics used by some companies to avoid unionization include the following:

Developing a spy network (tattletales) to identify union supporters Refusing to hire former employees of unionized companies (but giving the applicant a reason other than prior union affiliation for employment denial) Establishing a case for discharge (including documentation) of known union advocates Seeking to determine prospective employees attitudes toward unions from inter- views, references, and so on, and then refusing to hire them (again giving another reason) if they appear to be supportive of unions Giving psychological tests (job-interest questionnaires) to determine the likelihood that an applicant will be interested in a union Locating new plants in areas where union membership is low and expanding the company s nonunion plants Using a standard application of a State Employment Service that asks applicants whether they have been a member of a union and using the application as part of the preemployment inquiry7

Some employers facing union-organizing campaigns have committed unfair labor prac- tices deliberately, with the expectation of economic returns to them.8 When illegal practices yield economic returns to the violators, ethical questions are raised as to the fairness of the law and its application. One study of employers led to this disappointing conclusion:

[I]n the past, the compliance system [of the National Labor Relations Act] has been inadequate to the extent that some employers have found it profitable to commit

Exhibit 4.3 Unfair Labor Practices of Smithfield Packing Company, Wilson, North Carolina

1. Threats of plant closures by company president and plant manager. 2. Directing video security cameras to record employees and union organizers pass-

ing out union information. 3. Interrogating employees about support for the union by supervisors. 4. Unlawful loss of benefits by announcing that employees would lose their 401(k)

program if they voted for the union. 5. Threats of a pay cut if employees signed union authorization cards that

supported the union. 6. Discharge of employees because of their union activities.

SOURCE: Decisions and Order of the National Labor Relations Board, 347 NLRB No. 109, August 21, 2006. (The company has since changed ownership.)

138 PART 1 Recognizing Rights and Responsibilities of Unions and Management

unfair labor practices in order to forestall unionization. Those employers obeying the law because it s the law have faced a greater probability of incurring costs of union- ization and may have been at a competitive disadvantage to employers who violated the law. Such inequities do not encourage compliance with the law and provide evi- dence of the need for labor law reform.9

Union Avoidance. Some companies that select a union-avoidance strategy take a strong stance against union representation, even in facilities where unions already exist. They open nonunion facilities and attempt to keep them nonunion. They shift their capital investments away from the unionized facilities and make plant improvements in the nonunion plants. Where a union represents its employees, the company attempts to reduce the labor costs by lowering wages and benefits, modifying traditional work prac- tices, and encouraging decertification to the point of committing illegal actions. In these situations, the labor relations environment is highly adversarial, and union management collaboration is not considered an option.10

Some firms do not aggressively seek to crush union organization. They simply take steps to prevent unions from forming. Top managers may reason that if the con- ditions are not encouraging of unionization, then the workers are unlikely to organize. Consequently, it is not uncommon to see the following types of union avoidance tactics:

Locating new plants in areas where union membership is already low. Locating new facilities in rural areas in the South, where support for unions has historically been weak and anti-union attitudes have predominated. Having several small facilities in several nearby communities rather than one large facility; this helps employees feel like they are not just a number to management and it probably means that union organizers will have to organize each facility separately for union organizers, the payoff in new members may not be worth the effort. If a firm has both union and nonunion plants, expanding only the company s nonunion plants. Subcontracting work that is typically unionized so that union work is not in-house ; for example, if managers believe that printers are more likely to unionize than other employees, then the firm may hire a print shop to do its printing rather than have its own printing department.

Positive Human Resource Management. Some companies adopting the union- avoidance strategy practice positive human resources management or operate double- breasted. Company officials who adopt positive human resources management recognize the importance and necessity of maximizing employee voice. Moreover, such firms implement the claim that people are the most important asset of the organization. Such organizations involve their employees in the decision-making processes of their organizations. These efforts are included under the general umbrella of participative management, total quality management, and total quality control programs.11 In unionized organizations, the union is sometimes involved; those efforts are covered in Chapter 7.

Companies such as IBM, Texas Instruments, Publix, and Eastman Chemicals have essentially adopted this strategy. Positive human resources management programs include the following elements:

The absence of symbols of rank and status, such as designated parking spaces, company cars, or country club memberships for managers

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 139

Carefully considered surroundings locating near good schools and universities in order to give employees a high quality of life Overall corporate strength high profits, fast growth, high technology, or dominant market position Programs to promote employment security, such as work sharing or overall reduction in pay to avoid layoffs during hard times Promotion from within job posting, career development, and training and education programs Influential human resources management programs, for example, having the human resources manager report directly to top management Competitive pay and benefits, especially having compensation that is equitable externally and internally and comparable to the pay at unionized companies Management that listens using systematic approaches such as attitude surveys, open-door policies, and appeal procedures. This is based on the idea that dissat- isfied employees are more likely to unionize; if management can respond to worker concerns and alleviate dissatisfaction, they will be content and remain nonunion. Employee stock option plans that contribute stock to employees at no cost with opportunity to buy more Careful grooming of managers focusing on long-term results, using assessment centers, and emphasizing competence and employee relationships12

Double-breasting. Double-breasting exists when one company has two or more subsidiaries, one unionized and the others nonunion or open shop. These arrangements take several forms: (1) A holding company has financial control of one or more operat- ing subsidiaries, (2) a unionized company buys a nonunion firm and continues to oper- ate it as nonunion subsidiary, and (3) a nonunion company buys a unionized subsidiary and continues to operate it unionized.

In some cases, double-breasting appears to be a deliberate strategy designed to max- imize company opportunities and minimize pay dissatisfaction. In construction, govern- ment projects often require that firms pay a prevailing local wage rate (designed to prevent migrant construction workers and their firms from underbidding local firms); these wage rates are similar to union-scale rates and typically higher than nonunion wages. So some construction holding companies will set up one contractor firm to bid only on government jobs (paying union-scale wages) and a second contractor firm to bid only on nongovernment work (paying lower wages). Implicit in this arrangement is an assumption about wage satisfaction: Workers who get low wages and are unaware that they could get higher wages will be more satisfied than workers whose wages fluctu- ate based on the type of project.

At present, the law requires the open shop and unionized units of a holding com- pany to be separately managed and operated as distinct entities. Conversely, the National Labor Relations Board (NLRB) determines whether two seemingly separate companies should be treated as one by considering the following guidelines: interrelation of opera- tions, centralization of control of labor relations, common management, and common ownership or financial control.13 The Board stated:

Similarly, in 2015, the NLRB addressed situations joint employer status. The Board ruled that where there are two or more employers at a single work site (like in fran- chising) and one employer has sufficient control over the employees, a joint employer status may exist.14

140 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Union Substitution. A third company strategy to maintain nonunion status is the union substitute strategy. Some firms seek to avoid or ward off unionization of their employees by providing a substitute for unionism. Two companies, Northrup-Grumman Corporation (which has only 3 percent of its employees in unions) and Federal Express (whose pilots are the only group in unions) explicitly state that their adoption of nonunion employment dispute resolution procedures was due in large part to their desire to avoid additional employees in unions. In addition to union avoidance, nonunion employers have adopted formal workplace dispute procedures primarily for strategic reasons, such as avoidance of legal suits, identification of workplace problems, generation of information about these problems, diagnosis of the underlying reasons for these problems, and specifi- cation of solution to these problems. In fact, about 45 million employees in nonunion companies are covered by individual employment contracts, and about 80 percent of these contracts contain a formal dispute resolution procedure (employment arbitration as the final step in one half). In comparison, about 17 million employees are covered by grievance procedures in collective bargaining agreements (nearly all have arbitration as the final step).15

Many nonunion companies have initiated employee involvement programs to restore the sense of working in a small business, to gain employee commitment to the enterprise, to dissuade union organizing, and to provide feedback to enhance motivation and productivity. Most companies have a system for giving nonunion employees infor- mation about the competitive conditions or economic circumstances of their company. The majority have employee participation programs, such as quality circles and small- group discussions of production and quality of work, and have provided formal com- plaint and grievance systems.16

Employees must be careful of violating Section 8(a)(2) of the NLRA which prohibits an employer from dominating or interfering with the formation or administration of any labor organization or from contributing financial or other support to it. In the well-publicized Electromation decision, the NLRB developed tests to determine the legality of labor- management joint efforts. Electromation, a nonunion manufacturer of electrical components, set up action committees of employees in response to a unionization campaign. These committees were established to discuss (1) absenteeism/infractions, (2) no-smoking policy, (3) communication network, (4) pay progression for premium positions, and (5) attendance bonuses during working hours. The union afterwards requested recognition, contended that the action committees were labor organizations, and filed an unfair labor practice charge, which alleged that the company had violated Section 8(a)(2) of the NLRA by its domination of the committees and assistance given to those committees. The NLRB ruled that the action committees were dominated by the company. As a result of the unfair labor practice, the company was directed to disband the action committees. The tests developed by the NLRB address the topics discussed, the representational nature of the group, and the authority of the group. See Labor Relations in Action for these tests.

The most common system for resolving employee grievances is the open-door pol- icy, wherein employees may present their grievances to management representatives. The success of this system depends on how conscientious managers at all levels are in fulfill- ing this policy and whether employees fear that presenting their grievances to managers above their immediate supervisor will have undesirable consequences.

Other forms of nonunion grievance procedures include grievance appeal boards, appeal steps up to top management, and peer review committees.17 The grievance appeal board allows employees to present their grievances to a board for a final decision. In this system, three management members and two employees might hear the grievance and decide the outcome. Although the system is sometimes called a jury of one s peers,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 141

management representation is usually greater than that of employees and can outvote employee board members if necessary.18

Unionized Companies Strategies The labor relations function in unionized companies differs from that in nonunion com- panies in several ways. First, in the unionized setting, two parties, the union and manage- ment, are involved. Instead of decisions being made by management unilaterally, many decisions, such as wages, hours, promotion, layoffs, and other terms and conditions of employment, are made bilaterally through negotiations. Second, the presence of the union formalizes the employee-representation activities because employees may file a grievance if they believe that the company has violated terms of the negotiated agreement. Third, the negotiated rules and policies that govern the employment relationship for those employees covered under the collective bargaining agreement essentially become company policy because both parties have to abide by the terms that they have negotiated.19

LABOR RELATIONS IN ACTION Post-Electromation: Tests to Determine Whether Teams and their

Activities Are in Violation of 8(a)(2) of NLRA

1. Is the work team discussing Section 2(5) topics, such as grievances, labor disputes, wages, rates of pay, benefits, hours of employment, safety, or work- ing conditions? If so, the chances are increased that the company is violating Section 8(a)(2) of the NLRA.

2. Are work team members acting in an individual or representative capacity? If the team members are addressing issues that affect nonteam employees or are addressing issues on behalf of other employ- ees, the chances are increased that the company is violating Section 8(a)(2) of the NLRA. In considering the question of representation, the following factors will be investigated:

Function of the work team: Presenting employee views, making recommendations to manage- ment, and presenting other employees grie- vances are indicators of representation. Form of the plan under which work team exists: Consider the number of team members, how they were selected, and the formal organization of the team: the more formal a team s organization, the more a representative purpose is inferred. Con- sider collection of dues, defined electoral grouping, existence of a governing written instrument. Employer s intent in forming the work team: Was the team formed in response to an attempted union organizing drive? Is the team a substitute for a legitimate and independent rep- resentational union? Employee s perception of the work team: Do the employees consider the committee to resemble a labor organization or to represent anyone?

3. Is the authority of the work team limited to making recommendations to management, or does the team have delegated management authority to make deci- sions? If the work team only has power to make recommendations, this is an indicator of labor orga- nization status; however, if the work team has the power to make decisions, the presence of manage- rial decision-making authority is an indicator that the work team is not a labor organization.

4. Does the employer retain veto power over any action of the work team and who will serve on each team? Does the employer have power to abolish the team at will? Retention of discretionary veto power and power to abolish the team at will is an indication of management s unlawful domination.

5. Did the company create the work team or decide what it would do and how it would function? In other words, does the company dominate the work team? If the company establishes the work team, then selects the members, supports the work team financially, gives direction and assigns projects to the team, and so on, the chances are increased that a legal violation has occurred.

SOURCES: Michael S. Beaver, Are Worker Participation Plans Labor Organizations within the Meaning of Section 2(5)? A Proposed Framework of Analysis, Labor Law Journal 36 (August 1985), pp. 226 237; Aaron Bernstein, Making Teamwork Work Appeasing Uncle Sam, Business Week, January 25, 1993, p. 101; Electromation, Inc. and International Brotherhood of Teamsters, Local Union No. 1049, 309 NLRB NO. 163, December 16, 1992; E.I. DuPont de Nemours SG, 311 NLRB No. 88, May 28, 1993 in Daily Labor Report, June 8, 1993, pp. AA-1 AA-2, and D-1-D-10; Raymond L. Hogler, Employee Involvement and Electromation, Inc.: An Analysis and a Proposal for

Statutory Change, Labor Law Journal 44 (May 1993, June 1998), pp. 1055 1061.

142

Codified Businesslike Strategy. One strategy adopted by unionized companies is the codified, businesslike, strategy. These companies accept unions as the legitimate rep- resentative of the employees and conclude that if the employees want a union, manage- ment will deal with it. The managers do not attempt to have the union decertified, do not commit flagrant unfair labor practices, and do not try to substitute participative groups for unions. Company managers respect and trust their union counterparts and expect the same in return. For the relationship to last, both parties must realize that respect and trust are fundamental to both their futures. The approach of these compa- nies is to deal directly and bargain with the union over wages, hours, and terms and con- ditions of employment at the appropriate times. When the labor agreement negotiations are complete, managers of these companies administer the agreement as they interpret it. In other words, they go by the book. Although General Electric was known in the 1950s for its take-it-or-leave-it approach to labor negotiations (called Boulwarism), its strategy today can be categorized as a businesslike approach. The remaining chapters explain this approach to labor relations. Also, as noted previously, strategies of compa- nies and unions change during their lifetimes and with economic conditions, changes in leadership, and personalities of participants.

Accommodation or Labor-Management Cooperation. The fifth strategy shown in Exhibit 4.2 is one of accommodation or labor management cooperation. This strategy entails the union cooperating with management, rather than the parties having an adver- sarial relationship. Management and unions actively work together to create an organiza- tional climate and a way of operating that will allow employees to participate directly in decisions in their work areas as members of task teams and as members of problem- solving groups. Unions represent their members in decision making and in collective bargaining.20

Over 1,000 collective bargaining agreements have contract clauses that provide for cooperation between unions and management. Some agreements establish joint commit- tees, such as safety committees that focus on an interest to both parties, improving safety in the workplace. More extensive cooperative arrangements include joint decision mak- ing to improve quality and productivity. An even further degree of cooperation includes a partnership between the union and management about all or most decisions in the production process.21

Unions can contribute to companies strategic planning and implementation activities. For example, a union can provide input from a clearly defined group of employees, as well as transfer information about corporate plans and direction to those represented employ- ees. The union leaders can help the rank-and-file employees better understand the business plan and lend credibility to the plan. Although these contributions are clearly positive, union involvement in strategic planning takes more time because the union leadership must meet with the membership to explain planned actions. Also, to retain a competitive edge, upper management often does not want to reveal new directions and planned actions. As a result, unions typically have a greater opportunity to have a role in strategy implementation rather than in strategy formulation. For example, if a company is facing increasing losses because of foreign competition, the company may enlist the assistance of the union in finding ways to reduce costs. Alternatives include cooperative approaches to job design or developing a new reward system, such as gain-sharing, to encourage labor management cooperation. Another possibility is the introduction of new technology to improve productivity, which may include restructuring existing jobs.22

For organizations and unions to achieve a more collaborative relationship, man- agers, unions, and employees must overcome their resistance to change. Managers must develop a more open, less authoritarian managerial style; unions must abolish their

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 143

traditional us versus them approach and adopt the team concept; and employees must agree to greater worker commitment and more involvement in determining how to get the job done and how to get it done right.23

Employee empowerment is reflected in employee involvement and participation programs, which include quality circles, quality-of-work-life efforts, labor management participation teams, and autonomous work units. These efforts address such issues as product quality, work-unit performance, new technology, safety and health, and supervi- sion. Here, union leaders and members accept responsibility for success of the organiza- tion. Unions demonstrate their capacity to confer value to their members and create wealth for all of the organization s stakeholders.24

This relationship ensures that unions and management focus on common goals, which include the health of the business in a changing economic environment, and new issues, such as adopting new technology to ensure competitiveness and business survival. Management accepts unions as stakeholders in an ongoing complex, multi-stakeholder organization designed to ensure survival and provide an equitable return for all involved in the process. Several companies and unions have already proceeded in this direction. Harley-Davidson and its two unions co-manage the Kansas City plant. The parties have created a concept called relationship management, which places a high value on worker empowerment and interaction between employees, unions, and their suppliers. Managers at the plant have a strong, partnering relationship with the steelworkers and machinists. Team members are empowered to make key production decisions and have accountabil- ity for the results of their work without traditional supervision. Each work team has rotating representation in the plant s decision-making process. The plant manager shares office space with representatives from the steelworkers and machinists unions.

To achieve this new union role, management and union leaders must develop differ- ent skills. Union leaders need business decision-making skills; they must understand the business and the problem-solving process. At the same time, union leaders must main- tain contact with the membership to better represent members interests. Management must take steps to reorient its views from seeing unions and labor agreements as con- straints to recognizing a more cooperative union management relationship. Manage- ment must provide the union and its leadership with a secure position as the legitimate, permanent representative of the bargaining unit employees. This means aban- doning efforts to decertify the union or to reduce the union s importance at the work- place. It means developing a mutual trust between parties at every level of the organization.25

At the General Motors Lansing Grand River Assembly plant, the local management and the UAW Local 652 established a joint responsibility system of collective bargaining that encourages employees represented by the UAW to reduce production costs and increase profitability by accepting responsibilities traditionally held by management. Building on a trusting relationship and employment security, front line workers receive expanded job responsibilities and are involved in production and business decisions. An hourly team coordinator leads the work teams, reducing the number of supervisors, and shifting the supervisors role toward coaching and facilitating. More information on the company financial position and competitiveness is shared with the local UAW. The UAW local has become involved in issues, such as outsourcing, work quality, and scrap reduction, which had previously been management s responsibilities.

Because General Motors operates multiple plants, it can assign production work to those plants which have the greater productivity and efficiency records. Therefore, the motivation to continuously improve is present. Manufacturing firms in steel, aluminum, rubber, paper, food processing, and parts supply have the same opportunities. As well,

144 PART 1 Recognizing Rights and Responsibilities of Unions and Management

telecommunications and banking services have multiple call centers which could use the same model to lower costs, improve productivity and profitability, and guarantee employment security.26

Companies may choose a mixed strategy, which can encompass union avoidance, union substitution, or labor management cooperation, at various sites in a multi-plant operation. For example, a company may operate double-breasted and strongly oppose the union at one of its nonunion plants while engaging in labor management coopera- tion at another plant. Such strategic choices are made at the highest levels of the organi- zation, and the advantages and disadvantages of each strategy are seriously debated and deliberated before any strategy is adopted by the company.

Upper management considers the market pressures, operational and financial fac- tors, and collective bargaining relationships in its deliberations. If market pressures are intense as a result of import penetration, management may be inclined to choose union avoidance in the nonunion sector. However, if a high proportion of the plants are union- ized, management may choose the labor management cooperation strategy. Researchers continue to examine which factors lead to certain strategies.27

Union Strategic Planning Labor unions, like other organizations, define their operational goals, determine their organizational strategies and plans, develop policies and procedures, and manage their resources to reach their goals and maximize their performance. Unions also are involved in long-range planning, establishing procedures for budgeting, attracting able staff mem- bers, communicating with members to provide information and to obtain reliable feed- back, and establishing controls for financial accountability.28

Labor unions in the United States have been involved in strategic planning for only a short time. For years, unions as a rule reacted to managerial decisions with little con- cern for long-range implications. Today, more and more unions are finding it essential to become involved in strategic planning. Several unions, such as the Communications Workers (CWA), the Auto Workers (UAW), and the Steelworkers (USW), have recog- nized the need for long-range strategic planning and created strategic planning commit- tees. To survive, all unions must develop such plans. A typical union s strategic plan includes (1) a mission statement, (2) analysis of the external environment, (3) internal analysis of the union s strengths and weaknesses, (4) long-term and short-term objec- tives, and (5) strategy development. A survey of American Federation of Labor Congress of Industrial Organizations (AFL-CIO) unions found the following:

1. Typical mission statements are: To organize workers for the purpose of collective bargaining; to foster legislation of interest to the working class; and to disseminate economic, social, and political information affecting workers lives and welfare. As an example, see Exhibit 4.4 for the AFL-CIO s mission statement.

2. The analysis of the external environment includes an examination of the changing demographics of the workforce (toward more worker diversity), appraisal of current and future political and legislative concerns, consideration of labor s image, and analysis of employer practices and industry trends.

3. The internal analysis includes an examination of the union s internal functioning, such as union governance, openness for discussion of diverse opinions, and appraisal of the professional staff whose jobs are to provide representational services to the members.

4. Organizational objectives are set for short-term and long-term activities. Short-term objectives may include meeting membership needs through collective bargaining,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 145

reducing substance abuse, improving pensions, and enhancing job security. The most common long-term objective is simply the survival of the labor organization.

5. Further work is needed to define strategies for addressing labor unions long-term concerns for continued survival and growth as institutions.29

Some unions, like the UAW, have established internal commissions to participate in strategic planning. The report of the Commission on the Future of the UAW, entitled A Strong Union in a Changing World, addressed the union s major economic concern about the erosion of the nation s industrial base and related problems of corporate flight and disinvestment. It also urged more effective use of the media in presenting the union s public positions on tax policy and fairness, dislocated employees, the changing workforce, issues of sexism and racism, and rapid change in technology and methods of work.

The Communications Workers of America (CWA) is one union that has effectively instituted strategic planning for its success. Over the last two decades, the CWA has faced serious challenges as a result of product market deregulation and technological

Exhibit 4.4 AFL-CIO s Mission Statement What We Stand for: Mission and Goals of the AFL-CIO

The mission of the AFL-CIO is to improve the lives of working families to bring economic justice to the workplace and social justice to our nation. To accomplish this mission we will build and change the American labor movement.

We will build a broad movement of American workers by organizing workers into unions. We will recruit and train the next generation of organizers, mass the resources needed to organize and create the strategies to win organizing campaigns and union contracts. We will create a broad understanding of the need to organize among our members, our leadership and among unorganized workers. We will lead the labor movement in these efforts.

We will build a strong political voice for workers in our nation. We will fight for an agenda for working families at all levels of government. We will empower state federations. We will build a broad progressive coalition that speaks out for social and economic justice. We will create a political force within the labor movement that will empower workers and speak forcefully on the public issues that affect our lives.

We will change our unions to provide a new voice to workers in a changing economy. We will speak for working people in the global economy, in the industries in which we are employed, in the firms where we work, and on the job every day. We will transform the role of the union from an organization that focuses on a member s contract to one that gives workers a say in all the decisions that affect our working lives from capital investments, to the quality of our products and services, to how we organize our work.

We will change our labor movement by creating a new voice for workers in our communities. We will make the voices of working families heard across our nation and in our neighborhoods. We will create vibrant community labor councils that reach out to workers at the local level. We will strengthen the ties of labor to our allies. We will speak out in effective and creative ways on behalf of all working Americans.

SOURCE: AFL-CIO s Mission Statement. Used with permission. Copyright © 2011 AFL-CIO. www.aflcio.org

146 PART 1 Recognizing Rights and Responsibilities of Unions and Management

change: union density declining, downsizing by the regional Bell companies, reclassifying jobs from technical and professional to managerial (resulting in those employees being ineligible for union membership), and creation and growth in mostly nonunion compa- nies. The CWA was faced with organizational uncertainty and complexities, with a mem- bership accustomed to easy contract victories and predictable, paternalistic labor relations. The CWA decided to transform itself from a telephone workers union to the union of the information age, which would focus on information services. Instead of

being a union predominantly of telephone employees, the CWA expanded to printing and publishing, radio broadcasting, journalists, computer programmers, airlines employ- ees, software specialists, and others. The CWA made adjustments at the bargaining table; it began negotiating retraining provisions for its members, pension enhancements, and early retirement bonuses. However, to ward off health insurance concessions, it had to mobilize its members for contract fights. Mobilizations included one-on-one postcard messages, work-to-rule (following rules and instructions in excessive detail) campaigns, wearing common colors or armbands on certain days of the week to show solidarity, public rallies, and campaigns of letter writing to state and local politicians. The CWA negotiated company neutrality pledges (where the company promises not to oppose efforts to organize nonunion facilities), expedited elections, and card checks for union recognition; through these efforts the CWA gained over 30,000 members. Through mer- gers with eight smaller national unions, the CWA has gained an additional 227,000 new members. The CWA agreed to support regulatory changes by use of its political influ- ence in exchange for explicit benefits guarantees and job security. Thus, over the last 20 years, the CWA has taken strategic steps to transform itself from a telephone workers

Exhibit 4.5 Excerpts from CWA s Strategic Plan: 2006 2011

Strategic Intent: Member Development Develop CWA membership to enable the organization to be self-sufficient. Develop a compelling set of member benefits. Broaden efforts to identify new member seg- ments within the scope of CWA s vision and mission, and attract and recruit new members. Maintain efforts to retain existing members.

Strategic Intent: Identity/Branding The intent is to establish the CWA as a well-known, recognized, and reputable organi- zation in the North American climbing community and with the public. Increase recog- nition of the CWA, and continue to differentiate the CWA from preceding organizations. Position the CWA as the primary source of information regarding risk management, insurance, education, and standards for the climbing wall industry and the public. Define, promote, and deliver functional, tangible, features and benefits to our members, and the public, that promote competence in practice, quality in pro- ducts and services, and a positive image for the manufactured climbing wall industry.

Strategic Intent: Standards Development The intention is for the CWA to be the leader in standards development for the manufactured climbing wall industry. The CWA will develop widely adopted, consensus-based standards, with a high degree of cooperation with other standard- setting organizations. The CWA will advocate for the adoption of sound standards and will promote the interoperability of standards by working with national and international standard-setting organizations such as ANSI. The CWA will develop and implement both engineering standards for the construction of manufactured climbing structures, and practice standards for the management and operation of manufactured climbing structures.

(Continued)

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 147

union to a union of the information age and has intertwined its collective bargaining, political, and organizing activities to make it one of America s most effective and suc- cessful unions.30

Several other international unions, such as the Air Line Pilots Association; Steel- workers; Service Employees International Union; American Federation of Teachers; and the Bakery, Confectionery, and Tobacco Workers, have undertaken strategic plan- ning efforts. These international unions have added new terms to their operational language, such as strategy development, organizational assessment and planning, and implementation. Unions have used surveys, interviews, and focus groups for building participation and consensus. The results have been mission statements, goals and pri- orities, assignment of responsibilities, funding activities and budget allocations, dues split between the local and international unions, and measures for evaluating success.31

With the decline of union membership as a percentage of the total labor force and subsequent reduction in dues income, unions at every level have attempted

Exhibit 4.5 (Continued) Strategic Intent: Government Affairs/Public Policy

The CWA s intention is to protect and expand the recreational use of climbing facili- ties in North America. The CWA will attempt to influence government actions, pol icy development, and legislation to achieve either neutral or positive outcomes for the industry. By marshalling the industry s resources, involving industry members, maintaining reliable relationships, and using effective advocacy techniques, the CWA can position itself to effectively represent the manufactured climbing wall industry. CWA will employ an effective issues management process that will focus its resources on advocacy at the state and, to certain extent, federal levels. Advo- cacy on the state level will attempt to achieve the best results for CWA membership.

Publications/Communications/Information Systems Development The development, organization, and distribution of information pertaining to the industry is vital to its continued growth and success. The intention is to develop CWA into the central source of information and communication regarding the man- ufactured climbing wall industry to become the industry s information broker. The CWA will identify information of interest to members and the public and will determine cost-effective ways to distribute this information.

Strategic Intent: Program Development The CWA s intention is to define and develop programs of interest to our members and to the general public that promote responsible recreational use of manufac- tured climbing facilities. CWA programs will be focused on the professional devel- opment of members and the improvement climbing related knowledge and information.

Strategic Intent: CWA Conference and Events The CWA s intention is to develop and promote a constructive and collegial com- munity within the manufactured wall industry. Community building can best be done face-to-face. The conference will bring together a critical mass of members to discuss industry-wide concerns and initiatives, promote information sharing, and improve opportunities networking. The conference will offer an opportunity to con- duct CWA business cost effectively and will provide opportunities for member train- ing, education, and professional development.

SOURCE: Reprinted with permission by Communications Workers of America, website: http://www.cwa.org

148 PART 1 Recognizing Rights and Responsibilities of Unions and Management

revitalization efforts. The Service Employees International Union (SEIU) and the United Brotherhood of Carpenters (UBC) have taken a mission-driven strategic approach, which includes a strategic plan with time-bound goals promoted aggressively by their national union leaders. The SEIU allocated 50 percent of its national budget to organizing new members; engineered mergers among locals, which were deemed too small to pursue an effective organizing agenda independently; and removed old-line, heavy-handed local leaders who resisted change. The UBC cut the national office staff by half, eliminated departments, outsourced some work, rented out a substantial part of its national headquarters, eliminated many small locals, and shifted control of resources to regional councils. These cost-cutting efforts helped to fund a shift of 50 percent of the union s resources to union organizing. While most of the national and international unions experienced a decline in overall membership, the SEIU and UBC experienced growth over the last 20 years.32 Items from the Strategic Plan of Change to Win are included in Exhibit 4.6.

Company Organization for Labor Relations Activities

There are many organizational structures for labor relations activities in U.S. companies. The following discussion introduces some of the basic organizational considerations, although different company characteristics will alter these designs.33

In larger corporations, the labor relations function is usually highly centralized, with policy, strategic planning, and bargaining decisions made at the corporate level. In fact, the final economic decisions are usually made by the chief operating executive with the advice of corporate-level labor relations managers. In smaller companies with only one

Exhibit 4.6 Items from Win s Strategic Plans

To emphasize organizing by reallocating resources on a grand scale away from other union activities and devoting 75 percent of the CTW budget to organizing.

To rebate one-half of union affiliates per capita dues if they adopt aggressive orga- nizing programs and to create a $25 million Strategic Center that will target nota- ble anti-union employers.

To target for organizing those industries that will remain in the United States. These include the health care, hospitality, retail, building services, transportation, and construction industries.

To conduct joint campaigns to recruit new members. As examples, SEIU and the Teamsters are partnering to recruit school bus drivers; UFCW and UNITE-HERE are developing a retail apparel and distribution initiative; all unions are joining the Wake Up Wal-Mart campaign, a public awareness offensive to provide informa- tion about the world s largest retailer.

To build global partnerships with unions in other countries in support of organizing multinational corporations. Andy Stern, president of the SEIU, has established informal global alliances with key union leaders in at least a dozen countries.

To cooperate with the AFL-CIO in national election campaigns. In addition, to oper- ate field offices in several states in hopes of electing labor-friendly governors and elect legislators who are committed to take actions that will facilitate organizing.

SOURCE: Richard W. Hurd, U.S. Labor 2006: Strategic Developments across the Divide, Journal of Labor Research, 38 (2) (2007), pp. 313 324; Marick F. Masters, Ray Gibney, and Tom Zagenczyk, The AFL-CIO v. CTW: the Competing Visions, Strategies, and Structures, Journal of Labor Research, 27(4) (2006), pp. 473 503.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 149

or a few facilities, these decisions are made at the plant level and shared by plant man- agement with the plant labor relations manager, who offers advice.

In larger companies, at the operations or plant level, the plant manager and plant labor relations manager or human resource manager play the key roles in certain labor relations activities, such as contract administration, grievance handling, and monitoring labor relations activities. In smaller companies, activities at the plant level also include bargaining, strategic planning, and policy formulation.34

The duties and responsibilities of all labor relations managers and specialists are determined in large part by the organizational structure and its degree of centralization or decentralization of authority. The duties typically include corporate-wide responsibil- ity for policies, procedures, and programs ranging from union-organizing drives at non- union facilities to negotiations with the union at other facilities.

Exhibit 4.7 shows the organizational chart for the labor relations function in a large, complex company. As shown in the organizational chart, the vice president of personnel and industrial relations reports directly to the president and has the director of labor relations reporting to him or her. Each of the company s six product lines has its own labor relations organization.

A large, diversified company with several divisions or product lines will typically have a vice president of industrial relations, which includes human resources and labor relations activities, who reports directly to the president and has the director of labor relations reporting to him or her.

Labor relations managers at the plant level also typically have responsibilities for both human resources and labor relations activities. They help implement related corpo- rate and divisional policies, participate in contract negotiations, and resolve employee grievances over daily labor agreement administration. They typically are accountable both to the plant manager for daily labor relations activities and to divisional or corpo- rate industrial relations officials for approval of negotiated labor agreements.

Exhibit 4.8 shows relationships between labor relations managers and other man- agers at the plant level (for the sake of brevity, operations, B, C, and D are not delin- eated in detail). The facility s operations can be grouped in one or more of the following ways: by location (e.g., furnace room one versus furnace room two at a steel mill), by product (e.g., manufactured valves versus gaskets), by function (e.g., maintenance), or by technology (e.g., electroplated and chemical-plated processes).

The labor relations manager is on the same level as managers of the operations, but neither individual has authority over the other. Instead, plant labor relations managers have line-staff relationships with other managers. Line-staff relationships occur when two or more organizational members from different lines of authority work together on a particular policy (e.g., a no-smoking policy) or activity (e.g., grievances). Typically, the operations manager is responsible for the output of the facility (e.g., assembly line ) whereas the labor relations manager is responsible for employment relations with the workforce (the staff ). Neither has authority over the other; therefore, resolution or out- put of this relationship is often determined by past perceived benefits each has derived from the other.

Relationships between labor relations managers and other management officials at the plant level can be tension laden. Consider, for example, the attitude a shift supervisor might have toward a labor relations manager who has awarded to the union a grievance against him or her for performing bargaining unit work (Chapter 10) or who has over- turned a discharge decision made by the supervisor (Chapter 12).

150 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Union Governance and Structure

After the union is recognized, the ordinary functioning of the union requires members to hold offices, serve on staff committees, monitor contract compliance, and perform numer- ous other duties. Even though no immediate or explicit monetary rewards are associated with this work, there are potentially personal, political and self-actualization rewards. Employees who have positive attitudes toward unions are the ones who are most likely to be the volunteers who do this type of work toward building a successful union.35

Exhibit 4.7 Labor Relations Organization: Dotted-Line Relationships

NOTE: Each respective group personnel and industrial relations manager has a direct reporting relationship to his or her respective group management while maintaining a dotted-line relationship to the corporate staff, who has the responsibility for formulation of corporate-wide labor relations policies and procedures.

As each group is dependent upon the corporate function as the formulator of this policy, the lines of communication and working relationships are strong, and the level of communication is very high. Their function is to administer corporate policies and procedures as formulated by the vice president of personnel and industrial relations and his or her staff.

SOURCE: Audrey Freedman, Managing Labor Relations (New York: The Conference Board, 1979), p. 28.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 151

Unions as organizations are fundamentally different from business organizations. Business organizations are built on the assumption that power, authority, and legitimacy flow downward from the owner or stockholders through management. Union organiza- tions, on the other hand, have mechanisms such as a written constitution and by-laws that ensure an opportunity for members to participate in the governance of the organization hold office, attend meetings, vote in elections, or express dissatisfaction with the leadership. Thus, in the democratic organization of a union, power, authority, and legitimacy ultimately flow upward from the consent of the governed. If the leader- ship of a union wishes to move in a new direction, such as toward greater union management cooperation, the new direction ultimately depends on the approval of the membership. If elected leaders do not consider new initiatives in terms of the political realities, they will be rejected by the vote of the members. For example, in cases where the members do not trust management s actions in a joint cooperative effort, the leader- ship must put forth the appropriate effort to build a trusting relationship before develop- ing the joint effort.36

Nearly a hundred different international (an international union has local unions outside the United States, such as Canada. National unions have locals only in the United States) unions and over 60,000 local unions exist in the United States. Their gov- ernance is discussed in this chapter following a brief description of their organizational structure. As with companies, unions organizational structures reflect their activities. Exhibit 4.9 shows the organizational chart of an international union, which includes the various officers, operational departments and staff, regions, and local unions. In this case, the basic functions include financial activities handled by the secretary-treasurer, research, administration, education, organizing, political action, and international affairs. These activities are usually carried out at the union s national headquarters, with some headquarters staff members possibly working in the field. The regional offices are headed by a vice president, who has an advisory relationship with the local unions in the region. Regional offices are established in locations to better serve the needs of the local unions and to represent the national office in the region.

Exhibit 4.8 Management Organization at the Plant Level (Approximately 1,100 Hourly Employees)

152 PART 1 Recognizing Rights and Responsibilities of Unions and Management

At the local union level, the organizational structure is fairly simple, as illustrated by Exhibit 4.10. In most small unions, officer and shop steward positions are part-time; only in larger unions do the financial resources allow full-time union leaders. Most local unions have a president, at least one vice president, a secretary, and a treasurer. The addition of any other officer, such as the sergeant-at-arms in Exhibit 4.10, depends on the needs of the union. Shop stewards are usually elected by the members in depart- ments (or on a particular shift) to represent the membership in their respective depart- ments. The following section explains how unions are governed at the different levels and presents some of the major problems in the governing process.

To understand union governance, one can compare the union with a unit of state or federal government. The executive, legislative, and judicial activities occur at various levels. The local union meetings and national conventions are the legislative bodies; the officers and executive boards comprise the executive bodies; and the various appeal pro- cedures serve the judicial function. A union can also be compared with a private organi- zation because it is a specialized institution having a primary purpose of improving the economic conditions and working lives of its members.

Unions claim the democratic ideal, but realistically, they must rely on a representa- tive form of government. On the whole, they seem to be as democratic as local, state, and federal governments. In fact, a union s membership has more of a say in the way the union operates than most citizens have in their governments or most stockholders have in their corporations.37

To appreciate unions as organizations, one must recognize their wide diversity, the organizational relationships of the various levels, the functions of the officers, and the varying degrees of control. The next section explores the characteristics of craft and industrial unions, the functions of local union officers, and the government and opera- tions of local unions. The national or international union, which is composed of the local unions within a craft or industry, is explained in a similar framework. Not to be over- looked are the various intermediate levels of union organizations that provide specific functions for their affiliated unions. A fourth level for many union organizations is the

Exhibit 4.9 Organizational Chart of an International Union

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 153

federation. The AFL-CIO s organizational structure, functions, and officer responsibilities are discussed.

The Local Union Although there are generally four levels of unions local, national (or international), intermediate, and the federation of unions the local union is the main point of contact for the individual employee. The typical union member often identifies more closely with the local union than with the other union levels. He or she attends and sees local officers at the local meetings and workplace. When the union member has a grievance, the local union officers are the first to assist. During negotiations, the local union officers keep the members informed of the progress of the negotiations. Although the national union may negotiate the master labor agreement under which the local union members work and the AFL-CIO may deal with the U.S. president and Congress on certain issues facing the nation, the local union serves as the vital link between the individual union members and the national union, which in turn might link with the AFL-CIO.

Organizationally, the local union is a branch of the national union. It receives its char- ter from the national union and operates under the national union s constitution, by-laws, and rules. The constitution of the national union prescribes the number and types of offi- cers, their duties and responsibilities, and the limits of their authority. Although union constitutions vary in length and content, they often mandate certain financial reports and require that a certain number of meetings be held, that the local labor agreement conform to the master labor agreement negotiated by the national union if there is companywide bargaining, and that approval to call a strike be obtained by the local union beforehand. With the trend toward greater centralization of authority by the national union, the local union over the years has lost much of its operational flexibility.

Exhibit 4.10 Organizational Chart for a Local Union

154 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Differences between Local Craft and Industrial Unions The operation of the local union in large part depends upon the type of employees mak- ing up its membership. Although there is not a clear-cut division between them, unions can be divided generally into two groups: craft and industrial. The craft unions are com- posed of members who have been organized in accordance with their craft or skill, for example, actors, bricklayers, electricians, carpenters, pilots, or ironworkers. Industrial unions have been organized on an industry basis, for example, the Steelworkers, Auto Workers, Chemical Workers, and Mine Workers. This, of course, does not mean that there are no skilled employees in the steel, auto, or rubber industries; but it does mean, for example, that the electricians in a steel plant would likely be members of the Steelworkers.

Many unions today are neither pure craft unions nor pure industrial unions. Instead, they are general unions (or multi-jurisdictional), which means the union is composed of members from multiple industries and multiple crafts. In fact, there has been a trend toward general unions, even among the largest international unions. One of the reasons is due to mergers, but the primary reason is the existence of opportunity to organize and to increase membership. Over the last 30 years, six unions have con- ducted election campaigns in a greater number of jurisdictions. These unions include the United Food and Commercial Workers (UFCW), the United Steelworkers (USW), the Hotel Employees and Restaurant Employees (HERE), the CWA, the Retail, Whole- sale Department Store Union (RWDSU), and the Office and Professional Employees International Union (OPEIU).38

Differing Scope of the Labor Agreement The craft and industrial unions differ in other ways that have an effect on their opera- tions. First, the craft unions, which frequently represent the building trades, usually negotiate short labor agreements (supplemented by detailed agreements on special topics, such as apprenticeship programs and safety) that cover a defined geographical region, and each has considerable independence from the national union compared with indus- trial unions. Because of the nature of their construction work, craft union members may work on several job sites for several employers in a given year under the same labor agreement. The labor agreement typically covers several construction companies and a number of building trades unions in the particular geographical area.

The industrial union, on the other hand, may be covered by a national labor agree- ment (a master agreement) negotiated between the company and the national union, which covers all of the company s unionized plants. For example, GM plants in Detroit and Los Angeles are covered by the same master agreement. Well over 100 pages long, the agreement explains in detail the wage plan, transfers, pensions, layoffs, and so on. A separate local supplement agreement is negotiated to cover matters of concern to the specific local plant and its employees, which must be consistent with the master agree- ment. For example, the local agreements may address rotating overtime assignments, use of plant bulletin boards, visits by international union representatives, and other issues applicable to the local plant. In plants having no national labor agreement, a plant-wide agreement covering production and maintenance employees is typically negotiated.

Differing Skills Types of skills help demonstrate another difference in local union operations. The craft members are highly skilled artisans who have completed formal training, usually in a formal apprenticeship program. Many employees in industrial unions, on the other hand, are semiskilled and do not require much prior specialized job training. Therefore,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 155

the craft union members often feel that they have higher status than most of their indus- trial union counterparts. The training programs available for the industrial union mem- bers are usually offered by the company, whereas the training received by members of craft unions is organized and operated by the unions. Therefore, craft unions select those who will be offered the apprenticeship training, whereas companies alone select the trainees in the plants. Such an arrangement has allowed the craft unions to keep wages high by limiting the numbers in the craft, sometimes giving preference to their families and friends.

Differing Job Characteristics The nature of their work creates a unique opportunity for craft unions. Because many of the work assignments last only a short period, the craft members, such as electricians work on a construction project, return to the union hiring hall for their next assignment after their work is complete on a project. Upon receiving the assignment, the union members could report to another job site and work, possibly for another company. Usu- ally, these arrangements are worked out in advance by the business agent of the craft union and the companies who agree to operate under the existing regional labor agree- ment. In fact, at the time that a building contractor signs a union contract, it may have no union members in its employ (e.g., January in a northern state in the United States when construction is slow); later, the union will supply labor as needed. This type of contract is called a prehire agreement. It is similar to the closed shop (discussed later in this chapter) which is illegal in most industries but is allowed in construction under sec- tion 8(f) of the LMRA due to the unique characteristics of the industry.

The union hiring hall serves as a clearinghouse or placement office for the construc- tion companies as well as the union members. Because the hiring hall must be operated in a nondiscriminatory manner, nonunion employees may also use its services; however, use by nonunion employees is still quite rare. Typically, the union will offer work within specific job categories to the most senior workers on the hiring hall list who are available to work.

In comparison, the typical member of the industrial union is hired by the company and will work for the same employer usually at the same facility until retirement or until the employee resigns or is terminated. Thus, industrial unions do not utilize either prehire agreements or hiring halls.

Differing Leadership Roles Another difference between craft and industrial unions is the roles of the business agent and shop stewards of the craft unions and the local union officials of industrial unions. The business agent, the full-time administrator of the local craft union, provides many of the same services as the local union president of a large industrial union. Both are considered the key administrative official of their respective local union halls, and they lead the local union negotiations and play a key role in grievance administration. How- ever, the business agent has additional duties, such as administering the union hiring hall, serving as the chief watchdog over the agreement at the various work sites, and appointing an employee on each job site to serve as the shop steward.

Because the business agents of local craft unions have authority to assign members to jobs, such as in the construction industry, they can accumulate power which could lead to corruption, especially with assistance of cooperative employers. More impor- tantly, with this authority to assign workers to jobs, business agents can play favorites and members will be reluctant to challenge the business agent because they could be dis- ciplined by losing job assignments. However, in at least one case, an African-American

156 PART 1 Recognizing Rights and Responsibilities of Unions and Management

worker sued and proved that the union hiring hall had been operated in a racially dis- criminatory way for several years. The court appointed a special master to oversee the hiring hall to insure it operated fairly.39

The shop steward in a craft union, who may be the first person on the job or the most senior employee, handles employee grievances, represents the business agent on the job, and contacts the business agent if anything goes wrong. By contrast, the shop stew- ard in an industrial union is elected by the group of employees he/she will represent (like the members in a department or shift).

The shop steward is the personification of the union to the members; the impressions of the steward greatly influence the members perceptions of the union. Where impressions of the steward are positive, members also have positive views of grievance procedures and have greater union commitment. Stewards spend about 12 hours per week on labor rela- tions matters; between 50 and 80 percent of this time is spent on grievance handling. Therefore, training of shop stewards in grievance handling is important because it helps in reducing the time required to process grievances, an increased likelihood that the shop steward will seek reelection, and the ability of the steward to devote more time to improv- ing relations between the union and management.40 Most unions have ongoing steward training programs, which include such subjects as compliance with the labor agreement, filing grievances, and monitoring health and safety violations.

In local industrial unions, the local president may serve full-time if the local union can afford it. If the position is full-time, the salary comes from union dues. If the posi- tion is part-time, the president is compensated from the union treasury only for the time taken off his or her company job (at the regular rate of pay). Since much of the work is done outside the regular work hours, the presidents devote much more than the typical 40-hour week. Presidential duties include participating in local negotiations, maintaining the local union office, chairing local union meetings, assisting in grievance administra- tion, and ensuring that management abides by the agreement. Union officers who are involved in the day-to-day administration of the collective bargaining agreement may be granted preference in shift assignment and protected from layoffs. They may be granted super-seniority, which means they go to the top of the seniority list on layoff determinations.

Another position which is important to the operations of the local union is the international union representative, a staff member of the international union, who assists local officers in negotiations and in administering the labor agreement. He or she also ensures that the local s activities conform to the national constitution and direc- tives and any local agreements are consistent with a master agreement where applicable. They also have responsibilities in leadership roles in conducting union organizing cam- paigns at unrepresented sites.41

Involvement in union leadership depends upon individuals being convinced of the importance of the cause of the union. This is necessary because the union leadership, whether a shop steward or a local union president, will be devoting a certain number of hours each month without pay to provide services and benefits to co-workers. Employees who take on the role of union officer tend to do so because they are con- cerned about the well-being of their co-workers and have received encouragement from these peers. They are more likely to have been employed for a longer period but gain less satisfaction from their jobs.42

Government and Operation of the Local Union There are several common ways for union members to participate in union activities: attending meetings, holding office, attending conventions, voting (officer elections,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 157

ratification of a negotiated agreement, and strike vote), and helping with the monthly newsletter.

Union members whose growth needs are not fulfilled on their job are usually more willing to become involved in union administration. Also, individuals are usually more willing to participate in union administration when their values are closely aligned with their role in the union.43

Participation in Meetings Attendance at local union meetings frequently varies between 5 and 10 percent of the total membership; however, attendance is higher among union members who perceive a potential payoff for participation.44 When a union is confronted with important busi- ness, such as during local union officer elections, taking a strike vote, negotiations, or ratifying a negotiated agreement, attendance rises.

When the meeting location and time of the meeting are convenient to the member- ship, attendance tends to rise. For example, if the meeting is held at or near the work- place immediately after work, attendance will likely increase. Craft union members, higher skilled, higher seniority, and better-educated members are more likely to attend. Union members are more likely to attend if they know they will be able participate in the meetings and if they receive a personal invitation from their shop steward. Most interest- ing, when the union members do attend, they leave the meeting fairly satisfied with how the meetings are run.45

Local unions are now using survey methods and interviewing techniques to gather information about such issues as safety and health, contract provisions, promotional opportunities, job stress, perception of the union, and recruitment of new members, not only to prepare for negotiations but also to improve the operations of the union and assess membership attitudes.46

Unions have much potential for increasing participation of local union members. For example, unions may make full use of electronic information services, like the Inter- net, Web sites, and e-mail, to communicate and pursue union objectives; and find new ways to involve the rank-and-file members in organizing, bargaining, and political activ- ities.47 Interestingly, union participation does not mean that employees are not satisfied with their jobs.48

The union leaders almost always attend local union meetings, as do departmental representatives, hard-core members, pressure groups, social groups, and aspirants to union leadership positions. Union stewards are expected to attend local union meetings and represent the interests of those in their work unit. Although direct votes occur only on major issues, the union steward can usually reflect the membership views at the union meetings.49

Locals have tried numerous ways to increase attendance of regular members, such as providing beer, sandwiches, movies, and door prizes; fining members who miss a specified number of meetings; or refusing to let members who have missed too many meetings seek an elected office. Although some gimmicks may increase attendance in the short run, many members still feel the meetings are long, boring, and frustrating affairs. 50

The average length is about two hours and much of the time is devoted to presenta- tion of reports from the treasurer, project leaders, and committee chairpersons. Oppor- tunities are provided for members to discuss these reports, but this procedure itself takes time, especially when a grievance involving someone in attendance is presented or when a controversial issue is raised before the meeting as a whole. Although the meetings may stray from the ideal, the business of the local is generally accomplished.

158 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Functions of the Meeting The local union meeting may seem boring and not well attended; however, it serves sev- eral vital functions in the local union government. First, the meeting is the union s single most important governmental activity, and all authority at the local level is derived from it. Second, the meeting provides an opportunity for members to communicate with union leaders, express gripes directly, and call attention to their concerns. Likewise, it is an opportunity for leaders to provide information to members, present results of activi- ties, seek union support, and give direction to the membership. Finally, since the meeting is the supreme legislative body, this is where important decisions are made on such items as approval of appeals of grievance to arbitration, approval of expenses and constitu- tional changes, proposals for contract negotiations, election of officers, and ratification of the contract.51

Unions exist not only to better workers economic conditions, but to give employees a voice. Democratic unions provide that voice. A democratic union provides members an opportunity to exert influence over their workplace environment and to participate in decisions which affect them at work through such activities as attending local union meetings, voicing their opinions, participating in ratification and strike votes, running for office, and voting in local and national union elections. The processes in democratic unions, such as officer elections, make the union leaders more responsive to the membership.

Research has shown that positive union management relations lead to members voting in line with the political objectives of the union leaders, such as contract ratifica- tion and reelection of the incumbent union leaders. In local union officer elections, greater effectiveness in processing grievances increases the likelihood that an incumbent union leader will be reelected. Confidence in using the grievance procedure to resolve problems and the fairness of the collective bargaining agreement lead to increased sup- port for the local union leader s political goals and reelection of the incumbent. Interest- ingly, more senior members have been found more likely to have voted against the incumbent union leaders. Thus, it must be concluded that the more senior union mem- bers might not believe that the union officers are doing as much for them as they are for the more junior members.52

Because elections are so important to the democratic process, the U.S. Department of Labor has been authorized by Congress to develop rules governing union elections. (These rules are shown in the following Labor Relations in Action box on page 162.)

The National or International Union The national or international (these terms are used interchangeably in this chapter) union in the United States occupies the kingpin position in organized labor because of its influence in collective bargaining the core function of American unions. Size alone (Exhibit 4.11) indicates the magnitude of the influence of national unions millions of members work under labor agreements that are directly or indirectly the result of national union actions. The local union operates under its constitution and directives, and the federation (AFL-CIO) derives its influence, prestige, and power from the affiliated national unions.

The national union operates under a constitution adopted in a convention by representatives from locals. These constitutions have changed over time through three stages: first, in an era of independent local unions, the locals were initially careful to restrict the power of the national union. Second, as national businesses, larger regional railroads, and chain stores rose to prominence, national unions became more active in collective bargaining and political action. Local officers realized the need for a unified

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 159

approach toward these large corporations and the need for national laws protecting their interests. Consequently, the union locals became subordinate bodies. Third and currently, after scandals involving undemocratic and corrupt union leaders (and the passage of the Landrum-Griffin Act), most union constitutions added provisions that not only authorize the major national union functions but also protect union members individual rights and the rights of local unions in relation to the national union.53

The Convention The supreme governing body of the national union is its convention, which is usually held annually or biennially.54 The convention serves the national union in many ways: as the constitutional assembly, the legislature of the national union, the final court for union deci- sions, and the means for nominating officers (and the election in many cases). The con- vention provides the time and place for national officers to report to the members their accomplishments and failures. It provides the agenda for policy formulation, program planning, and rule making. It represents the time in which the voice of the membership holds leaders accountable for their actions. However, not all activities are official; the con- vention provides a reward for drudgery work at the local, an opportunity for politicking and public relations, and a time and place for the members to let their hair down.

The convention makes use of the delegate system, in which the number of delegates allowed depends on the number of members in the local. Because even the smallest union is allowed one delegate, the number of delegates is not exactly in direct proportion to the size of the local, although larger locals have more delegates. The convention con- ducts its business similarly to Congress and various state legislatures in that much com- mittee work (including the possible holding of hearings) is performed before debate and vote on the convention floor. However, much discussion also takes place in the conven- tion hotel bars and in meeting rooms.55

Exhibit 4.11 Twelve Largest National and International Unions

Organization Members (in thousands)

National Education Association* 2,963

Service Employees International Union** 1,867

American Federation of Teachers*** 1,597

American Federation of State, County and Municipal Employees***

1,379

United Food and Commercial Workers** 1,274

International Brotherhood of Teamsters** 1,258

International Brotherhood of Electrical Workers*** 750

United Steelworkers*** 659

Communication Workers of America*** 623

International Association of Machinists*** 570

Laborer International Union of North America*** 558

United Auto Workers*** 391

*Independent Union **Affiliated with Change to Win ***Affiliated with AFL-CIO

SOURCE: 2013-2014-2015 LM-2 Reports by U.S. labor unions, which may be found at http://www.olms.dol-esa.gov, the home page of the U.S. Department of Labor.

160 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Although many subjects may go before the convention, several continue to emerge year after year, such as the following:

Internal government: dues, financial matters; and authority of the president, execu- tive board, and locals Collective bargaining: problems with current agreements, membership requests for future negotiations, establishment of bargaining priorities, determination of strategy for future negotiations Resolutions in support of or against domestic and international public policies: labor law reform, inflation, interest rates, unemployment, international balance of pay- ments, loss of jobs to foreign countries.56

Leadership and Democracy Between conventions, the national union is led by its executive board, whose members are elected by the membership. In some cases, executive board members are elected on a regional basis, and they are responsible for regional intermediate organizations that main- tain contact between the locals in the regional and the national unions. The relationship between the executive board and the national union president is usually specified in the constitution. For example, some national union presidents primarily carry out the policies of the executive board; others direct the affairs of the national union, subject to the approval of the board. However, the largest group of presidents has virtually unrestricted authority to appoint staff and direct the activities of the national union. The rationale for allowing such great authority to be vested in the chief executive is that the union often finds itself in struggles with employers or in other situations where it must act decisively and quickly. Thus, a strong executive is needed, and a single spokesperson for the union is required. This concentration of power creates opportunities for misuse of power, and an internal system of checks and balances must be devised to ensure democracy and adequate representation. Experiences that led to the passage of Titles I to VI of the Landrum Griffin Act (covered later in this chapter) have shown that internal control may not work effec- tively, making that government regulation essential. Members rights to participate in union elections and governance include the right to nominate candidates in elections, vote in elections, attend membership meetings, participate in the deliberations, and vote on the business at these meetings, such as setting dues and assessments.57

Democracy within the union can improve its overall efficiency and effectiveness. Union leaders will better represent the members because they will know what the mem- bers want. Democracy will make it easier to eliminate corrupt and ineffective officers who do not represent the members interests. Furthermore, paid union officials cannot perform all the tasks needed within a union and have to rely on the efforts of volunteer unpaid leaders and members. These volunteer leaders will have a greater commitment to the union if they are involved. The components of democracy should include (1) shared sovereignty in decision making; (2) opportunities to participate in decision making; (3) access to complete information necessary for decision making; (4) guaranteed equal rights for individuals and respect for individual dignity.58

One indication of union democracy and active participation by members has been the turnover rates of national union presidents. Some former international union leaders maintained their positions for extended periods (e.g., Dan Tobin, Teamsters, 45 years; John L. Lewis, Mine Workers, 39 years). In the 1950s and 1960s, the turnover rate for union presidents was about 20 percent, rising to 25 percent in the 1970s. Then, in the late 1980s, the turnover rate reversed to 10 percent. Although turnover is not the necessary prerequisite for union democracy, the general rule is that to remain in office a union leader

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 161

must be responsive to the membership and satisfy the membership s objectives.59 The pre- sident s tenure in office tends to be longer in larger unions, which have formalized com- munication networks, centralized bargaining, and heterogeneous rank-and-file members.60

Profile of Union Leaders Most union leaders come from working-class families; the majority of their fathers were hourly employees. Union leaders have an average of 14.1 years of formal education. Over 70 percent of union leaders have some college experience; 17 percent have postgraduate edu- cation; and 27 percent are college graduates. They first joined a union for the same reasons most union members do today: 40 percent joined because it was a condition of employment, 33 percent joined because they believed in the goals of organized labor, and 25 percent wanted better pay and working conditions. Their reasons for pursuing union leadership posi- tions include the following: challenging work, interesting work, extended their range of abili- ties, opportunity to learn new things, achieve something personally valued, believed in the goals of the union, and opportunity to improve working conditions of fellow employees.61

A survey of national union leaders revealed some new directions, which included the following:

Centralizing some of the national union s functions, such as supporting federal leg- islation, while pushing other decisions closer to the membership, such as taking a local union member s grievance to arbitration

LABOR RELATIONS IN ACTION Rules Governing Union Officer Elections (U.S. Department of Labor)

1. All local unions must elect officers at least once every three years; international unions every five years.

2. Local unions are required to have direct elections by manual or mail ballots; international unions are per- mitted to elect officers by delegates.

3. Proper safeguards must be prepared for mail ballot- ing, for example, insurance that all members received a ballot and have sufficient time to vote and return the ballot. With manual balloting, proce- dures for voter secrecy (private voting booths, a pri- vate table where the view is blocked by cardboard or a private room), and voter identification (driver s license or company badge) must be established.

4. The location, date, and time of the election must be convenient for all of the members.

5. Notice of the election which contains the date, time, place, and so on must be mailed to every member 15 days prior to the election.

6. There must be reasonable notice of the rules gov- erning nominations mailed to or posted for the membership. Nominations may be done orally at a union meeting or by mail, but every member must have a reasonable opportunity to nominate.

7. Requirements for voter eligibility are the same as the requirements for membership. Voter eligibility must be verified.

8. After the ballot is marked, it should be placed in a nearby ballot box by the voter, and the voter should leave the area by a door different from the entrance of members who have not voted.

9. Neutral persons should conduct the elections and count the ballots.

10. Observers are a necessary part of the election pro- cess, and each candidate is entitled to one or more observers (depending on the polling hours, polling sites, and size of the election).

11. Each candidate has a right to have campaign mate- rials mailed. Some unions do the mailing at the can- didate s expense; some unions provide computer printouts of the membership lists or mailing labels of membership addresses.

12. The use of union or employer funds to support a candidate is prohibited. This ban applies to copying machines, campaigning in a union publication, use of union or employer cars, any property of the union or an employer, assistance by any employer or a relative who owns a business and just wants to help a family member get elected, and others.

SOURCE: Helen Boetticher, How to Hold a Union Election and Stay Out of Trouble, Labor Law Journal, 51 (4) (2000), pp. 219 224.

162

Broadening the scope of bargaining to include a more holistic approach, such as negotiating child-care and elder-care issues and member education Studying and learning from business organizations on subjects like strategic planning, clear objectives, a clear chain of command, and established rules and procedures Improving union and member effectiveness through goal setting, team building, and member surveys Improving communication with members by use of information technology, such as video conferences, Web sites, and e-mail.62

Administration The operational departments of international unions vary in kind and number, but the typical international union will have at least the following departments: (1) executive and administration; (2) financial and auditing; (3) organizing, (4) negotiating, grievance han- dling, and arbitration services; and (5) technical staff, which includes research, education, economics, law, publications, and public relations.

The executive and administrative group includes the president, vice president(s), secretary-treasurer, and their assistants. This group is chiefly responsible for the activities of the overall union. In some cases, the vice president may concentrate on organizing or collective bargaining, whereas the secretary-treasurer will focus on financial matters.

Presidents of U.S. national and international unions are paid well. Presidents of the three largest unions earn over $250,000 per year.63 These salaries do not approach the average earnings of CEOs. The salaries of the top 100 highest-paid CEOs ranged from $20.6 million to $156.1 million in 2014. CEOs now earn 373.1 times the earnings of an average worker in the United States who made $35,239.64

Thousands of union members, union stewards, and local union officials receive no compensation for their union work and are reimbursed only for time lost from their jobs when involved in union business.

Professional Staff Members Unions have two kinds of professional staffs. The first group is either appointed or elected and holds such titles as international union representative, staff representative, business agent, or organizer. These staff members work away from the international union headquarters and assist local unions in bargaining, contract administration, and organizing. The second group performs more technical, specialized functions at the union headquarters. This group includes such professionals as industrial hygienists; phy- sicians; economists; attorneys; accountants; computer operators; and specialists in educa- tion, media, public relations, and so forth. Interestingly, the staff members have formed staff unions, mostly to promote their job security and equitable salary schedules. Most staff unions are independent, but some have affiliated with a national labor union, such as the CWA, the Steelworkers, or the Newspaper Guild.

Unions have been criticized for making their personnel decisions based on internal politics and limiting selections only to internal candidates. There has always been a union tradition of protecting workers against unfair discharge; thus, this tradition has been a bar- rier to disciplinary action of its own employees with union staff members being fired only in the most serious cases of incompetence or abuse. Unions have also been criticized because few unions have written job descriptions or provided training programs and ori- entation for staff members. In recent years, these criticisms have been addressed and union s human resource practices have become more standardized. These changes have been addressed because unions are facing more and more complex challenges in all of

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 163

the areas in which they operate - economics, financial, political, legal, and organizational. Today, unions are likely to have written policies in five areas: sexual harassment, discipline and discharge, ethics, equal opportunity/affirmative action, and hiring.

Unions today are establishing more modern human resource policies and practices. The unions response has been caused by shrinking resources, growing employer resis- tance to unions, and government regulations.65

The types of skills, knowledge, and experience required of staff members to address these challenges have changed. When unions place a higher priority on servicing the membership (assisting the local in contract negotiations, resolving grievances, presenting an arbitration, etc.), the institutional knowledge and nuts and bolts of bargaining and political and leadership skills gained from being a local union officer are valuable for a staff job. While these qualities are important for some staff jobs, they may not be essen- tial for conducting organizing drives or working in political campaigns. In fact, many staff jobs today require greater technical skills, such as data assessment, communications, financial and economic analysis, which are not gained through experience in local unions. Unions now look outside their own membership to find the professionals needed to assist in meeting the needs of the unions and their members. Requiring a college degree for some staff jobs has become commonplace.

Unions are not unlike many organizations, such as local government, a public orga- nization, even student organizations. Within these organizations, change is difficult, even with visionary union leaders with smart plans for preparing their members to meet pres- ent and future challenges. One impediment to advancement of unions is resistance from the unions own staff. One reason is that unions are democratic organizations. Some of the staff members may have been placed in their positions because they helped get some- one elected. Some staff members may even do an end run to higher authorities to get a lower level supervisor off their backs. When a staff member has friends in high places, it is difficult to modify their behaviors.66

Today, most national unions provide in-house training for their professional staff. Numerous universities have labor education programs that offer professional develop- ment for union members. The George Meany Center for Labor Studies in Silver Springs, Maryland, offered courses on arbitration, organizing, negotiating, leadership development, etc. and has an annual enrollment of several thousands. Its National Labor College offers accredited undergraduate and graduate programs designed for union staff since 1997, and several hundred union officials have college degrees by par- ticipating in this program.67

Services to and Control of Locals As indicated earlier, the locals are constitutionally subordinated to the national union, but the degree of subordination varies with the union. The national union provides services to the local union in several ways while at the same time controlling local union leaders. For example, when the company produces a mobile product, such as automobiles and a national or international product market exists, a master labor agreement with one firm might be negotiated to cover all its facilities (such agreements have been negotiated in the steel, auto, rubber, aircraft, and electrical appliance industries). Also, a union such as the UAW may negotiate an agreement with a company like GM at the national level, and this agreement may establish a pattern for negotiating with other auto companies such as Ford and Chrysler. Following the negotiations of the master agreement between the national union and each company, the local union will negotiate a local agreement with company officials at each plant, covering local rules, policies, and benefits. Any deviations from the master agreement must be approved by the national union. When the product is not

164 PART 1 Recognizing Rights and Responsibilities of Unions and Management

mobile, such as in construction, the negotiations and the labor agreement cover a smaller geographic area. (See Chapter 6 for further coverage of this issue.)

The national union through the international union representative assists locals in collective bargaining, grievance administration, strike activities, and internal financial administration. These services also provide an opportunity for national union staff mem- bers to ensure that the local unions are conforming to national policies.

The national union supports the local union in strike situations, but the local union must get approval to qualify for strike benefits. The national union provides counseling and consultation for internal financial administration (bookkeeping, dues collection, pur- chases, financing union lodges, etc.), but trusteeship (receivership) procedures are avail- able whereby the national union can suspend local union control for abuses such as malfeasance, corruption, and misuse of funds. The national union could replace local lea- ders with a trustee appointed by the national union.

Dues, Fees, and Distribution of Funds Although all union members pay dues or fees to their national unions, the amount and form vary considerably. Such dues are the chief source of revenue for unions. The monthly dues are typically between $20 and $30, and the initiation fee is about $40. Some unions set a single rate, but most allow the local union some flexibility in making the final determination. Typically, dues are collected via a dues check off system wherein the member agrees to a payroll deduction of union dues, which are collected by the employer and paid them directly to the union.

The local unions forward a portion of the monthly dues for each member to the national union. The national unions use these funds for various purposes beneficial to the membership. Although the largest percentage of funds goes to the general fund, which covers administrative and operational costs and salary expenses, allocations are also made to accounts, such as a strike fund, a convention fund, union publications, edu- cational activities, and a retirement fund.68

The use of union dues for political purposes has been a combative political issue for many years. Unions spend on average only 4.27 percent of the dues income for political purposes. Advocates (which include the National Right-to-Work committee, the Heritage Foundation, and the Christian Coalition) for worker paycheck protection support state and federal legislation claim they which would give nonunion bargaining unit employees, who are required to pay dues under a union-security arrangement, the right to opt-out to the union using of any portion of their payments for political purposes. Those who opt-out may then apply for a rebate of the portion of their dues used by the union for political purposes. A more extensive approach is the opt-in provision which would require nonunion employee dues-payers to explicitly grant the union per- mission to use a portion of their dues for political purposes.69 Recent court decisions have caused several unions, such as the Machinists; Auto Workers; Communications Workers; and American Federation of State, County, and Municipal Employees, to adopt dues rebate plans. These plans allow a rebate of a portion of member dues spent on political activities if the member requests it in advance (usually annually).

The U.S. Supreme Court has ruled that if a union uses dues and fees of protesting employees for non-collective bargaining activities and purposes, it breaches its fidu- ciary duty of fair representation.70 Unions can continue to solicit volunteer contribu- tions through such units as the AFL-CIO Committee on Political Education (COPE), the UAW s Community Action Program (CAP), and the United Mine Workers (UMW s) Coal Miners Political Committee (COMPAC), but collections may be more difficult.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 165

Finances of unions are considerably decentralized across union levels, with a few local unions having more wealth and income than their national unions. Likewise, union finances are highly concentrated across unions, with a few unions dominating the scene. For example, the National Education Association receives $385 million in annual revenue, and the UAW has assets of nearly $1.0 billion.71

Unions financial performance has improved considerably in the last few years. In fact, some unions have a collective capacity to fund nearly a full year of services without the infusion of any new income. Organized labor s decline in bargaining power and strike activity over the past two decades has not been due to any diminished financial capacity of unions to withstand strikes.72

Mergers of National Unions Mergers of national unions have occurred at a quickening pace in recent years. These have been spurred by rising operating costs. Several additional reasons have prompted such mergers, including the following: (1) the AFL-CIO merger set an example for its member unions, (2) the need for stronger bargaining positions, (3) a desire to avoid expensive jurisdictional disputes between unions, (4) the decline for some U.S. industries, (5) economics of scale, (6) avoidance of external controls, and (7) the need for self- preservation. Obviously, some mergers reflect a combination of these motivations.

Union mergers are either amalgamations or absorptions. Amalgamations occur when two or more unions of roughly similar size join together to form a new union. Absorptions occur when a small union is absorbed by a larger one. The smaller one loses its separate identity, and the size and structure of the larger one is minimally affected.73 Since there were 146 national union mergers from 1955 to 2007, about three per year. Amalgamations accounted for about 15 percent and, since 2000, there have only been two. One of these amalgamations, the merger of UNITE (primarily clothing and textiles workers) and HERE (primarily hotel and restaurant workers) in 2004 lasted only five years. (The UNITE group split and formed Workers United; in 2010 Workers United affiliated with the Service Employees International Union). Amalgamation mer- gers are difficult because they join together different traditions, organizational structures, and administrative practices of two separate unions in creating a new union. Amalgama- tions essentially disband the existing unions and create a new one. Merger committees must agree on new governing structures and administrative practices, such as election of officers, changes in the constitutions, retention, layoffs, and retirement of staff mem- bers; officer positions and authority of these officers; location of the union headquarters; and continuation and/or elimination of separate union newspapers.

Absorptions are easier because the smaller unions merge into the larger union and the smaller union becomes part of the larger one. The smaller unions may retain a divi- sion or section within the larger union and may even retain their own officers, locals, bargaining councils, and most of their constitutions. As a result, the absorption may entail little more than printing new union stationery.

Often overlooked in union mergers are the behavioral dimensions. These dimen- sions include how the union merger affects the behavior of union members and how the union members are affected by the merger. Members tend to evaluate the merger in practical terms, that is, types and quality of service to be received, job protections they receive, effect on member dues, level of democracy, opportunities to participate in union governance, and so on. Successful mergers require issuing union bulletins and having special meetings to explain the benefits of the mergers. If the merger occurs without member support, the merger will fail. The leaders must convince enough members that the membership will benefit from the merger. If the members become disaffected and

166 PART 1 Recognizing Rights and Responsibilities of Unions and Management

withdraw their participation, the merged union will possibly disintegrate like the UNITE HERE merger in 2009.74

Five unions have dominated the merging activity. These unions are the Service Employees International Union (SEIU), the United Food and Commercial Workers Union (UFCW), the Communication Workers of America (CWA), the International Brotherhood of Teamsters (IBT), and the United Steelworkers of America (USWA). These five unions have over 5 million members. While some of their growth has occurred through organizing new members, most growth has occurred through mergers. While these unions are multi- jurisdictional, they have their roots in certain industries: SEIU in hospitals and nursing facil- ities; IBT in trucking; UFCW in grocery stores and meat products; USWA in aluminum, steel, petroleum refining, paper, and tires; and CWA in telecommunications.75

Intermediate Organizational Units Structurally, between national headquarters and the locals lie the intermediate organiza- tional units regional or district offices, trade conferences, conference boards, and joint councils. These units usually operate under the guidance of their various national unions, but their activities are important to the union members and employers in their areas.

The regional, or district, offices house the regional or district officers, the staff, and the international union representatives for the geographical area served. For example, Michigan has a number of Auto Workers district offices; the Steelworkers have district offices in Pittsburgh, Birmingham, and elsewhere. The offices are established to help national unions better serve their respective locals.

Trade conferences are set up within national unions to represent a variety of indus- trial groups. For example, the Teamsters have established 11 trade conferences for groups such as freight, laundry, airlines, and moving and storage. These groups meet to discuss various mutual problems and topics of interest.

Conference boards are organized within national unions in accordance with the company affiliation to discuss issues that pertain to the union and the particular com- pany. For instance, each of the national unions within the steel, auto, rubber, and electric industries has established conference boards that meet to discuss negotiations and related problems. Delegates are chosen from the local unions to represent the interests of their constituents at meetings, to plan the next negotiations, and then to relay these plans to the local union members. For example, when the United Rubber Workers were absorbed into the United Steel Workers of America in the mid-1990s, the USWA set up a Rubber & Plastics Industry Conference group led by former URW national officers; subgroups within that conference focused on each of the major tire manufacturers.

Joint councils involve groupings of local unions that have common goals, employ- ers, and interests. Examples are the building trades councils established in most metro- politan areas in the United States. Joint councils negotiate with the association of construction employers in the area, coordinate their activities, and assist in resolving jurisdictional disputes between unions.

Independent Unions There are 41 independent unions (not affiliated with the AFL-CIO or Change to Win). These unions represent mostly service and health care providers. The largest union in the United States, the National Education Association (about 3.0 million members), is among these independent unions. Other independent unions include the American Nurses Association, American Physicians and Dentists, Life Insurance Agents, National Labor Relations Board Union, Professional Engineering Association, and International

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 167

Union, Security, Police, and Fire Professionals.76 There are also approximately 1,500 independent local unions that have nearly half a million members. Independent local unions are found in a few large organizations such as DuPont, Texaco, Exxon, AT&T, and Procter & Gamble; in several medium-sized firms such as Dow-Jones, Weirton Steel, and Zenith; and in numerous small companies in a variety of industries.77

Employee Associations Unions are supporting new employee associations that provide a wide range of services to their members. In Cleveland, The Association for Working Women, an affiliate of the Service Employees International Union, provides a toll-free hotline, offers courses on sexual harassment and carpal tunnel syndrome injuries, and lobbies on workplace issues. In New York, AIM (Associate ILGWU Members), an affiliate of the International Ladies Garment Workers Union (now part of the SEIU), provides English classes for its mem- bers; graduate-equivalency diploma classes; skills training; and legal assistance with immigration, minimum wage, safety and health, sexual harassment, disability, and pen- sions laws. In Montana, the Montana Family Union is sponsored by the AFL-CIO and is made up of government employees, small-business owners, and even priests. It offers its members major medical benefits at less than 50 percent of their individual rates. Although critics refer to these employee associations as watered-down unions, they are serving important social functions, and their membership has grown nationally while total membership in unions has declined.78

Managerial and Professional Organizations Even though 43 percent of the total U.S. labor force is classified as managers, supervisors, or professional employees (Managers and supervisors are not eligible for coverage under the National Labor Relations Act), these groups are interested in having a greater voice at work. Sidney and Beatrice Webb recognized in their classic book Methods of Trade Union- ism, published in 1902, that there were three methods of unionism: (1) collective bargain- ing, (2) mutual aid and insurance, and (3) legal enactment. Many managers, supervisors, and professional employees have joined organizations to represent their work-related inter- ests, that is, for their mutual aid and insurance. There are 37 of these types of organiza- tions and many use union-like tactics, such as collective action, mutual aid, skill certification, and political activity, to achieve their goals. They provide group insurance and discounts and special rates for university courses, books, video tapes, and products; assist members in their career development; and engage in legal-enactment strategies. However, these organizations do not engage in collective bargaining.79

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) The AFL-CIO, while not including all U.S. labor unions, is composed of 55 national and international unions that have 60,000 local unions and about 10 million members. Mem- bers represent a diversity of occupations, such as actors, construction workers, barbers and hairdressers, steelworkers, bus drivers, doctors, nurses, athletes, railroad workers, telephone operators, newspaper reporters, sales clerks, garment workers, engineers, schoolteachers, and police. These unions affiliated with the AFL-CIO maintain day- to-day relationships with several thousand employers and administer about 150,000 labor agreements. Most (over 99 percent) of these agreements are negotiated without strikes or other forms of conflict and serve as the basis of employment conditions under which many work.

168 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Established in 1955 when the American Federation of Labor and the Congress of Industrial Organizations merged, the AFL-CIO recognized the principle that both craft and industrial unions are appropriate, equal, and necessary parts of U.S. organized labor. The federation accepts the principle of autonomy each affiliated union conducts its own affairs; has its own headquarters, offices, and staff; decides its own economic pol- icies; sets its own dues; carries out its own contract negotiations; and provides its own services to members.

No national union is required to affiliate with the AFL-CIO. About 40 unions remain outside the AFL-CIO. Member unions are free to withdraw at any time; however, their voluntary participation plays an essential role that advances the interest of every union. National unions continue their membership in the AFL-CIO because they believe that joining together of unions into a federation of unions serves purposes their own individual unions cannot serve as well, especially involving politics and lobbying.

Examples of AFL-CIO services include the following:

Representing for organized labor before Congress and other branches of government Speaking for U.S. labor in world affairs and keeping in direct contact with labor unions throughout the free world Coordinating activities such as community services, political education, lobbying, and voter registration with greater effectiveness Helping to coordinate efforts to organize unrepresented employees throughout the United States Conducting economic and legal research on important legislative topics.

Another vital service enhances the integrity and prestige of AFL-CIO unions they must operate under established ethical practice codes covering union democracy and financial integrity. The federation also assists in minimizing conflicts between national unions that cause work interruptions by mediating and resolving disputes, such as orga- nizing disputes and conflicts over work assignments.

Organizational Structure The AFL-CIO organizational structure, shown in Exhibit 4.12, illustrates the importance of the convention. Meeting every two years and at times of particular need, delegates decide on policies, programs, and direction for AFL-CIO activities. Each national or international union is authorized to send delegates to the convention. Each union s representation of delegates at the convention is determined by the number of dues- paying members. In addition, other affiliated organizations, such as state labor councils, are represented by one delegate each.

At the last AFL-CIO convention, delegates elected Richard Trumka to be president, Tefere Gebre to be executive vice president, and Elizabeth Shuler to be secretary- treasurer. Trumpka, a coal miner s son, went to work in the mines in 1968, received his bachelor of science in 1971 from Pennsylvania State University, and received his law degree from Villanova University in 1974. Gebre was born in Ethiopia and emigrated to the United States as a teenager. Gebre received his B.S. from University of California Poly Pomana and an MBA from the University of Southern California. While in college, he worked his first union job as a night shift loader at UPS. Shuler became the youngest secretary-treasurer ever and the first female secretary-treasurer. She received her bache- lor s degree in journalism from the University of Oregon. Shuler held numerous posi- tions within the International Brotherhood of Electrical Workers prior to being chosen as Trumka s running mate in the 2009 election.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 169

Between conventions, the governing body is the Executive Council, composed of the president, secretary-treasurer, and 55 vice presidents. The other members of the Execu- tive Council are likely to be current or previous presidents of international unions affili- ated with the AFL-CIO. The Executive Council meets at least three times a year and handles operational duties involving legislative matters, union corruption, charters of new international unions, and judicial appeals from member unions.

Between meetings of the Executive Council, the president, who is the chief executive officer, has authority to supervise the affairs of the federation and to direct its staff, and the secretary-treasurer handles all financial matters. To assist his administration, the president has appointed 11 programmatic departments on various subjects, which, with the assistance of the AFL-CIO staff, provide related services to member unions. The staff, located at headquarters in Washington, D.C., corresponds closely with these program- matic departments in order to better serve the member unions. (See Exhibit 4.12 for a listing of programmatic departments.) The General Board, composed of the Executive Council and one officer from each member union, is available to act on matters referred to it by the Executive Council.

Exhibit 4.12 Organization Chart of AFL-CIO

SOURCE: http://www.aflcio.org

170 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The AFL-CIO has established 51 state federations (plus one in Puerto Rico) to advance the statewide interests of labor through political, lobbying, and organizing activ- ities, which involve attempts to elect friends of labor, to have favorable legislation passed, and to organize unrepresented workers, respectively. Each local union of the AFL- CIO affiliated unions in a particular state may join the state organization and participate in and support its activities. In addition, 580 local central bodies have been formed by local unions of the national affiliates to deal with civic and community problems and other matters of local concern.

To accommodate and serve the interests and needs of various trade and industrial unions, the AFL-CIO has established seven trade and industrial departments. The Build- ing and Construction Trades Department represents the interests of craft unions, mostly members of the former AFL. Another department, the Union Label and Service Trades Department, promotes the purchase and sale of union-made goods and services. The remaining departments represent the interests of such union groups as the food and bev- erage trades, maritime employees, metal trades, transportation employees, and profes- sional employees. In addition, throughout the United States where there is sufficient interest and support, 976 local department councils have been organized.80

These local central bodies have become more active in recent years, particularly in the northeastern states. As an example, 60 percent of the councils in the northeast region have adopted the Union Cities program, which contains eight steps toward rebuilding the labor movement from the bottom up and helping to improve the lives of working families. These steps include mobilizing against anti-union employers, organizing grass- roots lobbying/political action committees, creating strategies to create jobs and improve economic growth, sponsoring economic education, persuading city and county officials to pass resolutions supporting worker rights, and increasing union membership.81

The AFL-CIO established a no-raiding clause for its affiliated unions in 1962 to keep one affiliated union from attempting to draw members from another or seeking to represent a group of employees at a work site where a union already exists. The AFL-CIO also set up an Internal Dispute Plan to adjudicate conflicts among its affiliated unions.82

The AFL-CIO s operations are financed through regular member dues, called per capita taxes, which are paid by affiliated unions on behalf of their members. Currently, the per capita tax is $0.75 month, or $9.00 per year, for each member. Thus, the AFL- CIO s operating budget is around $190 million, which covers nearly all regular operating expenses. A major portion of the budget goes to the salaries of the staff. The detailed financial report of the AFL-CIO is submitted to the delegates at each convention.

The AFL-CIO offers Internet access to 17 million union members, retirees, and asso- ciate members and offers computers at low cost. This new service is an extension of the Union Privilege Benefit Program (see Exhibit 4.13), which has been offered since the 1980s. The benefits include reduced attorney fees, lower-cost life and accident insurance, participation in a motor club, car repair discounts, travel club services, a Walt Disney discount, reduced prices for educational books and software, mortgage and real estate advice, and a dental program.

The AFL-CIO recently recognized the potential of maintaining contact with employ- ees who are not members of unions by establishing an associate membership program. Those eligible for associate membership includes those who voted for the union in elec- tions where the union did not win, employees in nonunion companies who would vote for the union if given a choice, and employees who are represented by the union but have not joined it.

The AFL-CIO has formed partnerships with worker centers of working people who do not have the legal right to collective bargaining. Some, like taxi drivers, have been

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 171

Exhibit 4.13 Union Plus Benefits from Union Privilege

Union Plus Benefits from Union Privilege Benefits for Life Union Plus benefits stand for quality and service, with prices working families can live with. Best of all, Union Plus programs are designed specifically for working families. Our benefits have added features that are especially helpful in cases of disability or layoffs.

Who can use these benefits? You don t have to join Union Plus or Union Privilege; as a member of an AFL-CIO union, you and your family are automatically eligible for our benefits. Most unions participate in most Union Plus benefits, but some international unions elect not to offer all the pro- grams. Click here to find out which Union Plus benefits your union participates in.

Our Secret? Union Power. Just as unions provide strength in the workplace, Union Privilege provides strength in the marketplace. We deliver the best benefits through the collective buying power of over 10 million AFL-CIO union members. And we do so without using union member dues.

Programs available outside the United States

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Money & Credit Credit Card Loans Mortgage & Real Estate Union-Made Checks Credit Educational Information Your Credit Score

Insurance Deals Accident Insurance Life Insurance Auto Insurance Pet Insurance

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Entertainment Discounts Theme Park Discounts Movie Ticket Discounts

Auto Advantages Care Rentals Auto Insurance Auto Buying Service Goodyear Tire & Service Discounts

Member Satisfaction & Advocacy To guarantee the quality of our benefits, we only work with industry-leading providers.

Our relationships don t stop after the Initial provider selection. We continuously update programs and monitor performance closely to ensure that they satisfy union members needs time and time again.

Our member advocates also use the collective strength of union consumers to ensure members get prompt, courteous service and high-quality benefits as well as help resolve any problems. With Union Plus programs, union members can rest assured their needs will be addressed and their voice will be heard.

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Computers & Tech Cingular Wireless Discount IBM Computer Discount Dell Computer Discount

Union-Made Auto Buying Cingular Wireless Discounts Goodyear Tire 7 Service Discounts Disney Hotel Savings Powell s unionized bookstore Union-Made Checks

Note: Visit www.unionplus.org for updated information.SOURCE: http://www.unionplus.com/benefits/.

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172 PART 1 Recognizing Rights and Responsibilities of Unions and Management

classified as independent contractors. Others include domestic workers and day laborers who are excluded from coverage by U.S. labor laws.

Other AFL-CIO activities are educational and informational, presenting the federation s stance on a variety of issues. For example, the AFL-CIO has a Web site that keeps members up to date on current events that pertain to them and presents various reports on problems and policies of organized labor. The AFL-CIO has its [email protected] to send out e-mail messages to interested persons. The AFL-CIO maintains the George Meany Center for Labor Studies, which offers short courses in union leader- ship development, and a speaker s bureau to provide labor speakers for high school and college classes. They also make educational films available to interested groups for a nominal fee.83

In 2003, the AFL-CIO launched the Working America program which reaches out to unrepresented workers and their families. Registration is free and members receive e- mail alerts on topics such as health care, social security, and wages, and they have access to the Union Privilege benefits. As of 2015, the AFL-CIO has enlisted three million members. Contacts are made with legislators and members engage in community- organizing activities. The AFL-CIO also offers the Union Summer program in which col- lege students or recent graduates spend nine weeks working on various workers rights campaigns.84

In the political arena, the AFL-CIO receives much attention. As a representative of organized labor, it serves as the focal point of political activities. Not only does it lobby aggressively for favorable legislation, but it publishes the voting records of each senator and representative at both federal and state levels. It attempts to influence appointments of Supreme Court judges, the Secretary of Labor, and NLRB members, who are important to organized labor. Its policy of reward your friends, punish your enemies has not changed much since Samuel Gompers s day. The AFL-CIO s COPE has a network in each state and in most large communities. COPE seeks voluntary contributions to provide funds for its activities, which include voter registration, get-out-the-vote campaigns, preparation of leaflets and posters, and research on

behalf of its candidates. Although the Federal Election Campaign Act of 1971, amended in 1974, has

restricted financial contributions to federal candidates, the AFL-CIO, COPE, and state and local bodies can still amass amazing support to help their candidates for office, espe- cially when the candidate is clearly the choice of organized labor. Organized labor and corporations have become major players in the funding of political campaigns at the fed- eral level, primarily through political action committees.

However, business groups outspend organized labor by 10 to 1. Although organized labor has played a major role in U.S. politics, it remains independent of a national polit- ical party. Over the years it has been more closely aligned with the Democratic Party, both philosophically and politically. It has become perhaps the single most important political force that has supported government programs to help the socially and econom- ically disadvantaged. It has supported consumer and environmental protection and safety and health legislation that has benefited all employees, union and nonunion alike.

Organized labor has accumulated much power and influence through its own estab- lished network and has also been instrumental in organizing other politically active groups with socially oriented objectives, such as minorities and senior citizens. However, organized labor s overall political strength and effectiveness should not be exaggerated. In some states and municipalities, union membership is so negligible that its influence is inconsequential. In areas where union membership is high, its influence is significant, and political candidates must actively solicit its support.85 Obviously, the AFL-CIO does

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 173

not control the membership s votes, and members frequently have multiple reasons for voting for a particular candidates.

Use of Information Technology by Unions Every international union in the United States uses the Internet and other information technologies in the major areas of union activity:

1. Internal communications between union officers, staff, and members, particularly when they are geographically dispersed. Within every union, there are international union representatives who are employed throughout the country and represent members in organizing and representational activities. E-mail communication serves as an immediate means of communication throughout the organization. Other unions provide an e-mail alert system that gives weekly updates to union members and their representatives.

2. External communications, such as to inform the public about union issues poten- tially affecting the public, workers, and unions. The AFL-CIO Web site (http:// www.aflcio.org/) gives members and nonmembers valuable information on matters dealing with worker rights, pensions, and benefits during layoffs; provides useful links to other resources; and provides a system that allows interested persons to receive e-mail updates about labor events from across the United States and the world. The AFL-CIO database over 600,000 e-mail addresses in and it is anticipated to reach several million.

3. Facilitation of bargaining activities, such as in negotiations, and informing members about employer practices. Members of the CWA were informed of the AT&T s pur- chase of BellSouth via CWA s home page. Members receive daily reports from nego- tiating teams.

4. Contract administration, such as communicating grievances and tracking decisions of arbitrators. Unions are better able to communicate with members in preparation for grievance meetings and arbitration hearings via e-mail communication. The American Postal Workers Union has a database of thousands of arbitrator decisions readily accessible to its arbitration advocates.

5. Union organizing, such as making contact with potential union members and pro- viding a means for interested employees to communicate with the union. The United Food and Commercial Workers (UFCW) is currently using the Internet in its attempt to organize employees at Wal-Mart. Its Web site (http://www.ufcw.com) keeps up-to-date information on the UFCW campaign activities.

6. Political action, such as informing potential voters about union views and those held by organized labor s friends and adversaries. Nearly every union Web site has politi- cal messages for the reader.

Union leaders see the Web as an important avenue for modernizing unionism and for bridging the gap between an increasingly heterogeneous workforce and collective activity and solidarity.86 Across the globe, unions are using information technology (IT) to expand their interactive communications. For example, LabourStart is a new social network. Unionbook, LaborNet, and LaborTech.net have sponsored annual conferences since 1990 on how to use digital communication for organized labor s advancement. The AFL-CIO uses the Web to build to mobilize the grassroots in the U.S. elections.87

The use of e-mail and the Internet has caused some concerns among organized labor. Among the concerns are the erosion of face-to-face contact, worry about loud- mouths and troublemakers monopolizing the communications, the generation gap between older precomputer leaders and the younger computer techies, loss of

174 PART 1 Recognizing Rights and Responsibilities of Unions and Management

confidentiality by computer hackers and snoops, and worry that e-mail messages will overload the system and consume an extraordinary amount of time that could be used more effectively elsewhere.88

One of organized labor s greatest concerns is use of company intranets (computerized e-mail and Web site systems within a company). These add new communication possibili- ties to employers union-substitution strategies by linking workers to their supervisors and human resource specialists who are able to quickly disseminate company information and focus attention on resolving employee grievances. Employers use of intranet is already widespread and has among its explicit objectives improved communication between work- ers and human resource departments and closer identification with the company.

One research study reports that over three-fourths of the union population has access to a computer at home. However, a third of this group did not use the Internet for e-mail or instant messaging, and nearly half did not use the Internet to receive news, weather, or sports information. Just 40 percent of the union members accessed the Inter- net at least once a day.

These researchers made several recommendations. First, unions should invest in promot- ing accessibility, educating rank-and-file about the potential benefits of IT, and training mem- bers on how to use relevant applications. Unions may also exercise their bargaining power to negotiate contracts which provide computer-based training for members. Unions may also negotiate discounted access rates through their Union Privilege program to spur members to adopt higher speed connections. Unions could identify and mobilize their high-intensity IT user members to develop networks to improve communications within and across unions, build connections with other progressive organizations, and wage grassroots campaigns in organizing and politics. Still, even with the use of IT, there can never be a substitute for the most traditional means of communication person-to-person, face-to-face contacts.89

Union Corruption and the Landrum Griffin Act

Like some business executives, a few union officials have encountered problems with law enforcement officials. Unethical and illegal practices, including corruption, racketeering, and embezzlement, have been discovered in some local and national unions. Union abuses of power were exposed by the McClellan hearings of the late 1950s. Large amounts from Teamsters pension funds had been misused. In other cases, union officials have been indicted for conspiracy to bribe a U.S. senator and for embezzlement. Indict- ments have been rendered where ghost workers were maintained on payrolls even though no services were performed. Although union corruption cannot be condoned, its magnitude is diminished when one considers the billions of dollars lost to share- holders and retirees from the corporate corruption scandals perpetuated by Enron, HealthSouth, Tyco International, WorldCom, and Bernie Madoff.

In January 2015, the federal government and the Teamsters agreed to phase out over the next five years the court s supervision of its activities. The new agreement would leave in place the election reforms contained in the 1989 consent decree and the ban on officials associating with organized crime. The new agreement struck a bal- ance that recognized both the significant progress made by the Teamsters in ridding itself of corrupt influence and providing avenue for the union to demonstrate these gains through its own independent disciplinary and electoral system. These reforms replaced national officer elections by convention delegates with secret-ballot elections by all Teamster members. It also continues a ban on officials associating with orga- nized crime figures. The new agreement struck a balance that recognized both rid- ding itself of corruption and providing an avenue for the union to demonstrate gains.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 175

In five years, the federal government will have no role in Teamsters affairs.90 Team- sters president James P. Hoffa is quoted as saying: After decades of hard work and millions of dollars spent we can finally say that corrupt elements have been driven from the Teamsters and that the government oversight can come to an end. 91

An accurate assessment of union corruption is reflected by the following conclusion:

Union corruption stories are front-page news. They create images that tend to linger and are reinforced each time new allegations are raised. Certainly, Jimmy Hoffa s last- ing notoriety is evidence of this phenomenon. In fact, the level of corruption among unions and union leaders is negligible. The Labor-Management Reporting and Disclo- sure Act insures this. Very few institutions in American society are as closely regu- lated or as open to scrutiny as are American unions . The evidence is clear that all but a minute fraction of American union leaders are honest and dedicated in the per- formance of their duties. Supporting this conclusion is an investigation by a former Attorney General that found serious problems of corruption in less than one-half of one percent of all local unions.92

The AFL-CIO established the Ethical Practices Committee in its efforts to control corrupt practices and racketeering of its member unions, and its executive council was given the authority to suspend any affiliated union with corrupt practices. In 1959, the U.S. Congress showed its concern with union abuse and the potential misuse of union power through passage of the Landrum Griffin Act (the Labor-Management Reporting and Disclosure Act), which has several provisions governing union operations and gov- ernment. For example, it governs the following:

Disclosure by union officers and employees (and employers and their agents) about financial dealings, trusteeships, and any private arrangements made with any employers. Regulation of union trusteeships, including rules for their establishment and main- tenance, and the protection of the rights of members of unions under trusteeship. Fiduciary responsibilities of union officers and representatives. It also disqualifies criminals and former communists from holding union offices, and it requires certain union officers to be bonded to ensure the faithful discharge of their duties and responsibilities. Rights to participate in union elections and governance, such as the right to nomi- nate candidates in elections, vote in elections, to attend membership meetings, par- ticipate in the deliberations, and vote on union business, such as setting dues and assessments.

The law was intended to promote union democracy and financial integrity. Success in the administration of the law requires initiative on the part of union members and availability of necessary information to union members.

The Landrum Griffin Act requires unions to report and file financial information (LM-2 Reports) with the Department of Labor and to make these reports available to members. The act s intent was to allow rank-and-file union members to hold union offi- cials accountable by letting members know how their union leaders were spending their dues. For many years after the passage of the act, these LM-2 reports were not readily accessible to union members and the general public. In the summer of 2002, the U.S. Department of Labor began addressing this problem about union financial reporting and began making these LM-2 reports available online via its Web site (http://www.dol .gov). Still, there has been criticism that even when accurately reported information fully

176 PART 1 Recognizing Rights and Responsibilities of Unions and Management

complies with the law, it is hard to obtain, too complicated to understand, and difficult for members to use. 93

In 1984, the Comprehensive Crime Control Act, containing the Labor Racketeering Amendments, was passed. These amendments, backed by the AFL-CIO, closed the loop- holes in the existing laws against labor malfeasance. Convicted labor officials cannot hold any union position for up to 13 years; the previous law allowed for elongated appeals during which the officials might remain in office. Any convicted management official must be transferred outside the labor relations function and cannot serve as a consultant or advisor in labor relations.

Union Security

A union security clause in the labor agreement makes it easier for the union to enroll and retain members. Such clauses must be bargained for just like bargaining over wages, hours, seniority, and others. A reasonable level of union security is necessary for a labor organiza- tion to survive and effectively represent the interests of bargaining unit members. After the union wins representation rights under a National Labor Relations Board (NLRB) union certification election, the union is granted an irrebuttable presumption of majority status sup- port for one year. This provides the certified union a reasonable time in which to negotiate a first labor agreement with the employer without being concerned that it might be replaced by a rival union or removed by a decertification election. Any additional form of union secu- rity (e.g., union shop or dues checkoff clause) must be obtained by a union through negotia- tions with the employer. This means that the employer must agree to include these forms of union security in the labor agreement. For example, the employer may gain a benefit, such as less cleanup time, fewer vacation days, in exchange for a union security clause.

Union security provisions strengthen the union s financial resources by increasing the number of dues-paying members. Union leaders believe they are morally justified in asking all bargaining unit members to help pay for services provided by the union because they are legally obligated to represent all bargaining unit employees and all bargaining unit employees receive any benefits gained by the union. Union security provisions can offer benefits to the employer and the union. Many might contend that employers prefer dealing with a weak rather than a strong union. A weak union can aid an employer s effort to terminate a union management relationship, but it can frustrate an employer who earnestly tries to resolve working condition disputes through an established union management relationship. It is commonly the union, not the employer, who sells the collective bargaining agreement to the membership. A union has difficulty in accomplishing this objective when there are non- union member factions within the bargaining unit that seek to undermine support for nego- tiated policies. The union leaders are often asked by management to deal with employees with problems, such as high absenteeism and low production.

Union officials contend that union security provisions also offer other advantages to the employer, such as less time spent recruiting new members and collecting dues of existing members during the workday. However, management officials counter that this time savings might not result in more production because union officials might use the extra time to police the labor agreement and formulate additional grievances. Unions also maintain that morale can be improved if all employees are union members. Tensions arise when some employees do not pay for the services shared by all (the so- called free rider issue). However, a counterargument could be made that tensions are not reduced by union security, merely redirected. The possible anger of union members working with nonunion employees is replaced by the anger of nonunion bargaining unit members who feel forced to pay for unwanted union services.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 177

Union Security Provisions In view of their potential advantages and disadvantages, union security provisions have taken one or more of the following forms.

Closed Shop For an employee to obtain a job in a closed shop, the employee must first become a member of a union prior to or upon employment. The closed shop was made unlawful by the LMRA in 1947.

Union Shop The most common form of union security clause, the union shop clause, is found in about 64 percent of private-sector labor agreements.94 Under a union shop contract pro- vision, the employee does not have to be a union member to be hired by the company. However, after being hired, the employee must become a union member within a period of not less than 30 days (seven days in the construction industry) to remain employed by the company. This period is considered a probationary period.

An example of a union shop clause is found in Exhibit 4.14. Can a union spend a portion of its members dues for political purposes? Does it

matter if there is a union shop and everyone is required to join the union? What if a member in a union shop doesn t want his or her money spent on political causes or dis- agrees with the positions that the union leaders take on the issues? The U.S. Supreme Court addressed these questions in Communications Workers v. Beck (487 U.S. 735 [1988]). The court held that a union shop clause requires a bargaining unit member to become only a financial core union member. This term refers to an individual who meets the minimum (core) union membership requirement of paying regular union dues and initiation fees. A union may impose additional lawful conditions for obtaining full union membership status (e.g., individual must be willing to comply with the union s constitution and bylaws). Under a union shop provision, an employer does not always have to honor a union request to discharge an employee who is not a union member if (1) the employer believes union membership was not offered to the employee on the same terms as other employees or (2) membership was denied for any reason other than the failure to tender dues.95

The Beck decision created a group of so-called Beck rights for bargaining unit employees. These Beck rights cover (1) notices to employees, (2) accounting of funds by

Exhibit 4.14 An Example of a Union Shop Clause

All present employees who are members of the union of the effective date of the execution of this Agreement shall remain members of the Union in good standing as a condition of employment. All present employees who are not members of the Local Union and all employees who are hired hereafter shall become and remain members in good standing of the Union as a condition of employment within thirty (30) calendar days following the beginning of their employment, or within sixty (60) calendar days following the effective date of this Agreement. An employee who has failed to acquire, or thereafter maintain, membership in the Union, as herein provided, shall be terminated seventy-two (72) hours after the Employer has received written notice from the Principal Officer of the Local Union certifying that member has been and is continuing to be offered to such employees on the same basis as all other members, and further that the employee has had notice and an opportunity to make all dues or initiation fee payments.

178 PART 1 Recognizing Rights and Responsibilities of Unions and Management

unions, and (3) procedure for implementation. Unions are required to notify current members annually of their Beck rights. For example, this notice requirement may be met with a notice in the December edition of the union s monthly magazine. Newly hired employees receive notice at the time the union seeks to have the employees pay dues. An employee may choose between being a nonmember agency fee payer (a financial core employee) or a union member in good standing who will become a full union member. The union is required to maintain an accounting system (subject to audit) that determines the percentage of employees dues used for collective bargaining purposes (known as charge- able fees) and those used for other activities not related to collective bargaining (known as nonchargeable fees). The union notifies employees that those who wish to exercise their Beck rights must do so annually, and the union then provides a window period (a certain time period each year) for application for a refund of a portion of dues (nonchargeable fees) for employees who exercise their Beck rights. In other words, employees who exercise their Beck rights must file once per year during a specific period designated by the union.96

In addition to appointments to heads of federal agencies, such as the National Labor Relations Board and other federal agencies, presidents are authorized to issue executive orders to cover those doing business with the federal government. On February 17, 2001, then-President George W. Bush issued Executive Order 13201 entitled Notification of Employee Rights Concerning Payment of Union Dues or Fees.

The Executive Order require federal government contractors to post notices to employees informing them of their Beck rights. The Executive Order 13201 stated:

If you do not want to pay the portion of dues or fees used to support activities not related to collective bargaining, contract administration, or grievance adjustment, you are entitled to an appropriate reduction in your payment. If you believe that you have been required to pay dues or fees used in part to support activities not related to collective bargaining, contract administration, or grievance adjustment, you may be entitled to a refund and to an appropriate reduction in future payment.

On January 2, 2002, the U.S. District Court for the District of Columbia held that the new rules would regulate a core labor management area that is already regulated by the National Labor Relations Act and would impose a duty on employers that the National Labor Relations Act does not impose. Therefore, the Court ruled that the new rules were preempted by the National Labor Relations Act and were unenforceable. This ruling was appealed and the Court of Appeals overturned the lower court s decision. Subsequently, the Labor Department began the regulatory process to implement Executive Order 13201.

On January 30, 2009, President Obama issued Executive Order 13496, which required federal government contractors and subcontractors to post a notice in the work- places informing employees of their rights under Federal labor laws (see Exhibit 4.15). Executive Order 13496 also precludes federal contractors from being reimbursed for expenses incurred to influence employees decisions to join or form a union or otherwise engage in protected collective bargaining. Nonreimbursable expenses include preparing and distributing printed materials, hiring legal and labor consultants, and holding meet- ings with employees (including paying wages for attending the meetings). Reimbursable expenses include expenses for maintaining good relations with employees and costs related to labor-management committee meetings and certain employee publications.

Agency Shop More commonly found in public-sector labor agreements, an agency shop clause does not require an employee to join the union but does require the employee to pay the union a sum equal to membership dues to remain employed. This provision assumes

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 179

that employees should not be forced to join a union but nonetheless should help defray the bargaining and grievance processing costs. The U.S. Supreme Court has determined that the minimum legal requirements for union membership imposed by a union or agency shop clause are essentially the same.97

Before seeking to impose an agency shop provision on a bargaining unit member, the union must inform the employee of his or her right to become a financial core rather than full union member.98 Under the agency shop, the union officers are not limited in the ways bargaining unit employee s dues are spent unless the employee exercises his or her Beck rights and becomes a financial core member. Then, the union may not charge a financial core member for the cost of union expenditures which are not related to collective bargaining, contract administration, or grievance resolution activities.99

Exhibit 4.15 Executive Order 13496: Notification of Employee Rights under Federal Labor Laws

Federal contractors and subcontractors are required to inform employees of their rights under the National Labor Relations Act (NLRA), the primary law governing rela- tions between unions and employers in the private sector. See 29 CFR Part 471. The notice, prescribed in the Department of Labor s regulations, informs employees of Federal contractors and subcontractors of their rights under the NLRA to organize and bargain collectively with their employers and to engage in other protected con- certed activity. Additionally, the notice provides examples of illegal conduct by employers and unions, and it provides contact information to the National Labor Rela- tions Board (http://www.nlrb.gov), the agency responsible for enforcing the NLRA. Federal contractors and subcontractors are required to post the prescribed employee notice conspicuously in plants and offices where employees covered by the NLRA perform contract-related activity, including all places where notices to employees are customarily posted both physically and electronically.

Federal Government contracting departments and agencies must include provi- sions requiring contractors to post the prescribed notice in every Government con- tract, except collective bargaining agreements entered into by a Federal agency, contracts for purchases under the Simplified Acquisition Threshold, and in those cases where the Secretary exempts a contracting department or agency pursuant to the Executive Order. Government contractors must also include provisions requiring posting of the prescribed notice in all subcontracts.

Enforcement responsibilities for the notice requirements are shared by two Department of Labor agencies. The Office of Federal Contract Compliance Programs (OFCCP) is responsible for investigation of complaints, compliance evaluations, and conciliation, and that agency will refer violations to the Office of Labor-Management Standards (OLMS) for enforcement. The sanctions, penalties, and remedies for non-compliance with the notice requirements include the suspen- sion or cancellation of the contract and the debarring of Federal contractors from future Federal contracts.

The Department of Labor s regulations implement Executive Order (E.O.) 13496 signed by President Barack Obama on January 30, 2009 (74 FR 6107, February 4, 2009). E.O. 13496 advances the Administration s goal of promoting economy and efficiency of Federal government procurement by ensuring that workers employed in the private sector and engaged in activity related to the performance of Federal gov- ernment contracts are informed of their rights to form, join, or assist a union and bar- gain collectively with their employer. Knowledge of such basic statutory rights promotes stable labor-management relations, thus reducing costs to the Federal government.

SOURCE: http://www.dol.gov/olms/regs/compliance/EO13496.htm

180 PART 1 Recognizing Rights and Responsibilities of Unions and Management

A union must notify all financial core members annually of the percentage of union dues assessments spent on nonchargeable activities, as well as the reasonable procedure by which the financial core member can object to such expenditures. If the financial core member objects, the union must reduce the amount of the financial core member s dues obligation by the percentage amount spent on nonchargeable activities. A financial core member who disagrees with the union s calculation of chargeable and nonchargeable expenditures may either appeal the dispute to final and binding arbitra- tion or file an unfair labor practice charge with the NLRB. Some examples of charge- able union activities are the costs of conducting contract negotiations, investigating and resolving grievances, conducting union business meetings, union publications such as newsletters intended to inform the union s membership about contract issues or griev- ance disputes, litigation costs incurred in the course of representational activities, social events or member benefits available to all bargaining unit members, and attendance at national or state union conventions. The NLRB recently ruled that the cost associated with union organizing is a chargeable expense as long as the employees being orga- nized work for an employer in the same competitive markets as bargaining unit mem- bers already represented by the union.100 Examples of nonchargeable union activities are the cost of legislative lobbying, union benefits not available to financial core mem- bers, and charitable contributions such as a donation to the local United Way campaign.

The U.S. Supreme Court in another decision also applied Beck guidelines to similar expenses paid by public-sector employees union dues.101 The Court stated that public employees did not have to pay the portion of union dues that paid for any union activi- ties that were not oriented toward the ratification or implementation of the dissenters collective bargaining agreement. This decision was not clear cut, however, as it indicated, for example, that dues payments can properly go toward a teacher union s strike prepa- ration activities even if a strike is illegal under state law. In essence, the Court agreed with the public-sector union that a strike threat represented a reasonable, albeit illegal, bargaining tactic in pursuit of legitimate bargaining unit objectives.

Contingency Union Shop Some labor agreements in right-to-work states (covered in Exhibit 4.16) have a contin- gency union shop provision stating that the union shop provision would automatically go into effect if the state s right-to-work law is eliminated. Also, some master labor agreements (covering multiple plants in several states) have quasi-union shops. These agreements provide for union shops in plants located in states that allow them, but exempt plants in states that prohibit union shop clauses. If the right-to-work law is elim- inated, the union shop clause will already be in the labor agreement.

Union Hiring Hall According to a union hiring hall provision, employers hire employees referred by the union if the union can supply a sufficient number of qualified applicants. This provi- sion is found in about 23 percent of all labor agreements but is much more common in certain industries such as construction (90 percent) and maritime (88 percent).102

Unions are required to operate hiring halls in a nondiscriminatory manner, making them equally available to union members and nonunion employees. In reality, most nonunion individuals do not choose to seek employment through union-operated hir- ing halls. A hiring hall provision helps to strengthen union security by encouraging current union members to associate their union more closely with the provision of job opportunities.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 181

Preferential Treatment Clause A negotiated labor agreement provision that indicates current employees who may be union members will be given employment preference over nonemployees when a new facility is opened is called a preferential treatment clause. This arrangement was negoti- ated between the United Auto Workers and General Motors for the Saturn manufactur- ing plant located in Spring Hill, Tennessee, and was upheld by the NLRB. Such an arrangement permitted General Motors to take advantage of the skilled labor pool repre- sented by employees already on the payroll, some of whom were laid off for lack of work at the time the new plant was seeking to fill employment positions.

Dues Checkoff A provision commonly used in conjunction with one of the previously cited union security provisions, a dues checkoff makes the collection of union dues more convenient for both the union and union members. It is not a union security clause in the strict sense of the word because it does not guarantee that some or all employees will become union mem- bers. However, a dues checkoff clause in the labor agreement allows a union member to have dues automatically taken out of his or her paycheck (similar to any other payroll deduction) and transferred to the union. In addition to the dues checkoff clause agreed to by the employer and union in the labor agreement, each individual union member must sign a separate document authorizing the deduction to be made before any union dues can be automatically deducted from the employee s paycheck. This provision is important to the union because it assures the union of an uninterrupted flow of income. Without a systematic dues deduction, union officers would have to spend a great deal of time contacting recalcitrant members who kept delaying their dues payments. Why would an employer agree to a dues checkoff clause? There are several reasons. In many cases, the employer automatically agrees to this provision agreement contains it. If the union also secures a union shop clause, then a member may be fined for not paying dues. Employers do not want to lose good employees; a company may agree to deduct union dues automat- ically to avoid having to fire a good worker for such a reason. The employer may charge a reasonable administrative fee to the union for the cost of dues collection and other paper- work associated with administering this contract provision. In negotiations, astute manage- ment officials usually bargain for something in return for this provision, such as flexibility in making work assignments, subcontracting, or writing job descriptions.

Right-to-Work Laws: Controversy and Effects Employers, some employees, and the courts have long been concerned with union secu- rity provisions.103 Efforts to have Congress impose a national ban on union security agreements as part of the LMRA (Taft-Hartley Act) in 1947 were unsuccessful. Congress believed that providing a reasonable opportunity to achieve union security aided in the effective representation of employees interests in collective bargaining between their union representative and the employer. As a political compromise, Congress did enact Section 14(b) of the LMRA, which states:

Nothing in this Act shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employ- ment in any State or Territory in which such execution of application is prohibited by State or Territorial law.

This section is unique to the United States; there is none similar to it in any other developed country in the world. Under this provision, a state may initiate legislation

182 PART 1 Recognizing Rights and Responsibilities of Unions and Management

prohibiting union membership as a condition of employment (Exhibit 4.16). Presently there are 25 states that have passed legislation (so-called right to work laws) that prohi- bits union security clauses in collective bargaining agreements.104

As noted in Exhibit 4.16, workers in the 19 of the 26 states that allow the parties to negotiate union shop agreements have average weekly pay greater than the U.S. average; 10 states which do not allow the parties to negotiate union shop agreements, have aver- age weekly pay above the U.S. ($904) weekly average.

In 2001, Oklahoma became the 22nd right-to-work state. During the political campaign, proponents of the change argued that Oklahoma would become more com- petitively positioned to create jobs if the state adopted the labor policies of neighboring states and argued for liberty, free choice, and individual initiative. Unions promoted the

Exhibit 4.16 Private Sector Average Weekly Pay by State and Right-to-Work Status, 2014

Right-to-Work States Average Weekly Pay Non-Right-to-Work States Average Weekly Pay

Alabama $881 Alaska $1,063

Arizona $926 California $1,209

Arkansas $807 Colorado $1,066

Florida $911 Connecticut $1,278

Georgia $958 Delaware $1,048

Idaho $782 District of Columbia $1,696

Indiana 846 Hawaii $908

Iowa $870 Illinois $1,089

Kansas $855 Kentucky $836

Louisiana $923 Maine $826

Michigan 984 Maryland $1,113

Mississippi $747 Massachusetts $1,315

Nebraska $837 Minnesota $1,024

Nevada $899 Missouri $891

North Carolina $890 Montana $794

North Dakota $1,050 New Hampshire $1,081

Oklahoma $876 New Jersey $1,211

South Carolina $817 New Mexico $850

South Dakota $792 New York $1,321

Tennessee $927 Ohio $922

Texas $1,070 Oregon $928

Utah $872 Pennsylvania $1,013

Virginia $1,057 Rhode Island $1,003

Wisconsin 894 Vermont $882

Wyoming $952 Washington $1,082

West Virginia $868

US Average Weekly Pay: $904

SOURCE: http://www.bls.gov/cew/ (U.S. Bureau of Labor Statistics). June 17, 2015.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 183

principle of majority rule as essential to workplace democracy and urged allowing parties to negotiate the union security issue without intervention from the state. Unions also claimed that the other Sunbelt states offered lower wages, tax relief, and other subsidies in order to attract jobs.105

Unfortunately, one study found that Oklahoma residents were uninformed or misin- formed about their rights under the law. Similar results had been found in studies of residents of Virginia and Idaho.106 Then, again, after the Montana legislature considered right-to-work legislation, a study of Montana residents revealed that a large percentage of the residents were uninformed or misinformed about provisions of their labor laws.107

With Republicans having the largest number of state lawmakers since 1920, empha- sis will be placed on passing right-to-work laws which allows workers to opt out of joining unions and paying dues, even though the union is required by law to represent them. In the past three years, three states, Michigan in 2012, Indiana in 2012, and Wisconsin in 2015, passed right-to-work laws. The states of New Mexico, Maine, and Missouri considered proposed legislation in 2015.108

Exhibit 4.16 (Continued)

Airline and railway industries are covered under the Railway Labor Act, and Union Security clauses are allowed to be negotiated by the parties.

184 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Efforts to promote so-called state right-to-work laws are mainly conducted by the National Right to Work Committee, founded in 1955, whose stated purpose is to protect an employee s right to determine whether to join a union. Funded principally by employer contributions, the committee does not regard itself as being against unions but merely against union security provisions that compel employees to become members. However, allegedly, the committee s pro-union, antiunion security stance has been modified to a flat anti-union approach in recent years. A related but separate organiza- tion, the National Right to Work Legal Defense Foundation provides legal representation in right-to-work cases.

There has been a long-running debate on the effects of right-to-work laws on wages and union membership. Because there is no single explanation for wage rates or union density rates and no cause-and-effect relationship has been identified, one cannot con- clude that right-to-work laws cause lower wages or low union density rates. However, Exhibit 4.16, which compares the average pay of employees in right-to-work states with that of employees in non-right-to-work states, certainly shows a wage disparity in favor of employees who work in states that allow the union and employers to negotiate and decide themselves.

There is conflicting academic research on the effects of right-to-work laws on eco- nomic development. While politicians claim that the presence of right-to-work laws attract new industries, the facts are unclear. The states which have right-to-work laws have been able to attract new industries with low taxes, tax credits, aggressive subsidies from the states and cities, and even lax environmental regulations. Therefore, a single identifiable factor such as the existence of a right-to-work law is not conclusive as the attraction of new industry. On the other hand, there is evidence that the existence of right-to-work laws leads to lower numbers of union members, less bargaining power, and lower wages to workers.109

More impressive is the comparison of union density rates between right-to-work states and non-right-to-work states (see Exhibit 4.17). Only five of the 25 (Alabama, Indiana, Michigan, Iowa, and Wisconsin) right-to-work states have union density rates above 10 percent, whereas 20 of non-right-to-work states (those states that allow the union and management to negotiate union security clauses) have union density rates of 10 percent or more.

Arguments for Right to Work Laws There are at least three primary arguments opposed to union security and in favor of right-to-work laws. First, union security clauses are considered an illegitimate restriction on employees free choice. It is argued that employees not only have the right to select a union of their choice, but also retain the right to refrain from participating in any and all union activities. Required union membership conflicts with their free choice and the requirement to join a union and/or pay union dues is undemocratic.

Second, requiring union membership violates the employees constitutional rights of free speech and association if their union dues are used to support activities not sup- ported by the nonmembers, such as backing a political candidate. Inherent in the right of free association is the employees right to choose not to participate in union activities.

Third, required union membership concedes too much power to union officials. Since employees must pay dues to retain their employment, it is plausible that the

union leaders may disregard the interests of portions of the workforce, such as nonmem- bers, women, and minorities. Requiring union membership could create a union bureau- cracy where the officers interest and the member interest collide and irresponsible union officials use the union s financial resources to achieve their own agenda, rather than meet

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 185

the needs of the membership. Allowing members to vote with their feet and leave the labor union forces union leaders to be more responsive to their members.110

Arguments for Abolishing Right-to-Work Laws There are three principal arguments in defense of union security clauses and abolishment of right-to-work laws. First, union security eliminates free riders those employees who receive the benefits from the union, but who pay no dues. Since the law requires

Exhibit 4.17 Employees Who Are Union Members and Who Are Represented by Unions by State and Right-to-Work Status, 2014

Employed Right- to-Work States

Employed Union Members (%)

Represented by Unions (%)

Non-Right-to- Work States

Union Members (%)

Represented by Unions (%)

Alabama 10.8 12.1 Alaska 22.8 24.4

Arizona 5.3 6.7 California 16.3 17.5

Arkansas 4.7 5.4 Colorado 9.5 10.7

Florida 5.7 7.0 Connecticut 14.8 15.7

Georgia 4.3 4.9 Delaware 9.9 11.3

Idaho 5.3 6.7 District of Columbia

8.6 10.7

Indiana 10.7 12.0 Hawaii 21.8 22.9

Iowa 10.7 12.6 Illinois 15.1 16.0

Kansas 7.4 9.0 Kentucky 11.0 12.8

Louisiana 5.2 6.4 Maine 11.0 12.5

Michigan 14.5 15.7 Maryland 11.9 13.3

Mississippi 3.7 4.2 Massachusetts 13.7 14.7

Nebraska 7.3 9.0 Minnesota 14.2 15.0

Nevada 14.4 16.4 Missouri 8.4 9.7

North Carolina 1.9 3.2 Montana 12.7 13.8

North Dakota 5.0 6.9 New Hampshire 9.9 11.5

Oklahoma 6.0 7.2 New Jersey 16.5 17.2

South Carolina 2.2 3.2 New Mexico 5.7 7.4

South Dakota 4.9 6.0 New York 24.6 25.8

Tennessee 5.0 5.6 Ohio 12.4 13.9

Texas 4.8 6.2 Oregon 15.6 17.0

Utah 3.7 4.6 Pennsylvania 12.7 13.7

Virginia 4.9 6.2 Rhode Island 15.1 15.8

Wisconsin 11.7 12.5 Vermont 11.1 13.1

Wyoming 6.7 7.5 Washington 16.8 18.4

West Virginia 10.6 11.6

U.S. Average 11.1 12.3

SOURCE: Bureau of Labor Statistics, U.S. Department of Labor, Union Affiliation of Employed Wage and Salary Workers by State, January 23, 2015, at http://stats. bls.gov/news.release/union2.t05.htm

186 PART 1 Recognizing Rights and Responsibilities of Unions and Management

the union to represent all bargaining unit employees (union s fair representation obliga- tion covered in Chapter 10) and are legally precluded from negotiating superior employment terms for union members only, it is reasonable that all employees pay dues to the union for services rendered. Therefore, it is not fair for union members to pay additional funds to the union to support employees who are free riders.

Second, where a union exists, the union was selected by a majority vote of the bar- gaining unit. The Union membership makes a democratic decision on union security clauses, that is, union shop or agency shop clauses are implemented only upon ratifica- tion of the collective bargaining by a majority of the union members and only after the union security clause has been agreed to by management. Moreover, if employees are against bargaining for different forms of union security clauses, Section 9(e) (1) of the National Labor Relations Act permits employees to conduct a secret ballot de- authorization election, administered by the National Labor Relations Board, to rescind the union s right to negotiate a union security clause in the agreement. These de- authorization elections make up only 2.5 percent of the NLRB elections and unions lose approximately 60 percent.

Third, union security clause keeps the employers from weakening employees sup- port for the union because all employees will be paying dues. There will be no incentive for employers to replace union members with nonmembers who opposed the union. This allows the democratically elected union to allocate its resources to providing repre- sentational services to members rather than being forced to defend itself against contin- uous assaults from the employer.111

Recent U.S. Supreme Court Decision In June 2014, the U.S. Supreme Court ruled that an agency fee provision in collective bar- gaining agreement under the Illinois Public Labor Relations Act violated employees free speech under the first amendment of the U.S. Constitution. The employees involved were personal assistants (PAs) who provided home care services. Customers controlled most aspects of the employment relationship, such as hiring, firing, training, supervising, and disciplining of PAs. The State of Illinois paid their salary. The Court ruled that these employees were much different from full-fledged public employees and did not enjoy the rights and benefits of state employees. Illinois law required all PAs to receive the same rate of pay and unions had no authority with respect to a PAs grievances against a customer.112

Summary This chapter discussed two of the major participants in the labor relations process: unions and manage- ment. First, the goals of unions and management were presented, with emphasis on where the goals are the same and where they have potential for con- flict. Companies labor relations strategies, ranging from union suppression to labor management coop- eration, were explained.

Union strategic plans, which are at the embryonic stage in most unions, were discussed, and examples from the AFL-CIO and CTW were presented. Compa- nies and unions are structured according to their goals;

typical examples of company labor relations organiza- tions and organizations at various levels of unions were displayed.

The chapter also discussed union governance. First, general characteristics of craft and industrial unions were explained. Then, the government and organizational activities of the local union, the national or international union, the intermediate bodies, and the federation (the AFL-CIO) were discussed. Because unions, like businesses and government, have experi- enced corruption and misuse of power and authority, examples of these problems and of steps that have been

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 187

taken to seek a resolution were provided. Unions show concern for the long-term survival and growth of their organizations when they attempt to negotiate a union security provision (e.g., union shop, union hiring hall, or agency shop) into the labor agreement. However,

certain union security provisions cannot be negotiated in states having right-to-work laws, permitted under Section 14(b) of the LMRA. Controversy occurs over the meaning, morality, and impact on union organiza- tions of a right-to-work law.

Key Terms Affiliation, p. 138 Craft unions, p. 155 Industrial unions, p. 155 General unions, p. 155 Business agent, p. 156 Shop steward, p. 157 International union representative,

p. 157 Constitution, p. 159

Convention, p. 160 Master labor agreement, p. 164 Dues check off system, p. 165 Absorptions, p. 166 Amalgamations, p. 166 Conference boards, p. 167 Joint councils, p. 167 Associate membership program, p. 171 Union security clause, p. 177

Closed shop, p. 178 Union shop, p. 178 Financial core union member, p. 178 Full union membership, p. 178 Agency shop, p. 179 Union hiring hall, p. 181 Preferential treatment clause, p. 182 Dues checkoff, p. 182

Discussion Questions

1. Compare the steps companies may take to implement a positive human resources manage- ment program with principles of effective management.

2. Identify the common goals of companies and unions as opposed to their conflicting goals?

3. Assess the strategic plans of the AFL-CIO and CTW, and determine whether these plans provide direction for growth.

4. Locate a local union and a local plant, and draw an organizational chart for each.

5. Select a craft union and an industrial union. Point out the characteristics of these two types of unions.

6. Compare the government of the local union with student governments and municipal governments, paying special attention to participation by members.

7. Explain why and how national unions presidents have been able to accumulate so much authority and power.

8. Differentiate among the business agent of a local union, a shop steward, and an international union representative. How do their roles differ?

9. Because the AFL-CIO does not negotiate labor agreements on behalf of national unions, why is it claimed to be the spokesperson for organized labor in the United States?

10. Compare the requirements for union democracy to any student organization with which you are familiar.

11. Formulate a one- or two-sentence argument for or against the right-to-work philosophy. Fully defend your statement from arguments that could be made against your position.

Exploring the Web

Labor Unions, Mergers, and Union Security

1. AFL-CIO Determine the names of the current leadership, the mission, the unions in the AFL-CIO, membership benefits, and summer student programs. Find out

how one who is interested can become a union member. (http://www.aflcio.org)

2. LaborNet This is a source for current information about the labor movement. It is designed to promote a democratic

188 PART 1 Recognizing Rights and Responsibilities of Unions and Management

independent labor movement. Included are references and handbooks, YouTube videos, a current blog, and the latest labor news in the United States and links to other countries. (http://labornet.org)

3. Bureau of Labor Statistics and Current Union Membership The Bureau of Labor Statistics publishes an annual report on union membership. Find and read the sum- mary for the 2015 report to discover more about the current status of labor unions. What percentage of the total employees in protective services were members of labor unions in 2015? (http://www.dol.gov) Look up the dues, assets, and officer salaries, membership of U.S. unions in LM-2 Reports.

4. Society for Human Resource Management (SHRM) As the world s largest association devoted to human resource management (275,000 members with more

than 575 affiliated chapters), the Web site for this organization provides resources, global best prac- tices, and a network of valuable contacts to more than 5,000 members in over 160 countries. SHRM has recently opened offices in China and India to establish a two-way relationship, provide education, and facilitate the advancement of human resource management. Anyone interested may sign up for e-mail alerts on human resource management topics. (http://www.shrm.org)

5. Union Security and Beck Rights For information on Union Security and Beck Rights, go to http://www.NLRB.org. Type in Beck Rights in Search Key Word ; you will find Guide- lines for Response to Beck-Related Inquiries and Advice Response memos.

References 1. Audrey Freedman, How the 1980s Have Chan-

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2. Joel Cuthcher-Gershenfeld and Saengdow Prasitti- suk, Beyond Gridlock: Advancing the American Dream in a Global Knowledge Economy via Dis- tinct Models for Labor and Employment Relations Policy, Proceedings of the 63rd Annual Meeting of the Labor and Employment Relations Association, 2011, pp. 104 129.

3. Martin M. Perline and David J. Poynter, Union Orientation and Perception of Managerial Prero- gatives, Labor Law Journal, 40, December 1989, p. 781.

4. http://hrw.org/english/docs/2007/05/01usdom 1597. Human Rights Watch, 350 Fifth Avenue 34th Floor, New York, NY 10118-3299.

5. Decisions and Order of the National Labor Rela- tions Board, 347 NLRB No. 109, August 21, 2006.

6. NLRB v. Southern Bakeries, LLC, Case 4- 14-cv04037-SOH Document 41 8/14/14.

7. Alan Balfour, The Unenforceability of the UAW s Neutrality Pledge from General Motors, paper presented at the Second Annual Meeting of the Southern Industrial Relations Association, 1981.

8. Charles R. Greer and Stanley A. Martin, Calcu- lative Strategy Decisions during Organization

Campaigns, Sloan Management Review, 19, Winter 1978, p. 73.

9. Ibid. 10. William N. Cooke and David G. Meyer,

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11. Douglas M. McCabe and David Lewin, Employee Voice: A Human Resource Manage-

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12. Fred K. Foulkes, How Top Nonunion Companies Manage Employees, Harvard Business Review, 59, September October 1981, pp. 121 125.

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CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 189

16. Audrey Freedman, The New Look in Wage Policy and Employer Relations (New York: The Confer- ence Board, Inc., 1985), pp. 16 18.

17. Richard B. Peterson and Douglas M. McCabe, The Nonunion Grievance System in High Per-

forming Firms, Proceedings of the 1994 Spring Meeting, Industrial Relations Research Associa- tion, Paula B. Voos, ed. (Madison, WI: Industrial Relations Research Association, 1994), p. 529.

18. Douglas M. McCabe, Corporate Nonunion Grievance Arbitration Systems: A Procedural Analysis, Labor Law Journal, 40, July 1989, pp. 432 438.

19. John E. Butler, Gerald Ferris, and Nancy K. Napier, Strategy and Human Resources Manage- ment (Cincinnati, OH: South-Western, 1991), pp. 147 158.

20. William N. Cooke and David G. Meyer, Struc- tural and Market Predictors, Industrial and Labor Relations Review, 43(2), pp. 280 282.

21. Barbara Haskew, A New Model for Labor- Management Relations, Tennessee Business, 13(2), 2004, p. 8.

22. Butler, Ferris, Napier, pp. 147 158. 23. Francis A. O Connell, Jr., The Changing Char-

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28. John T. Dunlop, The Management of Labor Unions (Lexington, MA: Lexington Books, 1989), pp. xii 7.

29. Christine L. Scheck and George W. Bohlander, The Planning Practices of Labor Organizations:

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31. Tracy Fitzpatrick and Weezy Waldsteing, Chal- lenges to Strategic Planning in International Unions, Proceedings of the 46th Annual Meeting of the Industrial Relations Research Association, Paula B. Voos, ed. (Madison, WI: IRRA, 1994), pp. 73 84.

32. Richard Hurd and Martin Behrens, Structural Change and Union Transformation, Proceedings of the 55th Annual Meeting of the Industrial Relations Research Association, Adrienne E. Eaton, ed., 2003, pp. 113 121.

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34. Audrey Freedman, Managing Labor Relations (New York: The Conference Board, Inc., 1979), pp. 7 33.

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36. Bert Spector, Transformational Leadership: The New Challenge for U.S. Unions, Human Resource Management, 26, Spring 1987, pp. 3 11.

37. Alice H. Cook, Union Democracy: Practice and Ideal (Ithaca, NY: Cornell University, 1963), pp. 19 26.

38. Victor G. Devinatz, Union Organizing Trends and the Question of Post-Industrial Unionism in the Early 21st Century, Labor Law Journal, 59(3), 2008, pp. 265 270.

39. Michael Alexander McCarthy, Why Should the Business Agents Be Bigger Than the Organiza- tion? Labor Studies Journal, 35(3), September 2010, pp. 322 342. Also see: http://scholarship. law.upenn.edu/cgi/viewcontent.cgi?article=1243& context=jbl

40. James E. Martin, John Christopher, and John M. Magenau, A Longitudinal Examination of Union Steward Behaviors and Behavioral Intentions, Proceedings of the 46th Annual Meeting of the Industrial Relations Research Association, In Paula B. Voos, ed. (Madison, WI: IRRA, 1994), pp. 422 431; Paul F. Clark, Daniel G. Gallagher, and Thomas J. Pavlak, Member Commitment in an American Union: The Role of the Grievance Procedure, Industrial Relations Journal, 21, 1990, pp. 147 157.

190 PART 1 Recognizing Rights and Responsibilities of Unions and Management

41. Allan Nash, The Union Steward: Duties, Rights, and Status (Ithaca, NY: New York State School of Industrial and Labor Relations, 1977), pp. 20 22.

42. Renaud Paquet and Isabelle Roy, Why Do Peo- ple Get Involved in Local Union Office? Journal of Collective Negotiations in the Public Sector, 27(1), 1998, pp. 73 75.

43. Steven L. McShane, A Path Analysis of Partici- pation in Union Administration, Industrial Relations, 25, Winter 1986, pp. 72 78.

44. John C. Anderson, Local Union Participation: A Reexamination, Industrial Relations, 18, Winter 1979, p. 30.

45. John Lund and Don Taylor, Labor Studies Jour- nal, 35(4), 2010, pp. 566 572.

46. John Lund, Using Surveys to Learn More about Membership Attitudes, Labor Studies Forum, 4(4), 1991, pp. 1 4.

47. John T. Delaney, Paul Jarley, and Jack Fiorito, Planning for Change: Determinants of Innova-

tion in U.S. National Unions, Industrial and Labor Relations Review, 49, July 1996, p. 612.

48. J. Bryan Fuller and Kim Hester, The Effect of Labor Relations Climate on the Union Participa- tion Process, Journal of Labor Research, 19, Winter 1998, pp. 184 185.

49. James E. Martin and John M. Magenau, An Analysis of Factors Related to the Accuracy of Steward Predictions of Membership Views, Labor Law Journal, 35, August 1985, pp. 490 494.

50. Leonard R. Sayles and George Strauss, The Local Union, rev. ed. (New York: Harcourt, Brace World, 1967), pp. 96 100.

51. Ibid., pp. 93 105. 52. James E. Martin and Michael P. Sherman, Vot-

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53. Jack Barbash, American Unions (New York: Random House, 1967), pp. 69 72.

54. The Landrum Griffin Act requires a convention at least every five years, and some unions, such as the Teamsters, take the limit of five years.

55. George Strauss, Union Government in the U.S.: Research Past and Future, Industrial Relations, 16, Winter 1977, p. 234.

56. Barbash, American Unions, pp. 76 80. 57. Marick F. Masters, Robert S. Atkin, and Gary W.

Florkowski, An Analysis of Union Reporting Requirements Under Title II of the Landrum

Griffin Act, Labor Law Journal, 40, November 1989, pp. 713 722.

58. Susan J. Schurman and Adrienne E. Eaton, Labor and Workplace Democracy: Past, Present and Future, Labor Studies Journal, 21, Summer 1996, p. 8.

59. Shulamit Kahn, Kevin Long, and Donna Kadev, National Union Leader Performance and Turn-

over in Building Trades, Industrial Relations, 25, Fall 1986, pp. 276 289.

60. Lawrence French, David A. Gray, and Robert W. Brobst, Political Structure and Presidential Tenure in International Unions: A Study of Union Democracy, paper presented at the annual meet- ing of the Academy of Management, Detroit, 1980, 16.

61. Phillip L. Quaglieri, The New People of Power: The Backgrounds and Careers of Top Labor Lea- ders, Journal of Labor Research, 9, Summer 1988, pp. 271 283.

62. Jack Fiorito, Lee P. Stepina, Paul Jarley, John Thomas Delaney, and Mike Knudstrup, Visions of Success: National Leaders Views on Union Effectiveness, Labor Studies Journal, 22, Spring 1997, pp. 14 16.

63. Current salaries may be obtained from the Forms LM-2 Reports by U.S. labor unions, found at http://www.dol.gov/esa, the home page of the U.S. Department of Labor.

64. http://www.aflcio.org/corporatewatch/paywatch/. 65. Paul F. Clark, Lois S. Gray, and Paul Whitehead,

Adapting Internal Administrative Practices of American Unions to External Challenges: A Longitudinal Study, Proceedings of 63rd Annual Meeting of the Labor and Employment Relations Association, 2011, pp. 171 177.

66. Ken Margolies, The Challenge Union Leaders Face When The Assume the Role of Managers within a Labor Organization, Proceedings of 63rd Annual Meeting of the Labor and Employment Relations Association, 2011, pp. 178 183.

67. Paul F. Clark and Lois S. Gray, Union Adminis- tration, in The State of Unions, eds. George Strauss, Daniel G. Gallagher, and Jack Fiorito (Madison, WI: Industrial Relations Research Association, 1992), pp. 179 193.

68. Charles W. Hickman, Labor Organizations, Fees and Dues, Monthly Labor Review, 100, May 1977, pp. 19 24. Also see: http://blogs.wsj.com/

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 191

economics/2012/12/17/closer-look-at-union-vs- nonunion-workers-wages/

69. Marick F. Masters, Raymond Gibney, and Thomas J. Zagenczyk, Workers Pay Protection: Implications for Labor s Political Spending and Voice, Industrial Relations, 48, October 2009, pp. 557 577.

70. Ibid., pp. 117 118. 71. Marick F. Masters and Robert S. Atkin, The

Finances of Major U.S. Unions, Industrial Rela- tions, 36, October 1997, pp. 502 503. Updated by LM-2 Reports.

72. Marick F. Masters, Union Wealth: The Bargain- ing Power, Journal of Labor Research, 18, Winter 1997, pp. 106 107.

73. Gary Chaison, Union Mergers: The New Interest and Some Old Questions, Employee Responsibil- ity and Rights Journal, 20, 2010, pp. 149 152.

74. Ibid., pp. 152 156. 75. Kim Moody, The Direction of Union Mergers in

the United States: The Rise of Conglomerate Unionism, British Journal of Industrial Relations, December 2009, pp. 676 700.

76. James W. Robinson, Structural Characteristics of the Independent Union in America Revisited, Labor Law Journal, 43, September 1992, pp. 567 575.

77. Sanford M. Jacoby and Anil Verma, Enterprise Unions in the United States, Industrial Relations, 31, Winter 1992, p. 140.

78. Dana Milbank, Labor Broadens Its Appeal by Set- ting Up Associations to Lobby and Offer Services, Wall Street Journal, January 13, 1993, pp. B-1, B-5.

79. Adrienne E. Eaton and Paula B. Voos, Manage- rial Unionism: Prospects and Forms, Labor Studies Journal, 29(3), 2004, pp. 25 56.

80. This is the AFL-CIO (Washington, D.C: American Federation of Labor and Congress of Industrial Organizations, 1992), pp. 1 10.

81. Jill Kriesky, Structural Change in the AFL-CIO: A Regional Study of Union Cities Impact, in Rekindling the Movement: Labor s Quest for Rele- vance in the 21st Century, eds. Lowell Turner, Harry C. Katz, and Richard W. Hurd (Ithaca, NY: ILR Press, 2001), pp. 129 154.

82. Joseph Krislov, The AFL-CIO Effort to Minimize Union Membership Conflicts: 1962 1987, Labor Studies Journal, 16, Summer 1991, pp. 3 5.

83. This Is the AFL-CIO, pp. 8 10.

84. John Budd, When Do U.S. Workers First Expe- rience Unionization? Implications for Revitalizing the Labor Movement, Industrial Relations, 49(2), 2010, pp. 209 225.

85. David Greenstone, Labor in American Politics (Chicago: University of Chicago Press, 1977), pp. xiii xxix.

86. Charles R. Greer, E-Voice: How Information Technology is Shaping Life within Unions, Journal of Labor Research, 23(2), 2002, pp. 215 235; Richard Freeman, Can the Internet Help Unions Rebound? Perspectives on Work, 7(1), 2003, pp. 43 49.

87. Marick F. Masters, Ray Gibney, Thomas J. Zagenczyk, and Irna Shevchenko, Union Mem- bers Usage of IT, Industrial Relations, 49(1), 2010, pp. 83 90.

88. Arthur B. Shostak, Today s Unions as Tomor- row s CyberUnion: Labor Newest Hope, Journal of Labor Research, 23(2), 2001, pp. 242 243.

89. Marick F. Masters, Ray Gibney, Thomas J. Zagenczyk, and Iryna Shevchuk, Union Mem- bers Usage of IT, Industrial Relations, 49(1), 2010, pp. 83 90.

90. Benjamin Weiser, Under New Agreement, U.S. Will End Oversight of the Teamsters in Five Years, The New York Times, January 15, 2015, p. A22.

91. Kris Maher, Oversight of Teamsters to End, The Wall Street Journal, January 15, 2015, p. A6.

92. Paul F. Clark, Union Image-Building at the Local Level, Labor Studies Journal, 15, Fall 1990, p. 55.

93. Phillip B. Wilson, Conquering the Enemy Within: The Case for Reform of the Landrum Griffin Act, Journal of Labor Research, 26(1), 2005, pp. 135 150.

94. Bureau of National Affairs, Inc., Basic Patterns in Union Contracts (Washington, D.C: Bureau of National Affairs, Inc., 1995), p. 97.

95. Billie Ann Brotman and Thomas J. McDonagh, Union Security Clauses as Viewed by the

National Labor Relations Board, Labor Law Journal, 37, February 1986, pp. 104 115.

96. Jeff Canfield, Note: What a Sham(e): The Broken Rights System in the Real World Workplace, Wayne Law Review, 47, Fall 2001, pp. 1049 1055.

97. NLRB v. General Motors, 373 U.S. 734 (1963); Retail Clerks International Association Local 1625 AFL-CIO v. Schermerhorn et al., 373 U.S. 746

192 PART 1 Recognizing Rights and Responsibilities of Unions and Management

(1963); and D. Louis Abood et al v. Detroit Board of Education, 431 U.S. 209 (1977).

98. California Saw and Knife Works, 320 NLRB 224 (1995), enf d. 133 F.3d 1012 (7th Cir. 1998). See also: Guidelines Concerning Processing of Beck Cases, Memorandum from the Office of the General Counsel, August 17, 1998.

99. For further discussion of this issue, see Kenneth A. Kovach and Peter Millspaugh, Implementing the Beck and Lehnert Union Security Agreement Decisions: A Study in Frustration, Business Horizons, 39, May/June 1995, pp. 57 65; Jan W. Henkel and Norman J. Wood, Limitations on the Uses of Union Shop Funds after Ellis: What Activities Are Germane to Collective Bargaining? Labor Law Journal, 35, December 1984, pp. 736 746; Peter Florey, Fair Share Proceedings: A Case for Common Sense, Arbitration Journal, 44, March 1989, pp. 35 44; David A. Lebowitz, Limits on the Use of Agency Fees: The Revival of

Communications Workers of America v. Beck, Employee Relations Law Journal, 18, Winter 1992 1993, pp. 437 461.

100. UFCW, Locals 951, 7, & 1036 (Meijer, Inc.) and Various Individuals, 329 NLRB No. 69(1999).

101. Lehnert v. Ferris Faculty Association, 500 U.S. 507 (1991).

102. Bureau of National Affairs, Inc., Basic Patterns in Union Contracts, p. 99.

103. For further historical insights into the right- to-work issue, see Gilbert J. Gall, The Politics of Right to Work (New York: Greenwood Press, 1988); William Canak and Berkeley Miller, Gumbo Politics: Unions, Business, and Louisiana

Right-to-Work Legislation, Industrial and Labor Relations Review, 43, January 1990, pp. 258 271. For a classification system of right-to-work laws various dimensions and related bibliography, see Thomas R. Haggard, Union Security and the Right to Work: A Comprehensive Bibliography,

Journal of Labor Research, 11, Winter 1990, pp. 81 106.

104. Raymond L. Hogler, The 2008 Defeat of Right to Work in Colorado: Is It the End of Section 14(b)? Labor Law Journal, 60(1), 2009, p. 5; see also Raymond L. Hogler, Right to Work and the Col- orado Labor Peace Act: How Politics Trumped Policy, Labor Law Journal, 58(2), 2007, pp. 85 95.

105. Raymond L. Hogler and Robert LaJeunesse, Oklahoma s Right to Work Initiative: Labor

Policy and Political Ideology, Labor Law Journal, 53(2), 2002, pp. 109 113. See also Stan Greer and Charles W. Baird, Reply to Hogler and LaJeu- nesse s Oklahoma s Right to Work Initiative: Labor Policy and Political Ideology, Labor Law Journal, 54(2), 2003, pp. 89 100.

106. Marc Singer, Knowledge of the Right-to-Work Law among Residents of the State of Oklahoma, Journal of Collective Negotiations in the Public Sector, 31(1), 2006, p. 85 99.

107. Marc G. Singer and Katie L. Valentine, Monta- na s Right-To-Work Legislation: Do Residents Know Their Labor Laws? Journal of Collective Negotiations in the Public Sector, 32(3), 2008, pp. 189 201.

108. Mark Peters, Opting Out of Unions Gets Boost in States, The Wall Street Journal, January 18, 2015, p. A3.

109. Raymond L. Hogler, How the Right to Work is Destroying the American Labor Movement: From the Ku Klux Klan to the Tea Party, Employee Responsibilities and Rights Journal, 23, 2011, pp. 295 304.

110. Victor G. Devinatz, The Continuing Controversy over Right-to-Work Laws in the Early Twenty- First Century, Employee Responsibilities and Rights Journal, 23, 2011.

111. Ibid., pp. 287 293. 112. Harris et. al. v. Quinn, Governor of Illinois, et. al.

Slip Opinion, October Term 2013.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 193

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4- 1 Employee Rights under the Landrum Griffin Act

Paul Sanchez, a member of Local 1 of the Bartenders Union, speaks Spanish and is not sufficiently bilingual to understand the English language in either written or spoken form. Local 1 has 16,500 members, 48 percent of whom understand Spanish only.

For several years Local 1 has had its collective bar- gaining agreements, monthly newsletters, and various notices printed in Spanish to accommodate its Spanish- speaking members. At meetings held to nominate union officers and contract ratification meetings, which occur once every three years, English and Span- ish translations are provided for the discussion that takes place. Monthly union meetings are conducted primarily in English and are attended by 50 75 mem- bers (less than 1 percent of the union s total member- ship). Subjects debated during local union meetings include such topics as union expenditures, salaries of officers, general complaints with particular employers, and various other operational matters. Such debate is commonly referred to as shop talk.

Spanish translation at monthly meetings is pro- vided whenever union officer nominations take place or whenever Spanish-speaking members request their comments or those of others be translated for the ben- efit of other members attending the meeting. Such translation duties are typically performed by a bilingual local union officer, rather than hiring an outside, pro- fessional translator to be present at each monthly meeting.

Paul Sanchez, along with several other employees, petitioned Local 1 s officers to provide a qualified translator who was not a member of the union at all monthly membership meetings. This person would simultaneously translate all meetings proceedings and discussion into Spanish and English. The union officers brought the petition request before the members at the next monthly meeting. With the union members in attendance acting as a legislative body in accordance with the union s constitution and by-laws, Sanchez s proposal to hire a full-time outside translator for the monthly meetings was debated and defeated by a majority vote of those members in attendance. The majority of the members in attendance felt that the cost of hiring an outside translator for every monthly meeting was not justified based on the number of

members who typically attended and the availability of bilingual union members who could perform the necessary translation duties upon request.

Union member Sanchez then filed a civil suit in fed- eral court. Sanchez alleged the union s failure to provide simultaneous translation at the regular monthly union meetings by an independent professional translator was a violation of his equal participation and freedom of speech rights under Title I of the Landrum Griffin Act.

Relevant Statutory Language Title I, Sec. 101(a), Landrum Griffin Act

(1) Equal Rights Every member of a labor organi- zation shall have equal rights and privileges within such organization to nominate candidates, to vote in elections or referendums of the labor organiza- tion, to attend membership meetings, and to partic- ipate in the deliberations and voting upon the business of such meetings, subject to reasonable rules and regulations in such organization s consti- tution and by-laws.

(2) Freedom of Speech and Assembly Every member of any labor organization shall have the right to meet and assemble freely with other mem- bers; and to express any views, arguments, or opi- nions; and to express at meetings of the labor organizations his views, upon candidates in an elec- tion of the labor organization or upon any business properly before the meeting, subject to the organiza- tion s established and reasonable rules pertaining to the conduct of meetings: Provided, that nothing herein shall be construed to impair the right of a labor organization to adopt and enforce reasonable rules as to the responsibility of every member toward the organization as an institution and to his refrain- ing from conduct that would interfere with its per- formance of its legal or contractual obligations.

Title IV, Section 401(e), Landrum Griffin Act states in relevant part, In any election a reasonable oppor- tunity shall be given for the nomination of candidates and every member in good standing shall be eligible to be a candidate and to hold office ( subject to reason- able qualifications uniformly imposed).

194 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Questions 1. Did the union violate Title I, Section 101(a) of the

Landrum Griffin Act in this case? If so, what should be the appropriate remedy?

2. Would it be legal under Title IV of the Landrum Griffin Act for the union in this case to adopt a rule that required all candidates for union office to be proficient in both Spanish and English? Why or why not?

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4- 2 Financial Core Membership Rights under the

Beck Decision

The company and union are parties to a collective bar- gaining agreement that contains the following valid union security clause:

It shall be a condition of employment that all employees of the company covered by this agree- ment who are members of the union in good stand- ing on the date of this agreement shall remain members in good standing, and those who are not members on the effective date of this agreement shall, on the ninety-first (91st) day following the effective date of this agreement, become and remain members in good standing in the union.

For purposes of this Agreement, an employee shall lose his good standing in the Union only for failure to tender periodic dues and initiation fees uniformly required of all members. The Business Manager of the Union shall notify the Company by certified mail of any employees the union deems to have lost good standing within the meaning of this Article.

On July 6, an employee named Budnik sent a letter to the union informing the union officers that he was resigning his union membership and claiming financial core member status. Budnik requested the union to begin charging him the new appropriate amount of dues in compliance with Beck (1988). Budnik did not pay any dues money to the union after he mailed the July 6 letter.

On July 28, the company sent a letter to all bar- gaining unit members informing them that financial core membership status was available to them and that full union membership was not a legal require- ment under the parties current union security contract language. The union sent a letter to Budnik on or about August 5 acknowledging receipt of Budnik s resigna- tion letter. The union informed Budnik that his

insistence on financial core membership status would result in the loss of valuable membership privileges and benefits and that, as a financial core member, he would still be required to pay the financial obligations of mem- bership germane to the costs of collective bargaining, con- tract administration, and grievance adjustment. The union encouraged Budnik to reconsider his decision to resign his union membership. The union s letter closed with the disclosure that the union was currently undergo- ing its annual financial audit and that, when that process was completed, all the expenses germane to collective bar- gaining duties would be identified.

The following February 23, the union sent a letter to Budnik and advised him that, despite his resignation from the union, he was still required to comply with the terms of the current union security clause. The union offered to let Budnik pay a sum equal to current monthly union dues to a mutually agreed upon charity. The union listed three charitable funds acceptable to it. Budnik did not agree to the union s proposal and, instead, quit his job at the company and filed an unfair labor practice against the union, alleging a violation of Section 8(b)(1)(A) of the Labor-Management Relations Act (LMRA). Specifically, Budnik alleged that the union failed to meet the require- ments set forth in Beck regarding a union s duty to furnish information about the amount of dues money spent for legitimate collective bargaining purposes or to provide a procedure by which employees like himself could chal- lenge the amount charged or the basis for calculating such charges.

In Communications Workers v. Beck, 487 U.S. 735 (1988), the Court upheld an interpretation that the LMRA does not permit a union, over the objection of a dues-paying nonmember, to expend funds collected from them under a union security agreement on activ- ities not related to collective bargaining, contract administration, or grievance adjustment. In California Saw & Knife Works, 320 NLRB 222 (1995), the Board

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 195

held that if a nonmember employee chooses to file a Beck objection to the payment of full union dues, the employee must be informed by the union of the follow- ing information: the percentage of the reduction in fees for objecting nonmembers, the basis for the union s calculation, and the right to challenge these figures. Any union-provided procedure for challenging the amount or method of dues calculation is appropriate so long as the procedure is not shown to be arbitrary, discriminatory, or in bad faith.

The union cited the NLRB decision Laborers Local 265 and Fred A. Newmann Co., in which the Board held that a union did not breach its duty of fair repre- sentation by failing to provide a Beck objector with Beck-related financial information, where the union expressly waived the objector s obligations under the union security clause and informed the objector that he would not be required to pay any dues or fees. The union noted that Budnik is the only employee, out of the 300 bargaining unit members the union represents, to request financial core membership status. The union believed that the cost burden of gathering Beck-related financial information for use by a single

employee would be prohibitive and detrimental to the union s obligation to use resources wisely to represent the bargaining interest of all bargaining unit members. The union believed that it had offered Budnik a reason- able accommodation that did not require him to pay any dues money to the union, thus ensuring that none of the objecting member s funds would be used for union expenditures. At the same time, the reasonable accommodation offered by the union avoided the necessity of spending union funds to gather Beck- related financial information for only one employee. The union requested that the unfair labor practice charge be dismissed.

Questions 1. What are the union s legal obligations? 2. Does Budnik have a burden of proof? Or, does the

union have the burden to prove that it has complied with the law?

3. Did the union commit an Unfair Labor Practice in this case? If so, what should be the appropriate remedy?

196 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CHAPTER 5

Why and How Unions Are Organized

I JUST RECEIVED another message on my office desktop computer from Jane Morgan that she had posted a message on Facebook. Since we are Facebook friends, Jane sends me a lot of interesting and helpful information. Jane and I have been friends for 15 years and have worked together for at least that long.

I went to Jane s Facebook posting and it had the following message: We need more pay. We need a pension plan and health insurance. And we don t want to be fired at the whim of our supervisors. Let s all meet at the community center at 7:00 P.M. tonight and hear what the union folks have to offer. I noticed that 25 of our 75 employees had already clicked on Like and several have added comments.

I have worked in a unionized plant before. We had a good pension plan, good health insurance, and job protection through the grievance and arbitration procedure. Then the plant closed and the jobs went to Mexico. I certainly believe in what Jane and the others are doing, but I don t know whether I should click Like and be identified by Management as one of Jane s supporters. I surely don t know what protection I have if I click Like and/or make a comment supporting Jane and the others.

Questions 1. What are my options? Evaluate the consequences of each

option.

2. Should I respond on my personal IPhone or on my office desktop computer?

3. What are my legal rights?

4. What legal protections will I have if I click on Like, make a comment, or attend the meeting?

197

This chapter focuses on the essential elements of unionization: why unions are formed,the procedures for organizing employees into unions, new union strategies for obtaining union recognition, and union decertification.

This chapter attempts to identify the many factors that are involved in the forma- tion of unions Employees have choices: (1) whether to become involved in union for- mation where there is no union and (2) whether to vote for or against union representation if and when there is a representation election. Although an employee s choices to assist in the formation of a union, to vote for a union, and to join a union are highly interrelated, they are separate decisions. Employees may join unions volun- tarily or be required to join. The circumstances in which an employee may be required to join a union were covered in Chapter 4. Employees who vote for union representa- tion in an election in which the union does not receive a majority vote are nevertheless left without union representation. However, they may be interested in becoming an associate member.

Why Unions Are Formed

Unions are not present in every organization; in many instances, employees have chosen to remain nonunion. This section provides explanations of why a group of employees collectively may choose to form a union. The following section explains what motivates employees at a particular facility to vote for a union.

Work and Job Conditions

Alienation Theory The alienation theory is based on the belief that employees might seek collective action to relieve their feelings of alienation. Employees feel alienated from their work because of the following reasons:1

They lost contact with their own labor when the products they created were taken away from them; thereby they cannot take pride in their work. They lost involvement in their work when the machine dominated, separating the work of the hand from the work of the brain. They became estranged from fellow employees when their work made them so tired and competitive that they were incapable of having authentic relationships.

As a result, employees might become aware of their common plight, and class con- sciousness could compel them to join together in a union or to engage in collective activities to improve their working situation. Unions can and do address a possible aspect of employee alienation, namely the employees desire to speak their minds with- out fear of management reprisal. In other words, intertwined with the motives for union membership is the almost universal desire to tell the boss to go to hell. 2

A union typically indicates to its potential members that the employees rights to voice their opinions on a managerial action are protected by negotiated grievance pro- cedures and disciplinary policies (see Chapters 10 and 12).

Unions provide employees a voice which gives them an alternative to quitting their jobs and leaving their employer if they are not satisfied with their jobs. It is difficult to find new jobs in today s economy, and it is costly for management to hire and train new employees. Lower employee turnover which is associated with union membership bene- fits not only the employees but also management.3

198 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Employees might be dissatisfied with some aspect of their jobs while not being alien- ated from their work. Some research has shown that employees might join unions if they (1) are dissatisfied with physical characteristics of the workplace, low wages, or lack of benefits and (2) believe that a union will help them achieve the job-related conditions important to them.4

Employees who are not satisfied with their pay, supervision, and/or work may view the union as the instrument to satisfy their job needs. Some researchers have argued that job dissatisfaction is the initiator of employees efforts to start a union formation cam- paign. They argue that job dissatisfaction sets in motion a search to end the uncomfort- able dissonance between what is desired (good pay, effective supervision, etc.) and what they are experiencing. Job dissatisfaction results in the formation of a coalition of employees designed to bring about changes in economic and working conditions.5

Employees who are less satisfied with the companies for which they work have greater desire to join a union. There is a negative relationship between work attitudes, such as company commitment, and desire to join a union.6

In a nationwide survey, workers voiced approval of unions and a majority said they definitely or probably would vote in favor of union representation in their workplace. Union members were more likely to receive benefits at their job, such as health insur- ance and paid time and a half for overtime than nonunion workers.7

Scarcity Consciousness Theory The Need for Job Security In his classic book A Theory of the Labor Movement, Selig Perlman theorized that employees are attracted to unions because unions will protect their jobs. Many employ- ees, particularly manual workers, strongly believe they live in a country of limited oppor- tunity and become scarcity conscious the employees collectively believe that jobs are difficult to obtain and retain. This belief is particularly true today for some industries, such as auto, steel, coal, and the public sector. Thus, employees turn to unions for job protection.8

Unions therefore are attractive to the many employees concerned about job security, regardless of their skill or occupational level. Few employees, including white-collar employees and managers, are currently immune from the possibility of a layoff. Also, unions do offer several ways of strengthening employees job security. For example, a union can negotiate work rules which prescribe procedures for performing a job, thereby ensuring that a certain number of employees will be assigned work. Unions can negotiate apprenticeship programs, which ensure that eligible employees are trained available for certain skilled jobs, or negotiate seniority and layoff provisions, which require the com- pany to lay off employees in order of their seniority (most senior laid off last) and to recall the most senior employees first. A union can negotiate grievance procedures, which include a final step of arbitration to protect them against unjust discharges, unfair treatment, and violations of the labor agreement. Unions can also lobby for legislation protecting employees job rights in regard to such issues as plant closings and employ- ment discrimination. Legislation or administrative policies can restrict employer access to cheap labor, strengthen job security by pressing for restrictions for example, foreign citizens, child labor, and prison labor; impose quotas or restrictions against imported products such as steel, automobiles, and textiles; and provide adjustment assistance to employees who are displaced as a result of free trade agreements.

Wheeler Model of Union Formation Hoyt Wheeler has provided a theoretical model for union formation that entails a two- stage process. The first stage consists of the worker s readiness to take some form of

CHAPTER 5 Why and How Unions Are Organized 199

aggressive action; the second stage represents that worker coming together with other workers as a group and deciding to take some form of collective action. A single employee usually begins to move toward unionization when he or she experiences feel- ings of deprivation about pay, security, and/or respect. The individual employee s thought process can be viewed as taking the individual along one or more possible paths toward readiness to take some form of aggressive action to demonstrate anger with the employer. The employee may take the path toward collective action and sup- porting the union under certain conditions.

Deprivation at work may occur when there is a gap between what employees expect from their work and what they actually receive in return. Three paths connect depriva- tion and readiness to take action. The first path is a threat or an attack, which results when the employer takes away or threatens to take away something the workers already have. The second path is frustration, which results when workers try to act on their own behalf, their action is blocked or ignored, and they feel they have no voice and see no way of achieving effective voice as individuals. The third path is rational calculation, a path by which, rather than show anger, the workers become convinced that the bene- fits of unionization outweigh the costs.

Even though workers may mobilize along one of these paths, they may not choose unionization. Instead, they may choose some form of withdrawal, such as quitting their job, or revenge behavior, such as sabotaging the company s products. The conditions that promote collective action or unionization are love, hope, and saliency. Love is essentially the cohesion and solidarity wherein workers care enough for each other to act together and share good relationships. Hope prevails when workers believe that the union can do what is necessary to bring an end to their deprivation and frustrations. Saliency is recog- nition that problems exist and workers perceive that dramatic events and good leader- ship would contribute to facilitating action toward resolution.

Along with each of these conditions, which promote the union option, there are inhibiting conditions. One such condition is the fear of punishment for supporting the union, such as being fired from one s job or being laid off. Another is the general belief that unions are wrong in principle. Either of these beliefs may dissuade a worker or a group of workers from taking action. The interaction of the workers beliefs, their chosen paths, and the existing conditions may determine whether a group of workers pursue collective action and unionization.9

Employees Backgrounds and Needs Employees previous experiences with unions can strongly affect their attitudes toward unions and their decision to join a union. Eighty-seven percent of those who have had experience with unions, usually as members, said they would vote for a union if given a choice; of those who have had no experience with unions, only 27 percent indicated they would vote for the union if given the choice.10

Many employees are influenced by parental attitudes and family experiences with unions. One active union member stated, I attended union meetings with my father before I was ever inside a church. Another commented, My dad was a great union man and that s where I got it if it wasn t union, it wasn t no good. 11 Of course, paren- tal comments about unions may be unfavorable as well.

Unions, like all formal organizations, potentially satisfy the members needs by pro- viding a means of enhancing a sense of identity and maintaining self-esteem. Thus, unions can appeal to three interrelated social needs of members: the need for affiliation, or belonging; the need for status; and the need to belong to something purposeful, useful, and creative that is on a higher level than improved wages and working conditions.

200 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Feelings about unions are a dominant predictor of union voting intent; those who have positive feelings toward unions typically intend to vote for forming a union. Those who have negative feelings toward unions tend to vote against forming a union. Researchers suggest that unions should spend their time and resources on iden- tifying what causes a nonunion employee to feel negatively or positively about unions and take steps to rectify the causes that make a nonunion employee feel negatively toward unions.12

The union s possible benefit of social affiliation is strengthened or weakened by the degree of prestige or self-esteem it offers its members. Some employees join a union for the same reason they would join any social organization, namely, to enjoy the responsi- bility and status associated with being a member of that organization. This feature can be particularly attractive to employees whose jobs are basically interchangeable and carry few elements of prestige or room for advancement.

Employees who become union officers can often attain prestige or self-esteem in their dealings with management officials:

As a shop steward or union officer or member of the grievance committee, a worker can become a fellow your buddies look to. Such positions give him the opportunity to win other workers approval by being a fellow who stands up to the boss with impunity. The role of a fellow who stands up to the boss is made more significant because the definition of the boss has been enlarged to include not merely the foreman but the head office in Pittsburgh. He can win prestige as a guy that gets results in such matters as the distribution of work, assignment to jobs, seniority policy, and pro- tection from discrimination.13

Chapter 10 discusses the notion that union officers and management officials are equals in their day-to-day administration of the labor agreement. However, as the pre- ceding quotation suggests, the union steward can often emphatically disagree with a management official six levels above the steward on the organizational chart. This ability to challenge without fear of reprisal is not afforded nonunion employees or even man- agement officials when they deal with their organizational superiors.

Studies of employee characteristics associated with employee votes have been mixed. Some have shown that characteristics such as age, gender, and education are not closely associated with favorable union votes or attitudes.14 Race appears to be the one exception several studies have suggested that more black employees have positive atti- tudes toward potential union advantages than their white counterparts.15 Other studies indicate that young people are more likely to support unions and women are less likely to support unions.16

Influences on Employees Votes for and against Unions In forming and joining a union, employees mainly consider whether they believe the union will improve their personal situations in terms of wages and benefits, promotional opportunities, and job security. Can the employees expect to satisfy their job-related goals and needs by supporting a union? Will the union provide the means for achieving these goals? If employees perceive that a union will help them attain their goals, they will likely support the union organizing campaign, vote for it in a representation election, and support its activities afterward. If they are not convinced, they will not get involved, vote for the union, or support its activities.

The union s campaign to secure employee support may contribute to a union vote, especially among those who are familiar with the union s positions and who attend union campaign meetings. Employees who are satisfied with working conditions are

CHAPTER 5 Why and How Unions Are Organized 201

less likely to attend union campaign meetings, but if they ever attend the meetings, they often feel more favorably toward the union.

The company s campaign can affect the vote because it affects employees belief in the anticipated influence of the union. If the company campaigns hard, some employees will believe that the employer has seen the light and will now improve conditions with- out the union. A strong anti-union campaign may convince some employees that the employer is so anti-union that the union cannot improve working conditions.17

Although there may be many reasons why a particular group of employees votes for or against the union in a specific election, several influences have been identified that affect employee votes generally. Exhibit 5.1 shows the relationships among the general influences on employees.

Researchers have argued that social pressure influences employee votes. When employ- ees know a number of union supporters within a work group, this knowledge helps to form group cohesion. When this group of employees is regularly blocked by employer actions, they respond as a group, and their actions can lead to union formation. As union suppor- ters, they are better able to convince others that the union has the power to bring about changes in the workplace and are more convincing in influencing other employees votes.

General beliefs about unions mean that an employee believes, for example, that a union will improve wages, benefits, and working conditions; provide a return to the employee for the dues paid; and secure pro-employee legislation. On the other hand, these general beliefs also include whether an employee believes unions are autocratic, increase the risks of a plant closing, stifle individual initiatives, or ignore the members in strike decisions. To influence employees positive general beliefs about unions, union orga- nizers must put more effort into national campaigns, such as the Union Yes campaign of the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO).

Specific beliefs about unions are more related to an individual s job and workplace. To influence employees specific beliefs about unions, union organizers must focus atten- tion on communicating the union s unique characteristics and its impact at the work place. Specific beliefs that can be focused on include expectations about improvement in pay, benefits, and job security that should result from unionization.18 Other beliefs include expected improvement in recognition, job advancement, worker participation, treatment by supervisors, and reduction in sexual and racial discrimination on the job.

Exhibit 5.1 Influences on Employees on Whether to Vote for or against a Union

202 PART 1 Recognizing Rights and Responsibilities of Unions and Management

In an organizing campaign, unions must show employees that significant positive results will occur at their workplace if they vote for and join a union. Unions must pro- mote the union s ability not only to improve wages and benefits but to help make work more meaningful and increase employee participation. At the same time, the employer will attempt to show that it has acted reasonably toward employees and has been fair and sincere in dealings with employees.19

Social pressure, job dissatisfaction, and general and specific beliefs about unions interact with union instrumentality, which is the employees perception of whether the union will be effective in attaining desired outcomes, such as higher wages, improved working conditions, job security, and protection from arbitrary treatment by manage- ment.20 In general, if these interactions are positive, the employee will vote for the union;21 if not, the employee will not vote for the union. For the individual employee, any one of the influences may cause the employee to vote a certain way. For example, if an employee believes his or her supervisor is considerate and supportive, this belief may be enough to cause the employee to vote against union representation.22

Finally, an individual s decision on whether to vote for union representation depends on his or her subjective assessment of the benefits to be obtained as weighed against the sub- jective assessment of the costs. These costs include the direct costs of union dues as well as possible indirect costs, such as managerial retaliation against individual union supporters, plant closure, or simply the hassles of a more bureaucratic workplace. If the expected ben- efits are higher than the costs, the employee will vote for the union. Otherwise, the employ- ee s vote will be to remain without union representation. If employees have a good chance of promotion, can expect a higher wage based on their present level of effort, and are pleased with their supervisor, they probably will vote to remain without representation.

The Union s Challenge of Organizing the Diverse Workforce Unions recognize that some occupations, such as retail sales, registered nursing, security services, janitorial services, and food services, are expected to expand in numbers. In addition, one-fourth of all workers in the United States are part-time employees; these employees are hired on a temporary basis (referred to by many as contingent workers ), are independent contractors, and are hired as subcontractors or leased workers. As noted earlier, minorities and skilled employees will also become a larger percentage of the work force. In fact, currently, over one-fourth of the work force are minorities, and the great- est percentage increases has come from the Hispanic and Asian populations. Unions must design organizing strategies to attract these employees.23

Organizing Professional Employees Professional employees provide a challenge to unions and an opportunity to increase union membership. Unions have already made significant inroads in many professions, such as acting, professional sports, writing, music, health care, and teaching; however, the debate continues over the compatibility of unionism with professionalism. Unions must address this compatibility issue if they will be able to increase the memberships of professional employee unions. On one side is the argument that the selection of a union entails the rejection of key professional values, such as collegial participation in organi- zational decision making, professional independence, and a merit-based performance and reward system. On the other side is the argument that collective bargaining is often the most effective method of achieving and maintaining these same professional values.24

Consider, for example, nurses, who tend to base their vote in a union representation election on the degree to which they believe the union can give them a greater voice in

CHAPTER 5 Why and How Unions Are Organized 203

how patient care is delivered. Nurses unions increasingly focus on strategies to use col- lective bargaining to address the core challenges that acute-care hospitals face. Approxi- mately 75 percent of the nurses in one survey reported that both their working conditions and the quality of nursing care had declined in recent years. In this same study, 34 percent of the nurses reported that they felt exhausted and discouraged upon leaving work; 34 percent were discouraged and saddened by what they could not provide their patients; and 29 percent felt powerless to affect change.

Nurses recognize that they can use their collective power to make their voices heard and be recognized as a full partner with other professionals, such as doctors and phar- macists, in the American health care system. Nurses have willingly assumed the role of patient advocate to ensure quality care. When a hospital cuts costs by reducing the num- ber of nurses, it employs, understaffing becomes a problem. In response, a nurses union has negotiated staffing levels to assure adequate staffing to enhance patient care. Nurses unions have negotiated restrictions on mandatory overtime, except during emergency situations, to ensure that nurses are adequately rested to provide the necessary patient care. They have negotiated provisions that prohibit nurse assignments to areas of the hospital in which the nurses are not trained or experienced. Also, nurses unions have negotiated consultative/cooperative arrangements in which the nurses have a voice in decisions involving patient care, such as forming professional practice committees or patient care committees in hospitals.25

Professional employees provide a fertile ground for increased unionization because professional employment has been growing rapidly. A survey of 2,014 members of the American Pharmacists Association revealed that general beliefs about unions have a stronger direct effect on union voting intentions among professionals than specific beliefs. An example of a general belief is, Unions improve wages and working condi- tions of workers, and an example of a specific belief is My job security will improve if my workplace becomes unionized. Among non-professional employees, both general and specific beliefs are important in predicting how an individual will vote in a union election; however, specific beliefs have a stronger effect. In addition, the researchers found that co-worker support among professionals had a large impact on union voting behavior. This supports the notion that unions must focus their organizing efforts on cultivating support among incumbent employees and developing a stronger positive presence within a profession (such as the union s involvement in the leadership and gov- ernance in the profession and the union actively advocating for the profession).26

Evidence drawn from a study of collective bargaining agreements covering profes- sional employees reveals that the overwhelming majority of contract provisions include subjects quite similar to those traditionally included in industrial sector agreements. These provisions include wages, fringe benefits, grievance arbitration procedures, and so on. In addition to these traditional subjects, these professionals collective bargaining agreements also address professional issues. These issues can be categorized into six groups: (1) professional standards, (2) mechanisms for professional participation in pol- icy making, (3) regulation of professional work, (4) training and professional develop- ment, (5) commitment of organizational resources to professional goals, and (6) criteria for personnel decisions and the role of professionals in making these decisions. The study showed that although there is variation in the collective bargaining agreements among professional employee unions, unionism and professionalism are not inherently incompatible. Moreover, professional values and interests can be incorporated into the bargaining process along with the economic and job security issues of professional employees. With concrete evidence of compatibility between professionalism and union- ism, the opportunity is present for unions to promote their services.27

204 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Mary Kay Henry, a graduate of Michigan State University and the recently elected president of the Service Employees International Union (SEIU, which has approximately 2 million members), has vowed to turn the SEIU into even more of an organizing and political powerhouse and plans to increase membership by 150,000 per year. The SEIU plans to spend $250 million a year on organizing activities and expand membership to 3 million by 2020.28

Activities of the Union in Organizing Employees Employees initial interest in unionization is usually based on their present dissatisfaction with some work-related situation coupled with a belief that each employee acting alone cannot change the current situation. The union does not create this dissatisfaction with working conditions among employees; instead, it is in the union s interest to improve job satisfaction among employees by negotiating to improve working conditions. Therefore, during an organizing campaign, the union advertises the benefits that would flow from a negotiated collective bargaining agreement and successful handling of grievances.29

Most managers of nonunion companies incorrectly believe that labor unions initiate union organization drives; instead it is usually the employees themselves who begin the process by contacting the union. This contact with union organizers usually occurs fol- lowing the emergence of employees belief that there is sufficient support for the union and that the union s expertise and representation will help them.30

Union organizers enter the campaign by playing three general roles that influence employees decisions on whether to vote for unionization. First, organizers try to educate the workers on the benefits of the union, labor movement traditions, and protections afforded by union representation and the present laws. Next, union organizers attempt to persuade workers to vote for unionization and respond to statements and allegations made by management during the organizing campaign. Third, organizers try to support workers in their individual and collective actions.31 To ensure that these roles are carried out capably, unions recruit and select union organizers with the appropriate education, competencies, and personality characteristics.

Today, unions, especially those in the service industries, are hiring union organi- zers who have different characteristics from traditional union organizers in manufacturing. Service union organizers are almost 15 years younger on average, ten times more likely to be female, average almost 4 more years of higher education, and have an average of about 7 fewer years of union-organizing experience. They are six times less likely to have held elected positions in local unions and are less than half as likely to have served in appointed positions in local or national unions. Although nearly all of the union organizers in manufacturing were rank-and-file members early in their careers, only about half of the union organizers in the service industries were rank-and-file members.32

Union organizers must recognize that the workforce has changed significantly and has become more complex. Employees do not typically have a homogeneous set of pro- blems. As well, the growth industry sectors and occupations are different from those that were traditional strongholds for unions, such as manufacturing, mining, trucking, ship- ping, railroads, and construction. As a result, the selection of staff members to work as union organizers has changed. Instead of appointing staff members based upon political rewards, unions are selecting organizers not only from the rank-and-file members but also from colleges, law schools, Volunteers in Service to America (Americorps, VISTA), and other sources. Unions are then investing funds in training union organizers at the AFL-CIO s George Meany Center and improving their organizing capability through training at the AFL-CIO s Organizing Institute (see Exhibit 5.2).33

CHAPTER 5 Why and How Unions Are Organized 205

The union organizer assists in convincing employees that they can achieve more job-related benefits through collective action than by each individual s attempts to improve his/her job situation, they tailor the organizing approach to employee concerns and problems and focuses on the special needs of various groups, such as older workers, female or minority workers, or white-collar workers. The organizer tries to sell the idea that group action via the union provides the instrument through which employee con- cerns and dissatisfaction can be most effectively addressed.34

When a union organizer considers when and where to commit time and resources in organizing a group of unrepresented workers at a particular location, the union orga- nizer tries to anticipate the voting propensities of the workers. For example, workers who hold bad jobs which are defined by low pay, poor job quality, and arbitrary employer practices are usually more receptive to unionization. Other factors which are considered include the absence of job autonomy, presence of high levels of teamwork, especially self- directed teams, presence of high levels of coercion, stress, work fatigue, job insecurity, and low levels of task complexity and influence, and absence of contingent pay systems and less than 40 hours of work per week.35

Exhibit 5.2 AFL-CIO Organizing Institute Informational Flier

About the Organizing Institute

The Organizing Institute s (OI s) mission is to develop and promote the craft of organizing. Founded in 1989, the Organizing Institute highlights the importance of organizing within the labor movement. We recruit and train new organizers; col- laborate across the labor movement with community allies; and share successful approaches to support organizing and strategic campaigns.

Three-Day Training for New Organizers: Our first three-day training was launched in November 1989. Twenty-five years and hundreds of trainings later, thousands of alumni of the OI three-day union staff and members alike are orga- nizing, advocating and leading the fight for social change in unions and allied organi- zations. Check out our current training schedule.

Apprentice Program: Following the three-day training, the OI assists qualified applicants with field placement in organizing campaigns underway among affiliate unions. Trainees sharpen their one-on-one communication skills with help from a lead organizer and mentoring from OI staff. Successful graduates of this paid intern- ship are in high-demand for entry-level union and community organizing jobs. Click here to apply.

Union Summer: This six-to-eight week summer internship offers students and others interested in social justice on-the-ground campaign experience while on summer break from school or work. Field work is matched with orientation and training, so participants emerge with a broad understanding of issues facing America s working families.

Advanced Organizer Training: The OI advanced organizing workshop supports experienced organizers who are taking on large-scale and long-term organizing, non- collective bargaining environments, engagement with immigrant workers and other key organizing challenges.

National Organizing Workshop: In March 2015, the OI is bringing together the best organizers from all over the country to talk shop and dream big. We ll look forward, together, as we build a dynamic movement that wins real victories for workers and communities. Sign up here (http://www.organizinginstitute.org/#!/contact) for updates about this can t-miss event for working-class organizers.

SOURCE: http://www.aflcio.org/Get-Involved/Become-a-Union-Organizer/Organizing-Institute/About-the-Organizing-Institute

206 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Union organizers need to focus on the interests of the potential union members and determine what the union can provide to meet the needs of potential members and pro- vide an incentive for them to support and vote for the union. Researchers have found that union members feel positive about the union s ability to improve working conditions and job security. Also, workers who have been exposed to unions and unionized workplaces hold a more positive view of unions. Women who are not yet union members hold a pos- itive view of the union s ability to secure job security for their members. As a general rule, women have been more exposed to various forms of workplace discrimination. This dis- crimination creates a greater need for different kinds of protection which can be provided by the union. Union organizers should incorporate these interests and views into their strategies in attempting to gain the right to represent these employees.36

The influence of union organizers should never be underestimated by a company. The union organizers may be first seen distributing handbills to employees as they leave the company parking lots. Union organizers dress like the target employee group so that the employees will identify with them. Although their dress may be misleading, management should realize that union organizers are professionals. Like their counter- parts in management, contemporary union organizers must understand the psychology of the workplace and the labor relations climate in which employees work. Union orga- nizers must be able to (1) sort out these complex factors for the employees on a group or individual basis and (2) communicate in the employees language how the union can assist in fulfilling their needs in the specific work environment.

As an example, Exhibit 5.3 lists a number of work-related concerns and pro- blems. To the right of each is a possible course of action the union could take to satisfy the concern or to alleviate the problem. The union organizer would bring to

Exhibit 5.3 Union Strategy and Courses of Action to Achieve Employee Goals and Resolve Job-Related Concerns

Examples of Work-Related Pro- blems and Employee Concerns

Actions by Unions to Encourage Employees to Join Union

Relations between employees and management are poor.

Union will represent the interests of employees to management.

Employees do not trust their employ- er s promises.

Union will negotiate a contract requiring management to abide by its agreements.

Employees prefer to deal with man- agement as a group.

Union provides an opportunity for individual employees to deal as a group with the employer.

Employees want to have more influ- ence in workplace decisions.

Union provides a mechanism for influence by collective bargaining and administering the agreement.

Employees feel that productivity improvement would be more effective if employees had more say in how programs are run.

Union provides a mechanism in which employees can provide input into those issues that affect the workplace.

Employees question the effectiveness of the company s system for resolving employee problems and grievances.

Unions typically negotiate a grievance pro- cedure that provides representation for employees at each step and hearings before an outside, neutral arbitrator.

SOURCE: Richard B. Freeman and Joel Rogers, Worker Representation and Participation Survey (Princeton, NJ: Princeton Survey Research Associates, 1994).

CHAPTER 5 Why and How Unions Are Organized 207

the employees attention outcomes that could result from such activities by the union on their behalf.

The union enters the organizing campaign knowing that it must convince the uncommitted employees that the union is composed not of outsiders but of concerned fellow employees, that the changes the union proposes are worth fighting for, that the union will be able to protect employees against reprisals, and that union officials can be trusted. The union realizes that its success depends on the development of a strong inside organizing committee to convey the message directly to employees who do not attend union meetings, and on the ability of the union organizer to convey his or her own personal commitment and concern, get to know the employees, listen to employees about their job concerns, and have employees themselves speak at public meetings to express their feelings and their commitment to the cause.

Researcher Kate Bronfenbrenner has identified union campaign tactics characterized as the rank-and-file intensive strategy, which yields a higher union win rate than other tactics. This strategy focuses on representative leadership, personal contact, dignity and justice, and building an active union presence in the workplace. This strategy generates the worker participation and commitment necessary to withstand aggressive employer anti-union campaigns and to counteract any anti-union aspects of the economic, politi- cal, and legal climate. The components of the strategy are associated with union win rates, which are 12 to 26 percent higher than win rates for unions that do not employ this strategy (Exhibit 5.4).37

With Elizabeth Shuler, the youngest AFL-CIO secretary-treasurer ever and first female secretary-treasurer ever, taking the lead, unions are emphasizing organizing young workers between the ages of 18 to 34. A report from AFL-CIO s Working America found these young workers are worse off than young workers 10 years ago were. The report found that while it is hard for young people to find any job, it is even harder to find a good job. Only 31 percent make enough money to pay their bills and put some money aside in savings; this is 33 percentage points fewer than in 1999. Twenty-four percent make less than they need to cover their monthly bills, and 31 percent have no health insurance, up from 24 percent in 1999. Only 47 percent have retirement plans at work, down from 53 percent 10 years ago. Nearly 40 percent

Exhibit 5.4 Components of Rank- and-File Intensive Strategy That Are Associated with Higher Union Win Rates

1. Use of representative committees to be more in touch with concerns of the bar- gaining unit as a whole, to have better access to employees at the work place, and to demonstrate to the employees that the union is a democratic and inclu- sive organization

2. Person-to-person contact, house calls, and small-group meetings 3. Conducting union bargaining surveys, selection of the bargaining committee, and

working with rank and file to develop proposals before election 4. Focus on issues, such as dignity, justice, discrimination, fairness, or service quality 5. Serious commitment of staff and financial resources to organizing, involvement

of the international in union local campaigns, and training, recruitment, and effec- tive utilization of rank-and-file volunteers from already organized bargaining units

6. Use of solidarity days (designated days to wear union buttons, hats, T-shirts, arm bands, etc.)

SOURCE: Kate Bronfenbrenner, The Role of Union Strategies in NLRB Elections, Industrial and Labor Relations Review, 50 (January 1997), pp. 195 211; Kate Bronfenbrenner and Tom Juravich, It Takes More Than House Calls: Organizing to Win with a Comprehensive Union-Building Strategy, Organizing to Win, Kate Bronfenbrenner et al. eds. (Ithaca, NY: Cornell University Press, 1999), pp. 33 34.

208 PART 1 Recognizing Rights and Responsibilities of Unions and Management

have put off further education or professional training, and over a third of the youn- ger workers are living at home with their parents because they can t make it finan- cially on their own.38

Activities of the Company in Union Organizing Many employers, preferring the flexibility of remaining nonunion, resist efforts of a labor union to organize the employees. The employer realizes that the keys to its suc- cess in remaining nonunion are twofold: First, uncertainty and change are naturally stressful for workers; employers often try to magnify employees natural concerns about how the workplace might change if they unionize. Second, employers attempt to convince employees that the employer s past record shows that it deserves their sup- port or at least a second chance.

Positive human resource management practices, such as job enrichment/enlarge- ment, internal promotions, learning opportunities, bonus and merit pay, and employee involvement programs, seem to reduce nonunion workers desire to vote for a union in a representation election.39 The employer enters the campaign with three advantages: (1) It has instant and prolonged access to the employees; (2) although it can make no promises of higher wages and benefits during the election campaign, it is able to inform employees of the possibility of improvement without any cost to them and without the creation of a new bureaucracy; and (3) it can take advantage of the fact that most people find the thought of substantial change in their lives frightening.40

Employers presently have favorable positions during the pre-election campaign. Not only do employers control employees jobs and their livelihoods, but they may also require employees to attend meetings on the job wherein the employer talks about employer employee relations. Unions are denied equal access to employees. Employers may commit an unfair labor practice by firing an employee for engaging in union activities. If they do, the remedial process of the NLRB often takes years. Unfortunately, some employers view breaking the law (and any associated costs with that) as simply a price to pay to say union free. 41

Employer campaign tactics attempt to persuade employees to vote against unionization. Usually more than one campaign activity must be used. The most commonly used employer tactics are hiring a labor lawyer or consultant, spreading rumors about loss of jobs, and spreading rumors about store or plant closings. In terms of making a difference in the outcome of the election, employees are more likely not to choose the union when the employer spreads rumors about a store or plant closing. On the other hand, employees are more likely to choose the union when the employer intentionally delays the election and when the unions work closely with community leaders to facilitate acceptance of the union by citizens in the community. Two employer tactics that have backfired and are associated with employees vote for the union are shifting work and jobs to other facilities and test- ing applicants to identify union sympathizers.42

Employers frequently use the second chance strategy. When the employer s past record has not been good for employees and problems clearly exist, the second chance strategy encourages the employer to admit that conditions could have been better and request employees to give the employer a second chance to do better. Often, employees are inclined to give management another chance when management indicates that it is listening. This is a one-time-use only strategy. If the employees vote no union and the employer does not make necessary changes, then another election will probably fol- low after 12 months and the second time employees won t be as responsive to manage- ment s message.

CHAPTER 5 Why and How Unions Are Organized 209

Other employer practices may affect the outcome of the election. For example, the employer can influence the election outcome by changing the election unit composi- tion and the date of the election. They may influence the election outcome modestly by such activities as publicizing the disadvantages of the union, displaying posters, and making campaign speeches. Companies must be cautious in election campaigns because they may overdo their resistance and cause a negative reaction from employ- ees, especially when both attorneys and management consultants are used.43 For exam- ple, in one election, union organizers said things like, The owners would rather pay a consultant tens of thousands of dollars than pay you a decent wage! Thus, overreac- tion to a union s campaign with vigorous tactics may create a more favorable climate for unionization.44

The use of consultants in organizational campaigns has increased dramatically. One study reports that most elections are directed by consultants. In these campaigns, consul- tants advise employers how to persuade employees not to vote for a union. According to this research, almost all companies actively resist the union by making captive audience speeches (employer speeches to employees on the job) and writing letters to employees. Employer unfair labor practices were committed in over half of these elections.45 Use of consultants to advise employers how to persuade employees not to vote for a union requires reports to be filed with the secretary of labor, even though the consultants usu- ally have no direct contact with employees.46

Attorneys who specialize in union avoidance campaigns are often employed either to offer advice on questions of labor law or to devise strategy and conduct the union avoidance campaign. In addition, attorneys may interview supervisors to identify sources of employee discontent and to ameliorate the discontent that led to the orga- nizing campaign; raise the perceived costs of union representation by such tactics as publicizing possible major layoffs and closings at unionized plants; train supervisors in how to effectively present the employer s position to the employees; prepare and edit campaign literature and speeches for company officials; and build support and sympathy for the employer in the local community. An inexpensive campaign in a small to medium-sized firm with one attorney could cost up to $30,000 in legal fees. An all-out campaign with several attorneys using the latest campaign tools, such as slick DVDs and visits by prominent politicians and civil rights leaders, could easily exceed $100,000. The cost of a campaign in a large, multi-plant firm involving a dozen attorneys could exceed $1 million. These costs are incurred at the rate up to $400 per hour for attorneys from specialized labor law firms ($500 per hour or more for prominent attorneys from specialized labor law firms).47

A leading management lawyer who promoted his ability to keep unions out of the workplace has an interesting approach when a union wins the right to represent employees in an election he encourages management to use Surface Bargaining, where the company goes through the motions of negotiating a contract but actually has no intention of reach-

ing an agreement. Management negotiators keep the first collective bargaining agreement from being negotiated by making only small concessions and using delay tactics. He suggests that while management delays bargaining, union support will eventually wane. Then, after the first year passes, a decertification election can take place.48

Illegal discharges and other forms of discrimination against union activists, used by employers to affect the outcome of the election, have increased dramatically in the past several years. Such discrimination reduces the probability of an organizing success by 17 percent and cuts nearly in half the likelihood of a first contract being obtained. Nearly all these illegal activities occur during an organizing drive, just before an election, or

210 PART 1 Recognizing Rights and Responsibilities of Unions and Management

during the first contract negotiations. Such violations generally occur when employers perceive the financial gains of keeping unions out are far greater than the cost of back- pay awards and reinstatement of union advocates, and such is often the case. One study reported that less than half of illegally discharged workers were offered reinstatement, and only 69 percent of those ever returned to work. Because it takes so long to adjudi- cate a case, and reinstatement comes so long after the organizing drive, some employers have been able to frustrate the legal process and use it against the union and employees interested in the union.49

One way in which some employers deny employees their legal rights is through worker misclassification, for example, classifying employees as independent contrac-

tors, self-employed, or leased workers. By this worker misclassification, the employer not only denies employees their legal rights, such as the right to form and join a union, but the employer does not pay its share of Social Security and Medicare obliga- tions, unemployment compensation, or state worker insurance. A representative of the Mason Contractors Association of America estimated that the worker misclassifi- cation reduces labor costs by as much as 30 percent; however, law abiding companies have to make up the difference and are placed at a competitive disadvantage. A Coop- ers and Lybrand study estimated that worker misclassifications cost the federal gov- ernment nearly $35 billion in lost taxes; other studies estimate between $3 and $4 billion per year. An Ohio attorney general s report revealed that worker misclassi- fications cost the state $30 million in payments for unemployment compensation, $103 million in workers compensation premiums, and over $36 million in forgone state income tax revenue.50

In a 2014 decision, the NLRB ruled that it would consider the following factors in determining whether one is an employee or an independent contractor and indicated that no single factor was determinative:

(a) The extent of control which, by the agreement, the master may exercise over the details of the work.

(b) Whether or not the one employed is engaged in a distinct occupation or business. (c) The kind of occupation, which reference to whether, in the locality, the work is usu-

ally done under the direction of the employer or by a specialist without supervision. (d) The skill required in the particular occupation. (e) Whether the employer or the workman supplies the instrumentalities, tools, and the

place of work for the person doing the work. (f) The length of time for which the person is employed. (g) The method of payment, whether by the time or by the job. (h) Whether or not the work is part of the regular business of the employer. (i) Whether or not the parties believe they are creating the relation of master and

servant. (j) Whether the principal is or is not in the business.51

Two relevant questions are: How do employers reconcile their personal ethics when either they or their representatives knowingly commit illegal practices by dis- charging an employee or a group of employees for exercising their legal right to sup- port a union? Moreover, why does the U.S. Congress continue to tolerate such an imbalance in the legal procedures governing the exercise of statutory rights that have existed in the United States since 1935? In an effort to make employees aware of their rights under the NLRA, the NLRB requires federal contractors to post a notice of employee rights under the NLRA.

CHAPTER 5 Why and How Unions Are Organized 211

Unintended Consequences of Anti-union Behavior Fear among employees of reprisal for disclosing interest in the union in the work envi- ronment can make fear a central experience for the nonunion employees even though they have not disclosed their interest in union representation. This concealment has the potential of causing a sense of anxiety that comes with living with this conceal- ment. A work environment wherein employees experience this fear of reprisal for dis- closing an interest in unions becomes a stressful work environment which can be detrimental to the health of employees. These stress effects of employees who are asso- ciated with fear in the workplace can extend to cardiovascular disorders, for example, hypertension, to musculoskeletal disorders, for example, chronic fatigue, to gastroen- terological disorders, for example, ulcers and to psychological disorders, for example, clinical depression. As a result, the costs incurred by employers of keeping the unions out may result in the untended consequences of employers paying for higher health care expenses for the employees.52

Methods for Organizing Unions The three basic ways for organizing unions are: (1) voluntary recognition, (2) NLRB directives, and (3) secret-ballot elections (Exhibit 5.5).

Voluntary Recognition By far the simplest and least confrontational path to union recognition is voluntary employer recognition often based on union authorization cards (see Exhibit 5.6). Gener- ally, a union officer approaches a management official and asserts that a majority of the employees in a particular bargaining unit have signed cards authorizing the union to be their bargaining representative. The union officer typically does not show the individual signed cards to the manager, to prevent retaliation. If the manager agrees to voluntarily recognize the union, a neutral third party will often compare the cards against the names of employees in that department to verify that a majority of employees want a union. This is called a Card Check Procedure.

Why do managers agree to voluntarily recognize unions? There are several possi- ble motives. First, they may feel that fighting the union is futile. If an organizer claims that an overwhelming majority (say, 89 percent) of the workers signed cards, manage- ment may feel that even if they decide to try to persuade the workers to remain non- union, a majority will continue to support the union. Second, they may feel that they may get a better deal in future contract negotiation if they appear conciliatory and accept the workers decision to unionize. Third, the union may have a reputation for violence and the managers may feel too intimidated to resist. Fourth, managers may have heard that a different, more militant union is trying to organize the workers, and it comes as a relief to find a more moderate and reasonable union claims to have a majority support; recognizing the moderate union may forestall dealing with the mil- itant alternative.

For employers who have some unionized facilities and other nonunion facilities, neutrality agreements are often used in conjunction with card check procedures. A neu- trality agreement is basically a joint memorandum between the union and management where management agrees not to oppose unionization efforts in its nonunion facilities. Technically, the employer remains neutral while employees who are union supporters contend with employees who oppose unionization on both sides seek to persuade unde- cided workers. The reality is that supporters usually have their international union sup- plying professionally developed campaign literature and DVSs, while opponents must

212 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Exhibit 5.5 Basic Union Representation Procedures

CHAPTER 5 Why and How Unions Are Organized 213

rely upon home-made materials. Not surprisingly, unions win more representation elections when a neutrality agreements in place.

Several unions, particularly the SEIU and UNITE/HERE, have been successful in organizing tens of thousands of employees under these neutrality/card check agree- ments. To summarize, these agreements require the employer to take a neutral posi- tion on whether or not employees chose a union and to allow signatures on union authorization cards to count as a vote for the union. The current agreements between the Big Three automakers and the UAW contain provisions for employer neutrality and card check. With such success, opposition groups, such the National Right to Work Committee and other groups, are challenging these agreements in court and before the NLRB.53

In December 2010, the NLRB found that Dana, an auto parts manufacturer, and the United Auto Workers had not violated labor laws when they agreed to certain grounds by which the union would be recognized if a majority of employees signed cards in favor of union representation and by creating a framework for any future collective bargaining agreements. The agreement between Dana and the UAW stated:

We both believe that membership in a union is a matter of personal choice and acknowledge that if a majority of employees wish to be represented by a union, Dana will recognize that choice.

The parties also agreed that any labor agreements that resulted from the agreement would be at least four years long and would incorporate team-based approaches, keep health care costs at competitive levels, and allow for mandatory overtime when necessary.54

Exhibit 5.6 Example of a Union Authorization Card

SOURCE: Courtesy of the United Food and Commercial Workers International Union.

214 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Proponents of the card check procedure argue that it substantially diminishes the employer s opportunity for coercive campaigning and reduces conflict between the par- ties, thereby leading to more positive labor relations. Opponents emphasize that peer pressure makes it difficult for employees to express their genuine feelings about the union. In addition, opponents say card checks are subject to misinterpretation of the card s meaning, even outright forgery of worker signatures. They argue that without a campaign, workers hear only one side and are thereby insufficiently informed. A study of NLRB elections by Getman and associates reports that approximately 75 percent of the people who sign cards actually vote for the union. This suggests that while cards are a reasonable surrogate for ballots, they are not perfect, and perhaps a higher thresh- old than 50 percent should be used (mathematically, it would be 67 percent) if cards are to be true indicators of a majority support for unionization.

Research that included interviews from workers in 48 union campaigns revealed the following:

Pressure on workers from employers to oppose unionization was significantly greater than pressure from co-workers or union organizers to support unions in both card check campaigns and NLRB elections. There was a reduction of labor law violations by employers under the card check procedure. Ninety-four percent of the workers who signed cards in the presence of union organizers did not report feeling pressured into signing the cards. There was reduced flow of information under the card check procedure; however, workers who did not feel they had sufficient information did not sign the cards, which is essentially voting no union. Card check procedures reduced intimidation and other pressures on workers who were faced with the unionization decision.55

Neutrality agreements typically contain language stating that the employer will nei- ther help nor hinder a union s organizing efforts, will not communicate opposition to the union, will not refer to the union as a third party, will not attack or demean the union or its representatives, and other similar provisions. The language in card check agree- ments typically calls for a third-party neutral to validate the cards to determine whether a majority of the bargaining unit employees want the union to represent them. Most of these agreements allow union access to the physical property of the employer and set limits on the union s behavior, most commonly not to attack management. In over 90 percent of the agreements, some form of dispute resolution, most frequently arbitration, is set up to resolve alleged violations or disputes that may occur during the term of the agreement. An example of a dispute is disagreement over the composition of the bar- gaining unit and eligibility of employees to sign union authorization cards.

Most employers still refuse to voluntarily recognize a union even when union orga- nizers present signed authorization cards (see Exhibit 5.6) from a majority of employees. Management might be concerned that these cards were obtained through inappropriate means (e.g., after drinking parties, under threats of violence, or through forgeries). Employers also realize that authorization cards are not always accurate predictors of union success in representation elections.

If a union is voluntarily recognized, its status as bargaining representative cannot be challenged during reasonable period for bargaining (not less than six months and not more than one year). Although the Board did not directly address the legality of employer neutrality or card check agreements, the new rule potentially alters how and when employers or unions may choose to enter neutrality and card check agreements.56

CHAPTER 5 Why and How Unions Are Organized 215

Since 1966, if an employer voluntarily recognized the union based on a card check agreement, the recognition bar applied. Any filing for decertification by a group of employees or a rival union during the year after the recognition would have been untimely. In addition, the one year time limit could be extended for up to three years if and when the parties nego- tiated and included such agreements in their collective bargaining agreement.57

In an interesting chain of events which actually ended in the voluntary recognition of two groups of employees (even after the union did not receive a majority of the votes in favor of the union), Volkswagen recognized the UAW as well as an independent employee group. See the Labor Relations in Action on the above.

NLRB Directive In rare and very controversial cases, the NLRB may direct the employer to recognize and bargain with the union. Although the NLRB considers secret-ballot elections superior, it

LABOR RELATIONS IN ACTION Volkswagen and the United Auto Workers Chattanooga, Tennessee

2008 Volkswagen announced its intention of building a $1 billion (with $577 of local, state and federal govern- ment incentives) assembly plant in Chattanooga, Ten- nessee. The plant was projected to employ 2,000 workers and produce 150,000 cars per year. Volkswa- gen has over 100 plants worldwide; the Chattanooga plant is the only one which is nonunion.

2011 The first Passat rolls off the assembly line. January 27, 2014 the UAW and Volkswagen

signed an agreement to have the NLRB conduct a representation election of the production and mainte- nance employees at the Chattanooga TN plant.

February 19, 2014 the Volkswagen workers voted 712 to 626 against union representation. UAW presi- dent Bob King blamed the defeat on the outside inter- ference from U.S. Senator Bob Corker, formerly Mayor of the City of Chattanooga and Tennessee Governor Bill Haslam. Both Corker and Haslam predicted that unioniz- ing the plant would hurt the state s economy and Corker warned that VW would move production of its new mid- sized SUV to Mexico. It was reported that the adminis- tration of Governor Bill Haslam offered VW $300 mil- lion in incentives to expand in Chattanooga as long as the UAW was not part of the picture.

October 2014 A group called the American Council of Employees began competing with the UAW to serve as the voice of workers with Volkswagen management.

November 19, 2014 VW s Juergen Stumpf, a mem- ber of VW s global works council, is quoted as saying his colleagues back in Germany were puzzled about what had happened in Chattanooga with the fierce politics surrounding unionization, it was hard to understand ... I would understand it being in North Korea.

December 2014 Volkswagen management announ- ced that an audit showed that at least 45 percent of the

workers supported the UAW. Under the Volkswagen Com- munity Organization Engagement policy, VW stated it has recognized the UAW as the collective bargaining agent for the 1,500 workers at the plant and would hold bi-weekly and monthly meetings to talk about issues.

January 2015 Tennessee Senate Speaker Pro Tempore Bo Watson was quoted as criticizing VW s support for the UAW and saying that VW conducted a labor campaign that s unfair, unbalanced and quite frankly un-American.

February 2015 Volkswagen announced that it had recognized the American Council of Employees (ACE), an independent employee council which repre- sents hourly and salaried employees, and will meet with them to discuss safety, productivity, efficiency, and other areas of concern. Sean Moss, interim ACE president, announced that its next step was to develop a works council similar to the German Model of employee representation which exists at other VW s plants.

November, 2015 Volkwagen objected to a request from a small group of maintenance workers at its Chatta- nooga plant to hold a vote on representation by the United Auto Workers. The Volkswagen instead re- quested a full vote by all maintenance and production employees at the plant. The Company remains neutral in regards to our employees rights to representation and an election, but the company believes that the main- tenance-only unit requested in the petition is not consis- tent with its One Team approach.

SOURCES: Lydia DePillis, The Strange Case of the Anti-Union Union at Volkswagen s Plant in Tennessee, Washington Post, November 19, 2014; http://www.wsj.com/arti- cles/uaw-to-begin-bargaining-for-volkswagen-plant-in-tennessee-1418143882?; http:// www.detroitnews.com/story/business/autos/foreign/2014/12/09/Volkswagen-decision; http://www.americancouncilofemployees.com

216

has discretionary authority to use alternative means to determine the majority interests of employees. In the landmark Gissel case, the NLRB decided (and the Supreme Court agreed) that a company may be ordered to recognize and bargain with a union under the following conditions:

1. Evidence reveals that a fair, impartial election would be impossible because of seri- ous or numerous employer unfair labor practices.

2. Wording on the authorization cards is clear and unambiguous (Exhibit 5.6). 3. Employee signatures on the cards were obtained without threat or coercion. 4. A majority of employees in the bargaining unit had indicated their interest in

having the union represent them by signing the authorization cards.58 (Card sig- natures are valid for 12 months unless voluntarily withdrawn by the employee who signed the card prior to a union s use of that card as evidence of employee support.)

In essence, the NLRB and the courts sometimes conclude that an employer has com- mitted flagrant and usually numerous violations of the law. In such situations, the employer has typically intimidated workers with the LMRA violations. Holding another election in these situations is not a realistic remedy because the workers will not vote their true desires. Under such conditions, the next best alternative for measuring union support is the workers willingness to sign union authorization cards (occurring before the campaign period and typically occurring before many of the flagrant viola- tions). Thus, in these instances, if a majority of the workers signed union authorization cards, the NLRB will forgo ordering an election and instead order the union to be certi- fied and management to negotiate with that union.

NLRB does not issue Gissel bargaining orders frequently. During a ten-year span from 1987 to 1996, the NLRB issued an average of ten per year. Then, if appealed by the company to the U.S. Circuit Court of Appeals, only about 50 percent of the bar- gaining orders were enforced.59 (The NLRB does not currently keep records on Gissel orders.)

An analysis of NLRB opinions issued since 1969 reveals a measure of predictability in deciding whether the NLRB will issue a Gissel bargaining order. The NLRB is more likely to issue a Gissel bargaining order:

When it believes that an employer s illegal acts are deliberate or calculated. If the employer s conduct threatens the employees economic interests. If the employer s actions are characterized as vengeful and the NLRB does not believe the actions can be remedied without a bargaining order. When the employer engages in a series of unfair labor practices rather than a single incident.

An NLRB-ordered bargaining order has little value without federal judicial enforce- ment (see Chapter 3) through the U.S. Circuit Courts of Appeals, which tend to rely on a case-by-case analysis. Before enforcing the NLRB s bargaining order, the courts require the NLRB to provide a reasoned explanation of why a rerun election would be futile. In general, if an employer s unfair labor practices seem reprehensible or egregious, the courts will be more likely to enforce the NLRB s bargaining order. For example, if a com- pany takes unlawful actions, such as terminating employees because of their union activ- ities or making threats about the consequences of unionization, the courts will likely enforce the bargaining order.60 Threats of an actual plant closing to deny employees an opportunity to exercise their Section 7 rights is also considered a serious unfair labor practice which could justify a Gissel doctrine bargaining order from the NLRB.

CHAPTER 5 Why and How Unions Are Organized 217

NLRB Secret Ballot Election Pre-NLRB-Election Union Campaigns. The union pre-election campaign is not simply a process of exchanging letters and handbills and then holding an election. The cam- paign usually goes through several stages:61

1. Contacting employees as a result of either employee requests for help or distribu- tion of union literature (handbilling) at the workplace by the union.

2. Determining interests by calling meetings, visiting homes, and counting responses to handbills. (See the previous Labor Relations in Action feature for an array of responses received by union organizers who were seeking support from employees.)

3. Setting up an organizing committee by identifying leaders and educating them about the benefits and procedures of the union, the law, and the issues likely to be raised by management.

4. Building interests by soliciting signatures on authorization cards (see Exhibit 5.6 on p. 214). (Most organizers will wait to announce that the union represents a majority until over 50 percent, and usually 60 to 80 percent, have signed cards.)

During this time the union discovers and highlights employees problems, compares wages at their facility to wages at unionized facilities, and explains the role of the union in helping to satisfy job-related needs. In other words, the union will attempt to convince workers that they need a union and then that they should sign union authorization cards and support the forthcoming organizing campaign by wearing union buttons, attending meetings, and signing up members. Although various means are available to gain sup- port, research indicates that one-to-one contact; peer contact and persuasion; and high quality, professionally designed written communications are most effective.62 Other efforts used by unions include television and radio advertising, hotline telephone num- bers, group meetings, and handbilling.

Organizing new locals is costly. Evidence shows that the cost of each additional union member is about $600.63 These costs include direct, out-of-pocket expenditures for such items as the printing and mailing of leaflets and other literature, rent for office

LABOR RELATIONS IN ACTION Objections to Joining the Union

Why should I join the union when I get exactly the same wages and benefits without joining?

I can t afford to join. I ve got a family to support, and my check just isn t big enough [to cover union dues].

I don t believe in unions. They are too strong and powerful now to suit me.

I don t need a union. My employer is fair and will take care of me. What could the union get for me that I wouldn t have gotten anyway?

My husband (or other relative) doesn t like unions.

The union does not do anything for you [grie- vances are not settled satisfactorily]. I don t like the peo- ple who are running things in the union.

I can handle my own affairs. I can take care of myself. I ll make my own decisions. I do not intend to stay on this job forever; I m looking for a promotion.

My religion doesn t permit me to belong to any outside organizations.

My boss doesn t believe in unions. I ve seen what happens to union members.

I don t want anything to do with unions. They are all corrupt.

I don t know enough about the local or the union movement.

I m not interested. I just don t want to join. I ll think about it. Maybe I ll join someday.

SOURCE: Organizing Committee, AFSCME Council 24, WSEU, 5 Odana Court, Madison, Wisconsin.

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space, salaries for staff hired, and legal fees. These efforts take time from the union staff that could have been devoted to providing services to present union members (handling grievances, arbitration, and negotiations).

The costs of organizing new members must be compared with the returns:

Extra compensation made possible by increased bargaining power Additional dues and fees paid by new members Enhanced political influence Social benefits and satisfaction derived from extending membership to others64

Companies often learn of union-organizing attempts from supervisors or rank- and-file employees and through observing handbilling at the work site before they receive official notification (by letter or telegram) from the union demanding recognition. Some companies react vigorously, whereas others do little to acknowledge any union s attempt to organize the employees. Some employers tell their employees about their opposition and urge them not to sign union authorization cards. Because the cards may specifically state that the signee wants union representation, any employee signature assists the union in establishing itself within the company. See the Labor Relations in Action feature on page 220 for typical employer messages during a union campaign.

Filing a Petition for the Election. Before 1935, to obtain recognition, the union usually had to show its strength and employee interest in representation by such actions as strikes. The Wagner Act and the NLRB changed this situation by developing procedures and guide- lines for peacefully determining the majority interests of employees through representation elections or some other comparable demonstration. The NLRB procedure is initiated when the potential bargaining representative for the employees files a petition for an election.

The NLRB is authorized to conduct a representation election only when a valid petition has been filed by an employee, a group of employees, an individual or labor organization, or an employer. Usually the petition is filed by the union after it has requested union recogni- tion from the employer and the request is denied. The petition must be supported by evi- dence (usually authorization cards) that a substantial interest in union representation (at least 30 percent of the anticipated bargaining unit) exists. An employer cannot petition for an election until the union seeks recognition. If the employer could, it would petition at the time when the union s support was weakest. After receiving a petition, the NLRB will first determine whether it has jurisdiction and the petition is valid. If so, it will promptly notify the company and request a listing of employees. Companies are not required to submit this list but usually comply with the request as an act of good faith. Next, the NLRB will arrange a conference with the company and union to discuss the possibility of a consent election. Here, if both sides agree to the appropriate bargaining unit, voter eligibility, ballot; and date, time, and place for the election, a consent election will be held. If either party refuses to agree on any one of these items, a formal hearing to settle these matters will be conducted.

Election Investigation and Hearing. In the event that the union and management offi- cials cannot agree to a consent election, the NLRB will investigate the petition and hold a hearing. If it finds that there is substantial interest in union representation, the NLRB will. direct an election (directed elections) This investigation will secure answers to the following questions:

1. What is the anticipated appropriate bargaining unit? 2. Does substantial interest in representation (30 percent) exist among employees in

the unit? 3. Are there any barriers to an election in the form of existing unions, prior elections,

or current labor agreements?

CHAPTER 5 Why and How Unions Are Organized 219

The formal hearing permits both parties to present evidence on issues in dispute, for example, composition of the bargaining unit, date of election, voter eligibility, and so on. Based on the evidence presented, the NLRB regional director will issue a directed elec- tion order which includes his or her decision on disputed issues at the hearing and prior voluntary agreements between the parties about other election issues.

Appropriate Bargaining Unit. An appropriate bargaining unit is a grouping of jobs or positions in which two or more employees share common employment interests and conditions (community of interests) and which may reasonably be grouped together for collective bargaining purposes. Determination of an appropriate bargaining unit is left to the discretion of the NLRB, which decides in each representation case how employee rights can best be protected under the act. The Board s decision has, however, been lim- ited by law in several ways. The statute includes the following:

Professional employees cannot be included in a unit composed of both professional and nonprofessional employees unless a majority of the professional employees vote to be included in a mixed unit. A proposed craft unit cannot be ruled inappropriate simply because a different unit has been previously approved by the NLRB unless a majority of employees in the proposed craft union vote against being represented separately. Plant guards cannot be included in any bargaining unit that has nonguard employ- ees in the unit because of the potential conflict of interest, such as searching a fellow union member s locker for stolen property. Supervisors and managers are not considered employees covered under the act and may not be in any bargaining unit. A supervisor is defined as any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them, or to adjust their grievances, or effectively to recom- mend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment. The Board does not focus on job titles; instead, the Board focuses on whether the supervisor in question does in fact exercise independent judgment in making decisions. 65

LABOR RELATIONS IN ACTION Examples of Employer Messages during a Representation Election Campaign

Tell employees that union contracts often contain wage cuts or givebacks. Mention that the union does not provide jobs and give examples of companies that have laid off employees who were union members. Explain that if the workers choose the union, the employer will be obligated to bargain with the union in good faith, but the employer cannot be forced to agree to contract provisions that are not in its best interests. Tell employees that a company must remain com- petitive and has a right to try to make a profit. If its

labor costs are so high that it cannot sell its product at a profit, it cannot remain in business. Advise employees that they can revoke the autho- rization card and explain the procedure to do so. Indicate that the union dues vary but can be as much as $600 per year. Tell employees that the employer has the legal right to hire permanent replacements for strikers.

SOURCE: Maintain a Union-Free Status, by Paul S. McDonough, Personnel Journal 69 (April 1990): 108 114.

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Excluded are agricultural laborers, public employees (except postal employees), and independent contractors, although some of these may be covered in separate state statutes. Confidential employees (individuals with access to confidential information, such as management s bargaining strategies) and some family members (e.g., the confiden- tial employees son, daughter, and spouse) are excluded, even if they work in bar- gaining unit jobs. Similarly, an owner s family members who work in bargaining unit jobs are typically excluded.

The interplay between a professional employee and a supervisor becomes more com- plicated when the professional employee exercises some supervisory responsibility over less-skilled employees. For example, nurses often direct the work of less-skilled aides and others in clinics and hospitals. In 1994, the Supreme Court made it more difficult for nurses in nursing homes to organize when it ruled that licensed practical nurses (LPNs) were not employees under the NLRA because they attended to the needs of nursing home patients and therefore acted in the interests of their employer. Then, in 2001, the Supreme Court ruled that six registered nurses were not employees under the NLRA because these nurses exercised a sufficient degree of discretion when they directed less- skilled employees to provide services to patients.66 In 2006, the Board spelled out the sev- eral standards for determining the inclusion or exclusion of nurses in the appropriate bar- gaining unit: responsible direction, assignment, independent judgment, and rotating of charge nurses. The Board concluded that in order to direct employees responsibly, a super- vising nurse must be held accountable for the performance of the task and must have authority to correct errors. In order to meet the assignment test, a supervising nurse must have authority to designate another nurse to a place, time, or type of work. In order words, a nurse who is determined to be a supervisor must have the necessary discre- tion to make an assignment which requires independent judgment.

In a later case, the Golden Crest Healthcare Center, the Board determined that nurses were employees, not supervisors, even though they executed supervisory authority in assigning nurse assistants. The Board found that the charge nurses directed nurse assistants and their performance was evaluated on that criteria; however, there was no evidence that adverse consequences, e.g. discipline, would have resulted if the charge nurse failed to adequately perform these duties.

The Board has since applied these standards in non-nursing cases. The Board deter- mined that lead persons in a company were not supervisors even though they had a role in hiring, disciplining, discharging, and evaluating employees. The Board determined that these lead persons did not have authority to assign employees and that their discre- tion was not greater than routine or clerical. Therefore, the Board determined the lead persons authority did not require independent judgment.67

On occasion, the NLRB has to decide who the employer is. During the nationwide fast food workers campaign involving employees of McDonalds, USA, LLC, and numerous McDonald s franchises over protests to improve working conditions and wages, 310 unfair labor practices charges were filed. Of those cases, 149 were settled, but 109 cases were found to have merit. Approximately 10 cases involved solely corporate-owned McDonald s facilities. However, in 2015, the NLRB found that McDonald s through its franchise relationship was a joint employer with its franchises. The NLRB found that McDonald s through its use of tools, resources, and technology engaged in sufficient control over a franchisees operations shared liability for viola- tions of the National Labor Relations Act.68

On occasion, the NLRB has to determine whether employee status exists. In a con- troversial decision, the Northwestern University football players were determined by an

CHAPTER 5 Why and How Unions Are Organized 221

administrative law judge within the NLRB to be employees within the meaning of the National Labor Relations Act and the NLRB conducted a representation election. How- ever, on appeal, the Board ruled that the football players were not employees and did not count the ballots,thereby voiding the election. In 1999, the Board had previously deter- mined that interns, residents, and fellows at Boston Medical Center were employees. Northwestern University argued that its relationship with student-athletes was primarily education, not economic. The NLRB conducted the election in April of 2014 and the ballots were impounded. The ballots would have been counted if the Board had decided that the football players were in fact employees. In the meantime, the NCAA has pledged greater scholarship protection and better health care for student-athletes and are offering an increase in student-athlete monetary stipends.69

The determination of the appropriate bargaining unit and the jurisdiction of the federal agency can also play an important role in determining whether a union will be successful in its organizing effort. An interesting comparison between United Parcel Ser- vice (UPS) and FedEx is highlighted in the Labor Relations in Action.

This NLRB s determination of the appropriate bargaining unit influences whether the union will win the election, who will vote in the election, whether one union will prevail in an interunion contest, whether craft employees will have their own union or be included in a plant-wide unit, who the union must represent, who will be covered by the collective bargaining agreement, or whether the union will include key employees who could give direction and leadership for the bargaining unit employees.

Analysis of NLRB representation elections indicates that the success of a union cam- paign depends on the composition of the appropriate bargaining unit. When the appro- priate bargaining unit is composed of similarly skilled groups, the union will likely succeed. This may be because decisions within unions are made through a democratic process, and a degree of consensus is necessary to facilitate decision making and to win the support of the majority. However, when different skill groups comprise the bargain- ing unit, achieving consensus is more difficult, and majority support for the union like- wise is harder to achieve and maintain. Thus, the NLRB s policy of including in a bargaining unit all production and maintenance employees within a plant (which would include a diversity of skills) may have contributed to the decline in union mem- bership as a percentage of the total labor force. A more narrowly defined bargaining unit composed only of employees of similar skills (such as electricians) would favor the union winning the representation election and sustaining the continuation of the union.70

Suppose that the union wins and is successful in negotiating a union shop clause. Recall that a union shop clause requires new employees to join the union within 30 days after employment commences. The appropriate bargaining unit may determine which employees will be required to join the union. Therefore, the composition of the bargain- ing unit is important to the employer, the union, and the public.

Some companies pay attention to these considerations and take preventive steps regarding management structure, employee interactions, and personnel policies and practices. For example, if the company prefers a large multi-unit bargaining unit, it will retain centralized control on management practices and decisions. If it prefers smaller, independent units, it will decentralize decision making in these independent units. Because the union has no control over management structure and the authority responsibility relationship, it can try to convince the NLRB that the bargaining unit should be composed only of those employees in specific job groupings where the major- ity support the union.71

Should a plant have several small bargaining units, the employer may face different unions in negotiations several times throughout the year, thereby potentially causing

222 PART 1 Recognizing Rights and Responsibilities of Unions and Management

continuous instability in labor relations and production. Separate units concerned with similar jobs may cause disputes over rights to jobs, leading to grievances, strikes or slow- downs. Should a small bargaining unit be merged with a nationwide bargaining unit, any confrontation that resulted in a strike could cause a nationwide shutdown and complica- tions for customers in need of the companies products. Chapter 6 covers the various bargaining structures and their implications.

The appropriate bargaining unit itself usually covers employees in one plant, but may cover two or more facilities of the same employer. The NLRB considers the com- munity of interests in determining the composition of an appropriate bargaining unit. It evaluates the following factors:

Interests of employees and employers Commonality of wages, working conditions, training, and skill History of collective bargaining either at the location in question or another facility owned by the company Transfers of employees among various facilities Geography and physical proximity of the workplaces Employer s administrative or territorial divisions Degree of separation (or distinctiveness) of work or integration (or interrelatedness) of work72

When the relevant factors do not give a clear indication for the composition of an appropriate bargaining unit, an election (commonly called a Globe election, from the original NLRB case) may be held to determine employee interests. For example, one group of electricians in a steel plant might wish to be represented by the International Brotherhood of Electrical Workers (IBEW) instead of the United Steelworkers of Amer- ica (USWA). The USWA wants to include all electricians in a bargaining unit composed of all production and maintenance employees in the plant. Under such circumstances, the electricians vote will determine whether they will be members of USWA, a separate electricians union (IBEW), or no union.

The U.S. Supreme Court supported the NLRB s first rule-making effort to determine appropriate bargaining units for private acute-care hospitals. Eight standard bargaining units were established for approximately 4,000 acute-care hospitals: (1) all registered nurses, (2) all physicians, (3) all professionals except registered nurses and physicians, (4) all technical employees, (5) all skilled maintenance employees, (6) all business office clericals, (7) all guards, and (8) all other nonprofessional employees. Such rule-making practices reduce the number of cases in which employers are able to contest the number and composition of the appropriate bargaining unit. Previously, employers had some- times intentionally challenged the composition of the bargaining unit in order to delay the election and thereby increase the chances that the union would not win representa- tional rights.73

In 2000, the Board ruled that, under the National Labor Relations Act, a group of medical interns, residents, and fellows were employees and formed a proper bargain- ing unit, even though they were students. This ruling overruled a previous ruling that had excluded such individuals from bargaining units of employees. The Board rea- soned that the interns, residents, and fellows were similar to apprentices, who had been considered statutory employees for a long time. Later in 2000, the Board extended its ruling and found that a group of graduate assistants (including teaching and research assistants) at New York University were employees. The Board rejected the university s contention that the graduate assistants were predominately students, not employees.74

CHAPTER 5 Why and How Unions Are Organized 223

In 2004, with a Bush-appointed majority, the Board made a significant reversal and ruled that graduate students were students, not employees, under the National Labor Relations Act. This reversal came at a time when graduate student unionization was on the rise in the United States. Over the previous decade, the number of graduate student unions had grown from 10 to 30. New graduate student unions existed at several major universities such as Temple, Michigan State University, University of Rhode Island, and Columbia. It is estimated that 20 percent of all graduate students are now covered under collective bargaining agreements.75 Most of these graduate student unions were orga- nized and recognized in the public sector, which is governed by state labor relations laws (covered in Chapter 13).

Eligibility of Voters. Before an election is conducted, voter eligibility must be deter- mined. An employee is eligible to vote in a representational election if he or she is (1) employed in a bargaining unit job; (2) employed during the eligibility period, which is usually the payroll period immediately preceding the date a consent agreement is signed or a directed election order is issued; and (3) employed on the date of the election. How- ever, employees who are on sick leave, vacation, temporary layoff, or temporary leave, such as military duty, may vote in the election. In addition, the NLRB will occasionally consider irregularity of employment, such as in the construction, food processing, and longshoring industries. Economic strikers who have been replaced by permanent employees are allowed to vote in any election within 12 months after the strike begins. This policy ensures that management does not provoke a strike and hire replacements who could vote out the union. Employees hired after the union files its petition but before the election may be challenged for their eligibility by the union.

Untimely Petitions. Several rules make a petition for a representation election untimely. The election bar doctrine is a legal requirement that prohibits any NLRB

LABOR RELATIONS IN ACTION Interesting Comparison: FedEx and UPS (United Parcel Service)

FedEx began operations in 1971 as an overnight air car- rier of freight and mail. Because FedEx was an air carrier and subject to airline regulations, it was covered under the Railway Labor Act. The 4,500 to 5,000 pilots of FedEx are now represented by the Air Line Pilots Asso- ciation (ALPA), which is an AFL-CIO affiliate. Due to expansion and its purchase of other companies, FedEx employs about 100,000 truck drivers, package handlers, dispatchers, and other FedEx Express ground transpor- tation employees who remain nonunion.

UPS began in 1907 as a ground transportation car- rier and is covered under the National Labor Relations Act. UPS ground transportation employs over 200,000 employees, most of whom are represented by the Teamsters. The 2,800 UPS pilots are represented by the Independent Pilots Association (IPA), which remains an independent union.

Under the National Labor Relations Act, employ- ees can be organized on a location-by-location basis.

In other words, employees of a particular facility of a nationwide company may organize a union to repre- sent them at that one facility. Under the Railway Labor Act, a union must organize employees through- out the entire company who do similar work. For example, if package handlers of FedEx Express wanted to be represented by a union, a union must organize these package handlers at all of the company facilities, not at a single location or transportation hub.

Today, both companies are competitors, offer basi- cally the same services, and are structured similarly. However, any union that attempted to organize one or more groups of the 100,000 FedEx employees would be required to organize on a national basis, not at a sin- gle location or facility.

SOURCE: Railroaded Out of Their Rights: How a Labor Law Prevents FedEx Express Employees from Being Represented by a Union (Washington, D.C.: The Leadership Conference on Civil and Human Rights, June 2010).

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representation election where one has been held in the last 12 months or where a peti- tion for election covers a group of employees who are already covered by an existing contract and already members of a legally certified union.

The second rule and potential barrier to elections is an administrative determination that was made in the interest of stable and effective labor relations. The NLRB rule, called the contract bar doctrine, specifies that a valid, signed agreement for a fixed period of three years or less will bar any representation election for the life of the agreement. Thus, the contract bar doctrine could extend the 12-month statutory limitation on elec- tions to three years. To do otherwise would be unfair to union and management officials who have negotiated a multiyear labor agreement in good faith.76

Names and Addresses (Excelsior Rule). Within two business days after the regional director of the NLRB has approved a consent election or after an election has been directed, the employer must file with the regional director a list of names, mailing and e-mail addresses, and phone numbers of all eligible voters. This information is then made available to the union. Refusal to comply could be identified as an act of bad faith on the part of the employer and cause the election to be set aside or require the NLRB to seek the names and addresses by subpoena. The purpose of this disclosure rule is to give the unions involved in an election access to employees contact informa- tion that management already possesses.77 If there is a pre-election hearing, the employer must now provide the employee list to the NLRB and union in one business day before the hearing.

The Election. The representation election, acclaimed as one of the great innovations of American labor law, is conducted by NLRB officials and is typically held within 38 days (median) of the initial request.

In December 2015, the NLRB issued the new rules and procedures which will gov- ern union representation elections. The NLRB stated that these new rules and proce- dures are designed to remove unnecessary barriers to the fair and expeditious resolution of representation questions, streamline litigation, eliminate duplication and delay, increase transparency, and update NLRB procedures using modern communica- tion technology. See Exhibit 5.7 for a comparison of the pre-2015 procedures and the new procedures.

NLRB data show that about 90 percent of the eligible voters usually vote in NLRB elections, as compared with about 50 percent in major political elections. The high voter turnout in union representation elections might be due to the convenient voting procedure (usually carried out on company property) and the belief of many employees that their vote more directly affects their lives (at least their working lives) than do political elections. Finally, both unions and management realize that an employee could express union preference to a union representative in a face-to-face meeting and an opposite preference to the management representative to avoid a confrontation during the election campaign. Neither side is certain of employee voting preferences when faced with a secret ballot; therefore, both union and management officials work to get out the vote.

In March 2013, the National Mediation Board (NMB) changed its rules that govern union representation elections for the airline and railroad industries. For 75 years, the NMB required that in the absence of substantial employer interference, a majority of an entire craft or class must affirmatively vote in favor of union representation before the union would be certified as the bargaining representative for a group of employees. Under the previous rule, if there were 100 employees in the bargaining unit, 51 must actually vote for the union. If only 50 of the 100 voted for the union, the employees

CHAPTER 5 Why and How Unions Are Organized 225

Exhibit 5.7 Comparison of Pre-2015 and New Procedures

Pre-2015 procedures New procedures

Parties cannot electronically file election petitions.

Election petitions, election notices and voter lists can be transmitted electronically

The parties and prospective voters receive limited information.

Parties will receive a more detailed description of the Agency s represen- tation case procedures, as well as a Statement of Position form, help parties identify the issues they may want to raise at the pre-election hearing.

The parties cannot predict when a pre- or post-election hearing will be held.

The Regional Director will generally set a pre-election hearing to begin 8 days after a hearing notice is served and a post-election hearing 21 days after the tally of ballots.

There is no mechanism for requiring par- ties to identify issues in dispute.

Non petitioning parties are required to identify any issues they have with the petition, in their Statements of Posi- tions, generally one business day before the pre-election hearing opens.

The employer is not required to share a list of prospective voters with the NLRB s regional office or the other parties until after the regional director directs an elec- tion or approves an election agreement.

The employer must provide a list of prospective voters with their job classi- fications, shifts and work locations, to the NLRB s regional office and the other parties, generally one business day before the pre-election hearing opens.

Parties may insist on litigating voter eligi- bility and inclusion issues that do not have to be resolved in order to determine whether an election should be held.

The purpose of the pre-election hearing is clearly defined and parties will gen- erally litigate only those issues that are necessary to determine whether it is appropriate to conduct an election.

Parties may file a brief within 7 days of the closing of the pre-election hearing.

Parties will be provided with an oppor- tunity to argue orally before the close of the hearing and written briefs will be allowed only if they are necessary.

Elections are delayed 25 30 days to allow the Board to consider any request for review of the regional director s decision that may be filed.

There will be no automatic stay of an election.

The voter list provided to non-employer parties to enable them to communicate with voters about the election includes only names and home addresses. The employer must submit the list within 7 days of the approval of an election agreement or the regional director s decision directing an election.

The voter list will also include personal phone numbers and email addresses (if available to the employer). The employer must submit the list within 2 business days of the regional director s approval of an election agreement or decision directing an election.

SOURCE: http://www.nlrb.gov/news-outreach/fact-sheets/nlrb-representation-case-procedures-fact-sheet

226 PART 1 Recognizing Rights and Responsibilities of Unions and Management

would continue to be unrepresented. The new rule requires a simple majority of those who actually vote in the union representation election (similar to NLRB elections). Now, if there are 100 employees in the bargaining unit and 80 employees actually vote in the election, 41 of the employees must vote for union representation. The NMB also changed another representation election rule. The NMB now requires not less than 50 percent (up from 35 percent) of the employees or class to have signed union authori- zation cards before the NMB will hold a representation election.

Voter participation tends to decline the longer it takes for the NLRB to conduct the election. Thus, some employers are motivated to refuse to consent to an election in hopes of increasing the chances of the union losing the election. Because most single-unit elections are close, the number of nonparticipants may affect the outcome of many elections.78 A small number of votes greatly influences the outcome of the election; research shows that a switch of eight votes would have changed the outcomes of half the elections.79 Furthermore, small increases in the time to process cases are important; a delay of ten days has proven to be a significant factor in differentiating employer wins from employer losses. The number of pre-election days has also been linked to union losses. During the first six months of delay, there is an average drop- off in union victories of 2.5 percent per month. Consent elections have the highest victory rate.80

The size of the election unit has tended to be negatively related to union victories. The larger election unit is closely related to delay because it takes longer to process and is more likely to result in a hearing than in a voluntary settlement.81 Success in union organizing has been influenced positively by the size of the union and democracy within the union and influenced negatively by the union s propensity to strike and centraliza- tion of the union s decision making.82

Using a ballot with the appropriate company and union designations (Exhibit 5.8), a secret-ballot election is conducted under NLRB supervision, usually during working hours on payday at the employer s location. However, the NLRB has discretionary authority to conduct it by mail ballot. The Board has encouraged the use of mail ballots in representation elections under any of the following conditions: (1) eligible voters were widely dispersed geographically; (2) eligible voters worked differing schedules and were not present at common locations at common times; or (3) where there was strike, lock- out, or picketing.83

The NLRB must determine whether the majority of employees in an appropriate bargaining unit want to be represented by a union for collective bargaining purposes. It defines majority as the simple majority rule generally accepted in democratic elections, which means that those choosing not to vote in the election have decided to assent to the wishes of the majority who did vote. Therefore, a majority of the employees who vote (50 percent plus one of those casting valid ballots in the election) must favor repre- sentation before a union will be certified by the NLRB.

If two or more choices are placed on the ballot, a runoff election may be necessary between the choices receiving the two highest numbers of votes in the initial election. If the majority votes no union, no representation election can be held for 12 months. If a union receives the majority of the votes, the NLRB will certify it as the exclusive bargaining agent of the employees in the bargaining unit. Interestingly, where more than one union has vied for representation rights in the same election, unions have fared extremely well.

Although only 4 percent of representation elections are multi-union elections (i.e., there is a choice between two unions), one of the competing unions is more likely to win representation rights than in a single-union election. Also, multi-union elections

CHAPTER 5 Why and How Unions Are Organized 227

bring out a substantially high number of voters.84 The major reason for this positive vote is that two unions would have to gain support from a sufficient number of the bargain- ing unit s employees to be placed on the ballot. Such support usually indicates that the employees have already decided to vote for a union; the election is conducted to deter- mine which union will receive the majority vote.

After the votes have been counted, either party has seven calendar days to file objec- tions alleging misconduct or to challenge the ballots of voters whom one party believes should not have voted in the election. This part of the representation process receives

Exhibit 5.8 Examples of Secret Ballots for Union Representation Election

228 PART 1 Recognizing Rights and Responsibilities of Unions and Management

considerable criticism because of the delay in assessing ballot challenges, and objections concerning misconduct often seem excessive.

In 2014, the NLRB conducted 1,260 representation elections. Unions won 68.0 percent, compared with 63.8 percent in 2009. In every year since 2002, unions have won more than 50 percent of the NLRB-conducted representation elections. While the unions have won a higher percent of representation elections, there are fewer elec- tions, e.g. in the 1970s between 7,000 and 8,000 elections per year with the union win- ning between 40 to 55 percent. The most active unions involved in representation elections have been the Teamsters, the United Food and Commercial Workers (UFCW), and the SEIU. The SEIU was the most successful union.85

In a study of 1,004 NLRB elections, employers threatened to close the plant in 57 percent of the elections, discharged workers in 34 percent, and threatened to cut wages and benefits in 47 percent. Eighty-nine percent of employers required their workers to attend captive-audience meetings during working hours. In 77 percent of the elections, supervisors regularly talked to workers one-on-one about the union campaign with a focus on threats of plant closings, wage and benefits cuts, and job losses. More than 60 percent used the one-on-one meetings to interrogate and harass workers about their sup- port for the union.

Employers are less likely to make promises (offering carrots ), such as granting unscheduled pay increases, making positive personnel changes, having special social events, and proposing various forms of employee involvement programs.

Employers appeal most decisions by administrative law judges of the NLRB, especially Gissel-type bargaining orders in hopes of having another election. The most egregious employers use the appeals available to ensure that the case is delayed by three to five years. The worst penalty an employer who is found guilty of unfair labor practices has to pay is backpay to employees who were illegally terminated; the amount of backpay, averages a few thousand dollars per employee.86

After the Election As noted in Chapter 1, the first step of the labor relations process, the recognition of legitimate rights and responsibilities of unions and management representatives, includes more than the representation election. After unions win bargaining rights in a represen- tation election, they attempt to negotiate their first labor agreement; however, they fail to secure a first contract 25 to 30 percent of the time. Several factors increase the likelihood of reaching agreement: existence of relatively high wages already at the company, pres- ence of other bargaining units within the company, large election victories, and active participation of international union representatives. Factors that reduce the chances of attaining a first contract include location in a southern state with right-to-work laws, the national union having to approve the local union s contract, presence of outside labor management consultants hired by the company,87 NLRB delays in resolving employer objections and challenges to election results, employer refusal to bargain in good faith, and discrimination against employees after the election.88

Delays associated with filing objections to campaign conduct have increased threefold over the last 20 years, and the median amount of delay time is now about 210 days. Employers fail or refuse to bargain in good faith 13 percent of the time. This unfair labor practice adds approximately 140 days. Additional delay can occur if appeals are made to the full Board in Washington, D.C., or to a federal court of appeals or the Supreme Court.

In addition to the delays, there has been a sixfold increase in the number of unfair labor practice charges for firing union supporters and an elevenfold increase in the number of backpay awards. Employers discharge union activists or union

CHAPTER 5 Why and How Unions Are Organized 229

supporters for two main reasons: (1) to get the key union organizers out of the facil- ity and (2) to send a chilling message to the rest of the workforce. With such statis- tics, it does not appear that ethical considerations prevent all employers from breaking the law.

Duties of the Exclusive Bargaining Agent and Employer The exclusive bargaining representative (the union) chosen by the majority of the employees in an appropriate unit has the duty to represent equitably and fairly all employees in the unit regardless of their union membership and to bargain in good faith with the employer. The employer has a comparable obligation; that is, to bargain in good faith with the exclusive bargaining agent and to refuse to bargain with either individual employees or any other union seeking to represent the employees. Further, any negotiated labor agreement will cover all employees in the bargaining unit, regard- less of their union membership status.

After Election Loss by the Union After losing a representation election, typically the union reduces its activities because there can be only one election every 12 months. However, there are some creative ways in which the union can maintain contact with employees, particularly those who sup- ported it during the campaign, and provide a representational service to those included in the bargaining unit. Exhibit 5.9 shows alternative activities that could increase the chances of success of any future unionization drive.

Proposed Mandatory Secret Ballot Elections versus Employee Free Choice Act (EFCA) The Secret Ballot Protection Act was introduced in the U.S. Congress in 2007 (and every year since) to require secret ballot elections for union certification. If passed, this bill would have made it an unfair labor practice for an employer to recognize or bargain with a union that has not been selected by a majority of employees in a secret ballot election conducted by the NLRB. It would have made it an unfair labor practice for a union to cause or attempt to cause an employer to recognize or bargain with a union that had not been chosen by a majority of employees in a secret ballot election. In other words, voluntary union recognition by card check would have been prohibited. This proposal legislation has, to date, failed to pass.

The bipartisan Employee Free Choice Act that was passed by the U.S. House of Representatives (244 to 185) in 2007 contained three major provisions:

The NLRB would be required to certify a union if a majority of employees signed union authorization cards which stated that the employee wants the union to rep- resent him or her (see Exhibit 5.6 on p. 214). A procedure for reaching the first collective bargaining agreement could be invoked by either party if the two parties have not reached an agreement within 90 days (or longer if both parties agreed) to request mediation by the Federal Mediation and Conciliation Service. If mediation is not successful, after 120 days a first contract would be subject to binding arbitration, resulting in a first contract in effect for a two-year period. Penalties for employer violations of certain unfair labor practices committed during the union organizing campaign or the negotiation of the first contract would be increased.89

For example, a wrongfully discharged employee could receive triple backpay.

230 PART 1 Recognizing Rights and Responsibilities of Unions and Management

There are several arguments from the proponents of union recognition via card check as well as proponents of mandatory secret ballot elections (see Exhibit 5.10 for the common arguments).

The card check procedure for union recognition has a history in other countries. A system of card check union recognition has operated successfully in the United Kingdom under the Employment Relations Act since 2000. The United Kingdom s equivalent to the NLRB will certify a union when over 50 percent of the workers sign union membership cards, or it may call for an election if it believes the election would be in the interest of good industrial relations. However, the practice has been that the Board rarely requires an election when a majority of workers has signed the union membership cards.90

Exhibit 5.9 Possible Activities for Unions after Losing a Representation Election

1. Maintain in-plant committees, designate employees as union stewards, identify them with steward buttons, and through them, maintain contact with member and nonmember employees.

2. Distribute employment-related union literature in the plant during nonworking time and serve as the voice of employees on all matters of common employment-related matters of concern.

3. Union stewards can present employee grievances to management. If manage- ment refuses to meet with the union committee, employees may leave their work as a group to request a discussion of their employment-related problems directly with management. If the response is unsatisfactory, the union may engage in a work stoppage; however, striker replacement rules apply.

4. A non majority union can provide a shield of concerted activity for an individual employee who refuses to drive a faulty truck, reports Occupational Safety and Health Administration (OSHA) violations, refuses to act in violation of personal ethics or morality, or sues for unpaid overtime.

5. Help employees know and enforce their individual employment rights concerning workers compensation, third-party tort claims, wage and hour violations, and so on.

6. In-plant committees help employees know and receive their entitlements, such as medical benefits, sick leave, severance pay, pensions, unemployment com- pensation, disability pay, and social security.

7. Inform employees of rights under common-law doctrines and exceptions to employment-at-will doctrine, including employee manuals, employment con- tracts, public policy exceptions, good faith exceptions, and tort suits involving outrageous conduct, defamation, and invasion of privacy.

8. Reinforce OSHA statutory procedures: (1) establish in-plant safety committees; (2) file complaints through the union; (3) serve as representative of employees to accompany compliance officer on plant walk-around, discuss claims, and participate in conferences; (4) act as representative of employees in the proceed- ings before the OSHA; (5) enforce the Hazard Communication Standard by filing complaints if employer fails to provide toxic training to employees and has not prepared a written communication program; and (6) petition for information con- tained on Material Safety Data Sheets.

9. Represent employees under plant closure laws, pregnancy leave acts, poly graph and privacy acts, and whistle-blowing statutes.

10. Represent employees under unjust discharge procedures modeled after labor arbitration.

SOURCE: Clyde W. Summers, Unions without Majorities: The Potentials of the NLRA, Proceedings of the 43rd Meeting of the Industrial Relations Research Association (Madison, WI: IRRA, 1991), pp. 154 162.

CHAPTER 5 Why and How Unions Are Organized 231

In Canada, five provinces require secret ballot elections, and five provinces allow card check union recognition. The province of British Columbia allowed card checks until 1984; then from 1984 to 1992, secret ballot elections were required. In 1992, card checks were allowed again. During the period when card checks were allowed, the union success rate was 91 percent; when secret ballot elections were required, the success rate was 73 percent. Also, during the period when card checks were allowed, there was an average of 531 union-organizing drives per year; during the period when secret ballot elections were required, the average was only 242.

In June 2007, the Senate failed to end a Republican filibuster by a vote of 51 to 48, thereby preventing a vote on the merits on the Employee Free Choice Act. Although a majority of senators would have voted for the act, 60 votes were needed to end the filibuster.91

Exhibit 5.10 Most Common Arguments Made by Proponents of Union Recognition via Card Check and Proponents of Mandatory Secret Ballot Elections

Proponents of Card Check Recognition

Proponents of Mandatory Secret Ballots

Card check recognition requires signa- tures from over 50 percent of bargaining unit employees (subject to verification by the NLRB). A secret ballot election is decided by a majority of workers voting.

Casting a secret ballot is private and confidential. A secret ballot election is conducted by the NLRB. Under card check recognition, authorization cards are controlled by the union.

During a secret ballot campaign, the employer has greater access to employees.

Under card check recognition, employ- ees may only hear the union s point of view.

Because of potential employer pressure or intimidation during a secret ballot election, some workers may feel coerced into voting against a union.

Because of potential union pressure or intimidation, some workers may feel coerced into signing authorization cards.

Employer objections can delay a secret ballot election.

Most secret ballot elections are held within two months after a petition is filed.

Allegations against a union for unfair labor practices can be addressed under existing law. Existing remedies do not deter employer violations of unfair labor practices.

Allegations against an employer for unfair labor practices can be addressed under existing law. Existing remedies do not deter union violations of unfair labor practices.

Card check recognition is less costly for both the union and employer. If only secret ballot elections were required, the NLRB would have to devote more resources to conducting elections.

Unionization may cost workers union dues; higher union wages may result in fewer union jobs.

Card check and neutrality agreements may lead to more cooperative labor management relations.

An employer may be pressured by a corporate campaign into accepting a card check or neutrality agreement. If an employer accepts a neutrality agreement, employees who do not want a union may hesitate to speak out.

SOURCE: E. Gerald Mayer, Labor Union Recognition Procedures: Use of Secret Ballots and Card Checks, Congressional Research Service, The Library of Congress, 2005, Table 3, http://digitalcommons.ilr.cornell.edu/keyworkplace/237.

232 PART 1 Recognizing Rights and Responsibilities of Unions and Management

In 2008, with President Obama, a Democrat, and a Democratic majority in the U.S. House and Senate, it appeared promising that the EFCA would pass. However, with the death of Senator Ted Kennedy and election of Scott Brown, a Republican, in Massachu- setts, the chances of ending a definite Republican filibuster were slim. Then, in 2010, the Republicans gained a majority in the House, and the chances of passing EFCA grew even slimmer.

Conduct of the Representation Election Campaign

Successful union recognition campaigns are dependent upon volunteers who help per- suade employee-voters to vote for the union. Much of the work behind a successful cam- paign involves such activities as arranging meetings and creating and distributing information, and most of this work is done by volunteers. Even though there are no immediate or explicit monetary rewards associated with this work, there are potentially personal, political, and self-actualization rewards. Employees who have positive attitudes toward unions are most likely volunteer to work on behalf of the union.92

All representation elections are conducted according to NLRB standards, which are designed to ensure that employees in the bargaining unit can indicate freely whether they want to be represented by a union for collective bargaining purposes. However, election campaigns differ substantially, and the strategies of individual unions and employers vary widely. For example, handbills similar to those in Exhibit 5.11 are often used in addition to speeches, informal talks, interviews, and films. Thus, the election campaign, one of the most interesting and controversial activities in labor relations, has led to a body of doctrines and rules. Because Board members are appointed by the U.S. presi- dent, the NLRB philosophy, doctrines, and rules are subject to change with changing administrations.

Campaign Doctrines and NLRB Policies The totality of conduct doctrine guides the NLRB interpretations of unfair labor prac- tice behavior. This doctrine essentially means that isolated incidents such as campaign speeches must be considered within the whole of the general circumstances of the cam- paign and with the possibility that other specific violations have occurred.

Employer statements to employees may seem harmless on the surface, but under the circumstances that exist at the time of the statements, they may carry implied threats. For example, if an employer stated that a third-party intervention could make it eco- nomically impossible for the company to continue in business, it would be making an illegal statement during a union election campaign. However, if the employer made the same statement during an attempted leveraged buyout, there would be no legal violation.

The NLRB concluded that it would no longer probe into the truth or falsity of the parties campaign statements but would intervene in cases where a party had used forged documents that render voters unable to recognize propaganda for what it is. The Board concluded that today s voters (employees) are more educated and sophisticated than their historical counterparts and can analyze materials more accurately. This assessment was influenced by a research study involving over 1,000 employees in 31 elections in 5 states. This study cast doubt on the previously held assumption that employees are unsophisti- cated about labor relations and are swayed easily by campaign propaganda. In fact, votes of 81 percent of the employees could have been predicted from their pre campaign intent

CHAPTER 5 Why and How Unions Are Organized 233

and their attitudes toward working conditions and unions in general. The study concluded that employees votes appeared to be the product of attitudes that resulted from their everyday experiences in the industrial world and not from the campaign itself.93

The data used in the study were later re-analyzed, and the following additional (some different) conclusions were made:94

Employee predisposition favoring the union is an important determinant of voting behavior. Written communications distributed later in the campaign and meetings held early in the campaign most probably have an effect. Threats and actions taken against union supporters are effective in discouraging support for the union.

Thus far, these later analyses have not influenced the Board s position on election campaigns.

Captive Audience 24-Hour Rule One legal approach used by employers to discourage union support includes presenting captive audience speeches, which are delivered to employees during working hours on

the employer s site, and employees are required to attend. The speeches, authorized by the Taft-Hartley amendments in 1947, must not be presented within 24 hours of an election, and the speech content must not include threats of reprisal or promises of ben- efits. However, if the union has no acceptable means of communicating with the employees, as in the mining, shipping, mountain resorts, and logging industries, where employees live on company property, or if the employer s unfair labor practices have created a serious election campaign imbalance, the NLRB and the courts may grant the union access to plant bulletin boards, parking lots, and entrances so that it may communicate with the employees. Still, it is extremely difficult for the union to respond effectively by using its traditional means of contacting employees, such as plant employee solicitations, distribution of literature before or after work, house calls, and union meetings.95

Polling or Questioning Employees Polling employees or asking questions about their interest in unions was considered unlawful interference with employee rights in early days. In 1984, the NLRB announced that it would no longer automatically consider an employer interrogation about an employee s union sentiment an unlawful inquiry in violation of Section 8(a)(1). It announced that it would examine the totality of the circumstances surrounding such interrogations in light of the following:

1. The background of the interrogation 2. The nature of the information sought 3. The identity of the questioner 4. The place and method of the interrogation

Therefore, an employer s questioning of open and active union supporters and other employees about their union sentiments in the absence of threats or promises does not necessarily violate the law. However, NLRB decisions since 1984 reveal that employers are still at great risk with these interrogations because it is necessary only to establish that the questions asked may reasonably be said to have a tendency to interfere with the free exercise of an employee s rights under the act.96

234 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Distribution of Union Literature and Solicitation by Employees on Company Property97

Distribution of union literature can be banned in work areas at all times. Union solicita- tion can be banned only during work time, for example, the time when the employee is expected to be engaged in performance of regular job duties.

The NLRB and the courts have long held that except in special circumstances, employees may not be prohibited from distributing union-organizing materials or solicit- ing union support in nonworking areas during nonworking time98 unless the employer can show that such activity would disrupt production, employee work, and plant disci- pline. For example, employees of restaurants and retail establishments cannot distribute union materials in customer areas, but they can solicit in employee-only break rooms.99

Courts allowed no-solicitation rules that permit exceptions for beneficial acts that may reasonably promote employee morale. These include collecting money to buy a cake for an employee who is leaving, asking for contributions to purchase a blazer as a gift for an employee who is leaving, asking for contributions to buy a gift for the Chef s wife who is expecting a baby, and collecting money to buy a gift for an employee who is leaving or is having a birthday.100

No-solicitation rules in health care facilities are allowed when the rules are applied to patient s rooms, sitting rooms, operating rooms, and any other place patients receive treatment which affects the patient s recovery. No-solicitation rules are prohibitive when applied to cafeterias, coffee shops, gift shops, and lobbies, which are areas that have no effect on patient care and may be visited by the general public.

In addition, the employer cannot prohibit distribution of union materials if the basis for the prohibition is that part of its content includes political issues, such as right- to-work laws and minimum wages.101 Nor can the employer prohibit employees from wearing buttons, hats, or T-shirts promoting the union.

Some employers publish no solicitation rules that prevent employees from discuss- ing union organizing on working time. However, to be enforceable, these no-solicitation rules must be posted in advance of the organizing drive, and these rules must prohibit all types of solicitation by employees with limited exceptions for broad-based community charities such as the United Way.

The employer may limit the type of information distributed to employees by classi- fying company data as confidential. The NLRB has upheld the discharge of five employees who distributed wage data comparing the company s wage scale with that of other plants in the area. The NLRB found that the company had declared this wage information to be confidential and that it had not been obtained in the normal course of employment.

Showing Films during Election Campaigns Films presented to discourage workers from joining unions have taken on new dimen- sions, especially since the 1950s, when the movie And Women Must Weep was produced by the National Right-to-Work Committee. This docudrama movie portrays union vio- lence, strikes, vandalism, phone threats, a house bombing, and even the shooting of a baby of a dissident union member. Frequent use of the film by employers prompted the International Association of Machinists to produce a rebuttal film, entitled Anatomy of a Lie, which claims no evidence exists of a connection between violence and the union s activities. On-site interviews with persons involved in the strike are shown to reveal an opposite view of the employer film, and the president of the union is filmed,

CHAPTER 5 Why and How Unions Are Organized 235

stating that nearly 99 percent of the union members voted to strike. The NLRB s position on the showing of these films has varied; its current position is that their showing alone does not constitute an unfair labor practice and is not sufficient cause to have the results of an election set aside, it is the totality of the employer s conduct that is important.102

Use of E-Mail, Internet, and Social Media Technology is transforming the way in which unions are able to communicate with employees during organizing campaigns. In 2015, there were 1.35 billion Facebook users and 288 million twitter users. The AFL-CIO has its own Internet provider. Workingfamilies.org allows it to contact 13 million people who are interested in legisla- tive and political campaigns, organizing drives, and product/consumer boycotts. Unions are creating recruiting videos and testimonials for posting on YouTube. Social network- ing via MySpace and Facebook is used as part of the union s organizing efforts. In addi- tion, workers are increasingly seeking information on how to organize by contacting unions via e-mail and connecting to unions Web sites.103 The AFL-CIO allows indivi- duals to sign up for e-mail messages from the AFL-CIO and has a link to the AFL-CIO s Organizing Institute with information, such as How to Join a Union, Find Your Union, and State and Local Labor Contacts. Change to Win (CTW) allows individuals to sign up for e-mail messages about organizing campaigns and also to Join the Movement. 104

During a union organizing campaign when social media is involved, the NLRB is required to determine whether the actions by an employee or employees is a group activity which is a protected concerted activity under Section 7 of the National Labor Relations Act. For example, if an employee posts on Facebook

We need a union here. We got no pension and no job security. My supervisors can fire me whenever he wants to.

Other employees who use Facebook review the content and clicks on the button which looks like a thumbs up. Other employees click on Like. (Or with Twitter, there is a favorite tweet that can be retweeted to others.) Questions arise:

Are other employees indicating they like the message? Are the other employees joining the group? Are these actions considered a group activity that is protected?

Further, what happens if an employee not only clicks on Like, but adds in the com- ment section., I agree. We need a union here!!! If any of the employees who clicked on Like and/or added comments are disciplined as a result of their actions, are they pro-

tected under Section 7? To add complications, what if the employees used company equip- ment and sent their message on Facebook during their working hours.105

Employees use of e-mail and employer e-mail policies have been an issue before the NLRB. In a controversial 3 2 decision in 2007, the Board majority upheld an employer policy that banned employees from using the company s e-mail system to urge support for groups or organizations (e.g., a union) while permitting employees to send personal e-mails during nonwork time (e.g., for sale notices, wedding announcements). The e-mail system was viewed as employer property which employees have no statutory right to use under Section 7, LMRA.106

However, after an appeal to the Circuit Court of Appeals of the District of Colum- bia, the court reversed part of the Board s decision. The court held that an employer vio- lates the National Labor Relations Act when it disciplines an employee who disseminates

236 PART 1 Recognizing Rights and Responsibilities of Unions and Management

union-related solicitations under an employer s e-mail policy (prohibiting all e-mails for non-job-related solicitations) but allows other types of solicitations such as hawking bikini lotion, organizing charitable or social functions, sending e-mails with jokes, births, lunches, poker games, sending mass solicitations of sports events, party invitations, requests for dog walking services, etc. 107

In December 2014, the NLRB found that employees have a presumptive right to use their employer s email system to engage in communication relating to concerted activities protected by Section 7 of the National Labor Relations Act including union organizing during nonworking time. The employer may rebut this presumption by demonstrating that there are special circumstances necessary to maintain production and/or discipline which would restrict employee rights; however, the NLRB stated that such circumstances will be rare. The Board reiterated that employees did not have Section 7 rights to use employer property such as bulletin boards, telephones, fax and copy machines, and public address systems. The Board noted that employee email use rarely interferes with others use of the email system and email use rarely adds significant usage costs. In addition, the Board acknowledged that an email system function is an ongoing and interactive means of employee communication which is conducted in a way that other older types of commu- nication equipment clearly do not.108

New Union Strategies In response to employers strategies to maintain nonunion status, unions have had to be creative in their actions. Some well-publicized strategies by unions include (1) instituting cyberspace organizing with the Internet, whereby employees can simply enter the search words how to organize and receive on-line information on union organizing; and (2) hir- ing union salts, whereby a union organizer applies for a job within a targeted company, goes to work, and solicits for union membership as an employee (see the Labor Relations in Action feature on p. 239).

Some recent union successes have come from corporate campaigns such as Justice for Janitors, which mobilized over 200,000 janitors across the United States, many of whom were immigrants. In Los Angeles, the campaign relied on tactics such as marches and civil disobedience, which required extensive participation by the membership. Through boycotts, mobilization of immigrant community organizations, public awareness cam- paigns, and support from the Department of Labor, UNITE-HERE was able to organize immigrant workers employed by contractors who provided supplies to fashion designers. After the traditional NLRB procedure was a completely ineffective approach.109

Other campaigns include the Fight for 15, http://www.fightfor15.com/, which launched a major campaign for $15.00 per hour on April 15, 2015, and for the right to join a union without retaliation. Aimed primarily at Walmart and McDonald s, Fight for 15 is also directed toward all fast food employers and retailers who pay their workers less than $15.00 per hour. Fight for 15 claim to have hundreds of thousands supporters in 35 countries.110 The AFL-CIO established a Strategic Organizing Fund and provided a plan to rebate $15 million to affiliated unions that met high standards in union organizing.111

Also, there have been suggestions that new forms of unions be created. Richard Freeman has proposed a new form of unionism open source unionism wherein union membership does not depend on unions proving that they have majority support of employees and negotiating collective bargaining agreements. Open source unionism builds a common collaborative platform, language, and practice among workers who may operate at some distance from each other and at different work sites. Union mem- bership would be defined more in terms of shared values and actions than collective bar- gaining with an employer. Representation would be extended to individual workers

CHAPTER 5 Why and How Unions Are Organized 237

rather than members of a bargaining unit and would continue to extend to the members as they move from employer to employer. Using the Internet, unions would be able to connect with this diverse and dispersed membership. This form of open unionism could appeal to a tremendous source of untapped union members who may be organized away from their workplace and away from their employer s opposition. Forty-two million workers have expressed a need for some form of representation, and open source union- ism could appeal to professional workers and others who need assistance with their employment contracts, overtime regulations, pensions, and health care benefits, but who believe that the traditional form of union representation through collective bargain- ing may not be appropriate for them.112

Removing a Labor Union

An employer may raise a good faith doubt as to whether its union represents the majority of employees. The NLRB and the courts have developed presumptions and rules related to determining good faith doubt. First, there is a presumption of majority status for one year following certification by the Board. The second presumption is that majority status continues for up to three years if the collective bar gaining agreement extends for three years. At the end of the certification year or the expiration of the three-year collective bargaining agreement, the employer may rebut the presumption of the union s majority status by presenting objective evidence that the union does not continue to represent the majority of bargaining unit employees. Examples of this good faith doubt evidence include (1) a reduction in dues-paying members, (2) a high percentage of employees crossing a union picket line during a strike,

Exhibit 5.11 Examples of Handbills Distributed During Representation Election Campaigns

MISLEADING PICTURES NEWSPAPERS

238 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION Union Salting: A New Union-Organizing Tactic

Town & Country Electric, a nonunion electrical con- tractor, needed to hire several licensed Minnesota electricians for construction work within Minnesota and advertised the positions through an employment agency. Eleven union applicants, including two profes- sional union staff members, applied for jobs. Only one union applicant was interviewed; he was hired but was subsequently dismissed after only a few days on the job.

The IBEW filed a complaint with the NLRB against Town & Country. The complaint was that the company refused to interview applicants and refused to retain union members because of their union membership, which was in violation of the National Labor Relations Act (NLRA).

An administrative law judge and the Board deter- mined that all of the union applicants were employ- ees under the language of the NLRA. Although the applicants had not been hired, applicants are covered under the prohibition of discrimination in regard to hire under the NLRA. The board found it immaterial that the union applicants intended to try to organize Town & Country employees upon securing employ- ment, as well as the fact that the union would be paying these employees to organize a union.

The U.S. Court of Appeals for the Eighth Circuit reversed the NLRB and held that the board had incor- rectly interpreted the definition of employee in the NLRA. The Court ruled that the NLRB did not protect employees who were working for a company while simultaneously being paid by the union to attempt to organize employees of the company.

The U.S. Supreme Court determined that the NLRA sought to improve labor management relations by granting employees the right to organize, form unions, join unions, and assist in organizing unions. The high Court ruled that the meaning of the word employee was critical and that the language and defi- nition of employee includes paid union organizers. The Court noted that the NLRB was created to administer the NLRA and will be upheld when its rulings are rea- sonably defensible. The Court indicated that it relied on the NLRB s expertise and congressional intent in its rulings. Furthermore, the Court ruled that Congress had delegated the primary responsibility for developing and applying national labor policy and that the Board s views are entitled to the greatest deference by the courts. The principal difference between salting and the traditional organizing is that salting is a

top-down approach and traditional organizing is a bottom-up approach. Union salting may be called

covert or overt. Covert salting is like a Trojan horse in that a full-time union organizer applies to a help- wanted ad placed by non-union businesses. The union organizer does not reveal that he or she is employed by the union. The employer does not con- duct a background or reference check, and the union organizer is hired by the employer. Once employed, the union organizer initiates an organizing campaign. Overt salting occurs when the union organizer reveals in the application process that he is employed by the union. If he is denied employment due to his union affiliation, he files a charge of an unfair labor practice against the employer for discriminating against him because of his union membership.

Refusal-to-hire cases have three criteria by which cases are analyzed. First, there must be evidence that the employer was hiring or had concrete plans to hire at the time of the unlawful conduct. Second, the applicant must have been qualified for the job. Third, there must be anti-union reason that contributed to the decision not to hire the applicants.

Once these criteria are met, the burden shifts to the employer to show that it would not have hired the appli- cant even in the absence of his/her union activity or affiliation.

Since the Town & Country Decision Since the Town & Country decision, there has been a 53 percent increase in overt salting activities and a 47 percent increase in covert salting. By 2001, there were 55 union salting unfair labor practices cases before the NLRB. Of the 55 cases, 6 were dismissed and 3 were remanded to the administrative law judge. In 43 cases, the charges were upheld by the NLRB. These charges were associated with monetary penalties of back pay. These charges included unlawful discharge, unlawful layoff, refusal to consider for employment, refusal to recall from layoff, unlawful suspension, and refusal to reinstate strikers. Interestingly, nonunion contractors may join the Associated Builders and Contractors and take out salting insurance, which pays legal fees and up to 90 percent of back pay awards issued by the NLRB.

The appellate courts have cut back on some union salting activities by finding that an employer may fire a union salt if he or she falsified his or her employment

application to obtain a job or the union salt violated a

239

(3) resignations from the union, or (4) a petition by employees without company involvement.113 (See Exhibit 5.12 for other examples of objective evidence.)

From 1951 to 2001, an employer could lawfully withdraw recognition from an incumbent union if it could show that the union no longer had the support of a majority of the bargaining unit or had a good-faith doubt, based on objective evidence, of the union s majority status. The Board has indicated that it is entirely appropriate to place the burden of proof on the employer to show that there is an actual loss of major- ity support for the union. In 2001, the NLRB ruled that where there have been no unfair labor practices that tended to undermine the employees support for the union, loss of majority would be the sole legal basis for withdrawing recognition from an incumbent union. The Board eliminated the good-faith doubt requirement and now provides for the employer to seek a new representation election if the employer can show a reason- able uncertainty that a majority of employees still support the union. The logical conclu- sion is that employers should not be allowed to withdraw recognition of the union short of a new representation election.114

lawful moonlighting policy that does not allow employees to hold two jobs at the same time. In other words, the court found that the dual employment rule was lawful if applied in a nondiscriminatory manner.

SOURCES: Jeffrey A. Mello, The Enemy Within: When Paid Union Organizers Become Employees, Labor Law Journal, 47 (October 1996): 677 679; NLRB v. Town & Country Electric, Inc., 116 S. Ct. 450 (1995); NLRB has developed

guidelines in FES (a Division of Thermo Power) 331 N.L.R.B. No. 20, May 5, 2000. See also Cory R. Fine, Union Salting: Reactions and Rulings since Town and Country, Journal of Labor Research, 23 (Summer 2002): 475 483; Jeffrey A. Mello, Putting a Big Chill on a Big Hurt : Genuine Interest in Employment of Salts in Assessing Protection under the National Labor Relations Act, Employee Rights and Responsibilities Journal, 21 (2009): 40. Also see NLRB v. FES (a Division of Thermo Power), 301 F.3d. 83, 3rd Cir., 2002; Oil Capitol Sheet Metal, Inc., 349 NLRB No. 118, May 31, 2007; Jeffrey A. Mello, Putting a Big Chill, Employee Rights and Responsibilities Journal, 21 (2009): 37 49.

Exhibit 5.12 Examples of Objective Evidence* of Union s Lack of Majority Status

1. Unsolicited communications from employees expressing a desire to become unrepresented

2. Any material change in the size or composition of the unit, such as a reduction in the number of employees

3. Date of union certification 4. Failure of the union to appoint a shop steward or committee 5. Failure of the union to process grievances 6. Failure of the union to actively represent employees on matters arising under the

contract 7. Failure of the union to hold meetings that could be attended by the employees 8. Failure of the employees to attend union meetings 9. Failure of a majority of employees to authorize a dues check off if the contract

provides for one 10. Whether the union has communicated a lack of interest in representation to

either the company or the employees 11. Whether employees have filed or attempted to file a decertification petition of

their own.

* Objective evidence is defined as reasonable grounds to believe that an incumbent union no longer represents a majority of bar- gaining unit employees.

SOURCE: Clyde Scott, Kim Hester, and Edwin Arnold, Employer-Initiated Elections, 1968 1992, Journal of Labor Research, 18, Spring 1997, p. 317.

240

Whenever employees believe that the union is not representing their interests, they may turn to a decertification procedure. Researchers have identified a variety of reasons for such a shift:

Fair treatment of employees by employers Poor job by unions (especially smaller unions) of providing services to members Inability of unions to negotiate an effective first contract after winning bargaining rights Striking employees having skills that can be easily replaced115 so that when a strike occurs, the employer hires replacements

Any employee, group of employees, or employee representative may file a petition for a decertification election 12 months after the union has been certified or upon expi- ration of the labor agreement (see the contract bar doctrine discussion earlier in this chapter). This petition must be supported by at least 30 percent of the bargaining unit employees.

If the employees choose to decertify their union, another representation election cannot be held for 12 months. However, after a valid petition is filed with the NLRB, but before the election, the employer must still bargain with the union until the question of union representation is resolved.

Although employers must be careful of their role in the decertification process, they have exhibited growing interest in it. For example, a one-day seminar, The Process of Decertification by Executive Enterprises, is designed to teach management representa- tives about the entire process of decertification. Many employers have concluded that they should become more involved, especially because they are becoming aware that they do not necessarily have to play a passive role in the decertification process.

Employers may become active participants in the decertification efforts after the petition is filed; however, they should do so only after analyzing the costs and benefits of such a strategy. For example, if the company actively campaigns against the present union and the union wins the election and continues to represent employees, the long- term relationship with the union may be irreparably damaged. Moreover, if the com- pany s relationship with the present union is reasonable and productive, it might be wiser to retain it than chance a later replacement by a more militant union.

If the employer chooses to become engaged in the decertification campaign, similar representation election rules and policies apply. For instance, after the petition is filed with the NLRB, the employer may communicate with employees and forcefully state its opposition to the present union, lawfully respond to employee questions, and inform them about the decertification election process. The employer may conduct captive audi- ence speeches, send letters to employees, and conduct small group discussions during the decertification election campaign. Management may tell employees about the employer s perception of the disadvantages of the union and that the employer prefers to deal directly with individual employees instead of through a third party and wants to build a trusting, team-oriented relationship with employees, not an adversarial one. At the same time, employers must be careful not to plant the idea of decertification in the minds of employees by offering unsolicited advice, distributing booklets that explain how to decertify the union, or circulating a decertification petition. During the union decertification campaign, union officials obviously will attempt to convince employees of the benefits of continued union representation.116

Decertification campaigns are conducted by unions and management in a manner similar to certification campaigns. Decertification elections are usually initiated by a group of employees who are not satisfied with the working conditions and economic provisions achieved by the union through collective bargaining. During the campaign

CHAPTER 5 Why and How Unions Are Organized 241

period, the union officials prefer to use handbills, conduct personal visits, and make special pleas with members to refuse signing any decertification petition. Management prefers to rely on legal counsel and small group meetings with employees. Researchers have found both management and the unions have been successful in their campaigns when they emphasize personal contacts with employees and listen genuinely to their concerns, instead of mailing letters and giving out handbills.117

Employers must be aware of related unlawful activities, such as the following:

Obtaining NLRB forms for employees who may be interested in union decertification Providing services such as typing, assistance in phrasing the petition for decertifica- tion, and use of company stationery by employees who are interested in launching a decertification campaign Initiating discussions on how or whether to decertify the union118

Unions respond to any challenge to their existence as the certified representative of the bargaining unit employees by attempting to convince the employees that there are reasons to continue their union membership and representation and not to seek decerti- fication. Unions do this by improving the level of services to the employees and by attempting to gain improvements in benefits through negotiation.

The number of decertification elections and the percentage of elections lost by unions have remained steady over the last five years. The number of elections was 180, and 33 percent of the elections were won by unions.119

Researchers have identified several explanations for union decertification. First, the affiliation status of the local union involved in the union decertification election with an international union is important because affiliated unions have greater resources avail- able to hold membership support and ultimately to retain union representation. Where employees face income and employment opportunities that are limited to part-time and low-wage employment, support for union retention is significantly lower. For those employees whose income from part-time employment is relatively small, the expense of continuing to support the union is reduced. These reasons may help to explain such cor- porate strategies as moving to small southern towns where alternative employment is relatively sparse and there is a proportional high percentage of part-time employees.

Employees, like employers, must be aware of possible consequences of their activities related to attempting to decertify the union. Decertification advocates must be prepared for pressure from union officials and isolation from fellow employees who are pleased with the union. The NLRB has upheld the union s right to discipline union members who actively participate in the campaign to decertify the union, as long as the disciplin- ary action does not affect the employee s employment status.120

Summary This chapter provides insights into reasons unions are formed. It discusses the most important theories and explanations ranging from alienation and class consciousness to the employees backgrounds and personal desires. The role of a union is to fulfill employees perceived needs and answer job-related concerns. Unionization efforts progress from first contacts with employees to signing the authorization

cards, petition for election, hearings, determination of the appropriate bargaining unit, and the eventual representation election. Within this framework numerous rules, regulations, and legal requirements govern the union certification process. The proce- dures by which employees can be formed into unions through voluntary recognition, NLRB directives, and secret-ballot elections are explained.

242 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The chapter presents the arguments for and against the proposed Employee Free Choice Act and the Manda- tory Secret Ballot Protection Act. The Employee Free Choice Act was passed by the U.S. House of Representa- tive. A majority of senators supported its passage, but there was not enough support to bring the act to a vote. Even if the act had passed, President George W. Bush would have vetoed it. After subsequent elections, the prospects for passing the Employee Free Choice Act appear dim.

Unions have launched new strategies to organize unrepresented employees, such as internet and social media. The AFL-CIO and CTW have introduced sev- eral new programs.

When the union is judged by employees as not representing their interests, a decertification procedure is available through the election process. Generally, only a few employees and only small bargaining units have been involved in decertification elections.

Key Terms alienation theory, p. 198 Scarcity Consciousness Theory, p. 199 union instrumentality, p. 203

Consent election, p. 219 Directed elections, p. 219 contract bar doctrine, p. 225

totality of conduct doctrine, p. 233

Discussion Questions

1. Refer to the reasons employees become members of unions to assess the means used by union organizers to meet these needs.

2. Select an organization with which you are famil- iar, and determine the number of bargaining units that would be appropriate.

3. Explain the contract bar doctrine. How would it influence the negotiation of the first labor agreement?

4. Appraise the shifting positions of the NLRB on representation election campaigning.

5. Prescribe a do and don t list for supervisors involved in unionization campaigns so that they will not commit any unfair labor practices.

6. Why do you believe employers are becoming more interested in decertification elections?

7. Explain the following statement: It is not the union that organizes the employees; it is management.

8. What would be a good response from a union organizer for each statement in the Labor Rela- tions in Action feature on page 239?

9. Review the arguments for and against the Employee Free Choice Act and the Mandatory Secret Ballot Protection Act. How would you vote? Give your reasons.

Exploring the Web

1. AFL-CIO Organizing Institute (http://www.afl-cio.org/aboutus/oi) The mission of AFL-CIO s Organizing Institute is to identify, train, and develop union organizers. This Web site has a schedule of training classes, frequently asked questions about the institute, information about a union organizer, and testimonies of graduates.

2. Union Organizing Delta Airlines. Type Union Organizing Delta Air- lines in a search engine (e.g., Bing, Google, Yahoo) for articles and commentary related to the 2010

union campaign and the continuing efforts by Delta Airlines and unions. Wal-Mart. Type Union Organizing Wal-Mart in a search engine for the latest on the United Food and Commercial Workers Union campaign to organize Wal-Mart employees in the United States and Wal- Mart s recognition of unions in Canada (Quebec) and China (All-China Federation of Trade Unions).

3. Role of Supervisors in Unionization Campaign To learn about the role of supervisors in a unionization campaign, type Union Organizing Role of Supervisors

CHAPTER 5 Why and How Unions Are Organized 243

in a search engine. You will find multiple sources, articles, books, advising comments from law firms, and so on.

4. Union Salts For up-to-date information and a review of NLRB decisions, review Michael C. Duff, Union Salts on Administrative Private Attorney General, Berkeley Journal of Employment and Labor Law, 32 (Spring 2011) (http://www.boalt.org/BJELL/).

5. Employer Positions of Labor Laws and Labor Relations Go to http://www.nam.org (National Association of Manufacturers) and http://www.uschamber.com/ issues/labor (U.S. Chamber of Commerce) for the latest positions of proposed labor legislation and related matters.

6. For NLRB Updates http:www.NLRB.org/

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244 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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CHAPTER 5 Why and How Unions Are Organized 245

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56. Jeffrey S. Bosley, NLRB Modifies Recognition and Contract Bar Doctrines to Provide 45-day

246 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Window to Challenge Voluntary Recognition, Employee Relations Law Journal, 33(4), 2008, p. 89 93; Henry H. Drummonds, The Union Authorization Card Majority Debate, Labor Law Journal, 58(4), 2007, pp. 217 227.

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An authorization card signifies that the employee desires to be represented by the union in collec- tive bargaining. The employee thereby authorizes the union to represent him or her with his employer. The signed card may be used later by the union as proof of majority representation, as support to demand recognition, and as evidence that there is substantial interest among the bargaining unit to support a petition to the NLRB for representation election. Schlossberg and Sherman, Organizing and the Law, p. 50.

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72. Robert J. Alberts, The Appropriate Bargaining Unit, Geographic Proximity, and the Nearest Neighbor : An Alternative Analysis, Labor Law Journal, 41, July 1990, pp. 424 426.

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and Contract Bar Doctrines to Provide 45-Day Window to Challenge Voluntary Recognition,

CHAPTER 5 Why and How Unions Are Organized 247

Employee Relations Law Journal, 33(4), 2008, pp. 89 93; Henry H. Drummonds, The Union Authorization Card Majority Debate, Labor Law Journal, 58(4), 2007, p. 92.

77. Excelsior Underwear, Inc., 156 NLRB 1236 (1966). 78. Richard N. Block and Myron Roomkin, Deter-

minants of Voter Participation in Union Certifi- cation Elections, Monthly Labor Review 105, April 1982, pp. 45 47.

79. Myron Roomkin and Richard N. Block, Case Processing Time and the Outcome of Represen- tation Elections: Some Empirical Evidence, Uni- versity of Illinois Law Review (1981, reprinted in Oversight Hearings on the Subject Has Labor Law Failed? (Washington, D.C.: Committee on Edu- cation and Labor, 1984), pp. 844 845.

80. Marcus H. Sandver and Herbert G. Heneman III, Union Growth through the Election Process,

Industrial Relations, 20, Winter 1981, pp. 109 115.

81. William N. Cooke, Determinants of the Out- comes of Union Certification Elections, Indus- trial and Labor Relations Review, 36, April 1983, pp. 402 414.

82. Cheryl L. Maranto and Jack Fiorito, The Effect of Union Characteristics on the Outcome of the NLRB Elections, Industrial and Labor Relations Review, 40, January 1987, pp. 225 238.

83. Dolin and Friedman, Recent Developments and the Likely Effect of Changes, p. 13.

84. Marcus Hart Sandver and Kathryn J. Ready, Trends in and Determinants of Outcomes in

Multi-Union Certification Elections, Journal of Labor Research, 19, Winter 1998, pp. 164 171.

85. Annual Report of the National Labor Relations Board, for the Fiscal Year ended September 30, 2009, at http://www.nlrb.gov.

86. Kate Bronfenbrenner, No Hold Barred: the Inten- sification of Employer Opposition of Organizing (Washington, D.C.: Economic Policy Institute, 2009), pp. 1 3, 24 26.

87. Study Calls for Labor Law Reform to Aid Unions Seeking First Contracts, Daily Labor Report, July 10, 1985, pp. A-10.

88. William N. Cooke, The Failure to Negotiate First Contracts: Determinants and Policy

Implications, Industrial and Labor Relations Review, 38, January 1985, pp. 163 178.

89. Gerald Mayer, Labor Union Recognition Proce- dures: Use of Secret Ballots and Card Checks, Congressional Research Service, The Library of Congress, 2005, at http://digitalcommons.ilr.cor- nell.edu/key_workplace/237. John Logan, No Choice for Workers, June 26, 2007, http://www. tompaine.com/articles/2007/6/26.

90. John Logan, No Choice for Workers, June 26, 2007, http://www.tompaine.com/articles/2007/ 6/26.

91. Gerald Mayer, Labor Union Recognition Proce- dures: Use of Secret Ballots and Card Checks, Congressional Research Service, The Library of Congress, 2005, at http://digitalcommons.ilr. cornell.edu/key_workplace/237.

92. Jack Fiorito, Gregor Gall, and Arthur D. Marti- nez, Activism and Willingness to Help Organiz- ing: Who Are the Activists? Journal of Labor Research, 31, Summer 2010, pp. 363 380.

93. Shopping Kart Food Market, 94 LRRM 1705 (1977); Julius G. Getman, Stephen B. Goldberg, and Jeanne B. Herman, Union Representation Elections: Law and Reality (New York: Russell Sage Foundation, 1976); Neal Orkin and Mara Landberg, Election Campaign Propaganda: Board Policy Then and Now, Labor Law Journal, 46, July 1995, pp. 440 446.

94. William T. Dickens, The Effect of Company Campaigns on Certification Elections: Law and Reality Once Again, Industrial and Labor Rela- tions Review, 36, July 1983, pp. 574 576.

95. Richard N. Block, Benjamin W. Wolkinson, and James W. Kuhn, Some Are More Equal Than Others: The Relative Status of Employers, Unions, and Employees in the Law of Union Organizing, Industrial Relations Law Journal, 10(2), 1989, p. 220.

96. David P. Brenskelle, Questioning Employees Concerning Union Sentiment Remains a Risky Proposition, Employee Relations Law Journal, 13, Summer 1987, pp. 141 147.

97. For a comprehensive review of union s solicita- tion decisions and policies, see: Henry Findley, Lee Vardaman, and Sebrena Moten, The Rules of

248 PART 1 Recognizing Rights and Responsibilities of Unions and Management

the Game: Union Solicitation in the Twenty-First Century Workplace, Employee Responsibility and Rights Journal, 22, 2010, pp. 33 44.

98. Republican Aviation Corp. v. NLRB, 324 U.S. 793 (1945).

99. Justices Twice Back Right to Distribute Union Literature on Company Property, Wall Street Journal, June 23, 1978, p. 6; Peter G Kilgore, No-Solicitation/No-Distribution Rules: The Word

Battle of Time Versus Hours Continues, Labor Law Journal, 35, November 1984, pp. 671 672.

100. Henry Findley, Lee Vardaman, and Sebrena Moten, The Rules of the Game: Union Solicita- tion in the Twenty-First Century Workplace, Employee Responsibility and Rights Journal, 22, 2010, pp. 34 41.

101. Eastex, Inc. v. NLRB, 46 U.S.L.W. 4783 (June 22, 1978).

102. Joseph A. Pichler and H. Gordon Fitch, And Women Must Weep: The NLRB as Film Critic, Industrial and Labor Relations Review, 28, April 1975, pp. 395 410.

103. Henry Findley, Lee Vardaman, and Sebrena Moten, The Rules of the Game: Union Solicita- tion in the Twenty-First Century Workplace, Employee Responsibility and Rights Journal, 22, 2010, p. 41.

104. Anthony M. Townsend, Samuel M. Demarie, and Anthony R Hendrickson, Information Technol- ogy, Unions, and the New Organization: Chal- lenges and Opportunities for Union Survival, Journal of Labor Research, 22(2), 2001, p. 285.

105. David Scher and R. Scott Oswald, Notes On: As You Like It: Ascribing Legal Significance

to Social Media Labor Law Journal, 2014, pp. 104 106.

106. The Guard Publishing Company, d/b/a/ The Register-Guard, 351 NLRB No. 70 (December 16, 2007).

107. Christine Neylon O Brien, Employer E-Mail Policies and the National Labor Relations Act: D.C. Circuit Bounces Back to the Obama Board on Discriminatory Enforcement Issue, Labor Law Journal, 61(1), 2010, pp. 5 14.

108. Purple Communications, Inc. and the Commu- nications Workers of America, AFL-CIO, 36

NLRB No. 126 (2014); For a review of case law on Use of Social Media as a Protected Concerted Activity, see: Wesley Kennedy and Angie Cowan Hamada, Protected Activity and the NLRA in the Age of Social Media, Proceedings of the Annual Meeting of the Labor and Employment Relations Association, pp. 40 49.

109. Andrew W. Martin, Why Does the New Labor Movement Look So Much Like the Old One? Putting the 1990s Revitalization Project in His- torical Context, Journal of Labor Research, 27(2), 2006, p. 176.

110. http://www.fightfor15.com/. 111. Richard W. Hurd, U.S. Labor 2006: Strategic

Developments across the Divide, Journal of Labor Research, 38(2), 2007, pp. 313 324; Marick F. Masters, Ray Gibney, and Tom Zagenczyk, The AFL-CIO v. CTW: the Competing Visions,

Strategies, and Structures, Journal of Labor Research, 27(4), 2006, pp. 473 503.

112. Gary Chaison, The Changing Role of Unions: A Review Essay, Journal of Labor Economics, 27(3), 2006, pp. 423 424.

113. Robert W. Schupp, When Is a Union Not a Union? Good Faith Doubt and Its Limitations in Collective Bargaining, Labor Law Journal, 48, June 1997, pp. 369 370; Clyde Scott, Kim Hester, and Edwin Arnold, Decertification Elections: An Analysis of Recent Activity, Labor Law Journal, 46, February 1995, pp. 67 74.

114. David M. Savino and Nealia S. Bruning, Decer- tification Strategies and Tactics: Management and Union Perspectives, Labor Law Journal, 43, April 1992, pp. 201 208.

115. James B. Dworkin and Marian Extejt, Why Workers Decertify Their Unions: A Preliminary Investigation, paper presented at the Annual Meeting of the Academy of Management, August 1979.

116. William A. Krupman and Gregory I. Rasin, Decertification: Removing the Shroud, Labor

Law Journal, 30, April 1979, pp. 234 235. 117. Trevor Bain, Clyde Scott, and Edwin Arnold,

Deauthorization Elections: An Early Warning Signal to Decertification? Labor Law Journal, 39, July 1988, pp. 432 436.

CHAPTER 5 Why and How Unions Are Organized 249

118. Seventieth Annual Report of the National Labor Relations Board, for the Fiscal Year ended Sep- tember 30, 2005, at http://www.nlrb.gov.

119. David Meyer and Trevor Bain, Union Decertifi- cation Election Outcomes: Bargaining-unit Char- acteristics and Union Resources, Journal of Labor Research, 15, Spring 1994, pp. 117 136.

120. Edwin Arnold, Clyde Scott, and John Rasp, The Determinants of Incumbent Union Victory in

Raid Elections, Labor Law Journal, 43, April 1992, pp. 221 228; Clyde Scott and Edwin Arnold, Raid Elections: An Analysis of Employer Campaigns, Labor Law Journal, 41, September 1990, pp. 641 648. See also Robert W. Schupp, When Is a Union Not a Union? Good Faith

Doubt by an Employer, Labor Law Journal, 42, June 1991, pp. 357 364.

250 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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5- 1 Are These Employees Engaged in a Protected

Concerted Activity?

Marianna Cole and Lydia Moore were coworkers employed by the ACE, Inc. to assist victims of domestic violence. The two employees frequently communicated with each other by phone and text message during the workday and after hours. According to Cole s credited testimony, Moore often criticized other employees dur- ing these communications, particularly housing depart- ment employees who, Moore asserted, did not provide timely and adequate assistance to clients. Other employ- ees similarly testified and Moore spoke critically to them about their work habits and those of other employees.

This criticism issue escalated on Saturday, Octo- ber 9, 2010, a nonworkday, when Cole received a text message from Moore stating that the latter intended to discuss her concerns regarding employee performance with Executive Director Lour Iglesias. Cole sent Moore a responsive text questioning whether she really wanted you to know how u feel we don t do our

job From her home, and using her own personal computer, Cole then posted the following message on her Facebook page:

Lydia Moore, a coworker feels that we don t help our clients enough at ACE. I about had it! My fellow coworkers how do u feel?

Four off-duty employees Dame Rodriguez, Ludi Rodriguez, Yaritza Campos and Carlos Ortiz responded by posting messages, via their personal com- puters, on Cole s Facebook page; the employees responses generally objected to the assertion that their work performance was substandard.

Moore also responded, demanding that Cole stop with ur lies about me. She then complained to Iglesias about the Facebook comments, stating that she had been slandered and defamed. At Iglesias request, Moore printed all the Facebook postings, Iglesias dis- charged Cole and her four coworkers, stating that their remarks constituted bullying and harassment of a coworker and violated the ACE s zero tolerance pol- icy prohibiting such conduct.

Questions 1. Are these employees engaged in a protected con-

certed activity? 2. If ACE had terminated Moore also, would a pro-

tected concerted activity be involved? 3. Does it matter that a union was not involved? 4. How should the NLRA rule? Why?

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5- 2 Are the Employees Involved in Activities That

Are Legal?

The representation election was conducted pursuant to a Stipulated Election Agreement. The tally of ballots showed 38 ballots for and 28 against the Union with 5 challenged ballots, an insufficient number to affect the results.

The Employer contended that the Union distrib- uted a flyer during the critical period containing state- ments purportedly made by employees that they did not, in fact, either make or authorize.

The Union explained to employees that it was mak- ing a campaign flyer. The Union obtained signed release forms from employees willing to be photographed and/ or videotaped and to provide statements of support for

the Union. Employees who signed the release forms authorized the Union to use pictures made of me and comments made by me on this date in video tapes, printed material, digital and online media, advertisements, and any other materials. Two questions on the release form asked employees how having a union would (1) improve your life and/or the life of your family and (2) help you provide better care [for your patients].

After collecting signed releases from approxi- mately 49 employees in a proposed bargaining unit of 73, the Union published a campaign flyer containing statements based on the answers in the release forms and on the prior statements employees made in

CHAPTER 5 Why and How Unions Are Organized 251

campaign videos expressing their desire for a union. The cover of the flyer displayed the words We re Vot- ing Yes for United 1199! between two group photo- graphs of employees. These words were repeated on the back of the flyer, surrounded by individual photo- graphs and employee statements. The flyer included statements from approximately 48 individual employ- ees, and approximately 25 of the statements included the words I m voting yes, although none of the employees expressly authorized the Union to use those specific words.

The Employer objected to the Union s use of the words I m/We re voting yes in quotes on the flyer. It claimed that the voting yes quotes were unauthorized misrepresentations that deceived voters and that should require a second election.

Under the well-established standard for evaluating misrepresentation in campaign propaganda, an election can be set aside on the basis of misleading campaign statements only if a party has used forged documents which render the voters unable to recognize propa- ganda for what it is. Under the broader rule, an elec- tion may be set aside where no forgery can be proved, but where the misrepresentation is so pervasive and the deception so artful that employees will be unable to separate truth from untruth and where their right to a free and fair choice will be affected. The Union claimed that it had received sufficient evidence of the employees support that its insertion of the words I m voting yes into employees statements expressing their desire for a union did not amount to misrepresenta- tion, regardless of whether employees expressly autho- rized attribution of those specific words to them.

The Union made an effort to verify the information. The Union asked all the employees to state their reasons for supporting union representation and for permission to use their names, images, and statements in campaign literature. The campaign flyer included statements

received in the answers supplied in the signed release forms. And many of the employees quoted in the flyer also appeared in a campaign video sincerely stating their desire for a union. Based on these interactions, the Union reasonably believed that each of the named employees was planning to vote yes for representation. To suggest that by including the phrase we re voting yes or I m voting yes in quotes the Union engaged in pervasive misrepresentation, artful deception, or

even misrepresentation at all is not supported by these facts. The Union did exactly what each of the employees who signed the release form would have understood the Union was going to do it used the employees names, images, and words in an effort to create a persuasive piece of campaign literature.

In turn, no reasonable employee reading the Union s flyer would think that all the listed employees actually got together and literally said, We re voting yes. That language appears on the cover and back of the flyer and is not attributed to any specific employee. A reasonable reader would have understood those words, as well as the repeated phrase, I m voting yes, as characterizing the pro-union sentiments of the named employees as a whole. There was no artful deception of the reader: that characterization was accurate and was verified by the Union. Surely, readers could recognize the propaganda for what it is. There was no misrepresentation.

Questions 1. Were the Union actions sufficient to cause the

election results to be overturned? 2. Did the Union misrepresent employees who signed

the release forms? 3. If the NLRB agreed with the Employer, what action

would the NLRB take? 4. How should the NLRB rule? Why?

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National Labor Relations Act (NLRA)?

The election was conducted pursuant to a Stipulated Election Agreement. The tally of ballots shows 85 bal- lots cast for, and 80 ballots cast against, the Union, with 2 challenged ballots, a number of insufficient to affect the outcome of the election.

The Employer provides digital television services to residential and commercial customers. At its Ran- cho, AZ facility, the Employer employs approximately 215 employees in the following classifications: field technicians, warehouse employees, and dispatchers.

252 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The vast majority of these employees are field techni- cians, who install or repair digital equipment at custo- mers locations. In addition, the Employer employs a site manager, 3 operations managers, and 22 field supervisors. Of the 22 field supervisors, 13 are designed field supervisors with a team [hereinafter referred to

as field supervisors ], and 9 are designated field supervisors without a team. Each field supervisor oversees a team of approximately 10 to 15 field techni- cians. In contrast, field supervisors without a team do not oversee anyone; rather, they primarily perform installation and repair work on complex jobs or jobs for important customers.

Field supervisors respond to their team members telephone calls seeking answers to technical questions, requesting additional equipment, or reporting pro- blems with particular job assignments (e.g., a cus- tomer is unavailable or a site is inaccessible). Field supervisors monitor the productivity of the field tech- nicians on their team, examine their work, and inspect their vehicles. Field supervisors have the authority to give verbal warnings to technicians for performance issues or for tardiness, such as being late to a team meeting. Such verbal counselings are documented by field supervisors in manager notes, which are not reviewed by management and not retained in employ- ees personnel files.

If a field supervisor determines that a technician s performance or infraction warrants more than a ver- bal counseling, he has the authority to initiate the dis- ciplinary process associated with an employee consultation form (ECF). Field supervisors do not have the authority to prepare and issue ECFs directly to technicians; rather, ECFs are subject to manage- ment review. More specifically after a field supervisor prepares a draft ECF, the ECF is reviewed, first, by the

operations manager to whom the field supervisor reports; next, by the site manager, and, finally, by the human resources department. At each stage of review, the reviewer may alter the language of the ECF, change the proposed level of discipline, or decide that the ECF should not be issued. Following that review, the field supervisor meets with the technician to present and explain the ECF. The field supervisor thereafter affords the technician the opportunity to set forth his version of events, or add other comments, on the ECF form. Finally, the field supervisor asks the technician to sign the ECF form and then signs it himself, after which the ECF is placed in the employ- ee s personnel file.

Section 2(11) of the Act defines a supervisor as Any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them, or to adjust their grievances, or effectively to recom- mend such action, if in connection with the foregoing the exercise of such authority is not of a merely rou- tine or clerical nature, but requires the use of inde- pendent judgment.

Questions 1. If the NLRB decides that the field supervisors are

supervisors under the National Labor Relations Act, what does the NLRB do about the representa- tion election?

2. Are the field supervisors supervisors under the NLRA?

3. How should the NLRB rule on the field supervisors? 4. How should the NLRB rule in the case of the elec-

tion? Why?

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5- 4 Are These Employees Activities Legally Protected

under the National Labor Relations Act?

Accurate Communications (AC) provides sign- language interpretation services. Its employees, known as video relay interpreters, provide two-way, real-time interpretation of telephone communications between deaf or hard-of-hearing individuals and hearing

individuals. The interpreters typically use an audio headset to communicate orally with the hearing partic- ipant on a call, leaving their hands free to communicate in sign language, via video, with the deaf participant. The interpreters work at 16 call centers that process

CHAPTER 5 Why and How Unions Are Organized 253

calls on a nationwide, around-the-clock, first come, first served basis.

Since June 2012, AC has maintained an employee handbook that contains its electronic communications policy. That policy states:

INTERNET, INTRANET, VOICEMAIL, AND ELECTRONIC COMMUNICATION POLICY

Computers, laptops, internet access, voicemail, electronic mail (email), Blackberry, I Phone, cellu- lar telephones and/or other Company equipment are provided and maintained by AC to facilitate Company business. All information and messages stored, sent, and received on these systems are the sole and exclusive property of the Company, regardless of the author or recipient. All such equipment and access should be used for business purposes only.

Prohibited activities Employees are strictly prohibited from using the

computer, internet, voicemail and email systems, and other Company equipment in connection with any of the following activities:

2. Engaging in activities on behalf of organizations or persons with no professional or business affil- iation with the Company.

. . . .

5. Sending uninvited email of a personal nature.

AC assigns its interpreters individual email accounts on its email system, and they use those accounts every day that they are at work. They are able to access their company email accounts on the computers at their workstations, as well as computers on the call centers break areas and on their personal computers and smartphones. The interpreters have access to the internet on the break-area computers but very limited access at their workstations.

In the fall of 2012, the Union filed petitions to represent the interpreters that resulted in Board elec- tions at seven of the AC call centers. The Union asserted that the electronic communications policy interfered with the employees freedom of choice in the election.

The Union argued that the Board should adopt a presumption that employees may access employer email or other communications systems to communi- cate about Section 7 matters if their employer generally allows them access to the system and uses it to

communicate with them about wages, hours, or work- ing conditions. The Union would allow an employer to rebut the presumption by showing that it expressly lim- its use of the email system to specific and defined busi- ness purposes.

The Union argued that previous Board decisions to recognize that the Board s equipment cases, by hold- ing that employers could not preclude employee use for Section 7 reasons if they allowed other uses.

The Union contends that the Board should take account of the fact that email communications is often less time consuming or disruptive to work of the recipient than face-to-face discussion, less likely to crowd out production-related matter than bulletin board postings, and less likely than other technologies to involve incremental usage costs. Employers controls over their communications system that have a clearly stated business purpose and are strictly enforced and nondiscriminatory would be permissible under the Union s proposal. The Union argued that the availabil- ity of alternative means of communication among employees is not relevant to assessing the nature and strength of the employees (as opposed to nonemploy- ees ) Section 7 rights.

AC encouraged the Board to rule that its elec- tronic communications policy was neither unlawful nor objectionable. AC maintains that Board prece- dents regarding the use of other types of equipment establish a strong property interest that outweighs employees interest in using their employer s email to engage in Section 7 communications. Employees need for such has weakened because the availability of personal email accounts and smart phones has greatly expanded their ability to communicate with one another. AC disputes the various points that characterization of email as the new water cooler.

AC describes various ways in which personal email use could interfere with employees work and undermine an employer s solicitation and distribution policies. AC rejects limited restrictions and other measures as inadequate substitutes for a broad ban on personal use of email; those measures would not effectively address employers interests in maintaining production and discipline, protecting confidential information, preventing computer viruses, and ensur- ing that worktime is used for work. AC also raised potential practical considerations, including how it can exercise its right to keep nonemployees off its communications systems if employees contact them.

254 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Finally, AC downplayed the evidence noted that employees did, in fact, use its email system for non- work communications.

Questions 1. Does it matter that the email equipment is owned by

the employee?

Assess the potential of a favorable ruling for the Union

2. How should the NLRB rule? Why?

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5- 5 Did the Company Violate the Section 8(a)(1) of the

LMRA When It Discharged the Employee?

DCP manufactures data collection products. The chief operational officer is Barry Marks. Larry Leiner is one of 23 employees located in two buildings and was hired in April 2005 as a software engineer who prepared computer programs.

On December 1, Marks sent a message to all employees by e-mail about proposed plans for an incentive-based bonus system. Employees were told to reply with your comments or stop by to see me. A

response to this is required. Changes in vacation policy were also mentioned ( Your comments are welcome, but not required ). The incorporated memorandum on the proposed vacation policy changes stated, Please give me your comments (send me an e-mail or stop in and talk to me) by Tuesday, 12/5. The suggested policy changes were to close the offices on December 23 and reopen on January 2 and to adjust the number of paid days off over a five-year period, the effect of which, Marks asserted, was that the employees actually get more days off each year, compared to our present system.

Marks received a number of employee responses on his vacation proposals, including one on December 1, by e-mail, from Larry Leiner. Leiner s response demon- strated that, in fact, the change referred to by Marks would result in the same number of vacation days per year and less flexibility as to their use. Marks conceded to the accuracy of Leiner s correction and claimed that he had inadvertently erred and had not intended to deceive the employees. On December 4, Leiner, having checked his calculations over the weekend, discovered another minor error and notified Marks by e-mail.

Marks did not reply to Leiner s communications. On December 5, Tom Dunn, a member of the

engineering team, sent an e-mail to Marks, with copies to other engineering team members (which would include Leiner), which stated: In response to the pro- posed vacation plan, I have only one word, GREAT! Promptly, Leiner sent an e-mail to Dunn telling him that the proposed policy did not, in fact, work to the advantage of the employees.

Also, on December 5, Leiner sent a lengthy e-mail message to all employees, including Marks. The mes- sage spelled out in detail Leiner s calculations on the result of the proposed vacation policy change. It con- tained, as well, some flippant and rather grating language.

The salutation was Greetings Fellow Travelers. In his initial remarks, Leiner wrote, the closing state- ment in Barry s memo: The effect of this is that you actually get more days off each year, compared to our present system, will be proven false. This declaration was reiterated in the final thought of the memo: Thus, the closing statement in Barry s memo is proven false. The paragraph pre ceding that statement read: Assuming anyone actually cares about the company

and being productive on the job, if Christmas falls on Tuesday or Wednesday as it did in 1996 and 1997, respectively, two work weeks of one and two days each produced by the proposed plan will replace the fragmented weeks. In closing, Leiner asked that the recipient please send errata to Larry.

Also on December 5, after reading the e-mail mes- sage from Leiner, Dunn e-mailed again Marks and also the engineering team (as shown on the e-mail address). Dunn said in part, After reading Larry s E-mail(s) of this date[,] I realized I had made a mistake in calculat- ing the vacation days and wish to change my comment

CHAPTER 5 Why and How Unions Are Organized 255

from GREAT to Not so Great on the proposed vaca- tion policy. Dunn also noted in his message that the proposals had generated more E-mail than any other plan in the company.

Marks became angry that Mr. Leiner sent his e-mail messages to all employees. He prepared a Decem- ber 5 memorandum to Leiner. The memo stated that Marks was saddened and disappointed by Leiner s e-mail, which was inappropriate and intentionally provocative and beneath someone as talented and intelligent as you are. Marks then wrote:

Our employment manual states: Certain actions or types of behavior may result in immediate dis- missal. These include, but are not limited to:

Failure to treat others with courtesy and respect.

Marks went on to direct Leiner to write him by 5 P.M. that day: In light of the above, why this e-mail message was inappropriate; how sending an e-mail message like this hurts the company; how this matter should have been handled.

Marks continued:

If your response is acceptable to me, you will post it by e-mail today to those who received your other messages.

If you decline to do so, or if your response is unacceptable to me, your employment will be ter- minated immediately. Otherwise, your employ- ment will continue on a probationary basis for six months, during which time your employment may be terminated at any time and for any reason.

Larry, I am very disappointed in you. Barry.

Marks stated that what upset him about the e-mail messages was their tone : it was a slap in the face of employees with good attitudes and a personal attack upon him.

At least twice in the afternoon on December 5, Leiner approached Marks. In Marks s words, Leiner wanted Marks to tell him what to write. In Marks s view, Leiner was profess[ing] not to understand what was wrong with the e-mail message, the confusion of which Marks seriously doubted. He nonetheless tried to give Leiner some appropriate suggestions. Leiner gave a different version of these conversations, portray- ing himself as admitting to an honest mistake after

Marks told him that Leiner should have contacted him, not the other employees, because it was up to him to decide what to say to other people ; Leiner described Marks as refusing to offer any assistance in preparing the requested memo and stated that Marks had branded Leiner a troublemaker.

Marks admonished Leiner for having contacted employees; his December 6 e-mail to the employees picked up the theme that the right way for Leiner to have proceeded was to approach management. Marks stated that, on December 5, he may have told Leiner that he should have pursued the matter privately.

Leiner said that in his last meeting with Marks on December 5, they agreed to extend the memo deadline to 8 A.M. the next day. Leiner further stated that he stayed up well into the morning as he attempted to compose an appropriate letter, but he was unable to come up with anything he deemed satisfactory. When the two men met at 8 A.M., and Marks asked if Leiner had produced a memo, Leiner said, No, I couldn t really write anything incriminating because it could be used against me later. Marks wished him luck in his future endeavors and bade him farewell.

Later that day, Leiner called his supervisor and asked for a discharge letter. The December 9 letter received by Leiner citing as the Reason [sic] for termi- nation two of the grounds for dismissal given in the employee manual:

Failure to treat others with courtesy and respect Failure to follow instructions or to perform

assigned work Early on December 6, Marks e-mailed all the

employees. After discussing the vacation proposal, he turned to Larry s memo and how to address our grievances. He wrote of the impropriety of using sar- casm or disrespect ; he pointed out that the long or provocative e-mail messages had taken up everyone s time; that reading, printing, discussing, and dealing with these messages had unnecessarily cost our com- pany time and money. Marks noted that the right way to handle a grievance, or a question, or a com- ment, or a complaint was to discuss it with a team leader or Marks. Marks admitted that he had erred in explaining the proposed vacation policy, and he asked employees to inform him if that had changed their minds. He closed by saying that, while he welcomed disagreement, he also demanded that everybody be

256 PART 1 Recognizing Rights and Responsibilities of Unions and Management

treated with courtesy. No specific mention was made of Leiner s discharge.

The records showed that in September 2005, Marks had sent a memo to the members of the engi- neering team requiring them to work at least 50 hours per week because of production necessities. Leiner sent a two-word reply: I refuse. Leiner said that he expected this to lead to a dialogue with Marks, which it did. Leiner explained to Marks that his free time was important to him and that he would rather accept a cut in pay than work additional hours. Marks eventually agreed that Leiner need not work the extra time, but Marks told Leiner don t tell anybody. Marks said that he spoke to Leiner and asked him simply to do what he can.

Marks stressed that it was the tone of Leiner s e-mail, and the ramifications of that tone, which played a dominant role in the discharge. This is reflected in his December 5 memorandum to Leiner, which mentioned only Failure to treat others with courtesy and respect. While his December 6 communication makes a point of the time and expense wasted by Leiner s lengthy

e-mail to the employees, no other message (including the reason for discharge set out in the December dis- charge letter) mentions that issue. Marks agreed that he had no objection to both simple e-mailings and per- sonal telephone calls being made by employees and that he was aware that, among the employees, there is a certain amount of time during the workday that is not devoted strictly to work. Marks acknowledged that he knew that Dunn s e-mails to him had been directed also to the other members of the engineering team, and Dunn had not been admonished or otherwise disciplined.

On December 10, Leiner filed a charge with the National Labor Relations Board.

Questions 1. Was this matter within the jurisdiction of the

National Labor Relations Board? 2. Were Leiner s actions considered a protected activ-

ity under the Labor Management Relations Act? 3. How should the NLRB rule? Give your reasons.

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5- 6 Bulletin Board Use

The employer operates a merchandise catalog distribu- tion center in Wichita, Kansas, employing 1,000 work- ers. The union began an organizing campaign among distribution center employees. For many years, the employer has published an employee handbook that contained the following bulletin board policy:

Bulletin boards are located throughout the Center [distribution center], generally near time clocks. Company announcements, such as policy changes, holiday schedules and Company news of general interest, are posted on these boards. Personal post- ings are not permitted.

Employees who supported the union placed printed material on the bulletin boards advertising upcoming union meetings and soliciting union sup- port. On discovery, managers removed the union mate- rial from the bulletin boards. The union subsequently filed an unfair labor practice charge, alleging the

employer s removal of the union materials from the bulletin board represented unlawful interference with employees right to solicit for the purpose of organizing a union under the LMRA.

The employer maintained that managers were sim- ply enforcing a nondiscriminatory policy barring all solicitation materials from company bulletin boards that were not approved by the company. The employer noted that management had given employees permis- sion to post on bulletin boards a company-approved newsletter that did include a section advertising employees personal items for sale (e.g., car, television set, golf clubs). Certain other company-sponsored soli- citations for the United Way and March of Dimes charities had also previously been approved for posting on company bulletin boards.

Several employees testified that other employee communications had also been posted on several com- pany bulletin boards in the past, such as thank-you

CHAPTER 5 Why and How Unions Are Organized 257

notes, party announcements, Christmas cards, a solici- tation for maid service, and donation requests when an employee was hospitalized or died. Such unapproved announcements were often posted for several weeks before being removed from bulletin boards. The employer responded that items such as those men- tioned by the employees who testified were, for the most part, connected to company-sponsored events or charities.

Questions 1. Is an employer required to have bulletin boards at

the workplace?

2. If an employer did not provide bulletin boards at the workplace, would employees have a right to provide and mount their own bulletin boards?

3. If there are company-provided bulletin boards at the workplace, does the employer have a right to restrict the purpose or type of material that can be posted on such boards?

4. In this case, did the employer unlawfully deny union supporters access to use company bulletin boards for union solicitation purposes? Explain your reasoning.

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5- 7 Nonemployee Union Solicitation Activity

In October, the union began an organizing drive involving nursing personnel employed at the Medco Hospital (the employer). In November, Medco s man- agement revised a portion of the existing no- solicitation and distribution policy to read as follows: Visitors, patients and other nonemployees may not

solicit or distribute literature on any hospital property for any purpose at any time.

The hospital operates a cafeteria that is open to serve employees, patients, and the general public. On December 4, two (nonemployee) union organizers entered the hospital cafeteria accompanied by some off-duty nursing employees. The off-duty nursing employees proceeded to distribute union literature pro- vided to them by the two union organizers. The two union organizers did not personally hand out any union literature or attempt to solicit any employees to sign a union authorization card. The two union orga- nizers did remain seated in the cafeteria for approxi- mately 5 hours and answered questions initiated by interested employees about the union. Sitting on the table where the two (nonemployee) union organizers were seated was an open box containing union literature.

On December 10, the two union organizers accompanied by several off-duty nursing employees, again entered the hospital cafeteria, and engaged in the same actions as those previously described as

occurring on December 4. After approximately 30 minutes, the human resources (HR) manager for the hospital entered the cafeteria and spoke to the two union organizers. The HR manager informed the two union organizers that they were in violation of the hospital s no-solicitation and distribution rule. The HR manager gave the two union organizers per- mission to stay for 15 minutes to have a drink or 30 minutes to eat a meal, after which time they would be arrested if they refused to leave. The two union orga- nizers left the hospital cafeteria voluntarily and pro- ceeded to file an unfair labor practice charge, alleging the hospital unlawfully barred their access to the hos- pital cafeteria. There was no evidence to show that the employer had ever allowed solicitation or distribution activity by nonemployees to occur on its premises in the past.

Questions 1. Did the employer unlawfully deny the two nonem-

ployee union organizers access to the hospital s cafeteria? If so, what should be the appropriate remedy?

2. Would the employer s no-solicitation policy pro- hibit the two nonemployee union organizers from entering the hospital s property anywhere at any time?

258 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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5- 8 Campaign Threats or Implied Promise of Benefit?

Do the oral or written statements made by employer representatives during a representation election cam- paign contain any unlawful threats or implied promises of benefit in violation of Section 8(a)(1) of the LMRA?

In early June, the union filed a petition with the NLRB requesting a representation election be held in a bargaining unit comprising 880 employees of the Jack son Equipment Company (the employer). The employer had previously rejected the union s request for voluntary recognition. The union s election petition was supported by 426 (52 percent) valid union authorization card sig natures. There were 880 employees declared eligible to vote in the election, which the union lost by a vote of 391 for to 489 (55.5 percent) against union representa- tion. The union filed several objections to the employer s conduct during the election.

The union charged that the employer s state- ments made during the election campaign threatened that if the union won the election, the employees benefits would be reduced. Such a threat tends to dis- courage employees from freely exercising their Sec- tion 7 rights under the act. The employer contended that these statements were merely a factual response to union s promises to increase employees wages. The employer cited 22 out of 33 leaflets distributed by the union that referred to improved employee benefits at some unionized plants. Here are the employer s statements:

Neither the Company nor the Union can predict what will be in the contract. Your wages and ben- efits could turn out to be higher, lower, or the same as they are.... I m sure the Union will try to tell you there is some sort of law that will pre- vent the Company from negotiating for anything less than you now receive. That statement is sim- ply not based on facts. I ve given your supervisors copies of a decision in which the court upheld the Employer s right to inform his employees that he may not even have to agree to the continuance of existing wages and benefits. These facts may seem harsh, but I think it s important that you know the truth about the collective-bargaining process before you vote.

Remember, bargaining means putting every- thing on the table, including the benefits you already have. Bargaining with a union can be a complicated and time-consuming process during which the Union and the Company negotiate to get an agreement that both sides are satisfied with. And bargaining starts from scratch, which means that everything is nego- tiable. As I have told you, we would bargain in good faith. But, I would not sign a contract that I did not believe was in this plant s best interest. Sometimes, when a company takes this position, the Union tries to force a settlement. This usually leads to a breakdown in bargaining and can result in a strike

which hurts everyone. You should know, however, that the benefit

package given our plant employees from the time the plant opened was better than those at other unionized plants owned by the Company. You were given greater benefits voluntarily by the Com- pany. Those in unions bargained repeatedly with the Employer for more than 20 years for their benefits.... Your pay increases are a result of the fair and responsible compensation policy we follow. There is no question in my mind that our wages are better than the Union wages I ve seen in contracts of other companies in our area. A vote of no union is a vote to continue the pay practices we have been commit ted to at our plant since the day we began operations.

The Union also objected to other employer state- ments on the grounds that they implied a promise to do things differently or better if the employees voted against the union. Such a promise, conditioned on whether an employee does or does not choose to exer- cise his or her lawful Section 7 rights to select a bar- gaining representative, is in the Union s view a form of positive coercion and destructive of an atmosphere in

which employees may freely decide the bargaining representation issue.

The employer contends it was only informing employees of how good conditions were at the plant. The conditions referred to were changes that had begun at the plant before the onset of the union-organizing

CHAPTER 5 Why and How Unions Are Organized 259

campaign. The statements made by the plant manager were as follows:

I admit, no employer is perfect. However, I am totally convinced that we can best resolve our dif- ferences without the Union and the adversarial relationship the organizers have tried to develop. In order to move ahead, we must work together, not fight each other.

Unions are known chiefly for extracting dues from you, calling strikes, making promises, and causing confusion among employees. I am asking for a vote of confidence and a chance to prove what we can accomplish by working together, with- out interference by a Union. I am asking for a chance to continue the improvements we have underway at our plant, without interference by the Union.

I know that mistakes have been made. The fact that we are having a Union election at this time indicates to me that some of you felt it was necessary, at one time, for an outsider to represent you, that management was unresponsive to your needs and concerns. It has been difficult to bring back to the plant the positive feelings that most of you had about the Company, but I sincerely feel we have turned the corner. I am aware of your frustrations with machine problems, material flow problems, overtime problems, inconsistent interpretation of company policies, pay inconsis- tencies, and management in general. Also, the per- sonnel function has not been as sensitive to your needs as it should have been or could be. I admit that these things could have been diagnosed sooner and acted upon. However, we all know it is easy to quarterback Friday night s football game on Mon- day morning.

I believe today we are building a management team that is willing to recognize its shortcomings and is actively working to correct them. It is not an easy job, but with your help it can be done. Programs have been developed to: (1) improve scheduling in the plant, (2) reduce scrap, (3) provide foremen training development, (4) improve the

quality of our product, (5) purchase required machinery, and (6) improve our housekeeping.

Finally, the Union charged that a company super- visor unlawfully questioned and threatened two open and active Union supporters. About two weeks before the election, supervisor Bates asked employee Culp what he thought the Union could do for him, and then told Culp, If it came down to where you all went out on strike and they had people out, they could go out and hire because the Company had 100 to 200 people waiting for jobs . They would use us as an example for the Company s other plants here in the South.

Approximately one week before the election, super visor Lofton asked employee Rogers how he was going to vote. When Rogers replied, For the union, Lofton inquired whether Rogers was sure he was doing the right thing. Supervisor Lofton further asked Rogers if he knew that if the union won he could lose his benefits and told him he should think twice about voting for the union.

Questions 1. Do these employer statements constitute an unlaw-

ful threat in violation of Section 8(a)(1) of the LMRA? Why or why not?

2. Do the employer statements constitute an unlawful promise of benefits in violation of Section 8(a)(1) of the act? Why or why not?

3. Did the questioning or statements by either super- visor Bates or supervisor Lofton constitute unlawful interrogation in violation of Section 8(a)(1) of the act? Why or why not?

4. Should the NLRB give consideration to its Totality of Conduct doctrine in reaching a conclusion about the alleged violations in this case? Explain your answer.

5. Develop some guidelines for managers who may be talking with employees about the union during an organizing campaign.

6. How should the NLRB rule?

260 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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5- 9 The T-Shirt Offer and Picnic Photographs

On the day before the Union election, the Union hosted a free picnic luncheon for employees during the first and second shifts meal breaks in a parking lot adjacent to the Young Skin s plant. At the picnic, the Union took 88 snapshots. During the luncheon, union representatives distributed Union Yes T-shirts carrying the slogan, The Best Things in Life Are Nego- tiable. Union Yes. Between Union and Yes was a square containing a checkmark. To receive a T-shirt, employees were required to sign a pro-union petition titled, We Are Voting Yes on August 2nd! which stated that the undersigned employees agreed to openly support the Union and asked their co-workers to join them. This petition was to be used as a handbill on election day.

By requiring signing as a condition of receiving a free T-shirt that cost the union $4 to $5 each, the Com- pany contended that this represented an unlawful grant of benefit that the Union used to induce employees to sign the pro-Union petition. The Company compared the T-shirt offer to a union s offer to waive union initi- ation fees contingent on an employee s signing a union authorization card. The Supreme Court found such a fee waiver unlawful in a previous case because it allow[ed] the Union to buy endorsements and paint

a false portrait of employee support during its election campaign. The Company said the monetary value of the T-shirts was irrelevant, noting that the waived initiation fee in the Supreme Court case was a nominal $10.

The Union stated that it was clear to all concerned that the T-shirts were inexpensive and that their free distribution would not interfere with employee free choice. They further stated that it was a considerable leap to conclude that the offer of these Union Yes T-shirts contingent on employees signing a prounion petition was an inducement tantamount to buying endorsements.

The Supreme Court in the previous case ruled that all employees, regardless of their views on unions, had an economic interest in obtaining the fee waiver that

was offered as an inducement to sign union authoriza- tion cards. The inducement here the Union Yes T- shirt however, would reasonably be desirable only to employees who favored the Union and wanted to pro- claim their pro-union view. Thus, the requiring employees to sign a pro-union petition to obtain a pro-union T-shirt would not reasonably induce non- supporters to sign the petition and thereby allow them to paint a false portrait of employee support.

Even if the T-shirts might be desirable to nonsup- porters, the Union in that event had a justifiable inter- est in trying to ensure that T-shirts were distributed only to employees who would wear them as campaign paraphernalia in support of the Union. Requiring employees desiring T-shirts to sign a pro-union peti- tion was a reasonable means for the Union to try to accomplish this objective.

The Company also contended that the Union cre- ated an atmosphere of fear and coercion by photo- graphing employees at the picnic luncheon. In many of the photographs, employees posed for the camera, sometimes displaying their Union T-shirts. The photographs were taken for the purpose of memorial- izing the chicken meal and perhaps to publish in a Union newspaper. Two employees later said they were concerned or felt funny about their pictures being taken.

The Company contended that the employees who were photographed might well have thought that their responses to the Union campaign activity were being recorded for the purpose of future retaliation. The Union responded that, although photographing some activities might suggest retaliatory purpose, the Union photographed employees enjoying a picnic, which each employee voluntarily chose to attend. When a com- pany security guard attending the picnic asked why a Union representative was taking photographs, the Union representative stated, You are all going to make the front page of USA Today, and We want to remember this fun-filled memory. Union represen- tatives stated that the photographs were taken for

CHAPTER 5 Why and How Unions Are Organized 261

submission to the Union s newspaper. Copies of the photographs were later given to employees at a party celebrating the Union s victory in the election (217 in favor of the Union, 200 against it, and 16 challenged ballots). The Company now seeks to overturn the elec- tion results based on its objections to the Union s T-shirt distribution and the photographing of employ- ees at the Union picnic.

Questions 1. Must illegal conduct occur to overturn the results of

a Union representation election? 2. Compare the present case to the following ones:

NLRB v. Savair Mfg. Co., 414 U.S. 270 (1973); 84 LRRM 2929 (1973) Pepsi Cola Bottling Co., 289 NLRB 736 (1988); 128 LRRM 1275 (1988) Mike Yurosek & Sons, Inc., 292 NLRB 1074 (1989); 130 LRRM 1308 (1989)

3. Did the Union interfere with the outcome of the election by offering the T-shirts? Why or why not?

4. Did the Union interfere with the outcome of the election by taking the photographs at the picnic? Why or why not?

5. How will the NLRB rule?

262 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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CLASSROOM EXERCISE

5.1 Designing Union Election Campaign Literature

Purpose: The purpose of this exercise is to allow students to use creativity and gain experience in designing legal election campaign materials that effectively communicate common employer or union themes.

Instructions: This exercise may be completed on an individual or group basis. Using one or more of the common employer and union representation election campaign themes described in Exhibit 5.3, design a poster to encourage employees to vote either for or against union representation. Some students (groups) may be assigned to create a poster stressing employer campaign themes, while other students may design a union campaign poster. Students should be allowed to view the finished posters and choose a winner for Best Company and Best Union poster. The best poster is the one that the group

majority judges would be most likely to lawfully influence (persuade) employees to vote in the intended direction. As a focus for their poster design, students may wish to develop a description of the type of company or bargaining unit employees that are the target of the union s organizing campaign. A local firm s description may be used as a mock organizing target, or news items concerning a recent organizing campaign reported in newspapers, business periodicals (e.g., BusinessWeek, BNA s Daily Labor Report), or other sources may be used.

Note: The same type of exercise may be used to give students experience in preparing and presenting a brief 5- to 10-minute oral presentation on the advantages or disadvan- tages of union representation.

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PART2 The Bargaining Process and Outcomes

Part 2 pertains to key activities and issues involved in the labor relations process of negotiating a labor agreement (contract), setting forth work rules pertaining to wages, hours, terms and conditions of employment, and the rights and responsibil- ities of the parties governed by the con- tract s terms. These topics are approached from the vantage point of legal and practical proscriptions on related behavior as well as with an eye to the realities forged out of the relationships between union and manage- ment representatives.

Chapter 6 Negotiating the Labor Agreement

Chapter 7 Economic Issues

Chapter 8 Administrative Issues

Chapter 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure

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CHAPTER 6

Negotiating the Labor Agreement

HAVE YOU EVER experienced a so-called make or break moment, when you knew the outcome of the situation could change your life significantly? That is the way Jim, a Human Resource (HR) manager, felt as he sat anxiously by the tele- phone, waiting for a call from the union s lead negotiator. The union bargaining team was currently in a caucus meeting con- sidering the final proposal Jim had made from the company to the union a few hours ago. As time passed, Jim didn t know whether to feel encouraged since the union team was obviously taking the time to seriously review the proposed contract terms or to feel worried because the longer the union team delayed giving a response, the more likely it could be that some union negotiating team members were having a problem with one or more terms of the proposed settlement.

This wasn t Jim s first contract negotiation, but it is never easy, no matter how many times one has negotiated success- fully in the past. Months of preparation that involved gathering detailed information about every bargaining subject and industry conditions, analyzing the data to determine the cost and operat- ing implications of agreeing to proposed terms, developing a bargaining strategy for presenting and gaining the union s acceptance of the proposed terms all of it came down to this final moment. Only in the past six months had the company begun to recover from the downturn in business caused by the recent recession. Employees had been required to make economic sacrifices in the form of wage and benefit freezes, temporary layoffs, and increased uncertainty about future job security. Jim was concerned that union members saw the recent improvement in business operations as a sign that every- thing was good going forward and the company could afford to make up the past employee concessions. While the company s

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proposal did contain some modest economic improvements for employ- ees, it also contained proposals to increase management s flexibility to schedule work operations and redefine job descriptions to improve effi- ciency. What effect these changes might have on the total number of jobs available at the company in the future was difficult to predict at pres- ent, which caused some union negotiators to push for more job security guarantees in the proposed contract language. Would the compromises made at the bargaining table after weeks of face-to-face negotiations be enough to win final approval? Jim s thoughts were interrupted by the ring- ing of his telephone. The moment of truth had arrived!

Questions 1. If the union were to reject the proposed contract settlement terms,

what would you advise Jim, the company s negotiator, to do next?

2. As a management negotiator, would you be willing to offer bargaining unit members a monetary signing bonus if they agreed to approve pro- posed contract settlement terms, and if so, how much money would you be willing to offer per bargaining unit member?

3. Imagine you were Jim s supervisor. In conducting Jim s annual perfor- mance evaluation, what percentage of Jim s evaluation score should be based upon how the company fared in the outcome of contract nego- tiations that year?

Negotiation is a common feature of everyday life. Although this chapter covers collec-tive bargaining between union and management representatives over terms and con- ditions of employment, many aspects of negotiations have broader applications to other bargaining activities in society. This chapter first defines collective bargaining and explains initial influences affecting this activity. Subsequent sections consider negotiation preparation activities, such as bargaining team selection, proposal formulation and cost estimates, bargaining strategies and tactics, and legal requirements. The chapter places these diverse collective bargaining considerations in perspective by describing a bargain- ing power model to help predict a likely resolution framework.

Collective Bargaining: Definition and Structure

Collective bargaining is an activity whereby union and management officials attempt to resolve conflicts of interest by exchanging commitments in a manner intended to sustain and possibly enrich their continuing relationship. In short, they attempt to negotiate a new labor contract. Collective bargaining is a special form of interdependent social inter- action, in which the attainment of desired outcomes by one party is dependent on the

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behavior of another party. A dispute that arises between union and management repre- sentatives over what the terms and conditions of employment will be is termed an inter- est dispute. The basic objective of collective bargaining is to resolve such interest disputes by reaching an agreement acceptable to both parties (union and management).1

Attitudes of union and management officials toward collective bargaining and the negotiated settlement influence their relationship during the term or duration of the labor agreement. The fact that both parties generally understand that they will return to the bargaining table in future negotiations affects their strategic choices regarding accept- able tactics and outcomes in any current negotiation.

Defining success in collective bargaining often entails both objective and subjective evaluation criteria. Objectively measuring the economic value or cost of specific settlement terms to each bargaining party is one way to measure success. Comparing settlement out- comes to industry or area averages or settlement outcomes obtained by key competitors is another way. Depending upon the prevailing bargaining conditions, maintaining the status quo or conceding less than one might have been expected to concede under the circum- stances could be defined as a successful bargaining outcome. Union leaders seeking re- election may consider the extent to which the interests of key constituent groups within the bargaining unit (e.g., skilled employees or women) are satisfied as one measure of suc- cess. One other criterion for measuring negotiation success is whether a bargaining settle- ment contributes to building a positive relationship between union and management representatives, which is necessary for the effective implementation of contract terms on an everyday basis.

It is not unusual for both union and management negotiators to claim success at the conclusion of contract negotiations. This may be possible due to the different priorities each party may place on achieving a desired outcome on specific bargaining subjects or a reflection of different criteria being applied by each party to measure success. A successful bargaining settlement reinforces a labor management relationship, whereby the parties, although not always agreeing, nonetheless trust each other to be honest and straightfor- ward in their positions without trying to unnecessarily damage the other party.2

Bargaining Structure Bargaining structure has two general dimensions: (1) independent employee groups that can affect the collective bargaining outcome and (2) the employees and employers who are subject to the provisions of the negotiated labor agreement (the bargaining unit). Each will be considered.

Employee Groups In some cases, union and management officials are influenced by the collective bargain- ing settlements of other, independent groups of employees. Often this is understood by both sides at the bargaining table. For example, a labor settlement between a city govern- ment and the police officers union might influence subsequent negotiations between that same city and its firefighters.

Pattern Bargaining The term pattern bargaining is used to describe a situation where union or management negotiators informally attempt to extend a negotiated settlement from one group to another. Pattern bargaining may occur among similar companies in the same industry. For example, for many years the United Auto Workers (UAW) designated one auto manufacturer in each cycle of contract negotiations as the lead firm with whom the union would attempt to achieve a contract settlement. Terms of the lead contract are

268 PART 2 The Bargaining Process and Outcomes

then used as a pattern for negotiating labor agreements with other auto makers during the same time frame. For example, in the 2015 auto negotiations the agreement reached between the UAW and Fiat Chrysler became the pattern for subsequent settlements between the UAW and General Motors and Ford Motor Company. Increased nonunion competition and the 2007 2009 economic recession substantially curtailed pattern bar- gaining activity in recent auto industry negotiations. Pattern bargaining might also occur if union or management negotiators attempt to apply a settlement obtained for one segment of an industry (automobile manufacturing) to another company that pro- duces related products, such as tires or headlights.

Management and union negotiators might prefer pattern bargaining as a way to take wages out of competition between unionized employers operating in the same

product or service market. The objective of standardizing wages through pattern bargain- ing is beneficial for management because it will reduce concern about competitors receiving a labor cost advantage. Pattern bargaining is also beneficial to union negotia- tors because it builds a perception among similar types of workers (represented by the same union under contracts at different firms) that they are receiving equal and fair treatment from their union in securing negotiated improvements desired by the union s membership.3 Sometimes management negotiators actively resist pattern bargaining in order to try to negotiate contract settlement terms which will provide the firm with a labor cost competitive advantage over other firms with whom the same union bargains. Increased competition by nonunion firms not covered under union-negotiated contracts (both domestic and international competitors) has also forced some unionized employers to resist pattern bargaining.

Sometimes negotiators think they are negotiating independently of other groups contracts; however, that is not how their counterparts see it. For example, union negotia- tors in one company may attempt to coordinate their bargaining strategy with other negotiators representing similar workers (e.g., different locals of the same union) in other companies. This clandestine coordination can take two different forms, based on whether the negotiations are occurring at the same time or different times. Each will be briefly considered.

Whipsawing A whipsaw bargaining strategy involves a negotiating team attempting to extract large, similar, concessions from multiple opponents; this is done by sharing information across negotiating teams on the same side as multiple negotiations proceed. For example, sup- pose the union at Company X is in contract negotiations and it gets a generous vaca- tion clause. The union negotiators immediately contact union negotiators at Companies Y and Z (e.g., via cell phone text messaging) telling of this development. Those union officials at firms Y and Z, who are simultaneously negotiating with their respective employers, decide to hold out for a similar vacation clause. A few days later, suppose the union at Company Y secures a generous paid maternity leave clause. The negotia- tors notify their counterparts at Companies X and Z so they can try to secure similar maternity leave clauses. Meanwhile, the management negotiators at Companies X, Y, and Z are unaware that the union is attempting this strategy.

Recognize that managers sometimes use a whipsaw strategy also. For example, a municipal government with multiple unions (e.g., police, fire, bus drivers, office & cleri- cal, airport workers) may open negotiations with all of them separately yet simulta- neously, hoping to extract similar concessions from all of them.

One foundational principle of unionism is solidarity with other workers. If multiple unions are negotiating with an employer, can the unions agree in advance that no union

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will sign a contract until all the unions have agreed? Such an arrangement is called a lock-in agreement between unions; it prohibits any union-represented bargaining unit from reaching a final contract settlement until all unions who bargain contracts with the same employer are willing to settle. The intent of such a lock-in agreement is to force an employer with multiple unions to satisfy all of the unions concerns and to pre- vent the employer from using a whipsaw bargaining strategy. However, the National Labor Relations Board (NLRB) has ruled that lock-in agreements are unlawful.4 It is law- ful for two or more separate unions (or bargaining units within the same union) to share information with each other about bargaining priorities, strategies, or employer-specific information. This can lead to establishing some similar negotiation goals. Sharing infor- mation and goals prior to bargaining, but bargaining independently of other union locals is called coordinated bargaining.

Leapfrogging If the negotiations at different firms are taking place over several months or years, one party to the negotiation may attempt leapfrogging. This strategy attempts to use the most recent contracts in the industry even if not your own as the starting point for extracting further concessions. Imagine a scenario where the workers at Companies A, B, and C were all earning $20 per hour two years ago. The union structured negotiations so that the contract at Company A expired last year. The union negotiated a raise to $21 per hour. This year, negotiations occur at Company B. The union attempts a strategy of arguing that the organization should not use its own contract (paying $20 per hour) as its starting point for determining pay raises; instead, everyone should use the most recent contract in the industry (Company A, now paying $21 per hour) as the reference. The union further argues that since nearly a year has passed and some inflation has occurred, workers are entitled to more than $21 per hour. Suppose that they are successful in this gambit and get $21.33 per hour. When the next contract with Company C is negotiated (perhaps a year later), the union will argue that negotiators should focus less on their own $20 per hour wage and focus more on current industry standards (the $21.33 now paid by Company B) and what sort of pay raise above current industry standards is appropriate. Thus, each set of contract negotiations provides an opportunity for the union to negotiate wages that jump over (leapfrog) what others are paying in order to secure ever-higher wages. Leapfrogging in this example represents a coordinated strat- egy by the union locals, yet managers may not realize it.

In all of these examples, negotiators for the local union used the collective bargain- ing agreements (CBA) of other groups of employees as a prominent reference point to determine what should be in their own upcoming contract. These other groups were not part of the local s negotiations, nor would the other groups be bound by the local s contract however, the negotiation outcomes of the other groups clearly played a signif- icant role in the local s strategy. Finally, recognize that these are bargaining strategies; there is no guarantee that they will work. The management negotiators may simply dis- regard what other companies pay their unions. Thus, successful pattern bargaining, whipsawing, or leapfrogging depends upon how persuasive the negotiators are when implementing the strategy.

The Bargaining Unit The second dimension of the bargaining structure, the bargaining unit, refers to the employees and employers who will be bound by a negotiated labor agreement. As dis- cussed further in Chapter 5, any appropriate bargaining unit (ABU) determined by the NLRB for representation election purposes is, by definition, a unit appropriate for

270 PART 2 The Bargaining Process and Outcomes

negotiating purposes (see the first example in Exhibit 6.1). Once a union has been certified as the representative of an ABU, two or more ABUs may be combined for the purpose of negotiating a single labor agreement to cover all ABUs if such a combination is acceptable to both the union and the employer(s).

Single Employer, Multiple ABUs Most often, combining bargaining units involves two or more ABUs at one employer s operation represented by the same union. For example, suppose that a company has sev- eral production facilities in three adjacent counties. While the same union may have won separate representation elections for each individual facility, the union may request that the ABUs from all three counties be combined for contract negotiations.

Sometimes ABUs represented by different unions are combined. For example, Harley-Davidson Motor Company operates a manufacturing plant in Kansas City, Mis- souri, where the International Association of Machinists and Aerospace Workers (IAM) and the United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied Indus- trial, and Service Workers International Union (USW) were elected to represent two sep- arate groups of plant workers but, with the employer s agreement, have chosen to negotiate a single contract to cover both groups of workers. For another illustration, see the second example in Exhibit 6.1.

Whether to combine ABUs together for negotiation purposes is a nonmandatory subject of bargaining.5 That means that if, for example, the union wants to discuss the topic of combining ABUs, managers may agree to discuss it, but the management nego- tiators are not legally required to discuss it if they don t want the ABUs to be combined. (By contrast, wages, hours, and working conditions are considered mandatory subjects of bargaining by the NLRB: If, for example, the union wants to discuss a wage raise, management is required to bargain with the union over it.)

There are several factors for both managers and union leaders to consider when deciding whether to allow multiple ABUs to combine for bargaining with a single employer. One or both parties might prefer companywide bargaining because of product interdependence, market factors, or legal considerations. For example, a company may have three manufacturing facilities, each having a separate ABU. If the products at the facilities are interdependent (Facility A s product is needed for Facility B, whose product is in turn completed at Facility C), then management would probably prefer centralized

Exhibit 6.1 Possible Structures for Collective Bargaining

Structure Example

1. Single employer single union Single location Multiple locations

ABC Manufacturing Co. UNITE General Motors UAW

2. Single employer several unions Single location Multiple locations

Johnson Metal, Buffalo, New York all crafts and industrial unions General Electric IBEW and IUE

3. Multiple employers single union Trucking Management Incorporated Teamsters

4. Multiple employers several unions Association of General Contractors of North Alabama Birmingham Trade Council

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bargaining, producing a single contract expiration date and only one risk of a possible strike at all facilities instead of three different contract expiration dates and possible separate strikes at different times at each of the facilities if each ABU negotiated a sepa- rate contract. Of course, should a work stoppage actually occur, the potential magnitude of the impact would be greater under centralized bargaining because all three covered plants would be affected immediately.

If the three facilities operate independent of each other each facility producing a complete product or service itself (e.g., three steel mills, each producing steel beams; or three facilities producing unrelated products such as baseball gloves, cereal, and marbles) management would probably prefer to negotiate a separate contract to cover the ABU at each independent facility. Separate negotiations would probably result in dif- ferent contract expiration dates for the three facilities. Although each separate contract would involve the risk of a work stoppage when it expired, if one facility went on strike, the others could still continue production. In the case of facilities that produce similar products, management could transfer some of the orders from the striking facility to other nonstriking facilities where labor contracts had not expired.

Some observers believe that conglomerate companies with a wide range of products have too much bargaining power over unions. One sample of nine conglomerates revealed 846 different manufacturing products sold. A union threatening a strike to shut down one of these manufacturing facilities or even an entire product line might not be able to put sufficient pressure on a conglomerate to reach a bargaining settlement. Under this condition, a union would prefer companywide bargaining, realizing that if all facilities were covered under the same contract a strike could effectively shut down the company s entire operations, thereby increasing union bargaining strength.

Multiple Employers, Multiple ABUs Choosing to formally combine ABUs from different companies for negotiation purposes can take several forms. One version of this is centralized bargaining (also called industry-wide bargaining), where all of the major employers in a given industry negotiate one contract with one union (see the third example in Exhibit 6.1 for an illustration). Historically, the major coal mine operators in the Appalachian mountains negotiated one basic agreement with the United Mine Workers. Industry-wide bargaining is also found in some European countries. Sometimes, centralized agreements are comprehensive. In other industries, centralized agreements only deal with wages, benefits, and general working conditions (industry-level bargaining); firms also negotiate supplemental agreements dealing with specific working conditions for their firms (company-level or companywide bargaining) or their individual facilities (local-level bargaining).6

It is difficult for both employer groups and unions to maintain a cohesive structure for centralized, industry-wide bargaining over many years. That is because it is tempting for individual companies and/or union locals to try to negotiate separate agreements that take their unique circumstances into account. Consequently, sometimes centralized bargaining gives way to pattern bargaining.

Even if it doesn t encompass most workers in an industry, multi-employer bargain- ing units sometimes occur at the regional level. These include more than one employer in a geographic region combining together to negotiate a single contract covering employees at each of the participating employer s firms who are typically represented by the same union. Multi-employer bargaining may be found in trucking, motion picture and television, construction, longshore, and newspaper industries.

Finally, sometimes multiple employers negotiate a regional contract with multiple unions (see the fourth example in Exhibit 6.1). This is common in construction, where

272 PART 2 The Bargaining Process and Outcomes

several unionized contractors and subcontractors engage in council bargaining with sev- eral different labor unions at the same time. This approach not only insures that all of the contractors will pay the same wage rate for the same type of work, it can also serve to insure that traditional wage differentials are maintained between different groups across unions (e.g., perhaps skilled plumbers historically earned 160% of the wage rate paid to unskilled laborers).

Whether considered at the industry level or the regional level, market factors influ- ence the degree of centralization of the bargaining structure. In a highly competitive product/service market, a multi-employer (centralized) negotiating unit would be desir- able to employers who fear being placed at a competitive disadvantage if other employers subsequently negotiate lower labor cost terms. This would be particularly true for an employer with fewer resources (less bargaining power) than the union with whom the employer must bargain and whose firm also exhibited a high degree of labor intensive- ness (i.e., the proportion of an employer s total operating costs comprising labor costs). Agreeing to join other employers in a multi-employer bargaining unit strengthens an individual employer s bargaining power and also minimizes another potential problem the loss of customers to competitors should a work stoppage occur.

Unions are also concerned about market problems in some industries (construction, coal, trucking, ladies garments, longshore, and others) and attempt to extend the bar- gaining unit to include all unionized employers in a geographic area producing the same competitive product. This approach is taken to prevent a few employers with above-average bargaining power from separately negotiating lower wages, which could provide them lower production costs, thereby attracting customers from other unionized firms resulting in layoffs at higher labor cost firms. In essence, unions are attempting to standardize wages, hours, and other terms of employment to reduce the importance of labor costs as a competitive factor and to force employers to compete on the basis of other nonlabor factors such as product design, product quality, and customer service.

Multi-employer bargaining also has other advantages. A union engaged in multi- employer bargaining has a powerful advantage over rival unions because the NLRB holds that while a multi-employer bargaining unit is intact, it is the only appropriate bar- gaining/election unit.7 Thus, the NLRB will dismiss a rival union s petition for an elec- tion in a single firm as long as the incumbent union and the firm are participants in a multi-employer bargaining unit. Both labor and management can benefit from the cost savings that accrue from having to prepare for fewer contract negotiations when separate ABUs are combined to form a centralized bargaining unit. The costs of preparing for and conducting negotiations can also be shared among employers participating in a multi-employer bargaining unit.

Multi-employer bargaining has some disadvantages. Over time, centralized bargain- ing tends to become more formal and less flexible in terms of meeting employee and employer concerns at an individual workplace. Because terms must be applied across dif- ferent employee groups, often at different locations, bargaining outcomes tend to reflect a broader regional, corporate, or industry level perspective rather than emphasizing local conditions prevailing at any particular plant location. For example, wage and benefit trend data used to identify an appropriate bargaining outcome are more likely to reflect prevailing industry or national averages rather than local labor market conditions.

Finally, multi-employer bargaining can create tensions among the member employ- ers. First, where there is a clear disparity in the size of the participating firms, larger employers may attempt to control the decisions of the multi-employer group. This may become a problem for smaller employers within the group whose perceptions may differ from larger employers regarding the affordability or administrative burden of accepting

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certain union bargaining proposals. Second, an employer might consider withdrawing from a multi-employer group if it feels it can get a better deal negotiating separately with the union. To legally withdraw from an existing multi-employer bargaining unit, an employer must provide both the union and other unit employers with reasonable advance notice (e.g., prior to the expiration date of the current agreement and before negotiations have commenced on a new contract).8

The decision to engage in centralized bargaining can also be affected by legal guide- lines. The size and makeup of a party s bargaining team is a nonmandatory subject of bargaining.9 Suppose that only union representing a particular bargaining unit is partici- pating in regional bargaining with a multi-employer group. That union could permit representatives from other unions who also bargain separately with the same employers to sit in on negotiations as part of the union s bargaining team. Although the employers cannot control who sits on the union bargaining team, the employers could legally require that only the legal union representative of the bargaining unit covered by the contract under negotiation be permitted to decide whether to accept or reject manage- ment s bargaining proposals.10 Union representatives from other bargaining units could function as observers in the negotiation process but could not exercise any authority over determining settlement terms.

The U.S. Supreme Court ruled that it is unlawful for an employer to withdraw from an established multi-employer bargaining arrangement during a bargaining impasse without the union s consent.11 The employer s withdrawal is not allowed, and the employer is bound to any subsequent agreement reached by the union and the multi- employer bargaining group.

Negotiation Preparation Activities

There are a number of different activities that union and management negotiators must engage in to adequately prepare to conduct labor negotiations. As in many aspects of life, effective preparation is the key to successful implementation of bargaining strategies and the attainment of desired bargaining outcomes.

Selection of the Negotiating Team and Related Bargaining Responsibilities The selection of the number and type of individuals who will make up the bargaining team for each party is an important decision that can affect the outcome of negotiations. Exhibit 6.2 suggests some characteristics of an effective negotiator, although few indivi- duals are likely to possess all of these characteristics to the ideal degree.

Personality Factors Using controlled, laboratory experiments, researchers have investigated how various per- sonality characteristics influence negotiation behavior. Here are a few examples of such research: (1) People who have confidence in their own negotiation ability (called high self-efficacy) tend to do well in one-issue salary negotiations; self-efficacy can also coun- teract the negative effects of negotiation anxiety.12 (2) People who are high in the Big Five Personality Traits of extraversion and agreeableness tended to do poorly in a simple buyer/seller negotiations, perhaps because they were more concerned about maintaining social relations than the product s price.13 (3) However, negotiators who are conscious of social cues and willing to vary their interpersonal style while still pursuing their goals (called high self-monitoring) tend to plan their negotiation interaction thoroughly and

274 PART 2 The Bargaining Process and Outcomes

do well when negotiating over emotionally laden issues or when given time to thought- fully plan their response to their opponent s uncooperative behavior.14 (4) For complex, multi-issue negotiations, cognitive ability, and perspective-taking ability were valuable for helping both sides achieve good outcomes.15 Clearly, negotiation depends on personality, experience, cognitive skills and abilities, as well as situational characteristics. As Ian Newall wrote, A skilled negotiator is not just someone who can make deals; a skilled negotiator is someone who can make deals that can be implemented. Skilled negotiators anticipate implementation issues before the deal is agreed. Less skilled negotiators make deals that others find difficult or impossible to implement. 16 This body of research sug- gests that it is desirable that at least some members of the negotiating team have certain personality traits, recognizing that personality factors interact with situational character- istics and no one set of traits will be universally beneficial.

Union and management negotiators seek bargaining team members who can keep their emotions and opinions in check. An indiscreet negotiating team member can unin- tentionally reveal confidential information about settlement positions and strategies to the other team. In some cases, union and management negotiators may agree to release information in the form of a joint statement to outside parties (e.g., news media) during negotiations. This tactic reduces rumors or misleading claims that can damage progress being made toward a settlement at the bargaining table. Where no such agreement exists, there is a risk that one or both parties may choose to leak certain information about the contents of specific proposals, perceived road blocks to settlement, or a perceived lack of

Exhibit 6.2 Some Common Characteristics of an Effective Negotiator Able to say no effectively

Integrity and the ability to inspire confidence in his or her judgment ability

Able to plan effectively and conduct research necessary to become thoroughly knowledgeable about bargaining issues and trends

Able to discern the bottom line interests of other parties

Even-tempered and able to tolerate conflict and ambiguity

An excellent communicator (i.e., able to speak, write, and listen effectively)

Self-confident and pragmatic (able to establish realistic bargaining expectations and accurately assess the benefits, costs, and risks of insisting on specific set- tlement terms)

Good physical and mental stamina

Able to understand the short- and long-term implications of specific bargaining proposals on the parties interests

Understands the importance of face saving and is willing to provide opportu- nities to the other party to do so (or conversely, knows when to take advantage of such opportunities when offered by the other party)

Willing to take calculated risks in order to achieve desired bargaining outcomes without seriously jeopardizing constituents best interests

Knows how and when to ask relevant questions and interpret the other party s responses (even no response to a question or action may, in fact, represent a meaningful response)

Has a sense of humor to relieve stress or establish rapport with the other party

Always laughs with the other party, never at the other party

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honest effort to reach an acceptable agreement. While such leaks may sway public opin- ion or shore up political support for negotiating team members, they can also damage trust between the bargaining parties and delay progress on substantive issues as the leaks themselves may become a topic of conversation at the bargaining table and can hinder progress. For example, one party may fear mentioning a possible alternative set- tlement on an issue for fear the other party may disclose the remark publicly as a firm and final position of the initiating party, rather than the idea starter or trial balloon it was intended to be.

How Many Negotiators? In determining the size of each negotiating team, smaller teams are generally preferable, with a maximum suggested size of nine.17 Large teams tend to experience increasing coordination problems (e.g., task assignment, delegation of authority, pressure to con- form) and require additional time to reach consensus on bargaining issues. In some instances, there is a large formal negotiating team that satisfies the internal organiza- tional politics of each side. However, the actual negotiations are conducted by a subset of that team, with the larger team playing only an advisory role during negotiations and endorsing the tentative contract after it has been negotiated. Sometimes bargaining team size is influenced by a desire to match the size of the other party s team. A bargaining structure that emphasizes centralized industry or corporate-level bargaining or multiple parties (on either side) tends to expand the size of negotiating teams.

Management Considerations Management generally selects negotiating team members based on the perceived need for each individual s skills and experience. Management generally wants at least one line manager who supervises bargaining unit employees on its team to either interpret or answer negotiating issues related to daily work operations. This may be particularly important when gauging the likely effect of union proposed work rule changes.

Union Considerations Unions apply selection criteria similar to those of management, but in addition, they must weigh certain political considerations. For example, an elected union leader may think it is important to appoint at least one or more representatives from key constituent groups within the bargaining unit (e.g., skilled trade, largest department or occupation, women, minorities) to serve on the union s negotiating team. This choice helps to ensure that the special interests of key constituent groups will be considered in negotiating set- tlement terms, which will enhance the probability that tentative contract settlement terms will be approved by a majority of the union s membership.

The union negotiating team may be elected by the membership or appointed by elected union officers depending upon the wording contained in the union s constitution and by-laws. Where direct election of negotiating team members is permitted, there is always a risk to current leaders that one or more rivals for union leadership may be elected to serve on the team. This can create some problems in attempting to achieve consensus on bargaining priorities, strategies, tactics, and acceptable settlement terms.

Proposal Determination and Assessment Management relies on several sources to determine a union s likely bargaining goals in contract negotiations. A review of recent settlements negotiated by the company s com- petitors and other local firms may help to identify likely bargaining subjects as well as possible settlement outcomes. The company and union may have negotiated settlements

276 PART 2 The Bargaining Process and Outcomes

at other facilities that might also be used as a starting point in the current negotiations. Some management officials obtain bargaining insights by reviewing the proceedings of a national union s convention or visiting a union s Internet Web site.

One study of local union officials reported that staff representatives, business agents, and organizers were more likely to rely upon formal information sources (e.g., libraries, union research departments, databases) than informal sources (e.g., personal networks, telephone inquiries) to gather information for use in contract negotiations.18 Formal training in research methods also increased the number of information sources used by a union official in preparing to perform role functions such as contract negotiations.

Attention should be given to the parties previous negotiations, particularly to those issues that one party actively sought and reluctantly dropped. Compromise settlements on previous issues also generate valuable clues because compromise does not always mean permanent resolution of the issue. An analysis of previous grievances at the facility can also identify certain trouble spots. GM, for example, uses a computerized analysis of number, type, and resolution status of grievances in their negotiation preparations. How- ever, caution must be taken not to overemphasize these grievances. Unions often increase the number of grievances filed in the six months prior to negotiations to dramatize wide- spread concern over certain bargaining issues concerns perhaps more tactical than real.

Formulating Proposals Management negotiators need to be proactive rather than reactive in preparing for con- tract negotiations.19 Traditionally, many management negotiators chose to wait for the union to present its bargaining proposals before determining management s bargaining response. Often in the past, this approach permitted the union to control the bargaining agenda and left management negotiating over how many or to what extent to grant union demands for improvements in employment terms of interest. Increased competi- tive pressures have caused many unionized employers to initiate proposed work rule changes to decrease labor costs and improve productivity and quality, which would not likely have been a part of the bargaining agenda if management negotiators did not take a more proactive stance at the bargaining table. Rather than waiting for the union to raise every issue, management negotiators should put forward their own proposals con- cerning issues such as health care cost containment, revising pension benefits, broaden- ing job descriptions, and subcontracting or outsourcing of certain bargaining unit work.

Since the union will normally present its bargaining proposals first as the party ini- tiating the request to renegotiate a current contract set to expire soon, management negotiators may prefer to defer presenting proposals on any issues the union is expected to initially address (e.g., wage rate improvement) so as not to tip their hand to the union. See Exhibit 6.3 for some advice on wording contract language proposals.

Analyzing Contract Language In formulating bargaining proposals, managers often perform a close analysis of the cur- rent labor contract to determine desirable changes in language that will reduce labor costs and increase management flexibility in making operating decisions. Assume, for example, that the current contract prohibits managers from performing any bargaining unit work. Management might propose allowing supervisors to perform bargaining unit work under at least three conditions: (1) when training new employees, (2) in emergency situations (usually interpreted to mean when employees lives or production equipment are at immediate risk), and (3) when experimental production efforts are involved.

Sometimes contract language is ambiguous. For example, does a 90-day probation- ary period mean 90 calendar days ? Or 90 working days ? Other times, two clauses

CHAPTER 6 Negotiating the Labor Agreement 277

that were negotiated separately may have unintended consequences when they interact. For example, suppose that workers receive a pay raise on the fifth anniversary of their employment start date. Also suppose that a different contract clause states that indivi- duals going on vacation are to receive their pay the Friday prior to leaving on vacation. What happens if the person s fifth anniversary date happens to fall during the middle of their vacation week? Do they get advance vacation pay at the rate that is currently in effect when they receive it (the Friday before their vacation)? Or do they get part at the old rate and part at the new rate?

Examining Prior Arbitration Decisions Management and union officials may propose contract language intended to nullify the impact of prior adverse arbitration decisions. For example, an arbitrator s decision that the company will pay for an employee s safety shoes could be nullified by negotiating new contract language that reads, The Company will provide the employees with safety shoes and deduct the cost of these shoes from the employee s paycheck. Both union and management will typically contact union stewards and first-line supervisors or depart- ment heads, respectively, to determine if any contract language has been difficult to administer during the term of the current labor agreement and thus ought to be modified.

Economic and Legal Information Efforts will also be made to research data from government reports, especially from the U.S. Departments of Commerce and Labor, and from various labor relations services such as the Bureau of National Affairs, and Commerce Clearing House. Data pertaining

Exhibit 6.3 Practical Advice on Wording Contract Language Whenever possible, use common words, terms, or phrases that are easy to

read and understand.

Consider the types of individuals who will use the contract (e.g., employees, managers, union representatives, arbitrators) and write contract language with this audience in mind.

Anticipate questions or circumstances that might arise in implementing the intent of the proposal and include contract language that would answer or address such issues or concerns.

Use consistent terminology throughout the contract to refer to the same con- cept or item to enhance consistency of meaning and interpretation.

Write concisely using only the words necessary to clearly convey the meaning or intent of the contract clause.

Use appropriate section numbers or headings to organize contract language by specific bargaining subjects or topics.

Use numbered lists to highlight criteria or factors relevant to a particular subject (e.g., steps in a grievance procedure, promotion eligibility criteria).

Be clear and specific when specifying time frames or numbers (e.g., length of employee probationary period, length of regular work shift or break-time, effec- tive and expiration time and date of the contract).

SOURCE: Marc Boulanger and Brian H. Kleiner, Preparing and Interpreting Collective Bargaining Agreements Effectively, Man- agement Research News, 26(2/3/4) (2003), pp. 193 199.

278 PART 2 The Bargaining Process and Outcomes

to wages, benefits, safety and health, technological change, job security, productivity, legal developments, and so on, from these and other sources, give both parties substan- tial information with which to prepare for negotiations. Being over-prepared to conduct contract negotiations is a rarity, but the negotiator who enters bargaining under- prepared is taking a sizeable risk. Review the Labor Relations in Action item in this chapter on pages 282 283 for an example of a nursing union s bargaining goals.

The Bargaining Range Union and management officials enter collective bargaining with their own ideas of an acceptable settlement, although both parties know the other will not agree entirely with their position. Therefore, both parties usually enter negotiations with a range of accept- able positions that give them some room for maneuvering. These positions can be given priorities and grouped into a bargaining range, one for management and the other for the union.

A One-Issue Example Consider a simple, one-issue example involving wages: Imagine that the Union currently makes $20 per hour. The union is asking for a 95 cents per hour raise. Unknown to the management negotiating team, the union negotiators are willing to accept any pay raise larger than 50 cents per hour. However, the union is unwilling to accept any raise smal- ler than 50 cents per hour. Thus, 50 cents per hour is the union s resistance point (also called a reservation price or a limit): The union negotiators may make concessions from 95 cents per hour down to 50 cents per hour, but they will resist making additional con- cessions in their proposed raises beyond that point. Perhaps union leaders believe that a 65 cents per hour raise is a realistic goal to work toward; thus, 65 cents per hour is the union s target point. The range between 50 cents per hour and 95 cents per hour con- stitutes the Union s bargaining range.

Meanwhile, management negotiators have their own bargaining range. Perhaps they begin negotiations by offering the union no pay raise at all, but confidentially, the man- agers would accept a pay raise as high as 60 cents per hour. Their range is 0 cents per hour raise to 60 cents per hour raise and a 60 cents per hour raise constitutes manage- ment s resistance point (they won t pay more than that 60 cents per hour). Perhaps their target point is 33 cents per hour raise.

If you were an omniscient third party and could graph management s bargaining range next to the union s bargaining range, you would see that they overlap between their resistance points: 50 cents per hour to 60 cents per hour. This area of overlap is often called the contract zone (also sometimes called the settlement range or the zone of potential agreement). While negotiators do not have perfect information about the other side s bargaining range and resistance point for each issue, thorough economic research prior to negotiation can help each side calculate realistic, probabilistic estimates of the other side s bargaining range and resistance point, and better determine their own range for each issue.20

Both management and union representatives have upper and lower limits on their respective ranges. Management s upper limit on an issue is usually determined by its objectives, such as profitability and productivity growth. Settlement terms that are too costly or restrictive on management s right to make operating decisions would be incom- patible with the company s objectives. The point beyond which a party would prefer no settlement to settlement on unacceptable terms represents that party s resistance point on a particular bargaining issue. For example, management might prefer to close, move its operations, or bring new employees into its existing facility rather than agree to a

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settlement that would make operations unprofitable. On the other hand, management may not want to be known as the cheapest employer in the area, nor would it want to be unable to recruit, retain, and reward its productive employees. These concerns help place a lower limit on management s bargaining range a minimum offer that manage- ment feels is necessary to maintain employee morale and output.

A union s upper limit is usually shaped by two factors: (1) desired employment levels and (2) the ability to promote and sustain a strike. A union realizes that there is often a trade-off between pressing for economic gains (higher wages and improved ben- efits) and the number of jobs that may be available at that higher labor cost. Higher labor costs increase management s incentive to look for ways to substitute capital for labor (e.g., automation, robotics, or other technological innovation), use less labor (e.g., layoffs), or find a less costly labor supply (e.g., subcontracting bargaining unit work to nonunion employers or moving work operations to lower-cost domestic or international labor markets). Unrealistic union bargaining proposals are likely to be discounted by management and can serve as a hindrance to serious negotiation over meritorious issues. Also, it is difficult for a strike to be initiated, let alone successfully concluded, if union leaders call a strike over an unrealistic bargaining demand (e.g., $3 per hour wage increase when union members recognize that management could realistically afford a raise of only $0.80 per hour). Bargaining unit members are not likely to risk a work stop- page over issues of minor importance to their interests or proposed settlement terms that they view as unrealistic under the prevailing conditions.

On the other hand, union leaders realize that there is a lower limit on the bargaining range and that a settlement below this limit would result in membership dissatisfaction. Because union leaders are strongly influenced by their desire to ensure the survival of the union and their continued election as union officers, they seldom accept a settlement below this perceived resistance point. Union leaders can, to some extent, try to shape employee expectations regarding bargaining outcomes. It is important for union leaders to solicit input from members about their bargaining interests and priorities and to inform members about current bargaining conditions and trends, thereby encouraging the members to form realistic bargaining expectations.

A Multi-Issue Example The bargaining range may be calculated for multiple issues. Let us examine a three-issue example, introducing the concept of utility, subjective usefulness, to each side. For the union, a large pay raise is the most important issue, but it is not the only important issue. The union also wants a union shop clause added to the contract, requiring new employees to join the union after 30 days. The union would ideally like both a large raise (say, 80 cents per hour) and a union shop clause. An outcome that is less useful to union leaders (provides less utility) would be one that does not contain a union shop clause but a higher pay raise. The union is indifferent to a management proposal to keep requiring workers to do minor repairs to their machines, because they already do this.

Meanwhile, managers may currently have a contract clause that requires machine operators to do minor repairs to their machines. Managers find it useful to have that clause in the contract, and are willing to give the union members a 60 cents per hour pay raise to keep that clause in the contract. An outcome that provides less utility to managers involves the elimination of the minor repairs clause from the contract; in that circumstance, managers will offer a lower pay raise. Managers are indifferent to the union s proposal to insert a union shop clause in the CBA.

In this example, please notice several things. First, it is possible for each side to order (either rank order or by using some sort of subjective utility scale, such as 100

280 PART 2 The Bargaining Process and Outcomes

to 100) the various outcomes on issues individually or in combination if they are linked as package proposals. The package proposals just described are ranked in Exhibit 6.4. Second, objective dollar outcomes and subjective utility are not identical. The value of the union shop clause to the union may involve more than the trade-off of dollars in monthly dues from more members vs. 15 cents more per hour in pay raises. A union shop clause may provide value to union leaders in other ways: increased prestige of the local with national union headquarters, greater stability for the union, and it may make it more likely for union officers to be re-elected. Third, in this example, each side is indifferent toward one issue (perhaps with a utility of zero if a scale is used) that is important to the other side. The union is indifferent regarding the minor repairs issue and management is indifferent about the union shop issue. Thus, in negotiations you cannot automatically assume that the other side will oppose every position you take on every issue. For some issues, both sides may even have the same preferences (e.g., both sides may favor establishing a safety committee).

With multi-issue negotiations, each side s bargaining range may represent a multi- tude of issues and potential settlement points. Assigning priorities to these issues and their possible combinations produces bargaining ranges of an almost infinite number of possibilities as the number of issues and settlement options increase. Bargaining ranges can change during negotiations as bargaining issues get linked in package proposals cov- ering several subjects or in response to new information, usually becoming finalized as the parties approach the contract expiration date or a strike/lockout deadline. A party s bargaining resistance point on a particular issue generally remains relatively stable dur- ing negotiations. Any drastic alteration of a party s resistance point on an issue generally indicates insufficient bargaining preparation on the part of that bargaining party.

Exhibit 6.4 Bargaining Ranges for Union and Management Negotiators

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LABOR RELATIONS IN ACTION Bargaining Goals for Registered Nurses

Registered nurses are professional employees who undergo extensive education and practical training to learn health care skills and patient care procedures. Like other types of workers, nurses are concerned about improving their personal wages, hours, and other terms and conditions of employment. Unlike many nonprofessional occupations, nurses are licensed and must adhere to rigorous professional performance standards and a formal code of ethics. A nurse s primary focus on ensuring the well-being of patients and the quality of care they receive can create conflict in prac- tice when health care policy decisions are increasingly focused on reducing health care cost and increasing the efficient use of health care resources. Unlike some other occupations, the demand for skilled nursing care is projected to increase over the next decade, creating new job opportunities and increasing emphasis on employers recruitment and retention of registered nurses. This should enhance the bargaining power of nurses while also increasing employer opposition to union efforts to organize more nurses. The majority of nurses are employed in profit and nonprofit general medical and surgical hospitals.

The National Nurses United (NNU) union recently adopted a set of standards which will form the basis for contract proposals in negotiations with health care administrators throughout the country. The NNU, which is affiliated with the AFL-CIO, was formed in December 2009 by the merger of the California Nurses Association/National Nurses Organizing Committee and the Massachusetts Nurses Association. Representing over 150,000 registered nurses through affiliated state and local level nursing organizations throughout the country, the NNU is the largest union and professional organization of registered nurses in U.S. history. Among the bargaining goals of the NNU are the following:

Staffing levels based on the severity of the patient s condition with minimum specific nurse to patient staffing ratios enforceable through contract lan- guage. A recent study comparing patient s and nurses outcomes experienced under state law- mandated minimum staffing ratios in California to hospitals in two other states without mandated ratios found both the quality of patient care and nurse retention and job satisfaction were better under the California staffing ratios. Restrictions on allowing nurses to be assigned to a unit to aid temporary staffing shortages if the nurse does not have sufficient experience in providing the type of nursing care required on that unit.

A ban on mandatory overtime and shift rotation, although a voluntary plan would be acceptable. Measures to contain patients and nurses exposure to pandemics and other communicable diseases. Improvements in retirement security through defined benefit plans and employer paid retiree medical benefits. Restrictions on the introduction of new technology that displaces nurses, and reducing the ability under which RNs are permitted to exercise profes- sional judgment in carrying out the delivery of patient care.

The NNU also seeks to avoid signing any conces- sionary contract which would:

Reduce existing compensation, health and retiree benefits or work hours and schedules. Establish a two-tier compensation plan which would offer new hires lower wages or benefits than comparably qualified current hires receive for similar work. Use merit pay or other proposals to eliminate the use of seniority as a viable factor in human resource (HR) decisions. Result in nurse layoffs or the displacement of regis- tered nurses by other types of hospital employees.

Nurses may seek to oppose any hospital policy which is perceived to negatively impact patient care. For example, during contract negotiations at a Pennsyl- vania hospital, nurses complained about a hospital pol- icy that required them to escort every patient to the hospital s billing department prior to discharge. While performing this task nurses were necessarily absent from their assigned units and unable to render nursing care to patients admitted to the unit. A clerical, trans- port, or other administrative employee could have been assigned the escort duty if it were determined this was necessary to ensure patients didn t skip out on paying their hospital bill.

Nursing organizations and hospital administrators share a common goal of providing quality health care services at reasonable cost. While public statements during negotiations may emphasize such generally acceptable goals, the real work of negotiators involves how to translate such broad goals into specific work rules necessary to operate a complex health care facility on a daily basis. Every proposed work rule has both costs and benefits which the parties must recognize and weigh carefully. Establishing and maintaining a good bargaining relationship based upon mutual trust

282

Costing Contract Proposals Management has an overriding concern about the eventual cost of a labor agreement s terms because it has the responsibility of paying for those terms of employment. Man- agement will generally need to estimate the cost of contract proposals at several points during the negotiation process, including prior to the first bargaining meeting (pre- bargaining preparation), during negotiations as counterproposals are exchanged, and after final contract terms have been agreed on. Management negotiators often use two general costing approaches in negotiations: preparation of employee background data and calculation of a cents-per-hour wage increase. Unions also engage in costing efforts for the purpose of either determining the value of management proposals or helping to persuade management that it can afford to grant union proposals.

Management usually obtains statistical summaries of employees, cross-tabulated by several variables (e.g., age, sex, marital status, seniority, job classification). These summa- ries provide immediate information necessary to cost out a variety of contract proposals, such as health insurance, vacations, funeral pay, and pensions. For example, if the union is proposing vouchers to cover the cost of day care for pre-school age children of bar- gaining unit employees, then management negotiators should determine the number of children who would be covered to estimate the annual cost of such a benefit.

One of the most important calculations is the cost of a cents-per-hour wage increase. The cents-per-hour cost of any contract item can be obtained by dividing the annual total cost of the item by the number of bargaining unit hours worked during the year. If an employer has 100 employees who work a standard 40 hour week and the firm operates 52 weeks per year then the total bargaining unit hours worked would be 100 2,080 hours 208,000 hours. Calculating the cents-per-hour cost of an item allows for realistic cost comparisons across bargaining units of different sizes (number of employees).

The true cost of a wage increase includes the cost of the wage increase itself, plus the increased costs of all benefit items paid on the basis of an employee s straight-time hourly wage rate (e.g., holiday and vacation pay, sick leave and jury duty pay, paid rest and lunch periods, overtime pay, call-in pay). The roll-up factor is an estimate of the total cents-per-hour costs of employer benefit items affected by a change in the straight-time hourly wage rate as a proportion (percentage) of the current average hourly bargaining unit wage rate. For example, if the total cents-per-hour costs for the employer benefit items affected by a wage rate change amounted to $7.20, and the current average hourly bargaining unit wage rate was $20, then the roll-up factor or cost would equal $7.20/$20 $0.36 or 36 percent. The actual cost of the wage increase calculated in the following example would be $20,800 plus the roll-up factor cost ($20,800 0.36 $7,488) for a total annual wage cost of $28,288.

and respect between the parties can go a long way toward achieving a necessary accommodation of com- peting interests in the bargaining process.

SOURCES: Peter McMenamin, 2009 Registered Nurses Employment and Earnings, American Nurses Association Issue Brief, May 2010, pp. 1 8; Who We Are and About Us, National Nurses United at http://www.nationalnursesunited.org/about/

who-we-are.html (accessed November 16, 2010); Michelle Amber, RNs Adopt National Bargaining Standards, Say They Won t Sign Concessionary Contracts,

Daily Labor Report, No. 90, May 12, 2010, pp. A13 14; Linda H. Aiken, Douglas M. Sloane, Jeannie P. Cimiotti, Sean P. Clarke, Linda Flynn, Jean Ann Seago, Joanne Spetz, and Herbert L. Smith, Implications of the California Nurse Staffing Mandate for Other States, Health Services Research, 45(4) (2010), pp. 904 921; Joe Carlson, Rallying for Ratios: Nurse-Patient Ratios Lead to Strike, Testy Negotiations, Modern

Healthcare, 40(24) (2010), p. 8; Kathleen D. Sanford, Nurse Staffing: Finding the Right Number and Mix, Healthcare Financial Management, 64(9) (2010), pp. 38 39; Jerry Lynott, Nurses, Hospital Battle Over Policy, McClatchy, Tribune Business News, July 27, 2010, p. 1 at http://www.proquest/com/.

283

An illustrative calculation of a 1 cent-per-hour wage increase for a bargaining unit of 1,000 employees is as follows:

$20,800 Straight-time pay (1,000 employees 40 hours a week 52 weeks $0.01)

7,488 Roll-up cost for benefit items directly affected by the wage increase (profit sharing, pensions, life insurance, employer contributions to social security, shift differential if paid on a percentage basis, unemployment insurance, workers compensation, and so on), estimated for illustrative purposes at 36 percent of the average bargaining unit straight-time hourly wage rate

$28,288 True cost of a 1 cent-per-hour wage increase

A negotiator should be prepared to bargain on either a cents-per-hour or a percent- age wage increase proposal. Since the union will normally introduce the wage issue first when presenting its initial bargaining proposals, the union will initially determine whether the format for wage negotiations will be cents-per-hour or a percentage increase in the current hourly wage rate. If bargaining on a percentage basis, it is important to remember the magnitude difference between a given size percentage wage increase versus a similar size cents-per-hour wage increase.

Assuming the average hourly straight-time wage rate for the 1,000-member bargain- ing unit in the previous example was $20 per hour, the cost of a one percent wage increase for this bargaining unit would be calculated as follows: 0.01 $20 $0.20 per hour 1,000 employees 2,080 hours $416,000 straight-time pay roll-up cost of $149,760 ($416,000 0.36) $565,760. This compares to the $28,288 total cost of a 1 cent-per-hour wage increase for the same group of employees.

Union officials may submit proposals that are difficult to cost, thereby weakening management s related objections based on cost estimates during negotiations. Assume, for example, that a current contract provision provides a Sunday work premium of 75 cents per hour if the employees have no absences during their regularly scheduled work week. The union proposes that employees working on Sunday receive this premium pay regard- less of their attendance record during the week. Management can examine past payroll records to estimate the added cost of this proposal, which is a difficult task if there are thousands of employees involved, and it is uncertain if extra absences might occur if this proposal is accepted. Other proposals, such as extending a previous labor agreement s three-day paid leave for the death of an immediate family member to include first cousins, are nearly impossible to precisely estimate cost because it is difficult to accurately gather the data needed to cost the item (i.e., the number and ages of living first cousins of each employee along with some death rate probability for this group). In addition, using past payroll records and anticipated future production and staffing requirements may not always be a perfect predictor of future operating experience.

Union negotiators may formulate proposals that benefit members interests while saving management money, a difficult task requiring much ingenuity. Examples include the following:

Allowing police to keep a squad car for personal use, thereby reducing crime statis- tics and related expenses Allowing sabbaticals for which professors receive one-half their salaries for nine months, and management uses any surplus funds elsewhere if replacements teach the professors classes at a lower pay rate Using outpatient surgery for minor procedures or requiring second medical opi- nions before scheduling major surgical procedures

284 PART 2 The Bargaining Process and Outcomes

Agreeing to a wage freeze for a specified length of time in exchange for an employer s agreement to keep a plant open at current staffing levels for the same time period

When presenting cost analyses information at the bargaining table, it is important to clearly explain how cost estimates were obtained and any underlying assumptions on which estimates may rest.21 Using current and credible sources for data used in prepar- ing cost estimates can increase the credibility and thus, persuasiveness of such informa- tion when used in support of bargaining proposals.

Understanding Collective Bargaining Behavior: A Framework

Over 50 years ago, Walton and McKersie provided a framework that still guides thinking about collective bargaining behavior today.22 They suggested that collective bargaining consists of four separate processes and that each process is present to some extent in every labor contract negotiation. Of Walton and McKersie s four bargaining processes, the first two processes, distributive bargaining and integrative bargaining, involve two different approaches to dealing with the other side. Distributive bargaining takes a win lose contending approach, whereas integrative bargaining takes a win win

problem-solving approach. The third process, attitudinal structuring, focuses more on attending to the emotions of the other side, to create a harmonious context for negotia- tions. The fourth process, called intraorganizational bargaining, is concerned with the discussion that takes place within the union or within management. Each of these four processes will be considered.

Distributive and Integrative Bargaining: Two Different Approaches Although each bargaining situation is unique and depends on the negotiators personal- ities and the issues involved, collective bargaining behavior generally falls into one of two strategic approaches: distributive bargaining or integrative bargaining (also referred to as interest-based bargaining, mutual gains bargaining, or win win negotiation).23 Each of these approaches can lead to a voluntary settlement of bargaining issues, and neither approach guarantees that either party will get everything it wants.

A distributive bargaining approach tends to view the two parties interests as being in conflict, making the negotiation process a win lose (zero sum) exercise. Gains for one party s interests come at the expense of the other party because there is a finite amount of resources available to the parties with which to meet bargaining goals. Bargaining issues such as wages, for which the economic gain or cost of proposed settlement terms can be estimated by the parties, lend themselves to a distributive bargaining approach, particularly if they are negotiated one at a time. The primary focus of a distributive bar- gainer is to maximize his or her own party s interests, although to accomplish this may require some consideration and satisfaction of the other party s key interests.

A distributive bargainer seeks to achieve settlement at (or as close as possible to) the other party s resistance point (i.e., the point beyond which the other party would prefer no settlement to settlement on the other party s proposed terms). Each negotiator tries to discover where the other party s resistance point lies on each issue and to modify the other party s position and perceptions to achieve a settlement on preferred bargaining terms. An effort is made to restrict and structure communications for strategic advantage (e.g., control of the bargaining agenda). A distributive bargainer s persuasive efforts focus on convincing the other party that the distributive bargainer s proposal is more accept- able than the other party s or alternatively, that settlement on the distributive bargainer s

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proposed terms is preferable to the costs or risks of nonsettlement. Distributive bargai- ners often respect each other s abilities more than they trust each other s intentions. Finally, there is a greater willingness to use contending tactics (such as making threats, annoying the other side, and making extreme demands) and to rely upon bargaining power, if necessary, to force the other party s acceptance of proposed settlement terms.

Interest-based bargaining is sometimes referred to as integrative problem-solving, mutual gains bargaining, or win win bargaining. Interest-based bargaining differs from traditional distributive bargaining in a number of important ways. Negotiators approach the bargaining process as a mutual problem-solving exercise. Open and honest commu- nication about each party s interests, priorities, intentions, and the merits of specific bar- gaining proposals is encouraged. Interest bargaining lends itself particularly well to bargaining issues in which both parties perceive a common threat or need, and success- fully resolving the problem can benefit the interests of both parties.24 For example, resolving problems such as maintaining competitiveness, adapting to technological change, improving product/service quality, and meeting employee health care needs might lead negotiators to an interest-based bargaining approach.

Interest bargaining encourages and values mutual trust and respect between the par- ties. In addition to concern for the parties respective substantive interests, there is con- cern about the effects of the negotiation process and outcomes on the quality of the parties continuing bargaining relationship. In order to meet both parties key interests, efforts are made to identify multiple alternatives to each negotiating problem. Negotia- tors focus less on narrowing the gap between each party s position and more on expand- ing the number of mutually satisfactory solutions. Bargaining power is a less important determinant of bargaining outcomes because the parties agree in advance on what objec- tive criteria or standards to use in evaluating the merits of specific bargaining proposals. Accurate information about bargaining subjects becomes the key basis for determining what represents an acceptable bargaining outcome. For example, in negotiations over teacher salaries accurate information regarding historical salary trends and how a school district s salary trends compare to other similar school districts could be used to deter- mine an acceptable outcome.25 Data could be compiled for specific job positions or by salaries as a percentage of the operating budget and compared to data from other school districts with similar demographics and fiscal resources. This approach encourages mutual trust and an understanding of the other party s needs and objectives and empha- sizes the commonalities between the parties instead of their differences. Trust, ethical behavior, and information sharing have been shown to be important ingredients in both laboratory and field research investigating interest-based bargaining: Indeed, with- out trust in the other side, negotiators are reluctant to share information needed to cre- ate integrative agreements.26

Strategies and Tactics Some bargaining strategies and tactics may be appropriate for use in either a distributive or interest bargaining approach. Using persuasive arguments and objective evidence in support of bargaining proposals or painting a picture of the loss or gain to ensure that negotiators understand what is at stake for the parties interests, as well as the relative costs/benefits of reaching agreement versus continued disagreement, are two examples. Summarizing bargaining progress to date often helps to clarify perceptions and direct future negotiations on specific subjects. Presenting a bargaining proposal in writing, as well as explaining it orally, helps ensure that the other party understands the proposal. Listening carefully for ideas and emotions, not just facts, and noting nonverbal cues

286 PART 2 The Bargaining Process and Outcomes

(e.g., eye contact, tone of voice, facial or hand expressions, reaction of other team members) can often provide information about the importance and degree of commitment to statements made at the bargaining table.

Use of a bargaining caucus provides time away from the bargaining table to discuss bargaining proposals or strategies, conduct costing, gather additional information, or simply avoid making a statement at the bargaining table that one is not prepared to make. Use of positive reinforcement, such as expressing appreciation for specific bargain- ing behavior or acknowledging the acceptable portions of the other party s proposal, can help to establish a positive environment in which to continue negotiations. Linking issues (package proposal), such as the example in Exhibit 6.4, is another strategy that can be used to resolve a large number of issues in a fairly short time or aid in resolving the few remaining unsettled issues late in the negotiation process. As different types of issues become linked, it may become more difficult to evaluate the relative value of different proposed packages.

Two final strategies or tactics that may be appropriate in either a distributive or mutual gain approach to bargaining are matching concessions and splitting- the-difference. Many negotiators operate under the assumption that concessions granted by one party will be reciprocated or matched by concessions of relatively equal value from the other party, although not necessarily involving the same bargaining issue. Most negotiators prefer to leave all settlements reached during the negotiation process as tentative settlements until all issues have been resolved. What a party finds acceptable in the later stages of bargaining may be determined in part by the prior pattern of con- cessions and whether that established concession pattern is perceived to have been equi- table or fair. The acceptability of simply splitting the difference as a means of resolving settlement terms, particularly near the end of negotiations where the prior concession pattern is known, may depend on a party s perceived equity in the tentative contract terms already reached and the priority of the unsettled bargaining issues to that party s key bargaining interests. In addition to the general strategies and tactics mentioned above, Exhibit 6.5 presents a list of bargaining strategies or tactics appropriate for use in distributive bargaining.

Exhibit 6.6 presents a list of bargaining strategies and tactics appropriate for interest-based (mutual gain or win win) bargaining.

The Bargaining Power Model Bargaining power is an important concept that can affect the process and outcomes of negotiations, particularly when the parties adopt a distributive bargaining approach. Because negotiation is an interdependent activity, it is important to focus on the bargain- ing power of each bargaining party relative to the other rather than simply assessing the amount of bargaining power independently possessed by each party. Evidence of a party s greater relative bargaining power is the ability of that party to obtain settlement on its preferred terms rather than less favorable terms proposed by another party.

Chamberlain and Kuhn present one of the better-known bargaining power models.27

One party s bargaining power can be conceptualized as equal to the other party s cost of disagreeing with proposed settlement terms divided by their cost of agreeing to such terms. These union or management bargaining power equations can be applied to assess the parties relative bargaining power regarding specific bargaining proposals or to a post hoc analysis of final settlement terms to assess which party possessed greater bargaining power. Although the bargaining power model is presented as an equation, it is an impre- cise formula based on two major assumptions: (1) Union and management negotiators cost issues in a similar manner and are rational individuals and (2) if it costs more for

CHAPTER 6 Negotiating the Labor Agreement 287

party A to disagree than to agree with party B, then party A will agree to party B s pro- posal. Each side can increase its bargaining power by either increasing the other party s costs of disagreement or reducing the other party s cost of agreement to proposed con- tract terms.

To illustrate this strategic framework, consider a union bargaining proposal for a ten-minute cleanup time before the end of the work shift. First, the union could reduce management s cost of agreeing with the cleanup time proposal by eliminating some of its other bargaining proposals in exchange. The union negotiator might also reduce man- agement s perceived agreement costs by demonstrating that there are currently many dif- ferent cleanup practices at the firm. Some departments do not have cleanup time, whereas other departments let their employees stop work a half-hour early to clean up. If the total cleanup time in the plant were calculated, it would probably amount to

Exhibit 6.5 Some Strategies and Tactics for Use in Distributive Bargaining

Undermine the other party s position. Question the validity of assumptions, facts, or conclusions; focus on omissions, inconsistencies, or other perceived weaknesses in the other party s reasoning or information.

Offer initial proposals well removed from your party s resistance point on each bargaining subject.

Concede slowly from initial bargaining positions. The other party will value more highly (and thus reciprocate in kind) those concessions that it has to work hard to get.

Attempt to appear firmly committed to bargaining proposals.

Threaten the other party s key interests (e.g., job security, sales, public image) to impose pressure by increasing the other party s perceived costs of failing to settle on your party s proposed terms. For a threat to be perceived as credible, the party receiving the threat must believe that the party making the threat is both able and willing to perform the threatened act.

Offer to reward key interests of the other party (e.g., increase job security, grant greater access to information, and grant economic incentive) to persuade them to settle on your preferred terms. This approach is intended to lower the other party s costs of agreeing to your party s proposed terms.

Seek opportunities to delay negotiations as a means of imposing time pressure on the other party before a settlement deadline (e.g., contract expiration date, strike/lockout date).

Seek to maximize the perceived value of your party s concessions while mini- mizing the value of concessions granted by the other party.

Threaten to withdraw a proposal if it is not accepted within a reasonable time. Alternatively, make the initial proposal contingent on acceptance by a specified deadline. This approach can also be used to counter another party s delay tac- tics when addressing proposals.

Schedule marathon bargaining sessions in an effort to wear down the other party s resistance or concentration level. Time pressure during the late stage of bargaining may make such marathon bargaining sessions necessary if the parties seek to reach an agreement before a strike or lockout deadline is reached.

Make a final offer. Whether a so-called final offer is really final depends on the perceived credibility of the negotiator making the offer.

288 PART 2 The Bargaining Process and Outcomes

15 minutes per employee. It would be difficult for management to discipline employees who are abusing cleanup time because no consistent policy regarding this issue is cur- rently enforced in the plant. This contract provision would enable management to wipe the past practice slate clean and establish a consistent policy. Management could instruct supervisors to enforce a ten-minute cleanup time policy, which could actually save the company money.

If management does not accept this argument, the union could try the second strate- gic approach increasing management s cost of disagreeing with the union s proposal.

Exhibit 6.6 Some Strategies and Tactics for Use in Win Win (Mutual Gain) Bargaining

Set realistic bargaining objectives.

Clarify the interests underlying each party s proposals on specific issues. Avoid becoming fixated on another party s stated position. Focus instead on under- standing a party s key interests at stake regarding the issue being negotiated.

Open negotiations with a clear statement of your party s intent to negotiate cooperatively and invite the other party to participate in such an approach. For a win win bargaining approach to succeed, both parties must be committed to the process.

Use brainstorming to generate alternative proposals designed to meet the par- ties respective interests on each subject.

Build Momentum: Settle some small issues early in the process to build goodwill. Identify the bargaining subject where the parties share mutual inter- ests and those subjects where the parties interest may conflict. Begin negotia- tions on subjects of mutual interests, seeking to establish a bargaining pattern that can later be used as a model to address more difficult issues which involve conflicting interests.

Exhibit empathy toward the other party s interests and concerns.

Identify and mutually agree on objective standards for evaluating the merits of specific bargaining proposals.

Ask questions to clarify the substantive content or intent behind specific bar- gaining proposals.

Share objective information about specific bargaining subjects with the other party.

Seek to incorporate as much of the other party s proposal as possible into your party s counterproposal on a bargaining subject. This helps to demonstrate a willingness to accommodate the other party s interests and helps to focus sub- sequent bargaining on those aspects of the proposal where a conflict of inter- ests remains.

Explain how or why your party s proposal meets an important need or interest of the other party.

Openly discuss perceived obstacles or barriers to achieving a voluntary settle- ment (e.g., personalities, tactics, competitive environment, or status of the bar- gaining relationship).

Minimize emotional outburst.

Avoid strategies or tactics that might undermine your credibility as a negotiator or damage the level of mutual trust and respect between the bargaining parties.

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A union might threaten to withhold approval of some management proposal or publicize poor working or safety conditions at the plant, which could harm employee recruitment efforts or customer relations. A strike threat might carry some credibility if management knew that widespread dissatisfaction existed over this issue and, given current strong prod- uct demand, any disruption in current production would economically harm the firm.

Factors Potentially Affecting Both Bargaining Power Equations Some factors that may affect union and management bargaining power are prevailing economic conditions (e.g., unemployment rate, labor supply, sales volume), goodwill, public image, and government intervention. For example, high unemployment in the labor market increases the union s cost of disagreeing with management because strikers could find it difficult to find employment at other firms while reducing management s disagreement costs by making striker replacements easier to hire.

One factor that can influence the decision to strike, especially in small plants, is goodwill, which pertains mostly to internal relationships. Management and union nego- tiators do not want antagonistic attitudes that may develop during negotiations or a sub- sequent strike, to linger when operations are resumed. Negotiators also do not want their activities labeled irresponsible or insensitive to the public interest, thereby adversely impacting each party s public image. Possible government intervention for vital indus- tries (e.g., airline, railroad) or in the case of a national emergency dispute (discussed in Chapter 9) must also be considered, especially if management or the union believes government intervention will weaken its bargaining position.

Factors Affecting a Union s Disagreement and Agreement Costs Financial supplements given to union members can lower both a union s disagreement costs and management s bargaining power. Employees might be able to supplement their incomes during a strike through their spouses employment, union strike benefits, personal savings, aid from other labor organizations, or public aid. Union strike benefits rarely are intended to cover all lost income resulting from strike participation and usu- ally average $50 or less per week. Whether a union provides strike benefits may often determine whether union members will vote to strike, as well as how long they will stay out on strike. Although the amount that each union member receives during a strike is minimal, the total amount of annual strike payments can be large. Most unions pay strike benefits when funds are available and the strike has been sanctioned by the national union leadership, but often additional stipulations may require that the member be in good standing, complete a waiting period, or establish a need for the payments.

Public aid (e.g., welfare, food stamps, and unemployment compensation) can also reduce union members disagreement costs by supplementing their incomes when they go on strike. These assistance programs might exist at the federal or state level and are subject to various qualifications, such as a waiting period for striking employees to qual- ify for unemployment compensation. Many arguments can be made for and against pub- lic aid being given to union members on strike. Proponents of public aid might claim the following:

Strikers are taxpayers when they work, so when they do not work, they should receive aid. Tax dollars are used to feed hungry people in other countries and prisoners in this country, so strikers who are needy should receive the same consideration. Even though some persons may be against public aid for strikers, they should not be against public aid for the families of strikers who are directly affected.

290 PART 2 The Bargaining Process and Outcomes

Eligibility for public support should be based on need as determined by law, not on whether a person is on strike.

Opponents of public support to strikers also make several arguments:

Legislators never intended to provide public aid to strikers, particularly because strikers have voluntarily chosen to cease work and refuse to go back to work in furtherance of their bargaining position. Giving public aid to strikers violates a traditional policy of government neutrality in labor management relations.

Factors Affecting Management s Agreement and Disagreement Costs Management s costs of agreeing to union proposals can be reduced if it can pass on the cost of a negotiated settlement to customers. Increased global competition in many prod- uct and service markets makes it increasingly difficult for employers today to simply pass costs on to consumers in the form of product or service price increases. Some regulated firms, such as electric utilities, operate under pricing guidelines, which permit the com- pany to raise prices to cover legitimate increases in business operating costs. Manage- ment s disagreement costs (and union bargaining power) could be increased if any of the following conditions prevail: low inventories combined with strong customer demand; fear of permanent loss of customers (market share) during a work stoppage; or high fixed costs, such as rent, interest on loans, payments for equipment, and salaries of nonunion personnel, which could continue to accrue even if production were reduced or eliminated by a work slowdown or stoppage.

Complexities Associated with the Bargaining Power Model Bargaining power costs and utility benefits are often imprecise figures that are diffi- cult to calculate. Some issues are difficult to cost, such as inserting a job requirement that the employees must perform minor repairs. Such contract language could save the company money by permitting lower skilled employees to perform some duties previ- ously performed by more expensive, higher skilled maintenance employees, particularly when minor repairs are performed at overtime or other premium wage rates. However, management cannot calculate the precise dollar cost savings associated with this provi- sion, particularly if the union negotiator fears that agreeing with such a minor repairs clause would incur imprecise yet large political costs, such as skilled maintenance mem- bers rejecting the proposed labor contract or the union leader s re-election bid. Also, negotiations involve signaling behavior about what issues are important, what positions on those issues are important, how firm one negotiation party is in its commitment to attaining those positions, strike or lockout costs, and how willing each side is to allow an impasse to occur over particular issues. Such signaling is imprecise: Negotiators often overestimate the extent to which their bargaining preferences are clearly communicated to the other party during negotiations.28

Perceived or estimated costs associated with use of the bargaining power model are subject to change during negotiations. For example, management could receive a sudden influx of rush orders from a major customer just before the contract expiration date. Management s disagreement costs may sharply increase, particularly if a customer indi- cates that he or she will take unfilled orders to a competitor.

The limitations of the bargaining power model do not eliminate its usefulness. Union and management officials do assign costs, however crudely, and direct their

CHAPTER 6 Negotiating the Labor Agreement 291

strategies toward increasing the other party s disagreement costs relative to their agree- ment costs.

Attitudinal Structuring Another important aspect of negotiation involves a consideration of the emotional con- text of the negotiations. Walton and McKersie suggested that negotiators examine their negotiation processes to see whether they are promoting harmony and cooperation. While it may be tempting to try to intimidate or frustrate the other side, such techniques may be counterproductive, particularly when dealing with experienced negotiators and when both sides must work together to implement the agreement in a long-term work relationship. Instead, laboratory research suggests that effective negotiation is promoted when both sides have a cooperative motivational orientation (as opposed to a competi- tive or an individualistic orientation) and both sides are sensitive to the other s needs.29

How can negotiators encourage members of the other side to be cooperative and sen- sitive to their needs? Research suggests that early signals in the negotiation (e.g., commu- nicating a desire for a mutually acceptable agreement; making concessions and indicating that this is done as a gesture of good will) are very important in this process.30 Generally, Walton and McKersie suggest developing common attitudinal associations (i.e., liking sim- ilar things) and inducing a positive mood in the other negotiators. Some specific techni- ques include the following: (1) using similar language as the other side, (2) using humor to break tense moments (provided that the humor is not cruel), (3) build momentum by settling some small issues so that people feel good about their mutual accomplishments, (4) emphasize the common history the two sides share, (5) mention the value of the rela- tionship, (6) praise the other side s concessions, and (7) express optimism about the impli- cations of the negotiated agreement for the future for everyone in the organization.31

If key members of the opposing negotiating team are highly competitive it is unlikely that they will engage in the types of behavior (offering creative proposals; sharing informa- tion) that facilitate integrative bargaining. It may be necessary to first work to create posi- tive attitudes and a pleasant mood before attempting interest-based bargaining.

Intraorganizational Bargaining A fourth bargaining process is intraorganizational bargaining, which refers to the nego- tiations that occur within each bargaining party as management and union negotiators attempt to achieve consensus within their respective organizations.32 Sometimes the most difficult bargaining is that which occurs within each party s negotiating team rather than between union and management negotiators.

Intraorganizational bargaining may affect the management team in several ways. Man- agement s chief negotiator sometimes takes a backseat to other management officials, par- ticularly lawyers, at the bargaining table. Often the need to comply with corporate policy may complicate local plant negotiations by reducing a management negotiator s flexibility to deviate from a policy intended to cover a variety of different plant locations. When a settlement is reached, it is also subject to second-guessing by other managers, who usually contend that management negotiators could have obtained a better deal.

The union is not exempt from internal disputes either, particularly because its chief negotiator is seldom given a free hand in selecting the negotiating committee. In many cases, at least one member of the union s negotiating team is a political rival of the chief negotiator. More prevalent are factions that attempt to obtain various bargaining demands regardless of the chief negotiator s preferences. Union negotiators are respon- sive to several groups within and outside their organizations. Every organization has

292 PART 2 The Bargaining Process and Outcomes

informal work groups (e.g., the night-shift crew or the company bowling team) who have unique preferences and place pressures on union officers to achieve their preferences in collective bargaining. Other examples of groups within a bargaining unit who may seek to press special bargaining interests during negotiations include skilled craft employees, women, minorities, high- or low-seniority employees, and part-time employees. These groups may affect the bargaining structure and bargaining outcomes.

Management and union negotiators spend much time resolving differences within their respective organizations. One observer of labor management negotiations noted: [A] large share of collective bargaining is not conflict but a process by which the main

terms of the agreement, already understood by the negotiators, are made acceptable not to those in charge of the bargaining but to those who will have to live with its results. 33

Intraorganizational bargaining affects negotiating teams in three different phases of the overall negotiation process. First, the negotiating teams must consider the desires of various groups within their organizations as they research and formulate bargaining pro- posals. A union team negotiating a local contract might survey its members, consult with national headquarters, and look at economic data to try to identify goals that will satisfy various demographic groups within the local.

Second, during negotiations with the other side, teams will caucus and negotiate among themselves over how to proceed. Suppose that the management team presented the union with a new proposal that eliminated annual pay raises, but provided substan- tial bonuses based on worker productivity. The union team would probably meet pri- vately to discuss this proposal and to answer several questions: Will management s proposal be acceptable to the rank-and-file union members? Should the team accept the proposal? Reject the proposal? Make acceptance contingent upon management accepting a union proposal on a different topic? Caucusing during negotiations provides an oppor- tunity for intraorganizational bargaining to take place.

Third, after a contract has been tentatively negotiated with the other side, each side must get the contract approved by their respective organizations. For the union, this typ- ically means asking the members to vote to ratify it; for managers, this typically means asking upper managers, owners, or a board of directors to formally accept the contract. Members of the negotiating team usually give a presentation along with submitting the tentative contract to their members. Usually, negotiators attempt to persuade their con- stituents to ratify it. Thus, a union negotiator might explain why the agreement has pro- visions that are good for those working on the night shift, young parents, older workers, and other groups. (The ratification process is discussed further, later in this chapter.) One research study suggests that there are gender differences in this third phase: Male negotiators tend to justify, explain, and call attention to provisions in the tentative con- tract that are favorable to their side, whereas female negotiators tend to explain unfavor- able provisions.34 Generally, the discussion about the merits of the contract and whether it should be ratified constitutes a third type of instance where intraorganizational bar- gaining occurs.

Ethical and Legal Considerations in Collective Bargaining

It has been suggested that ethical negotiating behavior is not only the right thing to do, but often more profitable as well.35 Union and management negotiators bargaining behavior often involves at least two general ethical dimensions. The first ethical dimen- sion, moral or ideal behavior, is subject to varying definitions instead of an either/or dis- tinction. One scale measuring negotiating ethics identified several types marginally

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ethical tactics that were generally unacceptable, including (1) emotional manipulation (e.g., false anger or false satisfaction), (2) misrepresenting information, (3) inappropriate information gathering (e.g., stealing an opponent s confidential information; using elec- tronic surveillance to bug an opponent s meeting areas), (4) bluffing making false promises or threats with no intention to execute them, and (5) misrepresenting informa- tion to your opponent s constituents (e.g., demeaning, humiliating, or lying about a negotiator) in order to harm that person s reputation. Of these, emotional manipulation was seen as somewhat less unethical than tactics involving the misrepresentation of information.36 Other negotiator behaviors, such as bribing the opponent to reach a set- tlement, are clearly at the unethical end of the continuum.

Some bargaining behaviors have general and long-range ethical implications. Con- sider, for example, the reflections of Lee Iacocca, former chief executive officer of Chrys- ler Corporation:

As long as Detroit was making money, it was always easy for us to accept union demands and recoup them later in the form of price increases. The alternative was to take a strike and risk ruining the company. The executives at GM, Ford, and Chrysler have never been overly interested in long-range planning. They ve been too concerned about expediency, improving the profits for the next quarter and earning a good bonus. They? I should be saying we. After all, I was one of the boys. I was part of that system. Gradually, little by little, we gave in to virtually every union demand. We were making so much money that we didn t think twice. We were rarely willing to take a strike, and so we never stood on principle. I sat there in the midst of it all and I said: Discretion is the better part of valor. Give them what they want. Because if they strike, we ll lose hundreds of millions of dollars, we ll lose our bonuses, and I ll personally lose half a million dollars in cash. Our motivation was greed. The instinct was always to settle quickly, to go for the bottom line. In this regard, our critics were right we were always thinking of the next quarter. What s another dol- lar an hour? we reasoned. Let future generations worry about it. We won t be around then. But the future has arrived, and some of us are still around. Today we re all paying the price for our complacency.37

The second ethical dimension, conforming to professional standards, is more compli- cated when applied to negotiators behaviors. Top union and management bargaining team officials would likely agree on at least three professional commitments in their bar- gaining behaviors:

1. To obtain the best possible settlement benefiting their party s interests 2. To convince their respective bargaining team members and other constituents that

they are effective negotiators 3. To communicate with the other negotiating team in an honest, respectful fashion to

enhance the parties continuing labor relations relationship after the CBA is reached

All three of these standards are attainable, although maximizing the first two may strain and alter the third. In other words, it is difficult to convince one s bargaining con- stituents that the best settlement possible was obtained after revealing the complete truth to the negotiating opponent. This perhaps helps explain why distributive bargaining is still more common than interest-based bargaining in labor negotiations. A completely honest and open negotiator may be exploited by his or her opponent, commit to a posi- tion that allows no further concessions, or sacrifice what might have been successfully gained through a less-candid approach. Many successful negotiations feature ritualistic elements, such as describing elaborate but irrelevant statistics, using histrionics, or stag- ing false temper tantrums and walking out of negotiations.

294 PART 2 The Bargaining Process and Outcomes

Successful negotiators realize that credibility is a necessary personal attribute, and lying or uttering a deliberate falsehood can destroy credibility and ruin a negotiator s effectiveness. However, a fine line exists between lying and withholding the complete truth. Negotiators are not generally going to volunteer information that could damage their bargaining positions. Negotiators may also exaggerate or bluff on occasion, although this is risky behavior if a negotiator is not prepared to have his or her bluff called by the other party:

The principled negotiator doesn t resort to trickery, but that doesn t mean he naively gives away his position. Not all principled negotiators agree on just how principled you have to be. It s OK to mislead the other side as to your intentions, [one principled negotiator] argues. You can say I m not going to give in, and then give in five minutes later. But never give the other side misinformation about the facts.38

The Legal Duty to Bargain in Good Faith Union and management officials are not completely free to shape or ignore ethical con- siderations in collective bargaining. The government, through the Labor Management Relations Act (LMRA), as amended, requires that both union and management organiza- tions negotiate in good faith in an effort to voluntarily settle bargaining disputes. Good faith bargaining essentially means each party must demonstrate a sincere and honest intent to reach a labor agreement and be reasonable in their bargaining positions, tactics, and activities. A violation of the duty to bargain in good faith represents an unfair labor practice which can be remedied through the NLRB s unfair labor practice procedure.

In attempting to decide the merit of a bad faith bargaining charge, the NLRB must assess the totality of each party s conduct, which includes both overt behavior and underlying motivation or intent. However, good faith represents a state of mind which is difficult to define precisely. For example, the duty to bargain in good faith does not require a party to reach a settlement, agree to any specific proposal, or make a particular concession to the other party. Yet for settlement to occur there is an underlying pre- sumption in collective bargaining that concessions will typically be made by both parties. Violations of good faith bargaining can come from four sources: the type of the bargain- ing subject, specific bargaining actions (called per se violations), the totality of a party s conduct, and a successor employer bargaining obligations.

Type of Bargaining Subject Over the years, the NLRB and the courts have categorized bargaining subjects or issues as illegal, mandatory, or voluntary (also referred to as nonmandatory or permissive). Illegal bargaining subjects involve proposals which violate the law, and there is no legal duty to bargain over such an issue. If the parties were to include such an illegal term in their contract (e.g., permitting management to pay less than the federal minimum wage for covered employees), that portion of the parties contract would be unenforceable in court. Other examples of illegal terms would include a closed-shop union security clause, a whites only employment clause, mandatory retirement at age 60, and compensation terms that violate the provisions of the Fair Labor Standards Act (e.g., not paying covered employees overtime pay for hours worked in excess of 40 hours per week).

There is a duty to bargain in good faith over mandatory bargaining subjects, which are subjects that may have a direct effect on bargaining unit members wages, hours, or other terms and conditions of employment. Generally, the duty to bargain in good faith includes (1) the willingness to meet at reasonable times and reasonable places for the pur- pose of negotiating, (2) the willingness to make some concessions (and not simply present

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a take-it-or-leave-it ultimatum), and (3) the willingness to put verbal agreements in writ- ing. Exhibit 6.7 presents a list of some mandatory subjects of bargaining, although new bargaining subjects continue to arise in response to changing bargaining conditions, so any such listing should never be considered as all-inclusive. Mandatory bargaining subjects compose the bulk of the bargaining agenda during labor contract negotiations.

Management may not legally change current contract language governing an exist- ing employment term involving a mandatory bargaining subject unless the current con- tract clearly gives management the right to do so; the union has clearly waived its right to bargain over the subject; or both parties have bargained in good faith and reached a voluntary agreement about the change. Either party may request the other party to vol- untarily agree to negotiate a current contract provision early (so-called mid-term bar- gaining), but there is no legal duty to engage in good faith bargaining over existing contract terms until at the earliest 60 days prior to the scheduled expiration date of the current contract. If an issue concerning a mandatory bargaining subject not covered by the parties existing contract language arose during the mid-term of a labor

Exhibit 6.7 Some Mandatory Subjects of Bargaining*

Hourly wage or incentive (piece) rate of pay Vacation pay

Identity of the insurance carrier Layoff and recall procedure

Bonus pay Holiday pay

Health care cost containment plan Seniority rights

Profit-sharing plan Paid rest periods

Clothing or tool allowance Length of job probationary period

Employee stock ownership plan Paid lunch period

Hours of work Grievance-arbitration procedure

Lump-sum pay Employee discounts on company products or services

Mandatory overtime policy Management rights

Two-tier wage plan Child-care assistance plan

Pension plan Subcontracting of bargaining unit work

Call-in pay Dental insurance

Tax deferred (e.g., 401[k]) savings plan Joint union management cooperation plan

Shift differential pay Life insurance

Job or income security guarantee Employee testing procedures (e.g., drug test)

Jury duty pay Effective and expiration time and date of the contract

Job classification system Performance evaluation methods and procedure

Overtime pay Waiver of right to bargain (e.g., zipper clause )

Job duties and qualifications Safety and health standards and procedures

Cost-of-living adjustment clause Leave of absence

Job transfer rights and procedure Successorship clause

Funeral leave pay Health and accident insurance

Job promotion criteria and procedure No strike or lockout clause

*The subjects listed are not intended to represent an all-inclusive list of possible mandatory bargaining subjects.

296 PART 2 The Bargaining Process and Outcomes

agreement, then management could implement a change in such a subject after bargain- ing in good faith to an impasse or reaching an agreement with the union about the sub- ject. A good faith bargaining impasse occurs at the point in negotiation where neither party is willing to modify its position on a bargaining subject any further. Essentially it s the point in time when both parties can assume that further negotiation would be futile.39 Interest disputes involving a mandatory bargaining subject are also the only dis- putes over which a lawful strike or lockout may occur.

Effects Bargaining There is no duty to bargain over a business decision that involves a fundamental change in the nature, scope, or direction of the firm.40 This would include decisions to sell the firm or buy another firm, major equipment purchases, the number or types of products or ser- vices to produce, financing sources or terms to meet operating needs, and marketing deci- sions. Even though not required to bargain about a business decision itself, an employer is required to bargain over the effects of that business decision on bargaining unit employees job security or economic interests (e.g., severance pay, transfer rights, seniority rights, and layoff or recall rights).41 For example, in the early 2000s, Wal-Mart decided to only stock prepackaged meat and to discontinue employing butchers to cut meat in the grocery part of their stores. In a store in Texas where butchers had unionized, the NLRB ordered Wal- Mart to bargain over the consequences of the company s business decision as it affected wages, hours, and working conditions of the former meat cutters.42

An employer may be required to bargain over a decision to transfer or relocate bar- gaining unit work. This is true if the business decision does not involve a substantial change in the nature of the employer s operation (e.g., same work being performed under similar work conditions at a new location but using different [nonbargaining unit] employees).43

Union and management officials may also negotiate voluntary bargaining subjects (also termed nonmandatory or permissive) that do not directly affect bargaining unit members terms or conditions of employment and are not illegal. Examples include a jointly funded industry marketing promotion plan, strike insurance, an interest arbitra- tion clause, or improved pension benefits for retired (former) bargaining unit members. Unlike mandatory subjects, voluntary bargaining subjects do not require either party to bargain. In fact, insisting on their bargaining and inclusion in a labor agreement to the point of impasse would be an unfair labor practice. For example, when Dupont Com- pany managers asked employees to participate in a promotional videotape, the NLRB determined this action was a voluntary bargaining subject that did not have to be nego- tiated with the union. The NLRB decided it was voluntary because it was not part of the employees day-to-day responsibilities, employees were not compelled to participate, and the taping was not shown to be a matter of deep concern to the employees.44

Specific Bargaining Actions Per se violations In some cases, a single specific action by an employer constitutes an unfair labor practice in bargaining. These are called per se violations. For example, management commits a per se violation whenever it does the following:

Refuses to meet with the union to negotiate its proposals Implements a wage change without consulting the union Insists to a point of impasse on a provision requiring that a secret-ballot election be held before a strike can be called

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Refuses to furnish requested information to the union that is relevant and necessary for the union to perform its legal bargaining duty (e.g., basic financial information showing whether the firm made a profit; summary data relating to a group insur- ance plan administered by the employer)

If an employer claims an inability to pay for a union s bargaining proposal, the union is entitled access to company financial information necessary to validate the employer s inability to pay claim. An inability to pay is legally distinct from expressing an unwilling- ness to pay the cost of a union bargaining proposal, and thus this obligation is sometimes complicated to apply.45 In one case, the NLRB found the employer did not commit a vio- lation when it refused a union s request for information because the employer s stated desire to bring its labor costs in line with its competitors, who might be nonunion, was a legitimate bargaining goal and not a statement of the employer s inability to pay.46 Yet in other cases, although the employer tries to couch its refusal to furnish information requested by a union as a competitive issue rather than a claim of inability to pay, the NLRB has found that the employer s intent was to claim an inability to pay.47

Any information request by a union from management must meet the following requirements:

1. The union must make a good faith demand or request for the information. 2. The information sought must be relevant and necessary for negotiations. This typi-

cally means the information sought must pertain to a mandatory bargaining subject and is information not reasonably available to the union from any other source.

3. The information must be supplied to the union promptly and in a form reasonably useful for negotiation purposes although not necessarily in the exact format requested by the union.

A union commits a per se violation when it engages in the following:

Insists on a closed-shop or discriminatory hiring clause Refuses to meet with a legal representative of the employer about negotiations Refuses to negotiate a management proposal involving a mandatory subject

The NLRB General Counsel has provided a useful checklist that covers relevant questions and information which should be gathered when investigating bad faith bar- gaining claims.48 Such guidelines can be useful to union and management practitioners in evaluating the merits of their own case as well as NLRB personnel who may be con- ducting a formal investigation of such complaints.

Totality of Conduct In evaluating the underlying intent behind specific bargaining actions, the NLRB and the courts often apply the totality of conduct doctrine. This legal doctrine states that even though specific, individual actions, when viewed separately, do not constitute bargaining violations, such acts may constitute an unfair labor practice when viewed as a pattern of conduct in the totality of the circumstances surrounding the negotiations. A prominent and controversial example of this legal consideration involved a bargaining strategy used by the General Electric Company (GE) called Boulwarism after the late vice president of General Electric, Lemuel Boulware.49

GE contended that it simply approached bargaining in a manner similar to its product marketing by first researching the employees desires and the firm s competi- tive position and then presenting a fair bargaining proposal to the union. GE would refuse to modify its original proposal unless the union could present new and signifi- cant information bearing on the issues at the bargaining table, which the union, in the

298 PART 2 The Bargaining Process and Outcomes

company s view, was rarely able to do. GE management contended that this approach was not capricious, but fair and firm, because management s bargaining position was based on a careful examination of the facts. This approach, the company maintained, represented a sincere bargaining effort aimed not at destroying the union but rather at eliminating a time-consuming and unnecessary ritual from collective bargaining (such as initial unrealistic offers that both parties know will not be accepted). GE coupled its bargaining table strategy with a separate communication campaign aimed at convinc- ing bargaining unit employees that the company s offer was fair and reasonable and implying that any delay in reaching agreement would be the responsibility of union leaders, not management.

Unions representing GE employees termed the company s approach hard bargain- ing, which was tantamount to an ultimatum and not flexible enough to reasonably con- sider alternative union views on bargaining subjects. GE unions believed that the company s communication campaign directed at bargaining unit members represented an effort by management to undermine the union s legal status as the employees bar- gaining agent by attempting to bypass dealing with union negotiators at the bargaining table in favor of dealing directly with employees.

GE s Boulwarism strategy was found, based on the totality of conduct doctrine, to be a violation of good faith bargaining primarily because it attempted to bypass the employ- ees exclusive bargaining agent (the union) with a direct communication campaign intended to persuade employees to pressure their union representative to accept manage- ment s terms.50 The U.S. Supreme Court was careful to point out that hard bargaining without other condemning evidence was not, per se, an unfair labor practice itself. Other condemning evidence present in the GE case included a refusal to supply cost informa- tion on an insurance program, vague responses to the union s detailed proposals, a pre- pared lecture series instead of counteroffers, and a stiff and unbending patriarchal posture even after it was apparent that the union would have to concede to the employ- er s terms. Management can legally communicate to employees its own bargaining pro- posals and the reasons for them, as well as explain why management opposes specific union bargaining proposals, as long as such communication is not intended to under- mine the status of the union as the employees bargaining agent.51

Other rulings involving employer or union conduct have provided the following examples of conduct that may constitute bad faith bargaining:

Surface bargaining: A party is willing to meet at length and confer but merely goes through the motions of bargaining without any evidence of a sincere desire to reach an agreement. Surface bargaining includes a party making proposals that it knows the other party cannot accept, taking an inflexible attitude on important issues or offering no alternative proposals. Even though on the surface, some of the indi- vidual behaviors appear to meet the letter of the law, when considered using the totality of conduct standard, surface bargaining is typically determined to violate the good-faith-bargaining requirement of the LMRA. Dilatory tactics: Unreasonable procrastination in executing an agreement, unreason- able delay in scheduling meetings, willful avoidance of meetings, evasive tactics, unreasonable delay in providing data for bargaining, and similar tactics are evidence of bad faith. Imposing unreasonable conditions: Attempts to specify conditions on bargaining or the administration of a labor contract will be scrutinized closely to determine whether such conditions are onerous or unreasonable (e.g., insisting that all grie- vances be resolved before collective bargaining can start). In addition, the require- ment of agreement on a specific item as a prerequisite to negotiating other issues may reflect a bad faith bargaining intent.

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Unilateral changes in conditions: Such actions as changing the compensation or fringe-benefit package unilaterally during bargaining without having reached a good faith bargaining impasse is a strong indicator of bad faith bargaining. Commission of unfair labor practices: Committing unfair labor practices (such as promoting withdrawal from the union, reducing work hours without economic jus- tification, or engaging in discriminatory layoffs) during negotiations is indicative of a pattern of bad faith.

Bargaining over Managerial Rights One important mandatory subject of bargaining of interest to employers is the subject of management s rights. Before the passage of the National Labor Relations Act (NLRA) in 1935, management rights and discretion in operating facilities were seldom questioned, and managers were virtually free to run their operations as they saw fit. In many cases, unions were considered intruders into managerial prerogatives because there were few laws regulating managers actions toward employees. Although unions have become more accepted today, managers remain concerned over the gradual erosion of their rights in the labor relations process.

Under common law, management officials were relatively free to manage their busi- nesses and their employees. In unilaterally running the operation, the employer drew from the concepts of property rights and the laws of agency, as well as the legal and social acceptance of private enterprise, ingenuity, and the profit motive. Hence, management assumed the right to manage as derived from the property rights of the owner. The authority of the owner is delegated to management, which in turn directs the employees in achieving the goals of the company. Following this line of reasoning, management contends it cannot share its prerogatives with employees or any other group because such an action would represent a dereliction of legal responsibility to the ownership. Even under the LMRA, managers sometimes take the position that they do not wish to have a union infringe upon their right to make decisions about how to oper- ate the company and it is lawful for management negotiators to take the bargaining position that they do not wish to give up any of their managerial rights to a union.52

Unions in the United States, unlike their European counterparts (see Chapter 14), have historically been reluctant to become partners with management directly involved in managerial rights pertaining to layout of equipment, financial policies, sources of materials, and so forth. Union officers realize that often union members prefer to second-guess or challenge the wisdom of management decisions instead of supporting or echoing them. It is more difficult for union leaders to effectively criticize business policy decisions that they have jointly participated in deciding with management representatives.

Yet a union s desire to avoid involvement in traditional areas of management deci- sion making is not absolute. Under the LMRA, management must bargain with its employees union over wages, hours, and working conditions. Management rights are exercised to achieve significant managerial goals of organizational flexibility and effi- ciency. Unions are concerned about managerial actions that appear arbitrary, inconsis- tent, or entail adverse consequences for union members jobs or economic security.53

Some research has found that craft and industrial unions have become more interested in joint determination of some traditional management issues (e.g., products to be man- ufactured, services to be performed, and customer relations) over the past 20 years. This new emphasis is largely attributed to competitive pressures, which have influenced union officials to evaluate a broader range of managerial decisions that could reduce union members job opportunities.54

300 PART 2 The Bargaining Process and Outcomes

Until 1960, management rights clauses contained in labor agreements tended to be based solely on the reserved rights doctrine, which essentially holds that all rights to manage the firm are reserved to management except to the extent management has vol- untarily agreed to limit or restrict such rights through language found in a labor agree- ment. For example, if the labor agreement is silent on overtime administration, then under the reserved rights doctrine, management can assign overtime to whomever it sees fit. A typical short-form management s rights clause prior to 1960 based on the reserved rights doctrine might state the following:

Employer retains all rights to manage, direct, and control its business in all particu- lars, except as such rights are expressly and specifically modified by the terms of this agreement or any subsequent agreement.

Many managers assumed that the broad language of the short-form management s rights clause guaranteed management s complete discretion in those matters not specifically included in the labor agreement. Primary reliance by management on the reserved rights doctrine to protect its managerial prerogatives was dealt a setback by the U.S. Supreme Court s 1960 decision in United Steelworkers v. Warrior and Gulf Navigation Company (as discussed in Chapter 11).55 In this case, the employer refused the union s request to take a grievance dispute to final and binding arbitration because the employer argued that the issue involved was not covered under the parties labor agreement, and therefore the right to determine the outcome of that issue was reserved to management. The Court stated that where there isn t clear evidence of the parties intent to cover a specific subject under a labor agreement s terms, the arbitrator could determine whether an issue was covered under the parties agreement to arbitrate contract disputes, and any doubts about coverage should be resolved in favor of permitting the grievance dispute to be arbitrated.

In response to the U.S. Supreme Court s decision in Warrior and Gulf Navigation Company (1960), many management negotiators sought to bargain a more specific, detailed list of subjects over which management intended to reserve the unilateral right to control. Such contract language became known as a long-form management s rights clause and is the most common form of management s rights clause found in labor agreements today (see Exhibit 6.8). Presumably, arbitrators, upon seeing such a detailed list of management prerogatives clearly stated in the labor agreement, would rule in management s favor on whether the grievance is subject to arbitration.

However, the long-form management s rights clause has its problems. First, it is dif- ficult to anticipate and clearly list every item over which management might seek to maintain unilateral discretion. Arbitrators tend to view a detailed long-form manage- ment s rights clause as expressing management s intent to define all of its prerogatives. A detailed listing of management s rights in a labor agreement makes it more unlikely an arbitrator would permit management to retain exclusive control over any otherwise mandatory subject of bargaining that management might claim it merely forgot to include in the negotiated management s rights clause. Second, because the union must agree to all wording contained in the management s rights clause of the labor agreement, it may be necessary for management negotiators to give the union a concession on another issue to obtain a strongly worded management s rights clause. For example, management may have to allow the union a strong union security clause, such as a union shop clause, requiring all new employees to join the union after thirty days employment (previously discussed in Chapter 4). Third, even an extensive management rights clause does not guarantee a management victory in grievance arbitration, because there may be other pertinent contract clauses that bear on the issue. For example, suppose the management rights clause allows managers to discharge employees who are

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derelict or negligent in their duty. A manager finds an employee sleeping on the job. At first glance, it seems obvious that the employee should be subject to discharge. However, suppose the employee produces a doctor s note indicating that he suffers from a chronic medical condition that occasionally causes severe drowsiness; if the contract also contains a clause providing for reasonable accommodation for illness or disability, it

Exhibit 6.8 Example of a Long-Form Management s Rights Clause

Article 2 Management Rights The company has, retains and shall possess and exercise all management functions, rights, powers, privileges and authority inherent in the company as owner and opera- tor of the business, excepting only such rights that are specifically and expressly relinquished or restricted by a specific Article or Section of this Agreement.

The company shall have the exclusive right to manage facilities; to direct the working forces; to fix or change the number, hours, and duration of work shifts; to establish or alter work schedules or standards; to control the use of scheduling of operations; to allocate and assign work to employees; to schedule overtime; to hire, classify, train, promote, transfer, suspend, demote, discipline; to discharge employees for just cause, and to discipline or discharge employees for violation of such rules and reg- ulations; to determine safety, health, and property protection measures for any and all employees, operations, and facilities; to select and to change tools, equipment, machinery, material, layout, and facilities with which it shall carry on its operations; to determine the products to be manufactured or sold or the services to be rendered; to determine at all times the number and composition of the workforce as a whole or of any unit, shift, job classification, or work within such job classification; to create new organization groups deemed appropriate by the company and to determine the organization and structure of each; to determine, implement, modify, or eliminate techniques, methods, processes, means of manufacture, maintenance, and distribu- tion, schedules, crew, or production team sizes, and line speeds; to control raw material; to shift types of work and production or maintenance in and out of any facil- ity; to place production, service, maintenance, or distribution work with outside con- tractors or subcontractors; to use labor-saving devices; to determine and implement actions necessary to operate as economically and efficiently as possible when and where the company deems the same necessary or desirable, including layoff of employees; to determine the qualifications and duties of employees; to establish or modify reasonable quality and quantity standards; to judge the quantity and quality of workmanship required and discipline or discharge employees whose work does not meet such standards; to establish or revise pay grades for jobs; to change the method of compensation of employees, to establish or modify job classifications and related rates of pay, or revise or eliminate existing jobs; to transfer and assign work and duties to job classifications when the company deems the same necessary or desirable; to select, demote, promote, or transfer bargaining unit employees from one unit, section, department, division, plant, or other unit to another; to transfer work from one job to another; to determine the location of the business, including the establishment of new plants, departments, divisions, or subdivisions and the relo- cation, closing, selling, merging, or liquidating of any plant, department, division, or subdivisions thereof either permanently or temporarily; to determine financial policy, including accounting procedures, prices of goods or services rendered or supplied, and customer relations; to determine the size and character of inventories; to deter- mine the policy affecting the selection and training of new employees; to determine the amount of supervision necessary; and generally to control and direct the com- pany in all of its affairs and operations.

SOURCE: Excerpted from a labor agreement.

302 PART 2 The Bargaining Process and Outcomes

is unlikely that an arbitrator will uphold the employees discharge. Arbitrators consider the management rights clause in conjunction with other clauses as well.

Both long and short forms of a management s rights clause can cause additional problems. By insisting on including the management s rights clause in the labor agree- ment, management runs the risk of stirring up ideological differences with the union. Rights included in the management s rights clause may also influence union bargaining goals in subsequent negotiations.

For managers, the advantages of a long-form management s rights clause outweigh the potential risks. Approximately 80 percent of labor agreements contain a management s rights clause that helps remind arbitrators, union officials, and other managers (particularly first-line supervisors) that management retains its administrative prerogatives.56

Successor Employer Bargaining Obligations Economic changes and increased competitive pressures have resulted in merger and acqui- sition activity that has affected many firms in recent years. When the ownership of a unionized operation changes, it raises questions about the duty of the current owner to bargain in good faith with existing bargaining unit representatives. Whether a change in ownership at a unionized firm results in a new versus successor employer depends on the degree of continuity in the business enterprise after the ownership change occurs.57

Purchasers would generally prefer to be classified as a new employer, which has no legal duty to automatically recognize any previously existing union bargaining representatives and thus is under no duty to bargain over the establishment of employment terms or to abide by the terms of any prior labor agreement negotiated by the former owner.

Where there is substantial continuity in business operations, the purchaser is classi- fied as a successor employer, whereas a lack of substantial continuity in business opera- tions results in the designation of new employer. Degree of business continuity can be evaluated based on a preponderance of the evidence by examining factors such as (1) substantial continuity of the employed workforce: what percentage of the new own- er s work group continues to be comprised of former (union-represented) employees; (2) whether there is any substantial change in the location of the firm, type of customers served, or products produced; (3) degree of change in equipment or other technological processes; and (4) the percentage of managers under the former owner who continue to manage employees after the ownership change.

A successor employer has a legal duty, upon request, to recognize a union that repre- sented bargaining unit members under the former owner as continuing to represent the same bargaining unit structure under the current ownership. A successor employer must also be willing, upon request, to engage in good faith bargaining over the terms of a new labor agreement covering bargaining unit employees. A successor employer is not generally obligated to continue to enforce the terms of a previously existing labor agreement unless that contract contained a successorship clause that the purchaser knew about at the time of the ownership transfer. A successorship clause represents a mandatory subject of bar- gaining and generally requires an employer not to sell or merge the firm unless the pur- chaser is willing to take on the terms of any existing labor contract. Approximately 28 percent of labor agreements contain some type of a successorship clause although they are more common in nonmanufacturing than manufacturing labor agreements.58

Collective Bargaining under Bankruptcy Proceedings Turbulent operating environments in some industries (e.g., airlines and auto) have led some employers to threaten or actually declare bankruptcy as a means to radically restructure debt, eliminate or consolidate operations by reducing excess plant capacity, and lower labor cost in order to increase competitiveness. The negative stigma once

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attached to a bankruptcy filing implying management failure has seemingly been replaced by a view of bankruptcy as a strategic financial tool to implement transforma- tional change that might otherwise take years or be entirely impossible to accomplish without the protection afforded by the bankruptcy court. What happens to an existing bargaining agreement if management files for bankruptcy and contends that it can no longer honor the terms of the labor agreement? This question was addressed in the U.S. Supreme Court s 1984 Bildisco decision, which involved a building supply distribu- tor who filed a petition for reorganization under Chapter 11 of the bankruptcy code.59

After filing the bankruptcy petition, the company failed to pay the scheduled wage increases specified in the labor agreement and also failed to give collected union dues to the union. The company also moved to reject the CBA entirely.

The NLRB agreed with the union that this unilateral action violated the good faith bargaining duty under the LMRA. However, the Supreme Court disagreed with the NLRB and determined that management s behavior in this situation did not violate the good faith provision. The Court s decision in Bildisco gave management more discretion in its collective bargaining efforts with a union. Because many members of Congress did not fully agree with the Bildisco decision, the Bankruptcy Reform Act of 1978 was amended (P.L. 98-353) in June 1984 with the intent to make it more difficult for employ- ers to abandon the terms of an existing labor agreement after filing a petition for bank- ruptcy. Under current law, an employer cannot reject the terms of a valid labor agreement before obtaining approval of the employer s petition for bankruptcy from a federal bankruptcy court judge.60 To obtain the approval of a bankruptcy court judge, the following conditions must be proven:

1. The debtor in possession (the employer) must have made a proposal to the union to modify the CBA based on the most complete and reliable information available at the time.

2. The proposed modifications must be necessary to permit the reorganization of the firm and must ensure that all the creditors, the debtor, and all other affected parties are treated fairly and equitably.

3. The debtor must provide the union with requested information it needs to evaluate the employer s proposed contract modifications. The union cannot demand informa- tion simply for the purpose of making a counterproposal.

4. The debtor must meet at reasonable times with the union and bargain in good faith in an effort to reach an agreement on proposed modifications to the CBA.

5. The union s refusal to accept the employer s proposed modifications must demon- strate a lack of good cause for the union s rejection of the employer s terms.

6. In the bankruptcy court judge s view, the balance of equities in the case must clearly favor permitting the debtor (employer) to reject the CBA.

Disagreements between employers and unions have arisen over application of the current bankruptcy law, particularly in determining whether a proposed management action is necessary under the circumstances to maintain the viability of the firm and how much and what type of information a union reasonably needs to evaluate manage- ment proposals to modify or terminate existing labor agreements. Courts in interpreting and applying bankruptcy law to labor relations have shown a propensity to place a higher value on protecting employer property rights than protecting employee job rights when the two rights conflict in the bankruptcy process.61

Legal Remedies Associated with Violations of the Duty to Bargain in Good Faith NLRB remedies in unfair labor practice cases are designed to stop further violations and return any adversely affected parties to the position they would have been in had the

304 PART 2 The Bargaining Process and Outcomes

unfair labor practice violation(s) not occurred. As discussed in Chapter 3, a typical Board remedial order might consist of one or more of the following:

1. A cease and desist order to halt any further unfair labor practice violations. For example, suppose that a company announced it was going to unilaterally change a provision of the CBA. The NLRB might order the company to stop implementing the change.

2. A requirement that the Respondent (guilty party) post written and electronic (e-mail and/or intranet Web site) notices for a reasonable period (e.g., four to six weeks) in the workplace informing employees of their basic rights under the LMRA, the spe- cific unfair labor practices committed by the Respondent, and the Respondent s pledge not to commit such violations in the future.62

3. Whatever affirmative actions might be necessary to remedy the adverse effects of any unfair labor practices, often referred to as a make-whole remedy. For example, rein- statement with back pay, restoration of lost seniority rights or other benefits denied an employee because of the unfair labor practice violation, requirement to furnish necessary and relevant bargaining information upon proper request by another bar- gaining party, discontinuance of any policy found to be a violation of employees protected rights, removal from employee records of any reference to unlawful disci- plinary action taken against an employee; return of unlawfully transferred work to its previous location, or an order to begin or resume bargaining in good faith.

The Board has no authority to award punitive damages. This is true, regardless of the Respondent s willful intent, the number of specific violations committed, or the Respondent s history of committing similar violations in prior cases.63 The Board also lacks the authority to order an employer or union to agree to any specific term or condi- tion of employment. Even where back pay is awarded, the amount owed by the company (the respondent ) would be reduced by the amount of interim earnings that the employee (the charging party ) may have received while the unfair labor practice charge was pending (e.g., income from another job, unemployment compensation). Further, the discharged employee is required to seek comparable employment while pursuing his or her unfair labor practice charge.

Union officials have contended that present NLRB remedies are inadequate, particu- larly in cases of bad faith bargaining. Because NLRB decisions can be appealed to the courts, it might take two or three years for a final determination to occur. During the interim period, the employer s ability to delay labor cost increases by postponing negotia- tions results in lost economic benefits for bargaining unit members. Once the employer is found guilty of bad faith bargaining, the Board can only issue an order to stop bargaining in bad faith and begin good faith negotiations. No remedy is available for the lost income opportunities or possible deterioration in a union s bargaining power caused by the unlaw- ful time delay in reaching a voluntary settlement of bargaining issues.

Proposed Labor Law Reforms Failure to bargain in good faith during first or initial contract negotiations following certi- fication of a union as the employees lawful bargaining representative is a particular dam- aging occurrence to the protection of employees legal right to engage in collective bargaining and their faith in the current system designed to enforce the legitimate exercise of such rights. Former NLRB General Counsel Ronald Meisburg stated, Initial contract bargaining constitutes a critical stage of the negotiation process in that it provides the foundation for the parties future labor management relationship. Unfair labor practices by employers and unions during this critical stage may have long-lasting, deleterious effects on the parties collective bargaining and frustrate employees freely exercised choice to unionize. 64 Among additional ULP remedies recommended by Meisburg in these cases

CHAPTER 6 Negotiating the Labor Agreement 305

are requiring parties to bargain on a set schedule until either agreement is reached or a good faith bargaining impasse occurs; a minimum six-month extension of the normal 12-month time period following initial certification when a union s status as bargaining representative may not be lawfully challenged; reimbursement of bargaining costs incurred as a result of bad faith bargaining; and the filing of periodic reports with the NLRB, updat- ing the status of bargaining and the implementation of Board-ordered ULP remedies.

Many of Meisburg s recommendations are similar to the proposed Employee Free Choice Act, which was not enacted by the U.S. Congress. This bill also called for interest arbitration for first contracts following union certification, triple lost wages in cases where managers illegally discharged employees, and financial penalties for willful viola- tions of the law.65

Contract Ratification Unlike many management negotiators, union negotiators are typically authorized only to reach a tentative agreement on contract terms at the bargaining table. The union s con- stitution and by-laws typically require that union members be given an opportunity to approve or disapprove proposed tentative settlement terms before a final contract agree- ment can be achieved. The vote on whether to accept a tentative contract is called the contract ratification vote. For example, the Steelworkers, Auto Workers, and United Mine Workers use a direct referendum. Some unions may require a simple majority approval from union members voting whereas other unions might require a higher per- centage of votes for approval (e.g., 60 percent). In recent years, union members have shown increasing interest in participating in the contract ratification process, and more contract ratification elections have been held.

The ratification process provides union leaders with an indication as to whether union members can live with the proposed agreement, even though they may not be completely satisfied with all of its provisions. Acceptance of the proposed contract s terms by a majority of the union s membership also provides management some assur- ance that the employees will comply with the letter and spirit of the agreement during its term. A vote to accept is therefore considered a commitment or willingness to be bound by the agreement.66 Union members typically approve tentative contract settlement terms negotiated by their union representatives, rejecting such terms in only about 10 percent of cases.67

Explanation of Voting Behavior It is overly simplistic to say that union members vote for the contract when they like it and against it when they don t like it. Researchers have attempted to explain why and when union members will vote to accept or reject a tentative contract settlement. When employ- ees perceive that alternative employment opportunities are limited, members are more likely to approve proposed settlement terms. Satisfaction with the economic terms of the proposed settlement and a perception that their union has represented members interest effectively also increases the probability a union member will vote to approve proposed contract settlement terms.68 For example, when employees with the most seniority are to become eligible for a guaranteed income security plan, those employees can be counted on to favor ratification. Having adequate information about proposed contract terms and employer and union loyalty also affects an individual s decision to support or reject pro- posed contract terms.69 Review the following Labor Relations in Action feature about the contract settlement between the International Longshoremen s Association (ILA) and the United States Maritime Alliance for more information about this topic.

306 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION Contract Ratification Process Affecting East and Gulf Coast Ports

The ILA represents longshoremen, clerks, checkers, and maintenance employees who work on ships and port terminals along the east and gulf coasts of the United States. The ILA negotiates a master labor agreement covering its members with a multi-employer bargaining unit comprising shipping companies represented in nego- tiations by the United States Maritime Alliance, Ltd. There are additional negotiated local labor agreements that cover local issues affecting a specific port. A similar bargaining structure governs contract negotiations at west coast ports where workers are represented by a different national union, the International Longshore and Warehouse Union, which bargains with a multi-employer group represented by the Pacific Maritime Association.

Both east and west coast ports compete for ship- ping business, particularly coming from countries such as China, Japan, and Korea. East coast ports have made some competitive gains in recent years due in part to the labor unrest that has disrupted shipping operations at west coast ports, such as the 2002 employer lockout during contract negotiations that eventually triggered the use of the national emergency dispute settlement procedure outlined under the Labor Management Rela- tions Act (LMRA). Stability in labor relations is one factor which influences shippers choice of where to dock and offload cargo. A decline in the volume of shipping cargo during the 2007 2009 economic recession only served to intensify the competition between east and west coast ports for available work. With the scheduled open- ing of the Panama Canal to larger ships in 2016, east and gulf coast ports are poised to capture more busi- ness, but only if labor peace and stability can be assured.

The ILA-USMA current master agreement was scheduled to expire September 30, 2010. To minimize customer concerns that labor unrest surrounding the negotiation of a new agreement in 2010 might adversely affect shipping just when the economy was beginning to show signs of improvement, the ILA in October 2008 sought to negotiate a two-year contract extension which would be in effect until September 30, 2012. After extensive bargaining, the ILA and USMA reached a tentative contract settlement on a two-year contract extension, and a contract ratification vote was scheduled for November 17, 2009.

Key terms of the proposed settlement included an increase in starting pay from $16 to $20 per hour and a dollar per hour increase in the top pay rate from $31 to $32 per hour. The size of gaps between current pay levels would continue to narrow during the term of the new agreement. Current caps on royalty payments ship- pers pay per ton of cargo to help fund union benefit

programs would be removed. In exchange, shippers would be allowed to retain the first $42 million of sched- uled royalty payments during the first year of the new contract to help alleviate financial hardships suffered by shippers during the economic recession. The parties agreed to create a joint technology committee to inves- tigate and analyze the impacts of implementing new shipping technology to port operations and bargaining unit members.

Opposition against ratifying the proposed settle- ment was led by the Longshore Workers Coalition (LWC), an activist group of ILA members; this group had come close to defeating the ratification of the six- year labor agreement approved in 2004. In hindsight, ILA leaders believed they had not done enough to sell the 2004 agreement to the membership prior to

the contract ratification vote and vowed not to make the same mistake again. LWC leaders argued that given the recession, agreeing to bargain early rather than waiting to negotiate a new agreement closer to the scheduled September 2010 expiration date weakened the ILA s bargaining power and thus resulted in less satisfactory terms than could have been obtained by waiting to bar- gain. LWC leaders also disagreed with allowing shippers to retain the $42 million royalty amount during the first year of the proposed new agreement and back- loading wage improvements (giving a larger increase in the second year) designed to save employers money during the first year of the contract extension.

ILA President Richard Hughes traveled extensively in the weeks leading up to the contract ratification vote, visiting local unions at the various ports along the east and gulf coasts. The ILA prepared and posted on its Web site a memorandum explaining the terms of the proposed contract settlement. The ILA also posted a copy of the exact wording contained in the proposed contract settlement so that union members could read for themselves what had been tentatively agreed upon.

On November 17, 2009, during voting hours that extended from 7 A.M. to 7 P.M., 6,417 (66 percent) out of 9,736 ILA members approved the contract settle- ment ratification. The settlement signaled current and potential port customers that the parties intended to ensure stable and efficient operations at east and gulf coast ports.

The contract extension lasted through December 6, 2012. Subsequent negotiations almost ended in a strike several times in late 2012 and early 2013, but each time a deadline loomed, the current contract was extended. In early February 2013, a new agreement was reached between the ILA and the U.S. Maritime Alliance, avert- ing a strike at 14 ports.

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A no vote in a ratification election confronts employees with the potential costs of lost income and the uncertainty of when they will begin work again. Although the poten- tial for contract rejection may create incentives for union negotiators to try to get a little extra for the members, such extras come with increased anxiety as the strike deadline approaches.70

Reasons for Rejection of Tentative Contract Agreements The most common reason why union members reject proposed settlement terms is gen- uine dissatisfaction with one or more of those terms. Union members may feel short- changed in comparison with other agreements in their geographic area or industry. Internal union politics is another reason contract rejection may occur. Sometimes union leaders are elected by slight majorities, and their rivals will campaign against any labor agreement negotiated by the incumbent leaders. This problem can be exacerbated if the union permits members to select the union s negotiating team, and current leaders find rivals for union leadership elected to serve as part of the negotiating committee.

Communication problems between union leaders and members can sometimes play a role in contract rejection, although good communication can also facilitate contract approval. Upward communication flows are important because union leaders must understand what issues are most important to the majority of the union s membership if bargaining proposals and tentative agreements reached are to reflect those interests. For example, in industrial unions, individuals holding skilled-trade positions (electrician, carpenter, painter, and machinists) usually represent a minority of the total membership. Such skilled-trade members might vote to reject a contract if their wages did not

The 2013 2018 tentative master agreement con- tained the following provisions:

$1.00 per hour wage increases in October 2014, October 2016 and October 2017. New employees starting wage: $20.00 per hour. The wage progression formula was shortened from 9 years to 6 years. The Management-ILA (MILA) Managed Health Care Trust Fund will continue to provide health care cov- erage at no cost to eligible employees. A minimum coastwise guarantee of $211 million in container royalty each year. In addition, up to $14 million of administrative expenses will also be covered. All container royalty over these amounts will be evenly split between USMX and ILA. Container royalty will be centrally collected. The local fringe-benefit contribution increased by $1.00 per hour. New language has been negotiated to protect those who have been displaced due to new technology and automation.

Again, ILA leaders actively lobbied locals to ratify the agreement. The new contract was ratified by 88% of the ILA members, with all locals having a majority supporting the agreement.

SOURCES: ILA Plans Early Negotiations, Journal of Commerce, October 13, 2008, p. 1 at http://www.proquest.com/ (accessed November 15, 2010); Bill Mongelluzzo, Six More Years, Journal of Commerce, October 13, 2008, pp. 1 4 at http://www.

proquest.com/ (accessed November 15, 2010); Joseph Bonney, ILA Ratifies Contract Extension, Journal of Commerce, November 17, 2009, p. 1 at http://www. proquest.com/ (accessed November 15, 2010); ILA Members Ratify Two-year Contract Extension, ILA News Release, November 17, 2009 at http://www.ilaunion. org/news_ contract_ratified.html (accessed November 4, 2010); Re: Explanation of Extension Agreement, ILA Memorandum, October 19, 2009, pp. 1 3 at http://www. ilaunion.org/pdf/ExplanationOfExtensionAgreement.pdf; USMX-ILA Master Contract Memorandum of Settlement Between United States Maritime Alliance, LTD. and International Longshoremen s Association, AFL-CIO, October 16, 2009, pp. 1 13 at http://ilaunion.org/pdf/MemorandumOf Settlement.pdf; Mark Solomon, Tentative contract is reached by ILA, USMX to avert Feb. 7 strike at 14 U.S. ports, CSI International, Inc. [News/Weblog], Feb. 3, 2013, at http://csichb.com/tentative- contract-is-reached-by-ila-usmx/; ILA, Summary of Master Contract, ILA News [online], Feb. 13, 2013, at http://www.ilaunion.org/news_summary_master_ contract.html; ILA, Overwhelming Approval in ILA Master Contract Ratification Vote, ILA News [online], April 10, 2013, at http://www.ilaunion.org/news_ ratification_approval.html.

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compare favorably with those of similar skilled-trade individuals employed in the same geographic area.

Downward communication flows are particularly important in keeping members informed of progress toward achieving a settlement during negotiations and in explaining how members will be affected by contract language changes contained in the tentative con- tract settlement proposed for ratification. Particular care must be given to explaining changes in contract terms of high importance to members, such as the adoption of new wage payment methods and alterations in pension or health care benefit plans.

Some groups (women, racial minorities, and younger employees) within the bargain- ing unit may base their contract ratification vote on the outcome of one or more very specific issues directly impacting them. Although equal employment opportunity laws have been passed, wage differentials continue to exist for racial minorities and women, and eliminating perceived intra-plant inequities may be the primary determinant of how an affected employee votes on the contract ratification question. Moreover, young employees with low seniority often view pension and layoff issues, which are usually based on seniority or retirement age, differently from older employees, causing additional internal friction within a bargaining unit. Unless members in these subgroups believe that the agreement reflects their own personal needs, they may vote to reject it.

Contract rejection can sometimes be used as a bargaining strategy by a union, although the effectiveness of such a strategy would tend to diminish over time as man- agement negotiators adapted by being less willing to propose their best offer during ini- tial negotiations in case they had to go back to the bargaining table after the initial tentative agreement was rejected. One research study reported that a subsequent contract settlement obtained after an initial contract settlement was rejected by the union s mem- bership did contain additional economic gains for union members in 65 percent of cases.71 It is important that union leaders and managers attempt to keep members expectations of bargaining success as realistic as possible during the negotiation process in order to avoid a negative reaction to proposed contract settlement terms that fall below unrealistically high expectations.

Obtaining the union negotiating team s strong endorsement of a proposed contract settlement can usually ensure that the majority of union members will support the nego- tiation team s recommendation.72 Some contract concessions by management negotiators may be necessary in some cases to obtain the endorsement of a union s bargaining team. Management negotiators must carefully weigh the costs of any required concessions against the probability that contract rejection will occur without such an endorsement and the additional costs such a rejection might entail before any final contract settlement could be achieved (e.g., probability that contract rejection could trigger a strike).

Summary Collective bargaining occurs when the union and man- agement attempt to resolve conflicting interests by mutually agreeing to acceptable terms or conditions of employment. Sometimes this activity is centralized, and more than one ABU can be combined to form the nego- tiation unit, encompassing the employees and employers who are subject to the provisions of the labor agreement. Most often the structure of bargaining in the private

sector is decentralized, with a separate contract negoti- ated to cover employees in each separate bargaining unit of an individual employer at a specific location.

Management and union negotiators are involved in three general pre-negotiation activities: selecting the negotiating team, researching and formulating proposals and the bargaining range, and costing these proposals. Bargaining behavior during collective negotiations can

CHAPTER 6 Negotiating the Labor Agreement 309

be extremely varied, but choosing a distributive or interest-based approach to bargaining will dictate which specific bargaining behaviors are likely to be effec- tive. Intraorganizational bargaining is also an important and challenging part of achieving success in labor nego- tiations. A lack of success in resolving differences within one s own bargaining team can contribute to ineffective- ness in interactive bargaining between union and man- agement negotiating teams.

The relative distribution of bargaining power between the parties can be an important determinant of bargaining outcomes, especially in a distributive bar- gaining approach. Raising the other party s costs of dis- agreement or lowering the other party s costs of agreement with your proposals aids in attaining a bar- gaining settlement on your party s terms and thus increases your party s bargaining power. Bargaining

costs can and should be calculated in negotiations, albeit sometimes rather imprecisely.

Collective bargaining occurs within a legal frame- work, which regulates the parties bargaining responsi- bilities and behavior. Both union and management negotiators have a legal duty to bargain in good faith, demonstrating both reasonableness and a sincere effort to reach a voluntary settlement of interest disputes affecting employees wages, hours, and other terms or conditions of employment. Good faith bargaining enhances the opportunity for labor peace and stability necessary for the production of goods and services. The need to remain competitive and to successfully attain the respective interests of employers and employees helps to ensure the parties have a common goal to pro- mote realistic and ethical conduct during the negotia- tion process.

Key Terms collective bargaining, p. 267 interest dispute, p. 268 pattern bargaining, p. 268 whipsaw bargaining strategy, p. 269 lock-in agreement, p. 270 coordinated bargaining, p. 270 leapfrogging, p. 270 bargaining unit, p. 270 nonmandatory, p. 271 centralized bargaining, p. 272 multi-employer bargaining unit, p. 272 degree of labor intensiveness, p. 273 bargaining range, p. 279 resistance point, p. 279

target point, p. 279 package proposal, p. 281 cents-per-hour cost, p. 283 roll-up factor, p. 283 Walton & McKersie s four bargaining

processes, p. 285 distributive bargaining, p. 285 integrative bargaining, p. 285 interest-based bargaining, p. 285 intraorganizational bargaining, p. 292 good faith bargaining, p. 295 illegal bargaining subjects, p. 295 mandatory bargaining subjects, p. 295 mid-term bargaining, p. 296

good faith bargaining impasse, p. 297 voluntary bargaining subjects, p. 297 inability to pay, p. 298 totality of conduct doctrine, p. 298 Boulwarism, p. 298 reserved rights doctrine, p. 301 short-form management s rights clause,

p. 301 long-form management s rights clause,

p. 301 new employer, p. 303 successor employer, p. 303 successorship clause, p. 303 contract ratification, p. 306

Discussion Questions

1. What are some situations in which management or the union would prefer centralized bargaining? In what situations might both prefer centralized bargaining? Discussion should take into account specific legal considerations affecting centralized bargaining.

2. During an economic recession, discuss how management s or a union s bargaining power might be affected. Give an example to illustrate what you mean.

3. Assume that you are a management negotiator and the union presents the following proposal: Any overtime assignment will be guaranteed a

minimum of two hours at time-and-a-half the base hourly rate for the classification. Previously, employees working overtime received time and one-half pay for the hours they worked but no two-hour guarantee. Indicate in some detail how you would cost out this proposal. Also, discuss some arguments the union might use to make it

310 PART 2 The Bargaining Process and Outcomes

easier for management to accept this proposal (i.e., to reduce management s agreement costs).

4. Identify some sources of information a union or management negotiator could consult to get timely and relevant information about the following: a. recent bargaining settlements in a particular

industry b. current wage rates for specific types of labor in

a specific geographic area c. health care cost and bargaining trends d. pension benefits plans and trends

5. Good and bad faith bargaining might be easier to define than implement. Discuss different types of

evidence that might be used prove or disprove a charge of bad faith bargaining.

6. Briefly define each of Walton & McKersie s four bargaining processes. Pick two of the processes and discuss how they are similar and different. How might they be related?

7. Are current legal remedies for bad faith bargain- ing adequate to promote compliance with the LMRA s goal of good faith bargaining? Why or why not? What recommendations would you suggest for improving compliance with the goal of promoting good faith bargaining?

Exploring the Web

Collective Bargaining

1. Duty to bargain. Go to the Web site for the National Labor Relations Board (NLRB) and read the classic case A.M.F. Bowling Company, Inc. and United Steel- workers of America, District 4. Documents for this case (03-CA-013625; 314 NLRB 969) can be found here: http://www.nlrb.gov/case/03-CA-013625. Do you agree or disagree with the decision of the Board regarding whether the employer engaged in bad faith bargaining? Explain your reasoning.

2. Bankruptcy and collective bargaining. Using a research database such as LexisNexis or ABI/INFORM, explore the issue of labor contract rejections during the bank- ruptcy process by reading the following two articles and at least one more related articles that your search discovers. Andrew B. Dawson, Collective Bargaining Agreements in Corporate Reorganizations, American Bankruptcy Law Journal, 84(1), 2010, pp. 103 121 and

Samuel Maizel, Mary Lane, and Daniel Spitzer, Repercussions of the Collision of Labor Law and

Health Care Industry Bankruptcies, American Bank- ruptcy Institute Journal, 29(7), 2010, pp. 18, 85 87.

3. Auto Industry and collective bargaining. Visit the home page of the UAW Union and learn about the National Collective Bargaining Departments of the UAW. In your opinion, given the current state of the U.S. auto industry, are UAW members better served by having each national collective bargaining department (e.g., Ford, GM, Chrysler) negotiate a separate national contract at each company, or would it be better to seek a single contract covering auto workers at all U.S. auto companies represented by the UAW? Would employ- ers be willing to bargain as part of a multi-employer group, or would each employer insist on maintaining the present bargaining structure of negotiating their own contract with the UAW?

References 1. For a more detailed conceptualization of various

behavioral and situational aspects of negotiation behavior and a thorough bibliography, see Leonard Greenhalgh and Roy J. Lewicki, New Directions in Teaching Negotiations: From Walton and McKersie to the New Millennium, in Negotiations and Change, eds. Thomas

A. Kochan and David B. Lipsky (Ithaca, NY: Cor- nell University Press, 2003), pp. 20 34; James A. Wall and Michael W. Blum, Negotiations, Journal of Management, 17(3), 1991, pp. 273 303.

2. Leib Leventhal, Implementing Interest-based Negotiation: Conditions for Success with Evidence from Kaiser Permanente, Dispute

CHAPTER 6 Negotiating the Labor Agreement 311

Resolution Journal, 61(3), 2006, pp. 50 58; Interest-based Bargaining: Evidence from

Quebec, Worklife Report, 14(4), 2003, p. 2; Ira B. Lobel, Realities of Interest-based (Win-Win) Bargaining, Labor Law Journal, 45, December 1994, p. 771.

3. For related considerations, see Gregor Murray, Local Unions and Workplace Restructuring:

Introduction, Relations Industrielles/Industrial Relations, 56(2), 2001, pp. 237 239; Kathryn J. Ready, Is Pattern Bargaining Dead? Industrial and Labor Relations Review, 43(2), 1990, pp. 272 279; Peter Cappelli, Daniel J. B. Mitchell, and Kathryn J. Ready, Communication: Is Pat- tern Bargaining Dead? A Discussion, Industrial and Labor Relations Review, 44(1), 1990, pp. 152 155; John W. Budd, The Determinants and Extent of Pattern Bargaining, Industrial and Labor Relations Review, 45(3), 1992, pp. 523 539; John W. Budd, The Internal Union Political Imperative for UAW Pattern Bargaining, Journal of Labor Research, 16(1), 1995, pp. 43 57.

4. Don Lee Distributor, Inc., et al. v. NLRB, 145 F.3d 834 (6th Cir. 1998).

5. For a discussion of several factors associated with centralized bargaining in the United States and other countries, see Harry C. Katz, The Decen- tralization of Collective Bargaining: A Literature Review and Comparative Analysis, Industrial and Labor Relations Review, 47(1), 1993, pp. 3 22. For a discussion of centralized bargaining in the coal industry specifically, see, Coal Mines Committee, International Labour Organization of the United Nations, Productivity and Its Impact on Employment and Labour Relations in the Coalmining Industry: Thirteenth Session, Report II (Geneva, Switzerland: International Labour Organization, 1994).

6. Douglas L. Leslie, Labor Bargaining Units, Virgi- nia Law Review, 70, April 1984, p. 414; Douglas L. Leslie, Multiemployer Bargaining Rules, Virginia Law Review, 75, 1989, pp. 241 178.

7. David P. Twomey, Labor and Employment Law, 12th ed. (Mason, OH: Thomson, 2004), pp. 85 88.

8. General Electric Company and International Union of Electrical, Radio and Machine Workers, 173 NLRB 253 (1968).

9. Utility Workers Union of America and Ohio Power Company et al., 203 NLRB 30 (1973).

10. United Paperworkers International Union, Locals 620, 14, and 197 and International Paper Com- pany, 309 NLRB 44 (1992).

11. Charles D. Bonanno Linen Supply v. NLRB, 454 U.S. 404 (1982).

12. Marilyn E. Gist, Cynthia K. Stevens, and Anna G. Basvetta, Effects of self-efficacy and post-training intervention on the acquisition and maintenance of complex interpersonal skills. Personnel Psy- chology, 44(4), 1991, pp. 837 861; Alison W. Brooks, and Maurice E. Schweitzer, Can Nervous Nelly Negotiate? How Anxiety Causes Negotia- tors to Make Low First Offers, Exit Early, and Earn Less Profit, Organizational Behavior and Human Decision Processes, 115(1), 2011, pp. 43 54.

13. Bruce Barry and Ray Friedman, Bargainer char- acteristics in distributive and integrative negotiation. Journal of Personality and Social Psychology, 74, 1998, pp. 345 359; Nikolaos, Dimotakis, Donald E. Conlon, and Remus Ilies, The mind and heart (literally) of the negotiator:

Personality and contextual determinants of expe- riential reactions and economic outcomes in negotiation, Journal of Applied Psychology, 97(1), 2012, pp. 183 193.

14. J. M. Jordan and Michael E. Roloff, Planning skills and negotiator goal accomplishment, Communication Research, 24, 1997, pp. 31 63; Michael Boland, and William H. Ross, The impact of Self-Monitoring on the negotiation of emotionally-laden and non-emotionally-laden issues, International Journal of Management & Enterprise Development, 4(6), 2007, pp. 674 692. Ken Ohbuchi and O. Fukushima, Personality and interpersonal conflict: Aggressiveness, self- monitoring, and situational variables, Interna- tional Journal of Conflict Management, 8(2), 1997, pp. 99 113.

15. Terri R. Kurtzberg, Creative thinking, cognitive aptitude, and integrative joint gain: A study of negotiator creativity, Creativity Research Journal, 11, 1998, pp. 283 293; Ingrid S. Fulmer, and Bruce Barry, The smart negotiator: Cognitive ability and emotional intelligence in negotiation, International Journal of Conflict Management, 15, 2004, pp. 245 272; Sharma Sudeep, William P. Bottom, and Hillary A. Elfenbein, On the role of personality, cognitive ability, and emotional intelligence in predicting negotiation outcomes:

312 PART 2 The Bargaining Process and Outcomes

A meta-analysis, Organizational Psychology Review, 3(4), 2013, pp. 293 336.

16. Ian Newall, Is Win-win Just Pie in the Sky? Strategic Direction, 22(6), 2006, p. 4.

17. Leigh Thompson, The Mind and Heart of the Negotiator (Saddle River, NJ: Prentice-Hall, 1998), pp. 160 161.

18. Margaret A. Chaplan and Edward J. Hertenstein, The Information Needs of Local Union Offi-

cials, Library Trends, 51(1), 2002, pp. 50 69. 19. Rich, Clive. Successful negotiation is 80 percent

preparation: How to get more of what you want by preparing properly, Strategic Direction, 27(3). 2011, pp. 3 5.

20. Howard Raiffa, The Art & Science of negotiation (Cambridge, Mass: Belknap Press/Harvard University Press, 1982), pp. 44 51.

21. Sam Ashbaugh, The Art and Science of Costing Labor Contracts, Government Finance Review, 18(6), 2002, pp. 33 34.

22. Richard E. Walton and Robert B. McKersie, A Behavioral Theory of Labor Negotiations (New York: McGraw-Hill, 1965). For examples of applications of their concepts, see Tricia Dawson, Collective Bargaining and the Gender Pay Gap

in the Printing Industry, Gender, Work & Orga- nization, 21(5), pp. 381 394; Reynald Bourque and Marc-Antonin Hennebert, Cross-Border Trade Union Action in a Canadian Multinational Corporation, The International Journal of Com- parative Labour Law and Industrial Relations, 27 (3), 2011, pp. 271 286; Kamal K. Jain, Decoding the strike at Bajaj Auto s Chakan plant: a nego- tiator s framework , Emerald Emerging Markets Case Studies, 2014, at http://www.emeraldinsight. com/doi/abs/10.1108/EEMCS-12-2013-0230.

23. For a discussion of specific distributive bargaining and contending tactics in labor and other con- texts, see Joachim Hüffmeier, Philipp A. Freund, Alfred Zerres, Klaus Backhaus, and Guido Hertel, Being tough or being nice? A meta-analysis on

the impact of hard-and softline strategies in dis- tributive negotiations, Journal of Management, 40(3), 2014, pp. 866 892; Roger Dawson, You Can Get Anything You Want, But You Have to Do More Than Ask (Phoenix: Regency, 1985); Fassina, Neil E., and Glen R. Whyte. I am Disgusted by Your Proposal : The Effects of a Strategic Flinch in Negotiations. Group Decision and Negotiation, 23(4), 2014, pp. 901 920. For a

discussion of mutual gain bargaining, see Roger Fisher, William Ury, and Bruce Patton, Getting to Yes: Negotiating an Agreement without Giving In, 2nd ed. (Boston: Houghton Mifflin, 1991); William Ury, Getting Past No: Negotiating with Difficult People (New York: Bantam Books, 1991); Joel Cutcher-Gershenfeld, Interest-Based Bar- gaining in William K. Roche, Paul Teague, Alexander J.S. Colvin (Eds.), The Oxford Hand- book of Conflict Management in Organizations (Oxford, UK: Oxford University Press, 2014).

24. Leib Leventhal, Implementing Interest-based Negotiation: Conditions for Success with Evi- dence from Kaiser Permanente, pp. 50 58; Nils O. Fonstad, Robert B. McKersie, and Susan C. Eaton, Interest-based Negotiations in a Trans- formed Labor management Setting, Negotiation Journal, 20(1), 2004, pp. 5 11; Alfred Zerres, Joachim Hüffmeier, Philipp A. Freund, Klaus Backhaus, and Guido Hertel. Does it take two to tango? Longitudinal effects of unilateral and bilateral integrative negotiation training, Journal of Applied Psychology, 98(3), 2013, pp. 478 491; Joel Cutcher-Gershenfeld, How Process Matters: A Five-phase Model for Examining Interest-based Bargaining, in Thomas Kochan and D. Lipsky (Eds.) Negotiations and Change: From the Work- place to Society (Ithaca, NY: Cornell University Press, 2003), pp. 141 160.

25. Robert L. Zorn, Information-based Bargaining for a New Age, School Administrator, 63(7), 2006, p. 44.

26. Roy J. Lewicki, Bruce Barry, and David M. Saun- ders, Negotiation, Sixth Ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2010); Dejun Tony Kong, Kurt Dirks, and Donald Ferrin, Interpersonal trust within negotiations: Meta-analytic evidence, critical contingencies, and directions for future research, Academy of Management Journal, 57(5), 2014, pp. 1235 1255; Shay S. Tzafrir, Rudolph Joseph Sanchez, and Keren Tirosh- Unger, Social motives and trust: implications for joint gains in negotiations, Group Decision and Negotiation, 21(6), 2012, pp. 839 862.

27. Neil W. Chamberlain and James W. Kuhn, Collective Bargaining, 2nd ed. (New York: McGraw-Hill, 1965), pp. 162 190.

28. Eva Zellman and Simon Kemp, Estimating the Other Party s Preferences and Trust in Trade Union and Employer Negotiations:

CHAPTER 6 Negotiating the Labor Agreement 313

A Comparison between NZ and Sweden, New Zealand Journal of Employment Relations, 29(2), 2004, pp. 17 31.

29. Jeffrey Z. Rubin and Bert R. Brown, The Social Psychology of Bargaining and Negotiation (New York: Academic Press).

30. Roderick I. Swaab, William W. Maddux, and Marwan Sinaceur, Early words that work: When and how virtual linguistic mimicry facilitates negotiation outcomes, Journal of Experimental Social Psychology, 47(3), 2011, pp. 616 621; Svenn Lindskold, Trust develop- ment, the GRIT proposal, and the effects of conciliatory acts on conflict and cooperation, Psychological Bulletin, 85(4), 772 793; Roger J. Volkema, Getting Off on the Right Foot: The Effects of Initial Email Messages on Negotiation Process and Outcome, IEEE Transactions on Professional Communication, 54(3), 2011, pp. 299 313.

31. Walton and McKersie, A Behavioral Theory of Labor Negotiation; Daniel Druckman, Mara Ole- kalns, and P. L. Smith, Interpretive filters: Social cognition and the impact of turning points in negotiation, Negotiation Journal, 25, 2009, 13 40; Gerben A. Van Kleef, and Marwan Sina- ceur, The Demise of the Rational Negotiator: Emotional Forces in Conflict and Negotiation. In Mara Olekalns and Wendi L. Adair (Eds.) Handbook of Research on Negotiation (North- ampton, Mass.: Edward Elgar, 2013), pp. 103 132; Nicholas DiGiovanni, This Much I Know is True: The Five Intangible Influences on Collective Bargaining, Journal of Collective Bargaining in the Academy, 3, Article 5, 2012, at: http://thekeep. eiu.edu/jcba/vol3/iss1/5

32. Dudley B. Turner, Intraorganizational Bargaining: The Effect of Goal Congruence and Trust on Negotiator Strategy Use, Communication Studies, 41(1), 1990, pp. 54 75; Richard E. Walton and Robert B. McKersie, A Behavioral Theory of Labor Negotiations (New York: McGraw-Hill, 1965), pp. 281 351; Robert B. McKersie and Joel Cutcher-Gershenfeld, Labor Management Relations: Understanding and Practicing Effective Negotiations, Negotiation Journal, 25(4), 499 514.

33. Albert Blum, Collective Bargaining: Ritual or Reality? Harvard Business Review, 39, November/December 1961, p. 65.

34. Francisco J. Medina, Amapola Povedano, Ines Martinez, and Lourdes Munduate. How do we approach accountability with our constituency?: Gender differences in the use of influence tactics, International Journal of Conflict Management, 20(1), 2009, pp. 46 59.

35. H. Joseph Reitz, James A. Wall, Jr., and Mary Sue Love, Ethics in Negotiation: Oil and Water or Good Lubrication? Business Horizons, 41(3), 1998, pp. 5 14.

36. Roy J. Lewicki, David Saunders, and Bruce Barry, Negotiation: Readings, Exercises, and Cases, Sixth Edition (New York: McGraw-Hill/Irwin, 2010), pp. 680 681; Rob Robinson, Roy J. Lewicki, and E. Donahue, Extending and Testing a Five Factor Model of Ethical and Unethical Bargaining Tactics: The SINS Scale, Journal of Organizational Behavior, 21, 2000, pp. 649 664; Bruce Barry, Ingrid S. Fulmer, and Adam Long, Ethically Mar- ginal Bargaining Tactics: Sanction, Efficacy, and Performance. Paper presented at the annual meet- ing of the Academy of Management, Toronto, August, 2000; Ingrid S. Fulmer, Bruce Barry, and Adam Long, Lying and smiling: Informational and emotional deception in negotiation, Journal of Business Ethics, 88(4), 2009, pp. 691 709.

37. Lee Iacocca, Iacocca: An Autobiography (New York: Bantam Books, 1984), p. 304.

38. Jeremy Main, How to Be a Better Negotiator, Fortune, September 19, 1983, p. 143. Also see, Chia Jung Tsay, and Max H. Bazerman, A Decision Making Perspective to Negotiation: A Review of the Past and a Look to the Future, Negotiation Journal, 25(4), 2009, pp. 467 480; Charles B. Craver, Negotiation Ethics for Real World Interactions, Ohio State Journal on Dis- pute Resolution, 25, 2010, pp. 299 346.

39. See A.M.F. Bowling Company, Inc. and United Steel workers of America, District 4, 314 NLRB 978 (1994) and Pillowtex Corporation and Inter- national Brotherhood of Firemen and Oilers, 241 NLRB 46 (1979).

40. First National Maintenance Corporation v. NLRB, 452 U.S. 666 (1981).

41. Fibreboard Paper Products Corporation v. NLRB, 379 U.S. 203 (1964).

42. Al Norman, Wal-Mart s Meat Wars with Union Sizzles On, Huffington Post [online], May 25, 2011 at http://www.huffingtonpost.com/al-nor- man/walmarts-meat-wars-with-u_b_91757.html.

314 PART 2 The Bargaining Process and Outcomes

43. Dubuque Packing Co and UFCE, Local 150-A, 303 NLRB 386 (1991); enf. in UFCW, Local 150-A v. NLRB, 1 F.3d 24 (DC Cir. 1993); Roger Wolters and Stuart Langdon, The Duty to Bargain over Business Decisions: The Dubuque Case, Labor Law Journal, 43(9), 1992, pp. 579 587.

44. E. I. Dupont de Nemours & Company and Chemical Workers Association Inc., a/w Interna- tional Brotherhood of Dupont Workers, 301 NLRB 155 (1991).

45. See, for example, Katrina L. Abel, Current Developments in Labor management Relations, Employee Relations Law Journal, 15(2), 1989, pp. 281 289; Union Attorney Sees NLRB as More Willing to Inquire Whether Bargaining Is Serious, Daily Labor Report, February 5, 1991, pp. A-6, A-7.

46. Graphic Communications International Union, Local 508 v. NLRB, 977 F.2d 1168 (7th Cir. 1992).

47. ConAgra Inc. and Congreso de Uniones Indus- triales de Puerto Rico, 321 NLRB 944(1996); and Stroehmann Bakeries Inc. and Bakery, Confec- tionery and Tobacco Workers Local Union No. 116, 318 NLRB 1069 (1995).

48. Office of the General Counsel, Checklist for 8 (a) (5) Allegations, Memorandum GC 08-06, May 15, 2008, pp. 1 7 at http://www.nlrb.gov/ publications/general-counsel-memos.

49. Virgil B. Day, Bad Faith Bargaining? in Contem- porary Labor Issues, eds. Walter Fogel and Archie Kleingartner (Belmont, CA: Wadsworth Publish- ing, 1968), pp. 388 392; Lemuel R. Boulware, The Truth about Boulwarism (Washington, D.C.: Bureau of National Affairs, Inc., 1969).

50. NLRB v. General Electric Company, 418 F.2d 736 (1969); General Electric Company v. NLRB, 397 U.S. 965 (1970). See also Thomas P. Brown IV, Hard Bargaining: The Board Says No, the Courts

Say Yes, Employee Relations Law Journal, 8(1), 1982, pp. 37 51.

51. Francisco Hernandez-Senter, Jr., Closing the Communication Gap in Collective Bargaining, Labor Law Journal, 41(7), 1990, pp. 438 444.

52. Steward J. Schwab, The Union as Broker of Employment Rights, In Cynthia L. Estlund and Michael L. Wachter (Eds.) Research Handbook on the Economics of Labor and Employment Law (Northampton, Mass.: Edward Elgar, 2012), pp. 248 274.

53. Marvin Hill, Jr., and Anthony V. Sinicropi, Management Rights (Washington, D.C.: Bureau of National Affairs Inc., 1986), p. 6.

54. Michael H. Schuster and Steve Weidman, Organizational Change in Union Settings,

Labor management Partnerships: The Past and the Future, Human Resource Planning, 29(1), 2006, pp. 45 51; Martin M. Perline and David J. Poynter, Union Orientation and the Perception of Managerial Prerogatives, Labor Law Journal, 40(12), 1989, pp. 781 788.

55. United Steelworkers of America v. Warrior & Gulf Navigation Company, 363 U.S. 574 (1960).

56. Bureau of National Affairs, Inc., Basic Patterns in Union Contracts (Washington, D.C.: Bureau of National Affairs Inc., 1995), p. 79.

57. NLRB v. Burns Security Services, 406 U.S. 272 (1972); Fall River Dyeing & Finishing Corp. v. NLRB, 107 S.Ct. 2225 (1987); Golden State Bot- tling Co. v. NLRB, 414 U.S. 108 (1974). See also Clyde Scott, Trevor Bain, and John Robb, The Successorship Doctrine: Fall River Dyeing and Beyond, Labor Law Journal, 45(4), 1994, pp. 230 239.

58. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2010, Collective Bargain- ing Bulletin, 15(5), 2010, p. S-23.

59. NLRB v. Bildisco & Bildisco, 104 S.Ct. 1188 (1984).

60. Jennifer J. Froehlich, Bankruptcy Brinkmanship: Employer s Threats of Bankruptcy in the Context of Collective Bargaining and the National Labor Relations Act, Labor Law Journal, 57(2), 2006, pp. 89 116; John Wren and Kent Murrmann, Chapter 11 and Collective Bargaining

Agreements, Employee Relations Law Journal, 16(1), 1990, pp. 17 27.

61. Andrew B. Dawson, Collective Bargaining Agreements in Corporate Reorganizations, American Bankruptcy Law Journal, 84(1), 2010, pp. 103 121.

62. Alexander R. Rivera, J & R Flooring: The NLRA Notice Remedy Goes Electronic. Berkeley Journal of Employment & Labor Law, 32, 2011, pp. 569 569.

63. H. K. Porter Co., Inc. v. NLRB, 397 U.S. 99 (1970). 64. Office of the General Counsel, Additional

Remedies in First Contract Bargaining Cases, Memorandum GC 07-08, May 29, 2007, p. 1.

CHAPTER 6 Negotiating the Labor Agreement 315

65. Text of the Employee Free Choice Act of 2009, GovTrack, at https://www.govtrack.us/congress/ bills/111/s560/text.

66. Clyde W. Summers, Ratification of Agreements, in Frontiers of Collective Bargaining, eds. J. T. Dunlop and N. W. Chamberlain (New York: Harper & Row, 1967), pp. 82 83.

67. Herbert J. Lahne, Union Contract Ratification Procedures, Monthly Labor Review, 91(5), 1968, pp. 7 10; Federal Mediation and Conciliation Service, Thirty-fourth Annual Report (Washing- ton, D.C.: Government Printing Office, 1982), p. 21. (The FMCS no longer collects data on contract ratification outcomes.)

68. James E. Martin and Ruth D. Berthiaume, Predicting the Outcome of a Contract

Ratification Vote, Academy of Management Journal, 38(3), 1995, pp. 916 928.

69. James E. Martin, An Individual-level Study of Contract Ratification Support, Industrial Relations, 47(1), 2008, pp. 102 107.

70. Peter Cappelli and W. P. Sterling, Union Bar- gaining Decisions and Contract Ratifications: The 1982 and 1984 Auto Agreements, Industrial and Labor Relations Review, 41(2), 1988, pp. 195 209.

71. William E. Simkin, Refusal to Ratify Contracts, Industrial and Labor Relations Review, 21(4), 1968, pp. 528 529.

72. D. R. Burke and Lester Rubin, Is Contract Rejection a Major Collective Bargaining Prob- lem? Industrial and Labor Relations Review, 26(2), 1973, pp. 832 833.

316 PART 2 The Bargaining Process and Outcomes

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6- 1 The Funeral Leave Policy Proposal

Purpose

To provide each student practice in drafting and nego- tiating contract language. For a more in-depth bargain- ing experience, refer to the bargaining simulation exercise in Appendix A.

Instructions

1. Each student will be assigned the role of either a union or management negotiator. Students may also be assigned to either a union or management bargaining team.

2. Taking into consideration the relevant interests of your assigned role and the advice contained in Exhibit 6.3, prepare a written bargaining proposal to establish a funeral leave policy. Your proposal should address the following issues:

How many days (hours) of funeral leave will be provided? Will time off from work for funeral leave be paid or unpaid? If paid, at what rate of pay? Will part-time employees qualify to receive the funeral leave benefit? Whose death would qualify as an occurrence permitting an employee to take funeral leave? Be sure to be specific when defining terms such as immediate family member or relative.

Should funeral leave be granted upon the death of a domestic partner, significant other, or personal friend ?

If paid leave is granted for a specified period of time, could an employee extend his leave time by using either other paid-leave time (e.g., vacation days, holidays, sick-leave days) or by using unpaid-leave days? Must an employee actually attend the funeral in order to receive funeral leave? If so, what might constitute adequate proof of an employee s attendance at a funeral? Must an employee offer any proof to verify a death has occurred in order to receive funeral leave? If so, what type of evidence or proof would be acceptable? What is the procedure an employee must follow to request funeral leave?

How far in advance must an employee request funeral leave to cover a period of absence from work? Who has authority on behalf of the employer to grant or deny an employee s funeral leave request?

3. Union and management role players may be pro- vided an opportunity to negotiate any differences in contract language that may exist between each party s initial written funeral leave policy propo- sals. Any final agreement reached within the allot- ted bargaining time should be reduced to writing and signed by the respective parties.

Additional Background Information

The employer operates a large retail store in a popular shopping mall that serves a surrounding three-county area. There are 100 employees in the bargaining unit who currently earn an average hourly wage rate of $10 per hour. There is no current language in the parties labor agreement that addresses the issue of funeral leave. The company was recently purchased by another owner, and employees are very concerned that informal policies which may have been used in the past are likely to undergo significant change with the change in own- ership. The union has requested that management bar- gain over creating a formal funeral leave policy, and the company has agreed to do so.

The past company practice on an employee s request for funeral leave has been to handle each request on a case-by-case basis with the employee s department head having the authority to authorize varying amounts of unpaid time off from work depend- ing upon the circumstances. During the previous 12- month period there have been 20 requests for funeral leaves, of which 16 were granted. Three of the four funeral leave requests denied were from part-time employees, and no reason was given by the individual department head involved for denying the employee s request. The average length of time off from work for the 16 funeral leave requests that were granted (10 full- time and 6 part-time employees) was 2.8 days.

Each full-time employee s regular work schedule consists of 8 hours a day, five days per seven-day

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work period. Part-time employees work 8 to 32 hours per seven-day work period and comprise 45 percent of the bargaining unit members. The geographic area served by the store has seen tremendous growth in

the past 8 years, and unemployment rates in the area are among the state s lowest, averaging 1.5 2.5 percent per month. The store s regular hours of operation are seven days a week from 10 A.M. until 10 P.M.

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6- 2 Classification of a Bargaining Subject

The company and union have had a bargaining rela- tionship for more than 20 years. On July 11, bargaining unit member Allan Engle was performing his assigned work duties of cleaning the bathroom on the second floor of the company s administrative building when he glanced up and observed a camera approximately 6 to 8 feet away located in an air vent and pointed directly at him. Engle reported his discovery to three other bargaining unit members, including union stew- ard Luther Hall, who went to the second-floor bath- room in question and confirmed that the hidden camera was there. The following day the local union president was notified, but when she went to investi- gate, the hidden camera had been removed.

On July 15, local union president Wanda Jackson was asked to meet with the company s HR manager Susan Albright. Albright asked Jackson if she had heard about the camera that was discovered in the san- itation department s restroom. Albright went on to say that the camera had been installed by the company because of a reported theft problem in that area, and the company s legal counsel had advised her that it was lawful as long as the company had a legitimate business reason for doing so. Albright stated that once the cam- era had been discovered and union members appeared irate over the issue, the camera was immediately removed by management.

Local union president Jackson believed the company could have accomplished its theft investigation through less intrusive means, and the union did not approve of management s invasion of employees privacy. The union sent a letter to the company, dated August 1, indi- cating that an internal investigation by union members had also uncovered hidden cameras being used in the employees physical fitness room. On August 16, Jackson sent a hand-delivered letter to HR manager Albright demanding that the company bargain over the subject of video camera use in the workplace. The company refused to bargain over the subject, whereupon the union filed an unfair labor practice charge, alleging that

the company s action violated Section 8 (a)(5) and (1) of the LMRA, as amended.

Positions of the Parties

The union argues that the use of surveillance cameras in the workplace for providing evidence of work-rule viola- tions by employees, for which they could be subject to discipline or discharge, is clearly an issue that is germane to the working environment and job security interests of union members. Therefore, the union believes manage- ment has a legal duty to bargain in good faith, upon request, over issues such as the number and location of video cameras within the workplace. Other issues over which bargaining unit members might have an interest in bargaining include whether employees will be given prior notice that their conduct may be subject to filming; who will have access to the video recordings made; for what purposes the video recordings may be used; and the circumstances under which the cameras can be required to be removed.

The company essentially makes two arguments. First, the company believes it has an absolute right to engage in actions (like using cameras) to protect the legit- imate business-related interests of the ownership. The company noted that it had for many years used 17 video cameras located both inside and outside com- pany buildings to observe activity for protecting company property from theft or damage and to discourage other work-rule violations (e.g., drug use, sleeping on the job). These 17 cameras were in plain sight, and their existence had been known to the union s membership for many years without any prior objection from the union. In recent years, 11 additional hidden video cameras had been installed inside the company to observe specific areas where employee misconduct was suspected. To require management to bargain in advance over the use or placement of such surveillance equipment would sig- nificantly reduce the effectiveness of this method of mon- itoring employee conduct on the employer s premises.

318 PART 2 The Bargaining Process and Outcomes

Second, management argues that even if the Board were to find that a duty to bargain existed, based on the circumstances in this case, the union waived its right to bargain over the subject of surveillance cameras. The company points to the length of time it has used video cameras without any objection by the union as evidence that the union has acquiesced in this practice and essentially acknowledged management s right to use surveillance cameras for legitimate business rea- sons. The company acknowledges that the union has a right to file a contractual grievance over any alleged misuse or abuse of surveillance methods leading to a lack of just cause for disciplinary or discharge action against a bargaining unit member. However, the right to grieve a management discipline or discharge

decision is not equivalent to a right to require manage- ment to bargain, in advance, over the right to use cam- era surveillance as a legitimate investigatory technique.

Questions 1. What is a mandatory subject of bargaining? 2. Can a union waive its right to bargain over a man-

datory subject of bargaining? 3. Was management s refusal to bargain over the sub-

ject of surveillance camera usage in the workplace a violation of the duty to bargain in good faith under the LMRA, as amended? If so, what should be the appropriate remedy? Discuss the merits of the par- ties respective positions in this case.

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6- 3 The Influenza Work Rule

Mercy Hospital is an acute care facility employing nearly 5,000 employees, including 602 nurses; the nurses are represented by the Regional Nurses Associ- ation (RNA). The Hospital and RNA have a CBA which was implemented two years ago and expires next year. The current contract calls for a joint labor management committee to meet weekly for two hours on paid company time to discuss work and issues related to contract implementation.

Last May, Mercy managers brought before the labor management committee an announcement. We are amending our Fitness for Duty policy to

require all nurses to be immunized against the flu. The union objected, noting that some nurses were allergic to the preservative used in the flu vaccine and that a few objected to the flu vaccine on other grounds (doubts about its effectiveness, objections based on how it was developed, religious objections). The proposal was subject to discussion for six weeks. Subsequently, managers brought a revised policy last July. The Hos- pital informed the Union that it was considering requiring nurses to take one of three steps: (a) be immunized against the flu, (b) wear a protective face- mask, or (c) take antiviral medication during flu sea- son. Managers argued that any of these three steps would protect patients, many of whom were elderly, other employees, and visitors to the hospital from con- tracting influenza. During the course of the next several weeks, Mercy Hospital and Union officials discussed

the revised proposal a few times and even exchanged correspondence over this matter. However, by late October, it was obvious that the RNA and Mercy mem- bers of the labor management committee did not agree on the proposed flu policy.

On November 1, the Hospital declared discussion to be at an impasse and that managers would immedi- ately implement the revised flu-prevention policy requiring non-immunized nurses to either wear a face- mask or take antiviral medication. The Hospital s attor- ney indicated the organization s intention to handle any noncompliance with the policy through the stan- dard process, which might include progressive disci- pline, ultimately resulting in employment termination for repeat offenders. The union immediately filed charges, alleging that Mercy Hospital had violated the LMRA.

Union position

The union alleges that Mercy Hospital has (a) prema- turely determined that there is an impasse in bargain- ing, subsequently unilaterally changing working conditions for nurses, and (b) refused to submit the matter to an independent arbitrator under the existing contract s grievance-arbitration provision.

Elaborating upon each of these positions, Hospital management has a duty under the LMRA to bargain over this matter, as it constitutes a working condition

CHAPTER 6 Negotiating the Labor Agreement 319

in the form of a work rule and numerous NLRB prece- dent cases (e.g., Praxair, Inc., 317 NLRB 435, 436 1995) have established that work rules where employees may be disciplined are mandatory subjects of bargaining. Management representatives did not actually engage in bargaining over this matter; they merely described their proposed policy to the labor management com- mittee and answered a few union questions about how the policy would be implemented in specific work situations. Their answers were confusing, evasive, and misleading. We were led to believe, for example, that the policy would be implemented in the following year; suddenly, the Hospital revised the timeline for imple- mentation without sufficient notice to the Union. When we asked, we got contradictory answers regard- ing which types of nurses would be covered by the policy. We also requested for e-mail messages or other records from bargaining-unit employees con- cerning the policy in order to gauge employee reactions to the policy. An employer must provide a union with accurate and relevant information for collective bar- gaining purposes (see NLRB v. Truitt Mfg. Co., 351 U.S. 149, 153 [38 LRRM 2042], 1956).

It is true that managers revised the policy on the basis of union objections, but there was no bargaining and no meeting of the minds resulting in an agree- ment on a new policy. Rather, management presented its second version of the policy as a fait accompli, and unilaterally (1) declared an impasse and (2) implemen- ted its policy. This short-circuits the bargaining pro- cess. Management s actions violate Section 8(a)(5) of the LMRA, which reads, It shall be an unfair labor practice for an employer to refuse to bargain collec- tively with the representatives of his employees . The labor management committee is responsible for implementing the current collective bargaining agree- ment (CBA); bargaining over new provisions must be handled by negotiators designated by the Union and the Hospital. Thus, we maintain that no real bargain- ing occurred and to declare a bargaining impasse is erroneous. Further, the Hospital did not provide the Union with relevant information that we requested about the proposal and Hospital managers provided misleading and evasive information to the labor management committee regarding when it would implement a new flu-prevention policy.

If the policy is viewed as a matter to be decided under the current contract, then it must be the subject to grievance arbitration. When the Union suggested taking the case to grievance arbitration, management

objected, arguing that an arbitrator did not have juris- diction to decide the matter based on the Managerial Rights and Zipper clauses of the contract. While the union did agree to a Managerial Rights clause (giving managers authority over certain administrative mat- ters) the new flu-prevention policy does not fall within the parameters of the items listed in that clause in the current contract. Similarly, a Zipper clause states that an arbitrator is supposed to interpret what is written in the contract, and to ignore past practice when decid- ing cases. Yet the Hospital attempts to use past practice by referring to a different rule the Mercy Hospital Infection Prevention Policy that existed prior to the current contract. One cannot claim that past practice justifies a policy and simultaneously claim that the Zip- per Clause of the contract prevents the examination of past practice! Hospital managers are in error when they try to use contradictory logic to prevent an arbitrator from reviewing the new policy. An arbitrator clearly has authority to evaluate these new working conditions against the terms of the CBA. In summary, the Hospi- tal cannot have it both ways declaring that it is not subject to arbitration but then not bargaining about the matter either.

Finally, the Hospital claims it must implement this policy to conform to Centers for Disease Control (CDC) guidelines. However, CDC guidelines only require health care workers to wear a facemask when they are within three feet of the face of someone who has symptoms of a respiratory infection. Any addi- tional measures are discretionary. These could adversely affect employees working conditions and, legally, should fall within the scope of collective bar- gaining. However, here at Mercy Hospital, one regis- tered nurse in a critical care unit testified that, after enacting this policy, the Hospital required her to wear a facemask at all times except when she was either in the rest room, or the employee lunchroom adjacent to the Hospital cafeteria. This is clearly an excessive abuse of managerial authority. Management has not pro- duced even one example of another hospital with such a draconian policy. Therefore, the argument that this policy is required by law is without merit and should be rejected.

Hospital position

The Hospital defends the new flu-prevention policy based on numerous legal principles. First, when the Union accepted the Managerial Rights clause (below)

320 PART 2 The Bargaining Process and Outcomes

the Union waived its right to demand that the Hospital either bargain or arbitrate decisions that fall within the scope of that clause (see Provena St. Josepha Medical Center, 350 NLRB 808, 2007). The new flu-prevention policy falls within our Hospital s right to set a stan- dard of performance, implement improved opera- tional methods and procedures, and promulgate rules, regulations and personnel policies, under the Managerial Rights provision of the CBA. The waiver is clear and unmistakable. The Zipper clause also ensures that this is a managerial prerogative because arbitrators cannot grasp at any loosely related prece- dent cases to undermine our authority in this matter.

While the Managerial Rights clause does not spe- cifically mention facemasks, it does mention direct the nurses. Procedures to direct the nurses at the time that the contract was ratified (prior to the new flu- prevention policy) included a rule unilaterally devel- oped by Hospital administrators requiring facemasks and eye protection, if there is close contact with the patient such that contact with sprayed blood, secre- tions, drainage, or excretions is anticipated. [Mercy Hospital Infection Prevention Policy]. The Union accepted Hospital authority to devise that rule. There- fore, when combined with the Managerial Rights clause, it is obvious that this prior acceptance of Hos- pital rulemaking authority means that the Union has waived any right to demand that the Hospital negotiate or arbitrate any similar type of facemask personnel policy that sets a standard of performance and directs the nurses.

Second, federal law requires the Hospital to develop effective policies to control infection and com- municable diseases, including influenza. As the Union admits, hospitals have discretion as to what policies they develop to best implement CDC requirements; we believe that we have developed a reasonable policy that minimizes both patient and employee exposure to the flu.

Third, the care and protection of patients is at the core of what a hospital does. The prevention of influ- enza falls within a Hospital s core purpose and is, therefore, exempt from mandatory bargaining (see Peerless Publications, 283 NLRB 334, 1987). Devising policies to prevent the spread of diseases among patients and visitors represents a fundamental business decision. In First National Maintenance v. NLRB, 452 NLRB 666 (1981), the U.S. Supreme Court ruled that managers do not necessarily have to bargain over fun- damental business decisions. This policy identifies steps

that health care workers must take to stop the spread of the flu among vulnerable populations and they are not negotiable simply to satisfy the comfort of certain nurses who refuse to be vaccinated. Under these cir- cumstances an employer does not have a duty to bar- gain with its labor union over this type of fundamental business decision.

Finally, while not required to either bargain or arbitrate the new policy, management did, in effect, voluntarily discuss in good faith the new policy with the Union via the labor management committee. Under the LMRA, an employer must notify the employees collective bargaining representative and afford that representative an opportunity to discuss a proposed change in working conditions prior to its implementation (see NLRB v. Katz, 369 U.S. 736, 1962). We did this, even though the union had waived its right to bargain, and we modified the initial policy based on Union objections. By contrast, the Union showed no flexibility in its position and now even denies that the labor management committee was a proper forum for such discussion. If anyone is guilty of bargaining in bad faith, it is the Union. We reached an impasse over this matter. Given that we were within our rights based on the other three reasons, described above, we chose to implement our last and final offer. As for the charge that we were evasive, the union infor- mation request was irrelevant (they can easily poll their own members to gauge their sentiment) and excessive (requiring an examination of all correspondence, phone message logs, and e-mails from all nurses to see which mentioned the flu policy). Management is not legally obligated to comply with overly burdensome or irrelevant information requests (Ethicon and Local 630, SEIU, Case 22-CA-089085, 360 NLRB 104, 2014). Yes, the date for implementing the new policy was moved. The flu doesn t wait for labor management negotiation procedures and when the current year s flu season appeared to be more severe than anticipated, we revised the timetable to implement it this year rather than wait a full year. We are not legally liable because a Union officer is offended that we didn t get his permission prior to doing our duty as a health care institution.

Relevant Contract Clause: Managerial Rights

The Union recognizes the right of the Hospital to operate and manage the Hospital, including but

CHAPTER 6 Negotiating the Labor Agreement 321

not limited to the right to require standards of per- formance and to direct the nurses to deter- mine the materials and equipment to be used; to implement improved operational methods and pro- cedures to discipline, demote or discharge nurses for just cause and to promulgate rules, regula- tions and personnel policies .

Questions 1. Analyze the arguments over whether the two parties

bargained. Did management bargain in good faith with the union over the policy? Did they bargain to impasse? If so, does that give management the right to unilaterally implement its last offer?

2. Was management required to develop this new policy by the CDC? Did that trump labor management relations considerations? Explain your reasoning.

3. Using a database (e.g., Bloomberg BNA s Labor & Employment Law Resource Center), look at the Peerless and First National Maintenance cases. Evaluate management s argument that the flu- prevention policy is a core business decision in light of those case decisions.

4. Was management required to take this case to grievance arbitration? Explain your reasoning, considering the other precedent cases cited and the Managerial Rights and Zipper clause.

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6- 4 Refusal to Furnish Requested Information

The current employer purchased the auto glass supply business from the previous employer two years ago. The current employer immediately granted recognition to the existing union representation and agreed to assume the terms of the existing labor agreement, which had two years until it expired. Approximately one month prior to the contract s scheduled expiration date, the parties began negotiating a new contract to replace the expiring one. During June and July, the two sides held four separate bargaining meetings, with the last meeting occurring on July 24.

Merit Pay Plan One of the key company propo- sals was a new merit pay plan which would allow the company, at its discretion, to pay individual bargaining unit members a pay rate above the minimum pay rate for the job classification established in the contract so long as the company did not decide merit raises in a discriminatory or arbitrary manner. At several bargain- ing meetings, the union requested that the employer furnish it with information about goals, objectives, and standards that would be used by managers to award merit pay increases. The company negotiator responded that the employer could not furnish the requested information because it did not exist. Under management s proposal all merit raises would be granted solely at the discretion of the manager in charge, negating any reliance on fixed standards for determining individual employee s merit pay outcomes. The union filed an unfair labor practice charge alleging

that the failure to provide the requested information regarding the merit pay proposal violated the employ- er s duty to bargain in good faith.

Health Care Benefit Proposal At the last bargain- ing meeting between the parties on July 24, the com- pany introduced a proposal that bargaining unit members would pay the same share or dollar amount toward the cost of health care benefits as similarly sit- uated nonbargaining unit members of the employer. The union s negotiator immediately requested that the company furnish the dollar amount currently contrib- uted by similarly situated nonbargaining unit employ- ees of the firm. The company s negotiator replied that nonbargaining unit employees current share of health care cost was 50 percent, but the employer retained the right to raise or lower this share at any time. The com- pany s negotiator indicated that he could not furnish the dollar amount of similarly situated nonbargaining unit employees because the dollar amount would depend on an employee s individual circumstances such as their health condition and the number of dependents. The company s attorney/negotiator did disclose the dollar amount that he currently paid for health care benefits provided by the company. Although the union s negotiator did not pursue the matter further during the July 24 meeting, in letters to the company dated August 18 and September 8, the union repeated its request for the dollar amount currently paid for health care benefits by similarly

322 PART 2 The Bargaining Process and Outcomes

situated nonbargaining unit employees. The company never supplied the requested information to the union. The union filed an unfair labor practice charge alleging the company s refusal to supply the requested informa- tion related to the company s proposed change in health benefit cost-sharing for bargaining unit mem- bers represents a violation of the employer s duty to bargain in good faith.

Information about the Company s Financial Condi- tion During several bargaining meetings the com- pany s negotiator suggested that the company was struggling economically with the downturn in the U.S. auto industry. During the July 24 meeting when management presented its final proposed settlement terms the company s negotiator stated, We are not going to be able to continue the business unless we make these changes. The union s negotiator asked the company to provide financial information to verify the company s claim that it was struggling to stay in business. The union repeated its request in letters to

the company on July 31, August 14 and 18, and Sep- tember 8. The company never gave the union any financial information about its current business opera- tion. The union filed an unfair labor practice charge alleging the company s refusal to supply the requested information related to the company s financial condi- tion represents a violation of the employer s duty to bargain in good faith.

Questions 1. Under what circumstances or for what reasons

could an employer lawfully refuse to furnish infor- mation requested by a union during contract negotiations?

2. Evaluate each of the three unfair labor practice charges concerning the company s refusal to supply requested bargaining information and decide if each charge represents a violation of the employer s duty to bargain in good faith.

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6- 5 The Mileage Reimbursement Policy

The employer is a newspaper publishing company that bargained in good faith to an impasse with the bargain- ing unit union representative. After reaching a good faith bargaining impasse the employer on January 1 uni- laterally implemented the terms of its final bargaining proposal which included the following policy: Article 4.01, General Pay Provisions Employees will be reim- bursed for mileage at the rate of 29 cents per mile, or the rate generally offered to other company newsroom employees if that rate is higher than 29 cpm.

The company notified the union via e-mail on June 13 that it had announced several driving and parking policy changes affecting nonbargaining unit personnel, which would take effect on July 1. Among the changes announced was an increase in the mileage rate from 29 to 32 cents per mile and a requirement that employees in each department provide the company with their driver license number and car license plate number.

Later on that same day the union responded by sending an e-mail to the company informing manage- ment that under Article 4.01 (described previously), bargaining unit employees should get the same increased mileage rate as was scheduled to be granted

to nonbargaining unit employees on July 1. The union noted that it had some additional questions and con- cerns about other aspects of the announced policy changes but would be willing to negotiate with the company over those concerns. The union also stated it was reserving the right to negotiate a mileage rate higher than 32 cents for bargaining unit employees if the parties ever returned to the bargaining table to resume contract negotiations.

On June 16 the company replied to the union via e-mail that Article 4.01 was a posted condition estab- lishing a waiver of union rights. According to the company, Article 4.01 gives the employer an unfettered right to increase or decrease the bargaining unit employ- ees mileage reimbursement rate as long as that rate is not reduced below 29 cents per mile. According to the company, labor law does not permit a unilateral change in bargaining unit members wages, hours, or other terms and conditions of employment without first bargaining with the union and obtaining its agreement to the change or bargaining in good faith to an impasse. The company indicated it would be willing to meet with the union for the purpose of negotiating a possible increase

CHAPTER 6 Negotiating the Labor Agreement 323

in bargaining unit members mileage rates or other related driving and parking policy changes.

The union responded to the company that it did not object to the company s right to enforce the lan- guage of Article 4.01 as written. Based on the clear language in the article, the union insisted that bargain- ing unit employees are entitled to receive the new higher mileage rate of 32 cents per mile beginning on the same date, July 1, that the new higher rate will be applied to nonbargaining unit employees. According to the union, any failure to grant the increase to bargain- ing unit employees as of July 1 would represent a vio- lation of the employer s duty to bargain in good faith.

The company did not grant the mileage increase to bargaining unit employees on July 1 or thereafter. The

company reiterated its willingness to negotiate with the union over the subject of granting a mileage increase to bargaining unit employees. The union filed an unfair labor practice charge alleging the company was in vio- lation of Article 4.01 and requesting bargaining unit members be made whole for any losses suffered due to the company s failure to raise the mileage reimburse- ment rate to bargaining unit employees as of July 1.

Question 1. Did the employer violate its duty to bargain in good

faith by failing to increase bargaining unit members mileage rate to the same level on the same date as such an increase was implemented for nonbargain- ing unit employees? Explain your reasoning.

324 PART 2 The Bargaining Process and Outcomes

CHAPTER 7

Economic Issues

FINALLY NEGOTIATIONS WERE complete. A new tentative contract settlement had been reached and tomorrow bargaining unit members would vote on whether to accept the proposed contract terms. Janice was proud of the way her union negoti- ating team had managed to stick with their fair but firm approach at the bargaining table. Initially management had pro- posed a number of wage and benefit reductions apparently on the assumption that employees would be afraid to say no because they were concerned about their job security in the midst of an economic recession. As union president, Janice was familiar with the difficult economic conditions confronting the company and her members, but she was also aware that signs of an economic recovery were beginning to appear. Since the parties labor agreement would remain in place for the next three years, the union bargaining team didn t want to focus on just economic data from the past year or projections for the next 6 12 months. The union wanted to consider the company s likely competitive position over the next three-year period. The union did not get everything it wanted but was able to persuade the company to moderate many of its cost reduction proposals. Employee costs for health care benefits would increase some under the new contract but coverage would remain the same. A wage freeze in the first year of the contract would be followed by a 3 percent annual wage increase in each of the remaining two years of the contract. The company had also agreed to invest $500 million in capital improvements over the term of the contract to bolster the com- petitive position of the firm. Janice was confident that the union had done a good job of explaining the bargaining outcomes to

325

its members and looked forward to a positive contract ratification vote tomorrow.

Questions 1. What are some of the difficulties likely encountered by negotiators

when trying to bargain today for contract terms that will be applicable in most cases for several years into the future?

2. Should managers have any bargaining goal other than minimizing labor costs when negotiating contract terms? If so, what might be an exam- ple of other such management bargaining goals?

3. Should one of the union s bargaining goals always be to ensure that the company will be able to operate efficiently and effectively or is this solely management s responsibility?

The ability to achieve economic gains in the form of higher wages and improved ben-efits is one important criterion workers use to gauge the effectiveness of a union. From an employee s perspective, the economic rewards from work largely determine his or her standard of living. When management adopts a goal of minimizing operating costs as a means of optimizing profits, this creates an inevitable conflict of interest between employees desire for economic gains and an employer s desire to minimize higher operating costs. This chapter discusses a number of factors that help to determine the economic terms of employment, as well as current wage and benefit trends and issues.

First, some context: Prior to the recent recession, the U.S. economy appeared to be among the best in the world, experiencing strong growth, low inflation, and a steady crea- tion of new jobs. Much of the increase in family net worth was attributed to gains in the stock market as nearly 18 percent of families owned individual companies stocks and 53.2 percent of families owned stock directly or indirectly through mutual funds and retirement savings accounts in 2007. The recession led many families to sell their stocks or mutual funds: In 2013, only 13.8 percent owned individual firms stocks and 48.8 percent owned stock directly or indirectly through mutual funds or retirement accounts.1 Although the 2007 2009 recession (and subsequent slow recovery) shook the economy, its fundamentals remained relatively strong, compared to other world economies. Even so, in 2009 2012, the average U.S. job seeker took nearly six months to find permanent employment almost twice as long as the 2003 2008 period.2 As with other recent recessions, job crea- tion tends to lag other economic indicators (leading some to dub the 2009 2014 period a jobless recovery).3 From 2000 to 2007, productivity rose an average of 2.6 percent annually, but between 2007 and 2014 it averaged only 1.4 percent annually; in manufacturing, the difference was even more dramatic: 3.7 versus 1.7 percent annual growth.4 Meanwhile, between 2004 and 2014 median family income remained flat.5 These economic data serve as reminders that economic conditions create an important context in which the labor relations process occurs. A vibrant economy allows unions to seek better wages for their members; in a sluggish economy, wages are typically stagnant and unions tend to focus

326

on other benefits, such as job security for members, skill training, and assistance in finding new jobs for those suffering layoffs.

From an employee s perspective, wages and other economic benefits paid in exchange for an employee s labor represent income necessary to attain or maintain a desired stan- dard of living. To an employer, wages and benefits typically represent a cost to be mini- mized; a government might view them as a source of potential tax revenue. Wages also serve as a factor in the allocation of human resources. For example, wages may influence an individual s selection of an occupation and his or her job mobility (movement from one firm, industry, or location to another). Wages influence managers decisions on plant loca- tion, investments in machinery and capital equipment, and employment levels. As wage and benefit costs rise, at some point it becomes more cost effective for an employer to invest in production or service delivery technologies that require less labor (e.g., automa- tion, robotics, drones). Thus, employees may price themselves out of certain labor markets where substitutes for labor are available to an employer at lower costs.

Wage and benefit issues represent mandatory subjects of bargaining, as discussed previously in Chapter 6. Under the Labor Management Relations Act (LMRA), union and management negotiators are required to bargain in good faith over subjects such as pensions, health care insurance, shift differential pay, overtime pay, job evaluation procedures used as a basis for determining pay, and incentive pay or profit-sharing plans if either party presents a bargaining proposal on such a topic during negotia- tions. Union and management negotiators spend many hours annually bargaining over wages and wage-related issues. This chapter focuses on the methods of wage determination and factors used by negotiators in determining the wage package wages and other economic benefits.

Union and management officials have to agree on what the term wages means before they can successfully bargain over this issue. For instance, wages may refer to an employ- ee s base hourly wage rate (without considering factors such as shift differentials or longev- ity pay). It may refer to average gross hourly earnings in a given year, average weekly earnings, or incentive pay (payment per product completed). Basic wage rates for each job class are usually listed in the labor agreement; however, other wage payments (over- time, incentive pay, shift differentials, and other compensation earned in the regular work- week) may have to be computed in accordance with provisions in the labor agreement.6

After agreeing on the language for the basis of wage negotiations, the parties consider vari- ous factors in determining specific wage rates for different jobs or wage ranges covering different job classes.

Industrial Wage Differentials

The existence of wage differentials among individuals, jobs, industries, or geographic regions can be explained in a variety of ways. However, any explanation must consider the interrelationships between labor and capital as factors of production and as contribu- tors to productivity. Jobs with varying duties and responsibilities are often assigned dif- ferent wage rates. Besides these occupational wage differences within a firm, there are regional, industry, and shift differences that may affect an employee s wage rate. Retail employees in the South generally earn less than those in the North; electricians and laborers in the building trades generally have higher wage rates than electricians and laborers in manufacturing firms. Industrial wage differentials may be explained in terms of three interrelated factors: (1) the degree of competition or monopoly in the product market, (2) the value added by workers in a particular industry, and (3) the percentage of total costs that labor costs represent.

CHAPTER 7 Economic Issues 327

Competition in the product market. First, if a firm has a monopoly or near monopoly (the product is essential, with no or few available substitutes), then increased labor cost can easily be passed on to the consumer by raising the product price. In such cases, the employer may accept higher wages in negotiations because higher labor costs do not necessarily adversely impact the firm s competitiveness or profit margins. Conversely, many firms today that are affected by global competition in their product or service markets find it increasingly difficult to simply pass along increased labor costs in the form of higher product or service prices unless other competitors are also absorbing similar labor cost increases. Nonunion or foreign competitors are unlikely to pay compensation terms equal to or greater than those terms required under union labor agreements. Under highly competitive market conditions, unionized employers must bargain harder to ensure that labor cost increases do not force higher product prices that might make the firm less price competitive. In industries where employers face fewer competitive threats, wages tend to be proportionately higher. Value added by employees. The term value added refers to the contribution of fac- tors of production to the value of a final product. Comparing the value added by labor s contribution in different industries helps to explain industrial wage differen- tials. For example, the value added by labor in sawmills, cotton weaving, clothes manufacturing, and the mobile home industry is significantly lower than corre- sponding figures in the steel, petrochemical, and paper industries.7 However, because employees must use machines, which represent capital investments, and because such a close interrelationship exists between labor and capital investments in machinery and equipment, exact determination of labor s contributions has become a complicated process. It is often difficult to accurately measure the value added by an individual employee when that person functions as part of a team or performs only one or a few tasks required to create the final product or service delivered to customers. In unionized settings, negotiations between union and man- agement representatives ultimately determine the amount of value added attributed to labor. Labor costs as a percentage of total costs. A firm s degree of labor intensiveness, a measure of the proportion of total operating costs comprised of labor costs, must also be considered in determining employee wage rates. More labor-intensive organiza- tions, such as health care facilities, professional sports, and government, have high labor costs in relation to total costs. Any upward adjustment in labor costs will have a bigger impact on such a firm s competitiveness when compared with the effect on a less labor-intensive firm that may grant an equal size increase to their employees. Less labor-intensive firms, such as petroleum refining, chemical, and electricity-generating firms, can afford to offer relatively high wage and benefit levels because fewer workers are employed. Thus, labor costs have only small effects on the firm s total operating costs and have less impact on the firm s competitiveness.

Usually, firms with a high ratio of labor costs to total costs are more likely to resist wage increases in contract negotiations than less labor-intensive firms. For example, if a hospital where labor costs are 60 percent of total costs grants a 10 percent wage increase, it must raise prices about 6 percent to cover the cost increase. A petroleum refining plant where labor cost is only 5 percent of total costs would only have to raise its price about 0.5 percent to cover a similar 10 percent wage increase. If competitive conditions pre- clude or limit an employer s ability to raise product prices, the wage increase cost must be funded from other sources, such as firm profits; cost savings from other operating areas (e.g., finance, marketing); higher labor productivity; finding more cost-effective

328 PART 2 The Bargaining Process and Outcomes

ways to employ less labor (e.g., outsourcing, new technology); or some combination of these strategies. Nonetheless, the relation of labor cost to total cost can be an important factor in explaining differences in wages for similar jobs across different employers or industries.

Occupational Wage Differentials and the Role of Job Evaluation and Wage Surveys

Within a company or industry, maintaining rational and fair wage relationships among various jobs is important. These relationships are often maintained using a job evalua- tion program, but in other cases, they are determined by individual or collective bar- gaining. Job evaluation is a systematic process for defining the relative worth of jobs within an organization in order to establish internal relativities [relative pay] and provide the basis for designing an equitable [pay] grade structure. 8 By identifying the level of knowledge, skills, and abilities needed for various jobs, as well as working conditions, it is possible to determine the relative pay of jobs to each other. For exam- ple, a hospital might do a job evaluation and determine that ambulance drivers should be paid 20 percent more than emergency room nurses because, although they do simi- lar duties, ambulance drivers may do the same tasks under more difficult conditions; also driving at high speeds in traffic may warrant slightly higher pay. The process of determining the relative importance of each job to the organization helps in under- standing occupational wage differentials; therefore, the following steps in a job evalua- tion program are presented.9

Evaluating Jobs within the Organization Before conducting a job evaluation program, an organizational analysis should be con- ducted to evaluate the organization s objectives, structure, and authority and responsibility relationships. The findings from this analysis help ensure that the job content is up to date.

The organization then selects and measures the job factors that are found at least to some extent in all of the organization s jobs. Job factors typically include skill (education and training), effort, responsibility (for people, budgets, and equipment), and working conditions (hazards, surroundings), although job factors can vary substantially depend- ing on the type of organization. Management must consider the minimum amount of each job factor or qualification necessary to adequately perform a particular job. For example, it may be nice to employ a typist who can edit, interpret, and make complex economic subjects understandable, but few organizations can find or are willing to pay wages needed to attract such a qualified person.

Next, an appropriate job evaluation system for appraising jobs according to the established job factors is selected.10 Three common job evaluation methods used are (1) ranking, (2) classification, or (3) a point system. The ranking method compares jobs non-quantitatively in terms of each job s relative value to a firm s success, ranking jobs from most valuable to least valuable; higher ranked jobs get higher pay levels. The classification method groups jobs into categories, with each classification being assigned a range of pay (sometimes called a pay grade ). Thus, welders might be classified into different classifications based on the type of gasses they are certified to use, the type of surfaces they must weld, or the type of welds they are required to do. Regardless of how the classifications are created, each classification might have a pay range (e.g., $15 20 per hour; $21 25 per hour; and $26 30 per hour).

CHAPTER 7 Economic Issues 329

The point-system method compares jobs to pre-determined, weighted, numerical rating scales designed to measure each job factor. A job evaluation system may use 10 to 15 different job factors, with these factors often divided into subfactors; for example, effort may be divided into physical and mental effort. Each job is assigned a certain number of points for each job factor. Suppose that a hospital uses 10 factors (e.g., lifting, specialized knowledge) to measure its jobs. In this example, the job of ambulance driver/ paramedic gets a total of 840 points, the job of Emergency Room Nurse gets 700 points, and the job of Doctor gets 2,520 points. Ignoring market factors and going strictly by the point-system job evaluation method, the ambulance driver/paramedic should receive 20 percent more in pay that an Emergency Room Nurse and should be paid one-third of what a Doctor receives.

The basis of job evaluation is job analysis, which is a process of systematically securing information and facts about what employees do in various jobs. Job analysts use questionnaires, observation, and interviews with job incumbents and their supervi- sors to gather data about what employees are supposed to do on specific jobs.

Job analysis is a foundation for several Human Resource activities. One is job evalu- ation: By understanding what employees duties are in various jobs, HR managers can better determine how to assign pay for those jobs. Another is performance appraisal: After learning what people are supposed to do on the job, an HR manager can design performance appraisal measurement systems to determine how well the employees are actually fulfilling their duties.

Information gathered from a job analysis is used to formulate job descriptions and job specifications. A job description is a written summary of a job s duties and respon- sibilities. A job specification includes the personal characteristics, licenses, and educa- tional background that an employee must possess to successfully hold a given job. Both job description and job specification documents can aid manager as they seek to hire well-qualified individuals from among job applicants or defend a legal challenge to a hiring decision. Both are also used in the job evaluation process. As firms try to relate wages to various degrees of duties and responsibilities, they must also pay more to hire employees who have the higher qualifications in education, training, and skills needed for those jobs with greater responsibilities.

Lawler has noted that as work structures continue to be altered and employees job responsibilities become more varied and complex, it becomes increasingly difficult and perhaps less relevant to focus compensation systems solely on an analysis of job titles as opposed to focusing on the contributions of individuals or teams that actually perform those jobs.11 Some combination of job-based evaluation and individual or group-based performance evaluation may provide a more comprehensive compensation system designed to enhance the competitiveness of the firm and employees perceived equity in the effort reward exchange between the individual and the organization.12

Should management include the union in the job evaluation process? Management often prefers to conduct its job evaluation independently of the union. Management may prefer not to share its weightings of job factors, particularly when it believes cer- tain factors (such as training, skill, and responsibility for equipment) should receive more compensation than others. Excluding union participation in the job evaluation process may reduce the time required to complete the process; however, subsequent application of job evaluation results may generate grievances that then must be resolved on a case-by-case basis. Some companies seek to encourage union participa- tion in the job evaluation process, both to benefit from the insight of workers who actually perform different jobs and to increase the acceptance of the results of job eval- uation by bargaining unit members.

330 PART 2 The Bargaining Process and Outcomes

Union Perspectives Some union leaders view job evaluation with disfavor because it tends to limit bargaining and freeze the wage structure.13 Unions prefer to establish wage scales through collective bargaining where both internal and external labor market factors can be considered in determining the value or worth of a job. Although unions reserve the right to file grie- vances to resist or express dissatisfaction with job evaluation results, they seldom show strong opposition. Unions are likely to object if their firms attempt to use job evaluation as the sole criterion for wage determination or try to use job evaluation as a substitute for collective bargaining.14 Some union leaders regard job evaluation techniques as a use- ful guide in negotiating wages and a means to more effectively explain the negotiated wage settlement outcome to their members.15

Regardless of the job-evaluation method used, the objective is to develop a wage structure that prices jobs with less skill, effort, and responsibility at lower wage rates than jobs with greater skill, effort, and responsibility. Exhibit 7.1 presents an example of a wage structure for a firm that includes job titles, labor grades, job evaluation point ranges, and starting wage rates for each labor grade. Because a numerical score should indicate the relative value of the job, the greater the score, the higher the labor grade and the hourly wage rate.

Surveys to Compare Firms Wage Structures Wage surveys are conducted to ensure that external labor market considerations, such as comparable wages, are included in the wage structure. Such a market-based approach has become an increasingly important determinant of wage rates in many firms.16 Although firms attempt to rationalize their wage structure internally through job evaluation, they must also maintain competitive wages externally to ensure that the firm can recruit and retain qualified employees. Usually a wage analyst either visits, sends a questionnaire, or conducts a telephone interview with the wage analysts of similar organizations to obtain

Exhibit 7.1 Typical Wage Structure for a Manufacturing Firm Job Title Labor Grade Points

Starting Hourly Wage Rate

Janitor I 200 249 $10.86

Material handler II 250 299 12.96

Shipper III 300 349 14.34

Tool room keeper IV 350 399 15.24

Machinist B V 400 449 15.60

Maintenance worker VI 450 499 17.16

Mechanic VII 500 549 17.40

Painter VIII 550 599 18.96

Carpenter IX 600 649 19.92

Truck driver X 650 699 20.62

Electrician XI 700 749 23.63

Tool and die maker XII 750 799 23.90

Machinist A XIII 800 849 25.19

SOURCE: Adapted and updated from Collective Bargaining Negotiations and Contracts (Washington, DC: Bureau of National Affairs Inc., 1992), p. 18:331.

Economic Issues 331CHAPTER 7

current wage rates for comparable jobs.17 Some trade or professional groups conduct annual wage surveys among their member firms and share the information with partici- pating firms. Unions often conduct independent wage surveys as part of their prepara- tion for collective bargaining.

The U.S. Department of Labor also periodically conducts area wage surveys and publishes the results.18 Two of these publications are the National Compensation Survey (NCS) and the Occupational Pay Relatives (OPR) survey, which provide wage data by occupation for different geographical areas. The OPR survey covers a larger number of geographical areas and provides information on the relative pay differences between spe- cific occupations in those locations. The NCS survey provides more detailed information about specific occupations based on the duties and responsibilities of the job (e.g., knowledge, complexity, scope of responsibility).

The party conducting the survey provides the responding firms with titles, descrip- tions, and specifications of the jobs in the wage survey. Participating firms supply the starting wage rate and the economic benefits paid to individuals in these job classifica- tions (Exhibit 7.2). After the wage survey is complete, the firm must determine how the data will be used. For example, does it want to lead the industry, compete with a specific competitor, or pay the industry average? The final wage plan should contain a certain number of job classes; wages for each job class; wage ranges (from starting to top wages) for each class; policies and procedures for wage adjustments (seniority, merit, etc.); procedures for job changes to a different class, including temporary job changes; procedures for dealing with jobs that pay above or below their wage range; and a policy on union involvement.

Production Standards and Wage Incentives Unions and management sometimes negotiate provisions in the labor agreement that cover wage-related issues such as production standards, time studies, and wage- incentive payments. Production standards refer to the expected employee output that is consistent with workmanship quality, operational efficiency, and reasonable working capacities of normal operators. These standards are often determined by analyses of the time and motions of workers on a job, and the resulting standards are used to assess performance and determine the wage incentives for individual employees or groups of employees. For example a mason working with twelve-pound concrete blocks may be expected to meet a production standard of laying 180 blocks per day.

Exhibit 7.2 Typical Results from a Wage Survey

Firms

Job Title A B C D E F Average Wages

Janitor $11.00 $11.25 $11.75 $11.80 $12.00 $12.20 $11.67

Assembler 11.00 11.60 11.30 11.70 10.90 11.30 11.30

Shop clerk 12.00 11.00 11.75 11.25 11.40 11.60 11.50

Welder 15.60 15.30 15.00 15.00 15.30 15.60 15.30

Electrician 16.50 17.00 17.50 17.00 16.75 17.25 17.00

Tool and die maker 19.00 18.00 18.75 18.25 18.50 18.50 18.50

Machinist 20.00 19.50 19.00 19.75 19.25 18.50 19.33

332 PART 2 The Bargaining Process and Outcomes

Performance standards that are not accepted as realistic by both labor and manage- ment can be demoralizing and adversarial when used to determine workers pay.19 Unre- alistically high performance standards will ensure lower performance ratings for many workers, thereby reducing pay and motivation levels. Unrealistically low performance standards will ensure that many workers easily meet or exceed work requirements, encouraging some workers to slack off during remaining scheduled work hours and discouraging workers from seeking to improve performance beyond the established norm. Performance standards also should be periodically updated to reflect changes that occur in materials and methods used to perform job tasks.

Typical Contract Provisions When incentive wage plans are negotiated, the structure and design are included in the contract, although specific details may not be included. Contract language defining the role of the union in setting and challenging production standards and wage rate changes and its right to be consulted on related issues is also usually included. Some contracts include provisions about time studies and the involvement of unions. A small number permit a union observer during the time study, and a few provide special training for the union time study representative. Other provisions include procedures used for timing an employee, specification of the meaning of typical employee, advance notice to the employee holding the job being studied, and specification for fatigue and personal allow- ances in setting production standards.20

Although wage incentive plans such as piece-rate pay, profit sharing, and gain shar- ing, (described below) vary in structure and specific content, their goals are essentially the same: (1) to increase employee productivity, (2) to attract prospective employees to the company, and (3) to reward employees monetarily for their increased productivity. Such wage incentive plans are used with both white-collar and blue-collar workers, although for white-collar workers, the performance measures are broader and the span of time in which performance is measured is longer, relative to blue-collar workers. A typical piece- rate individual wage incentive plan is one in which employees are paid for the number of pieces or jobs completed. Other incentive plans pay bonuses or premiums to employ- ees for production above the standard. Many varieties of incentive plans exist, but all are similar in concept.

The majority of production employees are paid an hourly wage rate. A major reason for an hourly based compensation plan is that many production jobs are machine paced, so employees have limited control over the pace of work and thus the number of items produced during scheduled work hours. Many companies and unions have investigated the additional use of various incentive pay plans as a way to stimulate employee produc- tivity. Increased interest in incentive plans has resulted from increased foreign and domestic competition, adoption of various employee involvement (EI) and total quality management (TQM) practices, heightened interest in labor management cooperation, and employer efforts to obtain wage concessions from unions.

A sample of employers involved in negotiating recent labor agreements reported that 15 percent of all employers offered incentive pay plans. The following incidence of incentive or variable pay plans were offered in their current contracts: individual incen- tive plan (13 percent), profit-sharing plan (8 percent), group incentive plan (4 percent), and gain sharing plan (1 percent).21 These plans were much more common in manufacturing, with 36 percent of all manufacturing firms with labor agreements offer- ing such plans, including individual incentives (36 percent) and profit sharing (21 per- cent). Although companies tend to report that plans such as profit sharing, employee stock ownership, gain sharing, skill-based pay, team incentives, and open pay

CHAPTER 7 Economic Issues 333

information are successful, evidence is less clear over the ability of such plans to sustain initial improvements in productivity and pay satisfaction over time.22 These types of plans are described more fully below.

Employees may not be as enthusiastic about reward-incentive plans as employers. A survey of 1,500 employees reported that most workers preferred rewards based on indi- vidual performance, rather than team, group, or company performance, and preferred to receive rewards in the form of a base pay rate increase rather than a one-time, lump-sum bonus or incentive payment.23 Lack of employee support along with previously men- tioned employer concerns have led to a slowdown in the rate at which companies are adopting reward incentive plans.

Profit-sharing plans cover between 6 and 27 percent of employees in most industri- alized countries. Why are these plans widespread in some countries but not others? Gov- ernment tax policies often encourage the adoption of such plans.24 Between 15 and 20 percent of U.S. firms have a profit-sharing plan, although larger firms are more likely to participate.25 Plans typically provide an annual cash payment or some payment into a pension plan. Most U.S. and international labor organizations today do not oppose profit sharing and other incentive systems as a matter of general policy, although oppo- sition may arise in the context of negotiating a specific labor agreement.26

Of course the value of contract language establishing a profit-sharing plan is depen- dent upon a company s profit level. In 2005, union-represented employees at Ford Motor Company received average profit sharing of $600; however, they received no profit- sharing checks from 2006 to 2008 due to a severe recession adversely affecting Ford s profits.27 In 2009, Ford became the first of Detroit s three U.S. auto companies to return to profitability, enabling 43,000 union-represented Ford Motor Company employees to receive profit-sharing checks averaging $450 each. Subsequently, Ford maintained steady profits with a gradually increasing workforce: In 2014, the firm posted a net income of $3.2 billion, providing about 50,000 hourly United Auto Workers (UAW) union mem- bers with profit-sharing checks averaging $6,900 each.28 Profit-sharing payouts under UAW contracts are based on a formula that takes into consideration company profits, productivity gains, and the firm s market share.

Profit sharing does have some management critics. First, some are concerned that union participation in profit sharing could lead to more union influence on other major management decisions beyond just wages. Second, a costly profit-sharing plan could drain company funds that could otherwise be used for capital improvements or research and development. Third, although initial firm performance gains may occur after the adoption of a profit-sharing plan, this positive effect appears to dissipate fairly quickly over time; the bulk of the research suggests that the average employee is not motivated to maintain a high level of productivity simply because the firm shares its profits.29

In a group incentive or gain sharing plan, companies make monetary payments to a specific group or groups of employees for producing more output or generating cost sav- ings beyond some established goal. Incentives may include group bonuses, group piece rates, profit sharing, production sharing, and cost-reduction sharing. In some cases, plans may be limited to a few employees, to specific departments, to other organizational divisions, or extended to cover the entire company workforce. Although group incentives aim to increase production and reduce costs, they are also designed to increase team- work, provide greater job security, and achieve acceptance of new technology.

Many national unions adopt a neutral position toward gain sharing plans, preferring to allow local unions to address such proposals on a case-by-case basis.30 Union leaders may be wary of including gain sharing plans as part of wage negotiations out of concern

334 PART 2 The Bargaining Process and Outcomes

that management might tend to treat such plans as a substitute for traditional, negotiated hourly wage improvements during a contract s term. It may be easier to adopt gainshar- ing or other variable incentive plans if such plans are negotiated in addition to, rather than instead of, traditional straight-time hourly wage improvements.

There are a variety of group incentive plans. One of the most popular is the Scanlon plan, a group plan for sharing labor cost savings that was developed by former union leader Joseph Scanlon in the late 1930s.31 A Scanlon plan provides bonus payments based on a computed ratio of total labor costs (TLC) to total production values (TPV), which typically equal monthly sales, plus or minus inventory adjustments. A reduction in the ratio would be a labor cost savings. For example, if the employees were to reduce costs by working harder, producing more efficiently, and reducing wastes, and the TLC/ TPV ratio declined from 50 to 40 percent, the 10 percent labor cost savings would be shared with the employees.32

The Rucker plan is based on a change in the ratio between labor costs and dollar value added. The value added equals sales less purchased materials. Under this plan, if employees lower the ratio between labor costs and dollar value added, the productivity gains are shared. Under both the Scanlon and Rucker plans, employees receive between 25 and 75 percent of the available bonus pool, which is often distributed in the form of a percentage of each employee s hourly wage.33

The term improshare plan is derived from improved productivity through sharing. 34 Improshare productivity measurements use traditional work measurement standards for a selected base period. A monetary reward is granted whenever the number of labor hours required to produce the output during a measured period (e.g., week or month) is less than the number of hours required during the base period. Both blue- and white-collar employees are typically included in an improshare plan, and all participants share equally in the bonus pool created. A study of improshare programs in 34 union- ized companies showed an average productivity gain of 26.9 percent after the first year, whereas the average gain for 38 nonunion plants was 21.5 percent.35 Another study of 112 firms that had introduced improshare found that the median increase in productiv- ity in the first year was 8 percent and that cumulative productivity gains had risen to 17.5 percent by the third year, after which productivity gains leveled off.36

Although originally designed for application in an industrial environment, gainshar- ing programs are also applicable in service organizations such as health care.37 A review of several studies reports that gainsharing and profit-sharing plans generally provide a sustainable 3 to 6 percent increase in productivity.38 Keys to the successful implementa- tion of alternative reward systems in a unionized firm include (1) developing a coopera- tive relationship between union and management, which is based on genuine mutual trust and respect for each party; (2) involvement of the union in the development and implementation of the reward system; (3) effective communication of the program to covered employees; (4) flexibility to adapt the reward system to operating conditions and changing business needs; and (5) establishment of realistic achievable goals, particu- larly with respect to group incentive plans.39 Employees ability to understand the goals of a reward system and how those goals were established, how the attainment of plan goals will be measured, and how payouts are determined have a strong effect on covered employees perceptions of both procedural and distributive justice under a reward system.40

Group incentive programs are based on the assumption that by linking earnings to performance, employees will adjust their efforts to optimize income. Because bonuses are tied to group effort, employees should have more incentive to work cooperatively. Con- siderable evidence suggests that the combination of employee participation programs and

CHAPTER 7 Economic Issues 335

group incentive programs can exceed the gains made by either program alone. Employees have little incentive to share their performance-enhancing ideas with management with- out corresponding rewards. In addition, employees with no participation in decisions cannot respond effectively to such incentive programs. A union can provide more direct and open channels of communication for a collective voice in decisions, thus enhancing employee input. Contract language with rigid wage classifications and a confrontational negotiating style may inhibit cooperation and employee response to reward incentives. Thus, in general, unionized firms may provide an environment more conducive to employee participation because of the collective bargaining process, but nonunion firms may have an environment more conducive to implementing group incentive programs.41

One additional alternative reward plan that has received attention in recent years is skill-based pay (SBP).42 Rather than setting base pay on the job an employee performs, SBP systems base compensation on the skills or knowledge an employee possesses that are valued by the employer. Sixty percent of Fortune 1000 firms report using SBP, although it typically applies to less than 20 percent of employees in a firm.43 Changes in operating methods or the introduction of new technology requir- ing employees to acquire new skills or enhance existing skills may serve as an impetus for adopting an SBP plan. A proliferation of different job classifications may be reduced by grouping employees into a smaller number of skill blocks. Skill blocks can be defined based on natural work groups (e.g., assembly, painting), a set of exist- ing job classifications, normal skill progression within a particular trade (e.g., welder), or teams. Each block has a defined set of skills, and employees can acquire skills through training and work experience both within a block and in preparation to qual- ify for a different skill block. An SBP plan encourages a more flexible labor force, enhances employee skills acquisition, and aids a company in adapting to a changing competitive environment.44

SBP plans can be successfully implemented in a unionized company as demon- strated by such firms as GM, Ford Motor Company, AT&T, Corning, Maxwell House, and Harley-Davidson Motor Company.45 Establishing the initial composition of skill blocks, determining individuals access to training opportunities, and creating an appeals procedure for handling disputes over the administration of the plan are key issues affect- ing the success of SBP plans. Union representatives may initially prefer to handle the implementation of an SBP plan as a trial project governed by a negotiated memorandum of understanding separate from the parties negotiated labor agreement. An SBP plan is typically one part of a broader effort to introduce work-practice changes to enhance a firm s competitiveness. As with the introduction of other alternative reward systems, union involvement in planning, implementing, and administering an SBP plan can help to ensure employees acceptance of the plan and attainment of the plan s potential benefits.

Wage-Setting Criteria: Arguments Used by Management and Union Officials in Wage Determination Union and management representatives recognize that no single causal factor determines wage outcomes; however, both parties will use any identifiable factor to support their arguments for or against a wage increase. Related factors often used to bolster wage claims include (1) differential features of the work performed (usually determined by job evaluation), (2) wage comparability (external market-based pay), (3) the employer s ability to pay (financial condition of the organization), (4) productivity, (5) cost of living, and (6) legal requirements.46 Union and management officials do not always favor the same criteria for wage determination. Moreover, each may emphasize different criteria

336 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION Living Wage Ordinances: What Are They? What are Their Effects?

The Fair Labor Standards Act of 1938 established a federal minimum wage, and states also have passed minimum wage laws. The purpose of the federal minimum wage, as articulated in the FLSA, is not to eliminate poverty per se, but rather to eliminate wage standards that are so low that they are harmful to workers and to the economy.a

Because a person earning the federal minimum wage does not earn sufficient funds to provide for a family, some municipalities have implemented their own Living Wage ordinances. These require wages that are higher than the typical minimum wage because living wage ordi- nances are designed to allow a breadwinner to support a family, not merely provide a floor for wages.

Among the first cities to pass such an ordinance was Baltimore. Currently over 100 U.S. cities and coun- ties have such ordinances. Living wage advocates note that under the current federal minimum wage, a person makes approximately $15,100 about $9,000 below the federal poverty level (for a family of four in the 48 con- tiguous states in 2015, the poverty level was $24,250). By contrast, the median wage of working families was over $51,000 in 2014.b Thus, such ordinances seek to bring workers at least up to the federal poverty level, and in some cases, lift families well above that thresh- old so that basic needs for a quality urban life (e.g., transportation, clothing, utilities) are met. Unions have generally been advocates of living wage ordinances. Some members favor such ordinances as a way to get people off of welfare and to reduce the demand for pub- lic social services. However, these ordinances find the greatest welcome in communities where the majority of the citizens are politically left-leaning, favoring the redis- tribution of wealth, and citizens are willing to bear the costs (higher taxes, higher prices) necessary to facilitate this redistribution to alleviate high local poverty rates.c

The scope of living wage ordinances varyd: Some apply only to municipal employees; some apply only to private firms doing business with the municipality. In some cases, the laws specifically prohibit subcontract- ing municipal employees work to private firms such clauses were probably sought by municipal employee unions. Other laws apply to construction workers work- ing on municipal construction projects through Project Labor Agreements (PLAs) and often contain other pro- visions, such as using only union labor and buying cer- tain raw materials from U.S. and/or unionized factories; PLAs have been criticized as stifling competition.e In some cases, the law applies to all private-sector employees above a certain threshold in terms of the

number of employees on their payroll. Among this last group is Seattle, Washington which passed a law phas- ing in a $15 per hour minimum wage for private-sector businesses. However, in Seattle, not all public-sector agencies are required to raise their workers wages.f

What are the consequences of living wage ordi- nances? Economists debate whether these laws help more low-wage workers (because compensation is higher) or hurt more low-wage workers (because some workers may be laid off, and everyone may pay higher taxes). Research on the minimum wage often reports that lower minimum wages are associated with lower unemployment, particularly for younger, less-educated workers; presumably research on living wage ordi- nances will reveal similar effects.g However, one study concludes that job losses are smallh and another reports that for most firms, the added wage costs are less than 2 percent of a firm s operational costs.d Many econo- mists remain skeptical because such ordinances com- press the local wage structure and distort the natural laws of supply and demand which would otherwise determine the wage levels for various jobs.i Others assert that some businesses (and customers) simply relocate to (or shop in) suburban communities to avoid paying the higher wages; firms that stay in the commu- nity often raise prices to cover higher labor costs, trig- gering a round of inflation that hurts the very low-wage workers that the ordinances were designed to assist.j

There are other effects. One study reports, not sur- prisingly, that turnover decreases among workers who benefit from the living wage.i When businesses at the San Francisco Airport were required to pay living wages, absenteeism, turnover, and disciplinary problems decreased.k Another study shows that a side benefit of living wage laws is that property crime (e.g., theft) decreasesl which is consistent with other research show- ing that, if a living wage ordinance affects a large seg- ment of the working poor, then poverty generally decreases.d Finally, unions often benefit: By actively campaigning for living wage ordinances, they give the working poor the impression that unions care about their well-being. Workers who might not otherwise be inter- ested in joining unions become more receptive, and unions have won several organizing campaigns.m

In conclusion, living wage ordinances appear to benefit the low-wage workers who are covered under the law. However, employers often raise prices to cover these wage increases, which may adversely affect other low-wage earners. Thus, for the law to

(Continues)

337

at different times. During prosperous times, unions tend to emphasize the employer s ability to pay. During recessions, management may emphasize its poor financial position as a reason to justify a wage cut, freeze, or lower rate of increase than in past contract negotiations. Similarly, during periods of rapid inflation, unions emphasize cost-of-living adjustments. When prices are stable, management places much weight on the lack of necessity for cost-of-living adjustments.

Pressure from domestic and international competition has reduced management s ability to simply pass increased labor costs on to the customer in the form of higher prices for goods and services. This has caused employers to place more emphasis on operating efficiency, cost-cutting measures, and productivity improvement. During diffi- cult economic times, employers tend to de-emphasize industry wage patterns and focus more attention during wage negotiations on their firm s specific labor costs, expected profits, and labor market conditions. Because increased global competition has led some firms to cut costs, some cities have enacted Living Wage ordinances, designed to insure that workers earn enough to support their families. These ordinances are discussed in the appropriate Labor Relations in Action box.

Differential Features of the Work: Job Evaluation and the Wage Spread

The job evaluation process described previously can influence the wages assigned to var- ious job classifications in an organization. The relative influence of job evaluation can be seen in the wage spread, which represents the internal distribution of the proposed or negotiated wage increase to the bargaining unit employees (Exhibit 7.3).

The six employee job classifications in Exhibit 7.3 range in skill and pay from Classification A (highest) to Classification F (lowest), which conform to the results of

have its desired effect, it probably needs to be broad enough in scope that it covers most low-wage workers in the municipality. Even then, the distortions away from supply demand theory may create unintended conse- quences, such as businesses moving to the suburbs or some employers laying off some workers. Thus, while a blessing, one cannot conclude that these laws are an unmixed blessing.

SOURCES: aBruce E. Kaufman, Institutional Economics And The Minimum Wage: Broadening The Theoretical And Policy Debate. Industrial & Labor Relations Review 63(3), 2010, pp. 427 453. bAmy K. Glasmeier, Living Wage Calculator, March 24, 2014, at http://livingwage. mit.edu/ cSuzanne Clain, Explaining the Passage of Living Wage Legislation in the U.S. Atlan- tic Economic Journal 40 (3), 2012, pp. 315 327. dVictor Devinatz, The Significance of the Living Wage for US Workers in the Early Twenty-First Century Employee Responsibilities & Rights Journal, 25 (2), June, 2013, pp. 125 134.

eAssociated Builders and Contractors, the Truth about Project Labor Agreements, 2015, at http://thetruthaboutplas.com/get-the-truth/ fDan Springer, Seattle Minimum Wage Increase takes Effect and Eating Out gets more Expensive, Fox News [online], April 2, 2015, at http://www.foxnews.com/ politics/2015/04/02/seattle-minimum-wage-increase-takes-effect-for-tens-thousands- workers/ gLewis F. Abbott, Statutory Minimum Wage Controls: A Critical Review of Their Effects on Labour Markets, Employment & Incomes (Manchester, England UK: Industrial Sys- tems Research, 2012). hRichard Freeman, Fighting for other folks wages: the logic and illogic of living wage campaigns, Industrial Relations, 44, 2005, pp. 14 31. iS. Adams and D. Neumark, The economic effects of living wage laws: a provisional review, Urban Affairs Review, 40, 2004, pp. 210 245. jAaron Yelowitz, Citywide minimum wage hikes do more harm than good, Economic Policies for the 21st Century at the Manhattan Institute, Nov. 4, 2014, at http://www. economics21.org/commentary/citywide-minimum-wage-hikes-do-more-harm-good. kM. Reich, P. Hall, and K. Jacobs, Living wage policies at the San Francisco Airport: impacts on workers and businesses, Industrial Relations, 44, 2005, pp. 106 138. lJose Fernandez, Thomas Holman, and John V. Pepper, The Impact of Living-Wage Ordinances on Urban Crime, Industrial Relations: A Journal of Economy and Society 53(3), 2014, pp. 478 500. mS. Luce, Fighting for a living wage (Ithaca: Cornell University Press, 2004).

338

management s job evaluation procedure. Management would generally prefer the wage spread in example 2. It gives more highly skilled employees a higher hourly wage increase, which could maintain or increase their wage differential over less-skilled employees, while at the same time utilizing fewer employee classifications than example 1, which simplifies administration of the pay system. Maintaining this wage differential is important to man- agement for two reasons: (1) It helps ensure that current skilled employees do not leave because of higher wages offered by other firms and (2) it offers some motivation to employees in lower paid classifications to train for higher skill-level classifications within the company.

Unions support the job evaluation principle that highly rated jobs should receive a higher rate of pay than lower-rated jobs. However, job evaluation ratings are not the only factor unions believe should be considered in determining the size or amount of wage improvements. One concern of union negotiators (which should be shared by manage- ment) is to ensure that the negotiated wage spread will result in sufficient votes by bar- gaining unit members to ratify the proposed labor agreement. Satisfied union members will also enhance a union leader s re-election prospects. Assume, for example, that Clas- sification C in Exhibit 7.3 represented a politically influential group of employees. To satisfy this important group of bargaining unit constituents, union negotiators might prefer the wage spread illustrated by example 1, which grants Classification C employees a 48 cents-per-hour wage increase, or example 3, which grants a 47.2 cents-per-hour increase, rather than management s preferred wage spread (example 2), which only grants classification C employees a 44 cents per hour increase. The union might even propose a different wage spread that would give the employees in Classification C a much higher wage increase.

To encourage employees to ratify a tentative contract agreement and foster employ- ees perception of equity in wage adjustment, management might agree to an across- the-board increase to all employees regardless of their job classification. Granting an equal cents-per-hour increase in wages to all bargaining unit employees has the effect, over several contract renegotiations, of narrowing the wage spread between differently rated job classifications. If the wage spread narrows too much, management could

Exhibit 7.3 Three Examples of Internal Wage Spreads

Example Number of Employees

Employee Classification

Percentage of Plant s Total Employees

Increase in Cents per Hour

1 184 A 16 57.0

197 B 18 50.0

165 C 15 48.0

237 D 21 46.0

149 E 13 44.0

193 F 17 42.0

1125

2 381 A and B 34 60.0

402 C and D 36 44.0

342 E and F 30 34.0

1125

3 1125 A through F 100 47.2

CHAPTER 7 Economic Issues 339

experience increased dissatisfaction among employees holding high-rated jobs, thereby leading to problems of increased turnover, absenteeism, or lower productivity. Union and management negotiators might attempt to address the potential problem of narrow- ing wage spreads over time by agreeing to an equal percentage increase in hourly base wage rates (rather than an equal cents-per-hour increase), which would maintain existing wage spreads. Another alternative to maintain a desired wage spread between high- and low-skilled employees would be to negotiate a special cents-per-hour increase applicable only to certain high-rated jobs (skill pay differential) in addition to an equal cents- per-hour wage improvement granted to all job classifications.

Within the same or similar job classifications, one of the principal goals of unions is to reduce wage dispersion among employees with satisfactory job performance. This goal can be summarized in the phrase equal pay for equal work. Unions seek to achieve this goal by negotiating a single rate of pay for each job classification and a seniority-based progression of wage rates within a defined employee classification up to some defined maximum rate. This approach is commonly used in job classifications that have two or more steps or grades that an employee may advance to over time based on some estab- lished criteria (e.g., work experience, demonstration of advanced job skills, or successful completion of training). A single wage rate (one pay grade for all employees in a given classification) eliminates wage dispersion between employees in the same classification, and seniority rules help control overall wage rates by requiring similar treatment of workers who have the same plant, department, or companywide seniority. Because of the spillover effect of union wage practices, even nonunion firms experience less wage dispersion over time than one might expect.47

Two-Tier Wage Plans Contract language that specifies a newly hired employee will be paid less than other employees performing a similar job is referred to as a Two-Tier Wage plan. A sample of recent union contracts revealed that 19 percent contained a temporary Two-Tier Wage Plan and 15 percent contained a permanent plan, lasting throughout the duration of the contract. Manufacturing firms were more likely than nonmanufacturing firms to have some form of a Two-Tier Wage Plan.48 A temporary Two-Tier Wage Plan permits a new hire over time (e.g., the term of the contract) to rise to the same pay level as other similarly classified workers. Some bargaining relationships extend the two-tier concept to include eligibility for some employee benefits. Exhibit 7.4 presents an example of a two- tier pay schedule.

A Two-Tier Wage Plan achieves immediate labor cost savings as job openings are filled by comparatively lower paid new hires, and it may facilitate a favorable contract ratification vote since the wages of current bargaining unit members are not adversely affected by implementation of a two-tier plan. A union may legally negotiate a wage dif- ferential based on factors such as skill, type of work, or seniority so it would appear to have ample latitude to negotiate two-tier wage levels if the union does so in a good faith and honest effort to meet an employer s demand for lower labor costs in a manner that best protects the economic interests of current bargaining unit members. Steel, auto, and retail grocery companies are examples of firms that have negotiated two-tier wage and benefit plans.49 In exchange for a $120 million plant expansion and the creation of 100 new jobs, Harley-Davidson Inc. employees, represented by the United Steelworkers union, agreed to lower the top-tier wage rate of more than $27 per hour by $7 per hour, establishing a lower-tier wage rate that would match the wages the company would pay if it chose to move the production of motorcycle powertrains to another

340 PART 2 The Bargaining Process and Outcomes

location. The UAW agreed to two-tier wage plans in its contracts with the big three domestic automakers (GM, Ford, and Chysler) in 2007. Automakers assert that the two-tier wage system enabled them to remain competitive with imports and helped the firms survive the 2008 recession (in 2015, approximately 29 percent of all auto workers received the lower pay rate). However, in recent years the union has expressed a strong desire to eliminate the two-tier system, in part, because workers on the lower tier earn about $10 an hour less than workers on the higher tier. 50

The UAW is not alone in its opposition to two-tier wage plans. Some involved in bargaining relationships in other industries report that the costs of increased friction between lower- and upper-wage tier employees outweigh the initial labor cost savings of a two-tier wage plan and in subsequent negotiations have eliminated such language from their labor agreement.51 If lower-tier employees view the pay situation as inequita- ble, they may vote to remove union leaders responsible for negotiating the wage terms or support union decertification. Likewise, lower-tier employees may feel less commitment to their employer, thereby increasing turnover rates and lowering productivity, which results in higher relative labor costs to the company.52 For more about two-tier wage plans, see the appropriate Labor Relations in Action box.

Exhibit 7.4 Examples of Two-tier Pay Scales

Job Classes and Hourly Rates for Employees on Payroll Prior to March 1, 2017

Job Class Wage Rate

0 $15.40

1 15.60

2 15.80

3 16.00

4 16.20

5 16.40

6 16.60

7 16.80

All employees hired after March 1, 2010 shall be considered new hires and shall be paid according to the [following] bracket rate:

Job Classes and Hourly Rates for Employees Hired After March 1, 2017

Job Class Wage Rate

0 $12.00

1 12.10

2 12.20

3 12.40

4 12.60

5 12.80

6 13.00

7 13.20

CHAPTER 7 Economic Issues 341

LABOR RELATIONS IN ACTION The Waxing and Waning of Two-Tier Wage Plans

In this chapter, we discuss Two-Tier Wage Plans, where new workers earn less money than previously hired workers for completing the same tasks. Two-Tier Wage Plans seem to follow the economic cycle: When the economy is poor, Management negotiators trot out Two-Tier Wage Plans as alternative to layoffs or pay cuts. When the economy is robust, Two-Tier Wage Plans are abandoned as firms try to recruit and keep good employees in a competitive economy. But is there more to the decision to implement or abandon Two-Tier Wage Plans than simple economic cycles?

Frequently, managers view labor as a cost to con- trol rather than an asset that can partner with managers to provide competitive innovation.a Using a cost- containment philosophy leads managers to sometimes propose Two-Tier Wage Plans as a way to save money. Starting new workers at a lower pay rate seems plausi- ble when unemployment is high. If workers don t want to work in a two-tier company, they can take a job somewhere else, managers might say. [Indeed, research suggests that if new hires compare them- selves to the unemployed or to their nonunion counter- parts (and not to those on the upper tier), and if they see the plan as temporary, they may be quite satisfied with their pay.b] If the two-tier plan only affects new workers, who are granted more frequent and/or larger pay raises so that they eventually catch up with other workers, the plan may be seen as an acceptable way to save money by employees.c Because the most experienced workers are on the upper tier (and experience is modestly corre- lated with job performance), managers can expect to retain senior employees.

Two-Tier Wage Plans have helped domestic auto makers remain competitive against foreign imports and these plans have helped save money so that manufacturing jobs can remain in the U.S. For example, in 2011, Chrysler paid approximately 2,700 newer work- ers about $14 an hour; this was about half of what 20,000 more experienced workers made. With unem- ployment high, Chrysler reportedly had over 10,000 applicants and had no problem filling vacancies in spite of the lower pay.d And thanks, in part, to lower labor costs from a Two-Tier Wage Plan, General Electric moved production of high-end water heaters from China to the U.S.e Two-Tier Wage Plans often save not only wage costs, but save on other employee benefit costs as well, as many of these are tied to pay rates.

Why would union leaders agree to accept a Two- Tier Wage Plan? If the alternatives are to accept pay cuts or layoffs, then a Two-Tier plan may seem more

acceptable. After all, a Two-Tier Wage Plan hurts name- less, faceless, yet-to-be-hired people not current union members. It is often easier to agree to lower wages for yet-to-be-hired employees than it is to accept economic harm for friends and dues-paying union members to whom the union leader is accountable. Further, some union leaders negotiated job security provisions for those in the upper tier in return for agreeing to a Two- Tier Wage Plan. Thus, there is more that enters the decision than just economics.

However, Two-Tier Wage Plans are often aban- doned after only a few years. Why? Again, there is more going on than the economics of supply and demand (although that plays a part). First, managers sometimes find that they didn t save as much money as they thought that they would. Adam s Equity Theory suggests that when hourly workers feel underpaid, they cut back on the amount of work that they do as a way to restore equity.f If you are only going to pay me 90 per- cent of what people hired only six months before me got paid, then I ll only do 90 percent of the work, an employee might say. If the worker can t cut back on core job duties (perhaps because the job is machine- paced work), the employee might cut back on con- text job factors extra things that make the workplace run smoothly like cleaning up around the machine or covering for someone else who takes a break. Some managers might find that it is harder to recruit and retain the best new workers especially as the economy rebounds because such workers might find better paying jobs from competitors who don t have a Two- Tier Wage Plan.

From a union leader s perspective, a Two-Tier Wage Plan violates the founding principles of unionism in the U.S. One of the issues in the Philadelphia Cord- wainers Trial of 1806 (Ch. 2) was that master cordwai- ners wanted to pay their journeymen shoemakers different wages based on whether they were making shoes to fill custom work orders, to sell in the master s shop, or to sell wholesale. The journeymen wanted equal pay for doing the same work (making shoes), and rejected pay differences based on what they con- sidered to be an irrelevant factor (the type of customer).g

Throughout history, union leaders and members gener- ally adhered to the equal pay for the same work phi- losophy; they did not embrace significant pay differences for irrelevant factors, including very small differences in seniority. Because a Two-Tier Wage Plan typically calls for large pay differences with only small seniority differences, the natural propensity of

342

Wage Comparability

Wage Comparability across Organizations A common argument in wage negotiations is that wage rates in one bargaining unit should be equal or related to the wage rates in comparable bargaining units. Wage com- parability is given considerable weight in wage determination, although these compari- sons can become quite complicated and may be based on biased information.53 Wage surveys can be helpful. However, they do not measure how the job content, method of payment, regularity of employment, supplemental unemployment benefits, vacations, pensions, and holidays vary from company to company. Fundamental considerations such as the size of the appropriate labor market and occupational and geographic differ- ences must be recognized. At first glance, it appears that bus drivers in Miami would have duties identical to those of bus drivers in Chicago. However, many differences in these similar jobs can exist, such as weather conditions, number of scheduled stops, loca- tion of scheduled stops, number of passengers, and so on. Furthermore, a major differ- ence could arise in work duties. For example, are the bus drivers required to make change for passengers? In such cases, a union could claim that the added job

union leaders is to reject such plans or at least to end them as soon as possible.

Union leaders sometimes find that they must fight harder to win grievances that might have been negotiated previously. With a Two-Tier Wage Plan, managers have a strong financial incentive to replace workers who have dis- ciplinary problems with new employees. So union leaders may have to take cases to arbitration that in earlier years they could have negotiated a suspension or a last chance agreement for the disciplined employee.

Union leaders occasionally find that their own jobs are in peril. As more workers are hired on the lower tier, union leaders sometimes discover that these new workers have little loyalty to the current union leadership: You are the person who negotiated that contract that gives me $15 an hour when the others are getting $24 and you now want me to re-elect you to union office? I don t think so! In fact, we might try to de-certify the union at least then, we might all get the same wage rate! As the number of people on the lower tier grows, the wise union leader recognizes that he or she will need their support in order to be re-elected to union office; the fastest way to garner their support is to secure wage increases that effectively end the Two-Tier Wage Plan.h Indeed, United Auto Workers leaders are reportedly eager to secure meaningful and substantial pay raises for lower-tier GM and Chrysler workers.

Thus, whether considered from a management perspective or a union leader s perspective, Two-Tier

Wage Plans are inherently unstable work arrange- ments. They may help a firm survive an economic or financial crisis (as when the airlines went through a financial crises when newly deregulated in the 1980s), but the pressures on both managers and union leaders often lead both sides to abandon the plans once the crisis is over.i

SOURCES: a Thomas Kochan, Eileen Appelbaum, Jody Hoffer-Gittell, and Carrie Leana, The Human Capital Dimensions of Sustainable Investment: What Investment Analysts Need to Know, February 22, 2013, at SSRN: http://ssrn.com/abstract=2222657. b Peter Cappelli and Peter D. Sherer, Assessing Worker Attitudes under a Two-Tier Wage Plan, ILR Review, 43 (2), 1990, pp. 225 244. c Michael MacNeil, Two Tier Workplace Compensation: Issues and Remedies, Cana- dian Labour and Employment Law Journal, in press, at http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=2229248. d Bill Vlasic, Detroit sets its Future on a Foundation of Two-Tier Wages, New York Times, Sept. 12, 2011, at http://itc.gsw.edu/faculty/pszmedra/FALL2011MACRO/TwoTier WagesSept13.pdf. e Charles Fishman, The Insourcing Boom, The Atlantic, January 8, 2013, pp. 1 11, at: https://webfiles.uci.edu/schofer/classes/2014soc2/readings/3%20d%20Charles% 20Fishman%20-%20The%20Insourcing%20Boom%20-%20The%20Atlantic.pdf. f Alain Cohn, Ernst Fehr, Benedikt Herrmann, and Frédéric Schneider, Social compari- son in the workplace: Evidence from a field experiment, IZA Discussion Paper No. 5550, 2011, at SSRN: http://ssrn.com/abstract=1778894; James E. Martin and Melanie M. Peterson, Two-Tier Wage Structures: Implications for Equity Theory, Academy of Management Journal, 30 (2), 1987, pp. 297 315. g John S. Bowman, Philadelphia Cordwainers Trial: 1806, Encyclopedia.com, 2002, at: http://www.encyclopedia.com/doc/1G2-3498200041.html. h Andrew Weiss, Efficiency wages: Models of unemployment, layoffs, and wage dis- persion. (Princeton, NJ: Princeton University Press, 2014). i David Card, Deregulation and Labor Earnings in the Airline Industry, in James Peo- ples (Ed.) Regulatory Reform and Labor Markets (Norwell, MA: Kluwer, 1997).

343

responsibility of making change creates a safety hazard by increasing the likelihood of robberies; the union might seek higher compensation for this additional risk.

The relative importance of wages to total costs (degree of labor intensiveness) is also a significant factor in wage comparability. For example, if a modern, highly automated textile mill pays wages that account for 30 percent of total costs, a 10 percent increase in wages would equal a 3 percent change in the sales price. However, in an old textile mill with out-of-date machinery, where wages account for 65 percent of total costs, a 10 percent increase in wages would equal a 6.5 percent change in sales price. Even though wage data are often largely fragmented or deficient, negotiators still have to rely on wage comparability in arguing for or against certain levels of wages. Therefore, both parties continue to look for commonalities with other companies, local firms, or similar jobs that can provide a base from which to present their proposals.

Wage Comparability within Organizations Just as unions seek to insure that their members pay does not suffer relative to that of workers in other firms doing similar work, they also try to maintain pay comparability within their firms. For example, police officers and fire fighters typically see their jobs as similar (and similarly dangerous), warranting comparable wage levels from their common employer, a city government. Yet they are usually represented by two different labor unions. How can the union leaders insure comparable wages? It is common for each union to negotiate a Me-Too clause in their collective bargaining agreements. Thus, a Me-Too clause in the police officers contract states that if the fire fighters union negoti- ates a pay raise, then the police officers will receive an identical pay raise also. A similar clause in the fire fighters contract insures that they will receive whatever raises the police officers get. Such clauses are also sometimes used to maintain pay differentials. For exam- ple, skilled laborers may negotiate a contract stating that their wage levels will always be at least 115 percent of what unskilled laborers make. If the unskilled laborers get a raise, then the skilled laborers will automatically get a raise also. In this second example, the Me-Too clause is used to maintain wage differences between groups rather than identical pay levels.

Ability to Pay The ability to pay, or the financial condition of the organization, is a commonly used standard for wage determination that is given much weight by unions during periods of high profitability. By contrast, when profits are low, it is management negotiators who suggest that the employees may deserve more money but that the company simply doesn t have the ability to provide wage raises.

Consider the situation at Redondo Beach, California: In the depths of the Great Recession, city officials persuaded union negotiators to take cuts in wages and benefits that totaled six percent; these cuts were agreed to because the city faced a $7.3 million budget shortfall and did not have the ability to continue paying previously negotiated wage levels. Between 2012 and 2014, as tax revenues returned to pre-recession levels, the city gradually restored employee pay (but not as quickly as union members expected). At the end of 2014, the city even provided a 2 percent raise. This case illus- trates that when the city had an inability to pay, it sought wage cuts; when revenues increased and it had the ability to pay, unions lobbied for pay levels to increase.54

Management rarely claims a true inability to pay, except in extreme cases where the firm is losing money or is otherwise financially threatened. If management claims an inability to pay, the union has a legal right to independently examine the company s financial records under the duty to bargain in good faith for the purpose of verifying the employer s claim. Management more commonly responds to union wage demands by

344 PART 2 The Bargaining Process and Outcomes

expressing an unwillingness to pay based on factors such as productivity rates, wage survey data, other capital needs, industry settlement patterns, or other relevant factors.

Ability to pay has limited usefulness as the sole criterion for wage determination for several reasons:55

1. Wages based solely on the ability to pay would create a chaotic wage structure and would cause a change in the wage costs price relationships that have evolved over time.

2. To be consistent, the ability to pay must work both ways, causing wage reductions when profits are nonexistent or inadequate. Such an approach would be generally unacceptable to unions.

3. It is extremely difficult to determine the share of profits that should be used for wage increases. If the profit is distributed to employees in the form of higher wages and an insufficient amount is shared with stockholders, there will be less incentive for investment, thereby limiting the firm s growth potential.

4. Wages supposedly are paid to employees in accordance with their relative value to the firm, their contribution to its goals, and the relative importance of their services. If ability to pay is the major factor, the relationship between actual pay and actual value could become distorted.

5. Wages are negotiated for future application. Basing wage changes on past profits is no guarantee that future profit levels will remain high enough to sustain a firm s profitability at the higher agreed-on wage levels.

Productivity The average annual business productivity rate for U.S. workers in the nonfarm business sector rose at a 0.7 percent rate throughout 2014 compared to an increase of 1.8 percent in unit labor costs. Manufacturing productivity over the same period rose 2.2 percent compared to a rise in unit labor cost of 0.1 percent after manufacturing unit labor cost had fallen 1.4 percent in 2013.56 Labor productivity represents a measure of the value of output created relative to the hourly costs of the labor necessary to produce that output (see Exhibit 7.5 for an international comparison of manufacturing productivity).

Although no argument has been advanced with more conviction or sophistication than that wages should vary with changes in productivity, union and management nego- tiators often experience difficulty in attempting to apply the principle to specific negotia- tions. For example, the rate of change in productivity varies widely from industry to industry, firm to firm, and even plant to plant. Not only is productivity itself difficult to measure accurately, but any change in productivity (usually measured in output per employee-hour) results from many causes, only one of which is labor.57

Those who study productivity have generally agreed that new capital investment and mechanization have been the primary causes for greater productivity, but there are still important issues to reconcile. Who should share in the revenue resulting from increased productivity the employees, stockholders, or consumers? What is the proper balance among the contributing factors of production labor and capital investments? Any use of productivity data must be handled carefully because the available data are only approximate estimates. Output per employee-hour often overstates gains attributed to labor and understates the relative contributions of advanced technology, improved meth- ods, better machines, product quality, and so on to the value created by an hour of paid labor.

To remain competitive, companies and employees must be more productive. Union negotiators often argue that productivity gains may be used to pay for higher wage or

CHAPTER 7 Economic Issues 345

benefit costs. Conversely, rising labor costs without offsetting gains in productivity may act as an incentive for management to find lower cost substitutes for employing addi- tional labor (e.g., outsourcing, mechanization, and plant relocation). The International Longshoremen s Association (ILA) has agreed to work rules with shipping firms, allow- ing the use of cargo containers, global-positioning, satellite-system technology to track the movement of cargo, and other innovations that have increased productivity and job security, which benefits both employers and union members.58 The same principle applies to other industries: High productivity is the only way to justify high wages. How- ever, as witnessed in many manufacturing industries over the past 15 years, steady pro- ductivity growth has not led to a comparable increase in employment opportunities or significant real wage gains. One possible explanation for the inverse relationship between productivity growth and growth in real wages is that workers in the United States lack sufficient power to encourage or require employers to share a sufficient proportion of productivity gains with workers. The failure to see significant real wage gains may result in unions being unenthusiastic about production-enhancing technologies and may explain the finding that firms are sometimes less likely to invest in technological innova- tion when unions are present. On the other hand, relatively low, steady, labor costs have recently made the United States relatively attractive among developed countries as a place to locate a manufacturing facility.59

A gain sharing plan was previously discussed as one way to share productivity gains with employees who help create them. More than one-third of large companies have implemented some type of gain sharing program.60 In addition to providing an eco- nomic incentive for workers to improve the quantity and quality of outputs, productivity sharing plans may also serve to reduce grievances, absenteeism, and turnover, and to improve labor management relations.61

Exhibit 7.5 Average Annual Rates of Change in Manufacturing Output per Hour for the United States and Selected Countries

Country 1979 2011 2010 2011

United States 4.2% 2.0%

Australia 1.7 4.0

Canada 2.2 1.9

France 3.2 2.2

Germany (unified) 2.5 4.5

Italy 2.1 0.4

Japan 3.4 2.8

Korea __ 6.0

Singapore 5.0 8.0

Sweden 4.2 3.4

Taiwan 6.1 2.8

United Kingdom 3.4 4.5

Productivity data are affected by factors such as the amount of output (product or service produced), number of hours worked, hourly compensation costs, value of goods and services produced, and the currency exchange rate. Productivity data represent the combined contributions of labor, management, new technology, capital investment, capacity utilization, and energy use.

SOURCE: U.S. Department of Labor, International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2011, News Release, December 6, 2012, Table 1. Output per hour, output, and hours, at http://www.bls.gov/news.release/prod4.t01.htm

346 PART 2 The Bargaining Process and Outcomes

Problems with Productivity Sharing Although productivity sharing offers an innovative approach for mutual gain sharing and cooperative activity, it, too, has its problems. A large percentage of gain sharing pro- grams (43 percent) fail to achieve the positive returns expected by managers.62 Most often this results from managers setting productivity quality goals unrealistically high or disputes over the gain sharing formula. There are also problems associated with the measurement of productivity. Some jobs do not lend themselves to precise measurement of output. It is much easier to measure bricks laid per hour by a worker than the value of that same worker spending one hour in a meeting discussing safety issues affecting the job. In jobs that are not routine or repetitious, exact measures are impossible.

Another problem is locating and organizing productivity data in such a manner that it may be useful to a firm. Serious arguments over the contribution of specific fac- tors to increased productivity can inhibit the success of any productivity bargaining. What is the chief contributor to productivity gains? Is it the skill, efforts, or attitudes of the employees? Or is it the advanced technology of the machinery and equipment, efficiency of the operations, or the scale of operations? Or is it the interaction between these sets of factors?63

Because productivity gains are shared by labor and management under the productiv- ity bargaining concept, they will certainly give rise to rigorous and complicated negotia- tions. Evidence suggests that many unions do not consider gain sharing plans a substitute for traditional hourly wage gains but rather an additional pay benefit, a trade-off for wage concessions, or a means of maintaining parity with an industry wage pattern.64

Examples of bargaining for productivity improvement have occurred in the con- struction industry. Negotiations there have resulted in agreements to reduce work stoppages and contract language covering jurisdictional disputes, inefficient work rules, and the duties of nonworking union stewards. Interestingly, the stimulus for productivity bargaining in the construction industry was the loss of work that increas- ingly went to nonunion contractors, along with the desire of union members to pro- tect or expand their employment opportunities, particularly during unfavorable economic conditions.65

Effect of Unions on Productivity and Efficiency There has been considerable debate and research about the effect of unions on produc- tivity and efficiency. There is research suggesting a modest, positive relationship between unionization and labor productivity in certain industries such as manufacturing and con- struction. Explanations vary but the following reasons are often cited for higher union productivity: (1) improved morale brought about by higher wages, benefits, and improved working conditions; (2) less employee turnover at unionized firms; (3) higher levels of firm-specific skills, resulting in part from more training opportunities and greater employee longevity on the job; (4) more pressure on management to get its house in order and invest in better methods, such as technological improvements to reduce unit labor costs; (5) more effective grievance procedures, which help to resolve employee problems more quickly and therefore improve productivity; and (6) the ability to negotiate subjects related to industrial accidents and diseases that can reduce lost work time and consequently increase productivity.66

A union can also promote efficiency when employees, through their union power, ensure that managers treat them fairly and gain a voice to influence decision making that leads to higher morale and greater productivity. Productivity is also enhanced by the fact that unionized workplaces attract and retain more highly skilled and experienced employees because of higher wages, the opportunity to be heard, and the assurance of

CHAPTER 7 Economic Issues 347

fair treatment, which can also increase employees loyalty to the firm.67 Unionized firms are just as likely as nonunionized firms to adopt advanced manufacturing technologies as a means of enhancing productivity growth and competitiveness.68

On the other hand, it may be argued that unions can decrease productivity by reducing managerial flexibility, limiting the use of merit-based compensation, impos- ing work-rule restrictions, such as limits on workloads or tasks performed, and increasing the size of work crews. There is evidence that unions affect productivity both positively and negatively: unionized firms use existing technology more effi- ciently, on average, than nonunion firms; however, funds that might otherwise go to the technological development of new work processes are sometimes allocated to wage increases.69 To what extent unions are shown to have a positive or negative effect on productivity is often determined by the researchers methodology used to measure productivity.70

It has been noted that over most of the past 30 years, wage and income levels of many American workers have stagnated despite continuing improvements in labor pro- ductivity. From 1947 to 2010, productivity rose, on average 2.2 percent each year, whereas real hourly compensation rose, on average, only 1.7 percent each year. From 1973 to 2007 nonfarm business sector labor productivity rose 83 percent while real aver- age compensation for all workers (including managers) rose only 49 percent. The median wage gain was only 10 percent, indicating that average wage earners and entry-level workers did share nearly as much in the gains that were available compared to top wage earners such as management executives. While real wages in other industrialized countries generally increase at approximately the same rate as labor productivity, the dis- parity in the U.S. trend is noticeable. The trend is even more discouraging if one only considers male workers: When adjusted for inflation, real wages for all men ages 25 64 declined 19 percent between 1970 and 2010 and it declined 40 percent for those with only a high school education. One of the biggest predictors of income level is education, and the lack of income growth has made it increasingly difficult for many poorly edu- cated families to maintain a middle class standard of living without taking on the bur- den of additional debt borrowing. It has also made it extremely difficult for lower income families to make any significant improvement in their standard of living despite both adults being employed full-time. While it is difficult to identify causes, it is interesting to note that wages kept pace with labor productivity increases during the period (1947 1973) when U.S. labor unions were relatively powerful and influenced trade and other policies to protect workers wages. It is generally concluded that a large middle class ben- efits working families.71

On balance, unions generally have a positive effect on productivity. However, pro- ductivity gains are not generally sufficient to completely offset the higher labor costs (higher distribution of profits to meet employees interests) attributable to unioniza- tion. Therefore, unionization may lower the rate of return per dollar of capital invested (one measure of profitability), which may make unionized firms less attractive to inves- tors. This effect is most likely to be noticeable in unionized firms operating in product or service markets with relatively little competition and high profit margins.72

Cost of Living During periods of rising prices, unions support wage demands in part by referring to the cost of living. Union negotiators argue that a rise in the cost of living without a com- mensurate wage increase is equivalent to a cut in real wages or a drop in purchasing power. Thus, the proposition that wages should be raised at least in proportion to the rise in living costs may seem quite fair and reasonable, especially to employees.

348 PART 2 The Bargaining Process and Outcomes

Employers are often concerned that a firm has little control over how much inflation may increase over a specified time period, making the employer s liability for pay more unpredictable. Wage payments based solely on an increase in the cost of living are also not tied to the need for increased labor productivity or the actual operating experience (profit/loss) of the firm. Where contract negotiations cover two or more plants, the addi- tional concern is that the cost of living may vary by geographical location, either over- estimating or underestimating the true cost of living if national inflation rates are used in computing cost-of-living wage adjustments.73

Cost of living usually refers to the consumer price index (CPI) computed by the U.S. Labor Department s Bureau of Labor Statistics, which measures changes in the price of goods and services purchased by a typical American household on a monthly basis.74 The index covers 207 categories of goods or services (e.g., food, housing, health care, entertainment) sampled from 44 urban geographical areas around the country. The European Union (EU) has a similar cost of living index called the European Harmonized Index of Consumer Prices (HICP).75 Unlike the CPI, the HICP includes the rural population in its sample and does not measure price changes in the cost of owner- occupied housing. During the 12-month period ending in February, 2015, consumer prices were unchanged.76 This compares to a 1.1 percent increase in consumer prices for the 12-month period ending in February, 2014.

Wage Adjustments during the Term or Duration of the Labor Agreement Because most negotiated labor agreements have a term of more than one year, it is common to include contract language that allows the adjustment of wages during the term of the contract. The most common term or duration of a labor agreement is three years (43 percent of 711 contracts surveyed), followed by more than three years (27 percent), two years (22 percent), and one year or less (8 percent).77 Economic uncer- tainty in the bargaining environment makes it more difficult for negotiators to predict both a company s ability to pay and the potential needs of bargaining unit members, which creates more pressure to negotiate short-term labor agreements than might be common under economically stable bargaining conditions. This has impacted a previ- ous trend in some basic goods manufacturing industries (e.g., auto, textiles, petroleum, and paper) to negotiate long-term contracts (four to six years) in an effort to stabilize labor conditions and avoid any threat of a work stoppage. Several different methods may be used to adjust employee base wage rates during the term of a labor agreement such as a cost-of-living adjustment (COLA) clause, deferred wage increase (also called an annual improvement adjustment), or a wage re-opener clause. Each of these will be discussed.

Cost-of-Living Adjustments A COLA clause imposes a contractual obligation on an employer to change rates of pay in accordance with a collectively bargained formula and appears in approximately 21 percent of labor contracts-up from 14 percent in 2010.78 When negotiating COLA provi- sions, union and management representatives usually consider the following issues:

1. Selection of the particular price index and base point. Most labor agreements use the all-cities CPI-W (consumer price index for urban wage earners and clerical workers). The beginning date of the contract is usually specified as the base point. The CPI-W is used to measure the rate of inflation from the base point to the end of the period when the COLA adjustment is scheduled to be paid.

CHAPTER 7 Economic Issues 349

2. Frequency and timing of the wage adjustment. Quarterly adjustments are more com- mon in manufacturing industries, whereas annual adjustments are most common in nonmanufacturing firms. Employers would generally prefer less-frequent adjustment periods (e.g., annual rather than quarterly) to delay the time when the employer must expend the funds, thus permitting the firm to use that money in the interim and delaying the imposition of roll-up costs (as discussed in Chapter 6) incurred whenever an employee s base wage rate is adjusted upward. Unions would generally prefer quarterly (more frequent) COLA payments because it puts the money into the hands of bargaining unit members sooner and increases the value of benefit items affected by the roll-up factor.

3. COLA formula. The most common negotiated formula for COLA adjustments is a 1 cent-per-hour increase for each 0.3 point increase in the CPI-W during the speci- fied base period. For example, if during the base period the CPI-W rose 1.3 points, then the employer on the specified adjustment date would increase a covered employee s base wage rate by 4 cents per hour (1.3 0.3 4.33 $0.01 4¢, rounded off to the nearest whole cent). Some contracts negotiate an alternative formula, specifying a percentage change in wages in accordance with a specified percentage change in the CPI-W.

4. Effect of COLA on other elements of the compensation package. There is little unifor- mity found in labor contracts on this issue. Some agreements may include COLA adjustments only for the purpose of computing gross hourly earnings to avoid roll- up costs. Other labor contracts may use the COLA-adjusted base wage rate in com- puting all items related to wages and benefits (e.g., holiday pay, vacation pay, sick leave pay). In some contracts, COLA benefits are kept separate from the base wage and are instead treated as an annual bonus. In others, COLA adjustments are folded in to the base wage. This latter approach allows one year s COLA adjustment to enter into the equation when a subsequent adjustment is computed. Not surpris- ingly, to maintain members purchasing power, unions prefer COLA adjustments to be folded in while some employers, to save money, prefer that COLA adjustments be treated as bonuses.

5. Caps. In periods of high inflation, it is often difficult to budget adequately for ever- increasing labor costs. Therefore, management negotiators will sometimes seek a cap or upper limit on the COLA. For example, if a 5 percent cap is negotiated, then wages cannot rise more than 5 percent in one year, regardless of the inflation rate. Union negotiators might also seek a minimum cap for such payments. A minimum guarantee would benefit bargaining unit members in that management generally insists on negotiating smaller base hourly wage increases when a COLA clause is included in the labor agreement because part of the employee s wage gain is expected to be provided by the COLA payment during the contract s term. A maxi- mum cap would reduce management s wage liability risk should an unexpected rapid escalation in inflation occur (e.g., an oil crisis) during the contract s term. Despite the apparent advantage of a cap to both parties, only an estimated 25 percent of COLA clauses contain any form of caps, indicating the difficulty encountered in reaching a mutual agreement on what constitutes a reasonable minimum or maxi- mum guaranteed COLA payment.

Deferred Wage Increases Deferred wage increases are negotiated in multiyear contracts to provide some adjust- ment in base wage rates beyond the first contract year. Contracts are sometimes referred to as being back-loaded, front-loaded, or even-loaded as a means of indicating in which

350 PART 2 The Bargaining Process and Outcomes

contract years most of the wage improvement occurs. For example, a three-year contract that averaged a 3 percent annual wage gain could provide annual wage adjustments of 5 percent in the first year, 3 percent in the second year, and 1 percent in the third year of the contract. This arrangement is called a front-loaded contract because the largest raise occurs in the first year of the contract. By contrast, the timing of the pay raises might be arranged differently: 1, 3, and 5 percent (back-loaded); or 3, 3, and 3 percent (even-loaded). As with the timing of COLA adjustments, unions generally favor transfer- ring cash into the hands of bargaining unit members as quickly as possible (front load- ing), whereas management prefers delaying the transfer of money as long as possible (back loading). The loading of economic improvements in a labor agreement can be used as one measure of the relative bargaining power between the parties.

Wage Re-Opener Clauses A wage re-opener clause is written to permit wages to be renegotiated at a specified point in time during the term of the contract or whenever some predetermined event occurs (e.g., profits exceed a certain level; the CPI has risen by a specified amount). A wage re- opener clause may be necessary to get both parties to agree to a contract settlement whenever the future operating environment of the firm is unclear or the term of the con- tract is longer than one year and one or both bargaining parties believe they cannot rea- sonably predict what would constitute an adequate (acceptable) wage settlement in future years covered by the contract. Some labor agreements may also contain re-opener con- tract language which permits certain nonwage items to be renegotiated during the term of the contract (e.g., health care insurance costs).

Lump-Sum Pay Adjustments Lump-sum pay adjustments appeared in approximately 20 percent of labor contracts in 2014. The most common payment form was a flat dollar amount Flat dollar amounts averaged $1,176 in the first contract year, $783 in the second year, and $1,050 in the third contract year.79 Only 12 percent of multiyear contracts provided a lump-sum pay- ment in the second year, and only 9 percent did so in the third year. Lump-sum pay adjustments are popular with management because they do not change the employee s base hourly wage rate and thus have no impact on increasing roll-up costs.

The popularity of lump-sum payments waxes and wanes with economic conditions: When employers have difficulty recruiting and retaining specific types of skilled workers, then they are more willing to add to the base pay rate. For example, a survey of employ- ers whose contracts expired in 2013 found that 64 percent planned to give pay raises and only 11 percent planned to seek lump-sum payments. This marked a shift in strategy for many employers whose contracts had expired during the Great Recession, when 21 per- cent of labor contracts offered lump-sum payments.80 Unions generally favor lump-sum pay only as an alternative to a wage freeze or pay cut when economic conditions prevent an employer from paying a straight-time hourly wage increase.

Employee Benefits

In 2014, unionized employers in the United States paid bargaining unit benefit costs averaging $18.74 per hour worked (40.3 percent of each payroll dollar), compared with nonunion employers benefits expenditures of $8.70 per hour worked (29.2 percent of each payroll dollar).81 Exhibit 7.6 presents a complete breakdown of employer cost per hour worked by bargaining status. Benefits are an important part of an employee s com- pensation and include insurance costs, pension payments, pay for time not worked (such

CHAPTER 7 Economic Issues 351

as vacations, sick leave, holidays, paid rest and lunch breaks), supplemental pay (e.g., bonuses, shift differential, overtime pay), and legally required payments. An analysis of benefits based on employees race finds that only small gaps exist in benefits received based on race, with the exception of family health care benefits due to different marriage and divorce rates among the races.

Legally required payments (e.g., Social Security, workers compensation, and unem- ployment compensation) for many years constituted the single largest category of benefit expense incurred by both union and nonunion employers. In 2003, health insurance became the highest single benefit cost item for unionized employers, thus making it an important bargaining topic in labor negotiations. Unionized employers incur substan- tially higher cost than nonunion employers for health insurance because policies pro- vided for under union contracts generally cover a greater proportion of employees and provide a wider range and higher dollar amount of health care coverage.

The following sections present major areas of employee benefits, relying largely on two types of sources: (1) surveys of employers with one or more collective bargaining agreements up for recent renegotiation, and (2) Bureau of Labor Statistics data, compar- ing union and nonunion sectors.82

Insurance and Health Benefits According to the Bureau of Labor Statistics, in March, 2015, 86 percent of private industry unionized employers provided life insurance, whereas only 54 percent of nonunion employers offered this benefit. Ninety-two percent of unionized employers offered health care benefits, whereas only 67 percent of nonunion firms offered this benefit. Sixty-three percent offered short-term disability benefits, compared to 35 percent for nonunion firms and 73 percent offered paid sick leave compared to 60 percent for nonunion firms.

Exhibit 7.6 Employer Costs per Hour Worked by Bargaining Status, December, 2014

Type of Compensation Union Nonunion

Total Compensation (wages + benefits) $46.50 (100.0%) $29.83 (100.0%)

Wages and salaries 27.76 (59.7%) 21.13 (70.8%)

Total benefits 18.74 (40.3%) 8.70 (29.2%)

Individual Benefit Categories

Paid leave (e.g., vacation, holiday, sick leave)

3.25 (7.0%) 2.05 (6.9%)

Supplemental pay (e.g., overtime, shift differential, lump-sum pay)

1.44 (3.1%) 1.07 (3.6%)

Insurance (e.g., life, health, short-and long-term disability)

6.01 (12.9%) 2.20 (7.4%)

Retirement and savings (e.g., defined benefit plan, defined contribution plan, cash balance plan)

4.38 (9.4%) 1.00 (3.4%)

Legally required benefits (e.g., Social Security, unemployment compensation, workers compensation)

3.66 (7.9%) 2.38 (8.0%)

SOURCE: U.S. Bureau of Labor Statistics, Employer Cost for Employee Compensation: December, 2014, News Release, March 11, 2015, Table 5, p. 11.

352 PART 2 The Bargaining Process and Outcomes

Of 116 unionized workplaces surveyed in 2010, 91 percent covered hospitalization expenses. Other common health care benefits found in union contracts included surgical procedures (88 percent), doctor visits (91 percent), prescription drugs (91 percent), men- tal health (76 percent), dental care (82 percent), vision care (72 percent), and domestic partner coverage (43 percent). Compared to a similar survey administered in 2007, employer coverage of most types of health care benefits declined by about 4 percent.

Tight labor market conditions in the mid-2000s caused many employers to improve health insurance benefits as an incentive to attract and retain qualified workers. This was a change from the bargaining trend of the late 1990s and early 2000s when employers often sought to shift a greater proportion of rapidly rising health care costs onto employ- ees or reduce health care benefits as a means of controlling health care costs. More recently, generally weak demand for labor due to the recession, and increased pressure on company profits have once again focused employers attention on managing health care costs effectively. Health care benefits have been a principal issue in several major strikes that have occurred at companies such as General Electric, Hershey Foods Corpo- ration, and Lockheed Martin Corporation.83

Health Care Cost Containment In 2012 the United States spent $2.8 trillion dollars on health care, or nearly $9,000 per U.S. resident, accounting for 17.2 percent of the country s gross domestic product.84 In 1970 U.S. health care spending was a modest $356 per resident, accounting for 7.2 per- cent of gross domestic product. Despite higher spending on health care than other indus- trialized countries, in 2010 the United States still had 50 million residents who were uninsured, including one in five adults under the age of 65.85 The passage of the 2010 Patient Protection and Affordable Care Act and expansion of those receiving low-income based Medicaid have together resulted in a reduction of the uninsured to 41 million. The percentage of Americans without health insurance peaked in 2010 at 18.2 percent but has declined to pre-recession levels of 16.7 percent.86

Health care insurance premium costs are projected to rise at an average annual rate of 5.7 percent over the period 2013 2023, about 1.1 percent faster than inflation.87 Since 2005 the proportion of health insurance premium costs paid by employees has risen 47 percent compared to a 27 percent rise in health insurance premium costs, an 18 percent rise in wages, and a 12 percent rise in inflation.88

In 2014, the average annual health insurance premium for individual coverage was $5,837 in unionized firms and $4,384 in nonunion firms with 64 percent of unionized employees contributing to the premiums and 88 percent of nonunionized employees making such contributions.89 Family coverage averaged $14,244 in union and $10,630 in nonunion firms. Higher premium cost is an indicator of more comprehensive plan coverage. Also, unionized employers pay a larger percentage of health care insurance premium costs. On average unionized employers pay 76 percent (versus 67 percent for nonunion employers) of family coverage annual insurance premium costs and 83 percent (versus 81 percent for nonunion employers) of individual coverage annual insurance pre- mium costs.90 Thus, being in a union has its advantages: Union workers are likely to have more expensive (and extensive) health care coverage, are less likely to pay anything for it, and when they do have to share premium costs, they pay a smaller percentage of the costs than their nonunion counterparts.

Both union and nonunion employers have been active in recent years in efforts to either reduce the costs of health care coverage or shift a greater portion of that cost bur- den to employees. Such an employer strategy often conflicts with employees pressure on their union to maintain or expand the type and quality of health care benefits while

CHAPTER 7 Economic Issues 353

minimizing any additional cost to bargaining unit members. Unions and employers jointly recognize the importance employees place on the provision of health care benefits and the need to cooperate in seeking cost-effective means of providing such benefit cov- erage. The availability and quality of health care benefits is an important factor in the recruitment and retention of quality employees.

A number of contracts contain provisions designed to lower employer health care costs. These include including deductibles (93 percent), co-payments (84 percent), and premium contributions by employees. Premium contributions have grown more com- mon from 62 percent of contracts that expired in 2012, to 71 percent in 2013, to 83 percent among respondents for 2014. 91 Raising co-payments per doctor s office visit or deductible amounts paid by the employee before insurance coverage begins can impact employees differently, depending on how frequently they use medical services. Increasing the proportion of insurance premium costs paid by the employee affects all employees covered under the same policy provision equally and, therefore, is some- times preferred as a cost-sharing mechanism over raising employee co-pay or deduct- ible amounts. Other cost-containment provisions found in recent union contracts include wellness programs (63 percent), a pretax spending account (54 percent), delayed new hire eligibility or a two-tier health care plan where new hires get less cov- erage or pay more for the same coverage (26 percent), pre-admission testing (44 per- cent), utilization review (44 percent), spousal eligibility (48 percent), outpatient surgery requirement (29 percent), gatekeeper system requirement (24 percent), required second opinion (23 percent), hospice care requirement (23 percent), home health care require- ment (24 percent).

Most employees (58 percent) are enrolled in a preferred provider organization (PPO) health care plan which permits an employee to pay a lower rate for health care services if the employee agrees to use health care providers approved by the PPO.92 To become an approved health care provider, a health care provider or hospital must agree in advance with the insurance provider to accept a lower reimbursement rate than the traditional fee-for-service rate for most health care services provided. A health mainte- nance organization (HMO) plan restricts an employee s choice of health care provider to the HMO and enrolls 13 percent of employees in the United States. High deductible health care plans (HDHCP), typically coupled with some type of tax advantaged health care savings account, now enroll 20 percent of employees in the United States. Because of the high deductible amount the employee must pay before the insurance begins to pay any benefits, the annual premium for such a plan is lower. In 2015, the minimum annual deductible in such plans was approximately $1,300 for individual coverage and $2,600 for family coverage.93 Employees can put money into a health sav- ings account and spend it as pre-tax dollars for health-related needs. Some employers may make a defined contribution to an employee s health savings account, matching an employee s contribution up to a specified dollar amount. Many employees when pre- sented with a choice of plans do not prefer a high deductible plan because of the high out-of-pocket expense of meeting deductibles and confusion over how the plans are supposed to work.94

Income Maintenance Income maintenance provisions usually involve issues such as work or pay guarantees, severance pay (separation or termination pay, given when an individual employee leaves the firm), or a supplemental unemployment benefit plan (SUB), provided for laid-off workers, in addition to the unemployment benefits they receive directly from the state.

354 PART 2 The Bargaining Process and Outcomes

Severance Pay Severance pay plans provide a lump-sum payment on termination and are included in 28 percent of labor contracts.95 More senior workers and those who earn higher wages are generally entitled to a proportionally larger severance payment. In most cases, sever- ance pay is only extended to an employee (1) whose job has been terminated as a result of permanent shutdown, (2) is subject to a lengthy layoff extending beyond an estab- lished minimum period, or (3) who has no reasonable prospect for recall. For example, when the Hershey Company decided to shift production of some candy products to Mexico, resulting in employment reductions at its U.S. plants, the company and the Teamsters union negotiated an early retirement and severance pay package, which included two weeks of severance pay for each year of an employee s service.96 Some employers were offer enhanced severance pay in exchange for an employee s signature on a waiver releasing the employer from liability for claims of employment discrimina- tion during the employee s service with the firm.97 To be lawful such a waiver must be voluntary, the employee must understand the waiver terms, and he or she must receive something of value in exchange for willingness to sign the waiver. If the current contract does not specifically provide for severance pay, as a mandatory subject of bargaining, a union will generally request to bargain over the subject should a significant layoff or plant closure occur.

Supplemental Unemployment Benefits Normally, companies pay into a state unemployment fund (or must buy unemployment insurance). Then, when a firm lays off workers, those workers receive money from the state fund or from the unemployment insurance; benefits typically consist of up to 26 weeks pay at 50 percent of the workers last wages, following a 2 4 week waiting period. A SUB plan provides pay directly from the company in addition to unemployment com- pensation to which the individual would be entitled and is found in 10 percent of labor contracts. A few SUB plans provide individual accounts in which the employee has a vested right and from which he or she may withdraw money for reasons other than lack of work. The most common method provides payment of an amount equal to a percentage of the employee s take-home pay with unemployment compensation deducted. Other issues to be negotiated as part of a SUB plan include the duration of benefits, length of service requirements to qualify for coverage, and employer financial requirements to fund the plan.

Work sharing provisions are found in 6 percent of labor contracts. As a means of avoid- ing or minimizing layoffs among bargaining unit members, qualified employees agree to share the available work opportunities by having each employee work a reduced number of hours. An employer may benefit from such an arrangement by retaining quality workers who, if laid off, might accept employment elsewhere and not return to work when future work opportunities become available. Some states have passed legislation modifying their unemployment compensation laws to allow work sharing (also called Short-Time Compen- sation ) instead of layoffs. For example, two employees may each take a reduction in hours (e.g., from 40 hour/week to 20) and receive unemployment benefits for the hours not worked. Because such arrangements were not widespread, Short-Time Compensation programs, while helpful, did not have a significant benefit to workers in the recent recession.98

Premium Pay Overtime and Other Supplements Most labor agreements specify daily or weekly work schedules and provide premium pay for hours worked beyond regularly scheduled hours. Most agreements call for an 8-hour day and a workweek of 40 hours, Monday through Friday. Overtime premium pay rates are

CHAPTER 7 Economic Issues 355

required by law for many employees: The Fair Labor Standards Act (FLSA) requires time and one-half payment for work in excess of 40 hours in a week.

However, many unions negotiate more generous overtime rates. Frequently, over- time pay is paid for work over 8 hours per day at a time and one-half rate; this is more beneficial to the worker than the 40-hour week standard of the FLSA because a worker would receive overtime if he worked any extra hours on any one day. Under the FLSA standard, an employer might let the worker go home early on a different day in the same workweek to avoid paying overtime.

Payment of double-time for hours worked on certain days such as Sunday or holi- days is also frequently seen, although such provisions are less common in union con- tracts as employers have successfully bargained to eliminate such special pay incentives. Employers who operate on a continuous basis (e.g., retail stores open 24 hours per day, 7 days per week) typically negotiate work schedules (e.g., three shifts per day) that do not require the use of premium pay to meet normal operating schedules.

Many labor agreements also contain provisions for overtime administration. For example, overtime assignments may be restricted to qualified employees within a spe- cific job classification, department, or work shift. Often, the opportunity to earn over- time pay is awarded based on an equity norm: Management may be required to offer overtime work assignments to workers who have the greatest seniority first. In other contracts, an equality norm prevails: A contract might specify overtime opportunities to be awarded on a rotating basis regardless of seniority. In some cases, when manage- ment has had difficulty getting employees to voluntarily work overtime, a provision making overtime work mandatory may be negotiated. Excessive use of overtime as a means of avoiding the additional employment costs associated with hiring additional full-time workers can lead to a labor dispute. Most employees (and union leaders) understand the necessity for overtime work periodically and usually value the addi- tional income opportunity.

Some labor agreements that provide equalization of overtime hours count the hours whenever an overtime opportunity is offered even if the employee refuses the offer. For example, if an employee is offered four hours of Saturday morning overtime and he or she turns it down, those four hours for overtime-equalization purposes would still be counted as if the employee had worked them. Likewise, unions have sought provisions in a labor agreement that would enable their members to better plan their off-the-job activities, such as a minimum advance notice of required overtime work or the right to refuse overtime work for certain specified reasons.

Various other forms of premium pay are also included in most labor contracts. For instance, shift differentials (e.g., premium payments for working the night shift) are provided in most labor agreements. Other forms, such as reporting pay (which guaran- tees some minimum number of hours pay for employees who report for scheduled work but find no work) and call-in pay (which typically guarantees four hours pay for employees called in to work during nonscheduled work hours) are also usually included. For example, one of your textbook authors had a friend named Jack, who, while in col- lege, had a summer job at a factory. Jack said that he waited in a lounge every morning with a dozen others. Because the factory needed to be fully staffed to run the assembly line, if regular employees did not report for work, managers selected temporary replace- ments from among those in the lounge. Jack said that if he worked, he got eight hours pay; if he did not work, he got three hours reporting pay and he was free to leave and enjoy his summer day. Other pay supplements may include pay for temporary transfer, hazardous work, travel, work clothing, tool allowance, or bonus pay for certain specified purposes (e.g., annual bonus, good attendance, or safety record).

356 PART 2 The Bargaining Process and Outcomes

Pay for Time Not Worked Holidays, Vacations, and Rest Periods Labor agreements often contain payments for various times during which the employee is not required to work. According to the U.S. Bureau of Labor Statistics, 91 percent of union workers have access to paid holidays and paid vacation, whereas only 75 percent of non- union workers receive such benefits. The agency also reports that, as of March, 2015, 73 percent of union workers get paid sick leave, whereas only 60 percent of nonunion work- ers receive paid sick leave. A BNA survey reports that unionized employees enjoy a number of other paid nonwork time including: holiday leave (66 percent), vacation leave (65 percent), jury duty leave (50 percent), bereavement leave (59 percent), personal leave (51 percent); all of these types of paid leave are down about 10 percent from a similar survey taken a few years earlier, and some are down substantially from the early 2000s (e.g., paid vacation days and paid holiday leave were each found in over 90 percent of the contracts in 2001). Only two types of paid leave have shown increases: military leave (51 percent), and voting leave (36 percent).99 The two most expensive paid-leave benefit provisions deal with holiday and vacation pay. The mean number of paid holidays provided under union con- tracts is nine compared to nonunion with an average eight paid holidays annually.100

Nearly all union contracts provide holidays for Labor Day, Independence Day, Thanksgiving, Christmas, New Year s Day, and Memorial Day. Holidays for Good Friday, Christmas Eve, the day after Thanksgiving, and Martin Luther King, Jr. s birth- day are also often granted. Contracts generally contain some eligibility requirements for holiday pay (e.g., specified length of service [usually four weeks] or a requirement that the employee must perform any scheduled work the day before and after the holiday). Other issues that should be covered in contract language include payment for holidays falling on a regularly scheduled day off or during a paid vacation period and premium pay for hours worked on a paid holiday.

In many industrialized countries employees are guaranteed a paid vacation by law; however, in the United States there is no such legal guarantee.101 For example, after one year of service, workers receive 25 paid vacation days in France; 24 days in Germany; 22 days in Spain; and 20 days in Belgium, Ireland, the Netherlands, Australia, and the United Kingdom. In 2009 a Democratic representative from Florida introduced a legisla- tive proposal that would have granted at least one week of paid vacation for employees at companies with 100 or more workers after one year of service.102 Republican opposition to employer mandates make it unlikely such a proposal could be enacted into U.S. law. Not only do U.S. workers receive less paid vacation, a survey of 1,303 workers by the U.S. Travel Association reported that 40 percent of respondents did not plan to use all of their vacation entitlement.103

The U.S. Bureau of Labor Statistics reports that both private-sector union and non- union workers receive a median 10 paid vacation days after one year of service, 15 paid days after 10 years of service, and 20 paid days after 20 years of service.104 Part-time status, an average wage of less than $15 per hour, and employment in a firm with fewer than 100 employees are all factors that result in a below-average number of paid vacation days being granted an employee.

Vacation scheduling provisions appear in almost all labor agreements, covering issues such as annual plant shutdowns and consideration of employee seniority and employee preference in vacation scheduling decisions. In some contracts, workers with the greatest seniority get to choose their vacation times first; in others, it is a joint deci- sion between the individual employee and his/her manager. Regardless of the specific procedure, such provisions are essential in large organizations to reduce potential dis- putes between employees and to ensure that adequate qualified personnel are available to meet planned operating schedules.

CHAPTER 7 Economic Issues 357

Pensions As the life expectancy of U.S. workers has increased (to 79.5 years in 2014), pension ben- efits have taken on added importance as a source of income to sustain an individual s standard of living after leaving the labor force.105 In 2014, 83 percent of private-sector union members participated in some type of employer- or union-sponsored pension plan compared to 45 percent of nonunion employees.106 Only 18 percent of private- sector employees with average earnings in the lowest 25 percent range participated in a pension plan.

Nearly all labor agreements make some reference to pension plans, whether in the form of a general statement mentioning the plan or a fully detailed provision. Items usu- ally mentioned include age for retirement (normal and early), disability retirement, ben- efits available and requirements for qualifying, vesting provisions, administration procedures, and financial arrangements. Union members typically receive larger pension benefits than nonunion employees at the time they retire and also receive larger increases in such benefits in the years after their retirement. Union members also retire at an ear- lier age than nonunion employees.

In 1987, the Age Discrimination in Employment Act (ADEA) was amended to pro- hibit any mandatory retirement age (with limited exceptions for certain occupations such as airline pilots), ending the common pension plan use of 70 as a mandatory retirement age. Although this amendment helped extend the career of senior employees, the Supreme Court s controversial Betts decision in 1989 ruled that virtually all employee benefit programs are exempt from challenge under the ADEA unless the employee can prove intentional discrimination on the part of the employer.107

Common Types of Pension Plans The majority (60 percent) of union contracts include a defined benefit pension plan, which guarantees a specified dollar benefit payment per month to a covered employee on retirement and is typically funded by the employer. The percentage of union con- tracts with a defined benefit plan has declined in recent years as some employers have successfully bargained to shift more of the risk/cost of pension funding to employees (in 1994 it was found in 82 percent of contracts and in 2004 it was found in 73 per- cent).108 A defined benefit plan provides certainty regarding the amount of pension ben- efit to be received at retirement, which aids employees in retirement planning. In addition, a guaranteed pension benefit amount reduces the investment risk incurred by the employee.

With defined contribution pension plan the employer establishes an account in each employee s name and promises to contribute a specified amount to each account on an annual (or monthly) basis. The employer s contribution may be contingent on cer- tain factors such as sufficient operating revenue to make the payments or a matching contribution from the employee. The money is invested and when the employee retires, the amount of monthly benefit is determined based on the amount in the fund and anticipated life expectancy. The employer does not guarantee a given level of retirement. Employers often prefer defined contribution plans because it limits their financial obliga- tions to fund the plan.

Some younger employees who have grown up in an era of generally rising stock market values express a preference for a tax-deferred 401(k) plan where employees set aside pre-tax dollars from their paycheck for retirement; their savings are often matched by the employer. This retirement savings vehicle can be considered a type of defined contribution pension plan, although 401(k) plans are usually offered in addition to pen- sions. However, the stock market declines experienced in recent years have served to

358 PART 2 The Bargaining Process and Outcomes

remind employees of the risk and volatility associated with investing for long-term secu- rity in a stock market that historically has had periods of growth and decline.

Most union contracts (60 percent) contain a 401(k) plan often as a supplement to a member s defined benefit pension plan whereby an employee can invest his or her own dollars in a retirement savings account and often have the contribution matched by an employer s contribution up to a specified limit (e.g., 50 cents per dollar invested by the employee up to an amount equal to three percent of the employee s salary).109 During a period of economic stress, employers may decide to suspend discretionary company matching contributions to employee 401(k) plans as a cost savings measure, although employees are still eligible to contribute to their individual accounts.110

Employee stock ownership plan (ESOP) provide employees with company stock; this is typically provided from the firm s profits and can be provided at a cheaper cost than employees can, as individuals, purchase stock through a broker. Unions generally oppose efforts by an employer to use an employee stock ownership plan as a basic pen- sion plan, and they are found in less than 5 percent of union contracts.111 Investing pen- sion savings in a single company greatly increases the risk to the employee s investment should the firm experience poor future performance (and thus a decline in the value of its stock price). Enron, WorldCom, Global Crossing, Color Tile, Polaroid, Kmart, and Lucent are just some of the firms whose financial difficulties have resulted in significant 401(k) plan losses for covered employees.112 Firms in some industries such as airlines, steel, and trucking have negotiated ESOPs as a management trade-off for union wage concessions.113 Employee stock ownership plans under union contracts are more likely to permit union employees to vote their own shares of stock, have some direct represen- tation on the governing board of the plan, and be more involved in the development and implementation of the plan.

Research on the effects of ESOPs on labor relations is tentative at this time because of the lack of widespread or long-term experience. However, a few preliminary conclu- sions may be reported:114

Labor management cooperation does not emerge automatically when publicly traded companies move into employee ownership. Employee ownership leads to greater identification of the employees with the com- pany, and employees receive more information about the company; supervisor employee relations become more cooperative; and employees and managers express positive attitudes about employee ownership and the organizational climate. No evidence supports the concern that employees want to take over companies with ESOPs and restructure management roles and authority from top to bottom. Employee ownership does not have an automatic effect on employees motivation, work effort, absenteeism, or job satisfaction; however, greater integration of the employee into the organization and more employee participation in decisions do have positive results. Generally, the role of the union does not change except when the union made an early and ongoing effort to become involved in the change process, and unions ini- tiate few changes in labor management relations. Companies with an active employee ownership philosophy that try to translate it into concrete cooperative efforts have the strongest effect on positive employee attitudes. The presence of an ESOP does not make a firm more productive, efficient, or prof- itable; however, most studies show that employee-owned firms performed success- fully on a number of financial variables, such as profits, stock appreciation, sales, and employment growth.

CHAPTER 7 Economic Issues 359

The proportion of private-sector employees who have access to a defined benefit pension plan has declined since 1985 when this type of plan covered 75 percent of all workers in pension plans and 85 percent of union workers. In 2011, 70 percent of union workers and only 14 percent of nonunion workers had access to a defined benefit pension plan.115 Unionized workers (67 percent) are much more likely to participate in a defined benefit plan than nonunion workers (13 percent). Only 46 percent of nonunion employees participate in any type of pension plan compared to 82 percent of union represented employees.

Forty-one percent of nonunion employees participate in a defined contribution pen- sion plan compared to 44 percent of union-represented workers. In addition to the employer s contributions, an employee may also contribute as many of his or her own dollars to the defined contribution pension account s balance as desired. A low or nega- tive personal savings rate and a high level of consumer debt often make it difficult for employees to find personal funds to invest in their pension savings account. On average, U.S. households carry about $8,000 in credit card debt, and between 43 and 50 percent of families spend more than they earn annually.116 Most experts suggest that an employee will need to generate 70 to 85 percent of their preretirement income to main- tain a comparable lifestyle in retirement.117 Employees often express a desire or per- ceived need to save more for retirement purposes but most also believe they are not able to do so, creating a disconnect between stated goals and actual behavior.118

The ultimate value of an employee s retirement benefit under a defined contribution pension plan depends on the amount of employer and employee contributions to the account, along with the investment gains or losses experienced by the account. A defined contribution plan shifts the investment risk from the employer to the employee for ensur- ing at the time of actual retirement that pension funds available will be sufficient to fund the individual s retirement lifestyle. Allowing the employer to determine the amount of the firm s contribution rather than guarantee the value of the account at the time of retirement permits an employer to control the cost of providing a pension benefit.

Defined contribution plans are not insured unlike defined benefit plans whose value is insured by the federal government through the Pension Benefit Guaranty Corpo- ration (PBGC) should the employer default on pension obligations. The value of many pension plan assets were hard hit by the stock market decline in 2008, and recovery has been gradual. Funding for defined benefit plans of S & P 500 companies dropped to 69.5 percent of projected liabilities in 2012, but increased as the stock market recovered, beginning 2014 with 95 percent of projected liabilities. Even so, many pensions remain underfunded and some employers are seeking to end their defined benefit pension plans, replacing them with annuities from an insurer. In contrast to defined benefit pension plans, defined contribution plans are more common among nonunion employers: 53 percent of union workers and 59 percent of nonunion workers in private industry in the United States had access to a defined-contribution pension plan in 2011.119

When the value of a defined benefit pension fund s investments decline, an employer must make additional contributions to the pension fund to ensure pension fund liabilities are met. The Pension Protection Act of 2006 (PPA) mandates increased funding for under- funded private defined benefit pension plans.120 This can create a financial burden on a firm faced with declining profits and lower sales revenues and has led many firms to terminate their defined benefit plans and institute a defined contribution plan instead. Unless the col- lective bargaining agreement gives management the authority to modify its pension plan, a plan to change from a defined benefit to a defined contribution plan for unionized workers must first be negotiated with the union, as pensions are a mandatory bargaining issue.

360 PART 2 The Bargaining Process and Outcomes

A cash balance plan represents a retirement savings approach that combines fea- tures of both defined benefit and defined contribution plans.121 Under a cash balance plan, there are two parts to the monthly contribution. First, an employer typically agrees to make a specified contribution to an employee s retirement account, which is guaran- teed to earn a specified rate of interest generally pegged to an index such as the one-year treasury bill rate. This can provide a guaranteed level of income upon retirement, similar to a defined benefit pension. In addition to the guaranteed part of the contribution, an additional part of the monthly contribution may be invested, but with no guarantee of income (similar to a regular defined contribution plan).

On reaching retirement age, a retiree may generally choose to accept an annuity payment (e.g., $10,000 per year for life) based on the value of the account balance or receive a lump-sum distribution equal to the value of the account balance. Because the amount of benefit earned each year of employment is steady under a cash balance plan, an employee who does not anticipate remaining with the employer for an extended period might earn a greater pension benefit during a shorter employment tenure com- pared with an employee covered under a traditional defined benefit plan, which typically computes the amount of pension benefit earned based on the average of an employee s three highest salary years, which typically would not occur until late in a worker s career. Conversely, a more senior employee covered under a defined benefit plan might actually experience a 30 to 50 percent reduction in pension benefits if the pension plan were con- verted to a cash balance plan.122 A cash balance plan appears only 1 percent of union contracts down from 10 percent in 2003.123

Pension plans under union contracts often offer several early retirement options to an employee. For example, agreements provide such options as retirement at age 60 after 10 years of service; retirement at age 55, but only when the combined age and service years equal 85; or retirement after 30 years of service, without regard to age. Another topic is vesting. If a pension is vested, then an employee who leaves the firm can with- draw his or her pension benefit (e.g., putting what the employer has contributed into an Individual Retirement Account); if a pension is not vested, then the employee is only entitled to what he or she contributed not to what the employer contributed. Although nearly all of union contracts contain vesting provisions stating that an employee whose service is terminated continues to be entitled to earned benefits, the Employee Retire- ment Income Security Act (ERISA) of 1974, as modified by the Pension Protection Act of 2006, has very specific regulations governing vesting requirements of pension plans.124 Under a cliff vesting schedule, a qualified retirement plan must, at a mini- mum, permit a participant to earn a nonforfeitable right to 100 percent of his or her accrued benefit derived from the employer s contributions after five years of service. Alternatively, under a graded vesting schedule, (sometimes called a stair step sched- ule), a plan participant would be 20 percent vested after three years of service, 40 percent after four years, 60 percent after five years, 80 percent after six years, and 100 percent vested after seven years of service. Special vesting rules apply to elective deferrals and matching contributions. Elective deferrals are contributed to the pension plan by the employee s direction, as when an employee authorizes paycheck deductions toward his/ her 401(k) plan; elective deferrals must be immediately vested. Matching contributions (where the employer matches an employee s contributions to a plan such as a 401(k) plan) generally must vest at least as rapidly as under one of the two minimum vesting schedules described above. Although management and labor may negotiate provisions covering pensions that are more favorable than the law requires, most agreements corre- spond to the legal minimum.

CHAPTER 7 Economic Issues 361

Family and Child-Care Benefits After an eight-year effort in the U.S. Congress, the Family and Medical Leave Act (FMLA) of 1993 was passed.125 The FMLA requires private-sector employers of 50 or more employees to provide eligible employees up to 12 weeks of unpaid leave for their own serious illness; the birth or adoption of a child; or care of a seriously ill child, spouse, or parent. For eligibility, an employee must have been employed for at least one year and worked at least 1,250 hours within the previous 12 months. The Department of Labor (DOL) is assigned administrative responsibility for the act, and civil suits by employees are allowed. Small employers with fewer than 50 employees are exempt from coverage under the FMLA. The law only covers approximately 11 percent of private-sector employ- ers; these covered firms employ less than 60 percent of all private-sector employees.126

Therefore, many U.S. workers are not covered. The FMLA has served to make employers more aware of family work/life issues

without imposing any significant costs or administrative burdens on employers.127 The U.S. Department of Labor reports that 16.5 percent of eligible employees actually take leave time provided under the FMLA with a median length of ten days leave.128 The most common reason for taking leave is for an employee s own health (52.4 percent), followed by care for a newborn, newly adopted, or newly placed foster child (18.5 per- cent). Among employees who needed to take leave but did not, the most common reason cited for not taking leave was they could not afford to do so (77.6 percent). This has prompted some advocates to encourage Congress to amend the FMLA to provide paid rather than unpaid leave. In 2004, California became the first state to authorize partially paid family and medical leave benefits under the state s disability insurance fund; in 2015, the state required employers to provide at least three days of paid sick leave each year, based upon the hours the employee has worked. Legislation to provide paid family leave benefits have been introduced in 27 other states.129 Currently, 70 percent of union- ized employees but only 60 percent of nonunion employees have access to paid sick leave. In 2015 legislation entitled The Healthy Families Act was introduced in Congress to require employers with 15 or more employees to provide an employee up to 56 hours of paid sick leave to be earned at the rate of one hour of paid sick leave for every 30 hours worked.130 Many employers, especially small business owners, oppose any expansion of employee coverage or amount of leave entitlement, citing cost and admin- istrative burdens.

Unions are free to negotiate family and medical benefits that exceed those provided by the FMLA. Because family and medical leave is a mandatory subject of bargaining, the employer is legally obligated to bargain with the union over these subjects.131 Nego- tiable issues might include the amount of leave provided and reasons for taking leave, paid or unpaid status of leave time granted, substitution of other paid leave (e.g., sick leave, vacation days) for unpaid FMLA leave, or the method used to determine what 12-month period is used to calculate the 12 weeks of unpaid FMLA leave available within a 12-month period (e.g., calendar year, 12-month period beginning with the employee s date of hire, 12-month period beginning when the employee s first FMLA leave starts). If the company and union have negotiated a general nondiscrimination clause, it is important to ensure that specific laws, such as the FMLA to which the con- tract clause applies, are included in the contract language. This would permit the resolu- tion of FMLA disputes under the parties contract grievance-arbitration procedure rather than requiring an employee to file a complaint with the U.S. Department of Labor or pay a private attorney to pursue a court claim.

362 PART 2 The Bargaining Process and Outcomes

Other Benefits

Companies and unions also bargain over a wide range of other benefits. The American Bar Association estimates that half of all U.S. citizens need the services of an attorney annually.132 Prepaid legal service plans are a relatively inexpensive means of providing legal assistance to employees without imposing substantial administrative burdens on an employer. Legal services are provided by 10 percent of employers under their collective bargaining agreements.133 Prepaid legal service plans operate in a manner similar to HMOs. In exchange for a monthly premium ($16 to $26), subscribers are entitled to free legal advice, representation, and document reviews from a network of approved attorneys who provide the service for a fixed fee paid by the plan s provider. Some plans offer a full array of services, ranging from counsel for criminal offenses to routine matters such as a will, divorces, house closings, and landlord tenant problems.

Approximately 58 percent of collective bargaining agreements provide some type of employee assistance plan (EAP), which provides counseling services to 71 percent of unionized employees, covering a wide range of problems such as personal finance, mari- tal relationships, stress management, or substance abuse. By contrast, only 48 percent of nonunion workers have access to an EAP.134 The U.S. Labor Department estimates that employers save $14 in costs related to employees problems for every one dollar invested in an EAP program.135 Many employers and unions view an EAP plan as another means of effectively managing employee health care costs in a proactive manner by providing employees with timely assistance in identifying and resolving problems.

Wellness programs that provide employees with opportunities to pursue a healthier lifestyle received favorable treatment under the Patient Protection and Affordable Care Act, which should encourage more employers to offer this benefit in the future. Approx- imately 63 percent of union contracts offer wellness programs; this provides access to 44 percent of union members. By contrast, only 36 percent of nonunion workers in the pri- vate sector have access to some type of wellness program.136 Wellness programs help employees to address a variety of health care issues such as job stress, weight control, smoking, high cholesterol or blood pressure, excessive alcohol consumption, diabetes, and engaging in more exercise.

The need to improve employee job skills to match changing job requirements has led some firms to provide employees education tuition aid.137 Present in 48 percent of recent labor agreements sampled, education tuition aid helps to cover expenses incurred by an employee who seeks additional education and training related to the employee s career. While some firms (e.g., Sprint Nextel, General Motors) suspended tuition aid plans during the recent recession, most companies continue to fund such programs as a good investment in the retention and development of employees. Other types of employee benefits found in labor agreements samples included: transportation subsidy (approximately 20 percent of recent contracts) to offset travel expenses to and from work, more common in nonmanufacturing firms, child-care assistance (8 percent of contracts available to 15 percent of union members; also available to 10 percent of non- union workers), and a free or subsidized home computer (4 percent).138

Union Effects on Wages and Benefits

The degree to which unions influence wage and benefit levels is a commonly debated subject among labor economists. In a 1963 classic book, Unionism and Relative Wages

CHAPTER 7 Economic Issues 363

in the United States, Greg Lewis concluded that union wages ranged between 10 and 15 percent higher than nonunion wages.139 By the 1970s the union wage differential had climbed to 20 to 30 percent in most industries. The union wage effect is greater for jobs requiring less than a college degree, so it has a greater impact on wages of blue- collar employees, younger employees, and less-educated employees.140 Since the 1980s an increasingly competitive global economy has served to narrow the union nonunion wage differential; in 2011, it was approximately 18 percent.141

The data in Exhibit 7.7 present the union nonunion wage differential by industry in the United States. A positive union wage advantage is present in every industry listed except professional/ business services and finance/insurance. Unlike in Europe where narrower union nonunion wage differences appear to foster more cooperative labor rela- tions, there does not appear to be any significant lessening of employer opposition to unions in the United States, despite the narrowing wage gap. Perhaps this merely indi- cates that the gap has not narrowed sufficiently in the view of many employers to war- rant a change in their labor relations philosophy. Unions also have a spillover effect on wages and benefits in nonunion companies. Union wage and benefit changes spill over into nonunion companies because nonunion employers who want to retain their non- union status will respond to union wage increases by raising the wages of their employ- ees.142 Improvements are provided not only to reduce the threat of unions but to provide equity and maintain morale and productivity.

Exhibit 7.7 Union versus Nonunion Employee Median Weekly Earnings, 2014

Industry Union Nonunion Weekly Union $ Advantage

Annual Union $ Advantage

Construction $1,123 $724 $399 $20,748

Manufacturing 861 807 54 2,808

Wholesale and retail trade 669 638 31 1,612

Transportation and warehousing 947 748 199 10,348

Information (including publishing, motion pictures, sound recording, broadcasting, and telecommunications)

1,115 1,029 86 4,472

Finance and insurance 880 991 111 5,772

Professional and business services 805 918 113 5,876

Health care and social assistance 893 740 153 7,956

Leisure and hospitality 636 500 136 7,072

Public sector (federal, state, local) 1,014 850 164 8,528

Nonunion data include the earnings of managers and other salaried (nonbargaining unit) employees.

Data for both union and nonunion groups exclude employer-paid benefits, although union members typically enjoy an even greater advantage in fringe benefit comparisons (see data in Exhibit 7.6).

SOURCE: U.S. Department of Labor, Union Members Summary, News Release, January 23, 2015, Table 4: Median weekly earnings of full-time wage and salary work- ers, at http://www.bls.gov/news.release/union2.t04.htm

364 PART 2 The Bargaining Process and Outcomes

Summary Economic issues include wages and a variety of eco- nomic benefits that make up what is commonly called the economic package. The negotiation of economic issues consumes a substantial amount of time, and out- comes on such issues affect both parties satisfaction with the negotiation process. Wage differentials between jobs result from several industrial, occupa- tional, and regional factors. Job evaluation is a method used to determine the worth of a job to an organization and helps to ensure internal wage equity among jobs in an organization. To attract and retain qualified employees, an employer must also maintain external wage equity between similar jobs in the organization and other organizations competing to hire such labor.

In addition to a base wage, some firms also provide either individual or group wage incentives as a means of tying employee job performance more closely to the attainment of organizational objectives. Negotiators use a variety of criteria to determine an acceptable wage structure. Commonly accepted criteria include differ- ential features of jobs, comparable wages, ability to pay, productivity, and cost of living.

Because labor agreements usually are negotiated for periods greater than one year, provisions are com- monly negotiated to adjust wages during the life of the contract. Such adjustments include a fixed cents-

per-hour or percentage increase in base wages at speci- fied time intervals and/or a cost-of-living adjustment (COLA), which adjusts wages in accordance with changes in the consumer price index at specified inter- vals during the contract s term. Another less common form of wage adjustment during the term of a contract is the wage re-opener clause, which permits wages to be renegotiated at a predetermined time typically contin- gent on the occurrence of some specified event (e.g., sales or revenue target goal being achieved).

Employee benefits account for 39 percent of a unionized employer s payroll dollar compared to 28 percent for a nonunion employer. Numerous types of benefits exist. The major ones include insurance, income maintenance, premium pay, paid time off (e.g., rest period, lunch period, vacation, and holidays), pensions, and legally required payments (e.g., Social Security, workers and unemployment compensation). Employee demands to improve wages and benefits are being evaluated at the bargaining table in light of the impact such employer expenditures will likely have on a firm s ability to compete. Economic outcomes achieved in negotiations will vary across and within industries, reflecting the different operating environ- ments unions and employers confront in today s global economy.

Key Terms degree of labor intensiveness, p. 328 Job evaluation, p. 329 Job factors, p. 329 job analysis, p. 330 job description, p. 330 job specification, p. 330 Production standards, p. 332 piece-rate, p. 333 Profit-sharing plans, p. 334 gain sharing plan, p. 334 Scanlon plan, p. 335 Rucker plan, p. 335 improshare plan, p. 335 skill-based pay (SBP), p. 336 wage spread, p. 338 skill pay differential, p. 340 Two-Tier Wage Plan, p. 340 Wage comparability, p. 343

Me-Too clause, p. 344 ability to pay, p. 344 Labor productivity, p. 345 consumer price index (CPI), p. 349 cost-of-living adjustment (COLA),

p. 349 deferred wage increase, p. 349 wage re-opener, p. 349 back-loaded, p. 350 front-loaded, p. 350 even-loaded, p. 350 Lump-sum pay, p. 351 Patient Protection and Affordable Care

Act, p. 353 preferred provider organization (PPO),

p. 354 health maintenance organization

(HMO), p. 354

High deductible health care plans, p. 354 severance pay, p. 354 supplemental unemployment benefit

plan (SUB), p. 354 Work sharing, p. 355 premium pay, p. 355 Overtime premium pay rate, p. 355 shift differentials, p. 356 reporting pay, p. 356 call-in pay, p. 356 defined benefit pension plan, p. 358 defined contribution pension plan,

p. 358 401(k) plan, p. 358 Employee stock ownership plan

(ESOP), p. 359 defined contribution pension plan,

p. 360

CHAPTER 7 Economic Issues 365

Pension Protection Act of 2006, p. 360 cash balance plan, p. 361 early retirement options, p. 361 vesting, p. 361 Employee Retirement Income Security

Act (ERISA) of 1974, p. 361 cliff vesting schedule, p. 361

graded vesting schedule, p. 361 Elective deferrals, p. 361 Matching contributions, p. 361 Family and Medical Leave Act (FMLA)

of 1993, p. 362 Prepaid legal service plans, p. 363 employee assistance plan (EAP), p. 363

Wellness programs, p. 363 education tuition aid, p. 363 transportation subsidy, p. 363 child-care assistance, p. 363 home computer, p. 363 spillover effect, p. 364

Discussion Questions

1. List the main factors that may help to explain the wage differential between two different jobs in an organization with which you are familiar.

2. Explain why job evaluation plans must take into consideration external and internal factors if they are to be successful.

3. Assume that labor and management are negoti- ating a labor agreement and the wage spread becomes an issue of disagreement management wants a wider wage spread, and the union wants a smaller wage spread. Why should management be cautious about the union s proposal, even though the total costs may be the same?

4. Which party (union or management) would likely be in a stronger position to bargain for its pre- ferred wage outcome under the following condi- tions and why?

a. High profits, an expanding market share, a healthy economy, and the cost of living ris- ing less than 2 percent per year.

b. Low profits, stagnant sales growth, uncer- tain economic conditions, and a projected 4 percent annual rise in cost of living.

5. Assuming that a firm s costs for employee benefits are 38 percent of payroll, why doesn t the firm

just let the union determine the manner in which the amounts are apportioned to various benefits, such as insurance, holidays, and vacations, with- out negotiating each specific clause?

6. Which type of pension plan would you prefer to be covered under (i.e., defined benefit, defined contribution, or cash balance) and why, if you were an employee? An employer?

7. To what extent can a union exploit benefit issues (e.g., health care insurance, pension, child-care benefits, and family leave) in an effort to organize more union members? Explain your reasoning.

8. What type of control should an employee have over shares issued under an employee stock ownership plan? For example, should an employee have a right to sell their plan shares at any time or vote those shares in shareholder meetings to elect board of director candidates or approve a merger or bankruptcy plan?

9. Is early retirement (prior to age 62) still a realistic option for most employees to achieve without experiencing a substantial decline in their prere- tirement standard of living?

Exploring the Web

Economic Issues

1. Sources of Economic Data It is important to know how to find information on economic indicators that affect wages benefits. Using the Web site for the Bureau of Labor Statistics at http://www.bls.gov/, (or its publication, the Monthly Labor Review) please answer the following questions:

(a) What was the annual inflation rate last year? (Remember that the inflation rate is the per- centage change in the consumer price index over a specific period of time.)

(b) Over a recent 12-month period, did real aver- age weekly earnings increase 2 percent or more?

366 PART 2 The Bargaining Process and Outcomes

(c) As of November of last year, which three states had the highest and which three states had the lowest unemployment rates?

2. Explore the homepage of the latest National Com- pensation Survey at http://www.bls.gov/ncs/ (or http://www.bls.gov/ncs/ncspubs.htm for a list of some relevant reports) to learn more about occupa- tional wages, employment cost trends, and the avail- ability of different types of benefits to employees.

3. Explore the homepage of the Occupational Pay Relatives (OPR) at http://www.bls.gov/newsrelease/

ncspay.toc.htm to compare wage rates for similar jobs in different geographic areas.

4. Explore the recent publications by the International Labor Organization http://www.ilo.org/global/lang--en/ index.htm. Click on research or publications and find a recently published report that interests you, that you can download for free (e.g., World Employment and Social Outlook: Trends). What are the key points of the report? How do they relate to this chapter? How does the ILO perspective differ from that of domestic sources?

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CHAPTER 7 Economic Issues 367

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CHAPTER 7 Economic Issues 369

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60. Jeffrey B. Arthur and Linda Aiman-Smith, Gainsharing and Organizational Learning: An

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70. Hristos Douculiagos, Patrice Laroche, and T. D. Stanley, Publication Bias in Union-productivity Research? Relations Industrielles, 60(2), 2005, pp. 320 344; Brian Chezum and John E. Garen, Are Union Productivity Effects Overestimated?

Evidence from Coal Mining, Applied Economics, 30, July 1998, pp. 913 918; Merwin W. Mitchell and Joe A. Stone, Union Effects on Productivity: Evidence from Western Saw Mills, Industrial and Labor Relations Review, 46, October 1992, pp. 135 145; J. T. Addison and A. H. Barnett, The Impact of Unions on Productivity, British

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71. Robert Girtz, "The Mediation Effect of Education on Self-Esteem and Wages." Journal of Labor Research 35(4), 2014, pp. 358 372; Susan Fleck, John Glaser, and Shawn Sprague, The Compensation-Productivity Gap: A Visual Essay, Monthly Labor Review, 134(1), 2011, pp. 57 69; Horst Brand, U.S. Workers Confront Growing Insecurity, Dissent, 56(4), 2009, pp. 48 53; Rebecca Keller, How Shifting Occupational Com position Has Affected the Real Average Wage, Monthly Labor Review, 132(6), 2009, pp. 26 38; Richard B. Freeman, America Works: Critical Thoughts on the Exceptional U.S. Labor Market (New York: Russell Sage Foundation, 2007); Michael Greenstone and Adam Looney, The Uncomfortable Truth about American

Wages, The New York Times [online edition], Oct. 22, 2012, at http://economix.blogs.nytimes. com/2012/10/22/the-uncomfortable-truth-about- american-wages/?_r=0; Sam Pizzigati, Long Live

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72. Union Productivity Effects, Monthly Labor Review, 108, January 1985, p. 60; Richard B. Freeman and James L. Medoff, What Do Unions Do? (New York: Basic Books, Inc., 1984), pp. 162 190.

73. David A. Dilts, The Consumer Price Index as a Standard in Negotiations and Arbitration, Jour- nal of Collective Negotiations in the Public Sector, 23(4), 1994, pp. 279 285.

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75. Walter Lane and Mary Lynn Schmidt, Compar- ing U.S. and European Inflation: The CPI and the HICP, Monthly Labor Review, 129(5), 2006, pp. 20 27.

76. U.S. Bureau of Labor Statistics, Consumer Price Index: February, 2015, News Release, March 24, 2015, pp. 1 2 at http://www.bls.gov/news.release/ pdf/cpi.pdf; U.S. Bureau of Labor Statistics, Consumer Price Index: February, 2014, News

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77. The Bureau of National Affairs, Inc., First-Year Wage Hike of 1.7 Percent Reported to Date in 2010, Collective Bargaining Bulletin, 15(20), 2010, p. 118.

78. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p 33; The Bureau of National Affairs, Inc., Employer Bar- gaining Objectives 2010, Collective Bargaining Bulletin, 15(5), 2010, p. S-13.

79. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p 33; Andrew Teague, Major contract settlements & negotiations, Lexology [online Newsletter],

372 PART 2 The Bargaining Process and Outcomes

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80. Robert Combs, Labor Stats and Facts: Employer Bargaining Objectives for 2013, BNA Labor and Employment Blog, April 15, 2013, at http://www. bna.com/labor-stats-facts-b17179873355/; The Bureau of National Affairs, Inc. Frequency of Lump-sum Payments Edged Up in 2009, Collective Bargaining Bulletin, 15(4), 2010, pp. 21 22.

81. U.S. Bureau of Labor Statistics, Employer Costs For Employee Compensation: December, 2014, News Release, March 11, 2015, Table 5, p. 11, at http://www.bls.gov/news.release/pdf/ecec.pdf.

82. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp. 29 65; George I. Long, Differences Between Union and Nonunion Compensation, 2001 2011, Monthly Labor Review, 136(4), April, 2013, pp. 16 23; also see, Joseph A. Ritter, Racial and Ethnic Differ- ences in Nonwage Compensation, Industrial Relations: A Journal of Economy and Society, 52(4), 2013, pp. 829 852; U.S. Bureau of Labor Statistics, Employee Benefits in the United States March, 2015, News Release, July 24, 2015, Table 5, pg. 14, at: http://www.bls.gov/news. release/pdf/ebs2.pdf.

83. Utility Workers Union of America UWUA Local 123; DTE Workers/Local 223 Utility Workers Union of America UWUA Members Protest Out of Control Executive Pay, Profits at the Expense of Consumers and Bad Faith Bargaining with 96 Percent Approval of Strike Authorization Vote, Economics Week, June 18, 2010, p. 175 at http:// www.proquest.com/ (accessed December 13, 2010); Julie Wemau, Workers Authorize Strike at 5 Downtown Starwood Hotels, MCClatchy, Tri- bune Business News, October 28, 2009, pp. 1 2 at http://www.proquest.com/ (accessed December 13, 2010); Joshua Partlow, Health Care a Grow- ing Issue in Labor Talks, Washington Post, June 18, 2003, p. E2; Rising Health Care Costs Posing Challenges for Unions at the Bargaining Table, Labor Relations Research Association Online, December 19, 2002, pp. 1 3.

84. Katherine B. Wilson, Health Care Costs 101 California Health Care Almanac, California Health Care Foundation, July 2014, pp. 1 2, at

http://www.chcf.org/publications/2014/07/health- care-costs-101.

85. The Uninsured and the Difference Health Insurance Makes, Henry J. Kaiser Family Foun- dation Fact Sheet, September 2010, pp. 1 2.

86. Stephen H. Gorin, The Patient Protection and Affordable Care Act, Cost Control, and the Battle for Health Care Reform, Health and Social Work, 35(3), 2010, pp. 163 166; Kurt L. P. Lawson, Provisions of Interest to Employers in the Patient Protection and Affordable Care Act, Daily Labor Report, April 12, 2010, pp. I 1 10; Henry J. Kaiser Family Foundation, Key Facts About the Uninsured Population October 29, 2014, at http://kff.org/uninsured/fact-sheet/ key-facts-about-the-uninsured-population/.

87. NHE Fact Sheet, Centers for Medicare and Medicaid Services, December 3, 2014, at http:// www.cms.gov/Research-Statistics-Data-and- Systems/Statistics-Trends-and-Reports/National- HealthExpendData/NHE-Fact-Sheet.html.

88. Henry J. Kaiser Family Foundation, Family Health Premiums Rise 3 Percent to $13,770 in 2010, But Workers Share Jumps 14 Percent as Firms Shift Cost Burden, News Release, September 2, 2010, pp. 1 3.

89. U.S. Bureau of Labor Statistics, Medical care benefits, single coverage: Employer and employee premiums by employee contribution requirement, March, 2014, at http://www.bls.gov/ncs/ebs/bene- fits/2014/ownership/private/table11a.htm.

90. U.S. Bureau of Labor Statistics, Medical care benefits, family coverage: Employer and employee premiums by employee contribution requirement, March, 2014 at http://www.bls.gov/ncs/ebs/bene- fits/2014/ownership/private/table13a.htm; Gary Claxton, Bianca DiJulio, Benjamin Finder, Janet Lundy, Megan McHugh, Awo Osci-Anto, Heidi Whitmore, Jeremy Pickreign and Jon Gabel, Employer Health Benefits 2010 Annual Survey (Menlo Park, CA: Henry J. Kaiser Family Foundation and Chicago, IL: Health Research & Educational Trust, 2010), pp. 89 90. Note that estimates of annual single and family premiums vary, and some are much higher than the BLS survey suggests: According to one source, in 2014, single coverage premiums averaged $6,025 and family premiums averaged $15,834, Henry J. Kaiser Family Foundation, 2014 Employer Health Benefits Survey, September 10, 2014, Exhibit B, at

CHAPTER 7 Economic Issues 373

http://kff.org/report-section/ehbs-2014-summary- of-findings/.

91. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp. 42 43.

92. Henry J. Kaiser Family Foundation, 2014 Employer Health Benefits Survey, September 10, 2014, Exhibit E, at http://kff.org/report-section/ ehbs-2014-summary-of-findings/.

93. Blue Cross/Blue Shield, IRS provides guidance on 2015 High Deductible Health Plans Out-of-Pocket Maximum Limits, April 25, 2014, at https://www. bcbsm.com/health-care-reform/reform-alerts/irs- provides-guidance-on-2015-high-deductible- health-plans.html.

94. Vanessa Fuhrmans, Health Savings Plans Start to Falter; Despite Employer Enthusiasm for Consumer-directed Approach, Patients Express Dissatisfaction with How the Accounts Work, Wall Street Journal, July 2, 2007, p. D-1.

95. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p. 62.

96. David DeKok, Workers Advised to Weigh Ben- efits, Knight Ridder Tribune Business News, March 30, 2007, p. 1; Christina Salerno, Hershey Workers to Receive Severance: Employees 55 and Older Will Keep Medical Benefits, Knight Ridder Tribune Business News, May 5, 2007, p. 1.

97. Anne E. Moran, Waivers and Severance Arrangements: EEOC Announcement Offers Reminders for Employers, Employee Relations Law Journal, 35(4), 2010, pp. 72 80.

98. Diane Cadrain, Sharing Work and Unemploy- ment Benefits, HRMagazine, 54(7), 2009, pp. 40 43; Michael Huberman, An Economic and Business History of Worksharing: The Bell Canada and Volkswagen Experiences, Business and Economic History, 26(2), 1997, pp. 404 415; George Wentworth, Claire McKenna, and Lynn Minick, Lessons Learned: Maximizing the Poten- tial of Work-Sharing in the United States, National Employment Law Project, October, 2014 at http://www.nelp.org/page/-/UI/2014/Lessons- Learned-Maximizing-Potential-Work-Sharing-in- US.pdf?nocdn=1; Katharine G. Abraham and Susan N. Houseman, Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience during the Recent Recession, Industrial Relations, 53(4), 2014, pp. 543 567.

99. U.S. Bureau of Labor Statistics, National Com- pensation Survey Summary: Table 6: Selected paid leave benefits: Access, News Release, March, 2014, at http://www.bls.gov/news.release/ebs2.t06. htm; The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washing- ton, DC: Bureau of National Affairs, Inc., 2014), pp. 55 56.

100. U.S. Bureau of Labor Statistics, Table 33: Paid Holidays Provided Private Industry Workers, National Compensation Survey, March 2010, p. 1 at http://www.bls.gov/ncs/ebs/benefits/2010/bene- fits_leave.htm.

101. Diane Stafford, The Kansas City Star, MO, Workplace Column, Knight Ridder Tribune Business News, August 21, 2003, p. 1; U.S. Short on Vacation Time, San Francisco Chronicle, July 16, 1999, p. B-4.

102. Elizabeth DiNovella, Off on Vacation, Progres- sive, 73(7), 2009, pp. 24, 26.

103. U.S. Travel Association, Overwhelmed America: Why Don t We Use Our Earned Leave? August, 2014, at http://www.projecttimeoff.com/sites/ projecttimeoff.com/files/OverwhelmedAmerica_ FullReport_FINAL_0.pdf; the 2014 results were up from a 36% figure reported nearly ten years earlier in Joel Dresang, Americans Get Less Time Off and Don t Use Up What They Get, Knight Ridder Tribune Business News, August 14, 2005, p. 1.

104. U.S. Bureau of Labor Statistics, Table 36: Paid Vacations: Number of Annual Days by Service Requirement, Private Industry Workers, National Compensation Survey, March 2010, pp. 1 2 at http://www.bls.gov/ncs/ebs/benefits/ 2010/benefits_leave.htm.

105. Central Intelligence Agency, Washington DC, Country Comparison: Life Expectancy at Birth,

The World Factbook (2014), p. 2 at https://www. cia.gov/library/publications/the-world-factbook/ fields/2102.html#138.

106. U.S. Bureau of Labor Statistics, Employee Bene- fits in the United States, March 2014, News Release, July 25, 2014, p. 5, at http://www.bls.gov/ news.release/pdf/ebs2.pdf.

107. Ohio Public Employees Retirement System v. Betts, 492 U.S. 158 (1989).

108. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp. 49 50.

374 PART 2 The Bargaining Process and Outcomes

109. Ibid, pp. 50 51. 110. Towers Watson, 2010 Defined Contribution

Survey, Pension Benefits, 19(11), 2010, pp. 2 3. 111. Adria Scharf, Unions and ESOPs: Building a

Better Employee Stock Ownership Plan, Dollars and Sense, September 1999, p. 48; Patrick P. McHugh, Joel Cutcher-Gershenfeld, and Michael Polzin, Employee Stock Ownership Plans: Whose Interests Do They Serve? Proceedings of the 49th Annual Meeting of the Industrial Rela- tions Research Association (Madison, WI: Indus trial Relations Research Association, 1997), pp. 23 32; The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washing- ton, DC: Bureau of National Affairs, Inc., 2014), p. 58; Roger G McElrath and Richard L. Rowan, The American Labor Movement and Employee

Ownership: Objections to and Uses of Employee Stock Ownership Plans, Journal of Labor Research, 13, Winter 1992, pp. 99 103.

112. James J. Choi, David Laibson, Brigitte C. Madrian, William Gale, and Nellie Liang, Are Empower- ment and Education Enough? Under- diversification in 401k Plans, Brookings Papers on Economic Activity Issue 2, 2005, pp. 151 213 at http://www.brookings.edu/~/media/projects/ bpea/fall-2005/2005b_bpea_choi.pdf.

113. Joseph R. Blasi, Employee Ownership through ESOPs: Implication for the Public Corporation (New York: Pergamon Press, 1987), pp. 29 30.

114. Patrick P. McHugh, Joel Cutcher-Gershenfeld, and Diane L. Bridge, Examining Structure and Process in ESOP Firms, Personnel Review, 34(3), 2005, p. 289; Joseph Blasi, Michael Conte, and Douglas Kruse, Employee Stock Ownership and Corporate Performance among Public Compa- nies, Industrial and Labor Relations Review, 50(1), 1996, pp. 60 79; Blasi, Employee Ownership through ESOPs, 1987, pp. 40 44.

115. George I. Long, Differences Between Union and Nonunion Compensation, 2001 2011, Monthly Labor Review, 136(4), April, 2013, pp. 16 23; Olivia S. Mitchell, Pensions and Older Workers, in The Older Worker, eds. Michael E. Borus, Herbert S. Parnes, Steven H. Sandell, and Bert Seidman (Madison, WI: Industrial Relations Research Association, 1988), pp. 151 166; U.S. Bureau of Labor Statistics, Table 2: Retirement Benefits: Access, Participation, and Take-up

Rates, Private Industry Workers, National Com- pensation Survey, March 2010, p. 1 at http://www. bls.gov/ncs/ebs/benefits/2010/ownership/private/ table02a.pdf.

116. Kim Khan, How Does Your Debt Compare? MSN Money, at http://moneycentral.msn.com/ content/savingsanddebt/p70581.asp (accessed December 25, 2010); Bonnie Kavoussi, Half of Americans are Spending More Than They Earn But Don t Realize It The Huffington Post, May 17, 2012 at http://www.huffingtonpost.com/2012/ 05/17/americans-spending-more-than-they- earn_n_1523920.html.

117. Charles Steindel, How Worrisome Is a Negative Saving Rate? Current Issues in Economics and Finance, 13(4), 2007, pp. 1 7; Christian E. Weller, Need or Want: What Explains the Run-up in

Consumer Debt? Journal of Economic Issues, 41(2), 2007, pp. 583 591; U.S. Department of Labor, The State of Retirement Savings, Saving for Your Golden Years: Trends, Challenges and Opportunities (Washington, D.C: U.S. Depart- ment of Labor, 2006), p. 3.

118. Melissa A.Z. Knoll, The Role of Behavioral Eco- nomics and Behavioral Decision Making in Americans Retirement Savings Decisions, Social Security Bulletin, 70(4), 2010, pp. 1 3; Myeong Hwan Kim, The Determinants of Personal Sav- ings in the U.S., Journal of Applied Business Research, 26(5), 2010, p. 35.

119. Ashlea Ebeling, Companies Prepare to Dump Pension Plans, Forbes [online edition], March 19, 2014, http://www.forbes.com/sites/ashleaebeling/ 2014/03/19/companies-prepare-to-dump- pension-plans-in-2014/; George I. Long, Differ- ences Between Union and Nonunion Compensation, 2001 2011, Monthly Labor Review, 136(4), April, 2013, pp. 16 23.

120. Barbara Apostolou and Nicholas G Apostolou, Recent Developments in Pension Accounting:

The FASB and IASB Move Toward Conver- gence, CPA Journal, 79(11), 2009, pp. 46 50; Jerry Geisel, Obama Signs Pension Funding Relief Bill, Business Insurance, 44(26), 2010, p. 3.

121. U.S. Department of Labor, What You Should Know about Your Retirement, (Washington, DC: U.S. Department of Labor, Employee Benefits Security Administration, 2010), pp. 3, 35 and U.S. Department of Labor, Frequently Asked Questions about Cash Balance Pension Plans, 2010, pp. 1 5

CHAPTER 7 Economic Issues 375

at http://www.dol.gov/ebsa/faqs/faq_consumer_ cashbalanceplans.html (accessed December 27, 2010).

122. Curt Anderson, Congress, Feds Examine Pension Plan, Associated Press, September 22, 1999, pp. 1 3 at http://washingtonpost.com/wp-srv/ aponline/19990922/aponline/023454_000.htm.

123. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp. 50 51.

124. U.S. Department of Labor, What You Should Know About Your Retirement, October 2010, pp. 5 10; Joint Committee on Taxation, Technical Explanation of H.R. 4, The Pension Protection Act of 2006, As Passed by the House on July 28, 2006 and as considered by the Senate on August 3, 2006, (JCX-38-06), August 3, 2006, pp. 233 234; Mark J. Warshawsky, The New Pension Law and Defined Benefit Plans: A Surprisingly Good Match, Journal of Pension Benefits, 14(3), Spring 2007, pp. 14 27.

125. U.S. Department of Labor, Fact Sheet #28: The Family and Medical Leave Act of 1993, February 2010, pp. 1 5 at http://www.dol.gov/whd/regs/ compliance/whddfs28.pdf; Linda B. Dwoskin and Melissa Bergman Squire, FMLA Boot Camp: Regulatory and Case Law Developments under the Family Medical and Leave Act, Labor Law Journal, 61(1), 2010, pp. 37 51; Jane Waldfogel, Family Leave Coverage in the 1990s, Monthly

Labor Review, 122(10), 1999, pp. 13 21. 126. R. Mitch Casselman, Michael J. Gundlach, James

F. Morgan, and Suzanne Zivnuska, Legally Mandated Paid Sick Leave: Response Options for Businesses and Managers, SAM Advanced Man- agement Journal, 74(2), 2009, pp. 13 15; Jane Waldfogel, Family and Medical Leave: Evidence from the 2000 Surveys, Monthly Labor Review, 124(9), 2001, pp. 17 23.

127. U.S. Department of Labor, Family and Medical Leave Act Regulations: A Report on the Depart- ment of Labor s Request for Information, Federal Register, 72(124), 2007, pp. 33549 35638; Charles L. Baum II, The Effects of Government- Mandated Family Leave on Employer Family Leave Policies, Contemporary Economic Policy, 24(3), 2006, pp. 432 445; Michael Prince, FMLA Hasn t Been a Big Burden for Employers, Busi- ness Insurance, September 29, 2003, pp. 1 4.

128. David Cantor, Jane Waldfogel, et al., Balancing the Needs of Families and Employers: The Family Medical Leave Surveys, 2000 Update (Rockville, MD: Westat, 2000).

129. Michelle Andrews, California Passes Law to Require Paid Sick Leave, PBS News hour, Octo- ber 3, 2014, at http://www.pbs.org/newshour/ rundown/california-paid-sick-leave-law/; Lisa M. Cal and Brian H. Kleiner, California s Recent Paid Family Leave Law, Equal Opportunities International, 24(5/6), 2005, pp. 65 78; California Authorizes Partially Paid Family and Medical Leave, HR Focus, 79, November 2002, p. 8.

130. U.S. Bureau of Labor Statistics, National Com- pensation Survey Summary: Table 6: Selected paid leave benefits: Access, News Release, March, 2014, at http://www.bls.gov/news.release/ebs2.t06. htm; Linda Meric, The Healthy Families Act: For Healthy Families, Healthy Businesses, and a Healthy Economy, The Huffington Post, [online edition], Feb. 13, 2015, at http://www.huffington post.com/linda-meric/the-healthy-families-act-_b_ 6672298.html.

131. AFL-CIO Working Women s Department, Bar gaining Fact Sheet: Family Leave and Expanding the Family and Medical Leave Act (Washington, DC: AFL-CIO, 2001), pp. 1 4; Frederick L Douglas, Collective Bargaining under the Family and Medical Leave Act, Labor Law Journal, 45(2), 1994, pp. 102 105.

132. Scott Smith, Prepaid Legal Services Catching On: Plans Offer Low Cost Access to a Lawyer, but Experts Advise Caution, Knight Ridder Tribune Business News, February 12, 2007, p. 1; Ryan Mahoney, Prepaid Legal Insurance Plans: Justice For All? Birmingham Business Journal, 20, January 17, 2003, pp. 1 3; Charlotte Garvey, Access to the Law, HR Magazine, 47(9), 2002,

pp. 82 92. 133. The Bureau of National Affairs, Inc., Employer

Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p. 58.

134. Ibid; U.S. Bureau of Labor Statistics, National Compensation Survey Summary: Table 40: Qual- ity of Life Benefits, Private Industry Workers, News Release, March, 2014, at http://www.bls.gov/ ncs/ebs/benefits/2014/ownership/private/table40a. pdf.

135. Fonda Phillips, Employee Assistance Programs: A New Way to Control Health Care Costs,

376 PART 2 The Bargaining Process and Outcomes

Employee Benefit Plan Review, 58, August 2003, pp. 22 24.

136. Peter C. Brewer, Angela Gallo, and Melanie R. Smith, Getting Fit with Corporate Wellness Programs, Strategic Finance, 91(11), 2010, pp. 27 33; Eli R Stoltzfus, Access to Wellness and Employee Assistance Programs in the United States, Medical Benefits, 26(13), 2009, pp. 8 9; Wellness Programs Assist Employees, Reduce

Health Care Costs, Panel Says, Daily Labor Report, October 22, 2009, p. A-6; The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp. 42; U.S. Bureau of Labor Statistics, National Compensation Sur- vey Summary: Table 40: Quality of Life Benefits, Private Industry Workers, News Release, March, 2014, at http://www.bls.gov/ncs/ebs/benefits/ 2014/ownership/private/table40a.pdf.

137. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp. 58; Most Tuition Aid Programs Hold Steady in

Recession, Managing Benefit Plans, 9(7), 2009, pp. 1, 11 15; Erin White, Theory and Practice: Corporate Tuition Aid Appears to Keep Workers Loyal; Studies Reinforce View of Improved Retention; UTC s Plan Stands Out, Wall Street Journal, May 21, 2007, p. B-4; Dale K. DuPont, Tuition Aid That Makes the Grade, HR Maga-

zine, 44(4), 1999, pp. 74 80. 138. The Bureau of National Affairs, Inc., Employer

Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp. 58; The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2010, p. S-22; U.S. Bureau of Labor Statistics, National Compensation Sur- vey Summary: Table 40: Quality of Life Benefits,

Private Industry Workers, News Release, March, 2014, at http://www.bls.gov/ncs/ebs/benefits/ 2014/ownership/private/table40a.pdf.

139. Greg Lewis, Unionism and Relative Wages in the United States (Chicago: University of Chicago Press, 1963).

140. Rudy Fichtenbaum, Labour Market Segmenta- tion and Union Wage Gaps, Review of Social Economy, 64(3), 2006, pp. 387 420.

141. George I. Long, Differences Between Union and Nonunion Compensation, 2001 2011, Monthly Labor Review, 136(4), April, 2013, pp. 16 23; David Neumark and Michael L. Wachter, Union Effects on Nonunion Wages: Evidence

from Panel Data on Industries and Cities, Industrial and Labor Relations Review 49, October 1995, pp. 20 38; Richard B. Freeman and James L. Medoff, The Impact of Collective Bargaining: Illusion or Reality, in U.S. Indus- trial Relations 1950 1980: A Critical Assessment, eds. J. Stieber, R. B. McKersie, and D. Q. Mills (Madison, WI: Industrial Relations Research Association, 1981), pp. 53 54; Cihan Bilginsoy, Union Wage Gap in the U.S. Construction

Sector: 1983 2007, Industrial Relations: A Journal of Economy and Society, 52(3), 2013, pp. 677 701.

142. Susan Vroman, The Direction of Wage Spillover in Manufacturing, Industrial and Labor Relations Review, 36, October 1982, pp. 102 103; Anil Verma, What Do Unions Do to the Work place? Union Effects on Management and HRM Poli- cies, Journal of Labor Research, 26(3), 2005, pp. 415 449; Bengt Furåker, and Mattias Bengts- son, Collective and individual benefits of trade unions: a multi-level analysis of 21 European countries, Industrial Relations Journal 44(5/6), 2013, pp. 548 565.

CHAPTER 7 Economic Issues 377

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7- 1 Adding Insult to Injury

Background At the Zooming-Arrow bus lines (ZA), the mechanics were represented by a union. Mr. Jordan Haier (the Grievant), a maintenance mechanic, complained of severe elbow and arm pain as he removed the cracked windshield of a bus in November of last year. Conse- quently, ZA filed a report on his behalf with the state Worker s Compensation Board. From December to February, Mr. Haier received therapy and treatment while working light duty in the Parts Department, consistent with his physician s restrictions. In late Feb- ruary, he saw an orthopedic specialist who recom- mended surgery. Because the company allows transitional or light duty work for only 90 days, and because of the impending surgery, Mr. Haier was placed on full disability as of March 1st.

In mid-March, Mr. Haier applied for a mechanic position with Wistful Vistas (WV), a competing bus line. Mr. Haier stated in his WV application that he currently worked for ZA and that he had previously been injured on the job. However, he identified no medical restrictions when he filled out his employment application. He was hired on March 25th.

Mr. Haier received state Temporary Total Disability (TTD) payments in the amount of $500 per week while working as a mechanic for WV from April 8th until April 26th. On April 30th, the Grievant had radial tunnel decompression surgery and did not work throughout the month of May. The surgeon authorized the Grievant to return to work with restrictions on June 5th. ZA did not allow Mr. Haier to return to work on transitional duty, pursuant to its 90 day limit. Thus, he remained on leave and did not return to work at ZA until August 19th.

Meanwhile, WV allowed him to return to work in July and accommodated his restrictions. On July 29, the state Worker s Compensation Board notified Mr. Haier that his TTD payments were being suspended based upon their discovery of his work for WV. Upon learning of the Board decision, ZA investigated and concluded that Mr. Haier had been dishonest with ZA managers. They terminated his employment on Sept. 13th for dishonesty. Mr. Haier filed a grievance and the union appealed his termination decision to arbitration.

Position of the Company Mr. Haier has lied to everyone. He obviously lied to Wistful Vistas about whether there were any restric- tions on his ability to work when he applied to work there. He apparently did not tell WV that he was receiving Worker s Compensation while also employed. He lied to the state by not telling the government of his employment by WV at the same time that he was receiving Worker s Compensation. It is widely known that it is against state law to work while receiving Worker s Compensation; the state program is designed to compensate someone while they recuperate from an occupational injury or illness. Working jeopardizes this recovery process because the patient risks worsening the injury by working.

Finally, the Grievant lied to Zooming-Arrow. On Sept. 5th, he was interviewed by ZA manager, Andrew Molzahn, with union steward Tommy Barfield present. During that interview, Mr. Molzahn asked the Grievant if he had been working for any Company besides ZA, and the Grievant responded yes, indicating that he was working for WV. When Mr. Molzahn asked the Grievant how long he had been doing full-time, full- duty work for WV, the Grievant stated that, although he had been hired in early March, he did not begin working for WV until several weeks later and that he had only been given full-duty work after the sur- geon s restrictions were lifted in August. The time mentioned was, coincidentally, the time when Worker s Compensation payments ended. Mr. Haier misled Mr. Molzahn because he implied that he did no work for WV prior to August. At no point during this con- versation did the Grievant mention that he worked for WV in April, July, or in August prior to coming off of Worker s Compensation leave. Finally, he admitted to Mr. Molzahn he really didn t need to abide by the light duty restrictions imposed by the surgeon. This

suggests that, in the final analysis, either Mr. Haier was lying to ZA by refusing to return to work in a timely manner or he was lying to himself, because he now thinks he can do work that he was actually incapable of performing.

We note that arbitrators routinely uphold an employer s right to terminate employees for dishonesty. Dishonesty is a most serious offense. Both the

378 PART 2 The Bargaining Process and Outcomes

employee and the employer in an employer/employee relationship have the right to expect honesty, truthful- ness, and fair dealing in that relationship. Further, tak- ing wages and benefits under false pretenses constitutes dishonesty and is just cause for discharge. Mr. Haier was aware of the company rules: When hired, he signed and acknowledged receiving both (1) a copy of the col- lective bargaining agreement, which states that employ- ees may be disciplined for just cause, and (2) a copy of the ZA Rulebook. It contains the Company s rule stat- ing that employees will be subject to severe discipline, including discharge, for dishonesty. Given Mr. Haier s awareness of the rules and his deliberately misleading statements, the arbitrator should uphold the discharge.

Position of the Union The Union first noted that the employee had a fine twelve-year work record with ZA; Mr. Haier received good or excellent overall evaluations on his perfor-

mance appraisals and only two notations in his file for excessive absences, six and seven years ago. Prior to the incident requiring surgery, Mr. Haier had been injured at work twice. Neither was serious and no paid time off was taken for recuperation.

Mr. Haier is a conscientious employee: When on a ladder, removing the cracked windshield from the bus, the seal tore loose and it was all he could do to stop the windshield from crashing down on another mechanic who was below, replacing a light bulb. Whenever he had a doctor s visit or received feedback from a physi- cal therapist, Mr. Haier turned in a doctor s note to ZA and reported his prognosis for returning to work.

During the past nine years, Mr. Haier has held a second job with various other companies in the area as a mechanic. Because he is supporting his elderly mother who is in assisted living, Mr. Haier has a need for additional income. He never hid the fact that he worked a second job while working at ZA, and ZA was aware of Mr. Haier s second jobs because at times he even came to work at ZA wearing his uniform from the second job.

Our client (the Grievant) denies lying to WV on his job application. During that time, he was shuttling back and forth between doctors, specialists, and testing technicians. Although one specialist had recommended surgery, no clear diagnoses or treatment plan had been formulated and agreed upon at the time he filled out the WV application. Mr. Haier s duties at WV did not endanger recovery from his injury: He changed oil, replaced lamps, and reprogrammed software in busses. After surgery, he trained other mechanics while doing

other light duty tasks. He could have done similar work at ZA; however, ZA had a policy limiting light duty to 90 days.

ZA management did not follow proper disciplinary procedure. When meeting with the Grievant on Septem- ber 5th, Mr. Molzahn did not indicate that the purpose of the meeting was disciplinary or that Mr. Haier might be terminated. It is customary for the Union to be informed of a discipline/discharge meeting and to have time to prepare to present the employee s case.

This opportunity was not afforded to the union. Our client was honest in his answers to the questions that Mr. Molzahn asked, as he asked them. For example, Mr. Molzahn only asked about full-duty work at WV; he did not ask about light-duty work. In addition to not telling the Grievant the purpose of the meeting, the penalty imposed was inconsistent with the disciplinary procedure: Management should have imposed a suspension (if they believed a penalty was warranted); termination for a first- time offense is overly harsh and inconsistent with the principles and rules of progressive discipline.

Finally, regarding the Worker s Compensation issue, this was the first time Mr. Haier ever collected worker s compensation benefits. At no time did anyone explain how Worker s Compensation worked with respect to securing a job from second employer. Nobody told me that I couldn t, he said in a sworn

affidavit. He did not know until August that he was not supposed to collect Worker s Compensation benefits if he was working. He thought that the Worker s Com- pensation benefits he received was compensation for the fact that his 90 days of transitional duty had elapsed and he could not work for ZA until he was fully released by his physician to return to work. The Grievant never retained an attorney to represent him with respect to this Worker s Compensation claim. It is common for arbitrators to overturn or reduce management-imposed discipline when management bears some degree of responsibility for the offense. Here, management had a responsibility to explain what was expected of a ZA employee while receiving Worker s Compensation particularly since managers knew that the Grievant routinely worked other jobs. In terms of duplicate payment, Mr. Haier received both a paycheck and a state payment for only three weeks in April; state payments would have resumed in late July, but the duplication was discovered and state payments stopped. The Grievant offered to repay the money to the state (with interest) if that is appropriate. Mr. Haier may have been guilty of not

CHAPTER 7 Economic Issues 379

asking enough questions in advance; however, he is clearly not guilty of dishonesty.

In conclusion, the injury was real. Management at ZA has failed to prove dishonesty and they have failed to prove intent to defraud, given that Mr. Haier kept the company informed of his diagnosis and recovery and he answered all questions managers posed to him. To dis- charge a twelve-year employee with a fine work record because of ignorance of how a complex government enti- tlement program works while recovering from an acci- dent is (literally) adding insult to injury.

Relevant Contract Clause: Appendix G: Memoran- dum of Understanding

Article G-7 Discipline Employees will neither be disciplined nor will entries be made against their records without just cause. Use of the term just cause: Just cause includes violation of Company rules, regulations and instructions not inconsistent with this Agreement. When discipline is issued, employees will be given written notice specifying the charges and penalty by hand delivery with signed acknowledgment of receipt. Notification will be furn- ished to the appropriate Union shop steward.

Relevant Work Rule: Manual of Rules & Regula- tions Applicable to Maintenance Employees

Part I General Rules for Maintenance Employees 7. Discipline: Maintenance employees may be disci- plined with penalties up to and including discharge. It would be impractical in this Manual to set forth the extent to which every act shall subject an employee to discipline. As a general rule, however, a violation involving violence, theft or dishonesty,

possession of deadly weapons, tampering with safety devices and guards, or unapproved use of Company property, will be considered as a very serious viola- tion and may subject the employee to severe disci- pline, up to and including discharge.

Questions 1. In this case, the burden of proof is on management

to prove that the Grievant was dishonest. Have they proven this? Justify your answer.

2. It has been said that ignorance of the law is no excuse for avoiding criminal punishment. To what extent is ignorance of the law a reasonable defense for avoiding termination in employment? To what extent did managers bear responsibility for Mr. Haier s becoming informed about how the state Worker s Compensation program works?

3. Many points made by Zooming-Arrow managers involved Mr. Haier s actions that did not involve the company; they involved his relationship to Wistful Vistas bus lines. To what extent should the arbitra- tor consider actions taken by an employee while moonlighting for another employer?

4. Did managers disregard proper procedure when they disciplined Mr. Haier? Justify your answer. How much weight should arbitrators give proce- dural propriety or impropriety when deciding a case like this one?

5. If you were the arbitrator, how would you rule? Justify your decision.

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7- 2 Unilateral Freeze of Defined Benefit Pension Plan

The hospital (employer) and nurses union have main- tained a bargaining relationship for over 20 years. The union represents a bargaining unit of 250 registered nurses employed by the hospital. The current labor agreement became effective on January 22, 2008, and was scheduled to expire on January 21, 2011. The labor agreement con- tained the following contract language under Article 9, Sec- tion 12, regarding pension and life insurance benefits:

1. Nurses shall participate in the Pension and Life Insurance Plans available to Hospital Employees on the same basis as other hospital employees.

a. Full-time and Part-time Regular Nurses shall be eligible for a free life insurance pol- icy equivalent to one times the nurse s annual earnings, starting the first day of the month following the nurse s date of hire.

b. Full-time and Part-time Regular Nurses who have completed one (1) year of counted service and 21 years of age shall be eligible to join the Hospital s contrib- utory, defined benefit, pension plan. The normal retirement age is 65. However,

380 PART 2 The Bargaining Process and Outcomes

reduced benefits are available for partici- pants who elect early retirement at any time after their 55th birthday.

During the 2008 2009 time period the stocks in which the pension s assets were invested significantly underperformed the expected rate of return. This resulted in the pension plan being underfunded by $14.7 million in relation to the projected benefit pay- ments the fund would be required to pay plan partici- pants. Pension law allows the plan provider (the hospital) a period of seven years in which to make up the underfunded condition. In addition to bargaining unit members, other nonbargaining unit members also participate in the hospital s pension plan, although such individuals are not covered under the contract language contained in the nurses labor contract. After internal discussions involving management per- sonnel, the hospital announced a plan to freeze the pension plan for all hospital employees. While such a freeze would not eliminate or reduce already accrued pension benefits, it would stop the accrual of any addi- tional pension benefits until such time as the freeze was removed. The hospital s administrator invited the nurses union to meet for the purpose of discussing the proposed pension plan freeze.

The nurses union responded that in its view, the contract language in Article 9, Section 12, of the con- tract obligates the hospital to offer a defined pension benefit plan to all nurses in the bargaining unit who have met the eligibility criteria. Since the contract was still in effect, the hospital had no right to unilaterally change the terms of the existing pension plan without the union s consent. The union declined to voluntarily re-open the contract early for purposes of renegotiating

language pertaining to the pension plan but indicated a willingness to include pension plan modifications dur- ing the next regularly scheduled contract negotiation period.

The hospital was disappointed in the union s refusal to immediately bargain over the proposed pen- sion plan freeze. Hospital management believes that the language in the first part of Article 9, Section 12, gives it the right to make changes in the pension plan so long as the changes apply to all hospital personnel equally. The hospital administrator referred to previous minor changes in the pension plan applicable to all covered plan participants, which had been implemented by the hospital without comment from or negotiations with the union. On January 2, 2010, the hospital implemen- ted the pension plan freeze applicable to all plan parti- cipants, including the nurses in the bargaining unit. The nurses union filed a grievance, and the parties proceeded to submit the contract dispute to an arbitra- tor for resolution.

Questions 1. Did the hospital violate Article 9, Section 12, of the

labor agreement when it unilaterally implemented a pension plan freeze effective January 2, 2010? Explain your reasoning.

2. If the hospital s action did violate the parties labor agreement, what would be an appropriate remedy for the violation?

3. If you were a manager representing the hospital, would you recommend that the hospital file a bad faith unfair labor practice charge against the union over its refusal to engage in mid-term bargaining over the proposed pension plan freeze? Why or why not?

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7- 3 A Change in the Medical Insurance Plan

The employer designs, installs, and maintains private telephone systems for customers. Employees in the bar- gaining unit have been represented for many years by the union. The parties current collective bargaining agreement provides for the following medical insurance benefits:

Basic medical benefits covering reasonable and customary charges; and major medical benefits with an unlimited maximum benefit; a dental benefit

plan; and long-term disability benefits. These bene- fits are described by the specific insurance contracts to be filed with the Union s district office.

The company had been experiencing declining profits for several months attributed to a general eco- nomic recession and the loss of a major client. In June, the management team reviewed the current situation and forecast for the firm s short-term future and decided to adopt a strategy of cutting operating costs.

CHAPTER 7 Economic Issues 381

As part of this strategy, the three top managers of the firm, who were also its owners, agreed to eliminate their salaries and lay off two members of the adminis- trative staff.

The company s principal source of capital funding was a loan arrangement with a local bank, which per- mitted the company to borrow up to 80 percent of the value of current accounts receivable. Whenever a cus- tomer paid a bill for which the receivables had been pledged to the bank as collateral for the loan, the pay- ment had to be applied to reduce the amount of the outstanding loan. When new business was obtained, providing additional accounts receivables, the company could pledge these receivables to the bank and obtain additional loan capital to continue operations. The company s current loan was due to expire on Septem- ber 1, and because of the company s current financial problems, the bank informed the company managers that the current loan must be fully paid by the end of September and no new loan would be issued by the bank.

At about this same time the company was noti- fied by its current insurance carrier that medical insurance premium costs for the company s employee coverage would be increasing by 40 per- cent to a total of $28,000 per month. The insurance carrier also requested an advance payment equiva- lent to two months premium expense to continue the coverage because the company had been late in making premium payments in the past. The com- pany president did not believe the company could afford to make the higher insurance premium pay- ments and, therefore, found another insurance com- pany that would provide medical insurance coverage for employees at a cost of $22,000 per month. A meeting was requested by management officials with union representatives to inform the union about the new medical insurance plan.

The meeting occurred on October 8, at which time management explained the new medical insurance plan to union officials. The only significant difference between the old and new plans concerned the prescrip- tion drug benefit. Under the old plan employees were issued a prescription card that allowed the employee to fill any prescription for a cost of $4. The new plan would require each employee to pay a deductible amount before the insurance plan would cover any pre- scription drug expenses. Covered prescription drug expenses under the new plan would be reimbursed to the employee at the rate of 80 percent of the employee s

actual cost. The company estimated the new plan would save the firm $26,000 annually in premium cost compared to the current cost of the existing medi- cal insurance plan. Management further asserted that the new insurance plan complied with the parties con- tractual language to provide medical insurance cover- age. At this same meeting the company president also informed union leaders that management would like to reduce current employee wage rates by 20 percent to enable the firm to submit more cost-effective bids to obtain new customer orders.

Union representatives asked several questions about the medical insurance plan described by man- agement officials, not all of which managers could answer. Company officials provided the union with the name and address of the new insurance carrier and suggested the union contact the carrier directly for detailed information about the plan. Union offi- cials subsequently held a meeting with bargaining unit members at which the company s proposals to cut wages 20 percent and change insurance carriers were discussed. Employees voted unanimously to reject both proposed changes. Employees were partic- ularly concerned about the lack of a drug prescription card under the new medical insurance plan. Union officials reported the results of the employees vote to management.

Upon learning of the employees negative vote, the company president told union leaders that they must not have explained the new medical plan to employees in the right way. Management requested that the union hold another meeting with employees at which man- agement representatives could explain the new medical insurance plan to employees. Union officials agreed to the meeting, provided union officials were also present when managers spoke to the employees.

On the date of the scheduled employee meeting, the local union president was tied up on union business and did not arrive at the meeting until 25 minutes after it had begun. The local union president stated that when he arrived management officials were already in the process of explaining the new medical insurance plan to the assembled employees and had passed out enrollment cards for employees to fill out for the new plan. The local union president advised employees not to sign the enrollment cards because the union had not agreed to the new medical insurance plan. The com- pany president replied that the change needed to be made quickly, and he had already decided to change carriers and adopt the new insurance plan.

382 PART 2 The Bargaining Process and Outcomes

Questions 1. In your opinion, was management s request to

change the insurance carrier (plan) reasonable? Explain your reasoning.

2. In your opinion, was it reasonable for employees to oppose the new insurance plan because they per- ceived the prescription drug benefit would shift substantial new cost to them compared to the existing (old) plan? Explain your reasoning.

3. Is it the union s job to represent the views of the majority of its members to management or try to change union members views to be consistent with management s preferred business strategy?

4. Does the employer have a legal right to implement the change to a new insurance carrier (medical insurance plan) in this case without bargaining with the union? Why or why not?

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7- 4 Does the Deputy Sheriff Deserve a Pay Raise?

On November 4, 2014, the vacant position of Sheriff Deputy-Major with a salary range of $71,172 to $108,180 was announced by the Stonewall County Per- sonnel Department. Mrs. Jodi Davis applied for the position and was hired and began her service as a Sher- iff Deputy-Major on December 30, 2014. Based on the Sheriff s recommendation, as approved by Personnel Director, her starting salary was $90,000 annually.

In early February of 2015, Deputy-Major Rudy Jas- per filed a grievance using the grievance procedure found in the collective bargaining agreement between the State Law Enforcement Officers Association (here- after the Union) and the County. In the grievance, he argued that he was more qualified than Mrs. Davis and therefore, his wage should be adjusted upward to $90,000 also.

Position of the Union: The Grievant, Mr. Jasper, noted that he had been pro- moted to a position of Deputy Sheriff-Major on July 27, 2014, and is in the same salary range as the newly hired employee, but is currently receiving an annual salary of only $71,172, which is $18,828 less than that of newly hired employee. The Grievant made the following points:

Deputy Sheriff-Major Davis is not Jail Certified, although the Jail is 70 percent of the County Sheriff s Office and all other Deputy Sheriff-Majors are Jail Certified. The newly hired employee s qualifications are not in one of the professional, technical and scientific courses of study of a highly specialized nature listed in the contract. For example, she does not

have any training in forensics which might justify a higher salary. Sheriff Travis Jackson, Chief Deputy Billy Carter, Deputy Chief Bobby Graham, and Chief Jailer David Niemi all support Grievant receiving equal pay of $90,000.

Chief Deputy Billy Carter, Mr. Jasper s Depart- ment Head, also testified that: Major Jasper has 21 years of experience in the

Sheriff s Office and has performed his tasks and duties expertly both as a Deputy Sheriff, and now as a Sheriff Deputy-Major. Major Jasper has worked in the Sheriff Office and Jail Bureau Administration and is currently responsible for the 24 hour operations of the jail housing and security operations. Also under his management are the emergency response team and code red mass evacuation operations. As command staff in the Jail Bureau, at any given time, the grievant is responsible for the safety and security of over 1,500 inmates and 400+ sworn and civilian employees. The Union also asserted that the County did

not follow a relevant provision of the contract which stated:

If a new employee is employed at a salary rate above the minimum pay rate, the affected Department Head shall review the education and work experience, and performance evaluation of satisfactory current employees in his/her department holding the same job title and salary range of the newly hired employee to determine if their qualifications meet and/or exceed those of the newly hired employee. The affected

CHAPTER 7 Economic Issues 383

Department Head shall recommend that the salaries of all current employees meeting and/or exceeding the qualifications of the newly hired employees be adjusted upward to equal the salary paid to the newly hired employee. This recommendation shall be made in writing and shall be implemented, if approved, by the Personnel Director.

Mr. Jasper submitted relevant education and work experience documents (including a letter from Billy Carter which was essentially identical to his above testimony) to Ms. Carolyn Beauregard, Personnel Director, when he filed his grievance. However, he asserted that she ignored these, only sending a copy of his written grievance back to him two weeks later stating, Request denied. This led him to conclude that the salary decision was capricious.

Finally, The Grievant alleged that Ms. Beauregard was negligent in not verifying what Mrs. Davis had put on her application blank. Ms. Beauregard stated in her justification for the higher salary that Mrs. Davis had been a Police Chief and had supervised eight (8) divi- sions of officers, but Mrs. Davis did not have such exten- sive responsibilities. Ms. Beauregard did not verify Mrs. Davis duties. If she had done so, she would have real- ized that Mrs. Davis was Police Chief of a County School District for four years, supervising only three (3) divisions of officers (not eight), few of which worked with hardened criminals. Clearly, Mr. Jasper was far more qualified for the position than Mrs. Davis; thus, he deserves a higher level of compensation.

Position of the Stonewall County Personnel Department: The grievance should be denied for three reasons: First, Mrs. Davis possessed unique and exceptional qualifica- tions, warranting a higher salary. Second, Mr. Jasper had recently been promoted and had received a pay raise as a result of the promotion; another raise would be inappro- priate. Third, the contract gave Ms. Beauregard the sole authority to make a decision regarding the raise request and the arbitrator should defer to her professional judg- ment, based on the wording of the contract. Each of these reasons will be explored.

After Mr. Jasper initially filed his grievance, Ms. Beauregard reviewed his qualifications and com- pared those to Mrs. Davis. Ms. Beauregard concluded that Mrs. Davis displayed a professional ability that warranted a salary far higher than the minimum of $71,172.00. By contrast, Mr. Jasper has not met the burden of proof that he is clearly more qualified than

Mrs. Davis. Nor has he proven that her decision was in error. Consider the following facts:

Mrs. Davis obtained a master s degree in Public Administration. Both her undergraduate and graduate degrees were earned with a 4.0 GPA. Mr. Jasper only had a two-year technical college degree and a 2.96 GPA. Mrs. Davis had worked as a private security guard in retail for two years between attending college and graduate school. Mrs. Davis was director of an antigang program, and later as a Chief of Police in a large suburban school district in another county in the same state for four years. The fact that her department was housed in a school district does not diminish the fact that she was solely responsible for the operations of her depart- ment. The Grievant, Mr. Jasper, also has adminis- trative responsibilities; however, he was never Chief of Police. Prior to his promotion, his only experience was as Deputy Sheriff. At the school district, Mrs. Davis supervised and worked with staff in multiple jobs and with various types of assignments and qualifications (e.g., undercover school detectives, narcotics officers, staff who use electronic surveillance, office per- sonnel). Mr. Jasper manages more people, but almost all are in a few job categories within the classification of Jailer. Mrs. Davis job requires greater managerial skill and sensitivity. Mrs. Davis current job duties include supervising 72 administrative professionals in the Sheriff s office; it also includes administrative oversight of the Forensics Laboratory, meeting weekly with the lab director. She reports directly to the Sheriff on matters that range from budgets to ongoing crim- inal investigations. Ms. Beauregard admits to making one minor error. When she read Mrs. Davis application, she mis-read the number of divisions Mrs. Davis had supervised. The number 3 looked like an 8 she testified.

After the error had been brought to her attention, Ms. Beauregard submitted a corrected letter.

Second, in July, 2014, at the time of his pro- motion, the salary of Mr. Jasper, a current employee, was adjusted to $71,172.00 based on Section XII, paragraph 4, ( Promotions ) which reads, in pertinent part: When a bargaining unit employee is promoted, the salary shall be adjusted upward by 10% or to the minimum of the new

384 PART 2 The Bargaining Process and Outcomes

position s pay range, whichever is greater. Mr. Jas- per s salary was adjusted by more than 10 percent to reach the minimum of the pay grade for his new job. Further adjustment only seven months after a pro- motion is not required by the bargaining agreement; he is not entitled to two pay raises for receiving one promotion.

Salary compression (and even inversion) is the norm in law enforcement. In order to hire talent of the caliber of Mrs. Davis, it is necessary to pay a com- petitive salary. The Personnel Administration depart- ment has been given great latitude to negotiate salaries with new hires in order to bring quality talent into the County. Unfortunately for Mr. Jasper, pay raises from promotions are strictly governed by lan- guage in the collective bargaining agreement. Further, there is no past practice of making the type of adjust- ment he requests. His salary was set in accordance with the contract clause governing promotions and no fur- ther adjustment is allowed.

Third, there are procedural deficiencies to Mr. Jas- per s claim. He first filed a grievance using the County grievance procedure (not reproduced here). With that procedure, a Grievance Committee made up of fellow employees from other departments turned down his grievance. Then, he and the union filed a grievance based on the collective bargaining agreement. The rele- vant contract clause regarding wage adjustments pro- vides that the final decision resides with the Personnel Director. It reads that any Department Head recom- mendation for an employee s pay raise shall be imple- mented, if approved, by the Personnel Director. The authority to approve also includes the authority to deny. If the Personnel Director did not have the authority to deny raise requests, then this phrase would not be in the clause and any Department Head could give raises whenever he/she wished. Pay adjust- ment decisions always involve professional judgment

based on the evidence and Ms. Beauregard has great experience making these judgments as she has been the Personnel Director for the County for 27 years. Fur- ther, the collective bargaining agreement does not require that Ms. Beauregard give a Grievant a point- by-point analysis of the reasoning behind her conclu- sion. Just because she did not tell Mr. Jasper the reasons why his request was denied does not mean that the decision was capricious. As described above, the deci- sion was a reasoned judgment, based on relevant facts and comparisons. The burden of proof is upon the Grievant to demonstrate that the decision was capri- cious and violated provisions of the collective bargain- ing agreement; the Grievant has not proven such charges. Therefore, the arbitrator should defer to managerial authority in this matter.

Questions 1. If you were Ms. Beauregard, how would you com-

pare Mrs. Davis and Mr. Jasper s qualifications? What factors would be most important to you?

2. Analyze the key arguments that each side makes. Which are most compelling? Why?

3. Management argues that the arbitrator should defer to managerial judgment. Generally, under what conditions should arbitrators defer to managerial authority and under what conditions should they not?

4. Is the job of the arbitrator to determine whether the Grievant deserves higher pay or is the arbitrator s job simply to determine whether or not the collective bargaining agreement has been violated? Or both?

5. If you were to re-write the language of the wage- adjustment contract clause, perhaps incorporating concepts covered in this chapter (e.g., skill-based pay, job evaluation, two-tier pay plan), how would you improve the clause? Justify your revision.

CHAPTER 7 Economic Issues 385

.g

CLASSROOM EXERCISE

7.1 Employee Benefits

Directions:

A. From an employee s perspective, rank order the importance of the following employee benefits as a part of a compensation plan where 1 the most impor- tant benefit and 16 the least important benefit.

___Employee assistance plan ___Defined benefit pension plan ___Defined contribution pension plan ___Cash balance pension plan ___Major medical insurance plan ___Life and accidental death benefit ___Short- and long-term disability

benefit ___Prepaid legal service plan

___Child-care assistance plan ___Education tuition aid ___Transportation reimbursement ___Supplemental unemployment

benefit ___Paid holidays ___Paid vacation ___Paid sick leave ___Dental insurance plan

B. List the factors that were most important to you in determining your ranking of priorities among the benefits listed in part A (e.g., age, sex, current job, prior work experience, marital status, number of dependents, expected time period until retirement, or knowledge of employment conditions at other firms).

C. If asked to perform the same ranking task from an employer s perspective, would your rankings change, and if so, how or why?

386

CHAPTER 8

Administrative Issues

I KEPT THINKING about the words I had just read: Thanks to destructive outsourcing and faltering investments in research, the U.S. has lost or is on the verge of losing its ability to develop and manufacture a slew of high tech products average weekly wages have essentially remained flat since 1980, mean- ing the U.S. economy has been unable to provide a rising stan- dard of living for the majority of its people. In making their decisions to outsource, executives were heeding the advice du jour of business gurus and Wall Street: Focus on your core competencies, off-load your low value-added activities, and re- deploy the savings to innovation, the true source of your com- petitive advantage. 1 The problem is that such a single-minded focus on short-term cost savings has resulted in a continuous outsourcing of not just repetitive assembly tasks but also more complex engineering and professional jobs so that fewer hourly employees or managers today have a real sense of job security.2

Questions 1. Of course there are still highly competent and motivated

individuals working hard to succeed in today s economy, but are these individuals becoming the exception rather than the norm?

2. Should Americans be concerned about the ability of the U.S. economy to remain competitive in the future, or are the views expressed in the opening paragraph too alarmist and unrealistic?

3. What are some ideas that might improve U.S. competitive- ness in the future, and do you see any evidence that any of these ideas are being implemented today?

387

Most chapters of this book relate to a single topic, but this is a chapter that addressesseveral important administrative issues, each of which has important economic and work environment consequences for both labor and management. This chapter focuses on five broad areas that impact both contract negotiation and administration issues: (1) technological change and its impact on labor relations, (2) job security and seniority, (3) employee training, (4) work restructuring, and (5) safety and health.

Management seeks flexibility in arranging work content and schedules to maximize efficiency. Unions seek to protect employees job security and the conditions under which work is performed when workplace changes occur. The attempts of managers (owners) and union representatives (employees) to achieve their respective interests are discussed throughout this chapter.

Technological Change and Job Protection

Technological change refers to changes in the production process that result from the introduction of laborsaving machinery and changes in material handling and workflow. Automation, a type of technological change, goes one step further in that machines perform tasks formerly performed by humans, and the human operator is replaced by automatic controls.3 Technological change may affect a job by altering the tasks or equipment used and thus the job skills required, the pace or scheduling of the work, or a job s characteristics (e.g., degree of exposure to health and safety hazards, frequency of interaction with co-workers, closeness of supervision, job stress level).

Use of new technology is a means by which firms and nations seek to gain a com- petitive advantage in the arena of international competition. Often the competitive advantage gained from the introduction of new technology is short lived. Such technol- ogy often becomes available to competitors fairly rapidly, lessening the competitive advantage of being the first to possess the technology. Technology is being used to streamline and automate operations and reduce the need for labor, while also requiring remaining workers to do more. 4 Long-term competitive advantage derives from the ability of workers to apply technology in a highly efficient manner. This requires workers who are well trained and motivated.

Technological change generally occurs in three phases: (1) the development phase, in which key choices about the design and configuration of the new technology are made; (2) the resource allocation phase, in which claims for resources by different organizational units are presented and evaluated against performance criteria; and (3) the implementation phase, in which the new technology is constructed, put into service, and modified if necessary. The third phase, implementation, is typically when a union enters the picture because imple- mentation of new technologies affects the work structure and consequently the employees performing the job tasks. The consequences of the implementation of new technologies con- cern employees, as well as the union that represents their job-related interest.5 New technol- ogy can impact the number of jobs available, job content, and a job s compensation rate. Unions seek to protect the job interests of their members affected by technological change through (1) negotiating contract language (see later discussion of work scheduling, electronic monitoring, outsourcing, seniority rights); (2) lobbying for or against government legislation and assistance programs (see the later discussion of Worker Adjustment Retraining and Noti- fication Act); and (3) providing direct services to members (e.g., career counseling, job refer- ral, short-term economic support, retraining, social psychological support).

Unions and employers have a long history of bargaining over the effects of techno- logical change. Approximately 26 percent of labor agreements contain some language that addresses in some manner the introduction of new technology. Only 17 percent of

388 PART 2 The Bargaining Process and Outcomes

labor contracts provide for advance notification or discussion with the union prior to the introduction of new technology, and only 8 percent require an employer to retrain work- ers displaced by technological change.6 Sometimes, new technology can have widespread effects. One study reported that, in almost one-third of negotiations, labor and manage- ment discussed the creation of a substantially new work system (e.g., team-based work system, job rotation, worker participation, pay for knowledge, profit sharing, or gain sharing). The parties reached agreement on these types of work systems in less than half of the negotiations where the proposal was discussed (less than 16 percent of con- tract settlements).7

These low percentages are partially due to the fact that current labor law classifies most decisions concerning the decision to implement new technology as a nonmanda- tory bargaining subject. Further, many negotiated management rights clauses state that decisions about the adoption of new technology are solely management s preroga- tive. This limits a union s bargaining role to issues regarding the effects of technology on members interests concerning wages, hours, and working conditions after management decides what technology to use and when, where, and how to implement it. Essentially this forces a union to adopt a reactive rather than proactive stance in seeking to repre- sent bargaining unit members interests on technology change decisions. However, this does not mean that management can ignore these interests. The NLRB has ruled that bargaining over the wage, hour, and working condition consequences of managerial deci- sions (sometimes called effects bargaining ) is mandatory for decisions such as facility closures and technological decisions. For example, a grocery store replaced some check- out lines with self-service checkout machines. The store was found guilty of an unfair labor practice because it refused to bargain with its union about the effects of this tech- nological decision on the union members work. As a remedy, the Administrative Law Judge ordered the self-service machines removed until management bargained with the union over the effects of their decision.8

Critics of the current legal designation of the decision to implement technology as a nonmandatory bargaining subject argue that permitting unions to bargain over the full range of issues which arise concerning technology would provide valuable information to management from employees who work most closely with the technology, likely speed the adoption of new technologies, and enhance employees acceptance of techno- logical change efforts, benefiting the interests of both management and employees.9

Some companies do see advantages in voluntarily involving employees and union repre- sentatives in the early stages of selecting new technology as a means of achieving a sustain- able competitive advantage.10 Employees and union representatives may accompany engineers on trips to vendors, provide input to assess the merits of available technologies, and render opinions on what types of equipment to purchase. Employees may contribute valuable insight into how to operate the equipment and how to organize the work process after the new technology is implemented. When a union is consulted early in the technology development process, it is more likely to become an advocate for the new technology and is better able to assure its members that the technology will secure more jobs than it threatens.

The Joseph Abboud clothing manufacturing plant located in Bedford, Massachu- setts, is an example of a labor management relationship that has cooperated to imple- ment a lean manufacturing system. This system features work teams and employee skill cross-training to ensure high-quality production and timely delivery of suits to retail merchants at a competitive price.11 Local union representatives understood that low- wage competition from imported clothing required a flexible approach to negotiating work rules to improve productivity and product sales, enabling the company to maintain higher employee compensation while adding additional jobs to the bargaining unit.

CHAPTER 8 Administrative Issues 389

In the midst of the Great Recession, GE Appliance and Lighting announced plans to invest $432 million and create several hundred new jobs by establishing four U.S. Centers of Excellence for Design and Manufacture of Refrigeration Products. Located in Alabama, Indiana, Kentucky, and Tennessee, James P. Campbell, President and CEO of GE Appliances and Lighting, said: This type of investment would have been impossible without the tremendous work underway at these plants to drive down costs and improve productivity and efficiency. With the new center of excellence model, the adoption of lean manufacturing and agreements by employees and unions to freeze current wages and adopt competitive wage rates for new employees, these facilities are evidence of a growing American manufacturing renewal. The Louisville, Kentucky, facility hired new workers to make high-end, French-door style refrigerators, although sales were initially slower than expected and 500 workers were temporarily laid off in 2013.12

An example of labor conflict leading to an altered labor management relationship is the American Axle & Manufacturing (AAM) plant in Three Rivers, Michigan.13 Following a bit- ter strike at the plant in 2008, the local union members decided to split from the national union bargaining pattern and negotiate their own deal with plant management. Management credits the resulting substantially lower labor cost under the new labor agreement as a key factor in permitting the company to expand the number and types of products produced at the plant, including bringing back some work which had been outsourced. Between 2008 and 2010 the plant expanded, creating 24 salaried and 352 hourly jobs. The company and union cooperated in introducing lean manufacturing and other continuous improvement techni- ques to make the plant globally competitive. Plant managers credited employees for being open to changing work practices; managers provided 40 hours of training annually per employee with an emphasis on cross-training to make employee work assignments more flex- ible. In 2013, the company announced a new investment in the facility of $100 million and the addition of 500 more jobs. Meanwhile, union negotiations with the company in other communities had a different outcome; the firm closed facilities in Detroit and New York and instead expanded its production facilities in Mexico.

The International Association of Machinists (IAM) offers an integrated partnership program, called a high-performance work organization (HPWO), to employers with whom the union has a bargaining relationship.14 The program can enable an employer to save and create job opportunities while remaining globally competitive and stimulating company growth. The HPWO envisions a partnership in which both management and labor take responsibility for ensuring that the firm will adapt to competitive market and technological demands by sharing information, continuously training workers, and adapting work rules to meet each firm s needs (see the following Labor Relations in Action feature). Other unions are also engaged in negotiating technology-related issues with employers. For example, General Electric and Westinghouse negotiated provisions with the International Brotherhood of Electrical Workers that require advance notification of technology change, committees, retraining, and safety measures for people who work with robots.15

Although more firms are seeking to involve and empower employees in adapting to technological change, many firms are not.16 If a bargaining relationship is characterized by mistrust, then leaders on either side are probably not committed to developing a more cooper- ative relationship; this, in turn, will inhibit union acceptance of managers technology change efforts. The need for consultation with the workforce may be viewed as a loss of authority by some supervisors and middle managers, who may resist transferring their power to employees. For innovative work practices to be effective, upper management and union leaders must communicate their commitment to cooperation to all employees within the organization.

Unions are often portrayed as being obstacles to technological change in the work- place because many Americans remember publicity given to railroad firemen (those who

390 PART 2 The Bargaining Process and Outcomes

shoveled coal into the fire box on steam engines) who wanted to remain on diesel engines, the reluctance of plumbers to adapt to plastic pipes, airline crew members who resisted a reduction in the number of cockpit crew members needed to fly more modern aircraft, or the resistance of typographers to computerized typesetting in the newspaper industry. Unions are often depicted as negotiating complex work rules that restrict man- agement s ability to manage the workplace and management s right to introduce techno- logical advancements. Yet some unions have clearly encouraged changes in job design, skills training, employee involvement in decision making, teamwork, gain sharing, improved labor management communications, and more cooperative labor relations.17

In fact, unions have generally accepted the doctrine of high wages, high productivity, and low labor costs as the best approach to maintaining income growth and employ- ment stability for union members. As Joseph Hunt, president of the Iron Workers union, has stated: We have to make our contractors more competitive to gain market share. If they don t have a job, there s no job for us [our members] to work on. 18

Benefits of Technological Change Technological change can have both positive and negative effects on employees, and a union must represent members affected by both types of change. In general, technologi- cal progress in the United States has resulted in higher productivity, the elimination of many menial and dangerous jobs, higher wages, shorter hours, and a higher standard of

LABOR RELATIONS IN ACTION High Performance Work Organization (HPWO) Partnership Principles

Union and management leaders responsible for their respective organizations are asked to write and sign a partnership agreement signifying a real commitment to partnership as a means of implementing meaningful change in the work environment. The following princi- ples help define what components comprise a true partnership:

Shared decision making concerning issues critical to the competitiveness of the business, including costs and work processes. Development of continuous learning and skill build- ing to meet the changing education needs of all employees. Continuous integration of leading-edge technology that utilizes the skills, knowledge, and insights of employees. Leading-edge technology includes equipment, new materials, work processes, and labor relations intended to both stabilize and grow the business and the workforce. A co-determined definition of quality and its contin- uous measurement and improvement. Quality includes meeting customers expectations and is critical to the ability of the firm to grow and its employees to prosper. Shared technical and financial information. Access to relevant and timely information is necessary for

parties to make appropriate decisions. Open and honest communication between labor and manage- ment serves to build trust in a partner. Ongoing joint determination of costs such as design, prototype development, production, and administrative overhead. This requires a cost accounting system capable of assigning cost to var- ious elements in the work process. Acceptance of the union as an independently chosen representative of employees. Through the collective bargaining process, including the use of a contract grievance procedure, the parties can seek to resolve conflicts of interest which may arise while seeking to expand opportunities for cooperation. Union and management leaders willing to advocate the partnership concept and motivate all employees to participate in bringing about positive workplace changes. A jointly developed strategic business plan. The plan should cover current products and services, development of new products and services, and the goals and direction to be taken by the partners to achieve future growth.

SOURCE: International Association of Machinists, HPWO Components, October 19, 2009, pp. 1 3 at http://www.goiam.org/; International Association of Machinists, HPWO Ten Steps, October 19, 2009, pp. 1 2 at http://www.goiam.org/.

391

living.19 Technological advances have brought about numerous positive effects, such as (1) the ability to produce greater wealth with less effort; (2) machinery performing tasks that humans cannot complete; (3) machines performing tasks more reliably and efficiently than humans, thereby lowering production costs and permitting products to be sold at lower prices; (4) improved working conditions by minimizing backbreaking or hazardous work assignments; and (5) improved skill levels for some workers, leading to increases in pay.

Negative Effects of Technological Change Although technological change has many positive effects, it may also produce some negative effects. One explanation for the lack of job growth in recent years in the U.S. economy is the fact that due to technology advances, jobs are being eliminated at a faster rate than new jobs are being created, without any decline in productivity. New technology probably elim- inates more U.S. jobs than does free trade, and although new jobs are often created, they often call for different skills than were needed for the eliminated jobs.20 Further, job elimi- nation due to technological change is a phenomenon occurring in virtually every industrial- ized country in the world as employers adopt a similar competitive business strategy.

Technological advances also permit a reduction in the responsibility or skill level required to perform some jobs (deskilling), resulting in lower employee compensation and less job security for those employees holding such jobs. However, in some cases technology-enhanced machinery such as robotics may be less able to anticipate and adjust to unforeseen circumstances or changes in the operating environment compared to a well-trained human operator. Technology often carries higher capital costs to acquire it, which must be paid for through a combination of anticipated labor cost sav- ings and a higher productivity rate. To the extent that competitors adopt similar technol- ogy, increasing productivity may flood the market with an excess supply of a product or service relative to the market demand for that product or service. Such a supply demand imbalance would likely result in a declining product price, thereby requiring additional time (expense) to recover a firm s capital investment in technology. This situation is exacerbated if a company is forced to borrow capital funds in an environment of rising interest rates in order to purchase technological enhancements.

Technology has also increased the sophistication of methods used to monitor employees at the workplace. A survey of 304 firms by the American Management Asso- ciation reports that 84 percent of companies have e-mail usage and content policies, 43 percent engage in some form of active e-mail monitoring, and 24 percent had employee e-mail subpoenaed in a legal dispute during the previous 12 months.21 Just over half (51 percent) of 526 firms in another survey reported using video surveillance to monitor theft, violence, and sabotage; 10 percent monitored on-the-job performance in certain job categories and 6 percent videotaped all employees.22 Less than 10 percent used global positioning systems (GPSs) to monitor cell phone usage or track company vehicles. Technology may be used to monitor an employee s e-mail or other computer files, employee location, telephone conversations, smart phone applications, and Internet use to track employee productivity and activity, including counting keystrokes, error rates, time taken to complete tasks, and time away from a workstation. Data collected might be used by managers to determine production standards and pay rates, monitor speed and accuracy of job performance, or take disciplinary or discharge action for failure to perform in a satisfactory manner consistent with company policies.23

Employers argue that electronic monitoring of employees is a useful way to objec- tively evaluate their performance, increase productivity, prevent theft or other unlawful activity on company property, avoid potential legal liability arising from a failure to

392 PART 2 The Bargaining Process and Outcomes

reasonably monitor employee workplace activity, monitor compliance with safety regula- tions, and plan for future business needs. Union officials often respond that electronic monitoring can be a source of stress on employees, measures only quantitative aspects of job performance, erodes employees dignity, and invades employees privacy. Few fed- eral or state laws provide any significant protection for employee workplace privacy rights. Employers are often encouraged to reduce employees reasonable expectation of privacy in the workplace by adopting a policy that clearly states all workplace technol- ogy, equipment and systems are the property of the company and should be used only for business related purposes. 24 Most employers inform their employees of company policies on monitoring activities as well as penalties for violating such policies.

Unions are often under pressure from members to negotiate work rules to provide reasonable privacy protections from employer monitoring activity. As a mandatory bar- gaining subject for unionized employers, a union negotiator might propose contract lan- guage to achieve one or more of the following employment terms or conditions:

An outright ban on one or more types of unreasonable or obtrusive electronic monitoring activities A requirement for advance notification to each employee whose performance will be subject to electronic monitoring Imposing a beep provision requiring the employer to use a visible light or audible tone to inform employees when they are being monitored Prohibiting management from collecting information not directly related to an employee s work performance Prohibiting disclosure of employee information collected to other people or compa- nies without prior employee approval unless in connection with a criminal investigation Availability of counseling or other health-related services necessary to manage job stress or related conditions arising from exposure to electronic monitoring activities

Management negotiators would want to ensure that any agreed-upon electronic monitoring work rule:

Clearly informs employees that electronic communication equipment (e.g., computer, cell phone) cannot be misused for unprofessional or inappropriate communications (e.g., racial slurs, sexual harassment) Informs employees that electronic communication equipment necessary to perform assigned job duties will be provided by the company and represents company property Informs employees that they have no reasonable expectation of privacy in the use of company property for electronic communications purposes Requires that employees sign a consent form or provide other evidence acknowl- edging they have read and understood all electronic monitoring work rules and the consequences for their violation

Job Security and Personnel Changes

Several reasons account for occupational growth or decline in an economy. These include (1) technology (new machinery enables fewer workers to be more productive); (2) changes in business practices (e.g., easy-to-assemble furniture results in retail stores needing fewer workers to assemble and deliver furniture); (3) contracting work out to other firms (e.g., an HR department outsourcing the payroll function to a specialized firm); (4) new or restructured work methods (e.g., cleaning teeth is now usually done

CHAPTER 8 Administrative Issues 393

by dental hygienists rather than dentists); (5) changing consumer tastes (e.g., less demand for hats means less demand for hat makers).

The shift in employment opportunities from goods-producing (manufacturing) to service-producing industries (e.g., retail trade, communications, services, transportation, finance, insurance, and real estate) will continue with professional and service occupa- tions projected to increase the most both in terms of percentage growth and the actual number of jobs created between 2012 and 2022.25 An analysis of 22 occupational groups was made. Over half of the 11 groups with anticipated growth greater than 10 percent are professional occupations, usually requiring postsecondary training. Three of these occupational groups are in the health care field. Almost half (46 percent) of the occupa- tions with projected growth require a bachelor s or higher degree. Examples of occupa- tional groups that are expected to experience a growth rate in excess of 10 percent over the next decade include computer and mathematical occupations, health care practi- tioners, health care support occupations, personal care occupations, construction work- ers, legal occupations, architectural and engineering occupations, and business and financial operations occupations.

Some occupations are also expected to experience little growth in employment opportunities.26 Many of these occupations are related to manufacturing production jobs or office and administrative support occupations. Technological innovation enabling gains in productivity with fewer employees along with increased competition from employers located in lower wage countries have contributed to a projected decline in employment opportunities in these occupations. Many of the specific occupations require only on-the-job training for employment. Farming, fishing, and forestry is the one occupational group where decline is projected.

Finally, changing demographics are having a large impact. Two-thirds of job growth through 2022 is expected to occur as a result of the need to replace employees who leave current jobs (e.g., due to retirement) rather than the creation of additional (new) jobs. Also, many of the jobs showing significant growth are related to the needs of older adults. As the baby boomers (those born between 1946 and 1964) retire and age, there will be increased employment in jobs related to providing services (e.g., medical, legal) to meet their needs.

Job Security and the Changing Psychological Contract One thing that is not likely to change in the future is the desire of employees and the unions who represent them to obtain or enhance job security. Much has been written about the changes in the psychological contract. There has been a decline of the old contract whereby in exchange for good performance and loyalty, the employer promise to provide employees secure employment, job training, and periodic improvements in wages and benefits.

Motivated by a perceived need for flexibility to respond to changing market condi- tions and a desire to reduce labor costs, many employers offer a new employment con- tract that shifts the risk and uncertainty of employment to each employee, who is responsible for ensuring that his or her skills and abilities stay current with available job requirements. Downsizing, outsourcing, and an expanding variety of contingent work arrangements are manifestations of the greater job insecurity facing many workers today. Often, there is a group of core employees whose psychological contract is long- term and similar to the old contract ; this group is seen as providing the institutional memory necessary for the organization to function effectively. A second group of con- tingent workers has a short-term psychological contract, as they provide the firm with their services for a limited time. They may be classified as independent contractors (who

394 PART 2 The Bargaining Process and Outcomes

cannot unionize under the LMRA), temporary contract workers, or they may be employ- ees of temporary employment agencies. This latter group of workers usually receives lower levels of pay and benefits relative to the core employees.

There is some evidence suggesting that company profitability is greatest when core employees comprise about two-thirds to three-fourths of those working for the firm using this new type of psychological contract. If there are too many core employees, the firms do not realize the savings from having lower-paid contingent workers. If the con- tingent workers constitute a large percentage of the workforce particularly those from temporary agencies then the core employees react negatively, fearing for their job secu- rity and exhibiting less loyalty. Turnover also increases, resulting in a loss of experience and knowledge, and reducing profits. Employees who are wary of their employers motives also remain skeptical when their employers do fulfill their promises Thus, a large number of contingent workers often leads to employee dissatisfaction.27

A primary union concern is to ensure that members jobs are protected from elimi- nation resulting from technological change or unreasonable managerial decision making. Unions have been able to protect jobs by negotiating contract language concerning sub- jects such as job security work rules; limits on subcontracting, outsourcing, work assign- ments and jurisdiction, work scheduling, and the weight accorded seniority in personnel decisions. Each of these topics will be briefly discussed.

Job Security Work Rules Job security work rules are provisions that attempt to make jobs more secure, such as spreading the workload by placing limits on the load that can be carried, restricting the duties of employees, limiting the number of machines one operator can tend to, mandat- ing a minimum crew size, or requiring standby crews.28 Such practices when carried to an extreme are known as featherbedding, which exhibits unreasonable limits to the amount of work employees may do in a given period, payment for unneeded employ- ees, unnecessary tasks, work not performed, or jobs duplicating those already done. 29

The name conjures the image of employees being paid rest on a feather-stuffed beds; that is, they are paid to do nothing. Extreme work rules are often criticized by managers and viewed negatively by the public as an inefficient waste of resources. Congress attempted to help reduce featherbedding practices when it amended the Labor Manage- ment Relations Act (LMRA) to add Section 8(b)(6), which prohibits a labor union from causing or attempting to cause an employer to pay or deliver or agree to pay or deliver any money or other thing of value, in the nature of an exaction, for services which are not performed or not to be performed. 30

Workload restrictions underlie many labor relations conflicts. Unions have often been forced to abandon the use of such extreme work rules in an era of global competi- tion, but there remains a legitimate duty for unions to bargain reasonable job protections for their members. From an overall (macro) viewpoint, union leaders agree that change is necessary for economic progress, but from an individual (micro) view, where signifi- cant adjustment would be necessary, change may be resisted by workers and their unions. Thus, union leaders must grapple with the tension of wanting their firms to be competitive and profitable to create work opportunities for their members while also protecting members jobs as currently designed and insuring that members are not overworked.31

Job insecurity has been shown to negatively influence job attitudes, which, in turn, reduce performance, increase absenteeism, and increase turnover intention. Thus, it is not surprising that a 2013 survey of 6,000 job seekers found that 95 percent of them wanted job security. A commitment to employment security has several advantages

CHAPTER 8 Administrative Issues 395

for both employers and employees. Such a commitment may motivate employees to sup- port change, encourage employers to invest more in training employees, reduce costs associated with turnover, retain critical skills needed by the firm, and maintain employee morale. Employment security guarantees led the United Auto Workers (UAW) local union at the General Motors Lansing Grand River Assembly to reduce production costs and increase profitability by accepting responsibilities traditionally borne by man- agement, such as participating in plant operations and problem-solving teams. Building strategic partnerships with management based on a mutual recognition of the contribu- tions that labor and management make to enhance a firm s competitiveness is one approach to improving job security.32

The collective bargaining process is a means by which union representatives and managers attempt to resolve conflicts between employees desire for greater job security and employers desire for greater flexibility and cost effectiveness in adjusting the size and duties of the labor force to the workload. Some examples of issues affecting job secu- rity covered by negotiated work rules include the following:

Job assignment: Reducing crew size, adding duties, or eliminating unneeded jobs More job titles in each job classification: Combining jobs such as millwright, welder, rigger, and boilermaker, or allowing journeymen to perform helpers tasks Hours: Clean-up time, flexible work schedules, mandatory overtime, advance notice of shutdown, or extending work time for the same pay Seniority: Restricting the use of seniority in filling job vacancies, bumping, or deter- mining work schedules Wages: Permitting pay for knowledge, gain sharing, severance pay Training: amount and type provided, employee eligibility criteria to receive training

Union and management representatives must determine which job security work rules are appropriate in each bargaining relationship. Not all restrictive work rules intended to maintain a specified staffing level are illegal. Work rules negotiated between the longshoremen and shipping companies that prevent truckers and warehousemen from unloading cargo from containers within 50 miles of a ship docking pier were upheld by the U.S. Supreme Court because they were the product of voluntary bargain- ing between two informed parties. These work rules were designed to preserve a portion of the traditional longshore work that is dwindling because of the use of shipping con- tainers.33 In 2002 after an extended lockout by West Coast shippers and port terminal operators belonging to the Pacific Maritime Association, employers negotiated the right to implement new technology for loading and tracking cargo, but the International Longshore Worker s Union (ILWU) negotiated the right of its union members to operate the new technology with no loss in the number of current jobs. Since this groundbreak- ing labor agreement was signed, productivity improvements have helped support average earnings of $147,000 (in 2014) for full-time longshoremen working; during the same period, the number of jobs available at West Coast ports expanded by 32 percent.34

In 2008, 27,000 Boeing Company employees represented by the International Asso- ciation of Machinists and Aerospace Workers (IAM), Local 750 initiated an eight-week strike where one of the key bargaining issues was the job security of union members who could be impacted by a company proposal to alter the procedure for delivering parts to aircraft assembly lines.35 Under the existing system, parts suppliers delivered parts to loading dock drop-off locations where the parts were received, entered into the parts inventory system, and then delivered to appropriate areas within the plant by Boeing (IAM members) employees. Boeing sought to change the system to allow the employees of outside parts suppliers to deliver parts directly to assembly lines within the

396 PART 2 The Bargaining Process and Outcomes

manufacturing facility. The company also sought to use a radio-frequency identification tag (RFID) system attached to pallets on which parts arrived at the plant to track inven- tory and automatically reorder parts when necessary. Although this new system would eliminate some existing jobs, the company believed that many employees adversely affected could be reassigned to other jobs within the plant over time. Union members were skeptical.

Like most work stoppages, this strike ended with a negotiated settlement on new contract terms that involved compromise by both union and management negotiators on a variety of bargaining issues (e.g., contract length, job security, and wage and benefit improvements).36 On the job security issue, the parties agreed that outside vendors would be permitted to deliver parts to designated assembly line locations within the manufacturing facility, at which point Boeing employees would be responsible for receiv- ing and distributing the parts. Union leaders claimed that maintaining control over who would perform necessary job tasks would save the jobs of 2,200 facilities and mainte- nance workers and 2,920 forklift drivers, shipping, and other workers who were currently represented by the union. Job outsourcing is likely to remain a key bargaining issue between the parties in future negotiations.

Plant Closures, Downsizing, and WARN First and this may seem like an obvious point federal courts have ruled that an employer has an absolute right to go out of business; the employer does not have to first bargain over this decision with the union. What if an employer only wants to close one plant, and no language addresses this type of decision in the collective bargaining agreement? Is the employer legally required under the LMRA to bargain with the union about the decision? While there are many questions to consider in plant closing cases (e.g., Will the work being transferred to other facilities? ) that have resulted in nuanced NLRB and court decisions, perhaps the most important question is: What is the employer s motivation? If the motivation for closing the plant is to pursue other oppor- tunities and closing the plant reflects a shift in the direction of the business, then a com- pany does not have to bargain with the union. However, if the motivation for closing the plant is to avoid dealing with the union, to hamper union organizing efforts at other company facilities, or to lower labor costs, then the NLRB may require the employer to first bargain with the union. NLRB decisions in these latter cases depend upon the facts of each case. This issue is similar to the issue of subcontracting, discussed below.37

In 1988, Congress enacted the Worker Adjustment and Retraining Notification Act (WARN) in response to data that showed large numbers of employers either shut down or initiated layoffs while giving employees or community leaders less than 14 days advance notice or no notice at all. The WARN act requires employers with 100 or more employees to give 60 days advance notice of a plant closing or major layoff (i.e., termination of 50 or more workers at the same work location within a 30-day period or a major layoff affecting at least 50 employees who make up at least 33 percent of the workers at a work site) to employees (excluding those employed less than 20 hours per week), unions, and state and local governments. The WARN Act does permit union and management negotiators to establish contract language requiring more than the mini- mum 60 days advance notice required by the law. One survey reported 48 percent of employers had negotiated labor agreement language providing for advance notice of shutdown.38

In 2012, there were approximately 6,500 mass layoff incidents recorded (including 544 permanent worksite closures), resulting in 1.25 million initial claimants for unem- ployment insurance.39 This represented a decline from 2009 when nearly 12,000 mass

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layoff events occurred (including 1,099 permanent worksite closures), resulting in approximately 2.5 million initial claimants for unemployment insurance. Manufacturing and construction together accounted for over one-third of mass layoffs incidents, accounting for almost 30 percent of the first time unemployment claims.

Although providing workers with advance notice of shutdown has been shown to reduce the probability that notified workers will experience significant unemployment in transitioning to a new job opportunity, many employers continue to fail to provide the required advance notice to affected employees or communities.40 Several possible reasons exist to explain why required WARN Act advance notice of significant job dis- placement events is not given to more employees and community leaders.41 Some employers may be unaware or confused about their notification responsibilities under WARN, despite the U.S. Department of Labor s efforts to provide guidance to encourage voluntary employer compliance. The language of the act itself limits its potential. Exempting firms with fewer than 100 employees from coverage under the law eliminates a substantial portion of the labor force from receiving required advance notice. The WARN Act also has many exemptions applicable to covered employers.42 For example, an estimated 50 percent of layoffs involving 50 or more workers are exempt from any advance notice requirement because the number of affected employees is less than one-third of the employer s active workforce (one-third rule). Several states and the U.S. Virgin Islands have sought to address shortcomings in the federal law by enacting state laws similar in intent to the federal WARN Act.43 These state laws tend to expand coverage to more employers (with as few as ten employees in some cases), impose require- ments that employers continue to provide group health care coverage or severance pay for affected employees, and increase financial liability beyond the 60-day maximum back-pay requirement under the federal WARN Act.

Another deficiency of the federal WARN Act is the lack of any federal agency being responsible for the law s enforcement, unlike the LMRA which is enforced by the NLRB. Because the law designates no federal agency as responsible for enforcing the law, employees must take the expensive and time consuming step of hiring an attorney to sue their employer in federal district court for any alleged violation of the WARN Act. Unions often have attorneys on staff (or retainer); therefore, a union may sue for damages on behalf of its members under the WARN Act, and state law deter- mines the time limit imposed for filing such claims. During the 2008 2010 recession, the WARN Act attracted renewed attention as laid-off employees banded together to file class-action lawsuits against former employers; in some cases, lawsuits were filed against either the private equity firms that bought bankrupt employers or the banks that wound up controlling the firms assets. Similarly, when oil prices fell in 2015, non- union workers filed class-action lawsuits against the employers who laid them off. Thus, while most WARN lawsuits are filed by unions in manufacturing, the law is applicable to jobs as diverse as Wall Street brokers and car salespersons in large auto- mobile dealership chains.44

On occasion, the rules under the WARN Act and the LMRA are intertwined. In 1991, the Dallas Times Herald, which had a long-standing bargaining relationship with the Dallas Typographical Union and Mailers Local, actively misled the unions about rumors of a closing during negotiations for a new contract. On the date the sale was finalized, the business was closed. The Times Herald then informed employees and the union of the closing. The National Labor Relations Board (NLRB) ruled that remedies (back pay) owed to employees under the LMRA were separate from payments required under the WARN Act. Therefore, an employer s payment for back pay and benefits aris- ing from a violation of the WARN Act would not offset any back-pay liability arising

398 PART 2 The Bargaining Process and Outcomes

from an unfair labor practice finding that involved the same affected workers under the LMRA.45

Almost 40 percent of the largest U.S. employers engaged in a workforce reduction of more than 20 percent during the 2008 2010 recession.46 Although employers often turn to mass layoffs as a way to reduce operating costs quickly, there is increasing evidence that such action often fails to produce desired improvements in profits, return on assets, and costs going forward.47 Companies often fail to accurately assess the costs of repla- cing labor once economic activity recovers or overestimate the ease with which they will be able to find replacement employees comparable to those laid off during the reces- sion. Significant downsizing also tends to erode employee morale and increase both job stress and job security concerns among those employees who remain on the payroll.

Subcontracting, Outsourcing, and Work Transfer Subcontracting (also called contracting work out) is a procurement process that usually occurs when a firm determines that it cannot perform all the tasks that are necessary to operate its business successfully (e.g., it lacks the expertise to maintain its own Internet website) or that another firm can perform the needed tasks (janitorial and cafeteria ser- vices, equipment repair, parts production, etc.) better or at a lower cost. Outsourcing, a similar process, is a cost-cutting strategy that involves shifting work normally done by a firm s own workers to a different producer who may be located inside or outside the United States. Offshoring is a more recent term used to refer to the movement of work from a company location within the United States to locations outside of the United States (e.g., banking, information technology, telecommunications, engineering functions, tax preparation, medical services, manufacturing). The international producer who now performs the work may be owned in whole or in part by the U.S. firm from which the work came or may be a different company altogether.48 Outsourcing has become quite common for major U.S. firms; by contrast, a 2014 survey of managers indicated that only 16 percent planned to move work back to their home country.49

Among the advantages cited for subcontracting and outsourcing are lower costs (particularly labor costs); increased profitability, productivity, and quality improvements; increased operating flexibility, speed, and faster access to innovative technology with less capital risk.50 While many companies who outsource report achieving positive benefits, the magnitude of gains are often less than expected. A Dun & Bradstreet survey reported that 20 percent of outsourcing relationships fail in the first two years, and 50 percent fail within five years.51

Several potential problems confront firms engaged in outsourcing, including loss of intellectual property or institutional knowledge, confidentiality risk, reduced ability to respond to market changes in a timely manner, employee concern over possible job loss, poor selection or monitoring of outsourcing suppliers, insufficient training provided to individuals responsible for managing outsourcing activities, and a failure to develop a clear plan detailing outsourcing objectives, expected benefits, and performance mea- sures.52 It is important to remember that the survivors of a layoff, outsourcing, or off- shoring event may also experience adverse outcomes, including a higher propensity to quit in the future and lower perceptions of organizational performance and their own job security.53

To cut costs, auto manufacturers have expanded outsourcing of certain parts pro- duction and introduced less labor-intensive production methods, such as modular manufacturing, which permits various modules (e.g., dashboards, headliners, exhaust sys- tem) to be assembled by outside suppliers, requiring an auto manufacturer s workers to engage in only the final assembly of such preassembled modules.54 The UAW union has

CHAPTER 8 Administrative Issues 399

adopted a dual strategy of attempting to delay job cuts or limit such cuts to normal attri- tion rates at the Big Three (GM, Ford, and Chrysler) auto plants while at the same time becoming more aggressive in seeking to organize nonunion auto supply plants to reduce the labor costs differential between primary auto manufacturers and auto suppli- ers. The dual strategy of the UAW is consistent with research suggesting that the pres- ence of a union reduces international outsourcing among U.S. manufacturing firms.55

Use of the just-in-time inventory control method to minimize inventory-carrying costs has left firms particularly susceptible to disruptions in the flow of parts caused by selective strike actions at key supplier s plants or their own plant. This increases the importance to management of developing stable and cooperative labor relations with workers and their union representatives. Separate strikes at Boeing in 1995 and 2008 were caused in large part by outsourcing. In 1989 Boeing began to implement a global outsourcing model intended to ensure the company s competitive future.56 By 1995, Boeing s worldwide workforce had shrunk by 62,000, and forecasts for plane production were the lowest in 11 years. To help win orders in Asia, the aircraft industry s fastest growing market, Boeing agreed to farm out parts production to manufacturers in those countries (sometimes a requirement imposed by home countries in order for foreign firms to do business there). As an example, one supplier selected was Shanghai Aviation in China, with 2,000 employees who earned $120 per month compared to $3,530 per month earned by Boeing employees in Seattle, Washington, for producing 1,500 tail assemblies for Boeing. Although Boeing s aircraft are still assembled in Seattle, much of their fuselages and components, such as landing gear, are now produced in and imported from Asia. Many of the costly delays experienced in Boeing s 787 Dreamliner aircraft have been attributed to problems with outsourcing parts and components for the project. While preselling more orders for the new aircraft than any previous aircraft in the com- pany s history, the plane that was initially expected to be in service by August 2007 finally entered commercial service in 2011 only to be grounded for three months in 2013 due to battery fires.57

Subcontracting and outsourcing processes can be volatile and complicate collective bargaining issues. Unions often attempt to influence management s decisions to subcon- tract by restricting management s freedom to subcontract bargaining unit members work in order to protect and maximize members work and economic opportunities. Some contract language restricting management s right to subcontract is found in approximately 50 percent of labor agreements.58 For example, a union may seek to have management agree not to subcontract or outsource work as long as necessary per- sonnel and equipment are available to perform the work in a timely manner. Alterna- tively, a union may propose that there be no subcontracting or outsourcing of work without first providing the union an opportunity to demonstrate how the work can be performed in-plant by bargaining unit members as cost effectively as it can if the work is outsourced to another supplier. A union may also request information from manage- ment to document the type and amount of bargaining unit work being subcontracted by the employer.

A union may also join with other unions or community groups to apply pressure on subcontractors to provide their employees with competitive terms and conditions of employment (e.g., improvements in employment terms beyond what the subcontractor might choose to provide in the absence of such public pressure). For example, beginning in 2013, the Service Employees International Union (SEIU) and American Federation of Teachers (AFT) began a publicity campaign to pressure nonunion subcontractors to improve the wages and working conditions for guards, and cabin cleaning crews working at JFK and LaGuardia airports in New York City. As a result of the publicity, and

400 PART 2 The Bargaining Process and Outcomes

attention from state politicians, Delta Airlines ordered its subcontractors to raise employee pay by approximately $1 per hour so that over 2000 workers would make at least $10 per hour.59

Negotiation practices involving subcontracting clauses may vary across industries because unions in the construction and apparel industries do not usually attempt to limit subcontracting. Instead, unions in these two industries often attempt to extend the provisions of the collective bargaining agreement to the subcontractors that are com- monly used in those industries. Under the LMRA, subcontracting of bargaining unit work is considered a mandatory subject of bargaining. In the Fibreboard ruling (Fibre- board Corp. v. NLRB, 379 U.S. 203, 1964), the U.S. Supreme Court said that management cannot unilaterally replace bargaining unit members with subcontractors to do essen- tially the same work under similar conditions it must bargain with the union over that decision. The NLRB has determined that illegally replaced employees may receive back pay for the time they were without work. However, a company would not be required to bargain if all of the following conditions were met: (1) subcontracting was motivated solely by economic conditions, (2) subcontracting was a common method of doing business in the industry, (3) the current subcontracting decision did not differ much from similar decisions made by the company in the past, (4) there was no adverse impact on bargaining unit employees, and (5) the union had previously been given an opportunity to bargain over changes in established subcontracting practices.60

Arbitration likewise has played an increasingly important role in the subcontracting issue. In determining whether management had a contractual right to subcontract certain bargaining unit work, an arbitrator might consider several factors. These typically include: (1) the presence and clarity of contract language granting management a right to subcontract, (2) any evidence of an established past practice regarding subcontracting, (3) the history of the parties prior negotiations over the issue of subcontracting, (4) the intended duration of management s subcontracting decision, (5) the employer s business justification for contracting out, and (6) any evidence of anti-union animus (i.e., a desire or intent to weaken the bargaining unit or union representative by subcontracting unit work). For example, one case involved truck drivers supplying home heating oil in New York. The employer had replaced Teamster employees with subcontractors for some deliveries; in spite of a few instances of past practice, the arbitrator ruled against the employer, based on language of the contract clearly prohibiting subcontracting.61

An employer who unilaterally transfers bargaining unit work to another location has a duty to bargain over the decision to relocate the work if the relocation decision does not involve a basic change in the nature of the employer s operation.62 To avoid the duty to bargain, the employer must prove that (1) the work performed at the new location differs significantly from the bargaining unit work performed at the previous location, (2) labor costs were not a factor affecting the decision to relocate the work, or (3) the union representative of bargaining unit employees could not have offered sufficient labor cost concessions to reasonably justify any change in the employer s decision to relocate the work. Even where there is no duty to bargain over the decision to relocate bargaining unit work, an employer would still have a duty to bargain over the effects of the relocation decision ( effects bargaining ) on bargaining unit members (e.g., transfer rights, severance pay, pension rights).63

Even when a duty to bargain over the work relocation decision exists, an employer satisfies that duty by negotiating in good faith with the union until either a voluntary settlement or a bargaining impasse is reached, at which point the employer can legally implement the work relocation decision. This puts pressure on a union to adopt a rea- sonable approach in proposing alternative actions that might alter the employer s

CHAPTER 8 Administrative Issues 401

perceived need to relocate some or all of the planned work affected. It also ensures that bargaining efforts will not drag on too long, unnecessarily delaying any change in busi- ness operations.

Arbitrators have also limited management s right to relocate bargaining unit work when they conclude that the parties have already placed limits on work relocation by including in their labor agreements the following standard contract provisions: (1) a rec- ognition clause that acknowledges the union s status as representative of employees within the established scope of work by bargaining unit employees, (2) clauses that establish job classifications and wage rates, (3) seniority clauses that include layoff and recall procedures, and (4) job security clauses that limit the circumstances in which employees can be terminated or jobs eliminated.64 Practically speaking, there is usually good reason for an employer to bargain about a work relocation decision, as well as its

LABOR RELATIONS IN ACTION Creating Good Jobs Today and in the Future

Where are the jobs needed to reduce today s unem- ployment rate and provide income to American workers, whose spending is depended upon to drive future eco- nomic growth? Many business and union leaders, politi- cians, and average individuals seem to recognize the need to create better job opportunities, but who has a concrete plan for doing so, and where will the money come from to pay for it?

Ford Motor Company is an example of an American manufacturer that has chosen to invest $550 million in the redesign of an existing facility to achieve the production flexibility to produce profitable autos today and in the future.a The Ford assembly plant in Wayne, Michigan (near Detroit), covers an area the size of 22 football fields and employs 3,300 workers, many of whom are repre- sented by the UAW Union. The plant redesign permits the company to assemble multiple models of different sizes using either gas or electric powertrains. As the price of gas fluctuates and consumer preferences shift among various sizes and types of vehicles, the Ford assembly plant can shift production needs to match demand. To achieve such flexibility both machines and workers were required to adapt. To produce a car, the plant s 696 welding robots had to be reprogrammed to recognize a variety of parts that differed depending upon the model vehicle being produced. With approximately 4,000 welds in a finished vehicle, this was no easy task. Employees have been given greater responsibility to recog- nize and fix problems as they occur. Communication between managers and production workers has taken on increased importance and frequency to ensure that all par- ties are knowledgeable about the differences in parts and assembly techniques required for the variety of vehicle models being produced. No longer does an assembly worker spend an entire work shift installing the same part

of the same vehicle model in endless, mind-numbing repe- tition. This means assembly line workers today must be able to learn, problem-solve, take initiative in creating solu- tions, and focus on ensuring that the quality of every task performed is high. In 2010 Ford Motor Company earned $ 6.6 billion dollars making it the most profitable of Detroit s three major auto manufacturers.

The Apollo Alliance project provides another example of a broad coalition of business, labor, environmental, and community leaders committed to creating good jobs, reducing energy costs, and addressing climate change con- cerns.b The coalition draws its name from the Apollo space program which represented a previous national effort to attain an ambitious goal. By investing $500 billion over a 10-year period the coalition s plan seeks to create 5 million good jobs through investment in renewable sources of clean energy (e.g., wind turbines, solar panels, biomass fuels), increasing building energy efficiency using both design and materials improvements, modernizing the national power grid, and improving transit systems (e.g., more energy efficient transportation equipment). Will U.S. industrial policy support efforts such as these, or will the current budget-cutting frenzy determine that such ambi- tious goals are beyond the reach of Americans today?

SOURCES: a. Chris Woodyard, Ford Focuses on Flexibility at its Factories, USA Today, February 28, 2011, pp. 1 4 at http://www.usatoday.com/ (accessed February 28, 2011). b. Apollo Alliance, Project. The New Apollo Program: Clean Energy and Good Jobs, October 1, 2008, pp. 1 7 at http://www.bluegreenalliance.org/apollo/programs/new- apollo/file/Program.NewApolloProgram_Report.pdf (accessed October 3, 2015); Apollo Alliance Project. Make It in America: The Apollo Clean Transportation Manufacturing Action Plan, 2011, pp. 1 6 at http://www.bluegreenalliance.org/apollo/programs/tmap/ file/PR.TMAP.pdf (accessed October 3, 2015); Broad National Coalition Launches Make It in America Campaign to Restore Millions of Manufacturing Jobs, PR Newswire, April 15, 2009, pp. 1 2 at http://www.proquest.com/ (accessed February 27, 2011); Thinking Globally, Acting Locally on Energy Use, Futurist, 40 (4), July/ August 2006, pp. 8 9.

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effects. A union may offer helpful suggestions or concessions that make the relocation less necessary. More importantly, if the company acts unilaterally and its acts are later determined to be unlawful, it risks large back-pay awards and, in isolated cases, a costly order to reopen a closed operation.65

Work Assignments and Jurisdiction When changes in technology, job descriptions, work materials, or processes occur, some- times labor disputes develop over which workers will be assigned to perform particular jobs or job duties. Such disputes may occur if: (1) two or more unions representing dif- ferent bargaining units within the same firm claim jurisdiction for their members to per- form the available work assignment; (2) bargaining unit employees believe their work is being assigned to other employees outside the bargaining unit, such as supervisors; or (3) a disagreement occurs within a union over which members should perform particular work assignments. These disputes over work assignments are called jurisdictional disputes (see Exhibit 8.1 for an example of a work jurisdiction clause in a labor agreement).

The LMRA, as amended, makes it unlawful for a union to engage in or encourage a work stoppage to force an employer to assign work to a particular union or craft. The LMRA provides a special NLRB procedure for resolving jurisdictional disputes within ten days after an unfair labor practice charge is filed. Factors considered by the NLRB in resolving these types of disputes are skills and work experience required to perform the work; any union certifications already awarded by the NLRB; industry, and local practice; prior arbitration decisions; the employer s desires; and cost effectiveness and operating efficiency of assigning the work to a particular bargaining unit or craft.66 The AFL-CIO s Building and Construction Trades Department representing 12 affiliated national unions and several national contractors associations have generally sought to avoid using the NLRB jurisdictional dispute procedure by voluntarily establishing a

Exhibit 8.1 Example of a Work Jurisdiction Clause

It is the intent of the parties to this agreement to protect the work performed by employees in the bargaining unit.

The employer recognizes that it is important and desirable to use its own equipment and drivers to the greatest extent possible before using subhaulers and/ or noncompany trucks.

The union recognizes that under certain conditions, such as those dictated by customer demands, equipment requirements, daily dispatch determinations, materi- als to be hauled and similar factors, subhaulers and/or noncompany trucks are nec- essary and have been so used throughout the industry for many years.

The employer, in accordance with the above, must, however, determine the number, type, and location of its working equipment in conformity with its business requirements. The employer further must be able to determine, in keeping with sound business practices, the extent to which it will replace equipment that is too costly to operate, obsolete, or damaged.

Under these conditions, the employer agrees that the subhaulers and/or non- company trucks will not be used as a subterfuge to defeat the protection of the bargaining unit work.

In keeping with the above, the union recognizes that the employer will use such subhaulers and/or noncompany trucks as required by location and classifica- tion only after all the available company trucks at such locations and in similar clas- sifications have been initially dispatched.

CHAPTER 8 Administrative Issues 403

national joint board to consider and decide cases of jurisdictional disputes in the build- ing and construction industry.67

Some labor agreements require that bargaining unit work be performed only by bar- gaining unit employees except in instructional, experimental, or emergency situations. In instructional situations, such as new employee training, there must be a clear, direct, and immediate connection between work done by members of management and instruc- tions given to bargaining unit employees. Experimental work includes the introduction of a new technique, method, or procedure for doing the work; nonbargaining unit mem- bers might try out the methods for assessment purposes, prior to being introduced on a larger scale. An emergency situation might occur as the result of unforeseen circum- stances, such as a tornado, fire, or power failure, that warrant immediate action.

Unions generally do not object to bargaining unit work performed by supervisors in situations requiring only a few minutes of time but rather seek to prevent any trans- fer of work opportunities that might lead to the permanent elimination of one or more bargaining unit positions. For example, a brewery hired too few truck drivers. The union claimed that by being understaffed, it created hazardous working conditions, which in turn, increased injuries and work delays. These exacerbated the labor short- age, creating, what management called, emergency situations allowing managers to drive delivery trucks based on a relevant contract clause. However, the frequency of these emergencies prompted the union to file a grievance and an arbitrator ruled that managers could no longer drive delivery trucks. Consequently, the brewery hired more truck drivers.68

Intra-union work assignment problems, although not as critical and dramatic as other issues, are often sensitive political matters for local union leaders. Conflicts between members of the same union over work assignments can cause problems, espe- cially in industrial unions having both craft and semiskilled employees as members. Whenever production processes are automated, reassignment of work from skilled employees to semiskilled production employees can cause emotional conflicts within the union. For example, having pipe fitters do welding tasks when welding is not included in their job description gives rise to disputes.

To resolve these conflicts, unions favor specific, written job descriptions and a right to refuse to perform work outside those specified job descriptions. Management typically prefers increased flexibility in making work assignments, provided by a more general job description that includes phrases such as able to perform related duties and make minor repairs. Companies implementing a team-based production system have been successful in getting unions to agree to more cross-functional training and broader multiskill job descriptions that provide greater flexibility in assigning job duties to team members. For example, in spite of electrical jobs being moved to Mexico, Niagara Trans- former and the Buffalo, New York local of the International Brotherhood of Electrical Workers (IBEW) developed cross-functional teams and used flexible manufacturing practices to remain competitive in the global market.69

Work Scheduling Collective bargaining agreements often deal with work scheduling, such as determining the timing or duration of a work shift, day, or week. Management has a right to deter- mine work schedules unless restricted by negotiated language in the labor agreement. For example, management has a right to suspend operations temporarily, reduce the number of shifts, or change the number of days to be worked. Even when the labor agreement contains some restrictions on work scheduling, management can usually make

404 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION Computer Programming and Labor Relations

When one thinks of jobs involving labor unions and bar- gaining positions, one doesn t often think of computer programmers. Yet, there are some similarities between formal labor unions and the approaches some computer programmers have taken to their work. In the late 1990s, contingent workers at Microsoft, concerned about job security, formed a group called the Washing- ton (state) Alliance of Technology Workers or Wash- tech.a It expanded to include permanent high-tech employees, such as programmers, software develo- pers, testers, code writers, and customer service repre- sentatives at approximately 100 companies.b Eventually, Washtech affiliated with the Communication Workers of America (CWA) and today, it negotiates collective bar- gaining agreements. It gives advice to individuals (e.g., limiting work hours) as they negotiate their own profes- sional contracts with employers.c The group also lobbies to limit the number of specialized work visas the federal government issues; thus limiting the number of immi- grants who can take employees jobs. A similar group, called the Alliance at IBM has affiliated with the CWA. In September 2014, a group of software testers who work for Lionbridge, a Microsoft subcontractor, formed the Temporary Workers of America. Many of the mem- bers work in Microsoft facilities alongside permanent Microsoft employees. After a publicity campaign, Micro- soft announced in March, 2015 that contractors with 50 or more on-site employees will be required to provide at least 15 paid days off each year (Microsoft employees get 25 paid vacation and sick-leave days).d Many in the industry support the goals of such organizations; yet many workers are reluctant to join because they don t want to be a part of a labor union.e

Given that formal organizing has had limited success, others in the industry have focused on developing indus- try standards for high-tech professionals. For example, some programmers and their employers have aban- doned traditional software development, where the prod- uct is developed in phases, like an assembly line. Instead an agile process is used, where software components are developed, tested, and modified based on user feed- back, prior to developing other components. One analogy is that traditional programming is like an architect and con- tractor designing and building a house, whereas agile pro- gramming is comparable to designing and building a kitchen and insuring customer satisfaction before moving on to the other rooms.

What does Agile programming have to do with labor relations? As Agile programming has developed, it has become formalized, with programmers insisting that

managers and other programmers agree to a set of principles such as the Agile Manifesto. While these principles are typically written using the language of cus- tomer satisfaction and flexible work practices, a close examination suggests that such documents also contain a set of proposals regulating working conditions such as subcontracting, work assignments, and work scheduling. For example, one principle of the Agile Manifesto dis- cusses sustainable development where developers maintain a constant pace ; this is aimed at preventing programmers from being overworked with long hours. Other principles refer to trusting workers and self- organizing teams and appear to be designed to win free- dom and autonomy for workers from overly controlling managers. Principles such as Working software is the primary measure of progress downplays the relevance of extensive documentation as a measure of progress; this can also be seen as a way to ensure job security for current programmers. Finally, another principle reads, The most efficient and effective method of conveying

information to and within a development team is face- to-face conversation. Although couched in the language of efficiency, one can argue that the purpose of encour- aging face-to-face conversation is to prevent program- ming jobs from being outsourced to various low-wage countries. Thus, programmers who insist that their man- agers embrace agile software development may be doing more than increasing efficiency they may also be improving their own working conditions.f

In conclusion, although labor unions have not found high-tech workers to be fertile ground for formal orga- nizing, many workers (1) are sympathetic to the positions that unions take on workplace issues of relevance to them, (2) are sometimes willing to join organizations that downplay their affiliation with traditional unions in favor of focusing on specific issues, and (3) sometime embrace documents that articulate an approach to work that also incorporates a set of bargaining positions with regard to employees working conditions.

aMark Boardman, Unions Go High Tech, HR Magazine, 44(5), 1999, pp. 160 161. b Frequently Asked Questions, WashTech, 2015, at http://www.washtech.org/index. php/about/faq. c Worker Rights, WashTech, 2008, at http://archive.washtech.org/rights/contracts. php. dJosh Eidelson, Microsoft s Unionized Contract Workers Get Aggressive, Bloomberg Businessweek [online], April 30, 2015, at http://www.bloomberg.com/news/articles/ 2015-04-30/microsoft-contract-workers-are-organizing. e Alliance@IBM, IBM Employees Union, CWA, 2015, at http://www.endicottalliance. org/. fMike Bulajewski, The Agile Labour Union, West Space Journal [online], 2, Summer, 2013, at http://www.westspacejournal.org.au/article/the-agile-union/.

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unscheduled emergency changes in the work schedule if such changes are made in good faith and for reasonable cause, such as extreme weather conditions, bomb threats, or civil disturbances. The 5-day, 40-hour workweek has been accepted as a standard work sched- ule in most U.S. industries since passage of the Fair Labor Standards Act (1938), requir- ing employers to pay time and one-half a covered employee s regular rate of pay for hours worked in excess of 40 during the same workweek.

Since the 1970s, there has been a 10 percent decline in the number of Americans working a standard 40-hour week, with a corresponding increase in both part-time and overtime work. 70 Fewer workers are employed on a 9-to-5 work schedule as work sche- dules have increasingly included early morning and evening hours. About one-third of wage and salary workers have a work schedule which permits them some flexibility in determining the exact time when the workday begins and ends, although the total num- ber of hours to be worked per day may be fixed. About 20 percent of workers have a shift other than a regular daytime shift and a slightly smaller percentage work on weekends.71

Reflecting the interests of their members, unions in the United States and elsewhere have shown increasing interest in flextime work schedules which allow an employee to start and finish work at his or her discretion, as long as the specified total number of hours per week or per day are worked and the employee is present at work during a core-hour period (e.g., 9:00 A.M. to 11:00 A.M. and 1:30 P.M. to 3:30 P.M.). Some employers use flexible work schedules as a hiring incentive to attract applicants in occu- pations with a current labor shortage. These programs are designed to better match job requirements with the personal needs of individual employees. Although flextime has much potential for meeting employee needs, some work operations require all workers to be present at the same time, and in these cases, work schedules cannot be altered unless the entire group accepts the alternative schedule.72 Part-time workers and occupa- tions requiring higher levels of education or training are more likely to have access to a flexible work schedule. Approximately 32 percent of employers with union contracts include language addressing flexible work scheduling.73

Another possible alternative work schedule is a compressed workweek consisting of four 10-hour workdays with three days off each week or eight 9-hour days and one 8-hour day permitting one extra day off every two weeks.74 For example, the National Treasury Employees Union and U.S. Food and Drug Administration negotiated contract language that permitted employees to work nine 9-hour days over a 14-day period or four 10-hour days per week with work hours being performed sometime between 6 A.M. and 6 P.M. Some authors have raised concerns about the possible negative health effects of nonstandard work schedules, such as chronic sleep deprivation or the stress of being required to be on call during scheduled off hours.75

The Role of Seniority in Personnel Changes Employers usually have a free hand in selecting initial hires that best fit the prescribed job requirements and needs of the firm. However, once any employee has been selected and placed on a job within a bargaining unit, the employer must abide by provisions of the labor agreement regarding personnel decisions such as promotions, transfers, and layoffs. The concept of seniority is often a factor used to determine personnel decisions that affect bargaining unit employees. Seniority has played a key role in labor relations since the 1920s, when foremen s discretion (often abused) in personnel decisions was replaced by seniority-based decisions affecting compensation or reward structures, pro- motion, transfer, layoff, and recall decisions.76

406 PART 2 The Bargaining Process and Outcomes

Types of Seniority Seniority is usually measured by the length of an employee s continuous service in a company, at a particular facility (plant), in a specific department, or in a group of jobs (typically in a line of progression such as Welder 1, Welder 2, etc.).

Purpose of Seniority Seniority may be used to determine benefit rights (e.g., vacation entitlement or schedul- ing). When used to determine benefit rights, every employee s seniority is usually mea- sured on the same basis typically from the date of initial employment in the company or specific plant location. Such a company or plantwide measurement approach ensures equitable treatment of employees for entitlement to certain benefits that have no mean- ingful connection to the type of job or skill level the employee holds.

Seniority is also used for competitive job rights (e.g., promotion, layoff or recall, work assignments, transfers, shift preference). Determining who among competing employees will be entitled to a job promotion or transfer presents a different issue because, in determining competitive job rights, the ability to perform the job is an important consideration. Management generally prefers to measure seniority for deter- mining competitive job rights on a department or job line-of-progression basis. This measurement approach gives more assurance that the most senior applicant will be qual- ified to perform the job and eliminates the risk of grievance claims filed by employees from other departments. Managers may also try to negotiate contract language to insure that the person has satisfactory performance in their current job before being promoted (e.g., if a person isn t satisfactory as a Welder 1, they shouldn t be promoted to a Welder 2 position). Other firms may seek language requiring that the person pass a test, demon- strating that they have the knowledge, skill, and ability to perform satisfactorily in the higher-level position. A union may counter such a proposal by requiring paid training for the employee as he or she learns the new position.

Seniority provisions are found in most labor agreements and cover issues such as how seniority accrues, in what types of decisions it will be used and, in some cases, how it can be lost for a variety of reasons (e.g., layoff, failure to respond to recall, unauthorized absences, conviction of a felony, or taking a job elsewhere during a leave of absence). Seniority is considered very important by most union members, and managers seldom object to providing some sense of job security or benefit priority to productive long-service employees. Seniority is seen as fair by many workers because it serves as one of the few objective measures that can be used to distinguish between two or more employees; it is also used by nonunion employers in making some person- nel decisions.77 Seniority is not as commonly used outside of North America as a key factor in determining issues such as layoff or promotion decisions.78 Arbitrators often consider an employee s seniority as a possible mitigating circumstance in deciding the appropriateness of a discharge decision. A long period of satisfactory performance would weigh in an employee s favor in determining whether the behavior violation alleged or proven is likely to occur again if the employee was given another chance to correct the behavior.

Some authors argue that the increasing level of organizational instability resulting from rightsizing, outsourcing, mergers, increased global competition, and declining union density have weakened employers commitment to seniority and, in turn, weak- ened employees loyalty and commitment to their current employer.79 Individuals enter- ing the labor force today can expect to work for multiple different employers over the course of their work career, making seniority with any single employer more difficult to attain.

CHAPTER 8 Administrative Issues 407

Seniority and Layoffs If a contract grants bumping rights in a layoff, a more senior employee from one department might claim a job held by a less senior employee in a different department. Even if management wasn t sure the more senior employee could actually perform the job satisfactorily, the senior employee would likely insist on being granted a reasonable trial period to demonstrate his or her job ability. If there are waves of layoffs in a short time span, then unlimited bumping rights can make for a chaotic workplace. Sometimes managers will seek contract language limiting bumping rights. For example, a person may only be able to bump into jobs he or she had previously held or into jobs within a particular line of progression or department. Other proposals require that the person take a test to prove that they can do the job; some contracts limit the number of people who can be displaced in a bumping sequence.

Some commentators criticize seniority as a discriminatory concept because some groups with a higher proportion of more recent entrants to the labor force (e.g., women, minorities) are often among the first to be laid off when applying the last-in-first-out principle on which seniority preference is based.80 Many states are currently facing budget shortfalls which has resulted in some layoffs of public-sector employees such as teachers. If seniority is considered a primary factor in determining eligibility for layoff, then currently low-performing schools which tend to have a higher number of less senior teachers assigned would likely suffer the greatest turnover among teaching personnel.81

In some cases, union and management agree to include a seniority provision in the labor agreement called superseniority, which provides that highly skilled technical employees or union officials directly involved in contract negotiations or grievance han- dling will be the last ones laid off, regardless of their actual length of time on the job. This provision allows a company to retain essential skills and at the same time promote stable labor relations by ensuring that individuals skilled in contract negotiation and grievance-handling techniques will remain available to resolve any labor disputes that might arise at the workplace. Note that superseniority can only be used in the context of layoffs. It cannot be used for gaining additional benefits; nor can it be used for com- petitive job rights, to allow a person to move into a better job.

Combining Seniority and Qualifications Seniority also plays a role in determining job promotion and transfer decisions. Personnel changes within an organization that advance an employee to a position of more responsi- bility, usually accompanied by a wage increase, are promotions. Promotion provisions usu- ally explicitly specify that both ability and seniority as factors used to determine the personnel decision, but the weight accorded each factor can vary in different labor agree- ments. Although seniority can be easily and objectively determined, the measurement of ability is more complex. Job transfer provisions cover personnel changes from one job to another with relatively equal authority, responsibility, and compensation. Seniority and ability are also usually the determining factors in making a job transfer decision.

Four basic types of seniority clauses used in promotion and transfer decisions are presented here, with the approximate percentage of contracts using each:

Seniority is the only determining factor (5 percent). Among all employees who meet the minimum job requirements, seniority will be the determining factor (49 percent). Where the best-qualified candidates are relatively equal in ability, seniority will be the determining factor (40 percent). Ability and seniority will be given equal consideration (2 percent).82

408 PART 2 The Bargaining Process and Outcomes

Management generally prefers to give qualifications (the ability to perform the job) more weight than seniority in making promotion and transfer decisions to enhance potential productivity. Unions often argue that because the exact determination of ability is both complex and subjective, the emphasis should be on ensuring that each candidate is qualified to perform the job effectively; among such qualified candidates, seniority is an objective means of determining the candidate selected. The use of only seniority to determine eligibility for promotions and transfers is objective and administratively easy, but it does not ensure that the more senior employee will always be qualified to perform the job. Both union members and managers want to ensure that competent individuals occupy job positions within a bargaining unit; thus, ability to perform a job will almost always be a factor in any layoff or promotion decision. In the small percentage of con- tracts that apply equal weight to seniority and ability, arbitrators have concluded that when seniority between employees is relatively close, it is reasonable to use relative abil- ity to perform the job as the determining factor. If candidates seniority differs exten- sively, ability must be substantially greater to justify selection of a less senior candidate.83

Ability to perform a job includes measuring factors such as relevant job skills, knowledge, attitude, behavior, performance, pace, and production. Techniques most commonly used to measure these criteria include tests, work experience, education, pro- duction records, performance ratings, personality traits, and absence, tardiness, and dis- cipline records.84 Each of these criteria may be limited in its specific relationship to the needs of particular jobs, and thus the determination of employee qualifications is usually based on several criteria.

Although an employer may generally establish any valid criteria for assessing an employee s ability, promotion criteria and performance standards are mandatory bar- gaining subjects because they have the potential to directly impact both the employees economic interests and job security. Promotion and layoff decisions must comply with any standards expressed in the parties labor agreement. Selection and performance appraisal criteria and methods must also comply with the Uniform Guidelines on Employment Selection Procedures covering race, sex, national origin, and religious dis- crimination for covered employers.85 Moreover, the provisions of the labor agreement itself must not be discriminatory or perpetuate past discriminatory practices.

Job Posting Even though promotion and transfer procedures differ, most labor agreements require that job vacancies be posted for a specified time period to inform interested bargaining unit members about the employment opportunity. Interested employees are then permit- ted to bid for an available job vacancy within the reasonably specified time period. At an antiques auction someone might make a monetary bid for, say, a vase and it would be sold to the highest bidder the person offering the most money. Here, eligible workers apply for the promotion and it would be awarded to the qualified worker with the most seniority. Other related labor agreement provisions may be included to prevent possible administrative problems. For example, agreements should prescribe whether an employee carries his or her seniority to a new position or whether seniority will be retained only after a predetermined period. Other provisions should specify whether an employee who transfers out of the bargaining unit or is promoted to a management position will lose his or her seniority or be allowed to retain seniority should he or she ever return to the bargaining unit. Some contracts may also specify that if a promoted employee does not successfully perform his or her new job after a reasonable trial period, that employee may return to the previous position with no loss in previously accrued seniority. Management might well oppose such a contract provision since returning a

CHAPTER 8 Administrative Issues 409

previously promoted bargaining unit member to his or her prior job would cause a rip- ple effect, displacing a second individual who had been promoted to fill the promoted member s vacated position.

Approximately 45 percent of union contracts provide for recall of employees after layoffs in reverse order of layoff. This would mean more senior employees would be recalled before less senior employees. Increasingly, seniority has become the primary fac- tor in layoff determination; however, contracts generally consider seniority as the deter- mining factor for recall only if an employee is qualified for an available job.

Advance notice of a planned shutdown to the employees and their union is required in 48 percent of labor agreements and the right to transfer to another facility in the event of a plant closure (often with restrictions based on job openings, employee qualifications, and seniority) is mentioned in 35 percent.86 As previously discussed, the WARN Act requires covered employers to provide at least 60 days advance notice to the affected par- ties in the case of a plant closure or major layoff. Unionized firms experience only slightly higher layoff rates than nonunion firms in both manufacturing and nonmanufac- turing industries.87

Alternatives to layoffs as a means of cutting labor costs include a pay freeze, pay cut, productivity improvement through work-rule changes, addition of new products or ser- vices, normal attrition and hiring freezes, voluntary leave, early retirement, a reduction in operating hours, rotating layoffs, work relocation, and job sharing. Job sharing, where two or more employees share a job by dividing the standard total number of hours for the job between them, appears in about 6 percent of labor agreements.88 Job sharing agreements generally specify that the agreement will be implemented for a limited amount of time. Job sharing enables the employer to retain the skill mix of a full work- force and consequently retain its investment in employee training, keeps the employer s unemployment compensation tax contribution rates from increasing, and is considered by many employers as more equitable than retaining some employees and laying off others. This approach was used successfully in the hospitality industry following the events of September 11, 2001, to retain key staff represented by the Hotel and Restaurant Employees Union.89 Employers have no right to unilaterally institute job sharing arrangements without first bargaining to an impasse with the bargaining unit representa- tive, unless such action is permitted by a labor agreement, such as in the management rights clause.

Independent of union contracts, work sharing programs exist in many states and have been facilitated by 2012 federal legislation funding such programs as alternatives to layoffs. For example, a business that faces a slump in demand can reduce employees hours by

20 percent instead of laying off one-fifth of its workforce. In a state with a work sharing program, workers can apply for and receive prorated unemployment benefits to help com- pensate for reduced work hours if the employer files a plan with the workforce agency. Organized labor generally supports these programs provided that, in unionized firms, the employer secures its union s approval before implementing a work sharing program.90

Legal Issues Involving Seniority in Administrative Determinations Job rights guaranteed an employee under a labor agreement may pose a potential conflict with other employees legal rights. Use of seniority in administrative determinations such as promotions and layoffs has been the focus of much litigation. In some cases it has been shown that minorities have been locked in departments or jobs with unfavorable lines of progression, and these practices tend to perpetuate past employment discrimina- tion.91 Congress specifically granted legal protection to bona fide seniority systems that were not enacted for the intentional purpose of discriminating on the basis of race, sex,

410 PART 2 The Bargaining Process and Outcomes

and so on, even though the operation of such a seniority system might tend to perpetu- ate different treatment of some employees.92 Appropriate remedies for an unlawful seniority plan can include the award of retroactive seniority to employees who were dis- criminated against.

Although the Supreme Court encourages voluntary affirmative action plans, the high court upheld the right of white employees to challenge promotions made under a court- approved affirmative action consent decree when the white employees did not participate in the negotiation of the plan.93 The white employees sued their employer, claiming reverse racial discrimination, alleging that they had been denied promotions that had been awarded to less-qualified black employees under an affirmative action consent decree entered into by the employer and minority employees to settle the black employ- ees discrimination claim.

Merely because an affirmative action plan grants a preference to a certain class of employees (e.g., minorities) for the purpose of addressing past discrimination practices does not mean the plan is unlawful. The Supreme Court upheld a voluntary affirmative action plan negotiated between an employer and union intended to increase minority participation in a skilled-trade apprenticeship training program because the parties intent in establishing the plan was lawful, the plan was designed to be of a limited dura- tion, and it did not unnecessarily harm the interests of nonminority employees (i.e., no nonminority workers lost employment because of the plan, and 50 percent of available training slots were filled by nonminority applicants).94

The Supreme Court has tended to view permissible affirmative action in employee lay- offs somewhat differently because a layoff represents the loss of something an employee already has and a potentially permanent loss of income, thereby representing greater potential harm to adversely affected employees interests. In one decision the Supreme Court indicated that in fashioning a remedy for past discriminatory practices, a court can only award competitive seniority (more days of service than they have actually worked) to individuals who were the actual victims of a discriminatory practice.95

The Supreme Court has also limited the use of racial preferences in layoff proce- dures intended to protect minority employees, even though the procedure is part of a negotiated labor agreement.96 To ensure minority teachers availability to serve as role models for minority students, a board of education and a teachers union agreed that the order in which employees were laid off would be determined based on seniority, except that at no time would the percentage of minority personnel fall below the current percentage of minority students enrolled. In practice, the layoff procedure resulted in more senior nonminority personnel being laid off while less senior minority personnel were retained. The court recognized that the labor agreement provision represented an affirmative action effort. However, the provision could not be enforced because the pres- ence of generalized societal discrimination is not a sufficiently compelling reason, absent evidence of specific discriminatory practices by the board of education or union, to war- rant a special remedy such as racial preferences in layoffs. The court noted that the same affirmative action goal could be accomplished without adversely impacting current employees interests by establishing future minority hiring goals and time tables.

Accommodating seniority and affirmative action interests presents difficult dilem- mas for both employers and unions. Assuming that employers have increased the hiring of women and minorities in recent years, the firm s seniority list would consist of more nonminority and male employees toward the top and a greater proportion of minorities and women toward the bottom. If an employer was forced to lay off employees, it would impact minority and female employees more severely under a typical last-hired, first- fired seniority provision. In those cases where plant, department, or job line-of-progression

CHAPTER 8 Administrative Issues 411

seniority is used, a layoff could erase much of the employer s progress in its minority- and female-hiring affirmative action plan.

More generally, perceptions of organizational justice play a role in decisions to file a grievance or lawsuit. An employer who fails to explain to an individual the reason for his or her layoff may increase the probability of the employee challenging the layoff deci- sion, alleging some form of discrimination as the basis for the layoff decision. Research suggests that the perceived fairness of the outcomes (distributive justice), the layoff pro- cedure (procedural justice), the way that those being laid off were treated (interpersonal justice), and how information was used and the explanations offered (collectively called informational justice), can all be relevant when outcomes are negative. For example, one study found that people who received fair interpersonal treatment and an adequate explanation at the time of termination were less likely to consider filing a wrongful- termination lawsuit. Procedural justice during layoffs also enhanced the subsequent orga- nizational commitment of the survivors, particularly if the layoffs were for increased profits, rather than economic survival of the firm.97

Passage of the Americans with Disabilities Act of 1990 (ADA) has also required some accommodation of contractual seniority rights with reasonable accommodation requirements for persons with disabilities under the ADA. Unions represent both indivi- duals with disabilities and those without disabilities holding job positions in a bargaining unit. Does the employer have to negotiate with the union over every ADA-related deci- sion? For matters that do not significantly affect mandatory bargaining issues, such as installing a wheelchair ramp or adding braille signs, the answer is no. Similarly, because most labor agreements do not include provisions on the initial selection of employees, ADA compliance in the hiring process is essentially the employer s obligation.

Employment decisions after initial hire, such as promotions, transfers, layoffs, and recalls, are addressed in most labor agreements and come under the employment provi- sions of ADA. Under ADA provisions, an employer must make reasonable accommoda- tion for a person with a disability if that accommodation will allow the person to perform the essential functions of the job. Thus, if an employer can make a modification in a job s requirements or structure that will not cause the employer undue hardship and that will allow an employee with a disability to do the job, then that modification or change in the job must be made. Typically, the employer includes union representatives in any discussion about reasonable accommodation proposals. Note that an employer is not required to create special light duty jobs for disabled workers.

The Supreme Court has ruled that an accommodation requested by an individual with a disability (e.g., assignment to a particular job) will not ordinarily be considered a reasonable accommodation under the ADA if such an assignment would conflict with

the seniority rights of other employees, provided that seniority is applied consistently among bargaining unit employees.98 A union has a legal duty to fairly represent both disabled and nondisabled members in a bargaining unit. Labor organizations seek to inform members and nonmembers about ADA issues arising under a collective bargain- ing agreement.99 This represents an area of labor relations that afford both labor and management opportunities for a cooperative, mutual gain approach to resolving related issues in a fair and nondiscriminatory manner.

Employee Training

America s continued competitiveness in a global economy depends on how well our human resources are developed and managed. Many jobs in the future will require work- ers with higher levels of communication, mathematical, organizational, and interpersonal

412 PART 2 The Bargaining Process and Outcomes

skills. In 2010 the civilian noninstitutional population of the United States was com- prised of 12.8 percent of individuals with less than a high school education, 31.0 percent with a high school education, 26.1 percent with an associate degree or some college, and 30.0 percent with a bachelor s or higher college degree.100 The percentage of individuals who have a college degree or at least some college has approximately doubled over the past 30 years.101

Despite an increase in the education and training level of American workers, many employers today continue to speak of a skills gap between the job skills required to fill current job vacancies and the current job skills of job applicants.102 Senior vice-president of worldwide manufacturing at Corning Inc., Donald McCabe, has said that less than 50 percent of job applicants at many Corning locations can successfully complete job qualification tests.103 The American Management Association reports that 36 percent of job applicants lack the basic math and reading skills to perform the jobs for which they apply. A recent survey of 1,600 employers reports that 38 percent currently have posi- tions for which they cannot find qualified candidates. Other writers observe that students are not well prepared in Science, Technology, Engineering, and Math ( STEM ); yet these areas are showing significant growth. In 2012, 33 percent of jobs required postsec- ondary education, with most of those (23 percent) requiring a bachelor s degree or higher. Unemployment statistics also reflect the importance of educational preparation. In 2014, the unemployment rate was less than 3 percent for those with a graduate edu- cation, 3.5 percent for those with a bachelor s degree, 4.5 percent for those with an associate s degree, 6 percent for those with a high school degree, and 9 percent for those who had not completed high school.104

In addition to formal education, many businesses place critical importance on the issue of providing employee training and retraining to ensure future competitiveness. U.S. companies spend an estimated $70 billion annually to provide training to their employees, with spending on training increasing at annual rate of 10 percent or greater each year since 2011.105 Training can occur in a formal, structured program, such as apprenticeship training, new employee orientation, safety and health, basic skills (e.g., reading, math, and computer) or job-specific skills training. Training can also occur on a more informal basis, such as on-the-job training or mentoring by a more experienced employee. The availability of formal training programs has been shown to be positively correlated with large-size firms, the use of so-called high-performance work practices (e.g., total quality management, work teams), use of more capital intensive technologies, and workers possessing higher levels of education.106 Employees working in firms with a high turnover rate are less likely to receive training than those employed at firms with medium or low employee turnover.107 Employers are often reluctant to invest in employ- ees who aren t likely to remain on the job long enough to recoup the initial training investment. Because unionized firms tend to experience lower turnover rates compared to nonunion firms, over time union members have the ability to acquire more training related to a firm s specific job tasks and technologies, which can enhance productivity.

Most firms offer one or more types of formal training; however, the specific types of training and amount of training provided vary by industry.108 The most common types of formal training programs focus on new employee orientation, safety and health, job skills, and workplace practices. The most common job skills taught are sales and cus- tomer relations, management skills, and computer skills. Although there is little differ- ence in the total hours of formal training provided per employee between union and nonunion firms, unionized firms provide a greater percentage of training hours through formal, structured programs (36 percent) compared with nonunion firms (28 percent). Greater employer willingness to invest in formal training programs in unionized firms

CHAPTER 8 Administrative Issues 413

reflects the longer tenure of unionized employees with the same firm (43 percent have ten or more years compared with 23 percent of nonunion employees with the same length tenure), making the training investment more cost effective.109

U.S. employers now recognize that they are facing a training dilemma because advances in technology and global competition require a more highly skilled workforce. With the exception of the building trade unions that have long been providers of apprenticeship training, U.S. unions have traditionally left training activities to manage- ment. Joint union management administered apprenticeship programs in the construc- tion industry report higher rates of completion and greater participation by women and ethnic/racial minorities compared to programs run unilaterally by nonunion (open shop) employers.110 Many unions recognize that promoting a knowledge-based workforce is a critical strategy for economic development and employment security. 111

Unions have begun to take a more active role in response to increased interests from management in implementing new work practices such as continuous improvement in quality, productivity, and customer service. One survey of labor agreements reported that 15 percent contained language concerning high-performance work organization (HPWO). Although definitions of HPWO vary, John Tomer posits that, the essential characteristics [of HPWO] are the seven key dimensions identified by Jeffrey Pfeffer in The Human Equation (Harvard Business Review Press, 1998, chapter 3). These are (1) employment secu- rity; (2) selective hiring of new personnel; (3) self-managed teams and decentralization of decision making as the basic principles of organizational design; (4) comparatively high compensation contingent on organizational performance; (5) extensive training; (6) reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels; (7) extensive sharing of financial and performance information throughout the organization. 112 As listed, training is a key component of HPWO.

A 2014 survey of employers involved in contract negotiations reported 30 percent had contract language covering professional development programs and 14 percent addressed retraining programs in their contract language.113 Ensuring that workers receive adequate training to meet current skills requirements and develop necessary future skills is important to any union seeking to base future economic gains and job security on productivity improvement.

Unions have a long history of working with employers to provide training opportu- nities for employees. For example, the UAW union has joined Ford, GM, and Chrysler in developing an impressive set of programs for employees to upgrade their skills and further their education in personal and work-related matters. One program is the Paid Education Leave Program, which provides leadership training to both production and managerial employees to equip them to take an active role in the economic transforma- tion occurring in the automobile industry.114 Four unions, UAW, United Steelworkers of America, Communications Workers of America (CWA), and UNITE, in conjunction with the AFL-CIO s George Meany Center for Labor Studies and the U.S. Department of Labor, have organized the Labor Leadership Institute, designed to develop skills for co-management within these respective industries. The United Steelworkers union has joined with 14 steel and rubber companies to form the Institute for Career Development, which provides customized training programs for employed union members, those work- ing reduced hours, or those fully employed seeking to upgrade current skill levels to enhance future work opportunities. In San Francisco, the Hotel Employees and Restau- rant Employees Union negotiated an agreement with 12 hotels to create a $3 million training program directed toward employee empowerment, consensus decision making, and skill development in new technologies. State labor organizations such as the Ala- bama AFL-CIO s Labor Institute for Training or the Wisconsin AFL-CIO s Labor

414 PART 2 The Bargaining Process and Outcomes

Education and Training Center are also actively involved in meeting workforce-training needs.115

Some experts have called for improved efforts between business, labor, government, and educational institutions to develop programs that will prepare American workers for future work opportunities.116 The National Science Board has called for a renewed effort to identify and develop talented individuals in the areas of science, technology, engineer- ing, and mathematics to ensure future prosperity of the United States.117 Innovation is not the product of a haphazard process or very often plain luck. It requires intensive training, logical thought, perseverance, and a creative and inquisitive nature which does not hesitate to ask both why and why not. In the current climate of government budget cutting, it would benefit decision makers to distinguish between expenditures that repre- sent an investment in meeting vital future needs and expenditures that offer little return on the use of tax dollars.

Work Restructuring

Unions and companies are changing the nature of the work performed by employees. Work restructuring programs have many different labels, such as employee involve- ment, worker participation, cross-training, multiskills, or self-managed work teams. All such programs typically involve major departures from the traditional way of assigning specific tasks to each employee. For example, a semi-autonomous work team may include 5 to 12 multiskilled workers who rotate jobs and produce an entire product with a minimal amount of supervision. A few companies go one step further and create autonomous, self-managed work teams (also called self-directed work teams ), which determine production methods without any direct supervision. For example, Connecticut Spring & Stamping, a metal parts manufacturer, uses self-managed work teams. The teams assume responsibility for coordinating work schedules (e.g., to avoid attempting to schedule different jobs on the same machine at the same time). They also have chan- ged the facilities layout, moving related machinery closer together and have created a reward system for meeting team objectives.118

The team approach reduces the need for multilevel managerial tiers of authority and tears down bureaucratic barriers between departments. A team approach requires employees to improve their technical and behavioral skills. Some work teams not only gain a more direct voice in shop floor operations but also take over some managerial duties, such as scheduling work and vacations, hiring new members, and ordering mate- rials. These programs have unleashed enormous energy and creativity in employees and increased their feelings of dignity and self-worth. Work restructuring programs have enjoyed success in companies like General Electric, Champion International, Lucent Technologies, and Harley Davidson Motor Company.

A study by the U.S. Department of Labor and Ernst & Young found that American companies have discovered that investing in employees and innovative workplace strate- gies pays off in profits.119 Innovative work practices are most effective when implemen- ted in conjunction with employee training and empowerment programs. The study found that those companies that adopted aggressive employee development and involve- ment practices, such as skill training and team-based management, made significantly larger productivity gains than those that did not.

While innovative work practices may have a positive effect on firm performance, the exact magnitude of that effect and the ability to sustain performance gains over time are still questions of research interest.120 One study reported that the adoption of many high-performance work practices actually resulted in greater wage inequality among

CHAPTER 8 Administrative Issues 415

employees within the firm over time, and other studies have pointed to higher levels of employee stress when jobs are enhanced.121 Some union members may also cling to a belief that adversarial labor relations can produce greater economic gains and power for workers than a more cooperative labor relations approach inherent in many high- performance work environments. There appears to be a gap between what some firms say about the importance of training and employee involvement and the commitment to expend scarce corporate resources and time to implement such practices.

One of the major efforts in work restructuring, particularly in the metals industry, has been the development of cell manufacturing. The need to improve product quality has driven companies to realize that using traditional functional layouts of similar machinery for batch manufacturing is costly and obsolete. Cell manufacturing involves placing groups of dissimilar machinery in a small, cell-like configuration dedicated to machining a particular part or family of parts. Engineers experiment with machine place- ment, scheduling, and sequencing of operations to improve productivity and efficient use of machinery. Cell manufacturing requires highly skilled employees; these workers are generally more satisfied with their jobs because their tasks are varied and their authority is enhanced. Cell manufacturing is usually accompanied by just-in-time (JIT) inventory control and employee involvement (EI) programs. In cell manufacturing, employees are trained to perform new tasks, assume more responsibility, relinquish old habits and ideas, and become more involved in decision making through participation in work teams. Cell manufacturing is not an anti-union device, and unions around the United States are actively involved in these innovative efforts to make their companies more competitive. Active union involvement and cooperation in change efforts serve to reduce employee resistance to cell manufacturing.122

Safety and Health

Occupational safety and health clauses are common in labor agreements. The topics covered range from a pledge of cooperation on safety and health issues (64 percent) to the establishment of a joint local labor management safety and health committee (50 per- cent), provision for protective clothing (41 percent), safety rules (36 percent), reporting of safety and health needs (31 percent), first aid and medical facilities (24 percent), the use of a separate grievance procedure for safety and health disputes (23 percent), joint labor management involvement in conducting ergonomic evaluations and studies (23 percent), procedures for refusing to perform hazardous work (22 percent), and joint labor management committee review of hazardous communication programs (22 per- cent).123 Many of these provisions have resulted from safety and health standards formu- lated under the 1970 Occupational Safety and Health Act (OSHA); the emergence of new biological, ergonomic, and chemical hazards in the workplace (e.g., AIDS, cumula- tive trauma); rising health care treatment costs and greater awareness of the benefits of preventive health care; and an increase in legal claims filed by employees and attorneys related to occupational injury and disease.

The employer s overriding duty under OSHA is to furnish each employee with a work environment free from recognized hazards that may cause illness, injury, or death and to comply with all occupational safety and health standards adopted by the Depart- ment of Labor. The Occupational Safety and Health Administration (an agency within the U.S. Department of Labor responsible for administering the Occupational Safety and Health Act) is a fairly small agency with less than 2,500 inspectors to cover 7.5 mil- lion workplaces and more than 130 million workers.124 Assistant Secretary of Labor for Occupational Safety and Health, Dr. David Marsh states that OSHA must carefully

416 PART 2 The Bargaining Process and Outcomes

target its efforts and leverage its resources. One way to do that is through targeted inspections and penalties. Even there we are hobbled. The maximum fine for a serious violation is $7,000 a small fraction of those imposed by other federal agencies. By com- parison, the top penalty for violating the South Pacific Tuna Act is $350,000. Similarly, the maximum criminal penalty for a worker s death associated with a willful violation of an OSHA standard is a misdemeanor with up to six months in jail; yet harassing a wild burro on federal land is a felony with a sentence up to one year. 125 The Obama admin- istration has implemented a three-prong strategy to address existing deficiencies in the law and improve worker safety and health by (1) focusing closer scrutiny on the small number of employers with a documented history of willingness to commit safety and health violations, (2) strengthening the use of monetary penalties provided under current law, and (3) publicizing the poor safety and health records of employers who do not vol- untarily attempt to comply with established health and safety regulation.

In FY 2013, OSHA conducted 39,228 work site inspections and found 78,196 viola- tions. Of these, there were 185 significant and egregious violations warranting enforce- ment.126 Currently 27 states and U.S. territories operate their own safety and health programs that enforce safety and health standards at least equivalent to federal standards as permitted by Section 18 of the OSH Act of 1970. Four of these states (Connecticut, Illinois, New Jersey, and New York) and the Virgin Islands have plans which cover only public-sector employees.127 OSHA provides up to 50 percent of the cost of operating a state plan. Such plans must be approved by OSHA and are subject to annual federal monitoring of their activities. Health and safety inspections at both the federal and state level typically target industries or specific employers that historically experience a higher rate of job-related injuries and illnesses. OSHA works with both employers and labor organizations through partnerships and cooperative programs to improve awareness of and compliance with guidelines and work practices designed to improve the safety and health of employees.

Even though the agency is small, OSHA and its corresponding state agencies claim success in making workplaces safer. In 2013, 3.0 million private-sector nonfatal injuries and illnesses were reported, which is 3.3 cases per 100 full-time employees. This continues a decline in reported cases which has occurred since 1972 (when there were 10.9 cases per 100 workers) and 2003 (when there were 5.0 injuries and illnesses per 100 workers and when the government altered its data collection methods).128 The manufacturing industry sector reported a 23 percent decline, and the construction industry sector reported a 22 percent decline in nonfatal injuries and illnesses from 2008 levels. Several factors have been suggested as contributing to the decline, including better safety and health practices by employers, fewer hours worked by employees due to the economic recession, and over- reliance on data provided by employers who may have an economic incentive to under- report the actual number or severity of injuries and illnesses occurring.

Critics of efforts to strengthen safety and health laws, such as the Protecting America s Workers (PAW) Act proposed in 2009, point to the decline in reported ill- nesses and injuries as evidence that current law is adequate to protect the legitimate safety and health interest of American workers.129 Labor organizations, such as the AFL-CIO, are supportive of federal proposals to more vigorously enforce safety and health law and generally favor strengthening such efforts by creating additional standards to address spe- cific safety and health issues. For examples of union efforts to address domestic violence issues, see the Labor Relations in Action feature on page 419. In the view of many labor organizations, conducting a federal OSHA workplace inspection on average once every 137 years or a state program inspection once every 63 years places too much reliance on voluntary employer compliance to ensure safe and healthy workplaces.130

CHAPTER 8 Administrative Issues 417

In the United States in 2013 there were 4,585 deaths at work, which is 3.3 per 100,000 workers. This was down from 4,628 in 2012 and 6,217 in 1992 when OSHA and the Bureau of Labor Statistics first started keeping such records. Private-sector work- ers accounted for 90 percent of all fatal work injuries, with the two industry sectors accounting for the largest percentage of fatalities being construction (18 percent) and transportation and warehousing (16 percent).131

A study by the Congressional Office of Technology Assessment (OTA) revealed that OSHA has generally performed its regulatory tasks with workable accuracy, and actual employer costs of compliance with OSHA standards were often less than the agency s initial estimates. One reason for the lower than expected costs was employers retooling and modernization efforts to meet OSHA standards. OTA reported, for example, that the costs of complying with OSHA s vinyl chloride standard was 25 percent less than ini- tially estimated, and compliance with the cotton dust standard was 33 percent less than OSHA s estimate.132

Employers must permit inspectors to enter their establishments and conduct inspec- tions (although the employer may require the inspector to obtain a search warrant) and must post notices, provide equipment, and maintain records in accordance with OSHA s rules and regulations.133 Employees have a right to refuse to perform work that they believe represents a serious threat to their safety or health.134

OSHA applies some safety and health standards across all industries while additional standards may be required for specific industries.135 One standard requires employers to grant employees (or their designated union representative) access to their medical records maintained by the employer or any records concerning any employee s exposure to toxic substances. Generally, OSHA does not require employers to measure employees exposure to toxic substances or to conduct medical surveillance of employees to detect the effects of such exposure, but only to grant employees access to such information if such records are kept by the employer.

A second standard requires an employer to provide necessary personal protective equipment at no cost to the employee. This might include items such as protective hel- mets, eye and hearing protection, hard-toed shoes, or special goggles for welders.

Third, the hazard communications standard requires employers who manufacture or use materials to label all hazardous material containers, include a material safety sheet to inform customers about the nature and proper use of the hazardous materials, and train their employees to recognize and properly handle or avoid hazardous materials in the workplace.

A fourth standard requires employers (except in certain low-hazard industries such as retail, insurance, and finance) to maintain an injury/illness log to record the occur- rences and causes of anything beyond minor job-related injuries or illnesses. For exam- ple, injuries or illnesses that require more medical treatment than simple first aid or involve loss of consciousness, lost work time, or transfer to another job must be recorded.

The ten most frequently cited standards resulting from OSHA workplace inspections in FY 2014 were scaffolding; fall protection; hazard communication; scaffolding; respira- tory protection; powered industrial trucks; lockout/tagout (which involves preventing the operation of dangerous machines needing repair and minimizing the exposure of work- ers to electrical energy, when repairing or maintaining machines); ladders; electrical wir- ing methods; machine guarding and electrical systems design.136 Human resource departments that implement a comprehensive set of safety procedures and engage the workers in suggesting safety-related improvements tend to have fewer accidents and less time lost from work due to accidents, and HR managers must be vigilant in

418 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION Domestic Violence and Trade Unions

Domestic violence is defined as the willful intimidation, physical assault, battery, sexual assault, and/or other abusive behavior as part of a systematic pattern of power and control perpetrated by one intimate partner against another. It includes physical violence, sexual vio- lence, threats, and emotional abuse. a Unfortunately, domestic violence occurs in many homes, against both women and men as well as against children. Between 20 and 25 percent of women and between 3 and14 per- cent of men report having been victims of such violence during their lifetime.b Violence can affect victims at work directly, as when an angry ex goes to a workplace to commit violence (because that is where they can easily find their former lover). Although rare, domestic vio- lence sometimes results in workplace homicide: Between 2003 and 2008, 142 women were murdered at work by their former lovers.c Violence can also affect organizations indirectly, because of lost productivity, absences (e.g., victims missing work due to appearing in court to secure restraining orders), and victims need- ing medical treatment.

Recognizing that domestic violence affects far too many members, some labor unions have begun speaking out on this issue. Some participate in raising funds for victims and or working with local groups to offer anger management training and counseling to union members or their families.d Other unions have negotiated with employers to provide training to workers to understand and prevent domestic violence some training includes other forms of violence at work, including bullying.e

Unions in Australia have gone one step further in addressing this issue: Many have negotiated domestic violence clauses in their labor agreements. What has prompted the unions to seek such clauses is a report from the Australian Domestic & Family Violence Clear- inghouse indicating that the voluntary measures that employers have adopted are inadequate, and inconsis- tently applied.f

Union leaders tend to view domestic violence clauses from a threefold perspective. First, it is a medical issue, as victims may need physical treatment and psy- chological counseling. Second, it is a safety issue; if a for- mer lover who is prone to violence can easily find an employee, it creates an unsafe working situation for the victim and their co-workers and the victim may need to quietly transfer into a different department and/or have the employer increase physical security measures. Third, it is a gender equity issue, because domestic violence predominately victimizes women. In Australia, where the labor unions made a commitment to add such clauses to

collective bargaining agreements, and where records are kept of their success, over 100 domestic violence clauses have been negotiated since 2010.

What is included? Here is an example of a domes- tic violence clause:

Twenty days per year of paid special leave for medical appointments, legal proceedings and other activities related to domestic violence will be provided. All personal information concerning domestic vio- lence will be kept confidential and no information will be kept on the employee s personnel file with- out their express written permission. No adverse action will be taken against an employee if their attendance or performance at work suffers as a result of experiencing domestic violence. The employee can request a change in hours, job duties, telephone and email details and location of work. g

How well domestic violence clauses work, whether they are costly to businesses, whether additional bene- fits are warranted, and both employee and employer satisfaction with the procedures needed to implement these new types of contract clauses all are issues that need evaluation. Time will tell whether these clauses become widespread in other countries also.

SOURCES: aNational Coalition Against Domestic Violence, Domestic Violence: Statistics, Septem- ber, 2014, p. 1, at http://www.ncadv.org/images/National_Domestic_Violence_Statis- tics.pdf. bAmerican Bar Association, Domestic Violence Statistics, n.d., at http://www. americanbar.org/groups/domestic_violence/resources/statistics.html; M.C. Black, K.C. Basile, M. J. Breiding, S. G. Smith, M.I. Walters, M.T. Merrick, J. Chen, & M. Stevens, (2011). The National Intimate Partner and Sexual Violence Survey: 2010 Summary Report, National Center for Injury Prevention and Control, Centers for Disease Control and Prevention, 2010, at http://www.cdc.gov/violenceprevention/pdf/nisvs_report2010-a.pdf. cEmily F. Rothman, Jeanne Hathaway, Andrea Stidsen, and Heather F. de Vries, How Employment Helps Female Victims of Intimate Partner Abuse: A Qualitative Study, Journal of Occupational Health Psychology, 12(2), 2007, pp. 136 143. dGeorge Gresham, Domestic violence is a union issue, New York Amsterdam News [online], 102 (35), September 7, 2011. eCammie Chaumont Menendez, K. C. Wagner, Diane Yates, and Quentin Walcott, Engaging men and women as allies: A workplace curriculum module to challenge

gender norms about domestic violence, male bullying and workplace violence and encourage ally behavior, Work 42 (1), 2012, pp. 107 113. fS. Murray and A. Powell (2008), Working it Out: Domestic Violence Issues and the Workplace, Issue paper 16. Australian Domestic and Family Violence Clearinghouse UNSW, at http://www.adfvc.unsw.edu.au/PDF%20files/Issues%20Paper_16.pdf. gMarian Baird, Ludo McFerran, and Ingrid Wright, An equality bargaining break- through: Paid domestic violence leave, Journal of Industrial Relations, 56 (2), 2014, pp. 190 207.

419

understanding and following OSHA standards. When OSHA enacts a new standard it can impact an organization s HR practices.137 For example, it can affect employee training, monitoring, and controlling practices, or it may require an adjustment in the job description of some jobs to account for new safety and health knowledge or responsibilities required of a job holder. Business interests often oppose the creation of new safety standards on the grounds that they are either unnecessary, too costly to implement, lack adequate scientific evidence on which to establish a required safe level of operation, or would be administratively burdensome on the employer. After OSHA proposes a health or safety standard, there is an extensive period of public comment in which interested parties may propose various changes in the proposed rule, resulting eventually in a final standard being adopted.

Safety and health issues can result in controversial legal outcomes. For example, the Supreme Court ruled that companies could not bar women from jobs that may be haz- ardous to unborn children.138 The court explained that decisions about the welfare of future children must be left to the parents. Unions and women s groups had challenged the policy of Johnson Controls, Inc., an automobile battery manufacturer, which banned women who could not prove they were infertile from working in areas of the plant where they were exposed to lead, the principal material used in making batteries. The challen- gers successfully argued that the company policy discriminated against female employees because they were blocked from being considered for higher-paying jobs. To reduce the possibility of potential employer liability, employers were advised to fully inform employees of any potential health or safety risks involved in the performance of a partic- ular job.

The Johnson Controls (1991) decision, which permits the employee to decide if she is willing to risk exposure to potential hazards on the job, would appear to be at odds with the Supreme Court decision in Chevron U.S.A. Inc. v. Echazabal (2002), where the court ruled an employer cannot be required to make a reasonable accommodation to enable the hiring of a disabled person under the Americans with Disabilities Act if the job tasks could be hazardous to the disabled person.139 The job applicant in the case had a liver condition, which the employer argued would pose a direct health threat to the job applicant because of chemicals present in its oil refinery, even though the applicant had been previously employed by an independent contractor at the employer s oil refinery. The court stated that, were an employer to hire a disabled person who knowingly con- sented to the particular hazards of the job, the employer might run afoul of the OSHA mandate to ensure the safety of every worker.

Summary This chapter has explored five general categories of administrative issues technological change, job secu- rity and personnel changes, employee training, work restructuring, and safety and health. Each of these areas has many important facets that may be negoti- ated and become part of a labor agreement.

Technological change, an essential ingredient of a dynamic economic system, is broadly defined to include such activities as introduction of laborsaving machines, power-driven tools, and automatic loading

equipment. Although unions generally accept techno- logical change as inevitable with both positive and neg- ative impacts on bargaining unit members interests, they attempt to negotiate contract language which will protect members present jobs, ensure appropriate compensation for work performed, and establish the means for ensuring future protection of members interests.

Job security and personnel changes are two inter- related issues that raise challenges for both labor and

420 PART 2 The Bargaining Process and Outcomes

management. Unions often seek to protect their mem- bers by negotiating workload restrictions, limiting management s right to subcontract or outsource bar- gaining unit work, demanding specific work assign- ments and jurisdiction, or structuring jobs and work schedules to benefit employees. When personnel changes occur (e.g., layoff, promotion, job transfer), seniority may become a key decision criterion. Employ- ees like the objectivity of seniority determinations and generally believe long-term satisfactory performance should be rewarded. Both employers and unions must be concerned with ensuring that only qualified indivi- duals are placed in job positions. Striking the appropri- ate balance between seniority and job performance as criteria in human resource decisions is a topic to be resolved through the negotiation process. Employers and unions must consider EEOC regulations and court rulings in addition to contractual language when deciding personnel changes.

Employee training has taken on increasing impor- tance in maintaining competitiveness in today s global economy. Unions and employers alike expend much

effort in providing training programs to match employ- ees skills with the requirements of work restructuring. Work restructuring efforts are often initiated by man- agement, but union cooperation is essential to the com- plete success of such programs. Although some unions are reluctant to become involved with work restructur- ing initiatives, major breakthroughs have been identi- fied involving some unions, such as the UAW and Machinists unions.

Safety and health issues have become more impor- tant since the passage of the Occupational Safety and Health Act of 1970. Safety and health is clearly an area with great potential for fostering union management cooperation with tangible benefits accruing to both labor and management interests. Recent improvement in decreasing the frequency of workplace accidents and illnesses can be attributed in part to a greater awareness of the economic benefits of hazard prevention; better cooperation between government, employers, and unions regarding approaches to improve workers safety and health; and the presence of safety standards provided by federal and state laws.

Key Terms technological change, p. 388 automation, p. 388 effects bargaining, p. 389 high-performance work organization

(HPWO), p. 390 deskilling, p. 392 psychological contract, p. 394 job security, p. 394 featherbedding, p. 395 Worker Adjustment and Retraining

Notification Act (WARN), p. 397 subcontracting, p. 399 outsourcing, p. 399 offshoring, p. 399

Fibreboard ruling, p. 401 jurisdictional disputes, p. 403 instructional situations, p. 404 experimental work, p. 404 emergency situation, p. 404 flextime, p. 406 compressed workweek, p. 406 seniority, p. 406 benefit rights, p. 407 competitive job rights, p. 407 bumping rights, p. 408 superseniority, p. 408 job sharing, p. 410 work sharing, p. 410

Organizational justice, p. 412 Distributive justice, p. 412 Procedural justice, p. 412 Interpersonal justice, p. 412 Informational justice, p. 412 Americans with Disabilities Act of

1990, p. 412 reasonable accommodation, p. 412 work restructuring, p. 415 semi-autonomous work teams, p. 415 self-managed work teams, p. 415 Occupational Safety and Health Act

(OSHA), p. 416

Discussion Questions

1. My employer monitors my e-mail and Internet usage at work and tracks my location through the GPS feature of my cell phone. I receive work- related text messages or voice mails almost every day of the week and often after normal scheduled work hours. These messages are often seeking information or making comments that could

easily have waited until the next business day. I am frustrated that I always seem connected to work with little private time to pursue my own interest. What advice could you give me on how to manage the job stress of working in a techno- logically connected work environment? Is there any way I can capture some private time without

CHAPTER 8 Administrative Issues 421

making it appear to my employer that I m not motivated to constantly improve my job perfor- mance? Also, under what conditions does my employer have to pay me overtime for such work?

2. Think of an industry or company with which you are familiar, and assume that you are the local union president. What types of clauses regarding technological issues would you attempt to nego- tiate with the employer?

3. Discuss the advantages and disadvantages of out- sourcing or offshoring jobs. Should a worker in today s economy have any reasonable expectation of job security? Explain your reasoning.

4. Discuss some of the advantages and disadvantages of using seniority as a factor to determine shift preference or overtime assignments.

5. Explain why unions often place a priority on seniority in personnel decisions, whereas

employers tend to emphasize ability to perform the job. Based on your own experience with work performance appraisals conducted by managers, how confident are you that managers can effec- tively judge legitimate differences in performance between two or more employees?

6. Who has the responsibility of ensuring a safe and healthy work environment? Who should pay to provide this work environment? Should it be the employer, union, individual employees, or government?

7. Several alternative work schedules (e.g., flextime, compressed workweek) were discussed in this chapter. What would be your ideal 40-hour workweek schedule? Why? How likely are you to achieve that ideal work schedule in the career you currently have or intend to pursue upon com- pleting your education?

Exploring the Web

Administrative Issues

1. WARN. Review the U.S. Department of Labor s Worker Adjustment and Retraining Notification (WARN) Act compliance assistance materials at http://www.doleta.gov/Layoff/warn.cfm. In addition to the Worker s Guide and Employer s Guide, check out the Frequently Answered Questions link for a better understanding of the WARN Act.

2. Safety and Health. Please answer THREE of the following:

(a) Identify the states and territories which currently operate state level safety and health plans approved by OSHA at https://www.osha.gov/dcsp/osp/ index.html. Generally, what must states do to have their plans approved by OSHA?

(b) Identify the ten general industry safety and health standards which are most frequently accessed by parties seeking information from OSHA at http://www.osha.gov/.

(c) Examine fatality at work data from OSHA at http://www.bls.gov/iif/oshcfoi1.htm#charts. What causes most fatalities? Are there different causes for men and women? For different racial and ethnic groups?

(d) Examine recent nonfatal injuries and illnesses at work data from the Bureau of Labor Statistics (e.g., see http://www.bls.gov/news.release/pdf/ osh2.pdf). What causes most of these statistics? Are there different causes for men and women? For different racial and ethnic groups?

3. Electronic Monitoring. Using (and citing) at least five articles from the LexisNexis Academic database or a similar database, explore (1) the managerial, (2) legal, and/or (3) labor relations aspects of electronic monitoring of employees. Is new legislation war- ranted? Use the following articles as a starting point (you may use others also). Managerial: (1) Deborah Jeske, and Alecia M. San- tuzzi, Monitoring what and how: psychological implications of electronic performance monitoring, New Technology, Work and Employment 30 (1), 2015, pp. 62 78; (2) Chen, J. V., & Ross, W. H., The decision to implement electronic monitoring

at work: A literature review and a set of testable research propositions, International Journal of Organizational Analysis, 13(3), 2005, pp. 244 268. Legal: (1) Ariana R. Levinson, Carpe Diem: Privacy Protection in Employment Act, Akron Law Review,

422 PART 2 The Bargaining Process and Outcomes

43, 2010, pp. 331; (2) Susan Park, Employee Internet Privacy: A Proposed Act that Balances Legitimate Employer Rights and Employee Privacy. American Business Law Journal 51 (4), 2014, pp. 779 841. Labor Management Relations: (1) Karin Mika, Privacy in the Workplace: Are Collective Bargain-

ing Agreements a Place to Start Formulating More Uniform Standards, Willamette Law Review 49,

2012, pp. 251 274; (2) Jeffrey M. Hirsch, Worker Collective Action in the Digital Age, West Virginia Law Review (2015).

4. Labor force projections. Explore some of the key trends which will be affecting the U.S. labor force over the next five to ten years. Use the most recent projections found at http://www.bls.gov/emp/ ep_pub_labor_force.htm as your starting point.

References 1. Gary Pisano and Willy C. Shih, Restoring

American Competitiveness, Harvard Business Review, 87(7/8), 2009, p. 116.

2. Rick Hampson, Tense Time for Workers, as Career Paths Fade Away, USA Today, January 13, 2011, pp. 1 4 at http://www.usatoday.com/ (accessed January 13, 2011); Zachary Karabell, Where the Jobs Aren t, Time, 177(2), 2011, p. 32;

Pallavi Gogol, Where Are the Jobs? For Many Companies, Overseas, USA Today, December 28, 2010, pp. 1 3 at http://www.usatoday.com/ (accessed December 28, 2010).

3. Julius Rezler, Automation and Industrial Labor (New York: Random House, 1969), pp. 5 6.

4. David T. Collins and Mike H. Ryan, The Stra- tegic Implications of Technology on Job Loss, Academy of Strategic Management Journal, 6, 2007, p. 29.

5. T. N. Krishnan, Technological Change and Employment Relations in India, Indian Journal of Industrial Relations, 45(3), January 2010, pp. 374 375; Daniel B. Cornfield, Labor Union Responses to Technological Change: Past, Pres- ent, and Future, Perspectives on Work 1, April 1997, pp. 35 38; Robert J. Thomas, Technologi- cal Choice and Union-Management Coopera- tion, Industrial Relations, 30(2), 1991, pp. 189 190.

6. Editors of Collective Bargaining Negotiations and Contracts, Basic Patterns in Union Contracts, 14th ed. (Washington, DC: Bureau of National Affairs Inc., 1995), p. 81; Retraining Programs for a variety of reasons (not just technological change) were included in 14 percent of labor contracts in 2014, as noted in The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), pp 61 63.

7. Joel Cutcher-Gershenfeld, Thomas A. Kochan, and John C. Wells, How Do Labor and Man- agement View Collective Bargaining? Monthly Labor Review, 121(10), 1998, pp. 26 27.

8. Steven E. Abraham and Bart D. Finzel, New Technology in Unionized Firms: Advantages of Mandatory Bargaining, Employee Responsibilities and Rights Journal, 10(1), 1997, pp. 37 48; Bashas Inc. d/b/a/ Bashas Food City and A.J. s Fine Foods, 28-CA-20148, Decisions and Orders of the National Labor Relations Board, Jan. 16 Aug. 29, 2008, Vol. 352 (Washington, DC: U.S. Gov- ernment Printing Office), pp. 392 401.

9. Bart D. Finzel and Steven E. Abraham, Bargain- ing over New Technology: Possible Effects of Removing Legal Constraints, Journal of Eco- nomic Issues, 30(3), 1996, pp. 777 795.

10. John T. Delaney, Workplace Cooperation: Cur- rent Problems, New Approaches, Journal of Labor Research, 17(1), 1996, pp. 45 61.

11. Frank Langfitt, Suit Maker Goes Lean to Keep Jobs in the U.S., National Public Radio, January 24, 2007, pp. 1 2 at http://www.npr.org/ templates/story/story.php?storyId=6968780 (accessed on August 4, 2011).

12. GE Appliances and Lighting; GE to Invest $432 Million, Create 500 Jobs, to Establish U.S. Centers of Excellence for Design and Manufacture of Refrigeration Products, Energy and Ecology Business, November 5, 2010, p. 906; More than 500 jobs in Flux at G.E. Appliance Park, WDRB.com, February 21, 2013 at http://www. wdrb.com/story/21234650/more-than-500-jobs- in-flux-at-ge-appliance-park.

13. Steve Minter, Driving Home the Benefits of Productivity, Industry Week, 260(1), 2011, p. 22; Ursula Zerilli, American Axle investing $100 million in Three Rivers plant, expects workforce

CHAPTER 8 Administrative Issues 423

to top out around 1,300, MLive, February 3, 2013, at http://www.mlive.com/business/west- michigan/index.ssf/2013/02/american_axle_inves- ting_100_mi.html; Dustin Walsh, American Axle will close Detroit Manufacturing Complex; 300 workers affected, Crain s Detroit Business [online edition], July 1, 2011, at http://www. crainsdetroit.com/article/20110630/FREE/ 110639988/american-axle-will-close-detroit- manufacturing-complex-300-workers.

14. International Association of Machinists (IAM), High Performance Work Organization Partner

ships, October 19, 2009, p. 1 at http://www. goiam.org/; Miriam Szapiro, National Union Supports for New Work Systems and Techno logical Change, Labor Studies Journal, 21(2), 1996, pp. 73 95.

15. Richard M. Cyert and David C. Mowery, eds., Technology and Employment: Innovations and Growth in the U.S. Economy (Washington, DC: National Academy Press, 1987), pp. 129 133.

16. Maury Gittleman, Michael Horrigan, and Mary Joyce, Flexible Workplace Practices: Evidence from a Nationally Representative Survey, Indus- trial and Labor Relations Review, 52(1), 1998, pp. 99 115.

17. Jill Jusko, Nature vs. Nurture, Industry Week, 252(7), 2003, pp. 40 42, 45 46; Mark Kizilos and Yonatan Reshef, The Effects of Workplace Unionization on Worker Responses to HRM Innovation, Journal of Labor Research, 18(4), 1997, pp. 641 656; Jeffrey H. Keefe, Do Unions Hinder Technological Change? in Unions and Economic Competitiveness, ed. Lawrence Mishel and Paula B. Voss (Armonk, NY: M. E. Sharpe, Inc., 1992), pp. 109 110.

18. Sherie Winston, Ironworkers and Their Presi- dent are Polishing up Performance, ENR, Sep- tember 1, 2003, p. 1 at http://enr.construction. com/features/bizlabor/archives/030901.asp (accessed on August 4, 2011).

19. Richard M. Cyert and David C. Mowery, eds., Technology and Employment: Innovation and Growth in the U.S. Economy (Washington, DC: National Academy Press, 1987), p. 133.

20. Elisabetta Magnani and David Prentice, Out sourcing and Unionization: A Tale of Misallo- cated (Resistance) Resources, Economic Inquiry, 48(2), 2010, pp. 460 482; David T. Collins and Mike H. Ryan, The Strategic Implications of

Technology on Job Loss, Academy of Strategic Management Journal, 6, 2007, pp. 27 33; Katherine Dill, Was Your Job Replaced By Technology? Forbes [online edition], July 3, 2014, at http://www.forbes.com/sites/kathryndill/ 2014/07/31/was-your-job-replaced-by-technology- theres-a-decent-chance-youll-get-hired-back/

21. William P. Smith and Filiz Tabak, Monitoring Employee E-mails: Is There Any Room for Pri- vacy? Academy of Management Perspectives, 23(4), 2009, p. 33; Sarah E. Needleman, Manag- ing Technology, Monitoring the Monitors: Small Firms Increasingly are Keeping Tabs on their Workers, Keystroke by Keystroke, Wall Street Journal, August 16, 2010, pp. 1 2 at http://www. proquest.com/ (accessed January 27, 2011).

22. American Management Association, 2005 Elec- tronic Monitoring and Surveillance Survey: Many Companies Monitoring, Recording, Videotaping and Firing Employees, News Release, May 18, 2005, pp. 1 3.

23. Clifford H. Nelson, Jr. and Leigh Tyson, HR Undercover, HR Magazine, 55(10), 2010, pp. 107 110; D. Scott Kiker and Mary Kiker, A Quantitative Review of Organizational

Outcomes Related to Electronic Performance Monitoring, Business Review, Cambridge, 11(1), 2008, pp. 295 301; Robert H. Moorman and Deborah Wells, Can Electronic Performance Monitoring Be Fair? Exploring Relationships Among Monitoring Characteristics, Perceived Fairness, and Job Performance, Journal of Lead- ership and Organizational Studies, 10(2), 2003, p. 2; Elise M. Bloom, Madeleine Schachter, and Elliot H. Steelman, Justice in a Changed World: Competing Interests in the Post 9 11 Workplace: The New Line Between Privacy and Safety, 29 William Mitchell Law Review, 897, 2003.

24. David S. Mohl, Balancing Employer Monitoring and Employee Privacy, Workspan, September 2006, p. 69.

25. Emily Richards and Dave Terkanian, Occupa- tional Employment Projections to 2022, Monthly Labor Review, [online edition], 136(12), 2013 at http://www.bls.gov/opub/mlr/2013/article/ occupational-employment-projections-to-2022.htm.

26. Ibid. 27. William S. Brown, The New Employment Con-

tract and the At Risk Worker, Journal of Busi- ness Ethics, 58(1/3), 2005, pp. 195 201; Jeffrey

424 PART 2 The Bargaining Process and Outcomes

Pfeffer, The Human Equation: Building Profits by Putting People First (Boston: Harvard Business School Press, 1998); Alison Davis-Blake, Joseph P. Broschak, and Elizabeth George, Happy together? How using nonstandard workers affects exit, voice, and loyalty among standard employees. Academy of Management Journal, 46(4), 2003, pp. 475 485; Gokhan Karagonlar, Robert Eisenberger, and Justin Aselage. Recip- rocation Wary Employees Discount Psychological Contract Fulfillment. Academy of Management Proceedings. (New York: Academy of Manage- ment, 2014) at http://proceedings.aom.org/con- tent/2014/1/12396.short; David Lewin, Human Resource Management and business performance: Lessons for the 21st Century, In Marc Effron, Robert Gandossy, & Marshall Goldsmith (Eds.) Human Resources in the 21st Century, pp. 91 98 (Hoboken, NJ: Wiley, 2003), at http://www. anderson.ucla.edu/documents/areas/fac/hrob/hr- 21stC.pdf.

28. Summer H. Slichter, James J. Healy, and E. Robert Livernash. The Impact of Collective Bargaining on Management (Washington, DC: Brookings Insti- tution, 1960), pp. 317 335.

29. Robert D. Leiter, Featherbedding and Job Security (New York: Twayne Publishers, 1964), pp. 32 33.

30. Benjamin Aaron, Government Restraint on Featherbedding, Stanford Law Review, 5, July 1953, pp. 687 721.

31. William Gomberg, The Work Rules and Work Practices, Labor Law Journal, 12(7), 1961, pp. 643 653.

32. Trumpka, Business Lawyer Urge Cooperation, Perspective in Union-management Relations, Daily Labor Report, November 8, 2010, p. C-2; Peter Lazes and Jane Savage, A Union Strategy for Saving Jobs and Enhancing Workplace Democracy, Labor Studies Journal, 21(2), 1996, pp. 96 121; What Motivates Employees?, T+D, 67 (10), October, 2013, p. 16; Thomas Staufenbiel and Cornelius J. König. A model for the effects of job insecurity on performance, turnover intention, and absenteeism, Journal of Occupa- tional & Organizational Psychology, 83(1), March 2010, pp. 101 117; Richard N. Block, and Peter Berg, Joint Responsibility Unionism: A Multi- Plant Model of Collective Bargaining under Employment Security, Industrial & Labor Rela- tions Review 63(1), October 2009, pp. 60 81.

33. NLRB v. International Longshoremen s Associa- tion, 473 U.S. 61(1985).

34. Anne Marie Squeo, Safe Harbor: How Long- shoremen Keep Global Wind at Their Backs, Wall Street Journal, July 26, 2006, pp. A1 A12; The Pacific Maritime Association, Our Industry: The ILWU Workforce, 2014, http://www.pmanet. org/the-ilwu-workforce.

35. Dominic Gates, Boeing, Machinists at Logger heads Over Job Security and Automation of Parts Delivery, McClatchy, Tribune Business News, October 14, 2008, pp. 1 2 at http://www.proquest. com/ (accessed January 27, 2011); John Giles, Boeing, Union Reach Accord: Tentative Contract

Agreement Could End Nearly Eight-week-old Strike, McClatchy, Tribune Business News, October 28, 2008, pp. 1 2 at http://www.proquest. com/ (accessed February 7, 2011).

36. Michael Mecham, Big Vote, Aviation Week and Space Technology, 169(17), 2008, pp. 54 55; Elizabeth A. Ashack, Profiles of Significant Collective Bargaining Disputes of 2008, Compen- sation and Working Conditions, June 24, 2009, pp. 1 2 at http://www.bls.gov/opub/mlr/cwc/pro- files-of-significant-collective-bargaining-disputes-of- 2008.pdf (accessed October 3, 2015).

37. First National Maintenance v. NLRB, 452 U.S. 666 (1981); Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263 (1965); Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203 (1964); John S. Irving, Operational Changes: The First National Mainte- nance/Fibreboard Duel, (Washington, DC: Kirkland & Ellis, 2000) at http://www.kirkland.com/siteFiles/ kirkexp/publications/2566/Document1/Opera- tional%20Changes.pdf; Garrett Wozniak, Walk- away Shop: Long-Term Union Avoidance and Management Decisions to Open New Facilities as Lawful Conduct under the National Labor Relations Act, University of Baltimore Law Review, 42, 2012, p. 151; Theodore J. Antoine, Charles B. Craver, and Marion G. Crain. Labor Relations Law: Cases and Materials, Twelfth Ed. (New York: Matthew Bender/ LexisNexis, 2011).

38. The Worker Adjustment and Retraining Notifica- tion Act, 29 U.S.C. 2101, et seq. (1988); The Bureau of National Affairs, Inc., Employer Bar- gaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p. 62.

39. U.S. Department of Labor, Bureau of Labor Sta- tistics, Extended Mass Layoffs, 2012, BLS

CHAPTER 8 Administrative Issues 425

Reports, September 2013, pp. 1 25; ironically, these are the most recent data available because the Bureau of Labor Statistics stopped compiling this information in 2013 due to budget cuts and layoffs within the agency.

40. Parisis G. Gilippatos and Sean Farhang, The Rights of Employees Subjected To Reductions in Force: A Critical Evaluation, Employee Rights and Employment Policy Journal, 6, 2002, pp. 324 326; John T. Addison and McKinley L. Blackburn, A Puzzling Aspect of the Effect of Advance

Notice on Unemployment, Industrial and Labor Relations Review, 50, January 1997, pp. 268 288; John T. Addison and Jean-Luc Grosso, Job Security Provisions and Employment Revised Estimates, Industrial Relations, 35, October 1996, pp. 585 603.

41. Gerald E. Calvasina, Joyce M. Beggs, and I. E. Jernigan, III, The Worker Adjustment and Retraining Notification Act: Policy and Practice Issues for Employers, Journal of Legal, Ethical and Regulatory Issues, 9(1), 2006, pp. 31 48; John T. Addison and McKinley L. Blackburn, The Worker Adjustment and Retraining Notification Act: Effects on Notice Provisions, Industrial and Labor Relations Review, 47(4), 1994, pp. 660 661.

42. U.S. Department of Labor, Fact Sheet: The Worker Adjustment and Retraining Notification Act, 2011, pp. 1 5 at http://www.doleta.gov/ programs/factsht/warn.htm (accessed February 8, 2011).

43. Legal Insights, HR Focus, 86(2), 2009, p. 2; Rick Valliere, New Hampshire Governor Signs State WARN Act Covering Employers of 75 Workers, Daily Labor Report, August 11, 2009, pp. A-9 10; Michael Kenny, New Jersey WARN Act Creates New Obligations for Private Employers Contem- plating Plant Closings or Mass Layoffs, Employee Relations Law Journal, 34(1), 2008, pp. 41 46.

44. United Food and Commercial Workers Union, Local 751 v. Brown Group, Inc., 517 U.S. 544 (1996); North Star Steel Co. v. Thomas, 515 U.S. 29 (1995); Ashlea Ebeling, Layoffs and Lawsuits, Forbes [online edition], November 26, 2008, at http://www.forbes.com/2008/11/25/warn-layoffs- lawsuit-biz-beltway-cz_ae_1125beltway.html; Allen Vaught, Oilfield Mass Layoffs With No Advance Written Notice: Barron & Budd Files Lawsuit Against Energy Company for Failure to Comply with WARN Act, Businesswire,

February 11, 2015, at http://www.businesswire. com/news/home/20150211006484/en/Oilfield- Mass-Layoffs-Advance-Written-Notice-Baron#. VUVH7PlViko.

45. Times Herald Printing Company d/b/a Dallas Times Herald and Dallas Mailers Union, No. 20 affiliated with Communications Workers of America and Dallas Typographical Union, No. 173 affiliated with the Communications Workers of America, 315 NLRB 700(1994).

46. Pat Galagan, The Biggest Losers: The Perils of Extreme Downsizing, T&D, 64(11), 2010, pp. 27 29; Leland Teschler, Layoffs Galore, But Is It Smart Business, Machine Design, 82(11), 2010, p. 8.

47. Wayne Cascio, Downsizing: What Do We Know? What Have We Learned? Academy of Management Executive, 7(1), 1993, pp. 95 104.

48. Simran K. Kahai, Tejinder S. Sara, and Paramjit S. Kahai, Offshoring and Outsourcing, Journal of Applied Business Research, 27(1), 2011, pp. 113 121; Sharon P. Brown and Lewis B. Siegel, Mass Layoff Data Indicate Outsourcing and Offshoring Work, Monthly Labor Review, 128(8), 2005, p. 5; Christian Zlolniski, Labor Control and Resis- tance of Mexican Immigrant Janitors in Silicon Valley, Human Organizations, 62, Spring 2003, pp. 39 49; Kenneth L. Deavers, Outsourcing: A Corporate Competitiveness Strategy, Not a Search for Low Wages, Journal of Labor Research, 18, Fall 1997, pp. 503 519; Murem Sharpe, Out- sourcing, Organizational Competitiveness, and Work, Journal of Labor Research, 18, Fall 1997, pp. 535 549.

49. Deloitte Consulting LLP, Deloitte s 2014 Global Outsourcing and Insourcing Survey: 2014 and Beyond (New York: Deloitte Development LLC, 2014), p. 5, at https://www2.deloitte.com/content/ dam/Deloitte/us/Documents/strategy/us-2014- global-outsourcing-insourcing-survey-report- 123114.pdf.

50. Ronan McIvor, Outsourcing Done Right, Industrial Engineer, 43(1), 2011, pp. 30 35; Andrew R. Thomas and Timothy J. Wilkinson, The Outsourcing Compulsion, MIT Sloan

Management Review, 48(1), (2006), pp. 10 14; Dean Elmuti, The Perceived Impact of Out- sourcing on Organizational Performance, Mid- American Journal of Business, 18, Fall 2003, p. 33.

51. Deloitte Consulting LLP, Calling a Change in the Outsourcing Market: The Realities of the World s

426 PART 2 The Bargaining Process and Outcomes

Largest Organizations (New York: Deloitte Development LLC, 2005), p. 6. See also Phanish Puranam and Kannan Srikanth, Business Insight (A Special Report): Global Business; Seven Myths about Outsourcing: No. 1: We Can Have It All , Wall Street Journal, June 16, 2007, p. R-6.

52. Francesco Zirpoil and Markus C. Becker, What Happens When You Outsource Too Much? MIT Sloan Management Review, 52(2), 2011, pp. 59 64; Richard Vedder, Carl S. Guynes, and Ralph Reilly, Offshoring Limitations, Review of Busi- ness Information Systems, 14(1), 2010, pp. 39 42; Dave Luvison and Mike Bendizen, The Behav- ioral Consequences of Outsourcing: Looking Through the Lens of Paradox, Journal of Applied Management and Entrepreneurship, 15(4), 2010, pp. 28 52; American Society For Quality, BPO Providers Fall Short on Services, ASQ Survey Shows, News Release, October 28, 2010, p. 102 at http://www.asq.org/media-room/press-release/ 2010/20101028-bpo-providers-fall-short-on-ser- vice.html (accessed February 10, 2011).

53. Carl P. Maertz Jr., Jack W. Wiley, Cynthia LeRouge, and Michael A. Campion, Downsizing Effects on Survivors: Layoffs, Offshoring, and Outsourcing, Industrial Relations, 49(2), 2010, pp. 275 285.

54. Chester Dawson, Corporate News: Nissan Presses Export Brakes; Amid Strong Yen, the Japanese Automaker Will Shift More Production Overseas, Wall Street Journal, February 1, 2011, p. B-2; Steven Ribet, American Axle: Low-cost China s a Very Good Fit, Automotive News, 83(6339), 2008, p. 9; Garel Rhys, Seeking World Peace, Engineering and Technology, 3(2), 2008, pp. 70 71.

55. Charles R. Perry, Outsourcing and Union Power, Journal of Labor Research, 18, Fall 1997, pp. 521 533; Justin Hyde, GM Applies Lessons to New Factory, Associated Press, January 31, 2000, pp. 1 3.

56. Graham Warwick, The Outsourced Worker, Aviation Week and Space Technology, 170(1), 2009, p. 51; Widgetless in Wichita, Economist, October 14, 1995, p. 77; Kuang-Chung Hsu, Shinn-Juh Lin, and Yungho Weng, Do Labor Unions Hinder or Boost International Outsour- cing? Evidence from US Manufacturing, The International Trade Journal, 29(2), 2015, pp. 142 162.

57. Boeing Should Use 787 Delay to Re-evaluate Outsourcing; SPEEA Ready to Help Return to Engineering Excellence, Business Wire, Decem- ber 3, 2010, pp. 1 2; Jeremy Lemer, Boeing 787 Risks Further Setbacks, Financial Times, November 13, 2010, p. 9; Joseph Weber, Boeing to Rein in Dreamliner Outsourcing, Business Week Online, January 19,2009, p. 10; Denning, Stephen. What went wrong at Boeing. Strategy & Leadership, 41(3) 2013, pp. 36 41; Michael Hiltzik, 787 Dreamliner teaches Boeing costly lesson on outsourcing, Los Angeles Times [online edition], February 16, 2011, at http://articles. latimes.com/2011/feb/15/business/la-fi-hiltzik- 20110215.

58. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p. 62.

59. Jane Wills, Subcontracted Employment and Its Challenges to Labor, Labor Studies Journal, 34(4), 2009, pp. 441 460; Micah Landau, Steep descent of airport wages prompts ground fight, United Federation of Teachers: Labor Spotlight, [New York Teacher Issue], March 6, 2014, at http://www.uft.org/labor-spotlight/steep-descent- airport-wages-prompts-ground-fight.

60. Marvin J. Levine, Subcontracting and Privatiza- tion of Work: Private and Public Sector Devel- opments, Journal of Collective Negotiations in the Public Sector, 19(4), 1990, pp. 275 277.

61. Marlise McCammon and John L. Cotton, Arbi- tration Decisions in Subcontracting Disputes, Industrial Relations, 29, Winter 1990, p. 142; International Brotherhood of Teamsters, Local 553, v. Fred Schildwachter & Sons, Inc., at AAA 133000025313 (2013).

62. Dubuque Packing Company, Inc., and UFCW, Local 150A (Dubuque IL), 303 NLRB 386 (1991); enforced, 1 F.3d 24 (DC Cir. 1993).

63. Christopher Hexter, Wesley Kennedy, Alexia Kulwiec, and Peter Janus, Twenty-five Years of Developments in the Law under the National Labor Relations Act, ABA Journal of Labor and Employment Law, 25(3), 2010, pp. 1 4 at http:// www.proquest.com/ (accessed February 13, 2011); Roger S. Wolters and Stewart D. Langdon, The Duty to Bargain over Business Decisions, Labor Law Journal, 43, September 1992, pp. 583 587.

64. Kenneth A. Jenero and Patrick W. Kocian, The Relocation of Work between Plants: A Planning

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Checklist of Statutory and Contractual Obliga- tions, Employee Relations Law Journal, 20, Spring 1995, p. 622.

65. Leonard E. Cohen, The Duty to Bargain over Plant Relocations and Other Corporate Changes: Otis Elevator v. NLRB, Labor Lawyer, 1, Summer 1985, pp. 525 532.

66. National Labor Relations Board, Case Handling Manual Part One: Unfair Labor Practice Pro- ceedings (Washington, DC: U.S. Government Printing Office, 2009), Section 10206-10220; James K. McCollum and Edward A. Schroeder IV, NLRB Decisions in Jurisdictional Disputes: The

Success of the 10(k) Process, Employee Relations Law Journal, 13(4), 1988, pp. 649 652; and NLRB, Seventieth Annual Report, 2005, p. 130.

67. AFL-CIO, Constitution: Article XX: Settlement of Internal Disputes, 2015, pp. 1 4 at http://www. aflcio.org/About/Exec-Council/AFL-CIO-Consti- tution/XX.Settlement-of-Internal-Disputes (accessed February 13, 2011); The Construction Users Round Table and the Building and Con- struction Trades Department, AFL-CIO, Con- struction Industry Leaders Form Tripartite Initiative: Owners, Contractors, Unions Establish Collaboration to Improve Industry, Joint News Release, January 18, 2003, p. 1. This board uses two procedural rules that are worthy of note: (1) A request for a decision in a specific case does not have to wait until the dispute occurs. Once the contractor makes the initial work assignments, a request for a decision can be made. Thus, time is saved by facilitating the dispute-resolution pro- cess. (2) Decisions of the board are not precedent setting. This does not mean that similar decisions within an area are not based on patterns; it means that conditions vary from region to region, union to union, and even agreement to agreement. Therefore, the board is not bound completely by precedent, but past practice is a factor. Custom in the industry and skills, training, and job content are important elements that are considered.

68. Elvis C. Stephens, A Supervisor Performs Bargaining-unit Work: Is the Contract Violated? Labor Law Journal, 31, November 1980, pp. 683 688; Hands Off Our Work Campaign Pays Off, 812 Wins Major Arbitration Teamsters Local 812: Latest News, May 1, 2015, at http://team- sterslocal812.com/latest-news/158-hands-off-our-

work-campaign-pays-off-812-wins-major- arbitration.

69. Slichter, Healy, and Livernash, The Impact of Collective Bargaining, pp. 266 276; Upstate N.Y. Transformer Manufacturer Expands Plant, Global Reach, The Electrical Worker, 7(12), December, 2013, pp. 1 2. at http://www.ibew.org/articles/ 13ElectricalWorker/EW1312/IBEW%20EW% 20V07%20N12.pdf.

70. Sibyl Kleiner and Eliza K. Pavalka, Clocking In: The Organization of Work Time and Health in the United States, Social Forces, 88(3), 2010, pp. 1463 1464.

71. Terence M. McMenamin, A Time to Work: Recent Trends in Shift Work and Flexible Sche- dules, Monthly Labor Review, 130(12), 2007, p. 3.

72. Isik U. Zeytinoglu, Gordon B. Cooke, and Sara L. Mann, Whose Choice Is It Anyway? Relations Industrielles, 64(4), 2009, pp. 555 574; Jaime Ortega, Why Do Employers Give Discretion? Family Versus Performance Concerns, Industrial Relations, 48(1), 2009, pp. 1 26; Gillian Flynn, The Legalities of Flextime, Workforce, 80, October 2001, pp. 62 66; Jeffrey M. Miller, Innovations in Working Patterns (Washington, DC: Communica- tions Workers of America and German Marshall Fund of the United States, 1978).

73. Employer Bargaining Objectives 2010, Collective Bargaining Bulletin, p. S-23.

74. AFL-CIO Working Women s Department, Bar- gaining Fact Sheet: Control over Work Hours and Alternative Work Schedules, Spring 2001, pp. 1 4.

75. 12-hour Work Shift Blues, Industrial Engineer, 43(2), 2011, p. 12; Allen E. Dembe, Ethical Issues Relating to the Health Effects of Long Working Hours, Journal of Business Ethics, 84 (Supple- ment 2), 2009, pp. 195 208; Muhammad Bilal, Muhammad Zia-ur-Rehman, and Irfan Raza, Impact of Family Friendly Policies on Employ-

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76. Fredrik Engelstad, The Significance of Seniority in Layoffs: A Comparative Analysis, Social Jus- tice Research, 11(2), 1998, pp. 103 119; Frederic H. Harbison, The Seniority Principle in Union- management Relations (Princeton, NJ: Princeton University Industrial Relations Section, 1939), pp. 21 23.

428 PART 2 The Bargaining Process and Outcomes

77. Slichter, Healy, and Livernash, Collective Bar gaining, pp. 104 105; D. Quinn Mills, Seniority versus Ability in Promotion Decisions, Industrial and Labor Relations Review, 38(3), 1985, pp. 424 425.

78. Sangheon Lee, Seniority as an Employment Norm: The Case of Layoffs and Promotion in the U.S. Employment Relationship, Socio-Economic Review, 2(1), 2004, pp. 65 86.

79. Andrew Sikula Sr., The Five Biggest HRM Lies, Public Personnel Management, 30(3), 2001, pp. 424 425.

80. Gangaram Singh and Frank Reid, Are Seniority- based Layoffs Discriminatory? The Adverse Impact of Layoffs on Designated Groups, Rela- tions Industrielles, 53(4), 1998, pp. 730 746.

81. Pat Wingert and Evan Thomas, Chicago s Les son in Layoffs, Newsweek, 156(4), 2010, p. 41; Jonathan Alter, A Case of Senioritis, Newsweek, 156(23), 2010, p. 20.

82. Editors of Collective Bargaining Negotiations and Contracts, Basic Patterns in Union Contracts, pp. 85 87.

83. Roger I. Abrams and Dennis R. Nolan, Seniority Rights under the Collective Agreement, Labor Lawyer, 2, Winter 1986, pp. 99 110.

84. William H. Holley, Jr., Performance Ratings in Arbitration, Arbitration Journal, 32(1), 1977, pp. 8 25.

85. Daniel A. Biddle and Patrick M. Nooren, Valid- ity Generalization vs. Title VII: Can Employers Successfully Defend Test without Conducting Local Validation Studies? Labor Law Journal, 57(4), 2006, pp. 216 237; Robert D. Gatewood, Hubert S. Feild, and Murray Barrick, Human Resource Selection, 6th ed. (Mason, OH: Thomson/South-Western, 2008), pp. 50 57; Equal Employment Opportunity Commission, 29 C.F.R. Part 1607: Uniform Guidelines on Employee Selection Procedures (1978) at http://www.access. gpo.gov/nara/cfr/waisdx_10/29cfr1607_10.html (accessed August 4, 2011).

86. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p. 62.

87. Mark Montgomery, New Evidence on Unions and Layoff Rates, Industrial and Labor Relations Review, 44(4), 1991, pp. 708 712.

88. Employer Bargaining Objectives 2010, Collective Bargaining Bulletin, p. S-23; Suzanne M.

Crampton and Jitendra M. Mishra, Job Sharing: A Viable Work Alternative for the New Millen- nium, Journal of Applied Management and Entrepreneurship, 10(2), 2005, pp. 13 34; Mohamed Branine, The Logic of Job-sharing in the 374 PART 2 The Bargaining Process and Outcomes Provision of and Delivery of Health Care, Health Manpower Management, 24(1), 1998, p. 20.

89. David Sherwyn and Michael C. Sturman, Job Sharing: A Potential Tool for Hotel Managers, Cornell Hotel & Restaurant Administration Quarterly, 43(5), 2002, pp. 84 91.

90. Steven Briggs, Allocating Available Work in a Union Environment: Layoffs vs. Work Sharing, Labor Law Journal, 38(10), 1987, pp. 650 657; Quote is from Neil Ridley and George Went- worth, A Breakthrough for Work Sharing: A Summary of the Layoff Prevention Act of 2012, National Employment Law Project, April 2012, at https://nelp.org/content/uploads/2015/03/Break- throughForWorkSharing.pdf, p. 1; Pamela M. Prah, States Risk Losing Millions of Federal Work-Share Dollars, The Huffington Post [online], January 29, 2014 at http://www.huffingtonpost. com/2014/01/29/federal-work-share-dollars_n_ 4687571.html.

91. Franks v. Bowman Transportation Co., 424 U.S. 747(1976).

92. Teamsters v. United States, 431 U.S. 324(1977); American Tobacco Co. v. Patterson, 456 U.S. 63 (1982).

93. Martin v. Wilks, 490 U.S. 755(1989). 94. United Steelworkers of America v. Weber, 443 U.S.

193(1979). 95. Firefighters, Local 1784 v. Stotts, 467 U.S. 561

(1984). 96. Wygant v. Jackson Board of Education, 476 U.S.

267(1986). 97. Maurice Wexler, Charles C. Warner, Gary R.

Siniscalco, John L. Quinn, and Adrian T. Klein, The Law of Employment Discrimination from

1985 to 2010, ABA Journal of Labor and Employment Law, 25(3), 2010, pp. 349 410; Scott David Williams, William M. Slonaker, and Ann C. Wendt, An Analysis of Employment Dis- crimination Claims Associated with Layoffs, S.A.M. Advanced Management Journal, 68, Win- ter 2003, pp. 49 55; E. Allan Lind, Jerald Green- berg, Kimberly S. Scott, and Thomas D.

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Welchans, The winding road from employee to complainant: Situational and psychological determinants of wrongful-termination claims. Administrative Science Quarterly, 45(3), 2000, pp. 557 590; Dirk Van Dierendonck and Gabriele Jacobs, Survivors and Victims, a Meta-analytical Review of Fairness and Organizational Commit- ment after Downsizing, British Journal of Management, 23(1), 2012, pp. 96 109.

98. US Airways, Inc. v. Barnett, 535 U.S. 391(2002); Blake Sonne, NOTE: Employment Law: Reasonable Accommodation Under the Americans with Dis- abilities Act vs. Employee Seniority Rights: Under- standing the Real Conflict in US. Airways v. Barnett, 57 Oklahoma Law Review 225, Spring 2004, Scott J. Witlin and Niloofar Nejat-Bina, The Supreme Court s Balancing Act: Prioritizing ADA Rights Against Seniority and Worker Safety, Employment Relations Today, 29(3), 2002, pp. 95 100.

99. AFL-CIO, Discrimination against People with Disabilities, 2011, p. 1 at http://www.aflcio.org/ Issues/Civil-and-Workplace-Rights/Your-Rights- at-Work/Disability (accessed October 3, 2015); Laurie M. Johnston, The ADA and Collective Bargaining Issues ILRU Southwest ADA Center, 2014, p. 1 at http://www.southwestada.org/html/ publications/employment/otherlaws/collective_- bargaining.html (accessed May 16, 2015).

100. U.S. Bureau of Labor Statistics, Table 7: Employment Status of the Civilian Noninstitu- tional Population 25 Years and over by Educa- tional Attainment, Sex, Race, and Hispanic or Latino Ethnicity, Current Population Survey: Household Data Annual Averages, 2010, p. 8.

101. Drew Lining and Michael Wolf, Job Outlook by Education, 2006 16, Occupational Outlook Quarterly, 52(3), 2008, p. 5.

102. Mike Collins, America s Skilled Worker Short age, Industrial Maintenance and Plant Opera- tions, 72(1), 2011, p. 44; David Smith, The Skills Conundrum: A Barrier to Growth, BusinessWeek.Com, November 1, 2010, p. 7; Pat Galagan, Bridging the Skills Gap: New Factors Compound the Growing Skills Shortage, Train- ing and Development, 64(2), 2010, pp. 44 49; Adrienne Fox, At Work in 2020, HR Magazine, 55(1), 2010, pp. 18 23.

103. Mark Schoeff, Jr., Obama, Firms Place a Priority on Upgrading Worker Skills, Workforce Man- agement, 88(3), 2009, p. 6.

104. Kirstin D. Grimsley, Applicants Not Making the Grade, Washington Post, April 13, 1999, p. E-1; E. E. Gordon, What can be done about the U.S. Talent Crisis? TD: Talent Development, 68(12), 2014, 42 46; Lorri Freifeld, Bridging the Skills Gap, Training, March/April 2013, pp. 16 21, at http://pubs.royle.com/publication/?i=153868; Bureau of Labor Statistics, Education and Train- ing Outlook for Occupations, 2012 2022, 2012, pp. 1 9 at http://www.bls.gov/emp/ep_edtrain_ outlook.pdf; Bureau of Labor Statistics, Earnings and Unemployment Rates by Educational Attainment, Employment Projections, 2014, at http://www.bls.gov/emp/ep_chart_001.htm.

105. Josh Bersin, Spending on Corporate Training Soars: Employee Capabilities Now a Priority Forbes [online], February 4, 2014, at http://www. forbes.com/sites/joshbersin/2014/02/04/the- recovery-arrives-corporate-training-spend-sky- rockets/.

106. Lisa M. Lynch and Sandra E. Black, Beyond the Incidence of Employer Provided Training, Industrial and Labor Relations Review, 52, October 1998, pp. 64 81.

107. Harley Frazis, Maury Gittleman, Michael Horri- gan, and Mary Joyce, Results from the 1995 Survey of Employer Provided Training, Monthly Labor Review, 121(6), 1998, p. 8.

108. Harley J. Frazis, Diane E. Herz, and Michael W. Horrigan, Employer Provided Training: Results from a New Survey, Monthly Labor Review, 118(5), 1995, pp. 3 17.

109. Frazis, Gittleman, Horrigan, and Joyce, Results from the 1995 Survey of Employer Provided Training, p. 8; Dale Belman, and Richard N. Block, The Impact of Collective Bargaining on Competitiveness and Employment, In Richard N. Block, (Ed.), Bargaining for Competitiveness: Law, Research, and Case Studies (Kalamazoo, MI: W.E. Upjohn Institute for Employment Research, 2003), pp. 45 74.

110. Robert W. Glover and Cihan Bilginsoy, Regis- tered Apprenticeship Training in the U.S. Con- struction Industry, Education and Training, 47(4/5), 2005, pp. 337 349; Robert P. Mader, Union Apprentices More Likely to Finish

Training: GAO, Contractor, 52(10), 2005, pp. 1, 20, 54; Gunseli Berik and Cihan Bilginsoy, Do Unions Help or Hinder Women in Training?

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Apprenticeship Programs in the United States, Industrial Relations, 39(4), 2000, pp. 600 624.

111. Peter Lazes and Jane Savage, Embracing the Future: Union Strategies for the 21st Century, Journal for Quality and Participation, 23(4), 2000, p. 20.

112. George R. Gray, Donald W. Myers, and Phyllis S. Myers, Cooperative Provisions in Labor Agree- ments: A New Paradigm? Monthly Labor Review, 122(1), 1999, pp. 29 45; John Tomer, Under- standing High Performance Work Systems: The Joint Contribution of Economics and Human Resource Management, Journal of Socio- Economics, 30, 2001, pp. 63 73.

113. The Bureau of National Affairs, Inc., Employer Bargaining Objectives 2014 (Washington, DC: Bureau of National Affairs, Inc., 2014), p. 62.

114. James Parks, Shuler: Unions Can Play Critical Role in Training Nation s Workers, AFL-CIO, November 17, 2010, pp. 1 2 at http://blog.aflcio. org/ (accessed February 21, 2011); Henry P. Guzda, Unions Active in Joint Training Programs, American Workplace, January 1995, pp. 1 4.

115. Alabama AFL-CIO, Labor Institute for Training, 2011, p. 1 at http://al.aflcio.org/ (accessed February 21, 2011); Wisconsin State AFL-CIO, Labor Edu- cation and Training Center (LETC), 2011, p. 1 at http://wi.aflcio.org/ (accessed February 21, 2011).

116. Peter Coy, Stanley Reed, Carol Matlack, Dexter Roberts, Deane Brady, and Caroline Winter, A Message from the Street, Bloomberg Business week, February 7, 2011, pp. 6 7 at http://search. ebscohost.com.spot.lib.auburn.edu/login.aspx? direct=true&db=buh&AN=57943427&site=bsilive (accessed February 21, 2011); New Skills for America s Future Initiative to be Launched at the Aspen Institute, PR Newswire, October 4, 2010, pp. 1 2 at http://www.proquest.com/ (accessed February 21, 2011); Jill Jusko, The Training Imperative, Industry Week, 259(4), 2010, pp. 38 40.

117. National Science Board, Executive Summary, Preparing the Next Generation of STEM Innova- tors: Identifying and Developing Our Nation s Human Capital, May 5, 2010, pp. 1 6 at http:// www.nsf.gov/nsb/stem/innovators.jsp (accessed August 4, 2011).

118. Connecticut Company Uses Self-Directed Work Teams to Improve On-time Delivery and

Quality, Connecticut Spring & Stamping, Press Release, December, 2011, p. 1, at http://www. ctspring.com/press/2011/12/improving-delivery- time-and-quality; For a summary of how tech- nology is influencing work structuring, see Ursula Holtgrewe, New new technologies: the future and the present of work in information and communication technology, New Technology, Work and Employment, 29(1), 2014, pp. 9 24.

119. News Release: U.S. Department of Labor and Ernst & Young LLP Study Finds Competitive Gains from Innovative Workplace Practices, May 31, 1995 (Study conducted by Sarah C. Mavrinac, Neil R Jones, and Marshall W. Mayer).

120. Riki Takeuchi, Gilad Chen, and David P. Lepak, Through the Looking Glass of a Social System:

Cross-level Effects of High-Performance Work Systems on Employees Attitudes, Personnel Psychology, 62(1), 2009, pp. 1 29; John Godard and John T. Delaney, Reflections on the High Performance Paradigm s Implications for Indus- trial Relations as a Field, Industrial and Labor Relations Review, 53, April 2000, pp. 491 493; B. P. Cozzarina & S. A. Jeffrey, Human resource management practices and longitudinal work- place performance, Applied Economics Letters, 21(5), 2014, pp. 344 349.

121. Paul Stewart and Andy Danford, Editorial: Union Strategies and Worker Engagement with New Forms of Work and Employment, New Technology, Work and Employment, 23(3), 2008, pp. 146 150; Innovative Workplaces and Their Workers, Monthly Labor Review, 126(5), 2003, p. 32.

122. Noel Harvey, How Unions Should Respond to Cells, Labor Studies Journal, 18(4), 1994, pp. 21 31; Rubayet Karim and Sarojit Kumar Biswas. Cell Formation in a Batch Oriented Production System using a Local Search Heuristic with a Genetic Algorithm: An Application of Cellular Manufacturing System, Cell, 5(4), 2015, pp. 28 41.

123. George R Gray, Donald W. Myers, and Phyllis S. Myers, Collective Bargaining Agreements: Safety and Health Provisions, Monthly Labor Review, 121(5), 1998, pp. 13 35.

124. John Coniglio, OSHA Inspections: What to Do When OSHA Calls, Professional Safety, 55(12), 2010, pp. 39 41; OSHA Unveils Severe Violator Program for Employers That Endanger Work- ers , Daily Labor Report, April 26, 2010, p. A-

CHAPTER 8 Administrative Issues 431

10 11; John C. Bradbury, Regulatory Federalism and Workplace Safety: Evidence from OSHA Enforcement: 1981 1995, Journal of Regulatory Economics, 29, 2006, pp. 211 224.

125. David Michaels, Remarks By Dr. David Michels, Public Citizen 40th Anniversary Speak- ers Series, January 18, 2011, p. 2 at http://www. osha.gov/ (accessed February 23, 2011).

126. Occupational Safety and Health Administration, Occupational Safety and Health Administration (OSHA) Enforcement, 2009 2013, 2014, at https:// www.osha.gov/dep/2013_enforcement_summary. html.

127. Occupational Safety and Health Administration, State Plans, 2015, at https://www.osha.gov/dcsp/osp/ index.html; U.S. Department of Labor, US Labor Department s OSHA Reports on State-Run Occu- pational Safety and Health Programs: Agency Calls for Corrective Actions to Keep Workers Safe, News Release, September 28, 2010, pp. 1 2.

128. Occupational Safety and Health Administration, Commonly Used Statistics, 2014, at https://www. osha.gov/oshstats/commonstats.html; Bureau of Labor Statistics, Employer-Reported Workplace Injury and Illnesses Summary, 2013, News Release, December 4, 2014, at http://www.bls.gov/ news.release/osh.nr0.htm (Also see Chart 1 for 2003 data).

129. Adele L. Abrams, Legislative Activities Favor Heightened OSHA/MHSA Enforcement, Profes- sional Safety, 55(4), 2010, pp. 40 43; Rick Stasi, Developing Effective Workplace Safety Pro-

grams, Risk Management, 57(4), 2010, pp. 26 33.

130. Patricia Ware, AFL-CIO Lauds OSHA s Recent Actions, Urge Passage of Stronger Job Safety Laws, Daily Labor Report, April 29, 2010, pp. A- 14 15; AFL-CIO, Protecting the Safety and Health of America s Miners and Workers, August 5, 2010, at http://www.aflcio.org/About/Exec-Council/EC- Statements/Protecting-the-Safety-and-Health-of- America-s-Miners-and-Workers.

131. Bureau of Labor Statistics, National Census of Fatal Occupational Injuries in 2013 (Final Results), News Release, April 22, 2015, pp. 1 20 at http://www.bls.gov/iif/oshwc/cfoi/cfch0012.pdf.

132. U.S. Department of Labor, Statement from Assistant Secretary of Labor for OSHA Support- ing Promotion of Job Creation: Agency Doing Everything Possible to Support Good Safe Jobs, News Release, February 15, 2011, p. 1; OSHA Rulemaking Process Credible but May Overstate Costs, OTA Says, Daily Labor Report, October 25, 1995, p. A-9.

133. Marshall v. Barlow s Inc., 436 U.S. 307(1978). 134. Whirlpool Corporation v. Marshall, 445 U.S. 1

(1980); Gateway Coal Co. v. United Mine Work- ers, 414 U.S. 368(1974).

135. U.S. Department of Labor, Occupational Safety and Health Administration, OSHA Require- ments That Apply to Most General Industry Employers, OSHA Compliance Assistance Quick Start: General Industry, 2011, pp. 1 2 at http:// www.osha.gov/dcsp/compliance_assistance/quick- starts/general_industry/gi_step1.html (accessed February 24, 2011).

136. Occupational Safety and Health Administration, Top 10 Most Frequently Cited Standards for

Fiscal 2014 (October 1, 2013 to September 30, 2014), Most Frequently Cited Standards, October 28, 2014, p. 1 at https://www.osha.gov/Top_Ten_ Standards.html.

137. Jan K. Wachter, and Patrick L. Yorio, A system of safety management practices and worker engagement for reducing and preventing acci- dents: An empirical and theoretical investigation, Accident Analysis & Prevention, 68, 2014, pp. 117 130; Steven V. Cates and David O. Anderson, OSHA s Effect on Human Resource Management, Proceedings of the Academy of Organizational Culture, Communications, and Conflict, 15(1), 2010, pp. 11 13.

138. United Automobile Workers Union (UAW) v. Johnson Controls, Inc., 499 U.S. 187(1991).

139. Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 73 (2002). See also Ronald Bayer, Workers Liberty, Workers Welfare: The Supreme Court Speaks on the Rights of Disabled Employees, American Journal of Public Health, 93, April 2003, pp. 540 544; Norman Daniels, Chevron v. Echazabal: Protection, Oppor- tunity, and Paternalism, American Journal of Public Health, 93, April 2003, pp. 545 548.

432 PART 2 The Bargaining Process and Outcomes

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8- 1 Discharged for Facebook Comments

Betty Nelson worked as an emergency medical techni- cian for the First Alert Medical Response ambulance service in Redfern, Idaho. One day in a meeting with her supervisor, Nelson was asked to write an incident report responding to a customer s complaint concern- ing her service on a recent ambulance call. Nelson requested that she be allowed to meet with her local union representative prior to completing her written incident report. Nelson s supervisor denied her request. Later that evening after Nelson s work shift was over she returned home and posted some negative com- ments about her supervisor on her personal Facebook page. For example, Nelson posted that Looks like I m getting some time off. Love how the company allows a 17 to be a supervisor. (Note: A 17 is the company code used to describe a psychiatric patient.) The comments were read by several co-workers who responded to Nel- son with messages of support. Nelson then proceeded to post some additional negative comments about her supervisor on her personal Facebook page.

The company was made aware of Nelson s Facebook postings by an unknown source. The company temporally suspended Nelson and after confirming that the negative remarks had been posted to her Facebook page, she was terminated. The company s termination letter cited a blog- ging and Internet posting policy published in the Employee Handbook which prohibited employees from making dis- paraging comments when discussing the company or any of its supervisors and prohibited employees from depicting the company in any way over the Internet without receiv- ing prior approval from an authorized company official.

Nelson s union representative filed an unfair labor practice charge with the National Labor Relations Board on her behalf. The union argued that the comments Nelson made on her personal Facebook page constituted

free speech which she was entitled to make. Employees have a right to discuss terms and conditions of employ- ment with co-workers even if those comments might be interpreted as negative by a management official. The union further alleged that the company also committed an unfair labor practice by denying Nelson a chance to speak with her union representative during the investi- gatory meeting with her supervisor. Finally, the union charged that the blogging and Internet policy relied upon by the company as the basis for Nelson s discharge was overly broad in restricting employees use of com- munications media like Facebook.

Questions 1. Under what conditions, if any, does an employer

have a legal right to discipline or discharge an employee for comments the employee makes about the company? Would it matter if the comments were posted to a company-sponsored Internet forum, rather than Facebook? Would it matter if the comments were posted to a union-sponsored forum accessible only to members? Why or why not?

2. If you were representing the company in this case and the NLRB regional director asked if you would be willing to settle the union s charges voluntarily, would you do so or would you insist on your legal right to a formal NLRB hearing on the charges? Explain your reasoning.

3. Did the company commit an unfair labor practice by (1) discharging Nelson for her Facebook postings, (2) denying Nelson an opportunity to meet with her local union representative during an investigatory meeting with her supervisor, or (3) enforcing an overly broad blogging and Internet use policy?

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8- 2 The Outsourced Work

Rocket Motor Corporation (RMC) entered into a project labor agreement with 17 local building trades unions concerning a building remodeling project at one of the

company s manufacturing plants. As part of the project labor agreement, the unions agreed not to engage in any strikes, slowdowns, or other work stoppages and not to

CHAPTER 8 Administrative Issues 433

honor the picket lines established by any other labor organization at the job site. RMC agreed as part of the project labor agreement to hire contractors and subcon- tractors who would employ individuals to perform con- struction work from each specified type of trade, represented by the 17 unions with terms and conditions of employment equal to the terms specified in any appli- cable union contract covering the type of work to be performed. The project labor agreement called for final and binding arbitration to resolve any disputes arising from the interpretation or application of the terms of the project labor agreement.

Bolton Engineering (BE) was one contractor hired by Rocket Motor Corporation to help remodel the company s paint facilities at the work site. As part of the contract entered into between RMC and BE, a pledge to adhere to the project labor agreement previ- ously signed by RMC and the 17 unions was included. BE employed only a few supervisory employees of its own at the work site and relied upon unionized sub- contractors to complete most of the assigned job site tasks. However, a significant portion of the metal fab- rication work was subcontracted to two nonunion subcontractors whose employees performed the work off-site. All of the metal fabricated parts built off-site were eventually to be installed on the job site by union labor.

Local 82 of the Steel Fabricators Union (SFU) learned that BE was using nonunion labor at off-site facilities to perform metal fabrication work that could have been performed on-site by union members repre- sented by the SFU. The prevailing wage for a steel fab- ricator under current area labor agreements covering SFU members was $20.73 per hour, whereas the off- site nonunion workers were paid $14.00 per hour to

perform the steel fabrication work. Local 82 leaders believed that BE was in violation of the project labor agreement by subcontracting steel fabrication work to nonunion subcontractors who were paying their employees substantially less than the prevailing wage rate called for under Local 82 s current contract. Failing to resolve the issue voluntarily with BE, Local 82, SFU filed a grievance, which eventually went to final and binding arbitration. The union sought damages from BE in the amount of $1.6 million, the amount of the difference between the wages paid nonunion employees who performed the steel fabrication work off-site and what Local 82 members would have received had the work been performed by them on the work site.

Questions 1. Is BE bound by the terms of the project labor

agreement, which it did not directly sign, including the duty to submit this labor dispute to final and binding arbitration for resolution?

2. Was the project labor agreement meant to apply only to work performed on the job site as BE con- tends, or could the terms of the project labor agreement also be applied to off-site work as the Union contends?

3. Is it legitimate for a labor organization to negotiate a work preservation clause that seeks to encourage contractors to perform work on the job site using union labor by imposing an economic incentive not to outsource the work elsewhere to lower-paid employees?

4. What, if any, legitimate business interest of an employer is served by agreeing to a so-called work preservation agreement with one or more unions?

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Bob Dale and Sam Brady were employed as truck dri- vers by Jackson Transportation Inc. (JTI) a nonunion firm engaged in interstate commerce. JTI provided transportation services for nonunion Acme Steel Cor- poration (ASC) hauling steel coils between ASC s vari- ous plants and directly to various ASC customers. Dale and Brady performed all of their work assignments, transporting steel coils on ASC property.

To encourage safe trucking operations, ASC imple- mented a safety bonus program that paid trucking firms employed by ASC an amount equal to one $1 for each safe hour of work performed by each firm s employees. ASC strongly encouraged the transporta- tion firms with whom it contracted for services to pass the $1 per safe hour of operation bonus on to their employees.

434 PART 2 The Bargaining Process and Outcomes

JTI decided to pass one-half of the safety bonus payment (50 cents) on to its truck drivers and keep the remaining 50 cents to fund certain safety equip- ment purchases and the company s annual Christmas party. Bob Dale learned from talking to drivers at other firms employed by ASC that they were receiving the full $1 bonus from their employers. This upset Dale, who thought his employer (JTI) should also be giving drivers the full $1 per hour bonus payment. Dale dis- cussed his complaint with several other employees, including Sam Brady.

On December 9, employee Dale told Brady that he was on his way to see Phil Cook, ASC s transportation manager at the plant where both Brady and Dale were assigned. Brady said he would accompany Dale to the meeting as he didn t want to miss any of the fireworks. At the meeting, Dale explained to Cook his complaint about JTI not paying its drivers the full $1 bonus amount. Cook replied that essentially this was not a decision over which he had any control, and any com- plaints should be delivered directly to JTI managers, not ASC. The meeting ended after about 15 minutes, and Dale and Brady exited Cook s office. Cook then telephoned R. C. Ridley, the JTI terminal manager who supervised Dale and Brady, and explained to him the nature of the conversation Cook had engaged in with Dale in Brady s presence.

On December 19, Ridley, accompanied by a security guard, escorted Dale from the ASC property, explaining that he was being removed because they believed that he was trying get a union started because he had talked to Cook. Ridley told Dale that ASC had barred Dale from its property. Dale responded that he was not trying to start a union and had never even spoken to anyone about doing so. Ridley stated the company would have to investigate the matter further.

On that same date (December 19), Ridley, accom- panied by a security guard, also escorted Brady from the ASC property. Ridley told Brady he was being removed from the property because he had been pres- ent when Dale met with Cook about the safety bonus issue. Brady indicated that he had not known in advance the specific nature of the statements that Dale planned to make that day in Cook s office.

On December 27, Ridley informed Dale that he was being terminated in the best interest of the com- pany. Dale s written termination notice stated that he was terminated because he was not able to function on ASC property. Ridley also informed Brady on the same date that he too was terminated because ASC did not want him back on its property. Brady s written termination notice stated the reason for termination was not able to function on ASC property. Brady and Dale subsequently filed an unfair labor practice with the NLRB, alleging that JTI s discharge action represented unlawful discrimination against them under the LMRA, as amended.

Questions 1. Was the discharge of Dale and Brady a violation of

Section 8(a)(1) and (3) of the LMRA? If so, what should be the appropriate remedy?

2. Was the decision by JTI to award only half of the safety bonus money available to its truck drivers a lawful employer decision?

3. If you had been advising JTI on the safety bonus issue, would you have recommended the company retain half the bonus money for the purposes described by the company (i.e., buy safety equip- ment and pay for the annual Christmas party)? Why or why not?

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Clothes?

The Steelworkers union had a new collective bargain- ing agreement with the steel manufacturer that said, Employees shall be paid for donning and removing

protective gear prior to beginning work and at the end of the workday, provided it constitutes more than a de minimus activity. Soon after the agreement was ratified, the union filed a grievance, charging that

management was not abiding by the donning con- tract clause.

Position of the Union:

Under the new contract, management is supposed to pay workers for putting on and taking off personal pro- tective equipment (PPE). Working in a mill with

CHAPTER 8 Administrative Issues 435

molten steel is dangerous and requires that workers wear several pieces of PPE. These include the following special flame-retardant articles: a jacket, a pair of pants, a snood (a hood with neck protection), wristlets, work gloves, and leggings. Other types of PPE include the following: a hardhat, special steel-toe boots, safety glasses, earplugs, and a respirator (worn occasionally, as needed). Workers would not normally wear these types of PPE except for the hazards of the job. Indeed, these forms of PPE are expected by the Occupational Health and Safety Administration. Thus, donning PPE is an integral part of the day s work activities. The col- lective bargaining agreement requires that bargaining unit employees be paid for putting PPE on at the start of the workday and taking it off at the end of the workday. This equates to approximately 15 minutes total per worker per day. Further, after donning their PPE, the workers must walk (or ride a shuttle bus) approximately 10 15 minutes from the locker room to their specific work stations in the sprawling 4000- acre work site. This time, too, is an integral part of the workday and should be compensated.

Position of the Company:

Most of the articles mentioned in the Union s list are not PPE at all. They are clothing. The company is not obligated to pay for people to change clothes, even if they normally do it in a locker room on the company s premises. Hard hats are hats ; steel-toe boots are boots. Common sense indicates that these are clothes and not special PPE. The only items that con-

stitute PPE are safety glasses, earplugs, and the respira- tor (which is not always worn). Putting on safety glasses and earplugs takes less than 20 seconds. Thus, they fall under the de minimus activity exception mentioned in the contract. Also, there is no history of making such payments in the 59 years of collective

bargaining at this plant. Thus, we are not obligated to pay for changing time. Nor are we obligated to pay for the time spent walking to the appropriate work sta- tions. If we were required to do that, then the slowest, laziest workers would earn more pay by walking at a more leisurely pace, thereby undermining employee discipline and potentially the operation of the mill itself.

Questions 1. Analyze how each side interprets the meaning of

this contract clause. Whose position is more per- suasive? Why?

2. In 1947, Congress passed the Portal-to-Portal Act (a portal is a doorway; 61 Stat. 84, as amended, 29

U. S. C. §251 et seq. (2006 ed. and Supp. V). §251(a). This law said that an employer is not liable to pay workers for time they spend traveling to work (e.g., an hour-long commute). It also excludes from com- pensable time, activities which are preliminary to or postliminary to [the] principal activity or activities [that an employee is employed to perform], which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities. 61 Stat. 87, 29 U. S. C. §254(a)(2).

Further, in 1949, Congress amended the Fair Labor Standards Act (which regulates overtime) to read, [In determining] the hours for which an employee is employed, there shall be excluded any time spent in changing clothes or washing at the beginning or end of each workday. 63 Stat. 911, 29 U. S. C. §203(o). This law excluded changing clothes from compensable time, but it also specifically allowed collective bar- gaining agreements to specify that such time be paid.

Analyze the case in light of these two relevant laws.

436 PART 2 The Bargaining Process and Outcomes

CHAPTER 9

Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure

IT WAS ALWAYS about the money! There might be talk by the managers about the important topics of respect, equity, or fairness but in the end, it was always about the money. How did we reach this point? Six months ago when negotiations began it all appeared to be so simple. The business was doing well with increasing profits and market share. The bargaining relationship had been established for many years, and leaders on both sides understood each other well. Yet as we drew closer to the date when the old contract expired, as union nego- tiators, we were facing pressure by some employees to call a strike. We were also facing the possibility of a lockout by the employer if we didn t accept the terms of the company s latest settlement offer.

Both the company s offer and the union s counterproposal would mean an improvement from the terms of the expiring labor agreement. Much of the disagreement had to do with what impact business conditions and new technology were likely to have on future profits and growth. Obviously, greater profits would enable the firm to pay higher wages. Yet those forecasts and implications were based upon assumptions and expectations that neither side could guarantee. And if a work stoppage occurred, what would be the implications for the future of labor management relations? Would managers hire replacement workers? Would the union survive?

Now it is six hours before the expiration of the contract. What will the company negotiating team do? Should the union negotiators make one final compromise proposal to sweeten the deal? If we do, will it be enough to achieve settlement, or will the managers interpret our offer as a sign of weakness and

437

try to extract more concessions? How will we lower the expectations of union members who are demanding that we get everything that they want, or else go on strike? However the next six hours of the labor rela- tions process play out, I have a feeling that our relationship with the com- pany is never going to be the same.

Questions 1. Negotiators face pressure from the other side to make compromises.

Yet they also face pressure from constituents not to compromise. How should negotiators balance these two sets of pressures?

2. Some labor contracts today are being negotiated for longer durations (e.g., five, six, even ten years). What are the advantages and disadvan- tages to negotiating longer contracts? How can the interests of each side be adequately protected?

3. What are some examples of ways in which bargaining parties can attempt to reduce the uncertainty regarding future events that could impact their party s interests during a long-term contract?

4. If one bargaining party made one last compromise proposal prior to a threatened strike or lockout deadline, would you be more likely to interpret such an offer as a sign of the proposing party s weakness or an honest intent by the proposing party to reach a reasonable settle- ment? How might your interpretation affect your response to the bar- gaining proposal?

Labor management negotiations do not result in strikes very often. Only 11 majorwork stoppages involving 1,000 or more employees occurred in 2014, up from a record low level of 5 recorded in 2009. The high was 22, in 2005 (by comparison, in the 1950s, the average was 351).1 In the past ten years strikes and lockouts have accounted for 0.01 percent or less of the total hours worked. Media coverage of work stoppages that do occur is often intense and frequently creates the impression that strikes and lockouts are inevitable consequences of worker unionization. They are not. As described in Chapter 6, negotiations often produce a new collective bargaining agree- ment. Also, third-party dispute resolution procedures can facilitate agreement. Finally, economic pressure tactics (e.g., a threat of a strike) can play an important role in helping negotiators to reach a realistic settlement outcome.

This chapter begins with a discussion of the alternative interest dispute resolution procedures involving third parties, such as mediation, fact-finding, and interest arbitra- tion. The chapter also examines the use of economic pressure tactics (e.g., strike, lock- out, boycott, picketing) as a means of encouraging the voluntary resolution of interest disputes.

438

Impasse Resolution Procedures Involving a Third-Party Neutral

Usually both union and management representatives attempt to voluntarily resolve bar- gaining impasses, which can occur either before or after a contract s scheduled expiration date. In some cases, union and management officials need a third party either to facili- tate the negotiation process or to render a final and binding decision to resolve an inter- est dispute. Mediation, fact-finding, and interest arbitration are three important impasse resolution procedures involving the aid of a neutral third party to resolve an interest (negotiation) dispute.

Mediation Most union management interest disputes are resolved voluntarily by the parties them- selves without the need for assistance from an outside, third-party neutral. In 1947 as part of the Labor Management Relations Act (LMRA), Congress created the Federal Mediation and Conciliation Service (FMCS), an independent federal agency charged with helping to prevent or minimize labor disputes by providing mediation, conciliation, and voluntary arbitration services. In FY 2014, the FMCS was involved in 4,100 collec- tive bargaining contract negotiations covering every major industry.2 Mediation is the most commonly used third-party interest dispute resolution procedure, and the FMCS, along with some 18 state mediation agencies, helps to achieve Congress s goal of foster- ing stable labor management relations in order to facilitate the free flow of commerce. The FMCS has estimated that its efforts to prevent or shorten work stoppages on average provides an economic benefit to the U.S. economy of $1.6 billion annually.3

As part of the legal duty to bargain in good faith under the LMRA, bargaining par- ties are required to provide 30 days advance notice to the FMCS, or any other applicable state mediation agency, that bargaining between the parties is ongoing but no settlement has yet been reached. This notice can be filed electronically, using a form available from the FMCS s Web site at http://www.fmcs.gov. A mediator will contact the bargaining parties and offer his or her services to aid the parties to reach a voluntary settlement. Deciding to use the services of a third-party mediator is voluntary on the part of the bargaining parties except in the rare case where the dispute involves a national emer- gency, which will be discussed more fully later in this chapter.

A mediator has no legal authority to impose a settlement on the parties and thus functions more as an invited guest who can be required to leave if one or both bargain- ing parties no longer desire the mediator s continued involvement in the bargaining pro- cess. Mediators must rely on persuasion and their credibility as a facilitator in helping the bargaining parties reach agreement on their own. Mediators can perform a number of functions to assist the bargaining process including assisting in scheduling meetings, keeping the parties talking, carrying messages back and forth, helping each party realisti- cally assess their current bargaining position and alternatives, helping to manage rela- tions with news media interested in the bargaining process, and suggesting possible new approaches or terms to facilitate settlement.4 The mediation process is as much an art as a science. Mediation has been described as a process that has been helpful in a haphaz- ard way largely because of the talents of certain individuals who themselves would find it difficult to say why they had been successful. 5

Personal Characteristics Several characteristics and practices of labor mediators have been associated with media- tor effectiveness. Effective mediators have tenacity they do not give up without exhaust- ing themselves, the parties, and all reasonable avenues of settlement. A second

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 439

characteristic is experience, which simply means that the more times a mediator is involved in mediating labor disputes, the more effective he or she is likely to be in set- tling one. Mediators who are high in Emotional Intelligence an ability to perceive emo- tions, understand the relations among emotions, and effectively manage emotions to communicate and persuade use a wider variety of tactics and pursue an overall mutu- ally satisfactory settlement. Finally, mediators who are actively engaged, sometimes pres- suring the parties to reach a settlement, sometimes generating their own settlement proposals, are more likely to be effective mediators.6

Mediator Activities That Promote Agreement Carl Stevens, in a study focusing on the mediator s functions and tactics, identified sev- eral causal factors that lead to a negotiated settlement. Timing of the mediator s involve- ment is one of the most important considerations. A mediator should enter the bargaining dispute before the parties become too fixed in their positions but not so early as to upset the power balance between the parties, causing them to harden their bargaining positions. In some instances, the mere entrance of the mediator may be suffi- cient for dispute settlement to occur. In others, the invitation to the mediator to assist with the negotiations comes too late. For example, in the 2011 bargaining dispute between the National Football League Players Association (NFLPA) and the National Football League Team Owners, the parties did not agree to use the services of the FMCS until two weeks prior to the scheduled expiration date of their labor agreement, when they were faced with a threatened lockout by team owners if a new labor agree- ment had not been reached by the existingcontract s expiration date.7

Face-Saving is another key factor Carl Stevens identified. For example, assume that one of the negotiators leaves an active negotiation in a temper tantrum, vowing never again to return to the bargaining table. On subsequent reflection, the negotiator realizes a mistake was made but feels that calling the opposing negotiator would be embarrassing and perhaps indicate weakness. A common tactic used in such situations would be to call a mediator, who could schedule another meeting. As a different example, suppose that one negotiating team is willing to make a significant concession on an issue, but does not want to appear weak to the opposing side. The team may ask the mediator to make the proposal and claim the idea as his/her own. Thus, mediation can represent an impor- tant face-saving device for a bargaining party. In other cases, the parties do not desire any specific help from the mediator, but the availability of that mediator and the very existence of the mediation forum facilitate the bargaining process.8

One qualitative study asked highly successful mediators to reflect upon their careers and to identify the tactics that they felt were essential to dispute resolution. They identi- fied the following: (1) building rapport with the disputing parties, (2) identifying integra- tive solutions (e.g., novel, creative, win-win proposals), (3) strategically using humor to lessen tension, (4) combining patience with optimism that settlement is possible (even if one side thinks continued bargaining is futile), (5) focusing the parties attention on the consequences of an impasse (e.g., a strike that will cost the company thousands of dollars per day) to motivate them to settle, (6) helping each side to understand the other side s needs and pressures, and (7) pushing for a settlement by the parties only when the timing seemed right.9

Mediators are expected to possess a high level of knowledge concerning labor relations practices, economic and industry trends, labor and employment law, problem-solving tech- niques (e.g., interest-based bargaining), and best practices for building ongoing cooperative labor management relations (e.g., labor management committees, partnership training).10

Mediators vary in their roles, behaviors, and styles. Some have been characterized as deal

440 PART 2 The Bargaining Process and Outcomes

makers, entering the negotiations at an early stage, trying to motivate the negotiators to settle, and actively attempting to persuade the parties to accept the mediator s proposed settlement terms. Other mediators seem to prefer the role of orchestrator, attempting to structure the negotiations to facilitate communication between the parties to provide greater insight into the issues in dispute. A mediator may become much more active in pressing the parties to settle when a deadline or work stoppage appears imminent and the likelihood of voluntary settlement diminishes especially in public-sector negotiations, where strikes and lockouts are usually illegal.11

A successful mediator is often an interpreter who helps clarify the bargaining par- ties perceptions of the bargaining climate and possible costs of failing to reach an agree- ment. For example, if the parties disagree on data about the cost of living, comparative wage rates, or productivity data, the mediator could assist in reaching agreement on what relevant sources to use to obtain statistical data. If a negotiator underestimates the cost of a strike or lockout or overestimates the cost of agreeing to another parties proposed set- tlement terms, the mediator may be able to provide insights enabling the negotiator to evaluate his or her position more realistically. Often a mediator will hold separate meet- ings with each bargaining party before attempting to schedule a joint meeting between the parties. This provides the mediator a chance to better understand each party s ratio- nale for current bargaining positions and the depth of commitment each party has for those positions. Developing trust between the mediator and each bargaining party is nec- essary before the mediator is likely to have much success helping the parties better understand and trust each other in the bargaining process.

Helping bargaining parties to better understand the tactics or intentions of each other can also aid the bargaining process. If management bluffs about its willingness to accept a strike or to allow an ongoing strike to continue indefinitely, the mediator may attempt to diagnose management s true intentions and then advise the union. On the other hand, if the union threatens a strike to obtain an excessive bargaining demand, the mediator could attempt to diagnose what the union is really trying to say and so inform the company negotiator. By holding private caucuses with each party, the mediator becomes privy to much confidential information. Although no mediator should reveal confidential information to the other party, he or she can pro- vide insight to the parties regarding the magnitude of the differences that exist between them and encourage the parties that a settlement may be near if they continue bargain- ing in good faith. Mediators can apply pressure for settlement on one or both parties by using delays and deadlines in the mediation process, placing responsibility for set- tlement on the parties, engaging in marathon (round-the-clock) bargaining sessions, emphasizing the costs of a strike or lockout, and making settlement recommendations in a joint conference.12

The parties, however, play the dominant role in shaping the mediation process. Where experienced negotiators have a clear understanding of their bargaining objectives and strategies, the mediator is primarily the servant of the parties. However, where less experienced negotiators have not clearly defined their bargaining objectives, the personal qualities and actions of a competent mediator may help him or her gain the trust of the parties and create the type of negotiating atmosphere that achieves a settlement. The research literature on mediator style and mediation tactics has identified a few dis- tinct approaches. Some mediators emphasize reaching an agreement (a settlement orien- tation). Others emphasize pointing out the weaknesses of each side s positions and, in public-sector disputes, predicting what would happen if the dispute goes to court or arbi- tration; this evaluative mediation style seems aimed at motivating the parties to compro- mise. Still others focus on improving the relationships among the disputants (sometimes

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 441

called relational mediation, or transformative mediation. Even so, because each dispute is distinct, our understanding of mediator styles and tactics is still in its infancy.13

Code of Conduct To help ensure the integrity and impartiality of the mediation process, the Association for Conflict Resolution, the National Mediation Board, the American Bar Association, and the American Arbitration Association have adopted a code of professional conduct for mediators.14 This code articulates qualifications for mediators, standards of practice, and ethical behavior. It proscribes impermissible actions of mediators, such as holding meetings with one of the parties without the prior consent of the other party and reveal- ing to one party what would be considered an acceptable settlement to the other. The code is patterned after the widely accepted Code of Professional Responsibility for Arbi- trators of Labor Management Disputes, which has existed since 1951 (revised most recently in 1995) and which has been adopted by the National Academy of Arbitrators, the American Arbitration Association, the National Mediation Board, and the FMCS.15

Fact-Finding Fact-finding is a semijudicial process used primarily in the public sector to gather facts about a labor dispute for the purpose of publishing a public report containing the fact- finder s conclusions and often recommended terms of settlement. Like a mediator, a fact- finder has no legal authority to impose a final and binding settlement on the parties involved in a labor dispute. The fact-finder s purpose is to assess the facts and to organize and display them publicly in the hopes that the public will find the fact-finder s conclu- sions and recommendations to have merit and bring pressure on the parties in dispute to settle their differences.16 Typically both public employers and public employee unions, rec- ognizing the need to be responsive to taxpayers or consumers of public services, seek to use support from such groups to bolster their respective bargaining positions.

Fact-finding may be used in major disputes under the LMRA and the Railway Labor Act. In major disputes, fact-finding reports are useful to U.S. presidents in determining what actions to take in national emergencies, such as when to seek an injunction or rec- ommend legislation to resolve the dispute. Because fact-finding lacks the ability to ensure a final end to the labor dispute, this process does not have a good record in resolving major disputes. However, there is some evidence that fact-finding when used as an inter- mediate step prior to some final resolution procedure (e.g., interest arbitration, legislative action) can increase the rate of negotiated settlements compared to the voluntary settle- ment rate achieved in the absence of fact-finding as an intermediate step.17 The fact- finder s report and recommendations apparently serve as a focal point for negotiators, encouraging them to voluntarily agree to terms at or close to the fact-finder s recommen- dations, thus avoiding the need to turn the outcome of the interest dispute over to an outside party (e.g., arbitrator, legislature) to obtain a final dispute resolution.

Interest Arbitration Interest arbitration involves the selection of a neutral person or panel to hear the bar- gaining positions of the parties and make a final and binding decision on what should be included in a newly negotiated agreement. This process differs from grievance arbitra- tion (see Chapter 11), which is concerned mostly with resolving rights-type disputes over the interpretation or application of existing contract terms.

Interest arbitration in the United States dates back to the eighteenth century in the copper mines of Connecticut. It is not used often in the private sector (approximately 2

442 PART 2 The Bargaining Process and Outcomes

percent of negotiations) to resolve contract negotiation disputes, with some notable exceptions such as the Amalgamated Transit Union (which has arbitrated more than 700 cases), professional sports, and the U.S. Postal Service.18

Management and union representatives in the private sector prefer to control the outcome of interest disputes which establish the terms or conditions of employment and are therefore reluctant to grant such authority to an outside arbitrator. Both parties have concerns about possible delay created in trying to schedule an arbitration hearing and the extra cost involved. In addition, management becomes particularly concerned if an arbitrator fails to fully take into account the economic effect of the arbitration deci- sion on the employer s operations or if the award is above the industry average. Interest arbitration is more common in the public sector and is discussed more fully in Chapter 13.

A Comparison of Three Interest Arbitration Procedures

Conventional Interest Arbitration. The interest arbitration procedure affording the arbitrator the greatest degree of flexibility to determine an appropriate settlement out- come is conventional interest arbitration (CA).19 Using this procedure, each party pre- sents its proposed settlement terms and supporting evidence to the arbitrator who has the authority to decide the final terms of the new contract, based on what is most rea- sonable. The arbitrator can select either party s proposal or some compromise settlement terms between (or even beyond) those proposed by the parties themselves.

Conventional interest arbitration is widely used in the public sector; the specifics of the procedures vary across jurisdictions, including the types of evidence to be presented and factors arbitrators must consider when rendering a decision (see Exhibit 9.1). While it is possible to design a procedure where the interest arbitrator must rule on each issue separately ( issue-by-issue conventional arbitration), in most jurisdictions, the arbitrator is free to render a decision that considers all of the issues at once (conventional

Exhibit 9.1 Some Relevant Criteria an Arbitrator May Use to Decide an Interest Bargaining Dispute

Comparability of relevant employee wage, hours, or other working conditions with similar private- or public-sector employees within the same geographic area or industry.

Current economic conditions (e.g., inflation, unemployment, product/service demand, productivity).

Occupational or job requirements (e.g., physical or mental abilities, degree and variety of skills required, prior work experience or relevant training, hazardous or unpleasant working conditions, degree of responsibility, creativity, stress).

The financial ability of the employer to pay for the costs of any proposed settle- ment terms (including an assessment of current and future projected revenues during the term of the labor agreement).

Whether a bargaining proposal involves a new bargaining subject (i.e., a subject not previously agreed upon in a prior contract between the parties or not com- mon in other labor agreements in the industry or geographic area).

The potential effect of the arbitrator s decision on the encouragement of effec- tive and stable labor relations within the parties bargaining relationship.

The availability of recommended settlement terms from a mediator, fact-finder, or other similar board of inquiry concerning the interest dispute.

The general welfare and interest of the public.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 443

arbitration by package ). By giving the arbitrator the freedom to consider several issues in one ruling, lawmakers are allowing the arbitrator to consider the interrelationship among the issues and the total financial impact of the proposals.

Criticisms of Conventional Interest Arbitration. Conventional interest arbitration has been criticized on several grounds. One set of criticisms is at the microlevel in that anticipating arbitration in the event of an impasse may change the psychology of how one or both negotiating teams bargains. Many negotiators assume that arbitrators tend to split the difference in resolving disputes; such an assumption may cause the parties to take more extreme positions on issues in dispute.

Do arbitrators actually tend to split the difference? Early research suggested that they do, but that this is an average tendency which may or may not apply to a specific arbitra- tor in a specific dispute. However, a more recent study of wage outcomes in negotiations involving police and firefighters found no difference between the outcomes achieved when interest arbitration was available versus negotiations which did not permit the use of inter- est arbitration.20 This would suggest that interest arbitrators are employing similar criteria and evidence to that used by the parties themselves to determine an appropriate wage out- come rather than mechanically splitting the difference. Most arbitrators will weigh the par- ties positions and relevant supporting evidence in relation to specific criteria to determine the dispute outcome rather than simply splitting the difference to determine a dispute s outcome.21 Because neutrals may vary in the norms of their decision making (e.g., equity vs. equality), the parties can also exert some degree of control over the dispute outcome by defining the decision criteria to be used by an arbitrator in advance.22

Another, related, microlevel criticism of conventional interest arbitration is that if a negotiator anticipates going to arbitration and anticipates the arbitrator splitting the differ- ence, then the negotiator may believe that he/she will secure better outcomes by taking an extreme position and not making significant concessions. This is called the chilling effect. For example, suppose management offers a 2 percent pay raise. The chief union negotiator may reason that if the union asks for 8 percent then the arbitrator may give a 5 percent raise in his split-the-difference ruling [(2 8)/2 5]. If the union only asks for 6 per- cent, the negotiator may anticipate a 4 percent arbitration ruling [(2 6)/2 4]. Employ- ing this reasoning, the union leader may decide that the members will be better off if the union freezes in its bargaining positions and the dispute goes to arbitration. Thus, the expectation of the arbitrator splitting the difference leads to the parties not trying as hard to negotiate a settlement. Another explanation for the chilling effect is that the costs of using arbitration are insignificant compared to the costs of a strike or lockout. These low costs remove the parties incentive to reach an agreement.

Research on the chilling effect has produced mixed results. One research study reported that fewer voluntary settlements were reached under a negotiation system per- mitting interest arbitration than under systems permitting a right to strike or lockout in the event of an impasse. Another study reports that negotiators are likely to take posi- tions based on the expected arbitration award, suggesting that the expected arbitration outcome shapes the negotiators bargaining positions in ways consistent with the chilling effect.23 However, other research reports no chilling effect on the parties likelihood of reaching a voluntary settlement and avoiding the use of interest arbitration.24 If either party believes that it can gain a better settlement through interest arbitration then there may be an incentive to avoid a negotiated settlement even though some additional time and cost will be necessary to obtain an interest arbitrator s decision.

A third concern is a macrolevel concern: The more frequently conventional inter- est arbitration is used, the more likely it will continue to be used. This is called the nar- cotic effect. Why might the narcotic effect occur? This macrolevel effect may be the

444 PART 2 The Bargaining Process and Outcomes

consequence of the two microlevel effects just described. Anticipation of an arbitrator splitting the difference leads to parties freezing in their bargaining positions; this increases the likelihood of an impasse and the likelihood of using arbitration. The theory postulates that, as the parties repeatedly use an arbitration procedure, they feel less responsible for their own outcomes; also, as they gain more knowledge of how arbitra- tors decide outcomes negotiators, they may become increasingly reliant on interest arbi- tration to resolve bargaining disputes over less-predictable methods. It has been further argued that interest arbitration gives negotiators political cover for making unpopular decisions (e.g., wage concessions), as shown by the increased use of arbitration during the recent economic recession.25

Does the narcotic effect occur? Evidence is mixed. A study of the use of arbitration over an eight-year period under the Minnesota Public Labor Relations Act did not reveal its existence. However, earlier studies in New York and British Columbia identified such an effect. More recent research suggests that the effect fades after several years, as the parties gain experience with the process. The use of interest arbitration has declined from the 10 to 30 percent range in the 1970s (when arbitration procedures were new for public-sector labor negotiations) to less than 10 percent today in many jurisdictions.26

Thus, as negotiators gain insight regarding arbitral preferences and decision criteria, they take more realistic positions in subsequent negotiations. This produces settlements closer to the norms established by the arbitrator during prior contract negotiation dis- putes. These dynamics reduce the narcotic effect. However, the authors of one study report that this process is taking the parties longer to get a new contract: For example, in New York, the median length of time between the expiration of a public-sector con- tract and an arbitration award increased from 300 days in the mid-1970s to 790 days in the 2001 2006 period.27

Final-offer total package (FOTP) selection is a form of interest arbitration that restricts an arbitrator s authority to settle an interest dispute by requiring the selection of either the employer s or union s final proposal on all issues in dispute. This is in effect a winner take all proposition where one party s position will prevail on all issues in dispute. In theory, forcing one party to risk a total loss through FOTP arbitration pro- vides a powerful incentive for parties to voluntarily negotiate an acceptable outcome to avoid risking the arbitrator s decision. Neither party can guarantee that the arbitrator will select its proposal as the most appropriate or reasonable. FOTP eliminates any chance for an arbitrator to simply split the difference between the union s and management s final proposed settlement terms. Theoretically, if both parties genuinely attempt to pres- ent acceptable proposals to the arbitrator, their positions will converge, enhancing the opportunity for them to settle their differences without third-party intervention.

Is the theory correct? Research suggests that when an arbitrator is presented with two offers in which one offer differs substantially from what the arbitrator has deter- mined to be a reasonable or preferred offer, the arbitrator will most often select the offer which is closer to his or her preferred offer.28 This provides some incentive for par- ties to make reasonable offers in arbitration, which may then become the basis for fur- ther voluntary negotiations resulting in settlement prior to an arbitrator rendering a final and binding decision. There is also some evidence that final-offer arbitration reduces the chilling effect and the narcotic effect relative to conventional interest arbitration,

although some experimental laboratory research suggests that the two procedures have similar settlement rates.29

A somewhat less risky alternative to FOTP is final-offer issue-by-issue (FOIBI) selection, where the arbitrator is restricted to selecting either the union s or employer s final proposal on each separate issue in dispute. The FOIBI procedure permits the

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 445

arbitrator to assess each bargaining issue in dispute separately on its own merits to deter- mine which party has the most reasonable proposal. While in theory one party could still be determined to have the most reasonable proposal on every issue in dispute, it is more likely that one party s proposal would be judged more appropriate on some issues in dis- pute whereas the other party s position might prevail on other issues.

Salary arbitration in professional baseball is an example of FOTP on the single issue of wages.30 Both the club owners and the player s agent seek an arbitrated salary adjustment based on what comparable players are receiving. Each side presents a salary proposal and identifies comparable players (and their salaries). If the evidence suggests a salary figure closer to the player s proposal, then the player s proposal is accepted; if the evidence sug- gests a salary figure closer to the owners proposal, then that proposal is accepted. The arbitrator cannot split the difference. Similar to a strike threat, the threat of arbitration imposes a cost risk on the player and team owner for continuing to disagree on settlement terms. Because the salary arbitrator selects only one of the two offers submitted by the opposing sides, the parties are motivated to reach a negotiated voluntary settlement. Research studies report that approximately 15 to 20 percent of arbitration-eligible players actually have their salary determined by a baseball salary arbitrator.31 The vast majority of cases are settled voluntarily by the parties prior to the arbitration hearing.

Research on FOTP arbitration in baseball has revealed that typically only the high- quality baseball players file for arbitration and seek to have their salaries decided in arbi- tration. Because the salaries of baseball players who qualify for arbitration are 80 to 90 percent higher than those of comparable ineligible players, baseball clubs have an incen- tive to substitute players with cheaper salaries for players whose salaries are raised through arbitration beyond management s own valuation of a player s worth.32 Arbitra- tors preferred outcome in baseball salary arbitration tends to be based upon a weighted average of the player s salary from the previous season and the average free agent salary, representing a compromise between the perspectives of owners and players.33 While arbitration decisions do tend to select team owners offers slightly more often than players offers, one study reports such team proposals prevent players from receiving true market wages, and this is particularly true for African-American and Latin-born

players.34

Interest arbitration procedures do have some shortcomings, particularly if relevant criteria on which to base arbitration decisions are not agreed upon by the parties. More importantly, because labor negotiations usually involve multiple issues which may be in dispute between the parties, interest arbitration can become a complex process. Under final-offer arbitration procedures, if the parties do not compromise on significant differ- ences between their bargaining positions prior to arbitration, then an arbitrator would be required to select one of the party s extreme proposals. This could heighten union management tensions during the life of the contract and cause future difficulties in nego- tiating subsequent contracts.35

Mediation-Arbitration (Med-Arb) Mediation-arbitration (med-arb) is a hybrid alternative dispute resolution procedure blending traditional mediation and interest arbitration procedures. Under the procedure, the bargaining parties typically select a third-party neutral who will first function in the role of a mediator to encourage the parties to reach a voluntary settlement. If no settle- ment occurs, the third-party neutral then switches hats to become an arbitrator empow- ered by the parties to make a final and binding decision to resolve the parties interest dispute. Because the arbitrator would already be familiar with the parties positions and supporting evidence on issues in dispute, less time would be required in the arbitration

446 PART 2 The Bargaining Process and Outcomes

hearing to present those positions and have the arbitrator render a decision. It also takes less time to transition from the mediation phase to the arbitration phase since the parties have already determined in advance who the arbitrator will be.36

Some parties may have legitimate concerns about using a med-arb process. For example, the two phases of the procedure require different skills. Mediation requires skills somewhat akin to a facilitator or group counselor while arbitration requires quasi-judicial procedural skills and the legal knowledge to write precise contract clauses; it may be difficult to find third parties who have mastered both sets of competencies.37

Even if a skilled third party is employed, there are concerns about how the procedure operates. Because the same individual who has already functioned as a mediator will arbitrate the dispute, one or both parties may be concerned that opinions formed during the mediation phase could influence the outcome of the arbitration phase. It may encour- age greater impression management attempts in the mediation phase as negotiators try to win the sympathy of the third party to their positions. If the negotiators believe that such attempts have failed, then this concern would likely encourage greater effort to reach a voluntary settlement during the mediation phase when the parties still control the outcome rather than risking an unfavorable arbitration decision. There may also be concern that in rendering a final and binding decision the arbitrator s opinion may be influenced by information the third-party learns during mediation. Confidential informa- tion disclosed by one party to the arbitrator during ex parte communications during mediation (i.e., private caucuses) may be influential; yet, the other party would be unaware of such information and thus unlikely to respond to during the presentation of evidence and arguments during the arbitration phase. A variation on this concern is that the parties may withhold information during the mediation phase out of fear that it may later hurt them in arbitration. This may render the mediation phase ineffective.38

With proper advance consideration, most concerns regarding the med-arb process can be resolved through joint agreement and incorporation into a written med-arb agree- ment detailing the procedures and ethical standards that will apply. One study of med- arb with a community dispute resolution center reports that disputants in med/arb engaged in more problem solving and were less hostile and competitive than were dispu- tants in straight mediation. 39 Another study (a laboratory experiment) reports that for both distributive and integrative type of bargaining tasks, med-arb (with FOTP arbitra- tion) reduces intergroup competitiveness and results in fewer impasses than a team bargaining-only control group. While these findings are intriguing, more research needs to be done on the med-arb procedure.40

Other Third-Party Procedures

Mediation, arbitration, and med-arb are widely used third-party procedures in the labor relations process. Although rarely employed in labor disputes, other alternative dispute resolution (ADR) procedures exist, and are available should the parties decide to use them (or lawmakers authorize them for public-sector labor disputes). Only a few will be briefly discussed because they are relatively new with little evaluation of their effec- tiveness. Yet these illustrate some of the recent creativity that has gone into designing dispute resolution procedures.

Arbitration-Mediation Like med-arb, Arbitration-Mediation (arb-med) employs one third party to be both arbitrator and mediator. However, it reverses the procedural order of med-arb and also

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 447

divides the arbitration process into two phases: A hearing phase and a ruling revela- tion phase. With arb-med, the third party first holds the arbitration hearing. This may involve meeting with both parties, holding private caucuses, or even simply obtaining legal position papers ( briefs ) from each side. The arbitrator then withdraws to reflect upon each side s position and to write a decision. However, the decision is sealed in an envelope and not revealed to the parties. Rather, the third party next mediates. If a vol- untary agreement is reached, then the dispute is settled; the parties never see what the arbitrator put in the envelope. If a voluntary agreement is not reached by a specified deadline, then the dispute enters the ruling phase : the envelope is opened and the arbi- trator s decision becomes binding upon the parties.

What might be advantageous about arb-med, relative to med-arb? The primary advantage is that the parties know that nothing they say in the mediation phase of arb- med can affect the arbitration decision, because it has already been written. Thus, they may be more forthright with the mediator (not withholding information, not engaging in impression management). Each side may also be sensitive to statements the third party makes during mediation that imply that an unfavorable arbitration ruling has already been written (especially if FOTP is used); this may encourage the negotiators to compromise during mediation.41

There has been little research comparing arb-med and med-arb. In one laboratory study, disputants settled more frequently in the mediation phase (and with higher joint outcomes) when arb-med was used. Other research reports that negotiators and their constituents prefer med-arb over arb-med, because they control over the dispute resolution process as long as possible and they see med-arb as a fairer procedure.42

Tri-Offer Arbitration With tri-offer arbitration both parties and a neutral third party (e.g., a fact-finding panel) suggest settlements. This procedure has been used in Iowa for some public- sector disputes. An interest arbitrator must pick one of the three proposals. Experimental evidence suggests that the voluntary settlement rate is comparable to that of other forms of arbitration and that it is the more risk-averse party who makes more reasonable offers in both tri-offer and final-offer arbitration.43

Double Final-Offer Arbitration The variation on FOTP arbitration called double final-offer arbitration (DFOA), asks each disputant to submit two package proposals of roughly equivalent value. The arbitra- tor selects the winning side, based on a comparison of the total cost of each package. After picking the winning side, the losing party then selects from the winner s two packages. For example, suppose that management submits two proposals. Proposal A calls for a 2.5 percent pay raise and 12 paid holidays; Proposal B calls for a 3 percent pay raise and only six paid holidays (we will assume that six paid holidays are equivalent to a .5 percent pay raise, so that Proposals A and B are equivalent in total cost). Further suppose that the union submits two proposals. Proposal Y calls for a 4.5 percent pay raise and 16 paid holidays; Proposal Z calls for a 5 percent pay raise and ten paid holi- days. Proposals Y and Z are similar in total cost. The interest arbitrator must pick one side or the other side. In this example, she chooses management s side based on the cost of its proposals. Next, the losing side, the union in this example, chooses between Pack- age A and Package B, based on whether union leaders prefer a slightly higher wage or more paid holidays. The alleged advantage of this procedure is that it gives the losing

448 PART 2 The Bargaining Process and Outcomes

side some added voice in the final outcome, thereby encouraging greater commitment to fully implement the contract. This proposed procedure remains untested.44

Night Baseball Arbitration Night Baseball Arbitration is sometimes used where there is only one issue in dispute

(e.g., how much compensation to provide a victim of medical malpractice). Briefly, each side submits (1) sealed final offers (usually monetary), and (2) written briefs which dis- cuss the relevant issue(s) but do not explicitly state the parties positions on the issue(s). A hearing is next held with oral arguments and expert witness testimony; again, how- ever, the parties do not specifically reveal their final offers. The arbitrator adjourns and reviews the two sides materials and formulates a nonbinding opinion; the arbitrator does not reveal this private opinion to the parties. Instead, the arbitrator opens the two sealed offers and compares his/her opinion with each side s final offers. The offer that is closest to what the arbitrator had determined to be fair is the offer that is selected. Thus, this procedure is a variation on final-offer arbitration. It remains untested in the context of the labor relations process.45

Strikes and Lockouts: The Use of Economic Pressure to Resolve Interest Disputes

The ability to raise a party s costs of continuing to disagree to current proposed terms of settlement is an important factor which can encourage that party to compromise in order to avoid such costs. In most cases, a credible threat of the costs associated with a work stoppage, whether initiated as a strike by employees or a lockout by an employer, is sufficient to motivate both union and management negotiators to seek a reasonable alter- native. For such a threat to be perceived as credible, the party receiving the threat must believe that the party making the threat has both the ability and willingness to carry out the threat successfully. In commenting on the use of economic pressure tactics during good faith bargaining, the Supreme Court stated:

The policy of Congress is to impose a mutual duty upon the parties to confer in good faith with a desire to reach an agreement, in the belief that such an approach from both sides of the table promotes the over-all design of achieving industrial peace . The presence of economic weapons in reserve and their actual exercise on occasion by the parties, is part and parcel of the system that the Wagner and Taft-Hartley Acts have recognized . In one aspect collective bargaining is a brute contest of economic power somewhat masked by polite manners and voluminous statistics. Initially it may be only fear of the economic consequences of disagreement that turns the parties to facts, rea- son, a sense of responsibility, a responsiveness to government and public opinion, and moral principle; but in time these forces generate their own compulsions, and negoti- ating a contract approaches the ideal of informed persuasion.46

A strike is a temporary work stoppage by a group of employees for the purpose of expressing a grievance or enforcing a demand. Tactics often used to support a strike include picketing activity or a boycott of the primary employer s goods or services. The primary employer in a labor dispute is the employer with whom the striking employees (union) have a dispute and the employer that has the ability to end the dispute by agree- ing to the employees proposed settlement terms. The LMRA (Sections 7 and 13) pro- tects employees right to strike so long as the strike is for a lawful purpose and is carried out using lawful means. Authorizing an illegal strike can have serious

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 449

consequences for a union, as the Transport Union Workers Local 100 discovered when a judge fined the union $2.5 million and ordered the local union president to jail for ten days for calling an illegal strike which shut down New York City s mass transit system for three days during the Christmas holiday shopping season.47

A lockout is the employer s version of the strike. The employer temporarily locks the workers out of the company facility. A lockout is done for at least four reasons. First, a lockout can enforce a bargaining demand. A lockout may produce favorable outcomes if the firm can survive its economic losses from no production better than the workers can survive the loss of pay. Second, if the employer anticipates a strike, an employer may lock workers out as a preemptive move. A lockout may be timed to minimize the employer s potential loss. For example, a firm locks out workers during a slow season in the annual business cycle and avoids a more costly strike during the employer s busy season . It may also prevent some workers from engaging in theft or sabotage. Third, a lockout may be an attempt to ruin the local union. Locking out workers over stalled negotiations may just be a pretext; the employer may actually be trying to discourage workers, hoping that the workers will decertify their union in order to return to work.

Another reason an employer might initiate a lockout is to protect the integrity of a multiemployer bargaining unit. To counter a union s ability to selectively strike only certain competitors who may bargain together as a multiemployer unit, if one unit mem- ber is struck, the other employers agree to lockout their employees. Such a lockout forces the union to extend the scope of the bargaining dispute to a larger number of its mem- bers and causes the union to expend resources at a faster rate to support members affected by the strike or lockout actions.

In the 1990s, less than five percent of all work stoppages were lockouts; today it is about 9 percent. Lockouts tend to be longer than strikes. Lockouts have grown longer in recent years as employers now accept the lockout as a way to pursue their goals.

An example of a lockout occurred in the National Basketball Association (NBA) in 2011. The league complained in negotiations with the National Basketball Players Associa- tion (NBPA) that many small-market teams were losing money (collectively, over $300 mil- lion annually). Team owners wanted the soft salary cap (limiting each team s total payroll costs, but with exceptions) replaced with a hard salary cap (no exceptions). They also wanted a greater share of basketball-related revenue (BRI) the NBPA was receiving 57 percent of the revenue and the league wanted it divided 50 50. Finally, they wanted total salaries lowered by $800 million. During collective bargaining, the NBPA offered to reduce the BRI that they retained to 53 percent, provided that the NBA dropped its hard salary cap proposal. When further negotiations proved fruitless and a July 1 deadline passed, the NBA implemented a lockout; the lockout eventually shortened the season from 82 regular season games to 66 games. The timing of the lockout, in the summer and early fall, put pressure on the players more than the owners; had the players struck, they might have done it near the beginning of postseason play, when the owners would lose more television advertising revenue. The subsequent contract continued the soft salary cap but resulted in BRI sharing that was close to the 50 50 split the league demanded. The owners got wages reduced by $300 million. Thus, the NBA used the lockout to enforce its bargaining demands and it timed the lockout to minimize its potential losses.48 For another example of a sports lockout, see the Labor Relations in Action box, p. 452.

Replacement Workers during Strikes and Lockouts During a lockout, an employer can attempt to continue normal business operations by using nonbargaining unit personnel or hiring temporary replacements for locked-out employees.49 Since the employer initiated the work stoppage, permanent replacement of

450 PART 2 The Bargaining Process and Outcomes

locked-out workers is not permitted. Otherwise, some employers might initiate a lockout as a means of replacing workers who had lawfully exercised their right to join a union and engage in collective bargaining. Some authors have suggested that the ability to per- manently replace employees engaged in a lawful economic strike seriously undermines the effectiveness of the strike threat as a means of encouraging employers to reach a compromise settlement in order to avoid a strike.50 The alternate view would simply maintain that an employer s right to lockout workers is the economic equivalent of employees right to strike and can encourage union members to compromise in order to avoid being locked out.

A locked-out employee always has the right to return to work at any time during the lockout by notifying management of the employee s voluntary acceptance of the employ- er s proposed terms and conditions of employment (termed an unconditional request for reinstatement). Any unreasonable delay in reinstating a locked-out employee follow- ing such an unconditional request for reinstatement would represent an unfair (illegal) labor practice by the employer.

Types of Strikes It is useful to think about the concept of a strike along two dimensions. First, whether the strike is a legal strike or illegal strike; this distinction essentially involves examining the ends (purposes) of the strike action and the means (tactics) used to carry it out. A strike called for a lawful purpose does not become unlawful merely because one or more individuals engage in unlawful misconduct during the strike. Unlawful acts by indivi- duals can be remedied without denying all participants their lawful right to strike. How- ever, any employee who participates in an unlawful strike or engages in unlawful strike activity during an otherwise lawful strike forfeits the rights granted by the LMRA to law- ful strikers (discussed further later in the chapter).

A second dimension used to classify strikes reflects the types of issues that cause the strike. This dimension reflects whether the work stoppage involves an economic dispute or is caused by the commission of an employer s unfair labor practice (e.g., a refusal to bargain in good faith). Whether a work stoppage is classified as an economic strike or an unfair labor practice (ULP) strike has important implications for the rights of both employers and employees participating in the strike. For example, economic strikers can usually either be temporarily or permanently replaced; unfair labor practice strikers can- not be permanently replaced. It is possible that an economic strike (for example, a strike that began over a wage dispute) can become an unfair labor practice strike (such as a strike over management s refusal to bargain) if the employer s unfair labor practice pro- longs the work stoppage by becoming a reason for the strike s continuation.

Most work stoppages are classified as lawful economic strikes involving a dispute over a mandatory bargain subject such as wages, benefits, hours of work, or manage- ment s rights. Sometimes bargaining unit members are asked to support a strike to gain improvements in desired terms or conditions of employment or to avoid (minimize) proposed management reductions in such terms or conditions. Additionally union mem- bers sometimes strike to achieve some institutional goal of their union, such as a union security clause (see Chapter 4).51

Some types of strikes have been given their own special name. For example, the term wildcat strike generally refers to a strike that occurs in violation of an existing no-strike clause in a labor agreement and often without the approval or prior knowledge of union officials. Such a spontaneous employee work stoppage, if in violation of current contract terms, would be illegal and could result in the participating employees being subject to discipline or discharge by their employer.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 451

LABOR RELATIONS IN ACTION 2011 National Football League Contract Negotiations and Lockout

Football is generally regarded as the most popular profes- sional sport in the United States. Thirty-two professional teams and approximately 1,900 professional football players produce a sports entertainment product that gen- erates over $9 billion in revenue annually. The National Football League owners (NFL) bargain as a multiem- ployer group with the National Football League Players Association (NFLPA) which represents professional foot- ball players. The parties labor agreement negotiated in 2006 was scheduled to expire at midnight on March 3, 2011. The parties spent two years preparing for the 2011 contract negotiation by gathering information to support their bargaining proposals and developing a bargaining strategy intended to produce a new labor agreement to address the important interests of each side.

The last work stoppage in the NFL occurred in 1987 when players initiated a strike and owners responded by hiring replacement players for three scheduled lea- gue games. The relative labor peace enjoyed by the NFL since the 1987 strike is often attributed to the steady economic growth of the league and the positive working relationship between former NFL Commis- sioner Paul Tagliabue and former NFLPA President Gene Upshaw. While Upshaw was criticized at times for not being aggressive enough in pressing players economic demands, there is no question that contracts negotiated during the 1987 2010 period contained gains for players, producing an average NFL player sal- ary of $1.8 million in 2009.a The owners are represented in the current negotiations by NFL Commissioner Roger Goodell; Jeff Pash, NFL Vice-President and chief negoti- ator; and outside legal counsel Bob Batterman, who led negotiations for owners during the National Hockey Lea- gue lockout of players, which cancelled the entire 2004 2005 season. Individual owners may sit in on a contract negotiation meeting at various times as interested obser- vers but don t generally take an active role in direct nego- tiations with the union. Owners periodically meet as a group to develop guidelines and a consensus on bargain- ing proposals and tactics to be implemented by the own- ers bargaining representative. Some owners such as Robert Kraft of the New England Patriots, Wellington Mara of the New York Giants, Jerry Jones of the Dallas Cowboys, and Jerry Richardson of the Carolina Panthers appear to be influential forces within the ownership group.

The NFLPA negotiating team is headed by execu- tive director DeMaurice Smith, union attorneys Richard Berthelsen and Jeffrey Kessler, and an 11-member players executive committee. Each of the 32 profes- sional football teams has an elected player

representative (who is also a player). Player representa- tives beyond those officially listed as members of the executive committee may attend one or more bargain- ing sessions as interested observers. Both the owners and the NFLPA established a separate Web site for the purpose of conveying information about the progress of settlement efforts to their respective members and the general public.

In May 2008 owners voted to notify the union of their intent to opt out of the current labor agreement upon its expiration, citing increased cost associated with paying for new stadiums, operating the NFL Network, and seeking to expand interest in NFL football outside the United States by scheduling limited games in England or other possible markets.b To fund these types of items the owners wanted a new formula more beneficial to ownership interest for sharing reveues with the players. Under the expiring labor agreement owners were entitled to the first $1 billion in revenues while splitting remaining revenue, with players receiving 59.5 percent and owners getting 40.5 percent. Owners initially proposed doubling the amount owners receive prior to revenue sharing with the players from $1 to $2 billion annually and reducing the players share of the remaining revenue split to around the 50 percent level. Owners also wanted to expand the current regular season consisting of four preseason games and 16 regular season games to two preseason games and 18 regular season games. This would gener- ate additional stadium and television revenues.

The NFLPA was essentially satisfied with the current revenue sharing plan and believed it was important that players share in the projected increased revenues that would accrue during the term of a new collective bargain- ing agreement.c Media revenues were expected to grow even faster in future years as more football content is broadcast over television, smart phones, computer tablets, and other Internet sources. While not adamantly opposed to an 18 game regular season schedule, players were insis- tent that for health reasons, any such schedule change would have to include a reduction in off-season contact drills, improved health benefits including for conditions that affect players after their playing career have ended, and an expanded number of players on team rosters.

Both parties in principle supported some type of rookie wage scale that would reduce the amount of pay going to unproven rookies and redirect that money to veteran players, health care benefits, and improved pensions for current and retired NFL players. The stakes were high for both parties in these negotiations. The NFL estimated it would lose $120 million in revenue if

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no agreement were reached by the current contract s expiration date and an additional $1 billion if no agree- ment were reached by the scheduled start date of the 2011 regular season. An additional loss in revenue of $400 million per week would occur if regularly scheduled games were not played. Other estimates place the direct economic impact of a regularly scheduled NFL home game at $15 million for the community, with an additional indirect economic impact on stadium workers, parking attendants, restaurants, bars, retail merchandise sales, and so on of four to five times that amount.d

In the months leading up to the current contract s expiration date, face-to-face bargaining meetings between the parties were sporadic. One factor in the lack of negotiating progress was the union s insistence that the owners verify their claims of operating costs rising faster than team revenues by releasing audited financial statements pertaining to each team in the lea- gue. The league provided some average cost and reve- nue projections for the entire league but was unwilling to provide the level of individual team cost accounting that the union asked for. Without the detailed financial information, the union claimed it was impossible for them to accurately value management s economic pro- posals or accept as credible management s cost esti- mates. While the owners are under no legal obligation to provide such detailed cost information, it is clear that without additional detailed cost information the union would be extremely reluctant to just take manage- ment s word as sufficient justification to agree to signif- icant player economic concessions.

In anticipation of a possible work stoppage in 2011, the owners had spent the previous two years renegotiat- ing broadcast rights with various networks. At the NFL owners insistence, those media contracts removed lan- guage contained in prior agreements that penalized NFL owners if regular season games were lost because of a lockout of players. To get networks to agree to remove the lockout prohibition, the NFL agreed to lower revenue in the first two years but ensured that no loss of revenue worth approximately $4 billion would occur in 2011 even if games were cancelled due to an owner-initiated lockout. It is estimated that the owners have an additional $1 billion lockout reserve fund, which could be used to defray some short-term revenue loss should a work stoppage occur.

Union representatives repeatedly said they believe the owners fully intended to initiate a lockout if the union fails to agree to management s proposed terms by the contract expiration date. The union cited the net- work television contracts and the hiring of management

personnel with prior sports lockout experience as evi- dence to support their claim. The union also built a lock- out fund of its own by depositing a portion of regular member dues, which will allow the payment of up to $60,000 per player should a lockout occur.e This amount is a small fraction of the money players would have received if regular salary checks had continued to be earned uninterrupted by a work stoppage.

NFL owners expressed concern that the union appeared to be maneuvering to use a strategy of decerti- fication as the players bargaining representative and then filing an antitrust lawsuit against the owners in an effort to prevent a lockout and force management to return to the bargaining table with more acceptable pro- posals benefitting the union s interests. This is a strategy that the union successfully used in 1992, and they used the threat of such a strategy to win concessions in the 2006 contract negotiations. During the 2010 season the NFLPA obtained authorization from players on each team to decertify itself as the players bargaining agent if an acceptable new contract could not be obtained prior to the scheduled expiration date of the current labor agree- ment. Such decertification would be a necessary legal step in order for individual players to then sue league owners for violating the Sherman Anti-Trust Act. There was also some doubt whether the NFLPA could actually maintain solidarity amongst its rank-and-file members for very long once actual game checks normally paid to the players began to be lost due to a work stoppage.

Two weeks prior to the March 3 scheduled expira- tion date of the current contract, both the NFL owners and the NFLPA agreed to submit their bargaining dis- pute to the Federal Mediation and Conciliation Service in an effort to forge some progress in the negotiations.f

FMCS Director George H. Cohen was selected to lead the mediation effort, having had previous experience in both professional baseball and basketball labor negotia- tions. Although the FMCS cannot force a settlement, mediation can get the parties talking again about possi- ble solutions and help each party clarify its bargaining position and supporting evidence.

The parties participated in mediation efforts over a 16-day period, which included two agreements to extend the expiration date of the current labor agree- ment first by one day and then seven days in order to continue to try and reach a negotiated settlement.g

More time was spent with the mediator meeting with each party separately than was spent in actual face- to-face bargaining between the parties themselves. While some progress on some issues was reported,

(Continued )

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there remained significant differences between the par- ties, particularly regarding the formula for sharing annual revenues produced by the league.

On March 1, 2011, U.S. District Judge David Doty issued a ruling that essentially found that the media con- tracts negotiated by the NFL owners to ensure no loss of broadcast revenue during 2011 had unlawfully harmed the legitimate interests of the players. Since the labor agreement required that players share in the distribution of revenues, in negotiating television net- work broadcast rights for NFL games the owners were required to represent the best interests of both owners and players. According to Doty, The record shows that the NFL undertook contract renegotiations to advance its own interest and harm the interests of the players. The NFL sought to renegotiate broadcast contracts to ensure revenue for itself in the event of a lockout. h A hearing on May 12 was scheduled to address the NFLPA s claim for damages. Because of anticipated damages awarded by the court, it quickly became clear that the owners would not have access to the full $4 billion revenue stream in 2011 that had been anticipated when the league embarked on its broadcast contract renegotiation strategy; this put additional pres- sure on the league to settle the labor dispute.

The parties met for the final time on March 11, fac- ing a midnight contract expiration deadline. The owners presented several new bargaining proposals on key issues but continued to refuse to furnish detailed indi- vidual team cost and revenue data.i Without such infor- mation the union was unwilling to enter into a long-term contract that was slated to last for ten years according to the owner s last proposal. Shortly before 5 P.M. in order to meet a courthouse closing deadline, the NFLPA announced it would no longer represent players for collective bargaining purposes under the LMRA but would become an employee association to which players could continue to belong for their mutual inter- est and benefit. This strategy was known as a dis- claimer decertification strategy, where the union renounced any interest in representing the members for purposes of collective bargaining; the strategy was less permanent and also more legally ambiguous than the NLRB-supervised union decertification election pro- cess.j A federal antitrust lawsuit was immediately filed on behalf of ten players including well known quarter- backs Tom Brady, Drew Brees, and Peyton Manning alleging owners had participated in an illegal conspiracy to promote anticompetitive practices. As a remedy, the suit requested an immediate labor injunction to halt any

lockout initiated by owners and triple monetary damages for the actual losses suffered by the players as a result of the owners illegal activity.

At midnight on March 11 the owners initiated a lock- out of NFL players, creating the first work stoppage in pro- fessional football since 1987. A hearing on the players request for a temporary injunction was held and on April 25 U.S. District Court Judge Susan Richard Nelson issued a ruling granting the union s request to end the lockout.k

Judge Nelson agreed that the NFLPA s decision to decer- tify itself as a bargaining agent for players was lawful and the NFL s imposition of a lockout was causing irreparable harm to players in excess of any harm that owners might experience should an injunction to halt the lockout be issued. NFL owners immediately filed an appeal of Judge Nelson s ruling and on April 29 obtained a temporary labor injunction from a three-judge panel of the 8th U.S. Circuit Court of Appeals, suspending the implementation of Judge Nelson s order to halt the lockout.l A majority of the full panel of judges for the 8th Circuit Court of Appeals subsequently upheld the decision of the three-judge panel allowing the owner s lockout to continue. NFL owners continued to claim that a solution could only be found if the two sides returned to the bargaining table and resumed negotiations. Of course at this point since the NFLPA no longer represented players for purposes of col- lective bargaining, such negotiations would have to occur between the owners and attorneys representing players interests. Owners also filed an unfair labor practice claim with the National Labor Relations Board alleging that the NFLPA has engaged in bad faith bargaining and labeling the union s decertification as a sham intended only as a bargaining tactic to force owners to make contract conces- sions. Although the league s unfair labor practice charge was ultimately dropped, it increased pressure on the NFLPA to return to the bargaining table.

After months of stalemate, pressure for a settlement finally began to build on both parties as the scheduled date for the first preseason and regular season games approached. To dispel any threat of disunity by players if game checks were lost, the union revealed to manage- ment on July 14 that the union had previously obtained an insurance policy that would pay each player up to $200,000 if no games were played in 2011.m After many long hours of negotiation, the NFL owners approved a tentative bargaining settlement on July 21, 2011. Players had to first vote to approve reauthorizing the NFLPA to serve as their bargaining agent followed by several more days of negotiation and clarification of the agree- ment terms previously approved by the owners.

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For example, in 2014 a New York United Parcel Service (UPS) driver was fired for clocking in early. The driver claimed that he had his supervisor s permission to start

early regularly so that he could deliver packages to a shopping mall and park in one of the few delivery loading bays. His firing prompted 250 other drivers to walk off the job. UPS immediately fired twenty of them for violating the no-strike clause of the UPS- Teamster contract; the firm planned to fire the rest, but complaints from customers and union supporters led UPS to reinstate everyone and reduce the penalty to a ten- day suspension.52

Some employees refuse to work when confronted with perceived extremely dangerous and unsafe working conditions. Are such refusals considered wildcat strikes? No, such refu- sals do not fit the definition of a wildcat strike because Section 502 of the LMRA, specifically authorizes such concerted activity, which cannot be barred by the language of a contractual no-strike clause. Also, as interpreted by federal court decisions, the Occupational Health and Safety Act, the Railroad Safety Act, the Commercial Motor Vehicles Act, and the Mine Safety and Health Act protect individual refusal-to-work decisions when employees believe that working conditions present an imminent risk of serious bodily injury or death.53

Players voted to approve the new ten-year contract settlement on July 25, 2011 bringing an end to the own- ers lockout of players.n The 300-page collective bargain- ing agreement contained gains for both parties. Owners secured a higher share (53 percent) of all revenues and a rookie salary scale that reduced the cost of signing first year players. Players received a guarantee that teams would spend nearly all of the salary cap funds permitted and improvements in off-season and during season practice rules governing the number and inten- sity of scheduled practices. Current and retired players received enhanced pension and health insurance bene- fits. The number of preseason and regular season games remained the same, at sixteen games.. NFLPA Executive Director DeMaurice Smith summed up the bargaining settlement by stating, We didn t get every- thing that either side wanted but we did arrive at a deal we think is fair and balanced. o The parties also agreed to drop all pending legal cases associated with the lockout dispute. This labor dispute provides an excellent illustration of several concepts discussed in Chapters 9 and 6 regarding bargaining strategy and tactics.

a Jarrett Bell, Could Super Bowl Be Last NFL Action before Lockout Emerges? USA Today, February 4, 2011, pp. 1 5 at http://www.usatoday.com/. bDon Banks, Behind the Rhetoric: What a Fair Deal in NFL Labor Debate Will Look Like, SI.Com, February 17, 2011, pp. 1 6 at http://sportsillustrated.cnn.com/; Maury Brown, Numbers Show NFL s Economic Realities for Lockout Unwarranted, Forbes, January 10, 2011, pp. 1 10 at http://blogs.forbes.com/sportsmoney/. cNFLPA, What Is This Lockout About? Fact Sheet, March 31, 2011, pp. 1 2 at http:// www.nfllockout.com/; Judy Battista, What s at Stake in the NFL Labor Talks? New York Times, January 30, 2011, pp. 1 4 at http://www.nytimes.com/.

dRick Horrow and Karia Swatek, NFL Labor Armageddon: A Different Kind of March Madness, Business Week, March 4, 2011, p. 2. e NFL Players to Begin Drawing from a Lockout Fund, Sports Illustrated, March 29, 2011, p. 1 at http://sportsillustrated.cnn.com/. f NFL, Players Union Agree to Mediation in Labor Negotiations, Sports Illustrated, February 17, 2011, pp. 1 3 at http://sportsillustrated.cnn.com/; Arin Karimian, NFL and Players Union Beginning Mediation, USA Today, February 18, 2011, pp. 1 2 at http://www.usatoday.com/. gGary Mihoces, NFL, Players Union Agree to 7-day CBA Extension; Will Resume Talks, USA Today, March 4, 2011, pp. 1 2. hNate Davis, Federal Ruling Could Freeze NFL s TV Money Amid CBA Talks, USA Today, March 1, 2011, pp. 1 2 at http://www.usatoday.com/. See also Jim Trotter, Federal Judge Sides with Players Union in TV Revenue Dispute, Sports Illustrated,

March 2, 2011, pp. 1 2 at http://sportsillustrate.cnn.com/; NFL Players Ask for Damages in TV Revenue Case, Sports Illustrated, April 1, 2011, pp. 1 2 at http:// sportsillustrated.cnn.com/. i Lead Negotiator Pash Says NFL Recently Offered 10-year CBA Deal, Sports Illus- trated, March 14, 2011, pp. 1 2 at http://sportsillustrate.cnn.com/; NFLPA: Owners Last Contract Proposal Was The Old Switcheroo , Sports Illustrated, March 18, 2011, pp. 1 2 at http://sportsillustrated.cnn.com/. j Lockout, Decertification Put League, Players in Limbo, Sports Illustrated, March 12, 2011, pp. 1 3 at http://sportsillustrated.cnn.com/; Ross Siler, The Lesson of the 2011 NFL and NBA Lockouts: Why Courts Should Not Immediately Recognize Union Disclai- mers of Representation, Washington Law Review, 88, 2013, pp. 281-319; Nate Davis, With Union Decertification and NFL Lockout Official, Now What? USA Today, March

12, 2011, p. 1 at http://www.usatoday.com/; Gary Mihoces, Players Claim Irreparable Harm Now from NFL in Court Filing, USA Today, March 28, 2011, pp. 1 2 at http:// www.usatoday.com/. kSean Leahy, Judge Sides with Players, Tells NFL to End Lockout, USA Today, April 25, 2011, pp. 1 3 at http://www.usatoday.com/. lSean Leahy, NFL Reimposes Lockout on Players after Favorable Court Ruling, USA Today, April 29, 2011, pp. 1 3 at http://www.usatoday.com/. mJim Trotter, Players Secret Lockout Insurance Could Have Sparked Talks, SI.com, July 15, 2011, pp. 1 2 at http://sportsillustrated.cnn.com (accessed July 15, 2011). n Goodell, Smith Sign New CBA, Express Relief, SI.com, August 5, 2011, pp. 1 3 at http://sportsillustrated.cnn.com (accessed August 5, 2011). o Players Vote to Approve New Labor Deal, Put End to Extended Lockout, SI.com, July 25, 2011, p. 2 at http://sportsillustrated.cnn.com (accessed July 25, 2011).

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A sympathy strike is a work stoppage by employees who have no dispute with their own employer but are striking to support another bargaining unit of their employer or a union representing employees of another employer. For example, Republic Services (a sanitation company) negotiated a collective bargaining agreement with a Teamster local in Mobile, Alabama. Union leaders alleged that the owners then unilaterally decided not to implement two insurance-related clauses, so the union declared an unfair labor prac- tice strike. Workers from Alabama flew to Republic Services facilities in the distant states of Washington, New York, and Ohio and set up picket lines. Local Teamster officials at those facilities called sympathy strikes. They were aided by the fact that they had negoti- ated conscience clauses in their contracts allowing workers not to cross another s picket line without discipline or loss (beyond going without pay). The sympathy strikes eventually prompted the company to settle the dispute.54

Standard no-strike/no-lockout clause language is generally interpreted to apply only to disputes between the parties to that contract and subjects which could be resolved through submission to the contract s final and binding grievance-arbitration procedure. The LMRA has also generally been interpreted to limit job actions beyond a specific bar- gaining unit or employer. However, an employer may also seek to negotiate the addition of specific language to the parties standard no-strike clause which would also prohibit employees from engaging in a sympathy strike during the term of the labor agreement.

A jurisdictional strike involves a dispute between two or more unions over the assignment of work (see discussion in Chapter 8). It is an unfair labor practice under the LMRA for a union to strike or threaten such action to force an employer to assign work to that union s members rather than another work group.

Reasons for Strikes Work stoppages in the United States since 1982 have been at or near historic low levels in terms of numbers of strikes, employees involved, and days idled (Exhibit 9.2). The eco- nomic recession of 2008 2010 and its resultant higher unemployment rate is clearly one factor which served to discourage employees from risking possible job loss through the

Exhibit 9.2 Work Stoppages Involving 1,000 or More Employees in the United States: 1947 2014

Employees Involved Days Idled

Years Number of Strikes per Year

Number (Thousands)

Number of Days

Percentage of Working Time

1947 1950 300.3 1,824.8 31,414 0.29

1951 1960 331.5 1,508.2 24,902 0.19

1961 1970 298.8 1,390.9 22,833 0.14

1971 1980 269.4 1,320.5 22,818 0.11

1981 1990 64.2 427.1 9,673 0.04

1991 2000 34.3 277.8 6,026 0.03

2001 2010 17.3 93.4 1,732 0.0075

2011 19 113 1,020 0.005

2012 19 148 1,131 0.005

2013 15 55 290 0.005

2014 11 34 200 0.005

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, Major Work Stoppages, News Release, February 11, 2015, Table 1, available at: http://www.bls.gov/news.release/wkstp.toc.htm

456 PART 2 The Bargaining Process and Outcomes

exercise of their right to strike. The mean length of major work stoppages occurring in 2014 was 11 days (about the same as 2010) and about half of the 20-day average in 2005.55

Some researchers have attributed the decline in the frequency of union strikes to their declining effectiveness as a means of placing economic pressure on an employer. An excess supply of labor in relation to the demand for labor in many occupations and geographic areas in recent years have made strike replacements both easier and less costly to obtain, dampening many union members desire to engage in a work stoppage. The ability of many employers to move production to other cities or even countries (e.g., automakers) as well as systems of subcontracting work to a variety of firms (e.g., apparel) also weaken the ability of unions to pressure employers by threatening to strike.56

Work stoppages are not caused by one factor alone, although the most common issue over which strikes occur is wages, followed by plant administrative issues such as safety, promotion policies, and job assignments. In recent years several work stoppages have involved the issue of health care benefits as union members have sought to resist employer health care bargaining proposals aimed at reducing the employer s benefit cost for this item by shifting additional benefit cost to the employee or reducing the scope of health care coverage available (see Chapter 7). The decision to strike depends on the total environment in which bargaining takes place. Interrelated factors that can influence the decision to strike include the economic positions of the union and com- pany, characteristics of the production or service delivery process, the firm s market structure, business location, and occupational and demographic characteristics of the workforce.57

Researchers have shown that before 1980, strikes and economic activity were highly correlated, with strike activity rising during periods of economic growth and declining during economic recessions. However, after about 1980, this pattern did not occur; as shown in Exhibit 9.2, strike activity has declined to very low levels.58 Exhibit 9.3 presents several conclusions researchers have reached concerning the causes of work stoppages.

Although strikes have traditionally been viewed as economic or legal conflicts, the psychological and sociological aspects are important. Strikes can be categorized as a

Exhibit 9.3 Conclusions from Research on Work Stoppages Regarding the Likelihood of a Strike

Strikes are more likely when:

The duration of the preceding contract was longer.

Negotiations serve as a pattern setter for other firms/union pairs.

The bargaining units are larger.

There is a large variance (sharp drops and increases in earnings) in the firm s financial performance.

Firms and industries have risk of injury or fatalities.

Firms can inventory or stockpile goods.

Strikes are less likely when:

Fewer issues are being negotiated (such as in a contract reopener over wages).

Firms and industries employ a large proportion of women.

Firms and industries pay a higher wage rate than other firms or industries.

SOURCE: Bruce E. Kaufman, Research on Strike Models and Outcomes in the 1980s. Accomplishments and Shortcomings, in Research Frontiers in Industrial and Human Resources, David Lewin, Olivia S. Mitchell, and Peter D. Sherer (eds.) (Madison, WI: Industrial Relations Research Association, 1992), pp. 110 111.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 457

group process for organizational or social change. Protest strikes include actions by the membership, such as walking off their jobs because of a perceived injustice, such as non- union fast food workers protesting a lack of employer-provided paid sick-leave days. One form of the protest strike is the general strike where a large percentage of workers from a variety of industries strike simultaneously. Such strikes, while almost nonexistent in the United States, are fairly common in Europe. They are often motivated less by economic concerns than political concerns, such as workers (or their unions) feeling excluded from policymaking, and disagreements over what policies should implemented (e.g., leftist unions protesting conservative governments).59

Partial strikes occur in many forms, such as shutting down one department instead of an entire facility, refusing to do certain types of work, intermittent strikes, and refus- ing to work overtime. Perhaps the most common form of partial strike is the work slow- down where employees work to rule, following every detail of prescribed work processes, which often slows the normal pace of workflow. These protests may be in reaction to a unilateral change by management such as introducing production quotas or changing working conditions (such as lowering thermostat settings in winter months to save heating costs). Partial strikes may put economic pressure on the employer. For example, New Jersey outpatient clinic physicians engaged in a work slowdown, resulting in patients visiting more expensive emergency room services. Partial strikes often occur when workers want to protest without risking job loss by being permanently replaced. Ironically, except perhaps for the work-to-rule tactic, partial strikes are risky job actions, as they are not usually recognized by the courts as protected activities under the LMRA.60

As a group process, strikes require an important issue around which to mobilize a union s membership and adequate strike resources. Effective union leadership is critical to the success of any strike. Union leaders must instill unity among the membership, control courses of action, respond to the feelings of the group, and maintain communi- cation with management. An individual union member s participation in a strike is often determined by perceived costs and benefits. If the perceived benefits are small and the costs are high, willingness to participate will be low. However, if the benefits are per- ceived to be high and the costs are low, willingness to participate will be high.61 Employ- ees who believe that their pay is inequitable are often not willing to strike for a small wage increase. On the other hand, employees may be willing to strike to support the union for a large increase. The degree of commitment (loyalty) an employee has toward his or her union also has an important effect on an employee s willingness to strike, even more so than the employee s perceived commitment to his or her employer. To increase strike support, a union must help employees reduce the potential hardships of a strike (e.g., by providing strike benefits).62

Strikes can have traumatic effects on the parties attitudes; they can temper the militants with realism and radicalize the conservatives. Strikes may cause some members to question the credibility of their leaders or management. Most strikes end in some type of negotiated settlement. However, once a strike is over, much rebuilding must occur to restore good labor management relations and co-worker relations between strikers and nonstrikers.63

Strategic Purposes of a Strike Although the main purpose of a strike is to secure a contract, it may also serve other purposes. For example, a strike may be part of an overall union strategy to help resolve internal problems. A strike may have a cathartic effect on the union members, removing accumulated tensions and releasing frustrations resulting from monotonous work. In fact, strikes under these conditions might improve productivity when the strikers return

458 PART 2 The Bargaining Process and Outcomes

to work. A strike might also help to unify members, serving to rally diverse prestrike membership factions to work toward a common goal of winning the strike.

In some cases, a union may call a strike to show management it can unify the mem- bership over a collective bargaining issue. A short strike may send a signal to manage- ment regarding the importance of a specific issue to the employees. Over time, frequent strike threats may lose their effectiveness. If such threats are never carried out, manage- ment may perceive that the union leader s strike threat lacks credibility. Sometimes union members may view participation in a strike as an investment in the credibility of future strike threats intended to reduce the need for future strikes to occur.

Union leaders may also believe that their members might be more willing to accept a slightly modified company offer if employees have experienced the loss of wages during a brief strike. In this sense, strikes are used to roll the steam out of employees and force them to adopt a more realistic perspective on the possibility of attaining stated bar- gaining objectives.64

Unions also have to consider the effects of a strike on their institutional security. During a strike, some union members may accept jobs elsewhere and decide not to return after the strike. Sometimes employers hire permanent replacements for strikers, and the negotiations may never result in a collective bargaining agreement. Rival unions are sometimes waiting on the sideline for the legally recognized union to falter, hoping to get enough employees to shift their support to a rival union to win a union decertifica- tion election. With these considerations, a union must be aware that a decision to strike may be a risk to its own institutional security.

A strike may serve a strategic purpose for management as well. Although manage- ment cannot call a strike, it can take actions that it knows are likely to provoke a strike. For example, management can demand that the union collect dues rather than have management deduct them from employee paychecks (the union dues checkoff procedure is discussed in Chapter 4). Unions view this demand as a threat to their security and will often strike in response to it. Management s demand to subcontract bargaining unit work at will or to substantially change the wage system to the perceived detriment of covered employees will almost certainly lead to a strike. Management insistence on substantial employee concessions even though the company is currently profitable would likely be interpreted by union members as an attempt to provoke a work stoppage. Under what conditions would managers deliberately provoke a strike? Management may attempt to cause a strike when a strike is to its advantage, such as when inventories are high and customer demand is low. In some instances, managers can transfer work to other facili- ties or even contract out work to nonunion firms or facilities to meet demand and maintain profitability. If nonunion employees can produce at a sufficient level to main- tain acceptable production, if the union is weak, or if management knows that many employees will not support a strike, management may force a bargaining impasse as a strategy to secure more favorable contract terms.

Strike Experiences and Preparation Strikes can range from peaceful conflicts of short duration to protracted conflicts involv- ing unlawful acts on both sides lasting months or even years. Strikes have no uniform sequence of events, although strikers enthusiasm is generally highest during the early days of a strike. Indeed, the first few days on a picket line often draw a large number of union members in an almost carnival-like atmosphere. After several weeks, it may be more difficult for a union to recruit members to walk the picket line. A party s ability to accurately predict the duration of a work stoppage can provide an important strategic advantage during a work stoppage.65

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 459

Frustrations, antagonisms, and anxieties usually increase as the strike continues, with increased membership pressure being placed on union leaders to resolve the impasse. The relative peacefulness of a strike is influenced by the attitudes of community citizens, particularly merchants and creditors, toward the dispute. A striker s spouse is perhaps the most influential individual in shaping a striker s behavior and attitudes. It is much easier for a striker to sustain a long strike if her or his spouse lends moral and financial support to the cause. On the other hand, tensions created by the strike can cre- ate permanent divisions among family members, friends, and other groups in the com- munity as the strike endures and as individuals are asked to demonstrate their support.66

Tensions can be especially heightened if the company continues to operate the business with either supervisory employees or striker replacements.

There have been numerous research studies and much theorizing about the escalation of conflict among individuals, groups, organizations, and nations. To summarize this literature is beyond the scope of this book. However, a few key points are worth noting. First, while it is easy to describe an escalating dispute in terms of an aggressor and a defender, each side will probably see itself as taking defensive actions and view the other side as the aggressor. Sec- ond, as conflicts escalate, they often bring psychological changes, such as increasing us vs. them distrust of the other side, discounting the value of any concessions that the other side makes, and moving from a desire to do well to a desire to do better than (or even harm) the other party. Third, structural changes sometimes occur: militant subgroups within each group often acquire more power, each side seeks powerful allies, each side commits more resources to attaining its goals (sometimes the expenditures outweigh the economic benefits of goal attainment), and each side may prod neutral bystanders (e.g., local businesses) to take their side in the dispute (e.g., posting pro-union signs in shop windows). Finally, conflicts often go through very complex patterns of interaction, organized around certain ideas, goals, or behaviors. Conflicts tend to de-escalate when the costs to each side mount and nei- ther can achieve victory (a hurting stalemate ), or new leaders emerge who send unequivocal signals that they want a fair resolution; a neutral mediator s assistance can also prove valu- able.67 It takes a great deal of skill on the part of both union and management leadership to prevent a conflict from escalating during a strike.

Preparation Parties must prepare for a possible strike before the contract expiration date, whether a strike is called or a settlement is reached. Exhibit 9.4 presents some of the potential costs faced by employers, unions, or individual employees during a work stoppage, as well as possible actions to minimize or limit the adverse effects of such costs.

Union leaders must be certain of the extent to which members will actively partici- pate during a strike and present a unified front to the employer. Usually a strike vote will occur either days or weeks before the contract deadline to indicate the strength of the membership s willingness to strike and bolster the credibility of any union strike threat. Strike votes are typically supported by the overwhelming majority of union members voting, although management negotiators may place less credibility on the validity of such votes the earlier the vote is taken in advance of the contract expiration date.

As the strike date approaches, union leaders must schedule pickets, ensure appropri- ate support for those on the line (e.g., food, shelter, first-aid supplies), and properly pre- pare the pickets for various situations, such as what to do when strike replacements cross the picket line. The union also has to determine qualified recipients of strike benefits, as well as any available public aid. Communication channels (e.g., telephone hotlines, Web sites, media news releases) must be created and maintained to keep union members and the general public informed about the progress of negotiations. For example, Local 400,

460 PART 2 The Bargaining Process and Outcomes

Exhibit 9.4 Some Potential Strike or Lockout Costs and Mitigating Actions

Some Potential Employer Strike or Lockout Costs

Lost sales revenue

Loss of customers/market share (temporary or permanent)

Continued fixed operating costs (e.g., utilities, taxes, rent, maintenance, debt service)

Nonbargaining unit employee payroll costs

Recruitment, selection, and training costs for temporary or permanent replace- ment workers

Shut-down and start-up costs

Negative publicity

Legal fees

Damage to bargaining relationship or co-worker relations (temporary or permanent)

Increased stress level on managers, employees, and their families

Potential Employer Actions to Minimize or Limit such Costs

Build inventory in advance of an anticipated strike

Notify customers and suppliers in advance of strike potential and help arrange alternative sources to meet customer needs

Engage in a publicity campaign to inform the public (customers, civic leaders, and employees) about company efforts to resolve the labor dispute

Shift the struck work to other primary employer-owned plants or outsource such work to other secondary employers

Continue business operations using some combination of non-B.U. employees, B.U. employees willing to cross the union s picket line, and temporary or per- manent striker replacements

Existence of poor product market demand serves to decrease risk of market share loss and sales revenue

Purchase strike insurance or enter mutual aid pact with other employers

Some Potential Union or Individual Employee Strike or Lockout Costs

Loss of union members due to voluntary union membership resignation or per- manent striker replacement

Loss of wage income or employee benefits coverage

Loss of union dues revenue

Cost of strike benefits provided, if any

Costs of operating a strike (e.g., printing costs, legal fees, picket-line supplies such as coffee, food, or medical aid)

Political cost to union s leadership if strike isn t won or won big enough

Damage to co-worker (peer) relationships between strike supporters and nonsupporters

Continuing personal debt payments (e.g., auto, home, credit card, insurance, and telephone)

Increased level of stress on work stoppage participants, their families, and communities

(Continued)

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 461

United Food and Commercial Workers in preparation for a potential strike against Safe- way Inc. and Giant Food LLC in the Washington, D.C., area reported selecting strike captains, handing out instructions for setting up picket lines, distributing the names of bail bondsmen, and establishing a local strike fund. 68 In coordination with other local unions, the AFL-CIO Metropolitan Washington Council, and community groups, Local 400 distributed leaflets inside and outside of Giant and Safeway stores as well as appealed for support from local political leaders in an effort to achieve a fair contract settlement. During a labor dispute it is typical for both union and management negotiators to use the media (both traditional media and social media) to shape public opinion about the merits of each party s bargaining position or reasons for a work stoppage.69

Management often spends much time in its strike preparations, particularly if it is essential that the employer continue to operate during a strike, as public utilities or health care facilities must do. Management in manufacturing facilities must determine the feasibility of building inventories in advance of a possible strike or using a strategy of hiring striker replacements if the strike occurs. Continuing to operate during a strike may be a viable management alternative where the following conditions are met70:

There is a high risk of loss of market share if the firm ceases operation. An adequate supply of labor is available to operate the firm at reasonable costs. The union s anticipated response to management s decision to continue to operate will be limited or manageable.

The use of striker replacements (particularly permanent replacements) during an economic strike escalates the tensions between the parties and often prolongs the length

Exhibit 9.4 (Continued) Potential Union or Individual Employee Actions to Minimize or

Limit Costs

Ensure adequate membership support prior to initiating any strike action

Solicit morale and financial support from outside organizations (e.g., other unions, community groups, general public)

Increase individual savings rate in anticipation of income loss during work stoppage

Work with creditors to delay or reduce monthly debt payments

Ensure adequate funding of union strike benefit fund

Engage in publicity to demonstrate the merits of union members bargaining positions at issue in the work stoppage and the effectiveness of strike efforts to impose added costs on the employer s ability to operate

Recognize the potential effect of product market conditions (e.g., high product demand increases an employer s cost of lost sales, a high level of market com- petition increases an employer s risk of market share loss in the event opera- tions are curtailed)

Recognize the potential effect of labor market conditions (e.g., a relatively low supply of qualified labor reduces the risk of striker replacement)

Establish support groups for strikers and their families to help maintain striker solidarity

Keep strikers informed about the progress of efforts to resolve the labor dispute

Encourage a consumer boycott of the primary employer s goods or services

462 PART 2 The Bargaining Process and Outcomes

of a strike s duration. For this reason, most employers when confronted with a potential work stoppage do not hire permanent striker replacements as part of a strategy to con- tinue operations during a work stoppage.

Many organizations have an emergency strike manual that provides specific and detailed plans in the event of a strike. The manual typically has two major components: (1) specific job assignments for nonstriking employees, professional employees, and managers and (2) checklists of appropriate strike activities, such as notifying customers and suppliers, contacting law enforcement officials, and providing food and housing for those staying on the job. In cases where the work is highly automated, such as in the telephone industry, employees strikes may be less effective because companies find it easier to continue to operate, at least during short strikes. Management might also seek professional assistance from employer colleagues, trade associations, or members of the Society for Human Resource Management.71

Although union and management officials carefully consider the advantages and dis- advantages of work stoppage strategies and tactics, they are not entirely free to implement these activities as they please. While condoned as a viable part of the collective bargaining process, the use of economic pressure tactics are extensively regulated by federal, state, and local laws.72 Knowledge of labor law principles is essential to developing and implementing effective strike strategies and tactics. These regulations will now be considered.

Reinstatement Rights of Unfair Labor Practice and Economic Strikers Employees engaged in an unfair labor practice strike cannot be permanently replaced but may be temporarily replaced by an employer for the purpose of continuing normal busi- ness operations. An unfair labor practice strike can occur at any time to protest the com- mission of an employer unfair labor practice and cannot be barred by language contained in a negotiated no-strike agreement. Participating in an unfair labor practice strike entails less risk for an employee in the sense that a striker knows he or she will eventually return to work when the dispute ends. Since the decision to participate in an unfair labor practice strike is voluntary, ULP strikers are not entitled to back pay for wages lost during their withdrawal of labor. An exception to this rule would occur if an employee s loss in pay was the direct result of an employer s unfair labor practice. For example, an illegally discharged employee would be entitled to back pay as part of a ULP remedy, but employees who subsequently engaged in a ULP strike to protest that illegal discharge would not be entitled to a back-pay remedy.

A 1938 U.S. Supreme Court decision, Mackay Radio & Telegraph, established that economic strikers may be either temporarily or permanently replaced by an employer for the purpose of continuing normal business operations.73 The threat of hiring perma- nent striker replacements can significantly increase employees perceived risk of engaging in or continuing a work stoppage. The United States is one of the few industrialized countries in the world which permits the permanent replacement of lawful economic strikers during a labor dispute.74

Employers hire replacement workers in approximately 14 percent of strikes.75 Tempo- rary replacements are more likely to be hired than permanent replacements during a strike, which may help to reduce some of the risks associated with hiring striker replacements. As a way of making the threat of replacement more concrete in the minds of striking employ- ees, an employer may publicly announce that employment interviews for potential strike replacements will be conducted. Of course announcing the intention to conduct employ- ment interviews or collecting job applications in advance of a threatened strike action is not the same as actually hiring a striker replacement. The use of strike replacements

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 463

typically lengthens the duration of a strike and increases the chance that violent acts will occur, compared to strikes not involving the hiring of replacement workers.

If not permanently replaced, an economic striker has a right to be reinstated to his or her job at any time during a labor dispute after making an unconditional request for reinstatement to the employer. An economic striker s job is not considered to be filled on a permanent basis unless the employer indicates such an intent when hiring a replace- ment and the replacement is actually on the job performing a striker s job duties (as opposed to being engaged in training in order to qualify to perform the normal job duties of a striking employee). If temporary replacement workers are hired during a strike, lawful strikers will go back to work after a settlement is reached, and the tempo- rary replacements will be dismissed or reassigned if a job is available.

An employer must be careful when hiring permanent striker replacements to ensure that no promise of continued or permanent employment is extended. Employees hired during a strike who receive a promise of permanent employment may sue an employer for breach of contract if they are subsequently laid off due to a negotiated strike settle- ment or NLRB-ordered unfair labor practice remedy requiring striking employees be reinstated.76 Offering regular employment or full-time employment would not generally be considered equivalent to an offer of permanent employment. Other practical consid- erations may also discourage an employer from exercising the legal right to replace stri- kers. It is usually not easy to replace a large number of striking employees quickly, especially if work operations are complicated or employees require more than a short period of training to demonstrate the required level of job performance.

Efforts to enact a legislative ban on the use of permanent strike replacements, such as proposed in the Workplace Fairness Act in the early 1990s, have not been successful. Employers have argued that a legislative ban against hiring permanent striker replacements would drastically shift the balance of relative bargaining power to unions and would result in higher labor costs. However, in a Canadian study that examined a location where the hiring of permanent striker replacements is banned by provincial law, no evidence was reported supporting the contention that striker replacement legislation alters the existing balance of power between management and labor.77 Legislation to ban or restrict an employer s right to permanently replace lawful strikers is not likely to be enacted by the current Congress given the significant political influence of business interests opposed to the idea.

An employer should not tell strikers that if they do not return to work they will be fired. Even in cases where an economic striker is permanently replaced, the striker

retains employee status and has a right to be placed on a preferential recall list. The employer must fill any permanent vacancy occurring in a bargaining unit position there- after by first offering the job vacancy to a qualified individual on the preferential recall list before offering the job to an a job applicant not on the preferential recall list (Laid- law-Fleetwood doctrine).78 An employer and a union may negotiate the particulars of this list, including a reasonable time limit following a strike, during which permanently replaced economic strikers would be entitled to exercise their preferential recall rights.79

Management would generally favor including such a time limit in the new contract to reduce the administrative burden of notifying qualified individuals on the preferential recall list each time a permanent job vacancy occurs. Factors which might affect what constitutes a reasonable time period could include:

Historical data on normal employee attrition rates (e.g., voluntary turnover, dis- charge for cause, retirement, permanent disability). Future probability that new job openings may occur over some extended time period (e.g., new product development, plant expansion, industry economic forecast).

464 PART 2 The Bargaining Process and Outcomes

The percentage of total employees eligible for recall who were actually recalled dur- ing the negotiated time limit.

An employer is not permitted to grant superseniority (artificially high seniority levels, discussed in Chapter 8) or retroactive seniority rights to permanent strike replace- ments in order to protect their recall rights in any future layoff situation where the labor contract calls for reinstatement to be accomplished according to seniority.80 A grant of superseniority essentially exempts that individual from the normal application of senior- ity rights in making employment decisions. Since former economic strikers on a prefer- ential recall list were hired before the permanent strike replacements, former strikers on a preferential recall list almost always have more actual seniority than replacement work- ers hired during a strike.

Unlawful Strike Misconduct Employees who engage in an unlawful strike or serious strike misconduct during an otherwise lawful strike forfeit their normal rights to reinstatement. In addition to forfei- ture of job reinstatement rights, some strike misconduct may also represent a violation of criminal or civil statutes, subjecting an employee to legal penalties such as a monetary fine or imprisonment. Serious strike misconduct would include:

Acts of violence directed at managers, co-workers, customers, suppliers, or the gen- eral public. Intentional destruction of private property (e.g., acts of vandalism or sabotage). Verbal threats intended to intimidate, coerce, or prevent an individual from exercising his or her lawful rights.

All strike misconduct is examined in light of the surrounding circumstances, and courts recognize the heightened emotions which exist and may affect the conduct of par- ties involved in a work stoppage.81 Picketers use of derogatory but not threatening lan- guage directed at individuals crossing a lawfully established picket line, although unpleasant or embarrassing for the target of such verbal abuse to endure, will not gener- ally be classified as serious strike misconduct.82

Union members typically try to deter other union members from crossing an autho- rized union picket line by adopting a rule permitting the union to impose a reasonable monetary fine on any union member who engages in such conduct.83 A reasonable fine might include an amount equivalent to what a member might earn by crossing the picket line and performing work for the employer. If large numbers of union members cross the picket line and continue to work, it undermines the effectiveness of the union strike effort which has the support of the majority of union members.

Individual union members have a legal right to resign their union membership at any time, including during a work stoppage authorized by their union.84 To avoid the imposition of a monetary fine for crossing an authorized union picket line, a union member would simply need to resign from his or her union membership prior to crossing the picket line. Resigning one s union membership would not affect an employee s legal status as an employee of the company or as a member of the bargain- ing unit represented by the union from which the individual resigned. Of course such action by an individual could adversely affect relations between that individual and co-workers who are supporting the strike. Should a former union member who resigned during a strike seek future reinstatement as a union member, there is no guarantee that such a request would be approved by current union members.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 465

Employee Picketing Rights Employees have a right to publicize a labor dispute involving a primary employer in a peaceful manner to encourage public support for the striking employees (union s) posi- tion.85 Such publicity often takes the form of picket activity, which is primarily regulated by state and local laws. Efforts by state and local authorities to restrict employee picket activity requires a careful balancing of employee First Amendment free speech rights, employer property rights, and the government s interests in maintaining labor peace, the free flow of commerce, and protection of the public s interests.

Some reasonable restrictions on the right to picket during a labor dispute could include:86

Banning picket activity conducted for an unlawful purpose or involving violence. Reasonable limits on the times when picketing may occur, noise level, number of picketers present at one time, or mandatory spacing between picketers to ensure reasonable entry or exit from the employer s property. Requiring that the content of picket signs be truthful and clearly identify the employer with whom the picketers have a labor dispute.

An employer generally has a right to establish reasonable rules to govern the exer- cise of free speech on private property. Union picket activity on the employer s private property may generally be banned if (1) the ban is applied in a consistent, nondiscrimi- natory manner and (2) the union has other reasonable means of communicating its mes- sage to the intended audience.87

Secondary Strikes, Boycotts, and Picketing Up to this point the discussion has focused on labor disputes between a primary employer and his or her employees. A secondary employer (i.e., one with no direct authority to resolve the labor dispute) may become involved in a labor dispute either voluntarily or involuntarily. A general rule of thumb for union leaders is that it is legal to picket a primary employer as part of a legal economic or ULP strike. It is an unfair labor practice to picket a completely neutral secondary employer. For example, suppose striking meatpackers picket their meat processing plant. They also urge consu- mers not to shop at a company-owned outlet store; this type of consumer boycott is sometimes called a primary boycott. In this example, both the picketing and the con- sumer boycott are allowed because both facilities are employer-owned. If the meatpack- ers try to shut down a grocery store that is owned by a neutral third party simply because they sell deli lunchmeat made at the meatpacker s facility that would be an ille- gal secondary strike or secondary boycott. What if the union did not try to shut down the entire grocery store, but merely had members passing out leaflets or holding signs asking shoppers not to buy their employer s brand of lunchmeat? Such informational picketing is generally legal, provided that the signs or leaflets clearly indicate the union and the employer involved in the labor dispute; usually the signs or leaflets also note that the labor dispute does not involve the secondary employer, (informational picketing is discussed in more detail below). The distinctions between primary strikes and boycotts, secondary strikes, and informational picketing constitutes a general rule of thumb. However, as with many aspects of the law, there are nuances and exceptions; these will now be examined.

One exception involves a secondary employer who knows (or reasonably should have known) that engaging in certain conduct would aid a primary employer during a labor dispute. The secondary employer is presumed to have voluntarily joined the labor

466 PART 2 The Bargaining Process and Outcomes

dispute as a business ally of the primary employer and, therefore, can be subjected to the same lawful economic pressure tactics that employees could engage in regarding the pri- mary employer. A secondary employer who agrees to perform work normally done by striking employees (struck work) is the most common means of establishing business ally status. Thus, if the meatpacking facility in our example contracted out work to a dif- ferent meat processing company, the second firm would become a business ally in the labor dispute. A second exception involves common ownership: A primary employer with several plants or ownership of separate firms may find nonstruck entities enmeshed in the labor dispute as a business ally of the primary employer if a high degree of inter- dependence or co-mingling of assets is established between the various operations shar- ing common ownership. Where different operations function independent of each other, common ownership alone would not be sufficient to establish business ally status of the nonstruck operations, nor would carrying on an established business relationship with a struck employer by itself establish that a secondary employer has waived its neutral sta- tus in the labor dispute. Business ally status is determined case-by-case based on an anal- ysis of the totality of relevant circumstances.

Section 8(b)(4) of the LMRA makes it an unfair labor practice for a union to engage in tactics for the purpose of pressuring a neutral, secondary employer into becoming involved in a labor dispute. This includes prohibiting a union from discouraging employ- ees of a neutral, secondary employer from performing their normal job duties. However, lawful picketing to publicize a labor dispute (informational picketing) which has the effect of causing secondary employees to honor a picket line is lawful, so long as the intended purpose or object of such picketing is not to induce secondary employees to cease performing their regular job duties.88

When it passed the LMRA, Congress sought to balance (1) the legitimate right of neutral, secondary employers not to be forced to participate in a labor dispute with (2) striking employees rights to use economic pressure tactics against the primary employer and publicize the existence of a labor dispute. However, Congress did not intend to guar- antee neutral, secondary employers complete freedom from economic loss as the result of the lawful exercise of strike rights. For example, suppose that the workers at an air conditioning manufacturer are on strike. The air conditioning manufacturer manages to keep its operations open during the strike by using managers, engineers, and other non- union personnel. Suppose that the firm orders bolts from a neutral secondary employer a parts supplier. Further assume that parts supplier s driver is scheduled to make a delivery to the air conditioning manufacturer s facility but fails to make the delivery after encountering a union picket line at the struck employer s property. The driver is presumed to be acting in sympathy with the striking employees. The driver s voluntary decision not to cross the picket line represents a sympathy strike, and as a sympathy striker the driver s strike rights are equivalent to those of the picketers whose picket line the driver refused to cross.89 If the picket line was part of a lawful eco- nomic strike, the neutral, secondary employer could temporarily replace the driver or permanently replace the driver if no other reasonable alternative action exists (e.g., reas- signment of the driver to another delivery route which would not require him or her to encounter a picket line or rescheduling the delivery to another date when a driver willing to cross the picket line could be assigned to make the delivery). Even though the second- ary employer may suffer some costs in the form of lost productivity, time delay, or the loss of a sale, neither the primary employees picket activity nor the secondary employ- er s driver s refusal to cross the picket line would become unlawful merely because the effect of their exercise of lawful strike rights caused an adverse economic impact on the neutral, secondary employer.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 467

Hot Cargo Arrangements In the previous example, a struck air conditioning manufacturer ordered bolts from a neutral, secondary supplier. Let us change the example slightly: Suppose the supplier did not use its own delivery drivers, but instead, the supplier shipped its deliveries using a delivery company. Further, suppose that the delivery company is unionized. Can the delivery workers union insist on a contract clause that forbids the delivery com- pany from doing business with any firm whose workers are on strike? Pressuring the delivery company to agree to such a hot cargo agreement is an unfair practice under the LMRA and the Landrum Griffin Act because it injures a neutral firm the delivery company in this case. Although individual workers may choose to become sympathy strikers, it is illegal for unions to insist that hot cargo clauses be added to their collective bargaining agreements.90

Common Situs Picketing Common situs picketing occurs at a location where a primary employer and one or more neutral, secondary employers are engaged in normal business operations at the same site. Common examples of such sites would be a construction work site where sev- eral independent contractors are engaged in business, or a shipping dock where several shipping companies may be engaged in business at the same time. The challenge becomes how to permit employees involved in a labor dispute with a primary employer at the site to engage in lawful picket activity without unnecessarily disrupting the ability of neutral, secondary employers to continue to operate at the work site without becom- ing enmeshed in the primary employer s labor dispute. The Moore Dry Dock doctrine establishes some guidelines for lawful picketing at a common site of a labor dispute.91

Picketing at a common site is lawful if:

1. The primary employer is present and engaged in normal business operations at the common site. Presence can be indicated by the primary employer continuing to schedule deliveries to the site, maintaining equipment at the site, or having set-up or maintenance work continue to be performed at the site.

2. Picket signs must clearly identify the primary employer with whom the union has a labor dispute.

3. Picketing must occur at locations reasonably close to the primary employer s opera- tions at the common site.

Sometimes a primary employer will provide a schedule to the union listing dates and times when the primary employer will be present at the site and thus union picket activ- ity would be permitted. Of course, the primary employer would be required to adhere to the published schedule. If the primary employer maintains an intermittent presence at a work site so it is impossible for a union to know when the primary employer is or is not going to be present, the union is entitled to presume that the primary employer is pres- ent when conducting picket activity at the work site.

Unions have argued that employers who occupy a common work site are so inter- twined that a labor dispute with one employer is a labor dispute with all and, therefore, unions allege that there are no neutral employers on the site. The Supreme Court has rejected this union argument, ruling that general contractors and subcontractors on a building site are separate business entities and should be treated separately with respect to each other s labor controversies.92 Picket activity at a common site of a labor dispute must meet the Moore Dry Dock standard to be lawful.

A union may lawfully picket under the Moore Dry Dock standard at the location of a neutral, secondary employer, so long as a primary employer is present and engaged in

468 PART 2 The Bargaining Process and Outcomes

normal business operations at the neutral, secondary employer s site (so-called picketing between the headlights). This might occur where a struck primary employer is engaged in providing some service to its customers at the neutral, secondary employer s work site (e.g., computer repair service is struck by its employees but continues to service accounts at various neutral, secondary employers business locations during the strike). The union representing the primary employer s repair technicians might follow the repair truck from the primary employer s business and picket at the entrance used by the primary employer s repair technician at the neutral, secondary employer s business while the repair person is inside the business. When the primary employer s technician leaves the neutral customer s location, the union s picket activity would also have to cease and the union s picketers would have to follow the repair truck to the next custo- mer s location.

Consider a large construction work site. During a labor dispute, the reserve gate doctrine permits entrances to the work site to be clearly marked for the exclusive use of either a primary employer or neutral, secondary employer and their employees, custo- mers, and suppliers.93 Picketing by a union during a primary economic labor dispute at a gate reserved for the exclusive use of a neutral, secondary employer would generally be illegal, so long as the gate was properly marked, reasonably established, and used only by the neutral, secondary employer. A gate marked for the exclusive use of the primary employer involved in a labor dispute would not be reasonably established if the gate was located so as to unreasonably deny a union an opportunity to convey its intended picket message to the public (e.g., down a dead-end alley seldom used by customers or employees to gain entrance to the work site). Proper use of reserved gates helps to mini- mize the disruption in neutral, secondary employers ability to continue normal business operations at a common site of a labor dispute while still permitting striking employees to picket the operation of the primary employer.

A situational application of the reserve gate doctrine occurs when a primary employer involved in an economic dispute turns his or her property into a common site by hiring a neutral, secondary employer to perform work on the primary employer s property during a labor dispute. Such work might involve construction of new buildings, installation of new equipment, major maintenance projects, or other tasks which could be accomplished, even though the employer s normal business operations have been cur- tailed due to the ongoing strike.

Striking employees of a primary employer normally have a right to picket at every entrance to a primary employer s property during a labor dispute. The General Electric doctrine establishes the conditions under which a primary employer could lawfully establish a gate on the primary employer s property reserved for the exclusive use of a neutral, secondary employer hired to perform some work for the primary employer dur- ing a labor dispute.94 During a labor dispute, picketing may be prohibited at an entrance to the primary employer s property if the following conditions are met:

1. The gate must be reserved for the exclusive use of a neutral, secondary employer and only used by such an employer, their employees, or suppliers. Once the neu- trality of a reserved gate has been breached by the primary employer (or its non- striking employees), the gate loses its neutrality and the union can lawfully picket the gate.

2. The work performed by the neutral, secondary employer on the primary employer s property cannot be struck work (i.e., work that except for the work stoppage would have been performed by bargaining unit members). For example, a neutral contractor cannot go into a plant to do maintenance work that is normally per- formed by striking employees.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 469

3. The work performed by the neutral, secondary employer cannot be work that would require a work stoppage to occur in order for the task to be completed. New con- struction projects, repairs on nonfunctional equipment, or installation of new equip- ment in a location not already occupied by existing equipment would generally meet this requirement. Major maintenance on equipment currently in use requiring such equipment to be taken out of service in order for the maintenance to be accom- plished would not meet this third requirement. The purpose of this third require- ment is to reduce management s incentive to provoke a strike as a means of avoiding payments due workers who were laid off as the result of equipment being taken out of service for maintenance.

Product Picketing Rights As mentioned earlier, unions sometimes choose to publicize a dispute with a primary employer at the site of a neutral, secondary employer who sells the primary employer s product or service. Such Informational Picketing typically includes two types of activi- ties: Product picketing and handbilling. Product picketing lawfully occurs when the union urges customers not to buy the primary employer s products or services which are sold at a neutral, secondary employer s business.95 Picket signs must clearly identify the primary employer as the target of the picket activity and only urge a boycott of the primary employer s products or services, not a total boycott of all products or services sold by the neutral, secondary employer. For example, if workers at a commercial bakery go on strike, the strikers can engage in product picketing near a neutral supermarket, asking shoppers not to buy particular brands of bread or prepackaged baked snacks products made by the struck employer and sold at the supermarket. Picketers cannot prevent consumers from entering the secondary employer s premises to shop. If consu- mers voluntarily comply with the union s boycott request, then their actions will put economic pressure on the primary employer; the primary employer will be motivated to resolve the labor dispute.

Before initiating any product picket activity, a union will often request a neutral, secondary employer to voluntarily cease selling the primary employer s products or ser- vices for the duration of the labor dispute. If the neutral, secondary employer agrees to do so, it eliminates the need for the union to engage in any picketing activity at the neu- tral, secondary employer s business. While the secondary employer is not required to grant the union s request, a prudent employer will weigh the likely effectiveness or dura- tion of such product picket activity against the potential costs (e.g., lost sales, customer dissatisfaction, or negative publicity) such picketing might entail for the neutral, second- ary employer if it occurs.

There are two exceptions to a union s right to engage in product picketing at the business of a neutral, secondary employer. First, product picketing can be restricted or prohibited where evidence proves that the effect of such picket activity would cause a near total boycott (e.g., 90 percent or more loss of business) of the neutral, secondary employer.96 This might occur in a case where the only products or services sold by the neutral, secondary employer consisted of the primary employer s products or services and the union s boycott appeal was effective in causing customers not to purchase the primary employer s products or services. For example, picketing may be restricted if a neutral third-party owns a franchise that only sells the struck employer s products, such as a cellular telephone retailer that only sells one brand of mobile phone (and the pro- duction workers making those phones are on strike). Since it may not be clear from the outset how effective a union s product picket action will be, a neutral, secondary employer may have to bear some period of picket activity during which evidence as to

470 PART 2 The Bargaining Process and Outcomes

the effectiveness of the union s picket action can be established and presented to a court to obtain a labor injunction or presented to the NLRB to support an unfair labor practice charge against the union.

A second exception to a union s right to engage in product picketing occurs if the product of the primary employer being struck and a neutral, secondary employer are so intertwined (what is called the merged product doctrine) that it would be impossible for a consumer to boycott the primary employer s product without inducing a near total boycott of the neutral, secondary employer.97 For example, if the employees of a car bat- tery manufacturer initiated a product picket at a new car dealer that used the primary employer s batteries in all of the vehicles on the sales lot, it would be impossible for a customer to refuse to buy the primary employer s battery without also refusing to buy the neutral, secondary employer s car in which the battery was located. In this circum- stance, product picketing can be restricted or prohibited.

Handbilling Rights Even where picket activity may be illegal, the LMRA permits other forms of informa- tional publicity such as handbilling or the display of a banner to communicate the exis- tence of a labor dispute and seek public support.98 Attempting to hand a written notice to an individual is typically viewed as a less intrusive (and maybe less effective) means of communicating one s desired message than confronting that individual with picket signs carried by several individuals patrolling back and forth in front of an entrance.

Shopping malls that include a multitude of separate employers give rise to some interesting questions about lawful union picket and handbilling activities particularly when construction is involved (e.g., stores are remodeled), because the construction workers premises are actually another organization s premises. The Supreme Court has upheld the right of unions to peacefully distribute handbills urging customers not to shop at stores located in a mall (see, for example, the handbill shown in Exhibit 9.5) until all construction underway at the mall was performed by contractors paying fair wages. The Court ruled that the handbill used by the union truthfully revealed the exis- tence of a labor dispute and urged potential customers of the mall to follow a wholly legal course of action, namely, not to patronize the retailers doing business in the mall. The handbilling was peaceful. No picketing or patrolling was involved. The union was within its members right of free speech to encourage consumers to protest substandard wages by refusing to shop at a mall where such wages were paid.99

National Emergency Dispute Resolution Procedures

When labor disputes develop to a stage where they are regarded as having an adverse effect on the national interest, they assume a special significance. Strikes that have a sub- stantial adverse impact on national economic or defense interests are classified as national emergency strikes, and the federal government has used three methods to deal with such strikes: (1) presidential seizure or other intervention, (2) procedures under the Railway Labor Act, and (3) procedures under the LMRA.

Presidential seizures or attempts at seizure where the government takes control of a company s assets and proceeds to operate the firm have occurred 71 times under four presidents Lincoln, Wilson, Franklin D. Roosevelt, and Truman in the interests of maintaining production when actual strikes or threatened strikes caused national emer- gencies. Most of these presidential seizure actions have occurred at a time when the United States was at war.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 471

The Railway Labor Act provides a procedure for resolving national emergency work stoppages involving railroads or airlines that includes the following:

The National Mediation Board (NMB) attempts to mediate the dispute, and if unsuccessful, recommends voluntary interest arbitration. If arbitration is rejected by one or both parties, a 30-day cooling-off period is established during which wage rates, working rules, working conditions, and so forth would remain the same. If the dispute threatens to substantially interrupt essential transportation service to any section of the country, the president is notified by the NMB and can choose to appoint a Presidential Emergency Board (PEB). If the president chooses not to appoint a PEB, either union or management would be free after the conclusion of the 30-day cooling-off period, described in the previous step, to pursue a strike or lockout action. Within 30 days, the PEB appointed to investigate the dispute must issue a written report containing findings of fact regarding the dispute and recommended settle- ment terms to the parties. Union and management then have an additional 30 days to try to reach a voluntary settlement before either party could resort to any strike or lockout action. During this time, the status quo regarding terms and conditions of

Exhibit 9.5 Handbill Used at Shopping Mall to Influence Shoppers

PLEASE DON T SHOP AT EAST LAKE SQUARE.

The FLORIDA GULF COAST BUILDING TRADES COUNCIL, AFL-CIO is requesting that you do not shop at the stores in the East Lake Square Mall because of the Mall ownership s contribution to substandard wages.

The Wilson s Department Store under construction on these premises is being built by contractors who pay substandard wages and fringe benefits. In the past, the Mall s owner, The Edward J. DeBartolo Corporation, has supported labor and our local economy by ensuring that the Mall and its stores be built by contractors who pay fair wages and fringe benefits. Now, however, and for no apparent reason, the Mall own- ers have taken a giant step backwards by permitting our standards to be torn down. The payment of substandard wages not only diminishes the working person s ability to purchase with earned, rather than borrowed, dollars, but it also undercuts the wage standard of the entire company. Since low construction wages at this time of inflation means decreasing purchasing power, do the owners of East Lake Mall intend to compensate for the decreased purchasing power of workers of the community by encouraging the stores in East Lake Mall to cut their prices and lower their profits?

CUT-RATE WAGES ARE NOT FAIR UNLESS MERCHANDISE PRICES ARE ALSO CUT-RATE.

We ask your support in our protest against substandard wages. Please do not patronize the stores in East Lake Square Mall until the Mall s owner publicly pro- mises that all construction at the Mall will be done using contractors who pay their employees fair wages and fringe benefits.

IF YOU MUST ENTER THE MALL TO DO BUSINESS, please express to the store managers your concern over substandard wage and your support of our efforts. We are appealing only to the public the consumer. We are not seeking to induce any person to cease work or to refuse to make deliveries.

SOURCE: Supreme Court decision in DeBartolo v. Florida Gulf Coast Building & Construction Trades Council, 485 U.S. 568 (1988).

472 PART 2 The Bargaining Process and Outcomes

employment is maintained. If no voluntary settlement is reached, the president could request Congress to enact legislation mandating settlement terms to resolve the bargaining dispute.

Since the RLA s passage in 1926, its emergency provisions have been invoked about 200 times, an average rate of four times per year, and work stoppages have occurred at the end of the 60-day period at a rate of one per year since 1947. However, government interventions in railroad disputes have averaged only about one per year since 1980, and only three PEBs have occurred in the airline industry since 1978.100 Sixteen federal laws have been passed to deal with specific railroad labor disputes, usually by extending the strike date and involving a third-party mediator or arbitrator. The last time a federal law was passed to intervene was 1992, when Congress stopped a national rail strike and mandated mediation and arbitration of the dispute.

The LMRA contains a procedure for managing a threatened or actual strike or lock- out affecting an entire or substantial portion of a private-sector industry which, if allowed to occur or continue in the opinion of the President of the United States, would threaten the national health or safety. These provisions include a step-by-step pro- cedure to halt the strike or lockout for 80 days and provide the parties assistance in resolving their disputes. Exhibit 9.6 displays the steps in the national emergency proce- dure of the LMRA. Prior to engaging in any lawful strike or lockout, the party initiating the work stoppage must have bargained in good faith for 60 days, provided the FMCS at least 30 days advance notice prior to the current contract s expiration that the parties voluntary bargaining effort had not yet produced a settlement, and made sure that no contractual bar (e.g., a no-strike or lockout clause) was still in effect.

The first step in the national emergency dispute resolution procedure is for the presi- dent to appoint a board of inquiry when the actual or threatened strike is believed to be of sufficient severity to imperil the national health or safety. Because of the urgency of the mat- ter, the board will investigate the mandatory bargaining subjects in dispute, gather relevant facts, and make a report to the president in a very short time, usually one to three days.

After the president receives and studies the report, he or she may direct the attorney gen- eral to secure an 80-day labor injunction from an appropriate federal district court to prevent or end the strike or lockout. Once the injunction is issued, the board of inquiry is reconvened, and after the first 60 days of the injunction period, it will be asked to report to the president on the employer s last offer and any other relevant factors. During those 60 days, the FMCS will attempt to mediate a voluntary settlement between the parties in the dispute. Assuming no voluntary settlement is reached, the board reports the final employer bargaining proposal to the president who will then instruct the NLRB to conduct and certify a secret ballot vote (between the 60th and 80th days of the injunction period) to determine if employees will accept management s final offer. If employees reject the offer, the attorney general must request the federal district court who issued the 80-day labor injunction to dissolve the injunc- tion. After the 80th day, when the labor injunction has expired, the union or employer could legally initiate or resume a strike or lockout, respectively. The final step in the procedure calls for the president to submit a full and comprehensive report to Congress, accompanied by any recommendations that he or she may have (e.g., proposed legislation to mandate a settlement or a requirement that the parties submit the dispute to final and binding interest arbitration).

In the first 22 years following the enactment of the LMRA, the national emergency dis- pute resolution procedure was used 29 times. However, since 1960, it has been used only seven times (five times in 1971 with stevedoring and grain elevator operations). During a strike by eastern coal miners President Carter invoked the procedure in 1978, but a federal judge refused to grant the requested 80-day labor injunction because the attorney general failed to prove that the work stoppage actually represented a national emergency.101 More

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 473

recently, President Bush invoked the procedure to halt a lockout of West Coast dock workers in 2002, in which the key issue in dispute was shippers plans to introduce new technology into port operations and union member concerns over the effect of such action on job secu- rity.102 The Pacific Maritime Association representing shipping and cargo companies at 29 West Coast ports and the International Longshore and Warehouse Union representing some 10,500 dockworkers negotiated a voluntary contract settlement ending the labor dis- pute prior to the scheduled expiration of the 80-day labor injunction.

Several reasons have been identified to explain the infrequent need to invoke these national emergency procedures. Such reasons include the internationalization of some product markets; a breakup of many centralized, industry-wide bargaining arrangements; a decline in the percentage of the workforce represented by unions; an increase in the tendency of employ- ers to seek to break strikes by hiring replacement employees; and an increased employer will- ingness to operate during a work stoppage. This combination of factors has contributed to a reduction in the frequency of the use of national emergency strike procedures.103

Some critics argue that the use of national emergency dispute resolution procedures subverts the bargaining process by interjecting government action which alters the balance of bargaining power in the labor dispute and reduces the bargaining pressure on each party to reach an agreement at the bargaining table.104 The national emergency dispute resolution procedure appears to work as effectively as Congress intended because of the

Exhibit 9.6 National Emergency Dispute Resolution Procedure under the LMRA

SOURCE: Diagram created by Dr. Roy Moore, professor, College of Business, Delta State University, Cleveland, Mississippi.

60 days prior to contract expiration date, provide other party with notice of intent to renegotiate current contract and begin negotiations. 30 days prior to contract expiration date, notify FMCS if no settlement has been reached.

Upon contract expiration date, the president may appoint a board of inquiry to investigate a threatened or actual work stoppage and report back to the president. The president may also instruct the attorney general to seek a labor injunction in court halting any ongoing strike/lockout activity for a period of 80 days.

Union and management must negotiate in good faith for the next 60 days under the direction of the FMCS to seek a bargaining settlement.

If no settlement is reached by the end of 60 days, the presidential board of inquiry reconvenes and prepares a report to the president detailing the employer’s final offer on labor agreement terms in dispute. Within the next 15 days the NLRB will conduct a secret ballot election to determine if affected employees agree to the employer’s last offer. Between the 75th–80th days of the labor injunction period, the NLRB will certify the election results to the attorney general.

At the end of the 80-day labor injunction, the attorney general will request the court to lift the injunction, and the bargaining parties would be free to resume any strike or lockout. The president will submit a report to congress detailing the findings of the board of inquiry, results of the secret ballot contract ratification vote, and any additional recommendations intended to resolve the ongoing labor dispute.

474 PART 2 The Bargaining Process and Outcomes

rigidity and predictability of the procedures. When each step in the procedure is predict- able, either party may include the issuance of a labor injunction as part of its bargaining strategy. The requirement that a secret ballot election on the employer s last offer be held often solidifies union members opposition to management s proposal rather than facilitat- ing the bargaining process toward settlement. Lastly, because the presidential boards of inquiry are prohibited from proposing settlements, their effectiveness in securing the nec- essary public support and pressure to move the parties toward settlement is limited.

Summary Various third-party dispute resolution procedures to assist the parties in resolving negotiation disputes were presented, ranging from mediation (where a third party attempts to facilitate resolution by keeping the parties bargaining, acting as a go-between, and offering alternatives) to arbitration, a quasi-judicial procedure in which the bargaining positions are pre- sented to an arbitrator who makes a final and binding decision. Within the range of dispute resolution proce- dures are the med-arb procedure (which attempts mediation first and then arbitration if mediation fails) and fact-finding (in which the parties present their positions to a fact-finder, other facts are collected, and a report, which includes a recommended resolu- tion of the impasse, is written and publicized). Other third-party Alternative Dispute Resolution procedures were also briefly described.

Although voluntary agreements are reached by the parties in the vast majority of negotiation disputes, sometimes one or both parties will resort to the use of economic pressure tactics (e.g., strike, boycott, pick- eting, lockout) to encourage a party to agree to pro- posed settlement terms. Work stoppages involve significant costs and risks for all participants and require careful consideration and preparation before embarking on such a course of action.

The right to strike (by workers) or lockout (by management) for lawful reasons using lawful means is an intrinsic part of the labor relations process protected

by-law. It is a wise union or management representa- tive who understands the difference between possessing a legal right and determining whether it makes practi- cal sense to exercise such a right under the prevailing circumstances of a particular labor dispute. While data indicate that strike activity is less common in labor relations today, the potential threat of such action can still be a credible force encouraging the parties to care- fully weigh the cost of agreement against the cost of continued disagreement. It is unfortunate that peaceful bargaining settlements do not attract the same level of media or public attention that work stoppages do.

Most strikes and related activities involve primary employers, but often secondary employers (not directly involved in the employer employee relationship) are affected. A complex body of law and judicial decisions covers such activities as consumer and product boy- cotts and picketing, common situs picketing, and hot cargo clauses. Generally, primary strikes and boycotts as well as informational picketing (which includes product picketing, and handbilling) are legal, whereas secondary strikes are not legal; however, as noted, exceptions exist.

Strikes or lockouts that have an adverse effect on the national interest may be declared national emer- gency disputes. Procedures are available under the Rail- way Labor Act and the LMRA to facilitate their resolution. Although such impasses occur infrequently, they are significant when they do.

Key Terms mediation, p. 439 fact-finding, p. 439 interest arbitration, p. 439 Federal Mediation and Conciliation

Service (FMCS), p. 439

conventional interest arbitration (CA), p. 443

chilling effect, p. 444 narcotic effect, p. 444 final-offer total package (FOTP), p. 445

final-offer issue-by-issue (FOIBI), p. 445

mediation-arbitration, p. 446 Arbitration-Mediation (arb-med),

p. 447

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 475

tri-offer arbitration, p. 448 double final-offer arbitration (DFOA),

p. 448 Night Baseball Arbitration, p. 449

strike, p. 449 primary employer, p. 449 lockout, p. 450 unconditional request for

reinstatement, p. 451 legal strike, p. 451 illegal strike, p. 451 economic strike, p. 451 unfair labor practice strike, p. 451 wildcat strike, p. 451

sympathy strike, p. 456 jurisdictional strike, p. 456 Protest strikes, p. 458 general strike, p. 458 Partial strikes, p. 458 work slowdown, p. 458 strike manual, p. 463 preferential recall list, p. 464 Laidlaw-Fleetwood doctrine, p. 464 superseniority, p. 465 serious strike misconduct, p. 465 secondary employer, p. 466 informational picketing, p. 466 business ally, p. 467

struck work, p. 467 sympathy striker, p. 467 hot cargo agreement, p. 468

common situs picketing, p. 468 Moore Dry Dock doctrine, p. 468 picketing between the headlights,

p. 469 reserve gate doctrine, p. 469 General Electric doctrine, p. 469 product picketing, p. 470 merged product doctrine, p. 471 handbilling, p. 471 national emergency strikes, p. 471

Discussion Questions

1. What are some similarities and differences between mediation, fact-finding, and interest arbitration?

2. What characteristics or qualities should a practi- tioner look for in selecting a mediator to help resolve a labor dispute?

3. Some have suggested that interest arbitration is problematic because outcomes are almost always located between the two sides positions and fre- quently close to the midpoint between their posi- tions; thus, arbitrators seldom consider creative ( win win ) outcomes. Others have suggested that the time for creativity is before a dispute reaches arbitration and arbitration is not designed for that purpose. Which position do you support? Why?

4. Compare any three of the following: final-offer interest arbitration, double final-offer interest arbitration, night baseball arbitration, med-arb, arb-med. Which is the best (and what do you mean by the best )? Why?

5. To what extent would you agree or disagree with the following statement: Strikes are an intrinsic and essential element of the collective bargaining process. Explain your reasoning.

6. What types of preparation do management and union leaders need to engage in prior to a work stoppage?

7. What are some potential costs or risks parties face during a work stoppage, and how may such costs or risks be reduced or minimized?

8. If you were a secondary employer confronted with a threatened product picket action at your retail store, what factors would you consider in deciding whether to voluntarily cease sales or continue to sell the primary employer s products during the labor dispute?

9. Should employees engaged in lawful strike activity be protected from permanent replacement? Explain your reasoning.

Exploring the Web

Strikes, Lockouts, and Collective Bargaining 1. Bureau of Labor Statistics Reports on Collective

Bargaining. Review the Bureau of Labor Statistics News Release about major work stoppages in the past year at http://www.bls.gov/wsp. What is the definition of a major work stoppage?

2. Collective Bargaining and the U.S. Code. Title 29 is the section of the U.S. Code that contains federal law on labor. Go to Cornell s Legal Information Institute at https://www.law.cornell.edu/uscode/text. Search Title 29 for the following terms: picketing, strikes, advanced workplace practices. What is

476 PART 2 The Bargaining Process and Outcomes

included in the list of unfair labor practices in Sec- tion 158?

3. Professional Sports Strikes and Lockouts. Search online using the key words NFL lockout and review at least five articles related to the 2012 labor dispute between the NFL Referees Associa- tion and the National Football League (be sure to cite your sources). What issues caused the lock- out to occur? What is the difference between a lockout and a strike? How was the dispute resolved?

4. Mediation. The Federal Mediation and Conciliation Service (FMCS) is an independent agency whose mis- sion is to preserve and promote labor management peace and cooperation. The FMCS also arbitrates cases. Using the Search box, locate the Code of Profes- sional Responsibility for Arbitrators of Labor Management Disputes on the FMCS Web site at http:// www.fmcs.gov/. What, in your opinion, are five impor- tant elements of the code? Also, check the latest annual report for descriptions of FMCS involvement in major labor disputes. What are five important things you learned from the report?

References 1. Bureau of Labor Statistics, U.S. Department of

Labor, Table 1. Work Stoppages Involving 1,000 or more Workers, 1947 2014, News Release, February 11, 2015, at: http://www.bls.gov/news. release/wkstp.t01.htm.

2. Federal Mediation and Conciliation Service, 67th Annual Report: 2014 (Washington, D.C.: FMCS, 2014), p. 8, at: http://www.fmcs.gov/assets/files/ Public%20Documents/FY2014_Annual_Report_ Final.pdf; for other FMCS annual reports see: http://www.fmcs.gov/Internet/itemDetail.asp? categoryID=228&itemID=17315.

3. Christopher Brown, Collective Bargaining Important to Economy, FMCS Official Says, Collective Bargaining Bulletin, 15(4), 2010, p. 84.

4. Federal Mediation and Conciliation Service, Frequently Asked Questions About FMCS,

Who We Are, 2011, p. 2, at: http://www.fmcs.gov/ internet/faq.asp?categorID=22; Douglas E. Noll, The Myth of the Mediator as Settlement Broker,

Dispute Resolution Journal, 64(2), 2009, pp. 42 48; Ruth D. Raisfeld, How Mediation Works: A Guide to Effective Use of ADR, Employee Relations Law Journal, 33(2), 2007, pp. 30 41.

5. Carl Stevens, Mediation and the Role of the Neutral, in Frontiers of Collective Bargaining, eds. John T. Dunlop and Neil W. Chamberlain (New York: Harper & Row, 1967), p. 271.

6. Steven Briggs and Daniel J. Koys, What Makes Labor Mediators Effective? Labor Law Journal, 40(8), 1988, pp. 517 520; Michael Boland and William H. Ross, Emotional Intelligence and Dispute Mediation in Escalating and

De-escalating Situations, Journal of Applied Social Psychology, 40(12), 2010, pp. 3059 3105.

7. Albert Breer League, Union Meet in D.C., try Mediation in Labor Talks, NFL Network, Febru- ary 18, 2011, pp. 1-2, at: http://www.nfl.com/ news/story/09000d5d81e5ebf2/article/league- union-meet-in-dc-try-mediation-in-labor-talks.

8. Stevens, Mediation and the Role of the Neutral, in Frontiers of Collective Bargaining, eds. John T. Dunlop and Neil W. Chamberlain (New York: Harper & Row, 1967), pp. 280 284; also see Joseph Krislov and Amira Ealin, Comparative Analysis of Attitudes towards Mediation, Labor Law Journal, 30(3), 1979, p. 173; Eric van Ginkel, The mediator as face-giver, Negotiation Journal

20(4), 2004, pp. 475 487. 9. Stephen B. Goldberg, The Secrets of Successful

Mediators, Negotiation Journal, 21(3), 2005, pp. 365 376.

10. Patrice M. Mareschal, Providing High Quality Mediation: Insights from the Federal Mediation and Conciliation Service, Review of Public Per- sonnel Administration, 18(4), 1998, pp. 55 67.

11. Richard B. Peterson and Mark R. Peterson, Toward A Systematic Understanding of the

Labor Mediation Process, in Advances in Indus- trial and Labor Relations, vol. 4, eds. David Lewin, David B. Kipsky, and Donna Sockell (Greenwich, CT: JAI Press, Inc., 1987), p. 145; C. Baker and William H. Ross, Mediation Con- trol Techniques: A Test of Kolb s Orchestrators vs. Dealmakers Model, International Journal of Conflict Management, 3(4), 1992, pp. 319 341; Deborah Kolb, The Mediators (Cambridge,

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 477

Mass: MIT Press, 1983); Peter J. Carnevale and Donald E. Conlon, Time Pressure and Strategic Choice in Mediation, Organizational Behavior and Human Decision Processes, 42(1), 1988, pp. 111 133.

12. Richard B. Peterson and Mark R. Peterson, Toward a Systematic Understanding of the

Labor Mediation Process, in Advances in Indus- trial and Labor Relations, vol. 4, eds. David Lewin, David B. Kipsky, and Donna Sockell (Greenwich, CT: JAI Press, Inc., 1987) pp. 152 153.

13. Thomas A. Kochan and Todd Jick, The Public Sector Mediation Process, Journal of Conflict Resolution, 22, June 1978, p. 236; Kenneth Kressel, Tiffany Henderson, Warren Reich, and Claudia Cohen, Multidimensional Analysis of Conflict Mediator Style, Conflict Resolution Quarterly, 30(2), 2012, pp. 135 171; Joseph Folger and Robert A. Baruch Bush, Transformative Mediation: A Self-Assessment, International Journal of Con- flict Engagement and Resolution, 2(1), 2014, pp. 20 34; James Wall and Kenneth Kressel, Research on Mediator Style: A Summary and

some Research Suggestions, Negotiation and Conflict Management Research, 5(4), 2012, pp. 403 421.

14. American Bar Association, Model Standards of Conduct for Mediators, August 2005, pp. 1 10, at: http://www.americanbar.org/content/dam/aba/ migrated/dispute/documents/model_standards_ conduct_april2007.authcheckdam.pdf.

15. Robert A. Baruch Bush, Efficiency and Protec- tion or Empowerment and Recognition: The Mediator s Role and Ethical Standards in Media- tion, Florida Law Review, 41, Spring 1989, pp. 253 286.

16. Michael Marmo, The Role of Fact-finding and Interest Arbitration in Selling a Settlement, Journal of Collective Negotiation in the Public Sector, 24(1), 1995, pp. 78 82.

17. David L. Dickinson and Lynn Hunnicutt, Does Fact-finding Promote Settlement? Theory and a Test, Economic Inquiry, 43(2), 2005, pp. 401 416; Robert Hebdon, Fact-finding Effectiveness: Evidence from New York State, Industrial Rela- tions, 40(1), 2001, pp. 73 82; Charles B. Craver, The Use of Alternative Dispute Resolution

Techniques to Resolve Public Sector Bargaining Disputes, Ohio State Journal on Dispute Resolu- tion, 28, 2013, pp. 45 63.

18. Barry Winograd, An Introduction to the History of Interest Arbitration in the United States, Labor Law Journal, 61(3), 2010, pp. 164 168; William H. Ross, Jr. Situational Factors and Alternative Dis- pute Resolution, Journal of Applied Behavioral Science, 24(3), 1988, pp. 251 260.

19. Robert Herndon, Public Sector Dispute Resolu- tion in Transition, in Public Sector Employment in a Time of Transition, eds. Dale Belman, Morley Gunderson, and Douglas Hyatt (Madison, WI: Industrial Relations Research Association, 1996), pp. 104 112.

20. David E. Bloom, Empirical Models of Arbitrator Behavior under Conventional Arbitration, National Bureau of Economic Research, Report No. 1841, 1986, available at: http://www.nber.org/ papers/w1841; William W. Notz and Frederick A. Starke, Arbitration and Distributive Justice: Equity or Equality? Journal Of Applied Psychol- ogy, 72(3), 1987, pp. 359 365; Thomas Kochan, David B. Lipsky, Mary Newhart, and Alan Ben- son, The Long Haul Effects of Interest Arbitra- tion: The Case of New York State s Taylor Law, Industrial and Labor Relations Review, 63(4), 2010, pp. 565 584; also see Carl Stevens, Is Compulsory Arbitration Compatible With Bar- gaining?, Industrial Relations, 5(2), February 1966, pp. 38 52.

21. Max H. Bazerman and Henry S. Farber, Arbi- trator Decision Making: When Are Final Offers Important? Industrial and Labor Relations Review, 39, October 1985, pp. 76 89.

22. Max H. Bazerman, Norms of Distributive Justice in Interest Arbitration, Industrial and Labor Relations Review, 38, July 1985, pp. 558 570.

23. Joseph B. Rose and Michael Piczak, Settlement Rates and Settlement Stages in Compulsory Interest Arbitration, Relations Industrielles, 51, Fall 1996, pp. 643 645; Henry S. Farber, Splitting-the-difference in Interest Arbitration,

Industrial & Labor Relations Review, 35(1), 1981, pp. 70 77. Also see Peter Feuille, Final Offer Arbitration and the Chilling Effect, Industrial Relations: A Journal of Economy and Society, 14(3), 1975, pp. 302 310.

478 PART 2 The Bargaining Process and Outcomes

24. Thomas Kochan, David B. Lipsky, Mary Newhart, and Alan Benson, The Long Haul Effects of Interest Arbitration: The Case of New York State s Taylor Law, Industrial and Labor Relations Review, 63(4), pp. 565 584.

25. David E. Bloom and Christopher L. Cavanagh, Negotiator Behavior under Arbitration, Ameri-

can Economic Review, 77, May 1987, pp. 353 355; Hoyt N. Wheeler, Compulsory Arbitration: A Narcotic Effect ? Industrial Relations: A Journal

of Economy and Society, 14(1), 1975, pp. 117 120; Martin H. Malin, Two Models of Interest Arbi- tration, The Ohio State Journal on Dispute Res- olution, 28(1), 2013, pp. 145 169.

26. Craig A. Olson and Barbara L. Rau, Learning from Interest Arbitration: The Next Round, Industrial and Labor Relations Review, 50, 1997, pp. 237 251; Thomas A. Kochan and Jean Baderschneider, Dependence on Impasse Proce- dures: Police and Firefighters in New York State, Industrial and Labor Relations Review, 31(4), 1978, pp. 431 449; David Lewin, Jeffrey H. Keefe, and Thomas A. Kochan, The New Great Debate about Unionism and Collective Bargaining in U.S. State and Local Governments, Industrial & Labor Relations Review, 65(4), 2012, pp. 749 778.

27. David B. Lipsky and Harry C. Katz, Alternative Approaches to Interest Arbitration: Lessons from New York City, Public Personnel Management, 35(4), 2006, pp. 266 267; Frederic Champlin, Mario Bognanno, and Paul Schumann, Is Arbi- tration Habit Forming? The Narcotic Effect of Arbitration Use, Labour, 11(1), 1997, pp. 23 42; James R. Chelius and Marian M. Extejt, The Narcotic Effect of Impasse-resolution Proce- dures, Industrial and Labor Relations Review, 38, July 1985, pp. 629 638.

28. Daniel R. Marburger and Paul L. Burgess, Can Prior Offers and Arbitration Outcomes Be Used to Predict the Winners of Subsequent Final-offer Arbitration Cases? Southern Economics Journal, 71(1), 2004, pp. 93 94.

29. Carl M. Stevens, Is Compulsory Arbitration Compatible with Bargaining? Industrial Rela- tions, 5(1), 1966, pp. 38 52; William W. Notz and Frederick A. Starke, Final-Offer versus Conven- tional Arbitration as Means of Conflict Manage- ment, Administrative Science Quarterly, 23(2),

1978, pp. 189 203; Michael A. Kuhn, To Settle or not to Settle: A Review of the Literature on Arbitration in the Laboratory, Manuscript, Uni- versity of California San Diego, August 14, 2009, pp. 1 24, available at: https://www.international- arbitration-attorney.com/wp-content/uploads/ arbitrationarbitrationlawarb_hist.pdf.

30. Lawrence Hadley and John Ruggiero, Final-offer Arbitration in Major League Baseball: A Non- parametric Analysis, Annals of Operations Research, 145(1), 2006, pp. 201 209.

31. Eran Hanany, D. Marc Kilgour, and Yigal Gerchak, Final-offer Arbitration and Risk Aver- sion Bargaining, Management Science, 53(11), 2007, pp. 1785 1792; Daniel R. Marburger and Paul L. Burgess, Can Prior Offers and Arbitra- tion Outcomes Be Used to Predict the Winners of Subsequent Final-Offer Arbitration Cases? Southern Economic Journal, 71(1), p. 102.

32. Daniel R. Marburger and John F. Scoggins, Risk and Final Offer Arbitration Usage Rates: Evidence from Major League Baseball, Journal of Labor Research, 17, Fall 1996, pp. 735 741.

33. Daniel R. Marburger, Arbitrator Compromise in Final Offer Arbitration: Evidence from Major League Baseball, Economic Inquiry, 42(1), 2004, pp. 60 68.

34. John D. Burger and Stephen J. K. Walters, Arbitrator Bias and Self-interest: Lessons from

the Baseball Labor Market, Journal of Labor Research, 26(2), 2005, pp. 267 280.

35. David E. Feller, The Impetus to Contract Arbi- tration in the Private Area, Twenty-fourth Annual NYU Conference on Labor (New York: Matthew Bender, 1972), pp. 95 98.

36. Gerald Phillips, Same-neutral Med-arb: What Does the Future Hold? Dispute Resolution Jour- nal, 60(2), 2005, pp. 24 32; William H. Ross and Donald E. Conlon, Hybrid Forms of Third-party Dispute Resolution: Theoretical Implications of Combining Mediation and Arbitration, Academy of Management Review, 25(2), 2000, pp. 416 427.

37. Paul E. Mason, The Arbitrator as Mediator, and Mediator as Arbitrator. Journal of International Arbitration, 28(6), 2011, pp. 541 551.

38. Richard Fullerton, Med-arb and Its Variants: Ethical Issues for Parties and Neutrals, Dispute Resolution Journal, 65(2/3), 2010, pp. 52 61, 154;

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 479

David J. McLean and Sean-Patrick Wilson, Compelling Mediation in the Context of Med-

arb Agreements, Dispute Resolution Journal, 63(3), 2008, pp. 28 34; Ian McAndrew, Med-Arb in the New Zealand Police, in The Oxford Handbook of Conflict Management in Organiza- tions, eds. William K. Roche, Paul Teague, and Alexander J. S. Colvin (Oxford, UK: Oxford University Press, 2014), pp. 311 332.

39. Neil B. McGillicuddy, Gary Welton, and Dean G. Pruitt, Third-party Intervention: A Field Exper- iment Comparing Three Different Models, Jour- nal of Personality and Social Psychology, 53(1), 1987, pp. 104 112.

40. David D. Loschelder and Roman Trötschel, Overcoming the Competitiveness of an Inter-

group Context: Third-party Intervention in Intergroup Negotiations, Group Processes & Intergroup Relations, 13(6), 2010, pp. 795 815.

41. Arnold M. Zack, The Quest for Finality in Air- line disputes: A Case for Arb-Med, Dispute Res- olution Journal, 58(4), 2003, pp. 34 38; William H. Ross and Donald E. Conlon, Hybrid Forms of Third-party Dispute Resolution: Theoretical Implications of Combining Mediation and Arbi- tration, Academy of Management Review, 25(2), 2000, pp. 416 427; Jacob Rosoff, Hybrid Effi- ciency in Arbitration: Waiving Potential Conflicts for Dual Role Arbitrators in Med-Arb and Arb- Med Proceedings, Journal Of International Arbitration, 26(1), Feb. 2009, pp. 89 100.

42. Donald E. Conlon, Henry Moon, and K. Yee Ng, Putting the Cart Before the Horse: The Benefits

of Arbitrating before Mediating, Journal of Applied Psychology, 87(5), 2002, pp. 978 984; Patrick Condliffe and John Zeleznikow, What Process do Disputants Want?: An Experiment in Disputant Preferences, Monash University Law Review, 40(2), 2014, pp. 305 339.

43. Orley Ashenfelter, Janet Currie, Henry S. Farber, and Matthew Spiegel, An Experimental Com- parison of Dispute Rates in Alternative Arbitration Systems, Econometrica, 60(6), pp. 1407 1433.

44. Alphons J. C. Van de Kragt, William. W. Notz, and Fredrick. A. Starke, Double Final Offer Arbitration: Does it Work as Intended? in Pro- ceedings of the Second Biannual Conference of the

International Association for Conflict Manage- ment, Athens GA, June 11 14, 1989, ed. Afzalur Rahim (Bowling Green, KY: IACM Press, 1989) p 59; Donald E. Conlon, Christopher J. Meyer, Anne L. Lytle, and Harold W. Willaby, Third Party Interventions Across Cultures: No One Best Choice , Research in Personnel and Human Resources Management, 26, 2007, pp. 309 356.

45. Gerald Lebovits and Lucero Ramirez Hidalgo, Alternative Dispute Resolution in Real Estate

Matters: The New York Experience, Cardozo Journal of Conflict Resolution, 11(2), 2009, pp. 437 462; William H. Ross, Should Night Baseball Arbitration be Used in Lieu of Public Sector Strikes? Psychological Considerations and Suggestions for Research, Journal of Collective Negotiations in the Public Sector, 31(1), 2006, pp. 45 70; Laurie S. Coltri, Conflict Diagnosis and Alternative Dispute Resolution (Upper Saddle River, NJ: Pearson, 2004), p. 431.

46. Excerpts from NLRB v. Insurance Agents Inter- national Union, 361 U.S. 477 (1960).

47. Thomas J. Lueck, Transit Union Is Fined $2.5 Million Over December Strike, New York Times [online edition], April 18, 2006, at http://www. nytimes.com/2006/04/18/nyregion/18union.html? fta=y; Colin Moynihan and Maria Newman Transit Union Members March to Jail With

Chief, New York Times [online edition], April 24, 2006, at http://www.nytimes.com/2006/04/24/ nyregion/24cnd-toussaint.html?_r=0.

48. Paul D. Staudohar, The Basketball Lockout of 2011, Monthly Labor Review, 135(12), 2012, pp. 28 33; Richard B. Freeman, What Can Labor Organizations Do for U.S. Workers When Unions Can t Do What Unions Used to Do? in What Works for Workers? Public Policies and Innovative Strategies for Low-Wage Workers, eds. Stephanie Luce, Jennifer Luff, Joseph A. McCartin, and Ruth Milkman (New York: Russell Sage, 2014), pp. 50 78.

49. Harter Equipment, Inc. and Local 825, Interna- tional Union of Operating Engineers, 280 NLRB 71 (1986; upheld, 829 F.2d 458 (3rd Cir. 1987); NLRB v. Brown, 380 U.S. 278 (1965); and Amer- ican Shipbuilding Company v. NLRB, 380 U.S. 300 (1965).

480 PART 2 The Bargaining Process and Outcomes

50. Willis J. Nordlund, The Work Stoppage: A Dinosaur or a Lady in Waiting? Labor Law Journal, 61(3), 2010, pp. 152 163; Ellen Dannin, Michelle Dean, and Gangaram Singh, Law Reform, Collective Bargaining, and the Balance of Power: Results of an Empirical Study, Working USA, 11(2), 2008, pp. 219 236.

51. James E. Martin and Robert R. Sinclair, A Mul- tiple Motive Perspective on Strike Propensities, Journal of Organizational Behavior, 22(4), 2001, pp. 387 407.

52. Sarah Jaffe, How 250 UPS Workers Fired for a Wildcat Strike Won Back Their Jobs, In These Times, [online edition], April 14, 2014, available at: http://inthesetimes.com/working/entry/16561/ ups_workers.

53. Gateway Coal Company v. United Mine Workers, 414 U.S. 368 (1974); Billie Ann Brotman, A Comparative Analysis of Arbitration and National Labor Relations Board Decisions Involving Wildcat Strikes, Labor Law Journal, 36(7), 1985, p. 440; Larry Drapkin, The Right to Refuse Hazardous Work after Whirlpool, Industrial Relations Law Journal, 4(1), 1980, pp. 29 60; Barbara Fick, Protecting Worker Complaints after Meyers Industries, St. Louis University Law Journal, 31, 1987, pp. 823 852.

54. Josh Eidelson, Rare Rolling Sympathy Strike Beats Garbage Company That Tries to Trash Its Promise, Alternet, [online edition], March 29, 2012, available at: http://www.alternet.org/story/ 154765/rare_rolling_sympathy_strike_beats_ garbage_company_that_tries_to_trash_its_ promise.

55. Bureau of Labor Statistics, U.S. Department of Labor, Major Work Stoppages, News Release, February 11, 2015, pp. 1 6, esp. Table 2, available at: http://www.bls.gov/news.release/pdf/ wkstp.pdf.

56. Michael H. LeRoy, The Changing Character of Strikes Involving Permanent Striker Replace- ments: 1935 1990, Journal of Labor Research, 16 (4), 1995, p. 437; Mark Anner, The Impact of International Outsourcing on Unionization and Wages: Evidence from the Apparel Export Sector in Central America, Industrial & Labor Relations Review, 64(2), 2011, pp. 305 322; Marco

Hauptmeier and Ian Greer, Whipsawing: Orga- nizing Labor Competition in Multinational Auto Companies, 16th World Congress of ILERA in Philadelphia, 2012, available at: http://ilera2012. wharton.upenn.edu/RefereedPapers/Hauptmeier Marco%20IanGreer%20ILERA.pdf.

57. Bruce E. Kaufman, The Determinants of Strikes over Time and across Industries, Journal of Labor Research, 4(2), 1983, pp. 173 174.

58. Bruce E. Kaufman, Research on Strike Models and Outcomes in the 1980s: Accomplishments and Shortcomings, in Research Frontiers in Industrial and Human Resources, eds. David Lewin, Olivia S. Mitchell, and Peter D. Sherer (Madison, WI: Industrial Relations Research Association, 1992), pp. 78 79.

59. Kerstin Hamann, Alison Johnston, and John Kelly, Unions Against Governments: Explaining General Strikes in Western Europe, 1980 2006, Comparative Political Studies, 46(9), 2012, pp. 1030 1057.

60. Richard Mittenthal, Partial Strikes and National Labor Policy, Michigan Law Review, 54(1), 1955, pp. 71 100; Su-Ting T. Li, Malathi Srinivasan, Richard L. Kravitz, and Michael S. Wilkes, Ethics of Physician Strikes in Health Care, International Anesthesiology Clinics, 53(3), 2015, pp. 25 38; Jessica Bulman-Pozen and David Pozen, Uncivil Obedience, Columbia Law Review, 115, 2015, pp. 809 872.

61. Marc Dixon and Vincent J. Roscigno, Status, Networks, and Social Movement Participation: The Case of Striking Workers, American Journal of Sociology, 108(6), 2003, pp. 1292 1327; Bert Klandermans, Perceived Costs and Benefits of Participation in Union Action, Personnel Psychology, 39(2), 1986, pp. 380 381.

62. James E. Martin and Robert R. Sinclair, A Mul- tiple Motive Perspective on Strike Propensities, Journal of Organizational Behavior, 22(4), pp. 402 403; Aaron Cohen, Attitudinal Mili- tancy and Propensity to Strike Among Unionized Engineers and X-Ray Technicians, Human Relations, 45(12), 1992, pp. 1333 1336; James E. Martin, Predictors of Individual Propensity to Strike, Industrial and Labor Relations Review, 39(2), 1986, pp. 224 225.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 481

63. Nigel Nicholson and John Kelly, The Psychology of Strikes, Journal of Occupational Behavior, 1 (4), 1980, pp. 275 284.

64. William Serrin, The Company and the Union (New York: Knopf, 1973), p. 4.

65. Gregory Brian Finley, Strike Lengths: Correcting for Prestrike Announcements and the Ratio of Bargaining Unit Size to Firm Size, Journal of Labor Research, 31(4), 2010, pp. 307 321.

66. For examples of these strike-related dynamics, see the following: Alex Veiga, Strike, Lockout Hurt- ing Grocery Workers, Associated Press, January 26, 2004, pp. 1 2; Ashly McCall, Metal Workers Picket Home of Plant Manager in Nappane, Ind., South Bend Tribune, January 16, 2003, pp. 1 2; John R. Emshwiller, Strike Is Traumatic for a Quiet Village in Michigan Woods, Wall Street Journal, July 30, 1977, pp. 1, 24.

67. Jeffrey Z. Rubin, Dean G. Pruitt, and Sung Hee Kim, Social Conflict: Escalation, Stalemate, and Settlement (2nd ed.), (New York: McGraw-Hill, 1994); Randall Collins, C-Escalation and D- Escalation A Theory of the Time-Dynamics of Conflict. American Sociological Review, 77(1), 2012, pp. 1 20; Peter Coleman, Robin Vallacher, and Lan Bui-Wrzosinska, Intractable Conflict as an Attractor: A Dynamical Systems Approach to Conflict Escalation and Intractability, American Behavioral Scientist, 50(11), 2007, pp. 1454 1475.

68. Michael Barbaro, Sides Prepare for a Grocery Strike, Washington Post, March 17, 2004, p. E01.

69. Jim McCafferty, Labor management Dispute Resolution and the Media, Dispute Resolution Journal, 56(3), 2001, pp. 40 47; Jimmy Sander- son, Shaping, Driving, Engaging, and Influencing in 140 Characters: Exploring Twitter s Role in a Labor Dispute, Qualitative Research Reports in Communication, 15(1), 2014, pp. 43 50.

70. Charles R. Perry, Andrew M. Kramer, and Thomas J. Schneider, Operating During Strikes: Company Experiences, NLRB Policies, and Gov- ernment Regulations (Philadelphia: University of Pennsylvania, 1982), p. 38.

71. William R. Crandall and Michael L. Menefee, Crisis Management in the Midst of Labor Strife:

Preparing for the Worst, S.A.M. Advanced Management Journal, 61(1), 1996, pp. 11 15;

Leonard. C. Scott, Running a Struck Plant: Some Do s and Don ts, S.A.M. Advanced Management Journal, 38(4), 1973, pp. 58 62; John G. Hutch- inson, Management under Strike Conditions (New York: Holt, Rinehart and Winston, 1966).

72. Joseph A. McCartin, Symposium on James Atleson s Values and Assumption in American Labor Law, a Twenty-fifth Anniversary Retro- spective: Unexpected Convergence: Values, Assumptions, and the Right to Strike in Public and Private Sectors, 57 Buffalo Law Review, 727, May 2009; Julius G. Getman and F. Ray Marshall, The Continuing Assault on the Right to Strike,

Texas Law Review, 79(3), 2001, pp. 703 735. 73. NLRB v. Mackay Radio & Telegraph Co., 304 U.S.

333 (1938). 74. George S. Roukis and Mamdouh I. Farid, An

Alternative Approach to the Permanent Striker Replacement Strategy, Labor Law Journal, 44, February 1993, pp. 81 88.

75. Peter Crampton and Joseph Tracy, The Use of Replacement Workers in Union Contract Nego- tiations: The U.S. Experience, 1980 1989, Jour- nal of Labor Economics, 16(4), 1998, pp. 674 676.

76. Belknap, Inc. v. Hale, 463 U.S. 491 (1983); David B. Stephen and John P. Kohl, The Replacement Worker Phenomenon in the Southwest: Two Years after Belknap, Inc. v. Hale, Labor Law Journal, 37(1), 1986, pp. 48 49.

77. John W. Budd and Wendell E. Pritchett, Does the Banning of Permanent Strike Replacements Affect Bargaining Power? Proceedings of the 46th Annual Meeting of the Industrial Relations Research Association (Madison, WI: IRRA, 1994), pp. 370 376.

78. Laidlaw Corporation v. NLRB, 414 F.2d 99 (7th Cir. 1969); NLRB v. Fleetwood Trailer Company, 389 U.S. 375 (1967); Charles B. Craver, The Right to Strike and its Possible Conflict with Other Fundamental Rights of the People in the United States, XX World Congress of Labour & Social Security Law, Santiago, Chile, September. 2012.

79. United Aircraft Corporation, 191 NLRB 62 (1971). 80. NLRB v. Erie Resistor Corporation, 373 U.S. 221

(1963); William T. Krizner, The Mackay Doc- trine: Much More Than Mere Dicta, Labor Law Journal, 49(5), 1998, pp. 997 999.

482 PART 2 The Bargaining Process and Outcomes

81. Dane M. Partridge, Violence and Strikers Rights to Reinstatement: Two Decades Experience under Clear Pine Mouldings, Employee Relations Law Journal, 35(2), 2009, pp. 52 68.

82. North Cambria Fuel Co. v. NLRB, 645 F.2d 177 (3rd Cir. 1981); see also John R. Erickson, For- feiture of Reinstatement Rights through Strike Misconduct, Labor Law Journal, 31(10), 1980, pp. 602 616.

83. NLRB v. Allis-Chalmers Manufacturing Company, 388 U.S. 175 (1967).

84. Pattern Makers League of North America v. NLRB, 473 U.S. 95 (1985).

85. Thornhill v. Alabama, 310 U.S. 88 (1940). 86. Lowe Excavating Company v. International Union

of Operating Engineers, Local 150, 327 Ill. App. 711 (2002); Mary Swerczek, Judge: Picketers Get 25 Seconds; Running Kaiser Strike Means Jail Time for 3, Times-Picayune, May 13, 2000, p. B01.

87. Lechmere Inc. v. NLRB, 502 U.S. 527 (1992). 88. NLRB v. International Rice Milling Company, 341

U.S. 665 (1951); United Steelworkers of America v. NLRB, 376 U.S. 492 (1964).

89. Bruce Feldacker, Labor Guide to Labor Law (4th ed.) (Upper Saddle River, NJ: Prentice-Hall, 2000), pp. 276 278, 281 283.

90. Thomas J. Ryan, Secondary Boycotts Under the new Labor Management Reporting and Disclo- sure Act of 1959, St. John s Law Review, 34(1), 1959, pp. 42 70; David Twomey, Labor and Employment Law: Text & Cases. (Mason, OH: South-Western/Cengage Learning, 2012), pp. 235 238; Joseph L. Guza, Cure for Laryngitis: A First Amendment Challenge to the NLRA s Ban on Secondary Picketing, A, Buffalo Law Review, 59, 2011, pp. 1267 1313.

91. Moore Dry Dock Company and Sailors Union of the Pacific, 92 NLR 547 (1950); Sailors Union of the Pacific v. NLRB, 366 U.S. 667 (1950).

92. NLRB v. Denver Building Trade & Construction Council, 341 U.S. 675 (1951).

93. Local 501, International Brotherhood of Electrical Workers v. NLRB, 756 F.2d 888 (DC Cir. 1985).

94. Local 761, International Union of Electrical Radio & Machine Workers v. NLRB, 366 U.S. 667 (1961).

95. NLRB v. Fruit and Vegetable Packers & Ware- housemen, Local 760, 377 U.S. 58 (1964) and NLRB v. Servette, Inc., 377 U.S. 46 (1964).

96. NLRB v. Retail Store Employees Union, Local 1001, Retail Clerks International Association (Safeco Insurance Co.), 444 U.S. 1011 (1980).

97. The Kroger Company v. NLRB, 647 F.2d 634 (6th Cir. 1980).

98. United Brotherhood of Carpenters and Joiners of America, Local Union 1506 and Eliason & Knuth of Arizona, Inc.; United Brotherhood of Carpenters and Joiners of America, Local Union 1506 and Northwest Medical Center; and United Brother hood of Carpenters and Joiners of America, Local Union 1506 and Ra Tempe Corporation, 355 NLRB No. 159 (2010) and United Brotherhood of Carpenters and Joiners, Local 1498 and New Star General Contractors, Inc., 356 NLRB No. 88 (2011); Kate L. Rakoczy, Comment: On Mock Funerals, Banners, and Giant Rat Balloons: Why Current Interpretation of Section 8 (b)(4) (ii)(B) of the National Labor Relations Act Unconstitutionally Burdens Union Speech, 56 American University Law Review 1621 (August 2007).

99. Edward J. DeBartolo Corporation v. Florida Gulf Coast Building & Construction Trades Council ET AL., 485 U.S. 568 (1988).

100. General Accounting Office, Airline Labor Rela- tions: Information on Trends and Impact of Labor Actions (Washington, D.C.: U.S. General Accounting Office, 2003), pp. 15 16; Michael Cimini, Government Intervention in Railroad Disputes, Monthly Labor Review, 94(12), 1971, pp. 27 34.

101. John A. Ackermann, The Impact of the Coal Strike of 1977 1978, Industrial and Labor Rela- tions Review, 32(2), 1979, pp. 175 188; Michael Camp, Carter s Energy Insecurity: The Political Economy of Coal in the 1970s, Journal of Policy History, 26(4), 2014, pp. 459 478; C. Howard Davis, William M. Eisenberg, and Ronald E. Kutscher, Quick Special Purpose Surveys Passed Test during Coal Strike, Monthly Labor Review, 102(2), 1979, pp. 62 64.

102. Jim Puzzanghera, Jennifer Bjorhus, and Matt Marshall, West Coast Ports to Reopen Today;

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 483

Bush Uses Authority to Intervene in Dispute, Knight Ridder Tribune Business News, October 9, 2002, pp. 1 3; J. Martin McOmber, Six-year Deal Ends West Coast Dockworker Dispute, Knight Ridder Tribune Business News, January 23, 2003, pp. 1 2.

103. Charles M. Rehmus, Emergency Strikes Revis- ited, Industrial and Labor Relations Review, 43, January 1990, pp. 176 180.

104. Michael H. LeRoy, Compulsory Labor in a National Emergency: Public Service or Involun- tary Servitude? The Case of Crippled Ports, Berkeley Journal of Employment and Labor Law, 28(2), 2007, pp. 331 373; Michael H. LeRoy and John H. Johnson IV, Death by Lethal Injunction: National Emergency Strikes Under the Taft- Hartley Act and the Moribund Right to Strike, 43 Arizona Law Review, 63, Spring 2001, pp. 63 134.

484 PART 2 The Bargaining Process and Outcomes

CA SE

ST UD

Y

9- 1 An Interest Arbitration Hearing

Background:

Dry Gulch is a small community of almost 14,000 peo- ple. The City has 67 employees who are divided into three groups. The Public Servants Union (PSU) Local represents 35 employees in a variety of jobs. A second group of 15 employees are not represented by a union. The third group of employees consists of 17 commis- sioned law enforcement officers through the rank of sergeant, represented by the Western Police Officers Association. Dry Gulch pays a neighboring town for professional firefighting services. The Western Police Officers Association ( the Association ) and the City of Dry Gulch ( the City ) did not agree on all of the terms of a new collective bargaining agreement, despite the assistance of a state mediator. Consequently, the parties submitted two items in dispute to conventional interest arbitration as specified in state law.

Duration of the Contract:

The first unresolved certified issue relates to Article 2 (Term of the Agreement). The City proposes a two- year contact. The Association seeks the status quo of a three-year contract.

Position of the City on Article 2:

The City argues that a two year contract will enable it to work with greater efficiently. A two-year contract term will enable the City to bargain with all employees in one year rather than bargain with the PSU local one year and the Association a different year. The City pre- fers to negotiate with all unions under the same cir- cumstances and the same economic environment.

The second reason the City requests a two year contact is because the current health care plan ( Plan A ) will no longer be offered by the local Health Main- tenance Organization (HMO) two years from now. The discontinuation of Plan A was announced early by the HMO. This was so that parties with collective bargain- ing agreements would have a chance to negotiate a new health care provision consistent with the new coverage ( Plan B ) offered by the HMO prior to the date of the transition. The parties have already agreed to switch to Plan B coverage at the appropriate time. The City

argues that with the anticipated change in health care coverage it is important to the City to bargain with both union groups at the same time to insure consis- tent contract language in the new collective bargaining agreements.

Position of the Association on Article 2:

First, given the amount of time that has elapsed since the expiration of the contract, a two-year contract would actually be several months shorter than two years. Second, the last four contracts have all been three-year agreements. If one side wants to change the status quo, that side bears the burden of convincing the arbitrator, and the City has not met such a burden. The PSU group has no relevance to the Association s negotiations: the issues that relate to the two bargaining groups are different because they are in different types of jobs, and PSU is never a party to the Association s interest arbitration. The Association further argues there is sufficient time for the parties to bargain on issues related to the change in health care plans.

Wages:

The second unresolved issue concerns Article 13 (Wages). The City proposes a 2 percent increase for YEAR 1 and a 1.6 percent increase for YEAR 2. The Association proposes a three (3) year contact with a 3.0 percent increase in YEAR 1, a 3.5 percent increase in YEAR 2, and a 4.0 percent increase in YEAR 3.

Position of the City on Article 13:

The City notes that in the early part of the last decade the City experienced significant growth. However, in 2008 the great recession hit the community: two major employers had massive layoffs, construction came to a halt and the population declined by 11 per- cent. After the recession began, property tax- based-assessed valuation dropped almost 30 percent. This reduced property tax income for the city govern- ment. Meanwhile, sales tax revenue from retail sales also dropped significantly. Ever since 2008, the City s expenses have outpaced revenue and the City is now facing a structural deficit. The City is recovering from

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 485

the recession but has not fully recovered. The City asks the Arbitrator to consider these economic realities in assessing the wage proposals of the parties. The City also offers data on sales tax and the City s relative ability to receive revenue from sales tax. The evidence shows that the City is last among its list of nine comparable cities in terms of sales tax generation capabilities and next-to-last for property tax revenue. For comparable cities, the City uses those within the state that are within a band of approximately 25 percent smaller to 25 per- cent larger in population 10,000 to 18,000 people.

The City argues that over the past decade, officer wage increases have exceeded the rate of inflation. Asso- ciation members have earned 14.1 percent more with their Collective Bargaining Agreement (CBA) increases than what they would have earned if their wage increases were equal to the Consumer Price Index for Urban Consumers (CPI-U; details about the CPI-U at http://www.cpi-u.info/What-Is-CPI-U.aspx). Under the CBA the actual increase for a Top Pay-Step Officer s Base Wage was $5,924.00 last year. However, if the CPI-U had been used during this period the officer would have increased by only $5,192.00.

The generosity of the City has been rewarded with low turnover. The City has not had difficulty with retention and recruitment of police officers. Turnover data indicate that over the past decade there have been almost no voluntary departures from the Dry Gulch Police Department. Those officers who have left have done so for reasons unrelated to wages and benefits. These facts are undisputed.

The City argues that its proposed wage increase of 2 percent increase (YEAR 1) and 1.6 percent (YEAR 2) constitutes a cost of living adjustment that exceeds what has been given to nonrepresented employees and even the PSU local. Of the three employee groups in the City, Asso- ciation members have had the largest overall wage increases over the last decade. The City hopes that the Arbitrator agrees that the City has already been generous with the police officers, and simply cannot afford to acqui- esce to the Association s demands. Further, interest arbi- tration is not a forum where a union should obtain results that are not obtainable through robust good faith bargain- ing. Thus, the City urges the arbitrator to issue a ruling that is closely aligned with the City s offer.

Position of the Association on Article 13:

The Association argues that the City s financial problems have been exaggerated and introduces into evidence: (1) anEmployee Newsletter from last May,

(2) three news releases from the past year, (3) a tran- script of last month s City Council meeting where City revenues were discussed, and (4) a City website print- out regarding revenue and expenses. All of these exhi- bits indicate that the city is on the road to recovery from the recession and is financially stable.

The Association argues that an interest arbitrator should consider the parties bargaining history. The City bargained for the current contract after arguing that there was a recession, the City had financial pro- blems, and the Mayor informed Association members that he was going to disband the police department or privatize it. Consequently, the Association agreed to a contract with low wages. There was a wage freeze three years ago, and only a one (1) percent raise each year subsequently. In this contract the Association made insurance concessions by agreeing to pay more of the insurance costs. This contract was signed three years ago and six months later, when running for re- election, the Mayor proclaimed that the City finances were in the black. Now, the Mayor is saying in inter-

views that the City is back from the brink, and on solid financial footing. The City also added another police officer last year. It seems that the City only claims poverty when negotiating labor contracts.

However, during the term of the current CBA, three years ago, while Association members received no wage increase, inflation increased 2.86 percent. Last year, inflation increased another 2.31 percent while Association members received a 1 percent raise. This year, inflation increased again by 2.50 percent while Association members received another 1 percent wage increase. According to the City s own inflation index, Association pay increases fell behind inflation by 5.67 percent during period of the contract.

The City and the Association do not agree completely on a list of comparable cities. Using the City s list we see that if Association members are given a 2 percent wage increase for the first year of the new contract, they will be 2.2 percent below the average wage of the City s set of comparators. Without the 2 percent wage increase Association members are behind the City s external comparators by 4.4 percent for the first year. However, we believe that the City s population band is too narrow and we have used a range of cities within a population band of 50 percent to 150 percent the size of Dry Gulch: 7,000 to 21,000. If we use the Association s set of comparable cities, we see that Association employees are 5.1 percent behind the Association s set of comparators. Regardless of which

486 PART 2 The Bargaining Process and Outcomes

list is used, a 2 percent raise is grossly inadequate. A 3 percent increase is a minimum first step to begin to close the gap. In our proposal, we have purposely deferred larger wage increases to later years when the City is fully healthy, financially, so that the City can afford to give police officers larger increases to fully close the pay gap with similar cities.

Factors to be considered by the arbitrator, as specified in state law:

(1) In making its determination, the arbitrator shall be mindful of the legislative purpose of the law, namely, there exists a public policy in the state against strikes by uniformed personnel as a means of settling their labor disputes; that the uninterrupted and dedicated service of such employees is vital to the welfare and public safety of the state; that to promote such dedicated and uninter- rupted public service, strikes shall not be allowed; rather, there should exist an effective and adequate alternative means of settling disputes, namely interest arbitration.

As additional standards or guidelines to aid the arbitrator in reaching a decision, he/she shall consider:

(1.a.) The constitutional and statutory authority of the employer [Note: The constitutional and statutory authority of the City was not an issue in these proceedings];

(1.b.) Stipulations and agreements of the parties [Note: Other than agreeing that all evidence would be public, there were no stipulations or agreements for these proceedings];

(1.c.) The average consumer prices for goods and services, commonly known as the cost of living [Note: The parties agreed that the Consumer Price Index (CPI-U) for the state rose, on average, 2.7 percent between 2003 2008, rose only 0.68 percent during the 2009 2010 recession, and has risen, on average, 2.65 percent since 2011]; and

(1.d.) Other factors, not confined to the factors under (a) through (c) of this subsection, that are

normally or traditionally taken into consideration in the determination of wages, hours, and conditions of employment. [Note: The arbitrator observed that the other factors are not specifically named in the law.

However, such factors traditionally include: (1) the abil- ity to pay, (2) bargaining history of the parties, and (3) retention and recruitment of personnel.]

(2) Comparison of wages, hours, and conditions of employment of personnel involved in the proceedings with the wages, hours, and conditions of employment of like personnel of like government employers of sim- ilar size in the western United States.

Questions: 1. Assume the role of a Conventional Interest Arbi-

trator: Analyze the arguments for a two-year vs. a three-year contract. Which arguments are most compelling? Why?

2. Turning to the wage issue, consider the three other factors: (1) the ability to pay, (2) bargaining history of the parties, and (3) retention and recruitment of personnel. Which side does each factor tend to favor? Why?

3. Why does the list of comparable cities matter? Other than population, what should an arbitrator consider when deciding whether a city is comparable to another city?

4. If you were a Conventional Interest Arbitrator, how would you rule on the wage issue? Explain your rationale.

5. If you were a Final-Offer Interest Arbitrator, and you could only pick one side s package of propo- sals, which side would you pick? Why?

6. Suppose you were asked to mediate this dispute. What would you do, procedurally? What would you suggest regarding the issues? How would you moti- vate the parties to settle?

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9- 2 Legitimate Picketing? Or Illegal Secondary Boycott?

The construction union had signed a master agree- ment with most of the contractors in the area. How- ever, a few contractors remained nonunion and offered significantly lower pay and benefits to their workers.

The union decided to publicize these lower wages in order to put economic pressure on these contractors and to shame the companies into accepting the mas- ter agreement or to at least offer similar pay and

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 487

benefits. Thus, the union was engaged in a primary labor dispute with these nonunion subcontractors who refused to compensate workers according to area labor standards. The union decided to start with the House of Cards Construction (HCC).

To publicize the primary labor dispute with HCC, the union on eight occasions set up a banner and engaged in handbilling near the Caring Hearts Hospi- tal, where the contractor was working as part of a building expansion. The union erected a banner that was 4 feet high and 16 feet long on a public sidewalk facing the street within 100 feet of the main hospital entrance. Twice the union also put a 15-foot high inflatable rat on a flatbed truck (with the name of

the contractor across the rat s stomach) and parked the truck next to the banner on a city street. The union was not the bargaining representative of any employees at the hospital. The banner read Shame on House of Cards Construction in large letters, with the words Labor Dispute in smaller letters on each side. At each display two or three union representatives held up the banner in a fixed position but did not move it during the display period. The union representatives also gave out handbills to anyone who approached them and asked about the demonstration. Union mem- bers also passed out leaflets with the heading, HCC: Rat Employer asking people to complain to hospital administrators about their use of nonunion construc- tion labor. The handbill read, in part, Shame on House of Cards Construction for Desecration of the American Way of Life and included a drawing of a rat gnawing on an American flag. The handbill went on to state that the union had a dispute with HCC and other nonunion contractors based on their failure to respect area labor standards. The leaflet criticized the hospital for hiring HCC to perform a particular work project. Union members holding the banner and pass- ing out the handbills did not chant, yell, or march back and forth. At no time was anyone prevented from entering the hospital.

House of Cards Construction filed an unfair labor practice charge with the NLRB alleging a violation of Section 8 (b)(4)(ii)(B) of the Labor Management Rela- tions Act (LMRA). HCC argued that the union s action of placing individuals at or near the entrances to the hospital was illegal picketing and thus should be barred. Showing the inflatable rat and displaying a ban- ner was the equivalent of picketing, and the display and holding of leaflets directed at pedestrians and motorists approaching the hospital was illegal picketing. Further,

the conduct was confrontational and constituted illegal secondary activity because the union was attempting to coercive the neutral hospital to not do business with a particular firm.

HCC further argued that the information on the banner and leaflets was deceptive, dangerous, and disturbing, It was deceptive in that the information

did not state that the union had no dispute with the Caring Hearts Hospital. Rather it was intended to mis- lead the public into thinking that the union had a labor dispute with the hospital regarding its treatment of hospital employees. The initials HCC and CHH are similar and easily confused by the public. This deception could have a negative economic impact on the hospital and should be prohibited. It was dangerous because ill patients might think that hospital employees are striking, and these patients might suffer from stay- ing home and forgoing treatment. Finally, the inflatable rat would be disturbing to patients when they looked out their hospital windows. Courts have upheld limits on picketing near customer entrances, especially where quiet and tranquility are necessary, as at a courthouse or library; a hospital certainly falls into this category. See Carpenters & Joiners Union v. Ritters Cafe, 315 U.S. 722 (1942); Kulish v. Policemen s Benevolent Associa- tion, 84 LRRM 2143 (1973); Cox v. Louisiana, 37 U.S. 536 (1965).

The union s defense argued that Section 8 (b)(4) of the LMRA is not intended to prohibit the display of banners during a labor dispute. The union cited the U.S. Supreme Court s decision in DeBartolo Corp. v. Florida Gulf Coast Bldg. Trades Council, 485 U.S. 568 (1988), which upheld the use of handbilling and instructed the NLRB to be careful in applying the stat- utory language of Section 8 (b)(4) so as not to unduly restrict the lawful exercise of free speech. The union argued that holding up a banner, giving out handbills, and even using an inflatable rat to publicize an ongoing labor dispute is not threatening. Nor are these activities as intrusive as actual picketing (with moving crowds of picketers carrying wooden signs). The union noted that it did not block any entrance and it knew of no patients who decided not to seek treatment as the result of its banner. The union clearly stated that its dispute was with HCC and it merely used creative means to publi- cize its dispute. Finally, with major construction activ- ity going on as a new wing is added to the hospital, all is not serene and quiet on hospital property. The union was not boisterous and did not add significantly to the noise of the construction.

488 PART 2 The Bargaining Process and Outcomes

Questions 1. Which employer was the primary employer? The

secondary employer? 2. The union distinguishes between displaying a sta-

tionary banner and picketing (where union mem- bers move about, carrying wooden signs). Analyze this argument.

3. What actions would you recommend the secondary employer involved in this case take to minimize any adverse consequences of the union s handbilling and banner activity?

4. Does the union s handbilling, giant rat, and banner activity represent an unfair labor practice violation under the LMRA? Why or why not? If so, what would be an appropriate remedy?

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9- 3 The Aftermath of a Strike

On August 6, the collective bargaining agreement between the company and the union expired. Two days later, the union called a strike at the company s facilities, including those at 3303 Express Lane, St. Louis, Missouri. The strike ended on August 28 with the signing of a new three-year agreement. The follow- ing day, employees began returning to work. During the strike, a substantial number of bargaining unit employees at the plant crossed the union s picket line and continued to work.

On September 2, the union distributed materials to its union stewards for posting on bulletin boards main- tained by the union at the company s facilities. One of the items posted was a commentary by author Jack London, entitled Definition of a Scab :

After God had finished the rattlesnake, the toad, and the vampire, he had some awful substance left with which he made a SCAB. A SCAB is a two- legged animal with a corkscrew soul, a water- logged brain, and a combination backbone of jelly and glue. Where others have hearts, he carries a tumor of rotten principles.

When a SCAB comes down the street men turn their backs and angels weep in Heaven, and the devil shuts the gates of Hell to keep him out. No man has the right to SCAB, so long as there is a pool of water deep enough to drown his body in or a rope long enough to hang his carcass with. Judas Iscariot was a gentleman... compared with a SCAB; for betraying his master, he had the charac- ter to hang himself a SCAB hasn t. Esau sold his birthright for a mess of pottage. Judas Iscariot sold his Savior for thirty pieces of silver. Benedict Arnold sold his country for a promise of a commission in the British Army. The modern strikebreaker sells his

birthright, his country, his wife, his children, and his fellow man for an unfulfilled promise from his employer, trust or corporation.

Esau was a traitor to himself. Judas Iscariot was a traitor to his God. Benedict Arnold was a traitor to his country. A strikebreaker is a traitor to himself, a traitor to his God, a traitor to his country, a traitor to his family, and a traitor to his class. THERE IS NOTHING LOWER THAN A SCAB .

Union steward Cora Able immediately posted the Definition of a Scab along with another article, enti-

tled From Cora s Desk, praising the strikers and crit- icizing those who remained on the job, on a union bulletin board in the computer terminal room, adjacent to room 102 at the company s plant. Able posted the items in response to a memo from chief union steward, employee Anita Cain, requesting that she do so.

Able had been responsible for posting material on the union bulletin board in the computer terminal room since she became the union job steward three years prior. Able had previously posted campaign liter- ature regarding candidates for union office, notices of union meetings, and articles from union newsletters on this bulletin board. Able had also removed comic strips from the bulletin board. Before September 2, no com- pany supervisor had ever told Able what she could or could not post on the union s bulletin board, nor had any company supervisor ever removed anything from this board before this date.

The company had no written rules concerning the posting of literature on the union s bulletin boards on the company s premises. Neither the current nor previ- ous collective bargaining agreements covering bargain- ing unit employees contained any provision regarding the union s bulletin boards at the company s facilities.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 489

During the afternoon of September 2, company supervisor Joe Bay saw several employees near the bul- letin board, apparently reading the posted articles. Supervisor Bay removed the Definition of a Scab and deposited it in a garbage can. Union steward Able noticed that the article had been removed and asked Bay where it was. Supervisor Bay told her he had removed it, balled it up, and thrown it into the garbage can.

Union steward Able took the sheet from the can, then got another copy from her desk, and hung it on the union bulletin board. In the presence of several other employees, supervisor Bay promptly snatched this copy down, telling Able, This mess [isn t] going to hang up here. Bay then specifically prohibited Able from posting another copy and warned her of disciplin- ary action if she did so. Able called the chief union steward who spoke to supervisor Bay, requesting that he leave the literature on the bulletin board. Bay then told the chief union steward that the Definition of a Scab had no business on the board and was causing animosity among the clerks.

A half-hour later, supervisor Linda Trevino informed union steward Able that another supervisor, Ralph Coe, wanted to see her. Coe had a copy of the Definition of a Scab in his hand, and he told Able, We re not going to have this mess hanging in this

office. In the presence of supervisors Trevino and Bay, Coe also warned Able that she could be disci- plined for insubordination. Union steward Able asked to be excused and on returning to her desk called chief union steward Miller again.

Fifteen minutes later, supervisor Trevino told Able, We would like to see you for five minutes. Able told

Trevino that she did not want to go back to supervisor Coe s office. However, Able complied on Trevino s assur- ance that the return to Coe s office would take only five minutes, long enough to receive an apology. In Coe s office, Able was asked to tell her side of the incident. Supervisor Coe apologized, as did supervisor Bay, for the way they had treated Able in front of the other employees. Coe did not retract his support for supervisor Bay s action in removing the article and preventing its reposting.

On September 1, union job steward Milton Musk posted a copy of the Definition of a Scab on a union bulletin board located in a break room next to rooms 208 and 209, the switching control center, at the com- pany s plant. Musk had been responsible for posting material on this bulletin board for the past three years. As a matter of practice, Musk had posted on

the board notices of union meetings, listings of job vacancies provided to the union, lists of union officers names, announcements for an employee charitable organization, and the campaign material of candidates for union office. Occasionally, Musk removed cartoons from the board that had been posted by employees. Before September 1, no supervisor had ever told Musk what he could or could not post on the union bulletin board.

The Definition of a Scab remained on the union bulletin board in the Switching Control Center break room until about 4 P.M. on September 1. About that time, supervisor Wesley Vie directed Musk to remove Definition of a Scab. Union steward Musk said he did

not wish to do so. Supervisor Vie removed the printed copy of the Definition of a Scab as Musk watched.

The following day, before 7 A.M., the Definition of a Scab again appeared on the bulletin board. Super- visor Tom Davis summoned union steward Musk to his office at approximately 8 A.M. and told him to take down the Definition of a Scab from the union s bulletin board. Musk protested that he did not put it up, and he should not have to take it down. Supervisor Davis then warned Musk that he would suspend him if he continued to refuse to obey the order to take it down. Supervisor Davis asked for Musk s building pass and key, whereupon Musk requested permission to make a telephone call. After consulting a union dis- trict steward, Musk removed the Definition of a Scab. Musk again told Davis that it was unfair that he had to remove the article when he had not posted it. Supervi- sor Davis told Musk that he didn t want trash like that posted.

The union filed an unfair labor practice charge contending that the company violated Section 8(a)(1) of the LMRA by removing the Definition of a Scab from union bulletin boards and by threatening employ- ees with punishment if they posted or reposted the item on those bulletin boards. The company denied that it violated the LMRA on the grounds that the post- ing of Jack London s pejorative appraisal of nonstriking employees had disrupted the discipline of its employees and thus was beyond the protection of Sections 7 and 8(a)(1) of the act.

Questions 1. How does a union gain the right to use bulletin

boards on a company s premises? 2. Why was the union so insistent on having the

Definition of a Scab posted on the bulletin board?

490 PART 2 The Bargaining Process and Outcomes

3. Since the union is already recognized as the exclusive bargaining unit representative and the new contract terms have been settled, how or why does Section (8)(a)(1) apply to this case?

4. Did the supervisors removal of the posted union material and threats to discipline union members for reposting the Definition of a Scab constitute an unfair labor practice under the LMRA? Explain your reasoning.

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9- 4 The Right to Strike

Seven of the employer s 11 concrete truck drivers met several times during the week of September 16 to dis- cuss their current wage rates, the lack of a medical insurance plan, and whether they should consider join- ing a union. After meeting with a representative of the national truck drivers union, four of the seven drivers signed union authorization cards. Employee Santos, one of the card signers, wrote a letter that the seven employees presented to the company s plant manager on Friday, September 20. The letter stated, in part, Today all employees wish to express a silent strike in

pursuance of the right that our salaries be increased to $15.75 per hour. We will not work today ... until an accord is reached.

Later that Friday morning, the company president met with seven employees and told them that the com- pany was in no position to give any wage increase; however, steps were already underway to establish a medical insurance plan by the end of the year. The seven employees met outside the plant and decided the company s position was unacceptable. The com- pany president stated that the board of directors would be meeting the following day (Saturday) to con- sider the matter. The seven employees continued their walkout during the rest of Friday.

The board of directors met on Saturday and calcu- lated the annual cost of the employees wage demand to be $308,000. The board of directors found this unaccept- able and decided to replace the seven drivers rather than agree to increase wages. Later on Saturday, the plant manager offered driver positions to three individuals who already had job applications on file with the com- pany. All three applicants accepted the job offer and were scheduled to begin work the following week. On Monday, the seven drivers who had walked out on Fri- day returned to the company but remained outside the plant entrance. Upon learning that the seven drivers had not reported for work at 8 A.M. on Monday morning

but were instead congregating in front of the plant, the company president prepared a letter that was given to each of the seven drivers outside the company s entrance at 9:30 on Monday morning. The letter referred to the walkout on the previous Friday and stated in relevant part: The circumstances of having abandoned your work without first holding a dialogue, then bringing later on some demands which we cannot face economi- cally at this time, in addition to your refusal to work if your conditions are not met exactly the way [you] stated them, we have to interpret it as a resignation from your job, leaving us without alternatives and unfortunately we have to accept your decision effective today, Monday, September 23. The letter went on to state that the Fri- day work stoppage forced the company to fill some vacancies and curtail its operations in order to recover in part from the losses it had suffered.

After receiving the letters, the seven employees left the plant to attend a meeting with a union representa- tive. Sometime later on that Monday, three of the employees returned to the plant and requested rein- statement. The company reinstated the three drivers to their former jobs. The Union filed an unfair labor practice on behalf of the remaining four truck drivers, alleging that each had been unlawfully discharged in violation of the LMRA, as amended.

Questions 1. Does the work stoppage by the truck drivers in this

case represent an economic strike or an unfair labor practice strike?

2. What is the difference between the reinstatement rights of an unfair labor practice striker and an economic striker?

3. Did the employer unlawfully discharge the four truck drivers who never returned to work? Explain your reasoning.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 491

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9- 5 Denial of Health Care Benefits to Striking

Employees

The employer operates two production facilities, one in Michigan and the other in Ohio. Employees at both plants are covered under separate, but similar labor agreements. On August 10, a lawful economic strike was initiated by local union members at the company s Ohio plant. The Ohio local union members established picket lines at both the Ohio and Michigan facilities of the employer. Picketing occurred at the Michigan plant on August 10 11; August 23 26; August 31 September 3; and September 7 9.

On August 5, the company sent a letter to all employees advising them of the status of negotiations at the Ohio plant and warning employees that an employee s refusal to perform work under these circum- stances could result in the immediate loss of all unac- crued benefits, including health care. The Michigan plant employees who honored the picket line established by the Ohio plant employees were subsequently denied health care benefits by the company on the days they participated in the strike by refusing to cross the picket line established at the Michigan plant.

Both the employer and union agree that the Michi- gan plant union members who honored the picket line established at their plant did not cease to be employees of the company as a result of their refusal to cross the picket line. The language in the parties contractual no- strike agreement covering the Michigan plant does not prohibit employees from engaging in lawful sympathy strike activity, and thus covered sympathy strikers can- not be disciplined or discharged for their refusal to cross a lawfully established picket line. Both the union and the employer agree that the Michigan plant labor agreement is silent on the specific question of whether health care benefits must be maintained or can be denied to employees who strike.

The only contract language with any possible rele- vance concerns the clause dealing with termination of employment, which states: In the event of termination of employment other than normal layoff or retirement with pension, an employee s hospitalization, surgical and medical coverage and life insurance under the group arrangement shall be cancelled in thirty (30) days. The employer argues that this language is not applicable

to the strikers in this case because none of the strikers were terminated. The union argues that if the parties clearly intended to permit a terminated individual to retain medical insurance benefits for at least 30 days after termination, then surely employees who were not terminated would have at least an equal right to con- tinue health care coverage, even though they lawfully refused to work on certain dates in support of a lawful economic strike by other company employees.

The union filed a contractual grievance stating that the employer s withdrawal of medical benefits from Michigan plant sympathy strikers violated their con- tractual right to receive such benefits as provided under the health care benefits clause in the current labor agreement. The union asked the arbitrator to require the employer to reimburse all affected striking workers for all covered health care expenditures paid by the striking workers on dates when the company had suspended their health insurance coverage due to their refusal to cross a lawfully established union picket line at their place of employment.

Questions 1. Should the arbitrator uphold the union s grievance

and find that the company s withdrawal of medical benefits from striking workers violated their con- tractual right to receive such benefits? If so, what should the appropriate remedy be? Explain your reasoning.

2. When the current contract governing the Michigan plant expires, would you advise the employer to negotiate specific contract language as part of a no- strike agreement clearly waiving bargaining unit members right to engage in a sympathy strike dur- ing the term of the labor agreement? Explain your reasoning.

3. If the employer did propose a waiver of sympathy strike rights in the future, would this bargaining issue likely represent a high-, medium-, or low- priority item for the union and its membership? Explain your reasoning.

492 PART 2 The Bargaining Process and Outcomes

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9- 6 Product Picket Activity

A union engaged in a lawful economic strike against the Brown Bag Company (the primary employer) decided to establish a product picket line at the site of the Stop & Shop grocery store, a secondary employer who used grocery bags produced by the Brown Bag Company. Although the Stop & Shop grocery store does provide boxes instead of bags to a few customers who specifically request a box, the vast majority of grocery items are carried from the store in bags produced by the Brown Bag Company.

The union s picket signs were carefully worded to identify the Brown Bag Company as the target of the picket action and to request customers of the Stop & Shop grocery store to boycott only bags produced by the Brown Bag Company. During the two days that picketing occurred, 150 of 4,300 customers who shopped at the Stop & Shop grocery store specifically requested a box to transport their groceries rather than a bag. Managers were able to provide enough boxes for about two-thirds of the customers who requested a box rather than use a grocery bag produced by the Brown Bag Company. A few customers brought their own containers from home (e.g., pillow case, bag, or box) to transport their grocery purchases. One customer, upon being told by a Stop & Shop manager that there were no more boxes available, left the store without purchasing or taking any of the grocery items she had brought to the checkout line. The Brown Bag Company filed an unfair labor practice charge against the union

alleging that the union s product picket action was a violation of Section 8 (b)(4), LMRA. The employer sought an order to prevent the union from engaging in further product picket activity at the Stop & Shop grocery store. The employer argued that it is impossible for a customer to comply with the union s boycott of Brown Bag Company grocery bags without also refus- ing to purchase grocery items sold by the Stop & Shop grocery store since the grocery store exclusively used grocery bags produced by the Brown Bag Company. As evidence, the employer pointed to the fact that there were only enough boxes available for approxi- mately 2.3 percent of the total customers who shopped at the grocery store during the two days of product picket activity. The employer argued it was not reason- able to expect customers to bring their own containers with them to transport grocery items when shopping at the Stop & Shop grocery store.

Questions 1. Would the Stop & Shop grocery store in this case be

classified as a neutral, secondary employer, or business ally of the Brown Bag Company? Explain your reasoning.

2. Should the merged product doctrine be applied in this case to declare that the union s product picket action was unlawful? Explain your reasoning.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 493

PART3 Administering the Labor Agreement

After the collective bargaining agreement has been negotiated and accepted by both union members and management, the day- to-day tasks of administering the agreement begin. Although not the most publicized nor the most dramatic part of labor relations, this process involves more union and manage- ment officials than contract negotiations and provides meaning and common law princi- ples to the agreement. The chapters in Part 3 present the fundamentals of contract administration, and labor and employment arbitration followed by a subject that relates to every workplace employee discipline.

Chapter 10 Contract Administration

Chapter 11 Labor and Employment Arbitration

Chapter 12 Employee Discipline

495

CHAPTER 10

Contract Administration

IT SEEMS LIKE it has been ages since a bunch of us guys in the maintenance department were sitting around at lunch time and one said, I wish we had a voice in how we are treated. We knew that management was playing favorites in promotions and layoffs. In fact, one year they cut our wages 10 percent across the board. They called it an austerity move. So a group of us contacted my neighbor who works as an international union representative. He said to find out if there was interest in forming a union. We had a meeting and about 30 employees showed up. Since the plant employs 150, we knew we had a lot of work to do.

Finally, after six months of contacting other employees, explaining what a union is and does, and having meetings with the international union representative, we petitioned for a representational election. After a vigorous campaign, we won.

Then it took us six more months to get a labor agreement. Our three-year agreement covers all of the traditional subjects, such as wages, benefits, holidays, vacations, health insurance, promotions, layoffs, and just cause for discipline. These sub- jects are all in writing and everyone can read them.

Last month, we had a meeting to elect officers. I was elected shop steward for the maintenance department for a three-year term.

Now I realize that I have an awesome responsibility to make sure that I represent employees in my department and that management complies with the agreement.

496

Questions 1. How do I set up a communication network among employees to

ensure that management is complying with the agreement?

2. Several employees in the maintenance department never supported the union. In fact, they are not even union members still. Do I have to represent them like I do the dues-paying members?

3. When an employee comes to me with an allegation that the company has not followed the agreement, what do I do?

Labor agreement negotiations are usually the most publicized and dramatic aspect oflabor relations. Strike deadlines, negotiators in shirtsleeves working around the clock to avert a possible strike, and the economic settlement of the labor agreement receive attention from the news media. The day-to-day administration of the labor agreement, on the other hand, receives little, if any, recognition beyond that given by the involved parties. Contract administration, however, involves more labor and management officials and their time than do negotiations. It involves interpretation and application of the negotiated labor provisions. In contract negotiations, the union is typically the initiator; the union usually wants changes in the present agreement. The union, for example, proposes wage increases, more holidays, elimination of mandatory overtime, and others. In contract administration, management assumes the initiating role. In other words, management exercises its administrative initia- tive to make decisions and to direct the business operations. The union makes sure manage- ment applies the provisions of the negotiated agreement correctly.

During a typical year, managers in a large organization will make literally thousands of decisions on employment-related subjects such as wage increases, promotions, disci- pline, work assignments, layoffs, and performance appraisals. In small organizations, man- agers will make hundreds of these types of decisions. In organizations where there is a collective bargaining agreement that has been negotiated and agreed to by management and the union, rules, policies, and procedures contained in the collective bargaining agree- ment will guide the managers in their decisions.

Many times before a final decision is made, a responsible manager will be assigned the task of conducting an investigation to gather facts that will be used in the decision-making process. In fact, most managers have their most frequent labor relations experience during the investigation phase and the decision-making process than any other labor relations activities. In decisions on administrative issues (covered in Chapter 8), such as a promo- tion, the investigation will include the collection of information such as job requirements, seniority (job, department, or company), performance appraisals, supervisor recommenda- tions, test scores, and so on before the decision is made. In disciplinary matters (covered in Chapter 12) that involve a major infraction such as theft, fighting, carrying a weapon on the job site, and threatening a supervisor. The employee may also be suspended immedi- ately and the final decision of the type of discipline will be delayed until the investigation is completed. In disciplinary matters that are performance related, such as excessive absentee- ism and failure to meet production standards, the investigation will be conducted prior to the disciplinary decision. Performance-related information includes any type of perfor- mance records, attendance and tardiness records, past discipline (check time limits to make sure the discipline has not been erased and check to make sure the discipline has

497

been progressive), training received, and maintenance of the equipment to make sure the equipment is not the reason for the poor performance.

The employer should conduct a fair and full investigation of the misconduct prior to imposing disciplinary action. An inadequate or biased investigation, particularly if it fails to uncover evidence which would have justified the employee s behavior, will likely cause an arbi- trator to overturn the disciplinary action and reinstate the employee with or without back pay.1

The investigation itself is simply a systematic collection of facts that will serve as the basis for making a decision. Since employers are held accountable for their employment decisions, that is, compliance with the collective bargaining agreement or compliance with employment laws, the investigation should be speedy, thorough, and objective, and employ- ers should have a sound basis for making their employment decisions. The responsible manager will take many steps in completing the investigation. For example, in conducting an investigation of an altercation between employees, the investigator will interview wit- nesses and collect facts in order to describe and explain what occurred. As another example, if an employee falls on wet concrete on the job and seeks to be paid workers compensation, the manager will attempt to visit the scene of the accident as soon as possible after the fall to gather physical evidence, such as water on the floor, signs of leaking pipes, poor drainage, past requests to repair the leaking pipe, poorly lit stairwells, and so on.

After the responsible manager has gathered the facts, he or she will then decide which pieces of information are important. The relevant facts are the pieces of information that have the potential to help describe and explain what occurred. These pieces of information are referred to as evidence. Four types of evidence are used in investigations. The first type is testimonial evidence, which involves information gathered from witnesses to an incident. For example, if there are five witnesses to an incident, the responsible manager should interview all five witnesses. The witnesses tell the manager their recollection of the inci- dent, and the manager records the information.

If the responsible manager asks the witnesses to provide written statements or if there is an audio and/or video made of the interview, this type of evidence is considered docu- mentary evidence. Another type of evidence is physical evidence, which includes a broken chair that resulted from a fall, an item of clothing that contains blood as the result of an altercation, or a tool that was recovered from an employee engaged in theft of property. The final type of evidence is demonstrative evidence, which can be a diagram of the work- place where an incident occurred or a photograph that shows a cut to the lip of an employee who was engaged in an altercation.

As noted previously, the investigation should contain three valuable characteristics: speed, thoroughness, and objectivity. Speed is important because the longer the evidence remains uncollected, the more likely it will be contaminated or lost. Witnesses may forget certain facts or may even fabricate their story of what happened. As an expert on investiga- tion has claimed, the clock starts ticking at the time of occurrence, and each tick represents a decay of evidence. Thoroughness is important because it is necessary to collect all relevant facts. If there are five witnesses, the investigator should interview all five witnesses, not just a majority. Even if the first three witnesses tell the same story, the other two may have different versions. The first three witnesses may have been standing in the same location or they may have a reason to tell consistent stories. Objectivity means that the investigator needs to con- duct the fact-finding mission with a substantial degree of detachment. If the investigator is biased or prejudiced, the results of the investigation are less likely to contain the complete facts. If the investigator sympathizes with an employee who is being charged with a major infraction of company rules, the investigator may fail to ask tough and essential questions to obtain the truth. An expert on workplace investigation has formulated rules to govern inves- tigations2 (see the preceding Labor Relations in Action feature).

498 PART 3 Administering the Labor Agreement

After management has made its decision, the union will monitor this decision to make sure that it is consistent with the collective bargaining agreement and company rules and policies. If an employee or the union believes that management s decision has violated any provision of the collective bargaining agreement and rules and policies, either the employee or the union on behalf of an individual employee or a group of employees will file a griev- ance. Then the union will conduct its own investigation.

Grievances: Definition, Sources, and Significance

This chapter defines employee grievances and explores their sources and significance. The following section examines the grievance procedure: its typical steps, the relation- ships among grievance participants, and theoretical as well as practical concerns involved in contract administration. Alternative dispute resolution (ADR), a process to resolve grievances with the assistance of a neutral third party, is discussed. The chapter con- cludes with a discussion of the union s duty of fair representation.

A grievance represents the core of contract administration and is defined as an employ- ee s (or employer s) alleged violation of one or more provisions of the labor agreement that is submitted to the grievance procedure for resolution by the union representative and employer representative. A grievance is therefore distinguished from an employee s concern that is unrelated to labor agreement provisions and is not submitted to the grievance proce- dure. Grievances are usually written out at the first or second steps (Exhibit 10.1). Written grievances have several advantages for management and union officials:

1. Both union and management representatives need a written record of their daily problem resolutions. This record generates precedents that can guide future actions and save time in deciding similar grievances.

2. Written grievances tend to reduce emotions present in many employee concerns. Verbal confrontation on an emotional issue can produce exaggerated accusations

LABOR RELATIONS IN ACTION Rules Governing Workplace Investigations

(1) The person assigned to be an investigator should not have an interest in the outcome of the case.

(2) The investigator should interview the person who reported an incident first.

(3) After the scene has been secured, the investigator should visit the scene before interviewing other witnesses.

(4) The investigator should collect physical evidence at the scene and prepare demonstrative evidence for the use of those individuals who will evaluate the evidence and make decisions about the validity of the findings.

(5) The investigator should interview witnesses and take written statements immediately after visiting the scene (evidence becomes tainted from mem- ory loss and influence of others who have interests in the outcome of the investigation).

(6) The investigator should collect and review pertinent documentary evidence about the employee under

investigation only after other types of information have been gathered.

(7) The investigator should conduct background inter- views with supervisors, co-workers, medical pro- fessionals, and others who may provide relevant information that could help describe or explain what occurred.

(8) As the investigation nears completion, the investi- gator should conduct follow-up interviews to ask any question not thought of in the first interviews, to discover additional information, and to help resolve conflicting evidence already gathered.

(9) The investigator should write a final report which includes a summary of the findings, details of the investigative activities, the conclusion, and attach- ments of the evidence.

SOURCE: Antone Aboud, Conducting a Fair Investigation, The Dispute Resolution Journal, 60(3) (November 2004 January 2005), pp. 16 20.

499

that may irreparably harm the relationship between the parties. Consequently, writ- ing the grievance may be necessary for its rational discussion.

3. A written statement allows management and union representatives to focus on the employee s original grievance. As will be discussed further, a grievance can proceed through several steps that involve many more individuals than the aggrieved employee. Union officials may expand one employee s initial allegation into a broader philosophi- cal issue. For example, a complaint over the company s unilateral increase in prices of candy bars in the vending machine could conceivably be magnified in subsequent steps to protest the company s arbitrary and capricious actions in other working conditions.

4. Written grievances can benefit management in cases where the employee is appre- hensive about signing a written protest. One research effort found that supervisors react negatively in subsequent performance ratings of employees who file grievances against them that are decided in the employees favor.3

5. Even though most labor agreements permit a union officer to file a grievance on behalf of the grievant, requiring grievances to be written probably reduces the total number to which management representatives must respond.

There are two approaches to defining a grievance: therapeutic and legalistic. The thera- peutic approach is extremely broad and hinges on the employee s allegation that he or she has a grievance. Assume, for example, that Employee A protests Employee B s immoral

Exhibit 10.1 Examples of Incorrect and Correct Grievance Forms

USA Local Union No. Location

COPY FOR LOCAL UNION

Name Address Department Service Nature of Grievance

Union Ledger No.

Operation Check No.

Age

FILL OUT IN TRIPLICATE

GRIEVANCE REPORT USA Local Union No.

Location

COPY FOR LOCAL UNION

Name Address Department Service Nature of Grievance

Union Ledger No.

Operation Check No.

Age

FILL OUT IN TRIPLICATE

GRIEVANCE REPORT

SOURCE: United Steelworkers of America, The Grievance Man s Handbook.

500 PART 3 Administering the Labor Agreement

behavior. This protest could be an oral complaint without reference to the grievance proce- dure. Conversely, the employee could insist the complaint represents a violation of the terms of the labor agreement (the legalistic approach). Management seeks to identify the cause of a grievance and resolve it. More common in unionized firms is the legalistic approach, which restricts a grievance to an alleged violation of the provisions of the labor agreement. Man- agers prefer the legalistic approach because it restricts a potential arbitrator s decisions to only those subjects covered in the parties labor agreement, preserving management s right to control decisions affecting subjects not covered in the labor agreement.

In a typical collective bargaining agreement, multiple subjects are negotiated by the parties and included in the agreement under the general subject of wages, hours, and other terms and conditions of employment. Therefore, these provisions serve as the source of grievances. Typical subjects of grievances are listed in Exhibit 10.2.

Exhibit 10.2 Potential Subjects for Grievances

Administrative Issues

Use of seniority Promotion and transfers Layoffs/recall Work assignments Training Job changes and work restructuring Safety and health Disability Discrimination

Economics Issues

Wage rates Wage increases Job classifications Wage incentives Call-in pay Overtime assignments Shift differentials Merit pay Lump sum payments Past practice of benefits

Employee Discipline

Reasonable rules Fair and thorough investigation Equal treatment/discrimination Due process rights denial Mitigating circumstances Excessive penalty Communication of the rules Abusive behavior Insubordination Falsification of company records Fighting on the job Workplace violence/threats Sexual harassment Absences/tardiness Use or possession of drugs and/or alcohol

CHAPTER 10 Contract Administration 501

Reasons for Employee Grievances Some research has focused on individual characteristics that predict who will file a grievance. One such study found that employees who file grievances are younger; more active in their unions; and less satisfied with their job, supervisor, and union.4

In a study of four organizations over ten years, researchers found that grievance filers had slightly higher performance ratings, substantially higher work attendance rates, and markedly higher promotion rates than nonfilers. However, following the grievance filings, the grievance filers had significantly lower promotion rates in all four organiza- tions, significantly higher turnover rates in three organizations, and significantly lower performance ratings in two organizations. Differences in work attendance were not significant.

The research also shows that the step in the grievance procedure where there is a settlement and a decision in favor of the employer makes a difference. The performance ratings, promotion rates, and work attendance were higher for grievants whose cases were settled at the first step of the grievance procedure than at subsequent steps. As well, performance ratings were significantly higher for grievants whose cases were decided in favor of the employer rather than the grievants. Thus, negative outcomes are more common for grievants whose cases are resolved at higher steps rather than lower steps of the grievance procedure, especially if the grievant wins the grievance.

Analysis of grievance filings appears to reflect the performance of first-line super- visors. During a ten-year period, supervisors against whom grievances were filed or settled had higher turnover rates (mostly involuntary), and lower job performance ratings and promotion rates than supervisors against whom grievances were not filed.5

Grievances have also assumed research significance. Many studies have examined how grievances relate to organizational characteristics and to outcomes.6

To better understand the reasons behind employee grievances, the following exam- ple is given. A first-line supervisor administers a labor agreement that has the following provisions pertaining to management s rights and the scheduling of work to be per- formed on a holiday:

Article III: Management rights

Section 1. The company s right to hire, fire, and direct the working force, transfer or promote is unqualified as long as this right is not used in any conflict with any provision of this contract.

Article IX: Holiday scheduling

Section 1. When less than a normal crew is required to work on a holiday, the following procedure will apply:

(a) The senior employee working in the classification desired will be given the opportunity to work.

(b) Employees assigned holiday work will be paid a minimum of eight hours at time and one-half the contract rate of pay.

(c) If an employee works out of classification on the holiday, the senior employee in the appropriate classification will also be paid a minimum of eight hours at time and one-half his or her contract rate of pay.

Article XII: Bargaining Unit Work

Section 1. Supervisors may perform bargaining unit work only during emergencies.

502 PART 3 Administering the Labor Agreement

With these provisions in mind, consider the following chain of events. A crane operator is needed to work the July 4 holiday. The senior employee in this classification starts work on his shift; however, after he has worked a half hour, the crane breaks down and can no longer be operated. Management believes the maintenance department will be able to repair the crane within two hours. All job classifications typically perform some minor housekeeping and clean-up work, such as picking up debris around the workstation; however, there is also a janitor s classification in the labor agreement.

The first-line supervisor has at least four options. First, the supervisor can send the employee home, although Section 1(b) of the labor agreement compels management to pay that employee eight hours at time and one-half the employee s hourly pay rate. Con- sequently, the first option is not attractive to management.

The second option would have the employee remain at work and do nothing until the crane is repaired. Because management is already obligated to pay the employee for the entire shift, it does not cost any additional money to have the employee sit by the work site until the crane can be repaired. The first-line supervisor is not likely to take this option, particularly if higher level management officials and other hourly employees see this individual being paid while not performing work.

The third option would be to have the crane operator perform minor housekeeping chores until the crane is repaired. While the third option appears most beneficial to man- agement, there is a good possibility that this action will result in a grievance from the senior employee in the janitorial classification, asking payment for eight hours at time and one-half because Section 1(c) would apparently have been violated. The fourth option for the supervisor is to help repair the crane to minimize the lost time. Because the agreement allows supervisors to perform bargaining unit work only during emergencies, the supervi- sor must be prepared to convince the union that an emergency has occurred.

The employee could file a grievance for one or more of the following reasons.

1. To Protest a Contractual Violation When labor and management officials negotiate a labor agreement, they are mainly con- cerned with agreement over the major issues. The negotiators are not concerned with determining the precise meaning of every word in the labor agreement, particularly if few or no previous problems have arisen from the contract language. Similarly, these officials cannot possibly anticipate all the unique situations in which the negotiated terms of the labor agreement may apply. Consequently, union and management negotia- tors often gloss over the unimportant provisions, leaving potential interpretational pro- blems to those who must live with and administer the labor agreement on a daily basis.

In the crane operator example, local union officials could contend that the crane operator did work out of classification a clear violation of Section 1(c). Management, on the other hand, could contend that the needed holiday work was within the scope of a crane operator s job and point out the impracticality of paying an employee an amount equal to 12 hours pay simply to pick up debris around the workplace. Another manage- ment contention could be that minor housekeeping chores are performed by all employ- ees; therefore, the crane operator did not work out of classification on the day in question. Hence, Article III, Management Rights, would prevail in this situation. Even further, management could claim that the crane breakdown created an emergency situation.

2. To Draw Attention to a Problem in the Plant Some grievances do not protest violation of the labor agreement; instead, they stress that management has obligations beyond the scope of the labor agreement. Most grievances

CHAPTER 10 Contract Administration 503

over alleged safety hazards fall into this category because labor agreements may not spec- ify management s detailed obligations in this area. The employee might file a grievance to communicate concern to management over a safety issue. In our example, the griev- ance over holiday scheduling might have been filed not over receiving payment for the senior janitor in the classification but to give union officers a forum in which to stress the inadequate number of maintenance employees for equipment repair.

Unions often draw attention to a problem in the hopes of setting the stage for future labor agreement negotiations. A common union tactic is to file several grievances over a particular issue to buttress and document union demands during negotiation of the sub- sequent labor agreement. For example, labor unions, adhering to a job-protection philos- ophy, do not want supervisors performing bargaining unit work because these activities could reduce overtime opportunities or even result in employees being laid off. In the course of the workday, supervisors may perform several tasks that could be classified as bargaining unit work. Employees file grievances whenever the supervisor engages in this practice, no matter how minor that physical activity may be (e.g., changing a light bulb). Armed with several grievances, in formal contract negotiations the union can dramatize its concern that (1) performance of bargaining unit work by supervisors is a widespread problem and (2) a contractual provision restricting supervisors from performing bargain- ing unit work would save the company time and money by hiring additional mainte- nance employees.

3. To Make the Grievant and Union Feel Important In nonunion settings, the authority of managerial policies and actions often goes unchal- lenged. However, the grievance procedure permits and encourages an employee to pro- test an alleged wrong committed by management officials. Some employees raise their perceived organizational status by calling their organizational superiors on the carpet to explain their actions. Such grievances are often filed against a supervisor who flaunts authority unnecessarily, to protest the supervisor s personality as well as actions.

Similarly, some union officials wish to emphasize their importance through griev- ance involvement. Those falling into this category use grievances and contract adminis- tration problems to advance to high political office in the union. One study found a positive relationship between encouragement of grievances and union rivalry as mea- sured by closeness of vote in the most recent union election: As incumbent union lea- ders contend with challengers for member support, they may seek to use the grievance process to extend support for themselves. 7 Grievances in these cases provide a forum where the union steward can demonstrate his or her verbal and intellectual capabilities to other management and union officials. Other union officials might wish to strengthen the union as an institution through the grievance procedure. Here, the importance of the union (not of the union official) is stressed, that is, the union is safeguarding its mem- bers from management s arbitrary and capricious actions.

On some occasions, employees have a genuine belief that their supervisor is mis- treating them in work assignments and pay raises. These employees want an opportunity to explain their feelings and vent their frustrations. They are able to voice their feelings to managers higher than their own. Therefore, the grievance procedure provides thera- peutic value to the frustrated employee. If employees are not allowed to be heard, the beliefs of mistreatment will escalate.

4. To Get Something for Nothing Some managers believe that a few employees file grievances to receive pay related to their skill in formulating and writing grievances instead of their work efforts. The janitor in

504 PART 3 Administering the Labor Agreement

our crane operator example might not have been inclined to file a grievance at the time the work was denied. Indeed, he may have had previously scheduled holiday plans and may have refused to work if management had made the initial offer. However, assuming the janitor s classification paid $12 an hour, the janitor might have felt that time and one- half for eight hours ($144) was worth the effort to file a grievance. The payment could be particularly attractive to an individual who did not have to alter holiday plans to obtain it.

Employees filing grievances for this reason find opportunities in the area of overtime administration. A common labor agreement provision requires management to equalize overtime opportunity among qualified bargaining unit employees desiring overtime. In addition, management is often contractually required to pay the employee for the over- time worked by another employee if an administrative error was made. For example, assume the following list represents the names of employees in the electrician s classifica- tion who signed the daily overtime list, thereby volunteering to work overtime if the assignment occurs after the completion of their normal work shift.

The figure to the right of the employee s name represents the number of overtime hours worked by the employee to date and also includes any overtime assignments not accepted by the employee for example, if Jones chooses not to work an eight-hour overtime assignment eventually worked by Grant, both employees are charged the eight hours. If an overtime assignment for electricians is needed on the day in question, the supervisor checks the overtime list and determines that Simms is lowest in overtime hours. Consequently, the supervisor would give Simms the first opportunity to accept or turn down the overtime assignment.

Suppose, however, that Simms desires to receive the overtime payment without hav- ing to work the overtime assignment. Simms could accomplish this by actively avoiding or hiding from the supervisor at the end of his or her shift when overtime assignments are determined. Confronted with an overtime emergency, the supervisor has to offer the assignment to Grant, the employee next lowest in overtime. The next day, Simms could file a grievance on the administrative error seeking to be paid the equivalent of Grant s overtime assignment for no corresponding work effort. Needless to say, this reason for filing a grievance draws management s ire, particularly because some employees appear to make a contest out of acquiring grievance freebies, or payment for time not worked.

There are other reasons employees file grievances. Motives are as varied and complex as the employees personalities and life experiences. Uncovering the motive behind a griev- ance may be helpful to management. However, it must be stressed that management must process the grievance even if it feels the employee s motives are illegitimate or improper.

Significance of Employee Grievances Unresolved employee grievances can significantly affect both nonunion and unionized firms. In some cases, unsettled employee grievances have prompted successful union- organizing drives. Managers in nonunion firms might adopt some sort of grievance pro- cedure to minimize discrimination suits, enhance employee input into organizational

Name of Employee Number of Overtime Hours Worked (and/or Refused since January 1)

A. Jones 89 hours

T. Grant 76 hours

B. Simms 43 hours

CHAPTER 10 Contract Administration 505

decision making, and minimize or eliminate the employee s desire to join a union. These ADR procedures are gaining favor in organizations today because they are less costly and more effective decision-making processes for both management and employees. How- ever, since most nonunion grievance procedures do not enable the employee to have representation or to have his or her grievance decided by a third-party neutral, there is speculation about the fairness of these nonunion grievance procedures and whether they provide adequate due process protections.8 (Other forms of dispute resolution in non- union settings are covered later in this chapter.)

In unionized firms, employees often have unique concerns that are neither addressed in collective bargaining nor explicitly covered in the labor agreement. Union officials therefore demonstrate their intent to represent members particular job interests against perceived arbitrary managerial actions through the use of the grievance proce- dure. A union not demonstrating its interest in union members through an effective grievance procedure runs the risk of lawsuits (discussed later in this chapter under Fair Representation ) or membership dissatisfaction with union leaders, which, in

turn, can result in members voting leaders out of office or even decertifying the union. Employee grievances and the grievance procedure can offer an organization two

advantages, namely, conflict institutionalization and open upward communication. Employ- ees who attempt to resolve grievances at an organization, having no grievance procedure, might participate in various job actions, such as sabotage, wildcat strikes, and job slow- downs, to solve the problem; or they might quit their jobs. Indeed, one study of New York state public school teachers under the age of 55 found that individuals with strong grievance procedures9 in their labor agreements were less likely to quit than those working under weaker grievance procedures. All these outcomes are costly to management, partic- ularly when recruiting and training costs of employee replacements are considered.10

A grievance procedure, however, institutionalizes conflict. It recognizes that dis- agreements between employees, management, and the union are inevitable and provides an orderly, consistent approach for resolving differences. Grievances and related proce- dures represent a major upward communication forum for employee voice, whereby an individual has an opportunity to offer input into management s decision making and to discuss, even appeal, adverse employment actions.

Some think that grievances might assume even more significance because other employee voice mechanisms are eroding as management, facing increased foreign and domestic competition, has become preoccupied with plant closings and large layoffs. Furthermore, many employees, while theoretically able to do so, are unwilling to pursue adverse job actions because of excessive costs and time delays.11

In one study, nearly half of the employees believed that the grievance procedure pro- tected them against management s arbitrary decisions and actions; however, these employees did not express a favorable opinion of the grievance procedure itself. Com- plaints included grievances that were not settled in a timely fashion; that if they filed a grievance, they would be exposed to management s reprisals; that the outcome of the grievance procedure was not fair and equitable; that the grievance procedure was not the best way to win one s case; and that once management made up its mind, it wasn t open to change. Surprisingly, 57.3 percent of employees chose not to file a grievance, even when they were in a position where they would have been able to do so.12

Preparation for Grievance Processing During the grievance procedure, the grieving party, typically the union, must persuade management that one or more of the provisions of the collective bargaining agreement has been breached. If management disagrees, management will attempt to persuade the

506 PART 3 Administering the Labor Agreement

union that management has complied with the provisions of the collective bargaining agreement. For example, if the agreement states that overtime will be assigned to the most senior employee who is available, the union will file a grievance when a more- junior employee is assigned overtime first. In response, management may claim that the more-senior employees were not available. On the other hand, if management is con- vinced that the union s grievance has merit, then management will probably attempt to reach a settlement of the grievance. As an example, the collective bargaining agreement provides that call-in assignments be offered first to the most senior employee. When a call-in assignment occurs, the supervisor calls the most senior employee at home, receives no answer, and then leaves a message on the answering machine. The supervisor then calls the second most senior employee and offers an early call-in assignment at dou- ble pay. When the most senior employee reports to work at the regular time, he observes that the second most senior employee is already working. The most senior employee files a grievance and claims that he was home and the phone did not ring. An examination of the telephone records shows that the supervisor had called an incorrect number and left the message on another person s answering machine. Under this discovery, management indicates its willingness to pay the grievant for the hours worked at the double time rate.

In processing a grievance, each party should approach the grievance just as if the grievance would be proceeding to arbitration. Every step in the grievance procedure prior to arbitration provides the parties an opportunity to negotiate a grievance settle- ment. There are several steps in building a persuasive case during the various meetings during the grievance procedure and in preparation for arbitration in the event the griev- ance is appealed to arbitration.13 Exhibit 10.3 provides guidance in preparing for griev- ance meetings and for arbitration in the event the grievance is appealed to arbitration.

Exhibit 10.3 Preparation for Grievance Procedure Meetings (and for Arbitration Hearing)

Step 1: Gather Evidence Since testimony of witnesses is the principal type of evidence, the investigator should identify persons on both sides of the grievance and interview all persons whose statements are relevant to the grievance. Often, the collective bargaining agreement contains a provision requiring cooperation in developing the facts and contentions in order to increase the possibility that a resolution can be achieved at the initial steps of the grievance procedure. If relevant documents and other forms of physical evidence are not voluntarily offered, a written request with an explanation of why the documents are relevant should be mailed by registered mail. If the request is not honored, the arbitrator may draw adverse inferences about the withheld evidence in the event the grievance proceeds to arbitration.

Step 2: Determine the Facts and Substantiate Them From the statements taken and evidence gathered, you should determine what facts the evidence establishes. Because the statements from witnesses will over- lap, you should collate the statements in the following manner: (1) create a sepa- rate cover page for each fact established; (2) separate your witnesses statements into the facts they address, noting the name of the witness on each; and (3) append the statement portions to the related fact cover pages.

Step 3: Assess the Facts for Credibility, Accuracy, Reliability, and Consistency As you add factual claims, add your observation and conclusions about credibility, accuracy, and reliability furnished by each witness. Then compare each statement for consistency.

(Continued)

CHAPTER 10 Contract Administration 507

In preparation for grievance processing, the union may make a request for information from the company to assist the union in its role as representative of bargaining unit employ- ees. Under the Management Labor Relations Act, the employer is required to provide infor- mation to the union, upon the union s request, that the employer has or can reasonably obtain, provided that the information requested is relevant and useful to the union in the processing of the grievance. If the employer refuses to supply such information to the union, the employer will be committing an unfair labor practice and the union may file an unfair labor practice charge against the employer and obtain the relevant and useful information through the National Labor Relations Board (NLRB) procedures (see Chapters 3 and 6). Examples of information that the union may request are listed in Exhibit 10.4.

Steps in the Grievance Procedure

The procedure for resolving employee grievances is specified in approximately 97 percent of existing labor agreements. However, the procedures are as varied as the labor

Step 4: Frame Your Arguments The facts are obtained from the evidence and are what is objectively proven. Argu- ments are the way in which the facts show that the collective bargaining agree- ment has or has not been breached and are reasons why those facts should affect the outcome of the grievance. For example, it is a fact that an employee had a sat- isfactory work record with the employer for 25 years; it is an argument that the employee s long-term record of satisfactory performance should mitigate the sever- ity of any discipline imposed by the employer. Create a separate cover sheet for each argument and support each argument with a factual basis.

Steps 5 and 6: Seek Coherence, Consistency, and Credibility Organize your arguments into a logical sequence. Then make sure these arguments are coherent, consistent, and credible. For example, there is a contradiction when the union argues that the employee was defending himself if the union had earlier argued that the employee had been provoked.

Step 7: Prepare Witnesses Scripts After a grievance meeting has been set up, outline the questions you will ask each witness. These questions will serve two purposes. (1) Establish the facts you will ask unambiguous questions to which you already know the answer. If the answer is evasive, you should restate the question. If the answer is different from previous answers, you should remind the witness of an earlier statement. For example, Mr. Jones, didn t you tell me when I previously asked you this very question .

(2) Impeach the credibility of the witness by showing inconsistencies with previous statements, indicating prior acts of dishonesty or untruthfulness, and asking detailed questions about testimony you believe to be perjurious. Witnesses have difficulty lying extemporaneously; liars are forced to remember details about previ- ous lies instead of the truth that actually happened.

Step 8: Prepare Admissibility Challenges and Defenses The fundamental rule is that evidence that is not reliable and not relevant should not be considered. Be prepared to argue that hearsay evidence should not prove the truth of the matter asserted. For example, hearsay would be what one witness heard another person say. The other person would not be available to be cross- examined, and cross-examination is an important due process right.

SOURCE: Mark I. Lurie, The 8 Essential Steps in Grievance Processing, Dispute Resolution Journal, 54 (November 1999), pp. 81 86.

Exhibit 10.3 (Continued)

508 PART 3 Administering the Labor Agreement

agreements themselves. Although no one grievance procedure is applicable to all labor management relationships (21 percent of surveyed grievance procedures have two steps, and 51 percent have three steps), a four-step procedure illustrated in Exhibit 10.5 and discussed here is found in 19 percent of these relationships.

First Step of Grievance Procedure The first step of the typical grievance procedure consists of two phases. First, the employee (with or without the union steward) discusses the alleged grievance with his or her first-line supervisor. Actually, the employee can file a grievance without any union endorsement. If agreement is not reached, then a written grievance is filed by the grievant or the union steward acting on the grievant s behalf. Placing the grievance down in writing has some value: (1) there is a written record and (2) it increases the likelihood that the employee and/or union is serious about the grievance. The supervisor then answers the employee s grievance in writing. Time limits for filing a grievance and managerial response exist in 69 percent and 63 percent, respectively, of grievance procedures. If management or the union does not follow the time limits, the grievance might be challenged by either party as not meeting the procedural requirements in the labor agreement.14 If the union does not meet the time requirements, the grievance would be non-grievable. If management does not respond in a timely manner, the union usually may appeal to the next step.

The purpose of the discussion is to resolve the grievance as early and as informally as possible. The union does not want to delay any remedy, particularly back pay owed its members or reinstatement. Management does not wish to incur any unnecessary con- tinuing liability if back pay is owed an employee who is suspended or discharged and remains unemployed until the grievance is eventually resolved. The union simply wants the employee back at work.

Exhibit 10.4 Examples of Information the Union May Request

Accident records

Attendance records

Bargaining notes

Company memos

Contracts

Correspondence

Disciplinary records

Equipment specifications

Job evaluations

Health and safety studies

Inspection records

Insurance policies

Interview notes

Job assignment records

Job descriptions

Videotapes

Material safety data sheets

Names of witnesses

Notes to file

Information details

Payroll records

Performance reviews

Personnel files

Photographs

Reports and studies

Salary records

Security guard records

Seniority lists

Supervisor s notes

Time study records

Training manuals

SOURCE: http://www.ranknfile-ue.org/stwd_nlr.html

CHAPTER 10 Contract Administration 509

Employee (with or without union steward) files the grievance within the required time limits

Meeting to discuss grievance within 15 days

Unresolved

The grievance is reduced to writing within five days and presented to management

Management answers in writing in five days

If management’s answer is not accepted, the union has five days to appeal to Step 2

First-line supervisor

Resolved

Addition of international union representative

Meeting to discuss grievance

Unresolved

Management answers in writing in 15 days

If management’s answer is not accepted, the union has 30 days to appeal

The parties decide to use grievance mediation

Resolution through a third-party neutral arbitrator

Resolution through a third-party neutral arbitrator

Addition of company labor relations manager and general plant management official

Addition of union grievance committee (President, Vice President, Shop Steward)

Meeting to discuss grievance

Unresolved

Management answers in writing in ten days

If management’s answer is not accepted, the union has ten days to appeal

Addition of plant labor relations representative

Resolved

Resolved

Exhibit 10.5 Example of a Typical Grievance Procedure

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In some cases, the oral discussion is pro forma the employee initiates this step with a written grievance on the assumption that no amount of discussion will change his or her mind. For example, the immediate supervisor may have made the decision that led to the grievance and has no plans to change the decision. As is true with the next two steps of the grievance procedure, if the employee accepts management s answer to the written griev- ance, then the grievance is considered resolved and subsequent steps are unnecessary.

Second Step of Grievance Procedure In addition to the individuals in the first-step grievance meeting, the union grievance committee members and management s labor relations representative are brought in to discuss the supervisor s first-step grievance answer. These individuals are aware of administrative precedent throughout the entire facility; their main role is to determine whether the grievance should be resolved at this stage on the basis of this precedent.

For example, Employee A files a grievance protesting management s unilateral action in reducing wash-up time in her work area. The union grievance committee might be aware, however, that (1) the contract does not have a provision pertaining to wash-up time and (2) employees in other departments do not receive any time before the end of the shift to clean their hands. Therefore, the union grievance committee would probably encourage the grievant to accept the reduction in wash-up time rather than risk losing the privilege entirely in subsequent steps of the grievance procedure.

On another issue for example, an employee working out of his or her normal work classification and demanding an upgrade in pay for the time worked the labor relations representative might reverse the supervisor s first-step answer to avoid sending the griev- ance to the third step, where it might affect employees with similar work experiences in other departments. The second-step written grievance answer is furnished by the com- pany s labor relations representative, and any decision at this point applies only to the particular work department, not the entire facility.

Third Step of Grievance Procedure The third-step meeting involves the same individuals as the second step but also includes the labor relations manager and other management officials (such as general supervisor, superintendent, or assistant plant manager), members of the union s grievance commit- tee, and the union s international union representative (see Chapter 4). These individuals are added because the grievance answer at this level could affect plantwide, even compa- nywide, operations, and both management and union representatives wish to obtain as much input as possible before making the decision.

During the third-step meeting, the union discusses the grievance and its related rationale; management mostly listens and does not attempt to resolve the grievance dur- ing this meeting. Management s answer will be provided after discussions within man- agement s team and before the time limits have expired. The third-step grievance answer is usually written by the labor relations manager because the decision probably will have plantwide, or companywide implications and applications. This step offers union officials several advantages:

It provides new union stewards who sit in on the meeting with free training many labor agreements require paid time off for grievance meetings. It impresses the grievant that many union officials back his or her interests.

This step can also serve a therapeutic function for the grievant, who simply wishes to express concern to many levels of management officials. Perhaps the most important

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function of the third-step meeting is the inclusion of additional union and management officials who are not personally involved in the cause of the grievance and can assess its merits with relative objectivity.

Fourth Step of Grievance Procedure: Alternative Dispute Resolution (ADR) As the fourth step, some parties have negotiated the inclusion of an ADR provision which provides for the assistance of a neutral third party. (Arbitration is discussed in more detail in Chapter 11.)

A rate of 88 percent of American businesses report using mediation and 79 percent report using arbitration rather than litigation to resolve disputes. Despite the high use, there is a significant disconnect between the business use rate of ADR and ADR educa- tion in U.S. colleges of business. Just over one half of the U.S. colleges of business have an ADR course present in their curriculum; none require an ADR course for all business majors; only 4 percent of the management majors are required to take a course in ADR (less than a quarter of human resource management/labor relations majors).15

Grievance Mediation Grievance mediation is a formal step in the grievance procedure (before arbitration) designed to resolve grievances without the use of arbitration. Grievance mediation has several advantages over arbitration in the resolution of grievances.

Grievance mediation typically yields a voluntary agreement which is more satisfac- tory to both parties than arbitration, where only one party wins. Mediators encourage the parties to compromise their initial positions. For example, a union representative in a mediation session could trade the union s demand that a discharged employee receive reinstatement with all back pay from the time of his termination in exchange for rein- statement without back pay. The employer may have considered the avoidance of back pay as a high priority item due to the high costs and the reinstatement as a low priority item because the employee had a reasonably good performance record prior to his termi- nation. The settlement could result in a voluntary agreement which all parties can accept.

Grievance mediation is faster, less costly, and more informal than arbitration. In addition, it has the potential for long-term benefits. In mediation, the average time between the request for mediation and a final resolution is 43.5 days; in arbitration, the average completion time is 473 days. In arbitration, it usually takes one day for hearing each grievance; in mediation, several grievances can be addressed in a single day. In mediation, there is no need for written transcripts, posthearing briefs, or written deci- sions. The average amount paid to the mediator is $672 per case; the average paid to the arbitrator is nearly five times as much. In mediation, the union and management representatives proceed without attorneys and participate in a facilitative process wherein each party has an opportunity to tell its story. The parties learn to develop communica- tion skills and realize an understanding of the other side s position.

This understanding may be carried over to attempts to resolve future grievances. In fact, some of the residual effects of grievance mediation are improved relationships between the union and the company, better understanding of the needs and concerns of the other side, and a greater cooperative atmosphere, which creates an environment for mutual problem solving.16

The greatest asset of a grievance mediator in a labor management setting is his or her ability to quickly find acceptance among the parties, offer conduits for discussion and debate, and establish pathways to achieving a resolution of the grievance. The goal is to achieve a resolution without damaging the ongoing relationship between the parties.

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The grievance mediator essentially serves as a change agent for the parties. They fluctu- ate between and among different styles, placing problems in fresh perspective. The prob- lem categories consist of relationships, values, interests, and bureaucratic. It is understood that not all problems are relationship-oriented, but we all know that some problems exist because the parties just don t share the same values; for example, work ethic, sense of mission, and others. Then there are interests that we share and interests that we oppose and those that don t matter. The fourth category is bureaucratic or rule and policies that deal with structure, reporting, rules and regulations, span of control, and how we manage work.17

Exhibit 10.6 demonstrates the difference between a grievance arbitration hearing and a grievance mediation session, both designed to involve a third-party neutral in reaching resolution of a grievance.

Different Approaches by Grievance Mediators Mediators take different approaches in assisting the parties in reaching a settlement of their differences. There are three categories of approaches; however, their distinctions are not watertight, and the same mediator may shift from one type of approach to another during the same proceedings. Each of these approaches may be successful in dif- ferent environments because the specific approach used by the mediator is highly depen- dent on the attitudes of the opposing parties.

The first approach is transformation or collaborative mediation. Here, the mediator tries to get the parties to discover their own separate and mutual resources and to under- stand the other party s point of view. This approach serves as a good starting point from which to move on, if necessary, to the other approaches to mediation. In the second approach, evaluative mediation, the mediator does not attempt to come up with a spe- cific solution but concentrates on showing the respective strengths and weaknesses of each party s position. The mediator usually holds separate meetings with the parties in order to fully understand their positions. Then, effort is devoted to keeping the parties together, talking and listening, and moving toward a resolution.

The third approach is directive or results-oriented mediation. Here, the goal is to bring the parties to a certain agreement that the mediator believes is appropriate and achievable. The mediator first sits down with both parties who talk to the mediator directly, not to each other, with the agitated party going first. The ground rules require that no personal attacks be made, and no interruptions are allowed from the listener. Caucuses are allowed from time to time to cool tempers, to permit confidential commu- nications with the mediator, and to move the negotiations toward closure. In addition, the mediator will probably spend time meeting separately with the opposing parties in an effort to help each party understand the other s position.18

When one considers the success record of grievance mediation and also that only 4 percent of collective bargaining agreements contain mediation as a step in the griev- ance procedure,19 the question is: Why isn t mediation more widespread? One reason is that only a small fraction of all grievances filed are ever taken to arbitration (usually fewer than 20 percent and often as few as 2 percent). In addition, the majority of grie- vances that are appealed to arbitration are not arbitrated but are resolved prior to an arbitrator s decision. Therefore, most parties have inadequate motivation to change their grievance resolution practice to incorporate mediation. A second reason is that mediation is a fragile process because it cannot guarantee resolved grievances, and the parties may still have to proceed to arbitration. In fact, the success of mediation depends upon the continued existence of arbitration as the next step in the grievance procedure. A third reason that grievance mediation is not more widespread is that management is

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reluctant to accept it. Management appears to be the giving party, and the union has an opportunity to get something from the employer in return for resolving the grievance and avoiding arbitration. In most cases, the union is the party that files the grievance and is the party seeking a change in management s decision. For example, the union files a grievance when an employee is discharged, is not promoted, or does not receive a merit pay increase. Any compromise by the company to seek a settlement would be a change from management s initial decision. A final reason may be the self-interests of the arbi- tration advocates and arbitrators. Resolution of grievances through mediation infringes on the livelihoods of everyone who earns part or all of their professional income and status by arbitrating grievances. The vast bulk of the cost of arbitration is income to the advocates of each party to arbitration, and this income is lost if grievances are success- fully mediated and not arbitrated.20

Successful grievance mediation depends upon two key features. The first is the ability of the mediator. The experienced mediator will be able to point out the strengths and weaknesses of each party s position. Usually, there will be sidebar or caucus discussions with each party separately. If the parties do not reach a settlement, the mediator then pro- vides an advisory opinion of the likely outcome if the grievance were appealed to arbitra- tion. In other words, the mediator provides a peek-a-boo look at the likely outcome of an arbitrator s decision. The act itself creates substantial pressure on the party with the weaker position to reach a settlement in order to avoid the costs of losing in arbitration.

A second key feature for success is the motivation of the parties who have adopted the process. In cases where the parties are sufficiently motivated to try to improve their grievance resolution record, they tend to succeed because they have already decided to resolve differences on their own. Thus, it may be more accurate to view mediation as

Exhibit 10.6 Grievance Arbitration vs. Grievance Mediation Scenarios

Grievance Arbitration: A hearing is scheduled eight months after the grievance was filed. The participants in the hearing are typically the grievant, the arbitrator, a court reporter, the union team (attorney, staff representative, local union officials, and wit- nesses to be called by the union), and the company team (attorney, human resource manager, line supervisor involved, and witnesses to be called by the com- pany). During the hearing, witnesses are sworn, examined, and cross-examined, and documents are submitted as evidence. Both attorneys make frequent objec- tions, which are usually denied by the arbitrator. The hearing lasts from four to six hours; the court reporter may take two weeks to prepare a transcript; the two attor- neys may take 30 days to prepare and submit written posthearing briefs; and the arbitrator will generally prepare a written decision in 30 days.

Grievance Mediation: A grievance mediation conference is set up about three months after the grievance was filed. In attendance are the mediator, representa- tives of the union, and the company (no attorneys and no court reporter). Each side provides a narrative description of the grievance, which summarizes its views of the facts and arguments supporting its position. Each group goes to separate rooms, and the mediator visits both rooms to discuss the strengths and weak- nesses of their respective positions. In three hours, the parties agree on how the grievance should be resolved. After a break for lunch, the process is repeated with another grievance and another set of representatives. The mediator does not write up any decision. If no settlement is reached, the mediator advises the parties of the possible outcome of the grievance if it should proceed to arbitration. Then, the parties attempt once again to resolve the grievance.

SOURCE: Peter Feuille, Grievance Mediation, in Employment Dispute Resolution and Worker Rights in the Changing Workplace, Adrienne E. Eaton and Jeffrey H. Keene (eds.) (Champaign, IL: IRRA, 1999), pp. 187 188. Reprinted by permission.

514 PART 3 Administering the Labor Agreement

a proxy for the positive grievance resolution attitudes held by the adopters than as a pro- cedure that possesses some intricate ability to resolve grievances in a more cooperative manner than arbitration. 21

The success of mediators has stimulated interest in adopting workplace ADR poli- cies in other employment settings. Certainly the high number of employee complaints to government enforcement agencies, such as the Equal Employment Opportunity Com- mission (EEOC), has motivated many employers. The EEOC has jurisdiction over com- plaints of employment discrimination under the Civil Rights Act of 1991, the American with Disabilities Act, and the Age Discrimination in Employment Act. In 2014, the num- ber of employment discrimination charges filed with the EEOC was 88,728. In addition, tens of thousands of charges over workplace disputes are filed with other federal, state, and local agencies each year. ADR has been introduced as a way of diverting these dis- putes from the courts and regulatory systems to an internal dispute resolution procedure. Additional stimulus has been provided by U.S. Supreme Court decisions that have upheld the validity of employment contracts that require employees to submit their dis- crimination claims to arbitration22 (to be covered in Chapter 11).

The EEOC reported 10,431 mediations in 2014 with 7,846 resolutions (76.7 percent), a savings of $145 million and approvals of over 90 percent by employers and the charg- ing employees.23

A comprehensive assessment of the participants in the mediation program revealed that the participants had a positive experience with the procedure, the information pro- vided, and the mediators. An overwhelming majority believed that mediation was fair, and they felt that they had a full opportunity to present their views. In addition, an over- whelming majority indicated that they would be willing to participate in the mediation program again if they were a party to an EEOC charge.24

As an example, the Americans with Disabilities Act encourages ADR for resolving ADA claims. The mediator may help the parties reconcile their differences in making reasonable accommodation for the employee with a disability. Types of reasonable accommodation may include one or more of the following: acquiring equipment, modi- fying equipment, making architectural changes, modifying the work environment, pro- viding services, introducing flexible hours, restructuring jobs by assigning marginal functions to another employee, or reassigning the employee to a vacant position.

In reaching a reasonable accommodation, the employer is excused if its action would result in an undue hardship or if placement of a person with a disability may put that employee s or other employees health and safety at risk. The mediator may help the par- ties in resolving their different views regarding the employer s financial capabilities, dis- ruption to its business, nature and duration of the risks involved, potential severity of harm to the employee and others, or likelihood that harm will occur.

The U.S. Postal Service has over a decade of successful experience in transformation mediation and has the largest employment mediation program in the world. The medi- ation program is called REDRESS (which stands for Resolving Employment Disputes Reach Equitable Solutions Swiftly).25

Administrative Complexities of Processing Grievances All grievance procedures even though they may vary in terms of steps, time limits for the processing of each step, and participants represent a progression of the initial griev- ance to higher level management and union officials for consideration. These procedures can raise several administrative complexities (see the Labor Relations in Action box on page 517) and often appear inflexible. However, they also serve as the arena for the dynamic social relationships and interactions among management and union officials.

CHAPTER 10 Contract Administration 515

Other Forms of ADR While arbitration and mediation are the most common forms of ADR, the parties have the flexibility to design ADR approaches to meet their needs. Other forms more likely to exist in nonunion organizations include (1) open-door policies, (2) ombudsperson, (3) peer review systems, and (4) early neutral evaluation. The fairness of these proce- dures is determined by their distributive justice, procedural justice, and interactional justice. Distributive justice deals with the fairness of the decision. If employees believe that the process is inequitable, it could lead to decreased production, increased turn- over, lower morale, and so on. If an employee is innocent of charges against him and the charges are dismissed, the perceived distributive justice will be high. Procedural jus- tice refers to the fairness of the process by which decisions are rendered. If the employee has adequate notice of any charges and is given an opportunity to respond to any charges, procedural justice is higher. Also, if the decision maker is impartial and independent from management, the perceived procedural justice is higher. Interac- tional justice refers to the fairness of interpersonal interactions between individuals involved in process and the adequacy of communications. For example, if the interper- sonal communication is honest and the employee is treated with respect, had his or her day in court , and received the rightful decision, the perceived interactional justice

will be higher.26

The open-door policy invites workers with complaints to raise them with their immediate supervisor. If not satisfied with the result, the employee may appeal to upper level managers. These policies have been around for some time and are common in large companies. The biggest deficiency with these policies is the reluctance of workers to use them due in part to their belief that there may be retaliation.

Nonunion mediation is a process in which a neutral person attempts to facilitate an agreement that resolves the dispute over alleged treatment and/or misconduct. Nonunion mediation has recently come into fairly widespread use and is often used with one or more of the other processes. Nonunion mediation has few disadvantages and can at times produce results which are satisfactory to both the employee and management.

An ombudsperson program involves the appointment of an employee within the company to serve the role of consulting with employees who have problems and advo- cating on their behalf. The usefulness of the program depends upon the amount of inde- pendence that the ombudsperson has from management. There is difficulty for the ombudsperson to provide assistance to the employee with problems because, like other employees, the ombudsperson is dependent upon management to provide adequate resources to solve problems.

Peer reviews involve the appointment of a committee composed of a majority of rank-and-file employees, usually with some managers, who are led by a human resources staff person as the facilitator. An aggrieved employee may file a complaint with the peer review committee. Usually the committee has authority to make final and binding deci- sions on grievances. If the peer review committee merely makes a recommendation to management, it could legally be considered a labor organization under the National Labor Relation Act (NLRA), and its continued existence could be a violation of the (NLRA) (see Chapter 5 for more thorough coverage of this topic). If deemed to be a labor organization by the NLRB, the only consequence to the company for this illegal act is a NLRB directive to abandon the peer review committee and to establish another system which would comply with the law.

Employment arbitration is a dispute resolution system which is unilaterally estab- lished by the employer to resolve employee grievances and complaints (this system will be covered in Chapter 11).

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Peer reviews and employment arbitration are frequently offered as a substitute for unions and courts because they furnish the employee with a result which binds the employer and the employee. However, they do not necessarily provide a high likelihood of a favorable result for the employee. In peer reviews committee members are selected, trained, and operated by management, and the degree to which the committee members are actually independent is questionable. In fact, peer reviews may be abolished if they do not meet management s expectations. With employment arbitration, the arbitrator is selected and paid by the employer; therefore, there are frequent accusations about the arbitrator s independence and objectivity.27

Early neutral evaluation is a process in which a neutral party is chosen jointly by the employee and the company to conduct an informal hearing at which the parties present their evidence and arguments. The purpose of the hearing is to narrow the issues and help the parties better understand the strengths and weaknesses of their positions. The neutral evaluator then renders a nonbinding, advisory opinion on the merits of the case. Assessment of early neutral evaluations shows no discernible effect on the amount of time needed to dispose of the case, litigation costs, and the parties views of fairness or satisfaction with case management. In addition, the parties may be hesitant to reveal their real positions because either one or both may believe the case will end up in trial.28

Grievance Resolution: Relationships and Flexibility

A wide variety of activities, tactics, and relationships occur between the most frequently involved union and management participants: the union steward and the first-line supervisor.29

LABOR RELATIONS IN ACTION Tough Contract Administration Questions

The grievance procedure usually involves multiple steps and related participants and time limits for filing, answering, and appealing grievances. Union and man- agement officials, and sometimes arbitrators, often have to resolve complex administrative issues during the process; these are reflected in the following questions:

(1) Can management interrupt and order back to work employees who are also union officials investigat- ing a grievance?

(2) Does an employer have the right to charge the union a fee for processing requested information pertaining to a grievance?

(3) Can employees be discharged for secretly taping a grievance meeting?

(4) Do outside union representatives have the right to visit the facility to investigate a grievance?

(5) Is a grievance legitimate if it is filed or appealed by someone not affected by the grievance? By a group of employees? By a union official over the original grievant s objections? By someone who states the grievance orally but not in writing?

(6) Do clear time limits between grievance steps mean that a grievance cannot be processed if the union exceeds these limits? Must the employer accept to the grievance if it exceeds these limits?

(7) Does the initial time limit in which a grievance may be filed start from the day of the incident or the date of the grievant s knowledge/discovery?

(8) Does management have to pay union officials for all of the time spent investigating and processing grie- vances during company work hours?

(9) Can the effective date of management s grievance adjustment (e.g., paying for an overtime administra- tive error) precede the date the grievance was filed?

(10) Can an employer file a grievance against the union even if the labor agreement does not specifically refer to this action?

The answer to all of these questions is it depends upon A specific yes or no answer at a particular facility depends upon the formal (labor agreement lan- guage and/or memorandums or understanding) and informal (past practices) arrangements between union and management officials.

517

Codified Relationships Codified relationships stress the rights and privileges of union stewards and first-line supervisors established through the labor agreement and various union and management publications. These publications urge the steward and first-line supervisor to treat each other as organizational equals in grievance resolution and to realize that both benefit from resolving grievances at their level instead of involving higher level officials.30

Supervisors and union stewards may be aware of normative philosophies and codes but often do not take them into account when interacting. For example, the AFL-CIO Manual for Shop Stewards strongly urges union stewards to present their grievances directly to the first-line supervisor in the first step of the grievance procedure.

It is important to observe the steps in the grievance procedure, even if the foreman has limited authority. Leapfrogging to a higher step may have undesirable effects. The lower level of management will resent this and will be more difficult to deal with the next time, or the company may seek to get the grievance thrown out because the proper steps were not followed.31

Yet many first-line supervisors maintain that they are often completely bypassed by the union steward in the grievance process. Indeed, the steward can also bypass the involved employee by filing a grievance in the name of the union. This bypass capabil- ity given to the union steward is not given to management.32

Just as some union stewards do not adhere to codified relationships, many first-line supervisors do not implement another codified relationship aspect: treating the union stewards as organizational equals in the grievance process. It is often difficult for a first-line supervisor, accustomed to giving daily work orders to an employee who is also the union steward, to turn around in a grievance meeting and consider the union stew- ard as a peer. Some first-line supervisors can accept this situation; others have problems:

This guy, Walker (union steward) here, doesn t realize that the gang is kidding him. They haven t got anything to kick about. All the stuff he is bringing up is old stuff. We ve gone over it before with the other representatives. The other representative was sick of the job and gave it up. So the gang decided to elect this squirt because nobody else wanted the job. This fellow doesn t know anything about the department. He s only been there three months. He s only a kid and doesn t know what it s all about. I haven t got time to rehash this all over again . He s not qualified to talk about anything that happens in my department, and I haven t got time to waste with him. He brings up all this stuff and nonsense just so he can be a big shot.33

Codified relationships also suggest that first-line supervisors should have authority for resolving grievances at the first step of the procedure to give the employee a prompt response. Resolution of a grievance at the first step can also help prevent the plant-wide precedents that are established in the third step. However, other management officials, who prefer to be kept informed on employee grievances, often instruct the supervisors to inform the labor relations representative of the situation before taking any action. Indeed, one study found that 27 percent of 800 first-line supervisors believed that higher level man- agers sharply limited their authority to settle grievances informally or at the first step.34

Power Relationships

Conflicting power relationships develop in situations where the supervisor and union stewards pursue differing interests or goals. This situation has sometimes characterized shop-floor relationships in the steel industry:

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The local unions became highly politicized; any leader who made peaceful overtures to the company was promptly denounced as a sell-out artist. Union officials and super- visors conducted daily warfare over such matters as discipline, job assignment, and the handling of worker grievances. It was as though each side had to prove itself, day after day, that it had the capacity to hurt the other.35

Power relationships typically begin when both steward and supervisor are encour- aged by their superiors to be attentive to problems in the department. The supervisor is encouraged to discover problems before they become grievances, whereas the steward is encouraged to talk to the potential grievant before that employee talks to the supervisor. Competition for the employee s attention might become particularly intense, as one research study found that stewards and supervisors are equally successful in communi- cating with employees.36

Another type of power relationship results from the union steward knowing the labor agreement better than the supervisor. Many union stewards are long-term employ- ees who have been involved in numerous grievance meetings and may have received training in contract administration. A new supervisor may be a recent college graduate who is having his or her first taste of an industrial setting. In addition, union stewards can concentrate on particular provisions of the labor agreement and their application to the shop. The supervisor, on the other hand, has major responsibilities for production scheduling, meeting departmental quality and quantity standards, participating in cost- reduction programs, and so on, which reduce the amount of time available for grievance and labor agreement analyses.

Intimidation is another power relationship strategy that can be employed by both the union steward and the supervisor. In some situations, the union steward anticipates that the supervisor is vulnerable when he or she receives an excessive number of grievances the supervisor will be concerned with how higher level managers will react to this apparent inability to resolve labor relations problems. Even though the grievances might not be valid, some management officials might hold the following opinion:

A supervisor who is the subject of grievances creates red flags for us. We expect super- visors to be able to handle most employee relations issues, and if they can t, then we question whether or not they have a future with us. I know that grievances are some- times filed with no justification whatsoever, but on the whole a supervisor who avoids formal grievances looks a lot better to management than a supervisor who s tying up his and our time in grievance hearings.37

Consequently, a union steward can use the threat of additional grievances (bogus or real) to persuade the supervisor to concede to the grievance in question or to alter the supervisor s overall approach to labor relations. The practice is explained by a union official:

A short time ago we had a lot of trouble with a certain foreman . He was making them toe the line no quitting early, work from whistle to whistle, no sitting down, no horseplay, this and that. I told the committeeman there, You do the same thing. Every time he does any work, even if he picks up a box, write a grievance . The first thing you know grievances started mounting finally had a pile like that.

Things got so bad this foreman was removed from the department. He was moved to our department and it s his last chance. If he doesn t do good in this depart- ment, out he goes. So I went to the guy and told him, It s your last chance here and you know it. You cooperate with us and we ll cooperate with you. If you don t we ll put the screws on you and out you go. Things are working out pretty good so far.38

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Intimidation tactics are not always one-sided; a clever supervisor can make indus- trial life difficult for the union steward, probably without incurring an unfair labor prac- tice charge. For example, many job classifications have a wide variety of work assignments, with some of these assignments being less desirable than others. A supervi- sor could assign undesirable work assignments to the union steward, who would have little recourse as long as they were within his or her job classification. The supervisor could also undermine the steward s formal position in the union by (1) restricting the amount of freedom and time for the steward to investigate the grievance and (2) refusing to resolve any grievance in the first step when the union steward is present with the grievant. These tactics are usually successful only if the union steward is inexperienced. Regardless of the success of such actions, a grievance relationship governed by power and intimidation tactics distorts the primary purpose of contract administration: rational decision making.

Empathetic Relationships Empathetic relationships occur between individuals when each is aware of the other s position and is guided by an understanding appreciation. An example of this apprecia- tion comes from a union steward s comment:

You can t have industrial relations without giving and taking on both sides. You ll always win more cases by getting along with supervision than by being tough. You ve got to swap and make trades . Sometimes I have to talk like hell to explain some of the deals I make with them and sometimes I keep what I m doing to myself if I see a chance to get something good later on. The thing some grievers never get through their heads is that a lot of bosses are on the spot themselves. If you go a little easy on them when they re on the pan, by God you make friends they ll stand by you sometime when you re back of the eight ball. Sometimes when I have a rotten grievance, I ll take the case up to the supe [superintendent] and let him know I won t push it hard.39

Empathetic relationships are aided when the first-line supervisor and the union steward realize that they both occupy marginal positions within their own organizations. For example, one study found that first-line supervisors can have a rather loose identifi- cation with upper management. This might be due to several factors, including transient upper and middle management and reconsideration of the supervisor s original decision by other management officials.40

Union stewards have also experienced this situation in contract administration. On one hand, constituents expect their union steward to actively press every grievance because they think that the union should be attentive to their needs. Consequently, it is difficult for the steward to accept the supervisor s first-step rejection of the grievance, even if he or she thinks the supervisor is correct. On the other hand, union officials receiving the grievance in subsequent steps of the grievance procedure may tend to view the union steward as either ignorant of the labor agreement or gutless, wanting them to pursue frivolous grievances instead of accepting defeat.

Flexible Consideration in Processing Employee Grievances The preceding varieties of interpersonal relationships reveal how individual objectives, strategies, and personalities force the contractual procedure to be more flexible in prac- tice. This real-world consideration negates the theoretical principle that each grievance be considered on its individual merits. The grievant wishes to receive an answer unco- lored by any political or tactical concerns, but the union must consider political influence

520 PART 3 Administering the Labor Agreement

and overall strategy in its determination of which grievances will be filed and pursued. Not all grievances are clear-cut issues; in fact, many involve confusing or opposing inter- pretations of the labor agreement. In these cases, management has two options: Decide the grievance in the employee s favor or refuse, knowing that the union will appeal the grievance to arbitration. The latter alternative is not always attractive, particularly if management realizes that there is little contractual guidance in the issue (as in the exam- ple of the holiday scheduling of a crane operator) and insufficient past practice or prece- dent to support the decision. Contract administration has many gray areas that are open to interpretation. This uncertainty is compounded when the parties solicit a neutral party to resolve the issue in binding arbitration. Also, the arbitrator s decision might refute management s action in terms that further erode management s discretion in future mat- ters. The arbitrator s decision will be binding on the parties and can be changed only through negotiations. For example, the contract may not address how overtime is assigned. Unions also tend to use arbitration only as a last resort because such cases can drain the union s treasury.

In these instances, flexibility may be possible with the addition of an informal third-and-one-half step in the grievance procedure. This will not be specified in the labor agreement but occurs after management s final third-step decision and before the third-party neutral hears the grievance. During the third-and-one-half step meet- ings, management and union representatives meet to discuss several grievances which are scheduled for arbitration. During the discussions, they might trade a grievance requesting one-day pay upgrades for five employees who allegedly worked in a higher job classification for a grievance on management performing bargaining unit work filed against an unpopular first-line supervisor, which would give one union member a two- hour overtime payment as a remedy. Swapping grievances can lead to fast resolution of minor complaints that would perhaps cost more to arbitrate than it would be worth to either side. Usually the grievances involved in the negotiated package are settled with- out prejudice, which mean they are settled without precedent to either party s position in future related issues. These settlements will not be binding in any future delibera- tions between the parties. However, settlement of the grievances preserves manage- ment s discretion on these issues and the union s right to file future related grievances. The union has to be careful because swapping grievances that are clearly meritorious may constitute a violation of the union s duty of fair representation (cov- ered later in this chapter).

Opponents of this practice contend that valid employee grievances are bargained away for an expedient settlement. Grievance trading in the third-and-one-half step can also discourage first-line supervisors from actively trying to resolve grievances if they believe their efforts will be overturned in a mass grievance settlement. For example, the following remarks were made by a foreman who had sent an employee home for repeated tardiness. The employee filed a grievance with the foreman s supervisor, who sent the employee back on the job.

I went over to O Brien s [the superintendent s office] to find out why he had overruled me. He handed me a line of salve about having to do it. Said, It was a small item after all and that he might want a big favor from the union sometime in the future. He said, We have to trade back and forth. Sometimes we give in; sometimes they give in. That s why we never have any big trouble! Then he said he might have to reverse some of my decisions again sometime, but if he did, not to get sore about it, because he wouldn t mean no offense by it. Well damn that noise! If O Brien wants to make me look like a fool every time I make a decision, why by God, he can make all

CHAPTER 10 Contract Administration 521

the decisions. You know two can play that game. I can give the boys [workers] every damn thing he can give them. Then when they come up with a big one that I know well he can t give them, I ll tell em to take it up to him.41

As a result of management using the third-and-one-half step in the grievance proce- dure, unions might be encouraged to file more grievances in the belief that they can obtain more from a trade involving 50 fabricated grievances than they can from five legitimate ones. Furthermore, settlements without prejudice can result in more grie- vances of the same sort because the issues are not considered jointly resolved by manage- ment or union officials.

Advocates of settlements short of arbitration believe that this process merely repre- sents another legitimate cooperative effort between labor and management officials in efficiently dealing with day-to-day administrative problems. These individuals indicate that the union s and management s organizational self-interests require considerations and possible use of the third-and-one-half step grievance trading session. Opponents state that the third-and-one-half step hinders the union s fair representation obligation, discussed in the next section.

The Union s Duty of Fair Representation

Thus far, grievance procedures have been discussed from the perspectives of the union, management, and employee participants. As is true with most labor relations activities, grievance resolution can be strongly influenced by a fourth participant: the government. As noted in Chapter 5, the union is the exclusive bargaining agent for all employees in the appropriate bargaining unit, and the union has the legal duty to fairly represent all the bargaining unit employees, union members and nonunion members alike, in both contract negotiation and administration. This section focuses on the extent of the union s duty, particularly when some of the bargaining unit employees believe the union has acted in an unsatisfactory manner.42

Fair representation issues are difficult to resolve. On the one hand, some individual freedom must be sacrificed if the union wishes to effectively represent its members. However, the individual members right to dissent must also be protected, and all employees represented must be safe from negligent or corrupt union representatives. The Labor-Management Relations Act (LMRA) adds to the complexity of the issues because it does not contain any explicit provisions obligating the union to represent fairly all bar- gaining unit employees. Therefore, jurisdictional disputes over fair representation issues have occurred between the governmental participants, more specifically the NLRB and the courts.

The NLRB had for many years claimed that it alone had jurisdiction to determine fair representation issues because related unfair labor practices came under its statutory jurisdiction. However, the Supreme Court has indicated that district courts also have jurisdiction over such claims because the fair representation obligation is a fundamental part of federal labor relations policy and precedes the NLRB s statutory role in such cases.43 A subsequent Supreme Court decision indicated that employees who claim breach of fair representation are also entitled to a jury trial if monetary losses (back pay) are claimed.44

Related court decisions have addressed the following question: How far must the union go in representing employees whose interests or claims could potentially disrupt union goals and policies? The importance of this question is magnified when we consider that many decisions help some members while hurting others. Under the collective

522 PART 3 Administering the Labor Agreement

bargaining agreement, there are competitive rights involving subjects like promotions, transfers, and layoffs. If there is one vacancy, only one employee can be promoted. Those not promoted may believe that they have grievances.

Union actions pertaining to seniority (such as merging seniority rosters and calcu- lating seniority credits for employees returning from leave) will hurt some bargaining unit members while helping others. As an example, after the terrorist attack on the New York World Trade Center on September 11, 2001, US Airways was forced to lay off many employees due to lack of business. The union agreed to a modified layoff plan that allowed US Airways to retain fewer senior employees at the Charlotte, North Carolina, hub while laying off more senior employees who were assigned to the smaller air stations that were closed. Fifteen long-term passenger service employees sued the union and company. The court ruled that the anguish caused by the layoffs was not the result of the company and the union acting in bad faith, but by the tragic events of September 11. The court believed that the company and the union took reasonable mea- sures amidst difficult and trying times.45

Not surprisingly, two Supreme Court cases involving fair representation concerned the seniority issue.46 These decisions indicated that although a bargaining unit employee has no absolute right to take his or her grievance to arbitration, the union satisfies its fair representation obligation in collective bargaining and grievance processing if it considers the interests of all members and takes its ultimate position honestly, in good faith, and without hostility or arbitrary discrimination.

These rather broad guidelines were also applied in a landmark Supreme Court deci- sion, Vaca v. Sipes, which considered the union s fair representation obligation in the grievance procedure. A bargaining unit employee claimed that the union arbitrarily, capriciously, and without just or reasonable reason or cause refused to take his griev- ance to arbitration. The employee, who had long-term high blood pressure, returned to work after a sick leave and was judged by the company s doctor as being unfit for reem- ployment. The employee s personal physician, as well as a second doctor, indicated that the employee was fit for work; therefore, the employee asked the union to seek his rein- statement through the grievance procedure. The grievance was processed; however, the union, in attempting to strengthen its case before going to arbitration, sent the employee to a third doctor. The third doctor did not support the employee s position; therefore, the union refused to take the employee s case to arbitration.

The Supreme Court decided that the union, in this case, acted in good faith and was neither arbitrary nor discriminatory. It also indicated (in this and in another case) the following:47

The employee has the burden of proof of establishing that the union breached its fair representation obligation. Fair representation does not require the union to take every grievance to arbitration because this would create an intolerable expense for the union and management and would destroy the effectiveness of the lower steps in the grievance procedure. Courts should examine only the union s fair representation obligation, not the mer- its of the case.

In the event that a union is found guilty of breaching its duty of fair representation (actions are arbitrary, discriminatory, and/or in bad faith), the costs to the union may become expensive. In one case, the remedy assessed against the union was payment of the grievant s attorney fees, the costs of litigation, and back pay to the grievant from the date the grievant was dismissed to the date the grievant was either able to find employment or should have been employed in a substantially comparable job.48 In

CHAPTER 10 Contract Administration 523

another case, the Court of Appeals in the District of Columbia upheld a ruling of the NLRB that allowed an employee to proceed with his grievance and directed the union to pay the grievant for his own lawyer to represent him.49

The U.S. Supreme Court decided that any judicial examination of a union s perfor- mance must be highly deferential, giving wide latitude to union officials in the per- formance of their duties. A breach of fair representation has to be so far outside a wide range of reasonableness that it is wholly irrational or arbitrary. Moreover, a union s decision is not irrational simply because it turns out in retrospect to have been a bad settlement.50

Fair representation poses two difficult questions to the union and the employer. First, what specific types of conduct constitute violation of the fair representation duty? As previ- ously noted, the Supreme Court has given only broad guidelines ( arbitrary, bad faith, dishonest, etc.). Sometimes these guidelines can be rather easily applied; for example, a

union refusing to process grievances of any Black, female, or nonunion employees is clearly guilty of a violation.51 Other cases can become more complicated. The union, while not needing to take every grievance to arbitration, has an obligation to consider the merits of the grievance and effectively use the grievance procedure. In some cases, the courts have determined that union s perfunctory conduct (simply going through the motions) consti- tutes a breach of fair representation. Related actions include the following:

Providing inadequate defense of the grievant at an arbitration hearing. Delaying grievance processing until the time limits in the grievance procedure have expired. Failing to inform the grievant that the union accepted a different remedy than that asked for by the grievant. Failing to keep members informed about an arbitration award that affects members seniority rights.52

Yet some courts have suggested that negligence or honest mistakes alone will not constitute a lack of fair representation because union members always have the option of voting in new officers or even a new union to better represent them.

In an attempt to reduce the number of fair representation suits from members, unions include the subject of the duty of fair representation in their union steward train- ing programs. While the exact content of these training programs may differ, unions focus on the Seven Golden Rules on the Union s Duty of Fair Representation provided in Exhibit 10.7.

A second question concerns employer and union liability if the union fails to fairly represent a bargaining unit employee who has been discharged. Employees currently can sue the union as well as the employer for breach of the labor agreement, including fair representation under Section 301 of the LMRA.

Exhibit 10.7 Seven Golden Rules on the Union s Duty of Fair Representation

1. Consider all grievances solely on their merits. 2. Investigate each grievance promptly and vigorously. 3. Do not miss time limits. 4. Keep records. 5. Keep the grievant informed. 6. Have a valid reason for any action. 7. If the grievance lacks merit, drop it.

SOURCE: http://www.umass.edu/usa/dutyfairrep.htm.

524 PART 3 Administering the Labor Agreement

Assume, for example, that an employee is discharged and then later establishes that the union breached its duty of fair representation and the employee was unjustly dis- charged. According to the Supreme Court, both the employer and the union can be lia- ble. Bowen, an employee for the postal service, was discharged for an altercation with another employee, and he filed a grievance. Bowen sued both the union and the employer in the district court. His evidence at trial indicated that the responsible union officer, at each step of the grievance procedure, had recommended pursuing the griev- ance but that the national office, for no apparent reason, had refused to take the matter to arbitration. The jury found that the postal service had discharged Bowen wrongfully and that the union had breached its fair representation obligation.

The Supreme Court found that both the employer and the union contributed to this wrongful discharge. The employer, of course, made the initial wrong termination deci- sion and therefore owed Bowen reinstatement with some of his back wages. However, the Court also agreed that the union owed Bowen a portion of his lost wages because he could not have proceeded to arbitration independently of the union and if the union had arbitrated his grievance, he would have been reinstated. Thus, the employer was responsible for the back wages from the termination date to the approximate date an arbitrator would have ordered reinstatement if the union had fairly represented the grievant and the case had been submitted to arbitration. The union was responsible for losses beyond that date. (See Exhibit 10.8 for determining the union s and the company s proportional liability.)

In the absence of damages apportionment where the fault of both parties contributes to the employee s injury, incentives to comply with the grievance procedure will be diminished. Indeed, imposing total liability solely on the employer could well affect the willingness of employers to agree to arbitration clauses as they are customarily written.53

Bowen has controversial implications for a labor management relationship. Man- agers believe that they should not be held accountable for a union s errors, particularly

Exhibit 10.8 Determination of the Union s and Company s Proportional Liability

Employee is

terminated by

company

Employee files

grievance

Union investigates the incident

and processes

the grievance

Union decides not to appeal

the grievance

to arbitration

Grievant sues the

union and company

Jury trial

Jury decides

the grievant

is innocent

and entitled to

reinstatement and

backpay

Grievant is

reinstated and paid backpay

Union responsibility

The arbitrator would have ruled in favor of the grievant if the union had fulfilled its duty of fair representationCompany

responsibility

CHAPTER 10 Contract Administration 525

because management is legally prohibited from dealing in the internal affairs of the union. However, it can easily be argued that the union would not have violated the law in the first place if the company had not wrongfully discharged the employee. There is also the possibility that this decision would encourage the union to take more marginal grievances to arbitration to avoid any possible breach of fair representation and related financial liability. In other words, the union may believe that it is less expensive to take the case to arbitration than to defend against a breach of contract suit before a jury. Even if the union loses in arbitration, the costs will be less than defending the union s actions in court.

Summary Employee grievances and grievance administration extend collective bargaining by giving dynamic mean- ing to the negotiated terms of the labor agreement. A grievance is typically defined as any employee s con- cern over a perceived violation of the labor agreement that is submitted to the grievance procedure for resolution.

An employee might file a grievance for a variety reasons, such as to protest a contract violation, to draw attention to a problem in the plant, to get something for nothing, or to feel more important. Regardless of the reasons for filing grievances, management must process them through the grievance procedure speci- fied in the labor agreement (legalistic approach).

Although no one grievance procedure applies to all labor management relationships, two important aspects of a typical grievance procedure are inclusion of higher level management and union personnel and, particularly in the private sector, binding arbitration by a third-party neutral. Grievance procedures typically offer an organization two major advantages: conflict institutionalization and open upward communication. However, the grievance procedure as actually carried out involves a variety of behavioral dimensions, includ- ing social relationships (codified, power, and empa- thetic) enacted among the grievance participants in

resolving the grievance according to appropriate con- tractual provisions. The variety of personalities and motives of the participants suggest that a flexible, prag- matic approach in grievance resolution may be best.

Grievance mediation, a form of ADR procedure, was discussed and compared to grievance arbitration, another ADR procedure. The advantages of grievance mediation, such as costs, informality, skills develop- ment, and others, were explained. However, despite these advantages, grievance mediation remains less fre- quently used than arbitration. The reasons for its less frequent use and the various approaches used were explained. As a result of its success, mediation is being used successfully by the EEOC to resolve employment discrimination disputes. Other forms of ADR open-door policies, ombudsperson, peer review systems, and early neutral evaluation were also presented.

Unions have a legal obligation to fairly represent bargaining unit employees in the grievance procedure. Although unions are not legally required to take each grievance to arbitration, they must consider and pro- cess grievances in an effective, good faith manner. Legal and financial consequences to the union and the employer can arise when the union violates its duty of fair representation.

Key Terms grievance, p. 499 employee voice, p. 506 Arbitration, p. 512 Grievance mediation, p. 512 mediation, p. 512

directive or results-oriented mediation, p. 513

transformation mediation, p. 515 open-door policies, p. 516 ombudsperson, p. 516 peer review systems, p. 516

Early neutral evaluation, p. 517 Codified relationships, p. 518 power relationships, p. 518 Empathetic relationships, p. 520 third-and-one-half step, p. 521 fair representation obligation, p. 522

526 PART 3 Administering the Labor Agreement

Discussion Questions

1. A thin line differentiates employee grievances and employee complaints. Discuss the problems involved in defining a grievance, indicating why a broad definition of employee grievances is both confusing and necessary.

2. Discuss two reasons grievances might be filed, furnishing examples of these reasons other than those found in the text.

3. Why does a typical grievance procedure have so many steps when the employee is either right or wrong and a one- or two-step procedure would

save time and money? In your answer, discuss the various functions, opportunities, and problems each of the grievance steps can offer.

4. Why is it difficult for union and management officials to resolve each grievance on its own merits?

5. Briefly discuss the broad judicial guidelines con- cerning unions fair representation obligations to members. Also discuss the reasoning behind these obligations, furnishing some appropriate examples.

Exploring the Web

Grievance Procedures

1. Grievance Procedures For advice on investigating grievances, filing grie- vances, processing grievances, duty of fair representa- tion, winning past practices grievances, deciding whether or not to appeal grievances to arbitration, mid-contract bargaining changes, go to: http://www. ueunion.org and search for grievance procedure.

2. Successful Grievance Mediation REDRESS-US Postal Service (http://www.USPS. com/redress/employees) is an award-winning EEO mediation program which provides fast, fair, neu- tral, and informed attention to traditional EEO counseling. It is a voluntary process wherein the parties may develop their own resolution with the assistance a grievance mediator. Federal Mediation and Conciliation Service (http://www.fmcs.gov) offers grievance mediation

assistance with a third-party neutral. This Web site provides the following information: (1) when the FMCS mediation should be used, (2) FMCS training availability, (3) how to request grievance mediation, and (4) FMCS Guidelines for grievance mediation.

3. Union s Duty of Fair Representation As the exclusive bargaining representative for all bar- gaining unit employees, a union has the legal duty to represent all bargaining unit employees, regardless of union membership. Most labor unions have Web sites which provide guidance to their members regarding the unions duty of fair representation. Some of them are: United Electrical Radio and Machine Workers of America (http://www.ueunion.org) Communication Workers of America (http://www. cwa-union.org) Teamsters (http://www.teamsters.org/content/duty- fair-representation)

References 1. Bonnie G. Bogue and Katherine J. Thomson,

Pocket Guide to Just Cause: Discipline and Dis- charge Arbitration (Berkeley, CA: California Public Employee Relations Program, Institute for Research on Labor and Employment, University of California, 2010), pp. 25 26.

2. Antone Aboud, Conducting a Fair Investiga- tion, Dispute Resolution Journal, 60(3), 2004 2005, pp. 16 20.

3. Brian S. Klass and Angelo S. DeNisi, Manage- ment Reactions to Employee Dissent: The Impact of Grievance Activity on Performance Ratings,

CHAPTER 10 Contract Administration 527

Academy of Management Journal, 32(4), 1989, pp. 705 717.

4. Robert E. Allen and Timothy J. Keaveny, Factors Differentiating Grievants and Nongrievants, Human Relations, 38, November 1985, p. 529.

5. David Lewin and Richard B. Peterson, Behav- ioral Outcomes of Grievance Activity, Industrial Relations, 38, October 1999, pp. 554 566.

6. Chalmer E. Labig, Jr., and I. B. Helburn, Union and Management Policy Influences in Grievance Initiation, Journal of Labor Research, 7, Summer 1986, pp. 269 284.

7. Douglas M. McCabe, Corporate Nonunion Grievance Procedures: Open Door Policies A Procedural Analysis, Labor Law Journal, 41, August 1990, pp. 551 557. See also Mark J. Keppler, Nonunion Grievance Procedures: Union Avoidance Technique or Union Organiz- ing Opportunity? Labor Law Journal, 41, August 1990, pp. 557 563; George W. Bohlander and Ken Behringer, Public Sector Nonunion Com- plaint Procedures: Current Research, Labor Law Journal, 41, August 1990, pp. 563 568; Richard B. Peterson and David Lewin, The Nonunion Grievance Procedure: A Viable System of Due Process, Employee Responsibilities and Rights Journal, 3(1), 1990, pp. 1 18; Richard B. Peterson and Douglas M. McCabe, The Nonunion Griev- ance System in High Performing Firms, Labor Law Journal, 45, August 1994, pp. 529 534.

8. Donna Maria Blancero, Robert G. DelCampo, and George F. Marrow, Industrial Relations, 49(4) (October 2010), pp. 525 526.

9. Richard B. Freeman and James L. Medoff, What Do Unions Do? (New York: Basic Books, 1984), p. 10.

10. Richard B. Peterson, Organizational Governance and the Grievance Process: In Need of a New Model for Resolving Workplace Issues, Employee Respon- sibilities and Rights Journal, 7, March 1994, p. 13.

11. Renaud Paquet and Sylvain Dufour, Toward a Better Understanding of Grievance Procedure in the Public Service: A Canadian Example, Journal of Collective Negotiations in the Public Sector, 28(2), 1999, pp. 103 107.

12. For a fine research framework for grievances, see Michael E. Gordon and Sandra J. Miller, Grie- vances: A Review of Research and Practice, Per- sonnel Psychology, 37, Spring 1984, pp. 117 146. See also David Lewin, Empirical Measures of Grievance Procedure Effectiveness, Labor Law

Journal, 35, September 1984, pp. 491 496; Thomas R. Knight, Feedback and Grievance Resolution, Industrial and Labor Relations Review, 39, July 1986, pp. 487 501; Casey Ichiowski, The Effects of Grievance Activity on Productivity, Industrial and Labor Relations Review, 39, October 1986, pp. 75 89; Thomas R. Knight, Correlates of Informal Grievance Reso- lution among First- line Supervisors, Relations Industrial, 41(2), 1986, pp. 281 291; Brian Bem- mels, Yonatan Reshef, and Kay Stratton-Devine, The Roles of Supervisors, Employees and

Stewards in Grievance Initiation, Industrial and Labor Relations Review, 45, October 1991, pp. 15 30; Jeanette A. Davy, Greg Steward, and Joe Anderson, Formalization of Grievance Pro- cedures: A Multifirm and Industry Study, Jour- nal of Labor Research, 13, Summer 1992, pp. 307 316; Richard P. Chaykowski, George A. Slotsve, and J. S. Butler, Simultaneous Analysis of Grievance Activity and Outcome Decisions, Industrial and Labor Relations Review, 45, July 1992, pp. 724 737; Peter Capelli and Keith Chauvin, A Test of an Efficiency Model of Grievance Activity, Industrial and Labor Rela- tions Review, 45, October 1991, pp. 3 14; Morris M. Kleiner, Gerald Nickelsburg, and Adam Pilarski, Monitoring, Grievances, and Plant Per- formance, Industrial Relations, 34, April 1995, pp. 169 190.

13. Mark I. Lurie, The 8 Essential Steps in Grievance Processing, Dispute Resolution Journal, 54, November 1999, pp. 81 86.

14. Basic Patterns in Union Contracts (Washington, D.C.: Bureau of National Affairs, 1995), pp. 33 39.

15. David B. Stephens, Robert Stephens, and John Kohl, U.S. Business Colleges Still Lag in Teach- ing ADR; Dispute Resolution Journal, May/June 2013, pp. 23 28. For an example of a course curriculum in ADR, see: Peter Geoffrey Bowen, Teaching ADR to Undergraduate Business

Students , Dispute Resolution Journal, August/ October 2012, pp. 78 82.

16. Stephen B. Goldberg, How Interest-based Grievance Mediation Performs Over the Long Term, Dispute Resolution Journal, 60(4), 2004 2005, pp. 8 14; See also Helen Elkiss, Alterna- tives to Arbitration: Are Unions Ready for Change? Labor Law Journal, 48, November 1997, pp. 675 690.

528 PART 3 Administering the Labor Agreement

17. Gary Hattal, Labor Mediator as Internal Change Agent , Proceedings of the 62nd Annual Meeting of the Labor and Employment Relations Association, 2010, pp. 167 169.

18. Theodore J. St. Antoine, Introduction: What ADR Means Today, in How ADR Works (Washington, D.C.: Bureau of National Affairs, 2002), pp. 4 5.

19. Nels Nelson and A. Meshquat Uddin, Arbitra- tors as Mediators, Labor Law Journal, 46, April 1995, p. 205.

20. Peter Feuille, Grievance Mediation, in Employ- ment Dispute Resolution and Worker Rights in the Changing Workplace, ed. Adrienne E. Eaton and Jeffrey H. Keene (Champaign, IL: IRRA, 1999), pp. 197 205.

21. Fueille, Grievance Mediation, pp. 197 198. 22. Richard E. Dibble, Alternative Dispute Resolu-

tion in Employment: Recent Developments, Journal of Collective Negotiations in the Public Sector, 29(3), 2000, pp. 247 248.

23. http://www.eeoc.gov.mediation 24. E. Patrick McDermott, Anita Jose, Ruth Obar,

Mollie Bowers, and Brain Polkinghorn, Has the EEOC Hit a Home Run? An Evaluation of the Equal Employment Opportunity Commission Mediation Program from the Participants Per- spective, in Advances in Industrial and Labor Relations, ed. David Lewin and Bruce Kaufman (Amsterdam: JAI, 2002), pp. 2 34; http://www. eeoc.gov.

25. Lisa Bloomgreen Bingham, Cynthia J. Hallberlin, and Denise A. Walker, Mediation of Discrimi- nation Complaints at the USPS: Purpose Drives Practice, paper presented at the Annual Meeting of the National Academy of Arbitrators 2007.

26. Donna Maria Blancero, Robert G. DelCampo, and George F. Marrow, Industrial Relations, 49(4) (October 2010) pp. 524 543; Mark Harcourt, Helen Lam and Maureen Hannay, Employment at will versus Just Cause: Applying the Due Pro- cess Model of Procedural Justice, Labor Law Journal, 64, 2013, p. 67 79.

27. Hoyt Wheeler, Unions and Workplace Justice, Proceedings of the 61st Annual Meeting (Cham- paign, IL: Labor and Employment Relations Association, 2009), pp. 125 128.

28. Laura J. Cooper, Dennis R. Nolan, and Richard A. Bales, ADR in the Workplace (St. Paul, MN: West Group, 2000), pp. 659 672.

29. Judith L. Catlett and Edwin L. Brown, Union Leaders Perceptions of the Grievance Process, Labor Studies Journal, 15, Spring 1990, p. 61.

30. See, for example, Ralph Arthur Johnson, Griev- ance Negotiation: An Analysis of Factors Popu- larly Associated with Success, Labor Studies Journal, 9, Winter 1985, pp. 271 279.

31. AFL-CIO Manual for Shop Stewards (n.p., n.d.), p. 37. 32. William D. Todor and Dan R. Dalton, Union

Steward: A Little Known Actor with a Very Big Part, Industrial Management, 25, September/ October 1983, pp. 7 11.

33. Paul Pigors, The Old Line Foreman, in Orga- nizational Behavior, ed. Austin Grimshaw and John Hennessey, Jr. (New York: McGraw-Hill, 1960), p. 98.

34. Michael E. Gordon and Roger L. Bowlby, Pro- positions about Grievance Settlements: Finally, Consultation with Grievants, Personnel Psychol- ogy, 41, Spring 1988, p. 120. Another study also found that a high proportion of local union lea- ders believe that first-line supervisors have no authority to resolve grievances. See Catlett and Brown, p. 59.

35. John P. Hoerr, And the Wolf Finally Came (Pittsburgh: The University of Pittsburgh Press, 1988), p. 22.

36. P. Christopher Earley, Supervisors and Stewards and Sources of Contextual Information in Goal Setting: A Comparison of the United States with England, Journal of Applied Psychology, 71, February 1986, pp. 111 117. See also Mick Marchington and Roger Armstrong, Typologies of Union Stewards, Industrial Relations Journal (Autumn 1983), p. 44.

37. David Lewin and Richard B. Peterson, The Mod- ern Grievance Procedure in the United States (New York: Quorum Books, 1988), p. 195.

38. Delbert C. Miller and William Forum, Industrial Sociology (2nd ed.) (New York: Harper & Row, 1964), pp. 401 402.

39. Melville Dalton, Unofficial Union-management Relations, American Sociological Review, 15, October 1950, p. 613.

40. Marc G. Singer and Peter A. Veglahn, Corre- lates of Supervisor-steward Relations, Labor Studies Journal, 10, Spring 1985, pp. 46 55. For a study and related methodology revealing an empathetic relationship, see Brian Bemmels, The Determinants of Grievance Initiation,

CHAPTER 10 Contract Administration 529

Industrial and Labor Relations Review, 47, January 1994, pp. 293, 300.

41. Melville Dalton, The Role of Supervision, in Industrial Conflict, ed. Arthur Kornhauser, Robert Dubin, and Arthur Ross (New York: McGraw- Hill, 1958), pp. 183 184.

42. For related legal violations (unfair labor prac- tices), see Paul A. Brinker, Labor Union Coer- cion: The Misuse of the Grievance Procedure, Journal of Labor Research, 5, Winter 1984, pp. 93 102.

43. Arthur Hamilton and Peter A. Veglahn, Juris- diction in Duty of Fair Representation Cases, Labor Law Journal, 41, September 1990, p. 668. See also Martin H. Malin, The Supreme Court and the Duty of Fair Representation, Harvard Civil Rights: Civil Liberties Law Review, 27, February 1992, p. 127.

44. Decision of Supreme Court in Teamsters Local 391 v. Terry, Bureau of National Affairs Inc., Daily Labor Report, March 21, 1990, pp. D1 D11. An appeals court decision interpreting a subse- quent Supreme Court decision indicates the employee has a six-month period to sue starting from when he or she should have reasonably known about the union s alleged breach of duty. Court Affirms That Fair Representation Claim

over Abandoned Grievance Was Untimely Filed, Bureau of National Affairs Inc., Daily Labor Report, August 6, 1990, p. A1.

45. Peter Geier, The Daily Record, Baltimore Mary- land, January 5, 2004, p. 1. Ford Motor Co. v. Huffman et al., 345 U.S. 320 (1953); and Hum- phrey v. Moore, 375 U.S. 335 (1964).

46. For examples of judicial decisions that have upheld and rejected unions fair representation actions along these lines, see Court Immunizes Union Failure to Pursue Grievance, Bureau of National Affairs Inc., Daily Labor Report, March 9, 1994, p. A1; and Court Finds UFCW Breached Duty, but Vacates Fee Award, Bureau of National Affairs Inc., Daily Labor Report, May 27, 1993, p. A4.

47. Vaca v. Sipes, 386 U.S. 191 (1967); Amalgamated Association of Street, Electric, Railway and Motor Coach Employees of America v. Wilson p. Lock- ridge, 403 U.S. 294 (1971).

48. Union Must Pay Damages for Its Arbitrary Mishandling of Grievances, National Public Employment Reporter, July 5, 2001, p. 1.

49. Unions under Scrutiny, California Employment Law Letter, May 13, 2002, p. 1.

50. Air Line Pilots Association, International v. Joseph E. O Neill et al., Bureau of National Affairs Inc., The United States Law Week, March 19, 1991, pp. 4175 4180.

51. For an example of a relatively straightforward breach of fair representation, see Hines v. Anchor Motor Freight Inc., 424 U.S. 554 (1976).

52. Union Failure to Publicize Award Held Fair Representation Breach, Bureau of National Affairs, Daily Labor Report, August 13, 1984, p. 1.

53. T. Charles McKinney, Fair Representation of Employees in Unionized Firms: A Newer Direc- tive from the Supreme Court, Labor Law Jour- nal, 35, November 1984, pp. 693 700.

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10 -1 Are These Grievances Arbitrable?

Background Manchester T & E is a company which produces

propane cylinders. The International Workers repre- sents the bargaining unit employees at the Blue Ridge, Georgia plant.

Grievance No. 27-97 which is subject of this arbi- tration was filed on December 18, 2007, on behalf of Bob Boyce. Mr. Goode wrote:

Nature of Complaint:

The Union contends that on 12/16/07 the Company violated Article VII not to exclude any other Arti- cles or Sections pertaining to the contract.

To satisfy this grievance the Union will accept that Bob Boyce be placed back to work with all pay that he has lost which would be all straight pay and overtime pay.

On December 22, 2007, Mr. Sam Smallwood, per- sonnel manager, denied the grievance.

Grievance No. 27-97 was appealed to the third step, and Mr. Smallwood denied the grievance on Jan- uary 13, 2008.

The union appealed Grievance No. 27-97 to the third step, and Mr. Smallwood denied the grievance on January 13, 2008.

On January 21, 2008, Mr. Goode wrote the follow- ing note:

The Union wishes that Grievance number 27-97 be appealed to Arbitration.

On March 25, 2008, Mr. George H. Mason, busi- ness representative, wrote the following letter to Mr. Smallwood.

The Company s answer to the above mentioned grievance(s) has been deemed unsatisfactory to the Union. Pursuant to Article V, Section 5, of the cur- rent Collective Agreement, the Union will proceed to arbitration.

Issue

Is Grievance No. 27-97 arbitrable? That is, can the arbitrator consider the Grievance on its merits? Or is an arbitrator precluded from hearing the case in this instance because of alleged procedural irregularities?

Relevant Provisions of the Collective Bargain- ing Agreement

Article V: Grievance Procedure and Arbitration

Section 2. Time Limits. If an appeal is not made in the prescribed time limit following the company s answer at any step of the foregoing procedure, the grievance shall be considered settled on the basis of the company s answer, and not subject to further action of any kind. If the company does not answer the grievance in accordance with the foregoing pro- cedure, the grievance shall be settled on the basis of the union s request in said grievance.

The time limits for presentation, answer, and appeal on a grievance at any step are absolute and binding upon both parties, unless such time limits are extended by mutual agreement.

Section 5. Arbitration. If the director of human resources written answer in Step 3 is deemed unsat- isfactory, the union may elect to submit the griev- ance to arbitration. A grievance not settled in Step 3 must be appealed to arbitration by written notice to the director of human resources, or his representa- tive. Such notice shall be mailed by certified mail, return receipt requested, and must be postmarked no later than ten (10) normal working days after the date of the 3 answer.

Both parties shall have the opportunity to pres- ent evidence and to argue that grievance orally and/ or in writing. The arbitrator shall make a written decision and award, in accordance with the evi- dence, which shall not alter, add to, or subtract from the terms of this agreement. The arbitrator shall have no power to substitute his discretion for that of the company in any matter where the com- pany has not expressly contracted away its right allowing an arbitrator to exercise such discretion. Such written decision shall be binding upon the company, the union, and the aggrieved employee.

Positions of the Parties The Company

The company argued that, under the terms of this agreement, the union may proceed to arbitration when it is dissatisfied with the company s resolution of a

CHAPTER 10 Contract Administration 531

grievance in its Step 3 answer. As a prerequisite, the union must provide the company with timely and proper notice of its intent to proceed to arbitration. To be considered timely and proper, the notice must comply with the simple and straightforward provisions set forth in Article V, Section 5, of the agreement. Arti- cle V, Section 5, provides: A grievance not settled in Step 3 must be appealed to arbitration by written notice to the Director of Human Resources, or his representa- tive. Such notice shall be mailed by Certified Mail, Return Receipt Requested, and must be postmarked no later than ten (10) normal working days after the date of the Step 3 Answer. The straightforward lan- guage clearly and unambiguously states that a notice of intent to arbitrate must meet three requirements. First, the notice must be in writing. Second, it must be delivered to the company personally within ten days of the Step 3 answer. In addition, Article V, Section 5, states that time limits are absolute and binding upon both parties unless extended by mutual agreement.

The company claimed that the union is seeking to persuade the arbitrator that the company should be forced to arbitrate Grievance No. 27-97 despite the union s failure to provide the company with timely and proper notice of its intent to arbitrate this Grievance. Mr. George Mason provided the company with written notice; however, this notice was clearly untimely, because it was well beyond ten working days after the company s Step 3 denial.

Since the union failed to provide timely notice of its intent to arbitrate the grievances at issue, the union has attempted to characterize a handwritten note from its chief steward Goode to the company s representa- tive, Sam Smallwood, as a request for an extension of the time limits. The union s attempt to characterize a handwritten note as a request for an extension of time for Grievance No. 27-97 is wholly without merit.

The union has failed to either request arbitration in accordance with the mutually agreed upon terms of the agreement or to obtain a mutually agreed upon extension of the time. Therefore, this grievance is not procedurally arbitrable. The express terms of Article 5, Section 2, state that, as a result of the union s failure to appeal the company s Step 3 answers to arbitration within the prescribed time limit, the grievance[s] shall be considered settled on the basis of the com- pany s answer[s], and not subject to further action of any kind. According to this straightforward contrac- tual language, this grievance was rendered settled on the basis of the company s Step 3 answer.

The company never explicitly or implicitly agreed to extend the time limits on this grievance. In response to the union s untimely request, the company immediately raised the timeliness issue. The company has insisted on strict compliance with procedural requirements through- out its bargaining relationship with the union and has never waived compliance with the procedural provisions of the grievance and arbitration process, even when the result was detrimental to the company.

The company reviewed its version of the facts. On December 16, 2007, the company discharged Bob Boyce for fighting in the plant. On December 18, 2007, a timely grievance was filed. On December 22, 2007, Mr. Smallwood issued step 2 denial on the griev- ance. The grievance proceeded to the Step 3 of the grievance procedure on January 13, 2008, and the com- pany denied the grievance on this same date.

On January 21, 2008, Mr. Goode, submitted a handwritten note to Mr. Smallwood, which stated: The Union wishes that Grievance numbers 22-97, 23-

97, 24-97, 25-97 be put on hold until the next 3rd Step meeting, and that Grievance number 27-97 be appealed to arbitration. Mr. Smallwood interpreted the note exactly as it was written. Grievance Nos. 22-97, 23-97, 24-97, and 25-97 were put on hold. Mr. Goode s note, however, was not treated by the company as a formal demand for the arbitration of Grievance Nos. 27-97 because it was clearly not provided in accordance with the agreement. Mr. Smallwood expected the union to follow up with a formal request.

Mr. George Mason, the union s business represen- tative, eventually provided the company with a formal written request, as required by the agreement. How- ever, this request was postmarked March 25, 2008, many weeks beyond the time requirements set out in Article V, Section 5, which expressly requires the union to make a formal demand for arbitration within ten working days after the company s Step 3 denial. The company s Step 3 denials were issued on January 13, 2008, and the union s formal request for arbitration was received on March 26, 2008, well over two months later. Upon receipt of the union s untimely request, the company immediately responded by letter to Mr. Mason and denied the union s request for the arbi- tration of Grievance No. 27-97 as untimely and not in compliance with the agreement.

The company stated that it has maintained a long- standing policy of requiring strict compliance with time limitations of the grievance procedure throughout the bargaining relationship with the union. The evidence

532 PART 3 Administering the Labor Agreement

established this practice and illustrated that the com- pany has uniformly denied untimely requests for arbi- tration and has enforced contractual time limits even when detrimental to its own position.

The company claimed that it uniformly honors timely requests for arbitration. The evidence established that in the past the union has consistently provided its requests for arbitration in a timely manner. In response to the union s timely requests, the company has com- plied in good faith with the agreement and proceeded to arbitration. When the union complies with the time lim- itations set forth in the contract, the company upholds its part of the bargain and proceeds to arbitration.

The company argued that the agreement does not permit the arbitrator to modify the contract. Therefore, the arbitrator should enforce the contract in accordance with its plain and unambiguous language. Article V, Sec- tion 5, specifically states that the arbitrator shall not alter, add to, or subtract from the terms of this agreement. This is the intent of the parties as expressed by clear contractual language, which governs resolution of contract disputes rather than the preference of the arbitrator.

In this case, the contract clearly sets forth the pro- cedural requirements for requesting arbitration. The evi- dence firmly established that the union failed to request arbitration of Grievance No. 27-97 in accordance with these clear and unambiguous requirements.

The company concluded: Based on the reasons set forth above, grievance

No. 27-97 is not procedurally arbitrable and should be denied.

The Union: The union stated that on or about December 11,

2007, the company terminated the employment of Bob Boyce, and the union filed grievances on his behalf. This grievance was appealed through the grievance procedure, and the company s final answer, dated Jan- uary 13, 2008, was no violation, grievance denied. Subsequent to the company s final grievance answer, the company took the position that the grievance had become untimely and therefore not arbitrable.

The union presented testimony and documenta- tion by the local lodge chief Steward, Mr. Ralph Goode. Mr. Goode has worked for the company for 17 years and has been chief steward of the local union for six of those years. Mr. Sam Smallwood, per- sonnel manager, is Mr. Goode s counterpart in man- agement. Mr. Goode pointed out that both the union and the company from time to time have reasons for

extending the grievance time limits, and Mr. Goode presented to Mr. Smallwood a document extending the time limits on Grievance No. 27-97.

The union claimed that the company did not object to the above mentioned document s request. Mr. Goode recalled that neither party has ever rejected the other s request for time extensions. At the time of this arbitra- tion, there were seven grievances with time deferrals and the oldest was 11 months. The union deferred the time limits of Grievance No. 27-97 because the parties were in contract negotiations. On some occasions, issues could be resolved around those negotiations meetings without formal proposals being made. However, the union and company could not resolve Grievances No. 27-97 in negotiations, and the union sent a letter to the company appealing the grievances to arbitration.

The union argued that Article V, Section (2), Griev- ance Procedure and Arbitration, provides that the par- ties through mutual agreement may extend the time limits of grievances in process. For the past six years the parties have honored each other s request to defer time limits. Mr. Goode testified that he requested time limit deferrals on all grievances mentioned in his corre- spondence of January 21, 2008, and that the company did not object to his request. During the contract nego- tiations, the company and the union were attempting to resolve Grievance No. 27-97. The union argued: It flies in the face of reason that the company would discuss a grievance during negotiations and then later decide the grievance was untimely. When the company and the union exhausted their attempts to resolve Grievance No. 27-97, during their bargaining sessions, the union properly appealed the grievance to arbitration.

The union concluded: For all the foregoing reasons, the union requests

that Grievances No. 27-97 be ruled arbitrable and the company be directed to arbitration.

Questions 1. Assess the union s argument that the parties in the

past have agreed to extend time limits. 2. Should the arbitrator be influenced by any evidence

over the reasons for the termination of those two employees?

3. What are the company s best evidence and arguments?

4. What are the union s best evidence and arguments? 5. You be the arbitrator. How will you rule? Are these

grievances arbitrable?

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10 -2 Should the Union Represent Slick Willie Owens?

Slick Willie Owens had always claimed himself to be independent, believing that he never had to rely on anyone else to help him. Willie started out with the Walleye Productions plant in Walleye, Florida as a laborer 14 years ago and worked his way to a fork lift operator and then to shipping clerk. Back in 2008 dur- ing the economic recession, Walleye laid off about one third of its employees; the supervisors selected employ- ees who would not be laid off. There were many com- plaints among the more senior employees that the company did not give consideration to their long ser- vice with the company, instead, the supervisors retained the ones they believed to be the hardest work- ers, many of whom were the youngest, even some who had just been hired.

In 2009, the word got around that Walleye execu- tives had made a secret trip to Mexico to investigate having some of the manufacturing done in Mexico. Of course, this information outraged many of the employees who had worked for the company for many years. Soon afterwards, some of the more senior employees talked about contacting a union. They con- tacted the International Union Representative of the Industrial Union Workers (IUW) who represented employees at another plant in Walleye. The Interna- tional Union Representative called for a meeting at the union lodge and about 40 Walleye employees showed up and signed union authorization cards. Two weeks later the IUW had 150 signatures on the union authorization cards.

The IUW requested to be recognized, but the com- pany denied recognition. The IUW then filed for a representation election with the NLRB. During the campaign in the late 2011 and early 2012, Slick Willie continued to claim his independence, that he had made it this far without any union, and that he didn t need the union now. During the campaign when Willie was approached by co-workers in the shipping department who supported the union, Willie told them: Even if the union gets in, I don t have to join. The union still has to represent me. I get everything you guys get, and I don t have to pay them one red dime.

After a lively organizing campaign, the employees voted by 174 to 144 to be represented by the IUW. Afterwards, the IUW was successful in negotiating a

three-year contract in the fall of 2012. The IUW and Walleye Productions developed a fairly productive, cooperative relationship from the beginning. Both par- ties have acted professionally in dealing with each other. The company maintained its policy of going strictly by the rules. The company agreed to the grievance-arbitration procedure and that discipline must be for just cause. The IUW accepted the com- pany s right to formulate reasonable rules for employee behavior. One of these formulated rules for employee behavior was: Being under the influence of illegal drugs and alcohol during working hours will be cause for immediate termination.

On January 1, 2015, Slick Willie attended a New Year s party to watch the football bowl games. Willie was surrounded by his old buddies who were drinking beer and smoking a little marijuana. Willie knew that he had to report to work the following day but yielded to the temptation when he was offered a smoke. Since he had been drinking a little too much, Willie smoked a little too much. Knowing Walleye had a random testing policy, Willie believed that his chances of being tested were slim. Willie was wrong. Willie was selected to be tested and Willie tested positive. The results were con- firmed and Willie was terminated by the end of the day.

Willie filed a grievance and claimed that the smok- ing of marijuana was a single incident, that it was his first offense, and that he was a long-term employee with a good service record of 14 years. The company s position was that the rules were reasonable, clear, and communicated to all employees. Willie had tested pos- itive and the company s position was that it could not make an exception for Willie because the company would without doubt be faced with similar situations later and not applying the rule now would have an effect of nullifying the rule.

Willie went to the union to represent him. Willie claimed that the union had a duty to represent all bar- gaining unit employees and he held a job within the bargaining unit. At the next membership meeting, there was a backlash among the membership to repre- senting Willie because they remembered what Willie had said during the organizing campaign and that he has never joined the union. The members claimed that here is a guy who spoke out against the union, never

534 PART 3 Administering the Labor Agreement

joined the union, and never paid a red dime to sup- port the union. Now Willie wants the membership to pay the union s attorney to represent him in arbitration and pay the union s share of the arbitration, a total amount which could rise to as much as $5,000.

A discussion took place at the meeting and the following proposal was made by a member: The union would represent Willie in the grievance proce- dure and arbitration and Willie would pay for his representation costs, for example, the legal fees, the union s share of the arbitration costs. The union posi- tion was that this proposal as adopted would meet its legal duty of representing Willie. The membership voted approval without a negative vote.

Questions 1. What are Willie s arguments which would require

the union to represent him without Willie paying any money?

2. What are the union members argument which would require Willie to pay for the costs of repre- senting him?

3. Is this adopted proposal fair to Willie? To members of the union?

4. If the union refuses to represent Willie and pay for the union s attorney and its share of the arbitration costs and then Willie files a charge against the union with the NLRB, how will the NLRB rule?

5. If you were a member of the union, how would you have voted on the proposal? Why?

6. If you are a member of management and learn about Willie s position and the union s position, what would you do?

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CLASSROOM EXERCISE

10.1 Arbitration Scenario

On Thursday, March 4, 2004, Juan Carlos, age 43, was on sick leave at his home. He went out- side to feed his horses and noticed a pickup truck driving toward him. As the pickup came closer, Juan noticed that the driver was Billy Bob Jones, a former boyfriend of his ex-wife.

Billy Bob pulled up to Juan and the two of them had an exchange of words. This exchange led to Juan pulling out a pistol and shooting Billy Bob, who was taken to the hospital. Billy Bob was admitted and later released. A warrant for the arrest of Juan Carlos was issued by the Magistrate of the County District Court on March 5, 2004. Juan was arrested on March 5, 2004, made bail, and was released.

On Monday, March 8, Juan reported to work at the social service organization where he had worked for eight years. He asked for a meeting with his supervisor, Alice Smith, and department head, Larry Tate. Juan told them that he was involved in an altercation with Billy Bob Jones who had driven to his home, threatened to kill him, and grabbed his arm with his left hand from the driver s side of his pickup while the motor was still running. When Billy Bob leaned to his right and reached down toward his car seat, Juan feared for his life and shot Jones in self-defense. He told them that he was later arrested. After the meeting, Juan returned to his desk and continued his job of interviewing citizens who visited his office to apply for public assistance. On the follow- ing day, Suzie Cue, a fellow employee, told Mr. Tate that she had read an article in the local newspaper that Juan had shot Billy Bob Jones and had been arrested. Suzie told Mr. Tate that she was frightened having Juan in the same office. Mr. Tate knew that he had a potentially serious situation and he needed to investigate the situation. Mr. Tate first checked the Collective Bargaining Agreement. The relevant language is as follows:

Management may discipline employees for just cause. The Agency may suspend an employee indefinitely if there is reasonable cause to

believe that the employee has committed a crime for which a sentence of imprison- ment could be imposed.

On March 10, 2004, Tate decided to propose to suspend Carlos indefinitely, and Carlos was placed on administrative leave. After approval from his division head, Tate wrote a letter captioned Decision to Suspend Indefinitely to Carlos. Upon receipt, Carlos began serving an indefinite suspension. On March 11, 2004, Carlos filed a griev- ance and also filed a charge of race and age discrimination with the EEOC.

Management s preparation and decisions are only as good as its investigation. You be the investigator. What information will you seek? What actions will you take to obtain this needed information?

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CHAPTER 11

Labor and Employment Arbitration

YOU HAVE WORKED hard and spent a good deal of money on your college education. You have made good grades and are looking for a job in order to advance your career goals. You rec- ognize that jobs are hard to find for a new college graduate.

You were an excellent student with many campus activities, but you have had a difficult time finding a suitable job. Finally, you were offered a job with a good salary and benefits, with good career potential. You received the offer via letter. Attached to the letter is the following statement: As a condition of employment, I agree to resolve any and all of my employment discrimination claims through the company s arbitration proce- dure. I waive all of my legal rights to file any employment dis- crimination claim with the Equal Employment Opportunity Commission and/or any other governmental agency.

Questions 1. Will you sign the attached agreement?

2. What are your legal rights?

537

This chapter covers (1) traditional grievance labor arbitration, which involves the dispute-resolution procedures stemming from the last step in the grievance procedure and (2) employment arbitration, which is initiated by the employer. The traditional labor arbi- tration procedures are negotiated between the employer and the union, the representative of bargaining unit employees. Employment arbitration is promulgated by the employer to resolve statutory claims, including employment discrimination, and disputes over applica- tion of company personnel policies, such as a denied employee promotion under an employer handbook or policy manual. These two arbitration procedures are covered sepa- rately because, although they have some commonalities, they are distinctly different.

The first difference is the presence of the union in the traditional labor arbitration procedure. The union s role is to represent all bargaining unit employees, and the union and the company bilaterally negotiate an arbitration procedure that will best reflect both the interests of the employees covered under the collective bargaining agreement and the interests of the employer. Under this procedure, the parties generally have equal bargaining power. Under employment arbitration, the employer unilaterally designs the procedures and determines that disputes related to employment subjects will be resolved in arbitration. Under this procedure, the employer has the dominant power.

A second difference is the qualifications and selection of the arbitrators who hear the disputes. Arbitrators used in negotiated grievance arbitration have considerable experience and expertise in labor and employment matters and are selected mutually by the parties, who research their background, education, experience, and other factors before making the selection. In employer-promulgated employment arbitration, arbitrators may be selected only by the employer from lists of commercial arbitrators or from lists developed solely by the employer. In fact, some employers refuse to use arbitrators who have experience in the labor relations arena because employers believe that these arbitrators are likely to use the same standards as used in labor management arbitration, such as an employer having the burden of proof in a discharge case.

A third difference lies in the framework for decision making. Under a collective bar- gaining agreement, arbitration involves issues that arise over the interpretation and appli- cation of the labor agreement. Therefore, the labor agreement is negotiated by the union and company and establishes the framework ( four corners of the agreement ) for the arbitrator s decision. Under employment arbitration, the decision of the arbitrator involves interpretation and application of company-developed personnel policy or a public law.1

Development of Labor Arbitration

Labor arbitration first occurred in the United States in 1865, but it was used rarely before World War II, when it was used by the War Labor Board. In many cases prior to the war, employee grievances were resolved through sheer economic strength. For instance, a union desiring resolution of a particular grievance often needed to mobilize the entire workforce in a strike against the employer a difficult task before the company would attempt to resolve the grievance. In the early years, union and management officials were legally free to ignore the arbitrator s decision if they did not agree with it.

Other factors limiting the early growth of arbitration were the relatively few union- ized facilities and the vague language found in labor agreements, which gave little con- tractual guidance for the arbitrator s decision. Consequently, the early arbitration process combined elements of mediation and humanitarianism in an effort to reach a consensus decision, one that would be accepted by both parties to a grievance. The arbitrator under these circumstances had to draw on diplomatic and persuasive abilities to convince the parties that the decision should be accepted.

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Labor arbitration s popularity increased during World War II, when President Franklin Roosevelt s Executive Order 9017 provided for final resolution of disputes interrupting work that contributed to the war effort. Essential features of this order included a no-strike, no-lockout agreement and a National War Labor Board (NWLB) composed of four management representatives, four union representatives, and four representatives of the public all presidential appointees. The Board was to encourage collective bargaining and, if necessary, resolve disputes over application of the terms of the agreements.

The advent of World War II encouraged the role of labor arbitration in several ways. Many union and management officials realized that uninterrupted wartime production was essential and that grievance resolution was more effectively accomplished through arbitration than through strikes. The NWLB urged labor and management officials to resolve their own disputes and encouraged the parties to carefully define the arbitrator s jurisdiction in the labor agreement. Thus, the Board gave any negotiated restrictions full force when deciding cases and denied arbitration where it was reasonably clear that the arbitration clause meant to exclude a subject from arbitral review. It further defined grievance arbitration as a quasi-judicial process, thereby limiting a decision solely to the evidence presented at the hearing.

Results of the NWLB s activities further popularized and enriched the arbitration process, as the Board resolved some 20,000 disputes during its tenure. In addition, these efforts served as a training ground for many arbitrators who were able to apply their newly acquired skills to the arbitration process throughout the United States after the war.

Although the use of arbitration increased during World War II, the role and author- ity of arbitrators were far from resolved.2 Both parties in a labor dispute still remained legally free to ignore the arbitrator s award. In 1957, however, the U.S. Supreme Court declared in its Lincoln Mills decision that an aggrieved party could legally bring suit against a party that refused to arbitrate a labor dispute for violation of the labor agree- ment, under Section 301 of the Labor Management Relations Act. Thus, grievance pro- cedures including arbitration could be subjected to judicial review, although much confusion remained over the court s role in these activities.

Either party could refuse to submit the grievance to arbitration if the labor agree- ment did not directly address the issue in question. Some state statutes that made the agreement to arbitrate enforceable resulted in attempts to persuade the court to compel arbitration of various issues. Some courts then became involved in assessing the merits of a particular grievance and whether the grievance should be arbitrated in the first place. These actions, of course, contradicted the belief that arbitrators alone should rule on the merits of the grievance. Confusion resulted when either labor or management represen- tatives played the courts against the arbitrators in their attempts to obtain favorable decisions.

In 1960, the Supreme Court clarified and strengthened the arbitrator s role with three decisions commonly referred to as the Steelworkers Trilogy. These decisions can be summarized as follows:

The arbitrator, not the courts, determines the merits of a grievance. The courts have no business weighing the merits of a grievance.3

Arbitrators have far more expertise than judges in interpreting the common law of the shop (contract language negotiated by the parties and, experiences and past practices at a particular facility), which is fundamental to resolving grievances in a manner consistent with the continuing labor management relationship.4

Arbitrators have great latitude in fashioning a decision and its remedy.5

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The arbitrator was endorsed as most qualified to fashion a resolution of a grievance as long as the arbitration decision is based on the essence of the labor agreement.

In summary, the Steelworkers Trilogy greatly enhanced the authority and prestige of the arbitrator in interpreting the terms of the labor agreement and deciding the merits of a particular grievance. However, the Supreme Court reaffirmed its position that the courts should determine whether a grievance should be submitted to arbitration. For example, the company may refuse to arbitrate on the basis of its contention that the labor agreement excludes certain subjects from the arbitration procedure, such as wage rates, pensions, and so on.6 Other related decisions are presented in the next section.

The Supreme Court has determined that the obligation to arbitrate a grievance can- not be nullified by a successor employer7 or by the termination of a labor agreement. Management representatives in this latter situation argued that arbitration is a feature of the contract that ceases to exist when a contract terminates; therefore, a grievance can- not be processed to arbitration if the labor agreement is no longer in effect. Conse- quently, management representatives thought that the issue of severance pay was not subject to arbitration because the labor agreement had expired and management had decided to permanently close its operations. However, the Supreme Court indicated that arbitration was still be appropriate because employee rights that arose during the life of the labor agreement were continuing rights.8 Therefore, management had an obli- gation to honor a union s request for arbitration after the labor contract expired only if the dispute either arose before the contract expired or concerned a right that accrued or vested under the agreement. 9

Another issue resolved by the Supreme Court concerns how far the courts are will- ing to go in enforcing the role of an arbitrator. More specifically, what happens when one party is willing to arbitrate a grievance while the other party prefers to use the strike or lockout to resolve a dispute? As previously mentioned, a strike was a plausible alter- native in resolving a grievance in the early years of arbitration. Also, the Trilogy did not specifically consider this alternative in its conclusions.

The award enforceability issue was brought before the courts in 1969 when a union protested a work assignment given to nonbargaining unit employees. The union expressed its concern by striking even though the labor agreement contained a provision for arbitrat- ing disputes over the terms of the agreement. Management officials stressed that the union should use the contractually specified arbitration procedure and be enjoined or prevented from striking the employer, and the Supreme Court agreed.10

Elements of a Typical Arbitration Proceeding

The Supreme Court, by encouraging the use of arbitration, contended that this essen- tially private system of self-government is best suited to meet the unique needs of the parties at a particular facility. This means the particular arbitration procedures are essen- tially determined by the parties themselves, not a government agency. The parties them- selves determine the framework for their arbitrations. For example, the number of participants (even arbitrators) can vary; also, the location of the hearing might be at the plant conference room, a hotel room, or a courtroom. Some considerations and proce- dures are acceptable for most arbitration hearings. According to one study, only 16 per- cent of the grievances filed in the first step of the grievance procedure are eventually decided by arbitrators.11

Elements of a typical arbitration proceeding include the selection of the arbitrator, the prehearing activities, the arbitration hearing, and the arbitrator s decision.

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Selection and Characteristics of Arbitrators When union and management are unable to resolve their differences and need assistance in the selection of an arbitrator(s), the process typically begins with a request from the parties to an agency for a list of potential arbitrators. Parties make approximately 30,000 requests per year for lists of arbitrators from which they make their selection. Unions and management rely primarily on three sources for lists of arbitrators. One source is the Federal Mediation and Conciliation Service (FMCS), an independent federal agency that provides computer-generated lists of arbitrators through its Office of Arbitration Services (OAS) in Washington, D.C. About 43 percent of the requests for arbitrator lists are made to the FMCS. Its activity is limited to providing lists of arbitrators and biographical data on each arbitrator, informing arbitrators of the parties selection, and following up to ensure that the selected arbitrator renders a timely decision. For these services, the FMCS charges each party $30 per case for an online request and $50 per case for request by mail or fax. Each arbitrator pays $150 per year to remain on the FMCS roster, and periodically the FMCS reviews its roster of arbitrators and excludes arbitrators who are rarely selected.

The parties will negotiate the specific procedure for selecting arbitrators and may include the procedure in the collective bargaining agreement. A common selection pro- cedure is the striking method. For example, from a list of five potential arbitrators, one party will strike (mark through the name of the arbitrator so as to exclude) one arbitra- tor (likely their least desirable arbitrator) and then the other party will strike one arbitra- tor (likely the least desirable arbitrator from those remaining). The parties will continue to strike until there is one arbitrator remaining; the remaining arbitrator will be the one selected (an arbitrator acceptable to both parties). The arbitrator is then informed of his or her selection. Of course, if this procedure does not yield a selection, the parties may request another list or may ask the FMCS to make a direct appointment.

The second major source is the American Arbitration Association (AAA), a private, nonprofit organization that supplies hand-selected lists of arbitrators from regional cen- ters. About 38 percent of requests for arbitrator lists are made to the AAA. After selec- tion, the AAA provides additional services, including establishing the location of the hearings, exchanging posthearing briefs, and forwarding the decision to the parties. The AAA offers a different range of services for which it charges from $175 to $350; the AAA charges each arbitrator a $450 maintenance fee per year to remain on its list. Like the FMCS, the AAA conducts a periodic review of its list to make sure that the arbitrators are considered acceptable to the parties. If an arbitrator is rarely selected, the arbitrator is not considered acceptable and is taken off the AAA roster.

The selection procedure used in AAA cases is called the striking and ranking proce- dure. Here, each party will strike the names of arbitrators who are not acceptable and then will rank (1 for most preferred, 2 for second most preferred, etc.) the remaining arbitrators. The arbitrator selected will be the one who receives the highest rank among those remaining. As under the FMCS procedure, if this procedure does not yield an arbi- trator acceptable to both parties, then the parties may request another list or ask the AAA to make a direct appointment.

The third major source is the 26 state and local agencies located primarily in the northern and western states. The number of arbitrators on the agencies lists range from 270 with the New York Employment Relations Board to 15 with the North Carolina Department of Labor. About 18 percent of requests for arbitrator lists are made to these agencies. The number of requests per agency ranges from fewer than 50 to more than 300 per year, with 54 percent of the requests occurring in New York and New Jersey. The operational arrangements vary widely also. Some agencies provide

CHAPTER 11 Labor and Employment Arbitration 541

lists of arbitrators to unions and management in both the private and public sector; some only to the public sector. Half of the agencies send out arbitrator lists on a random selec- tion basis; half use a modified random, rotational, or discretionary system. Most agencies restrict membership on their arbitrator roster to state residents and residents of contigu- ous states. The Massachusetts Board of Conciliation and Arbitration, the New York State Employment Relations Board, the Washington Employment Relations Commission, and the Wisconsin Employment Relations Commission provide staff members to serve as grievance arbitrators at no cost to the parties, and the New York State Employment Rela- tions Board has a roster of pro bono arbitrators who are seeking to gain experience as labor arbitrators. Under the state agencies, there are numerous and varied selection procedures.12

First, the parties must decide the number of arbitrators needed to resolve a grievance. The most common method (approximately 82 percent of arbitration provisions) is for a single impartial arbitrator selected by management and union officials to be solely respon- sible for the decision, with no help from other individuals in formulating the written deci- sion. In about 11 percent of cases, the labor agreement specifies a three-member (tripartite) arbitration board, with management and the union each selecting a member and the two parties selecting the third impartial member. (The remaining agreements specify various numbers of arbitrators.) Most decisions are made by this impartial arbitrator because the other two members of the panel are influenced by their respective management and union constituents, although the impartial arbitrator does consult with the other members. In either case, the arbitrator s decision is final and binding.

Seventy-four percent of labor agreements specify an ad hoc arbitrator, meaning that the arbitrator will be selected on an ad hoc, or case-by-case, basis. Union and manage- ment representatives choose an arbitrator for a specific grievance but may select other arbitrators for subsequent grievances arising during the life of the labor agreement. Par- ticularly in the case of an established collective bargaining relationship, management and the union often reach an informal agreement on the appropriate arbitrator for a particu- lar grievance. However, if they cannot agree, they usually obtain a list of arbitrators names (a panel) from either the FMCS or the AAA (as described previously).

Five percent of labor agreements (21 percent do not specify) in the United States provide for a permanent arbitrator or umpire to resolve all disputes during the life of the labor agreement. Also in 5 percent of the agreements, there is a fixed list of arbitra- tors who serve on a rotating basis.13 Usually, large companies or industries in which a large number of arbitration hearings are anticipated use permanent arbitrators. Presum- ably, a permanent arbitrator can better allocate and schedule time to meet the grievance load of the union and employer so that settlements can be reached more promptly. This type of selection arrangement also allows the permanent arbitrator to become more knowledgeable of the complex and unique terms of the parties labor agreement and the organization s operations.

Assume, for example, that an arbitrator is hearing a grievance in the railroad indus- try for the first time. How long would it take for the arbitrator to accurately interpret the meaning of the following witness s testimony?

At 3 P.M. Mott Haven Yard was a busy place. A crew of gandy dancers tamped methodically on a frong near the switching lead. L.S. 3 was all made up and ready to be doubled over. She had forty-six hog racks on the head end and sixty-five empty reefers on the hind end. Her crew were all new men on the run. Mike Madigan, the hog head, had just been set up. Bill Blanchard, the fire-boy, was a boomer who had recently hired out. Jack Lewis, the brains of the outfit, had been a no bill since he was fired out of the Snakes for violating Rule G. Brady Holms, the flagman, used to

542 PART 3 Administering the Labor Agreement

work the high iron in a monkey suit, and J.B. Wells was a stu brakeman, right off the street. Over the hump lead, the yard rats were riding em in the clear and typing em down. The east side switcher was kicking loaded hoppers around, despite the vio- lent washouts of the yardmixer who had discovered a hot box. Two Malleys were on the plug and three more were at the coal pocket. Our train, Number B.D. 5, was all ready to pull out.14

The use of a permanent arbitrator saves time and expense because the parties do not have to repeatedly explain the meaning of site-specific terms in the arbitration hearing or show the work location. Greater consistency and predictability are attained where one arbitrator applies the same decision-making criteria to all of the arbitrated grievances. Consistent decisions guide the union and management officials in their day-to-day administration of the labor agreement and should enable the parties to better predict the arbitrator s subsequent decisions on similar issues, perhaps decreasing the number of frivolous grievances referred to arbitration as the parties become more certain of the arbitrator s reasoning.

For unions and companies having few arbitration hearings, ad hoc arbitrators offer the advantage of flexibility. Although permanent arbitrators usually are appointed by the parties for a specified period, either side can discontinue the appointment if it views the permanent arbitrator s decisions with disfavor. There is no obligation to retain the ad hoc arbitrator in future grievances if either side is displeased with the arbitrator s decisions.

Because some ad hoc arbitrators may specialize in particular categories of grievances, such as job classification or wage incentives, they could be better informed than a per- manent arbitrator on such issues. Permanent arbitrators may be more familiar with the parties but may have seldom encountered a particular issue in their arbitration experi- ence. Because both types of arbitrators have comparative advantages and disadvantages, management and union officials will design the selection method that best meets their needs.

According to one survey, arbitrators are likely to be males over 50 years of age with more than 14 years of experience in arbitration and a law degree or a graduate degree.15

(See Exhibit 11.1 for a profile of members of the National Academy of Arbitrators [NAA].)

Exhibit 11.1 Profile of Members of the National Academy of Arbitration and Arbitration Data (462 responses from 600 members)

Age (average) 63

Years of arbitration 26

Percent of income earned by arbitration 76

Years as member at NAA 16

Education: Masters 12.6%

Law Degree 61.4%

Doctorate 22.6%

Number of arbitration cases per year 55

Number of cases mediated per year (50.8% mediated no cases) 5

Accepted and completed cases in nonunion employment arbitration 45.9%

SOURCE: Michel Picher, Ronald Seeber, and David B. Lipsky, The Arbitration Profession in Transition (Ithaca, NY: Cornell/PERC Institute of Conflict Resolution, 2000), pp. 11 28; updated from http://www.fmcs.gov (accessed January 9, 2004).

CHAPTER 11 Labor and Employment Arbitration 543

Arbitrators characteristics can be significant for at least two reasons. First, union and management officials select an arbitrator who possesses certain characteristics that might, according to one study, include name recognition, reputation for integrity, and a specific geographical location. Other studies found that employers tend to prefer arbitrators with training in economics, whereas union and management officials who have law degrees prefer arbitrators who also have law degrees.16

Second, there is at least the possibility that certain background characteristics might influence arbitrators decisions. However, research has not established a strong relation- ship between arbitrators age, experience, or education and decision outcomes17 (e.g., upholding or denying the grievance).

Researchers have sought to identify the basis on which arbitrators make decisions. Some researchers have claimed influences such as bias, intuition, self-interest, values, beliefs, and attitudes. Others have identified management rights and efficiency, clear con- tract language, past practice, fairness, effect on the worker, negotiating history, prior awards, briefs, testimony, seniority, performance record, prior disciplinary record, and prior absence history of the grievants. A recent study of 133 arbitrators who read an abbreviated version of the transcript of the arbitration hearing concluded that arbitrator biographical characteristics such as age, education, experience, or status as a full-time arbitrator do not have a significant effect on arbitrators decisions. Instead, arbitrators engage in a highly structured process of fact-finding where they consider competing claims by the opposing parties and determine the extent to which they accept the various assertions made. Arbitrators weigh both the contested and uncontested facts to assess the relevance of the presented facts to determine the outcome.18

Although grievance arbitration is typically considered an objective proceeding in which an impartial neutral hears testimony, receives evidence from the employer and union representatives, and then makes a decision based solely on the facts, questions of acceptability often intrude on the process. Because arbitrators are selected by the parties, some believe that the arbitrators decisions are occasionally influenced by their concern over being selected to arbitrate future cases. If and when one of the parties believes that the arbitrator is concerned about continued acceptability, that party may select the arbitra- tor because of the belief that the arbitrator may owe them a favorable decision, thereby contaminating the process. This concern is the reason that the NAA inserted into the Code of Professional Responsibility for Arbitrators of Labor Management Disputes the fol- lowing passage: An arbitrator must be as ready to rule for one party as for the other on each issue, either in a single case or in a group of cases. Compromise by an arbitrator for the sake of attempting to achieve personal acceptability is unprofessional. 19

Decision to Arbitrate If the parties are unable to settle the grievance by the time it reaches the last step in the grievance procedure, one or both parties must decide whether to appeal to arbitration. Each party must evaluate the strengths and weaknesses of its own position as well as the position of the opposite party. The union considers the likelihood of prevailing, the costs of arbitration, and the effect of a win or loss on the bargaining unit. For instance, in a discharge case the union will review the documents provided and the probable testi- mony of witnesses to determine whether the employer would be likely to prove the ele- ments of just cause. In a theft case, if an employee leaves the shop with a small tool that she forgot was in her pocket, the employer must prove that the employer knowingly removed the tool and intended to keep it.

The union bears the burden of establishing the grievant s credibility when she claims that the removal was an oversight, not a theft. When the union concedes that the

544 PART 3 Administering the Labor Agreement

employer will be able to prove the charge that would justify discharge, the union must then evaluate whether it can meet its burden of proving other defenses, such as the employer violated procedural rights (no posted rules), mitigating circumstances (long- term employee with good work record), or disparate treatment (other employees have taken tools and not been terminated).

Each side must pick its battles carefully. For example, suppose the union knows that the employer has several witnesses available who will testify that they saw a short-term employee drinking on the job, and the employer has terminated every employee who has been charged with violating the rule banning drinking on the job; the union may decide not to expend resources taking this case to arbitration. Union leaders feel it would be futile to persuade an arbitrator to consider mitigating circumstances and disparate treatment.20

The real goal in arbitration is to achieve the result as expeditiously as possible, as economically as possible and with as little harm to the continuing relationship between the parties as possible . Unlike many arbitrations (like medical malpractice and dis- crimination claims by a former employee), in which the parties will never see each other again, in the collective bargaining context, the parties are partners to a continuing relationship. Prevailing on the current grievance at the cost of undermining future dealings between the parties is at best a partial victory. 21

Prehearing Activities Prior to the arbitration hearing, both parties need to take several steps to prepare for the hearing. Among these steps are the meeting with witnesses, contacting the opposing representative, preparation and arrangements of exhibits for evidence and exploring set- tlement alternatives. (See Labor Relations in Action on page 548.)

On occasion, the parties may decide to write a prehearing brief which highlights the issues and positions of the parties before the arbitrator arrives at the hearing. The briefs alert the arbitrator to the matters he or she will face at the hearing. These optional briefs, although uncommon, vary in length from a one-page letter to an extensively footnoted document. Most of the time the parties prefer to wait and introduce the subject matter of the arbitration to the arbitrator in the opening statements at the beginning of the hearing.

The prehearing brief might backfire for the presenting party, which is subject to challenges on the assumed facts and inconsistencies that may surface in the witnesses testimonies. On the other hand, prehearing briefs can be viewed as keeping the parties honest they tend to approach their contentions thoroughly and are forced to adhere to them during the arbitration proceedings.

Perhaps most arbitrators would agree to the value of prehearing stipulations joint union management statements as to the issues involved and certain applicable grievance facts. This saves time in the arbitration hearing, for neither party feels obligated to repeat

what the other has either previously said or agreed to in principle. In addition, through the process of working together to stipulate the issues and facts, the parties may be able to resolve the dispute without arbitration. If briefs or stipulations are not agreed to before the hearing, the parties will have to present their version of the facts at the hearing.

The Arbitration Hearing Held on a date convenient to the parties and arbitrator, the arbitration hearing typically varies in length from a few hours to several days, with the typical length being one day. Union and management officials who were involved in the grievance procedure (e.g., the international union representative and the labor relations manager) or their attorneys will likely present their versions of the arbitration case at the hearing. They will present

CHAPTER 11 Labor and Employment Arbitration 545

opening statements, question witnesses, present evidence, and make oral closing argu- ments or write posthearing briefs.

Variations also occur in the extent to which courtroom procedures and behaviors are used or required during the hearing. There are two perspectives on the arbitration process: (1) informal quasi-litigation (legalistic approach) designed to resolve a dispute between parties and (2) part of the ongoing collective bargaining process designed to facilitate con- flict resolution (problem-solving approach). Those adopting the legalistic approach argue that a more formal and orderly proceeding improves the process. Frequently, however, the advocates view arbitration as an adversarial procedure and adopt tactics to win the decision without considering that the parties have to live with each other after the decision. From the second perspective, arbitration is viewed as serving more purposes than simply resolving disputes. For example, arbitration may be therapeutic, having a cathartic value by allowing a grievant to openly air a complaint against a management decision. The belief is that if complaints are left unresolved, these complaints will become more serious and the employee will become counterproductive. The negotiators of the collective bargaining agreement are not able to anticipate and address every possible future scenario in the rela- tionship between the employer and the union. To do so would unnecessarily lengthen the negotiations and add significantly to the length of the collective bargaining agreement. Such actions would make the negotiations more complex and even jeopardize the possibil- ity of reaching an agreement. A comparison of example behaviors of the legalistic vs. the problem-solving approaches is shown in Exhibit 11.2.

At the typical arbitration hearing, the one of the first order of business is the intro- duction of joint exhibits. These exhibits usually include a copy of the relevant collective

Exhibit 11.2 Behavioral Examples of Legalistic versus Problem- Solving Approaches

Legalistic Approach

Drafting the statement of the issue is in such a way that there is a definite winner and a definite loser.

Looking for restrictions on the arbitrator s authority to hear issues not expressly stated in the written grievance.

Insisting on a specific level of proof at the beginning of the hearing (preponderance of evidence, clear and convincing evidence, or beyond a reasonable doubt).

Harsh and aggressive (eat em alive) cross-examining in an attempt to destroy witness credibility. Objecting to any form of hearsay evidence.

Noting for the record objections to certain types of evidence when the arbitrator has allowed the evidence to be introduced.

Acknowledging that the parties have a mutual obligation to bring out all relevant facts.

Citing custom and/or practice of the parties. Arguing that the arbitrator should interpret provisions of the collective bargaining

agreement in such a way that it will be reasonable and equitable to both parties. Stipulating certain facts where the parties have no dispute. Asking questions that call for a narrative answer; for example, asking the witness

to tell the story about what happened in her own words. Asking only a few nonthreatening questions on cross-examination. Exhibiting friendly and dignified behavior toward the opposite party.

SOURCE: Adapted from Richard A. Posthuma and Maris Stella Swift, Legalistic vs. Facilitative Approaches to Arbitration: Strengths and Weaknesses, Labor Law Journal, 52 (Fall 2001), pp. 181 182.

Problem-Solving Approach

546 PART 3 Administering the Labor Agreement

bargaining agreement, which contains the provision(s) one of the parties (usually the union) alleges has been violated, a copy of the grievance and the written responses to the grievance, and any stipulated facts that are not in contention.

Then the arbitrator will ask the parties whether they have agreed to the wording of the issue to be addressed. If the parties cannot agree on the wording of the issue, they may request that the arbitrator frame the issue after hearing the evidence presented at the hearing. The issue is usually written in a one-sentence question to be answered by the arbitrator s award.22 Consider, for example, a typical discharge case: Did the com- pany terminate Betty Brooks for just cause? If not, what is the remedy? Also consider a typical nondiscipline case: Did the company violate the agreement when it failed to pro- mote Martha Butler, the most senior employee? If so, what is the remedy?

The major part of the hearing is devoted to the presentation of (1) the opening statements in which each party s spokesperson states what he or she plans to prove and highlights the major issues and background of the case; (2) examination and cross-examination of union and management witnesses, (3) introduction of exhibits to support union and management positions (e.g., pictures of a job site, warning letters, performance ratings); and (4) oral closing statements by the union and management representatives, or the parties may agree to file a posthearing brief. In 46 percent of cases, the parties agree to have a transcript of the hearing so that there is a written record of it. This written record may be desired for the convenience of the parties, for use in an appeal, and in the event the grievant has also filed an employment discrimi- nation charge.

The posthearing brief is a written summation of (1) the facts of the case, (2) the relevant contract language, (3) the arguments to support a position, (4) counterargu- ments to the opposing party s position, and (5) the requested decision from the arbitra- tor. The FMCS reports that in 80 percent of cases, posthearing briefs are filed.23 The use of an attorney increases the likelihood that posthearing briefs will be filed.24 A written posthearing brief can be helpful when the arbitration case is very technical or compli- cated or includes statistical data that are difficult to explain in an oral argument.25 In many cases, however, a posthearing brief is unnecessary if the parties have prepared and presented their cases well during the hearing.

One experienced arbitrator estimated that more than 95 percent of posthearing briefs make no difference in the arbitrator s decision. The results would have been exactly the same if the parties had relied upon oral summaries at the close of the hear- ings. Unfortunately, use of briefs in arbitration has increased, and the average time taken to submit briefs is 40 days. Usually it takes two weeks to prepare a transcript and about four weeks before the briefs are submitted. An emergency or disruption in schedules can postpone the brief another few weeks or so. Then when the arbitrator finally sits down to begin work on the decision, his or her recollection of the hearing may be stale. Reviewing testimony and evidence about eight weeks after the hearing means the decision will take more time, which adds to the arbitrator s time. This increase in the arbitrator s cost is added to the costs of the transcript and the outside counsel s fee for preparing the brief. Thus, submission of briefs erodes two of the advantages of arbitration over traditional litigation: speed and economy.26

This summary of arbitration proceedings does not do justice to the considerable effort and drama involved in preparing and presenting an arbitration case. The Labor Relations in Action on page 548 suggests better preparation methods for an arbitration hearing.

Mental effort, verbal skills, and tensions continue to be applied after the hearing begins. Assume, for example, that you are a labor relations manager charged with

CHAPTER 11 Labor and Employment Arbitration 547

proving an employee deserved discharge for smoking marijuana on company premises. Consider the following:

How do you prove the employee actually smoked the marijuana when the evidence was destroyed and it is the employee s word against a supervisor s observations? Can the supervisor convince the arbitrator that he or she had sufficient training to recognize the shape and smell of the object in a dimly lit location? How do you reconcile that an employee appeared to be under the influence of an illegal substance but then tested negative on a drug screen test? Should you call the employee s co-workers as witnesses? What happens to their relationship if the grievant is returned to work? Will your witnesses testimony be strengthened or broken under cross-examination? How long can the supervisor remain calm under cross-examination? What if the arbitrator gives little weight to the circumstantial evidence presented by the company and a great deal of weight to the grievant s previous long and exem- plary work record with the company? Will the union introduce a surprise contention or witness not previously discussed in the grievance proceedings (e.g., that the grievant s discharge was due to the racial bias of the supervisor or the result of a long-running dispute between the employee and supervisor)?

Management and union representatives often enter arbitration hearings emotionally charged and uncertain. Experienced representatives are usually skillful in establishing their respective positions to the arbitrator s satisfaction and challenging their opponent s case by exploiting the opponent s weaknesses. The arbitrator must be skillful in keeping the hearing orderly while at the same time recording all of the testimony and evidence presented.

One arbitrator has noted the following paradox: The union and management offi- cials own the arbitration hearing, but the arbitrator is the presiding officer of the hearing. Union and management officials wrote the labor agreement and they hired the arbitra- tor. Therefore, arbitrators should not act like a judge, be arrogant, or talk too much.

Let the parties do the talking, work out the problems. You will be surprised how many knotty issues will be resolved during the hearing if you just ask the other side to

LABOR RELATIONS IN ACTION Improving Preparation for Arbitration Hearings

Telephone the arbitrator upon his or her selection, explore mutually acceptable dates, and schedule the hearing.

At the outset, inform the arbitrator that a bench decision is required or a written decision in less than 30 days is required or there is a loser pays provision.

Contact the opposing counsel and attempt to reach an agreement on the issue to be decided by the arbitra- tor, stipulation of facts, stipulations on documents, and exchange of witness lists.

Explore settlements with opposing counsel to avoid arbitration.

Prepare a detailed, well-organized opening state- ment. Because the arbitrator arrives at the hearing knowing nothing or little about the case, simply wrap your arm around the arbitrator and lead him or her along the path you want the arbitrator to follow.

Prepare your witnesses. Possible instructions are: Tell the truth. Just answer the question. If you don t understand a question, ask for clarification. Don t look to the advocate for help. Wait until the complete ques- tion is asked. Try to quote, not paraphrase. Be prepared for the old chestnut: Have you discussed your testi- mony with anyone?

Before the hearing, make enough copies of your exhibits. Number the pages. Staple the pages. Have a glossary for uncommon words and phrases. Have enough pens and paper to allow for communication instead of whispering.

Source: Matthew M. Franckiewicz, How to Win Your Arbitration Case before the Hearing Even Starts, Labor Law Journal, 60(3) (Fall 2009), pp. 115 120. © CCH Incorporated, Wolters Kluwer Law & Business. All Rights Reserved. Reprinted with permission from Labor Law Journal.

548

respond, and then ask the original side to add something, and so on. By the time they have killed off each other s contrariness, the problem has disappeared.

Do not try to take their procedure away from them. Give it back whenever they try to abdicate or place the burden of procedure on you. For example, it is an old ploy for one party or the other to say, Mr. or Ms. Arbitrator, do you want us to put in some evidence on this subject? This can put you into a trap. If your answer is no, then it is your fault when they lose the case because you excluded crucial evidence. If you say yes, then you are implying that the subject is important. Tell them it is up to them. Remind them that this is an adversary proceeding to elicit information and that it is their obligation to select whatever information they think is important.27

Comparison of Arbitration and Judicial Proceedings

The arbitration proceedings share some similarities with judicial proceedings, but their differences are profound. Many arbitration hearings differ from courtroom proceedings in that testimony of witnesses is not always taken under oath and transcripts of the pro- ceedings are not always taken. Arbitrators may subpoena witnesses at the request of one of the parties. This is particularly true if management requests the subpoena to protect bargaining unit employee witnesses whose testimony is used to support management s position. This way other employees realize the employee was required to testify because he or she was under subpoena. If the arbitrator issues a subpoena for witnesses and documents and it is not complied with, the arbitrator may make an adverse inference.

Both unions and companies have universally agreed that arbitration in the labor management settings has advantages over litigation. These advantages are highlighted in Exhibit 11.3. The most significant difference between arbitration and judicial proceedings is the arbitrator s reliance on common law of the shop principles in the resolution of disputes. Arbitrators, unlike judges, are selected by the parties to the dispute. Arbitrators

Exhibit 11.3 Advantages of Labor Arbitration over Litigation

1. The parties themselves can potentially save money and time because there are fewer legal procedures, less discovery, and fewer appeals. Also, the par- ties are able to select the arbitrator and set up the hearing instead of waiting for the court to schedule a hearing. The parties can also require a decision by the arbitrator in 30 to 60 days.

2. Parties select an arbitrator who has expertise in labor management relations as opposed to a judge assigned to the case who may or may not have any experience in labor management relations.

3. Arbitration is a system of self-government in which the parties design the rules and procedures: how the arbitrator is selected, how many arbitrators, the authority of the arbitrator, and the like.

4. The parties negotiate and agree to the terms of their collective bargaining agreement to meet their needs as opposed to a law enacted by a legislative body to apply to the general population.

5. Labor arbitration is a private process between the union and the company as opposed to a public tribunal with a public record; the arbitrator s decision may be published only with the consent of both parties.

SOURCE: Adapted from Frank Elkouri and Edna Elkouri How Arbitration Works (5th ed.), Marlin M. Volz and Edward P. Goggin, co-editors, (Washington, D.C.: Bureau of National Affairs, 1985), pp. 10 15.

CHAPTER 11 Labor and Employment Arbitration 549

are responsible for interpreting contract provisions that were negotiated and written by the parties to cover wages, hours, and conditions of employment for an identified group of employees and to rule on any proven past practice which is observed by the parties but not written in the parties agreements. Each of the over 150,000 separate labor agree- ments in the United States is different even though the subjects are similar. Judges, on the other hand, are not selected by the parties and are responsible for interpreting laws that were enacted by state and federal legislatures and that cover those individuals iden- tified in the specific law.

The arbitrator has the responsibility to resolve a dispute in a manner that the parties can live with. Unlike judicial decisions in lower courts, the arbitrator s decision is usually final and not subject to further appeals. Consequently, arbitrators must be concerned with the subsequent effects of their decisions on union management relationships. A judge has no such allegiance to the particular parties. The major responsibility of a judge is to adhere to the statute in question, to adhere to established courtroom and legal procedures, and to comply with precedent which has resulted from previous applicable cases.

The common law of the shop perspective often narrows the scope of arbitral deci- sion to interpreting the labor agreement language and identifying the intent of the par- ties and any past practices of the union and management officials at a particular location. The arbitrator uses these elements to convey to the union and management participants that their grievance is being resolved in terms of shop floor realities.

The distinction between judicial reasoning and common law of the shop principles can be shown through the following example. Assume that an employee has been dis- charged at company A for drinking alcohol on the job. After an arbitral decision uphold- ing the discharge has been reached, an employee at company B is also discharged for drinking alcohol on the job. Strict adherence to judicial principles would uphold the sec- ond employee s discharge for drinking on the job. More specifically, the judicial principle of stare decisis (letting the decision at company A stand in company B s situation) would probably disregard the differences in work environments of the two companies.

However, the common law of the shop principles governing arbitration could lead the arbitrator to render a different decision at company B from that reached at company A. For example, supervisors at company B may have been condoning this behavior, and other employees at this company may have been caught drinking on the job without being discharged for the infraction. Consequently, the arbitrator recognizes the two com- panies are independent with potentially unique circumstances and therefore they deserve mutually exclusive decisions.

Evidence in Arbitration vs. in Judicial Proceedings Although the best evidence is direct evidence, for example, company records identified by witness and direct testimony by an eye witness, it is also important to note that arbi- trators are much more liberal than the courts in the types of evidence permitted at the hearing. For example, lie detector tests (polygraphs) may be allowed by some arbitrators under certain conditions (having the administrator of the polygraph present for cross- examination or the opposing party does not object), although their use and weight in the arbitrator s decision remains controversial.28 Usually arbitrators give this evidence lit- tle weight unless the obtained information is corroborated by supporting evidence. The rationale for liberal admission of evidence is that the parties are seeking a solution to their perceived unique problem. In addition, some arbitrators maintain that arbitration performs a therapeutic function, that the parties are entitled to air their grievances regardless of the eventual decision. Arbitrators may allow aggrieved employees to digress from the pertinent subject or tell it like it is in front of higher level union and

550 PART 3 Administering the Labor Agreement

management officials to serve this function. Also, unlike a member of a jury, an experi- enced arbitrator does not need the protection of a judge to determine the weight to give to evidence and witness testimony.

Even though both parties are usually familiar with the evidence that each side plans to introduce at the arbitration hearing, occasionally new evidence found later or possibly withheld may be introduced by one or both parties in the arbitration hearing. The arbi- trator may accept or reject this new evidence, depending on the weight attached to the following, and sometimes conflicting, considerations: (1) the arbitrator s desire to learn all of the pertinent facts surrounding the grievance, (2) the need to protect the integrity of the prearbitral grievance machinery, that is, each side has in possession all the evi- dence to be presented to the arbitrator, and (3) general concepts of fairness.29 Because union and management officials are entitled to have all relevant evidence presented at the hearing, the arbitrator will offer the opposing party additional time to review and respond to any new evidence or even grant a continuance in the hearing.

Offers of compromise settlements before the hearing are not accepted as evidence by arbitrators. For example, in a discharge case, management officials with no major weak- ness in their original position might compromise their third-step discharge decision before arbitration by offering the grievant reinstatement with no back pay. A union could try to use this evidence to indicate to the arbitrator that management admitted wrongdoing by revising its original decision. Since arbitrators maintain that the parties should make every effort to resolve their disputes internally before going to arbitration, an offer of settlement between the parties is viewed by the arbitrator as a genuine attempt to accommodate differences and save costs of going to arbitration, not an admis- sion of guilt. Therefore, offers of settlements are not admissible as evidence.

Hearsay (secondhand) testimony might be accepted by arbitrators.30 For example, Joe S. was told by Mary B. that she saw Jim M. stealing hammers and nails from the company supply room. Hearsay evidence is typically given little or no weight unless it is corroborated by other credible testimony. But it may be accepted for what it s worth. Business records are usually accepted as an exception to the hearsay rule. Since doctors are difficult to have as witnesses due to their busy schedules, documented medi- cal records are also an exception to the hearsay rule.

Arbitrators vary in the weight they give to medical evidence. When a doctor testifies and is subject to cross-examination, greater weight generally given to the doctor who tes- tifies than to one who only provides records. Often doctors offer conflicting testimony. Consider, for example, an employee s doctor testifies that the employee s previous back injury does not disqualify her from her present job. Management then uses the employ- ee s own doctor to counter the testimony. Now, the arbitrator has to decide which doc- tor s testimony is most convincing. Exhibit 11.4 provides the results of two studies of

Exhibit 11.4 Survey of Arbitrators Consideration of Medical Opinions

1975 Study 1987 Study

1. Use specialist over nonspecialist NA 77 (26%)

2. Use report that indicates most intensive examination

90 (51%) 133 (45%)

3. Use report that indicates most intimate knowledge of work performed

34 (19%) 79 (27%)

SOURCE: Daniel F. Jennings and A. Dale Allen, Jr., Arbitration and Medical Evidence: A Longitudinal Analysis, Labor Law Journal (June 1994), p. 352. Reprinted by permission of Daniel F. Jennings.

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arbitrators use of medical evidence. Arbitrators are now more likely to rely on specia- lists opinions, give greater weight to the most recent medical analysis and place greater value on an analysis from the doctor who has knowledge of the specific job.

Arbitration in the Railway and Airline Industries Unlike other industries in which grievance arbitration stems from the collective bargain- ing agreement, the foundation for grievance arbitration in the railway and airline indus- tries is the Railway Labor Act. Disputes between parties in the railway industry over the interpretation and application of an existing collective bargaining agreement are referred to as minor disputes. Disputes between parties over the negotiation of the collective bar- gaining agreement are referred to as major disputes. Minor disputes may not be the basis for a work stoppage (strike).

Since 1934, the National Railroad Adjustment Board, which is made up of four divi- sions, handles grievances from the specific railroad crafts. Each division is composed of an equal number of management and union representatives. In the event of a deadlock, these representatives are empowered to appoint a neutral referee who will be compen- sated by the National Mediation Board (NMB) from government funds. The arbitration hearing is not a de novo (from the beginning); rather it is appellant in nature. The record is confined to arguments and evidence presented during the grievance process.

Since 1966, other arbitration boards have been authorized. Special Boards of Adjust- ment and Public Law Boards are composed of representatives of carriers and unions. Also, tripartite boards with neutrals are selected by the parties or appointed from the National Mediation Board. These hearings are also appellant only, and the neutrals are paid by the NMB from government funds.

In the airline industry, the parties have used System Boards of Adjustment. These boards include representatives of airlines and unions with a neutral arbitrator who is selected and paid by the parties. Hearings are de novo (complete hearings) in nature before the System Board, with the neutral arbitrator presiding.31

The Arbitrator s Decision

After the arbitration hearing the arbitrator will render a decision (usually within 30 to 60 days). Arbitrators approach writing a labor arbitration decision in different ways. One is the classic approach which includes the following:

1. Names of union and management representatives involved in the case, along with others who gave testimony (e.g., employees or expert witnesses) on a title page

2. Background of the case 3. A statement of the issue(s) and a statement of the facts surrounding the grievance 4. Pertinent provisions of the labor agreement 5. A summary of the union and management positions 6. An analysis of the evidence and arguments in relation to the contract language 7. The arbitrator s decision (grievance upheld, grievance denied, or a decision between

union and management positions) and reasons for the decision

Another common approach is a narrative story-telling approach wherein the arbi- trator follows the sequence of events and explains what happened in the story and what should have happened (the arbitrator s decision). As one labor arbitrator said,

Words are readily available to convey simple ideas. But transforming more complex ideas into persuasive written text is quite another level of achievement. This requires

552 PART 3 Administering the Labor Agreement

the arbitrator to use the exact words in a precise order thus creating a unique expression, one that is inapplicable to any other situation, and exemplifies the wonder and diversity of the English language.32

Few prospective guidelines govern the form and content of the arbitrator s decision. However, the arbitrator should demonstrate through the decision a thorough under- standing of all the facts and contentions raised in the arbitration hearing. Although arbi- trators should address each argument and the evidence presented by both parties, some arbitrators address their decisions to the losing party because the winners do not have to be convinced they are right.

The necessity of the arbitrator s analysis has been the subject of considerable contro- versy. While a few union and management officials may look only at the arbitrator s final decision to see who won or lost, most read the decision to obtain principles and guidelines for future actions and to assess the arbitrator s interpretative abilities.

The arbitrator s decision should explain to the parties how the grievance was resolved and why. Ideally, an analysis convinces the losing party that its arguments were heard, that the system used to decide the case is a fair one, and that the result makes sense. 33 An arbitrator s decision should explain the relative weight given to the parties evidence and contentions and should indicate in clear language the benefits to which the parties are entitled and the obligations that are imposed on them. Thus, the arbitrator s decision should educate the parties (including other union and management officials, who often select an arbitrator after researching his or her published decisions) within the context of the common law of the shop and established arbitration principles.

In some cases, the arbitrator s analysis is even more important than the decision. Con- sider, for example, that the union grieves management s overtime assignment of work nor- mally performed in Job Classification A, a senior machinist on Saturday, to an employee in Job Classification C, a machinist apprentice. The union seeks a remedy of eight hours at overtime rate of pay for the appropriate employee in Job Classification A, the senior machinist, on the basis that the company s violation of the contract had deprived a Job Classification A employee, the senior machinist, of this overtime opportunity. However, the arbitrator denies the grievance and stresses the following in his decision: The various job classifications are for pay purposes only and overtime provisions do not restrict man- agement s prerogative to assign work across different job classifications. This statement significantly harms the union in related matters, particularly if the language was not expressly stated in the labor agreement. Now the union will have a difficult time in griev- ing other overtime assignments, even though the previously mentioned decision pertained to one specific situation. In the next negotiations, most likely, the union will attempt to change the contract language on overtime assignment.

In other situations, the arbitrator s gratuitous advice in the decision may harm one or both of the parties. There is often a thin line between advising management and union practitioners on more effective and humane ways to run the operation. Thus, the arbitrator should focus on the contract language, the evidence, and the arguments of the parties. In a nutshell, the arbitrator should do no harm.

Decision-Making Guidelines Used by Arbitrators The arbitration decision is a deliberative process that requires on average about 2.4 days of the arbitrator s time to study the evidence and prepare a written decision.34 The arbi- trator s decision is particularly important to the parties because nearly all labor arbitra- tion decisions issued in the private sector are final and binding. In fact, less than 1 percent of arbitration decisions are appealed to the courts. Of those decisions that are

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appealed, less than one-third are overturned by the courts. Thus, it appears that the lower courts are complying with the U.S. Supreme Court s directive that the lower courts should refrain from reviewing the merits of arbitrators rulings and should overturn an arbitrator s decision only when the arbitrator s decision is not based on the essence of the collective bargaining agreement.35

Although arbitrators do not follow precise or identical methods in making decisions, one study indicated that individual arbitrators have been consistent in the importance they assign to various decision-making criteria over the years.36 The following generally accepted guidelines have been developed and serve as focal points, subject to interpreta- tion, consideration, and application by arbitrators in resolving grievances.

Burden of Proof, Witness Credibility, and Cross-Examination When the union files a grievance claiming that management violated the spirit or letter of the labor agreement, the union is the charging party and has the burden of proof to convince the arbitrator that management did not comply with the agreement. A major exception occurs in employee discipline and discharge cases, in which management is the charging party and has the burden of proof in establishing that its actions were cor- rect. The discharged employee is presumed to be innocent until the company proves the employee is guilty of a rule violation.

The burden of proof is typically approached through evidence (discussed earlier in this chapter) and testimony from credible witnesses. Witness credibility is often assessed through rather subjective behaviors, such as talking softly or hesitantly, looking down- ward, or giving long, evasive answers to questions. Witnesses are also subjected to cross-examination by the opposite party, which attempts to establish that the witness was not credible due to inconsistency in testimony, lack of familiarity with the facts, bias, or having some other self-serving motive behind his or her testimony. A cross-examiner must avoid a major potential problem: namely, reinforcing the witness s testimony. This avoidance is easier said than done, as evidenced in Exhibit 11.5, which illustrates incorrect cross-examination after two direct questions.

As noted earlier, participants general characteristics (e.g., age and gender of the grievant or arbitrator) do not have a strong correlation with an arbitrator s decision. Arbitrators are, however, influenced by witnesses credibility, which includes perceived mental attitudes of the grievance participants. A rambling, disjointed presentation by a witness or a union or management representative, or a grievant who comes across as insolent or sneaky, will likely receive a strong, negative arbitral evaluation that might not be offset by other decision-making criteria.37

Clear and Unambiguous Language One of the fundamental rules contract interpretation as used in labor arbitration is that when the contract language is clear and unambiguous, the arbitrator must apply the lan- guage as it is written. The problem with this rule is that if the parties have appealed to arbi- tration, one or both do not believe the contract language is clear and unambiguous. As demonstrated in the Labor Relations in Action on page 556 feature that discusses payment for jury duty leave, the negotiators of the collective bargaining agreement did not anticipate the specific dispute that arose, or they would have addressed the issue at the bargaining table. There is always great potential for differences in contract interpretation, and there are several reasons for each party to take the position that the contract language is ambigu- ous. One reason is that the parties may allow less than explicit language to be included in the collective bargaining agreement when they are close to reaching a final agreement and are working under pressure of a deadline. The negotiators may agree to ambiguous contract

554 PART 3 Administering the Labor Agreement

language because that is the only language on which they can agree, they want to save the rest of the agreement, and they don t want to have a strike or lockout over an issue that may not be significant. A second reason may occur during negotiations when the negotia- tors choose ambiguous language to memorialize their understanding. Each employer and each union negotiator independently knows what he or she has agreed to, but he or she did not express his or her understanding in clear and concise contract language. A third reason is that the negotiators may have carried on complex negotiations over a long period of time, perhaps several weeks, and simply forgot about inconsistencies in different provi- sions of the agreement, which may address the same issue.38

Adherence to common law of the shop principles stresses that the major function of the arbitrator is the interpretation of the labor agreement s provisions. Indeed, many arbitrators adhere at least in part to the parole evidence rule, which in its classic form holds that evidence, oral or otherwise, should not be admitted for the purpose of chang- ing or contradicting written language contained in the labor agreement. Consider, for example, the following labor agreement provision: Notice of a promotional opening shall be posted for five working days. Even though five working days is clearer than five days, a dispute could arise if the contract specified working days and the Satur-

day in question was a regularly unscheduled day on which certain employees were called in for emergency overtime. One of the parties might successfully argue before the arbi- trator that the term working day is clear and applies to days on which work is performed and that this precludes any evidence that Saturday was unscheduled and never

Exhibit 11.5 Transcript from an Arbitration Hearing Reflecting Poor Cross-Examination

(Direct questions of employee witness by a union spokesperson)

Q: How did your supervisor sexually harass you? A: He mooned me. Q: Describe the circumstances to the arbitrator. A: I was working overtime and as far as I knew we were the only ones left in the

laundry. As I was counting the inventory, the door to a broom closet opened, and there was this man s bare butt sticking out at me with his pants down around his ankles.

(Subsequent cross-examination of employee witness by a management spokesperson)

Q: Was the area near the broom closet well lighted? A: No, it was rather dim. Q: Was the broom closet well lit? A: No, the light in the closet wasn t even lit. Q: Was there a mirror that you could clearly see the face of the man? A: No, I never saw his face when it happened. He stepped back into the closet, and I went and punched out right away. Q: (Triumphantly) How then can you be sure that the bare fanny belonged to your

supervisor? A: Because of the tattoo. Q: I ve come this far so I might as well ask: what is the significance of the tattoo? A: Well he was always bragging to us women about his tattoo, describing it and

offering to show it to us. Of course, none of us ever took him up on it but there it was just as he had pictured it. (Whereupon the grievant proceeded to describe in some detail the tattoo that had been so prominently displayed.)

SOURCE: John J. Flagler, A Few Modest Proposals for Improving Conduct of the Hearing, in Arbitration 1990: New Perspectives on Old Issues, Proceedings of the Forty-third Annual Meeting, National Academy of Arbitrators, Gladys W. Gruenberg (ed.) (Washington, D.C.: Bureau of National Affairs, Inc., 1991), p. 55.

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contemplated as a working day. Rationale for this rule is that the parties have spent many hours in negotiating standardized employment conditions; thus, disregarding negotiated terms would damage stable labor management relationships and communi- cate to the parties that there is little or no point in reducing contract terms to writing.

A problem remains when the labor agreement language is ambiguous because it nor- mally cannot prescribe all essential rules or guidelines for day-to-day administration of labor relations. Also, many labor agreement terms, such as reasonable, make every effort, minor repairs, and maintain the work environment as safely as possible, might have resolved negotiation impasses but still pose interpretive problems in contract administra- tion and arbitration.

Some contract provisions that appear clear on the surface can cause differences of opinion among union and management officials as well as arbitrators. Consider the fol- lowing three examples and related questions39:

Example 1: The company will provide required safety clothing. Does the company have to pay for safety clothing or merely make it available for employees to purchase? Example 2: An employee must work the scheduled day before and after the holiday to receive holiday pay. What happens when the employee works three hours the day before the holiday, goes home because of sickness, and works the full eight hours the day after the holiday?

Example 3: Management will distribute overtime as equally as possible. Does a supervisor making overtime request calls to employees homes stop making such calls until contact is made with an employee whose telephone is busy or goes unanswered? Has the company met its obligation if the supervisor calls, leaves a message on the senior employee s answering machine, and then offers overtime to the next senior employee?

Arbitrators prefer to approach the ambiguity problem initially in terms of the com- plete labor agreement and to construe ambiguous language or provisions of the labor

LABOR RELATIONS IN ACTION Example of Contract Language Ambiguity

Contract Language: Any employee who is required to serve on jury duty who is unavoidably detained from his/ her assigned shift shall be paid for the shift in question.

Facts: Employer operates 24 hours, 7 days a week. Employee is a 3rd shift operator who works from

10:30 P.M. to 6:30 A.M. Employee is required to report for jury duty on

Tuesday at 9:00 A.M. Employee reports at the required time and serves

jury duty until 5:00 P.M. Employee did not report for Monday evening shift

prior to jury duty and did not report to work for the Tues- day evening shift.

Company does not pay the employee for either shift; the employee files a grievance seeking pay for both shifts.

Arguments: The company argued that the employee could have

served jury duty and still worked both shifts. As an alter- native, employee could have missed one shift of work

and been paid for this one shift. The employer argues that unavoidably detained from the employee s assigned shift requires the employee to work the shift prior to jury service and the shift after jury service unless the jury service conflicts with the latter shift. The employer contends that unavoidably detained means something not in the employee s control. Therefore,

when the employee was released from jury duty in time to travel to work, the employee had no option except to return to work. If the employee did not work, the employee does not get paid.

The union argued that the company s position is neither reasonable nor practical. The union claimed that when the negotiators of the collective bargaining agreement used the word detained, they meant that an employee cannot cover both the assigned shifts and jury duty in a single day.

Source: Adapted from John B. LaRocco, Ambiguities in Labor Contracts: Where Do They Come From? Dispute Resolution Journal, 59(1) (February April 2004), pp. 38 41.

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agreement so as to be compatible with the language in other provisions of the agreement. Thus, the contract should be viewed as a whole, not in isolated parts, and any interpre- tation that would nullify another provision of the contract should be avoided. When ambiguity remains, the arbitrator must seek guidance from sources outside the language in the labor agreement.

Intent of the Parties Another useful guideline, the intent of the parties, refers to what union and manage- ment officials had in mind when they (1) negotiated the labor agreement or (2) engaged in an action that resulted in a particular grievance. Intent of the parties may be proven by transcripts or notes taken at the negotiations table. Intent may be dem- onstrated by one of the parties that brings in written proposals submitted with expla- nations at the negotiations. For example, a demonstration with a calendar on how overtime will be equalized over a monthly schedule may prove convincing to an arbi- trator. Intent is entirely subjective; however, arbitrators consider observable behavioral manifestations of the intent to determine what a reasonable person would conclude from that behavior. For example, consider the previously cited holiday pay situation. To demonstrate that it intended for holiday pay to be given only to those individuals who worked a full eight hours the day before and the day after the holiday, manage- ment might supply the arbitrator with notes on various proposals and counterpropo- sals made during labor agreement negotiations to prove what they intended the contract language to mean. Arbitrators are strongly influenced by this evidence of intent because they are reluctant to award a benefit that could not be obtained at the bargaining table.

An example of an action s intent considered in a grievance might occur when an employee is caught in the act of preparing to take tools from company property. The supervisor approaches the employee, stating the following:

You and I both know you were caught in the act of stealing. You have two options. You can file a grievance which will be denied in arbitration and the discharge on your record will make it difficult for you to find a job elsewhere. Or you can sign this res- ignation slip, quit, and we won t tell any other companies about the stealing incident.

The employee hastily signs the slip and leaves the company premises. However, the next day the employee returns and informs management that she wants to work because she never really quit. If the company refuses the employee s request and a grievance is filed, the arbitrator would have to determine the grievant s and management s intent. Observable behaviors of an employee s intent to quit are cleaning out the locker, saying good-bye to colleagues, and asking management for the wages earned for that week. An employee usually resigns only after giving the decision careful thought and consideration. Because none of these behaviors were operative in this case, the arbitrator will have to assess management s intent in this action. Possibly, the supervisor was simply trying to do the employee a favor by letting her off the hook. However, management may have given the employee the alternative of quitting to avoid subsequent arbitration of the dis- charge and the risk of the discharge decision being overturned. The latter intent is viewed by arbitrators as being a constructive discharge.

Under this principle, the arbitrator would view the termination of employment as being subject to the employee discipline provisions of the labor agreement. These provi- sions usually call for union representation and a written notice of the reasons for the termination at the time of the employee s discharge. Because these procedures were not followed, many arbitrators would reinstate the grievant with full back pay. On the other

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hand, the company may decide to terminate the employee for stealing or wait to see whether the employee files a grievance over the question of her resignation.

Past Practice When the contract language is not clear or there is an absence of contract language, the parties attempt to prove an identifiable past practice. The principle of past practice refers to a specific and identical action that has been frequently employed over a number of years to the recognition and acceptance of both parties.40 This decision-making criterion demon- strates to the arbitrator how the parties have actually applied the labor agreement.

Because established contractual provisions place restrictions on managerial discretion, management attempts to avoid further reductions on supervisory decision making by press- ing for a zipper clause to be included in the labor agreement, similar to the following:

This zipper clause does not guarantee that management will not add to its contrac- tual restrictions by repeatedly handling a situation in a similar manner. For example, after many years of management s practice of unilaterally giving employees a Thanksgiv- ing turkey, such a gift might become a binding, implied term of the labor agreement. Furthermore, management will likely have to negotiate a labor agreement provision to the contrary (even if the current labor agreement is silent on the subject) if it wishes to discontinue the gift in subsequent years.

In addition to interpreting ambiguous language or resolving problems not covered in the agreement, on rare occasions, past practices may even alter clear and convincing contractual provisions. At one company, it had been a practice for many years to require clerks to perform cleanup operations at the end of their workday and to pay them no extra money for up to 10 minutes work, 15 minutes straight time for 11 to 15 minutes work, and time and one-half for work of more than 15 minutes in duration. There was clear contractual language specifying that work in excess of eight hours per day would be computed at time and one-half overtime premium. The union eventually filed a griev- ance stating that clear contractual language compelled overtime payment for any amount of daily work exceeding eight hours. However, the arbitrator maintained that past prac- tice was more significant than the express terms of the labor agreement in this case.

The written contract is, of course, the strongest kind of evidence of what the parties willed, intended, or agreed upon. An arbitrator will not ordinarily look beyond its unambiguous language. Where, however, as here, the parties have unmistakably dem- onstrated how they themselves have read and regarded the meaning and force of the language, and where the meaning varies from its normal intendment, the arbitrator should not, indeed, cannot close his eyes to this demonstration.41

Article XXVIII: Other Agreements

Section 2. The parties do hereby terminate all prior agreements heretofore entered into between representatives of the company and the unions (including all past understandings, practices, and arbitration rulings) pertaining to rates of pay, hours of work, and conditions of employment other than those stipulated in this agreement between the parties.*

*This provision on past practice was taken from Walter E. Baer, Practice and Precedent in Labor Relations (Lexington, MA: Lexington Books, 1972), p. 8.

558 PART 3 Administering the Labor Agreement

Past practice, although influential, is not interpreted the same by all arbitrators. For example, it is difficult to determine in a consistent fashion how long or how frequently an action must be continued before it becomes a binding past practice. Sometimes the nature of the issue further complicates the past practice criterion. Consider a situation in which management wants to unilaterally change a clear past practice of employee smok- ing at work. Some arbitrators have indicated that management could not unilaterally change this past practice, particularly if no specific evidence was presented to show that smoking adversely affected efficiency or productivity. However, some arbitrators have ruled that management may establish a no-smoking rule, thereby disregarding past prac- tice because recent research has proven that smoking is detrimental to employees health.42

Previous Labor Arbitration Decisions Also used as guidelines are previous arbitration decisions when they could bolster either party s position in the arbitration case. Similarly, the arbitrator may cite previous deci- sions to refute the parties contentions or to support the arbitral opinion. Arbitrators accord greater weight to prior arbitration decisions if the issue is the same and particu- larly, if the facts and contractual language are the same under the same labor agreement. Of course, few prior arbitration decisions meet these requirements because the parties would be extremely reluctant to arbitrate the same issue a second time, given the first arbitrator s decision. However, previous arbitrator decisions may be useful for providing principles that may be used to bolster one party s position.

Arbitrators are far less likely to be influenced by decisions concerning different labor agree- ments by different parties at other facilities because, as arbitrators, they recognize the common law uniqueness and autonomy of a particular operation. In fact, arbitrators may give little weight to the admission of prior arbitration decisions into a current arbitration hearing.

Unwillingness to present a case solely on its own merits may come to be interpreted as a sign of weakness. Also it may be considered that citation of prior arbitration awards indicates either a lack of confidence in the judgment of an arbitrator or a belief that he may be swayed by irrelevant considerations. An attempt to induce an arbitrator to follow some alleged precedent may come to be recognized as at least bad etiquette.43

Numerous factors influence the success of the parties in arbitration cases, including the burden of proof, the types of issues, and legal representation. The evidence suggests that management prevails more often in contract interpretation cases, and unions prevail more often in disciplinary cases. Because the employer has the burden of proof in disci- plinary and discharge cases and the union has the burden of proof in contract interpre- tation and application cases, apparently the party having the burden of proof does not prevail in most arbitration decisions. Evidence also indicates that legal representation has a positive influence on the outcome of the arbitrator s decision. Furthermore, research has discovered that certain unions prevail more often than other unions. These unions include the Ladies Garment Workers; the Retail and Wholesale Clerks; the American Federation of State, County, and Municipal Employees; and the Operating Engineers. Possible explanations include that the union s duty to fairly represent all bar- gaining unit employees and the democratic nature of unions in determining which cases to take to arbitration may cause some unions to take some grievances to arbitration when they have little chance of prevailing in the decision.44

Arbitrators are likely to consider factors in combination rather than in isolation from one another. For example, arbitrators follow a combination of certain principles, such as efficiency, economy, and good faith, in interpreting contract language concerning employer s decision to move bargaining work to other employees within a plant. In

CHAPTER 11 Labor and Employment Arbitration 559

discipline cases, arbitrator rulings against management repeatedly mention the employ- ee s work history factors together with procedural irregularities. Even in workplace vio- lence cases, arbitrators will look beyond the presence of violence itself and consider other factors, such as an unblemished disciplinary record, the grievant s length of service, prov- ocation, and so on.45

As a guide to the arbitration process and decisions, the Labor Relations in Action on page 561 presents several tenets of labor arbitration.

Current Issues Affecting Arbitration

There are several legal and procedural issues affecting labor/employment arbitration today.

Legal Jurisdiction As previously noted, the Steelworkers Trilogy and other judicial decisions clarified and enhanced arbitrators roles in resolving employee grievances. Yet arbitration decisions can sometimes involve various government agencies and the courts, which might be concerned with specific aspects of a grievance. Consider, for example, a case in which a 55-year-old Afri- can American union steward is discharged for insubordination. A grievance is filed and pro- ceeds to arbitration under the terms of the labor agreement. However, the employee claims that the discharge was prompted by racial and/or age discrimination or discrimination against a union steward. Conceivably, the discharge grievance could claim the attention of a number of persons an arbitrator and officials from the Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB). The problem involves untangling the various jurisdictional squabbles that could arise over this one grievance.

Labor Arbitration and the Equal Employment Opportunity Commission The passage of the 1964 Civil Rights Act (amended by the Equal Employment Opportunity Act of 1972), subsequent judicial decisions, and the passage of the 1991 Civil Rights Act have emphasized that management s well-meant intentions are not sufficient to preclude a charge of racial discrimination. Indeed, in administering this aspect of public law, the EEOC holds that employers must actively devise and implement employment procedures that remove present and possible residual effects of past discrimination. Hiring, promotion, and discipline procedures may be carefully scrutinized by the EEOC to protect employees from discriminatory practices when and if a charge of employment discrimination is filed. In a unionized facility, arbitrators also often assume a related decision-making role, particu- larly in grievances protesting discipline of an employee and other employment matters, such as promotions, transfers, pay, and so on. This situation poses at least two questions:

1. Should management, the union, and the employee turn to the arbitrator, the EEOC, or both in resolving a minority employee s grievance?

2. How do the courts and the EEOC view the arbitrator s decision in terms of Title VII of the 1964 Civil Rights Act?

The first question was answered by the Supreme Court in its 1974 Alexander v. Gardner- Denver Company decision. The Court contended that the arbitrator s expertise pertains to labor agreement interpretation and not to resolving federal civil rights laws. Moreover,

The fact-finding process in arbitration usually is not equivalent to judicial fact- finding. The record of the arbitration proceedings is not as complete; the usual rules

560 PART 3 Administering the Labor Agreement

of evidence do not apply; and rights and procedures common to civil trials, such as discovery, compulsory process, cross-examination, and testimony under oath, are often severely limited or unavailable.46

Consequently, a minority employee is almost encouraged to pursue both the arbitration process and appropriate judicial procedures.

LABOR RELATIONS IN ACTION Tenets of Labor Arbitration

1. Arbitrators don t know as much as the parties think we do. The advocates may use terms such as LSM machine, Form 19, LWOP, and so on, daily. Arbitra- tors must ask about terms the parties may use on a daily basis. When arbitrators get back to their office, they can t ask questions.

2. Arbitrators should not pursue new subjects. If the parties don t want to introduce certain evidence, there is a reason. Arbitrators should not initiate new arguments or pry into new evidence.

3. With the use of the striking method of selecting arbitrators, the selected arbitrator is usually not the first choice of either party. However, the selected arbitrator is acceptable to both parties.

4. After the decision, only half of the parties (the win- ning side) will believe the arbitrator was competent; the other half will wonder how in the world the arbi- trator ever qualified to be listed on the roster of AAA, FMCS, or NMB.

5. When in doubt about disclosure, the arbitrator must disclose connections with one or more of the par- ties involved which would affect his objectivity or give the appearance of affecting his objectivity.

6. Making credibility determinations is always the hardest part of an arbitrator s job. All arbitrators know the rules for credibility determinations, but making credibility determinations is still the hardest part of an arbitrator s job.

7. Arbitrators should always be careful about what they write in their decisions. Negative comments about supervisors may affect relationships with employees. Negative comments about employees may affect their future on the present job or the possibility of future employment. They should not demean or ridicule the grievant and other wit- nesses. Other company officials and union mem- bers have access to the written decision. Arbitrators should not write that a witness is inar- ticulate or he is a bald-face liar. Arbitrators should focus on which witness had greater credibil- ity and reasons why.

8. Arbitrators should respect the grievant and the pro- cess. Advocates may have been in arbitration

hundreds, maybe thousands of times. It may be the grievant s first time at an arbitration hearing and it may be his last. If it is a discharge hearing, it is one of the most important days in the grievant s life.

9. Arbitrators should do no harm. Arbitrators are the invited guests they are the presiding officer of the arbitration hearing. Collective bargaining is the parties process. Arbitration is part of the continuing process of collective bargaining. The parties still have to live with each other after the arbitrator ren- ders the decision.

10. Arbitrators should not forget the therapeutic value of arbitration. It is the grievant s day in court. Some- times the grievant may simply want to get some- thing off his or her chest. The grievant should be allowed a little leeway.

11. Arbitrators are not consultants. Don t say: The par- ties are advised to . Arbitrators are employed to make decisions. Arbitrators must rule within the essence of the contract language.

12. Arbitrators should treat every decision as it is his or her first and last : first, because the arbitrator will work hard to make sure the decision is correct; and last, because the arbitrator will be independent because the arbitrator will not worry about being selected again.

13. Arbitration is much more complicated than it was 35 years ago. Now arbitrators may need to ask the par- ties about the procedures before the hearing: (1) loser pays, (2) grievant without union representation, (3) grievant with his own attorney, and so on. There are also new technologies on the job and off the job: e-mail, Facebook, twitter, texted messages, and so on. There are more two- and three-day hearings, more transcripts and briefs, and longer detailed con- tracts (some parties even have interpretative man- uals for the contract language and then disagree on the meaning of their interpretations). There are more hearings about use of illegal drugs and various forms of drug tests.

Source: Based on a presentation by William H. Holley, Jr. at the FMCS Mid-West Symposium in Chicago, November 19, 2010.

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Some predicted that the Gardner-Denver decision would create havoc as every discrimi- nation grievance lost in arbitration would be overturned by the appropriate government agency or the courts. Yet research does not support this prediction. One study found that a grievance reviewed by the EEOC or related agencies only stood a one in six chance of being reversed. Also, the chances of a trial court overturning a discrimination grievance heard by an arbitrator are slim, 6.8 percent according to one study and 10 percent according to another.47 Apparently the courts believe that arbitrators are adequately covering the legal considerations of discrimination in their decisions.

In the Wright decision in 1998, Ceasar Wright injured his right heel and back, sought permanent disability, and ultimately settled for $250,000. Three years later he asked to be returned to work through the union hiring hall, and he presented his doctor s approval. Wright worked for nine days for four different companies, and none complained about his performance. However, when the employers realized that Wright had already settled a claim for permanent disability, they informed the union that they would no longer accept Wright for employment because a person certified as permanently disabled was not qualified to perform longshore work under the collective bargaining agreement. The union asserted that the employers had misapplied the collective bargaining agreement and suggested that the American with Disabilities Act (ADA) entitled Wright to return to work if he could per- form the duties of the job. The union contended that refusal of employment to Wright by the companies violated the collective bargaining agreement. When Wright contacted the union, the union advised him to file a civil suit under ADA, and Wright did so.

As their defense, the companies asserted that Wright had not exhausted his reme- dies under the collective bargaining agreement. The Fourth Circuit Court of Appeals concluded that the language of the general arbitration clause in the collective bargaining agreement was sufficiently broad to encompass a statutory claim arising under ADA.48

However, the U.S. Supreme Court disagreed and decided that the contract language did not contain a clear and unmistakable waiver of the covered employees rights to a judi- cial forum for federal claims of employment discrimination. 49 Therefore, Wright was allowed to proceed with his civil suit under ADA.

The Supreme Court s Gilmer decision, discussed later in this chapter, might enable arbi- trators, instead of the EEOC and the courts, to resolve a discrimination grievance filed under the terms of a collective bargaining agreement. Thus far this has not happened. The EEOC, while encouraging use of alternative dispute-resolution techniques, including arbitration, to resolve discrimination claims, has not yet waived its involvement in the issue. Moreover, Congress, in the passage of the 1991 Civil Rights Act, reinforced Gardner-Denver s rationale for judicial oversight in unionized settings.50

Then in 2009 the Supreme Court in a 5 4 decision (14 Penn Plaza LLC v. Pyett) provided a positive analysis of current day labor and employment arbitration and ruled that a provision in the collective bargaining agreement which clearly and unmistakably requires union members to arbitrate claims arising under a federal anti-discrimination statute is enforceable and represents a waiver of union members rights to pursue statu- tory claims in federal courts. Since the Alexander v. Gardner-Denver Co. decision had been the prevailing doctrine for 35 years, the Supreme Court essentially reversed this 35-year-old doctrine if the clause in the collective bargaining agreement specifically iden- tifies the equal employment laws which the arbitrator is to consider.51

Now unions, companies, and labor arbitrators may find themselves involved in arbitrat- ing statutory rights of employees. (See Exhibit 11.6 for excerpts of the Supreme Court s deci- sion favoring arbitration of statutory rights.) Note that arbitration of equal employment opportunity issues is not mandated for all workplaces: It becomes mandatory only if both the union and management agree to make it mandatory and expressly state this in the

562 PART 3 Administering the Labor Agreement

collective bargaining agreement. Further, if workers are unhappy with such a clause, they can vote to refuse to rafity the contract, or subsequently, elect different union leaders who will seek to remove the clause in future contract negotiations.

Arbitration between unions and management has long been recognized as an effec- tive means to enforce contractual rights that are created by the collective bargaining agreement. Although collective bargaining agreements frequently include a general non- discrimination clause such as The employer may not discriminate against an employee or group of employees, labor arbitrators have shied away from addressing statutory issues and have limited themselves to enforcing only the language in the collective bargaining agreement. On the other hand, if the parties agree to specifically ask the arbi- trator to address statutory issues, the arbitrator will do so.

Unions, employers and bargaining unit employees may prefer to take advantage of arbitration s informal, quick, and expert solution to their dispute. There are several advan- tages to employees. First, the union would provide an advocate to the employee at no addi- tional costs (this advantage is available through the payment of dues from members). Thus, lower wage employees with claims involving a small sum of money will have their day in court (attorneys usually will not accept a case unless there is sufficient money involved to justify their efforts). Second, losing the right to go to court only means the avoidance of a forum in which employees prevail in only 12 percent of the cases.

Exhibit 11.6 Excerpts of the Supreme Court s Decision Favoring Arbitration of Statutory Rights

Supreme Court Justice Clarence Thomas wrote:

We hold that a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law .

Justice Thomas explained:

The decision to fashion a CBA to require arbitration of employment- discrimination claims is no different from the many other decisions made by parties in designing grievance machinery .

As in any contractual negotiation, a union may agree to the inclusion of an arbi- tration provision in a collective bargaining agreement in return for other conces- sions from the employer .

Nothing in the law suggests a distinction between the status of arbitration agreements signed by an individual employee and those agreed to by a union representative. This Court has required only that an agreement to arbitrate stat- utory antidiscrimination claims be explicitly stated in the collective bargaining agreement .

We recognize that apart from their narrow holdings, the Gardner-Denver line of cases included broad dicta that was highly critical of the use of arbitration for the vindication of statutory antidiscrimination rights. That skepticism, however, rested on a misconceived view of arbitration that this Court has since abandoned .

the Court has recognized that arbitral tribunals are readily capable of han- dling the factual and legal complexities of antitrust claims, notwithstanding the absence of judicial instruction and supervision and that there is no reason to assume at the outset that arbitrators will not follow the law . An arbitrator s capacity to resolve complex questions of facts and law extends with equal force to discrimination claims brought under ADEA . At bottom, objections centered on the nature of arbitration do not offer a credible basis for discredit- ing the choice of that forum to resolve statutory antidiscrimination claims.

SOURCE: Excerpts from 14 Penn Plaza v. Pyett (2009), St. Ct., 1451 1461 (2009).

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Although there may be additional costs, training, and time invested by the union, arbitration does present potential advantages to the parties. First, the union may make the inclusion of these arbitration clauses a prime organizing tool. Protection from discrimina- tion and representation in statutory cases without out-of-pocket legal fees are attractive offerings which can be made by unions. Second, having a policy favoring arbitration of statutory claims might result in a reduction in the intensity of employers opposition to union organizing. For employers, arbitration would be cheaper than litigation, the employer would not be subject to unpredictable juries, and the arbitration process would be a private matter (with no negative publicity).

Despite a reluctance of unions and employers to include an arbitration clause that provides for arbitrating statutory rights in their collective bargaining agreements, at least one union, the Service Employees International Union, has already begun to include these arbitration clauses in their contracts. Only time will tell whether other unions and companies will follow their lead.52

Labor Arbitration and the National Labor Relations Board Perhaps the most frequent supplements to arbitral decisions have come from the NLRB because the grievant could have been discharged for reasons pertaining to provisions of the labor agreement that are similar to laws, such as engaging in union activities on the job or acting overly aggressive in the capacity of a union official. Section 10(a) of the National Labor Relations Act provides that the NLRB is empowered to prevent any person from engaging in any unfair labor practice (listed in Section 8) affecting com- merce. This power shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, law, or otherwise.

Although it has the power, the NLRB does not ignore arbitration decisions covering unfair labor practice issues. In fact, the NLRB often withholds its jurisdictional determi- nation and investigation pending the arbitrator s decision. In 1955, the NLRB s deferral to arbitration policy was formulated in the Spielberg Manufacturing Company case. In that case, the Board honored an arbitration award that denied reinstatement to certain employees guilty of strike misconduct. Resulting deferral guidelines stressed that the arbitration proceedings must be fair and regular, there must be adequate notice and representation, the arbitrator must address the issue of the alleged unfair labor practice, and all parties must agree to be bound by the arbitration decision.53 However, the Board would disregard the arbitrator s award if it was ambiguous or if the Board found that pertinent evidence had not been presented in the arbitration proceeding.

The NLRB s deferral to arbitration policy was enhanced in the Collyer case, in which the NLRB administrative law judge found that the company had committed an unfair labor practice when it made certain unilateral changes in wages and working condi- tions.54 The company maintained that the issues should be resolved through existing arbitration proceedings instead of the NLRB. The Board in essence agreed with the com- pany s position. While reserving the right to investigate the merits of the issue, the Board maintained the following:

1. Related disputes can be better resolved through the special skills and experiences of the arbitrators.

2. The objectives of the National Labor Relations Act, industrial peace and stability, can be significantly realized through adherence to arbitration procedures established in the labor agreement.

Under Collyer, the employee was obligated to use the arbitration procedure before the NLRB would review the merits of the employee s unfair labor practice case.55

564 PART 3 Administering the Labor Agreement

The NLRB s subsequent Olin Corporation and United Technologies decisions established additional guidelines that made it even more likely that the NLRB would defer to arbitration decisions. Under Olin, the unfair labor practice does not have to be specifically considered in the arbitration hearing. The NLRB will still defer to an arbitrator s award if the contractual and unfair labor practice issues were factually parallel and the facts relevant to resolving the unfair labor practice were presented generally to the arbitrator. 56

Under this deferral policy, there is potential for abuse by either the union or the com- pany. The arbitrator makes his or her decision based on the facts that the parties voluntarily choose to present at the arbitration hearing. Either of the parties could purposely withhold evidence and deny the arbitrator the full record for the purposes of undermining the NLRB s deferral to the arbitrator s decision. Such an incomplete record would preserve for one of the parties a second bite at the apple, and the arbitrator would be hard-pressed to produce a decision based on the record equivalent to the kind of record developed at an NLRB hearing.57

On December 15, 2014, the Board modified its deferral to arbitration policy. After a request for reconsideration from the General Counsel, the Board concluded that the then-existing deferral policy did not adequately balance the protection of employee rights under the Act and the national policy of encouraging arbitration of disputes arising over the interpretation or application of the collective bargaining agreement. The new policy provides that (1) the burden of proving that deferral is appropriate is properly placed on the party urging deferral, (2) deferral is appropriate only when the arbitrator has been explicitly authorized to decide the statutory issue, and (3) such authorization is given either in the collective bargaining agreement or by agreement of both parties in writing the particular case. The modified standard requires that the proponent of deferral dem- onstrate that the parties presented the statutory issue to the arbitrator, and that the arbi- trator considered the statutory issue in the decision.58

One research effort found that only about half of the arbitrators cited related exter- nal law in their decisions when at least one of the parties had filed an unfair labor prac- tice charge with the NLRB. It also found that most of these arbitrators who cited external law only briefly addressed the relevant external law. The study urged that, at a minimum, arbitrators and union and management officials should be aware that they may provide the grievant his or her only opportunity to litigate a statutory claim; therefore, an explicit, informed choice should be made on whether to argue, discuss, and explore stat- utory issues in the arbitration forum or to reject the discussion of such issues as inappro- priate to the arbitration process.59 Thus, it appears that the Supreme Court has recognized the ability of arbitrators to interpret the labor agreement provisions and has even encouraged parties to arbitrate the issue before proceeding to the NLRB.

In 2012, the NLRB ruled that an employer violates Section 8(a)(1) of the National Labor Relations Act when it requires employees covered by the Act to sign an arbitration agreement as a condition of employment that precludes them from filing joint, class, or collective claims that address their wages, hours, or other working conditions against their employer in any forum, arbitral or judicial. The NLRB ruled that such agreements unlawfully restrict employees Section 7 right to engage in concerted activities for mutual aid and protection. Then, in Decem- ber, 2013, the Firth Circuit Court of Appeals refused to enforce the Board ruling. As a result, it appears that the NLRB s ruling will be eventually decided by the U.S. Supreme Court.60

Labor Arbitration, the Courts, and Public Policy: The Misco Decision Federal courts can occasionally become involved when union or management officials request consideration of arbitration matters, particularly when a case heard by an arbitrator involves public policy considerations. The Supreme Court approached this situation in its Misco deci- sion. Misco fired an employee who operated a slitter rewinder, which cuts rolling coils of

CHAPTER 11 Labor and Employment Arbitration 565

paper, for allegedly smoking marijuana on company property. The grievant was arrested in his car in the company s parking lot. Police found a lit marijuana cigarette in the front ashtray of the car, and a subsequent police search of the car revealed marijuana residue.

The arbitrator reinstated the grievant because the evidence did not establish that the grievant smoked or even possessed marijuana on the company s premises. The arbitrator noted the grievant had been in the backseat of the car. The arbitrator also refused to consider the police report as evidence and ruled that the case must be limited to what the employer knew at the time of the firing. Management appealed the arbitrator s deci- sion to the courts, claiming that bringing the employee back would violate public policy operating dangerous equipment under the influence of drugs.

In Misco, the Court restated a principle established in an earlier decision (W.R. Grace). It said that a court may not enforce a collective bargaining agreement that is contrary to public policy. However, the Court noted that the public policy must be explicit, well defined and dominant, and ascertained by reference to the laws and

legal precedents and not from general considerations of supposed public interests. The Supreme Court upheld the arbitrator s decision because none of these prerequisites were examined by the lower courts and would not likely be found in this situation.61

Misco, therefore, reinforced the wide latitude given to arbitrators decision-making authority by the Steelworkers Trilogy. It will probably reduce the number of instances in which the courts second-guess the arbitrator s award on public policy grounds. However, the public policy exception, although made narrow by Misco, still exists. An employer does not have to honor an arbitration decision that would require a violation of law (e.g., reinstating a bus driver who lacks a driver s license).62

Sexual harassment represents a controversial public policy issue that has been subse- quently interpreted by arbitrators and judicial officials. The courts can have very differ- ent interpretations of this situation. For example, one federal district court vacated an arbitrator s award that reinstated an employee who allegedly harassed a female customer. The judge found that the arbitrator s decision contained some disturbing comments that evidenced bias against the employee and insensitivity toward the customer accuser.63

Another federal court refused to set aside an arbitration decision that reinstated an employee who, during a phone conversation, put down the receiver, approached a co- worker from behind, and grabbed her breasts. He then picked up the phone and said, Yup, they re real. The court commented, While we do not condone [the employee s]

behavior, it was within the purview of the collective bargaining agreement and public policy for the arbitrator to order his reinstatement. 64

Of course, harassment victims have won numerous cases in arbitration; further, in some male-dominated brokerage firms that require arbitration of individual disputes, women have joined together to file class action discrimination lawsuits.65

LABOR RELATIONS IN ACTION National Football League v. National Football League

Players Association (Tom Brady)

In the words of Federal District Judge Richard M. Berman, U.S.D.J., New York, September 3, 2015.

The court is fully aware of the deference afforded to arbitral decisions, but, nevertheless, concludes that the Award (by Commissioner Goodell as arbitrator to uphold Tom Brady s four game suspension) should be vacated. The Award is premised upon several significant deficiencies, including

(A) inadequate notice to Brady of both his potential discipline (four-game suspension) and his alleged misconduct;

(B) denial of the opportunity for Brady to examine one of two lead investigators, namely NFL Executive Vice President and General Counsel Jeff Pash; and

(C) denial of equal access to investigative files, including witness interviews notes.

566

As was learned in the highly-publicized Tom Brady s four game suspension, a fed- eral district judge will overturn an arbitrator s decision (NFL Commissioner Roger Goodell appointed himself as arbitrator which was allowed under the collective bargain- ing agreement) when the judge concludes that the arbitration procedure was not fair (See the Labor Relations in Action on page 567).

Appraising Labor Arbitration s Effectiveness Although the courts have praised the effectiveness of arbitration, some critical assess- ments have come from participants union and management officials and even some arbitrators (see the Labor Relations in Action feature for some related insights).

Arbitrators seldom, if ever, know why they were not chosen for a subsequent griev- ance. Little information is available concerning why the parties continually return to some arbitrators but not to others. Exhibit 11.7 approaches this void by grouping criti- cisms that several union and management practitioners have leveled at arbitrators. These criticisms apply to two general areas: arbitrators capabilities and ethics, and the potential procedural problems in the arbitration process.

Arbitrators Capabilities and Ethics Some contend arbitrators might compromise their decisions to minimize or avoid dis- pleasure from one or both of the parties or even to ensure possible selection in future arbitration cases. The following are examples of compromise decisions, such as rein- stating a discharged grievant without awarding any back pay.66

In some instances, union and management representatives believe that the arbitrator owes them one because of their support (financial and otherwise). One arbitrator, who

expressed surprise to officials at being selected to replace another prominent arbitrator, was given the following reason regarding why the previous arbitrator was fired:

I ll tell you why we fired him. The last case he had ended here at about 4:00. Mr. _____ expressed considerable concern since he had to make a plane for New York and was

LABOR RELATIONS IN ACTION Things They Never Told Me before I Became an Arbitrator

The difficulty of setting up a hearing date when union and company representatives have such busy schedules. How easy it is to read finished cases;how difficultit is to write one from the beginning. The need to know about admission of evidence and reasons for sustaining and overruling objections at a hearing and making quick decisions about the rel- evance of evidence. How physically tiring it is to fly or drive to and from some of the hearing sites. How unglamorous travel and hotels can be when all airports look alike and you are not even sure where you are. How mature and conscientious some parties can be in trying to do what is right, while some par- ties enter the hearing armed for combat and con- frontation and only wanting to win.

How much money, time, and effort could be saved if the parties prepared better and attempted to resolve their differences before arbitration. The role of the cancellation fee in making sure the par- ties are serious about going forth to arbitration. (If there is no cost of canceling, one of the parties can abuse the arbitration process by canceling at a late date.) How one party will hold out for a compromise set- tlement until right before the hearing. When no set- tlement is forthcoming and their case is weak, the party will drop the grievance. How important the fee is to the parties it cannot be too low because the parties think the arbitrator is not good enough to serve; it cannot be too high because the arbitrator is priced out of a job.

Source: From an experienced, somewhat weary arbitrator who enjoys relaxing in anonymity.

567

running late. I assured him that he would have no problem. I carried his bags to his car, drove in excess of all the speed limits, went through back roads, even proceeded through changing traffic lights. After a hectic ride and at considerable risk, I got him to the air- port just in time to make the plane. I parked my car in a no parking zone. I even carried his bags to the gate. After all this, you know, that [deleted] ruled against me.67

Yet other participants or students of arbitration maintain that the arbitrator s indebtedness to the parties is a necessary ingredient of dispute resolution. The arbitrator owes allegiance to both union and management, thereby providing a well-formulated decision. Four organizations, the NAA, the FMCS, the AAA, and the NMB, have adopted the following Code of Professional Responsibilities which guides arbitrator s behaviors:

An arbitrator, deciding that he or she does not have the technical competence to deal with the issue under consideration, is expected to withdraw from the case. Issues commonly included in this category are incentive systems, job evaluation plans, and pension and insurance programs. An arbitrator is not to make an award public without the consent of the parties. Before an arbitrator s appointment, the parties should be made aware of the arbi- trator s fees for the hearing, study time, travel time, postponement or cancelation, office overhead expenses, and any work of paid assistants. If either party requests the arbitrator to visit the workplace, the arbitrator should comply. An arbitrator should not consider a posthearing brief that has not been given to the other party. If the arbitrator knows any of the parties or has any private issue in the organiza- tion, he or she must make disclosure of any potential conflict of interest before the hearing.

Exhibit 11.7 Summary of Criticisms Union and Management Practitioners Have toward Arbitrators

1. Fails to treat all parties with respect (e.g., has offensive personal traits, tends to apply his or her feelings of fairness or justice as opposed to applying the parties intent, regularly exceeds his or her authority).

2. Cannot control the hearing properly (e.g., cannot rule on objections, is too legalistic or not legalistic enough, cannot stop gratuitous hostile exchanges or rambling or redundant testimony).

3. Awards are either too brief or too long, unclear, take a long time, emphasize compromise, evidence poor reasoning or writing skills, or fail to give parties direction on language issues.

4. Either too much experience with management or the union or insufficient experience with labor relations as a neutral or with the jobs and industry in question.

5. Decides cases on grounds other than those presented at the hearing (e.g., fails to consider precedents, is too academic, fails to pay sufficient attention at hearing, reviews evidence not presented in hearing, discusses cases with uninvolved parties before decision being issued, does not address all facts or issues).

6. Too expensive (e.g., generally unavailable in a reasonable time frame, thereby increasing potential back-pay liability; cancellation policy is unreasonable).

SOURCE: Adapted from Thomas L. Watkins, Assessing Arbitrator Competence: A Preliminary Regional Survey, Arbitration Journal, 47 (June 1992), p. 43.

568 PART 3 Administering the Labor Agreement

Other critics of arbitrators have focused on the quality of the arbitrator s decision. This may happen if the arbitrator s written opinion and award do not address specifics arguments raised at the hearing or if they do not reflect the original understandings of one or both parties regarding the nature or scope of the grievance. However, some arbitral decisions reflect legal considerations as much or more than union and manage- ment concerns expressed at the hearing. This potential overlawyering problem of arbitration decisions might be due to the large amount of legislation at the local, state, and federal levels that might pertain to the grievance, or the preferences of union and management officials and possibly the arbitrator68 to minimize subsequent judicial reviews by considering related laws at the hearing and in the decision.

Management and union representatives might also obtain poor arbitration awards under the garbage in, garbage out theory. Because the arbitrator s decision is based on the merits of the grievance, a sloppy grievance formulation and presentation might result in a relatively lackluster arbitral decision. Sometimes, union and management officials present an arbitrator with poorly conceived grievances that should have been resolved before going to arbitration. Some grievances are often prompted by political considerations the union or management officials take the grievance to arbitration to show support for their union stewards or first-line supervisors, even though they know them to be wrong. Arbitration in this sense serves as a buck-passing device; the errant union steward or supervisor is appar- ently given support but, in reality, is provided an education through the arbitrator s deci- sion. Sometimes unions take cases to arbitration as a form of on the job training. Leaders really don t expect to win such cases, but reason that this is a way to give an inexperienced union steward some experience presenting arguments in front of an arbitrator.

One almost inescapable concern arises from the finality of the arbitrator s award. Although the Supreme Court has encouraged single-person resolution of an industrial dis- pute, opponents of this practice suggest that an arbitrator has more authority than a judge, whose decisions may be overturned through judicial appeal. Many problems would result if arbitration awards were subjected to an appeals procedure. Any such procedure would be time consuming and expensive, thus taking away two major benefits of arbitration.

Procedural Problems The two general categories of procedural problems are time delay and expense of the arbitration proceedings. The FMCS reports that the average length of time between the filing of a grievance and an arbitrator s award is 399 days.69 However, the parties them- selves must share part of the blame because the average time between the filing of the Grievance and the request for a panel from the FMCS is 132 days. Delay in arbitration is a concern of union and company advocates, especially in discharge cases. The dis- charged employee is likely to be unemployed after the discharge and faces an uncertain future. The employer probably has to fill the vacant position and faces the possibility of back-pay liability. Because it is a universally accepted principle that discharge decisions should be based on the facts known at the time of the decision and the passage of time does not alter the facts of the case, the length of time since the discharge should not affect the arbitrator s decision. However, research of arbitrators decisions in discharge cases reveals that the longer the delay between an employee s discharge and the arbitra- tor s decision, the less likely the grievant will be reinstated.70

Although delay is harmful to employees, to the arbitration process, and to union management relationships, a number of reasons have been identified as causes for this delay:

Shortage of acceptable arbitrators coupled with the reluctance of the parties to take a risk on a new or inexperienced arbitrator

CHAPTER 11 Labor and Employment Arbitration 569

Prearbitration activities, such as the steps in the grievance procedure and accom- modating the schedules of busy advocates and arbitrators for the hearing Time after the hearing, which includes waiting on the preparation of the transcript of the hearing and any posthearing submissions by the parties, such as posthearing briefs; time taken by the arbitrator to review the evidence and arguments and to prepare the written decision

Although discharge cases are handled more expeditiously than nondischarge cases at every stage of the process, except for arbitrator selection, the parties have the power to address the causes of delay and are capable of moving more quickly because it is in their mutual interests to do so.71

One criticism directed at arbitrators is that they sometimes split their decisions in discharge cases; that is, they reinstate the grievant but without back pay. Split decisions are not uncommon in discipline and discharge cases because arbitrators generally exer- cise the right to modify a penalty when the penalty is found to be too severe based on the facts of the case or there are mitigating factors, such as the grievant is a long-term employee, the supervisor is partly at fault, or the employee has good work record. The arbitrator may conclude that the employee s misconduct warranted some penalty, but short of removal from the job. The parties themselves have the power to avoid penalty modification by the arbitrator simply by negotiating language that directs the arbitrator either to uphold the penalty imposed by management or to sustain the grievance and return the grievant to the job with back pay no split decision. One study of such con- tract language in the telecommunication industry showed that the grievant was more often reinstated with full back pay when the arbitrator could not modify the penalty than under the traditional contract language when the arbitrator is allowed to modify the penalty. Thus, if the arbitrator has no authority to modify the penalty, the arbitrator must be convinced that the penalty of removal is appropriate and that is a heavy burden of proof for management.72

Expenses to the parties are associated with arbitration. The FMCS reports that arbi- trators average per diem rate of $1,188, when applied to the arbitrator s average hearing time (1.05 days), travel time (0.63 days), and study time (2.39 days), plus average expenses ($395.09), resulted in an average charge of $4,911.86 for an arbitrated griev- ance.73 Although most labor agreements provide for the sharing of arbitration expenses between union and management organizations, each party can incur additional expenses, such as fees for the parties attorneys, which usually exceed the arbitrator s fee; wage pay- ments to plant employees who take part in the proceedings; and stenographic transcrip- tion costs, if a written record of the hearing is requested.

Arbitral fees have increased over the years, which is understandable in view of infla- tion. In many cases, however, management and union officials bring added expenses on themselves when the parties require the arbitrator to review transcripts of the hearing, prior arbitration awards, testimony of superfluous witnesses, and prehearing and post- hearing briefs. The parties may also insist on expensive frills, such as renting a hotel suite for a neutral arbitration site, that do not materially affect the quality of a decision.

Time delay is another problem directed at arbitration. The statistics from the FMCS show that the parties themselves and arbitrators must share the blame for extending the length of time for resolving disputes via arbitration. As shown in Exhibit 11.8, it takes the parties over 130 days between the time the grievance is filed and one of the parties, usually the union, contacts the FMCS for a panel of arbitrators. Of course, this period of time involves setting up meetings for the parties to be engaged in the various steps of the grievance procedure and attempts to resolve the grievance without going to arbitration. The increase in time for the arbitrator to render a decision is probably the result of

570 PART 3 Administering the Labor Agreement

continued use of busy more experienced arbitrators and the reluctance of the parties to use newer arbitrators who could render more timely decisions.

Expedited Arbitration Procedures. Some union and management officials have reduced expenses by expediting ( speeding up ) the arbitration procedures before, during, or after arbitration hearings. Prehearing suggestions include (1) appointing a panel of arbitrators for the length of the contract rather than working through a new list of arbitrators each time an arbitration is scheduled and (2) appointing a permanent umpire for a specific amount of time (e.g., one year or the life of the agreement). Hearings may be expedited by substituting tape recordings for transcripts. Posthearing expedition includes (1) setting a deadline for the decision to be returned to the parties or having the arbitra- tor render a bench decision at the end of the hearing, (2) reducing or eliminating the number of references for the arbitrator to research, (3) limiting the number of witnesses, (4) limiting the time allowed to present one s case, and (5) setting a maximum on the length of the arbitrator s decision or establishing the maximum amount to be paid for the decision ahead of the hearing.74

Other possibilities also exist for streamlining the arbitration process. For example, some grievances solely concern interpretations of the labor agreement. Unlike discipline cases, these grievances do not personally involve employee grievants and thus do not entail related therapeutic or political considerations. Perhaps, these grievances could be argued on paper without the necessity of a hearing and related expenses.75 Some parties have considered arbitration via video conferencing with the parties and the arbitrator at different locations.

The use of expedited or experimental approaches illustrates two fundamental issues concerning arbitration:

1. This process, although not perfect, appears to offer great advantages over alternative methods of grievance resolution, such as sudden strike activity.

2. Union and management officials created the arbitration process and are charged with controlling it in accordance with their jointly determined needs. They must monitor the process as well as their related actions and attitudes to ensure a rela- tively inexpensive, efficient, and objective means of dispute resolution.

Employment Arbitration Employers have initiated, promulgated, and used employment arbitration in situations such as the following:

Employment discrimination claims in union or nonunion firms (instead of using the courts)

Exhibit 11.8 Average Length of Time between Actions (in days)

Responsible Party(ies) 2013 2007

Grievance Filed and Panel Request from FMCS 132.46 136.26

Appointment of Arbitrator and Hearing 171.87 125.16

Date of Hearing and Filing of Post-hearing Briefs 58.01 57.87

Panel Request and Arbitrator Decision 333.12 -

Receipt of Briefs by Arbitrator and Decision 37.20 21.94

Total: 399.4 341.23

SOURCE: http://www.fmcs.gov/.

CHAPTER 11 Labor and Employment Arbitration 571

Employee grievances in nonunion firms over application of the company personnel policies (instead of using unilateral management decision making)

Of the types of cases heard by employment arbitrators, 65 percent involved violation of an employment contract, 56 percent violation of law, and 59 percent violation of a company policy. Obviously, these are not mutually exclusive categories, as many claims involve multiple types of alleged violations.76

It has been reported that 62 percent of large corporations had used employment arbitration. The number of employees who have signed employment arbitration con- tracts had grown to over six million.77

See the Labor Relations in Action box (on p. 575) for a summary of how employ- ment arbitration differs from arbitration found in labor agreements.

The use of arbitration to resolve employment discrimination suits was enhanced in 1991 by the Supreme Court in Gilmer v. Interstate Johnson Lane Corp (500 U.S. 20, 1991). A securities representative - Gilmer - signed an employment application (Form U-4, known as the Uniform Application for Securities Industry Registration or Transfer. By signing this form, which is common in the securities industry, the applicant agreed to arbitrate any dispute, claim, or controversy with his employer. After being terminated at age 62, Gilmer filed an age discrimination complaint with the EEOC and subsequently in federal court. The Supreme Court agreed with Gilmer s employer that arbitration, not the courts, was both the agreed-on and proper dispute resolution forum that did not counter the legislative history of the Age Discrimination in Employment Act.78 A subse- quent Supreme Court decision seemed to recognize arbitration as a proper resolution of other employment discrimination claims in the securities industry and possibly other industries as well.79

Although the Supreme Court s Gilmer decision appeared to be inconsistent with its previous decision in Alexander v. Gardner-Denver Company, the Gilmer decision did not involve union management relations.

In a 2001 case, Circuit City Stores v. Adams, the U.S. Supreme Court reconfirmed its position that there was a strong federal policy that supported arbitration and ruled that the Federal Arbitration Act applied to all contracts of employment except those applica- ble to employees working in transportation. The Court stated that arbitration was a desirable and workable forum for resolving employment disputes, including those under federal discrimination laws. In this case, Adams had signed an employment application form to settle any and all previously unasserted claims, disputes, or controversies arising out of or relating to my application or candidacy for employment (see Exhibit 11.9). Then, in 2002, the Court clarified the role of the EEOC in cases where an employee had been required, as a condition of employment, to sign an agreement to arbitrate all employment discrimination claims. The Court ruled that the EEOC was not bound by an arbitration agreement because the EEOC had not been a party to such agreement. Therefore, the EEOC may go to court on a worker s behalf even though the employee had previously been required to sign an agreement to arbitrate all employment discrimi- nation claims.80

In 2002, the U.S. Supreme Court held in EEOC v. Waffle House, Inc. (534 U.S. 754) that an employee s agreement to arbitrate did not preclude the EEOC from suing the employer on behalf of the employee in order to enforce the Equal Employment Oppor- tunity Act and attempt to recover judicial-specific relief, which may include back pay, reinstatement, and/or monetary damages.81 Since these decisions, lower courts have enforced the majority of contested arbitration agreements, but they still are willing to deny enforcement of arbitration agreements which the courts believe are unfair to employees.82

572 PART 3 Administering the Labor Agreement

Arbitral Dilemma The EEOC s policy is that mandatory arbitration systems imposed as a condition of employment are fundamentally inconsistent with U.S. civil rights laws. However, the EEOC is on record in support of alternative dispute resolution (ADR), which includes arbitration and mediation that resolves employment discrimination in a fair and credible manner if entered into voluntarily or after the dispute arises. In other words, the EEOC s position is that claimants have a legal right to decide whether to pursue a judicial forum or voluntarily choose to resolve their claim through arbitration.83

Where a union exists and when there is an overlap between the language in a collec- tive bargaining agreement and provisions in a law, the question arises as to what the parties and the neutral arbitrator should do. The conclusions drawn after analyzing court cases are as follows:

1. When the contract language and provisions of the Labor Management Relations Act apply (covered in Chapter 3), the statutory and contractual issues should be addressed, the arbi- trator must write the award to confirm that the statutory provisions were addressed, and the arbitrator s decision must not be repugnant to provisions of the statute.

2. When the collective bargaining agreement does not address any statute, arbitrators should decide the case based on the merits of the case and the contract language, not the law.

3. When the collective bargaining agreement contains principles found in the statute without any specific reference to the statute (e.g., there shall be no discrimination against employees), the principles incorporated in the statute may enter into the arbitrator s award.

4. When the statute is explicitly included in the collective bargaining agreement (e.g., this agreement must comply with provisions of the ADA) and instructs the arbitra- tor to apply the statute, the arbitrator should render his or her decision consistent with the statute.84

Several studies have shown that the typical rank-and-file employee with only a job and a small amount of money at stake finds it difficult to obtain an attorney who will accept an employment discrimination claim and take it to court. The time and effort necessary are not worth it to an experienced attorney who is probably operating on a contingency fee arrangement. Attorneys often prefer to represent professional or managerial employees who have the potential for a large payoff. As a result, only 1 in 20 discrimination claimants secure an attorney as counsel.

These studies also reveal rather startling results in the event the employee plaintiffs with job discrimination claims are actually able to reach court. These employees do not fare as well in court as do employees who take their cases to arbitration. In fact, claimants who take their cases to arbitration have won 55 to 63 percent of the time, while less than

Exhibit 11.9 An Employment Application Form under Mandatory Employment Arbitration.

I agree that I will settle any and all previously unasserted claims, disputes, or con- troversies arising out of or relating to my application or candidacy for employment, employment, and/or cessation of employment with XYZ Company, exclusively by final and binding arbitration before a neutral arbitrator. By way of example only, such claims include claims under federal, state, and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, including the amendments of the Civil Rights Act of 1991, the ADA, the law of contracts and the law of tort.

SOURCE: Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001).

CHAPTER 11 Labor and Employment Arbitration 573

20 percent of the claimants have prevailed in court. While claimants may obtain larger recoveries from a jury in court than in arbitration, for most employees without large finan- cial claims, arbitration may be the superior option. As one legal expert concluded:

It gets them back to work sooner, more often, with less cost, and without the psycho- logical pain of court litigation.

In cases where the union represents the employees, unions have not been convinced that they should agree with the employers in making arbitration of discrimination claims the exclusive means of resolving such discrimination claims. Because unions have political characteristics wherein officers must stand for elections and many clai- mants are not yet aware (or satisfied) that, despite the statistics, they may fare better in arbitration than in court, there has not been a movement toward unions showing an interest in representing the bargaining unit employees with employment discrimina- tion claims in arbitration. Employers who prefer arbitration have a selling task to per- form to the skeptical employees as well as the union representatives. The employers must convince employees and union representatives that they are pressing for arbitration, not because they believe they will win more often, but that, win or lose, arbitration is less costly, less time consuming, and less disruptive than court litigation.85

Critique of Mandatory Employment Arbitration. Supporters of mandatory employ- ment arbitration argue that arbitration is less expensive and more informal than the court system. Supporters also point out that arbitrators are significantly more predictable than juries, who may render extraordinary monetary verdicts. Employers like mandatory employment arbitration because arbitration is a private process, which means that the hearings are private and the arbitrator s decisions are not made a public record.

Researchers have found that while the court system from the outside appears to be the fairest way to adjudicate alleged mistreatment by employers, in reality the court sys- tem does not serve employees well. Plaintiff lawyers take only 5 percent of employment discrimination complaints, only 3 percent of those accepted ever go to trial and result in a verdict, and federal courts of appeal reverse 44 percent of appealed cases that had been won by employees in lower court.86

The most controversial element of employment arbitration is that it is mandated by the employer as a condition of employment at the time of hire or after employment, but before there is a dispute. Predispute employment arbitration confronts job applicants with the choice of agreeing to arbitration with a chance of being hired on a new job or confronts current employees with agreeing to arbitration in order to continue their employment. There typically is no bargaining, and the job applicant or the current employees are required to agree to arbitration on a take-it-or-leave-it basis.87

Walter Gershenfeld, former president of the NAA, pointed out several additional deficiencies of a typical nonunion employment arbitration procedure: (1) Many employ- ment arbitrators also serve as advocates in other cases. This means that there is a ques- tion of whether these employment arbitrators are truly neutral, a core ingredient of a fair and impartial arbitration. In traditional labor management arbitration, the arbitrator must be neutral. (2) In discipline and discharge cases in employment arbitration, the employee has the burden of proof. In traditional labor management arbitration, the employer has the burden of proof in discipline and discharge cases. In other words, the employer must prove that the employee is guilty of the charges made against him or her and the employee is considered not guilty until proven guilty. (3) The grievant has a limited right to appeal the arbitrator s decision in employment arbitration. In the tradi- tional labor management arbitration, the grievant must prove that the arbitrator s

574 PART 3 Administering the Labor Agreement

LABOR RELATIONS IN ACTION How Employment Arbitration Differs from

Arbitration Found in Labor Agreements

1. What are the conditions under which the arbitration system is devised? If the arbitration system is established to avoid a union, then many acceptable, well-qualified arbitrators will refuse to serve. If the employer designs a system for the purpose of pro- viding a fair and equitable mechanism for employ- ees to resolve their grievances by an independent neutral party, qualified arbitrators will be willing to serve. Under a collective bargaining agreement, the union and company have negotiated and designed the arbitration procedure that best fits their pur- poses. In other words, the parties design a system of self-governance for resolving conflicts. In employment arbitration, the arbitration procedure is designed unilaterally by the employer.

2. What subjects will be covered under the employ- ment arbitration system, and will employees be required to waive their statutory rights, such as employment discrimination on the basis of race, gender, age, national origin, disability, and so on? If the employees are required to waive their statu- tory rights as a condition of employment, the arbi- tration decision may not stand a court review. Under a collective bargaining agreement, arbitration involves contract interpretation and application of provisions negotiated and agreed to by the parties. Various federal agencies have different policies on deferral to arbitration.

3. How are the arbitrators selected? How long are they retained? If the arbitrators are selected only by the employer and serve at the pleasure of the employer, then a perception may persist that the arbitrator is loyal to the employer and can be terminated if a deci- sion unfavorable toward the employer is rendered. Under a collective bargaining agreement, the arbitra- tors are selected and retained by a procedure negoti- ated and agreed on by the union and company. To avoid problems and misperceptions, selections may be made through independent agencies such as the American Arbitration Association and the Federal Mediation and Conciliation Service.

4. What are the employee s due process rights, if any? Employment arbitration systems contain no guarantees of due process; however, under collec- tive bargaining agreements, arbitrators recognize these important employee rights that include:

Right to counsel by a union representative Right to face one s accusers Right to information to prepare for the arbitration hearing

Right to notice of hearing Right to a copy of written charges against the employee

5. Who pays the arbitrator? Under employment arbitra- tion procedures, the employer typically pays the arbi- trator. The concern is that the arbitrator might show loyalty to the party who pays the fee. Under most collective bargaining agreements, the union and the company jointly decide the method by which the arbi- trator will be paid. Usually, the two parties share the costs; however, on a few occasions, the union and company negotiate the method whereby the loser pays. To avoid the perception of bias in favor of the payer of the fee, one organization designed a system whereby each employee pays a monthly fee to sup- port an arbitration system; the arbitrator, then, is paid jointly by the employer and from employee fees.

6. How final is the arbitrator s decision? Under employment arbitration, the arbitrator s decision is final if the employer wants the decision to be final. Although overturning the arbitrator s decision would be bad policy unless fully justified, no legal basis exists for prohibiting the employer from tak- ing such action. Under collective bargaining agree- ments, the arbitrator s decision will stand in nearly all cases, except in those limited cases where the arbitrator s decision is inconsistent with public pol- icy, the arbitrator is incompetent, or the arbitrator has personal ties with one of the parties.

7. How are employees who file grievances protected? Under the employment arbitration system, employee protection survives as long as the employer allows the system to survive. Under the collective bargaining agreement, employees who file grievances are protected under the grievance and arbitration procedure, which lasts as long as the collective bargaining agreement lasts.

8. What issues are arbitrated under the arbitration sys- tems? Under the employment arbitration system, the employer decides the issues that may be grieved and arbitrated. Under the collective bargain- ing agreement, the union and company jointly decide; this usually includes conflicts over interpre- tation and application of provisions of the collective bargaining agreement.

9. What authority do arbitrators have to grant remedies? Under employment arbitration, the employer deter- mines the extent of the arbitrator s authority. How- ever, when there are statutory issues involved, such as gender discrimination, sexual harassment charges,

575

decision was in manifest disregard to the collective bargaining agreement, the law, or public policy. In employment arbitration, the grievant who claims employment discrimi- nation may take the case to arbitration, file a claim with an administrative agency, such as the EEOC, and/or sue in court, simultaneously or sequentially. This is based on the EEOC s position toward mandatory arbitration and the Waffle House ruling discussed earlier. Consequently, the grievant in employment arbitration has more than one bite at the apple. 88

Mandatory employment arbitration procedures have given rise to major criticisms. The Board of Governors of the NAA adopted a position that contains due process pro- tections under employment arbitration agreements. The Board s position is that an employment arbitration agreement which requires arbitration of an employee s claim arising under any law shall be enforceable only if it is adequate to vindicate the pur- pose of the law.

Adequacy in this context requires:

Employees be able to have representation of their choosing Access to prehearing discovery Reasonable accommodation on the time and location of a hearing

Adequacy also requires arbitrators:

To be selected from organizations of neutrals unless there is a postdispute agreement to do otherwise To disclose any connection with employers or any conflict of interest To have authority to determine the existence of any class claims To have authority to award any relief available under applicable law To provide a written decision which sets out the facts, resolves any material factual dispute, and draws such legal conclusion required by applying the same standards as the courts

The Court s Observation of Arbitral Deficiencies. Even the U.S. Courts have observed possible deficiencies in the mandatory employment arbitration process:

The lack of legal expertise of some arbitrators to analyze complex statutes Due process limitations with respect to discovery, examination of witnesses, remedies, compiling an official record of the hearing, and so on Insufficient communication of the reasoning behind the arbitrator s decision

As a result of criticism, court decisions, and the Due Process Protocol for arbitration and mediation of statutory claims designed by the Task Force on ADR (representatives of the most influential employment law and arbitration organizations),89 several princi- ples that provide a guide to procedural fairness have emerged (see Exhibit 11.10).

and so on, remedial authority may include awarding attorney fees, punitive and compensatory damages, interest on back pay, and so on in other words, issues normally decided by a jury. Under a collective bargaining agreement, back pay, reinstatement, and

make whole remedies are common. Interest may be paid where the parties have agreed to such pay- ments. In the federal sector, arbitrators have authority to award attorney fees and interest on back-pay awards.

576

One circuit court judge has already addressed one of the controversial issues under mandatory employment arbitration procedures: the payment of the arbitrator s fee. Chief Judge Harry T. Edwards, a distinguished scholar and a former labor arbitrator, addressed this issue in one of his decisions. Judge Edwards wrote that the judicial system is supported by government through taxes paid by citizens. Litigants do not pay judges who hear their cases, but private arbitrators do not work for free. Judge Edwards required the employer to pay the arbitrator s fee based on the fact that the employee had been forced by a condition of employment to give up his or her right to pursue his or her statutory claims in court. Therefore, Judge Edwards reasoned, a beneficiary of a federal statute (the claimant) would not have been required to pay a judge in a judicial forum and therefore should not be required to pay an arbitrator to decide the merits of his or her claim.90

Repeat Players. In the absence of a union, the employment arbitration process is usu- ally skewed against employees, particularly those who are not represented. When an employer is a repeat participant in the arbitration process, the employer has a distinct advantage over the employee who is not likely to be involved in arbitration more than

Exhibit 11.10 Guidelines to Procedural Fairness in Arbitrating Statutory Discrimination Claims

Parties knowingly and voluntarily agree to submit their claim to arbitration.

Arbitration agreement contains specific language with sufficient notice that signing the agreement represents an agreement to arbitrate all statutory employment dis- crimination claims (with inclusion of a representative list of employment discrimina- tion statutes for illustrative purposes).

Prehearing consultation addresses formulation of issues, production of evidence, witnesses lists, discovery, and application of rules of evidence.

Due process procedures provide that the employee has a right of representation of his or her choosing, adequate discovery of access to all information relevant to the employee claim, arbitrator authority to subpoena relevant information upon a specific request by one of the parties, and a reasonably timely hearing.

Impartial and competent arbitrator possesses personal qualities of honesty and integrity and discloses any prior association that might represent a potential conflict.

Joint selection of the arbitrator allows each party to have adequate information about the potential arbitrators organizational associations, biographical data, pub- lished case decisions, copies of recent decisions, and so on to avoid the advantage to the repeat player in the arbitration process.

Written opinions and awards that would include the issues decided, the findings of facts, conclusions of law, materials supplied by the parties, and information such as relevant decisions of courts and administrative agencies cited by the parties demon- strate the arbitrator s reasoning in reaching the decisions, the remedies sought, and the remedies decided.

Publication of the decisions with the consent of the prevailing party serves as a deterrent to future similar discriminatory acts.

Payment of the costs of arbitration is shared by the parties to ensure impartiality and is based on the employee s ability to pay and the relevant necessity of incurred expenses for adequate presentation of the employee s case.

SOURCE: Roger Wolters and William H. Holley, Jr., Arbitration of Statutory Employment Discrimination Claims in a Nonunion Environment: A Guide to Procedural Fairness, Employee Responsibilities and Rights Journal, 12 (3) (2000), pp. 174 175. With kind permission from Springer Science and Business Media.

CHAPTER 11 Labor and Employment Arbitration 577

once or twice in a lifetime. First, if the employer selects the arbitrator and pays the arbi- trator for his or her services, the arbitrator may feel the pressure to rule in favor of the employer in order to be selected in future cases. For all practical purposes, the employer and the arbitrator are the repeat players. Second, in the selection of the arbitrator, even when both parties participate in the selection, unrepresented employees have little infor- mation on which to base their selection. Even when an employee has legal counsel, the attorney may or may not have access to useful information about the arbitrator. In com- parison to a unionized setting, nearly all international unions and the American Federa- tion of Labor Congress of Industrial Organizations (AFL-CIO) have research staff who can obtain evaluative information about arbitrators that would be useful in selection. Third, repeat player employers have certain strategic advantages because they have an institutional memory. Employers can keep records about the disposition of prior cases of the arbitrator; the unrepresented employee has no comparable resource. Because the union has a continuous relationship with the employer through the collective bargaining agreement, the union gains an institutional memory and becomes a repeat player in the arbitration process.91

Supporters of Mandatory Employment Arbitration. Although many scholars and professional groups like the NAA, and governmental agencies, like the EEOC, have con- demned mandatory arbitration arrangements, Theodore J. St. Antoine, the former presi- dent of the National Academy of Arbitrators, believes that mandatory arbitration may be a blessing in disguise . As a practical matter, mandatory arbitration may offer persons with small monetary claims a better opportunity to secure a remedy than a traditional legal action. The EEOC is not the answer because it is underfunded and too overloaded with work to try anything other than major cases.

St. Antoine argues that arbitration is private, cheaper, faster, and more informal than court litigation which is a public forum. As a result, lawyers are more willing to assist a client in an arbitration proceeding when they would not be willing to devote the time and effort to prepare a federal court appearance. Further, without a lawyer, employees may make a reasonable presentation on their own or with the assistance of a fellow employee in a much less intimidating atmosphere of arbitration. St. Antoine fur- ther argues that if the claimant sues in court, there is no reason to believe that they would be better off than in arbitration. In fact, employees actually prevail more often in arbitration than in court. As expected, successful plaintiffs obtain larger awards from judges and juries, but as a group recover more in arbitration.92

In response to the repeat player effect, which leads to the repeat arbitrator effect, supporters of mandatory employment arbitration believe that the repeat player effect theory is based on the belief that a repeat player (the employer) chooses the same arbi- trator in several arbitration cases and therefore builds a relationship with the arbitrator, causing the arbitrator to rule in the repeat player s (the employer) favor. The research found no support for this theory. In the 200 cases studied, there were only two cases involving a second meeting between the same arbitrator and employer. On the employee side, it may also be argued that attorneys for grievants may become repeat players as more plaintiff attorneys accept employment arbitration assignments and as the number of employment arbitration cases grow.

Public Policy Implications for the Future A Comparison of Decisions by Employment Arbitrators, Labor Arbitrators, and Jurors in Employment Termination Cases. In a study of 225 employment arbitrators, 200 labor arbitrators, and 112 jurors from a federal district court, the arbitrators and for- mer jurors were asked to participate in a fairly extensive decision-making exercise that

578 PART 3 Administering the Labor Agreement

included 32 different case scenarios where an employee was challenging termination. Exhibit 11.11 highlights some of the significant differences between employment arbitra- tors, labor arbitrators, and jurors. Employment arbitrators, who usually have a manage- ment background, are usually selected solely by the employer and are less likely to rule in favor of the terminated employee. The employee has the burden of proof, which means that the employee must prove there was a violation of a company rule or policy that was written by the company. In addition, the employment arbitrator is not likely to consider mitigating circumstances, such as long service with the company, a good work record, and so on. Because the employer pays the arbitrator to serve and is selected by the employer, some critics of employment arbitration would say that the employment arbi- trator has allegiance to the employer.

In comparison, the burden of proof in discharge cases in labor arbitration rests with the employer. The general principle is that a person is innocent until proven guilty. Since the labor arbitrator is selected and paid by both parties, the labor arbitrator must have a reputation of neutrality or he or she will not be selected by both parties. In addition, the labor arbitrator may find an employee guilty of wrongdoing, but due to a good work record of considerable years may reduce the penalty from a termination to a disciplinary suspension without pay. Since the burden of proof rests with the employer and a labor arbitrator considers mitigating circumstances, the employee is more likely to receive a favorable decision from the labor arbitrator.

In between, in a jury trial, the employee has the burden to prove that the employer violated the employer s rules or policies. However, since jurors will consider mitigating cir- cumstances, they are more likely to render a favorable decision for the employee than an employment arbitrator would. Since jurors serve as a public service, they are not concerned about acceptability and receive only a small fee for their time and reimbursement for their expenses.93

Exhibit 11.11 Differences between Employment Arbitration, Labor Arbitration, and Jurors Involving an Employee Discharge

Employment Arbitration

Labor Arbitration Jurors

1. Burden of proof Employee Employer Employee

2. Acceptability Employer selects Union and employer

None

3. Professional background

Management more than likely

Neutral Public service

4. Consider mitigating circumstances

Not likely Yes Yes

5. Decision Less likely employ- ee will receive a favorable decision

More likely to receive favor- able decision when repre- sented by a union

More likely to receive favorable decision than by an employment arbitrator

6. Who pays the arbitrator

Usually the employer

Usually the union and employer pay equally

Taxpayers, a small fee for jury duty and expenses

SOURCE: Brian S. Klass, Douglas Mahony, and Hoyt N. Wheeler, Decision-making about Workplace Disputes: A Policy Capturing Study of Employment Arbitrators, Labor Arbitrators and Jurors, Industrial Relations, 45 (12) (2006), pp. 68 95.

CHAPTER 11 Labor and Employment Arbitration 579

Summary The arbitration process was little used during the period from 1865 to World War II; however, during World War II, the NWLB encouraged its widespread use. Although the increased reliance on arbitration continued after World War II, a major problem of enforcing the arbitrator s decision remained. Either party could refuse to abide by the arbitrator s decision, with uncertain con- sequences from the courts. This problem was initially approached in the Lincoln Mills decision, which pro- vided a judicial avenue for enforcement, and the Steel- workers Trilogy, three cases that established the superiority of the arbitration process over the courts in resolving industrial grievances. Subsequent Supreme Court decisions have indicated that termination of the labor agreement does not eliminate the possibility of arbitration, and injunctive relief might be granted when one party refuses to arbitrate according to griev- ance procedures established in the labor agreement.

Before the arbitration hearing, arbitrators must be selected on either an ad hoc or permanent basis. Each of these selection techniques has unique advantages depend- ing on the particular circumstances. The same can be said of prehearing and posthearing briefs. Other elements of an arbitration hearing include the grievance issue, presen- tation of witnesses for testimony and cross-examination, and presentation of separate and joint exhibits.

The hearing scene is a dramatic one; union and management officials display their skills in attempting to convince the arbitrator that their positions are cor- rect. The arbitration hearing shares many similarities with a judicial trial but differs in several ways. Perhaps the most significant differences are the informality of arbitration and the arbitrator s reliance on the common law of the shop.

Arbitrators consider the relevant provisions of the labor agreement, the intent of the parties, past practice

and, to a much lesser extent, prior arbitration awards in arriving at their decisions. Because arbitration proce- dures differ in some respects from those used in a courtroom, various jurisdictional disputes can occur over interpretations of contract provisions by arbitra- tors and the legal interpretation of federal policy. For example, a discharge case decided by the arbitrator could be subsequently considered by the EEOC or the NLRB.

Some criticisms directed toward arbitration pertain to the arbitrator s capability and ethics and potential procedural problems in the arbitration process. Certain arbitral problems, such as expense, time lag, and exces- sive formality, may be due to union and management preferences rather than any characteristics inherent in the arbitration process. Management and union offi- cials could reduce some of these problems by using expedited arbitration, new arbitrators, and grievance mediation.

Employment arbitration, which is used primarily with employees not represented by unions, was dis- cussed. With favorable rulings from the U.S. Supreme Court, a growing number of employers have imple- mented mandatory employment arbitration for new hires as well as current employees. This type of arbitra- tion requires an employee, as a condition of employ- ment, to sign an agreement that requires all future employment disputes be resolved in arbitration. Views of supporters and critics of mandatory employment arbitration were presented. Attempts to rectify these deficiencies, such as guides to procedural fairness, were presented. Anticipated problems for the future of mandatory employment arbitration were also addressed, and a comparison of decisions of employ- ment arbitrators, labor arbitrators, and jurors were provided.

Key Terms National War Labor Board (NWLB),

p. 539 Steelworkers Trilogy, p. 539 ad hoc arbitrator, p. 542

permanent arbitrator, p. 542 arbitration hearing, p. 545 common law of the shop, p. 549 parole evidence rule, p. 555

intent of the parties, p. 557 past practice, p. 558 employment arbitration, p. 571

580 PART 3 Administering the Labor Agreement

Discussion Questions

1. How did World War II and the National War Labor Board greatly expand the use of arbitration?

2. The Steelworkers Trilogy greatly enhanced the arbitrator s authority when compared with previ- ous years, yet it did not give the arbitrator final jurisdiction over certain issues. Discuss the pre- ceding statement in terms of the specific features of these judicial decisions; also consider current jurisdictional issues arbitrators face in terms of government agencies.

3. Discuss the similarities and differences between arbitration and judicial hearings with particular emphasis on the common law of the shop, admission of evidence, and the role of the arbi- trator vs. that of the judge.

4. Why are arbitrators decisions usually lengthy when one sentence could indicate who was right and wrong? Your discussion of this question should include the purposes of arbitration and its advantages, as well as disadvantages of an exten- sive arbitrator decision.

5. Discuss two decision-making guidelines used by arbitrators, furnishing specific examples (not mentioned in the text) of how these guidelines apply.

6. Cite and defend three specific methods you would use to make the typical arbitration procedure more effective. Also indicate the advantages and disadvantages of your suggestions.

7. Discuss the following: The refusal to use grievance mediation as a step prior to arbitration illustrates the stubbornness of many union and management officials.

8. After reviewing Exhibit 11.11, would you rather work as an employee in an environment of labor arbitration or employment arbitration? Why? Why not?

9. Do you believe that labor unions should use the benefits of labor arbitration as part of the union s strategy to recruit new members? Give your reasons.

Exploring the Web

Labor and Employment Arbitration

1. American Arbitration Association (AAA) (http:// www.adr.org/). AAA is a private organization which has a long his- tory and experience in ADR. AAA provides services (for a fee) to individuals and organizations who wish to resolve disputes out of court. Its Web site provides information on case administration, case filing, qualifications for an AAA neutral, AAA Rules and Procedures for employment and labor arbitration and training courses for neutrals and advocates.

2. National Academy of Arbitrators (NAA) (http:// www.naarb.org). The NAA is a not for profit honorary and profes- sional organization of approximately 650 labor and employment arbitrators in the United States and Canada. Its Web site provides information on offi- cers and committees, the constitution and by-laws, Code of Professional Responsibility and Advisory

Opinions, Policies and Guidelines on Employment Arbitrators, history of arbitration (which includes past presidential interviews which contain valuable insights on the development of labor arbitration in the United States), copies of amicus briefs filed with the U.S. Supreme Court, membership require- ments, research and education, notice of future meetings, and a retrievable database of Annual Pro- ceedings (at no charge), the best sources of labor arbitration authority in the United States and Canada.

3. Office of Arbitration Services (OAS) of the Federal Mediation and Conciliation Service (FMCS) (http:// www.fmcs.gov). The OAS provides arbitration panels and lists to labor and management customers. The OAS main- tains an arbitration roster of approximately 1,400 qualified arbitrators. During FY 2014, the OAS pro- cessed 13,300 requests for arbitrator panels and arbitration; arbitrators on the FMCS roster heard and decided 2,100 labor arbitration cases. The

CHAPTER 11 Labor and Employment Arbitration 581

Web site provides information on FMCS rules and policies, how to request an arbitrator panel, how to become an FMCS arbitrator, and arbitrator statistics

which includes awards by state, arbitrator per diem rates, average cost of arbitration, issues, and panel requests by state.

References 1. Cynthia F. Cohen and Theresa Domagalski, The

Effects of Mandatory Arbitration of Employment Discrimination Claims: Perceptions of Justice and Suggestions for Change, Employee Responsibili- ties and Rights Journal, 11(1), 1998, pp. 27 40.

2. For a detailed historical perspective of labor arbitration, see Dennis R. Nolan and Roger I. Abrams, American Labor Arbitration: The Early Years, University of Florida Law Review, 35, Summer 1983, pp. 373 421.

3. United Steelworkers of America v. American Manufacturing Company; 363 U.S. 566 567 (1960).

4. United Steelworkers of America v. Warrior and Gulf Navigation Company, 363 U.S. 582 (1960).

5. United Steelworkers of America v. Enterprise Wheel and Car Corporation, 363 U.S. 598 (1960).

6. AT&T Technologies Inc. v. Communications Workers of America, The United States Law Week, April 8, 1986, p. 4341.

7. The case is John Wiley and Sons v. Livingston (1964), discussed in Ralph S. Berger, The Col- lective Bargaining Agreement in Bankruptcy: Does the Duty to Arbitrate Survive? Labor Law Journal, 35, November 1984, pp. 385 393.

8. Nolde Brothers Inc. v. Local No. 358, Bakery and Confectionary Workers Union AFL-CIO, 430 U.S. 254 (1977). See also Irving M. Geslewitz, Case Law Development Since Nolde Brothers: When Must Post-contract Disputes Be Arbitrated? Labor Law Journal, 35, April 1984, pp. 225 238.

9. Paul F. Hodapp, The U.S. Supreme Court Rules on Duty to Arbitrate Post-contract Grievances, Labor Law Journal, 42, December 1991, pp. 827 829.

10. The Boys Market Inc. v. Retail Clerk s Union, Local 770, 398 U.S. 249, 250, 252 253 (1970). It should be noted that injunctive relief applies only when one party refuses to arbitrate issues that are subject to grievance procedures specified in the labor agreement. For additional details, see Buffalo Forge Company v. United Steelworkers of America, 428 U.S. 397 (1970).

11. Jeanette A. Davy and George W. Bohlander, Recent Findings and Practices in Grievance

Arbitration Procedures, Labor Law Journal, 43, March 1992, p. 187.

12. Nels E. Nelson and Walter J. Gershenfeld, The Appointment of Grievance Arbitrators by State and Local Agencies, Labor Law Journal, 52, Winter 2001, pp. 258 267.

13. Bureau of National Affairs Inc., Basic Patterns in Union Contracts (Washington, D.C.: Bureau of National Affairs, 1995), p. 38.

14. Delbert C. Miller and William Form, Industrial Sociology (2nd ed.) (New York: Harper & Row, 1964), p. 264.

15. Daniel F. Jennings and A. Dale Allen, Jr., Labor Arbitration Costs and Case Loads: A Longitudinal Analysis, Labor Law Journal, 41, February 1990, pp. 80 88.

16. David E. Bloom and Christopher L. Cavanagh, An Analysis of the Selection of Arbitrators,

American Economic Review, 86, June 1986, pp. 408 422; Arthur Eliot Berkeley and Susan Rawson Zacur, So You Want to Be an Arbitrator: Update of a Guide to the Perplexed, Labor Law Journal, 41, March 1990, pp. 170 174. For a thorough analysis of arbitrators backgrounds, experiences, and preferences, see Mario F. Bognanno and Charles J. Coleman, Labor Arbitration in America (New York: Praeger, 1992).

17. Clarence R. Deitsch and David A. Dilts, An Analysis of Arbitrator Characteristics and Their Effects on Decision Making in Discharge Cases, Labor Law Journal, 40, February 1989, pp. 112 116; Brian Bemmels, Gender Effects in Griev- ance Arbitration, Industrial Relations, 29, Fall 1990, pp. 513 525; Stephen M. Crow and James W. Logan, Arbitrators Characteristics and Decision-Making Records, Gender of Arbitrators and Grievants, and the Presence of Legal Counsel as Predictors of Arbitral Outcomes, Employee Responsibilities and Rights Journal, 7, 1994, pp. 169 185; Kenneth W. Thornicroft, Gender Effects in Grievance Arbitration Revisited,

582 PART 3 Administering the Labor Agreement

Labor Studies Journal, 19, Winter 1995, pp. 35 44.

18. Nels E. Nelson and Sung Min Kim, A Model of Arbitral Decision Making: Facts, Weights, and Decision Elements, Industrial Relations, 47(2), 2008, pp. 266 283.

19. Michael Marmo, Acceptability as a Factor in Grievance Arbitration, Labor Law Journal, 50, Summer 1999, pp. 97 102.

20. Bonnie G. Bogue and Katherine J. Thomson, Pocket Guide to Just Cause: Discipline and Dis- charge Arbitration, Berkeley, CA: California Pub- lic Employee relations Program, Institute for Research on Labor and Employment, University of California, 2010, pp. 48 49.

21. Matthew M. Franckiewicz, How to Win Your Arbitration Case Before the Hearing Even Starts, Labor Law Journal, 60(3), 2009, pp. 115 120.

22. For an excellent discussion on arbitrability s dimensions and implications, see Mark M. Grossman, The Question of Arbitrability (Ithaca, NY: ILR Press, 1984).

23. http://www.fmcs.gov 24. Clarence R. Deitsch and David A. Dilts, Factors

Affecting Pre-arbitral Settlement of Rights Dis- putes: Predicting the Method of Rights Dispute Resolution, Journal of Labor Research, 12, Win- ter 1986, p. 76; Richard A. Posthuma and Maris Stella Swift, Legalistic vs. Facilitative Approaches to Arbitration: Strengths and Weaknesses, Labor Law Journal, 52, Fall 2001, pp. 173 184.

25. For guidelines pertaining to an effective manage- ment or union posthearing brief, see Douglas E. Ray, On Writing the Posthearing Arbitration Brief, Arbitration Journal, 47, December 1992, pp. 58 60.

26. Matthew M. Franckiewicz, Dispute Resolution Journal, February 1999, http://www.findarticles. com.

27. Ronald W. Haughton, Running the Hearing, in Arbitration in Practice, ed. Arnold M. Zack (Ithaca, NY: ILR Press, 1984), p. 37.

28. See, for example, James B. Dworkin and Michael M. Harris, Polygraph Tests: What Labor Arbi- trators Need to Know, Arbitration Journal, 41, March 1986, pp. 23 33; Kimberly Janisch- Ramsey, Polygraphs: The Search for Truth in Arbitration Proceedings, Arbitration Journal, 41, March 1986, pp. 34 41; Herman A. Theeke and Tina M. Theeke, The Truth About Arbitrators

Treatment of Polygraph Tests, Arbitration Jour- nal, 42, December 1987, pp. 23 32; Marvin F. Hill, Jr. and Anthony Sinicropi, Evidence in Arbitration (2nd ed.) (Washington, D.C.: Bureau of National Affairs, 1987).

29. Frank Elkouri and Edna Asper Elkouri, How Arbitration Works (4th ed.) (Washington, D.C.: Bureau of National Affairs, 1985), p. 302.

30. Barry Simon, Grievance Arbitration under the Railway Labor Act, personal correspondence, February 11, 2009.

31. See, for example, Cynthia L. Gramm and Patricia A. Greenfield, Arbitral Standards in Medical Screening Grievances, Employee Responsibilities and Rights Journal, 3(3), 1990, pp. 169 184.

32. Herbert L. Marx, Jr., Who Are Labor Arbitration Opinions Written For? And Other Musing About Award Writing, Dispute Resolution Journal, 59(2), 2004, pp. 22 23.

33. Steven Starck, Arbitration Decision Writing: Why Arbitrators Err, Arbitration Journal, 38, June 1983, pp. 30 33. See also David Elliot, When the Hearing Is Over: Writing Arbitral

Awards in Plain Language, Arbitration Journal, 46, December 1991, p. 53.

34. http://www.fmcs.gov. 35. Michael H. LeRoy and Peter Feuille, Private

Justice and Public Policy: Whose Voice Prevails in Arbitration? Proceedings of the 54th Annual Meeting of the Industrial Relations Research Association (Champaign, IL: IRRA, 2002), pp. 219 221.

36. Daniel F. Jennings and A. Dale Allen, Jr., How Arbitrators View the Process of Labor Arbitra- tion: A Longitudinal Analysis, Labor Law Jour- nal, 44, Winter 1993, p. 44.

37. Stephen M. Crow and James Logan, A Tentative Decision-Making Model of the Strong and Weak Forces at Labor Arbitration, Journal of Collective Negotiations in the Public Sector, 24(2), 1995, pp. 111 120.

38. John B. LaRocco, Ambiguities in Labor Con- tracts: Where Do They Come From? Dispute Resolution Journal, 59(1), 2004, pp. 38 41.

39. The first two examples are from Allan J. Harrison, Preparing and Presenting Your Arbitration Case: A Manual for Union and Management Represen- tatives (Washington, D.C.: Bureau of National Affairs, 1979), pp. 23 24. The third example is suggested by Thomas R. Knight, Arbitration and

CHAPTER 11 Labor and Employment Arbitration 583

Contract Interpretation: Common Law v. Strict Construction, Labor Law Journal, 34, November 1983, pp. 714 726.

40. For arbitration examples of these dimensions of past practice, see Arthur Dobbelaere, Williams H. Leahy, and Jack Reardon, The Effect of Past Practice on the Arbitration of Labor Disputes, Arbitration Journal, 40, December 1985, pp. 27 43.

41. Ibid., p. 38. 42. Donald J. Petersen, No Smoking! The Arbitra-

tion of Smoking Restriction Policies, Dispute Resolution Journal, 50, January 1995, pp. 45 50.

43. William H. McPherson, Should Labor Arbitra- tors Play Follow the Leader? Arbitration Journal, 4, 1949, p. 170.

44. David Dilts, Mark Crouch, and Mashaalah Rahnama-Moghadam, Effectiveness in Griev- ance Arbitration: Are There Differences in Unions? Journal of Collective Negotiations in the Public Sector, 26(4), 1997, pp. 333 338.

45. Rafael Gely and Timothy D. Chandler, Exploring the Lumpiness of Grievance Arbitration Decision Making, Journal of Collective Negotiations in the Public Sector, Vol. 32, No. 4, 2010, pp. 287 304.

46. Harrell Alexander, Sr. v. Gardner-Denver Com- pany, 415 U.S. 60 (1974).

47. Michelle Hoyman and Lamont E. Stallworth, The Arbitration of Discrimination Grievances in

the Aftermath of Gardner-Denver, Arbitration Journal, 39, September 1984, p. 55; Karen Elwell and Peter Feuille, Arbitration Awards and Gardner-Denver Lawsuits: One Bite or Two? Industrial Relations, 23, Spring 1984, p. 295; Aubrey R. Fowler, Jr., Arbitration, the Trilogy, and Industrial Rights: Developments Since Alex- ander v. Gardner-Denver, Labor Law Journal, 36, March 1985, pp. 173 182. See also Elaine Gale Wrong, Arbitrators Awards in Cases Involving Discrimination, Labor Law Journal, 39, July 1988, pp. 411 417.

48. George M. Sullivan, Alexander v. Gardner- Denver: Staggered but Still Standing, Labor Law Journal, 50, March 1999, pp. 43 45. For a com- prehensive analysis, see Donald J. Petersen and Harvey R. Boller, Arbitral Responses to the Changing External Law of Discrimination, Labor Law Journal, 49, December 1998, pp. 1241 1253; Harvey R. Boller and Donald J. Petersen,

Mandatory Arbitration Clauses, Dispute Reso- lution Journal, 54, February 1999, pp. 56 58.

49. Wright v. Universal Maritime Service Corp., 119 S. Ct. 391 (1998).

50. Stephen L. Hayford, The Coming Third Era of Labor Arbitration, Arbitration Journal, 48, Sep- tember 1993, p. 17. See also Martha S. Weisel, The Tension between Statutory Rights and

Binding Arbitration, Labor Law Journal, 42, July 1991, pp. 766 772.

51. David P. Twomey, Tithe Supreme Court s 14 Penn Plaza, LLC v. Pyett Decision: Impact and Fairness Considerations for Collective Bargain- ing, Labor Law Journal, 61(2), 2010, pp. 55 66.

52. Hoyt N. Wheeler, Unions and the Arbitration of Statutory Rights, Perspectives on Work, 14(1/2), 2010, pp. 26 28.

53. Spielberg Manufacturing Company, 112 NLRB 1080 (1955). See John C. Truesdale, NLRB Deferral to Arbitration: Still Alive and Kicking, http://www.NLRB.gov/press/.

54. Collyer Insulated Wire and Local Union 1098, International Brotherhood of Electrical Workers, 192 NLRB 150 (August 20, 1977).

55. Curtis L. Mack and Ira P. Bernstein, NLRB Deferral to the Arbitration Process: The Arbitra- tor s Demanding Role, Arbitration Journal, 40, September 1985, pp. 33 43. For a related research effort, see Benjamin W. Wolkinson, The Impact of the Collyer Policy on Deferral: An Empirical Study, Industrial and Labor Relations Review, 38, April 1985, pp. 377 391.

56. Pat Greenfield, The NLRB s Deferral to Arbitra- tion before and after Olin: An Empirical Analy- sis, Industrial and Labor Relations Review, 42(1), 1988, pp. 34 49. See also Remarks of NLRB Chairman Gould on Deferral to Arbitration, Bureau of National Affairs Inc., Daily Labor Report, June 16, 1994, pp. E1 E3.

57. James L. Ferree, National Labor Relations Board Deferral to Arbitration, Dispute Resolution Jour- nal, 52, Summer 1997, pp. 31 35.

58. Babcock & Wilcox Construction Co., Inc. and Coletta Kim Bennett, 361 NLRB No. 132, December 15, 2014; 2015 Skills Enhancement Workshop, National Academy of Arbitrators, October 23, 2015, NLRB faculty.

59. Patricia A. Greenfield, How Do Arbitrators Treat External Law? Industrial and Labor Relations Review, 45, July 1992, p. 695.

584 PART 3 Administering the Labor Agreement

60. D.R. Horton, Inc. and Michael Cuda, 357 NLRB No. 184, January 2, 2012.

61. Decision of Supreme Court in Paperworkers v. Misco, Inc., Bureau of National Affairs, Daily Labor Report, December 1, 1987, pp. D1 D5. See also Bernard F. Ashe, Arbitration Finality and the Public-Policy Exception, Dispute Resolution Journal, 47, September 1994, pp. 22 28, 87 89.

62. Practitioners Assess Impact of Court Decisions Bolstering Finality of Labor Arbitration Awards, Bureau of National Affairs, Daily Labor Report, December 14, 1987, p. A1. For additional con- sideration of public policy intertwined with arbi- tration decisions in drug testing, see Lorynn A. Cone, Public Policies against Drug Use: Paper- workers v. Misco Inc., Labor Law Journal, 40, April 1989, pp. 243 247. See also Bernard D. Meltzer, After the Labor Arbitration Award: The Public Policy Defense, Industrial Relations Law Journal, 10(2), 1988, pp. 241 251; Robert F. Wayland, Elvis C. Stephens, and Geralyn McClure, Misco: Its Impact on Arbitration Awards, Labor Law Journal, 39, December 1988, pp. 813 819; Arthur Hamilton and Peter A. Veglahn, Public Policy Exceptions to Arbitration Awards, Labor Law Journal, 42, June 1991, pp. 366 370.

63. Court Vacates Reinstatement of Employee Charged with Sexual Abuse of Customer, Bureau of National Affairs, Daily Labor Report, March 29, 1991, pp. A4 A5. See also Reinstatement of Sexual Harasser Overturned as Public Policy Violation, Bureau of National Affairs, Inc., Daily Labor Report, October 22, 1990, pp. A8 A9.

64. Accused Sex Harasser Gains Reinstatement, Bureau of National Affairs, Daily Labor Report, April 10, 1992, pp. A1, A2. See also Thomas J. Piskorski, Reinstatement of the Sexual Harasser: The Conflict between Federal Labor Law and Title VII, Employee Relations Law Journal, 18, Spring 1993, pp. 617 623; Christie L. Roszkowski and Robert F. Wayland, Arbitration Review: Is the Public Policy against Sexual Harassment Suf- ficient Cause for Vacating an Arbitration Award? Labor Law Journal, 44, November 1993, pp. 707 717.

65. Margaret A. Jacobs, Men s Club: Riding Crop and Slurs: How Wall Street Dealt with a Sex Bias Case, Wall Street Journal, June 9, 1994, pp. A4, A6; Barbara Presley Noble, Attacking

Compulsory Arbitration, New York Times, Jan- uary 15, 1995, p. F21; Reinstatement of Alleged Sexual Harassers Does Not Violate Public Policy, Forum Told, Bureau of National Affairs, Daily Labor Report, January 10, 1994, pp. A10, A11.

66. Richard Mittenthal, Self-Interest: Arbitration s Unmentionable Consideration, Dispute Resolu- tion Journal, 47, March 1994, pp. 70 72.

67. Harry J. Dworkin, How Arbitrators Decide Cases, Labor Law Journal, 25, April 1974, p. 203.

68. Arbitrator Traces Growing Legalism as Pro- ceedings Are Modeled on Courts, Bureau of National Affairs, Daily Labor Report, June 3, 1991, p. A6; James Oldham, Arbitration and Relentless Legalization in the Workplace, in Arbitration 1990: New Perspectives on Old Issues, ed. Gladys W. Gruenberg, Proceedings at the Forty-third Annual Meeting, National Academy of Arbitrators (Washington, D.C.: Bureau of National Affairs, 1991), pp. 23 40.

69. http://www.fmcs.gov/. 70. Nels E. Nelson and A. N. M. Meshquat Uddin,

The Impact of Delay on Arbitrators Decisions in Discharge Cases, Labor Studies Journal, 23, Summer 1998, pp. 3 19.

71. Allen Ponak, Wifred Zerbe, Sarah Rose, and Corliss Olson, Using Even History Analysis to Model Delaying Grievance Arbitration, Indus- trial and Labor Relations Review, 50, October 1996, pp. 105 110.

72. Linda S. Byars, Limiting an Arbitrator s Reme- dial Power, Labor Law Journal, 48, January 1997, pp. 29 33.

73. http://www.fmcs.gov. 74. Nancy Kauffman, The Idea of Expedited Arbi-

tration Two Decades Later, Arbitration Journal, 46, September 1991, p. 35.

75. Dennis R. Nolan and Roger I. Abrams, The Future of Labor Arbitration, Labor Law Journal, 37, July 1986, pp. 441 442.

76. Richard N. Block and Hoyt Wheeler, Employ- ment Arbitration, Labor Arbitration, and Arbi- trators, Report to the National Academy of Arbitrators Board of Governors, May 4, 2009.

77. Elizabeth Hill, AAA Employment Arbitration: A Fair Forum at Low Cost, Dispute Resolution Journal, 59(2), 2003, pp. 9 15.

78. Thomas J. Piskorski and David B. Ross, Private Arbitration as the Exclusive Means of Resolving Employment-Related Disputes, Employee

CHAPTER 11 Labor and Employment Arbitration 585

Relations Law Journal, 19, Autumn 1993, p. 206; Loren K. Allison and Eric H. J. Stahlhut, Arbi- tration and the ADA: A Budding Partnership, Arbitration Journal, 48, September 1993, pp. 53 60.

79. Helen LeVan, Decisional Model for Predicting Outcomes of Arbitrated Sexual Harassment Dis- putes, Labor Law Journal, 44, April 1993, p. 231. See also Robert A. Shearer, The Impact of Employment Arbitration Agreements in Sex Dis- crimination Claims: The Trend toward Nonjudi- cial Resolution, Employee Relations Law Journal, 18, Winter 1992 1993, pp. 479 488; Stuart L. Bass, Recent Court Decisions Expand Role of Arbitration in Harassment and Other Title VII Cases, Labor Law Journal, 43, December 1992, pp. 772 779; Stuart H. Bompey and Michael P. Pappas, Is There a Better Way? Compulsory Arbitration of Employment Discrimination Claims after Gilmer, Employee Relations Law Journal, 19, Winter 1993 1994, pp. 197 216; Evan J. Spelfogel, New Trends in the Arbitration of Employment Disputes, Arbitration Journal, 48, March 1993, pp. 6 15.

80. Patricia Thomas Bittel, Arbitration: Is This Where We Were Headed? Labor Law Journal, 53, Fall 2002, pp. 130 131. See also Circuit City Stores, Inc. v. Adams, 532 U.S. 143 (2001); EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).

81. Ibid. 82. Michael H. Leroy and Peter Feuille, Short Cir-

cuiting Circuit City? Judicial Enforcement of Mandatory Employment Arbitration, in Pro- ceedings of the 55th Annual Meeting of the Industrial Relations Research Association (Champaign, IL: Industrial Relations Research Association, 2003), pp. 281.

83. Ellen J. Vargyas, Verdict on Mandatory Binding Arbitration in Employment, Dispute Resolution Journal, 52, Fall 1997, pp. 10 14.

84. Charles J. Coleman and Jose A. Vazquez, Man- datory Arbitration of Statutory Issues under Col- lective Bargaining: Austin and Its Progeny, Labor Law Journal, 48, December 1998, pp. 703 723. See also Charles J. Coleman, Invited Paper: Mandatory Arbitration of Statutory Issues: Austin, Wright, and the Future, in Arbitration 1998: The Changing World of Dispute Resolution;Proceedings of the 51st Annual Meeting of the National Academy of

Arbitrators, ed. Steven Briggs and Jay E. Grenig (Washington, D.C.: Bureau of National Affairs, Inc., 1999), pp. 134 159.

85. Theodore J. St. Antoine, Mandatory Arbitration: Something Old, Something New, Perspectives on Work, 7(2), 2004, pp. 21 22.

86. Michael H. Leroy and Peter Feuille, Short Cir- cuiting Circuit City? Judicial Enforcement of Mandatory Employment Arbitration, in Pro- ceedings of the 55th Annual Meeting of the Industrial Relations Research Association (Cham- paign, IL: Industrial Relations Research Associa- tion, 2003), pp. 27 278.

87. Hoyt N. Wheeler, Brian S. Klaas, and Douglas M. Mahoney, Workplace Justice without Unions (Kalamazoo, MI: W. E. Upjohn Institute for Employment Research, 2004), p. 16.

88. Walter J. Gershenfeld, Due Process in Employ- ment Arbitration: Differential Coverage Is Not Due Process, in Proceedings of the 57th Annual Meeting, ed. Adrienne E. Easton, (Champaign, IL: Labor and Employment Relations Association, 2005), pp. 259 269.

89. Lisa B. Bingham, Emerging Due Process Con- cerns in Employment Arbitration: A Look at Actual Cases, Labor Law Journal, 46, February 1996, pp. 108 120; Marjorie L. Icenogle and Robert A. Shearer, Emerging Due Process Stan- dards in Arbitration of Employment Discrimina- tion Disputes: New Challenges for Employers, Labor Law Journal, 48, February 1998, p. 84.

90. Morton H. Orenstein, Mandatory Arbitration: Alive and Well or Withering on the Vine? Dispute Resolution Journal, 54, August 1999, p. 86.

91. Lisa B. Bingham, Employment Arbitration: Dif- ferences between Repeat Player and Nonrepeat Payer Outcomes, Proceedings of the 49th Annual Meeting of the Industrial Relations Research Association (Madison, WI: IRRA, 1997), pp. 201 207.

92. Theordore J. St. Antoine, Mandatory Arbitra- tion: Bane or Boon? http://writ.news.findlaw. com/commentary/20000815_stantoine.html.

93. Brian S. Klaas, Douglas Mahony, and Hoyt N. Wheeler, Decision-Making about Workplace Disputes: A Policy Capturing Study of Employ- ment Arbitrators, Labor Arbitrators and Jurors, Industrial Relations, 45, 2006, pp. 68 95.

586 PART 3 Administering the Labor Agreement

CA SE

ST UD

Y

11 -1

Whether the Employer Violated the Contract by Implementing Fleet Operation Changes on or about June 18, 2014? If so, What Is the Appropriate Remedy?

Background

S & L Group produces and sells baking products. The United Drivers represents the truck drivers. The parties have a collective bargaining agreement effective from March 18, 2014 until March 20, 2018.

This matter of arbitration has as its origin the fol- lowing Grievance filed by Aaron Presley on June 30, 2014:

On June 18, 2014, the Employer unilaterally put into effect changes in the driver s wages, hours and working conditions by adopting what the Employer described as Fleet Operational Changes . The operational changes will be implementing on June 18, 2014 are:

Top end speed on the tractors will be set at 65 MPH Drivers will be required to pick up their tractors at the facility at the time of dispatch and upon com- pletion of the trips for the week, the tractors will be returned to the plant and drivers clock out. The driver dispatch documents will include a set of trip route documents. The drivers will be expected to travel the routes as directed in the documents. Any variance will need to be communicated to the dispatcher. All trips will be monitored. Following the comple- tion of the set of deliveries, the dispatcher will print the data collected and attach it to the documents the drivers submit to the dispatch office.

The Employer has refused to bargain with the Union over these changes as required under the National Labor Relations Act and the Recognition provision of the collective bargaining agreement. Article 1 of the collective bargaining agreement requires that all conditions of employment relating to wages, hours of work, and overtime differentials shall be maintained at not less than the highest standards of the Com- pany in effect at the signing of the Agreement. The changes made by the Employer have adversely impacted the drivers wages and hours of work in violation of Article 34. Article 5 of the Agreement

gives the Employer the right to make certain changes with respect to the drivers working conditions; how- ever, it is prohibited from doing so where the changes are used for the purpose of discriminating against any employee or otherwise in violation of the specific terms of this Agreement. These changes violate past practice and result in a substantial reduction in pay of the drivers and have an adverse impact on their hours of work in violation of Articles 1, 13, 26, 32, and 34 of the Agreement.

The remedy requested:

Rescind all of the changes made on June 18, 2014 and revert back to the conditions that existed prior to that date. Make all bargaining unit members whole because of the violations of the collective bar- gaining agreement.

The Company response was:

The Company denies that it has violated the agree- ment therefore the grievance is denied. If you do not agree with this decision, the appropriate Company representative will be happy to meet with you, in accordance with our collective bargaining agree- ment, to discuss the matter.

The Union appealed the Grievance to arbitration.

Relevant Provisions of the Agreement

Article 5: Management Rights The management of the Company and direction of the truck drivers, including but not limited to the maintenance of discipline and efficiency of employees; to use common carriers and/or casual drivers as the Company deems best to meet the customer require- ments and delivery needs in situations where no full- time drivers are physically and legally available to complete the work at the required time; provided that such will not be used for the purpose of discrim- ination against any employee or be otherwise in viola- tion of the specific terms enumerated in this Agreement. All rights that the Company has had in the past and those which are inherent in the

CHAPTER 11 Labor and Employment Arbitration 587

Company, except as modified by applicable Federal and State laws and the terms of this Agreement, are retained solely by the Company.

Article 13: Responsibilities of the Parties Each of the parties hereto acknowledges the rights and responsibilities under this Agreement. The Union recog- nizes the obligation imposed upon it as the exclusive bargaining agent of the employees, and realizes that in order to provide maximum opportunities for good working conditions and good wages, the Company must operate efficiently and at the lowest possible cost consistent with fair working conditions. The Union agrees to cooperate with the Company with attaining a fair days work on the part of its members in the intro- duction of new methods; and promotion of efficiency; in eliminating waste; in conserving materials, supplies, and equipment; in improving the quality of workmanship; in preventing accidents; discouraging absenteeism and strengthening good will and mutual respect between the Company, the Employees, and the Union.

Article 18: Arbitration Section 2: The arbitrator shall not have the power to add to, subtract from, or modify any of the terms of this contract. The decision of the arbitrator shall be final and binding upon parties and shall be rendered within thirty (30) days following the hearing.

Article 34: Maintenance of Standards The Company agrees that all conditions of employ- ment relating to wages, hours of work, and overtime differentials shall be maintained at not less than the highest standards of the Company in effect at the time of the signing of this Agreement and the conditions of employment shall be improved wherever specific pro- visions for improvement are made elsewhere in this Agreement.

Appendix A This appendix inclusive of Change in Dispatch Loca- tion letter dated February 24, 2014 as a Letter of Understanding.

2014 2015 2016 $ $ $

Mileage Year 1 Year 2 Year 3 Single Man $0.3935 $0.4015 $0.4090 Per Mile Double Man

$0.4885 $0.4965 $0.5040 Per Mile

Positions of the Parties The Union: The Union stated that it has represented the drivers of the College Park plant since 1973. A number of differ- ent employers have owned this plant during this period of time and have been signatory to collective bargain- ing agreements. United Drivers have delivered the product produced at the plant during the entire period of time that the Union has been the drivers represen- tative. There were approximately 28 drivers in the unit. The evidence shows that all but one of the drivers who works in the unit are over the road drivers, and they are primarily paid based on mileage (approximately 90 percent of the drivers pay is based on mileage). The methods of compensation for the drivers are set out in Appendix A of the Agreement.

In the past, the drivers have been permitted to take whatever route they chose to their destinations. Up until the current negotiations, the Company has not specified or prescribed routes for the unit drivers. Up until these negotiations, the only restriction with respect to the speed the drivers were permitted to drive their trucks was that they could not exceed the posted speed limit for the area in which they were driv- ing and/or 70 miles per hour.

The Union and Management began negotiations for a new Collective Bargaining Agreement shortly after the initial contract expiration date. At the bargaining session on January 13, 2013, Jim McBride, Chief Negotiator for S & L, advised the Union that S & L had adopted the Smart Way Program that the Company was going to put in place for the unit drivers and the facility and that Larry Tate would explain the program. Larry Tate, who is in charge of Transportation for the facility, advised the Union negotiators that under the Employer s Smart Way Program, the maximum speed limit the dri- vers would be permitted to drive was 65 miles per hour. He also said that S & L was studying and considering a 62 mile per hour speed limit.

Tate stated that the drivers would no longer be permitted to carry their trucks home and that S & L would be using the PC miler 18 computer program to calculate the drivers pay. Tate stated that S & L would distribute routes per PC miler 18 and drivers would be paid based on the mileage specified by PC miler 18 and not hub miles or actual miles driven. Tate stated that, if the drivers had a situation in which they needed to deviate from the prescribed route, they would be required to contact the dispatcher for approval of any change in routing. Tate advised the Union that S & L

588 PART 3 Administering the Labor Agreement

would be giving the Union in writing all of the fleet operation changes in the near future and the changes would go into effect on June 11, 2014.

After a break, the S & L negotiators returned to the table and stated that the Company had decided not to tie driver pay to the PC miler 18 as previously stated. The Union was advised that the drivers would continue to be paid by hub miles or actual miles driven. S & L negotiators stated that S & L would be putting gover- nors on the trucks that would actually turn the trucks down to a maximum speed of 65 miles per hour and that was the speed that the driver could not exceed.

The Union asked the S & L negotiators questions and gave suggestions as to how the top end speed issue could be dealt with. S & L Negotiator Jim McBride told the Union that Employer would listen to the Union s suggestions; however, S & L would not bargain over the issue of the maximum speed of the vehicles. According to McBride, the subject of the speed of the vehicles was not a mandatory subject of bargaining and S & L would not bargain over this issue.

The Union negotiators advised the S & L negotia- tors that they would give the Company written propo- sals on the proposed fleet operations changes and S & L Negotiator McBride restated that S & L would not bar- gain over these issues.

On May 20, 2014, Assistant Business Agent Wil- liam Ikerd received an e-mail from Larry Tate outlining the operational changes that the Company was imple- menting. The implementation date was moved back to June 18, 2014.

That e-mail outlined the changes in the fleet oper- ational changes (listed above in the Grievance).

On May 24, 2014, William Ikerd sent a letter wherein he responded to Tate s May 20 e-mail and the statements made by the S & L negotiators in bar- gaining. In this communication, Garmon reiterated the Union s position that the maximum speed was a man- datory subject of bargaining.

On June 4, 2014, the Union gave S & L a written proposal wherein the Union objected to the proposed changes. The Union advised the S & L negotiators that reducing the maximum speed of the vehicles had the effect of reducing the drivers pay by 8 percent. Local President Ray Brown explained that, under the announced new operations changes, it would take the drivers more time to make the same amount of money. He explained that, because DOT rules limited the num- ber of hours that the drivers can drive each day, the limitation placed on their speed had an adverse impact

on the earnings of the drivers. Brown argued to the Employer that reducing the speed from 70, which is the speed limit on most interstate highways to 65, is a 8 percent cut in pay and would cost the drivers a fur- ther reduction in pay when they were unable to return to the plant in time to get their next day s dispatch due to DOT hours of operations rules. The S & L negotia- tors only response to the Union s arguments and pro- posals on the reduction in the top end speed was that they would not bargain over the speed limit issue. The Union claimed on June 18, 2014 S & L put in place all the changes outlined in Tate s May 20, 2014 e-mail.

The Union argued that the evidence shows that the primary portion (approximately 90%) of the drivers work time is spent driving. A substantial part of the drivers work time is spent in driving on highways where the maximum lawful speed limit is 70 miles per hour. The maximum speed that these over- the-road drivers can operate their trucks has a direct and substantial impact on these drivers hours of work and their entire working experience.

Under the newly revised rules, drivers spend four additional hours per week at work due to the increased driving time associated with S & L s implementation of the 65 mile per hour maximum and/or top end speed.

On the date on which this collective bargaining agreement was signed, the maximum speed authorized for the drivers was 70 miles per hour or the posted speed limit. Accordingly, the Maintenance of Standards provision mandates and explicitly requires S & L to maintain the 70 miles per hour top end speed subject to the posted speed limit of the driving areas involved. This condition of employment was in effect at the time of the execution of this agreement. S & L violated the Maintenance of Standards provision and the contract by decreasing the top end speed to 65 miles per hour and the Company is continuing to violate the contract to this date.

S & L asserted that the Management Rights provi- sion of the contract supersedes the Maintenance of Standards provision as to the top end speed issue and S & L has the right under the Management Rights pro- vision to decrease the maximum speed of the vehicles. According to the Employer s position, the speed of the vehicles has an impact on such issues as efficiency, safety, and cost savings. Under the Employer s position, these types of matters are within its exclusive province of the Employer. The problem with this argument is that the Management Rights provision of the contract has the following proviso:

CHAPTER 11 Labor and Employment Arbitration 589

provided that such will not be used for the purpose of discrimination against any employee or other- wise in violation of the specific terms enumerated in this Agreement. The reduction in the top end speed violated an

express provision of this contact, the Maintenance of Standards provision. The Maintenance of Standards pro- vision trumps the Management Rights provision with respect to this dispute, not the reverse. The Management Rights provision restricts the employer s right to reduce the top end speed by stating the Company shall endeavor to make the maximum use of its full-time employees. S & L is not making the maximum use of its full-time drivers if it limits their mileage and then turns around and gives part of their work to subcontractors.

Article 13 of the contract was cited by the Com- pany as one of the bases for S & L s reduction in the top end speed. There is the statement in that provision of the contract that the Company must operate effi- ciently and at the lowest possible cost. That language is conditioned on the phrase consistent with fair working conditions. The Union submits that S & L s unilateral action in changing the top end speed during the term of the contract and refusing to bargain over this issue is not consistent with that commitment. It is not fair working conditions for the Employer to impose unilaterally a working condition on the drivers that causes a significant increase in their work hours with- out some type of increase in pay; time is money. The drivers time certainly has some value. The drivers have had their time at work and driving time increased with no increase in their compensation.

The Union submitted that the clear and explicit language of the collective bargaining agreement, specif- ically the Maintenance of Standards provision, prohi- bits S & L from decreasing the top end speed of the trucks during the life of the contract. By making this change, S & L violated the contract and continues to violate the contract at the present time.

As remedy, the Union contends that the Arbitrator should order S & L to increase the top end vehicle speed to 70 miles per hour or the posted speed limit consistent with the conditions that existed at the time of the execution of the contract. The Union asks the Arbitrator to award pay to the drivers for the added time that they have had to spend driving due to the increase in their hours of work.

The Union argued that S & L has clearly saved money due to the lowering of the top end speed and S & L saved this money by violating the Maintenance

of Standards provision of the contract. The Union con- tends S & L should not benefit from its violation of the contract, and the Arbitrator should order S & L to pay the drivers for their increased work time based on the formula specified above.

The Company: The Company stated that while the changes con-

tains four specific operational changes, the Union chal- lenged only the program s setting of the top end speed on Company trucks at 65 miles per hour.

The Company stated that the current Agreement was effective from March 18, 2014 through March 20, 2018.

The Company stated that, as early as January or February 2014, Tate discussed the possibility of a change to the top end speed of the Company s trucks with the entire transportation group. Tate specifically discussed a potential change in the top end speed with Union Steward Presley. During these discussions, Tate noted that a reduction in the top end speed could yield cost savings with respect to safety, fuel consumption, and insurance costs. Following these discussions, Tate surveyed other major carriers in the transportation industry. Each of these outfits confirmed that they were utilizing a top end speed between 60 and 65 miles per hour. None of these units, by contrast, was utilizing a top end speed in excess of 65 miles.

Tate reviewed a publication of the Transportation Research Board. This study, known as the Commercial Truck and Bus Safety Synthesis Program, concluded that safety, fuel efficiency, and insurance costs improve dramatically where trucks are set up with a top end speed of 65 miles per hour.

The Company for some time has been engaged in a corporate-wide initiative to reduce carbon emissions associated with its overall operations. This initiative is not limited to transportation operations but, rather, applies to all aspects of the Company s operations. With respect to transportation specifically, the Com- pany attempted to comply with governmental Smart- Way Standards which limits the top end speed of trucks to 65 miles per hour.

The Company holds all common carriers operating out of the Company s plant to SmartWay standards, including the 65 mile per hour limitations. As Tate explained, the Company eliminates common carriers who fail to comply with SmartWay guidelines.

On May 13, 2014, Company spokespersons McBride and Tate informed the Union that the Com- pany intended to implement various operational changes at the facility. The operational changes

590 PART 3 Administering the Labor Agreement

included reducing the top speed on the truck governors from 70 miles per hour to 65 miles per hour. During this meeting, the Company specifically informed the Union of the rationale for the change in the top end speed. Therefore, the Company noted that the reduc- tion in top end speed sought to improve fuel efficiency, safety and insurance costs. The Company noted that the 65 mile per hour standard already applied to all common carriers operating out of plant.

On May 20, 2014, the Company forwarded the Union a written summary of the operational changes. The summary noted that the operational changes would take effect on June 18, 2014.

On May 24, 2014, the Union forwarded a letter to the Company opposing the change in the top end speed for Company trucks. The Union s letter con- tended that the Company s institution of the change constituted an unlawful refusal to bargain.

The Union raised the top end speed issue during a June 4, 2014 bargaining session. During that meeting, the Union offered a counterproposal which the max- imum speed of the trucks at the lawful speed for the area traveled. The Company responded to the Union s proposal by reiterating that the operational changes already were permissible under existing contract language.

The Company instituted the 65 mile per hour lim- itation on June 18, 2014. Following the change, the Company completed a fuel consumption study cover- ing all drivers. The study reveals that the aggregate miles per gallon for the fleet ranged from 5.46 to 5.98 for the six months immediately preceding institution of the 65 mile per hour standard. For the three months following the change, the aggregate miles per gallon ranged from 6.50 to 6.60. The fuel efficiency improve- ment related to the 65 mile per hour standard is very substantial. The 65 miles per hour standard had little, if any, impact on the earnings of the drivers. A driver s workday includes duties and functions other than

time behind the wheel. The drivers make deliveries to Company facilities and customers and, for this reason, the drivers workday includes wait time associated with deliveries. Approximately 40 percent of the driving time completed by drivers involves roads with speed limits well under 65 miles per hour.

The drivers actually experienced a slight wage increase in average weekly earnings following the insti- tution of the 65 miles per hour standard. During the 15 weeks immediately preceding the change, the drivers averaged weekly earnings of $1,356. In the 15 weeks

following the implementation of the 65 miles per hour limitation, average weekly earnings increased one dollar ($1) to $1,357. The Grievance alleged a sub- stantial reduction in pay and an adverse impact on hours of work associated with the miles per hour limitation.

The Company argued that the Union has not met its burden of proof. The Union has the burden of prov- ing that the Company violated the Agreement. This burden requires the moving party to prove by a pre- ponderance of the evidence that the contract was brea- ched. This burden of proof really means that the party which has the burden must produce more evidence than the party which does not have the burden. There exists a strong presumption of contract compli- ance that the grieving party must overcome before it can prevail. The Company claimed that the Collective Bargaining Agreement clearly and unambiguously jus- tifies the Company s actions.

The Company instituted the 65 miles per hour standard to achieve cost savings associated with fuel consumption and safety. The Company did so only after a thorough review of industry standards. The 65 miles per hour standard comports with government and environmental guidelines that the Company strictly imposes on both itself and third party common carriers with which it does business. The 65 miles per hour limitation clearly must be deemed an efficiency standard related to delivery methods and fuel conser- vation. On each of these fronts, the Company clearly retains the contractual right to institute operational changes.

First, Article 5: Management Rights provision clearly reserves to the Company all rights related to the efficiency of employees. The 65 miles per hour change directly and clearly relates to the efficiencies and delivery schedules/methods covered by the Man- agement Rights clause.

Second, Article 13 s Responsibilities of the Parties clause speaks directly to issues of efficiency and conservation. The clause compels the Union to cooperate with the promotion of efficiency and

the conserve[ation] of materials. It is undisputed that the 65 miles per hour operational change yielded very substantial savings related to fuel conservation.

These efficiencies are the very sort of new methods covered by Article 13.

The Company argued that the Union s reliance on Article 34 s maintenance of standards provisions is misplaced. The operational change instituted by the

CHAPTER 11 Labor and Employment Arbitration 591

Company clearly was driven by efficiency and conser- vation concerns. Nevertheless, the Union s arguments attempted to recast the 65 miles per hour standard as a wage reduction or hours increase. The Union s

position fails. Article 34 s Maintenance of Standards provision

does not foreclose all Company actions related to any arguable condition of employment. Article 34 states that only employment conditions specifically related to wages, hours of work, and overtime differentials shall be maintained.

A driver s delivery schedule includes, and always has included, both drive time and wait/delivery time. The allotted drive time scheduling estimate never exceeds 57 miles per hour, even on an interstate high- way. For these reasons, the 65 miles per hour standard has not had, and does not have, any impact whatsoever on drivers wages. Absent such an impact, the Union s reliance on Article 34 fails.

The problem with the Union s position is that Article 34 does not speak to driving time. Article 34 requires a correlation with all hours of workwhether spent driving or not. As Tate explained, the 65 miles per hour standard has no impact whatsoever on a dri- ver s total hours of work or the workday. Clearly, there has been no impact on the drivers hours of work, as required by Article 34. At most, any impact has been limited to the driver s hours of driving.

The Union contends that a driver could exceed the DOT s 11 hour maximum for permissible driving time as a result of the 65 miles per hour limitation. This

argument ignores Company scheduling protocols, wait time, refueling time, and a host of other realities applicable to the drivers employment. The Union s position fails because there is absolutely no evidence that any driver exceeded the 11 hour limitation as a result of the Company s actions.

The Company concluded:

The 65 miles per hour limitation falls squarely within the Company s clear, existing contractual rights. The change had no impact on wages or hours of work. However, the action clearly had and continues to have a positive impact on effi- ciency safety and costs.

Therefore, based on the foregoing facts, argu- ments and authorities, the Company respectfully submits that the grievance lacks merit, and should be dismissed in its entirety.

Questions 1. What is the appropriate level of proof? 2. Which party bears the burden of proof? 3. Could this matter be subject matter under the

jurisdiction of the NLRB? 4. Should the arbitrator consider the Company s

attempt to bargain over the reduction to 65 miles per hour?

5. You be the arbitrator and decide the outcome. Give your reasoning.

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Issue: Did the Company Violate the Collective Bargaining Agreement When It Reduced the Hours of Full-Time Employees to Less than 35 Hours per Week as This Action Relates to the NLRB Charge?

Background

Roe Services, Inc. is a federal government contractor for food services. The Government Employees Union (GEU) represents the food service and custodial or maintenance employees. GEU has represented the food service employees over at the course of more than 25 years through a series of federal contractors. The GEU and Roe Services signed a Collective

Bargaining Agreement for the period October 12, 2012 to September 30, 2016.

The Grievance in this matter was Company is con- verting all fulltime employees to part time.

Mr. Bob Pain, President, GEU, wrote the following letter to Mr. Joe Roe, President, Roe Services, Inc.:

The Company informed the Union that on Septem- ber 1, 2015 it will put up a new schedule that

592 PART 3 Administering the Labor Agreement

contains only part time schedules with the exception of the Shop Steward s position which will remain fulltime. I was going to wait until you posted this schedule to file the grievance but I have chosen to file the grievance in advance of your illegal action in an attempt to sway you away from such drastic action. You bid your government contract with full- time employees and their benefit packages in your direct labor cost, you bridged the then existing col- lective bargaining agreement with fulltime employ- ees, you even negotiated a new CBA less than one year ago with fulltime employees in it so why are you now choosing to convert the fulltime employees to part-time? The CBA clearly defines fulltime and part-time employees with the clear and unambigu- ous position that the workforce is made up of both types of employees. Part-time employees serve two basic purposes; one is to backfill and replace full- time employees who are out on various types of absences and two, they fill in on the weekends and shifts of less than 3 hours. Because of the operating hours of the various galleys and the need to pro- vided 365 day service the Union has put up with the use of part-time employees in an effort to get along with the Company and in an understanding of what the customer s wants and needs are. This tolerance will diminish greatly if Company is deter- mined the follow through on this illegal action.

Article 6 Management rights states that the Company has the right to establish new jobs, abol- ish or change existing jobs, increase or decrease the number of jobs. . . whereas jobs are those that exist in the CBA currently or new job classifications negotiated between the Union and the Company at some point in the future. The Company does not have the right to change an employee s classifi- cation of fulltime to part-time at will. There is a CBA in place that defines clearly how those types of actions are to take place. In fact, many sections of the CBA are written specifically for that very purpose. A job is not a classification but a specific set of parameters, scope of work, to be performed by the two types of employees classified by the CBA as fulltime or part-time. Article 12, Section 2 defines the two classifications.

Article 29 Part-Time employees states in Sec- tion 2 that Part-time employees will have a senior- ity system within the part-time group. The seniority will be based on the part-time seniority date. By converting the fulltime employees to part-time you

will be making those who hold the most seniority employees with the least seniority. That loss of seniority will affect them in shift bids, overtime, extra time, and vacation preference. These employ- ees have worked here for more than twenty years and most have been in longer than twenty-five years working for wages you and I would not. The loss of medical benefits will be devastating. If you then decide a RIF (reduction in force) is needed these will be the first employees to go but I am sure you already know that.

Article 14 Sections 1 and 2 state the work week shall consist of five work days of eights hours

each. That means the work week for the employee will be 40 hours per week. There can be no other interpretation of that language. You may have day and night shifts but the CBA clearly shows that the work day will be eight hours five days a week. You have been in violation of that article for some time. It also states that the hours may be adjusted as agreed on by the parties. We certainly do not agree with this change and this grievance is notice that we do not agree with any change from eight hours a day five days a week.

The Company has no rights that can be found in the CBA to take this extreme action and the Union must demand that the Company cease its intentions to do so. These actions in and of them- selves clearly constitutes an Unfair Labor Practice.

The Company is in violation of the National Labor Relations Act and the CBA under Articles 6 12, 14 and those other articles as may apply.

The Union demands are: Cease and desist from committing an Unfair Labor Practice and violating the CBA mainly Article 6, 12, 14 and those other articles as may apply.

Mr. Roe responded:

We agree that Article 6 of our CBA clearly states that it is the Company s right to establish new jobs, abolish or change existing jobs, increase or decrease the number of jobs and employees to schedule and assign work to be performed . We do not agree with your statement that this Article does not give the Company the unilateral right to change an employee s classification from full-time to part- time. We believe that the management rights stated above, agreed to by the Union in prior CBA s as well as the current one, clearly gives us this right as part of our right to schedule and assign work.

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We agree that the CBA recognizes two job classifi- cations for seniority and other purposes, full-time and part-time, at Article 12, Section 2, Article 18, and Article 29.

Pursuant to these Articles, we plan to publish a proposed schedule on or about September 1, 2015 that would go into effect on October 1, 2015. Under this proposed schedule, there would be no positions that would regularly work more than 35 hours in a given week, so all employees would be considered part-time pursuant to Article 18, Section 1. This would allow employees to bid on the shifts as per our prior practice under Article 9, Section 4. Since current full-time employees would be bidding on shifts defined as part-time in the contract, we would agree to allow full-time employees to have the right to bump any part-time employee in his/ her classification and take the part-time position, similar to the procedure set out for reductions of force in Article 12, Section 3. Under this procedure, the current Grievant, has second seniority in the work force, and accordingly she will be offered the second choice of shift lead schedules in the Septem- ber shift bid. By going to part-time scheduling, we hope to avoid any reductions of force under Article 12, Section 3.

We do not agree that Article 14 limits the scope of our management right in Article 6 to schedule and assign work. Article 14 only states that the workweek shall consist of seven days from Sunday to Saturday. Only the regular weekly work sched- ule is described as five workdays of eight hours each and that does not limit the ability to change the work schedule under Article 6. This is supported by Article 14, Section 6, which states that Changes in hours or assignments to shifts may be made whenever necessary.

While we are aware that this schedule change may adversely impact the seven current full-time employees to some extent, we must deny this griev- ance at Step Two, and decline to agree to your demand that we cease and desist from publishing the proposed schedule. That does not mean that we are unwilling to discuss the effects of this change.

As you are aware, under Article 24, alleged vio- lations of Article 6 are not considered grievances. We believe that your grievance involves a dispute over the scope of Article 6. While we are willing to arbi- trate this question within the current procedures of

Article 25, we expressly do not waive any rights under Article 6 by proceeding to arbitrate, and we reserve the right to assert at the arbitration that your demand we cease and desist from proceeding with the planned change would itself be a violation of our rights under Article 6.

On October 28, 2015, the Union filed the following unfair labor practice charge:

On or about July 29, 2015, the Employer announced its decision to convert full-time employees to part- time employees, without prior notice or affording the Union an opportunity to bargain, regarding the decision or the effects of this decision, which relates to wages, hours, and other terms and condi- tions of employment.

On or about October 1, 2015, the Employer unilaterally implemented its decision to convert all full-time employees to part-time employees, without prior notice or affording the Union an opportunity to bargain, regarding the decision or the effects of this decision, which relates to wages, hours, and other terms and conditions of employment.

On November 26, 2015, the Regional Director of the National Labor Relations Board wrote the following to the Company and Union:

The Region has carefully considered the charge alleging that Roe Services, Inc. violated the National Labor Relations Act. As explained below, I have decided that further proceedings on the charge should be handled in accordance with the deferral policy of the National Labor Relations Board as set forth in Collyer Insulated Wire, 192 NLRB 837 (1971), and United Technologies Corp., 268 NLRB 557 (1984). This letter explains that deferral policy, the reasons for my decision to defer further proces- sing of the charge, and the Charging Party s right to appeal my decision.

The Grievance was appealed to arbitration.

Relevant Provisions of the Collective Bargaining Agreement

Article 6 Management Rights The management of the Company and the direction of its working forces including, but not limited to, the rights to determine whether to establish new jobs, abol- ish or change existing jobs, increase or decrease the

594 PART 3 Administering the Labor Agreement

number of jobs and employees, change materials, pro- cesses, products, equipment, and operations, shall be vested exclusively in the Company. Subject to the pro- visions of this Agreement, the Company shall have the right to schedule and assign work to be performed and the right to hire and rehire employees, discipline or discharge for any cause not in violation of this Agree- ment, transfer or layoff of employees because of lack of work other legitimate reasons. The Company reserves and retains in full and completely any and all manage- ment rights, prerogatives and privileges except only as specifically limited by this Agreement, or by applicable federal, state and local laws.

Article 12 Seniority Section 2: Seniority shall commence with the date of employment on the payroll of the Company under this Agreement in any classification hereunder. For seniority, there are two classes, full-time and part- time. If more than one person has the same seniority date, the person with the highest last four digits of their social security number will be senior.

Section 3: If a reduction in force is necessary, the junior employees in the classification performing the type of work being reduced shall be laid off. If a full time employee is laid off due to a reduction in force, that employee will have the right to bump the junior part-time employee in his or her classification and take the part-time position. The full-time employee will have recall rights to full-time for one year following his or her reduction to part-time status. If the full- time employee does not desire a part-time position, he or she will have recall/rehire rights in accordance with Section 4.

Section 4: Seniority rights of an employee, who, on the date they are laid off, had less than one (1) year of service under this Agreement, shall terminate with no recall/rehire rights. Seniority rights of an employee, who, on the date of their layoff, has one (1) year or more of service under this Agreement, shall be placed on a recall list, based on seniority, for the next twelve (12) months.

Section 5: Recall after a layoff shall be in accor- dance with the seniority of the employees laid off to the extent that they are qualified. The Company shall send a notice of rehiring by certified mail to the last known address on file, and if the employee fails to report to work within ten (10) calendar days after reg- istry date of recall letter, he or she shall lose all senior- ity rights .

Section 7: Before any new employee is hired in any labor classification, employees of that same employer covered by this Agreement shall be given an opportu- nity to qualify for such job openings in accordance with their seniority. All job openings in all labor clas- sifications shall be posted conspicuously for five (5) days. (Reposting after sixty (60) calendar days if not filled.) Any employee wishing to fill a job opening shall notify the Company in writing within the pre- scribed time limits listed above. The senior qualified employee shall be awarded the opening. This clause will be administered by each Company, which is party hereto, and this clause is only effective as to an employee s particular employer.

Article 14 Working Week Section 1: The work week shall consist of seven (7) days beginning immediately after 0001 on Sunday and end- ing at 2400 hours the following Saturday. The regular weekly work schedule shall consist of five (5) workdays of eight (8) hours each, exclusive meal periods, in the work week. Employees shall be paid twice monthly. Hours of shift other than eight (8) may be adjusted as agreed upon between the parties. In the event a dispute arises concerning the length of the workday as it relates to lunch periods, the Company may implement its requirement if agreement cannot be reached and the Union is free to bring the issue forth under the griev- ance procedure.

Section 2: The normal work week shall consist of seven (7) days beginning after 0001 on Sunday and ending at 2400 hours the following Saturday. The reg- ular weekly work schedule shall consist of five (5) work days of eight (8) hours each, exclusive of meal periods, in his or her work week. Pay periods shall begin on a specific day and employees shall be paid twice monthly.

Section 3: Fulltime employees will be given a per- manent schedule that includes two (2) consecutive days off as dictated by the Navy Contract while part-time employees will be flexible as contemplated in Article 29 of this agreement. Whenever possible, Company agrees to give part time employees two (2) consecutive days off each week. Additionally, the work week will be scheduled so that the most senior part time employee is scheduled for hours that are equal to, or more than, all part time employees with less seniority.

Section 4: Where employees are required to main- tain continuous operation of departments or assign- ments, days off may be fixed or rotated consistent with the requirements of the service. The Company

CHAPTER 11 Labor and Employment Arbitration 595

will make every reasonable effort to arrange work sche- dules so that a maximum number of employees will be off duty on Saturdays and Sundays consistent with operational requirements.

Section 5: All time worked in continuous tour of duty, including overtime, shall be considered as work performed on the workday within which the tour of duty is started.

Section 6: Changes in hours or assignments to shifts may be made whenever necessary. Except in emergency, five (5) days notice shall be given in advance of such changes.

Section 7: In the establishment or changing of the starting time for the commencement of shifts, the Company will consider among other items, the desires of the employees involved .

Section 9: Any full-time employee hereunder who is required to report for a regular tour of duty without being given at least seven and one-half (7½) hours off after the completion of the previous regularly sched- uled tour of duty, including overtime shall be paid at the applicable overtime rate for all time worked during the second regular tour of duty.

Article 18 Welfare Package Section 1: Health and Welfare: The Company agrees to pay for each of its fulltime employees One Thousand Dollars ($1000.00) per month for a welfare package effec- tive October 1, 2012. Payment will be made to the Union Health and Welfare Plan located in Baltimore, MD as agreed. Fulltime employees for the purpose of this article are defined as employees who are regularly scheduled to work thirty-five (35) hours or more per week. All other employees are considered part-time employees. The Union will make payments from this welfare package as follows in subparagraph (a):

(a) From this amount the Union will pay for hospi- tal, dental, vision, Life, AD&D, and short-term disability.

Section 2: Pension: The Company agrees to pay $0.50 per hour worked for each of its fulltime employ- ees to the Union Retirement and Severance Trust Fund located in Baltimore, MD.

Section 3: Management of Funds: The Health Plan and the Retirement Fund are currently managed by Benefits Administration Corporation (BAC) located in Baltimore, MD. Payments are to be made directly to BAC and the plans will be subject to the Board of Trus- tees and governed by the Employees Retirement Income Security Act commonly known as ERISA.

Article 29 Part-Time Employees Section 1: All articles of this agreement shall apply to part-time employees except Articles 18, Section 1 and 2 or as otherwise restricted by this Article 29. In case of conflict, Article 29 shall prevail.

Section 2: Part-time employees will have a senior- ity system within the part-time employee group. The seniority system will be based on the part-time senior- ity date.

Section 3: A part-time employee will enjoy the same displaced rights, reduction-in-force procedure applicable to full-time employees. Any employee bumping can only do so laterally or downward, must be qualified for the job he or she is bumping into, and must be senior by his or her part-time seniority date to the person bumped. Part-time employees terminated because of a RIF and who have ten years or more of continuous service will be entitled to severance pay of two weeks at twenty-five (25) hours per week.

Section 4: Part-time employees who obtain a full- time job with the Company will have a new seniority date assigned which will coincide with their change in status .

Section 7: Part-time employees are those personnel who have been hired for a work schedule of less than 35 hours per week .

Section 11: The Company will pay all part-time employees the prevailing Health & Welfare rate of $ 2.56 as specified in the current Department of Labor Determination for Camden County. Part-time employ- ees will receive pro-rated vacation, with the pro-rated amount based on actual number of hours worked. Part-time employees will be credited with the pro- rated vacation hours annually on the employee s anniversary.

Questions 1. What is meant by the Unfair Labor Practice charge

being deferred to arbitration? Is the arbitrator s decision final and binding?

2. What influence do you believe the enactment of the Affordable Care Act had on the Company s actions?

3. Take the position of the Company and lay out its arguments.

4. Take the position of the Union and lay out its arguments.

5. Now, be the arbitrator and decide the outcome.

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11 -3 Should Employee Be Penalized for On-the-Job Injury?

Background

The origin of this matter of arbitration is the following grievance filed on January 15, 2015:

On 4-25-14 due to circumstances beyond my con- trol I (Bob Boyce) was involved in a job-related accident leading to an injury. Negligence and disre- gard for safety by Management created an unsafe work environment. Information on defective equip- ment was not given to employees by Management. Therefore hazards remained when injury occurred. Only then did Management respond to correct problems.

I was denied work due to restrictions from M.D. I am filing for 26 weeks employee contribu- tions to his medical insurance and adjustment to my vacation checks. Compensation for others has been given in the past.

In a letter dated March 20, 2015, the company responded:

This regards Grievance filed by Bob Boyce who has requested to be reimbursed for the 26 weeks of employee contributions to medical coverage and adjustment for vacation pay during his recent absence due to an injury. The Grievant feels that since the injury was beyond his control, he should be compensated for all losses.

As a practice, the company does not require an employee who is out of work (regardless of reason) to keep contributing to their portion of the medical cov- erage during their absence. After the employee returns, he is required to catch up the back pay- ments over a period of time. In the following year, vacation pay is calculated on the basis of total wages earned for the 52 weeks period preceding the vaca- tion eligibility period (anniversary date). If the Griev- ant was out of work (regardless of the reason) his total wages would of course be less than normal.

The company has made only a couple of excep- tions to the policy relative to the medical contribu- tions in the past: two occasions when employees did not return to work from an injury and/or accident. Both of these cases were under extenuating circum- stances, not as in the present case. The Grievant

argued that, since he was not at fault in his inci- dent, he should be granted the same consideration as the previous cases. I do not think it will be pro- ductive to get into the practice of having to argue facts of each case as to who was at fault in the accident before granting the special request. Simi- larly, the Workers Compensation program is also a no fault system where the company is responsi- ble for paying for the claims regardless of who is at fault. Therefore, I am not inclined to start a differ- ent practice at this time.

The Grievant is also arguing that, since the accident was not his fault , he should be compen- sated for the loss of earnings that would have oth- erwise been considered in calculating his vacation pay for the following year. This would establish a completely new practice to administer in the future.

As I review the current Labor Agreement, I cannot find a provision that obligates the company to reimburse the grievant for either of his requests. The actions of the previous cases were above and beyond our contractual obligations and should not be construed as a precedent for other cases.

Based on the reasoning previously cited, I must deny the grievance.

Issue

Whether the collective bargaining agreement between the parties obligates the employer to pay for the employee s contribution for medical coverage during the time he was on workers compensation leave and to adjust the employee s vacation pay to credit him for time he was out on leave.

If so, what is the remedy?

Relevant Provisions of the Agreement

Article 15: Vacation Employees will become eligible for vacations with pay on the following basis:

1. Eligibility, time lost as a result of a work related injury will be counted for the purpose of determin- ing 1,040 hours of work during the fifty-two (52) week period prior to each eligibility date.

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2. Continuous Service For the purpose of computing vacation eligibility:

(a) Time lost as a direct result of illness or accident shall not constitute a break in continuous ser- vice for twelve (12) months of such time lost.

(b) Absences due to leave of absences which do not exceed three (3) months shall not consti- tute a break in continuous service. However, that period of absence from this cause in excess of one (1) month shall not be counted in computing continuous service for vacation, and an employee s anniversary date will be changed accordingly.

(c) Termination of seniority as provided for in Article 7, Section III(e), shall constitute a complete break of continuous service and no past service shall be credited in the event of re- employment.

3. Vacation Pay (a) Employees will qualify for six (6) weeks of

vacation on the twenty-fifth (25th) anniversary of the date from which their employment is continuous provided the employee has com- pleted at least 1,040 hours of work during the year immediately preceding such eligibility date. In such instances, vacation pay will be an amount equal to twelve (12) percent of the employee s total wages earned by the employee during the calendar year immediately preced- ing the year of his current eligibility date or 240 times his permanent hourly rate as of the date he became eligible, whichever is greater.

(b) Employees separated from the payroll and who have previously qualified for at least the first week of vacation shall receive pro rata vacation pay for unused vacation at the rate of three and one-half (3½) times their regular hourly rate per week of eligible vacation, for each month of continuous service since the last vacation eligibility date.

(c) Vacation payment will not be made earlier than the week immediately prior to the vaca- tion period.

4. Vacation Period (a) In a vacation,

one (1) week is defined as seven (7) consecutive days; two (2) weeks as fourteen (14) consecutive days;

three (3) weeks as twenty-one (21) consecutive days; four (4) weeks as twenty-eight (28) consecutive days; five (5) weeks as thirty-five (35) consecutive days; six (6) weeks as forty-two (42) consecutive days;

(b) The anniversary date of employment or the date if changed under two of this article, each year shall be the date upon which an individual employee becomes eligible for this vacation. Vacations must be taken during the twelve (12) months period following the date on which the employee has qualified. Vacation periods are not cumulative and are not transferable.

(c) The company will schedule the vacation period for each employee as well as generally admin- ister the vacation plan. Employees may schedule one week of their vacation one day at a time. Insofar as is practicable, consideration will be given to individual employee preference in scheduling vacations on the basis of mill seniority, provided the request is made prior to March 1 each year.

(d) The company may, at its option, elect to shut the mill for a one (1) or two (2) week period and require the vacation for which any employee is qualified to be taken. The company will sincerely try to give as much notice as possible to employees, should the above decision be made.

Article 19: Health & Safety The company will earnestly continue its efforts on behalf of the health, sanitation, and safety of employees during the hours of their employment. The company and the union agree to cooperate in achieving this. The union will cooperate in encouraging compliance with the rules regarding health, safety, and sanitation.

The company will continue in effect the Group Insurance Program and Retirement Plan during the life of this Agreement.

Positions of the Parties The Union The union stated that Boyce is an exemplary employee with 27 years of service at American Newsprint Corpo- ration. On April 25, 2014, Boyce was injured on the job when an automatic door malfunctioned. Issues with the

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door had been reported to management on numerous occasions and management has been negligent about repairing the door. Therefore, management is at fault for entire situation and should be held responsible. The injuries cost Boyce six months of work, which resulted in lost income in wages as a result of Work- ers Compensation, and those lost wages adversely affected the calculation of vacation pay for the next year. This is no way to treat a long-term employee with an excellent work record. Boyce has been harmed for doing his job.

The union closed:

For the foregoing reasons, the union requests that the grievance be sustained and the Grievant, Boyce be made whole for his losses.

The Company The company s maintenance department as well as department supervision tried on several occasions to cor- rect the defect in the door and were unable to do so.

The company communicated to all employees and alerted them to stand clear of the door and to be on alert. The company was eventually able to resolve the issue with some electrical modifications to the door.

The grievant argued at step 2 and step 3 of the grievance procedure that past practice was the basis for his complaint. The union failed to show that a past practice existed for either of Boyce s request, that is, reimbursement of insurance contribution during his absence or a pay adjustment for vacation.

Ms. Joyce Rambo confirmed that she had always required reimbursement of employee contributions to medical insurance upon return to work and that she

has never made an adjustment to the vacation provi- sions as argued by Boyce. Ms. Rambo confirmed that Boyce s case was handled in the same manner and with the same consideration as similar cases in the past. Two employees mentioned by Boyce never returned to work after their absences for the deductions to be made. Additionally, Rambo confirmed that she has never made vacation adjustments, as stated by the grievant in the step 2 grievance. The consistency in administer- ing this policy has never been made on the basis of who was at fault in the accident.

The company argued that this is a case in which the union is trying to seek through arbitration what it has not obtained in negotiations. The union failed to show that the CBA contains language that would require the company to pay Boyce. Therefore, the arbi- trator should not give the union something in this arbi- tration that it did not obtain in negotiations. The company has held several negotiations since the insur- ance contribution requirement was introduced, and this request has never been introduced. The union is in effect asking the arbitrator to add an additional ben- efit to the labor agreement, which bypasses the negoti- ation process and is beyond what the law requires.

The company requested that the arbitrator uphold the company s position in this matter.

Questions 1. What is the rule on the use of a past practice? 2. Has the union established a past practice? 3. Does the contract language support the union

position? 4. How should the arbitrator rule? Why?

CHAPTER 11 Labor and Employment Arbitration 599

CHAPTER 12

Employee Discipline

YOU ARE A first-year supervisor in a manufacturing plant. You supervise a group of employees who play cards during their lunch break for recreation and for a break from their monoto- nous routine work. They use matchsticks instead of money as their wager. The word around the plant is that they convert the match sticks to money after work to divide the winnings, but you have no proof that this is happening. Also, you are aware that staff members in the front office have football pools every week during the fall and declare a winner every Monday morn- ing. They also put their predictions on the Super Bowl and World Series with a $5 bill in a glass bowl. After the results are known, they declare a winner and give all the money to the winner. These employees do not report to you; they work for a different supervisor who is frequently out of the office on business travel. Office staff seldom, if ever, enter the manufacturing plant.

Rules against gambling on the job are posted all over the plant. You were informed about the principles of employee dis- cipline during your orientation and supervisory management training program. You learned that the rules must be reasonable and posted and that any disciplinary action must be applied consistently.

Questions 1. Do the plant employees and front office employees operate

under the same rules?

2. Should you discipline one or more employees to set an example for violating the no-gambling rule?

3. Do you have proof of a rule violation?

4. Are there other alternatives? What should you do? Why?

600

An entire chapter of this text is devoted to employee discipline, an important unionmanagement issue, for the following reasons: It is the most commonly heard grievance in arbitration. It is approached consistently by arbitrators, who typically rely on established principles to make their determinations.1

It is the most likely to involve readers of this book, who are likely to discipline employees in their careers in unionized as well as nonunionized settings and have that action challenged by a union, employees, government agencies such as the Equal Employment Opportunity Commission (EEOC), or in a suit by an employee.

Employee discipline is approached in this chapter by discussing its significance over time and its various elements, thereby enabling the reader to apply principles discussed in Chapter 11 to this issue.

The Changing Significance of Industrial Discipline

Employee discipline represents both organizational conditions and managerial actions. Organizational conditions can lead employees to form a disciplined work group that is largely self-regulated and willingly accepts management s directions and behavioral stan- dards. Managerial actions are taken against an employee who has violated organizational rules.2 Employee discipline has changed over time.

Historical Overview of Employer Disciplinary Policies During the eighteenth and nineteenth centuries, the employer exercised unrestricted discretion in directing the workforce.

In 1884, a judge in the State of Tennessee wrote the following:

All may dismiss their employees at will, be they many or few, for good cause, for no cause, or even for cause morally wrong, without being thereby guilty of legal wrong.3

This judge s statement laid the foundation for the common law, employment-at-will doctrine.

Although the employment-at-will doctrine is over 130 years old, the doctrine was confirmed by a California court in 2000 when it wrote:

An employer may terminate its employees at will, for any or no reason the employer may act peremptorily, arbitrarily, or inconsistently, without providing spe- cific protections such as prior warning, fair procedures, objective evaluation, or prefer- ential reassignment The mere existence of an employment relationship affords no expectation, protectable by law, that employment will continue, or will end only on certain conditions, unless the parties have actually adopted such terms.4

Employee discipline in the early days was sometimes harsh. Employees, who were verbally insolent to employers, could have their tongues burned with a hot iron or be subjected to public humiliation (e.g., a public whipping in the town square).

By the 1930s, management s total discretion to discipline employees was chal- lenged on pragmatic and legal grounds. Frederick Taylor s theory of scientific man- agement stressed the financial waste that occurred when employees were discharged in an arbitrary or capricious manner. According to Taylor, management had an obli- gation to determine and obtain desired employee work behavior and to correct, rather than discharge, the employee who deviated from managerial standards. Taylor

CHAPTER 12 Employee Discipline 601

argued that managers bore some responsibility for poor employee performance and advocated training employees and offering financial incentives for improved perfor- mance; other writers also noted that high turnover hampered organizational efficiency.

The employment-at-will system is most lacking in procedural justice which focuses on the fairness of the decision methods and procedures. Employees have several reasons for wanting fairness. First, fairness involves empowering the employees to have some control over decisions. Second, fair treatment indicates to the employees that the organi- zations value their worth.5

The Wagner Act of 1935 helped shape management s disciplinary policies. A pri- mary feature of this legislation was the prohibition of discriminatory discipline of employees because of their union activities or membership. The National Labor Relations Board (NLRB) was created, in part, for enforcement purposes. Management often had to defend disciplinary actions against charges filed with this agency, with a potential rem- edy being reinstatement with back pay. This was the first time that management could be legally held accountable for employee discipline, a situation that encouraged further development of employee disciplinary principles and policies.6 The NLRB also affected organizational discipline procedures indirectly when it ruled that discipline and griev- ance procedures were mandatory issues for collective bargaining. As a result of this NLRB decision, nearly all existing collective bargaining agreements now have both a pro- vision regulating employee discipline and a grievance procedure that makes possible the submission of discipline issues to arbitration. As a result, managerial policies on employee discipline were greatly influenced by the growth and development of labor arbitration. Under nearly every collective bargaining agreement, arbitrators have three broad powers on discipline:

1. To determine what constitutes just cause for discipline 2. To establish standards of proof and evidence 3. To review and modify or eliminate the penalty imposed by management when

warranted

Arbitrators have long held that management has the right to direct the workforce and manage its operations efficiently. Indeed, inefficient operations harm both the employer and employees because higher costs and subsequent reduced profits can result in employee layoffs. Discipline can improve efficiency by accomplishing the following interrelated purposes:

To set an example of appropriate behavior. For example, management impresses on its employees the seriousness of being absent by giving an absent employee a three- day suspension. To transmit rules of the organization. As illustrated in the preceding purpose, man- agement has transmitted a rule of the organization absences will not be accepted. To promote efficient production. Discipline those employees who either cannot or will not meet production standards. To maintain respect for the supervisor. In a sense, discipline shows the employee who has supervisory authority. A supervisor who does not discipline insubordinate employees weakens managerial authority. To correct an employee s behavior. Indicate what is expected, how the employee can improve, and what negative consequences might result in the future if the behavior does not change. The assumption here is that most employees have good intentions and will improve if management will simply show them the error of their ways.

602 PART 3 Administering the Labor Agreement

Discipline can accomplish all these purposes, but arbitrators must be convinced that management based its action on correction, which is discipline s main purpose. Because discharge is a terminal rather than a corrective action, it is appropriate only when all other attempts at correction have failed or the nature of the offense is so heinous, such as theft, attacking a supervisor, and so on, as to make lesser forms of dis- cipline inappropriate.7

Employment-at-Will Doctrine and Wrongful Discharge Consideration for Nonunion Employees In 2014, the number of union members in the workforce was 14.6 million, or 11.1 percent of the workforce, and unions represented another 1.6 million workers who were not members. In other words, today more than 88 percent of the U.S. workforce or 116 million workers are not afforded the protection of a union contract or a collectively bargained grievance- arbitration procedure. Most of these nonrepresented employees are employment-at-will employees and may be discharged at will.8 However, there are exceptions to the employment-at-will doctrine.

Under the public policy exception to the employment-at-will doctrine, an employee is wrongfully discharged if the discharge is inconsistent with an explicit, well-established public policy of the state. As an example, an employer cannot discharge an employee for filing a workers compensation claim after being injured on the job or refusing to break a law at the direction of the employer. (Forty-three states have made one or more public policy exceptions to the employment-at-will doctrine. Not all states recog- nize the same number or type of public policy exceptions.)

The implied contract exception to the employment-at-will doctrine occurs when an employer and employee form an implied contract, even though there is no express, writ- ten instrument regarding the employment relationship. For example, an employer makes oral or written representations, e.g. in the employer s employee handbook, to employees about job security or procedures that will be followed before adverse actions (discharges) are taken. These representations may create an employment contract. (Forty-two states have recognized the implied contract exception to the employment-at-will doctrine.)

The covenant-of-good-faith and fair dealing exception to the employment-at-will doc- trine means that employer personnel decisions are subject to the just cause standard, prohibiting terminations made in bad faith or motivated by malice. (Twenty states have recognized the covenant-of-good-faith and fair dealing exception to the employment- at-will doctrine.9) See Exhibit 12.1 for the listing of states that have exceptions to the employment-at-will doctrine.

A RAND Corp. study has found that employers overestimate the potential costs of a wrongful discharge suit and incur indirect costs that are 100 times higher when they attempt to avoid these suits. These indirect costs occur when employers do not terminate employees who perform poorly, establish complex and more costly hiring and decision- making processes, or use severance payments to deter wrongful termination claims.10

In 1987, Montana became the first (and still the only) state to have passed legislation (Wrongful Discharge from Employment Act) that adopted a good cause standard for discharge of employees with contracts of an unspecified duration. Under the act, a dis- charge is wrongful only if (1) the discharge is in retaliation for the employee s refusal to violate a public policy or reporting a violation of public policy, (2) the discharge is not for good cause and the employee had completed his or her probationary period, or (3) the employer violated an expressed provision of its own written personnel policy. Under the Montana Act, if a discharged employee makes a valid offer to arbitrate and the employer accepts, the arbitrator s decision will be final and binding and there is no

CHAPTER 12 Employee Discipline 603

Exhibit 12.1 Recognition of Employment- at-Will Exceptions, by State State

Public-Policy Exception

Implied-Contract Exception

Covenant of Good Faith and Fair Dealing

Total 43 42 20

Alabama No Yes Yes

Alaska Yes Yes Yes

Arizona Yes Yes Yes

Arkansas Yes Yes Yes

California Yes Yes Yes

Colorado Yes Yes No

Connecticut Yes Yes Yes

Delaware No No Yes

District of Columbia Yes Yes No

Florida No No No

Georgia No No No

Hawaii Yes Yes No

Idaho Yes Yes Yes

Illinois Yes Yes Yes

Indiana Yes No Yes

Iowa Yes Yes No

Kansas Yes Yes No

Kentucky Yes Yes No

Louisiana No No Yes

Maine No Yes No

Maryland No Yes No

Massachusetts Yes Yes Yes

Michigan Yes Yes Yes

Minnesota Yes Yes No

Mississippi Yes Yes No

Missouri Yes No No

Montana Yes Yes No

Nebraska Yes Yes No

Nevada Yes Yes Yes

New Hampshire Yes Yes Yes

New Jersey Yes Yes Yes

New Mexico Yes Yes No

New York No Yes No

North Carolina Yes No No

North Dakota Yes Yes No

Ohio Yes Yes No

Oklahoma Yes Yes Yes

Oregon Yes Yes No

(Continued)

604 PART 3 Administering the Labor Agreement

right for the employee to bring a lawsuit. If the employee prevails, the arbitrator will issue an appropriate remedy and the employer must pay the arbitrator s fee and all costs associ- ated with the arbitration. Due to Montana having less than a million employees in its workforce, broad application of the results cannot be applied across the United States.11

In an address to the National Academy of Arbitrators (NAA), former president of that organization, George Nicolau, noted that more than one million employees are dis- charged in the United States annually without the right to appeal the discharge decision. Nicolau called for a National Unfair Dismissal Statute which would provide protection against unfair dismissal to those employees who have worked for an employer (with 15 or more employees) for a period of one year. Nicolau believed that a one-year period should provide ample time for the employer to assess the performance of an employee and determine the needs of the company. After one year of continuous employment, a covered employee would have protection against an unfair dismissal by an employer.12

This proposed statute would be similar to those unfair dismissal laws which currently exist with many European countries.

Present-Day Significance of Employee Discipline Disciplinary systems are designed to discourage problematic behavior and to quickly cor- rect problems when they occur. The first-line supervisor is usually the first person to become involved in disciplinary action. The first-line supervisor usually conducts the ini- tial investigation of the facts surrounding the employee s misconduct. Furthermore, it is

Exhibit 12.1 (Continued)

State Public-Policy

Exception Implied-Contract

Exception Covenant of Good

Faith and Fair Dealing

Pennsylvania Yes Yes Yes

Rhode Island No No No

South Carolina Yes Yes Yes

South Dakota Yes Yes No

Tennessee Yes No No

Texas Yes Yes No

Utah Yes Yes No

Vermont Yes Yes Yes

Virginia Yes Yes No

Washington Yes Yes No

West Virginia Yes Yes No

Wisconsin Yes Yes No

Wyoming Yes Yes Yes

SOURCE: Charles J. Muhl, The Employment-at-will Doctrine: Three Major Exceptions, Monthly Labor Review, 124 (January 2001), pp. 3 11; David J. Walsh and Joshua L. Schwarz, State Common Law Wrongful Discharge Doctrines: Updates, Refinement, and Rationales, American Business Law Journal, 33 (Summer 1996), pp. 645 690; David Autor, Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment, Journal of Labor Economics, 21(1) (2003), pp. 1 42. Employment at-will Exceptions by State: April 2008, National Conference of State Legislatures, http://www.ncsl.org; Kenneth G. Dau-Schmidt and Timothy A. Haley, Governance of the Workplace: The Contemporary Regime of Individual Con- tract, Comparative Labor Law and Policy Journal (Winter 2007), p. 313. Nadjia Limani, Note, Righting Wrongful Discharge: A Recommendation for the New York Judiciary to Adopt a Public Policy Exception to the Employment-At-Will Doctrine, Cardoza Public Law Policy and Ethics Journal (Fall 2006).

CHAPTER 12 Employee Discipline 605

usually the first-line supervisor who recommends disciplinary action or has the authority to take disciplinary action. Because certain employee rights must be protected, employers may decide to have an oversight of the supervisor s decisions to discipline and require higher level approval before disciplinary action is taken. Therefore, it is possible to intro- duce some level of restriction on supervisors to protect employee rights without adversely affecting supervisors belief in the effectiveness of the disciplinary system.13

Management, union officials, and employees at unionized firms are strongly affected by disciplinary actions and arbitrators decisions concerning disciplinary actions. (See the Labor Relations in Action feature box above for potential disciplinary situations that have occurred on an automobile assembly line.) An arbitrator typically has two options in a case involving a discharged employee. The arbitrator can (1) uphold management s discharge decision or (2) reinstate the employee with some or all back pay for wages lost and restore the employee s accumulated seniority as a result of the employee s inappro- priate discharge.

In a study of 1,432 arbitrator discharge decisions by 74 arbitrators, the researchers found that arbitrators sustained the employer s discharge in 52.4 percent of the cases and upheld the grievance in only 19.8 percent. Other decisions include reinstatement without back pay in 17.4 percent and reinstatement with partial back pay in 10.4 percent.14

When an arbitrator overturns management s termination, the arbitrator s decision is advertised by other employees and the union when the reinstated employee is brought back to the shop floor. Reinstatement of the employee with back pay represents a

LABOR RELATIONS IN ACTION Disciplinary Possibilities on the Assembly Line

The following excerpts are taken from Rivethead (New York: Warner Books, 1992), written by Ben Hamper concerning his work experiences on an auto- mobile manufacturing line. These situations reflect vivid, real-world employees behaviors that manage- ment attempted to correct through disciplinary actions. Unions could claim management s response to each of these actions was inappropriate by filing a grievance that might, in time, be resolved by an arbitrator. The first five considerations involve employees Hamper knew on the line; the remainder of the events were per- petrated by Hamper and co-workers.

Roy captured a tiny mouse at work and built a home for the rodent. He took care of the mouse until one lunch break, when he claimed it was mocking his job performance. He then grabbed the mouse by the tail, took a brazing torch, and incinerated his little buddy at arm s length.

Lightnin had no known job assignment but would spend each workday in the men s washroom lean- ing up against the last urinal wall, asleep. Jack hated the company and thought manage- ment was out to get him. One night he claimed that the company purposefully robbed him by not

returning cigarettes for cash he placed into a vending machine. He then took a sledgehammer (which he labeled the Better Business Bureau ) and beat the vending machine to a glass and metallic pulp. Franklin was a man who took real pleasure in beat- ing up other employees. He snuck up on one employee who refused to give him an extra pair of safety gloves and smashed him over the head with a door latch. The employee received a dozen stitches in his head, and Franklin received a 30-day suspension. Louie peddled half pints of Canadian Club and Black Velvet at the workplace, delivering the alcohol to the customer s work station.

Mr. Hamper also admitted to drinking rather sub- stantially at work. His regular intake included a forty ouncer at first break, another one at lunch, then a pint or two of whiskey for the last part of the shift.

He and another employee also doubled up on the job, where one employee would perform both jobs, allowing the other employee to sleep in a hiding place. This practice basically gave each employee a four-hour nap during the work shift.

606

financial loss to management, and supervisory authority may also be reduced. It is rare for a supervisor who experiences the return of a disciplined employee to his work group with a large back pay check to pursue subsequent disciplinary action with as much vigor and initiative.15

Subsequent Discipline. In another study involving 85 employers and a total of just over 2,000 arbitration cases over termination, of the 767 employees who were terminated and later offered reinstatement, nearly all accepted reinstatement; only 1 percent agreed to a monetary buyout. After one year from their reinstatement, only 10 percent had been terminated again and 4 percent had quit their jobs. The vast majority (86 percent) remained on the job, and more than half of these employees had better disciplinary records than before their terminations. Interestingly, of the 1,303 cases in which the dis- charge decision was upheld by the arbitrators, only 12 employees (less than 1 percent) who did not prevail in their arbitration filed a duty of fair representation (DFR) suit against the union. As a result, it may be concluded that discharged employees were sat- isfied with their unions representation in the arbitration hearing.

Within these same 85 employers, there were 1,113 suspension arbitrations (five days or more). Arbitrators upheld 72 percent of the suspensions. The employers reported that the disciplinary records of these employees were the same or better after the arbitration than before. Only 25 percent of the employers reported that arbitration had a negative effect on workplace relationships. In general terms, the negative effect was expressed as low morale. More specific comments included: co-workers became angry with each other, company witnesses were harassed, reinstated employees were bitter against the company, and overturning the disciplinary action undermined the supervisor s authority.16

Subsequent Performance. Although there is also no guarantee that the reinstated employee will perform well when returned to the job, two studies have found that 51 to 62 percent of the reinstated employees performed their work in a below-average capacity, with a majority having subsequent disciplinary problems.17 Also, the seniority of the dis- charged employee (often considered an influential mitigating circumstance by arbitrators) was insignificant in predicting the employee s performance after reinstatement.18 Of course, it is possible that many of these were below-average employees before the discharge; it may have been that, in some companies, marginal performance was a contributing factor in managers deciding to pursue employee discipline. If so, then below-average performance after reinstatement merely reflected such employees returning to their normal work levels.

Tensions Among Managers. Arbitral reversal of management decisions can also cre- ate tensions between different levels of management officials. As noted in Chapter 1, management participants in the labor relations process do not constitute a unified group. The first-line supervisor is usually the most involved in employee discipline, hav- ing typically trained the employee; created past practices in the department that might influence the arbitrator s decision; and witnessed, reported, and in some cases, partici- pated in the events resulting in discipline. The supervisor also is the management official who directly administers discipline to employees.

Other management officials, such as labor relations representatives, monitor these activities to make sure that supervisory actions are consistent with company policy, reversing them if they are not, to avoid adverse arbitration decisions. This reversal can cause tensions, as indicated in the following remarks of a first-line supervisor:

I had this one troublemaker. He was a solid goldbricker. He couldn t cut the buck on any job. I tried everything, but he was lazy and he was a loudmouth. I caught him in the toilet after being away from his machine for over an hour. I told him he was through and to go upstairs and pick up his check . Do you know what those college

CHAPTER 12 Employee Discipline 607

boys in personnel did? He gives them some bull about being sick and weakly and the next day he is sitting on a bench in the department next to mine. He says to me, Well, wise guy you don t count for nothin around here. Every time I see you, I m

going to call you Mr. Nothin. 19

Enhanced Union Reputation. What management loses in arbitration hearings appears to be the union s gain. Most if not all union members believe the union should be responsive to problems arising from their day-to-day working conditions that remain after the formal labor agreement has been negotiated. There is no more dramatic exam- ple of union concern for its members than saving an employee s job. Almost every union newspaper contains at least one article per issue that describes (along with appro- priate pictures of union representatives, the grievant, and the back pay check) how the union successfully defended an employee against an unjust act of management. A repre- sentative article from one union newspaper proclaimed in bold headlines, Worker Wins $5,895 in Back Pay when Fired for Opening Beer Can. 20

Effects on the Disciplined Employee. A disciplinary action carries the most signifi- cance for the affected employee. Discharge has been viewed by unions as economic capi- tal punishment, for it deprives the employee of currently earning a livelihood and at the same time (with the discharge on his or her work record) makes it difficult to find future employment elsewhere. Any form of discipline represents an embarrassment to indivi- duals who do not like being told they are wrong and have to explain their unpaid removal from work to their friends and family.

Elements of the Just Cause Principle in Employee Discipline

As in other managerial decisions, there are important elements in employee discipline.

Discipline for Just Cause and Discipline s Legitimate Purpose To have a productive workforce, management must insist that there be order in the workplace. In reaching this goal, management develops work rules with respect to employee conduct and includes some form of discipline, up to discharge, for misconduct. Unions accept these rules; however, unions insist that a disciplinary system be fair in principle and in application. Management and unions agree to a verbal formula that would require management to show a valid reason (cause) for imposing discipline and to show that the penalty imposed was appropriate (just), given the nature of the offense and the surrounding circumstances, including the employee s years of service and employee s disciplinary history. In the application of this language, if the parties disagree with the amount of discipline, the union or the employee files a grievance. If not resolved, the grievance may be appealed to a third-party arbitrator (neutrals) who will be asked to determine not only the propriety of a given disciplinary action, but also the standards of conduct that employers may require, and how far, and in what manner, the employer may regulate employees lives.21

Just cause is not defined in nearly all collective bargaining agreements. The parties instead have left this task of defining just cause to the arbitrators. The most widely rec- ognized and accepted definition was proposed over 50 years ago by Arbitrator Carroll Daugherty in his seven tests. The tests are phrased in terms of seven questions and are presented as a framework (Elements of Discipline in Exhibit 12.2) for deciding whether or not just cause exists for upholding or overturning a discharge by an employer.22 These elements are not to be used as a formula and mechanically applied

608 PART 3 Administering the Labor Agreement

to every case. Strict application of the elements has been rejected by established arbitra- tors. In reality, only a few arbitrators will set aside a disciplinary action if the employer failed to satisfy only one of the seven tests because not all of the seven elements are relevant to every case and not all are equally important in all situations. In using the seven tests as a guide, arbitrators typically (1) review the facts on which the disciplin-

ary action was based and how the employer determined these facts and (2) assessment of whether the level of discipline was justified.23

As part of the seven tests definition, arbitrators include three major compo- nents in defining just cause : (1) industrial due process, (2) industrial equal protec- tion, and (3) individualized treatment. Industrial due process means that employers are expected to conduct a timely, full, and fair investigation where all evidence is con- sidered before imposing discipline. Due process deficiencies include the lack of evi- dence to justify the discipline, no prior investigation or lack thereof by the employer before making the discipline and/or lack of notice of the alleged violation. Industrial

Exhibit 12.2 Elements of Discipline for Just Cause Terminations

If the answer is no to one or more of the following questions, the employer s case for termination is seriously weakened.

1. Notice. Did the employer give to the employee forewarning or foreknowledge of the possible or probable consequences of the employee s disciplinary conduct?

2. Reasonable rule or order. Was the employer s rule or managerial order reason- ably related to (a) orderly, efficient, and safe operation of the employer s busi- ness and (b) performance that the employer might properly expect of the employee?

3. Investigation. Did the employer, before administering the discipline to the employee, make an effort to discover whether the employee did in fact violate or disobey a rule or order of management?

4. Fair investigation. Was the employer s investigation conducted in a fair and objective manner?

5. Proof. At the investigation, did the decision maker possess substantial evidence or proof that the employee was guilty as charged?

6. Equal treatment. Has the employer applied its rules, orders, and penalties even- handedly and without discrimination to all employees?

7. Penalty. Was the degree of discipline administered by the employer in a particu- lar case reasonably related to the seriousness of the employee s proven offense?

If the answers to the questions above are YES, then additional questions are considered in determining the degree of penalty:

1. Are there any due process procedural violations of the employee s rights, such as failure to give notice of charges, not allowing the employee to face his or her accusers, or lack of counsel?

2. Are there any mitigating circumstances, such as a record of long-term service with the employer or fault on the part of management which may result in a pen- alty less than termination, such as reinstatement without back pay?

SOURCE: Adapted from Enterprise Wire Co. and Enterprise Independent Union, 46 LA 359, 1996 (Carroll R. Daugherty). See also Adolph M. Koven and Susan L. Smith, Just Cause: The Seven Tests, revised by Donald F. Farwell (Washington, D.C.: Bureau of National Affairs, 1992); Jack Dunsford, Arbitral Discretion: The Tests for Just Cause, Proceedings of the 42nd Annual Meeting of the National Acad- emy of Arbitrators (Washington, D.C.: Bureau of National Affairs), 1989. See also Adolph M. Koven and Susan Smith, Just Cause: The Seven Test (3rd ed.) by Kenneth May (Washington, D.C.: Bureau of National Affairs, Inc., 2006).

CHAPTER 12 Employee Discipline 609

equal protection refers to comparisons with prior similar instances of disciplinary actions. Industrial equal protection requires the employer to act even-handedly and in a nondisciplinary manner when enforcing its disciplinary rules. It requires that the degree of discipline be in proportion to the alleged violation. Individualized treat- ment simply means that the arbitrators consider such factors as the employee s prior discipline, job performance record, length of seniority, and work history in their deci- sions. For example, suppose that a truck driver with numerous speeding violations was discharged after suffering his third work-related vehicle accident in five years, and all three accidents were determined by the police to be his fault. Further suppose that after the second accident, the company had paid to send the driver for additional driving training. The arbitrator might consider these individualized treatment facts in deciding whether the employee could be rehabilitated as a truck driver or whether dismissal was appropriate.24 Arbitrator Harry Platt might have said it best when he wrote:

It is ordinarily the function of an Arbitrator in interpreting a contract provision which requires sufficient cause as a condition precedent to discharge not only to determine whether the employee involved is guilty of wrongdoing but also to safe- guard the interests of the discharged employee by making reasonably sure that the causes for discharge were just and equitable and such as would appeal to reasonable and fair-minded persons as warranting discharge. To be sure, no standards exist to aid an Arbitrator in finding a conclusive answer to such a question and, therefore, perhaps the best he can do is to decide what a reasonable man, mindful of the habits and customs of industrial life and of the standards of justice and fair dealing preva- lent in the community, ought to have done under similar circumstances and in that light to decide whether the conduct of the discharged employee was defensible and the disciplinary penalty just.25

Collective bargaining agreements usually do not include a disciplinary structure that calls for specific penalties for specific offenses. Such arrangements have limited feasibility in today s complex workplace. Employee misconduct, such as insubordina- tion, fighting, stealing, and so on, takes many forms, and the circumstances surround- ing an act of misconduct have a multitude of variations, such as provocation, horseplay, and so on. In addition, each wrongdoer has his or her own explanations for behavior, experience, and work history. Unions tend to resist a Table of Penalties, such as shown in Exhibit 12.3, because they believe such prescriptions are overly strict and inflexible. Unions prefer that consideration be given to fairness and equity at the workplace. On the other hand, management prefers consistency in approach and seeks to preserve a large measure of discretion in determining the penalty in any given case. Since management s goal is usually not achieved in bargaining, management usually establishes rules of conduct unilaterally under its management s rights clause and describes each prohibited offense and the corresponding penalty to be assessed for committing each separate offense.26

Degree of Proof in Disciplinary Cases: Nature of the Evidence and Witness Credibility An overriding consideration in discipline and discharge cases is management s burden of proof to establish that the employee committed an infraction of one or more of the com- pany s rule(s). Such proof is easier to establish in situations having objectively measured indicators (e.g., absenteeism and related attendance records) than those that do not (e.g., insubordination).27

610 PART 3 Administering the Labor Agreement

Subjective standards can also apply to other employee infractions. For example, one arbitrator contends that a major difference exists between nodding off (eyes closed, head nodding lower and lower, jerking up, and then nodding again) and sleeping on the job, because the former condition, if successfully fought by the person, would lead to completely restored wakefulness. 28

Arbitrators use three levels of proof. The most often used level of proof by arbitra- tors is preponderance of evidence, wherein testimony and evidence must be adequate to overcome opposing presumptions and evidence. This level of proof is normally used in disputes over interpretation and application of contract language which do not deal with discipline, such as overtime assignments, promotions, and so on. The second, clear and convincing evidence, is shown where the truth of the facts asserted is highly probable. This level of proof is used most commonly in disciplinary matters that are noncriminal in nature, such as excessive absences, unacceptable performance, and so on. The third, beyond a reasonable doubt, represents a higher degree of proof, which some arbitrators use in criminal nature, such as selling illegal drugs on company property or stealing, that can more adversely affect the grievant s chances of finding subsequent employment or even lead to incarceration. Some arbitrators believe that this level of proof is extraordinarily high and should not be used in arbitration because the level of proof used in NLRB and unemployment insurance cases do not require proof beyond a reasonable doubt.29

In recent years, the use (or misuse) of e-mail, social media, and the Internet for non- business purposes has led to employee discipline. Misuse of e-mail or the Internet has been placed into three categories: (1) minor personal use, which the employer permits or ignores, (2) use without permission or improper use, which warrants discipline, and (3) serious misuse, which the employer believes warrants discharge. Misuse requires that the employer promulgate company rules about the use of e-mail and/or Internet, to

Exhibit 12.3 Table of Penalties Offense (Cause of Action) First Offense Second Offense Third Offense

1. Tardiness less than one hour

Reprimand 1-day suspension 3-day suspension

2. Unauthorized absence Reprimand 14-day suspension Discharge 3. Sleeping on duty Reprimand 14-day suspension Discharge 4. Gambling during

working hours Reprimand 5-day suspension Discharge

5. Working while intoxicated Discharge 6. Use or possession

of illegal drugs Discharge

7. Selling or transfer of illegal drugs

Discharge

8. Theft Discharge 9. Discourteous conduct Reprimand 14-day suspension Discharge

10. Failure to observe safety rules

Reprimand 14-day suspension Discharge

11. Falsifying company records and documents for personal gain

Discharge

12. Failure to report accident Reprimand 14-day suspension Discharge

SOURCE: Taken as examples from various company rules and collective bargaining agreements.

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communicate the rules, and to enforce the rules evenly and consistently. The question of whether a particular e-mail message warrants discipline depends on the nature of the message, magnitude of the distribution, the effect on the employer, and the employee s intent in sending the message. The charge of misuse is more serious when the employee sends e-mails than when the employee receives the e-mail message, and when the employee seeks out material on the Internet, such as pornographic materials.30 (See Labor in Action: Employee Discipline and Social Media). P. 14A 14C

Labor Relations in Action: Employee Discipline and Social Media In discipline cases involving social media, arbitrators focus on whether the substance of the message violates an employer policy or infringes on some legitimate employer interest. In one case involving an employee of the state of Ohio, he posted a Facebook message: OK, we got Bin laden let s go get Kadish (the governor) next who s with me. The Grievant was fired for making a threat against the governor; the union argued that the message was not truly a threat, but merely a call to vote Kadish out of office. The arbitrator ruled the words were not merely a joke, the Facebook page identified the employee as a public employee and the facility where he worked. The arbitrator concluded that the totality of evidence brought discredit to the employer and some discipline was warranted. The employee was reinstated without back pay or benefits.

Another issue involving social media and employee discipline is the means by which the employer obtains information. In relations to information posted on social media, such as Facebook, Twitter, Instagram, and so on, Once it is out there the person posting it has little or no control over where it goes or who sees it. On the other hand, unions will argue that breaking into an employee s locker is no different from breaking into a person s Face- book account without access to it and such information should not be used to justify the employee s discipline. The locker is usually on the employer s premises whereas, unless the employee is using an employer owned computer and on company time, many Facebook posts are made on personal computers off duty which raises the nexus (the relationship between the off duty conduct and employment policies) questions.

Arbitrators tend to look at the message, rather than the medium because a threat is a threat whether it is made sitting at a bar after work or on a Facebook page sitting at home after work. If there is a threat that is considered serious and potentially dangerous, it is a threat and is punishable. In a case involving a flight attendant, he posted the following critical remarks about scheduling: Better make it home at a decent hour tomorrow otherwise sched- uling better watch their back. I need a drink That s it, scheduling is dead; they are all f dead. Thanks for drafting me a holes. The union argued that there was no credible threat because the employee was just venting his frustration over scheduling and never intended to take any action. Further, the Facebook settings were private so only his friends could see the posts; the general public could not. Even though someone got these messages somehow, the flight attendant s action should not result in termination. The employer argued that the word dead meant more than mere venting even though no individual was mentioned. Therefore,

one must assume that he meant the entire scheduling department. The arbitrator ruled that the employer had a policy that required employees to act respectfully and not to adversely reflect on the company and its employees. The arbitrator ruled that the grievant passed on his private thoughts about the airline and its scheduling department to his friends, many of whom were employees. By doing so, the arbitrator concluded that the grievant lost any reasonable expectation of privacy and upheld the termination.

Electronic communications have great potential for harm. The messages are sent instantaneously and can go to thousands very quickly. If the intent of putting the

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message on social media is to broadcast the message to a wide, potentially anonymous audience, the issue becomes the medium as well as the message. While the message is the most important factor, the questions are: What does it say? What was the intent? What was the real harm? What is the potential harm? The professionals in labor rela- tions will have to deal with many issues, such as how the information was obtained, what it says, whether there is a nexus between the posts and work, whether there is a legitimate expectation of privacy, and so on. Jeffrey Jacobs, Social Media and Discipline Cases We re All Attitter Over It, Program Materials, National Academy of Arbitrators, FEC, 2014, pp. 1 15.

Another problem can occur when management uncovers the evidence while using search-and-seizure techniques. Few arbitrators deny the employer s right to impose, as a condition of employment, an inspection of the employee s clothes and packages on entering and leaving the plant. However, a problem arises when company officials search an employee s locker or, in some cases, home, with or without the employee s permis- sion. Many arbitrators (and the Supreme Court in Dennis O Conner v. Magno Ortega, 480 U.S. 709 (1987)) permit evidence obtained without the employee s knowledge if it is from company property, even if the property (such as a locker or tool chest) is momentarily under the control of the employee. On the other hand, few, if any, arbitra- tors believe evidence should be accepted if management obtained the evidence by forc- ibly breaking into the employee s personal property, even if the property is located on company premises.

Witness credibility. Arbitrators often have to assess witnesses testimony in a disci- pline case. These individuals are deemed credible if they had neither motive for an incorrect version (e.g., personal bias against the grievant) nor physical infirmity (e.g., poor hearing).31 Yet one arbitrator notes:

It is simply impossible to tell by observation if someone is lying under oath. You cannot tell by looking at and listening to the person. A trial judge in Chicago once compiled a list of tests to see if a witness is telling the truth: does he perspire; lick his lips; fidget in his seat; is he shifty-eyed? From my experience as an arbitrator, I can tell you that shifty-eyed people often tell the truth, while most honest-looking people will lead you by the nose right down the primrose path.32

Documented and credible evidence is necessary to bolster the company s decision to discipline/discharge an employee.

Effect of Work Rules on Discipline Management s right to establish and administer work rules is generally acknowledged as fundamental to efficient plant operations. Yet, managerial administration of work rules also assumes some fundamental responsibilities and obligations that, if not followed, may affect management s disciplinary efforts.

A first question that arises is, What happens if management has no rule governing the alleged offense committed by the employee? Such an event is not uncommon because employers cannot possibly anticipate the endless variety of employee misbeha- viors. Arbitrators, for example, have upheld the discharges of employees who have done the following:

Watched a fire develop and destroy a portion of a company over a lengthy period without notifying the company33

Called management officials in the early morning hours to belch over the telephone34

CHAPTER 12 Employee Discipline 613

Urinated on the floor of a delivery truck even though there were restroom facilities nearby Streaked (ran naked) through a portion of an airport35

Needless to say, management had no previously established work rules covering these specific behaviors. Arbitrators have also upheld management s right to discipline employees for those offenses that are commonly regarded as unwritten laws prohibitions against stealing or striking a supervisor, for example.

In most disciplinary situations, particularly those cases that are somewhat com- mon in industry (poor performance, absenteeism, insubordination, and so forth), management is on weak grounds with the arbitrator when it has not established work rules. Furthermore, written work rules must be reasonable, clear, and state the consequences of their violation. Reasonable rules are related to the orderly, efficient, and safe operation of the employer s business and the performance that the employer might properly expect of an employee. Unions will contend a rule is unreasonable if it is unrelated to business operations or outweighed by the employee s personal rights on and off the job.

Determining a rule s reasonableness can be complicated. For example, some arbitra- tors view a unilateral rule prohibiting smoking as reasonable, particularly if manage- ment presents evidence that nonsmoking employees can be harmed by being exposed to secondhand smoke. However, other arbitrators regard a no-smoking rule to be unrea- sonable, particularly if a clear past practice has permitted this activity.36 The reasonable- ness of an industrial work rule can vary according to industrial or company differences. A unilateral ban on moonlighting (working a second shift with another employer) is regarded as reasonable in the utility industry, which often needs emergency work per- formed during off shifts. Other industries not having emergency-related concerns might have a difficult time establishing the reasonableness of this rule.37 Rule reasonableness can also vary within an industrial production facility. For example, an employer might reasonably require a long-haired employee working in the cafeteria to wear a hair net (for sanitary reasons); it would be unreasonable to request the same compliance if the employee worked in the shipping department.

Complications regarding rule reasonableness can occur when an employee is disci- plined for off-the-job conduct. At first glance, this infraction would not appear to be job related; however, discipline would be appropriate if management establishes that it adversely affected the employer (e.g., damaged its reputation or standing in the commu- nity or had a negative effect on other employees performance caused by their fear of working beside the individual who had shot another person). In other words, manage- ment must establish that there is a nexus (connection) between the off-the-job behav- ior and the employee s job performance, the employer s business, and/or other employee s performance.38

The clarity of a work rule is also an important issue in corrective discipline because employees cannot adequately perform or correct behavior if they do not know what is expected. Management officials can create a problem when they discipline employees for infractions of a vague or confusing work rule, such as discharge for gambling on company premises or falsifying an employment application. These rules may, at first glance, appear clear and conclusive; however, their vagueness becomes apparent to any first-time supervisor who tries to enforce them. Gambling poses a managerial problem, particularly if employees are disciplined for participating in a card game on company premises while a management representative is sponsoring a World Series pool with hourly employee participants. Also, does gambling occur when employees are playing cards during their unpaid lunch break for matches or a numerical score that

614 PART 3 Administering the Labor Agreement

management (perhaps correctly) assumes will be converted into cash payments once the employees are off the company premises?

In another example of a vague work rule, does omitting application information constitute falsification ? Some arbitrators would say yes, particularly if the omissions are numerous and job related. Other arbitrators maintain that falsification must involve a definite response and might not uphold the discharge, much less discipline, of an employee if management did not promptly seek an explanation for any blank application items on the initial employment.39 Another complication occurs if the falsification is dis- covered several years after the employee was hired and the employee has proven over those years to have been a productive, contributing employee.

The existence of work rules carries the implicit, if not explicit, obligation for man- agement to inform its employees of the rules and the consequences of their violation. Sometimes an employee disciplined for violating a rule contends that he or she was unaware of the work rules. Management then usually has the difficult task of proving otherwise. Some arbitrators have even suggested that a card signed by an employee indi- cating he or she had read the rules is insufficient because it is signed in haste as part of the employee s orientation, and the signed card does not indicate that management has explained each rule to the employee or allowed time for questions. Many times manage- ment indicates in rules or warnings that an employee s continued misconduct could be subject to dismissal. However, arbitrators regard this term as carrying the potential for

lesser penalties such as written warnings or suspensions. Finally, management must administer the rules consistently for those employees

who violate the rules under similar circumstances. Management will likely have its disci- plinary action reduced or eliminated by the arbitrator if the union establishes that the employer was inconsistent or lax in enforcing the rule for the same misconduct on pre- vious occasions or gave different penalties to employees who were involved in the mis- conduct.40 Problems can also occur if management did not take different circumstances into account. In one case management stressed its consistent antihorseplay approach by indicating that it had discharged not only the grievant in the current situation but also another employee who engaged in horseplay in the past. The arbitrator overturned man- agement s action, however, noting that the horseplay committed in this case (a grocery store employee jumped from a second-story window onto the top of a display case, dam- aging it) was far less serious than in the previous situation, where another employee placed razor blades in a doughnut.41

In assessing the degree of consistency, arbitrators place particular emphasis on past practice, which refers to the customary way similar disciplinary offenses are handled and penalized. Some organizations seek to impose consistent discipline by including a price list in the labor agreement, which lists specific rules and furnishes uniform penalties for single or repeated violations (refer to Exhibit 12.3). This form of rule making has advan- tages: (1) the employee is clearly informed of the specific rules and consequences of vio- lations, (2) the standardized penalties suggest consistent disciplinary action is implemented, and (3) if agreed to by the union, the price list assumes more legitimacy than a unilateral work rule posted by management. However, some individuals contend that the price list represents a mechanical imposition of discipline that runs counter to the corrective philosophy because it does not consider each case on its own merits. Say, for example, management finds two employees fighting one a short-term employee, the other a long-term employee with a fine work record. According to the price-list approach, management is obligated to discharge both employees, yet it is likely that the arbitrator will reinstate the long-term employee who has an excellent performance record and who would typically respond to corrective measures to retain job seniority credits.

CHAPTER 12 Employee Discipline 615

Progressive Discipline Progressive discipline refers to increasingly severe penalties corresponding to repeated identical offenses committed by an employee. The focus of progressive discipline is on correction in at least two ways: (1) by impressing on the employee the seriousness of repeated rule infractions and (2) by providing the employee with opportunities to correct his or her behavior before applying the ultimate penalty of discharge. Management may be required to give an oral warning, a written warning, and at least one suspension before discharging an employee for repeatedly committing a similar offense, such as fail- ure to wear safety equipment, poor attendance, or ineffective performance. An exception to progressive discipline occurs when the nature of the offense is so heinous (stealing, striking a supervisor, setting fire to company property) as to make corrective discipline inappropriate.

An oral warning (or reprimand) represents an informal effort to correct and improve the employee s work performance. The informality of this oral warning is for corrective purposes; however, the oral warning can be prejudicial to the employee if it is entered as evidence in arbitration hearings. This disciplinary action, however, is subject to the following employee defenses: (1) the employee might have thought the supervi- sor s remarks were instructional and been unaware of the disciplinary aspects or conse- quences of the warning, and (2) an oral warning given in private can lead to conflicting testimony the employee can state that the supervisor never gave an oral warning. For these reasons, the supervisors are often instructed to make a record of the oral warning and document the discussion with the employee. Because of its relative harmlessness, the union seldom contests this form of discipline.

A written warning, the next step in progressive discipline, is a more serious matter because it summarizes the previous oral warnings to correct the employee s behaviors and is entered in the employee s work record file. More official than an oral warning, it brings disciplinary actions into focus by warning the employee of consequences of future rule violation.

If the written warning is not successful in correcting the employee s adverse behavior, a suspension will be the next step. A suspension is a disciplinary layoff with- out pay given by management to impress on the employee the seriousness of the offense. Although oral and written reprimands might also achieve this purpose, they do not involve a financial penalty to the employee. A suspension serves as an example of the economic consequences associated with discharge and at the same time indi- cates that management is willing to retain the employee if he or she will comply with directives and change errant ways. Management initially imposes a mild suspension (one to three days) and will then impose a suspension greater than ten days for a repeated offense. Arbitrators are reluctant to reduce the suspensions unless it can be shown that other employees were given lesser penalties for identical offenses under similar circumstances.

Some companies now require an employee to take a day off, with pay, a time out , to think about his or her employment situation and to determine whether he or she is willing to return to work and commit to being a productive worker.

Discharge, unlike suspension or warnings, is not a corrective measure because it means the employee is permanently removed from the company. As mentioned earlier, arbitrators have attached tremendous significance to the effects of discharge on the employee, regarding it as a last resort to be used when all other corrective attempts have failed and the employee totally lacks usefulness to the firm. Unions label discharge as capital punishment because of the adverse consequences to the employee and his or her future employment.

616 PART 3 Administering the Labor Agreement

Many labor agreements contain a statute of limitations. Some unions have been able to negotiate clauses that erase earlier disciplinary actions after a certain period of time (e.g., first disciplinary action is erased if no other incident occurs in three years). For example, it would be difficult to discharge an employee who has previously received two suspensions for failing to report an absence to management if the worker has worked for a fairly long time (say, three to five years) before committing a similar offense. Management is usually not obligated to return to the first step, that is, an oral warning; however, discharge is not warranted the employee s offense-free period indi- cates that corrective measures did have some effect and should be tried again before ter- minating the employee.

Last Chance Agreements When an employee is threatened with a termination, the union and employer may decide on an interim measure in the form of a last chance agreement. With a last chance agreement, the employee has another chance to improve his or her performance or conduct in order to keep his or her job. The employer is able to retain an employee who has the potential for being a productive employee. These last chance agreements are most common in cases when the employee has been threatened with discharge for poor attendance, inadequate performance, or violation of drug or alcohol rules. The agree- ments typically specifies standards for improved conduct that the employee must satisfy during the time period of the agreement, such as passing random drug tests or no unap- proved absences for one year. The agreement usually makes termination mandatory if the employee fails to meet any one of the prescribed requirements contained therein, although the employee retains the right to appeal. Under most last chance agreements, the arbitrator has limited authority.The Company has to prove that the employee vio- lated any one of the requirements contained in the last chance agreement.42 (See Exhibit 12.4.)

When and if an employee is discharged for violating a last chance agreement and a grievance is filed on the employee s behalf, the employer has only to prove (1) that the alleged offense occurred in violation of the last change agreement and (2) that there was no reasonable basis for the occurrence. Therefore, the burden of proving just cause for the discharge is not required. In fact, arbitrators sustain the employer s decision to ter- minate the grievant s employment in nearly three fourths of such cases. Arbitrators tend to recognize their discretion is limited by the terms of the last chance agreement which was fairly negotiated and signed by the employer, the union, and the employee.43

One study in one plant over a 15-year period revealed that the use of last chance agreements was effective in a majority of cases. Most employees who signed last chance agreements and who were returned to work became effective, rule-abiding employees, at least in the short term. Because the discharged employee is costly to replace and there is no guarantee that the replacement will be equal in performance to the rescued employee, the last chance agreement strategy appears to be justifiable to the employee, the employer, and the union.44

Disciplinary Penalty and Mitigating Circumstances If an employer s disciplinary action is appealed to arbitration, the arbitrators will deter- mine whether management was reasonable in assigning a particular disciplinary penalty for an employee found guilty of an infraction.

In making their determinations, arbitrators use several arbitral principles that have been developed over the years for considering management s discharge decisions (see the Labor Relations in Action feature on pg. 621 for examples of typical cases). Arbitrators

CHAPTER 12 Employee Discipline 617

often consider mitigating circumstances (factors), which might cause a reduction in management s assigned penalty (e.g., from a discharge to a suspension). Consider these examples:

1. Management contributed to a problem and must therefore assume part of the responsi- bility for the wrongdoing. Examples include management providing the employee with faulty tools and equipment and subsequently disciplining the employee for low produc- tion output or a management representative provoking the employee into committing physical or verbal abuse.

2. The circumstances of the case were so unusual as to give great doubt that it will occur again, particularly if management uses corrective techniques instead of discharge.

3. The employee s behavior is related to fulfilling his or her duties as a union officer. 4. Personal factors (such as marital, financial, or substance abuse problems) caused a

stressed or troubled employee to perform the disciplinary incident (e.g.,

Exhibit 12.4 Last Chance Agreement An investigation has concluded that Mr. Sam Bolden failed to follow the Lockout/

Tag Out procedure (locking all moving parts) while performing his job as B Opera- tor in the Utilities Department on May 4, 2014. The investigation into the incident revealed that his failure to adhere to the procedure was an unsafe behavior and placed himself and other employees at risk. This behavior is undesirable, unaccept- able, cannot and will not be tolerated. Accordingly, in an effort to correct this unde- sirable behavior, Mr. Bolden, the Union and the Company have agreed to the following terms and conditions of employment as outlined in this Last Chance Agreement:

1. Mr. Bolden agrees to follow and comply with all Lockout/Tag Out procedures and all Company policies when performing his job duties for the remainder of his employment. Failure to do so will constitute immediate termination of his employment.

2. Mr. Bolden will be on probation for a period of twelve months beginning from the date of this agreement. Should he violate any Mill Rules/Policies or have poor job performance, attendance, or neglect of duties, he will be subject to immediate termination.

3. Mr. Bolden agrees to faithfully follow these conditions of employment and all other Mill rules, orders, and standards of conduct and he and the Union further agree that if Mr. Bolden violates this agreement such violation will constitute just cause for termination of employment.

4. All lost time will be considered suspension without pay as disciplinary action in addition to this last chance agreement. This agreement shall be final and binding on all parties with no other relief or entitlement. This agreement is made without precedent or prejudice to any other agreement or grievance settlement. This agreement confers no additional rights to Mr. Bolden beyond what the current Labor Agreement provides.

Employee Signature: Date: Company Representative Signature: Date: Union Representative Signature: Date:

618 PART 3 Administering the Labor Agreement

absenteeism, poor work performance, or insubordination). Therefore, the employee will not continue these infractions once his or her personal problems are identified and resolved.

5. The employee has a long-term good work record.45

Each of these mitigating factors will now be considered further. Management might contribute to the problem by its work procedures or manage-

rial actions. For example, suppose management has provided the employee with faulty tools and equipment and subsequently disciplines the employee for low production output. An arbitrator might reduce the penalty if a manager provokes an employee into committing physical or verbal abuse. Management contributes to a disciplinary infraction by condoning, either openly or tacitly, offenses committed in the shop. Related examples include supervisors observing employees engaged in horseplay with- out attempting to stop the situation and subsequently disciplining employees for the action, and supervisors encouraging employees to violate quality standards in the name of production efficiency.

Another mitigating circumstance occurs when unusual events occur. For example, an employee has been repeatedly warned and suspended for failure to report his absence to management when he is unable to work a production shift; at the last sus- pension the grievant was informed that another infraction would result in discharge. One month after suspension, the employee again failed to report his absence to man- agement and was discharged when he reported to work the following morning. The employee contended (and added evidence in the form of a doctor s slip) that his wife became suddenly and seriously ill and that his concern for his wife, coupled with no telephone in the apartment, resulted in his failure to report his absence in advance to management. Here, management has followed all the principles of progressive disci- pline; however, the employee s discharge might be set aside if the arbitrator concludes that the circumstances were so unusual as to give management no reason to think it will happen again in the future.

Arbitrators often consider the mitigating effects of the grievant s role as a union offi- cer. Compared with other employees, union officials usually have special rights and pri- vileges, particularly when conducting union business. Many arbitrators consider the union steward and supervisor as organizational equals in discussions of union matters. Arbitrators therefore give the union steward leeway if harsh words are exchanged in these grievance meetings, whereas other employees might be successfully charged with insubordination for identical actions.

Union officers also have greater responsibilities that correspond to their rights. For example, arbitrators and the NLRB have upheld more serious disciplinary action for union officers who failed to prevent a wildcat strike than for employees who actu- ally participated in the strike, if the union officers knew in advance of the strike and failed to stop it. This differential penalty implies that union officers should be more knowledgeable about contractual prohibition against a wildcat strike and thus should uphold their contractual obligation to maintain uninterrupted production dur- ing the term of the labor agreement when there is a no-strike clause in the labor agreement.

The most complicated and controversial mitigating circumstances are found with troubled employees. Many management officials contend that arbitrators exceed their authority to interpret the labor agreement in these discipline cases and instead assume the roles of clergymen, psychiatrists, and medical doctors in indicating that management has an obligation to nurture these employees, even though this is not required by the

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contract language. One arbitrator acknowledged that he and some of his peers have addressed one troubled employee issue, alcohol abuse, with little medical or scientific foundation:

Curiously, published arbitral decisions involving alcohol abuse rarely distinguish between social drinking, heavy drinking, and alcoholism distinctions that are crucial in the mental health field. Moreover, although hundreds of arbitration decisions have adopted the popular view that alcoholism is a disease that involves loss of control over drinking, I am unaware of any decisions (including my own) that express an understanding of what arbitrators actually mean when they call alcoholism a disease. Even in the literature of arbitration, there is little recognition of whether

alcoholism is a medical disease, a social disorder, or some complex combination, and whether it has a natural progression and a unitary etiology.46

Finally, arbitrators generally believe that an employee with long and loyal service to the employer has earned some credit in consideration of his discipline and further that a long-term employee has more to lose than a short-term employee. Simultaneously, arbi- trators consider the quality of the employee s work record, including both job perfor- mance and active disciplinary actions on file. Arbitrators have reversed the employer s disciplinary action because of failure to provide due process standards in 15 percent of disciplinary cases. Due process and procedural errors committed by employers include failure to follow progressive disciplinary procedures, failure to adhere to contractual notice requirements, denial of representation rights, excessive delay in imposing penalty, and failure to provide a formal charge of wrongdoing.47

Enforcement of the remedy When there is a possible disagreement between the parties over the remedy, arbitrators may be asked to retain jurisdiction over the administration of the remedy. For example, when there is a dispute over the amount of back pay due a reinstated employee, the arbi- trator may be asked to determine the amount due. To be fair and to ensure that the monetary remedy is not perceived as a windfall, arbitrators will be asked to reduce the back pay by the amount of interim wages the employee earned on another job and/ or the amount of unemployment compensation received during the discharge period. In addition, the arbitrator may be asked to reduce the amount of back pay because the grievant did not look for work or did not accept an equivalent job offer during the dis- charge period to mitigate the back pay amount.48

Possible Collision between Discharge Decisions and Public Policy As a general rule in arbitration of disciplinary cases, the parties depend on the finality of the arbitrator s decision. If the employer proves just cause for its disci- plinary action, the arbitrator upholds the employer s disciplinary action. If the employer fails to prove just cause, the employee is returned to the workplace with an appropriate make-whole remedy. In disciplinary cases involving just cause deter- minations on sexual harassment charges, the finality of the arbitrator s decision becomes more complicated. After an alleged sexual harasser is discharged and files a grievance, he or she is subject to the traditional application of the just cause prin- ciples whereby the grievant would be entitled to a due process hearing with the pre- sumption of innocence. Furthermore, the arbitrator may consider the severity of the conduct, the employee s work and discipline record, length of service, potential for rehabilitation, proper investigation of the matter, and mitigating circumstances.

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LABOR RELATIONS IN ACTION Examples of Employee Misconduct and Mitigating

Factors to Consider in Employee Discipline

Abusive behavior (a form of insubordination) occurs when an employee directs profanity, epithets, or verbal abuse toward a supervisor. Employees defenses have included (1) no intent of hostility or anger, (2) provoca- tion from the supervisor, and (3) words used were shop talk, which are frequently used in the depart-

ment.a

Aggression toward supervisors includes verbal and physical abuse by subordinates that demean supervi- sors, undermine their authority, induce fear, and cause injuries. Reasons for setting aside employer-imposed discipline are severity of the infraction; provocation by the supervisor; the grievant s status, such as mental condition; employee s work history and seniority; lack of convincing evidence that the disciplinable offense occurred; and breach of contractual or due process requirements.b

Alcohol-related discipline occurs when an employee consumes alcohol on the job, possesses alcohol on the job, or reports to work under the influence of alcohol. Issues may involve whether there exists a reasonable suspicion that the employee was under the influence of alcohol, the employee refused to submit to an alcohol test, the employee failed the alcohol test, the employee was found drinking on the job or possessed alcohol on the job, or consumed alcohol off the job and then reported to work under the influence of alcohol. Another consideration may be the existence of a last chance agreement that contains conditions with which the employee must comply in order to continue employ- ment, such as testing for drugs or alcohol without warn- ing, participation in a rehabilitation program, and so on.c

Drug-testing issues include whether the drug-testing program was in place; whether the drug testing was random or resulted from reasonable cause (e.g., smelling marijuana smoke, accident or irratic behavior); whether there was a clear and legitimate basis for requiring drug tests; whether the drug program and its procedures were fair, consistent, accurate, and accommodated employ- ee s privacy rights; whether the drug test resulted from a random test under a last chance agreement; whether the drug test occurred during a fitness-for-duty examina- tion prior to a return to work or a random drug test; whether the failure to pass the test was the first offense or repetitive; whether the employer held a safety- sensitive job designated by the Department of Transpor- tation, Federal Aviation Administration, or the Federal Railroad Administration.

Falsification of employmentd application occurs when an applicant writes incorrect information on an

application for employment. Arbitrators consider a four- part test: Was the misrepresentation willful? Was it material to the decision to hire? Was it material to the employer at the time of discharge? Did the employer act promptly and in good faith when it discovered the mis- representation? Mitigating circumstances include the following: The employee did not understand the ques- tion or made an honest mistake; lack of connection (nexus) between the answer given and the employee s ability to perform the job; the employee had worked successfully over a long period of time; and the employer did not act promptly when the misrepresenta- tion was discovered.e

Fighting on the job occurs when one employee physically attacks another employee on the job. Prohibi- tions against fighting in the workplace are considered a legitimate employer interest because employers are obligated to provide employees with a safe working environment. Reasons for modification of penalties include the following: Employee was provoked by another employee, employee was a victim of another employee s violent act, penalty was too severe given the nature of the fight, management in some way con- tributed to the problem that caused the fight, or the grievant had a long-term service record without disci- pline.f

Incarceration occurs when an employee is placed in jail or prison and is unable to report to work. Factors considered in evaluating the amount of discipline are contract language that includes the term failure to per- form service, whether the employee is entitled to some form of leave of absence, the length and reason for the incarceration, whether the employee advised manage- ment of his continued unavailability and intent to return to work (if no communication, can the absence and fail- ure to communicate be interpreted as a job abandon- ment ?), and whether there was a no-fault attendance control program or last chance agreement. Mitigating factors include the employee s good work record, the employee s length of employment, the nature of the offense charged, and the impact on the employer s operations.g

Insubordination is the refusal of an employee to fol- low a direct order given by a supervisor. The employee is to obey now and grieve later. There are several quali- fications: The employee s act must be knowing, willing, and deliberate; the order must be explicit and clearly given so that the employee understands its meaning and intent; the order must be work-related and reason- able; the order must be given by someone with

621

However, courts may vacate an arbitrator s decision if the decision contravenes a significant public policy. Therefore, a court may vacate an arbitrator s decision if the court finds that the discharged employee had engaged in illegal sexual harass- ment activities on the job.49 Similar public policy considerations may apply to dis- charges related to child molestation and other criminal activity, or, conversely, legal protections for whistleblowers.

appropriate authority; the employee must be made aware of the consequences of failure to follow the supervisor s direct order. An employee is not obligated to follow an order that threatens the employee s health or safety or to engage in illegal or immoral behavior.h

Refusal to work overtime occurs when an employee is scheduled to work overtime or the employee is required to work overtime because of skill requirements, emergencies, short-term labor demands, or interdependencies of operations and then the employee refuses to work. Penalties may be reduced or overturned for several reasons, including no warning of the consequences of the overtime refusal, the order to work overtime was not clearly given, lack of proper advance notice, failure to apply progressive discipline, no previous discipline, or the employee offered a rea- sonable excuse for not working overtime.i

Sabotage is the willful destruction of company equipment, machinery, or property by an employee who has motive or opportunity to commit the act. Because sabotage is a criminal act, the burden of proof is usually beyond preponderance of the evidence. These cases may involve direct evidence (an eyewit- ness account) or circumstantial evidence. As an exam- ple of circumstantial evidence, a foreman sees an employee with a hose in one hand and a knife in the other. The foreman then observes that the hose is cut. The foreman did not see the employee cut the hose, but circumstantial evidence leads the foreman to the conclusion that the employee cut the hose.j

Sexual harassment misconduct occurs when one employee creates a hostile work environment for another employee or employees. Arbitrators evaluate the degree to which the alleged misconduct is severe or pervasive, and the degree of discipline follows the elements of discipline for just causek in Exhibit 12.2 on pg. 609.

Striker misconduct occurs when violence is directed toward strikebreakers or when strikers cause damage to nonstrikers property or the employer s prop- erty. Factors that may modify the penalty include the

following: The employee s actions were not exception- ally vicious or willfully malicious; the grievant engaged in a single incident, not multiple incidents of physical vio- lence; no damage was done to the employer employee relationship; there was provocation to cause the mis- conduct; disparate or discriminatory treatment had occurred; and the employee has a long service or good work record.l

Tardiness occurs when an employee is late for work, is not ready for work at the starting time, or is not at his or her work station at the scheduled starting time. Factors considered in determining the degree of discipline are the definition of tardiness, the number of tardies and the period of time over which the tardies occurred, and the appropriateness of the penalty under the circumstances.m

aStanley J. Schwartz, Insubordination: A Cardinal Sin in the Workplace, Labor Law Journal, 48 (December 1993), pp. 756 770. bMargaret A. Lucero and Robert E. Allen, Aggression against Supervisors, Dispute Resolution Journal, 53 (February 1998), pp. 57 63. cDonald J. Petersen, Arbitration of Alcohol Cases, Journal of Collective Negotiations in the Public Sector, 29 (3) (2000), pp. 175 193. dCarrie G. Donald and John Ralston, Company Labor Awards in Drug-testing Cases Involving Public and Private Sector Employers, Dispute Resolution Journal, 64 (1) (2009), pp. 72 80. eDonald J. Petersen, Trends in Arbitrating Falsification of Employment Application Forms, Arbitration Journal, 47 (September 1992), pp. 36 37. fMargaret A. Lucero and Robert E. Allen, Fighting on the Job: Analysis of Recent Arbitration Decisions, Dispute Resolution Journal, 5 (August 1998), pp. 51 57. gWilliam J. Walsh, Is Incarceration a Good Enough Excuse for Missing Work? A Sur- vey of Arbitration Decisions, Journal of Collective Negotiations in the Public Sector, 32 (2) (2008), pp. 117 131. hNorman Brand (ed.), Discipline and Discharge in Arbitration (Washington, D.C.: Bureau of National Affairs, 1998), pp. 156 161. iDonald J. Petersen, Arbitration of Employee Refusal to Work Overtime, Dispute Res- olution Journal, 52 (January 1997), pp. 21 27. jDonald J. Petersen and Harvey R. Boler, The Arbitration of Sabotage Cases, Employee Relations Law Journal, 30 (Winter 2004), pp. 52 64. kMollie H. Bowers, W. Sue Reddick, and E. Patrick McDermott, Just Cause in the Arbitration of Sexual Harassment Cases, Dispute Resolution Journal, 55 (November 2000/January 2001), pp. 40 85. lDonald J. Petersen, Arbitrating Cases of Employee Misconduct in Work Stoppages, Dispute Resolution Journal, 5 (February 1998), pp. 44 52. mDonald J. Petersen, The Arbitration of Tardiness Cases, Journal of Collective Nego- tiations in the Public Sector, 29 (2000), pp. 167 174

622

Due Process Due process has both substantive and procedural aspects. Substantive due process focuses on the purpose or rationale of the work rules to ensure that an employee has not been arbitrarily disciplined or discharged. This aspect is reflected in the previously discussed purposes and elements of discipline.

Procedural aspects of due process are usually covered in labor agreements and include the following:

The existence of a procedure that has rules, is known, is predictable, and is not arbitrary Rules are applicable and administered equitably to all employees Includes the right to be represented, the right to present evidence and rebut charges, the right to know the charges, and the right to relevant information concerning the charges The right to a fair and impartial fact-finding process and hearing To be free from retaliation The right to as much privacy and confidentiality as is practicable50

Other due process requirements which may be written in the labor agreement include the following:

The discipline process will follow certain time limits specified in the labor agree- ment. For example, if there is no discipline for three years, the disciplinary record will be cleared. The employee will be entitled to union representation, if requested, prior to discipline being administered and will be given an opportunity to respond (defend himself or herself). The employee will be notified of the specific offense in writing.

Another element of due process, written notice, has caused some problems for man- agement and is a major reason for the involvement of labor relations representatives in the discipline process. For example, if an employee gets into a heated argument with a supervisor, refuses to work an assignment, and shouts an obscenity at the supervisor, the foreman could discipline the employee for directing obscene and profane language toward a management representative. Once the charges are in writing, management may be required to convince an arbitrator that this charge warrants discipline, a task that is not easy if the arbitrator concludes that obscene language is regarded as common shop talk at the location. In this instance, management would have been wiser to have disciplined the employee for a more serious offense: Insubordination: refusal to follow supervisory orders. Since management can seldom change the offense once it is in writ- ing and handed to the grievant, a member of the industrial relations department is usu- ally present for consultation or direction before the charges are reduced to writing.

Another related element of due process is double jeopardy punishing an employee twice for the same offense. This doctrine most commonly comes into play when man- agement assigns an employee a more severe penalty after the one has been originally given. The rationale against double jeopardy is that management is held to any decision that purports to be final; therefore, it is important that it act only after ascertaining all relevant facts and determining the magnitude of the offense. Management can avoid the problem of double jeopardy if it makes clear to the grievant that the action taken in the first instance is tentative, pending further investigation by higher company officials. Usu- ally, this takes the form of an indefinite suspension that, pending a subsequent investiga- tion, can be converted to discharge.

CHAPTER 12 Employee Discipline 623

A final element of due process involves record-keeping of concern is the keeping of secret records on a particular employee. Most arbitrators maintain that keeping secret records is worse than keeping no records at all. Arbitrators may conclude that the employee has been singled out for discipline. Moreover, the employee is uninformed of any deficiencies.

One arbitrator notes three alternative positions that the arbitrator can take on pro- cedural or due process irregularities: (1) [T]hat unless there is strict compliance with the procedural requirements, the whole action will be nullified; (2) that the require- ments are of significance only where the employee can show that he has been preju- diced by failure to comply therewith; or (3) that the requirements are important, and that any failure to comply will be penalized, but that the action taken is not necessarily rendered null and void.51 Arbitrators tend to favor the third alternative, reasoning that management should suffer the consequences of its errors, but not to the point of exon- erating an employee who is guilty of a serious offense (particularly if it has not preju- diced the employee s case).

Due Process and the Weingarten Decision The due process procedure also involves union representation which has been addressed in NLRB decisions and by the Supreme Court in its Weingarten decision. This decision will be discussed in detail because it illustrates the model of the labor relations process presented in Chapter 1 (see Exhibit 1.2) and because it illustrates the impact of the fourth participant, the government, on labor management relations.

The Weingarten decision pertained to an employee who was believed to have paid only a fraction of the price of food she took out of the store. During the inter- view with management representatives she repeatedly asked for a union representa- tive to be present but was denied. In her emotional state, she admitted that over a period of time she had taken free lunches (totaling approximately $160) from the store, something a management official and other employees had also done. Manage- ment subsequently found her version of the incident to be supported. Although she was not disciplined for her actions, she reported to her union representatives that she had requested union representation and it had been denied. The union filed an unfair labor practice. The NLRB decided that management committed an unfair labor practice, violating Section 8(a)(1) of the National Labor Relations Act (men- tioned in Chapter 3), by denying the employee union representation. The NLRB ruled that union representation must be given to the employee at an employee s request when the employee reasonably believes an investigation could result in disci- plinary action. However, the employer has no legal requirement to bargain with any union representative who attends the interview.

The NLRB s Weingarten decision was appealed through the courts and, eventually, upheld by the Supreme Court. The Court s rationale for this decision was in part based on the union official s potential contribution to the disciplinary investigation:

A single employee confronted by an employer investigating whether certain conduct deserves discipline may be too fearful or inarticulate to relate accurately the incident being investigated, or too ignorant to raise extenuating factors. A knowledgeable union representative could assist the employer by eliciting favorable facts, and save the employer production time by getting to the bottom of the incident occasioning the interview. Certainly [the union representative s] presence need not transform the interview into an adversary contest.52

624 PART 3 Administering the Labor Agreement

Earlier arbitrator decisions formed the foundation for the Supreme Court s opinions on an employee s right to union representation. Justice Brennan observed that even where such a right is not explicitly provided in the agreement a well-established current of arbitral authority sustains the right of union representation at investigatory inter- views, which the employee reasonably believes may result in disciplinary action against him. 53

The Supreme Court ruled that an employee has the legal right to have a union rep- resentative present during an investigatory interview if the employee has reason to believe that the investigation will result in disciplinary action. The Court and NLRB have adopted the several principles which are highlighted in Exhibit 12.5.

The Weingarten decision also refuted the company s contention that union repre- sentation is necessary only after the company has made its disciplinary decision. The Supreme Court ruled that this practice would diminish the value of union representa- tion, thereby making it increasingly difficult for the employee to vindicate himself or herself in the subsequent grievance proceedings. NLRB cases indicate that an employee who is discharged for just cause will not be reinstated solely because the employer violated his or her Weingarten rights. This means that if the employer has obtained evidence from sources other than from the illegal interview, the employee s discharge that the employee has violated a company rule will be upheld on those grounds54.

Exhibit 12.5 Application of Weingarten Rights

1. The employee s right to union representation stems from Section 7 of the Labor Management Relations Act, which allows the employee to engage in concerted activities for mutual aid and protection.

2. The right can be exercised only if the employee chooses to request representa- tion; the employer is not obligated to inform the employee of his or her legal right to union representation.

3. The employee must reasonably believe that disciplinary action could follow before requesting the presence of a union representative.

4. If the employee refuses to go through the interview, the request for representa- tion having been denied, the employer may continue the investigation without the input of the employee.

5. The employer is not obligated to bargain with the employee s union representa- tive during the interview.

6. If the employer denies the employee his or her right to union representation after the employee makes a legitimate request and continues the investigatory inter- view, the interview is considered an illegal interview, and any information gained by the employer during the interview, even a confession to a misdeed such as theft, will not be allowed in a subsequent procedure, such as arbitration. Not to be confused, such rulings do not prove that the employee is innocent of the alleged crime; simply, the employer must prove the employee s guilt with some other evidence. For example, another employee may be willing to come forward as a witness to the employee s theft.

7. Weingarten rights do not apply if management had already decided to impose discipline and the purpose of the meeting with the employee is for management to communicate the disciplinary decision.

SOURCE: Neal Orkin and Miriam Heise, Weingarten through the Looking Glass, Labor Law Journal, 48 (March 1997), pp. 157 159. # 1994, 1997, & 2000, CCH Incorporated. All Rights Reserved. Reprinted with permission from Labor Law Journal.

CHAPTER 12 Employee Discipline 625

Union s Communication with Members on Weingarten Rights Unions continually attempt to inform their members of their Weingarten rights. Not only are these rights important to the individual member who needs representation by an experienced union representative, but the exercise of these rights play an impor- tant part in the union s role of representing members. For example, one union provides wallet-sized cards for members to carry with them (see Exhibit 12.6, The Weingarten Card: Don t Leave Home without It!). The AFSCME have developed an Awareness Quiz on Weingarten rights on its Web page to better educate its members (see Exhibit 12.7 for the Web site address of the interactive Awareness Quiz and see how you score).

The NLRB has a history of extending and then rescinding the rights of unrepre- sented employees to have a co-employee present during an investigatory interview that he or she reasonably believes could result in disciplinary action. On July 10, 2000, the NLRB decided that Weingarten rights should be extended to employees in nonunion workplaces to afford them the right to have a co-worker present at an investigatory interview that the employee reasonably believes could result in disciplinary action.55

Then, in 2004, the NLRB (with a majority of the Board appointed by President George W. Bush) flip-flopped again and returned to the 1985 position, meaning that currently unrepresented employees do not have the same rights of representation under the U.S. Supreme Court s Weingarten decision as are guaranteed employees who are represented by a union.56 Exhibit 12.8 shows how the NLRB has changed its position on unrepre- sented employee Weingarten rights since 1982. Since presidents appoint members of the Board, the NLRB s policy could change again.

During the years in which Weingarten rights were extended to nonunion employ- ees, several interesting issues were raised. First, there is a question of whether the rules developed by decisions of the NLRB since the Supreme Court s 1975 Weingarten deci- sion will be applied to nonunion settings. For example, an employee in a unionized setting does not have the right to union representation when the sole purpose of a meeting called by a management official is to communicate a previously determined disciplinary action.

Second, there is a question of who will serve as a witness. Although the decision that extended Weingarten rights to nonunion employees refers only to a co-worker as an observer, questions that may be raised are as follows: May an employee bring in his or her attorney to witness a disciplinary meeting? May the employee call in another super- visor? What if the employee wants to bring in a co-worker who is under investigation for the same wrongdoing? What happens if the employee calls for a co-worker who is not readily available, for example, is on layoff or vacation.

Third, there is a question of the role of the witness in a nonunion setting. In a unionized setting, a union representative may ask questions for clarification and consult with the employee. If there is an emotional confrontation, the union representative will

Exhibit 12.6 The Weingarten Card: Don t Leave Home without It!

If this discussion could in any way lead to my being disciplined or terminated, or affect my personal working conditions, I request that my UE steward or union offi- cer be present at the meeting. Without representation, I choose not to answer any questions.

(This is my right under a Supreme Court decision called Weingarten.)

SOURCE: http://www.ranknfile-ue.org/stwd_wei.html.

626 PART 3 Administering the Labor Agreement

try to defuse it. In a unionized setting, the union representative possesses knowledge of the grievance procedure and past practices of the parties and will be able to articulate the common law of the shop with the employer. A co-worker witness no doubt will not

have such knowledge and expertise. In fact, a co-worker may be reluctant to serve as a witness because he or she may fear retribution from the employer, and the co-worker is left unprotected because there is no union or collective bargaining agreement that pro- vides protection.

Fourth, there is a question concerning the employer s actions when an employee asserts Weingarten rights and requests a co-worker as a witness. One choice for the employer is simply to grant the request; this may be appropriate when the co- worker s presence may be beneficial to the investigation. A second choice is to discon- tinue the interview and continue the investigation without an interview with the

Exhibit 12.7 A Quiz on Weingarten Rights Interactive Exercise

Note: Weingarten Rights may be based in law, the contract or employer rules. To determine if you are protected by Weingarten Rights, check with your local steward or union staff.

The answers to this quiz are based in principles established by the U.S. Supreme Court and the National Labor Relations Board.

Always check before you act!

True False

1. ______ Like Miranda rights (where the police officer must tell the suspect you have the right to remain silent, etc., ), the supervisor must inform the

employee of his/her Weingarten rights ( you have a right to have a union steward present ).

2. ______ When an employee requests that a steward be present, the supervi- sor can select which steward is called in.

3. ______ If an employee requests a particular steward, and that steward is on sick leave or vacation, the supervisor must postpone an investigative interview until the steward returns to work.

4. ______ Upon arrival at the meeting, the steward has the right to meet privately with the employee before questioning begins.

5. ______ If a supervisor denies a request for a steward, the employee must still continue to answer the supervisor s questions.

6. ______ If a steward is called in by a supervisor and believes discipline may result, the steward may request the presence of another steward.

7. When an employee requests the presence of a steward at an investigative meeting, the supervisor may: a. Grant the request and wait for the steward to arrive b. Deny the request and immediately end the meeting c. Give the employee the choice of ending the meeting or continuing without

union representation 8. While at the meeting the steward may:

a. Ask the supervisor the purpose of the meeting b. Only be a silent witness at the meeting c. Ask the supervisor to clarify a confusing question d. Not take notes

SOURCE: http://www.afscme543.com/quiz_2.htm

CHAPTER 12 Employee Discipline 627

suspected employee. If the employer rejects the employee s request for a co-worker representative and continues the interview, the interview would be considered an ille- gal interview and no information learned in the interview could be used to support the disciplinary action. However, the employer may discipline the employee on facts found through means other than the interviews. Moreover, if the employee is consid- ered an at-will employee, the employee may be disciplined for any reason or no rea- son and probably will not have access to a grievance procedure or other forms of protection.57

A fifth dilemma for the employer is the pay for the co-worker representative. In a unionized setting, the collective bargaining agreement usually addresses whether union officials will be paid for time spent on union representational activities and at what rate. In a nonunion setting, since there is no collective bargaining agreement, the employer may attempt to avoid the issue by scheduling interviews after hours. Then, the employer may contend that the co-worker is not entitled to any pay because the employer did not ask the co-worker to attend the interview. The co-worker represen- tative s appearance at the interview was at the request of the employee being investigated.58

Exhibit 12.8 Evolving NLRB Policy on Employee Weingarten Rights

1975 The U.S. Supreme Court held that a unionized employee has the right to union representation at an investigatory interview when the employee reason- ably believes that the investigatory interview could lead to disciplinary action. NLRB v. J. Weingarten, Inc., 420 U.S. 251.

1982 The Board held that unrepresented employees had Weingarten rights because Section 7 of the National Labor Relations Act gives employees the right to engage in protected concerted activities for mutual aid and protection. Materials Research Corp., 262 NLRB 1010.

1985 The Board reversed itself and held that unrepresented employees did not have Weingarten rights because such rights stem from the union s right to represent employees and Weingarten rights extend to employees only when there is an exclu- sive bargaining representative (union). Sears Roebuck & Co., 274 NLRB 230.

1985 Weingarten rights are not applicable to nonunion settings. E. I. DuPont De Neumours & Co., 289 NLRB 627 (DuPont III).

2000 2001 The Board reversed itself again and held that unrepresented employ- ees had Weingarten rights. Employees are afforded the right to have a co-worker present at an investigatory interview when the employee reasonably believes the investigatory interview could lead to disciplinary action. Epilepsy Foundation of Northeast Ohio v. NLRB, 331 NLRB 92, upheld by the U.S. Circuit Court of Appeals, No. 00-1332 (November 2, 2001) 2001 U.S. App. LEXIS 23722 (D.C. Cir. 2001).

2004 For the fourth time, the NLRB changed its position. In IBM Corp., 341 NLRB 148 (June 9, 2004), the Board ruled that rights afforded to unionized workers by the U.S. Supreme Court s decision in NLRB v.J. Weingarten, Inc., 420 U.S. 251 (1975) are not extended to unrepresented employees.

SOURCE: Michael J. Soltis and Alexandra M. Gross, Weingarten Redux: An Employer s Manual, Labor Law Journal, 51 (Winter 2000), pp. 179 180; James F. Morgan, James M. Owens, and Glenn M. Gomes, Union Rules Intrude upon the Nonunion Domain: Workplace Investigations and the NLRB, Employee Responsibilities and Rights Journal, 14 (March 2002), p. 36; Weingarten Rights, Labor Law and Due Process, Center for Labor Relations and Research, Pearl City, Hawaii, University of Hawaii, West Oahu, http:// www.homepages.uhwo.hawaii.edu/clear/wein.html, pp. 1 2.

628 PART 3 Administering the Labor Agreement

Summary In many respects, employee discipline represents the most significant day-to-day issue in administering the labor agreement. For union and management, adminis- tration of discipline is a key factor related to control and production; the supervisor and the affected employee are even more directly and personally affected.

Management had a unilateral right to discharge or discipline employees until the 1930s, although psycho- logical reform and efficiency movements in the early 1900s urged management to critically examine its dis- ciplinary policies. Some managers realized that an employee represented an investment that could be unnecessarily lost because of whimsical disciplinary actions. These individuals realized that they had an obligation to provide employees with clear work rules and proper training that would minimize the number of discipline problems and lead to increased productiv- ity. The establishment of the NLRB further refined employers disciplinary policies, as employees dis- charged for union activities could be reinstated to their jobs with back pay.

Discipline in unionized settings must be for just cause, a concept consisting of several dimensions. Management has the burden of proof to establish that an employee committed an infraction. Although discipline can accomplish several purposes for the organization, management may have to prove that its actions were taken to correct an employee s behav- ior. Correction suggests that an employee must be aware of work rules that are clear in their content, as well as consequences for their infraction. The work rules must also be reasonable that is, related to the job and consistently applied to all employees under similar circumstances.

Discipline s corrective emphasis also suggests progressive penalties be given to an employee for repeating a similar offense. Progressive discipline impresses on the employee the seriousness of repeated rule infractions while giving the employee additional opportunities to correct work behavior. Unless the infraction is heinous, such as stealing property, management usually has to give an employee an oral warning for the first offense, then a written warning and suspension for subsequent, similar offenses. Discharge is a last resort, used only when all other attempts at correction have failed or the nature of the offense is so unacceptable as to make corrective efforts inappropriate.

Management must also establish that the penalty fits the crime and that it considered all possible miti- gating circumstances before imposing discipline. Man- agement must also provide the employee with due process in the disciplinary procedure; that is, it must ensure that the appropriate contractual provisions are upheld. The employee usually has the right to union representation and the right to be notified of the offense in writing.

The U.S. Supreme Court has ruled that an employee has the legal right, a Weingarten right, to have a union representative present during an inves- tigatory interview if the employee reasonably believes that the investigation could result in disciplinary action and the employee requests union representa- tion. Since this decision, the NLRB has provided additional guidance to the parties. Unions have attempted to inform their members on how to use their Weingarten rights.

Key Terms just cause, p. 602 discharge, p. 603 wrongfully discharged, p. 603 preponderance of evidence, p. 611 clear and convincing evidence, p. 611

beyond a reasonable doubt, p. 611 price list, p. 615 Progressive discipline, p. 616 oral warning, p. 616 written warning, p. 616

suspension, p. 616 last chance agreement, p. 617 mitigating circumstances (factors),

p. 618 due process, p. 623

CHAPTER 12 Employee Discipline 629

Discussion Questions

1. Why is discipline the most significant issue for union and management? Describe how this sig- nificance has shifted over time.

2. One union newspaper indicated how it saved an employee s job. The employee was in the mechanic s classification and was discharged for refusing to comply with management s sudden, unilateral rule that mechanics must perform jan- itorial duties. Given this sketchy situation, discuss the many possible reasons for the disciplinary action, indicating why the arbitrator might not have been convinced that management s disci- pline was for a legitimate purpose. (You are free to make and state assumptions in your answer.)

3. Explain in some detail the difficulties manage- ment would have in administering the following work rule in accordance with the disciplinary principles established in the chapter: Any employee reporting to work under the influence of alcohol will be subject to discharge.

4. Indicate the comparative advantages and disadvantages of a table of penalties (see Exhibit 12.3 on pg. 611) in the labor agreement versus a one-sentence contractual provision indicating management has the right to discipline or dis-

charge an employee for cause. 5. Although not subject to judicial scrutiny, evidence

in an arbitration hearing still has its complexities. Discuss related considerations that could be involved in an arbitration hearing involving an employee who was discharged for smoking mari- juana on the job.

6. Assume you are in charge of establishing a train- ing program for supervisors in administering discipline. Based on the supervisor s potential role in the disciplinary process, formulate and discuss three major principles you would stress in this session.

Exploring the Web

1. Supervisor Checklist for Employee Discipline Prior to taking disciplinary action, supervisors are given a checklist of questions on the following subjects:

Work performance problem Behavior problem Investigation Supervisor s responsibility The employee Appropriate correction action

(http://www.hra.iupui.edu/content/doclib) (Also see: http://www.nctraining.ncgov.com/disci- pline/supervisors.)

2. Progressive Discipline A supervisor s guide to the basic elements of a sound progressive disciplinary system (http://www. cmich.edu/x9684.xml). This guide includes steps, principles, check- lists, forms, sample letters, and termination letters.

3. Wrongful Discharge, Employer Exposure, and Types of Damages Go to http://employment/find/law.com/employment/ employment-employee-job-(loss) and find out the Ten Things to Think About: Wrongful Discharge.

Also, click on Wrongful Termination Claims for advice to a person who believes he or she has been wrongfully terminated from his or her job.

4. Due Process Protocol A due process protocol for mediation and arbitra- tion of statutory discipline arising out of the employment relationship can be found at http:// naarb.org/protocol.asp.; naarb.org/media.asp

5. Just Cause and Due Process For views of labor arbitration authorities go to: http://www.naarb.org/proceedings/index/asp. Type in just cause or due process or another labor arbi- tration subject in which you may be interested and want to know more about.

630 PART 3 Administering the Labor Agreement

References 1. Ahmad R. Karim, Why Arbitrators Sustain Dis-

charge Penalties, Labor Law Journal, 45, June 1994, pp. 374 378; Stephen M. Crow, Elvis C. Stephens, and Walton H. Sharp, A New Approach to Decision-making Research in Labor Arbitration Using Alcohol and Drug Disciplinary Cases, Labor Studies Journal, 17, Fall 1992, pp. 3 18.

2. For consideration of other, more informal disci- plinary actions taken by management, see Bruce Fortado, Informal Supervisory Social Control Strategies, Journal of Management Studies, 31, March 1994, pp. 251 275.

3. Payne v. Western & Atlantic Railroad Co., 81 Tenn. 507, 519 520, 1884 WL 469 at 6 (Sep. term 1884).

4. Guz v. Bechtel National Inc. 24, Cal. 4th 317, 8 P. 3d 1089, 100 Cal. Rptr. 2nd 352.

5. Mark Harcourt, Helen Lam and Maureen Han- nay, Employment at will versus Just Cause: Applying the Due Process Model of Procedural Justice, Labor Law Journal, 2013, pp. 67 79; E. Allan Lind, Fairness Heuristic Theory: Justice Judgments as Pivotal Cognitions in Organiza- tional Relations, in Jerald Greenberg and Russell Cropanzano (Eds.) Advances in Organizational Justice (Stanford, CA: Stanford University Press, 2001), pp. 56-88.

6. For an example of how the NLRB can alter an organization s decision policies, see Marcia A. Graham, Obscenity and Profanity at Work, Employee Relations Law Journal, 11, Spring 1986, pp. 662 677.

7. For more thorough explanations of this exhibit, see Donald S. McPherson, The Evolving Concept of Just Cause: Carroll R. Daugherty and the Requirement of Disciplinary Due Process, Labor Law Journal, 38, July 1987, pp. 387 403; Adolph M. Koven and Susan L. Smith, Just Cause: The Seven Tests (San Francisco: Kendall/Hunt, 1985).

8. Richard E. Dibble, Alternative Dispute Resolu- tion in Employment: Recent Developments, Journal of Collective Negotiations in the Public Sector, 29, 2000, pp. 245 257.

9. Marvin J. Levine, The Erosion of the Employment-at-will Doctrine: Recent Develop- ments, Labor Law Journal, 45, February 1994,

pp. 79 89. See also William H. Holley, Jr., and Roger S. Wolters, An Employment-at-will Vul- nerability Audit, Personnel Journal, 66, April 1987, pp. 130 138; William H. Holley, Jr. and Roger S. Wolters, Labor Relations: An Experien- tial and Case Approach (Hinsdale, IL: Dryden Press, 1988), pp. 33 35. See also Giles Trudeau, Is Reinstatement a Remedy Suitable to At-will

Employees? Industrial Relations, 30, Spring 1991, pp. 302 315; Jay E. Grenig, Dismissal of Employees in the United States, International Labor Review, 130, 1991, pp. 569 581; Marcia P. Miceli, Janet P. Near, and Charles R. Schwenk, Who Blows the Whistle and Why? Industrial

and Labor Relations Review, 45, October 1991, pp. 113 130; Lisa B. Bingham, Employee Free Speech and Wrongful Discharge, Labor Law Journal, 45, July 1994, pp. 387 400; Melissa S. Baucus and Terry Morehead Dworkin, Wrongful Firing in Violation of Public Policy: Who Gets Fired and Why, Employee Responsibilities and Rights Journal, 7, 1994, pp. 191 206; Charles J. Muhl, The Employment-at-will Doctrine: Three Major Exceptions, Monthly Labor Review, 124, January 2001, pp. 3 11.

10. RAND Corp. Study Links Job Losses to States Wrongful Termination Rules, Bureau of National Affairs, Daily Labor Report, July 23, 1992, p. A2. For somewhat similar conclusions reached by another survey, see Wrongful- discharge Claims Increasing, Management Asso- ciation Survey Finds, Bureau of National Affairs, Daily Labor Report, February 6, 1990, pp. A8, A9.

11. Bradley T. Ewing, Charles M. North, and Beck A. Taylor, The Employment Effects of a Good Cause Discharge Standard in Montana, Indus- trial and Labor Relations Review, 59, October 2005, pp. 17 33.

12. George Nicolau, Is It Time for a National Unfair Dismissal Statute? Paper presented at the Annual Meeting of the National Academy of Arbitrators, May 27, 2006, pp. 2 9.

13. Brian S. Klaas, Thomas W. Gainey, and Gregory G. Dell Omo, The Determinants of Disciplinary System Effectiveness: A Line-management Per- spective, Industrial Relations, 8, October 1999, pp. 542 550.

CHAPTER 12 Employee Discipline 631

14. Mario F. Bognanno, Jonathan E. Booth, Thonas J. Norman, Laura J. Cooper, and Stephen F. Befort, The Conventional Wisdom of Discharge Arbi-

tration Outcomes and Remedies Fact or Fiction, Cardozo Journal of Conflict Resolution, 16, 2014, p. 169.

15. See Kenneth M. Jennings, Barbara Sheffield, and Roger S. Wolters, The Arbitration of Discharge Cases: A Forty Year Perspective, Labor Law Journal, 38, January 1987, p. 35. See also Ahmad Karim and Thomas H. Stone, An Empirical Examination of Arbitrator

Decisions in Reversal and Reduction Discharge Hearings, Labor Studies Journal, 13, Spring 1988, p. 47; Thomas R. Knight, The Impact of Arbitration on the Administration of Disciplinary Policies, Arbitration Journal, 39, March 1984, pp. 43 56.

16. Stephen B. Goldberg, What Happens after the Arbitrator s Award? Paper presented at the Annual Meeting of the National Academy of Arbitrators, May 25, 2006, pp. 7-7 7-10.

17. Arthur Anthony Malinowski, An Empirical Analysis of Discharge Cases and the Work His- tory of Employees Reinstated by Labor Arbitra- tors, Arbitration Journal, 36, March 1981, p. 39; William E. Simkin, Some Results of Reinstate- ment by Arbitration, Arbitration Journal, 41, September 1986, p. 56.

18. Chalmer E. Labig, Jr., I. B. Helburn, and Robert C. Rodgers, Discipline, History, Seniority, and Reason for Discharge as Predictors of Post- rein- statement Job Performance, Arbitration Journal, 40, September 1985, p. 49. For additional con- siderations of this relationship, see Robert C. Rodgers, I. B. Helburn, and John E. Hunter, The Relationship of Seniority to Job Performance

Following Reinstatement, Academy of Manage- ment Journal, 29, March 1986, pp. 101 114; I. B. Helburn, Seniority and Postreinstatement Performance, in Proceedings of the Forty-Third Annual Meeting, National Academy of Arbitra- tors, ed. Gladys W. Gruenberg (Washington, D.C.: Bureau of National Affairs, 1991), pp. 141 149.

19. D. C. Miller, Supervisor: Evolution of a Forgot- ten Role, in Supervisory Leadership and Produc- tivity, ed. Floyd Mann, George Homans, and Delbert Miller (San Francisco: Chandler, 1965), p. 113.

20. Oil, Chemical, and Atomic, Union News, July 1970, p. 9.

21. Richard Mittenthal and W. David Vaughn, Working at the Margins of Just Cause : The

Never-ending Dispute over Arbitral Discretion on the Discharge Penalty, paper presented at the Annual Meeting of the National Academy of Arbitrators, May 25, 2006, pp. 3-9 3-35; Clarence R. Deitsch, Seniority Clauses: an End Run Around Just Cause? Dispute Resolution Journal, 60, November 2005 January 2006, pp. 31 34.

22. Mario F. Bognanno, Jonathan E. Booth, Thomas J. Norman, Laura J. Cooper, and Stephen F. Befort, The Conventional Wisdom of Discharge Arbitration Outcomes and Remedies Fact or Fic- tion, Cardozo Journal of Conflict Resolution, 16, 2014, pp. 157 158.

23. Hoosier Panel Co., Inc., 61 LA 983 (M. Volz, 1973). Marvin Hill, Jr. and Diana Beck, Some Thoughts on Just Cause and Group

Discipline, Arbitration Journal, 41, June 1986, pp. 60 62.

24. Rafael Gely and Timothy D. Chandler, Exploring the Lumpiness of Grievance Arbitration Deci- sion Making, Journal of Collective Negotiations in the Public Sector, 32(4), 2010, pp. 287 304.

25. Riley Stoker Corp., 7 LA 767 (Platt, 1947). 26. Richard Mittenthal and W. David Vaughn,

Working at the Margins of Just Cause : The Never-ending Dispute Over Arbitral Discretion on the Discharge Penalty, Paper presented at the Annual Meeting of the National Academy of Arbitrators, May 25, 2006, pp. 3 11.

27. David A. Dilts, Ahmad Karim, and Mashalah Kahnama Moghadam, The Arbitration of Disci- plinary Matters: Do Objective Standards Make a Difference in Proof? Labor Law Journal, 42, October 1991, pp. 708 712.

28. Arthur Eliot Berkeley, Asleep at the Wheel: How Arbitrators View Sleeping on the Job, Arbitra- tion Journal, 46, June 1991, p. 48.

29. Randall M. Kelly, The Burden of Proof in Criminal Offenses of Moral Turpitude Cases, Arbitration Journal, 46, December 1991, pp. 45 48.

30. Ayelet Ellie Lichtash, Inappropriate Use of E- mail and the Internet in the Workplace: The Arbitration Picture, Dispute Resolution Journal, 59, February/March, 2004, pp. 26 37.

632 PART 3 Administering the Labor Agreement

31. Laura Davis, Discipline and Decisions: A Study of Arbitration Cases Dealing with Employee Dis- courtesy, Labor Law Journal, 46, February 1995, p. 84.

32. Edgar A. Jones, Jr., Selected Problems of Procedure and Evidence, in Arbitration in Practice, ed. Arnold M. Zack (Ithaca, NY: ILR Press, 1984), p. 62.

33. Buick Youngstown Company, 41 LA 570 753 (H. Dworkin, 1963).

34. Ibid. 35. Terry L. Leap and Michael D. Crino, How to

Deal with Bizarre Behavior, Harvard Business Review (May/June 1986), pp. 18 25. This article also furnishes eight criteria for management in determining whether discharge for previously unconsidered disciplinary infractions is justified.

36. Donald J. Petersen, No Smoking! Dispute Resolution Journal, 50, January 1995, p. 48.

37. For additional consideration of the moonlight- ing employee, see Muhammad Jamal, Moon- lighting Myths, Personnel Journal, 67, May 1988, pp. 48 53.

38. Robert A. Kearney, Arbitral Practice and Pur- pose in Employee Off-duty Misconduct Cases, Notre Dame Law Review, 69, 1993, pp. 135 156; Janie L. Miller, David B. Balkin, and Robert Allen, Employer Restrictions on Employees Legal Off-

duty Conduct, Labor Law Journal, 44, April 1993, pp. 209 219.

39. Donald J. Petersen, Trends in Arbitrating Falsi- fication of Employment Application Forms, Arbitration Journal, 47, September 1992, pp. 32 33.

40. Gregory G. Dell Omo and James E. Jones, Jr., Disparate Treatment in Labor Arbitration: An

Empirical Analysis, Labor Law Journal, 41, November 1990, pp. 739 750.

41. Lisa Davis and Ken Jennings, Employee Horse- play and Likely Managerial Overreaction, Labor Law Journal, 40, April 1989, pp. 248 256; George T. Roumell, Jr., Hamady Brothers, Inc., 59 LA 1097, AAA Case No. 54 30 0563 72; October 20, 1972.

42. Bonnie G. Bogue and Katherine J. Thomson, Pocket Guide to Just Cause: Discipline and Dis- charge Arbitration (Berkeley, CA: California Public Employee Relations Program, Institute for Research on Labor and Employment, University of California, 2010), p. 47.

43. Mario F. Bognanno, Jonathan E. Booth, Thomas J. Norman, Laura J. Cooper, and Stephen F. Befort, The Conventional Wisdom of Discharge Arbitration Outcomes and Remedies Fact or Fic- tion, Cardozo Journal of Conflict Resolution, 16, 2014, p. 161.

44. Peter A. Bamberger and Linda H. Donahue, Employee Discharge and Reinstatement: Moral

Hazards and the Mixed Consequences of Last Chance Agreements, Industrial and Labor Rela- tions Review, 53, October 1999, pp. 3 19.

45. Mario F. Bognanno, Jonathan E. Booth, Thomas J. Norman, Laura J. Cooper, and Stephen F. Befort, The Conventional Wisdom of Discharge Arbitration Outcomes and Remedies Fact or Fic- tion, Cardozo Journal of Conflict Resolution, 16, 2014, pp. 163 164.

46. Tim Bornstein, Getting to the Bottom of the Issue: How Arbitrators View Alcohol Abuse, Arbitration Journal, 44, December 1989, pp. 47. 44.

47. George W. Bohlander and Donna Blancero, A Study of Reverse Determinants in Discipline and Discharge Arbitration Awards: The Impact of Just Cause Standards, Labor Studies Journal, 21, February 1996, pp. 3 10.

48. Mario F. Bognanno, Jonathan E. Booth, Thomas J. Norman, Laura J. Cooper, and Stephen F. Befort, The Conventional Wisdom of Discharge Arbitration Outcomes and Remedies Fact or Fic- tion, Cardozo Journal of Conflict Resolution, 16, 2014, p. 161.

49. John B. LaRocco, Just Cause Collides with Public Policy in Sexual Harassment Arbitrations, Proceedings of the 49th Annual Meeting of the Industrial Relations Research Association (Madison, WI: IRRA, 1997), pp. 211 216.

50. Hoyt N. Wheeler, Brian S. Klass, and Douglas M. Mahoney, Workplace Justice without Unions (Kalamazoo, MI: W. E. Upjohn Institute for Employment Research, 2004), p. 7; NLRB v. J. Weingarten, Inc., 420 U.S. 262, 1974. See also M. J. Fox, Louis V. Baldovin, Jr., and Thomas R. Fox, The Weingarten Doctrine, Arbitration Journal, 40, June 1985, pp. 45 54. The Weingar- ten decision has also been held by an appeals court to be applicable in at least some federal sector situations. See Court Permits Union Representation at Meetings with DOD Investiga- tors, Bureau of National Affairs, Daily Labor Report, September 7, 1988, p. A1.

CHAPTER 12 Employee Discipline 633

51. R. W. Fleming, The Labor Arbitration Process (Champaign: University of Illinois Press, 1965), p. 139.

52. Hoyt Wheeler, Brian S. Klass, and Douglas Mahoney, op.cit.

53. Ibid. 54. See: Ralphs Grocery Company and United Food

and Commercial Workers Union, Local 324, 361 NLRB No. 9 (2014).

55. Epilepsy Foundation of NE Ohio and Borgs and Hassan, 331 NLRB 92, July 10, 2000.

56. Clarence R. Deitsch, David A. Dilts, and Francice Guice, Weingarten Rights in the Non-union

Workplace: A Merry-go-round of NLRB Deci- sions, Dispute Resolution Journal, 61, May July 2006, pp. 46 49.

57. Ann C. Hodges, Courtney Mueller Coke, and Robert R. Trumble, Weingarten in the Nonunion Workplace: Looking in the Funhouse Mirror, Labor Law Journal, 54, Summer 2002, pp. 94 95.

58. James F. Morgan, James M. Owens, and Glenn M. Gomes, Union Rules Intrude Upon the Non- union Domain: Workplace Investigations and the NLRB, Employee Responsibilities and Rights Journal, 14, March 2000, pp. 36 39.

634 PART 3 Administering the Labor Agreement

CA SE

ST UD

Y

12 -1 Issue: Was Mr. Babcock s Termination for Just

Cause? If Not, What Is the Remedy?

Background

Golden Coin Casino Biloxi, MS and the United Servers have a Collective Bargaining Agreement. The origin of this matter of arbitration is an incident which occurred on December 6, 2014.

On Thursday 12/6/14 at approximately 7 P.M. two guests (two females) came into Buffet and asked Odel Mar- tin, Assistant Manager to speak with Babcock (food server) and when Odel was doing rounds in dining room observed one of the females with a plate eating in Babcock s section. When Babcock was asked about ticket he didn t have a reply. After viewing video tapes of the meal, it was deter- mined that the meals were not paid for.

Why this is important? This is a violation of Collective Bargaining Agree-

ment 6.02. Cause for Discharge Willful Misconduct Dishonesty Babcock had guests in his section that he served who did not pay for meal. Consequence of behavior:

Separation of Employment On December 17, 2014, Union Steward Pamela

Smith filed the following Grievance: Describe briefly the issue/problem:

Wrongful termination. What section(s) of the contract does this violate:

Article 6, 6.1 Just Cause What action/adjustment does the grievant want:

To be made whole.

In a letter dated January 24, 2015, Nat Miller, Golden Coin s Labor Relations Manager, provided the Company s Third Step Grievance Response. Mr. Miller wrote:

Mr. Babcock admitted to serving a guest without proper payment being made for a meal which was partially consumed by the guest on Thursday, December 6, 2014. By his own admission, Mr. Bab- cock invited the guest to dine at the Buffet with payment to be made personally by Mr. Babcock. The evidence reveals that Mr. Babcock did indeed tender his personal debit card to Cashier, Inez John- son, who was momentarily occupied with other guests and Ms. Johnson requested that Mr. Babcock wait as she tended to the other guests.

Mr. Babcock retreated to his duties, instructing Ms. Johnson to keep the card and advising that he would return later. Upon return to his assigned sec- tion, Mr. Babcock observed that one of his guests had decided to leave abruptly prior to completing her meal. He then returned to the Cashier stand to retrieve his debit card. According to Mr. Babcock, he then advised the Cashier that his guest had changed her mind about eating and he requested return of his debit card.

In his voluntary statement which Mr. Babcock submitted on or about December 17, 2014, he recounted all of the above facts. However, it was not until the 3rd step hearing that he made it clear that he insisted on a non-charge for the meal based on his understanding of Buffet operations.

Odel Martin testified that on December 6, 2014 at approximately 7:00 P.M., she was approached at the Host stand by two female employees of the Funny Bones Comedy Club who requested to speak with Babcock for a moment. Mrs. Martin granted permission and the two ladies proceeded past the Host station and into the main dining area of the Buffet. After remaining at the Host sta- tion for several minutes, Mrs. Martin next pro- ceeded to the main dining area in the course of her normal duties as Assistant Manager. She imme- diately observed that Babcock had placed utensils, beverages and napkins on a table where the two ladies were seated. Mrs. Martin continued to observe as one of the ladies left out of the restaurant and the other headed toward the buffet line to pre- pare a plate for consumption.

Mrs. Martin approached Babcock to advise that the ladies had not tendered payment for the meals and inquired as to why they were being seated without a receipt. Babcock did not respond and continued about his duties. Mrs. Martin then went to the Funny Bones Comedy Club to discuss the matter with the manager on duty, Sue Reeves. Ms. Reeves advised that she had not given permis- sion for the employees to leave their work area dur- ing working hours and considered them to be missing in action. Mrs. Martin learned that the

CHAPTER 12 Employee Discipline 635

names of the Funny Bones employees are Lois Smith and Jane Byrd. Equipped with this informa- tion, Mrs. Martin returned to the Buffet.

Mrs. Martin conferred with Tom Hansen, Buffet Manager, about the events involving Babcock and his guests and on December 7, 2014, Babcock was suspended pending investigation. The matter was then referred to investigations. Babcock reported to investigations on December 12, 2014 and was inter- viewed by Lead Investigator, Sid McLeod. Babcock submitted a voluntary statement later.

Conclusion of the Investigation The crucial facts in this case are clear, uncon-

tested and indisputable. On December 6, 2014, Bab- cock seated two acquaintances, Smith and Byrd in the Casino Buffet at approximately 7:00 P.M. Bab- cock invited both Smith and Byrd to dine at his expense and one of the two ladies declined. He then invited the acquaintance who accepted his invitation to proceed to the buffet station to prepare her plate. Babcock was approached by Assistant Buffer Manager, Odel Martin, who inquired about payment of the meals. Babcock did not respond.

Babcock approached the cashiering station and left his debit card for Cashier, Inez Johnson, and returned to his section. While it was unknown at the time of his termination, Babcock admitted that he advised Cashier, Inez Johnson that his guest decided against eating and Babcock insisted that no charges be assessed against his debit card.

Babcock admitted that he was the only Server for the guest and he bussed the table when his guest left the area abruptly without fully completing the meal. At no point did Babcock seek approval from any member of management to confirm the non- charge although he had full knowledge that his guest did indeed fill a plate from the Buffet line.

Babcock is keenly aware of operating procedures for the venue. As a Food Server he fully understands that one of the major responsibilities is to ensure that prior to taking any beverage orders, he is to observe for evidence of payment by the guest. He fully under- stands the universal operating tenet of buffets pay first, eat later. In cases involving customer satisfac- tion issues, management should be notified immedi- ately to address any problems/concerns. Babcock made no attempt to notify management of any prob- lem and sought no approval of a non-charge.

The Grievance was appealed to arbitration.

Relevant Provisions of the Collective Bargaining Agreement

Article 6: Discharge 6.01. Just Cause

No employee shall be disciplined or discharged except for Just Cause. Disciplinary actions shall be progressive and corrective in nature. Disciplinary notices shall include at a minimum; a documented coaching, a written warning, a final warning, and dis- charge. The parties agree that progressive discipline normally requires, prior to suspension or discharge, that an employee be given an opportunity to correct the deficiency through advance notice, additional train- ing or adequate time to correct the deficiency. Notwith- standing the above, certain conduct as set forth in 6.02(a) will result in immediate discharge without resort to progressive discipline.

6.02. Cause for Discharge. (a) No regular employee, after having completed

the probationary period as defined under Article 10, shall be discharged except for just cause.

Article 22: Management Rights 22.01. Management Rights

(a) The management of the Employer shall have the exclusive right to manage and operate the Employer, including all of its operations, activities, and the direction of the work force, with the right to hire; or to suspend, discipline or discharge for just cause .

22.03. Rules and Regulations The Employer shall have the right to establish,

amend, modify and post Rules governing and regulating the conduct of employees. Employees failure to abide by said Rules will constitute grounds for discipline consistent with the terms of this Agreement.

Relevant Provisions of the Employee Handbook

What Golden Coin Casino Expects From You Rules of the Road Conduct Standards: Out of respect for our guests

and each other, you are expected to maintain certain behavior and performance standards. The following list provides examples of behavior that can result in disci- plinary action; it is not intended to be an exhaustive list. You are expected to use good judgment at all times in behaving appropriately at work.

636 PART 3 Administering the Labor Agreement

Although the violations noted below may result in immediate Separation of Employment or immediate Final Written Warning upon first offense, less severe offenses are viewed cumulatively and will normally be handled on a four-step basis of progressive discipline:

First Step Document Coaching Second Step Written Warning Third Step Final Written Warning Fourth Step Separation of Employment

Discipline will be separated into three categories: Attendance, Performance/Policy, and Variances (money- handling).

Management may, based on the severity and the spe- cific facts of the incident, accelerate the disciplinary pro- cess to include any of the four steps up to and including immediate Separation of Employment. Also, violations of more than one Conduct Standard in a single act will result in increased or multiple disciplinary steps up to and including immediate Separation of Employment. Investi- gative suspension may be used to suspend an employee while an investigation is conducted. The following list is not all-inclusive and may be revised periodically .

3. Employees will be honest and forthcoming in all communication, verbal and written; this includes any Company documents, communication, and participation in investigations. Employees will not knowingly make false statements or omit pertinent information, particu- larly regarding investigations or reports. Employees must report any known acts or plans of dishonesty .

6. Employees will not participate in theft, misappro- priation, misuse or willful destruction of a co-worker s, guest s or Company property, or unauthorized removal of such, including lost and found items; this includes removing items from Company dumpsters or any other property disposal facility and includes unautho- rized removal of food and beverages .

16. Employees will obey all Company rules, department policies and procedures, supervisor s instructions, regulations and/or statutes of local, state and federal governmental agencies including those pre- scribed by the Mississippi Gaming Commission. Employees will follow all posted, stated or commonly known rules, policies, and procedures.

Positions of the Parties

The Employer: The Employer stated that, on December 15, 2014,

Babcock was terminated from his employment as a

server at Golden Coin. The Employer claimed that the essential facts that led to Mr. Babcock s termination are straight-forward.

On December 6, 2014, Mr. Babcock was working his part-time, evening shift as a server in the Golden Coin. All servers are required to greet guests who come into their assigned area and to take very specific, required steps to ensure that guests are seated, served their requested beverages and directed to buffet food areas to begin their buffet meals. Before any of that happens, servers must insure that guests have physical proof they have paid for their buffet meals. This required step is that every guest must have a receipt or ticket before he or she can be seated and served. The requirement that a receipt be produced is man- dated in step-by-step instructions included in a buffet training manual called The Sequence of Service.

The buffet provides several separate serving lines and a wide variety of food in an all-you-can-eat setting. In order to prevent individuals who have not paid from getting free meals in the buffet, the Employer con- stantly monitors and enforces the Sequence of Service guidelines. From the moment that customers approach the buffet reception area until the point when a server confirms that his or her customers have paid for the right to be seated and eat in the buffet, the Sequence of Service mandates required steps to be followed by all employees.

On December 6, 2014, two women came to the buffet and asked if they could visit with Babcock. It was learned that the two, Jane Byrd and Lois Smith, were employees of the Funny Bones night club, located directly across from the entrance to the buffet. The women first asked a cashier in the buffet reception area if they could go inside the buffet to say hello to Babcock. They asked Assistant Buffet Manager, Odel Martin, if it was okay to go see Babcock. The women pointedly told the cashier that they were not going to eat.

Once they walked inside the buffet service area, another waiter directed the two women to Babcock s section. Assistant Manager Martin observed Babcock as he greeted the women, sat them at one of his tables, got iced tea drinks for them and invited them to go to the buffet lines to eat. Ms. Martin did not see a written receipt on the women s table. It did not appear that Babcock asked either woman for a receipt, to verify they had properly paid the $21.95 per guest price for a buffet meal.

CHAPTER 12 Employee Discipline 637

Ms. Martin continued to observe as one of the women proceeded to the buffet lines to fill her plate with food, returned to her table, and began to eat. Assistant Manager Martin tried to question Babcock about why the women did not appear to have a buffet receipt; but Babcock refused to answer her questions and walked away from her.

After receiving a drink from Babcock, Ms. Byrd left the buffet. However, Ms. Smith remained in the buffet for approximately 15 minutes and continued to eat after her co-worker had left. Babcock consistently claimed that he did not know either woman prior to the December 6 encounter nor had he ever served them before.

After Ms. Martin tried to question Babcock, she called the Buffet Manager, Tom Hansen, to ask if it was possible that some arrangement had been worked out to permit Funny Bones employees to eat in the buffet without showing paper receipts Mr. Hansen was not aware of any reasons why Funny Bones employees would be allowed to eat in the buffet. He instructed Ms. Martin to speak with someone in Funny Bones management. Ms. Martin met with a Funny Bones Manager who said she had no idea why her employees were at the buffet. Ms. Martin returned to the buffet a few minutes later and observed that Ms. Smith was still at a table in Babcock s section and still eating. Ms. Smith was observed exiting the buffet at 7:15 P.M.

It appeared to Ms. Martin that Babcock had per- mitted one Funny Bones employee Ms. Smith to eat in the buffet without paying for the meal and had also served Ms. Byrd a drink without getting payment for it. After Ms. Martin called Mr. Hansen, they agreed that Babcock s actions appeared to be a potentially seri- ous violation of required procedures.

Babcock refused to write a statement, but told the managers that he had attempted to pay for one woman s meal and had left his debit card with a cashier.

Babcock was suspended on December 7, 2014. The Employer explained that there are a number

of unrefuted facts that underpin the Employer s deci- sions on Babcock s guilt. First, Babcock has consistently claimed that he did not know either Funny Bones employee when they came into the buffet and asked for him by name. When Babcock met the strangers, he never questioned how they knew him or why they came into the buffet, asking for him by his name. Instead, he immediately greeted them, sat them at

one of his assigned tables, invited them to eat, and offered to pay the buffet tabs for two strangers. Smith remained in the buffet for approximately fifteen min- utes and was observed eating from her plate of food before 7:05 P.M. and after 7:11 P.M.

Babcock misled Mr. Hansen and Ms. Martin when he claimed he had done nothing wrong because he had attempted to pay for one strangers meal. While video

surveillance does show that Babcock took his debit card to a cashier, supposedly to pay for a buffet meal, Bab- cock failed to mention that he retrieved his card and instructed a cashier that it not be charged. His change of mind occurred only four minutes later. Babcock does not deny that he told a cashier he did not want his debit card charged because the woman (Ms. Smith) had changed her mind and did not eat.

The evidence showed that Ms. Smith did, indeed, fix herself a plate of food, began to eat, and continued

to eat the buffet food. Babcock s claim that she changed her mind and did not eat is simply not true. Ms. Smith provided a written statement wherein she admitted eat- ing from the plate of food that Babcock offered to pay for. Babcock admitted that he did not stay and watch Ms. Smith so he did not know if she ate or not. He had no reason to refuse to pay for the food that Ms. Smith consumed. Certainly there is no dispute that payment for Ms. Smith s buffet meal was never received by the Employer.

Babcock continued to claim that he has done noth- ing wrong, and throughout the process, he has never offered an apology or to pay for the meal.

Babcock s claim of innocence does not change the fact that Ms. Smith was provided with a free buffet meal because Babcock was dishonest when he told a cashier the woman did not eat. The CBA clearly lists dishonestly and willful misconduct as violations which call for a penalty of termination. The Handbook rules, agreed to by the Union, call for termination in such situations.

The Employer argued that, if individuals tell a cashier they want to eat at the buffet, they are required to first pay. Once they pay, they are handed a paper receipt before they can be seated. Without a paper receipt, no one is allowed to eat in the buffet. Obvi- ously, neither Funny Bones employee was asked to present a receipt to Ms. Martin because they had already told Ms. Johnson they were not going to eat. Ms. Johnson testified that she followed standard proto- col and directed the women to the hostess stand, located at the entryway to the buffet serving areas.

638 PART 3 Administering the Labor Agreement

When the women approached Assistant Manager Mar- tin, they asked if it was okay to go see Babcock. Ms. Martin testified that it is not unusual for people to stop to say hello to buffet employees so she told the women they could proceed into the buffet area to see Babcock. Ms. Martin did not escort the women into the buffet to meet Babcock.

The Employer claimed that Babcock s violation is not that he offered to pay for meals for total strangers. His offense is that he refused to pay for a buffet meal that he served and agreed to pay for. Babcock did deliver his debit card to a cashier at 7:04 P.M. However, at 7:08 P.M., he went to retrieve his card and to instruct the cashier not to charge him. At that point, he lied to the cashier because he told her that his guest had changed her mind and had left and did not eat.

Another excuse attempted by the Union is that Ms. Smith only ate a small portion ( a bite ) of food. However, Ms. Martin testified that she watched Ms. Smith eating before she left the buffet area between 7:04 and 7:05 P.M. and again, when she returned to the buffet at 7:11 P.M. At 7:11 P.M. Ms. Martin said, Ms. Smith was still at the table and still eating. Ms. Martin s testimony is consistent with the surveillance timeline which also directly refutes Babcock s story. Babcock testified that, when he returned to Ms. Smith s table, he saw she was gone, he rushed back to the cashier to retrieve his debit card because he claimed: because she didn t eat. The timeline shows that Bab-

cock returned to the cashier at 7:08 P.M., even though Ms. Smith did not leave the buffet until 7:15 P.M.

The amount of food that Ms. Smith consumed is not relevant. The way the buffet works is simple. A guest pays one price to be entitled to a wide variety of food offerings. Once the established amount is paid and a guest is given access to the available food choices, it does not matter if he or she makes multiple trips to the food line, or if he or she takes a few bites of food and decides to eat nothing else.

The Employer concluded:

On December 6, 2014, Mr. Babcock invited two complete strangers to sit at one his assigned tables in the Golden Coin Buffet. He admittedly greeted them, asked them if they wanted to take a meal on the buffet line and then offered to pay for their meals. He began the process of serving the two strangers without doing what he absolutely knew he was required to do to ensure that they had paid for their meals before they were permitted to stay and eat.

Mr. Babcock further violated terms of Golden Coin s rules and procedures, as well as the CBA, when he refused to allow his debit card to be charged for, at least, the one meal that was served to a guest in his section.

It is respectfully requested that Mr. Babcock s grievance be denied. Whether Mr. Babcock actually knew the women before December 6 or not is not rele- vant. He violated a known and reasonable rule that all servers must comply with. He tried to get away with doing something he knew he should not and, just like other employees before him, his violations resulted in loss of his job.

The Union: The Union stated that Babcock has been employed at the Golden Coin since 2001. In 2005, he began working as a server at Golden Coin buffet. On December 6, 2014, Babcock was working as a server on the buffet when his Assistant Manager, Odel Martin, brought two women through the hostess section to Babcock. Although Martin was the Assistant Manager, she was working as a hostess on this day. According to Martin, the two women who were Funny Bones employees asked to speak to Babcock. Martin was aware the women did not have tickets to the buffet, but escorted them into the seating area anyhow. Martin did not give any instructions to Babcock or comment about the women except to say they had asked for him. Babcock greeted the women and asked them if they would like to eat. One of the women agreed to eat and the other declined. Babcock told the woman who wanted to eat to go fix her plate and he would pay for her meal. Bab- cock left the women to give his debit card to the cashier in the buffet. After giving his card to the cashier and asking her to charge him for one meal without his dis- count, Babcock returned to work and brought drinks to his guests. When Babcock returned to the Funny Bones employees table to bring them drinks, he discovered the woman who was not eating had left.

Martin saw one of the Funny Bones employee get- ting a plate of food and proceeded to contact her man- ager, Tom Hansen, about the situation. Apparently, Martin was unaware whether the Funny Bones employ- ees were allowed to eat for free at the buffet. Martin contacted Hansen to find out. Hansen was unaware if the women were allowed to eat for free. For some rea- son neither Hansen nor Martin deemed it appropriate to ask the women directly if they had paid or were entitled to free food. Martin and Hansen did not

CHAPTER 12 Employee Discipline 639

know Babcock had proffered his debit card to pay for the meal. Martin was instructed by Hansen to speak to the Funny Bones Manager and ascertain whether the women were allowed to eat for free.

As a result of Martin speaking to the Funny Bones Manager, the two women were called back to work and left the buffet abruptly. Babcock went back to check on the women and discovered that they were both gone and what looked like an uneaten plate of food was left on the table. The woman did not tell Babcock why she was leaving, or even that she was leaving. When Babcock discovered that the woman was gone, he looked for Martin to request his money be credited back to his card. Martin was nowhere to be found so Babcock went to cashier and requested the charge be credited back to his card. The cashier informed him that no charge had been made to his card. Babcock let the matter drop. He thought that he no longer needed to speak to Martin because he did not need her to autho- rize a replacement of money to his card. Babcock fin- ished his shift and left work with no concerns.

The next morning Babcock was called to the office and was informed that he was accused of bringing two people into the buffet without them paying. His imme- diate response was to tell Management to look at the surveillance video because he did not bring the women in and he did attempt to pay. He was sent home.

The Union argued that the termination of Babcock was contrary to the Collective Bargaining Agreement. There was no just cause for his termination. He was effectively terminated from his long-term employment at the Golden Coin for allegedly inviting and allowing one woman to eat for free in the buffet and then lying about the incident. The Collective Bargaining Agree- ment requires that no employee shall be disciplined or discharged except for just cause. Disciplinary actions shall be progressive and corrective in nature. The only exception to the progressive nature of the discipline occurs when an employee is dishonest, dis- plays willful misconduct and assorted other breaches in acceptable behavior, which are listed in Section 6.02(a) of the Collective Bargaining Agreement. Babcock was not dishonest nor did he exhibit willful misconduct or any other act listed under Section 6.02(a).

The Union claimed that Babcock did not bring or invite the women into the buffet area.

Babcock s supervisor, Odel Martin, allowed the women into the buffet without a ticket. Martin sent the women back to Babcock and knew they had not

paid for food. Martin breached the standard and stated rules of procedure by allowing persons without a ticket into the buffet eating area. The host is responsible for ensuring guests have paid for their meal and present their ticket prior to being allowed into the buffet area. Martin was asked during the hearing:

Q: Isn t it against the rules to let them through without paying?

A: We have guests who come into the restaurant a lot just to observe the food before they make decisions to pay.

Q: Okay. But you knew they weren t going to observe the food. They told you they wanted to talk to someone.

A: Yes.

Martin did not do her job, but instead brought the two Funny Bones employees to Babcock when she knew they did not have a ticket. Martin explained that she actually thought the Funny Bones employees might have been entitled to eat for free due to some agreement between the two venues. Martin admitted to seeing the one Funny Bones employee filling a plate at the buffet, but did not approach the employee and question her about payment. It appears that Mar- tin fully expected the women to eat, but perhaps became nervous about her participation in the event.

Babcock offered to buy the employee s meal and intended to do so. Babcock is originally from Senegal, a country in West Africa. Babcock s cultural heritage has direct bearing of the events in question and there- fore a brief foray into Senegalese culture is warranted. The culture of Senegal is very different from Western culture. Hospitality and kindness toward others are key attributes in Senegal. Extensive and lengthy greetings are expected and foul language is not tolerated in pub- lic. People usually resort to communication or dia- logue to diffuse hostility and aggressiveness. Hospitality is given such importance in Senegalese cul- ture that it is widely considered to be part of the national identity.

When there is an understanding of Babcock s cul- ture and his heritage, it is very understandable why Babcock would offer to pay for the meal of another employee who greeted him and specifically asked for him by name, even when he did not have a friendship with the employee. Babcock offered to pay for the Funny Bones employee s meal in an act of hospitality; something of the upmost importance to the Senegalese.

640 PART 3 Administering the Labor Agreement

Babcock stated that it meant a lot to him when people came to say hello and ask how he was doing.

It is clear that Babcock presented his debit card to the cashier and requested that one meal be paid for. Martin believed Babcock had no intention of paying for the food of the employee. The problem arose for Babcock when the woman left unexpectedly and abruptly and he could not find Martin to discuss the matter with her. Babcock did not pay for the meal because he believed, based on past practice of the buf- fet, that the woman would not be charged since she essentially did not eat. It was not unusual for customers to be refunded money for the buffet when the food was not eaten for one reason or another.

Babcock came back to the Funny Bones employees table to find both employees gone. The plate of food was on the table and none appeared to be eaten. When Bab- cock saw the woman had left without eating, he did not know why. The reason the woman had left the buffet so abruptly was due to the fact that Martin spoke to the Funny Bones employees supervisor and their supervisor mandated their immediate return to Funny Bones.

The Union concluded that Babcock was termi- nated in violation of the Collective Bargaining Agree- ment and the grievance should be upheld and Babcock should be made whole in every way.

Questions 1. Apply the elements of employee discipline to this

arbitration. Determine whether these elements are helpful in making the decision.

2. Evaluate whether or not Babcock s heritage makes a difference in the outcome.

3. What were Babcock s intentions in giving the credit card to the cashier? Was it part of the scheme to avoid paying for the meal?

4. The burden of proof rests with the Company. Did the Company prove that Babcock violated the CBA and Company policies? If so, what should be the penalty? If not, what should be the appropriate remedy?

CA SE

ST UD

Y

12 -2 Falsification of Application

Issue: Did the Company have just cause to terminate James Kane for falsifying employment records? If not, what shall be the appropriate remedy?

Background

The Company is a world-class integrated Pulp and Paper Mill which has approximately 1,050 hourly and salaried employees. The Grievant, James Kane, was employed on March 10, 2014 as a Reserve on No. 34 Paper Machine.

This arbitration stems from the following letter from Sam Gill, Human Resources Generalist, dated August 21, 2014, to James D. Kane, the Grievant.

Your employment is being terminated effective immediately. The reason for your termination is falsification of Company records, specifically failure to disclose all medical information on the New Employee Health History form provided to you during your pre-employment medical assessment. The information that you failed to disclose was

important not only to the initial determination of the most appropriate job assignment from a safety perspective, but also critical to ensure you received the most appropriate medical treatment in the event of an on-the-job medical emergency similar to the one you experienced. In fact, the medical personnel have indicated that they would have handled a pre- vious medical situation differently had they been aware of the information you omitted from the pre-employment medical history. On the form dated 3/1/2014 you answered No to Section B: In the past 5 years have you ever been told that you had one of the following health problems, or have you been provided medical treatment for: (16) Liver, stomach, bowel disease and (26) Kidney or bladder disease.

The form that you signed includes the following statement:

I certify that all statement and answers pro- vided by me are true, complete and correct to the best of my knowledge. I understand and agree that

CHAPTER 12 Employee Discipline 641

my employment and continued employment is con- ditioned upon full disclosure of all information requested. I understand and agree that any false, incomplete or incorrect statement or answer made by me shall be considered sufficient cause for denial of employment or discharge.

You read and signed the form certifying accu- racy of the medical information.

The Company never takes the termination of an employee lightly. Our decision to terminate your employment was reached after careful and thorough consideration and discussion of all aspects of our investigation of this matter.

The Union filed the following Grievance:

Specific Provision(s) of Contract Violated: All applicable Statement of Grievance: Wrongful termination. Action Requested: Return to work with all seniority and benefits

restored. Make whole.

In a letter dated October 27, 2014, Jack Fuller, HR Manager, wrote to Kevin Jackson, Union Repre- sentative:

Mr. James Kane was terminated on August 20, 2014. The reason given for Mr. Kane s termination was falsification of Company records, specifically failure to disclose all medical information on the New Employee Health History form provided

during his pre-employment medical assessment. A copy of the termination letter is attached and is herewith incorporated into this third step griev- ance answer.

During the third step grievance meeting it was the contention of the Union that Mr. Kane did not have knowledge of the specific health problems and/ or medical treatment for the specific health pro- blems at the time that he completed the New Employee Health History form.

Following the third step meeting, we have again reviewed in detail the medical records released to the Company by Mr. Kane. The Com- pany remains convinced that he did, in fact, have knowledge of the medical conditions which should have been disclosed on the New Employee Health History form.

Having again reviewed the factual circum- stances of this case, the Company has concluded

that Mr. Kane s termination should stand. This grievance must, therefore, be denied.

The Grievance was appealed to arbitration.

Relevant Provisions of the Labor Agreement

Section XXXIII

Management Rights The Union agrees that unless specifically abridged by this Agreement, the Company shall be vested solely with all the rights it had prior to the signing of this Agreement, including the management of the business, the direction of the working force, the right to hire, plan, direct and control all plant operations; the right to promote, demote, layoff, assign or transfer, disci- pline, or discharge for just cause.

Positions of the Parties The Company:

Mr. James Kane was employed on March 10, 2014 as a Reserve on No. 34 Paper Machine. On June 21, 2014, he w6as working the 6:00 P.M. to 6:00 A.M. shift when he experienced symptoms of heat stress. He was brought to the Mill Medical Department by his supervisor and was evaluated by the on-duty Mill nurse, Doris Kates, RN, who completed a required written evaluation of the Grievant. Treatment for heat stress and dehydration was begun. Kane was kept in Medical Department through the night with the nurses who checked the progress of his recovery. The Mill Medical Director, Dr. Wayne G. Stanwich, was called and was apprised of the Grievant s condition. Dr. Stan- wich in turn provided direction for his treatment.

By morning on June 22, 2014, Kane had recovered sufficiently well to be allowed to go home. Based on the notes of the Nurse Practitioner, Max Smith, Patient states he s feeling a lot better. The nurse felt the heat exhaustion problem was resolved. Kane was given instructions to follow for the coming days and was told to follow up on June 25, 2014, before returning to work and to contact the Medical Department if he had further problems. After June 22, 2014, he saw his personal doctor, Dr. Vadik and was hospitalized. He was released from the hospital on June 26, 2014 and returned to work on June 29, 2014.

Since his hospitalization was related to the illness he experienced at work, the Mill Medical Department requested records from the hospital, and based on that information requested records from his personal doctor. Once these records were reviewed by the Mill

642 PART 3 Administering the Labor Agreement

Medical Director Dr. Stanwich, he discovered medical conditions the Grievant had not disclosed on the New Employee Health History Form. Based on his conclu- sion that (1) The Grievant knew of his problems on March 1, 2014, and (2) He failed to acknowledge his problems when completing the New Employee Health History Form, Dr. Stanwich directed that this informa- tion be communicated to the Mill HR Manager.

A subsequent investigation led to the Grievant s termination on August 20, 2014. The Union contended that the Grievant did not have knowledge of the spe- cific health problems at the time he completed the New Employee Health History Form.

The Company argued the Grievant knowingly fal- sified a part of the application process for which he was subsequently terminated. There is a statement on the New Employee Health History Form that states:

I certify that all statements and answers provided by me are true, complete, and correct to the best of my knowledge. I understand and agree that my employment and continued employment is condi- tioned upon full disclosure of all information requested.I understand and agree that any false, incomplete or incorrect statement or answer made by me shall be considered sufficient cause for denial of employment or discharge.

The Grievant signed the above on 3/1/2014. Previous to the above statement is the health pro-

blems, or have you been provided Medical treatment for, Mr. Kane circled NO to the following questions: 16 Liver, Stomach, Bowel Disease and 26 Kid-

ney or Bladder Disease. The Company introduced 18 Exhibits of notes

from the Grievant s personal physician, Dr. Condale, which referenced the medical problems; fatty liver and chronic renal insufficiency. Several of the exhi- bits were explicit in that the Grievant was advised by his doctor of his problems. All of these were during the period December 24, 2008 February 25, 2014, all within five years of the date of the New Employee Health History Form and all relating to conditions which the Grievant failed to acknowledge on the form. It is quite clear from Dr. Stanwich s testimony and the exhibits that the Grievant knew on March 1, 2014 that he had these problems, yet he answered NO on the form.

The Grievant s explanation for answering NO to these questions was that questions 16 and 26 asked about disease and that he did not have either of these

diseases. It should be noted that the form has at the top of the form: Ask for help if you do not understand a question. The dictionary definition Disease is: A condition of the living animal or plant body or of one of its parts that impairs the performance of a vital function. The Grievant was given tests on a number of occasions to evaluate the function of his liver. Fur- ther, Dr. Stanwich, testified that Renal Function Dis- order means: That means there s an abnormality in his kidney function. Dr. Stanwich was asked if, in his opinion, the Grievant was advised about the renal func- tion disorder. Dr. Stanwich s answer: According to what is written here, yes.

On a number of occasions, the Grievant was advised to discontinue use of alcohol and to increase water intake. These actions were in response to alco- holic fatty liver and acute renal insufficiency. It should also be noted that Dr. Condale made reference to Diffuse Liver Disease. Not only are the conditions diseases, but the Grievant was treated for them and

was advised of these conditions. The Grievant explained the reason for answering

NO on the form was that he did not know he had the conditions, that is, chronic renal insufficiency and fatty liver. Clearly, the Grievant knew on March 1, 2014 about his condition and he was being treated for the conditions. He should have acknowledged these condi- tions during his preemployment processing; however, he did not even ask questions. It is important to note that the Grievant was terminated for falsification of the New Employee Health History Form not the events of June 21, 2014 through June 25, 2014.

The Company believes the Grievant falsified an employment form on March 1, 2014 and has since offered nothing to explain his action. There is nothing to mitigate the Company s decision to terminate his employment based on the New Employee Health His- tory Form. In light of all of the above, the Company clearly had just cause to terminate the Grievant.

The Company concluded:

The Grievant was employed on 3/10/14 and experi- enced heat stress and dehydration while at work on 6/21/14. He was treated by the Mill Medical Department for these conditions, and subsequently went home the morning following the incident. He subsequently went to his own doctor who admitted him to the hospital. As a result of the hospitaliza- tion the Mill Medical Department requested his medical records, and a review of these records by

CHAPTER 12 Employee Discipline 643

the Mill Medical Director led to discovery of Medi- cal conditions which he had not acknowledged when he completed a New Employee Health History Form prior to his employment. These discrepancies were then investigated, and based on the statements on the form relating to accuracy and completeness of information provided; he was terminated on 8/20/14. The statements on the form are clear as to the person completing the form attesting to the accuracy and completeness of the information pro- vided, and the consequences of false, incomplete, or inaccurate information is likewise clear and under- standable. The Grievant signed the form on 3/1/14. The evidence is overwhelming that the Grievant had knowledge of the relevant health conditions, had been advised by his doctor of the conditions on a number of occasions, but he chose to answer NO on the form. The Company believes the Grievant s knowingly violated the provision of the New Employee Health History Form, the penalty for which is termination. The Company s decision to terminate the Grievant was based solely on his vio- lation of the conditions on the New Employee Health History Form, and the absolute need to maintain the integrity of the employment process. This need has been and is recognized by arbitrators in deciding numerous similar cases. At no time has it been suggested that the Company s actions were arbitrary and capricious. The Company therefore respectfully requests that this grievance be denied, the integrity of the employment process be preserved and the termination stand.

The Union: The Union filed a grievance on behalf of James

Kane s unjust termination. The Company denied the Grievance in its final answer dated August 23, 2014, and stated that it had reviewed in detail the medical records released to the Company by Mr. Kane. The Company remains convinced that he did, in fact, have knowledge of the medical conditions which should have been disclosed on the New Employee Health History form. The Company has concluded that Mr. Kane s termination should stand. This grievance must, therefore, be denied.

Mr. James Kane was employed at the Company on three different occasions. Kane was laid off, due to lack of work on the two prior occasions. Kane s length of layoff status required him to be rehired due to the seniority on recall provisions in the contract. Mr. Kane s employment

records are without blemish until his unjust termination on August 20, 2014. Mr. Kane had applied for employ- ment and been rehired multiple times with the Company and was always forthcoming in his application process and screening procedures. On March 1, 2014 was no dif- ferent. During this rehire, Kane was asked to complete a New Employee Health History which he did. The ques- tionnaire asked multiple health questions with lines for explanation to answers given. The questionnaire provided space to reveal all prescribed medications currently being taken. Kane identified all of his known medical issues and the medications he was taking at the time. Kane truthfully admitted tobacco use, knowing that the Company did not test for tobacco. Mr. Kane was forthcoming with all answers to this questionnaire. Mr. Kane signed and dated the form s last page which certified the accuracy of the information with no reservations. On the question- naire, Kane indicated that he suffered from Diabetes, High Blood Pressure, Cholesterol, and Anxiety and also listed the medications for each known ailment and the amounts prescribed for his condition.

On June 21, 2014, Kane was working as a sixth hand on the winder. The job was extremely demanding due to the speed of the process and the sheer number of paper rolls being produced. The temperature in the facility was in excess of 100 degrees. Due to the heat and overexertion to the job task, Kane began to cramp in his shoulders and back. Kane became dizzy and reported to the on-site medical facility. Kane was trea- ted by the nurse on call. Kane s clothing was loosened and he was given squincher sports drink and allowed to rest. After a couple of hours in the medical department, Kane informed his nurse that he couldn t catch my breath. The nurse called Dr. Stanwich. When Kane returned, he said, if they had to give me an IV, it would be a recordable incident, and it was left at that. She never gave me an IV. Just kept feeding me Squincher or Gatorade.

Kane saw a nurse practitioner the morning before he left the facility and was told to go home and rest and continue hydration. He was told he would be suscepti- ble to similar episodes in the following days. Kane s condition worsened and he was hospitalized on June 24, 2014. Kane was admitted for dehydration and was treated by Dr. Vadik, his Doctor of Internal Medicine. Kane received aggressive IV fluid rehydration during these days of inpatient care.

Upon Kane s return to work June 29, 2014, he was informed to report through the Company s medical facility. Kane met with Supervisor Frank Nix and

644 PART 3 Administering the Labor Agreement

completed an Incident Investigation Report. The report briefly describes the incident root causes, analysis, and corrective action(s) as prepared by the Company.

Kane was instructed to report to the nurse s station and was instructed to go into a room. The nurse dialed Curtis Smith, Nurse Practitioner. Kane was handed the phone. Kane testified that Mr. Smith said You don t know what kind of mess you have caused by not coming through medical. Why didn t you come through medical instead of going to your physician? Smith said, You ve thrown a monkey wrench in this. We re going to have to go back with workman s comp. Kane felt somewhat threatened by the message and feared retaliation.

Kane testified that he felt he was inadequately trea- ted in the medical facility due to a corporate safety initiative. He felt that he did not receive IV fluids to rehydrate his system because the Company would have to report the treatment and that would be a recordable injury. Kane worked the rest of the week which con- sisted of Tuesday, Wednesday and Thursday night. On his break on Friday morning, Kane received a call from Jack Fuller around 11:00 A.M. telling him not to report back to work pending an investigation. Kane hand delivered 92 pages of medical records on July 22, 2014. These records were from Doctors Condale and Vadik. Kane signed a Release of Medical Information to be sent to Liberty Health Care, the contracted medi- cal providers for the Company, on July 29, 2014.

The Company advised Kane that his employment was being terminated effective immediately. The reason was falsification of Company records, specifically fail- ure to disclose all medical information on the New Employee Health History. The Company stated that the information that Kane failed to disclose during his preemployment medical assessment was important not only to the initial determination of the most appropri- ate job assignment from a safety perspective, but also critical to ensure he received the most appropriate medical treatment in the event of an on-the-job medi- cal emergency similar to the one he experienced. In fact, the medical personnel have indicated that they would have handled his medical situation differently had they been aware of the information Kane omitted from the preemployment medical history.

On October 10, 2014, Kane presented two separate letters written by Dr. Vadik, M.D. who specializes in internal medicine. These letters described the condition of Kane and Dr. Vadik gave his expert medical opinion that refuted the Company s position that Kane had

Chronic Renal Insufficiency and stated he is perfectly fit to return to work.

The Union argued that the evidence makes several things clear. Kane was forthcoming in all his state- ments and answered all questions truthfully. Kane never tried to hide any condition known to him at the time of his preemployment New Employee Health History. Kane filled out this form to best of his knowl- edge, as truthfully as a person untrained in medical terminology could possibly comprehend. Kane was being treated for Diabetes, High Blood Pressure, Cho- lesterol, and Anxiety. Kane listed all medications pre- scribed for the treatment of these illnesses. Kane was forthcoming and admitted using tobacco products in Section A: listing the brand of snuff he uses Copenha- gen. Kane said multiple times that he was never told that he had liver, stomach, bowel, kidney or bladder disease. Kane testified I would sign it again today just like it is. He signed the Certification of Accuracy of Medical Information and Authorization to Obtain Additional Medical Information from which included all he knew was wrong with him.

The Company brought several claims about a fatty liver condition. Kane freely admitted he was diagnosed with a fatty liver. Kane testified numerous times that his doctor told him the fatty liver was reversible with proper lifestyle choices. He testified that he did not consider fatty liver a disease. Kane thought, as a regular person, not a trained medical practitioner, that fatty liver was reversible with lifestyle modification and he was never told he had a liver disease. When asked if the form had said that in the past five years, you have been told or you had one of the following health problems or you have been provided medical treatment for, or if this question said kidney or bladder problems, what would your answer have been? Kane testified Yes. He testified if the word disease had not been affixed to either of these, he would have answered the questions differently.

Kane repeatedly testified he was aware of the kidney test. Also, he received routine eye and feet examinations, all due to his diagnoses of diabetes. The records prove Kane regularly visited his physicians and was aware of his diabetes and complications of the disease.

The Union argued that the Company had com- plete access to Kane s health records and performed tests prior to his employment. The conditions as por- trayed by the Company would not have returned nor- mal under the blood and urine screens provided in early March.

CHAPTER 12 Employee Discipline 645

The statement that the Company would have han- dled his medical situation differently is perplexing. The Company was aware Kane was a diabetic yet only checked his blood sugar twice the night Kane suffered heat exhaus- tion. The first glucose blood check was high at 212, around 9:00 P.M. The last check was at 6:00 A.M. the following morning. The Union asked why there were only two checks of glucose levels on a diabetic who during the night experienced trouble breathing? Dr. Stanwich testified that, if he had known the renal insufficiency, we would have been more apt to send him to the hospi-

tal, rather than orally re-hydrate him. The Union argued that diabetes affects the kidneys, and medical protocol for diabetics are more stringent.

Dr. Stanwich testified diabetes can affect the kid- neys or renal system. Dr. Stanwich also testified he had been notified by the nurse that Kane was a diabetic during the call he received the night of the heat exhaus- tion. Dr. Stanwich testified he could have ordered Kane, IV therapy. In regard to the termination letter statement The medical personnel have indicated that they would have handled your medical situation differ- ently had they been aware of the information you omit- ted from the pre-employment medical history. The Union asked: How? The Company knew of the dia- betes and potential complications from that illness.

When asked about the fatty liver, Dr. Stanwich testified that the word disease was not mentioned, but it says he was advised of fatty liver. The word disease was not used. The reason is simple; Kane was never told he had a disease. Curtis Smith penned the letter to Mr. Fuller on July 23, 2014. He stated, that Kane answered No to Section B: In the past 5 years have you ever been told that you have one of following health problems, or have you been provided Medical Treatment for: (16.) Liver, stomach, bowel Disease and (26) Kidney or bladder disease. Kane was never told of any disease, other than diabetes.

The Union concluded:

in this case, the Company had the burden of proof, to show by preponderance of the evidence, that they had just cause to terminate Kane s employment. The Company provided medical docu- ments that were hand delivered by Kane. The Com- pany brought multiple witnesses who were trained professionally as doctors, to give interpretation to other doctor s notes, and results. Kane testified truthfully to all questions, and also provided two letters provided by Dr. Joshua Vadik, M.D. Internal Medicine, to provide insight into his condition.

the Union feels Kane was unjustly termi- nated for an incident that happened on the night of June 21, 2014, that would blemish the safety record of the mill. Kane is a common man, not a medical professional whose dialogue consists of medical terminology. He stated from the beginning he was a diabetic, and that was the only Disease he suffered from. The Union believes it made a clear case to show what happened in this matter.

the Union respectfully asks that the griev- ance be sustained, that Kane be returned to employ- ment, and made whole for all lost wages and benefits.

Questions 1. Should Kane receive credit for his previous years of

employment with the Company? 2. Compare the weight to be given the Company doc-

tor to that of Kane s personal doctor. 3. What level of proof should be used in this decision? 4. Now you decide. Did the Company have just cause to

terminate James Kane? If so, why? If not, why not?

646 PART 3 Administering the Labor Agreement

PART4 Applying the Labor Relations Process to Different Labor Relations Systems

Part 4 presents the opportunity to apply the previous chapters discussions of the labor relations process to various labor relations situations. Collective bargaining in the pub- lic sector at all governmental levels is dis- cussed, and a discussion of foreign labor relations systems is presented for compari- son purposes.

Chapter 13 Labor Relations in the Public Sector

Chapter 14 Labor Relations in Multinational Corporations and in Other Countries

649

CHAPTER 13

Labor Relations in the Public Sector

YOU HAVE BEEN reading about the economic crisis in the pub- lic sector. Nearly every state and most municipalities have experienced shortfalls in their expected revenues. Because state legislation and city ordinances require balanced budgets, it has been necessary to reduce services and this means fewer employees. You are an elementary school teacher and have never been a member of a union. You realize that your state law allows for employee unions in your city; however, there has been interest by other teachers only in recent months. You have been approached by some other teachers in your school to become involved in their efforts to have a union rep- resent the teachers. You know that wages, pensions, and health care are not subjects for bargaining because these sub- jects are covered under state law.

Questions 1. What can the union do for these teachers?

2. Why should you be interested in joining a union?

650

Significance of Public-Sector Labor Relations

The field of public-sector labor relations has developed from a time when public employ- ees were required to lobby their respective legislators for favorable employment terms to one in which bona fide collective bargaining occurs. Public-sector labor relations has moved from an earlier period characterized by rapid union growth, management s inability to react to collective bargaining, and a fear of strikes to a period characterized by slower union growth.1 With many state legislatures and the U.S. Congress interested in reducing government costs, management strategies such as downsizing and privatiza- tion of public services have caused many public employees to become more concerned about their job security and welfare.2 Therefore, union leaders are showing increased attention to public employees concerns in these areas (see the Labor Relations in Action feature on page 656).

Over the years, the public sector has become an increasingly important part of the collective bargaining environment in the United States. There is a higher percentage of public-sector employees who are members of unions than there are private-sector employees. In 2014, only 6.6 percent (7.4 million) of private-sector workers were union members, and 7.4 percent (8.2 million) were represented by unions. In comparison, 35.7 percent (7.2 million) of public-sector employees were union members, and 39.2 percent (7.9 million) were represented by unions.

Within the public sector, local governments have the highest union membership rate, at 41.9 percent. This group includes employees in heavily unionized occupations such as teachers, police officers, and firefighters. The percentage of state government employees who were union members was 29.8 percent, and the percentage of federal employees who were union members was 27.5 percent.3

There are also major differences in public-sector union membership based on geog- raphy. Public-sector union membership is much greater in the Northeast, North, and West than in the South and Midwest. For example, public-sector union membership is over 60 percent in New York, Rhode Island, Hawaii, and New Jersey as compared with less than 10 percent in Mississippi, North Carolina, and South Carolina.4

Exhibit 13.1 presents a listing of some national unions representing public-sector employ- ees. By far, the National Education Association (NEA) is the largest union that represents pub- lic employees with nearly 3.0 million members, primarily teachers. The NEA is followed by the American Federation of Teachers (AFT) (1.6 million) and the American Federation of State, County, and Municipal Employees (AFSCME), with 1.3 million members.

Some national unions (e.g., United Auto Workers, International Association of Machinists) that predominantly represent private-sector employees have diversified their organizing efforts in recent years to attract public-sector employees. The Service Employees International Union (SEIU) now represents over 600,000 public-sector employees in the United States, Canada, and Puerto Rico.5

The so-called free rider issue mentioned in the discussion of private-sector union security issues in Chapter 4 is an important factor affecting union membership among federal employees.6 Under the Civil Service Reform Act (CSRA) of 1978 and the Postal Reorganization Act, union security clauses, such as a union or agency shop, are prohib- ited. Overall, 7.4 million public-sector employees are union members who pay dues to be represented by unions, but nearly 800,000 are not union members who are represented by unions but still do not pay union dues. These nonpaying employees must be repre- sented in collective bargaining, grievance administration, and arbitration by the unions.7

Because the so-called free riders receive benefits at no cost to them, there is not a signifi- cant incentive to join and pay dues.

CHAPTER 13 Labor Relations in the Public Sector 651

The American Federation of Government Employees (AFGE) is the largest union representing federal government employees. Although its membership is 306,338, the AFGE is legally required to represent about 600,000 federal government employees and negotiates over 300 collective bargaining agreements. In other words, about one-half of the federal government employees who are represented by the AFGE do not pay dues; therefore, half of those who are members pay dues to provide representational services (bargaining, grievance handling, arbitration, etc.) for the other half (see Chapter 4 for a discussion of union security issues). As a result, the U.S. federal government is the nation s largest open shop employer.8

Labor Legislation in the Public Sector The presence of a strong public-sector bargaining law may be influenced by the general public s attitude toward collective bargaining, the degree of public-sector employers opposition to unions, and the degree to which state legislators are viewed as being more liberal, among other factors.9 Favorable legislation protecting employees right to bargain, regulating unfair labor practices, and establishing impasse procedures to resolve both interests and rights-type labor disputes is a significant factor encouraging the growth of public-sector bargaining within a state.10

As shown in Exhibit 13.2, 37 states have passed legislation that allows collective bar- gaining for some public-sector employees, which usually includes police and fire, state, education, and municipal employees. Alabama, Arizona, Arkansas, Colorado, Louisiana, Maryland, and Mississippi have no legislation that allows these types of public employees to participate in collective bargaining. Georgia, North Carolina, South Carolina, Texas, and Virginia ban collective bargaining rights for public-sector employees.

Although the content of agreements may vary, the bargaining laws usually include wages, hours, and other terms or conditions of employment; this is similar to the scope

Exhibit 13.1 Some Unions Representing Public Employees

Union

Number of Public Employee

Members

American Federation of Government Employees (AFGE) 306,338

American Federation of State, County, and Municipal Employ- ees (AFSCME)

1,337,126

American Federation of Teachers (AFT) 1,597,140

American Postal Workers Union (APWU) 238,627

Fraternal Order of Police (FOP) 325,000

International Association of Firefighters (IAFF) 296,931

National Air Traffic Controllers Association (NATCA) 16,378

National Association of Letter Carriers (NALC) 270,203

National Education Association (NEA) 2,963,121

National Federation of Federal Employees (NFFE, IAM) 7,553

National Rural Letter Carriers Association (NRLCA) 101,636

National Treasury Employees Union (NTEU) 79,588

SOURCE: LM-2 Reports by U.S. Labor Unions, https://olms.dol-esa.gov/query/getOrgQry.do

652 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

of bargaining under the National Labor Relations Act in the private sector (see Exhibit 13.3). However, a majority of the states have some statutory limitations on the scope of collective bargaining, such as limitations guaranteeing management rights. Another important element of labor legislation is unfair labor practices. Although this type of legislation varies from state to state, most states have legislation defining unfair labor practices for some or all public employers that are similar to the types of discrimination banned under the private sector LMRA (e.g., bad-faith bargaining, threats or reprisals for engaging in concerted and protected activity).

Twelve states allow union recognition via card checks (see Chapter 5) for at least some of their employees. The effects of these card check laws are higher union represen- tation for the bargaining unit employees covered in the legislation. The results of higher union representation via card checks is similar to the findings in the private sector.11

Thirteen states permit public-sector strikes by some groups of public employees either by statutory law or by judicial decision.12 These states are Alaska, California, Colorado, Hawaii, Idaho, Illinois, Louisiana, Minnesota, Montana, Ohio, Oregon, Pennsylvania, and Vermont. For example, in California, the state supreme court ruled that strikes by public employees other than police officers or firefighters were not illegal as long as they did not represent a substantial or imminent threat to the public s health or safety.13 Most states prohibit public employee strikes and may authorize a variety of potential sanctions for illegal strike activity varying from injunctions to dismissals, jail sentences, substantial fines, and loss of union recognition. Decreasing use of the strike as a bargaining tactic has occurred in recent years in the public sector, similar to the trend in the private sector. Unionized public-sector employees in states that grant a legal right to strike are only slightly more likely to be involved in strikes compared with employees in states that ban public employee strikes. Educators are the employee group most likely to participate in strikes, and strikes in education are more likely to occur in five states (California, Illinois, Michigan, Ohio, and Pennsylvania).14

Exhibit 13.2 States That Allow Collective Bargaining for Public-Sector Employees, Primarily Firefighters, Police, and Teachers.

Alaska Maine North Dakota

Arizona Maryland New York

California Massachusetts Ohio

Connecticut Michigan Oregon

Delaware Minnesota Pennsylvania

Florida Missouri Rhode Island

Hawaii Montana South Dakota

Idaho Nebraska Utah

Illinois Nevada Vermont

Indiana New Hampshire Washington

Iowa New Jersey Wisconsin

Kansas New Mexico Wyoming

SOURCES: Bureau of National Affairs, Public-Sector Bargaining: State Comparison Chart, in Collective Bargaining Negotiating and Contracts, May 18, 2000, pp. 8:2901 2952; updated by State Labor Laws, BNA Labor Relations Reporter, Washington, D.C., 2007; Marick F. Masters, Robert R. Albright, and Ray Gibney, The State of Public Sector Unionism: Challenges and Oppor- tunities, Employee Responsibilities and Rights Journal, Published online, May 29, 2010; Richard B. Freeman and Eunice S. Han, Public Sector Unionism Without Collective Bargaining, AEA Meetings, January 6, 2012, San Diego.

CHAPTER 13 Labor Relations in the Public Sector 653

In states that allow some public employee groups to strike, certain employees, such as police officers, firefighters, hospital employees, and correctional employees, are usually prohibited from striking under any circumstances. Services of these employees are often deemed to be critical to citizens health and safety. Police officers, firefighters, and tea- chers are the public employee groups most likely to be offered an alternative dispute res- olution procedure to the strike, such as mediation, fact-finding, or interest arbitration (discussed later in this chapter).

Most federal employees bargaining rights are governed by Title VII of the CSRA. One group of federal workers, U.S. Postal Service employees, are the only public employ- ees covered under the private-sector Labor Management Relations Act (LMRA) as speci- fied in the Postal Reorganization Act of 1970.15 Unlike other employees covered under the LMRA, postal workers have no legal right to strike but are granted access to final and binding interest arbitration as a means of resolving bargaining disputes.

Current Challenges to Collective Bargaining Rights of Public Unions With large budget deficits and higher pension and health care costs, some state and local officials are complaining that their outlays for retiree health benefits are rising by 20 per- cent a year. The Pew Center on the States estimated that there is $555 billion in

Exhibit 13.3 Provisions in a Collective-Bargaining Agreement between Teachers and Boards of Education

A management rights clause is designed to clarify and protect the rights of the employer and to limit the authority of an arbitrator. Such a clause would include the right to supervise all operations; determine the size of the workforce; introduce new methods, programs, or procedures; hire and discharge employees for just cause; and maintain an orderly, effective, and efficient operation.

A grievance procedure is a step-by-step sequence of steps for resolving allega- tions of violations of the provisions of the collective bargaining agreement.

A no strike and no lockout provision is included to guarantee continued opera- tion for the life of the agreement. Some agreements provide for discipline of employees who participate in a work stoppage in violation of the no strike clause and penalties to the union that encourages a work stoppage.

A zipper clause stipulates that the written agreement is the complete and full contract between the parties and that neither party is required to bargain over other items during the term of the agreement.

Maintenance of standards incorporates a school district s current and past prac- tices, such as teaching hours, relief periods, leaves of absence, extra compensation for work outside regular teaching hours, and so on.

A reduction-in-force provision provides the criteria used in layoffs. Usually seniority in a certified field is used in layoff and recall, and some agreements pro- vide for bumping rights.

A wages and benefits provision addresses wage increases, such as across- the-board increases, step increases, cost-of-living increases based on the Con- sumer Price Index, and merit increases. Benefits would include insurance (life, health, and dental), pension, sick leave, personal days, funeral leave, holidays, and so on.

Other issues include grievance arbitration, teacher evaluation, class size, school calendar, and so on.

SOURCE: Fred C. Lunenburg, Collective Bargaining in the Public Schools: Issues, Tactics, and New Strategies, Journal of Collective Negotiations in the Public Sector, 29 (4) (2000), p. 259.

654 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

unfunded liabilities to finance retiree health coverage, with New Jersey having the largest amount ($68.9 billion) and California second with $62.5 billion. In 14 states, the state pays 100 percent of the health benefits for public employee retirees. Overall, state and local government employees pay 11 percent of the cost of individual medical plans as compared to 20 percent for private-sector employees. State and local government employees pay 27 percent of the cost of family plans as compared to 30 percent for private-sector employees.16

The shortfalls for pension obligations are estimated to be as high as $1 trillion. By far, the reason for the shortfall is the stock market plunge between 2007 and 2009. In fact, if pension funds had earned a return equal to the interest rate on 30-year Treasury bonds during the 2007 2009 time period, the pension assets would have been more than $850 billion greater. Another $80 billion of the shortfall is due to the failure of states to contribute to the pension funds.17

Many political leaders and finance experts argue that much of basis for municipal and state finance is jury rigged (unions support political leaders who in turn reward public employees with better pension benefits and job security). In 2000, with a budget surplus, union leaders were successful in persuading the New Jersey legislature to cut five years off of the retirement age of firefighters and police officers. In the following year and still with a budget surplus, legislators gave retirees a 9 percent increase in their retirement income.

A recent Pew Center on the States report indicated a shortage of $1 trillion on a $3.35 obligation in pension, health care, and other retirement benefits states have prom- ised current and retired employees. The Stanford Institute for Economic Policy Research reported a shortfall of $452.2 billion in California s three major public-sector pension plans. Although politicians like to blame public-sector unions for much of the deficits in public sector, most of the pension benefits and rules are established through state laws and regulations, not collective bargaining. Since 2010, 41 states have enacted legis- lative changes in the pension plans. Eighteen have increased employee contributions to the pension plan; twelve have reduced the automatic cost of living adjustments to bene- fits. Although the amounts of the pension gap vary by state, every state government will face challenges to meet their pension obligations.

Politicians like to blame public-sector unions, collective bargaining rights, and highly paid public employees as the cause of state budget deficits. However, researchers have found that there is no significant correlation between public-sector bargaining rights and state deficit levels. In 2012, states that allow public-sector collective bargaining had an average of 14 percent budget deficit; states that banned public-sector collective bar- gaining had an average budget deficit of 16.5 percent. The state of Texas that has essen- tially no collective bargaining in the public sector had the largest budget deficit in the United States; Nevada that has no collective bargaining in the public sector had one of the largest; North Carolina that outlaws public-sector collective bargaining had a 20 percent budget deficit. In contrast, some states that allow public-sector collective bargaining have smaller than average deficits: Wisconsin 12.8 percent; Ohio 11 percent; Iowa 3.5 percent.18

Since labor costs are the largest percentage of public service costs, there is a natural tension between administrators and employees and their unions. Governors and legislators look for ways to reduce the influence and power public-sector unions have gained over the years.19

Fourteen states have taken legislative steps on reducing the influence of public-sector unions in their respective states. (See Labor Relations in Action on Page of 656.)

Wisconsin, the state that received the most national attention recently, was the first state to give public employees the right to bargain collectively. Governor Scott Walker, a Republican, obtained sweeping changes in the Wisconsin law that governs public-sector

CHAPTER 13 Labor Relations in the Public Sector 655

labor relations, from a state legislature that is also controlled by Republicans. With the state of Wisconsin facing a $100 million shortage in its budget, in 2011, Governor Walker proposed and the Wisconsin legislature passed the following:

Collective bargaining for most state and local government employees (firefighters and State Patrol employees were not included) is limited to wages only (health cov- erage, vacations, and other benefits would not be negotiable). State government employees would contribute 5.8 percent of their pay to pensions. State government employees would pay at least 12.6 percent of health care pre- miums (most pay 6 percent now). The state would stop collecting union dues from employees paychecks. Public-sector union members would have the right not to pay dues. There would be a secret ballot election annually for every public-sector union to determine whether a majority of total number of workers still wanted the union. (Interestingly, in 2010, Wisconsin Governor Walker received votes of only 25.8 per- cent of the total registered voters.)

LABOR RELATIONS IN ACTION States That Have Passed Laws Limiting Representational Rights for

Public Sector Employees Since 2010

Alabama: Made it a crime to arrange for public employee payments by salary deductions to political action committees.

Idaho: Curtailed teachers collective bargaining rights, eliminated seniority protections during layoffs, and replaced tenure track contracts for new teachers with renewable agreements for one or two years.

Illinois: Amended the Educational Labor Relation Act that made the length of the school day and school years permissible subjects of bargaining, instead of mandatory subjects and authorized the appointed school board in Chicago to lengthen the school day unilaterally.

Indiana: Limited the scope of bargaining and substi- tuted fact finding for arbitration.

Massachusetts: Created a new method for local gov- ernment to change their health insurance for employees.

Michigan: Allowed the governor to appoint an emergency manager for local governments experienc-

ing a financial emergency ; the emergency manager could reject, modify, or terminate any terms of a collec- tive bargaining agreement.

Nebraska: Made changes to the rules governing the interest arbitration run by the Nebraska Commission of Industrial Relations. These changes are designed to produce lower compensation awards.

Nevada: Reduced the number of public employee supervisors eligible to engage in collective bargaining and mandated clauses in labor agreements that would reopen the agreement during fiscal emergencies.

New Hampshire: Eliminated the requirement that the terms of a collective bargaining agreement would

automatically continue if an impasse is not resolved at the time of the expiration of such agreement.

New Jersey: Made significant cutbacks in pension and health benefits and placed restrictions on interest arbitrators.

Ohio: Enacted Senate Bill No. 5 that would have eliminated collective bargaining rights for certain employees and eliminated the right to strike. Created a system of nonbinding mediation and fact-finding wherein either party could reject the fact-finder s recom- mendations and the legislative body would select from the last best offers submitted by the parties. (Senate Bill No. 5 was overturned in a state referendum.)

Oklahoma: Repealed a 2004 law that required cities with a population of 35,000 and over to engage in col- lective bargaining with unions.

Tennessee: Eliminated collective bargaining for public school teachers and replaced it with collabora- tive conferencing wherein local boards and teachers meet and discuss matters relating to terms of employ- ment, except wages, benefits and grievance procedures

Wisconsin: Enacted the Budget Repair Act that is covered in the text.

SOURCES: Martin H. Malin, Sifting Through the Wreckage of the Tsunami That Hit Public Sector Collective Bargaining (2012), http://scholarship.kent.law.itt.edu/facschol/ 744; Joseph E. Slater, Public Sector Labor in the Age of Obama, Indiana Law Journal, 89 (Winter 2012), 189 211; Jon O. Shimabukuro, Collective Bargaining and Employees in the Public Sector, Cornell University, ILR School, DigitalCommons@ILR, 3-30-2011; Joseph Slater, The Strangely Unsettled State of Public-Sector in the Past Thirty Years, Hofstra Labor and Employment Law Journal, 30(2), Article 10, pp. 511 541.

656

New collective bargaining agreements would be negotiated every year. Pay raises would be limited to the consumer price index unless the public approved a greater raise in a voter referendum.

When this proposed legislation was proposed, over 100,000 public employees dem- onstrated against Walker s proposals and Wisconsin Senate Democrats left the state for about two weeks to prevent a vote on the proposed legislation (due to lack of quorum).20

Governors in Ohio and Indiana followed Governor Walker in attempting to severely restrict or eliminate public-sector collective bargaining; however, Ohio s legislation was overturned in a statewide referendum. Governors in California, New York, and Michigan have sought to reduce the state budget deficit by using public pressure and threats of layoffs to persuade public-sector unions to make far-reaching concessions.21

The end results of these changes have been half a million jobs lost in the public sec- tor since 2007. This reduction has hurt black adults worse than other groups because one in five black adult workers is employed in the public sector. In addition, many of the new hires are only part-timers who are paid no benefits. Still supporters of curbs on col- lective bargaining power of government employees say all of these measures were aimed at improved efficiency and taxpayer savings.22

Federal-Sector Labor Relations Legislation

Prior to the 1880s, if a candidate was elected as U.S. president, he was free to appoint people to virtually any federal office based on their loyalty to his candidacy or political party. This partronage system (also called the spoils system ) was criticized because the person who was appointed to a job was not necessarily qualified to do the work. In 1881, Congress established the federal civil service system, patterned after the British and Chi- nese systems. The civil service system, as subsequently modified and expanded, required that new hires meet minimum qualifications for most federal jobs. The civil service sys- tem also created a set of human resource policies designed to insure that workers were treated fairly and protected from unfair dismissal. In the 1960s, when federal workers were first allowed to unionize by presidential executive order, it rapidly became apparent that harmonizing civil service procedures and union-negotiated procedures (e.g., griev- ance procedures) warranted additional legislation by the CSRA, which was passed in 1978. Although the CSRA regulates labor relations for most federal employees, the CSRA retained many provisions of previous executive orders, the following discussion centers on the provisions of Title VII, Federal Service Labor Management Relations. The CSRA is applied within a framework of federal personnel rules and policies affecting merit system principles, civil service functions, performance appraisals, staffing, merit pay, senior executive service, and adverse employment actions such as discipline or discharge.

The CSRA established the Federal Labor Relations Authority (FLRA), an indepen- dent, neutral agency that administers the federal labor relations program and investigates unfair labor practices. The FLRA oversees the creation of bargaining units, supervises representation elections, conducts hearings and resolves complaints of unfair labor prac- tices, hears appeals regarding arbitrator awards, and assists federal agencies in dealing with labor relations issues. It is headed by a chairperson and two members, appointed on a bipartisan basis for five-year terms. The FLRA s structure provides for a general counsel whose office prosecutes unfair labor practice charges and exercises such powers as the FLRA may prescribe.

CHAPTER 13 Labor Relations in the Public Sector 657

LABOR RELATIONS IN ACTION Privatization of the Public Sector

Privatization of public-sector services or transfer of gov- ernmental services to the private sector has received much attention over the last two decades. This focus is due largely to perceived cost differences between public- and private-sector service delivery. However, an important consideration is the role of public employee unions in the privatization process as an interest group and as political actors in blocking the privatization efforts.

A hallmark of the conservative agenda begun in the Reagan administration in the 1980s was the initiative to reduce the scope and size of government. This initiative was manifested in the call for privatization of services for- merly provided exclusively by government agencies. Pri- vatization has come in many forms: contracting out or outsourcing of support services, such as janitorial or main- tenance services; vouchers for use in education; and man- agement contracts to operate organizations such as airports and prisons. Needless to say, public-sector unions have strongly opposed privatization and feel threatened with the loss of jobs to private-sector employees. In addi- tion, privatization has already caused a reduction in the per- centage of a union membership in hospitals, bus and urban transit, sanitary services, and education.a

One consideration in the decision regarding whether to privatize is the differing labor laws that cover private- and public-sector employees. Collective bargain- ing rights for employees in the private sector are cov- ered primarily under the Labor Management Relations Act (LMRA); employees of interstate carriers in the rail- road and airline industries are covered under the Rail- way Labor Act (RLA). Collective bargaining rights for state and local public employees are covered under var- ious local ordinances and state laws; and federal gov- ernment employees are covered under the CSRA. When government services are contracted to private firms, employees performing such services are covered under different statutes. This means that in some states in which no laws are in place to protect public employees right to bargain, employees of the private contractor will be covered. Also, in some states where a public-sector labor laws provide bargaining rights to public employees, the employees of firms contracting government services now have to seek union repre- sentation through the procedures of the LMRA or the Railway Labor Act (RLA), whichever is applicable.

Of course when the state, or any public entity, con- tracts work out to the private sector, the contractor is a private employer subject to the rules and policies of the National Labor Relations Board. In Illinois, AFSCME in particular has been successful in organizing the private contractors.

Most municipalities in the suburbs of Chicago have contracted out garbage collection to private haulers, such as Waste Management. The employees of most of these private haulers are now represented by the Teamsters and are part of a multi-employer bargaining unit. Several years ago, the Teamsters and the multi- employer association reached impasse in negotiations and the union struck. As the trash piled up in the Chi- cago suburbs, citizens complained that something should be done to enjoin the strike. Under the LMRA, the employees had a right to strike and the Norris LaGuardia Act barred any injunction action. To get an injunction under LMRA, the city would have been required to prove that the strike affected an entire indus- try or substantial part thereof and imperiled national health and safely. If those suburbs had continued to have performed the work by their employees, the strike might have been enjoinable under the Illinois Public Labor Relations Act, which allows for an injunction if a strike poses a clear and present danger to public health and safety (it need not affect an entire industry or sub- stantial part thereof) and imperils national health and safety. In most states, public employees have no right to strike in any event. (Illinois is one of the small minor- ity of states that recognize public employees right to strike.) Those who advocate weakening public employee bargaining rights to make it easier to contract out to the private sector should be careful because they might get that which they wish for. b

Another issue in privatization is that a different employer takes over the responsibilities for the con- tracted public service, and this employer is responsible to the contracting agency for the performance of the public service, not directly to the citizens. The private employer takes over the publicly owned buildings and equipment either by renting or purchasing them or, in regard to small contracts, provides equipment and build- ing space already owned but charges overhead costs to the public employer.c Although the advantages of privat- ization should be similar for the same type of public ser- vice whether currently provided by a unionized or unrepresented (nonunion) public workforce, the type of relationship between the union and city management is a significant factor. If the union management relation- ship is cooperative, the probability of the city contracting out services currently performed by union-represented employees is lower than in a nonunion city. On the other hand, the probability of a city considering privatiza- tion when a bargaining relationship is adversarial is higher than in a nonunion city.d

Another interesting dilemma is the difference in employees right to strike. In most public-sector

658

A second agency, the Federal Service Impasse Panel (FSIP), provides assistance in resolving negotiation impasses. The role of the FSIP is to resolve bargaining impasses between federal agencies and unions in the federal government that arise over the nego- tiation of terms and conditions of employment. The FSIP is composed of a chairperson, and at least six other members who are appointed by the president for five-year terms, are familiar with federal government operations, and are knowledgeable about labor management relations.

The FSIP has jurisdiction over 71 federal departments and agencies representing 1.8 million federal employees. The FSIP appoints an executive director, who is responsible for the day-to-day operations. Although the Federal Mediation and Conciliation Service (FMCS), the federal agency established in 1947 by the LMRA, is required to assist the parties in resolving negotiation impasses, either party may request that the FSIP con- sider the matter or pursue binding arbitration. The panel must investigate the impasse and recommend a procedure for resolution or assist the parties through whatever means necessary, including fact-finding and recommendations. If these actions fail, the FSIP may conduct a formal interest arbitration hearing and take legal action to settle the dispute.23

The CSRA created the Merit System Protection Board (MSPB) which is an inde- pendent quasi-judicial agency. The MSPB hears appeals from federal employees who allege violation of their employment rights. A federal employee may chose to appeal to the MSPB or appeal through the grievance procedure but not both.

jurisdictions, the right to strike has been eliminated or limited. If services previously performed by public employees were afterwards contracted to a private employer covered by the LMRA or the RLA, employees now performing such services would have a legal right to strike under those statutes.e

In addition to attacking collective bargaining and public employee unions, several states have attempted to resolve their large revenue shortfalls with privatization of govern- ment services. New Jersey Governor Chris Christie issued an executive order that created a privatization task force to focus on replacing government services with private com- panies. Other states, Virginia, Maryland, Arizona, Kansas, Oregon, Illinois, South Carolina, and Pennsylvania, followed suit and created privatization commissions. An organization called the American Legislative Exchange Council (ALEC), which was founded in 1973 and supported by conservative foundations and corporations, has drafted nearly 1,000 pieces of model legislation to be used by states that may be interested in replacing government services with private contractors. ALEC s chief legislative goals are to impede union s ability to engage in effective political action by wag- ing a multi-front attack on public-sector collective bargain- ing rights, dues deductions, paycheck deductions for political action and right-to-work legislation.f

In recent years, more public employee unions have been accepting the challenge of demonstrating that they can compete successfully with private-sector employers that offer similar services (see foonote f). Phoenix, Arizona; Indianapolis, Indiana; Charlotte, North Carolina; and Philadelphia, Pennsylvania are examples of communities in which public employee unions have demonstrated their ability to deliver more cost-effective, higher-quality, and more effective public services than competing private-sector firms.g

aTerry Thomason and John F. Burton, Jr., Unionization Trends and Labor Management Cooperation in the Public Sector, Going Public: The Role of Labor Management Rela- tions in Delivering Quality Government Services, eds. Jonathan Brock and David B. Lipsky (Champaign, Ill.: Industrial Relations Research Association, 2003), pp. 94 100. bTimothy D. Chandler and Peter Feuille, Municipal Unions and Privatization, Public Administration Review, 51 (January/February 1991), pp. 15 22. cDavid A. Dilts, Privatization of the Public Sector: De Facto Standardization of Labor- Law, Journal of Collective Negotiations in the Public-sector, 24 (1) (1995), pp. 37 47. dChandler and Feuille, 1994. eRobert Hebdon, Contracting Out in New York State: The Story the Lauder Report Chose Not to Tell! Labor Studies Journal, 20 (Spring 1995), pp. 3 10. fEllen Dannin, Privatizing Government Services in the Era of ALEC and the Great Recession, Dannin.Final DOCX, July 12, 2012, pp. 503. gLawrence L. Martin, Public Private Competition: A Public Employee Alternative to Privatization, Review of Public Personnel Administration, 19 (Winter 1999), pp. 59 70; See also Richard W. Hurd and Sharon Pinnock, Public-Sector Unions: Will They Thrive or Struggle to Survive? Journal of Labor Research, 25 (2) (2004), pp. 211 221.

659

Appropriate Bargaining Units and Union Recognition in the Federal Sector An appropriate bargaining unit for exclusive union representation purposes may be established on an agency, plant, installation, function, or other basis to ensure a clear and identifiable community of interests among employees and to promote effective fed- eral agency operations. The criteria used for determining the extent to which employees in different federal jobs share a sufficient community of interests are similar to those used by the National Labor Relations Board (NLRB) in the private sector. These include comparing jobs to identify common duties and skills, similar working conditions, com- mon supervision, degree of work interdependence, and physical proximity of the jobs. No single factor determines the decision, but rather an evaluation is made based on a preponderance of the evidence. Similarly, certain positions are generally excluded from the bargaining unit, such as confidential employees, management and supervisory per- sonnel, human resource management employees, and professionals, unless they vote in favor of inclusion. About 60 percent of all eligible employees are represented by various labor organizations in over 2,000 bargaining units, and nearly 60 percent are covered by labor agreements.24 A federal agency accords exclusive recognition to a labor union if the union has been selected as the employee representative in a secret ballot election by a majority of the employees in the appropriate unit who cast valid ballots.

Negotiable Subjects in the Federal Sector In the federal sector, the agency and the exclusively recognized union have a duty to meet at reasonable times and confer in good faith with respect to mandatory subjects of collective bargaining, such as certain personnel policies and practices and working con- ditions, to the extent that appropriate laws and regulations allow such negotiations. The parties may voluntarily agree to bargain over certain permissible subjects, but the CSRA does not require negotiation over such subjects one party can legally refuse to negotiate these issues. Permissive subjects include numbers, types, and grades of positions assigned to any organizational unit, work project, or tour of duty; technology of the workplace; and methods and means of performing the work. Subjects prohibited from negotiations include wages (except for certain blue-collar employees) and the following management rights:

To determine the mission, budget, organization, number of employees, and internal security practices To hire, assign, direct, lay off, and retain employees in accordance with applicable law To suspend, remove, reduce in grade or pay, or take other disciplinary action To assign work, subcontract, and select employees for promotion from properly ranked and certified candidates and other appropriate sources To take whatever actions may be necessary to carry out the agency s mission during emergencies

(In 1996, as part of the Department of Transportation appropriations, Congress directed the Federal Aviation Administration (FAA) to negotiate labor management relations reform, which provided for salary negotiations with the air traffic controllers union.)

Why are wages prohibited from collective bargaining? They are prohibited because Congress has passed several laws in various years (e.g. 1962, 1970, and 1990) providing that the executive branch shall pay salaries to federal employees that are comparable to

660 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

the average salaries earned in comparable jobs in the private sector. These laws also out- lined the procedures and types of formulae to be used for making these wage determina- tion. If wages are structured using a predetermined formula, then logically there is no need to negotiate them.

Although the CSRA limits the scope of negotiable subjects, the parties have ample opportunity to negotiate many issues, as illustrated in Exhibit 13.4. The fact that man- agement and the union are required to bargain in good faith does not mean that the parties must reach an agreement on these issues; they must make a good-faith intent to do so.

Under the CSRA, the FSIP is responsible for resolving interest disputes that result in an impasse during negotiations. If mediation or fact-finding fails to resolve the dispute, the FSIP may use arbitration to render a final and binding decision to resolve the interest dispute. Management s position tends to prevail in 58 percent of disputes resolved through arbitration conducted by the FSIP, a higher management win rate than typically prevails under state and local interest arbitration procedures (see the related discussion later in this chapter).25

Unfair Labor Practices in the Federal Sector The CSRA specifies unfair labor practices to protect the rights of individual employees, labor organizations, and federal agencies. Employee grievances over matters concerning adverse action, position classification, and equal employment opportunity are covered by other laws, statutes, or agency rules and cannot be filed as an unfair labor practice charge under the CSRA.

The CSRA prohibits unfair labor practices similar to those prohibited under previ- ous executive orders and the LMRA. For example, prohibited management activities include restraining and coercing employees in the exercise of their rights; encouraging or discouraging union membership; sponsoring, controlling, or assisting a labor organi- zation; disciplining union members who file complaints; and refusing to recognize or negotiate with a designated labor organization. The CSRA prohibits unions from inter- fering with, restraining, or coercing employees in the exercise of their rights; attempting to induce agency management to coerce employees; impeding or hindering an employ- ee s work performance; calling for or engaging in job actions (e.g., work slowdown or strike); and discriminating against employees or refusing to consult, confer, or negotiate

Exhibit 13.4 Subjects That Could Be Included in a Master Labor Agreement in the Federal Sector

Union recognition Sick leave

Official time Health and safety

Discipline and counseling Contracting out

Grievance procedure and arbitration Child care services

Dues withholding Call-back, standby, and on-call duty

Employee performance Workers compensation

Merit promotion Performance appraisal

Training Hazard and environmental pay

Equal employment opportunity Reduction-in-force

Travel time and pay Position classifications

Annual leave

CHAPTER 13 Labor Relations in the Public Sector 661

with the appropriate federal agency. Unfair labor practice remedies available to the FLRA include the issuance of a cease-and-desist order and/or an appropriate make-whole type of remedy, such as requiring that an employee be reinstated with back pay.

The CSRA makes it an unfair labor practice to refuse or fail to cooperate in impasse procedures and decisions. The FLRA has authority to revoke recognition of a union that commits an unfair labor practice or encourages a strike or slowdown. The FLRA can also require the parties to renegotiate a labor agreement in accordance with an FLRA decision and seek a temporary restraining order to halt suspected unlawful conduct while an unfair labor practice case is pending.

Grievance Procedures and Arbitration in the Federal Sector The CSRA requires that all negotiated agreements in the federal sector include a griev- ance procedure with binding arbitration as its final step. A grievance is broadly defined to include any complaint by an employer, labor organization, or agency relating to employment with an agency and any claimed violation, misinterpretation, or misapplica- tion of any law, rule, or regulation affecting conditions of employment. Certain issues are exempt from the grievance procedure, such as employee appointment, certification, job classification, removal for national security reasons or political activities, issues concern- ing retirement, and life and health insurance. However, the scope of grievance procedure coverage has been extended considerably. In fact, all matters within the allowable limits of the CSRA are within the scope of any grievance procedure negotiated by the parties, unless the parties have specifically agreed to exclude certain matters from coverage. Thus, unlike private-sector negotiations, which often focus on union efforts to expand the scope of grievance subjects, federal-sector negotiators often focus on management proposals to remove specific items from the scope of grievable subjects. Negotiated griev- ance procedures serve as the exclusive forum for bargaining unit employees in most cases; however, in cases of adverse employment action (e.g., suspension, reduction in grade, or discharge for poor performance), the employee may choose either the negoti- ated grievance procedure or an applicable statutory procedure, but not both. Depending on the nature of the employee s grievance claim, the employee might receive a hearing before the FLRA, the Equal Employment Opportunity Commission (EEOC), Merit Systems Protection Board (an independent agency established to hear federal employee grievances under CSRA), or a federal court.26 See the Labor Relations in Action feature on p. 663 for more on this topic.

Labor Management Forums in the Federal Government On December 29, 2009, President Obama issued Executive Order 13522, Creating Labor Management Forums to Improve Delivery of Government Services. Similar to President Clinton s executive order in 1993 that established labor management partnerships, Execu- tive Order 15322 mandated the creation of forums throughout the federal service to involve unions in making decisions to improve productivity and save money. The executive order recognized that labor s involvement provides an essential source of frontline ideas and information about the realities of delivering government services to the American people and that cooperative forums promote satisfactory labor relations and improve the produc- tivity and effectiveness of the federal government. The executive order created the National Council of Federal Labor Management Relations, which is composed of the director of the Office of Personnel Management (OPM), the deputy director of the Office of Management and Budget (OMB), seven union presidents, nine managers, and one neutral.

Agencies and departments of the federal government are required to submit for review and approval plans on implementing these forums by the council, and they are

662 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

required to allow employees and their union representatives to have predecisional involvement in all workplace matters to the fullest extent practicable without regard to whether those matters are negotiable subjects for bargaining. Section 5 of the executive order protects existing collective bargaining agreements, the authority of agency and department heads, and the functions of the director of OMB. The Federal Labor Rela- tions Authority and the Federal Mediation and Conciliation Service offers two-day joint training programs that are attended by management and union representatives together from the same agency. The purpose of the training is to learn the fundamentals of estab- lishing and maintaining an effective labor management forum to meet the goals of the executive order that include consensus decision making and facilitation.27

Based on nearly 20 years of experience in various sorts of labor management coop- eration efforts in the federal sector, several factors have been identified as barriers to the success of these efforts. They include distrust, lack of accountability, an us versus them mentality, turnover on the management and union sides, lack of commitment,

and the role of labor management specialists who attempt to create a barrier between top and line management. Likewise, keys to success have been identified. They include commitment of top management and union leaders to the process, a proper amount of training in interest-based problem solving, pursuit of cooperative labor management relations in the collective bargaining process, recognition of the legitimacy of both parties goals, and a measurable focus on solving problems in a predecisional fashion.28

Homeland Security Act In 2002, the Homeland Security Act (HSA) was enacted. This act transferred several existing agencies into the Department of Homeland Security (DHS), which would oper- ate along four functional lines: border and transportation security; emergency

LABOR RELATIONS IN ACTION Arbitration under the Federal Service Labor management Relations Statute

Statutory Requirements: All collective bargaining agreements must provide procedures for the settle- ment of grievances; only an agency or union represen- tative may invoke arbitration; the grievance procedure must be fair and simple and provide for expeditious processing.

Subjects Excluded from Arbitration: Prohibited polit- ical matters, retirement, life insurance, health insurance, national security issues, examinations, certification, appointments, and classification of positions.

Grievances: The scope of grievances that may include not only alleged violations of the collective bar- gaining agreement, but also laws, rules, and regulations affecting conditions of employment.

Unacceptable Performance and Serious Adverse Actions: Employees may choose an appeal to the Mer- its System Protection Board (MSPB) or file a grievance. Arbitrators must apply standards used by the MSPB.

Discrimination Claims under the Civil Rights Act: Employees may file a grievance or file a complaint under the agency s EEO process. Employees are not

precluded from requesting EEOC review of the arbitra- tor s award, and they also retain the right to file a civil action in an appropriate district court.

Filing Exceptions to the Arbitrator s Award: Within 30 days after the arbitrator s award, either party may file an exception to the arbitrator s award under the follow- ing grounds: The award is contrary to the law or federal regulation; the subject of the grievance is precluded by law (examples given previously); the arbitrator s deci- sion is not drawn from the essence of the collective bargaining agreement ; the arbitrator is biased and/or denied a fair hearing; or the decision is inconsistent with public policy.

Remedies: An arbitrator may award back pay under the Back Pay Act when he or she finds (1) an unjustified or unwarranted personnel action and (2) that action directly resulted in the withdrawal of pay, allowances, or differentials.

SOURCE: Guide to Arbitration under the Federal Service Labor Management Relations Statute, Update October 8, 2010, http://www.flra.gov.

663

preparedness and response; chemical, biological, radiological, and nuclear countermea- sures; and information analysis and infrastructure protection. The total workforce of the DHS is over 200,000 federal government employees. From a labor management rela- tions standpoint, over 40,000 of these employees were members of pre-existing bargain- ing units. These included 24,000 employees within the Immigration and Naturalization Service (Justice Department); 12,000 in the Customs Service (Treasury Department); 3,500 in the Coast Guard (Department of Transportation); and 2,500 in Animal and Plant Health Service (Department of Agriculture). The provision that makes labor unions nervous is Section 730, which states:

Notwithstanding any other provision of this title, the Secretary of Homeland Security may, in regulations prescribed jointly with the Director of the Office of Personnel Management, establish, and from time to time adjust, a human resources manage- ment system for some or all of the organizational units of the Department of Home- land Security, which shall be flexible, contemporary, and grounded in the public employment principles of merit and fitness.

Under the CSRA, the president has authority to exempt from coverage any group of federal employees for national security purposes. Under the Homeland Security Act, the president may waive employee and union rights granted under the CSRA if such appli- cation would have a substantial adverse impact on the ability of the department to pro- tect homeland security and/or the agency, subdivision, or unit s mission and responsibilities are materially changed and a majority of the affected employees are assigned intelligence, counterintelligence, or investigative work directly related to terror- ism investigation as their primary duty.29

As part of the National Defense Authorization Act, Congress authorized the Depart- ment of Defense (DoD) to create a new personnel system. DoD created the National Security Personnel System (NSPS), which covers 700,000 employees, which is 40 percent of the federal government civil service workforce. The NSPS includes changes in such personnel matters as pay for performance, performance appraisals, training, promotion, pay classifications, labor relations, and employee appeals.

The DHS established a new Human Resource Management System (the Transporta- tion Security Administration (TSA) was not included), which included occupational clus- ters, pay bands, pay ranges, and pay for performance. DHS created a Homeland Security Labor Relations Board but also issued regulations in labor relations, which included expanded management rights, limited bargaining on the impact of management s actions, prohibited bargaining on procedures, established the burden of proof to a single preponderance of evidence standard, and permitted arbitrators to mitigate discipline

only when the penalty was wholly without justification. The DHS reserved for itself the right to declare any part of any collective bargaining agreement null and void by issuing directives or taking whatever actions may be necessary to carry out DHS s mission.30

On November 16, 2010, the Federal Labor Relations Authority issued a decision that called for an election among Transportation Security Officers (TSOs) within the TSA to determine whether a majority of officers wished to have exclusive union. More than 13,000 TSOs were already paying dues to one or more labor unions, but the unions could provide only personal representation, not collective bargaining representation. On February 2, 2011, after a complete assessment of the impact collective bargaining could have on the safety and security of the traveling public, TSA Administrator Pistole deter- mined to allow the representation election to move forward and laid out specific terms for limited and clearly defined bargaining within the framework consistent with TSA s

664 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

security mission if the TSOs chose union representation. The two unions competed for the authority to represent the TSOs: the American Federation of Government Employees and the National Treasury Union. On April 20, 2011, 85 percent of the 44,000 plus TSO employees voted in favor of union representation. On June 23, 2011, it was announced that a majority had chosen the American Federation of Government Employees to rep- resent them.

With this election, the labor movement secured one of its most important victories of recent years in a high profile area of the public sector. Then in 2012, the TSA and the AFGE negotiated and agreed to a collective bargaining agreement. Among the subjects included, the new agreement revises the performance pay system, institutes policies for dress codes, provides for shift scheduling, includes uniform allowances, allows for vaca- tion time and contains a grievance procedure31

Labor Relations in the U.S. Postal Service

The Postal Reorganization Act (PRA) signed by President Nixon on August 12, 1970, fulfilled the desires of the postal unions to have their labor management relations pro- grams established by statute. Under previous presidential executive orders authorizing bargaining by federal workers, the Post Office Department never fully accepted collec- tive bargaining, even though it was the largest single employer in the United States and had the largest proportion of employees belonging to unions. Another interesting note is that the legislation placing postal employees under the private-sector LMRA was proposed by President Nixon and adopted by Congress to resolve an illegal strike by postal workers a far different approach than that used by President Reagan during a similar illegal strike by air traffic controllers in 1981 wherein all strikers were terminated.32

The PRA created the U.S. Postal Service (USPS) as an independent entity within the executive branch of the federal government. The office of postmaster general, previously a position in the cabinet, was made independent of Congress and the president. The postmaster general was selected by an 11-member board of governors. Under the PRA, wages, hours, benefits, and other terms and conditions of employment are mandatory bargaining subjects to be determined through collective bargaining. Grievance and arbi- tration procedures are also subject to negotiations. The NLRB supervises representation elections and prosecutes unfair labor practices. Although the right to strike was denied postal employees, a fact-finding and binding interest arbitration procedure was made available if a bargaining impasse persisted longer than 180 days after bargaining began. Since the PRA was passed, contracts have been negotiated without any major disruption in the delivery of postal services.

The parties have often relied on the arbitration provisions of the PRA to resolve one or more bargaining issues. The Postal Service and one or more of the postal unions have submitted their unresolved issues to arbitration seven times since 1978.33

With revenues of $67.8 billion and over half a million employees, the U.S. Postal Service is an important American business. With the volume of first class mail declining by 18 percent since 2008 (down to 64.0 billion pieces) due to people paying bills online, e-mailing instead of writing and sending first class letters, etc., but with 4.0 billion packages delivered (up 8.0 percent the Postal Service experienced a record $25.4 billion in losses from 2007 to 2011.34 The U.S. Postal Service continued the process of closing as many as 3,700 post offices on top of the 491 it closed in 2010. With the closing of post offices, there will also be a reduction in the number of employees, down 33 percent since 1999. Not only will these closings mean that many citizens, especially the elderly, will be

CHAPTER 13 Labor Relations in the Public Sector 665

inconvenienced but those employees who once almost had total job security will be directly affected.35

Similarities between Private- and Public-Sector Bargaining

Although differences are found between private and public-sector labor relations, simi- larities also exist. First, many participants in public-sector bargaining are trained and gain their experience in the private sector. Labor relations practitioners in the public sec- tor tend to rely on the private-sector approach to labor relations with appropriate modi- fication as needed. State and local bargaining statutes often use NLRB criteria for appropriate bargaining units, subjects for collective bargaining, use of labor injunctions, and standards for arbitration. Some unions, such as the SEIU and the Teamsters that represent a significant number of public employees, have much experience in private- sector labor relations. Other unions (such as the National Education Association; the American Federation of Teachers; the American Federation of State, County, and Munic- ipal Employees; and civil service employee groups) often hire professional staff members with private-sector labor relations experience.36

A second similarity is the reason employees form and join unions. Public employees, like their private-sector counterparts, form and join unions when they are not satisfied with one or more terms or conditions of employment, including their work, supervision, and promotional opportunities; have a favorable attitude toward unions as institutions; and believe that unionization will be instrumental in yielding positive outcomes.37 In fact, public employees tend to hold more favorable attitudes toward union representation than do private-sector workers and perceive public managers as less hostile toward unionization than with their private-sector counterparts.38

A third similarity is that the collective bargaining settlements are often influenced by the personalities of the negotiators and their abilities to increase their bargaining power relative to the other party (the bargaining power model was discussed in Chapter 6). To reiterate briefly, each party increases bargaining power over the opponent by either increasing the cost to the opponent of disagreeing or reducing the cost to the opponent of agreeing. Public opinion represents a most significant cost item in public-sector labor relations both union and government officials often structure their tactics in a manner intended to gain public support for their position, which places pressure on the other party to concede negotiation items. However, public opinion and political support can be a double-edged sword in the bargaining process. Unions in the public sector can use at least three general tactics to increase management s cost of disagreeing with the union s position.39 The first technique is a union threat to blow the whistle on ques- tionable practices unless the government agency agrees with the desired settlement. Examples include threatening to release information on the unpublicized practice of dumping raw sewage in a river or on the dollar amount of government officials liquor bills which are paid by the taxpayers. A second tactic of increasing management s cost of disagreeing is more direct, that is, the union s threat of withdrawing political support.40

Since public employees vote at a higher rate than other individuals, a threat to withhold candidate endorsements or campaign support, both manpower and financial, increases pressure on elected officials and influencing bargaining outcomes. Of course, the success of this tactic depends on the number of union members and the ability of the union to mobilize a cohesive voting bloc.

The third tactic is the union s use of various job action techniques to raise manage- ment s cost of disagreeing. Strikes by public employees have occurred often despite legal sanctions. Even though they are illegal, these actions take place under the assumption

666 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

that most public-sector strikes have eventually been resolved without fines or other sanc- tions. Some other job actions that have been used are also outside the law or proscribed by the job requirements (e.g., government employees in New York raising the toll bridges at rush hour when walking off the job), whereas others are marginally outside the law or job requirements (e.g.,, all public employees calling in to say they are too sick to work blue flu ).41

From the union standpoint, a most promising job action is working within the law while placing pressure on management to resolve the dispute. Job slowdowns fall mar- ginally into this category because most public-sector labor agreements give manage- ment the right to discipline employees for poor performance. Yet, there is a thin line between a job slowdown and malicious obedience (also called work-to-rule) by which the employees follow the agency s rules to the letter. For example, a fingerprint techni- cian is charged with verifying an individual s address during his criminal booking. This could be done by simply telephoning the individual s purported residence. However, a more time consuming but accurate verification method would be for the fingerprint technician to personally visit the individual s residence. Needless to say, the home visit approach would create an assignment backlog. Other public employees can also use bureaucratic rules to their advantage. For example, tollbooth employees could check paper currency serial numbers against a list of counterfeit bills, or postal workers could check each item to ensure a proper ZIP code. Malicious obedience has the tacti- cal advantage of cutting back on the delivery of public services. More importantly, employees continue to receive wages under this tactic while being relatively immune from disciplinary actions.

Public-sector unions can also reduce the management s cost of agreeing with the union by campaigning for referendums to fund the negotiated labor settlement or elimi- nating some of their initial proposals.42 Public employee unions can also push for cer- tain issues that contribute significantly to their economic well-being at little cost to the political incumbents. Employee pensions usually fall into this category because they can be increased without immediate cost implications; the bulk of pension costs would be incurred under some future politician s budget.

Management can reduce its political cost of agreeing on wages by publicizing a rather low across-the-board settlement along with general improvements in the pay step plan. This plan usually gives progressive salary increases to each job classification. For example, an employee in a particular classification might receive a 5 percent wage increase after three years service in that classification. Management can improve the employee s situation by either raising the percentage increase or reducing the number of service years needed to qualify for a step wage increase. However, it is difficult to determine and report the precise cost of these changes. Most news media presentations are limited to specific reports on the average wage gain of public employees and ignore the more detailed cost implications of a modified pay step plan.

Like in the private sector, there is the continuing controversy over nonunion employees obligation to pay for their representational rights. Public-sector employees not joining unions may be required to pay for representational services provided by the union (collective bargaining, grievance handling, arbitration, etc.) but not for non- collective bargaining activities (such as political action committees, lobbying, or public relations activities).43 The nonmember has the burden of objecting to inappropriate expenditures of his or her agency or fair-share fee, but the union must provide written notice to nonmembers of their right to raise objections and provide sufficiently detailed information about the nature of dues expenditures to permit the nonmember to make a reasonable determination whether to challenge a particular expenditure as chargeable.

CHAPTER 13 Labor Relations in the Public Sector 667

In 2007, the U.S. Supreme Court ruled in Davenport et al. v. Washington Education Association that the First Amendment prohibits public-sector unions from using nonmem- ber fees collected under an agency shop agreement for purposes not germane (such as the union s political agenda) to the union s collective bargaining duties. The Court further ruled that unions must have procedures to obtain the nonmembers affirmative authoriza- tion (opt-in) before using their fees for election-related purposes.44 In January of 2016, the U.S. Supreme court heard a case which challenged the legality of the agency shop.

In summary, public-sector collective bargaining has some similarities to the process found in the private sector. In both situations, the parties are trying to increase their bar- gaining power relative to the other party s by increasing the other party s cost of dis- agreeing with their party s position or by reducing the other party s cost of agreeing with their party s position. There are several differences between public and private- sector bargaining processes; however, once these differences are acknowledged and understood, one can better appreciate the public sector as it fits into the overall frame- work of labor management relations in the United States. Moreover, skills learned in private-sector labor relations are easily transferred to the public sector.

Differences between Private-Sector and Public-Sector Bargaining

An understanding of public-sector labor relations requires recognition of some of the differences as well as the similarities between the public and private sectors.

The Market Economy Does Not Operate in the Public Sector One difference between the public and private sectors can be explained in terms of the economic system and the market economy. Unlike the private sector, many public ser- vices (such as public education, welfare services, and police and fire protection) are pro- vided to citizens at little or no additional cost (beyond taxes). The cost of such services is spread across many individuals rather than expecting each customer to pay the entire cost of the services used or available for use. The market economy therefore does not operate in the public sector and cannot act as a constraint on union and management negotiators.

Moreover, monopolistic conditions often exist in the public sector, and public orga- nizations often control the services rendered or the products offered. For example, the police and fire departments are the primary organizations that provide certain types of security protection. Public education has little real competition from the private sector, and even that is usually among only more affluent families. Thus, products and services provided by the government cannot be readily substituted if they become more costly.

The lack of substitute goods or services distinguishes public-sector collective bar- gaining from related activities in the private sector and adds to the critical nature of pub- lic services. For example, citizens usually take sanitation services for granted; yet a strike by city garbage collectors would be regarded as a public crisis because there is no imme- diate alternative means for garbage disposal. The lack of substitute services also elimi- nates one of management s strike costs: loss of business to a competitor. In fact, some union leaders contend that municipal leaders use a strike to their advantage by transfer- ring payroll savings resulting from a strike to other government budgetary accounts.

The relatively vague aspects of particular public service institutions may make pro- ductivity bargaining difficult. Clear and precise productivity measures are a necessary first step in productivity bargaining (although many private-sector companies have these figures and do not engage in productivity bargaining). Most public-sector

668 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

bargaining parties do not have specific productivity measures at their disposal and could not engage in productivity bargaining even if they desired this approach. Many public services are provided regardless of customer use. Police officers and bus drivers can legit- imately contend that they should not be financially punished for nonuse of their services; their salaries should not be a direct function of the number of crimes detected or drivers ticketed respectively, if the service is available for all. Hence, much of the public-sector wage determination process is based on a comparison of similar jobs in the public and private sectors rather than on employee performance records. Because the market does not act as a significant moderator in the public sector, budgetary limitations, public atti- tudes, and administrative discretion must operate to successfully maintain order, equity, and balance in collective bargaining relationships.45

The Relationship between the Budget and Public-Sector Bargaining Processes The budget tends to play a more conspicuous role in public-sector collective bargaining than in private-sector bargaining. In recent years, public employers have been under severe budget constraints, necessitating an increased emphasis on cost reduction. To the extent taxpayers are unwilling to approve revenue increases through the political process, cost reductions must come from curtailing public services or finding more cost-efficient ways of providing public services at current levels. Public employers have experienced increased pressure to emulate changes in labor relations practices occurring in the pri- vate sector by privatizing (i.e., outsourcing or subcontracting) some public services, broadening job classifications and multiskilled job descriptions, using more part-time or contingent employees, paying for performance, adopting flexible and alternative work schedules, reducing supervision and encouraging employee involvement and empower- ment, decentralizing and streamlining bureaucratic operating structures and methods, and increasing labor management cooperation.46

Most municipal budgets are published in advance before public hearings and subse- quent adoption. Although many citizens ignore public hearings, key taxpayers, such as local companies, pay close attention to the budget in terms of its implication for increased property or business taxes. The anticipated salaries for public employees are recorded as separate line items on the budget, something not done in the private sector. Thus, the opportunity exists for concerned taxpayers to pressure city officials in the hopes of keeping the budget and subsequent taxes at a minimum.

The specific influence of the budget on the public-sector bargaining process remains uncertain. Some suggest that a great deal of flexibility exists in the budget bargaining relationship in terms of budget padding, transfer of funds among line items, and supple- mental or amended budgets that can often be filed after the final approval date.47

Union negotiators major concerns pertain to securing benefits for their members; it is up to management to find sufficient funds for an equitably negotiated settlement. Thus, there is little union management agreement over the budget s significance in con- tract negotiations. Few, if any, public-sector collective bargaining agreements have provi- sions specifying the role the budget will assume in the collective bargaining process.

Employee Rights and Obligations Another way that public employment differs from private employment is that public employees have some legal rights and obligations that private employees do not. Numer- ous laws and executive orders pertain only to public employees. Public employees polit- ical activities, personal appearance, place of residence, and off-the-job behavior are

CHAPTER 13 Labor Relations in the Public Sector 669

regulated more closely than most private-sector workers. For example, public employees in particularly sensitive jobs and those whose misdeeds are most susceptible to adverse publicity, such as teachers, police officers, and firefighters, are held to a higher conduct standard than most other employees.48 Because citizens pay the taxes that pay public employees salaries, employers have to be careful of the image employees project.

Although freedom of speech and association are constitutional rights, there are lim- its to their exercise by public employees. The Supreme Court has identified several rea- sons for which these rights may be limited, including the need to maintain discipline and harmony in the workforce, the need for confidentiality, and the need to ensure that the proper performance of duties is not impeded.49 However, public employers cannot give priority to efficient work operation over an employee s First Amendment right to expres- sion about a matter of public concern.

Within the public sector in many states, merit-based civil service employment systems rather than collective bargaining agreements supersede employment-at-will laws. Before collective bargaining was authorized by statute, most public-sector entities adopted merit systems that covered all but the highest-level employees who are appointed and serve at the pleasure of the governor, mayor, or similar executive or who are elected to their posi- tions. Merit systems protect employees from political influence and corruption in hiring, pay, job classification as well as discipline and discharge. When a public employer adopts a merit system, it must provide a merit-based reason for discipline and discharge. In addi- tion, an appeal process that allows disciplined employees to challenge the disciplinary action before an independent personnel board or commission is included. Although the standard for review of the sufficiency of the employer s cause for discipline or discharge in a merit system may vary from the just cause standard that is applied under a collective bargaining agreement, in many instances, the elements of discipline (see Chapter 12) are quite similar, for example, progressive discipline.

A major difference between an appeal process under a merit system and a negoti- ated grievance procedure is that the disciplined employee may decide to appeal to a per- sonnel board or commission, with the employer bearing the cost of the proceedings. Under a collective bargaining agreement, the parties usually share the costs. Moreover, in some jurisdictions, employees have the option either to appeal to the public personnel board or to file a grievance under the negotiated grievance procedure, but not both.50

Generally, the courts have not attempted to substitute their judgment for that of exec- utive branch officials about whether an individual public employee should be dismissed. Rather, courts have sought to establish guidelines for the constitutional treatment of public employees in adverse action cases, such as a discharge. Procedural due process requires the right of notice of the proposed government action; the reasons for the action; the opportu- nity to respond; the right to a hearing before an impartial official; and the rights to legal counsel, to confront accusers, and to cross-examine and subpoena witnesses.

In Board of Regents v. Roth (1972) the Supreme Court delineated the following grounds on which a public employee whose employment has been terminated could assert the right to procedural due process:51

Where an employee had a property right to the job Where the termination harmed the individual s reputation and/or adversely affected his or her future employability Where termination was in retaliation for an exercise of a protected constitutional activity, such as the freedom of speech or freedom of assembly

In the case of Cleveland Board of Education v. Loudermill (1985), the Supreme Court held that before tenured public employees can be fired, they must be informed of the

670 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

charges against them and be given an opportunity to respond.52 Tenured employees due process rights under the U.S. Constitution include written or oral notice of the charges against them, an explanation of the employer s evidence, and an opportunity to rebut the evidence.

Collective Bargaining Structures and Decision-Making Processes

The bargaining structure within municipal governments is decentralized, and with few exceptions, negotiations are conducted on a single-employer basis. The bargaining unit coverage extends only as far as the municipal jurisdiction, and municipal officials are reluctant to relinquish their political autonomy and decision-making authority. The city manager or the chief administrative officer of the municipality will often serve as chief negotiator, with the assistance of the personnel director or an attorney retained by the city.53 An increased level of political activity by public employees, increased level of strike activity, and occurrence of prior job actions by organized public employees are fac- tors that increase the likelihood that a labor relations specialist will be included on the negotiations team. If the negotiation activities become complex, the city is more likely to employ a labor relations professional as the chief negotiator.54

Defining the appropriate bargaining unit in the public sector is more difficult than in the private sector. In the private sector, legislation and related enforcement agencies provide direction for determining an appropriate bargaining unit. For example, plant guards in the private sector are required to be in separate bargaining units, and super- visors are not eligible for membership in a bargaining unit. The public sector, especially at the state and local levels, experiences many different combinations of appropriate bar- gaining units. Depending on the particular applicable state law or administrative deter- mination, public-sector supervisors may be prohibited from joining unions, in some jurisdictions, they may be in the same bargaining units as other employees in other jur- isdictions, or they can join unions in separate bargaining units.55

Of the differences between public- and private-sector labor relations, one of the potentially most important, but often ignored, is the unionization of supervisors and other managers. While private-sector supervisors and managers lack representational rights under the Labor Management Relations Act, public-sector supervisors and other lower to midlevel managers have the right to engage in collective bargaining in more than a dozen states, including the most highly populated states. There have been questions about the loyalty, identity, and organizational commitment of public-sector supervisory unions, and the logic for exclusion is rooted in the need of the employer to have the undivided loyalty of supervisors and other managerial employees. However, research has identified little negative effect from the unionization of supervisors. Potential problems seem to arise with the highest-level supervisors on issues concern- ing strikes and discipline, especially when supervisors are in the same bargaining units as employees. Based on research in New Jersey, supervisors can both receive representation in their role as employees and act on the job in a managerial capacity. In other words, supervisors can wear two hats ; they are loyal to the mission of the agency and act as supervisors to further the mission of the agency while they are also union members.56

Another organizational difference applies to the chief negotiator in the public sector, who often lacks authority to reach a final and binding agreement with the union on behalf of the public organization. The sovereignty doctrine makes it difficult to delegate

CHAPTER 13 Labor Relations in the Public Sector 671

decision-making authority to specific administrative officials. Many elected officials still refuse to give up their legislative authority to make final decisions on matters that they believe are important to effective government operations because they feel responsible directly to the electorate. Elected officials do not want appointed negotiators to bind them to wage settlements and other provisions of collective bargaining agreements that they believe are unworkable.57 For example, unionized schoolteachers might encounter a variety of managers in collective negotiations the school principal, the superintendent of schools, the school board, and possibly state education officials. The problem of deter- mining who speaks for management can negatively affect the negotiation process in two ways:

1. Management negotiators at the bargaining table can defer to other management offi- cials in the bargaining process. Union officers are often shuffled off to a variety of government officials in collective bargaining on the premise that another individual has specific authority for a particular issue or a portion of available funds. Often, political rivalries prompt certain government officials to either intervene or pass the buck in the hopes of looking good at another official s expense. This situation can result in a more confusing collective bargaining relationship than is typically found in the private sector. In some cases, it can almost entirely prevent serious collective bargaining efforts between management and union negotiators.

2. The unwillingness of some government agencies to delegate sufficient authority to a labor relations representative can result in a lack of labor relations understanding on management s side of the negotiation table. In some cases, taxpayers are affected if unions take advantage of the inexperienced management negotiators. Perhaps in other cases a public strike could have been avoided if the parties had adopted a more realistic understanding of the collective bargaining process.58

Research has shown that when the chief negotiator holds a higher-level position in the organizational structure, the parties are less likely to reach an impasse. This is the result of the chief negotiator from a higher-level position having greater authority to make crucial decisions during the negotiations, thereby simplifying the process. Where outside consultants serve as chief negotiators, public-sector unions are more likely to make end runs to higher-level government officials whom the union negotiators per- ceive as having greater authority to make binding decisions in the negotiations. Such activity occurs away from the bargaining table and makes the negotiations between the parties at the bargaining table more difficult. In reference to the bargaining strategies covered in Chapter 6, chief negotiators who use the mutual gain bargaining strategy decrease the likelihood of an impasse, and negotiators who use a distributive strategy increase the likelihood of a bargaining impasse. In reference to impasse procedures cov- ered in Chapter 9, prior use of arbitration increases the likelihood of a bargaining impasse.59

Negotiable Issues and Bargaining Tactics Exemption by statute of many traditional collective bargaining subjects (particularly at the federal level) limits the ability of both unions and managers to resolve some disputes through the bargaining process. Under the CSRA, most compensation issues affecting federal budgets are excluded from the scope of mandatory bargaining subjects (except for postal workers and air traffic controllers). In many states operating under merit sys- tem rules and regulations, related subjects such as promotion, pension plans, and layoff procedures cannot be negotiated.60 Merit or civil service systems establishing rules for governing terms and conditions of employment existed before the passage of state laws

672 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

authorizing collective bargaining as a procedure for determining work rules affecting public employees. This situation sometimes can lead to conflicts over which system should take precedent in deciding the outcome of disputes over the determination or application of particular work rules. Legislators should clearly address this potential dilemma when drafting public-sector bargaining laws to minimize conflicts over whether collective bargaining or civil service procedures should take precedent.61

Some public-sector bargaining relationships attempt to get around statutory limita- tions on bargaining subjects by removing such discussions from the formal bargaining process. One study found that some public-sector labor agreement provisions are not actually negotiated between the parties, whereas other decisions are jointly determined but not included in the formal labor agreement.62

Public-sector bargaining tactics also differ from those in the private sector. Negotia- tions in the private sector stem from a bilateral relationship management and union representatives negotiate the terms of the labor agreement with little involvement from outside groups. Multilateral bargaining is a term used, particularly at the state and local levels, to describe the involvement of multiple parties in the collective bargaining process.63 For example, elected (e.g., mayor, city council member) and administrative (e.g., city manager, police chief) officials may share decision-making responsibility over some issues on the employer side. Various community interest groups (e.g., taxpayer, minority, environmentalist, business) perceive themselves as stakeholders potentially affected by the outcomes of negotiations and may also seek to actively influence the bar- gaining process by bringing pressure on either the employer or union(s) to approve acceptable bargaining terms. The outcomes of the negotiating process may affect the need for additional revenues (e.g., taxes) to fund improved employment terms or the quantity or quality of public services provided citizens.

The ability to impose political costs or rewards on a bargaining party often becomes as important in determining public-sector bargaining outcomes as the ability to impose or minimize economic costs affects bargaining power in the private sector. Thus, public- sector negotiations often become an exercise in politics who one knows and what one can do to help or hurt a government official s political career. Public unions have dem- onstrated an ability to use multilateral bargaining and political pressure to increase eco- nomic gains and job security for their members.64

Public-sector unions often have opportunities to engage in end-run bargaining before, during, or after negotiations. End-run bargaining involves a union making a direct appeal to a legislative body or government official who has the final decision- making authority rather than dealing exclusively with the designated management nego- tiator present at the bargaining table. For example, one mayor made concessions to a police association in return for its endorsement in the gubernatorial primary. The mayor changed the regular police work schedule from five days on and two off to four days on and two off (increasing the annual days off by 17), guaranteed two patrol offi- cers in every car, and agreed that 50 percent plus 1 of the patrol cars in each police dis- trict would be on the street during night hours.65 Because public-sector unions are often politically potent, elected officials are generally more receptive to this end-run tactic than a private-sector corporation president or majority stockholders of a corporation might be. In fact, such attempts by a union to bypass the designated management negotiators of a private-sector organization would probably result in the employer filing an NLRB unfair labor practice claiming of refusal to bargain in good faith.

Occasionally, the media aids a party s use of the end-run tactic by allowing manage- ment and union negotiators to present their positions through the press rather than to the other party at the bargaining table. Public-sector bargaining usually receives more

CHAPTER 13 Labor Relations in the Public Sector 673

press coverage than similar activities in the private sector because more information is typically furnished to the media by the bargaining parties, and the eventual settlement has a more direct impact on the government s constituents. Use of the end-run tactic can harm the collective bargaining process, as evidenced by a union leader s account of one contract negotiation between New York City and its uniformed forces:

All of this [bargaining issues] should have been brought to the bargaining table. It would have given both labor and management a chance to work out of these very dif- ficult trouble spots. But, almost nothing was done at the table; instead both sides took to the television, advertising, and the loud and dramatic press releases.

Experts know the best way to insure trouble is to bring collective bargaining into the public arena. Instead of labor and management representatives talking to each other, they will talk to the public and to their principals only. Invariably, the wrong things will be said.

Management will talk of the irresponsibly high demands of the workers, and about how services will have to be cut back or taxes raised. The labor leader now has to talk tough. The strike threat becomes almost obligatory, because he is now put in an impossible squeeze. When the union leader goes public he first must talk to the people he represents, and retain their confidence. Understandably, the public responds not to the facts of the situation but to the militant rhetoric. Everybody loses in the process, a process that has little or nothing to do with collective bargaining.66

The media plays an important role in determining the priority issues, providing information about bargaining issues, and helping the public formulate its attitudes toward the negotiating parties. The local media is highly influential because many times it is the primary source of information for the general public. Because voters cannot directly observe union and management interactions, they rely on the media, which itself has biases. These biases include personal beliefs, ideologies and prejudices, budgetary and technological constraints, and a tendency to deal with problems stereotypically.

During negotiations, both parties try to manipulate the media because the negotia- tion outcomes are often shaped as much by people s perceptions of what is reasonable or necessary as they are by the factual merits of a bargaining position. In fact, sometimes the parties jointly manipulate the media to their own advantage. The union may blame city officials for its members receiving less than the wage increase they demanded; city officials in turn blame the union for a tax increase needed to pay for a wage increase that was given.67

Accompanying the growth of collective bargaining in the public sector have been efforts to open up the bargaining process to citizen observation and participation through the enactment of so-called sunshine laws. The rationale for this approach is that citizens can provide more input into how tax dollars are spent by their involvement, and openness reduces public distrust of the bargaining process. Although every state has some form of sunshine law, 25 states require labor negotiations to be conducted in the open, and 12 states even require that the strategy sessions in preparation for labor nego- tiations be open.68 The open approach to public-sector bargaining differs widely from the private sector in that a private enterprise s owners (stockholders) are excluded from collective bargaining sessions.

Negotiators often seek to avoid bargaining in the sunshine because it becomes more difficult to make necessary trade-offs amongst bargaining priorities and terms when every constituent affected by those trade-offs can observe the deliberations. Nego- tiators may spend too much time posturing for the benefit of key constituents in the

674 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

public audience, thereby prolonging the amount of time required to get down to the par- ties bottom-line bargaining interests and positions. On the positive side, one study found the presence of sunshine laws to have no significant effect on bargaining outcomes in police officer and firefighter negotiations.69

Grievance Administration The public sector has widely accepted the grievance procedure with binding arbitration as the mechanism for resolving conflicts over the interpretation and application of the collective bargaining agreement. Although most grievance procedures are multistep, unlike in the private sector, most grievances are not settled at the first step. Instead, grievance disputes tend to be settled at the second or third step. Some evidence indicates that where there are fewer steps in public-sector grievance procedures, grievances are resolved more quickly. Once a grievance is appealed to arbitration, the parties make a significant effort to resolve the grievances before the formal arbitration hearing. At an arbitration hearing, labor and management representatives are most likely to present their own case rather than rely upon an outside attorney to represent their party, as is common in the private sector.70

Similar to the private sector, legalism is creeping into the arbitration process in the public sector. Increased legalism means greater use of attorneys, post hearing briefs, writ- ten transcripts, and over-adherence to formal rules of order. Although grievance arbitra- tion (as well as conciliation, mediation, and fact-finding) initially was intended to avoid legalism, the process of arbitration appears to be evolving as part of the problem rather than part of the solution. In addition, labor and management initially viewed the infor- mality of the arbitration process as the primary reason for its effectiveness; however, the increase in formality has caused a decline in the willingness of the parties to use arbitra- tion as an alternative dispute resolution process.71

The types of grievance subjects arbitrated in the public sector do not vary signifi- cantly from the private-sector experience, and in both sectors, discipline and discharge cases constitute the largest single category of grievance disputes.72 Public-sector union stewards may be less likely to file a written grievance if a cooperative bargaining relation- ship exists, which provides and encourages informal methods of resolving employment disputes.73 A number of alternative dispute resolution methods are being encouraged on the federal, state, and local levels to ensure fair and cost-effective resolution of employee grievances. Among techniques being used are mediation, peer-review panels comprised of employees or employees and managers, and arbitration.74 Grievance medi- ation programs typically report dispute settlement rates in the 75 to 90 percent range, and arbitration may reduce attorney fees and settlement costs by 20 percent.75

The Right-to-Strike Controversy The right to strike, considered by many a vital instrument for successful collective bar- gaining, is usually prohibited by statute in the public sector.76 Even though public employee strikes are illegal in most states, there appears to be no research evidence to support the proposition that the presence of a statutory strike ban significantly reduces the occurrence of public employee strike activity.77

The basic argument given for legislative prohibition of strikes is that the services provided by public organizations are essential to the general welfare of the citizens. Work stoppages or refusals to work would adversely affect the delivery of such vital ser- vices and create disorder in the community. As is true with many industrial relations concepts, the words essential services are subject to many diverse interpretations. Some

CHAPTER 13 Labor Relations in the Public Sector 675

maintain that all public services are essential, whereas others suggest that many public employee classifications (such as clerks, mechanics, and librarians) are no more essential than their counterparts in the private sector who are granted a right to strike. Police offi- cers and firefighters are almost always viewed as crucial for public safety; however, at least one police strike saw no increase in the area s crime rate. One political official, believing that criminals fear irate citizens more than they fear the police, commented, Hoodlums have no rights without police protection. Shop owners will use their

shotguns. 78

The right to strike in the public sector has other debatable dimensions. Some would prohibit public-sector strikes because they would place too much power in the hands of a union relative to taxpayers. Also, unions would unnecessarily benefit at the expense of other groups that are dependent on government revenues but do not have a right to strike or participate in power ploys with public officials.79

Some commenters contend that the right to strike in the public sector is not essen- tial to collective bargaining because public-sector unions are already influential interest groups and effectively use their lobbying and political support techniques to obtain col- lective bargaining goals. One research study found that successful bargaining gains in the public sector occur when unions either: (1) threat to strike (despite its illegality) or (2) intertwine themselves closely with their employers by exchanging political support for improved wages and benefits.80

Regardless of the arguments for or against the right to strike or statutory penalties imposed for illegal strike activity, significant strikes have occurred in the public sector. When illegal strike activity occurs or management permanently replaces lawful strikers, strike settlements may be delayed as union representatives seek to negotiate terms grant- ing all strikers or discharged employees amnesty or reinstatement to their former jobs. Unions may also seek to have management waive or negate (with back-to-work bonuses) the fines that many jurisdictions impose for illegally striking. Although there would gen- erally be no legal obligation for a public employer to bargain over or grant such a union proposal, public or political pressure to end the strike may cause a public employer to voluntarily agree to such a proposal.81

Discipline of Public-Sector Employees Although private-sector employees may be disciplined or discharged for off-duty mis- conduct, employers in the public sector have a heightened sensitivity about off-duty mis- conduct of their employees, especially public school teachers, firefighters, and police officers. As a general rule, in both the private and public sectors, the employees retain the right to conduct their private lives as they see fit without the interference of their employer, and the employer has just cause to discipline employees only if there is a nexus (connection) between the off-duty conduct and the employment. However, it is well established that off-duty conduct of public employees is subject to closer employer scrutiny, and discipline is more likely than for similar conduct in the private sector. Police officers are held to a more rigid standard of conduct since they are sworn, uni- formed, and armed employees. Firefighters are frequently disciplined for unbecoming off-duty conduct. School teachers who are certified professionals have important respon- sibilities for nurturing the community s youth and serving as role models for their stu- dents. Publicized criminal convictions for such illegal activities as drug use and selling drugs by school teachers will likely lead to termination of employment. In the private sector, the employer may discipline the employee but will be required to prove that the off-duty conduct had harmed productivity, adversely affected the business, and/or other employees refused to work with the convicted employee. In addition, employees in the

676 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

private sector may be employed under a collective bargaining agreement that requires entry to a rehabilitation program for a first offense.82

Within the federal sector, the Merit Systems Protection Board has formulated the so-called Douglas Factors that should be considered in deciding disciplinary punishment of federal employees. (See above the Labor Relations in Action feature.)

Interest Dispute Impasse-Resolution Procedures in the Public Sector Because legislation usually prohibits public employees from striking or requires participa- tion in impasse-resolution procedures before striking, these procedures play an important role in resolving interest disputes over what the terms and conditions of employment will be in the public sector. Because multiple laws exist that govern labor relations in different governmental jurisdictions, many different impasse-resolution procedures may be man- dated or encouraged. These procedures normally involve a third-party neutral, who assists the parties in reaching an agreement without interrupting services or endangering the public interest (see the discussion of mediation, fact-finding, and interest arbitration in Chapter 9).

Legislation for public-sector impasse-resolution procedures vary from state to state. Impasse-resolution procedures may combine mediation, fact-finding, and conventional or final-offer arbitration.83 For example, Connecticut has mediation, fact-finding, and arbitration for state employees; fact-finding and arbitration for municipal employees; and mediation and fact-finding for teachers. On the other hand, 15 states have no legislation on impasse resolution procedures. Mediation is a legislatively mandated mechanism in public-sector bargaining in most states, followed by fact-finding.84

Nearly one half of the states provide for interest arbitration for firefighters and police.85

LABOR RELATIONS IN ACTION Douglas Factors in Deciding Disciplinary Punishment of Federal Employees

1. The nature and seriousness of the offense, and its relation to the employee s duties, position and responsibilities, including whether the offense was intentional or technical or inadvertent, or was commit- ted maliciously or for gain, or was frequently repeated

2. The employee s job level and type of employment, including supervisory or fiduciary role, contacts with the public, and prominence of the position

3. The employee s past disciplinary record 4. The employee s past work record, including length

of service, performance on the job, ability to get along with fellow workers, and dependability

5. The effect of the offense upon the employee s abil- ity to perform at a satisfactory level and its effect upon supervisors confidence in the employee s ability to perform assigned duties

6. Consistency of the penalty with those imposed on other employees for the same or similar offense

7. The consistency of the penalty with any applicable agency table of penalties

8. The notoriety of the offense or impact upon the reputation of the agency

9. The clarity with which the employee was on notice of any rules that were violated in committing the offense, or had been warned about the conduct in question

10. Potential for the employee s rehabilitation 11. Mitigating circumstances surrounding the offense

such as unusual job tensions, personality problems, mental impairment, harassment, or bad faith, mal- ice or provocation on the part of others involved in the matter

12. The adequacy and effectiveness of alternative sanc- tions to deter such conduct in the future by the employee or others

Only those Douglas Factors relevant to each case need be considered.

SOURCE: Douglas v. Veterans Administration, M.S.P.R. 280 (at 305-6), 1981 MSPB Lexis 886 (at *38-9).

677

In all, 24 states have legislation that provides for interest arbitration special masters, or fact-finding for some employees (see Exhibit 13.5).86

Mediation Mediation involves a third-party neutral who has no binding authority to decide a dis- pute but assists the parties efforts to reach a voluntary agreement. Of the impasse- resolution procedures used in the public sector, mediation is the least intrusive and is little more than an adjunct to the negotiation process.87 Mediation is probably the most used and least studied dispute resolution procedure. This is because the mediation process is relatively informal and unstructured, reflecting the personal style of the medi- ator, the preferences of the union and employer representatives, and the intensity of the dispute. 88 The key ingredient for mediator effectiveness is experience, with related mediator training and knowledge. Effective mediators need tenacity for example, not taking no for an answer and they need to take an active role in the process by such actions as pressuring the parties with successive proposals for compromise rather than simply relaying messages back and forth to the parties.89

Mediation tends to be more successful when the parties are unsure of themselves or have personality conflicts. Mediation is generally less effective when followed by fact-finding, but more effective when followed immediately by arbitration.90

Fact-Finding and Arbitration of Interest Disputes Fact-finding and arbitration are separate impasse-resolution procedures; however, they are discussed and assessed jointly because of their many similarities. Both involve a third-party neutral who conducts a quasi-judicial hearing to assess union s and management s collective bargaining positions on issues in dispute. Those neu- trals who are generally accepted to serve as fact-finders or arbitrators are likely to have much labor relations experience, as evidenced by their membership in the National Academy of Arbitrators, and are more likely than not to be attorneys trained in the evidentiary process.91

Fact-finders have multiple roles in the impasse-resolution process. A fact-finder must interpret data and other information presented and recommend settlement posi- tions to the parties, and in some jurisdictions, to the legislators.92 Fact-finding is

Exhibit 13.5 States with Legislation for Interest Arbitration Covering Some Public Employees

Alaska Massachusetts New Mexico Vermont

Colorado Michigan New York** Washington

Connecticut Minnesota Ohio** Wisconsin**

Delaware Montana Oklahoma

Hawaii Nebraska* Oregon

Iowa Nevada Pennsylvania

Maine New Jersey Rhode Island

*Special Master **Fact-Finding

SOURCE: Committee Report of the Public Employment Disputes Settlement Committee of the National Academy of Arbitrators, May 9, 2007, Joyce M. Najita, Chair Updated by Amy Moor Gaylord and Franczek Radelet, P.C., Interest Arbitration Pros, cons, and How Tos, ABA 2010 Annual Meeting, San Francisco, CA, August 5 10, 2010.

678 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

intended to encourage a voluntary settlement by the parties by providing an objective assessment of the dispute from a credible and neutral third party. However, the fact- finder s recommendations are not binding on the bargaining parties.

Unlike mediation or fact-finding, arbitration entails a binding decision by a third- party neutral who settles the negotiation impasse. The degree of flexibility an arbitrator has in resolving the bargaining dispute depends on the procedure adopted by the parties or mandated by applicable law. Conventional arbitration permits the arbitrator to decide the most appropriate outcome based on the evidence presented. The arbitrator s discre- tion is more restricted under a final-offer arbitration (FOA) procedure, which typically has two variations. Total package selection FOA requires the arbitrator to choose either the union s or employer s final offer covering all disputed issues. Issue-by-issue FOA still requires the arbitrator to select either the union s or employer s final offer, but on an issue-by-issue basis. In both cases, FOA means the arbitrator will select only one party s final offer; there is no compromise or splitting the difference.93

The theory is that if the arbitrator will be selecting the most reasonable position of one of the parties, the parties positions would converge. As the date of the hearing approaches, theoretically the positions will converge and a settlement will be reached.

Fact-finding and arbitration are successful in resolving impasses because these pro- cedures provide deadlines for the parties to resolve their differences, provide fresh knowledgeable perspectives, and give negotiators political cover because negotiators can blame the neutral for the eventual settlement. Politicians sometimes criticize fact- finders or arbitrators, calling them outsiders or limousine liberals who have no accountability to taxpayers they make the decisions and then leave town. Fact-finding also provides a proposed solution that the parties can then accept without appearing weak; even if they do not accept it, the proposal forms the basis for discussion and mod- ification. The mere possibility that these procedures might be used to determine negotia- tion outcomes is intended to pressure the negotiators to resolve their differences voluntarily for fear that the third-party neutral might not understand or agree with their bargaining proposals.

These techniques can also carry some disadvantages. For example, the fact-finder s recommendation and arbitrator s decision may lead to settlement terms but may not resolve the genuine union management differences underlying the interest dispute. These techniques might cause the parties to cement their respective positions during negotiations because negotiators believe they can get a better deal from the arbitrator or more favorable recommendations from the fact-finder. Instead of earnestly attempt- ing to resolve differences during negotiations, negotiators focus their time and thoughts on preparing for the fact-finder or arbitrator, thus producing a so-called chilling effect on the bargaining process. Rather than being viewed as a risk to be avoided, fact-finding or arbitration simply becomes another bargaining strategy. If either party believes that it could get a better settlement from an arbitrator than from negotiation, an incentive exists to maintain excessive demands in hopes that the arbitrator may split the difference and make a favorable award. When one side acts in such a manner, the other side has no realistic choice but to respond similarly, wid- ening the gap between the parties and chilling the prospects for reaching a voluntary settlement.94

Nearly all public-sector laws have established criteria for arbitrator decision making on wages and benefits. The most common are:

Wage rates of comparable employees Changes in costs of living Comparable benefits such as insurance, pensions, and so on

CHAPTER 13 Labor Relations in the Public Sector 679

Comparisons of peculiarities such as hazards of employment; physical, mental, and educational qualifications; job training; and skills involved Employer s ability to pay Interest and welfare of the public

Some statutes require that the arbitrator give emphasis to the employer s ability to pay. For example, in today s economic climate, questions arise about financial distress of the government employer, consequences of the arbitrator s decision in terms of an increase in public expenses, tax increases versus employee layoffs, reduction in services, postponement of building projects, compliance with federal mandates, and so on. When no criteria are included in the statute, arbitrators tend to give comparability the greatest weight. The comparability criteria can become complex when the arbitra- tor has to consider corporation tax schedules, population shifts, and multiple economic indices.

When the advocates make their presentations to the arbitrator(s), they should first present evidence that meets the applicable statutory criteria in the relevant jurisdiction. Second, they should try to make it as easy as possible for the arbitrator(s) to understand and incorporate their evidence into the final decision. To accomplish a satisfactory result, advocates frequently use charts, graphs, and compilations of numbers in a manner that can be easily understood and analyzed.

After the arbitrator renders the decision, it is common for the decision to be reviewed by the courts. In fact, many public-sector statutes require the arbitrator(s) to specifically address the criteria in their decisions. Failure to do so may result in the decision being overturned by a judge.95

Research into this aspect of interest arbitration has produced mixed results. Analysis of arbitral decisions involving police impasses revealed that some management officials are reluctant to reveal their final offer before arbitration because they fear that the arbi- trator will use management s final offer as a starting point in his or her decisions.96 Yet this concern appears less relevant in a study of several arbitration awards in firefighters interest disputes, for which the majority of arbitrators took an intermediate or compro- mise stance on negotiation issues, such as wages and clothing allowances, but did not compromise on other issues, selecting either management s or the union s final position.97

Another concern about public-sector interest arbitration is that the mere existence of impasse-resolution procedures could create a so-called narcotic effect. Once the parties start using fact-finding or interest arbitration procedures, they may become increasingly reliant on them in subsequent negotiations. Research studies find that this frequently expressed concern is not warranted, and the narcotic effect tends to dissipate over time in subsequent contract negotiations.98

Effectiveness of Fact-Finding and Arbitration of Interest Disputes Many variables influence the bargaining process and outcomes. In a study of 97 fire- fighter and 326 police bargaining units in the state of New York between 1995 and 2007, researchers concluded:

The New York State police and firefighter arbitration has performed well over the 30-year history. Strikes have been avoided. The reliance on arbitration to decide impasses has declined considerably. Only a small number of bargaining units have developed a dependence on arbitra- tion (no narcotic effect).

680 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

In recent years, there is no evidence that the availability of arbitration has had a chilling effect on negotiations, although studies during the 1970s and 1980s showed a chilling effect. The use of arbitration has not led to an escalation of wages above those wage levels negotiated by police officers and firefighters in other states that do not have legisla- tion making arbitration available to resolve negotiations impasses The use of tripartite arbitration panels and use of clearly defined decision-making criteria have avoided bad or unworkable arbitrator awards.99

Assessing fact-finding is particularly difficult. Its effectiveness does not hinge on the fact-finder s ability; the fact-finder is presented facts by the parties in hopes that he or she will agree with their respective positions. The success of such a procedure is based on the assumption that the fact-finder s report will structure public opinion, which will in turn place pressure on the parties to resolve their differences in accord with published recommendations. Thus far, no concrete evidence shows that public pressure has notice- ably affected public-sector management and union officials. The views of the participants themselves appear to be divided, with time delays and disagreement over the weight attached by the fact-finder to factors, such as wage comparability being among the criti- cisms voiced.100

In general, participants, as well as analysts, appear to be satisfied with interest arbi- tration procedures used in the public sector. Compulsory arbitration of interest disputes does reduce the occurrence of public-sector strikes.101 Voluntary settlement rates of interest disputes tend to be highest when the parties have a legal right to strike (94.7 percent of cases), followed by the availability of FOA issue-by-issue selection (87 per- cent), FOA total package selection (84.1 percent), and conventional arbitration (75.7 per- cent).102 Compulsory interest arbitration also appears to have a small positive effect on wage and benefit improvements for affected employees.

Interest arbitrators view their role in the arbitral process as continuing the existing nature of the parties relationship, which has stemmed from the bilateral process of negotiations. Arbitrators believe that any major deviations from this relationship must come from the parties, not the arbitrator.103 In wage disputes using FOA, evidence sug- gests that arbitrators are heavily influenced by wage settlements in comparable units of government. As a result, national unions discourage their local union affiliates from set- tling for a wage less than the targeted statewide settlement terms.104

Even though some management officials may fear arbitration, arbitrators have not stripped them of their rights and authority. Interest arbitration settlements have not proven to be significantly different from outcomes reached through voluntary negotia- tions under similar circumstances. The public, in general, has accepted the use of alter- native dispute resolution procedures to avoid public-sector strikes, and most significantly, arbitration has been increasingly adopted as an impasse-resolution proce- dure throughout the public sector.105

A derivative of FOA, called Night Baseball Arbitration, has been proposed.106

(See Chapter 9)

Referendum One final impasse-resolution procedure that is sometimes used to resolve public-sector interest disputes is to submit unresolved issues to a taxpayer referendum or vote. The following item, for example, might be placed on a ballot: Do you approve of granting a wage increase of X cents per hour to our police officers at an estimated additional annual cost to property taxpayers of $Y million? 107 In 2011, Wisconsin legislature

CHAPTER 13 Labor Relations in the Public Sector 681

passed a law that included a provision that any pay raise to state employees would be limited to the consumer price index unless the public approved the greater raise in a vote referendum.

One advantage of the referendum procedure is to avoid having an outsider (fact- finder or arbitrator) determine the cost of a negotiated settlement. Citizens often com- plain less if the union s settlement is achieved in a democratic manner. Similarly, a union s integrity is at stake if it refuses to abide by the will of the public. Yet this pro- cedure could turn collective bargaining into a public relations campaign directed at a body of individuals (citizens) largely unfamiliar with labor relations complexities. This procedure has no precedent in private-sector labor relations because no practical com- pany would agree to submit labor agreement proposals to stockholders or consumers for approval.

Referendum, or direct submission to the electorate for final and binding settlement of interest disputes, has been used in several Texas cities. Employees have won over two- thirds of the elections that involved civil service and bonus issues, but lost 56.6 percent when the issue was pay parity, such as raising the firefighter pay scale to the level of the police.108 Use of a referendum has the potential advantage of motivating citizens to take an active interest in the matter of public employment.109 However, in cities where the referendum method has been used, the assessment of this approach has not been favor- able. The electorate has little understanding of the law and the issues, and it is highly susceptible to propaganda campaigns by both parties.110

In conclusion, there are many varieties and combinations of public impasse- resolution procedures. Yet, the objectives remain the same: to avoid strikes, to minimize dependence on outsiders, to maximize good-faith bargaining between the parties, to pro- tect the public interest, and to build labor management commitment to accountability and mutual problem solving.

Conclusions on Public-Sector Labor Relations

There is a stereotype that government employees are overpaid. The most convincing evidence from authorities reveals that state and local govern- ment employees are not overpaid. In fact, their research shows that public-sector employees are somewhat under-compensated about five percent when compared to their private-sector counterparts. When compared in accordance with the various skill groups, lower skilled, less educated public sector employees have significant wage and total compensation advantages over their private-sector counterparts; however, the higher-skilled, more educated public-sector employees have significant wage and total compensation disadvantages relative to their private-sector counterparts.111

Health care cost increases are equally problematic and challenging in the private and public sectors. Retiree health care costs are a more serious problem in the public sector because many private-sector firms have already cut back on these benefits or shifted a higher portion of the costs of retiree health care to employees and retirees. The specific levels of costs and the options for addressing them require state-specific fact gathering and offer an opportunity for public employers and public employee unions to pursue statewide and/or coalition bargaining as others have done in response to past state- and municipal-level financial crises. Public-sector pension funding shortfalls vary considerably across states. The princi- pal cause of such pension underfunding is the investment losses that occurred dur- ing the recent recession. A secondary cause is the failure of some governments to

682 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

make annual payments to cover the normal costs of pensions. This secondary cause can be addressed by requiring governments to make promised annual pension fund payments. Public employers and employee unions also need to address and, where appropriate, reform certain pension-design and administrative features, such as those that increase pension benefits based on an employee s final years or year of service. There are risks that putative short-term savings in pension costs achieved by shifting to 401(k) and other defined-contribution plans covering public employees risk will impose additional, hidden costs on the public and are based on faulty assessment of the reasons for the public-sector pension shortfall. Dispute resolution procedures (i.e., mediation, fact-finding, and arbitration) vari- ously included in public-sector collective bargaining laws have worked well in terms of reducing the incidence of public employee strikes and achieving equitable out- comes. In certain instances, however, the time required to reach arbitrated settle- ments of public-sector labor disputes has increased to the point where it imposes hardships on employees and excessive uncertainty on public employers and citizens. Consideration should therefore be given to setting time limits on arbitration deci- sions or otherwise reforming the arbitration process. The rate of reliance on arbitration has declined from between 10 and 30 percent in the early years of public-sector bargaining to below 10 percent in states allowing interest arbitration. Evidence and examples drawn from the public and private sectors show that collec- tive bargaining and workplace innovations based on a mutual-interest, joint problem-solving approach can produce positive outcomes for employers, employees, customers, and citizens, especially during fiscal crisis. Adopting, sustaining and dif- fusing such innovations require vigorous advocacy by and support from leadership champions; policy makers can be such champions. Wages of police and firefighters covered by arbitration statutes are not significantly different from those in states in which arbitration is not allowed (mediation and/or fact-finding are allowed) and wage growth for police and firefighters in states that allow for arbitration do not differ from wage growth in those states without arbi- tration. Arbitrators tend to be very conservative and follow the norms and standards established by the parties. On the negative side, the time required to complete negotiations when arbitration is invoked has risen over the years. Unions have responded positively to financial crises. Unions in New York City agreed to multiyear wage freezes, fringe benefits givebacks, productivity enhance- ments, and deferrals and cuts to help avoid bankruptcy. In San Francisco, major pension reforms were negotiated. In Boston, unions agreed to major givebacks in health care and pension plans. In the state of Connecticut, benefit and education reform were agreed to in return for employment security guarantees. In multiple states, school administrators and local teacher unions focused on school improve- ment, student achievement, and teacher quality.112

Labor relations experts do not predict that, despite severe pressures, public-sector labor relations will be transformed as the private sector in the United States. The economic pressures, international competition, and noneconomic pressures, a growing, more sophisticated nonunion sector, which induced fundamental change in the private sector have not occurred in the public sector given the inherent local and service nature of public sector.113

There are four primary factors that have the potential to produce pressures on public- sector labor relations: (1) public attitudes toward public-sector unions and collective

CHAPTER 13 Labor Relations in the Public Sector 683

bargaining. As yet, there are no signs of widespread support for the elimination of public employee union rights, except in selected areas; (2) there are no signs of significant declines in revenue available to governments, which could seriously affect public-sector employees; (3) the condition of public pensions could influence public attitudes toward public-sector unions and public-sector collective bargaining when and if there is evidence the pension liabilities and public-sector collective bargaining are linked; and (4) concern about the quality of education and the role of teacher unions in meeting the challenges of cost savings, quality improvements, and resistance to change.114

Challenges and Opportunities for Public-Sector Unions Although the public-sector union density has been above 35 percent for over 20 years, public-sector unions must be conscious of the external and internal influences that could affect their strength and stability. Public-sector unions are presented with many challenges and opportunities.

Privatizing of public services. Political candidates and elected officials who advocate privatization usually argue for cost savings; however, beneath the surface, they are attempting to do away with jobs held by union members. Unions will have to chal- lenge these approaches and promote the value of public services reaching out to political leaders who embrace that appeal. Extending bargaining rights by law, executive order, or municipal ordinance to the dozen-plus states that do not have legislation that grants rights to public employees to join unions and to bargain collectively. Although over the last few years there have been bills in Congress to establish minimum standards to extend employee rights to join unions and to bargain collectively for all state and local government employees, no law has been passed. Thus, unions must continue their political efforts at every level. Unionizing the unrepresented professionals who make over one-third of government jobs. Organizing campaigns will increasingly rely on the Internet and Web-based technologies because nearly all of the professional employees have computers at their workstations. In addition, unions will need to experiment with alternative forms of representation, such as associate memberships, minority unions, and legal assistance. Moving beyond the traditional adversarial approaches. Because public-sector employees and managers share a common commitment to serve the public, they want to secure and defend the missions of their agencies. Their common ground creates opportunities for interest-based bargaining, labor management partnerships, self-directed work teams, labor management commitments, and full partnerships. Seeking new approaches and subjects for bargaining. Unions and management must become innovative in their negotiations. The parties might negotiate evergreen contracts, which have no fixed expiration date so the parties are allowed to modify their collective bargaining agreements at any time in order to keep pace with tech- nological changes and conditions. Subjects such as quality of work life, family and work life, and telecommuting create opportunities to address the contemporary working lives of employees. Recruiting a new cadre of leaders. At all levels of unions, those experienced leaders who helped build their organizations in the 1960s and 1970s are reaching retirement age. Unions will have to devote more attention to leadership training and manage- ment skills in the context of union values. Unions will need a more diverse set of

684 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

leaders who will reflect a membership that is diverse occupationally, ethnically, and chronologically. Public employee unions challenges will be both economic and political. Govern- ments at all levels are experiencing large deficits, which will limit opportunities for future growth in public employment. States resort to layoffs to trim their budgets. Within these limits, all government entities will have to find ways to fund their obligated health care and pension costs. The ability of public employee unions to protect and expand employment through political influence will depend on voting numbers and lobbying efforts, which are mainly dependent on the efforts and vol- untary donations from the rank-and-file members. At the federal level, labor management relations in the nonpostal sector took a sharp 180-degree turn during the administration of President George W. Bush. Soon after taking office, President Bush rescinded the Labor Management Partner- ships established by President Clinton. President Bush s Director of Transportation Security Administration stripped employees of their collective bargaining rights, and President Bush removed employees of the Bureau of Alcohol, Tobacco, Firearms, and Explosives from protection under the CSRA. President Obama created Labor Management Relations Forums that required labor and management to work together prior to decisions. The Federal Labor Relations Authority and Transportation Security Administration have allowed TSA employees to choose to be represented by a union for limited collective bargaining purposes. The challenge is whether both management and labor can make these efforts successful.115

Summary Public employee unions over the past 50 years have grown to represent a majority of employees in educa- tion, police, and fire protection in state and local gov- ernments and a significant proportion of workers in the federal sector. Public employers and employees are under pressure to deliver an increasing variety of public services in the most cost-efficient and timely manner possible. Concepts familiar to private-sector labor relations over the past 20 years, such as down- sizing, cost reduction, outsourcing, and productivity improvement, have made their way into the bargaining reality of public-sector labor relations as well.

Most states have one or more comprehensive laws regulating state and local public-sector labor relations. Such legislation typically specifies the administrative setup, union recognition procedure, bargaining rights, impasse procedures, unfair labor practices, and strike provisions applicable to covered employees. Facing budget deficits and serious shortfalls in meeting pen- sion and health care costs obligations, states and municipalities are looking for ways to meet their obli- gations, including reducing or eliminating public-sector employees bargaining rights.

The CSRA of 1978 regulates federal employee labor relations. The administrative structure under the CSRA includes the Federal Labor Relations Authority, the General Counsel, and the Federal Service Impasse Panel. Within this framework, the parties attempt to negotiate and administer labor agreements covering mandatory and permissible bargaining subjects. Also available for assistance are the Federal Mediation and Conciliation Service, labor arbitrators, and fact-finders who provide important dispute resolution services for the parties.

Public- and private-sector labor relations differ in several ways: (1) by its very nature, public service dif- fers from private-sector services economically and in its demand characteristics; (2) the effect of the budget on bargaining processes differs; (3) the bargaining struc- ture differs, affecting decision-making processes; (4) negotiable issues and bargaining tactics differ; and (5) the right to strike is usually prohibited by law. Public- and private-sector similarities include the role of personalities and skills of negotiators and the interplay of bargaining power model variables, such as public opinion, political support, and various forms of job actions.

CHAPTER 13 Labor Relations in the Public Sector 685

Since 2001, Congress has passed a series of laws that have affected labor management relations in the federal sector. In 2001, the Aviation and Transportation Act created the Transportation Security Administration (TSA), which federalized airport screeners and gave the TSA the same personnel flexibilities afforded the Federal Aviation Administration. In 1996 as part of the Depart- ment of Transportation appropriations, Congress had directed the FAA to negotiate labor management rela- tions reform, which provided for salary negotiations with the air traffic controllers union. In 2011, the Fed- eral Labor Relations Authority and Transportation Secu- rity Administration decided to allow TSA employees to choose whether they want to be represented by a union for limited collective bargaining purposes. In 2011, the TSA employers chose the AFGE.

Impasse-resolution procedures are often estab- lished as a substitute for public employees lack of a legal right to strike and include mediation, fact- finding, arbitration, and various combinations of these. Such terms as chilling effect and narcotic effect have become common in assessing the effectiveness of these procedures. Public employee unions do appear to have had a positive impact on raising wage and benefit levels for public employees and in garnering a larger proportion of public-sector bud- gets to address employee interests. Although public- sector union membership growth rates are likely to moderate in future years, public employee unions will continue to play an important role in determin- ing labor relations policy and outcomes in the public sector.

Key Terms Federal Labor Relations Authority

(FLRA), p. 657 Federal Service Impasse Panel (FSIP),

p. 659 Merit System Protection Board

(MSPB), p. 659

exclusive recognition, p. 660 work-to-rule, p. 667 sovereignty doctrine, p. 671 Multilateral bargaining, p. 673 end-run bargaining, p. 673 sunshine laws, p. 674

mediation, p. 677 fact-finding, p. 677 interest arbitration, p. 677 chilling effect, p. 679 narcotic effect, p. 680

Discussion Questions

1. Think of a public organization with which you are familiar. Explain how it differs from a private company in terms of the following:

a. Nature of its service b. Relationship between its budget and col-

lective bargaining processes c. Bargaining structure and decision-making

processes d. Negotiable issues and bargaining tactics e. The right to strike

2. Using the same public organization as in question 1, discuss the similarities between collective bar- gaining in this organization and a typical negoti- ation between a private company and its union.

3. Explain why some states do and other states do not have a public-sector bargaining law or laws that cover some public employees but not others.

4. Describe the different types of impasse- resolution procedures used in the public

sector, and discuss the relative effectiveness of each.

5. What are the advantages of Night Baseball arbi- tration over conventional interest arbitration and FOA arbitration?

6. What are some possible advantages or disadvantages of expanding the scope of bargaining in the federal sector to include issues such as wages and benefits?

7. Why does the federal government have multiple labor management relations models?

8. Should public employees have the same right to strike as private-sector employees are granted under the Labor Management Relations Act? Why or why not?

9. Should all public employees have a right to submit interest disputes to final and binding arbitration in exchange for giving up the right to engage in legal strike activity? Why or why not?

686 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Exploring the Web

Labor Relations in the Public Sector

1. Association of Labor Relations Agencies (ALRA). Check out the Web site http://www.alra.org/. Read the newsletter, the ALRA Advisor, for the latest in current activities of neutrals in the United States and Canada.

2. Federal-Sector Labor Relations Legislation. The Federal Labor Relations Authority is an independent agency responsible for administering the labor management relations program for federal nonpos- tal employees. Go to the Web site of the Authority and find the section that describes the purpose of the Federal Service Impasses Panel. Who are the members of the panel? Look for FLRA decisions.

3. Labor Relations and Teachers. The Education Pol- icy Institute in Washington, D.C., provides links to information on teacher unions. What are some of the differences between the National Education Association (NEA) and the American Federation of Teachers (AFT)?

4. Bureau of Labor Statistics on Work Stoppages in the Public Sector. The BLS reports major work stoppages, which include worker-initiated strikes and lockouts by their employers involving 1,000 workers or more. What percentage of the total work stoppages in 2010 occurred in the public sector?

References 1. David Lewin, Peter Feuille, and Thomas Kochan,

Public-Sector Labor Relations: An Analysis and Readings (2nd ed.) (Glen Ridge, NJ: Thomas Horton & Daughters, 1988), pp. 1 5.

2. Dale Belman, Morley Gunderson, and Douglas Hyatt, Public-Sector Employment Relations in Transition, in Public-Sector Employment, ed. D. Belman, M. Gunderson, and D. Hyatt (Madison, WI: Industrial Relations Research Association, 1996), pp. 1 9.

3. Martin H. Malin, The Paradox of Public-Sector Labor Law, Indiana Law Journal, 4(4), 2009, p. 1369 at http://www.bls.gov/news.release/ union2.nro.htm.

4. Terry Thomason and John F. Burton, Jr., Unionization Trends and Labor Management

Cooperation in the Public Sector, in Going Public: The Role of Labor Management Relations in Delivering Quality Government Services, ed. Jonathan Brock and David B. Lipsky (Champaign, IL: Industrial Relations Research Association, 2003), pp. 69 83.

5. Service Employees International Union, SEIU s Public Service Employees, 2002, pp.

1 2 at http://www.sein.org/public_employee/ abtpubemp.html.

6. James L. Stern, Unionism in the Public Sector, in Public-Sector Bargaining, 2nd edn. Benjamin Aaron, Joyce M. Najita, and James L. Stern

(Washington, D.C.: The Bureau of National Affairs, 1988), pp. 66 67; Marick F. Masters and Robert S. Atkin, Reforming Federal Sector Labor Relations: Recommendations of President Clin- ton s National Partnership Council, Labor Law Journal, 45, June 1994, pp. 353 354.

7. http://www.bls.gov/news.release/union2.t03.htm. 8. James T. Bennett and Marick F. Masters, The

Future of Public-Sector Labor Management Relations, Journal of Labor Research, 24, Fall 2003, pp. 537 538.

9. Heejoon Park, State Legislation of Public-Sector Collective Bargaining: An Event History Analy- sis, in Proceedings of the Fiftieth Annual Meeting, Industrial Relations Research Association (Madison, WI: Industrial Relations Research Association, 1998), pp. 23 32; Susan Schwochau, Interest Group Tactics and Public-Sector Labor

Relations Policy, Journal of Labor Research, 15, Fall 1994, pp. 331 354.

10. Jeffrey S. Zax and Casey Ichniowski, Bargaining Laws and Unionization in the Local Public Sec- tor, Industrial and Labor Relations Review, 43, April 1990, pp. 447 463; Greg Hundley, Who Joins Unions in the Public Sector? The Effect of Individual Characteristics and the Law, Journal of Labor Research, 9, Fall 1988, pp. 301 306; Richard B. Freeman and Casey Ichniowski, Introduction: The Public-Sector Look of

CHAPTER 13 Labor Relations in the Public Sector 687

American Unionism, in When Public-Sector Workers Unionize, ed. by Richard B. Freeman and Casey Ichniowski (Chicago: The University of Chicago Press, 1988), p. 3.

11. Timothy D. Chandler and Rafael Gely, Card Check Laws and Public-Sector Union Member- ship in the States, Labor Studies Journal, 6(4), 2011, pp. 445 457.

12. John Lund and Cheryl L. Maranto, Public-Sector Labor Law: An Update, in Public-Sector Employment in a Time of Transition, ed. Dale Belman, Morley Gunderson, and Douglas Hyatt (Madison, WI.: Industrial Relations Research Association, 1996), p. 48.

13. County Sanitation District No. 2 of L.A. County v. L.A. County Employees Association, 699 P.2d 835 (1985); Raymond L. Hogler, Public-Sector Strikes: Employee Rights, Union Responsibilities, and Employer Prerogatives (Alexandria, VA: Interna- tional Personnel Management Association, 1988), pp. 5 6.

14. Robert Hebdon, Public-Sector Dispute Resolu- tion in Transition, in Public-Sector Employment in a Time of Transition, ed. Dale Belman, Morley Gunderson, and Douglas Hyatt (Madison, WI: Industrial Relations Research Association, 1996), pp. 87 92.

15. Charles J. Coleman, Federal Sector Labor Rela- tions: A Reevaluation of Policies, Journal of Collective Negotiations in the Public-Sector, 16, 1987, pp. 37 52.

16. Steven Greenhouse, States Aim Ax at Health Cost of Retirement, New York Times, February 13, 2011, pp. A1 and A3.

17. Dean Baker, The Origins and Severity of the Public Pension Crisis, (Washington, D.C.: Center for Economic Policy Research, February 2011), pp. 1 10.

18. Joseph E. Slater, Public Sector Labor in the Age of Obama, Indiana Law Journal, 89(1) (Winter 2012), pp. 190 229. Also, see, Joseph E. Slater, The Assault on Public Sector Collective Bargaining: Real Harms and Imaginary Benefits, Washington, D.C.: American Constitution Society for Law and Policy, June 2011, pp. 1 18; Also, see, Raymond Hogler and Christine Henle, The Attack on Public Sector Unions in the United States: How Regional Culture Influences Legal Policy, Labor Law Journal, 62 (Fall 2011), pp. 136 144.

19. A Look at States Facing Budget Deficits in 2015, http://www.cultistate.com/insider/2015; U.S. Public Pension Gap Widened to Nearly $1 Tril- lion in FY 12 , http://www.reuters.com/article/ 2014/04/01usa-pensions-pew.

20. Monica Davey and Steven Greenhouse, Wisconsin May Take an Ax to State Workers Benefits and Their Unions, New York Times, http://www. nytimes.com/2011/02/12/us/12unions.html.

21. Steven Greenhouse, A Watershed Moment for Public-Sector Unions, New York Times, February 19, 2011, p. A12.

22. Patricia Cohen, Public-Sector Jobs Vanish, and Blacks Take Blow. The New York Times, May 25, 2015, p. A1 and B5.

23. George W. Bohlander, The Federal Service Impasse Panel: A Ten-Year Review and Analysis, Journal of Collective Negotiations in the Public Sector, 24, 1995, pp. 194 195.

24. Ibid. 25. Charles G. Smith, Winning and Losing in Federal

Sector Dispute Resolution, Public Personnel Management, 23, Summer 1994, pp. 301 319.

26. Peter Feuille, Unionism in the Public Sector: The Joy of Protected Markets, Journal of Labor Research, 12, Fall 1991, pp. 351 353; and Jill Kriesky, Trends in Dispute Resolution in the Public Sector, in Employment Dispute Resolution and Worker Rights in a Changing Workplace, ed. by Adrienne E. Eaton and Jeffrey H. Keefe (Champaign, IL: Industrial Relations Research Association, 1999), pp. 249 250.

27. Marick F. Masters, Robert Albright, and Ray Gibney, Linking Labor-Management Relations to Improved Agency Performance, Public Manager, Spring 2010, pp. 69 71 at http://www.thepublic manager.org/docs_articles/current/Vol39,2010/Vol39, Issue01/Vol39N1_ LinkingLaborManagement_ MastersAlbright Gibney.pdf.

28. Marick F. Masters, Christina Sickles Merchant, and Robert Tobias, Engaging Federal Employees through Their Union Representatives to Improve Agency Performance, February 2, 2010, pp. 17 31 at http://www.american.edu/spa/key/ upload/white-paper.

29. Marick F. Masters and Robert R Albright, Labor Relations in the Department of Homeland

Security: Competing and Perspectives and Future Possibilities, Labor Law Journal 54, 2003, pp. 66 83.

688 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

30. http://www.cpms.osd.mil/nsps/lr.html; www.opm. opm.gov. See: Douglas A. Brook and Cynthia L. King, Civil Service Reform as National Security: The Homeland Security Act of 2002, Public Adminis- tration Review, 67, May June 2007, pp. 399 407.

31. http://www.thenewsamerican.com/usnews/ politics.

32. Richard W. Hurd and Jill K. Kriesky with reply by Herbert R Northrup, The Rise and Demise of PATCO, Industrial and Labor Relations Review 40, October 1986, pp. 115 127; Herbert R. Northrup, The Rise and Demise of PATCO, Industrial and Labor Relations Review, 37, January 1984, pp. 167 184.

33. http://www.apwu.org/; http://www.nalca.org/; http://www.npmhu.org; http://www.nlrca.org/.

34. Kevin R. Kosar, The U.S. Postal Service s Financial Condition: Overview and Issues for Congress, Congressional Research Service, January 27, 2012, pp. 1 10; David Leonard, It s Amazon s World: The USPS Just Delivers

It, Bloomberg Businessweek, July 30, 2015, p. 27. 35. Jennifer Levitz, Postal Service Eyes Closing

Thousands of Post Offices , Wall Street Journal, p. A-1, A-14.

36. Tim Bornstein, Legacies of Local Government Collective Bargaining in the 1970s, Labor Law Journal, 31, March 1980, pp. 165 173.

37. Jack Fiorito and Lee P. Stepina, Explaining the Unionism Gap: Public-Private-Sector Differences in Preferences for Unionization, Journal of Labor Research, 17, Summer 1996, pp. 463 478; Kate Bronfenbrenner and Tom Juravich, Union Organiz- ing in the Public Sector (Ithaca, NY: Cornell Uni- versity Press, 1995); Lee A. Graf, Masoud Hemmasi, Kenneth E. Newgreen, and Warren R. Nielsen, Profiles of Those Who Support Collective Bargain-

ing in Institutions of Higher Learning and Why: An Empirical Examination, Journal of Collective Negotiations in the Public Sector, 23, 1994, p. 155.

38. Richard Freeman, Through Public-Sector Eyes: Employee Attitudes toward Public-Sector Labor Relations in the U.S., in Public-Sector Employ- ment in a Time of Transition, ed. Dale Belman, Morley Gunderson, and Douglas Hyatt (Madison, WI: Industrial Relations Research Association, 1996), pp. 71 73.

39. These techniques were formulated in various discussions with Paul Gerhart of Case Western Reserve University.

40. Kevin M. O Brien, Compensation, Employment, and the Political Activity of Public Employee Unions, Journal of Labor Research, 13, Spring 1992, pp. 189 203; Michael Marmo, Public Employee Unions: The Political Imperative, Journal of Collective Negotiations in the Public Sector, 4, 1975, p. 371.

41. Paul D. Staudohar, Quasi-strikes by Public Employees, Journal of Collective Negotiations in the Public-Sector, 3, Fall 1974, pp. 363 371.

42. Richard B. Freeman and Casey Ichniowski, Introduction: The Public-Sector Look of Ameri-

can Unionism, in When Public-Sector Workers Unionize, ed. Richard B. Freeman and Casey Ichniowski (Chicago: The University of Chicago Press, 1988), pp. 1 13.

43. John Lund and Cheryl L. Maranto, Public-Sector Law: An Update, pp. 39 47.

44. http://www.lawmemo.com/sct/WEA/. 45. Michael Moskow, J. J. Loewenberg, and E. C.

Koziara, Collective Bargaining in Public Employment (New York: Random House, 1970), pp. 14 18; H. H. Wellington and R K Winter, Jr., Structuring Collective Bargaining in Public Employment, Yale Law Journal, 79, April 1970, pp. 806 822.

46. Dale Belman, Morley Gunderson, and Douglas Hyatt, Public-Sector Employment Relations in Transition, in Public-Sector Employment in a Time of Transition, ed. by D. Belman, M. Gun- derson, and D. Hyatt (Madison, WI: Industrial Relations Research Association, 1996), pp. 4 5.

47. Milton Derber, Ken Jennings, Ian McAndrew, and Martin Wagner, Bargaining and Budget- Making in Illinois Public Institutions, Industrial and Labor Relations Review, 27, October 1973, pp. 49 62; Kenneth M. Jennings, J. A. Smith, and Earle C. Traynham, Jr., Budgetary Influences on Bargaining in Mass Transit, Journal of Collective Negotiations in the Public Sector, 6, 1977, pp. 333 339.

48. Michael Marmo, Public Employees: On-the-Job Discipline for Off-the-Job Behavior, Arbitration Journal, 40, June 1985, p. 23; Marvin Hill, Jr., and Donald Dawson, Discharge for Off-Duty Misconduct in the Private and Public Sectors, Arbitration Journal, 40, June 1985, pp. 24 33.

49. Kevin A. Banasik, Government Regulation of Federal Employee Speech: United States v. National Treasury Employees Union, 115 S.Ct.

CHAPTER 13 Labor Relations in the Public Sector 689

1003 (1993), Harvard Journal of Law and Public Policy, 19, Fall 1995, pp. 200 209; David H. Rosenbloom, Public Personnel Administration and the Constitution: An Emergent Approach, Public Administration Review, 35, February 1975, pp. 52 59.

50. Bonnie G Bogue and Katherine J. Thomson, Pocket Guide to Just Cause: Discipline and Dis charge Arbitration (Berkeley, CA California Public Employees Relations Program, Institute for Research on Labor and Employment, University of California, 2010), pp. 4 7.

51. Board of Regents v. Roth, 408 U.S. 564 (1972); Perry v. Sindermann, 408 U.S. 593 (1972).

52. Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985).

53. Timothy D. Chandler and Timothy A. Judge, Management Chief Negotiators, Bargaining

Strategies, and the Likelihood of Impasse in Public-Sector Collective Bargaining, American Review of Public Administration, 28, June 1998, pp. 146 166.

54. Rafael Gely and Timothy D. Chandler, Determinants of Management s Organizational

Structure in the Public Sector, Journal of Labor Research, 14, Fall 1993, pp. 381 397.

55. Stephen L. Hayford, An Empirical Investigation of the Public-Sector Supervisory Bargaining Rights Issue, Labor Law Journal, 26, October 1975, pp. 641 652; Alan Balfour, Rights of Col- lective Representation for Public-Sector Supervi- sors, Journal of Collective Negotiations in the Public Sector, 4, 1975, pp. 257 265; William H. Holley, Jr., J. Boyd Scebra, and William Rector, Perceptions of the Role of the Principal in Pro-

fessional Negotiations, Journal of Collective Negotiations in the Public Sector, 5, 1976, pp. 361 369.

56. Adrienne E. Eaton and Paula B. Voos, Wearing Two Hats: The Unionization of Public-Sector Supervisors, Going Public: The Role of Labor- Management Relations in Delivering Quality Government Services, ed. Jonathan Brock and David B. Lipsky (Champaign, IL: Industrial Relations Research Association, 2003), pp. 295 309.

57. Louis V. Imundo, Jr., The Federal Government Sovereignty and Its Effect on Labor-Management Relations, Labor Law Journal, 26, March 1975, pp. 145 152.

58. Milton Derber, Management Organization for Collective Bargaining in the Public Sector, in Public-Sector Bargaining, ed. Benjamin Aaron, Joseph Grodin, and James Stern (Washington, D.C.: Bureau of National Affairs, 1978), pp. 80 117.

59. Timothy D. Chandler and Timothy A. Judge, Management Chief Negotiators, Bargaining

Strategies, and the Likelihood of Impasse in Public-Sector Collective Bargaining, Annual Review of Public Administration, 28, June 1998, pp. 160 161.

60. I. B. Helburn and N. B. Bennett, Public Employee Bargaining and the Merit Principle, Labor Law Journal, 23, October 1972, p. 619; I. B. Helburn, The Scope of Bargaining in Public- Sector Negotiations: Sovereignty Reviewed, Journal of Collective Negotiations in the Public Sector, 3, Spring 1974, pp. 147 166.

61. Richard C. Williams, Resolution of the Civil Service-collective Bargaining Dilemma, Ameri- can Review of Public Administration, 24, June 1994, pp. 149 160.

62. Paul F. Gerhart, The Scope of Bargaining in Local Government Negotiations, Labor Law Journal, 20, August 1969, pp. 545 552.

63. Marjorie Sarbaugh-Thompson, Bargaining over Education Policy: Who Represents the Commu- nity? Journal of Collective Negotiations in the Public Sector, 26, 1997, pp. 223 245; Thomas A. Kochan, A Theory of Multilateral Collective Bargaining in City Governments, Industrial and Labor Relations Review, 27, July 1974, pp. 525 542.

64. Marick F. Masters, AFSCME as a Political Union, Journal of Labor Research, 19, Spring 1998, pp. 313 349; Marick F. Masters and Robert S. Atkin, Financial and Political Resources of Nine Major Public-Sector Unions in the 1980s, Journal of Labor Research, 17, Winter 1996, pp. 183 198; Rafael Gely and Timothy D. Chandler, Protective Service Unions Political Activities and Departmental Expenditures, Journal of Labor Research, 16, Spring 1995, pp. 171 185; Robert G. Valletta, The Impact of Unionism on Municipal Expenditures and Revenues, Indus trial and Labor Relations Review, 42, April 1989, pp. 430 442.

65. Peter Feuille, Police Labor Relations and Multi- lateralism, Journal of Collective Negotiations in the Public Sector, 3, Summer 1974, p. 216.

690 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

66. Victor Gotbaum, Collective Bargaining and the Union Leader, pp. 83 84.

67. Michael Marmo, Public Employee Collective Bargaining: A Mass-Mediated Process, Journal of Collective Negotiations in the Public Sector, 13, 1984, pp. 291 307.

68. Characteristics of Sunshine Laws in the 50 States, Chronicle of Higher Education, October 10, 1984, p. 18.

69. Kevin M. O Brien, The Impact of Sunshine Laws on Police and Firefighter Bargaining Outcomes, Applied Financial Economics, 5, December 1995, pp. 425 432.

70. George W. Bohlander, Public-Sector Grievance Arbitration: Structure and Administration, Journal of Collective Negotiations in the Public Sector, 21, 1992, pp. 282 283; Greg Stewart and Jeanette A. Davy, An Empirical Examination of Grievance Resolution and Filing Rates in the Public and Private Sectors, Journal of Collective Negotiations in the Public Sector, 21, 1992, pp. 331 334.

71. Barry M. Rubin and Richard S. Rubin, Creeping Legalism in Public-Sector Grievance Arbitration: A National Perspective, Journal of Collective Negotiation in the Public Sector, 30, 2003, pp. 3 12.

72. Debra J. Mesch and Olga Shamayeva, Arbitration in Practice: A Profile of Public-Sector Arbitration Cases, Public Personnel Management, 25, Spring 1996, pp. 119 132.

73. Michael J. Duane, To Grieve or Not to Grieve: Why Reduce It to Writing? Public Personnel Management, 20, Spring 1991, pp. 83 88.

74. Jill Kriesky, Trends in Dispute Resolution in the Public Sector, in Employment Dispute Resolution and Worker Rights in the Changing Workplace, pp. 251 254.

75. Joseph I. Goldstein and Martin F. Payson, Alter- nate Dispute Resolution of Employment Matters in the Public Sector, Spectrum: The Journal of State Government, 68, Fall 1995, pp. 36 42.

76. Michael H. Cimini, 1982 97 State and Local Government Work Stoppages and Their Legal Background, Compensation and Working Con- ditions, 3, Fall 1998, pp. 32 34; John Lund and Cheryl L. Maranto, Public-Sector Labor Law: An Update, in Public-Sector Employment in a Time of Transition, p. 30.

77. Dane M. Partridge, The Effect of Public Policy on Strike Activity in the Public Sector, Journal of

Collective Negotiations in the Public Sector, 19, 1990, pp. 87 94; Robert E. Doherty, Trends in Strikes and Interest Arbitration in the Public Sector, Labor Law Journal, 37, August 1986, pp. 473 475; Craig Olson, Strikes, Strike Penal ties, and Arbitration in Six States, Industrial and Labor Relations Review, 39, July 1986, p. 539.

78. Crime Rate Is Same Despite Police Strike, Miami Herald, July 20, 1975, p. 15-A.

79. Paul D. Staudohar, Reappraisal of the Right to Strike in California, Journal of Collective Nego- tiations in the Public Sector, 15, 1986, p. 91.

80. Theodore Kheel, Resolving Deadlocks without Banning Strikes, Monthly Labor Review, 91, July 1969, pp. 62 63.

81. Michael H. Cimini, 1982-97 State and Local Government Work Stoppages and Their Legal Background, p. 34.

82. William Walsh and Sheila Vicars-Duncan, Disciplining Public School Employees for Off-

Duty (Mis)conduct: A View for Arbitration Decisions, Journal of Collective Negotiations in the Public Sector, 30, 2005, pp. 329 336; Helen LeVan, Arbitration of Discipline in the Public Sector: Case Characteristics and Party Behavior Predicting Case Outcomes, Journal of Collective Bargaining Negotiations in the Public Sector, 31(3), 2007, pp. 199 212.

83. U.S. Department of Labor, Labor-Management Services Administration, Summary of Public- Sector Labor Relations Policies: 1976 (Washing ton, D.C.: Government Printing Office, 1976), pp. 1 126.

84. Mark D. Karper, Fact Finding in Public Employment: Promise or Illusion, Revisited, Journal of Collective Negotiations in the Public Sector, 23, 1994, pp. 288 296.

85. John Lund and Cheryl L. Marnto, Public-Sector Labor Law: An Update, in Public-Sector Employment in a Time of Transition, 31(48), pp. 50 54.

86. Committee Report of the Public Employment Disputes Settlement Committee of the National Academy of Arbitrators, May 9, 2007, Joyce M. Najita, Chair. Updated by Amy Moor Gaylord and Franczek Radelet, P.C., Interest Arbitra- tionPros, Cons, and How Tos, ABA 2010 Annual Meeting, San Francisco, CA, August 5 10, 2010.

87. David A. Dilts, Ahmad Karm, and Ali Rassuli, Mediation in the Public Sector: Toward a

CHAPTER 13 Labor Relations in the Public Sector 691

Paradigm of Negotiations and Dispute Resolu- tion, Journal of Collective Negotiations in the Public Sector, 19, 1990, pp. 49 50.

88. David Lewin, Peter Feuille, Thomas A. Kochan, and John T. Delaney, Public-Sector Labor Rela- tions: Analysis and Readings (Lexington, MA: D.C. Heath, 1988), pp. 334 335.

89. Steven Briggs and Daniel J. Koys, An Empirical Investigation of Public-Sector Mediator Effec- tiveness, Journal of Collective Negotiations in the Public Sector, 19, 1990, pp. 121 126.

90. Thomas A. Kochan, Dynamics of Dispute Resolution in the Public Sector, in Public-Sector Bar gaining, ed. B. Aaron, J. R Grodin, and J. L. Stern (Washington, D.C: Bureau of National Affairs, 1979), pp. 150 190; Thomas P. Gilroy and Anthony Sinicropi, Impasse Resolution in Public Employment: A Current Assessment, Industrial and Labor Relations Review, 25, July 1972, pp. 500 501.

91. Stanley W. Elsea, David Dilts, and Lawrence J. Haber, Fact-Finders and Arbitrators in Iowa: Are They the Same Neutrals? Journal of Collective Negotiations in the Public Sector, 19, 1990, pp. 61 81.

92. Debra J. Mesch, A Union-Management Cooper- ative Program Gone Wrong: Some Unintended Consequences of a Fact-Finding Program, Jour- nal of Applied Behavioral Science, 30, March 1994, pp. 43 62; Kenneth M. Jennings, Steve K. Paul son, and Steven A. Williamson, Fact-Finding in Perspective, Government Union Review, 8, Sum- mer 1987, pp. 54 70; Nels Nelson, Fact-finders View the Fact-finding Process, Journal of Col- lective Negotiations in the Public Sector, 19, 1990, pp. 141 149.

93. For an excellent review of the distinctive nature of arbitration in the public sector, see Helen LaVan, Arbitration in the Public Sector: A Current Per-

spective, Journal of Collective Negotiations in the Public Sector, 19, 1990, pp. 153 163.

94. Lewin, Feuille, and Kochan, Public-Sector Labor Relations, p. 229; Frederic C. Champlin and Mario F. Bognanno, Time Spent Processing Interest Arbitration Cases: The Minnesota Expe- rience, Journal of Collective Negotiations in the Public Sector, 14, 1985, pp. 53 64; Charles M. Rehmus, Public Employees: A Survey of Some Critical Problems on the Frontier of Collective

Bargaining, Labor Law Journal, 27, September 1976, pp. 588 599.

95. F. Donald O Brien and Nancy Peace, Interest Arbitration: Some Timely Thoughts, Perspectives on Work, 14(1/2), 2010 2011, p 30 32.

96. Craig E. Overton and Max S. Wortman, Compulsory Arbitration: A Strike Alternative

for Police? Arbitration Journal, 28, March 1974, p. 40.

97. Hoyt N. Wheeler, Is Compromise the Rule in Fire Fighter Arbitration? Arbitration Journal, 29, September 1974, pp. 176 185.

98. James R Chelius and Marian M. Extejt, The Narcotic Effect of Impasse Resolution Proce- dures, Industrial and Labor Relations Review, 38, July 1985, pp. 629 637; Marian M. Extejt and James R Chelius, The Behavioral Impact of Impasse Resolution Procedures, Review of Public Personnel Administration, 5, Spring 1985, pp. 46 47.

99. Thomas Kochan, David B. Lipsky, Mary Newhart, and Alan Benson, The Long Haul Effects of Interest Arbitration: The Case of New York State Taylor Law, Industrial and Labor Relations Review, 14(4), 2010, pp. 565 583.

100. Hebdon, Public-Sector Dispute Resolution in Transition, pp. 102 103.

101. Morley Gunderson, Robert Hebdon, and Douglas Hyatt, Collective Bargaining in the Public Sector: Comment, American Economic Review, 86, March 1996, pp. 315 326.

102. Hebdon, Public-Sector Dispute Resolution in Transition, pp. 110 112; Michael A. Zigarelli, Dispute Resolution Mechanisms and Teacher

Bargaining Outcomes, Journal of Labor Research, 17, Winter 1996, pp. 135 148.

103. Richard A. Turpin, An Analysis of Public-Sector Interest Arbitrators Assessments of Wage Compa- rability, Journal of Collective Negotiations in the Public Sector, 27, 1998, pp. 45 51; Richard A. Turpin, Factors Considered by Public-Sector Interest Arbitrators in Assessing Ability to Pay, Journal of Collective Negotiations in the Public Sec- tor, 26, 1997, pp. 1 7; Gregory G Dell omo, Wage Disputes in Interest Arbitration: Arbitrators Weigh the Criteria, Arbitration Journal, 44, June 1989, pp. 4 8; Susan Schwochau and Peter Feuille, Interest Arbitrators and Their Decision Behavior,

Industrial Relations, 27, Winter 1988, pp. 37 55.

692 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

104. Craig A. Olson and Paul Jarley, Arbitration Decisions in Wisconsin Teacher Wage Disputes, Industrial and Labor Relations Review, 44, April 1991, p. 546.

105. Karl O. Magnusen and Patricia A. Renovitch, Dispute Resolution in Florida s Public Sector:

Insight into Impasse, Journal of Collective Nego- tiations in the Public Sector, 18, 1989, pp. 241 252; J. Joseph Loewenberg, Compulsory Arbi- tration in the United States, in Compulsory Arbitration, ed. J. J. Loewenberg et al. (Lexington, MA: D.C. Heath, 1976), p. 166; Hoyt N. Wheeler, An Analysis of Fire Fighter Strikes, Labor Law

Journal, 26, January 1975, pp. 17 20. 106. William H. Ross, Should Night Baseball Arbi-

tration Be Used in Lieu of Public-Sector Strikes? Psychological Considerations and Suggestions for Research, Journal of Collective Negotiations in the Public Sector, 31(1), 2006, pp. 45 47.

107. J. H. Foegen, Public-Sector Strike-prevention: Let the Taxpayer Decide, Journal of Collective Nego- tiations in the Public Sector, 3, Summer 1974, p. 223.

108. I. B. Helburn and J. L. Matthews, The Referen- dum as an Alternative to Bargaining, Journal of Collective Negotiations in the Public Sector, 9, 1980, pp. 93 105.

109. Raymond L. Hogler and Curt Kriksciun, Impasse Resolution in Public Sector Collective

Negotiations: A Proposed Procedure, Industrial Relations Law Journal, 6, 1984, pp. 481 510.

110. Donald T. Barnum and I. B. Helburn, Influence the Electorate Experience with Referenda on

Public Employee Bargaining, Industrial and Labor Relations Review, 35, April 1982, pp. 330 342.

111. David Lewin, Jeffrey H. Keefe, and Thomas Kochan, The New Debate about Unionism and Collective Bargaining in U.S., State and Local Governments, Industrial & Labor Relations Review, 65 (October 2012), pp. 749 761.

112. David Lewin, Thomas Kochan, Joel Cutcher- Gershenfeld, Teresa Ghilarducci, Harry Katz, Jeff Keefe, Daniel J. B. Mitchell., Craig Olson, Saul Rubinstein, and Christian Weller, Getting It Right: Empirical Evidence and

Policy Implications from Research on Public- Sector Unionism and Collective Bargaining, March 16, 2011, pp. 29 30, http://www. employmentpolicy.org/ topic/402/research/ getting-it-right.

113. David Lewin, Jeffrey H. Keefe, and Thomas Kochan, The New Debate about Unionism and Collective Bargaining in U.S. Senate and Local Governments, Industrial & Labor Relations Review, 65 (October 2012), pp. 749 761.

114. Harry Katz, U.S. Public Sector Labor Relations in the Midst of a Transformation, Industrial & Labor Relations Review, 66, October 2013, p. 1031.

115. Marick F. Masters, Robert R Albright, and Ray Gibney, The State of Public Sector Unionism: Challenges and Opportunities, Employee Responsibilities and Rights Journal, Published online, May 29, 2010.

CHAPTER 13 Labor Relations in the Public Sector 693

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13 -1 Unions Representing Public Employees

In Anywhere, United States, an incident that received national attention occurred. In a gated neighborhood that had experienced recent frequent crimes, a neigh- borhood watch group was formed to provide night watch on traffic in the neighborhood. Late one night, two teenagers were walking through the neighborhood and Citizen A who was on watch that night and armed with a pistol observed two teenagers and stopped them. Citizen A asked the teenagers what they were doing in the neighborhood. One teenager who was quite large for his age answered: It s a free country; this is the direct path to my house; I will walk wherever I want to walk. Citizen A responded: This is a private property and you are not welcome here. The larger teenager reached in his pocket. Citizen A later told police that he thought the teenager was reaching for a weapon and he fired his pistol. A neighbor who heard the shot called 911 and an emergency medic unit was dis- patched. Upon arrival, the teenager was declared dead. Needless to say, the incident drew much atten- tion locally, even national. Group leaders wanted Citizen A to be arrested and put in jail. The local police began to conduct their investigations. Citizen claimed self-defense and relied on the state s law of Stay Your Ground .

The local media began writing articles for the newspapers and the television stations began interviews with interested parties. The incident became the topic of discussion within the community. Captain Fire- fighter, a 15-year veteran of the fire department, became interested in the subject and, during his off- hours, posted the following on his Facebook page:

I and my coworkers could rewrite an entire book on whether our urban youths are victims of profiling or products of their failed, pathetic, welfare dependent parents.

Once Captain Firefighter posted this message and the message went viral. Many group leaders called for Captain Firefighter s termination. After an investiga- tion into the matter, the Fire Chief concluded that Cap- tain Firefighter had hurt the public s trust in the fire department and decided to suspend Caption Firefighter for two weeks. When the mayor heard of the two-week suspension, he was upset. The mayor thought that a two-week suspension was an insufficient penalty for

Captain Firefighter s offense. Instead of a suspension, the mayor decided to demote Captain Firefighter to a regular firefighter, two ranks below captain.

Upon being notified of his demotion, Captain Fire- fighter immediately filed a grievance Article IV (b) of the collective bargaining agreement that stated:

The Fire Chief will make all disciplinary decisions.

The Union s Position:

The Firefighters union argued that Captain Firefighter had the constitutional right to express himself even though the city administration did not like his message. Captain Firefighter testified at the hearing: I am a pri- vate citizen and have the same right to freely express myself on any subject that anyone else does. Impor- tantly, Captain Firefighter did not violate the city s social media policy and he did not identify himself as a city employee or a captain within the fire department. Moreover, the city is not in the business of regulating employee s speech on an employee s own time, even if others find it offensive.

The union argued that Captain Firefighter had an impeccable record with no discipline for 15 years.

The union also argued that even though the mayor held a higher officer than the fire chief the collective bargaining agreement authorizes only the fire chief to make disciplinary decisions. In addition, the union argued that the disciplinary action was excessive and not progressive.

The union claimed that the publicity given by the news media to this case has caused the city to over- react and the city administration has tried to appease the loudest voices. This matter is simply a case where internal labor relations principles should prevail and the city has not proven that disciplinary action should have been taken. Therefore, the grievance should be sustained, Captain Firefighter should be returned to his caption position, and he should be made whole for any loss of benefits, pay, or seniority.

The City s Position: The city argued that Captain Firefighter had embar- rassed the city and had betrayed the public s trust with the fire department. The city argued that, unless

694 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

it took more serious action than a mere suspension, the citizens of the city would not have confidence in and support the city s administration. With all the attention now focused on this matter, the city was forced to take more dramatic discipline than a mere two-week sus- pension. The city argued that there is an important principle here: the penalty should fit the crime. The two-week suspension does not fit the offense commit- ted by Captain Firefighter.

The position of captain is second highest position in the fire department, just below the chief. Captain Firefighter has now lost the respect of this fellow fire- fighters and citizens. Allowing Captain Firefighter to remain in the captain position would essentially make him nonfunctional. Moreover, the city called it to the attention of the arbitrator that Captain Firefighter had never recanted his message and never apologized for his actions. Further, the city called to the attention of the arbitrator that the mayor is ultimately responsible

for running the city, not the fire chief. Therefore, the mayor s decision should prevail and the grievance should be denied.

Questions 1. Which party has the burden of proof? 2. Which level of proof should be used by the

arbitrator? 3. Is this matter a contract administration case or a

disciplinary case? Which party should go first at the hearing?

4. Should progressive discipline have been used in this matter? Why? Why not?

5. Which side has the best arguments? 6. How should the arbitrator decide? Give your

reasons.

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13 -2 Discharge for Off-Duty Conduct

On March 4, 2011, Mr. Charles Lee was removed from the Postal Service. The Notice of Removal stated:

You pled guilty to Count 1 of the information charging you with a violation of Title 18 USC § 371, Conspiracy to Commit an Offense or to Defraud the United States.

In an August 9, 2010 plea agreement that you signed, you engaged in a conspiracy to acquire financ- ing for two quadruplex homes located at 8416 and 8418 Camden Street, Miami, Florida. You lacked the neces- sary financial assets to qualify for these loans. The ele- ments of the conspiracy follow:

You employed the service of Paldo Corporation to purchase the quadruplexes for $100,000.00 each. You signed contracts in which you agreed to pur- chase the same properties from Paldo for $169,000.00 each. As part of the conspiracy, false data were provided to an appraiser to justify the inflated sales prices for the properties, and in reli- ance of the fraudulent information, a lending institution extended loans in amounts substan- tially in excess of the true values of these properties.

In order to qualify for the mortgage financing, you submitted two mortgage loan applications. In each application, you falsely stated you had made a $19,000.00 down payment to Paldo Corporation. In reality, you had agreed with Bert Muscat, Realtor, to accept a rebate on your down payment in the amount of $19,000.00 from his commission. This was accomplished through an exchange of checks. The purported down payment was thus a sham trans- action. The net effect of this scheme was that you were able to purchase this property with no money down on your part. You received an additional $10,000.00 rebate after the closing, thereby reducing the actual purchase price of the properties. You agreed with the loan broker and others not to disclose any of this rebate scheme to the financial institution.

In addition, you also failed to disclose on the loan application, two other mortgage loans on which you were obligated.

Your plea of guilty to Count 1 of the informa- tion was accepted by the United States District Court for the Southern District of Florida on Sep- tember 21, 2010, and you were adjudged guilty. On December 3, 2010, U.S. District Judge William S.

CHAPTER 13 Labor Relations in the Public Sector 695

Casta sentenced you to serve six months house arrest, two years probation and ordered you to make restitution in the amount of $136,398.64 to the lending institution you had defrauded.

Section 2635.101(a) of the Standards of Ethical Conduct for Employees of the Executive Branch states, in pertinent part:

Public service is a public trust. Each employee has a responsibility to the United States Government and its citizens to place loyalty to the Constitution, laws and ethical principles above private gain.

Section 661.53 of the Employee and Labor Rela- tions Manual states:

Unacceptable Conduct. No employee will engage in criminal, dishonest, notoriously disgraceful or immoral conduct, or other conduct prejudicial to the Postal Service. Conviction of a violation of any criminal statute may be grounds for disciplinary action by the Postal Service, in addition to any other penalty by or pursuant to statute.

Your misconduct of conspiring to defraud the United States is in direct conflict with the basic obliga- tions of public service. As a postal employee, you hold a position that requires honesty and trustworthiness.

You have the right to file a grievance within four- teen (14) days of your receipt of this notice of removal.

On March 16, 2011, a step 1 meeting was held and the following written grievance was filed:

Background: On March 4, 2011, Mr. Lee received written notification that he would be removed from the Postal Service for violation of the stan- dards of ethical conduct and unacceptable con- duct. He pled guilty to violation of Title 18 U.S.C. 371, Conspiring to Commit an Offense or Defraud the United States.

Management s Position: Mr. Lee was removed from the Postal Service for his unacceptable con- duct. He had an obligation as a postal employee to demonstrate honesty and trustworthiness. He broke this trust when he pled guilty to defrauding the United States.

Union s Position: Management did not show just cause when it issued a notice of removal to Mr. Lee. Further, Management currently employ another employee, Scotty Hall, a convicted felon and has not remove him and other similar- situated employees.

The grievance was denied and was appealed. The step 2 grievance was completed by David Tover, union steward, who stated:

Violation: Including but not limited to National (Art. & Sect.) 16.1, 16.6, 16.7, 19.

Other Grounds: ELM 661.53, previous arbitra- tion cases.

Facts and Union Contentions: Date, Time & Location: 5 Feb. 94, GMF Miami, Fla.

What Happened: Grievant was issued Notice of Removal dated March 4, 2010. Reason for removal was cited as: you pled guilty to Count 1 of the infor- mation, charging you with a violation of Title 18, U.S.C. & 371, Conspiracy to Commit an Offense or to Defraud the United States. Grievant and Union contend that removal is without just cause.

Corrective Action Requested: That Grievant be returned to his job immediately and that he be made whole in all respects.

Mr. R. H. Gooche, Manager of Distribution Opera- tions (MDO), Tour 3, provided management s step 2 answer. He wrote:

On March 16, 2011, a Step 2 meeting was held to discuss the subject grievance.

Union Position: Union Contends: 1. The removal is without just cause. 2. Grievant did not knowingly commit a criminal offense. 3. Grievant was misled and he trusted other people,

and therefore unwittingly became involved in a wrongful act.

4. The Postal Service has not presented any nexus between the grievant s workplace and the criminal activity.

5. During the investigative interview, management stated that conviction of a felony is a removable offense. However there is no provision to automat- ically remove an employee from the postal service based simply on the fact that they have been con- victed of a felony.

6. The Postal Service infers that being convicted of a criminal offense automatically means that an employee is no longer loyal and trustworthy and destroys the faith and trust in him by the U.S. Postal Service and public.

Management responded to each of the union s contentions:

1. The grievant was removed from the Postal Service for his unacceptable conduct. He had an obligation as a postal employee to demonstrate honesty and

696 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

trustworthiness. He broke this trust when he pled guilty to defrauding the United States.

2. The grievant voluntarily pled guilty. Case No. 93- 234-CR-T-15 (A) Plea Agreement Page 6, Para- graph 5. Second element for the crime: That the defendant willingly became a member of such con- spiracy. Page 9, paragraph 13 states that the grievant will plead guilty because he is in fact guilty of the charge contained in Count One of the Information.

3. The grievant was part of a conspiracy to defraud financial institutions using the U.S. Mails. Apprai- sal on all properties was inflated, which resulted in the subject receiving kickbacks from the original mortgage company holding the mortgage. The grievant was involved in a wrongful act for three years. It is reasonable to believe that the grievant had enough knowledge of the conspiracy to know what he was doing was illegal.

4. The grievant and two others conspired in a scheme to defraud financial institutions using the U.S. Mails.

5. The grievant conspired in a scheme to defraud financial institutions using the U.S. Mails. By doing so he violated his obligation as a Postal Employee to demonstrate honesty and trustworthiness. However he was not automatically removed. An investigation into the grievant s conduct was conducted. An inves- tigative interview was held by the grievant s supervi- sor, William Smith, resulting in the grievant being placed in an off-duty status. The grievant was removed from the Postal Service on March 4, 2011. All actions taken were after a complete investigation, hardly an automatic removal.

6. The grievant was found guilty of a crime for which a sentence of imprisonment can be imposed. The grievant pled guilty to Conspiracy to Defraud the United States. A complete investigation of all facts was conducted; the facts of this case bring into question the loyalty and trustworthiness of the grievant. The grievant conspired to defraud finan- cial institutions using the U.S. Mails, compromis- ing the faith and trust in him by the Postal Service.

Based on the facts the grievant was properly removed from the Postal Service.

The grievance is denied. The grievance was appealed to arbitration.

Issue

Was the removal of Charles Lee for just cause? If not, what shall be the proper remedy?

Article 16

Relevant Provisions of the Employee and Labor Relations Manual

661.11 This Code of Ethical Conduct is designed to instruct and guide employees entering the Postal Ser- vice, and to remind all employees of the conduct expected and required of them in performing their offi- cial duties and in their general conduct.

661.3 Standards of Conduct Employees must avoid any action, whether or not

specifically prohibited by this Code, which might result in or create the appearance of:

Using Postal Service office for private gain. Giving preferential treatment to any person. Impeding Postal Service efficiency or economy. Losing complete independence or impartiality. Making a Postal Service decision outside official

channels. Affecting adversely the confidence of the public in

the integrity of the Postal Service. Unacceptable Conduct. No employee will engage

in criminal, dishonest, notoriously disgraceful or immoral conduct, or other conduct prejudicial to the Postal Service. Conviction of a violation of any criminal statute may be grounds for disciplinary action by the Postal Service, in addition to any other penalty by or pursuant to statute.

Positions of the Parties

Management: Management stated that it is a fact that Mr. Lee pled guilty to conspiracy to defraud the United States and therefore the Postal Service does not have to prove that he was guilty. Management claimed that Mr. Lee violated that standard of ethical conduct, that the Postal Service and the public had lost trust in Mr. Lee as a postal employee, and he was not loyal to the Constitution and the laws of the United States. Therefore, his actions were in violation of several provisions of the Employee and Labor Relations Manual, and there was an obvious nexus between his crime and his employment.

Management argued that the burden is on the union to prove that there was disparate treatment of Mr. Lee. There was no disparate treatment of Mr. Lee because Ms. Edwards, the other postal employee named by the union as a comparison, was not similarly situ- ated, was not in the same department, was not in the bargaining unit, did not plead guilty, and was not found guilty. In the other comparison case, the union

CHAPTER 13 Labor Relations in the Public Sector 697

failed in its effort to show disparate treatment by addressing Scotty Hall s employment because his case was a hiring decision, not a removal decision. More- over, Mr. Hall s civil rights had been restored prior to the date of his employment by the Postal Service.

Mr. Lee was afforded the same opportunity as other employees who were judged guilty, that is, either to resign or to be removed. Mr. Lee chose not to resign; therefore, he was removed from the Postal Service. Management argued that even though the investigation mentioned that Mr. Lee was involved in a conspiracy to defraud the financial institution using the U.S. Mails as a reason for his removal, the union is not justified in using this information to support its claim.

Management explained that it considered the investigation, the plea of guilty, and the seriousness of the crime. Management conducted its own investiga- tion and gave Mr. Lee an opportunity to present his side of the case. After its investigation, management found no merit to Mr. Lee s explanation and concluded that the removal was justified.

Management argued that the postal employees knew that Mr. Lee had been convicted of a crime. Man- agement stated: our employees knew. It doesn t take a rocket scientist to figure it out. Everyone was aware. Management submitted a decision by an appeals referee of the Florida Department of Labor and Employment Security concerning Mr. Lee s claim for unemployment compensation. Management noted the following excerpt:

Consideration was given to the claimant s contention that he was treated more harshly than other postal employees who were involved in the same criminal activity. In support of that position, the claimant provided information that another postal employee was not disciplined. Further information provided by the claimant including that adjudication was withheld by the court on the other employee. Since the legal disposition was different in that case, the employer s failure to discipline with the same degree of severity is not viewed as disparate treatment. The claimant s contention is rejected.

At the hearing, the parties agreed that there is a possibility that the claimant will be reinstated in his job. The notice of removal, however, specifically ter- minated the claimant from his position and is viewed as a discharge. The discharge was for miscon- duct connected with the work and the claimant was properly disqualified from receiving benefits.

The Postal Service stated that postal employees must be honest and reliable and have good character. Mr. Lee s actions were willful and deliberate and were against the interests of the U.S. government of which the Postal Service is a part. Guidelines for Postal employees are published in the Employee and Labor Relations Manual to guide employee behavior.

Management responded to the union s claim that Mr. Lee was an ideal, long-term employee with no record of discipline. Management questioned this claim because no evidence was presented. Mr. Lee was a good employee and the decision to remove Mr. Lee

was difficult. However, management felt compelled to take removal action. His actions were no different from theft, and Mr. Lee had stolen money from the same institution that employed him. Management then asked: If he will steal, how can we trust him? He will have many opportunities to steal.

Management objected to the introduction, any consideration, and any comparison to Ms. Edwards employment. The union did not mention any compar- ison between Mr. Lee and Ms. Edwards in the proces- sing of Mr. Lee s grievance. Therefore, the union was estopped from arguing any comparison at the hearing when disparate treatment had not been mentioned earlier.

Management concluded that a finding that Mr. Lee was removed from the Postal Service for just cause and that his grievance should be denied.

The Union

The union argued that the Postal Service made its deci- sion to remove Mr. Lee solely on the basis of his con- viction. The union claimed that the Postal Service failed to establish any connection (nexus) between the crime and Mr. Lee s ability to perform as a productive employee. The Postal Service must show a nexus between the crime and the efficiency of the Postal Ser- vice and how the Postal Service was adversely affected, and management failed to do so. The Postal Service claimed that the public trust was broken, but there was no evidence that anyone in the public knew of Mr. Lee s conviction. In fact, there was no evidence that any other employees complained about working with Mr. Lee.

The union presented numerous arbitration deci- sions to show that a postal employee may not be removed from employment based solely on the com- mitment of a crime. The first arbitrator wrote: As

698 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

many arbitrators have recognized, the Postal Service, among other things, must establish a nexus between the employees conduct and the employment relation- ship. It must seek to determine, for example, whether the occurrences of the off-duty misconduct has destroyed the basis for continued employment because of adverse impacts on the efficiency, operations, prop- erty or personnel of the Postal Service. To put it another way, the Postal Service must show some harm to it, to the public, or to fellow employees if the employee continues his employment.

In a second arbitration case, the grievant was charged with murder and later found guilty of first degree manslaughter. The grievant shot his wife in the head with a 32-caliber pistol. The arbitrator wrote in his decision that, The Grievant s conviction of first degree manslaughter, his sentencing and his subsequent placement on probation did not involve an on-the-job action. Neither did it involve a job related matter with an adverse impact on employee or public relations, efficiency, etc., or pose a threat to Postal operations, property or personnel.

In a third case, the grievant was charged with aggravated sexual assault and criminal sexual conduct. The grievant pled guilty to one count of criminal sexual conduct. The arbitrator interpreted the CSRA, 5 U.S.C. 2302(b)(10), as prohibiting the termination of a Postal Service employee for off-duty misconduct absent a showing that such conduct would affect the efficiency of the service. The Court held that this requirement of a nexus cannot be satisfied by unsupported general assertions or internal regulations prohibiting certain kinds of immoral or disgraceful conduct period. The arbitrator wrote: The Court read the CSRA as an expression of congressional intent with respect to termination for off-duty misconduct. Clearly, an arbi- trator operating under a just cause standard in a Postal Service contract should give great weight to such clearly expressed Congressional intent.

In the fourth case, the grievant was charged with knowingly receiving child pornography through the mails, a violation of 18 U.S.C. 2252(a)(2). The grievant was found guilty of knowingly receiving child pornog- raphy through the mails and was sentenced to a ten year suspended sentence, five-year probation, and a fine of $50. The arbitrator wrote: Under this contract, employees may only be discharged or disciplined for just cause. Arbitrators and courts have interpreted this requirement and similar statutory standards, as prohibiting the discharge of a Postal Service employee

for off duty, off-premises, misconduct unrelated to the employee s job. In such cases, the Postal Service must show that the retention of the employee will have some adverse impact on the employee relationship. This principle has often been interpreted as requiring a showing of a nexus between the off-duty misconduct and the ability of the employee to function in his job.

In a fifth case, the arbitrator wrote: Ms. Nichole s conviction on charges associated with her fraudulent application for housing subsidy funds is unrelated to her employment. Her conduct was not prejudicial to the Postal Service. (661.53 E&LM). There is no show- ing of an adverse impact on the employer or its employees. For these reasons this removal is not for just cause.

In a sixth case, the arbitrator wrote in his opinion: The weight of arbitral authority requires that a nexus

be shown before an employee may be discharged for off-duty, off-premises misconduct. See, for example, Elkouri and Elkouri, How Arbitration Works, Seventh Edition, page 15 11 and cases cited.

The union argued that Mr. Lee was an excellent employee for 13 years with the Postal Service. During these 13 years, Mr. Lee had no discipline issues and continued to perform effectively for several months even after his conviction. Since the Postal Service was not adversely affected during this time, the return of Mr. Lee to his former job had not and would not adversely affect the performance and efficiency of the Postal Service. Management claimed that its trust of Mr. Lee was broken, but offered no evidence.

The union claimed that the Postal Service failed to take any action against another employee who was charged with the same crime and who continues to be employed as a postal employee. Other employees who were involved in the scheme were offered to resign or told they would be fired. However, no evi- dence was presented.

In regard to the charge and conviction, the union contended that the management incorrectly used the postal inspector s memos wherein Management indi- cated that Mr. Lee had conspired to defraud financial institutions using the U.S. Mails. The fact is Mr. Lee was not charged with misuse of the U.S. Mails. The Postal Service falsely charged him and this charge con- taminated the cause for removal.

The union addressed two arguments made by management: (1) unemployment compensation claim and (2) knowledge about continued employment of

CHAPTER 13 Labor Relations in the Public Sector 699

Ms. Edwards. First, the unemployment compensation decision referred to misconduct connected with work, and the arbitrator is not bound by this decision. Unemployment compensation is another forum with different rules. Second, the union did not find out that Ms. Edwards s employment had been continued even though she was involved in the same financial scheme as Mr. Lee and that she had been charged with the same crime until after Mr. Lee had filed an EEO claim, just before the date of the arbitration hear- ing. During the processing of this EEO claim, the griev- ant and the union were made aware of the fact that Ms. Edwards remained on the payrolls as a postal employee.

The union contended that the burden of proof rests with the Postal Service and it has failed to prove just cause for the removal of Mr. Lee. As a result, the union requested that Mr. Lee be returned to his former position, that his back pay and benefits including over- time and interest be restored, and that all references to this removal be expunged.

Questions 1. What are the rules for discharge for off-duty

conduct? 2. Explain the term nexus as used in labor arbitration. 3. Does equal treatment have any bearing on the out-

come of this decision? 4. What is the rule concerning use of the employer s

submission of the unemployment compensation claim in the labor arbitration proceedings?

5. How much weight should be given to Mr. Lee s job performance after his conviction but before his termination?

6. Should the arbitrator consider the union s submis- sion of evidence of the continued employment of Ms. Edwards and Mr. Hall? Give your reasoning.

7. How much weight should be given to previous arbitrators decisions? Explain.

8. What will the arbitrator decide? Why?

700 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

CHAPTER 14

Labor Relations in Multinational Corporations and in Other Countries

IN PREPARING FOR your first job after graduation, you need to go shopping and buy some clothes to wear to work. Nearly all of your clothes now are fine for attending class, but they don t look very professional. Since you have accumulated a fairly siz- able student loan debt, you have to be careful with your spend- ing and you are looking very hard for bargains, but all of the best prices for clothes are those which are manufactured in places like China, Thailand, Vietnam, and Guatemala.

In your studies, you have learned about the low wages, long hours, and unfavorable working conditions for workers in those countries and don t want to support these types of conditions of employment. You also want to support American workers and manufacturers by keeping your money in America, but you will end up paying more for your clothes.

Questions 1. What should you do?

2. When you buy these imported goods, are you actually sup- porting the foreign workers or the companies?

3. Are you supporting the low wages, long hours, and unfavor- able working conditions in those countries?

701

With the development of a global economy, movement in Eastern Europe and Chinatoward greater political democracy and market-oriented economies, and increased trade between countries, the study of labor relations within multinational corporations (MNCs) and foreign countries becomes imperative to today s student. This chapter begins with a general discussion of the operations of MNCs in a global economy and unions approaches and problems in dealing with MNCs. Concerns about globalization and free trade are addressed and principal characteristics of the labor relations systems of the major trading partners of the United States are also presented.

Multinational Corporations and Transnational Collective Bargaining

The growing interdependency among nations and the activities of MNCs have become important facets of economic life. Although MNCs have existed for more than 150 years, their numbers and share of world output have expanded their importance and vis- ibility in recent years.

MNCs in the United States are enormous in size. Worldwide employment by U.S. MNCs is 34.5 million workers. Foreign-owned MNCs employ 5.6 million workers in the United States. The annual sales revenue of Wal-Mart in 2014 ($476.2 billion) was greater than the gross national product (GNP) of each of the following countries: Austria, Iran, Israel, and South Africa. The annual revenues of ExxonMobil ($390.25 billion) in 2014 were greater than the GNP of Greece, Chile, Finland, Ireland, Portugal, and New Zealand. In fact, of the 30 largest MNCs in the world, 13 have their home offices located in the United States, and nine of these are heavily unionized (AT&T, Chevron, Phillips 66, ExxonMobil, Ford, General Electric, McKesson, General Motors, and Valero).1

Total employment among U.S. parent companies abroad was 22.9 million; employ- ment among U.S. affiliates of foreign companies was 5.6 million. Spending by U.S. firms or U.S. direct investments abroad in 2012 was $388 billion. The cumulative amount of book value is $4.4 trillion. Europe accounts for over half of all U.S. direct investments.2

Investments in the Netherlands (14.5 percent of the total) and the United Kingdom (13 percent) followed by Canada (7.8 percent) and Luxemburg (8.6 percent).3

Value added by majority-owned affiliates of foreign companies totaled $736.4 billion in 2011 and these MNCs employed 5.6 million. The countries are Canada, France, Ger- many, the Netherlands, Switzerland, the United Kingdom, and Japan accounted for three-fourths of the total. The United Kingdom (18.9 percent) was the largest investing country, followed by Germany (12.1 percent) and Japan (9.4 percent).4

Exchange rates have a great deal to do with the trade between countries and produc- tion within a specific country. The importance of fluctuating exchange rates is reflected in Exhibit 14.1, which shows the indexes of hourly compensation costs for production workers in manufacturing for 29 countries during periods from 1980 to 2012. In 2012, hourly compensation costs for manufacturing production workers in Belgium, Germany, Denmark, Norway, and Switzerland were 28 to 78 percent higher than those in the United States. Compensation costs were 88 percent of the U.S. figure in the United King- dom, 134 percent in Australia, 75 percent in Spain, 42 percent in Korea, 27 percent in Taiwan, and 23 percent in Mexico.

In 1980 Japan s hourly compensation cost (hourly pay plus benefits) was 57 percent of that of the United States; however, it increased to 87 percent by 1990 and then to 99 percent by 2012. In Germany in 1980, the cost was 25 percent higher than the United States; but by 1990 it had risen to 44 percent higher than U.S. compensation costs and then fell to 28 percent higher by 2012.5

702 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Operating in different countries creates opportunities for MNCs to bypass protective tariffs by making parts in one country and assembling the final product in another. For example, an automaker may make 90 percent of its parts in Japan, do the assembly work in the United States, and ship products from the United States as U.S. exports. With Jap- anese automakers locating in the United States, such issues provide challenges in trade between countries.6

MNCs in the United States prefer to locate production facilities in foreign countries that have a decentralized bargaining structure, like that in the United States. Labor rela- tions features like union density and strike intensity do not appear to be nearly as impor- tant. The most important reason behind decisions related to locating production facilities is the national resources of the particular country.7

MNCs have the capacity to force concessions from unions by threatening to shift production to another country and essentially pit one group of employees against another. One automaker that operated a plant in Ohio sought to introduce new technol- ogy; the union resisted because the membership would lose jobs. The company then took a number of the union leaders to a new plant in Juarez, Mexico just across the border from El Paso showed them the technologies used in the plant, and said: It is your choice. Either you concede what we are asking in terms of bargaining or the work that you do in Ohio will be transferred to Juarez. If you think this is an idle threat, this is the plant. This is the production process. 8

MNCs do not deploy consistent employee relations policies in the various countries in which they operate. In 2011, Wal-Mart purchased 51 percent of the South African retail chain store Massmart. Massmart operates about 290 stores in 14 African countries. Upon announcement, South African labor groups claimed that Wal-Mart was anti-union in the United States. In response, Wal-Mart said it will respect present labor contracts and is committed to working with South African unions.9

The American Rights at Work Education Fund has alleged that T-Mobile USA* and its parent company German telecommunications giant Deutsche Telekom operate under two standards: (1) respect workers rights in Germany and (2) interfere with employees rights to organize and bargain in the United States.10

Some MNCs pursue policies of divide and rule. For example, they inform workers in one country that they cannot have the improved employment conditions they seek because they are less productive than its employees in another country. Other MNCs embrace the accepted employee relations philosophy and approach of their own country but apply totally opposite policies in another country. Unions have responded by exchanging information about employment practices in their country with employees of the same MNCs that operate in other countries.

International links between trade unions are not new. One international organiza- tion, the Global Union Federation (previously known as the International Trade Secre- tariats), has operated for almost 100 years. There are currently 11 autonomous Global Union Federations of which Union Network International with 140 million members in 900 unions on every continent is the largest. Other Global Union Federations include the Education International, the International Transport Workers Federation, the Public Ser- vices International, and the International Metal Workers Federation. Currently, none of the federations have authority to enforce their instructions against affiliated unions; how- ever, they can share information in pursuit of common objectives.11

*In 2011, T-Mobile USA was purchased by AT&T, which has a labor relations reputation that is highly regarded.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 703

Exhibit 14.1 Indexes of Hourly Compensation Costs for Production Workers in Manufacturing for 31 Countries or Areas, 1980 2012

Index (United States = 100)

Country or Area

Percentage of Workforce in Unions 1980 1990 2005 2012

Compensation Costs in 2012 U.S. Dollars

United States 10.8 100 100 100 100 35.67

Canada 27.2 92 107 101 103 36.59

Brazil 35.4 14 17 17 31 11.20

Mexico 13.6 30 12 11 23 6.36

Australia 17.0 82 88 105 134 47.68

Israel 32.8 39 57 53 56 20.14

Japan 17.8 57 87 92 99 35.34

Korea 9.9 0 28 57 58 20.71

New Zealand 19.4 54 56 63 69 24.77

Singapore 14.5 15 22 32 68 24.16

Taiwan 34.9 10 27 27 27 9.46

Austria 27.4 87 114 124 116 41.58

Czech Republic 13.4 26 34 11.95

Belgium 55.0 134 127 130 162 52.19

Denmark 66.8 111 126 150 140 48.47

Finland 68.6 84 139 135 119 42.60

France 7.7 91 103 104 112 39.81

Germany 17.7 125 144 140 128 45.79

Ireland 29.6 60 79 96 107 38.17

Italy 36.9 81 119 89 96 34.18

Netherlands 17.6 123 125 135 111 39.62

Norway 53.5 119 147 166 178 63.36

Poland 12.5 19 23 8.25

Portugal 20.5 21 24 31 34 12.10

Spain 17.5 61 78 75 75 26.83

Sweden 67.7 127 141 121 140 49.80

Switzerland 16.2 113 139 129 162 57.79

United Kingdom 25.4 76 84 109 88 31.23

Note: Dash indicates data not available.

SOURCE: International Labor Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing, August 9, 2013; U.S. Department of Labor, Bureau of International Labor Affairs, Trade Union Density, http://www.bls.gov/fls; http://www.stats.oecd.org/.

704 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Organized labor in the United States has been critical of the effect of U.S. MNCs on employment and labor relations for the following reasons:

Their foreign investments deplete capital resources needed for domestic investment and undermine economic growth and new job creation at home. They export U.S. technology to exploit low-cost foreign labor, depriving American employees of their rightful share of the rewards of technology. They substitute imports from their affiliates in low-wage countries for American- made goods, thereby undermining the American wage standard, depressing eco- nomic conditions at home, and decreasing employment and payrolls. They displace U.S. exports with foreign-produced goods from their foreign affiliates, thereby adversely affecting the U.S. trade balance.12

Foreign MNCs have grown rapidly and installed facilities in the United States. Unions have often viewed these MNCs with suspicion, but the management and employ- ment practices tend to be more similar to those of home-based firms. The labor relations activities and decisions tend to be locally determined and highly decentralized. American unions have found that organizing foreign-based MNCs has been just as difficult as orga- nizing U.S.-based companies. In addition, the management of the various plants of foreign-based MNCs uses essentially the same tactics to keep unions out of U.S. plants. These tactics include use of lawyers and management consultants, positive human resources (HR) management, consultation with employees on decisions, delays allowed under National Labor Relations Board (NLRB) procedures, and local politicians making statements to support the company. Unions use the same organizing tactics, with the addition of negative publicity directed toward the foreign owners and appeals to Ameri- can patriotism. With these counteractive tactics, the results of representation elections have not been significantly different from other NLRB elections approximately 50 per- cent wins for the unions. Whenever American unions have contact with foreign-based unions, these contacts are generally of the information-sharing nature.13

Unions in particular have difficulty dealing with MNCs for the following reasons: 1. If a strike occurs, the union cannot shut down the flow of financial resources to the

struck plant. Operations of the MNCs in other countries continue to function and generate profits, which may relieve management of much pressure in negotiations and reduce the costs of the strike.

2. MNCs have an internal source of products from facilities in several countries and use this position as leverage to bargain down wages, benefits, and other conditions of employment (called whipsawing the union). If a strike occurs at one facility, the MNCs increase production at other units, destroying the potency of the strike. Many specific examples of whipsawing can be identified. General Motors (GM) was able to expand the work week from 37.5 hours to 40 hours by convincing the union in Germany that it had to increase hours to retain competitiveness. GM has consid- ered increasing its auto production in Brazil and Mexico as part of its wage conces- sion demands, and when Canadian unions resisted wage concessions, GM considered shifting production back to the United States.

3. MNCs with complex tiers of management do not delegate authority to local manage- ment to make labor relations decisions, thereby complicating the negotiation process because unions do not know who is in charge.14 Empirical evidence indicates that most unions have not encountered different behavior between domestic and foreign-owned MNCs, but there seems to be a wider variation in behavior among the MNCs than among single-nation corporations in terms of grievance settlement before arbitration, amount of local autonomy in negotiations, and difficulty in

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 705

negotiating the first agreement.15 However, because budget and investment decisions are made at the home office, local negotiations are certainly affected.

4. MNCs shift profits to different facilities, manipulate prices on internal transactions, and change marketing emphasis, confusing the unions in negotiations when they seek the facts necessary to address and resolve collective bargaining issues. Further, different national laws have different financial disclosure requirements.

Because U.S. unions are accustomed to bargaining on ability to pay and are entitled to wage and financial information that allows them to conduct informed negotiations, they are frustrated when MNCs furnish only information that is required by law. Infor- mation about MNCs locating plants in foreign countries and operating data on these plants may be refused by the MNCs with the approval of the NLRB.16

Union Approaches to Multinational Bargaining and Employer Reactions

A primary motivator for American and foreign-based unions to seek transnational bar- gaining and to standardize labor conditions among the MNCs is to lessen competition from lower wage areas and to protect their own standards in other words, to take wages out of competition. To combat the power of the MNCs and to seek objectives that are mutually beneficial to the unions and their members, union leaders have tried two main approaches: (1) collective bargaining and (2) legislative enactment. Through collective bargaining, unions either have attempted to bargain directly with the MNCs or coordinate their bargaining activities with unions in other countries by sharing infor- mation and supporting one another s activities.

Various groups, such as the International Labor Organization (ILO) and the Organi- zation for Economic Cooperation and Development (OECD) have established codes of conduct for MNCs (see the Labor Relations in Action feature on page 707). However, labor standards remain predominately under national laws. To be effective, these labor standards need to be incorporated into national laws. The fact remains that countries are empowered to find violations of labor laws only within their own jurisdiction and consequently have no influence on the decisions made by MNCs when they operate in another country. Without legislation, compliance often depends on public campaigns against the MNCs for alleged violations of human and labor rights at their overseas subsidiaries. One successful campaign caused Nike to improve the working conditions at their foreign subsidiaries.17

Recognizing that colleges and universities spend billions a year on logo clothing, stu- dent groups, consumer groups, and unions have pressured universities to require that their brand name products only be produced and sold by firms that adhere to the ILO conventions.

In the past few years, the number of global agreements (International Framework Agreements (IFA)) signed by MNCs has increased. These agreements between MNCs and international trade union organizations commit the companies to observing stan- dards and principles throughout their worldwide operations (codes of conduct). These principles generally relate to various aspects of worker rights, employment, and other areas of corporate social responsibility. By 2015, there were 113 global agreements in place. Although the number is small, the companies involved include some of the world s largest, most high-profile and internationalized MNCs. For example, Fiat Chrysler employs 370,000 worldwide; Volkswagen employs 320,000; French retailer Carrefour employs 300,000; and Danish business services organization ISS employs 250,000. In

706 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

total, the 30 companies including General Motors Europe that have signed the global agreements employ around 2.5 million people.18 Other IFAs include Ford, Siemens, BMW, Volkswagen, Electrolux, Club Med, Bosch, and IKEA.19

Unions, as well as some governments, have asserted that collective bargaining on a national basis has considerable limitations in facing MNCs. This assertion is based on the belief that MNCs have adopted global strategies, so a union acting alone within one nation cannot effectively respond. Likewise, some governments are uneasy about the fact that MNCs cannot easily be made accountable to any one country s economic and social policies. Moreover, there has been persistent fear that if a union or government in one country acted without the support of unions or governments in other countries, it would risk transfer of operations by the MNC to a more hospitable nation.20

The creation of the European Union has led to a resurgence of interests in prospects of transnational collective bargaining. However, initiatives have primarily taken the form of joint consultation and adherence to labor rights principles at a transnational level rather than true collective bargaining.

The aim of European trade unions is to achieve European-level collective bargaining. Despite the long-recognized hurdles, there have been positive steps toward this end. First, the European Trade Union Confederation (ETUC) has become an effective voice for trade unions in the political arena and has the potential to become the spokesperson

LABOR RELATIONS IN ACTION Core Labor Standards

The core labor standards are fundamental principles that protect basic human rights in the workforce. The inter- national community, largely through the International Labor Organization (ILO) a United Nations agency bringing together representatives of governments, employers, and workers has developed a consensus with respect to the definition of the core labor stan- dards. As stated in the ILO Declaration on Fundamental Principles and Rights at Work (1998) the core labor stan- dards aim to: (1) eliminate all forms of forced or compul- sory labor, (2) effectively abolish child labor, (3) eliminate discrimination in respect of employment and occupa- tion, and (4) ensure the freedom of association and the right to collective bargaining.

Specific definitions of these principles are spelled out in eight ILO core labor standard conventions, also known as the fundamental human rights conventions. These are:

Elimination of forced and compulsory labor (Conventions 29 and 105). Where forced labor is all work or service which is exacted from any per-

son under the menace of any penalty and for which the said person has not offered himself voluntarily. Abolition of child labor (Conventions 138 and 182). Aside from violating children s basic human rights, sending children to work rather than to school perpetuates poverty and compromises eco- nomic growth. Each signatory, regardless of level of

economic development, agrees to design and implement a course of action, effectively monitor implementation and apply appropriate sanctions. Elimination of discrimination in respect of employment and occupation (Conventions 100 and 111) is central to achieving greater social jus- tice while also promoting development through a more efficient allocation of resources. Discrimina- tion includes any distinction, exclusion or prefer- ence made on the basis of race, colour, sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation Freedom of association and collective bargain- ing (Conventions 87 and 98). The right for workers and employers to freely create and participate in organizations to promote and protect their interests is a fundamental principle behind the ILO s work. Signatories must give workers and employees the right freely to establish and join organizations of their choice, without any type of prior authorization. Signatories further agree to establish mechanisms to ensure the right to organize and to encourage the practice of negotiating between employers and workers organizations.

SOURCE: http://www.ilo.org/declaration/principles/freedomofassociation

707

for European trade unions in collective bargaining. Second, new bilateral agreements between trade unions in two countries grant reciprocal memberships to members in both unions and provide for cooperation between these unions in exchanging informa- tion, developing closer coordination with respect to European works councils, (labor management forums where MNCs operating in multiple European countries share information with their unions) harmonization of pay demands, and training. Third, cross-national coordination of collective bargaining strategies is taking place. Trade unions are agreeing on a common bargaining strategy and exchange of information. Trade unions in Germany, Netherlands, Belgium, and Luxembourg agreed to make pay demands reflect inflation and productivity gains and agreed to bargain on reducing the hours of work. The ETUC has established bargaining committees comprised of officials from European-level federations who are responsible for collective bargaining. The intent is to achieve some consistency in collective bargaining across national boundaries.21

One of the promising developments for transnational collective bargaining is occur- ring in Europe under the European Company Statute under the European Union (EU). Under this legislation, companies that operate in more than one EU member country can work under the umbrella of a single legal framework, thereby reducing the internal costs of operating in several countries. Not only is this an attempt to develop an appro- priate corporate governance but to develop well-developed and well-functioning indus- trial relations, which gives workers a significant influence over company decisions.22

Most MNCs generally consider transnational labor relations a distant prospect and one that will not be lightly entertained by management. Part of management s opposition stems from the unions potential for shutting down production internationally. Further- more, transnational bargaining would introduce a tri-level structure of bargaining that would include multinational negotiations, followed by national, industry-wide bargaining (common in some European countries), and then local negotiations. This additional level would increase the complexity of negotiations, as well as companies vulnerability to strikes at the international level without a comparable reduction in vulnerability at the national and local levels.

In some cases, countries themselves are now encouraging investments by MNCs by using taxation policies, building limitations, requirements for local partners, the possibility of nationalization and expropriation of facilities, and the risks of political uncertainties to deter MNC investments. Less-developed countries seek additional investments by MNCs for economic stimulus to the countries development, income, and other employment programs. MNCs find these countries attractive because of the low-wage structure, tax incentives, little regulation and political guarantees. Such advantages are particularly appealing to the MNC that must operate in a very competitive product market. However, when unions press via transnational bargaining for improved wages, benefits, and working conditions all socially desirable goals for the populace they become a force running counter to the short-run national economic goals of the country. The economic boost MNCs can give a developing nation will not occur if firms fail to locate there. MNCs might well decide to avoid countries with the high wages and benefits that transnational bargaining has instituted.23

Obstacles for Unions in Bargaining with Multinational Corporations American and foreign unions face formidable tasks in their efforts to arrange transnational bargaining because they must be successful in mediating and balancing the conflicting interests of different groups encompassed by the MNCs employees, labor leaders, compa- nies, and governments. In fact, unions themselves provide some of the more important obstacles to transnational bargaining; however, these obstacles are not insurmountable. Only when these obstacles are overcome can attention be turned to external factors.

708 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Differences in Labor Relations Laws Legal systems for labor relations vary widely among countries. There are different meth- ods for determining union representation, different union jurisdictions and structure, and differences in the scope of bargaining.24

Absence of a Central Authority Unions lack strong, centralized decision-making authority on transnational affairs, and most national union leaders are reluctant to allow a transnational body to make deci- sions that affect their unions and members.

Cultural Differences Cultures differ in numerous ways, including individualism-collectivism, common responses to powel, and indulgence-restraint; unions, like other institutions, reflect scuch cultural tendencies. Among complicating factors are differences in ideological and religious beliefs several, for example, free trade unions and socialist- or communist- linked unions. Such differences have made joint undertakings between unions in the free world and elsewhere almost impossible.

Lack of Coordination of Activities Unions have not been very successful in coordinating their transnational bargaining, boycott, and strike activities. An excellent example occurred in the last major rubber strike of Good- year, Uniroyal, B. F. Goodrich, and Firestone. Each had extensive overseas operations. Sup- port for the U.S. strikers came from the International Federation of Chemical, Energy, Mining, and General Workers Unions (ICEM), which has affiliates in Europe, North Amer- ica, and Japan. The ICEM Rubber Division approved a ban on overtime by employees of nonstruck companies and a system of monitoring and preventing shipments to the United States. At the end of the strike the longest rubber strike in U.S. history the ICEM claimed that its efforts had had a significant effect on the bargaining outcome; however, the facts seemed to contradict this claim. Researchers could not identify a single instance of interfer- ence with tire shipments from Europe, Japan, or North America during the U.S. rubber workers strike. In fact, they found that imports jumped substantially in anticipation of the strike and never fell below the prestrike level. Furthermore, even Canadian imports were significantly increased during the strike, reversing what had occurred several years before, when U.S. rubber workers refused to support a strike by Canadian rubber workers.25

Differing National Priorities The economic, social, legal, and political differences among countries serve as yet another obstacle to transnational bargaining. Few, if any, countries would subvert their national needs to the interest of developing an international system of labor relations.

Employer Resistance Employer resistance is less obvious than other obstacles at this time, mostly because of the inability of the unions to overcome the other hurdles that they face. Once the initial hurdles are overcome, employers opinions and attitudes concerning transnational collec- tive bargaining will no doubt emerge, but in the meantime, MNCs may sit idly by until the unions are able to eliminate the initial hurdles.

Effects of Unions on Multinational Corporations Research has indicated that unions have had little direct effect on investment and pro- duction allocation policies of MNCs in European countries. However, a recent study

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 709

reported evidence that industrial relations systems affected the foreign direct investments by private companies in New Zealand and Great Britain. When the industrial relations systems of those two countries became less restrictive, the foreign direct investments were greater than in neighboring countries. The MNCs tend to be somewhat sensitive to the industrial relations climate and prefer to invest where management has a greater amount of leeway in allocating labor and reducing employee voice at work.26

MNCs rarely have been able to afford to switch production to other countries as a bargaining or union intimidation tactic because of the costs involved. MNCs no doubt would shift production to another country in cases where a labor dispute stops produc- tion and the move is economically and practically possible. However, such decisions are considerably limited because companies must have the necessary excess production capacity available, and management must expect the labor dispute to last sufficiently long enough to justify a shift in production before it would be feasible.

Overall, little evidence exists of substantial negative effects of MNCs on labor rela- tions in countries in which they operate. MNCs usually offer prevailing or superior wage standards and provide comparable working conditions for several reasons. The strengths of unions in the respective countries, the highly integrated and institutionalized nature of labor relations systems, and the socioeconomic and political climates of the countries have clearly constrained the potential for direct adverse effect.27

Conclusions and Predictions on Transnational Bargaining Systematic investigations of transnational collective bargaining reveal that it does not yet exist broadly in any realistic form and is not likely to occur in the immediate future. MNCs are generally opposed to it, and trade unions are not of a single mind on its desir- ability. Although there have been several cases of information exchange between multi- national unions and a few instances of union management agreements, only in the unique U.S. Canadian and European Union environments do many transnational activi- ties occur.

There has been no identifiable trend toward transnational collective bargaining by companies and unions in the United States, Europe, or Japan. Some believe that no effec- tive transnational collective bargaining will occur in the near future. However, others believe that such collective bargaining is inevitable. If it occurs, it will probably develop first in the European Union, North America, or Central America and deal initially with general topics such as employment protection, investment policies, and codes of fair practices, before broadening into other bargaining topics.

Globalization and Concerns about Free Trade

In 1947, the General Agreement on Tariffs and Trade (GATT), a multilateral agreement which regulates international trade, was signed by 23 countries (now 123). Its purpose was to reduce tariffs and trade barriers on a reciprocal and mutually advantageous basis.

The net effect of free trade globalization has been gains to consumers in lower prices, greater efficiency in the overall economy, and reduced poverty in developing nations. However, the distribution of the net benefits of free trade and globalization has been uneven. American jobs have been lost in major industries, such as the automobile, steel, textile, footwear, and consumer electronics, whereas jobs in the aircraft, computers, entertainment, and finance industries have increased.

There is concern in the United States, the European Union, and Australia that Ire- land, South Africa, Russia, and India (where there are two million college graduates per

710 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

year and 80 percent of the college graduates in India speak English) may do for the ser- vice sector what China has already done for manufacturing. (Japan has similar concerns about northern China, where Japanese is spoken.) In the near future, competition will come from Malaysia and the Philippines, where there are 300,000 college graduates each year who speak English. Also, any product can be manufactured in China less expensively than in the richer, high-wage countries. Now, it is just a matter of time before any service that can be electronically transmitted will be produced in India more cheaply. Cheaper communications allow companies to move back-office tasks such as data entry, call centers, and payroll processing to poorer countries, such as India, which has three huge advantages for companies: a large pool of well-educated young workers, low wages, and the use of the English language.28

One of the free trade agreements signed by the United States with our major trading countries is the North American Free Trade Agreement (NAFTA). This agreement removed most barriers to trade and investments between these three countries. Many of the tariffs were eliminated immediately, and the others were phased out. Under NAFTA, three countries became a single, giant, integrated market of over 450 million people with a combined GNP of $19.2 trillion.

The United States has signed other free trade agreements, with countries such as Australia, Chile, South Korea, and the Dominican Republic/Central America. These agreements are similar to NAFTA whereby tariffs on trade with the United States are eliminated. In addition, discussions began on a Free Trade Area of the Americas that would cover 34 North, Central, and South America countries, extend trade agreements similar to those under NAFTA, and cover a population of over 800 million.29

In 2015, Congress passed the Trans-Pacific Partnership that gives the U.S. president fast-track authority over trade deal negotiations with 11 Pacific Rim countries that

have a combined GNP of $28 trillion, about 40 percent of the world s GNP. The promises of NAFTA included creation of new and better jobs, rising incomes,

and economic growth acceleration to underdeveloped countries in Central America. Whereas there would be environmental challenges, extra resources would be made avail- able to address those challenges. Economists have attempted to identify the effects of NAFTA on the economies of the United States, Canada, and Mexico. There has been expansion in trade and foreign investment; in fact, U.S. exports to and imports from Canada and Mexico now account for about one-third of U.S. trade (up from one-fourth in 1990). However, there has been a contraction in manufacturing employment in the United States and economic stagnation in Mexico.

In fact, Mexico wages remain low relative to U.S. manufacturing wages (see Exhibit 14.1). In Mexico, productivity rates have improved; however, real wages have risen only slightly. In several areas of the agricultural sector, there has been a near disaster for most farmers, who have to compete with America s government-subsidized products, such as corn. Up to 90 percent of the heads of families in some communities now spend at least six months per year working in the United States and Canada where they earn in four months the amount they would earn in Mexico in an entire year. Mexican producers of horticultural products, fresh vegetables, and fresh fruits have nearly doubled their exports to the United States. Sadly, successive Mexican gov- ernments have failed to deal with structural problems of corruption, poor education, red tape, crumbling infrastructure, lack of credit, and an inadequate tax base.30

Since the 1990s, over 600,000 Mexican farm jobs have been lost due to lower import barriers for beans, apples, grapes, and other crops. In 2010, tariffs on imported corn were eliminated, and loss of jobs increased. These job losses in agriculture have fueled migra- tion into urban areas, where 80 percent of the population now resides. Migration to the

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 711

cities is much faster than the rate of new job creation. Investments encouraged by NAFTA have produced 300,000 jobs, mostly in the northern cities. However, since a mil- lion people enter the labor force each year in Mexico, there is an annual deficit of 700,000 jobs. As a result, 40 percent of the labor force about 12 million workers do not have stable employment. Most of them work in the informal sector as street vendors, maids, and short-term workers jobs that provide no social security protections. As a result, the loss of rural jobs in Mexico has swelled the ranks of undocumented Mexican workers in the United States.

While the value of exports was ten times greater than in 1990, the total compensa- tion of these workers in Mexico is 23 percent of what similar workers in the United States earn. Factories continue to use outdated equipment and inefficient work systems, and technological improvements have been concentrated in the export-oriented plants owned by global corporations, particularly in the electronics and automobile industries. Managers realize that they must adapt to new work arrangements and improve the skills of their employees; however, only a few companies, usually foreign-owned, have intro- duced quality control methods and workplace systems that promote efficiency or provide formal training for employees. Until changes are implemented, Mexican workers will see few gains from free trade.31

Along the border with the United States, the number of maquiladoras plants (assem- bly plants for export using imported parts and components) rose to 3,655 during the first seven years after NAFTA was enacted in 1993. However since 2000, more than 850 have shut down, and employment is down more than 20 percent from its peak of 1.3 million. Companies are being courted by China, Malaysia, India, and Southeast Asian countries with tax incentives, low wages, worker training, and access to the latest technology.32

There have been a loss of manufacturing jobs from the United States and Canada to Mexico, but most of these jobs were low-skilled manufacturing jobs. There has also been increased competition from low-wage countries, which has adversely affected Mexico. The end result is that NAFTA did not achieve as much as the politicians promised, nor as much negative effect as the critics claimed.33

North American Agreement on Labor Cooperation (NAALC) The NAFTA provided several side agreements that were designed to protect employees and the environment. The North American Agreement on Labor Cooperation (NAALC), one of the two side agreements, commits the United States, Canada, and Mexico to improve working conditions and living standards as NAFTA continues to promote increased trade. Its objectives are to be furthered by intergovernmental cooperation and by a procedure established to resolve complaints based on a monitoring system and a series of steps to resolve unsettled disputes (up to arbitration). In the last ten years, eight complaints have been filed against Mexico for its failure to enforce its labor laws. One is currently under review and these others were denied for review. Complaints included infringements on the right to freedom of association, charges of employment discrimination, and occupational health and safety violations.34

Thus far, the NAALC has failed because the three countries disagree on its aims. Canada and Mexico consider the NAALC a way to achieve greater intergovernmental cooperation; the United States focuses on the dispute resolution mechanisms. As a result, limited success has been achieved on either front because the parties seldom engage in active cooperation and are reluctant to use the conflict-resolution mechanisms.35 Perhaps another reason that the NAALC has not been successful is that some lawmakers in these countries are concerned that these sorts of agreements violate their respective national

712 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

sovereignties and allow unelected transnational organizations to fashion domestic labor regulations.

The NAALC has also fallen far short of the expectations of Canadian and U.S. labor organizations. First, it does not offer remedies to workers whose legal rights have been violated. Second, it is procedurally difficult to sanction NAFTA governments that fail to enforce their own labor laws and violate the NAALC s 11 labor principles (see Exhibit 14.2). Whereas arbitration offers sanctions, the procedures are cumbersome, and only occupational safety and health, child labor, and minimum wage issues may be arbitrated. Core labor rights of freedom of association, bargaining collectively, and striking are not subjects for arbitration. So far, no arbitration panel has been called into service. Although the NAALC has not met expectations, it has provided an important education and research role. Trade unions have publicized abuses for all to see and have brought together cross-border coalitions among unions that would have otherwise not been formed. Four complaints were brought to an equitable resolution after widespread nega- tive publicity or threat of negative publicity. The conclusion of one study is:

The labor law side agreement is withering as an effective labor law enforcement and MNC compliance strategy. To sustain as an institution designed in part to motivate labor law enforcement and business compliance with labor policy, the remedy and penalty aspects of the NAALC will need to be revisited.36

Jon Hiatt, formerly with the AFL-CIO, concluded that the case history of NAALC has indicated that even when workers win, they still lose. He concluded that no work- ers have been reinstated in any NAALC cases, there have been no concrete remedies ordered, and no financial sanctions imposed. In fact, he concluded that corporate or gov- ernment behavior has changed very little as a result of any cases brought under the NAALC. Hiatt recommends several specific actions:

The NAALC, instead of being a side agreement, should be made a part of NAFTA, which does not address worker rights. All 11 principles of worker rights covered by NAALC (see Exhibit 14.2) should be subject to final and binding dispute resolution and to possible sanctions. The NAALC should address the need to raise a country s labor standards where inadequate, not just the obligation to adhere to a country s existing laws. The time frame for dispute resolution should be shortened. Where a dispute involves an allegation that a company has violated the law, that company should be required to participate in the hearing.37

Exhibit 14.2 Eleven Principles of the North American Agreement on Labor Cooperation

1. Freedom of association and protection of the right to organize 2. Right to bargain collectively 3. Right to strike 4. Prohibition of forced labor 5. Labor protection for children and young persons 6. Minimum employment standards, such as minimum wages and overtime pay 7. Elimination of employment discrimination 8. Equal pay for women and men 9. Prevention of occupational injuries and illnesses

10. Compensation in cases of occupational injuries and illnesses 11. Protection of migrant workers

SOURCE: http://www.mac.doc.gov/nafta/3006.htm (December 15, 2003).

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 713

Another assessment of the NAALC found five general trends. First, most of the alleged violations of the NAALC side agreements have involved lack of or improper enforcement of labor laws in Mexico. Second, labor unions and human rights groups in one of the NAFTA countries are more likely to file the complaint in their own country against another country. Third, most of the complaints allege violations of workers rights to organize labor unions in Mexico, where independent unions have tried to orga- nize workers. Fourth, the submission process has resulted only in conferences, seminars, and public reports. While these are not effective remedies, employers desire to avoid public attention has facilitated resolution in those cases where the submissions were vol- untarily withdrawn. Fifth, the dispute resolution procedure has provided a platform for those parties who want to raise concerns about the enforcement procedures in the NAFTA member countries.38

Unions in Other Countries

With the growing interdependency among nations, major improvements in communica- tion and travel between countries, and the increasing role of MNCs, learning more about labor relations systems in other countries in the world is imperative. Books have been written about many of the specific topics in this chapter, so no attempt is made to pres- ent detailed descriptions or analyses of labor relations systems in the countries men- tioned. This section presents unique and interesting features of a variety of countries with the hope of encouraging readers to pursue more thorough investigation further. The chapter s coverage ranges from the developing countries of Central and South America to the countries nearest our borders Mexico and Canada to the major trad- ing partners of the United States, such as Australia, China, Japan, and the Western Euro- pean countries. The extent of discussion of each country s labor relations system is determined by its proximity to the United States; its trade, economic, and political rela- tionships with the United States; and its uniqueness among the world s labor relations systems.

Many U.S. residents tend to view the rest of the world in terms of their own pat- terns of living. The fact is that virtually no country has a labor relations system like ours, and none are the same. One example of the differences between countries is the degree of employee protection against termination without cause. In the United States, only 20 percent of employees have such protection. In other words, the majority of American employees can be terminated from their employment without any justifi- cation unless termination is a violation of a contractual agreement, such as a collective bargaining agreement or a law, such as a discrimination law. As shown in Exhibit 14.3, 50 percent of Canadian employees are protected, and 90 percent of employees in Aus- tralia and the United Kingdom are protected. In Belgium, France, Germany, Italy, and Spain, 100 percent of employees are protected against termination without cause. As discussed in Chapter 12, there are basic principles for terminating employees for cause.39

Canada has several major departures from typical U.S. labor relations practices. Unions of Europe have much closer ties to political parties; Japanese unions are orga- nized on the enterprise level; and Central American unions are split along ideological lines. By contrast, the U.S. labor relations system is based on majority rule, exclusive representation for bargaining agents, and political independence. Exhibit 14.4 presents an overview of distinguishing features of foreign labor relations systems; the following discussion briefly explains these systems.

714 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Another distinguishing feature between labor relations in the United States and that of other countries of the world is the percentage of employees who are union members. Exhibit 14.5 shows that the United States is listed among the least unionized countries, such as France and Spain. Denmark, Finland, and Sweden are among the most unionized countries, with more than 65 percent of the workforce being unionized.40

Canada The relationship between the United States and Canada is probably the closest and most extensive of any in the world. The staggering volume of trade is $1.8 billion a day in goods and services, about 300,000 U.S. and Canadian citizens cross the border every day, and 28,814 trucks cross daily. Since the North America Free Trade Agreement, trade has increased over 270 percent.41

Canada s labor relations system is affected by a number of variables: foreign influ- ences, climate, labor relations laws within provinces, natural resources, and two major linguistic and cultural groups. Its economy is subject to cyclical fluctuations resulting from harsh winters, seasonality of its industries, and foreign influences (mostly the United States). In addition, Canada s geographical spread, labor laws within the pro- vinces, and regional concentration of resources and production have led to decentralized and fragmented collective bargaining. The penetration of U.S. corporations into Canada have had a significant effect on Canadian labor relations because many major corporate decisions still are made in the United States.42 Of the four largest labor unions in

100

80

60

40

20

0

Be lg iu m

Fr an

ce

Ge rm

an y

Ita ly

Sp ain

Au str

ali a

Un ite

d Ki

ng do

m

Ca na

da

Un ite

d St

at es

Exhibit 14.3 Percentage of the Labor Force That Is Protected against Termination without Cause

SOURCES: Hoyt N. Wheeler and Jaques Rojot, General Comments, in Workplace Justice: Employment Obligation in International Perspective (Columbia, SC: University of South Carolina Press, 1992), pp. 368 369. See also Anthony Forsyth, Protection against Economic Dismissals: Australian Law Compared with Five Other CEOD Countries, Journal of Industrial Relations, 51 (2009), pp. 723 730.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 715

Canada, three are in the public sector. Half of the largest 16 unions have their headquar- ters in the United States. The Canadian Autoworkers and the Canadian Paperworkers are two of the largest unions and were formerly affiliated with U.S.-based unions.

Although the public-sector unions continue to represent 71 percent of public employees, private-sector unions have begun to recruit members outside their traditional jurisdictions to offset their decline in membership. The Steelworkers now represent many hotel and restaurant employees, and the Canadian Autoworkers represent fishermen on the East Coast of Canada. In addition, some significant mergers have taken place, such as the Canadian Retail, Wholesale Union (formerly part of a U.S. union) with the Canadian Autoworkers.43

In 1956, union membership in Canada and the United States was about one-third of the labor force. Union membership in Canada has remained at about the same strength, whereas the United States has faced serious membership erosion. The union density of 27.2 percent is about two and one-half times the union membership percentage in the United States.

The differences between the membership success of Canadian unions and U.S. unions can be attributed to several interrelated factors: favorable Canadian labor laws and court decisions, more aggressive union organizing, less employer opposition, and supportive public policy. Favorable labor laws contribute to union organizing and suc- cess. Canadian legal restrictions on employer opposition to unions also contribute to a higher union density.

Exhibit 14.4 Overview of Distinguishing Features of U.S. and Foreign Labor Relations Systems

United States Exclusive bargaining representation Majority rule Political independence

Canada Influence by unions and companies

from United States Two major linguistic and cultural groups Decentralized and fragmented collec-

tive bargaining Legal influence within provinces

Central and South America Wide variation in the degree of

sophistication in labor relations systems

Close connection between trade unions and political parties

Voluminous labor codes and govern- ment regulations that cover wages and terms of employment

Negotiations predominantly at plant level only

Western Europe Exclusive bargaining representation

nonexistent Much negotiation between employer

association and union confederation with individual bargaining under the resulting agreement

Many fringe benefits established by law Worker participation mandated in many

countries

Japan Labor management consultation/

teamwork Lifetime employment in large firms Enterprise unions Wage system with much weight on

seniority Higher status of human resource

department

Australia Decentralized bargaining Nonunion bargaining Unfair dismissal law

Eastern Europe Little collective bargaining No labor agreements

716 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

The union certification procedures vary among the provinces in Canada. In New- foundland, Nova Scotia, and Ontario, mandatory elections ( quick votes ) are held within 5 business days of the application date ( as soon as possible in Alberta). In Man- itoba and British Columbia, the card check procedure is required (since 2002 in British Columbia; since 2000 in Manitoba). Mandatory certification elections reduced the union certification success rates by about 9 percent. In British Columbia, when mandatory elec- tions were in effect prior to 2002, the union certification success rate declined by 20 per- cent in the private sector, but there was no difference between mandatory elections and the card check procedure in the public sector.44

Three decisions of the Supreme Court of Canada reflect Canadian s recognition of international standards in interpreting the freedom of association provisions in the

Finland

Sweden

Belgium

Denmark

Norway

Ireland

Austria

Portugal

Italy

New Zealand

Switzerland

Germany

United Kingdom

Canada

Greece

Netherlands

Australia

Mexico

Japan

United States

Spain

France

68.3

51.9

67.6

53.3

32.3

28.9

20.4

20.8

18.3

19.1

27.1

27.1

24.0

18.9

20.0

18.2

11.9

14.3

7.7

67.5

33.4

18.6

0 20 40 Union density 2000–2010 (percent)

60 80 100

Exhibit 14.5 Comparison of Worldwide Union Density 2014

SOURCE: http://www.stats.oecd/org/Index.aspx?DataSetCode=UN_DEN

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 717

Charter of Rights and Freedoms enshrined in the Canadian constitution. First, in 2007, the Supreme Court of Canada decided that collective bargaining was protected under the freedom of association provision of the Canadian Constitution s Charter of Rights and Freedoms. Second, the high court held that the exclusion of agricultural workers from coverage under the Ontario Labor Relations Act contravened the constitutional guaran- tee of freedom of association. Third, the Court invalidated a law passed in British Columbia pertaining to health care, which would have overridden provisions in collective bargaining agreement concerning layoffs and bumping rights. The Court ruled that this law to eliminate important provisions in collective bargaining agreements without engag- ing in good faith bargaining and consultation interfered with freedom of association.45

Differences exist between the United States and Canada in their respective public sectors. All public employees in Canada are covered by collective bargaining laws that provide finality and strikes are permitted except for essential services employees who are primarily regulated by interest arbitration. With such favorable legislation, 71 percent of public-sector employees in Canada are union members, twice that of the United States. There was a significant difference in the provincial governments reaction to the budget shortfalls and recession in 2008 to 2010. Instead of blaming the public-sector employees and their unions and passing laws to limit collective bargaining rights, as in Wisconsin and Ohio, the parties were by and large able to negotiate wage restraints with- out modifying public-sector employee rights.46

In Canada, nonunion representation at the workplace is neither banned nor encour- aged. As a result, a representative group of employees without any formal certification can legally negotiate with their nonunion employer over formal conditions of employment including wages and benefits. In the United States, a series of decision and interpretations Section 8(2) of the National Labor Relations Act by the NLRB has limited the scope of representation of nonunion employees. However, like in the United States, nonunion representation reduces the demand for unionization and serves as a substitution for union representation, a traditional union avoidance strategy used in the United States.47

In some provinces, there is arbitration available for the first contract. Analysis of the use of first contract arbitration across Canada reveals that there is no evidence that the parties have relied on arbitration to settle their differences. In fact, it appears that the presence of first contract arbitration provides an incentive for the parties to reach an agreement on their own without resorting to work stoppages or arbitration. Since first contract arbitration is limited to first contracts only, there is no possibility that the par- ties could become dependent on interest arbitration to resolve future disputes (no nar- cotic effect). The end result is that the concern that first contract arbitration would undermine the collective bargaining process has no support. Instead, first contract arbi- tration supports and encourages collective bargaining.48

Other factors that contribute to greater Canadian union density are:

Canadian unions have exhibited greater activity in recruiting new members and have assigned a higher priority to organizing than in the United States. Some provinces have laws, granting greater job protection for striking workers; limiting the use of replacement workers during strikes and lockouts. Some Canadian labor boards in the provinces have greater remedial powers, for example, a board may certify the union without a vote or it might order a first collective bargaining agreement. Employer campaigning activities during union representation attempts are more restrictive, for example, more restrictions on the content of employer captive audience speeches.

718 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

There is no such thing as a right-to-work law in Canada; in fact, 7 of 11 provinces in Canada have made the agency shop (see Chapter 4) the statutory minimum.49

The scope of bargaining is greater because the distinction between mandatory and voluntary subjects for collective bargaining has never been adopted in Canada. Therefore, all subjects except those that are illegal may be negotiated.

With regard to labor/employment grievance arbitration, there are commonalities (arbitration proceedings, court deference to the arbitrator s decision, arbitrators selected by the parties) with the manner in which arbitration is conducted in the United States and Canada; however, there are significant differences.

1. In the United States, grievance arbitration is considered a matter of private contract between the parties; in Canada, arbitration is considered as having both public and private elements.

2. In the United States, individuals other than the parties may attend the hearing only with permission of the parties; in Canada, the issue of whether the hearings are con- ducted publicly is decided by the arbitrators.

3. In the United States, the arbitrator s decision will not be published without the consent of the parties; in Canada, arbitration decisions are required by law to be filed with the government, to be accessible to the public, and to be reported to law publishers.

4. In Canada, arbitrators have exclusive jurisdiction to decide matters relating to employment-related legislation such as discrimination issues; in the United States, employees who alleged legal violations, such as employment discrimination based on race, gender, age, or disability, still may proceed through the administrative and court system.

5. In Canada, arbitrators can consider and apply external statues in the deliberations; in the United States, arbitrators as a general rule do not consider external statutes unless there is a clear direction from the parties or the contract.50

In 1991 the Supreme Court of Canada rendered a ruling opposite to the Beck deci- sion in the United States (see Chapter 4). Unions can use membership dues for activities not directly related to collective bargaining, including political contributions. If the deci- sion had gone the other way, unions would have seen their political activities thwarted by lack of funds and a restriction on their support for the New Democratic Party (NDP).51

Mexico, Central America, and South America Collective bargaining in Central and South America is less extensive and sophisticated than corresponding activities in the United States; however, the number of labor agree- ments has been increasing. A higher percentage of employees are covered by labor agree- ments in Mexico, Venezuela, and Argentina than in the United States. The extent of development of collective bargaining may be illustrated in three categories:

1. The advanced group, as exemplified in parts of Mexico and Argentina. 2. A much larger middle group in which bargaining ranges from advanced collective

bargaining with larger firms to very simple or no bargaining in smaller firms, as in Chile and Brazil.

3. A large third group in which collective bargaining is not widespread, as in Costa Rica, Ecuador, and Nicaragua.

Labor unions in Central America are relatively weak, especially in the private sector. They usually do not represent workers in the informal labor market where most people

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 719

work. Where they exist, the unions lobby the inspection agencies to focus on their own sectors rather than pressing for more aggressive enforcement overall.

Political parties in Central and South America on the left of the political spectrum are more likely to introduce pro-labor legislation when they are in power to satisfy their constituents and left-oriented governments are more likely to increase enforcement of labor regulations.52

Mexico is the second largest trading partner of the United States and has the twelfth largest economy in the world. Seventy-nine percent of Mexico s exports are shipped to the United States and 50 percent of its imports are from the United States. Of the total foreign investments in Mexico, about 50 percent is from the United States, whereas only 0.56 percent of the total foreign investments in the United States are from Mexico.53

In Mexico, trade unions remain extremely weak due to the complex legal and administrative controls that regulate wages, contract negotiations, strikes, and union rec- ognition. The labor courts in Mexico have significant decision-making powers over union representation, registration of unions and the legality of strikes. Official unions support the government s strategy of keeping wages low as a basis for its international comparative advantage. Thus, the institutional constraints prevent any significant power to extend workers and their unions.54

Mexico has paid a high price for its stability in terms of corruption and lack of dem- ocratic processes due to seven decades (ended in 2000) of one-party rule by the Institu- tional Revolutionary Party (PRI). However, Mexico is a model of stability when compared to many Latin American countries. Union membership in Mexico declined from over 30 percent in 1984 to 13.6 percent in 2012. However, because of the variety of unions in Mexico, sometimes it is difficult to determine whether a worker is really a union member. Confounding the determination of the number of union members is the presence of company unions (ghost unions) which negotiate protection contracts with employers, whereby the union collects dues from workers but protects the company from organizational campaigns by independent unions. By allowing the less intrusive ghost unions to organize, the company is not subject to organizing campaigns from legitimate unions. The Mexican laws allow ghost unions to be recognized almost immediately; independent unions may be required to wait up to 10 years.

Most unions are in confederations that have traditionally been in alliance with the Institutional Revolutionary Party (PRI). The largest is the Confederation of Mexican Workers (CTM), which claims 5.5 million members. The Revolutionary Workers and Peasants Confederation claims between two and four million. Teachers are the most heavily unionized at 65 percent, and the dominant teachers union is the National Union of Education Workers, which is affiliated with the independent Democratic Fed- eration of Unions of Public Servants.55

The traditional labor union central bodies have long sacrificed freedom of action to gain political influence and position. However, the importance of political influence to workers has declined as the economy has decentralized and privatized. Today, unions must obtain more for workers through enterprise collective bargaining and less through influence with the government. Faced with NAFTA and international competition, unions and employers are finding it increasingly necessary to work together to improve productivity, competitiveness, and quality if companies and jobs are to survive and prof- its and wages are to increase.

Mexico has undergone profound changes over the last 40 years. It has changed from a closed, import substitution economy to become part of the open market economy. It has joined the OECD and entered into the NAFTA. Mexico has experienced a dramatic political change from a system dominated by the Institutional Revolutionary Party (PRI)

720 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

for more than 70 years with strong worker and peasant sectors and featuring leftist, nationalist, and often anti-American rhetoric, to a more multiparty, democratic system with a closer relationship with the United States.

Of the 51 million in the economically active population, less than 50 percent are employed in the formal sector. These jobs are covered by social security and related pro- grams funded through employer and smaller worker contributions (medical care, small pensions, IRA-like compulsory retirement savings plan, and a housing loan fund). The formal sector workers also receive profit sharing. Another 30 percent of the economically active population works in tiny enterprises in the semiformal sector, where few are cov- ered by social security. The remaining are marginally underemployed or self-employed in the informal sector.

Mexico has comprehensive, progressive labor laws; however, there are major enforcement deficiencies. Its constitution and laws provide extensive rights and protec- tions for labor and favor union organization. Mexico has ratified 78 International Labor Organization (ILO) Conventions, and 68 are currently in force. The legal protections for union organization also can unintentionally protect and facilitate racketeering, sweet- heart protection contracts, and undemocratic practices within unions. These practices have been fairly widespread, but not universal. The CTM has recognized the need to address corrupt practices and has agreed to promote changes that would lead to the elimination of protection contracts. Nevertheless, such contracts are with respected busi- nesses, and more than 50 percent of all labor contracts contain sweetheart protection clauses.56

One of the most important developments in the last century has been the Mexican Supreme Court s decision on May 11, 1999, which recognized the legitimacy of indepen- dent unions that were not affiliated with the CTM. This decision allows employee groups of 20 or more the right to form unions on their own. To obtain protection under the law and to conduct collective bargaining, the unions are required to register with the Secre- tary of Labor and Social Welfare. However, the government has been willing to deny some new union registrations, and this denial has become a weapon to be used to pre- vent the more activist independent unions from representing workers. In addition, labor laws in Mexico permit exclusion clauses, which allow for restrictions on hiring (essen- tially a closed shop [see Chapter 4] that requires potential employees to become mem- bers with CTM-affiliated unions before they can be employed).57

The Mexican Constitution and the Federal Labor Law guarantee the right to strike; however, a six to ten days notice is required, followed by government mediation. If a strike is ruled nonexistent or illicit, employees must remain at work, return to work within 24 hours, or face dismissal. If the strike is ruled legal, the company must shut down totally, management may not enter the premises until the strike is over and striker replacements may not be hired. In the administration of these laws, unions have accused government authorities of stretching the legal requirements to rule that strikes are non- existent or illicit so that they can prevent potentially damaging strikes.

Under Mexican law, closed shops are allowed in collective bargaining agreements, as are exclusion clauses, which allow union leaders to veto new hires and force the firing of anyone the union expels. Under Mexican law, several mandatory benefits and protec- tions are provided. Work shifts are eight hours for the day shift, seven hours for the night shift, and seven and one-half hours for a mixed shift. The work week is 48 hours with a full day of rest. Workers are paid double for overtime and triple for more than nine hours. Overtime is voluntary and often refused. A Christmas bonus equal to at least two weeks wages must be paid to employees in December of each year. Mexican workers are guaranteed seven holidays per year and are paid double time for work on

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 721

holidays. Employees are entitled to six working days of paid vacation after one year of service, with more days added as the years of service increase. Employees are entitled to a vacation bonus equal to 25 percent of the weekly salary. Employees are also entitled to severance pay when termination is without just cause ; however, this money is usually paid any way rather than the employer trying to prove just cause to the labor board.58

The Conciliation and Arbitration (JCA) boards help workers and employers resolve labor disputes. If an employer violates a worker s rights, the worker can file a claim with the local or federal JCA. Also, if the employer fails to comply with the collective bargain- ing agreement, the union can file a claim with the local JCA.59

Under Mexico s constitution, workers are entitled to participate in the profits of the enterprise. Employees participate in the profits at a percentage rate fixed by the National Committee for Workers Profit-Sharing in Enterprises. This committee is required to con- sider the general condition of the Mexican economy, the promotion of industrial develop- ment, the right to obtain reasonable interest on capital, and the necessity of reinvestment of capital. Fifty percent of the profit shared is distributed equally among employees in accordance with the number of days worked during the year. The remaining 50 percent is distributed among eligible workers in proportion to the earnings for the year.60

The opening of the Mexican markets to NAFTA and international trade, the deval- uation of the peso, plant closings, and corporate downsizing to become more competitive have created an economic challenge for the entire country. Free collective bargaining in the last few years has been limited voluntarily and replaced by annual national pacts negotiated by the government, the major trade unions, and employers with the major goal of controlling inflation. Many efforts have been made by employers, unions, and the government to create greater flexibility and labor management cooperation to improve productivity, quality, and employee remuneration.61

Since NAFTA was enacted, there have been numerous alliances and exchanges between Mexican, U.S., and Canadian unions. AFL-CIO officials have agreed to exchange visits of union officials and labor lawyers. The United Auto Workers and Canadian Auto Workers have conducted safety and health training in Mexico. The Steel- workers have provided financial assistance to Mexican unions to assist their organizing efforts. There have been worker-to-worker exchanges that help to erase stereotypes of both U.S. and Mexican workers by providing workers on both sides with opportunities to cross the borders and tour plants, attend union meetings, work on organizing drives, and walk picket lines. As an example, union organizers from Mexico went to Milwaukee to meet with Mexican workers to speak of their own experience in telling them that the U.S.-based United Electrical Workers was a democratic union, unlike some unions (ghost unions) in Mexico.62

Beginning in the later 1980s, most countries in Central and South America reformed their regulations of labor relations. In 1988, after two decades of military dictatorship, the Brazilian government reinstated collective labor rights and expanded unionization rights to public employees. Four countries Chile, El Salvador, Nicaragua, and Panama reduced the number of workers required to form a union. On average, 20 workers are needed to form a union in the region. Countries eased their strike regula- tions. The Dominican Republic, Nicaragua, and Peru now require a simple majority of workers in a work center to call a strike. Argentina and Peru gave unions the legal right to obtain financial information from the employer to facilitate collective bargaining. Guatemala simplified the procedures for forming unions and increased employer fines for violating labor laws.

Although laws have been passed to enable union organizing, the number of union members has declined. As well, although requirements for calling strikes have eased,

722 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

fewer strikes have occurred throughout Central and South America. In some countries, strikes are rare. For example, in Costa Rica, there have been only two legal strikes in the last 60 years. Another problem is the lack of adequate enforcement and the failure to fund the enforcement agencies. For example, in Bolivia, there are only 18 workplace inspectors in La Paz, a city with over one million people. In Brazil, three million worker complaints lingered in the labor courts in 2003, and some cases took five to ten years to resolve.63

With the outsourcing of manufacturing jobs to Central America, primarily from the United States, it is theorized that manufacturing workers would achieve greater economic benefits through higher wages and improved working conditions and this economic growth would enhance union-organizing power. To the contrary, MNCs have restruc- tured their operations by increasing their outsourcing or subcontracting of parts of the production process to independent rival firms located in developing regions, thereby forcing small firms to compete for a limited number of contracts and putting pressure to lower costs and remain nonunion.64

Negotiations between unions and employers in Central and South America take place primarily at the plant level. Only Argentina, Venezuela, and Mexico have wide- spread industry-wide bargaining. The principal reason for this arrangement is that legis- lation in the various countries typically does not require employers to bargain except at the plant level.

In the more industrialized countries of the world, people interpret labor management relations to mean the wide range of relationships between employers and employees. However, people of Central American countries tend to define labor relations in terms of the voluminous labor codes and government regulations.

Labor relations vary widely among the countries in Central America, but they have one common feature: a close connection between trade unions and political parties. For example, in Mexico, unions constitute a large section of a political party and therefore are assigned a quota of candidates on the party s ticket for office. Thus, unions have some assurance of having a voice in the party s program and on its council. Some unions have been very effective in gaining relatively high wages for members. For example, the electrical workers in Mexico earn two to three times more than the urban working class.65 Likewise, unions have been criticized because they have made gains for their own members while neglecting the interests of the great mass of people, including the peasants, who are terribly poor.

Labor agreements vary in content both within countries and among countries. In Argentina, labor agreements include provisions that set forth in some detail the employ- ment conditions and establish a highly developed shop steward system to administer grievances and ensure that employers abide by the agreements. In Chile, labor agree- ments are more general, but they do establish certain minimum rules and include a grievance mechanism to enforce the agreement. In Brazil, where unions have struggled since 1945 to have a greater say in determining employment rules and conditions for their members, they have achieved more through labor legislation than by engaging in collective bargaining.

In Central American countries, political parties maintain close ties with unions for their support, votes, and influence. Likewise, trade unions depend on the politicians for laws to protect their members, to legalize their organizations, and to regulate their rela- tions with employers. On the other hand, political parties have appealed to organized labor to favor their own policies, and in some cases, they have accommodated organized labor in hopes that it will remain satisfied and continue to support the existing economic and political system.66

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 723

The United States has signed a free trade agreement, the Dominican Republic Central America Free Trade Agreement (DR CAFTA), with the countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. Eighty percent of U.S. exports of consumer and industrial goods from Central America and the Dominican Republic will become duty free immediately with the remaining tariffs phased out over ten years. U.S. exports that will benefit are information technology, agri- culture, construction equipment, paper, pharmaceuticals, and medical and scientific equipment. Tariffs on U.S. autos and auto parts will be phased out within five years. DR CAFTA addresses worker rights protections with a three-part strategy intended to ensure effective enforcement of domestic laws, establish a cooperative program to improve labor laws and enforcement, and build the capacity of Central America and the Dominican Republic to monitor and enforce labor rights.67

Cuba Although not a major trading partner of the United States, Cuba, which is the largest island nation in the Caribbean Sea, is on the brink of social, economic, and political change. For years, Cuba received about $6 billion in annual subsidies from abroad, including the Soviet Union and Venezuela. With the economic decline of the former Soviet Union and Venezuela, China remains Cuba s major external supporter. Cuba is the largest island in the Caribbean Sea and its shore is 93 miles from the United States. During the presidency of Raul Castro, Cuba has been slowly moving toward more privat- ization of its economy although the government plays the major role in its direction. As example, in 1982, only 8 percent of the workforce worked in the private economy, today 22 percent works in the private economy. Tourists find out very quickly that a black market exists in Cuba wherein taxi drivers, tour guides, hotel employees, and others wel- come cash especially U.S. dollars.

On April 14, 2015, President Obama announced that the United States had taken Cuba off the list on countries that support terrorism. This act was welcomed by the Cuban government and the two countries negotiated the avenue to reinstating formal diplomatic relations. The United States eliminated many of the restrictions on travel to Cuba and 600,000 U.S. citizens are projected to visit Cuba each year.68

Obtaining a true picture of labor relations in Cuba is presently difficult because of the absence of a free press. Propagandists from the government describe a free and inde- pendent trade union that promotes the interests of the government and the Cuban peo- ple. From the opposite site is a description that trade unions are subservient to the government and has a role of enforcing the government s policies. See the Labor Rela- tions in Action on page 725. In fact, it appears that the further one looks back, the more accurate the picture becomes.

For Cuba to be successful, trade unions in Cuba must become part of the system and contribute to it. However, currently there are no independent and autonomous trade unions. In fact, independent trade unions are prohibited by law, and the law does not pro- vide for the right to form unions, the right of collective bargaining, or the right to strike.

In 2011, Cuban Premier Raul Castro (who replaced Fidel Castro in 2008) announced a plan to gradually cut as many as one million jobs from the public sector, 20 percent of Cuba s workforce. Some experts view this move as a step toward transformation of Cuba s communist economic model to a more market-oriented one. It is predicted that over the next five years, several hundred thousand workers will move from the public to the private sector. This government plan has failed to provoke any protest or criticism from the Workers Central Union of Cuba (CTC). To the contrary, the CTC helps imple- ment the cuts, which will generate widespread insecurity and anxiety. Salvador Valdes

724 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Mesa, the CTC s chief, was appointed by the ruling Communist party rather than being selected by union members as is the norm for independent unions. The laid-off workers can seek compensation for one month s salary for every ten years on the job.69

As countries in Eastern Europe have moved toward more democratic and pluralistic economies, so shall Cuba in time. The future choices will then be the various forms of labor participation programs, such as work councils, employee collectives, and greater reliance on collective bargaining at the enterprise level. Unions have become the primary means by which workers are represented. Unions represent a broader segment than their membership; they represent retired pensioners, the unemployed, and other interest groups. Unions in Eastern Europe have become political partners within the framework of tripartite arrangements (government, labor, and management). Whether these approaches are suitable for Cuba s transition is open for debate. What is certain is that the economic globalization trend will continue, posing the question as to what extent Cuba will participate in that process.

Western Europe In Western Europe, union density is significantly greater than in the United States, with the exception of France. Of the largest countries, the range is from less than 10 percent in France to over 60 percent in Denmark, Finland, and Sweden. Unions have been able to use this membership strength to accumulate political influence at the national level. Furthermore, they have been able to coordinate their efforts with large, well-established labor parties in government to achieve their goals.

LABOR RELATIONS IN ACTION Two Views of Trade Unions in Cuba

On the Web page http://www.cuba-solidarity.org.uk/, it shows that there are 17 different national unions with workers organized by industrial sectors. A federation of these unions is the Central de Trabajadores de Cuba (CTC) is organized and meets every five years to dis- cuss and propose plans to improve the economic and social conditions of workers in Cuba. The CTC is fully involved in the legislative process and government pol- icy making and every employment law and regulation are discussed and must be approved by the trade unions. Membership in trade unions is voluntary and independent of the Communist party and state. There are few disputes between unions and management because conflicts are resolved through negotiations and collective bargaining. Every month, an assembly of workers meets and reviews production plans and dis- cusses problems with the administrators of their workplaces.

On the web page, http://www.globalsecurity.org/ wmd/library/news.cuba/4889.htm, a quite contrasting point of view is presented. Here, it is described that, when Fidel Castro took power in 1959, he promised to fulfill labor s goals. His regime sought to bring the CTC

under the control of the Communists. Over time, Cas- tro purged the CTC leadership and replaced them with his supporters. By 1981, the CTC was under the con- trol of the Communist party and many labor laws and provisions of collective bargaining agreements were made null and void. In other words, the trade unions became instruments of the Castro regime. Today, the Communist party selects the leaders of the CTC and the CTC s principal responsibility is to ensure that the government s production goals are met. The CTC does not promote worker rights, observe the existing labor laws, or protect the right to strike. The CTC is under the control of the state and Communist party, which also manages the enterprises for which the laborers are employed. The Cuban government prohi- bits independent unions and none are recognized. Workers who engage in union activities face govern- ment harassment and possible prosecution. The Inter- national Labor Organization, a highly respected international organization, has found violations of con- ventions on employment discrimination and employ- ees rights to unionize and to engage in collective bargaining.

725

As in the United States, union membership in Western Europe as a percentage of the labor force has declined. Nationwide and industry-wide bargaining is less fre- quent, and employers are winning more concessions for efficient work rules and wages. Also, as in the United States, unions are trying to sign up new members in growing industries, such as leisure and finance, where technological change has fueled worries about job security.70 Unions have achieved significantly greater worker partic- ipation in the operation of the firm many times through legislative mandate and sometimes through management reaction to wildcat strikes and worker dissatisfaction. In addition, public opinion in these countries strongly supports the idea that worker participation enhances production, fosters harmony, and enriches the workers personally.

The labor relations system in Western Europe can be contrasted with that of the United States in a number of ways.71

1. In the United States, unions are selected by the majority of the appropriate bargain- ing unit and certified as the exclusive bargaining representative, whereas in Western Europe, exclusive representation is not a common concept.

2. In the United States, the exclusive bargaining representative has a monopoly over all employee bargaining, and the employer is required to bargain only with the legally certified union. In Western Europe, the employer often bargains with a number of unions in addition to worker councils elected by the employees.

3. In Western Europe, negotiations take place between representatives of employer associations and those representing a confederation of unions; in the United States, this type of bargaining arrangement is adopted only in a few industries, primarily construction.

4. In North America, the focus of union management interaction is the shop floor, whereas in Europe, bargaining at national levels is the major focus of most unions.72

5. More fringe benefits are established by law in Western Europe than in the United States; therefore, trade unions have found that they can obtain benefits more quickly through the political process and have tied themselves more closely to political parties.

6. Western European countries have a greater commitment to employee training. For example, German firms spend twice as much on this activity as U.S. firms, or nearly 17 times as much per apprentice. In Germany, two-thirds of all young adults enter apprenticeship training programs. In contrast, 57 percent of high school graduates in the United States enroll in postsecondary education, and the majority drop out before graduation. The apprentice signs a formal contract with the firm and receives a predetermined

wage rate, which is a fraction of the regular rate over the entire training period. The duration of the apprenticeship is typically 2 to 3.5 years, during which the apprentice spends two days of the working week in vocational school and the rest of the week at the firm learning how to become a skilled worker. At the end of the training the appren- tice takes an external exam and the degree is recognized by employers throughout Germany.73

One major reason for the disparity in support for employee training between Germany and the United States is the role of unions and employer associations. German companies band together in employer associations to negotiate with unions over wages and other personnel matters, such as training. Because unions are stronger in Germany, the labor agreements require investments in training, and collective bargaining provides the mechanism for collecting union dues and fees. This approach is similar to the

726 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

high-quality apprenticeship programs financed by contracts between craft unions and employer associations in the U.S. construction industry.74

European Union By 1992 the economies of 12 countries in Western Europe (Belgium, Denmark, Germany, Greece, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom) were joined together as the European Union (see Exhibit 14.6). In 1995, Austria, Finland, and Sweden joined the EU. By 2007, the EU had a membership of 28 countries with a combined population of over 507 million (7 percent

Exhibit 14.6 The European Union

Iceland

Joined in 1995

Original Members

Members in 2004

Admitted in 2007

Sweden

Norway Finland

Russia

Belarus

Latvia

Estonia

LithuaniaKalingrad

Slovakia

Moldovia

UkraineCzech Rep.

Poland

Austria Hungary

RomaniaRomania

Bosnia- Herzegovena

Montenegro

BulgariaBulgaria

Romania

Bulgaria

Macedonia

Sicily Cyprus

TurkeyTurkeyTurkey

Greece

Albania

Italy Slovenia

France

Luxembourg

Denmark

Netherlands Belgium

Great Britain

Ireland

Portugal

Spain

Switzerland

Germany

Croatia

Serbia

N. Ireland

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 727

of the world s population) and an economy of over $18 trillion, the largest in the world (see Exhibit 14.6).

The EU s goal is the gradual elimination of economic barriers among member coun- tries and removal of restrictions on the movement of goods, capital, and labor across national borders. The EU constitution includes employment and social issues (see Exhibit 14.7 for the employment-related issues).

The Charter of Fundamental Social Rights (called the Social Charter) was approved by all EU countries except Great Britain. This arrangement establishes certain standards for working conditions throughout the EU so that some countries cannot attract industry merely because their pay and working conditions are below those of other countries. The charter stipulates statements of principles on fundamental rights that include freedom of association and encourages collective bargaining; vocational training; equal treatment for men and women; health and safety; child protection; and rights of information, consul- tation, and participation for workers.75

Critics of the Social Charter have argued that the EU has returned Western Europe to a re-regulation phase that will raise labor costs, inhibit employment growth, and dis- proportionately affect the poorer employees. Critics contend the end result of mandated benefits in the Social Charter will lead to higher costs and an erosion of their external competitive position.76

Companies have experienced the effects of the EU, which could include increased mobility of employees among operations in the various countries, more recruiting from overseas, more active monitoring of pay and benefits developments in other countries, and increased language training, as well as a premium placed on language skills. These areas and others will provide much opportunity for trade unions to be involved at the bargaining table.

At the EU level the European Works Council (EWC) Directive was adopted in 1995 to provide a legal right for workers and their representatives to be consulted and informed about MNCs operating in more than one country. Any MNC employing

Exhibit 14.7 Employment-Related Elements of the Charter of Fundamental Rights

Prohibition of slavery and forced labor Protection of personal data Freedom of assembly and association, including trade union matters Freedom to choose an occupation and the right to engage in work Equality in employment matters including prohibition against employment discrimi-

nation based on sex, race, color, ethnic or social origin, nationality, genetic fea- tures, language, religion, disability, age, or sexual orientation

Information and consultation Right of collective bargaining and action Right of access to placement services Unjustified dismissal Fair and just working conditions, including health, safety, and dignity Child labor and protection Family and professional life, including protection against dismissal connected to

maternity and the right to paid maternity leave and parental leave following birth or adoption of a child

Social security and assistance in cases such as maternity, illness, industrial accidents, dependency or old age, and loss of employment

SOURCE: European Union: 2003 (Washington, D.C.: U.S. Printing Office, 2003), pp. 17 19.

728 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

more than 1,000 workers in the European Economic Area (EEA includes the EU coun- tries plus Norway, Iceland, and Liechtenstein) and with 150 workers in at least two member states have to establish a procedure for informing and consulting employees when the workers asked for it. The European Trade Union Institute estimates that 2400 MNCs are covered by the directive. By 2012, 1,214 MNCs had negotiated voluntary agreements. Although these agreements are indeed transnational, their effect on worker representation, unions, economic performance, and labor markets has yet to be determined.77

Under the Works Constitution Act, the staff in every firm with five or more employees has the right to elect a works council. Despite the right to establish works councils, only 10 percent of the firms with five or more employees in the private sector have a works council. However, the probability of having a works council rises in direct proportion with the size of the firm with well over 40 percent of all employees working for a firm with a works council. The elected members of the works council are exempt from their regular duties without pay cuts during the council activities. The members of the works council may formally object to hiring and firing decisions taken by manage- ment in the event that social criteria, such as age, tenure, financial obligations, and dis- ability, are not respected. Work councils also monitor safety standards and are responsible for implementing and monitoring collective bargaining agreements at the plant level.

Trade unions support the works council system, and many of the works council members are also members of unions. In fact, collective bargaining agreements amplify the effectiveness of the works council voice at the workplace in several ways. Works councils can draw on the information obtained by the union during collective bargain- ing. Collective bargaining reduces the potential conflicts between the works council and the management of the firm because several sensitive issues, such as wages, working time, and safety, have already been resolved in collective bargaining. As a result, collec- tive bargaining may improve the cooperation between the works council and manage- ment. Also collective bargaining reduces the burden for a works council to deal with several issues, such as wage negotiations, safety issues, which are addressed in collective bargaining agreements.78

Each of these EWCs meets at least once a year to discuss the firm s changes, its business environment, employment issues, and future plans. Senior managers present information to employee representatives who are asked to respond, and consultation takes place over corporate decisions that affect workers in more than one country. Most EWCs allow employee representatives to hold their own meetings before and after the main sessions, and some EWCs are developing new forms of communication between the annual events. Although EWC activities are separate from trade union activities and European trade unions are not actively involved, the EWC provides a mechanism for promulgating industrial relations policy initiatives across national boundaries and implementing new regulatory measures in industrial relations within the European Union.79

The European Works Council provided an avenue for trade unions that dealt with General Motors Europe (GME) during the early 2000s. When GME was deciding to close some plants and shift production during the economic recession and GME attempted to whipsaw (pit one group of employees and their unions against another group of employees and their union) by threatening to close plants and shift production unless the unions granted bargaining concessions, the EWC provided a mechanism for the unions in multiple countries to coordinate their efforts to save jobs and postpone wage cuts.80

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 729

The euro, the common currency of the EU, replaced the separate national currencies in 2002. The single EU currency (currently adopted by 19 of the 28 member countries) has encouraged the formation of a single European economy as the corollary of a single European market. A single currency was expected to make European markets for goods and services more integrated and efficient. Therefore, European firms needed to become more integrated and efficient to compete against each other and foreign competitors, who were attracted to the EU as the internal barriers disappeared. A wave of consolida- tions that were expected among businesses had already begun in banking, retailing, and manufacturing. The mergers and consolidations evoked cost-cutting and major layoffs. Unions and governments had to become attentive to the problems that coincided with these events.81

In Western Europe, aggressive opposition to bargaining is relatively uncommon; therefore, many countries do not have specific legislation that addresses these subjects. However statutory or constitution provisions on freedom of association in some coun- tries are interpreted as entailing the right to bargain.82

Great Britain Like membership in trade unions in other countries, the number of union members in Great Britain has declined since their overall peak in 1980 of over 13 million members and 56 percent of the workforce. The decline in membership to 25.4 percent of the workforce after 1980 can be attributed to industrial change, particularly manufacturing, and government policies established particularly during the term of Prime Minister Margaret Thatcher. In recent years, there have been promising signs of a resurgence, due to the passage of the Employment Relations Act (ERA) of 1999 and the recent growth in trade union recognition, particularly in professional unions (teachers, nurses, and doctors). Continued success will depend on unions abilities in identifying, mentor- ing, and developing new representatives who can provide a trusting relationship between the members and their respective unions.83

Membership in unions in Great Britain s public sector (about 70 percent) is greater than the private sector (about 20 percent). The Trade Union Congress (TUC) continues to be the largest labor organization, and the TUC has 11 unions with each having over 100,000 members. Two other unions with over 100,000 members, the British Medical Association (doctors) and the Royal College of Nurses (nurses), are not in the TUC.84

In Great Britain, unions gain legal recognition in companies with more than 20 employees if (1) the union wins a majority support in a secret ballot where at least 40 percent of the eligible voters actually vote or (2) 50 percent plus 1 of the eligible workers in the bargaining unit are union members.85

After Britain introduced its new union recognition law, one U.S. union avoidance consultant firm notified employers in Britain of its 65 years of assisting employers on how to stay union free. In fact, one U.S.-based firm promoted itself as having a success- ful record in Canada, Mexico, South America, the United Kingdom, Belgium, France, and Germany.

Labor agreements are negotiated by a large number of multiunion multiemployer negotiating committees. The United Kingdom has nearly 600 labor unions, over three times the number in the United States, and a single manufacturing firm typically negoti- ates with about seven unions. One of the most important negotiations involves the Engi- neering Employers Federation, representing 5,000 companies, and the Confederation of Shipbuilding and Engineering Unions, representing 34 unions and over two million employees. This general agreement sets forth guidelines that establish the floor for addi- tional bargaining at the plants. Labor agreements are negotiated and administered at the

730 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

plant level; however, they are not enforceable by law, and grievances are not subject to private arbitration.

Shop stewards are volunteers who serve without pay. Unlike their U.S. counterparts, they cannot be removed by union executives. Often, shop stewards accumulate much authority and influence at the plant and have more control over local union affairs than any national union official. Steward councils composed of union stewards from var- ious unions and work councils representing members of the various departments are important in the labor relations system.

Labor agreements at the plant level are often negotiated by representatives of the national union, steward councils, and work councils. These agreements usually have no fixed term and include letters of understanding, minutes of meetings, and oral under- standings. Although there is no legal obligation to negotiate, unions have gained exten- sive power and control over jobs by refusing to work with any employer whom they find in bad standing and maintaining strict membership discipline.

An explosion of contingent pay plans, such as profit sharing, employee stock owner- ship, and merit pay has occurred. This era of deregulation included new industrial rela- tions legislation being passed every two years, with changes affecting these areas. The responsibility for industrial relations was placed at the company level, and any collective bargaining agreement would cover only a single firm.86

The act encourages voluntary settlement of recognition claims. The ERA provides individual worker protections against unfair dismissal and protections for supporting union recognition. After the Central Arbitration Committee (CAC) grants recognition, the employer must bargain over pay, hours, and holidays but may bargain over other issues as they wish. The act also introduced new protections from dismissal of striking workers and established an Employment Appeal Tribunal procedure for unfair employee dismissals. Since its passage, the parties to CAC cases expressed satisfaction with the procedures.87

Germany The German model of labor management relations rests upon three pillars: (1) central- ized industry-level collective bargaining, (2) work councils, and (3) company-level code- termination committees. The central wage agreements are designed to take wages out of competition and the works councils are designed to facilitate implementation of the mas- ter labor agreements and represent workers interests at the workplace. Collective bar- gaining in Germany occurs between trade unions and employer confederations at the industry and regional levels. With the exception of Volkswagen, which negotiates its own collective bargaining agreements with their unions, collective bargaining over wages and conditions of employment (job classification, working time, and working con- ditions) occurs formally outside the plant. Strikes and lockouts are among the lowest in the world.

The role of the works councils in Germany was determined by the Works Constitu- tion Act of 1952 (amended in 2001). Under this law, works councils are set up in any establishment with at least five permanent employees after a petition is filed by a small group of workers or a trade union representing the workers. While mandatory, they are not automatic. In fact, works councils are found in only 10 percent of German establish- ments in the private sector. However, their presence rises sharply with plant size, and the number of employees covered considerably exceeds their frequency. Members of the works councils are elected by secret ballot for a four-year term and represent all workers, not just union members. While works councils are formally independent of unions, as a practical matter, the ties are usually close because three of the five works councilors are

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 731

union members. Typically, works councilors assist in recruiting union members at the workplace and are considered pillars of union security.

Works councils at the workplace in Germany focus on production issues and indi- vidual grievances and are charged with the implementation of the collective bargaining agreements. Works councils may negotiate plant agreements with local management on matters that are not covered by the collective bargaining agreements. Works councils have actively participated in the fixing of wages above the formal wage schedule set under the collective bargaining agreements and have negotiated provisions for special bonuses and allowances at the plant.

The law provides works councils with rights to information and consultation on subjects such as manpower planning, change in work processes, working environment, and job content. There is a set of rules on codetermination or joint-management rights on so-called social matters, which include subjects such as working hours, principles of remuneration, holidays, health, and safety. The works councils also have consent rights on hiring and firing decisions.

Work councils in Germany contribute positively toward family friendly work prac- tices, such as on-site child care, flexible working hours, and leaves to meet family obliga- tions, and are especially effective when there is a collective bargaining agreement and where there are female representatives on the work councils.88

In Germany, there is also a system of codetermination at the company level wherein representatives of employees sit on the company s supervisory boards. Although Germany is the world s second biggest exporters of goods and this system of codetermi- nation has held up moderately well in Germany, this system has not been exported suc- cessfully to any other country. Currently, nearly 700 companies in Germany operate under this system. The supervisory boards have four functions:

Approves the appointment of management board members Monitors the management board that has to inform the board members of the business policy and corporate planning on an annual basis and of business opera- tions more regular basis Can codetermine business operation requiring approval Scrutinize the annual accounts of the company

Various laws stipulate different shares of seats that are assigned to employee repre- sentatives on supervisory boards: full party codetermination for the coal and steel indus- try with equal numbers of shareholders and employee members and one neutral member, almost equal representation for corporations having more than 2000 employees with election of the chair and vice-chair by two-thirds vote (if no one gains enough votes, the shareholders elect the chair and vice-chair), and one-third representation in companies between 500 and 2000 employees. It should not go unmentioned that the laws that provided for these arrangements generated fierce employer opposition.89

With the dual system of industrial relations in Germany, unions have enjoyed stable membership levels for many years; however, membership levels changed after the fall of the Berlin wall and subsequent unification of Germany. Union membership has declined from 19.1 percent of the workforce to 17.7. In eastern Germany, the decline was even more dramatic where the membership started at almost 100 percent. Currently, unions are attempting to gain the assistance of works councils in recruiting new union members. Thus far, unions have been able to count on works councils in membership recruitment, especially in large companies.90

The major federation is the German Federation of Trade Unions, which includes eight major unions representing 80 percent of all union members. These unions bargain

732 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

at the industry and regional levels, with the manufacturing union taking the lead and setting the wage standard for others to follow. For example, IG Metal, the German metalworkers union, represents 2.4 million metalworkers and is the dominant wage trend setter in national bargaining. Interestingly, Eastern German manufacturers, which are still adjusting to a competitive market economy, are allowed to enter into hardship agreements that exempt them for a period of time from the industry wage standard. Companies seeking these agreements must prove they are close to bankruptcy and must demonstrate a strategy for economic recovery by opening their books to scrutiny.91

Central and Eastern Europe Former Soviet Bloc Countries Trade unions represent workers all over the region; however, their major role in many countries has been to exert political pressure. For instance, solidarity in Poland, the orig- inal independent union in Eastern Europe, has 2.5 million members and has played a major role in the breakup of the Soviet bloc. Trade unions in Czechoslovakia led the rev- olution, and then members voted out the old leadership and democratized the union movement. The unions wanted the country to be divided along Czech and Slovak ethnic lines, thereby creating the Czech Republic and Slovakia. In the former Soviet Union, the trade union movement has been in a state of rapid flux; however, coal miners have maintained their relative strength throughout the developments.92

Some countries in the former Soviet bloc are enjoying success in attracting new industries. Offering lower wages and lower manufacturing costs, businesses primarily from Western Europe are investing in central Europe particularly. The transition to a market economy has been slow and judged not yet successful. Factories do not have the funds to upgrade their plants, buy products from one another, or make payrolls. Faced with massive restructuring and operational inefficiencies that have been allowed to develop over the years, unemployment remains high.93

The transfer of labor institutions from Western Europe to Central and Eastern Europe has been slowly progressing. Although Central and Eastern Europe represent around 5 percent of Germany s foreign investments, the Czech Republic (tenth) and Poland (fifth) are among the ten most attractive locations for Germany s direct investors. Germany has become the leading direct investor in Hungary and the Czech Republic, where it competes with the United States and France for the leading position. However, there is no evidence that these German companies are exporting the German model of labor relations to Eastern European countries. Instead, the German companies have adapted to the host country s institutions and environment and transferred only those labor relations practices, such as heavy emphasis on vocational training, long-term employment commitment, and consensual work organizations, which are acceptable in the host country.94

The cultures, traditions, and beliefs of West Germans have been slowly introduced in East Germany. Works councils have been introduced in Hungary, and German labor legislation has been introduced in Slovenia. The nature of collective bargaining varies widely from merely endorsing legislation for consultation only to regulation of conflict. Collective agreements on pay appear to be widespread in the unionized sectors; however, employers refuse to negotiate on any other issues. Hungary and the Czech Republic have had the most employment deregulation and workplace change, but unions exercise few controls over employment contracts and working hours.

Collective bargaining varies across countries and companies. These differences in collective bargaining are determined in part by the dissimilarities in legislation, nation- ally inherited legacies, and the progress made toward economic reform. In Eastern European countries such as Romania, there is a trend toward decentralization of

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 733

bargaining, thereby establishing terms and conditions of employment at the company level with more authority delegated to managers and union officials at that level. Also, the strike as a power source for the union is a new phenomenon.95

In Russia, where the market economy is still in its infancy, lawmakers adopted a labor code that would present a reassuring face to millions of workers whose cultural and psychological environment was thrown into disarray by the collapse of the Soviet system. The new labor code marked a further step in Russia s process of legislative and institutional reform in the field of labor relations. While the new code stops short of making a clean break with the past, it reflects a radical departure from the former Soviet system. Under the Soviet system, the purpose of a collective bargaining agreement was to spell out in writing the mutual obligations of management and workers in the execution of the production plans, introduction of new equipment, raising labor productivity, improvement in quality standards, lowering production costs, strengthening production and labor discipline, and training of supervisory personnel.

Under the new code, there is greater flexibility given to the parties with guaranteed protections provided to workers (safety and health, minimum wages, etc.). The new code covers contracts of employment, dismissal rules and procedures, and dispute resolution procedures. The parties decide the appropriate level for collective bargaining; they may choose to bargain at the enterprise, regional, industry, or federal level. The parties to col- lective bargaining have chosen enterprise bargaining far more frequently. Bargaining procedures, schedules, and duration of the labor agreements are decided by the parties. Under the new code, unions have the right to strike, but only after a long detailed pro- cedure of attempts at mediation and advanced notice. In addition, strikes in the public services industries and in industries that would pose a threat to the country are prohib- ited. During strikes, the freedom to work by nonstrikers must be guaranteed.96

Japan Japan s labor relations system has five distinguishing characteristics: labor management consultation and teamwork, lifetime employment in large companies, seniority-based wage system, enterprise or company unions, and a higher status for the HR department.

Collective bargaining takes place at the enterprise levels, and umbrella organizations may coordinate the negotiations. In most unionized enterprises, there are elaborate joint consultation mechanisms in which union representatives participate. Joint consultation is considered a means of information sharing, but most labor issues are also discussed at these consultation meetings. Since the same people (top managers and union officials) attend both the consultation meetings and negotiating meetings, the line between collec- tive bargaining and consultation becomes blurred.97 Management and employees com- municate considerably more in Japan than in most other countries. Ninety percent of all Japanese companies have some sort of labor management consultation. The flow of information is extensive. As examples, management reports to employees on the com- pany s financial status, its problems, its expectations and plans, and on contemplated technological innovations before they occur. All aspects of employment, training, disci- pline, working conditions, and employee benefits are open for examination. Joint consul- tation includes subjects that a U.S. manager would classify as management prerogatives.98 Research has shown that when Japanese firms increase their information sharing with employee unions, the negotiations are shorter and easier, unions tend to demand and accept lower wage increases,99 and profitability and productivity are improved.100

Teamwork and consensus building are a cultural heritage in Japan. Japanese employees feel comfortable with this approach, and both sides stress sharing of goals,

734 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

responsibilities, and rewards. The communication links are through the normal channels at work, such as meetings, newsletters and bulletins, labor unions, and labor management councils.101

Lifetime employment, a standard in Japan since the 1950s when employers agreed to this arrangement to quell labor unrest, has been applied to regular employees of large employers (500 or more employees), which make up about one-third of the nonagricul- tural workforce. These regular employees are hired after completing high school or col- lege, with the expectation that they will be retained by the company until they reach the mandatory retirement age of 60. Legal, written contracts are nonexistent; however, unac- ceptable behavior may lead to a suggested voluntary resignation or a hidden discharge. Lifetime employment has encouraged employers to invest in training these long-term employees and has led to responsiveness by employees not only to participate in training but to willingly accept innovation and technological advancement, knowing that they will not be adversely affected by a layoff.102

When Japanese companies locate a plant in the United States, they most likely do not adopt the lifetime employment concept. Although over half of the Japanese plants have explicit no-layoff policies, only 5 percent of their plants located in the United States have a similar policy. The Japanese plants use temporary workers as a buffer to enhance employment security for their core workforce, whereas the U.S. counterparts use layoffs to adjust to a shortfall in demand for workers. For example, auto parts plants typically lay off employees for one month when retooling is required to meet new cus- tomer specifications. In Japan, companies tolerate periods of substantial underemploy- ment to avoid layoffs. In fact, some Japanese companies donate their employees to perform community service during temporary slowdowns.103

Collective bargaining revolves around pay levels, particularly during the Spring Wage Round, which used to be an important national event. The decline in union den- sity and the sluggish economy have caused the annual Shunto (spring wage offensive by Japan s unions) to decline in importance, and the focus of wage bargaining has shifted toward bargaining at the enterprise level. The Shunto functions as a type of pattern bar- gaining, whereby one union is selected to negotiate a new wage level with its employer; the agreement that they reach is copied by the other unions within a union confederation.

Mostly due to the recession in the first decade of the twenty first century, Japanese firms have restricted recruitment of regular career employees. At the same time, the employment of atypical workers (part-time, temporary, and fixed-term) and outsourcing have increased.104

Those Japanese workers who are able to obtain employment in a long-term employ- ment relationship, most in large corporations, enjoy relatively higher wages than those outside the practice who experience lower wages and unstable employment.105

The wage system in Japan has several distinguishing characteristics:

1. Salaries are paid monthly, even if the employee has been absent (with justification) from work.

2. Wage differentials are small between regular line employees and staff personnel, all of whom are members of the same union.

3. Wage distinctions exist between amounts earned for one s work (e.g., efficiency out- put) and amounts earned for just being an employee (e.g., allowances for housing, transportation, and dependents).

4. Wages are accepted as permanent and last for the employee s entire career, including a minimum annual increase and a lump sum at retirement.106

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 735

Length of service and age are more highly correlated with wages in Japan than in other industrially developed countries. For example, between the ages of 40 and 50, Japanese workers wages are 67 percent greater than those of 21- to 24-year-old employ- ees, whereas in the United States, older employees wages average only 23 percent more than those of younger workers. The smaller difference in income levels between man- agers and workers than in other countries contributes to the sense of unity among employees. Wage increases and promotions are primarily governed by the employee s age and the length of service in the company. The seniority-based wage system serves as a means of guaranteeing stability of employment throughout employees careers within the company and is closely connected to the lifetime employment concept. In addition to wages, employees are provided fringe benefits that enable them to enjoy recreation and leisure activities, such as athletic competition, employee excursions, and so on. Employees have access to facilities for hobbies, including sports, reading, and board games. Companies offer special allowances for company-owned housing, dormito- ries for single workers, and various health and welfare benefits. Workers in smaller com- panies (who make up 60 percent of the total workforce) do not receive the same benefits or job security as those who are employed in the larger companies.107

Pay of CEOs is generally linked to employees pay. Top executives in large Japanese firms earn on average 11 times the average annual earnings of employees. The average earnings of CEOs in the United States are over 200 times the average of employees.108

Enterprise unionism implies at least three practices: (1) employees of a single firm organize their own union and include all employees, except managers and temporary employees; (2) there is no segregation based on employees occupation classification or job categories; and (3) collective bargaining takes place at the firm level, which leads to a decentralized bargaining structure in Japan. Thus, in Japan, the enterprise unions have functioned both as labor unions for gaining higher wages and improving working condi- tions in negotiations with management and also as the employee representative bodies, which promote participation and cooperation with management.109 Thus, the individual employee identifies more closely with the company than does the typical employee in many Western countries.

The enterprise unions are affiliated at the national level and have national organiza- tions in the textile, electricity, shipbuilding, automobile, steel, appliance, and chemical industries, which hold conferences to discuss industrial policies. National organizations do not discuss such topics as wages, working conditions, and other employment policies. These topics are discussed within the enterprise union. At the national level, industrial problems are discussed in a more general context, and issues such as economic growth, employment forecasts, retirement ages, and improved communications are addressed.110

Previous studies have pointed to Japanese unions lack of bargaining power that has resulted from negotiations at the enterprise level; however, unions have experienced strong bargaining power against deteriorating work conditions during economic stagna- tion. Research shows that unions in Japan have contributed toward an increase in the average wage and a compression of wage distributions among workers.

Most enterprise unions within the same industry have joined industrial federations of unions, and there are more than 100 such federations. These federations belong to national centers, of which Rengo (Japan Trade Union Confederation) is the largest with 6.6 million members. The major function of the industrial federations is coordinating the activities of the member enterprise unions with the goal of improving wages and working conditions and dealing with problems common to the entire industry.111

In Japan, the HR department has a higher status in corporations than in the United States. The HR department is in charge of rotating managers around the company and

736 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

identifying people for senior positions. Managers view HR as a beneficial position because it is a place to network with other managers and is a good springboard for top corporate positions. HR is linked to corporate governance indirectly by grooming people for the board of directors, which is comprised of management insiders. On the board, the HR executive voices employee concerns to other executives and serves as the advo- cate for career employees in strategic decision-making. In the last 40 to 50 years in the United States, the powerhouse function has been finance, not HR.112

In comparison to the United States (see Chapter 5), it is relatively easy for a group of workers to establish a trade union. The Japanese Trade Union Law requires neither majority support for certification nor the recognition of exclusive bargaining rights. Instead, under the Trade Union Law, when a group of workers wishes to form a so- called statutorily qualified union and receive legal protection under the law, an appli- cation is filed with the Labor Commission. The Commission then conducts a qualifica- tion examination with rules set forth by the Labor Commission. When the group of workers is qualified as a union, the employer is required by law to engage in collective bargaining even though the union represents only a very small number of workers. In practice, prior to filing with the Labor Commission, union organizers usually visit the employers and obtain their consent. This consent is important because many workers will not want to join a union that is opposed by their employer. Unlike in the United States, it is rare that an employer will engage in activities that are regarded as active union opposition or suppression.113

In 1975, union membership was 34 percent of the workforce. In 2014, it was 18.1 percent of the workforce. There were wide variations among industries and sectors: 44 percent in civil services, 59 percent in public utilities, and 11 percent in retail and whole- sale trades (1 percent in businesses with less than 99 employees, but 47.5 percent in busi- nesses with more than 1,000 employees). The reasons for this decline in union membership are shifts toward service jobs and an increase in the number of part-time, seasonal, temporary, fixed-term, and female workers.114

The nonregular workers make up 35 percent of the workforce in Japan and more than half of these workers are part-time. The existence of such a high percentage of non- regular workers has brought a challenge to companies and labor unions. Their working conditions are poorer than the regular workers and their productivity is lower. Previ- ously, nonregular workers have been excluded from union membership, but now, labor unions have decided that they must unionize the nonregular in order to maintain their influence in the workplace.115

In the final analysis, Japanese employers and unions eventually will have to face many critical issues that may cause a break with the traditional labor relations system. Due to the economic recession in Japan during the 1990s and 2000s (referred to as the Two Lost Decades in Japan), there is evidence of a long-term transformation in the seniority-based wage system and lifetime employment of core employees. However, such structural changes in the Japanese employment system will take years to manifest themselves. Many firms are attempting to replace regular full-time employees on indefi- nite contracts with other types of workers (part-time, contract, etc.) in order to cut their fixed labor costs. Thus, the percentage of core workers who are covered by the tradi- tional Japanese employment system is gradually decreasing. The older workers no longer enjoy the same wage increases as in the past. However, due to their guaranteed jobs and the difficulty of finding comparable jobs elsewhere, they remain with the same firms. Unlike the older workers, the young, highly educated do not have the same incentive to commit to the implicit contract of the traditional Japanese employment system.116 These issues include early retirement, lifetime employment, higher unemployment, elimination

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 737

of automatic pay increases and promotions, introduction of labor-saving devices, union emphasis on job security rather than wage hikes, decline of employee loyalty to the firm, and Japan s declining competitiveness with rapidly developing countries such as Brazil, China, South Korea, Singapore, and Taiwan.117

South Korea The United States and South Korea signed the Republic of Korea United States Free Trade Agreement (KORUS FTA), which eliminated 95 percent of each nation s tariffs on goods. The treaty was renegotiated in 2010 to grant U.S. car makers greater access to Korean markets. This renegotiated treaty was supported by the United Auto- workers 118

South Korea is the world s tenth largest economy and the United States s seventh largest goods-trading partner, with two-way goods trade of over $80 billion. KORUS FTA also incorporates provisions to safeguard workers rights and provides environmen- tal protections that are consistent with internationally recognized standards.119

South Korea has a tripartite labor relations system in which the Ministry of Labor serves as the governmental agency that formulates labor relations policy and implements and enforces labor relations laws, including child labor, forced labor, employment equal- ity, wages, hours of work, and safety and health. The government continues to receive criticism of its policies concerning freedom of association and the right to organize because the government refuses to register new trade unions in the public sector and arrests and imprisons trade unionists who participate in strikes.

The other parties, trade union federations and employer organizations, represent their constituents concerning labor relations matters by giving advice and guidance and serving on government advisory commissions. The Korean Employers Federation (KEF) serves as an umbrella organization representing 13 regional employers associations, 30 trade associations, and about 4,000 enterprises. The KEF claims industrial peace and national economic development as its primary objectives and advocates its members interests to the government and legislative bodies. In addition, the KEF provides advice to its members on labor laws and industrial relations matters.

The 6,150 unions in South Korea, with a membership of 1.6 million, may be orga- nized by company, by occupation, by region, or by industry. While the majority of unions in South Korea are enterprise-based, there are 44 industrial federations and two national federations: the Federation of Korean Trade Unions (FKTU) and the South Korea Confederation of Trade Unions (KCTU). The FKTU is the largest labor organiza- tion in South Korea and represents nearly one million workers in 3,408 unions. The KCTU now represents about 600,000 workers in 16 industrial federations.

South Korea is governed by numerous labor laws. The South Korean constitution guarantees freedom of association, the right to bargain collectively, and the right to col- lective action. However, strikes are prohibited in government agencies, state-owned enterprises, and defense industry companies. A majority of union members must vote in favor of striking by direct, secret, and unsigned balloting, and the union must report the planned strike in advance and in writing to the appropriate government agencies.

Labor relations are governed by five separate laws. The most comprehensive is the Trade Union and Labor Relations Adjustment Act (TULRAA), which among other pro- visions protects workers from dismissal for organizing and joining unions and for partic- ipating in union activities. A worker may seek relief for any such unfair labor practice by filing a complaint with the Labor Relations Commission (LRC) or by bringing a civil suit against the employer. Employers who are found guilty of an unfair labor practice can be required to reinstate the worker and provide back pay.

738 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

The South Korean labor law (TULRAA) does not provide a list of subjects for collec- tive bargaining, but court precedents have classified bargaining subjects into three catego- ries: (1) mandatory, (2) permissible, and (3) illegal. Mandatory subjects include working conditions, wages, hours, holidays, leaves, safety, and health. Management cannot refuse to bargain without cause, and such refusal without cause becomes an unfair labor practice. If an impasse is reached, the union may request the LRC to mediate. If mediation is not successful, the union may strike. Permissible subjects include union activities, prior deduc- tion of union dues, and full-time union officials. Here, the union may request to bargain and management may refuse. Such refusal does not constitute an unfair labor practice. If negotiations come to a deadlock on a permissible issue, the union cannot resort to media- tion or strike. Illegal subjects include abolishment of legal retirement pay, subsidy to a union, or subjects that infringe on essential parts of management rights. Having an illegal subject in the collective bargaining agreement is prohibited.120

Individual and collective labor disputes are adjudicated and mediated or arbitrated by the LRC, which operates at the regional and national levels. As a general rule, collective bargaining in Korea takes place at the enterprise level; however, unions are attempting to transition to greater centralization of bargaining (industrial unions) despite heavy employer resistance. For example, this transition has been more successful with the Korea Health and Medical Workers than other unions because the health care industry does not receive as much pressure from global competition.121 A union may delegate negotiation responsibility to the trade union federation with which it is affiliated. Collective bargaining usually covers wages, hours of work, workers welfare, and other employment conditions. The collective bargaining agreements are valid for up to two years; however, if a new agreement is not concluded by the expiration date of a current agreement even though the parties are engaged in negotiations, the existing agreement will remain in effect for another three months. Negotiations may extend to trade union activities during working hours and issues concerning full-time union officers. Within 15 days following completion of negotiations, the collective bargaining agreement must be submitted to the appropriate government agencies. If any provision of the agreement is determined to be unlawful, the parties may be ordered to amend the unlawful provision(s).122

Employee dismissals are covered under the Labor Standards Act (LSA), which sets out basic requirements for justifiable dismissal. A justifiable reason is one that makes it impossible for an employee to maintain the employment relationship. Specific reasons include failure to follow instructions, unauthorized leave, early leaving, poor perfor- mance, physical or verbal violence, criminal offenses off the job, violation of company safety rules, and so on. The employer must give an advance notice of 30 days before dis- missal and must give the worker a notification of the reason for the dismissal in writing (e-mails and texted messages are not valid means of notification).123

In 2014, the International Trade Union Confederation assigned Korea one of its lowest ratings among 139 countries in terms of worker rights, unfair labor practices, and protection from anti-union discrimination. South Korea s labor ministry rejected the report and claimed the report wasn t objective because it only used information sub- mitted by local labor unions.124

Australia Until 1996, the Australian labor relations system was characterized by industry-wide or companywide awards, which were negotiated by company, union, and sometimes gov- ernment officials and then submitted to the federal Australia Industrial Relations Com- mission (AIRC) for ratification or resolution of differences. Such awards established minimum wages and working conditions for specific categories of workers and are the

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 739

approximate equivalent of an American collective bargaining agreement. For example, if a union claimed a wage for one class of worker, such as a metal machinist, an award for a wage increase would apply to all machinists in the same class throughout Australia. This mechanism led to rampant wage-push inflation in the 1970s as unions fought to protect the value of workers real wages. In the 1980s, the government restricted wage claims and price increases by companies.125

The Workplace Relations Act of 1996 (WRA) was passed. The WRA introduced individual contracts called Australian Workplace Agreements (AWAs) to enhance choice by placing individual and collective agreements on an equal footing. Absent

was any mechanism for union recognition or good faith bargaining. As a result, the absence of statutory protection against coercion or inducement allowed employers to pressure or compel employees into signing AWAs. Union rights, including rights to workplace entry, were curtailed. While a right to strike was legislated for the first time, the practical effect was to limit the circumstances under which unions could take indus- trial action. For the first time, employers had the right to lockout employees, including AWA lockouts that are used to induce employees to sign individual agreements.

In 2005, the WRA of 1996 was amended by the Work Choice Act of 2005. The Work Choices reform represented a fundamental revolution in the Australian industrial relations system. Although the government emphasizes that the new laws were designed to increase choices to employers and employees, the main beneficiaries of the reform were employers. Employers were able to access a wide range of industrial agreements. In addition to the AWAs, employers could choose to negotiate union or nonunion col- lective agreements or union or employer Greenfield agreements, which enable an employer to unilaterally determine the terms and conditions of employment that bind all future employees of a new work site for a period of up to 12 months. The employer may simply elect not to bargain with their employees and remain within the law, pro- vided the conditions they offered met the minimum standards established by the new Fair Pay and Conditions Standard. Further, wage rates of employees covered by awards were not increased until their wage rate fell below the minimum wage set by the new Australian Fair Pay Commission. Employees who were left on awards, over time, became dependent on the minimum set by the Australian Fair Pay and Conditions Standard unless they were able to negotiate a collective agreement or an individual contract or accept an AWA that might be offered by their employer.

The Work Choices dramatically recast the role of the AIRC by all but removing its compulsory arbitral power. Instead of the parties going to the AIRC to resolve their dis- putes, the parties were required to agree on a dispute resolution procedure of their own. The government s Workplace Relations Minister could also declare an end to a bargain- ing period on a wide range of grounds, thereby rendering any industrial action, such as a strike, illegal. Under Work Choices reform, terminated employees rights to bring an action for unfair dismissal were severely restricted. Employees of corporations with fewer than 100 employees had no right to bring action. Larger employers were protected from the risk of an unfair dismissal claim when they could establish that at least one of the grounds for dismissal was a genuine operational reason. 126

In 2007, two pieces of legislation were passed: (1) the Workplace Relations Amend- ment (Transition to Forward with Fairness) Act of 2008 and (2) the Forward with Fair- ness Act (FWFA). The first act removed the option of entering any new AWAs, which were individual contracts between employers and employees. These AWAs were used extensively by employers to de-unionize workplaces. This legislation allowed existing AWAs to carry on indefinitely and established a temporary option for employers already using AWAs.

740 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

The FWFA also created national employment standards that included maximum weekly hours of work of 38 hours, requests for flexible working arrangements, parental leave, leave for personal care, community service, long service, public holidays, notice of termination, redundancy pay, and fair work information statement. The FWFA created a new national regulator, Fair Work Australia (FWA) which assumed the functions of the former Australian Industrial Relations Commission. The FWA s role is to settle indus- trial disputes, set minimum wages, and regulate the awards system.

The FWA continued the process of modernizing the award system. Award modern- ization process included writing submissions, producing responses to draft of awards, and lobbying government. The final awards would take into consideration the special cir- cumstances of member businesses (whose costs would be increased) or the particular needs of the employees engaged in an occupation or industry (who may be disadvan- taged). The FWA would administer the good faith bargaining requirements, such as the requirement to attend and participate in meetings, disclose relevant information in a timely fashion, respond and give genuine consideration to bargaining proposals, and recognize the other bargaining party.

Protection from unfair treatment is provided to employees upon completion of 6 months of employment in businesses employing more than 15 employees and upon completion of 12 months for employees of smaller business (15 or fewer employees). In addition, there is a range of workplace rights protection against punitive or discrimina- tory treatment.127

In 2009, the Fair Work Act was passed. This act established an independent umpire, the Fair Work Commission (FWC) to oversee the new workplace relations. The FWC has the power to vary awards, make minimum wage orders, approve agreements, deter- mine unfair dismissal claims, make order on such matters as good faith bargaining and industrial action (strikes and lockouts), and help employees and employers resolve dis- putes at the workplace. The act created an inspectorate headed by the Fair Work Ombudsman, which created a court to hear matters that arise under the new WRA.128

Tony Abbott was elected Prime Minister in 2013 with heavy support from the Busi- ness community. As expected and as characterized by Australia s approach to labor rela- tions, Abbott created several formal review commissions, the Heydon Royal Commission into Trade Union Governance and Corruption, Australian Law Reform Commission, and Productivity Commission. As one scholar has written:

Australian IR continues to also be an ongoing tussle between Employers/employer associations and employees/unions to control what happens in the workplace and influence more favorably the outcome for their respective group. While pluralist theory guides us to understand that this is normal due to differing interest, one might observe that this conflict has become somewhat ritualized and is not resulting in the resolu- tion of many of the real problems needing to be addressed.129

China Before China opened to the rest of the world and engaged in reform, labor relations in China were unusual. Labor relations essentially involved relations between the employee and the government. The premier of the State Council was the only boss, and the only authoritative labor relationship was formed between the central government and the workers. This abnormal arrangement has come to an end in the last two decades. How- ever, the Chinese employment system is more complex now than it was in the late 1970s. Population is 1.4 billion, four times that of the United States. There are many types of employers: state-owned enterprises, state units, collective units, private and individually

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 741

owned enterprises, and foreign-owned enterprises. The government is not involved in hiring among the collective units and private enterprises, and the state-owned enterprises now have more autonomy in employment decisions. Although employment remains rather stable, employers treat staffing levels more flexibly than in the past. For example, employers terminated their relationship with 1.4 million workers in one year, and these workers had no right to appeal their employment decisions.130

In 1990, China produced 3 percent of the global manufacturing output; in 2015, it produces 25 percent. China now produces 89 percent of world s air conditioners; 70 per- cent of the mobile phones and 60 percent of the shoes.131 Average pay in China is $270 per month, less than a quarter of the pay in the United States. With rising wages in China, companies are looking for alternatives sites for manufacturing, such as Thailand, Indonesia, and others, and poorer provinces within China. Chinese manufacturers are also adding robots in record number. In fact, Chinese manufacturers purchased 20 per- cent of all robots produced in the world in 2013.132

By the end of 2008, unions in China had organized 86 percent of the Fortune 500 companies operating in China. The Chinese union movement had grown from 87 mil- lion to 212 million. Since independent unions are banned in China, this meant that branches of the All-China Federation of Trade Unions (ACFTU) were present not so much to protect worker rights, but to strengthen the Chinese Communist Party social control. In southern China, there are a few grassroots unions emerging in the region that may show signs of more independence in the unions.133

The AFCTU was founded in 1925, five years after the founding of the Communist Party of China (CPC). The ACFTU is the largest trade union in the world with well over 230 million members across 1.8 million union branches. The ACFTU that has been known as a top-down organization and has been criticized that the top leaders are out of touch with the membership and are behaving like bureaucrats .134 When the CPC took over, trade unions were one of the three Leninist Mass Party organizations, but they were not given any bargaining status at the national or enterprise level. In the 1950s, the trade union movement helped the CPC bring industry under state control. In the early 1960s, the AFCTU sought and achieved a short-lived institutional upgrade; however, the Cultural Revolution in 1965 brought about a purge of the AFCTU and its disbandment. In 1978, with the removal of the Maoist regime and the launching of the modernization of China with a goal of quadrupling China s GNP by 2000, coupled with ownership, enterprise management, and distribution era in wealth, trade unions were once again reconstituted to play a more appropriate role.

Trade unions in China have been dominated by welfarism and played a role in surveillance and control of the workers rather than serving as a political representative of the working class. Trade unions were viewed more as a caretaker of workers that channeled their grievance to higher authorities. In China, the CPC controlled the unions and dictated the unions programs. The CPC held absolute control of the union, and the union leaders remained answerable only to the heads of state, not the working popula- tion. In 1992, the National People s Congress passed amendments to the Trade Union Law in which unions were given consultative status, collective bargaining power. Trade unions were given the task of supporting the state s economic program.135

In 2001, a new trade union law was passed and set up a national system of tripartite consultation. By 2010, the ACFTU issued official documents that called for the establish- ment of a collective consultation system in all firm. By September of 2010, 1.4 million collective contracts covering 185 million workers in 2.4 million firms had been signed. The contracts signed often followed the model contract provided by the Communist Party state through the ACFTU, which is shown in Exhibit 14.8. The role of these

742 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

collective consultation contracts was not to negotiate the terms and conditions of employment between the employer and employees, but to monitor the enforcement of and implementation of labor regulations. Although far from the establishment of a sys- tem of collective bargaining, these collective contracts served as a means for securing a harmonious labor relations. 136

Between January 2011 and January 2015, nearly 2,900 strikes and protests have occurred nationwide in China. In 2010, workers at a Honda auto transmission plant near Guangzhou struck for 17 days. Also in 2014, tens of thousands walked off their jobs at the Taiwanese-owned Yue Yuen shoe factory complex, the maker of global brands like Nike and Reebok. In 2014, the People s Congress of Guangdong in South China passed a groundbreaking law, Regulations on Collective Contracts for Enter- prises, which set up rules to establish more democratic forms of union representation and a genuine system of collective bargaining. Under the new regulations, if at least 50 percent of the workers support a demand for collective bargaining, the employer has to respond to their proposals in 30 days. These regulations also provide for democratic elec- tion of employee bargaining committee members, require employers to give employee representatives time off their jobs to participate in negotiations and prohibit manage- ment retaliation against these representatives. Although these regulations are limited to the shop floor and to one province, they mark a major step forward.

There have been pressures to pass legislation at the national level; however, the only national labor law passed was the one to regulate employment contracts and resolve individual worker disputes. The Chinese government remains hostile to any independent

Exhibit 14.8 A Model Collective Contract Table of Contents

Chapter One General Principles

Chapter Two Payment for Labor

Chapter Three Working Hours

Chapter Four Labor Contract Management

Chapter Five Leaves and Holidays

Chapter Six Labor Safety and Health

Chapter Seven Insurance and Welfare

Chapter Eight Special Protection of Female Workers and Underage Workers

Chapter Nine Professional Skill Training

Chapter Ten Rules and Regulations, Award and Punishment

Chapter Eleven Settlement of Labor Disputes

Chapter Twelve Alteration, Cancellation, Termination, and Renewal of the Collective Contract

Chapter Thirteen Settlement of the Disputes in the Course of Contract Execution

Chapter Fourteen Supervision and Inspection of the Collective Contract

Chapter Fifteen The Collective Contract Period

Chapter Sixteen Supplementary Articles

SOURCE: http://english.acftu.org/template/10002/file.jsp?cid=77&aid=403.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 743

labor organization or to any challenges to its authority. Local enforcement of laws vary greatly around China and there is still no national law to enable real collective bargain- ing or to protect or prohibit the right to strike, leaving strikes among the few ways work- ers can express their collective grievances to management, local governments, or union officials.137

The Chinese economic system has evolved from a centrally planned economy to a guided market economy open to foreign investments. Under the centrally planned econ- omy, employees were assigned to state-owned enterprises that guaranteed lifetime employment and a wide range of benefits, including housing and education. Wage levels were set centrally, and the Communist Party served in a supervisory capacity in the fac- tory. Changes in employment relations began to align with an emerging market econ- omy; that is, enterprises attempted to become more competitive, and firms with foreign investments were allowed to operate without undue state interference. Centralized job allocation and state guarantees of lifetime employment were relaxed, and firms no longer were required to provide social welfare benefits. Employment laws required that new workers be hired on fixed-term contracts, but the terms could not exceed four years. In addition, employers were authorized to dismiss employees under certain circumstances, such as stealing. The authority of factory managers was increased, and pay linked to per- formance was introduced. New regulations allowed factory managers to lay off surplus workers through voluntary resignations but required the firms to try to find work for these employees and/or train them for new jobs. Meanwhile, the government still did not allow independent unions or any form of collective action in industrial disputes. State-controlled trade unions continued to exist at the enterprise, industry, and regional levels. A dispute settlement law that applied to a broad range of issues was passed, and arbitration tribunals have been established. Individual disputes accounted for 93 percent of the disputes, and work stoppages were likely to come in the form of spontaneous actions in the outlying provinces, which are less subject to control from Beijing and foreign-owned enterprises.

In China, the formal system of laws and regulations is supplemented by local interpre- tation and is unevenly enforced. For example, it is easier for workers in some provinces to obtain and extend work permits than others. Also, the working hours differ; in several dis- tricts of the Guangdong province, firms are able to extend working hours beyond the 60 hours per week maximum by seeking permission (which is rarely denied) from the local government labor authority. Throughout China, local officials sacrifice enforcement of labor standards to attract investment and to generate additional jobs. There has been increased labor unrest and a growing number of labor disputes, which are usually sponta- neous actions and have more frequently occurred in the outlying provinces.138

There are two contrasting narratives on the effect of investments of MNCs on Chi- na s labor practices. On the one hand, it has been argued that MNCs transfer their best labor practices to China and therefore the labor practices in China are quite similar to those at home. On the other hand, there is a growing body of research that shows that foreign MNCs are exploiting China s weak and unprotected workforce, particularly the migrant rural workers. As a result, the ACFTU has been forced to take a more proac- tive stance toward foreign MNCs. This stance has resulted from the growing number of employees of foreign MNCs, the decline in the number of state-owned enterprises, and the limited, but growing, trend of independent union organizing outside of the ACFTU. Currently, the ACFTU still has to perform a dual function: an instrument of the state and a labor organization that represents its members.

There are three fundamental developments that will shape labor relations within for- eign MNCs in China. First, the ACFTU will have to continue to engage in grassroots

744 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

organizing to counter management opposition to trade unions. The most publicized has been Wal-Mart, which refused to recognize a union until the ACFTU was able to obtain the signatures of at least 25 workers at each Wal-Mart store. By September 2006, all 62 Wal-Mart stores in China were unionized (unlike Wal-Mart stores in the United States). Second, there is a growing trend within ACFTU for direct election of trade union leaders at the workplace levels. Although the direct election is still a contested issue, there is much experimentation going on among union members who are employed by foreign MNCs. Third, within the new labor arbitration system, which includes 3,000 arbitration committees, the ACFTU representatives have become more involved at the workplace levels. The ACFTU officials are more likely to confront managers in order to protect workers rights.139

Cheap labor in China has been the foundation of the so-called China miracle. There is a floating population of about 130 million migrant workers whose average take-home pay is $197 per month, one-twentieth the average monthly wage in the United States. However, this $197 is 17 percent higher than the 2009 wage. The export- ing factories that are clustered on the China coast are growing short of workers and the workers have grown short on patience. The courts in China handled more than 280,000 labor disputes in 2008. In the Guangdong province alone, there were 36 strikes between May 25 and July 12, 2010, a space of 48 days. In the past, goon squads from the government-controlled trade unions roughed up the strikers. However, in 2010, strength- ened by the new 2008 labor law, there were no midnight knocks at the door. Some explain that the police are far less likely to intervene in a labor dispute when the workers are striking against a company owned by a foreign company than one that is state- owned. It appears that the government is allowing wages to increase in order to support additional consumer spending and to continue growth in the economy.

These increases in labor costs will have consequences in the United States. Presently, it is estimated that trade with China has added $1,000 a year in purchasing power to every American household through cheaper goods. On the other side, a 20 percent rise in Chinese consumption would potentially lead to an extra $25 billion in American exports and the creation of over 200,000 jobs in America. Now attention is turning to Vietnam where the pay is one-third that of China s and foreign direct investment has quadrupled since 2000. For example, in July 2010, Hoya, a Japanese optical glass maker, announced a $145 million factory near Hanoi, and Intel is due to open a $1 billion plant that will assemble and test silicon chips in Vietnam.140

After years of working 12-hour days, six days a week on monotonous assembly lines, China s workers began to push back in May of 2010. Remarkably, a strike at the Honda transmission factory in Foshan by nearly 2,000 workers suddenly and unexpectedly turned into a symbol of China s struggle with income inequality and soaring property prices. Even more remarkable, Chinese authorities allowed the strike to occur. One striker reported that he had read on the Internet of considerably higher wages at other factories in China and expected Honda to match them. The strikers focused on higher wages, the factory s air-conditioning not being cool enough, and the unfairness of having to rise from their dormitories as early as 5:30 A.M. for a 7 A.M. shift. Workers at the plant earned around $150 monthly and gained a 24 percent pay increase. They already received free lodging in rooms that sleep four to six in bunk beds, free lunches, and sub- sidized breakfasts.

In June 2010, a strike occurred in Southern China at a Honda auto parts plant; how- ever, the strike collapsed when Honda began hiring striker replacements. All but half a dozen strikers returned, and Honda raised wages and benefits, but not as much as the workers had demanded. Strikes also occurred or were threatened in other locations and

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 745

caused the local government of Shenzhen, a major manufacturing city, to announce a 10 percent wage increase for all workers, private and government.141

In the Western world, labor and management enter negotiations, which typically lead to collective bargaining agreements. In China, autocratic management, nepotism, and unprofessional, undisciplined management techniques have dominated the work- place. Managers have viewed their firms as their personal kingdoms, and paternalism has led workers to expect a certain level of economic and noneconomic support from their employers. Unity of labor management interests has usually been more important than personal disagreements. While there has been significant change in China since 1988, China is a long way from embracing Western-style employment relations, strong unions, and collective bargaining. China remains constrained by its cultural and political history and by a large supply of low-wage workers. Moreover, its labor relations system does not appear likely to demonstrate major changes for many years.142

One assessment from labor relations expert Arnold Zack, a past president of the National Academy of Arbitrators, is:

Worker exploitation is an ongoing problem, unpaid wages and overtime remains a rampant problem, and the workers are denied the full measure of right to form their own unions. And to engage in collective bargaining, the prevailing standards in the industrialized world. Workers in both Chinese owned factories and those owned by investors from abroad continue to protest over issues of wages, termination, insurance, and work injury

The recent Mediation and Arbitration law, while appealing in title, bears little resemblance to similar entitled laws in the western world where mediation and arbi- tration gain their vitality as procedures for adversaries to resolve their disputes. In China the absence of any legal organization of grassroots workers raises issue as to the usefulness of the terms themselves. With the ACFTC empowered by the party and government to be present in public and private enterprises, funded by a tax on the employer and often headed by a designee of the employer, worker participation is lacking. While in all western countries the workers representatives, the trade union, seeks to protect, advance and champion the interests of its members and indeed to represent the workers in mediation and arbitration, the ACFTU has no such role 143

Summary MNCs and transnational collective bargaining are becoming increasingly important topics of labor rela- tions. Although MNCs continue to grow in sales vol- ume, capital investments, and economic influence, they have also aroused trade unions in various coun- tries to combine their energies, skills, and power in an effort to negotiate on an equal footing. Thus far, little success has been achieved because of legal, political, social, economic, and organizational obstacles. How- ever, it is obvious that transnational collective bar- gaining could have a tremendous impact on the world s economy if the obstacles can be eliminated. Time will tell whether unions will be able to over- come the obstacles.

With the growing interdependency among nations, it is imperative that students who study labor relations learn more about labor relations systems throughout the world. This chapter highlights the main features of the labor relations systems of the major trading partners of the United States. Unions in Canada have expressed con- cern over the United States s economically dominant role in North America and its influence on the internal affairs of that country. Canada s system features two major lin- guistic and cultural groups and highly decentralized col- lective bargaining activities that are governed by provincial law. Mexico, the other partner with Canada and the United States in the NAFTA, has fairly well- developed labor laws but has major deficiencies in their

746 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

administration and enforcement. The effects of NAFTA on jobs and trade unions were discussed.

Cuba, the largest Caribbean island, has a labor relations system that has suffered under the Castro regime but is showing signs of change. Labor relations vary widely among the countries in Central and South America, but they have one common feature: a close connection between trade unions and political parties.

Unionization in most of Western Europe is signifi- cantly greater than in the United States, and there is wide implementation of codetermination and employee partici- pation policies. By 2007, 28 countries in Europe with a mar- ket of 507 million consumers had joined together to form the European Union, which provides for greater deregula- tion and a decrease in trade and travel barriers between member countries. The formation of the EU increases the need to learn more about the labor relations system in each of these countries and will probably bring these countries closer together. In the past, the labor movements in many Eastern European countries were dominated by the Soviet Union. The countries of the former Soviet bloc are now trying to adjust to a market economy.

Unique features of the Japanese system include labor management consultations, teamwork, a lifetime employment policy at the largest firms, a wage system primarily based on seniority, enterprise unions, and higher status accorded to HR managers. However, international money exchange rate fluctuations and recession could quickly alter these special union management relationships of the Japanese system.

Korean labor relations have developed rapidly from a strike-ridden system in 1987 to more successful collective bargaining. With high economic growth rates, Korea still has problems of discrimination against women and employment of child labor.

The Australian system has evolved from a highly centralized system in which unions had much power to a pro-employer, more decentralized system. With the 2013 election, change will continue.

The chapter ends with a description of the Chinese labor relations system, which has experienced rapid change in recent years.

Key Terms multinational corporations (MNCs),

p. 702 whipsawing, p. 705

European works councils, p. 708 North American Free Trade Agreement

(NAFTA), p. 711

wage system, p. 735 Enterprise unionism, p. 736 awards system, p. 741

Discussion Questions

1. Although the United States shares a common border with Canada, its labor relations system is affected by a number of variables that do not greatly affect the United States. Enumerate and explain these variables.

2. Explain why labor unions in many Central American countries have developed more slowly than those in the United States.

3. Western Europe seems to be uniquely involved with various forms of worker participation. Explain why these worker participation systems have developed so fully there instead of elsewhere.

4. What are five special features of the Japanese system? Why haven t these features been widely adopted in the United States?

5. Although multinational corporations seem to be growing in size and influence, what must occur before transnational collective bargaining can be effectively carried out?

6. Which features of Canada s labor relations system would you transfer to the United States? Why?

7. Assess the continuing transformation of the Aus- tralian labor relations system.

8. Give your assessment of the requirements for Cuba to develop a free, independent trade union. Is it essential for a free society?

9. Assess the strategy of Wal-Mart in China, where the company has recognized unions in all 62 stores, to its strategy in the United States, which is to combat any type of union representation.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 747

Exploring the Web

Labor Relations in Multinational Corporations and in Other Countries

1. The International Labor Organization. The Inter- national Labor Organization (ILO) has established labor standards for 150 countries represented by the organization. Locate the Web site for the ILO, and comment on how these standards are created and how they are used. What is the Declaration of Philadelphia? www.ilo.org/. Locate the section on National Labor Law Profiles, select a country, and read the section on collective bargaining for that country.

2. Foreign Labor Trends. Search the Foreign Labor Statistics home page of the Bureau of Labor Statis- tics to find the following information: www.bls.org/. Hourly compensation costs in U.S. dollars for pro- duction workers in manufacturing in 2005 for the United States, France, Canada, Mexico, and Ireland. How does the employment rate in Canada compare with the rate in the United States in July 2007? Using LABORSTA Internet, the service from the ILO Bureau of Statistics, compare statistics on

strikes and lockouts in 2006 for two countries of your choice.

3. Guidelines for Multinational Corporations. The Guidelines for Multinational Enterprises established the OECD and presented on the OECD Web site are recommendations addressed by governments to multinational enterprises. The guidelines provide vol- untary standards for responsible business conduct in a variety of areas, including employment and industrial relations. Locate OECD Guidelines: Useful for Workers Rights? on the Clean Clothes Web site. How do unions go about filing a complaint against companies that are in violation of the guidelines?

4. Multinational Labor Organizations. Search for the history and mission statements for the following organizations: International Federation of Airline Pilots Associa- tion (IFALPA) www.ifalpa.org/ International Metalworkers Federation (IMF) www .infmetal.org/ International Federation of Chemical, Energy, Mine, and General Workers (ICEM) www.icem.org/

References 1. http://www.statista.com/; http://data.worldbank

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4. Thomas Anderson, U.S. Affiliates of Foreign Companies, Survey of Current Business, August 2013, pp. 82 86.

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7. Mario F. Bognanno, Michael P. Keane, and Donghoon Yang, The Influence of Wages and Industrial Relations Environments on the Pro- duction Location Decisions of U.S. Multinational Corporations, Industrial and Labor Relations Review, 58, January 2005, pp. 171 200.

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748 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

americanrightatwork.org/press-release-341. Also see: John J. Lawler, Po-Chen Change, Woonki Hong, Shyh-Jer Chen, Pei-Chaun Wu, and Johngseok Bae, Going Abroad HR Policies, National IR Systems, and Union Activity in For- eign Subsidiaries of U.S. Multinations, Industrial & Labor Relations Review, 66, October 2013, at: http://www.lexienexis.com.spot.lib.auburn.edu/ Inacui2api/delivery/PrintDoc.don frontCar1.

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16. Robert F. Banks and Jack Stieber, Introduction, in Multinationals, Unions, and Labor Relations in Industrial Countries (Ithaca, NY: New York State School of Industrial and Labor Relations, 1977), p. 1. See: Marissa Brookes, Varieties of Power in Transnational Labor Alliances: An Analysis of Workers Structural, Institutional, and Coalitional Power in the Global Economy, Labor Studies Journal, 38(8), 2013, pp. 181 200.

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23. Robert F. Banks and Jack Stieber, Multinationals, Unions, and Labor Relations in Industrial Coun- tries (Ithaca, NY: New York State School of Industrial and Labor Relations. 1977), pp. 11 12.

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28. Stolen Jobs? Economist, December 13, 2003, pp. 13 15; Relocating the Back Office, Econo- mist, December 13, 2003, pp. 67 68; Charles Schumer and Paul Craig Roberts, Second Thoughts on Free Trade, New York Times, January 6, 2004, p. A27.

29. http://www.fas.usda/gov/info/factsheets/nafta. 30. Free Trade on Trial, Economist, January 3, 2004,

pp. 13 16; Joseph E. Stiglitz, The Broken Prom- ise of NAFTA New York Times, January 6, 2004, p. A27.

31. Francisco Zapata, NAFTA: Few Gains for Mexico s Workers, Perspectives on Work, 6, 2002, pp. 22 24.

32. Mexico: Was NAFTA Worth It? Business Week, December 22, 2003, pp. 66 72.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 749

33. Free Trade on Trial, Economist, January 3, 2004, pp. 13 16; Joseph E. Stiglitz, The Broken Prom- ise of NAFTA New York Times, January 6, 2004, p. A27.

34. Bureau of International Labor Affairs, United States Department of Labor, Submissions under the North American Agreement on Labor Coop- eration (NAALC), at: http://www.dol.gov.ilab .trade/agreements/naalc.htm.

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36. Mario F. Bognanno and Jiangfeng Lu, NAFTA s Labor Side Agreement: Withering as an Effective Labor Law Enforcement and MNC Compliance Strategy? Multinational Companies and Global Human Resource Strategies, ed. William N. Cooke (Westport, CT: Quorum Books, 2003), pp. 391 393.

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40. Todd E. Vachon and Michael Wallace, Globali- zation, Labor Market Transformation, and Union Decline in U.S. Metropolitan Areas, Labor Stud- ies Journal, 38(3), 2013, pp. 229 255.

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42. Joseph B. Rose and Gary N. Chaison, Union Density and Union Effectiveness: The North American Experience, Proceedings of the 9th World Congress of the International Industrial Relations Association (Sydney, Australia: International Industrial Relations Association, 1992), p. 528.

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45. Joseph B. Rose, Canadian Public Sector Unions at the Crossroads, Journal of Collective Negotiations in the Public Sector, 31(3), 2007, pp. 183 197.

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47. Michele Campolieti, Rafael Gomez, and Morley Gunderson, Does Non-Union Employee Repre- sentation Act as a Complement or Substitute to Union Voice? Evidence from Canada and the United States, Industrial Relations, 52(S1), Janu- ary 2013, pp. 378 396; Daphne Taras and Bruce Kaufman, Non-Union Employee Representation in North America: Diversity, Controversy and Uncertain Future, Industrial Relations Journal, 37(5), pp. 513 542.

48. Susan T. Johnson, First Contract Arbitration: Effects on Bargaining and Work Stoppages, Industrial & Labor Relations Review, 63, July 2010, pp. 585 590.

49. Chris Riddell, Quick Votes and Union Certifi- cation Drives in Canada, Proceedings of the Annual Meeting of the Labor and Employment Relations Association (Champaign, IL: Labor and Employment Relations Association, 2009), pp. 44 47; See also Michele Campolieti, Chris Rid- dell, and Sara Slinn, Labor Law Reform and the Role of Delay in Union Organizing: Empirical Evidence from Canada, Industrial and Labor

750 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Relations Review, 61(1), 2007, pp. 32 58; Chris Riddell, The Casual Effect of Election Delay on Union Win Rates: Instrumental Variable Esti- mates from Two Natural Experiments, Industrial Relations, 49(3), 2010, pp. 371 385.

50. Daphne G. Taras, Explaining Canadian American Differences in Union Density, Proceedings of the 53rd Annual Meeting of the Industrial Relations Research Association, ed. Paula B. Voos (Cham- paign, IL: IRRA, 2001), pp. 153 159.

51. Jeffrey Sack, Collective Agreement Arbitration in Canada and the U.S.: A Comparison.

52. Lucas Ronconi, Globalization, Domestic Institu- tions, and Enforcement of Labor Law: Evidence from Latin America, Industrial Relations, 51(1), January, 2012, pp. 90 93.

53. Christian Levesque, Graciela Bensusan, Gregor Murray, Marta Novick, Jorge Carrillo, and Ma. Silvana Gurrera, Labour Relations Policies in Multinational Companies: A Three-Country Study of Power Dynamics, Journal of Industrial Relations, 57(2), 2013, p. 188.

54. Ibid., p. 192. 55. Jeffrey Sack, Collective Agreement Arbitration.

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81. Paul Marginson, The Eurocompany and Euro Industrial Relations, European Journal of Indus- trial Relations, 6, 2000, pp. 9 30; Jane Wills, Great Expectations: Three Years in the Life of a

European Works Council, European Journal of Industrial Relations, 8, 2000, pp. 85 107.

82. A Work in Progress: A Survey of Europe, Economist, October 23, 2000, pp. 3 18.

83. Richard Saundry and Gemma Wibberly, Con- temporary Union Organizing in the UK Back to the Future? Labor Studies Journal, 38(4), 2014, pp. 281 299.

84. John Logan, Union Recognition and Collective Bargaining: How Does the United States Compare

with Other Democracies, Perspective on Work, 11, Spring 2009.

85. Paul Willman and Alex Bryson, Union Organi- zation in Great Britain, Journal of Labor Research, 28, Winter 2007, pp. 93 111; Gregory Fall, Trade Union Recognition in Britain: Is a Corner Being Turned? Proceedings of the 57th Annual Meeting of the Labor and Employment Relations Association, ed. Adrienne E. Easton (Champaign IL: LERA, 2006), p. 216.

86. J. R. Shackleton, Britain s Labor Market under the Blair Government, Journal of Labor Research, 28, 2007, pp. 454 476.

87. David Metcalf, Prime Minister Blair s New Labor Industrial Relations Program, Perspectives on Work, 3, 1999, pp. 12 17.

88. For an excellent review of the development of German labor relations system and the challen- gers ahead, see Lowell Turner, Institutions and Activism: Crisis and Opportunity for a German Labor Movement in Decline, Industrial and Labor Relations Review, 62(3), 2009, pp. 294 312.

89. John T. Addison and Claus Schnabel, Worker Directors: A German Product that Did Not Export?, Industrial Relations, 50(2), April 2011, pp. 354 372.

90. John S. Heywood and Uwe Jirjahn, Family Friendly Practices and Worker Representation in Germany, Industrial Relations, 48(1), 2009, pp. 121 145.

91. Martin Behrens, Still Married after All These Years: Union Organizing and the Role of Works Councils in German Industrial Relations, Indus- trial and Labor Relations Review, 62(3), 2009, pp. 275 292.

92. John T. Addison, Claus Schnabel, and Joachim Wagner, Te (Parlous) State of German Unions, Journal of Labor Research, 28, Winter 2007, pp. 3 16.

93. World Labor Report 1992 (Geneva: International Labor Office, 1992), p. 57.

94. Peter Galuszka, Toss another Match into the Russian Tinderbox: Labor, Business Week, June 6, 1994, p. 51.

95. Katharina Bluhm, Exporting or Abandoning the German Model ?: Labor Policies of German Manufacturing Firms in Central Europe, Euro- pean Journal of Industrial Relations, 7, July 2001, pp. 153 168.

752 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

96. Aurora Trif, Collective Bargaining in Eastern Europe: Case Study Evidence from Romania, European Journal of Industrial Relations, 13, July 2007, pp. 236 254.

97. Arturo Bronstein, The New Labor Law of the Russian Federation, International Labor Review, 133, 2005, pp. 291 318. See also Simon Clarke, The State of the Russian Unions, Journal of

Labor Research, 28, Spring 2007, pp. 275 299. 98. Hiromasa Suzuki, Employment Relations in

Japan: Recent Changes under Global Competition and Recession, Journal of Industrial Relations, 52, 2010, pp. 394 395.

99. Joseph Krislov, How Does the Japanese Indus- trial Relations System Differ? Labor Law Journal, 40, June 1989, pp. 338 344.

100. Motohiro Morishima, Information Sharing and Collective Bargaining in Japan: Effects of Wage Negotiations, Industrial and Labor Relations Review, 44, April 1991, pp. 469 482.

101. Motohiro Morishima, Information Sharing and Firm Performance in Japan, Industrial Relations, 30, Winter 1991, pp. 37 57.

102. Kiyoshi Kawahito, Labor Relations in the Japa- nese Automobile and Steel Industries, Journal of Labor Research, 11, Summer 1990, pp. 232 237.

103. Katsumi Yakabe, Labor Relations in Japan (Tokyo: International Society for Educational Information, 1974), pp. 1 14; Hisashi Kawada and Ryuji Komatsu, Post-war Labor Movements in Japan, in The International Labor Movement in Transition, eds. Adolph Strumthal and James G. Scoville (Urbana, IL: University of Illinois Press, 1973), pp. 122 148; Tadashi A. Hanami, The Multinational Corporation and Japanese

Industrial Relations, in International Labor and Multinational Enterprise, ed. Duane Kujawa (New York: Praeger Publishers, 1975), pp. 183 185.

104. Peter B. Doeringer, Christine Evans-Klock, and David G. Terkla, Hybrids or Hodgepodge? Workplace Practices of Japanese and Domestic Startups in the United States, Industrial and Labor Relations Review, 51, January 1998, pp. 171 177.

105. Hiromasa Suzuki, Employment Relations in Japan: Recent Changes under Global Competition and Recession , Journal of Industrial Relations, 52, 2010, pp. 390 396.

106. Satoshi Shimizutani and Izumi Yokoyama, Has Japan s Long-Term Employment Practice

Survived? Developments since the 1990s. Indus- trial and Labor Relations Review, 62(3), 2009, pp. 313 323.

107. Krislov, How Does the Japanese System Differ? Labor Law Journal, 40, June 1989, p. 340.

108. JIM: Japan Information Network, at: http://www .jinpapn.org/access/employ/index.html (January 4, 2004).

109. Hiromasa Suzuki, Employment Relations in Japan: Recent Changes under Global Competition and Recession, Journal of Industrial Relations, 52, 2010, pp. 390 401.

110. Tsuyoshi Tsuru and Motohiro Morishima, Nonunion Employee Representation in Japan,

Journal of Labor Research, 20, Winter 1999, pp. 94 96.

111. Glenn Halm and Clinton R. Shiels, Damage Control: Yen Appreciation and the Japanese Labor Market, Monthly Labor Review, 111, November 1988, pp. 3 5.

112. Hiromasa Suzuki, Employment Relations in Japan: Recent Changes under Global Competition and Recession, Journal of Industrial Relations, 52, 2010, pp. 392 395.

113. Sanford M. Jacoby, Emily M. Nason, and Kazuro Saguchi, The Role of the Senior HR Executive in Japan and the United States: Employment Rela- tions, Corporate Governance, and Values, Industrial Relations, 44, April 2005, pp. 207 241.

114. Tsuyoshi Tsuru and Motohiro Morishima, Nonunion Employee Representation in Japan,

Journal of Labor Research, 20, Winter 1999, pp. 94 96.

115. Hak-Soo Oh, The Unionization of Part-time workers in Japan, Journal of Industrial Relations, 54, 2012, pp. 510 520.

116. Junya Hamaaki, Masahiro Hori, Saeko Maeda, and Keiko Murata, Changes in the Japanese Employment System in the Two Lost Decades, Industrial & Labor Relations Review, 65, October 2012, pp. 810 820.

117. Hiromi Hara and Daiji Kawaguchi, The Union Wage Effect in Japan, Industrial Relations, 47(4), 2008, pp. 569 588; An Aging Workforce Strains Japan s Traditions, Business Week, April 20, 1981, pp. 72 85.

118. Drawn primarily from Mario F. Bognanno, Korea s Industrial Relations at the Turning Point (Seoul: Korea Development Institute, 1988), pp. 4 90; Mario F. Bognanno, John W. Budd, and

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 753

Young-Myon Lee, Institutional Turmoil and Strike Activity in Korea, Journal of Industrial Relations, 36, September 1994, pp. 360 367; Korea (Washing- ton, D.C.: U.S. Department of Labor, Bureau of International Labor Affairs, 1998), pp. 8 9; Mario F. Bognanno, Michael L. Bognanno, and Young-Myon Lee, Incomplete Information and Conversion to a No Work No Pay Strike Policy: Their Effects on Wage Settlements and Strikes in Korea, Working Paper, July 1998, p. 1.

119. http://www.koreanlaborlaw.com/. 120. http://www.koreanlaborlaw.com/. 121. Joohee Lee, Between Fragmentation and Cen-

tralization: South Korea Industrial Relations in Transition, British Journal of Industrial Rela- tions, 49(4), December 2011, 767 791; Byong- Hoon Lee and Sanghoon Yi, Organizational Transformation Towards Industry Unionism in South Korea, Journal of Industrial Relations, 54, 2012, pp. 476 491.

122. Korea, (Washington, D.C.: U.S. Government Printing Office, 2003), pp. 1 19.

123. http://www.koreanlaborlaw.com/. 124. Jeyup S. Kwaak, Labor Group Ranks South

Korea among World s Worst for Workers, Korea Realtime, June 15, 2014, pp. 1 4.

125. Australia, (Washington, D.C.: U.S. Printing Office, 2003), pp. 3 7.

126. C. Jeffrey Waddoups, Trade Union Decline and Union Wage Effects in Australia, Industrial Relations, 44, October 2005, pp. 607 624.

127. Richard Hall, The Work Choices Revolution in Australia: Recent Legislative Reforms and Their Consequences, Work on Perspectives, 11, Sum- mer 2007, pp. 35 38.

128. The Fair Work Act An Overview, Australia Government, 2015.

129. Patricia Todd, Introduction: Australian Indus- trial Relations in 2014, Journal of Industrial Relations, 57(3), 2015, pp. 325 332; Patricia Todd, Introduction: Australian Industrial Relations in 2013, Journal of Industrial Relations, 56(3), 2015, pp. 324 330.

130. Jihi Xia, Reforming China s Systems of Employ- ment and Labor Relations, Perspectives on Work,7, Winter 2004, pp. 28 30.

131. Made in China? The Economist, March 14, 2015, p. 16.

132. A Tightening Grip The Economist, March 14, 2015, p. 69.

133. Mingwei Liu, Union Organizing in China: A Monolithic Labor Movement? Industrial & Labor Relations Review, 64, 2010, pp. 30 40.

134. Ying Zhu, Malcolm Warner, and Tongquinp Feng, Employment Relations with Chinese Characteristics : The Role of Trade Unions in China, International Labour Review, 150, 2011.

135. Stephen Frenkel and Sarosh Kuruvilla, Logic of Action, Globalization, and Changing Employ- ment Relations in China, India, Malaysia, and the Philippines, Industrial and Labor Relations Review, 55, April 2002, pp. 398 401.

136. Xianghong (Shirley) Wang Huihua Nie, The Impact of Collective Wage Agreements in China: A Firm-Level Study, Proceedings of the 64th Annual Meeting of LERA (Urbana, IL, LERA), 2012, pp. 92 101.

137. Chris Rhomberg, A Turning Point for Chinese Workers? http://inthesetimes.com/article/17759/ a-turning-point-for-chinese-workers, 4-2-15.

138. Trini Wing-Yue Leung, Trade Unions and Labor Relations under Market Socialism in China, Industrial Relations between Command and Market: A Comparative Analysis of Eastern Eur- ope and China, eds. Gerd Chienstock, Paul Thompson, and Franz Traxler (New York: Nova Science, 1997), pp. 2347 280.

139. Stephen Frenkel and Sarosh Kuruvilla, Logics of Action, Globalization, and Changing Employ- ment Relations in China, India, Malaysia, and Philippines, Industrial and Labor Relations Review(in press), pp. 26 30.

140. Christain Levesque and Hao Hu, Multinationals and Employment Relations in China, Perspec- tives on Work, 11, Summer 2007, pp. 13 15.

141. The Rising Power of the Chinese Worker, Economist, July 31, 2010, p. 9; The Next China, Economist, July 31, 2010, pp. 48 49.

142. Trevor Bain and Chyi-Herng Chang, Revisiting China and Taiwan, Perspectives on Work, 7, Winter 2004, pp. 34 35.

143. Arnold M. Zack, A Potential Roadmap toward Workplace Fairness in China, paper presented to Council of Foreign Relations, November 11, 2008.

754 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

.g

CLASSROOM EXERCISE

14.1 Mobile Factory

You are the owner of a small North Carolina factory that makes T-shirts for interna- tional distribution. You have observed that your sales have declined by about 10 percent for each of the last three years. You believe that the reason is that you are being under- priced by your international competitors even though your market is in the United States, and your competitors are required to pay transportation costs from their factories in other countries to the United States.

You have been reading several articles about exchange rates and the weakening of the dollar in comparison with many foreign currencies and believe you have come up with a unique solution to your problem. You have surveyed your 50 employees and found that most of them are single and love to travel. Therefore, you have decided to purchase a ship and transfer your machinery and office equipment to the ship. Since you pay employees and sell your goods based on where you dock your ship, you have considerable flexibility in the country in which you conduct business. When the exchange rates change, you will simply move to another location where the exchange rates are more favorable. As an example, in 2011, the 100 U.S. dollars were trading for about 70 euros; in 2016, 100 U.S. dollars would trade for 92.0 euros. That means that U.S. manufacturers were much more competitive internationally in 2011 than in 2002, when the U.S. dollar was stronger internationally.

You have to decide where in the world you would like to dock your ship in order to take advantage of the exchange rates and wage rates of the country where you dock.

Questions

1. Evaluate the exchange rates and wages shown in Exhibit 14.1, and decide where you should dock your ship for local production.

2. Review the index of wage rates of 1980, 1990, 2005, and 2012 and determine whether the strategy and decision in 2011 would be the same as in the previous years.

755

APPENDIX A

Collective Bargaining Negotiations Exercise

Learning Objectives

1. To gain an understanding of negotiation preparations, actual negotiations, and assessment of negotia- tions outcomes.

2. To develop an appreciation for problems that arise from interpersonal and teamwork interactions in contract negotiations.

3. To familiarize participants with the mechanics of bargaining negotiations and compromise on issues in collective bargaining and with the difficulty of writing provisions to the satisfaction of both parties.

4. To gain an appreciation for the practical application of bargaining theories to negotiations.

General Rules of the Negotiations Exercise

1. Team members are not to discuss the confidential details of the exercise with anyone except their assigned team members.

2. Each team member will be assigned a negotiating team role by either the instructor or the team s chief negotiator. Team members must follow the instructions of their respective team leaders. Alternatively, if permitted by the instructor, teams may elect their own chief negotiator and assign their members to spe- cific negotiating team roles.

3. The negotiations must take place within the framework of the present company and union relation- ship. Creativity in offering proposals and the use of various bargaining tactics is encouraged, but a realistic and pragmatic approach is recommended.

4. Data, materials, and information (financial and otherwise) used for establishing initial demand positions for bargaining items and to support arguments on behalf of follow-on proposals must be based only on information contained in the overall scenario and within the portion of the bargaining scenario furn- ished separately by the instructor to each team. The details of the scenario, economic and industry pro- jections, and estimates of company activities contained therein, while realistic in the portrayal of the relationship between a particular employer and its union, are to be taken at face value. The simulation scenario is intended as a scripted encounter between the union and management teams.

5. Each team may have as many meetings outside class as are needed and desirable.

Instructions to the Participants

1. Each participant will be assigned to either the management team or the union team. Once team roles are assigned, the teams will meet to establish ground rules for subsequent bargaining meetings. The teams will jointly complete the Ground Rules form. Chief negotiators for both teams will sign the form and provide a copy of the form to the instructor.

2. Violation of the ground rules will serve as the basis for the filing of an unfair labor practice (ULP) charge. Teams are to use the ULP form to file a charge. The instructor will serve as the administrative judge in determining the merits of filed charges and has the discretion to reduce grade credit for the simulation exercise if a filed charge is found to have merit.

3. The chief negotiators will call meetings for their respective teams to begin preparation of their respective initial demand proposals and to anticipate the other team s bargaining positions and proposals. Each

756

team is to determine its overall bargaining strategy and specific goals. Major issues for negotiations may include: a. Union security, dues check-off, union shop b. Wages, job classes, wage premiums c. Management s rights d. Hours of work e. Promotions and layoff (the use of seniority) f. Workforce reduction g. Grievance and arbitration procedures h. Pension plans i. Supplemental unemployment benefits j. Vacations, holidays, personal and sick leaves, and other time-not-worked issues k. Other issues as assigned and/or allowed by the instructor

4. Each team must complete the Initial Bargaining Demands form and provide a copy of the form to the instructor before the demands are presented to the opposing team.

5. At the first joint team bargaining meeting, the teams will exchange written copies of their demands. Each team must be prepared to respond to the opposing team s requests for clarification of the terms and conditions of its specific demands. The union will present its proposals and explain the need for each proposal. Then management will present its proposals and/or counterproposals and justify each proposal.

6. After the initial demand proposals are exchanged, teams will meet to negotiate the new agreement at times specified by the instructor or as mutually agreed to by the teams. The instructor will specify time and date limits for the duration of negotiations.

7. Each team will maintain written records of its progress on bargaining items during the term of the nego- tiations. In preparatory and caucus meetings, each team is expected to consider the terms of the expired agreement, to review opposing team proposals, and to prepare counterproposals in a timely manner. If requested, the written records are to be submitted to the instructor at the completion of negotiations for assessment if requested.

8. At the completion of negotiations, the teams will jointly prepare a presentation of the projected annual costs of the new agreement. If assigned by the instructor, the teams will also submit a signed written col- lective bargaining agreement to the instructor.

9. Additional instructions and coaching may be provided to the participants by the instructor.

Other Sources of Materials for Bargaining Preparations

Government publications: U.S. Department of Labor, Bureau of Labor Statistics, Area Wage Surveys, Employment and Earnings, Handbook of Labor Statistics, Monthly Labor Review, Characteristics of Major Collective Bargaining Agreements. U.S. Department of Commerce, U.S. Industrial Outlook (published every year). Binder services of Bureau of National Affairs, Inc. (BNA) and Commerce Clearing House. Especially helpful is the BNA Collective Bargaining Negotiations and Contracts. Business publications: Business Week and The Wall Street Journal. Professional labor relations journals: Dispute Resolution Journal, Employee Relations Law Journal, Indus- trial and Labor Relations Review, Industrial Relations, Berkeley Journal of Employment and Labor Law, Journal of Collective Negotiations in the Public Sector, Labor Law Journal, and Monthly Labor Review. Proceedings: Industrial Relations Research Association, Labor Law Developments, National Academy of Arbitrators, and NYU Conference on Labor. Labor agreements between other companies and labor unions (as available).

APPENDIX A Collective Bargaining Negotiations Exercise 757

Collective Bargaining Negotiation Scenario: Harper Container Company and the United Chemical and Plastics Workers Union

Scenario Background

Although small in size relative to its competitors, Harper Container Company (HCC) is recognized as a tech- nology leader in the specialty plastics container market. HCC s only manufacturing plant is located in a medium-sized city that has experienced long-term declines in both its heavy industrial base and its population as many area firms moved production operations to lower-cost locations both nationally and overseas. HCC survived the downturn only to face increased competition as foreign firms began to expand its product mar- ket segment. Local economic conditions have improved recently with the relocation of two large service- industry firms to the city that significantly reduced the area s unemployment and forced local firms to com- pete for available workers. HCC is regarded as a progressive employer concerned with the welfare of its employees. Many employees have spent their entire working lives at HCC and expect to continue there until retirement.

United Chemical and Plastics Workers (UCPW) Local 14 represents all of the 200 labor employees at HCC. There are 15 unorganized office staff employees. The amicable relationship between HCC and the UCPW has now become strained due to union pressure for wage and benefit increases as economic condi- tions have changed since the last contract was signed three years ago.

The previous collective bargaining agreement expired two months ago; the parties have agreed to continue operating under the old contract on a day-by-day basis. The company and the union are both concerned that a new contract be agreed to as quickly as possible.

General Industry and Economic Information Available to Both Bargaining Parties

For the specialty plastics industry, average industry-wide wages have increased 4% each year for the past three years while HCC wages increased by only 2% (across-the-board) each year for the same period under the now-expired contract. Future industry-wide wage increases are forecast to average 5% per year for the next three years. Increases in the Consumer Price Index for the next three years are forecast to range from 2.5 to 4% (the expected three-year average is 3.0%).

Per-hour shift differentials are 15 cents for the evening shift and 25 cents for the night shift. There are 50 non-monetary grievances pending for settlement. Turnover of labor employees at HCC averages 5% per year.

Beginning the Bargaining Simulation

Your instructor will provide additional bargaining item information and activity forms to both the manage- ment and the union bargaining teams to facilitate the development of their initial bargaining demands. The information provided separately to the teams is confidential and should not be shared with anyone who is not a member of that team.

758 APPENDIX A Collective Bargaining Negotiations Exercise

Author Index

A Abbott, Lewis F., 338 Abbott, Tony, 741 Abboud, Joseph, 389 Aboud, Antone, 499 Adams, S., 338 Aiken, Linda H., 283 Albright, Robert R., 653 Allen, A. Dale, Jr., 551 Allen, Robert E., 622 Anderson, Jervis, 61 Appelbaum, Eileen, 343 Arnold, Edwin, 240 Auch, Mary Jane, 67 Autor, David, 605 Avendaño, Ana, 26

B B.F. Goodrich, 709 Baer, Walter E., 558 Baird, Marian, 419 Banks, Don, 455 Barone, Michael, 28 Basile, K.C., 419 Batterman, Bob, 452 Beaver, Michael S., 142 Beck, Dave, 98 Bell, Jarrett, 455 Bellace, Janice, 112 Berman, Richard M., 566 Bernstein, Aaron, 142 Berthelsen, Richard, 452 Black, M.C., 419 Blake, Fay M., 68 Boardman, Mark, 405 Boetticher, Helen, 162 Boler, Harvey R., 622 Bonney, Joseph, 308 Boulware, Lemuel, 298 Bowers, Mollie H., 622 Bowman, John S., 343 Boyle, Kevin, 61 Brady, Tom, 454, 566 Brand, Norman, 622 Brees, Drew, 454 Breiding, M.J., 419 Brock, Jonathan, 659 Bronfenbrenner, Kate, 208 Brown, Maury, 455 Brown, Scott, 233 Bulajewski, Mike, 405 Bullard, Arthur, 67 Burton, John F., Jr., 659 Bush, George W., 179, 474, 626, 685 Bynum, Cornelius L., 61

C Campbell, James P., 390 Cantwell, Robert, 67 Cappelli, Peter, 343 Card, David, 343 Carlson, Joe, 283 Carnegie, Andrew, 50 Carter, Jimmy, 473 Castro, Fidel, 724, 725 Castro, Raul, 724 Chamberlain, Neil W., 287 Chandler, Timothy D., 659 Chen, J., 419 Christie, Chris, 659 Cimiotti, Jeannie P., 283 Clain, Suzanne, 338 Clarke, Sean P., 283 Clinton, Bill, 662, 685 Cohen, George H., 453 Cohn, Alain, 343 Coleman, Louis, 67 Coleman, Lynn A., 67 Conroy, Jack, 67 Corker, Bob, 216

D Dannin, Ellen, 659 Dau-Schmidt, Kenneth G., 605 Daugherty, Carroll R., 608, 609 Davis, Nate, 455 de Vries, Heather F., 419 Debs, Eugene, 60 63 DePillis, Lydia, 216 Devinatz, Victor, 338 Dilts, David A., 659 Dolin, Kenneth, 112 Donald, Carrie G., 622 Doty, David, 454 Dubinsky, David, 72 Dunlop, John, 7 Dunsford, Jack, 609

E Eaton, Adrienne E., 514 Eidelson, Josh, 405 Eisenhower, Dwight D., 78 Elkouri, Edna, 549 Elkouri, Frank, 549

F Farrell, Mary Cronk, 67 Farwell, Donald F., 609 Fast, Howard, 67

Fehr, Ernst, 343 Fernandez, Jose, 338 Feuille, Peter, 514, 659 Fine, Cory R., 240 Fine, Janice R., 26 Fishman, Charles, 343 Flagler, John J., 555 Flynn, Linda, 283 Forsyth, Anthony, 715 Franckiewicz, Matthew M., 548 Freedman, Audrey, 76, 151 Freeman, Richard B., 207, 338, 653 Frick, Henry Clay, 59

G Garland, Hamlin, 67 Gates, Alice B., 26 Gaylord, Amy Moor, 678 Gebre, Tefere, 169 Gibney, Ray, 149, 653 Gilfillan, Lauren, 67 Glasmeier, Amy K., 338 Goggin, Edward P., 549 Gomes, Glenn M., 628 Gompers, Samuel, 49, 50, 55, 56 59 Goodell, Roger, 452 Gould, Jay, 54 Green, William, 71, 77 Gresham, George, 419 Grey, Zane, 67 Gross, Alexandra M., 628 Gross, James, 112 Grossman, Robert J., 26, 28 Gruenberg, Gladys W., 555

H Haddix, Margaret P., 67 Haley, Timothy A., 605 Hall, P., 338 Hamper, Ben, 606 Han, Eunice S., 653 Hapke, Laura, 68 Haslam, Bill, 216 Hathaway, Jeanne, 419 Haywood, William Big Bill, 63 65 Hebdon, Robert, 659 Heise, Miriam, 625 Henry, Mary Kay, 29 Herrmann, Benedikt, 343 Hester, Kim, 240 Hiatt, Jon, 713 Hiatt, Jonathan, 26 Hillman, Sidney, 72 Hoffa, James P., 74, 78, 176 Hoffa, Jimmy, 98

759

Hoffer-Gittell, Jody, 343 Hogler, Raymond L., 142 Holley, William H., Jr., 561, 577 Holman, Thomas, 338 Horrow, Rick, 455 Hunt, Joseph, 391 Hurd, Richard W., 149, 659

J Jacobs, Jeffrey, 613 Jacobs, K., 338 Jennings, Daniel F., 551 Jones, Jerry, 452 Juravich, Tom, 208

K Kaufman, Bruce E., 338, 457 Keene, Jeffrey H., 514 Kemske, Floyd, 67 Kennedy, John F., 51 Kennedy, Ted, 233 Kessler, Jeffrey, 452 King, Martin Luther, Jr., 51, 61 Klass, Brian S., 579 Kochan, Thomas, 343 Koven, Adolph M., 609 Kraft, Robert, 452 Kuhn, James W., 287

L LaRocco, John B., 556 Lawler, Edward E., III, 330 Lawson, Andrew, 67 Leahy, Sean, 455 Leana, Carrie, 343 Lewin, David, 457 Lewis, John L., 50, 71 72, 73, 77, 161 Limani, Nadjia, 605 Lincoln, Abraham, 471 Lipsky, David B., 543, 659 Luce, S., 338 Lucero, Margaret A., 622 Lunenburg, Fred C., 654 Lurie, Mark I., 508 Lynott, Jerry, 283

M MacNeil, Michael, 343 Madoff, Bernie, 175 Maher, Kris, 28 Mahony, Douglas, 579 Malin, Martin H., 656 Manning, Peyton, 454 Mara, Wellington, 452 Martin, James E., 343 Martin, Lawrence L., 659 Masters, Marick F., 149, 653 May, Kenneth, 609 Mayer, Gerald, 232 McCabe, Donald, 413 McCardell, Roy L., 67

McClellan, John, 98 McDermott, E. Patrick, 622 McDonough, Paul S., 220 McFerran, Ludo, 419 McKenney, Ruth, 67 McKersie, Robert B., 285, 292 McMenamin, Peter, 283 Meany, George, 50 51, 78 Meisburg, Ronald, 305 306 Mello, Jeffrey A., 240 Menendez, Cammie Chaumont, 419 Merrick, M.T., 419 Merwin, Samuel, 67 Mihelich, Max, 26 Mihoces, Gary, 455 Mitchell, Olivia S., 457 Mongelluzzo, Bill, 308 Morgan, James F., 628 Muhl, Charles J., 605 Murray, Phillip, 77 Murray, S., 419

N Naduris-Weissman, Eli, 26 Najita, Joyce M., 678 Nelson, Susan Richard, 454 Neumark, D., 338 Newall, Ian, 275 Newell, Arthur, 67 Nixon, Richard, 665

O Obama, Barack, 112, 179, 180, 662, 685, 724 Orkin, Neal, 625 Owens, James M., 628

P Pash, Jeff, 452 Pepper, John V., 338 Perez, Norah A., 67 Perkins, Frances, 50 Petersen, Donald J., 622 Peterson, Melanie M., 343 Pfeffer, Jeffrey, 414 Phelps, Elizabeth Stuart, 67 Picher, Michel, 543 Pinkerton, Allan, 67 Pinnock, Sharon, 659 Pistole, John S., 664 Platt, Harry, 610 Posthuma, Richard A., 546 Powderly, Terence, 52 56, 58 59 Powell, A., 419 Pullman, George, 60 63

R Radelet, Franczek, 678 Ralston, John, 622 Randolph, Phillip, 61 Reagan, Ronald, 665 Reddick, W. Sue, 622 Reich, M., 338

Reuther, Walter, 50 51, 78 Richardson, Jerry, 452 Rogers, Joel, 207 Rojot, Jaques, 715 Roosevelt, Franklin D., 94, 471 Rothman, Emily F., 419

S Sanford, Kathleen D., 283 Schelzig, Erik, 216 Schneider, Frédéric, 343 Schocket, Eric, 68 Schwartz, Stanley J., 622 Schwarz, Joshua L., 605 Scott, Clyde, 240 Scott, Leroy, 67 Seago, Jean Ann, 283 Seeber, Ronald, 543 Shanker, Albert, 23 24 Sherer, Peter D., 343, 457 Shimabukuro, Jon O., 656 Shuler, Elizabeth, 169 Sinclair, Upton, 67 Slater, Joseph E., 656 Sloane, Douglas M., 283 Smith, DeMaurice, 455 Smith, Herbert L., 283 Smith, S.G., 419 Smith, Susan L., 609 Solomon, Mark, 308 Soltis, Michael J., 628 Spetz, Joanne, 283 Springer, Dan, 338 Steinbeck, John, 67 Stephens, Uriah S., 52 Stern, Andrew, 28 Stevens, Carl, 440 Stevens, M., 419 Stidsen, Andrea, 419 Summers, Clyde W., 231 Swatek, Karia, 455 Swift, Maris Stella, 546

T Tagliabue, Paul, 452 Taylor, Frederick, 601 Thatcher, Margaret, 730 Thomason, Terry, 659 Tobin, Dan, 161 Tomer, John, 414 Trotter, Jim, 455 Truman, Harry S., 471 Trumka, Richard, 169

U Upshaw, Gene, 452 Uyen Vu, 28

V Vlasic, Bill, 343 Volz, Marlin M., 549

760 Author Index

W Wagner, K.C., 419 Walcott, Quentin, 419 Walker, Scott, 655 657 Walsh, David J., 605 Walsh, William J., 622 Walters, M.I., 419 Walton, Richard E., 285, 292 Watkins, Thomas L., 568 Watson, Bo, 216

Webb, Beatrice, 168 Webb, Sidney, 168 Weber, K., 67 Weiss, Andrew, 343 Wheeler, Hoyt N., 579, 715 Williams, Ryan, 26 Wilson, Woodrow, 471 Wolters, Roger, 577 Woodyard, Chris, 402 Wright, Harold B., 67 Wright, Ingrid, 419

Y Yates, Diane, 419 Yelowitz, Aaron, 338

Z Zack, Arnold, 746 Zagenczyk, Tom, 149

Author Index 761

Subject Index

A Abbott, Tony, 741 Abboud, Joseph, 389 ABI/INFORM Global, 21 ABI/ INFORM Trade & Industry, 21 Ability to pay, 344 345 Absorptions, 166 ABU. See Appropriate bargaining unit (ABU) Abusive behavior, 621 Accommodation or labor-management

cooperation, 143 145 Acquired immune deficiency syndrome (AIDS), 8 Action Needed to Improve Case-Processing Time at

Headquarters, 113 ADA. See Americans with Disabilities Act (ADA) ADEA. See Age Discrimination in Employment

Act (ADEA) Ad hoc arbitrator, 542 Administration

grievance, 675 of unions, 163

Administrative determinations, seniority in, 410 412

Administrative Law Judge (ALJ), 108 Affiliation, 138 Affirmative action, 110 AFL-CIO. See American Federation of

Labor-Congress of Industrial Organizations (AFL-CIO)

AFL-CIO Manual for Shop Stewards, 518 Age Discrimination in Employment Act (ADEA),

51, 120, 358 Agency shop, 179 181 Agency shop clause, 97 Aggression, toward supervisors, 621 Agile Manifesto, 405

Agreement, lock-in, 270 AIM (Associate ILGWU Members), 168 Airline Deregulation Act, 117 Airline industries, arbitration in, 552 Air Line Pilots Association, 148 Alcatel-Lucent, 16 Alcohol-related discipline, 621 Alexander v. Gardner-Denver Company, 560, 562,

572 Alienation theory, 198 199 All-China Federation of Trade Unions (ACFTU),

742, 744 745 Allegheny Ludlum Corporation, 103 Allentown Mack Sales & Service v. NLRB, 101 Alliance for Employee Growth and Development,

Inc., 16 Alliance of Technology Workers, 405 Alternative dispute resolution (ADR),

512 513 early neutral evaluation, 516, 517 employment arbitration, 516 nonunion mediation, 516 ombudsperson, 516

open-door policies, 516 peer review systems, 516

Amalgamated Transit Union, 443 Amalgamations, 166 American Arbitration Association (AAA), 442,

541 American Axle & Manufacturing (AAM), 390 American Banker, 21 American Bar Association, 442 American Federation of Government Employees

(AFGE), 652, 665 American Federation of Labor (AFL), 44, 169

merger with CIO, 77 78 organization of, 58 59 origin and goals of, 56 58 strategies and tactics of, 58

American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), 145, 154, 168 175, 713, 722

associate membership program, 171 Building and Construction Trades Department,

171 Committee on Political Education (COPE),

165, 173 employee training, 414 415 established in, 169 Ethical Practices Committee, 176 Gulf Coast Revitalization Program, 24 Internal Dispute Plan, 171 job for union members, 17 Labor Education and Training Center, 414 415 local central bodies, 171 local department councils, 171 mission statement, 146 organizational structure, 169 174 organization chart of, 170 safety and health law, 417 services, 169 Union Label and Service Trades Department, 171 Union Summer program, 173 use of information technology by, 174 175 Working America program, 173

American Federation of State, County, and Municipal Employees (AFSCME), 160, 165, 559, 651, 652, 666

American Federation of Teachers (AFT), 148, 160, 400, 651, 652, 666

American labor law, 45 American Legislative Exchange Council (ALEC),

659 American Management Association, 392, 413 American Nurses Association, 167 American Physicians and Dentists, 167 American Plan, 68 American Postal Workers Union (APWU), 174,

652 American Railway Union (ARU), 50, 62 American Rights at Work Education Fund, 703 Americans with Disabilities Act (ADA), 15, 29,

51, 119, 412, 420, 562

American Telephone & Telegraph (AT&T), 16, 24, 336

Anatomy of a Lie, 235 And Women Must Weep, 235 Anti-union behavior

unintended consequences of, 212 Anti-union sentiment, 70 71 Apollo Alliance, 402 Appropriate bargaining unit (ABU), 271 274

multiple employer and, 272 274 single employer and, 271 272

Arbitral deficiencies court s observation of, 576 577

Arbitral dilemma, 573 578 court s observation of arbitral deficiencies,

576 577 critique of mandatory employment arbitration,

574 576 repeat players, 577 578 supporters of mandatory employment arbitra-

tion, 578 Arbitrate, decision to, 544 545 Arbitration

appraising effectiveness, 567 569 binding, 13 current issues affecting, 560 579 double final-offer, 448 449 employment, 571 578 and the Equal Employment Opportunity

Commission, 560 564 examining prior, 278 in federal sector, 662 of interest disputes, 678 680 and judicial proceedings, 549 552 vs. judicial proceedings, 550 552 legal jurisdiction, 560 Misco decision, 565 567 and the National Labor Relations Board,

564 565 night baseball, 449

procedural problems, 569 571 public policy implications for the future,

578 579 in the railway and airline industries, 552 tri-offer, 448

Arbitration hearing, 545 549 Arbitration-mediation (arb-med), 447 448 Arbitration procedures, expedited, 571 Arbitration proceeding

arbitration hearing, 545 549 decision to arbitrate, 544 545 elements of a typical, 540 549 prehearing activities, 545 selection and characteristics of arbitrators,

541 544 Arbitrators, 402

burden of proof, 554 capabilities and ethics, 567 569 cross-examination, 554 decision-making guidelines used by, 553 558

762

decision of, 552 560 defined, 13 selection and characteristics of, 541 544 witness credibility, 554

Arbitrator s decision, 552 560 decision-making guidelines used by arbitrators,

553 558 past practice, 558 559 previous labor arbitration decisions, 559 560

Arizona Supreme Court, 49 Armour and Company, 76 ARU. See American Railway Union (ARU) Associate membership program, 171 Association for Conflict Resolution, 442 Association for Working Women, 168 AT&T. See American Telephone & Telegraph

(AT&T) Attitudinal structuring, 292 Auciello Iron Works, Inc. v. NLRB, 101 Australia

collective bargaining in, 739 741 unions in, 739 741

Australia Industrial Relations Commission (AIRC), 739

Australian Fair Pay Commission, 740 Australian Industrial Relations Commission, 741 Australian Law Reform Commission, 741 Australian Workplace Agreements (AWAs), 740 Automation, 388 Automation Fund Agreement, 76 Automotive News, 21 Auto Workers (UAW), 145 Avaya, 16 Awards system, 741

B Back Pay Act, 663 Bad faith bargaining, 299 300 Bakery, Confectionery, and Tobacco Workers,

138, 148 Bankruptcy Act, 119 Bankruptcy proceedings, collective bargaining

under, 303 304 Bankruptcy Reform Act, 304 Bargaining. See also specific types

bad faith, 299 300 centralized, 272 collective, ethical and legal considerations,

293 309 concession, 76 coordinated, 270 council, 273 decentralized, 15 distributive, 285 effects, 297, 389 goals for registered nurses, 282 283 good faith, 295 interest, 286 interest-based, 285 286 intraorganizational, 292 293 and mediators, 441 mid-term, 296 mutual gain, 285 over managerial rights, 300 303 pattern, 268 269

strategies and tactics, 286 287 surface, 299 win-win, 285

Bargaining actions, specific, 297 298 Bargaining caucus, 287 Bargaining impasse, good faith, 297 Bargain in good faith

legal duty to, 295 remedies to violations of duty to, 304 306

Bargaining power equations, factors affecting, 290 Bargaining power model, 287 290

complexities associated with, 291 292 Bargaining range, 279 281

defined, 279 multi-issue example, 280 281 one-issue example, 279 280

Bargaining strategy, whip-saw, 269 270 Bargaining subjects

illegal, 295 mandatory, 295 296 types, 295 297 voluntary, 297

Bargaining unit, 270 274 Bavarian Motor Works (BMW), 17, 707 Behavior

collective bargaining, 285 293 voting, 306 308

BellSouth, 174 Benefit rights, 407 Best Buy, 20 Beverly Enterprises-Minnesota, Inc. d/b/a Golden

Crest Healthcare Center and United Steelworkers of America, 101

Beyond a reasonable doubt, 611 B.F. Goodrich, 73, 709 Bilateral process, 15 Bildisco decision, 304 Bituminous Coal Commission, 66 Blacklisted, 68 69 BNA. See Bureau of National Affairs (BNA) The Board. See National Labor Relations Board

(NLRB) Board of Regents v. Roth, 670 Boeing Company, 396 397, 400 Bosch, 707 Boston Medical Center Corp., 103 Boulware, Lemuel, 298 Boulwarism, 143, 298 299 Boycotts, 15, 466 471 British Journal of Industrial Relations, 21 British Medical Association (doctors), 730 Brotherhood of Electrical Workers v. NLRB, 102 Brotherhood of Sleeping Car Porters, 61 Brown, Scott, 233 Brown University, 103 Budget, private-sector bargaining and, 669 Budget Repair Act, 656 Build momentum, 292 Bumping rights, 408 Burden of proof, 554 Bureau of Alcohol, Tobacco, Firearms, and

Explosives, 685 Bureau of National Affairs (BNA), 21, 278 Bush, George W., 179, 626, 685 Business agent, 156 Business ally, 467

Business Periodicals Index, 21 Business Week, 21 Byrnes Act of 1936, 73

C California Nurses Association/National Nurses

Organizing Committee, 282 Call-in pay, 356 Campbell, James P., 390 Canada

Charter of Rights and Freedoms, 718 collective bargaining in, 715 719 unions in, 715 719

Canadian Auto Workers, 716, 722 Canadian Constitution

Charter of Rights and Freedoms, 718 Canadian Paperworkers, 716 Canadian Retail, Wholesale Union, 716 Capitalist economic system, 13 Card Check Procedure, 212 Carnegie Steel Works, 59 60 Carrefour, 706 Cash balance plan, 361 Castro, Fidel, 724, 725 Castro, Raul, 724 Caterpillar, 23 Cease-and-desist order, 110, 305 Cell manufacturing, 416 Central and Eastern Europe

collective bargaining in, 733 734 unions in, 733 734

Central Arbitration Committee (CAC), 731 Central de Trabajadores de Cuba (CTC). See

Workers Central Union of Cuba (CTC)

Centralized bargaining, 272 Cents-per-hour cost, 283 Champion International, 415 Change to Win labor federation, 52, 78 Charging Party, 108 Charter of Fundamental Social Rights (Social

Charter), 728 Charter of Rights and Freedoms, 718 Chevron, 702 Chevron U.S.A. Inc. v. Echazabal, 420 Chicago Tribune, 56, 60 Child-care assistance, 363 Chilling effect, 444, 679 China

average pay in, 742 collective bargaining in, 741 746 National People s Congress, 742 Regulations on Collective Contracts for

Enterprises, 743 State Council, 741 unions in, 741 746

China miracle, 745 Chinese Communist Party, 742 Christian Coalition, 165 Christie, Chris, 659 Chrysler, LLC, 164, 269 Chrysler Corporation, 294, 414 CIO. See Congress of Industrial Organizations

(CIO)

Subject Index 763

Circuit City Stores v. Adams, 572 Civil conspiracy doctrine, 47 Civil Rights Act, 12, 51, 61, 560 Civil Rights Act of 1964, 120 Civil Rights Act of 1991, 120 Civil Service Reform Act (CSRA), 51, 651, 657

Title VII of, 654 Clayton Antitrust Act, 48 49, 93 Clear and convincing evidence, 611 Clear and unambiguous language, 554 557 Cleveland Board of Education v. Loudermill, 671 Cliff vesting schedule, 361

Clinton, Bill, 662, 685 Closed shop, 97, 178 Closed shop union security clause, 96 Club Med, 707 Code of conduct, 442 Code of Professional Responsibility for

Arbitrators of Labor Management Disputes, 442, 544

Codified businesslike strategy, 143 Codified relationships, 518 COLA. See Cost-of-living adjustment (COLA) Collective bargaining. See also Bargaining

Australia, 739 741 under bankruptcy proceedings, 303 304 bargaining unit, 270 274 behavior, 285 293 Central and Eastern Europe, 733 734 centralized, 272 China, 741 746 Cuba, 724 725 defined, 267 268 employee groups, 268 ethical and legal considerations, 293 309 European Union, 727 730 Former Soviet Bloc countries, 733 734 Germany, 731 733 Great Britain, 730 731 issues after World War II, 75 77 Japan, 734 738 and job security, 396 Korea, 738 739 labor relations system, 14 leapfrogging, 270 mandatory, 271 Mexico, 719 724 nonmandatory, 271 pattern bargaining, 268 269 South America, 719 724 structures, 268 270 Western Europe, 725 727 whipsaw bargaining strategy, 269 270 work scheduling, 404 406

Collective bargaining structures, and decision- making processes, 671 685

Columbia University, 10 Commerce Clearing House (CCH), 21, 278 Commercial Motor Vehicles Act, 455 Commission of unfair labor practices, 300 Committee for Industrial Organization, 50 Common law, 45 46 Common law of the shop, 549 Common situs picketing, 468 470 Commonwealth v. Hunt, 46, 47, 50 Communications Workers of America (CWA),

16, 145, 146 147, 155, 160, 163, 167, 405

employee training, 414 Communications Workers v. Beck, 178 Communist Party of China (CPC), 742, 744 Communist society, 63 Company organization, for labor relations

activities, 149 151 Company strategic planning, 136 137 Company unions (ghost unions), 69, 720

Compensation work rules, 8 Competition in the product market, 328 Competitive job rights, 407 Comprehensive Crime Control Act, 177 Compressed workweek, 406 Computer programming, 405 Concerted activity, 107 108 Concerted and protected activity, 107 Concession bargaining, 76 Conciliation and Arbitration (JCA) boards, 722 Confederation of Mexican Workers (CTM),

720 Confederation of Shipbuilding and Engineering

Unions, 730 Conference boards, 167 Congressional Office of Technology Assessment

(OTA), 418 Congress of Industrial Organizations (CIO), 44,

50, 71, 169 leadership, 72 merger with AFL, 77 78 rise of, 71 72

Consent election, 219 Consumer price index (CPI), 349 Contingency union shop, 181 Contract

negotiations, 5 6, 452 455 provisions, 333 336 psychological, 394 395 ratification process, 306, 307 308 reasons for rejection of tentative, 308 309 sweetheart, 70 yellow-dog, 47, 50

Contract bar doctrine, 225 Contract language

employment terms and conditions, 393 wage rates, 333 336 wording, 277 278

Contractual violation, protesting, 503 Contract zone, 279 Convention, 160 161 Conventional interest arbitration (CA), 443 444

criticisms of, 444 446 Coordinated bargaining, 270 Cordwainers Trial of 1806, 342 Corning Inc., 336, 413 Cost, cents-per-hour, 283 Costing contract proposals, 283 285 Cost of living, 348 349 Cost-of-living adjustment (COLA), 349 350 Council bargaining, 273 Craft unions, 155 Criminal conspiracy doctrine, 46, 47 Criminal syndicalism laws, 65 Croft Metals, Inc. and International Brotherhood

of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, 101

Cross-examination, 554

Cuba collective bargaining in, 724 725 unions in, 724 725

Cultural Revolution, 742 CWA. See Communications Workers of America

(CWA)

D Daily Labor Report, 22 Daimler AG (Mercedes), 17 Daimler Chrysler, 706 Dallas Times Herald, 398 Dana Corporation, 104 Danbury Hatters case, 48 Daugherty, Carroll, 608 Davenport et al. v. Washington Education

Association, 668 Decentralized authority, 59 Decision-making processes, collective bargaining

structures and, 671 685 Deferred wage increase, 349, 350 351 Defined benefit pension plan, 358 Defined contribution pension plan, 358, 360 Degree of labor intensiveness, 273, 328 Degree of proof in disciplinary cases, 610 612 Delegate system, 160 Delta Airlines, 401 Democracy, leadership and, 161 162 Democratic Federation of Unions of Public

Servants, 720 Dennis O Conner v. Magno Ortega, 613 Department of Defense (DoD), 664 Department of Homeland Security (DHS),

663 664 Homeland Security Labor Relations Board, 664

Department of Transportation, 621 Deregulation legislation, 117 Deskilling, 392 Detroit Free Press, 21 Deutsche Telekom, 703 Differential features of work, job evaluation and

wage spread, 338 351 Dilatory tactics, 299 Directed elections, 219 Directive or results-oriented mediation, 513 Discharge decisions, and public policy, 620 622 Disciplinary penalty and mitigating

circumstances, 617 620 Discipline

changing significance of industrial, 601 608 effect of work rules on, 613 615 elements of the just cause principle in

employee, 608 628 for just cause and it s legitimate purpose,

608 610 present-day significance of employee, 605 608 progressive, 616 617 of public-sector employees, 676 677

Discouraged workers, 15 16 Distributive bargaining, 285, 288 Distributive justice, 412, 516 Domestic violence, 419 Dominican Republic Central America Free Trade

Agreement (DR CAFTA), 724 Dotted-line relationships, 151 Double-breasting, 140

764 Subject Index

Double final-offer arbitration (DFOA), 448 449 Douglas Factors, 677 Dow-Jones, 168 Downsizing, 397 399 Drug-testing, 621 Dual loyalty, 12 Due process, 623 628

double jeopardy, 623 elements of, 623 624 procedural aspects of, 623 record-keeping, 624 requirements of, 623 and the Weingarten decision, 624 625 written notice, 623

Dues, fees, and distribution of funds, 165 166

Dues checkoff, 182 Dues check off system, 165 Dun & Bradstreet, 399 Dunlop, John, 7 DuPont Company, 168, 297

E Early neutral evaluation, 516, 517 Early retirement options, 361 Eastman Chemicals, 139 Ebola virus, 8 EBSCO, 21 Economic and legal information, 278 279 Economic capital punishment, 608 Economic goals, short term, 80 Economic strike, 451 Economy

state of, 14 15 structural changes in, 27 28

Editor & Publisher, 21 Education

and KOL, 54 tuition aid, 363

Educational Labor Relation Action, 656 Education International, 703 EEOC v. Waffle House, Inc., 572 Effects bargaining, 297, 389 Efficiency, effects of unions on, 347 348 Eight-hour workday movement, 55 56 Election investigation and hearing, 219 220 Elective deferrals, 361 Electrolux, 707 Electromation, 141 Electronic communications, 612 613 Electronic-monitoring workplace, 393 E-mail, 236 237 Emergency situation, 404 Emotional intelligence, 440 Empathetic relationships, 520 Employee assistance plan (EAP), 363 Employee associations, 168 Employee benefit

family and child-care benefits, 362 health benefits, 352 353 health care cost containment, 353 354 income maintenance, 354 355 insurance, 352 353 other benefits, 363 pay for time not worked, 357 pension, 358 361

premium pay, 355 356 types of compensation, 352

Employee discipline degree of proof in disciplinary cases,

610 612 disciplinary penalty and mitigating circum-

stances, 617 620 discipline for just cause and discipline s legiti-

mate purpose, 608 610 due process, 623 629 effect of work rules on, 613 615 elements of the just cause principle in, 608 628 employment-at-will doctrine, 603 605 enforcement of the remedy, 620 historical overview of policies, 601 603 last chance agreements, 617 nature of the evidence and witness credibility,

610 612 possible collision between discharge decisions

and public policy, 620 622 present-day significance of, 605 608 progressive discipline, 616 617 and social media, 612 613 wrongful discharge, 603 605

Employee empowerment, 144 Employee Free Choice Act, 230 233, 306 Employee grievances

to draw attention to a problem in the plant, 503 504

flexible consideration in processing, 520 522 to get something for nothing, 504 505 to make the grievant and union feel important,

504 preparation for processing, 506 508 to protest a contractual violation, 503 reasons for, 502 505 significance of, 505 506

Employee groups, 268 Employee involvement (EI), 333, 416 Employee misconduct, 610 Employee participation programs, 141 Employee picketing rights, 466 Employee Relations, 21 Employee representation plan, 69 Employee Retirement and Income Security Act

(ERISA), 15, 29, 51, 118, 361 Employees

activities of the union in organizing, 205 209 attitudes, 74 coverage under LMRA, 104 107 defined, 101 102 backgrounds and needs, 200 201 discipline of public-sector, 676 677 employment-at-will doctrine and wrongful

discharge consideration for nonunion, 603 605

organizing professional, 203 205 polling or questioning, 234 rights and obligations, 669 671 solicitation by, on company property, 235 value added by, 328 voting for and against unions, 201 203 wrongful discharge of, 603 605

Employee stock option plan (ESOP), 17, 359 Employee training, 412 415 Employee voice, 506 Employer costs per hour, 352

Employer disciplinary policies, 601 603 Employer resistance, 709 Employers

coverage under LMRA, 104 107 criticisms of the Wagner Act, 96 duties of, 230 new, 303 opposition to unionization, 97 opposition to unions by, 68 70 secondary, 466 successor, 303 and technological change, 388 389

Employment falsification, 621 Employment Appeal Tribunal, 731 Employment arbitration, 516, 571 578

supporters of mandatory, 578 Employment-at-will (EAW) doctrine, 45 46,

603 605 Employment discrimination laws, 120 Employment Relations Act (ERA), 730 End-run bargaining, 673 Engineering Employers Federation, 730 English common law, 45 Enron, 175 Enterprise unionism, 736 Epilepsy Foundation of Northeast Ohio v. NLRB,

103 Equal Employment Opportunity Act, 29 Equal Employment Opportunity Commission

(EEOC), 601, 662 labor arbitration and, 560 564

Equal Pay Act, 51, 120 ERISA. See Employee Retirement and Income

Security Act (ERISA) Ernst & Young, 415 Espionage Act of 1917, 65 Ethics of arbitrators, 567 569 European Company Statute, 708 European Economic Area (EEA), 729 European Harmonized Index of Consumer Prices

(HICP), 349 European Trade Union Confederation (ETUC),

707 708 European Trade Union Institute, 729 European Union (EU), 349, 707, 710, 727

Charter of Fundamental Social Rights (Social Charter), 728

collective bargaining in, 727 730 European Company Statute, 708 European Works Council (EWC) Directive, 728 goal of, 728 unions in, 727 730

European Works Council, 729 European Works Council (EWC) Directive, 728 European works councils, 708 Evaluative mediation, 441, 513 Evidence in arbitration vs. in judicial proceedings,

550 552 Excelsior rule, 225 Exclusive bargaining representative, 230 Executive Order 10988, 51 Executive Order 11246, 120 Executive Order 11375, 120 Executive Order 13201, 179 Executive Order 13496, 179 Executive Order 13522, 662 Expedited arbitration procedures, 571

Subject Index 765

Experience, 440 Experimental work, 404 Exxon, 168 ExxonMobil, 702

F Facebook, 236, 612 Face-saving, 440 Fact-finding, 442, 677

and arbitration of interest disputes, 678 680 effectiveness of, 680 681

Fair Labor Association, 22 Fair Labor Standards Act (FLSA), 50, 51, 70, 121,

337, 356, 406 Fair Pay and Conditions Standard, Australia, 740 Fair representation obligation, 522 Fair Work Act, 741 Fair Work Australia (FWA), 741 Fair Work Commission (FWC), 741 Fair Work Ombudsman, 741 Falsification of employment, 621 Family and child-care benefits, 362 Family and Medical Leave Act (FMLA), 15, 52,

121, 362 Featherbedding, 395 Federal Aviation Administration (FAA), 621, 660 Federal Bureau of Investigation, 65 Federal Election Campaign Act of 1971, 173 Federal Express, 141 Federal Labor Relations Authority (FLRA), 657,

663, 664, 685 Federal Mediation and Conciliation Service

(FMCS), 12, 92, 439, 541, 659, 663 Federal Railroad Administration, 621 Federal Reserve Board, 14 15 Federal sector

appropriate bargaining units and union recog- nition in, 660

grievance procedures and arbitration in, 662 Labor Management Forums in, 662 663 negotiable subjects in, 660 661 unfair labor practices in, 661 662

Federal-sector labor relations legislation, 657 665 Federal Service Impasse Panel (FSIP), 657 659, 661 Federation of Korean Trade Unions (FKTA), 738 FedEx, 222, 224 Fibreboard Corp. v. NLRB, 401 Fifth Amendment to the Constitution, 45, 49 Films, showing during election campaigns,

235 236 Final-offer arbitration (FOA), 679 Final-offer issue-by-issue (FOIBI), 445 446 Final-offer total package (FOTP), 445 446 Financial core union member, 178 Financial market, 17 Firestone, 73, 709 First Amendment to the Constitution, 45, 668,

670 Flextime, 406 FLSA. See Fair Labor Standards Act (FLSA) Forbes, 21 Ford Motor Company, 16, 164, 269, 334, 336, 402,

414, 702, 707 Former Soviet Bloc countries

collective bargaining in, 733 734 unions in, 733 734

Fortune, 21 Forum shopping, 111 Forward with Fairness Act (FWFA), 740 741 401(k) plan, 358 359 14 Penn Plaza LLC v. Pyett, 103, 562 Fourteenth Amendment to the Constitution, 45,

49 Fraternal Order of Police (FOP), 652 Free enterprise (capitalist) economic system, 13 Free trade

globalization and concerns about, 710 714 North American Agreement on Labor Cooper-

ation (NAALC), 712 714 North American Free Trade Agreement

(NAFTA) and, 711 712 Full union membership, 178

G Gain sharing plan, 334 Gale, 21 GE Appliance and Lighting, 390 Gebre, Tefere, 169 General Agreement on Tariffs and Trade (GATT),

710 General Counsel, 100 General Electric (GE), 71, 143, 298 299, 353, 390,

415, 702 General Electric doctrine, 469 470 General Motors (GM), 73, 76, 164, 182, 269, 336,

414, 702, 705 Lansing Grand River Assembly plant, 144

General Motors Europe (GME), 707, 729 General Motors Skills Centers, 16 General strike, 458 General unions, 155 George Meany Center for Labor Studies, 164, 173,

414 German Federation of Trade Unions, 732 Germany

collective bargaining in, 731 733 unions in, 731 733

Giant Food LLC, 462 Gilmer v. Interstate Johnson Lane Corp., 572 Globalization

and concerns about free trade, 710 714 General Agreement on Tariffs and Trade

(GATT) and, 710 North American Agreement on Labor

Cooperation (NAALC), 712 714 North American Free Trade Agreement

(NAFTA) and, 711 712 Global Positioning Satellite (GPS) signals, 10 Global positioning systems (GPSs), 392 Global Union Federation, 703. See also

International Trade Secretariats Golden Crest Healthcare Center, 221 Good faith bargaining, 295 Good faith bargaining impasse, 297 Goodyear, 73, 709 Government, 12 Graded vesting schedule, 361

Great Britain Central Arbitration Committee (CAC), 731 collective bargaining in, 730 731 Employment Appeal Tribunal, 731 unions in, 730 731

Great Depression, 94 Great Northern Railroad, 62 Greenfield agreements, 740

Grievance administration, 675 Grievance arbitration, 514 Grievance mediation, 512 513, 514 Grievance mediators, 513 515 Grievance procedure, 654

administrative complexities of, 515 alternative dispute resolution (ADR), 512 513 codified relationships, 518 different approaches by grievance mediators,

513 515 first step of, 509 511 fourth step of, 512 513 other forms of ADR, 516 517 second step of, 511 steps in, 508 518 third step of, 511 512

Grievance processing preparation for, 506 508 steps in, 508 518

Grievance resolution, 517 518 Grievances

definition, 499 incorrect and correct grievance forms, 500 reasons for, 502 505 significance, 499 502 sources, 499 502

Gulf Coast Revitalization Program, 24

H H1N1 flu, 8 Hamper, Ben, 606 Handbilling rights, 471 Harley-Davidson Motor Company, 144, 271, 336,

415 Harris Poll, 23 Harvard Business Review, 21 Haymarket Riot, 49, 55 56 Health care cost containment, 353 354 Health Care Hustle Web site, 24 Health maintenance organization (HMO), 354 HealthSouth, 175 Henry, Mary Kay, 29 Heritage Foundation, 165 Hershey Company, 353, 355 Heydon Royal Commission into Trade Union

Governance and Corruption, 741

Hiatt, Jon, 713 High deductible health care plans (HDHCP),

354 High-performance work organization (HPWO),

390 partnership principles, 391

High-performance work systems (HPWS), 414 Hoffa, James P., 176 Hoffman Plastic Compounds, Inc. v. NLRB, 101 Holiday pay, 357 Holly Farms Corp. v. NLRB, 102 Home computer, 363 Homeland Security Act (HSA), 663 665 Homeland Security Labor Relations Board, 664 Homestead Incident, 59 60 Homestead strike, 49, 50

766 Subject Index

Honda, 743, 745 Hot cargo agreement, 468 Hotel and Restaurant Employees Union, 410 Hotel Employees and Restaurant Employees

(HERE), 155, 166 167 Hughes, Richard, 307 The Human Equation (Pfeffer), 414 Human Rights Watch, 137 Hurricane Katrina, 24 Hurricane Rita, 24 H.W. Wilson Company, 21

I Iacocca, Lee, 294 IAM. See International Association of Machinists

and Aerospace Workers (IAM) IBEW. See International Brotherhood of Electrical

Workers (IBEW) IBM, 139, 405 IBM Corporation, 103 ICEM Rubber Division, 709 Idiosyncratic deals, 13 IG Metal, 733 IKEA, 707 ILA. See International Longshoremen s

Association (ILA) Illegal bargaining subject, 295 Illegal strike, 451 ILO. See International Labor Organization (ILO) ILO Declaration on Fundamental Principles and

Rights at Work, 707 ILWU. See International Longshore Worker s

Union (ILWU) Immigration and Naturalization Service (Justice

Department), 664 Impasse-resolution procedures involving third-

party neutral, 439 447 Imposing unreasonable conditions, 299 Improshare plan, 335 Inability to pay, 298 Incarceration, 621 Income maintenance, 354 355 Independent unions, 167 168 Individualized treatment, 610 Industrial discipline, changing significance of,

601 608 Industrial Economy, 52 53 Industrial equal protection, 609 610 Industrial & Labor Relations Review (ILR Review),

21 Industrial Relations Systems (Dunlop), 7 Industrial Revolution, 137 Industrial spies, 68 Industrial unionism, 71 72 Industrial unions, 155

local craft and, 155 157 Industrial wage differentials, 327 329 Industrial Workers of the World (IWW), 44, 49,

50, 63 65 Industry-wide bargaining. See Centralized

bargaining Information

economic, 278 279 legal, 278 279

Informational justice, 412 Informational picketing, 466, 470

Information technology, 174 175 Instagram, 612 Institutional Revolutionary Party (PRI), 720 Instructional situations, 404 Insubordination, 621 622 Insurance, health, 352 353 Intel Corporation, 24 Intent of the parties, 557 558 Interactional justice, 516 Interboro doctrine, 107 Interest arbitration, 442 446, 677

conventional, 443 446 procedures, 447 449 traditional, 446 447

Interest bargaining, 286 Interest-based bargaining, 285 286 Interest disputes, 6, 268

fact-finding and arbitration of, 678 680 Intermediate organizational units, 167 International Association of Firefighters (IAFF),

652 International Association of Machinists and

Aerospace Workers (IAM), 160, 271, 390, 396, 651

International Brotherhood of Electrical Workers (IBEW), 16, 160, 169, 390, 404

International Brotherhood of Teamsters (IBT), 74, 78, 160, 167

International Federation of Chemical, Energy, Mining, and General Workers Unions (ICEM), 709

International forces, 19 20 International Framework Agreements (IFA), 706 International Labor Organization (ILO), 20, 706,

707, 725 International Labor Organization (ILO)

Conventions, 721 International Ladies Garment Workers Union,

168 International Longshoremen s Association (ILA),

306, 346 International Longshore Worker s Union

(ILWU), 396 International Metal Workers Federation, 703 International Monetary Fund, 20 International trade, 20 International Trade Secretariats, 703. See also

Global Union Federation International Trade Union Confederation, 739 International Transport Workers Federation, 703 International union, 159 161 International union representative, 157 Internet, 236 237 Interpersonal justice, 412 Interstate Commerce Commission, 117 Intraorganizational bargaining, 292 293 ISS, 706 Issue-by-issue FOA, 679

J Jacobs, Jeffrey, 613 Japan

collective bargaining in, 734 738 enterprise unionism, 736 Labor Commission, 737 lifetime employment, 735

seniority-based wage system in, 736 Shunto, 735 Two Lost Decades, 737 unions in, 734 738 wage system in, 735

Japanese Trade Union Law, 737 Job analysis, 330 Job characteristics, 156 Job description, 330 Job evaluation

within an organization, 329 330 defined, 329 occupational wage differentials, 329 338 unions on, 331 wage spread, 338 351

Job factors, 329 Job posting, 409 410 Job protection, 388 393 Job security, 393 412

and the changing psychological contract, 394 395

goals, 80 need for, 199 work rules, 395 397

Job sharing, 410 Job specification, 330 Jobs within the organization, evaluating,

329 330 Job Training Partnership Act (JTPA), 119 Johnson Controls, Inc., 420 Johnson Controls decision, 420 Joint councils, 167 Journal of Collective Negotiations, 21 Journal of Labor Economics, 21 Journal of Labor Research, 21 JTPA. See Job Training Partnership Act

(JTPA) Judicial proceedings, arbitration and,

549 552 Jurisdictional disputes, 403 Jurisdictional strike, 456 Jurisdiction and work assignments,

403 404 Just cause, 602

Just-in-time (JIT) inventory control, 416

K Kaiser Steel, 76 Kennedy, Ted, 233 Knights of Labor (KOL), 44, 49

failure and demise, 54 55 goals and organization of the, 52 53 strategies to accomplish goals, 53 54

Korea collective bargaining in, 738 739 Labor Relations Commission (LRC),

738 Labor Standards Act (LSA), 739 unions in, 738 739

Korea Confederation of Trade Unions (KCTU), 738

Korea Health and Medical Workers, 739 Korean Employers Federation (KEF),

738 Korean War, 75

Subject Index 767

L Labor agreement, 155

administration, 6 negotiating, 6 negotiation, 266 267 wage adjustments, 349 350

Labor and Employment Law Resource Center online, 22

Labor arbitration appraising effectiveness, 567 569 courts and, 565 567 development of, 538 540 and the Equal Employment Opportunity

Commission, 560 564 Misco decision, 565 567 and the National Labor Relations Board,

564 567 procedural problems, 569 571 public policy and, 565 567

Labor arbitration decisions, 559 560 Labor costs as percentage of total costs,

328 Laborer International Union of North America, 160 Labor History, 21 Labor injunction, 47 Labor intensiveness, degree of, 328 Labor Law Journal, 21 Labor law reforms, 305 306 Labor laws, framework of, 15 Labor Leadership Institute, 414 Labor legislation, in public sector, 652 654 Labor management forums, in the federal

government, 662 663 Labor Management Relations Act (LMRA), 29,

92, 182, 307, 327, 439, 625, 653, 654, 658 659, 671

assessment of, 112 114 changes under, 96 98 employee coverage under, 104 107 employer coverage under, 104 107 employer opposition to unionization, 97 fact finding, 442 featherbedding, 395 good faith bargaining, 304 jurisdictional disputes, 403 labor relations characteristics, 15 managers and unionization, 98 plant closures, 397 right to file a lawsuit, 97 98 vs. RLA, 115 116 strikes, 449, 473 unfair labor practices, 467 unfair labor practices by unions, 96 97 Worker Centers, 25

Labor-management relationships, early legal developments, 45 46

Labor Management Reporting and Disclosure Act (LMRDA), 15, 25, 51, 92, 98

Labor market, 16 LaborNet, 174 Labor productivity, 345 Labor Racketeering Amendments, 177 Labor relations

additional laws affecting, 118 basic assumptions, 13 24 characteristics, 15

company organization for, 149 151 focal point, 6 10 online databases, 21 22 research, 21 22 in the U.S. Postal Service, 665 666

Labor Relations Commission (LRC), 738 Labor relations law(s)

origin of, 91 92 other related, 121

Labor relations legislation, federal-sector, 657 665 Labor relations process

arbitrator, 13 contract negotiations, 5 6 defined, 5 elements, 6 13 government, 12 management consultants, 11 managers, 10 11 mediators, 12 participants in, 10 13 phases in, 5 6 public opinion, 22 24 third-party neutrals, 12 union representatives, 11

Labor Standards Act (LSA), 739 LaborTech.net, 174 LabourStart, 174 Ladies Garment Workers; the Retail and

Wholesale Clerks, 559 Laidlaw-Fleetwood doctrine, 464 Landrum Griffin Act. See Labor Management

Reporting and Disclosure Act (LMRDA)

Language, clear and unambiguous, 554 557 Last chance agreements, 617 Layoffs, 408 Leadership

and democracy, 161 162 roles, 156 157

Lead ULP case, 110 Lean manufacturing system, 389

Leapfrogging, 270 Lee Lumber and Building Material Corp., 103 Legal environment, 29 Legal jurisdiction, 560 Legal strike, 451 Leninist Mass Party organizations, 742 Levitz Furniture Company of the Pacific, Inc., 101 Lewis, John L., 71 72, 161 LexisNexis, 21 Life Insurance Agents, 167 Lifetime employment, 735 Lilly Ledbetter Fair Pay Act of (FPA), 29, 52, 120 Linking issues, 287 Little Steel Formula, 74 Living Wage ordinances, 337 338

LMRA. See Labor Management Relations Act (LMRA)

Local 400, 462 Local craft and industrial unions, 155 157

differing job characteristics, 156 differing leadership roles, 156 157 differing scope of the labor agreement, 155 differing skills, 155 156

Local union, 154 functions of the meeting, 159 government and operation of, 157 159

organizational chart for, 154 participation in meetings, 158 services to and control of, 164 165

Lockheed Martin Corporation, 353 Lock-in agreement, 270 Lockout, 15. See also Strike

defined, 450 and National Basketball Association (NBA),

450 and National Football League owners (NFL),

452 455 replacement workers during, 450 451

Loewe & Co., 48 Loewe v. Lawlor, 48 Long-form management s rights clause, 301 Long-Range Sharing Plan, 76 Longshore Workers Coalition (LWC), 307 Los Angeles Times, 21 Lucent Technologies, 415 Lump-sum pay adjustments, 351

M Mackay Radio & Telegraph decision, 463 Madoff, Bernie, 175 Magna Charta, 49 Majority rule, 15 Make-whole remedy, 305 Malicious obedience, 667. See also Work-to-rule Management

agreement and disagreement costs, factors affecting, 291

considerations and negotiation teams, 276 practices, changes in, 29 rights and responsibilities, 6 unions, goals and strategies, 135 149 wage determination, 336 338

Management consultants, 11 Management rights, 300 303 Management rights clause, 654

long-form, 301 short-form, 301

Managerial and professional organizations, 168 Managers, 10 11

tensions among, 607 Mandatory bargaining subjects, 295 Mandatory employment arbitration, 578

critique of, 574 576 supporters of, 578

Maquiladoras plants, 712 Market economy, public sector and, 668 669 Massachusetts Board of Conciliation and

Arbitration, 542 Massachusetts Nurses Association, 282 Massachusetts Supreme Court, 50 Massmart, 703 Master labor agreement, 164 Matching concessions, 287 Matching contributions, 361 Maxwell House, 336 McDonalds, USA, LLC, 221 McKesson, 702 Mechanization and Modernization Agreement, 76 Mediation, 439 442, 512, 677, 678

directive or results-oriented, 513 evaluative, 513 nonunion, 516

768 Subject Index

personal characteristics, 439 440 transformation, 515 transformation or collaborative, 513

Mediation-arbitration (med-arb), 446 447 Mediators, 12

activities that promote agreement, 440 442 personal characteristics of, 439 440

Meetings functions of, 159 participation in, 158

Meisburg, Ronald, 305 306 Merged product doctrine, 471 Mergers of national unions, 166 167 Merit, 108 Merit System Protection Board (MSPB), 659, 662,

663, 677 Mesa, Salvador Valdes, 724 725 Methods of Trade Unionism (Webb and Webb),

168 Me-Too clause, 344 Mexican Supreme Court, 721 Mexico

collective bargaining in, 719 724 National Committee for Workers

Profit-Sharing in Enterprises, 722 unions in, 719 724

Microsoft, 405 Mid-term bargaining, 296 Mine Safety and Health Act, 455 Mitigating circumstances (factors), 618 Modern Healthcare, 21 Mohawk Valley Formula, 69 Montana Family Union, 168 Moore Dry Dock doctrine, 468 469 Motor Carrier Act, 117 Multi-employer bargaining units, 272 274 Multilateral bargaining, 673 Multinational corporations

with complex tiers of management, 705 706 conclusions and predictions on transnational

bargaining, 710 cultural differences, 709 differences in labor relations laws, 709 differing national priorities, 709 effects of unions on, 709 710 internal source of products, 705 obstacles for unions in bargaining with, 708 709 shifting profits to different facilities, 706 strikes and, 705 and transnational collective bargaining, 702 706

Municipal budgets, 669 Mutual gain bargaining, 285, 289 MV Transportation, 102 MySpace, 236

N Narcotic effect, 444 445 National Academy of Arbitrators (NAA), 442,

543, 605, 678 National Air Traffic Controllers Association

(NATCA), 652 National Association of Letter Carriers (NALC),

652 National Basketball Association (NBA), 450 National Bureau of Economic Research, 15 National Civic Federation (NCF), 58

National Committee for Workers Profit-Sharing in Enterprises, 722

National Compensation Survey (NCS), 332 National Council of Federal Labor Management

Relations, 662 National Defense Authorization Act, 664 National Education Association (NEA), 160, 166,

167, 651, 652, 666 National Emergency Dispute resolution

procedures, 471 475 National emergency strikes, 471 National Federation of Federal Employees (NFFE,

IAM), 652 National Football League owners (NFL), 452 455 National Football League Players Association

(NFLPA), 440 National Football League Team Owners, 440 National Industrial Recovery Act (NRA), 70, 94 95 National Labor Board (NLB), 94 National labor organizations, 49 National Labor Relations Act (NLRA), 50, 72,

73 74, 179, 187, 236, 624, 653, 718 employer criticisms of, 96 Section 7 rights, 95 Section 8(a)(2) of, 141, 142 Supreme Court challenge, 96 unfair labor practices by employers, 95 96

National Labor Relations Board (NLRB), 92, 140, 179, 602, 658, 660, 705

administration, 112 114 assessment of the LMRA, 112 114 background, 99 concerted activity, 107 108 directive, 216 217 good faith bargaining duty, 304 jurisdiction, 104 107 jurisdictional disputes, 403 404 jurisdictional standards, 105 labor arbitration and, 564 567 lock-in agreement, 270 management consultants, 11 multi-employer bargaining, 273 Olin Corporation and, 565 plant closures, 397 protected employee activity, 107 108 responsibilities of, 100 secret ballot election, 218 229 totality of conduct doctrine, 298 unfair labor practice procedure, 108 110 unfair labor practice remedies, 110 112 United Technologies decision, 565

National Labor Relations Board Union, 167 National Mediation Board (NMB), 92, 225, 442,

472, 552 National Nurses United (NNU), 282 National People s Congress, 742 National Railroad Adjustment Board (NRAB), 92,

115, 552 National Right to Work Committee, 165, 185 National Right to Work Legal Defense

Foundation, 185 National Rural Letter Carriers Association

(NRLCA), 652 National Science Board, 415 National Security Personnel System (NSPS), 664 National Treasury Employees Union (NTEU),

406, 652

National Treasury Union, 665 National Unfair Dismissal Statute, 605 National Union of Education Workers, 720 National unions, 159 161

mergers of, 166 167 National War Labor Board (NWLB), 539 NBA. See National Basketball Association (NBA) NCF. See National Civic Federation (NCF) NCS. See National Compensation Survey (NCS) Near total boycott, 470 Nebraska Commission of Industrial Relations, 656 Negotiating team, selection of, 274 276

management considerations, 276 number of negotiators, 276 personality characteristics, 274 276 union considerations, 276

Negotiation labor agreement, 266 267 preparation activities, 274 285

Negotiators management, bargaining range of, 279 number of, 276 personality factors of, 274 276

Neutrality agreement, 212 Newall, Ian, 275 New Democratic Party (NDP), 719 New employer, 303 New Process Steel, L.P. v. NLRB, 99 Newspaper Guild, 163 New union strategies, 237 238 New York City Taxi Workers Alliance

(NYTWA), 25 New York State Employment Relations

Board, 542 New York Times, 22 New York University, 103 NFL. See National Football League owners (NFL) NFLPA. See National Football League Players

Association (NFLPA) Nicolau, George, 605 Night baseball arbitration, 449, 681 Nike, 706, 743 NLRA. See National Labor Relations Act

(NLRA) NLRB. See National Labor Relations Board

(NLRB) NLRB secret ballot election, 218 229

appropriate bargaining unit, 220 224 election, 225 229 election investigation and hearing, 219 220 eligibility of voters, 224 filing a petition for the election, 219 names and addresses (Excelsior rule), 225

pre-NLRB-election union campaigns, 218 219 untimely petitions, 224 225

NLRB v. Kentucky River Community Care, Inc., 101 NLRB v. Town & Country, 102 NLRB v. Weingarten, 103 NMB. See National Mediation Board (NMB) NNU. See National Nurses United (NNU) Noel Canning v. NLRB, 99 Nonmanagerial employees, 11 Nonunion companies strategies, 137 142

double-breasting, 140 positive human resource management, 139 140 union avoidance, 139 union substitution, 141 142

Subject Index 769

Nonunion employees employment-at-will doctrine, 603 605 wrongful discharge consideration for, 603 605

Nonunion mediation, 516 Nonverbal cues, 286 287 Norris-La Guardia Act, 15, 50, 92, 93 94, 658 North America Free Trade Agreement, 715 North American Agreement on Labor

Cooperation (NAALC), 712 714 North American Free Trade Agreement

(NAFTA), 19, 52, 711 712 Northrup-Grumman Corporation, 141 No-smoking rules, 10 NRA. See National Industrial Recovery Act

(NRA) NRAB. See National Railroad Adjustment Board

(NRAB)

O Oakwood Care Center, 102 Oakwood Healthcare, Inc. and United Auto

Workers of America, 101, 107 Obama, Barack, 179, 662, 685, 724 Objective evidence, 286 Occupational Health and Safety Act, 51, 455 Occupational Pay Relatives (OPR) survey, 332 Occupational Safety and Health Act (OSHA), 15,

29, 121, 416 420 Occupational Safety and Health Administration,

416 417 Occupational wage differentials, job evaluation

and wage surveys, 329 338 OCLC (FirstSearch), 21 Office and Professional Employees International

Union (OPEIU), 155 Office of Management and Budget (OMB), 662 Office of Personnel Management (OPM), 662 Offshoring, 399 OFS Optical Fiber, 16 Ombudsperson, 516 One Big Union, 53 Ontario Labor Relations Act, 718 Open-door policies, 516 Open shop, 97 Open-shop movement, 68 Oral warning, 616 Organizational justice, 412 Organizational politics, 276 Organization for Economic Cooperation and

Development (OECD), 706 Organizations

managerial, 168 professional, 168

OSHA. See Occupational Safety and Health Act (OSHA)

Outsourcing, 399 403 Overtime premium pay rates, 355 356

P Pacific Maritime Association, 307, 396 Package proposals, 28 Packinghouse Workers and Meat Cutters

unions, 76 Parole evidence rule, 555 Partial lockout, 102

Partial strikes, 458 Past practice, 558 559 Paternalism, 69 Patient Protection and Affordable Care Act, 353, 363 Pattern bargaining, 268 269 Pay

ability to, 344 345 call-in, 356 holiday, 357 inability to, 298 premium, 355 reporting, 356 skill-based, 336 for time not worked, 357 unwillingness to, 298 vacation, 357

Pearl Harbor bombing, 74 Peer review systems, 516 Pennsylvania State University, 169 Pension Benefit Guaranty Corporation (PBGC),

118, 360 Pension Protection Act of 2006 (PPA), 360 Pension(s), 358 361 Permanent arbitrator, 542 Personal characteristics, of mediators, 439 440 Personnel changes

and job security, 393 412 role of seniority in, 406 410

Persuasive arguments, 286 Petition for certiorari, 111 112 Pew Center on the States, 654 655 Pfeffer, Jeffrey, 414 Phillips 66, 702 Picketing, 15, 466 471

common situs, 468 470 between the headlights, 469 informational, 466, 470 product, 470 471

Pistole, John S., 664 Plant closures, 397 399 Platt, Harry, 610 Political action, 53 Politics, and unions, 79 Positive human resource management,

139 140 Positive human resources management, 139 Positive reinforcement, 287 Postal Reorganization Act (PRA), 106, 651, 654, 665 Post written and electronic notices, 305 Post written notices, 110 Power relationships, 518 522

empathetic relationships, 520 flexible consideration in processing employee

grievances, 520 522 Preemption doctrine, 92 Preferential recall list, 464 Preferential treatment clause, 182 Preferred provider organization (PPO), 354 Prehearing activities, 545 Prehearing stipulations, 545 Premium pay, 355 356 Pre-NLRB-election union campaigns, 218 219 Prepaid legal service plans, 363 Preponderance of evidence, 611 Presidential-appointed emergency boards (PEB),

114 115 Previous labor arbitration decisions, 559 560

Primary employer, 449 Private- and public-sector bargaining

budget and, 669 differences between, 668 671 similarities between, 666 668

Privatization of public-sector services, 658 659 of public services, 684

Procedural justice, 412, 516 Procter & Gamble, 168 Producer and consumer cooperatives, 54 Production standards

defined, 332 and wage incentives, 332 336

Productivity, 345 348 effect of unions on, 347 348 sharing, problems with, 347

Productivity Commission, 741 Product market competition, 328 Product or service market, 16 17 Product picketing rights, 470 471 Professional Air Traffic Controllers Union

(PATCO), 51 Professional employees, 203 205 Professional Engineering Association, 167 Professional staff members of unions,

163 164 Profit-sharing plans, 334 Progressive discipline, 616 617 Project Labor Agreements (PLAs), 337

Proposal determination and assessment, 276 277

Proposals contract language, 277 278 costing contract, 283 285 economic and legal information, 278 279 formulating, 277 279 package, 28 prior arbitration decisions, 278

ProQuest, 21 Protected employee activity, 107 108 Protecting America s Workers (PAW) Act, 417 Protest strikes, 458 Psychological contract, 394 395 Public Labor Relations Act, 187 Public opinion, 22 24 Public policy, discharge decisions and, 620 622 Public sector

interest dispute impasse-resolution procedures in, 677 678

labor legislation in, 652 654 market economy and, 668 669

Public-sector employees discipline, 676 677 Public-sector labor relations

conclusions on, 682 684 significance of, 651 657

Public-sector services, privatization of, 658 659 Public-sector unions

challenges and opportunities for, 684 685 current challenges to collective bargaining

rights of, 654 657 Public Services International, 703 Public Works Alliance, 24 Publix, 139 Pullman Palace Car Company, 50, 61 Pullman Strike, 49, 60 63 Pure and simple unionism, 57 58

770 Subject Index

Q Qualifications, 408 409

R Racketeer Influenced and Corrupt Organizations

Act (RICO), 51, 120 Radio Frequency Identification (RFID) chips, 18,

397 Railroad Safety Act, 455 Railway industries, arbitration in, 552 Railway Labor Act (RLA), 15, 50, 61, 68, 472 473,

658 659 assessment of, 116 117 enactment of, 114 vs. LMRA, 115 116 major dispute under, 114 minor dispute under, 115 promising developments regarding, 117 118

Rainbow PUSH Coalition, 24 Reagan, Ronald, 665 Reasonable accommodation, 412 Recognition strikes, 68 Red Scare, 65 Reebok, 743 Referendum, 681 682 Regulations on Collective Contracts for

Enterprises, China, 743 Relational mediation, 441 442 Relationship management, 144 Relationships

dotted-line, 151 empathetic, 520 and flexibility, 517 518 power, 518 522

Rengo (Japan Trade Union Confederation), 736 Replacement workers

during lockouts, 450 451 during strikes, 450 451

Reporting pay, 356 Representation election campaign

campaign doctrines and NLRB policies, 233 234

distribution of union literature and solicitation by employees on company property, 235

new union strategies, 237 238 polling or questioning employees, 234 showing films during election campaigns,

235 236 24-hour rule, 234 use of e-mail, Internet, and social media,

236 237 Republic of Korea United States Free Trade

Agreement (KORUS FTA), 738 Reservation price, 279 Reserved rights doctrine, 301 Reserve gate doctrine, 469 Resistance point, 279 Respondent, 108 Retail, Wholesale Department Store Union

(RWDSU), 155 Revolutionary Workers and Peasants

Confederation, 720 RICO. See Racketeer Influenced and Corrupt

Organizations Act (RICO) Rights disputes, 6

Right-to-strike controversy, 675 676 Right-to-work laws, 97

arguments for, 185 186 arguments for abolishing, 186 187 controversy and effects, 182 185

Rivethead (Hamper), 606 Roll-up factor, 283 Routine ULP case, 110 Royal College of Nurses (nurses), 730 Rubber & Plastics Industry Conference, 167 Rucker plan, 335

S Sabotage, 622 Safety and health, 416 420 Safeway Inc., 462 Scanlon, Joseph, 335 Scanlon plan, 335 Scarcity consciousness theory, 199 Science, Technology, Engineering, and Math

( STEM ), 413 Scientific management, 601 Scrip, 69 Seattle General Strike of 1919, 66 Secondary employer, 466 Secondary strikes, 466 471 Secret Ballot Protection Act, 230 Sedition Act of 1918, 65 Sedition laws, 65 SEIU. See Service Employees International Union

(SEIU) Self-managed work teams, 415 Semi-autonomous work team, 415 Senate Bill No. 5, 656 Seniority, 406 410

defined, 406 and job postings, 409 410 and layoffs, 408 purpose of, 407 and qualifications, 408 409 types of, 407

Serious strike misconduct, 465 Service Employees International Union (SEIU),

16, 24, 78, 148, 149, 160, 166, 167, 168, 400, 651

Settlement range, 279 Severance pay, 354, 355 Sexual harassment misconduct, 622 Shanghai Aviation, 400 Shanker, Albert, 23 24 Sherman Antitrust Act, 47 49, 50 Sherman Anti-Trust Act, 453 Shift differentials, 356 Shop steward, 157 Short-form management s rights clause, 301 Shuler, Elizabeth, 169 Shunto (spring wage offensive by Japan s unions),

735 Siemens, 707 Sit-down strike, 73 Skill-based pay (SBP), 336 Skill pay differential, 340 Smithfield Packing Company, 138 Socialism, 63 Social media, 236 237

employee discipline and, 612 613

Social Security Act, 121 South America

collective bargaining in, 719 724 unions in, 719 724

Southern Bakeries, LLC, 138 South Pacific Tuna Act, 417 Sovereignty doctrine, 671 Spillover effect, 364 Spoils system, 657

Stanford Institute for Economic Policy Research, 655

St. Antoine, Theodore J., 578 State and local administrative agencies, 92 Steelworkers Trilogy, 539 540 Stevens, Carl, 440 Steward councils, 731 St. John s Health Systems v. NLRB, 102 Strike. See also Lockout

defined, 449 experiences, 459 463 general, 458 illegal, 451 jurisdictional, 456 and KOL, 54 legal, 451 partial, 458 preparation, 459 463 protest, 458 reasons for, 456 458 recognition, 68 reinstatement rights of economic, 463 465 replacement workers during, 450 451 secondary, 466 471 serious strike misconduct, 465 sit-down, 73 strategic purposes of, 458 459 sympathy, 456 types of, 451 456 wildcat, 451 work stoppages due to, 457

Striker misconduct, 622 Striking method, 541 Struck work, 467 Subcontracting, 399 403 Successor employer, 303 Successorship clause, 303 Sunshine laws, 674 Supermarket News, 21 Superseniority, 408, 465 Supervisor, defined, 106 Supplemental unemployment benefit plan (SUB),

354, 355 Supreme Court of Canada, 717 718, 719 Surface bargaining, 299 Suspension, 616 Sweetheart contract, 70 Sympathy strike, 456 Sympathy striker, 467 System Boards of Adjustment, 552

T Taft Hartley Act, 50, 75, 78, 96 98. See also Labor

Management Relations Act (LMRA) Tardiness, 622 Target, 20 Target point, 279

Subject Index 771

Taylor, Frederick, 601 Technological change

benefits, 391 392 defined, 388 and job protection, 388 393 negative effects of, 392 393 work rules, 17 18

Technology, 17 19 Telephone Electronic Voting (TEV), 115 Temporary Workers of America, 405 Tenacity, 439 Terrorism, 724 Texaco, 168 Texas Instruments, 139 Thatcher, Margaret, 730 Third-and-one-half step, 521 Third-party neutrals, 12 T-Mobile USA, 703 Tobin, Dan, 161 Total costs, labor costs as percentage of, 328 Totality of conduct doctrine, 298 300 Totality of conduct doctrine, 233 Total quality management (TQM), 333 Trade conferences, 167 Trade Union and Labor Relations Adjustment Act

(TULRAA), 738 739 Trade Union Congress (TUC), 730 Transformation mediation, 515 Transformation or collaborative mediation,

513 Transformative mediation, 441 442 Transnational collective bargaining

conclusions and predictions on, 710 multinational corporations and, 702 706

Trans-Pacific Partnership, 711 Transportation subsidy, 363 Tri-offer arbitration, 448 Trumka, Richard, 169 24-hour rule, 234 Twitter, 612 Two-Tier Wage plan, 340 341

example, 342 343 Tyco International, 175

U UAW Local 652, 144 UFCW. See United Food and Commercial

Workers (UFCW) UHU. See United Hatters of North America

(UHU) ULP. See Unfair labor practices (ULP) Unconditional request for reinstatement, 451 Unemployment rates, 14 15 Unfair labor practices (ULP)

commission of, 300 lead case, 110 and National Labor Relations Act, 95 96 procedure of NLRB, 108 110 reinstatement rights of, 463 465 remedies, 110 112 routine case, 110 strike, 451

Uniformed Services Employment and Reemployment Rights Act (USERRA), 121

Uniform Guidelines on Employment Selection Procedures, 409

Unilateral changes in conditions, 300 Union affiliation, 138 Union avoidance, 139 Union-avoidance strategy, 139 Unionbook, 174 Union Cities program, 171 Union density, 24 Union governance and structure, 151 175

administration, 163 American Federation of Labor and Congress of

Industrial Organizations (AFL-CIO), 168 169

dues, fees, and distribution of funds, 165 166 employee associations, 168 government and operation of the local union,

157 159 independent unions, 167 168 intermediate organizational units, 167 leadership and democracy, 161 162 local craft and industrial unions, differences

between, 155 157 local union, 154 mergers of national unions, 166 167 national or international union, 159 161 organizational structure, 169 174 professional staff members, 163 164 profile of union leaders, 162 163 services to and control of locals, 164 165 use of information technology by unions,

174 175 Union hiring hall, 181 Union instrumentality, 203 Unionization

employers opposition to, 97 and managers, 98

Unionized companies strategies, 142 145 accommodation or labor-management

cooperation, 143 145 codified businesslike strategy, 143

Union leaders, profile of, 162 163 Union literature, 235 Union Network International, 703 Union Privilege Benefit Program, 171 Union Privilege program, 175 Union representatives, 6, 11 Unions

absence of a central authority, 709 activities of, in organizing employees, 205 209 activities of the company in union organizing,

209 211 administration, 163 after election loss by, 230 after the election, 229 230 agency shop, 179 181 alienation theory and, 198 199 American Federation of Labor and Congress of

Industrial Organizations (AFL-CIO), 168 169

application of antitrust legislation to, 47 49 approaches to multinational bargaining and

employer reactions, 706 710

in Australia, 739 741 bargaining range, 279 and bargaining with multinational corpora-

tions, 708 709 campaign doctrines and NLRB policies, 233 234

in Canada, 715 719 in Central America, 719 724 in Central and Eastern Europe, 733 734 challenge of organizing the diverse workforce,

203 in China, 741 746 and the civil rights movement, 61 closed shop, 178 communication with members on Weingarten

rights, 626 628 company strategic planning and, 136 137 conclusions and predictions on transnational

bargaining, 710 conduct of the representation election cam-

paign, 233 238 consensus among, 79 80 considerations and negotiation teams, 276 contingency union shop, 181 convention, 160 161 corruption and the Landrum Griffin Act,

175 177 cost of living, 348 349 in Cuba, 724 725 cultural differences, 709 current challenges to collective bargaining

rights of, 654 657 determination of proportional liability, 525 differences between local craft and industrial,

155 157 differences in labor relations laws, 709 differing national priorities, 709 disagreement and agreement costs, factors

affecting, 290 291 distribution of union literature and solicitation

by employees on company property, 235 and domestic violence, 419 dues, fees, and distribution of funds, 165 166 dues checkoff, 182 duties of the exclusive bargaining agent and

employer, 230 duty of fair representation, 522 526 effect on efficiency, 347 348 effect on productivity, 347 348 effects on multinational corporations, 709 710 effects on wages and benefits, 363 364 employee associations, 168 employees backgrounds and needs, 200 201 employer monitoring activities, 393 employer resistance, 709 in European Union, 727 730 formation of, 198 233 in former Soviet Bloc countries, 733 734 in Germany, 731 733 governance and structure, 151 175 government and operation of the local, 157 159 in Great Britain, 730 731 independent, 167 168 influences on employees votes for and against,

201 203 intermediate organizational units, 167 international, 159 161 in Japan, 734 738 on job evaluation, 331 in Korea, 738 739 labor relations process, 11 lack of coordination of activities, 709 leadership and democracy, 161 162

772 Subject Index

legal right to form, 5 local, 154 local union, 154 management goals and strategies, 135 149 membership, 24 29 mergers of national, 166 167 methods for organizing, 212 230 in Mexico, 719 724 national, 159 161 national or international, 159 161 new strategies, 237 238 NLRB directive, 216 217 NLRB secret ballot election, 218 229 nonunion companies strategies, 137 142 organizational chart for a local, 154 organizing professional employees, 203 205 in other countries, 714 746 and politics, 79 polling or questioning employees, 234 preferential treatment clause, 182 professional staff members, 163 164 profile of union leaders, 162 163 proposed mandatory secret ballot elections

versus Employee Free Choice Act (EFCA), 230 233

public approval, 24 recent U.S. Supreme Court decisions, 187 recognition in the federal sector, 660 relevancy, 28 removing a labor, 238 242 right-to-work laws, 182 185 scarcity consciousness theory and, 199 security, 177 187 services to and control of locals, 164 165 showing films during election campaigns,

235 236 in South America, 719 724 strategic planning, 145 149 and strikes, 459 and technological change, 388 389 24-hour rule, 234 unintended consequences of anti-union behav-

ior, 212 union hiring hall, 181 unionized companies strategies, 142 145 union shop, 178 179 use of e-mail, Internet, and social media,

236 237 use of information technology by, 174 175 voluntary recognition, 212 216 and wage determination, 336 338 in Western Europe, 725 727 Wheeler model of union formation, 199 200 work and job conditions, 198 200 and Worker Centers, 25 26

Union salts, 102 Union security, 177 187

agency shop, 179 181 closed shop, 178 contingency union shop, 181 dues checkoff, 182 preferential treatment clause, 182 provisions, 178 recent U.S. Supreme Court decision, 187 right-to-work laws, 182 187 union hiring hall, 181 union shop, 178 179

Union security clause, 177 Union security provisions, 178 Union shop, 178 179

vs. closed shop, 97 contingency, 181

Union shop union security clause, 97 Union strategic planning, 145 149 Union substitution, 141 142 Union Summer program, 173 Union-suppression strategy, 137 Uniroyal, 709 UNITE, 166 167

employee training, 414 United Auto Workers (UAW), 16, 76, 160, 182,

216, 268 269, 651, 722, 738

and Caterpillar, 23 Community Action Program (CAP), 165 employee training, 414 outsourcing, 399 400 pattern bargaining, 268 269 subcontracting, 399 400 two-tier wage plans, 341

United Brotherhood of Carpenters (UBC), 149 United Electrical Workers, 722 United Farm Workers of America, 78 United Food and Commercial Workers (UFCW),

19, 78, 138, 155, 160, 167, 174, 462 United Hatters of North America (UHU), 48 United Mine Workers (UMW), 74

Coal Miners Political Committee (COMPAC), 165

United Mine Workers Union, 71 United Parcel Service (UPS), 222, 224, 455 United Rubber Workers, 73, 167 United States Maritime Alliance, Ltd., 306, 307 United Steel, Paper and Forestry, Rubber

Manufacturing, Energy, Allied Industrial & Service Workers International Union (USW), 271

United Steelworkers of America (USWA), 76, 145, 148, 155, 160, 163, 167

employee training, 414 United Steelworkers v. Warrior and Gulf

Navigation Company, 301 303

Unrepresented professionals, unionizing of, 684 Untimely petitions, 224 225 Unwillingness to pay, 298 USA Today, 21 U.S. Bureau of Labor Statistics, 357 U.S. Centers of Excellence for Design and

Manufacture of Refrigeration Products, 390 U.S. common law, 45 U.S. Congress, 136, 176, 306, 651, 657 U.S. Constitution, 45, 159 U.S. Department of Labor (USDOL), 50, 92, 159,

176, 332, 414 U.S. Departments of Commerce and Labor, 278 USDOL. See U.S. Department of Labor (USDOL) USERRA. See Uniformed Services Employment

and Reemployment Rights Act (USERRA) U.S. Food and Drug Administration, 406 U.S. Labor Department, 363

Bureau of Labor Statistics, 349 U.S. labor relations

characteristics, 15 economy, 14 19 international forces, 19 20

U.S. Postal Service (USPS), 443, 654, 665 labor relations in, 665 666

U.S. Steel, 66 U.S. Supreme Court, 165, 178, 180 181, 668, 670

affirmative action, 411 bankruptcy, 304 labor relations cases, 101 104 management s rights, 301 multi-employer bargaining, 274 and NLRA, 96 reasonable accommodation, 412

U.S. Travel Association, 357 U.S. Treasury, 20 Utility, 280

V Vacation pay, 357 Valero, 702 Value added, by employees, 328 Vegelahn v. Guntner, 47 Vesting, 361 Vietnam Era Veteran Readjustment Assistance

Act, 121 Vietnam War, 121 Villanova University, 169 VJ Day, 75 Vocational Rehabilitation Act, 120 Volkswagen, 23, 216, 706, 707, 731 Voluntary bargaining subjects, 297 Voluntary recognition, 212 216 Voters, eligibility of, 224 Voting behavior, 306 308 V technique, 70

W Wage comparability, 343 344

across organizations, 343 344 defined, 343 within organizations, 344

Wage determination, arguments used by management and union officials, 336 338

Wage differential, 338 351 Wage re-opener, 349 Wages

adjustments, during labor agreement, 349 351 defined, 327 differentials, industrial, 327 329 incentives and production standards, 332 336 increase, deferred, 350 351 one-issue example, 279 280 reopener clause, 351 unions effect on, 363 364

Wage spread, 338 351 Wage structure, firms comparison, 331 332 Wage survey, occupational wage differentials and,

329 338 Wage system in Japan, 735 Wagner Act of 1935, 602 WakeUpWalMart.com, 24 Walker, Scott, 655 657 Wall Street Journal, 21

Subject Index 773

Wal-Mart, 20, 137, 297, 702, 703, 745 WalMartWatch.com, 24 Walt Disney, 171 Walton and McKersie s four bargaining processes,

285 WARN. See Worker Adjustment and Retraining

Notification Act (WARN) Warning

oral, 616 written, 616

Washington Employment Relations Commission, 542

Washington Post, 21 Washtech. See Alliance of Technology Workers Webb, Beatrice, 168 Webb, Sidney, 168 Weingarten decision, 624 625 Weingarten Rights, 103, 626 628 Weirton Steel, 168 Wellness programs, 363 Western Europe

collective bargaining in, 725 727 unions in, 725 727

Westinghouse, 390 WestLaw Next, 21 Wheeler model of union formation,

199 200 Whipsaw bargaining strategy, 269 270 Whipsawing, 705 Wildcat strike, 451 Wilson Business Abstracts, 21 Win-win bargaining, 285, 289 Wisconsin Employment Relations Commission, 542

Web site, 22

Witness credibility, 554 nature of the evidence and, 610 612

Work and Job conditions, 198 200 alienation theory, 198 199 scarcity consciousness theory, 199 Wheeler model of union formation, 199 200

Work assignments and jurisdiction, 403 404

Work Choice Act of 2005, 740 Worker Adjustment and Retraining Notification

Act (WARN), 51, 119, 397 399 Worker Centers, 24

and unions, 25 26 Workers Central Union of Cuba (CTC), 724 Workforce, union s challenge of organizing the

diverse, 203 Working America, 24, 173 Work jurisdiction clause, example, 403 Workplace Relations Act of 1996 (WRA), 740 Workplace Relations Amendment, 740 Work restructuring, 415 416 Work rules

AIDS, 8 compensation, 8 constraints affecting administration of, 14 defined, 7 examples, 9 interpretation, 8 technological change, 17 18

Work scheduling, 404 406 Works Constitution Act, 729, 731 Work sharing, 355, 410 Work slowdown, 458 Work-to-rule, 667. See also Malicious obedience

Work transfer, 399 403 WorldCom, 175 World Trade Organization, 20 World War I

anti-union sentiment, 70 71 CIO leadership, 72 employees attitudes, 74 industrial unionism, 71 72 National Labor Relations Act (NLRA),

73 74 opposition from employers, 68 70 rise of the CIO, 71 72 sit-down strike, 73 union organizing after, 66 68

World War II AFL and CIO merger, 77 78 aspects of organized labor unchanged since, 79 Change to Win federation, 78 collective bargaining issues, 75 77 developments in organized labor since, 75 organization of different employees in private

and public sector, 77 Written warning, 616 Wrongful discharge of employees, 603 605

Y Yellow-dog contract, 47, 50 YouTube, 236

Z Zack, Arnold, 746 Zenith, 168

774 Subject Index

  • 1-400
  • 401-792