Entrepreneur: Start & Grow Your Business

Work teams and unions: keeping employee involvement legal.


by Thomas, Steven L.^Best, Judy
Business Forum • Summer-Fall, 2001 •

The nature of the American workplace has undergone a radical transformation, much of it occurring over the last decade. In the face of challenges from increasing global competition, organizations have been continuously pressured to control costs, increase productivity, and improve product and service quality. Efforts for improved organizational effectiveness have taken forms that range from corporate downsizing and massive restructuring, to the introduction of Total Quality Management and reengineering programs.

One common thread running through attempts at organizational revival has been the move to restructure conventional work systems by replacing traditional hierarchy with team based work structures. In many organizations, autonomous work teams allow employees to collectively make decisions traditionally reserved for supervisors and managers. Although many work teams are responsible for relatively simple decisions such as scheduling, maintenance, and problem solving issues, some have assumed what have traditionally been managerial functions such as employee selection, performance appraisal, and employee discipline.

Management scholars and practitioners alike attribute many advances in productivity and quality to the successful introduction of work team arrangements. One major problem for organizations, however, has been that some work team arrangements may run counter to American labor law that requires organizations to maintain an arm's length relationship with groups that negotiate over wages, hours, and working conditions. Since many work teams collectively make decisions regarding some of these aspects of the employment relationship, and since the groups have been created by management, the National Labor Relations Board (NLRB) and the courts have determined that some work teams are illegal in companies dominated labor organizations. This article explores this conflict between modern work structures and the law.

Company Dominated Unions: A Bit of Labor History

The onset of the Great Depression with its economic hardship gradually produced a social climate more accepting of the legitimacy of labor unions and collective bargaining. Changes in public attitudes were soon reflected in this country's political environment, and, ultimately, in new legislation aimed at addressing legal tactics that had frustrated union formation for a number of years.

In 1932, Congress passed the Norris-LaGuardia Act which removed several le gal barriers that companies had previously used to prevent union organizing. As union organizing efforts increased, employers began to look for new tools to discourage union activity. A particularly effective tool was to initiate employee involvement committees friendly to the interests of management. These "company dominated unions" were created because employers recognized workers' desires to exercise collective control over their employment situation. Company unions, not affiliated with the union movement and dependent on the financial support of the company, allowed this expression in a non-threatening manner and served to block the formation of legitimate unions. True collective bargaining was nonexistent because employers dominated the selection of representatives and controlled the activities of the association.

Managerial tactics continued to prevent union formation during the latter years of the depression. Congress recognized that workers acting individually were powerless to deal with management tactics, and further felt that to stimulate an economic recovery it was necessary to encourage the practice of collective bargaining and give employees the right to form and join unions. As a result the Wagner Act was passed in 1935 to give workers broad rights to form and join unions, to require bargaining on the part of employers, and to prevent companies from interfering in the formation of a union.

Aware of company-dominated unions, Congress specifically prohibited employer participation in labor unions and organizations, favoring collective bargaining by bona fide independent unions as the exclusive representative of employees, and preserving the notion that employment should be contractually based. The theory was that cooperation between industry and labor would be possible only when either side is free to contract with the other or to withdraw, and that mutual respect and industrial peace are most likely to result when employers deal with independent labor organizations.

The language of the Wagner Act made it clear that Congress intended to abolish the company-dominated union. Section 8(a)(2) of the Act provides that employers "may not dominate or interfere with the formation or administration of any labor organization, or provide financial or any other support to labor organizations." In Section 2(5), Congress defined a labor organization as "any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work." The protections in these sections were not meant to totally prevent employee representation outside of labor unions, but they were intended to prevent any form of employee representation dominated by the company. The overall objective of the Act was, there fore, cooperation between employers and employees, dealing with one another on an equal footing.

In 1947, in response to what was generally perceived to be union abuses, Congress amended the Wagner Act with the Taft-Hartley Act, outlawing a number of union practices and providing somewhat more discretion for employers in terms of their ability to actively resist unionization. Early drafts of Taft-Hartley included a proposal that would have allowed employers to form or maintain employee committees to discuss working conditions where no union existed, but the final version of the Act did not include this proposal (Martin, 1996). Laws regulating private sector labor relations in the United States, have a common assumption: an employment relationship characterized by hostility between labor and management. The U.S. labor laws were not written with cooperative workplace arrangements in mind at all, even if some room was left for some forms of these arrangements (Suntrup and Barnum, 1994).

After the Wagner Act became firmly established, relatively few charges involving company dominated unions were prosecuted. Strict enforcement of the Wagner Act and active oversight by legitimate unions served to discourage most post-Act employer attempts to dominate unions. By the 1970s, however, new work structures began to appear that were never envisioned by the framers of the Wagner Act. These work structures evolved from attempts to improve the design of jobs in order to make them more intrinsically interesting to workers and, in turn, to enhance the motivational potential of each job. Eventually, organizations began to turn to work teams or autonomous work groups in an effort to capitalize on the creative energies of their labor forces and to become more responsive to an increasingly changing and competitive global business environment.

The Evolution of the Employee Involvement Movement

There is little doubt that interest in work teams or autonomous work groups has exploded in recent years. A computerized literature search conducted by the authors revealed hundreds of recent references to work teams. The interest in work teams is understandable since they are at the heart of changing workplace structures. Many organizations have abandoned narrow job descriptions and hierarchal work structures in order to achieve greater organizational effective ness through work team arrangements. Different work teams vary in respect to who makes decisions and the level at which decisions are made, but most arrangements share a common feature: they empower employees by delegating to them some of the decisions normally made by managers in more traditional organizations. Some teams have authority to implement decisions without management approval, and the limits of their discretion are clearly defined. By contrast, cross-functional or autonomous work teams may be distinct structures in an organizational system, are largely self-managing, and may make traditionally management decisions as far-reaching as deciding on work methods, scheduling, hiring, and pay adjustments.

Changing Assumptions about Work and Workers

Management models addressing the universal challenges to improve operational efficiency demonstrate the evolution of employee and labor relations over time. More than half-a-century ago, Frederick Taylor's scientific management model focused on the one best way to do each task, explicitly moving thinking, planning and control tasks from the shop floor to the manager's office. In the name of efficiency, workers were to do what they are told and only in the manner pre scribed. Although subsequent "human relations" models of work behavior stressed that managers had to understand and be sympathetic to employees, the main objective was still compliance with authority.

Many of the traditional assumptions regarding work behavior were challenged by management scholars during the 1960s, but changes in global markets beginning in the 1970s may have provided even more impetus to question traditional methods of managing. Japanese and European imports began to capture market share and create pressures for U.S. firms to operate more efficiently in order to compete. These global competitors offered relatively short runs of differentiated products that required a broadly skilled workforce and flexible job assignment systems that permitted shifting between various tasks on short notice. As American managers sought to hold their own in this global playing field, new theories emerged with concepts like just in time systems, total quality programs, continuous improvement initiatives, and employee involvement structures drawn from experiences in countries such as Japan and Sweden. U.S. managers adopted some features and rejected others, but initiatives were more likely to be adopted outside of a union setting, and involvement programs tended to be carefully controlled by management.

The first formal employee involvement programs following the enactment of the Wagner Act were quality of working life (QWL) committees designed to improve worker satisfaction with the work environment, with the hope that improved product quality, lower absenteeism, and greater company loyalty would result. These QWL programs grew rapidly during the 1970s and 1980s, but enthusiasm dwindled as increasing competition and economic pressure led management to focus on product quality and productivity issues (Nissen, 1994).

During the 1980s, plant closures and job losses, coupled with employer demands for labor concessions, created pressures for unions to cooperate in the search for improved productivity and product quality. Japan had seen incredible success in improving productivity and quality through the use of employee participation in quality circles (Hoerr, 1989). Quality circles used worker recommendations not only to improve product quality and reduce costs, but also to gain compliance with management decisions via shared information and a sense that workers had a say in the work environment (Cappelli and Rogovski, 1998). Quality circles, labor-management teams, and similar structures, found varying degrees of success in the U.S., but many companies failed to reorganize the work or enlarge the role of the worker (Hoerr, 1989). More advanced participatory methods attempted to incorporate these essential elements and tap the potential of employee involvement through increasing emphasis on the establishment of work teams. In many U.S. industries, work teams became important components of "lean production" features to produce just-in-time delivery systems and constant improvement programs (Nissen, 1994).

Employee Involvement and the High Performance Workplace

Team concepts appear to be essential to contemporary work reorganization methods that lead to the "high performance workplace." The high performance workplace (HPW) involves continuous training, multi-skilling, worker-management partnerships, pay linked to team performance and skills, and a supportive work environment (Nissen, 1994). The assumed benefits of HPWs are that workers find their work to be more meaningful and secure, and companies have better employees, more commitment, higher quality, and, ultimately, increased economic competitiveness (Ngai, 1994).

In 1994, a Presidential commission known as the Dunlop Commission was created to assess labor-management cooperation, employee participation, and workplace governance (Katz and Kochan, 2000). The Dunlop Commission found that despite their perceived benefits, only five percent of the nations workplaces were HPWs, (Ngai, 1994). Other research and survey work reveals similar results. According to a 1987 survey of 476 large companies, 70% had problem-solving committees like quality circles, but less than half the work force was involved. Other studies show that where participation is not mandatory only 25% of employees volunteer to join. There appears to be little opposition to these arrangements, but most employees are only passive supporters (Hoerr, 1989).

A Worker Representation and Participation Survey in the Dunlop Commission Report revealed that slightly more than half of employees reported some form of employee participation program operational in their workplace, but only 31% participate. More than three-fourths of all employees view them as either very or somewhat effective and say that the arrangements give them a greater say in their jobs. A two-to-one majority say they would like these types of programs at their workplaces. Other studies indicate broad support for some sort of worker committee to discuss concerns with employers. Workers, by a three to-one margin, prefer joint employee-management committees to union representation. Most employees, however, oppose management selection of committee members, and favor outside arbitration to resolve conflicts (Grattan, 1994).

Studies generally support the positive impact of employee involvement processes. A 1988 study found a positive relationship between employee participation and organizational commitment. A 1992 study further supported these findings, and found that commitment extended to both company and union. Two separate 1990 studies found statistically significant relationships between employee involvement and individual performance. A 1993 study found that while quality circles and similar programs had only weak effects on productivity, self-managed work-teams had strong effects on both productivity and work attitudes (Cappelli and Rogovski, 1998).

These studies demonstrate the potential that employee involvement offers. The employee involvement movement has focused on unleashing the creative energy in each employee recognizing that each wants to use his or her brain as well body on the job. If employee involvement is a better way of running the American workplace, and since many workplace partnerships currently exist, it might seem logical that employment and labor law would support such partnerships. There are, however, some very important and longstanding reasons why American labor law creates barriers to employee involvement. It is to this issue we now turn.

The Legal Environment of Employee Involvement Programs

In recent years the U.S. has seen increasing conflict between the functions of work teams and the language of the Wagner Act. During the mid-1970s, work team structures in several organizations began to make decisions involving issues such as safety, work rules, and incentive structures that traditionally had been subject to negotiation with labor unions. Unions began to feel that these company-instituted work structures were interfering with their attempts to organize workers, and were assuming functions that the law reserved for the bargaining agent. Unions argued that when an organization created autonomous work teams and allowed them to meet, discuss, and make recommendations on issues relating to wages, hours, and working conditions, the company was providing illegal financial support and control of a "labor organization" as defined under Section 8(a) (2) of the Wagner Act. While in some cases, such as the 1977 General Foods Corporation case, the NLRB ruled that work teams were not illegally dominated unions under the Wagner Act, autonomous work group arrangements have come under increasing legal scrutiny.

A number or articles during the 1980s, however, addressed management's concerns that the nation's labor laws were not responsive to changing team work and other workplace structural arrangements, and feared that the NLRB might ultimately rule some team arrangements illegal (see Deitsch, 1987; Schlossberg and Fetter, 1986; and Sockell, 1984). Their fears were realized as the NLRB ruled in more recent cases such as the 1992 Electromation and 1993 Dupont cases, that action committees in the former and "personal effectiveness program" groups in the latter constituted illegal company dominated unions under Section 8(a)(2) of the Wagner Act.

Electromation, DuPont, and similar cases have been alarming to employers who see the outcome as having a significant chilling effect on employee empowerment. Most agree that while companies should not be allowed to circumvent the intent of the labor laws, they should be allowed to create work team arrangements that tap the creative energies of employees and make the organization more responsive and competitive (Hanson, Porterfield, and Ames, 1995). Additionally, these cases create great uncertainty for employers because the distinction between legal and illegal team arrangements has been poorly defined. Rather than deal with the uncertainty, or out of fear of committing an illegal act, some managers may reject work team arrangements that would otherwise prove beneficial.

However, the Dunlop Commission found that between one-fifth and one-third of workers are involved in some form of employee participation effort with about 30,000 of these workplace systems already in existence in the United States. Their studies indicate that most American workers still want more input into decision making, desire even more labor-management partnerships, and that employee involvement programs are flourishing despite legal obstacles (Suntrup and Barnum, 1994). Companies continue to develop employee involvement plans even when the specter of an unfair labor practice exists because unless union organizers take an interest in a company's employee involvement program, it is unlikely to attract the attention of the NLRB. Indeed, searches reveal fewer than 60 cases from 1972 to 1993 in which the NLRB had disestablished an employee involvement committee. Also, even if a program is the target of a union complaint, the penalty is not normally severe, usually only an order to abolish the program and a requirement to post a statement of employee rights to be upheld under the Wagner Act (Dalton, 1996).

Defining "Labor Organization" and "Dealing With"

Establishing the legality of employee involvement programs is not always easy, but NLRB and court decisions have provided a two-part guide. The NLRB must first determine whether the employee involvement program is a "labor organization" as defined by the NLRA. Section 2(5) of the NLRA provides the criteria for a labor organization. It provides that "any organization of any kind" is a labor organization if:

1. Employees participate;

2. The organization is "dealing with" the employer; and

3. These dealings concern conditions of work, grievances, labor disputes, wages, rates of pay, or hours of employment. Various case decisions add a fourth item in this determination:

4. Does the committee operate in a representational capacity for their employees?

The label "employee involvement group" assures that the first criterion is met--employees do participate. The remaining distinction between an employee involvement groups and a labor organization must rely on answers to the remaining criteria: is the organization dealing with the employer, and, if so, what are the subject matters of the dealings? The case of Electromation, sets the foundation.

In 1988, Electromation, an Indiana electrical component manufacturing company, unilaterally proposed to cut an attendance bonus and eliminate wage increases in order to reduce increasing financial losses. Employee complaints and an employee petition led management to organize five action committees of employees and managers to help reduce losses. Employees were invited to sign up, and then management posted the lists of members of each committee to allow all employees the opportunity to discuss concerns with committee members. The company paid committee members for their time working with the committee and supplied all necessary materials.

About one month after the committees were formed, a union requested recognition from Electromation. In response to the union's demand, the Electromation president stopped company participation in the committees, stating that committees could continue to meet on their own if they liked. No committee proposals were ever implemented: the union lost the election and filed unfair labor practice charges against Electromation.

The administrative law judge ruled that the action committees constituted an employer-dominated labor organization. Additionally, the NLRB found that the company had set up "a bilateral process involving employees and management to reach bilateral solutions on the basis of employee initiated proposals." The NLRB felt the committees were "dealing with the employer" on "conditions of employment" like employee absenteeism and remuneration via bonuses or other monetary incentives. The NLRB also noted that Electromation pitted the committees against the union that was trying to organize employees when it suspended, but did not disband, the commit tees during an organizing campaign. Finally, the Board held that the Action Committees were designed to allow employees to act on behalf of other employees.

Despite the Board's unanimous decisions in the Electromation case, three Board members wrote separate concurring opinions to emphasize the fact that employee committees could be found lawful under different factual settings. One member indicated that if the committee had not acted in a representative capacity, the committee would have been out side the legal definition of labor organization. The same would be true if it had simply provided ideas or suggestions to the employer. Another member noted that this case did not present a "quality circle" approach or "represent the type of program which gives emphasis on effective employer/employee communication." This particular Board member would have allowed committees established for "the purpose of fostering better communication over such matters as 'productivity and efficiency problems in the workplace'."

The Seventh Circuit affirmed the NLRB's Electromation decision. The court clearly recognized the growing importance of employee involvement organizations, applauding employer efforts to improve the workplace. The court encouraged the use of legitimate company sponsored employee involvement programs that are independent, do not function in a representational capacity, and focus on productivity, efficiency, and quality control. The court upheld the Board's determination in the case of Electromation's action committees because only independent labor organizations may deal with an employer in a bilateral condition regarding working conditions.

Similar to Electromation, was a case involving DuPont. In 1984, a TQM program called a "personal effectiveness program" (PEP) was implemented at DuPont's Deepwater plants to encourage decision making through consensus. The groups were formed to regularly meet to discuss various safety issues, and included both managers and employees as members. Problems started when the union tried to get a new shop for a welder whose shop was unsafe. The company refused, but eventually consented when the safety committee made the same recommendation. Later, when the union tried to bargain for a fitness facility at the plant, and the company again refused the request. Subsequently a fitness committee was formed, which recommended and received funding for a jogging track, volleyball court, a horseshoe pit, and a picnic area with bathrooms. Essentially, the fitness committee was able to gain employee benefits that the union was refused the opportunity to bargain over. The union, seeing a pattern developing, filed an unfair labor practice charge against DuPont.

In June of 1993, the NLRB determined that the DuPont committees were labor organizations as defined under the NLRA, and were "dealing with" the company, by making proposals to management to which management responded. The NLRB, in both the Electromation and DuPont decisions, established a broader definition of the Section 2(5) concept of "dealing with" as compared to bargaining. While bargaining requires the two parties to seek to comprise their differences and arrive at an agreement, "dealing with" involves only a "bilateral mechanism" between two parties in which a group of employees make proposals to management, and management responds to these proposals by acceptance or rejection by word or deed, and compromise is not required.

In DuPont, both the safety and fitness committees were designed to discuss issues with their fellow employees and make proposals to management on their behalf, which management would make a response. The Board determined from these facts that the safety and fitness committees had moved well beyond the legal limits of the NLRA. The Board found that the action committees went beyond mere cooperation to improve quality or efficiency and sought to unilaterally create in employees the impression that their disagreements with management could be resolved bilaterally. The Board held that the establishment of the action committees in response to employee discontent and the imposition of a committee mechanism that included employees instructed to represent fellow employees violated Section 8(a)(2).

In DuPont, the NLRB specifically declared three "safe havens" for employee participation under the NLRA:

1. If the groups were merely brainstorming "a whole host of ideas" (as opposed to proposals), there would be no dealing.

2. Committees that merely gave management information without making proposals would also not be engaged in dealing.

3. A committee that has the power to make decisions without making proposals and without management vote or with minority management voting, would not be considering dealing.

The Board ruling in DuPont seemed to say, in essence, that to be legal under the Act, committees must have no power or be fully empowered. Their decision echoed court decisions handed down years earlier in Cabot Carbon in which the Supreme Court distinguished "dealing with" from "bargaining" also noting that "bargaining" is a more limiting term than "dealing with." The Cabot Carbon decision was used to emphasize the following:

1. Employer communication with employees, even concerning working conditions, does not necessarily mean that the employer is "dealing with" its employees.

2. There must exist a pattern or practice of employee proposals and correlative employer responses over time before an employer may be deemed as "dealing";

3. Isolated instance of employee proposals and employer responses do not lead to "dealing"; and

4. Management may sometimes gather information from employees regarding working conditions and even act on that information without "dealing with" the employees.

These points create uncertainty for managers, so some other cases may provide useful guidelines. Dillon Stores in the Wichita, Kansas area used a committee of employees who met quarterly with representatives of their employer for a question and answer session. The employer then posted a written summary of the questions and responses. In 1995, the NLRB ruled the committees at Dillon Stores to be illegal. The employee organization focused almost exclusively on grievances and working conditions. In this decision, the NLRB determined that conditions of work included health and safety, a gym, a day care center, insurance, rewards for efficiency and productivity, work assignments, compensation, work rules, job descriptions, use of bulletin boards, workloads, scheduling, changes in machinery, discipline, hiring, and promotions.

In other cases the legality of committees was upheld. In Von's Grocery Company, the NLRB held that the employer created quality circles to "identify operational problems and research ways to address and solve these problems" making them lawful employee involvement groups, not labor organizations. In this case, where there was a recognized union representative, an occasional dress code discussion by a quality circle group did not constitute a violation of the Act. Although the quality circles had on occasion dealt with management with respect to terms and conditions of employment, the Board found no proof of "a pattern or practice of dealing with management." According to the Board, this requirement "permits experimentation with employee participation but protects against the danger of an employer dominated labor organization."

A similar case was the employee committee at Stoody Company. The company's general manager asked for volunteers from the workforce to serve on the recently formed "Handbook Committee." The stated purpose of this committee was to gather information about the company's employee handbook that were inconsistent with practices, obsolete, or that were misunderstood by employees in order to correct the provisions. The committee was specifically instructed to only gather information, with no discussions about possible policy changes.

At the very first meeting employee members raised concerns about vacation policies and offered proposals to address their issues. The manager facilitating the meeting did not end the discussion and ultimately agreed to a policy change. When the general manager learned of the committee's action, he immediately reiterated the instruction that the committee was only an "information gathering" body and was not to discuss changes in workplace policies.

The NLRB found the Stoody Company Handbook Committee legal under the NLRA, as it "did not exist, even in part, for such a purpose as dealing with the employees regarding terms and conditions at work." Just as in the Vons Grocery Company decision, the NLRB found the Handbook Committee was dealing with the employer, but not in violation of Section 8(a)(2) of the NLRA because of the absence of a "pattern and practice" of dealing. The Board went on to state that they fully support "an interpretation of the Act which would not discourage such programs." Although Stoody's committees were legal based on the facts in this case, had the employer permitted the discussions to continue and implemented the employee proposals, a violation may have been found.

In the General Foods decision, the Board found that the work teams were created based on management's judgment as to the best way to perform various jobs and communicate with employees. Team meetings for purposes of direct communication between management employees do not, of themselves, serve to transform the work teams into labor organizations. The NLRB further held in this case the delegation of final decision-making authority to an employee body, which then effectively serves a "managerial or adjudicative function," is also not "dealing with" as defined by the NLRA.

Unlawful Domination

Once an employee involvement pro gram of any type is found to be a labor organization, the NLRB then moves to the second part of the two-step test, determining if management unlawfully dominates the group. On this second point of "domination" of a labor organization, the statute actually prohibits domination and interference, including financial contributions and other such support to the labor organization. Examination of this second point in the NLRB two-part test requires revisiting those case decisions where the various employee involvement programs were found to be labor organizations.

In Electromation, the NLRB held that the company violated this section because in addition to creating employee participation committees, management also established the committees' rules of operation, placed management representatives in key committee roles; paid for employees' time spent in committee meetings; provided for free meeting space on company premises; and provided company purchased supplies for the meetings. The employer further dominated the committees by creating them and determined their structure and function. The judge specifically ruled that management had not dominated meeting discussion, but that domination was present since all meetings took place on company property, all materials were supplied by management, and members were paid for time spent in committee. The committees were created only after a third of the employees had signed a petition protesting management's actions. The employer selected a group of employees, mostly from those who had not signed the petition, to serve on the five committees. The membership and the agenda were both selected by management, not by the employees whom the committees were designed to represent. The Board was not attempting to eliminate all teams or committees, and it further emphasized that evidence of anti-union animus by the employer is not necessary to a finding of unlawful domination, but it was clearly concerned with employer-dominated committees who were dealing with the employer over conditions of work.

One member of the Board proposed a new four-part test to determine the legality of such committees. Under this test, the Board would examine:

1. The extent of the employer's involvement in the structure and operation of the committees;

2. Whether the employees perceive the program as a substitute for collective bargaining;

3. Whether employees have been assured of their Section 7 rights to be represented by a labor organization; and

4. The employer's motives in establishing the program.

The Seventh Circuit concurred with the Board's decisions that Electromation's committees were dominated by the Company which had defined both the committee structure and its subject matter. It further found that a manager was appointed to coordinate and monitor each committee's meetings and to review committee proposals before they were presented to management.

The Board again addressed the issue of domination in the context of a unionized workplace in the DuPont case in which the employer had formed a number of committees to discuss safety and fitness subjects, without involving the union in the formation or administration of the committees. The union had attempted to bargain over many of the issues the committees addressed and had been rebuffed. Management picked the employee members from those who volunteered and retained the power to abolish committees. All group decisions had to be unanimous, so no proposal left the committee without the agreement of the management members. Management supplied the meeting places and equipment, and members were paid for their time serving on the committees.

When the NLRB found illegal employer domination in this case, a crucial factor in the Board's decisions was the management committee members had veto power over all committee proposals. The Board indicated that their decisions might have been different if the committees had more employee members than management members, and decisions were based on majority rule, and the committee had the power to decide matters for itself, In this case, the committees were created, staffed, and could be abolished by management. Clearly these committees were employer dominated. The Board ordered DuPont to abolish the committees and to bargain with the union on safety and fitness issues. The Board attempted to send the message that they were not ruling against worker participation, but only against company-dominated employee involvement programs.

In a case involving Polaroid Corporation, an employee committee made up of employees and management, and funded by management, was created as an employee voice on pay and working conditions and to handle grievances. After the determination that the committee was a labor organization, management decided to replace it with a newly formed committee in which employees could influence decisions on company-wide pay, benefits, and personnel policy. Management believed the new group would be legal because it did not develop collective recommendations. However, in 1994, the NLRB determined that Polaroid's new group was also an employer dominated labor organization based on the way officers in the committee were elected. The new council had been carefully selected to represent all groups, but members were still chosen by management. An additional problem was that committee members, although advised that they did not "represent" other employees, sought to collect the view of other workers and resolve problems as a group, by presenting solutions to management.

In a 1995 NLRB decision in Keeler Brass Automotive the NLRB, in finding the employer illegally supported an employee committee admitted the difficulty of the issue declaring that the difference between unlawful domination and permissible cooperation is often one of degree, and that the distinction is difficult to make. In the Magen Medical case, the NLRB ruled that a committee was illegal where an employer had heavy involvement in the formation of the committee, but then completely abandoned the role, allowing employees to established their committee as they saw fit. The committee would otherwise be a legitimate organization.

In another case, EFCO Corporation, management in a non-union work environment put out a notice asking for volunteers to serve on newly forming committees. The initial goals were to have representation from every area of their plant. The Human Resource Department selected the members for the first committee, and then turned over further selection of committee members and the succession of committee members to the committee. No one from management was permitted to attend committee meetings unless they were specifically invited. The goal of these committees, according to the EFCO president, was establishment of self-directed work teams on the production floor and employee committees empowered to share management decision making authority" with management divorced from the committees. However, the NLRB ruled that four of the EFCO committees were unlawfully dominated and assisted by the Company. None of those committees demonstrated shared management decision making or codetermination of company operations by the workforce because EFCO's Safety Directory had continued to set the agendas for the meetings, and the committees had never exercised any real authority to enact policies.

Thus, where the employees either initiate the organization of employee committees and suggest their functional and operational structure, or where the employer merely suggests the establishment of such committees, but the employees are free to devise their own operational construct, determine the subjects to be treated, select their own members, schedule and hold their own meetings without the presence of management and formulate their own proposals, the desired employee participation may be achieved without transgressing Section 8(a)(2).

The committees at Dillon Store met quarterly with representatives of their employer for a question and answer session, after which the employer posted a written summary of the questions and responses. The NLRB administrative law judge noted that communication was the primary purpose of the committee and that the response to questions asked could often simply be found in an employee policy or handbook. The NLRB affirmed those findings that "some communications are dealings," however, and that these communications involved "bilateral" activity. Since the employer participated in the formation and administration of the committee, including paying employees for meeting times, the committee was held to be an employer-dominated organization and was ordered disbanded.

In the Keeler Brass case, the NLRB ruled that the company had dominated the committee by selecting its setting eligibility rules for members and approving the candidates. The company also conducted the election, counting ballots and soliciting employees to vote for particular committee members.

In DuPont, the Board considered other unfair labor practice that can occur when a company established an employee involvement program where the employees are already represented by a union. In cases such as this, the union is recognized legally as the exclusive representative of all the employees. Under Section 8(a)(5), it is a violation for the company to deal directly with its employees, bypassing the legally recognized employee representative, the union. Even unilateral proposals or changes cannot be implemented without bargaining with the union. The Board held that the employer's actions attempted to bypass the union, by implementing committee proposals without allowing the union an opportunity to bargain for them. The Board ordered the employer to cease and desist these illegal activities and disestablish the committees.

From all these case decisions, no "bright line" test distinguishes whether the employer's influence over a group is extensive enough to constitute domination. The NLRB does, however, seem to consider several factors:

1. The relationship of the employer to the committee following the initial establishment of the committee;

2. The nature of the collective bargaining negotiations between parties;

3. What control, if any, the employer had over the commit tee membership;

4. Whether the committee had a constitution and bylaws;

5. The nature and place of committee meetings;

6. Whether the employees were compensated for their time and attendance at such meetings; and

7. Whether supervisory personnel attended such meetings and, if so, what part they played.

In general, the more severe the employer's actions in dominating the group, they greater the likelihood of sustaining an unfair labor practice charge. Penalties can range from simply stopping any unlawful influence the employer may be exerting over the employee group to completely disbanding the group.

Employment Involvement Programs Implemented

These various case decisions and court rulings clearly suggest that employee involvement programs formed to deal with the employer concerning conditions of work, grievances, rates of pay, or hours of employment, in which the employer dominates, interferes, and/or supports the employee involvement program create legal problems for employers. The current law seems to support two different models for employee involvement programs in workplace decisions, with the difference based on whether the employer is unionized or not. The union model permits discussion of both work organization issues and the terms and conditions of employment, while the non union model permits discussion of work organization issues, like productivity, quality, and efficiency.

Unionized workplaces simply need to first seek the support and cooperation of all recognized unions in their organization before implementing employee participation programs. The chances of achieving the benefits of a successfully implemented program increase with the

full support of the union. With union representation within the employee involvement program, employees are likely to more fully participate in the program, trusting that their rights are protected while they are working on the company's behalf to solve business problems. Unions are unlikely to charge employers with unfair labor practices for including them fully in the planning and implementation of these programs. In no event can a company use employee involvement programs to avoid dealing with a union.

Within the non-union workplace, discussions on issues normally reserved for collective bargaining such as wages, hours, and other terms and conditions of employment put the employer at risk. Although the NLRB encourages groups formed to discuss productivity, efficiency, and quality, it may be difficult to prevent employee committees from moving back to the forbidden subjects. For example, one of the distinct goals of any TQM effort is developing cost-savings measures. As companies attempt to implement cost-cutting measures, it becomes difficult to avoid issues regarding absenteeism and monetary incentives, clearly an area protected for union negotiation. The NLRB recognizes that distinguishing between a lawful employee participation program and a statutory labor organization is not easy because it may be difficult to separate issues of operations and efficiency from those issues defining a labor organization.

Courts and the NLRB have established some clear boundaries where employee involvement programs are acceptable. Current law allows employers to:

1. Set up "suggestion box" procedures and set up groups of employees for "brainstorming" or sharing information.

2. Deal directly with non-union employees individually about all terms and conditions of employment.

3. Hold staff meetings about issues of quality or customer care.

4. Set up a method of production delegating significant managerial responsibilities to employee work teams.

The NLRB approaches the issue of union domination in a relatively structured manner by reviewing whether the employer contributes space, time, resources, and its own energies and efforts to the "dealing with" process. Management must not create the committee, select members, or place management members in a group to control, review, or manipulate group decisions. Employee involvement groups need to be independent of management control and support. They should not function in a representational capacity, but instead seek to use their personal knowledge only within the group. The NLRB has stated that it supports the growth of employee groups designed to increase company productivity, efficiency, and quality control. Purely social or educational groups are permissible, as long as they do not engage in a bilateral exchange with the employer or develop a pattern and practice of making proposals regarding working conditions.

A committee created by an employer made up of employees who are empowered to make decisions and take action would be deemed a labor organization, which cannot be dominated by the employer. Self-directed work teams would fall under this description. Teams with complete decision-making authority and the power to take action on the decisions they make without management approval or review would not be considered an unlawful labor organization. Management veto power over these groups, however, implies company domination. Thus, organizations are advised to structure committees with a majority-rule approach in which employee members outnumber management members, so management can never overrule the employee group decisions. Management must be willing to accept all group decisions, even the unpopular ones. (As an interesting twist, in a number of cases involving private colleges and universities in the 1980s beginning with Yeshiva, the courts have ruled that faculty committees that have similar or even less authority compared to autonomous work teams, were declared to be managerial employees and not subject to the NLRA. This argument has not been applied to work teams, but it would suggest that with enough empowerment, employees who collectively make decisions in a committee setting may be classified as managerial. In that case, the illegal company union argument would be moot.)

In conclusion, organizations forming employee involvement groups need to decide what level of employee involvement they are comfortable with initiating. The spectrum ranges from information gathering, in the form of brainstorming or just employees sharing a whole host of ideas and suggestion with no response from management, to committees to discuss permissible subjects, like productivity, efficiency, and quality, within the limits of the law, to the ultimate employee involvement program in the form of fully empowered self-directed work teams. This level of independent employee participation requires a high level of trust between labor and management. In any event, employees should be fully trained to understand the boundaries of permissible group interaction.

Newly started employee involvement groups will be suspect when a union organization drive has been initiated or is rumored to be initiated and will likely lead to the filing of ULP charges if the union drive fails. While the Board ruled that anti-union animus does not necessarily prove company domination, the reason the group was started at that time will lead to a more thorough investigation.

Under the current legislation, organizations are well advised to seek legal counsel before implementing employee involvement in their workplaces. Court rulings and case decisions continue to interpret the law shedding more and more light on how these implementations can be done within a legal framework. The numbers of challenged employee involvement programs remain relatively small, and the potential benefits of a successful program to the employer seem much greater than the risks. Proceed with caution, but, without question, proceed.

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Steven L. Thomas, Ph.D. (slt600f@smsu.edu) is an Associate Professor in the Department of Management at Southwest Missouri State University in Springfield Missouri.

Judy Best is the Vice President of Manufacturing Support at Universal Systems House.


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