Saturday, September 28, 2013

Labor Law


Labor Law

By Budd, J.W.
Edited by Paul Ducham
CONSPIRACY DOCTRINE AND INJUNCTIONS
In the beginning there was no labor law. But there were (and are) common-law doctrines pertaining to conspiracy, property rights, and breach of contract. Throughout the 19th century and in the first three decades of the 20th century, workers who collectively tried to influence their wages and working conditions by forming unions, striking, and leading boycotts were subjected to these common-law doctrines. Philadelphia shoemakers formed the first permanent union in the United States in the 1790s. The Philadelphia shoemakers also have the dubious honor of marking the start of the conspiracy doctrine in labor relations: They were the first union convicted of being an illegal conspiracy in 1806. By joining together and refusing to work unless their terms were met, the shoemakers were viewed as conspiring to harm the community because shoe prices and unemployment would increase and profits would fall. Individual attempts to influence wages and working conditions are consistent with individual freedom; but in mainstream economics thought that emphasizes free MARKET COMPETITION, the collective aspect of union activity was viewed as particularly harmful—and thus was considered an illegal conspiracy. Note that conspiracy is a criminal offense, so prosecution required a jury trial. In the early 1800s jurors had to own property, so the juries included employers and merchants, not workers.
In 1842 the Massachusetts Supreme Court ruled in Commonwealth v. Hunt that although some union actions might be conspiratorial and therefore illegal, labor unions are not per se unlawful conspiracies. This case is viewed as a landmark in granting unions some legal legitimacy, and it marks the beginning of the end for the application of the conspiracy doctrine to labor relations. Starting in the 1880s, the application of common law to labor relations was dominated by the use of injunctions —court-ordered restraints on action to prevent harm or damage to someone else. One study estimates that at least 4,300 injunctions were issued between 1880 and 1930, with increased activity in each decade of that period. Injunctions were most frequently issued to stop or limit picketing during strikes, though there were also cases of prohibiting employees from striking or even from unionizing.
Central to the increased use of injunctions, and to their controversy, is that temporary restraining orders and injunctions are issued by judges without full hearings. In theory these orders’ purpose is to preserve the status quo until a full hearing with witnesses, evidence, and the like can be held. But in practice, full hearings rarely occurred because the strike would be over by then. In fact, rather than maintaining the status quo, injunctions contributed to breaking strikes in several ways: by turning public opinion away from strikers because of a perception that they were lawbreakers; by draining the unions’ financial and human resources through legal proceedings; and most importantly, by demoralizing strikers through fear and confusion. 7 As such, injunctions had powerful effects, and sweeping injunctions could be quickly issued based on questionable evidence without a full hearing and in response to a standard, generic employer request that was nearly identical to employers’ submissions in hundreds of other injunction cases. In short, the potential for abuse was high, and the injunction was a powerful antiunion legal weapon in the late 1800s and early 1900s.
The use of injunctions in labor disputes was rooted in the property rights area of common law. If a strike caused physical destruction of the employer’s factory, machines, rail-road cars, and the like, the link between property and an injunction to prevent irreparable harm was clear. But “property” in U.S. common law is significantly broader than tangible physical assets: Intangibles such as the right to do business, to hire and fire employees, and to interact with customers are also part of an employer’s property rights. 8 As such, any strike or boycott that threatened to interfere with business could potentially be challenged by an injunction. Note that if the law were applied equally, judges should have granted injunctions equally when a company’s right to conduct business was threatened by the actions of either a union or another business. But in practice labor seems to have been treated more harshly—judges frequently refused to grant injunctions to restrain potentially harmful business actions but often restrained union actions even though the same legal principles applied to both situations.
In the 1900s, labor injunctions were also applied to yellow dog contracts. A yellow dog contract is a promise by a worker not to join or support a union; refusal to agree to such conditions meant either termination or not being hired. The courts viewed these contracts as legally enforceable, binding contracts because, in their view, employees signed them voluntarily and were not economically coerced into agreement because of a lack of other jobs. As such, a union’s attempt to organize employees could result in an injunction because an outside third party should not be allowed to try to break up valid contracts. If a union ignores such an injunction, there can be significant penalties for contempt of court, so yellow dog contracts were an effective antiunion device. Some states passed laws outlawing yellow dog contracts, but they were ruled unconstitutional because they violated the liberty of employers and employees to freely make contracts incorporating whatever terms they desire. Putting these elements together, organized labor felt that employers and judges were abusing property rights and the Constitution to break strikes and unions.
LABOR RELATIONS AND THE LAW
Corporations increased in size during the 19th century, and toward the end of the 1800s some were huge monopolies or trusts that dominated entire industries. As a result, Congress passed the Sherman Antitrust Act in 1890 to outlaw monopolies and prevent their negative economic and social effects. Note that this is statutory law, not common law, and is premised on the mainstream economics promotion of competition. This law remains in effect today; it was the basis for the U.S. Football League’s suit against the NFL in the 1980s and for lawsuits trying to break up Microsoft between 1997 and 2001. Violators can be punished by triple damages.
The particular concern for labor relations is whether the Sherman Antitrust Act applies to labor unions. However, the language of the act does not explicitly include or exclude labor unions. If a union is viewed as a “combination . . . in restraint of trade or commerce” or represents an attempt “to monopolize any part of the trade or commerce,” then this act applies to unions as well as corporations. This question went to the Supreme Court in the Danbury Hatters case (1908). After a failed strike, the United Hatters of North America initiated a nationwide boycott of hats made by a Danbury, Connecticut, nonunion company in 1902. In the Danbury Hatters case the Supreme Court ruled that the union boycott violated the Sherman Antitrust Act, and a later ruling held individual union members responsible for over $200,000 in damages. In a different case, Samuel Gompers and the American Federation of Labor were found guilty of violating the act by placing a stove company on its “We Don’t Patronize” list in its magazine;here free speech was forced to take a back seat to antitrust law. Given that the Mainstream Economics School of thought views labor unions as labor market monopolies, it is unsurprising that the Supreme Court applied the Sherman Antitrust Act to labor unions.
During this period Congress was debating a follow-up act to clarify some weaknesses of the Sherman Antitrust Act. Organized labor lobbied hard for this legislation to exempt unions from antitrust law. The new law was the Clayton Act (1914), which Gompers hailed as a great victory for labor because it included this statement: “The labor of a human being is not a commodity or article of commerce.” But contrary to labor’s proclamations, the Clayton Act simply gave unions the legal right to exist; it did not unambiguously exempt them from antitrust laws. Other aspects of the Clayton Act actually increased labor’s burdens under antitrust laws because it became easier for employers to seek injunctions. And because the philosophy of the Supreme Court did not change, the act was narrowly interpreted to labor’s disadvantage. For example, the Clayton Act allowed peaceful strikes and picketing, but the Supreme Court so narrowly construed this language that any picketing that involved even two people was assumed not to be peaceful and could therefore be prevented with an injunction.
Between 1890 and 1932, therefore, business law was applied to union activities in ways unfavorable to organized labor (as were common-law injunctions and the coercive force of the police, militia, and army). Perhaps the most lasting development in this era, however, was the emergence of the legal view that unions are legitimate but need to be controlled by legal regulation to make sure they serve the public interest. The 19th-century philosophy of Gompers and the AFL was that unions were voluntary associations of workers, not incorporated organizations. As such, freedoms to unionize, strike, and boycott were rooted in individual liberty, and the government should not interfere. But the Danbury Hatters case revealed a risk—individual members were liable for damages—and the unwillingness of the courts to sanction all voluntary actions, such as nationwide boycotts. Meanwhile, the industrial relations school of thought developed its pluralist rather than individualist vision: Corporations and unions are both formal institutions that should serve the public interest and counterbalance each other. In this business law era, adherents to this school successfully laid the foundation for transforming the legal treatment of unions (and corporations) from voluntary associations beyond the state’s control to legally sanctioned organizations with corresponding rights and obligations in a pluralist society— including serving the public interest and living up to collective bargaining agreements. Republicans, too, wanted labor controlled, so both they and the industrial relations school promoted responsible unionism. This institutionalized rather than voluntaristic vision of labor unions—legally sanctioned, tightly regulated, and party to enforceable union contracts—would become more firmly cemented in the labor laws of the 1930s and 1940s, and it still dominates U.S. labor relations today.
THE NORRIS– LAGUARDIA ACT
Because of the potential for abuse, especially with so much power concentrated in a single judge’s hands with no checks and balances, the labor injunction was despised not only by union leaders and members, but also by sympathetic lawmakers and reformers. In fact, the AFL supported at least one anti-injunction proposal in Congress in every year between 1895 and 1914. Events in the early 1920s brought anti-injunction legislation to the fore again. Narrow Supreme Court rulings deflated labor’s faith in the Clayton Act. And in 1922 Judge James Wilkerson issued “one of the most notorious injunctions in American legal history” during a strike by railroad shop workers. Not only did this expansive injunction make striking illegal regardless of how peaceful it was, it restricted free speech by banning any type of “persuasion” to convince workers to strike and even made it illegal to “annoy any employees of said railroad companies.”
Between 1924 and 1931 anti-injunction legislation failed to get enough votes in Congress. But with the onset of the Great Depression in the early 1930s, the political composition of Congress changed, and in 1932 the Norris–LaGuardia Act was enacted. The policy declaration for this act is presented in Table 4.3 . Note carefully the intellectual foundations: organized corporations (essentially individual shareholders who have unionized by pooling their resources and hiring experts to look out for their best interests) are significantly more powerful than unorganized individual workers, and this imbalance in Bargaining Power forces workers to accept substandard wages and working conditions. As such, in the industrial relations school of thought, workers should be able to unionize to balance corporate power and thus obtain decent wages and working conditions. But how should this Unionization be promoted? The last 20 words in Table 4.3 reveal the answer: The Norris–LaGuardia Act seeks to protect unionization efforts by limiting the “jurisdiction and authority of the courts of the United States.” In other words, this act seeks to remove the courts from labor relations.
More concretely, the Norris–LaGuardia Act forbids federal courts from issuing injunctions that interfere with strikes, payment of strike benefits, publicizing a dispute (as long as it is not fraudulent), peaceful picketing, and workers joining unions. 28 The conditions under which injunctions can be issued were also severely limited. As such, the popular name for this act is the federal anti-injunction act. The act further makes yellow dog contracts unenforceable and ends the criminal conspiracy doctrine of labor unions. Finally, by broadly defining permissible labor disputes, the act effectively exempts labor unions from the Sherman Antitrust Act. The Norris–LaGuardia Act therefore marks the end of the common law and business law eras in labor relations, and the start of the labor law era that governs labor relations today. But the Norris–LaGuardia Act simply tries to remove the courts from labor relations. The act does not give labor unions or workers any new rights or enforcement mechanisms. These are the next steps toward today’s labor law.
TABLE 4.3  The Norris– LaGuardia Act (1932)
Section 2. Whereas under prevailing economic conditions, developed with the aid of governmental authority for owners of property to organize in the corporate and other forms of organization, the individual unorganized worker is commonly helpless to exercise actual liberty of contract and to protect his freedom of labor, and thereby to obtain acceptable terms and condition of employment, wherefore, though he should be free to decline to associate with his fellows, it is necessary that he have full freedom of association, self-organization, and designation of representatives of his own choosing, to negotiate the terms and conditions of employment, and that he shall be free from the interference, restraint, and coercion of the employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection; therefore, the following definitions of and limitations upon the jurisdiction and authority of the courts of the United States are enacted.
NATIONAL POLICY ON LABOR
Franklin Delano Roosevelt was elected president of the United States several months after the passage of the Norris–LaGuardia Act in 1932. The Great Depression had been wreaking economic havoc for three years, and 1933 was to be even worse. Widespread unemployment, poverty, homelessness, and hunger shook the country’s faith in the wisdom of laissez faire government policies supporting free markets to promote economic prosperity and security. Roosevelt promised “a new deal for the American people,” which meant creating an active government role in promoting and guaranteeing the welfare of the population. The industrial relations school of thought, not mainstream economics or human resource management, underlies this New Deal philosophy. Because of imperfect markets, conflicts of interest in the employment relationship between workers and owners, and the importance of employees as human beings, government regulation and labor unions are important for balancing power between employees and employers, which promotes economic stability and prosperity as well as fairness and democracy—efficiency, equity, and voice.

Prelude 1: The National Industrial Recovery Act

But at the beginning of the Roosevelt presidency, the existing labor legislation was passive, not active: The Norris–LaGuardia Act simply tried to remove the courts from labor relations by clamping down on the rampant use of labor injunctions by judges hostile to unions. The Norris–LaGuardia Act did not actively protect or promote union activity, and it did little to combat employers’ open shop tactics: infiltrating unions with spies, using armed guards and professional strikebreaking agencies to break strikes, firing union activists, creating racial tension to divide workers, and using nonunion employee representation plans (company unions) to prevent the creation of independent labor unions. On the other hand, the most pressing issue in 1933 was not union busting—it was massive unemployment. As such, an early New Deal initiative was the National Industrial Recovery Act (NIRA) in 1933. The NIRA contained a public works program to create jobs and an ambitious framework for establishing industry codes of fair competition for preventing destructive competition and promoting economic recovery.
Echoing the declaration of the Norris–LaGuardia Act, and over the opposition of business, Section 7(a) of the NIRA also specified that each industry code of fair competition must contain the following:
Employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint, and coercion of the employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.
This language emboldened workers to focus their pent-up frustration on unionizing, but the lack of specific enforcement provisions could not prevent continued employer opposition. A National Labor Board chaired by Senator Robert Wagner of New York was created to help settle labor disputes, but without specific enforcement powers it was ineffective. Employers also established sham company unions in an attempt to minimally comply with the NIRA without recognizing independent labor unions.
The ineffectiveness of the NIRA and the National Labor Board in achieving industrial peace was starkly demonstrated by the intense strikes of 1934. And the broader failure of the NIRA to restructure power relations between workers and employers, improve wages and working conditions, and reduce unemployment was graphically illustrated by the 170,000 Southern textile workers who also went on strike in 1934. In contrast to the New Deal’s promise of justice for the working class and reduced unemployment, lay- offs increased as the remaining textile mill hands were worked to exhaustion by the stretch-out (assigning more looms to each worker). And in spite of Section 7(a), thousands of union supporters were fired. Since the NIRA’s textile industry code was written and administered by the owners of the mills, workers struck out of extreme frustration and a sense of powerlessness. Various institutions failed the workers, and the strike was a major defeat; but it highlighted the need for new legislation. The NIRA was ruled unconstitutional by the Supreme Court in May 1935 because of its overly broad regulation of economic activity.

Prelude 2: The Railway Labor Act

Even before the NIRA was struck down by the Supreme Court, Senator Wagner had been working to craft a stronger labor relations law with enough teeth to counter corporate resistance and thus improve U.S. capitalism by creating increased worker purchasing power, industrial peace, fairness, and industrial democracy through unionization. Moreover, there were already the experiences of a major industry to draw on—the railroad industry. Some of the most destructive strikes in labor history occurred in the railroad industry, including the Great Uprising of 1877 and the Pullman strike of 1894. Because railroads were the backbone of the entire economy, congressional efforts to achieve industrial peace specifically in this industry dated back to the Arbitration Act of 1888. A series of attempts to improve the regulation of railroad labor relations culminated in the passage of the Railway Labor Act in 1926. Airlines were added to the act in 1936, and both industries are still regulated by this act today.
The primary purpose of the Railway Labor Act is to avoid strikes and other forms of labor–management conflict that disrupt interstate commerce and weaken the economy. Thus the act protects the rights of employees to form labor unions, provides government mediation of bargaining disputes, and establishes adjustment boards to resolve grievances. Consistent with American values, note the importance of individualism—unions specifically are not granted rights; rather, individual employees are granted the right to select a union to represent them. Moreover, these rights are procedural (such as the right to choose a bargaining representative or to engage in collective bargaining) rather than substantive (such as a specific wage rate), which is also consistent with individual free choice. As such, U.S. labor policy has important Republican origins.
But how should individual choices about unionization be made effective? A major shortcoming of the initial Railway Labor Act was failing to provide a mechanism for determining when an employer would have to recognize a union as the employees’ representative. In fact, while nonunion employee representation plans sometimes served workers’ needs in other industries, the railroad industry extensively manipulated company unions to keep independent labor unions out, both before and after the passage of the Railway Labor Act in 1926. 44 Consequently the act was strengthened in 1934 by restricting company-dominated unions and by establishing the National Mediation Board to conduct secret ballot elections to determine whether a union should represent employees. If a union wins support from a majority of workers, the union is certified as the exclusive representative of all the workers in that craft or class, and the company must bargain with that union. Senator Wagner’s efforts at a national labor policy developed along similar lines.

Prelude 3: The Amalgamated Clothing Workers

As a third prelude to a national labor relations law, there was also the philosophy of some union leaders like Sidney Hillman, leader of the Amalgamated Clothing Workers (ACW) union. The garment industry was traditionally characterized by destructive competition— anyone could sew clothes as a subcontractor, and desperate workers undercut each other. Purchasing power was low, working and living conditions were lousy, and larger manufacturers were undercut. In the 1910s and 1920s the ACW brought stability and order to the garment industry through strong collective bargaining and an orderly Grievance Procedure. The militancy of small work groups was replaced by the discipline of “responsible” union leaders and Union Contracts. This was an early example of a union working cooperatively with employers and the government to create economic stability, increased purchasing power, and fair economic outcomes while also providing some form of employee voice. This experience proved to be a “dress rehearsal for the New Deal.”
Labor Relations Application Senator Robert F. Wagner: Father of U.S. Labor Law
The development of U.S. labor law is a complex story with many events and actors; but if there is a single father of U.S. labor law, it would be Senator Robert F. Wagner. Wagner was born in Germany in 1877, the youngest of seven children, and emigrated to New York City with his family when he was nine years old. As the youngest, Wagner was able to attend public school, college, and law school while being supported by the rest of his family.
Wagner was elected to the New York legislature in 1904 and was appointed chairman of the New York State Factory Investigating Commission in 1911 after the horrendous 1911 Triangle Shirtwaist factory fire killed over 100 seamstresses because of locked fire exits. Wagner spent four years comprehensively touring factories across the state and saw firsthand the deplorable working and living conditions of many individuals. In response, Wagner sponsored numerous state laws to improve fire safety, establish safety standards for machinery, limit child labor, and control tenement home work. This would continue to be the foundation for his thinking throughout his political career: the need for government to place checks and balances on economic markets to protect the unlucky and promote prosperity for all.
As a state judge in the early 1920s, Wagner became the first judge to issue an injunction compelling an employer rather than a union to abide by the terms of a collective bargaining agreement it had agreed to. In 1926 he was elected to the U.S. Senate, where he immediately continued to champion workers’ issues. Both before and after his colleague from the New York State Senate, Franklin Delano Roosevelt, was elected president in 1932, Wagner advocated using public spending to create jobs to increase workers’ purchasing power, which would both improve their living standards and further boost the economy by giving them money to spend. As one of the most respected and influential senators of the time, Wagner was instrumental in shaping the National Industrial Recovery Act (NIRA), which contained a large public works component.
When strikes erupted after the NIRA’s Section 7(a) guaranteed workers the right to organize, Wagner was appointed to head the National Labor Board. This appointment shifted Wagner’s attention from public works projects to collective bargaining. As Wagner witnessed labor relations firsthand, he became convinced that the way to achieve economic prosperity and decent working and living standards was through equality of bargaining power between labor and management. Without this equality, companies were able to keep wages low—which, Wagner believed, not only maintained substandard living conditions and threatened democracy by leaving workers voiceless and powerless, but also kept the economy depressed because of insufficient purchasing power. Wagner witnessed how company-dominated unions were powerless to raise wages and therefore were not a worthy substitute for independent labor unions.
Wagner continued to press for stronger labor relations legislation—in addition to strong public works programs, unemployment insurance, and a social security program—that would achieve industrial peace and economic prosperity that “rests upon freedom, not restraint; upon equality, not subservience; upon cooperation, not dominance.” In 1935 Wagner mustered sufficient support for the National Labor Relations Act (commonly and appropriately referred to as the Wagner Act), which continues today as the basis of U.S. labor law. Wagner continued to champion the government’s role in improving economic and social issues, including public housing and fair employment practices, until he was forced to retire from the Senate in 1949 due to health problems. His last speech on the Senate floor was, unsurprisingly, in objection to the Taft–Hartley Act that substantially modified the Wagner Act in 1947. He died in his old Manhattan neighborhood in 1953, but his legacy of progressive labor policies remains.
THE WAGNER ACT
When the NIRA was ruled unconstitutional in 1935, President Roosevelt finally endorsed Senator Wagner’s efforts at creating stronger labor legislation, and one of the most radical pieces of U.S. legislation was passed relatively quickly. 46 The Wagner Act , or the national labor relations act (NLRA), was signed into law by President Roosevelt on July 5, 1935. This act builds upon previous legislative attempts to promote and protect workers’ abilities to unionize in the private sector if they so choose (see the accompanying box, “Senator Wagner Presents His Labor Relations Bill to Congress”). As amended in 1947 and 1959, the Wagner Act remains the centerpiece of today’s U.S. labor law in the private sector. In other words, corporate and union leaders in the 21st century must thoroughly understand the objectives and provisions of the Wagner Act.

The Principles of the Wagner Act

The Wagner Act encourages collective bargaining in the private sector by protecting workers’ rights to join and form labor unions. These objectives are rooted in the industrial relations principal beliefs:
• Labor is more than a commodity.
• Labor and management are not economic or legal equals (in other words, there is an imbalance of bargaining power).
• There is at least some conflict of interest between workers and employers that cannot be resolved by unitarist management policies, but this is pluralist employment relationship conflict, not class-based or societal conflict.
• Employee voice is important.
From other intellectual perspectives, the Wagner Act is difficult to understand and is viewed as a harmful protection of monopoly labor (mainstream economics), unnecessary support of adversarial third parties (human resource management), or an imperfect attempt to empower labor that inadequately challenges capital’s power (critical industrial relations). But in the industrial relations school, unequal bargaining power is at the heart of the labor problem, and equalizing bargaining power through unionization is the solution. One does not need to agree with the industrial relations school, but understanding its perspective is critical for understanding U.S. labor law and its goal of protecting union activity to balance efficiency, equity, and voice:
• Efficiency: Increasing the purchasing power of workers, reducing disruptive strike activity, and largely maintaining employer’s property rights.
• Equity: Achieving fair employment conditions and protections against exploitation.
• Voice: Providing democracy in the workplace.
In the later words of Senator Wagner, “The spirit and purpose of the law is to create a free and dignified workingman who has the economic strength to bargain collectively with a free and dignified employer in accordance with the methods of democracy.”
The full text of the Wagner Act can be found in Appendix A at the end of this book, and its central provisions are summarized in Table 4.4 . The core of the Wagner Act, Section 7, echoes the NIRA’s Section 7(a):
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.
Note that this protects more than formal union activities like bargaining over a contract; spontaneous acts by small groups of nonunion employees can also be protected by Section 7 (see “Take the Section 7 Quiz”). The remainder of the Wagner Act essentially tries to make Section 7 a reality rather than hollow words. As such, the act builds from earlier legislative failures and shortcomings in three important ways:
• Granting a certified, majority-status union the right to be the exclusive representative of the relevant employees, and specifying a certification procedure for establishing whether a majority of workers want union representation.
• Defining illegal employer actions that undermine Section 7.
• Creating an independent agency, the National Labor Relations Board (NLRB), to enforce the act.
Let’s consider each of these in turn.

Exclusive Representation and Certifying Majority Status

First the Wagner Act explicitly establishes exclusive representation when a union has the support of a majority of a group of employees. In other words, with majority support a union is the only representative of that group of workers—there cannot be another union or a company union representing some employees in the group. Exclusive representation is unique to North America and stems from Senator Wagner’s experience under the NIRA, which did not mandate exclusive representation. Without exclusivity, companies established company unions even when a majority of employees wanted an independent union, and then manipulated the company unions to weaken the independent unions. Exclusive representation was established by the Wagner Act to prevent this problem. Note that any percentage of workers could have been specified for determining when a union becomes the exclusive representative. But using a simple majority as the decision rule is the most consistent with democracy and is therefore what the Wagner Act specifies.
Establishing the principle of exclusive representation with majority support begs the question of how to determine majority support, and therefore union recognition, in practice. Recall from labor history that before 1935 the primary method for forcing employers to recognize unions was by striking. In fact, the major strikes in 1934 were over recognition, so this issue was fresh in Senator Wagner’s mind. These strikes disrupted the economy as well as workers’ lives, and the Wagner Act sought to help both by replacing these strikes with an orderly procedure. What’s the natural method in a democratic society for determining what a majority of individuals prefer? A secret ballot vote. So the Wagner Act allows secret ballot elections to determine whether a majority of workers support a specific union. Technically the Wagner Act allows secret ballot elections or “any other suitable method,” but elections are now the dominant method. If a union is certified as the exclusive representative of a group of workers after a secret ballot election, the employer must bargain with that union over wages, hours, and other terms and conditions of employment. However, the obligation to bargain with a union that represents a minority of workers has interestingly and perhaps inappropriately faded away (see “What About Nonmajority Unions?”).

Unfair Labor Practices

To make the organizing and bargaining processes effective, the second major element of the Wagner Act specifies illegal employer actions, which are called unfair labor practices (see Table 4.5 ). The first unfair labor practice [Section 8(a)(1)] prohibits employers from interfering, restraining, or coercing employees who are exercising their Section 7 rights. Refer to the “Take the Section 7 Quiz” box. For each example of protected activity, Section 8(a)(1) makes it illegal for employers to take adverse actions against employees who engage in activities protected by Section 7. This does not require employers to yield to employees’ demands; for example, there is no legal obligation to provide the improved benefits, lighting, or lunch breaks demanded in entries 2, 5, and 7 of the quiz. Rather, the key point is that the employer cannot punish employees for making these demands. Such punishment would be considered interference, restraint, or coercion under Section 8(a)(1) and would therefore be illegal. So employees can “self-organize” by talking to their managers as a group, rather than as individuals, and be protected against reprisals even if they do not form a formal union.
Section 8(a)(1) is the “universal enforcer” because it covers all employer violations of employee rights. As a result, this is the only unfair labor practice that is technically necessary to enforce the Wagner Act, but four other unfair labor practices were included to reinforce the illegality of four of the most problematic issues at the time. Employers are explicitly reminded that they cannot fire or otherwise discriminate against employees who are trying to form a union [Section 8(a)(3)]. It is also reinforced that it is illegal for companies to dominate a labor organization [8(a)(2)]—this bans company unions, which Senator Wagner experienced as being sham unions that management manipulated to prevent workers from forming legitimate, independent unions. Company unions were also perceived as weak and thus undermined Senator Wagner’s objective of increasing employee bargaining power to prevent destructive competition, increase workers’ purchasing power, and thus stimulate the economy. This unfair labor practice received renewed attention in the 1990s because it potentially hinders corporate employee involvement initiatives. Finally, in the 1930s some employers would agree to bargain with a union that had majority support, but they would not recognize the union as the exclusive representative of all the employees (in other words, the employer would agree to apply the resulting contractual terms only to union members). To promote stable collective bargaining arrangements, Section 8(a)(5) reminds employers that when a union has majority support, the employer must recognize the union as the exclusive representative of all employees and bargain with it accordingly. In short, it is an unfair labor practice for an employer to refuse to bargain with a certified majority union as the exclusive representative.

The National Labor Relations Board

How should secret ballot elections be conducted and allegations of unfair labor practices be resolved? The final component of the Wagner Act creates the National Labor Relations Board (NLRB), which is an independent federal agency devoted to conducting representation elections and adjudicating unfair labor practices. The NLRB now has two parts—(1) a general counsel’s office that conducts representation elections and investigates and prosecutes unfair labor practices and (2) a five-member board of presidential appointees (also called the National Labor Relations Board or the board for short) that hears and decides cases. If a group of workers or a union wants an employer to recognize and bargain with a union, they generally approach a regional office of the NLRB’s general counsel’s office to manage the process and determine—usually through a secret ballot vote—whether the union has majority support.
If an individual believes an unfair labor practice has occurred, they can file charges with an NLRB regional office. If the regional office finds merit in the charge, a hearing will be held before an administrative law judge; which evidence can be presented and witnesses examined and cross-examined. The administrative law judge issues a formal decision that can be appealed by the general counsel to the five-member board. Violators can be ordered to cease and desist from their illegal activities and, when relevant, to offer reinstatement with back pay to illegally discharged workers. The NLRB can seek enforcement of its rulings in federal court. Although the NLRB is criticized by some as weak—for example, punitive damages or fines are not allowed—this is a significantly stronger enforcement mechanism than appeared in previous labor laws. The NLRB currently receives over 20,000 unfair labor practice allegations and requests for over 3,000 representation elections each year.

The First Years of the Wagner Act

The Wagner Act was immediately controversial. Laissez faire proponents attacked the act as greatly extending the federal government’s reach into private affairs and therefore interfering with economic efficiency as well as individual and corporate liberty. In contrast, New Deal reformers felt that the overall structure of private property and economic exchange was maintained: The Wagner Act “did not dictate the terms and conditions of employment, but rather endorsed a process by which the parties could shape their own substantive contract terms.” As such, the act protects worker choice regarding unionization and provides an affirmative obligation for employers to bargain with a majority union, but it does not require agreement or specific outcomes. Senator Wagner argued that his act increased rather than decreased individual freedom by granting workers the same opportunities to join together as were enjoyed by employers: Employers formed associations to discuss common problems and search for solutions, so why not employees? Some business leaders hoped that unions could help stabilize their industries by preventing marginal employers from undercutting wage rates and labor standards and by increasing workers’ purchasing power.
Nevertheless, many employers openly flouted the new law. The historic General Motors sit-down strike and Memorial Day Massacre occurred in 1937— after the passage of the Wagner Act. In fact nearly two-thirds of the tremendous number of strikes in 1937 were exactly what the act sought to prevent: union recognition strikes. On the legal front, the new NLRB spent its first two years defending its existence. Federal judges issued injunctions against the NLRB, and two months after the passage of the Wagner Act, conservative lawyers attached to the American Liberty League declared that the Wagner Act was unconstitutional. The American Liberty League was bankrolled by major corporations; and in that period of misinformation and resistance, this pronouncement fueled legal attacks on the NLRB as well as continued opposition to unions and the new law. Not until the Supreme Court’s 1937 ruling in NLRB v. Jones and Laughlin Steel Corp., which declared the act constitutional, could the NLRB wholeheartedly attend to the business of enforcing the nation’s new labor policy.

In Their Own Words Senator Wagner Presents His Labor Relations Bill to Congress (March 1935)

Mr. Chairman and members of the committee, the National Labor Relations bill does not present a single novel principle for the consideration of Congress. It is designed to further the equal balance of opportunity among all groups that we have always attempted to preserve despite the technological forces driving us toward excessive concentration of wealth and power. . . .
I am not pleading for any special group. It is well recognized today that the failure to spread adequate purchasing power among the vast masses of the consuming public disrupts the continuity of business operations and causes everyone to suffer. . . .
The government policy of fixing minimum wages and maximum hours is not a definitive solution. It is merely the foundation upon which can be built the mutual endeavors of a revived industry and a rehabilitated labor. This process of economic self-rule must fail unless every group is equally well represented. In order that the strong may not take advantage of the weak, every group must be equally strong. Not only is this common sense; but it is also in line with the philosophy of checks and balances that colors our political thinking. It is in accord with modern democratic concepts which reject the merger of all group interests into a totalitarian state. . . .
Our alternatives are clear. If we allow Section 7(a) [of the NIRA] to languish, we shall be confronted by intermittent periods of peace at the price of economic liberty, dangerous industrial warfare, and dire depressions. On the other hand, if we clarify that law and bolster it by adequate enforcement agencies, we shall do much to round out the program for a balanced economic system founded upon fair dealing and common business sense.
Labor Relations Application What About Nonmajority Unions?
Since the 1940s U.S. labor relations have emphasized exclusive representation with majority support. But consider a situation in which some workers, but less than 50 percent, want a union to collectively bargain for them. Around the time of the Wagner Act in the mid-1930s, it was not uncommon for companies to bargain with a union in this situation, and the resulting contract would apply only to union members. In fact, the famous 1937 General Motors sit-down strike resulted in a members-only agreement because the UAW did not have majority support. In this situation the union is called a minority union or a nonmajority union because it represents only a minority of the workers. It is clear from Section 7 of the Wagner Act that workers have the right to engage in this type of concerted activity; but does a company have an obligation to bargain with a nonmajority union when there is no majority union present?
It has recently been argued that a company must indeed bargain with a nonmajority union; failure to do so interferes with an employee’s Section 7 rights and is therefore a Section 8(a)(1) unfair labor practice. Section 8(a)(5) was added late in the drafting of the Wagner Act and makes it explicit that a company must treat a union with majority support as the exclusive representative because there was significant employer resistance to exclusive representation (employers wanted to be able to continue to use company unions even when a majority of workers supported an independent union). But Section 8(a)(5) was not intended to limit employers’ bargaining obligation to cases of majority support.
Perhaps ironically, in the late 1930s and early 1940s unions were so successful in winning majority support that the use of nonmajority unionism faded away. And with it the legal doctrine that employers must bargain with nonmajority unions also faded from memory. As a result, without majority support a union today is considered a nonentity in the workplace, and U.S. labor relations have become in essence an all-or-nothing affair—a union is entitled to represent either all or none of the employees. But nonmajority unionism can provide representation to groups of workers who would otherwise be denied the opportunity, and it can also let unions demonstrate their effectiveness and generate majority support. Whether unions will revive their use of nonmajority unionism, and whether the legal system will support a return to the legislative intent of the Wagner Act and obligate employers to bargain with nonmajority unions in the absence of a union with majority support, remain to be seen.
Table 4.4
Table 4.5
THE TAFT–HARTLEY ACT
Although the Wagner Act grew out of the experience of earlier laws, it was a major increase in government intervention in economic and social affairs and continued to be controversial even after its constitutionality was affirmed: “Scarcely had the ink dried on the President’s signature establishing the NLRA as part of our national policy when bills to repeal or amend the Act began pouring into the congressional mills.” In the decade after the Wagner Act, Union Membership nearly quadrupled from 4 million to more than 15 million, and many felt that unions were too strong, lacked a sense of public responsibility, were controlled by communists or corrupt union bosses, and should be bound by the same responsibilities and restrictions that employers faced under the Wagner Act. Remember that the Wagner Act specified only employer unfair labor practices; unions were not restricted in any way. The pressures for reforming (or discarding) the Wagner Act boiled over with the Great Strike Wave of 1945–46 that followed the end of World War II. For the 12 months beginning in August 1945, 4,600 strikes occurred involving 4.9 million workers and resulting in nearly 120 million lost worker-days. There were large strikes in autos, steel, coal, rail, oil refining, longshoring, meatpacking, and electrical products. This level of strike activity surpassed any other year in U.S. history and magnified the perceived need to bring unions under control.

The Principles of the Taft–Hartley Act

A popular framework for thinking about labor law is to consider a pendulum that can range from strong bargaining power for labor on one side to strong bargaining power for companies on the other side. If the pendulum is too far to one side, either labor or management will have too much power, which will be bad for society as a whole. For much of the 19th and early 20th centuries, the absence of specific laws pertaining to collective bargaining left labor relations subject to common-law and business-law rulings shaped by classical economic beliefs about the importance of free markets. The pendulum favored employers—injunctions were issued, strikes broken, union leaders jailed, and union supporters blacklisted. The Wagner Act in 1935 sought to move the pendulum to the middle of the power spectrum by restraining employers’ abilities to repress unionization. However, by 1946 many believed that the Wagner Act had overcorrected the earlier problems: The pendulum swung through the middle and too far toward labor. Proposals for reform sought to fix the perceived excesses of the Wagner Act to move the pendulum to the middle of the spectrum.
Unlike today, when labor issues are rarely on the national agenda, labor relations issues in the 1930s and 1940s were a big deal. In fact, 17 bills to reform labor law were introduced on the opening day of Congress in 1947—the first Congress controlled by Republicans since 1930. The proposal that was ultimately enacted in 1947 was the Taft–Hartley Act , also known as the Labor Management Relations Act. The Taft–Hartley Act significantly amends the Wagner Act. These acts are still the basis of U.S. labor law and together are often referred to as the National Labor Relations Act (NLRA). Whereas the opening of the Wagner Act emphasizes inequalities between labor and management and therefore the need to promote collective bargaining, the Taft–Hartley Act, in contrast, declares,
Industrial strife . . . can be avoided or substantially minimized if employers, employees, and labor organizations each recognize under law one another’s legitimate rights in their relations with each other, and above all recognize under law that neither party has any right in its relations with any other to engage in acts or practices which jeopardize the public health, safety, or interest. It is the purpose and policy of this Act . . . to prescribe the legitimate rights of both employees and employers . . . , to provide orderly and peaceful procedures for preventing the interference by either with the legitimate rights of the other, to protect the rights of individual employees in their relations with labor organizations . . . , and to protect the rights of the public in connection with labor disputes affecting commerce.
To accomplish these objectives, the Taft–Hartley Act amends and adds to the Wagner Act in diverse and far-reaching ways; the full text is in Appendix A, and the major provisions are summarized in Table 4.6 . These changes can be usefully divided into three categories:
• Restrictions on union actions.
• Enhanced rights of individuals and employers.
• New dispute resolution procedures.

Taft–Hartley Restrictions on Unions

Union actions are restricted in the Taft–Hartley Act primarily by the addition of six union unfair labor practices (a seventh was added in 1959 to restrict picketing for union recognition). The Wagner Act’s employer unfair labor practices remain and appear in Section 8(a); Section 8(b) was created for the union unfair labor practices. The first three parallel the employer unfair labor practices: to restrain or coerce employees in the exercise of the rights guaranteed in Section 7 [8(b)(1)], to cause or attempt to cause an employer to discriminate against employees except for failing to pay any required union dues [8(b)(2)], and to refuse to bargain collectively with the employer [8(b)(3)].
Of the remaining three unfair labor practices, only 8(b)(4) is significant. This unfair labor practice prohibits unions from engaging in secondary boycotts and other forms of strikes and picketing that involve “innocent” employers. The term secondary boycott comes from the fact that a secondary rather than a primary employer is targeted—that is, a company that does not directly employ the workers who are involved in the dispute. For example, consider a union of brewery workers that is on strike against the maker of a certain beer that is sold in a local grocery store. A secondary boycott would occur if the union picketed the grocery store to tell consumers not to shop at the store. This is illegal because the grocery store is a secondary employer; the workers on strike work for the the beer maker, not the grocery store. In contrast, it would be legal for the union members to “picket the product” outside the grocery store and tell consumers not to buy the specific brand of beer because of a labor dispute: This action specifically targets the primary employer and is therefore acceptable.
Union actions are also restricted by a change that outlaws closed shop agreements. A closed shop agreement is a provision negotiated into a collective bargaining agreement that requires the employer to hire only union members. In other words, the workplace is closed to all except union members. Employers viewed this as especially pernicious because the employers cannot hire whomever they choose; rather, they must hire union members. In contrast, a union shop allows anyone to be hired; but to remain employed, workers must join the union within a certain amount of time (such as 30–90 days). An agency shop is similar; but rather than joining the union, workers must pay dues. Both are allowed by the Taft–Hartley Act, though later Supreme Court rulings rendered union shops enforceable only as agency shops in which workers can be forced to pay only the fraction of union dues that is germane to bargaining and administering union contracts; union shop clauses cannot compel workers to formally join unions. Moreover, Section 14(b) of the act allows states to pass right-to-work laws—laws that prohibit union or agency shop agreements. There are 22 such states—called right-to-work states—and union actions are further restricted in these states with respect to these types of membership provisions (see Figure 4.1 ).

Enhancing the Rights of Individuals and Employers

The second major category of the Taft–Hartley Act provisions enhances the rights of individuals and employers. These provisions again reflect the view that unions were too strong and the resulting perceived need to bolster the rights of other parties in the employment relationship. Section 7 is expanded from the Wagner Act to give individuals the right to refrain from concerted activity, and Section 9 is revised to add a decertification procedure by which individuals can oust their bargaining agent if they no longer desire union representation. Employers are granted rights by the employer’s free speech provision [Section 8(c)]. This provision lets employers express views about unionization as long as these expressions do not contain threats or promises. This is an important aspect of union organizing campaigns. Additionally, to serve employers’ demands for unquestioned loyalty among supervisors, supervisors were excluded from protection of the act. Supervisors can try to unionize, but it’s not an unfair labor practice to fire them in response. Another right granted to employers is the ability to file unfair labor practice charges against unions.

New Dispute Resolution Procedures

Finally, the Taft–Hartley Act addressed various dispute resolution mechanisms. The NLRB had been sharply attacked by business since its creation; the Taft–Hartley Act restructured the NLRB to separate the investigation/prosecution and judicial aspects of the agency (unlike all other federal agencies) and also prevented it from undertaking economic analyses—changes that significantly weakened the agency and forced it to become singularly legal rather than pragmatic. The board was also expanded to five members. To facilitate resolution of bargaining disputes, the act created the Federal Mediation and Conciliation Service (FMCS) to provide voluntary mediation to labor and management negotiators. Also, the U.S. president was authorized by the act to petition the courts to stop strikes that “imperil the national health or safety.” This national emergency strike provision is unsurprising when one remembers that this act was passed in the aftermath of the tremendous strike wave in 1945–46, though its provisions are used infrequently. President Bush used this power to stop a dispute that shut some Pacific Coast docks in 2002; before that, President Carter’s request to stop a 1978 coal strike was denied by the courts.
In sum, if unions were too powerful, the various amendments to the Wagner Act that were implemented by the Taft–Hartley Act in 1947 can be viewed as restoring a needed balance among individuals, unions, and employers. On the other hand, organized labor saw the Taft–Hartley Act as an opportunistic effort by business and conservative politicians to roll back labor’s protections and therefore labeled it the “Slave Labor Act.” This label might be more accurate for the more draconian original proposal in the House of Representatives than the final law that was passed, but it clearly underscores labor’s strong opposition. In this view, restrictions on secondary boycotts undermined union solidarity and prevented the strong from aiding the weak; the employer’s free speech provision legitimized employer interference in what should be a worker-only issue (whether to join a union); not protecting supervisor unions relegated the labor movement to representing only blue-collar workers; and the act generally made unions even more dependent on government control. Union leaders also felt victimized by the Taft–Hartley requirement that union leaders sign an affidavit swearing that they are not communists (this provision is no longer in effect). Many unions had already purged communists from their organizations, but the Taft–Hartley Act publicly equated unionism with communism. Business leaders did not have to sign such affidavits—only union leaders. Advocates of the industrial relations school of thought opposed the Taft–Hartley Act amendments as injecting too much government regulation into labor relations (such as with broad and vague union unfair labor practices). President Truman vetoed the Taft–Hartley Act, but his veto was easily overridden by an alliance of Republicans and conservative Southern Democrats. As such, the Taft–Hartley Act remains at the heart of U.S. labor law—and by some accounts, organized labor’s weakness—in the 21st century.

In Their Own Words Representative Hartley Reports His Labor Relations Bill to Congress (1947)

During the last few years, the effects of industrial strife have at times brought our country to the brink of general economic paralysis. Employees have suffered, employers have suffered—and above all, the public has suffered. . . .
During the 6 years preceding the enactment of the National Industrial Recovery Act of 1933, the United States had an average of 753 strikes a year, involving an average of 297,000 workers; during the next 6 years 2,541 strikes per year involving an average of 1,181,000 workers; and during the next 5 years—that is, through 1944—3,514 strikes a year involving an average of 1,508,000 workers. In 1945 approximately 38,000,000 man-days of labor were lost as a result of strikes. And that total was trebled in 1946, when there were 116,000,000 man-days lost and the number of strikes hit a new high of 4,985. The resulting loss in national wealth is staggering. . . .
For the last 14 years, as a result of labor laws ill-conceived and disastrously executed, the American workingman has been deprived of his dignity as an individual. He has been cajoled, coerced, intimidated, and on many occasions beaten up, in the name of the splendid aims set forth in Section 1 of the National Labor Relations Act. His whole economic life has been subject to the complete domination and control of unregulated [labor union] monopolists. . . . He has been forced into labor organizations against his will. . . . He has been prohibited from expressing his own mind on public issues. He has been denied any voice in arranging the terms of his own employment. He has frequently against his will been called out on strikes. . . . In many cases his economic life has been ruled by Communists and other subversive influences. . . .
The employer’s plight has likewise not been happy. He has witnessed the productive efficiency in his plants sink to alarmingly low levels. He has been required to employ or reinstate individuals who have destroyed his property and assaulted other employees. . . . He has seen the loyalty of his supervisors undermined by the compulsory unionism imposed upon them by the National Labor Relations Board. . . .
The bill attacks the problem in a comprehensive— not in a piecemeal—fashion. It is neither drastic, oppressive, nor punitive. . . . It does not take away any rights guaranteed by the existing National Labor Relations Act. It does, however, go to the root of the evils and provides a fair, workable, and long-overdue solution to the problem.
Table 4.6
Figure 4.1
THE LANDRUM–GRIFFIN ACT
In 1956 a New York journalist appeared on national television with dark glasses and bandaged hands and generated widespread public outrage about labor movement corruption. After publishing a newspaper column about organized crime in the New York garment and trucking industries, this journalist had been blinded in an acid attack linked to New York gangster Johnny Dio. A congressional investigating committee was formed in response; and through the McClellan committee hearings in 1957–1959, the American public learned about the links among Teamsters leader Jimmy Hoffa, Johnny Dio, and other organized crime figures and their use of sweetheart contracts (in return for kickbacks, union officials would ignore an employer’s contract violations such as substandard wages, though they would still collect union dues), personal loans from union health and welfare funds, and violence to keep resistant employers and employees in line. In fact, the committee eventually published 58 volumes of hearings and reports—34 about the Teamsters and the rest about four other unions. The McClellan committee concluded that rank-and-file union members lacked a voice and often the right to vote in internal union affairs, national union leaders abused their power over locals and union finances, and violence was used to keep members in line. This represented just 5 out of 200 or so national unions, so it is important not to overstate the extent of union corruption; nevertheless there were (and continue to be) unfortunate examples of mafia-infiltrated unions and corrupt union leaders.
Congress responded by debating various bills to address concerns with union democracy, financial transparency, and some revisions to the National Labor Relations Act (NLRA). As a result, the Landrum–Griffin Act was passed in 1959. 91 As emphasized by its opening declaration, this act focuses on internal union affairs:
In order to accomplish the objective of a free flow of commerce it is essential that labor organizations, employers, and their officials adhere to the highest standards of responsibility and ethical conduct in administering the affairs of their organizations, particularly as they affect labor–management relations. The Congress further finds, from recent investigations in the labor and management fields, that there have been a number of instances of breach of trust, corruption, disregard of the rights of individual employees, and other failures to observe high standards of responsibility and ethical conduct which require further and supplementary legislation that will afford necessary protection of the rights and interests of employees and the public generally as they relate to the activities of labor organizations, employers, labor relations consultants, and their officers and representatives.
To achieve union democracy, the Landrum–Griffin Act creates a bill of rights for union members that guarantees all union members equal rights of participation in internal union affairs, including voting and expressing views (see Table 4.7 ). Democratic standards for the election of union officers are also established.
Increased democracy should reduce union corruption, but the Landrum–Griffin Act tries to prevent union corruption and labor racketeering in three additional ways. First, unions and their officers are required to disclose financial records by filing reports with the U.S. Department of Labor. In fact, the formal name of the Landrum–Griffin Act is the Labor–Management Reporting and Disclosure Act. This reporting is intended to increase the transparency of union governance to prevent abuse—foreshadowing the attempts to increase the transparency of corporate governance 40 years later in the wake of the Enron scandal. Second, the act restricts the use of union trusteeships. National unions can take over the operation of a local union and replace the elected officers with an appointed trustee; the act tries to ensure that this power is used for legitimate purposes (cleaning up a corrupt local) rather than illegitimate ones (removing local leaders that are political opponents of the national leadership or installing a corrupt leader who is beholden to the national leadership). Third, the Landrum–Griffin Act establishes the fiduciary responsibility of union leaders.
Although the overwhelming purpose of the Landrum–Griffin Act is to increase internal union democracy and prevent union corruption, it also amended the National Labor Relations Act in a few minor ways. The rights of permanently replaced strikers to participate in NLRB elections were confined to the first 12 months of a strike; the Section 8(b)(4) restrictions on secondary boycotts were revised; a seventh union unfair labor practice [Section 8(b)(7)] was added to restrict picketing for union recognition; and hot cargo agreements were outlawed [Section 8(e)]. In labor relations, hot cargo consists of goods that are made by nonunion workers or by a company that is being struck; a hot cargo agreement is a union contract clause giving members the right to refuse to handle hot cargo. The Landrum–Griffin Act also created special exceptions in various areas for the construction industry because of its short-term nature of employment.

In Their Own Words Representative Landrum Introduces a Labor–Management Reform Bill (1959)

Mr. Chairman, together with the gentleman from Michigan [Representative Griffin], I have today introduced a nonpartisan bill, dealing with the tremendously vital issue of labor–management reform legislation. We did so only after the most thorough consideration, and in light of what we feel to be absolutely necessary in this field, if free and democratic processes in the industrial relations of our great Nation are to survive. . . .
I would call to the Members’ attention that the interim report of the McClellan committee found that there has been a significant lack of democratic processes in certain unions, that one-man dictatorships have thrived—in some instances for 20 to 30 years—and that through intimidation and fear, the rank-and-file union member has been deprived of a voice in his own union affairs. . . .
One of the basic underlying principles of both the Wagner Act of 1935 and the Taft–Hartley Act of 1947 has been the rights of employees—under the first to be free from employer domination, under the second to be free from union domination. That further legislation, however, dealing with union democracy is needed in 1959 cannot be challenged. As one union official put it in his testimony, “We believe that the control of the union by its membership is the best way to insure its democracy and keep the officers in line—I believe that the best demonstration of democracy in action, is where the people directly handle their own union business.”
This [our] bill seeks to accomplish, by insuring effective membership control. The [previous] bill also purports to contain reporting provisions, under which the goldfish-bowl approach would enable union members to see for themselves wrongdoing and take effective and corrective action. . . . Under the bill we propose, all unions of whatever size would be required to report pertinent financial data, informing the membership of possible conflicts of interest, and other shady deals . . . . . .
In conclusion, Mr. Chairman, let me say that the bill the gentleman from Michigan and I have introduced is not an antiunion bill, it is not a union busting bill, it is not an anticollective bargaining bill. It would not impinge in any way upon the lawful and legitimate purposes and activities of American labor unions. It is a bill which would restore the control of union affairs to union members.
Table 4.7
PUBLIC SECTOR LABOR LAW
The next major developments in U.S. labor law occurred in the public sector—government employees at the federal, state, and local levels. By 1959 the legislative framework for private sector labor law was nearly completely established, but it was just on the verge of erupting in the public sector. The National Labor Relations Act (NLRA) applies to private sector employers and workers nationwide. In contrast, public sector labor law has 51 separate jurisdictions—the U.S. federal government for federal employees and the 50 states for state and local government workers. Thus there can be significant differences in public sector labor law across jurisdictions.
Public sector unionization dates back to the 19th century: There was a strike in 1836 in the federal shipyards, a national teachers’ union was established in 1857, postal workers formed unions as early as 1863, and firefighters and police began organizing around the turn of the century. However, in the wake of a 1919 strike by Boston police that resulted in looting and violence, public sentiment became, in the words of Calvin Coolidge, who was governor of Massachusetts at the time, “there is no right to strike against the public safety by anybody, anywhere, any time.” As such, early laws and legal rulings treated attempts to bargain with governments as interfering with the responsibility of elected government officials to establish public policies and protect the public interest. In the 1950s this aversion to public sector unions started weakening in the face of worsening public sector employment conditions and a new legal respect for the freedom of association. The first public sector law giving government employees the right to engage in collective bargaining was passed by Wisconsin in 1959; the federal government and a number of other states followed in the 1960s. Since then public sector union membership membership has increased from less than 1 million in 1960 to nearly 8 million today—that is, from a union density of 10 percent to nearly 40 percent.
In the federal sector President Kennedy established limited bargaining rights, exclusive representation, and unfair labor practices for federal employees with Executive Order 10988 in 1962. Subsequent presidents revised this initial structure, and the resulting bargaining system was codified into law by Congress in 1978 through the Civil Service Reform Act . 96 This act protects most federal sector workers, though supervisors, the military, security agencies (like the FBI), the Post Office, and several other agencies are excluded. Postal employees are covered under the NLRA (but cannot legally strike), and it is illegal for military personnel to unionize. The major elements of the labor relations system for federal workers set forth in the Civil Service Reform Act parallel the NLRA framework: exclusive representation with majority support, certification elections, employer and union unfair labor practices, and an agency (the Federal Labor Relations Authority) that administers elections and unfair labor practice charges (see Table 4.8 ). However, there are some important differences between the two systems. In particular, strikes are prohibited, wages and benefits are excluded from bargaining, and unions with minority but not majority support have consultation rights so that a federal agency must consult with the union before changing working conditions. As long as one remembers that this is an oversimplification, labor law for federal employees can be summarized as “the NLRA without the right to strike.”
Labor relations for state and municipal workers are governed by the laws and courts of each state. First note that the courts have decided that preventing public sector workers from unionizing violates freedom of assembly and speech (this differs from the private sector because in the public sector the employer is a government), but there is no constitutional right of bargaining. Thus questions of public sector labor law focus on bargaining. With this in mind, it is useful to consider four categories of state public sector bargaining laws: comprehensive laws, narrow laws, no laws, and prohibitive laws. Comprehensive laws broadly grant nearly all government occupations—teachers, firefighters, police, state employees, and the like—the right to collectively bargain, whereas narrow laws apply to one or several occupations only. For example, Hawaii, Iowa, and New York have comprehensive laws; Wyoming’s narrow law covers only firefighters, and Indiana’s covers only teachers. States with no laws are silent on whether public sector bargaining is legal, whereas prohibitive laws ban it. All told, 26 states have comprehensive laws, 15 have narrow laws or executive orders, 7 have no laws, and laws in 2 states prohibit bargaining (see Table 4.9 ). In states with no laws, bargaining still occurs; this underscores the important distinction between unprotected and illegal union activity.
Unsurprisingly, the bargaining laws (where present) vary tremendously from state to state in operational details. The sentiment of “there is no right to strike against the public safety by anybody, anywhere, any time” is still widespread, so most public sector bargaining laws prohibit strikes for all public sector employees. Some states even harshly penalize strikers; for example, New York’s Taylor law imposes a “two for one” penalty for each day someone is on strike—their lost pay for the day plus a fine equal to their day’s pay. In contrast, some states allow strikes by nonessential workers—teachers, bus drivers, state workers, college professors—while banning strikes by essential workers—firefighters, police, prison guards. Public sector bargaining laws also differ in the types of dispute resolution procedures used as substitutes for strikes. There are additional operational differences in the scope of bargaining, the legality of the agency shop, and the wording of unfair labor practices. But the laws are generally based on exclusive representation with majority rule, certification elections, unfair labor practices, and administration via a specialized agency. As long as one remembers that this is an oversimplification, labor law for state and municipal employees—where it exists—can be summarized as “the NLRA usually without the right to strike.”
It is estimated that approximately one-third of public sector workers (excluding the military) are not covered by a bargaining law. Moreover, 20 to 25 percent of private sector workers lack the protections of the NLRA because they are supervisors or independent contractors or because they work for businesses that are too small to be covered or in excluded industries such as agriculture.
Table 4.8
Table 4.9
NLRB DECISIONS
The statutes that comprise both private and public sector U.S. labor law are quite static. In the private sector, in particular, most of today’s laws governing labor–management relations were written in 1935 and 1947. The Landrum–Griffin Act made some minor modifications, but the major focus of that act was internal union affairs rather than interactions between labor and management. In 1974 the NLRA was amended to include private sector hospitals and to provide stringent notice requirements before hospital unions could strike. These are the only changes since 1947 worth mentioning here. However, a second important component of labor law is much more dynamic and voluminous: the accumulated body of case law developed through National Labor Relations Board (NLRB) and court decisions and precedents. The same is true on a smaller scale for public sector labor law. In practice, both the stable statutes and the dynamic case law are criticized by various advocates, so reforming the NLRA is a perennial debate in labor relations.

NLRB Decisions and Precedents

The NLRA contains numerous general standards—interference, restraint, domination, discrimination, good faith; but in practice, what do these standards mean? The NLRB must apply the facts of specific cases to these general legal principles to determine if violations have occurred. When the NLRB hears a case, it issues a written decision that may serve as a precedent for future cases; a sample decision is presented in Appendix C at the end of this book). Between 1935 and 2008, the NLRB issued 353 volumes of decisions. It is difficult to keep up with these rulings, but labor relations professionals need to be generally aware of this body of case law. Moreover, some NLRB and court precedents are so important that they have become part of everyday labor relations jargon: Beck rights (from the 1988 Supreme Court decision Communication Workers of America v. Beck), the Mackay doctrine, Weingarten rights, the Borg–Warner doctrine, the Excelsior list, and the Wright Line test, to name a few.
The Wright Line test illustrates the importance of precedents for guiding legal decision making, and it pertains to the heart of U.S. labor law: the dividing line between legitimate Employee Discipline and discharge on the one hand, and unlawful retaliation for union activity on the other (an 8(a)(3) unfair labor practice). Under the Wright Line test established by a 1980 NLRB decision, the NLRB general counsel (the prosecution) must first show that (1) the disciplined or discharged employee was engaged in protected activity, (2) the employer was aware of the activity, and (3) the activity was a substantial or motivating reason for the employer’s action. If the general counsel establishes these facts, the burden of proof shifts to the employer to prove that it would have taken the same action even if the employee had not engaged in protected activity. Human resource managers therefore must be able to document that employee discipline and termination are applied consistently and for valid job-related reasons, and that the reasons for discipline are not a pretext for discriminating against organizing activity. This shows how labor law matters for the everyday practice of labor relations, even in nonunion situations.
A major theme in many areas that the NLRB has to adjudicate is balancing property rights with labor rights. The Wright Line test tries to balance employers’ rights and needs to discipline and discharge poor performers with employees’ rights to engage in protected activity under the NLRA. Preventing employees from wearing pro-union buttons and other insignia interferes with protected activity and therefore violates Section 8(a)(1)—unless the employer can demonstrate a legitimate business need. Employers can use surveillance equipment to monitor employees to maintain security, but aggressive surveillance that might be used to retaliate against union supporters is viewed by the NLRB as going beyond the need to protect property rights and violates labor rights. Sticky issues in labor law pertaining to union organizing, bargaining, and strikes also often involve difficulties in balancing property rights with labor rights.
NLRB case law—the dynamic, interpretive aspect of labor law—enables the law to accommodate new situations that were not present in 1935 and 1947 and to therefore balance property rights and labor rights in a changing environment. For example, are a company’s restrictions on employee use of its e-mail system a legitimate use of property rights, or do they violate labor rights by interfering with concerted activity such as discussing working conditions? Such questions are addressed by NLRB decisions. However, the NLRB framework for adjudicating U.S. labor law has critics. The board’s five members who decide cases are political appointees, and few deny that there are political influences on major NLRB rulings (see Table 4.10 ). One critic goes so far as to assert that “national labor policy is in shambles in part because its meaning seems to depend on which political party won the last election.” Other labor supporters argue that the NLRB lacks sufficient remedial powers—in particular, the lack of punitive damages means that employers find it cost-effective to commit unfair labor practices. If this is true, the penalties for labor law violators need to be strengthened. Unions are also critical of how employers can manipulate NLRB hearings and judicial appeals to create legal delays that frustrate union organizing and bargaining.

Debating the Need for Labor Law

Reform Beyond the operation of the NLRB, there are a number of ongoing labor law controversies. As more employees are asked to exercise independent judgment or delegate minor tasks to coworkers, who exactly is a supervisor under the NLRA has become a contentious legal issue, especially as employers have increasingly tried to exclude nurses and others from coverage under the act. The increased importance of undocumented immigrant workers for the U.S. economy highlights another controversial area: Undocumented workers are protected under the NLRA, but the 2002 Hoffman Plastic Supreme Court decision denies back pay awards to undocumented workers when their NLRA rights are violated. The NLRA protects the right to strike, but the Supreme Court lets employers use permanent strike replacements. One can also argue that judges have rewritten the NLRA through legal rulings that significantly weaken the original law. So there continue to be calls to reform substantive aspects of the NLRA. Union proponents favor expanding NLRA coverage to supervisors, streamlining the certification election process to determine majority support, and banning the use of permanent strike replacements.
Although Congress has debated various reform proposals, none have passed. A recent example is the Employee Free Choice Act. This bill is organized labor’s top legislative priority: It would certify unions based on signed authorization cards rather than an election, authorize the use of first contract arbitration, and mandate stiffer penalties for violators. The Employee Free Choice Act was passed by the U.S. House of Representatives in 2007, but a lack of Senate support and the threat of a veto by President Bush killed it. After the election of President Obama, this bill was promptly reintroduced in Congress in 2009 and has received a lot of media attention. It is likely to again pass in the House but not garner enough votes to break a Senate filibuster unless there are compromises on its provisions.
Others criticize the NLRA framework for reducing labor unions to economic agents. Rather than seeing freedom of association and the right to strike as fundamental civil liberties that support democracy, workers are legally protected only when they pursue narrow economic interests such as higher wages. Taking this a step further, critical scholars advocate more sweeping changes that would shift U.S. labor law away from seeing unions as limited workplace advocates of workers (as in the industrial relations school) toward broader visions of unions as key institutions of the working class across workplaces and throughout the political and economic aspects of society (as in the critical industrial relations school). Such changes require weakening the dominance of employers’ property rights, increasing union participation in corporate governance, and removing barriers to broad-based working-class solidarity like the prohibition on secondary boycotts. In a different vein, advocates of using joint (nonunion) labor–management committees for improving workplace issues lobby for a loosening of the Section 8(a)(2) ban on company-dominated unions; this too has been considered by Congress but has not been enacted. Still others favor repealing the NLRA: Adherents of the mainstream economics school see the NLRA as interfering with the achievement of economic prosperity through free markets and individual action.
An alternative view is that the NRLA assumptions—especially a sharp divide between managers and workers in stable, mass manufacturing industries—no longer match the 21st-century world of work based on knowledge workers in a global system of flexible production. The industrial relations school of thought implies that new institutions should be created to place checks and balances on free markets, promote efficiency, equity, and voice, and balance property rights with labor rights. These various perspectives on labor law reform are important for thinking about future directions for U.S. labor relations. But first, discuss the major processes of the current U.S. labor relations system—union organizing, bargaining, and grievance resolution. Understanding the development of the NLRA out of the industrial relations school of thought is a vital foundation for understanding these processes.
Table 2.10
EMPLOYMENT LAW
In U.S. legal and business circles it is common to distinguish between labor law, which focuses on workers’ collective actions, and employment law , which pertains to individual employment rights. In the absence of explicit laws, the U.S. employment relationship is governed by the employment-at-will doctrine, which means employees can be hired under any conditions and fired at any time for any reason. Under the employment-at-will doctrine, outstanding job performers can be fired because their supervisors dislike them, because of their gender or their race, or for any other arbitrary reason—and in return, employees are free to quit at any time.
The earliest attempts to temper the at-will doctrine occurred in the area of safety and health as various states enacted laws specifying minimum safety standards around 1900, though these laws were generally ineffective. Many states also passed workers’ compensation laws between 1910 and 1920, and they are now universal. Because of these workers’ compensation policies, employees do not have to sue their employers in court to collect damages if they are injured on the job; rather, employees are now guaranteed a set schedule of benefits. This tempers the at-will doctrine by requiring workers’ compensation insurance and by prohibiting an employee from being fired in retaliation for filing a valid workers’ compensation claim. Workers’ compensation laws were probably passed much earlier than other employment laws because employers benefit substantially: They are shielded from litigation expenses and the possibility of large damage awards.
During the Great Depression adherents to the industrial relations school of thought believed that both unionization and government regulation of the employment relationship were necessary for balancing efficiency, equity, and voice. Unions can help equalize bargaining power between employers and unionized employees, while laws can ensure minimum standards for all employees. Consequently, the New Deal period not only saw the passage of the Wagner Act promoting unionization but also advanced employment law through the passage of the Social Security Act (1935) and the Fair Labor Standards Act (FLSA, 1938). The Social Security Act established what has grown into OASDHI: old age, survivors, disability, and health insurance, which provides federal monetary assistance and health care coverage to retirees, the disabled, and their dependents. This legislation also established a system of state unemployment insurance benefits programs administered under the Federal Unemployment Tax Act. The FLSA created a federal national minimum wage, a mandatory overtime premium for covered workers for hours worked in excess of a weekly standard (now 40 hours), and restrictions on child labor.
As noted earlier, private sector labor law was largely enacted before 1960. By that time employment law consisted of various forms of social insurance (workers’ compensation, unemployment insurance, Social Security) and protective employment standards (minimum wages, maximum hours, and child labor restrictions). Between the 1960s and the present, private sector labor law has received little attention by lawmakers while employment law has exploded. Consistent with the civil rights movement of the 1960s, many new employment laws target discriminatory employment practices. The Equal Pay Act of 1963 prohibits discriminating between men and women in determining compensation for equal jobs. Title vii of the civil rights act of 1964 prohibits employment discrimination by both employers and unions on the basis of race, color, religion, sex, or national origin. The americans with disabilities act (1967) extends Title VII’s protections to age discrimination against employees over the age of 40, and the Americans with Disabilities Act (1990) adds disabled individuals to the list of protected classes. The Civil Rights Act of 1991 strengthens these nondiscriminatory laws by adding the possibility of compensatory and punitive damages, not just back pay.
Other employment laws passed since the 1960s mandate employment conditions beyond the wage, hours, and child labor provisions specified by the FLSA. The Occupational Safety and Health Act (1970) obligates employers to provide safe workplaces and empowers the Occupational Safety and Health Administration (OSHA) to determine specific safety standards. The Employee Retirement Income Security Act (ERISA, 1974) establishes basic requirements for employer-sponsored pension plans and other benefits to protect employees against abuse and loss of benefits; some of these requirements and protections were strengthened in 2006 in the Pension Protection Act. The Worker Adjustment and Retraining Act (WARN, 1989) requires employers to provide advance notice of mass layoffs, and the Family and Medical Leave Act (FMLA, 1993) guarantees employees 12 weeks of unpaid leave to care for themselves, their parents, or their children. Finally, state courts have developed a patchwork of limited exceptions to the employment-at-will doctrine, such as when a dismissal violates a public policy or when an employee handbook constitutes a valid employment contract.
The rise of employment law is a significant feature of the modern U.S. employment relationship and is important for labor relations. On a practical level, these laws directly affect labor relations by providing standards that both employers and unions must fulfill, such as nondiscrimination or family leave. Moreover, research shows that unions facilitate the fulfillment of the promises of employment law, such as the receipt of unemployment insurance benefits. On a broader level, the sufficiency of employment law protections against the potential abuses of the employment-at-will doctrine provides a basis for evaluating the need for labor unions in the 21st-century employment relationship. In other words, does employment law give nonunion workers sufficient levels of equity and voice? By some accounts, employment law has made unions obsolete by providing basic protections, and the rise of employment law may therefore underlie the long-term decline in union density. Other observers think the exceptions to the employment-at-will doctrine are still quite limited. Age discrimination, for example, is permissible toward workers under the age of 40, and many other areas are untouched by employment law—workers have been fired for living with someone without being married, smoking, drinking, motorcycling, and other legal activities outside work. Workers can even be fired for saying, “Blacks have rights too,” to a coworker. In contrast to the standard of just cause discipline and discharge prevalent in union contracts, the current nonunion exceptions to the employment-at-will doctrine do not amount to broad protections against unfair dismissal for nonunion workers. Whether this narrowness of employment law is evaluated as sufficient for the 21st-century employment relationship (as in the mainstream economics and human resource management schools of thought) or not (as in the industrial relations and critical industrial relations schools of thought) has important ramifications for the future role of labor unions.

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