The History and the organizational context of labor relations

Module 1: Labor Relations in Perspective—

The Historical, Legal, and Organizational

Context of Labor Relations

Topics

1. Labor-Management Relations in Perspective 2. The Evolution of Labor-Management Relationships 3. Legal and Organizational Framework for Labor-Management Relations

1. Labor-Management Relations in Perspective

Labor relations is neither an event nor a set of laws, rules, and procedures. Instead, it is a

process. Labor unions (also called labor organizations or simply unions) are key participants in

the process, but there are others as well. Employees are a critical group. Under the U.S. system

of union-management relations, it is employees who are empowered to decide, through

government-supervised elections, whether they desire union representation. This means the

government is yet another key player in the process. Through regulatory agencies, such as the

National Labor Relations Board (NLRB), the U.S. government plays a crucial role in

overseeing labor relations.

Managers constitute another vital participant group. It is managers who establish an

organization's attitude and approach toward unions―friendly, hostile, or something in between.

You should concentrate on understanding the basic roles of management, unions, employees, and

government. Equally important is an understanding of the external influences that bear on the

process. These basic elements will be subject to closer scrutiny as the course proceeds.

Finally, an effective system of union-management relations depends upon third-party neutrals

such as mediators and arbitrators. These individuals owe their allegiance to neither union nor

management. Instead, they serve as referees, facilitators, or decision makers in helping to resolve

disputes.

The central participants in the labor relations process are union representatives who speak for

employees and management officials representing the employer. These are commonly referred to

as the parties. In a unionized organization, it is union and management representatives who

hammer out an agreement covering the wages, hours, and other working conditions of covered

employees.

These negotiations are not conducted in a vacuum. On the contrary, they affect and are affected

by various external parties, e.g., neutrals, representatives of the NLRB, and agents of other

government agencies such as the Department of Labor and the courts. External variables,

including laws and regulations, labor and product market pressures, technology, and various

social and political considerations, also influence negotiations. Even public opinion can

influence the conduct of labor relations.

An illustration of many of these factors at work may be found in the United Parcel Service v.

Teamsters Union negotiations and strike of 1997. The parties initially failed to reach voluntary

agreement. An impasse was reached, followed by a national strike by the union. Mediation was,

at first, unsuccessful. Arbitration of disputed issues was rejected. Some in positions of influence

called on President Clinton to invoke national emergency procedures for ending the strike under

the National Labor Relations Act (NLRA). He declined.

In the meantime, market forces, in the form of outcries from business interests, as well as the

reality of UPS competitors (such as Federal Express and the U.S. Postal Service) moving in to

claim large portions of UPS's business, were creating intense pressure for settlement of the

dispute. The AFL-CIO and other labor organizations were united in support of the Teamsters

Union. Public opinion appeared to favor the employees and their union. Within a few weeks,

with prodding from the secretary of labor, the parties finally reached an agreement that

eventually was ratified by the union membership.

2. The Evolution of Labor-Management Relationships

A number of key events have shaped the development of the labor movement in the United

States. These events are easier to grasp by organizing them into three separate time frames: pre-

World War I, World War I to World War II, and World War II to the present. Each of these eras

produced landmark events having a profound and lasting influence on the conduct of labor

relations.

The predecessors to modern-day unions were the craft guilds of medieval Europe. These small

associations (of "the butchers, bakers, and candlestick makers") were a primitive effort to

establish fair wages and working conditions for working people. Fast-forward several hundred

years to the modern labor union. It not only deals with management on day-to-day issues but

may also lobby Congress for new laws favorable to labor or use the Internet to attract new

members.

Violence and bloodshed sometimes accompanied the growth of unionism in the nineteenth

century. In recent years, the conduct of labor relations has become more "institutionalized."

Mediators, arbitrators, and the NLRB have helped to build a framework for resolving disputes

without resorting to riots, guns, or violence.

Before the 1930s, labor unions organized, recruited members, and dealt with management

without the benefit of the legislated rights and protections we take for granted today. Many

disputes were resolved through the application of unbridled power―or "in the streets."

Companies employed antiunion tactics, including fear and intimidation, that today would be

considered both illegal and unethical. Unions often operated in secret, for fear that union

sympathizers would be identified and blacklisted by employers.

Since the passage of the NLRA in 1935, the conduct of labor-management relations in the United

States has been governed by federal statute. This law, which has been amended several times,

has defined the regulatory relationship between union and management during what may

appropriately be called the "modern era."

We summarize the evolution of labor-management relations in the following subsections.

1869 to World War I

Two national labor organizations―The Knights of Labor (KOL), under Terence Powderly, and

the Industrial Workers of the World (IWW)―were formed, prospered for a time, and then faded.

The forces behind their creation and the reasons for their demise are instructive in understanding

the strengths and weaknesses of modern labor. A third national organization, the American

Federation of Labor (AFL), was formed during this period and has survived to this day. It was

founded and led by Samuel Gompers for more than 30 years.

Perhaps the phenomenal early growth of the KOL demonstrates the frustration of workers at that

time and the autocratic control maintained by many business owners, often referred to as "robber

barons." Their conduct was not unusual for the era in which they operated but would be

indefensible by today's standards. It's important to focus on both the KOL's achievements and the

reasons for its failure. It certainly laid the groundwork for modern unions.

Yet another early labor organization was the International Workers of the World

(IWW)―sometimes referred to as the "Wobblies." They were left-leaning and even borderline

communists, or certainly viewed that way. Whereas the AFL supported capitalism, and simply

wanted a bigger piece of the pie for workers, the Wobblies wanted to change the underlying

capitalist system. They were unsuccessful, but their views are important to a complete

understanding of the role of labor unions in modern society. Some people, even today, see unions

as left leaning or as rabble-rousers, an image that is part of the legacy of both the KOL and the

IWW.

The KOL and IWW have long since faded from the scene, but the AFL survives to this day.

Why? Primarily, it focused on economic betterment, and, unlike the Knights did not involve

itself in moral or social objectives. Among the tactics the nineteenth-century American labor

movement and the AFL perfected were the sit-down strike, civil disobedience, and a "unity"

approach. Several decades later the civil rights movement successfully used these tactics to

achieve moral and social goals.

Two other events during this era also proved to have a long-term influence on the conduct of

labor relations in this country. The first event was the Pullman strike of 1894, during which a

railway union, led by the dynamic and controversial Eugene Debs, conducted job actions that

eventually spread to 27 states and territories. Interstate commerce as well as cross-country mail

service were interrupted. Eventually, President Grover Cleveland called in several thousand U.S.

troops to help quell the strike (Holley, Jennings, & Wolters, 2005, p. 51). This strike showed

Congress, the public, and the unions themselves how a labor dispute could have national

repercussions. Its outcome reinforced the difficulty of conducting a successful strike in the face

of a stubborn employer and a government policy hostile to unions.

The second important labor-relations milestone during this era was the Haymarket Riot, which

was associated with the eight-hour workday movement. During that riot, 7 participants were

killed, and 60 were wounded (Holley, Jennings, & Wolters, 2005, p. 44). Historians are not in

complete agreement about all of the facts and underlying causes of this "incident." You can find

other fascinating historical views of the riot on the Web.

World War I to World War II

This period was marked by limited growth in union membership. A rift within the AFL over the

organization of nonunion unskilled and semiskilled workers resulted in the formation of a rival

organization, the Congress of Industrial Organizations (CIO), led by John L. Lewis, president of

the United Mine Workers Union (UMW).

Unlike the AFL, which limited its membership to workers in the craft trades and other highly

skilled occupations, the CIO sought to organize and represent all workers, both unskilled and

semiskilled, across occupation lines in industrial settings. The CIO succeeded in organizing

substantial numbers of workers during the 1930s and 1940s. The rivalry between the AFL and

the CIO was intense. However, they eventually merged in 1955 to become what is known as the

AFL-CIO, the world's largest federation of national and local unions.

World War II to the Present

With the merger creating the AFL-CIO, the labor movement reached the height of its power and

influence. Postwar economic expansion fueled employees' appetites for expanding pay and

benefits, opening up new areas of collective bargaining. New sources of members were found in

the growing workforce in federal, state, and local governments. An era of relative labor peace

ensued.

But all was not well with the labor movement. The NLRA was amended in 1947 by the Taft-

Hartley Act and again in 1959 by the Landrum-Griffin Act. Both of these acts imposed greater

restrictions on union activities and were viewed by those sympathetic to unions as antilabor.

Labor strength, as measured by membership in unions, began to erode, and that decline has

continued to this day.

In the 1980s, conservative President Ronald Reagan was elected to serve for two terms. During

the Reagan era, many companies were emboldened to take a militant stance in collective

bargaining. For the first time, we heard such phrases as "concession bargaining" or "take-back

bargaining." Both of these terms signaled company efforts to diminish or eliminate wage or

benefit gains that unions had achieved in previous contracts.

Today, union members constitute a minority of the workforce, and union membership has been

declining for the past 30 years. Yet labor unions still play an influential role in our society. The

current role of labor in the political arena is well illustrated by the controversy over the passage

of the North American Free Trade Agreement (NAFTA) and the active role unions play in

supporting specific political candidates.

After completing this topic and reading about labor-union history both on the Web and in your

text, you should be prepared to identify each of the significant events or developments that

occurred in these three periods and explain how they affected the labor movement and why they

are important.

Topic 2 Self-Assessment Questions

Please go to My Tools > Self Assessments > to complete this self assessment.

3. Legal and Organizational Framework for Labor-Management Relations

The National Labor Relations Act (NLRA) is the primary labor-relations law in the United

States. A full appreciation of current labor law requires an understanding of its historical

precedents, such as the Railway Labor Act (1926) and the Norris-LaGuardia Act (1932). In this

topic, we also describe the ways in which unions and management create internal structures to

deal effectively with each other.

The NLRA (also called the Wagner Act) has been amended several times since its passage in

1935. However, the core system of union-management relations it created continues to provide

many important guarantees for American workers, including:

• the right to unionize and to select their own representatives

• once organized, the right to insist that an employer engage in collective bargaining

• the right to support a union or to serve as a union official without intimidation or

interference from one's employer

• the right to refrain from any and all union activities

Under the NLRA, both management and the union establish organizational structures to facilitate

their participation in the labor relations process. Management often deals with its union through

the human resources staff and may employ lawyers as an additional source of advice. Individual

organizations may assume different stances relative to unionization, ranging from cooperation to

outright hostility. Unions are organized along "local" (plant-level) and "international"

(nationwide) lines.

The AFL-CIO, based in Washington, D.C., serves as an umbrella organization in which many

international unions maintain membership. The recent losses in union membership and the

declining strength of the labor movement influence the priorities of unions today.

Basis for Labor Relations Law

The legal framework for the conduct of labor relations has many different sources, including:

• laws enacted by the U.S. Congress and by state and local governments

• decisions of the courts interpreting law and the Constitution

• judicial decisions on issues not covered by statutes―that is, case law or common law

• regulations and administrative decisions of governmental agencies such as the NLRB and

the Department of Labor

• executive orders issued by the president or elected executives of state or local

governments

Evolution of the Legal Framework for the Conduct of Labor Relations

Early (1806–1931) judicial decisions were generally hostile to unionism. For example, the

Cordwainers case (1806) established the idea that unionism was a "criminal conspiracy."

According to this notion, when employees band together to withhold their services or raise

wages they are engaging in illegal conduct. This ruling was modified in Commonwealth v. Hunt

(1842), which held that not all strikes are illegal and that the specific motivation and methods of

the union must be considered on a case-by-case basis.

Employers routinely required employees to sign yellow-dog contracts in which employees

pledged, under threat of dismissal, not to join or support unions. Congress passed the Sherman

Antitrust Act (1890) and the Clayton Act (1914) to control business monopolies and to

discourage price fixing. Nevertheless, the courts interpreted both of these laws to prevent or limit

union activity.

Finally, employers looked to local judges to issue injunctions in labor disputes. Under this

procedure, an order could be issued directing a union to cease its strike activity. A failure to

honor the injunction could lead to severe financial penalties against unions or union officials.

Injunctions were often issued without a full hearing at which both parties appeared. Employers

were free to seek out "friendly" local judges who were unsympathetic to unions in general.

The Railway Labor Act (1926) was the first comprehensive federal statute granting union rights

to employees. It was limited, however, to those in the railway industry (it was later extended to

the airline industry). The first federal law applicable to employees in most industries was the

Norris-LaGuardia Act (1932). It guaranteed employees full freedom of association without

interference from employers, limited the power of the courts to issue injunctions, and declared

yellow-dog contracts unenforceable.

The Norris-LaGuardia Act had a number of important shortcomings, however. First, it did not

provide for an administrative enforcement agency, unlike the Railway Labor Act, which

established the National Mediation Board. In addition, it failed to establish specific unfair labor

practices. In 1933, another piece of New Deal legislation, the National Industrial Recovery Act,

attempted to address some of these deficiencies. However, the Supreme Court in 1935 declared it

unconstitutional.

Contemporary Labor Relations and the National Labor Relations Board

The beginning of the modern era of labor relations was marked by the enactment, in 1935, of the

Wagner, or National Labor Relations Act (NLRA), which was upheld as constitutional in 1937.

The original law, which addressed only unfair labor practices by employers, has been amended

several times over the years.

The Taft-Hartley Act of 1947 established unfair labor practices on the part of unions and placed

other limits on union activities. Congress amended it again in 1959 when it passed the Landrum-

Griffin Act. It, too, addressed union abuses of power and established a "bill of rights" for union

members. Later, coverage of the act was extended to the health-care industry (1974) and to the

Postal Service (1970). The original Wagner Act of 1935 and its many amendments are

cumulatively referred to as the NLRA or the National Labor Relations Act as amended.

The express policy of the NLRA is to stimulate commerce and encourage collective bargaining.

It "guarantees" employees' rights to

• join or not to join labor unions

• bargain collectively through representatives of their own choosing

• strike or otherwise withhold their labor

Each of these rights has limitations. The law specifies practices of both unions and employers

that are considered unfair (illegal).

The NLRB administers the NLRA. It is composed of five presidential appointees who decide

cases as well as a general counsel who investigates and prosecutes charges of unfair labor

practices (ULPs). The board also establishes bargaining units and supervises secret-ballot

elections where employees may decide upon union representation. The NLRB's decisions, which

are often controversial, are subject to review by the courts, including the Supreme Court.

The NLRB is frequently criticized for slow decision making or for applying a notable "pro-

union" or "pro-management" slant in its decisions―depending upon your perspective. Other

critics point to the board's limited remedial powers. The NLRB has no authority to fine or jail

offenders. It can direct the reinstatement of employees who have been illegally terminated and

may issue cease and desist orders against unions or employers that commit unfair labor practices.

Unions and Management: Establishing Internal Structures

The conduct of labor relations is governed by a legal framework, but the internal organizational

structure of each side is not. Instead, both unions and management recognize that a healthy,

profitable, and thriving organization benefits both parties. A secure and well-motivated

workforce that is adequately compensated also benefits both sides.

Labor and management often diverge, however, when it comes to the priorities, methods, and

policies that should be used in achieving mutual objectives. There is always a measure of tension

between management's efforts to maintain decision-making flexibility and the union's efforts to

assure employees' job security and a rightful share in the success of the enterprise―a fair "piece

of the pie." Neither party wishes to have a strike or lockout, which is likely to take a toll on both

sides.

The law does not require an employer to have a union. Generally, employers would prefer to

avoid dealing with a union. They will employ every weapon within the letter of the law to resist

union recognition. However, once employees have voted in favor of union representation,

employers generally prefer a business-like, contract-based relationship of trust and cooperation

with the union.

Employers often organize their human resources departments to deal effectively with the new

challenges associated with unionization. They may hire a "labor relations manager," or in large

organizations, an entire staff to conduct day-to-day dealings with the labor organization. It is a

special challenge for the human resources staff to simultaneously build a harmonious and

constructive relationship with the union while continuing to preserve "management rights."

The backbone of a union's organizational structure is the so-called local union. Local unions are

distinguished as either craft or industrial. Craft unions (e.g., carpenters' or electricians' unions)

are composed of skilled workers, who must typically complete a formal apprenticeship program

before achieving licensure or full journeyman status in their occupation. Industrial unions

comprise semiskilled or unskilled workers representing a broad spectrum of skills across a given

industry. Many employees in the auto, coal, steel, and trucking industries are represented by

large industrial unions.

At the local level, elected representatives (shop stewards) are the initial point of contact with

management officials and human resources staff. Local officials, including shop stewards, may

be charged with such tasks as negotiating contracts, resolving grievances, and participating in

arbitration.

Local unions also gather together to form national or international unions that provide a higher

level of power and influence vis-à-vis management, as well as providing research and support

services to the locals. Indeed, many national unions have their headquarters in Washington, D.C.,

with ready access to congressional and other political leaders.

The culture, goals, and orientations of unions are as diverse as those of companies. The Airline

Pilots Association and the NFL players association represent dues-paying members whose

annual salaries far exceed those of the average American. At the other end of the spectrum, the

Service Employees International Union (SEIU) has many minimum-wage and immigrant

members, including janitors, health-care aides, and kitchen workers. It is always a challenge for

the AFL-CIO to balance divergent interests and membership concerns. What is organized labor?

It has no single face or identity.

Most of the major national unions in the United States have formed a federation, or umbrella

organization, to better exert their influence on the national stage, particularly in the political and

legislative arenas. This federation, the AFL-CIO, is a highly complex and multifaceted

organization. As noted previously, the power and influence of the labor movement in the United

States, as measured by union representation and membership in the workforce, has been

declining steadily for the past 40 years to its current nadir of about 14 percent of the workforce

(Holley, Jennings, & Wolters, 2005, 25).

A further indication of the labor movement's decline is found in the 2005 splintering of the AFL-

CIO. Led by the SEIU, several national unions, representing more than a million union members,

withdrew from the federation. This action was the culmination of a simmering dispute over the

level of funds to be invested in organizing new members versus making allocations for political

activities. How this schism will affect the financial health and influence of organized labor

remains uncertain.

Topic 3 Self-Assessment Questions

Please go to My Tools > Self Assessments > to complete this self assessment.

References

Holley, W. H., Jennings, K. M., & Wolters, R. S. The labor relations process (8th ed.). Mason,

OH: Thompson/Southwestern, 2005.