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.