IN LATE 1988, Electromation, an Elkhart, Indiana-based manufacturer of small electrical items, recognized that it was facing financial difficulties.
Concluding that it needed to undertake cost-cutting measures, Electromation's executives decided to cut back on the company's bonus system for faithful attendance and to forego wage increases for the upcoming year. The company announced the cut-backs to its approximately 200 workers at an employee Christmas party on December 23 at which it also distributed length-of-service bonuses designed to take the place of the wage increases.
When the workers returned to work after New Year's Day, they presented Electromation with 68 signatures complaining about the company's policy changes. After holding a meeting with a selected group of employees, management realized it had trouble on its hands.
The company decided to set up "action committees" comprised of employees and members of management to help improve morale. Company executives selected the members of the committees, coordinated them, provided facilities where they could meet and paid employee-members for attending the meetings. The company also selected the issues the committees would address: absenteeism/infractions; no smoking policy; communication network; pay progression for premium positions; and the attendance bonus program. The committees would make recommendations to management, which would evaluate them and implement suggestions it found feasible.
The employees were not very enthusiastic about the action committees; in the words of a National Labor Relations Board (NLRB) administrative law judge who later examined the case, "They just wanted action and did not want any more committees." Nonetheless, the committees were selected and began their work. At about the same time, in January 1989, some of the employees contacted the Teamsters, which began a union organizing drive among the Electromation workers. In mid-February, the Teamsters demanded company recognition of the union as the representative of the Electromation employees, and petitioned the NLRB for a certification election.
The Teamsters lost the subsequent March 31, 1989 election. But the union did not accept the result meekly. It cried foul and asked the NLRB, the federal agency which regulates collective bargaining, to investigate whether the workers were given a fair choice in the election.
The Teamsters charged that Electromation's action committees constituted a management-dominated employee organization, in violation of the 1935 National Labor Relations Act (NLRA, or the Wagner Act), which sought to prohibit businesses from forming "company unions" to preclude independent unions from representing workers. The existence of the action committees, the Teamsters contended, misled workers into believing they already had a means to bargain collectively with the company and interfered with their right to organize an independent union.
Administrative Law Judge George F. McInerny agreed with the Teamsters. He ordered Electromation to disband the action committees and instructed the regional office of the NLRB to hold a new union election at the company. The Teamsters won the new election, and a few months later had a union contract.
When Electromation appealed McInerny's decision to the full National Labor Relations Board, the business community saw more at stake than just the fate of a small Indiana company's employee committees. Big business groups decided to turn Electromation into a test case which the Detroit News labeled a battle for the soul of labor law. The NLRB's December 1992 ruling upheld McInerny's decision in strong terms, but it is a ruling that may soon be eroded or legislated away.
"Cooperative" programs
Against the background of concerns about international competitiveness, labor- management cooperation programs became the rage among U.S. corporations in the 1980s, and remain so today. According to a 1992 survey by Fortune magazine, 80 percent of the nation's 1,000 largest corporations have some type of employee participation program.
Known variously as quality circles, team concept, jointness or participation programs, these labor-management cooperative programs appeal to benign concepts like harmony and teamwork in an effort to subordinate conflict between workers and their employers. With the power and influence of organized labor in the United States dropping precipitously over the last two decades, few unions have been willing to oppose the cooperative programs so enthusiastically advocated by management, and many unions actively support them.
Among the more progressive and dissident elements in the labor movement, cooperation programs have been widely denounced [See "Management By Stress," Multinational Monitor, January/February 1990]. Critics charge the purpose of the programs is to squelch labor militancy by coopting workers and their unions so that they identify with management and lose sight of their independent interests. Cooperative programs are misnamed, they assert, since they are controlled almost entirely by management, which determines which topics joint committees can address and which they cannot. Finally, critics allege, the productivity gains these programs generate generally stem from forcing employees to work faster, not by improving the production process.
Whatever the merits of the critics' claims, it is clear that cooperation schemes represent a major departure from traditional U.S. labor-management relations. And since the U.S. Congress enacted the Wagner Act with the traditional, adversarial model of labor relations in mind, many new cooperative plans and committees seem to run afoul of the law. Accordingly, the business community is eager to see the law modified - and it hoped the NLRB might do that through the Electromation case.
Powerful business groups, including the National Association of Manufacturers and the American Iron and Steel Institute, jumped into the case as friends of the court to argue for management. They launched a media campaign, demanded rare oral argument before the full NLRB and submitted briefs to the Board totalling more than 400 pages.
The business groups asked for "clarification" of the law to allow employers to dominate committees if their "intent" was good. They argued that because Electromation executives did not have knowledge of the Teamsters' organizing drive when the company set up the action committees, the intent of the committees was not to prevent organizing.
The union responded that the intent of the company is irrelevant. By their very nature, the Teamsters and others argued, cooperation teams squelch independent concerted worker activity. They function as an alternative to independent labor organizations, and lead employees to believe their grievances may be addressed through cooperative committees. The problem is that those committees are under management's control; anything short of a real union prevents workers from joining together to advance their interests in bargaining with their employer.
The NLRB decision
The NLRB rejected the arguments of Electromation and its business allies. Using its traditional two-step analysis, the NLRB concluded first that the company's action committees were labor organizations, and second that they were management-dominated. When the Electromation employees resisted the initial suggestion to create action committees, the Board concluded, the company essentially issued them an ultimatum that they could accept the committees or accept the changes introduced by management at the 1987 Christmas party. Every element of the committees reflected management domination, the Board decided, ruling: "The [company] drafted the written purposes and goals of the Action Committees which defined and limited the subject matter to be covered by each Committee, determined how many members would compose a committee and that an employee could serve on only one committee, and appointed management representatives to the Committees to facilitate discussions. Finally, ... [Electromation] permitted the employees to carry out the committee activities on paid time within a structure that the [company] itself created."
The case really was not that close. All 13 prior U.S. Supreme Court decisions on the contested issues have been decided unanimously. Electromation and its friends were asking the Board to ignore that precedent in light of the stagnant U.S. economy and the widespread use of labor-management cooperation schemes. But they asked for too much.
Most NLRB decisions on employee committees or employer-dominated unions are short and pro forma. In this case, however, the Board issued a lengthy opinion. It harked back to the passage of the NLRA in 1937 and the words of Senator Wagner, the author of the NLRA, on the pernicious effects of management-dominated employee committees or unions: "Genuine collective bargaining is the only way to attain equality of bargaining power. ... The greatest obstacles to collective bargaining are employer- dominated unions, which have multiplied with amazing rapidity since the enactment of [the National Industrial Recovery Act]. Such a union makes a sham of equal bargaining power. ... [O]nly representatives who are not subservient to the employer with whom they deal can act freely in the interest of employees. For these reasons the very first step toward genuine collective bargaining is the abolition of the employer-dominated union as an agency for dealing with grievances, labor disputes, wages, rates or hours of employment."
The Board concluded its decision by denouncing Electromation for trying to create the impression that the action committees were bilateral solutions to problems when they were actually a unilateral, management-imposed form of bargaining or dealing.
The meaning and reaction
Labor and management divided on the meaning of the Electromation decision, but not in entirely predictable ways. Normally, the winning side in a legal dispute tries to read a court or administrative agency's decision broadly and the losers attempt to explain why the ruling applies only to the specific facts in the case decided. To a significant extent, those typical, post-decision roles were reversed in this instance.
Following the decision, the AFL-CIO issued a perfunctory statement that said, "All that the National Labor Relation Board's Electromation decision does is to faithfully follow what the [Wagner] Act says and what it means." The AFL-CIO's position essentially is that ruling would not impede the ability of corporations to create much- needed employee participation committees, but that the committees should be established on an "honest and equal" basis: "Only companies that are commited to an honest and equal partnership between management and labor can create and sustain the kind of employee participation that is essential if this country is to meet the competitive challenge of a world economy."
In notable contrast, the Teamsters, now headed by reformer Ron Carey, more directly challenged the entire concept of labor-management cooperation as it is currently conceptualized. Carey interpreted the ruling in terms that apply more generally to all jointness programs. "This ruling exposed management-dominated quality of work life programs for what they are: attempts to pit worker against worker and undermine workers' rights," he said. Carey suggested an entirely different way to improve labor- management relations, saying, "It's time to strengthen this country's labor-management relations by restoring the right to organize and bargain collectively that has been systematically undermined in recent years."
But it was business groups that interpreted the NLRB decision as the greatest threat to currently existing labor-management cooperation schemes. Quentin Riegel, deputy general counsel at the National Association of Manufacturers, told Multinational Monitor, "We are very concerned about the implication of the Electromation decision because although the National Labor Relations Board tried to make the decision as narrow as it could, the decision on its face seems to apply to any cooperative committee between workers and management. All such cooperative committees are now subject to challenge by unions or employees claiming that they violate the National Labor Relations Act." The strategy underlying the business response to the Electromation decision is clear: business groups are hoping to have the National Labor Relations Act itself changed.
Electromation's aftermath
The prospects for business groups succeeding in pressing for legislative or judicial reform of U.S. labor law on the matter of employee committees are unclear, but certainly not hopeless.
The NLRB itself may work to narrow its ruling in Electromation. NLRB member Dennis Devaney told a Stetson University conference in January that the Electromation opinions will be clarified in future cases and in Congress. He teased the conferees with insinuations that a forthcoming case was "in some ways even more interesting" than Electromation.
The Electromation decision specified that one problem with the company's action committees was that they were established to resolve employee grievances, not to discuss product quality, and intimated that labor-management committees devoted to product quality issues might be viewed differently. The NLRB may follow up on that suggestion and hold in future cases that management-dominated worker committees devoted to product quality are permissible. That will be a very difficult tack to navigate, however, because even committees focused on quality issues almost always end up discussing working conditions, which is a subject for collective bargaining under the NLRA.
The Electromation decision will also be challenged in Congress, where Representative Steve Gunderson, R-Wisconsin, and Senator Nancy Kassebaum, R- Kansas, have proposed legislation to ensure that cooperative committees will be legal, with or without union participation.
Support for legal change may also be forthcoming from the Clinton administration. In March 1993, Secretary of Commerce Ron Brown and Secretary of Labor Robert Reich announced the formation of a 10-member "Commission on the Future of Worker- Management Relations." According to the panel's mission statement, it will consider "what (if any) new methods or institutions should be encouraged, or required, to enhance workplace productivity through labor-management cooperation and employee participation" and "what (if any) changes should be made in the present legal framework and practices of collective bargaining to enhance cooperative behavior, improve productivity and reduce conflict and delay."
In announcing the new panel, Brown said, "We must create an environment within which American business can prosper. An instrumental part of this mission is to create a new model of worker-management relations that allows American businesses to flourish." Reich added, "We are seeking to establish new partnerships between workers and managers."
The wave of enthusiasm for cooperation schemes has not yet crested, and it is quite possible that it will gather enough force to wipe out many of the traditional protections guaranteed workers by U.S. labor law. Business interests clearly plan to do everything in their power to achieve that result; unfortunately, while the Teamsters and some other national unions and local labor activists may oppose their efforts, the response of the mainstream of the U.S. labor movement is less clear. The AFL-CIO may try to use the panel to revive 1978 legislation to streamline NLRB procedures for organizing unions. But that is not in the panel's mission statement, and the 1978 reforms went down in a Senate filibuster.
The most powerful force opposing corporate-driven changes in U.S. labor law may be business leaders' fear that it is not worth the risk of amending a body of labor law and focusing attention on labor law enforcement mechanisms that are now strongly pro- management. At a conference sponsored by the National Association of Manufacturers, former NLRB General Counsel John Irving, now with a management firm, warned that business could be "walking into a trap" by proposing changes in the NLRA, since labor organizations might be waiting with their own labor law reform package. Rosemary Collyer, another former NLRB general counsel who now works with management, urged companies simply to maintain their labor-management cooperative committees. Even if the committees are vulnerable to challenge, she said, in most instances the only NLRB remedy would be to order disbandment, and that will only occur in the relatively few cases where the NLRB chooses to undertake enforcement action.