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MISCO DECISION

Give your reaction to the Misco Decision on p. 494 in the textbook. State the implications for employers and employees. Include your opinion about whether you or your organization would have fired the employee under these circumstances.

Your Task

Your initial discussion board post should be at least 200-250 words in length and should use at least one resource as support. This resource may be your textbook, required readings for the course, or outside research. Use APA citation format to properly credit your supporting material. 

SE/The Labor Relations Process, 11th Edition ISBN-13: 978-1-305-57620-9 ©2017
Designer: LD Text & Cover printer: Edward Brothers Binding: CB Trim: 8” x 10” CMYK

THE LABOR
RELATIONS PROCESS

Holley | Ross | Wolters

11th Edition

THE LABOR
RELATIONS PROCESS

Holley | Ross | Wolters

11th Edition

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Holley
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76209_cvr_ptg01_hires.indd 1 14/03/16 4:06 PM

The Labor Relations Process

ELEVENTH EDITION

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

The Labor Relations Process,
Eleventh Edition

William H. Holley, Jr., William H. Ross,
and Roger S. Wolters

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Brief Contents

Preface xiii
Acknowledgements xvi
About the Authors xvii

Part 1 Recognizing Rights and Responsibilities of Unions and Management

Chapter 1 Union Management Relationships in Perspective 4

Chapter 2 The History of Labor Management Relations 43

Chapter 3 Legal Influences 89

Chapter 4 Unions and Management: Key Participants in the Labor Relations
Process 134

Chapter 5 Why and How Unions Are Organized 197

Part 2 The Bargaining Process and Outcomes

Chapter 6 Negotiating the Labor Agreement 266

Chapter 7 Economic Issues 325

Chapter 8 Administrative Issues 387

Chapter 9 Resolving Negotiation (Interest) Disputes and the Use of Economic
Pressure 437

Part 3 Administering the Labor Agreement

Chapter 10 Contract Administration 496

Chapter 11 Labor and Employment Arbitration 537

Chapter 12 Employee Discipline 600

Part 4 Applying the Labor Relations Process to Different Labor
Relations Systems

Chapter 13 Labor Relations in the Public Sector 650

Chapter 14 Labor Relations in Multinational Corporations and in Other Countries 701

Appendix A Collective Bargaining Negotiations Exercise 756

Author Index 759

Subject Index 762

iii

Contents

Preface xiii
Acknowledgements xvi
About the Authors xvii

Part 1 Recognizing Rights and Responsibilities of Unions
and Management

Chapter 1 Union Management Relationships in Perspective 4

Phases in the Labor Relations Process 5
Elements in the Labor Relations Process 6

Focal Point of Labor Relations: Work Rules 6 Key Participants in the Labor
Relations Process 10

Three Basic Assumptions Underlying U.S. Labor Relations 13
Constraints or Influences Affecting Participants Negotiation and Administration of
Work Rules 14 State of the Economy: National, Industrial, and Firm-Specific
Indicators 14 International Forces 19

Labor Relations in Action: Getting Online with Labor Relations Research 21
Public Opinion 22

Union Membership 24
Labor Relations in Action: Unions and Worker Centers 25

Labor Relations in Action: Are Unions Still Relevant? 28

Case Study 1-1: Was a Troublemaker Laid Off for Sharing Wage Information?
Or for Business Reasons? 37

Case Study 1-2: Discharge for Whistleblower Activity 38

Classroom Exercise 1.1: Work Rules 41

Classroom Exercise 1.2: Union Membership Trend 41

Classroom Exercise 1.3: Word Association 41

Chapter 2 The History of Labor Management Relations 43

1869 to World War I 44
Early Legal Developments Involving Labor Management Relationships (1806 1931)
45 Civil Conspiracy Doctrine 47 Application of Antitrust Legislation to Labor
Unions 47 Emergence of National Labor Organizations 49

Labor Relations in Action: Labor History Time Line: Selected Events 50
The Knights of Labor (KOL) 52 Strategies to Accomplish the KOL s
Goals 53 Reasons for the KOL s Failure and Demise 54 The Eight-Hour
Workday Movement and the Haymarket Riot 55 Origin and Goals of the
American Federation of Labor 56 Strategies and Tactics of the
AFL 58 Organization of the AFL 58 The Homestead Incident 59 The
Pullman Strike 60

iv

Labor Relations in Action: Unions and the Civil Rights Movement 61
The Industrial Workers of the World 63

World War I to World War II 66
Union Organizing after World War I: Problems and Prospects 66

Labor Relations in Action: The American Labor Movement as Portrayed
in Fiction 67

Opposition from Employers 68 Labor s Inability to Overcome Anti-Union
Sentiment 70 Rise of the CIO and Industrial Unionism 71 Strong CIO
Leadership 72 Realistic Goals 72 The Effective Use of Sit-Down
Strikes 73 Passage of the National Labor Relations (Wagner)
Act 73 Changes in Employees Attitudes 74

World War II to the Present 74
Developments in Organized Labor since World War II 75 New Collective
Bargaining Issues 75 Increased Organization of Women, Minorities, Younger
Age Employees, and Professionals in the Public-Sector and Private-Sector Service
Industries 77 Merger of the AFL and CIO 77 Formation of the Change to
Win Federation 78 Aspects of Organized Labor Unchanged since World
War II 79 Unions and Politics 79 Difficulty in Achieving Consensus among
Unions and among Members 79 Pursuit of Short-Range Economic and Job
Security Goals Instead of Long-Range Reform 80

Chapter 3 Legal Influences 89

Origin of Labor Relations Law 91
The Norris La Guardia Act 93
The National Industrial Recovery Act of 1933 94
The National Labor Relations (Wagner) Act of 1935 95

Changes under the Labor Management Relations (Taft Hartley) Act 96
Labor Management Reporting and Disclosure (Landrum Griffin) Act 98
National Labor Relations Board 99
Labor Relations in Action: Selected Labor Relations Cases Decided by the U.S.
Supreme Court and the NLRB 101

Employer and Employee Coverage under the LMRA, as Amended 104 Concerted
and Protected Employee Activity 107 NLRB Unfair Labor Practice
Procedure 108 Unfair Labor Practice Remedies 110 Assessment of the LMRA,
as amended, and NLRB Administration 112

Transportation-Related Labor Relations Law (Railway and Airlines) 114
Assessment of the RLA 116 Deregulation Legislation in Railroads and
Airlines 117 Promising Developments Regarding the RLA 117 Additional Laws
That Affect Labor Relations 118 Employee Retirement Income Security Act of
1974 118 The Americans with Disabilities Act of 1990 119 Bankruptcy
Act 119 Worker Adjustment and Retraining Notification Act 119 Racketeer
Influenced and Corrupt Organizations Act of 1970 120 Employment Discrimination
Laws and Executive Orders 120 Other Related Labor Relations Laws 121

Case Study 3-1: The Great Temperature Debate 128

Case Study 3-2: Independent Contractors? Or Employees? 128

Case Study 3-3: NLRB Jurisdiction over a Private Charter School 131

Case Study 3-4: Determination of Supervisory Status 132

Contents v

Chapter 4 Unions and Management: Key Participants in the Labor Relations Process 134

Goals and Strategies: Management and Unions 135
Company Strategic Planning 136 Nonunion Companies Strategies 137

Labor Relations in Action: Post-Electromation: Tests to Determine Whether Teams
and their Activities Are in Violation of 8(a)(2) of NLRA 142

Unionized Companies Strategies 142 Union Strategic Planning 145
Company Organization for Labor Relations Activities 149
Union Governance and Structure 151

The Local Union 154 Differences between Local Craft and Industrial
Unions 155 Government and Operation of the Local Union 157 The National
or International Union 159 Leadership and Democracy 161

Labor Relations in Action: Rules Governing Union Officer Elections (U.S.
Department of Labor) 162

Profile of Union Leaders 162 Administration 163 Professional Staff
Members 163 Services to and Control of Locals 164 Dues, Fees, and
Distribution of Funds 165 Mergers of National Unions 166 Intermediate
Organizational Units 167 Independent Unions 167 Employee
Associations 168 The American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO) 168 Organizational Structure 169

Union Corruption and the Landrum Griffin Act 175
Union Security 177

Union Security Provisions 178 Closed Shop 178 Union Shop 178 Agency
Shop 179 Contingency Union Shop 181 Union Hiring Hall 181 Preferential
Treatment Clause 182 Dues Checkoff 182 Right-to-Work Laws: Controversy
and Effects 182 Arguments for Right to Work Laws 185 Arguments for
Abolishing Right-to-Work Laws 186 Recent U.S. Supreme Court Decision 187

Case Study 4-1: Employee Rights under the Landrum Griffin Act 194

Case Study 4-2: Financial Core Membership Rights under the Beck Decision 195

Chapter 5 Why and How Unions Are Organized 197

Why Unions Are Formed 198 Work and Job Conditions 198 Employees
Backgrounds and Needs 200 Influences on Employees Votes for and against
Unions 201 The Union s Challenge of Organizing the Diverse
Workforce 203 Organizing Professional Employees 203 Activities of the Union
in Organizing Employees 205 Activities of the Company in Union
Organizing 209 Unintended Consequences of Anti-Union
Behavior 212 Methods for Organizing Unions 212

Labor Relations in Action: Volkswagen and the United Auto Workers Chattanooga,
Tennessee 216

Labor Relations in Action: Objections to Joining the Union 218

Labor Relations in Action: Examples of Employer Messages during a
Representation Election Campaign 220

Labor Relations in Action: Interesting Comparison: FedEx and UPS (United
Parcel Service) 224

Duties of the Exclusive Bargaining Agent and Employer 230 After Election Loss by
the Union 230 Proposed Mandatory Secret Ballot Elections versus Employee Free
Choice Act (EFCA) 230

vi Contents

Conduct of the Representation Election Campaign 233
Campaign Doctrines and NLRB Policies 233 Captive Audience 24-Hour
Rule 234 Polling or Questioning Employees 234 Distribution of Union
Literature and Solicitation by Employees on Company Property 235 Showing Films
during Election Campaigns 235 Use of E-Mail, Internet, and Social
Media 236 New Union Strategies 237

Removing a Labor Union 238
Labor Relations in Action: Union Salting: A New Union-Organizing Tactic 239

Case Study 5-1: Are These Employees Engaged in a Protected Concerted
Activity? 251

Case Study 5-2: Are the Employees Involved in Activities That Are Legal? 251

Case Study 5-3: Are the Field Supervisors Supervisors under the National Labor
Relations Act (NLRA)? 252

Case Study 5-4: Are These Employees Activities Legally Protected under the
National Labor Relations Act? 253

Case Study 5-5: Did the Company Violate the Section 8(a)(1) of the LMRA When It
Discharged the Employee? 255

Case Study 5-6: Bulletin Board Use 257

Case Study 5-7: Nonemployee Union Solicitation Activity 258

Case Study 5-8: Campaign Threats or Implied Promise of Benefit? 259

Case Study 5-9: The T-Shirt Offer and Picnic Photographs 261

Classroom Exercise 5.1: Designing Union Election Campaign Literature 263

Part 2 The Bargaining Process and Outcomes

Chapter 6 Negotiating the Labor Agreement 266

Collective Bargaining: Definition and Structure 267
Bargaining Structure 268 The Bargaining Unit 270

Negotiation Preparation Activities 274
Selection of the Negotiating Team and Related Bargaining
Responsibilities 274 Proposal Determination and Assessment 276 Formulating
Proposals 277 The Bargaining Range 279

Labor Relations in Action: Bargaining Goals for Registered Nurses 282
Costing Contract Proposals 283

Understanding Collective Bargaining Behavior: A Framework 285
Distributive and Integrative Bargaining: Two Different Approaches 285 Strategies
and Tactics 286 The Bargaining Power Model 287 Factors Potentially Affecting
Both Bargaining Power Equations 290 Factors Affecting a Union s Disagreement
and Agreement Costs 290 Factors Affecting Management s Agreement and
Disagreement Costs 291 Complexities Associated with the Bargaining Power
Model 291 Attitudinal Structuring 292 Intraorganizational Bargaining 292

Ethical and Legal Considerations in Collective Bargaining 293
The Legal Duty to Bargain in Good Faith 295 Type of Bargaining Subject 295

Specific Bargaining Actions 297 Totality of Conduct 298 Bargaining over

Contents vii

Managerial Rights 300 Successor Employer Bargaining Obligations 303
Collective Bargaining under Bankruptcy Proceedings 303 Legal Remedies

Associated with Violations of the Duty to Bargain in Good Faith 304
Contract Ratification 306 Explanation of Voting Behavior 306

Labor Relations in Action: Contract Ratification Process Affecting East and Gulf
Coast Ports 307

Reasons for Rejection of Tentative Contract Agreements 308
Case Study 6-1: The Funeral Leave Policy Proposal 317

Case Study 6-2: Classification of a Bargaining Subject 318

Case Study 6-3: The Influenza Work Rule 319

Case Study 6-4: Refusal to Furnish Requested Information 322

Case Study 6-5: The Mileage Reimbursement Policy 323

Chapter 7 Economic Issues 325

Industrial Wage Differentials 327
Occupational Wage Differentials and the Role of Job Evaluation and Wage Surveys 329

Evaluating Jobs within the Organization 329 Surveys to Compare Firms Wage
Structures 331 Production Standards and Wage Incentives 332 Wage-Setting
Criteria: Arguments Used by Management and Union Officials in Wage
Determination 336

Labor Relations in Action: Living Wage Ordinances: What are They? What Are
Their Effects? 337

Differential Features of the Work: Job Evaluation and the Wage Spread 338
Two-Tier Wage Plans 340

Labor Relations in Action: The Waxing and Waning of Two-Tier Wage Plans 342
Wage Comparability 343 Ability to Pay 344 Productivity 345 Cost of
Living 348 Wage Adjustments during the Term or Duration of the Labor
Agreement 349 Lump-Sum Pay Adjustments 351

Employee Benefits 351
Insurance and Health Benefits 352 Health Care Cost Containment 353 Income
Maintenance 354 Premium Pay Overtime and Other Supplements 355 Pay for
Time Not Worked Holidays, Vacations, and Rest Periods 357

Pensions 358 Family and Child-Care Benefits 362
Other Benefits 363
Union Effects on Wages and Benefits 363
Case Study 7-1: Adding Insult to Injury 378

Case Study 7-2: Unilateral Freeze of Defined Benefit Pension Plan 380

Case Study 7-3: A Change in the Medical Insurance Plan 381

Case Study 7-4: Does the Deputy Sheriff Deserve a Pay Raise? 383

Classroom Exercise 7.1: Employee Benefits 386

Chapter 8 Administrative Issues 387

Technological Change and Job Protection 388
Labor Relations in Action: High Performance Work Organization (HPWO)
Partnership Principles 391

viii Contents

Benefits of Technological Change 391 Negative Effects of Technological
Change 392

Job Security and Personnel Changes 393
Job Security and the Changing Psychological Contract 394 Job Security Work
Rules 395 Plant Closures, Downsizing, and WARN 397 Subcontracting,
Outsourcing, and Work Transfer 399

Labor Relations in Action: Creating Good Jobs Today and in the Future 402
Work Assignments and Jurisdiction 403 Work Scheduling 404

Labor Relations in Action: Computer Programming and Labor Relations 405
The Role of Seniority in Personnel Changes 406 Legal Issues Involving Seniority in
Administrative Determinations 410

Employee Training 412
Work Restructuring 415
Safety and Health 416
Labor Relations in Action: Domestic Violence and Trade Unions 419

Case Study 8-1: Discharged for Facebook Comments 433

Case Study 8-2: The Outsourced Work 433

Case Study 8-3: The Disputed Safety Bonus 434

Case Study 8-4: Donning Safety Equipment? or Changing Clothes? 435

Chapter 9 Resolving Negotiation (Interest) Disputes and the Use of Economic
Pressure 437

Impasse Resolution Procedures Involving a Third-Party Neutral 439
Mediation 439 Fact-Finding 442 Interest Arbitration 442

Mediation-Arbitration (Med-Arb) 446
Other Third-Party Procedures 447

Arbitration-Mediation 447 Tri-Offer Arbitration 448 Double Final-Offer
Arbitration 448 Night Baseball Arbitration 449

Strikes and Lockouts: The Use of Economic Pressure to Resolve Interest
Disputes 449

Replacement Workers during Strikes and Lockouts 450 Types of Strikes 451
Labor Relations in Action: 2011 National Football League Contract Negotiations and
Lockout 452

Reasons for Strikes 456 Strategic Purposes of a Strike 458 Strike Experiences
and Preparation 459 Reinstatement Rights of Unfair Labor Practice and Economic
Strikers 463 Unlawful Strike Misconduct 465 Employee Picketing
Rights 466 Secondary Strikes, Boycotts, and Picketing 466

National Emergency Dispute Resolution Procedures 471
Case Study 9-1: An Interest Arbitration Hearing 485

Case Study 9-2: Legitimate Picketing? Or Illegal Secondary Boycott? 487

Case Study 9-3: The Aftermath of a Strike 489

Case Study 9-4: The Right to Strike 491

Case Study 9-5: Denial of Health Care Benefits to Striking Employees 492

Case Study 9-6: Product Picket Activity 493

Contents ix

Part 3 Administering the Labor Agreement

Chapter 10 Contract Administration 496

Labor Relations in Action: Rules Governing Workplace Investigations 499

Grievances: Definition, Sources, and Significance 499
Reasons for Employee Grievances 502 Significance of Employee
Grievances 505 Preparation for Grievance Processing 506

Steps in the Grievance Procedure 508
First Step of Grievance Procedure 509 Second Step of Grievance
Procedure 511 Third Step of Grievance Procedure 511 Fourth Step of Grievance
Procedure: Alternative Dispute Resolution (ADR) 512 Different Approaches by
Grievance Mediators 513 Administrative Complexities of Processing
Grievances 515 Other Forms of ADR 516

Labor Relations in Action: Tough Contract Administration Questions 517

Grievance Resolution: Relationships and Flexibility 517
Codified Relationships 518

Power Relationships 518
Empathetic Relationships 520 Flexible Consideration in Processing Employee
Grievances 520

The Union s Duty of Fair Representation 522
Case Study 10-1: Are These Grievances Arbitrable? 531

Case Study 10-2: Should the Union Represent Slick Willie Owens? 534

Classroom Exercise 10.1: Arbitration Scenario 536

Chapter 11 Labor and Employment Arbitration 537

Development of Labor Arbitration 538
Elements of a Typical Arbitration Proceeding 540

Selection and Characteristics of Arbitrators 541 Decision to
Arbitrate 544 Prehearing Activities 545 The Arbitration Hearing 545

Labor Relations in Action: Improving Preparation for Arbitration Hearings 548

Comparison of Arbitration and Judicial Proceedings 549
Evidence in Arbitration vs. in Judicial Proceedings 550 Arbitration in the Railway
and Airline Industries 552

The Arbitrator s Decision 552
Decision-Making Guidelines Used by Arbitrators 553

Labor Relations in Action: Example of Contract Language Ambiguity 556
Past Practice 558 Previous Labor Arbitration Decisions 559

Current Issues Affecting Arbitration 560
Legal Jurisdiction 560

Labor Relations in Action: Tenets of Labor Arbitration 561
Labor Arbitration and the National Labor Relations Board 564

Labor Relations in Action: National Football League v. National Football League
Players Association (Tom Brady) 566

Labor Relations in Action: Things They Never Told Me before I Became an
Arbitrator 567

x Contents

Appraising Labor Arbitration s Effectiveness 567 Procedural
Problems 569 Employment Arbitration 571

Labor Relations in Action: How Employment Arbitration Differs from Arbitration
Found in Labor Agreements 575

Public Policy Implications for the Future 578
Case Study 11-1: Whether the Employer Violated the Contract by Implementing Fleet
Operation Changes on or about June 18, 2014? If so, What Is the Appropriate
Remedy? 587

Case Study 11-2: Issue: Did the Company Violate the Collective Bargaining
Agreement When It Reduced the Hours of Full-Time Employees to Less than 35
Hours per Week as This Action Relates to the NLRB Charge? 592

Case Study 11-3: Should Employee Be Penalized for On-the-Job Injury? 597

Chapter 12 Employee Discipline 600

The Changing Significance of Industrial Discipline 601
Historical Overview of Employer Disciplinary Policies 601 Employment-at-Will
Doctrine and Wrongful Discharge Consideration for Nonunion
Employees 603 Present-Day Significance of Employee Discipline 605

Labor Relations in Action: Disciplinary Possibilities on the Assembly Line 606

Elements of the Just Cause Principle in Employee Discipline 608
Discipline for Just Cause and Discipline s Legitimate Purpose 608 Degree of Proof
in Disciplinary Cases: Nature of the Evidence and Witness Credibility 610 Labor
Relations in Action: Employee Discipline and Social Media 612 Effect of Work
Rules on Discipline 613 Progressive Discipline 616 Disciplinary Penalty and
Mitigating Circumstances 617 Possible Collision between Discharge Decisions and
Public Policy 620

Labor Relations in Action: Examples of Employee Misconduct and Mitigating
Factors to Consider in Employee Discipline 621

Due Process 623
Case Study 12-1: Issue: Was Mr. Babcock s Termination for Just Cause? If Not,
What Is the Remedy? 635

Case Study 12-2: Falsification of Application 641

Part 4 Applying the Labor Relations Process to Different Labor Relations Systems

Chapter 13 Labor Relations in the Public Sector 650

Significance of Public-Sector Labor Relations 651
Labor Legislation in the Public Sector 652 Current Challenges to Collective
Bargaining Rights of Public Unions 654

Labor Relations in Action: States That Have Passed Laws Limiting Representational
Rights for Public Sector Employees Since 2010 656

Federal-Sector Labor Relations Legislation 657
Labor Relations in Action: Privatization of the Public Sector 658

Appropriate Bargaining Units and Union Recognition in the Federal
Sector 660 Negotiable Subjects in the Federal Sector 660 Unfair Labor Practices

Contents xi

in the Federal Sector 661 Grievance Procedures and Arbitration in the Federal
Sector 662 Labor Management Forums in the Federal Government 662

Labor Relations in Action: Arbitration under the Federal Service Labor management
Relations Statute 663

Homeland Security Act 663
Labor Relations in the U.S. Postal Service 665
Similarities between Private- and Public-Sector Bargaining 666
Differences between Private-Sector and Public-Sector Bargaining 668

The Market Economy Does Not Operate in the Public Sector 668 The Relationship
between the Budget and Public-Sector Bargaining Processes 669 Employee Rights
and Obligations 669

Collective Bargaining Structures and Decision-Making Processes 671
Negotiable Issues and Bargaining Tactics 672 Grievance
Administration 675 The Right-to-Strike Controversy 675 Discipline of Public-
Sector Employees 676

Labor Relations in Action: Douglas Factors in Deciding Disciplinary Punishment of
Federal Employees 677

Interest Dispute Impasse-Resolution Procedures in the Public
Sector 677 Mediation 678 Fact-Finding and Arbitration of Interest
Disputes 678 Effectiveness of Fact-Finding and Arbitration of Interest
Disputes 680 Referendum 681 Conclusions on Public-Sector Labor
Relations 682 Challenges and Opportunities for Public-Sector Unions 684

Case Study 13-1: Unions Representing Public Employees 694

Case Study 13-2: Discharge for Off-Duty Conduct 695

Chapter 14 Labor Relations in Multinational Corporations and in Other Countries 701

Multinational Corporations and Transnational Collective Bargaining 702
Union Approaches to Multinational Bargaining and Employer Reactions 706
Labor Relations in Action: Core Labor Standards 707

Obstacles for Unions in Bargaining with Multinational Corporations 708 Effects of
Unions on Multinational Corporations 709 Conclusions and Predictions on
Transnational Bargaining 710

Globalization and Concerns about Free Trade 710
North American Agreement on Labor Cooperation (NAALC) 712

Unions in Other Countries 714
Canada 715 Mexico, Central America, and South America 719 Cuba 724

Labor Relations in Action: Two Views of Trade Unions in Cuba 725
Western Europe 725 European Union 727 Great
Britain 730 Germany 731 Central and Eastern Europe Former Soviet Bloc
Countries 733 Japan 734 South Korea 738 Australia 739 China 741

Classroom Exercise 14.1: Mobile Factory 755

Appendix A Collective Bargaining Negotiations Exercise 756

Author Index 759

Subject Index 762

xii Contents

Preface

This textbook is a culmination of more than 100 years of classroom teaching to more
than 10,000 undergraduate and graduate college students. The eleventh edition of The
Labor Relations Process reflects our original objective in writing the book: to provide stu-
dents with a textbook that will generate an understanding of and appreciation for core
elements of union management relationships. We have attempted to involve the student
with the subject matter and to create an interest in related issues that will continue after
the student completes the course. A model of the labor relations process (Exhibit 1.2) is
presented in the first chapter and expanded in subsequent chapters through extensive
references to academics and practitioners that focus on real-world situations and con-
cerns. This provides a balance between concepts and applications for the reader.

The eleventh edition of The Labor Relations Process continues our long-standing tra-
dition of being the most comprehensive text on the market.

Features of the Eleventh Edition

The objective of this text has always been to increase student involvement by focusing on
applying the concepts being taught. This emphasis is unmatched by other textbooks in
this area. This application generates student interest in the subject matter while enabling
students to demonstrate their understanding of concepts and principles and apply this
information to real-world situations. These opportunities and related efforts should
sharpen readers communication skills, a desirable skill for any student, regardless of
his or her academic major or intended occupation.

Application has been enhanced through Labor Relations in Action features;
National Labor Relations Board (NLRB), court, or arbitration case studies at the end of
most chapters; and class activity experiential exercises designed to promote active stu-
dent participation in the learning process. There are updated Internet exercises called
Exploring the Web at the end of each chapter to enhance student learning and appli-

cation and to create interest in independent research. The negotiation exercise with com-
puter applications and the arbitration cases have been prepared for role-playing
experience to promote the reality of union management relations. The book has also
maintained many of the previous edition s features: a focus on currency, ethics, interna-
tional issues, and real-world applications:

Chapter-Opening Vignettes. Each chapter begins with a short story or situation
that prepares the reader for the chapter s subject. These encourage critical thinking
and make the chapter s subject matter relevant to the student.
Currency. This edition offers many opportunities for readers to become involved
with the current applications of the labor relations process. For example, recent col-
lective bargaining occurred with management and union officials in the auto indus-
try and recent bargaining subjects such as health care costs and technological change
are given expanded coverage in this edition.
Ethics. Ethical issues concerning such topics as bargaining behavior, union organiz-
ing, employee empowerment, and termination for union activities are addressed
throughout the book.

xiii

International Labor. Chapter 14 has been updated and expanded to include
changes that have occurred in Canada, Mexico, China, Australia, and the European
Union, as well as the effects of the North American Free Trade (NAFTA)
Agreement.
Real-World Applications. The Labor Relations in Action boxes integrate current
events in labor relations and have been updated with several new applications.

Key Chapter-by-Chapter Changes in the Eleventh Edition

Each chapter has been updated with current research, laws and judicial decisions, studies,
and statistics. Additional attention has been given to explaining the labor relations pro-
cess and influences. Following are some of the key updates to this edition:

Chapter 1 features updated information on mediators, the effect of the recent U.S.
economic downturn, and its effect on the labor pool, and encourages online searches
on current labor relations topics, supplemented by Internet exercises in every
chapter.
Chapter 2 has new information about early legal developments involving labor
management relationships, the Knights of Labor, and the origin and goals of the
American Federation of Labor.
Chapter 3 presents recent key decisions of the NLRB and courts affecting labor rela-
tions, such as classification of hospital interns and residents, graduate students in
academic institutions, and supervisors for purposes of determining coverage as
employees under the Labor Management Relations Act. The chapter also includes

expanded coverage of the NLRB s unfair labor practice procedure, and the concept
of concerted and protected activity under the LMRA.
Chapter 4 offers updates in the leadership of the American Federation of Labor-
Congress of Industrial Organizations (AFL-CIO), expanded coverage of financial
core membership, and right-to-work legislation.
Chapter 5 covers modern union-organizing tactics, with the latest updates on union
salting, card check, and neutrality agreements. This chapter addresses NLRB policies
with changes from President Obama s appointees and new representation election
rules.
Chapter 6 explores collective bargaining preparation and behavior, including a com-
parison of distributive bargaining versus mutual gain (interest-based) bargaining
approaches and contract ratification procedures. There s also a new feature about
the labor relations struggle for nurses and two new case studies.
Chapter 7 features current information on wage and benefit trends and expanded
coverage of wage incentive pay plans, such as skill-based pay, health care cost con-
tainment, and pension plans.
Chapter 8 covers technological change issues, efforts to foster more cooperative
labor management relationships, safety and health issues, and the Americans with
Disabilities Act.
Chapter 9 reveals the role of the mediator as viewed through the eyes of one of the
nation s prominent labor mediators. Coverage includes trends in strike activity; legal
decisions affecting employees and employers rights during a work stoppage; and
secondary strike, picket, and boycott activity.
Chapter 10 provides the important actions for a successful workplace investigation,
elements of grievance mediation, and coverage of a union s legal duty of fair
representation.

xiv Preface

Chapter 11 provides insights to the real world of labor/employment arbitration;
offers a critique of employment arbitration; compares employment arbitration to
labor arbitration; explores the controversy over mandated employment arbitration
as a condition of employment; explains Due Process Protocol; explains the guide-
lines used in arbitrator decisions; and reveals the arbitrator decision s potential con-
flict and accommodation with public policy and the new NLRB deferral policy.
Chapter 12 provides guidelines used by arbitrators in determining just cause and
their consideration of due process principles. This chapter features updates on
Weingarten rights, such as the withdrawal of the NLRB s extension of Weingarten
rights to nonunion (unrepresented) employees.
Chapter 13 addresses dramatic changes in public sector bargaining, which have
resulted from budget problems and politics. The subjects of public sector dispute
resolution, privatization of public services, and homeland security issues are
addressed.
Chapter 14 focuses on the labor relations issues among multinational corporations
in a global economy and characteristics of labor relations systems of America s
major trading partners, including NAFTA members, European Union countries,
Australia, China, Japan, and Korea. The chapter also covers major recent develop-
ments in those countries.

Supplementary Materials

Instructor s Manual with Test Bank
This supplement includes chapter outlines, answers to end-of-chapter discussion ques-
tions, case notes, suggested student readings and term projects, and both instructors
and students instructions for the Collective Bargaining Negotiations Exercise (available
on our product support Web site). The Test Bank has been fully revised, updated, and
expanded.

Holley/Ross/Wolters Product Support Website
Our product support website is a robust learning and resource center for both instructors
and students. The self-assessment exercises on the site include:

An Industrial Relations Orientation Self-Assessment that measures the degree of
one s pro-union or anti-union sentiments.
Bargaining Strategy Orientation Self-Assessment that measure one s preference for
different bargaining strategies (e.g., distributive vs. mutual gain).
Mediator Effectiveness Potential Self-Assessment measures the degree to which one
possesses the personal characteristics attributed to successful mediators.
Quizzes presented as multiple-choice and true false questions for download by the
instructor allow self-assessments by students in understanding materials related to
each chapters key terms and concepts.

Preface xv

Acknowledgments

We are especially grateful to the following professors for their reviews and suggestions
on this revision:

Jeffrey Arthur, Virginia Tech
James Benson, Boise State University
Kristian F. Braekkan, Virginia Tech
Richard J. Campbell, University of Rio Grande
Kim Hester, Arkansas State University
Dr. Miguel R. Olivas-Lujan, Clarion University of Pennsylvania
Tony Vrba, Tarleton State University

We also extend our appreciation to those who made valuable suggestions for previ-
ous editions: Todd Baker, John C. Bird, Mollie Bowers, Gene Brady, James F. Byers,
Joseph M. Cambridge, Anthony Campagna, James Chambers, William Chase, Boyd
Childress, Milton Derber, Satish Desphande, Victor Devinatz, James B. Dworkin, Randyl
D. Elkin, Geraldine Ellerbrock, Art Finkle, Paul Gerhart, Dennis W. Gibson, Carol L.
Gilmore, Thomas P. Gilroy, David Gray, Charles R. Greer, Marvin Hill, Jr., Wayne
Hochwarter, Janis Holden, Denise Tanguay Hoyer, Thomas Hyclak, H. Roy Kaplan,
Zeinrab A. Karake, Katherine Karl, Philip Kienast, John Kilgour, Toni S. Knechtges,
Kenneth A. Kovach, Charles Krider, Thomas W. Lloyd, Eugene Lorge, Howard T.
Ludlow, Karl O. Magnusen, Douglas M. Mahoney, Marick Masters, William Maloney,
Pamela Marett, Douglas McCabe, Patrick McHugh, Frank Milman, Jonathan Monat,
Roy Moore, William L. Moore, Thomas Noble, Carol Nowicki, Lou Parrotta, Dane M.
Partridge, Robert Penfield, Alex Pomnichowski, Roy R. Reynolds, Robert Rodgers,
Richard L. Rowan, Sue Schaefer, Machelle K. Schroeder, Peter Sherer, David Shulenber-
ger, Donna M. Testa, Herman A. Theeke, Peter A. Veglahn, Suzanne M. Vest, Jeffrey L.
Walls, William Werther, Elizabeth Wesman, and Carolyn Wiley.

We also wish to thank Sarah M. Philips, Cathy Wright, and Charlie T. Cook for
their aid in the preparation of this book.

Finally, we would like to thank Cengage Learning for its fine work on this book. We
are especially grateful to Erin Joyner, Vice President and General Manager; Michael
Roche, Senior Product Manager; Brian Pierce, Content Developer; Jennifer Ziegler,
Senior Content Project Manager; Kristina Mose-Libon, Art Director; Emily Horowitz,
Marketing Manager; and Casey Binder, Marketing Coordinator.

William H. Holley, Jr.
Auburn University

William H. Ross
University of Wisconsin La Crosse

xvi

About the Authors

William H. Holley, Jr., has had research published in a variety of journals including Labor
Law Journal, Arbitration Journal, Employee Responsibilities and Rights Journal, Journal of
Construction Engineering and Management, and Industrial Relations. He has engaged in
consulting with private and public organizations and served as an Administrative Hearing
Officer in the grievance procedure of the City of Auburn, Alabama. Dr. Wolters is a mem-
ber of the Labor and Employment Relations Association. Outside interests include golfing
and motorcycling.

William H. Ross has taught labor relations, collective bargaining, and human resource
management courses for 30 years. He teaches at the University of Wisconsin La Crosse,
where he also serves as Chairperson of the Department of Management. He does research
on third-party dispute resolution procedures, including mediation and arbitration, as well
as the implications of technological innovations for human resource management. His
research has been published in Academy of Management Review, Journal of Applied Psychol-
ogy, Labor Law Journal, and Negotiation Journal. Dr. Ross is on the editorial board of The
International Journal of Conflict Management and Negotiation and Conflict Management
Research. He is a member of the Academy of Management, the Society for Industrial-
Organizational Psychology, and other professional organizations. Dr. Ross received his
B.A. from Auburn University and his M.A. and Ph.D. in Industrial-Organizational Psy-
chology, with a minor in Labor and Industrial Relations, from the University of Illinois.

Roger S. Wolters is professor emeritus in the Department of Management at Auburn
University, where his primary interests included labor law, collective bargaining, and dis-
pute resolution. Coauthor of Labor Relations: An Experiential and Case Approach with
William H. Holley, Jr., his research was published in Labor Law Journal, Arbitration Jour-
nal, Employee Responsibilities and Rights Journal, Journal of Construction Engineering and
Management, Industrial Relations, and other journals. Dr. Wolters has consulted to private
and public organizations and served as an Administrative Hearing Officer for grievances
with the City of Auburn, Alabama. He earned his B.B.A. and M.A. from the University
of North Florida and his Ph.D. in Labor and Industrial Relations from the University of
Illinois.

xvii

The Labor Relations Process

PART1
Recognizing Rights and
Responsibilities of Unions
and Management

Part 1 introduces the labor relations process
that will be discussed throughout the book,
placing it in historical and legal perspec-
tives. It also examines the difference
between union and management organiza-
tions and their labor relations strategies.

Chapter 1
Union Management Relationships in Perspective

Chapter 2
The History of Labor Management Relationships

Chapter 3
Legal Influences

Chapter 4
Unions and Management: Key Participants in the Labor Relations
Process

Chapter 5
Why and How Unions Are Organized

3

CHAPTER 1

Union Management Relationships
in Perspective

BOB SAT IN his office staring out the window and thinking
about the future. As the human resources manager of the firm,
Bob had just finished preparing an announcement to be sent to
all employees informing them that the company had just been
sold to a larger competitor. After 20 years of service, Bob was
very proud of the employee relations that existed at his
company and wondered how things might change now that a
larger corporation would be in charge. Although Bob s unit was
not unionized, he knew that the new owner had a number of
unionized facilities within its corporate structure. Bob had never
thought much about what it would be like to manage in a
unionized firm and whether the management strategies he had
relied upon throughout his career would be as effective or even
entirely legal. How might the labor relations process change if
he had to deal with employees as a group through their
selected union representative rather than as individuals? Would
there be an effort to equalize employment terms and policies
between union and nonunion facilities of the new owner?
Would unions already representing employees at other similar
facilities of the owner now seek to organize employees at
Bob s unit? While Bob had more questions than answers about
the immediate future, he did resolve to be proactive by
attempting to expand his current level of knowledge about the
labor relations process.

4

Questions
1. In your opinion, what is the biggest difference between managing

employees in a unionized versus nonunion firm?

2. In your opinion, does having other unionized facilities within a corpora-
tion s operating units alter management s approach to labor relations at
its nonunion facilities and, if so, give an example to illustrate what you
mean.

Today s global economy presents many challenges and opportunities for both employersand employees. As organizations seek to use resources both efficiently and effectively,
there will be inevitable tension over how best to manage those assets to benefit both
ownership and employees. The effective management of human resources is critical to
maintaining an organization s competitiveness. Recognition of and respect for the legitimate
interests of both labor and management are an important step in building and maintaining
work relationships capable of adapting to change in the competitive environment most
organizations face. Stable work relationships are built upon trust between ownership and
employees, which is reflected in both the actions and words of the parties.

Chapter 1 seeks to build a basic frame of reference for understanding the labor relations
process by first defining the three phases of the labor relations process and then placing this
process into an analytical perspective. Chapter 1 introduces the activities, focal point,
participants, and influences of the labor relations process, which are discussed in detail in
subsequent chapters. The chapter ends with a discussion of the current status of union
membership and the relevance of labor organizations in today s economy.

Phases in the Labor Relations Process

The labor relations process involves managers (representing the ownership interests) and a
labor organization (union), selected by employees as their exclusive bargaining agent to rep-
resent their interests. Managers and union representatives jointly determine and administer
work rules. Where employees are not represented by a union, work rules are typically deter-
mined unilaterally by the employer with the opportunity for individual bargaining between
an employee and his or her employer at the employer s discretion. The negotiation and
administration of work rules demonstrate considerable variation across public- and private-
sector organizations in the United States, reflecting unique aspects of each organization.

The labor relations process includes three basic phases:

1. Recognition of the legitimate rights and responsibilities of union and manage-
ment representatives. Employees have a legal right to form and join a union or to
refrain from doing so (see Chapters 3 and 5). Labor law also sets forth the rights and
responsibilities of management and union officials to abide by applicable laws and labor
agreement (contract) terms. From a union s perspective, phase 1 may be the most impor-
tant phase because without gaining legal recognition as the exclusive bargaining represen-
tative of a group of employees in phase 1, the process does not proceed to phases 2 and 3.

2. Negotiation of the labor agreement, including appropriate strategies, tactics, and
impasse resolution techniques. Contract negotiation involves union and management

5

representatives jointly determining work rules (policies) governing the parties rights
and responsibilities affecting wages, hours, or other terms and conditions of employ-
ment (discussed in Chapters 6, 7, and 8). The outcomes of such negotiations have an
important impact on a firm s labor costs, management s rights, and covered employees
standard of living. Most interest disputes (i.e., a dispute over what the terms or condi-
tions of employment or work rules will be) are resolved voluntarily by union and man-
agement negotiators during the bargaining process. Strikes, lockouts, mediation, and
interest arbitration are examples of impasse resolution techniques (discussed in
Chapter 9) that can be used to resolve an interest dispute. Phase 2 of the labor relations
process generally receives the most media attention even though phases 1 and 3 are
equally essential.

3. Administration of the negotiated labor agreement the interpretation and applica-
tion of labor contract terms on a daily basis. Once contract terms have been settled
in phase 2, there is a need to apply those terms every day during the stated term or dura-
tion of the labor agreement. The contract enforcement phase of the labor relations pro-
cess is generally accomplished through daily union and management interactions and,
when necessary, the use of a grievance-arbitration procedure to resolve rights disputes
(i.e., disputes over the interpretation or application of a contract s terms, discussed in
Chapters 10, 11, and 12). Resolving rights disputes accounts for the most time and
energy spent by union and management officials in the labor relations process and
usually involves a larger number of these officials than the preceding phases.

Of course, not all labor management relationships progress smoothly through these
three phases. Indeed, employees and their chosen union representative at some public-
and private-sector organizations have a difficult time moving from the recognition of
an employee bargaining representative (phase 1) through the remaining two phases of
the process.1

The phases of the labor relations process are subject to qualitative variation as well.
In the first phase, for example, organizations vary in the amount of mutual trust and
respect union and management officials have for each other s goals. In the second
phase, negotiations are carried out with different levels of intelligence, preparation, and
sincere desire to achieve results. The third phase may vary as to how well the negotiated
labor agreement is understood and effectively administered in good faith by both parties.
There are probably as many different relationships as there are union and management
officials negotiating labor agreements.

Elements in the Labor Relations Process

Exhibit 1.1 provides a framework for the labor relations process. The elements shown
can be applied to the labor relations activities at a single or multiple facilities owned by
a single company, or in an entire industry. The exhibit cites three major elements: (1) the
negotiation and administration of work rules, which are the focal point of labor relations;
(2) the key participants in the process, who are the union and management organiza-
tions, employees, third-party neutrals, and branches of government (administrative, leg-
islative, and judicial); and (3) the constraints or influences affecting the parties in their
negotiation and administration of work rules.

Focal Point of Labor Relations: Work Rules
Any academic discipline needs a focal point so that research, investigation, and commen-
tary can generate applicable insights. Labor or industrial relations can become a

6 PART 1 Recognizing Rights and Responsibilities of Unions and Management

broad topic including many academic concerns. For example, sociologists have examined
employee alienation; psychologists have investigated causes of job satisfaction and work
motivation; economists have studied wage determination; and political scientists have
assessed the impact of union and management as interest groups attempting to influence
government policy and legislative outcomes.

John Dunlop s book Industrial Relations Systems provides a useful focal point for
these diverse academic approaches. Dunlop suggested that the center of attention in
labor relations should be the work rules negotiated between management and union offi-
cials. Work rules facilitate the implementation of operational plans designed to accom-
plish an organization s strategic goals. Work rules determine employees standard of
living and the work environment within which employees will spend a substantial por-
tion of their time. Today external factors (e.g., state of the economy, technology, interna-
tional forces) play an increased role in determining the substance and type of work rules
created by union and management representatives.

It is important to understand the influences determining the creation and particular
content of work rules.2 Work rules can be placed in two general categories: (1) rules
governing compensation in all its forms (e.g., wages, overtime payments, vacations, holi-
days, shift premiums) and (2) rules specifying the employees and employers job rights
and obligations, such as no employee strike or employer lockout during the term of the
labor agreement. This second category of rules may specify performance standards,

Work Rules

Exhibit 1.1
Elements in the Labor
Relations Process

CHAPTER 1 Union Management Relationships in Perspective 7

promotion qualifications and procedures, job specifications, and layoff procedures. Addi-
tional examples of work rules are furnished in Exhibit 1.2.

Compensation work rules, such as a negotiated wage rate, often capture the attention of
employees and the media because they are negotiation outcomes that are easier for most
people to understand and compare. Union and management officials, however, may attach
equal or greater importance to work rules regarding the second work rule category, job
rights, and obligations. Managers are often adamant about retaining control over key oper-
ating decisions such as determining the number and types of employees, equipment and
technology decisions, geographic location of company operations, and operating hours. In
order to appreciate the importance of these rules, consider the following three examples:
Managers at Company A are interested in obtaining a work rule that permits production
employees to perform minor repairs, instead of requiring higher paid maintenance
employees to do the tasks. At Company B the union wants to reduce forced overtime;
they want workers to have the final decision about whether and when they will work over-
time. About 39 percent of union contracts contain limitations on the right of management
to require employees to work overtime. At Company C union leaders are seeking work
rules that would change the standard work week to less than 40 hours required to earn
full-time pay and benefits.3 Why would the union at Company C seek a shorter work
week? Assuming the number of employee work hours required to meet a firm s workload
is relatively stable, reducing the number of hours considered to be an employee s full work
week would theoretically require additional employee positions (and potentially more due-
paying union members) or create more overtime work opportunities for employees.

Work rules can vary depending upon whether they are common or unique in the sub-
ject matter addressed and vague or specific in the wording used to express the rule. Because
work rules are the outcome of joint negotiation between union and management represen-
tatives, neither party typically gets the exact contract language it originally preferred. Com-
promise language is often worded more generally, which allows room for interpretation.
However, vague wording can lead to subsequent grievance disputes during the contract s
term as management implements its interpretation of contract terms through job decisions
and that interpretation is challenged by employees or their union representative through the
grievance dispute process. The wording or interpretation of work rules can also change over
time in response to changes in operating environments and the need for greater flexibility.

For example, the work rules for airline flight attendants today would most certainly dif-
fer from the following three work rules formulated in the 1930s: (1) swat flies in the cabin
after takeoff, (2) prevent passengers from throwing lighted cigar butts out the windows, and
(3) carry a railroad timetable in case of plane trouble. Today, the flight attendants union is
concerned with issues such as too much luggage stuffed into overhead compartments, which
may fall and hit a passenger, and passenger use of cell phones during flights, which could
pose a security risk by making it easier for terrorists to communicate with each other.4

An analysis of work rules helps to explain the complex output of the labor relations
process. The formal labor agreement in this sense represents a compilation of jointly
negotiated work rules. However, as discussed in Chapter 10, labor relations activities
are not limited to the negotiation of work rules. The labor relations process also
includes the everyday interpretation and application of work rules and the resolution of
any disputes arising over such decisions.

Concern over health care workers exposure to H1N1 flu, the Ebola virus, and
acquired immune deficiency syndrome (AIDS) represents working conditions that create
a need for appropriate work rules to limit patients and health care workers exposure.
A nurses union could seek to negotiate health and safety work rules aimed at protecting
members from unnecessary occupational exposure or ensure the availability of appropri-
ate treatment when exposure does occur.5

8 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Exhibit 1.2
Examples of Work Rules Job or Industry

Classification Work Rule

Government
Installation

The employer agrees to furnish adequate protective clothing for
employees required to work outside during rain, sleet, hail, or
other atmospheric conditions detrimental to health or safety,
provided the employee subjected to such assignments normally
and historically performs the majority of his or her work assign-
ment indoors. Employees who normally perform a majority of
their work outdoors shall furnish their own protective clothing

Electricians Where the work assignment of employees who have been
assigned a permanent reporting location requires travel to and
between other work locations and/or return to their permanent
reporting location, the time consumed by the employees in such
travel shall be counted as time worked

Health Care In situations where a department head determines that it is
necessary for an employee to use bilingual skills, those
employees who have been previously determined to possess
those skills at a level necessary for the assignment, and who are
so assigned by the department head, shall be eligible to receive
additional compensation of 3 percent above the applicable pay
rate for the time period of the assignment

Communications The company subscribes to the principle that a well-informed union
leadership promotes harmony and efficiency in union management
relations. The company agrees to notify the union of any proposed
changes affecting rates of pay, hours of work, and other conditions
of employment. It is understood that the company has the sole right
to institute all such changes as it may consider necessary, subject
to the terms of this agreement. The union agrees to cooperate with
the company at all times in maintaining a high degree of service to its
customers and through conscientious endeavor and application of
effort to strive for the lowest possible costs

Professional
Baseball

The player and the club recognize and agree that the player s
participation in certain other sports may impair or destroy his or
her ability and skill as a baseball player. Accordingly, the player
agrees that he or she will not engage in professional boxing or
wrestling, and that except with the written consent of the club,
he or she will not engage in skiing, auto racing, motorcycle rac-
ing, sky diving or in any game or exhibition of football, soccer,
professional league basketball, ice hockey, or other sport involv-
ing a substantial risk of personal injury

Television The latest version of the script will be made accessible to the
player in the casting office 24 hours in advance of a scheduled
reading or immediately after the scheduling of the interview,
whichever occurs last

Manufacturing When employees are called to work at a time other than their
regular reporting time, and after having clocked out, they shall
be paid two hours plus one and one-half their straight time rate
for all hours worked, but in no event will less than four hours at
the straight rate be paid

Cemeteries In all cases where a grave is dug straight down, a second person
shall be assigned to assist the digger after a depth of five feet is
reached

CHAPTER 1 Union Management Relationships in Perspective 9

Companies and unions are also negotiating no-smoking rules in the workplace both
as a health benefit and a means of reducing health care costs associated with smoking-
related insurance claims. In 1908, a Columbia University professor insisted that the dele-
terious effects of tobacco are greatly exaggerated, a belief that prevailed for the next
70 years. Now, union and management officials and possibly arbitrators at thousands of
facilities jointly determine whether the issuance of a no-smoking policy is reasonable and
whether an employee was properly disciplined or discharged for violating the rule. For
example, in Kansas City, an arbitrator ruled that a collective bargaining agreement between
the fire department and the firefighters union that allowed smoking in designated areas of
fire stations prevailed over a newer law banning smoking inside work facilities.6

A majority of employers engage in one or more forms of electronic monitoring of
employee work performance. Computer monitoring software, bar code scanners, video
cameras, and pressure-sensitive plates have enabled management to monitor employee
performance in various ways, such as counting the number of key strokes made on com-
puter keyboards, listening to employees telephone conversations with customers, following
truck drivers via Global Positioning Satellite (GPS) signals, or viewing computer files,
e-mail messages, and Internet connections on company computers. Employers have several
legitimate interests for monitoring. These include evaluating employees work performance,
seeking to eliminate illegal employee misconduct, protecting their company s trade secrets,
and defending the firm s business reputation. Employees have a legitimate interest in
ensuring that their union representatives negotiate appropriate work rules to govern the
time, place, and method of such electronic monitoring as well as the use of such informa-
tion to reward or penalize employees work performance. Employees also have a legitimate
interest in discussing wages, hours, and working conditions among themselves electroni-
cally (e.g., on social media Web sites) without fear that managers are electronically moni-
toring their discussions in order to punish those who criticize the company.7

Key Participants in the Labor Relations Process
Through the organization s structure, managers represent the interests of the ownership
as well as their own self-interests. Under a legal doctrine known as agency theory, man-
agers are delegated authority by the owners to make decisions required to operate the
organization. Because managers represent the owners interests in employment relations
matters, U.S. managers do not generally have a legally protected right to unionize.

Managers work at various levels within the organization from first-line supervisors or
department heads to the highest ranking management official (e.g., chief executive officer).
Labor relations managers are typically found at corporate, divisional, and plant levels.
Companies with both represented (union) and unrepresented (nonunion) employees or
facilities often prefer the term human resources manager rather than labor relations
manager. Organizations that operate different facilities in different geographic locations
may emphasize standardizing some work rules (e.g., management rights) at all locations
while insisting that other work rules, such as a wage rate for a particular job classification,
be based on local labor market conditions. Thus, wages would vary across facilities.

Plant-level labor relations managers implement these corporate directives, but they
must also deal with other managers at each facility s location (particularly production
and maintenance managers and first-line supervisors) who direct the daily work activities
of hourly employees.

As will be further discussed in Chapter 10, first-line supervisors or department
heads typically hear and attempt to resolve employees grievances on the production
floor. In some cases, lower-level managers are surprised to learn that higher-level man-
agement officials have overturned their decisions. Alert union leaders may use dissension

10 PART 1 Recognizing Rights and Responsibilities of Unions and Management

or lack of clear communication among different levels of management officials to influ-
ence labor relations activities and the company s position toward unions.

Management consultants are individuals hired from outside the organization to
provide some special service or expertise. The activities of management consultants in
the labor relations process are varied and sometimes controversial, ranging from restruc-
turing personnel practices in nonunion firms (in the absence of any active union-
organizing campaign) to designing and presenting the employer s response throughout
a formal union-organizing campaign. During an organizing campaign, both union sup-
porters (often including professional union organizers) and union opponents (often
including managers and managerial consultants) try to persuade employees to support
(or oppose) forming a labor union; the campaign usually ends with a secret-ballot vote,
supervised by the federal National Labor Relations Board (NLRB). One union estimate
found that managerial consultants were involved in 75 percent of union-organizing cam-
paigns.8 Employers who hire managerial consultants to thwart union-organizing efforts
are more likely to engage in a number of legally and ethically questionable tactics.
Employers who make threats of plant closings are more likely to hire outside consul-

tants, discharge union activists, hold captive audience meetings and supervisor one-
on-ones, establish employee involvement committees during the organizing campaign,
make unilateral changes in benefits and/or working conditions, use bribes and special
favors, use electronic surveillance, threaten to report workers to the INS [U.S. Immigra-
tion and Naturalization Service], and show anti-union films. 9 Controversy occurs over
the consultants effectiveness. Research shows that the use of a management consultant
can reduce the probability of a union win in very closely contested elections, but it does
not appear to be as big an influence on union election outcomes as some other factors
such as election-unit size (i.e., how many people will vote in a union representation elec-
tion) or relevant labor market conditions.10

Effectively managing an organization s labor relations is an important part of the
ownership goal of being competitive in the industry or market. Organizations with a
quality labor management relationship may gain a competitive advantage over firms
that lack the ability to gain cooperation and consensus from employees necessary to
effectively implement change to meet new competitive pressures.

Union representatives, usually elected by the members to represent their employ-
ment interests, are another key participant in the labor relations process. As elected
representatives, union officials must consider the varied and sometimes conflicting inter-
ests of individual employees within the bargaining unit seeking to build a consensus for
decisions that benefit the majority of constituents. Unlike managers who are appointed
by higher-level managers, union officials are subject to the political pressure of majority
rule if they wish to be reelected to a union leadership position in the future. Unions as
democratic organizations do experience internal differences of opinion on policies and
priorities that union officials must learn to effectively manage. Every union has its own
history, traditions, personalities, and accepted practices that can lead to observed differ-
ences across union organizations as well as within a particular union. While different
unions may share common interests and positions on many issues of common concern,
each union tends to value maintaining its own independence and sense of self-
determination in representing the interests of its membership.

Certainly some of the most significant participants in the labor relations process are
nonmanagerial employees because they often determine whether a union is even present
in an organization (representation elections and union-organizing drives are discussed in
Chapter 5), whether a negotiated labor agreement is accepted or rejected, and the extent
to which a threatened strike is actually carried out (see Chapter 9).

CHAPTER 1 Union Management Relationships in Perspective 11

Employees are treated here as a separate category because they may demonstrate
dual loyalty to both their employer and union organization.11 Most employees want
their organization to be successful but also value the ability of their union to voice
employee concerns to managers or demand that employees be treated fairly both in com-
pensation and work activities. For example, public employees such as firefighters, police,
and teachers may feel torn between the critical or professional nature of their jobs and
the strategic advantages of a strike. Auto workers may agree that operating costs, includ-
ing labor costs, must be reduced for their employer to remain competitive. Yet they
expect their union representative to ensure that when profitability improves employees
will fairly share in that improvement. Employees varied interests help shape the exis-
tence and content of particular work rules and thus employees are considered a third
key participant in the labor relations process.

The government acting through its different branches executive, legislative, and
judicial at the federal, state, and local levels represents another key participant in the
labor relations process. As discussed in Chapters 2 and 3, the government s role in
regulating labor relations has gradually increased over time as the importance of labor
relations to the effective functioning of the economy has become more apparent. In the
public sector, government officials also serve as managers in the labor relations process,
representing both taxpayers and the general public s interests (discussed in Chapter 13).

In the private sector, the federal government has traditionally played an indirect role
in determining the outcomes of work rule negotiations, preferring to allow union and
management representatives to determine such work rules through the bargaining pro-
cess. Governments in many other industrialized countries (see Chapter 14) take a much
more active role in both regulating and determining the outcomes of specific work rules
(e.g., amount of paid vacation time). The federal government s hands-off approach in
most private-sector bargaining situations is based on the belief that most management
and union officials are better equipped than their government counterparts to assess
their needs and limitations and reach a mutually acceptable labor agreement.

Although the federal government does not dictate the terms of a negotiated labor
agreement, laws, judicial decisions, and administrative agencies, such as the NLRB, can
influence work rules and the ability to exercise legally granted rights. The following three
examples illustrate this: First, legislation to deregulate the trucking and airline industries
has contributed to reduced union membership and economic gains for employees.12 Sec-
ond, the Age Discrimination in Employment Act prohibits union and management offi-
cials from negotiating a mandatory retirement age of 60 years. Third, although some coal
miners have long believed that females working in mines would be bad luck, union and
management officials would be violating sexual discrimination aspects of the Civil Rights
Act if they negotiated a provision prohibiting female employees from working in mines.

Third-party neutrals (i.e., mediators and arbitrators) represent a final key partici-
pant in the labor relations process. Differences between union and management officials
that arise in negotiating the terms of a labor agreement (interest disputes) or administer-
ing its provisions (rights disputes) are often resolved with the aid of a third-party neu-
tral. Mediators (discussed in Chapters 9 and 13), often supplied by the Federal
Mediation and Conciliation Service (FMCS) or a state or private mediation agency, may
be used to help resolve interest disputes during contract negotiations. The mediator
assists the union and management officials to clarify and resolve their differences, thus
promoting a voluntary settlement. The mediator does not possess any binding legal
authority to require the parties to settle an interest dispute, but he or she will offer
advice to help each party assess its own priorities and the costs or risks associated with
failing to reach a voluntary agreement.

12 PART 1 Recognizing Rights and Responsibilities of Unions and Management

An arbitrator is a third-party neutral hired by union and management representa-
tives to make a final and binding decision on a disputed issue. While final and binding
arbitration may occasionally be used to resolve the terms of a new contract (an interest
dispute ) (see Chapter 9), most often it is used to resolve grievances ( rights-type
disputes ) arising during the term of a labor agreement over the interpretation or
application of the contract s language (see Chapters 11 and 12).

Three Basic Assumptions Underlying U.S. Labor Relations

To better understand the U.S. labor relations system and the actions of its participants, it
is helpful to bear in mind certain underlying assumptions that affect the thinking and
behavior of most individuals within the system. Whereas the degree of support by some
participants for these three basic assumptions has varied over the course of U.S. labor
history, these assumptions have been the basis for a majority consensus for many years.

First, the free enterprise (capitalist) economic system in the United States creates an
inherent conflict of interest between employers (owners) and employees. Both employees
and employers seek to advance their own self-interests. Employers seek to maximize
their return on capital invested, while employees seek to advance their pay, working con-
ditions, and job security. Most of the interests employees seek to advance through the
collective bargaining process represent an increased cost to the employer which, unless
offset by cost savings elsewhere or higher productivity, may reduce the investment return
desired by ownership. This creates a natural tension within a capitalist economic system
between the pursuits of employees and employers legitimate interests. Such conflict
should not be viewed in a negative light but rather as simply a reality of business opera-
tion which must be managed effectively. The presence of some degree of inherent con-
flict between employer and employee interests should also not be viewed as precluding
opportunities for cooperation between the parties. Both employees and employers share
a common interest in ensuring that the organization is competitive. Maintaining a suffi-
cient number of qualified and motivated employees is necessary for an employer to
attain desired organizational goals (e.g., productivity, product or service quality). Profits
in turn permit an organization to provide competitive wages, benefits, and working con-
ditions to help ensure the recruitment and retention of qualified employees. Ideally,
employees perceive their own self-interest as best advanced by seeking to advance the
interests of the organization as a whole.

A second underlying assumption of the U.S. labor relations system is that employees
in a free and democratic society have a right to independently pursue their employment
interests using lawful means. Employees should have a right to determine for themselves
what is in their best interests and to pursue means of attaining such interests so long as
the goals pursued and tactics used are legal. Only by allowing individuals to pursue their
legitimate interests can a society foster the necessary support for prevailing economic,
social, and political systems used to sustain the country. Employees may choose to pur-
sue their legitimate interests on an individual basis or collectively by joining a labor
organization. Managers may prefer to work with employees individually and avoid deal-
ing with a union, in order to contain any wage disagreements to only a few people and
to avoid negotiating widespread workplace rule changes. However, co-workers may see it
as unfair when individual employees with unique skills negotiate special work arrange-
ments or pay rates (sometimes called idiosyncratic deals). Further, perceived injustice
has been shown to predict unionization. Therefore, such idiosyncratic deals can be chal-
lenging to negotiate and implement for managers.13

CHAPTER 1 Union Management Relationships in Perspective 13

A third underlying assumption of the U.S. labor relations system is that collective bar-
gaining provides a process for meaningful employee participation through independently
chosen representatives in the determination of work rules. Employees in the U.S. labor
relations system are not required to form or join a labor organization for the purpose of
engaging in collective bargaining, but they are permitted to do so when a majority of the
employee group expresses such a preference. In the absence of collective bargaining, indi-
vidual bargaining may occur between an employer and his or her employee. Labor history
suggests that most employees are at a relative bargaining power disadvantage in individual
bargaining when confronted with the greater resources of their employer, but each
employee is free to determine the degree of satisfaction that his or her own individual bar-
gaining experience provides. Many unrepresented employees, for a variety of reasons, do
not attempt to engage in individual or collective bargaining, thereby permitting the
employer to unilaterally (without bargaining) establish work rules, setting the terms and
conditions of employment. In limited cases, employment terms may be mandated by gov-
ernment action (e.g., minimum wage law, safety, and health standards).

Exhibit 1.3 presents a list of some basic characteristics of the private-sector U.S. labor rela-
tions system. These characteristics will be discussed in further detail throughout the text.

Constraints or Influences Affecting Participants Negotiation and
Administration of Work Rules
The labor relations participants who affect the development of work rules are influenced
by external variables or constraints in their labor relations activities (see the outer circle
of Exhibit 1.1). These constraints and influences can sometimes affect one another and
may relate to a particular firm, local community, or society in general. The following
discussion furnishes a few illustrations of how these constraints and influences can affect
the existence and content of work rules.

State of the Economy: National, Industrial, and Firm-Specific
Indicators
The state of the economy is usually referred to by indicating movement among such quan-
titative indicators as inflation, unemployment, and productivity. During the 1980s, the
United States witnessed a rising inflation rate, which influenced the negotiation of work
rules notably, union insistence that a labor agreement include provisions to increase
wages if increases occur in the cost of living (see Chapter 7). In the early 1990s, the focus
of negotiations was on wage increases, enhancing employee benefits, and containing rising
health care costs. More recently, with slow economic growth, low inflation, and rising job
losses, union and management negotiators returned to an emphasis on job security and
other job protection issues. Many employers, citing competitive pressures, have successfully
negotiated labor cost reductions involving wages, benefits (e.g., pensions, health care), and
inefficient work rules (e.g., restrictive job descriptions).

Two economic indicators that can affect work rules are interest and unemployment
rates. An increase in interest rates can slow home and industrial construction projects.
The Federal Reserve Board voted to raise interest rates 17 times between June 2004 and
June 2006 out of concern that too rapid economic growth might trigger an increase in
consumer inflation.14 More recently, the Federal Reserve Board has cut interest rates to
historically low levels in an effort to spur economic growth by making capital more
available at reasonable cost. If employees wage gains do not at least match the rate of
increase in consumer prices (inflation rate), the purchasing power of employees declines,
adversely affecting employees standard of living. If interest rates are raised to fight

14 PART 1 Recognizing Rights and Responsibilities of Unions and Management

inflation, employees will pay more for consumer debt (e.g., credit cards, auto, or home
loans). A union might respond to such a rising interest/inflation rate environment by
seeking to negotiate pay improvements that exceed the rate of inflation as well as by
offering group discount rates to members on benefits such as credit cards or various
types of consumer loans. In a low interest/inflation rate environment, a union might
focus more on job security issues knowing members are more likely to be satisfied with
moderate wage and benefit improvements that match the low inflation rate.

The unemployment rate affects work rules that provide job protection. Chapter 6
discusses ways in which the unemployment rate can affect the bargaining power of union
and management officials. If this and other economic measures pertaining to the gross
national product, productivity, cost of living, compensation at all employee levels, and
exports and imports are unfavorable, unions will be more likely to accept bargaining
concessions. By the same token, strong product sales, economic growth, and low
unemployment tend to strengthen union bargaining power as employers have more reason
to compromise to avoid any disruption in the production of current products or services.

The National Bureau of Economic Research has determined that the most recent
recession affecting the U.S. economy began in December 2007 when the national unem-
ployment rate was 4.9 percent. By October 2009, the national unemployment rate had
risen to 10.2 percent, representing 15.7 million individuals the highest rate since the
recession in the early 1980s. By September 2014, the unemployment rate had declined to
5.9 percent, representing 9.3 million individuals. An additional 698,000 individuals were
classified as discouraged workers who had given up searching for a job because they

Exhibit 1.3
Basic Characteristics of the
U.S. Private-Sector Labor
Relations System

Primarily a bilateral process (union and management) governed by a framework
of labor laws. For example, LMRA, Labor Management Reporting and Disclo-
sure Act (LMRDA), Railway Labor Act (RLA), OSHA, Family Medical Leave Act
(FMLA), ERISA, ADA, Norris-LaGuardia Act, and anti-discrimination laws.

A highly decentralized bargaining structure that results in a large number of
labor contracts negotiated most often between a single employer and a spe-
cific union to cover a defined group of employees (bargaining unit) at a specific
geographic location.

Recognition of the key legal principles of majority rule and exclusive bargaining
representation. No union can gain the right to represent a group of employees
for purposes of collective bargaining without first demonstrating the majority
support (50 percent 1) of the employees in that group. Once recognized, the
union is the only legal representative authorized to negotiate work rules with
the employer to establish the work group s terms and conditions of
employment.

Permits the use of economic pressure (e.g., strike, lockout, picketing, and boy-
cott) to aid the parties (union and management) in reaching a voluntary negoti-
ated settlement of interest disputes over what the terms and conditions of
employment will be.

Encourages the use of final and binding arbitration, if voluntary grievance nego-
tiation efforts fail, to resolve rights disputes that arise during the term of a con-
tract over the interpretation or application of the labor agreement s terms.

Characterized by significant employer opposition to employee efforts to orga-
nize and bargain collectively through representation by an independent labor
union chosen by the employees themselves.

CHAPTER 1 Union Management Relationships in Perspective 15

believed no jobs were available for them.15 While unemployment rates are expected to
continue to decline as economic recovery occurs, the decline is expected to be gradual,
extending over several years, as employers are typically reluctant to add new jobs or fill
existing vacancies until the recovery in product and service demand is well established.16

The skills, wage levels, and availability of employees in a relevant labor market can
affect negotiated work rules. Management is often concerned with ensuring that an ade-
quate supply of labor of the skill levels required to operate is available in a particular com-
munity. For example, a firm needing skilled employees from a relatively low-skilled labor
market supply would probably wish to negotiate work rules regarding apprenticeship pro-
grams or other forms of job training. Management would also consider negotiating a rea-
sonable employee probationary period (e.g., 60 120 days) within which it could terminate
a union-represented employee who cannot learn the job and perform adequately, with no
union right to protest the action through the labor contract s grievance procedure.

One example of a labor management cooperative effort to assist employees in adjust-
ing to changes in labor market forces is the Alliance for Employee Growth and Develop-
ment, Inc., created in 1986 as a joint enterprise by American Telephone & Telegraph
(AT&T), the Communication Workers of America (CWA), and the International Brother-
hood of Electrical Workers (IBEW) to help displaced workers. Today, the Alliance also
includes employers Alcatel-Lucent, OFS Optical Fiber, and Avaya.17 The Alliance has pro-
vided training and development services to more than 175,000 individuals, helping to pre-
pare them to handle new technologies, job skills training (e.g., technical, customer service,
teamwork), and career transition training. Other outstanding examples include the United
Auto Workers (UAW)/General Motors Skills Centers and the joint training programs of
Ford Motor Company and the UAW. The Service Employees International Union (SEIU)
has partnered with Kaiser-Permanente in California to provide training to upgrade the
skills of workers in entry-level jobs, such as housekeeping. Trainees can then move into
health care related jobs such as medical assistant and acute care nursing assistant that
offer higher pay and more career potential. The vacancies created in entry-level jobs are
filled with those transferring from part-time positions and from newly hired unemployed
and economically impoverished workers who have also received training. In the building
trades, unions have played a major role in training skilled workers. Because workers
move from employer to employer on a regular basis, single construction companies have
less financial incentive to train employees who may end up working for a competitor.
Therefore, the unions, through their training and apprenticeship programs, provide an
obvious contribution to the general national welfare. In fact, unions and their contractors
outspend their nonunion counterparts by a ratio of 50 to 1 in training investments.18

Both management and union representatives should share an interest in establishing
competitive compensation rates for comparably skilled employees within a relevant
external labor market and internally within the firm itself. Externally, when wages are
increasing, both the firm and the union may want to pay comparable wage rates.
Employees generally see this as fair and owners see it as a way to attract and retain
good workers. In cases where the employer faces significant labor cost competition
from nonunion or foreign employers, a union may have to agree to compensation reduc-
tion that will permit a unionized employer to remain competitive in pricing goods or
services sold in the firm s product or service markets. Internally, a job with higher skill
or responsibility requirements should earn a higher compensation rate than jobs with
less skill or job responsibility requirements.

The labor relations process can be affected by the product or service market where
the company either sells its product or purchases key elements required for production
of its products or services. Management would be more vulnerable if a strike occurred at

16 PART 1 Recognizing Rights and Responsibilities of Unions and Management

a time when major customer sales were anticipated or on-time delivery of promised
goods was critical to meet a customer s needs. For example, management at a brewery
would prefer to avoid a labor agreement expiring, possibly leading to a strike, during
the summer months, when significant beverage sales are anticipated. A public school sys-
tem would much prefer a contract expiration date in early summer after the regular
school year has ended, rather than risk a possible work stoppage disruption if the con-
tract expiration date coincided with the first day of the new school year.

A second dimension of the product market, the source of key elements for product
manufacture, can be a factor affecting union members perceptions of job security. For
example, the UAW union is concerned over the fact that many of the parts utilized in
U.S. automobiles are being manufactured in other countries, creating job opportunities
for foreign workers but not for UAW-represented employees.19

Another important consideration in the labor relations process is the financial market,
the arena in which the employers (and unions) seek to borrow funds to finance their invest-
ment strategies. Companies must consider exchange rate money value differences among
countries, which affect the profitability of plant location and sales marketing decisions.
Exchange rates between countries (see Chapter 14) can alter companies investment
strategies because exchange rates affect comparative wage rates and, consequently, the
comparative labor costs of production. As an example, when the peso in Mexico was
devalued by as much as 50 percent of the U.S. dollar, the labor costs of production in
Mexico declined dramatically and made producing goods in Mexico more attractive and
economical for multinational corporations. A strong euro currency valuation in comparison
to the U.S. dollar helped drive up labor production costs in European countries such as
Germany, encouraging automakers such as Daimler AG (Mercedes) and Bavarian Motor
Works (BMW) to build production plants in the United States.

When a company wants to expand its plant capacity and increase jobs, it often has
to borrow money in the financial markets at the same time it may request wage conces-
sions from a union (see Chapter 7) or request the elimination of work rule restrictions to
improve productivity (see Chapter 8). Unions must be able to perform financial
valuation analysis to support, for example, an employee stock option plan (ESOP) (see
Chapter 7), or anticipate the advantages or disadvantages of the sale or merger of an
existing employer s operations with another competitor or private equity fund from the
perspective of union-represented employees.

Labor unions have been able to use their financial resources and become active in the
financial markets as a source of capital. With U.S. employee pension funds valued in
excess of $7 trillion, many unions believe that decisions on how to invest those funds
ought to take into consideration the effect of capital investments on the economic and
job security interests of union members.20 Thus, one goal of many unions is to invest pen-
sion funds in firms that are already unionized. For example, the United Steelworkers have
created a regional investment fund of $100 million called the Heartland Labor Capital
Project, which has the following objectives: (1) invest in regional business and protect
jobs, (2) promote economic awareness as well as training workers and unions and raising
the level of influence on economic development, (3) stimulate regional economies,
(4) encourage regional business enterprises by involving both labor and its allies to support
institutional development, (5) provide capital to enterprises where unions have created
more democratic and sustainable practices, and (6) provide prudent returns to investors.21

Other unions, including the American Federation of Labor-Congress of Industrial Organi-
zations (AFL-CIO), have similar programs to promote jobs for union members.

Perhaps the most immediate and persistent influence on the creation of work rules is
the technology of a particular workplace. Technology has four dimensions: (1) equipment

CHAPTER 1 Union Management Relationships in Perspective 17

used in the operation, (2) the pace and scheduling of work, (3) characteristics of the work
environment and tasks to be performed, and (4) information exchange. Consider, for
example, the major equipment found at a steel mill blast furnace, which requires a very
high temperature for operation. Such a furnace cannot simply be turned on and off like a
household oven. Often several days are required for either reaching the high operating
temperature or for cooling the furnace for maintenance. This equipment characteristic
affects the facility s work rules. In essence, steel mills must operate 24 hours a day, 7 days a
week a situation prompting related work rules, such as wage premiums for working the
night shift, weekends, or holidays. Other continuous operating organizations like hospitals,
hotels, or large retail centers may face similar work rule issues.

In some cases, the introduction of equipment reduces or eliminates employees in a
particular job classification. This situation occurs when industrial robots handle tasks
formerly performed by employees. A rather common application occurs in the auto
industry, where mechanically joined arms perform spot welding, spraying, machine
unloading, and assembly. Unions faced with having membership replaced by robots
have increased related bargaining demands to protect their members job security such
as more paid time off; fewer hours comprising a regular work week (e.g., 35 or 38
hours versus a 40-hour week); or job transfer or retraining rights, enabling displaced
workers to fill available vacant employment opportunities.

Technological advances in computer and communications have made many profes-
sional jobs (e.g., accounting, engineering, and radiology) capable of being outsourced to
workers at outside firms and even in different countries. Some workers benefit from new
job opportunities, while others may lose their job as their employer seeks to reduce labor
costs by outsourcing work formerly performed by its own employees.

Changes in technology have raised the level and type of skill requirements for many
workers. While most competing firms have access to the same technology, the ability to
apply that technology using the skills and brainpower of their employees ultimately
determines whether any real competitive advantage is achieved. Technology improve-
ments have created a greater demand for more highly skilled workers who are able to
assume multiple responsibilities, while reducing the demand for strictly manual labor.
Although, both profits and productivity growth have improved, average real hourly com-
pensation for American workers has not changed significantly over the last 20 years, cre-
ating increasing stress on workers seeking to maintain a middle class standard of living.22

Technological change can also result in certain jobs requiring fewer skills to perform.
In the supermarket industry, electronic scanners are used to change item prices, record
customers purchases, and maintain product inventory counts. Radio Frequency Identifica-
tion (RFID) chips combined with smart shelf systems can send electronic signals to
notify personnel when store shelves are depleted. These activities result in reduced skill
requirements and compensation for cashiers as well as a need for fewer employees. Inter-
estingly, self-service checkout stations in grocery stores, which allow one cashier to do the
work of up to six, have met with some consumer resistance; many customers simply prefer
to have their groceries scanned and bagged by grocery store employees.23

The pace and scheduling of the workday also affect the work rules of certain occupa-
tions. For example, bus companies optimizing their productivity and revenue would concen-
trate on rush-hour traffic (6:00 9:00 A.M., 3:00 7:00 P.M.) when buses are likely to be filled
with passengers. However, problems would remain in scheduling work because many bus
drivers might have a daily eight-hour work schedule of three hours on, three hours off, one
hour on, two hours off, and four hours on. Because of the nature of the work, most labor
agreements in related industries have provisions pertaining to the permissible number,
length, and possible compensation of intervals (times off) between daily work assignments.

18 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Computer operations can help both union and management officials in their daily
labor relations activities. Union officers can use computer applications to maintain mem-
bership and dues records, as well as word processing for communication to the member-
ship. Union and management officials can also use computer applications in the areas of
contract negotiations (costing the various proposals, writing contract language) and
administration (maintenance and research of grievances and arbitration decisions).24

Union officers also use computer applications for communicating with the union s cur-
rent and prospective members. E-mail, Internet, weblogs ( blogs ), and social networking
Web sites are used to keep union members and the public informed of progress during
negotiations. Also, both union and management spokespersons frequently use these commu-
nication tools during union-organizing campaigns. (See Chapter 4, which discusses how
unions use computer technology.) For example, the United Food and Commercial Workers
(UFCW) Local 21 in Washington state has used its own Web site (http://www.ufcw21.org/)
and a Facebook page (https://www.facebook.com/2013GroceryBargainingUFCW21) to bring
attention to its complaints about nonunion grocers, including Wal-Mart.

One survey of U.S., U.K., Irish, Australian, and New Zealand labor unions finds that
97 percent have a Web site, 78 percent have an e-mail newsletter, and about one-half use
Facebook. Less than 10 percent of union leaders use UnionBook, a social media site for
union organizations (http://www.unionbook.org/); 13 percent post YouTube videos. The
AFL-CIO has an extensive Web site (http://www.aflcio.org/) which enables workers, union
members, and students of labor and employment relations to become informed regarding
current developments.25 Students needing to research current labor relations topics for a
class assignment may find the Labor Relations in Action box in this chapter helpful.

International Forces
As participants in the global economy, both labor and management must continuously
monitor international developments and trends to determine how their respective inter-
ests may be affected and how best to respond. Many U.S. firms are dependent on foreign
sales or production to generate profits. The international financial crisis in recent years
has affected U.S. and foreign currency values as well as the availability and costs of nec-
essary operating capital. Economic cycles have differing effects: a weak U.S. dollar value
may make U.S.-produced goods and services cheaper to export but drive up the cost of
imported goods and services. A strong U.S. dollar has opposite consequences in that
U.S.-produced goods are more expensive overseas and imported goods become cheaper.
After several years of decline, the dollar had begun strengthening; at the end of 2014, the
U.S. dollar was again considered strong against other currencies. Finally, a recession in
other countries may reduce the demand for U.S. goods and services in those countries,
thus adversely affecting employment levels at U.S. exporting firms.26

The wars in Iraq and Afghanistan have affected thousands of Americans, including
union members called up as reservists. Although companies are required to retain the
reservists positions, some companies may be reluctant to hire and train new employees
who may have to be laid off upon return of the reservists. Instead, companies may require
other employees to work more overtime or temporarily reclassify employees (through pro-
motions or transfers) to fill the positions left vacant by the call-up of the reservists.

Unions are concerned about the job security and economic impact of free trade
agreements such as the North American Free-Trade Agreement (NAFTA; discussed
more in Chapters 2 and 14) involving the United States, Canada, and Mexico. While
imports from Mexico have clearly increased the U.S. trade deficit with Mexico since the
enactment of NAFTA, the effect of NAFTA on U.S. employment and wages tends to be
less clear.27 Unions tend to stress fair trade rather than free trade in discussing ways

CHAPTER 1 Union Management Relationships in Perspective 19

to ensure that domestic companies can compete effectively in global markets. In addition
to fostering more cooperation with foreign-based labor organizations, U.S. unions also
seek to promote policies aimed at raising pay, working conditions, and environmental
and safety standards applicable to workers in foreign countries.28 Not only does such
an approach serve to raise the living standards of workers in their own countries, it
also serves to reduce the labor cost advantage of moving work done by U.S. workers to
those foreign countries, thus enhancing job security for U.S. workers.

International trade is a major influence in the labor relations process. Imports and
exports, trade deficits, exchange rates, capital investments, and jobs are interconnected.
As an example, the U.S. trade deficit with China increased from $6 million in 1985 to
$318 billion in 2013.29 Using trade surplus funds to purchase U.S. Treasury notes, China
has become the U.S. government s largest foreign creditor.30 Some economists believe that
China s currency is undervalued by 25 to 40 percent.31 Coupled with a low-wage work-
force, this provides China with a competitive advantage in trade with the United States.

Major retailers, such as Target, Best Buy, and Wal-Mart, depend on low-priced
imports from China. These imports help to keep inflation rates low and have helped the
Federal Reserve to keep interest rates in the United States at their lowest levels in four dec-
ades.32 A strong U.S. dollar has made imports appear cheap and has contributed to the
growing U.S. current account deficit (mainly comprising the trade deficit but including
capital income and transfers). With large and persistent external deficits, the United States
has swung from being the world s largest creditor nation to its largest debtor, with net for-
eign liabilities now at about one-fourth of GDP (gross domestic product). 33

The trend toward globalization has been characterized as free-market capitalism,
which places enormous competitive pressures on all firms that become part of the global
economy. Multinational firms that sell globally are pressured to produce globally by seg-
menting their production chains and outsourcing each segment to the country that can
produce cheapest and most efficiently. Newly industrialized countries are able to com-
pete in price-conscious markets by paying lower wages, offering fewer benefits, and pro-
viding less ideal working conditions than those available in the United States. In
addition, due to the diversity and customization made possible by computer-based tech-
nology, the cost advantages of American-style mass production have been reduced.34

Labor unions have been active in the international arena since their beginning.
American labor unions have a long history of resisting the importation of foreign pro-
ducts. Over the last two centuries, organized labor has been one of the more protection-
ist institutions in America. This position should not be a surprise because unions are
democratic organizations that must reflect the interests and needs of their members,
many of whom believe that their jobs are endangered by foreign imports. Most union
members have little inclination to accept assurances that they will find another compara-
ble job or that, in the long run, everyone will be better off. Organized labor unsuccess-
fully opposed trade legislation such as NAFTA and has consistently encouraged
Congress to ensure that trade agreements with other countries contain safeguards for
workers rights and environmental protections applicable to foreign trading partners.
North American unions continue to support positions of the International Labor Orga-
nization (ILO), a United Nations-sponsored labor federation headquartered in Geneva,
Switzerland, which has adopted core labor standards promoting basic workers rights
such as freedom of association, collective bargaining, the right to earn a living wage in
a safe workplace, and the prevention of forced child labor.35 Organized labor continues
to press the World Trade Organization and the International Monetary Fund to forge
links between international trading rights and labor standards.36

20 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION
Getting Online with Labor Relations Research

The number of electronic sources for locating informa-
tion on collective bargaining and labor relations is con-
stantly increasing. The most efficient method for finding
reports in journals, magazines, newspapers, and other
periodical literature is through the use of online research
databases, which are offered by most university and
college libraries to their students, faculty, and staff
members. You will choose your sources depending on
the time period you want to cover, the amount of infor-
mation you need, and the availability of resources in
your area. Libraries still maintain a collection of print
indexes, but most of these are being replaced by online
versions, which allow for faster searching and less
maintenance by the library.

Online databases have several advantages over
print indexes, including currency, the ability to print in
a variety of formats, the ability to combine terms and
other ways to limit (e.g., date, language, and publication
title) to broaden or narrow a search, generate biblio-
graphic citations by style, and the ability to e-mail or
download articles. Online databases that can be
searched from college libraries can also usually be
searched from a dorm room, home, or office with appro-
priate user authentication. A few disadvantages are the
commitment of time to become skilled in their use, the
availability of only selected content in some databases,
and overlapping titles from database to database.

Subscriptions to online databases that provide
access to indexing or the full text of articles on business
topics are sold by a number of vendors, including Lex-
isNexis, ProQuest (formerly University Microfilms or
UMI), OCLC (FirstSearch), Gale (part of Cengage Learn-
ing), and EBSCO. Databases specifically devoted to
labor relations cases and issues are provided by the
Bureau of National Affairs (BNA) and Commerce Clear-
ing House (CCH). Most of these databases are provided
through the Internet, although there are a few that are
available electronically only on CD-ROM.

General business indexes are extremely useful in
locating articles on labor relations. Business Periodicals
Index, originally published by the H.W. Wilson Com-
pany, is a print index that is still found in most libraries
and, for many years, was the only business index likely
to be found in a small library. The online version of the
current index is Wilson Business Abstracts with Full
Text; earlier years are accessible via a separate data-
base: Business Periodicals Index Retrospective: 1913
1982. Wilson merged with database provider EBSCO in
2011.

Other general business periodical databases that
are useful for finding trade publications are ABI/
INFORM Trade & Industry (ProQuest), Business &
Industry (Gale Cengage Learning) and the Business
News portion of LexisNexis Academic. Both Lexis-
Nexis and its competitor, WestLaw Next (Thompson
Reuters) publish law-related information and court
case summaries. Trade journals such as Automotive
News, Supermarket News, Editor & Publisher, and
Modern Healthcare can provide related insights into
labor issues and unions such as the United Autowor-
kers (UAW), UFCW, Newspaper Guild, and American
Nurses Association, respectively.

ABI/INFORM Global, produced by ProQuest, was
one of the first electronic databases to provide an
index to both scholarly journals and practitioner maga-
zines pertaining to business. EBSCO Business Source
Complete is another comprehensive business periodical
database that offers 2,300 journals and general busi-
ness periodicals including Business Week, Forbes, For-
tune, American Banker, and many others. EBSCO has
exclusive rights to the electronic version of Harvard
Business Review. Both ABI/INFORM and EBSCO data-
bases feature several academic journals in the field of
labor and employment relations. Leading academic jour-
nals include Industrial Relations, Industrial & Labor Rela-
tions Review (ILR Review), Journal of Labor Economics,
British Journal of Industrial Relations, Labor Law Jour-
nal, Employee Relations, Labor History, Journal of Col-
lective Negotiations, and Journal of Labor Research.

Newspapers are an excellent source of business
information because of the detailed analysis of events
not often found in other periodical literature. Because
newspapers are often published daily, they offer the
latest news about ongoing labor negotiations or work
stoppages. Citations to articles in leading newspapers
may be found in print indexes, whereas a rapidly
increasing number of electronic indexes provide the
complete text and indexing of national and regional
newspapers. Many major newspapers maintain online
Web sites that offer free access to some stories (e.g.,
the Washington Post, USA Today, Detroit Free Press,
and Los Angeles Times). The text of the Wall Street
Journal is offered by several sources, such as Lexis-
Nexis Academic and ABI/INFORM Complete.

LexisNexis Academic and Regional Business
News (EBSCO) are reliable sources to consult for arti-
cles from regional newspapers about a particular event
published in the city or region where the event took

21

Public Opinion
Public opinion is a factor that also affects the labor relations process. The mass media
(television, radio, newspapers, movies, music) represent an important influence within a
community, serving as both a generator and conduit of community opinion. Media
sources often tend to perpetuate a negative stereotype of unions. When put together,
the collective media image portrays unions as greedy and corrupt institutions, eager to
strike, protective of unproductive workers, heedless of America s need to compete inter-
nationally, and generally outmoded in a society that would have no disruptive class
antagonisms were it not for a few self-aggrandizing union hot-heads. 37 The media are
profit-making businesses, and at least one prominent union official contends that this
orientation biases the reporting of labor relations activities:

The media tend to cover collective bargaining as if it were a pier six brawl. The intri-
cate moves and trade-offs that really make up bargaining aren t as newsy as impas-
sioned rhetoric or a picket line confrontation. Reporters are given little training in
covering collective bargaining. They are told to look for the news the fist fight, the
walkout, the heated exchange and, as a result, frequently miss the story, which is
the settlement. Every union proposal is a demand, every management proposal is
an offer. 38

An analysis of 40 years of New York Times columns concerning labor unions agreed
with the preceding quotation, as it found that the newspaper had increasingly concen-
trated on strike activities and had exaggerated the frequency of strikes.39 Media coverage
of labor issues often treats the subject matter as a consumer issue, focusing on how con-
sumer prices or the availability of goods or services may be affected rather than focusing
on the concerns of the workers affected by the labor issue.40

From the 1930s through the mid-1970s, the percentage of Americans who approve
of unions was 60 percent or higher. Between the mid-1970s and 2008, approval has

place. Regional publications often offer a different per-
spective from that of a national newspaper.

The Daily Labor Report, published by BNA in both
print and online versions, is extremely useful in research-
ing current labor relations topics. Coverage includes leg-
islation pending in Congress, discussion of court cases,
bargaining settlements, statistical information, and other
items relating to labor. BNA also publishes the Labor and
Employment Law Resource Center online, providing the
full text of labor and employment cases, sample contract
clauses, and manuals for answering day-to-day labor and
employment law questions.

Government sources and libraries can also prove
valuable. NLRB cases and policies can be searched
directly from the agency s Web site. FLRA.gov has
descriptions of cases involving federal employees who
are covered under the Federal Labor Relations Act. Sev-
eral states have searchable databases for state public-
sector grievance cases; for example, Wisconsin cases

can be found at the Wisconsin Employment Relations
Commission Web site. Archived full-text collective bar-
gaining agreements can be downloaded at the Institute
for Research on Labor and Employment at the Uni-
versity of California Berkeley (http://www.irle.berkeley.
edu/library/CBA.html). A similar database of collective
bargaining agreements is found at the Digital Com-
mons of the Industrial & Labor Relations School at
Cornell University. The Digital Commons also contains
reports from groups such as the Fair Labor Association,
an anti-sweatshop group, which monitors production
facilities to assess their compliance with the organiza-
tion s labor standards.

Exploring the Web Internet exercises at the end
of each chapter in this book will give you a chance to
use some of these resources. They can be helpful in
exploring different labor relations topics further to
enhance your understanding of labor and employment
relations.

22

hovered between 55 and 65 percent. Public approval of labor unions declined at the start
of the recent economic recession to an all-time low of 48 percent in August 2009, down
from 59 percent one year prior; however, it has since climbed steadily to 54 percent in
2013.41 These results vary by political party affiliation with a majority of Democrats (75
percent) approving of unions in 2013 compared to 51 percent of Independents and
34 percent of Republicans. Approximately two-thirds of Americans believe that unions
are helpful to their members, but less than 50 percent believe unions are helpful to the
companies where workers are organized and to the U.S. economy in general. About one-
third of those surveyed in 2013 desired to see unions exert the same or more influence in
the United States in the future compared to today; 25 percent said that unions should have
the same amount of influence and 39 percent said that they should have less influence.

Public opinion of institutions in general is low in the United States, with more than
one-third of the public currently expressing confidence in only 5 out of 17 surveyed
American institutions: the military (74 percent), small business (62 percent), the police
(53 percent), the church or organized religion (45 percent) and the medical system
(34 percent). Only 22 percent of the public expressed a lot of confidence in organized
labor about the same as big business (21 percent). Confidence in unions did rank
ahead of the public s opinion of Congress (7 percent), television news (18 percent), and
news on the Internet (19 percent).42 In a separate 2009 Harris Poll, adults surveyed
believed that a number of groups exerted too much power and influence over govern-
ment in Washington, D.C., including big companies and political action committees
(85 percent each), news media (75 percent), entertainment and sports celebrities
(70 percent), and labor unions (54 percent).43

Public opinion, like other external influences, can affect one or more phases of the
labor relations process, as well as the content of negotiated work rules. After experienc-
ing a bitter, well-publicized strike between Caterpillar and the UAW, the mayor of
Peoria, Illinois feared employers would not locate in his community: We had worked
so hard to make this a city with the image of having a cohesive relationship between
labor and management, a place [in which] people should think about expanding their
businesses or opening new ones. Now comes this strike, which is going to damage our
reputation. In some cases, a community may stress its low union membership level or
the anti-union attitudes of citizens as a benefit to encourage business organizations to
expand or relocate there. For example, commenting on UAW efforts to organize a
Volkswagen plant in Chattanooga (see Chapter 5 for details), Tennessee Senator Bob
Corker explained why he spoke against unionization, It was critical that workers knew
the potential long-term economic consequences of this decision on the state. If the UAW
came into our community, attracting suppliers and other prospective companies would
be far more difficult . On Feb. 14, [2014] the workers made their voices heard, with
53% voting against allowing the UAW to represent them. I believe that the workers
understood that they were nothing more than dollar signs for the UAW. 44

Union officials are aware of the significant influence that public opinion can have on
the labor relations process. Albert Shanker, former president of the American Federation
of Teachers, indicated why he wrote the first of 1,000 columns entitled Where We
Stand. After strikes were conducted by his union, Shanker reflected,

I became one of the best-known figures in New York City, but people saw me only as
a militant union leader urging teachers to strike, refusing to settle, going to jail. In
late 1968, I became convinced that I had been dead wrong in believing that the pub-
lic s opinion of me didn t matter. Public schools depend on public support. And the
public was not likely to support the schools for long if they thought teachers were led

CHAPTER 1 Union Management Relationships in Perspective 23

by a powerful madman . I decided to devote some time and energy to letting the
public know that the union s president was someone who read books and had ideals
and ideas about how to fix the schools.45

Union officials seek to enhance public opinion in three general ways: (1) monitoring
and reacting to negative comments made in the media, (2) getting organized labor s pos-
itive message out to the community, and (3) forming alliances with various groups in the
community. For example, the AFL-CIO supported a march sponsored by the Rainbow
PUSH Coalition in New Orleans, Louisiana, to encourage faster government action to
rebuild homes and communities devastated by Hurricanes Katrina and Rita.46 The
AFL-CIO has created its own Gulf Coast Revitalization Program, committing $1 billion
dollars over seven years to fund housing and economic development initiatives. Another
example is the BlueGreen Alliance, which is a national strategic partnership between
environmental groups (e.g., Sierra Club) and labor unions (e.g., SEIU, United Steel-
workers, CWA, and the American Federation of Teachers).47 The Alliance s goal is to
expand the number and quality of jobs in the green economy. Organized labor con-
tinues to work with community-based religious, civil rights, and environmental groups
on issues of shared interests, such as improving health care access and affordability,
immigration reform, and ensuring economic and social justice on the job and within
the communities in which workers live.48

Unions have also become more sophisticated in creating their own media campaigns
to support union membership and bargaining activities. Some efforts such as
WakeUpWalMart.com or WalMartWatch.com target a specific company, while others
target a specific issue, such as the Health Care Hustle Web site sponsored by Working
America, an affiliate of the AFL-CIO representing 1.5 million employees who currently
are not members of an organized bargaining unit.49 Some form alliances with indepen-
dent Worker Centers. For information about such alliances, see the appropriate Labor
Relations in Action box.

In some cases, organized labor has cultivated alliances with business organizations.
A coalition including Wal-Mart, AT&T Inc., Intel Corporation, the SEIU, and the
CWA worked to encourage public policy changes that would provide affordable health
care coverage to all Americans.50 Other examples include the Public Works Alliance,
which involves labor unions and contractors cooperating to obtain federal funds for
road and bridge improvements in the Long Island, New York, area and a labor
management alliance in Rhode Island seeking to save the funding of a valued job train-
ing program.51

Union Membership

Union membership in the United States has shown a steady, gradual decline as a propor-
tion of the total labor force (i.e., all employed persons 16 years of age or older). In 2014,
union membership was 14.6 million, or 11.1 percent of the 131 million wage and salary
employees in the total U.S. labor force.52 In 1945, union membership was about 36 per-
cent of the total labor force. One partial explanation of this trend is that while the num-
ber of union members has declined slowly (e.g., from 16.1 million in 2002 to 14.6 million
in 2014), the number of people in the workforce has risen (e.g., from 122 million in 2002
to 131 million in 2014). Thus, even if union membership had held constant, it would
comprise a smaller percentage of an expanding workforce. Union density, the propor-
tion of a total group (e.g., national labor force, industry, or geographic region) comprised
of union members, is one measure of relative union strength or potential influence.

24 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION
Unions and Worker Centers

During the past decade, over 200 Worker Centers
have formed. These nonprofit organizations provide ser-
vices for groups of workers in their communities or in
specific types of low-paying jobs. For example, there are
Worker Centers for taxi drivers, day laborers, undocu-
mented workers, farm workers, and fast-food employ-
ees. They are funded through charitable donations and
grants, often obtaining financial support from religious,
political, environmental, and civil rights groups.a Worker
Centers typically educate low-income and immigrant
workers about their legal rights and about social ser-
vices; some also advocate that workers join labor
unions. Thus, Worker Centers represent a hybrid
between social work organizations, political action/advo-
cacy groups, and union recruiting centers. As one
Worker Center described its activities,

If, for example, we discover that the most common
problem in the restaurant sector is employer fail-
ure to pay extra for overtime work, we may suggest
to the [Worker Center] Board that we make that
failure the focal point of a [publicity] campaign.
(p. 112) b

Many individual unions support Worker Centers
financially, and through joint cooperative actions. In
2006 and again in 2013, the AFL-CIO endorsed the
idea of cooperating with Worker Centers. This alliance
has produced some notable successes. For example,
since the 1980s, many New York taxi firms have reclas-
sified their drivers from employees to independent
contractors ; this change means that the drivers are
unable to join a union. Instead, many of the taxi drivers
have formed the New York City Taxi Workers Alliance
(NYTWA), a type of Worker Center. In 2006, the group
partnered with the AFL-CIO and began securing
improved working conditions from individual firms. In
2012, the NYTWA negotiated a fare increase from the
New York Taxi and Limousine Commission, with the
increase designated for a new type of benefit: health
coverage.c

Because Worker Centers do not negotiate labor
contracts with businesses or have ongoing relationships
with specific employers, legally, they are not labor
unions. Therefore, they are free to use tactics that tradi-
tional unions cannot use, such as a secondary boy-
cott where the group attempts to convince the public
to boycott one firm s goods in order to persuade that
firm to either not do business with a second company
or pressure the second company to change its labor pol-
icies. Thus, Worker Centers are not subject to the reg-
ulations of the Labor Management Relations Act.d

Neither are they required to abide by the Labor
Management Reporting and Disclosure Act (LMRDA;
also called the Landrum-Griffin Act); this means that
they do not have to disclose financial information to
the same degree as labor unions.e They do not even
have to garner the support of a majority of workers in
a firm. If the leaders of a Worker Center believe that
there are, say, safety problems at a particular employer,
they can immediately take action.

What sorts of actions do Worker Centers do? A
few tactics are common:

(1) Publicizing problems in the media. Protests for
higher wages for fast food workers in the summer
of 2014 were largely organized by Worker Centers
in major U.S. cities.

(2) Boycotts and picketing. Besides drawing the pub-
lic s attention to issues of concern, these efforts
can hurt a company financially. For example, a
four-year boycott of Taco Bell in Florida by the Coa-
lition of Immokalee Workers led to Taco Bell restau-
rants agreeing to pay more for tomatoes, with the
increase going into farm workers pay.

(3) Lobbying for government action. This has
resulted in increases in the minimum wage in
some cities as well as California and Washington
State.

(4) Class-action lawsuits. Lawsuits filed on behalf of
employees can sometimes result in out-of-court
voluntary settlements that improve wages or work-
ing conditions and sometimes these settlements
include employer donations to the Worker Center.

(5) Union organizing. Sometimes Worker Centers
help organizers get jobs within a nonunion firm
with the primary goal of forming a union a tactic
that is called salting.

Employers see this set of tactics as a form of
harassment, led by outside groups who are not
accountable to anyone. A union is accountable to its
members who are employees of the company; if a
majority of the members want the union to pursue a
course of action, then they can encourage its leaders
to do so. However, because Worker Centers are not
unions, they do not need to have the support of a
majority of the employees. Critics complain that the
lack of legal regulation, accountability, and officially
sanctioned union bargaining rights for Worker Centers
means that employers cannot negotiate a compromise
settlement. Many employers complain that their profit
margins are too thin to afford some of the demands
these groups make yet they can t afford to hire

25

One estimate predicts that unions would need to organize 1 million new members
annually to increase the union density level in the total labor force by 1 percent.53

Exhibit 1.4 shows union membership data trends since 1975.

Exhibit 1.4
Union Membership
Trends, 1975 2014
(in thousands)

Year
Total
Employment

Union
Members

Percentage
Union
Members

Percentage
Represented
for
Bargaining

1975 75,703.9 16,778 22.2

1980 87,479.5 20,095 23.0 25.7

1985 94,520.5 16,996 18.0 20.5

1990 103,904 16,740 16.1 18.3

1995 110,038.1 16,359 14.9 16.7

2000 110,038.1 16,258 14.9 14.9

2005 125,889.3 15,685 12.5 13.7

2010 124,073 14,715 11.9 13.1

2013 129,110 14,528 11.3 12.4

2014 131,431 14,576 11.1 12.3

Data set is based upon information in the Current Population Survey (CPS) compiled by the Bureau of Labor
Statistics, U.S. Department of Labor.

SOURCES: U.S. Department of Labor, Union Members in 2010, News Release, January 21, 2011; U.S. Department of Labor,
Union Members in 2013, News Release, January 24, 2014; Barry Hirsch and David Macpherson, Union Membership, Coverage,

Density, and Employment among All Wage and Salary Workers, 1973 2006, Unionstats.com, 2007, p. 1 at http://www.trinity.
edu/bhirsch/unionstats/.

attorneys, lobbyists, and advertising agencies to fight
these tactics either. Consequently, some owners,
managers, and critics (like Worker Center Watch )
view Worker Center tactics with distain, likening
them to extortion.f

Even within the labor movement, the alliance
between Worker Centers and traditional unions is
often tenuous. Some Worker Centers are dominated
by activists who are suspicious of both capitalism and
of what they see as overly bureaucratic unions. At
others, leaders worry about being co-opted by traditional
unions. Unions have criticized Worker Centers for refer-
ring the unemployed to low-wage nonunion employers.
Consequently, while both types of groups cooperate to
improve poor workers wages and working conditions,
such cooperation has not yet resulted in substantial
membership gains for unions.g

It will be interesting to see how this develops over
the upcoming years. Will Worker Centers remain a set

of minor players in the labor movement? Or will they
grow and redefine the labor movement in the twenty-
first century?

aRobert J. Grossman, Leading from Behind? HR Magazine, 58 (12), Dec., 2013,
pp. 37 41.
bAlice B. Gates, Integrating Social Services and Social Change: Lessons From an
Immigrant Worker Center, Journal of Community Practice, 22(1), 2014, pp. 102 129.
cAvendaño, Ana, and Jonathan Hiatt, Worker Self-Organization in the New Economy:
The AFL-CIO s Experience in Movement Building with Community-Labour Partnerships,
Labour, Capital & Society, 45(1), April, 2012, pp. 66 95.
dEli Naduris-Weissman, The Worker Center Movement and Traditional Labor Law:
A Contextual Analysis, Berkely Journal of Employment & Labor Law, 30(1), 2009,
pp. 232 335.
eMax Mihelich, Worker Centers Are Center of Attention, Workforce, 92(11), Nov.,
2013, pp. 24 25.
fRyan Williams, Worker Center Watch calls on Florida Attorney General to Investigate
CIW, Worker Center Watch News, Nov., 2013. Accessed Oct. 28, 2014 at: http://
www.workercenterwatch.com/wcw-calls-on-fl-attorney-general-to-investigate-ciw/.
gFine =Janice R. Fine, New Forms to Settle Old Scores: Updating the Worker Center
Story in the United States, Relations Industrielles/Industrial Relations, 66(4), Fall,
2011, pp. 604 630.

26

Unions typically represent a higher number of employees than are actually union
members because a simple majority of employees must support a union in order for
that union to gain the legal right to represent the entire employee group (called a bar-
gaining unit ) for purposes of collective bargaining. While no employee can legally be
required to become a full active member of any union, if that employee is a member of
an employee group whose majority has chosen to be represented by a union, then all
members of that group would be covered by the labor agreement negotiated by that
union and the employee group s employer. In 2014, 1.6 million employees had jobs cov-
ered by a collective bargaining agreement (labor contract) but were not union members
themselves.54 Almost half of these individuals were government employees.

In 2014, 7.3 million (6.6 percent) of over 111 million private-sector employees were
union members, while 7.4 percent of private-sector employees were represented by a
union for purposes of collective bargaining.55 A similar number of union members were
employed in the public-sector (7.2 million), but the union density was greater, with
union members comprising 35.7 percent of total public-sector employment. Approximately
39.2 percent were represented by a union for purposes of collective bargaining. The higher
union representation among public-sector employees varies by level of public employment,
with 45.5 percent of local government employees, 32.8 percent of state employees and 31.6
percent of federal employees represented by a union for purposes of collective bargaining.
Union membership among these groups is 41.9 percent for local government employees,
29.8 percent for state employees, and 27.5 percent for federal employees. Public-sector
labor relations issues and trends will be discussed further in Chapter 13.

The gradual decline or stagnation in union membership has been attributed to three
broad factors: (1) structural changes in the labor force, (2) improved management prac-
tices in business organizations, and (3) political and legal conditions governing the work-
place. Of these three explanations, research suggests that changes in the structure of the
labor force may be the most important.56 Since 2008, job losses due to the economic
recession resulted in the loss of many union members, particularly in the manufacturing
and construction industries.57

Structural Changes in the Economy
Employment has shifted from traditionally unionized industries (manufacturing, rail-
roads, and mining) to professional and service-related industries (e.g., health care, legal,
education, food preparation, personal care and service, building and grounds cleaning
and maintenance, and protective services).58 Many of the fastest growing occupations
are at opposite ends of the level of education and skills continuum required for effective
job performance. The problems of defending a shrinking number of high wage
manufacturing jobs are different from organizing the growing ranks of lower-wage ser-
vice workers. But what they have in common is the need to confront industry with one
union that can bargain hard and solve problems. 59

Most business organizations in the United States are small, with 88 percent of firms
having fewer than 20 employees and 98 percent of firms having fewer than 100 employ-
ees.60 Union membership has traditionally been concentrated in the 2 percent of firms that
account for 43 percent of all jobs in the economy. Efforts to increase union membership in
small firms is both time consuming and more expensive for labor organizations.

Demographic trends affecting the size and composition of the labor force can also affect
union membership trends. The proportion of the labor force comprised of individuals 55
years and older is expected to increase while the proportion of individuals in the 16 24 and
25 54 age groups is expected to decline.61 Over the period from 1992 to 2014, the proportion
of the U.S. labor force comprising men declined from 54.6 percent to 51.7 percent, while

CHAPTER 1 Union Management Relationships in Perspective 27

women s proportion increased from 45.4 percent to 48.2 percent. These percentages are
expected to remain virtually unchanged through 2022. The percentage of Whites in the work-
force changed little, from 77.1 percent in 1992 to 79.2 percent in 2014; yet, it is expected to
drop to 60 percent in 2022. In 2014, Black, Asian, and Hispanic workers comprised 12.0 per-
cent, 5.7 percent, and 16.4 percent of the workforce. By 2022, groups of Black, Asian, and
Hispanic origin groups will increase their representation in the labor force to an estimated
12.4 percent, 6.2 percent, and 19.1 percent of the labor force respectively. Unions will need
to be able to attract and retain new members from these groups of employees to maintain
or increase current union density levels in the future.

In 2014, 24.7 million part-time workers comprised about 19 percent of the total
labor force.62 Unions represented 13.6 percent of full-time workers but only 6.6 percent
of part-time workers for purposes of collective bargaining in 2014. Among these, 12.3
percent of full-time workers and 5.8 percent of part-time workers are union members.63

Research demonstrates that growth in part-time employment has a small, but significant,
negative impact on union density, although this negative effect declines as the number of
hours of work increases to 20 or more per week.64

LABOR RELATIONS IN ACTION
Are Unions Still Relevant?

The answer to the provocative question of whether
unions are still relevant in today s economy may depend
on who you ask. Andrew Stern, past president of the
SEIU believes the need for unions today may be greater
than at any time in the past 75 years.

I think American workers want a voice on their job.
The question is: Will unions change to become better
partners with employers to respond to what is now a
global economy where more people went to work in
the U.S. in retail than in manufacturing? We want to
find a 21st century new model that may look more like
a European model, that is less focused on individual
grievances, more focused on industry needs. We
don t see our employers as enemies. We need to
build successful employers [and] as a part of that
you need to be involved and have a voice, and every-
one needs to share in the success of an employer, not
just the share-holders and executives.a

The AFL-CIO shares the belief that unions are just
as important today as ever and views one important
union role as safeguarding workers past gains while
seeking a fair share of future prosperity.

Through unions, workers win better wages, bene-
fits, and a voice on the job and good union jobs mean
stronger communities. Unions have made life better for
all working Americans by helping to pass laws ending
child labor, establishing the eight-hour day, protecting
workers safety and health and helping to create Social
Security, unemployment insurance and the minimum
wage, for example. Unions are continuing the fight
today to improve life for all working families in

America.b A survey of Canadian employees reported
the top three advantages of unions were that they
made health and safety, job security, and benefits a lot
better on the job.c While agreeing that it was important
for workers to have a voice on the job, more Canadians
preferred an employee association form of representa-
tion that would take up problems on behalf of workers
with management than the traditional Canadian union
model.

Employers, particularly those who currently are non-
union, are more likely to argue that unions today are no
longer necessary. the protections unions used to
seek, such as from unfair dismissal and dangerous work-
places, have with labor s ardent support been taken
over by government. d What were once considered sig-
nificant employee pension and health care benefit gains
under union contracts are now referred to as high legacy
costs by unionized employers in industries such as air-
lines and autos, making those employers less competi-
tive and threatening job security.e

Ultimately, what matters is how employees will
answer the question of whether unions are still relevant.
The issue of why employees join a union will be
explored further in Chapter 5.

aKris Maher, Are Unions Relevant? Wall Street Journal, January 22, 2007, p. R-5.
bAFL-CIO, A Quick Study of How Unions Help Workers Win a Voice on the Job,
Unions, 101 (accessed August 13, 2010), p. 1 at http://www.aflcio.org/joinaunion/
union101.cfm.
cUyen Vu, Employees Want a Collective Voice, but Not Necessarily a Union, Survey
Says, Canadian HR Reporter, 16(20), 2003, pp. 3, 11.
dRobert J. Grossman, Do Unions Pay? HR Magazine, 50(5), May 2005, p. 49.
eMichael Barone, Big Labor, RIP, Wall Street Journal, July 28, 2005, p. A-10.

28

Changing Management Practices
Another reason often given for stagnant or declining union membership is that more
organizations are learning how to operate their businesses on a nonunion basis. Some-
times this entails moving some or all operations to less-unionized geographic areas of
the United States (e.g., the Southwest and South). More firms are trying to be proactive
in recognizing and addressing employee interests and concerns. Managers are also
adopting human resource management practices, including aggressive anti-union cam-
paigns (see Chapter 5), to keep their firms nonunion.

Some union officials indicate that employers often use labor law loopholes to fore-
stall or negate free employee union choice through secret-ballot elections. For example,
using pre-election procedural time delays, contesting election results, lengthy appeals,
and delays in union attempts to negotiate a first contract settlement once union recogni-
tion is granted are possible under the Labor Management Relations Act (LMRA) (see
Chapter 3). One analyst makes a comparison with the political process: Suppose U.S.
political elections were legally structured so that access to potential voters was denied to
one political party (analogous to the union), while it was granted to the other one for
eight hours a day at one s place of work. The second political party (analogous to man-
agement) could force the electorate to listen to campaign speeches (captive audience
meetings), while the opposing party was denied access.65

Changing Legal Environment
Employment law changes that have expanded employees rights Passage of the Ameri-
cans with Disabilities Act (ADA), Equal Employment Opportunity Act, Occupational
Safety and Health Act (OSHA), Employee Retirement and Income Security Act
(ERISA), Lilly Ledbetter Fair Pay Act, and other laws have helped employers to argue
that unions are less necessary today. Indeed, many unions appear to be committing
more of their resources to serving the needs of their current members than to organizing
new members.

There is an ongoing debate within the union movement regarding the proportion of
resources that ought to be devoted to organizing new members versus providing enhanced
services (e.g., negotiating contracts; researching wage, benefit, and working condition
issues; processing contract grievances; monitoring political issues) to currently represented
members. Each union s membership must decide if organizing new employees is in their
best interests when these efforts would require the use of scarce union organization funds
earmarked for present members services. Mary Kay Henry, the president of the SEIU, has
made union organizing the organization s primary goal, with the union investing $250 mil-
lion annually in organizing activities.66 Because unions are political organizations and
union leaders are elected by the current membership, the incentive to organize new mem-
bers is often less than the incentive to provide services to current members.67

Although union membership has experienced a gradual decline as a percentage of
the total labor force, many labor unions have responded by increasing their union-
organizing activities. Unions are attempting to improve the ways in which they relate
both to their own members and to employers with whom they have bargaining relation-
ships.68 The social significance of unions can also be assessed in general terms by consid-
ering what the consequences would be if unions were absent from our society. With no
organized voice for workers interests to counterbalance the economic interests of
employers to reduce labor costs, will the improvements gained over the previous century
continue, or will they be subject to erosion and lax enforcement? Labor unions have his-
torically functioned in the United States as a countervailing power necessary to maintain
some balance between employer and employee rights and responsibilities.

CHAPTER 1 Union Management Relationships in Perspective 29

Summary
Although unique to the particular labor management
activities, attitudes, and relationships at each organiza-
tion (discussed more in Chapter 4), the labor relations
process includes three key phases or steps: recognition
of the legitimate rights and responsibilities of union
and management representatives, negotiation of a
labor agreement, and daily administration of the
terms of that negotiated labor agreement.

The labor relations process focuses on jointly nego-
tiated and administered work rules that pertain to com-
pensation and employees and employers rights and
responsibilities. The labor relations process is flexible
enough to permit negotiated work rules to vary, thus
accommodating the unique characteristics of a particular
industry, job classification, geographic setting, or exter-
nal environmental conditions. The labor relations pro-
cess is dynamic, which enables bargaining relationships
to adapt to changing competitive conditions.

Union and management officials represent two key
participants in the labor relations process along with
employees, government, and certain third-party neu-
trals such as mediators and arbitrators who aid in
resolving interest and rights-type disputes. Employees
are particularly important in the labor relations process

because they determine whether a union will be chosen
to represent their employment interests. Employees
typically demonstrate some degree of dual loyalty to
both their union and employer, which helps to deter-
mine the organizational effectiveness of each. However,
there may be certain critical times in a bargaining
relationship when each employee will have to decide
which side they are on.

Participants in the labor relations process are influ-
enced by several variables such as technology (equip-
ment, pace and scheduling of work, the work
environment and tasks to be performed, and informa-
tion exchange); labor and product markets; international
forces such as trade agreements or armed conflicts;
public opinion; and prevailing economic conditions.

The current status of labor unions can be assessed
from both statistical and general standpoints. A pro-
longed decline in the proportion of the total labor
force comprised of unionized employees has occurred
in the United States. However, this trend and its related
general explanations (employment shifts; business
organizational practices; and economic, legal, and
political conditions) do not indicate that unions have
lost their societal significance.

Key Terms
labor relations process, p. 5
interest disputes, p. 6
rights disputes, p. 6
work rules, p. 7
managers, p. 10
management consultants, p. 11
union representatives, p. 11
employees, p. 11

dual loyalty, p. 12
government, p. 12
third-party neutrals, p. 12
mediators, p. 12
arbitrator, p. 13
economy, p. 14
discouraged workers, p. 15
labor market, p. 16

product or service market, p. 16
financial market, p. 17
technology, p. 17
international forces, p. 19
public opinion, p. 22
Worker Centers, p. 24
union density, p. 24
employment-at-will, p. 39

Discussion Questions

1. Exhibit 1.1 illustrates the focal point of the labor
relations process and many variables that affect
the process. Select an academic discipline such
as political science, economics, or sociology,
and indicate three specific ways the discipline
could add insights into the labor relations
process.

2. Think about a job you have performed and dis-
cuss some of the external variables (see the outer

circle of Exhibit 1.1) that influenced the work
rules required on that job.

3. The text outlines three basic assumptions under-
lying the labor relations process in the United
States. To what extent do you agree or disagree
with these assumptions? Does your response dif-
fer depending on whether you think about the
question from the perspective of an employer or
an employee?

30 PART 1 Recognizing Rights and Responsibilities of Unions and Management

4. Discuss your opinion regarding whether
unions are still relevant and necessary in today s
work environment. What other means might be
used to ensure employee voice in the
workplace?

5. Can an individual be both pro-union and pro-
employer, or does being pro-union mean one has
to be anti-employer? Can an individual be anti-
union and still legitimately claim to support pro-
employee interests?

Exploring the Web

Labor Relations from Several Points of View

1. Public Opinion Polls
Chapter 1 discusses the effect that public opinion
may have on the labor relations process. Public
opinion polls can provide an indication of the back-
ing or support by the public during a strike.

The Gallup Organization s Web site provides
abstracts of the results of polls the organization
has conducted (a subscription is required to read
most of the full reports). The abstracts can provide
some insight into the attitudes of the public on labor
issues. Go to the Gallup home page and determine
how employees are reacting to the recent economic
recession.

The Harris Poll provides portions of its reports
without charge on the Harris Interactive Web
page. Search the site for results of a recent poll
on American adults attitudes toward gender
equality.

2. Reports from Labor and Management Web Sites
Good sources of information on labor relations
can be found by searching the Web sites of labor
unions and management organizations as well as
reports from newspapers and newswires.
Go to the Web site of the AFL-CIO and under Get
Informed click on Health Care to find out what
labor unions are thinking and doing to implement
health care reform.

Go to the Web site of the U.S. Chamber of Com-
merce and find out what the Chamber is doing to
help employers implement health care reform legis-
lation recently passed by Congress.

3. Newspapers
The Library of Congress provides News & Periodical
Resources on the Web, a Web page that provides
links to online newspapers and news services. You
may know of other free news services that you
search on a daily basis. Search online news sources
to find articles that discuss labor relations involving
aircraft mechanics at American Airlines and/or
Southwest Airlines in the Dallas Fort Worth,
Texas area. For example, mechanics at Southwest
are upset with increasing workloads and difficulty
in negotiating a new contract. Some members at
American have been unhappy with their current
union representative, the Transport Workers
Union, and are considering joining a new, indepen-
dent union (the Association of Maintenance Profes-
sionals). Pick one of these airlines and write about
the main issues and current developments. For
example, what might be the advantages or disadvan-
tages of being represented by a smaller independent
union versus a larger national union affiliated with
the AFL-CIO (an organization discussed further in
Chapter 4) at American Airlines? How do mergers
or acquisitions affect labor relations? You may also
want to consult union and industry weblogs (e.g.,
Sky Talk ) as you research your topic.

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CHAPTER 1 Union Management Relationships in Perspective 31

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CHAPTER 1 Union Management Relationships in Perspective 33

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34 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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of a community effort involving religious institu-
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49. Why Wal-Mart Must Change, Wakeup
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50. Kris Maher, Politics and Economics: Wal-Mart
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51. David Winzelberg, L.I. Labor, Management
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CHAPTER 1 Union Management Relationships in Perspective 35

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52. United States Department of Labor, Union
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53. Gary Chaison, The AFL-CIO Split: Does It
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2007, p. 305.

54. United States Department of Labor, Union
Members in 2014, News Release, January 23,
2015, pg. 1, at http://www.bls.gov/news.release/
union2.nr0.htm.

55. United States Department of Labor, Union
Members in 2014, News Release, January 23,
2015, Table 3, pp. 7 8, at http://www.bls.gov/
news.release/union2.nr0.htm.

56. John Godard, The Exceptional Decline of the
American Labor Movement, Industrial and
Labor Relations Review, 63(1), 2009, pp. 82 108;
Arne L. Kalleberg, Precarious Work, Insecure
Workers: Employment Relations in Transition,
American Sociological Review, 74(1), 2009,
pp. 1 22; Justice on the Job: Perspectives on the
Erosion of Collective Bargaining in the United
States, ed. by Richard N. Block, Sheldon Fried-
man, Michelle Kaminski, and Andy Levin (Kala-
mazoo, MI: W. E. Upjohn Institute for
Employment Research, 2006); C. Timothy Koel-
ler, Union Activity and the Decline in American
Trade Union Membership, Journal of Labor
Research, 15(1), Winter 1994, pp. 19 31.

57. Union Ranks Down in 2009 as Recession Elim-
inated Jobs, BNA s Collective Bargaining Bulletin,
January 28, 2010, p. 8.

58. T. Alan Lacey and Benjamin Wright, Occupa-
tional Employment Projections to 2018, Monthly
Labor Review, 132(11), 2009, pp. 82 99.

59. Rik Kirkland, The New Face of Labor, Fortune,
154(8), October 16, 2006, pp. 122 132.

60. Shail J. Butani, Richard L. Clayton, Vinod Kapani,
James R. Spietzer, David M. Talan, and George S.
Werking Jr., Business Employment Dynamics:

Tabulations by Employer Size, Monthly Labor
Review, 129(2), 2006, p. 4; United States Census
Bureau, Statistics about Business Size (Including
Small Business), available at http://www.census.
gov/econ/smallbus.html.

61. Mitra Toosi, Labor Force Projections to 2022:
The Labor Force Participation Rate Continues to
Fall, Monthly Labor Review, 136(12), Dec., 2013
[online edition] at http://www.bls.gov/opub/mlr/
2013/article/labor-force-projections-to-2022-the-
labor-force-participation-rate-continues-to-fall-1.
htm; also see, U.S. Bureau of Labor Statistics,
Employment Projections: Civilian Labor Force

by Age, Sex, Race, and Ethnicity at http://www.
bls.gov/emp/ep_table_304.htm.

62. U.S. Department of Labor, Union Members
Summary: 2014, News Release, January 23, 2015,
Table 1, at http://www.bls.gov/news.release/
union2.t01.htm.

63. U.S. Department of Labor, Union Members
Summary: 2014, News Release, January 23, 2015,
at http://www.bls.gov/news.release/union2.nr0.
htm.

64. Arleen Hernandez, The Impact of Part-Time
Employment on Union Density, Journal of Labor
Research, 16(4), 1995, pp. 485 491.

65. Bruce Nissen, The Recent Past and Near Future
of Private Sector Unionism in the U.S.: An
Appraisal, Journal of Labor Research, 26(2),
2001, p. 325.

66. Michelle Amber, Henry Pledges Innovative
Organizing Efforts Along With Addressing U.S.
Economic Crisis, Daily Labor Report, 93, 2010,
pp. C-1 2.

67. Joseph B. Rose and Gary N. Chiason, New
Measures of Union Organizing Effectiveness,
Industrial Relations, 29(3), Fall 1990,
pp. 457 468.

68. Andrew W. Martin, Resources for Success: Social
Movements, Strategic Resource Allocation, and
Union Organizing Outcomes, Social Problems,
55(4), 2008, pp. 501 524; Peter Fairbrother and
Glynne Williams, Unions Facing the Future:
Questions and Possibilities, Labor Studies Jour-
nal, 31(4), 2007, pp. 31 53; Paul F. Clark and Lois
S. Gray, Changing Administrative Practices in
American Unions: A Research Note, Industrial
Relations, 44(4), 2005, pp. 654 658.

36 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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1-
1 Was a Troublemaker Laid off for Sharing Wage

Information? Or for Business Reasons?

The American Restoration Contractors (ARC), Inc. was
hired to reroof and fix cracks in the bricks of several
buildings of a regional university. Because it was a
large job, several new employees were hired. One was
an experienced mason and bricklayer named Bruce
Potts.* Potts had completed a four-year union appren-
ticeship training program and another four years as a
journeyman; subsequently, he had 12 years experience
in both union and nonunion settings. ARC was a non-
union contractor.

Potts testified before the federal NLRB that he had
been led to believe by both his immediate supervisor,
Gene Polizzi, and a co-worker who had been hired
along with him, that the job would pay $44 per hour.
However, upon arriving at the work site, Potts learned
that it only paid $35 per hour, which made him angry,
given the nature of the work.

He described the work as difficult. It required him
to wash the building surface and the roof, removing any
dirt. Next, employees inspected the bricks, caulk, and
wood for needed repairs. Rotted caulk and other defec-
tive building materials had to be removed and replaced.
When the new caulk dried, the building was again
sprayed with a high pressure hose. After the water
dried, final waterproofing chemicals were applied. The
caulk work was the most laborious, calling for the great-
est expertise and precision. Much of this work took
place on a 100° roof under the sweltering summer sun.

In recognition of the excellent work that Potts was
doing, Polizzi recommended him for several pay raises:
As the summer passed, Potts s pay went from $35 (the
first week of June) to $36.13 (second week) to $37
(third week) to $39.21 (last week of June) to $40.13
throughout July and August, until he was laid off on
in early September. As a result of these raises, Potts
became the highest-paid non-managerial employee on
the job site.

Potts often told his co-workers what his current
pay rate was and he encouraged them to ask for more
money. He said everyone was underpaid and all the
workers should all be getting more. He also criticized
some of the work methods they were asked to use. One
employee quit soon after Potts discussed wage rates
with him. The following week, the firm s Human

Resources Manager, Dixie Boxrud, hand-wrote the fol-
lowing message on Potts s July 1st pay stub:

Please keep your pay rate to yourself. Thanks, Dixie B.

Further, when he distributed pay envelopes, Polizzi
told Potts that he shouldn t be discussing his pay with
his co-workers and stirring up trouble by encourag-
ing them to complain.

At the end of the summer, Potts was laid off with
four other workers, even though three others who did
similar work kept their jobs. Potts accused ARC of lay-
ing him off in retaliation for his complaining about the
wages. Potts testified. I was telling everyone how they
were getting short-changed and management was mak-
ing a lot of money off of them and how they ought to
do something about it threaten to quit or
something to get what they deserved. Potts also indi-
cated that Polizzi had told him that ARC had bid on
another, similar job and that Potts offered to work at
that site, even though it was several hours drive away.
However, he was never called to work at that site, or
any other ARC work sites.

The General Counsel (which often prosecutes
cases involving allegations of unfair labor practices
under the National Labor Relations Act, as amended
by the Labor Management Relations Act [LMRA]),
alleged that ARC was retaliating against Potts for his
activities. Under federal labor law, employees, have the
right to engage in concerted activities for the pur-
pose of collective bargaining or other mutual aid or
protection (Section 7); it is an unfair labor practice
for employers to interfere with, restrain, or coerce
employees in the exercise of [their] rights or to dis-
criminate in regard to hire or tenure of employment
or any term or condition of employment to encourage
or discourage membership in any labor organization
(Sections 8 (a) (1) and 8 (a) (3) of the LMRA).
The General Counsel argued that ARC s actions were
illegal because (1) they interfered with Potts s actions
aimed at mutual aid and protection (securing pay
raises for all workers) and (2) ARC discriminated
against Potts when making layoff and rehiring decisions
because of his efforts to organize the workers to com-
plain about their pay.

CHAPTER 1 Union Management Relationships in Perspective 37

Polizzi and other company officials denied the
charges. They said that from the first day that he
showed up at the job site Potts had been a trouble-
maker. When he was hired, he had an erroneous
impression as to what the pay for the work was
worth. He was quite vocal about what he saw as low
pay and other subjects, such as how the work should
be done. I had to put up with his mouth, always com-
plaining and whining, Polizzi said. However, he over-
looked it because, he was a good caulker and he was
productive. His outstanding productivity and excellent
work resulted in several pay raises in the ensuing
weeks. Still, his constant complaining bred dissatisfac-
tion and caused one co-worker to quit. ARC had an
informal (unwritten) policy that people not tell others
their pay rate; such complaining leads to workers com-
paring themselves to each other, breeding dissatisfac-
tion. Potts went against that policy, even after he had
been asked politely to keep your pay rate to yourself.

Ms. Boxrud testified that she wrote this on Potts s
pay stub because he was causing issues on the job site
telling people that, walk off and they will give you a
raise. I wanted to keep an atmosphere of calm on the
job. We already had one employee quit over it. Talking
about pay was causing problems, so I wanted him to
stop talking about it.

Managers also denied that their actions violated
labor law. The workers had not formed a union, nor
were they contemplating forming a union. The word
union was never mentioned to ARC managers. Fur-

ther, workers were not bargaining collectively and they
were not threatening to strike if wages stayed
unchanged. Clearly, they were not joining together for

mutual aid and protection against an exploitive
employer, given that they were all earning over $30
per hour. Thus, management at ARC was not interfer-
ing with their rights under labor law.

Finally, ARC did not retaliate against Potts for his
complaints. He was laid off near the end of the job,
along with several other workers. He would have been
laid off regardless of his statements to his co-workers:
When a job neared completion, fewer workers were
needed. Yes, it was true that Potts offered to work at
another job site. However, what Polizzi did not know
at the time that he mentioned that project was whether
ARC would win the contract. It turned out that the firm
did not have the low bid and the contract was awarded
to another firm. The firm won other bids, but the work
was not as difficult; thus, the company did not need to
hire a caulker who commanded the high rate of pay that
Mr. Potts earned. Consequently, ARC did not need his
services. Potts s charges of retaliation are baseless.

* = All company and individual names and some
minor facts are changed. This case is adapted from an
NLRB case.

Questions
1. Given the facts of the case and the brief description

of the LMRA, did ARC violate labor law by telling
Mr. Potts to Please keep your pay rate to yourself ?
Explain your reasoning.

2. Did ARC retaliate against Mr. Potts when it laid him
off and did not offer him work on other jobs? Did
these actions constitute violations of the LMRA?
Explain your reasoning.

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2 Discharge for Whistleblower Activity

Janet Broom and Darla Miller were employed as a cer-
tified medication aide and cook, respectively, at the
employer s residential care facility located in Norman,
Oklahoma. Both employees suspected another
employee of stealing and using drugs, intended for
use by residents of the facility, from the facility s medi-
cation room. Broom and Miller decided to report the
suspected employee based on their observation that she
had falsified medical drug log books to conceal her
theft from facility managers.

The facility s Employee Handbook clearly outlined a
procedure employees were to follow when making com-
plaints involving other employees. The Employee Hand-
book called for the initial complaint to be filed with the
accused employee s immediate supervisor. Because
the two employees making the complaint believed that
the immediate supervisor in this case, Sarah Dutton, was
a close personal friend of the accused, Broom and Miller
chose to make their complaint to another manager, who
was the medication consultant at the facility.

38 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Upon learning of the complaint from the medica-
tion consultant, supervisor Dutton discharged Broom
and Miller for not following the proper chain of com-
mand in raising an issue about another employee.
Both Broom and Miller are nonunion employees
unrepresented by a union. After being discharged,
Broom and Miller s only recourse was to file a wrongful
discharge state court claim, arguing that they were
engaged in internal whistle blowing activity and thus
protected from discharge as a matter of Oklahoma
public policy.

The employer argued that Broom and Miller were
subject to the Oklahoma common law employment-
at-will (EAW) doctrine, which permits an employer
to discharge an at-will employee at any time for any
or no stated reason. The employer sought and received
a summary judgment in state district court declaring
Broom and Miller s discharge to be lawful under the
state s common law, EAW doctrine.

Broom and Miller appealed the state district
court s decision to a federal Court of Appeals, seeking
to reverse the district court s decision.

In Groce v. Foster, 880 P.2d902 (Okla. 1994), the
Oklahoma Supreme Court recognized five types of
public policy exceptions to the common law, EAW
doctrine. Under Oklahoma law, an at-will employee
may not be lawfully discharged for (1) refusing to par-
ticipate in an illegal activity; (2) performing an impor-
tant public service (e.g., jury duty); (3) exercising a legal
right or interest of the employee; (4) exposing some
wrongdoing by his or her employer; and (5) perform-
ing an act that public policy would encourage or refus-
ing to perform an act that public policy would
discourage, when the discharge action is coupled with
a showing of bad faith, malice, or retaliation.

Broom and Miller argued that their discharge fell
under the fifth public policy exception to the EAW
doctrine. By reporting to management a co-worker
who they honestly believed was engaged in stealing
drugs intended for administration to residents of the
facility, Broom and Miller believed they were engaging
in conduct that Oklahoma public policy encourages.

The Oklahoma Supreme Court mandates that to
be recognized and enforced, public policy exceptions
must be clearly stated in state constitutional, regula-
tory, or case decision law. To that end, Broom and
Miller cited three statutory laws that they believed pro-
vided a clear statement of public policy supporting
their action.

The first law is the Nursing Home Care Act, which
governs safeguards and procedures for the storage,
safekeeping, monitoring, dispensing, and, when neces-
sary, destruction of patient prescription drugs. The
employer argued that the act specifically applies only
to licensed nursing homes operating within the state.
The employer s facility is licensed as a residential care
facility and thus is excluded from coverage under the
Nursing Home Care Act. The state of Oklahoma grants
operating licenses for several different types of elder-
care facilities, including nursing homes, assisted living
homes, and residential care facilities.

The second law is the Residential Care Act, which
the employer admitted does apply to the facility in this
case. Broom and Miller noted that the law authorizes
the Oklahoma State Department of Health to develop
and enforce rules and regulations to implement the
provisions of the Residential Care Act. Such rules and
regulations shall include but not be limited to govern-
ing temperature limits, lighting, ventilation, and other
physical conditions which shall protect the health,
safety, and welfare of the residents in the home. The
employer argued that Broom and Miller did not raise
the issue of the Residential Care Act s applicability to
their case when the case was before the district court
and therefore could not legally raise it as a supporting
argument on appeal. It is a well-settled legal principle
that issues or arguments not clearly presented and con-
sidered at a prior legal proceeding cannot be subse-
quently raised as a legal basis for argument on appeal.
The employer also noted that the language referred to
by Broom and Miller in the Residential Care Act is very
general and not specific enough to rise to the level of a
clear statement of public policy supporting intent to
make an exception to the prevailing Oklahoma EAW
doctrine.

The third law cited by Broom and Miller as a basis
for their appeal is the Uniform Controlled Dangerous
Substances Act. Although this law does make it a crim-
inal offense to steal a controlled dangerous substance,
Broom and Miller made no specific argument as to
how this law established a clear mandate of public pol-
icy applicable to their discharge case. The employer
argued that Broom and Miller again failed to meet
the required showing of a clear and compelling public
policy in favor of restricting an employer s right to dis-
charge an at-will employee for failing to follow the
established procedure for bringing a serious complaint
against a co-worker.

CHAPTER 1 Union Management Relationships in Perspective 39

Questions
1. Should the federal appeals court deny Broom and

Miller s appeal and enforce the decision of the state
district court finding upholding the discharge of the
two whistleblowers? Explain your reasoning.

2. How might this case have been handled differently if
Broom and Miller had been members of a bargain-
ing unit represented by a union for purposes of
collective bargaining?

40 PART 1 Recognizing Rights and Responsibilities of Unions and Management

41

CLASSROOM EXERCISES

1.1
Work Rules

Directions: This activity can be performed as an individual or group assignment using
either an oral or written report format. Select a recent (not more than one-year old)
news story or article and explain how the information in the story could affect the nego-
tiation or administration of a particular work rule. An appropriate news story or article
should contain information on one or more of the possible constraints or influences
affecting the negotiation or administration of work rules identified in the text (e.g.,
state of the economy, labor market conditions, product market conditions, financial mar-
ket conditions, technology, and international forces or events).

1.2
Union Membership Trend

Directions: This activity can be performed as an individual or group assignment using
either an oral or written report format. Select a recent (not more than one-year old)
news story or article and explain how the information in the story could affect future
union membership growth in a positive or negative manner. Your explanation should
clearly indicate why or how you think the information in your story will have the pre-
dicted effect on future union membership growth.

1.3
Word Association

Directions: Divide the class into groups of three to five students. Presented below are 25
words or phrases. Each group should classify each listed word or phrase as primarily
applicable to UNIONS (U) or MANAGERS (M), BOTH U & M (B), or NEITHER U
nor M (N). Groups may compare their results and discuss their reasoning for associating
particular words or phrases with the terms Union or Management. Groups may also list
additional descriptive terms or phrases that they would strongly associate with the terms
Union or Management.

Words or phrases to classify

1. Powerful
2. Educated
3. Democratic
4. Profit-oriented
5. Productive
6. Fair
7. Violence
8. Trustworthy
9. Job security

10. Competitive
11. Political
12. Authority
13. Reasonable
14. Work stoppage
15. Professional
16. Employee compensation
17. Ethical
18. Innovative
19. Flexible
20. Quality improvement
21. Risk taker
22. Necessary
23. Job safety and health
24. Work rules
25. Growth-oriented

42 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CHAPTER 2

The History of Labor Management Relations

UNCLE BOB USED to try and explain to me what it meant to be
a labor man. This was generally a part of his usual rant about
how workers today, especially young workers, had no under-
standing of or appreciation for what it took to achieve some of
the working conditions they enjoyed today, such as the eight-
hour work day, paid vacations and holidays, protection from
unsafe working conditions, and so on. In Uncle Bob s view,
every advancement made by American workers over the past
100 years occurred because workers learned to join together
and fight for their right to enjoy the American dream. That fight
often involved pressuring employers to make more improve-
ments at a faster pace than employers would likely be inclined
to do in the absence of such pressure. Sometimes it meant pres-
suring politicians to support needed change or sometimes other
societal institutions (religious, civic, and charitable organizations)
as well. A strong union movement helped to ensure that as
employers profited from economic growth, so too increased the
prosperity of typical workers helping to create a strong middle
class in this country. I suspect Uncle Bob s pro-labor views
didn t do adequate justice to the history of the positive contribu-
tions made by employers or other societal groups strongly sup-
portive of a free enterprise system and economic growth. Still I
must admit, I knew very little about the history of labor
management relations in the United States and how personal-
ities, events, environmental factors, and formal organizations
interacted to create the type of labor management relations I
experienced on the job today.

43

Questions
1. Some would argue that the middle class in America is shrinking

today. Do you agree or disagree and why?

2. To what extent do you think the decline in union membership in the
United States has made it more or less difficult for individuals to
maintain their standard of living?

3. Should labor history be a subject taught in public/private schools in the
United States similar to required study of the free enterprise system
and leading entrepreneurs (e.g., John D. Rockefeller, Andrew Carnegie,
Bill Gates)?

The American labor movement, as we know it, has adjusted to changing social and eco-nomic events, employers attitudes and actions, and employee preferences for more than
100 years. A historical perspective is necessary to better understand current union behavior
and help us predict how most unions might react to sudden and dramatic change.

There is no best way to obtain this perspective.1 Insights from many academic disci-
plines (sociology, economics, political science, etc.) have to be considered, and many focal
points can be assessed. Our discussion focuses on what has worked and not worked for
organized labor through two interrelated historical dimensions: (1) relations between
labor and management organizations and (2) organizational characteristics of labor
organizations.

This second dimension is important to labor relations students and practitioners
because current national union and labor federations have been historically affected by
four major labor organizations: the Knights of Labor (KOL), the Industrial Workers of
the World (IWW), the American Federation of Labor (AFL), and the Congress of Indus-
trial Organizations (CIO).

The strength or likely continued success of any labor organization can be assessed by
focusing on four criteria:

A labor organization s structural and financial stability.
Its ability to work within the established political and economic system, particularly
the wage system.
The degree to which the broader social environment, such as laws, media, and pub-
lic opinion, is supportive or opposed to a labor organization s goals and tactics.
The ability of union leaders to identify and satisfy members goals and interests.

Readers can use these criteria to assess why some labor organizations failed in the past
and to predict the likelihood of current unions posing a strong challenge to management.
The chapter is organized into three time periods: from 1869 to World War I, World War I
to World War II, and World War II to the present.

1869 to World War I

Unions as we know them today did not exist before 1800. There were some small guilds,
joint associations of employers, and craftspeople, that pressed for professional standards

44

and restriction of outside competition.2 Such guilds typically pressed concerns that
benefited employees and employers alike. By 1820, there had been only a few scattered
strikes, usually over wages, because only two industries, shoemaking and printing, had
even a semblance of collective bargaining. There was also no general labor philosophy
or labor movement in the United States at this time, as labor organizations were princi-
pally small groups of craft employees located in major metropolitan areas along the East-
ern coast of the United States.3

The 1850s and 1860s saw development of the U.S. factory system (industrial revolu-
tion), improved transportation, and increased product mobility, all factors that extended
a company s (and potential unionized employees ) organization beyond the local com-
munity. For example, an employer could produce shoes at lower wages in Baltimore
and ship them to Boston, where they could be sold at a higher price. Negotiating similar
terms and employment conditions for labor was viewed as a means to take wages out of
competition; but to do so would require labor organizations capable of operating on a
national rather than local basis. The Civil War (1861 1865) refined and encouraged
mass production techniques, creating large concentrations of semiskilled and low-skilled
employees under a single factory roof a situation that created conditions conducive to
the organization of labor.

Early Legal Developments Involving Labor Management
Relationships (1806 1931)
Article I, Section 8, of the U.S. Constitution grants Congress the right to pass laws reg-
ulating interstate and international commerce. Labor relation activities can affect inter-
state commerce and therefore, since the late 1800s, they have been the focus of many
statutory laws to regulate various aspects of the employment relationship. The First
Amendment of the U.S. Constitution, which ensures the rights of peaceful assembly,
freedom of association, and freedom of speech, usually has been interpreted as allowing
employees to form and join unions and has provided the justification for union picketing
(to communicate information to possible union members or supporters). The Fifth
Amendment contains due process protections, and the Fourteenth Amendment prohibits
state laws from depriving citizens of their constitutional rights, providing equal protec-
tion under the law. These constitutional provisions play an important role in defining
the basic framework of American labor law.

Few statutory labor laws were enacted prior to the late 1800s, so early U.S. history
was governed by the application of common law. Common law is used to resolve a legal
dispute only when no constitutional or statutory law applies to that dispute. In such
situations, judges develop legal principles or procedures to resolve these types of dis-
putes. Over time, these principles and procedures are adopted by other judges in similar
disputes and come to represent the common law. Early U.S. common law was based
upon English common law principles as modified by local custom and practice.

One example of a common law doctrine that is still often used today is the employment-
at-will (EAW) doctrine. The EAW doctrine states that employment relationships established
for an indefinite duration may be terminated by either the employer or the employee at any
time for any or no stated reason. Arising from the English common law governing master
servant relationships, employers have historically relied upon this common law doctrine as a
basis for terminating employees for a wide variety of reasons without permitting the termi-
nated individual to legally challenge whether management s decision or reasoning was correct
or justified. Of course, if a group of employees were to join a union that bargained an employ-
ment contract with their employer that established terms and conditions of employment,
then such employees would no longer be considered employees-at-will, and their job rights

CHAPTER 2 The History of Labor Management Relations 45

and protections would be governed by the jointly negotiated and administered labor agree-
ment. Thus for many employers, the question of whether their employees join a union and
engage in collective bargaining directly affects the employer s ability to make decisions con-
cerning specific employees and whether those decisions will be subjected to legal challenge
through a grievance procedure contained in the applicable collective bargaining agreement.
Over time the EAW doctrine has been modified by the passage of laws and court interpreta-
tions intended to prohibit employers from discharging individuals for certain protected rea-
sons (e.g., joining a union or an individual s race, sex, or religion). In many states, the EAW
doctrine remains the primary protection of management s right to discharge employees. This
doctrine is more thoroughly discussed in Chapter 12.

Early labor unions in the United States had to struggle for existence. The legal sys-
tem was primarily focused on protecting employer property rights to advance the eco-
nomic growth of the nation, with little importance placed on protecting the rights of
employees within the emerging free enterprise economic system. Employer property
rights were defined in broad terms to include both tangible property (e.g., right to con-
trol plant, equipment, employees) as well as intangible property (e.g., right to engage in
normal business, right to make a profit). Due to the absence of statutory laws regulating
labor relations, the judicial system exerted great control over conflicts of interests
between employers and employees from the early 1800s through the 1930s.

Under English common law, it was illegal for two or more workers to join together
for the purpose of pressuring their employer to improve wages or working conditions. In
1806, one of the first major labor law cases in the United States, known as the Cordwai-
ners case, occurred when a group of journeymen shoemakers in Philadelphia were
indicted, convicted, and fined $8 each for forming an illegal criminal conspiracy. The
shoemakers had joined together in an attempt to raise their wages and refused to work
with nonmembers or at a wage rate less than they demanded. Twelve jurors (all busi-
nessmen) found the shoemakers guilty of forming an illegal combination for the purpose
of raising their own wages while injuring those who did not join the coalition.4 The pros-
ecutor in the trial stated: Our position is that no man is at liberty to combine, conspire,
confederate and unlawfully agree to regulate the whole body of workmen in the city. The
defendants are not indicted for regulating their own individual wages but for undertak-
ing by a combination, to regulate the price of labor of others as well as their own. It must
be known to you, every society of people are affected by such confederacies; they are
injurious to the public good and against the public interest. 5

The application of the common law criminal conspiracy doctrine to attempts by
employees to organize unions aroused much public protest, not only from employees but
also from factory owners who feared the closing of their factories if their employees dissat-
isfaction grew too strong. These concerns were undoubtedly a consideration when the
Supreme Judicial Court of Massachusetts in Commonwealth v. Hunt (1842) set aside the
criminal conspiracy conviction of seven members of the Journeymen Bootmakers Society
who had refused to work in shops where nonmembers were employed at less than their
scheduled rate of $2 per pair of boots.6 While not rejecting the criminal conspiracy doctrine,
the court instituted an ends/means test to be applied on a case-by-case basis to determine if
the ends (goals) sought by the combination of workers were legal and if the means (tactics)
used by the workers were also lawful. The court concluded it was not illegal for workers to
seek to protect their own economic interests in maintaining a desired wage rate, nor was it
illegal to refuse to work as a means of encouraging an employer not to hire an individual at
a lower wage rate, thus undercutting the current established rate of pay for a particular type
of labor. Of course, in order to continue normal business operations, the employer was free
to replace any employee who refused to work.

46 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Civil Conspiracy Doctrine
The Commonwealth v. Hunt decision virtually ended the use of the common law criminal
conspiracy doctrine in labor relations. However, the courts continued to apply the civil
conspiracy doctrine, which held that a group involved in concerted activities violated the
law if it inflicted harm on other parties outside the disputants (e.g., customers or other
employees) even though the workers were pursuing a valid objective in their own interest.7

In Vegelahn v. Guntner (Mass. S.Ct. 1896), an injunction was issued against a union that
was picketing its employer to obtain higher wages and shorter hours.8 Although the court
agreed that higher wages and shorter work hours were legitimate ends for workers to pur-
sue, the court concluded that picketing, accompanied by threats of violence, could unlaw-
fully intimidate individuals who desired to continue to work for the employer or
customers who sought to do business with the employer and, therefore, was an unlawful
means to accomplish an otherwise lawful end. Only where both the workers ends and
their means were lawful would the concerted activity be permitted.

Around 1880, many states began loosening restrictions on who could serve on juries
(e.g., removing property ownership requirements), which permitted more hourly workers
to perform jury duty service. As a consequence, juries became less willing to convict
workers of criminal or civil conspiracy charges. Employers turned to the courts for a
quicker and more reliable means of restricting employee concerted activities, which the
legal system provided in the form of a labor injunction.9 A labor injunction is a court
order prohibiting or restricting certain activities in conjunction with a labor dispute. The
advantage of a labor injunction over a jury trial was that a preliminary labor injunction
could be issued by a judge without a formal jury hearing and was often based solely on
statements or evidence provided by the employer to demonstrate the need for the labor
injunction. It might be weeks or months before the labor organization enjoined might
get a chance to challenge the credibility of the employer s evidence or offer alternative
evidence at a hearing to show why a labor injunction was not necessary or appropriate.
By that time the employer had often prevailed in ending the labor dispute on terms
favorable to the employer s interest aided by the labor injunction s restrictions on work-
ers ability to use effective economic pressure tactics against the employer.

The courts long-standing interest in enforcing the terms of contracts led many employ-
ers to require their employees to sign a yellow-dog contract, an agreement stating that they
would neither join a union nor assist in organizing one.10 Why would an employer use the
yellow-dog contract if, under the EAW doctrine, it could already legally fire employees for
virtually any reason including organizing a union? While motives varied, we believe that
three reasons were predominant. First, asking employees to sign a yellow-dog contract sent
a strong signal that a union would not be tolerated at the company. Second, because this
contract was a condition of initial or continued employment, any violation would clearly
allow the company to discharge the employee. Third, if any outside union organizer
attempted to solicit employees to join a union or engage in other concerted activity (such
as a strike to improve wages or working conditions), such activity could be enjoined by a
judge on the grounds that it was an attempt to interfere with a legal contractual relationship
between the employer and its employees. Union organizers who violated the court order
could then be charged with contempt of court and fined and/or imprisoned.

Application of Antitrust Legislation to Labor Unions
Another legal obstacle confronting labor organizations in the late 1800s was the applica-
tion of antitrust law to restrict union-organizing and bargaining activities. Congress
passed the Sherman Antitrust Act in 1890 to regulate the increasing power of large

CHAPTER 2 The History of Labor Management Relations 47

corporations to engage in anti-competitive practices (e.g., cutthroat pricing, restricting
competitor s access to necessary raw materials), which tended to drive smaller firms out
of the market.11 The Sherman Antitrust Act neither explicitly included nor excluded
labor unions from coverage as an illegal combination in restraint of interstate commerce.
The congressional debate and testimony leading to passage of the bill focused on the
business practices of employers, not labor organizations.

The U.S. Supreme Court decided to apply the Sherman Antitrust Act to labor orga-
nizations in the 1908 landmark decision Loewe v. Lawlor (better known as the Danbury
Hatters case).12 The United Hatters of North America (UHU), having organized 70 of 82
firms in the hat manufacturing industry, wanted to organize Loewe & Co., one of the few
remaining nonunion employers located in Danbury, Connecticut. As a part of the
UHU s campaign to gain union recognition as the bargaining agent for employees at
Loewe & Co., the union organized a nationwide boycott assisted by the AFL and directed
at persuading all retailers, wholesalers, and customers not to buy, sell, or handle hats
produced by Loewe & Co. The boycott was successful, which prompted Loewe & Co. to
sue, alleging that the UHU s boycott interfered with Loewe & Co. s ability to engage in
its normal interstate commerce of selling hats. The Supreme Court ruled that unions
were covered under the Sherman Act and that the union s boycott did illegally obstruct
Loewe & Co. s ability to engage in its normal interstate commerce. The court awarded
the employer triple damages ($252,000) as provided for under the Sherman Antitrust
Act and ruled that individual union members could be held liable for paying the damage
award if the labor organization itself did not have sufficient funds to pay the claim.

The Loewe v. Lawlor decision had several important impacts on labor relations.
First, the decision essentially eliminated the use of the boycott, which had previously
been an effective union tactic for bringing economic pressure against an employer to
persuade it to agree to union proposals. It also raised concerns in the minds of some
union leaders as to whether the courts might extend the ruling on boycotts in future
legal cases to include other union tactics (e.g., picketing, strikes, or handbilling) also
intended to impose economic pressure on an employer s business operations. Second,
the court s decision to hold individual union members personally liable for damages
resulting from the actions of their labor organization dealt a serious blow to union-
organizing efforts. Not only could an employee face discharge for participating in
union-organizing activity, but if the organizing activity was declared to be an antitrust
violation, the employee might also risk loss of personal assets acquired over the indivi-
dual s work career, as some UHU members experienced.

One positive aspect for unions of the Loewe v. Lawlor decision was that it clearly
demonstrated to AFL president Samuel Gompers and other labor leaders the need to
expand state and local union political efforts to include Congress and other federal
branches of government. An aggressive campaign led by the AFL to reverse the court s
interpretation of the Sherman Antitrust Act led to the enactment of the Clayton Anti-
trust Act in 1914. Included among the Clayton Act s amendments to the Sherman Anti-
trust Act were the following provisions:

[The] labor of a human being is not a commodity or article of commerce. Nothing
contained in the antitrust laws shall be construed to forbid the existence and opera-
tions of labor [unions] nor shall such organizations be held or construed to be
illegal combinations or conspiracies in restraint of trade.

No restraining order or injunction shall be granted in any case between an
employer and employees growing out of a dispute concerning terms or conditions
of employment, unless necessary to prevent irreparable injury to property.

48 PART 1 Recognizing Rights and Responsibilities of Unions and Management

No such restraining order shall prohibit any person or persons from ceasing
to perform work recommending, advising, or persuading others by peaceful means
so to do peacefully persuading any person to work or abstain from working
peacefully assembling in a lawful manner, and for lawful purposes.13

When AFL president Samuel Gompers read the provisions of the Clayton Act, he pro-
claimed it U.S. labor s Magna Charta because it would free organized labor from the
restraints of antitrust prosecution. Gompers s joy, however, was short-lived. A series of
Supreme Court decisions in the 1920s left no doubt that the Clayton Act was not labor s
Magna Charta.14 Rather than viewing the Clayton Act as a repudiation of the court s prior
interpretation of the Sherman Antitrust Act, the Supreme Court interpreted Congress s
intent in passing the Clayton Act as only reaffirming a labor organization s right to exist
so long as it sought to achieve lawful ends using lawful means. In fact, the Clayton Act
hurt union growth and development more than it helped. Under the Clayton Act employ-
ers could directly seek a court order for a labor injunction rather than having to ask a U.S.
district attorney to seek such a court order, as had been required under the Sherman Act.

Some states attempted to address perceived labor law deficiencies on their own by
enacting state labor legislation to grant legal bargaining rights to employees or restrict the
circumstances under which a state court judge could issue a labor injunction to ban
employee activity during a labor dispute. For example, in 1921 the U.S. Supreme Court
declared a law enacted by the Arizona legislature and upheld by the Arizona Supreme
Court unconstitutional in violation of the Fifth and Fourteenth Amendments.15 The Ari-
zona law sought to deny a judge the right to issue a labor injunction during a labor dispute
to halt peaceful picketing. The Supreme Court majority declared that the Arizona law
unlawfully denied the employer being picketed during a wage dispute its due process and
equal protection right to obtain a labor injunction to prevent the picketing from damaging
normal business operations. The dissenting opinion argued that states such as Arizona
ought to be free to determine for themselves whether some restrictions on employer prop-
erty rights (e.g., limiting access to injunctive relief) might be imposed if necessary to pro-
tect other legitimate rights of employees to participate in bargaining over work conditions.

The 1920s were a difficult period for organized labor. Although this was a period of
general economic growth and prosperity, unions confronted an environment where labor
injunctions were easier to obtain; the court system strongly supported employer property
rights; favorable legislation protecting employees right to organize and bargain collec-
tively was absent; and employers commonly used anti-union tactics (such as goon
squads, yellow-dog contracts, discharge, and blacklisting). Although the Railway Labor
Act (discussed in Chapter 3), passed in 1926, granted bargaining rights to railroad
employees, the 1920s was primarily a time of regrouping, self-analysis, and trying to
preserve the status quo for most unions.

Emergence of National Labor Organizations
During the period of 1869 to World War I, three national labor organizations emerged:
the KOL, the AFL, and the IWW. Each of these organizations is discussed in terms of its
philosophy and goals, organizational structure, and strategies and tactics. Reasons sug-
gested for the demise of the KOL and decline of the IWW are discussed to illustrate
the previously mentioned criteria for assessing the strength or success of a labor organi-
zation. Three prominent labor episodes of this period are also discussed: the drive for an
eight-hour workday (including the Haymarket Riot of 1886), the Homestead strike
(1892), and the Pullman strike (1894). The Labor Relations in Action box highlights
some of the key events that have helped to shape U.S. labor relations over time.

CHAPTER 2 The History of Labor Management Relations 49

LABOR RELATIONS IN ACTION
Labor History Time Line: Selected Events

Year Event

Late 1700s Emergence of local craft unions in large East Coast cities (e.g., New York, Philadelphia).
1842 The Massachusetts Supreme Court in Commonwealth v. Hunt establishes a legal precedent

that workers have a right to combine together for the purpose of pursuing lawful end (goals)
using lawful means (tactics).

1850 U.S. economy begins to shift from an agricultural base to a manufacturing (industrial) base.
Regional and national product markets emerge with larger firms able to use new technology
and improved transportation modes (roads, rail) to mass produce goods.

1869 Noble Order of the Knights of Labor organized.
1880s Use of the labor injunction to prohibit or restrict employees concerted activities replaces reli-

ance on criminal or civil conspiracy trials and emerges as a popular management legal strategy.
1886 Eight-hour day movement gains momentum; Haymarket Square Riot occurs in Chicago, Illinois;

American Federation of Labor (AFL) is organized, electing Samuel Gompers as president.
1892 The Homestead strike involving the Amalgamated Association of Iron, Steel and Tin Workers

and steel mills owned by Andrew Carnegie occurs.
1894 Eugene Debs leads the American Railway Union in a strike against the Pullman Company,

resulting in federal troop intervention in the labor dispute.
1905 The Industrial Workers of the World (IWW) organizes.
1908 U.S. Supreme Court declares a national product boycott by the United Hatters Union to be a

violation of the Sherman Antitrust Act.
1911 Triangle Waist Company fire in New York City leads to the death of 146 clothing workers. This

tragedy focuses national attention on the poor working conditions facing many industrial
employees.

1913 Congress creates the U.S. Department of Labor, and the department s head (Secretary of
Labor) is designated a member of the president s cabinet.

1926 Railway Labor Act enacted, granting employees in the private-sector railroad industry the right
to form unions and bargain collectively.

1932 The Norris-LaGuardia Act enacted, placing restrictions on the issuance of labor injunctions dur-
ing labor disputes and making yellow-dog contracts unenforceable in court.

1933 U.S. Secretary of Labor Frances Perkins becomes the first woman to serve as a member of the
president s cabinet.

1935 National Labor Relations (Wagner) Act enacted, granting most private-sector employees the
right to form unions and bargain collectively. The Committee for Industrial Organization created
by several AFL unions to encourage efforts to organize workers in the mass production indus-
tries (auto, steel, rubber, etc.).

1936 Railway Labor Act amended to add coverage of the airline industry.
1938 The Committee for Industrial Organization is reorganized as the Congress of Industrial Organi-

zations (CIO), electing John L. Lewis as its first president. Fair Labor Standards Act enacted,
establishing a federal minimum wage of 25 cents per hour and requiring time and one-half pay
for hours worked in excess of 40 hours in a regular work week.

1947 Labor Management Relations (Taft Hartley) Act enacted over the veto of President Truman.
Retains NLRA protections for employee collective activity but adds protection for the right of
individual employees not to engage in collective activity and imposed restrictions on union
conduct similar to restrictions imposed on management conduct by the NLRA.

1952 Presidents of both the AFL and CIO die of natural causes in the same month, setting the stage
for new leadership by AFL president George Meany and CIO president Walter Reuther.

50

Year Event

1955 AFL and CIO labor organizations merge to form the AFL-CIO, electing George Meany as presi-
dent and Walter Reuther as vice president.

1959 Following Senate hearings on alleged organized crime infiltration of unions, the Labor Manage-
ment Reporting and Disclosure (Landrum Griffin) Act enacted to regulate the internal affairs of
unions and their relationship with individual union members.

1959 Wisconsin passes the first state law allowing collective bargaining by state and local govern-
ment employees.

1962 President John F. Kennedy issues Executive Order 10988, permitting federal employees to
organize and engage in collective bargaining.

1963 Equal Pay Act enacted, prohibiting different wage rates based on sex for workers performing
the same job who are subject to coverage under the Fair Labor Standards Act.

1964 Civil Rights Act enacted, prohibiting discrimination based upon race, color, religion, sex, or
national origin in hiring, apprenticeship, compensation, terms or conditions of employment, and
union membership.

1967 Age Discrimination in Employment Act enacted, making it illegal to discriminate against indivi-
duals 40 years of age or older in regard to hiring, discharge, or other employment decisions on
the basis of the individual s age.

1968 Unrest leads to increased organizing, bargaining, and strikes by public employees (e.g., police,
firefighters, and teachers). Martin Luther King Jr. is assassinated while helping to lead a sanita-
tion workers strike in Memphis, Tennessee.

1970 Occupational Health and Safety Act enacted to provide a safe and healthy work environment
for American workers. Congress passes the Racketeer Influenced and Corrupt Organizations
Act (RICO) which allows the prosecution of organizational leaders for racketeering if two or
more crimes have been committed by the organization in a ten-year period; used against crime
syndicates involved with business firms and labor unions.

1974 Employee Retirement Income Security Act (ERISA) enacted to regulate defined-benefit pension
plans; the goal of the law was to protect employee pensions.

1975 Economy begins to transition from industrial-based to service-based.
1978 Civil Service Reform Act enacted, converting previous presidential executive orders establish-

ing bargaining right for federal employees into permanent legislation.
1980 Increasing global competition ushers in a decade in which many U.S. firms are forced to

undergo dramatic change in order to remain competitive. Concession bargaining, flexible work
rules, and labor management cooperation become common topics for negotiation.

1981 Members of the Professional Air Traffic Controllers Union (PATCO) engage in an illegal strike and
are discharged by the Reagan administration. This act was widely interpreted by practitioners in
the private and public sectors as evidence of a new employer get tough policy in labor rela-
tions. Union avoidance consultants advised firms on how to become or remain union free.

1988 Worker Adjustment and Retraining Notification Act enacted. Requires employers who employ
100 or more employees to provide 60 days advance notice of any plant closing or major layoff.

1991 Americans with Disabilities Act enacted to protect persons with disabilities from discrimination
in regard to hiring, discharge, or other terms and conditions of employment. Civil Rights Act of
1991 amended Title VII of the 1964 Civil Rights Act to permit (1) suits for punitive damages for
violations involving intentional discrimination and (2) the use of alternative dispute resolution
methods to resolve employment discrimination claims.

(Continues)

51

The Knights of Labor (KOL)

Goals and Organization of the KOL
Founded by Uriah S. Stephens as a secret society in 1869, the Knights of Labor (KOL)
operated in secrecy until 1882 so that the members would not be discharged by their
employers for participating in a labor organization. There are two major reasons for dis-
cussing the KOL. First, rather than limiting membership to a local geographic area, it
was a national union that had a scope larger than any previous union in American his-
tory. The KOL enjoyed steady growth in the early 1880s, reaching a membership of more
than 100,000 in 1885. Between 1885 and 1886, the organization s membership increased
dramatically to 700,000. The KOL achieved more power, prestige, and notoriety than any
other previous labor organization.16 However, its goals and strategies also contributed to
its demise as an effective organization. Therefore, the KOL served as an important nega-
tive example to the AFL and other contemporary labor organizations that followed as
they worked to establish goals, policies, and an organizational structure necessary to sur-
vive and grow as a labor organization.

The Knights attracted members who were dissatisfied with many features of the new
industrial revolution, which dramatically altered work practices and relationships begin-
ning at the time of the Civil War. In response to workers concerns, the KOL established
two major interrelated goals:

1. Change the existing labor management relationship so that the depersonalized and
specialized aspects of mass production could be avoided.

2. Attain moral betterment for employees and society.

The KOL s goals can best be understood through the views of Terence Powderly, its
leader and chief spokesman from 1879 to 1883. Powderly felt that mass production
reduced employees feelings of pride and personal accomplishment.17 During the Agri-
cultural Economy era, prior to 1850, work occurred in relatively small shops where
employees often gained satisfaction and pride from their craftsmanship as they created
high-quality customized products from beginning to end. The Industrial Economy
(1850 1975) utilized mass production techniques and job specialization so that different

Year Event

1992 North American Free Trade Agreement enacted; intended to promote trade between the
United States, Canada, and Mexico.

1993 The Family and Medical Leave Act enacted, permitting employees of employers who employ
50 or more employees to take up to 12 weeks of unpaid time off in the event of a birth, adop-
tion, or foster care of a child; or to care for a child, parent, spouse, or themselves involving a
serious health condition.

2005 Formation of the Change to Win labor federation to focus more resources on organizing unrep-
resented employees.

2009 Lilly Ledbetter Fair Pay Act enacted to clarify the time limit within which a pay discrimination
claim may be filed but limiting any potential employer liability for damages to a maximum of
two years.

52

jobs focused only on a relatively few tasks which, when combined with other employees
job output, could produce a complete product. Because the time and skill level required
to learn and perform, a limited set of job tasks were less than previously required to pro-
duce the entire product, less costly labor could be employed, and more easily replaced
when necessary. Powderly placed this situation in perspective by considering the shoe-
makers situation: The man who was called a shoemaker 30 years ago made shoes; the
man who claims to be a shoemaker today makes only part of a shoe. What was once a
trade in itself is a multiplicity of trades. Once there were shoemakers, now we have Bea-
ters, Binders, Bottomers, Buffers, Burnishers, Channellers, Crimpers, Cutters, Dressers,
Edge Setters and several other workers at the shoe trade, and they all consider them-
selves shoemakers. 18

Employees working in these specialized classifications often did not obtain meaning
or satisfaction from their fragmented work tasks. Powderly also felt that bankers and
owners of gold were the villains of industrial society, causing higher taxes for employees
and creating monopolies that further depersonalized the individual employee.19

The KOL believed that changing the existing industrial and societal system would
help accomplish a second goal, moral betterment, and increased dignity for their mem-
bers. Powderly claimed that members must place their concerns on a higher ground
than material working conditions, as these physical effects were but stepping stones to
a higher cause, of a nobler nature the more exalted and divine nature of man, his

high and noble capabilities for good. 20 The leadership of the KOL were continually con-
cerned that its members would devote too much attention to improving working condi-
tions and ignore the goal of moral betterment to make every man his own master.21

The moralistic overtones of the Knights guided their membership policies, organiza-
tional structure, and strategies and tactics. Because moral betterment affected all mem-
bers of society, the KOL adopted a One Big Union approach encouraging people of all
job types and skill levels to join the organization except professional gamblers, stock-
brokers, lawyers, bankers, and those who lived in whole or in part by the sale or manu-
facture of intoxicating liquors.22 Employers were also encouraged to join the KOL, the
rationale being that they along with employees were being duped by financiers and law-
yers, and once educated to this fact would join hands with their employees to improve
society.

The local assembly, the basic unit in the KOL, could consist of employers and
employees from several different trades. By 1886, there were 1,100 KOL local assemblies.
However, the formal authority and power of the KOL remained centralized in the hands
of the General Executive Board headed by Powderly.23 As seen later in this section, the
top-down pyramid structure of the KOL later led the AFL to adopt a dramatically differ-
ent organizational structure.

Strategies to Accomplish the KOL s Goals
The Knights used at least four strategies to accomplish their goals. First, political action
was viewed as important, particularly because the Knights felt that previous legislation
had led society down the wrong road. The Knights believed that politicians were moti-
vated by self-interest and therefore required careful watching. However, the Knights
believed in operating through existing political parties. The KOL actively lobbied for leg-
islation to restrict the immigration of foreign labor. Employers often encouraged less
restrictive immigration policies as a way to expand the labor supply, thereby reducing
the cost (value) of labor. The KOL lobbied for increased funding of public school sys-
tems to give every individual an opportunity to become better educated.

CHAPTER 2 The History of Labor Management Relations 53

They also lobbied against the use of prison labor. At that time, companies in some
states could secure contracts to use prisoners as workers, who were often paid very little
in wages. Because of the lower labor costs, firms with prison contracts could expand
their market share at the expense of their competitors. Occasionally, prisoners were
used as strikebreakers. Thus, labor leaders complained that prisoners were given work
even as honest citizens lost their jobs. Some business and religious leaders also believed
that the system gave some firms an unfair advantage over others and lobbied for change.
Initially resistant, many states eventually passed laws limiting the use of prison labor in
the private sector. Consequently, to keep prisoners from becoming idle, penitentiaries
gave their prisoners public-sector work to do.24

A second strategy was the encouragement of producer and consumer cooperatives.
Unlike the socialists, the Knights did not want the cooperatives to be owned by the state.
Instead, the KOL wanted employees to save enough from their wages to either purchase
established operations or create their own cooperative ventures. Because factories would
then be owned by the employees, KOL leaders reasoned that conflict between employees
and employers would cease. Cooperatives would also enable employees to become their
own masters, granting them a voice in decision making, including the determination of a
fair distribution of profits.

The Knights leadership believed cooperatives would affect the established wage
profit system most directly; yet they made little attempt to establish cooperatives or to
financially support the approximately 100 cooperatives that were established by KOL
local or district assemblies during the mid-1880s. Most of these cooperatives failed
because of inefficient managers, squabbles among shareholders, lack of capital, and inju-
dicious borrowing of money at high rates of interest. 25

The KOL pursued a third strategy when it actively avoided the use of strikes to
obtain its goals. Indeed, the KOL s leadership often actively discouraged strikes and, in
some cases, demoralized local assembly members by failing to financially support local
assembly strike actions.26 Some leaders viewed strikes as a last resort that could result
in labor violence and lessen the common interests of employers and employees, serving
to distract members from the major goal of moral betterment. The General Executive
Board set up a complicated procedure that local assemblies had to follow before they
could obtain strike funds.27 Powderly believed that no employee should be able to enter
a strike that would result in other employees losing their jobs; therefore, a procedure was
needed to ensure that every employee possibly affected by a strike would have a voice in
the strike decision.28 Yet the red tape involved in obtaining strike funds caused great dis-
sension between the KOL leaders and members.29 Local assemblies that conducted
strikes were often left on their own to financially support work stoppages, or KOL-
approved funds arrived too late to effectively support a strike.

The Knights leadership preferred a fourth strategy as an alternative to the strike:
namely, the education of its members and general citizens as to the perceived evils of the
existing industrial system, as well as the Knights goals for societal improvement. Usually
the leaders would meet with members of local assemblies in private sessions to inform
them of the organization s goals and objectives. The emphasis on education instead of job
action efforts (strikes and boycotts) is further discussed in the next section.

Reasons for the KOL s Failure and Demise
Despite tremendous growth, the KOL experienced a sudden demise. One reason for its
growth was a successful strike initiated by local assemblies against Jay Gould s railroads
in 1885, during which the Knights showed the public that an aggressive, well-disciplined

54 PART 1 Recognizing Rights and Responsibilities of Unions and Management

group could take on one of the most powerful financiers of the day and win. Yet the
effect of this strike may have been limited because neither the Knights nor the newspa-
pers highly publicized the events. Another reason for the KOL s growth was its identifi-
cation with the eight-hour workday, an issue of growing importance to the nation s
workforce.30 However, as discussed in the next section, the KOL s actions in support of
the eight-hour workday were rather weak.

The KOL s leadership operated under several faulty assumptions. First, the advan-
tage of hindsight makes it clear that the KOL s leadership erred in assuming that techno-
logical advancement could be halted and possibly reversed. Second, the KOL
overestimated the extent to which employers and employees share common interests.
Although some common ground exists, each group is motivated by self-interest, which
in a profit-oriented economic system makes labor gains a cost factor to be minimized
by employers in order to enhance ownership s interest. Employers are concerned about
increased operating efficiency, effectiveness, and profitability, whereas employees are
more concerned about job security, fair treatment, and improving working conditions.

The KOL s third faulty assumption was that all types of employees shared identical
employment interests. The KOL was ahead of its time in its attempt to organize less-
skilled employees a goal eventually accomplished by unions within the CIO in the late
1930s. However, employees do not all have the same employment interests, particularly
if they have different skills or work classifications, or if they are employed in different
industries or occupations. The one big union approach (enrolling nearly anyone who
expressed an interest in the Knights) was further complicated by many immigrant mem-
bers whose differences in race, language, and religion presented barriers to effective com-
munication and achieving consensus regarding goals and tactics.31

Fourth, the KOL s success was further hampered by a lack of legislation protecting
the rights of employees to join unions and engage in collective bargaining. Suffice it to
say that the Knights, as well as other labor organizations before 1935, did not have a
legal right to engage in many of the collective activities necessary for effective represen-
tation of workers interests.

Finally, the inability of the KOL s leadership (particularly Powderly) to identify with
members goals also presented a problem. The Knights insisted on adopting a middle
class program for the American labor force, which they refused to contemplate in indus-
trial, working-class terms. Almost all local assembly meetings required the members to
dress up after a day s work to engage in intellectual discourse. The preference for intel-
lectual deliberation over immediate action is perhaps best illustrated by Powderly s
approach to the eight-hour workday movement.

The Eight-Hour Workday Movement and the Haymarket Riot
One of the more important reforms desired by many employees in the late 1800s was reduc-
ing the prevalent ten-hour workday to eight hours. Samuel Gompers, who was a Knights
member and an official of other labor organizations (Federation of Organized Trades and
Labor Unions and the Cigar Makers Union), pressed Powderly to support a nationwide gen-
eral strike on May 1, 1886, in support of the eight-hour workday. Powderly was receptive to
the goal of an eight-hour workday, as it would give employees more leisure time to pursue
intellectual activities. However, Powderly did not join Gompers s call to action because he
did not believe the length of the workday was the major problem: To talk of reducing the
hours of labor without reducing the power of machinery is a waste of energy. 32

Supporters of the eight-hour workday believed that, if instituted, employers would have
to hire more employees to perform the current total hours worked, thereby reducing the
unemployment problem. On May 3, 1886, some workers striking over this issue in Chicago

CHAPTER 2 The History of Labor Management Relations 55

were involved in a skirmish with the police, and at least four strikers were killed. A leader of
this dispute published an inflammatory circular urging Revenge! and Workingmen to
Arms! The circular also indicated that a mass rally would be held the next day at Haymarket
Square in Chicago. The stage was set for an event (known later as the Haymarket Riot) that
virtually eliminated the KOL s effectiveness.

On May 4, 1886, approximately 3,000 people attended the scheduled meeting, which
began peacefully. Police who monitored the meeting were ordered by their chief to
return to the station. However, Police Captain Bonfield, whom the governor of Illinois
later charged as being responsible for the incident, ordered them back to the meeting.
During a speech a bomb was thrown into the gathering of police, killing 7 and wounding
60. What happened next is uncertain. The Chicago Tribune reported that anarchists and
rioters poured in a shower of bullets before the first action of the police was taken. 33 Yet
another report in the same article stated that the police opened fire on the crowd imme-
diately after the bomb exploded. Regardless of the order of events, the police did shoot
into the crowd, killing several and wounding 200.

Eight individuals allegedly responsible for the incident were arrested. Four of the
eight were hanged, one committed suicide in prison, and three were eventually pardoned
by the governor of Illinois after serving some of their sentences. The trial of these eight
individuals contained a number of irregularities. For example, the hand-picked jury
included a relative of one of the bombing victims.34 The trial never did establish who
threw the bomb; however, the accused were judged guilty by the Chicago Tribune before
the trial took place. More specifically, the paper stressed that the mob was led by two
wirey whiskered foreigners, 35 who were Nihilistic Agitators. 36

The Knights were not directly labeled in the immediate press accounts of the strike
nor in the subsequent series of unsuccessful strikes over the eight-hour workday, which
involved nearly 340,000 employees. However, the strikes contributed to the organization s
demise for at least two paradoxical reasons. A substantial body of public opinion did label
the Knights as being involved in the strikes. Yet many of the Knights own members criti-
cized their leadership for not participating enough in the events during and after the Hay-
market Riot.37 Indeed, Powderly strongly discouraged strikes over the eight-hour workday,
believing instead that members should write essays on the subject. Thus, the Haymarket
Riot dramatically reflected the split between the KOL and the newly formed AFL led by
Samuel Gompers, a labor organization that was to flourish and endure.

Origin and Goals of the American Federation of Labor
The American Federation of Labor (AFL) was formed in 1886 after some of its member
national unions (most notably the Cigar Makers) were expelled from the KOL.38 As pre-
viously mentioned, Samuel Gompers, a major founder of the AFL, was a member of the
KOL until he became disenchanted with the KOL leadership s long-range social reform
philosophy. Gompers was also upset about KOL activities involving his own craft union,
the Cigar Makers. In particular, the KOL tried to persuade local cigar makers to join a
KOL assembly and sometimes supplied its own members to act as strikebreakers to work
for employers who were being struck by the Cigar Makers (Gompers s) union.

Gompers met with KOL leaders in December 1886 to discuss these problems, but
the meeting did not resolve the situation. Indeed, Gompers became incensed when a
pamphlet was circulated among KOL representatives attacked Gompers personally by
indicating the General Executive Board has never had the pleasure of seeing Mr. Gom-
pers sober. 39 Also, in retrospect, KOL leaders blundered when they focused on recruit-
ing skilled craft employees already members of existing craft unions (e.g., Cigar Makers
union), a move that resulted in bitter reactions from those trade unions. The Knights

56 PART 1 Recognizing Rights and Responsibilities of Unions and Management

might have been better off (and still consistent with their goals) if they had devoted more
attention to recruiting other, less-skilled employees who were not eligible for member-
ship in existing skilled craft unions.40

Unlike the KOL, the AFL was not established as one big union. AFL member unions
were organized along skilled craft lines, where only employees who shared a skilled trade
(e.g., painters) were in the same union. (The current organizational structure of the AFL-
CIO is discussed in detail in Chapter 4.) The AFL represented a federation of national
unions cooperating for mutual gain while permitting each national union to maintain
independent control over its own identity and operations. Craft unions such as the Cigar
Makers, dominated the early stages of the AFL. The AFL influenced its member unions
through its services, particularly organizing activities, philosophies, and strategies.

It is impossible to discuss the AFL apart from Gompers because in the early years,
the AFL existed only in the person of Gompers and in the annual conventions. 41 With
the exception of 1895, Gompers was president of the AFL from its founding in 1886
until his death in 1924. Therefore, much of the discussion of the goals, strategies, and
organization of the AFL is from the perspective of Gompers, a point of view that still
relates strongly to the thinking of organized labor.

Gompers placed little emphasis on intellectual betterment, and he scorned other
union leaders pretensions to show labor union members the course of action they
should pursue.42 Gompers criticized the KOL as representing a hodgepodge with no
basis for solidarity with the exception of a comparatively few trade assemblies. 43 Gom-
pers believed that the goals and organization of unions should flow directly and naturally
from the members needs, not from the pronouncements of top leaders who structured
unions based on their views of what should have been, rather than what was.

Gompers particularly scorned those union leaders who tried to change the existing
social system through revolutionary means.44 Although Gompers was a socialist in his
early years, he grew to despise this philosophy, contending that it was economically
unsound, socially wrong, and impossible to apply in an industrial setting.45 Gompers
believed that union members should work for equitable treatment within industrial soci-
ety rather than revolt against it.

Thus, the AFL s major goal was to improve the material conditions of members
through the existing capitalistic system. This goal was attacked by critics of the AFL as
representing pure and simple unionism. Gompers embraced this intended attack; indeed,
he seemed to devote most of his attention to ensuring that the AFL s pure and simple
approach to collective bargaining successfully differentiated it from other labor organiza-
tions. What can also be called business unionism represented a philosophy that the
union was an organization whose business was to represent the employees interests in
their dealings with their employers, just as a lawyer s business was to represent the cli-
ent s interests in the courtroom.46

Pure and simple unionism had two major objectives. The primary objective was eco-
nomic betterment of the organization s members. Gompers believed the truth, or essence,
of labor unions should be measured in terms of their economic accomplishments:

Economic betterment today, tomorrow, in home and shop, was the foundation upon
which trade unions have been built. Economic power is the base upon which may be devel-
oped power in other fields. It is the foundation of organized society. Whoever or whatever
controls economic power directs and shapes development for the group or the nation.47

Thus, the AFL s notion of employee dignity equated with measured economic
gains. This view differed from the KOL s contention that employee dignity is attained
by participation as equals in meaningful work and in other societal concerns.48

CHAPTER 2 The History of Labor Management Relations 57

Gompers also stressed a second objective of pure and simple unionism the
enhancement of the capitalistic system, which could benefit both employees and employ-
ers. Workers could obtain more only if capitalism continued to flourish. Without capital-
ism, neither employees nor employers would receive revenues. The AFL therefore
believed labor and management shared some similar interests. However, Gompers did
not agree with Powderly that this situation would lead to complete employer employee
agreement on all issues. Gompers realized that major differences of opinion would occur
over the distribution of revenues and that employees would probably have to pressure
employers to receive their fair share.

Strategies and Tactics of the AFL
This realization prompted the AFL to rely on using economic pressure tactics when nec-
essary to support its collective bargaining efforts. Unlike the KOL, Gompers believed the
strike was a viable collective bargaining tactic: A workman must convince his employer
that he is entitled to an advance in wages . Why should the wage earner work for less
than living wages, which he would have to do if he could not strike? The worker is
expected to continue to work at whatever wages his employer is willing to give in order
to save the public from inconvenience. 49

A second AFL tactic (particularly after its headquarters moved to Washington, D.C.)
was that of involvement in the political arena. Gompers, an aggressive lobbyist,
attempted to translate election votes of AFL members into rewards for political friends
of labor and punishments for political enemies of labor. However, political efforts dur-
ing Gompers s leadership were neither intense nor widespread throughout the AFL.50

AFL political efforts were directed at influencing the existing two-party system instead
of forming a third political party. Gompers felt that establishing a third party would
divert too much time from fundamental collective bargaining efforts, and he was con-
cerned that any new political party might fall under the socialists control.51

A third AFL tactic was to enhance the public status and reputation of organized
labor and the collective bargaining process. Gompers devoted much attention to the
National Civic Federation (NCF), formed in 1899 to promote industrial peace through
collective bargaining. The NCF was composed of prominent labor, management, and
political officials and attempted to guide public opinion toward the positive aspects of
collective bargaining, including improved wages and working conditions. For example,
unionized coal mines tended to have far fewer fatalities than nonunion mines. However,
at least one observer of industrial relations has questioned the success of this public rela-
tions tactic, believing that the NCF s rhetoric surpassed its performance. 52

Organization of the AFL
The AFL s organizational structure was based on two principles. The first principle,
exclusive union jurisdiction, had two normative ideas: First, workers should only be
members of one union they should not join multiple unions; second, when dealing
with a specific employer, one union should represent everyone who worked in that
skilled craft. The AFL avoided the concept of one big union, which had proven ineffec-
tive for the KOL, and insisted on using the principle of exclusive union jurisdiction. This
principle rested on the twofold observation that (1) each craft or trade had unique work-
ing conditions and job interests and (2) combining members of different trades into one
organization would jeopardize those interests and cause unnecessary dissension. The
AFL believed in one union representing each identifiable skilled craft; for example, sepa-
rate unions to represent carpenters, painters, and cigar makers. Because membership in
the AFL was restricted to established skilled crafts, many semiskilled workers did not
meet the qualifications for membership in an AFL-affiliated union.

58 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The second principle was that of decentralized authority. Gompers strongly
believed the AFL was a voluntary organization held together by the mutual self-
interests of its members. Unlike Powderly, who believed that centralized authority was
necessary to achieve the Knights objectives, Gompers viewed the AFL as a rope of
sand, dependent entirely on the acceptance of its members. Thus, the real authority
rested with the AFL s affiliated national unions and their member locals. As is further
discussed in Chapter 4, these principles continue to influence contemporary union
organizations.

Gompers was a most active union organizer who claimed to have helped in organiz-
ing 28 unions representing different crafts such as painters, papermakers, firefighters,
and post office clerks.53 Much of this effort was due to Gompers s view of himself as
one of the boys he took pride in his ability to socialize with the members on their

own terms.
Despite Gompers s efforts, the AFL s early growth was not spectacular. Its original

membership of 150,000 had increased to only 250,000, six years later. The initial slow
growth was due to the counterattack of industry (discussed in the section on World
War I to World War II), the generally repressive attitude of the government and the
courts toward collective employee activities, and the difficulties created by the depression
of 1893. Yet Gompers could view these modest membership gains as a tribute to the
AFL s powers of stability and permanency. 54

From its formation until World War I, the AFL was directly or indirectly involved
in three prominent events: the Homestead and Pullman incidents and the formation and
demise of the IWW.

The Homestead Incident
The Carnegie Steel Works, located in Homestead, Pennsylvania, was ironically the scene
of one of the more violent episodes in labor history. The founder of the works, Andrew
Carnegie, was a renowned philanthropist who gave every indication of being receptive to
organized labor. In one article, written before the Homestead Incident, Carnegie stated
that a strike or a lockout was a ridiculous affair because it represented only a test of
strength instead of determining what was fair and just. 55 Carnegie also believed that
labor management problems would occur in large firms run by salaried managers
instead of owners because the managers had no permanent interest in the desires of the
employees.

Carnegie s remarks proved prophetic in the Homestead Incident of July 6, 1892.
Although many have labeled the incident a strike, one labor historian has noted that
no-strike vote was ever taken by the membership, and the employer prohibited the
employees from working, which would be more consistent with an employer lockout.56

During negotiation between the mill and the Amalgamated Association of Iron, Steel,
and Tin Workers (an affiliate of the AFL), a 15-foot-high solid board fence, topped
with barbed wire, was constructed around the building. Andrew Carnegie was vacation-
ing in Scotland during negotiations and had delegated construction of the fence to a
manager named Henry Clay Frick. The union labeled the structure around the steel
mill Fort Frick. Union members were undoubtedly aware that Frick was negotiating
with Pinkerton detectives as a potential strike intervention force at the same time nego-
tiations were being conducted with the union. Frick intended to use Pinkerton detectives
inside the facility to protect the company s property and as strikebreakers to perform
work should a strike occur.

On June 30, 1892, the company made its last offer, which represented a substantial
reduction of previous wages; when it was rejected, the company locked out its 4,000

CHAPTER 2 The History of Labor Management Relations 59

employees.57 Workers then began an around-the-clock surveillance of the plant. One
newspaper account indicated, The line of pickets covers the river, roads, and railways so
tightly that no stranger can enter the town without being known to the strikers. 58 On the
morning of July 5, 300 Pinkertons gathered at Ashtabula, Ohio, and proceeded by rail to
Youngstown, Ohio. They then traveled up the Monongahela River by barge. On July 6,
word had reached those in Homestead that the Pinkertons would be entering the plant
from the river. Six thousand people lined the river banks at 2:00 A.M., and employees pre-
pared two small cannons, one on each side of the river, to be used on the Pinkertons.59

The Pinkertons attempted to land by the company s beach at 5:00 A.M.; shots were
exchanged, and three Pinkertons were killed. Shooting by both sides continued for 12
hours, with an additional seven townspeople killed and 50 wounded. The Pinkertons sur-
rendered to the townspeople and were forced to run a bloody gauntlet before being
locked up for their protection. The townspeople had taken weapons from the Pinkertons,
a situation that resulted in 8,700 National Guard members being sent to secure the town.
There were few further attempts to occupy the mill by Pinkertons or strikebreakers.60

The incident ended for all purposes approximately 5 months later (November 20, 1892)
when the Amalgamated lifted its prohibition against returning to work.

Homestead has been labeled the Waterloo of unions in the steel industry. After the
Homestead Incident, membership in the national union dropped from 24,000 in 1892 to
8,000 in 1894. On the local level, only 800 of the original Homestead employees were
reinstated. Carnegie s mills showed a dramatic increase in profits when the union was
eliminated, a fact that encouraged other employers to take an anti-union stance.61

Although Homestead represented a victory for management, the AFL and organized
labor did benefit to some extent from the situation. First, Gompers demonstrated to
existing and potential union members his very real concern about the Homestead situa-
tion.62 The funds contributed by the AFL to help defray the employees legal expenses
also demonstrated that the AFL was interested in helping its member unions in a mate-
rial sense.63 Finally, the Homestead situation received more sympathetic newspaper cov-
erage than did the Haymarket Riot. The press charged Carnegie with provoking the
situation. For example, the Chicago Tribune strongly criticized the company s use of Pin-
kerton guards and contended that Carnegie s company, as well as any large industrial
organization, has duties and obligations toward society which it must not forget, and
not the least of them is to do all in its power, and make all of the concessions it can, to
preserve civil and industrial peace. 64

The Pullman Strike
In the late 1800s and early 1900s strikes were common in the railroad industry. For
example, the Great Upheaval of 1877 involved independent railroad employee associa-
tions protesting wage cuts. It was a bitter and violent confrontation in which more than
100 employees were killed and several hundred were badly wounded.65

Yet the Pullman Strike of 1894 assumed significance because of the principal per-
sonalities involved (Eugene Debs and George Pullman) and an organization (the Ameri-
can Railway Union (ARU)) that had the potential to challenge the AFL for union
members. It also approached being a revolutionary strike in the United States, progres-
sing from a nationwide strike in one industry to nearly involving all industries.

First, some background: George Pullman recognized the need for comfortable rail
cars suited to long distance travel and he decided to fill that need. Consequently, Pull-
man, who had experience as a carpenter and refurbishing other firm s passenger cars,
began making railroad cars. He improved upon existing sleeper cars and offered the
first dining car in the late 1860s. However, instead of simply selling railroad cars, he

60 PART 1 Recognizing Rights and Responsibilities of Unions and Management

usually rented them to the railroads, complete with staff. Thus, conductors, cooks, wait-
ers, and porters usually were not employed by the client railroads, but were employed by
Pullman.66 For more about the African-American employees who worked for Pullman
and the Civil Rights movement, see the Labor Relations in Action Box.

As a result of the 1893 depression, the Pullman Palace Car Company laid off 3,000 of
its 5,800 employees and cut wages 25 to 40 percent. Both actions were important because
they occurred in the milieu of Pullman, Illinois (now a part of Chicago) a company town
where the factory was located. This town represented a paternalistic social experiment by
George Pullman. The company owned all the buildings, and houses in the town, which
were built to provide living space for company employees, who were not allowed to own
their own homes in the town.67 After wages were cut, the company did not reduce housing

LABOR RELATIONS IN ACTION
Unions and the Civil Rights Movement

When George Pullman sought workers for his passen-
ger cars in the mid-to-late 1800s, he found a ready
source of labor, already experienced in pleasing others:
Former slaves. For these workers, employment at Pull-
man was a position of some status, although low
wages had to be supplemented with tips and White
passengers were sometimes condescending.

Prior to the 1960s, work in many parts of the coun-
try was segregated based on race. Some jobs (e.g., train
conductors) were generally reserved for Whites, while
other jobs were reserved for Blacks and other minorities
(e.g., train porters, baggage handlers). Unions often
reflected the social norms of their day: Some refused
to admit minority-group members. Others established
auxiliary unions for Blacks and/or women workers.

Some union leaders, particularly in the CIO, were more
open to the idea of admitting minority-group members
because they felt that segregating the races only
allowed managers to pit one group against another
(e.g., threatening White workers with layoff and replace-
ment with lower paid Blacks; using minorities as strike-
breakers when White unions went on strike). Even
when national union leaders embraced the idea of
equal opportunity, local unions occasionally thwarted
their efforts, as happened with the United Automobile
Workers (UAW) in the late 1940s: Whites in a few fac-
tories walked off the job rather than allow Blacks to do
White work.

One union leader who worked to bring about equal
employment opportunity for African-Americans was A.
Phillip Randolph. A Socialist in his youth, in 1925 he
was elected president of a labor union called the Broth-
erhood of Sleeping Car Porters, which consisted of
Blacks who worked for the Pullman Co. The following
year Congress passed the Railway Labor Act, which
regulated labor relations in the railroad industry. How-
ever, because Pullman employees technically did not

work for the railroads (who merely rented cars from Pull-
man), these porters were not covered under this new
law. Randolph lobbied successfully to get the law chan-
ged (1934) and then successfully negotiated a contract
with Pullman Co. (1937) that provided pay raises and a
shorter work week.

By 1940, U.S. defense industries were boosting
production out of concerns that the country might be
dragged into World War II. Yet Blacks were ineligible
for many jobs due to racial segregation, which prompted
some protest marches in selected cities. Randolph and
other Civil Rights leaders proposed a March on
Washington, D.C., where African-Americans would
argue for equal employment opportunity. The march
was called off, however, because President Roosevelt
issued an Executive Order forbidding racial discrimina-
tion in defense industries. Later, Randolph and others
persuaded President Truman to issue an executive
order abolishing racial segregation in the armed ser-
vices. In the 1950s, he lobbied to end segregated
schools and to promote equal voting rights for all
races, forming an alliance with Rev. Martin Luther
King, Jr. In 1963, over 20 years after he had first pro-
posed it, he helped organize the March on Washington,
D.C., which promoted passage of the 1964 Civil Rights
Act. This law forbade discrimination in employment,
access to job training, union membership, and other
aspects of society. Randolph s incessant efforts had
finally brought the sweeping legal changes he had
sought over a 40-year career.

SOURCES: Cornelius L. Bynum, A. Philip Randolph and the Struggle for Civil Rights
(Urbana, IL: University of Illinois Press, 2010); Venus Green, Not your average frater-
nal organization: the IBPOEW and labor activism, 1935 1950, Labor History, 53(4),
2012, pp. 471 494; Kevin Boyle, There are no Union Sorrows that the Union Can t
Heal : The struggle for racial equality in the United Automobile Workers, 1940 1960,
Labor History, 36, 1995, pp. 5 24; Jervis Anderson, A. Philip Randolph: A Biographical
Portrait (New York: Harcourt, Brace, Jovanovich, 1973).

61

rents or charges for other services. The wage cuts resulted in some employees having a net
two-week pay of $1 to $6 during the winter of 1893 to 1894.

This situation generated much hostility among employees, many of whom were
members of the ARU, formed in 1893. The ARU was completely independent from the
AFL and competed for members with the AFL-affiliated railway craft unions. The ARU
accepted any white employee, regardless of specific job classification, so that railroad
employees could present a unified front to the railroad companies.68 The ARU was
attractive to many employees because its inclusion of all types of railway workers served
to counter employers previously successful strategy of creating dissension among the dif-
ferent specialized craft unions by playing one against the other in wage negotiations.

The ARU s local unions had sole authority to call a strike, and the Pullman strike
began on May 11, 1894. Eugene Debs, the ARU s leader, came to Chicago fresh from a
labor victory: The Great Northern Railroad in Minnesota and North Dakota had tried to
impose substantial wage cuts, but Debs led an ARU strike and, in April, 1894, got most
of the cuts rescinded. Debs informed the Pullman strikers that the strike should repre-
sent a protest against philosophical issues rather than just for mere material betterment:
The paternalism of Pullman is the same as the interest of a slave holder in his human

chattels. You are striking to avert slavery and degradation. 69

At first the strikers followed Debs orders not to damage railroad property. The
ARU instead adopted a strategy of not operating any train that included a Pullman
sleeping car the common practice was to cut these cars from the train and move them
to the side tracks. If any employee was discharged for this action, then the entire crew
would quit, leaving the train immobilized. This tactic, employed in 27 states and territo-
ries, was intended to make railroad carriers put pressure on Pullman to agree with the
ARU s bargaining position.

The railroad employers rallied behind Pullman and countered the union s strategy
by hiring strikebreakers. Railroad employers also decided to include federal mail on
nearly every train as a way of getting support from the federal government to ensure
the mail was delivered. Owners were able to obtain a labor injunction on July 2, 1894
(subsequently upheld by the U.S. Supreme Court), to prevent any employee from inter-
fering with the delivery of the mail. Employees could no longer engage in their strike
strategy of rendering the trains inoperative. Some 16,000 troops, dispatched by President
Cleveland to enforce the injunction, either delivered the mail and operated the trains or
protected strikebreakers so that food and other perishable items could be delivered
throughout the country.

The strike then took a particularly ugly turn when employees burned at least 700
railroad cars in Chicago on July 7, 1894. Management was also criticized for this incident
for failing to take minimum security measures, such as guarding or locking the railroad
cars, to prevent such damage. There were allegations that some management officials
may have even provoked the incident to receive additional support from the government.
This possibility is suggested because all the burned cars were old (the newer, more
expensive Pullman sleeping cars were not on the property), and very few of the cars
were loaded with any product.70

The resulting negative public opinion and increased action by federal troops forced
Debs to seek Gompers s cooperation. Debs wanted Gompers to call a national strike to
help enforce Debs s last offer to settle the strike, which was simply management s agree-
ment to reinstate the striking employees. Gompers refused to support Debs, contending
that he did not have the authority to call a general strike. Gompers also believed that the
proposed settlement would, in effect, admit to the public that the ARU had failed to win
material benefits for its members. Much of Gompers s reluctance was based on his view

62 PART 1 Recognizing Rights and Responsibilities of Unions and Management

of Debs as being a leader of irregular movements and lost causes. 71 However, Gom-
pers s inaction might also have been caused by his desire to eliminate a potential rival
to the AFL and bolster his reputation in the business community.

Debs was eventually convicted and sentenced to federal prison in Atlanta, Georgia,
for failing to abide by the court s labor injunction. In prison, Debs read books on social-
ism and began to advocate the election of a government that would be responsive to the
working classes by taking control of major industries including railroads. Eventually,
Debs ran for the U.S. president as the Socialist Party s candidate. Meanwhile, the ARU,
which had grown to 150,000 members in one year, quickly faded from existence. Orga-
nized labor did learn an important lesson from the Pullman strike: It would be difficult
to alter existing terms and conditions of employment when confronted by a persistent, if
not exceptionally stubborn, owner (Pullman), the federal government (troops, injunc-
tions, legislation), and negative public opinion (fueled by exaggerated and dramatic
newspaper articles).

The Industrial Workers of the World
The Industrial Workers of the World (IWW) was formed as an alternative to the AFL
on June 27, 1905. William Big Bill Haywood, one of the initial organizers of the
IWW, proclaimed the organization s goals in calling the convention of 209 delegates to
order with the following remarks:

Fellow Workers . We are here to confederate the workers of this country into a
working class movement that shall have for its purpose the emancipation of the work-
ing class from the slave bondage of Capitalism. The aims and objects of this organi-
zation should be to put the working class in possession of the economic power, the
means of life, in control of the machinery of production and distribution without
regard to capitalist masters.72

The significance of the IWW as a labor organization is that it represents perhaps the
most serious effort in U.S. labor history to organize workers on the basis of a radical
political ideology. The initial goal of the IWW was to overthrow the existing capitalistic
system by any means necessary, based on the belief that employers and employees had
nothing in common. The IWW s radical political ideology was a marked departure from
the pure and simple unionism approach advocated by the AFL, which extolled the vir-
tues of the capitalist system. While the KOL had also stressed that the existing wage and
profit system needed to be reformed, the KOL believed that employees and employers
shared similar interests and that change should be peaceful and gradual. The IWW, on
the other hand, had no reservations about advocating the use of any method that would
result in the quick destruction of capitalism; thus, some IWW leaders saw the union as a
stepping stone to a communist society where all private property would be abolished.

The IWW also opposed any group that supported capitalism. This approach placed
the IWW in direct opposition to the AFL, not to mention most other established orga-
nizations in society. The IWW regarded the AFL as an extension of the capitalist class
because it advocated pure and simple unionism, which was dependent on capitalism.73

Haywood believed that Gompers had sold out the ARU when he failed to support Debs
in the Pullman strike, and he viewed Gompers as an arrogant, power-hungry leader.74

Thus, the IWW appeared to have two general enemies. One was capitalism. The second
was the AFL. Unlike IWW leaders, AFL officers did not divide society into a ruling
class and laboring class dichotomy. Thus, the AFL did not embrace the idea of a
working-class movement of hourly employees uniting to overthrow capitalism.

CHAPTER 2 The History of Labor Management Relations 63

An analysis of the IWW reveals that establishing goals can be an easier task than
accomplishing them. The IWW never did establish an effective organization; in fact, its
leaders never made up their minds about precisely what kind of organizational structure
it should adopt.75 Most of the IWW officials agreed with Haywood s objective of orga-
nizing every man that earns his livelihood either by his brain or his muscle. 76 This was
similar to the One Big Union approach previously tried by the KOL. However, major
differences arose among IWW leaders over how to organize one big union into an effec-
tive organization. Some members felt that the IWW should work slowly, for example,
infiltrate the established AFL unions and gradually persuade members that the IWW
cause was best. Others felt that this temporary acceptance of collective bargaining with
the capitalists made employees only better paid slaves and would hinder the quick
and necessary overthrow of the capitalistic system.77 In addition to organizational differ-
ences, there were at least four other reasons for the decline of the IWW, reasons that
served as negative lessons for contemporary organized labor.

1. Lack of permanent membership and financial base. A large proportion of the
IWW consisted of itinerants individuals who either were unemployed or traveled
from job to job, particularly in the agriculture, mining, and lumber industries. This
contributed to an unstable financial base. Many IWW leaders thought the members
dues should not be mandatory but instead should be paid out of a voluntary inner
conviction. For example, in 1907 only 10,000 members out of the total 31,000
members paid any dues. The lack of revenues resulted in meager strike funds, and
by 1909 the organization was deeply in debt.

2. Inability of the IWW to appeal to members interests. The IWW did not consider
the short-run material interests of its members. Its major emphasis on long-term
political and philosophical goals and its focus on propaganda as a means to achieve
these goals failed to demonstrate tangible signs of success on a continuous basis.78

The average trade unionist, inside or outside the IWW, had no strong desire to
help the underdog. Most employees were too focused on trying to survive them-
selves. For example, while many men worked full time and were considered family
breadwinners, it was sometimes financially necessary for their wives and children to
also hold jobs in factories, work at home (e.g., sewing, laundry), or sell produce from
gardens. Such families had little time for radical rhetoric.79

3. Identification of the IWW with sabotage and violence. The relationship between
the IWW and sabotage and violence was ambiguous. The IWW in 1914 became
the only labor organization ever at its convention to officially endorse sabotage as a
legitimate labor tactic. Yet no local, state, or federal authority could ever establish
legal proof of any IWW-instigated violence. A strike in 1917 closed the logging
camps and sawmills of the Pacific Northwest but did not record any violent acts of
sabotage by the IWW.80 The IWW often stated that sabotage does not always equal
destruction of equipment. For example, employees could sabotage a company by
malicious obedience (following the work rules to the letter, thereby creating a

slowdown) and by informing customers that the company s product was of inferior
quality. However, at least one article in the IWW s paper, the Industrial Worker,
indicated how emery dust and ground-up glass could cause the destruction of
machinery. Evidence suggests that the IWW s leadership did not generally advocate
physical violence.81 Yet, there are some accounts of incidents in which IWW mem-
bers and leaders pledged a life for a life or an eye for an eye. 82 At a minimum, it
would appear that the IWW did not actively discourage its link with violence. Given
the widespread reputation for violence and inflammatory rhetoric that accompanied
many IWW strikes, many workers distanced themselves from the union.

64 PART 1 Recognizing Rights and Responsibilities of Unions and Management

4. Alienation of the news media and government officials. The newspapers enhanced
the IWW s reputation for violence by labeling members as desperate villains who
set fire to wheat fields, drove spikes into sawmill-bound logs, derailed trains,
destroyed industrial machinery, and killed policemen. 83 Part of this negative image
was enhanced by leaders of IWW factions who would damn one another in the
press. The IWW also engaged in several free speech fights soapbox speeches in
local communities. This strategy, which has since been copied by various protest
groups, including students, relied upon there being more participants than there
were available jail spaces. City officials, faced with such a situation, typically allowed
the unlawful demonstration to continue.84 In many of these speeches, members of
the IWW would shout anti-social comments such as There is no God. 85

The press, never enthusiastic about unions in general, reserved a special hatred for
the IWW. One editorial against the IWW stated: They would be much better dead, for
they are absolutely useless in the human economy; they are the waste material of crea-
tion and should be drained off into the sewer of oblivion there to rot in cold obstruction
like any other excrement. 86

The IWW also remained alienated from the government. It did not actively use the
existing political system because many of its transient members could not meet voter
registration requirements. The IWW also incurred the wrath of the federal government
when it opposed American involvement in World War I, proclaiming instead that the
war represented a plot to allow capitalists to profit from the sale of war materials. Mean-
while, they said working-class individuals served as soldiers in the armed conflict. IWW-
led strikes reduced lumber and copper production for the war effort.

Opposition to the war and the Soviet revolution in Russia in 1917 led to what was
called the Red Scare: A general concern that a communist revolution would happen in
the United States. Several states passed criminal syndicalism laws. These laws outlawed
the promotion or use of organized violence, sabotage, or terrorism to accomplish indus-
trial aims or social revolution. Sedition laws such as the federal Espionage Act of 1917
and the Sedition Act of 1918 prohibited interfering with the war effort, spreading false
rumors, advocating revolution, or incitement to resist lawful authority. Red Scare fears
were also fueled by an anarchist letter-bomb campaign, the Boston police strike and an
IWW-led general strike in Seattle in 1919. The government responded to these activities
by creating a Federal Bureau of Investigation that aided in the arrest of more than 100
IWW leaders for sedition. Many foreign nationals were deported and hundreds of
U.S.-born IWW leaders were sentenced to prison terms ranging from 5 to 20 years. In
effect, the IWW ceased to be a major player on labor s stage after World War I. The
organization went into a steep decline in the 1920s. The IWW was rejuvenated during
the 1960s, but today it has only a few thousand members.87

The onset of World War I found the AFL confronting several challenges. The AFL
had been the first national labor organization to withstand a severe economic depression,
a hostile press, reluctant or hostile employers, and three rival labor organizations (KOL,
ARU, and IWW). Yet the AFL also faced internal pressures from at least three sources:
(1) socialists and other related political groups that advocated independent political
action and the organization of low-skilled industrial employees, (2) pacifist members
who wanted the AFL to remain neutral or take a stand against the war, and (3) member
unions that became involved in jurisdictional disputes caused by increased specialization
and technological change (e.g., the plumber was no longer responsible for the complete
installation of the water and heating system for a building). Perhaps the most lingering
concern of the AFL was that the largest proportion of unrepresented workers in the labor
force, low- or semiskilled industrial employees, remained essentially outside the ranks of
organized labor.88

CHAPTER 2 The History of Labor Management Relations 65

World War I to World War II

The period from World War I to World War II witnessed several important trends:

1. The inability of unions, particularly the AFL, to make substantial membership gains
in the 1920s.

2. The further development of employer strategies to minimize union growth.
3. Increased union concern over organizing semiskilled industrial employees, which led

to a bitter rivalry between the AFL and the CIO.

Union Organizing after World War I: Problems and Prospects
The AFL overcame its initial reluctance toward participating in World War I and even-
tually pledged its cooperation when the United States became directly involved in the
war. The government, aware of the need to ensure uninterrupted production of war
materials, responded to the AFL by attempting to meet some its concerns. Government
agreements with the AFL provided for the enforcement of trade union standards in all
government contracts; labor representatives were appointed to all government agencies,
including the War Labor Board; and Gompers was made a member of the Advisory
Commission of the National Council of Defense. In short, organized labor was elevated
to a more prominent status than had ever been witnessed before. Accordingly, the AFL
had a sizable growth in membership during this period (an increase from 2.37 million
members in 1917 to 3.26 million members in 1919). Legislative gains also occurred.
A long-time AFL goal of severely restricting the number of new immigrants entering
the country was accomplished.

The rather sharp increase in the cost of living that followed World War I, coupled
with the newly recognized status of labor, resulted in an unprecedented number of
strikes such as the Seattle General Strike of 1919, along with other strikes by actors,
New York waterfront employees, and coal miners. The most widespread strike in 1919
occurred in the steel industry, where some 367,000 employees walked off the job in 70
major cities.

This strike actually resulted in a setback to organized labor in the steel industry.
Many possible factors contributed to the setback. Some were notably similar to those
found in the Homestead and Pullman incidents, whereas others reflected a typical situa-
tion unions faced in the 1920s and early 1930s. Of crucial importance to the outcome of
the 1919 steel strike were internal union difficulties: an organizing campaign conducted
by 24 unions instead of one common industrial union; improvised leadership rather than
a consistent union approach to the issues; and poor financial resources. U.S. Steel was
also successful in withstanding the strike by using strikebreakers and maintaining strong
ties with other companies and social institutions, such as the press and church leaders.
The strike ended without a labor agreement, and another 15 years would elapse before
organized labor would make any significant progress in organizing the steel industry.89

Although the steel industry did not reflect all industrial reactions to collective bar-
gaining, apparently many other unions were similarly powerless to organize companies
such as U.S. Steel, who firmly believed unions were not in the firm s best interests. For
example, another 1919 strike almost paralyzed the coal industry when no miners
returned to work until President Wilson persuaded them to accept a temporary wage
increase and submit all other issues to the newly appointed Bituminous Coal Commis-
sion. In 1920, the commission awarded increases ranging from 20 to 30 percent, but this
was the last victory for mine employees for several years.

66 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION
The American Labor Movement as Portrayed in Fiction

One way to learn about U.S. labor history is through
works of fiction: The Labor Novel. While fiction is rarely
completely historically accurate, it can give a sense of the
problems that working-class families went through and
why workers embraced certain solutions (e.g., labor
unions, socialism, or violence or all three). A textbook
gives the broad sweep of history; a novel can show the
rich details of particular historical events as seen through
the eyes of the novel s central characters.

It is good to consider the historical setting of a work
of fiction as well as the context in which the person
created the work; sometimes, a novel says as much
about the time in which it was written (e.g., a twenty-
first-century feminist viewpoint) as it does about the
time in which the novel was set (e.g., early 1900s).
Also the use of a particular genre of fiction, such as a
detective story, to discuss labor relations may reflect
the popularity of the genre at the time it was written.

Works of fiction tend to follow a few broad themes.
One theme is the struggle between the impoverished
workers and the rich unsympathetic industrialist.
Another theme is the conflict within the family of the
industrialist, as some family members may sympathize
with the working classes. A third common theme is that
of the honest union member fighting corruption (or
gangsters or communists or all three) within his or
her own union. A fourth theme is that of a manager,
detective, police officer, or consultant fighting to keep
a corrupt union from coming into a business or town.
A fifth theme is that violent strikes are either inevitable
or futile and that only through reason and compromise
can labor management disputes be resolved. Finally, in
some novels, there is the rejection of conventional
social norms (including the American dream of mar-
riage, having employment, and owning one s home) in
favor of life as a revolutionary labor leader and the con-
sequences that such a decision brings, both profes-
sionally and personally. Often works of fiction are
thinly disguised descriptions of actual people, unions,
or events. If you read one of the following novels, you
might do a little research and ask yourself how closely it
relates to actual labor events.

Here are a few titles that you may find interesting
and informative (some older titles are available as full-
text, free e-books at Web sites such as www.books.
google.com/, http://onlinebooks.library.upenn.edu/, or
http://www.classicreader.com/):

Auch, Mary Jane (2004). Ashes of Roses. Random
House.

Bullard, Arthur [Evans, Arthur, pseud.] (1913). Comrade
Yetta. New York: Macmillan.
Cantwell, Robert (1934). The Land of Plenty. New York:
Farrar & Rinehart.
Coleman, Louis (1931). Lumber. Boston: Little, Brown.
Coleman, Lynn A. (2005). Fighting for Bread and Roses.
Kregel.
Conroy, Jack (1933). The Disinherited. New York:
Covici-Friede Press.
Farrell, Mary Cronk (2004). Fire in the Hole! New York:
Clarion Books.
Fast, Howard (1962). Power. New York: Doubleday.
Foote, Mary H. (1894). Coeur d Alene. Boston:
Houghton Mifflin.
Garland, Hamlin (1903). Hesper. New York: Harper.
Gilfillan, Lauren (1934). I Went to Pit College. New York:
Viking Press.
Grey, Zane (1920). Desert of Wheat. New York: Grossett &
Dunlop.
Haddix, Margaret P. (2007) Uprising. NY: Simon &
Schuster.
Kemske, Floyd (2000). Labor Day. Catbird Press.
McCardell, Roy L. (1899). The Wage Slaves of New
York. New York: G. W. Dillingham Co.
McKenney, Ruth (1939). Industrial Valley. New York:
Harcourt, Brace.
Merwin, Samuel (1901). Calumet K New York:
Macmillan.
Newell, Arthur (1905). A Knight of the Toilers. Philadel-
phia: F. L. Marsh.
Perez, Norah A. (1988). Breaker. Houghton Mifflin.
Phelps, Elizabeth Stuart (1871). The Silent Partner. Boston:
James R. Osgood.
Pinkerton, Allan (1877). The Mollie Maguires and the
Detectives. Reprint, 1973, New York: Dover.
Scott, Leroy (1905). The Walking Delegate. New York:
Doubleday.
Sinclair, Upton (1917). King Coal. self-published. (396
pages).
Steinbeck, John (1936). In Dubious Battle. New York:
Covici, Friede.
Weber, K. (1996). Triangle: A Novel. Farrar, Straus, &
Giroux.
Wright, Harold B. (1921). Helen of the Old House. New
York: D. Appleton & Co.

For general essays and commentary on labor
unions, workers lives, and strikes as portrayed in fic-
tion, see one or more of the following books: (1)
Andrew Lawson, Class and the Making of American

67

During the early 1920s, there was a series of rail strikes. Railroads played a vital role
in society at that time, transporting both passengers and goods; thus, a major railroad
strike could significantly harm the economy of a geographic region. Some strikes dealt
with economic issues such as wages and pensions, while others were recognition strikes:
Strikes undertaken to force management to accept and deal with ( recognize ) a labor
union. Because of the importance of railroads to interstate commerce, members of Con-
gress decided that a labor law was needed to regulate union-organizing and labor dis-
putes. Therefore, representatives from the major railway lines and their unions met to
negotiate over the terms of such a law. Consequently, in 1926 Congress passed the Rail-
way Labor Act. The provisions of this law are discussed in Chapter 3.

Despite increased status and militancy, something went wrong for organized labor
in the 1920s; the Golden Twenties for the majority in the United States was a dreary
decade for labor both for hourly employees in terms of real income and for labor
unions in terms of membership.90 Between 1920 and 1924, total union membership
declined from 5.11 million to 3.6 million; membership in AFL unions dropped from
4.078 million to 2.866 million. By 1930 total union membership had declined to 3.4 mil-
lion, and AFL membership dropped to 2.7 million.91 This decline was caused by at least
two major factors: (1) aggressive opposition from employers and (2) organized labor s
inability to overcome anti-union sentiment among potential union members.92

Opposition from Employers
Concerned with the increased status given labor during the war, employers actively
engaged in efforts to roll back union membership gains, beginning in the 1920s and con-
tinuing through the 1930s. These tactics took the form of either (1) aggressive opposition
toward established labor unions or (2) providing an acceptable nonunion alternative to
independent unions.

Employers actively opposed unions by supporting the open-shop movement, which
is discussed in more detail in Chapter 4. The stated purpose of the open shop was to
ensure that each employee had the freedom to determine whether he or she would join a
union. Thus, an open-shop arrangement prevents a union from negotiating a contract
clause that forces workers to join the labor organization. Another rationale for this
movement, also called the American Plan, was employers desire for employees to
adhere to the traditional American value of rugged individualism instead of the
foreign, subversive, and corrupt principles of labor unions. Many employers

equated the attainment of an open-shop status with the absence of an independent
union controlled by employees.

Other tactics were also used by employers to prevent employees from joining or
forming an independent union. For example, some employers would hire industrial
spies to identify which employees had pro-union sentiments. Once identified, employees
would then be discharged and possibly blacklisted, meaning that their names would be

Literature: Created Unequal (New York: Routledge,
2014); (2) Fay M. Blake, The Strike in the American
Novel (Metuchen, NJ: Scarecrow Press, 1972); (3)
Laura Hapke, Labor s Text: The Worker in American

Fiction (New Brunswick, NJ: Rutgers University Press,
2000); or (4) Eric Schocket, Vanishing Moments: Class
and American Literature (Ann Arbor: University of Michi-
gan Press, 2006).

68

placed on a list that was circulated to other employers in the area, who would then refuse
to hire anyone whose name appeared on the list. Employer violence against participants
in union-organizing drives was also a potential strategy to counter unions during this
period.93

As employers gained experience using anti-union tactics, a refinement of the open
shop or American Plan appeared in the 1930s, called the Mohawk Valley Formula. This
approach formulated specific steps that could be used by any employer to defeat an orga-
nizing drive or strike action by a union. The Mohawk Valley Formula consisted of the fol-
lowing steps: (1) form a citizens committee in the community to support the employer s
position in the labor dispute, (2) label the union leaders as outside agitators, (3) stir up
violence or the fear of violence, (4) report union leaders and meetings to the police and/
or have a state of emergency declared by public authorities, (5) organize a back-to-work
movement encouraging individuals to resume their normal work duties, and (6) have the
back-to-work employees march into the plant protected by armed police.94

Employers also countered unions by providing an alternative model to unionism.
The 1920s saw widespread employer paternalism, a management style in which the
employer was viewed as the wise parent figure and employees were expected to rely
upon the employer to know what was in their best interest and trust the employer to
protect employees interests. Paternalistic practices implemented by some companies
included free lunches, baseball fields, vacations, pensions, and employee counseling.95

Employers felt that employees receiving these benefits would be indebted to the
employer and realize that a union would be unnecessary.

An employee representation plan (also called a company union), provided another
substitute for an employee-controlled independent union. Employee representation plans
(ERPs) covered as many as 1.5 million employees and appeared superficially similar to
independent unions in that employee representatives (typically selected by the employer)
would discuss working conditions with management officials. ERPs differed from inde-
pendent unions in four major respects.

First, the employer typically controlled the type of subjects discussed with ERP
leaders.
Second, independent unions had more autonomy than ERPs. Employers strongly
influenced the decisions of ERPs; provided the funding, space, and time for their
operation; and management could veto any decision made by the joint labor
management committee.
Third, ERPs were usually limited to a single facility, and employees under ERPs
could neither press for work rules that would remove unfair competition from other
facilities nor push for legislation at the local, state, or federal level.
Fourth, ERPs did not engage in economic pressure tactics such as strikes or boycotts
to persuade the employer to modify decision outcomes.96

ERPs did provide employees more communication with management than existed in
their absence and, most importantly, most employees did not fear discharge for partici-
pating in an organization created by their own employer.

Another anti-union weapon used by employers was that of paying employees in
company scrip (company-created currency) instead of U.S. currency. Scrip often
emerged in isolated locations where one employer (e.g., a coal mining or lumber firm)
owned the land and provided the infrastructure and most business services. In a com-
pany town the scrip could be used at the employer-owned stores and to pay rent for
employer-owned housing. How could scrip serve as an anti-union weapon? Imagine
this scenario: managers suspected two employees of being union organizers. These

CHAPTER 2 The History of Labor Management Relations 69

workers received a triple punishment : (1) they lost their jobs, (2) their families had to
move from their company-owned houses (leaving town because they were also black-
listed), and (3) whatever modest savings they had accumulated in scrip became worth-
less, because the company-owned stores would no longer do business with them and
stores in other towns would not accept the scrip as legal tender. Thus, in this scenario,
the two pro-union workers and their families would be forced to move away, penniless.

Independent merchants lobbied against company scrip and the practice was out-
lawed in some states; it came under increasing federal scrutiny and skepticism by regu-
lators in the 1930s after the National Industrial Recovery Act (NRA) and the Fair Labor
Standards Acts were passed and by the end of the 1940s almost all such practices had
ended in the United States.97

Labor s Inability to Overcome Anti-Union Sentiment
The lack of organizing gains during the 1920s also has to be attributed to the anti-union
sentiment of potential union members and the activities and attitudes of organized labor.
The number workers in new types of industries was growing and these workers some
of whom were white-collar sales clerks and office workers often felt that unions were
irrelevant to their work experience. Part of this problem may have been caused by the
relatively good economic conditions that prevailed throughout most of the 1920s:
While job insecurity may have deterred some employees from joining unions in the

face of employer opposition, many of them apparently felt that unions were no longer
as necessary as they had formerly believed them to be. What profit strikes or other agi-
tation for collective bargaining when the pay envelope was automatically growing fatter
and a more abundant life seemed to be assured with our rapid approach to the final tri-
umph over poverty? 98

There was also a public perception fostered by employers and media accounts that
much of organized labor was corrupt and subject to control by socialists and commu-
nists, even though many AFL leaders were consistently anti-communist. Racketeering
had become a feature of some local union employer relationships. For example, in one
incident a union official signed a two-paragraph agreement with three major employers
guaranteeing no wage increase for three years and requiring all employees to join the
union or be discharged. None of the employees had ever contacted the union about join-
ing, nor did they ever see a union official during the life of the contract. This type of
sweetheart contract was often coupled with financial kickbacks from the employer to
the union official, meaning the employer paid the union official a portion of the labor
cost savings achieved by the employer.99

Some labor unions were also accused of harboring political radicals. Many promi-
nent union leaders would occasionally accept help from almost any group that would
devote time and effort in organizing employees, believing that they could control these
political elements once the local union had been established. However, union leaders
sometimes overestimated their ability to control such elements. One former president of
the Steelworkers Union recalled how communists could dominate local union meetings
by using the V technique, whereby the leader would find a seat at the center of the audi-
torium in about the second or third row. Then the following would ensue: A few rows
back, two of his associates would locate about ten seats apart, and this same pattern
would be followed all the way to the rear of the hall. When the chief spokesman opened
debate, his line would then be parroted all the way through the V behind him, giving an
illusion of widespread strength. The radical groups would also wait until other union
members, tired and bored, had gone home before trying to push through their own
proposals. 100

70 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Organized labor, particularly the AFL, devoted much of its attention during the
1920s to overcoming its negative public image.101 These efforts detracted from active
organizing efforts, particularly because Gompers had lost much of his former physical
enthusiasm for this activity. In 1924 Gompers died, and his successor, William Green,
did not revive any major organizing activities, as he focused on maintaining the status
quo of the AFL s existing organization in an adverse atmosphere.102 The AFL s prefer-
ence for simply maintaining the status quo among its member unions rather than seek-
ing to actively grow the labor movement eventually led to the formation of the Congress
of Industrial Organizations (CIO).

Rise of the CIO and Industrial Unionism
Major disagreement occurred within the AFL over organizing the growing number of
semiskilled employees in the labor force. Tremendous technological shifts occurred dur-
ing and after World War I, reducing the demand for highly skilled employees. This
increased the percentage of the labor force comprised of semiskilled or unskilled produc-
tion workers. In 1926, for example, 85 percent of the hourly employees at Ford Motor
Company required less than two weeks of training.103 Because craft employees no longer
dominated the industrial scene, the AFL needed to organize production employees if it
wanted to increase membership.

Many of the AFL unions did not want to enroll semiskilled production employees.
Some AFL leaders believed these employees were inferior to craft employees and pos-
sessed less bargaining power because they were easier to replace than skilled workers if
they went on strike. Other AFL leaders thought the inclusion of production workers
would confuse and distort the AFL s organization. Recall that AFL member unions
were organized along skilled craft lines. William Green himself did not view industrial
employees as being compatible with the AFL s organizational principle of exclusive juris-
diction by skilled craft.

Some AFL leaders thought that if they were to try to organize semiskilled factory
workers, a separate union would be needed for each company s or industry s products.
Thus, if General Electric (GE) had 50 different products, then 50 different AFL unions
(each having exclusive jurisdiction over its members interests) would be needed for
effective collective bargaining. In other words, at least 50 separate collective bargaining
agreements could be negotiated by GE and its unions. Both the craft approach and the
product line stood in contrast to the industrial unionism approach, where everyone in
the same industry could be represented by the same union (e.g., all the employees at
GE might be in one electrical workers union). The president of one AFL union urged
his members to stamp out the awful serpent of industrial trade unionism that would
destroy this International and weaken the entire structure of the Labor Movement. 104

The issue came to a head in 1935 under the direction of John L. Lewis, president of
the AFL s United Mine Workers Union. The AFL rejected the concept of industrial
unionism at its 1935 convention.105 On November 9, 1935, the Committee for Industrial
Organizations was formed. Its purpose was allegedly educational and advisory, but in
reality it was intended to promote organizing among unrepresented employees, particu-
larly those semiskilled workers in the mass production industries.106

In January 1936, AFL leaders were shocked to find that the Committee for Industrial
Organizations had been formed by some AFL unions. AFL President Green thought the
industrial unionism issue had been buried once and for all at the 1935 convention. AFL
leaders ordered the Committee for Industrial Organizations to disband or get out. Per-
sonalities intensified the issue. John L. Lewis, a powerful man in voice and action, sought
and obtained power and publicity through his union activities.107 Lewis managed to

CHAPTER 2 The History of Labor Management Relations 71

provoke AFL leaders into a confrontation while at the same time whipping his United
Mine Workers members into a lather of rage against the AFL.108 Lewis believed that
the future success of the American labor movement was dependent on the ability to
organize production workers in the fast growing mass production industries. The split
over the industrial unionism issue resulted in seven unions with almost a million mem-
bers being expelled from the AFL. These seven unions joined with newly established
industrial unions in some of the mass production industries to quickly form a rival and
completely independent labor federation, the CIO, electing John L. Lewis (then president
of the United Mine Workers union) as the first CIO president.109

The development of the CIO coincided with a significant upsurge in union member-
ship. By November 1937, the CIO s affiliated unions had already organized 75 percent of
the steel industry, 70 percent of the automobile industry, 65 percent of the rubber indus-
try, and about one-third of the maritime and textile industries.110 The AFL also saw
rapid growth in membership during the late 1930s and the 1940s. The AFL organized
the skilled trade employees in mass production industries into local labor unions and
national councils assigned to various craft unions. The steady growth of the AFL during
the late 1930s was also aided by employers preference to deal with the more conserva-
tive organization instead of taking their chances with the new, unpredictable, and more
politically radical CIO.111

Why did union membership increase dramatically in the 1930s and 1940s? At least
five factors seem to account for the growth in unionism during this period: strong CIO
leadership, the CIO s realistic goals, the CIO s effective use of the sit-down strike tactic,
passage of the National Labor Relations (Wagner) Act of 1935, and changes in employ-
ees attitudes toward a more favorable view of unions.

Strong CIO Leadership
The aggressive and effective CIO leaders (John L. Lewis, Sidney Hillman, and David
Dubinsky, among others) infused new life into a union movement previously content
with resting on its laurels. Most of the CIO union leaders had extensive organizing expe-
rience and prided themselves on keeping in touch with their membership.112 Union lea-
ders accomplishments should not be overstated, however, because organizing drives
involved the tireless efforts of many individuals who typed up circulars, contacted pro-
spective members, and provided routine services that ensured union election victories.
One biographer of John L. Lewis indicated he lacked involvement in many routine orga-
nizing chores by noting that Lewis preferred arriving only in time for the triumphant
finale. 113 Much organizing effort in the steel, mining, automobile, and other industries
was effectively directed toward second-generation immigrants. Some 30 percent of the
CIO leadership came from a new immigrant background. One historian notes, The
success of the CIO was based on the mobilization of ethnic workers and on their willing-
ness to join unions. 114

Realistic Goals
Although all three unions favored organizing unskilled factory workers, the CIO shared
only a superficial similarity with the KOL and IWW. First, the CIO did not embrace the
KOL s and IWW s one big union approach to union membership. The CIO believed
that grouping all employees by chartering one union for each particular industry (e.g.,
auto, steel) would still provide sufficient membership similarity to reflect the common
interests of employees even though within that industry non-managerial employees of
all skill levels were welcome to join. More importantly, the CIO dramatically differed

72 PART 1 Recognizing Rights and Responsibilities of Unions and Management

from the Knights and the IWW in its goal of focusing on short-run economic gains
instead of long-range reform, which paralleled the AFL s pure and simple unionism
approach, including support for the existing capitalist system. Although in its early
years the CIO had some affiliate unions with communist officers, as a federation, the
CIO rejected revolutionary goals. John L. Lewis remarked: I think most people have
come to realize, that we cannot progress industrially without real cooperation between
workers and management, and that this can only be brought about by equality in
strength and bargaining power of labor and management. Labor is sincere in its desire
to help. It looks forward to an industrial procedure which will increase productive effi-
ciency and lower prices to the consumer. 115

The Effective Use of Sit-Down Strikes
The CIO used a successful tactic for encouraging employer s to recognize and bargain
with its member national unions the sit-down strike, in which employees stayed inside
the plant instead of picketing outside. This technique was successful because employers
were reluctant to physically remove the employees from the plant for fear that their
equipment could be damaged in the confrontation.

The tactic was initially applied by the IWW at a GE facility in 1906, but the most
famous use of this strike tactic occurred in December 1936 at a General Motors facility
in Flint, Michigan. At one time, 26,000 General Motors employees had belonged to a
union, but in early 1936, there were only 122 union members, many of whom were man-
agement spies.116 A local grassroots organization was secretly established to build up the
union at Flint. The sit-down strike was locally planned by autoworkers as Lewis and the
CIO were focused on organizing the steel industry before launching any major effort to
organize the automobile industry. The CIO, however, did lend its active support to auto-
workers once the strike was under way.

The sit-down strike at Flint lasted 44 days and received widespread community sup-
port while hindering GM s efforts to reverse its negative profit situation of previous
years.117 The strike resulted in employer recognition of the union, a fact that was noticed
by many employees in other trades. Sit down strikes at three tire manufacturers
Firestone, Goodyear, and B.F. Goodrich effectively won recognition of the United Rub-
ber Workers and better working conditions. During 1936 and 1937, some 500,000
employees in the rubber, glass, and textile industries engaged in sit-down strikes.
Although effective, the sit-down strike was short-lived because public opinion eventually
frowned on this tactic, and a subsequent decision by the U.S. Supreme Court declared
such strikes represented an illegal seizure of the employer s property.118

Passage of the National Labor Relations (Wagner) Act
Another (and perhaps the most significant) reason for the increased number of union
members was the passage of the National Labor Relations Act (NLRA) of 1935 (dis-
cussed more in Chapter 3). The federal government indicated through this law that
collective bargaining was a public policy in the national interest. Private-sector
employees covered by the law were granted a legal right to form or join unions, bargain
collectively, or engage in other concerted acts for mutual aid or protection. Many
previously common employer tactics used for preventing union growth became illegal
(e.g., blacklisting, spies, discharging workers for union activity, and creating company
unions). A supporting law, the Byrnes Act of 1936 prohibited the interstate
transportation of strikebreakers for the purpose of using force or threats against union
organizers, negotiators, or peaceful picketers as they exercised their rights under the
NLRA.119 A new federal agency, the National Labor Relations Board (NLRB), was

CHAPTER 2 The History of Labor Management Relations 73

created to administer union representation elections, define employer unfair labor
practices, and enforce the legal rights of employees to join independent unions and
bargain collectively.

Changes in Employees Attitudes
Many employees previously negative attitudes toward organized labor changed dramati-
cally. Employees had experienced the Great Depression of the 1930s and realized that job
security could not be achieved solely through hard work and loyalty to the employer.
These employees now viewed unions as a mechanism to promote job security and pro-
vide other material economic benefits.

By the onset of World War II, organized labor had reversed its membership decline
of the 1920s, rising to almost 9 million members in 1940. Yet the rivalry between the
CIO and the AFL was intense and sometimes violent as AFL and CIO organizers clashed
over the right to represent mass production industry employees. James Hoffa, a former
president of the International Brotherhood of Teamsters (then an AFL union), recalled
violent organizing drives in 1941 between CIO affiliated unions and his union: Through
it all the members wore two pins, putting on a Teamsters button when we were around
and switching to a CIO button when those guys showed up. They were waiting to see
which union was going to win the battle. You couldn t really blame them. They were
scared out of their britches because they didn t want to get caught in the bloody
middle. 120 The AFL and CIO rivalry existed in almost every industry and extended to
the local level, where it was common for an employer to have both AFL and CIO unions
representing the same employees. Even employers with the best intentions had difficulty
in building an effective labor management relationship in such an environment.

World War II to the Present

The AFL at first did not want the United States to become involved in World War II;
however, this attitude changed after the bombing of Pearl Harbor. Concern over provid-
ing for the nation s defense prompted increased union management cooperation. For
example, both union and management officials participated on War Production Board
subcommittees. Such panels weighed employee suggestions, which saved 31 million
work hours and $44 million during World War II.121

The cooperative spirit was not total, particularly when one considers the number of
strikes that occurred during wartime. In February 1943, organized labor complained to
President Roosevelt that the cost of living during wartime had increased far beyond wage
increases permitted by the government under the 1942 government imposed wage con-
trols known as the Little Steel Formula.122 In 1943 the United Mine Workers conducted
a series of strikes to obtain wage increases of $2 a day. These actions resulted in Presi-
dent Roosevelt seizing the mines to ensure continued production, but eventually a com-
promise wage settlement was obtained.

The public viewed these and other strikes with anger and alarm, considering them
violations of the no-strike pledge announced by organized labor in 1941. Negative public
sentiment increased when some unions continued to call strikes. After 1942, the number
of strikes increased every year of the war. In perspective, however, the number of
employee days lost to strikes was estimated to be the equivalent of no more than one
day per year per worker for the four war years.123 Yet, the mere act of participating in
a strike was viewed by some as unpatriotic because it interfered with production of mate-
rials needed for the war effort.

74 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Labor s collective bargaining concerns shifted at the end of the war to the issues of
full employment and further wage increases in order to sustain national purchasing
power and thereby create an expanding market for industrial goods. Labor, remembering
the reconversion period following World War I, was concerned about employer policies
aimed at restricting union growth and wage gains.

Unions backed their postwar concerns with strikes. During no period in the his-
tory of the United States did the scope and intensity of labor management conflicts
match those recorded in the year following VJ Day, August 14, 1945. 124 In this one-
year period, more than 4,600 strikes, involving 5 million employees resulted in almost
120 million workdays of idleness that affected almost every major industry. These
strikes were basically nonviolent, representing economic tests of strength and endur-
ance. Employers recognized that the many returning soldiers would greatly expand
the available supply of labor, thus creating little reason to pay more to obtain the
labor needed to continue operations. Generally, both labor and management prefer to
be free to resolve their differences through the collective bargaining process without
the type of government interference and wage restrictions that were present during
the war years.

However, the strikes did raise questions about the abuse of power by labor unions.
The National Labor Relations Act (Wagner Act) of 1935 only listed unfair employer
practices; it did not address the issue of similar actions by unions. In response, Congress
passed the Labor Management Relations Act (Taft Hartley Act) in 1947. This law iden-
tified unfair union practices and prohibited certain types of job actions. The law is dis-
cussed in detail in Chapter 3.

One provision of the Taft Hartley Act merits mention in this chapter on labor his-
tory: Union leaders were required to sign affidavits declaring that they were not commu-
nists. This requirement led the CIO leadership to disaffiliate some member unions whose
leaders refused sign such affidavits. In the atmosphere of the Cold War between the
United States and the communist Soviet Union, the CIO had little difficulty creating
rival unions and persuading members to switch their allegiance to the new unions. Con-
cerns about communist and organized crime infiltration of organized labor throughout
the 1950s also led to the passage of the Labor Management Reporting and Disclosure
Act (Landrum Griffin Act) of 1959. This law, which regulates union operations and
finances, is discussed in Chapter 3.125

Developments in Organized Labor since World War II
Four major developments have occurred in organized labor since World War II: (1)
increased concern over new collective bargaining issues; (2) organizing drives aimed at
white-collar, service-, and public-sector employees; (3) the merger of the AFL and CIO
in 1955; and (4) the formation of the Change to Win labor federation in 2005.

New Collective Bargaining Issues
The return to peacetime after World War II and, particularly, the Korean War saw
increased efforts to extend the provisions of the labor agreement to include all aspects
of the collective bargaining relationship. In the late 1950s and early 1960s, the relative
scarcity of jobs coincided with the need for price stability to ease the deficit in interna-
tional payments. Unions directed their collective bargaining efforts toward (1) guarantee-
ing members job security in the face of possible technological advances, (2) securing new
types of benefits, and (3) securing wages that provided adequate compensation in fluctu-
ating economic cycles. Organized labor s response toward technological change

CHAPTER 2 The History of Labor Management Relations 75

(discussed in more detail in Chapter 8) brought notable results during this period,
including the Automation Fund Agreement between Armour and Company and the
Packinghouse Workers and Meat Cutters unions (1959), the Mechanization and
Modernization Agreement in the Pacific Coast longshore industry (1960), and the
Long-Range Sharing Plan negotiated between Kaiser Steel and the United Steelworkers
(1962).

Efforts to expand employer-provided employee benefits represented a second new
bargaining area. Before World War II, labor cost was overwhelmingly comprised of
straight-time hourly pay for time actually worked. Subsequent bargaining efforts by
labor unions (and personnel policies of nonunion firms) have resulted in a substantial
increase in the proportion of labor costs comprised of employee benefits (pensions, den-
tal care, insurance plans, etc.), which are currently almost 41 percent of payroll costs for
unionized employers and 29 percent for nonunionized employers.126 Wage and benefit
issues will be discussed further in Chapter 7.

Responding to fluctuations in the economic cycle constituted a third area for bar-
gaining. The trend toward multi-year labor agreements after World War II put pressure
on union leaders to safeguard wage increases against the possibility of increases in the
inflation rate because rising inflation erodes the purchasing power of earned wages. In
1948, General Motors and the United Auto Workers negotiated a long-term agreement
with a cost-of-living adjustment (COLA) provision that adjusted wages for inflationary
changes during the life of the contract. This contract provision spread to other labor
management negotiations. In 1952, almost 3 million employees (approximately 20 per-
cent of the employees covered by labor agreements) had cost-of-living provisions in
their contracts.127 By contrast, when inflation is low, unions are less likely to have
COLAs in their contracts.

Deflation, where wages and prices fall, is less common than inflation in the modern
American economy (although deflation did occur during the recent Great Recession).
Even in the absence of deflation downward pressure on union wages occurs. Since the
mid-1970s, increased global competition from foreign companies and low-wage non-
union organizations in the United States have produced periods of concession bargain-
ing in some industries (e.g., auto, airline, steel, rubber), in which management seeks to
obtain more flexible work-rule modifications or other labor cost reductions (wage rates,
pension, or health care benefits). Work rule modifications include scheduling changes,
fewer rest breaks, and combining job classifications to give management more flexibility
in employee work assignments. Some employers (e.g., United Airlines, Delphi Automo-
tive) have declared bankruptcy and sought to use the bankruptcy process as a means to
pressure unions representing the firm s employees to agree to significant concessions as a
part of management s reorganization plan, resulting in a lower, more competitive labor
cost operating structure. Wage concessions represent the most significant organized
labor development since World War II. Audrey Freedman of the Conference Board
notes that, wages, even under union bargaining pressures, are responsive to economic
conditions at the industry and firm level and even the product level . 128 Examples of
wage flexibility include:

Two-tiered wage plans, where employees hired after a negotiated labor agreement
takes effect receive a lower hourly pay rate (and/or benefits) than their counterparts
for performing similar work.
Lump-sum bonuses usually associated with a firm s economic performance for a
given time period. This wage payment does not necessarily occur in every year of a
contract s term and does not alter the employee s hourly wage rate, thus avoiding

76 PART 1 Recognizing Rights and Responsibilities of Unions and Management

any increase in employee benefit costs which use an employee s wage rate to calcu-
late the size or amount of the benefit earned (e.g., holiday or vacation pay).

Thus, unions have sought to provide adequate income levels for their member in the
face of two different types of economic conditions: inflation, which erodes purchasing
power if wages do not increase correspondingly, and downward wage pressures (primar-
ily brought about by globalization and nonunion competition) where labor and other
costs must decrease for a unionized firm to remain competitive.

Increased Organization of Women, Minorities, Younger Age
Employees, and Professionals in the Public-Sector
and Private-Sector Service Industries
A second major development in organized labor since World War II involves the orga-
nization of different types of employees, more specifically, public-sector (government)
employees (discussed in Chapter 13) and private-sector service and professional
employees (discussed in Chapter 5). The growing number of women, minorities, and
younger age workers (18 30 years) has received increased attention from union
organizers as key components of recent and future union membership gains.

Merger of the AFL and CIO
Perhaps the most dramatic postwar development in organized labor was the merger of
the AFL and CIO in 1955. The presence of three influences during the 1950s resulted
in the eventual merger of the rival organizations.129 First was the change in the presi-
dents of the AFL and CIO. Phillip Murray of the steelworkers union became president
of the CIO in 1940 when John L. Lewis resigned, and Murray continued the verbal feud
against the AFL and its president, William Green. In November 1952 both Green and
Murray died. Walter Reuther from the autoworkers union was elected to head the CIO,
and George Meany from the plumbers union was elected president of the AFL. Although
neither new leader had any particular fondness for the other, unlike Green and Murray,
the new leaders had not previously gone on the record as being opposed to each other.
Therefore, a merger could occur without either leader losing face.

Another influence contributing to the AFL-CIO merger was the recognition of the
ineffectiveness of union raiding. The two labor organizations investigated employee
representation elections in which the AFL tried to organize employees affiliated with
CIO unions, and vice versa. During a two-year period (1951 1952), 1,245 such elections
involved some 366,740 employees, with only 62,000 employees changing union affilia-
tion. This figure overestimates the number affected because it does not consider the off-
setting nature of elections. An AFL union could organize a CIO represented factory of
1,000 employees only to have a CIO union organize an AFL factory of 1,000
employees the net change being zero. In fact, the extensive raiding during 1951 and
1952 resulted in a net gain for the AFL of only 8,000 members, or only 2 percent of
the total number of employees involved in the elections.130 Both the AFL and CIO finally
realized that organized labor would benefit if the energies devoted to raiding each other
were spent on organizing unrepresented employees. Accordingly, many of the AFL and
CIO unions signed a no-raiding agreement in 1954. Instead of concentrating on differ-
ences emphasized in raiding activities, the two major federations could now look at sim-
ilar goals that might be more easily attained by a merger.

CHAPTER 2 The History of Labor Management Relations 77

One similar goal was the desire of both organizations to reward their political
friends and punish political enemies.131 In many instances, the independent organiza-
tions failed to achieve this goal. For example, the AFL and CIO were unable to defeat the
re-election of Senator Taft (one of the authors of the Taft Hartley Act, who was per-
ceived as being anti-labor) and failed to elect Adlai Stevenson (supporter of organized
labor) over Dwight D. Eisenhower for U.S. president. Both organizations believed that a
merger might increase their effectiveness in the political arena.

The AFL-CIO merger on December 12, 1955, involved 15.55 million members, mak-
ing the new organization the largest trade union federation in the world. George Meany
became the president of the merged organization due to the longer history of the AFL as
an established organization. Walter Reuther, the former president of the CIO, became
the vice president of the merged AFL-CIO. George Meany believed the merger would
lead to more employees becoming unionized and to a greater political influence for
labor within the American two-party system.132

The merger resulted in the continued reduction of union raiding. It also reduced the
influence of union locals within the national unions because they could no longer threaten
to affiliate with the rival national organization.133 However, as discussed in the next sec-
tion, the AFL-CIO merger has not resulted in a tremendous increase in union membership
or political influence. It did reduce the former divisiveness within organized labor, but it
cannot be concluded that the merger was a significant impetus for growth and change.

Formation of the Change to Win Federation
Reminiscent of the split among AFL unions that led to the formation of the CIO in the late
1930s, several national unions affiliated with the AFL-CIO voluntarily chose to leave in
order to form a new federation of national unions called the Change to Win federation
(discussed further in Chapter 4). After failing to achieve reforms within the AFL-CIO
intended to focus more resources on organizing new union members, seven national
unions representing approximately 6.4 million members, many of whom work in service-
related industries, formed their own independent federation to foster more emphasis on
organizing new union members.134 The Change to Win federation, although less formally
structured than the AFL-CIO, still shares many of the same basic principles and
philosophies as unions affiliated with the AFL-CIO. Member unions of the Change to Win
federation are encouraged to devote 50 percent of their annual operating budget toward
union-organizing activities compared to a goal of 30 percent for AFL-CIO affiliated unions.
The Change to Win federation also plans to spend less time and money working through
the established political parties (principally the Democratic Party) and instead focus more
resources on grassroots direct political action by the member unions themselves.

Since its formation in 2005, the Change to Win labor federation has not been able to
substantially alter the existing trend toward declining union membership as a percentage
of the total U.S. labor force. It could be argued that without the new focus and energy
devoted to union organizing since 2005, the decline would likely have been more severe.

There has been some movement in recent years to reunite the labor movement, and
indeed some original Change to Win union affiliates (e.g., UNITE-HERE, Laborers
International) have rejoined the AFL-CIO.135 Several key Change to Win labor federa-
tion leaders have recently retired (e.g., Andrew Stern, former president of the Service
Employees International Union). Currently, the Change to Win organization is led by
James P. Hoffa of the International Brotherhood of Teamsters. In addition to the Team-
sters, other affiliated unions include the Service Employees International Union, the
United Food and Commercial Workers, and United Farm Workers of America; together
they represent 5.5 million members.136

78 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Aspects of Organized Labor Unchanged since World War II
Organized labor as it existed at the end of World War II compared with its present state
appears to have more similarities than differences:137

Exclusive union representation, in which one union is selected by a majority of the
employees to represent their employment interests.
Collective bargaining agreements that embody a sharp distinction between the
negotiation and contract administration phases of the labor relations process. Once
the contract is negotiated, the no-strike, no-lockout, and grievance procedure clauses
ensure that the parties will use an arbitrator instead of job action (e.g., strikes or
boycotts) to resolve disputes that may arise over the interpretation or application of
the labor agreement.
Government policies that favor a basically hands-off or nonintervention role in the
conduct of labor relations based on the principle that the parties involved, not gov-
ernment, should decide bargaining outcomes for themselves.

Additional major labor relations similarities from World War II to the present are
organized labor s continued effort to advance workers interests through the political
process; difficulty in achieving consensus on key issues among unions and union mem-
bers; and continued emphasis on economic gains and increased job security-related bar-
gaining goals. Each of these topics will be briefly discussed.

Unions and Politics
Samuel Gompers s political dictum of reward your friends and punish your enemies still
conveys the political philosophy of organized labor today. Politicians or political parties
that support the issues and outcomes favored by unions will be rewarded with support,
while those who oppose union preferences will be denied such support. Historically the
Democratic Party and its candidates have been more supportive of labor s agenda and
have thus garnered the majority of union support.

Difficulty in Achieving Consensus among Unions
and among Members
Whether the subject is politics or bargaining issues, there has always been a diversity of
opinions and responses within the U.S. labor movement. While many unions share some
basic organizational and philosophical similarities, each union has its own unique history
and membership characteristics that help to shape the organization s response to specific
issues. Understandably, complete agreement among the diverse national unions within
the AFL-CIO or Change to Win labor federations and among all members within a par-
ticular national or local union is rare. This problem occurs in any large organization,
particularly one that grants a large amount of autonomy to its members. A labor federa-
tion is always subject to national unions withdrawing from it if they become dissatisfied.
The federation also realizes that many national unions are strong enough to get along
quite well without its support. For example, the expulsion of the Teamsters in the
1950s (for alleged mafia infiltration) and the disaffiliation of the United Auto Workers
(UAW) from the federation in 1968 (over national policy and federation governance dis-
agreements) did not hinder these organizations ability to increase their membership,
grow in influence, and engage in collective bargaining. (Both the Teamsters and the
UAW subsequently re-affiliated with the AFL-CIO, with the Teamsters voluntarily with-
drawing in 2005 to participate in the Change to Win federation.)138

CHAPTER 2 The History of Labor Management Relations 79

Lack of consensus is also found at the local union level, especially when younger
employees become members. Most labor unions have a long tradition of struggle and
sacrifice; their leaders have risked physical hardships merely to gain employer recogni-
tion of their union. However, many of the younger members have little appreciation for
labor history and are more likely to be asking local leaders, What have you done for me
lately?

Pursuit of Short-Range Economic and Job Security Goals Instead
of Long-Range Reform
The KOL and IWW likely taught organized labor a permanent lesson that goals should
relate to members needs instead of being abstract attempts to change the existing socie-
tal system. The period since World War II has witnessed tremendous economic growth
and technological change; therefore, union leaders believe these issues deserve more
attention than other societal concerns. Even when unions make bargaining concessions
due to recessionary economic conditions, the concessions are viewed as short-term and
economically related lower wages in exchange for enhanced job security, for example.

Summary
To understand contemporary labor relations or make
reasonably accurate predictions about the future, one
must be aware of the changing nature of labor
management relationships and the various labor orga-
nizations, conditions, and events which have shaped
those relationships. Current labor organizations are
the product of the experiences of their historical coun-
terparts. An assessment of any labor organization s
effectiveness can be made by evaluating a union s struc-
tural and financial stability; its ability to work within
the established political and economic system; the pres-
ence of supportive or disruptive features in the social
environment, such as the public image portrayed by the
mass media or the presence or lack of supportive labor
legislation; and the ability of union leaders to identify
and satisfy members goals and interests.

Organized labor did not exert much influence in
the United States prior to 1869, although employees
became increasingly concerned with working and mar-
ket conditions associated with technological and prod-
uct changes. The active years of organized labor can be
grouped into three time periods: 1869 to World War I,
World War I to World War II, and World War II to
the present. Three major labor organizations developed
in the period from 1869 to World War I: the KOL, the
AFL under Gompers, and the IWW. These organiza-
tions had different goals, strategies, organizational
characteristics, which in part furnished reasons for
the demise of the KOL and IWW. Events such as the

Haymarket Riot, the Homestead Incident, and the Pull-
man Strike hurt organized labor, although AFL Presi-
dent Gompers managed to derive some benefit from
each of these events.

The period immediately following World War I
saw limited growth in union membership. Factors con-
tributing to this situation included several strategies
used by employers to counter union-organizing cam-
paigns. Internal differences occurred within the AFL s
national union members regarding the advantages of
organizing the heretofore unrepresented semiskilled
employees increasingly employed in the nation s mass
production industries. This disagreement led to the for-
mation of a rival labor federation, the CIO, whose
major objective was to organize industrial employees.
The CIO achieved substantial membership gains in the
late 1930s and 1940s, aided by the passage of key labor
legislation protecting the right of employees to join
unions and bargain collectively.

Three major developments have occurred in orga-
nized labor since World War II. Concern has increased
over new collective bargaining issues; organizing drives
have targeted areas of employment growth such as
public-sector employees, service and professional
employees, women, minorities, and younger age work-
ers; and the AFL and CIO labor federations merged and
a new labor federation (Change to Win) resulted from
differing views among national unions about the best
strategy for attracting and retaining union members. It

80 PART 1 Recognizing Rights and Responsibilities of Unions and Management

is still too early to tell what lasting impact the Change to
Win federation will have on union membership levels,
but labor has enjoyed a stronger voice in the political
process in recent years. More similarities than differ-
ences are apparent when comparing the state of orga-
nized labor at the end of World War II with its present

state. Despite representing a relatively small proportion
of the total labor force, organized labor remains an influ-
ential economic and social movement in U.S. society.
The emphasis on advancing employees short-term eco-
nomic and job security interests have remained the focus
of organized labor since World War II.

Key Terms
U.S. Constitution, p. 45
common law, p. 45
employment-at-will (EAW) doctrine,

p. 45
criminal conspiracy doctrine, p. 46
Commonwealth v. Hunt (1842), p. 46
civil conspiracy doctrine, p. 47
labor injunction, p. 47
yellow-dog contract, p. 47
Sherman Antitrust Act, p. 47
Loewe v. Lawlor, p. 48
Danbury Hatters, p. 48
Clayton Antitrust Act, p. 48
Knights of Labor (KOL), p. 52
Terence Powderly, p. 52
One Big Union, p. 53
Haymarket Riot, p. 56
American Federation of Labor (AFL),

p. 56

Samuel Gompers, p. 56
Pure and simple unionism, p. 57
exclusive union jurisdiction, p. 58
decentralized authority, p. 59
Homestead Incident, p. 59
Pullman Strike, p. 60
socialism, p. 63
Industrial Workers of the World

(IWW), p. 63
William Big Bill Haywood, p. 63
communist society, p. 63
Red Scare, p. 65
criminal syndicalism laws, p. 65
sedition laws, p. 65
recognition strikes, p. 68
open-shop movement, p. 68
American Plan, p. 68
industrial spies, p. 68
blacklisted, p. 68

Mohawk Valley Formula, p. 69
paternalism, p. 69
employee representation plan, p. 69
company union, p. 69
scrip, p. 69
sweetheart contract, p. 70
V technique, p. 70
Congress of Industrial Organizations

(CIO), p. 71
John L. Lewis, p. 72
sit-down strike, p. 73
National Labor Relations Act (NLRA)

of 1935, p. 73
Byrnes Act of 1936, p. 73
concession bargaining, p. 76
AFL-CIO, p. 77
Change to Win federation, p. 78

Discussion Questions

1. Discuss the similarities and differences between
the Knights of Labor (KOL) and the Industrial
Workers of the World (IWW).

2. Select an existing national union and use the four
criteria mentioned in the introduction of this
chapter for evaluating the strengths of that labor
organization. Using the same criteria, discuss why
the AFL survived and the IWW faded into
obscurity.

3. Explain how the Haymarket Riot, Homestead
Strike, and Pullman Strike helped as well as hurt
the AFL.

4. Discuss some employer tactics used to prevent or
minimize union membership growth prior to the
passage of the National Labor Relations (Wagner)

Act in 1935. Which, if any, of these tactics would
be lawful today? What anti-union tactics are used
today?

5. Discuss some key similarities and differences
between the AFL and the CIO.

6. In your opinion, does having two different exist-
ing labor federations (AFL-CIO and Change to
Win) strengthen or weaken the ability of orga-
nized labor to represent the interests of employees
today? Support your position.

7. Some experts predict that in the future there are
likely to be fewer but larger labor organizations.
Discuss some advantages and disadvantages of the
so-called One Big Union approach to representing
employees interests.

CHAPTER 2 The History of Labor Management Relations 81

Exploring the Web

History of the Labor Movement

1. Who am I? Using Google or some other search engine,
select three of the names in the following list and find
out what role each person played in the history of
American labor management relations: Mary Harris
Mother Jones, Sidney Hillman, George Meany,

Frances Perkins, Terence V. Powderly, Pearl Bergoff,
Rose Schneiderman, Walter Reuther, Andrew Stern,
Liz Shuler, William Tony Boyle, Esther Eggertson
Peterson, Luisa Moreno, Cesar Chavez, Adolph Stras-
ser, Leonora O Reilly, Harry Bridges, Richard L.
Trumpka, William H. Sylvis, and Anna Burger.

2. IWW. Visit the official Web site of the Industrial
Workers of the World to learn more about this
labor organization and its activities today at http://
www.iww.org/.

3. The Pinkertons. Using search engines, explore the
role that the Pinkerton Detective Agency played in
labor history, including the Molly Maguires, the
Homestead strike, the Great Hocking Valley Coal
Strike, and the death of IWW leader Frank Little.

4. Pullman Strike. For a brief account of the Pullman
Strike involving the American Railway Union
(ARU), view the Ohio State University eHistory
site at http://ehistory.osu.edu/exhibitions/1912/con-
tent/pullman. For a somewhat different viewpoint
on the strike, consult the Stan Iverson Memorial
library at http://recollectionbooks.com/siml/library/
PullmanStrike.htm. Why was Eugene Debs ARU
successful in reversing wage cuts with the Great
Northern Railroad in April, 1894, and unsuccessful
in reversing wage cuts with Pullman just a few
weeks later?

5. Haymarket Riot. The Chicago Historical Society
offers the Haymarket Digital Collection, composed
of photographs and narrative related to the Hay-
market Riot that occurred in Chicago on May 4,
1886. Enter the Dramas of Haymarket at http://
www.chicagohs.org/dramas/ and read about the
sequence of events that ignited the Haymarket

bomb. Who were August Vincent Spies and Albert
Parsons, and what part did they play in the events
leading up to the riot?

References
1. Robert Ozanne, Trends in American Labor His-

tory, Labor History (Fall 1980), p. 521. See also
Barry Goldberg, A New Look at Labor History,
Social Policy, 12, Winter 1982, pp. 54 63; Robert
H. Zieger, Industrial Relations and Labor His-
tory in the Eighties, Industrial Relations, 22,
Winter 1983, pp. 58 70.

2. Henry Pelling, American Labor (Chicago: Uni-
versity of Chicago Press, 1960), pp. 12 13.

3. Edward B. Mittelman, Trade Unionism 1833
1839, in History of Labor in the United States,
John R. Commons et al., eds. (1918; reprinted.
New York: Augustus M. Kelly, Publishers, 1966),
vol. 1, p. 430.

4. John R. Commons, and Eugene A. Gilmore, A
Documentary History of American Industrial
Society (Cleveland, OH: A. H. Clark, 1910), p. 68;
Brian Greenberg, Class Conflict and the Demise
of the Artisan Order: The Cordwainers 1805
Strike and 1806 Conspiracy Trial, Pennsylvania
Legacies 14(1), 2014, pp. 6 11.

5. Quoted by John Fanning in The Balance of
Labor Management Economic Power under Taft-
Hartley, Proceedings of the 40th Annual Meeting
of the Industrial Relations Research Association,
ed. Barbara D. Dennis (Madison, WI: IRRA,
1988), p. 70.

6. Commonwealth v. Hunt, 45 Mass. 111 (1842).
7. E. E. Herman and G. S. Skinner, Labor Law (New

York: Random House, 1972), p. 21.
8. Vegelahn v. Guntner, 44 N.E. 1077(1896). Also

see Herbert L. Sherman, Jr., and William
P. Murphy, Unionization and Collective
Bargaining, 3rd ed. (Washington, D.C.: Bureau
of National Affairs Inc., 1975), p. 3.

9. John R. Commons, History of Labour in the
United States, vol. 2 (New York: The Macmillan
Company, 1946), p. 504. See also Sherry v.
Perkins, 147 Mass. 212 (1888).

10. Hitchman Coal & Coke Company v. Mitchell, 245
U.S. 229 (1917); Robert E. Weir, Workers in
America: A Historical Encyclopedia, Revised

82 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Edition, Vol. 2 (Santa Barbara, CA: ABC-CLIO,
2013), pp. 872 873.

11. Sherman Antitrust Act, 26 Stat. 209 (1890).
12. Loewe v. Lawlor, 208 U.S. 274 (1908).
13. Clayton Anti trust Act, 38 Stat. 731 (1914).
14. Duplex Printing Press Co. v. Deering, 254 U.S. 443

(1921).
15. Truax v. Corrigan, 257 U.S. 312 (1921).
16. William C. Birdsall, The Problems of Structure

in the Knights of Labor, Industrial and Labor
Relations Review, 6, July 1953, p. 546.

17. For a discussion of how the expansion of the
markets affected unionization among the shoe-
makers, see John R. Commons, Labor and
Administration (New York: Macmillan, 1913),
pp. 210 264.

18. T. V. Powderly, Thirty Years of Labor: 1859 1889
(Columbus, OH: Excelsior Publishing House,
1889), p. 21.

19. Ibid., pp. 58 59.
20. Ibid., p. 163.
21. Philip Taft, Organized Labor in American History

(New York: Harper and Row, 1964), p. 90.
22. Gerald N. Grob, Workers and Utopia (Evanston,

IL: Northwestern University Press, 1961), p. 35.
Powderly was most concerned about the evils of
drinking; for example, he spent almost 50 pages
of his autobiography, Thirty Years of Labor, dis-
cussing this issue.

23. Birdsall, The Problems of Structure, p. 533.
24. Terence V. Powderly, Thirty Years of Labor, 1859

to 1889 (Philadelphia: Terence Powderly, 1890),
pp. 128 130; Rebecca M. McLennan, The Crisis of
Imprisonment (New York: Cambridge University
Press, 2008), pp. 150 161.

25. Joseph G. Rayback, A History of American Labor
(New York: Macmillan, 1968), p. 174; Also see
Melton Alonza McLaurin, The Knights of Labor in
the South (Westport, CT: Greenwood Press,
1978), p. 39; John Curl, For All the People:
Uncovering the Hidden History of Cooperation,
Cooperative Movements, and Communalism in
America, Second Edition (Oakland, CA: PM Press,
2012), pp. 86 110.

26. Joseph R. Buchanan, The Story of a Labor Agita-
tor (1903; reprinted. Westport, CT: Greenwood
Press, 1970), pp. 318 323.

27. For details of these procedures, see Taft, Orga-
nized Labor, p. 91.

28. Powderly, Thirty Years of Labor, pp. 151 157.

29. It should be noted that local assemblies were
somewhat responsible for this situation as they
contributed only $600 to the General Assembly s
strike funds in 1885 1886 (McLaurin, The
Knights of Labor, p. 54). For more details of KOL
strike activities, see Norman J. Ware, The Labor
Movement in the United States, 1860 1895 (1929;
reprinted. Gloucester, MA: Peter Smith, 1959),
pp. 117 154. It should be further noted that the
Knights made more effective use of boycotts than
any previous union. However, as was true with
strikes, the boycotts were instigated by the local
assemblies and forced on the Knights national
leaders (Grob, Workers and Utopia, p. 61).

30. Donald L. Kemmerer and Edward D. Wicker-
sham, Reasons for the Growth of the Knights of
Labor in 1885 1886, Industrial and Labor Rela-
tions Review, 3, January 1950, pp. 213 220.

31. Foster Rhea Dulles, Labor in America: A History, 3rd
ed. (New York: Thomas Y. Crowell, 1966), p. 127.

32. Powderly, Thirty Years of Labor, p. 514. It should
also be noted that Powderly believed Gompers
misled employees by advocating the eight-hour
workday without telling them that their wages
would be proportionately reduced. Most workers
thought they would receive ten hours payment
for eight hours of work.

33. A Hellish Deed! Chicago Tribune, May 5, 1886,
p. 1.

34. For additional details of the rigged nature of the
trial, see Samuel Yellen, American Labor Struggles
(1936; reprinted. New York: Arno Press, 1969),
pp. 60 65 or Philip Dray, There Is Power in a
Union: The Epic Story of Labor in America (New
York: Anchor Books, 2011).

35. A Hellish Deed! Chicago Tribune, May 5, 1886,
p. 1.

36. Their Records, Chicago Tribune, May 5, 1886,
p. 1. See also Paul Avrich, The Haymarket Trag-
edy (Princeton, NJ: Princeton University Press,
1984).

37. Sidney Lens, The Labor Wars: From the Molly
Maguires to the Sitdowns (Garden City, NY:
Doubleday, 1973), p. 67.

38. The origination of the AFL was changed between
1881 and 1889 to include activities under the
Federation of Organized Trade and Labor Unions.
At least one historian has claimed that the revised
date is regrettable because the organization (Fed-
eration of Organized Trades and Labor Unions)

CHAPTER 2 The History of Labor Management Relations 83

had little similarity to the AFL in terms of effective
organization and broad-based support (Ware, The
Labor Movement, p. 251). See also Glen A. Gilde-
meister, The Founding of the American Federa-
tion of Labor, Labor History, 22, Spring 1981;
Harold C. Livesay, Samuel Gompers and Organized
Labor in America (Boston: Little, Brown and
Company, 1978), pp. 75 86.

39. Samuel Gompers, Seventy Years of Life and Labor
(New York: E. P. Dutton, 1925), p. 266.

40. Ware, The Labor Movement, pp. 70 71.
41. Norman J. Ware, Labor in Modern Industrial

Society (1935; reprinted. New York: Russell and
Russell, 1968), p. 262.

42. Dulles, Labor in America, p. 155.
43. Gompers, Seventy Years of Life and Labor, p. 245.
44. Samuel Gompers, Labor and the Employer (1920;

reprinted. New York: Arno Press, 1971), pp. 33 34.
45. Stuart Bruce Kaufman, Samuel Gompers and the

Origins of the American Federation of Labor:
1848 1896 (Westport, CT: Greenwood Press,
1973), p. 173. For details of this relationship, see
Gompers, Seventy Years of Life and Labor,
pp. 381 427.

46. Louis Reed, The Labor Philosophy of Samuel
Gompers (1930; reprinted. Port Washington,
D.C., NY: Kennikat Press, 1966), p. 20. See also
an editorial by Gompers in the American Fed-
erationist, June 1924, p. 481; Sarah Lyon Watts,
Order Against Chaos: Business Culture and Labor
Ideology in America 1880 1915 (New York:
Greenwood Press, 1991), pp. 9 10; William E.
Forbath, Law and the Shaping of the American
Labor Movement (Cambridge, MA: Harvard
University Press, 1991).

47. Gompers, Seventy Years of Life and Labor,
pp. 286 287, 381 427.

48. Alice Kessler-Harris, Trade Unions Mirror
Society in Conflict between Collectivism and
Individualism, Monthly Labor Review, 110,
August 1987, p. 33.

49. Gompers, Labor and the Employer, p. 202.
50. Marc Karson, American Labor Unions and Politics:

1900 1918 (Carbondale, IL: Southern Illinois Uni-
versity Press, 1968), p. 29; Julia Green, Strike at the
Ballot Box: The American Federation of Labor s
Entrance into Election Politics, 1906 1909, Labor
History, 32, Spring 1991, pp. 165 192.

51. Reed, The Labor Philosophy of Samuel Gompers,
pp. 106 110.

52. Milton Derber, The American Idea of Industrial
Democracy: 1865 1965 (Urbana, IL: University of
Illinois Press, 1970), p. 117; also see Christopher J.
Cyphers, The National Civic Federation and the
Making of a New Liberalism, 1900 1915 (West-
port, CT: Praeger, 2002); William M. Boal, The
Effect of Unionism on Accidents in U.S. Coal
Mining, 1897 1929, Industrial Relations, 48(1),
2009, pp. 97 120.

53. Gompers, Seventy Years of Life and Labor, p. 342.
For additional details regarding early AFL orga-
nizing, see Philip Taft, The AF of L in the Time of
Gompers (1957; reprinted. New York: Octagon
Books, 1970), pp. 95 122.

54. Dulles, Labor in America, pp. 163 164.
55. Andrew Carnegie, An Employer s View of the

Labor Question, in Labor: Its Rights and Wrongs
(1886; reprinted. Westport, CT: Hyperion Press,
1975), pp. 91 95. For a recent collection and
analysis of material pertaining to the situation, see
David P. Demarest Jr., ed., The River Ran Red
(Pittsburgh: University of Pittsburgh Press, 1992).

56. Yellen, American Labor Struggles, p. 81.
57. For details of the wage package, see ibid., pp. 77 80.

See also E. W. Bemis, The Homestead Strike,
Journal of Political Economy, 2, 1894, pp. 369 396;
Linda Schneider, The Citizen Striker: Workers
Ideology in the Homestead Strike of 1892, Labor
History, 23, Winter 1982, pp. 47 66. For some
additional insights into Frick s background, see
Carol Aymowitz, Frick s Homey Mansion, Wall
Street Journal, September 24, 1990, p. A-12.

58. Surrounded by Pickets, New York Times, July 4,
1892, p. 1.

59. Mob Law at Homestead, New York Times, July
7, 1892, p. 1.

60. Leader O Donnell Is Glad, New York Times,
July 12, 1892, p. 2; and Bayonet Rule in Force,
New York Times, July 13, 1892, p. 1.

61. Lens, The Labor Wars, p. 77.
62. A Talk with Gompers, New York Times, July 7,

1892, p. 2; Provoked by Carnegie, New York
Times, July 7, 1892, pp. 2, 5.

63. Taft, The AF of L in the Time of Gompers, p. 136.
64. Arbitrate the Homestead Strike, Chicago Tri-

bune, July 8, 1892, p. 4. See also The Origin of
the Trouble, New York Times, July 8, 1892, p. 2.

65. Yellen, American Labor Struggles, p. 3.
66. Lens, The Labor Wars, p. 81; Richard Schneirov,

George M. Pullman and the Sleeping Car Business,

84 PART 1 Recognizing Rights and Responsibilities of Unions and Management

2007 at http://dig.lib.niu.edu/gildedage/pullman/
events1.html. Liston E. Leyendecker, Palace Car
Prince: A Biography of George Mortimer Pullman,
Niwot: University Press of Colorado, 1992; Larry
Tye, Rising From the Rails: Pullman Porters and
the Making of the Black Middle Class, New York:
Henry Holt, 2004, p. 3.

67. For additional details about the town, see Almont
Lindsay, The Pullman Strike (Chicago: University
of Chicago Press, 1967), pp. 38 60.

68. For more details regarding ARU s organization,
see Philip S. Foner, History of the Labor Move-
ment in the United States, vol. 2 (New York:
International Publishers, 1955), p. 256.

69. Lindsay, The Pullman Strike, p. 124; Nick Salva-
tore, Eugene Debs: Citizen and Socialist (Urbana,
IL: University of Illinois Press, 1982).

70. Ibid., p. 215.
71. Gompers, Seventy Years of Life and Labor, p. 403.
72. Proceedings of the First Convention of the Indus-

trial Workers of the World (New York: Labor
News Company, 1905), p. 1.

73. Ibid., p. 143.
74. Bill Haywood, Bill Haywood s Book: The Autobi-

ography of William D. Haywood (New York:
International Publishers, 1929), p. 73.

75. Melvyn Dubofsky, We Shall Be All: A History of
the Industrial Workers of the World (Chicago:
Quadrangle Books, 1969), p. 481.

76. Haywood, Bill Haywood s Book, p. 181.
77. For additional details pertaining to these differences,

see Dubofsky, We Shall Be All, pp. 105 119; Joseph
Robert Conlin, Bread and Roses Too (Westport, CT:
Greenwood Publishing, 1969), pp. 97 117; and
Lens, The Labor Wars, pp. 154 155.

78. David J. Saposs, Left-Wing Unionism (1926; rep-
rinted. New York: Russell and Russell, 1967),
p. 148.

79. Louis Adamic, Dynamite: The Story of Class Vio-
lence in America (1934; reprinted. Gloucester,
MA: Peter Smith, 1963), p. 174; Eileen DeVault,
Family wages: The roles of wives and mothers

in U.S. working-class survival strategies, 1880
1930, Labor History, 54(1), 2013, pp. 1 20.

80. Robert E. Ficken, The Wobbly Horrors, Pacific
Northwest Lumbermen, and the Industrial
Workers of the World, 1917 1918, Labor His-
tory, 24, Summer 1983, p. 329.

81. Conlin, Bread and Roses Too, pp. 97 117. See also
Fred Thompson, The IWW: Its First Fifty Years

(Chicago: Industrial Workers of the World, 1955),
pp. 80 87 or Eric Thomas Chester, The Wobblies
in Their Heyday: The Rise and Destruction of the
Industrial Workers of the World During the World
War I Era (Santa Barbara, CA: ABC-CLIO, 2014).

82. Adamic, Dynamite, pp. 163 164.
83. Conlin, Bread and Roses Too, p. 96.
84. Philip S. Foner, ed., Fellow Workers and Friends: I.

W. W. Free Speech Fights as Told by Participants
(Westport, CT: Greenwood Press, 1981), p. 15.

85. Foner, History of the Labor Movement, vol. 3,
p. 465.

86. Conlin, Bread and Roses Too, p. 68.
87. Robert C. Sims, Idaho s Criminal Syndicalism

Act: One State s Response to Radical Labor,
Labor History, 15(4), 1974, pp. 511 527; Melvin
Dubofsky, We Shall Be All: A History of the
Industrial Workers of the World (Urbana, IL:
University of Illinois Press), p. 228; Nick Shepley,
The Palmer Raids and the Red Scare, 1918 1920
(London: Andrews UK Limited, 2011); Kenneth
D. Ackerman, Young J. Edgar Hoover and the Red
Scare, 1919 1920 (Falls Church, VA: Viral His-
tory Press, 2011).

88. For additional details, see Frank L. Grubbs, Jr.,
The Struggle for Labor Loyalty: Gompers, the AFL,
and the Pacifists, 1917 1920 (Durham, NC: Duke
University Press, 1968); James O. Morris, Conflict
within the AFL: A Study of Craft versus Industrial
Unionism, 1901 1938 (1958; reprinted. Westport,
CT: Greenwood Press, 1974), pp. 9 10.

89. Taft, Organized Labor, pp. 355 358; Francis Fox
Piven and Richard A. Cloward, Poor People s
Movements (New York: Pantheon Books, 1977),
p. 104. For details of this strike, see Lens, The
Labor Wars, pp. 196 219.

90. Frank Stricker, Affluence for Whom? Another
Look at Prosperity and the Working Classes in the
1920s, Labor History, 24, Winter 1983, pp. 5 34.

91. Lens, The Labor Wars, pp. 222, 296, 312.
92. Derber, The American Idea, p. 246. For an appli-

cation of these reasons to a specific industrial
situation during this time period, see Stephen L.
Shapiro, The Growth of the Cotton Textile
Industry in South Carolina: 1919 1930 (Ph.D.,
diss., University of South Carolina, 1971),
pp. 168 171.

93. For additional details regarding the use of com-
pany spies, see Clinch Calkins, Spy Overhead: The
Story of Industrial Espionage (1937; reprinted.

CHAPTER 2 The History of Labor Management Relations 85

New York: Arno Press, 1971). Violence was lim-
ited neither to this time period nor to the
employer. One of the more publicized episodes of
employer violence was the Ludlow Massacre of
1914. The mining camps in Colorado were
involved in a strike for union recognition when,
on April 20, militiamen opened fire on a tent
colony, killing two strikers and one boy. They
then set fire to the tents, killing two women and
eleven children. For details of this event, see Leon
Stein, ed., Massacre at Ludlow: Four Reports (New
York: Arno Press, 1971). Perhaps one of the more
vivid examples of union violence occurred in
Herrin, Illinois (1922), where miners tortured and
killed at least 26 management officials and stri-
kebreakers. For details of this episode, see Saul
Alinsky, John L. Lewis: An Unauthorized Biogra-
phy (New York: Vintage Books, 1970), pp. 43 50.

94. Richard C. Wilcock, Industrial Management s
Policies toward Unionism, in Milton Derber and
Edwin Young, eds., Labor and the New Deal
(Madison: University of Wisconsin Press, 1957),
p. 293.

95. For a case study of paternalism, see Welfare
Work in Company Towns, Monthly Labor
Review, 25, August 1927, pp. 314 321. For a more
thorough discussion of employer counteractions
during this time period, see Larry J. Griffin,
Michael E. Wallace, and Beth A. Rubin, Capi-
talist Resistance to the Organization of Labor
before the New Deal: Why? How? Success?
American Sociological Review (April 1986),
pp. 147 167.

96. Derber, The American Idea, pp. 220 221; and
Morris, Conflict within the AFL, pp. 40 41. For
more details on ERPs, see Ware, Labor in Modern
Industrial Society, pp. 414 435. For a contempo-
rary assessment of the problems and prospects
facing the single-firm, independent union, see
Arthur B. Shostak, America s Forgotten Labor
Organization (Princeton: Industrial Relations
Section, Department of Economics, Princeton
University, 1962).

97. Loren Gatch, Local Money in the United States
During the Great Depression, Essays in Eco-
nomic & Business History, 26(1), 2008, pp. 47 61;
James P. Johnson, Drafting the NRA Code of
Fair Competition for the Bituminous Coal
Industry, Journal of American History, 53(3),
1966, pp. 521 541; Sean M. McGivern and Joseph

A. Schremmer The Fair Labor Standards Act: A
Tool for Those Who Represent Employees, Clai-
mants, and Plaintiffs, Journal of the Kansas
Association for Justice, Jan. 2014, pp. 18 21.

98. Dulles, Labor in America, p. 245; also see Mark
W. Robbins, Transitioning labor to the lean
years : the middle class and employer repression
of organized labor in post-World War I Chicago,
Labor History, 54(3), 2013, pp. 321 342.

99. This example was drawn from a more detailed
account of racketeering during this period found
in Sidney Lens, Left, Right, and Center: Conflicting
Forces in American Labor (Hinsdale, IL: Henry
Regnery, 1949), pp. 86 108; also see Jennifer Luff,
Commonsense Anticommunism: Labor and Civil
Liberties Between the World Wars (Chapel Hill,
NC: University of North Carolina Press, 2012).

100. David J. McDonald, Union Man (New York: E. P.
Dutton, 1969), p. 185. See also Max Gordan, The
Communists and the Drive to Organize Steel,
1936, Labor History, 23, Spring 1982, pp. 226 245.
For further historical insights into the relation-
ship between organized labor and communism,
see Harvey A. Levenstein, Communism,
Anticommunism and the CIO (Westport, CT:
Greenwood Press, 1981).

101. James O. Morris, The AFL in the 1920s: A
Strategy of Defense, Industrial and Labor Rela-
tions Review, 11, July 1958, pp. 572 590.

102. See, for example, William Green: Guardian of
the Middle Years, American Federationist, 88,
February 1981, pp. 24 25.

103. Bruce Minton and John Stuart, Men Who Lead
Labor (New York: Modern Age Books, 1937),
pp. 14 15.

104. Morris, Conflict within the AFL, p. 216.
105. For additional details pertaining to the back-

ground of this historic convention, see Herbert
Harris, Labor s Civil War (New York: Greenwood
Press, 1969).

106. Lens, The Labor Wars, p. 284.
107. Cecil Carnes, John L. Lewis: Leader of Labor (New

York: Robert Speller Publishing, 1936), p. 299.
108. David Dubinsky and A. H. Raskin, David

Dubinsky: A Life with Labor (New York: Simon
and Schuster, 1977), p. 226.

109. The seven unions were the United Mine Workers;
the Amalgamated Clothing Workers; the Inter-
national Ladies Garment Workers Union; United
Hatters; Cap and Millinery Workers; Oil Field,

86 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Gas Well and Refinery Workers; and the Inter-
national Union of Mine, Mill, and Smelter
Workers.

110. Benjamin Stolberg, The Story of the CIO (1938;
reprinted. New York: Arno Press, 1971), p. 28.

111. Milton Derber, Growth and Expansion, in
Derber and Young, Labor and the New Deal, p. 13
and Steve Rosswurm, ed., The CIO s Left-Led
Unions (New Brunswick, NJ: Rutgers University
Press, 1992).

112. See, for example, John Hutchinson, John L.
Lewis: To the Presidency of the UMWA, Labor
History, 19, Spring 1978, pp. 185 203; Steven
Fraser, Sidney Hillman and the Rise of American
Labor (New York: The Free Press, 1991).

113. James Arthur Wechsler, Labor Baron: A Portrait
of John L. Lewis (New York: William Morrow,
1944), p. 71; and Robert H. Zieger, Leadership
and Bureaucracy in the Late CIO, Labor History,
31(3), 1990, pp. 253 270.

114. Thomas Gobel, Becoming American: Ethnic
Workers and the Rise of the CIO, Labor History,
29, Spring 1988, p. 174.

115. S. J. Woolf, John L. Lewis and His Plan, in
Melvyn Dubofsky, ed., American Labor since the
New Deal (Chicago: Quadrangle Books, 1971),
pp. 110 111.

116. Lens, The Labor Wars, p. 295.
117. Sidney Fine, Sit-Down: The General Motors Strike

of 1936 1937 (Ann Arbor: The University of
Michigan Press, 1969), pp. 156 177. For another
perspective of the sit-down strike, see Daniel
Nelson, Origins of the Sit-Down Era: Worker
Militancy and Innovation in the Rubber Industry,
1934 1938, Labor History, 23, Winter 1982,
pp. 198 225.

118. National Labor Relations Board v. Fansteel Metal-
lurgical Corporation, 306 U.S. 240 (1939); for a legal
review, see Ahmed A. White, The Depression-Era
Sit-Down Strikes and the Limits of Liberal Labor
Law, Seaton Hall Law Review, 40, 2010, pp. 1 78;
Maliha Safri, The economics of occupation,
Economists Voice, 9(3), 2012, pp. 1 3.

119. Theodore J. St. Antoine, Charles B. Craver,
Marion G. Crain, Labor Relations Law: Cases
and Materials, 12th Edition (New York: Matthew
Bender/LexisNexis, 2011).

120. James R. Hoffa and Oscar Fraley, Hoffa: The Real
Story (New York: Stein and Day Publishers,
1975), p. 65. For a detailed account of the

AFL-CIO rivalries in several industries, see
Walter Galenson, The CIO Challenge to the AFL
(Cambridge, MA: Harvard University Press, 1960).

121. Richard B. Morris, ed., The U.S. Department of
Labor Bicentennial History of the American
Worker (Washington, D.C.: U.S. Government
Printing Office, 1976), p. 236.

122. For details of this formula and the extent that
cost-of-living estimates exceeded this formula, see
Taft, Organized Labor in American History,
pp. 549 553 and 557 559.

123. Dulles, Labor in America: A History, p. 334.
124. Arthur F. McClure, The Truman Administration

and the Problems of Postwar Labor, 1945 1948
(Cranburry, NJ: Associated University Press,
1969), p. 45.

125. Katherine G. Aiken, When I Realized how
Close Communism was to Kellogg, I was Willing
to Devote Day and Night : Anti-Communism,
Women, Community Values, and the Bunker Hill
Strike of 1960, Labor History, 36, 1995, pp. 165
186; Will Cooley, Communism, the Cold War,
and a Company Town: The Rise and Fall of UE
Local 709, Labor History, 55(1), 2014, pp. 67 96.

126. For historical information pertaining to compen-
sation in the World War II era, see: George H.
Hildebrand, American Unionism: An Historical
and Analytical Survey (Reading: Addison-Wesley,
1979), pp. 36 37; for current information on the
allocation of compensation among wages and
benefits, see: U.S. Department of Labor,
Employer Costs for Employee Compensation:

June, 2014, News Release, Sept. 10, 2014, Table 5
at http://www.bls.gov/news.release/ecec.t05.htm.

127. Robert M. MacDonald, Collective Bargaining in
the Postwar Period, Industrial and Labor Rela-
tions Review, 20, July 1967, p. 568.

128. Audrey Freedman, How the 1980s Have Chan-
ged Industrial Relations, Monthly Labor Review,
May 1988, p. 37.

129. For a more detailed discussion of historical
attempts at the merger of the AFL and CIO, see
Joel Seidman, Efforts toward Merger 1935
1955, Industrial and Labor Relations Review, 9,
April 1956, pp. 353 370.

130. Document: AFL-CIO No-Raiding Agreement,
Industrial and Labor Relations Review, 8, October
1954, p. 103.

131. A Short History of American Labor, American
Federationist, 88, March 1981, p. 14.

CHAPTER 2 The History of Labor Management Relations 87

132. George Meany, Merger and the National Wel-
fare, Industrial and Labor Relations Review, 9,
April 1956, p. 349.

133. Richard A. Lester, As Unions Mature (Princeton,
NJ: Princeton University Press, 1958), p. 25.

134. Aaron Bernstein, Is Labor Headed for Splits-
ville? BusinessWeek, May 30, 2005, p. 32.

135. Kris Maher, U.S. News: AFL-CIO, Breakaway
Unions Discuss Reuniting, Wall Street Journal,
January 9, 2009, p. A-4; Michelle Amber, UNITE
HERE Rejoins AFL-CIO, Wilhelm Gets Seat on
Governing Bodies, Daily Labor Report, No. 179,
September 18, 2009, pp. C1 2; Richard L.
Trumpka, Statement by AFL-CIO President
Richard L. Trumpka on LIUNA Reaffiliation with
the AFL-CIO, Press Release, August 16, 2010, p. 1

at http://www.aflcio.org/mediacenter/prsptm/pr081
62010.cfm.

136. Holly Rosenkrantz, What Andy Stern Leaves
Behind, Business Week, April 25, 2010, p. 23;
About us Change to Win at http://www.

changetowin.org/about.
137. John T. Dunlop, Have the 1980s Changed

Industrial Relations? Monthly Labor Review, 111,
May 1988, pp. 29 33.

138. Lichtenstein, Nelson, The Most Dangerous
Man in Detroit: Walter Reuther and the Fate of
American Labor. (Urbana, IL: University of Illi-
nois Press, 1995); James B. Jacobs, Mobsters,
Unions and Feds: The Mafia in the American
Labor Movement (New York: New York Univer-
sity Press, 2006).

88 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CHAPTER 3

Legal Influences

GRANTING EMPLOYEES a legal right to decide for themselves
whether to form or join a labor organization and engage in col-
lective bargaining over wages, hours, or other terms and condi-
tions of employment has been described as a grand experiment
in industrial democracy. It hasn t always been this way in U.S.
history, as the discussion in Chapter 2 made clear. Because
statutory laws are the product of a political process involving
compromise wording and trade-offs among the competing
interests of the parties affected, there will inevitably be
differences of opinion over how the wording of a law is
interpreted and applied to everyday decisions affecting the
rights of employers, employees, labor organizations, and the
general public. For legal rights to be meaningful, there must
also be an effective process for enforcing those legal rights.

Susan pondered these words as she sat at her desk in the
human resources (HR) department. As an HR manager at a
resort, Susan rarely had time to ponder the big picture because
she was always responding to situations and putting out
fires. Often, these situations had legal implications for the
firm. Just last week a female employee filed a discrimination
complaint against the resort s hotel restaurant where she has
been employed as a costumed storyteller for the past two
years, entertaining children. The employee, a Muslim woman,
had requested management to allow her to wear a head scarf
(hijab) during work time. After consulting with higher manage-
ment authority, her supervisor informed the employee that she
could wear a head scarf but it would have to be one designed
by the resort s costume department and in the interim period
she could not wear her own head scarf. Two months later,
after hearing no further word from her supervisor about the

89

issue, the employee chose to wear her own head scarf to work. Upon
seeing the employee wearing her head scarf, her supervisor told her that
she would have to remove it, change to a job which did not require direct
customer contact, or go home. She refused to remove it and she refused
to change jobs, asserting that she was protected by federal equal employ-
ment opportunity law. So the manager suspended her. Typically, some-
body in an on-stage position like hers wouldn t wear something like that,
that s not part of the costume, the manager explained. We were trying
to accommodate her with a backstage position that would allow her to
work. We gave her a couple of different options and she chose not to
take those and to go home. 1 The woman has not worked for the
firm for the past week. The employee s union supported her decision
to file a legal discrimination claim against the company and indicated it
would be willing to file a contract grievance discrimination claim if she
wanted to do so.

Susan, as the HR manager, was confident that the company had a
good antidiscrimination policy in place. Susan thought that requiring every
aspect of the employee s costume to conform to the resort s intended
image was important to maintaining good customer relations. The accom-
modations offered by the employer (e.g., transfer to a behind-the-scenes
job, wearing a company-designed head scarf) were reasonable in Susan s
view. Still it did concern her that two months had elapsed since the
employee s initial request to wear a head scarf at work and while the com-
pany had indicated she could do so if the scarf conformed to the com-
pany s costume concept, no suitable scarf had yet been provided to the
employee. Could the company be liable for reinstatement and back pay if
the delay were found to be unreasonable, and the employee continued to
refuse the transfer to a noncustomer contact job? Even if the company
prevailed in getting the federal discrimination complaint dismissed, would
the employee then file a contractual grievance seeking a similar remedy for
lost time from work? Would an arbitrator likely take the same view as a
court? What effect could the publicity surrounding the claim have on the
company s business operations or the ongoing contract negotiations with
the employee s union?

90

Questions
1. Could the company be liable for reinstatement and back pay if the delay

were found to be unreasonable and the employee continued to refuse a
transfer to a noncustomer contact job?

2. Even if the company prevailed in getting the federal discrimination
complaint dismissed, do you think the employee would then file a con-
tractual grievance seeking a similar remedy for lost time from work?

3. What effect could the publicity surrounding the discrimination claim
have on the company s business operations or future contract negotia-
tions with the employee s union?

4. In your opinion, is it the responsibility of government to pass laws
designed to establish the working conditions of American workers? Or
is the purpose of U.S. labor law to establish a framework whereby
employees can group together to negotiate their own working condi-
tions, tailoring them to the conditions that are important to the work-
ers? Explain your reasoning.

Labor relations law provides a framework for defining the legal rights and responsibil-ities of the parties engaged in the labor relations process. This chapter introduces the
basic legal foundation regulating the major phases of the labor relations process: organiz-
ing unions, negotiating labor agreements, and ensuring employee rights in contract
administration. It is essential today not only to know the law but to understand and
appreciate the interrelationships between the law and the labor relations process. Practi-
tioners should be aware that having a legal right to act does not always mean it is in
one s practical best interest to exercise that legal right.

Chapter 3 logically follows the chapter on historical development of unions in the United
States because labor relations law and union development go hand in hand. As unions grew in
strength, they successfully lobbied to get labor laws passed by the U.S. Congress. This chapter
focuses on key labor laws that pertain to most private firms today: the Norris La Guardia,
Wagner, Taft Hartley, and Landrum Griffin Acts. Because these acts cover the major por-
tion of private-sector U.S. industries and businesses, a substantial amount of space in this
chapter is devoted to their content. The Railway Labor Act (RLA), which principally covers
railroads and airlines, is also explained and assessed. A final section briefly considers several
other employment laws that can affect the labor relations process.

Origin of Labor Relations Law

Modern U.S. labor relations law relies primarily on federal and state statutory laws or local
government ordinances; judicial decisions interpreting and applying statutory laws and
local ordinances; and decisions by administrative agencies (e.g., National Labor Relations
Board [NLRB], U.S. Department of Labor [USDOL], Occupational Safety and Health
Administration [OSHA]) responsible for administering specific labor laws. Congress has
enacted numerous labor relations laws in the interest of employees and employers, public

91

welfare, and the furtherance of interstate commerce. Three major laws the Norris La
Guardia Act, the Labor Management Relations Act (LMRA), as amended, and the RLA
are discussed at length later in this chapter. Under the preemption doctrine, federal law
takes precedent over state law or local ordinances whenever both seek to regulate the same
conduct and there is a conflict between them.2 The preemption doctrine underscores the
importance of labor relations as an area that affects the national economy and therefore
benefits from the uniformity and stability that federal regulation of issues can provide.
State legislatures may pass laws and local municipalities may enact ordinances to fill voids
in federal laws or to extend regulation to issues not regulated by federal laws, such as the
right of state and local public employees to engage in collective bargaining.

The judicial branch of government, with its court system at the federal, state, and
local levels, functions to determine a law s constitutionality and conformity to legal stan-
dards; to assess the accuracy of interpretations by administrative agencies; and to issue
injunctions that restrict or require certain activities. In addition, the courts must decide
issues not covered by existing laws and make rulings under the general guide of equity.
These decisions constitute case law, which has developed over the years, establishing pre-
cedents and providing guidance for future legal decisions.

The executive branch of government includes various administrative agencies cre-
ated by Congress to interpret and administer some labor laws. These government agen-
cies establish policies and make rules to guide the administration of specific labor laws.
Although administrative agency decisions may be appealed to federal courts, the courts
are encouraged by Congress to give great deference to the expertise of agencies in inter-
preting and applying an applicable labor law. Some of the more important administrative
agencies mentioned include the following:

National Labor Relations Board (NLRB): Administers the National Labor
Relations (Wagner) Act as amended by the LMRA and certain aspects of the Labor
Management Reporting and Disclosure (Landrum Griffin) Act; the NLRB is
involved in the supervision of union representation elections and determination of
unfair labor practice (ULP) charges. Note that ULP charges can be pressed against
either employers or labor unions.
Federal Mediation and Conciliation Service (FMCS): Provides mediation services
to unions and employers engaged in collective bargaining. (A mediator is a third
party who helps the negotiators find a voluntary resolution to their dispute). The
FMCS also assists these parties in selecting arbitrators (third parties who issue
binding decisions) in grievance administration. Finally, the FMCS provides training
programs to encourage more cooperative labor management relations.
U.S. Department of Labor (USDOL): Performs many employment-related services,
such as research and data collection functions; administers federal wage and safety
laws; and enforces federal contract compliance under equal employment opportunity
requirements. In addition, the Secretary of Labor who heads the USDOL serves as a
member of the president s cabinet, responsible for employment-related matters.
National Mediation Board (NMB): Handles union representation issues under the
RLA; provides mediation services to parties in negotiations; assists in resolving disputes
over contract interpretation; and in cases involving emergency disputes, proposes
arbitration and certifies to the president that a dispute does constitute an emergency.
National Railroad Adjustment Board (NRAB): Hears and attempts to resolve
railroad labor disputes growing out of grievances and interpretation or application
of labor agreements.
State and local administrative agencies: Are responsible for the enforcement and
administration of state laws and local ordinances involving labor relations topics.

92 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The Norris La Guardia Act

The 1929 stock market crash and ensuing economic depression forced a reassessment of
the extent to which private-sector employers should be trusted to manage the economic
welfare of the country. As unemployment rose and individuals savings declined, political
pressure mounted on Congress to take a more active role in regulating the economy,
including providing more protection for basic workers rights. In 1932, Congress passed
the Norris La Guardia Act (also called the Federal Anti-Injunction Act) to accomplish
four public policy goals.3

First, to allow employees a greater voice in seeking to advance and protect their
legitimate job interests, Congress limited the power of federal courts to issue labor injunc-
tions. Activities that previously had been routinely enjoined (prohibited) by judges were
now protected by law (e.g., peaceful picketing or publicity; encouraging employees to
join a union; a union s provision of economic or legal aid to employees during a labor
dispute). Under the Norris La Guardia Act, a temporary restraining order (TRO)
obtained solely on the basis of an employer s statements to restrict some alleged unlawful
employee conduct was limited in duration to only five days. During that time period, the
judge was required to conduct a hearing at which both sides could present basic argu-
ments and evidence as to whether the TRO should be converted to a temporary labor
injunction after the initial five-day period expired. An employer seeking to have the
court issue a labor injunction had the burden of proving that the following conditions
existed: (1) Unlawful acts have been threatened or committed; (2) substantial and irrep-
arable injury to the employer s property has or will likely occur as a result of such unlaw-
ful acts; (3) greater injury would be inflicted on the employer by denial of an injunction
than on the union (employees) by granting an injunction; (4) the employer had no other
adequate legal remedy; (5) public safety officers were either unable or unwilling to ade-
quately protect the employer s property; and (6) the employer had satisfied any existing
legal duty to bargain in good faith in an effort to settle the labor dispute (including the
offer of mediation) before going to court. Any labor injunction issued by a court was
required to describe the specific conduct being enjoined, eliminating the previous abuse
of general or vaguely worded blanket injunctions. 4

Second, the Norris La Guardia Act declared that a yellow-dog contract (previously
discussed in Chapter 2) would be unenforceable in federal court and thus no longer
valid as a basis for obtaining a labor injunction to prevent conduct which might breach
such an employment contract.5 However, many employers continued to discharge or
otherwise discriminate against employees for engaging in union activities.

A third public policy goal of the Norris La Guardia Act was to encourage the courts
to adopt a more impartial or neutral role in seeking to protect and enforce the legitimate
rights of employers and employees. Courts were encouraged to balance the legitimate
rights of employers and employees, a difficult task in an economic system where the par-
ties interests inevitably conflict to some extent. Acts for which a labor injunction was
not obtainable under the Norris La Guardia Act were no longer considered to be anti-
trust violations under the Clayton Antitrust Act.6 Rejecting the Supreme Court s inter-
pretation and application of the antitrust laws during the 1920s, Congress reinstated the
use of the economic boycott as a legitimate means of worker protest so long as it was
used to pursue a lawful purpose in a lawful manner.

A fourth public policy goal of the Norris La Guardia Act was to express congressio-
nal support for the process of collective bargaining as an appropriate means for employees
to improve and protect their employment interests. Through the collective bargaining
process, both labor and management could voice their concerns and present evidence

CHAPTER 3 Legal Influences 93

to support the adoption of reasonable work rules which fit the particular circumstances
and resources of each bargaining relationship. While the potential for conflict was part of
such a bargaining process, the presumption was that in most cases the parties would see
it to be in their own self-interests to peacefully resolve disputes over what the terms and
conditions of employment would be.

Although the passage of the Norris La Guardia Act signaled a change in U.S. labor
relations policy, the act did not establish an independent administrative agency to
enforce the act s provisions. This meant that organized labor had to pursue enforcement
through the judicial system, which historically had not been responsive to labor s needs
and interests. Another deficiency of the Norris La Guardia Act was that no specific
employer ULPs were identified and prohibited. These deficiencies were not resolved
until three years later.

The National Industrial Recovery Act of 1933

Franklin D. Roosevelt, who was backed strongly by labor unions, was elected president in
1932 along with a new Congress receptive to labor legislation as a means of ending a
long economic depression. President Roosevelt promised Americans a new deal based
upon a belief that market forces alone were incapable of putting the public s interests
ahead of private ownership s interests. He argued that dire economic conditions created
a need for more active government involvement in managing the economic welfare of
the country. The historical debate over the proper and necessary role of government in
helping to manage the economy has been a prominent part of efforts to address eco-
nomic recessions ever since including the latest one.

One of the first acts of the Roosevelt administration was to encourage Congress to
pass the National Industrial Recovery Act (NIRA, also abbreviated NRA), a law designed
to stabilize economic activity by allowing businesses to form associations that would
draw up codes of fair competition to standardize marketing, pricing, financial, and
other practices. Upon approval of the codes by the National Recovery Administration,
firms could display the Blue Eagle symbol that supposedly signified compliance and
identified firms from which customers should purchase their goods and services.

Section 7 of the NIRA required the codes to guarantee employees the right to union-
ize without employer interference, and a National Labor Board (NLB) was later estab-
lished to help settle disputes and to determine violations under Section 7. Meanwhile,
textile workers were dissatisfied with declining wages and miserable working conditions
as the Great Depression (which began in 1929) continued. Encouraged by the legal pro-
mises of the NIRA, between 300,000 and 400,000 textile workers, mostly in the South,
went on strike. However, the strike was a failure: The union did not have the financial
resources to feed or pay strike benefits to so many people. The industry board did not
address employee grievances. A separate federally appointed mediation board merely
issued a report calling for further study of industry and working conditions. Employers
did not recognize textile unions, raise wages, or improve working conditions. Strike lea-
ders were blacklisted and unions got a bad name in the South where union organizing
has remained difficult.7

Because the NIRA did not require employers to bargain with unions, and the NLB
could not enforce its orders effectively, the law was not very effective in protecting
employees rights to organize and bargain collectively. In 1934, Congress issued a joint
resolution calling for the president to establish an NLRB to investigate violations under
Section 7, NIRA and to conduct elections to determine whether employees wanted

94 PART 1 Recognizing Rights and Responsibilities of Unions and Management

independent union representation.8 The new board, created like its predecessor by exec-
utive order of the president, had trouble enforcing its orders and determining appropri-
ate employee organizational units for conducting elections. In 1935, the Supreme Court
ruled the NIRA unconstitutional when one of its codes of fair competition was applied to
an employer engaged in intrastate commerce going beyond Congresses authority to reg-
ulate interstate commerce.9

The National Labor Relations (Wagner) Act of 1935

One month after the NIRA was declared unconstitutional, Senator Robert Wagner, the
chairman of the NLRB and an active participant in labor law matters, steered through
Congress a separate labor relations law the National Labor Relations (Wagner) Act
(NLRA).10 The NLRA established a new national labor policy that sought to ensure the
free flow of commerce, labor peace and stability, and protection of the public s interests
by encouraging the process of collective bargaining and preventing employer interference
with the exercise of employee rights defined in the act. The NLRB was authorized to
investigate and decide ULP charges and conduct representation elections (other provi-
sions are covered later in the chapter).

This law provides the basic framework for private-sector labor relations for most
employees in the United States. Congress perceived that without legal protection for
employee rights, the economic power of employers far exceeded that of individual
employees and inevitably led to labor unrest, which had a detrimental effect on eco-
nomic growth and the public s interests. The Wagner Act is premised on an industrial
relations model that there are two classes in the industrial world, labor and management,
and that these two classes have very different, in fact opposing interests. 11

Section 7 Rights
Perhaps the key provision of the NLRA was Section 7, which listed the rights of employ-
ees under the law. These included the right to form or join a union, bargain collectively,
and engage in other concerted activity for mutual aid and protection (see Exhibit
3.1). Note that while it takes at least two people to have a union, an individual can
make statements or take actions that are protected under the law if it is done on behalf
of a group of employees.

Unfair Labor Practices by Employers
Section 8 of the Wagner Act specified that it was a ULP for employers to interfere with,
restrain, or coerce employees as they exercised their Section 7 rights. Subsequent inter-
pretation of this provision determined that the Wagner Act outlawed many employer
tactics designed to discourage union activity such as

Exhibit 3.1
Rights of Employees Section 7 Employees shall have the right to self-organization, to form, join, or

assist labor organizations, to bargain collectively through representatives of
their own choosing, and to engage in other concerted activities for the purpose of
collective bargaining or other mutual aid or protection, and shall also have the
right to refrain from any or all such activities except to the extent that such right
may be affected by an agreement requiring membership in a labor organization as
a condition of employment as authorized in section 8(a)(3).

SOURCE: Labor-Management Relations Act, 1947, as amended.

CHAPTER 3 Legal Influences 95

discharging or refusing to hire union supporters,
threatening pro-union workers with poor job assignments or termination,
using company spies to learn who was organizing a union,
blacklisting pro-union employees,
creating company unions,
bargaining in bad faith (discussed in Chapter 6),
requiring applicants to sign yellow-dog contracts.

All of these were declared to be ULPs under the NLRA.

The Supreme Court Challenge
Many employers believed the NLRA would be ruled unconstitutional like the NIRA.12

However, the Supreme Court declared the NLRA constitutional in 1937, recognizing
the important impact labor relations can have on interstate commerce and endorsing
Congress s right to regulate labor relations.13 With Supreme Court approval of the
NLRA and improved economic conditions in the United States, unions experienced tre-
mendous growth, almost tripling union membership to 8.4 million members by 1941.14

Employer Criticisms of the Wagner Act
Union activities in the decade following passage of the NLRA caused many to believe
that the labor relations pendulum had swung too far in favor of unions. Examples of
union actions that precipitated much public concern were strikes over union representa-
tion rights between competing AFL and CIO unions, union strikes or boycotts over bar-
gaining issues, a union refusal in some cases to negotiate in good faith with an employer,
and pressure on job applicants to become union members at companies where the
employer and union negotiated a closed shop union security clause under which an
employer agreed to hire only job applicants who were already members of a union repre-
senting the firm s workers.

Changes under the Labor Management Relations
(Taft Hartley) Act
As a reaction to employer criticisms of the NLRA and growing public concern over orga-
nized labor s actions, particularly during a wave of strikes that followed the end of World
War II, in 1947 Congress amended the NLRA by enacting the LMRA.15 Leaving the
original language of the NLRA virtually unchanged, the LMRA added language intended
to address certain identified deficiencies and direct more attention to the legitimate
rights of individual employees and employers involved in the labor relations process.
Thus, the law protected anti-union individuals from retaliation by pro-union workers
and union organizers. It also clearly gave owners and managers the right to speak in
opposition to unionization by employees. However, the law did not universally expand
free-speech rights. As noted in Chapter 2, the law required union officers to sign
affidavits swearing that they were not communists (this last provision was declared
unconstitutional by the U.S. Supreme Court in 1965). Calling it a slave labor act,
labor groups immediately mounted a successful campaign to have President Truman
veto the bill; however, Congress easily overrode Truman s veto.

Unfair Labor Practices by Unions
To emphasize Congress s intent to fairly balance labor relations policy, the National
Labor Relations Act (NLRA) was renamed the Labor Management Relations Act
(LMRA). Similar to employer prohibitions included in the NLRA, a section of unfair

96 PART 1 Recognizing Rights and Responsibilities of Unions and Management

union labor practices was added to the LMRA, making it illegal for a union to engage in
actions that discriminated against any employee s exercise of rights protected under Sec-
tion 7 of the LMRA. Language was added to Section 7 granting individual employees a
right to refrain from engaging in most forms of otherwise protected concerted activity.

Some union actions that have subsequently been determined to be illegal under the
LMRA include the following:

threatening workers who refuse to join or support a labor union,
paying people to support or vote for a union,
pressuring an employer to discriminate against hiring an anti-union applicant,
bargaining in bad faith,
jurisdictional strikes,
strikes against employers who are not involved in the labor dispute,
political strikes striking in support of a political cause or candidate.

The Closed Shop vs. the Union Shop. Congress agreed that membership in a particu-
lar labor organization should not be a precondition for employment and therefore made
the closed shop union security clause illegal. However, Congress recognized that some
level of union security was necessary to ensure that employees who desired union repre-
sentation could achieve a reasonably permanent and effective voice in protecting their
workplace interests. Employers and unions were permitted under the LMRA to negotiate
certain types of voluntary union security clauses. One form was a union shop union
security clause requiring a new employee join a union within 30 days after hire. A sec-
ond form was an agency shop clause where the new employee did not have to join the
union, but, because the union is the bargaining agent for everyone in certain unionized
jobs, the employee had to pay a fee equivalent to regular union dues and initiation fees.
Either of these clauses typically required payment for as long as the employee held a job
in a bargaining unit represented by the union.

Some members of Congress supported legislation allowing labor contracts to contain
union security clauses; others opposed such clauses. As a political compromise, Congress
allowed individual states to ban union security agreements in their state (so-called right-
to-work laws). Essentially, a right-to-work law allows only the open shop, where work-
ers can choose to join a union or can choose not to; those who choose not to join the
union do not pay anything to the union. Union security issues will be discussed further
in Chapter 4.

Employer Opposition to Unionization
The LMRA addressed employer criticism of an NLRB policy that severely restricted an
employer s right to speak out on the question of union representation during an organiz-
ing campaign. In 1941, the Supreme Court declared that NLRB policy to be an unconsti-
tutional prohibition of employers First Amendment free-speech rights.16 Six years later,
Congress essentially incorporated the court s decision into the language of Section 8(c),
LMRA, which protects the expressing of any opinions or arguments about labor relations
issues so long as such expression contains no threat of reprisal or promise of benefit.

Right to File a Lawsuit
To encourage unions and employers to live up to negotiated contract terms, Section 301,
LMRA permitted the parties to a collective bargaining agreement to sue in court for
breach of contract if necessary to obtain the other party s compliance with the terms of
the labor agreement. Prior to this change, an employer was forced to sue individual
union members separately for violating a contractual no-strike agreement, which was

CHAPTER 3 Legal Influences 97

both time consuming and expensive. While permitting an employer to sue a union
directly for economic damages under Section 301, LMRA, Congress removed the right
to sue individual union members to recover economic damages for a breach of a labor
contract s terms.

Managers and Unionization
The Taft Hartley Act also clarified that managers did not have a legal right to unionize.
Nor did managers have a right to keep their job if they publicly spoke out against an
employer s labor policy or bargaining position. The law codified the assumption that
managers acted as the agents for their employers when dealing with labor relations
issues.

Since 1959, there have been two successful legislative attempts to expand employee
coverage under the LMRA. The LMRA was first extended to cover the U.S. Postal Service
in 1970 (see Chapter 13) and then to cover private-sector profit and nonprofit health
care institutions in 1974.

Labor Management Reporting and Disclosure
(Landrum Griffin) Act

In the late 1950s, a special Senate committee headed by Senator John McClellan vigor-
ously pursued the abuses of power and corruption by some union leaders, particularly
those of the Teamsters and specifically of Dave Beck and Jimmy Hoffa.17 Exposing
shocking examples of union corruption and abuses of power, Congress reacted in 1959
by passing the Labor Management Reporting and Disclosure (Landrum Griffin) Act
(LMRDA).18 The LMRDA is primarily designed to protect the rights of individual
union members in their relations with their own union and to ensure that labor organi-
zations operate in a democratic and financially responsible manner. Unlike the LMRA,
which applies to both union and nonunion employees, the LMRDA covers only indivi-
duals who are members of a labor organization.

For example, the LMRDA requires all local union officers to be elected by secret-
ballot vote of union members at least once every three years and national union officers
at least once every five years. Union members must approve any increase or decrease in
the amount charged for union membership dues, initiation fees, or other special assess-
ments. A union s constitution and by-laws approved by a vote of the membership is con-
sidered to be a binding contract between the union and its members, enforceable in
court. Unions are required to file annual reports with the USDOL available to the public
containing information on union assets and liabilities, union officer salaries, and current
union operating rules. Labor organizations are among the most regulated organizations
in U.S. society today.

The Landrum Griffin Act also contains provisions that enhance and protect the
rights of individual members. The law provides for equal voting rights in officer elections
for all members, regardless of their position in the union or how long they have been in
the union. The law grants members the right to run for union office, to nominate others
for office, and to make speeches for candidates. Members also have the right to own a
copy of their collective bargaining agreement.

Title VII of the LMRDA also contained some amendments to the LMRA. Most
important was the addition of Section 303 to the LMRA, which granted neutral, second-
ary employers harmed by unlawful secondary strike, boycott, or picket activity a right to
sue a labor organization to recover economic damages.

98 PART 1 Recognizing Rights and Responsibilities of Unions and Management

National Labor Relations Board

One weakness of the 1933 1935 NIRA had been the lack of any effective enforcement
mechanism. Confronted with a prior history of relatively weak court enforcement of
employee rights, Congress took the extraordinary step of designating an independent
federal administrative agency, the NLRB, to be the primary interpreter and administrator
of the newly created NLRA. To ensure the constitutionality of the NLRA, Congress pro-
vided that ULP decisions of the NLRB could be appealed for review to an appropriate
federal circuit court of appeals. The courts were instructed by Congress to pay great def-
erence to the policies of the NLRB in interpreting what Congress intended the law to
accomplish.

The NLRB is headquartered in Washington, D.C., and headed by a five-member
panel termed the Board.19 Board members are nominated by the president to serve a
five-year term and must be confirmed by the U.S. Senate. Terms of Board members are
staggered to ensure that not all vacancies occur at the same time, although due to delays
in the nomination and confirmation process there have been periods where several
Board seats were vacant at the same time, affecting the ability of the NLRB to function
effectively.

As political appointees, Board members generally reflect the basic labor relations
philosophy of the president who nominated them. The nomination process is subject to
intense lobbying by employers, unions, and other outside interest groups (e.g., National
Right to Work Committee) who recognize the important role the Board serves in deter-
mining the balance between protection for employer and employee interests, particularly
on legal issues where such interests may conflict. Interpretations of the facts and law
governing union management relations is dependent in part on the makeup of the
board. 20 One study reported finding an apparent pro-employer or pro-union bias in
only 20 percent of Board case decisions.21

Increased political partisanship in the selection and confirmation of Board members
has been a real problem in recent years. Frequent legal interpretation shifts among Board
members makes it difficult for labor and management practitioners and covered employ-
ees to know with some reasonable degree of certainty that lawful acts taken today will
continue to be lawful in the future.22 Significant periods of time when the Board has
fewer than its full five-member complement results in case delays and prevents signifi-
cant legal questions regarding the LMRA s interpretation from being addressed. Since
1988 over 25 percent of Board nominees have failed to win Senate confirmation.23

From January 2008 through March 27, 2010, the Board functioned with only two
members. The two Board members continued to render almost 600 ULP case decisions
on the theory that two members constituted a majority quorum of a three-member
panel. In a 5 4 decision in New Process Steel, L.P. v. NLRB (2010), the Supreme
Court ruled that the LMRA requires that at least three Board members participate in
every case decision in order to be lawful.24 At the time of the court s decision, there
were 96 cases on appeal before the federal courts. The Board subsequently requested
that all of these cases be remanded to the Board for further consideration by a three-
member panel of Board members. (Most cases were re-heard with a proper quorum
and resolved with a similar Board decision.) However, that was not the end of the
political drama. Because the Senate would not confirm some of President Obama s
nominees to the Board, in 2012 the president made three recess appointments while
Congress was out of town during Christmas Break; the only problem was that the Sen-
ate was technically not recessed, leaders held cursory sessions to prevent just such
recess appointments. In 2014, the Supreme Court ruled in Noel Canning v. NLRB that

CHAPTER 3 Legal Influences 99

the recess appointments were invalid. This decision meant that over 1000 NLRB
decisions had to be reconsidered.25

The Board has two primary responsibilities. One responsibility is to prevent employer
and union ULPs as defined by the LMRA, as amended, which interfere with the exercise of
employee rights protected by the act. This responsibility is carried out primarily through the
investigation, prosecution, and remedy of ULPs. The second responsibility is to determine if
employees covered under the LMRA desire representation by an independent labor organi-
zation for purposes of collective bargaining. The Board establishes and conducts certifica-
tion procedures to determine if a majority of eligible employees desires a specific labor
organization to represent them for purposes of collective bargaining. These secret-ballot
elections are called union representation elections or certification elections. In FY
2012, of 24,275 total cases filed with the NLRB, 89 percent were ULP; the remainder of the
cases involved union representation elections. Many were resolved by Administrative Law
Judges (described below), but some were appealed to the Board. Typically, between 65 and
75 percent of the Board s case load involves ULP cases and 25 and 35 percent involves repre-
sentation election cases.26 The Board exercises final administrative decision-making author-
ity in all ULP and representation cases, although ULP decisions may be appealed for review
by a federal court. Some recent decisions, shown in the Labor Relations in Action box,
demonstrate the importance of Board decisions to workers and their employers.

The Board delegates authority to the General Counsel and staff attorneys to prosecute
ULP charges. The General Counsel is nominated by the president to serve a four-year term
and must be confirmed by the U.S. Senate. As with Board members, the General Counsel s
nomination and confirmation process is subject to interest group politics.

A major responsibility of the General Counsel s office is to conduct a preliminary
investigation of each ULP charge to determine if sufficient (prima facie) evidence exists
to conclude a ULP may have occurred. If insufficient evidence of a violation is found, the
General Counsel has the authority to dismiss a ULP charge, and there is no appeal of
that decision. This gives the General Counsel tremendous influence in helping to deter-
mine the policy making agenda of the Board because the Board announces new policies
or alters existing policies through the issuance of ULP case decisions. The only cases in
which the Board will have an opportunity to render a ULP decision are those cases in
which the General Counsel s investigation concluded that evidence of a ULP existed.

The General Counsel is also responsible for representing the NLRB whenever a
Board decision or order is appealed to a federal court or when the Board seeks a court
order to enforce its decision. The General Counsel also serves as a legal advisor to Board
members on matters pertaining to the interpretation or application of the LMRA or how
past Board policies and procedures have fared upon review by the federal courts. The
General Counsel relies upon staff attorneys located at the NLRB s headquarters in
Washington, D.C., as well as each regional NLRB office to help carry out the responsibil-
ities of the General Counsel s office.

For employees, a union, or management practitioner, contact with the NLRB typi-
cally occurs at the regional or resident office level. The NLRB maintains 26 regional
offices, with 25 additional satellite offices located throughout the country to handle
ULP and union representation election cases. Each regional office is headed by a regional
director, who also manages any sub regional or resident offices located within the
regional office s geographic jurisdiction. The regional director and staff work with the
General Counsel to investigate ULP charges and are delegated authority by the Board
to administer all representation election procedures. Most meritorious ULP cases get
resolved at the regional office level with the settlement rate ranging between 91.5 and
99.5 percent over the previous ten-year period. Among the cases that are litigated before

100 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION
Selected Labor Relations Cases Decided by the U.S. Supreme Court and the NLRB

Back-Pay Remedy
One remedy available to employees who have been ille-
gally discharged (in violation of the LMRA) is that they
can receive back pay for the period of time they were
unemployed. However, what if the employee is an ille-
gal immigrant? In a 5 4 decision, the U.S. Supreme
Court ruled that the Immigration Reform and Control
Act prevents the NLRB from awarding a back-pay rem-
edy to an undocumented immigrant (a.k.a., illegal alien).
This is so, even though an employer can be found guilty
of committing an unfair labor practice in violation of the
undocumented alien s employee rights under the
LMRA. Requiring back pay is inappropriate, the Court
reasoned, because the illegal immigrant is not allowed
to work in the United States. However, the NLRB can
impose other remedies for the employer s unfair labor
practice such as a cease-and-desist order and an order
to post notices admitting the unlawful conduct and
informing company employees of their basic employee
rights under the LMRA. Hoffman Plastic Compounds,
Inc. v. NLRB, 122 S.Ct. 1275 (2002).

Determination of Supervisory Status
Supervisors are excluded from coverage under the
LMRA. However, it is not always obvious whether an
employee is a supervisor. The party asserting that an
employee is a supervisor bears the burden of proving
the employee s supervisory status. To be a supervisor
under the LMRA, an individual must (1) perform at least
one of the 12 specified supervisory functions (e.g., hir-
ing, performance evaluation); (2) use independent judg-
ment that is not merely routine or clerical in nature; and
(3) exercise authority in the interests of the employer.
Supervisory status must be determined on a case-
by-case basis. See: Oakwood Healthcare, Inc. and
United Auto Workers of America, 348 NLRB 686
(2006); Beverly Enterprises-Minnesota, Inc. d/b/a
Golden Crest Healthcare Center and United Steelwor-
kers of America, 348 NLRB 727 (2006); Croft Metals,
Inc. and International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers,
348 NLRB 717 (2006); and NLRB v. Kentucky River
Community Care, Inc., 121 S.Ct. 1861 (2001).

Unilateral Employer Withdrawal of Union
Recognition
Applying legal principles established by the U.S.
Supreme Court in Allentown Mack Sales & Service v.
NLRB, 522 U.S. 359 (1998), the Board held that an
employer may unilaterally withdraw union recognition
of the exclusive bargaining unit representative only if

the employer can prove the union has lost majority
employee support as of the date of the employer s uni-
lateral withdrawal of recognition. Alternatively, an
employer may obtain an NLRB-supervised election to
determine if the majority of bargaining unit employees
supports the incumbent union if the employer can dem-
onstrate a good faith reasonable uncertainty regarding
the union s continued majority support. The Board
would prefer employees directly express their desire
for or against union representation through a secret-
ballot representation election rather than have an
employer act unilaterally to withdraw union recognition.
Levitz Furniture Company of the Pacific, Inc., 333 NLRB
717 (2001)

Union Recognition
What if an employer believes that a majority of the
workers in the bargaining unit no longer support their
union? Can the employer refuse to deal with that
union? The U.S. Supreme Court unanimously held that
an employer may not refuse to bargain with an incum-
bent union on the grounds that the employer believed
that the union had lost the support from a majority of
the workers in the bargaining unit. Interestingly, the
employer had made this determination shortly after
entering into a contract with the union. Auciello Iron
Works, Inc. v. NLRB, 116 S. Ct 1754 (1996).

Definition of Employees under LMRA
Agricultural workers are not covered under the LMRA.
Are the people who work as members of a live chicken
catching crew considered agricultural workers? Most
of their work was performed at chicken farms. They
caught chickens for farmers who subcontracted with a
chicken processing plant to raise the chickens to a mar-
ketable age and size. The NLRB ruled that crew mem-
bers were employees of the chicken processing plant
and not excluded from coverage under the LMRA as
agricultural laborers. Holly Farms Corp. v. NLRB, 116
S. Ct. 1396 (1996)

Union Organizers
The Court unanimously upheld the NLRB s decision that
paid union organizers are employees within the
meaning of the LMRA when applying for a job or after
being hired by the employer. Therefore, individuals act-
ing as union salts (undercover union organizers) are
protected against employer retaliation in the form of dis-
charge or discipline for participating in any protected
activity under Section 7 of the act, such as attempting
to organize a union among employees. NLRB v. Town &
Country, 116 S. Ct. 450 (1995)

101

Partial Lockout
What happens to employees who strike but then
abandon their strike? Can their employer lock them
out? That was the situation at one employer: Employ-
ees had initiated a lawful economic strike on June 28,
but abandoned that strike on August 31 and sought
immediate reinstatement to their bargaining unit jobs.
Still without a negotiated collective bargaining agree-
ment, the employer initiated a lockout applicable to
striking workers who had not abandoned the strike
prior to August 31 in order to put pressure on those
employees to agree to the employer s proposed
contract terms. The 7th U.S. Circuit Court of Appeals
prohibited the employer from locking out those
employees. The court found no evidence supporting
a legitimate business reason for the lockout and fur-
ther found the lockout to be an unfair labor practice
under the LMRA. Why? Because the lockout discrimi-
nated against employees who had exercised their law-
ful right to engage in an economic strike in furtherance
of their bargaining interests. Local 15, International
Brotherhood of Electrical Workers v. NLRB, 429 F.3d
651 (7th Cir. 2005)

Failure to Pay Required Union Dues
Employees covered by a valid union security clause
(e.g., a union shop clause) are subject to discharge
for failing to pay the amount of union dues owed
after proper notification by the union and a reason-
able opportunity to meet the employee s dues obliga-
tion. If employees do not pay their dues, must the
employer fire them? Yes. A refusal by an employer
to honor a union s request to discharge bargaining
unit employees who have failed to meet their lawful
union dues obligation represents an employer unfair
labor practice violation under the LMRA. St. John s
Health Systems v. NLRB, 436 F.3d 843 (8th Cir.
2006)

Successor Employer Bargaining
Overruling a 1999 Board policy, the Board returned to
the previous policy, which holds that an incumbent
union in a successor employer situation is entitled to a
presumption of continuing majority support. This policy
also permits the following: (1) employees can file a valid
decertification petition (to schedule a vote to get rid of
the union), (2) another union can file a valid representa-
tion petition (to try to replace the incumbent union), or
(3) a successor employer can file an employer election
petition challenging the union s presumption of continu-
ing majority support. A successor employer s duty to

bargain with an incumbent union continues until the
date on which a lack of majority employee support for
the union can be established. MV Transportation, 337
NLRB 770 (2002)

Inclusion of Leased Employees in a
Bargaining Unit with Regular Employees
On a 3 2 vote, the Board held that it was not permis-
sible to combine an employer s own employees in
the same bargaining unit with employees performing
similar job tasks obtained from another employer
(e.g., company supplying leased labor) without the
consent of both the user employer and the supplier
employer. This will make it more difficult for leased
or temporary agency employees to gain union repre-
sentation rights at the firm where they actually per-
form their job duties. Oakwood Care Center, 343
NLRB 659 (2004)

Duty to Bargain
When an employer has been found guilty of bad
faith bargaining and issued a remedial order to bargain
in good faith, such bargaining must occur for a rea-
sonable time before the union s majority status as
bargaining representative can be challenged. Rea-
sonable time refers to a period no less than six
months nor longer than one year. The exact length
time good faith bargaining would be required is deter-
mined on a case-by-case basis based on several fac-
tors including: whether the negotiations are for an
initial contract or seek to amend an existing agree-
ment, the complexity of the issues being negotiated
and the parties bargaining procedures, the total
amount of time elapsed since the start of bargaining
and the number of bargaining meetings held, the
amount of progress the parties have made and how
close the parties appear to be to reaching a settle-
ment, and whether the parties have reached a good-
faith bargaining impasse. Lee Lumber and Building
Material Corp., 334 NLRB 399 (2001)

Employer Use of Employees in Pro-Company
Union Representation Election Campaign
Videos
Suppose an employer wants to make a video to show to
employees as part of an anti-union campaign prior to a
representation vote. Can the employer ask employees
to appear in an anti-union video? The Board established
four clear conditions which if met, would permit
employers to solicit employees to appear in an anti-
union election campaign video. To be lawful: (1) the

102

solicitation to participate in the campaign video must be
in the form of a general announcement, which discloses
the purpose of filming and assures employees that par-
ticipation is voluntary; no retaliation can occur against
employees who do not voluntarily choose to participate
and no rewards or benefits will be provided to those
employees who do participate; (2) employees may not
be pressured to make a decision regarding their partici-
pation in the presence of a supervisor; (3) there can be
no unlawful conduct connected with the employer s
solicitation for voluntary participants; and (4) the solicita-
tion cannot occur in a coercive atmosphere created
by the employer s commission of other unfair labor
practices. Allegheny Ludlum Corporation, 333 NLRB
734 (2001).

Coverage of Teaching and Research
Graduate Assistants
Graduate students take classes, but also work in
laboratories and teach classes at many private univer-
sities. Are they employees and thus eligible to
unionize? The Board ruled that graduate student
assistants do not meet the definition of employee
and thus are not entitled to exercise protected
employee rights under the LMRA. This reversed, by a
3 2 vote, a 2000 Board decision that had extended
coverage to teaching and research graduate assis-
tants at a private university. Compare Brown Univer-
sity, 342 NLRB 483 (2004) to New York University,
332 NLRB 1205 (2000).

Coverage of Medical Interns, Residents, and
Fellows (House Staff)
Reversing previous policy, the Board ruled that hospital
interns and residents in a private hospital are employees
covered by the LMRA even though they are students.
Therefore, these employees have the right to organize
and join a union and participate in other protected
concerted activities. Boston Medical Center Corp., 330
NLRB 152 (1999). (Note: If the Board follows its reason-
ing in Brown University discussed previously, then
the Boston Medical Center Corp. decision could be
reversed in the future.)

Weingarten Rights Applied to
Unrepresented Employees
In 1975, the U.S. Supreme Court ruled that if a union-
ized employee anticipates being disciplined by manage-
ment, he or she has a right to have a union official
present at the meeting. The right to obtain union coun-
sel at such meetings is called Weingarten Rights. But

what about nonunion employees? Can a nonunion
worker bring a co-worker to such a meeting? No. Con-
tinuing a long running dispute over the interpretation of
what constitutes protected activity for mutual aid or pro-
tection, by a 3 2 vote, the Board reinstated a previous
policy denying nonunion (unrepresented) employees
covered by the LMRA a right to have a co-worker pres-
ent during an investigatory interview with management
where the employee had reason to believe that he or
she might be subject to disciplinary or discharge. Exer-
cise of such a right is viewed as a form of concerted
activity for mutual aid or protection when exercised by
union-represented employees but not when exercised
by unrepresented employees. So-called Weingarten
rights also permit a union-represented employee to
know the general nature of the alleged violation being
investigated and a reasonable opportunity to meet with
his or her union representative prior to any investigatory
meeting with management. Compare IBM Corporation,
341 NLRB 1288 (2004) to Epilepsy Foundation of North-
east Ohio, 331 NLRB 676 (2000) enforced in part, Epi-
lepsy Foundation of Northeast Ohio v. NLRB, 268 F.3d
1095 (D.C. Cir. 2002). See also NLRB v. Weingarten,
420 U.S. 251 (1975).

Enforcement of Agreement to Arbitrate
Employment Discrimination Claim
An arbitration clause in a collective bargaining agree-
ment that clearly and unmistakably requires a bargaining
unit member to submit employment discrimination
claims covered by a federal antidiscrimination statute
to arbitration is enforceable. The bargaining unit mem-
ber may not submit a legal claim under the applicable
antidiscrimination law through the court system. The
contractual arbitration procedure is the bargaining unit
member s exclusive remedy for his or her employment
discrimination claim. 14 Penn Plaza, LLC v. Pyett, 129 S.
Ct. 1456 (2009).

Minimum Number of NLRB Board Members
Required to Make a Case Decision
Section 3(b) of the LMRA requires the Board to have at
least three of five members participating in order to
exercise the delegated authority of the board. New Pro-
cess Steel, L.P. v. National Labor Relations Board, 130
S. Ct. 2635 (2010).

Voluntary Employer Recognition Does Not
Create an Election Bar
If an employer grants voluntary recognition of a labor
union, can workers who support a rival union still file a

103

an ALJ or the Board, the General Counsel and prosecutorial staff typically win, in whole
or in part, 75 90 percent of the time.27

Employer and Employee Coverage under the LMRA, as Amended
To promote the public policy goals of the LMRA, as amended, Congress sought to
include as many employers and employees as possible under the statute s coverage.
The U.S. Constitution permits Congress to regulate private-sector employers whose
operations have the potential to vitally affect interstate commerce. If an employer is
subject to coverage under the statute, the employer s employees are also covered
(protected) by the statute unless they fall into an employee category specifically
excluded from coverage (e.g., agricultural workers). The term NLRB jurisdiction
refers to those employers and employees to whom the NLRB can apply the language
of the LMRA.

The NLRB may refuse to assert jurisdiction in cases where it believes the effect on
interstate commerce is minor (de minimus). For example, the NLRB has refused to
hear cases from state-regulated industries such as real estate, horse and dog racing.
Individual states may assert jurisdiction over any case where the NLRB has declined
to do so.28

From 1935 to 1950 the Board relied upon the judgment of individual regional direc-
tors to determine an employer s ability to affect interstate commerce on a case-by-case
basis. To reduce the inconsistencies inherent in this approach and improve the objectiv-
ity of decisions, the Board adopted a set of monetary standards (guidelines) applicable to
different types of employer operations (see Exhibit 3.2). In 1959 as part of the LMRDA,
Congress prohibited the Board from refusing to apply or altering the monetary standards
then in effect without congressional approval.

The standards measure the total dollar volume of an employer s operations (gross rev-
enue) and the dollar value of products or services sold (outflow) or purchased (inflow) over
a 12-month period (e.g., most recent calendar or business tax year or 12 months immedi-
ately preceding the filing of a ULP charge or representation election petition). Meeting the
specified dollar threshold using any one of the available measurements is sufficient to per-
mit the NLRB to assert jurisdiction over the case and apply the terms of the LMRA.

Congress excluded some individuals from the definition of an employee subject to
coverage under the LMRA, as amended. Specifically excluded by statutory language are
as follows:

Agricultural laborers are employees whose primary duties involve ordinary farming
operations performed prior to a product s readiness for initial sale.29 Some states
(e.g., AZ, CA, HI, ID, KS, MA, WI) have enacted a collective bargaining law to cover
agricultural laborers.

petition asking the NLRB to hold a representation elec-
tion? In a 3 2 decision, the Board ruled that an employ-
er s granting of a union s request for voluntary
recognition as the exclusive bargaining representative
of an employee group does not bar the filing of a rival
union petition within 45 days of the date notice is

provided that voluntary employer recognition has
been granted. The policy appears aimed at weakening
the credibility of voluntary employer recognition
based upon a showing of significant employee support
for a rival union. Dana Corporation, 351 NLRB 434
(2007).

104

Exhibit 3.2
NLRB Jurisdictional
Standards Determining
Employer Coverage
under the LMRA

Nonretail Business Direct or indirect sales through others of goods to consu-
mers in other states (called outflow) of at least $50,000 a year; or direct or indi-
rect purchases through others of goods from suppliers in other states (called
inflow) of at least $50,000 a year.

Retail Business At least $500,000 total annual volume of business.

Office Building Total annual revenue of $100,000, $25,000, or more of which
is derived from organizations which meet any of the standards except the indi-
rect outflow and indirect inflow standards for nonretail firms.

Public Utility At least $250,000 total annual volume of business, or $50,000
direct or indirect outflow or inflow.

Newspaper At least $200,000 total annual volume of business.

Radio, Telegraph, Television, and Telephone Firms At least $100,000 total
annual volume of business.

Private Health Care Institutions (e.g., hospital, HMO, clinic, nursing home)
At least $250,000 total annual volume of business for hospitals; at least $100,000
for nursing homes, visiting nurses associations, and related facilities; at least
$250,000 for all other types of private health care institutions.

Hotel, Motel, Residential Apartment Houses At least $500,000 total annual
volume of business.

Transportation Enterprises, Links, and Channels of Interstate Commerce
(e.g., interstate bus, truck) At least $50,000 total annual income from furnish-
ing interstate passenger and freight transportation services OR performing ser-
vices valued at $50,000 or more for businesses which meet any of the
jurisdictional standards except the indirect outflow and inflow standards estab-
lished for nonretail firms. [NOTE: Airline and Railroad operations are covered
under the Railway Labor Act (RLA), not the LMRA and thus are not subject to
NLRB jurisdiction.]

Transit Systems At least $250,000 total annual volume of business.

Taxicab Companies At least $500,000 total annual volume of business.

Associations The annual business of each association member is totaled to
determine whether any of the standards apply.

Private Universities and Colleges At least $1 million gross annual revenue
from all sources (excluding contributions not available for operating expenses
due to limitations imposed by the donor).

Any Firm with a Substantial Impact on National Defense.

U.S. Postal Service by enactment of the Postal Reorganization Act of 1970.

Symphony Orchestras At least $1 million gross annual revenue from all
sources (excluding contributions not available for operating expenses due to
limitations imposed by the donor).

Social Service Organizations Not Covered under Any Other Standard At
least $250,000 gross annual revenue.

SOURCE: Office of the General Counsel, NLRB, A Guide to Basic Law and Procedures under the National Labor Relations Act
(Washington, D.C.: U.S. Government Printing Office, 1997), pp. 33 35 at http://www.nlrb.gov/shared_files/brochures/basicguide.pdf.

CHAPTER 3 Legal Influences 105

Individuals employed by an employer covered under the RLA (rail and airline
industries).
Individuals employed as a domestic by a private household (e.g., cook, nanny, butler,
chauffeur, gardener, personal assistant).
Individuals employed by a parent or spouse are excluded from coverage under the
LMRA. On a case-by-case basis, other individuals may be excluded from a particular
bargaining unit because evidence demonstrates their self-interests to be more
closely aligned with that of ownership rather than other employees included in a
bargaining unit.
Individuals employed by a public-sector employer (federal, state, or local). Public-
sector labor relations issues are discussed further in Chapter 13. U.S. Postal Service
employees are the only exception to the public employee exclusion rule. As part of a
settlement to end an illegal strike by postal workers, Congress enacted the Postal
Reorganization Act of 1970, which placed postal workers under coverage of the
LMRA, greatly expanding the number and types of issues over which workers could
legally bargain. Unlike other private-sector employees covered by the LMRA, postal
workers have no legal right to strike. However, if the negotiation process does not
successfully produce a labor agreement they may invoke final and binding interest
arbitration as a means of resolving the terms of the new contract. Interest arbitration
will be discussed further in Chapter 9.
Independent contractors are considered self-employed and thus are treated as an
employer, not an employee under the LMRA. Thus, independent contractors cannot
unionize. Merely calling someone an independent contractor is not sufficient evi-
dence to establish their employment status. The Department of Labor has estab-
lished some guidelines for whether someone is an independent contractor. In
general, an independent contractor is an individual who offers a service for a fixed
fee to provide a specified result. The wages of an independent contractor are at risk
in the sense that any profit is dependent upon the contractor s ability to deliver the
agreed-upon work product at a cost below the fixed fee agreed upon in advance. An
independent contractor controls the manner in which work is performed and gen-
erally furnishes his own training, tools, or other work materials.
Supervisors were not originally excluded from coverage under the 1935 NLRA, but
Congress added the exclusion as part of the LMRA (Taft Hartley) amendments in
1947. Section 2(11), LMRA defines a supervisor as any individual delegated man-
agement authority to perform or effectively recommend one or more of the follow-
ing functions affecting employees: to hire, transfer, suspend, lay off, recall, promote,
discipline, discharge, adjust grievances, assign work, or reward employees so long as
the exercise of such authority requires the use of independent judgment which is not
merely routine or clerical in nature. 30 To be a supervisor the evidence must show
that the individual (1) performs at least one of the specified supervisory functions,
(2) has been delegated authority to perform such supervisory functions in the inter-
ests of the employer (as opposed to performance as a routine part of the individual s
professional responsibilities), and (3) exercises independent judgment when per-
forming his or her supervisory duties (as opposed to merely carrying out the deci-
sions of some other manager or applying established policies). The supervisory
exclusion has since been extended to include any manager who participates in the
formulation or execution of management policies and procedures so long as such
activity involves the exercise of independent judgment or discretion.31

The mere fact that a professional employee (e.g., nurse, teacher, or engineer) exer-
cises some independent judgment or discretion in performing their job duties does not

106 PART 1 Recognizing Rights and Responsibilities of Unions and Management

automatically exclude that individual from coverage under the LMRA. In Oakwood
Healthcare Inc. (NLRB 2006), cited in the Labor Relations in Action section earlier in
this chapter, the Board ruled that 12 permanent charge nurses met the definition of a
supervisor, whereas 169 other registered nurses whom the employer had sought to
exclude from a bargaining unit as supervisors were not supervisors even though on
some occasions they were labeled as charge nurses by the employer.32

Concerted and Protected Employee Activity
Concerted activity implies some action taken by or on behalf of two or more employees
to express a complaint or grievance relating to conditions of employment under the
employer s control, for example, work procedures, staffing levels, pay or benefits, safety
conditions, hours of work, discipline or other matters affecting wages, hours, or other
terms and conditions of employment. The LMRA does not protect complaints or grie-
vances of a purely personal nature (i.e., of concern to a single employee). Nor does it
protect concerns unrelated to employment, such as financial concerns an employee
might have as owner of a firm s stock.

To be protected under the LMRA, the concerted activity must be for a protected
purpose (described in Section 7 of the act) and engaged in using lawful means. For
example, tactics used to form or join a union or engage in collective bargaining or
other mutual aid or protection cannot involve violence, sabotage, or a disproportionate
loss or disruption to the employer relative to the seriousness or importance of the
employees complaint or grievance. On a case-by-case basis, the NLRB must decide if
the act is taken on behalf of multiple employees and if so, is the act for a lawful purpose
using lawful means?

Employees are not required to provide management with an opportunity to resolve
a complaint or grievance prior to engaging in some form of concerted and protected
activity to express a complaint or grievance.33 Nor are employees required to accept
any management proposal for resolving a complaint or grievance even though manage-
ment believes the proposed settlement terms are fair and appropriate. Although unrepre-
sented (nonunion) employees covered under the LMRA have a right to engage in
concerted and protected activity, they do not have a right to require their employer to
engage in collective bargaining with them over a solution to the grievance dispute. The
duty to bargain cannot be lawfully imposed until a labor organization has been legally
certified as the exclusive bargaining representative of an employee group. The union rec-
ognition (certification) step is discussed further in Chapter 5, and the duty to bargain in
good faith is discussed in Chapter 6.

The Interboro doctrine represents an exception to the requirement that an employee
be able to prove that he or she acted with or on the express authorization of one or more
other employees in order to be considered engaged in concerted activity.34 A single bar-
gaining unit member can be implied to be acting in concert with other bargaining unit
members covered under the same contract terms whenever the individual acts alone to
enforce a term or condition of a collective bargaining agreement. Even if an employee
has not previously discussed the issue (e.g., safety concern, denial of pay, or promotion)
with other employees or no other employee is present at the time when the employee
expresses the grievance complaint to a member of management, no adverse action can
be taken against the individual merely for expressing the grievance so long as the com-
plaint concerned a term or condition of an existing collective bargaining agreement.

The exercise of Section 7 rights through concerted activities is not unlimited. For
example, reasonable restrictions on the right to strike can occur based upon a strike s
objective, its timing, or the conduct of the strikers. If a strike s purpose was to achieve

CHAPTER 3 Legal Influences 107

a closed shop contract provision forcing the hiring of only union members, its purpose
would be illegal; therefore, the strike would be illegal. If a strike occurs in violation of a
no-strike provision in the contract, the timing of the strike is inappropriate, and all strik-
ing employees may be disciplined. Further, strikers do not have the right to threaten or
engage in acts of violence. Neither sit-down strikes nor refusals to leave a plant are pro-
tected strike activities. Strikers also exceed their rights when they physically block per-
sons from entering or exiting a struck plant or when threats of violence are directed
against employees not on strike. Strike issues are further explained in Chapter 9.

NLRB Unfair Labor Practice Procedure
The procedure for a ULP charge (Exhibit 3.3) starts when an employee, employer, labor
union, or individual files a charge with an NLRB office within six months of the date the
alleged violation occurred. The party filing the charge is termed the Charging Party and
the party accused of committing the violation is termed the Respondent. Typically, a
union files charges on behalf of one or more employees and the workers employer is
named as Respondent. A refusal to bargain in good faith is typically the most common
alleged employer ULP (accounting for about half of ULP cases) followed by alleged ille-
gal discharge or other discrimination against employees (about 40 percent of cases). Of
the ULP charges filed against unions, the two most common allegations were illegal
restraint or coercion of employees (79 percent of cases in FY 2009).35

The General Counsel s office with the aid of the NLRB regional office staff will
investigate the ULP charge to determine if sufficient evidence exists to believe a ULP vio-
lation may have occurred. The investigation may involve interviews with potential wit-
nesses, examination of documents, or other necessary steps. A ULP charge may be
settled or withdrawn at any point in the ULP procedure prior to a final Board decision.
If insufficient evidence to support the charge is found during the preliminary investiga-
tion, the General Counsel will dismiss the ULP charge, and there is no further appeal of
this decision. In cases alleging an unlawful boycott or strike, the NLRB must request a
federal district court to issue a temporary restraining order while the case is investigated.
The NLRB may seek a court injunction in other cases to limit the amount of damages a
charging party might suffer if required to wait until a final ULP decision is reached.
However, the Board has been reluctant to use this authority in most ULP cases.

If the General Counsel s investigation confirms the ULP charge has merit (i.e., there
is sufficient evidence found to believe a ULP appears to have been committed), a reason-
able effort will be made to get the Respondent to agree to a voluntary settlement of the
charge. If no voluntary settlement is reached, a formal ULP complaint and notice to
appear for a formal hearing before an Administrative Law Judge (ALJ) will be issued.

In a typical year, 20,000 25,000 ULP charges are filed (e.g., in FY 2014, there were
20,492 ULP charges); of these, 30 40% are typically found to have merit.36 Approximately
90 percent of ULP complaints issued involve alleged employer ULP. Of approximately
21,000 ULP cases closed in FY 2013, 34 percent were settled and closed before the issuance
of an ALJ s decision, 35 percent were withdrawn voluntarily before a formal complaint was
issued, and 28 percent were dismissed administratively by the General Counsel. The volun-
tary settlement rate for ULP charges with merit has ranged between 91.5 and 99.5 percent
each year over the past decade. The percentage of filed ULP charges that have been found to
have merit has ranged from 32 to 40 percent since 1980.37

The ALJ presides over a formal ULP hearing conducted under federal court rules of
evidence during which the General Counsel (representing the Charging Party) has the
initial burden of proving by a preponderance of the evidence that a ULP was committed.
The Respondent (typically an employer) would have an opportunity during the hearing

108 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Exhibit 3.3
Unfair Labor Practice Procedure

SOURCE: National Labor Relations Board.

CHAPTER 3 Legal Influences 109

to present evidence and arguments attempting to prove that no ULP violation occurred.
Based upon the evidence presented at the hearing, the ALJ sends a written report to the
Board containing findings of fact regarding the alleged ULP charge and recommenda-
tions on an appropriate remedy for any ULP violations found to have occurred.

The Board has final agency authority to decide all ULP charges. The ALJ s written
report is sent to all parties involved in the case as well as the Board. The Board rarely
hears oral arguments or testimony from any of the parties in a ULP case and therefore
places a great deal of importance on the ALJ s findings regarding key issues such as the
credibility and demeanor of witnesses who testified during the hearing.

ULP cases can be classified into two broad categories or types: routine or lead cases.
A routine ULP case involves charges that do not raise any new or novel issues of labor
law and can be determined by application of existing relevant Board policies and legal
principles. Such cases are typically decided by a three-member panel of Board members
and comprise 80 to 90 percent of all Board decisions. What are we to make of the high
percentage of routine cases? From one perspective, this is evidence that the Board s cur-
rent remedial powers are not adequate to prevent typical discriminatory acts involving
supposedly protected employee rights under the Act; employers are allegedly willing to
break the law because the penalties under the NLRA are so weak. A second perspective
posits that sometimes unions file frivolous charges (that are subsequently withdrawn) as
a way to harass and distract managers during elections or times of collective bargaining.
A third perspective is that the NLRB needs to do a better job of informing managers
about the law so that managers do not commit ULPs out of ignorance. Finally, one
can argue that this is consistent with the base rate: Most alleged violations of a labor
law that has been on the books for approximately 80 years would be expected to deal
with issues that have been addressed in previous cases.38

A lead ULP case involves a charge that either raises a new or novel labor law issue
or presents the Board with an opportunity to initiate a new policy or significantly change
an established policy interpreting the LMRA, as amended. Because of the precedent-
setting nature of lead cases, a decision requires the participation of all Board members.
The Board adopts the recommended decision and order of the ALJ in approximately 85
percent of ULP cases but has the authority to reject or alter the ALJ s recommendations
in every ULP case.

Unfair Labor Practice Remedies
Section 10 (c), LMRA grants the Board broad authority to fashion an appropriate rem-
edy for ULP violations.39 At a minimum, the Board will issue a cease-and-desist order,
instructing the Respondent to stop committing the ULP violations immediately and in
the future. It is common for the Board to order a Respondent to post written notices
at places where employees will see them to inform employees about the ULP violations
that have occurred, the Respondent s pledge not to commit such violations in the future,
and the basic rights of employees protected by Section 7 of the LMRA. The Board has
recently added the requirement that ULP remedy notices also be posted electronically
(e.g., e-mail, text message) where the Charging Party normally uses such communication
channels to disseminate information to employees.40 Posted notices must remain on dis-
play for a period of time ranging from six weeks to six months.

Additional remedies fall under the heading of affirmative action necessary to pro-
vide a make-whole type remedy to individuals adversely affected by the occurrence of a
ULP. The goal is to restore the workers situation to what it was prior to the ULP occur-
ring. Depending upon the specific type of ULP committed, affirmative action could
include one or more of the following types of actions: reinstatement, back pay,

110 PART 1 Recognizing Rights and Responsibilities of Unions and Management

promotion, restoration of seniority rights, or other benefits to which the individual
should have been entitled had the ULP not occurred, expunging any reference to the ille-
gal action from an individual s personnel file, an order to bargain in good faith, an order
to reopen an illegally closed plant or return illegally relocated work, decertification or
disestablishment of a union as the employees exclusive bargaining representative, or
union repayment of illegally withheld or overcharged dues or fines.

The Board has no authority to award punitive damages in any case no matter how
many separate or intentional ULP violations were committed by a Respondent. An
employee alleging unlawful discharge is under an affirmative duty to seek comparable
employment to mitigate the Respondent s potential back-pay liability while awaiting a
final determination of the merit of the ULP charge. Although the Board can order a
party to bargain in good faith, the Board has no authority to order either union or man-
agement representatives to accept any specific change in a term or condition of employ-
ment. The Board could rule that a current employment policy or practice is unlawful and
cannot continue to be enforced but could not order the guilty party to change the policy
or practice in a way to make it lawful.

Parties may appeal a Board ULP decision to an appropriate federal appeals court as
shown in Exhibit 3.3. While the Board relies primarily on voluntary compliance by
Respondents with its ordered remedies, when necessary the Board may also petition an
appropriate federal appeals court for an order enforcing the Board s ULP decision. A
ULP decision can be appealed to either (1) the District of Columbia Circuit Court of
Appeals, which has jurisdiction over the headquarters of the Board; an appeals court
having jurisdiction over the location where the ULP occurred; or (2) an appeals court
having jurisdiction over the location of the appealing party s principal residence or busi-
ness headquarters. If the appealing party is aware of a difference of opinion among the
federal courts having jurisdiction in the ULP case, this provides an opportunity to engage
in so-called forum shopping whereby the party would choose to file the appeal under
the court s jurisdiction whose prior interpretations would likely be most favorable to
the appealing party s position in the current case.

Upon review of the Board s ULP decision, a court of appeals may enforce the
order as written, modify the decision, remand the case back to the Board for further con-
sideration, or refuse to enforce the Board s decision. Approximately 50 percent of final
ULP Board decisions (or approximately 1 percent of all ULP charges filed) are appealed
annually to federal courts, making the NLRB one of the most active federal agencies
involved in federal court litigation.

A federal court must enforce the Board s ULP decision if (1) the decision is a rea-
sonable interpretation of congressional intent as expressed in the language of the LMRA,
as amended and (2) the decision is supported by substantial evidence (facts and reason-
ing) contained in the case record.41 It is the lack of substantial evidence in the case
record to support the Board s decision which is cited most frequently when a court
refuses to enforce all or part of a Board ULP decision. The courts were encouraged by
Congress to pay deference to the Board s interpretations of the LMRA and to witness
credibility determinations by an ALJ during the ULP hearing. On balance, the NLRB
has a successful track record of having its decisions enforced by federal appeals courts.
In FY 2012, U.S. courts of appeal decided 73 ULP cases, of which 85 percent of Board
decisions were enforced entirely; 10 percent were enforced in part; 4 percent were
remanded to the Board for further consideration; and 1 percent of Board ULP case
decisions were denied enforcement.42

A court of appeals decision in a ULP case can be appealed for possible review by the
U.S. Supreme Court (petition for certiorari). To be reviewed, four of the nine Supreme

CHAPTER 3 Legal Influences 111

Court justices must agree to hear a case. Cases most likely to be accepted for review are
those that raise a new or novel labor law question not previously addressed by the court
or which raise an issue on which lower courts of appeal having rendered different inter-
pretations, thus creating a so-called legal split among the courts of appeal. Agreeing to
hear such a case on appeal would allow the Supreme Court to resolve the legal question
and establish a binding precedent which lower courts and administrative agencies (e.g.,
NLRB) would have to follow in deciding future similar cases. The Supreme Court agrees
to review less than 1 percent of all petitions for certiorari it receives.

Assessment of the LMRA, as amended,
and NLRB Administration
The LMRA and its administration have critics in the academic community. Professor
James Gross, an authority on the LMRA, has stated: The current national labor policy
favors and protects the powerful at the expense of the powerless. In the essential moral
sense, therefore, the current national labor policy is a failure. 43 Professor Janice Bellace
has suggested that most labor commentators find the current application of labor laws
has actually discouraged unionism:

Current labor law tolerates long delays in getting to an election and in having the
election results certified. Labor supporters will also point out that even when there is
a union at a work place, labor law permits the threatened and actual replacement of
strikers from the first day of the strike. They will decry this, particularly because rules
on the labor contract do not maintain the status quo when the contract expires, thus
enabling employers demanding concessions to take back in a flash those contract items
gained by the union over the years. Finally, labor supporters deride a statute with
remedies so weak they do not deserve the label remedy .44

Because the U.S. President appoints members of the Board, labor relations policy
can be thought of like a pendulum, swinging somewhat toward management when a
Republican President is in office and somewhat toward labor unions when a Democrat
is in the oval office. For example, while admitting that the Bush Board favored employer
interest in decisions, management attorney Kenneth Dolin viewed policy changes as
returning the Board to the mainstream and correcting the excesses of the Clinton-era
Board. More recently, some observers have claimed that there is a pro-labor tilt to the
Board under the Obama administration.45 Other commentators express concern that
such frequent policy interpretation shifts may eventually cause the courts to pay less def-
erence to the Board s interpretation of the LMRA, viewing the opinions as more reflec-
tive of changing economic and political climates than a consistent view of congressional
intent in passing the law.46

The language of the LMRA has remained relatively unchanged by congressional
action since 1959, even though the labor relations environment has undergone substan-
tial change over the same time period. The labor force has become substantially more
diverse with increased labor force participation by women, and racial and ethnic minori-
ties. The economy has transformed from a manufacturing base to a service-information
technology base, creating a truly global economy where products, information, and mon-
etary resources are easily transported across national boundaries, expanding product/ser-
vice markets and increasing competitive pressures on both employers and employees.
Emphasis by Congress and the legal system on protecting individual employees right to
equal treatment and the establishment of minimum employment standards has also
deemphasized the role of collective bargaining as a means of providing employees a
voice in determining employment interests.47

112 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The lack of congressional action to address labor law reforms has been attributed to
the fact that for many decades, both organized labor and especially employers have had
enough support in Congress to block any significant amendment that either group
strongly opposes. Enough support does not mean a majority; it means a minority that
is big enough, well organized enough, and committed enough to tie up a bill through
the arcane supermajority requirements of the Senate for example through filibuster
or to sustain a presidential veto. 48

Labor union advocates would like to see several reforms of the LMRA enacted.
Among desired reforms are the following:

Greater access by nonemployee union organizers to communicate with employees
during organizing campaigns. Currently, employers can make anti-union speeches to
employees, as long as they are paying them, while limiting access to union organi-
zers. Labor advocates want to counter these so-called captive audience speeches
(discussed further in Chapter 5).
Stronger penalties for ULPs committed by employers against union supporters. For
example, current Board policy states that if an employee has been unlawfully dis-
charged for union activity, he or she is to be awarded back pay, minus any interim
earnings from other jobs while unemployed (called an offset ); labor advocates want
the policy changed so that employees get back pay without any reduction due to offsets.
Union advocates have also sought unsuccessfully to eliminate management s right to
permanently replace otherwise lawful economic strikers during a labor dispute.49

Some employer advocates seek changes also. Many favor an expansion of an
employer s right to create work teams and have those teams deal with a wide range of
employment issues involving work processes, compensation, productivity, safety, and
other work rules. Currently, the LMRA contains Section 8(a)(2), which prohibits
employer creation, domination, or interference with the operation of a labor organiza-
tion. This prevents company unions, but some argue that it stifles nonunion employer
attempts to create forums for improving productivity and employee involvement in
work decisions.50 Employers also want to expand the application of so-called Beck rights;
In the Beck case, the U.S. Supreme Court established the basic right of an employee not
to be forced to pay for a union s political lobbying activities and to pay only for those
regular charges associated with the duties of representing the bargaining unit. However,
the specific procedures for implementing that right (e.g., opting in vs. opting out of
political participation) are set by individual unions, who usually want plenty of funds
available for lobbying purposes.51 Thus, employers argue that the procedure should be
set by the government. Beck rights will be discussed further in Chapter 4.

The NLRB also has its critics among government officials. One area of concern over
the years has been the amount of time required to complete ULP case decisions by the
Board. Both ALJs and Board members share the responsibility for administrative delays
which have occurred.52 The problem reached a crisis point in 1991 when the General
Accounting Office (GAO) released a damaging report to Congress entitled Action Needed
to Improve Case-Processing Time at Headquarters. This report revealed that between
1984 and 1989 only about 67 percent of the 5,000 cases appealed to the Board were
decided within one year, and ten percent took 3 7 years.53 To its credit, the NLRB has
worked to reduce the amount of time for ULP cases to be heard. In FY 2014, the NLRB
processed almost 84 percent of cases within one year of charges being docketed and 72
percent were resolved within 120 days.54

A number of labor law reform proposals have been made over the past 50 years
intended to correct perceived deficiencies in the current statutory language, alter Board

CHAPTER 3 Legal Influences 113

procedures, or affect the scope of employees covered by the statute. For example, under
the Obama administration, the NLRB has pursued changes aimed at reducing the
amount of time that elapses between (a) when a valid petition is filed, requesting a
union certification election, and (b) when the representation election vote actually
occurs.55 Among other suggested changes are the following: strengthening the remedies
for ULPs; making greater use of administrative rule-making to reduce shifts in Board
policies; permitting voluntary union authorization card signatures to be used to establish
proof of employee majority support for union representation; and ensuring that first
contract negotiations do result in a labor agreement either through voluntary bargaining,
mediation, or if necessary, final and binding interest arbitration.56 New forms of
employee representation along the lines of European works councils to involve employ-
ees who are not union members in decisions affecting their work lives have also been
advocated and a plan to establish a works council has been explored by the United
Auto Workers and Volkswagen in Chattanooga, Tennessee.57 Whether some or any of
these proposed reforms will actually become reality remains to be seen but history
would suggest that the road to meaningful reform is difficult and slow.

Transportation-Related Labor Relations
Law (Railway and Airlines)

Because of the vital role that railroads played in interstate commerce, and because of the
violence that characterized both the Great Railroad Strike of 1877 and the Pullman Strike
of 1894, courts have historically given the federal government great latitude in regulating
labor management relations in this industry. Congress tried to prevent disruption to the
economy from rail disputes, but early legislation (e.g., the Arbitration Act of 1888 which
allowed for nonbinding arbitration) proved ineffective. After a series of strikes in the
early 1920s, the major rail lines and their employees unions negotiated a draft law that
Congress enacted as the RLA in 1926.

Even today, rail and air transportation labor relations are covered by the Railway
Labor Act (RLA) of 1926. Enacted with bipartisan labor and management support to
apply only to the railway industry, the RLA was actually the first comprehensive collec-
tive bargaining law. In 1936, the RLA was amended to extend coverage to a new and
developing transportation industry airlines. The railroad and airline industries have
the highest union density level of any private-sector U.S. industries, approximately 84
and 60 percent respectively.58 Similar to other labor laws, the RLA did not develop over-
night; it resulted from years of employee efforts to gain union recognition and engage in
collective bargaining, often resulting in disruptions in normal rail transportation opera-
tions.59 The primary goal of the RLA is the avoidance of disruption in transportation
services by encouraging collective bargaining.

Under the RLA, if a union and employer are unable to resolve their differences over
negotiating terms of a labor agreement (termed a major dispute under the RLA), the
dispute is subject to mandatory mediation through the NMB. If mediation does not suc-
ceed, the parties have the option of proceeding to final and binding interest arbitration.
If either party declines to submit the dispute to arbitration, there is a 30-day status quo
period invoked during which the president may appoint an emergency board to investi-
gate the dispute and make recommendations on a settlement.

Since the enactment of the RLA, over 97 percent of the collective bargaining
disputes mediated by the NMB have been resolved without a strike or other form of
interruptions of commerce. Historically, about 85 percent of presidential-appointed

114 PART 1 Recognizing Rights and Responsibilities of Unions and Management

emergency boards (PEB) established have dealt with disputes in the railroad industry.
In recent years, there has been a dramatic drop in both strikes and in the use of emer-
gency boards. Only two airline strikes occurred between 2008 and 2012; the last rail-
road strike occurred in 1994. The most recent PEB in the airline industry convened
in 2002. In the five-year period from FY 2008 FY 2012, only two presidential emer-
gency boards were established for railroad labor disputes. No PEBs were established
in either industry in FY 2013.60

The National Railroad Adjustment Board (NRAB), a bipartisan group of 17 union and
17 management representatives, was established to assist in resolving grievances arising
during the term of a labor agreement over the interpretation or application of the contract s
terms (termed a minor dispute under the RLA). Where the board cannot agree to a settle-
ment, the grievance may be settled by an arbitrator selected by the parties.61

In FY 2013, the parties brought 6,576 grievances before the NMB for arbitration; 35
representation cases were filed and 35 more were resolved.62 The NMB is empowered to
conduct representation elections and to help resolve interest disputes that develop during
negotiations between union and management representatives over what the terms and
conditions of employment will be as stated by contract language. Under the RLA, labor
agreements never expire but do become amenable for negotiation of proposed changes as
of a specified date.

There are several differences between the RLA and the LMRA:

1. The RLA covers the railway and airline industries, whereas the LMRA covers most
other private-sector employers engaged in interstate commerce.

2. Because railroad and airline workers were geographically dispersed, NMB ballots for
union certification elections were mailed to employees homes (employees completed
them and mailed them back); by contrast, voting was done in-person via secret bal-
lot at NLRB-supervised election sites within factories or office complexes. In 2002,
the NMB began using Telephone Electronic Voting (TEV) for representation elec-
tions, and in 2007 it began using Internet Voting. The NMB believes the system is
very secure and will save the agency substantial time and expense in conducting
representation elections; in most elections, it no longer uses mailed ballots.

3. Historically, union representation under the RLA required a showing of support
from the majority of all employees in the particular craft or class who were eligible
to vote, whereas the NLRB required only support from the majority of employees
who actually voted. The NMB rule had the effect of requiring a larger number of
yes union votes to gain bargaining rights because the rule treated eligible voters

who did not to vote as if they had voted no. If there were 100 eligible voters and
68 cast a valid ballot, historically under the RLA a union would need 51 yes votes
for a union to be certified as the exclusive bargaining representative for the 100
employees. Under the LMRA, if 68 workers voted, a union would require only 35
yes union votes to be certified.

In May, 2010, the NMB adopted the same certification election voting rule for the
RLA as that used under the LMRA. The NMB members believe that the rule
change will provide a more reliable measure of employees preference on the ques-
tion of union representation. As with other democratic election procedures used in
U.S. society, eligible voters who choose not to cast a ballot are presumed to have no
preference regarding the outcome of the election but are still bound by the resulting
majority vote of those eligible voters who do choose to express their preference by
casting a valid ballot. One study concludes that the NMB s procedural change has
not resulted in a significant increase in union victories in certification elections.63

CHAPTER 3 Legal Influences 115

4. A significantly higher percentage of employees in the railway and airline industries
are organized by unions under the RLA compared to other private-sector employees
covered under the LMRA. For example, approximately 85 percent of Class I
(major railroad) employees are unionized and 60 percent of other railroad employees
are unionized.64

5. Under the RLA, a union cannot strike and an employer cannot lock out until they
have exhausted the impasse resolution procedures required by the NMB. Under the
LMRA, the parties can engage in these self-help actions if (a) the dispute involves
a mandatory subject of bargaining; (b) there is no current contract language barring
the action; and (c) good-faith bargaining responsibilities have been met.

6. Under the RLA, arbitration of minor disputes (grievances) in the railway industry is
mandatory, and the government pays the arbitrator s fee and expenses. Under the
LMRA, grievance arbitration procedures are negotiated by the parties, and the par-
ties pay for the arbitration (airline grievance arbitration is similar to arbitration
under the LMRA).65

7. The LMRA, as amended, severely limits certain union activities, including feather-
bedding (where minimum crew sizes that are mandated in the labor agreement far
exceed those needed to do the work) and secondary strikes or boycotts where
unions who have a dispute with one employer embroil a neutral, uninvolved
employer in the dispute. The RLA does not contain the same limitations.

8. Both the LMRA and the RLA allow unions to negotiate union shop contract clauses,
requiring new hires to join the union that represents them (or pay financial core sta-
tus fees). However, the LMRA also allows states to prohibit union shops. The RLA
does not give individual states the same leeway, and federal laws supersede state laws.
Thus, if a railroad workers union negotiates a union shop clause under the RLA, and
the railroad goes through a state with a law prohibiting union shops, then the contract
clause remains in effect for those railroad workers, despite the state law.

Assessment of the RLA
Faced with such problems as changing markets for freight transportation, severe compe-
tition, increased merger activity, government regulation, and public interest in uninter-
rupted rail and air service, labor relations in the railway and airline industries are
somewhat unique. Complicating the situation further are the chronic financial instability
of the numerous independent railroads; the presence of strong, competing craft unions;
and tradition-bound work rules. These factors can affect labor relations in the following
ways. First, because the public depends on rail transportation for many essential goods,
much effort has been made to avoid strikes (including interventions by Congress). Sec-
ond, due to different craft unions involved, the labor relations process takes much time
and creates many opportunities for disputes. However, because of union mergers since
1970 there are now only 13 major freight-related rail unions. Finally, the tradition-
bound work rules of the operating crafts strictly control not only how a particular job
will be performed, but also which craft will be assigned the job. These work rules slow
the introduction of new technology and magnify the problems of this industry.66

Any assessment of the RLA must be kept in proper perspective. There are thousands of
labor agreements in the railroad and airline industries, with hundreds of agreements (mostly
local) in negotiations during any given year. Further, any measure of the RLA s effectiveness
must be made with reference to its objectives to promote free collective bargaining and pro-
tect the public from interrupted flows of commerce which it has done effectively.

Regarding negotiations, mediation has been the most important method of interven-
tion under the RLA; however, few nationwide railroad wage cases have been settled by

116 PART 1 Recognizing Rights and Responsibilities of Unions and Management

mediation since 1936. Its greatest success has been in settling minor controversies after
the major issues have been resolved. This does not mean that mediation is
unimportant minor disputes left unresolved could easily lead to major strikes in future
negotiations.67

Deregulation Legislation in Railroads and Airlines
Prior to 1978, the federal Civil Aeronautics Board tightly regulated which airlines could fly
specific routes and it guaranteed a 12 percent return on flights that were 55 percent full.
To insure that this threshold was met, competition was limited and airlines often had to
wait years to add a new route. The Airline Deregulation Act of 1978 ended government con-
trols of fares and routes, and the Motor Carrier Act of 1980 reduced the amount of eco-
nomic regulation of the industry by the Interstate Commerce Commission. The Staggers
Rail Act of 1980 gave railroads more flexibility in setting rates and service levels.68 Concerns
that deregulation might result in only a relatively few large carriers, thereby reducing
competition within the industry, initially proved unfounded. Prior to 1978, ten major air
carriers controlled 90 percent of the market. Airline deregulation prompted the introduc-
tion of 128 nonunion carriers, but by 1987 only 37 had survived. This was not unexpected:
There is a high failure rate for start-ups in almost every industry.

Since the 1980s, there has been increased merger activity by the major airlines. This
accelerated in the last ten years, to the point that now four major airlines control 85 per-
cent of the market, prompting some to call for government intervention to prevent
regional monopolies. Other developments include ticketing agreements between major
carriers and regional and commuter airlines, hub-and-spoke airports, and frequent
flier programs to promote airline customer loyalty.69 Deregulation also initially encour-
aged price competition, with 90 percent of passengers traveling at discount prices aver-
aging 60 percent below the coach price; however, airlines have attempted to make up lost
revenue with ancillary fees. During the same time, accident rates have not increased, and
service to many small communities has not deteriorated; however, there have been
increased congestion at airports and in the airways, delays in departures and arrivals,
price fluctuations due to volatile jet fuel prices, and a general decline in the quality of
air service.70 Profitability in both the railroad and airline industry has been reduced by
the slow pace of economic recovery, although large (Class 1) railroad operators appear to
be making a faster recovery than most major airlines.

Most airlines have adopted a variety of cost cutting strategies, including significant
employee layoffs, postponement or cancelation of equipment orders, reduced flight sche-
dules, and negotiated economic concessions from employees. This has led to increasing ten-
sions and employee complaints at many carriers.71 A study by the GAO reported that since
airline industry deregulation in 1978, the average length of time to negotiate new contracts
has increased, the number of strikes has declined, but the frequency of nonstrike work
actions (e.g., employees all calling in sick on the same day) have increased.72

Promising Developments Regarding the RLA
Despite problems, several events and developments provide the basis for some optimism:

Recent negotiations in railroads have been characterized by greater union
management cooperation, resulting in fewer conflicts and outside interventions.
Emergency board procedures have been drastically improved, and the ritualism and
legalism so prevalent in the 1960s have been reduced.
Encouraging progress has been made on some long-standing manning and workrule
issues, such as combined road and yard service, and eliminating contract

CHAPTER 3 Legal Influences 117

requirements that firemen (whose job originally involved shoveling coal into the
fire box on steam engines) also work on diesel trains.
New leadership has had a positive influence on both management and unions, and
neutrals and government officials have provided capable assistance in the bargaining
and dispute-resolution processes.
With railroad industry consolidation, major Class I freight carriers have formed the
National Railway Labor Conference. This group now negotiates national contracts
with representatives of groups of unions, setting minimum wage and benefits. These
are supplemented by company contracts addressing specific working conditions and
other issues.

Critical issues remain to be resolved, including secondary picketing, bargaining sta-
lemates, restrictive work rules in some agreements, crew size disputes (e.g., some carriers
are seeking one-person rail crews), and the use of bankruptcy law to force labor cost
concessions from employees, including the abandonment of traditional defined pension
benefit plans.73

On balance, even in a deregulated environment, the RLA appears to have accom-
plished its primary goal of facilitating cooperative labor relations in the airline and rail-
road industries and avoidance of significant service disruptions. Whereas both labor and
management might create their own wish list of labor law reforms, as a joint airline
labor management committee concluded the potential for disruption far outweighs
the marginal gain that any legislative refinements might provide. 74

Additional Laws That Affect Labor Relations
Other statutes and executive orders, more narrow in scope, influence labor relations
either directly or indirectly. The following section highlights only their major provisions;
however, practitioners find that detailed knowledge of them is essential to most business
operations. (Related legislation is summarized here, but its specific implications for labor
relations activities and unions are discussed in the appropriate chapters.)

Employee Retirement Income Security Act of 1974
The Employee Retirement Income Security Act (ERISA) establishes minimum stan-
dards for the operation of voluntarily established private-sector defined benefit pension
(which specifies a retiree s benefit levels) and health benefit plans (covered further in
Chapter 7). Standards define plan participation, vesting rights, benefit accrual and
funding, fiduciary responsibilities of plan administrators, and guaranteed payments of
benefits accrued under a defined benefit plan through a federally chartered corporation
called the Pension Benefit Guaranty Corporation (PBGC), should the private plan be
terminated. There are approximately 40 million U.S. employees currently enrolled in
more than 26,000 defined benefit plans. There is a maximum monthly pension benefit
adjusted by law each year, which the PBGC is allowed to pay to a beneficiary. This
means that some private-sector employees covered under a generous defined benefit plan
(e.g., airline pilots) may lose some portion of their expected benefits if their private
employer-sponsored plan is terminated and their benefits are determined by the
PBGC s mandated benefit cap. The PBGC is currently responsible for paying the
pension benefits of 887,000 retirees previously covered under 4,500 terminated private-
sector-defined benefit plans.75 The PBGC receives its funding from insurance premiums
paid by employers whose plans are covered, investment revenues, and the remaining
assets of pension plans, which are terminated and taken over by the PBGC.

118 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The Americans with Disabilities Act of 1990
The Americans with Disabilities Act (ADA) of 1990, which covers an estimated 40 mil-
lion disabled Americans, went into effect in January 1992. Considered a Bill of Rights
for Americans with a wide variety of disabilities, the act applies to employment, public
accommodations, transportation, and telecommunications. The employment provisions
cover virtually every aspect of the employment process. The act prohibits discrimination
in advancement, discharge, compensation, training, and other terms and conditions of
employment which are usually included in collective bargaining agreements. The act
requires employers to make reasonable accommodations for disabled employees, except
when doing so would subject the employer to undue hardship. This subject will be
addressed more fully in Chapter 8.

Bankruptcy Act
The Bankruptcy Act of 1984 includes standards for the rejection of collective bargaining
agreements by companies seeking to alter terms of a current labor agreement. It requires
companies to provide relevant information to unions and engage in good-faith efforts to
reach an agreement, which could avoid the necessity to declare bankruptcy. In cases
where no agreement can be reached, the act specifies the requirements for terminating
or altering provisions of an existing labor agreement. (See Chapter 6 for more details.)
Most importantly, a business cannot use bankruptcy to easily change from union to
nonunion status.

Worker Adjustment and Retraining Notification Act
In response to negative public opinion triggered by major plant closings without any
advance notice to employees or community leaders, the Worker Adjustment and Retrain-
ing Notification Act (WARN) was passed in 1988. WARN requires employers with 100 or
more employees to give 60 days advance notice to employees (excluding those employed
less than 20 hours per week) who will be affected by a plant closing or major layoff. Also,
the union, the chief elected local government official, and the state government must be
notified. The law permits a union and employer to negotiate language in their collective bar-
gaining agreement that could require more than 60 days of advance notice be provided.

Situations where WARN Act notice requirements would apply include the following:

A plant closing resulting in an employment loss for 50 or more workers at one site
within a 30-day period.
A mass layoff of at least 33 percent of the workforce (minimum of 50 employees)
within any 30-day period.
A mass layoff involving at least 500 employees within any 30-day period (even if
this is less than 33 percent of the workforce).

Remedies available to affected employees for employer violations include back pay
and benefits for up to 60 days and payments (maximum of $500 per day) to local com-
munities for a period of up to 60 days. One criticism of the statute is that no government
agency will file a lawsuit on behalf of the workers if a violation occurs. The WARN Act
requires the injured party to bear the economic cost of initiating enforcement action by
hiring their own attorney and filing a lawsuit in a federal district court.

WARN ties in closely with the workforce innovation and opportunity Act of 1998, as
amended, which provides funds to state and local governments for training and retraining.
In cases of plant closing and mass layoff, state rapid response teams are available to work
with labor and management officials to set up retraining and reemployment programs for
the affected workers.

CHAPTER 3 Legal Influences 119

Racketeer Influenced and Corrupt Organizations Act of 1970
The Racketeer Influenced and Corrupt Organizations Act (RICO), part of the Orga-
nized Crime Control Act of 1970, forbids anyone involved in racketeering from investing
in or controlling through racketeering activity any enterprise (business or labor union)
engaged in interstate commerce. The law provides for penalties of up to $25,000,
20 years of imprisonment, and forfeiture of all relevant property. A person found guilty
of a RICO violation may be required to divest himself of all interests in the organization
and may be restricted from any future activities in that or a related organization. In addi-
tion, any persons who suffered damages from the prohibited activities are entitled to
recover triple the amount of damages.

Employment Discrimination Laws and Executive Orders
Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991
prohibits any form of employment discrimination by companies, labor unions, and
employment agencies on the basis of race, color, religion, sex, or national origin. The
Equal Employment Opportunity Commission is a federal administrative agency created
to enforce the statute through investigating complaints, attempts at conciliation, and law
suits filed on behalf of the complainant.

The Age Discrimination in Employment Act of 1967, as amended in 1978, 1984,
and 1986, prohibits employment discrimination against those over the age of 40; permits
compulsory retirement for executives who are entitled to pensions of $44,000 per year or
more; and authorizes jury trials in covered cases.

The Equal Pay Act of 1963 requires that men and women doing the same work
receive the same rate of pay. However, pay differences are allowed based upon differ-
ences in qualifications, seniority, and quality of job performance.

The Lilly Ledbetter Fair Pay Act of 2009 (FPA) is an amendment to Title VII of
the 1964 Civil Rights Act and also applies to claims arising under the Age Discrimina-
tion in Employment Act of 1967 and the Americans with Disabilities Act of 1990.76

Passed by Congress in response to a U.S. Supreme Court decision limiting the amount
of time a victim had to bring a legal claim for alleged pay discrimination, the FPA states
that each incidence of pay discrimination starts anew the time limit for filing a valid
claim under the applicable statute. Thus, if an employer illegally discriminated against,
say, women employees by giving them lower pay, and the employer paid them monthly,
then each new paycheck would reset the clock for the 180-day statute of limitations for
filing a discrimination claim.

Executive Order 11246, as amended by Executive Order 11375, prohibits employ-
ment discrimination in the federal government and by federal government contractors
and subcontractors receiving $50,000 or more. Those having contracts of $50,000 or
more and employing 50 people or more are required to establish affirmative action
plans that prescribe specific goals and procedures for increasing the percentage of minor-
ity employees. Firms that fail to comply could lose part or all of their contracts.

The Vocational Rehabilitation Act of 1973 (Section 503) requires holders of federal
government contracts in excess of $2,500 to take affirmative action to employ and
advance in employment qualified physically and mentally disabled individuals. Further,
if any disabled individual believes that a federal contractor has failed or refused to
comply with the act, he or she may file a complaint with the Department of Labor,
which will investigate the complaint and take any warranted action. In addition,
Section 504 extends coverage to organizations receiving federal financial assistance
and is enforced by the Department of Health and Human Services.

120 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Other Related Labor Relations Laws
The Uniformed Services Employment and Reemployment Rights Act (USERRA) of
1994 clarifies and extends the Veterans Reemployment Rights Act of 1940 to protect
the job rights of individuals called to perform military service on behalf of the United
States. Also, the Vietnam Era Veteran Readjustment Assistance Act requires employers
with government contracts of $10,000 or more to take affirmative action to employ and
advance disabled veterans and qualified veterans of the Vietnam War.

The Social Security Act of 1935, as amended, established two national systems of
social security for protection against loss of income resulting from unemployment, old
age, disability, and death: (1) retirement, survivors, and disability insurance, and health
insurance for persons over age 65; and (2) unemployment insurance, which operates
under a state-administered, federal-state plan whose operating costs are paid by the fed-
eral government. The Fair Labor Standards Act of 1938 administered by the USDOL
covers a variety of employment issues including minimum wage and overtime pay
requirements, child labor, and migrant and seasonal agricultural worker protections.

Other important laws include state wage laws, the federal Occupational Safety and
Health Act of 1970 designed to promote workplace safety and prevent injuries (covered
in Chapter 8), the Family and Medical Leave Act of 1993 that allows workers to take
unpaid leave for the birth or adoption of children or for family medical reasons
(covered in Chapter 7). There are also state laws and local ordinances that pertain to
public-sector labor relations and equal employment opportunity.

Summary
This chapter has presented the major provisions of fed-
eral labor relations laws in the United States. These
legal influences must be understood to fully appreciate
the remaining chapters in this book because nearly all
issues in labor relations are either directly or indirectly
influenced by labor law. The legal question of whether
one has a right to act is separate and distinct from the
practical question of whether it is in one s best interest
to exercise such a right under the prevailing circum-
stances. Union and management practitioners should
give consideration to the legal and practical costs, ben-
efits, and risks of actions in making operational
decisions.

Although many think of law in terms of statutes
passed by the U.S. Congress or state legislatures, labor
relations, and other types of law proceed not only from
statutes but also from the U.S. Constitution, judicial
decisions, and administrative decisions of government
agencies. Similarly, case law and administrative law
develop at the state and local government levels.

The 1930s, a decade during which the country
confronted a severe economic depression, brought
about major labor law changes. The enactment of the
Norris La Guardia Act removed many legal

restrictions on the types of employee concerted activity
that could be used to peacefully pressure employers to
grant favorable employment improvements. Federal
courts began to take a more neutral stance in labor
disputes attempting to balance the legitimate exercise
of employee and employer rights.

Congress passed the NLRA in 1935, which covered
most private-sector employees, to control employer
ULPs. It established the NLRB to enforce the right of
employees to form and join unions, bargain collec-
tively, and engage in other concerted activities for
mutual aid or protection. Then, in 1947 and again in
1959, Congress amended the NLRA with passage of the
LMRA and the Labor Management Reporting and Dis-
closure (Landrum Griffin) Act, respectively. The
LMRA s amendments added union ULPs and restric-
tions on union security clauses. The LMRDA added
regulations governing the internal operations of unions
and restrictions on secondary strike, picketing, and
boycott activities.

Starting in 1863, union activity in the railroad
industry played a key role in the legislative arena. The
RLA of 1926, whose major purpose is to provide for
stable and effective labor relations without major

CHAPTER 3 Legal Influences 121

interruptions in commerce, established procedures for
resolving labor disputes and created the NMB and
NRAB to accomplish the act s purposes. The airline
industry was added to coverage under the RLA in
1936.

While the legal rights of employers and employees
to pursue their respective interests in a free enterprise
system will inevitably create certain conflicts and stress,
on balance the legal environment has provided

reasonable stability in U.S. labor relations, encouraging
economic growth. The acceptance of collective bargain-
ing, widespread use of no-strike or lockout clauses,
final and binding arbitration of rights disputes,
improved employer union cooperation on important
issues, and infrequent need to use national emergency
dispute procedures provide support for progress in
protecting the legitimate rights of both employers and
employees.

Key Terms
Preemption doctrine, p. 92
National Labor Relations Board

(NLRB), p. 92
Labor Management Reporting and

Disclosure (Landrum Griffin) Act,
p. 92

Federal Mediation and Conciliation
Service (FMCS), p. 92

U.S. Department of Labor (USDOL),
p. 92

National Railroad Adjustment Board
(NRAB), p. 92

National Mediation Board (NMB),
p. 92

Norris La Guardia Act, p. 93
closed shop union security clause, p. 96
National Labor Relations Act (NLRA),

p. 96
Labor Management Relations Act

(LMRA), p. 96
Union shop union security clause, p. 97
Agency shop union security clause, p. 97
right-to-work law, p. 97
The Board, p. 99
union salts, p. 101
Weingarten Rights, p. 103

NLRB jurisdiction, p. 104
Postal Reorganization Act of 1970,

p. 106
concerted and protected activity, p. 107
Interboro doctrine, p. 107
Charging Party, p. 108
Respondent, p. 108
merit, p. 108
Administrative Law Judge (ALJ), p. 108
routine ULP case, p. 110
lead ULP case, p. 110
cease-and-desist order, p. 110
post written notices, p. 110
affirmative action, p. 110
forum shopping, p. 111
petition for certiorari, p. 111
Railway Labor Act (RLA) of 1926,

p. 114
major dispute under the RLA, p. 114
minor dispute under the RLA, p. 115
Employee Retirement Income Security

Act (ERISA), p. 118
Pension Benefit Guaranty Corporation

(PBGC), p. 118
Americans with Disabilities Act

(ADA), p. 119

Bankruptcy Act of 1984, p. 119
Worker Adjustment and Retraining

Notification Act (WARN), p. 119
Racketeer Influenced and Corrupt

Organizations Act (RICO), p. 120
Civil Rights Act of 1964, p. 120
Civil Rights Act of 1991, p. 120
Age Discrimination in Employment

Act of 1967, p. 120
Equal Pay Act of 1963, p. 120
Lilly Ledbetter Fair Pay Act of 2009

(FPA), p. 120
Executive Order 11246, p. 120
Executive Order 11375, p. 120
Vocational Rehabilitation Act of 1973,

p. 120
Uniformed Services Employment and

Reemployment Rights Act
(USERRA) of 1994, p. 121

Social Security Act of 1935, p. 121
Fair Labor Standards Act of 1938,

p. 121
Occupational Safety and Health Act of

1970, p. 121
Family and Medical Leave Act of 1993,

p. 121

Discussion Questions

1. Some union advocates have suggested that NLRB
certification procedures are so cumbersome that
unions would be better off if the LMRA was
repealed. If labor laws discussed in this chapter
were repealed, how might this affect (a) the for-
mation of unions and (b) the terms and condi-
tions of employment for employees? Discuss.

2. How were yellow-dog contracts and labor
injunctions used to limit the activities of union
organizers or slow union growth?

3. What was the intent or purpose of Congress in
passing (a) the 1932 Norris La Guardia Act,
(b) the 1935 National Labor Relations (Wagner)
Act, (c) the 1947 Labor Management Relations

122 PART 1 Recognizing Rights and Responsibilities of Unions and Management

(Taft Hartley) Act, and (d) the Landrum Griffin
Act of 1959?

4. Although the National Labor Relations Act gives
employees certain rights, these rights are not
unlimited. Discuss.

5. Is the selection process for determining members
of the National Labor Relations Board too politi-
cized? Does the current selection process lead to
instability in interpretations of the LMRA and if
so, is this a positive or negative for employers and
employees covered by the law?

6. Why is there still a separate labor relations law for
the railway and airline industries?

7. Should the LMRA be amended to cover agricul-
tural laborers?

8. Should the NLRB s current jurisdictional stan-
dards (i.e., monetary threshold for affecting
interstate commerce) be adjusted to take into
account the effects of inflation (which would have
the effect of removing employees currently cov-
ered by the law under existing jurisdictional
standards)?

Exploring the Web

Labor Relations and the Law

1. Case Law. Find a recent Supreme Court or U.S.
Court of Appeals decision concerning a labor law
issue. What legal principles does the court rely
upon in determining the case decision? Suggestions
for searching: Cornell University s Law School offers
the Supreme Court Collection through their Legal
Information Institute. Findlaw Legal Information
Center is a good commercial site. You may also
use electronic databases offered by your university s
library, for example, LexisNexis or Westlaw.

2. National Labor Relations Board. Go to the Web
site for the National Labor Relations Board at
http://www.nlrb.gov/ to see the NLRB s current
organization, rules and regulations, decisions, and man-
uals. Read the section that describes the National Labor
Relations Act. Included also on the site are press

releases, public notices, and a weekly summary of cur-
rent events. Who is the current chairman of the NLRB?
What are three current activities of the NLRB and/or
three recently decided cases?

3. U.S. Code. When legislation becomes law, it is
incorporated into the U.S. Code in the appropriate
sections. Identify sections of the Code affected by
these acts related to labor relations: Railway Labor
Act, Norris La Guardia Act, LMRA (Taft Hartley),
and Labor Management Reporting and Disclosure
Act (Landrum Griffin). Searching hints: Search by
Popular Names of Acts in Cornell University s Law
School U.S. Code Collection or the U.S. Code search
provided by the U.S. House of Representatives. You
may also use electronic databases offered by your
university s library, for example, LexisNexis or
Westlaw.

References
1. Muslim employee claims Disneyland banned her

from wearing head scarf in front of customers,
Fox News [Online], August 18, 2010, at http://
www.foxnews.com/us/2010/08/18/muslim-
employee-claims-disneyland-banned-wearing-
head-scarf-customers/; Gilliam Flaccus, Muslim
Employee: Disney Banned Her Head Scarf,
FindLaw Legal News, August 19, 2010, pp. 1 2 at
http://news.findlaw.com/; Deanne Katz, Disney-
land Banned Muslim Woman s Head Scarf: Law-
suit FindLaw Legal News Blog, August 15, 2012,
pp. 1 2 at http://blogs.findlaw.com/injured/2012/

08/disneyland-banned-muslim-womans-head-
scarf-lawsuit.html.

2. Walter E. Oberer, Kurt L. Hanslowe, and
Timothy J. Heinsz, Labor Law: Collective
Bargaining in a Free Society, 4th ed. (St. Paul,
MN: West Publishing Co., 1994), pp. 358 359.

3. 47 Stat. 70 (1932).
4. A labor dispute was defined as any controversy

concerning terms or conditions of employment,
or concerning the association or representation of
persons in negotiating, fixing, maintaining,
changing, or seeking to arrange terms or

CHAPTER 3 Legal Influences 123

conditions of employment regardless of whether
the disputants stand in the proximate relation of
employer and employee. 47 Stat. 70 (1932).

5. United States v. Hutcheson, 312 U.S. 219 (1941).
6. Ibid.
7. Irving Bernstein, Turbulent Years: A History of

the American Worker, 1933 1941 (Boston:
Houghton Mifflin, 1971), pp. 1 36. See also Bruce
Nelson, Give Us Roosevelt: Workers and the
New Deal Coalition, History Today, 40(1), 1990,
pp. 40 48. Janet Irons, Testing the New Deal: The
General Textile Strike of 1934 in the American
South (Urbana: University of Illinois Press, 2000).
John A. Salmond, The General Textile Strike of
1934: From Maine to Alabama (Columbia, MO:
University of Missouri Press, 2002).

8. Alvin L. Goldman, The Supreme Court and
Labor-Management Relations Law (Lexington,
MA: D.C. Heath, 1976), pp. 22 28; Herbert L.
Sherman, Jr., and William P. Murphy, Unioniza-
tion and Collective Bargaining (Washington, D.C.:
Bureau of National Affairs, Inc., 1975),
pp. 7 9.

9. Schecter Poultry Corporation v. United States, 295
U.S. 495 (1935).

10. National Labor Relations Act, 49 Stat. 449 (1935).
11. Janice R. Bellace, The Future of Employee

Representation in America: Enabling Freedom of
Association in the Workplace in Changing Times
through Statutory Reform, University of Penn-
sylvania Journal of Labor & Employment Law,5,
Fall 2002, p. 5 at http://web.lexis-nexis.com. See
also Bruce E. Kaufman and David Lewin, Is the
NLRA Still Relevant to Today s Economy and
Workplace? Labor Law Journal, 49, September
1998, pp. 1113 1126.

12. Goldman, The Supreme Court, pp. 28 31.
13. NLRB v. Jones & Laughlin Steel Corporation, 301

U.S. 1 (1937).
14. Bernstein, Turbulent Years, pp. 769 771.
15. Labor Management Relations Act, 61 Stat. 136

(1947).
16. NLRB v. Virginia Electric & Power Company, 314

U.S. 469 (1941).
17. Goldman, The Supreme Court, pp. 31 39.
18. Labor Management Reporting and Disclosure Act,

73 Stat. 519 (1959).
19. Fact Sheet on the National Labor Relations Board

(Washington, D.C.: NLRB Division of Informa-
tion, 2010), pp. 1 2.

20. William N. Cooke and Frederick H. Gautschi III,
Political Bias in NLRB Unfair Labor Practice

Decisions, Industrial and Labor Relations
Review, 35, July 1982, p. 549.

21. William N. Cooke, Aneil K. Mishra, Gretchen M.
Spreitzer, and Mary Tschirhart, The Determi-
nants of NLRB Decision-Making Revisited,
Industrial and Labor Relations Review, 48, Janu-
ary 1995, pp. 254 256.

22. See, for example, the discussion of Board policy
changes comparing the Clinton Board with the
Bush II Board in Catherine L. Fisk and Deborah
C. Malamud, Thirty-Ninth Annual Administra-
tive Law Issue: Administrative Law Under the
George W. Bush Administration: Looking Back
and Looking Forward: Article: The NLRB in
Administrative Law Exile: Problems with Its
Structure and Function and Suggestions for
Reform, Duke Law Journal, 58, May 2009,
pp. 2013 2085.

23. Professor/Arbitrator Calls NLRA Pretty Sick,
Recommends Fixes, Collective Bargaining
Bulletin, 14, July 2, 2009, p. 83.

24. Howard S. Lavin and Elizabeth E. DiMichele,
Circuits Split on Whether Two-Member NLRB

Decisions Are Binding, Employee Relations Law
Journal, 35(3), 2009, pp. 82 87; New Process Steel,
L.P. v. National Labor Relations Board, 130 S. Ct.
2635 (2010).

25. Amanda Becker, U.S. Supreme Court ruling seen
unlikely to alter past NLRB decisions, Chicago
Tribune [online edition], June 26, 2014, at http://
articles.chicagotribune.com/2014-06-26/news/
sns-rt-us-usa-courts-appointments-nlrb-
20140626_1_noel-canning-nlrb-national-labor-
relations-board; Pamela C. Corley, Recess
Appointments: National Labor Relations Board v.
Noel Canning. Justice System Journal, 35(4),
2014, pp. 410 412.

26. Office of the General Counsel of the National
Labor Relations Board, Summary of Operations,
2012, pp. 2 5 at http://www.nlrb.gov/reports-
guidance/reports/summary-operations; NLRB
Board Decisions Issued, at http://www.nlrb.gov/
news-outreach/graphs-data/decisions/board-
decisions-issued.

27. Ibid., Office of General Counsel, pp. 4 5.
28. Bruce S. Feldacker, Labor Guide to Labor Law,

4th ed. (Upper Saddle River, NJ: Prentice-Hall,
2000), pp. 12 14.

124 PART 1 Recognizing Rights and Responsibilities of Unions and Management

29. Holly Farms Corporation v. NLRB, 116 S.Ct. 1396
(1996).

30. Section 2(11), LMRA 61 Stat. 136 (1947). See also
NLRB v. Kentucky River Community Care, Inc.,
532 U.S. 706 (2001).

31. NLRB v. Bell Aerospace Company, 416 U.S. 267
(1974).

32. Oakwood Healthcare Inc. and United Automobile
Workers International Union, 348 NLRB No. 37
(2006).

33. NLRB v. City Disposal Systems, Inc., 465 U.S. 822
(1984); NLRB v. Washington Aluminum Com-
pany, 370 U.S. 9 (1962).

34. NLRB v. City Disposal Systems, Inc., 465 U.S. 822
(1984).

35. Seventy-Fourth Annual Report of the National
Labor Relations Board for the Fiscal Year Ended
September 30, 2009 (Washington, D.C.: U.S.
Government Printing Office, 2009), pp. 4 5.

36. National Labor Relations Board, Performance and
Accountability Report, FY 2014, at http://www.
nlrb.gov/reports-guidance/reports/performance-
and-accountability.

37. Office of the General Counsel of the National
Labor Relations Board, Summary of Operations,
2012, pp. 4 5; also see, National Labor Relations
Board, Disposition of Unfair Labor Practice
Charges, at http://www.nlrb.gov/news-outreach/
graphs-data/charges-and-complaints/disposition-
unfair-labor-practice-charges.

38. Leonard R. Page, The NLRA at 70: Perspectives
from the Office of the General Counsel, Labor
Law Journal, 56(3), 2005, pp. 188 189; Fredrick
L. Feinstein, The NLRA at 70: Perspectives from
the Office of the General Counsel, Labor Law
Journal, 56(3), 2005, pp. 192 195; Risa L.
Lieberwitz, Labor Law in the United States:
The Continuing Need for Reform, Managerial
Law, 46(4/5), 2004, pp. 53 70.

39. H.K. Porter Company v. NLRB, 397 U.S. 99
(1970). See also BE & K Construction Company v.
NLRB, 536 U.S. 516 (2002) and Hoffman Plastic
Compounds, Inc. v. NLRB, 535 U.S. 137 (2002).

40. Lawrence E. Dube, NLRB Rules 3 1 for Elec-
tronic Posting of Notices to Remedy Unfair Labor
Practice, Daily Labor Report, No. 205, October
25, 2010, pp. AA2 3.

41. Ford Motor Company v. NLRB, 441 U.S. 488
(1979); Charles D. Bonanno Linen Service v.
NLRB, 454 U.S. 404 (1982).

42. Office of the General Counsel of the National
Labor Relations Board, Summary of Operations,
2012, January 11, 2013, p. 6 at http://www.nlrb.
gov/reports-guidance/reports/summary-
operations.

43. James A. Gross, The Demise of the National
Labor Policy: A Question of Social Justice, in
Restoring the Promise of American Labor Law, ed.
Sheldon Friedman et al. (Ithaca, NY: ILR Press,
1994), pp. 57 58.

44. Janice R. Bellace, Labor Law Reform for the Post
Industrial Workplace, Labor Law Journal, 45,
August 1994, p. 460.

45. Kenneth R. Dolin, Analyzing Recent Devel-
opments at the National Labor Relations
Board, Labor Law Journal, 56(2), 2005,
pp. 120 138; James Gray Pope, Class Conflicts
of Law II: Solidarity, Entrepreneurship, and
the Deep Agenda of the Obama NLRB,
Buffalo Law Review, 57, 2009, p. 653;
Anonymous, Employers beware: Senate has
confirmed pro-labor majority to NLRB,
Management Report for Nonunion Organizations,
36(9), 2013, p. 1

46. Bush Labor Board Decisions: Pendulum Shift or
Permanent Changes? Labor Law Journal, 56(3),
2005, p. 222.

47. James J. Brudney, The Changing Workplace:
Reflections on Group Action and the Law of the
Workplace, Texas Law Review, 74, June 1996,
pp. 1563 1599.

48. Cynthia L. Estlund, The Ossification of
American Labor Law, Columbia Law Review,
102, October 2002, p. 1540.

49. Estlund, The Ossification of American Labor
Law, pp. 1536 1158. See also William B. Gould,
Agenda for Reform: The Future of Employment
Relationships and the Law (Cambridge, MA: MIT
Press, 1993) and Paul C. Weiler, Governing the
Workplace: The Future of Labor and Employment
Law (Cambridge, MA: Harvard University
Press, 1990).

50. Michael C. Harper, The Continuing Relevance
of Section 8(a)(2) to the Contemporary
Workplace, Michigan Law Review, 96(8), 1998,
pp. 2322 2383.

51. Jeff Canfield, Note: What a Shame: The
Broken Beck Rights System in the Real World
Workplace, Wayne Law Review, 47, Fall 2001,
1049 1074; Peter Capelli, Old Laws Hobble the

CHAPTER 3 Legal Influences 125

New Economy Workplace, Sloan Management
Review, 42(2), 2001, pp. 110 111.

52. Samuel Estreicher and Matthew T. Bodie, Review
Essay: Administrative Delay at the NLRB: Some
Modest Proposals, Journal of Labor Research,
23(1), 2002, pp. 87 105. See also Edward B.
Miller, An Administrative Appraisal of the NLRB,
4th ed. (Fairfax, VA: John M. Olin Institute for
Employment Practice and Policy at George
Mason University, 1999).

53. U.S. General Accounting Office, National
Labor Relations Board: Action Needed to
Improve Case Processing Time at Headquarters
(Washington, D.C.: Superintendent of
Documents, 1991), pp. 1 7.

54. National Labor Relations Board, Performance and
Accountability Report, FY 2014, pp. 46 47, at
http://www.nlrb.gov/reports-guidance/reports/
performance-and-accountability.

55. Samuel Estreicher, Improving the Administra-
tion of the National Labor Relations Act without
Statutory Change, ABA Journal of Labor and
Employment Law, 25(1), 2009, pp. 1 24; Melanie
Trottman & Kris Maher. Plan to Ease Way for
Unions Labor Board Proposes Speeding Up
Organizing Votes; Employers, GOP Cry Foul.
Wall Street Journal (Eastern Edition), June 22,
2011, p. A.1; Tim Devaney, Labor Board Speeds
Up Union Elections, The Hill [Online edition],
December 12, 2014, at http://thehill.com/
regulation/finance/226935-nlrb-speeds-up-
union-elections.

56. William B. Gould IV, New Labor Law Reform
Variations on Old Theme: Is the Employee Free
Choice Act the Answer? Fall 2009, pp. 1 46.

57. Charles B. Craver, The National Labor Relations
Act at 75: In Need of a Heart Transplant, Hofstra
Labor and Employment Law Journal, 27, Spring
2010, pp. 311 356; Mike Pare, U.S. Secretary of
Labor Thomas Perez cites Chattanooga s Volks-
wagen plant in touting new approach, Chatta-
nooga Times Free Press [online edition], October
23, 2014, at http://www.timesfreepress.com/news/
business/aroundregion/story/2014/oct/23/labor-
secretary-supports-works-council/270231/.

58. National Mediation Board, Annual Performance
and Accountability Report FY 2009 (Washington,
D.C.: National Mediation Board, 2009), p. 2.

59. Lisa Catherine Tulk, Comment: The 1926 Rail-
way Labor Act and the Modern American Airline

Industry: Changes and Chaos Outline the Need
for Revised Legislation, Journal of Air Law and
Commerce, 69, Summer 2004, pp. 615 645;
Nancy Brown Johnson, Airlines: Can Collective
Bargaining Weather the Storm? in Collective
Bargaining in the Private Sector, ed. by Paul
F. Clark, John T. Delaney, and Ann C. Frost
(Champaign, IL: Industrial Relations Research
Association, 2002), pp. 16 20; Charles M.
Rehmus, Evolution of Legislation Affecting
Collective Bargaining in the Railroad and Airline
Industries, in The Railway Labor Act at Fifty, ed.
Charles M. Rehmus (Washington, D.C.: U.S.
Government Printing Office, 1977), p. 4.

60. National Mediation Board, Annual Performance
and Accountability Report FY 2009, p. 34;
National Mediation Board, NMB and RLA Fact
Sheet, Sept. 30, 2012, at http://www.nmb.gov/
documents/mediation/Fact-Sheet_FY-2012.pdf;
National Mediation Board, Annual Report FY
2013, at https://storage.googleapis.com/dakota-
dev-content/2013annual-report/index.htm.

61. National Mediation Board, NRAB Board Members:
FY 2010 February 4, 2010, p. 1, at http://www.nmb.
gov/arbitration/nrab-board-members_fy-2010.pdf;
Rehmus, Collective Bargaining, in The Railway
Labor Act at Fifty, pp. 14 15.

62. National Mediation Board, Annual Performance
and Accountability Report FY 2009, pp. 40, 45;
National Mediation Board, Arbitration Highlights,
FY 2013, at https://storage.googleapis.com/
dakota-dev-content/2013annual-report/mda/
arbitration.html; National Mediation Board,
Representation Highlights, at https://storage.
googleapis.com/dakota-dev-content/2013annual-
report/rep/representation.html.

63. Larry Swisher, NMB Ends Longstanding Policy,
Adopts Rule for Majority Vote in Representation
Elections, Daily Labor Report, No. 89, May 11,
2010, pp. AA1 3; Jennifer Michels, Precedent
Setting Case, Aviation Week and Space Technol-
ogy, 172(20), 2010, p. 43; Seth Borden, National
Mediation Board (NMB) Changes Union Election
Rules, Easing Unionization Process, Labor Rela-
tions Today [online edition], May 12, 2010, at
http://www.laborrelationstoday.com/2010/05/arti-
cles/rla/national-mediation-board-nmb-changes-
union-election-rules-easing-unionization-process/;
also see Doug Hall, NMB Announces Internet
Voting, Venulex Legal Summaries, Q1, January,

126 PART 1 Recognizing Rights and Responsibilities of Unions and Management

2007, pg. 1 at http://connection.ebscohost.com/c/
articles/25046749/nmb-announces-internet-vot-
ing; Michael Elsenrath, “Effect of NMB Voting
Change on Airline Unionization.” The Journal of
Aviation/Aerospace Education & Research 23(2),
2014, pp. 41 56.

64. Association for American Railroads, Collective
Bargaining in the Rail Industry, April, 2014, p. 1,
at https://www.aar.org/BackgroundPapers/
Collective%20Bargaining.pdf.

65. Fact Finding Report, Commission on the Future of
Worker-Management Relations (Washington,
D.C.: U.S. Departments of Labor and Commerce,
May 1994), pp. 99 100.

66. Charles M. Rehmus, Emergency Strikes Revis-
ited, Industrial and Labor Relations Review,
43(2), 1990, pp. 175 190; Douglas M. McCabe,
The Railroad Industry s Labor Relations Envi-

ronment: Implications for Railroad Managers,
ICC Practitioners Journal, 49, September October
1982, pp. 592 602; Railroad Workers United, U.S.
Unions in National Rail Bargaining, Updated July
25, 2012, at http://railroadworkersunited.org/us-
unions-in-national-bargaining#.

67. Charles M. Rehmus, The First Fifty Years: And
Then, in The Railway Labor Act at Fifty, ed.
Rehmus, p. 246; Beatrice M. Burgoon, Mediation
under the Railway Labor Act, in The Railway
Labor Act at Fifty, ed. Rehmus, p. 23.

68. Deregulation in Three Transport Industries Has
Produced Widely Diverse Labor Market Results,
Daily Labor Report, May 13, 1986, p. A-13.

69. Mark Kahn, Introduction, in Cleared for Take-
off: Airline Labor Relations since Deregulation, ed.
Jean T. McKelvey (Ithaca, NY: ILR Press, 1988),
p. 3; David Morris, Airline Deregulation: A Tri-
umph of Ideology Over Evidence, The Huffing-
ton Post [online edition], December 13, 2013, at
http://www.huffingtonpost.com/david-morris/air-
line-deregulation-ideology-over-evidence_b_
4399150.html.

70. Alfred Kahn, In Defense of Deregulation, in
Cleared for Takeoff: Airline Labor Relations since
Deregulation, ed. Jean T. McKelvey (Ithaca, NY:
ILR Press, 1988), pp. 344 345. Jan K. Brueckner,
Darin Lee, & Ethan S. Singer, Airline Competi-
tion and Domestic US airfares: A Comprehensive
Reappraisal, Economics of Transportation, 2(1),
2013, pp. 1 17. For a legal analysis, see Beth

Adler, Comment: Deregulation in the Airline
Industry: Toward a New Judicial Interpretation of
the Railway Labor Act, Northwestern University
Law Journal, 80, Winter 1986, pp. 1003 1006.

71. Greg J. Bamber, Jody Hoffer Gittell, Thomas A.
Kochan, & Andrew Von Nordenflycht. Up in the
air: How airlines can improve performance by
engaging their employees. (Ithaca, NY: Cornell
University/ILR Press, 2009); Bruce E. Kaufman,
Keeping the Commitment Model in the Air

during Turbulent Times: Employee Involvement
at Delta Air Lines, Industrial Relations,
52(Supplement 1), 2013, pp. 343 377.

72. U.S. General Accounting Office, Airline Labor
Relations: Information on Trends and Impact of
Labor Actions (Washington, D.C.: Government
Accounting Office, 2003), pp. 3 4; Andrew von
Nordenflycht and Thomas A. Kochan, Labor
Contract Negotiations in the Airline Industry,
Monthly Labor Review, 126 (7), 2003, pp. 18 28.

73. Johnathan E. Collins, Comment: Airlines Jettison
Their Pension Plans: Congress Must Act to Save
the PBGC and Protect Plan Beneficiaries, Journal
of Air Law and Commerce, 70, Spring 2005,
pp. 289 317; Daniel P. Rollman, Comment:
Flying Low: Chapter 11 s Contribution to the
Self-Destructive Nature of Airline Industry
Economics, Emory Bankruptcy Developments
Journal, 21, 2004, pp. 381 418; and Donald E.
Cullen, Emergency Boards under the Railway
Labor Act, in The Railway Labor Act at Fifty,
ed. Rehmus, pp. 176 183; Alexandra Bradbury,
Rail Workers Vote Down Single-Person Crews,

Labor Notes [online edition], September 11, 2014, at
http://www.labornotes.org/2014/09/rail-workers-
vote-down-single-person-crews.

74. Nancy Brown Johnson, Airlines: Can Collective
Bargaining Weather the Storm? in Collective
Bargaining in the Private Sector, eds. Clark,
Delaney, and Frost, 2002, p. 20.

75. Pension Benefit Guaranty Corporation, Who We
Are, 2014, pp. 1 2 at http://www.pbgc.gov/
about/who-we-are.html; U.S. Department of
Labor, Retirement Plans, Benefits and Savings,
2014, p. 1 at http://www.dol.gov/dol/topic/
retirement/typesofplans.htm.

76. David A. Drachsler, Notes On: Year One of the
Lilly Ledbetter Fair Pay Act, Labor Law Journal,
61(2), 2010, pp. 102 106.

CHAPTER 3 Legal Influences 127

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1 The Great Temperature Debate

The employer is a small, nonunion furniture manufacturer
with 15 employees engaged in interstate commerce. Both of
the employees involved in this case worked in the machine
shop building as band-saw operators. Because the band
saws were located near the shop s large overhead door, to
facilitate the disposal of sawdust, the band-saw operators
were often subject to lower temperatures and drafts on
cool or cold days, whereas other employees farther from
the overhead door often felt too warm. To resolve this
long-standing problem, the plant manager established a
rule that stated: The overhead door will remain open
when the temperature in the shop exceeds 68 degrees and
closed when the temperature is at or below 68 degrees.

On the day in question, employees Drake and Keeler,
who were both band-saw operators, complained to the
shop supervisor that they were too cold and requested
that the overhead door be closed. When questioned by
the shop supervisor, the majority of the other shop
employees present responded that they thought the
door should be left open. The thermometer on the wall
of the shop supervisor s office, located in approximately
the center of the machine shop building, read 72 degrees.

On this day, employee Drake was wearing a sleeve-
less shirt and shorts. Employee Keeler was dressed in
blue jeans, a short-sleeved shirt, a flannel shirt, and a
heavy sweater. Both Keeler and Drake claimed it was
too cold and drafty at their workstation near the open
overhead door. The shop supervisor refused to close
the overhead door because the majority of employees
wanted it left open. During a scheduled lunch break,

Drake and Keeler discussed their problem and decided
to walk off the job for the remainder of the day to
protest the cold temperature at their workstation.

Upon returning to work the following morning,
Drake and Keeler were informed by the plant manager
that they had been fired for leaving work the previous
day without management s permission. Drake and Kee-
ler subsequently filed an unfair labor practice charge
with the NLRB alleging their discharge represented
unlawful discrimination of their right to engage in con-
certed and protected activity under Section 7 of the
LMRA. Drake and Keeler requested a remedy to
include reinstatement with full back pay and restora-
tion of any lost privileges.

Questions
1. Because Drake and Keeler s employer meets the

standard for coverage under the LMRA by engaging
in interstate commerce, which specific employee
right protected by Section 7 of the LMRA could
Drake and Keeler argue they were engaged in which
at least partially motivated the employer s decision
to discharge them?

2. On what grounds might the employer try to argue
that the discharge of Drake and Keeler was an
appropriate (legal) exercise of management s rights?

3. Was the employer s discharge of Drake and Keeler an
unfair labor practice under the LMRA, as amended? If
so, what should be the appropriate remedy?

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2 Independent Contractors? Or Employees?

The employer publishes the South Texas Clarion daily
newspaper, employing 726 carriers on 780 routes
throughout the rural Rio Grande river valley. In addi-
tion to the Clarion, the carriers also deliver seven other
newspapers (e.g., The Wall Street Journal). The
employer operates four distribution centers (ware-
houses) where carriers pick up the papers to take on
their routes. Each distribution center has a general

manager and several District Managers who super-
vise the work of 30 50 carriers. A few carriers work
multiple routes.

In order to become a carrier, an individual must
submit proof from the state that they are a safe and
licensed driver. They also sign a Contractor s Agree-
ment and put down a $300 security deposit. Either
party can terminate the Agreement with a 21-day

128 PART 1 Recognizing Rights and Responsibilities of Unions and Management

notice. District Managers usually show new carriers
their routes, although sometimes the previous carrier
trains his/her replacement.

District managers leave messages for carriers via dry-
erase boards in the warehouse and small read-only com-
puters, which carriers rent for $2 per week. These
computers are updated daily at the distribution center
with information about new/ending subscriptions, route
suggestions, and special requests from subscribers.

Because most sections of the newspaper have been
pre-printed, they are delivered to the Distribution Cen-
ters when the facilities open at 1:00 A.M. each day. The
front two sections, with the most current news, arrive
by truck an hour later. Carriers arrive at 2:00 A.M. and
assemble the papers at route tables, although they are
free to assemble them in their vehicles or even at
home. The employer provides free plastic bags on Sun-
days and on mornings where rain is imminent. Carriers
must purchase bags and/or rubber bands on other days
(the carriers are free to choose which to use).
Once assembled, the carriers deliver the newspapers.
By contract, all papers must be delivered to residences
by 6:00 A.M, and to organizations by 8:00 A.M.

Many carriers occasionally use helpers (e.g., to
assemble papers) or substitute drivers (e.g., if a carrier
goes on vacation). These workers are paid by the carriers,
not by the newspaper; the newspaper only requires that
substitutes have a valid driver s license and vehicle insur-
ance. Carriers are paid weekly from the Accounts Pay-
able department, whereas Clarion employees are paid
from the Payroll Department. Both types of paychecks
originate from the same office. Carriers are paid 30 cent
per delivery of the Clarion plus 5 cent for each full-sized
advertising supplement. For other papers, the rate is 10
cent per delivery. The newspaper does not deduct payroll
taxes or workmen s compensation for carriers and at the
end of the year, they are issued a 1099 form rather than a
W-2 form. They receive no health insurance or other
fringe benefits from the employer.

The question before the ALJ is whether the carriers
are employees of the publisher of the South Texas Clar-
ion newspaper or whether the carriers are independent
contractors. Section 2(3) of the National Labor Relations
Act (also called the Labor Management Relations Act or
the Act ) indicates that, the term employee shall not

include any individual having the status of independent
contractor. [for full text, see http://www.nlrb.gov/
resources/national-labor-relations-act]. If carriers are
employees they are free to unionize if they wish; if

they are independent contractors then they are not.

The employer maintains that the carriers are inde-
pendent contractors and not employees and that a sim-
ilar newspaper case, St. Joseph News-Press (2005)
supports this position. The employer argues that case
differs from a superficially similar case the Roadway

Package System, 326 NLRB 842 [159 LRRM 1153]
(1998), and is similar to the Dial-A-Mattress Operating
System, 326 NLRB 884 [159 LRRM 1166] (1998) case
where workers were found to be independent contrac-
tors. The employer concedes that a few factors raised in
the St. Joseph New-Press case may suggest employee
status for the Clarion carriers (e.g., the work is unskilled,
yet is essential to the operation of the newspaper). How-
ever, the majority of the factors indicate that the carriers
at the Clarion are independent contractors. These
include the following reasons:

1. Control of work. As independent contractors, car-
riers maintain great control over the details of how
they complete their work. For example, while the
District Managers can suggest routes, the carriers
are free to deviate from those suggestions. Carriers
can also decide whether to use rubber bands or
bags and where to assemble newspapers.

2. Supervision. The newspaper does not subject car-
riers to any sort of progressive discipline system
for problems with deliveries. It is true that the
employer relays customer complaints to its carriers
and may follow a carrier on his or her route if
complaints persist. But the employer does not
take any adverse action against a carrier for failure
to adequately perform his or her duties, other than
terminating the contract. Moreover, although the
carriers are subject to Safety Standards rules,
the employer disagrees with the union s character-
ization of these as employee work rules. The
standards apply to anyone who enters the distribu-
tion center, including carriers, employees, and visi-
tors. The rules state that no alcohol, drugs, or
weapons are allowed on employer property; also
closed-toed shoes must be worn. The Safety Stan-
dards do contain some carrier-specific rules. How-
ever, these rules simply ensure the safe operation of
the distribution center; they do not dictate how the
carrier is to perform his or her duties.

3. Entrepreneurial potential. Carriers have more than
a paycheck; they are, in essence, small business
owners. They are free to hire full-time substitutes,
hold multiple routes, and deliver other papers in
addition to those distributed by the employer.

CHAPTER 3 Legal Influences 129

They can work as substitutes for other carriers.
Many also hold other day jobs.

4. Provision of tools, supplies, and a place to work.
Carriers own, control, and maintain their own
vehicles. They buy supplies and are free to work
anywhere.

5. Parties intent. The parties intend to have a
contractor client relationship. The parties Con-
tractor s Agreement clearly states the type of
agreement that the carrier and newspaper are
forming. Also, the carriers are not subject to
employee pay and benefits, but are paid in the
same manner as other outside vendors.

By contrast, the union calls attention to the work
relationship of the carriers and the employer. Based
on their economic dependence on the newspaper,
together with other relevant factors, we submit that
the carriers are statutory employees, and not indepen-
dent contractors. But even considering only the factors
management listed in the common-law test, we would
reach the conclusion that the carriers are employees.

The union argues that four of the nine factors
mentioned in the St. Joseph News-Press case indisput-
ably weigh in favor of finding employee status :

1. The distribution of newspapers is an integral part
of the Employer s business.

2. The carriers are performing unskilled work
3. Carriers are hired for an indefinite period (inde-

pendent contractors, such as construction contrac-
tors, usually have a deadline whereby a project
must be completed; these carriers have no such
deadline)

4. Other employees perform work that is similar to the
work performed by the carriers (it is not uncom-
mon for newspaper employees or District Managers
to deliver newspapers if a carrier is ill or no carrier
has been hired to serve a particular route)

The further union contends that the remain-
ing factors tip the balance in favor of finding that
the carriers are employees:

5. Control of Work. The employer exercises more
control over the carriers details of work than did
the employer in News-Press. The Clarion requires
carriers to deliver to all subscribers on their routes.
Unlike New-Press carriers, Clarion carriers, more-
over, do not issue bills, extend credit, or collect
payments. Instead, the Clarion s circulation depart-
ment bills subscribers. Clarion carriers have been
subjected to discipline that went beyond merely

threatening to terminate the contract (e.g., two-
week suspensions). Carriers are subject to a list of
work rules specified in their employment agree-
ment and to ad hoc rules developed by District
Managers. One District Manager prohibits pets in
carrier vehicles during delivery and even pre-
approves carriers Christmas cards.

6. Supervision. District managers relay customer
complaints to carriers and sometimes terminate
contracts if complaints are excessive. But District
Managers will sometimes take the additional step
of following carriers on their routes. District Man-
agers will also call carriers if they are late arriving
at the distribution center. Two carriers in the pres-
ent case have testified that carriers will be offi-
cially reprimanded if they receive too many
customer complaints. Thus, a formal progressive
discipline system for carriers exists.

7. Provision of tools, supplies, and a place to work. It is
also clear that the employer provides supplies and
a place of work. The employer furnishes compu-
ters, albeit it charges the carriers a nominal weekly
rental fee. The employer also maintains distribu-
tion centers complete with route tables, cubby
holes, and downloading facilities for the compu-
ters. The carriers must report to a distribution cen-
ter to obtain newspapers.

8. Entrepreneurial potential. The employer requires
carriers to deliver newspapers at a nonnegotiable
piece rate. This inability to negotiate rates limits
entrepreneurial potential. Although carriers also
can hire substitutes, Clarion managers control sub-
stitutes terms and conditions of employment.
Some District Managers will not give more routes
to carriers whom they believe do not have time for
another route. Together, these facts suggest Clarion
carriers are employees and not entrepreneurs.

9. Parties intent. Finally, the parties contract implies
an independent contractor client agreement. But
the carriers have no choice in whether they are
considered independent contractors or employees;
rather, the employer simply labels them
contractors. To say that this contract reflects

the carriers intent is therefore dubious. Further,
in the Rio Grande valley, many carriers speak
Spanish, but the contract is written in English!
Such a contract is not negotiated by two inde-
pendent equals; it is simply is the dictation of
terms by one side and is not reflective of mutual
interests.

130 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Questions
1. Go to www.NLRB.gov/ and search for the precedent

cases (Roadway, Dial-a-mattress, and St. Joseph
News-Press. How does this case parallel and differ
from those cases?

2. Which of the company s arguments for indepen-
dent contractor status are most compelling?

3. Which of the union s arguments for employee
status are most compelling?

4. Is this simply a case of who wins more of the nine
factors? Or are some factors inherently more
important than others? If so, which ones in this case
are more important?

5. If you were an Administrative Law Judge working
for the NLRB, how would you rule in this case and
why?

CA
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3 NLRB Jurisdiction over a Private Charter School

The key issue in this case is whether the employer, a
private for profit corporation that contracted with a
government entity to operate a school, is exempt
from Board jurisdiction as a political subdivision of
the state of Michigan within the meaning of Section
2(2) of the LMRA. Section 2(2) of the LMRA excludes
from the definition of a covered employer any state or
political subdivision thereof.

This case began when the Michigan Education
Association filed a representation election petition
with the NLRB seeking to become the representative
for a proposed bargaining unit consisting of teachers
and counselors employed at the Academy of Waterford
(the Academy), a public charter school under the pro-
visions of the Michigan Revised School Code. To deter-
mine if the representation petition was valid, one
question the NLRB must determine is whether the
employer (Charter Schools Professional Management
Inc.) meets the definition of a covered employer
under the LMRA as noted previously.

The Academy was first created as a public charter
school by the Blue Springs Community College (BSCC)
under provisions of the Michigan revised School Code.
BSCC retains oversight authority of the Academy and
is responsible to the Michigan Department of Educa-
tion for ensuring the operation and performance of
the Academy complies with its charter and all applica-
ble laws. BSCC appoints a board of directors to oversee
the Academy and disburses funds received from the
state of Michigan to the Academy to fund its opera-
tions. In return for administering oversight authority,
BSCC receives a fee equal to 3 percent of all funds the
Academy receives from the state of Michigan. The

Academy was incorporated as a nonstock, nonprofit,
tax exempt corporation under Michigan s Non-Profit
Corporation Act. The Academy is considered a govern-
ment agency under the Michigan revised School Code
and board members, officers, and employees have gov-
ernment immunity from lawsuits. As a government
agency, the Academy must comply with Michigan s
Open Meetings Act, Freedom of Information Act, and
Public Employment Relations Act in addition to sub-
mitting numerous reports regarding educational, finan-
cial, and operating matters to BSCC annually.

The Academy s Board of Directors decided to enter
into a services contract with Charter Schools Professional
Management Inc. (CSPMI) to operate the Academy.
CSPMI is a private, for profit organization incorporated
under the Michigan Business Corporation Act to provide
educational management services to public charter
schools. CSPMI as a private corporation is not subject to
Michigan s Open Meetings Act or Freedom of Informa-
tion Act. CSPMI is controlled by a board of directors that
is elected by the ownership of the corporation. The cor-
poration s financial records are not available to the public
nor is there any state requirement that the corporation s
financial transactions be subjected to any audit. CSPMI
receives an annual fee of 12 percent of all state and federal
funds received by the Academy as payment for the man-
agement services it provides.

CSPMI (the employer) is solely responsible for hir-
ing, training, and disciplining all teachers or other staff
employees of the Academy. The employer solely deter-
mines the rates of pay or other benefits employees
receive, performs all performance evaluations, and
determines disciplinary or discharge actions to be

CHAPTER 3 Legal Influences 131

taken against employees. The day-to-day operations of
the Academy are the responsibility of the principal and
staff, who are each employed by CSPMI. Neither the
Academy s board of directors nor anyone affiliated
with BSCC has any involvement in personnel matters
affecting Academy employees. The Academy s teachers
as employees of a private corporation are not eligible to
participate in the Michigan Public School Retirement
System. The employer is responsible for the operation
and maintenance of the Academy s school building and
all aspects of the Academy s business administration
including reports the Academy is required to submit
to the state and an annual operating budget submitted
to the Academy s board of directors.

The NLRB has formulated a standard test to deter-
mine if an entity such as the employer in this case is a
political subdivision of the state and thus exempt from
coverage under the definition of an employer contained
in Section 2(2), LMRA. To be exempt from NLRB
jurisdiction as a political subdivision of a state, the

employer must either (1) be created directly by the
state so as to constitute a department or administrative
arm of the government, or (2) administered by indivi-
duals who are responsible to public officials or to the
general electorate.

Questions
1. Applying the standard test outlined previously, does

the employer (CSPMI) meet the definition of an
employer as stated in Section 2(2), LMRA and
therefore, the board may assert jurisdiction and
conduct a representation election? Explain your
reasoning.

2. In the debate over whether charter public schools
should be created, are the potential bargaining rights
of charter school employees a relevant issue which
should be part of the public debate over whether
charter schools are more advantageous than existing
public schools? Explain your reasoning.

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4 Determination of Supervisory Status

The union sought to become the exclusive bargaining
representative for a group of five harbor pilots
employed by Pacific Coast Docking Pilots (the
employer). The union won a National Labor Relations
Board (NLRB) supervised secret-ballot election by a
vote of 5 0. The employer refused to recognize and
bargain with the union in an effort to force a federal
court to determine if the five harbor pilots who com-
posed the bargaining unit were supervisors or employ-
ees. The union filed an unfair labor practice against the
employer for a refusal to bargain in good faith. The
Board granted summary judgment in favor of the
union, which the employer then appealed to a federal
court of appeals for review.

The employer argued that the harbor pilots should
be classified as supervisors and therefore excluded
from the definition of an employee covered under
the LMRA, as amended. The burden of proving the
supervisory status of an employee is on the party
asserting such a status. Section 2(11), LMRA defines a
supervisor as any individual having authority, in the
interests of the employer, to hire, transfer, suspend, lay
off, recall, promote, discharge, assign, reward, or

discipline other employees, or responsible to direct
them, or to adjust their grievances, or effectively to rec-
ommend such action, if in conjunction with the fore-
going the exercise of such authority is not of a merely
routine or clerical nature, but requires the use of inde-
pendent judgment.

The Supreme Court has established a three-part
test for determining the supervisory status of an indi-
vidual under the LMRA, as amended (NLRB v. Health
Care & Retirement Corp., 511 U.S. 571 [1994]). First,
an employee must perform at least one of the 12 spe-
cific functions outlined in the statutory definition of a
supervisor under Section 2(11) of the LMRA. Second,
in performing one of the 12 specified supervisory func-
tions, the individual must be required to exercise inde-
pendent judgment. Third, the exercise of independent
judgment in performing one or more of the 12 listed
supervisory functions must be in the interest of the
employer. The third test is typically the easiest to
prove because virtually any action related to the attain-
ment of a legitimate business goal or purpose of the
firm will be considered an act in the interest of the
employer. Most cases involving the determination of

132 PART 1 Recognizing Rights and Responsibilities of Unions and Management

supervisory status will rest on an analysis of the evi-
dence related to parts one and two of the three-part
supervisory status test.

The employer maintains that the docking pilots
make recommendations on hiring and promotion deci-
sions, assign work to employees, and are responsible for
directing employees work during the docking process.
More specifically, the employer states that the advice of
docking pilots is almost always followed in making deci-
sions regarding who to hire or promote into a docking
pilot position or relief docking pilot position. U.S. Coast
Guard regulations require that docking pilot trainees
make trips with licensed docking pilots before becoming
eligible to obtain a docking pilot s license. Docking pilots
are required to evaluate the performance of trainees on
such trips and provide a recommendation as to the suit-
ability of each trainee for the job position of docking
pilot. Docking pilots do not discipline other employees,
adjust employee grievances, or evaluate the job perfor-
mance of nontrainee pilots. The final authority for all
hiring and promotion decisions rest with the president
and vice president of the employer.

When a large ship enters a port, it requires the assis-
tance of tugboats to maneuver into a position to dock or
undock. The docking pilot receives from the employer a
list of the ships scheduled to arrive or depart the port on a
given day. The information provided by the employer
includes such items as the current location and dimen-
sions of each ship. The docking pilot uses this informa-
tion together with current information on other factors
(e.g., current wind speed, water current speed, existing
navigation hazards in the channel) to determine the
number of tugboats required to accomplish the docking
procedure. Once a ship s captain has entered the port, a
tugboat delivers the docking pilot to the ship. The dock-
ing pilot then assumes command of the ship from the
ship s captain and directs the docking procedure. The
docking pilot communicates directly with the captain
of each tugboat involved to ensure that each tugboat
will render the necessary assistance to ensure a safe and
accurate docking experience. Essentially, the docking
pilot communicates what must be accomplished to
each tugboat captain, who then determines what actions
his tugboat crew must take to accomplish the defined
objective. Each tugboat captain is responsible for direct-
ing his or her own boat crew to carry out the instructions
of the docking pilot. Tugboat captains have been previ-
ously determined by the NLRB to be supervisors under

the LMRA. Once the docking procedure is completed,
the docking pilot returns control of the ship to the
ship s captain and reboards one of the tugboats to pre-
pare for the arrival or departure of the next ship on the
daily schedule.

The employer argued that the docking pilot s
determination of how many tugboats will be required
to perform a particular docking operation constitutes
an assignment of work using independent judgment,
which is a supervisory function under the LMRA s def-
inition of a supervisor. The employer also notes that a
docking pilot responsibly directs others during the
docking procedure by giving orders to the tugboat cap-
tains regarding the number and placement of towing
lines to ensure a safe and efficient docking procedure.

The union argued that the five docking pilots were
professional employees covered by the LMRA, not
supervisors. The docking pilots have no authority to
hire anyone, although they may be asked to give a pro-
fessional opinion regarding the qualifications of an
applicant for a vacant docking pilot position. Compli-
ance with Coast Guard regulations, which require less-
experienced pilots to ride along with a more experi-
enced pilot to learn information about a particular
port before assuming responsibility for docking proce-
dures in that port, represents a discharge of profes-
sional responsibility, which is a job duty of being a
docking pilot. The docking pilots do not discipline
other employees, handle grievances, or formally evalu-
ate other employees job performance.

The union further argued that instructions given
by docking pilots to other tugboat captains (who are
supervisors) during docking procedures are part of
the job duties of a professional docking pilot. The
docking pilot has no authority to order members of a
tugboat captain s crew to perform any specific job
duties. The determination of the number of tugboats
required to perform docking procedures is a function
of the size of the ship to be docked and prevailing sea
and weather conditions. This determination does not
require the exercise of significant independent judg-
ment on the part of the docking pilot.

Question
1. Should the docking pilots be classified as supervisors

and thus excluded from participating in a bargain-
ing unit for purposes of collective bargaining?
Explain your reasoning.

CHAPTER 3 Legal Influences 133

CHAPTER 4

Unions and Management: Key Participants
in the Labor Relations Process

YESTERDAY, BOB BOYCE, my department s Shop Steward,
came up to me and told me that I ought to join the union like
so many of my fellow employees. My hunting buddies, David
Hunt, Jim McBride, Larry Tate, and Bill Ikerd, have already
joined and are taking an active role in the union by going to
meetings. I realize that a lot of folks put it on the line to get
the union in during the organizing campaign and during the
negotiations. After several months of negotiations, the union
finally got a huge contract that gave employees a nice pay
raise, a pension program, and guaranteed health insurance.
Also, gone are the days where the supervisors can simply
make favorable work assignments and offer overtime to their
cronies; they now have to go by provisions in the labor agree-
ment. I have been thinking about joining, but I get all the bene-
fits that union members get and I don t have to pay anything to
receive these benefits.

Questions
1. Why should he join? Are there other benefits?

2. How similar is this situation to others in American society?

3. What would you do? Why?

134

As noted in Chapter 1, two key participants in the labor relations process are the union,which as the exclusive bargaining agent represents employees in the bargaining units,
and management, which represents the owners or stockholders of the company. This
chapter first provides a general explanation of the goals, strategies, and organizational
structure of the company and the union for labor relations purposes. Because companies
and unions are organized differently to meet different purposes, basic goals, strategies, and
organizational structures will be presented that may be adjusted to meet respective
differences. The second part of the chapter focuses on union governance and structure by
describing the characteristics of unions, union government at the various levels,
organizational structure, and problems with corruption and misuse of power within a few
unions. The final section covers union security, a subject vital to the union s role in gaining
bargaining strength and meeting members expectations.

Goals and Strategies: Management and Unions

Unions and management of companies have goals that are similar; they also have goals
which at times conflict. These goals provide direction and serve as the basis for the orga-
nization s strategies, plans, and organizational structure. Exhibit 4.1 displays some major
goals for both companies and unions, which in several cases are similar and consistent,
and in other cases, the goals have potential for conflict. The areas of potential conflict cre-
ate possibilities for an adversarial relationship, and the areas of agreement create possibilities
for cooperation and labor peace. As will be noted, most of the time unions and management
are able to settle their differences without resorting to a work stoppage (0.0002 of total man-
days per year are lost due to work stoppages). The collective bargaining process itself is a

Exhibit 4.1
Goals of the Company
and the Union

The Company Wants The Union Wants

To survive and remain competitive The company to survive and remain
competitive as well as for the union to
survive and remain secure

To grow and prosper The company, as well as the union, to
grow and prosper

To achieve a favorable return on its
investment

The company to achieve a favorable
return on its investment and return
fair wages to employees

To effectively use human resources The company to effectively use human
resources within the rules and
policies of the agreement and to
achieve job security and employment
opportunities for members

To attract, retain, and motivate
employees

The company to attract, retain, and
motivate employees within the rules
and policies of the agreement

To protect management s rights to
make decisions and retain flexibility

To protect union and employee rights
that were negotiated and included in
the labor agreement

To obtain a commitment from the
union that there will be no strike for
the duration of the agreement

To obtain a commitment from the
company that there will be no lockout
for the duration of the agreement

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 135

mechanism designed by the parties and adopted by the U.S. Congress as the preferred
method for resolving differences between unions and management.

Both the company and the union want the company to survive and remain compet-
itive. Union agreement with this goal is logical because the employees would lose their
jobs and the union would not survive without the company. Likewise, the union wants
to survive as the representative of the employees of the company and will take steps to
retain this designation. When a company wishes to remain nonunion or to have the
union decertified, an inevitable conflict occurs.

The company wants to grow and prosper a sign of its management s success. The
union agrees with this goal and supports it because it creates more opportunities and ben-
efits for employees, adds union members, allows more funds for union activities, and
strengthens the union as an institution. Likewise, both the company and the union want
the company to achieve a favorable return on its investment. Although they may disagree
on what is meant by favorable, both parties understand the mechanics of the financial
side of the business. However, the union also wants to achieve a favorable or fair return
for the employees efforts, input, and contribution. Here, there may be a disagreement over
what is a favorable return to the investors and a fair return to the employees.

Two related goals of the company are to achieve the effective use of its human
resources and to attract, retain, and motivate employees. The union accepts these com-
pany goals as long as the company abides by the provisions that were negotiated and
included in the collective bargaining agreement. For example, the company may wish
to have the most productive employee work on an overtime assignment to be able to
ship a rush order; however, the agreement may require that overtime be offered on a
rotating basis. The presence of the union does not prevent making overtime assignments
to the most productive employee; however, the overtime provision is a negotiable subject,
and the parties must live by the provisions that they agree on.

The company wants to protect its rights to make decisions and retain the flexibility
to operate the business. The union accepts the philosophy that some decisions are best
made by management, including the type of products, the price of products, financial
policies, customer relations, advertising and promotion decisions, product design, and
plant layout. At the same time, the union represents the interests of employees and
attempts to provide job protection and guarantee job opportunities for them by negoti-
ating provisions in the labor agreement, such as limits on contracting out work and use
of seniority in layoff decisions to provide job security.1

The company wants a union commitment to have no work stoppage for a specified
period; this guarantees a stable workforce and allows the company to make production
promises to customers. This commitment comes in the form of a no-strike clause in
the labor agreement. The union may want a commitment from the company that
employees have the right to have their grievances heard by management and may appeal
them to a third-party neutral (arbitrator) when necessary to resolve differences.

Once the union and the company decide on their respective goals, they determine
the appropriate strategies to reach these goals. Companies have been involved in strategic
planning much longer than unions, and their strategic plans are usually more detailed
and sophisticated. Only in recent times have unions started to think and operate in
terms of strategic planning.

Company Strategic Planning
A company s strategy in labor relations is determined by its managerial philosophy, the
ethics of its management, its economic condition, the composition of the workforce,
competition in the industry, the time in the life of the company, and the capabilities of

136 PART 1 Recognizing Rights and Responsibilities of Unions and Management

management. Management has choices about its strategy. It may believe that the com-
pany is better off remaining nonunion and may devote much time and effort to ensuring
positive human resources management. Some employers resist unions bitterly to ward
off the large wage gap between union and nonunion employees (weekly earnings aver-
aged $907 for union members versus $753 for nonunion workers in 2014, according to
the Bureau of Labor Statistics). Management members who are in a highly competitive
industry may be willing to do almost anything to keep unions out. Management at other
companies may choose to change from a hard-bargaining approach to one of labor
management cooperation after it finally accepts the philosophy that both parties would
gain more by cooperating than by conflicting. Exhibit 4.2 shows the range of company
strategies in labor relations, from union suppression to labor management cooperation.2

Nonunion Companies Strategies
Some authorities believe that profound changes in labor relations began in the 1980s and
were brought on by forces external to union management relationships. These forces
include competition from abroad, deregulation, and competition from nonunion compa-
nies. More and more companies are finding that their labor relations strategies are
driven by economic choices and their need to adapt to new, more competitive business
conditions. Because union-suppression, union-avoidance, and union-substitution strate-
gies have existed in different forms since the Industrial Revolution, a company may
choose to attempt to maintain its nonunion status by preventing or supplanting unions.
Another company may choose one of the nonunion strategies as a legitimate response
that has been forced on it to cut costs, innovate, enter new markets, and devise flexible
labor force strategies. This latter approach focuses on costs and productivity of human
resources and the management of human resources.3

A company may use a more aggressive approach, called the union-suppression strat-
egy, to maintain its nonunion status or to destroy the union. Human Rights Watch con-
ducted research on Wal-Mart labor relations by interviewing 41 former employees;
meeting with labor lawyers and union organizers; analyzing cases against Wal-Mart,
which charged the company with violating U.S. labor laws; and reviewing company
publications that addressed working conditions at the company. Human Rights Watch
concluded: Wal-Mart employs a sophisticated and multifaceted strategy to prevent union

Exhibit 4.2
Company Strategies in Labor Relations

Nonunion Companies Strategies Union Companies Strategies

Union
Suppression

Union
Avoidance Union Substitution

Codified
Businesslike

Accommodation or
Labor-Management
Cooperation

Union busting
Illegal acts
Refusal to Bargain
Decertification

Positive human
resources
management

Double-breasting

Company paternalism
Company-Sponsored

employee
organizations

Forms of employee
participation
and employee
involvement

Neutral in union
campaign

Straight-forward
approach

Union involvement
Employee

Empowerment

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 137

activity at its U.S. stores and, when that strategy fails, quashes organizing wherever it starts. 4

Another company, Smithfield Packing Company in Wilson, North Carolina, was found by the
NLRB to have committed multiple unfair labor practices in its attempt to keep the United
Food and Commercial Workers from representing its employees. See Exhibit 4.3.5

In 2014, the NLRB ordered the Southern Bakeries, LLC, to recognize the Bakery,
Confectionery, Tobacco Workers and Grain Millers International Union and bargain
with the union after it found multiple unfair labor practices. These included:

1. Making unilateral changes in employees wages, hours, and other terms of employment
2. Refusing to allow union representatives access to the company s facility
3. Interrogating employees about their union activities
4. Threatening employees with discharge, job loss, and plant closure
5. Making disparaging comments about the union
6. Creating the impression that the union is under surveillance.6

Other extreme and in some cases illegal tactics used by some companies to avoid
unionization include the following:

Developing a spy network (tattletales) to identify union supporters
Refusing to hire former employees of unionized companies (but giving the applicant
a reason other than prior union affiliation for employment denial)
Establishing a case for discharge (including documentation) of known union advocates
Seeking to determine prospective employees attitudes toward unions from inter-
views, references, and so on, and then refusing to hire them (again giving another
reason) if they appear to be supportive of unions
Giving psychological tests (job-interest questionnaires) to determine the likelihood
that an applicant will be interested in a union
Locating new plants in areas where union membership is low and expanding the
company s nonunion plants
Using a standard application of a State Employment Service that asks applicants
whether they have been a member of a union and using the application as part of
the preemployment inquiry7

Some employers facing union-organizing campaigns have committed unfair labor prac-
tices deliberately, with the expectation of economic returns to them.8 When illegal practices
yield economic returns to the violators, ethical questions are raised as to the fairness of the
law and its application. One study of employers led to this disappointing conclusion:

[I]n the past, the compliance system [of the National Labor Relations Act] has been
inadequate to the extent that some employers have found it profitable to commit

Exhibit 4.3
Unfair Labor Practices of
Smithfield Packing Company,
Wilson, North Carolina

1. Threats of plant closures by company president and plant manager.
2. Directing video security cameras to record employees and union organizers pass-

ing out union information.
3. Interrogating employees about support for the union by supervisors.
4. Unlawful loss of benefits by announcing that employees would lose their 401(k)

program if they voted for the union.
5. Threats of a pay cut if employees signed union authorization cards that

supported the union.
6. Discharge of employees because of their union activities.

SOURCE: Decisions and Order of the National Labor Relations Board, 347 NLRB No. 109, August 21, 2006. (The company has since
changed ownership.)

138 PART 1 Recognizing Rights and Responsibilities of Unions and Management

unfair labor practices in order to forestall unionization. Those employers obeying the
law because it s the law have faced a greater probability of incurring costs of union-
ization and may have been at a competitive disadvantage to employers who violated
the law. Such inequities do not encourage compliance with the law and provide evi-
dence of the need for labor law reform.9

Union Avoidance. Some companies that select a union-avoidance strategy take a strong
stance against union representation, even in facilities where unions already exist. They
open nonunion facilities and attempt to keep them nonunion. They shift their capital
investments away from the unionized facilities and make plant improvements in the
nonunion plants. Where a union represents its employees, the company attempts to
reduce the labor costs by lowering wages and benefits, modifying traditional work prac-
tices, and encouraging decertification to the point of committing illegal actions. In these
situations, the labor relations environment is highly adversarial, and union management
collaboration is not considered an option.10

Some firms do not aggressively seek to crush union organization. They simply
take steps to prevent unions from forming. Top managers may reason that if the con-
ditions are not encouraging of unionization, then the workers are unlikely to organize.
Consequently, it is not uncommon to see the following types of union avoidance
tactics:

Locating new plants in areas where union membership is already low.
Locating new facilities in rural areas in the South, where support for unions has
historically been weak and anti-union attitudes have predominated.
Having several small facilities in several nearby communities rather than one large
facility; this helps employees feel like they are not just a number to management and
it probably means that union organizers will have to organize each facility separately
for union organizers, the payoff in new members may not be worth the effort.
If a firm has both union and nonunion plants, expanding only the company s
nonunion plants.
Subcontracting work that is typically unionized so that union work is not in-house ;
for example, if managers believe that printers are more likely to unionize than other
employees, then the firm may hire a print shop to do its printing rather than have its
own printing department.

Positive Human Resource Management. Some companies adopting the union-
avoidance strategy practice positive human resources management or operate double-
breasted. Company officials who adopt positive human resources management recognize
the importance and necessity of maximizing employee voice. Moreover, such firms
implement the claim that people are the most important asset of the organization.
Such organizations involve their employees in the decision-making processes of their
organizations. These efforts are included under the general umbrella of participative
management, total quality management, and total quality control programs.11 In
unionized organizations, the union is sometimes involved; those efforts are covered in
Chapter 7.

Companies such as IBM, Texas Instruments, Publix, and Eastman Chemicals have
essentially adopted this strategy. Positive human resources management programs
include the following elements:

The absence of symbols of rank and status, such as designated parking spaces,
company cars, or country club memberships for managers

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 139

Carefully considered surroundings locating near good schools and universities in
order to give employees a high quality of life
Overall corporate strength high profits, fast growth, high technology, or dominant
market position
Programs to promote employment security, such as work sharing or overall reduction
in pay to avoid layoffs during hard times
Promotion from within job posting, career development, and training and education
programs
Influential human resources management programs, for example, having the human
resources manager report directly to top management
Competitive pay and benefits, especially having compensation that is
equitable externally and internally and comparable to the pay at unionized
companies
Management that listens using systematic approaches such as attitude surveys,
open-door policies, and appeal procedures. This is based on the idea that dissat-
isfied employees are more likely to unionize; if management can respond to
worker concerns and alleviate dissatisfaction, they will be content and remain
nonunion.
Employee stock option plans that contribute stock to employees at no cost with
opportunity to buy more
Careful grooming of managers focusing on long-term results, using assessment
centers, and emphasizing competence and employee relationships12

Double-breasting. Double-breasting exists when one company has two or more
subsidiaries, one unionized and the others nonunion or open shop. These arrangements
take several forms: (1) A holding company has financial control of one or more operat-
ing subsidiaries, (2) a unionized company buys a nonunion firm and continues to oper-
ate it as nonunion subsidiary, and (3) a nonunion company buys a unionized subsidiary
and continues to operate it unionized.

In some cases, double-breasting appears to be a deliberate strategy designed to max-
imize company opportunities and minimize pay dissatisfaction. In construction, govern-
ment projects often require that firms pay a prevailing local wage rate (designed to
prevent migrant construction workers and their firms from underbidding local firms);
these wage rates are similar to union-scale rates and typically higher than nonunion
wages. So some construction holding companies will set up one contractor firm to bid
only on government jobs (paying union-scale wages) and a second contractor firm to
bid only on nongovernment work (paying lower wages). Implicit in this arrangement is
an assumption about wage satisfaction: Workers who get low wages and are unaware
that they could get higher wages will be more satisfied than workers whose wages fluctu-
ate based on the type of project.

At present, the law requires the open shop and unionized units of a holding com-
pany to be separately managed and operated as distinct entities. Conversely, the National
Labor Relations Board (NLRB) determines whether two seemingly separate companies
should be treated as one by considering the following guidelines: interrelation of opera-
tions, centralization of control of labor relations, common management, and common
ownership or financial control.13 The Board stated:

Similarly, in 2015, the NLRB addressed situations joint employer status. The Board
ruled that where there are two or more employers at a single work site (like in fran-
chising) and one employer has sufficient control over the employees, a joint employer
status may exist.14

140 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Union Substitution. A third company strategy to maintain nonunion status is the
union substitute strategy. Some firms seek to avoid or ward off unionization of their
employees by providing a substitute for unionism. Two companies, Northrup-Grumman
Corporation (which has only 3 percent of its employees in unions) and Federal Express
(whose pilots are the only group in unions) explicitly state that their adoption of nonunion
employment dispute resolution procedures was due in large part to their desire to avoid
additional employees in unions. In addition to union avoidance, nonunion employers
have adopted formal workplace dispute procedures primarily for strategic reasons, such
as avoidance of legal suits, identification of workplace problems, generation of information
about these problems, diagnosis of the underlying reasons for these problems, and specifi-
cation of solution to these problems. In fact, about 45 million employees in nonunion
companies are covered by individual employment contracts, and about 80 percent of
these contracts contain a formal dispute resolution procedure (employment arbitration as
the final step in one half). In comparison, about 17 million employees are covered by
grievance procedures in collective bargaining agreements (nearly all have arbitration as
the final step).15

Many nonunion companies have initiated employee involvement programs to
restore the sense of working in a small business, to gain employee commitment to the
enterprise, to dissuade union organizing, and to provide feedback to enhance motivation
and productivity. Most companies have a system for giving nonunion employees infor-
mation about the competitive conditions or economic circumstances of their company.
The majority have employee participation programs, such as quality circles and small-
group discussions of production and quality of work, and have provided formal com-
plaint and grievance systems.16

Employees must be careful of violating Section 8(a)(2) of the NLRA which prohibits an
employer from dominating or interfering with the formation or administration of any labor
organization or from contributing financial or other support to it. In the well-publicized
Electromation decision, the NLRB developed tests to determine the legality of labor-
management joint efforts. Electromation, a nonunion manufacturer of electrical components,
set up action committees of employees in response to a unionization campaign. These
committees were established to discuss (1) absenteeism/infractions, (2) no-smoking policy,
(3) communication network, (4) pay progression for premium positions, and (5) attendance
bonuses during working hours. The union afterwards requested recognition, contended that
the action committees were labor organizations, and filed an unfair labor practice charge,
which alleged that the company had violated Section 8(a)(2) of the NLRA by its domination
of the committees and assistance given to those committees. The NLRB ruled that the action
committees were dominated by the company. As a result of the unfair labor practice, the
company was directed to disband the action committees. The tests developed by the NLRB
address the topics discussed, the representational nature of the group, and the authority of
the group. See Labor Relations in Action for these tests.

The most common system for resolving employee grievances is the open-door pol-
icy, wherein employees may present their grievances to management representatives. The
success of this system depends on how conscientious managers at all levels are in fulfill-
ing this policy and whether employees fear that presenting their grievances to managers
above their immediate supervisor will have undesirable consequences.

Other forms of nonunion grievance procedures include grievance appeal boards,
appeal steps up to top management, and peer review committees.17 The grievance appeal
board allows employees to present their grievances to a board for a final decision. In this
system, three management members and two employees might hear the grievance and
decide the outcome. Although the system is sometimes called a jury of one s peers,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 141

management representation is usually greater than that of employees and can outvote
employee board members if necessary.18

Unionized Companies Strategies
The labor relations function in unionized companies differs from that in nonunion com-
panies in several ways. First, in the unionized setting, two parties, the union and manage-
ment, are involved. Instead of decisions being made by management unilaterally, many
decisions, such as wages, hours, promotion, layoffs, and other terms and conditions of
employment, are made bilaterally through negotiations. Second, the presence of the union
formalizes the employee-representation activities because employees may file a grievance if
they believe that the company has violated terms of the negotiated agreement. Third, the
negotiated rules and policies that govern the employment relationship for those employees
covered under the collective bargaining agreement essentially become company policy
because both parties have to abide by the terms that they have negotiated.19

LABOR RELATIONS IN ACTION
Post-Electromation: Tests to Determine Whether Teams and their

Activities Are in Violation of 8(a)(2) of NLRA

1. Is the work team discussing Section 2(5) topics,
such as grievances, labor disputes, wages, rates of
pay, benefits, hours of employment, safety, or work-
ing conditions? If so, the chances are increased that
the company is violating Section 8(a)(2) of the NLRA.

2. Are work team members acting in an individual or
representative capacity? If the team members are
addressing issues that affect nonteam employees
or are addressing issues on behalf of other employ-
ees, the chances are increased that the company is
violating Section 8(a)(2) of the NLRA. In considering
the question of representation, the following factors
will be investigated:

Function of the work team: Presenting employee
views, making recommendations to manage-
ment, and presenting other employees grie-
vances are indicators of representation.
Form of the plan under which work team exists:
Consider the number of team members, how they
were selected, and the formal organization of the
team: the more formal a team s organization, the
more a representative purpose is inferred. Con-
sider collection of dues, defined electoral grouping,
existence of a governing written instrument.
Employer s intent in forming the work team:
Was the team formed in response to an
attempted union organizing drive? Is the team a
substitute for a legitimate and independent rep-
resentational union?
Employee s perception of the work team: Do the
employees consider the committee to resemble
a labor organization or to represent anyone?

3. Is the authority of the work team limited to making
recommendations to management, or does the team
have delegated management authority to make deci-
sions? If the work team only has power to make
recommendations, this is an indicator of labor orga-
nization status; however, if the work team has the
power to make decisions, the presence of manage-
rial decision-making authority is an indicator that the
work team is not a labor organization.

4. Does the employer retain veto power over any
action of the work team and who will serve on
each team? Does the employer have power to
abolish the team at will? Retention of discretionary
veto power and power to abolish the team at will
is an indication of management s unlawful
domination.

5. Did the company create the work team or decide
what it would do and how it would function? In
other words, does the company dominate the
work team? If the company establishes the work
team, then selects the members, supports the
work team financially, gives direction and assigns
projects to the team, and so on, the chances are
increased that a legal violation has occurred.

SOURCES: Michael S. Beaver, Are Worker Participation Plans Labor Organizations
within the Meaning of Section 2(5)? A Proposed Framework of Analysis, Labor Law
Journal 36 (August 1985), pp. 226 237; Aaron Bernstein, Making Teamwork Work
Appeasing Uncle Sam, Business Week, January 25, 1993, p. 101; Electromation, Inc.
and International Brotherhood of Teamsters, Local Union No. 1049, 309 NLRB NO. 163,
December 16, 1992; E.I. DuPont de Nemours SG, 311 NLRB No. 88, May 28, 1993 in
Daily Labor Report, June 8, 1993, pp. AA-1 AA-2, and D-1-D-10; Raymond L. Hogler,
Employee Involvement and Electromation, Inc.: An Analysis and a Proposal for

Statutory Change, Labor Law Journal 44 (May 1993, June 1998), pp. 1055 1061.

142

Codified Businesslike Strategy. One strategy adopted by unionized companies is
the codified, businesslike, strategy. These companies accept unions as the legitimate rep-
resentative of the employees and conclude that if the employees want a union, manage-
ment will deal with it. The managers do not attempt to have the union decertified, do
not commit flagrant unfair labor practices, and do not try to substitute participative
groups for unions. Company managers respect and trust their union counterparts and
expect the same in return. For the relationship to last, both parties must realize that
respect and trust are fundamental to both their futures. The approach of these compa-
nies is to deal directly and bargain with the union over wages, hours, and terms and con-
ditions of employment at the appropriate times. When the labor agreement negotiations
are complete, managers of these companies administer the agreement as they interpret it.
In other words, they go by the book. Although General Electric was known in the
1950s for its take-it-or-leave-it approach to labor negotiations (called Boulwarism), its
strategy today can be categorized as a businesslike approach. The remaining chapters
explain this approach to labor relations. Also, as noted previously, strategies of compa-
nies and unions change during their lifetimes and with economic conditions, changes in
leadership, and personalities of participants.

Accommodation or Labor-Management Cooperation. The fifth strategy shown
in Exhibit 4.2 is one of accommodation or labor management cooperation. This strategy
entails the union cooperating with management, rather than the parties having an adver-
sarial relationship. Management and unions actively work together to create an organiza-
tional climate and a way of operating that will allow employees to participate directly in
decisions in their work areas as members of task teams and as members of problem-
solving groups. Unions represent their members in decision making and in collective
bargaining.20

Over 1,000 collective bargaining agreements have contract clauses that provide for
cooperation between unions and management. Some agreements establish joint commit-
tees, such as safety committees that focus on an interest to both parties, improving safety
in the workplace. More extensive cooperative arrangements include joint decision mak-
ing to improve quality and productivity. An even further degree of cooperation includes
a partnership between the union and management about all or most decisions in the
production process.21

Unions can contribute to companies strategic planning and implementation activities.
For example, a union can provide input from a clearly defined group of employees, as well
as transfer information about corporate plans and direction to those represented employ-
ees. The union leaders can help the rank-and-file employees better understand the business
plan and lend credibility to the plan. Although these contributions are clearly positive,
union involvement in strategic planning takes more time because the union leadership
must meet with the membership to explain planned actions. Also, to retain a competitive
edge, upper management often does not want to reveal new directions and planned
actions. As a result, unions typically have a greater opportunity to have a role in strategy
implementation rather than in strategy formulation. For example, if a company is facing
increasing losses because of foreign competition, the company may enlist the assistance of
the union in finding ways to reduce costs. Alternatives include cooperative approaches to
job design or developing a new reward system, such as gain-sharing, to encourage labor
management cooperation. Another possibility is the introduction of new technology to
improve productivity, which may include restructuring existing jobs.22

For organizations and unions to achieve a more collaborative relationship, man-
agers, unions, and employees must overcome their resistance to change. Managers must
develop a more open, less authoritarian managerial style; unions must abolish their

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 143

traditional us versus them approach and adopt the team concept; and employees must
agree to greater worker commitment and more involvement in determining how to get
the job done and how to get it done right.23

Employee empowerment is reflected in employee involvement and participation
programs, which include quality circles, quality-of-work-life efforts, labor management
participation teams, and autonomous work units. These efforts address such issues as
product quality, work-unit performance, new technology, safety and health, and supervi-
sion. Here, union leaders and members accept responsibility for success of the organiza-
tion. Unions demonstrate their capacity to confer value to their members and create
wealth for all of the organization s stakeholders.24

This relationship ensures that unions and management focus on common goals,
which include the health of the business in a changing economic environment, and new
issues, such as adopting new technology to ensure competitiveness and business survival.
Management accepts unions as stakeholders in an ongoing complex, multi-stakeholder
organization designed to ensure survival and provide an equitable return for all involved
in the process. Several companies and unions have already proceeded in this direction.
Harley-Davidson and its two unions co-manage the Kansas City plant. The parties have
created a concept called relationship management, which places a high value on worker
empowerment and interaction between employees, unions, and their suppliers. Managers
at the plant have a strong, partnering relationship with the steelworkers and machinists.
Team members are empowered to make key production decisions and have accountabil-
ity for the results of their work without traditional supervision. Each work team has
rotating representation in the plant s decision-making process. The plant manager shares
office space with representatives from the steelworkers and machinists unions.

To achieve this new union role, management and union leaders must develop differ-
ent skills. Union leaders need business decision-making skills; they must understand the
business and the problem-solving process. At the same time, union leaders must main-
tain contact with the membership to better represent members interests. Management
must take steps to reorient its views from seeing unions and labor agreements as con-
straints to recognizing a more cooperative union management relationship. Manage-
ment must provide the union and its leadership with a secure position as the
legitimate, permanent representative of the bargaining unit employees. This means aban-
doning efforts to decertify the union or to reduce the union s importance at the work-
place. It means developing a mutual trust between parties at every level of the
organization.25

At the General Motors Lansing Grand River Assembly plant, the local management
and the UAW Local 652 established a joint responsibility system of collective bargaining
that encourages employees represented by the UAW to reduce production costs and
increase profitability by accepting responsibilities traditionally held by management.
Building on a trusting relationship and employment security, front line workers receive
expanded job responsibilities and are involved in production and business decisions. An
hourly team coordinator leads the work teams, reducing the number of supervisors, and
shifting the supervisors role toward coaching and facilitating. More information on the
company financial position and competitiveness is shared with the local UAW. The
UAW local has become involved in issues, such as outsourcing, work quality, and scrap
reduction, which had previously been management s responsibilities.

Because General Motors operates multiple plants, it can assign production work to
those plants which have the greater productivity and efficiency records. Therefore, the
motivation to continuously improve is present. Manufacturing firms in steel, aluminum,
rubber, paper, food processing, and parts supply have the same opportunities. As well,

144 PART 1 Recognizing Rights and Responsibilities of Unions and Management

telecommunications and banking services have multiple call centers which could use the
same model to lower costs, improve productivity and profitability, and guarantee
employment security.26

Companies may choose a mixed strategy, which can encompass union avoidance,
union substitution, or labor management cooperation, at various sites in a multi-plant
operation. For example, a company may operate double-breasted and strongly oppose
the union at one of its nonunion plants while engaging in labor management coopera-
tion at another plant. Such strategic choices are made at the highest levels of the organi-
zation, and the advantages and disadvantages of each strategy are seriously debated and
deliberated before any strategy is adopted by the company.

Upper management considers the market pressures, operational and financial fac-
tors, and collective bargaining relationships in its deliberations. If market pressures are
intense as a result of import penetration, management may be inclined to choose union
avoidance in the nonunion sector. However, if a high proportion of the plants are union-
ized, management may choose the labor management cooperation strategy. Researchers
continue to examine which factors lead to certain strategies.27

Union Strategic Planning
Labor unions, like other organizations, define their operational goals, determine their
organizational strategies and plans, develop policies and procedures, and manage their
resources to reach their goals and maximize their performance. Unions also are involved
in long-range planning, establishing procedures for budgeting, attracting able staff mem-
bers, communicating with members to provide information and to obtain reliable feed-
back, and establishing controls for financial accountability.28

Labor unions in the United States have been involved in strategic planning for only
a short time. For years, unions as a rule reacted to managerial decisions with little con-
cern for long-range implications. Today, more and more unions are finding it essential
to become involved in strategic planning. Several unions, such as the Communications
Workers (CWA), the Auto Workers (UAW), and the Steelworkers (USW), have recog-
nized the need for long-range strategic planning and created strategic planning commit-
tees. To survive, all unions must develop such plans. A typical union s strategic plan
includes (1) a mission statement, (2) analysis of the external environment, (3) internal
analysis of the union s strengths and weaknesses, (4) long-term and short-term objec-
tives, and (5) strategy development. A survey of American Federation of Labor
Congress of Industrial Organizations (AFL-CIO) unions found the following:

1. Typical mission statements are: To organize workers for the purpose of collective
bargaining; to foster legislation of interest to the working class; and to disseminate
economic, social, and political information affecting workers lives and welfare. As
an example, see Exhibit 4.4 for the AFL-CIO s mission statement.

2. The analysis of the external environment includes an examination of the changing
demographics of the workforce (toward more worker diversity), appraisal of current
and future political and legislative concerns, consideration of labor s image, and
analysis of employer practices and industry trends.

3. The internal analysis includes an examination of the union s internal functioning,
such as union governance, openness for discussion of diverse opinions, and appraisal
of the professional staff whose jobs are to provide representational services to the
members.

4. Organizational objectives are set for short-term and long-term activities. Short-term
objectives may include meeting membership needs through collective bargaining,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 145

reducing substance abuse, improving pensions, and enhancing job security. The
most common long-term objective is simply the survival of the labor organization.

5. Further work is needed to define strategies for addressing labor unions long-term
concerns for continued survival and growth as institutions.29

Some unions, like the UAW, have established internal commissions to participate in
strategic planning. The report of the Commission on the Future of the UAW, entitled A
Strong Union in a Changing World, addressed the union s major economic concern
about the erosion of the nation s industrial base and related problems of corporate flight
and disinvestment. It also urged more effective use of the media in presenting the
union s public positions on tax policy and fairness, dislocated employees, the changing
workforce, issues of sexism and racism, and rapid change in technology and methods of
work.

The Communications Workers of America (CWA) is one union that has effectively
instituted strategic planning for its success. Over the last two decades, the CWA has
faced serious challenges as a result of product market deregulation and technological

Exhibit 4.4
AFL-CIO s Mission Statement What We Stand for: Mission and Goals of the AFL-CIO

The mission of the AFL-CIO is to improve the lives of working families to bring
economic justice to the workplace and social justice to our nation. To accomplish
this mission we will build and change the American labor movement.

We will build a broad movement of American workers by organizing workers
into unions.
We will recruit and train the next generation of organizers, mass the resources
needed to organize and create the strategies to win organizing campaigns and
union contracts. We will create a broad understanding of the need to organize
among our members, our leadership and among unorganized workers. We will lead
the labor movement in these efforts.

We will build a strong political voice for workers in our nation.
We will fight for an agenda for working families at all levels of government. We will
empower state federations. We will build a broad progressive coalition that speaks
out for social and economic justice. We will create a political force within the labor
movement that will empower workers and speak forcefully on the public issues
that affect our lives.

We will change our unions to provide a new voice to workers in a changing
economy.
We will speak for working people in the global economy, in the industries in which
we are employed, in the firms where we work, and on the job every day. We will
transform the role of the union from an organization that focuses on a member s
contract to one that gives workers a say in all the decisions that affect our working
lives from capital investments, to the quality of our products and services, to how
we organize our work.

We will change our labor movement by creating a new voice for workers in
our communities.
We will make the voices of working families heard across our nation and in our
neighborhoods. We will create vibrant community labor councils that reach out to
workers at the local level. We will strengthen the ties of labor to our allies. We will
speak out in effective and creative ways on behalf of all working Americans.

SOURCE: AFL-CIO s Mission Statement. Used with permission. Copyright © 2011 AFL-CIO. www.aflcio.org

146 PART 1 Recognizing Rights and Responsibilities of Unions and Management

change: union density declining, downsizing by the regional Bell companies, reclassifying
jobs from technical and professional to managerial (resulting in those employees being
ineligible for union membership), and creation and growth in mostly nonunion compa-
nies. The CWA was faced with organizational uncertainty and complexities, with a mem-
bership accustomed to easy contract victories and predictable, paternalistic labor
relations. The CWA decided to transform itself from a telephone workers union to the
union of the information age, which would focus on information services. Instead of

being a union predominantly of telephone employees, the CWA expanded to printing
and publishing, radio broadcasting, journalists, computer programmers, airlines employ-
ees, software specialists, and others. The CWA made adjustments at the bargaining table;
it began negotiating retraining provisions for its members, pension enhancements, and
early retirement bonuses. However, to ward off health insurance concessions, it had to
mobilize its members for contract fights. Mobilizations included one-on-one postcard
messages, work-to-rule (following rules and instructions in excessive detail) campaigns,
wearing common colors or armbands on certain days of the week to show solidarity,
public rallies, and campaigns of letter writing to state and local politicians. The CWA
negotiated company neutrality pledges (where the company promises not to oppose
efforts to organize nonunion facilities), expedited elections, and card checks for union
recognition; through these efforts the CWA gained over 30,000 members. Through mer-
gers with eight smaller national unions, the CWA has gained an additional 227,000 new
members. The CWA agreed to support regulatory changes by use of its political influ-
ence in exchange for explicit benefits guarantees and job security. Thus, over the last
20 years, the CWA has taken strategic steps to transform itself from a telephone workers

Exhibit 4.5
Excerpts from CWA s
Strategic Plan: 2006 2011

Strategic Intent: Member Development
Develop CWA membership to enable the organization to be self-sufficient. Develop
a compelling set of member benefits. Broaden efforts to identify new member seg-
ments within the scope of CWA s vision and mission, and attract and recruit new
members. Maintain efforts to retain existing members.

Strategic Intent: Identity/Branding
The intent is to establish the CWA as a well-known, recognized, and reputable organi-
zation in the North American climbing community and with the public. Increase recog-
nition of the CWA, and continue to differentiate the CWA from preceding
organizations. Position the CWA as the primary source of information regarding risk
management, insurance, education, and standards for the climbing wall industry and
the public. Define, promote, and deliver functional, tangible, features and benefits to
our members, and the public, that promote competence in practice, quality in pro-
ducts and services, and a positive image for the manufactured climbing wall industry.

Strategic Intent: Standards Development
The intention is for the CWA to be the leader in standards development for the
manufactured climbing wall industry. The CWA will develop widely adopted,
consensus-based standards, with a high degree of cooperation with other standard-
setting organizations. The CWA will advocate for the adoption of sound standards
and will promote the interoperability of standards by working with national and
international standard-setting organizations such as ANSI. The CWA will develop
and implement both engineering standards for the construction of manufactured
climbing structures, and practice standards for the management and operation of
manufactured climbing structures.

(Continued)

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 147

union to a union of the information age and has intertwined its collective bargaining,
political, and organizing activities to make it one of America s most effective and suc-
cessful unions.30

Several other international unions, such as the Air Line Pilots Association; Steel-
workers; Service Employees International Union; American Federation of Teachers;
and the Bakery, Confectionery, and Tobacco Workers, have undertaken strategic plan-
ning efforts. These international unions have added new terms to their operational
language, such as strategy development, organizational assessment and planning, and
implementation. Unions have used surveys, interviews, and focus groups for building
participation and consensus. The results have been mission statements, goals and pri-
orities, assignment of responsibilities, funding activities and budget allocations, dues
split between the local and international unions, and measures for evaluating
success.31

With the decline of union membership as a percentage of the total labor force and
subsequent reduction in dues income, unions at every level have attempted

Exhibit 4.5
(Continued) Strategic Intent: Government Affairs/Public Policy

The CWA s intention is to protect and expand the recreational use of climbing facili-
ties in North America. The CWA will attempt to influence government actions, pol
icy development, and legislation to achieve either neutral or positive outcomes for
the industry. By marshalling the industry s resources, involving industry members,
maintaining reliable relationships, and using effective advocacy techniques, the
CWA can position itself to effectively represent the manufactured climbing wall
industry. CWA will employ an effective issues management process that will focus
its resources on advocacy at the state and, to certain extent, federal levels. Advo-
cacy on the state level will attempt to achieve the best results for CWA
membership.

Publications/Communications/Information Systems Development
The development, organization, and distribution of information pertaining to the
industry is vital to its continued growth and success. The intention is to develop
CWA into the central source of information and communication regarding the man-
ufactured climbing wall industry to become the industry s information broker.
The CWA will identify information of interest to members and the public and will
determine cost-effective ways to distribute this information.

Strategic Intent: Program Development
The CWA s intention is to define and develop programs of interest to our members
and to the general public that promote responsible recreational use of manufac-
tured climbing facilities. CWA programs will be focused on the professional devel-
opment of members and the improvement climbing related knowledge and
information.

Strategic Intent: CWA Conference and Events
The CWA s intention is to develop and promote a constructive and collegial com-
munity within the manufactured wall industry. Community building can best be
done face-to-face. The conference will bring together a critical mass of members to
discuss industry-wide concerns and initiatives, promote information sharing, and
improve opportunities networking. The conference will offer an opportunity to con-
duct CWA business cost effectively and will provide opportunities for member train-
ing, education, and professional development.

SOURCE: Reprinted with permission by Communications Workers of America, website: http://www.cwa.org

148 PART 1 Recognizing Rights and Responsibilities of Unions and Management

revitalization efforts. The Service Employees International Union (SEIU) and the
United Brotherhood of Carpenters (UBC) have taken a mission-driven strategic
approach, which includes a strategic plan with time-bound goals promoted aggressively
by their national union leaders. The SEIU allocated 50 percent of its national budget to
organizing new members; engineered mergers among locals, which were deemed too
small to pursue an effective organizing agenda independently; and removed old-line,
heavy-handed local leaders who resisted change. The UBC cut the national office staff
by half, eliminated departments, outsourced some work, rented out a substantial part
of its national headquarters, eliminated many small locals, and shifted control of
resources to regional councils. These cost-cutting efforts helped to fund a shift of 50
percent of the union s resources to union organizing. While most of the national and
international unions experienced a decline in overall membership, the SEIU and UBC
experienced growth over the last 20 years.32 Items from the Strategic Plan of Change to
Win are included in Exhibit 4.6.

Company Organization for Labor Relations Activities

There are many organizational structures for labor relations activities in U.S. companies.
The following discussion introduces some of the basic organizational considerations,
although different company characteristics will alter these designs.33

In larger corporations, the labor relations function is usually highly centralized, with
policy, strategic planning, and bargaining decisions made at the corporate level. In fact,
the final economic decisions are usually made by the chief operating executive with the
advice of corporate-level labor relations managers. In smaller companies with only one

Exhibit 4.6
Items from Win s
Strategic Plans

To emphasize organizing by reallocating resources on a grand scale away from
other union activities and devoting 75 percent of the CTW budget to organizing.

To rebate one-half of union affiliates per capita dues if they adopt aggressive orga-
nizing programs and to create a $25 million Strategic Center that will target nota-
ble anti-union employers.

To target for organizing those industries that will remain in the United States. These
include the health care, hospitality, retail, building services, transportation, and
construction industries.

To conduct joint campaigns to recruit new members. As examples, SEIU and the
Teamsters are partnering to recruit school bus drivers; UFCW and UNITE-HERE
are developing a retail apparel and distribution initiative; all unions are joining the
Wake Up Wal-Mart campaign, a public awareness offensive to provide informa-
tion about the world s largest retailer.

To build global partnerships with unions in other countries in support of organizing
multinational corporations. Andy Stern, president of the SEIU, has established
informal global alliances with key union leaders in at least a dozen countries.

To cooperate with the AFL-CIO in national election campaigns. In addition, to oper-
ate field offices in several states in hopes of electing labor-friendly governors and
elect legislators who are committed to take actions that will facilitate organizing.

SOURCE: Richard W. Hurd, U.S. Labor 2006: Strategic Developments across the Divide, Journal of Labor Research, 38 (2)
(2007), pp. 313 324; Marick F. Masters, Ray Gibney, and Tom Zagenczyk, The AFL-CIO v. CTW: the Competing Visions, Strategies,
and Structures, Journal of Labor Research, 27(4) (2006), pp. 473 503.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 149

or a few facilities, these decisions are made at the plant level and shared by plant man-
agement with the plant labor relations manager, who offers advice.

In larger companies, at the operations or plant level, the plant manager and plant
labor relations manager or human resource manager play the key roles in certain labor
relations activities, such as contract administration, grievance handling, and monitoring
labor relations activities. In smaller companies, activities at the plant level also include
bargaining, strategic planning, and policy formulation.34

The duties and responsibilities of all labor relations managers and specialists are
determined in large part by the organizational structure and its degree of centralization
or decentralization of authority. The duties typically include corporate-wide responsibil-
ity for policies, procedures, and programs ranging from union-organizing drives at non-
union facilities to negotiations with the union at other facilities.

Exhibit 4.7 shows the organizational chart for the labor relations function in a large,
complex company. As shown in the organizational chart, the vice president of personnel
and industrial relations reports directly to the president and has the director of labor
relations reporting to him or her. Each of the company s six product lines has its own
labor relations organization.

A large, diversified company with several divisions or product lines will typically
have a vice president of industrial relations, which includes human resources and labor
relations activities, who reports directly to the president and has the director of labor
relations reporting to him or her.

Labor relations managers at the plant level also typically have responsibilities for
both human resources and labor relations activities. They help implement related corpo-
rate and divisional policies, participate in contract negotiations, and resolve employee
grievances over daily labor agreement administration. They typically are accountable
both to the plant manager for daily labor relations activities and to divisional or corpo-
rate industrial relations officials for approval of negotiated labor agreements.

Exhibit 4.8 shows relationships between labor relations managers and other man-
agers at the plant level (for the sake of brevity, operations, B, C, and D are not delin-
eated in detail). The facility s operations can be grouped in one or more of the
following ways: by location (e.g., furnace room one versus furnace room two at a
steel mill), by product (e.g., manufactured valves versus gaskets), by function (e.g.,
maintenance), or by technology (e.g., electroplated and chemical-plated processes).

The labor relations manager is on the same level as managers of the operations, but
neither individual has authority over the other. Instead, plant labor relations managers
have line-staff relationships with other managers. Line-staff relationships occur when
two or more organizational members from different lines of authority work together on
a particular policy (e.g., a no-smoking policy) or activity (e.g., grievances). Typically, the
operations manager is responsible for the output of the facility (e.g., assembly line )
whereas the labor relations manager is responsible for employment relations with the
workforce (the staff ). Neither has authority over the other; therefore, resolution or out-
put of this relationship is often determined by past perceived benefits each has derived
from the other.

Relationships between labor relations managers and other management officials at
the plant level can be tension laden. Consider, for example, the attitude a shift supervisor
might have toward a labor relations manager who has awarded to the union a grievance
against him or her for performing bargaining unit work (Chapter 10) or who has over-
turned a discharge decision made by the supervisor (Chapter 12).

150 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Union Governance and Structure

After the union is recognized, the ordinary functioning of the union requires members to
hold offices, serve on staff committees, monitor contract compliance, and perform numer-
ous other duties. Even though no immediate or explicit monetary rewards are associated
with this work, there are potentially personal, political and self-actualization rewards.
Employees who have positive attitudes toward unions are the ones who are most likely to
be the volunteers who do this type of work toward building a successful union.35

Exhibit 4.7
Labor Relations Organization: Dotted-Line Relationships

NOTE: Each respective group personnel and industrial relations manager has a direct reporting relationship to his or her respective group management while maintaining a
dotted-line relationship to the corporate staff, who has the responsibility for formulation of corporate-wide labor relations policies and procedures.

As each group is dependent upon the corporate function as the formulator of this policy, the lines of communication and working relationships are strong, and the level
of communication is very high. Their function is to administer corporate policies and procedures as formulated by the vice president of personnel and industrial relations and
his or her staff.

SOURCE: Audrey Freedman, Managing Labor Relations (New York: The Conference Board, 1979), p. 28.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 151

Unions as organizations are fundamentally different from business organizations.
Business organizations are built on the assumption that power, authority, and legitimacy
flow downward from the owner or stockholders through management. Union organiza-
tions, on the other hand, have mechanisms such as a written constitution and by-laws
that ensure an opportunity for members to participate in the governance of the
organization hold office, attend meetings, vote in elections, or express dissatisfaction
with the leadership. Thus, in the democratic organization of a union, power, authority,
and legitimacy ultimately flow upward from the consent of the governed. If the leader-
ship of a union wishes to move in a new direction, such as toward greater union
management cooperation, the new direction ultimately depends on the approval of the
membership. If elected leaders do not consider new initiatives in terms of the political
realities, they will be rejected by the vote of the members. For example, in cases where
the members do not trust management s actions in a joint cooperative effort, the leader-
ship must put forth the appropriate effort to build a trusting relationship before develop-
ing the joint effort.36

Nearly a hundred different international (an international union has local unions
outside the United States, such as Canada. National unions have locals only in the
United States) unions and over 60,000 local unions exist in the United States. Their gov-
ernance is discussed in this chapter following a brief description of their organizational
structure. As with companies, unions organizational structures reflect their activities.
Exhibit 4.9 shows the organizational chart of an international union, which includes the
various officers, operational departments and staff, regions, and local unions. In this case,
the basic functions include financial activities handled by the secretary-treasurer,
research, administration, education, organizing, political action, and international affairs.
These activities are usually carried out at the union s national headquarters, with some
headquarters staff members possibly working in the field. The regional offices are
headed by a vice president, who has an advisory relationship with the local unions in
the region. Regional offices are established in locations to better serve the needs of the
local unions and to represent the national office in the region.

Exhibit 4.8
Management Organization at the Plant Level (Approximately 1,100 Hourly Employees)

152 PART 1 Recognizing Rights and Responsibilities of Unions and Management

At the local union level, the organizational structure is fairly simple, as illustrated by
Exhibit 4.10. In most small unions, officer and shop steward positions are part-time; only
in larger unions do the financial resources allow full-time union leaders. Most local
unions have a president, at least one vice president, a secretary, and a treasurer. The
addition of any other officer, such as the sergeant-at-arms in Exhibit 4.10, depends on
the needs of the union. Shop stewards are usually elected by the members in depart-
ments (or on a particular shift) to represent the membership in their respective depart-
ments. The following section explains how unions are governed at the different levels
and presents some of the major problems in the governing process.

To understand union governance, one can compare the union with a unit of state or
federal government. The executive, legislative, and judicial activities occur at various
levels. The local union meetings and national conventions are the legislative bodies; the
officers and executive boards comprise the executive bodies; and the various appeal pro-
cedures serve the judicial function. A union can also be compared with a private organi-
zation because it is a specialized institution having a primary purpose of improving the
economic conditions and working lives of its members.

Unions claim the democratic ideal, but realistically, they must rely on a representa-
tive form of government. On the whole, they seem to be as democratic as local, state, and
federal governments. In fact, a union s membership has more of a say in the way the
union operates than most citizens have in their governments or most stockholders have
in their corporations.37

To appreciate unions as organizations, one must recognize their wide diversity, the
organizational relationships of the various levels, the functions of the officers, and the
varying degrees of control. The next section explores the characteristics of craft and
industrial unions, the functions of local union officers, and the government and opera-
tions of local unions. The national or international union, which is composed of the local
unions within a craft or industry, is explained in a similar framework. Not to be over-
looked are the various intermediate levels of union organizations that provide specific
functions for their affiliated unions. A fourth level for many union organizations is the

Exhibit 4.9
Organizational Chart of an International Union

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 153

federation. The AFL-CIO s organizational structure, functions, and officer responsibilities
are discussed.

The Local Union
Although there are generally four levels of unions local, national (or international),
intermediate, and the federation of unions the local union is the main point of contact
for the individual employee. The typical union member often identifies more closely with
the local union than with the other union levels. He or she attends and sees local officers
at the local meetings and workplace. When the union member has a grievance, the local
union officers are the first to assist. During negotiations, the local union officers keep the
members informed of the progress of the negotiations. Although the national union may
negotiate the master labor agreement under which the local union members work and
the AFL-CIO may deal with the U.S. president and Congress on certain issues facing
the nation, the local union serves as the vital link between the individual union members
and the national union, which in turn might link with the AFL-CIO.

Organizationally, the local union is a branch of the national union. It receives its char-
ter from the national union and operates under the national union s constitution, by-laws,
and rules. The constitution of the national union prescribes the number and types of offi-
cers, their duties and responsibilities, and the limits of their authority. Although union
constitutions vary in length and content, they often mandate certain financial reports and
require that a certain number of meetings be held, that the local labor agreement conform
to the master labor agreement negotiated by the national union if there is companywide
bargaining, and that approval to call a strike be obtained by the local union beforehand.
With the trend toward greater centralization of authority by the national union, the local
union over the years has lost much of its operational flexibility.

Exhibit 4.10
Organizational Chart for a Local Union

154 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Differences between Local Craft and Industrial Unions
The operation of the local union in large part depends upon the type of employees mak-
ing up its membership. Although there is not a clear-cut division between them, unions
can be divided generally into two groups: craft and industrial. The craft unions are com-
posed of members who have been organized in accordance with their craft or skill, for
example, actors, bricklayers, electricians, carpenters, pilots, or ironworkers. Industrial
unions have been organized on an industry basis, for example, the Steelworkers, Auto
Workers, Chemical Workers, and Mine Workers. This, of course, does not mean that
there are no skilled employees in the steel, auto, or rubber industries; but it does mean,
for example, that the electricians in a steel plant would likely be members of the
Steelworkers.

Many unions today are neither pure craft unions nor pure industrial unions.
Instead, they are general unions (or multi-jurisdictional), which means the union is
composed of members from multiple industries and multiple crafts. In fact, there has
been a trend toward general unions, even among the largest international unions. One
of the reasons is due to mergers, but the primary reason is the existence of opportunity
to organize and to increase membership. Over the last 30 years, six unions have con-
ducted election campaigns in a greater number of jurisdictions. These unions include
the United Food and Commercial Workers (UFCW), the United Steelworkers (USW),
the Hotel Employees and Restaurant Employees (HERE), the CWA, the Retail, Whole-
sale Department Store Union (RWDSU), and the Office and Professional Employees
International Union (OPEIU).38

Differing Scope of the Labor Agreement
The craft and industrial unions differ in other ways that have an effect on their opera-
tions. First, the craft unions, which frequently represent the building trades, usually
negotiate short labor agreements (supplemented by detailed agreements on special topics,
such as apprenticeship programs and safety) that cover a defined geographical region,
and each has considerable independence from the national union compared with indus-
trial unions. Because of the nature of their construction work, craft union members may
work on several job sites for several employers in a given year under the same labor
agreement. The labor agreement typically covers several construction companies and a
number of building trades unions in the particular geographical area.

The industrial union, on the other hand, may be covered by a national labor agree-
ment (a master agreement) negotiated between the company and the national union,
which covers all of the company s unionized plants. For example, GM plants in Detroit
and Los Angeles are covered by the same master agreement. Well over 100 pages long,
the agreement explains in detail the wage plan, transfers, pensions, layoffs, and so on.
A separate local supplement agreement is negotiated to cover matters of concern to the
specific local plant and its employees, which must be consistent with the master agree-
ment. For example, the local agreements may address rotating overtime assignments, use
of plant bulletin boards, visits by international union representatives, and other issues
applicable to the local plant. In plants having no national labor agreement, a plant-wide
agreement covering production and maintenance employees is typically negotiated.

Differing Skills
Types of skills help demonstrate another difference in local union operations. The craft
members are highly skilled artisans who have completed formal training, usually in a
formal apprenticeship program. Many employees in industrial unions, on the other
hand, are semiskilled and do not require much prior specialized job training. Therefore,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 155

the craft union members often feel that they have higher status than most of their indus-
trial union counterparts. The training programs available for the industrial union mem-
bers are usually offered by the company, whereas the training received by members of
craft unions is organized and operated by the unions. Therefore, craft unions select
those who will be offered the apprenticeship training, whereas companies alone select
the trainees in the plants. Such an arrangement has allowed the craft unions to keep
wages high by limiting the numbers in the craft, sometimes giving preference to their
families and friends.

Differing Job Characteristics
The nature of their work creates a unique opportunity for craft unions. Because many of
the work assignments last only a short period, the craft members, such as electricians
work on a construction project, return to the union hiring hall for their next assignment
after their work is complete on a project. Upon receiving the assignment, the union
members could report to another job site and work, possibly for another company. Usu-
ally, these arrangements are worked out in advance by the business agent of the craft
union and the companies who agree to operate under the existing regional labor agree-
ment. In fact, at the time that a building contractor signs a union contract, it may have
no union members in its employ (e.g., January in a northern state in the United States
when construction is slow); later, the union will supply labor as needed. This type of
contract is called a prehire agreement. It is similar to the closed shop (discussed later in
this chapter) which is illegal in most industries but is allowed in construction under sec-
tion 8(f) of the LMRA due to the unique characteristics of the industry.

The union hiring hall serves as a clearinghouse or placement office for the construc-
tion companies as well as the union members. Because the hiring hall must be operated
in a nondiscriminatory manner, nonunion employees may also use its services; however,
use by nonunion employees is still quite rare. Typically, the union will offer work within
specific job categories to the most senior workers on the hiring hall list who are available
to work.

In comparison, the typical member of the industrial union is hired by the company
and will work for the same employer usually at the same facility until retirement or
until the employee resigns or is terminated. Thus, industrial unions do not utilize either
prehire agreements or hiring halls.

Differing Leadership Roles
Another difference between craft and industrial unions is the roles of the business agent
and shop stewards of the craft unions and the local union officials of industrial unions.
The business agent, the full-time administrator of the local craft union, provides many
of the same services as the local union president of a large industrial union. Both are
considered the key administrative official of their respective local union halls, and they
lead the local union negotiations and play a key role in grievance administration. How-
ever, the business agent has additional duties, such as administering the union hiring
hall, serving as the chief watchdog over the agreement at the various work sites, and
appointing an employee on each job site to serve as the shop steward.

Because the business agents of local craft unions have authority to assign members
to jobs, such as in the construction industry, they can accumulate power which could
lead to corruption, especially with assistance of cooperative employers. More impor-
tantly, with this authority to assign workers to jobs, business agents can play favorites
and members will be reluctant to challenge the business agent because they could be dis-
ciplined by losing job assignments. However, in at least one case, an African-American

156 PART 1 Recognizing Rights and Responsibilities of Unions and Management

worker sued and proved that the union hiring hall had been operated in a racially dis-
criminatory way for several years. The court appointed a special master to oversee the
hiring hall to insure it operated fairly.39

The shop steward in a craft union, who may be the first person on the job or the
most senior employee, handles employee grievances, represents the business agent on the
job, and contacts the business agent if anything goes wrong. By contrast, the shop stew-
ard in an industrial union is elected by the group of employees he/she will represent (like
the members in a department or shift).

The shop steward is the personification of the union to the members; the impressions
of the steward greatly influence the members perceptions of the union. Where impressions
of the steward are positive, members also have positive views of grievance procedures and
have greater union commitment. Stewards spend about 12 hours per week on labor rela-
tions matters; between 50 and 80 percent of this time is spent on grievance handling.
Therefore, training of shop stewards in grievance handling is important because it helps
in reducing the time required to process grievances, an increased likelihood that the shop
steward will seek reelection, and the ability of the steward to devote more time to improv-
ing relations between the union and management.40 Most unions have ongoing steward
training programs, which include such subjects as compliance with the labor agreement,
filing grievances, and monitoring health and safety violations.

In local industrial unions, the local president may serve full-time if the local union
can afford it. If the position is full-time, the salary comes from union dues. If the posi-
tion is part-time, the president is compensated from the union treasury only for the time
taken off his or her company job (at the regular rate of pay). Since much of the work is
done outside the regular work hours, the presidents devote much more than the typical
40-hour week. Presidential duties include participating in local negotiations, maintaining
the local union office, chairing local union meetings, assisting in grievance administra-
tion, and ensuring that management abides by the agreement. Union officers who are
involved in the day-to-day administration of the collective bargaining agreement may
be granted preference in shift assignment and protected from layoffs. They may be
granted super-seniority, which means they go to the top of the seniority list on layoff
determinations.

Another position which is important to the operations of the local union is the
international union representative, a staff member of the international union, who
assists local officers in negotiations and in administering the labor agreement. He or
she also ensures that the local s activities conform to the national constitution and direc-
tives and any local agreements are consistent with a master agreement where applicable.
They also have responsibilities in leadership roles in conducting union organizing cam-
paigns at unrepresented sites.41

Involvement in union leadership depends upon individuals being convinced of the
importance of the cause of the union. This is necessary because the union leadership,
whether a shop steward or a local union president, will be devoting a certain number
of hours each month without pay to provide services and benefits to co-workers.
Employees who take on the role of union officer tend to do so because they are con-
cerned about the well-being of their co-workers and have received encouragement from
these peers. They are more likely to have been employed for a longer period but gain less
satisfaction from their jobs.42

Government and Operation of the Local Union
There are several common ways for union members to participate in union activities:
attending meetings, holding office, attending conventions, voting (officer elections,

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 157

ratification of a negotiated agreement, and strike vote), and helping with the monthly
newsletter.

Union members whose growth needs are not fulfilled on their job are usually more
willing to become involved in union administration. Also, individuals are usually more
willing to participate in union administration when their values are closely aligned with
their role in the union.43

Participation in Meetings
Attendance at local union meetings frequently varies between 5 and 10 percent of the
total membership; however, attendance is higher among union members who perceive a
potential payoff for participation.44 When a union is confronted with important busi-
ness, such as during local union officer elections, taking a strike vote, negotiations, or
ratifying a negotiated agreement, attendance rises.

When the meeting location and time of the meeting are convenient to the member-
ship, attendance tends to rise. For example, if the meeting is held at or near the work-
place immediately after work, attendance will likely increase. Craft union members,
higher skilled, higher seniority, and better-educated members are more likely to attend.
Union members are more likely to attend if they know they will be able participate in the
meetings and if they receive a personal invitation from their shop steward. Most interest-
ing, when the union members do attend, they leave the meeting fairly satisfied with how
the meetings are run.45

Local unions are now using survey methods and interviewing techniques to gather
information about such issues as safety and health, contract provisions, promotional
opportunities, job stress, perception of the union, and recruitment of new members, not
only to prepare for negotiations but also to improve the operations of the union and
assess membership attitudes.46

Unions have much potential for increasing participation of local union members.
For example, unions may make full use of electronic information services, like the Inter-
net, Web sites, and e-mail, to communicate and pursue union objectives; and find new
ways to involve the rank-and-file members in organizing, bargaining, and political activ-
ities.47 Interestingly, union participation does not mean that employees are not satisfied
with their jobs.48

The union leaders almost always attend local union meetings, as do departmental
representatives, hard-core members, pressure groups, social groups, and aspirants to
union leadership positions. Union stewards are expected to attend local union meetings
and represent the interests of those in their work unit. Although direct votes occur only
on major issues, the union steward can usually reflect the membership views at the
union meetings.49

Locals have tried numerous ways to increase attendance of regular members, such
as providing beer, sandwiches, movies, and door prizes; fining members who miss a
specified number of meetings; or refusing to let members who have missed too many
meetings seek an elected office. Although some gimmicks may increase attendance in
the short run, many members still feel the meetings are long, boring, and frustrating
affairs. 50

The average length is about two hours and much of the time is devoted to presenta-
tion of reports from the treasurer, project leaders, and committee chairpersons. Oppor-
tunities are provided for members to discuss these reports, but this procedure itself takes
time, especially when a grievance involving someone in attendance is presented or when
a controversial issue is raised before the meeting as a whole. Although the meetings may
stray from the ideal, the business of the local is generally accomplished.

158 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Functions of the Meeting
The local union meeting may seem boring and not well attended; however, it serves sev-
eral vital functions in the local union government. First, the meeting is the union s single
most important governmental activity, and all authority at the local level is derived from
it. Second, the meeting provides an opportunity for members to communicate with
union leaders, express gripes directly, and call attention to their concerns. Likewise, it is
an opportunity for leaders to provide information to members, present results of activi-
ties, seek union support, and give direction to the membership. Finally, since the meeting
is the supreme legislative body, this is where important decisions are made on such items
as approval of appeals of grievance to arbitration, approval of expenses and constitu-
tional changes, proposals for contract negotiations, election of officers, and ratification
of the contract.51

Unions exist not only to better workers economic conditions, but to give employees
a voice. Democratic unions provide that voice. A democratic union provides members an
opportunity to exert influence over their workplace environment and to participate in
decisions which affect them at work through such activities as attending local union
meetings, voicing their opinions, participating in ratification and strike votes, running
for office, and voting in local and national union elections. The processes in democratic
unions, such as officer elections, make the union leaders more responsive to the
membership.

Research has shown that positive union management relations lead to members
voting in line with the political objectives of the union leaders, such as contract ratifica-
tion and reelection of the incumbent union leaders. In local union officer elections,
greater effectiveness in processing grievances increases the likelihood that an incumbent
union leader will be reelected. Confidence in using the grievance procedure to resolve
problems and the fairness of the collective bargaining agreement lead to increased sup-
port for the local union leader s political goals and reelection of the incumbent. Interest-
ingly, more senior members have been found more likely to have voted against the
incumbent union leaders. Thus, it must be concluded that the more senior union mem-
bers might not believe that the union officers are doing as much for them as they are for
the more junior members.52

Because elections are so important to the democratic process, the U.S. Department
of Labor has been authorized by Congress to develop rules governing union elections.
(These rules are shown in the following Labor Relations in Action box on page 162.)

The National or International Union
The national or international (these terms are used interchangeably in this chapter) union in
the United States occupies the kingpin position in organized labor because of its influence
in collective bargaining the core function of American unions. Size alone (Exhibit 4.11)
indicates the magnitude of the influence of national unions millions of members work
under labor agreements that are directly or indirectly the result of national union actions.
The local union operates under its constitution and directives, and the federation (AFL-CIO)
derives its influence, prestige, and power from the affiliated national unions.

The national union operates under a constitution adopted in a convention by
representatives from locals. These constitutions have changed over time through three
stages: first, in an era of independent local unions, the locals were initially careful to
restrict the power of the national union. Second, as national businesses, larger regional
railroads, and chain stores rose to prominence, national unions became more active in
collective bargaining and political action. Local officers realized the need for a unified

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 159

approach toward these large corporations and the need for national laws protecting
their interests. Consequently, the union locals became subordinate bodies. Third and
currently, after scandals involving undemocratic and corrupt union leaders (and the
passage of the Landrum-Griffin Act), most union constitutions added provisions that
not only authorize the major national union functions but also protect union members
individual rights and the rights of local unions in relation to the national union.53

The Convention
The supreme governing body of the national union is its convention, which is usually held
annually or biennially.54 The convention serves the national union in many ways: as the
constitutional assembly, the legislature of the national union, the final court for union deci-
sions, and the means for nominating officers (and the election in many cases). The con-
vention provides the time and place for national officers to report to the members their
accomplishments and failures. It provides the agenda for policy formulation, program
planning, and rule making. It represents the time in which the voice of the membership
holds leaders accountable for their actions. However, not all activities are official; the con-
vention provides a reward for drudgery work at the local, an opportunity for politicking
and public relations, and a time and place for the members to let their hair down.

The convention makes use of the delegate system, in which the number of delegates
allowed depends on the number of members in the local. Because even the smallest
union is allowed one delegate, the number of delegates is not exactly in direct proportion
to the size of the local, although larger locals have more delegates. The convention con-
ducts its business similarly to Congress and various state legislatures in that much com-
mittee work (including the possible holding of hearings) is performed before debate and
vote on the convention floor. However, much discussion also takes place in the conven-
tion hotel bars and in meeting rooms.55

Exhibit 4.11
Twelve Largest National and
International Unions

Organization Members (in thousands)

National Education Association* 2,963

Service Employees International Union** 1,867

American Federation of Teachers*** 1,597

American Federation of State, County and Municipal
Employees***

1,379

United Food and Commercial Workers** 1,274

International Brotherhood of Teamsters** 1,258

International Brotherhood of Electrical Workers*** 750

United Steelworkers*** 659

Communication Workers of America*** 623

International Association of Machinists*** 570

Laborer International Union of North America*** 558

United Auto Workers*** 391

*Independent Union
**Affiliated with Change to Win
***Affiliated with AFL-CIO

SOURCE: 2013-2014-2015 LM-2 Reports by U.S. labor unions, which may be found at http://www.olms.dol-esa.gov, the home page
of the U.S. Department of Labor.

160 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Although many subjects may go before the convention, several continue to emerge
year after year, such as the following:

Internal government: dues, financial matters; and authority of the president, execu-
tive board, and locals
Collective bargaining: problems with current agreements, membership requests for
future negotiations, establishment of bargaining priorities, determination of strategy
for future negotiations
Resolutions in support of or against domestic and international public policies: labor
law reform, inflation, interest rates, unemployment, international balance of pay-
ments, loss of jobs to foreign countries.56

Leadership and Democracy
Between conventions, the national union is led by its executive board, whose members are
elected by the membership. In some cases, executive board members are elected on a
regional basis, and they are responsible for regional intermediate organizations that main-
tain contact between the locals in the regional and the national unions. The relationship
between the executive board and the national union president is usually specified in the
constitution. For example, some national union presidents primarily carry out the policies
of the executive board; others direct the affairs of the national union, subject to the
approval of the board. However, the largest group of presidents has virtually unrestricted
authority to appoint staff and direct the activities of the national union. The rationale for
allowing such great authority to be vested in the chief executive is that the union often
finds itself in struggles with employers or in other situations where it must act decisively
and quickly. Thus, a strong executive is needed, and a single spokesperson for the union is
required. This concentration of power creates opportunities for misuse of power, and an
internal system of checks and balances must be devised to ensure democracy and adequate
representation. Experiences that led to the passage of Titles I to VI of the Landrum Griffin
Act (covered later in this chapter) have shown that internal control may not work effec-
tively, making that government regulation essential. Members rights to participate in
union elections and governance include the right to nominate candidates in elections,
vote in elections, attend membership meetings, participate in the deliberations, and vote
on the business at these meetings, such as setting dues and assessments.57

Democracy within the union can improve its overall efficiency and effectiveness.
Union leaders will better represent the members because they will know what the mem-
bers want. Democracy will make it easier to eliminate corrupt and ineffective officers
who do not represent the members interests. Furthermore, paid union officials cannot
perform all the tasks needed within a union and have to rely on the efforts of volunteer
unpaid leaders and members. These volunteer leaders will have a greater commitment to
the union if they are involved. The components of democracy should include (1) shared
sovereignty in decision making; (2) opportunities to participate in decision making;
(3) access to complete information necessary for decision making; (4) guaranteed equal
rights for individuals and respect for individual dignity.58

One indication of union democracy and active participation by members has been the
turnover rates of national union presidents. Some former international union leaders
maintained their positions for extended periods (e.g., Dan Tobin, Teamsters, 45 years;
John L. Lewis, Mine Workers, 39 years). In the 1950s and 1960s, the turnover rate for
union presidents was about 20 percent, rising to 25 percent in the 1970s. Then, in the
late 1980s, the turnover rate reversed to 10 percent. Although turnover is not the necessary
prerequisite for union democracy, the general rule is that to remain in office a union leader

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 161

must be responsive to the membership and satisfy the membership s objectives.59 The pre-
sident s tenure in office tends to be longer in larger unions, which have formalized com-
munication networks, centralized bargaining, and heterogeneous rank-and-file members.60

Profile of Union Leaders
Most union leaders come from working-class families; the majority of their fathers were
hourly employees. Union leaders have an average of 14.1 years of formal education. Over
70 percent of union leaders have some college experience; 17 percent have postgraduate edu-
cation; and 27 percent are college graduates. They first joined a union for the same reasons
most union members do today: 40 percent joined because it was a condition of employment,
33 percent joined because they believed in the goals of organized labor, and 25 percent
wanted better pay and working conditions. Their reasons for pursuing union leadership posi-
tions include the following: challenging work, interesting work, extended their range of abili-
ties, opportunity to learn new things, achieve something personally valued, believed in the
goals of the union, and opportunity to improve working conditions of fellow employees.61

A survey of national union leaders revealed some new directions, which included the
following:

Centralizing some of the national union s functions, such as supporting federal leg-
islation, while pushing other decisions closer to the membership, such as taking a
local union member s grievance to arbitration

LABOR RELATIONS IN ACTION
Rules Governing Union Officer Elections (U.S. Department of Labor)

1. All local unions must elect officers at least once every
three years; international unions every five years.

2. Local unions are required to have direct elections by
manual or mail ballots; international unions are per-
mitted to elect officers by delegates.

3. Proper safeguards must be prepared for mail ballot-
ing, for example, insurance that all members
received a ballot and have sufficient time to vote
and return the ballot. With manual balloting, proce-
dures for voter secrecy (private voting booths, a pri-
vate table where the view is blocked by cardboard or
a private room), and voter identification (driver s
license or company badge) must be established.

4. The location, date, and time of the election must be
convenient for all of the members.

5. Notice of the election which contains the date,
time, place, and so on must be mailed to every
member 15 days prior to the election.

6. There must be reasonable notice of the rules gov-
erning nominations mailed to or posted for the
membership. Nominations may be done orally at a
union meeting or by mail, but every member must
have a reasonable opportunity to nominate.

7. Requirements for voter eligibility are the same as
the requirements for membership. Voter eligibility
must be verified.

8. After the ballot is marked, it should be placed in a
nearby ballot box by the voter, and the voter should
leave the area by a door different from the entrance
of members who have not voted.

9. Neutral persons should conduct the elections and
count the ballots.

10. Observers are a necessary part of the election pro-
cess, and each candidate is entitled to one or more
observers (depending on the polling hours, polling
sites, and size of the election).

11. Each candidate has a right to have campaign mate-
rials mailed. Some unions do the mailing at the can-
didate s expense; some unions provide computer
printouts of the membership lists or mailing labels
of membership addresses.

12. The use of union or employer funds to support a
candidate is prohibited. This ban applies to copying
machines, campaigning in a union publication, use
of union or employer cars, any property of the union
or an employer, assistance by any employer or a
relative who owns a business and just wants to
help a family member get elected, and others.

SOURCE: Helen Boetticher, How to Hold a Union Election and Stay Out of Trouble,
Labor Law Journal, 51 (4) (2000), pp. 219 224.

162

Broadening the scope of bargaining to include a more holistic approach, such as
negotiating child-care and elder-care issues and member education
Studying and learning from business organizations on subjects like strategic planning,
clear objectives, a clear chain of command, and established rules and procedures
Improving union and member effectiveness through goal setting, team building, and
member surveys
Improving communication with members by use of information technology, such as
video conferences, Web sites, and e-mail.62

Administration
The operational departments of international unions vary in kind and number, but the
typical international union will have at least the following departments: (1) executive and
administration; (2) financial and auditing; (3) organizing, (4) negotiating, grievance han-
dling, and arbitration services; and (5) technical staff, which includes research, education,
economics, law, publications, and public relations.

The executive and administrative group includes the president, vice president(s),
secretary-treasurer, and their assistants. This group is chiefly responsible for the activities
of the overall union. In some cases, the vice president may concentrate on organizing or
collective bargaining, whereas the secretary-treasurer will focus on financial matters.

Presidents of U.S. national and international unions are paid well. Presidents of the
three largest unions earn over $250,000 per year.63 These salaries do not approach the
average earnings of CEOs. The salaries of the top 100 highest-paid CEOs ranged from
$20.6 million to $156.1 million in 2014. CEOs now earn 373.1 times the earnings of an
average worker in the United States who made $35,239.64

Thousands of union members, union stewards, and local union officials receive no
compensation for their union work and are reimbursed only for time lost from their jobs
when involved in union business.

Professional Staff Members
Unions have two kinds of professional staffs. The first group is either appointed or
elected and holds such titles as international union representative, staff representative,
business agent, or organizer. These staff members work away from the international
union headquarters and assist local unions in bargaining, contract administration, and
organizing. The second group performs more technical, specialized functions at the
union headquarters. This group includes such professionals as industrial hygienists; phy-
sicians; economists; attorneys; accountants; computer operators; and specialists in educa-
tion, media, public relations, and so forth. Interestingly, the staff members have formed
staff unions, mostly to promote their job security and equitable salary schedules. Most
staff unions are independent, but some have affiliated with a national labor union, such
as the CWA, the Steelworkers, or the Newspaper Guild.

Unions have been criticized for making their personnel decisions based on internal
politics and limiting selections only to internal candidates. There has always been a union
tradition of protecting workers against unfair discharge; thus, this tradition has been a bar-
rier to disciplinary action of its own employees with union staff members being fired only
in the most serious cases of incompetence or abuse. Unions have also been criticized
because few unions have written job descriptions or provided training programs and ori-
entation for staff members. In recent years, these criticisms have been addressed and
union s human resource practices have become more standardized. These changes have
been addressed because unions are facing more and more complex challenges in all of

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 163

the areas in which they operate – economics, financial, political, legal, and organizational.
Today, unions are likely to have written policies in five areas: sexual harassment, discipline
and discharge, ethics, equal opportunity/affirmative action, and hiring.

Unions today are establishing more modern human resource policies and practices.
The unions response has been caused by shrinking resources, growing employer resis-
tance to unions, and government regulations.65

The types of skills, knowledge, and experience required of staff members to address
these challenges have changed. When unions place a higher priority on servicing the
membership (assisting the local in contract negotiations, resolving grievances, presenting
an arbitration, etc.), the institutional knowledge and nuts and bolts of bargaining and
political and leadership skills gained from being a local union officer are valuable for a
staff job. While these qualities are important for some staff jobs, they may not be essen-
tial for conducting organizing drives or working in political campaigns. In fact, many
staff jobs today require greater technical skills, such as data assessment, communications,
financial and economic analysis, which are not gained through experience in local
unions. Unions now look outside their own membership to find the professionals needed
to assist in meeting the needs of the unions and their members. Requiring a college
degree for some staff jobs has become commonplace.

Unions are not unlike many organizations, such as local government, a public orga-
nization, even student organizations. Within these organizations, change is difficult, even
with visionary union leaders with smart plans for preparing their members to meet pres-
ent and future challenges. One impediment to advancement of unions is resistance from
the unions own staff. One reason is that unions are democratic organizations. Some of
the staff members may have been placed in their positions because they helped get some-
one elected. Some staff members may even do an end run to higher authorities to get a
lower level supervisor off their backs. When a staff member has friends in high places,
it is difficult to modify their behaviors.66

Today, most national unions provide in-house training for their professional staff.
Numerous universities have labor education programs that offer professional develop-
ment for union members. The George Meany Center for Labor Studies in Silver
Springs, Maryland, offered courses on arbitration, organizing, negotiating, leadership
development, etc. and has an annual enrollment of several thousands. Its National
Labor College offers accredited undergraduate and graduate programs designed for
union staff since 1997, and several hundred union officials have college degrees by par-
ticipating in this program.67

Services to and Control of Locals
As indicated earlier, the locals are constitutionally subordinated to the national union, but
the degree of subordination varies with the union. The national union provides services to
the local union in several ways while at the same time controlling local union leaders. For
example, when the company produces a mobile product, such as automobiles and a
national or international product market exists, a master labor agreement with one firm
might be negotiated to cover all its facilities (such agreements have been negotiated in the
steel, auto, rubber, aircraft, and electrical appliance industries). Also, a union such as the
UAW may negotiate an agreement with a company like GM at the national level, and this
agreement may establish a pattern for negotiating with other auto companies such as Ford
and Chrysler. Following the negotiations of the master agreement between the national
union and each company, the local union will negotiate a local agreement with company
officials at each plant, covering local rules, policies, and benefits. Any deviations from the
master agreement must be approved by the national union. When the product is not

164 PART 1 Recognizing Rights and Responsibilities of Unions and Management

mobile, such as in construction, the negotiations and the labor agreement cover a smaller
geographic area. (See Chapter 6 for further coverage of this issue.)

The national union through the international union representative assists locals in
collective bargaining, grievance administration, strike activities, and internal financial
administration. These services also provide an opportunity for national union staff mem-
bers to ensure that the local unions are conforming to national policies.

The national union supports the local union in strike situations, but the local union
must get approval to qualify for strike benefits. The national union provides counseling
and consultation for internal financial administration (bookkeeping, dues collection, pur-
chases, financing union lodges, etc.), but trusteeship (receivership) procedures are avail-
able whereby the national union can suspend local union control for abuses such as
malfeasance, corruption, and misuse of funds. The national union could replace local lea-
ders with a trustee appointed by the national union.

Dues, Fees, and Distribution of Funds
Although all union members pay dues or fees to their national unions, the amount and
form vary considerably. Such dues are the chief source of revenue for unions. The
monthly dues are typically between $20 and $30, and the initiation fee is about $40.
Some unions set a single rate, but most allow the local union some flexibility in making
the final determination. Typically, dues are collected via a dues check off system wherein
the member agrees to a payroll deduction of union dues, which are collected by the
employer and paid them directly to the union.

The local unions forward a portion of the monthly dues for each member to the
national union. The national unions use these funds for various purposes beneficial to
the membership. Although the largest percentage of funds goes to the general fund,
which covers administrative and operational costs and salary expenses, allocations are
also made to accounts, such as a strike fund, a convention fund, union publications, edu-
cational activities, and a retirement fund.68

The use of union dues for political purposes has been a combative political issue for
many years. Unions spend on average only 4.27 percent of the dues income for political
purposes. Advocates (which include the National Right-to-Work committee, the Heritage
Foundation, and the Christian Coalition) for worker paycheck protection support
state and federal legislation claim they which would give nonunion bargaining unit
employees, who are required to pay dues under a union-security arrangement, the right
to opt-out to the union using of any portion of their payments for political purposes.
Those who opt-out may then apply for a rebate of the portion of their dues used by
the union for political purposes. A more extensive approach is the opt-in provision
which would require nonunion employee dues-payers to explicitly grant the union per-
mission to use a portion of their dues for political purposes.69 Recent court decisions
have caused several unions, such as the Machinists; Auto Workers; Communications
Workers; and American Federation of State, County, and Municipal Employees, to
adopt dues rebate plans. These plans allow a rebate of a portion of member dues spent
on political activities if the member requests it in advance (usually annually).

The U.S. Supreme Court has ruled that if a union uses dues and fees of protesting
employees for non-collective bargaining activities and purposes, it breaches its fidu-
ciary duty of fair representation.70 Unions can continue to solicit volunteer contribu-
tions through such units as the AFL-CIO Committee on Political Education (COPE),
the UAW s Community Action Program (CAP), and the United Mine Workers
(UMW s) Coal Miners Political Committee (COMPAC), but collections may be more
difficult.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 165

Finances of unions are considerably decentralized across union levels, with a few
local unions having more wealth and income than their national unions. Likewise,
union finances are highly concentrated across unions, with a few unions dominating
the scene. For example, the National Education Association receives $385 million in
annual revenue, and the UAW has assets of nearly $1.0 billion.71

Unions financial performance has improved considerably in the last few years. In
fact, some unions have a collective capacity to fund nearly a full year of services without
the infusion of any new income. Organized labor s decline in bargaining power and
strike activity over the past two decades has not been due to any diminished financial
capacity of unions to withstand strikes.72

Mergers of National Unions
Mergers of national unions have occurred at a quickening pace in recent years. These
have been spurred by rising operating costs. Several additional reasons have prompted
such mergers, including the following: (1) the AFL-CIO merger set an example for its
member unions, (2) the need for stronger bargaining positions, (3) a desire to avoid
expensive jurisdictional disputes between unions, (4) the decline for some U.S. industries,
(5) economics of scale, (6) avoidance of external controls, and (7) the need for self-
preservation. Obviously, some mergers reflect a combination of these motivations.

Union mergers are either amalgamations or absorptions. Amalgamations occur
when two or more unions of roughly similar size join together to form a new union.
Absorptions occur when a small union is absorbed by a larger one. The smaller one
loses its separate identity, and the size and structure of the larger one is minimally
affected.73 Since there were 146 national union mergers from 1955 to 2007, about three
per year. Amalgamations accounted for about 15 percent and, since 2000, there have
only been two. One of these amalgamations, the merger of UNITE (primarily clothing
and textiles workers) and HERE (primarily hotel and restaurant workers) in 2004 lasted
only five years. (The UNITE group split and formed Workers United; in 2010 Workers
United affiliated with the Service Employees International Union). Amalgamation mer-
gers are difficult because they join together different traditions, organizational structures,
and administrative practices of two separate unions in creating a new union. Amalgama-
tions essentially disband the existing unions and create a new one. Merger committees
must agree on new governing structures and administrative practices, such as election
of officers, changes in the constitutions, retention, layoffs, and retirement of staff mem-
bers; officer positions and authority of these officers; location of the union headquarters;
and continuation and/or elimination of separate union newspapers.

Absorptions are easier because the smaller unions merge into the larger union and
the smaller union becomes part of the larger one. The smaller unions may retain a divi-
sion or section within the larger union and may even retain their own officers, locals,
bargaining councils, and most of their constitutions. As a result, the absorption may
entail little more than printing new union stationery.

Often overlooked in union mergers are the behavioral dimensions. These dimen-
sions include how the union merger affects the behavior of union members and how
the union members are affected by the merger. Members tend to evaluate the merger in
practical terms, that is, types and quality of service to be received, job protections they
receive, effect on member dues, level of democracy, opportunities to participate in union
governance, and so on. Successful mergers require issuing union bulletins and having
special meetings to explain the benefits of the mergers. If the merger occurs without
member support, the merger will fail. The leaders must convince enough members that
the membership will benefit from the merger. If the members become disaffected and

166 PART 1 Recognizing Rights and Responsibilities of Unions and Management

withdraw their participation, the merged union will possibly disintegrate like the UNITE
HERE merger in 2009.74

Five unions have dominated the merging activity. These unions are the Service
Employees International Union (SEIU), the United Food and Commercial Workers Union
(UFCW), the Communication Workers of America (CWA), the International Brotherhood
of Teamsters (IBT), and the United Steelworkers of America (USWA). These five unions
have over 5 million members. While some of their growth has occurred through organizing
new members, most growth has occurred through mergers. While these unions are multi-
jurisdictional, they have their roots in certain industries: SEIU in hospitals and nursing facil-
ities; IBT in trucking; UFCW in grocery stores and meat products; USWA in aluminum,
steel, petroleum refining, paper, and tires; and CWA in telecommunications.75

Intermediate Organizational Units
Structurally, between national headquarters and the locals lie the intermediate organiza-
tional units regional or district offices, trade conferences, conference boards, and joint
councils. These units usually operate under the guidance of their various national unions,
but their activities are important to the union members and employers in their areas.

The regional, or district, offices house the regional or district officers, the staff, and
the international union representatives for the geographical area served. For example,
Michigan has a number of Auto Workers district offices; the Steelworkers have district
offices in Pittsburgh, Birmingham, and elsewhere. The offices are established to help
national unions better serve their respective locals.

Trade conferences are set up within national unions to represent a variety of indus-
trial groups. For example, the Teamsters have established 11 trade conferences for
groups such as freight, laundry, airlines, and moving and storage. These groups meet to
discuss various mutual problems and topics of interest.

Conference boards are organized within national unions in accordance with the
company affiliation to discuss issues that pertain to the union and the particular com-
pany. For instance, each of the national unions within the steel, auto, rubber, and electric
industries has established conference boards that meet to discuss negotiations and related
problems. Delegates are chosen from the local unions to represent the interests of their
constituents at meetings, to plan the next negotiations, and then to relay these plans to
the local union members. For example, when the United Rubber Workers were absorbed
into the United Steel Workers of America in the mid-1990s, the USWA set up a Rubber
& Plastics Industry Conference group led by former URW national officers; subgroups
within that conference focused on each of the major tire manufacturers.

Joint councils involve groupings of local unions that have common goals, employ-
ers, and interests. Examples are the building trades councils established in most metro-
politan areas in the United States. Joint councils negotiate with the association of
construction employers in the area, coordinate their activities, and assist in resolving
jurisdictional disputes between unions.

Independent Unions
There are 41 independent unions (not affiliated with the AFL-CIO or Change to Win).
These unions represent mostly service and health care providers. The largest union
in the United States, the National Education Association (about 3.0 million members),
is among these independent unions. Other independent unions include the American
Nurses Association, American Physicians and Dentists, Life Insurance Agents, National
Labor Relations Board Union, Professional Engineering Association, and International

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 167

Union, Security, Police, and Fire Professionals.76 There are also approximately 1,500
independent local unions that have nearly half a million members. Independent local
unions are found in a few large organizations such as DuPont, Texaco, Exxon, AT&T,
and Procter & Gamble; in several medium-sized firms such as Dow-Jones, Weirton
Steel, and Zenith; and in numerous small companies in a variety of industries.77

Employee Associations
Unions are supporting new employee associations that provide a wide range of services
to their members. In Cleveland, The Association for Working Women, an affiliate of the
Service Employees International Union, provides a toll-free hotline, offers courses on
sexual harassment and carpal tunnel syndrome injuries, and lobbies on workplace issues.
In New York, AIM (Associate ILGWU Members), an affiliate of the International Ladies
Garment Workers Union (now part of the SEIU), provides English classes for its mem-
bers; graduate-equivalency diploma classes; skills training; and legal assistance with
immigration, minimum wage, safety and health, sexual harassment, disability, and pen-
sions laws. In Montana, the Montana Family Union is sponsored by the AFL-CIO and is
made up of government employees, small-business owners, and even priests. It offers its
members major medical benefits at less than 50 percent of their individual rates.
Although critics refer to these employee associations as watered-down unions, they
are serving important social functions, and their membership has grown nationally
while total membership in unions has declined.78

Managerial and Professional Organizations
Even though 43 percent of the total U.S. labor force is classified as managers, supervisors,
or professional employees (Managers and supervisors are not eligible for coverage under
the National Labor Relations Act), these groups are interested in having a greater voice at
work. Sidney and Beatrice Webb recognized in their classic book Methods of Trade Union-
ism, published in 1902, that there were three methods of unionism: (1) collective bargain-
ing, (2) mutual aid and insurance, and (3) legal enactment. Many managers, supervisors,
and professional employees have joined organizations to represent their work-related inter-
ests, that is, for their mutual aid and insurance. There are 37 of these types of organiza-
tions and many use union-like tactics, such as collective action, mutual aid, skill
certification, and political activity, to achieve their goals. They provide group insurance
and discounts and special rates for university courses, books, video tapes, and products;
assist members in their career development; and engage in legal-enactment strategies.
However, these organizations do not engage in collective bargaining.79

The American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO)
The AFL-CIO, while not including all U.S. labor unions, is composed of 55 national and
international unions that have 60,000 local unions and about 10 million members. Mem-
bers represent a diversity of occupations, such as actors, construction workers, barbers
and hairdressers, steelworkers, bus drivers, doctors, nurses, athletes, railroad workers,
telephone operators, newspaper reporters, sales clerks, garment workers, engineers,
schoolteachers, and police. These unions affiliated with the AFL-CIO maintain day-
to-day relationships with several thousand employers and administer about 150,000
labor agreements. Most (over 99 percent) of these agreements are negotiated without
strikes or other forms of conflict and serve as the basis of employment conditions
under which many work.

168 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Established in 1955 when the American Federation of Labor and the Congress of
Industrial Organizations merged, the AFL-CIO recognized the principle that both craft
and industrial unions are appropriate, equal, and necessary parts of U.S. organized
labor. The federation accepts the principle of autonomy each affiliated union conducts
its own affairs; has its own headquarters, offices, and staff; decides its own economic pol-
icies; sets its own dues; carries out its own contract negotiations; and provides its own
services to members.

No national union is required to affiliate with the AFL-CIO. About 40 unions
remain outside the AFL-CIO. Member unions are free to withdraw at any time; however,
their voluntary participation plays an essential role that advances the interest of every
union. National unions continue their membership in the AFL-CIO because they believe
that joining together of unions into a federation of unions serves purposes their own
individual unions cannot serve as well, especially involving politics and lobbying.

Examples of AFL-CIO services include the following:

Representing for organized labor before Congress and other branches of government
Speaking for U.S. labor in world affairs and keeping in direct contact with labor
unions throughout the free world
Coordinating activities such as community services, political education, lobbying,
and voter registration with greater effectiveness
Helping to coordinate efforts to organize unrepresented employees throughout the
United States
Conducting economic and legal research on important legislative topics.

Another vital service enhances the integrity and prestige of AFL-CIO unions they
must operate under established ethical practice codes covering union democracy and
financial integrity. The federation also assists in minimizing conflicts between national
unions that cause work interruptions by mediating and resolving disputes, such as orga-
nizing disputes and conflicts over work assignments.

Organizational Structure
The AFL-CIO organizational structure, shown in Exhibit 4.12, illustrates the importance
of the convention. Meeting every two years and at times of particular need, delegates
decide on policies, programs, and direction for AFL-CIO activities. Each national or
international union is authorized to send delegates to the convention. Each union s
representation of delegates at the convention is determined by the number of dues-
paying members. In addition, other affiliated organizations, such as state labor councils,
are represented by one delegate each.

At the last AFL-CIO convention, delegates elected Richard Trumka to be president,
Tefere Gebre to be executive vice president, and Elizabeth Shuler to be secretary-
treasurer. Trumpka, a coal miner s son, went to work in the mines in 1968, received his
bachelor of science in 1971 from Pennsylvania State University, and received his law
degree from Villanova University in 1974. Gebre was born in Ethiopia and emigrated
to the United States as a teenager. Gebre received his B.S. from University of California
Poly Pomana and an MBA from the University of Southern California. While in college,
he worked his first union job as a night shift loader at UPS. Shuler became the youngest
secretary-treasurer ever and the first female secretary-treasurer. She received her bache-
lor s degree in journalism from the University of Oregon. Shuler held numerous posi-
tions within the International Brotherhood of Electrical Workers prior to being chosen
as Trumka s running mate in the 2009 election.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 169

Between conventions, the governing body is the Executive Council, composed of the
president, secretary-treasurer, and 55 vice presidents. The other members of the Execu-
tive Council are likely to be current or previous presidents of international unions affili-
ated with the AFL-CIO. The Executive Council meets at least three times a year and
handles operational duties involving legislative matters, union corruption, charters of
new international unions, and judicial appeals from member unions.

Between meetings of the Executive Council, the president, who is the chief executive
officer, has authority to supervise the affairs of the federation and to direct its staff, and
the secretary-treasurer handles all financial matters. To assist his administration, the
president has appointed 11 programmatic departments on various subjects, which, with
the assistance of the AFL-CIO staff, provide related services to member unions. The staff,
located at headquarters in Washington, D.C., corresponds closely with these program-
matic departments in order to better serve the member unions. (See Exhibit 4.12 for a
listing of programmatic departments.) The General Board, composed of the Executive
Council and one officer from each member union, is available to act on matters referred
to it by the Executive Council.

Exhibit 4.12
Organization Chart of AFL-CIO

SOURCE: http://www.aflcio.org

170 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The AFL-CIO has established 51 state federations (plus one in Puerto Rico) to
advance the statewide interests of labor through political, lobbying, and organizing activ-
ities, which involve attempts to elect friends of labor, to have favorable legislation passed,
and to organize unrepresented workers, respectively. Each local union of the AFL-
CIO affiliated unions in a particular state may join the state organization and participate
in and support its activities. In addition, 580 local central bodies have been formed by
local unions of the national affiliates to deal with civic and community problems and
other matters of local concern.

To accommodate and serve the interests and needs of various trade and industrial
unions, the AFL-CIO has established seven trade and industrial departments. The Build-
ing and Construction Trades Department represents the interests of craft unions, mostly
members of the former AFL. Another department, the Union Label and Service Trades
Department, promotes the purchase and sale of union-made goods and services. The
remaining departments represent the interests of such union groups as the food and bev-
erage trades, maritime employees, metal trades, transportation employees, and profes-
sional employees. In addition, throughout the United States where there is sufficient
interest and support, 976 local department councils have been organized.80

These local central bodies have become more active in recent years, particularly in
the northeastern states. As an example, 60 percent of the councils in the northeast region
have adopted the Union Cities program, which contains eight steps toward rebuilding
the labor movement from the bottom up and helping to improve the lives of working
families. These steps include mobilizing against anti-union employers, organizing grass-
roots lobbying/political action committees, creating strategies to create jobs and improve
economic growth, sponsoring economic education, persuading city and county officials
to pass resolutions supporting worker rights, and increasing union membership.81

The AFL-CIO established a no-raiding clause for its affiliated unions in 1962 to keep one
affiliated union from attempting to draw members from another or seeking to represent a
group of employees at a work site where a union already exists. The AFL-CIO also set up
an Internal Dispute Plan to adjudicate conflicts among its affiliated unions.82

The AFL-CIO s operations are financed through regular member dues, called per
capita taxes, which are paid by affiliated unions on behalf of their members. Currently,
the per capita tax is $0.75 month, or $9.00 per year, for each member. Thus, the AFL-
CIO s operating budget is around $190 million, which covers nearly all regular operating
expenses. A major portion of the budget goes to the salaries of the staff. The detailed
financial report of the AFL-CIO is submitted to the delegates at each convention.

The AFL-CIO offers Internet access to 17 million union members, retirees, and asso-
ciate members and offers computers at low cost. This new service is an extension of the
Union Privilege Benefit Program (see Exhibit 4.13), which has been offered since the
1980s. The benefits include reduced attorney fees, lower-cost life and accident insurance,
participation in a motor club, car repair discounts, travel club services, a Walt Disney
discount, reduced prices for educational books and software, mortgage and real estate
advice, and a dental program.

The AFL-CIO recently recognized the potential of maintaining contact with employ-
ees who are not members of unions by establishing an associate membership program.
Those eligible for associate membership includes those who voted for the union in elec-
tions where the union did not win, employees in nonunion companies who would vote
for the union if given a choice, and employees who are represented by the union but
have not joined it.

The AFL-CIO has formed partnerships with worker centers of working people who
do not have the legal right to collective bargaining. Some, like taxi drivers, have been

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 171

Exhibit 4.13
Union Plus Benefits from Union Privilege

Union Plus Benefits from Union Privilege
Benefits for Life
Union Plus benefits stand for quality and service, with prices working families can live
with. Best of all, Union Plus programs are designed specifically for working families. Our
benefits have added features that are especially helpful in cases of disability or layoffs.

Who can use these benefits?
You don t have to join Union Plus or Union Privilege; as a member of an AFL-CIO union,
you and your family are automatically eligible for our benefits. Most unions participate in
most Union Plus benefits, but some international unions elect not to offer all the pro-
grams. Click here to find out which Union Plus benefits your union participates in.

Our Secret? Union Power.
Just as unions provide strength in the workplace, Union Privilege provides strength in the
marketplace. We deliver the best benefits through the collective buying power of over
10 million AFL-CIO union members. And we do so without using union member dues.

Programs available outside the United States

Calculate your annual savings with Union Plus benefits

Money & Credit
Credit Card
Loans
Mortgage & Real Estate
Union-Made Checks
Credit Educational Information
Your Credit Score

Insurance Deals
Accident Insurance
Life Insurance
Auto Insurance
Pet Insurance

Health & Well Being
Health Savings
Health Club Discounts

Education Services
Union Plus Scholarship
Union Plus National Labor College Scholarship
Education Loan Program
Go to College Process

Entertainment Discounts
Theme Park Discounts
Movie Ticket Discounts

Auto Advantages
Care Rentals
Auto Insurance
Auto Buying Service
Goodyear Tire & Service Discounts

Member Satisfaction & Advocacy
To guarantee the quality of our benefits, we only work with industry-leading providers.

Our relationships don t stop after the Initial provider selection. We continuously update
programs and monitor performance closely to ensure that they satisfy union members
needs time and time again.

Our member advocates also use the collective strength of union consumers to ensure
members get prompt, courteous service and high-quality benefits as well as help resolve
any problems. With Union Plus programs, union members can rest assured their needs
will be addressed and their voice will be heard.

CONSUMER CORNER

Sign up for updates.

Save time and money with the
tips and deals offered in the
Union Plus e-mails. Click here
to sign up.

For other benefits, visit the links
below. Union Plus products and
services help save money and
headaches.

House & Home
Mortgage & Real Estate
North American Van Lines

Legal Resources
Immigration Legal Service

Pet Service
Pet Insurance
Pet Savings
PETCO Discounts

Gift Shop
Flower Discounts

Travel & Recreation
Car Rentals
Vacation Tours
Bahamas Getaways
Disney Hotel Savings

Computers & Tech
Cingular Wireless Discount
IBM Computer Discount
Dell Computer Discount

Union-Made
Auto Buying
Cingular Wireless
Discounts
Goodyear Tire 7 Service
Discounts
Disney Hotel Savings
Powell s unionized bookstore
Union-Made Checks

Note: Visit www.unionplus.org for updated information.SOURCE: http://www.unionplus.com/benefits/.

PROVIDER EXCELLENCE

Union Privilege only works
with top quality companies
you can trust. Our program
providers:

Are respected specialists in
their field
Offer first-rate products and
services nationwide
Share our worker-friendly
philosophy
Demonstrate outstanding
customer service
Understand the importance
of privacy and security

172 PART 1 Recognizing Rights and Responsibilities of Unions and Management

classified as independent contractors. Others include domestic workers and day laborers
who are excluded from coverage by U.S. labor laws.

Other AFL-CIO activities are educational and informational, presenting the federation s
stance on a variety of issues. For example, the AFL-CIO has a Web site that keeps members
up to date on current events that pertain to them and presents various reports on
problems and policies of organized labor. The AFL-CIO has its [email protected]
to send out e-mail messages to interested persons. The AFL-CIO maintains the
George Meany Center for Labor Studies, which offers short courses in union leader-
ship development, and a speaker s bureau to provide labor speakers for high school
and college classes. They also make educational films available to interested groups
for a nominal fee.83

In 2003, the AFL-CIO launched the Working America program which reaches out
to unrepresented workers and their families. Registration is free and members receive e-
mail alerts on topics such as health care, social security, and wages, and they have access
to the Union Privilege benefits. As of 2015, the AFL-CIO has enlisted three million
members. Contacts are made with legislators and members engage in community-
organizing activities. The AFL-CIO also offers the Union Summer program in which col-
lege students or recent graduates spend nine weeks working on various workers rights
campaigns.84

In the political arena, the AFL-CIO receives much attention. As a representative
of organized labor, it serves as the focal point of political activities. Not only does it
lobby aggressively for favorable legislation, but it publishes the voting records of each
senator and representative at both federal and state levels. It attempts to influence
appointments of Supreme Court judges, the Secretary of Labor, and NLRB members,
who are important to organized labor. Its policy of reward your friends, punish your
enemies has not changed much since Samuel Gompers s day. The AFL-CIO s COPE
has a network in each state and in most large communities. COPE seeks voluntary
contributions to provide funds for its activities, which include voter registration,
get-out-the-vote campaigns, preparation of leaflets and posters, and research on

behalf of its candidates.
Although the Federal Election Campaign Act of 1971, amended in 1974, has

restricted financial contributions to federal candidates, the AFL-CIO, COPE, and state
and local bodies can still amass amazing support to help their candidates for office, espe-
cially when the candidate is clearly the choice of organized labor. Organized labor and
corporations have become major players in the funding of political campaigns at the fed-
eral level, primarily through political action committees.

However, business groups outspend organized labor by 10 to 1. Although organized
labor has played a major role in U.S. politics, it remains independent of a national polit-
ical party. Over the years it has been more closely aligned with the Democratic Party,
both philosophically and politically. It has become perhaps the single most important
political force that has supported government programs to help the socially and econom-
ically disadvantaged. It has supported consumer and environmental protection and safety
and health legislation that has benefited all employees, union and nonunion alike.

Organized labor has accumulated much power and influence through its own estab-
lished network and has also been instrumental in organizing other politically active
groups with socially oriented objectives, such as minorities and senior citizens. However,
organized labor s overall political strength and effectiveness should not be exaggerated.
In some states and municipalities, union membership is so negligible that its influence
is inconsequential. In areas where union membership is high, its influence is significant,
and political candidates must actively solicit its support.85 Obviously, the AFL-CIO does

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 173

not control the membership s votes, and members frequently have multiple reasons for
voting for a particular candidates.

Use of Information Technology by Unions
Every international union in the United States uses the Internet and other information
technologies in the major areas of union activity:

1. Internal communications between union officers, staff, and members, particularly
when they are geographically dispersed. Within every union, there are international
union representatives who are employed throughout the country and represent
members in organizing and representational activities. E-mail communication serves
as an immediate means of communication throughout the organization. Other
unions provide an e-mail alert system that gives weekly updates to union members
and their representatives.

2. External communications, such as to inform the public about union issues poten-
tially affecting the public, workers, and unions. The AFL-CIO Web site (http://
www.aflcio.org/) gives members and nonmembers valuable information on matters
dealing with worker rights, pensions, and benefits during layoffs; provides useful
links to other resources; and provides a system that allows interested persons to
receive e-mail updates about labor events from across the United States and the
world. The AFL-CIO database over 600,000 e-mail addresses in and it is anticipated
to reach several million.

3. Facilitation of bargaining activities, such as in negotiations, and informing members
about employer practices. Members of the CWA were informed of the AT&T s pur-
chase of BellSouth via CWA s home page. Members receive daily reports from nego-
tiating teams.

4. Contract administration, such as communicating grievances and tracking decisions
of arbitrators. Unions are better able to communicate with members in preparation
for grievance meetings and arbitration hearings via e-mail communication. The
American Postal Workers Union has a database of thousands of arbitrator decisions
readily accessible to its arbitration advocates.

5. Union organizing, such as making contact with potential union members and pro-
viding a means for interested employees to communicate with the union. The United
Food and Commercial Workers (UFCW) is currently using the Internet in its
attempt to organize employees at Wal-Mart. Its Web site (http://www.ufcw.com)
keeps up-to-date information on the UFCW campaign activities.

6. Political action, such as informing potential voters about union views and those held
by organized labor s friends and adversaries. Nearly every union Web site has politi-
cal messages for the reader.

Union leaders see the Web as an important avenue for modernizing unionism and
for bridging the gap between an increasingly heterogeneous workforce and collective
activity and solidarity.86 Across the globe, unions are using information technology (IT)
to expand their interactive communications. For example, LabourStart is a new social
network. Unionbook, LaborNet, and LaborTech.net have sponsored annual conferences
since 1990 on how to use digital communication for organized labor s advancement. The
AFL-CIO uses the Web to build to mobilize the grassroots in the U.S. elections.87

The use of e-mail and the Internet has caused some concerns among organized
labor. Among the concerns are the erosion of face-to-face contact, worry about loud-
mouths and troublemakers monopolizing the communications, the generation gap
between older precomputer leaders and the younger computer techies, loss of

174 PART 1 Recognizing Rights and Responsibilities of Unions and Management

confidentiality by computer hackers and snoops, and worry that e-mail messages will
overload the system and consume an extraordinary amount of time that could be used
more effectively elsewhere.88

One of organized labor s greatest concerns is use of company intranets (computerized
e-mail and Web site systems within a company). These add new communication possibili-
ties to employers union-substitution strategies by linking workers to their supervisors and
human resource specialists who are able to quickly disseminate company information and
focus attention on resolving employee grievances. Employers use of intranet is already
widespread and has among its explicit objectives improved communication between work-
ers and human resource departments and closer identification with the company.

One research study reports that over three-fourths of the union population has
access to a computer at home. However, a third of this group did not use the Internet for
e-mail or instant messaging, and nearly half did not use the Internet to receive news,
weather, or sports information. Just 40 percent of the union members accessed the Inter-
net at least once a day.

These researchers made several recommendations. First, unions should invest in promot-
ing accessibility, educating rank-and-file about the potential benefits of IT, and training mem-
bers on how to use relevant applications. Unions may also exercise their bargaining power to
negotiate contracts which provide computer-based training for members. Unions may also
negotiate discounted access rates through their Union Privilege program to spur members to
adopt higher speed connections. Unions could identify and mobilize their high-intensity IT
user members to develop networks to improve communications within and across unions,
build connections with other progressive organizations, and wage grassroots campaigns in
organizing and politics. Still, even with the use of IT, there can never be a substitute for the
most traditional means of communication person-to-person, face-to-face contacts.89

Union Corruption and the Landrum Griffin Act

Like some business executives, a few union officials have encountered problems with law
enforcement officials. Unethical and illegal practices, including corruption, racketeering,
and embezzlement, have been discovered in some local and national unions. Union
abuses of power were exposed by the McClellan hearings of the late 1950s. Large
amounts from Teamsters pension funds had been misused. In other cases, union officials
have been indicted for conspiracy to bribe a U.S. senator and for embezzlement. Indict-
ments have been rendered where ghost workers were maintained on payrolls even
though no services were performed. Although union corruption cannot be condoned,
its magnitude is diminished when one considers the billions of dollars lost to share-
holders and retirees from the corporate corruption scandals perpetuated by Enron,
HealthSouth, Tyco International, WorldCom, and Bernie Madoff.

In January 2015, the federal government and the Teamsters agreed to phase out
over the next five years the court s supervision of its activities. The new agreement
would leave in place the election reforms contained in the 1989 consent decree and
the ban on officials associating with organized crime. The new agreement struck a bal-
ance that recognized both the significant progress made by the Teamsters in ridding
itself of corrupt influence and providing avenue for the union to demonstrate these
gains through its own independent disciplinary and electoral system. These reforms
replaced national officer elections by convention delegates with secret-ballot elections
by all Teamster members. It also continues a ban on officials associating with orga-
nized crime figures. The new agreement struck a balance that recognized both rid-
ding itself of corruption and providing an avenue for the union to demonstrate gains.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 175

In five years, the federal government will have no role in Teamsters affairs.90 Team-
sters president James P. Hoffa is quoted as saying: After decades of hard work and
millions of dollars spent we can finally say that corrupt elements have been driven
from the Teamsters and that the government oversight can come to an end. 91

An accurate assessment of union corruption is reflected by the following conclusion:

Union corruption stories are front-page news. They create images that tend to linger
and are reinforced each time new allegations are raised. Certainly, Jimmy Hoffa s last-
ing notoriety is evidence of this phenomenon. In fact, the level of corruption among
unions and union leaders is negligible. The Labor-Management Reporting and Disclo-
sure Act insures this. Very few institutions in American society are as closely regu-
lated or as open to scrutiny as are American unions . The evidence is clear that all
but a minute fraction of American union leaders are honest and dedicated in the per-
formance of their duties. Supporting this conclusion is an investigation by a former
Attorney General that found serious problems of corruption in less than one-half of
one percent of all local unions.92

The AFL-CIO established the Ethical Practices Committee in its efforts to control
corrupt practices and racketeering of its member unions, and its executive council was
given the authority to suspend any affiliated union with corrupt practices. In 1959, the
U.S. Congress showed its concern with union abuse and the potential misuse of union
power through passage of the Landrum Griffin Act (the Labor-Management Reporting
and Disclosure Act), which has several provisions governing union operations and gov-
ernment. For example, it governs the following:

Disclosure by union officers and employees (and employers and their agents) about
financial dealings, trusteeships, and any private arrangements made with any
employers.
Regulation of union trusteeships, including rules for their establishment and main-
tenance, and the protection of the rights of members of unions under trusteeship.
Fiduciary responsibilities of union officers and representatives. It also disqualifies
criminals and former communists from holding union offices, and it requires certain
union officers to be bonded to ensure the faithful discharge of their duties and
responsibilities.
Rights to participate in union elections and governance, such as the right to nomi-
nate candidates in elections, vote in elections, to attend membership meetings, par-
ticipate in the deliberations, and vote on union business, such as setting dues and
assessments.

The law was intended to promote union democracy and financial integrity. Success
in the administration of the law requires initiative on the part of union members and
availability of necessary information to union members.

The Landrum Griffin Act requires unions to report and file financial information
(LM-2 Reports) with the Department of Labor and to make these reports available to
members. The act s intent was to allow rank-and-file union members to hold union offi-
cials accountable by letting members know how their union leaders were spending their
dues. For many years after the passage of the act, these LM-2 reports were not readily
accessible to union members and the general public. In the summer of 2002, the U.S.
Department of Labor began addressing this problem about union financial reporting
and began making these LM-2 reports available online via its Web site (http://www.dol
.gov). Still, there has been criticism that even when accurately reported information fully

176 PART 1 Recognizing Rights and Responsibilities of Unions and Management

complies with the law, it is hard to obtain, too complicated to understand, and difficult
for members to use. 93

In 1984, the Comprehensive Crime Control Act, containing the Labor Racketeering
Amendments, was passed. These amendments, backed by the AFL-CIO, closed the loop-
holes in the existing laws against labor malfeasance. Convicted labor officials cannot hold
any union position for up to 13 years; the previous law allowed for elongated appeals
during which the officials might remain in office. Any convicted management official
must be transferred outside the labor relations function and cannot serve as a consultant
or advisor in labor relations.

Union Security

A union security clause in the labor agreement makes it easier for the union to enroll and
retain members. Such clauses must be bargained for just like bargaining over wages, hours,
seniority, and others. A reasonable level of union security is necessary for a labor organiza-
tion to survive and effectively represent the interests of bargaining unit members. After the
union wins representation rights under a National Labor Relations Board (NLRB) union
certification election, the union is granted an irrebuttable presumption of majority status sup-
port for one year. This provides the certified union a reasonable time in which to negotiate a
first labor agreement with the employer without being concerned that it might be replaced
by a rival union or removed by a decertification election. Any additional form of union secu-
rity (e.g., union shop or dues checkoff clause) must be obtained by a union through negotia-
tions with the employer. This means that the employer must agree to include these forms of
union security in the labor agreement. For example, the employer may gain a benefit, such
as less cleanup time, fewer vacation days, in exchange for a union security clause.

Union security provisions strengthen the union s financial resources by increasing the
number of dues-paying members. Union leaders believe they are morally justified in asking
all bargaining unit members to help pay for services provided by the union because they are
legally obligated to represent all bargaining unit employees and all bargaining unit employees
receive any benefits gained by the union. Union security provisions can offer benefits to the
employer and the union. Many might contend that employers prefer dealing with a weak
rather than a strong union. A weak union can aid an employer s effort to terminate a
union management relationship, but it can frustrate an employer who earnestly tries to
resolve working condition disputes through an established union management relationship.
It is commonly the union, not the employer, who sells the collective bargaining agreement to
the membership. A union has difficulty in accomplishing this objective when there are non-
union member factions within the bargaining unit that seek to undermine support for nego-
tiated policies. The union leaders are often asked by management to deal with employees
with problems, such as high absenteeism and low production.

Union officials contend that union security provisions also offer other advantages to
the employer, such as less time spent recruiting new members and collecting dues of
existing members during the workday. However, management officials counter that this
time savings might not result in more production because union officials might use the
extra time to police the labor agreement and formulate additional grievances. Unions
also maintain that morale can be improved if all employees are union members.
Tensions arise when some employees do not pay for the services shared by all (the so-
called free rider issue). However, a counterargument could be made that tensions are not
reduced by union security, merely redirected. The possible anger of union members
working with nonunion employees is replaced by the anger of nonunion bargaining
unit members who feel forced to pay for unwanted union services.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 177

Union Security Provisions
In view of their potential advantages and disadvantages, union security provisions have
taken one or more of the following forms.

Closed Shop
For an employee to obtain a job in a closed shop, the employee must first become a
member of a union prior to or upon employment. The closed shop was made unlawful
by the LMRA in 1947.

Union Shop
The most common form of union security clause, the union shop clause, is found in
about 64 percent of private-sector labor agreements.94 Under a union shop contract pro-
vision, the employee does not have to be a union member to be hired by the company.
However, after being hired, the employee must become a union member within a period
of not less than 30 days (seven days in the construction industry) to remain employed by
the company. This period is considered a probationary period.

An example of a union shop clause is found in Exhibit 4.14.
Can a union spend a portion of its members dues for political purposes? Does it

matter if there is a union shop and everyone is required to join the union? What if a
member in a union shop doesn t want his or her money spent on political causes or dis-
agrees with the positions that the union leaders take on the issues? The U.S. Supreme
Court addressed these questions in Communications Workers v. Beck (487 U.S. 735
[1988]). The court held that a union shop clause requires a bargaining unit member to
become only a financial core union member. This term refers to an individual who
meets the minimum (core) union membership requirement of paying regular union
dues and initiation fees. A union may impose additional lawful conditions for obtaining
full union membership status (e.g., individual must be willing to comply with the
union s constitution and bylaws). Under a union shop provision, an employer does not
always have to honor a union request to discharge an employee who is not a union
member if (1) the employer believes union membership was not offered to the employee
on the same terms as other employees or (2) membership was denied for any reason
other than the failure to tender dues.95

The Beck decision created a group of so-called Beck rights for bargaining unit
employees. These Beck rights cover (1) notices to employees, (2) accounting of funds by

Exhibit 4.14
An Example of a
Union Shop Clause

All present employees who are members of the union of the effective date of the
execution of this Agreement shall remain members of the Union in good standing
as a condition of employment. All present employees who are not members of the
Local Union and all employees who are hired hereafter shall become and remain
members in good standing of the Union as a condition of employment within thirty
(30) calendar days following the beginning of their employment, or within sixty (60)
calendar days following the effective date of this Agreement. An employee who
has failed to acquire, or thereafter maintain, membership in the Union, as herein
provided, shall be terminated seventy-two (72) hours after the Employer has
received written notice from the Principal Officer of the Local Union certifying that
member has been and is continuing to be offered to such employees on the same
basis as all other members, and further that the employee has had notice and an
opportunity to make all dues or initiation fee payments.

178 PART 1 Recognizing Rights and Responsibilities of Unions and Management

unions, and (3) procedure for implementation. Unions are required to notify current
members annually of their Beck rights. For example, this notice requirement may be
met with a notice in the December edition of the union s monthly magazine. Newly hired
employees receive notice at the time the union seeks to have the employees pay dues. An
employee may choose between being a nonmember agency fee payer (a financial core
employee) or a union member in good standing who will become a full union member.
The union is required to maintain an accounting system (subject to audit) that determines
the percentage of employees dues used for collective bargaining purposes (known as charge-
able fees) and those used for other activities not related to collective bargaining (known as
nonchargeable fees). The union notifies employees that those who wish to exercise their Beck
rights must do so annually, and the union then provides a window period (a certain time
period each year) for application for a refund of a portion of dues (nonchargeable fees) for
employees who exercise their Beck rights. In other words, employees who exercise their Beck
rights must file once per year during a specific period designated by the union.96

In addition to appointments to heads of federal agencies, such as the National Labor
Relations Board and other federal agencies, presidents are authorized to issue executive
orders to cover those doing business with the federal government. On February 17, 2001,
then-President George W. Bush issued Executive Order 13201 entitled Notification of
Employee Rights Concerning Payment of Union Dues or Fees.

The Executive Order require federal government contractors to post notices to
employees informing them of their Beck rights. The Executive Order 13201 stated:

If you do not want to pay the portion of dues or fees used to support activities not
related to collective bargaining, contract administration, or grievance adjustment,
you are entitled to an appropriate reduction in your payment. If you believe that
you have been required to pay dues or fees used in part to support activities not
related to collective bargaining, contract administration, or grievance adjustment,
you may be entitled to a refund and to an appropriate reduction in future payment.

On January 2, 2002, the U.S. District Court for the District of Columbia held that the
new rules would regulate a core labor management area that is already regulated by the
National Labor Relations Act and would impose a duty on employers that the National
Labor Relations Act does not impose. Therefore, the Court ruled that the new rules were
preempted by the National Labor Relations Act and were unenforceable. This ruling was
appealed and the Court of Appeals overturned the lower court s decision. Subsequently,
the Labor Department began the regulatory process to implement Executive Order 13201.

On January 30, 2009, President Obama issued Executive Order 13496, which
required federal government contractors and subcontractors to post a notice in the work-
places informing employees of their rights under Federal labor laws (see Exhibit 4.15).
Executive Order 13496 also precludes federal contractors from being reimbursed for
expenses incurred to influence employees decisions to join or form a union or otherwise
engage in protected collective bargaining. Nonreimbursable expenses include preparing
and distributing printed materials, hiring legal and labor consultants, and holding meet-
ings with employees (including paying wages for attending the meetings). Reimbursable
expenses include expenses for maintaining good relations with employees and costs
related to labor-management committee meetings and certain employee publications.

Agency Shop
More commonly found in public-sector labor agreements, an agency shop clause does
not require an employee to join the union but does require the employee to pay the
union a sum equal to membership dues to remain employed. This provision assumes

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 179

that employees should not be forced to join a union but nonetheless should help defray the
bargaining and grievance processing costs. The U.S. Supreme Court has determined that
the minimum legal requirements for union membership imposed by a union or agency
shop clause are essentially the same.97

Before seeking to impose an agency shop provision on a bargaining unit member,
the union must inform the employee of his or her right to become a financial core rather
than full union member.98 Under the agency shop, the union officers are not limited
in the ways bargaining unit employee s dues are spent unless the employee exercises his
or her Beck rights and becomes a financial core member. Then, the union may not
charge a financial core member for the cost of union expenditures which are not related
to collective bargaining, contract administration, or grievance resolution activities.99

Exhibit 4.15
Executive Order 13496:
Notification of Employee
Rights under Federal
Labor Laws

Federal contractors and subcontractors are required to inform employees of their
rights under the National Labor Relations Act (NLRA), the primary law governing rela-
tions between unions and employers in the private sector. See 29 CFR Part 471. The
notice, prescribed in the Department of Labor s regulations, informs employees of
Federal contractors and subcontractors of their rights under the NLRA to organize
and bargain collectively with their employers and to engage in other protected con-
certed activity. Additionally, the notice provides examples of illegal conduct by
employers and unions, and it provides contact information to the National Labor Rela-
tions Board (http://www.nlrb.gov), the agency responsible for enforcing the NLRA.
Federal contractors and subcontractors are required to post the prescribed employee
notice conspicuously in plants and offices where employees covered by the NLRA
perform contract-related activity, including all places where notices to employees are
customarily posted both physically and electronically.

Federal Government contracting departments and agencies must include provi-
sions requiring contractors to post the prescribed notice in every Government con-
tract, except collective bargaining agreements entered into by a Federal agency,
contracts for purchases under the Simplified Acquisition Threshold, and in those
cases where the Secretary exempts a contracting department or agency pursuant
to the Executive Order. Government contractors must also include provisions
requiring posting of the prescribed notice in all subcontracts.

Enforcement responsibilities for the notice requirements are shared by
two Department of Labor agencies. The Office of Federal Contract Compliance
Programs (OFCCP) is responsible for investigation of complaints, compliance
evaluations, and conciliation, and that agency will refer violations to the Office of
Labor-Management Standards (OLMS) for enforcement. The sanctions, penalties,
and remedies for non-compliance with the notice requirements include the suspen-
sion or cancellation of the contract and the debarring of Federal contractors from
future Federal contracts.

The Department of Labor s regulations implement Executive Order (E.O.) 13496
signed by President Barack Obama on January 30, 2009 (74 FR 6107, February 4,
2009). E.O. 13496 advances the Administration s goal of promoting economy and
efficiency of Federal government procurement by ensuring that workers employed in
the private sector and engaged in activity related to the performance of Federal gov-
ernment contracts are informed of their rights to form, join, or assist a union and bar-
gain collectively with their employer. Knowledge of such basic statutory rights
promotes stable labor-management relations, thus reducing costs to the Federal
government.

SOURCE: http://www.dol.gov/olms/regs/compliance/EO13496.htm

180 PART 1 Recognizing Rights and Responsibilities of Unions and Management

A union must notify all financial core members annually of the percentage of
union dues assessments spent on nonchargeable activities, as well as the reasonable
procedure by which the financial core member can object to such expenditures. If the
financial core member objects, the union must reduce the amount of the financial core
member s dues obligation by the percentage amount spent on nonchargeable activities.
A financial core member who disagrees with the union s calculation of chargeable and
nonchargeable expenditures may either appeal the dispute to final and binding arbitra-
tion or file an unfair labor practice charge with the NLRB. Some examples of charge-
able union activities are the costs of conducting contract negotiations, investigating and
resolving grievances, conducting union business meetings, union publications such as
newsletters intended to inform the union s membership about contract issues or griev-
ance disputes, litigation costs incurred in the course of representational activities, social
events or member benefits available to all bargaining unit members, and attendance at
national or state union conventions. The NLRB recently ruled that the cost associated
with union organizing is a chargeable expense as long as the employees being orga-
nized work for an employer in the same competitive markets as bargaining unit mem-
bers already represented by the union.100 Examples of nonchargeable union activities
are the cost of legislative lobbying, union benefits not available to financial core mem-
bers, and charitable contributions such as a donation to the local United Way
campaign.

The U.S. Supreme Court in another decision also applied Beck guidelines to similar
expenses paid by public-sector employees union dues.101 The Court stated that public
employees did not have to pay the portion of union dues that paid for any union activi-
ties that were not oriented toward the ratification or implementation of the dissenters
collective bargaining agreement. This decision was not clear cut, however, as it indicated,
for example, that dues payments can properly go toward a teacher union s strike prepa-
ration activities even if a strike is illegal under state law. In essence, the Court agreed
with the public-sector union that a strike threat represented a reasonable, albeit illegal,
bargaining tactic in pursuit of legitimate bargaining unit objectives.

Contingency Union Shop
Some labor agreements in right-to-work states (covered in Exhibit 4.16) have a contin-
gency union shop provision stating that the union shop provision would automatically
go into effect if the state s right-to-work law is eliminated. Also, some master labor
agreements (covering multiple plants in several states) have quasi-union shops. These
agreements provide for union shops in plants located in states that allow them, but
exempt plants in states that prohibit union shop clauses. If the right-to-work law is elim-
inated, the union shop clause will already be in the labor agreement.

Union Hiring Hall
According to a union hiring hall provision, employers hire employees referred by the
union if the union can supply a sufficient number of qualified applicants. This provi-
sion is found in about 23 percent of all labor agreements but is much more common in
certain industries such as construction (90 percent) and maritime (88 percent).102

Unions are required to operate hiring halls in a nondiscriminatory manner, making
them equally available to union members and nonunion employees. In reality, most
nonunion individuals do not choose to seek employment through union-operated hir-
ing halls. A hiring hall provision helps to strengthen union security by encouraging
current union members to associate their union more closely with the provision of job
opportunities.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 181

Preferential Treatment Clause
A negotiated labor agreement provision that indicates current employees who may be
union members will be given employment preference over nonemployees when a new
facility is opened is called a preferential treatment clause. This arrangement was negoti-
ated between the United Auto Workers and General Motors for the Saturn manufactur-
ing plant located in Spring Hill, Tennessee, and was upheld by the NLRB. Such an
arrangement permitted General Motors to take advantage of the skilled labor pool repre-
sented by employees already on the payroll, some of whom were laid off for lack of work
at the time the new plant was seeking to fill employment positions.

Dues Checkoff
A provision commonly used in conjunction with one of the previously cited union security
provisions, a dues checkoff makes the collection of union dues more convenient for both
the union and union members. It is not a union security clause in the strict sense of the
word because it does not guarantee that some or all employees will become union mem-
bers. However, a dues checkoff clause in the labor agreement allows a union member to
have dues automatically taken out of his or her paycheck (similar to any other payroll
deduction) and transferred to the union. In addition to the dues checkoff clause agreed
to by the employer and union in the labor agreement, each individual union member
must sign a separate document authorizing the deduction to be made before any union
dues can be automatically deducted from the employee s paycheck. This provision is
important to the union because it assures the union of an uninterrupted flow of income.
Without a systematic dues deduction, union officers would have to spend a great deal of
time contacting recalcitrant members who kept delaying their dues payments. Why would
an employer agree to a dues checkoff clause? There are several reasons. In many cases, the
employer automatically agrees to this provision agreement contains it. If the union also
secures a union shop clause, then a member may be fined for not paying dues. Employers
do not want to lose good employees; a company may agree to deduct union dues automat-
ically to avoid having to fire a good worker for such a reason. The employer may charge a
reasonable administrative fee to the union for the cost of dues collection and other paper-
work associated with administering this contract provision. In negotiations, astute manage-
ment officials usually bargain for something in return for this provision, such as flexibility
in making work assignments, subcontracting, or writing job descriptions.

Right-to-Work Laws: Controversy and Effects
Employers, some employees, and the courts have long been concerned with union secu-
rity provisions.103 Efforts to have Congress impose a national ban on union security
agreements as part of the LMRA (Taft-Hartley Act) in 1947 were unsuccessful. Congress
believed that providing a reasonable opportunity to achieve union security aided in the
effective representation of employees interests in collective bargaining between their
union representative and the employer. As a political compromise, Congress did enact
Section 14(b) of the LMRA, which states:

Nothing in this Act shall be construed as authorizing the execution or application of
agreements requiring membership in a labor organization as a condition of employ-
ment in any State or Territory in which such execution of application is prohibited by
State or Territorial law.

This section is unique to the United States; there is none similar to it in any other
developed country in the world. Under this provision, a state may initiate legislation

182 PART 1 Recognizing Rights and Responsibilities of Unions and Management

prohibiting union membership as a condition of employment (Exhibit 4.16). Presently
there are 25 states that have passed legislation (so-called right to work laws) that prohi-
bits union security clauses in collective bargaining agreements.104

As noted in Exhibit 4.16, workers in the 19 of the 26 states that allow the parties to
negotiate union shop agreements have average weekly pay greater than the U.S. average;
10 states which do not allow the parties to negotiate union shop agreements, have aver-
age weekly pay above the U.S. ($904) weekly average.

In 2001, Oklahoma became the 22nd right-to-work state. During the political
campaign, proponents of the change argued that Oklahoma would become more com-
petitively positioned to create jobs if the state adopted the labor policies of neighboring
states and argued for liberty, free choice, and individual initiative. Unions promoted the

Exhibit 4.16
Private Sector Average Weekly Pay by State and Right-to-Work Status, 2014

Right-to-Work States Average Weekly Pay Non-Right-to-Work States Average Weekly Pay

Alabama $881 Alaska $1,063

Arizona $926 California $1,209

Arkansas $807 Colorado $1,066

Florida $911 Connecticut $1,278

Georgia $958 Delaware $1,048

Idaho $782 District of Columbia $1,696

Indiana 846 Hawaii $908

Iowa $870 Illinois $1,089

Kansas $855 Kentucky $836

Louisiana $923 Maine $826

Michigan 984 Maryland $1,113

Mississippi $747 Massachusetts $1,315

Nebraska $837 Minnesota $1,024

Nevada $899 Missouri $891

North Carolina $890 Montana $794

North Dakota $1,050 New Hampshire $1,081

Oklahoma $876 New Jersey $1,211

South Carolina $817 New Mexico $850

South Dakota $792 New York $1,321

Tennessee $927 Ohio $922

Texas $1,070 Oregon $928

Utah $872 Pennsylvania $1,013

Virginia $1,057 Rhode Island $1,003

Wisconsin 894 Vermont $882

Wyoming $952 Washington $1,082

West Virginia $868

US Average Weekly Pay: $904

SOURCE: http://www.bls.gov/cew/ (U.S. Bureau of Labor Statistics). June 17, 2015.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 183

principle of majority rule as essential to workplace democracy and urged allowing parties
to negotiate the union security issue without intervention from the state. Unions also
claimed that the other Sunbelt states offered lower wages, tax relief, and other subsidies
in order to attract jobs.105

Unfortunately, one study found that Oklahoma residents were uninformed or misin-
formed about their rights under the law. Similar results had been found in studies of
residents of Virginia and Idaho.106 Then, again, after the Montana legislature considered
right-to-work legislation, a study of Montana residents revealed that a large percentage of
the residents were uninformed or misinformed about provisions of their labor laws.107

With Republicans having the largest number of state lawmakers since 1920, empha-
sis will be placed on passing right-to-work laws which allows workers to opt out of
joining unions and paying dues, even though the union is required by law to represent
them. In the past three years, three states, Michigan in 2012, Indiana in 2012, and
Wisconsin in 2015, passed right-to-work laws. The states of New Mexico, Maine, and
Missouri considered proposed legislation in 2015.108

Exhibit 4.16
(Continued)

Airline and railway industries are covered under the Railway Labor Act, and Union Security clauses are
allowed to be negotiated by the parties.

184 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Efforts to promote so-called state right-to-work laws are mainly conducted by the
National Right to Work Committee, founded in 1955, whose stated purpose is to protect
an employee s right to determine whether to join a union. Funded principally by
employer contributions, the committee does not regard itself as being against unions
but merely against union security provisions that compel employees to become members.
However, allegedly, the committee s pro-union, antiunion security stance has been
modified to a flat anti-union approach in recent years. A related but separate organiza-
tion, the National Right to Work Legal Defense Foundation provides legal representation
in right-to-work cases.

There has been a long-running debate on the effects of right-to-work laws on wages
and union membership. Because there is no single explanation for wage rates or union
density rates and no cause-and-effect relationship has been identified, one cannot con-
clude that right-to-work laws cause lower wages or low union density rates. However,
Exhibit 4.16, which compares the average pay of employees in right-to-work states with
that of employees in non-right-to-work states, certainly shows a wage disparity in favor
of employees who work in states that allow the union and employers to negotiate and
decide themselves.

There is conflicting academic research on the effects of right-to-work laws on eco-
nomic development. While politicians claim that the presence of right-to-work laws
attract new industries, the facts are unclear. The states which have right-to-work laws
have been able to attract new industries with low taxes, tax credits, aggressive subsidies
from the states and cities, and even lax environmental regulations. Therefore, a single
identifiable factor such as the existence of a right-to-work law is not conclusive as the
attraction of new industry. On the other hand, there is evidence that the existence of
right-to-work laws leads to lower numbers of union members, less bargaining power,
and lower wages to workers.109

More impressive is the comparison of union density rates between right-to-work
states and non-right-to-work states (see Exhibit 4.17). Only five of the 25 (Alabama,
Indiana, Michigan, Iowa, and Wisconsin) right-to-work states have union density rates
above 10 percent, whereas 20 of non-right-to-work states (those states that allow the
union and management to negotiate union security clauses) have union density rates of
10 percent or more.

Arguments for Right to Work Laws
There are at least three primary arguments opposed to union security and in favor of
right-to-work laws. First, union security clauses are considered an illegitimate restriction
on employees free choice. It is argued that employees not only have the right to select a
union of their choice, but also retain the right to refrain from participating in any and all
union activities. Required union membership conflicts with their free choice and the
requirement to join a union and/or pay union dues is undemocratic.

Second, requiring union membership violates the employees constitutional rights of
free speech and association if their union dues are used to support activities not sup-
ported by the nonmembers, such as backing a political candidate. Inherent in the right
of free association is the employees right to choose not to participate in union activities.

Third, required union membership concedes too much power to union officials.
Since employees must pay dues to retain their employment, it is plausible that the

union leaders may disregard the interests of portions of the workforce, such as nonmem-
bers, women, and minorities. Requiring union membership could create a union bureau-
cracy where the officers interest and the member interest collide and irresponsible union
officials use the union s financial resources to achieve their own agenda, rather than meet

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 185

the needs of the membership. Allowing members to vote with their feet and leave the
labor union forces union leaders to be more responsive to their members.110

Arguments for Abolishing Right-to-Work Laws
There are three principal arguments in defense of union security clauses and abolishment
of right-to-work laws. First, union security eliminates free riders those employees
who receive the benefits from the union, but who pay no dues. Since the law requires

Exhibit 4.17
Employees Who Are Union Members and Who Are Represented by Unions by State and Right-to-Work Status, 2014

Employed Right-
to-Work States

Employed
Union
Members (%)

Represented
by Unions (%)

Non-Right-to-
Work States

Union
Members
(%)

Represented
by Unions (%)

Alabama 10.8 12.1 Alaska 22.8 24.4

Arizona 5.3 6.7 California 16.3 17.5

Arkansas 4.7 5.4 Colorado 9.5 10.7

Florida 5.7 7.0 Connecticut 14.8 15.7

Georgia 4.3 4.9 Delaware 9.9 11.3

Idaho 5.3 6.7 District of
Columbia

8.6 10.7

Indiana 10.7 12.0 Hawaii 21.8 22.9

Iowa 10.7 12.6 Illinois 15.1 16.0

Kansas 7.4 9.0 Kentucky 11.0 12.8

Louisiana 5.2 6.4 Maine 11.0 12.5

Michigan 14.5 15.7 Maryland 11.9 13.3

Mississippi 3.7 4.2 Massachusetts 13.7 14.7

Nebraska 7.3 9.0 Minnesota 14.2 15.0

Nevada 14.4 16.4 Missouri 8.4 9.7

North Carolina 1.9 3.2 Montana 12.7 13.8

North Dakota 5.0 6.9 New Hampshire 9.9 11.5

Oklahoma 6.0 7.2 New Jersey 16.5 17.2

South Carolina 2.2 3.2 New Mexico 5.7 7.4

South Dakota 4.9 6.0 New York 24.6 25.8

Tennessee 5.0 5.6 Ohio 12.4 13.9

Texas 4.8 6.2 Oregon 15.6 17.0

Utah 3.7 4.6 Pennsylvania 12.7 13.7

Virginia 4.9 6.2 Rhode Island 15.1 15.8

Wisconsin 11.7 12.5 Vermont 11.1 13.1

Wyoming 6.7 7.5 Washington 16.8 18.4

West Virginia 10.6 11.6

U.S. Average 11.1 12.3

SOURCE: Bureau of Labor Statistics, U.S. Department of Labor, Union Affiliation of Employed Wage and Salary Workers by State, January 23, 2015, at http://stats.
bls.gov/news.release/union2.t05.htm

186 PART 1 Recognizing Rights and Responsibilities of Unions and Management

the union to represent all bargaining unit employees (union s fair representation obliga-
tion covered in Chapter 10) and are legally precluded from negotiating superior
employment terms for union members only, it is reasonable that all employees pay
dues to the union for services rendered. Therefore, it is not fair for union members to
pay additional funds to the union to support employees who are free riders.

Second, where a union exists, the union was selected by a majority vote of the bar-
gaining unit. The Union membership makes a democratic decision on union security
clauses, that is, union shop or agency shop clauses are implemented only upon ratifica-
tion of the collective bargaining by a majority of the union members and only after the
union security clause has been agreed to by management. Moreover, if employees are
against bargaining for different forms of union security clauses, Section 9(e) (1) of the
National Labor Relations Act permits employees to conduct a secret ballot de-
authorization election, administered by the National Labor Relations Board, to rescind
the union s right to negotiate a union security clause in the agreement. These de-
authorization elections make up only 2.5 percent of the NLRB elections and unions lose
approximately 60 percent.

Third, union security clause keeps the employers from weakening employees sup-
port for the union because all employees will be paying dues. There will be no incentive
for employers to replace union members with nonmembers who opposed the union.
This allows the democratically elected union to allocate its resources to providing repre-
sentational services to members rather than being forced to defend itself against contin-
uous assaults from the employer.111

Recent U.S. Supreme Court Decision
In June 2014, the U.S. Supreme Court ruled that an agency fee provision in collective bar-
gaining agreement under the Illinois Public Labor Relations Act violated employees free
speech under the first amendment of the U.S. Constitution. The employees involved were
personal assistants (PAs) who provided home care services. Customers controlled most
aspects of the employment relationship, such as hiring, firing, training, supervising, and
disciplining of PAs. The State of Illinois paid their salary. The Court ruled that these
employees were much different from full-fledged public employees and did not enjoy the
rights and benefits of state employees. Illinois law required all PAs to receive the same rate
of pay and unions had no authority with respect to a PAs grievances against a customer.112

Summary
This chapter discussed two of the major participants
in the labor relations process: unions and manage-
ment. First, the goals of unions and management
were presented, with emphasis on where the goals
are the same and where they have potential for con-
flict. Companies labor relations strategies, ranging
from union suppression to labor management coop-
eration, were explained.

Union strategic plans, which are at the embryonic
stage in most unions, were discussed, and examples
from the AFL-CIO and CTW were presented. Compa-
nies and unions are structured according to their goals;

typical examples of company labor relations organiza-
tions and organizations at various levels of unions were
displayed.

The chapter also discussed union governance.
First, general characteristics of craft and industrial
unions were explained. Then, the government and
organizational activities of the local union, the national
or international union, the intermediate bodies, and the
federation (the AFL-CIO) were discussed. Because
unions, like businesses and government, have experi-
enced corruption and misuse of power and authority,
examples of these problems and of steps that have been

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 187

taken to seek a resolution were provided. Unions show
concern for the long-term survival and growth of their
organizations when they attempt to negotiate a union
security provision (e.g., union shop, union hiring hall,
or agency shop) into the labor agreement. However,

certain union security provisions cannot be negotiated
in states having right-to-work laws, permitted under
Section 14(b) of the LMRA. Controversy occurs over
the meaning, morality, and impact on union organiza-
tions of a right-to-work law.

Key Terms
Affiliation, p. 138
Craft unions, p. 155
Industrial unions, p. 155
General unions, p. 155
Business agent, p. 156
Shop steward, p. 157
International union representative,

p. 157
Constitution, p. 159

Convention, p. 160
Master labor agreement, p. 164
Dues check off system, p. 165
Absorptions, p. 166
Amalgamations, p. 166
Conference boards, p. 167
Joint councils, p. 167
Associate membership program, p. 171
Union security clause, p. 177

Closed shop, p. 178
Union shop, p. 178
Financial core union member, p. 178
Full union membership, p. 178
Agency shop, p. 179
Union hiring hall, p. 181
Preferential treatment clause, p. 182
Dues checkoff, p. 182

Discussion Questions

1. Compare the steps companies may take to
implement a positive human resources manage-
ment program with principles of effective
management.

2. Identify the common goals of companies and
unions as opposed to their conflicting goals?

3. Assess the strategic plans of the AFL-CIO and
CTW, and determine whether these plans provide
direction for growth.

4. Locate a local union and a local plant, and draw
an organizational chart for each.

5. Select a craft union and an industrial union. Point
out the characteristics of these two types of unions.

6. Compare the government of the local union with
student governments and municipal governments,
paying special attention to participation by members.

7. Explain why and how national unions presidents
have been able to accumulate so much authority
and power.

8. Differentiate among the business agent of a local
union, a shop steward, and an international union
representative. How do their roles differ?

9. Because the AFL-CIO does not negotiate labor
agreements on behalf of national unions, why is it
claimed to be the spokesperson for organized
labor in the United States?

10. Compare the requirements for union democracy to
any student organization with which you are familiar.

11. Formulate a one- or two-sentence argument for or
against the right-to-work philosophy. Fully
defend your statement from arguments that could
be made against your position.

Exploring the Web

Labor Unions, Mergers, and Union Security

1. AFL-CIO
Determine the names of the current leadership, the
mission, the unions in the AFL-CIO, membership
benefits, and summer student programs. Find out

how one who is interested can become a union
member. (http://www.aflcio.org)

2. LaborNet
This is a source for current information about the labor
movement. It is designed to promote a democratic

188 PART 1 Recognizing Rights and Responsibilities of Unions and Management

independent labor movement. Included are references
and handbooks, YouTube videos, a current blog, and
the latest labor news in the United States and links to
other countries. (http://labornet.org)

3. Bureau of Labor Statistics and Current Union
Membership
The Bureau of Labor Statistics publishes an annual
report on union membership. Find and read the sum-
mary for the 2015 report to discover more about the
current status of labor unions. What percentage of the
total employees in protective services were members
of labor unions in 2015? (http://www.dol.gov) Look
up the dues, assets, and officer salaries, membership
of U.S. unions in LM-2 Reports.

4. Society for Human Resource Management (SHRM)
As the world s largest association devoted to human
resource management (275,000 members with more

than 575 affiliated chapters), the Web site for this
organization provides resources, global best prac-
tices, and a network of valuable contacts to more
than 5,000 members in over 160 countries. SHRM
has recently opened offices in China and India to
establish a two-way relationship, provide education,
and facilitate the advancement of human resource
management. Anyone interested may sign up for
e-mail alerts on human resource management
topics. (http://www.shrm.org)

5. Union Security and Beck Rights
For information on Union Security and Beck
Rights, go to http://www.NLRB.org. Type in Beck
Rights in Search Key Word ; you will find Guide-
lines for Response to Beck-Related Inquiries and
Advice Response memos.

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63. Current salaries may be obtained from the Forms
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64. http://www.aflcio.org/corporatewatch/paywatch/.
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68. Charles W. Hickman, Labor Organizations, Fees
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CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 191

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70. Ibid., pp. 117 118.
71. Marick F. Masters and Robert S. Atkin, The

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74. Ibid., pp. 152 156.
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the United States: The Rise of Conglomerate
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76. James W. Robinson, Structural Characteristics of
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77. Sanford M. Jacoby and Anil Verma, Enterprise
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78. Dana Milbank, Labor Broadens Its Appeal by Set-
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81. Jill Kriesky, Structural Change in the AFL-CIO:
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82. Joseph Krislov, The AFL-CIO Effort to Minimize
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83. This Is the AFL-CIO, pp. 8 10.

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85. David Greenstone, Labor in American Politics
(Chicago: University of Chicago Press, 1977),
pp. xiii xxix.

86. Charles R. Greer, E-Voice: How Information
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235; Richard Freeman, Can the Internet Help
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2003, pp. 43 49.

87. Marick F. Masters, Ray Gibney, Thomas J.
Zagenczyk, and Irna Shevchenko, Union Mem-
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2010, pp. 83 90.

88. Arthur B. Shostak, Today s Unions as Tomor-
row s CyberUnion: Labor Newest Hope, Journal
of Labor Research, 23(2), 2001, pp. 242 243.

89. Marick F. Masters, Ray Gibney, Thomas J.
Zagenczyk, and Iryna Shevchuk, Union Mem-
bers Usage of IT, Industrial Relations, 49(1),
2010, pp. 83 90.

90. Benjamin Weiser, Under New Agreement, U.S.
Will End Oversight of the Teamsters in Five
Years, The New York Times, January 15, 2015,
p. A22.

91. Kris Maher, Oversight of Teamsters to End, The
Wall Street Journal, January 15, 2015, p. A6.

92. Paul F. Clark, Union Image-Building at the Local
Level, Labor Studies Journal, 15, Fall 1990, p. 55.

93. Phillip B. Wilson, Conquering the Enemy
Within: The Case for Reform of the Landrum
Griffin Act, Journal of Labor Research, 26(1),
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94. Bureau of National Affairs, Inc., Basic Patterns in
Union Contracts (Washington, D.C: Bureau of
National Affairs, Inc., 1995), p. 97.

95. Billie Ann Brotman and Thomas J. McDonagh,
Union Security Clauses as Viewed by the

National Labor Relations Board, Labor Law
Journal, 37, February 1986, pp. 104 115.

96. Jeff Canfield, Note: What a Sham(e): The Broken
Rights System in the Real World Workplace,
Wayne Law Review, 47, Fall 2001, pp. 1049 1055.

97. NLRB v. General Motors, 373 U.S. 734 (1963);
Retail Clerks International Association Local 1625
AFL-CIO v. Schermerhorn et al., 373 U.S. 746

192 PART 1 Recognizing Rights and Responsibilities of Unions and Management

(1963); and D. Louis Abood et al v. Detroit Board
of Education, 431 U.S. 209 (1977).

98. California Saw and Knife Works, 320 NLRB 224
(1995), enf d. 133 F.3d 1012 (7th Cir. 1998). See
also: Guidelines Concerning Processing of Beck
Cases, Memorandum from the Office of the
General Counsel, August 17, 1998.

99. For further discussion of this issue, see Kenneth
A. Kovach and Peter Millspaugh, Implementing
the Beck and Lehnert Union Security Agreement
Decisions: A Study in Frustration, Business
Horizons, 39, May/June 1995, pp. 57 65; Jan W.
Henkel and Norman J. Wood, Limitations on the
Uses of Union Shop Funds after Ellis: What
Activities Are Germane to Collective Bargaining?
Labor Law Journal, 35, December 1984, pp. 736
746; Peter Florey, Fair Share Proceedings: A Case
for Common Sense, Arbitration Journal, 44,
March 1989, pp. 35 44; David A. Lebowitz,
Limits on the Use of Agency Fees: The Revival of

Communications Workers of America v. Beck,
Employee Relations Law Journal, 18, Winter
1992 1993, pp. 437 461.

100. UFCW, Locals 951, 7, & 1036 (Meijer, Inc.) and
Various Individuals, 329 NLRB No. 69(1999).

101. Lehnert v. Ferris Faculty Association, 500 U.S. 507
(1991).

102. Bureau of National Affairs, Inc., Basic Patterns in
Union Contracts, p. 99.

103. For further historical insights into the right-
to-work issue, see Gilbert J. Gall, The Politics of
Right to Work (New York: Greenwood Press,
1988); William Canak and Berkeley Miller,
Gumbo Politics: Unions, Business, and Louisiana

Right-to-Work Legislation, Industrial and Labor
Relations Review, 43, January 1990, pp. 258 271.
For a classification system of right-to-work laws
various dimensions and related bibliography, see
Thomas R. Haggard, Union Security and the
Right to Work: A Comprehensive Bibliography,

Journal of Labor Research, 11, Winter 1990,
pp. 81 106.

104. Raymond L. Hogler, The 2008 Defeat of Right to
Work in Colorado: Is It the End of Section
14(b)? Labor Law Journal, 60(1), 2009, p. 5; see also
Raymond L. Hogler, Right to Work and the Col-
orado Labor Peace Act: How Politics Trumped
Policy, Labor Law Journal, 58(2), 2007, pp. 85 95.

105. Raymond L. Hogler and Robert LaJeunesse,
Oklahoma s Right to Work Initiative: Labor

Policy and Political Ideology, Labor Law Journal,
53(2), 2002, pp. 109 113. See also Stan Greer and
Charles W. Baird, Reply to Hogler and LaJeu-
nesse s Oklahoma s Right to Work Initiative:
Labor Policy and Political Ideology, Labor Law
Journal, 54(2), 2003, pp. 89 100.

106. Marc Singer, Knowledge of the Right-to-Work
Law among Residents of the State of Oklahoma,
Journal of Collective Negotiations in the Public
Sector, 31(1), 2006, p. 85 99.

107. Marc G. Singer and Katie L. Valentine, Monta-
na s Right-To-Work Legislation: Do Residents
Know Their Labor Laws? Journal of Collective
Negotiations in the Public Sector, 32(3), 2008,
pp. 189 201.

108. Mark Peters, Opting Out of Unions Gets Boost
in States, The Wall Street Journal, January 18,
2015, p. A3.

109. Raymond L. Hogler, How the Right to Work is
Destroying the American Labor Movement: From
the Ku Klux Klan to the Tea Party, Employee
Responsibilities and Rights Journal, 23, 2011,
pp. 295 304.

110. Victor G. Devinatz, The Continuing Controversy
over Right-to-Work Laws in the Early Twenty-
First Century, Employee Responsibilities and
Rights Journal, 23, 2011.

111. Ibid., pp. 287 293.
112. Harris et. al. v. Quinn, Governor of Illinois, et. al.

Slip Opinion, October Term 2013.

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 193

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1 Employee Rights under the Landrum Griffin Act

Paul Sanchez, a member of Local 1 of the Bartenders
Union, speaks Spanish and is not sufficiently bilingual
to understand the English language in either written or
spoken form. Local 1 has 16,500 members, 48 percent
of whom understand Spanish only.

For several years Local 1 has had its collective bar-
gaining agreements, monthly newsletters, and various
notices printed in Spanish to accommodate its Spanish-
speaking members. At meetings held to nominate
union officers and contract ratification meetings,
which occur once every three years, English and Span-
ish translations are provided for the discussion that
takes place. Monthly union meetings are conducted
primarily in English and are attended by 50 75 mem-
bers (less than 1 percent of the union s total member-
ship). Subjects debated during local union meetings
include such topics as union expenditures, salaries of
officers, general complaints with particular employers,
and various other operational matters. Such debate is
commonly referred to as shop talk.

Spanish translation at monthly meetings is pro-
vided whenever union officer nominations take place
or whenever Spanish-speaking members request their
comments or those of others be translated for the ben-
efit of other members attending the meeting. Such
translation duties are typically performed by a bilingual
local union officer, rather than hiring an outside, pro-
fessional translator to be present at each monthly
meeting.

Paul Sanchez, along with several other employees,
petitioned Local 1 s officers to provide a qualified
translator who was not a member of the union at all
monthly membership meetings. This person would
simultaneously translate all meetings proceedings and
discussion into Spanish and English. The union officers
brought the petition request before the members at the
next monthly meeting. With the union members in
attendance acting as a legislative body in accordance
with the union s constitution and by-laws, Sanchez s
proposal to hire a full-time outside translator for the
monthly meetings was debated and defeated by a
majority vote of those members in attendance. The
majority of the members in attendance felt that the
cost of hiring an outside translator for every monthly
meeting was not justified based on the number of

members who typically attended and the availability
of bilingual union members who could perform the
necessary translation duties upon request.

Union member Sanchez then filed a civil suit in fed-
eral court. Sanchez alleged the union s failure to provide
simultaneous translation at the regular monthly union
meetings by an independent professional translator was
a violation of his equal participation and freedom of
speech rights under Title I of the Landrum Griffin Act.

Relevant Statutory Language Title I, Sec. 101(a),
Landrum Griffin Act

(1) Equal Rights Every member of a labor organi-
zation shall have equal rights and privileges within
such organization to nominate candidates, to vote
in elections or referendums of the labor organiza-
tion, to attend membership meetings, and to partic-
ipate in the deliberations and voting upon the
business of such meetings, subject to reasonable
rules and regulations in such organization s consti-
tution and by-laws.

(2) Freedom of Speech and Assembly Every
member of any labor organization shall have the
right to meet and assemble freely with other mem-
bers; and to express any views, arguments, or opi-
nions; and to express at meetings of the labor
organizations his views, upon candidates in an elec-
tion of the labor organization or upon any business
properly before the meeting, subject to the organiza-
tion s established and reasonable rules pertaining to
the conduct of meetings: Provided, that nothing
herein shall be construed to impair the right of a
labor organization to adopt and enforce reasonable
rules as to the responsibility of every member toward
the organization as an institution and to his refrain-
ing from conduct that would interfere with its per-
formance of its legal or contractual obligations.

Title IV, Section 401(e), Landrum Griffin Act states in
relevant part, In any election a reasonable oppor-
tunity shall be given for the nomination of candidates
and every member in good standing shall be eligible to
be a candidate and to hold office ( subject to reason-
able qualifications uniformly imposed).

194 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Questions
1. Did the union violate Title I, Section 101(a) of the

Landrum Griffin Act in this case? If so, what should
be the appropriate remedy?

2. Would it be legal under Title IV of the Landrum
Griffin Act for the union in this case to adopt a rule
that required all candidates for union office to be
proficient in both Spanish and English? Why or why
not?

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2 Financial Core Membership Rights under the

Beck Decision

The company and union are parties to a collective bar-
gaining agreement that contains the following valid
union security clause:

It shall be a condition of employment that all
employees of the company covered by this agree-
ment who are members of the union in good stand-
ing on the date of this agreement shall remain
members in good standing, and those who are not
members on the effective date of this agreement
shall, on the ninety-first (91st) day following the
effective date of this agreement, become and remain
members in good standing in the union.

For purposes of this Agreement, an employee shall
lose his good standing in the Union only for failure
to tender periodic dues and initiation fees uniformly
required of all members. The Business Manager of
the Union shall notify the Company by certified
mail of any employees the union deems to have
lost good standing within the meaning of this
Article.

On July 6, an employee named Budnik sent a letter
to the union informing the union officers that he was
resigning his union membership and claiming financial
core member status. Budnik requested the union to
begin charging him the new appropriate amount of
dues in compliance with Beck (1988). Budnik did not
pay any dues money to the union after he mailed the
July 6 letter.

On July 28, the company sent a letter to all bar-
gaining unit members informing them that financial
core membership status was available to them and
that full union membership was not a legal require-
ment under the parties current union security contract
language. The union sent a letter to Budnik on or about
August 5 acknowledging receipt of Budnik s resigna-
tion letter. The union informed Budnik that his

insistence on financial core membership status would
result in the loss of valuable membership privileges and
benefits and that, as a financial core member, he would
still be required to pay the financial obligations of mem-
bership germane to the costs of collective bargaining, con-
tract administration, and grievance adjustment. The
union encouraged Budnik to reconsider his decision to
resign his union membership. The union s letter closed
with the disclosure that the union was currently undergo-
ing its annual financial audit and that, when that process
was completed, all the expenses germane to collective bar-
gaining duties would be identified.

The following February 23, the union sent a letter to
Budnik and advised him that, despite his resignation from
the union, he was still required to comply with the terms
of the current union security clause. The union offered to
let Budnik pay a sum equal to current monthly union dues
to a mutually agreed upon charity. The union listed
three charitable funds acceptable to it. Budnik did not
agree to the union s proposal and, instead, quit his job at
the company and filed an unfair labor practice against the
union, alleging a violation of Section 8(b)(1)(A) of the
Labor-Management Relations Act (LMRA). Specifically,
Budnik alleged that the union failed to meet the require-
ments set forth in Beck regarding a union s duty to furnish
information about the amount of dues money spent for
legitimate collective bargaining purposes or to provide a
procedure by which employees like himself could chal-
lenge the amount charged or the basis for calculating such
charges.

In Communications Workers v. Beck, 487 U.S. 735
(1988), the Court upheld an interpretation that the
LMRA does not permit a union, over the objection of a
dues-paying nonmember, to expend funds collected
from them under a union security agreement on activ-
ities not related to collective bargaining, contract
administration, or grievance adjustment. In California
Saw & Knife Works, 320 NLRB 222 (1995), the Board

CHAPTER 4 Unions and Management: Key Participants in the Labor Relations Process 195

held that if a nonmember employee chooses to file a
Beck objection to the payment of full union dues, the
employee must be informed by the union of the follow-
ing information: the percentage of the reduction in fees
for objecting nonmembers, the basis for the union s
calculation, and the right to challenge these figures.
Any union-provided procedure for challenging the
amount or method of dues calculation is appropriate
so long as the procedure is not shown to be arbitrary,
discriminatory, or in bad faith.

The union cited the NLRB decision Laborers Local
265 and Fred A. Newmann Co., in which the Board
held that a union did not breach its duty of fair repre-
sentation by failing to provide a Beck objector with
Beck-related financial information, where the union
expressly waived the objector s obligations under the
union security clause and informed the objector that
he would not be required to pay any dues or fees.
The union noted that Budnik is the only employee,
out of the 300 bargaining unit members the union
represents, to request financial core membership status.
The union believed that the cost burden of gathering
Beck-related financial information for use by a single

employee would be prohibitive and detrimental to the
union s obligation to use resources wisely to represent
the bargaining interest of all bargaining unit members.
The union believed that it had offered Budnik a reason-
able accommodation that did not require him to pay
any dues money to the union, thus ensuring that none
of the objecting member s funds would be used for
union expenditures. At the same time, the reasonable
accommodation offered by the union avoided the
necessity of spending union funds to gather Beck-
related financial information for only one employee.
The union requested that the unfair labor practice
charge be dismissed.

Questions
1. What are the union s legal obligations?
2. Does Budnik have a burden of proof? Or, does the

union have the burden to prove that it has complied
with the law?

3. Did the union commit an Unfair Labor Practice in
this case? If so, what should be the appropriate
remedy?

196 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CHAPTER 5

Why and How Unions Are Organized

I JUST RECEIVED another message on my office desktop
computer from Jane Morgan that she had posted a message on
Facebook. Since we are Facebook friends, Jane sends me a lot of
interesting and helpful information. Jane and I have been friends
for 15 years and have worked together for at least that long.

I went to Jane s Facebook posting and it had the following
message: We need more pay. We need a pension plan and
health insurance. And we don t want to be fired at the whim
of our supervisors. Let s all meet at the community center at
7:00 P.M. tonight and hear what the union folks have to
offer. I noticed that 25 of our 75 employees had already
clicked on Like and several have added comments.

I have worked in a unionized plant before. We had a good
pension plan, good health insurance, and job protection through
the grievance and arbitration procedure. Then the plant closed
and the jobs went to Mexico. I certainly believe in what Jane
and the others are doing, but I don t know whether I should
click Like and be identified by Management as one of
Jane s supporters. I surely don t know what protection I have
if I click Like and/or make a comment supporting Jane and
the others.

Questions
1. What are my options? Evaluate the consequences of each

option.

2. Should I respond on my personal IPhone or on my office
desktop computer?

3. What are my legal rights?

4. What legal protections will I have if I click on Like, make a
comment, or attend the meeting?

197

This chapter focuses on the essential elements of unionization: why unions are formed,the procedures for organizing employees into unions, new union strategies for
obtaining union recognition, and union decertification.

This chapter attempts to identify the many factors that are involved in the forma-
tion of unions Employees have choices: (1) whether to become involved in union for-
mation where there is no union and (2) whether to vote for or against union
representation if and when there is a representation election. Although an employee s
choices to assist in the formation of a union, to vote for a union, and to join a union
are highly interrelated, they are separate decisions. Employees may join unions volun-
tarily or be required to join. The circumstances in which an employee may be required
to join a union were covered in Chapter 4. Employees who vote for union representa-
tion in an election in which the union does not receive a majority vote are nevertheless
left without union representation. However, they may be interested in becoming an
associate member.

Why Unions Are Formed

Unions are not present in every organization; in many instances, employees have chosen
to remain nonunion. This section provides explanations of why a group of employees
collectively may choose to form a union. The following section explains what motivates
employees at a particular facility to vote for a union.

Work and Job Conditions

Alienation Theory
The alienation theory is based on the belief that employees might seek collective action
to relieve their feelings of alienation. Employees feel alienated from their work because of
the following reasons:1

They lost contact with their own labor when the products they created were taken
away from them; thereby they cannot take pride in their work.
They lost involvement in their work when the machine dominated, separating the
work of the hand from the work of the brain.
They became estranged from fellow employees when their work made them so tired
and competitive that they were incapable of having authentic relationships.

As a result, employees might become aware of their common plight, and class con-
sciousness could compel them to join together in a union or to engage in collective
activities to improve their working situation. Unions can and do address a possible
aspect of employee alienation, namely the employees desire to speak their minds with-
out fear of management reprisal. In other words, intertwined with the motives
for union membership is the almost universal desire to tell the boss to go to hell. 2

A union typically indicates to its potential members that the employees rights to
voice their opinions on a managerial action are protected by negotiated grievance pro-
cedures and disciplinary policies (see Chapters 10 and 12).

Unions provide employees a voice which gives them an alternative to quitting their
jobs and leaving their employer if they are not satisfied with their jobs. It is difficult to
find new jobs in today s economy, and it is costly for management to hire and train new
employees. Lower employee turnover which is associated with union membership bene-
fits not only the employees but also management.3

198 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Employees might be dissatisfied with some aspect of their jobs while not being alien-
ated from their work. Some research has shown that employees might join unions if they
(1) are dissatisfied with physical characteristics of the workplace, low wages, or lack of
benefits and (2) believe that a union will help them achieve the job-related conditions
important to them.4

Employees who are not satisfied with their pay, supervision, and/or work may view
the union as the instrument to satisfy their job needs. Some researchers have argued that
job dissatisfaction is the initiator of employees efforts to start a union formation cam-
paign. They argue that job dissatisfaction sets in motion a search to end the uncomfort-
able dissonance between what is desired (good pay, effective supervision, etc.) and what
they are experiencing. Job dissatisfaction results in the formation of a coalition of
employees designed to bring about changes in economic and working conditions.5

Employees who are less satisfied with the companies for which they work have
greater desire to join a union. There is a negative relationship between work attitudes,
such as company commitment, and desire to join a union.6

In a nationwide survey, workers voiced approval of unions and a majority said they
definitely or probably would vote in favor of union representation in their workplace.
Union members were more likely to receive benefits at their job, such as health insur-
ance and paid time and a half for overtime than nonunion workers.7

Scarcity Consciousness Theory The Need for Job Security
In his classic book A Theory of the Labor Movement, Selig Perlman theorized that
employees are attracted to unions because unions will protect their jobs. Many employ-
ees, particularly manual workers, strongly believe they live in a country of limited oppor-
tunity and become scarcity conscious the employees collectively believe that jobs are
difficult to obtain and retain. This belief is particularly true today for some industries,
such as auto, steel, coal, and the public sector. Thus, employees turn to unions for job
protection.8

Unions therefore are attractive to the many employees concerned about job security,
regardless of their skill or occupational level. Few employees, including white-collar
employees and managers, are currently immune from the possibility of a layoff. Also,
unions do offer several ways of strengthening employees job security. For example, a
union can negotiate work rules which prescribe procedures for performing a job, thereby
ensuring that a certain number of employees will be assigned work. Unions can negotiate
apprenticeship programs, which ensure that eligible employees are trained available for
certain skilled jobs, or negotiate seniority and layoff provisions, which require the com-
pany to lay off employees in order of their seniority (most senior laid off last) and to
recall the most senior employees first. A union can negotiate grievance procedures,
which include a final step of arbitration to protect them against unjust discharges, unfair
treatment, and violations of the labor agreement. Unions can also lobby for legislation
protecting employees job rights in regard to such issues as plant closings and employ-
ment discrimination. Legislation or administrative policies can restrict employer access
to cheap labor, strengthen job security by pressing for restrictions for example, foreign
citizens, child labor, and prison labor; impose quotas or restrictions against imported
products such as steel, automobiles, and textiles; and provide adjustment assistance to
employees who are displaced as a result of free trade agreements.

Wheeler Model of Union Formation
Hoyt Wheeler has provided a theoretical model for union formation that entails a two-
stage process. The first stage consists of the worker s readiness to take some form of

CHAPTER 5 Why and How Unions Are Organized 199

aggressive action; the second stage represents that worker coming together with other
workers as a group and deciding to take some form of collective action. A single
employee usually begins to move toward unionization when he or she experiences feel-
ings of deprivation about pay, security, and/or respect. The individual employee s
thought process can be viewed as taking the individual along one or more possible
paths toward readiness to take some form of aggressive action to demonstrate anger
with the employer. The employee may take the path toward collective action and sup-
porting the union under certain conditions.

Deprivation at work may occur when there is a gap between what employees expect
from their work and what they actually receive in return. Three paths connect depriva-
tion and readiness to take action. The first path is a threat or an attack, which results
when the employer takes away or threatens to take away something the workers already
have. The second path is frustration, which results when workers try to act on their
own behalf, their action is blocked or ignored, and they feel they have no voice and see
no way of achieving effective voice as individuals. The third path is rational calculation,
a path by which, rather than show anger, the workers become convinced that the bene-
fits of unionization outweigh the costs.

Even though workers may mobilize along one of these paths, they may not choose
unionization. Instead, they may choose some form of withdrawal, such as quitting their
job, or revenge behavior, such as sabotaging the company s products. The conditions that
promote collective action or unionization are love, hope, and saliency. Love is essentially
the cohesion and solidarity wherein workers care enough for each other to act together
and share good relationships. Hope prevails when workers believe that the union can do
what is necessary to bring an end to their deprivation and frustrations. Saliency is recog-
nition that problems exist and workers perceive that dramatic events and good leader-
ship would contribute to facilitating action toward resolution.

Along with each of these conditions, which promote the union option, there are
inhibiting conditions. One such condition is the fear of punishment for supporting the
union, such as being fired from one s job or being laid off. Another is the general belief
that unions are wrong in principle. Either of these beliefs may dissuade a worker or a
group of workers from taking action. The interaction of the workers beliefs, their chosen
paths, and the existing conditions may determine whether a group of workers pursue
collective action and unionization.9

Employees Backgrounds and Needs
Employees previous experiences with unions can strongly affect their attitudes toward
unions and their decision to join a union. Eighty-seven percent of those who have had
experience with unions, usually as members, said they would vote for a union if given a
choice; of those who have had no experience with unions, only 27 percent indicated they
would vote for the union if given the choice.10

Many employees are influenced by parental attitudes and family experiences with
unions. One active union member stated, I attended union meetings with my father
before I was ever inside a church. Another commented, My dad was a great union
man and that s where I got it if it wasn t union, it wasn t no good. 11 Of course, paren-
tal comments about unions may be unfavorable as well.

Unions, like all formal organizations, potentially satisfy the members needs by pro-
viding a means of enhancing a sense of identity and maintaining self-esteem. Thus,
unions can appeal to three interrelated social needs of members: the need for affiliation,
or belonging; the need for status; and the need to belong to something purposeful, useful,
and creative that is on a higher level than improved wages and working conditions.

200 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Feelings about unions are a dominant predictor of union voting intent; those who
have positive feelings toward unions typically intend to vote for forming a union.
Those who have negative feelings toward unions tend to vote against forming a
union. Researchers suggest that unions should spend their time and resources on iden-
tifying what causes a nonunion employee to feel negatively or positively about unions
and take steps to rectify the causes that make a nonunion employee feel negatively
toward unions.12

The union s possible benefit of social affiliation is strengthened or weakened by the
degree of prestige or self-esteem it offers its members. Some employees join a union for
the same reason they would join any social organization, namely, to enjoy the responsi-
bility and status associated with being a member of that organization. This feature can be
particularly attractive to employees whose jobs are basically interchangeable and carry
few elements of prestige or room for advancement.

Employees who become union officers can often attain prestige or self-esteem in
their dealings with management officials:

As a shop steward or union officer or member of the grievance committee, a worker
can become a fellow your buddies look to. Such positions give him the opportunity
to win other workers approval by being a fellow who stands up to the boss with
impunity. The role of a fellow who stands up to the boss is made more significant
because the definition of the boss has been enlarged to include not merely the foreman
but the head office in Pittsburgh. He can win prestige as a guy that gets results in
such matters as the distribution of work, assignment to jobs, seniority policy, and pro-
tection from discrimination.13

Chapter 10 discusses the notion that union officers and management officials are
equals in their day-to-day administration of the labor agreement. However, as the pre-
ceding quotation suggests, the union steward can often emphatically disagree with a
management official six levels above the steward on the organizational chart. This ability
to challenge without fear of reprisal is not afforded nonunion employees or even man-
agement officials when they deal with their organizational superiors.

Studies of employee characteristics associated with employee votes have been mixed.
Some have shown that characteristics such as age, gender, and education are not closely
associated with favorable union votes or attitudes.14 Race appears to be the one
exception several studies have suggested that more black employees have positive atti-
tudes toward potential union advantages than their white counterparts.15 Other studies
indicate that young people are more likely to support unions and women are less likely
to support unions.16

Influences on Employees Votes for and against Unions
In forming and joining a union, employees mainly consider whether they believe the
union will improve their personal situations in terms of wages and benefits, promotional
opportunities, and job security. Can the employees expect to satisfy their job-related
goals and needs by supporting a union? Will the union provide the means for achieving
these goals? If employees perceive that a union will help them attain their goals, they will
likely support the union organizing campaign, vote for it in a representation election,
and support its activities afterward. If they are not convinced, they will not get involved,
vote for the union, or support its activities.

The union s campaign to secure employee support may contribute to a union vote,
especially among those who are familiar with the union s positions and who attend
union campaign meetings. Employees who are satisfied with working conditions are

CHAPTER 5 Why and How Unions Are Organized 201

less likely to attend union campaign meetings, but if they ever attend the meetings, they
often feel more favorably toward the union.

The company s campaign can affect the vote because it affects employees belief in
the anticipated influence of the union. If the company campaigns hard, some employees
will believe that the employer has seen the light and will now improve conditions with-
out the union. A strong anti-union campaign may convince some employees that the
employer is so anti-union that the union cannot improve working conditions.17

Although there may be many reasons why a particular group of employees votes for
or against the union in a specific election, several influences have been identified that
affect employee votes generally. Exhibit 5.1 shows the relationships among the general
influences on employees.

Researchers have argued that social pressure influences employee votes. When employ-
ees know a number of union supporters within a work group, this knowledge helps to form
group cohesion. When this group of employees is regularly blocked by employer actions,
they respond as a group, and their actions can lead to union formation. As union suppor-
ters, they are better able to convince others that the union has the power to bring about
changes in the workplace and are more convincing in influencing other employees votes.

General beliefs about unions mean that an employee believes, for example, that a
union will improve wages, benefits, and working conditions; provide a return to the
employee for the dues paid; and secure pro-employee legislation. On the other hand,
these general beliefs also include whether an employee believes unions are autocratic,
increase the risks of a plant closing, stifle individual initiatives, or ignore the members in
strike decisions. To influence employees positive general beliefs about unions, union orga-
nizers must put more effort into national campaigns, such as the Union Yes campaign of
the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO).

Specific beliefs about unions are more related to an individual s job and workplace.
To influence employees specific beliefs about unions, union organizers must focus atten-
tion on communicating the union s unique characteristics and its impact at the work
place. Specific beliefs that can be focused on include expectations about improvement
in pay, benefits, and job security that should result from unionization.18 Other beliefs
include expected improvement in recognition, job advancement, worker participation,
treatment by supervisors, and reduction in sexual and racial discrimination on the job.

Exhibit 5.1
Influences on Employees on Whether to Vote for or against a Union

202 PART 1 Recognizing Rights and Responsibilities of Unions and Management

In an organizing campaign, unions must show employees that significant positive
results will occur at their workplace if they vote for and join a union. Unions must pro-
mote the union s ability not only to improve wages and benefits but to help make work
more meaningful and increase employee participation. At the same time, the employer
will attempt to show that it has acted reasonably toward employees and has been fair
and sincere in dealings with employees.19

Social pressure, job dissatisfaction, and general and specific beliefs about unions
interact with union instrumentality, which is the employees perception of whether the
union will be effective in attaining desired outcomes, such as higher wages, improved
working conditions, job security, and protection from arbitrary treatment by manage-
ment.20 In general, if these interactions are positive, the employee will vote for the
union;21 if not, the employee will not vote for the union. For the individual employee,
any one of the influences may cause the employee to vote a certain way. For example,
if an employee believes his or her supervisor is considerate and supportive, this belief
may be enough to cause the employee to vote against union representation.22

Finally, an individual s decision on whether to vote for union representation depends
on his or her subjective assessment of the benefits to be obtained as weighed against the sub-
jective assessment of the costs. These costs include the direct costs of union dues as well as
possible indirect costs, such as managerial retaliation against individual union supporters,
plant closure, or simply the hassles of a more bureaucratic workplace. If the expected ben-
efits are higher than the costs, the employee will vote for the union. Otherwise, the employ-
ee s vote will be to remain without union representation. If employees have a good chance of
promotion, can expect a higher wage based on their present level of effort, and are pleased
with their supervisor, they probably will vote to remain without representation.

The Union s Challenge of Organizing the Diverse Workforce
Unions recognize that some occupations, such as retail sales, registered nursing, security
services, janitorial services, and food services, are expected to expand in numbers. In
addition, one-fourth of all workers in the United States are part-time employees; these
employees are hired on a temporary basis (referred to by many as contingent workers ),
are independent contractors, and are hired as subcontractors or leased workers. As noted
earlier, minorities and skilled employees will also become a larger percentage of the work
force. In fact, currently, over one-fourth of the work force are minorities, and the great-
est percentage increases has come from the Hispanic and Asian populations. Unions
must design organizing strategies to attract these employees.23

Organizing Professional Employees
Professional employees provide a challenge to unions and an opportunity to increase
union membership. Unions have already made significant inroads in many professions,
such as acting, professional sports, writing, music, health care, and teaching; however,
the debate continues over the compatibility of unionism with professionalism. Unions
must address this compatibility issue if they will be able to increase the memberships of
professional employee unions. On one side is the argument that the selection of a union
entails the rejection of key professional values, such as collegial participation in organi-
zational decision making, professional independence, and a merit-based performance
and reward system. On the other side is the argument that collective bargaining is often
the most effective method of achieving and maintaining these same professional values.24

Consider, for example, nurses, who tend to base their vote in a union representation
election on the degree to which they believe the union can give them a greater voice in

CHAPTER 5 Why and How Unions Are Organized 203

how patient care is delivered. Nurses unions increasingly focus on strategies to use col-
lective bargaining to address the core challenges that acute-care hospitals face. Approxi-
mately 75 percent of the nurses in one survey reported that both their working
conditions and the quality of nursing care had declined in recent years. In this same
study, 34 percent of the nurses reported that they felt exhausted and discouraged upon
leaving work; 34 percent were discouraged and saddened by what they could not provide
their patients; and 29 percent felt powerless to affect change.

Nurses recognize that they can use their collective power to make their voices heard
and be recognized as a full partner with other professionals, such as doctors and phar-
macists, in the American health care system. Nurses have willingly assumed the role of
patient advocate to ensure quality care. When a hospital cuts costs by reducing the num-
ber of nurses, it employs, understaffing becomes a problem. In response, a nurses union
has negotiated staffing levels to assure adequate staffing to enhance patient care. Nurses
unions have negotiated restrictions on mandatory overtime, except during emergency
situations, to ensure that nurses are adequately rested to provide the necessary patient
care. They have negotiated provisions that prohibit nurse assignments to areas of the
hospital in which the nurses are not trained or experienced. Also, nurses unions have
negotiated consultative/cooperative arrangements in which the nurses have a voice in
decisions involving patient care, such as forming professional practice committees or
patient care committees in hospitals.25

Professional employees provide a fertile ground for increased unionization because
professional employment has been growing rapidly. A survey of 2,014 members of the
American Pharmacists Association revealed that general beliefs about unions have a
stronger direct effect on union voting intentions among professionals than specific
beliefs. An example of a general belief is, Unions improve wages and working condi-
tions of workers, and an example of a specific belief is My job security will improve if
my workplace becomes unionized. Among non-professional employees, both general
and specific beliefs are important in predicting how an individual will vote in a union
election; however, specific beliefs have a stronger effect. In addition, the researchers
found that co-worker support among professionals had a large impact on union voting
behavior. This supports the notion that unions must focus their organizing efforts on
cultivating support among incumbent employees and developing a stronger positive
presence within a profession (such as the union s involvement in the leadership and gov-
ernance in the profession and the union actively advocating for the profession).26

Evidence drawn from a study of collective bargaining agreements covering profes-
sional employees reveals that the overwhelming majority of contract provisions include
subjects quite similar to those traditionally included in industrial sector agreements.
These provisions include wages, fringe benefits, grievance arbitration procedures, and
so on. In addition to these traditional subjects, these professionals collective bargaining
agreements also address professional issues. These issues can be categorized into six
groups: (1) professional standards, (2) mechanisms for professional participation in pol-
icy making, (3) regulation of professional work, (4) training and professional develop-
ment, (5) commitment of organizational resources to professional goals, and (6) criteria
for personnel decisions and the role of professionals in making these decisions. The
study showed that although there is variation in the collective bargaining agreements
among professional employee unions, unionism and professionalism are not inherently
incompatible. Moreover, professional values and interests can be incorporated into the
bargaining process along with the economic and job security issues of professional
employees. With concrete evidence of compatibility between professionalism and union-
ism, the opportunity is present for unions to promote their services.27

204 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Mary Kay Henry, a graduate of Michigan State University and the recently elected
president of the Service Employees International Union (SEIU, which has approximately
2 million members), has vowed to turn the SEIU into even more of an organizing and
political powerhouse and plans to increase membership by 150,000 per year. The SEIU
plans to spend $250 million a year on organizing activities and expand membership to
3 million by 2020.28

Activities of the Union in Organizing Employees
Employees initial interest in unionization is usually based on their present dissatisfaction
with some work-related situation coupled with a belief that each employee acting alone
cannot change the current situation. The union does not create this dissatisfaction with
working conditions among employees; instead, it is in the union s interest to improve job
satisfaction among employees by negotiating to improve working conditions. Therefore,
during an organizing campaign, the union advertises the benefits that would flow from a
negotiated collective bargaining agreement and successful handling of grievances.29

Most managers of nonunion companies incorrectly believe that labor unions initiate
union organization drives; instead it is usually the employees themselves who begin the
process by contacting the union. This contact with union organizers usually occurs fol-
lowing the emergence of employees belief that there is sufficient support for the union
and that the union s expertise and representation will help them.30

Union organizers enter the campaign by playing three general roles that influence
employees decisions on whether to vote for unionization. First, organizers try to educate
the workers on the benefits of the union, labor movement traditions, and protections
afforded by union representation and the present laws. Next, union organizers attempt
to persuade workers to vote for unionization and respond to statements and allegations
made by management during the organizing campaign. Third, organizers try to support
workers in their individual and collective actions.31 To ensure that these roles are carried
out capably, unions recruit and select union organizers with the appropriate education,
competencies, and personality characteristics.

Today, unions, especially those in the service industries, are hiring union organi-
zers who have different characteristics from traditional union organizers in
manufacturing. Service union organizers are almost 15 years younger on average, ten
times more likely to be female, average almost 4 more years of higher education, and
have an average of about 7 fewer years of union-organizing experience. They are six
times less likely to have held elected positions in local unions and are less than half as
likely to have served in appointed positions in local or national unions. Although
nearly all of the union organizers in manufacturing were rank-and-file members
early in their careers, only about half of the union organizers in the service industries
were rank-and-file members.32

Union organizers must recognize that the workforce has changed significantly and
has become more complex. Employees do not typically have a homogeneous set of pro-
blems. As well, the growth industry sectors and occupations are different from those that
were traditional strongholds for unions, such as manufacturing, mining, trucking, ship-
ping, railroads, and construction. As a result, the selection of staff members to work as
union organizers has changed. Instead of appointing staff members based upon political
rewards, unions are selecting organizers not only from the rank-and-file members but
also from colleges, law schools, Volunteers in Service to America (Americorps, VISTA),
and other sources. Unions are then investing funds in training union organizers at the
AFL-CIO s George Meany Center and improving their organizing capability through
training at the AFL-CIO s Organizing Institute (see Exhibit 5.2).33

CHAPTER 5 Why and How Unions Are Organized 205

The union organizer assists in convincing employees that they can achieve more
job-related benefits through collective action than by each individual s attempts to
improve his/her job situation, they tailor the organizing approach to employee concerns
and problems and focuses on the special needs of various groups, such as older workers,
female or minority workers, or white-collar workers. The organizer tries to sell the idea
that group action via the union provides the instrument through which employee con-
cerns and dissatisfaction can be most effectively addressed.34

When a union organizer considers when and where to commit time and resources
in organizing a group of unrepresented workers at a particular location, the union orga-
nizer tries to anticipate the voting propensities of the workers. For example, workers who
hold bad jobs which are defined by low pay, poor job quality, and arbitrary employer
practices are usually more receptive to unionization. Other factors which are considered
include the absence of job autonomy, presence of high levels of teamwork, especially self-
directed teams, presence of high levels of coercion, stress, work fatigue, job insecurity,
and low levels of task complexity and influence, and absence of contingent pay systems
and less than 40 hours of work per week.35

Exhibit 5.2
AFL-CIO Organizing Institute
Informational Flier

About the Organizing Institute

The Organizing Institute s (OI s) mission is to develop and promote the craft
of organizing. Founded in 1989, the Organizing Institute highlights the importance
of organizing within the labor movement. We recruit and train new organizers; col-
laborate across the labor movement with community allies; and share successful
approaches to support organizing and strategic campaigns.

Three-Day Training for New Organizers: Our first three-day training was
launched in November 1989. Twenty-five years and hundreds of trainings later,
thousands of alumni of the OI three-day union staff and members alike are orga-
nizing, advocating and leading the fight for social change in unions and allied organi-
zations. Check out our current training schedule.

Apprentice Program: Following the three-day training, the OI assists qualified
applicants with field placement in organizing campaigns underway among affiliate
unions. Trainees sharpen their one-on-one communication skills with help from a
lead organizer and mentoring from OI staff. Successful graduates of this paid intern-
ship are in high-demand for entry-level union and community organizing jobs. Click
here to apply.

Union Summer: This six-to-eight week summer internship offers students
and others interested in social justice on-the-ground campaign experience while
on summer break from school or work. Field work is matched with orientation
and training, so participants emerge with a broad understanding of issues facing
America s working families.

Advanced Organizer Training: The OI advanced organizing workshop supports
experienced organizers who are taking on large-scale and long-term organizing, non-
collective bargaining environments, engagement with immigrant workers and other
key organizing challenges.

National Organizing Workshop: In March 2015, the OI is bringing together
the best organizers from all over the country to talk shop and dream big. We ll look
forward, together, as we build a dynamic movement that wins real victories for
workers and communities. Sign up here (http://www.organizinginstitute.org/#!/contact)
for updates about this can t-miss event for working-class organizers.

SOURCE: http://www.aflcio.org/Get-Involved/Become-a-Union-Organizer/Organizing-Institute/About-the-Organizing-Institute

206 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Union organizers need to focus on the interests of the potential union members and
determine what the union can provide to meet the needs of potential members and pro-
vide an incentive for them to support and vote for the union. Researchers have found that
union members feel positive about the union s ability to improve working conditions and
job security. Also, workers who have been exposed to unions and unionized workplaces
hold a more positive view of unions. Women who are not yet union members hold a pos-
itive view of the union s ability to secure job security for their members. As a general rule,
women have been more exposed to various forms of workplace discrimination. This dis-
crimination creates a greater need for different kinds of protection which can be provided
by the union. Union organizers should incorporate these interests and views into their
strategies in attempting to gain the right to represent these employees.36

The influence of union organizers should never be underestimated by a company.
The union organizers may be first seen distributing handbills to employees as they
leave the company parking lots. Union organizers dress like the target employee group
so that the employees will identify with them. Although their dress may be misleading,
management should realize that union organizers are professionals. Like their counter-
parts in management, contemporary union organizers must understand the psychology
of the workplace and the labor relations climate in which employees work. Union orga-
nizers must be able to (1) sort out these complex factors for the employees on a group or
individual basis and (2) communicate in the employees language how the union can
assist in fulfilling their needs in the specific work environment.

As an example, Exhibit 5.3 lists a number of work-related concerns and pro-
blems. To the right of each is a possible course of action the union could take to
satisfy the concern or to alleviate the problem. The union organizer would bring to

Exhibit 5.3
Union Strategy and Courses
of Action to Achieve
Employee Goals and
Resolve Job-Related
Concerns

Examples of Work-Related Pro-
blems and Employee Concerns

Actions by Unions to Encourage
Employees to Join Union

Relations between employees and
management are poor.

Union will represent the interests of
employees to management.

Employees do not trust their employ-
er s promises.

Union will negotiate a contract requiring
management to abide by its agreements.

Employees prefer to deal with man-
agement as a group.

Union provides an opportunity for individual
employees to deal as a group with the
employer.

Employees want to have more influ-
ence in workplace decisions.

Union provides a mechanism for influence
by collective bargaining and administering
the agreement.

Employees feel that productivity
improvement would be more effective
if employees had more say in how
programs are run.

Union provides a mechanism in which
employees can provide input into those
issues that affect the workplace.

Employees question the effectiveness
of the company s system for resolving
employee problems and grievances.

Unions typically negotiate a grievance pro-
cedure that provides representation for
employees at each step and hearings
before an outside, neutral arbitrator.

SOURCE: Richard B. Freeman and Joel Rogers, Worker Representation and Participation Survey (Princeton, NJ: Princeton Survey
Research Associates, 1994).

CHAPTER 5 Why and How Unions Are Organized 207

the employees attention outcomes that could result from such activities by the union
on their behalf.

The union enters the organizing campaign knowing that it must convince the
uncommitted employees that the union is composed not of outsiders but of concerned
fellow employees, that the changes the union proposes are worth fighting for, that the
union will be able to protect employees against reprisals, and that union officials can be
trusted. The union realizes that its success depends on the development of a strong
inside organizing committee to convey the message directly to employees who do not
attend union meetings, and on the ability of the union organizer to convey his or her
own personal commitment and concern, get to know the employees, listen to employees
about their job concerns, and have employees themselves speak at public meetings to
express their feelings and their commitment to the cause.

Researcher Kate Bronfenbrenner has identified union campaign tactics characterized
as the rank-and-file intensive strategy, which yields a higher union win rate than other
tactics. This strategy focuses on representative leadership, personal contact, dignity and
justice, and building an active union presence in the workplace. This strategy generates
the worker participation and commitment necessary to withstand aggressive employer
anti-union campaigns and to counteract any anti-union aspects of the economic, politi-
cal, and legal climate. The components of the strategy are associated with union win
rates, which are 12 to 26 percent higher than win rates for unions that do not employ
this strategy (Exhibit 5.4).37

With Elizabeth Shuler, the youngest AFL-CIO secretary-treasurer ever and first
female secretary-treasurer ever, taking the lead, unions are emphasizing organizing
young workers between the ages of 18 to 34. A report from AFL-CIO s Working
America found these young workers are worse off than young workers 10 years ago
were. The report found that while it is hard for young people to find any job, it is
even harder to find a good job. Only 31 percent make enough money to pay their
bills and put some money aside in savings; this is 33 percentage points fewer than in
1999. Twenty-four percent make less than they need to cover their monthly bills, and
31 percent have no health insurance, up from 24 percent in 1999. Only 47 percent
have retirement plans at work, down from 53 percent 10 years ago. Nearly 40 percent

Exhibit 5.4
Components of Rank-
and-File Intensive Strategy
That Are Associated with
Higher Union Win Rates

1. Use of representative committees to be more in touch with concerns of the bar-
gaining unit as a whole, to have better access to employees at the work place,
and to demonstrate to the employees that the union is a democratic and inclu-
sive organization

2. Person-to-person contact, house calls, and small-group meetings
3. Conducting union bargaining surveys, selection of the bargaining committee, and

working with rank and file to develop proposals before election
4. Focus on issues, such as dignity, justice, discrimination, fairness, or service quality
5. Serious commitment of staff and financial resources to organizing, involvement

of the international in union local campaigns, and training, recruitment, and effec-
tive utilization of rank-and-file volunteers from already organized bargaining units

6. Use of solidarity days (designated days to wear union buttons, hats, T-shirts, arm
bands, etc.)

SOURCE: Kate Bronfenbrenner, The Role of Union Strategies in NLRB Elections, Industrial and Labor Relations Review,
50 (January 1997), pp. 195 211; Kate Bronfenbrenner and Tom Juravich, It Takes More Than House Calls: Organizing to
Win with a Comprehensive Union-Building Strategy, Organizing to Win, Kate Bronfenbrenner et al. eds. (Ithaca, NY: Cornell
University Press, 1999), pp. 33 34.

208 PART 1 Recognizing Rights and Responsibilities of Unions and Management

have put off further education or professional training, and over a third of the youn-
ger workers are living at home with their parents because they can t make it finan-
cially on their own.38

Activities of the Company in Union Organizing
Many employers, preferring the flexibility of remaining nonunion, resist efforts of a
labor union to organize the employees. The employer realizes that the keys to its suc-
cess in remaining nonunion are twofold: First, uncertainty and change are naturally
stressful for workers; employers often try to magnify employees natural concerns
about how the workplace might change if they unionize. Second, employers attempt
to convince employees that the employer s past record shows that it deserves their sup-
port or at least a second chance.

Positive human resource management practices, such as job enrichment/enlarge-
ment, internal promotions, learning opportunities, bonus and merit pay, and employee
involvement programs, seem to reduce nonunion workers desire to vote for a union
in a representation election.39 The employer enters the campaign with three advantages:
(1) It has instant and prolonged access to the employees; (2) although it can make no
promises of higher wages and benefits during the election campaign, it is able to inform
employees of the possibility of improvement without any cost to them and without the
creation of a new bureaucracy; and (3) it can take advantage of the fact that most people
find the thought of substantial change in their lives frightening.40

Employers presently have favorable positions during the pre-election campaign.
Not only do employers control employees jobs and their livelihoods, but they may
also require employees to attend meetings on the job wherein the employer talks
about employer employee relations. Unions are denied equal access to employees.
Employers may commit an unfair labor practice by firing an employee for engaging
in union activities. If they do, the remedial process of the NLRB often takes years.
Unfortunately, some employers view breaking the law (and any associated costs with
that) as simply a price to pay to say union free. 41

Employer campaign tactics attempt to persuade employees to vote against
unionization. Usually more than one campaign activity must be used. The most
commonly used employer tactics are hiring a labor lawyer or consultant, spreading
rumors about loss of jobs, and spreading rumors about store or plant closings. In
terms of making a difference in the outcome of the election, employees are more
likely not to choose the union when the employer spreads rumors about a store or
plant closing. On the other hand, employees are more likely to choose the union
when the employer intentionally delays the election and when the unions work
closely with community leaders to facilitate acceptance of the union by citizens in
the community. Two employer tactics that have backfired and are associated with
employees vote for the union are shifting work and jobs to other facilities and test-
ing applicants to identify union sympathizers.42

Employers frequently use the second chance strategy. When the employer s past
record has not been good for employees and problems clearly exist, the second chance
strategy encourages the employer to admit that conditions could have been better and
request employees to give the employer a second chance to do better. Often, employees
are inclined to give management another chance when management indicates that it is
listening. This is a one-time-use only strategy. If the employees vote no union and
the employer does not make necessary changes, then another election will probably fol-
low after 12 months and the second time employees won t be as responsive to manage-
ment s message.

CHAPTER 5 Why and How Unions Are Organized 209

Other employer practices may affect the outcome of the election. For example, the
employer can influence the election outcome by changing the election unit composi-
tion and the date of the election. They may influence the election outcome modestly
by such activities as publicizing the disadvantages of the union, displaying posters,
and making campaign speeches. Companies must be cautious in election campaigns
because they may overdo their resistance and cause a negative reaction from employ-
ees, especially when both attorneys and management consultants are used.43 For exam-
ple, in one election, union organizers said things like, The owners would rather pay a
consultant tens of thousands of dollars than pay you a decent wage! Thus, overreac-
tion to a union s campaign with vigorous tactics may create a more favorable climate
for unionization.44

The use of consultants in organizational campaigns has increased dramatically. One
study reports that most elections are directed by consultants. In these campaigns, consul-
tants advise employers how to persuade employees not to vote for a union. According to
this research, almost all companies actively resist the union by making captive audience
speeches (employer speeches to employees on the job) and writing letters to employees.
Employer unfair labor practices were committed in over half of these elections.45 Use of
consultants to advise employers how to persuade employees not to vote for a union
requires reports to be filed with the secretary of labor, even though the consultants usu-
ally have no direct contact with employees.46

Attorneys who specialize in union avoidance campaigns are often employed either
to offer advice on questions of labor law or to devise strategy and conduct the union
avoidance campaign. In addition, attorneys may interview supervisors to identify
sources of employee discontent and to ameliorate the discontent that led to the orga-
nizing campaign; raise the perceived costs of union representation by such tactics as
publicizing possible major layoffs and closings at unionized plants; train supervisors
in how to effectively present the employer s position to the employees; prepare and
edit campaign literature and speeches for company officials; and build support and
sympathy for the employer in the local community. An inexpensive campaign in a
small to medium-sized firm with one attorney could cost up to $30,000 in legal fees.
An all-out campaign with several attorneys using the latest campaign tools, such as
slick DVDs and visits by prominent politicians and civil rights leaders, could easily
exceed $100,000. The cost of a campaign in a large, multi-plant firm involving a
dozen attorneys could exceed $1 million. These costs are incurred at the rate up to
$400 per hour for attorneys from specialized labor law firms ($500 per hour or more
for prominent attorneys from specialized labor law firms).47

A leading management lawyer who promoted his ability to keep unions out of the
workplace has an interesting approach when a union wins the right to represent employees
in an election he encourages management to use Surface Bargaining, where the company
goes through the motions of negotiating a contract but actually has no intention of reach-

ing an agreement. Management negotiators keep the first collective bargaining agreement
from being negotiated by making only small concessions and using delay tactics. He suggests
that while management delays bargaining, union support will eventually wane. Then, after
the first year passes, a decertification election can take place.48

Illegal discharges and other forms of discrimination against union activists, used by
employers to affect the outcome of the election, have increased dramatically in the past
several years. Such discrimination reduces the probability of an organizing success by 17
percent and cuts nearly in half the likelihood of a first contract being obtained. Nearly all
these illegal activities occur during an organizing drive, just before an election, or

210 PART 1 Recognizing Rights and Responsibilities of Unions and Management

during the first contract negotiations. Such violations generally occur when employers
perceive the financial gains of keeping unions out are far greater than the cost of back-
pay awards and reinstatement of union advocates, and such is often the case. One study
reported that less than half of illegally discharged workers were offered reinstatement,
and only 69 percent of those ever returned to work. Because it takes so long to adjudi-
cate a case, and reinstatement comes so long after the organizing drive, some employers
have been able to frustrate the legal process and use it against the union and employees
interested in the union.49

One way in which some employers deny employees their legal rights is through
worker misclassification, for example, classifying employees as independent contrac-

tors, self-employed, or leased workers. By this worker misclassification, the employer
not only denies employees their legal rights, such as the right to form and join a
union, but the employer does not pay its share of Social Security and Medicare obliga-
tions, unemployment compensation, or state worker insurance. A representative of
the Mason Contractors Association of America estimated that the worker misclassifi-
cation reduces labor costs by as much as 30 percent; however, law abiding companies
have to make up the difference and are placed at a competitive disadvantage. A Coop-
ers and Lybrand study estimated that worker misclassifications cost the federal gov-
ernment nearly $35 billion in lost taxes; other studies estimate between $3 and
$4 billion per year. An Ohio attorney general s report revealed that worker misclassi-
fications cost the state $30 million in payments for unemployment compensation,
$103 million in workers compensation premiums, and over $36 million in forgone
state income tax revenue.50

In a 2014 decision, the NLRB ruled that it would consider the following factors in
determining whether one is an employee or an independent contractor and indicated
that no single factor was determinative:

(a) The extent of control which, by the agreement, the master may exercise over the
details of the work.

(b) Whether or not the one employed is engaged in a distinct occupation or business.
(c) The kind of occupation, which reference to whether, in the locality, the work is usu-

ally done under the direction of the employer or by a specialist without supervision.
(d) The skill required in the particular occupation.
(e) Whether the employer or the workman supplies the instrumentalities, tools, and the

place of work for the person doing the work.
(f) The length of time for which the person is employed.
(g) The method of payment, whether by the time or by the job.
(h) Whether or not the work is part of the regular business of the employer.
(i) Whether or not the parties believe they are creating the relation of master and

servant.
(j) Whether the principal is or is not in the business.51

Two relevant questions are: How do employers reconcile their personal ethics
when either they or their representatives knowingly commit illegal practices by dis-
charging an employee or a group of employees for exercising their legal right to sup-
port a union? Moreover, why does the U.S. Congress continue to tolerate such an
imbalance in the legal procedures governing the exercise of statutory rights that have
existed in the United States since 1935? In an effort to make employees aware of their
rights under the NLRA, the NLRB requires federal contractors to post a notice of
employee rights under the NLRA.

CHAPTER 5 Why and How Unions Are Organized 211

Unintended Consequences of Anti-union Behavior
Fear among employees of reprisal for disclosing interest in the union in the work envi-
ronment can make fear a central experience for the nonunion employees even though
they have not disclosed their interest in union representation. This concealment has
the potential of causing a sense of anxiety that comes with living with this conceal-
ment. A work environment wherein employees experience this fear of reprisal for dis-
closing an interest in unions becomes a stressful work environment which can be
detrimental to the health of employees. These stress effects of employees who are asso-
ciated with fear in the workplace can extend to cardiovascular disorders, for example,
hypertension, to musculoskeletal disorders, for example, chronic fatigue, to gastroen-
terological disorders, for example, ulcers and to psychological disorders, for example,
clinical depression. As a result, the costs incurred by employers of keeping the unions
out may result in the untended consequences of employers paying for higher health
care expenses for the employees.52

Methods for Organizing Unions
The three basic ways for organizing unions are: (1) voluntary recognition, (2) NLRB
directives, and (3) secret-ballot elections (Exhibit 5.5).

Voluntary Recognition
By far the simplest and least confrontational path to union recognition is voluntary
employer recognition often based on union authorization cards (see Exhibit 5.6). Gener-
ally, a union officer approaches a management official and asserts that a majority of the
employees in a particular bargaining unit have signed cards authorizing the union to be
their bargaining representative. The union officer typically does not show the individual
signed cards to the manager, to prevent retaliation. If the manager agrees to voluntarily
recognize the union, a neutral third party will often compare the cards against the names
of employees in that department to verify that a majority of employees want a union.
This is called a Card Check Procedure.

Why do managers agree to voluntarily recognize unions? There are several possi-
ble motives. First, they may feel that fighting the union is futile. If an organizer claims
that an overwhelming majority (say, 89 percent) of the workers signed cards, manage-
ment may feel that even if they decide to try to persuade the workers to remain non-
union, a majority will continue to support the union. Second, they may feel that they
may get a better deal in future contract negotiation if they appear conciliatory and
accept the workers decision to unionize. Third, the union may have a reputation for
violence and the managers may feel too intimidated to resist. Fourth, managers may
have heard that a different, more militant union is trying to organize the workers,
and it comes as a relief to find a more moderate and reasonable union claims to have
a majority support; recognizing the moderate union may forestall dealing with the mil-
itant alternative.

For employers who have some unionized facilities and other nonunion facilities,
neutrality agreements are often used in conjunction with card check procedures. A neu-
trality agreement is basically a joint memorandum between the union and management
where management agrees not to oppose unionization efforts in its nonunion facilities.
Technically, the employer remains neutral while employees who are union supporters
contend with employees who oppose unionization on both sides seek to persuade unde-
cided workers. The reality is that supporters usually have their international union sup-
plying professionally developed campaign literature and DVSs, while opponents must

212 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Exhibit 5.5
Basic Union Representation Procedures

CHAPTER 5 Why and How Unions Are Organized 213

rely upon home-made materials. Not surprisingly, unions win more representation
elections when a neutrality agreements in place.

Several unions, particularly the SEIU and UNITE/HERE, have been successful in
organizing tens of thousands of employees under these neutrality/card check agree-
ments. To summarize, these agreements require the employer to take a neutral posi-
tion on whether or not employees chose a union and to allow signatures on union
authorization cards to count as a vote for the union. The current agreements between
the Big Three automakers and the UAW contain provisions for employer neutrality
and card check. With such success, opposition groups, such the National Right to
Work Committee and other groups, are challenging these agreements in court and
before the NLRB.53

In December 2010, the NLRB found that Dana, an auto parts manufacturer, and the
United Auto Workers had not violated labor laws when they agreed to certain grounds
by which the union would be recognized if a majority of employees signed cards in favor
of union representation and by creating a framework for any future collective bargaining
agreements. The agreement between Dana and the UAW stated:

We both believe that membership in a union is a matter of personal choice and
acknowledge that if a majority of employees wish to be represented by a union,
Dana will recognize that choice.

The parties also agreed that any labor agreements that resulted from the agreement
would be at least four years long and would incorporate team-based approaches, keep
health care costs at competitive levels, and allow for mandatory overtime when necessary.54

Exhibit 5.6
Example of a Union Authorization Card

SOURCE: Courtesy of the United Food and Commercial Workers International Union.

214 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Proponents of the card check procedure argue that it substantially diminishes the
employer s opportunity for coercive campaigning and reduces conflict between the par-
ties, thereby leading to more positive labor relations. Opponents emphasize that peer
pressure makes it difficult for employees to express their genuine feelings about the
union. In addition, opponents say card checks are subject to misinterpretation of the
card s meaning, even outright forgery of worker signatures. They argue that without a
campaign, workers hear only one side and are thereby insufficiently informed. A study
of NLRB elections by Getman and associates reports that approximately 75 percent of
the people who sign cards actually vote for the union. This suggests that while cards
are a reasonable surrogate for ballots, they are not perfect, and perhaps a higher thresh-
old than 50 percent should be used (mathematically, it would be 67 percent) if cards are
to be true indicators of a majority support for unionization.

Research that included interviews from workers in 48 union campaigns revealed the
following:

Pressure on workers from employers to oppose unionization was significantly
greater than pressure from co-workers or union organizers to support unions in
both card check campaigns and NLRB elections.
There was a reduction of labor law violations by employers under the card check
procedure.
Ninety-four percent of the workers who signed cards in the presence of union
organizers did not report feeling pressured into signing the cards.
There was reduced flow of information under the card check procedure; however,
workers who did not feel they had sufficient information did not sign the cards,
which is essentially voting no union.
Card check procedures reduced intimidation and other pressures on workers who
were faced with the unionization decision.55

Neutrality agreements typically contain language stating that the employer will nei-
ther help nor hinder a union s organizing efforts, will not communicate opposition to the
union, will not refer to the union as a third party, will not attack or demean the union
or its representatives, and other similar provisions. The language in card check agree-
ments typically calls for a third-party neutral to validate the cards to determine whether
a majority of the bargaining unit employees want the union to represent them. Most of
these agreements allow union access to the physical property of the employer and set
limits on the union s behavior, most commonly not to attack management. In over 90
percent of the agreements, some form of dispute resolution, most frequently arbitration,
is set up to resolve alleged violations or disputes that may occur during the term of the
agreement. An example of a dispute is disagreement over the composition of the bar-
gaining unit and eligibility of employees to sign union authorization cards.

Most employers still refuse to voluntarily recognize a union even when union orga-
nizers present signed authorization cards (see Exhibit 5.6) from a majority of employees.
Management might be concerned that these cards were obtained through inappropriate
means (e.g., after drinking parties, under threats of violence, or through forgeries).
Employers also realize that authorization cards are not always accurate predictors of
union success in representation elections.

If a union is voluntarily recognized, its status as bargaining representative cannot be
challenged during reasonable period for bargaining (not less than six months and not
more than one year). Although the Board did not directly address the legality of
employer neutrality or card check agreements, the new rule potentially alters how and
when employers or unions may choose to enter neutrality and card check agreements.56

CHAPTER 5 Why and How Unions Are Organized 215

Since 1966, if an employer voluntarily recognized the union based on a card check
agreement, the recognition bar applied. Any filing for decertification by a group of employees
or a rival union during the year after the recognition would have been untimely. In addition,
the one year time limit could be extended for up to three years if and when the parties nego-
tiated and included such agreements in their collective bargaining agreement.57

In an interesting chain of events which actually ended in the voluntary recognition
of two groups of employees (even after the union did not receive a majority of the votes
in favor of the union), Volkswagen recognized the UAW as well as an independent
employee group. See the Labor Relations in Action on the above.

NLRB Directive
In rare and very controversial cases, the NLRB may direct the employer to recognize and
bargain with the union. Although the NLRB considers secret-ballot elections superior, it

LABOR RELATIONS IN ACTION
Volkswagen and the United Auto Workers Chattanooga, Tennessee

2008 Volkswagen announced its intention of building a
$1 billion (with $577 of local, state and federal govern-
ment incentives) assembly plant in Chattanooga, Ten-
nessee. The plant was projected to employ 2,000
workers and produce 150,000 cars per year. Volkswa-
gen has over 100 plants worldwide; the Chattanooga
plant is the only one which is nonunion.

2011 The first Passat rolls off the assembly line.
January 27, 2014 the UAW and Volkswagen

signed an agreement to have the NLRB conduct a
representation election of the production and mainte-
nance employees at the Chattanooga TN plant.

February 19, 2014 the Volkswagen workers voted
712 to 626 against union representation. UAW presi-
dent Bob King blamed the defeat on the outside inter-
ference from U.S. Senator Bob Corker, formerly Mayor
of the City of Chattanooga and Tennessee Governor Bill
Haslam. Both Corker and Haslam predicted that unioniz-
ing the plant would hurt the state s economy and Corker
warned that VW would move production of its new mid-
sized SUV to Mexico. It was reported that the adminis-
tration of Governor Bill Haslam offered VW $300 mil-
lion in incentives to expand in Chattanooga as long as
the UAW was not part of the picture.

October 2014 A group called the American Council
of Employees began competing with the UAW to serve
as the voice of workers with Volkswagen management.

November 19, 2014 VW s Juergen Stumpf, a mem-
ber of VW s global works council, is quoted as saying
his colleagues back in Germany were puzzled about
what had happened in Chattanooga with the fierce politics
surrounding unionization, it was hard to understand …
I would understand it being in North Korea.

December 2014 Volkswagen management announ-
ced that an audit showed that at least 45 percent of the

workers supported the UAW. Under the Volkswagen Com-
munity Organization Engagement policy, VW stated it has
recognized the UAW as the collective bargaining agent for
the 1,500 workers at the plant and would hold bi-weekly
and monthly meetings to talk about issues.

January 2015 Tennessee Senate Speaker Pro
Tempore Bo Watson was quoted as criticizing VW s
support for the UAW and saying that VW conducted a
labor campaign that s unfair, unbalanced and quite
frankly un-American.

February 2015 Volkswagen announced that it
had recognized the American Council of Employees
(ACE), an independent employee council which repre-
sents hourly and salaried employees, and will meet
with them to discuss safety, productivity, efficiency,
and other areas of concern. Sean Moss, interim ACE
president, announced that its next step was to develop
a works council similar to the German Model of
employee representation which exists at other VW s
plants.

November, 2015 Volkwagen objected to a request
from a small group of maintenance workers at its Chatta-
nooga plant to hold a vote on representation by the
United Auto Workers. The Volkswagen instead re-
quested a full vote by all maintenance and production
employees at the plant. The Company remains neutral
in regards to our employees rights to representation
and an election, but the company believes that the main-
tenance-only unit requested in the petition is not consis-
tent with its One Team approach.

SOURCES: Lydia DePillis, The Strange Case of the Anti-Union Union at Volkswagen s
Plant in Tennessee, Washington Post, November 19, 2014; http://www.wsj.com/arti-
cles/uaw-to-begin-bargaining-for-volkswagen-plant-in-tennessee-1418143882?; http://
www.detroitnews.com/story/business/autos/foreign/2014/12/09/Volkswagen-decision;
http://www.americancouncilofemployees.com

216

has discretionary authority to use alternative means to determine the majority interests
of employees. In the landmark Gissel case, the NLRB decided (and the Supreme Court
agreed) that a company may be ordered to recognize and bargain with a union under
the following conditions:

1. Evidence reveals that a fair, impartial election would be impossible because of seri-
ous or numerous employer unfair labor practices.

2. Wording on the authorization cards is clear and unambiguous (Exhibit 5.6).
3. Employee signatures on the cards were obtained without threat or coercion.
4. A majority of employees in the bargaining unit had indicated their interest in

having the union represent them by signing the authorization cards.58 (Card sig-
natures are valid for 12 months unless voluntarily withdrawn by the employee
who signed the card prior to a union s use of that card as evidence of employee
support.)

In essence, the NLRB and the courts sometimes conclude that an employer has com-
mitted flagrant and usually numerous violations of the law. In such situations, the
employer has typically intimidated workers with the LMRA violations. Holding another
election in these situations is not a realistic remedy because the workers will not vote
their true desires. Under such conditions, the next best alternative for measuring
union support is the workers willingness to sign union authorization cards (occurring
before the campaign period and typically occurring before many of the flagrant viola-
tions). Thus, in these instances, if a majority of the workers signed union authorization
cards, the NLRB will forgo ordering an election and instead order the union to be certi-
fied and management to negotiate with that union.

NLRB does not issue Gissel bargaining orders frequently. During a ten-year span
from 1987 to 1996, the NLRB issued an average of ten per year. Then, if appealed by
the company to the U.S. Circuit Court of Appeals, only about 50 percent of the bar-
gaining orders were enforced.59 (The NLRB does not currently keep records on Gissel
orders.)

An analysis of NLRB opinions issued since 1969 reveals a measure of predictability
in deciding whether the NLRB will issue a Gissel bargaining order. The NLRB is more
likely to issue a Gissel bargaining order:

When it believes that an employer s illegal acts are deliberate or calculated.
If the employer s conduct threatens the employees economic interests.
If the employer s actions are characterized as vengeful and the NLRB does not
believe the actions can be remedied without a bargaining order.
When the employer engages in a series of unfair labor practices rather than a single
incident.

An NLRB-ordered bargaining order has little value without federal judicial enforce-
ment (see Chapter 3) through the U.S. Circuit Courts of Appeals, which tend to rely on a
case-by-case analysis. Before enforcing the NLRB s bargaining order, the courts require
the NLRB to provide a reasoned explanation of why a rerun election would be futile.
In general, if an employer s unfair labor practices seem reprehensible or egregious, the
courts will be more likely to enforce the NLRB s bargaining order. For example, if a com-
pany takes unlawful actions, such as terminating employees because of their union activ-
ities or making threats about the consequences of unionization, the courts will likely
enforce the bargaining order.60 Threats of an actual plant closing to deny employees an
opportunity to exercise their Section 7 rights is also considered a serious unfair labor
practice which could justify a Gissel doctrine bargaining order from the NLRB.

CHAPTER 5 Why and How Unions Are Organized 217

NLRB Secret Ballot Election
Pre-NLRB-Election Union Campaigns. The union pre-election campaign is not simply
a process of exchanging letters and handbills and then holding an election. The cam-
paign usually goes through several stages:61

1. Contacting employees as a result of either employee requests for help or distribu-
tion of union literature (handbilling) at the workplace by the union.

2. Determining interests by calling meetings, visiting homes, and counting responses to
handbills. (See the previous Labor Relations in Action feature for an array of
responses received by union organizers who were seeking support from employees.)

3. Setting up an organizing committee by identifying leaders and educating them
about the benefits and procedures of the union, the law, and the issues likely to
be raised by management.

4. Building interests by soliciting signatures on authorization cards (see Exhibit 5.6 on
p. 214). (Most organizers will wait to announce that the union represents a majority
until over 50 percent, and usually 60 to 80 percent, have signed cards.)

During this time the union discovers and highlights employees problems, compares
wages at their facility to wages at unionized facilities, and explains the role of the union
in helping to satisfy job-related needs. In other words, the union will attempt to convince
workers that they need a union and then that they should sign union authorization cards
and support the forthcoming organizing campaign by wearing union buttons, attending
meetings, and signing up members. Although various means are available to gain sup-
port, research indicates that one-to-one contact; peer contact and persuasion; and high
quality, professionally designed written communications are most effective.62 Other
efforts used by unions include television and radio advertising, hotline telephone num-
bers, group meetings, and handbilling.

Organizing new locals is costly. Evidence shows that the cost of each additional
union member is about $600.63 These costs include direct, out-of-pocket expenditures
for such items as the printing and mailing of leaflets and other literature, rent for office

LABOR RELATIONS IN ACTION
Objections to Joining the Union

Why should I join the union when I get exactly the
same wages and benefits without joining?

I can t afford to join. I ve got a family to support,
and my check just isn t big enough [to cover union
dues].

I don t believe in unions. They are too strong and
powerful now to suit me.

I don t need a union. My employer is fair and will
take care of me. What could the union get for me that I
wouldn t have gotten anyway?

My husband (or other relative) doesn t like
unions.

The union does not do anything for you [grie-
vances are not settled satisfactorily]. I don t like the peo-
ple who are running things in the union.

I can handle my own affairs. I can take care of
myself. I ll make my own decisions. I do not intend to
stay on this job forever; I m looking for a promotion.

My religion doesn t permit me to belong to any
outside organizations.

My boss doesn t believe in unions. I ve seen what
happens to union members.

I don t want anything to do with unions. They are
all corrupt.

I don t know enough about the local or the union
movement.

I m not interested. I just don t want to join. I ll
think about it. Maybe I ll join someday.

SOURCE: Organizing Committee, AFSCME Council 24, WSEU, 5 Odana Court, Madison,
Wisconsin.

218

space, salaries for staff hired, and legal fees. These efforts take time from the union staff
that could have been devoted to providing services to present union members (handling
grievances, arbitration, and negotiations).

The costs of organizing new members must be compared with the returns:

Extra compensation made possible by increased bargaining power
Additional dues and fees paid by new members
Enhanced political influence
Social benefits and satisfaction derived from extending membership to others64

Companies often learn of union-organizing attempts from supervisors or rank-
and-file employees and through observing handbilling at the work site before they receive
official notification (by letter or telegram) from the union demanding recognition. Some
companies react vigorously, whereas others do little to acknowledge any union s attempt
to organize the employees. Some employers tell their employees about their opposition
and urge them not to sign union authorization cards. Because the cards may specifically
state that the signee wants union representation, any employee signature assists the
union in establishing itself within the company. See the Labor Relations in Action feature
on page 220 for typical employer messages during a union campaign.

Filing a Petition for the Election. Before 1935, to obtain recognition, the union usually
had to show its strength and employee interest in representation by such actions as strikes.
The Wagner Act and the NLRB changed this situation by developing procedures and guide-
lines for peacefully determining the majority interests of employees through representation
elections or some other comparable demonstration. The NLRB procedure is initiated when
the potential bargaining representative for the employees files a petition for an election.

The NLRB is authorized to conduct a representation election only when a valid petition
has been filed by an employee, a group of employees, an individual or labor organization, or
an employer. Usually the petition is filed by the union after it has requested union recogni-
tion from the employer and the request is denied. The petition must be supported by evi-
dence (usually authorization cards) that a substantial interest in union representation (at
least 30 percent of the anticipated bargaining unit) exists. An employer cannot petition for
an election until the union seeks recognition. If the employer could, it would petition at the
time when the union s support was weakest. After receiving a petition, the NLRB will first
determine whether it has jurisdiction and the petition is valid. If so, it will promptly notify
the company and request a listing of employees. Companies are not required to submit this
list but usually comply with the request as an act of good faith. Next, the NLRB will arrange
a conference with the company and union to discuss the possibility of a consent election.
Here, if both sides agree to the appropriate bargaining unit, voter eligibility, ballot; and date,
time, and place for the election, a consent election will be held. If either party refuses to
agree on any one of these items, a formal hearing to settle these matters will be conducted.

Election Investigation and Hearing. In the event that the union and management offi-
cials cannot agree to a consent election, the NLRB will investigate the petition and hold a
hearing. If it finds that there is substantial interest in union representation, the NLRB
will. direct an election (directed elections) This investigation will secure answers to the
following questions:

1. What is the anticipated appropriate bargaining unit?
2. Does substantial interest in representation (30 percent) exist among employees in

the unit?
3. Are there any barriers to an election in the form of existing unions, prior elections,

or current labor agreements?

CHAPTER 5 Why and How Unions Are Organized 219

The formal hearing permits both parties to present evidence on issues in dispute, for
example, composition of the bargaining unit, date of election, voter eligibility, and so on.
Based on the evidence presented, the NLRB regional director will issue a directed elec-
tion order which includes his or her decision on disputed issues at the hearing and prior
voluntary agreements between the parties about other election issues.

Appropriate Bargaining Unit. An appropriate bargaining unit is a grouping of jobs or
positions in which two or more employees share common employment interests and
conditions (community of interests) and which may reasonably be grouped together for
collective bargaining purposes. Determination of an appropriate bargaining unit is left to
the discretion of the NLRB, which decides in each representation case how employee
rights can best be protected under the act. The Board s decision has, however, been lim-
ited by law in several ways. The statute includes the following:

Professional employees cannot be included in a unit composed of both professional
and nonprofessional employees unless a majority of the professional employees vote
to be included in a mixed unit.
A proposed craft unit cannot be ruled inappropriate simply because a different unit
has been previously approved by the NLRB unless a majority of employees in the
proposed craft union vote against being represented separately.
Plant guards cannot be included in any bargaining unit that has nonguard employ-
ees in the unit because of the potential conflict of interest, such as searching a fellow
union member s locker for stolen property.
Supervisors and managers are not considered employees covered under the act and
may not be in any bargaining unit. A supervisor is defined as any individual
having authority, in the interest of the employer, to hire, transfer, suspend, lay off,
recall, promote, discharge, assign, reward, or discipline other employees, or
responsibility to direct them, or to adjust their grievances, or effectively to recom-
mend such action, if in connection with the foregoing the exercise of such
authority is not of a merely routine or clerical nature, but requires the use of
independent judgment.
The Board does not focus on job titles; instead, the Board focuses on whether the
supervisor in question does in fact exercise independent judgment in making
decisions. 65

LABOR RELATIONS IN ACTION
Examples of Employer Messages during a Representation Election Campaign

Tell employees that union contracts often contain
wage cuts or givebacks.
Mention that the union does not provide jobs and
give examples of companies that have laid off
employees who were union members.
Explain that if the workers choose the union, the
employer will be obligated to bargain with the union
in good faith, but the employer cannot be forced to
agree to contract provisions that are not in its best
interests.
Tell employees that a company must remain com-
petitive and has a right to try to make a profit. If its

labor costs are so high that it cannot sell its product
at a profit, it cannot remain in business.
Advise employees that they can revoke the autho-
rization card and explain the procedure to do so.
Indicate that the union dues vary but can be as
much as $600 per year.
Tell employees that the employer has the legal right
to hire permanent replacements for strikers.

SOURCE: Maintain a Union-Free Status, by Paul S. McDonough, Personnel Journal
69 (April 1990): 108 114.

220

Excluded are agricultural laborers, public employees (except postal employees), and
independent contractors, although some of these may be covered in separate state
statutes.
Confidential employees (individuals with access to confidential information, such as
management s bargaining strategies) and some family members (e.g., the confiden-
tial employees son, daughter, and spouse) are excluded, even if they work in bar-
gaining unit jobs. Similarly, an owner s family members who work in bargaining
unit jobs are typically excluded.

The interplay between a professional employee and a supervisor becomes more com-
plicated when the professional employee exercises some supervisory responsibility over
less-skilled employees. For example, nurses often direct the work of less-skilled aides and
others in clinics and hospitals. In 1994, the Supreme Court made it more difficult for
nurses in nursing homes to organize when it ruled that licensed practical nurses (LPNs)
were not employees under the NLRA because they attended to the needs of nursing
home patients and therefore acted in the interests of their employer. Then, in 2001, the
Supreme Court ruled that six registered nurses were not employees under the NLRA
because these nurses exercised a sufficient degree of discretion when they directed less-
skilled employees to provide services to patients.66 In 2006, the Board spelled out the sev-
eral standards for determining the inclusion or exclusion of nurses in the appropriate bar-
gaining unit: responsible direction, assignment, independent judgment, and rotating of
charge nurses. The Board concluded that in order to direct employees responsibly, a super-
vising nurse must be held accountable for the performance of the task and must have
authority to correct errors. In order to meet the assignment test, a supervising nurse
must have authority to designate another nurse to a place, time, or type of work. In
order words, a nurse who is determined to be a supervisor must have the necessary discre-
tion to make an assignment which requires independent judgment.

In a later case, the Golden Crest Healthcare Center, the Board determined that
nurses were employees, not supervisors, even though they executed supervisory authority
in assigning nurse assistants. The Board found that the charge nurses directed nurse
assistants and their performance was evaluated on that criteria; however, there was no
evidence that adverse consequences, e.g. discipline, would have resulted if the charge
nurse failed to adequately perform these duties.

The Board has since applied these standards in non-nursing cases. The Board deter-
mined that lead persons in a company were not supervisors even though they had a role
in hiring, disciplining, discharging, and evaluating employees. The Board determined
that these lead persons did not have authority to assign employees and that their discre-
tion was not greater than routine or clerical. Therefore, the Board determined the lead
persons authority did not require independent judgment.67

On occasion, the NLRB has to decide who the employer is. During the nationwide
fast food workers campaign involving employees of McDonalds, USA, LLC, and
numerous McDonald s franchises over protests to improve working conditions and
wages, 310 unfair labor practices charges were filed. Of those cases, 149 were settled,
but 109 cases were found to have merit. Approximately 10 cases involved solely
corporate-owned McDonald s facilities. However, in 2015, the NLRB found that
McDonald s through its franchise relationship was a joint employer with its franchises.
The NLRB found that McDonald s through its use of tools, resources, and technology
engaged in sufficient control over a franchisees operations shared liability for viola-
tions of the National Labor Relations Act.68

On occasion, the NLRB has to determine whether employee status exists. In a con-
troversial decision, the Northwestern University football players were determined by an

CHAPTER 5 Why and How Unions Are Organized 221

administrative law judge within the NLRB to be employees within the meaning of the
National Labor Relations Act and the NLRB conducted a representation election. How-
ever, on appeal, the Board ruled that the football players were not employees and did not
count the ballots,thereby voiding the election. In 1999, the Board had previously deter-
mined that interns, residents, and fellows at Boston Medical Center were employees.
Northwestern University argued that its relationship with student-athletes was primarily
education, not economic. The NLRB conducted the election in April of 2014 and the
ballots were impounded. The ballots would have been counted if the Board had decided
that the football players were in fact employees. In the meantime, the NCAA has pledged
greater scholarship protection and better health care for student-athletes and are offering
an increase in student-athlete monetary stipends.69

The determination of the appropriate bargaining unit and the jurisdiction of the
federal agency can also play an important role in determining whether a union will be
successful in its organizing effort. An interesting comparison between United Parcel Ser-
vice (UPS) and FedEx is highlighted in the Labor Relations in Action.

This NLRB s determination of the appropriate bargaining unit influences whether
the union will win the election, who will vote in the election, whether one union will
prevail in an interunion contest, whether craft employees will have their own union or
be included in a plant-wide unit, who the union must represent, who will be covered by
the collective bargaining agreement, or whether the union will include key employees
who could give direction and leadership for the bargaining unit employees.

Analysis of NLRB representation elections indicates that the success of a union cam-
paign depends on the composition of the appropriate bargaining unit. When the appro-
priate bargaining unit is composed of similarly skilled groups, the union will likely
succeed. This may be because decisions within unions are made through a democratic
process, and a degree of consensus is necessary to facilitate decision making and to win
the support of the majority. However, when different skill groups comprise the bargain-
ing unit, achieving consensus is more difficult, and majority support for the union like-
wise is harder to achieve and maintain. Thus, the NLRB s policy of including in a
bargaining unit all production and maintenance employees within a plant (which
would include a diversity of skills) may have contributed to the decline in union mem-
bership as a percentage of the total labor force. A more narrowly defined bargaining unit
composed only of employees of similar skills (such as electricians) would favor the union
winning the representation election and sustaining the continuation of the union.70

Suppose that the union wins and is successful in negotiating a union shop clause.
Recall that a union shop clause requires new employees to join the union within 30 days
after employment commences. The appropriate bargaining unit may determine which
employees will be required to join the union. Therefore, the composition of the bargain-
ing unit is important to the employer, the union, and the public.

Some companies pay attention to these considerations and take preventive steps
regarding management structure, employee interactions, and personnel policies and
practices. For example, if the company prefers a large multi-unit bargaining unit, it will
retain centralized control on management practices and decisions. If it prefers smaller,
independent units, it will decentralize decision making in these independent units.
Because the union has no control over management structure and the authority
responsibility relationship, it can try to convince the NLRB that the bargaining unit
should be composed only of those employees in specific job groupings where the major-
ity support the union.71

Should a plant have several small bargaining units, the employer may face different
unions in negotiations several times throughout the year, thereby potentially causing

222 PART 1 Recognizing Rights and Responsibilities of Unions and Management

continuous instability in labor relations and production. Separate units concerned with
similar jobs may cause disputes over rights to jobs, leading to grievances, strikes or slow-
downs. Should a small bargaining unit be merged with a nationwide bargaining unit, any
confrontation that resulted in a strike could cause a nationwide shutdown and complica-
tions for customers in need of the companies products. Chapter 6 covers the various
bargaining structures and their implications.

The appropriate bargaining unit itself usually covers employees in one plant, but
may cover two or more facilities of the same employer. The NLRB considers the com-
munity of interests in determining the composition of an appropriate bargaining unit. It
evaluates the following factors:

Interests of employees and employers
Commonality of wages, working conditions, training, and skill
History of collective bargaining either at the location in question or another facility
owned by the company
Transfers of employees among various facilities
Geography and physical proximity of the workplaces
Employer s administrative or territorial divisions
Degree of separation (or distinctiveness) of work or integration (or interrelatedness)
of work72

When the relevant factors do not give a clear indication for the composition of an
appropriate bargaining unit, an election (commonly called a Globe election, from the
original NLRB case) may be held to determine employee interests. For example, one
group of electricians in a steel plant might wish to be represented by the International
Brotherhood of Electrical Workers (IBEW) instead of the United Steelworkers of Amer-
ica (USWA). The USWA wants to include all electricians in a bargaining unit composed
of all production and maintenance employees in the plant. Under such circumstances,
the electricians vote will determine whether they will be members of USWA, a separate
electricians union (IBEW), or no union.

The U.S. Supreme Court supported the NLRB s first rule-making effort to determine
appropriate bargaining units for private acute-care hospitals. Eight standard bargaining
units were established for approximately 4,000 acute-care hospitals: (1) all registered
nurses, (2) all physicians, (3) all professionals except registered nurses and physicians,
(4) all technical employees, (5) all skilled maintenance employees, (6) all business office
clericals, (7) all guards, and (8) all other nonprofessional employees. Such rule-making
practices reduce the number of cases in which employers are able to contest the number
and composition of the appropriate bargaining unit. Previously, employers had some-
times intentionally challenged the composition of the bargaining unit in order to delay
the election and thereby increase the chances that the union would not win representa-
tional rights.73

In 2000, the Board ruled that, under the National Labor Relations Act, a group of
medical interns, residents, and fellows were employees and formed a proper bargain-
ing unit, even though they were students. This ruling overruled a previous ruling that
had excluded such individuals from bargaining units of employees. The Board rea-
soned that the interns, residents, and fellows were similar to apprentices, who had
been considered statutory employees for a long time. Later in 2000, the Board
extended its ruling and found that a group of graduate assistants (including teaching
and research assistants) at New York University were employees. The Board rejected
the university s contention that the graduate assistants were predominately students,
not employees.74

CHAPTER 5 Why and How Unions Are Organized 223

In 2004, with a Bush-appointed majority, the Board made a significant reversal and
ruled that graduate students were students, not employees, under the National Labor
Relations Act. This reversal came at a time when graduate student unionization was on
the rise in the United States. Over the previous decade, the number of graduate student
unions had grown from 10 to 30. New graduate student unions existed at several major
universities such as Temple, Michigan State University, University of Rhode Island, and
Columbia. It is estimated that 20 percent of all graduate students are now covered under
collective bargaining agreements.75 Most of these graduate student unions were orga-
nized and recognized in the public sector, which is governed by state labor relations
laws (covered in Chapter 13).

Eligibility of Voters. Before an election is conducted, voter eligibility must be deter-
mined. An employee is eligible to vote in a representational election if he or she is (1)
employed in a bargaining unit job; (2) employed during the eligibility period, which is
usually the payroll period immediately preceding the date a consent agreement is signed
or a directed election order is issued; and (3) employed on the date of the election. How-
ever, employees who are on sick leave, vacation, temporary layoff, or temporary leave,
such as military duty, may vote in the election. In addition, the NLRB will occasionally
consider irregularity of employment, such as in the construction, food processing, and
longshoring industries. Economic strikers who have been replaced by permanent
employees are allowed to vote in any election within 12 months after the strike begins.
This policy ensures that management does not provoke a strike and hire replacements
who could vote out the union. Employees hired after the union files its petition but
before the election may be challenged for their eligibility by the union.

Untimely Petitions. Several rules make a petition for a representation election
untimely. The election bar doctrine is a legal requirement that prohibits any NLRB

LABOR RELATIONS IN ACTION
Interesting Comparison: FedEx and UPS (United Parcel Service)

FedEx began operations in 1971 as an overnight air car-
rier of freight and mail. Because FedEx was an air carrier
and subject to airline regulations, it was covered under
the Railway Labor Act. The 4,500 to 5,000 pilots of
FedEx are now represented by the Air Line Pilots Asso-
ciation (ALPA), which is an AFL-CIO affiliate. Due to
expansion and its purchase of other companies, FedEx
employs about 100,000 truck drivers, package handlers,
dispatchers, and other FedEx Express ground transpor-
tation employees who remain nonunion.

UPS began in 1907 as a ground transportation car-
rier and is covered under the National Labor Relations
Act. UPS ground transportation employs over 200,000
employees, most of whom are represented by the
Teamsters. The 2,800 UPS pilots are represented by
the Independent Pilots Association (IPA), which remains
an independent union.

Under the National Labor Relations Act, employ-
ees can be organized on a location-by-location basis.

In other words, employees of a particular facility of a
nationwide company may organize a union to repre-
sent them at that one facility. Under the Railway
Labor Act, a union must organize employees through-
out the entire company who do similar work. For
example, if package handlers of FedEx Express
wanted to be represented by a union, a union must
organize these package handlers at all of the company
facilities, not at a single location or transportation hub.

Today, both companies are competitors, offer basi-
cally the same services, and are structured similarly.
However, any union that attempted to organize one or
more groups of the 100,000 FedEx employees would
be required to organize on a national basis, not at a sin-
gle location or facility.

SOURCE: Railroaded Out of Their Rights: How a Labor Law Prevents FedEx Express
Employees from Being Represented by a Union (Washington, D.C.: The Leadership
Conference on Civil and Human Rights, June 2010).

224

representation election where one has been held in the last 12 months or where a peti-
tion for election covers a group of employees who are already covered by an existing
contract and already members of a legally certified union.

The second rule and potential barrier to elections is an administrative determination
that was made in the interest of stable and effective labor relations. The NLRB rule,
called the contract bar doctrine, specifies that a valid, signed agreement for a fixed period
of three years or less will bar any representation election for the life of the agreement.
Thus, the contract bar doctrine could extend the 12-month statutory limitation on elec-
tions to three years. To do otherwise would be unfair to union and management officials
who have negotiated a multiyear labor agreement in good faith.76

Names and Addresses (Excelsior Rule). Within two business days after the regional
director of the NLRB has approved a consent election or after an election has been
directed, the employer must file with the regional director a list of names, mailing and
e-mail addresses, and phone numbers of all eligible voters. This information is then
made available to the union. Refusal to comply could be identified as an act of bad
faith on the part of the employer and cause the election to be set aside or require the
NLRB to seek the names and addresses by subpoena. The purpose of this disclosure
rule is to give the unions involved in an election access to employees contact informa-
tion that management already possesses.77 If there is a pre-election hearing, the employer
must now provide the employee list to the NLRB and union in one business day before
the hearing.

The Election. The representation election, acclaimed as one of the great innovations of
American labor law, is conducted by NLRB officials and is typically held within 38 days
(median) of the initial request.

In December 2015, the NLRB issued the new rules and procedures which will gov-
ern union representation elections. The NLRB stated that these new rules and proce-
dures are designed to remove unnecessary barriers to the fair and expeditious
resolution of representation questions, streamline litigation, eliminate duplication and
delay, increase transparency, and update NLRB procedures using modern communica-
tion technology. See Exhibit 5.7 for a comparison of the pre-2015 procedures and the
new procedures.

NLRB data show that about 90 percent of the eligible voters usually vote in NLRB
elections, as compared with about 50 percent in major political elections. The high
voter turnout in union representation elections might be due to the convenient voting
procedure (usually carried out on company property) and the belief of many employees
that their vote more directly affects their lives (at least their working lives) than do
political elections. Finally, both unions and management realize that an employee
could express union preference to a union representative in a face-to-face meeting
and an opposite preference to the management representative to avoid a confrontation
during the election campaign. Neither side is certain of employee voting preferences
when faced with a secret ballot; therefore, both union and management officials work
to get out the vote.

In March 2013, the National Mediation Board (NMB) changed its rules that govern
union representation elections for the airline and railroad industries. For 75 years, the
NMB required that in the absence of substantial employer interference, a majority of an
entire craft or class must affirmatively vote in favor of union representation before the
union would be certified as the bargaining representative for a group of employees.
Under the previous rule, if there were 100 employees in the bargaining unit, 51 must
actually vote for the union. If only 50 of the 100 voted for the union, the employees

CHAPTER 5 Why and How Unions Are Organized 225

Exhibit 5.7
Comparison of Pre-2015
and New Procedures

Pre-2015 procedures New procedures

Parties cannot electronically file election
petitions.

Election petitions, election notices and
voter lists can be transmitted
electronically

The parties and prospective voters
receive limited information.

Parties will receive a more detailed
description of the Agency s represen-
tation case procedures, as well as a
Statement of Position form, help parties
identify the issues they may want to
raise at the pre-election hearing.

The parties cannot predict when a pre- or
post-election hearing will be held.

The Regional Director will generally set
a pre-election hearing to begin 8 days
after a hearing notice is served and a
post-election hearing 21 days after the
tally of ballots.

There is no mechanism for requiring par-
ties to identify issues in dispute.

Non petitioning parties are required to
identify any issues they have with the
petition, in their Statements of Posi-
tions, generally one business day
before the pre-election hearing opens.

The employer is not required to share a
list of prospective voters with the NLRB s
regional office or the other parties until
after the regional director directs an elec-
tion or approves an election agreement.

The employer must provide a list of
prospective voters with their job classi-
fications, shifts and work locations, to
the NLRB s regional office and the
other parties, generally one business
day before the pre-election hearing
opens.

Parties may insist on litigating voter eligi-
bility and inclusion issues that do not have
to be resolved in order to determine
whether an election should be held.

The purpose of the pre-election hearing
is clearly defined and parties will gen-
erally litigate only those issues that are
necessary to determine whether it is
appropriate to conduct an election.

Parties may file a brief within 7 days of
the closing of the pre-election hearing.

Parties will be provided with an oppor-
tunity to argue orally before the close of
the hearing and written briefs will be
allowed only if they are necessary.

Elections are delayed 25 30 days to allow
the Board to consider any request for
review of the regional director s decision
that may be filed.

There will be no automatic stay of an
election.

The voter list provided to non-employer
parties to enable them to communicate
with voters about the election includes
only names and home addresses. The
employer must submit the list within 7
days of the approval of an election
agreement or the regional director s
decision directing an election.

The voter list will also include personal
phone numbers and email addresses (if
available to the employer). The
employer must submit the list within 2
business days of the regional director s
approval of an election agreement or
decision directing an election.

SOURCE: http://www.nlrb.gov/news-outreach/fact-sheets/nlrb-representation-case-procedures-fact-sheet

226 PART 1 Recognizing Rights and Responsibilities of Unions and Management

would continue to be unrepresented. The new rule requires a simple majority of those
who actually vote in the union representation election (similar to NLRB elections).
Now, if there are 100 employees in the bargaining unit and 80 employees actually vote
in the election, 41 of the employees must vote for union representation. The NMB also
changed another representation election rule. The NMB now requires not less than
50 percent (up from 35 percent) of the employees or class to have signed union authori-
zation cards before the NMB will hold a representation election.

Voter participation tends to decline the longer it takes for the NLRB to conduct
the election. Thus, some employers are motivated to refuse to consent to an election
in hopes of increasing the chances of the union losing the election. Because most
single-unit elections are close, the number of nonparticipants may affect the outcome
of many elections.78 A small number of votes greatly influences the outcome of the
election; research shows that a switch of eight votes would have changed the outcomes
of half the elections.79 Furthermore, small increases in the time to process cases are
important; a delay of ten days has proven to be a significant factor in differentiating
employer wins from employer losses. The number of pre-election days has also been
linked to union losses. During the first six months of delay, there is an average drop-
off in union victories of 2.5 percent per month. Consent elections have the highest
victory rate.80

The size of the election unit has tended to be negatively related to union victories.
The larger election unit is closely related to delay because it takes longer to process and
is more likely to result in a hearing than in a voluntary settlement.81 Success in union
organizing has been influenced positively by the size of the union and democracy within
the union and influenced negatively by the union s propensity to strike and centraliza-
tion of the union s decision making.82

Using a ballot with the appropriate company and union designations (Exhibit 5.8), a
secret-ballot election is conducted under NLRB supervision, usually during working
hours on payday at the employer s location. However, the NLRB has discretionary
authority to conduct it by mail ballot. The Board has encouraged the use of mail ballots
in representation elections under any of the following conditions: (1) eligible voters were
widely dispersed geographically; (2) eligible voters worked differing schedules and were
not present at common locations at common times; or (3) where there was strike, lock-
out, or picketing.83

The NLRB must determine whether the majority of employees in an appropriate
bargaining unit want to be represented by a union for collective bargaining purposes. It
defines majority as the simple majority rule generally accepted in democratic elections,
which means that those choosing not to vote in the election have decided to assent to
the wishes of the majority who did vote. Therefore, a majority of the employees who
vote (50 percent plus one of those casting valid ballots in the election) must favor repre-
sentation before a union will be certified by the NLRB.

If two or more choices are placed on the ballot, a runoff election may be necessary
between the choices receiving the two highest numbers of votes in the initial election.
If the majority votes no union, no representation election can be held for 12 months.
If a union receives the majority of the votes, the NLRB will certify it as the exclusive
bargaining agent of the employees in the bargaining unit. Interestingly, where more
than one union has vied for representation rights in the same election, unions have
fared extremely well.

Although only 4 percent of representation elections are multi-union elections (i.e.,
there is a choice between two unions), one of the competing unions is more likely to
win representation rights than in a single-union election. Also, multi-union elections

CHAPTER 5 Why and How Unions Are Organized 227

bring out a substantially high number of voters.84 The major reason for this positive vote
is that two unions would have to gain support from a sufficient number of the bargain-
ing unit s employees to be placed on the ballot. Such support usually indicates that the
employees have already decided to vote for a union; the election is conducted to deter-
mine which union will receive the majority vote.

After the votes have been counted, either party has seven calendar days to file objec-
tions alleging misconduct or to challenge the ballots of voters whom one party believes
should not have voted in the election. This part of the representation process receives

Exhibit 5.8
Examples of Secret Ballots
for Union Representation
Election

228 PART 1 Recognizing Rights and Responsibilities of Unions and Management

considerable criticism because of the delay in assessing ballot challenges, and objections
concerning misconduct often seem excessive.

In 2014, the NLRB conducted 1,260 representation elections. Unions won 68.0
percent, compared with 63.8 percent in 2009. In every year since 2002, unions have
won more than 50 percent of the NLRB-conducted representation elections. While
the unions have won a higher percent of representation elections, there are fewer elec-
tions, e.g. in the 1970s between 7,000 and 8,000 elections per year with the union win-
ning between 40 to 55 percent. The most active unions involved in representation
elections have been the Teamsters, the United Food and Commercial Workers
(UFCW), and the SEIU. The SEIU was the most successful union.85

In a study of 1,004 NLRB elections, employers threatened to close the plant in 57
percent of the elections, discharged workers in 34 percent, and threatened to cut wages
and benefits in 47 percent. Eighty-nine percent of employers required their workers to
attend captive-audience meetings during working hours. In 77 percent of the elections,
supervisors regularly talked to workers one-on-one about the union campaign with a
focus on threats of plant closings, wage and benefits cuts, and job losses. More than 60
percent used the one-on-one meetings to interrogate and harass workers about their sup-
port for the union.

Employers are less likely to make promises (offering carrots ), such as granting
unscheduled pay increases, making positive personnel changes, having special social
events, and proposing various forms of employee involvement programs.

Employers appeal most decisions by administrative law judges of the NLRB, especially
Gissel-type bargaining orders in hopes of having another election. The most egregious
employers use the appeals available to ensure that the case is delayed by three to five
years. The worst penalty an employer who is found guilty of unfair labor practices has to
pay is backpay to employees who were illegally terminated; the amount of backpay,
averages a few thousand dollars per employee.86

After the Election
As noted in Chapter 1, the first step of the labor relations process, the recognition of
legitimate rights and responsibilities of unions and management representatives, includes
more than the representation election. After unions win bargaining rights in a represen-
tation election, they attempt to negotiate their first labor agreement; however, they fail to
secure a first contract 25 to 30 percent of the time. Several factors increase the likelihood
of reaching agreement: existence of relatively high wages already at the company, pres-
ence of other bargaining units within the company, large election victories, and active
participation of international union representatives. Factors that reduce the chances of
attaining a first contract include location in a southern state with right-to-work laws,
the national union having to approve the local union s contract, presence of outside
labor management consultants hired by the company,87 NLRB delays in resolving
employer objections and challenges to election results, employer refusal to bargain in
good faith, and discrimination against employees after the election.88

Delays associated with filing objections to campaign conduct have increased threefold
over the last 20 years, and the median amount of delay time is now about 210 days.
Employers fail or refuse to bargain in good faith 13 percent of the time. This unfair labor
practice adds approximately 140 days. Additional delay can occur if appeals are made to
the full Board in Washington, D.C., or to a federal court of appeals or the Supreme Court.

In addition to the delays, there has been a sixfold increase in the number of
unfair labor practice charges for firing union supporters and an elevenfold increase
in the number of backpay awards. Employers discharge union activists or union

CHAPTER 5 Why and How Unions Are Organized 229

supporters for two main reasons: (1) to get the key union organizers out of the facil-
ity and (2) to send a chilling message to the rest of the workforce. With such statis-
tics, it does not appear that ethical considerations prevent all employers from
breaking the law.

Duties of the Exclusive Bargaining Agent and Employer
The exclusive bargaining representative (the union) chosen by the majority of the
employees in an appropriate unit has the duty to represent equitably and fairly all
employees in the unit regardless of their union membership and to bargain in good
faith with the employer. The employer has a comparable obligation; that is, to bargain
in good faith with the exclusive bargaining agent and to refuse to bargain with either
individual employees or any other union seeking to represent the employees. Further,
any negotiated labor agreement will cover all employees in the bargaining unit, regard-
less of their union membership status.

After Election Loss by the Union
After losing a representation election, typically the union reduces its activities because
there can be only one election every 12 months. However, there are some creative ways
in which the union can maintain contact with employees, particularly those who sup-
ported it during the campaign, and provide a representational service to those included
in the bargaining unit. Exhibit 5.9 shows alternative activities that could increase the
chances of success of any future unionization drive.

Proposed Mandatory Secret Ballot Elections versus Employee
Free Choice Act (EFCA)
The Secret Ballot Protection Act was introduced in the U.S. Congress in 2007 (and every
year since) to require secret ballot elections for union certification. If passed, this bill
would have made it an unfair labor practice for an employer to recognize or bargain
with a union that has not been selected by a majority of employees in a secret ballot
election conducted by the NLRB. It would have made it an unfair labor practice for a
union to cause or attempt to cause an employer to recognize or bargain with a union
that had not been chosen by a majority of employees in a secret ballot election. In
other words, voluntary union recognition by card check would have been prohibited.
This proposal legislation has, to date, failed to pass.

The bipartisan Employee Free Choice Act that was passed by the U.S. House of
Representatives (244 to 185) in 2007 contained three major provisions:

The NLRB would be required to certify a union if a majority of employees signed
union authorization cards which stated that the employee wants the union to rep-
resent him or her (see Exhibit 5.6 on p. 214).
A procedure for reaching the first collective bargaining agreement could be invoked
by either party if the two parties have not reached an agreement within 90 days (or
longer if both parties agreed) to request mediation by the Federal Mediation and
Conciliation Service. If mediation is not successful, after 120 days a first contract
would be subject to binding arbitration, resulting in a first contract in effect for a
two-year period.
Penalties for employer violations of certain unfair labor practices committed during the
union organizing campaign or the negotiation of the first contract would be increased.89

For example, a wrongfully discharged employee could receive triple backpay.

230 PART 1 Recognizing Rights and Responsibilities of Unions and Management

There are several arguments from the proponents of union recognition via card
check as well as proponents of mandatory secret ballot elections (see Exhibit 5.10 for
the common arguments).

The card check procedure for union recognition has a history in other countries.
A system of card check union recognition has operated successfully in the United
Kingdom under the Employment Relations Act since 2000. The United Kingdom s
equivalent to the NLRB will certify a union when over 50 percent of the workers sign
union membership cards, or it may call for an election if it believes the election would
be in the interest of good industrial relations. However, the practice has been that the
Board rarely requires an election when a majority of workers has signed the union
membership cards.90

Exhibit 5.9
Possible Activities for
Unions after Losing a
Representation Election

1. Maintain in-plant committees, designate employees as union stewards, identify
them with steward buttons, and through them, maintain contact with member
and nonmember employees.

2. Distribute employment-related union literature in the plant during nonworking
time and serve as the voice of employees on all matters of common
employment-related matters of concern.

3. Union stewards can present employee grievances to management. If manage-
ment refuses to meet with the union committee, employees may leave their
work as a group to request a discussion of their employment-related problems
directly with management. If the response is unsatisfactory, the union may
engage in a work stoppage; however, striker replacement rules apply.

4. A non majority union can provide a shield of concerted activity for an individual
employee who refuses to drive a faulty truck, reports Occupational Safety and
Health Administration (OSHA) violations, refuses to act in violation of personal
ethics or morality, or sues for unpaid overtime.

5. Help employees know and enforce their individual employment rights concerning
workers compensation, third-party tort claims, wage and hour violations, and so on.

6. In-plant committees help employees know and receive their entitlements, such
as medical benefits, sick leave, severance pay, pensions, unemployment com-
pensation, disability pay, and social security.

7. Inform employees of rights under common-law doctrines and exceptions to
employment-at-will doctrine, including employee manuals, employment con-
tracts, public policy exceptions, good faith exceptions, and tort suits involving
outrageous conduct, defamation, and invasion of privacy.

8. Reinforce OSHA statutory procedures: (1) establish in-plant safety committees;
(2) file complaints through the union; (3) serve as representative of employees
to accompany compliance officer on plant walk-around, discuss claims, and
participate in conferences; (4) act as representative of employees in the proceed-
ings before the OSHA; (5) enforce the Hazard Communication Standard by filing
complaints if employer fails to provide toxic training to employees and has not
prepared a written communication program; and (6) petition for information con-
tained on Material Safety Data Sheets.

9. Represent employees under plant closure laws, pregnancy leave acts, poly graph
and privacy acts, and whistle-blowing statutes.

10. Represent employees under unjust discharge procedures modeled after labor
arbitration.

SOURCE: Clyde W. Summers, Unions without Majorities: The Potentials of the NLRA, Proceedings of the 43rd Meeting of the
Industrial Relations Research Association (Madison, WI: IRRA, 1991), pp. 154 162.

CHAPTER 5 Why and How Unions Are Organized 231

In Canada, five provinces require secret ballot elections, and five provinces allow
card check union recognition. The province of British Columbia allowed card checks
until 1984; then from 1984 to 1992, secret ballot elections were required. In 1992, card
checks were allowed again. During the period when card checks were allowed, the union
success rate was 91 percent; when secret ballot elections were required, the success rate
was 73 percent. Also, during the period when card checks were allowed, there was an
average of 531 union-organizing drives per year; during the period when secret ballot
elections were required, the average was only 242.

In June 2007, the Senate failed to end a Republican filibuster by a vote of 51 to 48,
thereby preventing a vote on the merits on the Employee Free Choice Act. Although a
majority of senators would have voted for the act, 60 votes were needed to end the
filibuster.91

Exhibit 5.10
Most Common Arguments
Made by Proponents of
Union Recognition via
Card Check and Proponents
of Mandatory Secret
Ballot Elections

Proponents of Card Check
Recognition

Proponents of Mandatory Secret
Ballots

Card check recognition requires signa-
tures from over 50 percent of bargaining
unit employees (subject to verification by
the NLRB). A secret ballot election is
decided by a majority of workers voting.

Casting a secret ballot is private and
confidential. A secret ballot election is
conducted by the NLRB. Under card
check recognition, authorization cards
are controlled by the union.

During a secret ballot campaign, the
employer has greater access to
employees.

Under card check recognition, employ-
ees may only hear the union s point of
view.

Because of potential employer pressure
or intimidation during a secret ballot
election, some workers may feel coerced
into voting against a union.

Because of potential union pressure or
intimidation, some workers may feel
coerced into signing authorization cards.

Employer objections can delay a secret
ballot election.

Most secret ballot elections are held
within two months after a petition is filed.

Allegations against a union for unfair labor
practices can be addressed under existing
law. Existing remedies do not deter
employer violations of unfair labor
practices.

Allegations against an employer for
unfair labor practices can be addressed
under existing law. Existing remedies
do not deter union violations of unfair
labor practices.

Card check recognition is less costly for
both the union and employer. If only
secret ballot elections were required, the
NLRB would have to devote more
resources to conducting elections.

Unionization may cost workers union
dues; higher union wages may result in
fewer union jobs.

Card check and neutrality agreements
may lead to more cooperative labor
management relations.

An employer may be pressured by a
corporate campaign into accepting a
card check or neutrality agreement. If
an employer accepts a neutrality
agreement, employees who do not
want a union may hesitate to speak out.

SOURCE: E. Gerald Mayer, Labor Union Recognition Procedures: Use of Secret Ballots and Card Checks, Congressional
Research Service, The Library of Congress, 2005, Table 3, http://digitalcommons.ilr.cornell.edu/keyworkplace/237.

232 PART 1 Recognizing Rights and Responsibilities of Unions and Management

In 2008, with President Obama, a Democrat, and a Democratic majority in the U.S.
House and Senate, it appeared promising that the EFCA would pass. However, with the
death of Senator Ted Kennedy and election of Scott Brown, a Republican, in Massachu-
setts, the chances of ending a definite Republican filibuster were slim. Then, in 2010, the
Republicans gained a majority in the House, and the chances of passing EFCA grew even
slimmer.

Conduct of the Representation Election Campaign

Successful union recognition campaigns are dependent upon volunteers who help per-
suade employee-voters to vote for the union. Much of the work behind a successful cam-
paign involves such activities as arranging meetings and creating and distributing
information, and most of this work is done by volunteers. Even though there are no
immediate or explicit monetary rewards associated with this work, there are potentially
personal, political, and self-actualization rewards. Employees who have positive attitudes
toward unions are most likely volunteer to work on behalf of the union.92

All representation elections are conducted according to NLRB standards, which are
designed to ensure that employees in the bargaining unit can indicate freely whether they
want to be represented by a union for collective bargaining purposes. However, election
campaigns differ substantially, and the strategies of individual unions and employers
vary widely. For example, handbills similar to those in Exhibit 5.11 are often used in
addition to speeches, informal talks, interviews, and films. Thus, the election campaign,
one of the most interesting and controversial activities in labor relations, has led to a
body of doctrines and rules. Because Board members are appointed by the U.S. presi-
dent, the NLRB philosophy, doctrines, and rules are subject to change with changing
administrations.

Campaign Doctrines and NLRB Policies
The totality of conduct doctrine guides the NLRB interpretations of unfair labor prac-
tice behavior. This doctrine essentially means that isolated incidents such as campaign
speeches must be considered within the whole of the general circumstances of the cam-
paign and with the possibility that other specific violations have occurred.

Employer statements to employees may seem harmless on the surface, but under the
circumstances that exist at the time of the statements, they may carry implied threats.
For example, if an employer stated that a third-party intervention could make it eco-
nomically impossible for the company to continue in business, it would be making
an illegal statement during a union election campaign. However, if the employer made
the same statement during an attempted leveraged buyout, there would be no legal
violation.

The NLRB concluded that it would no longer probe into the truth or falsity of the
parties campaign statements but would intervene in cases where a party had used forged
documents that render voters unable to recognize propaganda for what it is. The Board
concluded that today s voters (employees) are more educated and sophisticated than their
historical counterparts and can analyze materials more accurately. This assessment was
influenced by a research study involving over 1,000 employees in 31 elections in 5 states.
This study cast doubt on the previously held assumption that employees are unsophisti-
cated about labor relations and are swayed easily by campaign propaganda. In fact, votes
of 81 percent of the employees could have been predicted from their pre campaign intent

CHAPTER 5 Why and How Unions Are Organized 233

and their attitudes toward working conditions and unions in general. The study concluded
that employees votes appeared to be the product of attitudes that resulted from their
everyday experiences in the industrial world and not from the campaign itself.93

The data used in the study were later re-analyzed, and the following additional
(some different) conclusions were made:94

Employee predisposition favoring the union is an important determinant of voting
behavior.
Written communications distributed later in the campaign and meetings held early
in the campaign most probably have an effect.
Threats and actions taken against union supporters are effective in discouraging
support for the union.

Thus far, these later analyses have not influenced the Board s position on election
campaigns.

Captive Audience 24-Hour Rule
One legal approach used by employers to discourage union support includes presenting
captive audience speeches, which are delivered to employees during working hours on

the employer s site, and employees are required to attend. The speeches, authorized by
the Taft-Hartley amendments in 1947, must not be presented within 24 hours of an
election, and the speech content must not include threats of reprisal or promises of ben-
efits. However, if the union has no acceptable means of communicating with the
employees, as in the mining, shipping, mountain resorts, and logging industries, where
employees live on company property, or if the employer s unfair labor practices have
created a serious election campaign imbalance, the NLRB and the courts may grant
the union access to plant bulletin boards, parking lots, and entrances so that it may
communicate with the employees. Still, it is extremely difficult for the union to respond
effectively by using its traditional means of contacting employees, such as plant
employee solicitations, distribution of literature before or after work, house calls, and
union meetings.95

Polling or Questioning Employees
Polling employees or asking questions about their interest in unions was considered
unlawful interference with employee rights in early days. In 1984, the NLRB announced
that it would no longer automatically consider an employer interrogation about an
employee s union sentiment an unlawful inquiry in violation of Section 8(a)(1). It
announced that it would examine the totality of the circumstances surrounding such
interrogations in light of the following:

1. The background of the interrogation
2. The nature of the information sought
3. The identity of the questioner
4. The place and method of the interrogation

Therefore, an employer s questioning of open and active union supporters and other
employees about their union sentiments in the absence of threats or promises does not
necessarily violate the law. However, NLRB decisions since 1984 reveal that employers
are still at great risk with these interrogations because it is necessary only to establish
that the questions asked may reasonably be said to have a tendency to interfere with
the free exercise of an employee s rights under the act.96

234 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Distribution of Union Literature and Solicitation by Employees
on Company Property97

Distribution of union literature can be banned in work areas at all times. Union solicita-
tion can be banned only during work time, for example, the time when the employee is
expected to be engaged in performance of regular job duties.

The NLRB and the courts have long held that except in special circumstances,
employees may not be prohibited from distributing union-organizing materials or solicit-
ing union support in nonworking areas during nonworking time98 unless the employer
can show that such activity would disrupt production, employee work, and plant disci-
pline. For example, employees of restaurants and retail establishments cannot distribute
union materials in customer areas, but they can solicit in employee-only break rooms.99

Courts allowed no-solicitation rules that permit exceptions for beneficial acts that
may reasonably promote employee morale. These include collecting money to buy a
cake for an employee who is leaving, asking for contributions to purchase a blazer as a
gift for an employee who is leaving, asking for contributions to buy a gift for the Chef s
wife who is expecting a baby, and collecting money to buy a gift for an employee who is
leaving or is having a birthday.100

No-solicitation rules in health care facilities are allowed when the rules are applied
to patient s rooms, sitting rooms, operating rooms, and any other place patients receive
treatment which affects the patient s recovery. No-solicitation rules are prohibitive when
applied to cafeterias, coffee shops, gift shops, and lobbies, which are areas that have no
effect on patient care and may be visited by the general public.

In addition, the employer cannot prohibit distribution of union materials if the basis
for the prohibition is that part of its content includes political issues, such as right-
to-work laws and minimum wages.101 Nor can the employer prohibit employees from
wearing buttons, hats, or T-shirts promoting the union.

Some employers publish no solicitation rules that prevent employees from discuss-
ing union organizing on working time. However, to be enforceable, these no-solicitation
rules must be posted in advance of the organizing drive, and these rules must prohibit all
types of solicitation by employees with limited exceptions for broad-based community
charities such as the United Way.

The employer may limit the type of information distributed to employees by classi-
fying company data as confidential. The NLRB has upheld the discharge of five
employees who distributed wage data comparing the company s wage scale with that of
other plants in the area. The NLRB found that the company had declared this wage
information to be confidential and that it had not been obtained in the normal course of
employment.

Showing Films during Election Campaigns
Films presented to discourage workers from joining unions have taken on new dimen-
sions, especially since the 1950s, when the movie And Women Must Weep was produced
by the National Right-to-Work Committee. This docudrama movie portrays union vio-
lence, strikes, vandalism, phone threats, a house bombing, and even the shooting of a
baby of a dissident union member. Frequent use of the film by employers prompted
the International Association of Machinists to produce a rebuttal film, entitled Anatomy
of a Lie, which claims no evidence exists of a connection between violence and the
union s activities. On-site interviews with persons involved in the strike are shown to
reveal an opposite view of the employer film, and the president of the union is filmed,

CHAPTER 5 Why and How Unions Are Organized 235

stating that nearly 99 percent of the union members voted to strike. The NLRB s position
on the showing of these films has varied; its current position is that their showing alone
does not constitute an unfair labor practice and is not sufficient cause to have the results
of an election set aside, it is the totality of the employer s conduct that is important.102

Use of E-Mail, Internet, and Social Media
Technology is transforming the way in which unions are able to communicate with
employees during organizing campaigns. In 2015, there were 1.35 billion Facebook
users and 288 million twitter users. The AFL-CIO has its own Internet provider.
Workingfamilies.org allows it to contact 13 million people who are interested in legisla-
tive and political campaigns, organizing drives, and product/consumer boycotts. Unions
are creating recruiting videos and testimonials for posting on YouTube. Social network-
ing via MySpace and Facebook is used as part of the union s organizing efforts. In addi-
tion, workers are increasingly seeking information on how to organize by contacting
unions via e-mail and connecting to unions Web sites.103 The AFL-CIO allows indivi-
duals to sign up for e-mail messages from the AFL-CIO and has a link to the AFL-CIO s
Organizing Institute with information, such as How to Join a Union, Find Your
Union, and State and Local Labor Contacts. Change to Win (CTW) allows individuals
to sign up for e-mail messages about organizing campaigns and also to Join the
Movement. 104

During a union organizing campaign when social media is involved, the NLRB
is required to determine whether the actions by an employee or employees is a group
activity which is a protected concerted activity under Section 7 of the National Labor
Relations Act. For example, if an employee posts on Facebook

We need a union here. We got no pension and no job security. My supervisors can
fire me whenever he wants to.

Other employees who use Facebook review the content and clicks on the button
which looks like a thumbs up. Other employees click on Like. (Or with Twitter,
there is a favorite tweet that can be retweeted to others.) Questions arise:

Are other employees indicating they like the message?
Are the other employees joining the group?
Are these actions considered a group activity that is protected?

Further, what happens if an employee not only clicks on Like, but adds in the com-
ment section., I agree. We need a union here!!! If any of the employees who clicked on
Like and/or added comments are disciplined as a result of their actions, are they pro-

tected under Section 7? To add complications, what if the employees used company equip-
ment and sent their message on Facebook during their working hours.105

Employees use of e-mail and employer e-mail policies have been an issue before the
NLRB. In a controversial 3 2 decision in 2007, the Board majority upheld an employer
policy that banned employees from using the company s e-mail system to urge support
for groups or organizations (e.g., a union) while permitting employees to send personal
e-mails during nonwork time (e.g., for sale notices, wedding announcements). The
e-mail system was viewed as employer property which employees have no statutory
right to use under Section 7, LMRA.106

However, after an appeal to the Circuit Court of Appeals of the District of Colum-
bia, the court reversed part of the Board s decision. The court held that an employer vio-
lates the National Labor Relations Act when it disciplines an employee who disseminates

236 PART 1 Recognizing Rights and Responsibilities of Unions and Management

union-related solicitations under an employer s e-mail policy (prohibiting all e-mails for
non-job-related solicitations) but allows other types of solicitations such as hawking
bikini lotion, organizing charitable or social functions, sending e-mails with jokes, births,
lunches, poker games, sending mass solicitations of sports events, party invitations,
requests for dog walking services, etc. 107

In December 2014, the NLRB found that employees have a presumptive right to use
their employer s email system to engage in communication relating to concerted activities
protected by Section 7 of the National Labor Relations Act including union organizing
during nonworking time. The employer may rebut this presumption by demonstrating
that there are special circumstances necessary to maintain production and/or discipline
which would restrict employee rights; however, the NLRB stated that such circumstances
will be rare. The Board reiterated that employees did not have Section 7 rights to use
employer property such as bulletin boards, telephones, fax and copy machines, and public
address systems. The Board noted that employee email use rarely interferes with others
use of the email system and email use rarely adds significant usage costs. In addition, the
Board acknowledged that an email system function is an ongoing and interactive means of
employee communication which is conducted in a way that other older types of commu-
nication equipment clearly do not.108

New Union Strategies
In response to employers strategies to maintain nonunion status, unions have had to be
creative in their actions. Some well-publicized strategies by unions include (1) instituting
cyberspace organizing with the Internet, whereby employees can simply enter the search
words how to organize and receive on-line information on union organizing; and (2) hir-
ing union salts, whereby a union organizer applies for a job within a targeted company,
goes to work, and solicits for union membership as an employee (see the Labor Relations
in Action feature on p. 239).

Some recent union successes have come from corporate campaigns such as Justice for
Janitors, which mobilized over 200,000 janitors across the United States, many of whom
were immigrants. In Los Angeles, the campaign relied on tactics such as marches and
civil disobedience, which required extensive participation by the membership. Through
boycotts, mobilization of immigrant community organizations, public awareness cam-
paigns, and support from the Department of Labor, UNITE-HERE was able to organize
immigrant workers employed by contractors who provided supplies to fashion designers.
After the traditional NLRB procedure was a completely ineffective approach.109

Other campaigns include the Fight for 15, http://www.fightfor15.com/, which
launched a major campaign for $15.00 per hour on April 15, 2015, and for the right to
join a union without retaliation. Aimed primarily at Walmart and McDonald s, Fight for
15 is also directed toward all fast food employers and retailers who pay their workers less
than $15.00 per hour. Fight for 15 claim to have hundreds of thousands supporters in 35
countries.110 The AFL-CIO established a Strategic Organizing Fund and provided a plan to
rebate $15 million to affiliated unions that met high standards in union organizing.111

Also, there have been suggestions that new forms of unions be created. Richard
Freeman has proposed a new form of unionism open source unionism wherein
union membership does not depend on unions proving that they have majority support
of employees and negotiating collective bargaining agreements. Open source unionism
builds a common collaborative platform, language, and practice among workers who
may operate at some distance from each other and at different work sites. Union mem-
bership would be defined more in terms of shared values and actions than collective bar-
gaining with an employer. Representation would be extended to individual workers

CHAPTER 5 Why and How Unions Are Organized 237

rather than members of a bargaining unit and would continue to extend to the members
as they move from employer to employer. Using the Internet, unions would be able to
connect with this diverse and dispersed membership. This form of open unionism could
appeal to a tremendous source of untapped union members who may be organized away
from their workplace and away from their employer s opposition. Forty-two million
workers have expressed a need for some form of representation, and open source union-
ism could appeal to professional workers and others who need assistance with their
employment contracts, overtime regulations, pensions, and health care benefits, but
who believe that the traditional form of union representation through collective bargain-
ing may not be appropriate for them.112

Removing a Labor Union

An employer may raise a good faith doubt as to whether its union represents the
majority of employees. The NLRB and the courts have developed presumptions and
rules related to determining good faith doubt. First, there is a presumption of majority
status for one year following certification by the Board. The second presumption is that
majority status continues for up to three years if the collective bar gaining agreement
extends for three years. At the end of the certification year or the expiration of the
three-year collective bargaining agreement, the employer may rebut the presumption
of the union s majority status by presenting objective evidence that the union
does not continue to represent the majority of bargaining unit employees. Examples
of this good faith doubt evidence include (1) a reduction in dues-paying members,
(2) a high percentage of employees crossing a union picket line during a strike,

Exhibit 5.11
Examples of Handbills Distributed During Representation Election Campaigns

MISLEADING PICTURES
NEWSPAPERS

238 PART 1 Recognizing Rights and Responsibilities of Unions and Management

LABOR RELATIONS IN ACTION
Union Salting: A New Union-Organizing Tactic

Town & Country Electric, a nonunion electrical con-
tractor, needed to hire several licensed Minnesota
electricians for construction work within Minnesota
and advertised the positions through an employment
agency. Eleven union applicants, including two profes-
sional union staff members, applied for jobs. Only one
union applicant was interviewed; he was hired but
was subsequently dismissed after only a few days
on the job.

The IBEW filed a complaint with the NLRB against
Town & Country. The complaint was that the company
refused to interview applicants and refused to retain
union members because of their union membership,
which was in violation of the National Labor Relations
Act (NLRA).

An administrative law judge and the Board deter-
mined that all of the union applicants were employ-
ees under the language of the NLRA. Although the
applicants had not been hired, applicants are covered
under the prohibition of discrimination in regard to
hire under the NLRA. The board found it immaterial
that the union applicants intended to try to organize
Town & Country employees upon securing employ-
ment, as well as the fact that the union would be paying
these employees to organize a union.

The U.S. Court of Appeals for the Eighth Circuit
reversed the NLRB and held that the board had incor-
rectly interpreted the definition of employee in the
NLRA. The Court ruled that the NLRB did not protect
employees who were working for a company while
simultaneously being paid by the union to attempt to
organize employees of the company.

The U.S. Supreme Court determined that the
NLRA sought to improve labor management relations
by granting employees the right to organize, form
unions, join unions, and assist in organizing unions.
The high Court ruled that the meaning of the word
employee was critical and that the language and defi-
nition of employee includes paid union organizers. The
Court noted that the NLRB was created to administer
the NLRA and will be upheld when its rulings are rea-
sonably defensible. The Court indicated that it relied
on the NLRB s expertise and congressional intent in
its rulings. Furthermore, the Court ruled that Congress
had delegated the primary responsibility for developing
and applying national labor policy and that the Board s
views are entitled to the greatest deference by the
courts. The principal difference between salting
and the traditional organizing is that salting is a

top-down approach and traditional organizing is a
bottom-up approach. Union salting may be called

covert or overt. Covert salting is like a Trojan horse in
that a full-time union organizer applies to a help-
wanted ad placed by non-union businesses. The
union organizer does not reveal that he or she is
employed by the union. The employer does not con-
duct a background or reference check, and the union
organizer is hired by the employer. Once employed,
the union organizer initiates an organizing campaign.
Overt salting occurs when the union organizer reveals
in the application process that he is employed by the
union. If he is denied employment due to his union
affiliation, he files a charge of an unfair labor practice
against the employer for discriminating against him
because of his union membership.

Refusal-to-hire cases have three criteria by which
cases are analyzed. First, there must be evidence that
the employer was hiring or had concrete plans to hire at
the time of the unlawful conduct. Second, the applicant
must have been qualified for the job. Third, there must
be anti-union reason that contributed to the decision not
to hire the applicants.

Once these criteria are met, the burden shifts to the
employer to show that it would not have hired the appli-
cant even in the absence of his/her union activity or
affiliation.

Since the Town & Country Decision
Since the Town & Country decision, there has been a
53 percent increase in overt salting activities and a 47
percent increase in covert salting. By 2001, there were
55 union salting unfair labor practices cases before the
NLRB. Of the 55 cases, 6 were dismissed and 3 were
remanded to the administrative law judge. In 43 cases,
the charges were upheld by the NLRB. These charges
were associated with monetary penalties of back pay.
These charges included unlawful discharge, unlawful
layoff, refusal to consider for employment, refusal to
recall from layoff, unlawful suspension, and refusal to
reinstate strikers. Interestingly, nonunion contractors
may join the Associated Builders and Contractors
and take out salting insurance, which pays legal fees
and up to 90 percent of back pay awards issued by the
NLRB.

The appellate courts have cut back on some union
salting activities by finding that an employer may fire a
union salt if he or she falsified his or her employment

application to obtain a job or the union salt violated a

239

(3) resignations from the union, or (4) a petition by employees without company
involvement.113 (See Exhibit 5.12 for other examples of objective evidence.)

From 1951 to 2001, an employer could lawfully withdraw recognition from an
incumbent union if it could show that the union no longer had the support of a majority
of the bargaining unit or had a good-faith doubt, based on objective evidence, of the
union s majority status. The Board has indicated that it is entirely appropriate to
place the burden of proof on the employer to show that there is an actual loss of major-
ity support for the union. In 2001, the NLRB ruled that where there have been no unfair
labor practices that tended to undermine the employees support for the union, loss of
majority would be the sole legal basis for withdrawing recognition from an incumbent
union. The Board eliminated the good-faith doubt requirement and now provides for
the employer to seek a new representation election if the employer can show a reason-
able uncertainty that a majority of employees still support the union. The logical conclu-
sion is that employers should not be allowed to withdraw recognition of the union short
of a new representation election.114

lawful moonlighting policy that does not allow
employees to hold two jobs at the same time. In other
words, the court found that the dual employment rule
was lawful if applied in a nondiscriminatory manner.

SOURCES: Jeffrey A. Mello, The Enemy Within: When Paid Union Organizers
Become Employees, Labor Law Journal, 47 (October 1996): 677 679; NLRB v.
Town & Country Electric, Inc., 116 S. Ct. 450 (1995); NLRB has developed

guidelines in FES (a Division of Thermo Power) 331 N.L.R.B. No. 20, May 5,
2000. See also Cory R. Fine, Union Salting: Reactions and Rulings since Town
and Country, Journal of Labor Research, 23 (Summer 2002): 475 483; Jeffrey A.
Mello, Putting a Big Chill on a Big Hurt : Genuine Interest in Employment of
Salts in Assessing Protection under the National Labor Relations Act, Employee
Rights and Responsibilities Journal, 21 (2009): 40. Also see NLRB v. FES (a
Division of Thermo Power), 301 F.3d. 83, 3rd Cir., 2002; Oil Capitol Sheet Metal,
Inc., 349 NLRB No. 118, May 31, 2007; Jeffrey A. Mello, Putting a Big Chill,
Employee Rights and Responsibilities Journal, 21 (2009): 37 49.

Exhibit 5.12
Examples of Objective
Evidence* of Union s Lack
of Majority Status

1. Unsolicited communications from employees expressing a desire to become
unrepresented

2. Any material change in the size or composition of the unit, such as a reduction in
the number of employees

3. Date of union certification
4. Failure of the union to appoint a shop steward or committee
5. Failure of the union to process grievances
6. Failure of the union to actively represent employees on matters arising under the

contract
7. Failure of the union to hold meetings that could be attended by the employees
8. Failure of the employees to attend union meetings
9. Failure of a majority of employees to authorize a dues check off if the contract

provides for one
10. Whether the union has communicated a lack of interest in representation to

either the company or the employees
11. Whether employees have filed or attempted to file a decertification petition of

their own.

* Objective evidence is defined as reasonable grounds to believe that an incumbent union no longer represents a majority of bar-
gaining unit employees.

SOURCE: Clyde Scott, Kim Hester, and Edwin Arnold, Employer-Initiated Elections, 1968 1992, Journal of Labor Research, 18, Spring
1997, p. 317.

240

Whenever employees believe that the union is not representing their interests, they
may turn to a decertification procedure. Researchers have identified a variety of reasons
for such a shift:

Fair treatment of employees by employers
Poor job by unions (especially smaller unions) of providing services to members
Inability of unions to negotiate an effective first contract after winning bargaining rights
Striking employees having skills that can be easily replaced115 so that when a strike
occurs, the employer hires replacements

Any employee, group of employees, or employee representative may file a petition
for a decertification election 12 months after the union has been certified or upon expi-
ration of the labor agreement (see the contract bar doctrine discussion earlier in this
chapter). This petition must be supported by at least 30 percent of the bargaining
unit employees.

If the employees choose to decertify their union, another representation election
cannot be held for 12 months. However, after a valid petition is filed with the NLRB,
but before the election, the employer must still bargain with the union until the question
of union representation is resolved.

Although employers must be careful of their role in the decertification process, they
have exhibited growing interest in it. For example, a one-day seminar, The Process of
Decertification by Executive Enterprises, is designed to teach management representa-
tives about the entire process of decertification. Many employers have concluded that
they should become more involved, especially because they are becoming aware that
they do not necessarily have to play a passive role in the decertification process.

Employers may become active participants in the decertification efforts after the
petition is filed; however, they should do so only after analyzing the costs and benefits
of such a strategy. For example, if the company actively campaigns against the present
union and the union wins the election and continues to represent employees, the long-
term relationship with the union may be irreparably damaged. Moreover, if the com-
pany s relationship with the present union is reasonable and productive, it might be
wiser to retain it than chance a later replacement by a more militant union.

If the employer chooses to become engaged in the decertification campaign, similar
representation election rules and policies apply. For instance, after the petition is filed
with the NLRB, the employer may communicate with employees and forcefully state its
opposition to the present union, lawfully respond to employee questions, and inform
them about the decertification election process. The employer may conduct captive audi-
ence speeches, send letters to employees, and conduct small group discussions during the
decertification election campaign. Management may tell employees about the employer s
perception of the disadvantages of the union and that the employer prefers to deal
directly with individual employees instead of through a third party and wants to build
a trusting, team-oriented relationship with employees, not an adversarial one. At the
same time, employers must be careful not to plant the idea of decertification in the
minds of employees by offering unsolicited advice, distributing booklets that explain
how to decertify the union, or circulating a decertification petition. During the union
decertification campaign, union officials obviously will attempt to convince employees
of the benefits of continued union representation.116

Decertification campaigns are conducted by unions and management in a manner
similar to certification campaigns. Decertification elections are usually initiated by a
group of employees who are not satisfied with the working conditions and economic
provisions achieved by the union through collective bargaining. During the campaign

CHAPTER 5 Why and How Unions Are Organized 241

period, the union officials prefer to use handbills, conduct personal visits, and make
special pleas with members to refuse signing any decertification petition. Management
prefers to rely on legal counsel and small group meetings with employees. Researchers
have found both management and the unions have been successful in their campaigns
when they emphasize personal contacts with employees and listen genuinely to their
concerns, instead of mailing letters and giving out handbills.117

Employers must be aware of related unlawful activities, such as the following:

Obtaining NLRB forms for employees who may be interested in union
decertification
Providing services such as typing, assistance in phrasing the petition for decertifica-
tion, and use of company stationery by employees who are interested in launching a
decertification campaign
Initiating discussions on how or whether to decertify the union118

Unions respond to any challenge to their existence as the certified representative of
the bargaining unit employees by attempting to convince the employees that there are
reasons to continue their union membership and representation and not to seek decerti-
fication. Unions do this by improving the level of services to the employees and by
attempting to gain improvements in benefits through negotiation.

The number of decertification elections and the percentage of elections lost by
unions have remained steady over the last five years. The number of elections was 180,
and 33 percent of the elections were won by unions.119

Researchers have identified several explanations for union decertification. First, the
affiliation status of the local union involved in the union decertification election with an
international union is important because affiliated unions have greater resources avail-
able to hold membership support and ultimately to retain union representation. Where
employees face income and employment opportunities that are limited to part-time and
low-wage employment, support for union retention is significantly lower. For those
employees whose income from part-time employment is relatively small, the expense of
continuing to support the union is reduced. These reasons may help to explain such cor-
porate strategies as moving to small southern towns where alternative employment is
relatively sparse and there is a proportional high percentage of part-time employees.

Employees, like employers, must be aware of possible consequences of their activities
related to attempting to decertify the union. Decertification advocates must be prepared
for pressure from union officials and isolation from fellow employees who are pleased
with the union. The NLRB has upheld the union s right to discipline union members
who actively participate in the campaign to decertify the union, as long as the disciplin-
ary action does not affect the employee s employment status.120

Summary
This chapter provides insights into reasons unions
are formed. It discusses the most important theories
and explanations ranging from alienation and class
consciousness to the employees backgrounds and
personal desires. The role of a union is to fulfill
employees perceived needs and answer job-related
concerns. Unionization efforts progress from first
contacts with employees to signing the authorization

cards, petition for election, hearings, determination
of the appropriate bargaining unit, and the eventual
representation election. Within this framework
numerous rules, regulations, and legal requirements
govern the union certification process. The proce-
dures by which employees can be formed into unions
through voluntary recognition, NLRB directives, and
secret-ballot elections are explained.

242 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The chapter presents the arguments for and against
the proposed Employee Free Choice Act and the Manda-
tory Secret Ballot Protection Act. The Employee Free
Choice Act was passed by the U.S. House of Representa-
tive. A majority of senators supported its passage, but there
was not enough support to bring the act to a vote. Even if
the act had passed, President George W. Bush would have
vetoed it. After subsequent elections, the prospects for
passing the Employee Free Choice Act appear dim.

Unions have launched new strategies to organize
unrepresented employees, such as internet and social
media. The AFL-CIO and CTW have introduced sev-
eral new programs.

When the union is judged by employees as not
representing their interests, a decertification procedure
is available through the election process. Generally,
only a few employees and only small bargaining units
have been involved in decertification elections.

Key Terms
alienation theory, p. 198
Scarcity Consciousness Theory, p. 199
union instrumentality, p. 203

Consent election, p. 219
Directed elections, p. 219
contract bar doctrine, p. 225

totality of conduct doctrine, p. 233

Discussion Questions

1. Refer to the reasons employees become members
of unions to assess the means used by union
organizers to meet these needs.

2. Select an organization with which you are famil-
iar, and determine the number of bargaining units
that would be appropriate.

3. Explain the contract bar doctrine. How would it
influence the negotiation of the first labor agreement?

4. Appraise the shifting positions of the NLRB on
representation election campaigning.

5. Prescribe a do and don t list for supervisors
involved in unionization campaigns so that they
will not commit any unfair labor practices.

6. Why do you believe employers are becoming
more interested in decertification elections?

7. Explain the following statement: It is not the
union that organizes the employees; it is
management.

8. What would be a good response from a union
organizer for each statement in the Labor Rela-
tions in Action feature on page 239?

9. Review the arguments for and against the
Employee Free Choice Act and the Mandatory
Secret Ballot Protection Act. How would you
vote? Give your reasons.

Exploring the Web

1. AFL-CIO Organizing Institute
(http://www.afl-cio.org/aboutus/oi)
The mission of AFL-CIO s Organizing Institute is to
identify, train, and develop union organizers. This
Web site has a schedule of training classes, frequently
asked questions about the institute, information about
a union organizer, and testimonies of graduates.

2. Union Organizing
Delta Airlines. Type Union Organizing Delta Air-
lines in a search engine (e.g., Bing, Google, Yahoo)
for articles and commentary related to the 2010

union campaign and the continuing efforts by
Delta Airlines and unions.
Wal-Mart. Type Union Organizing Wal-Mart in a
search engine for the latest on the United Food and
Commercial Workers Union campaign to organize
Wal-Mart employees in the United States and Wal-
Mart s recognition of unions in Canada (Quebec) and
China (All-China Federation of Trade Unions).

3. Role of Supervisors in Unionization Campaign
To learn about the role of supervisors in a unionization
campaign, type Union Organizing Role of Supervisors

CHAPTER 5 Why and How Unions Are Organized 243

in a search engine. You will find multiple sources, articles,
books, advising comments from law firms, and so on.

4. Union Salts
For up-to-date information and a review of NLRB
decisions, review Michael C. Duff, Union Salts on
Administrative Private Attorney General, Berkeley
Journal of Employment and Labor Law, 32 (Spring
2011) (http://www.boalt.org/BJELL/).

5. Employer Positions of Labor Laws and Labor
Relations
Go to http://www.nam.org (National Association of
Manufacturers) and http://www.uschamber.com/
issues/labor (U.S. Chamber of Commerce) for the
latest positions of proposed labor legislation and
related matters.

6. For NLRB Updates http:www.NLRB.org/

References
1. Kai Erikson, On Work and Alienation, Ameri-

can Sociological Review, 51 (February 1986), p. 2.
For examples of this situation, see Michael
Hanagan and Charles Stephenson, Confrontation,
Class Consciousness, and the Labor Process (New
York: Greenwood Press, 1986).

2. Clinton S. Golden and Harold Ruttenberg,
Motives for Union Membership, in Unions,

Management, and the Public, ed. E. Wight Bakke,
Clark Kerr, and Charles W. Anrod (New York:
Harcourt, Brace, 1948), p. 49.

3. Steven E. Abraham, Barry A. Friedman, and
Randall K. Thomas, The Relationship among
Union membership, Facets of Satisfaction and
Intent to Leave: Further Evidence on the Voice
Face of Unions, Employee Responsibility and
Rights Journal, 20, 2008, p. 10.

4. William J. Bigoness, Correlates of Faculty Atti-
tudes toward Collective Bargaining, Journal of
Applied Psychology, 63, 1978, pp. 228 233; Che-
ster A. Schreisheim, Job Satisfaction, Attitudes
toward Unions, and Voting in a Union Repre-
sentation Election, Journal of Applied Psychology,
63, 1978, pp. 548 552; J. G. Getman, S. B. Gold-
berg, and J. B. Herman, Union Representation
Elections: Law and Reality (New York: Russel
Sage Foundation, 1976; Edward L. Harrison,
Employee Satisfaction and Voting Behavior in

Union Representation Elections, in Toward
Renewal of Management Thought and Practices,
ed. Dennis F. Ray and Thad B. Green (State
College, MS: Southern Management Association,
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5. Jeanette A. Davy and Frank Shipper, Voter
Behavior in Union Certification Elections: A
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6. Barry A. Friedman, Steven E. Abraham, and
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ees Desire to Join and Leave Unions, Industrial
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7. Labor Day 2005: The State of Working America,
survey conducted by Peter D. Hart Research
Associates for the AFL-CIO, August 2005, p. 6.

8. Selig Perlman, A Theory of the Labor Movement
(1928; reprinted New York: Augustus M. Kelley,
1968), p. 242.

9. Roger D. Weikle, Hoyt N. Wheeler, and John A.
McClendon, A Comparative Case Study of
Union Organizing Success and Failure: Implica-
tions for Practical Strategy, in Organizing to
Win, ed. Kate Bronfenbrenner et al. (Ithaca, NY:
Cornell University Press, 1999), pp. 199 203.

10. Hoyt N. Wheeler and John A. McClendon, The
Individual Decision to Unionize, in The State
of the Unions, ed. George Strauss, Daniel G Gal-
lagher, and Jack Fiorito (Madison, WI: IRRA,
1991), pp. 65 67.

11. Joel Seidman, Jack London, and Bernard Karsh,
Why Workers Join Unions, Annals of the

American Academy of Political and Social
Sciences, 274, March 1951, pp. 775 784.

12. Arthur D. Martinez and Jack Fiorito, General
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dictors of Union Voting Intent, Journal of Labor
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13. E. Wight Bakke, Why Workers Join Unions,
Personnel, 22, July 1947, p. 3.

14. J. G. Getman, S. B. Goldberg, and J. B. Herman,
Union Representation Elections: Law and Reality
(New York: Russel Sage Foundation, 1976). See
also Henry S. Farber and Daniel H. Saks, Why
Workers Want Unions: The Role of Relative
Wages and Job Characteristics, Journal of

244 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Political Economy, 88, April 1980, pp. 349 369;
Jack Fiorito and Charles R Greer, Gender Dif-
ferences in Union Membership, Preferences and
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pp. 145 164.

15. Farber, Why Workers; Stephen M. Hills, The
Attitudes of Union and Nonunion Male Workers
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16. Hoyt N. Wheeler and John A. McClendon, The
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17. J. M. Brett and T. J. Hammer, Organizational
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18. Satish P. Deshpande and Chockalingam Viswer-
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Specific Beliefs, General Beliefs, and Normative
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19. Satish P. Deshpande and Jack Fiorito, Specific
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20. Thomas A. DeCottis and Jean-Yves Le Lovarn, A
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H. Mobley, The Impact of Work Environment,
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Image, and Subjectivity Norms on Union Voting
Intentions, Academy of Management Journal, 27,
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Behavior in Union Representation Elections: A
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November 1, 1995, pp. 13 32.

21. Stuart A. Youngblood, William H. Mobley, and
Angelo S. DeNisi, Attitudes, Perceptions, and
Intentions to Vote in a Union Certification Elec-
tion: An Empirical Investigation, Proceedings of
the Thirty-Fourth Annual Meeting: Industrial

Relations Research Association, ed. B. D. Dennis
(Madison, WI: Industrial Relations Research
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Involvement with Unions, Union Belief Per-

spectives, and Desires for Union Membership,
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22. Edward L. Harrison, Douglas Johnson, and Frank
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23. Dorothy Sue Cobble, Union Strategies for
Organizing and Representing the New Service
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24. David M. Rabban, Is Unionism Compatible with
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25. Paul F. Clark and Darlene Clark, Nurses Unions
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26. Heejoon Park, Patrick P. McHugh, and Matthew
M. Bodah, Revisiting General and Specific Union
Beliefs: The Union-Voting Intentions of Profes-
sionals, Industrial Relations, 45(2), 2006,
pp. 270 289; Wheeler, Hoyt N. and John A
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Madison, WI: Industrial Relations Research
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27. David M. Rabban. Is Unionism Compatible with
Professionalism? Industrial and Labor Relations
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28. Steven Greenhouse, New Union Leader Wants
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29. Michael E. Gordon and Angelo S. DeNisi, A Re-
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30. John J. Hoover, Union Organization Attempts:
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March 1982, pp. 214 215.

31. Thomas F. Reed, Do Union Organizers Matter?
Individual Differences, Campaign Practices, and

CHAPTER 5 Why and How Unions Are Organized 245

Representation Election Outcomes, Industrial
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pp. 102 117.

32. Thomas F. Reed, Profiles of Union Organizers
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33. Charles McDonald, U.S. Union Membership in
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34. James A. Craft and Marian M. Extejt, New
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35. John Godard, Uncertainty and the Correlates of
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37. Kate Bronfenbrenner, The Role of Union Strat-
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38. Elizabeth Shuler, Next Up for Labor: America s
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39. Jack Fiorito, Human Resource Management
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40. Julius G. Getman, Ruminations on Union
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41. Henry H. Drummonds, The Union Authoriza-
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42. Richard B. Peterson, Thomas W. Lee, and Barbara
Finnegan, Strategies and Tactics in Union
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43. John J. Lawler and Robin West, Impact of
Union-Avoidance Strategy in Representation
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pp. 406 420.

44. Satish P. Deshpande and Chockalingam Viswer-
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Specific Beliefs, General Beliefs, and Normative
Pressures, Labor Studies Journal, 19, Fall 1994,
pp. 68 69.

45. Donna Sockell, Contemporary Challenges of
Labor Law, in Proceedings of the Fortieth Annual
Meeting of the Industrial Relations Research
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Industrial Relations Research Association, 1988),
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46. United Autoworkers v. Secretary of Labor, 678 F.
Supp. 4 (D.C., 1988).

47. Bruce Kaufman and Paula E. Stephan, The Role
of Management Attorneys in Union Organizing
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48. Walter J. Gershenfeld, A Proposal for Labor Law
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49. William N. Cooke, The Rising Toll of Discrimi-
nation against Union Activists, Industrial Rela-
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50. Statement of Seth Harris, Deputy Secretary, U.S.
Department of Labor, Before the Committee of
Health, Education, Labor and Pension, U.S. Sen-
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uploads/2010/08/100809misclassificationfactsheet
final_logo.pdf.

51. FedEx Home Delivery, an Operating Division of
FedEx Ground Package Systems, Inc. and Inter-
national Brotherhood of Teamsters, Local Union
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52. Steven Mellor and Lisa M. Kath, Fear of Reprisal
for Disclosing Union Interest: Assessing the
Effectiveness of Perceived Anti-Unionism,
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53. Wilma B. Liebman, Discussion, Proceedings
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54. Board Finds Employer and Union Agreement in
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55. Adrienne E. Eaton and Jill Kriesky, NLRB Elec-
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G. Getman, Stephen B. Goldberg, and Jeanne B.
Herman. Union Representation Elections: Law
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Press, 1976).

56. Jeffrey S. Bosley, NLRB Modifies Recognition
and Contract Bar Doctrines to Provide 45-day

246 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Window to Challenge Voluntary Recognition,
Employee Relations Law Journal, 33(4), 2008,
p. 89 93; Henry H. Drummonds, The Union
Authorization Card Majority Debate, Labor
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57. Ibid., pp. 220 227.
58. NLRB v. Gissel Packing Co. 385 U.S. 575 (1969).

An authorization card signifies that the employee
desires to be represented by the union in collec-
tive bargaining. The employee thereby authorizes
the union to represent him or her with his
employer. The signed card may be used later by
the union as proof of majority representation, as
support to demand recognition, and as evidence
that there is substantial interest among the
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for representation election. Schlossberg and
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59. Peter J. Leff, Failing to Give the Board Its Due:
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60. Gil A. Abramson, The Uncertain Fate of Gissel
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61. Harry E. Graham and Karen N. Neilsen, Union
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62. David R. Stephens and Paul R. Timm, A Com-
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63. Paula B. Voos, Does It Pay to Organize? The
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64. Paula Voos, Union Organizing: Costs and Ben-
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1953 1977, Industrial and Labor Relations
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65. Jane Lauer Barker and Carlos E. Beato, Supervisors
under the NLRA: Oakwood Healthcare One Year

Later, Labor Law Journal, 58(4), 2007, pp. 249
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66. Steven E. Abraham and Paula B. Voos, The
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67. Edwin Arnold and Trevor Bain, Notes on: A
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68. McDonald s Fact Sheet, http://www.nlrb.gov/
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69. Ben Strauss, Still Awaiting Union Ruling,
Northwestern Players Focus on Field, New York
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ern University and College Athletes Players
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70. Rebecca S. Demsetz, Voting Behavior in Union
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Homogeneity and Skill, Industrial and Labor
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71. Robert Sebris, Jr., and Robert D. McDonald,
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the NLRB, Labor Law Journal, 37, June 1986,
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72. Robert J. Alberts, The Appropriate Bargaining
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73. Clyde Scott and Nicholas A. Beadles II, Unit
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Satish P. Deshpande and David J. Flanagan,
Union Certification Elections in Hospitals,

Labor Studies Journal, 21, Fall 1996, pp. 56 71.
74. Kenneth R. Dolin and Ross H. Friedman, Recent

Developments and the Likely Effect of Changes at
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75. Debroah M. Zinni and Anne F. MacLennan,
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Journal of Labor Research, 27(1), 2006, pp. 55 70.
76. Jeffrey S. Bosley, NLRB Modifies Recognition

and Contract Bar Doctrines to Provide 45-Day
Window to Challenge Voluntary Recognition,

CHAPTER 5 Why and How Unions Are Organized 247

Employee Relations Law Journal, 33(4), 2008,
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Authorization Card Majority Debate, Labor Law
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77. Excelsior Underwear, Inc., 156 NLRB 1236 (1966).
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79. Myron Roomkin and Richard N. Block, Case
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80. Marcus H. Sandver and Herbert G. Heneman III,
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Industrial Relations, 20, Winter 1981,
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81. William N. Cooke, Determinants of the Out-
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82. Cheryl L. Maranto and Jack Fiorito, The Effect of
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83. Dolin and Friedman, Recent Developments and
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84. Marcus Hart Sandver and Kathryn J. Ready,
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85. Annual Report of the National Labor Relations
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86. Kate Bronfenbrenner, No Hold Barred: the Inten-
sification of Employer Opposition of Organizing
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87. Study Calls for Labor Law Reform to Aid Unions
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88. William N. Cooke, The Failure to Negotiate First
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Implications, Industrial and Labor Relations
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89. Gerald Mayer, Labor Union Recognition Proce-
dures: Use of Secret Ballots and Card Checks,
Congressional Research Service, The Library of
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tompaine.com/articles/2007/6/26.

90. John Logan, No Choice for Workers, June 26,
2007, http://www.tompaine.com/articles/2007/
6/26.

91. Gerald Mayer, Labor Union Recognition Proce-
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Congressional Research Service, The Library of
Congress, 2005, at http://digitalcommons.ilr.
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92. Jack Fiorito, Gregor Gall, and Arthur D. Marti-
nez, Activism and Willingness to Help Organiz-
ing: Who Are the Activists? Journal of Labor
Research, 31, Summer 2010, pp. 363 380.

93. Shopping Kart Food Market, 94 LRRM 1705
(1977); Julius G. Getman, Stephen B. Goldberg,
and Jeanne B. Herman, Union Representation
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Sage Foundation, 1976); Neal Orkin and Mara
Landberg, Election Campaign Propaganda:
Board Policy Then and Now, Labor Law Journal,
46, July 1995, pp. 440 446.

94. William T. Dickens, The Effect of Company
Campaigns on Certification Elections: Law and
Reality Once Again, Industrial and Labor Rela-
tions Review, 36, July 1983, pp. 574 576.

95. Richard N. Block, Benjamin W. Wolkinson, and
James W. Kuhn, Some Are More Equal Than
Others: The Relative Status of Employers, Unions,
and Employees in the Law of Union Organizing,
Industrial Relations Law Journal, 10(2), 1989,
p. 220.

96. David P. Brenskelle, Questioning Employees
Concerning Union Sentiment Remains a Risky
Proposition, Employee Relations Law Journal, 13,
Summer 1987, pp. 141 147.

97. For a comprehensive review of union s solicita-
tion decisions and policies, see: Henry Findley,
Lee Vardaman, and Sebrena Moten, The Rules of

248 PART 1 Recognizing Rights and Responsibilities of Unions and Management

the Game: Union Solicitation in the Twenty-First
Century Workplace, Employee Responsibility and
Rights Journal, 22, 2010, pp. 33 44.

98. Republican Aviation Corp. v. NLRB, 324 U.S. 793
(1945).

99. Justices Twice Back Right to Distribute Union
Literature on Company Property, Wall Street
Journal, June 23, 1978, p. 6; Peter G Kilgore,
No-Solicitation/No-Distribution Rules: The Word

Battle of Time Versus Hours Continues, Labor
Law Journal, 35, November 1984, pp. 671 672.

100. Henry Findley, Lee Vardaman, and Sebrena
Moten, The Rules of the Game: Union Solicita-
tion in the Twenty-First Century Workplace,
Employee Responsibility and Rights Journal, 22,
2010, pp. 34 41.

101. Eastex, Inc. v. NLRB, 46 U.S.L.W. 4783 (June 22,
1978).

102. Joseph A. Pichler and H. Gordon Fitch, And
Women Must Weep: The NLRB as Film Critic,
Industrial and Labor Relations Review, 28, April
1975, pp. 395 410.

103. Henry Findley, Lee Vardaman, and Sebrena
Moten, The Rules of the Game: Union Solicita-
tion in the Twenty-First Century Workplace,
Employee Responsibility and Rights Journal, 22,
2010, p. 41.

104. Anthony M. Townsend, Samuel M. Demarie, and
Anthony R Hendrickson, Information Technol-
ogy, Unions, and the New Organization: Chal-
lenges and Opportunities for Union Survival,
Journal of Labor Research, 22(2), 2001, p. 285.

105. David Scher and R. Scott Oswald, Notes On:
As You Like It: Ascribing Legal Significance

to Social Media Labor Law Journal, 2014,
pp. 104 106.

106. The Guard Publishing Company, d/b/a/ The
Register-Guard, 351 NLRB No. 70 (December 16,
2007).

107. Christine Neylon O Brien, Employer E-Mail
Policies and the National Labor Relations Act:
D.C. Circuit Bounces Back to the Obama Board
on Discriminatory Enforcement Issue, Labor
Law Journal, 61(1), 2010, pp. 5 14.

108. Purple Communications, Inc. and the Commu-
nications Workers of America, AFL-CIO, 36

NLRB No. 126 (2014); For a review of case law on
Use of Social Media as a Protected Concerted
Activity, see: Wesley Kennedy and Angie Cowan
Hamada, Protected Activity and the NLRA in
the Age of Social Media, Proceedings of the
Annual Meeting of the Labor and Employment
Relations Association, pp. 40 49.

109. Andrew W. Martin, Why Does the New Labor
Movement Look So Much Like the Old One?
Putting the 1990s Revitalization Project in His-
torical Context, Journal of Labor Research, 27(2),
2006, p. 176.

110. http://www.fightfor15.com/.
111. Richard W. Hurd, U.S. Labor 2006: Strategic

Developments across the Divide, Journal of
Labor Research, 38(2), 2007, pp. 313 324; Marick
F. Masters, Ray Gibney, and Tom Zagenczyk,
The AFL-CIO v. CTW: the Competing Visions,

Strategies, and Structures, Journal of Labor
Research, 27(4), 2006, pp. 473 503.

112. Gary Chaison, The Changing Role of Unions: A
Review Essay, Journal of Labor Economics, 27(3),
2006, pp. 423 424.

113. Robert W. Schupp, When Is a Union Not a
Union? Good Faith Doubt and Its Limitations in
Collective Bargaining, Labor Law Journal, 48,
June 1997, pp. 369 370; Clyde Scott, Kim Hester,
and Edwin Arnold, Decertification Elections: An
Analysis of Recent Activity, Labor Law Journal,
46, February 1995, pp. 67 74.

114. David M. Savino and Nealia S. Bruning, Decer-
tification Strategies and Tactics: Management and
Union Perspectives, Labor Law Journal, 43, April
1992, pp. 201 208.

115. James B. Dworkin and Marian Extejt, Why
Workers Decertify Their Unions: A Preliminary
Investigation, paper presented at the Annual
Meeting of the Academy of Management, August
1979.

116. William A. Krupman and Gregory I. Rasin,
Decertification: Removing the Shroud, Labor

Law Journal, 30, April 1979, pp. 234 235.
117. Trevor Bain, Clyde Scott, and Edwin Arnold,

Deauthorization Elections: An Early Warning
Signal to Decertification? Labor Law Journal, 39,
July 1988, pp. 432 436.

CHAPTER 5 Why and How Unions Are Organized 249

118. Seventieth Annual Report of the National Labor
Relations Board, for the Fiscal Year ended Sep-
tember 30, 2005, at http://www.nlrb.gov.

119. David Meyer and Trevor Bain, Union Decertifi-
cation Election Outcomes: Bargaining-unit Char-
acteristics and Union Resources, Journal of
Labor Research, 15, Spring 1994, pp. 117 136.

120. Edwin Arnold, Clyde Scott, and John Rasp, The
Determinants of Incumbent Union Victory in

Raid Elections, Labor Law Journal, 43, April
1992, pp. 221 228; Clyde Scott and Edwin
Arnold, Raid Elections: An Analysis of Employer
Campaigns, Labor Law Journal, 41, September
1990, pp. 641 648. See also Robert W. Schupp,
When Is a Union Not a Union? Good Faith

Doubt by an Employer, Labor Law Journal, 42,
June 1991, pp. 357 364.

250 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CA
SE

ST
UD

Y

5-
1 Are These Employees Engaged in a Protected

Concerted Activity?

Marianna Cole and Lydia Moore were coworkers
employed by the ACE, Inc. to assist victims of domestic
violence. The two employees frequently communicated
with each other by phone and text message during the
workday and after hours. According to Cole s credited
testimony, Moore often criticized other employees dur-
ing these communications, particularly housing depart-
ment employees who, Moore asserted, did not provide
timely and adequate assistance to clients. Other employ-
ees similarly testified and Moore spoke critically to them
about their work habits and those of other employees.

This criticism issue escalated on Saturday, Octo-
ber 9, 2010, a nonworkday, when Cole received a text
message from Moore stating that the latter intended to
discuss her concerns regarding employee performance
with Executive Director Lour Iglesias. Cole sent Moore
a responsive text questioning whether she really
wanted you to know how u feel we don t do our

job From her home, and using her own personal
computer, Cole then posted the following message on
her Facebook page:

Lydia Moore, a coworker feels that we don t help our
clients enough at ACE. I about had it! My fellow
coworkers how do u feel?

Four off-duty employees Dame Rodriguez, Ludi
Rodriguez, Yaritza Campos and Carlos Ortiz
responded by posting messages, via their personal com-
puters, on Cole s Facebook page; the employees
responses generally objected to the assertion that their
work performance was substandard.

Moore also responded, demanding that Cole stop
with ur lies about me. She then complained to Iglesias
about the Facebook comments, stating that she had
been slandered and defamed. At Iglesias request,
Moore printed all the Facebook postings, Iglesias dis-
charged Cole and her four coworkers, stating that their
remarks constituted bullying and harassment of a
coworker and violated the ACE s zero tolerance pol-
icy prohibiting such conduct.

Questions
1. Are these employees engaged in a protected con-

certed activity?
2. If ACE had terminated Moore also, would a pro-

tected concerted activity be involved?
3. Does it matter that a union was not involved?
4. How should the NLRA rule? Why?

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2 Are the Employees Involved in Activities That

Are Legal?

The representation election was conducted pursuant to
a Stipulated Election Agreement. The tally of ballots
showed 38 ballots for and 28 against the Union with
5 challenged ballots, an insufficient number to affect
the results.

The Employer contended that the Union distrib-
uted a flyer during the critical period containing state-
ments purportedly made by employees that they did
not, in fact, either make or authorize.

The Union explained to employees that it was mak-
ing a campaign flyer. The Union obtained signed release
forms from employees willing to be photographed and/
or videotaped and to provide statements of support for

the Union. Employees who signed the release forms
authorized the Union to use pictures made of me and
comments made by me on this date in video tapes, printed
material, digital and online media, advertisements, and
any other materials. Two questions on the release form
asked employees how having a union would (1) improve
your life and/or the life of your family and (2) help you
provide better care [for your patients].

After collecting signed releases from approxi-
mately 49 employees in a proposed bargaining unit of
73, the Union published a campaign flyer containing
statements based on the answers in the release forms
and on the prior statements employees made in

CHAPTER 5 Why and How Unions Are Organized 251

campaign videos expressing their desire for a union.
The cover of the flyer displayed the words We re Vot-
ing Yes for United 1199! between two group photo-
graphs of employees. These words were repeated on the
back of the flyer, surrounded by individual photo-
graphs and employee statements. The flyer included
statements from approximately 48 individual employ-
ees, and approximately 25 of the statements included
the words I m voting yes, although none of the
employees expressly authorized the Union to use
those specific words.

The Employer objected to the Union s use of the
words I m/We re voting yes in quotes on the flyer. It
claimed that the voting yes quotes were unauthorized
misrepresentations that deceived voters and that
should require a second election.

Under the well-established standard for evaluating
misrepresentation in campaign propaganda, an election
can be set aside on the basis of misleading campaign
statements only if a party has used forged documents
which render the voters unable to recognize propa-
ganda for what it is. Under the broader rule, an elec-
tion may be set aside where no forgery can be proved,
but where the misrepresentation is so pervasive and the
deception so artful that employees will be unable to
separate truth from untruth and where their right to
a free and fair choice will be affected. The Union
claimed that it had received sufficient evidence of the
employees support that its insertion of the words I m
voting yes into employees statements expressing their
desire for a union did not amount to misrepresenta-
tion, regardless of whether employees expressly autho-
rized attribution of those specific words to them.

The Union made an effort to verify the information.
The Union asked all the employees to state their reasons
for supporting union representation and for permission
to use their names, images, and statements in campaign
literature. The campaign flyer included statements

received in the answers supplied in the signed release
forms. And many of the employees quoted in the flyer
also appeared in a campaign video sincerely stating their
desire for a union. Based on these interactions, the
Union reasonably believed that each of the named
employees was planning to vote yes for representation.
To suggest that by including the phrase we re voting
yes or I m voting yes in quotes the Union engaged in
pervasive misrepresentation, artful deception, or

even misrepresentation at all is not supported by these
facts. The Union did exactly what each of the employees
who signed the release form would have understood the
Union was going to do it used the employees names,
images, and words in an effort to create a persuasive
piece of campaign literature.

In turn, no reasonable employee reading the
Union s flyer would think that all the listed employees
actually got together and literally said, We re voting
yes. That language appears on the cover and back of
the flyer and is not attributed to any specific employee.
A reasonable reader would have understood those
words, as well as the repeated phrase, I m voting
yes, as characterizing the pro-union sentiments of
the named employees as a whole. There was no artful
deception of the reader: that characterization was
accurate and was verified by the Union. Surely, readers
could recognize the propaganda for what it is. There
was no misrepresentation.

Questions
1. Were the Union actions sufficient to cause the

election results to be overturned?
2. Did the Union misrepresent employees who signed

the release forms?
3. If the NLRB agreed with the Employer, what action

would the NLRB take?
4. How should the NLRB rule? Why?

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3 Are the Field Supervisors Supervisors Under the

National Labor Relations Act (NLRA)?

The election was conducted pursuant to a Stipulated
Election Agreement. The tally of ballots shows 85 bal-
lots cast for, and 80 ballots cast against, the Union,
with 2 challenged ballots, a number of insufficient to
affect the outcome of the election.

The Employer provides digital television services
to residential and commercial customers. At its Ran-
cho, AZ facility, the Employer employs approximately
215 employees in the following classifications: field
technicians, warehouse employees, and dispatchers.

252 PART 1 Recognizing Rights and Responsibilities of Unions and Management

The vast majority of these employees are field techni-
cians, who install or repair digital equipment at custo-
mers locations. In addition, the Employer employs a
site manager, 3 operations managers, and 22 field
supervisors. Of the 22 field supervisors, 13 are designed
field supervisors with a team [hereinafter referred to

as field supervisors ], and 9 are designated field
supervisors without a team. Each field supervisor
oversees a team of approximately 10 to 15 field techni-
cians. In contrast, field supervisors without a team do
not oversee anyone; rather, they primarily perform
installation and repair work on complex jobs or jobs
for important customers.

Field supervisors respond to their team members
telephone calls seeking answers to technical questions,
requesting additional equipment, or reporting pro-
blems with particular job assignments (e.g., a cus-
tomer is unavailable or a site is inaccessible). Field
supervisors monitor the productivity of the field tech-
nicians on their team, examine their work, and inspect
their vehicles. Field supervisors have the authority to
give verbal warnings to technicians for performance
issues or for tardiness, such as being late to a team
meeting. Such verbal counselings are documented by
field supervisors in manager notes, which are not
reviewed by management and not retained in employ-
ees personnel files.

If a field supervisor determines that a technician s
performance or infraction warrants more than a ver-
bal counseling, he has the authority to initiate the dis-
ciplinary process associated with an employee
consultation form (ECF). Field supervisors do not
have the authority to prepare and issue ECFs directly
to technicians; rather, ECFs are subject to manage-
ment review. More specifically after a field supervisor
prepares a draft ECF, the ECF is reviewed, first, by the

operations manager to whom the field supervisor
reports; next, by the site manager, and, finally, by
the human resources department. At each stage of
review, the reviewer may alter the language of the
ECF, change the proposed level of discipline, or decide
that the ECF should not be issued. Following that
review, the field supervisor meets with the technician
to present and explain the ECF. The field supervisor
thereafter affords the technician the opportunity to set
forth his version of events, or add other comments, on
the ECF form. Finally, the field supervisor asks the
technician to sign the ECF form and then signs it
himself, after which the ECF is placed in the employ-
ee s personnel file.

Section 2(11) of the Act defines a supervisor as
Any individual having authority, in the interest of the
employer, to hire, transfer, suspend, lay off, recall,
promote, discharge, assign, reward, or discipline
other employees, or responsibility to direct them, or
to adjust their grievances, or effectively to recom-
mend such action, if in connection with the foregoing
the exercise of such authority is not of a merely rou-
tine or clerical nature, but requires the use of inde-
pendent judgment.

Questions
1. If the NLRB decides that the field supervisors are

supervisors under the National Labor Relations
Act, what does the NLRB do about the representa-
tion election?

2. Are the field supervisors supervisors under the
NLRA?

3. How should the NLRB rule on the field supervisors?
4. How should the NLRB rule in the case of the elec-

tion? Why?

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4 Are These Employees Activities Legally Protected

under the National Labor Relations Act?

Accurate Communications (AC) provides sign-
language interpretation services. Its employees, known
as video relay interpreters, provide two-way, real-time
interpretation of telephone communications between
deaf or hard-of-hearing individuals and hearing

individuals. The interpreters typically use an audio
headset to communicate orally with the hearing partic-
ipant on a call, leaving their hands free to communicate
in sign language, via video, with the deaf participant.
The interpreters work at 16 call centers that process

CHAPTER 5 Why and How Unions Are Organized 253

calls on a nationwide, around-the-clock, first come,
first served basis.

Since June 2012, AC has maintained an employee
handbook that contains its electronic communications
policy. That policy states:

INTERNET, INTRANET, VOICEMAIL, AND
ELECTRONIC COMMUNICATION POLICY

Computers, laptops, internet access, voicemail,
electronic mail (email), Blackberry, I Phone, cellu-
lar telephones and/or other Company equipment
are provided and maintained by AC to facilitate
Company business. All information and messages
stored, sent, and received on these systems are the
sole and exclusive property of the Company,
regardless of the author or recipient. All such
equipment and access should be used for business
purposes only.

Prohibited activities
Employees are strictly prohibited from using the

computer, internet, voicemail and email systems, and
other Company equipment in connection with any of
the following activities:

2. Engaging in activities on behalf of organizations
or persons with no professional or business affil-
iation with the Company.

. . . .

5. Sending uninvited email of a personal nature.

AC assigns its interpreters individual email
accounts on its email system, and they use those
accounts every day that they are at work. They are
able to access their company email accounts on the
computers at their workstations, as well as computers
on the call centers break areas and on their personal
computers and smartphones. The interpreters have
access to the internet on the break-area computers
but very limited access at their workstations.

In the fall of 2012, the Union filed petitions to
represent the interpreters that resulted in Board elec-
tions at seven of the AC call centers. The Union
asserted that the electronic communications policy
interfered with the employees freedom of choice in the
election.

The Union argued that the Board should adopt a
presumption that employees may access employer
email or other communications systems to communi-
cate about Section 7 matters if their employer generally
allows them access to the system and uses it to

communicate with them about wages, hours, or work-
ing conditions. The Union would allow an employer to
rebut the presumption by showing that it expressly lim-
its use of the email system to specific and defined busi-
ness purposes.

The Union argued that previous Board decisions
to recognize that the Board s equipment cases, by hold-
ing that employers could not preclude employee use for
Section 7 reasons if they allowed other uses.

The Union contends that the Board should take
account of the fact that email communications is
often less time consuming or disruptive to work of
the recipient than face-to-face discussion, less likely to
crowd out production-related matter than bulletin
board postings, and less likely than other technologies
to involve incremental usage costs. Employers controls
over their communications system that have a clearly
stated business purpose and are strictly enforced and
nondiscriminatory would be permissible under the
Union s proposal. The Union argued that the availabil-
ity of alternative means of communication among
employees is not relevant to assessing the nature and
strength of the employees (as opposed to nonemploy-
ees ) Section 7 rights.

AC encouraged the Board to rule that its elec-
tronic communications policy was neither unlawful
nor objectionable. AC maintains that Board prece-
dents regarding the use of other types of equipment
establish a strong property interest that outweighs
employees interest in using their employer s email
to engage in Section 7 communications. Employees
need for such has weakened because the availability
of personal email accounts and smart phones has
greatly expanded their ability to communicate
with one another. AC disputes the various points
that characterization of email as the new water
cooler.

AC describes various ways in which personal
email use could interfere with employees work and
undermine an employer s solicitation and distribution
policies. AC rejects limited restrictions and other
measures as inadequate substitutes for a broad ban
on personal use of email; those measures would not
effectively address employers interests in maintaining
production and discipline, protecting confidential
information, preventing computer viruses, and ensur-
ing that worktime is used for work. AC also raised
potential practical considerations, including how it
can exercise its right to keep nonemployees off its
communications systems if employees contact them.

254 PART 1 Recognizing Rights and Responsibilities of Unions and Management

Finally, AC downplayed the evidence noted that
employees did, in fact, use its email system for non-
work communications.

Questions
1. Does it matter that the email equipment is owned by

the employee?

Assess the potential of a favorable ruling for
the Union

2. How should the NLRB rule? Why?

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5 Did the Company Violate the Section 8(a)(1) of the

LMRA When It Discharged the Employee?

DCP manufactures data collection products. The chief
operational officer is Barry Marks. Larry Leiner is one
of 23 employees located in two buildings and was hired
in April 2005 as a software engineer who prepared
computer programs.

On December 1, Marks sent a message to all
employees by e-mail about proposed plans for an
incentive-based bonus system. Employees were told to
reply with your comments or stop by to see me. A

response to this is required. Changes in vacation policy
were also mentioned ( Your comments are welcome, but
not required ). The incorporated memorandum on the
proposed vacation policy changes stated, Please give
me your comments (send me an e-mail or stop in and
talk to me) by Tuesday, 12/5. The suggested policy
changes were to close the offices on December 23 and
reopen on January 2 and to adjust the number of paid
days off over a five-year period, the effect of which,
Marks asserted, was that the employees actually get
more days off each year, compared to our present
system.

Marks received a number of employee responses on
his vacation proposals, including one on December 1, by
e-mail, from Larry Leiner. Leiner s response demon-
strated that, in fact, the change referred to by Marks
would result in the same number of vacation days per
year and less flexibility as to their use. Marks conceded
to the accuracy of Leiner s correction and claimed that
he had inadvertently erred and had not intended to
deceive the employees. On December 4, Leiner, having
checked his calculations over the weekend, discovered
another minor error and notified Marks by e-mail.

Marks did not reply to Leiner s communications.
On December 5, Tom Dunn, a member of the

engineering team, sent an e-mail to Marks, with copies
to other engineering team members (which would
include Leiner), which stated: In response to the pro-
posed vacation plan, I have only one word, GREAT!
Promptly, Leiner sent an e-mail to Dunn telling him
that the proposed policy did not, in fact, work to the
advantage of the employees.

Also, on December 5, Leiner sent a lengthy e-mail
message to all employees, including Marks. The mes-
sage spelled out in detail Leiner s calculations on the
result of the proposed vacation policy change. It con-
tained, as well, some flippant and rather grating
language.

The salutation was Greetings Fellow Travelers.
In his initial remarks, Leiner wrote, the closing state-
ment in Barry s memo: The effect of this is that you
actually get more days off each year, compared to our
present system, will be proven false. This declaration
was reiterated in the final thought of the memo: Thus,
the closing statement in Barry s memo is proven
false. The paragraph pre ceding that statement read:
Assuming anyone actually cares about the company

and being productive on the job, if Christmas falls on
Tuesday or Wednesday as it did in 1996 and 1997,
respectively, two work weeks of one and two days
each produced by the proposed plan will replace the
fragmented weeks. In closing, Leiner asked that the
recipient please send errata to Larry.

Also on December 5, after reading the e-mail mes-
sage from Leiner, Dunn e-mailed again Marks and also
the engineering team (as shown on the e-mail address).
Dunn said in part, After reading Larry s E-mail(s) of
this date[,] I realized I had made a mistake in calculat-
ing the vacation days and wish to change my comment

CHAPTER 5 Why and How Unions Are Organized 255

from GREAT to Not so Great on the proposed vaca-
tion policy. Dunn also noted in his message that the
proposals had generated more E-mail than any other
plan in the company.

Marks became angry that Mr. Leiner sent his
e-mail messages to all employees. He prepared a Decem-
ber 5 memorandum to Leiner. The memo stated that
Marks was saddened and disappointed by Leiner s
e-mail, which was inappropriate and intentionally
provocative and beneath someone as talented and
intelligent as you are. Marks then wrote:

Our employment manual states: Certain actions or
types of behavior may result in immediate dis-
missal. These include, but are not limited to:

Failure to treat others with courtesy and
respect.

Marks went on to direct Leiner to write him by
5 P.M. that day: In light of the above, why this e-mail
message was inappropriate; how sending an e-mail
message like this hurts the company; how this matter
should have been handled.

Marks continued:

If your response is acceptable to me, you will post it
by e-mail today to those who received your other
messages.

If you decline to do so, or if your response is
unacceptable to me, your employment will be ter-
minated immediately. Otherwise, your employ-
ment will continue on a probationary basis for
six months, during which time your employment
may be terminated at any time and for any
reason.

Larry, I am very disappointed in you. Barry.

Marks stated that what upset him about the e-mail
messages was their tone : it was a slap in the face of
employees with good attitudes and a personal attack
upon him.

At least twice in the afternoon on December 5,
Leiner approached Marks. In Marks s words, Leiner
wanted Marks to tell him what to write. In Marks s
view, Leiner was profess[ing] not to understand what
was wrong with the e-mail message, the confusion of
which Marks seriously doubted. He nonetheless tried
to give Leiner some appropriate suggestions. Leiner
gave a different version of these conversations, portray-
ing himself as admitting to an honest mistake after

Marks told him that Leiner should have contacted him,
not the other employees, because it was up to him to
decide what to say to other people ; Leiner described
Marks as refusing to offer any assistance in preparing
the requested memo and stated that Marks had
branded Leiner a troublemaker.

Marks admonished Leiner for having contacted
employees; his December 6 e-mail to the employees
picked up the theme that the right way for Leiner
to have proceeded was to approach management.
Marks stated that, on December 5, he may have
told Leiner that he should have pursued the matter
privately.

Leiner said that in his last meeting with Marks on
December 5, they agreed to extend the memo deadline
to 8 A.M. the next day. Leiner further stated that he
stayed up well into the morning as he attempted to
compose an appropriate letter, but he was unable to
come up with anything he deemed satisfactory. When
the two men met at 8 A.M., and Marks asked if Leiner
had produced a memo, Leiner said, No, I couldn t
really write anything incriminating because it could
be used against me later. Marks wished him luck in
his future endeavors and bade him farewell.

Later that day, Leiner called his supervisor and
asked for a discharge letter. The December 9 letter
received by Leiner citing as the Reason [sic] for termi-
nation two of the grounds for dismissal given in the
employee manual:

Failure to treat others with courtesy and respect
Failure to follow instructions or to perform

assigned work
Early on December 6, Marks e-mailed all the

employees. After discussing the vacation proposal, he
turned to Larry s memo and how to address our
grievances. He wrote of the impropriety of using sar-
casm or disrespect ; he pointed out that the long or
provocative e-mail messages had taken up everyone s
time; that reading, printing, discussing, and dealing
with these messages had unnecessarily cost our com-
pany time and money. Marks noted that the right
way to handle a grievance, or a question, or a com-
ment, or a complaint was to discuss it with a team
leader or Marks. Marks admitted that he had erred in
explaining the proposed vacation policy, and he asked
employees to inform him if that had changed their
minds. He closed by saying that, while he welcomed
disagreement, he also demanded that everybody be

256 PART 1 Recognizing Rights and Responsibilities of Unions and Management

treated with courtesy. No specific mention was made of
Leiner s discharge.

The records showed that in September 2005,
Marks had sent a memo to the members of the engi-
neering team requiring them to work at least 50 hours
per week because of production necessities. Leiner sent
a two-word reply: I refuse. Leiner said that he
expected this to lead to a dialogue with Marks, which
it did. Leiner explained to Marks that his free time was
important to him and that he would rather accept a cut
in pay than work additional hours. Marks eventually
agreed that Leiner need not work the extra time, but
Marks told Leiner don t tell anybody. Marks said that
he spoke to Leiner and asked him simply to do what
he can.

Marks stressed that it was the tone of Leiner s
e-mail, and the ramifications of that tone, which played
a dominant role in the discharge. This is reflected in his
December 5 memorandum to Leiner, which mentioned
only Failure to treat others with courtesy and respect.
While his December 6 communication makes a point
of the time and expense wasted by Leiner s lengthy

e-mail to the employees, no other message (including
the reason for discharge set out in the December dis-
charge letter) mentions that issue. Marks agreed that he
had no objection to both simple e-mailings and per-
sonal telephone calls being made by employees and
that he was aware that, among the employees, there
is a certain amount of time during the workday that is
not devoted strictly to work. Marks acknowledged that
he knew that Dunn s e-mails to him had been directed
also to the other members of the engineering team, and
Dunn had not been admonished or otherwise
disciplined.

On December 10, Leiner filed a charge with the
National Labor Relations Board.

Questions
1. Was this matter within the jurisdiction of the

National Labor Relations Board?
2. Were Leiner s actions considered a protected activ-

ity under the Labor Management Relations Act?
3. How should the NLRB rule? Give your reasons.

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6 Bulletin Board Use

The employer operates a merchandise catalog distribu-
tion center in Wichita, Kansas, employing 1,000 work-
ers. The union began an organizing campaign among
distribution center employees. For many years, the
employer has published an employee handbook that
contained the following bulletin board policy:

Bulletin boards are located throughout the Center
[distribution center], generally near time clocks.
Company announcements, such as policy changes,
holiday schedules and Company news of general
interest, are posted on these boards. Personal post-
ings are not permitted.

Employees who supported the union placed
printed material on the bulletin boards advertising
upcoming union meetings and soliciting union sup-
port. On discovery, managers removed the union mate-
rial from the bulletin boards. The union subsequently
filed an unfair labor practice charge, alleging the

employer s removal of the union materials from the
bulletin board represented unlawful interference with
employees right to solicit for the purpose of organizing
a union under the LMRA.

The employer maintained that managers were sim-
ply enforcing a nondiscriminatory policy barring all
solicitation materials from company bulletin boards
that were not approved by the company. The employer
noted that management had given employees permis-
sion to post on bulletin boards a company-approved
newsletter that did include a section advertising
employees personal items for sale (e.g., car, television
set, golf clubs). Certain other company-sponsored soli-
citations for the United Way and March of Dimes
charities had also previously been approved for posting
on company bulletin boards.

Several employees testified that other employee
communications had also been posted on several com-
pany bulletin boards in the past, such as thank-you

CHAPTER 5 Why and How Unions Are Organized 257

notes, party announcements, Christmas cards, a solici-
tation for maid service, and donation requests when an
employee was hospitalized or died. Such unapproved
announcements were often posted for several weeks
before being removed from bulletin boards. The
employer responded that items such as those men-
tioned by the employees who testified were, for the
most part, connected to company-sponsored events or
charities.

Questions
1. Is an employer required to have bulletin boards at

the workplace?

2. If an employer did not provide bulletin boards at the
workplace, would employees have a right to provide
and mount their own bulletin boards?

3. If there are company-provided bulletin boards at the
workplace, does the employer have a right to restrict
the purpose or type of material that can be posted
on such boards?

4. In this case, did the employer unlawfully deny union
supporters access to use company bulletin boards
for union solicitation purposes? Explain your
reasoning.

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7 Nonemployee Union Solicitation Activity

In October, the union began an organizing drive
involving nursing personnel employed at the Medco
Hospital (the employer). In November, Medco s man-
agement revised a portion of the existing no-
solicitation and distribution policy to read as follows:
Visitors, patients and other nonemployees may not

solicit or distribute literature on any hospital property
for any purpose at any time.

The hospital operates a cafeteria that is open to
serve employees, patients, and the general public. On
December 4, two (nonemployee) union organizers
entered the hospital cafeteria accompanied by some
off-duty nursing employees. The off-duty nursing
employees proceeded to distribute union literature pro-
vided to them by the two union organizers. The two
union organizers did not personally hand out any
union literature or attempt to solicit any employees to
sign a union authorization card. The two union orga-
nizers did remain seated in the cafeteria for approxi-
mately 5 hours and answered questions initiated by
interested employees about the union. Sitting on the
table where the two (nonemployee) union organizers
were seated was an open box containing union
literature.

On December 10, the two union organizers
accompanied by several off-duty nursing employees,
again entered the hospital cafeteria, and engaged in
the same actions as those previously described as

occurring on December 4. After approximately 30
minutes, the human resources (HR) manager for the
hospital entered the cafeteria and spoke to the two
union organizers. The HR manager informed the
two union organizers that they were in violation of
the hospital s no-solicitation and distribution rule.
The HR manager gave the two union organizers per-
mission to stay for 15 minutes to have a drink or 30
minutes to eat a meal, after which time they would be
arrested if they refused to leave. The two union orga-
nizers left the hospital cafeteria voluntarily and pro-
ceeded to file an unfair labor practice charge, alleging
the hospital unlawfully barred their access to the hos-
pital cafeteria. There was no evidence to show that the
employer had ever allowed solicitation or distribution
activity by nonemployees to occur on its premises in
the past.

Questions
1. Did the employer unlawfully deny the two nonem-

ployee union organizers access to the hospital s
cafeteria? If so, what should be the appropriate
remedy?

2. Would the employer s no-solicitation policy pro-
hibit the two nonemployee union organizers from
entering the hospital s property anywhere at any
time?

258 PART 1 Recognizing Rights and Responsibilities of Unions and Management

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8 Campaign Threats or Implied Promise of Benefit?

Do the oral or written statements made by employer
representatives during a representation election cam-
paign contain any unlawful threats or implied promises
of benefit in violation of Section 8(a)(1) of the LMRA?

In early June, the union filed a petition with the
NLRB requesting a representation election be held in a
bargaining unit comprising 880 employees of the Jack
son Equipment Company (the employer). The employer
had previously rejected the union s request for voluntary
recognition. The union s election petition was supported
by 426 (52 percent) valid union authorization card sig
natures. There were 880 employees declared eligible to
vote in the election, which the union lost by a vote of
391 for to 489 (55.5 percent) against union representa-
tion. The union filed several objections to the employer s
conduct during the election.

The union charged that the employer s state-
ments made during the election campaign threatened
that if the union won the election, the employees
benefits would be reduced. Such a threat tends to dis-
courage employees from freely exercising their Sec-
tion 7 rights under the act. The employer contended
that these statements were merely a factual response
to union s promises to increase employees wages.
The employer cited 22 out of 33 leaflets distributed
by the union that referred to improved employee
benefits at some unionized plants. Here are the
employer s statements:

Neither the Company nor the Union can predict
what will be in the contract. Your wages and ben-
efits could turn out to be higher, lower, or the
same as they are…. I m sure the Union will try
to tell you there is some sort of law that will pre-
vent the Company from negotiating for anything
less than you now receive. That statement is sim-
ply not based on facts. I ve given your supervisors
copies of a decision in which the court upheld the
Employer s right to inform his employees that he
may not even have to agree to the continuance of
existing wages and benefits. These facts may seem
harsh, but I think it s important that you know
the truth about the collective-bargaining process
before you vote.

Remember, bargaining means putting every-
thing on the table, including the benefits you already
have. Bargaining with a union can be a complicated
and time-consuming process during which the Union
and the Company negotiate to get an agreement that
both sides are satisfied with. And bargaining starts
from scratch, which means that everything is nego-
tiable. As I have told you, we would bargain in good
faith. But, I would not sign a contract that I did not
believe was in this plant s best interest. Sometimes,
when a company takes this position, the Union
tries to force a settlement. This usually leads to a
breakdown in bargaining and can result in a strike

which hurts everyone.
You should know, however, that the benefit

package given our plant employees from the time
the plant opened was better than those at other
unionized plants owned by the Company. You
were given greater benefits voluntarily by the Com-
pany. Those in unions bargained repeatedly with
the Employer for more than 20 years for their
benefits…. Your pay increases are a result of the
fair and responsible compensation policy we follow.
There is no question in my mind that our wages are
better than the Union wages I ve seen in contracts
of other companies in our area. A vote of no
union is a vote to continue the pay practices we
have been commit ted to at our plant since the
day we began operations.

The Union also objected to other employer state-
ments on the grounds that they implied a promise to
do things differently or better if the employees voted
against the union. Such a promise, conditioned on
whether an employee does or does not choose to exer-
cise his or her lawful Section 7 rights to select a bar-
gaining representative, is in the Union s view a form of
positive coercion and destructive of an atmosphere in

which employees may freely decide the bargaining
representation issue.

The employer contends it was only informing
employees of how good conditions were at the plant.
The conditions referred to were changes that had begun
at the plant before the onset of the union-organizing

CHAPTER 5 Why and How Unions Are Organized 259

campaign. The statements made by the plant manager
were as follows:

I admit, no employer is perfect. However, I am
totally convinced that we can best resolve our dif-
ferences without the Union and the adversarial
relationship the organizers have tried to develop.
In order to move ahead, we must work together,
not fight each other.

Unions are known chiefly for extracting dues
from you, calling strikes, making promises, and
causing confusion among employees. I am asking
for a vote of confidence and a chance to prove
what we can accomplish by working together, with-
out interference by a Union. I am asking for a
chance to continue the improvements we have
underway at our plant, without interference by
the Union.

I know that mistakes have been made. The
fact that we are having a Union election at this
time indicates to me that some of you felt it was
necessary, at one time, for an outsider to represent
you, that management was unresponsive to your
needs and concerns. It has been difficult to bring
back to the plant the positive feelings that most of
you had about the Company, but I sincerely feel
we have turned the corner. I am aware of your
frustrations with machine problems, material
flow problems, overtime problems, inconsistent
interpretation of company policies, pay inconsis-
tencies, and management in general. Also, the per-
sonnel function has not been as sensitive to your
needs as it should have been or could be. I admit
that these things could have been diagnosed sooner
and acted upon. However, we all know it is easy to
quarterback Friday night s football game on Mon-
day morning.

I believe today we are building a management
team that is willing to recognize its shortcomings
and is actively working to correct them. It is not
an easy job, but with your help it can be done.
Programs have been developed to: (1) improve
scheduling in the plant, (2) reduce scrap, (3) provide
foremen training development, (4) improve the

quality of our product, (5) purchase required
machinery, and (6) improve our housekeeping.

Finally, the Union charged that a company super-
visor unlawfully questioned and threatened two open
and active Union supporters. About two weeks before
the election, supervisor Bates asked employee Culp
what he thought the Union could do for him, and
then told Culp, If it came down to where you all
went out on strike and they had people out, they
could go out and hire because the Company had 100
to 200 people waiting for jobs . They would use us as
an example for the Company s other plants here in the
South.

Approximately one week before the election,
super visor Lofton asked employee Rogers how he
was going to vote. When Rogers replied, For the
union, Lofton inquired whether Rogers was sure he
was doing the right thing. Supervisor Lofton further
asked Rogers if he knew that if the union won he
could lose his benefits and told him he should think
twice about voting for the union.

Questions
1. Do these employer statements constitute an unlaw-

ful threat in violation of Section 8(a)(1) of the
LMRA? Why or why not?

2. Do the employer statements constitute an unlawful
promise of benefits in violation of Section 8(a)(1) of
the act? Why or why not?

3. Did the questioning or statements by either super-
visor Bates or supervisor Lofton constitute unlawful
interrogation in violation of Section 8(a)(1) of the
act? Why or why not?

4. Should the NLRB give consideration to its Totality
of Conduct doctrine in reaching a conclusion about
the alleged violations in this case? Explain your
answer.

5. Develop some guidelines for managers who may be
talking with employees about the union during an
organizing campaign.

6. How should the NLRB rule?

260 PART 1 Recognizing Rights and Responsibilities of Unions and Management

CA
SE

ST
UD

Y

5-
9 The T-Shirt Offer and Picnic Photographs

On the day before the Union election, the Union
hosted a free picnic luncheon for employees during
the first and second shifts meal breaks in a parking
lot adjacent to the Young Skin s plant. At the picnic,
the Union took 88 snapshots. During the luncheon,
union representatives distributed Union Yes T-shirts
carrying the slogan, The Best Things in Life Are Nego-
tiable. Union Yes. Between Union and Yes was a
square containing a checkmark. To receive a T-shirt,
employees were required to sign a pro-union petition
titled, We Are Voting Yes on August 2nd! which
stated that the undersigned employees agreed to openly
support the Union and asked their co-workers to join
them. This petition was to be used as a handbill on
election day.

By requiring signing as a condition of receiving a
free T-shirt that cost the union $4 to $5 each, the Com-
pany contended that this represented an unlawful grant
of benefit that the Union used to induce employees to
sign the pro-Union petition. The Company compared
the T-shirt offer to a union s offer to waive union initi-
ation fees contingent on an employee s signing a union
authorization card. The Supreme Court found such a
fee waiver unlawful in a previous case because it
allow[ed] the Union to buy endorsements and paint

a false portrait of employee support during its
election campaign. The Company said the monetary
value of the T-shirts was irrelevant, noting that the
waived initiation fee in the Supreme Court case was a
nominal $10.

The Union stated that it was clear to all concerned
that the T-shirts were inexpensive and that their free
distribution would not interfere with employee free
choice. They further stated that it was a considerable
leap to conclude that the offer of these Union Yes
T-shirts contingent on employees signing a prounion
petition was an inducement tantamount to buying
endorsements.

The Supreme Court in the previous case ruled that
all employees, regardless of their views on unions, had
an economic interest in obtaining the fee waiver that

was offered as an inducement to sign union authoriza-
tion cards. The inducement here the Union Yes T-
shirt however, would reasonably be desirable only to
employees who favored the Union and wanted to pro-
claim their pro-union view. Thus, the requiring
employees to sign a pro-union petition to obtain a
pro-union T-shirt would not reasonably induce non-
supporters to sign the petition and thereby allow
them to paint a false portrait of employee support.

Even if the T-shirts might be desirable to nonsup-
porters, the Union in that event had a justifiable inter-
est in trying to ensure that T-shirts were distributed
only to employees who would wear them as campaign
paraphernalia in support of the Union. Requiring
employees desiring T-shirts to sign a pro-union peti-
tion was a reasonable means for the Union to try to
accomplish this objective.

The Company also contended that the Union cre-
ated an atmosphere of fear and coercion by photo-
graphing employees at the picnic luncheon. In many
of the photographs, employees posed for the camera,
sometimes displaying their Union T-shirts. The
photographs were taken for the purpose of memorial-
izing the chicken meal and perhaps to publish in a
Union newspaper. Two employees later said they
were concerned or felt funny about their pictures
being taken.

The Company contended that the employees who
were photographed might well have thought that their
responses to the Union campaign activity were being
recorded for the purpose of future retaliation. The
Union responded that, although photographing some
activities might suggest retaliatory purpose, the Union
photographed employees enjoying a picnic, which each
employee voluntarily chose to attend. When a com-
pany security guard attending the picnic asked why a
Union representative was taking photographs, the
Union representative stated, You are all going to
make the front page of USA Today, and We want
to remember this fun-filled memory. Union represen-
tatives stated that the photographs were taken for

CHAPTER 5 Why and How Unions Are Organized 261

submission to the Union s newspaper. Copies of the
photographs were later given to employees at a party
celebrating the Union s victory in the election (217 in
favor of the Union, 200 against it, and 16 challenged
ballots). The Company now seeks to overturn the elec-
tion results based on its objections to the Union s
T-shirt distribution and the photographing of employ-
ees at the Union picnic.

Questions
1. Must illegal conduct occur to overturn the results of

a Union representation election?
2. Compare the present case to the following ones:

NLRB v. Savair Mfg. Co., 414 U.S. 270 (1973);
84 LRRM 2929 (1973)
Pepsi Cola Bottling Co., 289 NLRB 736 (1988);
128 LRRM 1275 (1988)
Mike Yurosek & Sons, Inc., 292 NLRB 1074
(1989); 130 LRRM 1308 (1989)

3. Did the Union interfere with the outcome of the
election by offering the T-shirts? Why or why not?

4. Did the Union interfere with the outcome of the
election by taking the photographs at the picnic?
Why or why not?

5. How will the NLRB rule?

262 PART 1 Recognizing Rights and Responsibilities of Unions and Management

.g

CLASSROOM EXERCISE

5.1
Designing Union Election Campaign Literature

Purpose: The purpose of this exercise is to allow students to use creativity and gain
experience in designing legal election campaign materials that effectively communicate
common employer or union themes.

Instructions: This exercise may be completed on an individual or group basis. Using one
or more of the common employer and union representation election campaign themes
described in Exhibit 5.3, design a poster to encourage employees to vote either for or
against union representation. Some students (groups) may be assigned to create a poster
stressing employer campaign themes, while other students may design a union campaign
poster. Students should be allowed to view the finished posters and choose a winner for
Best Company and Best Union poster. The best poster is the one that the group

majority judges would be most likely to lawfully influence (persuade) employees to vote
in the intended direction. As a focus for their poster design, students may wish to
develop a description of the type of company or bargaining unit employees that are the
target of the union s organizing campaign. A local firm s description may be used as a
mock organizing target, or news items concerning a recent organizing campaign reported
in newspapers, business periodicals (e.g., BusinessWeek, BNA s Daily Labor Report), or
other sources may be used.

Note: The same type of exercise may be used to give students experience in preparing
and presenting a brief 5- to 10-minute oral presentation on the advantages or disadvan-
tages of union representation.

263

PART2
The Bargaining Process and
Outcomes

Part 2 pertains to key activities and issues
involved in the labor relations process of
negotiating a labor agreement (contract),
setting forth work rules pertaining to
wages, hours, terms and conditions of
employment, and the rights and responsibil-
ities of the parties governed by the con-
tract s terms. These topics are approached
from the vantage point of legal and practical
proscriptions on related behavior as well as
with an eye to the realities forged out of the
relationships between union and manage-
ment representatives.

Chapter 6
Negotiating the Labor Agreement

Chapter 7
Economic Issues

Chapter 8
Administrative Issues

Chapter 9
Resolving Negotiation (Interest) Disputes and the Use of Economic
Pressure

265

CHAPTER 6

Negotiating the Labor Agreement

HAVE YOU EVER experienced a so-called make or break
moment, when you knew the outcome of the situation could
change your life significantly? That is the way Jim, a Human
Resource (HR) manager, felt as he sat anxiously by the tele-
phone, waiting for a call from the union s lead negotiator. The
union bargaining team was currently in a caucus meeting con-
sidering the final proposal Jim had made from the company
to the union a few hours ago. As time passed, Jim didn t know
whether to feel encouraged since the union team was obviously
taking the time to seriously review the proposed contract terms
or to feel worried because the longer the union team delayed
giving a response, the more likely it could be that some union
negotiating team members were having a problem with one or
more terms of the proposed settlement.

This wasn t Jim s first contract negotiation, but it is never
easy, no matter how many times one has negotiated success-
fully in the past. Months of preparation that involved gathering
detailed information about every bargaining subject and industry
conditions, analyzing the data to determine the cost and operat-
ing implications of agreeing to proposed terms, developing a
bargaining strategy for presenting and gaining the union s
acceptance of the proposed terms all of it came down to this
final moment. Only in the past six months had the company
begun to recover from the downturn in business caused by
the recent recession. Employees had been required to make
economic sacrifices in the form of wage and benefit freezes,
temporary layoffs, and increased uncertainty about future job
security. Jim was concerned that union members saw the
recent improvement in business operations as a sign that every-
thing was good going forward and the company could afford to
make up the past employee concessions. While the company s

266

proposal did contain some modest economic improvements for employ-
ees, it also contained proposals to increase management s flexibility to
schedule work operations and redefine job descriptions to improve effi-
ciency. What effect these changes might have on the total number of
jobs available at the company in the future was difficult to predict at pres-
ent, which caused some union negotiators to push for more job security
guarantees in the proposed contract language. Would the compromises
made at the bargaining table after weeks of face-to-face negotiations be
enough to win final approval? Jim s thoughts were interrupted by the ring-
ing of his telephone. The moment of truth had arrived!

Questions
1. If the union were to reject the proposed contract settlement terms,

what would you advise Jim, the company s negotiator, to do next?

2. As a management negotiator, would you be willing to offer bargaining
unit members a monetary signing bonus if they agreed to approve pro-
posed contract settlement terms, and if so, how much money would
you be willing to offer per bargaining unit member?

3. Imagine you were Jim s supervisor. In conducting Jim s annual perfor-
mance evaluation, what percentage of Jim s evaluation score should be
based upon how the company fared in the outcome of contract nego-
tiations that year?

Negotiation is a common feature of everyday life. Although this chapter covers collec-tive bargaining between union and management representatives over terms and con-
ditions of employment, many aspects of negotiations have broader applications to other
bargaining activities in society. This chapter first defines collective bargaining and
explains initial influences affecting this activity. Subsequent sections consider negotiation
preparation activities, such as bargaining team selection, proposal formulation and cost
estimates, bargaining strategies and tactics, and legal requirements. The chapter places
these diverse collective bargaining considerations in perspective by describing a bargain-
ing power model to help predict a likely resolution framework.

Collective Bargaining: Definition and Structure

Collective bargaining is an activity whereby union and management officials attempt to
resolve conflicts of interest by exchanging commitments in a manner intended to sustain
and possibly enrich their continuing relationship. In short, they attempt to negotiate a
new labor contract. Collective bargaining is a special form of interdependent social inter-
action, in which the attainment of desired outcomes by one party is dependent on the

267

behavior of another party. A dispute that arises between union and management repre-
sentatives over what the terms and conditions of employment will be is termed an inter-
est dispute. The basic objective of collective bargaining is to resolve such interest
disputes by reaching an agreement acceptable to both parties (union and management).1

Attitudes of union and management officials toward collective bargaining and the
negotiated settlement influence their relationship during the term or duration of the
labor agreement. The fact that both parties generally understand that they will return to
the bargaining table in future negotiations affects their strategic choices regarding accept-
able tactics and outcomes in any current negotiation.

Defining success in collective bargaining often entails both objective and subjective
evaluation criteria. Objectively measuring the economic value or cost of specific settlement
terms to each bargaining party is one way to measure success. Comparing settlement out-
comes to industry or area averages or settlement outcomes obtained by key competitors is
another way. Depending upon the prevailing bargaining conditions, maintaining the status
quo or conceding less than one might have been expected to concede under the circum-
stances could be defined as a successful bargaining outcome. Union leaders seeking re-
election may consider the extent to which the interests of key constituent groups within
the bargaining unit (e.g., skilled employees or women) are satisfied as one measure of suc-
cess. One other criterion for measuring negotiation success is whether a bargaining settle-
ment contributes to building a positive relationship between union and management
representatives, which is necessary for the effective implementation of contract terms on
an everyday basis.

It is not unusual for both union and management negotiators to claim success at the
conclusion of contract negotiations. This may be possible due to the different priorities
each party may place on achieving a desired outcome on specific bargaining subjects or a
reflection of different criteria being applied by each party to measure success. A successful
bargaining settlement reinforces a labor management relationship, whereby the parties,
although not always agreeing, nonetheless trust each other to be honest and straightfor-
ward in their positions without trying to unnecessarily damage the other party.2

Bargaining Structure
Bargaining structure has two general dimensions: (1) independent employee groups that
can affect the collective bargaining outcome and (2) the employees and employers who
are subject to the provisions of the negotiated labor agreement (the bargaining unit).
Each will be considered.

Employee Groups
In some cases, union and management officials are influenced by the collective bargain-
ing settlements of other, independent groups of employees. Often this is understood by
both sides at the bargaining table. For example, a labor settlement between a city govern-
ment and the police officers union might influence subsequent negotiations between that
same city and its firefighters.

Pattern Bargaining
The term pattern bargaining is used to describe a situation where union or management
negotiators informally attempt to extend a negotiated settlement from one group to
another. Pattern bargaining may occur among similar companies in the same industry.
For example, for many years the United Auto Workers (UAW) designated one auto
manufacturer in each cycle of contract negotiations as the lead firm with whom the
union would attempt to achieve a contract settlement. Terms of the lead contract are

268 PART 2 The Bargaining Process and Outcomes

then used as a pattern for negotiating labor agreements with other auto makers during
the same time frame. For example, in the 2015 auto negotiations the agreement reached
between the UAW and Fiat Chrysler became the pattern for subsequent settlements
between the UAW and General Motors and Ford Motor Company. Increased nonunion
competition and the 2007 2009 economic recession substantially curtailed pattern bar-
gaining activity in recent auto industry negotiations. Pattern bargaining might also
occur if union or management negotiators attempt to apply a settlement obtained for
one segment of an industry (automobile manufacturing) to another company that pro-
duces related products, such as tires or headlights.

Management and union negotiators might prefer pattern bargaining as a way to
take wages out of competition between unionized employers operating in the same

product or service market. The objective of standardizing wages through pattern bargain-
ing is beneficial for management because it will reduce concern about competitors
receiving a labor cost advantage. Pattern bargaining is also beneficial to union negotia-
tors because it builds a perception among similar types of workers (represented by the
same union under contracts at different firms) that they are receiving equal and fair
treatment from their union in securing negotiated improvements desired by the union s
membership.3 Sometimes management negotiators actively resist pattern bargaining in
order to try to negotiate contract settlement terms which will provide the firm with a
labor cost competitive advantage over other firms with whom the same union bargains.
Increased competition by nonunion firms not covered under union-negotiated contracts
(both domestic and international competitors) has also forced some unionized employers
to resist pattern bargaining.

Sometimes negotiators think they are negotiating independently of other groups
contracts; however, that is not how their counterparts see it. For example, union negotia-
tors in one company may attempt to coordinate their bargaining strategy with other
negotiators representing similar workers (e.g., different locals of the same union) in
other companies. This clandestine coordination can take two different forms, based on
whether the negotiations are occurring at the same time or different times. Each will be
briefly considered.

Whipsawing
A whipsaw bargaining strategy involves a negotiating team attempting to extract large,
similar, concessions from multiple opponents; this is done by sharing information across
negotiating teams on the same side as multiple negotiations proceed. For example, sup-
pose the union at Company X is in contract negotiations and it gets a generous vaca-
tion clause. The union negotiators immediately contact union negotiators at Companies
Y and Z (e.g., via cell phone text messaging) telling of this development. Those union
officials at firms Y and Z, who are simultaneously negotiating with their respective
employers, decide to hold out for a similar vacation clause. A few days later, suppose
the union at Company Y secures a generous paid maternity leave clause. The negotia-
tors notify their counterparts at Companies X and Z so they can try to secure similar
maternity leave clauses. Meanwhile, the management negotiators at Companies X, Y,
and Z are unaware that the union is attempting this strategy.

Recognize that managers sometimes use a whipsaw strategy also. For example, a
municipal government with multiple unions (e.g., police, fire, bus drivers, office & cleri-
cal, airport workers) may open negotiations with all of them separately yet simulta-
neously, hoping to extract similar concessions from all of them.

One foundational principle of unionism is solidarity with other workers. If multiple
unions are negotiating with an employer, can the unions agree in advance that no union

CHAPTER 6 Negotiating the Labor Agreement 269

will sign a contract until all the unions have agreed? Such an arrangement is called a
lock-in agreement between unions; it prohibits any union-represented bargaining unit
from reaching a final contract settlement until all unions who bargain contracts with
the same employer are willing to settle. The intent of such a lock-in agreement is to
force an employer with multiple unions to satisfy all of the unions concerns and to pre-
vent the employer from using a whipsaw bargaining strategy. However, the National
Labor Relations Board (NLRB) has ruled that lock-in agreements are unlawful.4 It is law-
ful for two or more separate unions (or bargaining units within the same union) to share
information with each other about bargaining priorities, strategies, or employer-specific
information. This can lead to establishing some similar negotiation goals. Sharing infor-
mation and goals prior to bargaining, but bargaining independently of other union locals
is called coordinated bargaining.

Leapfrogging
If the negotiations at different firms are taking place over several months or years, one
party to the negotiation may attempt leapfrogging. This strategy attempts to use the
most recent contracts in the industry even if not your own as the starting point for
extracting further concessions. Imagine a scenario where the workers at Companies A,
B, and C were all earning $20 per hour two years ago. The union structured negotiations
so that the contract at Company A expired last year. The union negotiated a raise to $21
per hour. This year, negotiations occur at Company B. The union attempts a strategy of
arguing that the organization should not use its own contract (paying $20 per hour) as
its starting point for determining pay raises; instead, everyone should use the most recent
contract in the industry (Company A, now paying $21 per hour) as the reference. The
union further argues that since nearly a year has passed and some inflation has occurred,
workers are entitled to more than $21 per hour. Suppose that they are successful in this
gambit and get $21.33 per hour. When the next contract with Company C is negotiated
(perhaps a year later), the union will argue that negotiators should focus less on their
own $20 per hour wage and focus more on current industry standards (the $21.33 now
paid by Company B) and what sort of pay raise above current industry standards is
appropriate. Thus, each set of contract negotiations provides an opportunity for the
union to negotiate wages that jump over (leapfrog) what others are paying in order
to secure ever-higher wages. Leapfrogging in this example represents a coordinated strat-
egy by the union locals, yet managers may not realize it.

In all of these examples, negotiators for the local union used the collective bargain-
ing agreements (CBA) of other groups of employees as a prominent reference point to
determine what should be in their own upcoming contract. These other groups were
not part of the local s negotiations, nor would the other groups be bound by the local s
contract however, the negotiation outcomes of the other groups clearly played a signif-
icant role in the local s strategy. Finally, recognize that these are bargaining strategies;
there is no guarantee that they will work. The management negotiators may simply dis-
regard what other companies pay their unions. Thus, successful pattern bargaining,
whipsawing, or leapfrogging depends upon how persuasive the negotiators are when
implementing the strategy.

The Bargaining Unit
The second dimension of the bargaining structure, the bargaining unit, refers to the
employees and employers who will be bound by a negotiated labor agreement. As dis-
cussed further in Chapter 5, any appropriate bargaining unit (ABU) determined by the
NLRB for representation election purposes is, by definition, a unit appropriate for

270 PART 2 The Bargaining Process and Outcomes

negotiating purposes (see the first example in Exhibit 6.1). Once a union has been
certified as the representative of an ABU, two or more ABUs may be combined for the
purpose of negotiating a single labor agreement to cover all ABUs if such a combination
is acceptable to both the union and the employer(s).

Single Employer, Multiple ABUs
Most often, combining bargaining units involves two or more ABUs at one employer s
operation represented by the same union. For example, suppose that a company has sev-
eral production facilities in three adjacent counties. While the same union may have won
separate representation elections for each individual facility, the union may request that
the ABUs from all three counties be combined for contract negotiations.

Sometimes ABUs represented by different unions are combined. For example,
Harley-Davidson Motor Company operates a manufacturing plant in Kansas City, Mis-
souri, where the International Association of Machinists and Aerospace Workers (IAM)
and the United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied Indus-
trial, and Service Workers International Union (USW) were elected to represent two sep-
arate groups of plant workers but, with the employer s agreement, have chosen to
negotiate a single contract to cover both groups of workers. For another illustration, see
the second example in Exhibit 6.1.

Whether to combine ABUs together for negotiation purposes is a nonmandatory
subject of bargaining.5 That means that if, for example, the union wants to discuss the
topic of combining ABUs, managers may agree to discuss it, but the management nego-
tiators are not legally required to discuss it if they don t want the ABUs to be combined.
(By contrast, wages, hours, and working conditions are considered mandatory subjects
of bargaining by the NLRB: If, for example, the union wants to discuss a wage raise,
management is required to bargain with the union over it.)

There are several factors for both managers and union leaders to consider when
deciding whether to allow multiple ABUs to combine for bargaining with a single
employer. One or both parties might prefer companywide bargaining because of product
interdependence, market factors, or legal considerations. For example, a company may
have three manufacturing facilities, each having a separate ABU. If the products at the
facilities are interdependent (Facility A s product is needed for Facility B, whose product
is in turn completed at Facility C), then management would probably prefer centralized

Exhibit 6.1
Possible Structures for
Collective Bargaining

Structure Example

1. Single employer single union
Single location
Multiple locations

ABC Manufacturing Co. UNITE
General Motors UAW

2. Single employer several unions
Single location
Multiple locations

Johnson Metal, Buffalo, New York
all crafts and industrial unions
General Electric IBEW and IUE

3. Multiple employers single union Trucking Management Incorporated
Teamsters

4. Multiple employers several unions Association of General Contractors of
North Alabama Birmingham Trade
Council

CHAPTER 6 Negotiating the Labor Agreement 271

bargaining, producing a single contract expiration date and only one risk of a possible
strike at all facilities instead of three different contract expiration dates and possible
separate strikes at different times at each of the facilities if each ABU negotiated a sepa-
rate contract. Of course, should a work stoppage actually occur, the potential magnitude
of the impact would be greater under centralized bargaining because all three covered
plants would be affected immediately.

If the three facilities operate independent of each other each facility producing a
complete product or service itself (e.g., three steel mills, each producing steel beams; or
three facilities producing unrelated products such as baseball gloves, cereal, and
marbles) management would probably prefer to negotiate a separate contract to cover
the ABU at each independent facility. Separate negotiations would probably result in dif-
ferent contract expiration dates for the three facilities. Although each separate contract
would involve the risk of a work stoppage when it expired, if one facility went on strike,
the others could still continue production. In the case of facilities that produce similar
products, management could transfer some of the orders from the striking facility to
other nonstriking facilities where labor contracts had not expired.

Some observers believe that conglomerate companies with a wide range of products
have too much bargaining power over unions. One sample of nine conglomerates
revealed 846 different manufacturing products sold. A union threatening a strike to
shut down one of these manufacturing facilities or even an entire product line might
not be able to put sufficient pressure on a conglomerate to reach a bargaining settlement.
Under this condition, a union would prefer companywide bargaining, realizing that if all
facilities were covered under the same contract a strike could effectively shut down the
company s entire operations, thereby increasing union bargaining strength.

Multiple Employers, Multiple ABUs
Choosing to formally combine ABUs from different companies for negotiation purposes
can take several forms. One version of this is centralized bargaining (also called
industry-wide bargaining), where all of the major employers in a given industry negotiate
one contract with one union (see the third example in Exhibit 6.1 for an illustration).
Historically, the major coal mine operators in the Appalachian mountains negotiated one
basic agreement with the United Mine Workers. Industry-wide bargaining is also found in
some European countries. Sometimes, centralized agreements are comprehensive. In other
industries, centralized agreements only deal with wages, benefits, and general working
conditions (industry-level bargaining); firms also negotiate supplemental agreements
dealing with specific working conditions for their firms (company-level or companywide
bargaining) or their individual facilities (local-level bargaining).6

It is difficult for both employer groups and unions to maintain a cohesive structure
for centralized, industry-wide bargaining over many years. That is because it is tempting
for individual companies and/or union locals to try to negotiate separate agreements that
take their unique circumstances into account. Consequently, sometimes centralized
bargaining gives way to pattern bargaining.

Even if it doesn t encompass most workers in an industry, multi-employer bargain-
ing units sometimes occur at the regional level. These include more than one employer
in a geographic region combining together to negotiate a single contract covering
employees at each of the participating employer s firms who are typically represented
by the same union. Multi-employer bargaining may be found in trucking, motion picture
and television, construction, longshore, and newspaper industries.

Finally, sometimes multiple employers negotiate a regional contract with multiple
unions (see the fourth example in Exhibit 6.1). This is common in construction, where

272 PART 2 The Bargaining Process and Outcomes

several unionized contractors and subcontractors engage in council bargaining with sev-
eral different labor unions at the same time. This approach not only insures that all of
the contractors will pay the same wage rate for the same type of work, it can also serve
to insure that traditional wage differentials are maintained between different groups
across unions (e.g., perhaps skilled plumbers historically earned 160% of the wage rate
paid to unskilled laborers).

Whether considered at the industry level or the regional level, market factors influ-
ence the degree of centralization of the bargaining structure. In a highly competitive
product/service market, a multi-employer (centralized) negotiating unit would be desir-
able to employers who fear being placed at a competitive disadvantage if other employers
subsequently negotiate lower labor cost terms. This would be particularly true for an
employer with fewer resources (less bargaining power) than the union with whom the
employer must bargain and whose firm also exhibited a high degree of labor intensive-
ness (i.e., the proportion of an employer s total operating costs comprising labor costs).
Agreeing to join other employers in a multi-employer bargaining unit strengthens an
individual employer s bargaining power and also minimizes another potential problem
the loss of customers to competitors should a work stoppage occur.

Unions are also concerned about market problems in some industries (construction,
coal, trucking, ladies garments, longshore, and others) and attempt to extend the bar-
gaining unit to include all unionized employers in a geographic area producing the
same competitive product. This approach is taken to prevent a few employers with
above-average bargaining power from separately negotiating lower wages, which could
provide them lower production costs, thereby attracting customers from other unionized
firms resulting in layoffs at higher labor cost firms. In essence, unions are attempting to
standardize wages, hours, and other terms of employment to reduce the importance of
labor costs as a competitive factor and to force employers to compete on the basis of
other nonlabor factors such as product design, product quality, and customer service.

Multi-employer bargaining also has other advantages. A union engaged in multi-
employer bargaining has a powerful advantage over rival unions because the NLRB
holds that while a multi-employer bargaining unit is intact, it is the only appropriate bar-
gaining/election unit.7 Thus, the NLRB will dismiss a rival union s petition for an elec-
tion in a single firm as long as the incumbent union and the firm are participants in a
multi-employer bargaining unit. Both labor and management can benefit from the cost
savings that accrue from having to prepare for fewer contract negotiations when separate
ABUs are combined to form a centralized bargaining unit. The costs of preparing for
and conducting negotiations can also be shared among employers participating in a
multi-employer bargaining unit.

Multi-employer bargaining has some disadvantages. Over time, centralized bargain-
ing tends to become more formal and less flexible in terms of meeting employee and
employer concerns at an individual workplace. Because terms must be applied across dif-
ferent employee groups, often at different locations, bargaining outcomes tend to reflect
a broader regional, corporate, or industry level perspective rather than emphasizing local
conditions prevailing at any particular plant location. For example, wage and benefit
trend data used to identify an appropriate bargaining outcome are more likely to reflect
prevailing industry or national averages rather than local labor market conditions.

Finally, multi-employer bargaining can create tensions among the member employ-
ers. First, where there is a clear disparity in the size of the participating firms, larger
employers may attempt to control the decisions of the multi-employer group. This may
become a problem for smaller employers within the group whose perceptions may differ
from larger employers regarding the affordability or administrative burden of accepting

CHAPTER 6 Negotiating the Labor Agreement 273

certain union bargaining proposals. Second, an employer might consider withdrawing
from a multi-employer group if it feels it can get a better deal negotiating separately
with the union. To legally withdraw from an existing multi-employer bargaining unit,
an employer must provide both the union and other unit employers with reasonable
advance notice (e.g., prior to the expiration date of the current agreement and before
negotiations have commenced on a new contract).8

The decision to engage in centralized bargaining can also be affected by legal guide-
lines. The size and makeup of a party s bargaining team is a nonmandatory subject of
bargaining.9 Suppose that only union representing a particular bargaining unit is partici-
pating in regional bargaining with a multi-employer group. That union could permit
representatives from other unions who also bargain separately with the same employers
to sit in on negotiations as part of the union s bargaining team. Although the employers
cannot control who sits on the union bargaining team, the employers could legally
require that only the legal union representative of the bargaining unit covered by the
contract under negotiation be permitted to decide whether to accept or reject manage-
ment s bargaining proposals.10 Union representatives from other bargaining units could
function as observers in the negotiation process but could not exercise any authority over
determining settlement terms.

The U.S. Supreme Court ruled that it is unlawful for an employer to withdraw from
an established multi-employer bargaining arrangement during a bargaining impasse
without the union s consent.11 The employer s withdrawal is not allowed, and the
employer is bound to any subsequent agreement reached by the union and the multi-
employer bargaining group.

Negotiation Preparation Activities

There are a number of different activities that union and management negotiators must
engage in to adequately prepare to conduct labor negotiations. As in many aspects of life,
effective preparation is the key to successful implementation of bargaining strategies and
the attainment of desired bargaining outcomes.

Selection of the Negotiating Team and Related Bargaining
Responsibilities
The selection of the number and type of individuals who will make up the bargaining
team for each party is an important decision that can affect the outcome of negotiations.
Exhibit 6.2 suggests some characteristics of an effective negotiator, although few indivi-
duals are likely to possess all of these characteristics to the ideal degree.

Personality Factors
Using controlled, laboratory experiments, researchers have investigated how various per-
sonality characteristics influence negotiation behavior. Here are a few examples of such
research: (1) People who have confidence in their own negotiation ability (called high
self-efficacy) tend to do well in one-issue salary negotiations; self-efficacy can also coun-
teract the negative effects of negotiation anxiety.12 (2) People who are high in the Big
Five Personality Traits of extraversion and agreeableness tended to do poorly in a simple
buyer/seller negotiations, perhaps because they were more concerned about maintaining
social relations than the product s price.13 (3) However, negotiators who are conscious of
social cues and willing to vary their interpersonal style while still pursuing their goals
(called high self-monitoring) tend to plan their negotiation interaction thoroughly and

274 PART 2 The Bargaining Process and Outcomes

do well when negotiating over emotionally laden issues or when given time to thought-
fully plan their response to their opponent s uncooperative behavior.14 (4) For complex,
multi-issue negotiations, cognitive ability, and perspective-taking ability were valuable for
helping both sides achieve good outcomes.15 Clearly, negotiation depends on personality,
experience, cognitive skills and abilities, as well as situational characteristics. As Ian
Newall wrote, A skilled negotiator is not just someone who can make deals; a skilled
negotiator is someone who can make deals that can be implemented. Skilled negotiators
anticipate implementation issues before the deal is agreed. Less skilled negotiators make
deals that others find difficult or impossible to implement. 16 This body of research sug-
gests that it is desirable that at least some members of the negotiating team have certain
personality traits, recognizing that personality factors interact with situational character-
istics and no one set of traits will be universally beneficial.

Union and management negotiators seek bargaining team members who can keep
their emotions and opinions in check. An indiscreet negotiating team member can unin-
tentionally reveal confidential information about settlement positions and strategies to
the other team. In some cases, union and management negotiators may agree to release
information in the form of a joint statement to outside parties (e.g., news media) during
negotiations. This tactic reduces rumors or misleading claims that can damage progress
being made toward a settlement at the bargaining table. Where no such agreement exists,
there is a risk that one or both parties may choose to leak certain information about the
contents of specific proposals, perceived road blocks to settlement, or a perceived lack of

Exhibit 6.2
Some Common Characteristics
of an Effective Negotiator Able to say no effectively

Integrity and the ability to inspire confidence in his or her judgment ability

Able to plan effectively and conduct research necessary to become thoroughly
knowledgeable about bargaining issues and trends

Able to discern the bottom line interests of other parties

Even-tempered and able to tolerate conflict and ambiguity

An excellent communicator (i.e., able to speak, write, and listen effectively)

Self-confident and pragmatic (able to establish realistic bargaining expectations
and accurately assess the benefits, costs, and risks of insisting on specific set-
tlement terms)

Good physical and mental stamina

Able to understand the short- and long-term implications of specific bargaining
proposals on the parties interests

Understands the importance of face saving and is willing to provide opportu-
nities to the other party to do so (or conversely, knows when to take advantage
of such opportunities when offered by the other party)

Willing to take calculated risks in order to achieve desired bargaining outcomes
without seriously jeopardizing constituents best interests

Knows how and when to ask relevant questions and interpret the other party s
responses (even no response to a question or action may, in fact, represent a
meaningful response)

Has a sense of humor to relieve stress or establish rapport with the other party

Always laughs with the other party, never at the other party

CHAPTER 6 Negotiating the Labor Agreement 275

honest effort to reach an acceptable agreement. While such leaks may sway public opin-
ion or shore up political support for negotiating team members, they can also damage
trust between the bargaining parties and delay progress on substantive issues as the
leaks themselves may become a topic of conversation at the bargaining table and can
hinder progress. For example, one party may fear mentioning a possible alternative set-
tlement on an issue for fear the other party may disclose the remark publicly as a firm
and final position of the initiating party, rather than the idea starter or trial balloon it
was intended to be.

How Many Negotiators?
In determining the size of each negotiating team, smaller teams are generally preferable,
with a maximum suggested size of nine.17 Large teams tend to experience increasing
coordination problems (e.g., task assignment, delegation of authority, pressure to con-
form) and require additional time to reach consensus on bargaining issues. In some
instances, there is a large formal negotiating team that satisfies the internal organiza-
tional politics of each side. However, the actual negotiations are conducted by a subset
of that team, with the larger team playing only an advisory role during negotiations and
endorsing the tentative contract after it has been negotiated. Sometimes bargaining team
size is influenced by a desire to match the size of the other party s team. A bargaining
structure that emphasizes centralized industry or corporate-level bargaining or multiple
parties (on either side) tends to expand the size of negotiating teams.

Management Considerations
Management generally selects negotiating team members based on the perceived need for
each individual s skills and experience. Management generally wants at least one line
manager who supervises bargaining unit employees on its team to either interpret or
answer negotiating issues related to daily work operations. This may be particularly
important when gauging the likely effect of union proposed work rule changes.

Union Considerations
Unions apply selection criteria similar to those of management, but in addition, they
must weigh certain political considerations. For example, an elected union leader may
think it is important to appoint at least one or more representatives from key constituent
groups within the bargaining unit (e.g., skilled trade, largest department or occupation,
women, minorities) to serve on the union s negotiating team. This choice helps to ensure
that the special interests of key constituent groups will be considered in negotiating set-
tlement terms, which will enhance the probability that tentative contract settlement
terms will be approved by a majority of the union s membership.

The union negotiating team may be elected by the membership or appointed by
elected union officers depending upon the wording contained in the union s constitution
and by-laws. Where direct election of negotiating team members is permitted, there is
always a risk to current leaders that one or more rivals for union leadership may be
elected to serve on the team. This can create some problems in attempting to achieve
consensus on bargaining priorities, strategies, tactics, and acceptable settlement terms.

Proposal Determination and Assessment
Management relies on several sources to determine a union s likely bargaining goals in
contract negotiations. A review of recent settlements negotiated by the company s com-
petitors and other local firms may help to identify likely bargaining subjects as well as
possible settlement outcomes. The company and union may have negotiated settlements

276 PART 2 The Bargaining Process and Outcomes

at other facilities that might also be used as a starting point in the current negotiations.
Some management officials obtain bargaining insights by reviewing the proceedings of a
national union s convention or visiting a union s Internet Web site.

One study of local union officials reported that staff representatives, business agents,
and organizers were more likely to rely upon formal information sources (e.g., libraries,
union research departments, databases) than informal sources (e.g., personal networks,
telephone inquiries) to gather information for use in contract negotiations.18 Formal
training in research methods also increased the number of information sources used by
a union official in preparing to perform role functions such as contract negotiations.

Attention should be given to the parties previous negotiations, particularly to those
issues that one party actively sought and reluctantly dropped. Compromise settlements
on previous issues also generate valuable clues because compromise does not always
mean permanent resolution of the issue. An analysis of previous grievances at the facility
can also identify certain trouble spots. GM, for example, uses a computerized analysis of
number, type, and resolution status of grievances in their negotiation preparations. How-
ever, caution must be taken not to overemphasize these grievances. Unions often increase
the number of grievances filed in the six months prior to negotiations to dramatize wide-
spread concern over certain bargaining issues concerns perhaps more tactical than real.

Formulating Proposals
Management negotiators need to be proactive rather than reactive in preparing for con-
tract negotiations.19 Traditionally, many management negotiators chose to wait for the
union to present its bargaining proposals before determining management s bargaining
response. Often in the past, this approach permitted the union to control the bargaining
agenda and left management negotiating over how many or to what extent to grant
union demands for improvements in employment terms of interest. Increased competi-
tive pressures have caused many unionized employers to initiate proposed work rule
changes to decrease labor costs and improve productivity and quality, which would not
likely have been a part of the bargaining agenda if management negotiators did not take
a more proactive stance at the bargaining table. Rather than waiting for the union to
raise every issue, management negotiators should put forward their own proposals con-
cerning issues such as health care cost containment, revising pension benefits, broaden-
ing job descriptions, and subcontracting or outsourcing of certain bargaining unit work.

Since the union will normally present its bargaining proposals first as the party ini-
tiating the request to renegotiate a current contract set to expire soon, management
negotiators may prefer to defer presenting proposals on any issues the union is expected
to initially address (e.g., wage rate improvement) so as not to tip their hand to the
union. See Exhibit 6.3 for some advice on wording contract language proposals.

Analyzing Contract Language
In formulating bargaining proposals, managers often perform a close analysis of the cur-
rent labor contract to determine desirable changes in language that will reduce labor
costs and increase management flexibility in making operating decisions. Assume, for
example, that the current contract prohibits managers from performing any bargaining
unit work. Management might propose allowing supervisors to perform bargaining unit
work under at least three conditions: (1) when training new employees, (2) in emergency
situations (usually interpreted to mean when employees lives or production equipment
are at immediate risk), and (3) when experimental production efforts are involved.

Sometimes contract language is ambiguous. For example, does a 90-day probation-
ary period mean 90 calendar days ? Or 90 working days ? Other times, two clauses

CHAPTER 6 Negotiating the Labor Agreement 277

that were negotiated separately may have unintended consequences when they interact.
For example, suppose that workers receive a pay raise on the fifth anniversary of their
employment start date. Also suppose that a different contract clause states that indivi-
duals going on vacation are to receive their pay the Friday prior to leaving on vacation.
What happens if the person s fifth anniversary date happens to fall during the middle of
their vacation week? Do they get advance vacation pay at the rate that is currently in
effect when they receive it (the Friday before their vacation)? Or do they get part at the
old rate and part at the new rate?

Examining Prior Arbitration Decisions
Management and union officials may propose contract language intended to nullify the
impact of prior adverse arbitration decisions. For example, an arbitrator s decision that
the company will pay for an employee s safety shoes could be nullified by negotiating
new contract language that reads, The Company will provide the employees with safety
shoes and deduct the cost of these shoes from the employee s paycheck. Both union and
management will typically contact union stewards and first-line supervisors or depart-
ment heads, respectively, to determine if any contract language has been difficult to
administer during the term of the current labor agreement and thus ought to be
modified.

Economic and Legal Information
Efforts will also be made to research data from government reports, especially from the
U.S. Departments of Commerce and Labor, and from various labor relations services
such as the Bureau of National Affairs, and Commerce Clearing House. Data pertaining

Exhibit 6.3
Practical Advice on Wording
Contract Language Whenever possible, use common words, terms, or phrases that are easy to

read and understand.

Consider the types of individuals who will use the contract (e.g., employees,
managers, union representatives, arbitrators) and write contract language with
this audience in mind.

Anticipate questions or circumstances that might arise in implementing the
intent of the proposal and include contract language that would answer or
address such issues or concerns.

Use consistent terminology throughout the contract to refer to the same con-
cept or item to enhance consistency of meaning and interpretation.

Write concisely using only the words necessary to clearly convey the meaning
or intent of the contract clause.

Use appropriate section numbers or headings to organize contract language by
specific bargaining subjects or topics.

Use numbered lists to highlight criteria or factors relevant to a particular subject
(e.g., steps in a grievance procedure, promotion eligibility criteria).

Be clear and specific when specifying time frames or numbers (e.g., length of
employee probationary period, length of regular work shift or break-time, effec-
tive and expiration time and date of the contract).

SOURCE: Marc Boulanger and Brian H. Kleiner, Preparing and Interpreting Collective Bargaining Agreements Effectively, Man-
agement Research News, 26(2/3/4) (2003), pp. 193 199.

278 PART 2 The Bargaining Process and Outcomes

to wages, benefits, safety and health, technological change, job security, productivity,
legal developments, and so on, from these and other sources, give both parties substan-
tial information with which to prepare for negotiations. Being over-prepared to conduct
contract negotiations is a rarity, but the negotiator who enters bargaining under-
prepared is taking a sizeable risk. Review the Labor Relations in Action item in this
chapter on pages 282 283 for an example of a nursing union s bargaining goals.

The Bargaining Range
Union and management officials enter collective bargaining with their own ideas of an
acceptable settlement, although both parties know the other will not agree entirely with
their position. Therefore, both parties usually enter negotiations with a range of accept-
able positions that give them some room for maneuvering. These positions can be given
priorities and grouped into a bargaining range, one for management and the other for
the union.

A One-Issue Example
Consider a simple, one-issue example involving wages: Imagine that the Union currently
makes $20 per hour. The union is asking for a 95 cents per hour raise. Unknown to the
management negotiating team, the union negotiators are willing to accept any pay raise
larger than 50 cents per hour. However, the union is unwilling to accept any raise smal-
ler than 50 cents per hour. Thus, 50 cents per hour is the union s resistance point (also
called a reservation price or a limit): The union negotiators may make concessions from
95 cents per hour down to 50 cents per hour, but they will resist making additional con-
cessions in their proposed raises beyond that point. Perhaps union leaders believe that a
65 cents per hour raise is a realistic goal to work toward; thus, 65 cents per hour is the
union s target point. The range between 50 cents per hour and 95 cents per hour con-
stitutes the Union s bargaining range.

Meanwhile, management negotiators have their own bargaining range. Perhaps they
begin negotiations by offering the union no pay raise at all, but confidentially, the man-
agers would accept a pay raise as high as 60 cents per hour. Their range is 0 cents per
hour raise to 60 cents per hour raise and a 60 cents per hour raise constitutes manage-
ment s resistance point (they won t pay more than that 60 cents per hour). Perhaps their
target point is 33 cents per hour raise.

If you were an omniscient third party and could graph management s bargaining
range next to the union s bargaining range, you would see that they overlap between
their resistance points: 50 cents per hour to 60 cents per hour. This area of overlap is
often called the contract zone (also sometimes called the settlement range or the zone
of potential agreement). While negotiators do not have perfect information about the
other side s bargaining range and resistance point for each issue, thorough economic
research prior to negotiation can help each side calculate realistic, probabilistic estimates
of the other side s bargaining range and resistance point, and better determine their own
range for each issue.20

Both management and union representatives have upper and lower limits on their
respective ranges. Management s upper limit on an issue is usually determined by its
objectives, such as profitability and productivity growth. Settlement terms that are too
costly or restrictive on management s right to make operating decisions would be incom-
patible with the company s objectives. The point beyond which a party would prefer no
settlement to settlement on unacceptable terms represents that party s resistance point
on a particular bargaining issue. For example, management might prefer to close, move
its operations, or bring new employees into its existing facility rather than agree to a

CHAPTER 6 Negotiating the Labor Agreement 279

settlement that would make operations unprofitable. On the other hand, management
may not want to be known as the cheapest employer in the area, nor would it want to
be unable to recruit, retain, and reward its productive employees. These concerns help
place a lower limit on management s bargaining range a minimum offer that manage-
ment feels is necessary to maintain employee morale and output.

A union s upper limit is usually shaped by two factors: (1) desired employment
levels and (2) the ability to promote and sustain a strike. A union realizes that there is
often a trade-off between pressing for economic gains (higher wages and improved ben-
efits) and the number of jobs that may be available at that higher labor cost. Higher
labor costs increase management s incentive to look for ways to substitute capital for
labor (e.g., automation, robotics, or other technological innovation), use less labor (e.g.,
layoffs), or find a less costly labor supply (e.g., subcontracting bargaining unit work to
nonunion employers or moving work operations to lower-cost domestic or international
labor markets). Unrealistic union bargaining proposals are likely to be discounted by
management and can serve as a hindrance to serious negotiation over meritorious issues.
Also, it is difficult for a strike to be initiated, let alone successfully concluded, if union
leaders call a strike over an unrealistic bargaining demand (e.g., $3 per hour wage
increase when union members recognize that management could realistically afford a
raise of only $0.80 per hour). Bargaining unit members are not likely to risk a work stop-
page over issues of minor importance to their interests or proposed settlement terms that
they view as unrealistic under the prevailing conditions.

On the other hand, union leaders realize that there is a lower limit on the bargaining
range and that a settlement below this limit would result in membership dissatisfaction.
Because union leaders are strongly influenced by their desire to ensure the survival of the
union and their continued election as union officers, they seldom accept a settlement
below this perceived resistance point. Union leaders can, to some extent, try to shape
employee expectations regarding bargaining outcomes. It is important for union leaders
to solicit input from members about their bargaining interests and priorities and to
inform members about current bargaining conditions and trends, thereby encouraging
the members to form realistic bargaining expectations.

A Multi-Issue Example
The bargaining range may be calculated for multiple issues. Let us examine a three-issue
example, introducing the concept of utility, subjective usefulness, to each side. For the
union, a large pay raise is the most important issue, but it is not the only important
issue. The union also wants a union shop clause added to the contract, requiring new
employees to join the union after 30 days. The union would ideally like both a large raise
(say, 80 cents per hour) and a union shop clause. An outcome that is less useful to union
leaders (provides less utility) would be one that does not contain a union shop clause but
a higher pay raise. The union is indifferent to a management proposal to keep requiring
workers to do minor repairs to their machines, because they already do this.

Meanwhile, managers may currently have a contract clause that requires machine
operators to do minor repairs to their machines. Managers find it useful to have that
clause in the contract, and are willing to give the union members a 60 cents per hour pay
raise to keep that clause in the contract. An outcome that provides less utility to
managers involves the elimination of the minor repairs clause from the contract; in that
circumstance, managers will offer a lower pay raise. Managers are indifferent to the
union s proposal to insert a union shop clause in the CBA.

In this example, please notice several things. First, it is possible for each side to
order (either rank order or by using some sort of subjective utility scale, such as 100

280 PART 2 The Bargaining Process and Outcomes

to 100) the various outcomes on issues individually or in combination if they are
linked as package proposals. The package proposals just described are ranked in Exhibit
6.4. Second, objective dollar outcomes and subjective utility are not identical. The value
of the union shop clause to the union may involve more than the trade-off of dollars in
monthly dues from more members vs. 15 cents more per hour in pay raises. A union
shop clause may provide value to union leaders in other ways: increased prestige of the
local with national union headquarters, greater stability for the union, and it may make
it more likely for union officers to be re-elected. Third, in this example, each side is
indifferent toward one issue (perhaps with a utility of zero if a scale is used) that is
important to the other side. The union is indifferent regarding the minor repairs
issue and management is indifferent about the union shop issue. Thus, in negotiations
you cannot automatically assume that the other side will oppose every position you
take on every issue. For some issues, both sides may even have the same preferences
(e.g., both sides may favor establishing a safety committee).

With multi-issue negotiations, each side s bargaining range may represent a multi-
tude of issues and potential settlement points. Assigning priorities to these issues and
their possible combinations produces bargaining ranges of an almost infinite number of
possibilities as the number of issues and settlement options increase. Bargaining ranges
can change during negotiations as bargaining issues get linked in package proposals cov-
ering several subjects or in response to new information, usually becoming finalized as
the parties approach the contract expiration date or a strike/lockout deadline. A party s
bargaining resistance point on a particular issue generally remains relatively stable dur-
ing negotiations. Any drastic alteration of a party s resistance point on an issue generally
indicates insufficient bargaining preparation on the part of that bargaining party.

Exhibit 6.4
Bargaining Ranges for
Union and Management
Negotiators

CHAPTER 6 Negotiating the Labor Agreement 281

LABOR RELATIONS IN ACTION
Bargaining Goals for Registered Nurses

Registered nurses are professional employees who
undergo extensive education and practical training to
learn health care skills and patient care procedures.
Like other types of workers, nurses are concerned
about improving their personal wages, hours, and
other terms and conditions of employment. Unlike
many nonprofessional occupations, nurses are licensed
and must adhere to rigorous professional performance
standards and a formal code of ethics. A nurse s primary
focus on ensuring the well-being of patients and the
quality of care they receive can create conflict in prac-
tice when health care policy decisions are increasingly
focused on reducing health care cost and increasing the
efficient use of health care resources. Unlike some
other occupations, the demand for skilled nursing care
is projected to increase over the next decade, creating
new job opportunities and increasing emphasis on
employers recruitment and retention of registered
nurses. This should enhance the bargaining power of
nurses while also increasing employer opposition to
union efforts to organize more nurses. The majority of
nurses are employed in profit and nonprofit general
medical and surgical hospitals.

The National Nurses United (NNU) union recently
adopted a set of standards which will form the basis
for contract proposals in negotiations with health care
administrators throughout the country. The NNU,
which is affiliated with the AFL-CIO, was formed in
December 2009 by the merger of the California Nurses
Association/National Nurses Organizing Committee and
the Massachusetts Nurses Association. Representing
over 150,000 registered nurses through affiliated state
and local level nursing organizations throughout the
country, the NNU is the largest union and professional
organization of registered nurses in U.S. history. Among
the bargaining goals of the NNU are the following:

Staffing levels based on the severity of the patient s
condition with minimum specific nurse to patient
staffing ratios enforceable through contract lan-
guage. A recent study comparing patient s and
nurses outcomes experienced under state law-
mandated minimum staffing ratios in California to
hospitals in two other states without mandated
ratios found both the quality of patient care and
nurse retention and job satisfaction were better
under the California staffing ratios.
Restrictions on allowing nurses to be assigned to a
unit to aid temporary staffing shortages if the nurse
does not have sufficient experience in providing the
type of nursing care required on that unit.

A ban on mandatory overtime and shift rotation,
although a voluntary plan would be acceptable.
Measures to contain patients and nurses exposure
to pandemics and other communicable diseases.
Improvements in retirement security through
defined benefit plans and employer paid retiree
medical benefits.
Restrictions on the introduction of new technology
that displaces nurses, and reducing the ability
under which RNs are permitted to exercise profes-
sional judgment in carrying out the delivery of
patient care.

The NNU also seeks to avoid signing any conces-
sionary contract which would:

Reduce existing compensation, health and retiree
benefits or work hours and schedules.
Establish a two-tier compensation plan which
would offer new hires lower wages or benefits
than comparably qualified current hires receive for
similar work.
Use merit pay or other proposals to eliminate the
use of seniority as a viable factor in human
resource (HR) decisions.
Result in nurse layoffs or the displacement of regis-
tered nurses by other types of hospital employees.

Nurses may seek to oppose any hospital policy
which is perceived to negatively impact patient care.
For example, during contract negotiations at a Pennsyl-
vania hospital, nurses complained about a hospital pol-
icy that required them to escort every patient to the
hospital s billing department prior to discharge. While
performing this task nurses were necessarily absent
from their assigned units and unable to render nursing
care to patients admitted to the unit. A clerical, trans-
port, or other administrative employee could have
been assigned the escort duty if it were determined
this was necessary to ensure patients didn t skip out
on paying their hospital bill.

Nursing organizations and hospital administrators
share a common goal of providing quality health care
services at reasonable cost. While public statements
during negotiations may emphasize such generally
acceptable goals, the real work of negotiators involves
how to translate such broad goals into specific work
rules necessary to operate a complex health care facility
on a daily basis. Every proposed work rule has both
costs and benefits which the parties must recognize
and weigh carefully. Establishing and maintaining a
good bargaining relationship based upon mutual trust

282

Costing Contract Proposals
Management has an overriding concern about the eventual cost of a labor agreement s
terms because it has the responsibility of paying for those terms of employment. Man-
agement will generally need to estimate the cost of contract proposals at several points
during the negotiation process, including prior to the first bargaining meeting (pre-
bargaining preparation), during negotiations as counterproposals are exchanged, and
after final contract terms have been agreed on. Management negotiators often use two
general costing approaches in negotiations: preparation of employee background data
and calculation of a cents-per-hour wage increase. Unions also engage in costing efforts
for the purpose of either determining the value of management proposals or helping to
persuade management that it can afford to grant union proposals.

Management usually obtains statistical summaries of employees, cross-tabulated by
several variables (e.g., age, sex, marital status, seniority, job classification). These summa-
ries provide immediate information necessary to cost out a variety of contract proposals,
such as health insurance, vacations, funeral pay, and pensions. For example, if the union
is proposing vouchers to cover the cost of day care for pre-school age children of bar-
gaining unit employees, then management negotiators should determine the number of
children who would be covered to estimate the annual cost of such a benefit.

One of the most important calculations is the cost of a cents-per-hour wage increase.
The cents-per-hour cost of any contract item can be obtained by dividing the annual total
cost of the item by the number of bargaining unit hours worked during the year. If an
employer has 100 employees who work a standard 40 hour week and the firm operates
52 weeks per year then the total bargaining unit hours worked would be 100 2,080
hours 208,000 hours. Calculating the cents-per-hour cost of an item allows for realistic
cost comparisons across bargaining units of different sizes (number of employees).

The true cost of a wage increase includes the cost of the wage increase itself, plus the
increased costs of all benefit items paid on the basis of an employee s straight-time
hourly wage rate (e.g., holiday and vacation pay, sick leave and jury duty pay, paid rest
and lunch periods, overtime pay, call-in pay). The roll-up factor is an estimate of the
total cents-per-hour costs of employer benefit items affected by a change in the
straight-time hourly wage rate as a proportion (percentage) of the current average hourly
bargaining unit wage rate. For example, if the total cents-per-hour costs for the employer
benefit items affected by a wage rate change amounted to $7.20, and the current average
hourly bargaining unit wage rate was $20, then the roll-up factor or cost would equal
$7.20/$20 $0.36 or 36 percent. The actual cost of the wage increase calculated in
the following example would be $20,800 plus the roll-up factor cost ($20,800 0.36
$7,488) for a total annual wage cost of $28,288.

and respect between the parties can go a long way
toward achieving a necessary accommodation of com-
peting interests in the bargaining process.

SOURCES: Peter McMenamin, 2009 Registered Nurses Employment and Earnings,
American Nurses Association Issue Brief, May 2010, pp. 1 8; Who We Are and
About Us, National Nurses United at http://www.nationalnursesunited.org/about/

who-we-are.html (accessed November 16, 2010); Michelle Amber, RNs Adopt
National Bargaining Standards, Say They Won t Sign Concessionary Contracts,

Daily Labor Report, No. 90, May 12, 2010, pp. A13 14; Linda H. Aiken, Douglas M.
Sloane, Jeannie P. Cimiotti, Sean P. Clarke, Linda Flynn, Jean Ann Seago, Joanne
Spetz, and Herbert L. Smith, Implications of the California Nurse Staffing Mandate for
Other States, Health Services Research, 45(4) (2010), pp. 904 921; Joe Carlson,
Rallying for Ratios: Nurse-Patient Ratios Lead to Strike, Testy Negotiations, Modern

Healthcare, 40(24) (2010), p. 8; Kathleen D. Sanford, Nurse Staffing: Finding the Right
Number and Mix, Healthcare Financial Management, 64(9) (2010), pp. 38 39; Jerry
Lynott, Nurses, Hospital Battle Over Policy, McClatchy, Tribune Business News, July
27, 2010, p. 1 at http://www.proquest/com/.

283

An illustrative calculation of a 1 cent-per-hour wage increase for a bargaining unit
of 1,000 employees is as follows:

$20,800 Straight-time pay (1,000 employees 40 hours a week 52 weeks $0.01)

7,488 Roll-up cost for benefit items directly affected by the wage increase (profit
sharing, pensions, life insurance, employer contributions to social security,
shift differential if paid on a percentage basis, unemployment insurance,
workers compensation, and so on), estimated for illustrative purposes at
36 percent of the average bargaining unit straight-time hourly wage rate

$28,288 True cost of a 1 cent-per-hour wage increase

A negotiator should be prepared to bargain on either a cents-per-hour or a percent-
age wage increase proposal. Since the union will normally introduce the wage issue first
when presenting its initial bargaining proposals, the union will initially determine
whether the format for wage negotiations will be cents-per-hour or a percentage increase
in the current hourly wage rate. If bargaining on a percentage basis, it is important to
remember the magnitude difference between a given size percentage wage increase versus
a similar size cents-per-hour wage increase.

Assuming the average hourly straight-time wage rate for the 1,000-member bargain-
ing unit in the previous example was $20 per hour, the cost of a one percent wage
increase for this bargaining unit would be calculated as follows: 0.01 $20 $0.20 per
hour 1,000 employees 2,080 hours $416,000 straight-time pay roll-up cost of
$149,760 ($416,000 0.36) $565,760. This compares to the $28,288 total cost of a 1
cent-per-hour wage increase for the same group of employees.

Union officials may submit proposals that are difficult to cost, thereby weakening
management s related objections based on cost estimates during negotiations. Assume, for
example, that a current contract provision provides a Sunday work premium of 75 cents
per hour if the employees have no absences during their regularly scheduled work week.
The union proposes that employees working on Sunday receive this premium pay regard-
less of their attendance record during the week. Management can examine past payroll
records to estimate the added cost of this proposal, which is a difficult task if there are
thousands of employees involved, and it is uncertain if extra absences might occur if this
proposal is accepted. Other proposals, such as extending a previous labor agreement s
three-day paid leave for the death of an immediate family member to include first cousins,
are nearly impossible to precisely estimate cost because it is difficult to accurately gather
the data needed to cost the item (i.e., the number and ages of living first cousins of each
employee along with some death rate probability for this group). In addition, using past
payroll records and anticipated future production and staffing requirements may not
always be a perfect predictor of future operating experience.

Union negotiators may formulate proposals that benefit members interests while
saving management money, a difficult task requiring much ingenuity. Examples include
the following:

Allowing police to keep a squad car for personal use, thereby reducing crime statis-
tics and related expenses
Allowing sabbaticals for which professors receive one-half their salaries for nine
months, and management uses any surplus funds elsewhere if replacements teach
the professors classes at a lower pay rate
Using outpatient surgery for minor procedures or requiring second medical opi-
nions before scheduling major surgical procedures

284 PART 2 The Bargaining Process and Outcomes

Agreeing to a wage freeze for a specified length of time in exchange for an employer s
agreement to keep a plant open at current staffing levels for the same time period

When presenting cost analyses information at the bargaining table, it is important to
clearly explain how cost estimates were obtained and any underlying assumptions on
which estimates may rest.21 Using current and credible sources for data used in prepar-
ing cost estimates can increase the credibility and thus, persuasiveness of such informa-
tion when used in support of bargaining proposals.

Understanding Collective Bargaining Behavior: A Framework

Over 50 years ago, Walton and McKersie provided a framework that still guides thinking
about collective bargaining behavior today.22 They suggested that collective bargaining
consists of four separate processes and that each process is present to some extent in
every labor contract negotiation. Of Walton and McKersie s four bargaining processes,
the first two processes, distributive bargaining and integrative bargaining, involve two
different approaches to dealing with the other side. Distributive bargaining takes a
win lose contending approach, whereas integrative bargaining takes a win win

problem-solving approach. The third process, attitudinal structuring, focuses more on
attending to the emotions of the other side, to create a harmonious context for negotia-
tions. The fourth process, called intraorganizational bargaining, is concerned with the
discussion that takes place within the union or within management. Each of these four
processes will be considered.

Distributive and Integrative Bargaining: Two Different Approaches
Although each bargaining situation is unique and depends on the negotiators personal-
ities and the issues involved, collective bargaining behavior generally falls into one of two
strategic approaches: distributive bargaining or integrative bargaining (also referred to
as interest-based bargaining, mutual gains bargaining, or win win negotiation).23 Each
of these approaches can lead to a voluntary settlement of bargaining issues, and neither
approach guarantees that either party will get everything it wants.

A distributive bargaining approach tends to view the two parties interests as being
in conflict, making the negotiation process a win lose (zero sum) exercise. Gains for one
party s interests come at the expense of the other party because there is a finite amount
of resources available to the parties with which to meet bargaining goals. Bargaining
issues such as wages, for which the economic gain or cost of proposed settlement terms
can be estimated by the parties, lend themselves to a distributive bargaining approach,
particularly if they are negotiated one at a time. The primary focus of a distributive bar-
gainer is to maximize his or her own party s interests, although to accomplish this may
require some consideration and satisfaction of the other party s key interests.

A distributive bargainer seeks to achieve settlement at (or as close as possible to) the
other party s resistance point (i.e., the point beyond which the other party would prefer
no settlement to settlement on the other party s proposed terms). Each negotiator tries to
discover where the other party s resistance point lies on each issue and to modify the
other party s position and perceptions to achieve a settlement on preferred bargaining
terms. An effort is made to restrict and structure communications for strategic advantage
(e.g., control of the bargaining agenda). A distributive bargainer s persuasive efforts focus
on convincing the other party that the distributive bargainer s proposal is more accept-
able than the other party s or alternatively, that settlement on the distributive bargainer s

CHAPTER 6 Negotiating the Labor Agreement 285

proposed terms is preferable to the costs or risks of nonsettlement. Distributive bargai-
ners often respect each other s abilities more than they trust each other s intentions.
Finally, there is a greater willingness to use contending tactics (such as making threats,
annoying the other side, and making extreme demands) and to rely upon bargaining
power, if necessary, to force the other party s acceptance of proposed settlement terms.

Interest-based bargaining is sometimes referred to as integrative problem-solving,
mutual gains bargaining, or win win bargaining. Interest-based bargaining differs from
traditional distributive bargaining in a number of important ways. Negotiators approach
the bargaining process as a mutual problem-solving exercise. Open and honest commu-
nication about each party s interests, priorities, intentions, and the merits of specific bar-
gaining proposals is encouraged. Interest bargaining lends itself particularly well to
bargaining issues in which both parties perceive a common threat or need, and success-
fully resolving the problem can benefit the interests of both parties.24 For example,
resolving problems such as maintaining competitiveness, adapting to technological
change, improving product/service quality, and meeting employee health care needs
might lead negotiators to an interest-based bargaining approach.

Interest bargaining encourages and values mutual trust and respect between the par-
ties. In addition to concern for the parties respective substantive interests, there is con-
cern about the effects of the negotiation process and outcomes on the quality of the
parties continuing bargaining relationship. In order to meet both parties key interests,
efforts are made to identify multiple alternatives to each negotiating problem. Negotia-
tors focus less on narrowing the gap between each party s position and more on expand-
ing the number of mutually satisfactory solutions. Bargaining power is a less important
determinant of bargaining outcomes because the parties agree in advance on what objec-
tive criteria or standards to use in evaluating the merits of specific bargaining proposals.
Accurate information about bargaining subjects becomes the key basis for determining
what represents an acceptable bargaining outcome. For example, in negotiations over
teacher salaries accurate information regarding historical salary trends and how a school
district s salary trends compare to other similar school districts could be used to deter-
mine an acceptable outcome.25 Data could be compiled for specific job positions or by
salaries as a percentage of the operating budget and compared to data from other school
districts with similar demographics and fiscal resources. This approach encourages
mutual trust and an understanding of the other party s needs and objectives and empha-
sizes the commonalities between the parties instead of their differences. Trust, ethical
behavior, and information sharing have been shown to be important ingredients in
both laboratory and field research investigating interest-based bargaining: Indeed, with-
out trust in the other side, negotiators are reluctant to share information needed to cre-
ate integrative agreements.26

Strategies and Tactics
Some bargaining strategies and tactics may be appropriate for use in either a distributive
or interest bargaining approach. Using persuasive arguments and objective evidence in
support of bargaining proposals or painting a picture of the loss or gain to ensure that
negotiators understand what is at stake for the parties interests, as well as the relative
costs/benefits of reaching agreement versus continued disagreement, are two examples.
Summarizing bargaining progress to date often helps to clarify perceptions and direct
future negotiations on specific subjects. Presenting a bargaining proposal in writing, as
well as explaining it orally, helps ensure that the other party understands the proposal.
Listening carefully for ideas and emotions, not just facts, and noting nonverbal cues

286 PART 2 The Bargaining Process and Outcomes

(e.g., eye contact, tone of voice, facial or hand expressions, reaction of other team
members) can often provide information about the importance and degree of commitment
to statements made at the bargaining table.

Use of a bargaining caucus provides time away from the bargaining table to discuss
bargaining proposals or strategies, conduct costing, gather additional information, or
simply avoid making a statement at the bargaining table that one is not prepared to
make. Use of positive reinforcement, such as expressing appreciation for specific bargain-
ing behavior or acknowledging the acceptable portions of the other party s proposal, can
help to establish a positive environment in which to continue negotiations. Linking issues
(package proposal), such as the example in Exhibit 6.4, is another strategy that can be
used to resolve a large number of issues in a fairly short time or aid in resolving the
few remaining unsettled issues late in the negotiation process. As different types of issues
become linked, it may become more difficult to evaluate the relative value of different
proposed packages.

Two final strategies or tactics that may be appropriate in either a distributive or
mutual gain approach to bargaining are matching concessions and splitting-
the-difference. Many negotiators operate under the assumption that concessions granted
by one party will be reciprocated or matched by concessions of relatively equal value
from the other party, although not necessarily involving the same bargaining issue.
Most negotiators prefer to leave all settlements reached during the negotiation process
as tentative settlements until all issues have been resolved. What a party finds acceptable
in the later stages of bargaining may be determined in part by the prior pattern of con-
cessions and whether that established concession pattern is perceived to have been equi-
table or fair. The acceptability of simply splitting the difference as a means of resolving
settlement terms, particularly near the end of negotiations where the prior concession
pattern is known, may depend on a party s perceived equity in the tentative contract
terms already reached and the priority of the unsettled bargaining issues to that party s
key bargaining interests. In addition to the general strategies and tactics mentioned
above, Exhibit 6.5 presents a list of bargaining strategies or tactics appropriate for use
in distributive bargaining.

Exhibit 6.6 presents a list of bargaining strategies and tactics appropriate for
interest-based (mutual gain or win win) bargaining.

The Bargaining Power Model
Bargaining power is an important concept that can affect the process and outcomes of
negotiations, particularly when the parties adopt a distributive bargaining approach.
Because negotiation is an interdependent activity, it is important to focus on the bargain-
ing power of each bargaining party relative to the other rather than simply assessing the
amount of bargaining power independently possessed by each party. Evidence of a
party s greater relative bargaining power is the ability of that party to obtain settlement
on its preferred terms rather than less favorable terms proposed by another party.

Chamberlain and Kuhn present one of the better-known bargaining power models.27

One party s bargaining power can be conceptualized as equal to the other party s cost of
disagreeing with proposed settlement terms divided by their cost of agreeing to such
terms. These union or management bargaining power equations can be applied to assess
the parties relative bargaining power regarding specific bargaining proposals or to a post
hoc analysis of final settlement terms to assess which party possessed greater bargaining
power. Although the bargaining power model is presented as an equation, it is an impre-
cise formula based on two major assumptions: (1) Union and management negotiators
cost issues in a similar manner and are rational individuals and (2) if it costs more for

CHAPTER 6 Negotiating the Labor Agreement 287

party A to disagree than to agree with party B, then party A will agree to party B s pro-
posal. Each side can increase its bargaining power by either increasing the other party s
costs of disagreement or reducing the other party s cost of agreement to proposed con-
tract terms.

To illustrate this strategic framework, consider a union bargaining proposal for a
ten-minute cleanup time before the end of the work shift. First, the union could reduce
management s cost of agreeing with the cleanup time proposal by eliminating some of its
other bargaining proposals in exchange. The union negotiator might also reduce man-
agement s perceived agreement costs by demonstrating that there are currently many dif-
ferent cleanup practices at the firm. Some departments do not have cleanup time,
whereas other departments let their employees stop work a half-hour early to clean up.
If the total cleanup time in the plant were calculated, it would probably amount to

Exhibit 6.5
Some Strategies and
Tactics for Use in
Distributive Bargaining

Undermine the other party s position. Question the validity of assumptions,
facts, or conclusions; focus on omissions, inconsistencies, or other perceived
weaknesses in the other party s reasoning or information.

Offer initial proposals well removed from your party s resistance point on each
bargaining subject.

Concede slowly from initial bargaining positions. The other party will value
more highly (and thus reciprocate in kind) those concessions that it has to
work hard to get.

Attempt to appear firmly committed to bargaining proposals.

Threaten the other party s key interests (e.g., job security, sales, public image)
to impose pressure by increasing the other party s perceived costs of failing to
settle on your party s proposed terms. For a threat to be perceived as credible,
the party receiving the threat must believe that the party making the threat is
both able and willing to perform the threatened act.

Offer to reward key interests of the other party (e.g., increase job security,
grant greater access to information, and grant economic incentive) to persuade
them to settle on your preferred terms. This approach is intended to lower the
other party s costs of agreeing to your party s proposed terms.

Seek opportunities to delay negotiations as a means of imposing time pressure
on the other party before a settlement deadline (e.g., contract expiration date,
strike/lockout date).

Seek to maximize the perceived value of your party s concessions while mini-
mizing the value of concessions granted by the other party.

Threaten to withdraw a proposal if it is not accepted within a reasonable time.
Alternatively, make the initial proposal contingent on acceptance by a specified
deadline. This approach can also be used to counter another party s delay tac-
tics when addressing proposals.

Schedule marathon bargaining sessions in an effort to wear down the other
party s resistance or concentration level. Time pressure during the late stage
of bargaining may make such marathon bargaining sessions necessary if the
parties seek to reach an agreement before a strike or lockout deadline is
reached.

Make a final offer. Whether a so-called final offer is really final depends on the
perceived credibility of the negotiator making the offer.

288 PART 2 The Bargaining Process and Outcomes

15 minutes per employee. It would be difficult for management to discipline employees
who are abusing cleanup time because no consistent policy regarding this issue is cur-
rently enforced in the plant. This contract provision would enable management to wipe
the past practice slate clean and establish a consistent policy. Management could instruct
supervisors to enforce a ten-minute cleanup time policy, which could actually save the
company money.

If management does not accept this argument, the union could try the second strate-
gic approach increasing management s cost of disagreeing with the union s proposal.

Exhibit 6.6
Some Strategies and
Tactics for Use in Win Win
(Mutual Gain) Bargaining

Set realistic bargaining objectives.

Clarify the interests underlying each party s proposals on specific issues. Avoid
becoming fixated on another party s stated position. Focus instead on under-
standing a party s key interests at stake regarding the issue being negotiated.

Open negotiations with a clear statement of your party s intent to negotiate
cooperatively and invite the other party to participate in such an approach. For a
win win bargaining approach to succeed, both parties must be committed to
the process.

Use brainstorming to generate alternative proposals designed to meet the par-
ties respective interests on each subject.

Build Momentum: Settle some small issues early in the process to build
goodwill. Identify the bargaining subject where the parties share mutual inter-
ests and those subjects where the parties interest may conflict. Begin negotia-
tions on subjects of mutual interests, seeking to establish a bargaining pattern
that can later be used as a model to address more difficult issues which
involve conflicting interests.

Exhibit empathy toward the other party s interests and concerns.

Identify and mutually agree on objective standards for evaluating the merits of
specific bargaining proposals.

Ask questions to clarify the substantive content or intent behind specific bar-
gaining proposals.

Share objective information about specific bargaining subjects with the other
party.

Seek to incorporate as much of the other party s proposal as possible into your
party s counterproposal on a bargaining subject. This helps to demonstrate a
willingness to accommodate the other party s interests and helps to focus sub-
sequent bargaining on those aspects of the proposal where a conflict of inter-
ests remains.

Explain how or why your party s proposal meets an important need or interest
of the other party.

Openly discuss perceived obstacles or barriers to achieving a voluntary settle-
ment (e.g., personalities, tactics, competitive environment, or status of the bar-
gaining relationship).

Minimize emotional outburst.

Avoid strategies or tactics that might undermine your credibility as a negotiator
or damage the level of mutual trust and respect between the bargaining
parties.

CHAPTER 6 Negotiating the Labor Agreement 289

A union might threaten to withhold approval of some management proposal or publicize
poor working or safety conditions at the plant, which could harm employee recruitment
efforts or customer relations. A strike threat might carry some credibility if management
knew that widespread dissatisfaction existed over this issue and, given current strong prod-
uct demand, any disruption in current production would economically harm the firm.

Factors Potentially Affecting Both Bargaining Power Equations
Some factors that may affect union and management bargaining power are prevailing
economic conditions (e.g., unemployment rate, labor supply, sales volume), goodwill,
public image, and government intervention. For example, high unemployment in the
labor market increases the union s cost of disagreeing with management because strikers
could find it difficult to find employment at other firms while reducing management s
disagreement costs by making striker replacements easier to hire.

One factor that can influence the decision to strike, especially in small plants, is
goodwill, which pertains mostly to internal relationships. Management and union nego-
tiators do not want antagonistic attitudes that may develop during negotiations or a sub-
sequent strike, to linger when operations are resumed. Negotiators also do not want their
activities labeled irresponsible or insensitive to the public interest, thereby adversely
impacting each party s public image. Possible government intervention for vital indus-
tries (e.g., airline, railroad) or in the case of a national emergency dispute (discussed in
Chapter 9) must also be considered, especially if management or the union believes
government intervention will weaken its bargaining position.

Factors Affecting a Union s Disagreement and Agreement Costs
Financial supplements given to union members can lower both a union s disagreement
costs and management s bargaining power. Employees might be able to supplement
their incomes during a strike through their spouses employment, union strike benefits,
personal savings, aid from other labor organizations, or public aid. Union strike benefits
rarely are intended to cover all lost income resulting from strike participation and usu-
ally average $50 or less per week. Whether a union provides strike benefits may often
determine whether union members will vote to strike, as well as how long they will stay
out on strike. Although the amount that each union member receives during a strike is
minimal, the total amount of annual strike payments can be large. Most unions pay
strike benefits when funds are available and the strike has been sanctioned by the
national union leadership, but often additional stipulations may require that the member
be in good standing, complete a waiting period, or establish a need for the payments.

Public aid (e.g., welfare, food stamps, and unemployment compensation) can also
reduce union members disagreement costs by supplementing their incomes when they
go on strike. These assistance programs might exist at the federal or state level and are
subject to various qualifications, such as a waiting period for striking employees to qual-
ify for unemployment compensation. Many arguments can be made for and against pub-
lic aid being given to union members on strike. Proponents of public aid might claim the
following:

Strikers are taxpayers when they work, so when they do not work, they should
receive aid.
Tax dollars are used to feed hungry people in other countries and prisoners in this
country, so strikers who are needy should receive the same consideration.
Even though some persons may be against public aid for strikers, they should not be
against public aid for the families of strikers who are directly affected.

290 PART 2 The Bargaining Process and Outcomes

Eligibility for public support should be based on need as determined by law, not on
whether a person is on strike.

Opponents of public support to strikers also make several arguments:

Legislators never intended to provide public aid to strikers, particularly because
strikers have voluntarily chosen to cease work and refuse to go back to work in
furtherance of their bargaining position.
Giving public aid to strikers violates a traditional policy of government neutrality in
labor management relations.

Factors Affecting Management s Agreement
and Disagreement Costs
Management s costs of agreeing to union proposals can be reduced if it can pass on the
cost of a negotiated settlement to customers. Increased global competition in many prod-
uct and service markets makes it increasingly difficult for employers today to simply pass
costs on to consumers in the form of product or service price increases. Some regulated
firms, such as electric utilities, operate under pricing guidelines, which permit the com-
pany to raise prices to cover legitimate increases in business operating costs. Manage-
ment s disagreement costs (and union bargaining power) could be increased if any of
the following conditions prevail: low inventories combined with strong customer
demand; fear of permanent loss of customers (market share) during a work stoppage;
or high fixed costs, such as rent, interest on loans, payments for equipment, and salaries
of nonunion personnel, which could continue to accrue even if production were reduced
or eliminated by a work slowdown or stoppage.

Complexities Associated with the Bargaining Power Model
Bargaining power costs and utility benefits are often imprecise figures that are diffi-
cult to calculate. Some issues are difficult to cost, such as inserting a job requirement that
the employees must perform minor repairs. Such contract language could save the
company money by permitting lower skilled employees to perform some duties previ-
ously performed by more expensive, higher skilled maintenance employees, particularly
when minor repairs are performed at overtime or other premium wage rates. However,
management cannot calculate the precise dollar cost savings associated with this provi-
sion, particularly if the union negotiator fears that agreeing with such a minor repairs
clause would incur imprecise yet large political costs, such as skilled maintenance mem-
bers rejecting the proposed labor contract or the union leader s re-election bid. Also,
negotiations involve signaling behavior about what issues are important, what positions
on those issues are important, how firm one negotiation party is in its commitment to
attaining those positions, strike or lockout costs, and how willing each side is to allow an
impasse to occur over particular issues. Such signaling is imprecise: Negotiators often
overestimate the extent to which their bargaining preferences are clearly communicated
to the other party during negotiations.28

Perceived or estimated costs associated with use of the bargaining power model are
subject to change during negotiations. For example, management could receive a sudden
influx of rush orders from a major customer just before the contract expiration date.
Management s disagreement costs may sharply increase, particularly if a customer indi-
cates that he or she will take unfilled orders to a competitor.

The limitations of the bargaining power model do not eliminate its usefulness.
Union and management officials do assign costs, however crudely, and direct their

CHAPTER 6 Negotiating the Labor Agreement 291

strategies toward increasing the other party s disagreement costs relative to their agree-
ment costs.

Attitudinal Structuring
Another important aspect of negotiation involves a consideration of the emotional con-
text of the negotiations. Walton and McKersie suggested that negotiators examine their
negotiation processes to see whether they are promoting harmony and cooperation.
While it may be tempting to try to intimidate or frustrate the other side, such techniques
may be counterproductive, particularly when dealing with experienced negotiators and
when both sides must work together to implement the agreement in a long-term work
relationship. Instead, laboratory research suggests that effective negotiation is promoted
when both sides have a cooperative motivational orientation (as opposed to a competi-
tive or an individualistic orientation) and both sides are sensitive to the other s needs.29

How can negotiators encourage members of the other side to be cooperative and sen-
sitive to their needs? Research suggests that early signals in the negotiation (e.g., commu-
nicating a desire for a mutually acceptable agreement; making concessions and indicating
that this is done as a gesture of good will) are very important in this process.30 Generally,
Walton and McKersie suggest developing common attitudinal associations (i.e., liking sim-
ilar things) and inducing a positive mood in the other negotiators. Some specific techni-
ques include the following: (1) using similar language as the other side, (2) using humor
to break tense moments (provided that the humor is not cruel), (3) build momentum by
settling some small issues so that people feel good about their mutual accomplishments,
(4) emphasize the common history the two sides share, (5) mention the value of the rela-
tionship, (6) praise the other side s concessions, and (7) express optimism about the impli-
cations of the negotiated agreement for the future for everyone in the organization.31

If key members of the opposing negotiating team are highly competitive it is unlikely
that they will engage in the types of behavior (offering creative proposals; sharing informa-
tion) that facilitate integrative bargaining. It may be necessary to first work to create posi-
tive attitudes and a pleasant mood before attempting interest-based bargaining.

Intraorganizational Bargaining
A fourth bargaining process is intraorganizational bargaining, which refers to the nego-
tiations that occur within each bargaining party as management and union negotiators
attempt to achieve consensus within their respective organizations.32 Sometimes the
most difficult bargaining is that which occurs within each party s negotiating team rather
than between union and management negotiators.

Intraorganizational bargaining may affect the management team in several ways. Man-
agement s chief negotiator sometimes takes a backseat to other management officials, par-
ticularly lawyers, at the bargaining table. Often the need to comply with corporate policy
may complicate local plant negotiations by reducing a management negotiator s flexibility
to deviate from a policy intended to cover a variety of different plant locations. When a
settlement is reached, it is also subject to second-guessing by other managers, who usually
contend that management negotiators could have obtained a better deal.

The union is not exempt from internal disputes either, particularly because its chief
negotiator is seldom given a free hand in selecting the negotiating committee. In many
cases, at least one member of the union s negotiating team is a political rival of the chief
negotiator. More prevalent are factions that attempt to obtain various bargaining
demands regardless of the chief negotiator s preferences. Union negotiators are respon-
sive to several groups within and outside their organizations. Every organization has

292 PART 2 The Bargaining Process and Outcomes

informal work groups (e.g., the night-shift crew or the company bowling team) who have
unique preferences and place pressures on union officers to achieve their preferences in
collective bargaining. Other examples of groups within a bargaining unit who may seek
to press special bargaining interests during negotiations include skilled craft employees,
women, minorities, high- or low-seniority employees, and part-time employees. These
groups may affect the bargaining structure and bargaining outcomes.

Management and union negotiators spend much time resolving differences within
their respective organizations. One observer of labor management negotiations noted:
[A] large share of collective bargaining is not conflict but a process by which the main

terms of the agreement, already understood by the negotiators, are made acceptable not
to those in charge of the bargaining but to those who will have to live with its results. 33

Intraorganizational bargaining affects negotiating teams in three different phases of
the overall negotiation process. First, the negotiating teams must consider the desires of
various groups within their organizations as they research and formulate bargaining pro-
posals. A union team negotiating a local contract might survey its members, consult with
national headquarters, and look at economic data to try to identify goals that will satisfy
various demographic groups within the local.

Second, during negotiations with the other side, teams will caucus and negotiate
among themselves over how to proceed. Suppose that the management team presented
the union with a new proposal that eliminated annual pay raises, but provided substan-
tial bonuses based on worker productivity. The union team would probably meet pri-
vately to discuss this proposal and to answer several questions: Will management s
proposal be acceptable to the rank-and-file union members? Should the team accept the
proposal? Reject the proposal? Make acceptance contingent upon management accepting
a union proposal on a different topic? Caucusing during negotiations provides an oppor-
tunity for intraorganizational bargaining to take place.

Third, after a contract has been tentatively negotiated with the other side, each side
must get the contract approved by their respective organizations. For the union, this typ-
ically means asking the members to vote to ratify it; for managers, this typically means
asking upper managers, owners, or a board of directors to formally accept the contract.
Members of the negotiating team usually give a presentation along with submitting the
tentative contract to their members. Usually, negotiators attempt to persuade their con-
stituents to ratify it. Thus, a union negotiator might explain why the agreement has pro-
visions that are good for those working on the night shift, young parents, older workers,
and other groups. (The ratification process is discussed further, later in this chapter.)
One research study suggests that there are gender differences in this third phase: Male
negotiators tend to justify, explain, and call attention to provisions in the tentative con-
tract that are favorable to their side, whereas female negotiators tend to explain unfavor-
able provisions.34 Generally, the discussion about the merits of the contract and whether
it should be ratified constitutes a third type of instance where intraorganizational bar-
gaining occurs.

Ethical and Legal Considerations in Collective Bargaining

It has been suggested that ethical negotiating behavior is not only the right thing to do,
but often more profitable as well.35 Union and management negotiators bargaining
behavior often involves at least two general ethical dimensions. The first ethical dimen-
sion, moral or ideal behavior, is subject to varying definitions instead of an either/or dis-
tinction. One scale measuring negotiating ethics identified several types marginally

CHAPTER 6 Negotiating the Labor Agreement 293

ethical tactics that were generally unacceptable, including (1) emotional manipulation
(e.g., false anger or false satisfaction), (2) misrepresenting information, (3) inappropriate
information gathering (e.g., stealing an opponent s confidential information; using elec-
tronic surveillance to bug an opponent s meeting areas), (4) bluffing making false
promises or threats with no intention to execute them, and (5) misrepresenting informa-
tion to your opponent s constituents (e.g., demeaning, humiliating, or lying about a
negotiator) in order to harm that person s reputation. Of these, emotional manipulation
was seen as somewhat less unethical than tactics involving the misrepresentation of
information.36 Other negotiator behaviors, such as bribing the opponent to reach a set-
tlement, are clearly at the unethical end of the continuum.

Some bargaining behaviors have general and long-range ethical implications. Con-
sider, for example, the reflections of Lee Iacocca, former chief executive officer of Chrys-
ler Corporation:

As long as Detroit was making money, it was always easy for us to accept union
demands and recoup them later in the form of price increases. The alternative was
to take a strike and risk ruining the company. The executives at GM, Ford, and
Chrysler have never been overly interested in long-range planning. They ve been too
concerned about expediency, improving the profits for the next quarter and earning
a good bonus. They? I should be saying we. After all, I was one of the boys. I was
part of that system. Gradually, little by little, we gave in to virtually every union
demand. We were making so much money that we didn t think twice. We were rarely
willing to take a strike, and so we never stood on principle. I sat there in the midst of
it all and I said: Discretion is the better part of valor. Give them what they want.
Because if they strike, we ll lose hundreds of millions of dollars, we ll lose our bonuses,
and I ll personally lose half a million dollars in cash. Our motivation was greed. The
instinct was always to settle quickly, to go for the bottom line. In this regard, our
critics were right we were always thinking of the next quarter. What s another dol-
lar an hour? we reasoned. Let future generations worry about it. We won t be
around then. But the future has arrived, and some of us are still around. Today
we re all paying the price for our complacency.37

The second ethical dimension, conforming to professional standards, is more compli-
cated when applied to negotiators behaviors. Top union and management bargaining
team officials would likely agree on at least three professional commitments in their bar-
gaining behaviors:

1. To obtain the best possible settlement benefiting their party s interests
2. To convince their respective bargaining team members and other constituents that

they are effective negotiators
3. To communicate with the other negotiating team in an honest, respectful fashion to

enhance the parties continuing labor relations relationship after the CBA is reached

All three of these standards are attainable, although maximizing the first two may
strain and alter the third. In other words, it is difficult to convince one s bargaining con-
stituents that the best settlement possible was obtained after revealing the complete truth
to the negotiating opponent. This perhaps helps explain why distributive bargaining is
still more common than interest-based bargaining in labor negotiations. A completely
honest and open negotiator may be exploited by his or her opponent, commit to a posi-
tion that allows no further concessions, or sacrifice what might have been successfully
gained through a less-candid approach. Many successful negotiations feature ritualistic
elements, such as describing elaborate but irrelevant statistics, using histrionics, or stag-
ing false temper tantrums and walking out of negotiations.

294 PART 2 The Bargaining Process and Outcomes

Successful negotiators realize that credibility is a necessary personal attribute, and
lying or uttering a deliberate falsehood can destroy credibility and ruin a negotiator s
effectiveness. However, a fine line exists between lying and withholding the complete
truth. Negotiators are not generally going to volunteer information that could damage
their bargaining positions. Negotiators may also exaggerate or bluff on occasion,
although this is risky behavior if a negotiator is not prepared to have his or her bluff
called by the other party:

The principled negotiator doesn t resort to trickery, but that doesn t mean he naively
gives away his position. Not all principled negotiators agree on just how principled
you have to be. It s OK to mislead the other side as to your intentions, [one principled
negotiator] argues. You can say I m not going to give in, and then give in five minutes
later. But never give the other side misinformation about the facts.38

The Legal Duty to Bargain in Good Faith
Union and management officials are not completely free to shape or ignore ethical con-
siderations in collective bargaining. The government, through the Labor Management
Relations Act (LMRA), as amended, requires that both union and management organiza-
tions negotiate in good faith in an effort to voluntarily settle bargaining disputes. Good
faith bargaining essentially means each party must demonstrate a sincere and honest
intent to reach a labor agreement and be reasonable in their bargaining positions, tactics,
and activities. A violation of the duty to bargain in good faith represents an unfair labor
practice which can be remedied through the NLRB s unfair labor practice procedure.

In attempting to decide the merit of a bad faith bargaining charge, the NLRB must
assess the totality of each party s conduct, which includes both overt behavior and
underlying motivation or intent. However, good faith represents a state of mind which
is difficult to define precisely. For example, the duty to bargain in good faith does not
require a party to reach a settlement, agree to any specific proposal, or make a particular
concession to the other party. Yet for settlement to occur there is an underlying pre-
sumption in collective bargaining that concessions will typically be made by both parties.
Violations of good faith bargaining can come from four sources: the type of the bargain-
ing subject, specific bargaining actions (called per se violations), the totality of a party s
conduct, and a successor employer bargaining obligations.

Type of Bargaining Subject
Over the years, the NLRB and the courts have categorized bargaining subjects or issues
as illegal, mandatory, or voluntary (also referred to as nonmandatory or permissive).
Illegal bargaining subjects involve proposals which violate the law, and there is no legal
duty to bargain over such an issue. If the parties were to include such an illegal term in
their contract (e.g., permitting management to pay less than the federal minimum wage
for covered employees), that portion of the parties contract would be unenforceable in
court. Other examples of illegal terms would include a closed-shop union security clause,
a whites only employment clause, mandatory retirement at age 60, and compensation
terms that violate the provisions of the Fair Labor Standards Act (e.g., not paying covered
employees overtime pay for hours worked in excess of 40 hours per week).

There is a duty to bargain in good faith over mandatory bargaining subjects, which
are subjects that may have a direct effect on bargaining unit members wages, hours, or
other terms and conditions of employment. Generally, the duty to bargain in good faith
includes (1) the willingness to meet at reasonable times and reasonable places for the pur-
pose of negotiating, (2) the willingness to make some concessions (and not simply present

CHAPTER 6 Negotiating the Labor Agreement 295

a take-it-or-leave-it ultimatum), and (3) the willingness to put verbal agreements in writ-
ing. Exhibit 6.7 presents a list of some mandatory subjects of bargaining, although new
bargaining subjects continue to arise in response to changing bargaining conditions, so
any such listing should never be considered as all-inclusive. Mandatory bargaining subjects
compose the bulk of the bargaining agenda during labor contract negotiations.

Management may not legally change current contract language governing an exist-
ing employment term involving a mandatory bargaining subject unless the current con-
tract clearly gives management the right to do so; the union has clearly waived its right
to bargain over the subject; or both parties have bargained in good faith and reached a
voluntary agreement about the change. Either party may request the other party to vol-
untarily agree to negotiate a current contract provision early (so-called mid-term bar-
gaining), but there is no legal duty to engage in good faith bargaining over existing
contract terms until at the earliest 60 days prior to the scheduled expiration date of
the current contract. If an issue concerning a mandatory bargaining subject not covered
by the parties existing contract language arose during the mid-term of a labor

Exhibit 6.7
Some Mandatory Subjects of Bargaining*

Hourly wage or incentive (piece) rate of pay Vacation pay

Identity of the insurance carrier Layoff and recall procedure

Bonus pay Holiday pay

Health care cost containment plan Seniority rights

Profit-sharing plan Paid rest periods

Clothing or tool allowance Length of job probationary period

Employee stock ownership plan Paid lunch period

Hours of work Grievance-arbitration procedure

Lump-sum pay Employee discounts on company products or services

Mandatory overtime policy Management rights

Two-tier wage plan Child-care assistance plan

Pension plan Subcontracting of bargaining unit work

Call-in pay Dental insurance

Tax deferred (e.g., 401[k]) savings plan Joint union management cooperation plan

Shift differential pay Life insurance

Job or income security guarantee Employee testing procedures (e.g., drug test)

Jury duty pay Effective and expiration time and date of the contract

Job classification system Performance evaluation methods and procedure

Overtime pay Waiver of right to bargain (e.g., zipper clause )

Job duties and qualifications Safety and health standards and procedures

Cost-of-living adjustment clause Leave of absence

Job transfer rights and procedure Successorship clause

Funeral leave pay Health and accident insurance

Job promotion criteria and procedure No strike or lockout clause

*The subjects listed are not intended to represent an all-inclusive list of possible mandatory bargaining subjects.

296 PART 2 The Bargaining Process and Outcomes

agreement, then management could implement a change in such a subject after bargain-
ing in good faith to an impasse or reaching an agreement with the union about the sub-
ject. A good faith bargaining impasse occurs at the point in negotiation where neither
party is willing to modify its position on a bargaining subject any further. Essentially it s
the point in time when both parties can assume that further negotiation would be
futile.39 Interest disputes involving a mandatory bargaining subject are also the only dis-
putes over which a lawful strike or lockout may occur.

Effects Bargaining
There is no duty to bargain over a business decision that involves a fundamental change in
the nature, scope, or direction of the firm.40 This would include decisions to sell the firm
or buy another firm, major equipment purchases, the number or types of products or ser-
vices to produce, financing sources or terms to meet operating needs, and marketing deci-
sions. Even though not required to bargain about a business decision itself, an employer is
required to bargain over the effects of that business decision on bargaining unit employees
job security or economic interests (e.g., severance pay, transfer rights, seniority rights, and
layoff or recall rights).41 For example, in the early 2000s, Wal-Mart decided to only stock
prepackaged meat and to discontinue employing butchers to cut meat in the grocery part
of their stores. In a store in Texas where butchers had unionized, the NLRB ordered Wal-
Mart to bargain over the consequences of the company s business decision as it affected
wages, hours, and working conditions of the former meat cutters.42

An employer may be required to bargain over a decision to transfer or relocate bar-
gaining unit work. This is true if the business decision does not involve a substantial
change in the nature of the employer s operation (e.g., same work being performed
under similar work conditions at a new location but using different [nonbargaining
unit] employees).43

Union and management officials may also negotiate voluntary bargaining subjects
(also termed nonmandatory or permissive) that do not directly affect bargaining unit
members terms or conditions of employment and are not illegal. Examples include a
jointly funded industry marketing promotion plan, strike insurance, an interest arbitra-
tion clause, or improved pension benefits for retired (former) bargaining unit members.
Unlike mandatory subjects, voluntary bargaining subjects do not require either party to
bargain. In fact, insisting on their bargaining and inclusion in a labor agreement to the
point of impasse would be an unfair labor practice. For example, when Dupont Com-
pany managers asked employees to participate in a promotional videotape, the NLRB
determined this action was a voluntary bargaining subject that did not have to be nego-
tiated with the union. The NLRB decided it was voluntary because it was not part of the
employees day-to-day responsibilities, employees were not compelled to participate, and
the taping was not shown to be a matter of deep concern to the employees.44

Specific Bargaining Actions
Per se violations
In some cases, a single specific action by an employer constitutes an unfair labor practice
in bargaining. These are called per se violations. For example, management commits a
per se violation whenever it does the following:

Refuses to meet with the union to negotiate its proposals
Implements a wage change without consulting the union
Insists to a point of impasse on a provision requiring that a secret-ballot election be
held before a strike can be called

CHAPTER 6 Negotiating the Labor Agreement 297

Refuses to furnish requested information to the union that is relevant and necessary
for the union to perform its legal bargaining duty (e.g., basic financial information
showing whether the firm made a profit; summary data relating to a group insur-
ance plan administered by the employer)

If an employer claims an inability to pay for a union s bargaining proposal, the union
is entitled access to company financial information necessary to validate the employer s
inability to pay claim. An inability to pay is legally distinct from expressing an unwilling-
ness to pay the cost of a union bargaining proposal, and thus this obligation is sometimes
complicated to apply.45 In one case, the NLRB found the employer did not commit a vio-
lation when it refused a union s request for information because the employer s stated
desire to bring its labor costs in line with its competitors, who might be nonunion, was a
legitimate bargaining goal and not a statement of the employer s inability to pay.46 Yet in
other cases, although the employer tries to couch its refusal to furnish information
requested by a union as a competitive issue rather than a claim of inability to pay, the
NLRB has found that the employer s intent was to claim an inability to pay.47

Any information request by a union from management must meet the following
requirements:

1. The union must make a good faith demand or request for the information.
2. The information sought must be relevant and necessary for negotiations. This typi-

cally means the information sought must pertain to a mandatory bargaining subject
and is information not reasonably available to the union from any other source.

3. The information must be supplied to the union promptly and in a form reasonably
useful for negotiation purposes although not necessarily in the exact format
requested by the union.

A union commits a per se violation when it engages in the following:

Insists on a closed-shop or discriminatory hiring clause
Refuses to meet with a legal representative of the employer about negotiations
Refuses to negotiate a management proposal involving a mandatory subject

The NLRB General Counsel has provided a useful checklist that covers relevant
questions and information which should be gathered when investigating bad faith bar-
gaining claims.48 Such guidelines can be useful to union and management practitioners
in evaluating the merits of their own case as well as NLRB personnel who may be con-
ducting a formal investigation of such complaints.

Totality of Conduct
In evaluating the underlying intent behind specific bargaining actions, the NLRB and the
courts often apply the totality of conduct doctrine. This legal doctrine states that even
though specific, individual actions, when viewed separately, do not constitute bargaining
violations, such acts may constitute an unfair labor practice when viewed as a pattern of
conduct in the totality of the circumstances surrounding the negotiations. A prominent
and controversial example of this legal consideration involved a bargaining strategy used
by the General Electric Company (GE) called Boulwarism after the late vice president of
General Electric, Lemuel Boulware.49

GE contended that it simply approached bargaining in a manner similar to its
product marketing by first researching the employees desires and the firm s competi-
tive position and then presenting a fair bargaining proposal to the union. GE would
refuse to modify its original proposal unless the union could present new and signifi-
cant information bearing on the issues at the bargaining table, which the union, in the

298 PART 2 The Bargaining Process and Outcomes

company s view, was rarely able to do. GE management contended that this approach
was not capricious, but fair and firm, because management s bargaining position was
based on a careful examination of the facts. This approach, the company maintained,
represented a sincere bargaining effort aimed not at destroying the union but rather at
eliminating a time-consuming and unnecessary ritual from collective bargaining (such
as initial unrealistic offers that both parties know will not be accepted). GE coupled its
bargaining table strategy with a separate communication campaign aimed at convinc-
ing bargaining unit employees that the company s offer was fair and reasonable and
implying that any delay in reaching agreement would be the responsibility of union
leaders, not management.

Unions representing GE employees termed the company s approach hard bargain-
ing, which was tantamount to an ultimatum and not flexible enough to reasonably con-
sider alternative union views on bargaining subjects. GE unions believed that the
company s communication campaign directed at bargaining unit members represented
an effort by management to undermine the union s legal status as the employees bar-
gaining agent by attempting to bypass dealing with union negotiators at the bargaining
table in favor of dealing directly with employees.

GE s Boulwarism strategy was found, based on the totality of conduct doctrine, to be
a violation of good faith bargaining primarily because it attempted to bypass the employ-
ees exclusive bargaining agent (the union) with a direct communication campaign
intended to persuade employees to pressure their union representative to accept manage-
ment s terms.50 The U.S. Supreme Court was careful to point out that hard bargaining
without other condemning evidence was not, per se, an unfair labor practice itself. Other
condemning evidence present in the GE case included a refusal to supply cost informa-
tion on an insurance program, vague responses to the union s detailed proposals, a pre-
pared lecture series instead of counteroffers, and a stiff and unbending patriarchal
posture even after it was apparent that the union would have to concede to the employ-
er s terms. Management can legally communicate to employees its own bargaining pro-
posals and the reasons for them, as well as explain why management opposes specific
union bargaining proposals, as long as such communication is not intended to under-
mine the status of the union as the employees bargaining agent.51

Other rulings involving employer or union conduct have provided the following
examples of conduct that may constitute bad faith bargaining:

Surface bargaining: A party is willing to meet at length and confer but merely goes
through the motions of bargaining without any evidence of a sincere desire to reach
an agreement. Surface bargaining includes a party making proposals that it knows
the other party cannot accept, taking an inflexible attitude on important issues or
offering no alternative proposals. Even though on the surface, some of the indi-
vidual behaviors appear to meet the letter of the law, when considered using the
totality of conduct standard, surface bargaining is typically determined to violate the
good-faith-bargaining requirement of the LMRA.
Dilatory tactics: Unreasonable procrastination in executing an agreement, unreason-
able delay in scheduling meetings, willful avoidance of meetings, evasive tactics,
unreasonable delay in providing data for bargaining, and similar tactics are evidence
of bad faith.
Imposing unreasonable conditions: Attempts to specify conditions on bargaining or
the administration of a labor contract will be scrutinized closely to determine
whether such conditions are onerous or unreasonable (e.g., insisting that all grie-
vances be resolved before collective bargaining can start). In addition, the require-
ment of agreement on a specific item as a prerequisite to negotiating other issues
may reflect a bad faith bargaining intent.

CHAPTER 6 Negotiating the Labor Agreement 299

Unilateral changes in conditions: Such actions as changing the compensation or
fringe-benefit package unilaterally during bargaining without having reached a good
faith bargaining impasse is a strong indicator of bad faith bargaining.
Commission of unfair labor practices: Committing unfair labor practices (such as
promoting withdrawal from the union, reducing work hours without economic jus-
tification, or engaging in discriminatory layoffs) during negotiations is indicative of
a pattern of bad faith.

Bargaining over Managerial Rights
One important mandatory subject of bargaining of interest to employers is the subject of
management s rights. Before the passage of the National Labor Relations Act (NLRA) in
1935, management rights and discretion in operating facilities were seldom questioned,
and managers were virtually free to run their operations as they saw fit. In many cases,
unions were considered intruders into managerial prerogatives because there were few
laws regulating managers actions toward employees. Although unions have become
more accepted today, managers remain concerned over the gradual erosion of their
rights in the labor relations process.

Under common law, management officials were relatively free to manage their busi-
nesses and their employees. In unilaterally running the operation, the employer drew
from the concepts of property rights and the laws of agency, as well as the legal and
social acceptance of private enterprise, ingenuity, and the profit motive. Hence,
management assumed the right to manage as derived from the property rights of the
owner. The authority of the owner is delegated to management, which in turn directs
the employees in achieving the goals of the company. Following this line of reasoning,
management contends it cannot share its prerogatives with employees or any other
group because such an action would represent a dereliction of legal responsibility to the
ownership. Even under the LMRA, managers sometimes take the position that they do
not wish to have a union infringe upon their right to make decisions about how to oper-
ate the company and it is lawful for management negotiators to take the bargaining
position that they do not wish to give up any of their managerial rights to a union.52

Unions in the United States, unlike their European counterparts (see Chapter 14),
have historically been reluctant to become partners with management directly
involved in managerial rights pertaining to layout of equipment, financial policies,
sources of materials, and so forth. Union officers realize that often union members
prefer to second-guess or challenge the wisdom of management decisions instead of
supporting or echoing them. It is more difficult for union leaders to effectively criticize
business policy decisions that they have jointly participated in deciding with
management representatives.

Yet a union s desire to avoid involvement in traditional areas of management deci-
sion making is not absolute. Under the LMRA, management must bargain with its
employees union over wages, hours, and working conditions. Management rights are
exercised to achieve significant managerial goals of organizational flexibility and effi-
ciency. Unions are concerned about managerial actions that appear arbitrary, inconsis-
tent, or entail adverse consequences for union members jobs or economic security.53

Some research has found that craft and industrial unions have become more interested
in joint determination of some traditional management issues (e.g., products to be man-
ufactured, services to be performed, and customer relations) over the past 20 years. This
new emphasis is largely attributed to competitive pressures, which have influenced union
officials to evaluate a broader range of managerial decisions that could reduce union
members job opportunities.54

300 PART 2 The Bargaining Process and Outcomes

Until 1960, management rights clauses contained in labor agreements tended to be
based solely on the reserved rights doctrine, which essentially holds that all rights to
manage the firm are reserved to management except to the extent management has vol-
untarily agreed to limit or restrict such rights through language found in a labor agree-
ment. For example, if the labor agreement is silent on overtime administration, then
under the reserved rights doctrine, management can assign overtime to whomever it
sees fit. A typical short-form management s rights clause prior to 1960 based on the
reserved rights doctrine might state the following:

Employer retains all rights to manage, direct, and control its business in all particu-
lars, except as such rights are expressly and specifically modified by the terms of this
agreement or any subsequent agreement.

Many managers assumed that the broad language of the short-form management s
rights clause guaranteed management s complete discretion in those matters not specifically
included in the labor agreement. Primary reliance by management on the reserved rights
doctrine to protect its managerial prerogatives was dealt a setback by the U.S. Supreme
Court s 1960 decision in United Steelworkers v. Warrior and Gulf Navigation Company (as
discussed in Chapter 11).55 In this case, the employer refused the union s request to take a
grievance dispute to final and binding arbitration because the employer argued that the
issue involved was not covered under the parties labor agreement, and therefore the right
to determine the outcome of that issue was reserved to management. The Court stated that
where there isn t clear evidence of the parties intent to cover a specific subject under a
labor agreement s terms, the arbitrator could determine whether an issue was covered
under the parties agreement to arbitrate contract disputes, and any doubts about coverage
should be resolved in favor of permitting the grievance dispute to be arbitrated.

In response to the U.S. Supreme Court s decision in Warrior and Gulf Navigation
Company (1960), many management negotiators sought to bargain a more specific,
detailed list of subjects over which management intended to reserve the unilateral right
to control. Such contract language became known as a long-form management s rights
clause and is the most common form of management s rights clause found in labor
agreements today (see Exhibit 6.8). Presumably, arbitrators, upon seeing such a detailed
list of management prerogatives clearly stated in the labor agreement, would rule in
management s favor on whether the grievance is subject to arbitration.

However, the long-form management s rights clause has its problems. First, it is dif-
ficult to anticipate and clearly list every item over which management might seek to
maintain unilateral discretion. Arbitrators tend to view a detailed long-form manage-
ment s rights clause as expressing management s intent to define all of its prerogatives.
A detailed listing of management s rights in a labor agreement makes it more unlikely
an arbitrator would permit management to retain exclusive control over any otherwise
mandatory subject of bargaining that management might claim it merely forgot to
include in the negotiated management s rights clause. Second, because the union must
agree to all wording contained in the management s rights clause of the labor agreement,
it may be necessary for management negotiators to give the union a concession on
another issue to obtain a strongly worded management s rights clause. For example,
management may have to allow the union a strong union security clause, such as a
union shop clause, requiring all new employees to join the union after thirty days
employment (previously discussed in Chapter 4). Third, even an extensive management
rights clause does not guarantee a management victory in grievance arbitration, because
there may be other pertinent contract clauses that bear on the issue. For example,
suppose the management rights clause allows managers to discharge employees who are

CHAPTER 6 Negotiating the Labor Agreement 301

derelict or negligent in their duty. A manager finds an employee sleeping on the job. At
first glance, it seems obvious that the employee should be subject to discharge. However,
suppose the employee produces a doctor s note indicating that he suffers from a chronic
medical condition that occasionally causes severe drowsiness; if the contract also
contains a clause providing for reasonable accommodation for illness or disability, it

Exhibit 6.8
Example of a Long-Form
Management s Rights Clause

Article 2 Management Rights
The company has, retains and shall possess and exercise all management functions,
rights, powers, privileges and authority inherent in the company as owner and opera-
tor of the business, excepting only such rights that are specifically and expressly
relinquished or restricted by a specific Article or Section of this Agreement.

The company shall have the exclusive right to manage facilities; to direct the working
forces; to fix or change the number, hours, and duration of work shifts; to establish
or alter work schedules or standards; to control the use of scheduling of operations;
to allocate and assign work to employees; to schedule overtime; to hire, classify,
train, promote, transfer, suspend, demote, discipline; to discharge employees for just
cause, and to discipline or discharge employees for violation of such rules and reg-
ulations; to determine safety, health, and property protection measures for any and
all employees, operations, and facilities; to select and to change tools, equipment,
machinery, material, layout, and facilities with which it shall carry on its operations;
to determine the products to be manufactured or sold or the services to be rendered;
to determine at all times the number and composition of the workforce as a whole or
of any unit, shift, job classification, or work within such job classification; to create
new organization groups deemed appropriate by the company and to determine the
organization and structure of each; to determine, implement, modify, or eliminate
techniques, methods, processes, means of manufacture, maintenance, and distribu-
tion, schedules, crew, or production team sizes, and line speeds; to control raw
material; to shift types of work and production or maintenance in and out of any facil-
ity; to place production, service, maintenance, or distribution work with outside con-
tractors or subcontractors; to use labor-saving devices; to determine and implement
actions necessary to operate as economically and efficiently as possible when and
where the company deems the same necessary or desirable, including layoff of
employees; to determine the qualifications and duties of employees; to establish or
modify reasonable quality and quantity standards; to judge the quantity and quality of
workmanship required and discipline or discharge employees whose work does not
meet such standards; to establish or revise pay grades for jobs; to change the
method of compensation of employees, to establish or modify job classifications and
related rates of pay, or revise or eliminate existing jobs; to transfer and assign work
and duties to job classifications when the company deems the same necessary or
desirable; to select, demote, promote, or transfer bargaining unit employees from
one unit, section, department, division, plant, or other unit to another; to transfer
work from one job to another; to determine the location of the business, including
the establishment of new plants, departments, divisions, or subdivisions and the relo-
cation, closing, selling, merging, or liquidating of any plant, department, division, or
subdivisions thereof either permanently or temporarily; to determine financial policy,
including accounting procedures, prices of goods or services rendered or supplied,
and customer relations; to determine the size and character of inventories; to deter-
mine the policy affecting the selection and training of new employees; to determine
the amount of supervision necessary; and generally to control and direct the com-
pany in all of its affairs and operations.

SOURCE: Excerpted from a labor agreement.

302 PART 2 The Bargaining Process and Outcomes

is unlikely that an arbitrator will uphold the employees discharge. Arbitrators consider
the management rights clause in conjunction with other clauses as well.

Both long and short forms of a management s rights clause can cause additional
problems. By insisting on including the management s rights clause in the labor agree-
ment, management runs the risk of stirring up ideological differences with the union.
Rights included in the management s rights clause may also influence union bargaining
goals in subsequent negotiations.

For managers, the advantages of a long-form management s rights clause outweigh the
potential risks. Approximately 80 percent of labor agreements contain a management s
rights clause that helps remind arbitrators, union officials, and other managers (particularly
first-line supervisors) that management retains its administrative prerogatives.56

Successor Employer Bargaining Obligations
Economic changes and increased competitive pressures have resulted in merger and acqui-
sition activity that has affected many firms in recent years. When the ownership of a
unionized operation changes, it raises questions about the duty of the current owner to
bargain in good faith with existing bargaining unit representatives. Whether a change in
ownership at a unionized firm results in a new versus successor employer depends on
the degree of continuity in the business enterprise after the ownership change occurs.57

Purchasers would generally prefer to be classified as a new employer, which has no legal
duty to automatically recognize any previously existing union bargaining representatives
and thus is under no duty to bargain over the establishment of employment terms or to
abide by the terms of any prior labor agreement negotiated by the former owner.

Where there is substantial continuity in business operations, the purchaser is classi-
fied as a successor employer, whereas a lack of substantial continuity in business opera-
tions results in the designation of new employer. Degree of business continuity can be
evaluated based on a preponderance of the evidence by examining factors such as
(1) substantial continuity of the employed workforce: what percentage of the new own-
er s work group continues to be comprised of former (union-represented) employees;
(2) whether there is any substantial change in the location of the firm, type of customers
served, or products produced; (3) degree of change in equipment or other technological
processes; and (4) the percentage of managers under the former owner who continue to
manage employees after the ownership change.

A successor employer has a legal duty, upon request, to recognize a union that repre-
sented bargaining unit members under the former owner as continuing to represent the
same bargaining unit structure under the current ownership. A successor employer must
also be willing, upon request, to engage in good faith bargaining over the terms of a new
labor agreement covering bargaining unit employees. A successor employer is not generally
obligated to continue to enforce the terms of a previously existing labor agreement unless
that contract contained a successorship clause that the purchaser knew about at the time
of the ownership transfer. A successorship clause represents a mandatory subject of bar-
gaining and generally requires an employer not to sell or merge the firm unless the pur-
chaser is willing to take on the terms of any existing labor contract. Approximately
28 percent of labor agreements contain some type of a successorship clause although they
are more common in nonmanufacturing than manufacturing labor agreements.58

Collective Bargaining under Bankruptcy Proceedings
Turbulent operating environments in some industries (e.g., airlines and auto) have led
some employers to threaten or actually declare bankruptcy as a means to radically
restructure debt, eliminate or consolidate operations by reducing excess plant capacity,
and lower labor cost in order to increase competitiveness. The negative stigma once

CHAPTER 6 Negotiating the Labor Agreement 303

attached to a bankruptcy filing implying management failure has seemingly been
replaced by a view of bankruptcy as a strategic financial tool to implement transforma-
tional change that might otherwise take years or be entirely impossible to accomplish
without the protection afforded by the bankruptcy court. What happens to an existing
bargaining agreement if management files for bankruptcy and contends that it can no
longer honor the terms of the labor agreement? This question was addressed in the
U.S. Supreme Court s 1984 Bildisco decision, which involved a building supply distribu-
tor who filed a petition for reorganization under Chapter 11 of the bankruptcy code.59

After filing the bankruptcy petition, the company failed to pay the scheduled wage
increases specified in the labor agreement and also failed to give collected union dues
to the union. The company also moved to reject the CBA entirely.

The NLRB agreed with the union that this unilateral action violated the good faith
bargaining duty under the LMRA. However, the Supreme Court disagreed with the
NLRB and determined that management s behavior in this situation did not violate the
good faith provision. The Court s decision in Bildisco gave management more discretion
in its collective bargaining efforts with a union. Because many members of Congress did
not fully agree with the Bildisco decision, the Bankruptcy Reform Act of 1978 was
amended (P.L. 98-353) in June 1984 with the intent to make it more difficult for employ-
ers to abandon the terms of an existing labor agreement after filing a petition for bank-
ruptcy. Under current law, an employer cannot reject the terms of a valid labor
agreement before obtaining approval of the employer s petition for bankruptcy from a
federal bankruptcy court judge.60 To obtain the approval of a bankruptcy court judge,
the following conditions must be proven:

1. The debtor in possession (the employer) must have made a proposal to the union to
modify the CBA based on the most complete and reliable information available at
the time.

2. The proposed modifications must be necessary to permit the reorganization of the
firm and must ensure that all the creditors, the debtor, and all other affected parties
are treated fairly and equitably.

3. The debtor must provide the union with requested information it needs to evaluate
the employer s proposed contract modifications. The union cannot demand informa-
tion simply for the purpose of making a counterproposal.

4. The debtor must meet at reasonable times with the union and bargain in good faith
in an effort to reach an agreement on proposed modifications to the CBA.

5. The union s refusal to accept the employer s proposed modifications must demon-
strate a lack of good cause for the union s rejection of the employer s terms.

6. In the bankruptcy court judge s view, the balance of equities in the case must clearly
favor permitting the debtor (employer) to reject the CBA.

Disagreements between employers and unions have arisen over application of the
current bankruptcy law, particularly in determining whether a proposed management
action is necessary under the circumstances to maintain the viability of the firm and
how much and what type of information a union reasonably needs to evaluate manage-
ment proposals to modify or terminate existing labor agreements. Courts in interpreting
and applying bankruptcy law to labor relations have shown a propensity to place a
higher value on protecting employer property rights than protecting employee job rights
when the two rights conflict in the bankruptcy process.61

Legal Remedies Associated with Violations
of the Duty to Bargain in Good Faith
NLRB remedies in unfair labor practice cases are designed to stop further violations and
return any adversely affected parties to the position they would have been in had the

304 PART 2 The Bargaining Process and Outcomes

unfair labor practice violation(s) not occurred. As discussed in Chapter 3, a typical Board
remedial order might consist of one or more of the following:

1. A cease and desist order to halt any further unfair labor practice violations. For
example, suppose that a company announced it was going to unilaterally change a
provision of the CBA. The NLRB might order the company to stop implementing
the change.

2. A requirement that the Respondent (guilty party) post written and electronic (e-mail
and/or intranet Web site) notices for a reasonable period (e.g., four to six weeks) in
the workplace informing employees of their basic rights under the LMRA, the spe-
cific unfair labor practices committed by the Respondent, and the Respondent s
pledge not to commit such violations in the future.62

3. Whatever affirmative actions might be necessary to remedy the adverse effects of any
unfair labor practices, often referred to as a make-whole remedy. For example, rein-
statement with back pay, restoration of lost seniority rights or other benefits denied
an employee because of the unfair labor practice violation, requirement to furnish
necessary and relevant bargaining information upon proper request by another bar-
gaining party, discontinuance of any policy found to be a violation of employees
protected rights, removal from employee records of any reference to unlawful disci-
plinary action taken against an employee; return of unlawfully transferred work to
its previous location, or an order to begin or resume bargaining in good faith.

The Board has no authority to award punitive damages. This is true, regardless of
the Respondent s willful intent, the number of specific violations committed, or the
Respondent s history of committing similar violations in prior cases.63 The Board also
lacks the authority to order an employer or union to agree to any specific term or condi-
tion of employment. Even where back pay is awarded, the amount owed by the company
(the respondent ) would be reduced by the amount of interim earnings that the
employee (the charging party ) may have received while the unfair labor practice charge
was pending (e.g., income from another job, unemployment compensation). Further, the
discharged employee is required to seek comparable employment while pursuing his or
her unfair labor practice charge.

Union officials have contended that present NLRB remedies are inadequate, particu-
larly in cases of bad faith bargaining. Because NLRB decisions can be appealed to the
courts, it might take two or three years for a final determination to occur. During the
interim period, the employer s ability to delay labor cost increases by postponing negotia-
tions results in lost economic benefits for bargaining unit members. Once the employer is
found guilty of bad faith bargaining, the Board can only issue an order to stop bargaining
in bad faith and begin good faith negotiations. No remedy is available for the lost income
opportunities or possible deterioration in a union s bargaining power caused by the unlaw-
ful time delay in reaching a voluntary settlement of bargaining issues.

Proposed Labor Law Reforms
Failure to bargain in good faith during first or initial contract negotiations following certi-
fication of a union as the employees lawful bargaining representative is a particular dam-
aging occurrence to the protection of employees legal right to engage in collective
bargaining and their faith in the current system designed to enforce the legitimate exercise
of such rights. Former NLRB General Counsel Ronald Meisburg stated, Initial contract
bargaining constitutes a critical stage of the negotiation process in that it provides the
foundation for the parties future labor management relationship. Unfair labor practices
by employers and unions during this critical stage may have long-lasting, deleterious
effects on the parties collective bargaining and frustrate employees freely exercised choice
to unionize. 64 Among additional ULP remedies recommended by Meisburg in these cases

CHAPTER 6 Negotiating the Labor Agreement 305

are requiring parties to bargain on a set schedule until either agreement is reached or a
good faith bargaining impasse occurs; a minimum six-month extension of the normal
12-month time period following initial certification when a union s status as bargaining
representative may not be lawfully challenged; reimbursement of bargaining costs incurred
as a result of bad faith bargaining; and the filing of periodic reports with the NLRB, updat-
ing the status of bargaining and the implementation of Board-ordered ULP remedies.

Many of Meisburg s recommendations are similar to the proposed Employee Free
Choice Act, which was not enacted by the U.S. Congress. This bill also called for interest
arbitration for first contracts following union certification, triple lost wages in cases
where managers illegally discharged employees, and financial penalties for willful viola-
tions of the law.65

Contract Ratification
Unlike many management negotiators, union negotiators are typically authorized only to
reach a tentative agreement on contract terms at the bargaining table. The union s con-
stitution and by-laws typically require that union members be given an opportunity to
approve or disapprove proposed tentative settlement terms before a final contract agree-
ment can be achieved. The vote on whether to accept a tentative contract is called the
contract ratification vote. For example, the Steelworkers, Auto Workers, and United
Mine Workers use a direct referendum. Some unions may require a simple majority
approval from union members voting whereas other unions might require a higher per-
centage of votes for approval (e.g., 60 percent). In recent years, union members have
shown increasing interest in participating in the contract ratification process, and more
contract ratification elections have been held.

The ratification process provides union leaders with an indication as to whether
union members can live with the proposed agreement, even though they may not be
completely satisfied with all of its provisions. Acceptance of the proposed contract s
terms by a majority of the union s membership also provides management some assur-
ance that the employees will comply with the letter and spirit of the agreement during its
term. A vote to accept is therefore considered a commitment or willingness to be bound
by the agreement.66 Union members typically approve tentative contract settlement
terms negotiated by their union representatives, rejecting such terms in only about
10 percent of cases.67

Explanation of Voting Behavior
It is overly simplistic to say that union members vote for the contract when they like it and
against it when they don t like it. Researchers have attempted to explain why and when
union members will vote to accept or reject a tentative contract settlement. When employ-
ees perceive that alternative employment opportunities are limited, members are more
likely to approve proposed settlement terms. Satisfaction with the economic terms of the
proposed settlement and a perception that their union has represented members interest
effectively also increases the probability a union member will vote to approve proposed
contract settlement terms.68 For example, when employees with the most seniority are to
become eligible for a guaranteed income security plan, those employees can be counted on
to favor ratification. Having adequate information about proposed contract terms and
employer and union loyalty also affects an individual s decision to support or reject pro-
posed contract terms.69 Review the following Labor Relations in Action feature about the
contract settlement between the International Longshoremen s Association (ILA) and the
United States Maritime Alliance for more information about this topic.

306 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION
Contract Ratification Process Affecting East and Gulf Coast Ports

The ILA represents longshoremen, clerks, checkers, and
maintenance employees who work on ships and port
terminals along the east and gulf coasts of the United
States. The ILA negotiates a master labor agreement
covering its members with a multi-employer bargaining
unit comprising shipping companies represented in nego-
tiations by the United States Maritime Alliance, Ltd.
There are additional negotiated local labor agreements
that cover local issues affecting a specific port. A similar
bargaining structure governs contract negotiations at
west coast ports where workers are represented by a
different national union, the International Longshore and
Warehouse Union, which bargains with a multi-employer
group represented by the Pacific Maritime Association.

Both east and west coast ports compete for ship-
ping business, particularly coming from countries such
as China, Japan, and Korea. East coast ports have made
some competitive gains in recent years due in part to
the labor unrest that has disrupted shipping operations
at west coast ports, such as the 2002 employer lockout
during contract negotiations that eventually triggered
the use of the national emergency dispute settlement
procedure outlined under the Labor Management Rela-
tions Act (LMRA). Stability in labor relations is one factor
which influences shippers choice of where to dock and
offload cargo. A decline in the volume of shipping cargo
during the 2007 2009 economic recession only served
to intensify the competition between east and west
coast ports for available work. With the scheduled open-
ing of the Panama Canal to larger ships in 2016, east
and gulf coast ports are poised to capture more busi-
ness, but only if labor peace and stability can be
assured.

The ILA-USMA current master agreement was
scheduled to expire September 30, 2010. To minimize
customer concerns that labor unrest surrounding the
negotiation of a new agreement in 2010 might
adversely affect shipping just when the economy was
beginning to show signs of improvement, the ILA in
October 2008 sought to negotiate a two-year contract
extension which would be in effect until September
30, 2012. After extensive bargaining, the ILA and
USMA reached a tentative contract settlement on a
two-year contract extension, and a contract ratification
vote was scheduled for November 17, 2009.

Key terms of the proposed settlement included an
increase in starting pay from $16 to $20 per hour and a
dollar per hour increase in the top pay rate from $31 to
$32 per hour. The size of gaps between current pay
levels would continue to narrow during the term of the
new agreement. Current caps on royalty payments ship-
pers pay per ton of cargo to help fund union benefit

programs would be removed. In exchange, shippers
would be allowed to retain the first $42 million of sched-
uled royalty payments during the first year of the new
contract to help alleviate financial hardships suffered by
shippers during the economic recession. The parties
agreed to create a joint technology committee to inves-
tigate and analyze the impacts of implementing new
shipping technology to port operations and bargaining
unit members.

Opposition against ratifying the proposed settle-
ment was led by the Longshore Workers Coalition
(LWC), an activist group of ILA members; this group
had come close to defeating the ratification of the six-
year labor agreement approved in 2004. In hindsight,
ILA leaders believed they had not done enough to
sell the 2004 agreement to the membership prior to

the contract ratification vote and vowed not to make the
same mistake again. LWC leaders argued that given the
recession, agreeing to bargain early rather than waiting
to negotiate a new agreement closer to the scheduled
September 2010 expiration date weakened the ILA s
bargaining power and thus resulted in less satisfactory
terms than could have been obtained by waiting to bar-
gain. LWC leaders also disagreed with allowing shippers
to retain the $42 million royalty amount during the first
year of the proposed new agreement and back-
loading wage improvements (giving a larger increase
in the second year) designed to save employers
money during the first year of the contract extension.

ILA President Richard Hughes traveled extensively
in the weeks leading up to the contract ratification vote,
visiting local unions at the various ports along the east
and gulf coasts. The ILA prepared and posted on its
Web site a memorandum explaining the terms of the
proposed contract settlement. The ILA also posted a
copy of the exact wording contained in the proposed
contract settlement so that union members could read
for themselves what had been tentatively agreed upon.

On November 17, 2009, during voting hours that
extended from 7 A.M. to 7 P.M., 6,417 (66 percent)
out of 9,736 ILA members approved the contract settle-
ment ratification. The settlement signaled current and
potential port customers that the parties intended to
ensure stable and efficient operations at east and gulf
coast ports.

The contract extension lasted through December 6,
2012. Subsequent negotiations almost ended in a strike
several times in late 2012 and early 2013, but each time
a deadline loomed, the current contract was extended.
In early February 2013, a new agreement was reached
between the ILA and the U.S. Maritime Alliance, avert-
ing a strike at 14 ports.

307

A no vote in a ratification election confronts employees with the potential costs of
lost income and the uncertainty of when they will begin work again. Although the poten-
tial for contract rejection may create incentives for union negotiators to try to get a little
extra for the members, such extras come with increased anxiety as the strike deadline
approaches.70

Reasons for Rejection of Tentative Contract Agreements
The most common reason why union members reject proposed settlement terms is gen-
uine dissatisfaction with one or more of those terms. Union members may feel short-
changed in comparison with other agreements in their geographic area or industry.
Internal union politics is another reason contract rejection may occur. Sometimes
union leaders are elected by slight majorities, and their rivals will campaign against any
labor agreement negotiated by the incumbent leaders. This problem can be exacerbated if
the union permits members to select the union s negotiating team, and current leaders
find rivals for union leadership elected to serve as part of the negotiating committee.

Communication problems between union leaders and members can sometimes play
a role in contract rejection, although good communication can also facilitate contract
approval. Upward communication flows are important because union leaders must
understand what issues are most important to the majority of the union s membership
if bargaining proposals and tentative agreements reached are to reflect those interests.
For example, in industrial unions, individuals holding skilled-trade positions (electrician,
carpenter, painter, and machinists) usually represent a minority of the total membership.
Such skilled-trade members might vote to reject a contract if their wages did not

The 2013 2018 tentative master agreement con-
tained the following provisions:

$1.00 per hour wage increases in October 2014,
October 2016 and October 2017.
New employees starting wage: $20.00 per hour.
The wage progression formula was shortened from
9 years to 6 years.
The Management-ILA (MILA) Managed Health Care
Trust Fund will continue to provide health care cov-
erage at no cost to eligible employees.
A minimum coastwise guarantee of $211 million in
container royalty each year.
In addition, up to $14 million of administrative
expenses will also be covered.
All container royalty over these amounts will be
evenly split between USMX and ILA.
Container royalty will be centrally collected.
The local fringe-benefit contribution increased by
$1.00 per hour.
New language has been negotiated to protect those
who have been displaced due to new technology and
automation.

Again, ILA leaders actively lobbied locals to ratify
the agreement. The new contract was ratified by 88%
of the ILA members, with all locals having a majority
supporting the agreement.

SOURCES: ILA Plans Early Negotiations, Journal of Commerce, October 13, 2008,
p. 1 at http://www.proquest.com/ (accessed November 15, 2010); Bill Mongelluzzo,
Six More Years, Journal of Commerce, October 13, 2008, pp. 1 4 at http://www.

proquest.com/ (accessed November 15, 2010); Joseph Bonney, ILA Ratifies
Contract Extension, Journal of Commerce, November 17, 2009, p. 1 at http://www.
proquest.com/ (accessed November 15, 2010); ILA Members Ratify Two-year
Contract Extension, ILA News Release, November 17, 2009 at http://www.ilaunion.
org/news_ contract_ratified.html (accessed November 4, 2010); Re: Explanation of
Extension Agreement, ILA Memorandum, October 19, 2009, pp. 1 3 at http://www.
ilaunion.org/pdf/ExplanationOfExtensionAgreement.pdf; USMX-ILA Master Contract
Memorandum of Settlement Between United States Maritime Alliance, LTD. and
International Longshoremen s Association, AFL-CIO, October 16, 2009, pp. 1 13 at
http://ilaunion.org/pdf/MemorandumOf Settlement.pdf; Mark Solomon, Tentative
contract is reached by ILA, USMX to avert Feb. 7 strike at 14 U.S. ports, CSI
International, Inc. [News/Weblog], Feb. 3, 2013, at http://csichb.com/tentative-
contract-is-reached-by-ila-usmx/; ILA, Summary of Master Contract, ILA News
[online], Feb. 13, 2013, at http://www.ilaunion.org/news_summary_master_
contract.html; ILA, Overwhelming Approval in ILA Master Contract Ratification
Vote, ILA News [online], April 10, 2013, at http://www.ilaunion.org/news_
ratification_approval.html.

308

compare favorably with those of similar skilled-trade individuals employed in the same
geographic area.

Downward communication flows are particularly important in keeping members
informed of progress toward achieving a settlement during negotiations and in explaining
how members will be affected by contract language changes contained in the tentative con-
tract settlement proposed for ratification. Particular care must be given to explaining
changes in contract terms of high importance to members, such as the adoption of new
wage payment methods and alterations in pension or health care benefit plans.

Some groups (women, racial minorities, and younger employees) within the bargain-
ing unit may base their contract ratification vote on the outcome of one or more very
specific issues directly impacting them. Although equal employment opportunity laws
have been passed, wage differentials continue to exist for racial minorities and women,
and eliminating perceived intra-plant inequities may be the primary determinant of
how an affected employee votes on the contract ratification question. Moreover, young
employees with low seniority often view pension and layoff issues, which are usually
based on seniority or retirement age, differently from older employees, causing additional
internal friction within a bargaining unit. Unless members in these subgroups believe
that the agreement reflects their own personal needs, they may vote to reject it.

Contract rejection can sometimes be used as a bargaining strategy by a union,
although the effectiveness of such a strategy would tend to diminish over time as man-
agement negotiators adapted by being less willing to propose their best offer during ini-
tial negotiations in case they had to go back to the bargaining table after the initial
tentative agreement was rejected. One research study reported that a subsequent contract
settlement obtained after an initial contract settlement was rejected by the union s mem-
bership did contain additional economic gains for union members in 65 percent of
cases.71 It is important that union leaders and managers attempt to keep members
expectations of bargaining success as realistic as possible during the negotiation process
in order to avoid a negative reaction to proposed contract settlement terms that fall
below unrealistically high expectations.

Obtaining the union negotiating team s strong endorsement of a proposed contract
settlement can usually ensure that the majority of union members will support the nego-
tiation team s recommendation.72 Some contract concessions by management negotiators
may be necessary in some cases to obtain the endorsement of a union s bargaining team.
Management negotiators must carefully weigh the costs of any required concessions
against the probability that contract rejection will occur without such an endorsement
and the additional costs such a rejection might entail before any final contract settlement
could be achieved (e.g., probability that contract rejection could trigger a strike).

Summary
Collective bargaining occurs when the union and man-
agement attempt to resolve conflicting interests by
mutually agreeing to acceptable terms or conditions of
employment. Sometimes this activity is centralized, and
more than one ABU can be combined to form the nego-
tiation unit, encompassing the employees and employers
who are subject to the provisions of the labor agreement.
Most often the structure of bargaining in the private

sector is decentralized, with a separate contract negoti-
ated to cover employees in each separate bargaining unit
of an individual employer at a specific location.

Management and union negotiators are involved in
three general pre-negotiation activities: selecting the
negotiating team, researching and formulating proposals
and the bargaining range, and costing these proposals.
Bargaining behavior during collective negotiations can

CHAPTER 6 Negotiating the Labor Agreement 309

be extremely varied, but choosing a distributive or
interest-based approach to bargaining will dictate
which specific bargaining behaviors are likely to be effec-
tive. Intraorganizational bargaining is also an important
and challenging part of achieving success in labor nego-
tiations. A lack of success in resolving differences within
one s own bargaining team can contribute to ineffective-
ness in interactive bargaining between union and man-
agement negotiating teams.

The relative distribution of bargaining power
between the parties can be an important determinant
of bargaining outcomes, especially in a distributive bar-
gaining approach. Raising the other party s costs of dis-
agreement or lowering the other party s costs of
agreement with your proposals aids in attaining a bar-
gaining settlement on your party s terms and thus
increases your party s bargaining power. Bargaining

costs can and should be calculated in negotiations,
albeit sometimes rather imprecisely.

Collective bargaining occurs within a legal frame-
work, which regulates the parties bargaining responsi-
bilities and behavior. Both union and management
negotiators have a legal duty to bargain in good faith,
demonstrating both reasonableness and a sincere effort
to reach a voluntary settlement of interest disputes
affecting employees wages, hours, and other terms or
conditions of employment. Good faith bargaining
enhances the opportunity for labor peace and stability
necessary for the production of goods and services. The
need to remain competitive and to successfully attain
the respective interests of employers and employees
helps to ensure the parties have a common goal to pro-
mote realistic and ethical conduct during the negotia-
tion process.

Key Terms
collective bargaining, p. 267
interest dispute, p. 268
pattern bargaining, p. 268
whipsaw bargaining strategy, p. 269
lock-in agreement, p. 270
coordinated bargaining, p. 270
leapfrogging, p. 270
bargaining unit, p. 270
nonmandatory, p. 271
centralized bargaining, p. 272
multi-employer bargaining unit, p. 272
degree of labor intensiveness, p. 273
bargaining range, p. 279
resistance point, p. 279

target point, p. 279
package proposal, p. 281
cents-per-hour cost, p. 283
roll-up factor, p. 283
Walton & McKersie s four bargaining

processes, p. 285
distributive bargaining, p. 285
integrative bargaining, p. 285
interest-based bargaining, p. 285
intraorganizational bargaining, p. 292
good faith bargaining, p. 295
illegal bargaining subjects, p. 295
mandatory bargaining subjects, p. 295
mid-term bargaining, p. 296

good faith bargaining impasse, p. 297
voluntary bargaining subjects, p. 297
inability to pay, p. 298
totality of conduct doctrine, p. 298
Boulwarism, p. 298
reserved rights doctrine, p. 301
short-form management s rights clause,

p. 301
long-form management s rights clause,

p. 301
new employer, p. 303
successor employer, p. 303
successorship clause, p. 303
contract ratification, p. 306

Discussion Questions

1. What are some situations in which management
or the union would prefer centralized bargaining?
In what situations might both prefer centralized
bargaining? Discussion should take into account
specific legal considerations affecting centralized
bargaining.

2. During an economic recession, discuss how
management s or a union s bargaining power
might be affected. Give an example to illustrate
what you mean.

3. Assume that you are a management negotiator
and the union presents the following proposal:
Any overtime assignment will be guaranteed a

minimum of two hours at time-and-a-half the
base hourly rate for the classification. Previously,
employees working overtime received time and
one-half pay for the hours they worked but no
two-hour guarantee. Indicate in some detail how
you would cost out this proposal. Also, discuss
some arguments the union might use to make it

310 PART 2 The Bargaining Process and Outcomes

easier for management to accept this proposal
(i.e., to reduce management s agreement costs).

4. Identify some sources of information a union or
management negotiator could consult to get
timely and relevant information about the
following:
a. recent bargaining settlements in a particular

industry
b. current wage rates for specific types of labor in

a specific geographic area
c. health care cost and bargaining trends
d. pension benefits plans and trends

5. Good and bad faith bargaining might be easier to
define than implement. Discuss different types of

evidence that might be used prove or disprove a
charge of bad faith bargaining.

6. Briefly define each of Walton & McKersie s
four bargaining processes. Pick two of
the processes and discuss how they are
similar and different. How might they be
related?

7. Are current legal remedies for bad faith bargain-
ing adequate to promote compliance with the
LMRA s goal of good faith bargaining? Why or
why not? What recommendations would you
suggest for improving compliance with the goal of
promoting good faith bargaining?

Exploring the Web

Collective Bargaining

1. Duty to bargain. Go to the Web site for the National
Labor Relations Board (NLRB) and read the classic
case A.M.F. Bowling Company, Inc. and United Steel-
workers of America, District 4. Documents for this
case (03-CA-013625; 314 NLRB 969) can be found
here: http://www.nlrb.gov/case/03-CA-013625. Do
you agree or disagree with the decision of the Board
regarding whether the employer engaged in bad faith
bargaining? Explain your reasoning.

2. Bankruptcy and collective bargaining. Using a research
database such as LexisNexis or ABI/INFORM, explore
the issue of labor contract rejections during the bank-
ruptcy process by reading the following two articles
and at least one more related articles that your search
discovers. Andrew B. Dawson, Collective Bargaining
Agreements in Corporate Reorganizations, American
Bankruptcy Law Journal, 84(1), 2010, pp. 103 121 and

Samuel Maizel, Mary Lane, and Daniel Spitzer,
Repercussions of the Collision of Labor Law and

Health Care Industry Bankruptcies, American Bank-
ruptcy Institute Journal, 29(7), 2010, pp. 18, 85 87.

3. Auto Industry and collective bargaining. Visit the home
page of the UAW Union and learn about the National
Collective Bargaining Departments of the UAW. In
your opinion, given the current state of the U.S.
auto industry, are UAW members better served by
having each national collective bargaining department
(e.g., Ford, GM, Chrysler) negotiate a separate national
contract at each company, or would it be better to seek
a single contract covering auto workers at all U.S. auto
companies represented by the UAW? Would employ-
ers be willing to bargain as part of a multi-employer
group, or would each employer insist on maintaining
the present bargaining structure of negotiating their
own contract with the UAW?

References
1. For a more detailed conceptualization of various

behavioral and situational aspects of negotiation
behavior and a thorough bibliography, see
Leonard Greenhalgh and Roy J. Lewicki, New
Directions in Teaching Negotiations: From
Walton and McKersie to the New Millennium,
in Negotiations and Change, eds. Thomas

A. Kochan and David B. Lipsky (Ithaca, NY: Cor-
nell University Press, 2003), pp. 20 34; James A.
Wall and Michael W. Blum, Negotiations, Journal
of Management, 17(3), 1991, pp. 273 303.

2. Leib Leventhal, Implementing Interest-based
Negotiation: Conditions for Success with
Evidence from Kaiser Permanente, Dispute

CHAPTER 6 Negotiating the Labor Agreement 311

Resolution Journal, 61(3), 2006, pp. 50 58;
Interest-based Bargaining: Evidence from

Quebec, Worklife Report, 14(4), 2003, p. 2; Ira B.
Lobel, Realities of Interest-based (Win-Win)
Bargaining, Labor Law Journal, 45, December
1994, p. 771.

3. For related considerations, see Gregor Murray,
Local Unions and Workplace Restructuring:

Introduction, Relations Industrielles/Industrial
Relations, 56(2), 2001, pp. 237 239; Kathryn J.
Ready, Is Pattern Bargaining Dead? Industrial
and Labor Relations Review, 43(2), 1990,
pp. 272 279; Peter Cappelli, Daniel J. B. Mitchell,
and Kathryn J. Ready, Communication: Is Pat-
tern Bargaining Dead? A Discussion, Industrial
and Labor Relations Review, 44(1), 1990,
pp. 152 155; John W. Budd, The Determinants
and Extent of Pattern Bargaining, Industrial and
Labor Relations Review, 45(3), 1992, pp. 523 539;
John W. Budd, The Internal Union Political
Imperative for UAW Pattern Bargaining, Journal
of Labor Research, 16(1), 1995, pp. 43 57.

4. Don Lee Distributor, Inc., et al. v. NLRB, 145 F.3d
834 (6th Cir. 1998).

5. For a discussion of several factors associated with
centralized bargaining in the United States and
other countries, see Harry C. Katz, The Decen-
tralization of Collective Bargaining: A Literature
Review and Comparative Analysis, Industrial
and Labor Relations Review, 47(1), 1993,
pp. 3 22. For a discussion of centralized
bargaining in the coal industry specifically, see,
Coal Mines Committee, International Labour
Organization of the United Nations, Productivity
and Its Impact on Employment and Labour
Relations in the Coalmining Industry: Thirteenth
Session, Report II (Geneva, Switzerland:
International Labour Organization, 1994).

6. Douglas L. Leslie, Labor Bargaining Units, Virgi-
nia Law Review, 70, April 1984, p. 414; Douglas L.
Leslie, Multiemployer Bargaining Rules, Virginia
Law Review, 75, 1989, pp. 241 178.

7. David P. Twomey, Labor and Employment Law,
12th ed. (Mason, OH: Thomson, 2004),
pp. 85 88.

8. General Electric Company and International
Union of Electrical, Radio and Machine Workers,
173 NLRB 253 (1968).

9. Utility Workers Union of America and Ohio
Power Company et al., 203 NLRB 30 (1973).

10. United Paperworkers International Union, Locals
620, 14, and 197 and International Paper Com-
pany, 309 NLRB 44 (1992).

11. Charles D. Bonanno Linen Supply v. NLRB, 454
U.S. 404 (1982).

12. Marilyn E. Gist, Cynthia K. Stevens, and Anna G.
Basvetta, Effects of self-efficacy and post-training
intervention on the acquisition and maintenance
of complex interpersonal skills. Personnel Psy-
chology, 44(4), 1991, pp. 837 861; Alison W.
Brooks, and Maurice E. Schweitzer, Can Nervous
Nelly Negotiate? How Anxiety Causes Negotia-
tors to Make Low First Offers, Exit Early, and
Earn Less Profit, Organizational Behavior and
Human Decision Processes, 115(1), 2011,
pp. 43 54.

13. Bruce Barry and Ray Friedman, Bargainer char-
acteristics in distributive and integrative
negotiation. Journal of Personality and Social
Psychology, 74, 1998, pp. 345 359; Nikolaos,
Dimotakis, Donald E. Conlon, and Remus Ilies,
The mind and heart (literally) of the negotiator:

Personality and contextual determinants of expe-
riential reactions and economic outcomes in
negotiation, Journal of Applied Psychology, 97(1),
2012, pp. 183 193.

14. J. M. Jordan and Michael E. Roloff, Planning
skills and negotiator goal accomplishment,
Communication Research, 24, 1997, pp. 31 63;
Michael Boland, and William H. Ross, The
impact of Self-Monitoring on the negotiation of
emotionally-laden and non-emotionally-laden
issues, International Journal of Management &
Enterprise Development, 4(6), 2007, pp. 674 692.
Ken Ohbuchi and O. Fukushima, Personality
and interpersonal conflict: Aggressiveness, self-
monitoring, and situational variables, Interna-
tional Journal of Conflict Management, 8(2), 1997,
pp. 99 113.

15. Terri R. Kurtzberg, Creative thinking, cognitive
aptitude, and integrative joint gain: A study of
negotiator creativity, Creativity Research Journal,
11, 1998, pp. 283 293; Ingrid S. Fulmer, and
Bruce Barry, The smart negotiator: Cognitive
ability and emotional intelligence in negotiation,
International Journal of Conflict Management, 15,
2004, pp. 245 272; Sharma Sudeep, William P.
Bottom, and Hillary A. Elfenbein, On the role of
personality, cognitive ability, and emotional
intelligence in predicting negotiation outcomes:

312 PART 2 The Bargaining Process and Outcomes

A meta-analysis, Organizational Psychology
Review, 3(4), 2013, pp. 293 336.

16. Ian Newall, Is Win-win Just Pie in the Sky?
Strategic Direction, 22(6), 2006, p. 4.

17. Leigh Thompson, The Mind and Heart of the
Negotiator (Saddle River, NJ: Prentice-Hall, 1998),
pp. 160 161.

18. Margaret A. Chaplan and Edward J. Hertenstein,
The Information Needs of Local Union Offi-

cials, Library Trends, 51(1), 2002, pp. 50 69.
19. Rich, Clive. Successful negotiation is 80 percent

preparation: How to get more of what you want
by preparing properly, Strategic Direction, 27(3).
2011, pp. 3 5.

20. Howard Raiffa, The Art & Science of negotiation
(Cambridge, Mass: Belknap Press/Harvard
University Press, 1982), pp. 44 51.

21. Sam Ashbaugh, The Art and Science of Costing
Labor Contracts, Government Finance Review,
18(6), 2002, pp. 33 34.

22. Richard E. Walton and Robert B. McKersie, A
Behavioral Theory of Labor Negotiations (New
York: McGraw-Hill, 1965). For examples of
applications of their concepts, see Tricia Dawson,
Collective Bargaining and the Gender Pay Gap

in the Printing Industry, Gender, Work & Orga-
nization, 21(5), pp. 381 394; Reynald Bourque
and Marc-Antonin Hennebert, Cross-Border
Trade Union Action in a Canadian Multinational
Corporation, The International Journal of Com-
parative Labour Law and Industrial Relations, 27
(3), 2011, pp. 271 286; Kamal K. Jain, Decoding
the strike at Bajaj Auto s Chakan plant: a nego-
tiator s framework , Emerald Emerging Markets
Case Studies, 2014, at http://www.emeraldinsight.
com/doi/abs/10.1108/EEMCS-12-2013-0230.

23. For a discussion of specific distributive bargaining
and contending tactics in labor and other con-
texts, see Joachim Hüffmeier, Philipp A. Freund,
Alfred Zerres, Klaus Backhaus, and Guido Hertel,
Being tough or being nice? A meta-analysis on

the impact of hard-and softline strategies in dis-
tributive negotiations, Journal of Management,
40(3), 2014, pp. 866 892; Roger Dawson, You
Can Get Anything You Want, But You Have to
Do More Than Ask (Phoenix: Regency, 1985);
Fassina, Neil E., and Glen R. Whyte. I am
Disgusted by Your Proposal : The Effects of a
Strategic Flinch in Negotiations. Group Decision
and Negotiation, 23(4), 2014, pp. 901 920. For a

discussion of mutual gain bargaining, see Roger
Fisher, William Ury, and Bruce Patton, Getting to
Yes: Negotiating an Agreement without Giving In,
2nd ed. (Boston: Houghton Mifflin, 1991);
William Ury, Getting Past No: Negotiating with
Difficult People (New York: Bantam Books, 1991);
Joel Cutcher-Gershenfeld, Interest-Based Bar-
gaining in William K. Roche, Paul Teague,
Alexander J.S. Colvin (Eds.), The Oxford Hand-
book of Conflict Management in Organizations
(Oxford, UK: Oxford University Press, 2014).

24. Leib Leventhal, Implementing Interest-based
Negotiation: Conditions for Success with Evi-
dence from Kaiser Permanente, pp. 50 58; Nils
O. Fonstad, Robert B. McKersie, and Susan C.
Eaton, Interest-based Negotiations in a Trans-
formed Labor management Setting, Negotiation
Journal, 20(1), 2004, pp. 5 11; Alfred Zerres,
Joachim Hüffmeier, Philipp A. Freund, Klaus
Backhaus, and Guido Hertel. Does it take two to
tango? Longitudinal effects of unilateral and
bilateral integrative negotiation training, Journal
of Applied Psychology, 98(3), 2013, pp. 478 491;
Joel Cutcher-Gershenfeld, How Process Matters:
A Five-phase Model for Examining Interest-based
Bargaining, in Thomas Kochan and D. Lipsky
(Eds.) Negotiations and Change: From the Work-
place to Society (Ithaca, NY: Cornell University
Press, 2003), pp. 141 160.

25. Robert L. Zorn, Information-based Bargaining
for a New Age, School Administrator, 63(7),
2006, p. 44.

26. Roy J. Lewicki, Bruce Barry, and David M. Saun-
ders, Negotiation, Sixth Ed. (Burr Ridge, IL:
McGraw-Hill/Irwin, 2010); Dejun Tony Kong,
Kurt Dirks, and Donald Ferrin, Interpersonal
trust within negotiations: Meta-analytic evidence,
critical contingencies, and directions for future
research, Academy of Management Journal,
57(5), 2014, pp. 1235 1255; Shay S. Tzafrir,
Rudolph Joseph Sanchez, and Keren Tirosh-
Unger, Social motives and trust: implications for
joint gains in negotiations, Group Decision and
Negotiation, 21(6), 2012, pp. 839 862.

27. Neil W. Chamberlain and James W. Kuhn,
Collective Bargaining, 2nd ed. (New York:
McGraw-Hill, 1965), pp. 162 190.

28. Eva Zellman and Simon Kemp, Estimating
the Other Party s Preferences and Trust in
Trade Union and Employer Negotiations:

CHAPTER 6 Negotiating the Labor Agreement 313

A Comparison between NZ and Sweden, New
Zealand Journal of Employment Relations, 29(2),
2004, pp. 17 31.

29. Jeffrey Z. Rubin and Bert R. Brown, The Social
Psychology of Bargaining and Negotiation (New
York: Academic Press).

30. Roderick I. Swaab, William W. Maddux, and
Marwan Sinaceur, Early words that work:
When and how virtual linguistic mimicry
facilitates negotiation outcomes, Journal of
Experimental Social Psychology, 47(3), 2011,
pp. 616 621; Svenn Lindskold, Trust develop-
ment, the GRIT proposal, and the effects of
conciliatory acts on conflict and cooperation,
Psychological Bulletin, 85(4), 772 793; Roger
J. Volkema, Getting Off on the Right Foot: The
Effects of Initial Email Messages on Negotiation
Process and Outcome, IEEE Transactions on
Professional Communication, 54(3), 2011,
pp. 299 313.

31. Walton and McKersie, A Behavioral Theory of
Labor Negotiation; Daniel Druckman, Mara Ole-
kalns, and P. L. Smith, Interpretive filters: Social
cognition and the impact of turning points in
negotiation, Negotiation Journal, 25, 2009,
13 40; Gerben A. Van Kleef, and Marwan Sina-
ceur, The Demise of the Rational Negotiator:
Emotional Forces in Conflict and Negotiation.
In Mara Olekalns and Wendi L. Adair (Eds.)
Handbook of Research on Negotiation (North-
ampton, Mass.: Edward Elgar, 2013), pp. 103
132; Nicholas DiGiovanni, This Much I Know is
True: The Five Intangible Influences on Collective
Bargaining, Journal of Collective Bargaining in
the Academy, 3, Article 5, 2012, at: http://thekeep.
eiu.edu/jcba/vol3/iss1/5

32. Dudley B. Turner, Intraorganizational Bargaining:
The Effect of Goal Congruence and Trust on
Negotiator Strategy Use, Communication Studies,
41(1), 1990, pp. 54 75; Richard E. Walton and
Robert B. McKersie, A Behavioral Theory of Labor
Negotiations (New York: McGraw-Hill, 1965),
pp. 281 351; Robert B. McKersie and Joel
Cutcher-Gershenfeld, Labor Management
Relations: Understanding and Practicing
Effective Negotiations, Negotiation Journal,
25(4), 499 514.

33. Albert Blum, Collective Bargaining: Ritual
or Reality? Harvard Business Review, 39,
November/December 1961, p. 65.

34. Francisco J. Medina, Amapola Povedano, Ines
Martinez, and Lourdes Munduate. How do we
approach accountability with our constituency?:
Gender differences in the use of influence tactics,
International Journal of Conflict Management,
20(1), 2009, pp. 46 59.

35. H. Joseph Reitz, James A. Wall, Jr., and Mary Sue
Love, Ethics in Negotiation: Oil and Water or
Good Lubrication? Business Horizons, 41(3),
1998, pp. 5 14.

36. Roy J. Lewicki, David Saunders, and Bruce Barry,
Negotiation: Readings, Exercises, and Cases, Sixth
Edition (New York: McGraw-Hill/Irwin, 2010),
pp. 680 681; Rob Robinson, Roy J. Lewicki, and E.
Donahue, Extending and Testing a Five Factor
Model of Ethical and Unethical Bargaining Tactics:
The SINS Scale, Journal of Organizational
Behavior, 21, 2000, pp. 649 664; Bruce Barry,
Ingrid S. Fulmer, and Adam Long, Ethically Mar-
ginal Bargaining Tactics: Sanction, Efficacy, and
Performance. Paper presented at the annual meet-
ing of the Academy of Management, Toronto,
August, 2000; Ingrid S. Fulmer, Bruce Barry, and
Adam Long, Lying and smiling: Informational
and emotional deception in negotiation, Journal
of Business Ethics, 88(4), 2009, pp. 691 709.

37. Lee Iacocca, Iacocca: An Autobiography (New
York: Bantam Books, 1984), p. 304.

38. Jeremy Main, How to Be a Better Negotiator,
Fortune, September 19, 1983, p. 143. Also see,
Chia Jung Tsay, and Max H. Bazerman, A
Decision Making Perspective to Negotiation: A
Review of the Past and a Look to the Future,
Negotiation Journal, 25(4), 2009, pp. 467 480;
Charles B. Craver, Negotiation Ethics for Real
World Interactions, Ohio State Journal on Dis-
pute Resolution, 25, 2010, pp. 299 346.

39. See A.M.F. Bowling Company, Inc. and United
Steel workers of America, District 4, 314 NLRB
978 (1994) and Pillowtex Corporation and Inter-
national Brotherhood of Firemen and Oilers, 241
NLRB 46 (1979).

40. First National Maintenance Corporation v. NLRB,
452 U.S. 666 (1981).

41. Fibreboard Paper Products Corporation v. NLRB,
379 U.S. 203 (1964).

42. Al Norman, Wal-Mart s Meat Wars with Union
Sizzles On, Huffington Post [online], May 25,
2011 at http://www.huffingtonpost.com/al-nor-
man/walmarts-meat-wars-with-u_b_91757.html.

314 PART 2 The Bargaining Process and Outcomes

43. Dubuque Packing Co and UFCE, Local 150-A, 303
NLRB 386 (1991); enf. in UFCW, Local 150-A v.
NLRB, 1 F.3d 24 (DC Cir. 1993); Roger Wolters
and Stuart Langdon, The Duty to Bargain over
Business Decisions: The Dubuque Case, Labor
Law Journal, 43(9), 1992, pp. 579 587.

44. E. I. Dupont de Nemours & Company and
Chemical Workers Association Inc., a/w Interna-
tional Brotherhood of Dupont Workers, 301 NLRB
155 (1991).

45. See, for example, Katrina L. Abel, Current
Developments in Labor management Relations,
Employee Relations Law Journal, 15(2), 1989,
pp. 281 289; Union Attorney Sees NLRB as
More Willing to Inquire Whether Bargaining Is
Serious, Daily Labor Report, February 5, 1991,
pp. A-6, A-7.

46. Graphic Communications International Union,
Local 508 v. NLRB, 977 F.2d 1168 (7th Cir. 1992).

47. ConAgra Inc. and Congreso de Uniones Indus-
triales de Puerto Rico, 321 NLRB 944(1996); and
Stroehmann Bakeries Inc. and Bakery, Confec-
tionery and Tobacco Workers Local Union
No. 116, 318 NLRB 1069 (1995).

48. Office of the General Counsel, Checklist for 8 (a)
(5) Allegations, Memorandum GC 08-06,
May 15, 2008, pp. 1 7 at http://www.nlrb.gov/
publications/general-counsel-memos.

49. Virgil B. Day, Bad Faith Bargaining? in Contem-
porary Labor Issues, eds. Walter Fogel and Archie
Kleingartner (Belmont, CA: Wadsworth Publish-
ing, 1968), pp. 388 392; Lemuel R. Boulware, The
Truth about Boulwarism (Washington, D.C.:
Bureau of National Affairs, Inc., 1969).

50. NLRB v. General Electric Company, 418 F.2d 736
(1969); General Electric Company v. NLRB, 397
U.S. 965 (1970). See also Thomas P. Brown IV,
Hard Bargaining: The Board Says No, the Courts

Say Yes, Employee Relations Law Journal, 8(1),
1982, pp. 37 51.

51. Francisco Hernandez-Senter, Jr., Closing the
Communication Gap in Collective Bargaining,
Labor Law Journal, 41(7), 1990, pp. 438 444.

52. Steward J. Schwab, The Union as Broker of
Employment Rights, In Cynthia L. Estlund and
Michael L. Wachter (Eds.) Research Handbook on
the Economics of Labor and Employment Law
(Northampton, Mass.: Edward Elgar, 2012),
pp. 248 274.

53. Marvin Hill, Jr., and Anthony V. Sinicropi,
Management Rights (Washington, D.C.: Bureau
of National Affairs Inc., 1986), p. 6.

54. Michael H. Schuster and Steve Weidman,
Organizational Change in Union Settings,

Labor management Partnerships: The Past and
the Future, Human Resource Planning, 29(1),
2006, pp. 45 51; Martin M. Perline and David J.
Poynter, Union Orientation and the Perception
of Managerial Prerogatives, Labor Law Journal,
40(12), 1989, pp. 781 788.

55. United Steelworkers of America v. Warrior & Gulf
Navigation Company, 363 U.S. 574 (1960).

56. Bureau of National Affairs, Inc., Basic Patterns in
Union Contracts (Washington, D.C.: Bureau of
National Affairs Inc., 1995), p. 79.

57. NLRB v. Burns Security Services, 406 U.S. 272
(1972); Fall River Dyeing & Finishing Corp. v.
NLRB, 107 S.Ct. 2225 (1987); Golden State Bot-
tling Co. v. NLRB, 414 U.S. 108 (1974). See also
Clyde Scott, Trevor Bain, and John Robb, The
Successorship Doctrine: Fall River Dyeing and
Beyond, Labor Law Journal, 45(4), 1994,
pp. 230 239.

58. The Bureau of National Affairs, Inc., Employer
Bargaining Objectives 2010, Collective Bargain-
ing Bulletin, 15(5), 2010, p. S-23.

59. NLRB v. Bildisco & Bildisco, 104 S.Ct. 1188
(1984).

60. Jennifer J. Froehlich, Bankruptcy Brinkmanship:
Employer s Threats of Bankruptcy in the Context
of Collective Bargaining and the National Labor
Relations Act, Labor Law Journal, 57(2), 2006,
pp. 89 116; John Wren and Kent Murrmann,
Chapter 11 and Collective Bargaining

Agreements, Employee Relations Law Journal,
16(1), 1990, pp. 17 27.

61. Andrew B. Dawson, Collective Bargaining
Agreements in Corporate Reorganizations,
American Bankruptcy Law Journal, 84(1), 2010,
pp. 103 121.

62. Alexander R. Rivera, J & R Flooring: The NLRA
Notice Remedy Goes Electronic. Berkeley Journal
of Employment & Labor Law, 32, 2011,
pp. 569 569.

63. H. K. Porter Co., Inc. v. NLRB, 397 U.S. 99 (1970).
64. Office of the General Counsel, Additional

Remedies in First Contract Bargaining Cases,
Memorandum GC 07-08, May 29, 2007, p. 1.

CHAPTER 6 Negotiating the Labor Agreement 315

65. Text of the Employee Free Choice Act of 2009,
GovTrack, at https://www.govtrack.us/congress/
bills/111/s560/text.

66. Clyde W. Summers, Ratification of Agreements,
in Frontiers of Collective Bargaining, eds. J. T.
Dunlop and N. W. Chamberlain (New York:
Harper & Row, 1967), pp. 82 83.

67. Herbert J. Lahne, Union Contract Ratification
Procedures, Monthly Labor Review, 91(5), 1968,
pp. 7 10; Federal Mediation and Conciliation
Service, Thirty-fourth Annual Report (Washing-
ton, D.C.: Government Printing Office, 1982),
p. 21. (The FMCS no longer collects data on
contract ratification outcomes.)

68. James E. Martin and Ruth D. Berthiaume,
Predicting the Outcome of a Contract

Ratification Vote, Academy of Management
Journal, 38(3), 1995, pp. 916 928.

69. James E. Martin, An Individual-level Study of
Contract Ratification Support, Industrial
Relations, 47(1), 2008, pp. 102 107.

70. Peter Cappelli and W. P. Sterling, Union Bar-
gaining Decisions and Contract Ratifications: The
1982 and 1984 Auto Agreements, Industrial and
Labor Relations Review, 41(2), 1988, pp. 195 209.

71. William E. Simkin, Refusal to Ratify Contracts,
Industrial and Labor Relations Review, 21(4),
1968, pp. 528 529.

72. D. R. Burke and Lester Rubin, Is Contract
Rejection a Major Collective Bargaining Prob-
lem? Industrial and Labor Relations Review,
26(2), 1973, pp. 832 833.

316 PART 2 The Bargaining Process and Outcomes

CA
SE

ST
UD

Y

6-
1 The Funeral Leave Policy Proposal

Purpose

To provide each student practice in drafting and nego-
tiating contract language. For a more in-depth bargain-
ing experience, refer to the bargaining simulation
exercise in Appendix A.

Instructions

1. Each student will be assigned the role of either a
union or management negotiator. Students may
also be assigned to either a union or management
bargaining team.

2. Taking into consideration the relevant interests of
your assigned role and the advice contained in
Exhibit 6.3, prepare a written bargaining proposal
to establish a funeral leave policy. Your proposal
should address the following issues:

How many days (hours) of funeral leave will be
provided?
Will time off from work for funeral leave be paid
or unpaid? If paid, at what rate of pay?
Will part-time employees qualify to receive the
funeral leave benefit?
Whose death would qualify as an occurrence
permitting an employee to take funeral leave? Be
sure to be specific when defining terms such as
immediate family member or relative.

Should funeral leave be granted upon the death
of a domestic partner, significant other, or
personal friend ?

If paid leave is granted for a specified period of
time, could an employee extend his leave time
by using either other paid-leave time (e.g.,
vacation days, holidays, sick-leave days) or by
using unpaid-leave days?
Must an employee actually attend the funeral in
order to receive funeral leave? If so, what might
constitute adequate proof of an employee s
attendance at a funeral?
Must an employee offer any proof to verify a
death has occurred in order to receive funeral
leave? If so, what type of evidence or proof
would be acceptable?
What is the procedure an employee must follow
to request funeral leave?

How far in advance must an employee request
funeral leave to cover a period of absence from
work?
Who has authority on behalf of the employer to
grant or deny an employee s funeral leave
request?

3. Union and management role players may be pro-
vided an opportunity to negotiate any differences
in contract language that may exist between each
party s initial written funeral leave policy propo-
sals. Any final agreement reached within the allot-
ted bargaining time should be reduced to writing
and signed by the respective parties.

Additional Background Information

The employer operates a large retail store in a popular
shopping mall that serves a surrounding three-county
area. There are 100 employees in the bargaining unit
who currently earn an average hourly wage rate of $10
per hour. There is no current language in the parties
labor agreement that addresses the issue of funeral
leave. The company was recently purchased by another
owner, and employees are very concerned that informal
policies which may have been used in the past are likely
to undergo significant change with the change in own-
ership. The union has requested that management bar-
gain over creating a formal funeral leave policy, and the
company has agreed to do so.

The past company practice on an employee s
request for funeral leave has been to handle each
request on a case-by-case basis with the employee s
department head having the authority to authorize
varying amounts of unpaid time off from work depend-
ing upon the circumstances. During the previous 12-
month period there have been 20 requests for funeral
leaves, of which 16 were granted. Three of the four
funeral leave requests denied were from part-time
employees, and no reason was given by the individual
department head involved for denying the employee s
request. The average length of time off from work for
the 16 funeral leave requests that were granted (10 full-
time and 6 part-time employees) was 2.8 days.

Each full-time employee s regular work schedule
consists of 8 hours a day, five days per seven-day

CHAPTER 6 Negotiating the Labor Agreement 317

work period. Part-time employees work 8 to 32 hours
per seven-day work period and comprise 45 percent of
the bargaining unit members. The geographic area
served by the store has seen tremendous growth in

the past 8 years, and unemployment rates in the area
are among the state s lowest, averaging 1.5 2.5 percent
per month. The store s regular hours of operation are
seven days a week from 10 A.M. until 10 P.M.

CA
SE

ST
UD

Y

6-
2 Classification of a Bargaining Subject

The company and union have had a bargaining rela-
tionship for more than 20 years. On July 11, bargaining
unit member Allan Engle was performing his assigned
work duties of cleaning the bathroom on the second
floor of the company s administrative building when
he glanced up and observed a camera approximately
6 to 8 feet away located in an air vent and pointed
directly at him. Engle reported his discovery to three
other bargaining unit members, including union stew-
ard Luther Hall, who went to the second-floor bath-
room in question and confirmed that the hidden
camera was there. The following day the local union
president was notified, but when she went to investi-
gate, the hidden camera had been removed.

On July 15, local union president Wanda Jackson
was asked to meet with the company s HR manager
Susan Albright. Albright asked Jackson if she had
heard about the camera that was discovered in the san-
itation department s restroom. Albright went on to say
that the camera had been installed by the company
because of a reported theft problem in that area, and
the company s legal counsel had advised her that it was
lawful as long as the company had a legitimate business
reason for doing so. Albright stated that once the cam-
era had been discovered and union members appeared
irate over the issue, the camera was immediately
removed by management.

Local union president Jackson believed the company
could have accomplished its theft investigation through
less intrusive means, and the union did not approve of
management s invasion of employees privacy. The
union sent a letter to the company, dated August 1, indi-
cating that an internal investigation by union members
had also uncovered hidden cameras being used in the
employees physical fitness room. On August 16, Jackson
sent a hand-delivered letter to HR manager Albright
demanding that the company bargain over the subject
of video camera use in the workplace. The company
refused to bargain over the subject, whereupon the
union filed an unfair labor practice charge, alleging that

the company s action violated Section 8 (a)(5) and (1) of
the LMRA, as amended.

Positions of the Parties

The union argues that the use of surveillance cameras in
the workplace for providing evidence of work-rule viola-
tions by employees, for which they could be subject to
discipline or discharge, is clearly an issue that is germane
to the working environment and job security interests of
union members. Therefore, the union believes manage-
ment has a legal duty to bargain in good faith, upon
request, over issues such as the number and location
of video cameras within the workplace. Other issues
over which bargaining unit members might have an
interest in bargaining include whether employees will
be given prior notice that their conduct may be subject
to filming; who will have access to the video recordings
made; for what purposes the video recordings may be
used; and the circumstances under which the cameras
can be required to be removed.

The company essentially makes two arguments.
First, the company believes it has an absolute right to
engage in actions (like using cameras) to protect the legit-
imate business-related interests of the ownership. The
company noted that it had for many years used
17 video cameras located both inside and outside com-
pany buildings to observe activity for protecting company
property from theft or damage and to discourage other
work-rule violations (e.g., drug use, sleeping on the job).
These 17 cameras were in plain sight, and their existence
had been known to the union s membership for many
years without any prior objection from the union. In
recent years, 11 additional hidden video cameras had
been installed inside the company to observe specific
areas where employee misconduct was suspected. To
require management to bargain in advance over the use
or placement of such surveillance equipment would sig-
nificantly reduce the effectiveness of this method of mon-
itoring employee conduct on the employer s premises.

318 PART 2 The Bargaining Process and Outcomes

Second, management argues that even if the Board
were to find that a duty to bargain existed, based on the
circumstances in this case, the union waived its right to
bargain over the subject of surveillance cameras. The
company points to the length of time it has used
video cameras without any objection by the union as
evidence that the union has acquiesced in this practice
and essentially acknowledged management s right to
use surveillance cameras for legitimate business rea-
sons. The company acknowledges that the union has
a right to file a contractual grievance over any alleged
misuse or abuse of surveillance methods leading to a
lack of just cause for disciplinary or discharge action
against a bargaining unit member. However, the right
to grieve a management discipline or discharge

decision is not equivalent to a right to require manage-
ment to bargain, in advance, over the right to use cam-
era surveillance as a legitimate investigatory technique.

Questions
1. What is a mandatory subject of bargaining?
2. Can a union waive its right to bargain over a man-

datory subject of bargaining?
3. Was management s refusal to bargain over the sub-

ject of surveillance camera usage in the workplace a
violation of the duty to bargain in good faith under
the LMRA, as amended? If so, what should be the
appropriate remedy? Discuss the merits of the par-
ties respective positions in this case.

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3 The Influenza Work Rule

Mercy Hospital is an acute care facility employing
nearly 5,000 employees, including 602 nurses; the
nurses are represented by the Regional Nurses Associ-
ation (RNA). The Hospital and RNA have a CBA
which was implemented two years ago and expires
next year. The current contract calls for a joint labor
management committee to meet weekly for two hours
on paid company time to discuss work and issues
related to contract implementation.

Last May, Mercy managers brought before the
labor management committee an announcement.
We are amending our Fitness for Duty policy to

require all nurses to be immunized against the flu.
The union objected, noting that some nurses were
allergic to the preservative used in the flu vaccine and
that a few objected to the flu vaccine on other grounds
(doubts about its effectiveness, objections based on how
it was developed, religious objections). The proposal
was subject to discussion for six weeks. Subsequently,
managers brought a revised policy last July. The Hos-
pital informed the Union that it was considering
requiring nurses to take one of three steps: (a) be
immunized against the flu, (b) wear a protective face-
mask, or (c) take antiviral medication during flu sea-
son. Managers argued that any of these three steps
would protect patients, many of whom were elderly,
other employees, and visitors to the hospital from con-
tracting influenza. During the course of the next several
weeks, Mercy Hospital and Union officials discussed

the revised proposal a few times and even exchanged
correspondence over this matter. However, by late
October, it was obvious that the RNA and Mercy mem-
bers of the labor management committee did not agree
on the proposed flu policy.

On November 1, the Hospital declared discussion
to be at an impasse and that managers would immedi-
ately implement the revised flu-prevention policy
requiring non-immunized nurses to either wear a face-
mask or take antiviral medication. The Hospital s attor-
ney indicated the organization s intention to handle
any noncompliance with the policy through the stan-
dard process, which might include progressive disci-
pline, ultimately resulting in employment termination
for repeat offenders. The union immediately filed
charges, alleging that Mercy Hospital had violated the
LMRA.

Union position

The union alleges that Mercy Hospital has (a) prema-
turely determined that there is an impasse in bargain-
ing, subsequently unilaterally changing working
conditions for nurses, and (b) refused to submit the
matter to an independent arbitrator under the existing
contract s grievance-arbitration provision.

Elaborating upon each of these positions, Hospital
management has a duty under the LMRA to bargain
over this matter, as it constitutes a working condition

CHAPTER 6 Negotiating the Labor Agreement 319

in the form of a work rule and numerous NLRB prece-
dent cases (e.g., Praxair, Inc., 317 NLRB 435, 436 1995)
have established that work rules where employees may
be disciplined are mandatory subjects of bargaining.
Management representatives did not actually engage
in bargaining over this matter; they merely described
their proposed policy to the labor management com-
mittee and answered a few union questions about how
the policy would be implemented in specific work
situations. Their answers were confusing, evasive, and
misleading. We were led to believe, for example, that
the policy would be implemented in the following year;
suddenly, the Hospital revised the timeline for imple-
mentation without sufficient notice to the Union.
When we asked, we got contradictory answers regard-
ing which types of nurses would be covered by the
policy. We also requested for e-mail messages or
other records from bargaining-unit employees con-
cerning the policy in order to gauge employee reactions
to the policy. An employer must provide a union with
accurate and relevant information for collective bar-
gaining purposes (see NLRB v. Truitt Mfg. Co., 351
U.S. 149, 153 [38 LRRM 2042], 1956).

It is true that managers revised the policy on the
basis of union objections, but there was no bargaining
and no meeting of the minds resulting in an agree-
ment on a new policy. Rather, management presented
its second version of the policy as a fait accompli, and
unilaterally (1) declared an impasse and (2) implemen-
ted its policy. This short-circuits the bargaining pro-
cess. Management s actions violate Section 8(a)(5) of
the LMRA, which reads, It shall be an unfair labor
practice for an employer to refuse to bargain collec-
tively with the representatives of his employees .
The labor management committee is responsible for
implementing the current collective bargaining agree-
ment (CBA); bargaining over new provisions must be
handled by negotiators designated by the Union and
the Hospital. Thus, we maintain that no real bargain-
ing occurred and to declare a bargaining impasse is
erroneous. Further, the Hospital did not provide the
Union with relevant information that we requested
about the proposal and Hospital managers provided
misleading and evasive information to the labor
management committee regarding when it would
implement a new flu-prevention policy.

If the policy is viewed as a matter to be decided
under the current contract, then it must be the subject
to grievance arbitration. When the Union suggested
taking the case to grievance arbitration, management

objected, arguing that an arbitrator did not have juris-
diction to decide the matter based on the Managerial
Rights and Zipper clauses of the contract. While the
union did agree to a Managerial Rights clause (giving
managers authority over certain administrative mat-
ters) the new flu-prevention policy does not fall within
the parameters of the items listed in that clause in the
current contract. Similarly, a Zipper clause states that
an arbitrator is supposed to interpret what is written in
the contract, and to ignore past practice when decid-
ing cases. Yet the Hospital attempts to use past practice
by referring to a different rule the Mercy Hospital
Infection Prevention Policy that existed prior to the
current contract. One cannot claim that past practice
justifies a policy and simultaneously claim that the Zip-
per Clause of the contract prevents the examination of
past practice! Hospital managers are in error when they
try to use contradictory logic to prevent an arbitrator
from reviewing the new policy. An arbitrator clearly
has authority to evaluate these new working conditions
against the terms of the CBA. In summary, the Hospi-
tal cannot have it both ways declaring that it is not
subject to arbitration but then not bargaining about the
matter either.

Finally, the Hospital claims it must implement this
policy to conform to Centers for Disease Control
(CDC) guidelines. However, CDC guidelines only
require health care workers to wear a facemask when
they are within three feet of the face of someone who
has symptoms of a respiratory infection. Any addi-
tional measures are discretionary. These could
adversely affect employees working conditions and,
legally, should fall within the scope of collective bar-
gaining. However, here at Mercy Hospital, one regis-
tered nurse in a critical care unit testified that, after
enacting this policy, the Hospital required her to wear
a facemask at all times except when she was either in
the rest room, or the employee lunchroom adjacent to
the Hospital cafeteria. This is clearly an excessive abuse
of managerial authority. Management has not pro-
duced even one example of another hospital with
such a draconian policy. Therefore, the argument that
this policy is required by law is without merit and
should be rejected.

Hospital position

The Hospital defends the new flu-prevention policy
based on numerous legal principles. First, when the
Union accepted the Managerial Rights clause (below)

320 PART 2 The Bargaining Process and Outcomes

the Union waived its right to demand that the Hospital
either bargain or arbitrate decisions that fall within the
scope of that clause (see Provena St. Josepha Medical
Center, 350 NLRB 808, 2007). The new flu-prevention
policy falls within our Hospital s right to set a stan-
dard of performance, implement improved opera-
tional methods and procedures, and promulgate
rules, regulations and personnel policies, under the
Managerial Rights provision of the CBA. The waiver
is clear and unmistakable. The Zipper clause also
ensures that this is a managerial prerogative because
arbitrators cannot grasp at any loosely related prece-
dent cases to undermine our authority in this matter.

While the Managerial Rights clause does not spe-
cifically mention facemasks, it does mention direct the
nurses. Procedures to direct the nurses at the time
that the contract was ratified (prior to the new flu-
prevention policy) included a rule unilaterally devel-
oped by Hospital administrators requiring facemasks
and eye protection, if there is close contact with the
patient such that contact with sprayed blood, secre-
tions, drainage, or excretions is anticipated. [Mercy
Hospital Infection Prevention Policy]. The Union
accepted Hospital authority to devise that rule. There-
fore, when combined with the Managerial Rights
clause, it is obvious that this prior acceptance of Hos-
pital rulemaking authority means that the Union has
waived any right to demand that the Hospital negotiate
or arbitrate any similar type of facemask personnel
policy that sets a standard of performance and
directs the nurses.

Second, federal law requires the Hospital to
develop effective policies to control infection and com-
municable diseases, including influenza. As the Union
admits, hospitals have discretion as to what policies
they develop to best implement CDC requirements;
we believe that we have developed a reasonable policy
that minimizes both patient and employee exposure to
the flu.

Third, the care and protection of patients is at the
core of what a hospital does. The prevention of influ-
enza falls within a Hospital s core purpose and is,
therefore, exempt from mandatory bargaining (see
Peerless Publications, 283 NLRB 334, 1987). Devising
policies to prevent the spread of diseases among
patients and visitors represents a fundamental business
decision. In First National Maintenance v. NLRB, 452
NLRB 666 (1981), the U.S. Supreme Court ruled that
managers do not necessarily have to bargain over fun-
damental business decisions. This policy identifies steps

that health care workers must take to stop the spread of
the flu among vulnerable populations and they are not
negotiable simply to satisfy the comfort of certain
nurses who refuse to be vaccinated. Under these cir-
cumstances an employer does not have a duty to bar-
gain with its labor union over this type of fundamental
business decision.

Finally, while not required to either bargain or
arbitrate the new policy, management did, in effect,
voluntarily discuss in good faith the new policy with
the Union via the labor management committee.
Under the LMRA, an employer must notify the
employees collective bargaining representative and
afford that representative an opportunity to discuss a
proposed change in working conditions prior to its
implementation (see NLRB v. Katz, 369 U.S. 736,
1962). We did this, even though the union had waived
its right to bargain, and we modified the initial policy
based on Union objections. By contrast, the Union
showed no flexibility in its position and now even
denies that the labor management committee was a
proper forum for such discussion. If anyone is guilty
of bargaining in bad faith, it is the Union. We reached
an impasse over this matter. Given that we were within
our rights based on the other three reasons, described
above, we chose to implement our last and final offer.
As for the charge that we were evasive, the union infor-
mation request was irrelevant (they can easily poll their
own members to gauge their sentiment) and excessive
(requiring an examination of all correspondence,
phone message logs, and e-mails from all nurses to
see which mentioned the flu policy). Management is
not legally obligated to comply with overly burdensome
or irrelevant information requests (Ethicon and Local
630, SEIU, Case 22-CA-089085, 360 NLRB 104, 2014).
Yes, the date for implementing the new policy was
moved. The flu doesn t wait for labor management
negotiation procedures and when the current year s
flu season appeared to be more severe than anticipated,
we revised the timetable to implement it this year
rather than wait a full year. We are not legally liable
because a Union officer is offended that we didn t get
his permission prior to doing our duty as a health care
institution.

Relevant Contract Clause: Managerial
Rights

The Union recognizes the right of the Hospital to
operate and manage the Hospital, including but

CHAPTER 6 Negotiating the Labor Agreement 321

not limited to the right to require standards of per-
formance and to direct the nurses to deter-
mine the materials and equipment to be used; to
implement improved operational methods and pro-
cedures to discipline, demote or discharge nurses
for just cause and to promulgate rules, regula-
tions and personnel policies .

Questions
1. Analyze the arguments over whether the two parties

bargained. Did management bargain in good faith
with the union over the policy? Did they bargain to
impasse? If so, does that give management the right
to unilaterally implement its last offer?

2. Was management required to develop this new
policy by the CDC? Did that trump labor
management relations considerations? Explain
your reasoning.

3. Using a database (e.g., Bloomberg BNA s Labor &
Employment Law Resource Center), look at the
Peerless and First National Maintenance cases.
Evaluate management s argument that the flu-
prevention policy is a core business decision in
light of those case decisions.

4. Was management required to take this case to
grievance arbitration? Explain your reasoning,
considering the other precedent cases cited and
the Managerial Rights and Zipper clause.

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4 Refusal to Furnish Requested Information

The current employer purchased the auto glass supply
business from the previous employer two years ago.
The current employer immediately granted recognition
to the existing union representation and agreed to
assume the terms of the existing labor agreement,
which had two years until it expired. Approximately
one month prior to the contract s scheduled expiration
date, the parties began negotiating a new contract to
replace the expiring one. During June and July, the
two sides held four separate bargaining meetings, with
the last meeting occurring on July 24.

Merit Pay Plan One of the key company propo-
sals was a new merit pay plan which would allow the
company, at its discretion, to pay individual bargaining
unit members a pay rate above the minimum pay rate
for the job classification established in the contract so
long as the company did not decide merit raises in a
discriminatory or arbitrary manner. At several bargain-
ing meetings, the union requested that the employer
furnish it with information about goals, objectives,
and standards that would be used by managers to
award merit pay increases. The company negotiator
responded that the employer could not furnish the
requested information because it did not exist. Under
management s proposal all merit raises would be
granted solely at the discretion of the manager in
charge, negating any reliance on fixed standards for
determining individual employee s merit pay outcomes.
The union filed an unfair labor practice charge alleging

that the failure to provide the requested information
regarding the merit pay proposal violated the employ-
er s duty to bargain in good faith.

Health Care Benefit Proposal At the last bargain-
ing meeting between the parties on July 24, the com-
pany introduced a proposal that bargaining unit
members would pay the same share or dollar amount
toward the cost of health care benefits as similarly sit-
uated nonbargaining unit members of the employer.
The union s negotiator immediately requested that the
company furnish the dollar amount currently contrib-
uted by similarly situated nonbargaining unit employ-
ees of the firm. The company s negotiator replied that
nonbargaining unit employees current share of health
care cost was 50 percent, but the employer retained the
right to raise or lower this share at any time. The com-
pany s negotiator indicated that he could not furnish
the dollar amount of similarly situated nonbargaining
unit employees because the dollar amount would
depend on an employee s individual circumstances
such as their health condition and the number of
dependents. The company s attorney/negotiator did
disclose the dollar amount that he currently paid for
health care benefits provided by the company.
Although the union s negotiator did not pursue the
matter further during the July 24 meeting, in letters
to the company dated August 18 and September 8,
the union repeated its request for the dollar amount
currently paid for health care benefits by similarly

322 PART 2 The Bargaining Process and Outcomes

situated nonbargaining unit employees. The company
never supplied the requested information to the union.
The union filed an unfair labor practice charge alleging
the company s refusal to supply the requested informa-
tion related to the company s proposed change in
health benefit cost-sharing for bargaining unit mem-
bers represents a violation of the employer s duty to
bargain in good faith.

Information about the Company s Financial Condi-
tion During several bargaining meetings the com-
pany s negotiator suggested that the company was
struggling economically with the downturn in the
U.S. auto industry. During the July 24 meeting when
management presented its final proposed settlement
terms the company s negotiator stated, We are not
going to be able to continue the business unless we
make these changes. The union s negotiator asked
the company to provide financial information to verify
the company s claim that it was struggling to stay in
business. The union repeated its request in letters to

the company on July 31, August 14 and 18, and Sep-
tember 8. The company never gave the union any
financial information about its current business opera-
tion. The union filed an unfair labor practice charge
alleging the company s refusal to supply the requested
information related to the company s financial condi-
tion represents a violation of the employer s duty to
bargain in good faith.

Questions
1. Under what circumstances or for what reasons

could an employer lawfully refuse to furnish infor-
mation requested by a union during contract
negotiations?

2. Evaluate each of the three unfair labor practice
charges concerning the company s refusal to supply
requested bargaining information and decide if each
charge represents a violation of the employer s duty
to bargain in good faith.

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5 The Mileage Reimbursement Policy

The employer is a newspaper publishing company that
bargained in good faith to an impasse with the bargain-
ing unit union representative. After reaching a good
faith bargaining impasse the employer on January 1 uni-
laterally implemented the terms of its final bargaining
proposal which included the following policy: Article
4.01, General Pay Provisions Employees will be reim-
bursed for mileage at the rate of 29 cents per mile, or the
rate generally offered to other company newsroom
employees if that rate is higher than 29 cpm.

The company notified the union via e-mail on June
13 that it had announced several driving and parking
policy changes affecting nonbargaining unit personnel,
which would take effect on July 1. Among the changes
announced was an increase in the mileage rate from 29
to 32 cents per mile and a requirement that employees
in each department provide the company with their
driver license number and car license plate number.

Later on that same day the union responded by
sending an e-mail to the company informing manage-
ment that under Article 4.01 (described previously),
bargaining unit employees should get the same
increased mileage rate as was scheduled to be granted

to nonbargaining unit employees on July 1. The union
noted that it had some additional questions and con-
cerns about other aspects of the announced policy
changes but would be willing to negotiate with the
company over those concerns. The union also stated
it was reserving the right to negotiate a mileage rate
higher than 32 cents for bargaining unit employees if
the parties ever returned to the bargaining table to
resume contract negotiations.

On June 16 the company replied to the union via
e-mail that Article 4.01 was a posted condition estab-
lishing a waiver of union rights. According to the
company, Article 4.01 gives the employer an unfettered
right to increase or decrease the bargaining unit employ-
ees mileage reimbursement rate as long as that rate is
not reduced below 29 cents per mile. According to the
company, labor law does not permit a unilateral change
in bargaining unit members wages, hours, or other
terms and conditions of employment without first
bargaining with the union and obtaining its agreement to
the change or bargaining in good faith to an impasse. The
company indicated it would be willing to meet with the
union for the purpose of negotiating a possible increase

CHAPTER 6 Negotiating the Labor Agreement 323

in bargaining unit members mileage rates or other related
driving and parking policy changes.

The union responded to the company that it did
not object to the company s right to enforce the lan-
guage of Article 4.01 as written. Based on the clear
language in the article, the union insisted that bargain-
ing unit employees are entitled to receive the new
higher mileage rate of 32 cents per mile beginning on
the same date, July 1, that the new higher rate will be
applied to nonbargaining unit employees. According to
the union, any failure to grant the increase to bargain-
ing unit employees as of July 1 would represent a vio-
lation of the employer s duty to bargain in good faith.

The company did not grant the mileage increase to
bargaining unit employees on July 1 or thereafter. The

company reiterated its willingness to negotiate with the
union over the subject of granting a mileage increase to
bargaining unit employees. The union filed an unfair
labor practice charge alleging the company was in vio-
lation of Article 4.01 and requesting bargaining unit
members be made whole for any losses suffered due
to the company s failure to raise the mileage reimburse-
ment rate to bargaining unit employees as of July 1.

Question
1. Did the employer violate its duty to bargain in good

faith by failing to increase bargaining unit members
mileage rate to the same level on the same date as
such an increase was implemented for nonbargain-
ing unit employees? Explain your reasoning.

324 PART 2 The Bargaining Process and Outcomes

CHAPTER 7

Economic Issues

FINALLY NEGOTIATIONS WERE complete. A new tentative
contract settlement had been reached and tomorrow bargaining
unit members would vote on whether to accept the proposed
contract terms. Janice was proud of the way her union negoti-
ating team had managed to stick with their fair but firm
approach at the bargaining table. Initially management had pro-
posed a number of wage and benefit reductions apparently on
the assumption that employees would be afraid to say no
because they were concerned about their job security in the
midst of an economic recession. As union president, Janice
was familiar with the difficult economic conditions confronting
the company and her members, but she was also aware that
signs of an economic recovery were beginning to appear.
Since the parties labor agreement would remain in place for
the next three years, the union bargaining team didn t want to
focus on just economic data from the past year or projections
for the next 6 12 months. The union wanted to consider the
company s likely competitive position over the next three-year
period. The union did not get everything it wanted but was
able to persuade the company to moderate many of its cost
reduction proposals. Employee costs for health care benefits
would increase some under the new contract but coverage
would remain the same. A wage freeze in the first year of the
contract would be followed by a 3 percent annual wage
increase in each of the remaining two years of the contract.
The company had also agreed to invest $500 million in capital
improvements over the term of the contract to bolster the com-
petitive position of the firm. Janice was confident that the union
had done a good job of explaining the bargaining outcomes to

325

its members and looked forward to a positive contract ratification vote
tomorrow.

Questions
1. What are some of the difficulties likely encountered by negotiators

when trying to bargain today for contract terms that will be applicable in
most cases for several years into the future?

2. Should managers have any bargaining goal other than minimizing labor
costs when negotiating contract terms? If so, what might be an exam-
ple of other such management bargaining goals?

3. Should one of the union s bargaining goals always be to ensure that the
company will be able to operate efficiently and effectively or is this
solely management s responsibility?

The ability to achieve economic gains in the form of higher wages and improved ben-efits is one important criterion workers use to gauge the effectiveness of a union.
From an employee s perspective, the economic rewards from work largely determine his
or her standard of living. When management adopts a goal of minimizing operating
costs as a means of optimizing profits, this creates an inevitable conflict of interest
between employees desire for economic gains and an employer s desire to minimize
higher operating costs. This chapter discusses a number of factors that help to determine
the economic terms of employment, as well as current wage and benefit trends and
issues.

First, some context: Prior to the recent recession, the U.S. economy appeared to be
among the best in the world, experiencing strong growth, low inflation, and a steady crea-
tion of new jobs. Much of the increase in family net worth was attributed to gains in the
stock market as nearly 18 percent of families owned individual companies stocks and 53.2
percent of families owned stock directly or indirectly through mutual funds and retirement
savings accounts in 2007. The recession led many families to sell their stocks or mutual
funds: In 2013, only 13.8 percent owned individual firms stocks and 48.8 percent owned
stock directly or indirectly through mutual funds or retirement accounts.1 Although the
2007 2009 recession (and subsequent slow recovery) shook the economy, its fundamentals
remained relatively strong, compared to other world economies. Even so, in 2009 2012,
the average U.S. job seeker took nearly six months to find permanent employment
almost twice as long as the 2003 2008 period.2 As with other recent recessions, job crea-
tion tends to lag other economic indicators (leading some to dub the 2009 2014 period a
jobless recovery).3 From 2000 to 2007, productivity rose an average of 2.6 percent annually,
but between 2007 and 2014 it averaged only 1.4 percent annually; in manufacturing, the
difference was even more dramatic: 3.7 versus 1.7 percent annual growth.4 Meanwhile,
between 2004 and 2014 median family income remained flat.5 These economic data serve
as reminders that economic conditions create an important context in which the labor
relations process occurs. A vibrant economy allows unions to seek better wages for their
members; in a sluggish economy, wages are typically stagnant and unions tend to focus

326

on other benefits, such as job security for members, skill training, and assistance in finding
new jobs for those suffering layoffs.

From an employee s perspective, wages and other economic benefits paid in exchange
for an employee s labor represent income necessary to attain or maintain a desired stan-
dard of living. To an employer, wages and benefits typically represent a cost to be mini-
mized; a government might view them as a source of potential tax revenue. Wages also
serve as a factor in the allocation of human resources. For example, wages may influence
an individual s selection of an occupation and his or her job mobility (movement from one
firm, industry, or location to another). Wages influence managers decisions on plant loca-
tion, investments in machinery and capital equipment, and employment levels. As wage
and benefit costs rise, at some point it becomes more cost effective for an employer to
invest in production or service delivery technologies that require less labor (e.g., automa-
tion, robotics, drones). Thus, employees may price themselves out of certain labor markets
where substitutes for labor are available to an employer at lower costs.

Wage and benefit issues represent mandatory subjects of bargaining, as discussed
previously in Chapter 6. Under the Labor Management Relations Act (LMRA), union
and management negotiators are required to bargain in good faith over subjects such
as pensions, health care insurance, shift differential pay, overtime pay, job evaluation
procedures used as a basis for determining pay, and incentive pay or profit-sharing
plans if either party presents a bargaining proposal on such a topic during negotia-
tions. Union and management negotiators spend many hours annually bargaining
over wages and wage-related issues. This chapter focuses on the methods of wage
determination and factors used by negotiators in determining the wage package
wages and other economic benefits.

Union and management officials have to agree on what the term wages means before
they can successfully bargain over this issue. For instance, wages may refer to an employ-
ee s base hourly wage rate (without considering factors such as shift differentials or longev-
ity pay). It may refer to average gross hourly earnings in a given year, average weekly
earnings, or incentive pay (payment per product completed). Basic wage rates for each
job class are usually listed in the labor agreement; however, other wage payments (over-
time, incentive pay, shift differentials, and other compensation earned in the regular work-
week) may have to be computed in accordance with provisions in the labor agreement.6

After agreeing on the language for the basis of wage negotiations, the parties consider vari-
ous factors in determining specific wage rates for different jobs or wage ranges covering
different job classes.

Industrial Wage Differentials

The existence of wage differentials among individuals, jobs, industries, or geographic
regions can be explained in a variety of ways. However, any explanation must consider
the interrelationships between labor and capital as factors of production and as contribu-
tors to productivity. Jobs with varying duties and responsibilities are often assigned dif-
ferent wage rates. Besides these occupational wage differences within a firm, there are
regional, industry, and shift differences that may affect an employee s wage rate. Retail
employees in the South generally earn less than those in the North; electricians and
laborers in the building trades generally have higher wage rates than electricians and
laborers in manufacturing firms. Industrial wage differentials may be explained in terms
of three interrelated factors: (1) the degree of competition or monopoly in the product
market, (2) the value added by workers in a particular industry, and (3) the percentage
of total costs that labor costs represent.

CHAPTER 7 Economic Issues 327

Competition in the product market. First, if a firm has a monopoly or near
monopoly (the product is essential, with no or few available substitutes), then
increased labor cost can easily be passed on to the consumer by raising the product
price. In such cases, the employer may accept higher wages in negotiations because
higher labor costs do not necessarily adversely impact the firm s competitiveness or
profit margins. Conversely, many firms today that are affected by global competition
in their product or service markets find it increasingly difficult to simply pass along
increased labor costs in the form of higher product or service prices unless other
competitors are also absorbing similar labor cost increases. Nonunion or foreign
competitors are unlikely to pay compensation terms equal to or greater than those
terms required under union labor agreements. Under highly competitive market
conditions, unionized employers must bargain harder to ensure that labor cost
increases do not force higher product prices that might make the firm less price
competitive. In industries where employers face fewer competitive threats, wages
tend to be proportionately higher.
Value added by employees. The term value added refers to the contribution of fac-
tors of production to the value of a final product. Comparing the value added by
labor s contribution in different industries helps to explain industrial wage differen-
tials. For example, the value added by labor in sawmills, cotton weaving, clothes
manufacturing, and the mobile home industry is significantly lower than corre-
sponding figures in the steel, petrochemical, and paper industries.7 However,
because employees must use machines, which represent capital investments, and
because such a close interrelationship exists between labor and capital investments
in machinery and equipment, exact determination of labor s contributions has
become a complicated process. It is often difficult to accurately measure the value
added by an individual employee when that person functions as part of a team or
performs only one or a few tasks required to create the final product or service
delivered to customers. In unionized settings, negotiations between union and man-
agement representatives ultimately determine the amount of value added attributed
to labor.
Labor costs as a percentage of total costs. A firm s degree of labor intensiveness, a
measure of the proportion of total operating costs comprised of labor costs, must also
be considered in determining employee wage rates. More labor-intensive organiza-
tions, such as health care facilities, professional sports, and government, have high
labor costs in relation to total costs. Any upward adjustment in labor costs will have a
bigger impact on such a firm s competitiveness when compared with the effect on a
less labor-intensive firm that may grant an equal size increase to their employees. Less
labor-intensive firms, such as petroleum refining, chemical, and electricity-generating
firms, can afford to offer relatively high wage and benefit levels because fewer workers
are employed. Thus, labor costs have only small effects on the firm s total operating
costs and have less impact on the firm s competitiveness.

Usually, firms with a high ratio of labor costs to total costs are more likely to resist
wage increases in contract negotiations than less labor-intensive firms. For example, if a
hospital where labor costs are 60 percent of total costs grants a 10 percent wage increase,
it must raise prices about 6 percent to cover the cost increase. A petroleum refining plant
where labor cost is only 5 percent of total costs would only have to raise its price about
0.5 percent to cover a similar 10 percent wage increase. If competitive conditions pre-
clude or limit an employer s ability to raise product prices, the wage increase cost must
be funded from other sources, such as firm profits; cost savings from other operating
areas (e.g., finance, marketing); higher labor productivity; finding more cost-effective

328 PART 2 The Bargaining Process and Outcomes

ways to employ less labor (e.g., outsourcing, new technology); or some combination of
these strategies. Nonetheless, the relation of labor cost to total cost can be an important
factor in explaining differences in wages for similar jobs across different employers or
industries.

Occupational Wage Differentials and the Role of Job
Evaluation and Wage Surveys

Within a company or industry, maintaining rational and fair wage relationships among
various jobs is important. These relationships are often maintained using a job evalua-
tion program, but in other cases, they are determined by individual or collective bar-
gaining. Job evaluation is a systematic process for defining the relative worth of
jobs within an organization in order to establish internal relativities [relative pay] and
provide the basis for designing an equitable [pay] grade structure. 8 By identifying
the level of knowledge, skills, and abilities needed for various jobs, as well as working
conditions, it is possible to determine the relative pay of jobs to each other. For exam-
ple, a hospital might do a job evaluation and determine that ambulance drivers should
be paid 20 percent more than emergency room nurses because, although they do simi-
lar duties, ambulance drivers may do the same tasks under more difficult conditions;
also driving at high speeds in traffic may warrant slightly higher pay. The process of
determining the relative importance of each job to the organization helps in under-
standing occupational wage differentials; therefore, the following steps in a job evalua-
tion program are presented.9

Evaluating Jobs within the Organization
Before conducting a job evaluation program, an organizational analysis should be con-
ducted to evaluate the organization s objectives, structure, and authority and responsibility
relationships. The findings from this analysis help ensure that the job content is up to date.

The organization then selects and measures the job factors that are found at least to
some extent in all of the organization s jobs. Job factors typically include skill (education
and training), effort, responsibility (for people, budgets, and equipment), and working
conditions (hazards, surroundings), although job factors can vary substantially depend-
ing on the type of organization. Management must consider the minimum amount of
each job factor or qualification necessary to adequately perform a particular job. For
example, it may be nice to employ a typist who can edit, interpret, and make complex
economic subjects understandable, but few organizations can find or are willing to pay
wages needed to attract such a qualified person.

Next, an appropriate job evaluation system for appraising jobs according to the
established job factors is selected.10 Three common job evaluation methods used are
(1) ranking, (2) classification, or (3) a point system. The ranking method compares jobs
non-quantitatively in terms of each job s relative value to a firm s success, ranking
jobs from most valuable to least valuable; higher ranked jobs get higher pay levels. The
classification method groups jobs into categories, with each classification being assigned
a range of pay (sometimes called a pay grade ). Thus, welders might be classified into
different classifications based on the type of gasses they are certified to use, the type of
surfaces they must weld, or the type of welds they are required to do. Regardless of how
the classifications are created, each classification might have a pay range (e.g., $15 20 per
hour; $21 25 per hour; and $26 30 per hour).

CHAPTER 7 Economic Issues 329

The point-system method compares jobs to pre-determined, weighted, numerical
rating scales designed to measure each job factor. A job evaluation system may use 10
to 15 different job factors, with these factors often divided into subfactors; for example,
effort may be divided into physical and mental effort. Each job is assigned a certain
number of points for each job factor. Suppose that a hospital uses 10 factors (e.g., lifting,
specialized knowledge) to measure its jobs. In this example, the job of ambulance driver/
paramedic gets a total of 840 points, the job of Emergency Room Nurse gets 700 points,
and the job of Doctor gets 2,520 points. Ignoring market factors and going strictly by the
point-system job evaluation method, the ambulance driver/paramedic should receive
20 percent more in pay that an Emergency Room Nurse and should be paid one-third
of what a Doctor receives.

The basis of job evaluation is job analysis, which is a process of systematically
securing information and facts about what employees do in various jobs. Job analysts
use questionnaires, observation, and interviews with job incumbents and their supervi-
sors to gather data about what employees are supposed to do on specific jobs.

Job analysis is a foundation for several Human Resource activities. One is job evalu-
ation: By understanding what employees duties are in various jobs, HR managers can
better determine how to assign pay for those jobs. Another is performance appraisal:
After learning what people are supposed to do on the job, an HR manager can design
performance appraisal measurement systems to determine how well the employees are
actually fulfilling their duties.

Information gathered from a job analysis is used to formulate job descriptions and
job specifications. A job description is a written summary of a job s duties and respon-
sibilities. A job specification includes the personal characteristics, licenses, and educa-
tional background that an employee must possess to successfully hold a given job. Both
job description and job specification documents can aid manager as they seek to hire
well-qualified individuals from among job applicants or defend a legal challenge to a
hiring decision. Both are also used in the job evaluation process. As firms try to relate
wages to various degrees of duties and responsibilities, they must also pay more to hire
employees who have the higher qualifications in education, training, and skills needed
for those jobs with greater responsibilities.

Lawler has noted that as work structures continue to be altered and employees job
responsibilities become more varied and complex, it becomes increasingly difficult and
perhaps less relevant to focus compensation systems solely on an analysis of job titles
as opposed to focusing on the contributions of individuals or teams that actually perform
those jobs.11 Some combination of job-based evaluation and individual or group-based
performance evaluation may provide a more comprehensive compensation system
designed to enhance the competitiveness of the firm and employees perceived equity in
the effort reward exchange between the individual and the organization.12

Should management include the union in the job evaluation process? Management
often prefers to conduct its job evaluation independently of the union. Management
may prefer not to share its weightings of job factors, particularly when it believes cer-
tain factors (such as training, skill, and responsibility for equipment) should receive
more compensation than others. Excluding union participation in the job evaluation
process may reduce the time required to complete the process; however, subsequent
application of job evaluation results may generate grievances that then must be
resolved on a case-by-case basis. Some companies seek to encourage union participa-
tion in the job evaluation process, both to benefit from the insight of workers who
actually perform different jobs and to increase the acceptance of the results of job eval-
uation by bargaining unit members.

330 PART 2 The Bargaining Process and Outcomes

Union Perspectives
Some union leaders view job evaluation with disfavor because it tends to limit bargaining
and freeze the wage structure.13 Unions prefer to establish wage scales through collective
bargaining where both internal and external labor market factors can be considered in
determining the value or worth of a job. Although unions reserve the right to file grie-
vances to resist or express dissatisfaction with job evaluation results, they seldom show
strong opposition. Unions are likely to object if their firms attempt to use job evaluation
as the sole criterion for wage determination or try to use job evaluation as a substitute
for collective bargaining.14 Some union leaders regard job evaluation techniques as a use-
ful guide in negotiating wages and a means to more effectively explain the negotiated
wage settlement outcome to their members.15

Regardless of the job-evaluation method used, the objective is to develop a wage
structure that prices jobs with less skill, effort, and responsibility at lower wage rates
than jobs with greater skill, effort, and responsibility. Exhibit 7.1 presents an example of
a wage structure for a firm that includes job titles, labor grades, job evaluation point
ranges, and starting wage rates for each labor grade. Because a numerical score should
indicate the relative value of the job, the greater the score, the higher the labor grade
and the hourly wage rate.

Surveys to Compare Firms Wage Structures
Wage surveys are conducted to ensure that external labor market considerations, such as
comparable wages, are included in the wage structure. Such a market-based approach has
become an increasingly important determinant of wage rates in many firms.16 Although
firms attempt to rationalize their wage structure internally through job evaluation, they
must also maintain competitive wages externally to ensure that the firm can recruit and
retain qualified employees. Usually a wage analyst either visits, sends a questionnaire, or
conducts a telephone interview with the wage analysts of similar organizations to obtain

Exhibit 7.1
Typical Wage Structure
for a Manufacturing Firm Job Title Labor Grade Points

Starting Hourly
Wage Rate

Janitor I 200 249 $10.86

Material handler II 250 299 12.96

Shipper III 300 349 14.34

Tool room keeper IV 350 399 15.24

Machinist B V 400 449 15.60

Maintenance worker VI 450 499 17.16

Mechanic VII 500 549 17.40

Painter VIII 550 599 18.96

Carpenter IX 600 649 19.92

Truck driver X 650 699 20.62

Electrician XI 700 749 23.63

Tool and die maker XII 750 799 23.90

Machinist A XIII 800 849 25.19

SOURCE: Adapted and updated from Collective Bargaining Negotiations and Contracts (Washington, DC: Bureau of National Affairs
Inc., 1992), p. 18:331.

Economic Issues 331CHAPTER 7

current wage rates for comparable jobs.17 Some trade or professional groups conduct
annual wage surveys among their member firms and share the information with partici-
pating firms. Unions often conduct independent wage surveys as part of their prepara-
tion for collective bargaining.

The U.S. Department of Labor also periodically conducts area wage surveys and
publishes the results.18 Two of these publications are the National Compensation Survey
(NCS) and the Occupational Pay Relatives (OPR) survey, which provide wage data by
occupation for different geographical areas. The OPR survey covers a larger number of
geographical areas and provides information on the relative pay differences between spe-
cific occupations in those locations. The NCS survey provides more detailed information
about specific occupations based on the duties and responsibilities of the job (e.g.,
knowledge, complexity, scope of responsibility).

The party conducting the survey provides the responding firms with titles, descrip-
tions, and specifications of the jobs in the wage survey. Participating firms supply the
starting wage rate and the economic benefits paid to individuals in these job classifica-
tions (Exhibit 7.2). After the wage survey is complete, the firm must determine how the
data will be used. For example, does it want to lead the industry, compete with a specific
competitor, or pay the industry average? The final wage plan should contain a certain
number of job classes; wages for each job class; wage ranges (from starting to top
wages) for each class; policies and procedures for wage adjustments (seniority, merit,
etc.); procedures for job changes to a different class, including temporary job changes;
procedures for dealing with jobs that pay above or below their wage range; and a policy
on union involvement.

Production Standards and Wage Incentives
Unions and management sometimes negotiate provisions in the labor agreement that
cover wage-related issues such as production standards, time studies, and wage-
incentive payments. Production standards refer to the expected employee output that
is consistent with workmanship quality, operational efficiency, and reasonable working
capacities of normal operators. These standards are often determined by analyses of the
time and motions of workers on a job, and the resulting standards are used to assess
performance and determine the wage incentives for individual employees or groups of
employees. For example a mason working with twelve-pound concrete blocks may be
expected to meet a production standard of laying 180 blocks per day.

Exhibit 7.2
Typical Results from
a Wage Survey

Firms

Job Title A B C D E F
Average
Wages

Janitor $11.00 $11.25 $11.75 $11.80 $12.00 $12.20 $11.67

Assembler 11.00 11.60 11.30 11.70 10.90 11.30 11.30

Shop clerk 12.00 11.00 11.75 11.25 11.40 11.60 11.50

Welder 15.60 15.30 15.00 15.00 15.30 15.60 15.30

Electrician 16.50 17.00 17.50 17.00 16.75 17.25 17.00

Tool and die maker 19.00 18.00 18.75 18.25 18.50 18.50 18.50

Machinist 20.00 19.50 19.00 19.75 19.25 18.50 19.33

332 PART 2 The Bargaining Process and Outcomes

Performance standards that are not accepted as realistic by both labor and manage-
ment can be demoralizing and adversarial when used to determine workers pay.19 Unre-
alistically high performance standards will ensure lower performance ratings for many
workers, thereby reducing pay and motivation levels. Unrealistically low performance
standards will ensure that many workers easily meet or exceed work requirements,
encouraging some workers to slack off during remaining scheduled work hours and
discouraging workers from seeking to improve performance beyond the established
norm. Performance standards also should be periodically updated to reflect changes
that occur in materials and methods used to perform job tasks.

Typical Contract Provisions
When incentive wage plans are negotiated, the structure and design are included in the
contract, although specific details may not be included. Contract language defining the
role of the union in setting and challenging production standards and wage rate changes
and its right to be consulted on related issues is also usually included. Some contracts
include provisions about time studies and the involvement of unions. A small number
permit a union observer during the time study, and a few provide special training for
the union time study representative. Other provisions include procedures used for timing
an employee, specification of the meaning of typical employee, advance notice to the
employee holding the job being studied, and specification for fatigue and personal allow-
ances in setting production standards.20

Although wage incentive plans such as piece-rate pay, profit sharing, and gain shar-
ing, (described below) vary in structure and specific content, their goals are essentially the
same: (1) to increase employee productivity, (2) to attract prospective employees to the
company, and (3) to reward employees monetarily for their increased productivity. Such
wage incentive plans are used with both white-collar and blue-collar workers, although
for white-collar workers, the performance measures are broader and the span of time in
which performance is measured is longer, relative to blue-collar workers. A typical piece-
rate individual wage incentive plan is one in which employees are paid for the number
of pieces or jobs completed. Other incentive plans pay bonuses or premiums to employ-
ees for production above the standard. Many varieties of incentive plans exist, but all are
similar in concept.

The majority of production employees are paid an hourly wage rate. A major reason
for an hourly based compensation plan is that many production jobs are machine paced,
so employees have limited control over the pace of work and thus the number of items
produced during scheduled work hours. Many companies and unions have investigated
the additional use of various incentive pay plans as a way to stimulate employee produc-
tivity. Increased interest in incentive plans has resulted from increased foreign and
domestic competition, adoption of various employee involvement (EI) and total quality
management (TQM) practices, heightened interest in labor management cooperation,
and employer efforts to obtain wage concessions from unions.

A sample of employers involved in negotiating recent labor agreements reported
that 15 percent of all employers offered incentive pay plans. The following incidence of
incentive or variable pay plans were offered in their current contracts: individual incen-
tive plan (13 percent), profit-sharing plan (8 percent), group incentive plan (4 percent),
and gain sharing plan (1 percent).21 These plans were much more common in
manufacturing, with 36 percent of all manufacturing firms with labor agreements offer-
ing such plans, including individual incentives (36 percent) and profit sharing (21 per-
cent). Although companies tend to report that plans such as profit sharing, employee
stock ownership, gain sharing, skill-based pay, team incentives, and open pay

CHAPTER 7 Economic Issues 333

information are successful, evidence is less clear over the ability of such plans to sustain
initial improvements in productivity and pay satisfaction over time.22 These types of
plans are described more fully below.

Employees may not be as enthusiastic about reward-incentive plans as employers. A
survey of 1,500 employees reported that most workers preferred rewards based on indi-
vidual performance, rather than team, group, or company performance, and preferred to
receive rewards in the form of a base pay rate increase rather than a one-time, lump-sum
bonus or incentive payment.23 Lack of employee support along with previously men-
tioned employer concerns have led to a slowdown in the rate at which companies are
adopting reward incentive plans.

Profit-sharing plans cover between 6 and 27 percent of employees in most industri-
alized countries. Why are these plans widespread in some countries but not others? Gov-
ernment tax policies often encourage the adoption of such plans.24 Between 15 and 20
percent of U.S. firms have a profit-sharing plan, although larger firms are more likely
to participate.25 Plans typically provide an annual cash payment or some payment into
a pension plan. Most U.S. and international labor organizations today do not oppose
profit sharing and other incentive systems as a matter of general policy, although oppo-
sition may arise in the context of negotiating a specific labor agreement.26

Of course the value of contract language establishing a profit-sharing plan is depen-
dent upon a company s profit level. In 2005, union-represented employees at Ford Motor
Company received average profit sharing of $600; however, they received no profit-
sharing checks from 2006 to 2008 due to a severe recession adversely affecting Ford s
profits.27 In 2009, Ford became the first of Detroit s three U.S. auto companies to return
to profitability, enabling 43,000 union-represented Ford Motor Company employees to
receive profit-sharing checks averaging $450 each. Subsequently, Ford maintained steady
profits with a gradually increasing workforce: In 2014, the firm posted a net income of
$3.2 billion, providing about 50,000 hourly United Auto Workers (UAW) union mem-
bers with profit-sharing checks averaging $6,900 each.28 Profit-sharing payouts under
UAW contracts are based on a formula that takes into consideration company profits,
productivity gains, and the firm s market share.

Profit sharing does have some management critics. First, some are concerned that
union participation in profit sharing could lead to more union influence on other
major management decisions beyond just wages. Second, a costly profit-sharing plan
could drain company funds that could otherwise be used for capital improvements or
research and development. Third, although initial firm performance gains may occur
after the adoption of a profit-sharing plan, this positive effect appears to dissipate fairly
quickly over time; the bulk of the research suggests that the average employee is not
motivated to maintain a high level of productivity simply because the firm shares its
profits.29

In a group incentive or gain sharing plan, companies make monetary payments to a
specific group or groups of employees for producing more output or generating cost sav-
ings beyond some established goal. Incentives may include group bonuses, group piece
rates, profit sharing, production sharing, and cost-reduction sharing. In some cases,
plans may be limited to a few employees, to specific departments, to other organizational
divisions, or extended to cover the entire company workforce. Although group incentives
aim to increase production and reduce costs, they are also designed to increase team-
work, provide greater job security, and achieve acceptance of new technology.

Many national unions adopt a neutral position toward gain sharing plans, preferring
to allow local unions to address such proposals on a case-by-case basis.30 Union leaders
may be wary of including gain sharing plans as part of wage negotiations out of concern

334 PART 2 The Bargaining Process and Outcomes

that management might tend to treat such plans as a substitute for traditional, negotiated
hourly wage improvements during a contract s term. It may be easier to adopt gainshar-
ing or other variable incentive plans if such plans are negotiated in addition to, rather
than instead of, traditional straight-time hourly wage improvements.

There are a variety of group incentive plans. One of the most popular is the Scanlon
plan, a group plan for sharing labor cost savings that was developed by former union
leader Joseph Scanlon in the late 1930s.31 A Scanlon plan provides bonus payments
based on a computed ratio of total labor costs (TLC) to total production values (TPV),
which typically equal monthly sales, plus or minus inventory adjustments. A reduction in
the ratio would be a labor cost savings. For example, if the employees were to reduce
costs by working harder, producing more efficiently, and reducing wastes, and the TLC/
TPV ratio declined from 50 to 40 percent, the 10 percent labor cost savings would be
shared with the employees.32

The Rucker plan is based on a change in the ratio between labor costs and dollar
value added. The value added equals sales less purchased materials. Under this plan, if
employees lower the ratio between labor costs and dollar value added, the productivity
gains are shared. Under both the Scanlon and Rucker plans, employees receive between
25 and 75 percent of the available bonus pool, which is often distributed in the form of a
percentage of each employee s hourly wage.33

The term improshare plan is derived from improved productivity through
sharing. 34 Improshare productivity measurements use traditional work measurement
standards for a selected base period. A monetary reward is granted whenever the number
of labor hours required to produce the output during a measured period (e.g., week or
month) is less than the number of hours required during the base period. Both blue- and
white-collar employees are typically included in an improshare plan, and all participants
share equally in the bonus pool created. A study of improshare programs in 34 union-
ized companies showed an average productivity gain of 26.9 percent after the first year,
whereas the average gain for 38 nonunion plants was 21.5 percent.35 Another study of
112 firms that had introduced improshare found that the median increase in productiv-
ity in the first year was 8 percent and that cumulative productivity gains had risen to
17.5 percent by the third year, after which productivity gains leveled off.36

Although originally designed for application in an industrial environment, gainshar-
ing programs are also applicable in service organizations such as health care.37 A review
of several studies reports that gainsharing and profit-sharing plans generally provide a
sustainable 3 to 6 percent increase in productivity.38 Keys to the successful implementa-
tion of alternative reward systems in a unionized firm include (1) developing a coopera-
tive relationship between union and management, which is based on genuine mutual
trust and respect for each party; (2) involvement of the union in the development and
implementation of the reward system; (3) effective communication of the program to
covered employees; (4) flexibility to adapt the reward system to operating conditions
and changing business needs; and (5) establishment of realistic achievable goals, particu-
larly with respect to group incentive plans.39 Employees ability to understand the goals
of a reward system and how those goals were established, how the attainment of plan
goals will be measured, and how payouts are determined have a strong effect on covered
employees perceptions of both procedural and distributive justice under a reward
system.40

Group incentive programs are based on the assumption that by linking earnings to
performance, employees will adjust their efforts to optimize income. Because bonuses are
tied to group effort, employees should have more incentive to work cooperatively. Con-
siderable evidence suggests that the combination of employee participation programs and

CHAPTER 7 Economic Issues 335

group incentive programs can exceed the gains made by either program alone. Employees
have little incentive to share their performance-enhancing ideas with management with-
out corresponding rewards. In addition, employees with no participation in decisions
cannot respond effectively to such incentive programs. A union can provide more direct
and open channels of communication for a collective voice in decisions, thus enhancing
employee input. Contract language with rigid wage classifications and a confrontational
negotiating style may inhibit cooperation and employee response to reward incentives.
Thus, in general, unionized firms may provide an environment more conducive to
employee participation because of the collective bargaining process, but nonunion firms
may have an environment more conducive to implementing group incentive programs.41

One additional alternative reward plan that has received attention in recent years
is skill-based pay (SBP).42 Rather than setting base pay on the job an employee
performs, SBP systems base compensation on the skills or knowledge an employee
possesses that are valued by the employer. Sixty percent of Fortune 1000 firms report
using SBP, although it typically applies to less than 20 percent of employees in a
firm.43 Changes in operating methods or the introduction of new technology requir-
ing employees to acquire new skills or enhance existing skills may serve as an impetus
for adopting an SBP plan. A proliferation of different job classifications may be
reduced by grouping employees into a smaller number of skill blocks. Skill blocks
can be defined based on natural work groups (e.g., assembly, painting), a set of exist-
ing job classifications, normal skill progression within a particular trade (e.g., welder),
or teams. Each block has a defined set of skills, and employees can acquire skills
through training and work experience both within a block and in preparation to qual-
ify for a different skill block. An SBP plan encourages a more flexible labor force,
enhances employee skills acquisition, and aids a company in adapting to a changing
competitive environment.44

SBP plans can be successfully implemented in a unionized company as demon-
strated by such firms as GM, Ford Motor Company, AT&T, Corning, Maxwell House,
and Harley-Davidson Motor Company.45 Establishing the initial composition of skill
blocks, determining individuals access to training opportunities, and creating an appeals
procedure for handling disputes over the administration of the plan are key issues affect-
ing the success of SBP plans. Union representatives may initially prefer to handle the
implementation of an SBP plan as a trial project governed by a negotiated memorandum
of understanding separate from the parties negotiated labor agreement. An SBP plan is
typically one part of a broader effort to introduce work-practice changes to enhance a
firm s competitiveness. As with the introduction of other alternative reward systems,
union involvement in planning, implementing, and administering an SBP plan can help
to ensure employees acceptance of the plan and attainment of the plan s potential
benefits.

Wage-Setting Criteria: Arguments Used by Management and
Union Officials in Wage Determination
Union and management representatives recognize that no single causal factor determines
wage outcomes; however, both parties will use any identifiable factor to support their
arguments for or against a wage increase. Related factors often used to bolster wage
claims include (1) differential features of the work performed (usually determined by
job evaluation), (2) wage comparability (external market-based pay), (3) the employer s
ability to pay (financial condition of the organization), (4) productivity, (5) cost of living,
and (6) legal requirements.46 Union and management officials do not always favor the
same criteria for wage determination. Moreover, each may emphasize different criteria

336 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION
Living Wage Ordinances: What Are They? What are Their Effects?

The Fair Labor Standards Act of 1938 established a federal
minimum wage, and states also have passed minimum
wage laws. The purpose of the federal minimum wage,
as articulated in the FLSA, is not to eliminate poverty per
se, but rather to eliminate wage standards that are so low
that they are harmful to workers and to the economy.a

Because a person earning the federal minimum wage
does not earn sufficient funds to provide for a family,
some municipalities have implemented their own Living
Wage ordinances. These require wages that are higher
than the typical minimum wage because living wage ordi-
nances are designed to allow a breadwinner to support a
family, not merely provide a floor for wages.

Among the first cities to pass such an ordinance
was Baltimore. Currently over 100 U.S. cities and coun-
ties have such ordinances. Living wage advocates note
that under the current federal minimum wage, a person
makes approximately $15,100 about $9,000 below the
federal poverty level (for a family of four in the 48 con-
tiguous states in 2015, the poverty level was $24,250).
By contrast, the median wage of working families was
over $51,000 in 2014.b Thus, such ordinances seek to
bring workers at least up to the federal poverty level,
and in some cases, lift families well above that thresh-
old so that basic needs for a quality urban life (e.g.,
transportation, clothing, utilities) are met. Unions have
generally been advocates of living wage ordinances.
Some members favor such ordinances as a way to get
people off of welfare and to reduce the demand for pub-
lic social services. However, these ordinances find the
greatest welcome in communities where the majority of
the citizens are politically left-leaning, favoring the redis-
tribution of wealth, and citizens are willing to bear the
costs (higher taxes, higher prices) necessary to facilitate
this redistribution to alleviate high local poverty rates.c

The scope of living wage ordinances varyd: Some
apply only to municipal employees; some apply only to
private firms doing business with the municipality. In
some cases, the laws specifically prohibit subcontract-
ing municipal employees work to private firms such
clauses were probably sought by municipal employee
unions. Other laws apply to construction workers work-
ing on municipal construction projects through Project
Labor Agreements (PLAs) and often contain other pro-
visions, such as using only union labor and buying cer-
tain raw materials from U.S. and/or unionized factories;
PLAs have been criticized as stifling competition.e In
some cases, the law applies to all private-sector
employees above a certain threshold in terms of the

number of employees on their payroll. Among this last
group is Seattle, Washington which passed a law phas-
ing in a $15 per hour minimum wage for private-sector
businesses. However, in Seattle, not all public-sector
agencies are required to raise their workers wages.f

What are the consequences of living wage ordi-
nances? Economists debate whether these laws help
more low-wage workers (because compensation is
higher) or hurt more low-wage workers (because some
workers may be laid off, and everyone may pay higher
taxes). Research on the minimum wage often reports
that lower minimum wages are associated with lower
unemployment, particularly for younger, less-educated
workers; presumably research on living wage ordi-
nances will reveal similar effects.g However, one study
concludes that job losses are smallh and another reports
that for most firms, the added wage costs are less than
2 percent of a firm s operational costs.d Many econo-
mists remain skeptical because such ordinances com-
press the local wage structure and distort the natural
laws of supply and demand which would otherwise
determine the wage levels for various jobs.i Others
assert that some businesses (and customers) simply
relocate to (or shop in) suburban communities to avoid
paying the higher wages; firms that stay in the commu-
nity often raise prices to cover higher labor costs, trig-
gering a round of inflation that hurts the very low-wage
workers that the ordinances were designed to assist.j

There are other effects. One study reports, not sur-
prisingly, that turnover decreases among workers who
benefit from the living wage.i When businesses at the
San Francisco Airport were required to pay living
wages, absenteeism, turnover, and disciplinary problems
decreased.k Another study shows that a side benefit of
living wage laws is that property crime (e.g., theft)
decreasesl which is consistent with other research show-
ing that, if a living wage ordinance affects a large seg-
ment of the working poor, then poverty generally
decreases.d Finally, unions often benefit: By actively
campaigning for living wage ordinances, they give the
working poor the impression that unions care about their
well-being. Workers who might not otherwise be inter-
ested in joining unions become more receptive, and
unions have won several organizing campaigns.m

In conclusion, living wage ordinances appear to
benefit the low-wage workers who are covered under
the law. However, employers often raise prices to
cover these wage increases, which may adversely
affect other low-wage earners. Thus, for the law to

(Continues)

337

at different times. During prosperous times, unions tend to emphasize the employer s
ability to pay. During recessions, management may emphasize its poor financial position
as a reason to justify a wage cut, freeze, or lower rate of increase than in past contract
negotiations. Similarly, during periods of rapid inflation, unions emphasize cost-of-living
adjustments. When prices are stable, management places much weight on the lack of
necessity for cost-of-living adjustments.

Pressure from domestic and international competition has reduced management s
ability to simply pass increased labor costs on to the customer in the form of higher
prices for goods and services. This has caused employers to place more emphasis on
operating efficiency, cost-cutting measures, and productivity improvement. During diffi-
cult economic times, employers tend to de-emphasize industry wage patterns and focus
more attention during wage negotiations on their firm s specific labor costs, expected
profits, and labor market conditions. Because increased global competition has led some
firms to cut costs, some cities have enacted Living Wage ordinances, designed to insure
that workers earn enough to support their families. These ordinances are discussed in the
appropriate Labor Relations in Action box.

Differential Features of the Work: Job Evaluation and the
Wage Spread

The job evaluation process described previously can influence the wages assigned to var-
ious job classifications in an organization. The relative influence of job evaluation can be
seen in the wage spread, which represents the internal distribution of the proposed or
negotiated wage increase to the bargaining unit employees (Exhibit 7.3).

The six employee job classifications in Exhibit 7.3 range in skill and pay from
Classification A (highest) to Classification F (lowest), which conform to the results of

have its desired effect, it probably needs to be broad
enough in scope that it covers most low-wage workers
in the municipality. Even then, the distortions away from
supply demand theory may create unintended conse-
quences, such as businesses moving to the suburbs
or some employers laying off some workers. Thus,
while a blessing, one cannot conclude that these laws
are an unmixed blessing.

SOURCES:
aBruce E. Kaufman, Institutional Economics And The Minimum Wage: Broadening The
Theoretical And Policy Debate. Industrial & Labor Relations Review 63(3), 2010,
pp. 427 453.
bAmy K. Glasmeier, Living Wage Calculator, March 24, 2014, at http://livingwage.
mit.edu/
cSuzanne Clain, Explaining the Passage of Living Wage Legislation in the U.S. Atlan-
tic Economic Journal 40 (3), 2012, pp. 315 327.
dVictor Devinatz, The Significance of the Living Wage for US Workers in the Early
Twenty-First Century Employee Responsibilities & Rights Journal, 25 (2), June, 2013,
pp. 125 134.

eAssociated Builders and Contractors, the Truth about Project Labor Agreements, 2015,
at http://thetruthaboutplas.com/get-the-truth/
fDan Springer, Seattle Minimum Wage Increase takes Effect and Eating Out gets
more Expensive, Fox News [online], April 2, 2015, at http://www.foxnews.com/
politics/2015/04/02/seattle-minimum-wage-increase-takes-effect-for-tens-thousands-
workers/
gLewis F. Abbott, Statutory Minimum Wage Controls: A Critical Review of Their Effects
on Labour Markets, Employment & Incomes (Manchester, England UK: Industrial Sys-
tems Research, 2012).
hRichard Freeman, Fighting for other folks wages: the logic and illogic of living wage
campaigns, Industrial Relations, 44, 2005, pp. 14 31.
iS. Adams and D. Neumark, The economic effects of living wage laws: a provisional
review, Urban Affairs Review, 40, 2004, pp. 210 245.
jAaron Yelowitz, Citywide minimum wage hikes do more harm than good, Economic
Policies for the 21st Century at the Manhattan Institute, Nov. 4, 2014, at http://www.
economics21.org/commentary/citywide-minimum-wage-hikes-do-more-harm-good.
kM. Reich, P. Hall, and K. Jacobs, Living wage policies at the San Francisco Airport:
impacts on workers and businesses, Industrial Relations, 44, 2005, pp. 106 138.
lJose Fernandez, Thomas Holman, and John V. Pepper, The Impact of Living-Wage
Ordinances on Urban Crime, Industrial Relations: A Journal of Economy and Society
53(3), 2014, pp. 478 500.
mS. Luce, Fighting for a living wage (Ithaca: Cornell University Press, 2004).

338

management s job evaluation procedure. Management would generally prefer the wage
spread in example 2. It gives more highly skilled employees a higher hourly wage increase,
which could maintain or increase their wage differential over less-skilled employees, while
at the same time utilizing fewer employee classifications than example 1, which simplifies
administration of the pay system. Maintaining this wage differential is important to man-
agement for two reasons: (1) It helps ensure that current skilled employees do not leave
because of higher wages offered by other firms and (2) it offers some motivation to
employees in lower paid classifications to train for higher skill-level classifications within
the company.

Unions support the job evaluation principle that highly rated jobs should receive a
higher rate of pay than lower-rated jobs. However, job evaluation ratings are not the only
factor unions believe should be considered in determining the size or amount of wage
improvements. One concern of union negotiators (which should be shared by manage-
ment) is to ensure that the negotiated wage spread will result in sufficient votes by bar-
gaining unit members to ratify the proposed labor agreement. Satisfied union members
will also enhance a union leader s re-election prospects. Assume, for example, that Clas-
sification C in Exhibit 7.3 represented a politically influential group of employees. To
satisfy this important group of bargaining unit constituents, union negotiators might
prefer the wage spread illustrated by example 1, which grants Classification C employees
a 48 cents-per-hour wage increase, or example 3, which grants a 47.2 cents-per-hour
increase, rather than management s preferred wage spread (example 2), which only
grants classification C employees a 44 cents per hour increase. The union might even
propose a different wage spread that would give the employees in Classification C a
much higher wage increase.

To encourage employees to ratify a tentative contract agreement and foster employ-
ees perception of equity in wage adjustment, management might agree to an across-
the-board increase to all employees regardless of their job classification. Granting an
equal cents-per-hour increase in wages to all bargaining unit employees has the effect,
over several contract renegotiations, of narrowing the wage spread between differently
rated job classifications. If the wage spread narrows too much, management could

Exhibit 7.3
Three Examples of
Internal Wage Spreads

Example
Number of
Employees

Employee
Classification

Percentage of
Plant s Total
Employees

Increase in
Cents per
Hour

1 184 A 16 57.0

197 B 18 50.0

165 C 15 48.0

237 D 21 46.0

149 E 13 44.0

193 F 17 42.0

1125

2 381 A and B 34 60.0

402 C and D 36 44.0

342 E and F 30 34.0

1125

3 1125 A through F 100 47.2

CHAPTER 7 Economic Issues 339

experience increased dissatisfaction among employees holding high-rated jobs, thereby
leading to problems of increased turnover, absenteeism, or lower productivity. Union
and management negotiators might attempt to address the potential problem of narrow-
ing wage spreads over time by agreeing to an equal percentage increase in hourly base
wage rates (rather than an equal cents-per-hour increase), which would maintain existing
wage spreads. Another alternative to maintain a desired wage spread between high- and
low-skilled employees would be to negotiate a special cents-per-hour increase applicable
only to certain high-rated jobs (skill pay differential) in addition to an equal cents-
per-hour wage improvement granted to all job classifications.

Within the same or similar job classifications, one of the principal goals of unions is
to reduce wage dispersion among employees with satisfactory job performance. This goal
can be summarized in the phrase equal pay for equal work. Unions seek to achieve this
goal by negotiating a single rate of pay for each job classification and a seniority-based
progression of wage rates within a defined employee classification up to some defined
maximum rate. This approach is commonly used in job classifications that have two or
more steps or grades that an employee may advance to over time based on some estab-
lished criteria (e.g., work experience, demonstration of advanced job skills, or successful
completion of training). A single wage rate (one pay grade for all employees in a given
classification) eliminates wage dispersion between employees in the same classification,
and seniority rules help control overall wage rates by requiring similar treatment of
workers who have the same plant, department, or companywide seniority. Because of
the spillover effect of union wage practices, even nonunion firms experience less wage
dispersion over time than one might expect.47

Two-Tier Wage Plans
Contract language that specifies a newly hired employee will be paid less than other
employees performing a similar job is referred to as a Two-Tier Wage plan. A sample
of recent union contracts revealed that 19 percent contained a temporary Two-Tier
Wage Plan and 15 percent contained a permanent plan, lasting throughout the duration
of the contract. Manufacturing firms were more likely than nonmanufacturing firms to
have some form of a Two-Tier Wage Plan.48 A temporary Two-Tier Wage Plan permits
a new hire over time (e.g., the term of the contract) to rise to the same pay level as other
similarly classified workers. Some bargaining relationships extend the two-tier concept to
include eligibility for some employee benefits. Exhibit 7.4 presents an example of a two-
tier pay schedule.

A Two-Tier Wage Plan achieves immediate labor cost savings as job openings are
filled by comparatively lower paid new hires, and it may facilitate a favorable contract
ratification vote since the wages of current bargaining unit members are not adversely
affected by implementation of a two-tier plan. A union may legally negotiate a wage dif-
ferential based on factors such as skill, type of work, or seniority so it would appear to
have ample latitude to negotiate two-tier wage levels if the union does so in a good faith
and honest effort to meet an employer s demand for lower labor costs in a manner that
best protects the economic interests of current bargaining unit members. Steel, auto, and
retail grocery companies are examples of firms that have negotiated two-tier wage and
benefit plans.49 In exchange for a $120 million plant expansion and the creation of 100
new jobs, Harley-Davidson Inc. employees, represented by the United Steelworkers
union, agreed to lower the top-tier wage rate of more than $27 per hour by $7 per
hour, establishing a lower-tier wage rate that would match the wages the company
would pay if it chose to move the production of motorcycle powertrains to another

340 PART 2 The Bargaining Process and Outcomes

location. The UAW agreed to two-tier wage plans in its contracts with the big three
domestic automakers (GM, Ford, and Chysler) in 2007. Automakers assert that the
two-tier wage system enabled them to remain competitive with imports and helped the
firms survive the 2008 recession (in 2015, approximately 29 percent of all auto workers
received the lower pay rate). However, in recent years the union has expressed a strong
desire to eliminate the two-tier system, in part, because workers on the lower tier earn
about $10 an hour less than workers on the higher tier. 50

The UAW is not alone in its opposition to two-tier wage plans. Some involved in
bargaining relationships in other industries report that the costs of increased friction
between lower- and upper-wage tier employees outweigh the initial labor cost savings
of a two-tier wage plan and in subsequent negotiations have eliminated such language
from their labor agreement.51 If lower-tier employees view the pay situation as inequita-
ble, they may vote to remove union leaders responsible for negotiating the wage terms or
support union decertification. Likewise, lower-tier employees may feel less commitment
to their employer, thereby increasing turnover rates and lowering productivity, which
results in higher relative labor costs to the company.52 For more about two-tier wage
plans, see the appropriate Labor Relations in Action box.

Exhibit 7.4
Examples of Two-tier
Pay Scales

Job Classes and Hourly Rates for
Employees on Payroll Prior to March 1, 2017

Job Class Wage Rate

0 $15.40

1 15.60

2 15.80

3 16.00

4 16.20

5 16.40

6 16.60

7 16.80

All employees hired after March 1, 2010 shall be considered new hires and shall
be paid according to the [following] bracket rate:

Job Classes and Hourly Rates for
Employees Hired After March 1, 2017

Job Class Wage Rate

0 $12.00

1 12.10

2 12.20

3 12.40

4 12.60

5 12.80

6 13.00

7 13.20

CHAPTER 7 Economic Issues 341

LABOR RELATIONS IN ACTION
The Waxing and Waning of Two-Tier Wage Plans

In this chapter, we discuss Two-Tier Wage Plans, where
new workers earn less money than previously hired
workers for completing the same tasks. Two-Tier
Wage Plans seem to follow the economic cycle: When
the economy is poor, Management negotiators trot out
Two-Tier Wage Plans as alternative to layoffs or pay
cuts. When the economy is robust, Two-Tier Wage
Plans are abandoned as firms try to recruit and keep
good employees in a competitive economy. But is
there more to the decision to implement or abandon
Two-Tier Wage Plans than simple economic cycles?

Frequently, managers view labor as a cost to con-
trol rather than an asset that can partner with managers
to provide competitive innovation.a Using a cost-
containment philosophy leads managers to sometimes
propose Two-Tier Wage Plans as a way to save money.
Starting new workers at a lower pay rate seems plausi-
ble when unemployment is high. If workers don t want
to work in a two-tier company, they can take a job
somewhere else, managers might say. [Indeed,
research suggests that if new hires compare them-
selves to the unemployed or to their nonunion counter-
parts (and not to those on the upper tier), and if they see
the plan as temporary, they may be quite satisfied with
their pay.b] If the two-tier plan only affects new workers,
who are granted more frequent and/or larger pay raises
so that they eventually catch up with other workers, the
plan may be seen as an acceptable way to save money
by employees.c Because the most experienced workers
are on the upper tier (and experience is modestly corre-
lated with job performance), managers can expect to
retain senior employees.

Two-Tier Wage Plans have helped domestic auto
makers remain competitive against foreign imports and
these plans have helped save money so that
manufacturing jobs can remain in the U.S. For example,
in 2011, Chrysler paid approximately 2,700 newer work-
ers about $14 an hour; this was about half of what
20,000 more experienced workers made. With unem-
ployment high, Chrysler reportedly had over 10,000
applicants and had no problem filling vacancies in spite
of the lower pay.d And thanks, in part, to lower labor
costs from a Two-Tier Wage Plan, General Electric
moved production of high-end water heaters from
China to the U.S.e Two-Tier Wage Plans often save not
only wage costs, but save on other employee benefit
costs as well, as many of these are tied to pay rates.

Why would union leaders agree to accept a Two-
Tier Wage Plan? If the alternatives are to accept pay
cuts or layoffs, then a Two-Tier plan may seem more

acceptable. After all, a Two-Tier Wage Plan hurts name-
less, faceless, yet-to-be-hired people not current union
members. It is often easier to agree to lower wages for
yet-to-be-hired employees than it is to accept economic
harm for friends and dues-paying union members to
whom the union leader is accountable. Further, some
union leaders negotiated job security provisions for
those in the upper tier in return for agreeing to a Two-
Tier Wage Plan. Thus, there is more that enters the
decision than just economics.

However, Two-Tier Wage Plans are often aban-
doned after only a few years. Why? Again, there is
more going on than the economics of supply and
demand (although that plays a part). First, managers
sometimes find that they didn t save as much money
as they thought that they would. Adam s Equity Theory
suggests that when hourly workers feel underpaid, they
cut back on the amount of work that they do as a way to
restore equity.f If you are only going to pay me 90 per-
cent of what people hired only six months before me
got paid, then I ll only do 90 percent of the work, an
employee might say. If the worker can t cut back on
core job duties (perhaps because the job is machine-
paced work), the employee might cut back on con-
text job factors extra things that make the workplace
run smoothly like cleaning up around the machine or
covering for someone else who takes a break. Some
managers might find that it is harder to recruit and retain
the best new workers especially as the economy
rebounds because such workers might find better
paying jobs from competitors who don t have a Two-
Tier Wage Plan.

From a union leader s perspective, a Two-Tier
Wage Plan violates the founding principles of unionism
in the U.S. One of the issues in the Philadelphia Cord-
wainers Trial of 1806 (Ch. 2) was that master cordwai-
ners wanted to pay their journeymen shoemakers
different wages based on whether they were making
shoes to fill custom work orders, to sell in the master s
shop, or to sell wholesale. The journeymen wanted
equal pay for doing the same work (making shoes),
and rejected pay differences based on what they con-
sidered to be an irrelevant factor (the type of customer).g

Throughout history, union leaders and members gener-
ally adhered to the equal pay for the same work phi-
losophy; they did not embrace significant pay
differences for irrelevant factors, including very small
differences in seniority. Because a Two-Tier Wage
Plan typically calls for large pay differences with only
small seniority differences, the natural propensity of

342

Wage Comparability

Wage Comparability across Organizations
A common argument in wage negotiations is that wage rates in one bargaining unit
should be equal or related to the wage rates in comparable bargaining units. Wage com-
parability is given considerable weight in wage determination, although these compari-
sons can become quite complicated and may be based on biased information.53 Wage
surveys can be helpful. However, they do not measure how the job content, method of
payment, regularity of employment, supplemental unemployment benefits, vacations,
pensions, and holidays vary from company to company. Fundamental considerations
such as the size of the appropriate labor market and occupational and geographic differ-
ences must be recognized. At first glance, it appears that bus drivers in Miami would
have duties identical to those of bus drivers in Chicago. However, many differences in
these similar jobs can exist, such as weather conditions, number of scheduled stops, loca-
tion of scheduled stops, number of passengers, and so on. Furthermore, a major differ-
ence could arise in work duties. For example, are the bus drivers required to make
change for passengers? In such cases, a union could claim that the added job

union leaders is to reject such plans or at least to end
them as soon as possible.

Union leaders sometimes find that they must fight
harder to win grievances that might have been negotiated
previously. With a Two-Tier Wage Plan, managers have a
strong financial incentive to replace workers who have dis-
ciplinary problems with new employees. So union leaders
may have to take cases to arbitration that in earlier years
they could have negotiated a suspension or a last
chance agreement for the disciplined employee.

Union leaders occasionally find that their own jobs
are in peril. As more workers are hired on the lower
tier, union leaders sometimes discover that these
new workers have little loyalty to the current union
leadership: You are the person who negotiated that
contract that gives me $15 an hour when the others
are getting $24 and you now want me to re-elect
you to union office? I don t think so! In fact, we
might try to de-certify the union at least then, we
might all get the same wage rate! As the number of
people on the lower tier grows, the wise union leader
recognizes that he or she will need their support in
order to be re-elected to union office; the fastest way
to garner their support is to secure wage increases that
effectively end the Two-Tier Wage Plan.h Indeed,
United Auto Workers leaders are reportedly eager to
secure meaningful and substantial pay raises for
lower-tier GM and Chrysler workers.

Thus, whether considered from a management
perspective or a union leader s perspective, Two-Tier

Wage Plans are inherently unstable work arrange-
ments. They may help a firm survive an economic or
financial crisis (as when the airlines went through a
financial crises when newly deregulated in the
1980s), but the pressures on both managers and
union leaders often lead both sides to abandon the
plans once the crisis is over.i

SOURCES:
a Thomas Kochan, Eileen Appelbaum, Jody Hoffer-Gittell, and Carrie Leana, The
Human Capital Dimensions of Sustainable Investment: What Investment Analysts
Need to Know, February 22, 2013, at SSRN: http://ssrn.com/abstract=2222657.
b Peter Cappelli and Peter D. Sherer, Assessing Worker Attitudes under a Two-Tier
Wage Plan, ILR Review, 43 (2), 1990, pp. 225 244.
c Michael MacNeil, Two Tier Workplace Compensation: Issues and Remedies, Cana-
dian Labour and Employment Law Journal, in press, at http://papers.ssrn.com/sol3/
papers.cfm?abstract_id=2229248.
d Bill Vlasic, Detroit sets its Future on a Foundation of Two-Tier Wages, New York
Times, Sept. 12, 2011, at http://itc.gsw.edu/faculty/pszmedra/FALL2011MACRO/TwoTier
WagesSept13.pdf.
e Charles Fishman, The Insourcing Boom, The Atlantic, January 8, 2013, pp. 1 11, at:
https://webfiles.uci.edu/schofer/classes/2014soc2/readings/3%20d%20Charles%
20Fishman%20-%20The%20Insourcing%20Boom%20-%20The%20Atlantic.pdf.
f Alain Cohn, Ernst Fehr, Benedikt Herrmann, and Frédéric Schneider, Social compari-
son in the workplace: Evidence from a field experiment, IZA Discussion Paper No.
5550, 2011, at SSRN: http://ssrn.com/abstract=1778894; James E. Martin and Melanie
M. Peterson, Two-Tier Wage Structures: Implications for Equity Theory, Academy of
Management Journal, 30 (2), 1987, pp. 297 315.
g John S. Bowman, Philadelphia Cordwainers Trial: 1806, Encyclopedia.com, 2002, at:
http://www.encyclopedia.com/doc/1G2-3498200041.html.
h Andrew Weiss, Efficiency wages: Models of unemployment, layoffs, and wage dis-
persion. (Princeton, NJ: Princeton University Press, 2014).
i David Card, Deregulation and Labor Earnings in the Airline Industry, in James Peo-
ples (Ed.) Regulatory Reform and Labor Markets (Norwell, MA: Kluwer, 1997).

343

responsibility of making change creates a safety hazard by increasing the likelihood of
robberies; the union might seek higher compensation for this additional risk.

The relative importance of wages to total costs (degree of labor intensiveness) is also
a significant factor in wage comparability. For example, if a modern, highly automated
textile mill pays wages that account for 30 percent of total costs, a 10 percent increase
in wages would equal a 3 percent change in the sales price. However, in an old textile
mill with out-of-date machinery, where wages account for 65 percent of total costs, a
10 percent increase in wages would equal a 6.5 percent change in sales price. Even
though wage data are often largely fragmented or deficient, negotiators still have to rely
on wage comparability in arguing for or against certain levels of wages. Therefore, both
parties continue to look for commonalities with other companies, local firms, or similar
jobs that can provide a base from which to present their proposals.

Wage Comparability within Organizations
Just as unions seek to insure that their members pay does not suffer relative to that of
workers in other firms doing similar work, they also try to maintain pay comparability
within their firms. For example, police officers and fire fighters typically see their jobs as
similar (and similarly dangerous), warranting comparable wage levels from their common
employer, a city government. Yet they are usually represented by two different labor
unions. How can the union leaders insure comparable wages? It is common for each
union to negotiate a Me-Too clause in their collective bargaining agreements. Thus, a
Me-Too clause in the police officers contract states that if the fire fighters union negoti-
ates a pay raise, then the police officers will receive an identical pay raise also. A similar
clause in the fire fighters contract insures that they will receive whatever raises the police
officers get. Such clauses are also sometimes used to maintain pay differentials. For exam-
ple, skilled laborers may negotiate a contract stating that their wage levels will always be at
least 115 percent of what unskilled laborers make. If the unskilled laborers get a raise, then
the skilled laborers will automatically get a raise also. In this second example, the Me-Too
clause is used to maintain wage differences between groups rather than identical pay levels.

Ability to Pay
The ability to pay, or the financial condition of the organization, is a commonly used
standard for wage determination that is given much weight by unions during periods of
high profitability. By contrast, when profits are low, it is management negotiators who
suggest that the employees may deserve more money but that the company simply
doesn t have the ability to provide wage raises.

Consider the situation at Redondo Beach, California: In the depths of the Great
Recession, city officials persuaded union negotiators to take cuts in wages and benefits
that totaled six percent; these cuts were agreed to because the city faced a $7.3 million
budget shortfall and did not have the ability to continue paying previously negotiated
wage levels. Between 2012 and 2014, as tax revenues returned to pre-recession levels,
the city gradually restored employee pay (but not as quickly as union members
expected). At the end of 2014, the city even provided a 2 percent raise. This case illus-
trates that when the city had an inability to pay, it sought wage cuts; when revenues
increased and it had the ability to pay, unions lobbied for pay levels to increase.54

Management rarely claims a true inability to pay, except in extreme cases where
the firm is losing money or is otherwise financially threatened. If management claims
an inability to pay, the union has a legal right to independently examine the company s
financial records under the duty to bargain in good faith for the purpose of verifying the
employer s claim. Management more commonly responds to union wage demands by

344 PART 2 The Bargaining Process and Outcomes

expressing an unwillingness to pay based on factors such as productivity rates, wage
survey data, other capital needs, industry settlement patterns, or other relevant factors.

Ability to pay has limited usefulness as the sole criterion for wage determination for
several reasons:55

1. Wages based solely on the ability to pay would create a chaotic wage structure and
would cause a change in the wage costs price relationships that have evolved over
time.

2. To be consistent, the ability to pay must work both ways, causing wage reductions
when profits are nonexistent or inadequate. Such an approach would be generally
unacceptable to unions.

3. It is extremely difficult to determine the share of profits that should be used for wage
increases. If the profit is distributed to employees in the form of higher wages and an
insufficient amount is shared with stockholders, there will be less incentive for
investment, thereby limiting the firm s growth potential.

4. Wages supposedly are paid to employees in accordance with their relative value to
the firm, their contribution to its goals, and the relative importance of their services.
If ability to pay is the major factor, the relationship between actual pay and actual
value could become distorted.

5. Wages are negotiated for future application. Basing wage changes on past profits is
no guarantee that future profit levels will remain high enough to sustain a firm s
profitability at the higher agreed-on wage levels.

Productivity
The average annual business productivity rate for U.S. workers in the nonfarm business
sector rose at a 0.7 percent rate throughout 2014 compared to an increase of 1.8 percent
in unit labor costs. Manufacturing productivity over the same period rose 2.2 percent
compared to a rise in unit labor cost of 0.1 percent after manufacturing unit labor cost
had fallen 1.4 percent in 2013.56 Labor productivity represents a measure of the value of
output created relative to the hourly costs of the labor necessary to produce that output
(see Exhibit 7.5 for an international comparison of manufacturing productivity).

Although no argument has been advanced with more conviction or sophistication
than that wages should vary with changes in productivity, union and management nego-
tiators often experience difficulty in attempting to apply the principle to specific negotia-
tions. For example, the rate of change in productivity varies widely from industry to
industry, firm to firm, and even plant to plant. Not only is productivity itself difficult
to measure accurately, but any change in productivity (usually measured in output per
employee-hour) results from many causes, only one of which is labor.57

Those who study productivity have generally agreed that new capital investment and
mechanization have been the primary causes for greater productivity, but there are still
important issues to reconcile. Who should share in the revenue resulting from increased
productivity the employees, stockholders, or consumers? What is the proper balance
among the contributing factors of production labor and capital investments? Any use
of productivity data must be handled carefully because the available data are only
approximate estimates. Output per employee-hour often overstates gains attributed to
labor and understates the relative contributions of advanced technology, improved meth-
ods, better machines, product quality, and so on to the value created by an hour of paid
labor.

To remain competitive, companies and employees must be more productive. Union
negotiators often argue that productivity gains may be used to pay for higher wage or

CHAPTER 7 Economic Issues 345

benefit costs. Conversely, rising labor costs without offsetting gains in productivity may
act as an incentive for management to find lower cost substitutes for employing addi-
tional labor (e.g., outsourcing, mechanization, and plant relocation). The International
Longshoremen s Association (ILA) has agreed to work rules with shipping firms, allow-
ing the use of cargo containers, global-positioning, satellite-system technology to track
the movement of cargo, and other innovations that have increased productivity and job
security, which benefits both employers and union members.58 The same principle
applies to other industries: High productivity is the only way to justify high wages. How-
ever, as witnessed in many manufacturing industries over the past 15 years, steady pro-
ductivity growth has not led to a comparable increase in employment opportunities or
significant real wage gains. One possible explanation for the inverse relationship between
productivity growth and growth in real wages is that workers in the United States lack
sufficient power to encourage or require employers to share a sufficient proportion of
productivity gains with workers. The failure to see significant real wage gains may result
in unions being unenthusiastic about production-enhancing technologies and may
explain the finding that firms are sometimes less likely to invest in technological innova-
tion when unions are present. On the other hand, relatively low, steady, labor costs have
recently made the United States relatively attractive among developed countries as a
place to locate a manufacturing facility.59

A gain sharing plan was previously discussed as one way to share productivity gains
with employees who help create them. More than one-third of large companies have
implemented some type of gain sharing program.60 In addition to providing an eco-
nomic incentive for workers to improve the quantity and quality of outputs, productivity
sharing plans may also serve to reduce grievances, absenteeism, and turnover, and to
improve labor management relations.61

Exhibit 7.5
Average Annual Rates of
Change in Manufacturing
Output per Hour for the
United States and
Selected Countries

Country 1979 2011 2010 2011

United States 4.2% 2.0%

Australia 1.7 4.0

Canada 2.2 1.9

France 3.2 2.2

Germany (unified) 2.5 4.5

Italy 2.1 0.4

Japan 3.4 2.8

Korea __ 6.0

Singapore 5.0 8.0

Sweden 4.2 3.4

Taiwan 6.1 2.8

United Kingdom 3.4 4.5

Productivity data are affected by factors such as the amount of output (product or service produced), number of
hours worked, hourly compensation costs, value of goods and services produced, and the currency exchange rate.
Productivity data represent the combined contributions of labor, management, new technology, capital investment,
capacity utilization, and energy use.

SOURCE: U.S. Department of Labor, International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2011,
News Release, December 6, 2012, Table 1. Output per hour, output, and hours, at http://www.bls.gov/news.release/prod4.t01.htm

346 PART 2 The Bargaining Process and Outcomes

Problems with Productivity Sharing
Although productivity sharing offers an innovative approach for mutual gain sharing
and cooperative activity, it, too, has its problems. A large percentage of gain sharing pro-
grams (43 percent) fail to achieve the positive returns expected by managers.62 Most
often this results from managers setting productivity quality goals unrealistically high
or disputes over the gain sharing formula. There are also problems associated with the
measurement of productivity. Some jobs do not lend themselves to precise measurement
of output. It is much easier to measure bricks laid per hour by a worker than the value of
that same worker spending one hour in a meeting discussing safety issues affecting the
job. In jobs that are not routine or repetitious, exact measures are impossible.

Another problem is locating and organizing productivity data in such a manner
that it may be useful to a firm. Serious arguments over the contribution of specific fac-
tors to increased productivity can inhibit the success of any productivity bargaining.
What is the chief contributor to productivity gains? Is it the skill, efforts, or attitudes
of the employees? Or is it the advanced technology of the machinery and equipment,
efficiency of the operations, or the scale of operations? Or is it the interaction between
these sets of factors?63

Because productivity gains are shared by labor and management under the productiv-
ity bargaining concept, they will certainly give rise to rigorous and complicated negotia-
tions. Evidence suggests that many unions do not consider gain sharing plans a substitute
for traditional hourly wage gains but rather an additional pay benefit, a trade-off for wage
concessions, or a means of maintaining parity with an industry wage pattern.64

Examples of bargaining for productivity improvement have occurred in the con-
struction industry. Negotiations there have resulted in agreements to reduce work
stoppages and contract language covering jurisdictional disputes, inefficient work
rules, and the duties of nonworking union stewards. Interestingly, the stimulus for
productivity bargaining in the construction industry was the loss of work that increas-
ingly went to nonunion contractors, along with the desire of union members to pro-
tect or expand their employment opportunities, particularly during unfavorable
economic conditions.65

Effect of Unions on Productivity and Efficiency
There has been considerable debate and research about the effect of unions on produc-
tivity and efficiency. There is research suggesting a modest, positive relationship between
unionization and labor productivity in certain industries such as manufacturing and con-
struction. Explanations vary but the following reasons are often cited for higher union
productivity: (1) improved morale brought about by higher wages, benefits, and
improved working conditions; (2) less employee turnover at unionized firms; (3) higher
levels of firm-specific skills, resulting in part from more training opportunities and
greater employee longevity on the job; (4) more pressure on management to get its
house in order and invest in better methods, such as technological improvements to
reduce unit labor costs; (5) more effective grievance procedures, which help to resolve
employee problems more quickly and therefore improve productivity; and (6) the ability
to negotiate subjects related to industrial accidents and diseases that can reduce lost work
time and consequently increase productivity.66

A union can also promote efficiency when employees, through their union power,
ensure that managers treat them fairly and gain a voice to influence decision making
that leads to higher morale and greater productivity. Productivity is also enhanced by
the fact that unionized workplaces attract and retain more highly skilled and experienced
employees because of higher wages, the opportunity to be heard, and the assurance of

CHAPTER 7 Economic Issues 347

fair treatment, which can also increase employees loyalty to the firm.67 Unionized firms
are just as likely as nonunionized firms to adopt advanced manufacturing technologies as
a means of enhancing productivity growth and competitiveness.68

On the other hand, it may be argued that unions can decrease productivity by
reducing managerial flexibility, limiting the use of merit-based compensation, impos-
ing work-rule restrictions, such as limits on workloads or tasks performed, and
increasing the size of work crews. There is evidence that unions affect productivity
both positively and negatively: unionized firms use existing technology more effi-
ciently, on average, than nonunion firms; however, funds that might otherwise go to
the technological development of new work processes are sometimes allocated to wage
increases.69 To what extent unions are shown to have a positive or negative effect on
productivity is often determined by the researchers methodology used to measure
productivity.70

It has been noted that over most of the past 30 years, wage and income levels of
many American workers have stagnated despite continuing improvements in labor pro-
ductivity. From 1947 to 2010, productivity rose, on average 2.2 percent each year,
whereas real hourly compensation rose, on average, only 1.7 percent each year. From
1973 to 2007 nonfarm business sector labor productivity rose 83 percent while real aver-
age compensation for all workers (including managers) rose only 49 percent. The median
wage gain was only 10 percent, indicating that average wage earners and entry-level
workers did share nearly as much in the gains that were available compared to top
wage earners such as management executives. While real wages in other industrialized
countries generally increase at approximately the same rate as labor productivity, the dis-
parity in the U.S. trend is noticeable. The trend is even more discouraging if one only
considers male workers: When adjusted for inflation, real wages for all men ages 25 64
declined 19 percent between 1970 and 2010 and it declined 40 percent for those with
only a high school education. One of the biggest predictors of income level is education,
and the lack of income growth has made it increasingly difficult for many poorly edu-
cated families to maintain a middle class standard of living without taking on the bur-
den of additional debt borrowing. It has also made it extremely difficult for lower income
families to make any significant improvement in their standard of living despite both
adults being employed full-time. While it is difficult to identify causes, it is interesting
to note that wages kept pace with labor productivity increases during the period (1947
1973) when U.S. labor unions were relatively powerful and influenced trade and other
policies to protect workers wages. It is generally concluded that a large middle class ben-
efits working families.71

On balance, unions generally have a positive effect on productivity. However, pro-
ductivity gains are not generally sufficient to completely offset the higher labor costs
(higher distribution of profits to meet employees interests) attributable to unioniza-
tion. Therefore, unionization may lower the rate of return per dollar of capital invested
(one measure of profitability), which may make unionized firms less attractive to inves-
tors. This effect is most likely to be noticeable in unionized firms operating in product
or service markets with relatively little competition and high profit margins.72

Cost of Living
During periods of rising prices, unions support wage demands in part by referring to the
cost of living. Union negotiators argue that a rise in the cost of living without a com-
mensurate wage increase is equivalent to a cut in real wages or a drop in purchasing
power. Thus, the proposition that wages should be raised at least in proportion to the
rise in living costs may seem quite fair and reasonable, especially to employees.

348 PART 2 The Bargaining Process and Outcomes

Employers are often concerned that a firm has little control over how much inflation
may increase over a specified time period, making the employer s liability for pay more
unpredictable. Wage payments based solely on an increase in the cost of living are also
not tied to the need for increased labor productivity or the actual operating experience
(profit/loss) of the firm. Where contract negotiations cover two or more plants, the addi-
tional concern is that the cost of living may vary by geographical location, either over-
estimating or underestimating the true cost of living if national inflation rates are used in
computing cost-of-living wage adjustments.73

Cost of living usually refers to the consumer price index (CPI) computed by the
U.S. Labor Department s Bureau of Labor Statistics, which measures changes in the
price of goods and services purchased by a typical American household on a monthly
basis.74 The index covers 207 categories of goods or services (e.g., food, housing, health
care, entertainment) sampled from 44 urban geographical areas around the country. The
European Union (EU) has a similar cost of living index called the European Harmonized
Index of Consumer Prices (HICP).75 Unlike the CPI, the HICP includes the rural
population in its sample and does not measure price changes in the cost of owner-
occupied housing. During the 12-month period ending in February, 2015, consumer
prices were unchanged.76 This compares to a 1.1 percent increase in consumer prices
for the 12-month period ending in February, 2014.

Wage Adjustments during the Term or Duration of the
Labor Agreement
Because most negotiated labor agreements have a term of more than one year, it is
common to include contract language that allows the adjustment of wages during the
term of the contract. The most common term or duration of a labor agreement is three
years (43 percent of 711 contracts surveyed), followed by more than three years (27
percent), two years (22 percent), and one year or less (8 percent).77 Economic uncer-
tainty in the bargaining environment makes it more difficult for negotiators to predict
both a company s ability to pay and the potential needs of bargaining unit members,
which creates more pressure to negotiate short-term labor agreements than might be
common under economically stable bargaining conditions. This has impacted a previ-
ous trend in some basic goods manufacturing industries (e.g., auto, textiles, petroleum,
and paper) to negotiate long-term contracts (four to six years) in an effort to stabilize
labor conditions and avoid any threat of a work stoppage. Several different methods
may be used to adjust employee base wage rates during the term of a labor agreement
such as a cost-of-living adjustment (COLA) clause, deferred wage increase (also
called an annual improvement adjustment), or a wage re-opener clause. Each of these
will be discussed.

Cost-of-Living Adjustments
A COLA clause imposes a contractual obligation on an employer to change rates of pay
in accordance with a collectively bargained formula and appears in approximately 21
percent of labor contracts-up from 14 percent in 2010.78 When negotiating COLA provi-
sions, union and management representatives usually consider the following issues:

1. Selection of the particular price index and base point. Most labor agreements use the
all-cities CPI-W (consumer price index for urban wage earners and clerical workers).
The beginning date of the contract is usually specified as the base point. The CPI-W
is used to measure the rate of inflation from the base point to the end of the period
when the COLA adjustment is scheduled to be paid.

CHAPTER 7 Economic Issues 349

2. Frequency and timing of the wage adjustment. Quarterly adjustments are more com-
mon in manufacturing industries, whereas annual adjustments are most common in
nonmanufacturing firms. Employers would generally prefer less-frequent adjustment
periods (e.g., annual rather than quarterly) to delay the time when the employer
must expend the funds, thus permitting the firm to use that money in the interim
and delaying the imposition of roll-up costs (as discussed in Chapter 6) incurred
whenever an employee s base wage rate is adjusted upward. Unions would generally
prefer quarterly (more frequent) COLA payments because it puts the money into the
hands of bargaining unit members sooner and increases the value of benefit items
affected by the roll-up factor.

3. COLA formula. The most common negotiated formula for COLA adjustments is a
1 cent-per-hour increase for each 0.3 point increase in the CPI-W during the speci-
fied base period. For example, if during the base period the CPI-W rose 1.3 points,
then the employer on the specified adjustment date would increase a covered
employee s base wage rate by 4 cents per hour (1.3 0.3 4.33 $0.01 4¢,
rounded off to the nearest whole cent). Some contracts negotiate an alternative
formula, specifying a percentage change in wages in accordance with a specified
percentage change in the CPI-W.

4. Effect of COLA on other elements of the compensation package. There is little unifor-
mity found in labor contracts on this issue. Some agreements may include COLA
adjustments only for the purpose of computing gross hourly earnings to avoid roll-
up costs. Other labor contracts may use the COLA-adjusted base wage rate in com-
puting all items related to wages and benefits (e.g., holiday pay, vacation pay, sick
leave pay). In some contracts, COLA benefits are kept separate from the base wage
and are instead treated as an annual bonus. In others, COLA adjustments are folded
in to the base wage. This latter approach allows one year s COLA adjustment to
enter into the equation when a subsequent adjustment is computed. Not surpris-
ingly, to maintain members purchasing power, unions prefer COLA adjustments to
be folded in while some employers, to save money, prefer that COLA adjustments
be treated as bonuses.

5. Caps. In periods of high inflation, it is often difficult to budget adequately for ever-
increasing labor costs. Therefore, management negotiators will sometimes seek a cap
or upper limit on the COLA. For example, if a 5 percent cap is negotiated, then
wages cannot rise more than 5 percent in one year, regardless of the inflation rate.
Union negotiators might also seek a minimum cap for such payments. A minimum
guarantee would benefit bargaining unit members in that management generally
insists on negotiating smaller base hourly wage increases when a COLA clause is
included in the labor agreement because part of the employee s wage gain is
expected to be provided by the COLA payment during the contract s term. A maxi-
mum cap would reduce management s wage liability risk should an unexpected rapid
escalation in inflation occur (e.g., an oil crisis) during the contract s term. Despite
the apparent advantage of a cap to both parties, only an estimated 25 percent of
COLA clauses contain any form of caps, indicating the difficulty encountered in
reaching a mutual agreement on what constitutes a reasonable minimum or maxi-
mum guaranteed COLA payment.

Deferred Wage Increases
Deferred wage increases are negotiated in multiyear contracts to provide some adjust-
ment in base wage rates beyond the first contract year. Contracts are sometimes referred
to as being back-loaded, front-loaded, or even-loaded as a means of indicating in which

350 PART 2 The Bargaining Process and Outcomes

contract years most of the wage improvement occurs. For example, a three-year contract
that averaged a 3 percent annual wage gain could provide annual wage adjustments of
5 percent in the first year, 3 percent in the second year, and 1 percent in the third year
of the contract. This arrangement is called a front-loaded contract because the largest
raise occurs in the first year of the contract. By contrast, the timing of the pay raises
might be arranged differently: 1, 3, and 5 percent (back-loaded); or 3, 3, and 3 percent
(even-loaded). As with the timing of COLA adjustments, unions generally favor transfer-
ring cash into the hands of bargaining unit members as quickly as possible (front load-
ing), whereas management prefers delaying the transfer of money as long as possible
(back loading). The loading of economic improvements in a labor agreement can be
used as one measure of the relative bargaining power between the parties.

Wage Re-Opener Clauses
A wage re-opener clause is written to permit wages to be renegotiated at a specified point
in time during the term of the contract or whenever some predetermined event occurs
(e.g., profits exceed a certain level; the CPI has risen by a specified amount). A wage re-
opener clause may be necessary to get both parties to agree to a contract settlement
whenever the future operating environment of the firm is unclear or the term of the con-
tract is longer than one year and one or both bargaining parties believe they cannot rea-
sonably predict what would constitute an adequate (acceptable) wage settlement in future
years covered by the contract. Some labor agreements may also contain re-opener con-
tract language which permits certain nonwage items to be renegotiated during the term
of the contract (e.g., health care insurance costs).

Lump-Sum Pay Adjustments
Lump-sum pay adjustments appeared in approximately 20 percent of labor contracts in
2014. The most common payment form was a flat dollar amount Flat dollar amounts
averaged $1,176 in the first contract year, $783 in the second year, and $1,050 in the
third contract year.79 Only 12 percent of multiyear contracts provided a lump-sum pay-
ment in the second year, and only 9 percent did so in the third year. Lump-sum pay
adjustments are popular with management because they do not change the employee s
base hourly wage rate and thus have no impact on increasing roll-up costs.

The popularity of lump-sum payments waxes and wanes with economic conditions:
When employers have difficulty recruiting and retaining specific types of skilled workers,
then they are more willing to add to the base pay rate. For example, a survey of employ-
ers whose contracts expired in 2013 found that 64 percent planned to give pay raises and
only 11 percent planned to seek lump-sum payments. This marked a shift in strategy for
many employers whose contracts had expired during the Great Recession, when 21 per-
cent of labor contracts offered lump-sum payments.80 Unions generally favor lump-sum
pay only as an alternative to a wage freeze or pay cut when economic conditions prevent
an employer from paying a straight-time hourly wage increase.

Employee Benefits

In 2014, unionized employers in the United States paid bargaining unit benefit costs
averaging $18.74 per hour worked (40.3 percent of each payroll dollar), compared with
nonunion employers benefits expenditures of $8.70 per hour worked (29.2 percent of
each payroll dollar).81 Exhibit 7.6 presents a complete breakdown of employer cost per
hour worked by bargaining status. Benefits are an important part of an employee s com-
pensation and include insurance costs, pension payments, pay for time not worked (such

CHAPTER 7 Economic Issues 351

as vacations, sick leave, holidays, paid rest and lunch breaks), supplemental pay (e.g.,
bonuses, shift differential, overtime pay), and legally required payments. An analysis of
benefits based on employees race finds that only small gaps exist in benefits received
based on race, with the exception of family health care benefits due to different marriage
and divorce rates among the races.

Legally required payments (e.g., Social Security, workers compensation, and unem-
ployment compensation) for many years constituted the single largest category of benefit
expense incurred by both union and nonunion employers. In 2003, health insurance
became the highest single benefit cost item for unionized employers, thus making it an
important bargaining topic in labor negotiations. Unionized employers incur substan-
tially higher cost than nonunion employers for health insurance because policies pro-
vided for under union contracts generally cover a greater proportion of employees and
provide a wider range and higher dollar amount of health care coverage.

The following sections present major areas of employee benefits, relying largely on
two types of sources: (1) surveys of employers with one or more collective bargaining
agreements up for recent renegotiation, and (2) Bureau of Labor Statistics data, compar-
ing union and nonunion sectors.82

Insurance and Health Benefits
According to the Bureau of Labor Statistics, in March, 2015, 86 percent of private industry
unionized employers provided life insurance, whereas only 54 percent of nonunion
employers offered this benefit. Ninety-two percent of unionized employers offered health
care benefits, whereas only 67 percent of nonunion firms offered this benefit. Sixty-three
percent offered short-term disability benefits, compared to 35 percent for nonunion firms
and 73 percent offered paid sick leave compared to 60 percent for nonunion firms.

Exhibit 7.6
Employer Costs per Hour
Worked by Bargaining Status,
December, 2014

Type of Compensation Union Nonunion

Total Compensation (wages + benefits) $46.50 (100.0%) $29.83 (100.0%)

Wages and salaries 27.76 (59.7%) 21.13 (70.8%)

Total benefits 18.74 (40.3%) 8.70 (29.2%)

Individual Benefit Categories

Paid leave (e.g., vacation, holiday, sick
leave)

3.25 (7.0%) 2.05 (6.9%)

Supplemental pay (e.g., overtime, shift
differential, lump-sum pay)

1.44 (3.1%) 1.07 (3.6%)

Insurance (e.g., life, health, short-and
long-term disability)

6.01 (12.9%) 2.20 (7.4%)

Retirement and savings (e.g., defined
benefit plan, defined contribution plan, cash
balance plan)

4.38 (9.4%) 1.00 (3.4%)

Legally required benefits (e.g., Social
Security, unemployment compensation,
workers compensation)

3.66 (7.9%) 2.38 (8.0%)

SOURCE: U.S. Bureau of Labor Statistics, Employer Cost for Employee Compensation: December, 2014, News Release, March
11, 2015, Table 5, p. 11.

352 PART 2 The Bargaining Process and Outcomes

Of 116 unionized workplaces surveyed in 2010, 91 percent covered hospitalization
expenses. Other common health care benefits found in union contracts included surgical
procedures (88 percent), doctor visits (91 percent), prescription drugs (91 percent), men-
tal health (76 percent), dental care (82 percent), vision care (72 percent), and domestic
partner coverage (43 percent). Compared to a similar survey administered in 2007,
employer coverage of most types of health care benefits declined by about 4 percent.

Tight labor market conditions in the mid-2000s caused many employers to improve
health insurance benefits as an incentive to attract and retain qualified workers. This was
a change from the bargaining trend of the late 1990s and early 2000s when employers
often sought to shift a greater proportion of rapidly rising health care costs onto employ-
ees or reduce health care benefits as a means of controlling health care costs. More
recently, generally weak demand for labor due to the recession, and increased pressure
on company profits have once again focused employers attention on managing health
care costs effectively. Health care benefits have been a principal issue in several major
strikes that have occurred at companies such as General Electric, Hershey Foods Corpo-
ration, and Lockheed Martin Corporation.83

Health Care Cost Containment
In 2012 the United States spent $2.8 trillion dollars on health care, or nearly $9,000 per
U.S. resident, accounting for 17.2 percent of the country s gross domestic product.84 In
1970 U.S. health care spending was a modest $356 per resident, accounting for 7.2 per-
cent of gross domestic product. Despite higher spending on health care than other indus-
trialized countries, in 2010 the United States still had 50 million residents who were
uninsured, including one in five adults under the age of 65.85 The passage of the 2010
Patient Protection and Affordable Care Act and expansion of those receiving
low-income based Medicaid have together resulted in a reduction of the uninsured to
41 million. The percentage of Americans without health insurance peaked in 2010 at
18.2 percent but has declined to pre-recession levels of 16.7 percent.86

Health care insurance premium costs are projected to rise at an average annual rate
of 5.7 percent over the period 2013 2023, about 1.1 percent faster than inflation.87 Since
2005 the proportion of health insurance premium costs paid by employees has risen 47
percent compared to a 27 percent rise in health insurance premium costs, an 18 percent
rise in wages, and a 12 percent rise in inflation.88

In 2014, the average annual health insurance premium for individual coverage was
$5,837 in unionized firms and $4,384 in nonunion firms with 64 percent of unionized
employees contributing to the premiums and 88 percent of nonunionized employees
making such contributions.89 Family coverage averaged $14,244 in union and $10,630
in nonunion firms. Higher premium cost is an indicator of more comprehensive plan
coverage. Also, unionized employers pay a larger percentage of health care insurance
premium costs. On average unionized employers pay 76 percent (versus 67 percent for
nonunion employers) of family coverage annual insurance premium costs and 83 percent
(versus 81 percent for nonunion employers) of individual coverage annual insurance pre-
mium costs.90 Thus, being in a union has its advantages: Union workers are likely to
have more expensive (and extensive) health care coverage, are less likely to pay anything
for it, and when they do have to share premium costs, they pay a smaller percentage of
the costs than their nonunion counterparts.

Both union and nonunion employers have been active in recent years in efforts to
either reduce the costs of health care coverage or shift a greater portion of that cost bur-
den to employees. Such an employer strategy often conflicts with employees pressure on
their union to maintain or expand the type and quality of health care benefits while

CHAPTER 7 Economic Issues 353

minimizing any additional cost to bargaining unit members. Unions and employers
jointly recognize the importance employees place on the provision of health care benefits
and the need to cooperate in seeking cost-effective means of providing such benefit cov-
erage. The availability and quality of health care benefits is an important factor in the
recruitment and retention of quality employees.

A number of contracts contain provisions designed to lower employer health care
costs. These include including deductibles (93 percent), co-payments (84 percent), and
premium contributions by employees. Premium contributions have grown more com-
mon from 62 percent of contracts that expired in 2012, to 71 percent in 2013, to 83
percent among respondents for 2014. 91 Raising co-payments per doctor s office visit
or deductible amounts paid by the employee before insurance coverage begins can
impact employees differently, depending on how frequently they use medical services.
Increasing the proportion of insurance premium costs paid by the employee affects all
employees covered under the same policy provision equally and, therefore, is some-
times preferred as a cost-sharing mechanism over raising employee co-pay or deduct-
ible amounts. Other cost-containment provisions found in recent union contracts
include wellness programs (63 percent), a pretax spending account (54 percent),
delayed new hire eligibility or a two-tier health care plan where new hires get less cov-
erage or pay more for the same coverage (26 percent), pre-admission testing (44 per-
cent), utilization review (44 percent), spousal eligibility (48 percent), outpatient surgery
requirement (29 percent), gatekeeper system requirement (24 percent), required second
opinion (23 percent), hospice care requirement (23 percent), home health care require-
ment (24 percent).

Most employees (58 percent) are enrolled in a preferred provider organization
(PPO) health care plan which permits an employee to pay a lower rate for health care
services if the employee agrees to use health care providers approved by the PPO.92 To
become an approved health care provider, a health care provider or hospital must agree
in advance with the insurance provider to accept a lower reimbursement rate than the
traditional fee-for-service rate for most health care services provided. A health mainte-
nance organization (HMO) plan restricts an employee s choice of health care provider
to the HMO and enrolls 13 percent of employees in the United States. High deductible
health care plans (HDHCP), typically coupled with some type of tax advantaged
health care savings account, now enroll 20 percent of employees in the United States.
Because of the high deductible amount the employee must pay before the insurance
begins to pay any benefits, the annual premium for such a plan is lower. In 2015, the
minimum annual deductible in such plans was approximately $1,300 for individual
coverage and $2,600 for family coverage.93 Employees can put money into a health sav-
ings account and spend it as pre-tax dollars for health-related needs. Some employers
may make a defined contribution to an employee s health savings account, matching an
employee s contribution up to a specified dollar amount. Many employees when pre-
sented with a choice of plans do not prefer a high deductible plan because of the high
out-of-pocket expense of meeting deductibles and confusion over how the plans are
supposed to work.94

Income Maintenance
Income maintenance provisions usually involve issues such as work or pay guarantees,
severance pay (separation or termination pay, given when an individual employee leaves
the firm), or a supplemental unemployment benefit plan (SUB), provided for laid-off
workers, in addition to the unemployment benefits they receive directly from the state.

354 PART 2 The Bargaining Process and Outcomes

Severance Pay
Severance pay plans provide a lump-sum payment on termination and are included in
28 percent of labor contracts.95 More senior workers and those who earn higher wages
are generally entitled to a proportionally larger severance payment. In most cases, sever-
ance pay is only extended to an employee (1) whose job has been terminated as a result
of permanent shutdown, (2) is subject to a lengthy layoff extending beyond an estab-
lished minimum period, or (3) who has no reasonable prospect for recall. For example,
when the Hershey Company decided to shift production of some candy products to
Mexico, resulting in employment reductions at its U.S. plants, the company and the
Teamsters union negotiated an early retirement and severance pay package, which
included two weeks of severance pay for each year of an employee s service.96 Some
employers were offer enhanced severance pay in exchange for an employee s signature
on a waiver releasing the employer from liability for claims of employment discrimina-
tion during the employee s service with the firm.97 To be lawful such a waiver must be
voluntary, the employee must understand the waiver terms, and he or she must receive
something of value in exchange for willingness to sign the waiver. If the current contract
does not specifically provide for severance pay, as a mandatory subject of bargaining, a
union will generally request to bargain over the subject should a significant layoff or
plant closure occur.

Supplemental Unemployment Benefits
Normally, companies pay into a state unemployment fund (or must buy unemployment
insurance). Then, when a firm lays off workers, those workers receive money from the
state fund or from the unemployment insurance; benefits typically consist of up to 26
weeks pay at 50 percent of the workers last wages, following a 2 4 week waiting period.
A SUB plan provides pay directly from the company in addition to unemployment com-
pensation to which the individual would be entitled and is found in 10 percent of labor
contracts. A few SUB plans provide individual accounts in which the employee has a
vested right and from which he or she may withdraw money for reasons other than
lack of work. The most common method provides payment of an amount equal to a
percentage of the employee s take-home pay with unemployment compensation
deducted. Other issues to be negotiated as part of a SUB plan include the duration of
benefits, length of service requirements to qualify for coverage, and employer financial
requirements to fund the plan.

Work sharing provisions are found in 6 percent of labor contracts. As a means of avoid-
ing or minimizing layoffs among bargaining unit members, qualified employees agree to
share the available work opportunities by having each employee work a reduced number of
hours. An employer may benefit from such an arrangement by retaining quality workers
who, if laid off, might accept employment elsewhere and not return to work when future
work opportunities become available. Some states have passed legislation modifying their
unemployment compensation laws to allow work sharing (also called Short-Time Compen-
sation ) instead of layoffs. For example, two employees may each take a reduction in hours
(e.g., from 40 hour/week to 20) and receive unemployment benefits for the hours not worked.
Because such arrangements were not widespread, Short-Time Compensation programs, while
helpful, did not have a significant benefit to workers in the recent recession.98

Premium Pay Overtime and Other Supplements
Most labor agreements specify daily or weekly work schedules and provide premium pay for
hours worked beyond regularly scheduled hours. Most agreements call for an 8-hour day
and a workweek of 40 hours, Monday through Friday. Overtime premium pay rates are

CHAPTER 7 Economic Issues 355

required by law for many employees: The Fair Labor Standards Act (FLSA) requires time
and one-half payment for work in excess of 40 hours in a week.

However, many unions negotiate more generous overtime rates. Frequently, over-
time pay is paid for work over 8 hours per day at a time and one-half rate; this is more
beneficial to the worker than the 40-hour week standard of the FLSA because a worker
would receive overtime if he worked any extra hours on any one day. Under the FLSA
standard, an employer might let the worker go home early on a different day in the
same workweek to avoid paying overtime.

Payment of double-time for hours worked on certain days such as Sunday or holi-
days is also frequently seen, although such provisions are less common in union con-
tracts as employers have successfully bargained to eliminate such special pay incentives.
Employers who operate on a continuous basis (e.g., retail stores open 24 hours per day,
7 days per week) typically negotiate work schedules (e.g., three shifts per day) that do not
require the use of premium pay to meet normal operating schedules.

Many labor agreements also contain provisions for overtime administration. For
example, overtime assignments may be restricted to qualified employees within a spe-
cific job classification, department, or work shift. Often, the opportunity to earn over-
time pay is awarded based on an equity norm: Management may be required to offer
overtime work assignments to workers who have the greatest seniority first. In other
contracts, an equality norm prevails: A contract might specify overtime opportunities
to be awarded on a rotating basis regardless of seniority. In some cases, when manage-
ment has had difficulty getting employees to voluntarily work overtime, a provision
making overtime work mandatory may be negotiated. Excessive use of overtime as a
means of avoiding the additional employment costs associated with hiring additional
full-time workers can lead to a labor dispute. Most employees (and union leaders)
understand the necessity for overtime work periodically and usually value the addi-
tional income opportunity.

Some labor agreements that provide equalization of overtime hours count the hours
whenever an overtime opportunity is offered even if the employee refuses the offer. For
example, if an employee is offered four hours of Saturday morning overtime and he or
she turns it down, those four hours for overtime-equalization purposes would still be
counted as if the employee had worked them. Likewise, unions have sought provisions
in a labor agreement that would enable their members to better plan their off-the-job
activities, such as a minimum advance notice of required overtime work or the right to
refuse overtime work for certain specified reasons.

Various other forms of premium pay are also included in most labor contracts. For
instance, shift differentials (e.g., premium payments for working the night shift) are
provided in most labor agreements. Other forms, such as reporting pay (which guaran-
tees some minimum number of hours pay for employees who report for scheduled work
but find no work) and call-in pay (which typically guarantees four hours pay for
employees called in to work during nonscheduled work hours) are also usually included.
For example, one of your textbook authors had a friend named Jack, who, while in col-
lege, had a summer job at a factory. Jack said that he waited in a lounge every morning
with a dozen others. Because the factory needed to be fully staffed to run the assembly
line, if regular employees did not report for work, managers selected temporary replace-
ments from among those in the lounge. Jack said that if he worked, he got eight hours
pay; if he did not work, he got three hours reporting pay and he was free to leave and
enjoy his summer day. Other pay supplements may include pay for temporary transfer,
hazardous work, travel, work clothing, tool allowance, or bonus pay for certain specified
purposes (e.g., annual bonus, good attendance, or safety record).

356 PART 2 The Bargaining Process and Outcomes

Pay for Time Not Worked Holidays, Vacations, and Rest Periods
Labor agreements often contain payments for various times during which the employee is
not required to work. According to the U.S. Bureau of Labor Statistics, 91 percent of union
workers have access to paid holidays and paid vacation, whereas only 75 percent of non-
union workers receive such benefits. The agency also reports that, as of March, 2015,
73 percent of union workers get paid sick leave, whereas only 60 percent of nonunion work-
ers receive paid sick leave. A BNA survey reports that unionized employees enjoy a number
of other paid nonwork time including: holiday leave (66 percent), vacation leave
(65 percent), jury duty leave (50 percent), bereavement leave (59 percent), personal leave
(51 percent); all of these types of paid leave are down about 10 percent from a similar survey
taken a few years earlier, and some are down substantially from the early 2000s (e.g., paid
vacation days and paid holiday leave were each found in over 90 percent of the contracts in
2001). Only two types of paid leave have shown increases: military leave (51 percent), and
voting leave (36 percent).99 The two most expensive paid-leave benefit provisions deal with
holiday and vacation pay. The mean number of paid holidays provided under union con-
tracts is nine compared to nonunion with an average eight paid holidays annually.100

Nearly all union contracts provide holidays for Labor Day, Independence Day,
Thanksgiving, Christmas, New Year s Day, and Memorial Day. Holidays for Good
Friday, Christmas Eve, the day after Thanksgiving, and Martin Luther King, Jr. s birth-
day are also often granted. Contracts generally contain some eligibility requirements for
holiday pay (e.g., specified length of service [usually four weeks] or a requirement that
the employee must perform any scheduled work the day before and after the holiday).
Other issues that should be covered in contract language include payment for holidays
falling on a regularly scheduled day off or during a paid vacation period and premium
pay for hours worked on a paid holiday.

In many industrialized countries employees are guaranteed a paid vacation by law;
however, in the United States there is no such legal guarantee.101 For example, after one
year of service, workers receive 25 paid vacation days in France; 24 days in Germany;
22 days in Spain; and 20 days in Belgium, Ireland, the Netherlands, Australia, and the
United Kingdom. In 2009 a Democratic representative from Florida introduced a legisla-
tive proposal that would have granted at least one week of paid vacation for employees at
companies with 100 or more workers after one year of service.102 Republican opposition
to employer mandates make it unlikely such a proposal could be enacted into U.S. law.
Not only do U.S. workers receive less paid vacation, a survey of 1,303 workers by the
U.S. Travel Association reported that 40 percent of respondents did not plan to use all
of their vacation entitlement.103

The U.S. Bureau of Labor Statistics reports that both private-sector union and non-
union workers receive a median 10 paid vacation days after one year of service, 15 paid
days after 10 years of service, and 20 paid days after 20 years of service.104 Part-time
status, an average wage of less than $15 per hour, and employment in a firm with
fewer than 100 employees are all factors that result in a below-average number of paid
vacation days being granted an employee.

Vacation scheduling provisions appear in almost all labor agreements, covering
issues such as annual plant shutdowns and consideration of employee seniority and
employee preference in vacation scheduling decisions. In some contracts, workers with
the greatest seniority get to choose their vacation times first; in others, it is a joint deci-
sion between the individual employee and his/her manager. Regardless of the specific
procedure, such provisions are essential in large organizations to reduce potential dis-
putes between employees and to ensure that adequate qualified personnel are available
to meet planned operating schedules.

CHAPTER 7 Economic Issues 357

Pensions
As the life expectancy of U.S. workers has increased (to 79.5 years in 2014), pension ben-
efits have taken on added importance as a source of income to sustain an individual s
standard of living after leaving the labor force.105 In 2014, 83 percent of private-sector
union members participated in some type of employer- or union-sponsored pension
plan compared to 45 percent of nonunion employees.106 Only 18 percent of private-
sector employees with average earnings in the lowest 25 percent range participated in a
pension plan.

Nearly all labor agreements make some reference to pension plans, whether in the
form of a general statement mentioning the plan or a fully detailed provision. Items usu-
ally mentioned include age for retirement (normal and early), disability retirement, ben-
efits available and requirements for qualifying, vesting provisions, administration
procedures, and financial arrangements. Union members typically receive larger pension
benefits than nonunion employees at the time they retire and also receive larger increases
in such benefits in the years after their retirement. Union members also retire at an ear-
lier age than nonunion employees.

In 1987, the Age Discrimination in Employment Act (ADEA) was amended to pro-
hibit any mandatory retirement age (with limited exceptions for certain occupations such
as airline pilots), ending the common pension plan use of 70 as a mandatory retirement
age. Although this amendment helped extend the career of senior employees, the
Supreme Court s controversial Betts decision in 1989 ruled that virtually all employee
benefit programs are exempt from challenge under the ADEA unless the employee can
prove intentional discrimination on the part of the employer.107

Common Types of Pension Plans
The majority (60 percent) of union contracts include a defined benefit pension plan,
which guarantees a specified dollar benefit payment per month to a covered employee
on retirement and is typically funded by the employer. The percentage of union con-
tracts with a defined benefit plan has declined in recent years as some employers have
successfully bargained to shift more of the risk/cost of pension funding to employees
(in 1994 it was found in 82 percent of contracts and in 2004 it was found in 73 per-
cent).108 A defined benefit plan provides certainty regarding the amount of pension ben-
efit to be received at retirement, which aids employees in retirement planning. In
addition, a guaranteed pension benefit amount reduces the investment risk incurred by
the employee.

With defined contribution pension plan the employer establishes an account in
each employee s name and promises to contribute a specified amount to each account
on an annual (or monthly) basis. The employer s contribution may be contingent on cer-
tain factors such as sufficient operating revenue to make the payments or a matching
contribution from the employee. The money is invested and when the employee retires,
the amount of monthly benefit is determined based on the amount in the fund and
anticipated life expectancy. The employer does not guarantee a given level of retirement.
Employers often prefer defined contribution plans because it limits their financial obliga-
tions to fund the plan.

Some younger employees who have grown up in an era of generally rising stock
market values express a preference for a tax-deferred 401(k) plan where employees set
aside pre-tax dollars from their paycheck for retirement; their savings are often matched
by the employer. This retirement savings vehicle can be considered a type of defined
contribution pension plan, although 401(k) plans are usually offered in addition to pen-
sions. However, the stock market declines experienced in recent years have served to

358 PART 2 The Bargaining Process and Outcomes

remind employees of the risk and volatility associated with investing for long-term secu-
rity in a stock market that historically has had periods of growth and decline.

Most union contracts (60 percent) contain a 401(k) plan often as a supplement to a
member s defined benefit pension plan whereby an employee can invest his or her own
dollars in a retirement savings account and often have the contribution matched by an
employer s contribution up to a specified limit (e.g., 50 cents per dollar invested by the
employee up to an amount equal to three percent of the employee s salary).109 During a
period of economic stress, employers may decide to suspend discretionary company
matching contributions to employee 401(k) plans as a cost savings measure, although
employees are still eligible to contribute to their individual accounts.110

Employee stock ownership plan (ESOP) provide employees with company stock;
this is typically provided from the firm s profits and can be provided at a cheaper cost
than employees can, as individuals, purchase stock through a broker. Unions generally
oppose efforts by an employer to use an employee stock ownership plan as a basic pen-
sion plan, and they are found in less than 5 percent of union contracts.111 Investing pen-
sion savings in a single company greatly increases the risk to the employee s investment
should the firm experience poor future performance (and thus a decline in the value of
its stock price). Enron, WorldCom, Global Crossing, Color Tile, Polaroid, Kmart, and
Lucent are just some of the firms whose financial difficulties have resulted in significant
401(k) plan losses for covered employees.112 Firms in some industries such as airlines,
steel, and trucking have negotiated ESOPs as a management trade-off for union wage
concessions.113 Employee stock ownership plans under union contracts are more likely
to permit union employees to vote their own shares of stock, have some direct represen-
tation on the governing board of the plan, and be more involved in the development and
implementation of the plan.

Research on the effects of ESOPs on labor relations is tentative at this time because
of the lack of widespread or long-term experience. However, a few preliminary conclu-
sions may be reported:114

Labor management cooperation does not emerge automatically when publicly
traded companies move into employee ownership.
Employee ownership leads to greater identification of the employees with the com-
pany, and employees receive more information about the company; supervisor
employee relations become more cooperative; and employees and managers express
positive attitudes about employee ownership and the organizational climate.
No evidence supports the concern that employees want to take over companies with
ESOPs and restructure management roles and authority from top to bottom.
Employee ownership does not have an automatic effect on employees motivation,
work effort, absenteeism, or job satisfaction; however, greater integration of the
employee into the organization and more employee participation in decisions do
have positive results.
Generally, the role of the union does not change except when the union made an
early and ongoing effort to become involved in the change process, and unions ini-
tiate few changes in labor management relations.
Companies with an active employee ownership philosophy that try to translate it
into concrete cooperative efforts have the strongest effect on positive employee
attitudes.
The presence of an ESOP does not make a firm more productive, efficient, or prof-
itable; however, most studies show that employee-owned firms performed success-
fully on a number of financial variables, such as profits, stock appreciation, sales,
and employment growth.

CHAPTER 7 Economic Issues 359

The proportion of private-sector employees who have access to a defined benefit
pension plan has declined since 1985 when this type of plan covered 75 percent of all
workers in pension plans and 85 percent of union workers. In 2011, 70 percent of
union workers and only 14 percent of nonunion workers had access to a defined benefit
pension plan.115 Unionized workers (67 percent) are much more likely to participate in a
defined benefit plan than nonunion workers (13 percent). Only 46 percent of nonunion
employees participate in any type of pension plan compared to 82 percent of union
represented employees.

Forty-one percent of nonunion employees participate in a defined contribution pen-
sion plan compared to 44 percent of union-represented workers. In addition to the
employer s contributions, an employee may also contribute as many of his or her own
dollars to the defined contribution pension account s balance as desired. A low or nega-
tive personal savings rate and a high level of consumer debt often make it difficult for
employees to find personal funds to invest in their pension savings account. On average,
U.S. households carry about $8,000 in credit card debt, and between 43 and 50 percent
of families spend more than they earn annually.116 Most experts suggest that an
employee will need to generate 70 to 85 percent of their preretirement income to main-
tain a comparable lifestyle in retirement.117 Employees often express a desire or per-
ceived need to save more for retirement purposes but most also believe they are not
able to do so, creating a disconnect between stated goals and actual behavior.118

The ultimate value of an employee s retirement benefit under a defined contribution
pension plan depends on the amount of employer and employee contributions to the
account, along with the investment gains or losses experienced by the account. A defined
contribution plan shifts the investment risk from the employer to the employee for ensur-
ing at the time of actual retirement that pension funds available will be sufficient to fund
the individual s retirement lifestyle. Allowing the employer to determine the amount of the
firm s contribution rather than guarantee the value of the account at the time of retirement
permits an employer to control the cost of providing a pension benefit.

Defined contribution plans are not insured unlike defined benefit plans whose
value is insured by the federal government through the Pension Benefit Guaranty Corpo-
ration (PBGC) should the employer default on pension obligations. The value of many
pension plan assets were hard hit by the stock market decline in 2008, and recovery has
been gradual. Funding for defined benefit plans of S & P 500 companies dropped to 69.5
percent of projected liabilities in 2012, but increased as the stock market recovered,
beginning 2014 with 95 percent of projected liabilities. Even so, many pensions remain
underfunded and some employers are seeking to end their defined benefit pension plans,
replacing them with annuities from an insurer. In contrast to defined benefit pension
plans, defined contribution plans are more common among nonunion employers:
53 percent of union workers and 59 percent of nonunion workers in private industry in
the United States had access to a defined-contribution pension plan in 2011.119

When the value of a defined benefit pension fund s investments decline, an employer
must make additional contributions to the pension fund to ensure pension fund liabilities
are met. The Pension Protection Act of 2006 (PPA) mandates increased funding for under-
funded private defined benefit pension plans.120 This can create a financial burden on a firm
faced with declining profits and lower sales revenues and has led many firms to terminate
their defined benefit plans and institute a defined contribution plan instead. Unless the col-
lective bargaining agreement gives management the authority to modify its pension plan, a
plan to change from a defined benefit to a defined contribution plan for unionized workers
must first be negotiated with the union, as pensions are a mandatory bargaining issue.

360 PART 2 The Bargaining Process and Outcomes

A cash balance plan represents a retirement savings approach that combines fea-
tures of both defined benefit and defined contribution plans.121 Under a cash balance
plan, there are two parts to the monthly contribution. First, an employer typically agrees
to make a specified contribution to an employee s retirement account, which is guaran-
teed to earn a specified rate of interest generally pegged to an index such as the one-year
treasury bill rate. This can provide a guaranteed level of income upon retirement, similar
to a defined benefit pension. In addition to the guaranteed part of the contribution, an
additional part of the monthly contribution may be invested, but with no guarantee of
income (similar to a regular defined contribution plan).

On reaching retirement age, a retiree may generally choose to accept an annuity
payment (e.g., $10,000 per year for life) based on the value of the account balance or
receive a lump-sum distribution equal to the value of the account balance. Because the
amount of benefit earned each year of employment is steady under a cash balance plan,
an employee who does not anticipate remaining with the employer for an extended
period might earn a greater pension benefit during a shorter employment tenure com-
pared with an employee covered under a traditional defined benefit plan, which typically
computes the amount of pension benefit earned based on the average of an employee s
three highest salary years, which typically would not occur until late in a worker s career.
Conversely, a more senior employee covered under a defined benefit plan might actually
experience a 30 to 50 percent reduction in pension benefits if the pension plan were con-
verted to a cash balance plan.122 A cash balance plan appears only 1 percent of union
contracts down from 10 percent in 2003.123

Pension plans under union contracts often offer several early retirement options to
an employee. For example, agreements provide such options as retirement at age 60 after
10 years of service; retirement at age 55, but only when the combined age and service
years equal 85; or retirement after 30 years of service, without regard to age. Another
topic is vesting. If a pension is vested, then an employee who leaves the firm can with-
draw his or her pension benefit (e.g., putting what the employer has contributed into an
Individual Retirement Account); if a pension is not vested, then the employee is only
entitled to what he or she contributed not to what the employer contributed. Although
nearly all of union contracts contain vesting provisions stating that an employee whose
service is terminated continues to be entitled to earned benefits, the Employee Retire-
ment Income Security Act (ERISA) of 1974, as modified by the Pension Protection
Act of 2006, has very specific regulations governing vesting requirements of pension
plans.124 Under a cliff vesting schedule, a qualified retirement plan must, at a mini-
mum, permit a participant to earn a nonforfeitable right to 100 percent of his or her
accrued benefit derived from the employer s contributions after five years of service.
Alternatively, under a graded vesting schedule, (sometimes called a stair step sched-
ule), a plan participant would be 20 percent vested after three years of service, 40 percent
after four years, 60 percent after five years, 80 percent after six years, and 100 percent
vested after seven years of service. Special vesting rules apply to elective deferrals and
matching contributions. Elective deferrals are contributed to the pension plan by the
employee s direction, as when an employee authorizes paycheck deductions toward his/
her 401(k) plan; elective deferrals must be immediately vested. Matching contributions
(where the employer matches an employee s contributions to a plan such as a 401(k)
plan) generally must vest at least as rapidly as under one of the two minimum vesting
schedules described above. Although management and labor may negotiate provisions
covering pensions that are more favorable than the law requires, most agreements corre-
spond to the legal minimum.

CHAPTER 7 Economic Issues 361

Family and Child-Care Benefits
After an eight-year effort in the U.S. Congress, the Family and Medical Leave Act
(FMLA) of 1993 was passed.125 The FMLA requires private-sector employers of 50 or
more employees to provide eligible employees up to 12 weeks of unpaid leave for their
own serious illness; the birth or adoption of a child; or care of a seriously ill child, spouse,
or parent. For eligibility, an employee must have been employed for at least one year and
worked at least 1,250 hours within the previous 12 months. The Department of Labor
(DOL) is assigned administrative responsibility for the act, and civil suits by employees
are allowed. Small employers with fewer than 50 employees are exempt from coverage
under the FMLA. The law only covers approximately 11 percent of private-sector employ-
ers; these covered firms employ less than 60 percent of all private-sector employees.126

Therefore, many U.S. workers are not covered.
The FMLA has served to make employers more aware of family work/life issues

without imposing any significant costs or administrative burdens on employers.127 The
U.S. Department of Labor reports that 16.5 percent of eligible employees actually take
leave time provided under the FMLA with a median length of ten days leave.128 The
most common reason for taking leave is for an employee s own health (52.4 percent),
followed by care for a newborn, newly adopted, or newly placed foster child (18.5 per-
cent). Among employees who needed to take leave but did not, the most common reason
cited for not taking leave was they could not afford to do so (77.6 percent). This has
prompted some advocates to encourage Congress to amend the FMLA to provide paid
rather than unpaid leave. In 2004, California became the first state to authorize partially
paid family and medical leave benefits under the state s disability insurance fund; in
2015, the state required employers to provide at least three days of paid sick leave each
year, based upon the hours the employee has worked. Legislation to provide paid family
leave benefits have been introduced in 27 other states.129 Currently, 70 percent of union-
ized employees but only 60 percent of nonunion employees have access to paid sick
leave. In 2015 legislation entitled The Healthy Families Act was introduced in Congress
to require employers with 15 or more employees to provide an employee up to 56 hours
of paid sick leave to be earned at the rate of one hour of paid sick leave for every
30 hours worked.130 Many employers, especially small business owners, oppose any
expansion of employee coverage or amount of leave entitlement, citing cost and admin-
istrative burdens.

Unions are free to negotiate family and medical benefits that exceed those provided
by the FMLA. Because family and medical leave is a mandatory subject of bargaining,
the employer is legally obligated to bargain with the union over these subjects.131 Nego-
tiable issues might include the amount of leave provided and reasons for taking leave,
paid or unpaid status of leave time granted, substitution of other paid leave (e.g., sick
leave, vacation days) for unpaid FMLA leave, or the method used to determine what
12-month period is used to calculate the 12 weeks of unpaid FMLA leave available
within a 12-month period (e.g., calendar year, 12-month period beginning with the
employee s date of hire, 12-month period beginning when the employee s first FMLA
leave starts). If the company and union have negotiated a general nondiscrimination
clause, it is important to ensure that specific laws, such as the FMLA to which the con-
tract clause applies, are included in the contract language. This would permit the resolu-
tion of FMLA disputes under the parties contract grievance-arbitration procedure rather
than requiring an employee to file a complaint with the U.S. Department of Labor or pay
a private attorney to pursue a court claim.

362 PART 2 The Bargaining Process and Outcomes

Other Benefits

Companies and unions also bargain over a wide range of other benefits. The American
Bar Association estimates that half of all U.S. citizens need the services of an attorney
annually.132 Prepaid legal service plans are a relatively inexpensive means of providing
legal assistance to employees without imposing substantial administrative burdens on an
employer. Legal services are provided by 10 percent of employers under their collective
bargaining agreements.133 Prepaid legal service plans operate in a manner similar to
HMOs. In exchange for a monthly premium ($16 to $26), subscribers are entitled to
free legal advice, representation, and document reviews from a network of approved
attorneys who provide the service for a fixed fee paid by the plan s provider. Some
plans offer a full array of services, ranging from counsel for criminal offenses to routine
matters such as a will, divorces, house closings, and landlord tenant problems.

Approximately 58 percent of collective bargaining agreements provide some type of
employee assistance plan (EAP), which provides counseling services to 71 percent of
unionized employees, covering a wide range of problems such as personal finance, mari-
tal relationships, stress management, or substance abuse. By contrast, only 48 percent of
nonunion workers have access to an EAP.134 The U.S. Labor Department estimates that
employers save $14 in costs related to employees problems for every one dollar invested
in an EAP program.135 Many employers and unions view an EAP plan as another means
of effectively managing employee health care costs in a proactive manner by providing
employees with timely assistance in identifying and resolving problems.

Wellness programs that provide employees with opportunities to pursue a healthier
lifestyle received favorable treatment under the Patient Protection and Affordable Care
Act, which should encourage more employers to offer this benefit in the future. Approx-
imately 63 percent of union contracts offer wellness programs; this provides access to 44
percent of union members. By contrast, only 36 percent of nonunion workers in the pri-
vate sector have access to some type of wellness program.136 Wellness programs help
employees to address a variety of health care issues such as job stress, weight control,
smoking, high cholesterol or blood pressure, excessive alcohol consumption, diabetes,
and engaging in more exercise.

The need to improve employee job skills to match changing job requirements has
led some firms to provide employees education tuition aid.137 Present in 48 percent of
recent labor agreements sampled, education tuition aid helps to cover expenses incurred
by an employee who seeks additional education and training related to the employee s
career. While some firms (e.g., Sprint Nextel, General Motors) suspended tuition aid
plans during the recent recession, most companies continue to fund such programs as a
good investment in the retention and development of employees. Other types of
employee benefits found in labor agreements samples included: transportation subsidy
(approximately 20 percent of recent contracts) to offset travel expenses to and from
work, more common in nonmanufacturing firms, child-care assistance (8 percent of
contracts available to 15 percent of union members; also available to 10 percent of non-
union workers), and a free or subsidized home computer (4 percent).138

Union Effects on Wages and Benefits

The degree to which unions influence wage and benefit levels is a commonly debated
subject among labor economists. In a 1963 classic book, Unionism and Relative Wages

CHAPTER 7 Economic Issues 363

in the United States, Greg Lewis concluded that union wages ranged between 10 and 15
percent higher than nonunion wages.139 By the 1970s the union wage differential had
climbed to 20 to 30 percent in most industries. The union wage effect is greater for
jobs requiring less than a college degree, so it has a greater impact on wages of blue-
collar employees, younger employees, and less-educated employees.140 Since the 1980s
an increasingly competitive global economy has served to narrow the union nonunion
wage differential; in 2011, it was approximately 18 percent.141

The data in Exhibit 7.7 present the union nonunion wage differential by industry in
the United States. A positive union wage advantage is present in every industry listed
except professional/ business services and finance/insurance. Unlike in Europe where
narrower union nonunion wage differences appear to foster more cooperative labor rela-
tions, there does not appear to be any significant lessening of employer opposition to
unions in the United States, despite the narrowing wage gap. Perhaps this merely indi-
cates that the gap has not narrowed sufficiently in the view of many employers to war-
rant a change in their labor relations philosophy. Unions also have a spillover effect on
wages and benefits in nonunion companies. Union wage and benefit changes spill over
into nonunion companies because nonunion employers who want to retain their non-
union status will respond to union wage increases by raising the wages of their employ-
ees.142 Improvements are provided not only to reduce the threat of unions but to provide
equity and maintain morale and productivity.

Exhibit 7.7
Union versus Nonunion Employee Median Weekly Earnings, 2014

Industry Union Nonunion
Weekly Union
$ Advantage

Annual Union
$ Advantage

Construction $1,123 $724 $399 $20,748

Manufacturing 861 807 54 2,808

Wholesale and retail trade 669 638 31 1,612

Transportation and warehousing 947 748 199 10,348

Information (including publishing, motion
pictures, sound recording, broadcasting,
and telecommunications)

1,115 1,029 86 4,472

Finance and insurance 880 991 111 5,772

Professional and business services 805 918 113 5,876

Health care and social assistance 893 740 153 7,956

Leisure and hospitality 636 500 136 7,072

Public sector (federal, state, local) 1,014 850 164 8,528

Nonunion data include the earnings of managers and other salaried (nonbargaining unit) employees.

Data for both union and nonunion groups exclude employer-paid benefits, although union members typically enjoy an even greater advantage in
fringe benefit comparisons (see data in Exhibit 7.6).

SOURCE: U.S. Department of Labor, Union Members Summary, News Release, January 23, 2015, Table 4: Median weekly earnings of full-time wage and salary work-
ers, at http://www.bls.gov/news.release/union2.t04.htm

364 PART 2 The Bargaining Process and Outcomes

Summary
Economic issues include wages and a variety of eco-
nomic benefits that make up what is commonly called
the economic package. The negotiation of economic
issues consumes a substantial amount of time, and out-
comes on such issues affect both parties satisfaction
with the negotiation process. Wage differentials
between jobs result from several industrial, occupa-
tional, and regional factors. Job evaluation is a method
used to determine the worth of a job to an organization
and helps to ensure internal wage equity among jobs in
an organization. To attract and retain qualified
employees, an employer must also maintain external
wage equity between similar jobs in the organization
and other organizations competing to hire such labor.

In addition to a base wage, some firms also provide
either individual or group wage incentives as a means
of tying employee job performance more closely to the
attainment of organizational objectives. Negotiators use
a variety of criteria to determine an acceptable wage
structure. Commonly accepted criteria include differ-
ential features of jobs, comparable wages, ability to
pay, productivity, and cost of living.

Because labor agreements usually are negotiated
for periods greater than one year, provisions are com-
monly negotiated to adjust wages during the life of the
contract. Such adjustments include a fixed cents-

per-hour or percentage increase in base wages at speci-
fied time intervals and/or a cost-of-living adjustment
(COLA), which adjusts wages in accordance with
changes in the consumer price index at specified inter-
vals during the contract s term. Another less common
form of wage adjustment during the term of a contract
is the wage re-opener clause, which permits wages to be
renegotiated at a predetermined time typically contin-
gent on the occurrence of some specified event (e.g.,
sales or revenue target goal being achieved).

Employee benefits account for 39 percent of a
unionized employer s payroll dollar compared to 28
percent for a nonunion employer. Numerous types of
benefits exist. The major ones include insurance,
income maintenance, premium pay, paid time off
(e.g., rest period, lunch period, vacation, and holidays),
pensions, and legally required payments (e.g., Social
Security, workers and unemployment compensation).
Employee demands to improve wages and benefits are
being evaluated at the bargaining table in light of the
impact such employer expenditures will likely have on
a firm s ability to compete. Economic outcomes
achieved in negotiations will vary across and within
industries, reflecting the different operating environ-
ments unions and employers confront in today s global
economy.

Key Terms
degree of labor intensiveness, p. 328
Job evaluation, p. 329
Job factors, p. 329
job analysis, p. 330
job description, p. 330
job specification, p. 330
Production standards, p. 332
piece-rate, p. 333
Profit-sharing plans, p. 334
gain sharing plan, p. 334
Scanlon plan, p. 335
Rucker plan, p. 335
improshare plan, p. 335
skill-based pay (SBP), p. 336
wage spread, p. 338
skill pay differential, p. 340
Two-Tier Wage Plan, p. 340
Wage comparability, p. 343

Me-Too clause, p. 344
ability to pay, p. 344
Labor productivity, p. 345
consumer price index (CPI), p. 349
cost-of-living adjustment (COLA),

p. 349
deferred wage increase, p. 349
wage re-opener, p. 349
back-loaded, p. 350
front-loaded, p. 350
even-loaded, p. 350
Lump-sum pay, p. 351
Patient Protection and Affordable Care

Act, p. 353
preferred provider organization (PPO),

p. 354
health maintenance organization

(HMO), p. 354

High deductible health care plans, p. 354
severance pay, p. 354
supplemental unemployment benefit

plan (SUB), p. 354
Work sharing, p. 355
premium pay, p. 355
Overtime premium pay rate, p. 355
shift differentials, p. 356
reporting pay, p. 356
call-in pay, p. 356
defined benefit pension plan, p. 358
defined contribution pension plan,

p. 358
401(k) plan, p. 358
Employee stock ownership plan

(ESOP), p. 359
defined contribution pension plan,

p. 360

CHAPTER 7 Economic Issues 365

Pension Protection Act of 2006, p. 360
cash balance plan, p. 361
early retirement options, p. 361
vesting, p. 361
Employee Retirement Income Security

Act (ERISA) of 1974, p. 361
cliff vesting schedule, p. 361

graded vesting schedule, p. 361
Elective deferrals, p. 361
Matching contributions, p. 361
Family and Medical Leave Act (FMLA)

of 1993, p. 362
Prepaid legal service plans, p. 363
employee assistance plan (EAP), p. 363

Wellness programs, p. 363
education tuition aid, p. 363
transportation subsidy, p. 363
child-care assistance, p. 363
home computer, p. 363
spillover effect, p. 364

Discussion Questions

1. List the main factors that may help to explain the
wage differential between two different jobs in an
organization with which you are familiar.

2. Explain why job evaluation plans must take into
consideration external and internal factors if they
are to be successful.

3. Assume that labor and management are negoti-
ating a labor agreement and the wage spread
becomes an issue of disagreement management
wants a wider wage spread, and the union wants a
smaller wage spread. Why should management be
cautious about the union s proposal, even though
the total costs may be the same?

4. Which party (union or management) would likely
be in a stronger position to bargain for its pre-
ferred wage outcome under the following condi-
tions and why?

a. High profits, an expanding market share, a
healthy economy, and the cost of living ris-
ing less than 2 percent per year.

b. Low profits, stagnant sales growth, uncer-
tain economic conditions, and a projected 4
percent annual rise in cost of living.

5. Assuming that a firm s costs for employee benefits
are 38 percent of payroll, why doesn t the firm

just let the union determine the manner in which
the amounts are apportioned to various benefits,
such as insurance, holidays, and vacations, with-
out negotiating each specific clause?

6. Which type of pension plan would you prefer to
be covered under (i.e., defined benefit, defined
contribution, or cash balance) and why, if you
were an employee? An employer?

7. To what extent can a union exploit benefit issues
(e.g., health care insurance, pension, child-care
benefits, and family leave) in an effort to organize
more union members? Explain your reasoning.

8. What type of control should an employee have
over shares issued under an employee stock
ownership plan? For example, should an
employee have a right to sell their plan shares at
any time or vote those shares in shareholder
meetings to elect board of director candidates or
approve a merger or bankruptcy plan?

9. Is early retirement (prior to age 62) still a realistic
option for most employees to achieve without
experiencing a substantial decline in their prere-
tirement standard of living?

Exploring the Web

Economic Issues

1. Sources of Economic Data
It is important to know how to find information on
economic indicators that affect wages benefits. Using
the Web site for the Bureau of Labor Statistics at
http://www.bls.gov/, (or its publication, the Monthly
Labor Review) please answer the following questions:

(a) What was the annual inflation rate last year?
(Remember that the inflation rate is the per-
centage change in the consumer price index
over a specific period of time.)

(b) Over a recent 12-month period, did real aver-
age weekly earnings increase 2 percent or
more?

366 PART 2 The Bargaining Process and Outcomes

(c) As of November of last year, which three states
had the highest and which three states had the
lowest unemployment rates?

2. Explore the homepage of the latest National Com-
pensation Survey at http://www.bls.gov/ncs/ (or
http://www.bls.gov/ncs/ncspubs.htm for a list of
some relevant reports) to learn more about occupa-
tional wages, employment cost trends, and the avail-
ability of different types of benefits to employees.

3. Explore the homepage of the Occupational Pay
Relatives (OPR) at http://www.bls.gov/newsrelease/

ncspay.toc.htm to compare wage rates for similar
jobs in different geographic areas.

4. Explore the recent publications by the International
Labor Organization http://www.ilo.org/global/lang–en/
index.htm. Click on research or publications and
find a recently published report that interests you, that
you can download for free (e.g., World Employment and
Social Outlook: Trends). What are the key points of the
report? How do they relate to this chapter? How does
the ILO perspective differ from that of domestic
sources?

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CHAPTER 7 Economic Issues 369

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57. See for example: The New Economy
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370 PART 2 The Bargaining Process and Outcomes

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78. The Bureau of National Affairs, Inc., Employer
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79. The Bureau of National Affairs, Inc., Employer
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82. The Bureau of National Affairs, Inc., Employer
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83. Utility Workers Union of America UWUA Local
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89. U.S. Bureau of Labor Statistics, Medical care
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CHAPTER 7 Economic Issues 373

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91. The Bureau of National Affairs, Inc., Employer
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92. Henry J. Kaiser Family Foundation, 2014
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93. Blue Cross/Blue Shield, IRS provides guidance on
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100. U.S. Bureau of Labor Statistics, Table 33: Paid
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101. Diane Stafford, The Kansas City Star, MO,
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104. U.S. Bureau of Labor Statistics, Table 36: Paid
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105. Central Intelligence Agency, Washington DC,
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107. Ohio Public Employees Retirement System v. Betts,
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108. The Bureau of National Affairs, Inc., Employer
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374 PART 2 The Bargaining Process and Outcomes

109. Ibid, pp. 50 51.
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115. George I. Long, Differences Between Union and
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120. Barbara Apostolou and Nicholas G Apostolou,
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The FASB and IASB Move Toward Conver-
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121. U.S. Department of Labor, What You Should
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CHAPTER 7 Economic Issues 375

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122. Curt Anderson, Congress, Feds Examine Pension
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123. The Bureau of National Affairs, Inc., Employer
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124. U.S. Department of Labor, What You Should
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Healthy Families, Healthy Businesses, and a
Healthy Economy, The Huffington Post, [online
edition], Feb. 13, 2015, at http://www.huffington
post.com/linda-meric/the-healthy-families-act-_b_
6672298.html.

131. AFL-CIO Working Women s Department, Bar
gaining Fact Sheet: Family Leave and Expanding
the Family and Medical Leave Act (Washington,
DC: AFL-CIO, 2001), pp. 1 4; Frederick
L Douglas, Collective Bargaining under the
Family and Medical Leave Act, Labor Law
Journal, 45(2), 1994, pp. 102 105.

132. Scott Smith, Prepaid Legal Services Catching On:
Plans Offer Low Cost Access to a Lawyer, but
Experts Advise Caution, Knight Ridder Tribune
Business News, February 12, 2007, p. 1; Ryan
Mahoney, Prepaid Legal Insurance Plans: Justice
For All? Birmingham Business Journal, 20,
January 17, 2003, pp. 1 3; Charlotte Garvey,
Access to the Law, HR Magazine, 47(9), 2002,

pp. 82 92.
133. The Bureau of National Affairs, Inc., Employer

Bargaining Objectives 2014 (Washington, DC:
Bureau of National Affairs, Inc., 2014), p. 58.

134. Ibid; U.S. Bureau of Labor Statistics, National
Compensation Survey Summary: Table 40: Qual-
ity of Life Benefits, Private Industry Workers,
News Release, March, 2014, at http://www.bls.gov/
ncs/ebs/benefits/2014/ownership/private/table40a.
pdf.

135. Fonda Phillips, Employee Assistance Programs:
A New Way to Control Health Care Costs,

376 PART 2 The Bargaining Process and Outcomes

Employee Benefit Plan Review, 58, August 2003,
pp. 22 24.

136. Peter C. Brewer, Angela Gallo, and Melanie R.
Smith, Getting Fit with Corporate Wellness
Programs, Strategic Finance, 91(11), 2010,
pp. 27 33; Eli R Stoltzfus, Access to Wellness
and Employee Assistance Programs in the United
States, Medical Benefits, 26(13), 2009, pp. 8 9;
Wellness Programs Assist Employees, Reduce

Health Care Costs, Panel Says, Daily Labor
Report, October 22, 2009, p. A-6; The Bureau of
National Affairs, Inc., Employer Bargaining
Objectives 2014 (Washington, DC: Bureau of
National Affairs, Inc., 2014), pp. 42; U.S. Bureau
of Labor Statistics, National Compensation Sur-
vey Summary: Table 40: Quality of Life Benefits,
Private Industry Workers, News Release, March,
2014, at http://www.bls.gov/ncs/ebs/benefits/
2014/ownership/private/table40a.pdf.

137. The Bureau of National Affairs, Inc., Employer
Bargaining Objectives 2014 (Washington, DC:
Bureau of National Affairs, Inc., 2014), pp. 58;
Most Tuition Aid Programs Hold Steady in

Recession, Managing Benefit Plans, 9(7), 2009,
pp. 1, 11 15; Erin White, Theory and Practice:
Corporate Tuition Aid Appears to Keep Workers
Loyal; Studies Reinforce View of Improved
Retention; UTC s Plan Stands Out, Wall Street
Journal, May 21, 2007, p. B-4; Dale K. DuPont,
Tuition Aid That Makes the Grade, HR Maga-

zine, 44(4), 1999, pp. 74 80.
138. The Bureau of National Affairs, Inc., Employer

Bargaining Objectives 2014 (Washington, DC:
Bureau of National Affairs, Inc., 2014), pp. 58;
The Bureau of National Affairs, Inc., Employer
Bargaining Objectives 2010, p. S-22; U.S. Bureau
of Labor Statistics, National Compensation Sur-
vey Summary: Table 40: Quality of Life Benefits,

Private Industry Workers, News Release, March,
2014, at http://www.bls.gov/ncs/ebs/benefits/
2014/ownership/private/table40a.pdf.

139. Greg Lewis, Unionism and Relative Wages in the
United States (Chicago: University of Chicago
Press, 1963).

140. Rudy Fichtenbaum, Labour Market Segmenta-
tion and Union Wage Gaps, Review of Social
Economy, 64(3), 2006, pp. 387 420.

141. George I. Long, Differences Between Union and
Nonunion Compensation, 2001 2011, Monthly
Labor Review, 136(4), April, 2013, pp. 16 23;
David Neumark and Michael L. Wachter,
Union Effects on Nonunion Wages: Evidence

from Panel Data on Industries and Cities,
Industrial and Labor Relations Review 49,
October 1995, pp. 20 38; Richard B. Freeman
and James L. Medoff, The Impact of Collective
Bargaining: Illusion or Reality, in U.S. Indus-
trial Relations 1950 1980: A Critical Assessment,
eds. J. Stieber, R. B. McKersie, and D. Q. Mills
(Madison, WI: Industrial Relations Research
Association, 1981), pp. 53 54; Cihan Bilginsoy,
Union Wage Gap in the U.S. Construction

Sector: 1983 2007, Industrial Relations: A
Journal of Economy and Society, 52(3), 2013,
pp. 677 701.

142. Susan Vroman, The Direction of Wage Spillover
in Manufacturing, Industrial and Labor Relations
Review, 36, October 1982, pp. 102 103; Anil
Verma, What Do Unions Do to the Work place?
Union Effects on Management and HRM Poli-
cies, Journal of Labor Research, 26(3), 2005,
pp. 415 449; Bengt Furåker, and Mattias Bengts-
son, Collective and individual benefits of trade
unions: a multi-level analysis of 21 European
countries, Industrial Relations Journal 44(5/6),
2013, pp. 548 565.

CHAPTER 7 Economic Issues 377

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1 Adding Insult to Injury

Background
At the Zooming-Arrow bus lines (ZA), the mechanics
were represented by a union. Mr. Jordan Haier (the
Grievant), a maintenance mechanic, complained of
severe elbow and arm pain as he removed the cracked
windshield of a bus in November of last year. Conse-
quently, ZA filed a report on his behalf with the state
Worker s Compensation Board. From December to
February, Mr. Haier received therapy and treatment
while working light duty in the Parts Department,
consistent with his physician s restrictions. In late Feb-
ruary, he saw an orthopedic specialist who recom-
mended surgery. Because the company allows
transitional or light duty work for only 90 days, and
because of the impending surgery, Mr. Haier was
placed on full disability as of March 1st.

In mid-March, Mr. Haier applied for a mechanic
position with Wistful Vistas (WV), a competing bus
line. Mr. Haier stated in his WV application that he
currently worked for ZA and that he had previously
been injured on the job. However, he identified no
medical restrictions when he filled out his employment
application. He was hired on March 25th.

Mr. Haier received state Temporary Total Disability
(TTD) payments in the amount of $500 per week while
working as a mechanic for WV from April 8th until April
26th. On April 30th, the Grievant had radial tunnel
decompression surgery and did not work throughout the
month of May. The surgeon authorized the Grievant to
return to work with restrictions on June 5th. ZA did not
allow Mr. Haier to return to work on transitional duty,
pursuant to its 90 day limit. Thus, he remained on leave
and did not return to work at ZA until August 19th.

Meanwhile, WV allowed him to return to work in
July and accommodated his restrictions. On July 29,
the state Worker s Compensation Board notified Mr.
Haier that his TTD payments were being suspended
based upon their discovery of his work for WV.
Upon learning of the Board decision, ZA investigated
and concluded that Mr. Haier had been dishonest with
ZA managers. They terminated his employment on
Sept. 13th for dishonesty. Mr. Haier filed a grievance
and the union appealed his termination decision to
arbitration.

Position of the Company
Mr. Haier has lied to everyone. He obviously lied to
Wistful Vistas about whether there were any restric-
tions on his ability to work when he applied to work
there. He apparently did not tell WV that he was
receiving Worker s Compensation while also employed.
He lied to the state by not telling the government of his
employment by WV at the same time that he was
receiving Worker s Compensation. It is widely known
that it is against state law to work while receiving
Worker s Compensation; the state program is designed
to compensate someone while they recuperate from an
occupational injury or illness. Working jeopardizes this
recovery process because the patient risks worsening
the injury by working.

Finally, the Grievant lied to Zooming-Arrow. On
Sept. 5th, he was interviewed by ZA manager, Andrew
Molzahn, with union steward Tommy Barfield present.
During that interview, Mr. Molzahn asked the Grievant
if he had been working for any Company besides ZA,
and the Grievant responded yes, indicating that he
was working for WV. When Mr. Molzahn asked the
Grievant how long he had been doing full-time, full-
duty work for WV, the Grievant stated that, although
he had been hired in early March, he did not begin
working for WV until several weeks later and that
he had only been given full-duty work after the sur-
geon s restrictions were lifted in August. The time
mentioned was, coincidentally, the time when Worker s
Compensation payments ended. Mr. Haier misled
Mr. Molzahn because he implied that he did no work
for WV prior to August. At no point during this con-
versation did the Grievant mention that he worked for
WV in April, July, or in August prior to coming off of
Worker s Compensation leave. Finally, he admitted to
Mr. Molzahn he really didn t need to abide by the
light duty restrictions imposed by the surgeon. This

suggests that, in the final analysis, either Mr. Haier was
lying to ZA by refusing to return to work in a timely
manner or he was lying to himself, because he now
thinks he can do work that he was actually incapable of
performing.

We note that arbitrators routinely uphold an
employer s right to terminate employees for dishonesty.
Dishonesty is a most serious offense. Both the

378 PART 2 The Bargaining Process and Outcomes

employee and the employer in an employer/employee
relationship have the right to expect honesty, truthful-
ness, and fair dealing in that relationship. Further, tak-
ing wages and benefits under false pretenses constitutes
dishonesty and is just cause for discharge. Mr. Haier
was aware of the company rules: When hired, he signed
and acknowledged receiving both (1) a copy of the col-
lective bargaining agreement, which states that employ-
ees may be disciplined for just cause, and (2) a copy of
the ZA Rulebook. It contains the Company s rule stat-
ing that employees will be subject to severe discipline,
including discharge, for dishonesty. Given Mr. Haier s
awareness of the rules and his deliberately misleading
statements, the arbitrator should uphold the discharge.

Position of the Union
The Union first noted that the employee had a fine
twelve-year work record with ZA; Mr. Haier received
good or excellent overall evaluations on his perfor-

mance appraisals and only two notations in his file for
excessive absences, six and seven years ago. Prior to the
incident requiring surgery, Mr. Haier had been injured
at work twice. Neither was serious and no paid time off
was taken for recuperation.

Mr. Haier is a conscientious employee: When on a
ladder, removing the cracked windshield from the bus,
the seal tore loose and it was all he could do to stop the
windshield from crashing down on another mechanic
who was below, replacing a light bulb. Whenever he
had a doctor s visit or received feedback from a physi-
cal therapist, Mr. Haier turned in a doctor s note to ZA
and reported his prognosis for returning to work.

During the past nine years, Mr. Haier has held a
second job with various other companies in the area as
a mechanic. Because he is supporting his elderly mother
who is in assisted living, Mr. Haier has a need for
additional income. He never hid the fact that he worked
a second job while working at ZA, and ZA was aware of
Mr. Haier s second jobs because at times he even came
to work at ZA wearing his uniform from the second job.

Our client (the Grievant) denies lying to WV on
his job application. During that time, he was shuttling
back and forth between doctors, specialists, and testing
technicians. Although one specialist had recommended
surgery, no clear diagnoses or treatment plan had been
formulated and agreed upon at the time he filled out
the WV application. Mr. Haier s duties at WV did not
endanger recovery from his injury: He changed oil,
replaced lamps, and reprogrammed software in busses.
After surgery, he trained other mechanics while doing

other light duty tasks. He could have done similar work
at ZA; however, ZA had a policy limiting light duty
to 90 days.

ZA management did not follow proper disciplinary
procedure. When meeting with the Grievant on Septem-
ber 5th, Mr. Molzahn did not indicate that the purpose
of the meeting was disciplinary or that Mr. Haier might
be terminated. It is customary for the Union to be
informed of a discipline/discharge meeting and to have
time to prepare to present the employee s case.

This opportunity was not afforded to the union. Our
client was honest in his answers to the questions that
Mr. Molzahn asked, as he asked them. For example, Mr.
Molzahn only asked about full-duty work at WV; he did
not ask about light-duty work. In addition to not telling
the Grievant the purpose of the meeting, the penalty
imposed was inconsistent with the disciplinary procedure:
Management should have imposed a suspension (if they
believed a penalty was warranted); termination for a first-
time offense is overly harsh and inconsistent with the
principles and rules of progressive discipline.

Finally, regarding the Worker s Compensation
issue, this was the first time Mr. Haier ever collected
worker s compensation benefits. At no time did anyone
explain how Worker s Compensation worked with
respect to securing a job from second employer.
Nobody told me that I couldn t, he said in a sworn

affidavit. He did not know until August that he was not
supposed to collect Worker s Compensation benefits if
he was working. He thought that the Worker s Com-
pensation benefits he received was compensation for
the fact that his 90 days of transitional duty had
elapsed and he could not work for ZA until he was
fully released by his physician to return to work. The
Grievant never retained an attorney to represent him
with respect to this Worker s Compensation claim. It is
common for arbitrators to overturn or reduce
management-imposed discipline when management
bears some degree of responsibility for the offense.
Here, management had a responsibility to explain
what was expected of a ZA employee while receiving
Worker s Compensation particularly since managers
knew that the Grievant routinely worked other jobs.
In terms of duplicate payment, Mr. Haier received
both a paycheck and a state payment for only three
weeks in April; state payments would have resumed
in late July, but the duplication was discovered and
state payments stopped. The Grievant offered to
repay the money to the state (with interest) if that is
appropriate. Mr. Haier may have been guilty of not

CHAPTER 7 Economic Issues 379

asking enough questions in advance; however, he is
clearly not guilty of dishonesty.

In conclusion, the injury was real. Management at
ZA has failed to prove dishonesty and they have failed
to prove intent to defraud, given that Mr. Haier kept the
company informed of his diagnosis and recovery and he
answered all questions managers posed to him. To dis-
charge a twelve-year employee with a fine work record
because of ignorance of how a complex government enti-
tlement program works while recovering from an acci-
dent is (literally) adding insult to injury.

Relevant Contract Clause: Appendix G: Memoran-
dum of Understanding

Article G-7 Discipline Employees will neither be
disciplined nor will entries be made against their
records without just cause. Use of the term just
cause: Just cause includes violation of Company
rules, regulations and instructions not inconsistent
with this Agreement. When discipline is issued,
employees will be given written notice specifying
the charges and penalty by hand delivery with signed
acknowledgment of receipt. Notification will be furn-
ished to the appropriate Union shop steward.

Relevant Work Rule: Manual of Rules & Regula-
tions Applicable to Maintenance Employees

Part I General Rules for Maintenance Employees
7. Discipline: Maintenance employees may be disci-
plined with penalties up to and including discharge.
It would be impractical in this Manual to set forth
the extent to which every act shall subject an
employee to discipline. As a general rule, however,
a violation involving violence, theft or dishonesty,

possession of deadly weapons, tampering with safety
devices and guards, or unapproved use of Company
property, will be considered as a very serious viola-
tion and may subject the employee to severe disci-
pline, up to and including discharge.

Questions
1. In this case, the burden of proof is on management

to prove that the Grievant was dishonest. Have
they proven this? Justify your answer.

2. It has been said that ignorance of the law is no
excuse for avoiding criminal punishment. To what
extent is ignorance of the law a reasonable defense
for avoiding termination in employment? To what
extent did managers bear responsibility for Mr.
Haier s becoming informed about how the state
Worker s Compensation program works?

3. Many points made by Zooming-Arrow managers
involved Mr. Haier s actions that did not involve the
company; they involved his relationship to Wistful
Vistas bus lines. To what extent should the arbitra-
tor consider actions taken by an employee while
moonlighting for another employer?

4. Did managers disregard proper procedure when
they disciplined Mr. Haier? Justify your answer.
How much weight should arbitrators give proce-
dural propriety or impropriety when deciding a case
like this one?

5. If you were the arbitrator, how would you rule?
Justify your decision.

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2 Unilateral Freeze of Defined Benefit Pension Plan

The hospital (employer) and nurses union have main-
tained a bargaining relationship for over 20 years. The
union represents a bargaining unit of 250 registered nurses
employed by the hospital. The current labor agreement
became effective on January 22, 2008, and was scheduled
to expire on January 21, 2011. The labor agreement con-
tained the following contract language under Article 9, Sec-
tion 12, regarding pension and life insurance benefits:

1. Nurses shall participate in the Pension and Life
Insurance Plans available to Hospital Employees
on the same basis as other hospital employees.

a. Full-time and Part-time Regular Nurses
shall be eligible for a free life insurance pol-
icy equivalent to one times the nurse s
annual earnings, starting the first day of
the month following the nurse s date of hire.

b. Full-time and Part-time Regular Nurses
who have completed one (1) year of
counted service and 21 years of age shall
be eligible to join the Hospital s contrib-
utory, defined benefit, pension plan. The
normal retirement age is 65. However,

380 PART 2 The Bargaining Process and Outcomes

reduced benefits are available for partici-
pants who elect early retirement at any
time after their 55th birthday.

During the 2008 2009 time period the stocks in
which the pension s assets were invested significantly
underperformed the expected rate of return. This
resulted in the pension plan being underfunded by
$14.7 million in relation to the projected benefit pay-
ments the fund would be required to pay plan partici-
pants. Pension law allows the plan provider (the
hospital) a period of seven years in which to make up
the underfunded condition. In addition to bargaining
unit members, other nonbargaining unit members also
participate in the hospital s pension plan, although
such individuals are not covered under the contract
language contained in the nurses labor contract.
After internal discussions involving management per-
sonnel, the hospital announced a plan to freeze the
pension plan for all hospital employees. While such a
freeze would not eliminate or reduce already accrued
pension benefits, it would stop the accrual of any addi-
tional pension benefits until such time as the freeze was
removed. The hospital s administrator invited the
nurses union to meet for the purpose of discussing
the proposed pension plan freeze.

The nurses union responded that in its view, the
contract language in Article 9, Section 12, of the con-
tract obligates the hospital to offer a defined pension
benefit plan to all nurses in the bargaining unit who
have met the eligibility criteria. Since the contract was
still in effect, the hospital had no right to unilaterally
change the terms of the existing pension plan without
the union s consent. The union declined to voluntarily
re-open the contract early for purposes of renegotiating

language pertaining to the pension plan but indicated a
willingness to include pension plan modifications dur-
ing the next regularly scheduled contract negotiation
period.

The hospital was disappointed in the union s
refusal to immediately bargain over the proposed pen-
sion plan freeze. Hospital management believes that the
language in the first part of Article 9, Section 12, gives
it the right to make changes in the pension plan so long
as the changes apply to all hospital personnel equally.
The hospital administrator referred to previous minor
changes in the pension plan applicable to all covered
plan participants, which had been implemented by the
hospital without comment from or negotiations with
the union. On January 2, 2010, the hospital implemen-
ted the pension plan freeze applicable to all plan parti-
cipants, including the nurses in the bargaining unit.
The nurses union filed a grievance, and the parties
proceeded to submit the contract dispute to an arbitra-
tor for resolution.

Questions
1. Did the hospital violate Article 9, Section 12, of the

labor agreement when it unilaterally implemented a
pension plan freeze effective January 2, 2010?
Explain your reasoning.

2. If the hospital s action did violate the parties labor
agreement, what would be an appropriate remedy
for the violation?

3. If you were a manager representing the hospital,
would you recommend that the hospital file a bad
faith unfair labor practice charge against the union
over its refusal to engage in mid-term bargaining over
the proposed pension plan freeze? Why or why not?

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3 A Change in the Medical Insurance Plan

The employer designs, installs, and maintains private
telephone systems for customers. Employees in the bar-
gaining unit have been represented for many years by
the union. The parties current collective bargaining
agreement provides for the following medical insurance
benefits:

Basic medical benefits covering reasonable and
customary charges; and major medical benefits with
an unlimited maximum benefit; a dental benefit

plan; and long-term disability benefits. These bene-
fits are described by the specific insurance contracts
to be filed with the Union s district office.

The company had been experiencing declining
profits for several months attributed to a general eco-
nomic recession and the loss of a major client. In June,
the management team reviewed the current situation
and forecast for the firm s short-term future and
decided to adopt a strategy of cutting operating costs.

CHAPTER 7 Economic Issues 381

As part of this strategy, the three top managers of the
firm, who were also its owners, agreed to eliminate
their salaries and lay off two members of the adminis-
trative staff.

The company s principal source of capital funding
was a loan arrangement with a local bank, which per-
mitted the company to borrow up to 80 percent of the
value of current accounts receivable. Whenever a cus-
tomer paid a bill for which the receivables had been
pledged to the bank as collateral for the loan, the pay-
ment had to be applied to reduce the amount of the
outstanding loan. When new business was obtained,
providing additional accounts receivables, the company
could pledge these receivables to the bank and obtain
additional loan capital to continue operations. The
company s current loan was due to expire on Septem-
ber 1, and because of the company s current financial
problems, the bank informed the company managers
that the current loan must be fully paid by the end of
September and no new loan would be issued by the
bank.

At about this same time the company was noti-
fied by its current insurance carrier that medical
insurance premium costs for the company s
employee coverage would be increasing by 40 per-
cent to a total of $28,000 per month. The insurance
carrier also requested an advance payment equiva-
lent to two months premium expense to continue
the coverage because the company had been late in
making premium payments in the past. The com-
pany president did not believe the company could
afford to make the higher insurance premium pay-
ments and, therefore, found another insurance com-
pany that would provide medical insurance coverage
for employees at a cost of $22,000 per month. A
meeting was requested by management officials
with union representatives to inform the union
about the new medical insurance plan.

The meeting occurred on October 8, at which time
management explained the new medical insurance plan
to union officials. The only significant difference
between the old and new plans concerned the prescrip-
tion drug benefit. Under the old plan employees were
issued a prescription card that allowed the employee to
fill any prescription for a cost of $4. The new plan
would require each employee to pay a deductible
amount before the insurance plan would cover any pre-
scription drug expenses. Covered prescription drug
expenses under the new plan would be reimbursed to
the employee at the rate of 80 percent of the employee s

actual cost. The company estimated the new plan
would save the firm $26,000 annually in premium
cost compared to the current cost of the existing medi-
cal insurance plan. Management further asserted that
the new insurance plan complied with the parties con-
tractual language to provide medical insurance cover-
age. At this same meeting the company president also
informed union leaders that management would like to
reduce current employee wage rates by 20 percent
to enable the firm to submit more cost-effective bids
to obtain new customer orders.

Union representatives asked several questions
about the medical insurance plan described by man-
agement officials, not all of which managers could
answer. Company officials provided the union with
the name and address of the new insurance carrier
and suggested the union contact the carrier directly
for detailed information about the plan. Union offi-
cials subsequently held a meeting with bargaining
unit members at which the company s proposals to
cut wages 20 percent and change insurance carriers
were discussed. Employees voted unanimously to
reject both proposed changes. Employees were partic-
ularly concerned about the lack of a drug prescription
card under the new medical insurance plan. Union
officials reported the results of the employees vote to
management.

Upon learning of the employees negative vote, the
company president told union leaders that they must
not have explained the new medical plan to employees
in the right way. Management requested that the union
hold another meeting with employees at which man-
agement representatives could explain the new medical
insurance plan to employees. Union officials agreed to
the meeting, provided union officials were also present
when managers spoke to the employees.

On the date of the scheduled employee meeting,
the local union president was tied up on union business
and did not arrive at the meeting until 25 minutes after
it had begun. The local union president stated that
when he arrived management officials were already in
the process of explaining the new medical insurance
plan to the assembled employees and had passed out
enrollment cards for employees to fill out for the new
plan. The local union president advised employees not
to sign the enrollment cards because the union had not
agreed to the new medical insurance plan. The com-
pany president replied that the change needed to be
made quickly, and he had already decided to change
carriers and adopt the new insurance plan.

382 PART 2 The Bargaining Process and Outcomes

Questions
1. In your opinion, was management s request to

change the insurance carrier (plan) reasonable?
Explain your reasoning.

2. In your opinion, was it reasonable for employees to
oppose the new insurance plan because they per-
ceived the prescription drug benefit would shift
substantial new cost to them compared to the
existing (old) plan? Explain your reasoning.

3. Is it the union s job to represent the views of the
majority of its members to management or try to
change union members views to be consistent with
management s preferred business strategy?

4. Does the employer have a legal right to implement
the change to a new insurance carrier (medical
insurance plan) in this case without bargaining with
the union? Why or why not?

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4 Does the Deputy Sheriff Deserve a Pay Raise?

On November 4, 2014, the vacant position of Sheriff
Deputy-Major with a salary range of $71,172 to
$108,180 was announced by the Stonewall County Per-
sonnel Department. Mrs. Jodi Davis applied for the
position and was hired and began her service as a Sher-
iff Deputy-Major on December 30, 2014. Based on the
Sheriff s recommendation, as approved by Personnel
Director, her starting salary was $90,000 annually.

In early February of 2015, Deputy-Major Rudy Jas-
per filed a grievance using the grievance procedure
found in the collective bargaining agreement between
the State Law Enforcement Officers Association (here-
after the Union) and the County. In the grievance, he
argued that he was more qualified than Mrs. Davis and
therefore, his wage should be adjusted upward to
$90,000 also.

Position of the Union:
The Grievant, Mr. Jasper, noted that he had been pro-
moted to a position of Deputy Sheriff-Major on July 27,
2014, and is in the same salary range as the newly hired
employee, but is currently receiving an annual salary of
only $71,172, which is $18,828 less than that of newly
hired employee. The Grievant made the following
points:

Deputy Sheriff-Major Davis is not Jail Certified,
although the Jail is 70 percent of the County
Sheriff s Office and all other Deputy Sheriff-Majors
are Jail Certified.
The newly hired employee s qualifications are not
in one of the professional, technical and scientific
courses of study of a highly specialized nature
listed in the contract. For example, she does not

have any training in forensics which might justify
a higher salary.
Sheriff Travis Jackson, Chief Deputy Billy Carter,
Deputy Chief Bobby Graham, and
Chief Jailer David Niemi all support Grievant
receiving equal pay of $90,000.

Chief Deputy Billy Carter, Mr. Jasper s Depart-
ment Head, also testified that:
Major Jasper has 21 years of experience in the

Sheriff s Office and has performed his tasks and
duties expertly both as a Deputy Sheriff, and now
as a Sheriff Deputy-Major.
Major Jasper has worked in the Sheriff Office and
Jail Bureau Administration and is currently
responsible for the 24 hour operations of the jail
housing and security operations. Also under his
management are the emergency response team and
code red mass evacuation operations.
As command staff in the Jail Bureau, at any given
time, the grievant is responsible for the safety and
security of over 1,500 inmates and 400+ sworn and
civilian employees.
The Union also asserted that the County did

not follow a relevant provision of the contract which
stated:

If a new employee is employed at a salary rate above the
minimum pay rate, the affected Department Head
shall review the education and work experience, and
performance evaluation of satisfactory current
employees in his/her department holding the same job
title and salary range of the newly hired employee to
determine if their qualifications meet and/or exceed
those of the newly hired employee. The affected

CHAPTER 7 Economic Issues 383

Department Head shall recommend that the salaries of
all current employees meeting and/or exceeding the
qualifications of the newly hired employees be adjusted
upward to equal the salary paid to the newly hired
employee. This recommendation shall be made in
writing and shall be implemented, if approved, by the
Personnel Director.

Mr. Jasper submitted relevant education and work
experience documents (including a letter from Billy Carter
which was essentially identical to his above testimony) to
Ms. Carolyn Beauregard, Personnel Director, when he filed
his grievance. However, he asserted that she ignored these,
only sending a copy of his written grievance back to him
two weeks later stating, Request denied. This led him
to conclude that the salary decision was capricious.

Finally, The Grievant alleged that Ms. Beauregard
was negligent in not verifying what Mrs. Davis had put
on her application blank. Ms. Beauregard stated in her
justification for the higher salary that Mrs. Davis had
been a Police Chief and had supervised eight (8) divi-
sions of officers, but Mrs. Davis did not have such exten-
sive responsibilities. Ms. Beauregard did not verify Mrs.
Davis duties. If she had done so, she would have real-
ized that Mrs. Davis was Police Chief of a County
School District for four years, supervising only three
(3) divisions of officers (not eight), few of which worked
with hardened criminals. Clearly, Mr. Jasper was far
more qualified for the position than Mrs. Davis; thus,
he deserves a higher level of compensation.

Position of the Stonewall County Personnel
Department:
The grievance should be denied for three reasons: First,
Mrs. Davis possessed unique and exceptional qualifica-
tions, warranting a higher salary. Second, Mr. Jasper had
recently been promoted and had received a pay raise as a
result of the promotion; another raise would be inappro-
priate. Third, the contract gave Ms. Beauregard the sole
authority to make a decision regarding the raise request
and the arbitrator should defer to her professional judg-
ment, based on the wording of the contract. Each of
these reasons will be explored.

After Mr. Jasper initially filed his grievance,
Ms. Beauregard reviewed his qualifications and com-
pared those to Mrs. Davis. Ms. Beauregard concluded
that Mrs. Davis displayed a professional ability that
warranted a salary far higher than the minimum of
$71,172.00. By contrast, Mr. Jasper has not met the
burden of proof that he is clearly more qualified than

Mrs. Davis. Nor has he proven that her decision was in
error. Consider the following facts:

Mrs. Davis obtained a master s degree in Public
Administration. Both her undergraduate and
graduate degrees were earned with a 4.0 GPA.
Mr. Jasper only had a two-year technical college
degree and a 2.96 GPA.
Mrs. Davis had worked as a private security guard
in retail for two years between attending college
and graduate school.
Mrs. Davis was director of an antigang program, and
later as a Chief of Police in a large suburban school
district in another county in the same state for four
years. The fact that her department was housed in a
school district does not diminish the fact that she was
solely responsible for the operations of her depart-
ment. The Grievant, Mr. Jasper, also has adminis-
trative responsibilities; however, he was never Chief
of Police. Prior to his promotion, his only experience
was as Deputy Sheriff.
At the school district, Mrs. Davis supervised and
worked with staff in multiple jobs and with various
types of assignments and qualifications (e.g.,
undercover school detectives, narcotics officers,
staff who use electronic surveillance, office per-
sonnel). Mr. Jasper manages more people, but
almost all are in a few job categories within the
classification of Jailer. Mrs. Davis job requires
greater managerial skill and sensitivity.
Mrs. Davis current job duties include supervising
72 administrative professionals in the Sheriff s
office; it also includes administrative oversight of
the Forensics Laboratory, meeting weekly with the
lab director. She reports directly to the Sheriff on
matters that range from budgets to ongoing crim-
inal investigations.
Ms. Beauregard admits to making one minor error.
When she read Mrs. Davis application, she mis-read
the number of divisions Mrs. Davis had supervised.
The number 3 looked like an 8 she testified.

After the error had been brought to her attention,
Ms. Beauregard submitted a corrected letter.

Second, in July, 2014, at the time of his pro-
motion, the salary of Mr. Jasper, a current
employee, was adjusted to $71,172.00 based on
Section XII, paragraph 4, ( Promotions ) which
reads, in pertinent part: When a bargaining unit
employee is promoted, the salary shall be adjusted
upward by 10% or to the minimum of the new

384 PART 2 The Bargaining Process and Outcomes

position s pay range, whichever is greater. Mr. Jas-
per s salary was adjusted by more than 10 percent to
reach the minimum of the pay grade for his new job.
Further adjustment only seven months after a pro-
motion is not required by the bargaining agreement;
he is not entitled to two pay raises for receiving one
promotion.

Salary compression (and even inversion) is the
norm in law enforcement. In order to hire talent of
the caliber of Mrs. Davis, it is necessary to pay a com-
petitive salary. The Personnel Administration depart-
ment has been given great latitude to negotiate
salaries with new hires in order to bring quality talent
into the County. Unfortunately for Mr. Jasper, pay
raises from promotions are strictly governed by lan-
guage in the collective bargaining agreement. Further,
there is no past practice of making the type of adjust-
ment he requests. His salary was set in accordance with
the contract clause governing promotions and no fur-
ther adjustment is allowed.

Third, there are procedural deficiencies to Mr. Jas-
per s claim. He first filed a grievance using the County
grievance procedure (not reproduced here). With that
procedure, a Grievance Committee made up of fellow
employees from other departments turned down his
grievance. Then, he and the union filed a grievance
based on the collective bargaining agreement. The rele-
vant contract clause regarding wage adjustments pro-
vides that the final decision resides with the Personnel
Director. It reads that any Department Head recom-
mendation for an employee s pay raise shall be imple-
mented, if approved, by the Personnel Director. The
authority to approve also includes the authority to
deny. If the Personnel Director did not have the
authority to deny raise requests, then this phrase
would not be in the clause and any Department Head
could give raises whenever he/she wished. Pay adjust-
ment decisions always involve professional judgment

based on the evidence and Ms. Beauregard has great
experience making these judgments as she has been
the Personnel Director for the County for 27 years. Fur-
ther, the collective bargaining agreement does not
require that Ms. Beauregard give a Grievant a point-
by-point analysis of the reasoning behind her conclu-
sion. Just because she did not tell Mr. Jasper the reasons
why his request was denied does not mean that the
decision was capricious. As described above, the deci-
sion was a reasoned judgment, based on relevant facts
and comparisons. The burden of proof is upon the
Grievant to demonstrate that the decision was capri-
cious and violated provisions of the collective bargain-
ing agreement; the Grievant has not proven such
charges. Therefore, the arbitrator should defer to
managerial authority in this matter.

Questions
1. If you were Ms. Beauregard, how would you com-

pare Mrs. Davis and Mr. Jasper s qualifications?
What factors would be most important to you?

2. Analyze the key arguments that each side makes.
Which are most compelling? Why?

3. Management argues that the arbitrator should defer
to managerial judgment. Generally, under what
conditions should arbitrators defer to managerial
authority and under what conditions should they
not?

4. Is the job of the arbitrator to determine whether the
Grievant deserves higher pay or is the arbitrator s job
simply to determine whether or not the collective
bargaining agreement has been violated? Or both?

5. If you were to re-write the language of the wage-
adjustment contract clause, perhaps incorporating
concepts covered in this chapter (e.g., skill-based
pay, job evaluation, two-tier pay plan), how would
you improve the clause? Justify your revision.

CHAPTER 7 Economic Issues 385

.g

CLASSROOM EXERCISE

7.1
Employee Benefits

Directions:

A. From an employee s perspective, rank order the importance of the following
employee benefits as a part of a compensation plan where 1 the most impor-
tant benefit and 16 the least important benefit.

___Employee assistance plan
___Defined benefit pension plan
___Defined contribution pension plan
___Cash balance pension plan
___Major medical insurance plan
___Life and accidental death benefit
___Short- and long-term disability

benefit
___Prepaid legal service plan

___Child-care assistance plan
___Education tuition aid
___Transportation reimbursement
___Supplemental unemployment

benefit
___Paid holidays
___Paid vacation
___Paid sick leave
___Dental insurance plan

B. List the factors that were most important to you in determining your ranking of
priorities among the benefits listed in part A (e.g., age, sex, current job, prior
work experience, marital status, number of dependents, expected time period
until retirement, or knowledge of employment conditions at other firms).

C. If asked to perform the same ranking task from an employer s perspective, would
your rankings change, and if so, how or why?

386

CHAPTER 8

Administrative Issues

I KEPT THINKING about the words I had just read: Thanks to
destructive outsourcing and faltering investments in research,
the U.S. has lost or is on the verge of losing its ability to develop
and manufacture a slew of high tech products average
weekly wages have essentially remained flat since 1980, mean-
ing the U.S. economy has been unable to provide a rising stan-
dard of living for the majority of its people. In making their
decisions to outsource, executives were heeding the advice
du jour of business gurus and Wall Street: Focus on your core
competencies, off-load your low value-added activities, and re-
deploy the savings to innovation, the true source of your com-
petitive advantage. 1 The problem is that such a single-minded
focus on short-term cost savings has resulted in a continuous
outsourcing of not just repetitive assembly tasks but also
more complex engineering and professional jobs so that fewer
hourly employees or managers today have a real sense of job
security.2

Questions
1. Of course there are still highly competent and motivated

individuals working hard to succeed in today s economy, but
are these individuals becoming the exception rather than the
norm?

2. Should Americans be concerned about the ability of the U.S.
economy to remain competitive in the future, or are the
views expressed in the opening paragraph too alarmist and
unrealistic?

3. What are some ideas that might improve U.S. competitive-
ness in the future, and do you see any evidence that any of
these ideas are being implemented today?

387

Most chapters of this book relate to a single topic, but this is a chapter that addressesseveral important administrative issues, each of which has important economic and
work environment consequences for both labor and management. This chapter focuses
on five broad areas that impact both contract negotiation and administration issues:
(1) technological change and its impact on labor relations, (2) job security and seniority,
(3) employee training, (4) work restructuring, and (5) safety and health.

Management seeks flexibility in arranging work content and schedules to maximize
efficiency. Unions seek to protect employees job security and the conditions under which
work is performed when workplace changes occur. The attempts of managers (owners)
and union representatives (employees) to achieve their respective interests are discussed
throughout this chapter.

Technological Change and Job Protection

Technological change refers to changes in the production process that result from the
introduction of laborsaving machinery and changes in material handling and workflow.
Automation, a type of technological change, goes one step further in that machines
perform tasks formerly performed by humans, and the human operator is replaced by
automatic controls.3 Technological change may affect a job by altering the tasks or
equipment used and thus the job skills required, the pace or scheduling of the work, or
a job s characteristics (e.g., degree of exposure to health and safety hazards, frequency
of interaction with co-workers, closeness of supervision, job stress level).

Use of new technology is a means by which firms and nations seek to gain a com-
petitive advantage in the arena of international competition. Often the competitive
advantage gained from the introduction of new technology is short lived. Such technol-
ogy often becomes available to competitors fairly rapidly, lessening the competitive
advantage of being the first to possess the technology. Technology is being used to
streamline and automate operations and reduce the need for labor, while also requiring
remaining workers to do more. 4 Long-term competitive advantage derives from the
ability of workers to apply technology in a highly efficient manner. This requires workers
who are well trained and motivated.

Technological change generally occurs in three phases: (1) the development phase, in
which key choices about the design and configuration of the new technology are made;
(2) the resource allocation phase, in which claims for resources by different organizational
units are presented and evaluated against performance criteria; and (3) the implementation
phase, in which the new technology is constructed, put into service, and modified if necessary.
The third phase, implementation, is typically when a union enters the picture because imple-
mentation of new technologies affects the work structure and consequently the employees
performing the job tasks. The consequences of the implementation of new technologies con-
cern employees, as well as the union that represents their job-related interest.5 New technol-
ogy can impact the number of jobs available, job content, and a job s compensation rate.
Unions seek to protect the job interests of their members affected by technological change
through (1) negotiating contract language (see later discussion of work scheduling, electronic
monitoring, outsourcing, seniority rights); (2) lobbying for or against government legislation
and assistance programs (see the later discussion of Worker Adjustment Retraining and Noti-
fication Act); and (3) providing direct services to members (e.g., career counseling, job refer-
ral, short-term economic support, retraining, social psychological support).

Unions and employers have a long history of bargaining over the effects of techno-
logical change. Approximately 26 percent of labor agreements contain some language
that addresses in some manner the introduction of new technology. Only 17 percent of

388 PART 2 The Bargaining Process and Outcomes

labor contracts provide for advance notification or discussion with the union prior to the
introduction of new technology, and only 8 percent require an employer to retrain work-
ers displaced by technological change.6 Sometimes, new technology can have widespread
effects. One study reported that, in almost one-third of negotiations, labor and manage-
ment discussed the creation of a substantially new work system (e.g., team-based work
system, job rotation, worker participation, pay for knowledge, profit sharing, or gain
sharing). The parties reached agreement on these types of work systems in less than
half of the negotiations where the proposal was discussed (less than 16 percent of con-
tract settlements).7

These low percentages are partially due to the fact that current labor law classifies
most decisions concerning the decision to implement new technology as a nonmanda-
tory bargaining subject. Further, many negotiated management rights clauses state
that decisions about the adoption of new technology are solely management s preroga-
tive. This limits a union s bargaining role to issues regarding the effects of technology on
members interests concerning wages, hours, and working conditions after management
decides what technology to use and when, where, and how to implement it. Essentially
this forces a union to adopt a reactive rather than proactive stance in seeking to repre-
sent bargaining unit members interests on technology change decisions. However, this
does not mean that management can ignore these interests. The NLRB has ruled that
bargaining over the wage, hour, and working condition consequences of managerial deci-
sions (sometimes called effects bargaining ) is mandatory for decisions such as facility
closures and technological decisions. For example, a grocery store replaced some check-
out lines with self-service checkout machines. The store was found guilty of an unfair
labor practice because it refused to bargain with its union about the effects of this tech-
nological decision on the union members work. As a remedy, the Administrative Law
Judge ordered the self-service machines removed until management bargained with the
union over the effects of their decision.8

Critics of the current legal designation of the decision to implement technology as a
nonmandatory bargaining subject argue that permitting unions to bargain over the full
range of issues which arise concerning technology would provide valuable information
to management from employees who work most closely with the technology, likely
speed the adoption of new technologies, and enhance employees acceptance of techno-
logical change efforts, benefiting the interests of both management and employees.9

Some companies do see advantages in voluntarily involving employees and union repre-
sentatives in the early stages of selecting new technology as a means of achieving a sustain-
able competitive advantage.10 Employees and union representatives may accompany
engineers on trips to vendors, provide input to assess the merits of available technologies,
and render opinions on what types of equipment to purchase. Employees may contribute
valuable insight into how to operate the equipment and how to organize the work process
after the new technology is implemented. When a union is consulted early in the technology
development process, it is more likely to become an advocate for the new technology and is
better able to assure its members that the technology will secure more jobs than it threatens.

The Joseph Abboud clothing manufacturing plant located in Bedford, Massachu-
setts, is an example of a labor management relationship that has cooperated to imple-
ment a lean manufacturing system. This system features work teams and employee
skill cross-training to ensure high-quality production and timely delivery of suits to retail
merchants at a competitive price.11 Local union representatives understood that low-
wage competition from imported clothing required a flexible approach to negotiating
work rules to improve productivity and product sales, enabling the company to maintain
higher employee compensation while adding additional jobs to the bargaining unit.

CHAPTER 8 Administrative Issues 389

In the midst of the Great Recession, GE Appliance and Lighting announced plans to
invest $432 million and create several hundred new jobs by establishing four U.S.
Centers of Excellence for Design and Manufacture of Refrigeration Products. Located in
Alabama, Indiana, Kentucky, and Tennessee, James P. Campbell, President and CEO of
GE Appliances and Lighting, said: This type of investment would have been impossible
without the tremendous work underway at these plants to drive down costs and improve
productivity and efficiency. With the new center of excellence model, the adoption of
lean manufacturing and agreements by employees and unions to freeze current wages
and adopt competitive wage rates for new employees, these facilities are evidence of a
growing American manufacturing renewal. The Louisville, Kentucky, facility hired new
workers to make high-end, French-door style refrigerators, although sales were initially
slower than expected and 500 workers were temporarily laid off in 2013.12

An example of labor conflict leading to an altered labor management relationship is the
American Axle & Manufacturing (AAM) plant in Three Rivers, Michigan.13 Following a bit-
ter strike at the plant in 2008, the local union members decided to split from the national
union bargaining pattern and negotiate their own deal with plant management. Management
credits the resulting substantially lower labor cost under the new labor agreement as a key
factor in permitting the company to expand the number and types of products produced at
the plant, including bringing back some work which had been outsourced. Between 2008 and
2010 the plant expanded, creating 24 salaried and 352 hourly jobs. The company and union
cooperated in introducing lean manufacturing and other continuous improvement techni-
ques to make the plant globally competitive. Plant managers credited employees for being
open to changing work practices; managers provided 40 hours of training annually per
employee with an emphasis on cross-training to make employee work assignments more flex-
ible. In 2013, the company announced a new investment in the facility of $100 million and
the addition of 500 more jobs. Meanwhile, union negotiations with the company in other
communities had a different outcome; the firm closed facilities in Detroit and New York
and instead expanded its production facilities in Mexico.

The International Association of Machinists (IAM) offers an integrated partnership
program, called a high-performance work organization (HPWO), to employers with
whom the union has a bargaining relationship.14 The program can enable an employer to
save and create job opportunities while remaining globally competitive and stimulating
company growth. The HPWO envisions a partnership in which both management and
labor take responsibility for ensuring that the firm will adapt to competitive market and
technological demands by sharing information, continuously training workers, and adapting
work rules to meet each firm s needs (see the following Labor Relations in Action feature).
Other unions are also engaged in negotiating technology-related issues with employers. For
example, General Electric and Westinghouse negotiated provisions with the International
Brotherhood of Electrical Workers that require advance notification of technology change,
committees, retraining, and safety measures for people who work with robots.15

Although more firms are seeking to involve and empower employees in adapting to
technological change, many firms are not.16 If a bargaining relationship is characterized by
mistrust, then leaders on either side are probably not committed to developing a more cooper-
ative relationship; this, in turn, will inhibit union acceptance of managers technology change
efforts. The need for consultation with the workforce may be viewed as a loss of authority by
some supervisors and middle managers, who may resist transferring their power to employees.
For innovative work practices to be effective, upper management and union leaders must
communicate their commitment to cooperation to all employees within the organization.

Unions are often portrayed as being obstacles to technological change in the work-
place because many Americans remember publicity given to railroad firemen (those who

390 PART 2 The Bargaining Process and Outcomes

shoveled coal into the fire box on steam engines) who wanted to remain on diesel
engines, the reluctance of plumbers to adapt to plastic pipes, airline crew members who
resisted a reduction in the number of cockpit crew members needed to fly more modern
aircraft, or the resistance of typographers to computerized typesetting in the newspaper
industry. Unions are often depicted as negotiating complex work rules that restrict man-
agement s ability to manage the workplace and management s right to introduce techno-
logical advancements. Yet some unions have clearly encouraged changes in job design,
skills training, employee involvement in decision making, teamwork, gain sharing,
improved labor management communications, and more cooperative labor relations.17

In fact, unions have generally accepted the doctrine of high wages, high productivity,
and low labor costs as the best approach to maintaining income growth and employ-
ment stability for union members. As Joseph Hunt, president of the Iron Workers
union, has stated: We have to make our contractors more competitive to gain market
share. If they don t have a job, there s no job for us [our members] to work on. 18

Benefits of Technological Change
Technological change can have both positive and negative effects on employees, and a
union must represent members affected by both types of change. In general, technologi-
cal progress in the United States has resulted in higher productivity, the elimination of
many menial and dangerous jobs, higher wages, shorter hours, and a higher standard of

LABOR RELATIONS IN ACTION
High Performance Work Organization (HPWO) Partnership Principles

Union and management leaders responsible for their
respective organizations are asked to write and sign a
partnership agreement signifying a real commitment to
partnership as a means of implementing meaningful
change in the work environment. The following princi-
ples help define what components comprise a true
partnership:

Shared decision making concerning issues critical
to the competitiveness of the business, including
costs and work processes.
Development of continuous learning and skill build-
ing to meet the changing education needs of all
employees.
Continuous integration of leading-edge technology
that utilizes the skills, knowledge, and insights of
employees. Leading-edge technology includes
equipment, new materials, work processes, and
labor relations intended to both stabilize and grow
the business and the workforce.
A co-determined definition of quality and its contin-
uous measurement and improvement. Quality
includes meeting customers expectations and is
critical to the ability of the firm to grow and its
employees to prosper.
Shared technical and financial information. Access
to relevant and timely information is necessary for

parties to make appropriate decisions. Open and
honest communication between labor and manage-
ment serves to build trust in a partner.
Ongoing joint determination of costs such as
design, prototype development, production, and
administrative overhead. This requires a cost
accounting system capable of assigning cost to var-
ious elements in the work process.
Acceptance of the union as an independently chosen
representative of employees. Through the collective
bargaining process, including the use of a contract
grievance procedure, the parties can seek to resolve
conflicts of interest which may arise while seeking to
expand opportunities for cooperation.
Union and management leaders willing to advocate
the partnership concept and motivate all employees
to participate in bringing about positive workplace
changes.
A jointly developed strategic business plan. The
plan should cover current products and services,
development of new products and services, and
the goals and direction to be taken by the partners
to achieve future growth.

SOURCE: International Association of Machinists, HPWO Components, October 19,
2009, pp. 1 3 at http://www.goiam.org/; International Association of Machinists,
HPWO Ten Steps, October 19, 2009, pp. 1 2 at http://www.goiam.org/.

391

living.19 Technological advances have brought about numerous positive effects, such as
(1) the ability to produce greater wealth with less effort; (2) machinery performing
tasks that humans cannot complete; (3) machines performing tasks more reliably and
efficiently than humans, thereby lowering production costs and permitting products to
be sold at lower prices; (4) improved working conditions by minimizing backbreaking
or hazardous work assignments; and (5) improved skill levels for some workers, leading
to increases in pay.

Negative Effects of Technological Change
Although technological change has many positive effects, it may also produce some negative
effects. One explanation for the lack of job growth in recent years in the U.S. economy is
the fact that due to technology advances, jobs are being eliminated at a faster rate than new
jobs are being created, without any decline in productivity. New technology probably elim-
inates more U.S. jobs than does free trade, and although new jobs are often created, they
often call for different skills than were needed for the eliminated jobs.20 Further, job elimi-
nation due to technological change is a phenomenon occurring in virtually every industrial-
ized country in the world as employers adopt a similar competitive business strategy.

Technological advances also permit a reduction in the responsibility or skill level
required to perform some jobs (deskilling), resulting in lower employee compensation
and less job security for those employees holding such jobs. However, in some cases
technology-enhanced machinery such as robotics may be less able to anticipate and
adjust to unforeseen circumstances or changes in the operating environment compared
to a well-trained human operator. Technology often carries higher capital costs to
acquire it, which must be paid for through a combination of anticipated labor cost sav-
ings and a higher productivity rate. To the extent that competitors adopt similar technol-
ogy, increasing productivity may flood the market with an excess supply of a product or
service relative to the market demand for that product or service. Such a supply demand
imbalance would likely result in a declining product price, thereby requiring additional
time (expense) to recover a firm s capital investment in technology. This situation is
exacerbated if a company is forced to borrow capital funds in an environment of rising
interest rates in order to purchase technological enhancements.

Technology has also increased the sophistication of methods used to monitor
employees at the workplace. A survey of 304 firms by the American Management Asso-
ciation reports that 84 percent of companies have e-mail usage and content policies,
43 percent engage in some form of active e-mail monitoring, and 24 percent had
employee e-mail subpoenaed in a legal dispute during the previous 12 months.21 Just
over half (51 percent) of 526 firms in another survey reported using video surveillance
to monitor theft, violence, and sabotage; 10 percent monitored on-the-job performance
in certain job categories and 6 percent videotaped all employees.22 Less than 10 percent
used global positioning systems (GPSs) to monitor cell phone usage or track company
vehicles. Technology may be used to monitor an employee s e-mail or other computer
files, employee location, telephone conversations, smart phone applications, and Internet
use to track employee productivity and activity, including counting keystrokes, error
rates, time taken to complete tasks, and time away from a workstation. Data collected
might be used by managers to determine production standards and pay rates, monitor
speed and accuracy of job performance, or take disciplinary or discharge action for failure
to perform in a satisfactory manner consistent with company policies.23

Employers argue that electronic monitoring of employees is a useful way to objec-
tively evaluate their performance, increase productivity, prevent theft or other unlawful
activity on company property, avoid potential legal liability arising from a failure to

392 PART 2 The Bargaining Process and Outcomes

reasonably monitor employee workplace activity, monitor compliance with safety regula-
tions, and plan for future business needs. Union officials often respond that electronic
monitoring can be a source of stress on employees, measures only quantitative aspects
of job performance, erodes employees dignity, and invades employees privacy. Few fed-
eral or state laws provide any significant protection for employee workplace privacy
rights. Employers are often encouraged to reduce employees reasonable expectation of
privacy in the workplace by adopting a policy that clearly states all workplace technol-
ogy, equipment and systems are the property of the company and should be used only
for business related purposes. 24 Most employers inform their employees of company
policies on monitoring activities as well as penalties for violating such policies.

Unions are often under pressure from members to negotiate work rules to provide
reasonable privacy protections from employer monitoring activity. As a mandatory bar-
gaining subject for unionized employers, a union negotiator might propose contract lan-
guage to achieve one or more of the following employment terms or conditions:

An outright ban on one or more types of unreasonable or obtrusive electronic
monitoring activities
A requirement for advance notification to each employee whose performance will be
subject to electronic monitoring
Imposing a beep provision requiring the employer to use a visible light or audible
tone to inform employees when they are being monitored
Prohibiting management from collecting information not directly related to an
employee s work performance
Prohibiting disclosure of employee information collected to other people or compa-
nies without prior employee approval unless in connection with a criminal
investigation
Availability of counseling or other health-related services necessary to manage job
stress or related conditions arising from exposure to electronic monitoring activities

Management negotiators would want to ensure that any agreed-upon electronic
monitoring work rule:

Clearly informs employees that electronic communication equipment (e.g., computer,
cell phone) cannot be misused for unprofessional or inappropriate communications
(e.g., racial slurs, sexual harassment)
Informs employees that electronic communication equipment necessary to perform
assigned job duties will be provided by the company and represents company property
Informs employees that they have no reasonable expectation of privacy in the use
of company property for electronic communications purposes
Requires that employees sign a consent form or provide other evidence acknowl-
edging they have read and understood all electronic monitoring work rules and the
consequences for their violation

Job Security and Personnel Changes

Several reasons account for occupational growth or decline in an economy. These
include (1) technology (new machinery enables fewer workers to be more productive);
(2) changes in business practices (e.g., easy-to-assemble furniture results in retail stores
needing fewer workers to assemble and deliver furniture); (3) contracting work out to
other firms (e.g., an HR department outsourcing the payroll function to a specialized
firm); (4) new or restructured work methods (e.g., cleaning teeth is now usually done

CHAPTER 8 Administrative Issues 393

by dental hygienists rather than dentists); (5) changing consumer tastes (e.g., less
demand for hats means less demand for hat makers).

The shift in employment opportunities from goods-producing (manufacturing) to
service-producing industries (e.g., retail trade, communications, services, transportation,
finance, insurance, and real estate) will continue with professional and service occupa-
tions projected to increase the most both in terms of percentage growth and the actual
number of jobs created between 2012 and 2022.25 An analysis of 22 occupational groups
was made. Over half of the 11 groups with anticipated growth greater than 10 percent
are professional occupations, usually requiring postsecondary training. Three of these
occupational groups are in the health care field. Almost half (46 percent) of the occupa-
tions with projected growth require a bachelor s or higher degree. Examples of occupa-
tional groups that are expected to experience a growth rate in excess of 10 percent over
the next decade include computer and mathematical occupations, health care practi-
tioners, health care support occupations, personal care occupations, construction work-
ers, legal occupations, architectural and engineering occupations, and business and
financial operations occupations.

Some occupations are also expected to experience little growth in employment
opportunities.26 Many of these occupations are related to manufacturing production
jobs or office and administrative support occupations. Technological innovation
enabling gains in productivity with fewer employees along with increased competition
from employers located in lower wage countries have contributed to a projected decline
in employment opportunities in these occupations. Many of the specific occupations
require only on-the-job training for employment. Farming, fishing, and forestry is the
one occupational group where decline is projected.

Finally, changing demographics are having a large impact. Two-thirds of job growth
through 2022 is expected to occur as a result of the need to replace employees who leave
current jobs (e.g., due to retirement) rather than the creation of additional (new) jobs.
Also, many of the jobs showing significant growth are related to the needs of older
adults. As the baby boomers (those born between 1946 and 1964) retire and age, there
will be increased employment in jobs related to providing services (e.g., medical, legal) to
meet their needs.

Job Security and the Changing Psychological Contract
One thing that is not likely to change in the future is the desire of employees and the
unions who represent them to obtain or enhance job security. Much has been written
about the changes in the psychological contract. There has been a decline of the old
contract whereby in exchange for good performance and loyalty, the employer promise
to provide employees secure employment, job training, and periodic improvements in
wages and benefits.

Motivated by a perceived need for flexibility to respond to changing market condi-
tions and a desire to reduce labor costs, many employers offer a new employment con-
tract that shifts the risk and uncertainty of employment to each employee, who is
responsible for ensuring that his or her skills and abilities stay current with available
job requirements. Downsizing, outsourcing, and an expanding variety of contingent
work arrangements are manifestations of the greater job insecurity facing many workers
today. Often, there is a group of core employees whose psychological contract is long-
term and similar to the old contract ; this group is seen as providing the institutional
memory necessary for the organization to function effectively. A second group of con-
tingent workers has a short-term psychological contract, as they provide the firm with
their services for a limited time. They may be classified as independent contractors (who

394 PART 2 The Bargaining Process and Outcomes

cannot unionize under the LMRA), temporary contract workers, or they may be employ-
ees of temporary employment agencies. This latter group of workers usually receives
lower levels of pay and benefits relative to the core employees.

There is some evidence suggesting that company profitability is greatest when core
employees comprise about two-thirds to three-fourths of those working for the firm
using this new type of psychological contract. If there are too many core employees, the
firms do not realize the savings from having lower-paid contingent workers. If the con-
tingent workers constitute a large percentage of the workforce particularly those from
temporary agencies then the core employees react negatively, fearing for their job secu-
rity and exhibiting less loyalty. Turnover also increases, resulting in a loss of experience
and knowledge, and reducing profits. Employees who are wary of their employers
motives also remain skeptical when their employers do fulfill their promises Thus, a
large number of contingent workers often leads to employee dissatisfaction.27

A primary union concern is to ensure that members jobs are protected from elimi-
nation resulting from technological change or unreasonable managerial decision making.
Unions have been able to protect jobs by negotiating contract language concerning sub-
jects such as job security work rules; limits on subcontracting, outsourcing, work assign-
ments and jurisdiction, work scheduling, and the weight accorded seniority in personnel
decisions. Each of these topics will be briefly discussed.

Job Security Work Rules
Job security work rules are provisions that attempt to make jobs more secure, such as
spreading the workload by placing limits on the load that can be carried, restricting the
duties of employees, limiting the number of machines one operator can tend to, mandat-
ing a minimum crew size, or requiring standby crews.28 Such practices when carried to
an extreme are known as featherbedding, which exhibits unreasonable limits to the
amount of work employees may do in a given period, payment for unneeded employ-
ees, unnecessary tasks, work not performed, or jobs duplicating those already done. 29

The name conjures the image of employees being paid rest on a feather-stuffed beds;
that is, they are paid to do nothing. Extreme work rules are often criticized by managers
and viewed negatively by the public as an inefficient waste of resources. Congress
attempted to help reduce featherbedding practices when it amended the Labor Manage-
ment Relations Act (LMRA) to add Section 8(b)(6), which prohibits a labor union from
causing or attempting to cause an employer to pay or deliver or agree to pay or deliver
any money or other thing of value, in the nature of an exaction, for services which are
not performed or not to be performed. 30

Workload restrictions underlie many labor relations conflicts. Unions have often
been forced to abandon the use of such extreme work rules in an era of global competi-
tion, but there remains a legitimate duty for unions to bargain reasonable job protections
for their members. From an overall (macro) viewpoint, union leaders agree that change
is necessary for economic progress, but from an individual (micro) view, where signifi-
cant adjustment would be necessary, change may be resisted by workers and their
unions. Thus, union leaders must grapple with the tension of wanting their firms to be
competitive and profitable to create work opportunities for their members while also
protecting members jobs as currently designed and insuring that members are not
overworked.31

Job insecurity has been shown to negatively influence job attitudes, which, in turn,
reduce performance, increase absenteeism, and increase turnover intention. Thus, it is
not surprising that a 2013 survey of 6,000 job seekers found that 95 percent of them
wanted job security. A commitment to employment security has several advantages

CHAPTER 8 Administrative Issues 395

for both employers and employees. Such a commitment may motivate employees to sup-
port change, encourage employers to invest more in training employees, reduce costs
associated with turnover, retain critical skills needed by the firm, and maintain employee
morale. Employment security guarantees led the United Auto Workers (UAW) local
union at the General Motors Lansing Grand River Assembly to reduce production
costs and increase profitability by accepting responsibilities traditionally borne by man-
agement, such as participating in plant operations and problem-solving teams. Building
strategic partnerships with management based on a mutual recognition of the contribu-
tions that labor and management make to enhance a firm s competitiveness is one
approach to improving job security.32

The collective bargaining process is a means by which union representatives and
managers attempt to resolve conflicts between employees desire for greater job security
and employers desire for greater flexibility and cost effectiveness in adjusting the size
and duties of the labor force to the workload. Some examples of issues affecting job secu-
rity covered by negotiated work rules include the following:

Job assignment: Reducing crew size, adding duties, or eliminating unneeded jobs
More job titles in each job classification: Combining jobs such as millwright, welder,
rigger, and boilermaker, or allowing journeymen to perform helpers tasks
Hours: Clean-up time, flexible work schedules, mandatory overtime, advance notice
of shutdown, or extending work time for the same pay
Seniority: Restricting the use of seniority in filling job vacancies, bumping, or deter-
mining work schedules
Wages: Permitting pay for knowledge, gain sharing, severance pay
Training: amount and type provided, employee eligibility criteria to receive training

Union and management representatives must determine which job security work
rules are appropriate in each bargaining relationship. Not all restrictive work rules
intended to maintain a specified staffing level are illegal. Work rules negotiated between
the longshoremen and shipping companies that prevent truckers and warehousemen
from unloading cargo from containers within 50 miles of a ship docking pier were
upheld by the U.S. Supreme Court because they were the product of voluntary bargain-
ing between two informed parties. These work rules were designed to preserve a portion
of the traditional longshore work that is dwindling because of the use of shipping con-
tainers.33 In 2002 after an extended lockout by West Coast shippers and port terminal
operators belonging to the Pacific Maritime Association, employers negotiated the right
to implement new technology for loading and tracking cargo, but the International
Longshore Worker s Union (ILWU) negotiated the right of its union members to operate
the new technology with no loss in the number of current jobs. Since this groundbreak-
ing labor agreement was signed, productivity improvements have helped support average
earnings of $147,000 (in 2014) for full-time longshoremen working; during the same
period, the number of jobs available at West Coast ports expanded by 32 percent.34

In 2008, 27,000 Boeing Company employees represented by the International Asso-
ciation of Machinists and Aerospace Workers (IAM), Local 750 initiated an eight-week
strike where one of the key bargaining issues was the job security of union members who
could be impacted by a company proposal to alter the procedure for delivering parts to
aircraft assembly lines.35 Under the existing system, parts suppliers delivered parts to
loading dock drop-off locations where the parts were received, entered into the parts
inventory system, and then delivered to appropriate areas within the plant by Boeing
(IAM members) employees. Boeing sought to change the system to allow the employees
of outside parts suppliers to deliver parts directly to assembly lines within the

396 PART 2 The Bargaining Process and Outcomes

manufacturing facility. The company also sought to use a radio-frequency identification
tag (RFID) system attached to pallets on which parts arrived at the plant to track inven-
tory and automatically reorder parts when necessary. Although this new system would
eliminate some existing jobs, the company believed that many employees adversely
affected could be reassigned to other jobs within the plant over time. Union members
were skeptical.

Like most work stoppages, this strike ended with a negotiated settlement on new
contract terms that involved compromise by both union and management negotiators
on a variety of bargaining issues (e.g., contract length, job security, and wage and benefit
improvements).36 On the job security issue, the parties agreed that outside vendors
would be permitted to deliver parts to designated assembly line locations within the
manufacturing facility, at which point Boeing employees would be responsible for receiv-
ing and distributing the parts. Union leaders claimed that maintaining control over who
would perform necessary job tasks would save the jobs of 2,200 facilities and mainte-
nance workers and 2,920 forklift drivers, shipping, and other workers who were currently
represented by the union. Job outsourcing is likely to remain a key bargaining issue
between the parties in future negotiations.

Plant Closures, Downsizing, and WARN
First and this may seem like an obvious point federal courts have ruled that an
employer has an absolute right to go out of business; the employer does not have to
first bargain over this decision with the union. What if an employer only wants to close
one plant, and no language addresses this type of decision in the collective bargaining
agreement? Is the employer legally required under the LMRA to bargain with the union
about the decision? While there are many questions to consider in plant closing cases
(e.g., Will the work being transferred to other facilities? ) that have resulted in nuanced
NLRB and court decisions, perhaps the most important question is: What is the
employer s motivation? If the motivation for closing the plant is to pursue other oppor-
tunities and closing the plant reflects a shift in the direction of the business, then a com-
pany does not have to bargain with the union. However, if the motivation for closing the
plant is to avoid dealing with the union, to hamper union organizing efforts at other
company facilities, or to lower labor costs, then the NLRB may require the employer to
first bargain with the union. NLRB decisions in these latter cases depend upon the facts
of each case. This issue is similar to the issue of subcontracting, discussed below.37

In 1988, Congress enacted the Worker Adjustment and Retraining Notification
Act (WARN) in response to data that showed large numbers of employers either shut
down or initiated layoffs while giving employees or community leaders less than
14 days advance notice or no notice at all. The WARN act requires employers with 100
or more employees to give 60 days advance notice of a plant closing or major layoff (i.e.,
termination of 50 or more workers at the same work location within a 30-day period or
a major layoff affecting at least 50 employees who make up at least 33 percent of the
workers at a work site) to employees (excluding those employed less than 20 hours per
week), unions, and state and local governments. The WARN Act does permit union and
management negotiators to establish contract language requiring more than the mini-
mum 60 days advance notice required by the law. One survey reported 48 percent of
employers had negotiated labor agreement language providing for advance notice of
shutdown.38

In 2012, there were approximately 6,500 mass layoff incidents recorded (including
544 permanent worksite closures), resulting in 1.25 million initial claimants for unem-
ployment insurance.39 This represented a decline from 2009 when nearly 12,000 mass

CHAPTER 8 Administrative Issues 397

layoff events occurred (including 1,099 permanent worksite closures), resulting in
approximately 2.5 million initial claimants for unemployment insurance. Manufacturing
and construction together accounted for over one-third of mass layoffs incidents,
accounting for almost 30 percent of the first time unemployment claims.

Although providing workers with advance notice of shutdown has been shown to
reduce the probability that notified workers will experience significant unemployment
in transitioning to a new job opportunity, many employers continue to fail to provide
the required advance notice to affected employees or communities.40 Several possible
reasons exist to explain why required WARN Act advance notice of significant job dis-
placement events is not given to more employees and community leaders.41 Some
employers may be unaware or confused about their notification responsibilities under
WARN, despite the U.S. Department of Labor s efforts to provide guidance to encourage
voluntary employer compliance. The language of the act itself limits its potential.
Exempting firms with fewer than 100 employees from coverage under the law eliminates
a substantial portion of the labor force from receiving required advance notice. The
WARN Act also has many exemptions applicable to covered employers.42 For example,
an estimated 50 percent of layoffs involving 50 or more workers are exempt from
any advance notice requirement because the number of affected employees is less than
one-third of the employer s active workforce (one-third rule). Several states and the
U.S. Virgin Islands have sought to address shortcomings in the federal law by enacting
state laws similar in intent to the federal WARN Act.43 These state laws tend to expand
coverage to more employers (with as few as ten employees in some cases), impose require-
ments that employers continue to provide group health care coverage or severance pay for
affected employees, and increase financial liability beyond the 60-day maximum back-pay
requirement under the federal WARN Act.

Another deficiency of the federal WARN Act is the lack of any federal agency
being responsible for the law s enforcement, unlike the LMRA which is enforced by
the NLRB. Because the law designates no federal agency as responsible for enforcing
the law, employees must take the expensive and time consuming step of hiring an
attorney to sue their employer in federal district court for any alleged violation of the
WARN Act. Unions often have attorneys on staff (or retainer); therefore, a union may
sue for damages on behalf of its members under the WARN Act, and state law deter-
mines the time limit imposed for filing such claims. During the 2008 2010 recession,
the WARN Act attracted renewed attention as laid-off employees banded together to
file class-action lawsuits against former employers; in some cases, lawsuits were filed
against either the private equity firms that bought bankrupt employers or the banks
that wound up controlling the firms assets. Similarly, when oil prices fell in 2015, non-
union workers filed class-action lawsuits against the employers who laid them off.
Thus, while most WARN lawsuits are filed by unions in manufacturing, the law is
applicable to jobs as diverse as Wall Street brokers and car salespersons in large auto-
mobile dealership chains.44

On occasion, the rules under the WARN Act and the LMRA are intertwined. In
1991, the Dallas Times Herald, which had a long-standing bargaining relationship with
the Dallas Typographical Union and Mailers Local, actively misled the unions about
rumors of a closing during negotiations for a new contract. On the date the sale was
finalized, the business was closed. The Times Herald then informed employees and the
union of the closing. The National Labor Relations Board (NLRB) ruled that remedies
(back pay) owed to employees under the LMRA were separate from payments required
under the WARN Act. Therefore, an employer s payment for back pay and benefits aris-
ing from a violation of the WARN Act would not offset any back-pay liability arising

398 PART 2 The Bargaining Process and Outcomes

from an unfair labor practice finding that involved the same affected workers under the
LMRA.45

Almost 40 percent of the largest U.S. employers engaged in a workforce reduction of
more than 20 percent during the 2008 2010 recession.46 Although employers often turn
to mass layoffs as a way to reduce operating costs quickly, there is increasing evidence
that such action often fails to produce desired improvements in profits, return on assets,
and costs going forward.47 Companies often fail to accurately assess the costs of repla-
cing labor once economic activity recovers or overestimate the ease with which they
will be able to find replacement employees comparable to those laid off during the reces-
sion. Significant downsizing also tends to erode employee morale and increase both job
stress and job security concerns among those employees who remain on the payroll.

Subcontracting, Outsourcing, and Work Transfer
Subcontracting (also called contracting work out) is a procurement process that usually
occurs when a firm determines that it cannot perform all the tasks that are necessary to
operate its business successfully (e.g., it lacks the expertise to maintain its own Internet
website) or that another firm can perform the needed tasks (janitorial and cafeteria ser-
vices, equipment repair, parts production, etc.) better or at a lower cost. Outsourcing, a
similar process, is a cost-cutting strategy that involves shifting work normally done by a
firm s own workers to a different producer who may be located inside or outside the
United States. Offshoring is a more recent term used to refer to the movement of work
from a company location within the United States to locations outside of the United
States (e.g., banking, information technology, telecommunications, engineering functions,
tax preparation, medical services, manufacturing). The international producer who now
performs the work may be owned in whole or in part by the U.S. firm from which the
work came or may be a different company altogether.48 Outsourcing has become quite
common for major U.S. firms; by contrast, a 2014 survey of managers indicated that
only 16 percent planned to move work back to their home country.49

Among the advantages cited for subcontracting and outsourcing are lower costs
(particularly labor costs); increased profitability, productivity, and quality improvements;
increased operating flexibility, speed, and faster access to innovative technology with less
capital risk.50 While many companies who outsource report achieving positive benefits,
the magnitude of gains are often less than expected. A Dun & Bradstreet survey reported
that 20 percent of outsourcing relationships fail in the first two years, and 50 percent fail
within five years.51

Several potential problems confront firms engaged in outsourcing, including loss of
intellectual property or institutional knowledge, confidentiality risk, reduced ability to
respond to market changes in a timely manner, employee concern over possible job
loss, poor selection or monitoring of outsourcing suppliers, insufficient training provided
to individuals responsible for managing outsourcing activities, and a failure to develop a
clear plan detailing outsourcing objectives, expected benefits, and performance mea-
sures.52 It is important to remember that the survivors of a layoff, outsourcing, or off-
shoring event may also experience adverse outcomes, including a higher propensity to
quit in the future and lower perceptions of organizational performance and their own
job security.53

To cut costs, auto manufacturers have expanded outsourcing of certain parts pro-
duction and introduced less labor-intensive production methods, such as modular
manufacturing, which permits various modules (e.g., dashboards, headliners, exhaust sys-
tem) to be assembled by outside suppliers, requiring an auto manufacturer s workers to
engage in only the final assembly of such preassembled modules.54 The UAW union has

CHAPTER 8 Administrative Issues 399

adopted a dual strategy of attempting to delay job cuts or limit such cuts to normal attri-
tion rates at the Big Three (GM, Ford, and Chrysler) auto plants while at the same
time becoming more aggressive in seeking to organize nonunion auto supply plants to
reduce the labor costs differential between primary auto manufacturers and auto suppli-
ers. The dual strategy of the UAW is consistent with research suggesting that the pres-
ence of a union reduces international outsourcing among U.S. manufacturing firms.55

Use of the just-in-time inventory control method to minimize inventory-carrying
costs has left firms particularly susceptible to disruptions in the flow of parts caused by
selective strike actions at key supplier s plants or their own plant. This increases the
importance to management of developing stable and cooperative labor relations with
workers and their union representatives. Separate strikes at Boeing in 1995 and 2008
were caused in large part by outsourcing. In 1989 Boeing began to implement a global
outsourcing model intended to ensure the company s competitive future.56 By 1995,
Boeing s worldwide workforce had shrunk by 62,000, and forecasts for plane production
were the lowest in 11 years. To help win orders in Asia, the aircraft industry s fastest
growing market, Boeing agreed to farm out parts production to manufacturers in those
countries (sometimes a requirement imposed by home countries in order for foreign
firms to do business there). As an example, one supplier selected was Shanghai Aviation
in China, with 2,000 employees who earned $120 per month compared to $3,530 per
month earned by Boeing employees in Seattle, Washington, for producing 1,500 tail
assemblies for Boeing. Although Boeing s aircraft are still assembled in Seattle, much of
their fuselages and components, such as landing gear, are now produced in and imported
from Asia. Many of the costly delays experienced in Boeing s 787 Dreamliner aircraft
have been attributed to problems with outsourcing parts and components for the project.
While preselling more orders for the new aircraft than any previous aircraft in the com-
pany s history, the plane that was initially expected to be in service by August 2007
finally entered commercial service in 2011 only to be grounded for three months in
2013 due to battery fires.57

Subcontracting and outsourcing processes can be volatile and complicate collective
bargaining issues. Unions often attempt to influence management s decisions to subcon-
tract by restricting management s freedom to subcontract bargaining unit members
work in order to protect and maximize members work and economic opportunities.
Some contract language restricting management s right to subcontract is found in
approximately 50 percent of labor agreements.58 For example, a union may seek to
have management agree not to subcontract or outsource work as long as necessary per-
sonnel and equipment are available to perform the work in a timely manner. Alterna-
tively, a union may propose that there be no subcontracting or outsourcing of work
without first providing the union an opportunity to demonstrate how the work can be
performed in-plant by bargaining unit members as cost effectively as it can if the work
is outsourced to another supplier. A union may also request information from manage-
ment to document the type and amount of bargaining unit work being subcontracted by
the employer.

A union may also join with other unions or community groups to apply pressure on
subcontractors to provide their employees with competitive terms and conditions of
employment (e.g., improvements in employment terms beyond what the subcontractor
might choose to provide in the absence of such public pressure). For example, beginning
in 2013, the Service Employees International Union (SEIU) and American Federation of
Teachers (AFT) began a publicity campaign to pressure nonunion subcontractors to
improve the wages and working conditions for guards, and cabin cleaning crews working
at JFK and LaGuardia airports in New York City. As a result of the publicity, and

400 PART 2 The Bargaining Process and Outcomes

attention from state politicians, Delta Airlines ordered its subcontractors to raise
employee pay by approximately $1 per hour so that over 2000 workers would make at
least $10 per hour.59

Negotiation practices involving subcontracting clauses may vary across industries
because unions in the construction and apparel industries do not usually attempt to
limit subcontracting. Instead, unions in these two industries often attempt to extend the
provisions of the collective bargaining agreement to the subcontractors that are com-
monly used in those industries. Under the LMRA, subcontracting of bargaining unit
work is considered a mandatory subject of bargaining. In the Fibreboard ruling (Fibre-
board Corp. v. NLRB, 379 U.S. 203, 1964), the U.S. Supreme Court said that management
cannot unilaterally replace bargaining unit members with subcontractors to do essen-
tially the same work under similar conditions it must bargain with the union over
that decision. The NLRB has determined that illegally replaced employees may receive
back pay for the time they were without work. However, a company would not be
required to bargain if all of the following conditions were met: (1) subcontracting was
motivated solely by economic conditions, (2) subcontracting was a common method of
doing business in the industry, (3) the current subcontracting decision did not differ
much from similar decisions made by the company in the past, (4) there was no adverse
impact on bargaining unit employees, and (5) the union had previously been given an
opportunity to bargain over changes in established subcontracting practices.60

Arbitration likewise has played an increasingly important role in the subcontracting
issue. In determining whether management had a contractual right to subcontract certain
bargaining unit work, an arbitrator might consider several factors. These typically
include: (1) the presence and clarity of contract language granting management a right
to subcontract, (2) any evidence of an established past practice regarding subcontracting,
(3) the history of the parties prior negotiations over the issue of subcontracting, (4) the
intended duration of management s subcontracting decision, (5) the employer s business
justification for contracting out, and (6) any evidence of anti-union animus (i.e., a desire
or intent to weaken the bargaining unit or union representative by subcontracting unit
work). For example, one case involved truck drivers supplying home heating oil in New
York. The employer had replaced Teamster employees with subcontractors for some
deliveries; in spite of a few instances of past practice, the arbitrator ruled against the
employer, based on language of the contract clearly prohibiting subcontracting.61

An employer who unilaterally transfers bargaining unit work to another location has
a duty to bargain over the decision to relocate the work if the relocation decision does
not involve a basic change in the nature of the employer s operation.62 To avoid the duty
to bargain, the employer must prove that (1) the work performed at the new location
differs significantly from the bargaining unit work performed at the previous location,
(2) labor costs were not a factor affecting the decision to relocate the work, or (3) the
union representative of bargaining unit employees could not have offered sufficient
labor cost concessions to reasonably justify any change in the employer s decision to
relocate the work. Even where there is no duty to bargain over the decision to relocate
bargaining unit work, an employer would still have a duty to bargain over the effects of
the relocation decision ( effects bargaining ) on bargaining unit members (e.g., transfer
rights, severance pay, pension rights).63

Even when a duty to bargain over the work relocation decision exists, an employer
satisfies that duty by negotiating in good faith with the union until either a voluntary
settlement or a bargaining impasse is reached, at which point the employer can legally
implement the work relocation decision. This puts pressure on a union to adopt a rea-
sonable approach in proposing alternative actions that might alter the employer s

CHAPTER 8 Administrative Issues 401

perceived need to relocate some or all of the planned work affected. It also ensures that
bargaining efforts will not drag on too long, unnecessarily delaying any change in busi-
ness operations.

Arbitrators have also limited management s right to relocate bargaining unit work
when they conclude that the parties have already placed limits on work relocation by
including in their labor agreements the following standard contract provisions: (1) a rec-
ognition clause that acknowledges the union s status as representative of employees
within the established scope of work by bargaining unit employees, (2) clauses that
establish job classifications and wage rates, (3) seniority clauses that include layoff and
recall procedures, and (4) job security clauses that limit the circumstances in which
employees can be terminated or jobs eliminated.64 Practically speaking, there is usually
good reason for an employer to bargain about a work relocation decision, as well as its

LABOR RELATIONS IN ACTION
Creating Good Jobs Today and in the Future

Where are the jobs needed to reduce today s unem-
ployment rate and provide income to American workers,
whose spending is depended upon to drive future eco-
nomic growth? Many business and union leaders, politi-
cians, and average individuals seem to recognize the
need to create better job opportunities, but who has a
concrete plan for doing so, and where will the money
come from to pay for it?

Ford Motor Company is an example of an American
manufacturer that has chosen to invest $550 million in the
redesign of an existing facility to achieve the production
flexibility to produce profitable autos today and in the
future.a The Ford assembly plant in Wayne, Michigan
(near Detroit), covers an area the size of 22 football fields
and employs 3,300 workers, many of whom are repre-
sented by the UAW Union. The plant redesign permits
the company to assemble multiple models of different
sizes using either gas or electric powertrains. As the
price of gas fluctuates and consumer preferences shift
among various sizes and types of vehicles, the Ford
assembly plant can shift production needs to match
demand. To achieve such flexibility both machines and
workers were required to adapt. To produce a car, the
plant s 696 welding robots had to be reprogrammed to
recognize a variety of parts that differed depending upon
the model vehicle being produced. With approximately
4,000 welds in a finished vehicle, this was no easy task.
Employees have been given greater responsibility to recog-
nize and fix problems as they occur. Communication
between managers and production workers has taken on
increased importance and frequency to ensure that all par-
ties are knowledgeable about the differences in parts and
assembly techniques required for the variety of vehicle
models being produced. No longer does an assembly
worker spend an entire work shift installing the same part

of the same vehicle model in endless, mind-numbing repe-
tition. This means assembly line workers today must be
able to learn, problem-solve, take initiative in creating solu-
tions, and focus on ensuring that the quality of every task
performed is high. In 2010 Ford Motor Company earned $
6.6 billion dollars making it the most profitable of Detroit s
three major auto manufacturers.

The Apollo Alliance project provides another example
of a broad coalition of business, labor, environmental, and
community leaders committed to creating good jobs,
reducing energy costs, and addressing climate change con-
cerns.b The coalition draws its name from the Apollo space
program which represented a previous national effort to
attain an ambitious goal. By investing $500 billion over a
10-year period the coalition s plan seeks to create 5 million
good jobs through investment in renewable sources of
clean energy (e.g., wind turbines, solar panels, biomass
fuels), increasing building energy efficiency using both
design and materials improvements, modernizing the
national power grid, and improving transit systems (e.g.,
more energy efficient transportation equipment). Will U.S.
industrial policy support efforts such as these, or will the
current budget-cutting frenzy determine that such ambi-
tious goals are beyond the reach of Americans today?

SOURCES:
a. Chris Woodyard, Ford Focuses on Flexibility at its Factories, USA Today, February
28, 2011, pp. 1 4 at http://www.usatoday.com/ (accessed February 28, 2011).
b. Apollo Alliance, Project. The New Apollo Program: Clean Energy and Good Jobs,
October 1, 2008, pp. 1 7 at http://www.bluegreenalliance.org/apollo/programs/new-
apollo/file/Program.NewApolloProgram_Report.pdf (accessed October 3, 2015); Apollo
Alliance Project. Make It in America: The Apollo Clean Transportation Manufacturing
Action Plan, 2011, pp. 1 6 at http://www.bluegreenalliance.org/apollo/programs/tmap/
file/PR.TMAP.pdf (accessed October 3, 2015); Broad National Coalition Launches
Make It in America Campaign to Restore Millions of Manufacturing Jobs, PR
Newswire, April 15, 2009, pp. 1 2 at http://www.proquest.com/ (accessed February
27, 2011); Thinking Globally, Acting Locally on Energy Use, Futurist, 40 (4), July/
August 2006, pp. 8 9.

402

effects. A union may offer helpful suggestions or concessions that make the relocation
less necessary. More importantly, if the company acts unilaterally and its acts are later
determined to be unlawful, it risks large back-pay awards and, in isolated cases, a costly
order to reopen a closed operation.65

Work Assignments and Jurisdiction
When changes in technology, job descriptions, work materials, or processes occur, some-
times labor disputes develop over which workers will be assigned to perform particular
jobs or job duties. Such disputes may occur if: (1) two or more unions representing dif-
ferent bargaining units within the same firm claim jurisdiction for their members to per-
form the available work assignment; (2) bargaining unit employees believe their work is
being assigned to other employees outside the bargaining unit, such as supervisors; or
(3) a disagreement occurs within a union over which members should perform particular
work assignments. These disputes over work assignments are called jurisdictional
disputes (see Exhibit 8.1 for an example of a work jurisdiction clause in a labor
agreement).

The LMRA, as amended, makes it unlawful for a union to engage in or encourage a
work stoppage to force an employer to assign work to a particular union or craft. The
LMRA provides a special NLRB procedure for resolving jurisdictional disputes within
ten days after an unfair labor practice charge is filed. Factors considered by the NLRB
in resolving these types of disputes are skills and work experience required to perform
the work; any union certifications already awarded by the NLRB; industry, and local
practice; prior arbitration decisions; the employer s desires; and cost effectiveness and
operating efficiency of assigning the work to a particular bargaining unit or craft.66 The
AFL-CIO s Building and Construction Trades Department representing 12 affiliated
national unions and several national contractors associations have generally sought to
avoid using the NLRB jurisdictional dispute procedure by voluntarily establishing a

Exhibit 8.1
Example of a Work
Jurisdiction Clause

It is the intent of the parties to this agreement to protect the work performed by
employees in the bargaining unit.

The employer recognizes that it is important and desirable to use its own
equipment and drivers to the greatest extent possible before using subhaulers and/
or noncompany trucks.

The union recognizes that under certain conditions, such as those dictated by
customer demands, equipment requirements, daily dispatch determinations, materi-
als to be hauled and similar factors, subhaulers and/or noncompany trucks are nec-
essary and have been so used throughout the industry for many years.

The employer, in accordance with the above, must, however, determine the
number, type, and location of its working equipment in conformity with its business
requirements. The employer further must be able to determine, in keeping with
sound business practices, the extent to which it will replace equipment that is too
costly to operate, obsolete, or damaged.

Under these conditions, the employer agrees that the subhaulers and/or non-
company trucks will not be used as a subterfuge to defeat the protection of the
bargaining unit work.

In keeping with the above, the union recognizes that the employer will use
such subhaulers and/or noncompany trucks as required by location and classifica-
tion only after all the available company trucks at such locations and in similar clas-
sifications have been initially dispatched.

CHAPTER 8 Administrative Issues 403

national joint board to consider and decide cases of jurisdictional disputes in the build-
ing and construction industry.67

Some labor agreements require that bargaining unit work be performed only by bar-
gaining unit employees except in instructional, experimental, or emergency situations. In
instructional situations, such as new employee training, there must be a clear, direct,
and immediate connection between work done by members of management and instruc-
tions given to bargaining unit employees. Experimental work includes the introduction
of a new technique, method, or procedure for doing the work; nonbargaining unit mem-
bers might try out the methods for assessment purposes, prior to being introduced on a
larger scale. An emergency situation might occur as the result of unforeseen circum-
stances, such as a tornado, fire, or power failure, that warrant immediate action.

Unions generally do not object to bargaining unit work performed by supervisors
in situations requiring only a few minutes of time but rather seek to prevent any trans-
fer of work opportunities that might lead to the permanent elimination of one or more
bargaining unit positions. For example, a brewery hired too few truck drivers. The
union claimed that by being understaffed, it created hazardous working conditions,
which in turn, increased injuries and work delays. These exacerbated the labor short-
age, creating, what management called, emergency situations allowing managers to
drive delivery trucks based on a relevant contract clause. However, the frequency of
these emergencies prompted the union to file a grievance and an arbitrator ruled
that managers could no longer drive delivery trucks. Consequently, the brewery hired
more truck drivers.68

Intra-union work assignment problems, although not as critical and dramatic as
other issues, are often sensitive political matters for local union leaders. Conflicts
between members of the same union over work assignments can cause problems, espe-
cially in industrial unions having both craft and semiskilled employees as members.
Whenever production processes are automated, reassignment of work from skilled
employees to semiskilled production employees can cause emotional conflicts within
the union. For example, having pipe fitters do welding tasks when welding is not
included in their job description gives rise to disputes.

To resolve these conflicts, unions favor specific, written job descriptions and a right
to refuse to perform work outside those specified job descriptions. Management typically
prefers increased flexibility in making work assignments, provided by a more general job
description that includes phrases such as able to perform related duties and make
minor repairs. Companies implementing a team-based production system have been
successful in getting unions to agree to more cross-functional training and broader
multiskill job descriptions that provide greater flexibility in assigning job duties to team
members. For example, in spite of electrical jobs being moved to Mexico, Niagara Trans-
former and the Buffalo, New York local of the International Brotherhood of Electrical
Workers (IBEW) developed cross-functional teams and used flexible manufacturing
practices to remain competitive in the global market.69

Work Scheduling
Collective bargaining agreements often deal with work scheduling, such as determining
the timing or duration of a work shift, day, or week. Management has a right to deter-
mine work schedules unless restricted by negotiated language in the labor agreement. For
example, management has a right to suspend operations temporarily, reduce the number
of shifts, or change the number of days to be worked. Even when the labor agreement
contains some restrictions on work scheduling, management can usually make

404 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION
Computer Programming and Labor Relations

When one thinks of jobs involving labor unions and bar-
gaining positions, one doesn t often think of computer
programmers. Yet, there are some similarities between
formal labor unions and the approaches some computer
programmers have taken to their work. In the late
1990s, contingent workers at Microsoft, concerned
about job security, formed a group called the Washing-
ton (state) Alliance of Technology Workers or Wash-
tech.a It expanded to include permanent high-tech
employees, such as programmers, software develo-
pers, testers, code writers, and customer service repre-
sentatives at approximately 100 companies.b Eventually,
Washtech affiliated with the Communication Workers of
America (CWA) and today, it negotiates collective bar-
gaining agreements. It gives advice to individuals (e.g.,
limiting work hours) as they negotiate their own profes-
sional contracts with employers.c The group also lobbies
to limit the number of specialized work visas the federal
government issues; thus limiting the number of immi-
grants who can take employees jobs. A similar group,
called the Alliance at IBM has affiliated with the CWA.
In September 2014, a group of software testers who
work for Lionbridge, a Microsoft subcontractor, formed
the Temporary Workers of America. Many of the mem-
bers work in Microsoft facilities alongside permanent
Microsoft employees. After a publicity campaign, Micro-
soft announced in March, 2015 that contractors with 50
or more on-site employees will be required to provide at
least 15 paid days off each year (Microsoft employees
get 25 paid vacation and sick-leave days).d Many in the
industry support the goals of such organizations; yet
many workers are reluctant to join because they don t
want to be a part of a labor union.e

Given that formal organizing has had limited success,
others in the industry have focused on developing indus-
try standards for high-tech professionals. For example,
some programmers and their employers have aban-
doned traditional software development, where the prod-
uct is developed in phases, like an assembly line. Instead
an agile process is used, where software components
are developed, tested, and modified based on user feed-
back, prior to developing other components. One analogy
is that traditional programming is like an architect and con-
tractor designing and building a house, whereas agile pro-
gramming is comparable to designing and building a
kitchen and insuring customer satisfaction before moving
on to the other rooms.

What does Agile programming have to do with labor
relations? As Agile programming has developed, it has
become formalized, with programmers insisting that

managers and other programmers agree to a set of
principles such as the Agile Manifesto. While these
principles are typically written using the language of cus-
tomer satisfaction and flexible work practices, a close
examination suggests that such documents also contain
a set of proposals regulating working conditions such as
subcontracting, work assignments, and work scheduling.
For example, one principle of the Agile Manifesto dis-
cusses sustainable development where developers
maintain a constant pace ; this is aimed at preventing
programmers from being overworked with long hours.
Other principles refer to trusting workers and self-
organizing teams and appear to be designed to win free-
dom and autonomy for workers from overly controlling
managers. Principles such as Working software is the
primary measure of progress downplays the relevance
of extensive documentation as a measure of progress;
this can also be seen as a way to ensure job security
for current programmers. Finally, another principle reads,
The most efficient and effective method of conveying

information to and within a development team is face-
to-face conversation. Although couched in the language
of efficiency, one can argue that the purpose of encour-
aging face-to-face conversation is to prevent program-
ming jobs from being outsourced to various low-wage
countries. Thus, programmers who insist that their man-
agers embrace agile software development may be doing
more than increasing efficiency they may also be
improving their own working conditions.f

In conclusion, although labor unions have not found
high-tech workers to be fertile ground for formal orga-
nizing, many workers (1) are sympathetic to the positions
that unions take on workplace issues of relevance to
them, (2) are sometimes willing to join organizations that
downplay their affiliation with traditional unions in favor of
focusing on specific issues, and (3) sometime embrace
documents that articulate an approach to work that also
incorporates a set of bargaining positions with regard to
employees working conditions.

aMark Boardman, Unions Go High Tech, HR Magazine, 44(5), 1999, pp. 160 161.
b Frequently Asked Questions, WashTech, 2015, at http://www.washtech.org/index.
php/about/faq.
c Worker Rights, WashTech, 2008, at http://archive.washtech.org/rights/contracts.
php.
dJosh Eidelson, Microsoft s Unionized Contract Workers Get Aggressive, Bloomberg
Businessweek [online], April 30, 2015, at http://www.bloomberg.com/news/articles/
2015-04-30/microsoft-contract-workers-are-organizing.
e [email protected], IBM Employees Union, CWA, 2015, at http://www.endicottalliance.
org/.
fMike Bulajewski, The Agile Labour Union, West Space Journal [online], 2, Summer,
2013, at http://www.westspacejournal.org.au/article/the-agile-union/.

405

unscheduled emergency changes in the work schedule if such changes are made in good
faith and for reasonable cause, such as extreme weather conditions, bomb threats, or civil
disturbances. The 5-day, 40-hour workweek has been accepted as a standard work sched-
ule in most U.S. industries since passage of the Fair Labor Standards Act (1938), requir-
ing employers to pay time and one-half a covered employee s regular rate of pay for
hours worked in excess of 40 during the same workweek.

Since the 1970s, there has been a 10 percent decline in the number of Americans
working a standard 40-hour week, with a corresponding increase in both part-time and
overtime work. 70 Fewer workers are employed on a 9-to-5 work schedule as work sche-
dules have increasingly included early morning and evening hours. About one-third of
wage and salary workers have a work schedule which permits them some flexibility in
determining the exact time when the workday begins and ends, although the total num-
ber of hours to be worked per day may be fixed. About 20 percent of workers have a
shift other than a regular daytime shift and a slightly smaller percentage work on
weekends.71

Reflecting the interests of their members, unions in the United States and elsewhere
have shown increasing interest in flextime work schedules which allow an employee to
start and finish work at his or her discretion, as long as the specified total number of
hours per week or per day are worked and the employee is present at work during a
core-hour period (e.g., 9:00 A.M. to 11:00 A.M. and 1:30 P.M. to 3:30 P.M.). Some
employers use flexible work schedules as a hiring incentive to attract applicants in occu-
pations with a current labor shortage. These programs are designed to better match job
requirements with the personal needs of individual employees. Although flextime has
much potential for meeting employee needs, some work operations require all workers
to be present at the same time, and in these cases, work schedules cannot be altered
unless the entire group accepts the alternative schedule.72 Part-time workers and occupa-
tions requiring higher levels of education or training are more likely to have access to a
flexible work schedule. Approximately 32 percent of employers with union contracts
include language addressing flexible work scheduling.73

Another possible alternative work schedule is a compressed workweek consisting of
four 10-hour workdays with three days off each week or eight 9-hour days and one
8-hour day permitting one extra day off every two weeks.74 For example, the National
Treasury Employees Union and U.S. Food and Drug Administration negotiated contract
language that permitted employees to work nine 9-hour days over a 14-day period or
four 10-hour days per week with work hours being performed sometime between
6 A.M. and 6 P.M. Some authors have raised concerns about the possible negative health
effects of nonstandard work schedules, such as chronic sleep deprivation or the stress of
being required to be on call during scheduled off hours.75

The Role of Seniority in Personnel Changes
Employers usually have a free hand in selecting initial hires that best fit the prescribed
job requirements and needs of the firm. However, once any employee has been selected
and placed on a job within a bargaining unit, the employer must abide by provisions of
the labor agreement regarding personnel decisions such as promotions, transfers, and
layoffs. The concept of seniority is often a factor used to determine personnel decisions
that affect bargaining unit employees. Seniority has played a key role in labor relations
since the 1920s, when foremen s discretion (often abused) in personnel decisions was
replaced by seniority-based decisions affecting compensation or reward structures, pro-
motion, transfer, layoff, and recall decisions.76

406 PART 2 The Bargaining Process and Outcomes

Types of Seniority
Seniority is usually measured by the length of an employee s continuous service in a
company, at a particular facility (plant), in a specific department, or in a group of jobs
(typically in a line of progression such as Welder 1, Welder 2, etc.).

Purpose of Seniority
Seniority may be used to determine benefit rights (e.g., vacation entitlement or schedul-
ing). When used to determine benefit rights, every employee s seniority is usually mea-
sured on the same basis typically from the date of initial employment in the company
or specific plant location. Such a company or plantwide measurement approach ensures
equitable treatment of employees for entitlement to certain benefits that have no mean-
ingful connection to the type of job or skill level the employee holds.

Seniority is also used for competitive job rights (e.g., promotion, layoff or recall,
work assignments, transfers, shift preference). Determining who among competing
employees will be entitled to a job promotion or transfer presents a different issue
because, in determining competitive job rights, the ability to perform the job is an
important consideration. Management generally prefers to measure seniority for deter-
mining competitive job rights on a department or job line-of-progression basis. This
measurement approach gives more assurance that the most senior applicant will be qual-
ified to perform the job and eliminates the risk of grievance claims filed by employees
from other departments. Managers may also try to negotiate contract language to insure
that the person has satisfactory performance in their current job before being promoted
(e.g., if a person isn t satisfactory as a Welder 1, they shouldn t be promoted to a Welder
2 position). Other firms may seek language requiring that the person pass a test, demon-
strating that they have the knowledge, skill, and ability to perform satisfactorily in the
higher-level position. A union may counter such a proposal by requiring paid training
for the employee as he or she learns the new position.

Seniority provisions are found in most labor agreements and cover issues such as
how seniority accrues, in what types of decisions it will be used and, in some cases,
how it can be lost for a variety of reasons (e.g., layoff, failure to respond to recall,
unauthorized absences, conviction of a felony, or taking a job elsewhere during a
leave of absence). Seniority is considered very important by most union members,
and managers seldom object to providing some sense of job security or benefit priority
to productive long-service employees. Seniority is seen as fair by many workers because
it serves as one of the few objective measures that can be used to distinguish between
two or more employees; it is also used by nonunion employers in making some person-
nel decisions.77 Seniority is not as commonly used outside of North America as a key
factor in determining issues such as layoff or promotion decisions.78 Arbitrators often
consider an employee s seniority as a possible mitigating circumstance in deciding the
appropriateness of a discharge decision. A long period of satisfactory performance
would weigh in an employee s favor in determining whether the behavior violation
alleged or proven is likely to occur again if the employee was given another chance to
correct the behavior.

Some authors argue that the increasing level of organizational instability resulting
from rightsizing, outsourcing, mergers, increased global competition, and declining
union density have weakened employers commitment to seniority and, in turn, weak-
ened employees loyalty and commitment to their current employer.79 Individuals enter-
ing the labor force today can expect to work for multiple different employers over the
course of their work career, making seniority with any single employer more difficult to
attain.

CHAPTER 8 Administrative Issues 407

Seniority and Layoffs
If a contract grants bumping rights in a layoff, a more senior employee from one
department might claim a job held by a less senior employee in a different department.
Even if management wasn t sure the more senior employee could actually perform the
job satisfactorily, the senior employee would likely insist on being granted a reasonable
trial period to demonstrate his or her job ability. If there are waves of layoffs in a short
time span, then unlimited bumping rights can make for a chaotic workplace. Sometimes
managers will seek contract language limiting bumping rights. For example, a person
may only be able to bump into jobs he or she had previously held or into jobs within a
particular line of progression or department. Other proposals require that the person
take a test to prove that they can do the job; some contracts limit the number of people
who can be displaced in a bumping sequence.

Some commentators criticize seniority as a discriminatory concept because some
groups with a higher proportion of more recent entrants to the labor force (e.g., women,
minorities) are often among the first to be laid off when applying the last-in-first-out
principle on which seniority preference is based.80 Many states are currently facing budget
shortfalls which has resulted in some layoffs of public-sector employees such as teachers. If
seniority is considered a primary factor in determining eligibility for layoff, then currently
low-performing schools which tend to have a higher number of less senior teachers
assigned would likely suffer the greatest turnover among teaching personnel.81

In some cases, union and management agree to include a seniority provision in the
labor agreement called superseniority, which provides that highly skilled technical
employees or union officials directly involved in contract negotiations or grievance han-
dling will be the last ones laid off, regardless of their actual length of time on the job.
This provision allows a company to retain essential skills and at the same time promote
stable labor relations by ensuring that individuals skilled in contract negotiation and
grievance-handling techniques will remain available to resolve any labor disputes that
might arise at the workplace. Note that superseniority can only be used in the context
of layoffs. It cannot be used for gaining additional benefits; nor can it be used for com-
petitive job rights, to allow a person to move into a better job.

Combining Seniority and Qualifications
Seniority also plays a role in determining job promotion and transfer decisions. Personnel
changes within an organization that advance an employee to a position of more responsi-
bility, usually accompanied by a wage increase, are promotions. Promotion provisions usu-
ally explicitly specify that both ability and seniority as factors used to determine the
personnel decision, but the weight accorded each factor can vary in different labor agree-
ments. Although seniority can be easily and objectively determined, the measurement of
ability is more complex. Job transfer provisions cover personnel changes from one job to
another with relatively equal authority, responsibility, and compensation. Seniority and
ability are also usually the determining factors in making a job transfer decision.

Four basic types of seniority clauses used in promotion and transfer decisions are
presented here, with the approximate percentage of contracts using each:

Seniority is the only determining factor (5 percent).
Among all employees who meet the minimum job requirements, seniority will be
the determining factor (49 percent).
Where the best-qualified candidates are relatively equal in ability, seniority will be
the determining factor (40 percent).
Ability and seniority will be given equal consideration (2 percent).82

408 PART 2 The Bargaining Process and Outcomes

Management generally prefers to give qualifications (the ability to perform the job)
more weight than seniority in making promotion and transfer decisions to enhance
potential productivity. Unions often argue that because the exact determination of ability
is both complex and subjective, the emphasis should be on ensuring that each candidate
is qualified to perform the job effectively; among such qualified candidates, seniority is
an objective means of determining the candidate selected. The use of only seniority to
determine eligibility for promotions and transfers is objective and administratively easy,
but it does not ensure that the more senior employee will always be qualified to perform
the job. Both union members and managers want to ensure that competent individuals
occupy job positions within a bargaining unit; thus, ability to perform a job will almost
always be a factor in any layoff or promotion decision. In the small percentage of con-
tracts that apply equal weight to seniority and ability, arbitrators have concluded that
when seniority between employees is relatively close, it is reasonable to use relative abil-
ity to perform the job as the determining factor. If candidates seniority differs exten-
sively, ability must be substantially greater to justify selection of a less senior candidate.83

Ability to perform a job includes measuring factors such as relevant job skills,
knowledge, attitude, behavior, performance, pace, and production. Techniques most
commonly used to measure these criteria include tests, work experience, education, pro-
duction records, performance ratings, personality traits, and absence, tardiness, and dis-
cipline records.84 Each of these criteria may be limited in its specific relationship to the
needs of particular jobs, and thus the determination of employee qualifications is usually
based on several criteria.

Although an employer may generally establish any valid criteria for assessing an
employee s ability, promotion criteria and performance standards are mandatory bar-
gaining subjects because they have the potential to directly impact both the employees
economic interests and job security. Promotion and layoff decisions must comply with
any standards expressed in the parties labor agreement. Selection and performance
appraisal criteria and methods must also comply with the Uniform Guidelines on
Employment Selection Procedures covering race, sex, national origin, and religious dis-
crimination for covered employers.85 Moreover, the provisions of the labor agreement
itself must not be discriminatory or perpetuate past discriminatory practices.

Job Posting
Even though promotion and transfer procedures differ, most labor agreements require
that job vacancies be posted for a specified time period to inform interested bargaining
unit members about the employment opportunity. Interested employees are then permit-
ted to bid for an available job vacancy within the reasonably specified time period. At
an antiques auction someone might make a monetary bid for, say, a vase and it would be
sold to the highest bidder the person offering the most money. Here, eligible workers
apply for the promotion and it would be awarded to the qualified worker with the most
seniority. Other related labor agreement provisions may be included to prevent possible
administrative problems. For example, agreements should prescribe whether an
employee carries his or her seniority to a new position or whether seniority will be
retained only after a predetermined period. Other provisions should specify whether an
employee who transfers out of the bargaining unit or is promoted to a management
position will lose his or her seniority or be allowed to retain seniority should he or she
ever return to the bargaining unit. Some contracts may also specify that if a promoted
employee does not successfully perform his or her new job after a reasonable trial period,
that employee may return to the previous position with no loss in previously accrued
seniority. Management might well oppose such a contract provision since returning a

CHAPTER 8 Administrative Issues 409

previously promoted bargaining unit member to his or her prior job would cause a rip-
ple effect, displacing a second individual who had been promoted to fill the promoted
member s vacated position.

Approximately 45 percent of union contracts provide for recall of employees after
layoffs in reverse order of layoff. This would mean more senior employees would be
recalled before less senior employees. Increasingly, seniority has become the primary fac-
tor in layoff determination; however, contracts generally consider seniority as the deter-
mining factor for recall only if an employee is qualified for an available job.

Advance notice of a planned shutdown to the employees and their union is required
in 48 percent of labor agreements and the right to transfer to another facility in the event
of a plant closure (often with restrictions based on job openings, employee qualifications,
and seniority) is mentioned in 35 percent.86 As previously discussed, the WARN Act
requires covered employers to provide at least 60 days advance notice to the affected par-
ties in the case of a plant closure or major layoff. Unionized firms experience only
slightly higher layoff rates than nonunion firms in both manufacturing and nonmanufac-
turing industries.87

Alternatives to layoffs as a means of cutting labor costs include a pay freeze, pay cut,
productivity improvement through work-rule changes, addition of new products or ser-
vices, normal attrition and hiring freezes, voluntary leave, early retirement, a reduction in
operating hours, rotating layoffs, work relocation, and job sharing. Job sharing, where
two or more employees share a job by dividing the standard total number of hours for
the job between them, appears in about 6 percent of labor agreements.88 Job sharing
agreements generally specify that the agreement will be implemented for a limited
amount of time. Job sharing enables the employer to retain the skill mix of a full work-
force and consequently retain its investment in employee training, keeps the employer s
unemployment compensation tax contribution rates from increasing, and is considered
by many employers as more equitable than retaining some employees and laying off
others. This approach was used successfully in the hospitality industry following the
events of September 11, 2001, to retain key staff represented by the Hotel and Restaurant
Employees Union.89 Employers have no right to unilaterally institute job sharing
arrangements without first bargaining to an impasse with the bargaining unit representa-
tive, unless such action is permitted by a labor agreement, such as in the management
rights clause.

Independent of union contracts, work sharing programs exist in many states and have
been facilitated by 2012 federal legislation funding such programs as alternatives to layoffs.
For example, a business that faces a slump in demand can reduce employees hours by

20 percent instead of laying off one-fifth of its workforce. In a state with a work sharing
program, workers can apply for and receive prorated unemployment benefits to help com-
pensate for reduced work hours if the employer files a plan with the workforce agency.
Organized labor generally supports these programs provided that, in unionized firms, the
employer secures its union s approval before implementing a work sharing program.90

Legal Issues Involving Seniority in Administrative Determinations
Job rights guaranteed an employee under a labor agreement may pose a potential conflict
with other employees legal rights. Use of seniority in administrative determinations such
as promotions and layoffs has been the focus of much litigation. In some cases it has
been shown that minorities have been locked in departments or jobs with unfavorable
lines of progression, and these practices tend to perpetuate past employment discrimina-
tion.91 Congress specifically granted legal protection to bona fide seniority systems that
were not enacted for the intentional purpose of discriminating on the basis of race, sex,

410 PART 2 The Bargaining Process and Outcomes

and so on, even though the operation of such a seniority system might tend to perpetu-
ate different treatment of some employees.92 Appropriate remedies for an unlawful
seniority plan can include the award of retroactive seniority to employees who were dis-
criminated against.

Although the Supreme Court encourages voluntary affirmative action plans, the high
court upheld the right of white employees to challenge promotions made under a court-
approved affirmative action consent decree when the white employees did not participate
in the negotiation of the plan.93 The white employees sued their employer, claiming
reverse racial discrimination, alleging that they had been denied promotions that had
been awarded to less-qualified black employees under an affirmative action consent
decree entered into by the employer and minority employees to settle the black employ-
ees discrimination claim.

Merely because an affirmative action plan grants a preference to a certain class of
employees (e.g., minorities) for the purpose of addressing past discrimination practices
does not mean the plan is unlawful. The Supreme Court upheld a voluntary affirmative
action plan negotiated between an employer and union intended to increase minority
participation in a skilled-trade apprenticeship training program because the parties
intent in establishing the plan was lawful, the plan was designed to be of a limited dura-
tion, and it did not unnecessarily harm the interests of nonminority employees (i.e., no
nonminority workers lost employment because of the plan, and 50 percent of available
training slots were filled by nonminority applicants).94

The Supreme Court has tended to view permissible affirmative action in employee lay-
offs somewhat differently because a layoff represents the loss of something an employee
already has and a potentially permanent loss of income, thereby representing greater
potential harm to adversely affected employees interests. In one decision the Supreme
Court indicated that in fashioning a remedy for past discriminatory practices, a court can
only award competitive seniority (more days of service than they have actually worked)
to individuals who were the actual victims of a discriminatory practice.95

The Supreme Court has also limited the use of racial preferences in layoff proce-
dures intended to protect minority employees, even though the procedure is part of a
negotiated labor agreement.96 To ensure minority teachers availability to serve as role
models for minority students, a board of education and a teachers union agreed that
the order in which employees were laid off would be determined based on seniority,
except that at no time would the percentage of minority personnel fall below the current
percentage of minority students enrolled. In practice, the layoff procedure resulted in
more senior nonminority personnel being laid off while less senior minority personnel
were retained. The court recognized that the labor agreement provision represented an
affirmative action effort. However, the provision could not be enforced because the pres-
ence of generalized societal discrimination is not a sufficiently compelling reason, absent
evidence of specific discriminatory practices by the board of education or union, to war-
rant a special remedy such as racial preferences in layoffs. The court noted that the same
affirmative action goal could be accomplished without adversely impacting current
employees interests by establishing future minority hiring goals and time tables.

Accommodating seniority and affirmative action interests presents difficult dilem-
mas for both employers and unions. Assuming that employers have increased the hiring
of women and minorities in recent years, the firm s seniority list would consist of more
nonminority and male employees toward the top and a greater proportion of minorities
and women toward the bottom. If an employer was forced to lay off employees, it
would impact minority and female employees more severely under a typical last-hired, first-
fired seniority provision. In those cases where plant, department, or job line-of-progression

CHAPTER 8 Administrative Issues 411

seniority is used, a layoff could erase much of the employer s progress in its minority- and
female-hiring affirmative action plan.

More generally, perceptions of organizational justice play a role in decisions to file
a grievance or lawsuit. An employer who fails to explain to an individual the reason for
his or her layoff may increase the probability of the employee challenging the layoff deci-
sion, alleging some form of discrimination as the basis for the layoff decision. Research
suggests that the perceived fairness of the outcomes (distributive justice), the layoff pro-
cedure (procedural justice), the way that those being laid off were treated (interpersonal
justice), and how information was used and the explanations offered (collectively called
informational justice), can all be relevant when outcomes are negative. For example,
one study found that people who received fair interpersonal treatment and an adequate
explanation at the time of termination were less likely to consider filing a wrongful-
termination lawsuit. Procedural justice during layoffs also enhanced the subsequent orga-
nizational commitment of the survivors, particularly if the layoffs were for increased
profits, rather than economic survival of the firm.97

Passage of the Americans with Disabilities Act of 1990 (ADA) has also required
some accommodation of contractual seniority rights with reasonable accommodation
requirements for persons with disabilities under the ADA. Unions represent both indivi-
duals with disabilities and those without disabilities holding job positions in a bargaining
unit. Does the employer have to negotiate with the union over every ADA-related deci-
sion? For matters that do not significantly affect mandatory bargaining issues, such as
installing a wheelchair ramp or adding braille signs, the answer is no. Similarly, because
most labor agreements do not include provisions on the initial selection of employees,
ADA compliance in the hiring process is essentially the employer s obligation.

Employment decisions after initial hire, such as promotions, transfers, layoffs, and
recalls, are addressed in most labor agreements and come under the employment provi-
sions of ADA. Under ADA provisions, an employer must make reasonable accommoda-
tion for a person with a disability if that accommodation will allow the person to perform
the essential functions of the job. Thus, if an employer can make a modification in a
job s requirements or structure that will not cause the employer undue hardship and
that will allow an employee with a disability to do the job, then that modification or
change in the job must be made. Typically, the employer includes union representatives
in any discussion about reasonable accommodation proposals. Note that an employer is
not required to create special light duty jobs for disabled workers.

The Supreme Court has ruled that an accommodation requested by an individual
with a disability (e.g., assignment to a particular job) will not ordinarily be considered a
reasonable accommodation under the ADA if such an assignment would conflict with

the seniority rights of other employees, provided that seniority is applied consistently
among bargaining unit employees.98 A union has a legal duty to fairly represent both
disabled and nondisabled members in a bargaining unit. Labor organizations seek to
inform members and nonmembers about ADA issues arising under a collective bargain-
ing agreement.99 This represents an area of labor relations that afford both labor and
management opportunities for a cooperative, mutual gain approach to resolving related
issues in a fair and nondiscriminatory manner.

Employee Training

America s continued competitiveness in a global economy depends on how well our
human resources are developed and managed. Many jobs in the future will require work-
ers with higher levels of communication, mathematical, organizational, and interpersonal

412 PART 2 The Bargaining Process and Outcomes

skills. In 2010 the civilian noninstitutional population of the United States was com-
prised of 12.8 percent of individuals with less than a high school education, 31.0 percent
with a high school education, 26.1 percent with an associate degree or some college, and
30.0 percent with a bachelor s or higher college degree.100 The percentage of individuals
who have a college degree or at least some college has approximately doubled over the
past 30 years.101

Despite an increase in the education and training level of American workers, many
employers today continue to speak of a skills gap between the job skills required to fill
current job vacancies and the current job skills of job applicants.102 Senior vice-president
of worldwide manufacturing at Corning Inc., Donald McCabe, has said that less than
50 percent of job applicants at many Corning locations can successfully complete job
qualification tests.103 The American Management Association reports that 36 percent of
job applicants lack the basic math and reading skills to perform the jobs for which they
apply. A recent survey of 1,600 employers reports that 38 percent currently have posi-
tions for which they cannot find qualified candidates. Other writers observe that students
are not well prepared in Science, Technology, Engineering, and Math ( STEM ); yet
these areas are showing significant growth. In 2012, 33 percent of jobs required postsec-
ondary education, with most of those (23 percent) requiring a bachelor s degree or
higher. Unemployment statistics also reflect the importance of educational preparation.
In 2014, the unemployment rate was less than 3 percent for those with a graduate edu-
cation, 3.5 percent for those with a bachelor s degree, 4.5 percent for those with an
associate s degree, 6 percent for those with a high school degree, and 9 percent for
those who had not completed high school.104

In addition to formal education, many businesses place critical importance on the
issue of providing employee training and retraining to ensure future competitiveness.
U.S. companies spend an estimated $70 billion annually to provide training to their
employees, with spending on training increasing at annual rate of 10 percent or greater
each year since 2011.105 Training can occur in a formal, structured program, such as
apprenticeship training, new employee orientation, safety and health, basic skills (e.g.,
reading, math, and computer) or job-specific skills training. Training can also occur on
a more informal basis, such as on-the-job training or mentoring by a more experienced
employee. The availability of formal training programs has been shown to be positively
correlated with large-size firms, the use of so-called high-performance work practices
(e.g., total quality management, work teams), use of more capital intensive technologies,
and workers possessing higher levels of education.106 Employees working in firms with a
high turnover rate are less likely to receive training than those employed at firms with
medium or low employee turnover.107 Employers are often reluctant to invest in employ-
ees who aren t likely to remain on the job long enough to recoup the initial training
investment. Because unionized firms tend to experience lower turnover rates compared
to nonunion firms, over time union members have the ability to acquire more training
related to a firm s specific job tasks and technologies, which can enhance productivity.

Most firms offer one or more types of formal training; however, the specific types of
training and amount of training provided vary by industry.108 The most common types
of formal training programs focus on new employee orientation, safety and health, job
skills, and workplace practices. The most common job skills taught are sales and cus-
tomer relations, management skills, and computer skills. Although there is little differ-
ence in the total hours of formal training provided per employee between union and
nonunion firms, unionized firms provide a greater percentage of training hours through
formal, structured programs (36 percent) compared with nonunion firms (28 percent).
Greater employer willingness to invest in formal training programs in unionized firms

CHAPTER 8 Administrative Issues 413

reflects the longer tenure of unionized employees with the same firm (43 percent have
ten or more years compared with 23 percent of nonunion employees with the same
length tenure), making the training investment more cost effective.109

U.S. employers now recognize that they are facing a training dilemma because
advances in technology and global competition require a more highly skilled workforce.
With the exception of the building trade unions that have long been providers of
apprenticeship training, U.S. unions have traditionally left training activities to manage-
ment. Joint union management administered apprenticeship programs in the construc-
tion industry report higher rates of completion and greater participation by women and
ethnic/racial minorities compared to programs run unilaterally by nonunion (open shop)
employers.110 Many unions recognize that promoting a knowledge-based workforce is a
critical strategy for economic development and employment security. 111

Unions have begun to take a more active role in response to increased interests from
management in implementing new work practices such as continuous improvement in
quality, productivity, and customer service. One survey of labor agreements reported that
15 percent contained language concerning high-performance work organization (HPWO).
Although definitions of HPWO vary, John Tomer posits that, the essential characteristics
[of HPWO] are the seven key dimensions identified by Jeffrey Pfeffer in The Human
Equation (Harvard Business Review Press, 1998, chapter 3). These are (1) employment secu-
rity; (2) selective hiring of new personnel; (3) self-managed teams and decentralization
of decision making as the basic principles of organizational design; (4) comparatively high
compensation contingent on organizational performance; (5) extensive training; (6) reduced
status distinctions and barriers, including dress, language, office arrangements, and wage
differences across levels; (7) extensive sharing of financial and performance information
throughout the organization. 112 As listed, training is a key component of HPWO.

A 2014 survey of employers involved in contract negotiations reported 30 percent
had contract language covering professional development programs and 14 percent
addressed retraining programs in their contract language.113 Ensuring that workers
receive adequate training to meet current skills requirements and develop necessary
future skills is important to any union seeking to base future economic gains and job
security on productivity improvement.

Unions have a long history of working with employers to provide training opportu-
nities for employees. For example, the UAW union has joined Ford, GM, and Chrysler
in developing an impressive set of programs for employees to upgrade their skills and
further their education in personal and work-related matters. One program is the Paid
Education Leave Program, which provides leadership training to both production and
managerial employees to equip them to take an active role in the economic transforma-
tion occurring in the automobile industry.114 Four unions, UAW, United Steelworkers of
America, Communications Workers of America (CWA), and UNITE, in conjunction
with the AFL-CIO s George Meany Center for Labor Studies and the U.S. Department
of Labor, have organized the Labor Leadership Institute, designed to develop skills for
co-management within these respective industries. The United Steelworkers union has
joined with 14 steel and rubber companies to form the Institute for Career Development,
which provides customized training programs for employed union members, those work-
ing reduced hours, or those fully employed seeking to upgrade current skill levels to
enhance future work opportunities. In San Francisco, the Hotel Employees and Restau-
rant Employees Union negotiated an agreement with 12 hotels to create a $3 million
training program directed toward employee empowerment, consensus decision making,
and skill development in new technologies. State labor organizations such as the Ala-
bama AFL-CIO s Labor Institute for Training or the Wisconsin AFL-CIO s Labor

414 PART 2 The Bargaining Process and Outcomes

Education and Training Center are also actively involved in meeting workforce-training
needs.115

Some experts have called for improved efforts between business, labor, government,
and educational institutions to develop programs that will prepare American workers for
future work opportunities.116 The National Science Board has called for a renewed effort
to identify and develop talented individuals in the areas of science, technology, engineer-
ing, and mathematics to ensure future prosperity of the United States.117 Innovation is
not the product of a haphazard process or very often plain luck. It requires intensive
training, logical thought, perseverance, and a creative and inquisitive nature which does
not hesitate to ask both why and why not. In the current climate of government budget
cutting, it would benefit decision makers to distinguish between expenditures that repre-
sent an investment in meeting vital future needs and expenditures that offer little return
on the use of tax dollars.

Work Restructuring

Unions and companies are changing the nature of the work performed by employees.
Work restructuring programs have many different labels, such as employee involve-
ment, worker participation, cross-training, multiskills, or self-managed work teams. All
such programs typically involve major departures from the traditional way of assigning
specific tasks to each employee. For example, a semi-autonomous work team may
include 5 to 12 multiskilled workers who rotate jobs and produce an entire product
with a minimal amount of supervision. A few companies go one step further and create
autonomous, self-managed work teams (also called self-directed work teams ), which
determine production methods without any direct supervision. For example, Connecticut
Spring & Stamping, a metal parts manufacturer, uses self-managed work teams. The
teams assume responsibility for coordinating work schedules (e.g., to avoid attempting
to schedule different jobs on the same machine at the same time). They also have chan-
ged the facilities layout, moving related machinery closer together and have created a
reward system for meeting team objectives.118

The team approach reduces the need for multilevel managerial tiers of authority and
tears down bureaucratic barriers between departments. A team approach requires
employees to improve their technical and behavioral skills. Some work teams not only
gain a more direct voice in shop floor operations but also take over some managerial
duties, such as scheduling work and vacations, hiring new members, and ordering mate-
rials. These programs have unleashed enormous energy and creativity in employees and
increased their feelings of dignity and self-worth. Work restructuring programs have
enjoyed success in companies like General Electric, Champion International, Lucent
Technologies, and Harley Davidson Motor Company.

A study by the U.S. Department of Labor and Ernst & Young found that American
companies have discovered that investing in employees and innovative workplace strate-
gies pays off in profits.119 Innovative work practices are most effective when implemen-
ted in conjunction with employee training and empowerment programs. The study
found that those companies that adopted aggressive employee development and involve-
ment practices, such as skill training and team-based management, made significantly
larger productivity gains than those that did not.

While innovative work practices may have a positive effect on firm performance, the
exact magnitude of that effect and the ability to sustain performance gains over time are
still questions of research interest.120 One study reported that the adoption of many
high-performance work practices actually resulted in greater wage inequality among

CHAPTER 8 Administrative Issues 415

employees within the firm over time, and other studies have pointed to higher levels of
employee stress when jobs are enhanced.121 Some union members may also cling to a
belief that adversarial labor relations can produce greater economic gains and power for
workers than a more cooperative labor relations approach inherent in many high-
performance work environments. There appears to be a gap between what some firms
say about the importance of training and employee involvement and the commitment
to expend scarce corporate resources and time to implement such practices.

One of the major efforts in work restructuring, particularly in the metals industry,
has been the development of cell manufacturing. The need to improve product quality
has driven companies to realize that using traditional functional layouts of similar
machinery for batch manufacturing is costly and obsolete. Cell manufacturing involves
placing groups of dissimilar machinery in a small, cell-like configuration dedicated to
machining a particular part or family of parts. Engineers experiment with machine place-
ment, scheduling, and sequencing of operations to improve productivity and efficient use
of machinery. Cell manufacturing requires highly skilled employees; these workers are
generally more satisfied with their jobs because their tasks are varied and their authority
is enhanced. Cell manufacturing is usually accompanied by just-in-time (JIT) inventory
control and employee involvement (EI) programs. In cell manufacturing, employees are
trained to perform new tasks, assume more responsibility, relinquish old habits and
ideas, and become more involved in decision making through participation in work
teams. Cell manufacturing is not an anti-union device, and unions around the United
States are actively involved in these innovative efforts to make their companies more
competitive. Active union involvement and cooperation in change efforts serve to reduce
employee resistance to cell manufacturing.122

Safety and Health

Occupational safety and health clauses are common in labor agreements. The topics
covered range from a pledge of cooperation on safety and health issues (64 percent) to
the establishment of a joint local labor management safety and health committee (50 per-
cent), provision for protective clothing (41 percent), safety rules (36 percent), reporting
of safety and health needs (31 percent), first aid and medical facilities (24 percent), the
use of a separate grievance procedure for safety and health disputes (23 percent), joint
labor management involvement in conducting ergonomic evaluations and studies (23
percent), procedures for refusing to perform hazardous work (22 percent), and joint
labor management committee review of hazardous communication programs (22 per-
cent).123 Many of these provisions have resulted from safety and health standards formu-
lated under the 1970 Occupational Safety and Health Act (OSHA); the emergence of
new biological, ergonomic, and chemical hazards in the workplace (e.g., AIDS, cumula-
tive trauma); rising health care treatment costs and greater awareness of the benefits of
preventive health care; and an increase in legal claims filed by employees and attorneys
related to occupational injury and disease.

The employer s overriding duty under OSHA is to furnish each employee with a
work environment free from recognized hazards that may cause illness, injury, or death
and to comply with all occupational safety and health standards adopted by the Depart-
ment of Labor. The Occupational Safety and Health Administration (an agency within
the U.S. Department of Labor responsible for administering the Occupational Safety
and Health Act) is a fairly small agency with less than 2,500 inspectors to cover 7.5 mil-
lion workplaces and more than 130 million workers.124 Assistant Secretary of Labor for
Occupational Safety and Health, Dr. David Marsh states that OSHA must carefully

416 PART 2 The Bargaining Process and Outcomes

target its efforts and leverage its resources. One way to do that is through targeted
inspections and penalties. Even there we are hobbled. The maximum fine for a serious
violation is $7,000 a small fraction of those imposed by other federal agencies. By com-
parison, the top penalty for violating the South Pacific Tuna Act is $350,000. Similarly,
the maximum criminal penalty for a worker s death associated with a willful violation of
an OSHA standard is a misdemeanor with up to six months in jail; yet harassing a wild
burro on federal land is a felony with a sentence up to one year. 125 The Obama admin-
istration has implemented a three-prong strategy to address existing deficiencies in the
law and improve worker safety and health by (1) focusing closer scrutiny on the small
number of employers with a documented history of willingness to commit safety and
health violations, (2) strengthening the use of monetary penalties provided under current
law, and (3) publicizing the poor safety and health records of employers who do not vol-
untarily attempt to comply with established health and safety regulation.

In FY 2013, OSHA conducted 39,228 work site inspections and found 78,196 viola-
tions. Of these, there were 185 significant and egregious violations warranting enforce-
ment.126 Currently 27 states and U.S. territories operate their own safety and health
programs that enforce safety and health standards at least equivalent to federal standards
as permitted by Section 18 of the OSH Act of 1970. Four of these states (Connecticut,
Illinois, New Jersey, and New York) and the Virgin Islands have plans which cover only
public-sector employees.127 OSHA provides up to 50 percent of the cost of operating a
state plan. Such plans must be approved by OSHA and are subject to annual federal
monitoring of their activities. Health and safety inspections at both the federal and state
level typically target industries or specific employers that historically experience a higher
rate of job-related injuries and illnesses. OSHA works with both employers and labor
organizations through partnerships and cooperative programs to improve awareness of
and compliance with guidelines and work practices designed to improve the safety and
health of employees.

Even though the agency is small, OSHA and its corresponding state agencies claim
success in making workplaces safer. In 2013, 3.0 million private-sector nonfatal injuries
and illnesses were reported, which is 3.3 cases per 100 full-time employees. This continues
a decline in reported cases which has occurred since 1972 (when there were 10.9 cases per
100 workers) and 2003 (when there were 5.0 injuries and illnesses per 100 workers and
when the government altered its data collection methods).128 The manufacturing industry
sector reported a 23 percent decline, and the construction industry sector reported a 22
percent decline in nonfatal injuries and illnesses from 2008 levels. Several factors have
been suggested as contributing to the decline, including better safety and health practices
by employers, fewer hours worked by employees due to the economic recession, and over-
reliance on data provided by employers who may have an economic incentive to under-
report the actual number or severity of injuries and illnesses occurring.

Critics of efforts to strengthen safety and health laws, such as the Protecting
America s Workers (PAW) Act proposed in 2009, point to the decline in reported ill-
nesses and injuries as evidence that current law is adequate to protect the legitimate safety
and health interest of American workers.129 Labor organizations, such as the AFL-CIO,
are supportive of federal proposals to more vigorously enforce safety and health law and
generally favor strengthening such efforts by creating additional standards to address spe-
cific safety and health issues. For examples of union efforts to address domestic violence
issues, see the Labor Relations in Action feature on page 419. In the view of many labor
organizations, conducting a federal OSHA workplace inspection on average once every
137 years or a state program inspection once every 63 years places too much reliance on
voluntary employer compliance to ensure safe and healthy workplaces.130

CHAPTER 8 Administrative Issues 417

In the United States in 2013 there were 4,585 deaths at work, which is 3.3 per
100,000 workers. This was down from 4,628 in 2012 and 6,217 in 1992 when OSHA
and the Bureau of Labor Statistics first started keeping such records. Private-sector work-
ers accounted for 90 percent of all fatal work injuries, with the two industry sectors
accounting for the largest percentage of fatalities being construction (18 percent) and
transportation and warehousing (16 percent).131

A study by the Congressional Office of Technology Assessment (OTA) revealed that
OSHA has generally performed its regulatory tasks with workable accuracy, and actual
employer costs of compliance with OSHA standards were often less than the agency s
initial estimates. One reason for the lower than expected costs was employers retooling
and modernization efforts to meet OSHA standards. OTA reported, for example, that the
costs of complying with OSHA s vinyl chloride standard was 25 percent less than ini-
tially estimated, and compliance with the cotton dust standard was 33 percent less than
OSHA s estimate.132

Employers must permit inspectors to enter their establishments and conduct inspec-
tions (although the employer may require the inspector to obtain a search warrant) and
must post notices, provide equipment, and maintain records in accordance with OSHA s
rules and regulations.133 Employees have a right to refuse to perform work that they
believe represents a serious threat to their safety or health.134

OSHA applies some safety and health standards across all industries while additional
standards may be required for specific industries.135 One standard requires employers to
grant employees (or their designated union representative) access to their medical
records maintained by the employer or any records concerning any employee s exposure
to toxic substances. Generally, OSHA does not require employers to measure employees
exposure to toxic substances or to conduct medical surveillance of employees to detect
the effects of such exposure, but only to grant employees access to such information if
such records are kept by the employer.

A second standard requires an employer to provide necessary personal protective
equipment at no cost to the employee. This might include items such as protective hel-
mets, eye and hearing protection, hard-toed shoes, or special goggles for welders.

Third, the hazard communications standard requires employers who manufacture or
use materials to label all hazardous material containers, include a material safety sheet to
inform customers about the nature and proper use of the hazardous materials, and train
their employees to recognize and properly handle or avoid hazardous materials in the
workplace.

A fourth standard requires employers (except in certain low-hazard industries such
as retail, insurance, and finance) to maintain an injury/illness log to record the occur-
rences and causes of anything beyond minor job-related injuries or illnesses. For exam-
ple, injuries or illnesses that require more medical treatment than simple first aid or
involve loss of consciousness, lost work time, or transfer to another job must be
recorded.

The ten most frequently cited standards resulting from OSHA workplace inspections
in FY 2014 were scaffolding; fall protection; hazard communication; scaffolding; respira-
tory protection; powered industrial trucks; lockout/tagout (which involves preventing the
operation of dangerous machines needing repair and minimizing the exposure of work-
ers to electrical energy, when repairing or maintaining machines); ladders; electrical wir-
ing methods; machine guarding and electrical systems design.136 Human resource
departments that implement a comprehensive set of safety procedures and engage the
workers in suggesting safety-related improvements tend to have fewer accidents and
less time lost from work due to accidents, and HR managers must be vigilant in

418 PART 2 The Bargaining Process and Outcomes

LABOR RELATIONS IN ACTION
Domestic Violence and Trade Unions

Domestic violence is defined as the willful intimidation,
physical assault, battery, sexual assault, and/or other
abusive behavior as part of a systematic pattern of
power and control perpetrated by one intimate partner
against another. It includes physical violence, sexual vio-
lence, threats, and emotional abuse. a Unfortunately,
domestic violence occurs in many homes, against both
women and men as well as against children. Between
20 and 25 percent of women and between 3 and14 per-
cent of men report having been victims of such violence
during their lifetime.b Violence can affect victims at work
directly, as when an angry ex goes to a workplace to
commit violence (because that is where they can easily
find their former lover). Although rare, domestic vio-
lence sometimes results in workplace homicide:
Between 2003 and 2008, 142 women were murdered
at work by their former lovers.c Violence can also affect
organizations indirectly, because of lost productivity,
absences (e.g., victims missing work due to appearing
in court to secure restraining orders), and victims need-
ing medical treatment.

Recognizing that domestic violence affects far too
many members, some labor unions have begun speaking
out on this issue. Some participate in raising funds for
victims and or working with local groups to offer anger
management training and counseling to union members
or their families.d Other unions have negotiated with
employers to provide training to workers to understand
and prevent domestic violence some training includes
other forms of violence at work, including bullying.e

Unions in Australia have gone one step further in
addressing this issue: Many have negotiated domestic
violence clauses in their labor agreements. What has
prompted the unions to seek such clauses is a report
from the Australian Domestic & Family Violence Clear-
inghouse indicating that the voluntary measures that
employers have adopted are inadequate, and inconsis-
tently applied.f

Union leaders tend to view domestic violence
clauses from a threefold perspective. First, it is a medical
issue, as victims may need physical treatment and psy-
chological counseling. Second, it is a safety issue; if a for-
mer lover who is prone to violence can easily find an
employee, it creates an unsafe working situation for the
victim and their co-workers and the victim may need to
quietly transfer into a different department and/or have
the employer increase physical security measures. Third,
it is a gender equity issue, because domestic violence
predominately victimizes women. In Australia, where the
labor unions made a commitment to add such clauses to

collective bargaining agreements, and where records are
kept of their success, over 100 domestic violence clauses
have been negotiated since 2010.

What is included? Here is an example of a domes-
tic violence clause:

Twenty days per year of paid special leave for
medical appointments, legal proceedings and
other activities related to domestic violence will be
provided.
All personal information concerning domestic vio-
lence will be kept confidential and no information
will be kept on the employee s personnel file with-
out their express written permission.
No adverse action will be taken against an
employee if their attendance or performance at
work suffers as a result of experiencing domestic
violence.
The employee can request a change in hours, job
duties, telephone and email details and location of
work. g

How well domestic violence clauses work, whether
they are costly to businesses, whether additional bene-
fits are warranted, and both employee and employer
satisfaction with the procedures needed to implement
these new types of contract clauses all are issues that
need evaluation. Time will tell whether these clauses
become widespread in other countries also.

SOURCES:
aNational Coalition Against Domestic Violence, Domestic Violence: Statistics, Septem-
ber, 2014, p. 1, at http://www.ncadv.org/images/National_Domestic_Violence_Statis-
tics.pdf.
bAmerican Bar Association, Domestic Violence Statistics, n.d., at http://www.
americanbar.org/groups/domestic_violence/resources/statistics.html; M.C. Black, K.C.
Basile, M. J. Breiding, S. G. Smith, M.I. Walters, M.T. Merrick, J. Chen, & M. Stevens,
(2011). The National Intimate Partner and Sexual Violence Survey: 2010 Summary Report,
National Center for Injury Prevention and Control, Centers for Disease Control and
Prevention, 2010, at http://www.cdc.gov/violenceprevention/pdf/nisvs_report2010-a.pdf.
cEmily F. Rothman, Jeanne Hathaway, Andrea Stidsen, and Heather F. de Vries, How
Employment Helps Female Victims of Intimate Partner Abuse: A Qualitative Study,
Journal of Occupational Health Psychology, 12(2), 2007, pp. 136 143.
dGeorge Gresham, Domestic violence is a union issue, New York Amsterdam News
[online], 102 (35), September 7, 2011.
eCammie Chaumont Menendez, K. C. Wagner, Diane Yates, and Quentin Walcott,
Engaging men and women as allies: A workplace curriculum module to challenge

gender norms about domestic violence, male bullying and workplace violence and
encourage ally behavior, Work 42 (1), 2012, pp. 107 113.
fS. Murray and A. Powell (2008), Working it Out: Domestic Violence Issues and the
Workplace, Issue paper 16. Australian Domestic and Family Violence Clearinghouse
UNSW, at http://www.adfvc.unsw.edu.au/PDF%20files/Issues%20Paper_16.pdf.
gMarian Baird, Ludo McFerran, and Ingrid Wright, An equality bargaining break-
through: Paid domestic violence leave, Journal of Industrial Relations, 56 (2), 2014,
pp. 190 207.

419

understanding and following OSHA standards. When OSHA enacts a new standard
it can impact an organization s HR practices.137 For example, it can affect employee
training, monitoring, and controlling practices, or it may require an adjustment in
the job description of some jobs to account for new safety and health knowledge or
responsibilities required of a job holder. Business interests often oppose the creation of
new safety standards on the grounds that they are either unnecessary, too costly to
implement, lack adequate scientific evidence on which to establish a required safe
level of operation, or would be administratively burdensome on the employer. After
OSHA proposes a health or safety standard, there is an extensive period of public
comment in which interested parties may propose various changes in the proposed
rule, resulting eventually in a final standard being adopted.

Safety and health issues can result in controversial legal outcomes. For example, the
Supreme Court ruled that companies could not bar women from jobs that may be haz-
ardous to unborn children.138 The court explained that decisions about the welfare of
future children must be left to the parents. Unions and women s groups had challenged
the policy of Johnson Controls, Inc., an automobile battery manufacturer, which banned
women who could not prove they were infertile from working in areas of the plant where
they were exposed to lead, the principal material used in making batteries. The challen-
gers successfully argued that the company policy discriminated against female employees
because they were blocked from being considered for higher-paying jobs. To reduce the
possibility of potential employer liability, employers were advised to fully inform
employees of any potential health or safety risks involved in the performance of a partic-
ular job.

The Johnson Controls (1991) decision, which permits the employee to decide if she is
willing to risk exposure to potential hazards on the job, would appear to be at odds with
the Supreme Court decision in Chevron U.S.A. Inc. v. Echazabal (2002), where the court
ruled an employer cannot be required to make a reasonable accommodation to enable
the hiring of a disabled person under the Americans with Disabilities Act if the job
tasks could be hazardous to the disabled person.139 The job applicant in the case had a
liver condition, which the employer argued would pose a direct health threat to the job
applicant because of chemicals present in its oil refinery, even though the applicant had
been previously employed by an independent contractor at the employer s oil refinery.
The court stated that, were an employer to hire a disabled person who knowingly con-
sented to the particular hazards of the job, the employer might run afoul of the OSHA
mandate to ensure the safety of every worker.

Summary
This chapter has explored five general categories of
administrative issues technological change, job secu-
rity and personnel changes, employee training, work
restructuring, and safety and health. Each of these
areas has many important facets that may be negoti-
ated and become part of a labor agreement.

Technological change, an essential ingredient of a
dynamic economic system, is broadly defined to
include such activities as introduction of laborsaving
machines, power-driven tools, and automatic loading

equipment. Although unions generally accept techno-
logical change as inevitable with both positive and neg-
ative impacts on bargaining unit members interests,
they attempt to negotiate contract language which
will protect members present jobs, ensure appropriate
compensation for work performed, and establish the
means for ensuring future protection of members
interests.

Job security and personnel changes are two inter-
related issues that raise challenges for both labor and

420 PART 2 The Bargaining Process and Outcomes

management. Unions often seek to protect their mem-
bers by negotiating workload restrictions, limiting
management s right to subcontract or outsource bar-
gaining unit work, demanding specific work assign-
ments and jurisdiction, or structuring jobs and work
schedules to benefit employees. When personnel
changes occur (e.g., layoff, promotion, job transfer),
seniority may become a key decision criterion. Employ-
ees like the objectivity of seniority determinations and
generally believe long-term satisfactory performance
should be rewarded. Both employers and unions must
be concerned with ensuring that only qualified indivi-
duals are placed in job positions. Striking the appropri-
ate balance between seniority and job performance as
criteria in human resource decisions is a topic to be
resolved through the negotiation process. Employers
and unions must consider EEOC regulations and
court rulings in addition to contractual language
when deciding personnel changes.

Employee training has taken on increasing impor-
tance in maintaining competitiveness in today s global
economy. Unions and employers alike expend much

effort in providing training programs to match employ-
ees skills with the requirements of work restructuring.
Work restructuring efforts are often initiated by man-
agement, but union cooperation is essential to the com-
plete success of such programs. Although some unions
are reluctant to become involved with work restructur-
ing initiatives, major breakthroughs have been identi-
fied involving some unions, such as the UAW and
Machinists unions.

Safety and health issues have become more impor-
tant since the passage of the Occupational Safety and
Health Act of 1970. Safety and health is clearly an area
with great potential for fostering union management
cooperation with tangible benefits accruing to both
labor and management interests. Recent improvement
in decreasing the frequency of workplace accidents and
illnesses can be attributed in part to a greater awareness
of the economic benefits of hazard prevention; better
cooperation between government, employers, and
unions regarding approaches to improve workers
safety and health; and the presence of safety standards
provided by federal and state laws.

Key Terms
technological change, p. 388
automation, p. 388
effects bargaining, p. 389
high-performance work organization

(HPWO), p. 390
deskilling, p. 392
psychological contract, p. 394
job security, p. 394
featherbedding, p. 395
Worker Adjustment and Retraining

Notification Act (WARN), p. 397
subcontracting, p. 399
outsourcing, p. 399
offshoring, p. 399

Fibreboard ruling, p. 401
jurisdictional disputes, p. 403
instructional situations, p. 404
experimental work, p. 404
emergency situation, p. 404
flextime, p. 406
compressed workweek, p. 406
seniority, p. 406
benefit rights, p. 407
competitive job rights, p. 407
bumping rights, p. 408
superseniority, p. 408
job sharing, p. 410
work sharing, p. 410

Organizational justice, p. 412
Distributive justice, p. 412
Procedural justice, p. 412
Interpersonal justice, p. 412
Informational justice, p. 412
Americans with Disabilities Act of

1990, p. 412
reasonable accommodation, p. 412
work restructuring, p. 415
semi-autonomous work teams, p. 415
self-managed work teams, p. 415
Occupational Safety and Health Act

(OSHA), p. 416

Discussion Questions

1. My employer monitors my e-mail and Internet
usage at work and tracks my location through the
GPS feature of my cell phone. I receive work-
related text messages or voice mails almost every
day of the week and often after normal scheduled
work hours. These messages are often seeking
information or making comments that could

easily have waited until the next business day.
I am frustrated that I always seem connected to
work with little private time to pursue my own
interest. What advice could you give me on how
to manage the job stress of working in a techno-
logically connected work environment? Is there
any way I can capture some private time without

CHAPTER 8 Administrative Issues 421

making it appear to my employer that I m not
motivated to constantly improve my job perfor-
mance? Also, under what conditions does my
employer have to pay me overtime for such
work?

2. Think of an industry or company with which you
are familiar, and assume that you are the local
union president. What types of clauses regarding
technological issues would you attempt to nego-
tiate with the employer?

3. Discuss the advantages and disadvantages of out-
sourcing or offshoring jobs. Should a worker in
today s economy have any reasonable expectation
of job security? Explain your reasoning.

4. Discuss some of the advantages and disadvantages
of using seniority as a factor to determine shift
preference or overtime assignments.

5. Explain why unions often place a priority on
seniority in personnel decisions, whereas

employers tend to emphasize ability to perform
the job. Based on your own experience with work
performance appraisals conducted by managers,
how confident are you that managers can effec-
tively judge legitimate differences in performance
between two or more employees?

6. Who has the responsibility of ensuring a safe and
healthy work environment? Who should pay to
provide this work environment? Should it be the
employer, union, individual employees, or
government?

7. Several alternative work schedules (e.g., flextime,
compressed workweek) were discussed in this
chapter. What would be your ideal 40-hour
workweek schedule? Why? How likely are you to
achieve that ideal work schedule in the career you
currently have or intend to pursue upon com-
pleting your education?

Exploring the Web

Administrative Issues

1. WARN. Review the U.S. Department of Labor s
Worker Adjustment and Retraining Notification
(WARN) Act compliance assistance materials at
http://www.doleta.gov/Layoff/warn.cfm. In addition
to the Worker s Guide and Employer s Guide, check
out the Frequently Answered Questions link for a
better understanding of the WARN Act.

2. Safety and Health. Please answer THREE of the
following:

(a) Identify the states and territories which currently
operate state level safety and health plans approved
by OSHA at https://www.osha.gov/dcsp/osp/
index.html. Generally, what must states do to
have their plans approved by OSHA?

(b) Identify the ten general industry safety and
health standards which are most frequently
accessed by parties seeking information from
OSHA at http://www.osha.gov/.

(c) Examine fatality at work data from OSHA at
http://www.bls.gov/iif/oshcfoi1.htm#charts.
What causes most fatalities? Are there different
causes for men and women? For different racial
and ethnic groups?

(d) Examine recent nonfatal injuries and illnesses
at work data from the Bureau of Labor Statistics
(e.g., see http://www.bls.gov/news.release/pdf/
osh2.pdf). What causes most of these statistics?
Are there different causes for men and women?
For different racial and ethnic groups?

3. Electronic Monitoring. Using (and citing) at least
five articles from the LexisNexis Academic database
or a similar database, explore (1) the managerial, (2)
legal, and/or (3) labor relations aspects of electronic
monitoring of employees. Is new legislation war-
ranted? Use the following articles as a starting
point (you may use others also).
Managerial: (1) Deborah Jeske, and Alecia M. San-
tuzzi, Monitoring what and how: psychological
implications of electronic performance monitoring,
New Technology, Work and Employment 30 (1),
2015, pp. 62 78; (2) Chen, J. V., & Ross, W. H.,
The decision to implement electronic monitoring

at work: A literature review and a set of testable
research propositions, International Journal of
Organizational Analysis, 13(3), 2005, pp. 244 268.
Legal: (1) Ariana R. Levinson, Carpe Diem: Privacy
Protection in Employment Act, Akron Law Review,

422 PART 2 The Bargaining Process and Outcomes

43, 2010, pp. 331; (2) Susan Park, Employee Internet
Privacy: A Proposed Act that Balances Legitimate
Employer Rights and Employee Privacy. American
Business Law Journal 51 (4), 2014, pp. 779 841.
Labor Management Relations: (1) Karin Mika,
Privacy in the Workplace: Are Collective Bargain-

ing Agreements a Place to Start Formulating More
Uniform Standards, Willamette Law Review 49,

2012, pp. 251 274; (2) Jeffrey M. Hirsch, Worker
Collective Action in the Digital Age, West Virginia
Law Review (2015).

4. Labor force projections. Explore some of the key
trends which will be affecting the U.S. labor force
over the next five to ten years. Use the most recent
projections found at http://www.bls.gov/emp/
ep_pub_labor_force.htm as your starting point.

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CHAPTER 8 Administrative Issues 425

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51. Deloitte Consulting LLP, Calling a Change in the
Outsourcing Market: The Realities of the World s

426 PART 2 The Bargaining Process and Outcomes

Largest Organizations (New York: Deloitte
Development LLC, 2005), p. 6. See also Phanish
Puranam and Kannan Srikanth, Business Insight
(A Special Report): Global Business; Seven Myths
about Outsourcing: No. 1: We Can Have It All ,
Wall Street Journal, June 16, 2007, p. R-6.

52. Francesco Zirpoil and Markus C. Becker, What
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ness Information Systems, 14(1), 2010, pp. 39 42;
Dave Luvison and Mike Bendizen, The Behav-
ioral Consequences of Outsourcing: Looking
Through the Lens of Paradox, Journal of Applied
Management and Entrepreneurship, 15(4), 2010,
pp. 28 52; American Society For Quality, BPO
Providers Fall Short on Services, ASQ Survey
Shows, News Release, October 28, 2010, p. 102 at
http://www.asq.org/media-room/press-release/
2010/20101028-bpo-providers-fall-short-on-ser-
vice.html (accessed February 10, 2011).

53. Carl P. Maertz Jr., Jack W. Wiley, Cynthia
LeRouge, and Michael A. Campion, Downsizing
Effects on Survivors: Layoffs, Offshoring, and
Outsourcing, Industrial Relations, 49(2), 2010,
pp. 275 285.

54. Chester Dawson, Corporate News: Nissan
Presses Export Brakes; Amid Strong Yen, the
Japanese Automaker Will Shift More Production
Overseas, Wall Street Journal, February 1, 2011,
p. B-2; Steven Ribet, American Axle: Low-cost
China s a Very Good Fit, Automotive News,
83(6339), 2008, p. 9; Garel Rhys, Seeking World
Peace, Engineering and Technology, 3(2), 2008,
pp. 70 71.

55. Charles R. Perry, Outsourcing and Union
Power, Journal of Labor Research, 18, Fall 1997,
pp. 521 533; Justin Hyde, GM Applies Lessons
to New Factory, Associated Press, January 31,
2000, pp. 1 3.

56. Graham Warwick, The Outsourced Worker,
Aviation Week and Space Technology, 170(1),
2009, p. 51; Widgetless in Wichita, Economist,
October 14, 1995, p. 77; Kuang-Chung Hsu,
Shinn-Juh Lin, and Yungho Weng, Do Labor
Unions Hinder or Boost International Outsour-
cing? Evidence from US Manufacturing, The
International Trade Journal, 29(2), 2015,
pp. 142 162.

57. Boeing Should Use 787 Delay to Re-evaluate
Outsourcing; SPEEA Ready to Help Return to
Engineering Excellence, Business Wire, Decem-
ber 3, 2010, pp. 1 2; Jeremy Lemer, Boeing 787
Risks Further Setbacks, Financial Times,
November 13, 2010, p. 9; Joseph Weber, Boeing
to Rein in Dreamliner Outsourcing, Business
Week Online, January 19,2009, p. 10; Denning,
Stephen. What went wrong at Boeing. Strategy
& Leadership, 41(3) 2013, pp. 36 41; Michael
Hiltzik, 787 Dreamliner teaches Boeing costly
lesson on outsourcing, Los Angeles Times [online
edition], February 16, 2011, at http://articles.
latimes.com/2011/feb/15/business/la-fi-hiltzik-
20110215.

58. The Bureau of National Affairs, Inc., Employer
Bargaining Objectives 2014 (Washington, DC:
Bureau of National Affairs, Inc., 2014), p. 62.

59. Jane Wills, Subcontracted Employment and Its
Challenges to Labor, Labor Studies Journal,
34(4), 2009, pp. 441 460; Micah Landau, Steep
descent of airport wages prompts ground fight,
United Federation of Teachers: Labor Spotlight,
[New York Teacher Issue], March 6, 2014, at
http://www.uft.org/labor-spotlight/steep-descent-
airport-wages-prompts-ground-fight.

60. Marvin J. Levine, Subcontracting and Privatiza-
tion of Work: Private and Public Sector Devel-
opments, Journal of Collective Negotiations in the
Public Sector, 19(4), 1990, pp. 275 277.

61. Marlise McCammon and John L. Cotton, Arbi-
tration Decisions in Subcontracting Disputes,
Industrial Relations, 29, Winter 1990, p. 142;
International Brotherhood of Teamsters, Local
553, v. Fred Schildwachter & Sons, Inc., at AAA
133000025313 (2013).

62. Dubuque Packing Company, Inc., and UFCW,
Local 150A (Dubuque IL), 303 NLRB 386 (1991);
enforced, 1 F.3d 24 (DC Cir. 1993).

63. Christopher Hexter, Wesley Kennedy, Alexia
Kulwiec, and Peter Janus, Twenty-five Years of
Developments in the Law under the National
Labor Relations Act, ABA Journal of Labor and
Employment Law, 25(3), 2010, pp. 1 4 at http://
www.proquest.com/ (accessed February 13, 2011);
Roger S. Wolters and Stewart D. Langdon, The
Duty to Bargain over Business Decisions, Labor
Law Journal, 43, September 1992, pp. 583 587.

64. Kenneth A. Jenero and Patrick W. Kocian, The
Relocation of Work between Plants: A Planning

CHAPTER 8 Administrative Issues 427

Checklist of Statutory and Contractual Obliga-
tions, Employee Relations Law Journal, 20,
Spring 1995, p. 622.

65. Leonard E. Cohen, The Duty to Bargain over
Plant Relocations and Other Corporate Changes:
Otis Elevator v. NLRB, Labor Lawyer, 1, Summer
1985, pp. 525 532.

66. National Labor Relations Board, Case Handling
Manual Part One: Unfair Labor Practice Pro-
ceedings (Washington, DC: U.S. Government
Printing Office, 2009), Section 10206-10220;
James K. McCollum and Edward A. Schroeder IV,
NLRB Decisions in Jurisdictional Disputes: The

Success of the 10(k) Process, Employee Relations
Law Journal, 13(4), 1988, pp. 649 652; and
NLRB, Seventieth Annual Report, 2005, p. 130.

67. AFL-CIO, Constitution: Article XX: Settlement of
Internal Disputes, 2015, pp. 1 4 at http://www.
aflcio.org/About/Exec-Council/AFL-CIO-Consti-
tution/XX.Settlement-of-Internal-Disputes
(accessed February 13, 2011); The Construction
Users Round Table and the Building and Con-
struction Trades Department, AFL-CIO, Con-
struction Industry Leaders Form Tripartite
Initiative: Owners, Contractors, Unions Establish
Collaboration to Improve Industry, Joint News
Release, January 18, 2003, p. 1. This board uses
two procedural rules that are worthy of note: (1)
A request for a decision in a specific case does not
have to wait until the dispute occurs. Once the
contractor makes the initial work assignments, a
request for a decision can be made. Thus, time is
saved by facilitating the dispute-resolution pro-
cess. (2) Decisions of the board are not precedent
setting. This does not mean that similar decisions
within an area are not based on patterns; it means
that conditions vary from region to region, union
to union, and even agreement to agreement.
Therefore, the board is not bound completely by
precedent, but past practice is a factor. Custom in
the industry and skills, training, and job content
are important elements that are considered.

68. Elvis C. Stephens, A Supervisor Performs
Bargaining-unit Work: Is the Contract Violated?
Labor Law Journal, 31, November 1980, pp. 683
688; Hands Off Our Work Campaign Pays Off,
812 Wins Major Arbitration Teamsters Local
812: Latest News, May 1, 2015, at http://team-
sterslocal812.com/latest-news/158-hands-off-our-

work-campaign-pays-off-812-wins-major-
arbitration.

69. Slichter, Healy, and Livernash, The Impact of
Collective Bargaining, pp. 266 276; Upstate N.Y.
Transformer Manufacturer Expands Plant, Global
Reach, The Electrical Worker, 7(12), December,
2013, pp. 1 2. at http://www.ibew.org/articles/
13ElectricalWorker/EW1312/IBEW%20EW%
20V07%20N12.pdf.

70. Sibyl Kleiner and Eliza K. Pavalka, Clocking In:
The Organization of Work Time and Health in
the United States, Social Forces, 88(3), 2010,
pp. 1463 1464.

71. Terence M. McMenamin, A Time to Work:
Recent Trends in Shift Work and Flexible Sche-
dules, Monthly Labor Review, 130(12), 2007, p. 3.

72. Isik U. Zeytinoglu, Gordon B. Cooke, and Sara L.
Mann, Whose Choice Is It Anyway? Relations
Industrielles, 64(4), 2009, pp. 555 574; Jaime
Ortega, Why Do Employers Give Discretion?
Family Versus Performance Concerns, Industrial
Relations, 48(1), 2009, pp. 1 26; Gillian Flynn, The
Legalities of Flextime, Workforce, 80, October
2001, pp. 62 66; Jeffrey M. Miller, Innovations in
Working Patterns (Washington, DC: Communica-
tions Workers of America and German Marshall
Fund of the United States, 1978).

73. Employer Bargaining Objectives 2010, Collective
Bargaining Bulletin, p. S-23.

74. AFL-CIO Working Women s Department, Bar-
gaining Fact Sheet: Control over Work Hours and
Alternative Work Schedules, Spring 2001, pp. 1 4.

75. 12-hour Work Shift Blues, Industrial Engineer,
43(2), 2011, p. 12; Allen E. Dembe, Ethical Issues
Relating to the Health Effects of Long Working
Hours, Journal of Business Ethics, 84 (Supple-
ment 2), 2009, pp. 195 208; Muhammad Bilal,
Muhammad Zia-ur-Rehman, and Irfan Raza,
Impact of Family Friendly Policies on Employ-

ees Job Satisfaction and Turnover Intention,
Interdisciplinary Journal of Contemporary
Research in Business, 2(7), 2010, pp. 378 395.

76. Fredrik Engelstad, The Significance of Seniority
in Layoffs: A Comparative Analysis, Social Jus-
tice Research, 11(2), 1998, pp. 103 119; Frederic
H. Harbison, The Seniority Principle in Union-
management Relations (Princeton, NJ: Princeton
University Industrial Relations Section, 1939), pp.
21 23.

428 PART 2 The Bargaining Process and Outcomes

77. Slichter, Healy, and Livernash, Collective Bar
gaining, pp. 104 105; D. Quinn Mills, Seniority
versus Ability in Promotion Decisions, Industrial
and Labor Relations Review, 38(3), 1985,
pp. 424 425.

78. Sangheon Lee, Seniority as an Employment
Norm: The Case of Layoffs and Promotion in the
U.S. Employment Relationship, Socio-Economic
Review, 2(1), 2004, pp. 65 86.

79. Andrew Sikula Sr., The Five Biggest HRM Lies,
Public Personnel Management, 30(3), 2001,
pp. 424 425.

80. Gangaram Singh and Frank Reid, Are Seniority-
based Layoffs Discriminatory? The Adverse
Impact of Layoffs on Designated Groups, Rela-
tions Industrielles, 53(4), 1998, pp. 730 746.

81. Pat Wingert and Evan Thomas, Chicago s Les
son in Layoffs, Newsweek, 156(4), 2010, p. 41;
Jonathan Alter, A Case of Senioritis, Newsweek,
156(23), 2010, p. 20.

82. Editors of Collective Bargaining Negotiations and
Contracts, Basic Patterns in Union Contracts,
pp. 85 87.

83. Roger I. Abrams and Dennis R. Nolan, Seniority
Rights under the Collective Agreement, Labor
Lawyer, 2, Winter 1986, pp. 99 110.

84. William H. Holley, Jr., Performance Ratings in
Arbitration, Arbitration Journal, 32(1), 1977,
pp. 8 25.

85. Daniel A. Biddle and Patrick M. Nooren, Valid-
ity Generalization vs. Title VII: Can Employers
Successfully Defend Test without Conducting
Local Validation Studies? Labor Law Journal,
57(4), 2006, pp. 216 237; Robert D. Gatewood,
Hubert S. Feild, and Murray Barrick, Human
Resource Selection, 6th ed. (Mason, OH:
Thomson/South-Western, 2008), pp. 50 57;
Equal Employment Opportunity Commission, 29
C.F.R. Part 1607: Uniform Guidelines on Employee
Selection Procedures (1978) at http://www.access.
gpo.gov/nara/cfr/waisdx_10/29cfr1607_10.html
(accessed August 4, 2011).

86. The Bureau of National Affairs, Inc., Employer
Bargaining Objectives 2014 (Washington, DC:
Bureau of National Affairs, Inc., 2014), p. 62.

87. Mark Montgomery, New Evidence on Unions
and Layoff Rates, Industrial and Labor Relations
Review, 44(4), 1991, pp. 708 712.

88. Employer Bargaining Objectives 2010, Collective
Bargaining Bulletin, p. S-23; Suzanne M.

Crampton and Jitendra M. Mishra, Job Sharing:
A Viable Work Alternative for the New Millen-
nium, Journal of Applied Management and
Entrepreneurship, 10(2), 2005, pp. 13 34;
Mohamed Branine, The Logic of Job-sharing in
the 374 PART 2 The Bargaining Process and
Outcomes Provision of and Delivery of Health
Care, Health Manpower Management, 24(1),
1998, p. 20.

89. David Sherwyn and Michael C. Sturman, Job
Sharing: A Potential Tool for Hotel Managers,
Cornell Hotel & Restaurant Administration
Quarterly, 43(5), 2002, pp. 84 91.

90. Steven Briggs, Allocating Available Work in a
Union Environment: Layoffs vs. Work Sharing,
Labor Law Journal, 38(10), 1987, pp. 650 657;
Quote is from Neil Ridley and George Went-
worth, A Breakthrough for Work Sharing: A
Summary of the Layoff Prevention Act of 2012,
National Employment Law Project, April 2012, at
https://nelp.org/content/uploads/2015/03/Break-
throughForWorkSharing.pdf, p. 1; Pamela M.
Prah, States Risk Losing Millions of Federal
Work-Share Dollars, The Huffington Post [online],
January 29, 2014 at http://www.huffingtonpost.
com/2014/01/29/federal-work-share-dollars_n_
4687571.html.

91. Franks v. Bowman Transportation Co., 424 U.S.
747(1976).

92. Teamsters v. United States, 431 U.S. 324(1977);
American Tobacco Co. v. Patterson, 456 U.S. 63
(1982).

93. Martin v. Wilks, 490 U.S. 755(1989).
94. United Steelworkers of America v. Weber, 443 U.S.

193(1979).
95. Firefighters, Local 1784 v. Stotts, 467 U.S. 561

(1984).
96. Wygant v. Jackson Board of Education, 476 U.S.

267(1986).
97. Maurice Wexler, Charles C. Warner, Gary R.

Siniscalco, John L. Quinn, and Adrian T. Klein,
The Law of Employment Discrimination from

1985 to 2010, ABA Journal of Labor and
Employment Law, 25(3), 2010, pp. 349 410; Scott
David Williams, William M. Slonaker, and Ann
C. Wendt, An Analysis of Employment Dis-
crimination Claims Associated with Layoffs,
S.A.M. Advanced Management Journal, 68, Win-
ter 2003, pp. 49 55; E. Allan Lind, Jerald Green-
berg, Kimberly S. Scott, and Thomas D.

CHAPTER 8 Administrative Issues 429

Welchans, The winding road from employee to
complainant: Situational and psychological
determinants of wrongful-termination claims.
Administrative Science Quarterly, 45(3), 2000,
pp. 557 590; Dirk Van Dierendonck and Gabriele
Jacobs, Survivors and Victims, a Meta-analytical
Review of Fairness and Organizational Commit-
ment after Downsizing, British Journal of
Management, 23(1), 2012, pp. 96 109.

98. US Airways, Inc. v. Barnett, 535 U.S. 391(2002); Blake
Sonne, NOTE: Employment Law: Reasonable
Accommodation Under the Americans with Dis-
abilities Act vs. Employee Seniority Rights: Under-
standing the Real Conflict in US. Airways v. Barnett,
57 Oklahoma Law Review 225, Spring 2004, Scott J.
Witlin and Niloofar Nejat-Bina, The Supreme
Court s Balancing Act: Prioritizing ADA Rights
Against Seniority and Worker Safety, Employment
Relations Today, 29(3), 2002, pp. 95 100.

99. AFL-CIO, Discrimination against People with
Disabilities, 2011, p. 1 at http://www.aflcio.org/
Issues/Civil-and-Workplace-Rights/Your-Rights-
at-Work/Disability (accessed October 3, 2015);
Laurie M. Johnston, The ADA and Collective
Bargaining Issues ILRU Southwest ADA Center,
2014, p. 1 at http://www.southwestada.org/html/
publications/employment/otherlaws/collective_-
bargaining.html (accessed May 16, 2015).

100. U.S. Bureau of Labor Statistics, Table 7:
Employment Status of the Civilian Noninstitu-
tional Population 25 Years and over by Educa-
tional Attainment, Sex, Race, and Hispanic or
Latino Ethnicity, Current Population Survey:
Household Data Annual Averages, 2010, p. 8.

101. Drew Lining and Michael Wolf, Job Outlook by
Education, 2006 16, Occupational Outlook
Quarterly, 52(3), 2008, p. 5.

102. Mike Collins, America s Skilled Worker Short
age, Industrial Maintenance and Plant Opera-
tions, 72(1), 2011, p. 44; David Smith, The
Skills Conundrum: A Barrier to Growth,
BusinessWeek.Com, November 1, 2010, p. 7; Pat
Galagan, Bridging the Skills Gap: New Factors
Compound the Growing Skills Shortage, Train-
ing and Development, 64(2), 2010, pp. 44 49;
Adrienne Fox, At Work in 2020, HR Magazine,
55(1), 2010, pp. 18 23.

103. Mark Schoeff, Jr., Obama, Firms Place a Priority
on Upgrading Worker Skills, Workforce Man-
agement, 88(3), 2009, p. 6.

104. Kirstin D. Grimsley, Applicants Not Making the
Grade, Washington Post, April 13, 1999, p. E-1;
E. E. Gordon, What can be done about the U.S.
Talent Crisis? TD: Talent Development, 68(12),
2014, 42 46; Lorri Freifeld, Bridging the Skills
Gap, Training, March/April 2013, pp. 16 21, at
http://pubs.royle.com/publication/?i=153868;
Bureau of Labor Statistics, Education and Train-
ing Outlook for Occupations, 2012 2022, 2012,
pp. 1 9 at http://www.bls.gov/emp/ep_edtrain_
outlook.pdf; Bureau of Labor Statistics, Earnings
and Unemployment Rates by Educational
Attainment, Employment Projections, 2014, at
http://www.bls.gov/emp/ep_chart_001.htm.

105. Josh Bersin, Spending on Corporate Training
Soars: Employee Capabilities Now a Priority
Forbes [online], February 4, 2014, at http://www.
forbes.com/sites/joshbersin/2014/02/04/the-
recovery-arrives-corporate-training-spend-sky-
rockets/.

106. Lisa M. Lynch and Sandra E. Black, Beyond the
Incidence of Employer Provided Training,
Industrial and Labor Relations Review, 52,
October 1998, pp. 64 81.

107. Harley Frazis, Maury Gittleman, Michael Horri-
gan, and Mary Joyce, Results from the 1995
Survey of Employer Provided Training, Monthly
Labor Review, 121(6), 1998, p. 8.

108. Harley J. Frazis, Diane E. Herz, and Michael W.
Horrigan, Employer Provided Training: Results
from a New Survey, Monthly Labor Review,
118(5), 1995, pp. 3 17.

109. Frazis, Gittleman, Horrigan, and Joyce, Results
from the 1995 Survey of Employer Provided
Training, p. 8; Dale Belman, and Richard N.
Block, The Impact of Collective Bargaining on
Competitiveness and Employment, In Richard
N. Block, (Ed.), Bargaining for Competitiveness:
Law, Research, and Case Studies (Kalamazoo, MI:
W.E. Upjohn Institute for Employment Research,
2003), pp. 45 74.

110. Robert W. Glover and Cihan Bilginsoy, Regis-
tered Apprenticeship Training in the U.S. Con-
struction Industry, Education and Training,
47(4/5), 2005, pp. 337 349; Robert P. Mader,
Union Apprentices More Likely to Finish

Training: GAO, Contractor, 52(10), 2005, pp. 1,
20, 54; Gunseli Berik and Cihan Bilginsoy, Do
Unions Help or Hinder Women in Training?

430 PART 2 The Bargaining Process and Outcomes

Apprenticeship Programs in the United States,
Industrial Relations, 39(4), 2000, pp. 600 624.

111. Peter Lazes and Jane Savage, Embracing the
Future: Union Strategies for the 21st Century,
Journal for Quality and Participation, 23(4), 2000,
p. 20.

112. George R. Gray, Donald W. Myers, and Phyllis S.
Myers, Cooperative Provisions in Labor Agree-
ments: A New Paradigm? Monthly Labor Review,
122(1), 1999, pp. 29 45; John Tomer, Under-
standing High Performance Work Systems: The
Joint Contribution of Economics and Human
Resource Management, Journal of Socio-
Economics, 30, 2001, pp. 63 73.

113. The Bureau of National Affairs, Inc., Employer
Bargaining Objectives 2014 (Washington, DC:
Bureau of National Affairs, Inc., 2014), p. 62.

114. James Parks, Shuler: Unions Can Play Critical
Role in Training Nation s Workers, AFL-CIO,
November 17, 2010, pp. 1 2 at http://blog.aflcio.
org/ (accessed February 21, 2011); Henry
P. Guzda, Unions Active in Joint Training
Programs, American Workplace, January 1995,
pp. 1 4.

115. Alabama AFL-CIO, Labor Institute for Training,
2011, p. 1 at http://al.aflcio.org/ (accessed February
21, 2011); Wisconsin State AFL-CIO, Labor Edu-
cation and Training Center (LETC), 2011, p. 1 at
http://wi.aflcio.org/ (accessed February 21, 2011).

116. Peter Coy, Stanley Reed, Carol Matlack, Dexter
Roberts, Deane Brady, and Caroline Winter, A
Message from the Street, Bloomberg Business
week, February 7, 2011, pp. 6 7 at http://search.
ebscohost.com.spot.lib.auburn.edu/login.aspx?
direct=true&db=buh&AN=57943427&site=bsilive
(accessed February 21, 2011); New Skills for
America s Future Initiative to be Launched at the
Aspen Institute, PR Newswire, October 4, 2010,
pp. 1 2 at http://www.proquest.com/ (accessed
February 21, 2011); Jill Jusko, The Training
Imperative, Industry Week, 259(4), 2010,
pp. 38 40.

117. National Science Board, Executive Summary,
Preparing the Next Generation of STEM Innova-
tors: Identifying and Developing Our Nation s
Human Capital, May 5, 2010, pp. 1 6 at http://
www.nsf.gov/nsb/stem/innovators.jsp (accessed
August 4, 2011).

118. Connecticut Company Uses Self-Directed Work
Teams to Improve On-time Delivery and

Quality, Connecticut Spring & Stamping, Press
Release, December, 2011, p. 1, at http://www.
ctspring.com/press/2011/12/improving-delivery-
time-and-quality; For a summary of how tech-
nology is influencing work structuring, see
Ursula Holtgrewe, New new technologies: the
future and the present of work in information and
communication technology, New Technology,
Work and Employment, 29(1), 2014, pp. 9 24.

119. News Release: U.S. Department of Labor and
Ernst & Young LLP Study Finds Competitive
Gains from Innovative Workplace Practices,
May 31, 1995 (Study conducted by Sarah C.
Mavrinac, Neil R Jones, and Marshall W. Mayer).

120. Riki Takeuchi, Gilad Chen, and David P. Lepak,
Through the Looking Glass of a Social System:

Cross-level Effects of High-Performance Work
Systems on Employees Attitudes, Personnel
Psychology, 62(1), 2009, pp. 1 29; John Godard
and John T. Delaney, Reflections on the High
Performance Paradigm s Implications for Indus-
trial Relations as a Field, Industrial and Labor
Relations Review, 53, April 2000, pp. 491 493;
B. P. Cozzarina & S. A. Jeffrey, Human resource
management practices and longitudinal work-
place performance, Applied Economics Letters,
21(5), 2014, pp. 344 349.

121. Paul Stewart and Andy Danford, Editorial:
Union Strategies and Worker Engagement with
New Forms of Work and Employment, New
Technology, Work and Employment, 23(3), 2008,
pp. 146 150; Innovative Workplaces and
Their Workers, Monthly Labor Review, 126(5),
2003, p. 32.

122. Noel Harvey, How Unions Should Respond to
Cells, Labor Studies Journal, 18(4), 1994, pp. 21
31; Rubayet Karim and Sarojit Kumar Biswas. Cell
Formation in a Batch Oriented Production System
using a Local Search Heuristic with a Genetic
Algorithm: An Application of Cellular
Manufacturing System, Cell, 5(4), 2015, pp. 28 41.

123. George R Gray, Donald W. Myers, and Phyllis S.
Myers, Collective Bargaining Agreements: Safety
and Health Provisions, Monthly Labor Review,
121(5), 1998, pp. 13 35.

124. John Coniglio, OSHA Inspections: What to Do
When OSHA Calls, Professional Safety, 55(12),
2010, pp. 39 41; OSHA Unveils Severe Violator
Program for Employers That Endanger Work-
ers , Daily Labor Report, April 26, 2010, p. A-

CHAPTER 8 Administrative Issues 431

10 11; John C. Bradbury, Regulatory Federalism
and Workplace Safety: Evidence from OSHA
Enforcement: 1981 1995, Journal of Regulatory
Economics, 29, 2006, pp. 211 224.

125. David Michaels, Remarks By Dr. David
Michels, Public Citizen 40th Anniversary Speak-
ers Series, January 18, 2011, p. 2 at http://www.
osha.gov/ (accessed February 23, 2011).

126. Occupational Safety and Health Administration,
Occupational Safety and Health Administration
(OSHA) Enforcement, 2009 2013, 2014, at https://
www.osha.gov/dep/2013_enforcement_summary.
html.

127. Occupational Safety and Health Administration,
State Plans, 2015, at https://www.osha.gov/dcsp/osp/
index.html; U.S. Department of Labor, US Labor
Department s OSHA Reports on State-Run Occu-
pational Safety and Health Programs: Agency Calls
for Corrective Actions to Keep Workers Safe, News
Release, September 28, 2010, pp. 1 2.

128. Occupational Safety and Health Administration,
Commonly Used Statistics, 2014, at https://www.
osha.gov/oshstats/commonstats.html; Bureau of
Labor Statistics, Employer-Reported Workplace
Injury and Illnesses Summary, 2013, News
Release, December 4, 2014, at http://www.bls.gov/
news.release/osh.nr0.htm (Also see Chart 1 for
2003 data).

129. Adele L. Abrams, Legislative Activities Favor
Heightened OSHA/MHSA Enforcement, Profes-
sional Safety, 55(4), 2010, pp. 40 43; Rick Stasi,
Developing Effective Workplace Safety Pro-

grams, Risk Management, 57(4), 2010,
pp. 26 33.

130. Patricia Ware, AFL-CIO Lauds OSHA s Recent
Actions, Urge Passage of Stronger Job Safety
Laws, Daily Labor Report, April 29, 2010, pp. A-
14 15; AFL-CIO, Protecting the Safety and Health
of America s Miners and Workers, August 5, 2010,
at http://www.aflcio.org/About/Exec-Council/EC-
Statements/Protecting-the-Safety-and-Health-of-
America-s-Miners-and-Workers.

131. Bureau of Labor Statistics, National Census of
Fatal Occupational Injuries in 2013 (Final
Results), News Release, April 22, 2015, pp. 1 20
at http://www.bls.gov/iif/oshwc/cfoi/cfch0012.pdf.

132. U.S. Department of Labor, Statement from
Assistant Secretary of Labor for OSHA Support-
ing Promotion of Job Creation: Agency Doing
Everything Possible to Support Good Safe Jobs,
News Release, February 15, 2011, p. 1; OSHA
Rulemaking Process Credible but May Overstate
Costs, OTA Says, Daily Labor Report, October
25, 1995, p. A-9.

133. Marshall v. Barlow s Inc., 436 U.S. 307(1978).
134. Whirlpool Corporation v. Marshall, 445 U.S. 1

(1980); Gateway Coal Co. v. United Mine Work-
ers, 414 U.S. 368(1974).

135. U.S. Department of Labor, Occupational Safety
and Health Administration, OSHA Require-
ments That Apply to Most General Industry
Employers, OSHA Compliance Assistance Quick
Start: General Industry, 2011, pp. 1 2 at http://
www.osha.gov/dcsp/compliance_assistance/quick-
starts/general_industry/gi_step1.html (accessed
February 24, 2011).

136. Occupational Safety and Health Administration,
Top 10 Most Frequently Cited Standards for

Fiscal 2014 (October 1, 2013 to September 30,
2014), Most Frequently Cited Standards, October
28, 2014, p. 1 at https://www.osha.gov/Top_Ten_
Standards.html.

137. Jan K. Wachter, and Patrick L. Yorio, A system
of safety management practices and worker
engagement for reducing and preventing acci-
dents: An empirical and theoretical investigation,
Accident Analysis & Prevention, 68, 2014,
pp. 117 130; Steven V. Cates and David O.
Anderson, OSHA s Effect on Human Resource
Management, Proceedings of the Academy of
Organizational Culture, Communications, and
Conflict, 15(1), 2010, pp. 11 13.

138. United Automobile Workers Union (UAW) v.
Johnson Controls, Inc., 499 U.S. 187(1991).

139. Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 73 (2002).
See also Ronald Bayer, Workers Liberty, Workers
Welfare: The Supreme Court Speaks on the Rights of
Disabled Employees, American Journal of Public
Health, 93, April 2003, pp. 540 544; Norman
Daniels, Chevron v. Echazabal: Protection, Oppor-
tunity, and Paternalism, American Journal of Public
Health, 93, April 2003, pp. 545 548.

432 PART 2 The Bargaining Process and Outcomes

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1 Discharged for Facebook Comments

Betty Nelson worked as an emergency medical techni-
cian for the First Alert Medical Response ambulance
service in Redfern, Idaho. One day in a meeting with
her supervisor, Nelson was asked to write an incident
report responding to a customer s complaint concern-
ing her service on a recent ambulance call. Nelson
requested that she be allowed to meet with her local
union representative prior to completing her written
incident report. Nelson s supervisor denied her request.
Later that evening after Nelson s work shift was over
she returned home and posted some negative com-
ments about her supervisor on her personal Facebook
page. For example, Nelson posted that Looks like I m
getting some time off. Love how the company allows a
17 to be a supervisor. (Note: A 17 is the company code
used to describe a psychiatric patient.) The comments
were read by several co-workers who responded to Nel-
son with messages of support. Nelson then proceeded
to post some additional negative comments about her
supervisor on her personal Facebook page.

The company was made aware of Nelson s Facebook
postings by an unknown source. The company temporally
suspended Nelson and after confirming that the negative
remarks had been posted to her Facebook page, she was
terminated. The company s termination letter cited a blog-
ging and Internet posting policy published in the Employee
Handbook which prohibited employees from making dis-
paraging comments when discussing the company or any
of its supervisors and prohibited employees from depicting
the company in any way over the Internet without receiv-
ing prior approval from an authorized company official.

Nelson s union representative filed an unfair labor
practice charge with the National Labor Relations Board
on her behalf. The union argued that the comments
Nelson made on her personal Facebook page constituted

free speech which she was entitled to make. Employees
have a right to discuss terms and conditions of employ-
ment with co-workers even if those comments might be
interpreted as negative by a management official. The
union further alleged that the company also committed
an unfair labor practice by denying Nelson a chance to
speak with her union representative during the investi-
gatory meeting with her supervisor. Finally, the union
charged that the blogging and Internet policy relied
upon by the company as the basis for Nelson s discharge
was overly broad in restricting employees use of com-
munications media like Facebook.

Questions
1. Under what conditions, if any, does an employer

have a legal right to discipline or discharge an
employee for comments the employee makes about
the company? Would it matter if the comments
were posted to a company-sponsored Internet
forum, rather than Facebook? Would it matter if the
comments were posted to a union-sponsored forum
accessible only to members? Why or why not?

2. If you were representing the company in this case
and the NLRB regional director asked if you would
be willing to settle the union s charges voluntarily,
would you do so or would you insist on your legal
right to a formal NLRB hearing on the charges?
Explain your reasoning.

3. Did the company commit an unfair labor practice by
(1) discharging Nelson for her Facebook postings,
(2) denying Nelson an opportunity to meet with her
local union representative during an investigatory
meeting with her supervisor, or (3) enforcing an
overly broad blogging and Internet use policy?

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2 The Outsourced Work

Rocket Motor Corporation (RMC) entered into a project
labor agreement with 17 local building trades unions
concerning a building remodeling project at one of the

company s manufacturing plants. As part of the project
labor agreement, the unions agreed not to engage in any
strikes, slowdowns, or other work stoppages and not to

CHAPTER 8 Administrative Issues 433

honor the picket lines established by any other labor
organization at the job site. RMC agreed as part of the
project labor agreement to hire contractors and subcon-
tractors who would employ individuals to perform con-
struction work from each specified type of trade,
represented by the 17 unions with terms and conditions
of employment equal to the terms specified in any appli-
cable union contract covering the type of work to be
performed. The project labor agreement called for final
and binding arbitration to resolve any disputes arising
from the interpretation or application of the terms of the
project labor agreement.

Bolton Engineering (BE) was one contractor
hired by Rocket Motor Corporation to help remodel
the company s paint facilities at the work site. As part
of the contract entered into between RMC and BE, a
pledge to adhere to the project labor agreement previ-
ously signed by RMC and the 17 unions was included.
BE employed only a few supervisory employees of its
own at the work site and relied upon unionized sub-
contractors to complete most of the assigned job site
tasks. However, a significant portion of the metal fab-
rication work was subcontracted to two nonunion
subcontractors whose employees performed the work
off-site. All of the metal fabricated parts built off-site
were eventually to be installed on the job site by union
labor.

Local 82 of the Steel Fabricators Union (SFU)
learned that BE was using nonunion labor at off-site
facilities to perform metal fabrication work that could
have been performed on-site by union members repre-
sented by the SFU. The prevailing wage for a steel fab-
ricator under current area labor agreements covering
SFU members was $20.73 per hour, whereas the off-
site nonunion workers were paid $14.00 per hour to

perform the steel fabrication work. Local 82 leaders
believed that BE was in violation of the project labor
agreement by subcontracting steel fabrication work to
nonunion subcontractors who were paying their
employees substantially less than the prevailing wage
rate called for under Local 82 s current contract. Failing
to resolve the issue voluntarily with BE, Local 82, SFU
filed a grievance, which eventually went to final and
binding arbitration. The union sought damages from
BE in the amount of $1.6 million, the amount of the
difference between the wages paid nonunion employees
who performed the steel fabrication work off-site and
what Local 82 members would have received had the
work been performed by them on the work site.

Questions
1. Is BE bound by the terms of the project labor

agreement, which it did not directly sign, including
the duty to submit this labor dispute to final and
binding arbitration for resolution?

2. Was the project labor agreement meant to apply
only to work performed on the job site as BE con-
tends, or could the terms of the project labor
agreement also be applied to off-site work as the
Union contends?

3. Is it legitimate for a labor organization to negotiate a
work preservation clause that seeks to encourage
contractors to perform work on the job site using
union labor by imposing an economic incentive not
to outsource the work elsewhere to lower-paid
employees?

4. What, if any, legitimate business interest of an
employer is served by agreeing to a so-called work
preservation agreement with one or more unions?

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3 The Disputed Safety Bonus

Bob Dale and Sam Brady were employed as truck dri-
vers by Jackson Transportation Inc. (JTI) a nonunion
firm engaged in interstate commerce. JTI provided
transportation services for nonunion Acme Steel Cor-
poration (ASC) hauling steel coils between ASC s vari-
ous plants and directly to various ASC customers. Dale
and Brady performed all of their work assignments,
transporting steel coils on ASC property.

To encourage safe trucking operations, ASC imple-
mented a safety bonus program that paid trucking
firms employed by ASC an amount equal to one $1
for each safe hour of work performed by each firm s
employees. ASC strongly encouraged the transporta-
tion firms with whom it contracted for services to
pass the $1 per safe hour of operation bonus on to their
employees.

434 PART 2 The Bargaining Process and Outcomes

JTI decided to pass one-half of the safety bonus
payment (50 cents) on to its truck drivers and keep
the remaining 50 cents to fund certain safety equip-
ment purchases and the company s annual Christmas
party. Bob Dale learned from talking to drivers at other
firms employed by ASC that they were receiving the
full $1 bonus from their employers. This upset Dale,
who thought his employer (JTI) should also be giving
drivers the full $1 per hour bonus payment. Dale dis-
cussed his complaint with several other employees,
including Sam Brady.

On December 9, employee Dale told Brady that he
was on his way to see Phil Cook, ASC s transportation
manager at the plant where both Brady and Dale were
assigned. Brady said he would accompany Dale to the
meeting as he didn t want to miss any of the fireworks.
At the meeting, Dale explained to Cook his complaint
about JTI not paying its drivers the full $1 bonus
amount. Cook replied that essentially this was not a
decision over which he had any control, and any com-
plaints should be delivered directly to JTI managers,
not ASC. The meeting ended after about 15 minutes,
and Dale and Brady exited Cook s office. Cook then
telephoned R. C. Ridley, the JTI terminal manager
who supervised Dale and Brady, and explained to
him the nature of the conversation Cook had engaged
in with Dale in Brady s presence.

On December 19, Ridley, accompanied by a security
guard, escorted Dale from the ASC property, explaining
that he was being removed because they believed that
he was trying get a union started because he had talked
to Cook. Ridley told Dale that ASC had barred Dale
from its property. Dale responded that he was not trying
to start a union and had never even spoken to anyone
about doing so. Ridley stated the company would have
to investigate the matter further.

On that same date (December 19), Ridley, accom-
panied by a security guard, also escorted Brady from
the ASC property. Ridley told Brady he was being
removed from the property because he had been pres-
ent when Dale met with Cook about the safety bonus
issue. Brady indicated that he had not known in
advance the specific nature of the statements that
Dale planned to make that day in Cook s office.

On December 27, Ridley informed Dale that he
was being terminated in the best interest of the com-
pany. Dale s written termination notice stated that he
was terminated because he was not able to function on
ASC property. Ridley also informed Brady on the
same date that he too was terminated because ASC
did not want him back on its property. Brady s written
termination notice stated the reason for termination
was not able to function on ASC property. Brady
and Dale subsequently filed an unfair labor practice
with the NLRB, alleging that JTI s discharge action
represented unlawful discrimination against them
under the LMRA, as amended.

Questions
1. Was the discharge of Dale and Brady a violation of

Section 8(a)(1) and (3) of the LMRA? If so, what
should be the appropriate remedy?

2. Was the decision by JTI to award only half of the
safety bonus money available to its truck drivers a
lawful employer decision?

3. If you had been advising JTI on the safety bonus
issue, would you have recommended the company
retain half the bonus money for the purposes
described by the company (i.e., buy safety equip-
ment and pay for the annual Christmas party)? Why
or why not?

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4 Donning Safety Equipment? or Changing

Clothes?

The Steelworkers union had a new collective bargain-
ing agreement with the steel manufacturer that said,
Employees shall be paid for donning and removing

protective gear prior to beginning work and at the
end of the workday, provided it constitutes more than
a de minimus activity. Soon after the agreement was
ratified, the union filed a grievance, charging that

management was not abiding by the donning con-
tract clause.

Position of the Union:

Under the new contract, management is supposed to
pay workers for putting on and taking off personal pro-
tective equipment (PPE). Working in a mill with

CHAPTER 8 Administrative Issues 435

molten steel is dangerous and requires that workers
wear several pieces of PPE. These include the following
special flame-retardant articles: a jacket, a pair of pants,
a snood (a hood with neck protection), wristlets,
work gloves, and leggings. Other types of PPE include
the following: a hardhat, special steel-toe boots, safety
glasses, earplugs, and a respirator (worn occasionally,
as needed). Workers would not normally wear these
types of PPE except for the hazards of the job. Indeed,
these forms of PPE are expected by the Occupational
Health and Safety Administration. Thus, donning PPE
is an integral part of the day s work activities. The col-
lective bargaining agreement requires that bargaining
unit employees be paid for putting PPE on at the
start of the workday and taking it off at the end of
the workday. This equates to approximately 15 minutes
total per worker per day. Further, after donning their
PPE, the workers must walk (or ride a shuttle bus)
approximately 10 15 minutes from the locker room
to their specific work stations in the sprawling 4000-
acre work site. This time, too, is an integral part of the
workday and should be compensated.

Position of the Company:

Most of the articles mentioned in the Union s list are
not PPE at all. They are clothing. The company is not
obligated to pay for people to change clothes, even if
they normally do it in a locker room on the company s
premises. Hard hats are hats ; steel-toe boots are
boots. Common sense indicates that these are
clothes and not special PPE. The only items that con-

stitute PPE are safety glasses, earplugs, and the respira-
tor (which is not always worn). Putting on safety
glasses and earplugs takes less than 20 seconds. Thus,
they fall under the de minimus activity exception
mentioned in the contract. Also, there is no history of
making such payments in the 59 years of collective

bargaining at this plant. Thus, we are not obligated to
pay for changing time. Nor are we obligated to pay for
the time spent walking to the appropriate work sta-
tions. If we were required to do that, then the slowest,
laziest workers would earn more pay by walking at a
more leisurely pace, thereby undermining employee
discipline and potentially the operation of the mill
itself.

Questions
1. Analyze how each side interprets the meaning of

this contract clause. Whose position is more per-
suasive? Why?

2. In 1947, Congress passed the Portal-to-Portal Act (a
portal is a doorway; 61 Stat. 84, as amended, 29

U. S. C. §251 et seq. (2006 ed. and Supp. V). §251(a).
This law said that an employer is not liable to pay
workers for time they spend traveling to work (e.g.,
an hour-long commute). It also excludes from com-
pensable time, activities which are preliminary to or
postliminary to [the] principal activity or activities
[that an employee is employed to perform], which
occur either prior to the time on any particular
workday at which such employee commences, or
subsequent to the time on any particular workday at
which he ceases, such principal activity or activities.
61 Stat. 87, 29 U. S. C. §254(a)(2).

Further, in 1949, Congress amended the Fair Labor
Standards Act (which regulates overtime) to read, [In
determining] the hours for which an employee is
employed, there shall be excluded any time spent in
changing clothes or washing at the beginning or end of
each workday. 63 Stat. 911, 29 U. S. C. §203(o). This
law excluded changing clothes from compensable
time, but it also specifically allowed collective bar-
gaining agreements to specify that such time be paid.

Analyze the case in light of these two relevant laws.

436 PART 2 The Bargaining Process and Outcomes

CHAPTER 9

Resolving Negotiation (Interest) Disputes
and the Use of Economic Pressure

IT WAS ALWAYS about the money! There might be talk by the
managers about the important topics of respect, equity, or
fairness but in the end, it was always about the money. How
did we reach this point? Six months ago when negotiations
began it all appeared to be so simple. The business was doing
well with increasing profits and market share. The bargaining
relationship had been established for many years, and leaders
on both sides understood each other well. Yet as we drew
closer to the date when the old contract expired, as union nego-
tiators, we were facing pressure by some employees to call a
strike. We were also facing the possibility of a lockout by the
employer if we didn t accept the terms of the company s latest
settlement offer.

Both the company s offer and the union s counterproposal
would mean an improvement from the terms of the expiring
labor agreement. Much of the disagreement had to do with
what impact business conditions and new technology were
likely to have on future profits and growth. Obviously, greater
profits would enable the firm to pay higher wages. Yet those
forecasts and implications were based upon assumptions and
expectations that neither side could guarantee. And if a work
stoppage occurred, what would be the implications for the
future of labor management relations? Would managers hire
replacement workers? Would the union survive?

Now it is six hours before the expiration of the contract.
What will the company negotiating team do? Should the union
negotiators make one final compromise proposal to sweeten
the deal? If we do, will it be enough to achieve settlement, or
will the managers interpret our offer as a sign of weakness and

437

try to extract more concessions? How will we lower the expectations of
union members who are demanding that we get everything that they
want, or else go on strike? However the next six hours of the labor rela-
tions process play out, I have a feeling that our relationship with the com-
pany is never going to be the same.

Questions
1. Negotiators face pressure from the other side to make compromises.

Yet they also face pressure from constituents not to compromise. How
should negotiators balance these two sets of pressures?

2. Some labor contracts today are being negotiated for longer durations
(e.g., five, six, even ten years). What are the advantages and disadvan-
tages to negotiating longer contracts? How can the interests of each
side be adequately protected?

3. What are some examples of ways in which bargaining parties can
attempt to reduce the uncertainty regarding future events that could
impact their party s interests during a long-term contract?

4. If one bargaining party made one last compromise proposal prior to a
threatened strike or lockout deadline, would you be more likely to
interpret such an offer as a sign of the proposing party s weakness or
an honest intent by the proposing party to reach a reasonable settle-
ment? How might your interpretation affect your response to the bar-
gaining proposal?

Labor management negotiations do not result in strikes very often. Only 11 majorwork stoppages involving 1,000 or more employees occurred in 2014, up from a
record low level of 5 recorded in 2009. The high was 22, in 2005 (by comparison, in
the 1950s, the average was 351).1 In the past ten years strikes and lockouts have
accounted for 0.01 percent or less of the total hours worked. Media coverage of work
stoppages that do occur is often intense and frequently creates the impression that strikes
and lockouts are inevitable consequences of worker unionization. They are not. As
described in Chapter 6, negotiations often produce a new collective bargaining agree-
ment. Also, third-party dispute resolution procedures can facilitate agreement. Finally,
economic pressure tactics (e.g., a threat of a strike) can play an important role in helping
negotiators to reach a realistic settlement outcome.

This chapter begins with a discussion of the alternative interest dispute resolution
procedures involving third parties, such as mediation, fact-finding, and interest arbitra-
tion. The chapter also examines the use of economic pressure tactics (e.g., strike, lock-
out, boycott, picketing) as a means of encouraging the voluntary resolution of interest
disputes.

438

Impasse Resolution Procedures Involving a Third-Party Neutral

Usually both union and management representatives attempt to voluntarily resolve bar-
gaining impasses, which can occur either before or after a contract s scheduled expiration
date. In some cases, union and management officials need a third party either to facili-
tate the negotiation process or to render a final and binding decision to resolve an inter-
est dispute. Mediation, fact-finding, and interest arbitration are three important
impasse resolution procedures involving the aid of a neutral third party to resolve an
interest (negotiation) dispute.

Mediation
Most union management interest disputes are resolved voluntarily by the parties them-
selves without the need for assistance from an outside, third-party neutral. In 1947 as
part of the Labor Management Relations Act (LMRA), Congress created the Federal
Mediation and Conciliation Service (FMCS), an independent federal agency charged
with helping to prevent or minimize labor disputes by providing mediation, conciliation,
and voluntary arbitration services. In FY 2014, the FMCS was involved in 4,100 collec-
tive bargaining contract negotiations covering every major industry.2 Mediation is the
most commonly used third-party interest dispute resolution procedure, and the FMCS,
along with some 18 state mediation agencies, helps to achieve Congress s goal of foster-
ing stable labor management relations in order to facilitate the free flow of commerce.
The FMCS has estimated that its efforts to prevent or shorten work stoppages on average
provides an economic benefit to the U.S. economy of $1.6 billion annually.3

As part of the legal duty to bargain in good faith under the LMRA, bargaining par-
ties are required to provide 30 days advance notice to the FMCS, or any other applicable
state mediation agency, that bargaining between the parties is ongoing but no settlement
has yet been reached. This notice can be filed electronically, using a form available from
the FMCS s Web site at http://www.fmcs.gov. A mediator will contact the bargaining
parties and offer his or her services to aid the parties to reach a voluntary settlement.
Deciding to use the services of a third-party mediator is voluntary on the part of the
bargaining parties except in the rare case where the dispute involves a national emer-
gency, which will be discussed more fully later in this chapter.

A mediator has no legal authority to impose a settlement on the parties and thus
functions more as an invited guest who can be required to leave if one or both bargain-
ing parties no longer desire the mediator s continued involvement in the bargaining pro-
cess. Mediators must rely on persuasion and their credibility as a facilitator in helping
the bargaining parties reach agreement on their own. Mediators can perform a number
of functions to assist the bargaining process including assisting in scheduling meetings,
keeping the parties talking, carrying messages back and forth, helping each party realisti-
cally assess their current bargaining position and alternatives, helping to manage rela-
tions with news media interested in the bargaining process, and suggesting possible new
approaches or terms to facilitate settlement.4 The mediation process is as much an art as
a science. Mediation has been described as a process that has been helpful in a haphaz-
ard way largely because of the talents of certain individuals who themselves would find it
difficult to say why they had been successful. 5

Personal Characteristics
Several characteristics and practices of labor mediators have been associated with media-
tor effectiveness. Effective mediators have tenacity they do not give up without exhaust-
ing themselves, the parties, and all reasonable avenues of settlement. A second

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 439

characteristic is experience, which simply means that the more times a mediator is
involved in mediating labor disputes, the more effective he or she is likely to be in set-
tling one. Mediators who are high in Emotional Intelligence an ability to perceive emo-
tions, understand the relations among emotions, and effectively manage emotions to
communicate and persuade use a wider variety of tactics and pursue an overall mutu-
ally satisfactory settlement. Finally, mediators who are actively engaged, sometimes pres-
suring the parties to reach a settlement, sometimes generating their own settlement
proposals, are more likely to be effective mediators.6

Mediator Activities That Promote Agreement
Carl Stevens, in a study focusing on the mediator s functions and tactics, identified sev-
eral causal factors that lead to a negotiated settlement. Timing of the mediator s involve-
ment is one of the most important considerations. A mediator should enter the
bargaining dispute before the parties become too fixed in their positions but not so
early as to upset the power balance between the parties, causing them to harden their
bargaining positions. In some instances, the mere entrance of the mediator may be suffi-
cient for dispute settlement to occur. In others, the invitation to the mediator to assist
with the negotiations comes too late. For example, in the 2011 bargaining dispute
between the National Football League Players Association (NFLPA) and the National
Football League Team Owners, the parties did not agree to use the services of the
FMCS until two weeks prior to the scheduled expiration date of their labor agreement,
when they were faced with a threatened lockout by team owners if a new labor agree-
ment had not been reached by the existingcontract s expiration date.7

Face-Saving is another key factor Carl Stevens identified. For example, assume that
one of the negotiators leaves an active negotiation in a temper tantrum, vowing never
again to return to the bargaining table. On subsequent reflection, the negotiator realizes
a mistake was made but feels that calling the opposing negotiator would be embarrassing
and perhaps indicate weakness. A common tactic used in such situations would be to call
a mediator, who could schedule another meeting. As a different example, suppose that
one negotiating team is willing to make a significant concession on an issue, but does
not want to appear weak to the opposing side. The team may ask the mediator to make
the proposal and claim the idea as his/her own. Thus, mediation can represent an impor-
tant face-saving device for a bargaining party. In other cases, the parties do not desire
any specific help from the mediator, but the availability of that mediator and the very
existence of the mediation forum facilitate the bargaining process.8

One qualitative study asked highly successful mediators to reflect upon their careers
and to identify the tactics that they felt were essential to dispute resolution. They identi-
fied the following: (1) building rapport with the disputing parties, (2) identifying integra-
tive solutions (e.g., novel, creative, win-win proposals), (3) strategically using humor to
lessen tension, (4) combining patience with optimism that settlement is possible (even if
one side thinks continued bargaining is futile), (5) focusing the parties attention on the
consequences of an impasse (e.g., a strike that will cost the company thousands of dollars
per day) to motivate them to settle, (6) helping each side to understand the other side s
needs and pressures, and (7) pushing for a settlement by the parties only when the timing
seemed right.9

Mediators are expected to possess a high level of knowledge concerning labor relations
practices, economic and industry trends, labor and employment law, problem-solving tech-
niques (e.g., interest-based bargaining), and best practices for building ongoing cooperative
labor management relations (e.g., labor management committees, partnership training).10

Mediators vary in their roles, behaviors, and styles. Some have been characterized as deal

440 PART 2 The Bargaining Process and Outcomes

makers, entering the negotiations at an early stage, trying to motivate the negotiators to
settle, and actively attempting to persuade the parties to accept the mediator s proposed
settlement terms. Other mediators seem to prefer the role of orchestrator, attempting to
structure the negotiations to facilitate communication between the parties to provide
greater insight into the issues in dispute. A mediator may become much more active in
pressing the parties to settle when a deadline or work stoppage appears imminent and
the likelihood of voluntary settlement diminishes especially in public-sector negotiations,
where strikes and lockouts are usually illegal.11

A successful mediator is often an interpreter who helps clarify the bargaining par-
ties perceptions of the bargaining climate and possible costs of failing to reach an agree-
ment. For example, if the parties disagree on data about the cost of living, comparative
wage rates, or productivity data, the mediator could assist in reaching agreement on what
relevant sources to use to obtain statistical data. If a negotiator underestimates the cost of
a strike or lockout or overestimates the cost of agreeing to another parties proposed set-
tlement terms, the mediator may be able to provide insights enabling the negotiator to
evaluate his or her position more realistically. Often a mediator will hold separate meet-
ings with each bargaining party before attempting to schedule a joint meeting between
the parties. This provides the mediator a chance to better understand each party s ratio-
nale for current bargaining positions and the depth of commitment each party has for
those positions. Developing trust between the mediator and each bargaining party is nec-
essary before the mediator is likely to have much success helping the parties better
understand and trust each other in the bargaining process.

Helping bargaining parties to better understand the tactics or intentions of each
other can also aid the bargaining process. If management bluffs about its willingness
to accept a strike or to allow an ongoing strike to continue indefinitely, the mediator
may attempt to diagnose management s true intentions and then advise the union. On
the other hand, if the union threatens a strike to obtain an excessive bargaining
demand, the mediator could attempt to diagnose what the union is really trying to
say and so inform the company negotiator. By holding private caucuses with each
party, the mediator becomes privy to much confidential information. Although no
mediator should reveal confidential information to the other party, he or she can pro-
vide insight to the parties regarding the magnitude of the differences that exist between
them and encourage the parties that a settlement may be near if they continue bargain-
ing in good faith. Mediators can apply pressure for settlement on one or both parties
by using delays and deadlines in the mediation process, placing responsibility for set-
tlement on the parties, engaging in marathon (round-the-clock) bargaining sessions,
emphasizing the costs of a strike or lockout, and making settlement recommendations
in a joint conference.12

The parties, however, play the dominant role in shaping the mediation process.
Where experienced negotiators have a clear understanding of their bargaining objectives
and strategies, the mediator is primarily the servant of the parties. However, where less
experienced negotiators have not clearly defined their bargaining objectives, the personal
qualities and actions of a competent mediator may help him or her gain the trust of the
parties and create the type of negotiating atmosphere that achieves a settlement. The
research literature on mediator style and mediation tactics has identified a few dis-
tinct approaches. Some mediators emphasize reaching an agreement (a settlement orien-
tation). Others emphasize pointing out the weaknesses of each side s positions and, in
public-sector disputes, predicting what would happen if the dispute goes to court or arbi-
tration; this evaluative mediation style seems aimed at motivating the parties to compro-
mise. Still others focus on improving the relationships among the disputants (sometimes

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 441

called relational mediation, or transformative mediation. Even so, because each dispute is
distinct, our understanding of mediator styles and tactics is still in its infancy.13

Code of Conduct
To help ensure the integrity and impartiality of the mediation process, the Association
for Conflict Resolution, the National Mediation Board, the American Bar Association,
and the American Arbitration Association have adopted a code of professional conduct
for mediators.14 This code articulates qualifications for mediators, standards of practice,
and ethical behavior. It proscribes impermissible actions of mediators, such as holding
meetings with one of the parties without the prior consent of the other party and reveal-
ing to one party what would be considered an acceptable settlement to the other. The
code is patterned after the widely accepted Code of Professional Responsibility for Arbi-
trators of Labor Management Disputes, which has existed since 1951 (revised most
recently in 1995) and which has been adopted by the National Academy of Arbitrators,
the American Arbitration Association, the National Mediation Board, and the FMCS.15

Fact-Finding
Fact-finding is a semijudicial process used primarily in the public sector to gather facts
about a labor dispute for the purpose of publishing a public report containing the fact-
finder s conclusions and often recommended terms of settlement. Like a mediator, a fact-
finder has no legal authority to impose a final and binding settlement on the parties
involved in a labor dispute. The fact-finder s purpose is to assess the facts and to organize
and display them publicly in the hopes that the public will find the fact-finder s conclu-
sions and recommendations to have merit and bring pressure on the parties in dispute to
settle their differences.16 Typically both public employers and public employee unions, rec-
ognizing the need to be responsive to taxpayers or consumers of public services, seek to
use support from such groups to bolster their respective bargaining positions.

Fact-finding may be used in major disputes under the LMRA and the Railway Labor
Act. In major disputes, fact-finding reports are useful to U.S. presidents in determining
what actions to take in national emergencies, such as when to seek an injunction or rec-
ommend legislation to resolve the dispute. Because fact-finding lacks the ability to ensure
a final end to the labor dispute, this process does not have a good record in resolving
major disputes. However, there is some evidence that fact-finding when used as an inter-
mediate step prior to some final resolution procedure (e.g., interest arbitration, legislative
action) can increase the rate of negotiated settlements compared to the voluntary settle-
ment rate achieved in the absence of fact-finding as an intermediate step.17 The fact-
finder s report and recommendations apparently serve as a focal point for negotiators,
encouraging them to voluntarily agree to terms at or close to the fact-finder s recommen-
dations, thus avoiding the need to turn the outcome of the interest dispute over to an
outside party (e.g., arbitrator, legislature) to obtain a final dispute resolution.

Interest Arbitration
Interest arbitration involves the selection of a neutral person or panel to hear the bar-
gaining positions of the parties and make a final and binding decision on what should
be included in a newly negotiated agreement. This process differs from grievance arbitra-
tion (see Chapter 11), which is concerned mostly with resolving rights-type disputes over
the interpretation or application of existing contract terms.

Interest arbitration in the United States dates back to the eighteenth century in the
copper mines of Connecticut. It is not used often in the private sector (approximately 2

442 PART 2 The Bargaining Process and Outcomes

percent of negotiations) to resolve contract negotiation disputes, with some notable
exceptions such as the Amalgamated Transit Union (which has arbitrated more than
700 cases), professional sports, and the U.S. Postal Service.18

Management and union representatives in the private sector prefer to control the
outcome of interest disputes which establish the terms or conditions of employment
and are therefore reluctant to grant such authority to an outside arbitrator. Both parties
have concerns about possible delay created in trying to schedule an arbitration hearing
and the extra cost involved. In addition, management becomes particularly concerned if
an arbitrator fails to fully take into account the economic effect of the arbitration deci-
sion on the employer s operations or if the award is above the industry average. Interest
arbitration is more common in the public sector and is discussed more fully in
Chapter 13.

A Comparison of Three Interest Arbitration Procedures

Conventional Interest Arbitration. The interest arbitration procedure affording the
arbitrator the greatest degree of flexibility to determine an appropriate settlement out-
come is conventional interest arbitration (CA).19 Using this procedure, each party pre-
sents its proposed settlement terms and supporting evidence to the arbitrator who has
the authority to decide the final terms of the new contract, based on what is most rea-
sonable. The arbitrator can select either party s proposal or some compromise settlement
terms between (or even beyond) those proposed by the parties themselves.

Conventional interest arbitration is widely used in the public sector; the specifics of
the procedures vary across jurisdictions, including the types of evidence to be presented
and factors arbitrators must consider when rendering a decision (see Exhibit 9.1). While
it is possible to design a procedure where the interest arbitrator must rule on each issue
separately ( issue-by-issue conventional arbitration), in most jurisdictions, the arbitrator
is free to render a decision that considers all of the issues at once (conventional

Exhibit 9.1
Some Relevant Criteria an
Arbitrator May Use to
Decide an Interest
Bargaining Dispute

Comparability of relevant employee wage, hours, or other working conditions
with similar private- or public-sector employees within the same geographic
area or industry.

Current economic conditions (e.g., inflation, unemployment, product/service
demand, productivity).

Occupational or job requirements (e.g., physical or mental abilities, degree and
variety of skills required, prior work experience or relevant training, hazardous
or unpleasant working conditions, degree of responsibility, creativity, stress).

The financial ability of the employer to pay for the costs of any proposed settle-
ment terms (including an assessment of current and future projected revenues
during the term of the labor agreement).

Whether a bargaining proposal involves a new bargaining subject (i.e., a subject
not previously agreed upon in a prior contract between the parties or not com-
mon in other labor agreements in the industry or geographic area).

The potential effect of the arbitrator s decision on the encouragement of effec-
tive and stable labor relations within the parties bargaining relationship.

The availability of recommended settlement terms from a mediator, fact-finder,
or other similar board of inquiry concerning the interest dispute.

The general welfare and interest of the public.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 443

arbitration by package ). By giving the arbitrator the freedom to consider several issues
in one ruling, lawmakers are allowing the arbitrator to consider the interrelationship
among the issues and the total financial impact of the proposals.

Criticisms of Conventional Interest Arbitration. Conventional interest arbitration has
been criticized on several grounds. One set of criticisms is at the microlevel in that
anticipating arbitration in the event of an impasse may change the psychology of how
one or both negotiating teams bargains. Many negotiators assume that arbitrators tend
to split the difference in resolving disputes; such an assumption may cause the parties
to take more extreme positions on issues in dispute.

Do arbitrators actually tend to split the difference? Early research suggested that they
do, but that this is an average tendency which may or may not apply to a specific arbitra-
tor in a specific dispute. However, a more recent study of wage outcomes in negotiations
involving police and firefighters found no difference between the outcomes achieved when
interest arbitration was available versus negotiations which did not permit the use of inter-
est arbitration.20 This would suggest that interest arbitrators are employing similar criteria
and evidence to that used by the parties themselves to determine an appropriate wage out-
come rather than mechanically splitting the difference. Most arbitrators will weigh the par-
ties positions and relevant supporting evidence in relation to specific criteria to determine
the dispute outcome rather than simply splitting the difference to determine a dispute s
outcome.21 Because neutrals may vary in the norms of their decision making (e.g., equity
vs. equality), the parties can also exert some degree of control over the dispute outcome by
defining the decision criteria to be used by an arbitrator in advance.22

Another, related, microlevel criticism of conventional interest arbitration is that if a
negotiator anticipates going to arbitration and anticipates the arbitrator splitting the differ-
ence, then the negotiator may believe that he/she will secure better outcomes by taking an
extreme position and not making significant concessions. This is called the chilling effect.
For example, suppose management offers a 2 percent pay raise. The chief union negotiator
may reason that if the union asks for 8 percent then the arbitrator may give a 5 percent
raise in his split-the-difference ruling [(2 8)/2 5]. If the union only asks for 6 per-
cent, the negotiator may anticipate a 4 percent arbitration ruling [(2 6)/2 4]. Employ-
ing this reasoning, the union leader may decide that the members will be better off if the
union freezes in its bargaining positions and the dispute goes to arbitration. Thus, the
expectation of the arbitrator splitting the difference leads to the parties not trying as hard
to negotiate a settlement. Another explanation for the chilling effect is that the costs of
using arbitration are insignificant compared to the costs of a strike or lockout. These low
costs remove the parties incentive to reach an agreement.

Research on the chilling effect has produced mixed results. One research study
reported that fewer voluntary settlements were reached under a negotiation system per-
mitting interest arbitration than under systems permitting a right to strike or lockout in
the event of an impasse. Another study reports that negotiators are likely to take posi-
tions based on the expected arbitration award, suggesting that the expected arbitration
outcome shapes the negotiators bargaining positions in ways consistent with the chilling
effect.23 However, other research reports no chilling effect on the parties likelihood of
reaching a voluntary settlement and avoiding the use of interest arbitration.24 If either
party believes that it can gain a better settlement through interest arbitration then there
may be an incentive to avoid a negotiated settlement even though some additional time
and cost will be necessary to obtain an interest arbitrator s decision.

A third concern is a macrolevel concern: The more frequently conventional inter-
est arbitration is used, the more likely it will continue to be used. This is called the nar-
cotic effect. Why might the narcotic effect occur? This macrolevel effect may be the

444 PART 2 The Bargaining Process and Outcomes

consequence of the two microlevel effects just described. Anticipation of an arbitrator
splitting the difference leads to parties freezing in their bargaining positions; this
increases the likelihood of an impasse and the likelihood of using arbitration. The theory
postulates that, as the parties repeatedly use an arbitration procedure, they feel less
responsible for their own outcomes; also, as they gain more knowledge of how arbitra-
tors decide outcomes negotiators, they may become increasingly reliant on interest arbi-
tration to resolve bargaining disputes over less-predictable methods. It has been further
argued that interest arbitration gives negotiators political cover for making unpopular
decisions (e.g., wage concessions), as shown by the increased use of arbitration during
the recent economic recession.25

Does the narcotic effect occur? Evidence is mixed. A study of the use of arbitration
over an eight-year period under the Minnesota Public Labor Relations Act did not reveal
its existence. However, earlier studies in New York and British Columbia identified such
an effect. More recent research suggests that the effect fades after several years, as the
parties gain experience with the process. The use of interest arbitration has declined
from the 10 to 30 percent range in the 1970s (when arbitration procedures were new for
public-sector labor negotiations) to less than 10 percent today in many jurisdictions.26

Thus, as negotiators gain insight regarding arbitral preferences and decision criteria,
they take more realistic positions in subsequent negotiations. This produces settlements
closer to the norms established by the arbitrator during prior contract negotiation dis-
putes. These dynamics reduce the narcotic effect. However, the authors of one study
report that this process is taking the parties longer to get a new contract: For example,
in New York, the median length of time between the expiration of a public-sector con-
tract and an arbitration award increased from 300 days in the mid-1970s to 790 days in
the 2001 2006 period.27

Final-offer total package (FOTP) selection is a form of interest arbitration that
restricts an arbitrator s authority to settle an interest dispute by requiring the selection
of either the employer s or union s final proposal on all issues in dispute. This is in effect
a winner take all proposition where one party s position will prevail on all issues in
dispute. In theory, forcing one party to risk a total loss through FOTP arbitration pro-
vides a powerful incentive for parties to voluntarily negotiate an acceptable outcome to
avoid risking the arbitrator s decision. Neither party can guarantee that the arbitrator will
select its proposal as the most appropriate or reasonable. FOTP eliminates any chance
for an arbitrator to simply split the difference between the union s and management s
final proposed settlement terms. Theoretically, if both parties genuinely attempt to pres-
ent acceptable proposals to the arbitrator, their positions will converge, enhancing the
opportunity for them to settle their differences without third-party intervention.

Is the theory correct? Research suggests that when an arbitrator is presented with
two offers in which one offer differs substantially from what the arbitrator has deter-
mined to be a reasonable or preferred offer, the arbitrator will most often select the
offer which is closer to his or her preferred offer.28 This provides some incentive for par-
ties to make reasonable offers in arbitration, which may then become the basis for fur-
ther voluntary negotiations resulting in settlement prior to an arbitrator rendering a final
and binding decision. There is also some evidence that final-offer arbitration reduces the
chilling effect and the narcotic effect relative to conventional interest arbitration,

although some experimental laboratory research suggests that the two procedures have
similar settlement rates.29

A somewhat less risky alternative to FOTP is final-offer issue-by-issue (FOIBI)
selection, where the arbitrator is restricted to selecting either the union s or employer s
final proposal on each separate issue in dispute. The FOIBI procedure permits the

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 445

arbitrator to assess each bargaining issue in dispute separately on its own merits to deter-
mine which party has the most reasonable proposal. While in theory one party could still
be determined to have the most reasonable proposal on every issue in dispute, it is more
likely that one party s proposal would be judged more appropriate on some issues in dis-
pute whereas the other party s position might prevail on other issues.

Salary arbitration in professional baseball is an example of FOTP on the single issue of
wages.30 Both the club owners and the player s agent seek an arbitrated salary adjustment
based on what comparable players are receiving. Each side presents a salary proposal and
identifies comparable players (and their salaries). If the evidence suggests a salary figure
closer to the player s proposal, then the player s proposal is accepted; if the evidence sug-
gests a salary figure closer to the owners proposal, then that proposal is accepted. The
arbitrator cannot split the difference. Similar to a strike threat, the threat of arbitration
imposes a cost risk on the player and team owner for continuing to disagree on settlement
terms. Because the salary arbitrator selects only one of the two offers submitted by the
opposing sides, the parties are motivated to reach a negotiated voluntary settlement.
Research studies report that approximately 15 to 20 percent of arbitration-eligible players
actually have their salary determined by a baseball salary arbitrator.31 The vast majority of
cases are settled voluntarily by the parties prior to the arbitration hearing.

Research on FOTP arbitration in baseball has revealed that typically only the high-
quality baseball players file for arbitration and seek to have their salaries decided in arbi-
tration. Because the salaries of baseball players who qualify for arbitration are 80 to 90
percent higher than those of comparable ineligible players, baseball clubs have an incen-
tive to substitute players with cheaper salaries for players whose salaries are raised
through arbitration beyond management s own valuation of a player s worth.32 Arbitra-
tors preferred outcome in baseball salary arbitration tends to be based upon a weighted
average of the player s salary from the previous season and the average free agent salary,
representing a compromise between the perspectives of owners and players.33 While
arbitration decisions do tend to select team owners offers slightly more often than
players offers, one study reports such team proposals prevent players from receiving
true market wages, and this is particularly true for African-American and Latin-born

players.34

Interest arbitration procedures do have some shortcomings, particularly if relevant
criteria on which to base arbitration decisions are not agreed upon by the parties. More
importantly, because labor negotiations usually involve multiple issues which may be in
dispute between the parties, interest arbitration can become a complex process. Under
final-offer arbitration procedures, if the parties do not compromise on significant differ-
ences between their bargaining positions prior to arbitration, then an arbitrator would be
required to select one of the party s extreme proposals. This could heighten union
management tensions during the life of the contract and cause future difficulties in nego-
tiating subsequent contracts.35

Mediation-Arbitration (Med-Arb)
Mediation-arbitration (med-arb) is a hybrid alternative dispute resolution procedure
blending traditional mediation and interest arbitration procedures. Under the procedure,
the bargaining parties typically select a third-party neutral who will first function in the
role of a mediator to encourage the parties to reach a voluntary settlement. If no settle-
ment occurs, the third-party neutral then switches hats to become an arbitrator empow-
ered by the parties to make a final and binding decision to resolve the parties interest
dispute. Because the arbitrator would already be familiar with the parties positions and
supporting evidence on issues in dispute, less time would be required in the arbitration

446 PART 2 The Bargaining Process and Outcomes

hearing to present those positions and have the arbitrator render a decision. It also takes
less time to transition from the mediation phase to the arbitration phase since the parties
have already determined in advance who the arbitrator will be.36

Some parties may have legitimate concerns about using a med-arb process. For
example, the two phases of the procedure require different skills. Mediation requires
skills somewhat akin to a facilitator or group counselor while arbitration requires
quasi-judicial procedural skills and the legal knowledge to write precise contract clauses;
it may be difficult to find third parties who have mastered both sets of competencies.37

Even if a skilled third party is employed, there are concerns about how the procedure
operates. Because the same individual who has already functioned as a mediator will
arbitrate the dispute, one or both parties may be concerned that opinions formed during
the mediation phase could influence the outcome of the arbitration phase. It may encour-
age greater impression management attempts in the mediation phase as negotiators try
to win the sympathy of the third party to their positions. If the negotiators believe that
such attempts have failed, then this concern would likely encourage greater effort to
reach a voluntary settlement during the mediation phase when the parties still control
the outcome rather than risking an unfavorable arbitration decision. There may also be
concern that in rendering a final and binding decision the arbitrator s opinion may be
influenced by information the third-party learns during mediation. Confidential informa-
tion disclosed by one party to the arbitrator during ex parte communications during
mediation (i.e., private caucuses) may be influential; yet, the other party would be
unaware of such information and thus unlikely to respond to during the presentation
of evidence and arguments during the arbitration phase. A variation on this concern is
that the parties may withhold information during the mediation phase out of fear that it
may later hurt them in arbitration. This may render the mediation phase ineffective.38

With proper advance consideration, most concerns regarding the med-arb process
can be resolved through joint agreement and incorporation into a written med-arb agree-
ment detailing the procedures and ethical standards that will apply. One study of med-
arb with a community dispute resolution center reports that disputants in med/arb
engaged in more problem solving and were less hostile and competitive than were dispu-
tants in straight mediation. 39 Another study (a laboratory experiment) reports that for
both distributive and integrative type of bargaining tasks, med-arb (with FOTP arbitra-
tion) reduces intergroup competitiveness and results in fewer impasses than a team
bargaining-only control group. While these findings are intriguing, more research needs
to be done on the med-arb procedure.40

Other Third-Party Procedures

Mediation, arbitration, and med-arb are widely used third-party procedures in the labor
relations process. Although rarely employed in labor disputes, other alternative dispute
resolution (ADR) procedures exist, and are available should the parties decide to use
them (or lawmakers authorize them for public-sector labor disputes). Only a few will
be briefly discussed because they are relatively new with little evaluation of their effec-
tiveness. Yet these illustrate some of the recent creativity that has gone into designing
dispute resolution procedures.

Arbitration-Mediation
Like med-arb, Arbitration-Mediation (arb-med) employs one third party to be both
arbitrator and mediator. However, it reverses the procedural order of med-arb and also

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 447

divides the arbitration process into two phases: A hearing phase and a ruling revela-
tion phase. With arb-med, the third party first holds the arbitration hearing. This may
involve meeting with both parties, holding private caucuses, or even simply obtaining
legal position papers ( briefs ) from each side. The arbitrator then withdraws to reflect
upon each side s position and to write a decision. However, the decision is sealed in an
envelope and not revealed to the parties. Rather, the third party next mediates. If a vol-
untary agreement is reached, then the dispute is settled; the parties never see what the
arbitrator put in the envelope. If a voluntary agreement is not reached by a specified
deadline, then the dispute enters the ruling phase : the envelope is opened and the arbi-
trator s decision becomes binding upon the parties.

What might be advantageous about arb-med, relative to med-arb? The primary
advantage is that the parties know that nothing they say in the mediation phase of arb-
med can affect the arbitration decision, because it has already been written. Thus, they
may be more forthright with the mediator (not withholding information, not engaging
in impression management). Each side may also be sensitive to statements the third
party makes during mediation that imply that an unfavorable arbitration ruling has
already been written (especially if FOTP is used); this may encourage the negotiators to
compromise during mediation.41

There has been little research comparing arb-med and med-arb. In one laboratory
study, disputants settled more frequently in the mediation phase (and with higher
joint outcomes) when arb-med was used. Other research reports that negotiators and
their constituents prefer med-arb over arb-med, because they control over the dispute
resolution process as long as possible and they see med-arb as a fairer procedure.42

Tri-Offer Arbitration
With tri-offer arbitration both parties and a neutral third party (e.g., a fact-finding
panel) suggest settlements. This procedure has been used in Iowa for some public-
sector disputes. An interest arbitrator must pick one of the three proposals. Experimental
evidence suggests that the voluntary settlement rate is comparable to that of other forms
of arbitration and that it is the more risk-averse party who makes more reasonable offers
in both tri-offer and final-offer arbitration.43

Double Final-Offer Arbitration
The variation on FOTP arbitration called double final-offer arbitration (DFOA), asks
each disputant to submit two package proposals of roughly equivalent value. The arbitra-
tor selects the winning side, based on a comparison of the total cost of each package.
After picking the winning side, the losing party then selects from the winner s two
packages. For example, suppose that management submits two proposals. Proposal A
calls for a 2.5 percent pay raise and 12 paid holidays; Proposal B calls for a 3 percent
pay raise and only six paid holidays (we will assume that six paid holidays are equivalent
to a .5 percent pay raise, so that Proposals A and B are equivalent in total cost). Further
suppose that the union submits two proposals. Proposal Y calls for a 4.5 percent pay
raise and 16 paid holidays; Proposal Z calls for a 5 percent pay raise and ten paid holi-
days. Proposals Y and Z are similar in total cost. The interest arbitrator must pick one
side or the other side. In this example, she chooses management s side based on the cost
of its proposals. Next, the losing side, the union in this example, chooses between Pack-
age A and Package B, based on whether union leaders prefer a slightly higher wage or
more paid holidays. The alleged advantage of this procedure is that it gives the losing

448 PART 2 The Bargaining Process and Outcomes

side some added voice in the final outcome, thereby encouraging greater commitment
to fully implement the contract. This proposed procedure remains untested.44

Night Baseball Arbitration
Night Baseball Arbitration is sometimes used where there is only one issue in dispute

(e.g., how much compensation to provide a victim of medical malpractice). Briefly, each
side submits (1) sealed final offers (usually monetary), and (2) written briefs which dis-
cuss the relevant issue(s) but do not explicitly state the parties positions on the issue(s).
A hearing is next held with oral arguments and expert witness testimony; again, how-
ever, the parties do not specifically reveal their final offers. The arbitrator adjourns and
reviews the two sides materials and formulates a nonbinding opinion; the arbitrator does
not reveal this private opinion to the parties. Instead, the arbitrator opens the two sealed
offers and compares his/her opinion with each side s final offers. The offer that is closest
to what the arbitrator had determined to be fair is the offer that is selected. Thus, this
procedure is a variation on final-offer arbitration. It remains untested in the context of
the labor relations process.45

Strikes and Lockouts: The Use of Economic Pressure to
Resolve Interest Disputes

The ability to raise a party s costs of continuing to disagree to current proposed terms of
settlement is an important factor which can encourage that party to compromise in
order to avoid such costs. In most cases, a credible threat of the costs associated with a
work stoppage, whether initiated as a strike by employees or a lockout by an employer, is
sufficient to motivate both union and management negotiators to seek a reasonable alter-
native. For such a threat to be perceived as credible, the party receiving the threat must
believe that the party making the threat has both the ability and willingness to carry out
the threat successfully. In commenting on the use of economic pressure tactics during
good faith bargaining, the Supreme Court stated:

The policy of Congress is to impose a mutual duty upon the parties to confer in good
faith with a desire to reach an agreement, in the belief that such an approach from
both sides of the table promotes the over-all design of achieving industrial peace .
The presence of economic weapons in reserve and their actual exercise on occasion by
the parties, is part and parcel of the system that the Wagner and Taft-Hartley Acts have
recognized . In one aspect collective bargaining is a brute contest of economic power
somewhat masked by polite manners and voluminous statistics. Initially it may be only
fear of the economic consequences of disagreement that turns the parties to facts, rea-
son, a sense of responsibility, a responsiveness to government and public opinion, and
moral principle; but in time these forces generate their own compulsions, and negoti-
ating a contract approaches the ideal of informed persuasion.46

A strike is a temporary work stoppage by a group of employees for the purpose of
expressing a grievance or enforcing a demand. Tactics often used to support a strike
include picketing activity or a boycott of the primary employer s goods or services. The
primary employer in a labor dispute is the employer with whom the striking employees
(union) have a dispute and the employer that has the ability to end the dispute by agree-
ing to the employees proposed settlement terms. The LMRA (Sections 7 and 13) pro-
tects employees right to strike so long as the strike is for a lawful purpose and is
carried out using lawful means. Authorizing an illegal strike can have serious

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 449

consequences for a union, as the Transport Union Workers Local 100 discovered when a
judge fined the union $2.5 million and ordered the local union president to jail for ten
days for calling an illegal strike which shut down New York City s mass transit system
for three days during the Christmas holiday shopping season.47

A lockout is the employer s version of the strike. The employer temporarily locks
the workers out of the company facility. A lockout is done for at least four reasons. First,
a lockout can enforce a bargaining demand. A lockout may produce favorable outcomes
if the firm can survive its economic losses from no production better than the workers
can survive the loss of pay. Second, if the employer anticipates a strike, an employer may
lock workers out as a preemptive move. A lockout may be timed to minimize the
employer s potential loss. For example, a firm locks out workers during a slow season
in the annual business cycle and avoids a more costly strike during the employer s busy
season . It may also prevent some workers from engaging in theft or sabotage. Third, a
lockout may be an attempt to ruin the local union. Locking out workers over stalled
negotiations may just be a pretext; the employer may actually be trying to discourage
workers, hoping that the workers will decertify their union in order to return to work.

Another reason an employer might initiate a lockout is to protect the integrity of a
multiemployer bargaining unit. To counter a union s ability to selectively strike only
certain competitors who may bargain together as a multiemployer unit, if one unit mem-
ber is struck, the other employers agree to lockout their employees. Such a lockout forces
the union to extend the scope of the bargaining dispute to a larger number of its mem-
bers and causes the union to expend resources at a faster rate to support members
affected by the strike or lockout actions.

In the 1990s, less than five percent of all work stoppages were lockouts; today it is
about 9 percent. Lockouts tend to be longer than strikes. Lockouts have grown longer in
recent years as employers now accept the lockout as a way to pursue their goals.

An example of a lockout occurred in the National Basketball Association (NBA) in
2011. The league complained in negotiations with the National Basketball Players Associa-
tion (NBPA) that many small-market teams were losing money (collectively, over $300 mil-
lion annually). Team owners wanted the soft salary cap (limiting each team s total payroll
costs, but with exceptions) replaced with a hard salary cap (no exceptions). They also
wanted a greater share of basketball-related revenue (BRI) the NBPA was receiving
57 percent of the revenue and the league wanted it divided 50 50. Finally, they wanted
total salaries lowered by $800 million. During collective bargaining, the NBPA offered to
reduce the BRI that they retained to 53 percent, provided that the NBA dropped its hard
salary cap proposal. When further negotiations proved fruitless and a July 1 deadline
passed, the NBA implemented a lockout; the lockout eventually shortened the season from
82 regular season games to 66 games. The timing of the lockout, in the summer and early
fall, put pressure on the players more than the owners; had the players struck, they might
have done it near the beginning of postseason play, when the owners would lose more
television advertising revenue. The subsequent contract continued the soft salary cap but
resulted in BRI sharing that was close to the 50 50 split the league demanded. The owners
got wages reduced by $300 million. Thus, the NBA used the lockout to enforce its bargaining
demands and it timed the lockout to minimize its potential losses.48 For another example of
a sports lockout, see the Labor Relations in Action box, p. 452.

Replacement Workers during Strikes and Lockouts
During a lockout, an employer can attempt to continue normal business operations by
using nonbargaining unit personnel or hiring temporary replacements for locked-out
employees.49 Since the employer initiated the work stoppage, permanent replacement of

450 PART 2 The Bargaining Process and Outcomes

locked-out workers is not permitted. Otherwise, some employers might initiate a lockout
as a means of replacing workers who had lawfully exercised their right to join a union
and engage in collective bargaining. Some authors have suggested that the ability to per-
manently replace employees engaged in a lawful economic strike seriously undermines
the effectiveness of the strike threat as a means of encouraging employers to reach a
compromise settlement in order to avoid a strike.50 The alternate view would simply
maintain that an employer s right to lockout workers is the economic equivalent of
employees right to strike and can encourage union members to compromise in order
to avoid being locked out.

A locked-out employee always has the right to return to work at any time during the
lockout by notifying management of the employee s voluntary acceptance of the employ-
er s proposed terms and conditions of employment (termed an unconditional request
for reinstatement). Any unreasonable delay in reinstating a locked-out employee follow-
ing such an unconditional request for reinstatement would represent an unfair (illegal)
labor practice by the employer.

Types of Strikes
It is useful to think about the concept of a strike along two dimensions. First, whether
the strike is a legal strike or illegal strike; this distinction essentially involves examining
the ends (purposes) of the strike action and the means (tactics) used to carry it out. A
strike called for a lawful purpose does not become unlawful merely because one or more
individuals engage in unlawful misconduct during the strike. Unlawful acts by indivi-
duals can be remedied without denying all participants their lawful right to strike. How-
ever, any employee who participates in an unlawful strike or engages in unlawful strike
activity during an otherwise lawful strike forfeits the rights granted by the LMRA to law-
ful strikers (discussed further later in the chapter).

A second dimension used to classify strikes reflects the types of issues that cause the
strike. This dimension reflects whether the work stoppage involves an economic dispute
or is caused by the commission of an employer s unfair labor practice (e.g., a refusal to
bargain in good faith). Whether a work stoppage is classified as an economic strike or
an unfair labor practice (ULP) strike has important implications for the rights of both
employers and employees participating in the strike. For example, economic strikers can
usually either be temporarily or permanently replaced; unfair labor practice strikers can-
not be permanently replaced. It is possible that an economic strike (for example, a strike
that began over a wage dispute) can become an unfair labor practice strike (such as a
strike over management s refusal to bargain) if the employer s unfair labor practice pro-
longs the work stoppage by becoming a reason for the strike s continuation.

Most work stoppages are classified as lawful economic strikes involving a dispute
over a mandatory bargain subject such as wages, benefits, hours of work, or manage-
ment s rights. Sometimes bargaining unit members are asked to support a strike to gain
improvements in desired terms or conditions of employment or to avoid (minimize)
proposed management reductions in such terms or conditions. Additionally union mem-
bers sometimes strike to achieve some institutional goal of their union, such as a union
security clause (see Chapter 4).51

Some types of strikes have been given their own special name. For example, the term
wildcat strike generally refers to a strike that occurs in violation of an existing no-strike
clause in a labor agreement and often without the approval or prior knowledge of union
officials. Such a spontaneous employee work stoppage, if in violation of current contract
terms, would be illegal and could result in the participating employees being subject to
discipline or discharge by their employer.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 451

LABOR RELATIONS IN ACTION
2011 National Football League Contract Negotiations and Lockout

Football is generally regarded as the most popular profes-
sional sport in the United States. Thirty-two professional
teams and approximately 1,900 professional football
players produce a sports entertainment product that gen-
erates over $9 billion in revenue annually. The National
Football League owners (NFL) bargain as a multiem-
ployer group with the National Football League Players
Association (NFLPA) which represents professional foot-
ball players. The parties labor agreement negotiated in
2006 was scheduled to expire at midnight on March 3,
2011. The parties spent two years preparing for the 2011
contract negotiation by gathering information to support
their bargaining proposals and developing a bargaining
strategy intended to produce a new labor agreement to
address the important interests of each side.

The last work stoppage in the NFL occurred in 1987
when players initiated a strike and owners responded
by hiring replacement players for three scheduled lea-
gue games. The relative labor peace enjoyed by the
NFL since the 1987 strike is often attributed to the
steady economic growth of the league and the positive
working relationship between former NFL Commis-
sioner Paul Tagliabue and former NFLPA President
Gene Upshaw. While Upshaw was criticized at times
for not being aggressive enough in pressing players
economic demands, there is no question that contracts
negotiated during the 1987 2010 period contained
gains for players, producing an average NFL player sal-
ary of $1.8 million in 2009.a The owners are represented
in the current negotiations by NFL Commissioner Roger
Goodell; Jeff Pash, NFL Vice-President and chief negoti-
ator; and outside legal counsel Bob Batterman, who led
negotiations for owners during the National Hockey Lea-
gue lockout of players, which cancelled the entire 2004
2005 season. Individual owners may sit in on a contract
negotiation meeting at various times as interested obser-
vers but don t generally take an active role in direct nego-
tiations with the union. Owners periodically meet as a
group to develop guidelines and a consensus on bargain-
ing proposals and tactics to be implemented by the own-
ers bargaining representative. Some owners such as
Robert Kraft of the New England Patriots, Wellington
Mara of the New York Giants, Jerry Jones of the Dallas
Cowboys, and Jerry Richardson of the Carolina Panthers
appear to be influential forces within the ownership group.

The NFLPA negotiating team is headed by execu-
tive director DeMaurice Smith, union attorneys Richard
Berthelsen and Jeffrey Kessler, and an 11-member
players executive committee. Each of the 32 profes-
sional football teams has an elected player

representative (who is also a player). Player representa-
tives beyond those officially listed as members of the
executive committee may attend one or more bargain-
ing sessions as interested observers. Both the owners
and the NFLPA established a separate Web site for the
purpose of conveying information about the progress of
settlement efforts to their respective members and the
general public.

In May 2008 owners voted to notify the union of
their intent to opt out of the current labor agreement
upon its expiration, citing increased cost associated with
paying for new stadiums, operating the NFL Network,
and seeking to expand interest in NFL football outside
the United States by scheduling limited games in England
or other possible markets.b To fund these types of items
the owners wanted a new formula more beneficial to
ownership interest for sharing reveues with the players.
Under the expiring labor agreement owners were entitled
to the first $1 billion in revenues while splitting remaining
revenue, with players receiving 59.5 percent and owners
getting 40.5 percent. Owners initially proposed doubling
the amount owners receive prior to revenue sharing with
the players from $1 to $2 billion annually and reducing the
players share of the remaining revenue split to around
the 50 percent level. Owners also wanted to expand the
current regular season consisting of four preseason
games and 16 regular season games to two preseason
games and 18 regular season games. This would gener-
ate additional stadium and television revenues.

The NFLPA was essentially satisfied with the current
revenue sharing plan and believed it was important that
players share in the projected increased revenues that
would accrue during the term of a new collective bargain-
ing agreement.c Media revenues were expected to grow
even faster in future years as more football content is
broadcast over television, smart phones, computer tablets,
and other Internet sources. While not adamantly opposed
to an 18 game regular season schedule, players were insis-
tent that for health reasons, any such schedule change
would have to include a reduction in off-season contact
drills, improved health benefits including for conditions
that affect players after their playing career have ended,
and an expanded number of players on team rosters.

Both parties in principle supported some type of
rookie wage scale that would reduce the amount of
pay going to unproven rookies and redirect that money
to veteran players, health care benefits, and improved
pensions for current and retired NFL players. The stakes
were high for both parties in these negotiations. The
NFL estimated it would lose $120 million in revenue if

452

no agreement were reached by the current contract s
expiration date and an additional $1 billion if no agree-
ment were reached by the scheduled start date of the
2011 regular season. An additional loss in revenue of
$400 million per week would occur if regularly scheduled
games were not played. Other estimates place the direct
economic impact of a regularly scheduled NFL home
game at $15 million for the community, with an additional
indirect economic impact on stadium workers, parking
attendants, restaurants, bars, retail merchandise sales,
and so on of four to five times that amount.d

In the months leading up to the current contract s
expiration date, face-to-face bargaining meetings
between the parties were sporadic. One factor in the
lack of negotiating progress was the union s insistence
that the owners verify their claims of operating costs
rising faster than team revenues by releasing audited
financial statements pertaining to each team in the lea-
gue. The league provided some average cost and reve-
nue projections for the entire league but was unwilling
to provide the level of individual team cost accounting
that the union asked for. Without the detailed financial
information, the union claimed it was impossible for
them to accurately value management s economic pro-
posals or accept as credible management s cost esti-
mates. While the owners are under no legal obligation
to provide such detailed cost information, it is clear that
without additional detailed cost information the union
would be extremely reluctant to just take manage-
ment s word as sufficient justification to agree to signif-
icant player economic concessions.

In anticipation of a possible work stoppage in 2011,
the owners had spent the previous two years renegotiat-
ing broadcast rights with various networks. At the NFL
owners insistence, those media contracts removed lan-
guage contained in prior agreements that penalized NFL
owners if regular season games were lost because of a
lockout of players. To get networks to agree to remove
the lockout prohibition, the NFL agreed to lower revenue
in the first two years but ensured that no loss of revenue
worth approximately $4 billion would occur in 2011 even if
games were cancelled due to an owner-initiated lockout. It
is estimated that the owners have an additional $1 billion
lockout reserve fund, which could be used to defray some
short-term revenue loss should a work stoppage occur.

Union representatives repeatedly said they believe
the owners fully intended to initiate a lockout if the
union fails to agree to management s proposed terms
by the contract expiration date. The union cited the net-
work television contracts and the hiring of management

personnel with prior sports lockout experience as evi-
dence to support their claim. The union also built a lock-
out fund of its own by depositing a portion of regular
member dues, which will allow the payment of up to
$60,000 per player should a lockout occur.e This amount
is a small fraction of the money players would have
received if regular salary checks had continued to be
earned uninterrupted by a work stoppage.

NFL owners expressed concern that the union
appeared to be maneuvering to use a strategy of decerti-
fication as the players bargaining representative and
then filing an antitrust lawsuit against the owners in an
effort to prevent a lockout and force management to
return to the bargaining table with more acceptable pro-
posals benefitting the union s interests. This is a strategy
that the union successfully used in 1992, and they used
the threat of such a strategy to win concessions in the
2006 contract negotiations. During the 2010 season the
NFLPA obtained authorization from players on each team
to decertify itself as the players bargaining agent if an
acceptable new contract could not be obtained prior to
the scheduled expiration date of the current labor agree-
ment. Such decertification would be a necessary legal
step in order for individual players to then sue league
owners for violating the Sherman Anti-Trust Act. There
was also some doubt whether the NFLPA could actually
maintain solidarity amongst its rank-and-file members for
very long once actual game checks normally paid to the
players began to be lost due to a work stoppage.

Two weeks prior to the March 3 scheduled expira-
tion date of the current contract, both the NFL owners
and the NFLPA agreed to submit their bargaining dis-
pute to the Federal Mediation and Conciliation Service
in an effort to forge some progress in the negotiations.f

FMCS Director George H. Cohen was selected to lead
the mediation effort, having had previous experience in
both professional baseball and basketball labor negotia-
tions. Although the FMCS cannot force a settlement,
mediation can get the parties talking again about possi-
ble solutions and help each party clarify its bargaining
position and supporting evidence.

The parties participated in mediation efforts over a
16-day period, which included two agreements to
extend the expiration date of the current labor agree-
ment first by one day and then seven days in order to
continue to try and reach a negotiated settlement.g

More time was spent with the mediator meeting with
each party separately than was spent in actual face-
to-face bargaining between the parties themselves.
While some progress on some issues was reported,

(Continued )

453

there remained significant differences between the par-
ties, particularly regarding the formula for sharing annual
revenues produced by the league.

On March 1, 2011, U.S. District Judge David Doty
issued a ruling that essentially found that the media con-
tracts negotiated by the NFL owners to ensure no loss
of broadcast revenue during 2011 had unlawfully
harmed the legitimate interests of the players. Since
the labor agreement required that players share in the
distribution of revenues, in negotiating television net-
work broadcast rights for NFL games the owners were
required to represent the best interests of both owners
and players. According to Doty, The record shows that
the NFL undertook contract renegotiations to advance
its own interest and harm the interests of the players.
The NFL sought to renegotiate broadcast contracts to
ensure revenue for itself in the event of a lockout. h A
hearing on May 12 was scheduled to address the
NFLPA s claim for damages. Because of anticipated
damages awarded by the court, it quickly became
clear that the owners would not have access to the
full $4 billion revenue stream in 2011 that had been
anticipated when the league embarked on its broadcast
contract renegotiation strategy; this put additional pres-
sure on the league to settle the labor dispute.

The parties met for the final time on March 11, fac-
ing a midnight contract expiration deadline. The owners
presented several new bargaining proposals on key
issues but continued to refuse to furnish detailed indi-
vidual team cost and revenue data.i Without such infor-
mation the union was unwilling to enter into a long-term
contract that was slated to last for ten years according
to the owner s last proposal. Shortly before 5 P.M. in
order to meet a courthouse closing deadline, the
NFLPA announced it would no longer represent players
for collective bargaining purposes under the LMRA but
would become an employee association to which
players could continue to belong for their mutual inter-
est and benefit. This strategy was known as a dis-
claimer decertification strategy, where the union
renounced any interest in representing the members
for purposes of collective bargaining; the strategy was
less permanent and also more legally ambiguous than
the NLRB-supervised union decertification election pro-
cess.j A federal antitrust lawsuit was immediately filed
on behalf of ten players including well known quarter-
backs Tom Brady, Drew Brees, and Peyton Manning
alleging owners had participated in an illegal conspiracy
to promote anticompetitive practices. As a remedy, the
suit requested an immediate labor injunction to halt any

lockout initiated by owners and triple monetary
damages for the actual losses suffered by the players
as a result of the owners illegal activity.

At midnight on March 11 the owners initiated a lock-
out of NFL players, creating the first work stoppage in pro-
fessional football since 1987. A hearing on the players
request for a temporary injunction was held and on April 25
U.S. District Court Judge Susan Richard Nelson issued a
ruling granting the union s request to end the lockout.k

Judge Nelson agreed that the NFLPA s decision to decer-
tify itself as a bargaining agent for players was lawful and
the NFL s imposition of a lockout was causing irreparable
harm to players in excess of any harm that owners might
experience should an injunction to halt the lockout be
issued. NFL owners immediately filed an appeal of Judge
Nelson s ruling and on April 29 obtained a temporary labor
injunction from a three-judge panel of the 8th U.S. Circuit
Court of Appeals, suspending the implementation of
Judge Nelson s order to halt the lockout.l A majority of
the full panel of judges for the 8th Circuit Court of Appeals
subsequently upheld the decision of the three-judge panel
allowing the owner s lockout to continue. NFL owners
continued to claim that a solution could only be found if
the two sides returned to the bargaining table and
resumed negotiations. Of course at this point since the
NFLPA no longer represented players for purposes of col-
lective bargaining, such negotiations would have to occur
between the owners and attorneys representing players
interests. Owners also filed an unfair labor practice claim
with the National Labor Relations Board alleging that the
NFLPA has engaged in bad faith bargaining and labeling
the union s decertification as a sham intended only as a
bargaining tactic to force owners to make contract conces-
sions. Although the league s unfair labor practice charge
was ultimately dropped, it increased pressure on the
NFLPA to return to the bargaining table.

After months of stalemate, pressure for a settlement
finally began to build on both parties as the scheduled
date for the first preseason and regular season games
approached. To dispel any threat of disunity by players if
game checks were lost, the union revealed to manage-
ment on July 14 that the union had previously obtained
an insurance policy that would pay each player up to
$200,000 if no games were played in 2011.m After many
long hours of negotiation, the NFL owners approved a
tentative bargaining settlement on July 21, 2011. Players
had to first vote to approve reauthorizing the NFLPA to
serve as their bargaining agent followed by several
more days of negotiation and clarification of the agree-
ment terms previously approved by the owners.

454

For example, in 2014 a New York United Parcel Service (UPS) driver was fired for
clocking in early. The driver claimed that he had his supervisor s permission to start

early regularly so that he could deliver packages to a shopping mall and park in one of
the few delivery loading bays. His firing prompted 250 other drivers to walk off the job.
UPS immediately fired twenty of them for violating the no-strike clause of the UPS-
Teamster contract; the firm planned to fire the rest, but complaints from customers
and union supporters led UPS to reinstate everyone and reduce the penalty to a ten-
day suspension.52

Some employees refuse to work when confronted with perceived extremely dangerous
and unsafe working conditions. Are such refusals considered wildcat strikes? No, such refu-
sals do not fit the definition of a wildcat strike because Section 502 of the LMRA, specifically
authorizes such concerted activity, which cannot be barred by the language of a contractual
no-strike clause. Also, as interpreted by federal court decisions, the Occupational Health and
Safety Act, the Railroad Safety Act, the Commercial Motor Vehicles Act, and the Mine Safety
and Health Act protect individual refusal-to-work decisions when employees believe that
working conditions present an imminent risk of serious bodily injury or death.53

Players voted to approve the new ten-year contract
settlement on July 25, 2011 bringing an end to the own-
ers lockout of players.n The 300-page collective bargain-
ing agreement contained gains for both parties. Owners
secured a higher share (53 percent) of all revenues and
a rookie salary scale that reduced the cost of signing
first year players. Players received a guarantee that
teams would spend nearly all of the salary cap funds
permitted and improvements in off-season and during
season practice rules governing the number and inten-
sity of scheduled practices. Current and retired players
received enhanced pension and health insurance bene-
fits. The number of preseason and regular season
games remained the same, at sixteen games.. NFLPA
Executive Director DeMaurice Smith summed up the
bargaining settlement by stating, We didn t get every-
thing that either side wanted but we did arrive at a
deal we think is fair and balanced. o The parties also
agreed to drop all pending legal cases associated with
the lockout dispute. This labor dispute provides an
excellent illustration of several concepts discussed in
Chapters 9 and 6 regarding bargaining strategy and
tactics.

a Jarrett Bell, Could Super Bowl Be Last NFL Action before Lockout Emerges? USA
Today, February 4, 2011, pp. 1 5 at http://www.usatoday.com/.
bDon Banks, Behind the Rhetoric: What a Fair Deal in NFL Labor Debate Will Look
Like, SI.Com, February 17, 2011, pp. 1 6 at http://sportsillustrated.cnn.com/; Maury
Brown, Numbers Show NFL s Economic Realities for Lockout Unwarranted, Forbes,
January 10, 2011, pp. 1 10 at http://blogs.forbes.com/sportsmoney/.
cNFLPA, What Is This Lockout About? Fact Sheet, March 31, 2011, pp. 1 2 at http://
www.nfllockout.com/; Judy Battista, What s at Stake in the NFL Labor Talks? New
York Times, January 30, 2011, pp. 1 4 at http://www.nytimes.com/.

dRick Horrow and Karia Swatek, NFL Labor Armageddon: A Different Kind of March
Madness, Business Week, March 4, 2011, p. 2.
e NFL Players to Begin Drawing from a Lockout Fund, Sports Illustrated, March 29,
2011, p. 1 at http://sportsillustrated.cnn.com/.
f NFL, Players Union Agree to Mediation in Labor Negotiations, Sports Illustrated,
February 17, 2011, pp. 1 3 at http://sportsillustrated.cnn.com/; Arin Karimian, NFL
and Players Union Beginning Mediation, USA Today, February 18, 2011, pp. 1 2 at
http://www.usatoday.com/.
gGary Mihoces, NFL, Players Union Agree to 7-day CBA Extension; Will Resume
Talks, USA Today, March 4, 2011, pp. 1 2.
hNate Davis, Federal Ruling Could Freeze NFL s TV Money Amid CBA Talks, USA
Today, March 1, 2011, pp. 1 2 at http://www.usatoday.com/. See also Jim Trotter,
Federal Judge Sides with Players Union in TV Revenue Dispute, Sports Illustrated,

March 2, 2011, pp. 1 2 at http://sportsillustrate.cnn.com/; NFL Players Ask for
Damages in TV Revenue Case, Sports Illustrated, April 1, 2011, pp. 1 2 at http://
sportsillustrated.cnn.com/.
i Lead Negotiator Pash Says NFL Recently Offered 10-year CBA Deal, Sports Illus-
trated, March 14, 2011, pp. 1 2 at http://sportsillustrate.cnn.com/; NFLPA: Owners
Last Contract Proposal Was The Old Switcheroo , Sports Illustrated, March 18,
2011, pp. 1 2 at http://sportsillustrated.cnn.com/.
j Lockout, Decertification Put League, Players in Limbo, Sports Illustrated, March 12,
2011, pp. 1 3 at http://sportsillustrated.cnn.com/; Ross Siler, The Lesson of the 2011
NFL and NBA Lockouts: Why Courts Should Not Immediately Recognize Union Disclai-
mers of Representation, Washington Law Review, 88, 2013, pp. 281-319; Nate Davis,
With Union Decertification and NFL Lockout Official, Now What? USA Today, March

12, 2011, p. 1 at http://www.usatoday.com/; Gary Mihoces, Players Claim Irreparable
Harm Now from NFL in Court Filing, USA Today, March 28, 2011, pp. 1 2 at http://
www.usatoday.com/.
kSean Leahy, Judge Sides with Players, Tells NFL to End Lockout, USA Today, April
25, 2011, pp. 1 3 at http://www.usatoday.com/.
lSean Leahy, NFL Reimposes Lockout on Players after Favorable Court Ruling, USA
Today, April 29, 2011, pp. 1 3 at http://www.usatoday.com/.
mJim Trotter, Players Secret Lockout Insurance Could Have Sparked Talks, SI.com,
July 15, 2011, pp. 1 2 at http://sportsillustrated.cnn.com (accessed July 15, 2011).
n Goodell, Smith Sign New CBA, Express Relief, SI.com, August 5, 2011, pp. 1 3 at
http://sportsillustrated.cnn.com (accessed August 5, 2011).
o Players Vote to Approve New Labor Deal, Put End to Extended Lockout, SI.com, July
25, 2011, p. 2 at http://sportsillustrated.cnn.com (accessed July 25, 2011).

455

A sympathy strike is a work stoppage by employees who have no dispute with their
own employer but are striking to support another bargaining unit of their employer or a
union representing employees of another employer. For example, Republic Services (a
sanitation company) negotiated a collective bargaining agreement with a Teamster local
in Mobile, Alabama. Union leaders alleged that the owners then unilaterally decided not
to implement two insurance-related clauses, so the union declared an unfair labor prac-
tice strike. Workers from Alabama flew to Republic Services facilities in the distant states
of Washington, New York, and Ohio and set up picket lines. Local Teamster officials at
those facilities called sympathy strikes. They were aided by the fact that they had negoti-
ated conscience clauses in their contracts allowing workers not to cross another s
picket line without discipline or loss (beyond going without pay). The sympathy strikes
eventually prompted the company to settle the dispute.54

Standard no-strike/no-lockout clause language is generally interpreted to apply only
to disputes between the parties to that contract and subjects which could be resolved
through submission to the contract s final and binding grievance-arbitration procedure.
The LMRA has also generally been interpreted to limit job actions beyond a specific bar-
gaining unit or employer. However, an employer may also seek to negotiate the addition
of specific language to the parties standard no-strike clause which would also prohibit
employees from engaging in a sympathy strike during the term of the labor agreement.

A jurisdictional strike involves a dispute between two or more unions over the
assignment of work (see discussion in Chapter 8). It is an unfair labor practice under
the LMRA for a union to strike or threaten such action to force an employer to assign
work to that union s members rather than another work group.

Reasons for Strikes
Work stoppages in the United States since 1982 have been at or near historic low levels in
terms of numbers of strikes, employees involved, and days idled (Exhibit 9.2). The eco-
nomic recession of 2008 2010 and its resultant higher unemployment rate is clearly one
factor which served to discourage employees from risking possible job loss through the

Exhibit 9.2
Work Stoppages Involving
1,000 or More Employees
in the United States:
1947 2014

Employees Involved Days Idled

Years
Number of
Strikes per Year

Number
(Thousands)

Number
of Days

Percentage of
Working Time

1947 1950 300.3 1,824.8 31,414 0.29

1951 1960 331.5 1,508.2 24,902 0.19

1961 1970 298.8 1,390.9 22,833 0.14

1971 1980 269.4 1,320.5 22,818 0.11

1981 1990 64.2 427.1 9,673 0.04

1991 2000 34.3 277.8 6,026 0.03

2001 2010 17.3 93.4 1,732 0.0075

2011 19 113 1,020 0.005

2012 19 148 1,131 0.005

2013 15 55 290 0.005

2014 11 34 200 0.005

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, Major Work Stoppages, News Release, February 11, 2015,
Table 1, available at: http://www.bls.gov/news.release/wkstp.toc.htm

456 PART 2 The Bargaining Process and Outcomes

exercise of their right to strike. The mean length of major work stoppages occurring
in 2014 was 11 days (about the same as 2010) and about half of the 20-day average in
2005.55

Some researchers have attributed the decline in the frequency of union strikes to
their declining effectiveness as a means of placing economic pressure on an employer.
An excess supply of labor in relation to the demand for labor in many occupations and
geographic areas in recent years have made strike replacements both easier and less
costly to obtain, dampening many union members desire to engage in a work stoppage.
The ability of many employers to move production to other cities or even countries (e.g.,
automakers) as well as systems of subcontracting work to a variety of firms (e.g., apparel)
also weaken the ability of unions to pressure employers by threatening to strike.56

Work stoppages are not caused by one factor alone, although the most common
issue over which strikes occur is wages, followed by plant administrative issues such as
safety, promotion policies, and job assignments. In recent years several work stoppages
have involved the issue of health care benefits as union members have sought to resist
employer health care bargaining proposals aimed at reducing the employer s benefit
cost for this item by shifting additional benefit cost to the employee or reducing the
scope of health care coverage available (see Chapter 7). The decision to strike depends
on the total environment in which bargaining takes place. Interrelated factors that can
influence the decision to strike include the economic positions of the union and com-
pany, characteristics of the production or service delivery process, the firm s market
structure, business location, and occupational and demographic characteristics of the
workforce.57

Researchers have shown that before 1980, strikes and economic activity were highly
correlated, with strike activity rising during periods of economic growth and declining
during economic recessions. However, after about 1980, this pattern did not occur; as
shown in Exhibit 9.2, strike activity has declined to very low levels.58 Exhibit 9.3 presents
several conclusions researchers have reached concerning the causes of work stoppages.

Although strikes have traditionally been viewed as economic or legal conflicts, the
psychological and sociological aspects are important. Strikes can be categorized as a

Exhibit 9.3
Conclusions from Research
on Work Stoppages Regarding
the Likelihood of a Strike

Strikes are more likely when:

The duration of the preceding contract was longer.

Negotiations serve as a pattern setter for other firms/union pairs.

The bargaining units are larger.

There is a large variance (sharp drops and increases in earnings) in the firm s
financial performance.

Firms and industries have risk of injury or fatalities.

Firms can inventory or stockpile goods.

Strikes are less likely when:

Fewer issues are being negotiated (such as in a contract reopener over wages).

Firms and industries employ a large proportion of women.

Firms and industries pay a higher wage rate than other firms or industries.

SOURCE: Bruce E. Kaufman, Research on Strike Models and Outcomes in the 1980s. Accomplishments and Shortcomings, in
Research Frontiers in Industrial and Human Resources, David Lewin, Olivia S. Mitchell, and Peter D. Sherer (eds.) (Madison, WI:
Industrial Relations Research Association, 1992), pp. 110 111.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 457

group process for organizational or social change. Protest strikes include actions by the
membership, such as walking off their jobs because of a perceived injustice, such as non-
union fast food workers protesting a lack of employer-provided paid sick-leave days. One
form of the protest strike is the general strike where a large percentage of workers from
a variety of industries strike simultaneously. Such strikes, while almost nonexistent in the
United States, are fairly common in Europe. They are often motivated less by economic
concerns than political concerns, such as workers (or their unions) feeling excluded from
policymaking, and disagreements over what policies should implemented (e.g., leftist
unions protesting conservative governments).59

Partial strikes occur in many forms, such as shutting down one department instead
of an entire facility, refusing to do certain types of work, intermittent strikes, and refus-
ing to work overtime. Perhaps the most common form of partial strike is the work slow-
down where employees work to rule, following every detail of prescribed work
processes, which often slows the normal pace of workflow. These protests may be in
reaction to a unilateral change by management such as introducing production quotas
or changing working conditions (such as lowering thermostat settings in winter months
to save heating costs). Partial strikes may put economic pressure on the employer. For
example, New Jersey outpatient clinic physicians engaged in a work slowdown, resulting
in patients visiting more expensive emergency room services. Partial strikes often occur
when workers want to protest without risking job loss by being permanently replaced.
Ironically, except perhaps for the work-to-rule tactic, partial strikes are risky job
actions, as they are not usually recognized by the courts as protected activities under
the LMRA.60

As a group process, strikes require an important issue around which to mobilize a
union s membership and adequate strike resources. Effective union leadership is critical
to the success of any strike. Union leaders must instill unity among the membership,
control courses of action, respond to the feelings of the group, and maintain communi-
cation with management. An individual union member s participation in a strike is often
determined by perceived costs and benefits. If the perceived benefits are small and the
costs are high, willingness to participate will be low. However, if the benefits are per-
ceived to be high and the costs are low, willingness to participate will be high.61 Employ-
ees who believe that their pay is inequitable are often not willing to strike for a small
wage increase. On the other hand, employees may be willing to strike to support the
union for a large increase. The degree of commitment (loyalty) an employee has toward
his or her union also has an important effect on an employee s willingness to strike, even
more so than the employee s perceived commitment to his or her employer. To increase
strike support, a union must help employees reduce the potential hardships of a strike
(e.g., by providing strike benefits).62

Strikes can have traumatic effects on the parties attitudes; they can temper the militants
with realism and radicalize the conservatives. Strikes may cause some members to question
the credibility of their leaders or management. Most strikes end in some type of negotiated
settlement. However, once a strike is over, much rebuilding must occur to restore good
labor management relations and co-worker relations between strikers and nonstrikers.63

Strategic Purposes of a Strike
Although the main purpose of a strike is to secure a contract, it may also serve other
purposes. For example, a strike may be part of an overall union strategy to help resolve
internal problems. A strike may have a cathartic effect on the union members, removing
accumulated tensions and releasing frustrations resulting from monotonous work. In
fact, strikes under these conditions might improve productivity when the strikers return

458 PART 2 The Bargaining Process and Outcomes

to work. A strike might also help to unify members, serving to rally diverse prestrike
membership factions to work toward a common goal of winning the strike.

In some cases, a union may call a strike to show management it can unify the mem-
bership over a collective bargaining issue. A short strike may send a signal to manage-
ment regarding the importance of a specific issue to the employees. Over time, frequent
strike threats may lose their effectiveness. If such threats are never carried out, manage-
ment may perceive that the union leader s strike threat lacks credibility. Sometimes
union members may view participation in a strike as an investment in the credibility of
future strike threats intended to reduce the need for future strikes to occur.

Union leaders may also believe that their members might be more willing to accept
a slightly modified company offer if employees have experienced the loss of wages during
a brief strike. In this sense, strikes are used to roll the steam out of employees and
force them to adopt a more realistic perspective on the possibility of attaining stated bar-
gaining objectives.64

Unions also have to consider the effects of a strike on their institutional security.
During a strike, some union members may accept jobs elsewhere and decide not to
return after the strike. Sometimes employers hire permanent replacements for strikers,
and the negotiations may never result in a collective bargaining agreement. Rival unions
are sometimes waiting on the sideline for the legally recognized union to falter, hoping to
get enough employees to shift their support to a rival union to win a union decertifica-
tion election. With these considerations, a union must be aware that a decision to strike
may be a risk to its own institutional security.

A strike may serve a strategic purpose for management as well. Although manage-
ment cannot call a strike, it can take actions that it knows are likely to provoke a strike.
For example, management can demand that the union collect dues rather than have
management deduct them from employee paychecks (the union dues checkoff procedure
is discussed in Chapter 4). Unions view this demand as a threat to their security and will
often strike in response to it. Management s demand to subcontract bargaining unit work
at will or to substantially change the wage system to the perceived detriment of covered
employees will almost certainly lead to a strike. Management insistence on substantial
employee concessions even though the company is currently profitable would likely be
interpreted by union members as an attempt to provoke a work stoppage. Under what
conditions would managers deliberately provoke a strike? Management may attempt to
cause a strike when a strike is to its advantage, such as when inventories are high and
customer demand is low. In some instances, managers can transfer work to other facili-
ties or even contract out work to nonunion firms or facilities to meet demand and
maintain profitability. If nonunion employees can produce at a sufficient level to main-
tain acceptable production, if the union is weak, or if management knows that many
employees will not support a strike, management may force a bargaining impasse as a
strategy to secure more favorable contract terms.

Strike Experiences and Preparation
Strikes can range from peaceful conflicts of short duration to protracted conflicts involv-
ing unlawful acts on both sides lasting months or even years. Strikes have no uniform
sequence of events, although strikers enthusiasm is generally highest during the early
days of a strike. Indeed, the first few days on a picket line often draw a large number
of union members in an almost carnival-like atmosphere. After several weeks, it may be
more difficult for a union to recruit members to walk the picket line. A party s ability to
accurately predict the duration of a work stoppage can provide an important strategic
advantage during a work stoppage.65

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 459

Frustrations, antagonisms, and anxieties usually increase as the strike continues,
with increased membership pressure being placed on union leaders to resolve the
impasse. The relative peacefulness of a strike is influenced by the attitudes of community
citizens, particularly merchants and creditors, toward the dispute. A striker s spouse is
perhaps the most influential individual in shaping a striker s behavior and attitudes. It
is much easier for a striker to sustain a long strike if her or his spouse lends moral and
financial support to the cause. On the other hand, tensions created by the strike can cre-
ate permanent divisions among family members, friends, and other groups in the com-
munity as the strike endures and as individuals are asked to demonstrate their support.66

Tensions can be especially heightened if the company continues to operate the business
with either supervisory employees or striker replacements.

There have been numerous research studies and much theorizing about the escalation of
conflict among individuals, groups, organizations, and nations. To summarize this literature
is beyond the scope of this book. However, a few key points are worth noting. First, while it is
easy to describe an escalating dispute in terms of an aggressor and a defender, each side will
probably see itself as taking defensive actions and view the other side as the aggressor. Sec-
ond, as conflicts escalate, they often bring psychological changes, such as increasing us vs.
them distrust of the other side, discounting the value of any concessions that the other side
makes, and moving from a desire to do well to a desire to do better than (or even harm) the
other party. Third, structural changes sometimes occur: militant subgroups within each
group often acquire more power, each side seeks powerful allies, each side commits more
resources to attaining its goals (sometimes the expenditures outweigh the economic benefits
of goal attainment), and each side may prod neutral bystanders (e.g., local businesses) to take
their side in the dispute (e.g., posting pro-union signs in shop windows). Finally, conflicts
often go through very complex patterns of interaction, organized around certain ideas,
goals, or behaviors. Conflicts tend to de-escalate when the costs to each side mount and nei-
ther can achieve victory (a hurting stalemate ), or new leaders emerge who send unequivocal
signals that they want a fair resolution; a neutral mediator s assistance can also prove valu-
able.67 It takes a great deal of skill on the part of both union and management leadership to
prevent a conflict from escalating during a strike.

Preparation
Parties must prepare for a possible strike before the contract expiration date, whether a
strike is called or a settlement is reached. Exhibit 9.4 presents some of the potential costs
faced by employers, unions, or individual employees during a work stoppage, as well as
possible actions to minimize or limit the adverse effects of such costs.

Union leaders must be certain of the extent to which members will actively partici-
pate during a strike and present a unified front to the employer. Usually a strike vote will
occur either days or weeks before the contract deadline to indicate the strength of the
membership s willingness to strike and bolster the credibility of any union strike threat.
Strike votes are typically supported by the overwhelming majority of union members
voting, although management negotiators may place less credibility on the validity of
such votes the earlier the vote is taken in advance of the contract expiration date.

As the strike date approaches, union leaders must schedule pickets, ensure appropri-
ate support for those on the line (e.g., food, shelter, first-aid supplies), and properly pre-
pare the pickets for various situations, such as what to do when strike replacements cross
the picket line. The union also has to determine qualified recipients of strike benefits, as
well as any available public aid. Communication channels (e.g., telephone hotlines, Web
sites, media news releases) must be created and maintained to keep union members and
the general public informed about the progress of negotiations. For example, Local 400,

460 PART 2 The Bargaining Process and Outcomes

Exhibit 9.4
Some Potential Strike or
Lockout Costs and Mitigating
Actions

Some Potential Employer Strike or Lockout Costs

Lost sales revenue

Loss of customers/market share (temporary or permanent)

Continued fixed operating costs (e.g., utilities, taxes, rent, maintenance, debt
service)

Nonbargaining unit employee payroll costs

Recruitment, selection, and training costs for temporary or permanent replace-
ment workers

Shut-down and start-up costs

Negative publicity

Legal fees

Damage to bargaining relationship or co-worker relations (temporary or
permanent)

Increased stress level on managers, employees, and their families

Potential Employer Actions to Minimize or Limit such Costs

Build inventory in advance of an anticipated strike

Notify customers and suppliers in advance of strike potential and help arrange
alternative sources to meet customer needs

Engage in a publicity campaign to inform the public (customers, civic leaders,
and employees) about company efforts to resolve the labor dispute

Shift the struck work to other primary employer-owned plants or outsource
such work to other secondary employers

Continue business operations using some combination of non-B.U. employees,
B.U. employees willing to cross the union s picket line, and temporary or per-
manent striker replacements

Existence of poor product market demand serves to decrease risk of market
share loss and sales revenue

Purchase strike insurance or enter mutual aid pact with other employers

Some Potential Union or Individual Employee Strike or Lockout Costs

Loss of union members due to voluntary union membership resignation or per-
manent striker replacement

Loss of wage income or employee benefits coverage

Loss of union dues revenue

Cost of strike benefits provided, if any

Costs of operating a strike (e.g., printing costs, legal fees, picket-line supplies
such as coffee, food, or medical aid)

Political cost to union s leadership if strike isn t won or won big enough

Damage to co-worker (peer) relationships between strike supporters and
nonsupporters

Continuing personal debt payments (e.g., auto, home, credit card, insurance,
and telephone)

Increased level of stress on work stoppage participants, their families, and
communities

(Continued)

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 461

United Food and Commercial Workers in preparation for a potential strike against Safe-
way Inc. and Giant Food LLC in the Washington, D.C., area reported selecting strike
captains, handing out instructions for setting up picket lines, distributing the names of
bail bondsmen, and establishing a local strike fund. 68 In coordination with other local
unions, the AFL-CIO Metropolitan Washington Council, and community groups, Local
400 distributed leaflets inside and outside of Giant and Safeway stores as well as appealed
for support from local political leaders in an effort to achieve a fair contract settlement.
During a labor dispute it is typical for both union and management negotiators to use
the media (both traditional media and social media) to shape public opinion about the
merits of each party s bargaining position or reasons for a work stoppage.69

Management often spends much time in its strike preparations, particularly if it is
essential that the employer continue to operate during a strike, as public utilities or
health care facilities must do. Management in manufacturing facilities must determine
the feasibility of building inventories in advance of a possible strike or using a strategy
of hiring striker replacements if the strike occurs. Continuing to operate during a strike
may be a viable management alternative where the following conditions are met70:

There is a high risk of loss of market share if the firm ceases operation.
An adequate supply of labor is available to operate the firm at reasonable costs.
The union s anticipated response to management s decision to continue to operate
will be limited or manageable.

The use of striker replacements (particularly permanent replacements) during an
economic strike escalates the tensions between the parties and often prolongs the length

Exhibit 9.4
(Continued) Potential Union or Individual Employee Actions to Minimize or

Limit Costs

Ensure adequate membership support prior to initiating any strike action

Solicit morale and financial support from outside organizations (e.g., other
unions, community groups, general public)

Increase individual savings rate in anticipation of income loss during work
stoppage

Work with creditors to delay or reduce monthly debt payments

Ensure adequate funding of union strike benefit fund

Engage in publicity to demonstrate the merits of union members bargaining
positions at issue in the work stoppage and the effectiveness of strike efforts
to impose added costs on the employer s ability to operate

Recognize the potential effect of product market conditions (e.g., high product
demand increases an employer s cost of lost sales, a high level of market com-
petition increases an employer s risk of market share loss in the event opera-
tions are curtailed)

Recognize the potential effect of labor market conditions (e.g., a relatively low
supply of qualified labor reduces the risk of striker replacement)

Establish support groups for strikers and their families to help maintain striker
solidarity

Keep strikers informed about the progress of efforts to resolve the labor
dispute

Encourage a consumer boycott of the primary employer s goods or services

462 PART 2 The Bargaining Process and Outcomes

of a strike s duration. For this reason, most employers when confronted with a potential
work stoppage do not hire permanent striker replacements as part of a strategy to con-
tinue operations during a work stoppage.

Many organizations have an emergency strike manual that provides specific and
detailed plans in the event of a strike. The manual typically has two major components:
(1) specific job assignments for nonstriking employees, professional employees, and
managers and (2) checklists of appropriate strike activities, such as notifying customers
and suppliers, contacting law enforcement officials, and providing food and housing for
those staying on the job. In cases where the work is highly automated, such as in the
telephone industry, employees strikes may be less effective because companies find it
easier to continue to operate, at least during short strikes. Management might also seek
professional assistance from employer colleagues, trade associations, or members of the
Society for Human Resource Management.71

Although union and management officials carefully consider the advantages and dis-
advantages of work stoppage strategies and tactics, they are not entirely free to implement
these activities as they please. While condoned as a viable part of the collective bargaining
process, the use of economic pressure tactics are extensively regulated by federal, state, and
local laws.72 Knowledge of labor law principles is essential to developing and implementing
effective strike strategies and tactics. These regulations will now be considered.

Reinstatement Rights of Unfair Labor Practice and
Economic Strikers
Employees engaged in an unfair labor practice strike cannot be permanently replaced but
may be temporarily replaced by an employer for the purpose of continuing normal busi-
ness operations. An unfair labor practice strike can occur at any time to protest the com-
mission of an employer unfair labor practice and cannot be barred by language
contained in a negotiated no-strike agreement. Participating in an unfair labor practice
strike entails less risk for an employee in the sense that a striker knows he or she will
eventually return to work when the dispute ends. Since the decision to participate in an
unfair labor practice strike is voluntary, ULP strikers are not entitled to back pay for
wages lost during their withdrawal of labor. An exception to this rule would occur if an
employee s loss in pay was the direct result of an employer s unfair labor practice. For
example, an illegally discharged employee would be entitled to back pay as part of a
ULP remedy, but employees who subsequently engaged in a ULP strike to protest that
illegal discharge would not be entitled to a back-pay remedy.

A 1938 U.S. Supreme Court decision, Mackay Radio & Telegraph, established that
economic strikers may be either temporarily or permanently replaced by an employer
for the purpose of continuing normal business operations.73 The threat of hiring perma-
nent striker replacements can significantly increase employees perceived risk of engaging
in or continuing a work stoppage. The United States is one of the few industrialized
countries in the world which permits the permanent replacement of lawful economic
strikers during a labor dispute.74

Employers hire replacement workers in approximately 14 percent of strikes.75 Tempo-
rary replacements are more likely to be hired than permanent replacements during a strike,
which may help to reduce some of the risks associated with hiring striker replacements. As
a way of making the threat of replacement more concrete in the minds of striking employ-
ees, an employer may publicly announce that employment interviews for potential strike
replacements will be conducted. Of course announcing the intention to conduct employ-
ment interviews or collecting job applications in advance of a threatened strike action is
not the same as actually hiring a striker replacement. The use of strike replacements

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 463

typically lengthens the duration of a strike and increases the chance that violent acts will
occur, compared to strikes not involving the hiring of replacement workers.

If not permanently replaced, an economic striker has a right to be reinstated to his
or her job at any time during a labor dispute after making an unconditional request for
reinstatement to the employer. An economic striker s job is not considered to be filled on
a permanent basis unless the employer indicates such an intent when hiring a replace-
ment and the replacement is actually on the job performing a striker s job duties (as
opposed to being engaged in training in order to qualify to perform the normal job
duties of a striking employee). If temporary replacement workers are hired during a
strike, lawful strikers will go back to work after a settlement is reached, and the tempo-
rary replacements will be dismissed or reassigned if a job is available.

An employer must be careful when hiring permanent striker replacements to ensure
that no promise of continued or permanent employment is extended. Employees hired
during a strike who receive a promise of permanent employment may sue an employer
for breach of contract if they are subsequently laid off due to a negotiated strike settle-
ment or NLRB-ordered unfair labor practice remedy requiring striking employees be
reinstated.76 Offering regular employment or full-time employment would not generally
be considered equivalent to an offer of permanent employment. Other practical consid-
erations may also discourage an employer from exercising the legal right to replace stri-
kers. It is usually not easy to replace a large number of striking employees quickly,
especially if work operations are complicated or employees require more than a short
period of training to demonstrate the required level of job performance.

Efforts to enact a legislative ban on the use of permanent strike replacements, such as
proposed in the Workplace Fairness Act in the early 1990s, have not been successful.
Employers have argued that a legislative ban against hiring permanent striker replacements
would drastically shift the balance of relative bargaining power to unions and would result in
higher labor costs. However, in a Canadian study that examined a location where the hiring
of permanent striker replacements is banned by provincial law, no evidence was reported
supporting the contention that striker replacement legislation alters the existing balance of
power between management and labor.77 Legislation to ban or restrict an employer s right
to permanently replace lawful strikers is not likely to be enacted by the current Congress
given the significant political influence of business interests opposed to the idea.

An employer should not tell strikers that if they do not return to work they will be
fired. Even in cases where an economic striker is permanently replaced, the striker

retains employee status and has a right to be placed on a preferential recall list. The
employer must fill any permanent vacancy occurring in a bargaining unit position there-
after by first offering the job vacancy to a qualified individual on the preferential recall
list before offering the job to an a job applicant not on the preferential recall list (Laid-
law-Fleetwood doctrine).78 An employer and a union may negotiate the particulars of
this list, including a reasonable time limit following a strike, during which permanently
replaced economic strikers would be entitled to exercise their preferential recall rights.79

Management would generally favor including such a time limit in the new contract to
reduce the administrative burden of notifying qualified individuals on the preferential
recall list each time a permanent job vacancy occurs. Factors which might affect what
constitutes a reasonable time period could include:

Historical data on normal employee attrition rates (e.g., voluntary turnover, dis-
charge for cause, retirement, permanent disability).
Future probability that new job openings may occur over some extended time period
(e.g., new product development, plant expansion, industry economic forecast).

464 PART 2 The Bargaining Process and Outcomes

The percentage of total employees eligible for recall who were actually recalled dur-
ing the negotiated time limit.

An employer is not permitted to grant superseniority (artificially high seniority
levels, discussed in Chapter 8) or retroactive seniority rights to permanent strike replace-
ments in order to protect their recall rights in any future layoff situation where the labor
contract calls for reinstatement to be accomplished according to seniority.80 A grant of
superseniority essentially exempts that individual from the normal application of senior-
ity rights in making employment decisions. Since former economic strikers on a prefer-
ential recall list were hired before the permanent strike replacements, former strikers on
a preferential recall list almost always have more actual seniority than replacement work-
ers hired during a strike.

Unlawful Strike Misconduct
Employees who engage in an unlawful strike or serious strike misconduct during an
otherwise lawful strike forfeit their normal rights to reinstatement. In addition to forfei-
ture of job reinstatement rights, some strike misconduct may also represent a violation of
criminal or civil statutes, subjecting an employee to legal penalties such as a monetary
fine or imprisonment. Serious strike misconduct would include:

Acts of violence directed at managers, co-workers, customers, suppliers, or the gen-
eral public.
Intentional destruction of private property (e.g., acts of vandalism or sabotage).
Verbal threats intended to intimidate, coerce, or prevent an individual from
exercising his or her lawful rights.

All strike misconduct is examined in light of the surrounding circumstances, and
courts recognize the heightened emotions which exist and may affect the conduct of par-
ties involved in a work stoppage.81 Picketers use of derogatory but not threatening lan-
guage directed at individuals crossing a lawfully established picket line, although
unpleasant or embarrassing for the target of such verbal abuse to endure, will not gener-
ally be classified as serious strike misconduct.82

Union members typically try to deter other union members from crossing an autho-
rized union picket line by adopting a rule permitting the union to impose a reasonable
monetary fine on any union member who engages in such conduct.83 A reasonable fine
might include an amount equivalent to what a member might earn by crossing the picket
line and performing work for the employer. If large numbers of union members cross
the picket line and continue to work, it undermines the effectiveness of the union strike
effort which has the support of the majority of union members.

Individual union members have a legal right to resign their union membership at
any time, including during a work stoppage authorized by their union.84 To avoid the
imposition of a monetary fine for crossing an authorized union picket line, a union
member would simply need to resign from his or her union membership prior to
crossing the picket line. Resigning one s union membership would not affect an
employee s legal status as an employee of the company or as a member of the bargain-
ing unit represented by the union from which the individual resigned. Of course such
action by an individual could adversely affect relations between that individual and
co-workers who are supporting the strike. Should a former union member who
resigned during a strike seek future reinstatement as a union member, there is no
guarantee that such a request would be approved by current union members.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 465

Employee Picketing Rights
Employees have a right to publicize a labor dispute involving a primary employer in a
peaceful manner to encourage public support for the striking employees (union s) posi-
tion.85 Such publicity often takes the form of picket activity, which is primarily regulated
by state and local laws. Efforts by state and local authorities to restrict employee picket
activity requires a careful balancing of employee First Amendment free speech rights,
employer property rights, and the government s interests in maintaining labor peace,
the free flow of commerce, and protection of the public s interests.

Some reasonable restrictions on the right to picket during a labor dispute could
include:86

Banning picket activity conducted for an unlawful purpose or involving violence.
Reasonable limits on the times when picketing may occur, noise level, number of
picketers present at one time, or mandatory spacing between picketers to ensure
reasonable entry or exit from the employer s property.
Requiring that the content of picket signs be truthful and clearly identify the
employer with whom the picketers have a labor dispute.

An employer generally has a right to establish reasonable rules to govern the exer-
cise of free speech on private property. Union picket activity on the employer s private
property may generally be banned if (1) the ban is applied in a consistent, nondiscrimi-
natory manner and (2) the union has other reasonable means of communicating its mes-
sage to the intended audience.87

Secondary Strikes, Boycotts, and Picketing
Up to this point the discussion has focused on labor disputes between a primary
employer and his or her employees. A secondary employer (i.e., one with no direct
authority to resolve the labor dispute) may become involved in a labor dispute either
voluntarily or involuntarily. A general rule of thumb for union leaders is that it is
legal to picket a primary employer as part of a legal economic or ULP strike. It is an
unfair labor practice to picket a completely neutral secondary employer. For example,
suppose striking meatpackers picket their meat processing plant. They also urge consu-
mers not to shop at a company-owned outlet store; this type of consumer boycott is
sometimes called a primary boycott. In this example, both the picketing and the con-
sumer boycott are allowed because both facilities are employer-owned. If the meatpack-
ers try to shut down a grocery store that is owned by a neutral third party simply
because they sell deli lunchmeat made at the meatpacker s facility that would be an ille-
gal secondary strike or secondary boycott. What if the union did not try to shut down
the entire grocery store, but merely had members passing out leaflets or holding signs
asking shoppers not to buy their employer s brand of lunchmeat? Such informational
picketing is generally legal, provided that the signs or leaflets clearly indicate the union
and the employer involved in the labor dispute; usually the signs or leaflets also note that
the labor dispute does not involve the secondary employer, (informational picketing is
discussed in more detail below). The distinctions between primary strikes and boycotts,
secondary strikes, and informational picketing constitutes a general rule of thumb.
However, as with many aspects of the law, there are nuances and exceptions; these will
now be examined.

One exception involves a secondary employer who knows (or reasonably should
have known) that engaging in certain conduct would aid a primary employer during a
labor dispute. The secondary employer is presumed to have voluntarily joined the labor

466 PART 2 The Bargaining Process and Outcomes

dispute as a business ally of the primary employer and, therefore, can be subjected to the
same lawful economic pressure tactics that employees could engage in regarding the pri-
mary employer. A secondary employer who agrees to perform work normally done by
striking employees (struck work) is the most common means of establishing business
ally status. Thus, if the meatpacking facility in our example contracted out work to a dif-
ferent meat processing company, the second firm would become a business ally in the
labor dispute. A second exception involves common ownership: A primary employer
with several plants or ownership of separate firms may find nonstruck entities enmeshed
in the labor dispute as a business ally of the primary employer if a high degree of inter-
dependence or co-mingling of assets is established between the various operations shar-
ing common ownership. Where different operations function independent of each other,
common ownership alone would not be sufficient to establish business ally status of the
nonstruck operations, nor would carrying on an established business relationship with a
struck employer by itself establish that a secondary employer has waived its neutral sta-
tus in the labor dispute. Business ally status is determined case-by-case based on an anal-
ysis of the totality of relevant circumstances.

Section 8(b)(4) of the LMRA makes it an unfair labor practice for a union to engage
in tactics for the purpose of pressuring a neutral, secondary employer into becoming
involved in a labor dispute. This includes prohibiting a union from discouraging employ-
ees of a neutral, secondary employer from performing their normal job duties. However,
lawful picketing to publicize a labor dispute (informational picketing) which has the
effect of causing secondary employees to honor a picket line is lawful, so long as the
intended purpose or object of such picketing is not to induce secondary employees to
cease performing their regular job duties.88

When it passed the LMRA, Congress sought to balance (1) the legitimate right of
neutral, secondary employers not to be forced to participate in a labor dispute with (2)
striking employees rights to use economic pressure tactics against the primary employer
and publicize the existence of a labor dispute. However, Congress did not intend to guar-
antee neutral, secondary employers complete freedom from economic loss as the result
of the lawful exercise of strike rights. For example, suppose that the workers at an air
conditioning manufacturer are on strike. The air conditioning manufacturer manages to
keep its operations open during the strike by using managers, engineers, and other non-
union personnel. Suppose that the firm orders bolts from a neutral secondary
employer a parts supplier. Further assume that parts supplier s driver is scheduled to
make a delivery to the air conditioning manufacturer s facility but fails to make the
delivery after encountering a union picket line at the struck employer s property. The
driver is presumed to be acting in sympathy with the striking employees. The driver s
voluntary decision not to cross the picket line represents a sympathy strike, and as a
sympathy striker the driver s strike rights are equivalent to those of the picketers
whose picket line the driver refused to cross.89 If the picket line was part of a lawful eco-
nomic strike, the neutral, secondary employer could temporarily replace the driver or
permanently replace the driver if no other reasonable alternative action exists (e.g., reas-
signment of the driver to another delivery route which would not require him or her to
encounter a picket line or rescheduling the delivery to another date when a driver willing
to cross the picket line could be assigned to make the delivery). Even though the second-
ary employer may suffer some costs in the form of lost productivity, time delay, or the
loss of a sale, neither the primary employees picket activity nor the secondary employ-
er s driver s refusal to cross the picket line would become unlawful merely because the
effect of their exercise of lawful strike rights caused an adverse economic impact on the
neutral, secondary employer.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 467

Hot Cargo Arrangements
In the previous example, a struck air conditioning manufacturer ordered bolts from a
neutral, secondary supplier. Let us change the example slightly: Suppose the supplier
did not use its own delivery drivers, but instead, the supplier shipped its deliveries
using a delivery company. Further, suppose that the delivery company is unionized.
Can the delivery workers union insist on a contract clause that forbids the delivery com-
pany from doing business with any firm whose workers are on strike? Pressuring the
delivery company to agree to such a hot cargo agreement is an unfair practice under
the LMRA and the Landrum Griffin Act because it injures a neutral firm the delivery
company in this case. Although individual workers may choose to become sympathy
strikers, it is illegal for unions to insist that hot cargo clauses be added to their collective
bargaining agreements.90

Common Situs Picketing
Common situs picketing occurs at a location where a primary employer and one or
more neutral, secondary employers are engaged in normal business operations at the
same site. Common examples of such sites would be a construction work site where sev-
eral independent contractors are engaged in business, or a shipping dock where several
shipping companies may be engaged in business at the same time. The challenge
becomes how to permit employees involved in a labor dispute with a primary employer
at the site to engage in lawful picket activity without unnecessarily disrupting the ability
of neutral, secondary employers to continue to operate at the work site without becom-
ing enmeshed in the primary employer s labor dispute. The Moore Dry Dock doctrine
establishes some guidelines for lawful picketing at a common site of a labor dispute.91

Picketing at a common site is lawful if:

1. The primary employer is present and engaged in normal business operations at the
common site. Presence can be indicated by the primary employer continuing to
schedule deliveries to the site, maintaining equipment at the site, or having set-up
or maintenance work continue to be performed at the site.

2. Picket signs must clearly identify the primary employer with whom the union has a
labor dispute.

3. Picketing must occur at locations reasonably close to the primary employer s opera-
tions at the common site.

Sometimes a primary employer will provide a schedule to the union listing dates and
times when the primary employer will be present at the site and thus union picket activ-
ity would be permitted. Of course, the primary employer would be required to adhere to
the published schedule. If the primary employer maintains an intermittent presence at a
work site so it is impossible for a union to know when the primary employer is or is not
going to be present, the union is entitled to presume that the primary employer is pres-
ent when conducting picket activity at the work site.

Unions have argued that employers who occupy a common work site are so inter-
twined that a labor dispute with one employer is a labor dispute with all and, therefore,
unions allege that there are no neutral employers on the site. The Supreme Court has
rejected this union argument, ruling that general contractors and subcontractors on a
building site are separate business entities and should be treated separately with respect
to each other s labor controversies.92 Picket activity at a common site of a labor dispute
must meet the Moore Dry Dock standard to be lawful.

A union may lawfully picket under the Moore Dry Dock standard at the location of a
neutral, secondary employer, so long as a primary employer is present and engaged in

468 PART 2 The Bargaining Process and Outcomes

normal business operations at the neutral, secondary employer s site (so-called picketing
between the headlights). This might occur where a struck primary employer is engaged
in providing some service to its customers at the neutral, secondary employer s work
site (e.g., computer repair service is struck by its employees but continues to service
accounts at various neutral, secondary employers business locations during the strike).
The union representing the primary employer s repair technicians might follow the
repair truck from the primary employer s business and picket at the entrance used by
the primary employer s repair technician at the neutral, secondary employer s business
while the repair person is inside the business. When the primary employer s technician
leaves the neutral customer s location, the union s picket activity would also have to
cease and the union s picketers would have to follow the repair truck to the next custo-
mer s location.

Consider a large construction work site. During a labor dispute, the reserve gate
doctrine permits entrances to the work site to be clearly marked for the exclusive use
of either a primary employer or neutral, secondary employer and their employees, custo-
mers, and suppliers.93 Picketing by a union during a primary economic labor dispute at a
gate reserved for the exclusive use of a neutral, secondary employer would generally be
illegal, so long as the gate was properly marked, reasonably established, and used only by
the neutral, secondary employer. A gate marked for the exclusive use of the primary
employer involved in a labor dispute would not be reasonably established if the gate
was located so as to unreasonably deny a union an opportunity to convey its intended
picket message to the public (e.g., down a dead-end alley seldom used by customers or
employees to gain entrance to the work site). Proper use of reserved gates helps to mini-
mize the disruption in neutral, secondary employers ability to continue normal business
operations at a common site of a labor dispute while still permitting striking employees
to picket the operation of the primary employer.

A situational application of the reserve gate doctrine occurs when a primary
employer involved in an economic dispute turns his or her property into a common
site by hiring a neutral, secondary employer to perform work on the primary employer s
property during a labor dispute. Such work might involve construction of new buildings,
installation of new equipment, major maintenance projects, or other tasks which could
be accomplished, even though the employer s normal business operations have been cur-
tailed due to the ongoing strike.

Striking employees of a primary employer normally have a right to picket at every
entrance to a primary employer s property during a labor dispute. The General Electric
doctrine establishes the conditions under which a primary employer could lawfully
establish a gate on the primary employer s property reserved for the exclusive use of a
neutral, secondary employer hired to perform some work for the primary employer dur-
ing a labor dispute.94 During a labor dispute, picketing may be prohibited at an entrance
to the primary employer s property if the following conditions are met:

1. The gate must be reserved for the exclusive use of a neutral, secondary employer
and only used by such an employer, their employees, or suppliers. Once the neu-
trality of a reserved gate has been breached by the primary employer (or its non-
striking employees), the gate loses its neutrality and the union can lawfully picket
the gate.

2. The work performed by the neutral, secondary employer on the primary employer s
property cannot be struck work (i.e., work that except for the work stoppage
would have been performed by bargaining unit members). For example, a neutral
contractor cannot go into a plant to do maintenance work that is normally per-
formed by striking employees.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 469

3. The work performed by the neutral, secondary employer cannot be work that would
require a work stoppage to occur in order for the task to be completed. New con-
struction projects, repairs on nonfunctional equipment, or installation of new equip-
ment in a location not already occupied by existing equipment would generally meet
this requirement. Major maintenance on equipment currently in use requiring such
equipment to be taken out of service in order for the maintenance to be accom-
plished would not meet this third requirement. The purpose of this third require-
ment is to reduce management s incentive to provoke a strike as a means of
avoiding payments due workers who were laid off as the result of equipment being
taken out of service for maintenance.

Product Picketing Rights
As mentioned earlier, unions sometimes choose to publicize a dispute with a primary
employer at the site of a neutral, secondary employer who sells the primary employer s
product or service. Such Informational Picketing typically includes two types of activi-
ties: Product picketing and handbilling. Product picketing lawfully occurs when the
union urges customers not to buy the primary employer s products or services which
are sold at a neutral, secondary employer s business.95 Picket signs must clearly identify
the primary employer as the target of the picket activity and only urge a boycott of the
primary employer s products or services, not a total boycott of all products or services
sold by the neutral, secondary employer. For example, if workers at a commercial bakery
go on strike, the strikers can engage in product picketing near a neutral supermarket,
asking shoppers not to buy particular brands of bread or prepackaged baked snacks
products made by the struck employer and sold at the supermarket. Picketers cannot
prevent consumers from entering the secondary employer s premises to shop. If consu-
mers voluntarily comply with the union s boycott request, then their actions will put
economic pressure on the primary employer; the primary employer will be motivated
to resolve the labor dispute.

Before initiating any product picket activity, a union will often request a neutral,
secondary employer to voluntarily cease selling the primary employer s products or ser-
vices for the duration of the labor dispute. If the neutral, secondary employer agrees to
do so, it eliminates the need for the union to engage in any picketing activity at the neu-
tral, secondary employer s business. While the secondary employer is not required to
grant the union s request, a prudent employer will weigh the likely effectiveness or dura-
tion of such product picket activity against the potential costs (e.g., lost sales, customer
dissatisfaction, or negative publicity) such picketing might entail for the neutral, second-
ary employer if it occurs.

There are two exceptions to a union s right to engage in product picketing at the
business of a neutral, secondary employer. First, product picketing can be restricted or
prohibited where evidence proves that the effect of such picket activity would cause a
near total boycott (e.g., 90 percent or more loss of business) of the neutral, secondary
employer.96 This might occur in a case where the only products or services sold by the
neutral, secondary employer consisted of the primary employer s products or services
and the union s boycott appeal was effective in causing customers not to purchase the
primary employer s products or services. For example, picketing may be restricted if a
neutral third-party owns a franchise that only sells the struck employer s products, such
as a cellular telephone retailer that only sells one brand of mobile phone (and the pro-
duction workers making those phones are on strike). Since it may not be clear from the
outset how effective a union s product picket action will be, a neutral, secondary
employer may have to bear some period of picket activity during which evidence as to

470 PART 2 The Bargaining Process and Outcomes

the effectiveness of the union s picket action can be established and presented to a court
to obtain a labor injunction or presented to the NLRB to support an unfair labor practice
charge against the union.

A second exception to a union s right to engage in product picketing occurs if the
product of the primary employer being struck and a neutral, secondary employer are so
intertwined (what is called the merged product doctrine) that it would be impossible for
a consumer to boycott the primary employer s product without inducing a near total
boycott of the neutral, secondary employer.97 For example, if the employees of a car bat-
tery manufacturer initiated a product picket at a new car dealer that used the primary
employer s batteries in all of the vehicles on the sales lot, it would be impossible for a
customer to refuse to buy the primary employer s battery without also refusing to buy
the neutral, secondary employer s car in which the battery was located. In this circum-
stance, product picketing can be restricted or prohibited.

Handbilling Rights
Even where picket activity may be illegal, the LMRA permits other forms of informa-
tional publicity such as handbilling or the display of a banner to communicate the exis-
tence of a labor dispute and seek public support.98 Attempting to hand a written notice
to an individual is typically viewed as a less intrusive (and maybe less effective) means of
communicating one s desired message than confronting that individual with picket signs
carried by several individuals patrolling back and forth in front of an entrance.

Shopping malls that include a multitude of separate employers give rise to some
interesting questions about lawful union picket and handbilling activities particularly
when construction is involved (e.g., stores are remodeled), because the construction
workers premises are actually another organization s premises. The Supreme Court
has upheld the right of unions to peacefully distribute handbills urging customers not
to shop at stores located in a mall (see, for example, the handbill shown in Exhibit 9.5)
until all construction underway at the mall was performed by contractors paying fair
wages. The Court ruled that the handbill used by the union truthfully revealed the exis-
tence of a labor dispute and urged potential customers of the mall to follow a wholly
legal course of action, namely, not to patronize the retailers doing business in the mall.
The handbilling was peaceful. No picketing or patrolling was involved. The union was
within its members right of free speech to encourage consumers to protest substandard
wages by refusing to shop at a mall where such wages were paid.99

National Emergency Dispute Resolution Procedures

When labor disputes develop to a stage where they are regarded as having an adverse
effect on the national interest, they assume a special significance. Strikes that have a sub-
stantial adverse impact on national economic or defense interests are classified as
national emergency strikes, and the federal government has used three methods to
deal with such strikes: (1) presidential seizure or other intervention, (2) procedures
under the Railway Labor Act, and (3) procedures under the LMRA.

Presidential seizures or attempts at seizure where the government takes control of a
company s assets and proceeds to operate the firm have occurred 71 times under four
presidents Lincoln, Wilson, Franklin D. Roosevelt, and Truman in the interests of
maintaining production when actual strikes or threatened strikes caused national emer-
gencies. Most of these presidential seizure actions have occurred at a time when the
United States was at war.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 471

The Railway Labor Act provides a procedure for resolving national emergency work
stoppages involving railroads or airlines that includes the following:

The National Mediation Board (NMB) attempts to mediate the dispute, and if
unsuccessful, recommends voluntary interest arbitration.
If arbitration is rejected by one or both parties, a 30-day cooling-off period is
established during which wage rates, working rules, working conditions, and so forth
would remain the same.
If the dispute threatens to substantially interrupt essential transportation service to
any section of the country, the president is notified by the NMB and can choose to
appoint a Presidential Emergency Board (PEB). If the president chooses not to
appoint a PEB, either union or management would be free after the conclusion of
the 30-day cooling-off period, described in the previous step, to pursue a strike or
lockout action.
Within 30 days, the PEB appointed to investigate the dispute must issue a written
report containing findings of fact regarding the dispute and recommended settle-
ment terms to the parties. Union and management then have an additional 30 days
to try to reach a voluntary settlement before either party could resort to any strike
or lockout action. During this time, the status quo regarding terms and conditions of

Exhibit 9.5
Handbill Used at
Shopping Mall to
Influence Shoppers

PLEASE DON T SHOP AT EAST LAKE SQUARE.

The FLORIDA GULF COAST BUILDING TRADES COUNCIL, AFL-CIO is requesting
that you do not shop at the stores in the East Lake Square Mall because of the
Mall ownership s contribution to substandard wages.

The Wilson s Department Store under construction on these premises is being built
by contractors who pay substandard wages and fringe benefits. In the past, the
Mall s owner, The Edward J. DeBartolo Corporation, has supported labor and our local
economy by ensuring that the Mall and its stores be built by contractors who pay fair
wages and fringe benefits. Now, however, and for no apparent reason, the Mall own-
ers have taken a giant step backwards by permitting our standards to be torn down.
The payment of substandard wages not only diminishes the working person s ability
to purchase with earned, rather than borrowed, dollars, but it also undercuts the
wage standard of the entire company. Since low construction wages at this time of
inflation means decreasing purchasing power, do the owners of East Lake Mall intend
to compensate for the decreased purchasing power of workers of the community by
encouraging the stores in East Lake Mall to cut their prices and lower their profits?

CUT-RATE WAGES ARE NOT FAIR UNLESS MERCHANDISE PRICES ARE ALSO
CUT-RATE.

We ask your support in our protest against substandard wages. Please do not
patronize the stores in East Lake Square Mall until the Mall s owner publicly pro-
mises that all construction at the Mall will be done using contractors who pay their
employees fair wages and fringe benefits.

IF YOU MUST ENTER THE MALL TO DO BUSINESS, please express to the store
managers your concern over substandard wage and your support of our efforts.
We are appealing only to the public the consumer. We are not seeking to induce
any person to cease work or to refuse to make deliveries.

SOURCE: Supreme Court decision in DeBartolo v. Florida Gulf Coast Building & Construction Trades Council, 485 U.S. 568 (1988).

472 PART 2 The Bargaining Process and Outcomes

employment is maintained. If no voluntary settlement is reached, the president
could request Congress to enact legislation mandating settlement terms to resolve
the bargaining dispute.

Since the RLA s passage in 1926, its emergency provisions have been invoked about
200 times, an average rate of four times per year, and work stoppages have occurred at
the end of the 60-day period at a rate of one per year since 1947. However, government
interventions in railroad disputes have averaged only about one per year since 1980, and
only three PEBs have occurred in the airline industry since 1978.100 Sixteen federal laws
have been passed to deal with specific railroad labor disputes, usually by extending the
strike date and involving a third-party mediator or arbitrator. The last time a federal law
was passed to intervene was 1992, when Congress stopped a national rail strike and
mandated mediation and arbitration of the dispute.

The LMRA contains a procedure for managing a threatened or actual strike or lock-
out affecting an entire or substantial portion of a private-sector industry which, if
allowed to occur or continue in the opinion of the President of the United States,
would threaten the national health or safety. These provisions include a step-by-step pro-
cedure to halt the strike or lockout for 80 days and provide the parties assistance in
resolving their disputes. Exhibit 9.6 displays the steps in the national emergency proce-
dure of the LMRA. Prior to engaging in any lawful strike or lockout, the party initiating
the work stoppage must have bargained in good faith for 60 days, provided the FMCS at
least 30 days advance notice prior to the current contract s expiration that the parties
voluntary bargaining effort had not yet produced a settlement, and made sure that no
contractual bar (e.g., a no-strike or lockout clause) was still in effect.

The first step in the national emergency dispute resolution procedure is for the presi-
dent to appoint a board of inquiry when the actual or threatened strike is believed to be of
sufficient severity to imperil the national health or safety. Because of the urgency of the mat-
ter, the board will investigate the mandatory bargaining subjects in dispute, gather relevant
facts, and make a report to the president in a very short time, usually one to three days.

After the president receives and studies the report, he or she may direct the attorney gen-
eral to secure an 80-day labor injunction from an appropriate federal district court to prevent
or end the strike or lockout. Once the injunction is issued, the board of inquiry is reconvened,
and after the first 60 days of the injunction period, it will be asked to report to the president on
the employer s last offer and any other relevant factors. During those 60 days, the FMCS will
attempt to mediate a voluntary settlement between the parties in the dispute. Assuming no
voluntary settlement is reached, the board reports the final employer bargaining proposal to
the president who will then instruct the NLRB to conduct and certify a secret ballot vote
(between the 60th and 80th days of the injunction period) to determine if employees will
accept management s final offer. If employees reject the offer, the attorney general must
request the federal district court who issued the 80-day labor injunction to dissolve the injunc-
tion. After the 80th day, when the labor injunction has expired, the union or employer could
legally initiate or resume a strike or lockout, respectively. The final step in the procedure calls
for the president to submit a full and comprehensive report to Congress, accompanied by any
recommendations that he or she may have (e.g., proposed legislation to mandate a settlement
or a requirement that the parties submit the dispute to final and binding interest arbitration).

In the first 22 years following the enactment of the LMRA, the national emergency dis-
pute resolution procedure was used 29 times. However, since 1960, it has been used only
seven times (five times in 1971 with stevedoring and grain elevator operations). During a
strike by eastern coal miners President Carter invoked the procedure in 1978, but a federal
judge refused to grant the requested 80-day labor injunction because the attorney general
failed to prove that the work stoppage actually represented a national emergency.101 More

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 473

recently, President Bush invoked the procedure to halt a lockout of West Coast dock workers
in 2002, in which the key issue in dispute was shippers plans to introduce new technology
into port operations and union member concerns over the effect of such action on job secu-
rity.102 The Pacific Maritime Association representing shipping and cargo companies at 29
West Coast ports and the International Longshore and Warehouse Union representing
some 10,500 dockworkers negotiated a voluntary contract settlement ending the labor dis-
pute prior to the scheduled expiration of the 80-day labor injunction.

Several reasons have been identified to explain the infrequent need to invoke these
national emergency procedures. Such reasons include the internationalization of some product
markets; a breakup of many centralized, industry-wide bargaining arrangements; a decline in
the percentage of the workforce represented by unions; an increase in the tendency of employ-
ers to seek to break strikes by hiring replacement employees; and an increased employer will-
ingness to operate during a work stoppage. This combination of factors has contributed to a
reduction in the frequency of the use of national emergency strike procedures.103

Some critics argue that the use of national emergency dispute resolution procedures
subverts the bargaining process by interjecting government action which alters the balance
of bargaining power in the labor dispute and reduces the bargaining pressure on each
party to reach an agreement at the bargaining table.104 The national emergency dispute
resolution procedure appears to work as effectively as Congress intended because of the

Exhibit 9.6
National Emergency
Dispute Resolution Procedure
under the LMRA

SOURCE: Diagram created by Dr. Roy Moore, professor, College of Business, Delta State University, Cleveland, Mississippi.

60 days prior to contract expiration date, provide other party with notice of intent to
renegotiate current contract and begin negotiations. 30 days prior to contract
expiration date, notify FMCS if no settlement has been reached.

Upon contract expiration date, the president may appoint a board of inquiry to
investigate a threatened or actual work stoppage and report back to the president. The
president may also instruct the attorney general to seek a labor injunction in court
halting any ongoing strike/lockout activity for a period of 80 days.

Union and management must negotiate in good faith for the next 60 days under the
direction of the FMCS to seek a bargaining settlement.

If no settlement is reached by the end of 60 days, the presidential board of inquiry
reconvenes and prepares a report to the president detailing the employer’s final offer
on labor agreement terms in dispute. Within the next 15 days the NLRB will conduct
a secret ballot election to determine if affected employees agree to the employer’s last
offer. Between the 75th–80th days of the labor injunction period, the NLRB will certify
the election results to the attorney general.

At the end of the 80-day labor injunction, the attorney general will request the court
to lift the injunction, and the bargaining parties would be free to resume any strike or
lockout. The president will submit a report to congress detailing the findings of the
board of inquiry, results of the secret ballot contract ratification vote, and any
additional recommendations intended to resolve the ongoing labor dispute.

474 PART 2 The Bargaining Process and Outcomes

rigidity and predictability of the procedures. When each step in the procedure is predict-
able, either party may include the issuance of a labor injunction as part of its bargaining
strategy. The requirement that a secret ballot election on the employer s last offer be held
often solidifies union members opposition to management s proposal rather than facilitat-
ing the bargaining process toward settlement. Lastly, because the presidential boards of
inquiry are prohibited from proposing settlements, their effectiveness in securing the nec-
essary public support and pressure to move the parties toward settlement is limited.

Summary
Various third-party dispute resolution procedures to
assist the parties in resolving negotiation disputes
were presented, ranging from mediation (where a
third party attempts to facilitate resolution by keeping
the parties bargaining, acting as a go-between, and
offering alternatives) to arbitration, a quasi-judicial
procedure in which the bargaining positions are pre-
sented to an arbitrator who makes a final and binding
decision. Within the range of dispute resolution proce-
dures are the med-arb procedure (which attempts
mediation first and then arbitration if mediation fails)
and fact-finding (in which the parties present their
positions to a fact-finder, other facts are collected,
and a report, which includes a recommended resolu-
tion of the impasse, is written and publicized). Other
third-party Alternative Dispute Resolution procedures
were also briefly described.

Although voluntary agreements are reached by the
parties in the vast majority of negotiation disputes,
sometimes one or both parties will resort to the use
of economic pressure tactics (e.g., strike, boycott, pick-
eting, lockout) to encourage a party to agree to pro-
posed settlement terms. Work stoppages involve
significant costs and risks for all participants and
require careful consideration and preparation before
embarking on such a course of action.

The right to strike (by workers) or lockout (by
management) for lawful reasons using lawful means is
an intrinsic part of the labor relations process protected

by-law. It is a wise union or management representa-
tive who understands the difference between possessing
a legal right and determining whether it makes practi-
cal sense to exercise such a right under the prevailing
circumstances of a particular labor dispute. While data
indicate that strike activity is less common in labor
relations today, the potential threat of such action can
still be a credible force encouraging the parties to care-
fully weigh the cost of agreement against the cost of
continued disagreement. It is unfortunate that peaceful
bargaining settlements do not attract the same level of
media or public attention that work stoppages do.

Most strikes and related activities involve primary
employers, but often secondary employers (not directly
involved in the employer employee relationship) are
affected. A complex body of law and judicial decisions
covers such activities as consumer and product boy-
cotts and picketing, common situs picketing, and hot
cargo clauses. Generally, primary strikes and boycotts
as well as informational picketing (which includes
product picketing, and handbilling) are legal, whereas
secondary strikes are not legal; however, as noted,
exceptions exist.

Strikes or lockouts that have an adverse effect on
the national interest may be declared national emer-
gency disputes. Procedures are available under the Rail-
way Labor Act and the LMRA to facilitate their
resolution. Although such impasses occur infrequently,
they are significant when they do.

Key Terms
mediation, p. 439
fact-finding, p. 439
interest arbitration, p. 439
Federal Mediation and Conciliation

Service (FMCS), p. 439

conventional interest arbitration (CA),
p. 443

chilling effect, p. 444
narcotic effect, p. 444
final-offer total package (FOTP), p. 445

final-offer issue-by-issue (FOIBI),
p. 445

mediation-arbitration, p. 446
Arbitration-Mediation (arb-med),

p. 447

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 475

tri-offer arbitration, p. 448
double final-offer arbitration (DFOA),

p. 448
Night Baseball Arbitration, p. 449

strike, p. 449
primary employer, p. 449
lockout, p. 450
unconditional request for

reinstatement, p. 451
legal strike, p. 451
illegal strike, p. 451
economic strike, p. 451
unfair labor practice strike, p. 451
wildcat strike, p. 451

sympathy strike, p. 456
jurisdictional strike, p. 456
Protest strikes, p. 458
general strike, p. 458
Partial strikes, p. 458
work slowdown, p. 458
strike manual, p. 463
preferential recall list, p. 464
Laidlaw-Fleetwood doctrine, p. 464
superseniority, p. 465
serious strike misconduct, p. 465
secondary employer, p. 466
informational picketing, p. 466
business ally, p. 467

struck work, p. 467
sympathy striker, p. 467
hot cargo agreement, p. 468

common situs picketing, p. 468
Moore Dry Dock doctrine, p. 468
picketing between the headlights,

p. 469
reserve gate doctrine, p. 469
General Electric doctrine, p. 469
product picketing, p. 470
merged product doctrine, p. 471
handbilling, p. 471
national emergency strikes, p. 471

Discussion Questions

1. What are some similarities and differences
between mediation, fact-finding, and interest
arbitration?

2. What characteristics or qualities should a practi-
tioner look for in selecting a mediator to help
resolve a labor dispute?

3. Some have suggested that interest arbitration is
problematic because outcomes are almost always
located between the two sides positions and fre-
quently close to the midpoint between their posi-
tions; thus, arbitrators seldom consider creative
( win win ) outcomes. Others have suggested that
the time for creativity is before a dispute reaches
arbitration and arbitration is not designed for that
purpose. Which position do you support? Why?

4. Compare any three of the following: final-offer
interest arbitration, double final-offer interest
arbitration, night baseball arbitration, med-arb,
arb-med. Which is the best (and what do you
mean by the best )? Why?

5. To what extent would you agree or disagree with
the following statement: Strikes are an intrinsic
and essential element of the collective bargaining
process. Explain your reasoning.

6. What types of preparation do management and
union leaders need to engage in prior to a work
stoppage?

7. What are some potential costs or risks parties face
during a work stoppage, and how may such costs
or risks be reduced or minimized?

8. If you were a secondary employer confronted with
a threatened product picket action at your retail
store, what factors would you consider in deciding
whether to voluntarily cease sales or continue to
sell the primary employer s products during the
labor dispute?

9. Should employees engaged in lawful strike activity
be protected from permanent replacement?
Explain your reasoning.

Exploring the Web

Strikes, Lockouts, and Collective Bargaining
1. Bureau of Labor Statistics Reports on Collective

Bargaining. Review the Bureau of Labor Statistics
News Release about major work stoppages in the
past year at http://www.bls.gov/wsp. What is the
definition of a major work stoppage?

2. Collective Bargaining and the U.S. Code. Title 29
is the section of the U.S. Code that contains federal
law on labor. Go to Cornell s Legal Information
Institute at https://www.law.cornell.edu/uscode/text.
Search Title 29 for the following terms: picketing,
strikes, advanced workplace practices. What is

476 PART 2 The Bargaining Process and Outcomes

included in the list of unfair labor practices in Sec-
tion 158?

3. Professional Sports Strikes and Lockouts. Search
online using the key words NFL lockout and
review at least five articles related to the 2012
labor dispute between the NFL Referees Associa-
tion and the National Football League (be sure to
cite your sources). What issues caused the lock-
out to occur? What is the difference between a
lockout and a strike? How was the dispute
resolved?

4. Mediation. The Federal Mediation and Conciliation
Service (FMCS) is an independent agency whose mis-
sion is to preserve and promote labor management
peace and cooperation. The FMCS also arbitrates
cases. Using the Search box, locate the Code of Profes-
sional Responsibility for Arbitrators of Labor
Management Disputes on the FMCS Web site at http://
www.fmcs.gov/. What, in your opinion, are five impor-
tant elements of the code? Also, check the latest annual
report for descriptions of FMCS involvement in major
labor disputes. What are five important things you
learned from the report?

References
1. Bureau of Labor Statistics, U.S. Department of

Labor, Table 1. Work Stoppages Involving 1,000
or more Workers, 1947 2014, News Release,
February 11, 2015, at: http://www.bls.gov/news.
release/wkstp.t01.htm.

2. Federal Mediation and Conciliation Service, 67th
Annual Report: 2014 (Washington, D.C.: FMCS,
2014), p. 8, at: http://www.fmcs.gov/assets/files/
Public%20Documents/FY2014_Annual_Report_
Final.pdf; for other FMCS annual reports see:
http://www.fmcs.gov/Internet/itemDetail.asp?
categoryID=228&itemID=17315.

3. Christopher Brown, Collective Bargaining
Important to Economy, FMCS Official Says,
Collective Bargaining Bulletin, 15(4), 2010, p. 84.

4. Federal Mediation and Conciliation Service,
Frequently Asked Questions About FMCS,

Who We Are, 2011, p. 2, at: http://www.fmcs.gov/
internet/faq.asp?categorID=22; Douglas E. Noll,
The Myth of the Mediator as Settlement Broker,

Dispute Resolution Journal, 64(2), 2009,
pp. 42 48; Ruth D. Raisfeld, How Mediation
Works: A Guide to Effective Use of ADR,
Employee Relations Law Journal, 33(2), 2007,
pp. 30 41.

5. Carl Stevens, Mediation and the Role of the
Neutral, in Frontiers of Collective Bargaining,
eds. John T. Dunlop and Neil W. Chamberlain
(New York: Harper & Row, 1967), p. 271.

6. Steven Briggs and Daniel J. Koys, What Makes
Labor Mediators Effective? Labor Law Journal,
40(8), 1988, pp. 517 520; Michael Boland and
William H. Ross, Emotional Intelligence
and Dispute Mediation in Escalating and

De-escalating Situations, Journal of Applied
Social Psychology, 40(12), 2010, pp. 3059 3105.

7. Albert Breer League, Union Meet in D.C., try
Mediation in Labor Talks, NFL Network, Febru-
ary 18, 2011, pp. 1-2, at: http://www.nfl.com/
news/story/09000d5d81e5ebf2/article/league-
union-meet-in-dc-try-mediation-in-labor-talks.

8. Stevens, Mediation and the Role of the Neutral,
in Frontiers of Collective Bargaining, eds. John
T. Dunlop and Neil W. Chamberlain (New York:
Harper & Row, 1967), pp. 280 284; also see
Joseph Krislov and Amira Ealin, Comparative
Analysis of Attitudes towards Mediation, Labor
Law Journal, 30(3), 1979, p. 173; Eric van Ginkel,
The mediator as face-giver, Negotiation Journal

20(4), 2004, pp. 475 487.
9. Stephen B. Goldberg, The Secrets of Successful

Mediators, Negotiation Journal, 21(3), 2005,
pp. 365 376.

10. Patrice M. Mareschal, Providing High Quality
Mediation: Insights from the Federal Mediation
and Conciliation Service, Review of Public Per-
sonnel Administration, 18(4), 1998, pp. 55 67.

11. Richard B. Peterson and Mark R. Peterson,
Toward A Systematic Understanding of the

Labor Mediation Process, in Advances in Indus-
trial and Labor Relations, vol. 4, eds. David
Lewin, David B. Kipsky, and Donna Sockell
(Greenwich, CT: JAI Press, Inc., 1987), p. 145;
C. Baker and William H. Ross, Mediation Con-
trol Techniques: A Test of Kolb s Orchestrators
vs. Dealmakers Model, International Journal of
Conflict Management, 3(4), 1992, pp. 319 341;
Deborah Kolb, The Mediators (Cambridge,

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 477

Mass: MIT Press, 1983); Peter J. Carnevale and
Donald E. Conlon, Time Pressure and Strategic
Choice in Mediation, Organizational Behavior
and Human Decision Processes, 42(1), 1988,
pp. 111 133.

12. Richard B. Peterson and Mark R. Peterson,
Toward a Systematic Understanding of the

Labor Mediation Process, in Advances in Indus-
trial and Labor Relations, vol. 4, eds. David
Lewin, David B. Kipsky, and Donna Sockell
(Greenwich, CT: JAI Press, Inc., 1987)
pp. 152 153.

13. Thomas A. Kochan and Todd Jick, The Public
Sector Mediation Process, Journal of Conflict
Resolution, 22, June 1978, p. 236; Kenneth Kressel,
Tiffany Henderson, Warren Reich, and Claudia
Cohen, Multidimensional Analysis of Conflict
Mediator Style, Conflict Resolution Quarterly,
30(2), 2012, pp. 135 171; Joseph Folger and Robert
A. Baruch Bush, Transformative Mediation:
A Self-Assessment, International Journal of Con-
flict Engagement and Resolution, 2(1), 2014,
pp. 20 34; James Wall and Kenneth Kressel,
Research on Mediator Style: A Summary and

some Research Suggestions, Negotiation and
Conflict Management Research, 5(4), 2012,
pp. 403 421.

14. American Bar Association, Model Standards of
Conduct for Mediators, August 2005, pp. 1 10, at:
http://www.americanbar.org/content/dam/aba/
migrated/dispute/documents/model_standards_
conduct_april2007.authcheckdam.pdf.

15. Robert A. Baruch Bush, Efficiency and Protec-
tion or Empowerment and Recognition: The
Mediator s Role and Ethical Standards in Media-
tion, Florida Law Review, 41, Spring 1989,
pp. 253 286.

16. Michael Marmo, The Role of Fact-finding and
Interest Arbitration in Selling a Settlement,
Journal of Collective Negotiation in the Public
Sector, 24(1), 1995, pp. 78 82.

17. David L. Dickinson and Lynn Hunnicutt, Does
Fact-finding Promote Settlement? Theory and a
Test, Economic Inquiry, 43(2), 2005, pp. 401
416; Robert Hebdon, Fact-finding Effectiveness:
Evidence from New York State, Industrial Rela-
tions, 40(1), 2001, pp. 73 82; Charles B. Craver,
The Use of Alternative Dispute Resolution

Techniques to Resolve Public Sector Bargaining
Disputes, Ohio State Journal on Dispute Resolu-
tion, 28, 2013, pp. 45 63.

18. Barry Winograd, An Introduction to the History
of Interest Arbitration in the United States, Labor
Law Journal, 61(3), 2010, pp. 164 168; William H.
Ross, Jr. Situational Factors and Alternative Dis-
pute Resolution, Journal of Applied Behavioral
Science, 24(3), 1988, pp. 251 260.

19. Robert Herndon, Public Sector Dispute Resolu-
tion in Transition, in Public Sector Employment
in a Time of Transition, eds. Dale Belman, Morley
Gunderson, and Douglas Hyatt (Madison, WI:
Industrial Relations Research Association, 1996),
pp. 104 112.

20. David E. Bloom, Empirical Models of Arbitrator
Behavior under Conventional Arbitration,
National Bureau of Economic Research, Report
No. 1841, 1986, available at: http://www.nber.org/
papers/w1841; William W. Notz and Frederick
A. Starke, Arbitration and Distributive Justice:
Equity or Equality? Journal Of Applied Psychol-
ogy, 72(3), 1987, pp. 359 365; Thomas Kochan,
David B. Lipsky, Mary Newhart, and Alan Ben-
son, The Long Haul Effects of Interest Arbitra-
tion: The Case of New York State s Taylor Law,
Industrial and Labor Relations Review, 63(4),
2010, pp. 565 584; also see Carl Stevens, Is
Compulsory Arbitration Compatible With Bar-
gaining?, Industrial Relations, 5(2), February
1966, pp. 38 52.

21. Max H. Bazerman and Henry S. Farber, Arbi-
trator Decision Making: When Are Final Offers
Important? Industrial and Labor Relations
Review, 39, October 1985, pp. 76 89.

22. Max H. Bazerman, Norms of Distributive Justice
in Interest Arbitration, Industrial and Labor
Relations Review, 38, July 1985, pp. 558 570.

23. Joseph B. Rose and Michael Piczak, Settlement
Rates and Settlement Stages in Compulsory
Interest Arbitration, Relations Industrielles, 51,
Fall 1996, pp. 643 645; Henry S. Farber,
Splitting-the-difference in Interest Arbitration,

Industrial & Labor Relations Review, 35(1), 1981,
pp. 70 77. Also see Peter Feuille, Final Offer
Arbitration and the Chilling Effect, Industrial
Relations: A Journal of Economy and Society,
14(3), 1975, pp. 302 310.

478 PART 2 The Bargaining Process and Outcomes

24. Thomas Kochan, David B. Lipsky, Mary Newhart,
and Alan Benson, The Long Haul Effects of
Interest Arbitration: The Case of New York
State s Taylor Law, Industrial and Labor
Relations Review, 63(4), pp. 565 584.

25. David E. Bloom and Christopher L. Cavanagh,
Negotiator Behavior under Arbitration, Ameri-

can Economic Review, 77, May 1987, pp. 353 355;
Hoyt N. Wheeler, Compulsory Arbitration: A
Narcotic Effect ? Industrial Relations: A Journal

of Economy and Society, 14(1), 1975, pp. 117 120;
Martin H. Malin, Two Models of Interest Arbi-
tration, The Ohio State Journal on Dispute Res-
olution, 28(1), 2013, pp. 145 169.

26. Craig A. Olson and Barbara L. Rau, Learning
from Interest Arbitration: The Next Round,
Industrial and Labor Relations Review, 50, 1997,
pp. 237 251; Thomas A. Kochan and Jean
Baderschneider, Dependence on Impasse Proce-
dures: Police and Firefighters in New York State,
Industrial and Labor Relations Review, 31(4),
1978, pp. 431 449; David Lewin, Jeffrey H. Keefe,
and Thomas A. Kochan, The New Great Debate
about Unionism and Collective Bargaining in U.S.
State and Local Governments, Industrial &
Labor Relations Review, 65(4), 2012, pp. 749 778.

27. David B. Lipsky and Harry C. Katz, Alternative
Approaches to Interest Arbitration: Lessons from
New York City, Public Personnel Management,
35(4), 2006, pp. 266 267; Frederic Champlin,
Mario Bognanno, and Paul Schumann, Is Arbi-
tration Habit Forming? The Narcotic Effect of
Arbitration Use, Labour, 11(1), 1997, pp. 23 42;
James R. Chelius and Marian M. Extejt, The
Narcotic Effect of Impasse-resolution Proce-
dures, Industrial and Labor Relations Review, 38,
July 1985, pp. 629 638.

28. Daniel R. Marburger and Paul L. Burgess, Can
Prior Offers and Arbitration Outcomes Be Used
to Predict the Winners of Subsequent Final-offer
Arbitration Cases? Southern Economics Journal,
71(1), 2004, pp. 93 94.

29. Carl M. Stevens, Is Compulsory Arbitration
Compatible with Bargaining? Industrial Rela-
tions, 5(1), 1966, pp. 38 52; William W. Notz and
Frederick A. Starke, Final-Offer versus Conven-
tional Arbitration as Means of Conflict Manage-
ment, Administrative Science Quarterly, 23(2),

1978, pp. 189 203; Michael A. Kuhn, To Settle
or not to Settle: A Review of the Literature on
Arbitration in the Laboratory, Manuscript, Uni-
versity of California San Diego, August 14, 2009,
pp. 1 24, available at: https://www.international-
arbitration-attorney.com/wp-content/uploads/
arbitrationarbitrationlawarb_hist.pdf.

30. Lawrence Hadley and John Ruggiero, Final-offer
Arbitration in Major League Baseball: A Non-
parametric Analysis, Annals of Operations
Research, 145(1), 2006, pp. 201 209.

31. Eran Hanany, D. Marc Kilgour, and Yigal
Gerchak, Final-offer Arbitration and Risk Aver-
sion Bargaining, Management Science, 53(11),
2007, pp. 1785 1792; Daniel R. Marburger and
Paul L. Burgess, Can Prior Offers and Arbitra-
tion Outcomes Be Used to Predict the Winners
of Subsequent Final-Offer Arbitration Cases?
Southern Economic Journal, 71(1), p. 102.

32. Daniel R. Marburger and John F. Scoggins, Risk
and Final Offer Arbitration Usage Rates: Evidence
from Major League Baseball, Journal of Labor
Research, 17, Fall 1996, pp. 735 741.

33. Daniel R. Marburger, Arbitrator Compromise in
Final Offer Arbitration: Evidence from Major
League Baseball, Economic Inquiry, 42(1), 2004,
pp. 60 68.

34. John D. Burger and Stephen J. K. Walters,
Arbitrator Bias and Self-interest: Lessons from

the Baseball Labor Market, Journal of Labor
Research, 26(2), 2005, pp. 267 280.

35. David E. Feller, The Impetus to Contract Arbi-
tration in the Private Area, Twenty-fourth
Annual NYU Conference on Labor (New York:
Matthew Bender, 1972), pp. 95 98.

36. Gerald Phillips, Same-neutral Med-arb: What
Does the Future Hold? Dispute Resolution Jour-
nal, 60(2), 2005, pp. 24 32; William H. Ross and
Donald E. Conlon, Hybrid Forms of Third-party
Dispute Resolution: Theoretical Implications of
Combining Mediation and Arbitration, Academy
of Management Review, 25(2), 2000, pp. 416 427.

37. Paul E. Mason, The Arbitrator as Mediator, and
Mediator as Arbitrator. Journal of International
Arbitration, 28(6), 2011, pp. 541 551.

38. Richard Fullerton, Med-arb and Its Variants:
Ethical Issues for Parties and Neutrals, Dispute
Resolution Journal, 65(2/3), 2010, pp. 52 61, 154;

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 479

David J. McLean and Sean-Patrick Wilson,
Compelling Mediation in the Context of Med-

arb Agreements, Dispute Resolution Journal,
63(3), 2008, pp. 28 34; Ian McAndrew, Med-Arb
in the New Zealand Police, in The Oxford
Handbook of Conflict Management in Organiza-
tions, eds. William K. Roche, Paul Teague, and
Alexander J. S. Colvin (Oxford, UK: Oxford
University Press, 2014), pp. 311 332.

39. Neil B. McGillicuddy, Gary Welton, and Dean G.
Pruitt, Third-party Intervention: A Field Exper-
iment Comparing Three Different Models, Jour-
nal of Personality and Social Psychology, 53(1),
1987, pp. 104 112.

40. David D. Loschelder and Roman Trötschel,
Overcoming the Competitiveness of an Inter-

group Context: Third-party Intervention in
Intergroup Negotiations, Group Processes &
Intergroup Relations, 13(6), 2010, pp. 795 815.

41. Arnold M. Zack, The Quest for Finality in Air-
line disputes: A Case for Arb-Med, Dispute Res-
olution Journal, 58(4), 2003, pp. 34 38; William
H. Ross and Donald E. Conlon, Hybrid Forms of
Third-party Dispute Resolution: Theoretical
Implications of Combining Mediation and Arbi-
tration, Academy of Management Review, 25(2),
2000, pp. 416 427; Jacob Rosoff, Hybrid Effi-
ciency in Arbitration: Waiving Potential Conflicts
for Dual Role Arbitrators in Med-Arb and Arb-
Med Proceedings, Journal Of International
Arbitration, 26(1), Feb. 2009, pp. 89 100.

42. Donald E. Conlon, Henry Moon, and K. Yee Ng,
Putting the Cart Before the Horse: The Benefits

of Arbitrating before Mediating, Journal of
Applied Psychology, 87(5), 2002, pp. 978 984;
Patrick Condliffe and John Zeleznikow, What
Process do Disputants Want?: An Experiment in
Disputant Preferences, Monash University Law
Review, 40(2), 2014, pp. 305 339.

43. Orley Ashenfelter, Janet Currie, Henry S. Farber,
and Matthew Spiegel, An Experimental Com-
parison of Dispute Rates in Alternative
Arbitration Systems, Econometrica, 60(6),
pp. 1407 1433.

44. Alphons J. C. Van de Kragt, William. W. Notz,
and Fredrick. A. Starke, Double Final Offer
Arbitration: Does it Work as Intended? in Pro-
ceedings of the Second Biannual Conference of the

International Association for Conflict Manage-
ment, Athens GA, June 11 14, 1989, ed. Afzalur
Rahim (Bowling Green, KY: IACM Press, 1989)
p 59; Donald E. Conlon, Christopher J. Meyer,
Anne L. Lytle, and Harold W. Willaby, Third
Party Interventions Across Cultures: No One
Best Choice , Research in Personnel and
Human Resources Management, 26, 2007,
pp. 309 356.

45. Gerald Lebovits and Lucero Ramirez Hidalgo,
Alternative Dispute Resolution in Real Estate

Matters: The New York Experience, Cardozo
Journal of Conflict Resolution, 11(2), 2009,
pp. 437 462; William H. Ross, Should Night
Baseball Arbitration be Used in Lieu of Public
Sector Strikes? Psychological Considerations and
Suggestions for Research, Journal of Collective
Negotiations in the Public Sector, 31(1), 2006,
pp. 45 70; Laurie S. Coltri, Conflict Diagnosis and
Alternative Dispute Resolution (Upper Saddle
River, NJ: Pearson, 2004), p. 431.

46. Excerpts from NLRB v. Insurance Agents Inter-
national Union, 361 U.S. 477 (1960).

47. Thomas J. Lueck, Transit Union Is Fined $2.5
Million Over December Strike, New York Times
[online edition], April 18, 2006, at http://www.
nytimes.com/2006/04/18/nyregion/18union.html?
fta=y; Colin Moynihan and Maria Newman
Transit Union Members March to Jail With

Chief, New York Times [online edition], April 24,
2006, at http://www.nytimes.com/2006/04/24/
nyregion/24cnd-toussaint.html?_r=0.

48. Paul D. Staudohar, The Basketball Lockout of
2011, Monthly Labor Review, 135(12), 2012,
pp. 28 33; Richard B. Freeman, What Can Labor
Organizations Do for U.S. Workers When Unions
Can t Do What Unions Used to Do? in What
Works for Workers? Public Policies and Innovative
Strategies for Low-Wage Workers, eds. Stephanie
Luce, Jennifer Luff, Joseph A. McCartin, and
Ruth Milkman (New York: Russell Sage, 2014),
pp. 50 78.

49. Harter Equipment, Inc. and Local 825, Interna-
tional Union of Operating Engineers, 280 NLRB
71 (1986; upheld, 829 F.2d 458 (3rd Cir. 1987);
NLRB v. Brown, 380 U.S. 278 (1965); and Amer-
ican Shipbuilding Company v. NLRB, 380 U.S. 300
(1965).

480 PART 2 The Bargaining Process and Outcomes

50. Willis J. Nordlund, The Work Stoppage: A
Dinosaur or a Lady in Waiting? Labor Law
Journal, 61(3), 2010, pp. 152 163; Ellen Dannin,
Michelle Dean, and Gangaram Singh, Law
Reform, Collective Bargaining, and the Balance of
Power: Results of an Empirical Study, Working
USA, 11(2), 2008, pp. 219 236.

51. James E. Martin and Robert R. Sinclair, A Mul-
tiple Motive Perspective on Strike Propensities,
Journal of Organizational Behavior, 22(4), 2001,
pp. 387 407.

52. Sarah Jaffe, How 250 UPS Workers Fired for a
Wildcat Strike Won Back Their Jobs, In These
Times, [online edition], April 14, 2014, available
at: http://inthesetimes.com/working/entry/16561/
ups_workers.

53. Gateway Coal Company v. United Mine Workers,
414 U.S. 368 (1974); Billie Ann Brotman, A
Comparative Analysis of Arbitration and
National Labor Relations Board Decisions
Involving Wildcat Strikes, Labor Law Journal,
36(7), 1985, p. 440; Larry Drapkin, The Right
to Refuse Hazardous Work after Whirlpool,
Industrial Relations Law Journal, 4(1), 1980,
pp. 29 60; Barbara Fick, Protecting Worker
Complaints after Meyers Industries, St. Louis
University Law Journal, 31, 1987, pp. 823 852.

54. Josh Eidelson, Rare Rolling Sympathy Strike
Beats Garbage Company That Tries to Trash Its
Promise, Alternet, [online edition], March 29,
2012, available at: http://www.alternet.org/story/
154765/rare_rolling_sympathy_strike_beats_
garbage_company_that_tries_to_trash_its_
promise.

55. Bureau of Labor Statistics, U.S. Department of
Labor, Major Work Stoppages, News Release,
February 11, 2015, pp. 1 6, esp. Table 2,
available at: http://www.bls.gov/news.release/pdf/
wkstp.pdf.

56. Michael H. LeRoy, The Changing Character of
Strikes Involving Permanent Striker Replace-
ments: 1935 1990, Journal of Labor Research, 16
(4), 1995, p. 437; Mark Anner, The Impact of
International Outsourcing on Unionization and
Wages: Evidence from the Apparel Export Sector
in Central America, Industrial & Labor Relations
Review, 64(2), 2011, pp. 305 322; Marco

Hauptmeier and Ian Greer, Whipsawing: Orga-
nizing Labor Competition in Multinational Auto
Companies, 16th World Congress of ILERA in
Philadelphia, 2012, available at: http://ilera2012.
wharton.upenn.edu/RefereedPapers/Hauptmeier
Marco%20IanGreer%20ILERA.pdf.

57. Bruce E. Kaufman, The Determinants of Strikes
over Time and across Industries, Journal of
Labor Research, 4(2), 1983, pp. 173 174.

58. Bruce E. Kaufman, Research on Strike Models
and Outcomes in the 1980s: Accomplishments
and Shortcomings, in Research Frontiers in
Industrial and Human Resources, eds. David
Lewin, Olivia S. Mitchell, and Peter D. Sherer
(Madison, WI: Industrial Relations Research
Association, 1992), pp. 78 79.

59. Kerstin Hamann, Alison Johnston, and John
Kelly, Unions Against Governments: Explaining
General Strikes in Western Europe, 1980 2006,
Comparative Political Studies, 46(9), 2012, pp.
1030 1057.

60. Richard Mittenthal, Partial Strikes and National
Labor Policy, Michigan Law Review, 54(1), 1955,
pp. 71 100; Su-Ting T. Li, Malathi Srinivasan,
Richard L. Kravitz, and Michael S. Wilkes, Ethics
of Physician Strikes in Health Care, International
Anesthesiology Clinics, 53(3), 2015, pp. 25 38;
Jessica Bulman-Pozen and David Pozen, Uncivil
Obedience, Columbia Law Review, 115, 2015,
pp. 809 872.

61. Marc Dixon and Vincent J. Roscigno, Status,
Networks, and Social Movement Participation:
The Case of Striking Workers, American Journal
of Sociology, 108(6), 2003, pp. 1292 1327; Bert
Klandermans, Perceived Costs and Benefits of
Participation in Union Action, Personnel
Psychology, 39(2), 1986, pp. 380 381.

62. James E. Martin and Robert R. Sinclair, A Mul-
tiple Motive Perspective on Strike Propensities,
Journal of Organizational Behavior, 22(4),
pp. 402 403; Aaron Cohen, Attitudinal Mili-
tancy and Propensity to Strike Among Unionized
Engineers and X-Ray Technicians, Human
Relations, 45(12), 1992, pp. 1333 1336; James
E. Martin, Predictors of Individual Propensity
to Strike, Industrial and Labor Relations Review,
39(2), 1986, pp. 224 225.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 481

63. Nigel Nicholson and John Kelly, The Psychology
of Strikes, Journal of Occupational Behavior, 1
(4), 1980, pp. 275 284.

64. William Serrin, The Company and the Union
(New York: Knopf, 1973), p. 4.

65. Gregory Brian Finley, Strike Lengths: Correcting
for Prestrike Announcements and the Ratio of
Bargaining Unit Size to Firm Size, Journal of
Labor Research, 31(4), 2010, pp. 307 321.

66. For examples of these strike-related dynamics, see
the following: Alex Veiga, Strike, Lockout Hurt-
ing Grocery Workers, Associated Press, January
26, 2004, pp. 1 2; Ashly McCall, Metal Workers
Picket Home of Plant Manager in Nappane, Ind.,
South Bend Tribune, January 16, 2003, pp. 1 2;
John R. Emshwiller, Strike Is Traumatic for a
Quiet Village in Michigan Woods, Wall Street
Journal, July 30, 1977, pp. 1, 24.

67. Jeffrey Z. Rubin, Dean G. Pruitt, and Sung Hee
Kim, Social Conflict: Escalation, Stalemate, and
Settlement (2nd ed.), (New York: McGraw-Hill,
1994); Randall Collins, C-Escalation and D-
Escalation A Theory of the Time-Dynamics of
Conflict. American Sociological Review, 77(1),
2012, pp. 1 20; Peter Coleman, Robin Vallacher,
and Lan Bui-Wrzosinska, Intractable Conflict as
an Attractor: A Dynamical Systems Approach to
Conflict Escalation and Intractability, American
Behavioral Scientist, 50(11), 2007, pp. 1454 1475.

68. Michael Barbaro, Sides Prepare for a Grocery
Strike, Washington Post, March 17, 2004, p. E01.

69. Jim McCafferty, Labor management Dispute
Resolution and the Media, Dispute Resolution
Journal, 56(3), 2001, pp. 40 47; Jimmy Sander-
son, Shaping, Driving, Engaging, and Influencing
in 140 Characters: Exploring Twitter s Role in a
Labor Dispute, Qualitative Research Reports in
Communication, 15(1), 2014, pp. 43 50.

70. Charles R. Perry, Andrew M. Kramer, and
Thomas J. Schneider, Operating During Strikes:
Company Experiences, NLRB Policies, and Gov-
ernment Regulations (Philadelphia: University of
Pennsylvania, 1982), p. 38.

71. William R. Crandall and Michael L. Menefee,
Crisis Management in the Midst of Labor Strife:

Preparing for the Worst, S.A.M. Advanced
Management Journal, 61(1), 1996, pp. 11 15;

Leonard. C. Scott, Running a Struck Plant: Some
Do s and Don ts, S.A.M. Advanced Management
Journal, 38(4), 1973, pp. 58 62; John G. Hutch-
inson, Management under Strike Conditions (New
York: Holt, Rinehart and Winston, 1966).

72. Joseph A. McCartin, Symposium on James
Atleson s Values and Assumption in American
Labor Law, a Twenty-fifth Anniversary Retro-
spective: Unexpected Convergence: Values,
Assumptions, and the Right to Strike in Public
and Private Sectors, 57 Buffalo Law Review, 727,
May 2009; Julius G. Getman and F. Ray Marshall,
The Continuing Assault on the Right to Strike,

Texas Law Review, 79(3), 2001, pp. 703 735.
73. NLRB v. Mackay Radio & Telegraph Co., 304 U.S.

333 (1938).
74. George S. Roukis and Mamdouh I. Farid, An

Alternative Approach to the Permanent Striker
Replacement Strategy, Labor Law Journal, 44,
February 1993, pp. 81 88.

75. Peter Crampton and Joseph Tracy, The Use of
Replacement Workers in Union Contract Nego-
tiations: The U.S. Experience, 1980 1989, Jour-
nal of Labor Economics, 16(4), 1998, pp. 674 676.

76. Belknap, Inc. v. Hale, 463 U.S. 491 (1983); David
B. Stephen and John P. Kohl, The Replacement
Worker Phenomenon in the Southwest: Two
Years after Belknap, Inc. v. Hale, Labor Law
Journal, 37(1), 1986, pp. 48 49.

77. John W. Budd and Wendell E. Pritchett, Does
the Banning of Permanent Strike Replacements
Affect Bargaining Power? Proceedings of the 46th
Annual Meeting of the Industrial Relations
Research Association (Madison, WI: IRRA, 1994),
pp. 370 376.

78. Laidlaw Corporation v. NLRB, 414 F.2d 99 (7th
Cir. 1969); NLRB v. Fleetwood Trailer Company,
389 U.S. 375 (1967); Charles B. Craver, The Right
to Strike and its Possible Conflict with Other
Fundamental Rights of the People in the United
States, XX World Congress of Labour & Social
Security Law, Santiago, Chile, September. 2012.

79. United Aircraft Corporation, 191 NLRB 62 (1971).
80. NLRB v. Erie Resistor Corporation, 373 U.S. 221

(1963); William T. Krizner, The Mackay Doc-
trine: Much More Than Mere Dicta, Labor Law
Journal, 49(5), 1998, pp. 997 999.

482 PART 2 The Bargaining Process and Outcomes

81. Dane M. Partridge, Violence and Strikers Rights
to Reinstatement: Two Decades Experience
under Clear Pine Mouldings, Employee Relations
Law Journal, 35(2), 2009, pp. 52 68.

82. North Cambria Fuel Co. v. NLRB, 645 F.2d 177
(3rd Cir. 1981); see also John R. Erickson, For-
feiture of Reinstatement Rights through Strike
Misconduct, Labor Law Journal, 31(10), 1980,
pp. 602 616.

83. NLRB v. Allis-Chalmers Manufacturing Company,
388 U.S. 175 (1967).

84. Pattern Makers League of North America v.
NLRB, 473 U.S. 95 (1985).

85. Thornhill v. Alabama, 310 U.S. 88 (1940).
86. Lowe Excavating Company v. International Union

of Operating Engineers, Local 150, 327 Ill. App.
711 (2002); Mary Swerczek, Judge: Picketers Get
25 Seconds; Running Kaiser Strike Means Jail
Time for 3, Times-Picayune, May 13, 2000,
p. B01.

87. Lechmere Inc. v. NLRB, 502 U.S. 527 (1992).
88. NLRB v. International Rice Milling Company, 341

U.S. 665 (1951); United Steelworkers of America v.
NLRB, 376 U.S. 492 (1964).

89. Bruce Feldacker, Labor Guide to Labor Law (4th
ed.) (Upper Saddle River, NJ: Prentice-Hall,
2000), pp. 276 278, 281 283.

90. Thomas J. Ryan, Secondary Boycotts Under the
new Labor Management Reporting and Disclo-
sure Act of 1959, St. John s Law Review, 34(1),
1959, pp. 42 70; David Twomey, Labor and
Employment Law: Text & Cases. (Mason, OH:
South-Western/Cengage Learning, 2012), pp.
235 238; Joseph L. Guza, Cure for Laryngitis: A
First Amendment Challenge to the NLRA s Ban
on Secondary Picketing, A, Buffalo Law Review,
59, 2011, pp. 1267 1313.

91. Moore Dry Dock Company and Sailors Union of
the Pacific, 92 NLR 547 (1950); Sailors Union of
the Pacific v. NLRB, 366 U.S. 667 (1950).

92. NLRB v. Denver Building Trade & Construction
Council, 341 U.S. 675 (1951).

93. Local 501, International Brotherhood of Electrical
Workers v. NLRB, 756 F.2d 888 (DC Cir. 1985).

94. Local 761, International Union of Electrical Radio
& Machine Workers v. NLRB, 366 U.S. 667
(1961).

95. NLRB v. Fruit and Vegetable Packers & Ware-
housemen, Local 760, 377 U.S. 58 (1964) and
NLRB v. Servette, Inc., 377 U.S. 46 (1964).

96. NLRB v. Retail Store Employees Union, Local
1001, Retail Clerks International Association
(Safeco Insurance Co.), 444 U.S. 1011 (1980).

97. The Kroger Company v. NLRB, 647 F.2d 634 (6th
Cir. 1980).

98. United Brotherhood of Carpenters and Joiners of
America, Local Union 1506 and Eliason & Knuth
of Arizona, Inc.; United Brotherhood of Carpenters
and Joiners of America, Local Union 1506 and
Northwest Medical Center; and United Brother
hood of Carpenters and Joiners of America, Local
Union 1506 and Ra Tempe Corporation, 355
NLRB No. 159 (2010) and United Brotherhood of
Carpenters and Joiners, Local 1498 and New Star
General Contractors, Inc., 356 NLRB No. 88
(2011); Kate L. Rakoczy, Comment: On Mock
Funerals, Banners, and Giant Rat Balloons:
Why Current Interpretation of Section 8 (b)(4)
(ii)(B) of the National Labor Relations Act
Unconstitutionally Burdens Union Speech,
56 American University Law Review 1621
(August 2007).

99. Edward J. DeBartolo Corporation v. Florida Gulf
Coast Building & Construction Trades Council ET
AL., 485 U.S. 568 (1988).

100. General Accounting Office, Airline Labor Rela-
tions: Information on Trends and Impact of Labor
Actions (Washington, D.C.: U.S. General
Accounting Office, 2003), pp. 15 16; Michael
Cimini, Government Intervention in Railroad
Disputes, Monthly Labor Review, 94(12), 1971,
pp. 27 34.

101. John A. Ackermann, The Impact of the Coal
Strike of 1977 1978, Industrial and Labor Rela-
tions Review, 32(2), 1979, pp. 175 188; Michael
Camp, Carter s Energy Insecurity: The Political
Economy of Coal in the 1970s, Journal of Policy
History, 26(4), 2014, pp. 459 478; C. Howard
Davis, William M. Eisenberg, and Ronald E.
Kutscher, Quick Special Purpose Surveys Passed
Test during Coal Strike, Monthly Labor Review,
102(2), 1979, pp. 62 64.

102. Jim Puzzanghera, Jennifer Bjorhus, and Matt
Marshall, West Coast Ports to Reopen Today;

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 483

Bush Uses Authority to Intervene in Dispute,
Knight Ridder Tribune Business News, October 9,
2002, pp. 1 3; J. Martin McOmber, Six-year Deal
Ends West Coast Dockworker Dispute, Knight
Ridder Tribune Business News, January 23, 2003,
pp. 1 2.

103. Charles M. Rehmus, Emergency Strikes Revis-
ited, Industrial and Labor Relations Review, 43,
January 1990, pp. 176 180.

104. Michael H. LeRoy, Compulsory Labor in a
National Emergency: Public Service or Involun-
tary Servitude? The Case of Crippled Ports,
Berkeley Journal of Employment and Labor Law,
28(2), 2007, pp. 331 373; Michael H. LeRoy and
John H. Johnson IV, Death by Lethal Injunction:
National Emergency Strikes Under the Taft-
Hartley Act and the Moribund Right to Strike, 43
Arizona Law Review, 63, Spring 2001, pp. 63 134.

484 PART 2 The Bargaining Process and Outcomes

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1 An Interest Arbitration Hearing

Background:

Dry Gulch is a small community of almost 14,000 peo-
ple. The City has 67 employees who are divided into
three groups. The Public Servants Union (PSU) Local
represents 35 employees in a variety of jobs. A second
group of 15 employees are not represented by a union.
The third group of employees consists of 17 commis-
sioned law enforcement officers through the rank of
sergeant, represented by the Western Police Officers
Association. Dry Gulch pays a neighboring town for
professional firefighting services. The Western Police
Officers Association ( the Association ) and the City
of Dry Gulch ( the City ) did not agree on all of the
terms of a new collective bargaining agreement, despite
the assistance of a state mediator. Consequently, the
parties submitted two items in dispute to conventional
interest arbitration as specified in state law.

Duration of the Contract:

The first unresolved certified issue relates to Article 2
(Term of the Agreement). The City proposes a two-
year contact. The Association seeks the status quo of a
three-year contract.

Position of the City on Article 2:

The City argues that a two year contract will enable it
to work with greater efficiently. A two-year contract
term will enable the City to bargain with all employees
in one year rather than bargain with the PSU local one
year and the Association a different year. The City pre-
fers to negotiate with all unions under the same cir-
cumstances and the same economic environment.

The second reason the City requests a two year
contact is because the current health care plan ( Plan
A ) will no longer be offered by the local Health Main-
tenance Organization (HMO) two years from now. The
discontinuation of Plan A was announced early by the
HMO. This was so that parties with collective bargain-
ing agreements would have a chance to negotiate a new
health care provision consistent with the new coverage
( Plan B ) offered by the HMO prior to the date of the
transition. The parties have already agreed to switch to
Plan B coverage at the appropriate time. The City

argues that with the anticipated change in health care
coverage it is important to the City to bargain with
both union groups at the same time to insure consis-
tent contract language in the new collective bargaining
agreements.

Position of the Association on Article 2:

First, given the amount of time that has elapsed since
the expiration of the contract, a two-year contract
would actually be several months shorter than two
years. Second, the last four contracts have all been
three-year agreements. If one side wants to change
the status quo, that side bears the burden of convincing
the arbitrator, and the City has not met such a burden.
The PSU group has no relevance to the Association s
negotiations: the issues that relate to the two bargaining
groups are different because they are in different types
of jobs, and PSU is never a party to the Association s
interest arbitration. The Association further argues
there is sufficient time for the parties to bargain on
issues related to the change in health care plans.

Wages:

The second unresolved issue concerns Article 13
(Wages). The City proposes a 2 percent increase for
YEAR 1 and a 1.6 percent increase for YEAR 2. The
Association proposes a three (3) year contact with a 3.0
percent increase in YEAR 1, a 3.5 percent increase in
YEAR 2, and a 4.0 percent increase in YEAR 3.

Position of the City on Article 13:

The City notes that in the early part of the last decade
the City experienced significant growth. However, in
2008 the great recession hit the community: two
major employers had massive layoffs, construction
came to a halt and the population declined by 11 per-
cent. After the recession began, property tax-
based-assessed valuation dropped almost 30 percent.
This reduced property tax income for the city govern-
ment. Meanwhile, sales tax revenue from retail sales
also dropped significantly. Ever since 2008, the City s
expenses have outpaced revenue and the City is now
facing a structural deficit. The City is recovering from

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 485

the recession but has not fully recovered. The City asks
the Arbitrator to consider these economic realities in
assessing the wage proposals of the parties. The City
also offers data on sales tax and the City s relative ability
to receive revenue from sales tax. The evidence shows
that the City is last among its list of nine comparable
cities in terms of sales tax generation capabilities and
next-to-last for property tax revenue. For comparable
cities, the City uses those within the state that are within
a band of approximately 25 percent smaller to 25 per-
cent larger in population 10,000 to 18,000 people.

The City argues that over the past decade, officer
wage increases have exceeded the rate of inflation. Asso-
ciation members have earned 14.1 percent more with
their Collective Bargaining Agreement (CBA) increases
than what they would have earned if their wage
increases were equal to the Consumer Price Index for
Urban Consumers (CPI-U; details about the CPI-U at
http://www.cpi-u.info/What-Is-CPI-U.aspx). Under the
CBA the actual increase for a Top Pay-Step Officer s
Base Wage was $5,924.00 last year. However, if the CPI-U
had been used during this period the officer would have
increased by only $5,192.00.

The generosity of the City has been rewarded with
low turnover. The City has not had difficulty with
retention and recruitment of police officers. Turnover
data indicate that over the past decade there have been
almost no voluntary departures from the Dry Gulch
Police Department. Those officers who have left have
done so for reasons unrelated to wages and benefits.
These facts are undisputed.

The City argues that its proposed wage increase of
2 percent increase (YEAR 1) and 1.6 percent (YEAR 2)
constitutes a cost of living adjustment that exceeds what
has been given to nonrepresented employees and even the
PSU local. Of the three employee groups in the City, Asso-
ciation members have had the largest overall wage
increases over the last decade. The City hopes that the
Arbitrator agrees that the City has already been generous
with the police officers, and simply cannot afford to acqui-
esce to the Association s demands. Further, interest arbi-
tration is not a forum where a union should obtain results
that are not obtainable through robust good faith bargain-
ing. Thus, the City urges the arbitrator to issue a ruling
that is closely aligned with the City s offer.

Position of the Association on Article 13:

The Association argues that the City s financial
problems have been exaggerated and introduces into
evidence: (1) anEmployee Newsletter from last May,

(2) three news releases from the past year, (3) a tran-
script of last month s City Council meeting where City
revenues were discussed, and (4) a City website print-
out regarding revenue and expenses. All of these exhi-
bits indicate that the city is on the road to recovery
from the recession and is financially stable.

The Association argues that an interest arbitrator
should consider the parties bargaining history. The
City bargained for the current contract after arguing
that there was a recession, the City had financial pro-
blems, and the Mayor informed Association members
that he was going to disband the police department or
privatize it. Consequently, the Association agreed to a
contract with low wages. There was a wage freeze three
years ago, and only a one (1) percent raise each year
subsequently. In this contract the Association made
insurance concessions by agreeing to pay more of the
insurance costs. This contract was signed three years
ago and six months later, when running for re-
election, the Mayor proclaimed that the City finances
were in the black. Now, the Mayor is saying in inter-

views that the City is back from the brink, and on
solid financial footing. The City also added another
police officer last year. It seems that the City only
claims poverty when negotiating labor contracts.

However, during the term of the current CBA,
three years ago, while Association members received
no wage increase, inflation increased 2.86 percent.
Last year, inflation increased another 2.31 percent
while Association members received a 1 percent raise.
This year, inflation increased again by 2.50 percent
while Association members received another 1 percent
wage increase. According to the City s own inflation
index, Association pay increases fell behind inflation by
5.67 percent during period of the contract.

The City and the Association do not agree
completely on a list of comparable cities. Using the
City s list we see that if Association members are
given a 2 percent wage increase for the first year of
the new contract, they will be 2.2 percent below the
average wage of the City s set of comparators. Without
the 2 percent wage increase Association members are
behind the City s external comparators by 4.4 percent
for the first year. However, we believe that the City s
population band is too narrow and we have used a
range of cities within a population band of 50 percent
to 150 percent the size of Dry Gulch: 7,000 to 21,000. If
we use the Association s set of comparable cities, we see
that Association employees are 5.1 percent behind the
Association s set of comparators. Regardless of which

486 PART 2 The Bargaining Process and Outcomes

list is used, a 2 percent raise is grossly inadequate. A 3
percent increase is a minimum first step to begin to
close the gap. In our proposal, we have purposely
deferred larger wage increases to later years when the
City is fully healthy, financially, so that the City can
afford to give police officers larger increases to fully
close the pay gap with similar cities.

Factors to be considered by the arbitrator,
as specified in state law:

(1) In making its determination, the arbitrator shall be
mindful of the legislative purpose of the law, namely,
there exists a public policy in the state against strikes by
uniformed personnel as a means of settling their labor
disputes; that the uninterrupted and dedicated service of
such employees is vital to the welfare and public safety of
the state; that to promote such dedicated and uninter-
rupted public service, strikes shall not be allowed; rather,
there should exist an effective and adequate alternative
means of settling disputes, namely interest arbitration.

As additional standards or guidelines to aid the
arbitrator in reaching a decision, he/she shall consider:

(1.a.) The constitutional and statutory authority of the
employer [Note: The constitutional and statutory authority
of the City was not an issue in these proceedings];

(1.b.) Stipulations and agreements of the parties
[Note: Other than agreeing that all evidence would be
public, there were no stipulations or agreements for
these proceedings];

(1.c.) The average consumer prices for goods
and services, commonly known as the cost of living
[Note: The parties agreed that the Consumer Price Index
(CPI-U) for the state rose, on average, 2.7 percent
between 2003 2008, rose only 0.68 percent during the
2009 2010 recession, and has risen, on average, 2.65
percent since 2011]; and

(1.d.) Other factors, not confined to the factors
under (a) through (c) of this subsection, that are

normally or traditionally taken into consideration in
the determination of wages, hours, and conditions of
employment. [Note: The arbitrator observed that the
other factors are not specifically named in the law.

However, such factors traditionally include: (1) the abil-
ity to pay, (2) bargaining history of the parties, and (3)
retention and recruitment of personnel.]

(2) Comparison of wages, hours, and conditions of
employment of personnel involved in the proceedings
with the wages, hours, and conditions of employment
of like personnel of like government employers of sim-
ilar size in the western United States.

Questions:
1. Assume the role of a Conventional Interest Arbi-

trator: Analyze the arguments for a two-year vs. a
three-year contract. Which arguments are most
compelling? Why?

2. Turning to the wage issue, consider the three other
factors: (1) the ability to pay, (2) bargaining history
of the parties, and (3) retention and recruitment of
personnel. Which side does each factor tend to
favor? Why?

3. Why does the list of comparable cities matter? Other
than population, what should an arbitrator consider
when deciding whether a city is comparable to
another city?

4. If you were a Conventional Interest Arbitrator, how
would you rule on the wage issue? Explain your
rationale.

5. If you were a Final-Offer Interest Arbitrator, and
you could only pick one side s package of propo-
sals, which side would you pick? Why?

6. Suppose you were asked to mediate this dispute.
What would you do, procedurally? What would you
suggest regarding the issues? How would you moti-
vate the parties to settle?

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2 Legitimate Picketing? Or Illegal Secondary Boycott?

The construction union had signed a master agree-
ment with most of the contractors in the area. How-
ever, a few contractors remained nonunion and offered
significantly lower pay and benefits to their workers.

The union decided to publicize these lower wages in
order to put economic pressure on these contractors
and to shame the companies into accepting the mas-
ter agreement or to at least offer similar pay and

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 487

benefits. Thus, the union was engaged in a primary
labor dispute with these nonunion subcontractors
who refused to compensate workers according to area
labor standards. The union decided to start with the
House of Cards Construction (HCC).

To publicize the primary labor dispute with HCC,
the union on eight occasions set up a banner and
engaged in handbilling near the Caring Hearts Hospi-
tal, where the contractor was working as part of a
building expansion. The union erected a banner that
was 4 feet high and 16 feet long on a public sidewalk
facing the street within 100 feet of the main hospital
entrance. Twice the union also put a 15-foot high
inflatable rat on a flatbed truck (with the name of

the contractor across the rat s stomach) and parked
the truck next to the banner on a city street. The
union was not the bargaining representative of any
employees at the hospital. The banner read Shame
on House of Cards Construction in large letters, with
the words Labor Dispute in smaller letters on each
side. At each display two or three union representatives
held up the banner in a fixed position but did not move
it during the display period. The union representatives
also gave out handbills to anyone who approached
them and asked about the demonstration. Union mem-
bers also passed out leaflets with the heading, HCC:
Rat Employer asking people to complain to hospital
administrators about their use of nonunion construc-
tion labor. The handbill read, in part, Shame on
House of Cards Construction for Desecration of the
American Way of Life and included a drawing of a
rat gnawing on an American flag. The handbill went
on to state that the union had a dispute with HCC
and other nonunion contractors based on their failure
to respect area labor standards. The leaflet criticized the
hospital for hiring HCC to perform a particular work
project. Union members holding the banner and pass-
ing out the handbills did not chant, yell, or march back
and forth. At no time was anyone prevented from
entering the hospital.

House of Cards Construction filed an unfair labor
practice charge with the NLRB alleging a violation of
Section 8 (b)(4)(ii)(B) of the Labor Management Rela-
tions Act (LMRA). HCC argued that the union s action
of placing individuals at or near the entrances to the
hospital was illegal picketing and thus should be
barred. Showing the inflatable rat and displaying a ban-
ner was the equivalent of picketing, and the display and
holding of leaflets directed at pedestrians and motorists
approaching the hospital was illegal picketing. Further,

the conduct was confrontational and constituted illegal
secondary activity because the union was attempting to
coercive the neutral hospital to not do business with a
particular firm.

HCC further argued that the information on the
banner and leaflets was deceptive, dangerous, and
disturbing, It was deceptive in that the information

did not state that the union had no dispute with the
Caring Hearts Hospital. Rather it was intended to mis-
lead the public into thinking that the union had a labor
dispute with the hospital regarding its treatment of
hospital employees. The initials HCC and CHH
are similar and easily confused by the public. This
deception could have a negative economic impact on
the hospital and should be prohibited. It was dangerous
because ill patients might think that hospital employees
are striking, and these patients might suffer from stay-
ing home and forgoing treatment. Finally, the inflatable
rat would be disturbing to patients when they looked
out their hospital windows. Courts have upheld limits
on picketing near customer entrances, especially where
quiet and tranquility are necessary, as at a courthouse
or library; a hospital certainly falls into this category.
See Carpenters & Joiners Union v. Ritters Cafe, 315 U.S.
722 (1942); Kulish v. Policemen s Benevolent Associa-
tion, 84 LRRM 2143 (1973); Cox v. Louisiana, 37 U.S.
536 (1965).

The union s defense argued that Section 8 (b)(4) of
the LMRA is not intended to prohibit the display of
banners during a labor dispute. The union cited the
U.S. Supreme Court s decision in DeBartolo Corp. v.
Florida Gulf Coast Bldg. Trades Council, 485 U.S. 568
(1988), which upheld the use of handbilling and
instructed the NLRB to be careful in applying the stat-
utory language of Section 8 (b)(4) so as not to unduly
restrict the lawful exercise of free speech. The union
argued that holding up a banner, giving out handbills,
and even using an inflatable rat to publicize an ongoing
labor dispute is not threatening. Nor are these activities
as intrusive as actual picketing (with moving crowds of
picketers carrying wooden signs). The union noted that
it did not block any entrance and it knew of no patients
who decided not to seek treatment as the result of its
banner. The union clearly stated that its dispute was
with HCC and it merely used creative means to publi-
cize its dispute. Finally, with major construction activ-
ity going on as a new wing is added to the hospital, all
is not serene and quiet on hospital property. The union
was not boisterous and did not add significantly to the
noise of the construction.

488 PART 2 The Bargaining Process and Outcomes

Questions
1. Which employer was the primary employer? The

secondary employer?
2. The union distinguishes between displaying a sta-

tionary banner and picketing (where union mem-
bers move about, carrying wooden signs). Analyze
this argument.

3. What actions would you recommend the secondary
employer involved in this case take to minimize any
adverse consequences of the union s handbilling and
banner activity?

4. Does the union s handbilling, giant rat, and banner
activity represent an unfair labor practice violation
under the LMRA? Why or why not? If so, what
would be an appropriate remedy?

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3 The Aftermath of a Strike

On August 6, the collective bargaining agreement
between the company and the union expired. Two
days later, the union called a strike at the company s
facilities, including those at 3303 Express Lane, St.
Louis, Missouri. The strike ended on August 28 with
the signing of a new three-year agreement. The follow-
ing day, employees began returning to work. During
the strike, a substantial number of bargaining unit
employees at the plant crossed the union s picket line
and continued to work.

On September 2, the union distributed materials to
its union stewards for posting on bulletin boards main-
tained by the union at the company s facilities. One of
the items posted was a commentary by author Jack
London, entitled Definition of a Scab :

After God had finished the rattlesnake, the toad,
and the vampire, he had some awful substance left
with which he made a SCAB. A SCAB is a two-
legged animal with a corkscrew soul, a water-
logged brain, and a combination backbone of jelly
and glue. Where others have hearts, he carries a
tumor of rotten principles.

When a SCAB comes down the street men turn
their backs and angels weep in Heaven, and the
devil shuts the gates of Hell to keep him out. No
man has the right to SCAB, so long as there is a
pool of water deep enough to drown his body in or a
rope long enough to hang his carcass with. Judas
Iscariot was a gentleman… compared with a
SCAB; for betraying his master, he had the charac-
ter to hang himself a SCAB hasn t. Esau sold his
birthright for a mess of pottage. Judas Iscariot sold
his Savior for thirty pieces of silver. Benedict Arnold
sold his country for a promise of a commission in
the British Army. The modern strikebreaker sells his

birthright, his country, his wife, his children, and
his fellow man for an unfulfilled promise from his
employer, trust or corporation.

Esau was a traitor to himself. Judas Iscariot was
a traitor to his God. Benedict Arnold was a traitor to
his country. A strikebreaker is a traitor to himself, a
traitor to his God, a traitor to his country, a traitor
to his family, and a traitor to his class. THERE IS
NOTHING LOWER THAN A SCAB .

Union steward Cora Able immediately posted the
Definition of a Scab along with another article, enti-

tled From Cora s Desk, praising the strikers and crit-
icizing those who remained on the job, on a union
bulletin board in the computer terminal room, adjacent
to room 102 at the company s plant. Able posted the
items in response to a memo from chief union steward,
employee Anita Cain, requesting that she do so.

Able had been responsible for posting material on
the union bulletin board in the computer terminal
room since she became the union job steward three
years prior. Able had previously posted campaign liter-
ature regarding candidates for union office, notices of
union meetings, and articles from union newsletters on
this bulletin board. Able had also removed comic strips
from the bulletin board. Before September 2, no com-
pany supervisor had ever told Able what she could or
could not post on the union s bulletin board, nor had
any company supervisor ever removed anything from
this board before this date.

The company had no written rules concerning the
posting of literature on the union s bulletin boards on
the company s premises. Neither the current nor previ-
ous collective bargaining agreements covering bargain-
ing unit employees contained any provision regarding
the union s bulletin boards at the company s facilities.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 489

During the afternoon of September 2, company
supervisor Joe Bay saw several employees near the bul-
letin board, apparently reading the posted articles.
Supervisor Bay removed the Definition of a Scab
and deposited it in a garbage can. Union steward
Able noticed that the article had been removed and
asked Bay where it was. Supervisor Bay told her he
had removed it, balled it up, and thrown it into the
garbage can.

Union steward Able took the sheet from the can,
then got another copy from her desk, and hung it on
the union bulletin board. In the presence of several
other employees, supervisor Bay promptly snatched
this copy down, telling Able, This mess [isn t] going
to hang up here. Bay then specifically prohibited Able
from posting another copy and warned her of disciplin-
ary action if she did so. Able called the chief union
steward who spoke to supervisor Bay, requesting that
he leave the literature on the bulletin board. Bay then
told the chief union steward that the Definition of a
Scab had no business on the board and was causing
animosity among the clerks.

A half-hour later, supervisor Linda Trevino
informed union steward Able that another supervisor,
Ralph Coe, wanted to see her. Coe had a copy of the
Definition of a Scab in his hand, and he told Able,
We re not going to have this mess hanging in this

office. In the presence of supervisors Trevino and
Bay, Coe also warned Able that she could be disci-
plined for insubordination. Union steward Able
asked to be excused and on returning to her desk called
chief union steward Miller again.

Fifteen minutes later, supervisor Trevino told Able,
We would like to see you for five minutes. Able told

Trevino that she did not want to go back to supervisor
Coe s office. However, Able complied on Trevino s assur-
ance that the return to Coe s office would take only five
minutes, long enough to receive an apology. In Coe s
office, Able was asked to tell her side of the incident.
Supervisor Coe apologized, as did supervisor Bay, for the
way they had treated Able in front of the other employees.
Coe did not retract his support for supervisor Bay s action
in removing the article and preventing its reposting.

On September 1, union job steward Milton Musk
posted a copy of the Definition of a Scab on a union
bulletin board located in a break room next to rooms
208 and 209, the switching control center, at the com-
pany s plant. Musk had been responsible for posting
material on this bulletin board for the past three
years. As a matter of practice, Musk had posted on

the board notices of union meetings, listings of job
vacancies provided to the union, lists of union officers
names, announcements for an employee charitable
organization, and the campaign material of candidates
for union office. Occasionally, Musk removed cartoons
from the board that had been posted by employees.
Before September 1, no supervisor had ever told
Musk what he could or could not post on the union
bulletin board.

The Definition of a Scab remained on the union
bulletin board in the Switching Control Center break
room until about 4 P.M. on September 1. About that
time, supervisor Wesley Vie directed Musk to remove
Definition of a Scab. Union steward Musk said he did

not wish to do so. Supervisor Vie removed the printed
copy of the Definition of a Scab as Musk watched.

The following day, before 7 A.M., the Definition
of a Scab again appeared on the bulletin board. Super-
visor Tom Davis summoned union steward Musk to
his office at approximately 8 A.M. and told him to
take down the Definition of a Scab from the union s
bulletin board. Musk protested that he did not put it
up, and he should not have to take it down. Supervisor
Davis then warned Musk that he would suspend him if
he continued to refuse to obey the order to take it
down. Supervisor Davis asked for Musk s building
pass and key, whereupon Musk requested permission
to make a telephone call. After consulting a union dis-
trict steward, Musk removed the Definition of a Scab.
Musk again told Davis that it was unfair that he had to
remove the article when he had not posted it. Supervi-
sor Davis told Musk that he didn t want trash like that
posted.

The union filed an unfair labor practice charge
contending that the company violated Section 8(a)(1)
of the LMRA by removing the Definition of a Scab
from union bulletin boards and by threatening employ-
ees with punishment if they posted or reposted the
item on those bulletin boards. The company denied
that it violated the LMRA on the grounds that the post-
ing of Jack London s pejorative appraisal of nonstriking
employees had disrupted the discipline of its employees
and thus was beyond the protection of Sections 7 and
8(a)(1) of the act.

Questions
1. How does a union gain the right to use bulletin

boards on a company s premises?
2. Why was the union so insistent on having the

Definition of a Scab posted on the bulletin board?

490 PART 2 The Bargaining Process and Outcomes

3. Since the union is already recognized as the
exclusive bargaining unit representative and
the new contract terms have been settled, how
or why does Section (8)(a)(1) apply to this
case?

4. Did the supervisors removal of the posted union
material and threats to discipline union members
for reposting the Definition of a Scab constitute an
unfair labor practice under the LMRA? Explain your
reasoning.

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4 The Right to Strike

Seven of the employer s 11 concrete truck drivers met
several times during the week of September 16 to dis-
cuss their current wage rates, the lack of a medical
insurance plan, and whether they should consider join-
ing a union. After meeting with a representative of the
national truck drivers union, four of the seven drivers
signed union authorization cards. Employee Santos,
one of the card signers, wrote a letter that the seven
employees presented to the company s plant manager
on Friday, September 20. The letter stated, in part,
Today all employees wish to express a silent strike in

pursuance of the right that our salaries be increased to
$15.75 per hour. We will not work today … until an
accord is reached.

Later that Friday morning, the company president
met with seven employees and told them that the com-
pany was in no position to give any wage increase;
however, steps were already underway to establish a
medical insurance plan by the end of the year. The
seven employees met outside the plant and decided
the company s position was unacceptable. The com-
pany president stated that the board of directors
would be meeting the following day (Saturday) to con-
sider the matter. The seven employees continued their
walkout during the rest of Friday.

The board of directors met on Saturday and calcu-
lated the annual cost of the employees wage demand to
be $308,000. The board of directors found this unaccept-
able and decided to replace the seven drivers rather than
agree to increase wages. Later on Saturday, the plant
manager offered driver positions to three individuals
who already had job applications on file with the com-
pany. All three applicants accepted the job offer and
were scheduled to begin work the following week. On
Monday, the seven drivers who had walked out on Fri-
day returned to the company but remained outside the
plant entrance. Upon learning that the seven drivers had
not reported for work at 8 A.M. on Monday morning

but were instead congregating in front of the plant, the
company president prepared a letter that was given to
each of the seven drivers outside the company s entrance
at 9:30 on Monday morning. The letter referred to the
walkout on the previous Friday and stated in relevant
part: The circumstances of having abandoned your
work without first holding a dialogue, then bringing
later on some demands which we cannot face economi-
cally at this time, in addition to your refusal to work if
your conditions are not met exactly the way [you] stated
them, we have to interpret it as a resignation from your
job, leaving us without alternatives and unfortunately we
have to accept your decision effective today, Monday,
September 23. The letter went on to state that the Fri-
day work stoppage forced the company to fill some
vacancies and curtail its operations in order to recover
in part from the losses it had suffered.

After receiving the letters, the seven employees left
the plant to attend a meeting with a union representa-
tive. Sometime later on that Monday, three of the
employees returned to the plant and requested rein-
statement. The company reinstated the three drivers
to their former jobs. The Union filed an unfair labor
practice on behalf of the remaining four truck drivers,
alleging that each had been unlawfully discharged in
violation of the LMRA, as amended.

Questions
1. Does the work stoppage by the truck drivers in this

case represent an economic strike or an unfair labor
practice strike?

2. What is the difference between the reinstatement
rights of an unfair labor practice striker and an
economic striker?

3. Did the employer unlawfully discharge the four
truck drivers who never returned to work? Explain
your reasoning.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 491

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5 Denial of Health Care Benefits to Striking

Employees

The employer operates two production facilities, one in
Michigan and the other in Ohio. Employees at both plants
are covered under separate, but similar labor agreements.
On August 10, a lawful economic strike was initiated by
local union members at the company s Ohio plant. The
Ohio local union members established picket lines at both
the Ohio and Michigan facilities of the employer. Picketing
occurred at the Michigan plant on August 10 11; August
23 26; August 31 September 3; and September 7 9.

On August 5, the company sent a letter to all
employees advising them of the status of negotiations
at the Ohio plant and warning employees that an
employee s refusal to perform work under these circum-
stances could result in the immediate loss of all unac-
crued benefits, including health care. The Michigan
plant employees who honored the picket line established
by the Ohio plant employees were subsequently denied
health care benefits by the company on the days they
participated in the strike by refusing to cross the picket
line established at the Michigan plant.

Both the employer and union agree that the Michi-
gan plant union members who honored the picket line
established at their plant did not cease to be employees
of the company as a result of their refusal to cross the
picket line. The language in the parties contractual no-
strike agreement covering the Michigan plant does not
prohibit employees from engaging in lawful sympathy
strike activity, and thus covered sympathy strikers can-
not be disciplined or discharged for their refusal to
cross a lawfully established picket line. Both the
union and the employer agree that the Michigan
plant labor agreement is silent on the specific question
of whether health care benefits must be maintained or
can be denied to employees who strike.

The only contract language with any possible rele-
vance concerns the clause dealing with termination of
employment, which states: In the event of termination
of employment other than normal layoff or retirement
with pension, an employee s hospitalization, surgical and
medical coverage and life insurance under the group
arrangement shall be cancelled in thirty (30) days.
The employer argues that this language is not applicable

to the strikers in this case because none of the strikers
were terminated. The union argues that if the parties
clearly intended to permit a terminated individual to
retain medical insurance benefits for at least 30 days
after termination, then surely employees who were not
terminated would have at least an equal right to con-
tinue health care coverage, even though they lawfully
refused to work on certain dates in support of a lawful
economic strike by other company employees.

The union filed a contractual grievance stating that
the employer s withdrawal of medical benefits from
Michigan plant sympathy strikers violated their con-
tractual right to receive such benefits as provided
under the health care benefits clause in the current
labor agreement. The union asked the arbitrator to
require the employer to reimburse all affected striking
workers for all covered health care expenditures paid
by the striking workers on dates when the company
had suspended their health insurance coverage due to
their refusal to cross a lawfully established union picket
line at their place of employment.

Questions
1. Should the arbitrator uphold the union s grievance

and find that the company s withdrawal of medical
benefits from striking workers violated their con-
tractual right to receive such benefits? If so, what
should the appropriate remedy be? Explain your
reasoning.

2. When the current contract governing the Michigan
plant expires, would you advise the employer to
negotiate specific contract language as part of a no-
strike agreement clearly waiving bargaining unit
members right to engage in a sympathy strike dur-
ing the term of the labor agreement? Explain your
reasoning.

3. If the employer did propose a waiver of sympathy
strike rights in the future, would this bargaining
issue likely represent a high-, medium-, or low-
priority item for the union and its membership?
Explain your reasoning.

492 PART 2 The Bargaining Process and Outcomes

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6 Product Picket Activity

A union engaged in a lawful economic strike against the
Brown Bag Company (the primary employer) decided to
establish a product picket line at the site of the Stop & Shop
grocery store, a secondary employer who used grocery bags
produced by the Brown Bag Company. Although the Stop
& Shop grocery store does provide boxes instead of bags to
a few customers who specifically request a box, the vast
majority of grocery items are carried from the store in
bags produced by the Brown Bag Company.

The union s picket signs were carefully worded to
identify the Brown Bag Company as the target of the
picket action and to request customers of the Stop &
Shop grocery store to boycott only bags produced by
the Brown Bag Company. During the two days that
picketing occurred, 150 of 4,300 customers who
shopped at the Stop & Shop grocery store specifically
requested a box to transport their groceries rather than
a bag. Managers were able to provide enough boxes for
about two-thirds of the customers who requested a box
rather than use a grocery bag produced by the Brown
Bag Company. A few customers brought their own
containers from home (e.g., pillow case, bag, or box)
to transport their grocery purchases. One customer,
upon being told by a Stop & Shop manager that there
were no more boxes available, left the store without
purchasing or taking any of the grocery items she had
brought to the checkout line. The Brown Bag Company
filed an unfair labor practice charge against the union

alleging that the union s product picket action was a
violation of Section 8 (b)(4), LMRA. The employer
sought an order to prevent the union from engaging
in further product picket activity at the Stop & Shop
grocery store. The employer argued that it is impossible
for a customer to comply with the union s boycott of
Brown Bag Company grocery bags without also refus-
ing to purchase grocery items sold by the Stop & Shop
grocery store since the grocery store exclusively used
grocery bags produced by the Brown Bag Company.
As evidence, the employer pointed to the fact that
there were only enough boxes available for approxi-
mately 2.3 percent of the total customers who shopped
at the grocery store during the two days of product
picket activity. The employer argued it was not reason-
able to expect customers to bring their own containers
with them to transport grocery items when shopping at
the Stop & Shop grocery store.

Questions
1. Would the Stop & Shop grocery store in this case be

classified as a neutral, secondary employer, or
business ally of the Brown Bag Company? Explain
your reasoning.

2. Should the merged product doctrine be applied in
this case to declare that the union s product picket
action was unlawful? Explain your reasoning.

CHAPTER 9 Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure 493

PART3
Administering the
Labor Agreement

After the collective bargaining agreement
has been negotiated and accepted by both
union members and management, the day-
to-day tasks of administering the agreement
begin. Although not the most publicized nor
the most dramatic part of labor relations, this
process involves more union and manage-
ment officials than contract negotiations and
provides meaning and common law princi-
ples to the agreement. The chapters in
Part 3 present the fundamentals of contract
administration, and labor and employment
arbitration followed by a subject that relates
to every workplace employee discipline.

Chapter 10
Contract Administration

Chapter 11
Labor and Employment Arbitration

Chapter 12
Employee Discipline

495

CHAPTER 10

Contract Administration

IT SEEMS LIKE it has been ages since a bunch of us guys in the
maintenance department were sitting around at lunch time and
one said, I wish we had a voice in how we are treated. We
knew that management was playing favorites in promotions and
layoffs. In fact, one year they cut our wages 10 percent across the
board. They called it an austerity move. So a group of us contacted
my neighbor who works as an international union representative.
He said to find out if there was interest in forming a union. We had
a meeting and about 30 employees showed up. Since the plant
employs 150, we knew we had a lot of work to do.

Finally, after six months of contacting other employees,
explaining what a union is and does, and having meetings
with the international union representative, we petitioned for a
representational election. After a vigorous campaign, we won.

Then it took us six more months to get a labor agreement.
Our three-year agreement covers all of the traditional subjects,
such as wages, benefits, holidays, vacations, health insurance,
promotions, layoffs, and just cause for discipline. These sub-
jects are all in writing and everyone can read them.

Last month, we had a meeting to elect officers. I was
elected shop steward for the maintenance department for a
three-year term.

Now I realize that I have an awesome responsibility to
make sure that I represent employees in my department and
that management complies with the agreement.

496

Questions
1. How do I set up a communication network among employees to

ensure that management is complying with the agreement?

2. Several employees in the maintenance department never supported
the union. In fact, they are not even union members still. Do I have to
represent them like I do the dues-paying members?

3. When an employee comes to me with an allegation that the company
has not followed the agreement, what do I do?

Labor agreement negotiations are usually the most publicized and dramatic aspect oflabor relations. Strike deadlines, negotiators in shirtsleeves working around the clock to
avert a possible strike, and the economic settlement of the labor agreement receive attention
from the news media. The day-to-day administration of the labor agreement, on the other
hand, receives little, if any, recognition beyond that given by the involved parties. Contract
administration, however, involves more labor and management officials and their time than
do negotiations. It involves interpretation and application of the negotiated labor provisions.
In contract negotiations, the union is typically the initiator; the union usually wants changes
in the present agreement. The union, for example, proposes wage increases, more holidays,
elimination of mandatory overtime, and others. In contract administration, management
assumes the initiating role. In other words, management exercises its administrative initia-
tive to make decisions and to direct the business operations. The union makes sure manage-
ment applies the provisions of the negotiated agreement correctly.

During a typical year, managers in a large organization will make literally thousands
of decisions on employment-related subjects such as wage increases, promotions, disci-
pline, work assignments, layoffs, and performance appraisals. In small organizations, man-
agers will make hundreds of these types of decisions. In organizations where there is a
collective bargaining agreement that has been negotiated and agreed to by management
and the union, rules, policies, and procedures contained in the collective bargaining agree-
ment will guide the managers in their decisions.

Many times before a final decision is made, a responsible manager will be assigned the
task of conducting an investigation to gather facts that will be used in the decision-making
process. In fact, most managers have their most frequent labor relations experience during
the investigation phase and the decision-making process than any other labor relations
activities. In decisions on administrative issues (covered in Chapter 8), such as a promo-
tion, the investigation will include the collection of information such as job requirements,
seniority (job, department, or company), performance appraisals, supervisor recommenda-
tions, test scores, and so on before the decision is made. In disciplinary matters (covered in
Chapter 12) that involve a major infraction such as theft, fighting, carrying a weapon on
the job site, and threatening a supervisor. The employee may also be suspended immedi-
ately and the final decision of the type of discipline will be delayed until the investigation is
completed. In disciplinary matters that are performance related, such as excessive absentee-
ism and failure to meet production standards, the investigation will be conducted prior to
the disciplinary decision. Performance-related information includes any type of perfor-
mance records, attendance and tardiness records, past discipline (check time limits to
make sure the discipline has not been erased and check to make sure the discipline has

497

been progressive), training received, and maintenance of the equipment to make sure the
equipment is not the reason for the poor performance.

The employer should conduct a fair and full investigation of the misconduct prior to
imposing disciplinary action. An inadequate or biased investigation, particularly if it fails to
uncover evidence which would have justified the employee s behavior, will likely cause an arbi-
trator to overturn the disciplinary action and reinstate the employee with or without back pay.1

The investigation itself is simply a systematic collection of facts that will serve as the
basis for making a decision. Since employers are held accountable for their employment
decisions, that is, compliance with the collective bargaining agreement or compliance with
employment laws, the investigation should be speedy, thorough, and objective, and employ-
ers should have a sound basis for making their employment decisions. The responsible
manager will take many steps in completing the investigation. For example, in conducting
an investigation of an altercation between employees, the investigator will interview wit-
nesses and collect facts in order to describe and explain what occurred. As another example,
if an employee falls on wet concrete on the job and seeks to be paid workers compensation,
the manager will attempt to visit the scene of the accident as soon as possible after the fall
to gather physical evidence, such as water on the floor, signs of leaking pipes, poor drainage,
past requests to repair the leaking pipe, poorly lit stairwells, and so on.

After the responsible manager has gathered the facts, he or she will then decide which
pieces of information are important. The relevant facts are the pieces of information that
have the potential to help describe and explain what occurred. These pieces of information
are referred to as evidence. Four types of evidence are used in investigations. The first type
is testimonial evidence, which involves information gathered from witnesses to an incident.
For example, if there are five witnesses to an incident, the responsible manager should
interview all five witnesses. The witnesses tell the manager their recollection of the inci-
dent, and the manager records the information.

If the responsible manager asks the witnesses to provide written statements or if there
is an audio and/or video made of the interview, this type of evidence is considered docu-
mentary evidence. Another type of evidence is physical evidence, which includes a broken
chair that resulted from a fall, an item of clothing that contains blood as the result of an
altercation, or a tool that was recovered from an employee engaged in theft of property.
The final type of evidence is demonstrative evidence, which can be a diagram of the work-
place where an incident occurred or a photograph that shows a cut to the lip of an
employee who was engaged in an altercation.

As noted previously, the investigation should contain three valuable characteristics:
speed, thoroughness, and objectivity. Speed is important because the longer the evidence
remains uncollected, the more likely it will be contaminated or lost. Witnesses may forget
certain facts or may even fabricate their story of what happened. As an expert on investiga-
tion has claimed, the clock starts ticking at the time of occurrence, and each tick represents
a decay of evidence. Thoroughness is important because it is necessary to collect all relevant
facts. If there are five witnesses, the investigator should interview all five witnesses, not just a
majority. Even if the first three witnesses tell the same story, the other two may have different
versions. The first three witnesses may have been standing in the same location or they may
have a reason to tell consistent stories. Objectivity means that the investigator needs to con-
duct the fact-finding mission with a substantial degree of detachment. If the investigator is
biased or prejudiced, the results of the investigation are less likely to contain the complete
facts. If the investigator sympathizes with an employee who is being charged with a major
infraction of company rules, the investigator may fail to ask tough and essential questions to
obtain the truth. An expert on workplace investigation has formulated rules to govern inves-
tigations2 (see the preceding Labor Relations in Action feature).

498 PART 3 Administering the Labor Agreement

After management has made its decision, the union will monitor this decision to make
sure that it is consistent with the collective bargaining agreement and company rules and
policies. If an employee or the union believes that management s decision has violated any
provision of the collective bargaining agreement and rules and policies, either the employee
or the union on behalf of an individual employee or a group of employees will file a griev-
ance. Then the union will conduct its own investigation.

Grievances: Definition, Sources, and Significance

This chapter defines employee grievances and explores their sources and significance.
The following section examines the grievance procedure: its typical steps, the relation-
ships among grievance participants, and theoretical as well as practical concerns involved
in contract administration. Alternative dispute resolution (ADR), a process to resolve
grievances with the assistance of a neutral third party, is discussed. The chapter con-
cludes with a discussion of the union s duty of fair representation.

A grievance represents the core of contract administration and is defined as an employ-
ee s (or employer s) alleged violation of one or more provisions of the labor agreement that is
submitted to the grievance procedure for resolution by the union representative and
employer representative. A grievance is therefore distinguished from an employee s concern
that is unrelated to labor agreement provisions and is not submitted to the grievance proce-
dure. Grievances are usually written out at the first or second steps (Exhibit 10.1). Written
grievances have several advantages for management and union officials:

1. Both union and management representatives need a written record of their daily
problem resolutions. This record generates precedents that can guide future actions
and save time in deciding similar grievances.

2. Written grievances tend to reduce emotions present in many employee concerns.
Verbal confrontation on an emotional issue can produce exaggerated accusations

LABOR RELATIONS IN ACTION
Rules Governing Workplace Investigations

(1) The person assigned to be an investigator should
not have an interest in the outcome of the case.

(2) The investigator should interview the person who
reported an incident first.

(3) After the scene has been secured, the investigator
should visit the scene before interviewing other
witnesses.

(4) The investigator should collect physical evidence at
the scene and prepare demonstrative evidence for
the use of those individuals who will evaluate the
evidence and make decisions about the validity of
the findings.

(5) The investigator should interview witnesses and
take written statements immediately after visiting
the scene (evidence becomes tainted from mem-
ory loss and influence of others who have interests
in the outcome of the investigation).

(6) The investigator should collect and review pertinent
documentary evidence about the employee under

investigation only after other types of information
have been gathered.

(7) The investigator should conduct background inter-
views with supervisors, co-workers, medical pro-
fessionals, and others who may provide relevant
information that could help describe or explain what
occurred.

(8) As the investigation nears completion, the investi-
gator should conduct follow-up interviews to ask
any question not thought of in the first interviews,
to discover additional information, and to help
resolve conflicting evidence already gathered.

(9) The investigator should write a final report which
includes a summary of the findings, details of the
investigative activities, the conclusion, and attach-
ments of the evidence.

SOURCE: Antone Aboud, Conducting a Fair Investigation, The Dispute Resolution
Journal, 60(3) (November 2004 January 2005), pp. 16 20.

499

that may irreparably harm the relationship between the parties. Consequently, writ-
ing the grievance may be necessary for its rational discussion.

3. A written statement allows management and union representatives to focus on the
employee s original grievance. As will be discussed further, a grievance can proceed
through several steps that involve many more individuals than the aggrieved employee.
Union officials may expand one employee s initial allegation into a broader philosophi-
cal issue. For example, a complaint over the company s unilateral increase in prices of
candy bars in the vending machine could conceivably be magnified in subsequent steps
to protest the company s arbitrary and capricious actions in other working conditions.

4. Written grievances can benefit management in cases where the employee is appre-
hensive about signing a written protest. One research effort found that supervisors
react negatively in subsequent performance ratings of employees who file grievances
against them that are decided in the employees favor.3

5. Even though most labor agreements permit a union officer to file a grievance on
behalf of the grievant, requiring grievances to be written probably reduces the total
number to which management representatives must respond.

There are two approaches to defining a grievance: therapeutic and legalistic. The thera-
peutic approach is extremely broad and hinges on the employee s allegation that he or she has
a grievance. Assume, for example, that Employee A protests Employee B s immoral

Exhibit 10.1
Examples of Incorrect and Correct Grievance Forms

USA Local Union No.
Location

COPY FOR LOCAL UNION

Name
Address
Department
Service
Nature of Grievance

Union Ledger No.

Operation Check No.

Age

FILL OUT IN TRIPLICATE

GRIEVANCE REPORT
USA Local Union No.

Location

COPY FOR LOCAL UNION

Name
Address
Department
Service
Nature of Grievance

Union Ledger No.

Operation Check No.

Age

FILL OUT IN TRIPLICATE

GRIEVANCE REPORT

SOURCE: United Steelworkers of America, The Grievance Man s Handbook.

500 PART 3 Administering the Labor Agreement

behavior. This protest could be an oral complaint without reference to the grievance proce-
dure. Conversely, the employee could insist the complaint represents a violation of the terms
of the labor agreement (the legalistic approach). Management seeks to identify the cause of a
grievance and resolve it. More common in unionized firms is the legalistic approach, which
restricts a grievance to an alleged violation of the provisions of the labor agreement. Man-
agers prefer the legalistic approach because it restricts a potential arbitrator s decisions to
only those subjects covered in the parties labor agreement, preserving management s right
to control decisions affecting subjects not covered in the labor agreement.

In a typical collective bargaining agreement, multiple subjects are negotiated by the
parties and included in the agreement under the general subject of wages, hours, and
other terms and conditions of employment. Therefore, these provisions serve as the
source of grievances. Typical subjects of grievances are listed in Exhibit 10.2.

Exhibit 10.2
Potential Subjects for
Grievances

Administrative Issues

Use of seniority
Promotion and transfers
Layoffs/recall
Work assignments
Training
Job changes and work restructuring
Safety and health
Disability
Discrimination

Economics Issues

Wage rates
Wage increases
Job classifications
Wage incentives
Call-in pay
Overtime assignments
Shift differentials
Merit pay
Lump sum payments
Past practice of benefits

Employee Discipline

Reasonable rules
Fair and thorough investigation
Equal treatment/discrimination
Due process rights denial
Mitigating circumstances
Excessive penalty
Communication of the rules
Abusive behavior
Insubordination
Falsification of company records
Fighting on the job
Workplace violence/threats
Sexual harassment
Absences/tardiness
Use or possession of drugs and/or alcohol

CHAPTER 10 Contract Administration 501

Reasons for Employee Grievances
Some research has focused on individual characteristics that predict who will file a
grievance. One such study found that employees who file grievances are younger;
more active in their unions; and less satisfied with their job, supervisor, and union.4

In a study of four organizations over ten years, researchers found that grievance filers
had slightly higher performance ratings, substantially higher work attendance rates,
and markedly higher promotion rates than nonfilers. However, following the grievance
filings, the grievance filers had significantly lower promotion rates in all four organiza-
tions, significantly higher turnover rates in three organizations, and significantly lower
performance ratings in two organizations. Differences in work attendance were not
significant.

The research also shows that the step in the grievance procedure where there is a
settlement and a decision in favor of the employer makes a difference. The performance
ratings, promotion rates, and work attendance were higher for grievants whose cases
were settled at the first step of the grievance procedure than at subsequent steps. As
well, performance ratings were significantly higher for grievants whose cases were
decided in favor of the employer rather than the grievants. Thus, negative outcomes are
more common for grievants whose cases are resolved at higher steps rather than lower
steps of the grievance procedure, especially if the grievant wins the grievance.

Analysis of grievance filings appears to reflect the performance of first-line super-
visors. During a ten-year period, supervisors against whom grievances were filed
or settled had higher turnover rates (mostly involuntary), and lower job performance
ratings and promotion rates than supervisors against whom grievances were not filed.5

Grievances have also assumed research significance. Many studies have examined
how grievances relate to organizational characteristics and to outcomes.6

To better understand the reasons behind employee grievances, the following exam-
ple is given. A first-line supervisor administers a labor agreement that has the following
provisions pertaining to management s rights and the scheduling of work to be per-
formed on a holiday:

Article III: Management rights

Section 1. The company s right to hire, fire, and direct the working force, transfer
or promote is unqualified as long as this right is not used in any
conflict with any provision of this contract.

Article IX: Holiday scheduling

Section 1. When less than a normal crew is required to work on a holiday, the
following procedure will apply:

(a) The senior employee working in the classification desired will be
given the opportunity to work.

(b) Employees assigned holiday work will be paid a minimum of eight
hours at time and one-half the contract rate of pay.

(c) If an employee works out of classification on the holiday, the
senior employee in the appropriate classification will also be paid a
minimum of eight hours at time and one-half his or her contract
rate of pay.

Article XII: Bargaining Unit Work

Section 1. Supervisors may perform bargaining unit work only during
emergencies.

502 PART 3 Administering the Labor Agreement

With these provisions in mind, consider the following chain of events. A crane operator
is needed to work the July 4 holiday. The senior employee in this classification starts work on
his shift; however, after he has worked a half hour, the crane breaks down and can no longer
be operated. Management believes the maintenance department will be able to repair the
crane within two hours. All job classifications typically perform some minor housekeeping
and clean-up work, such as picking up debris around the workstation; however, there is also a
janitor s classification in the labor agreement.

The first-line supervisor has at least four options. First, the supervisor can send the
employee home, although Section 1(b) of the labor agreement compels management to
pay that employee eight hours at time and one-half the employee s hourly pay rate. Con-
sequently, the first option is not attractive to management.

The second option would have the employee remain at work and do nothing until
the crane is repaired. Because management is already obligated to pay the employee for
the entire shift, it does not cost any additional money to have the employee sit by the
work site until the crane can be repaired. The first-line supervisor is not likely to take
this option, particularly if higher level management officials and other hourly employees
see this individual being paid while not performing work.

The third option would be to have the crane operator perform minor housekeeping
chores until the crane is repaired. While the third option appears most beneficial to man-
agement, there is a good possibility that this action will result in a grievance from the
senior employee in the janitorial classification, asking payment for eight hours at time and
one-half because Section 1(c) would apparently have been violated. The fourth option for
the supervisor is to help repair the crane to minimize the lost time. Because the agreement
allows supervisors to perform bargaining unit work only during emergencies, the supervi-
sor must be prepared to convince the union that an emergency has occurred.

The employee could file a grievance for one or more of the following reasons.

1. To Protest a Contractual Violation
When labor and management officials negotiate a labor agreement, they are mainly con-
cerned with agreement over the major issues. The negotiators are not concerned with
determining the precise meaning of every word in the labor agreement, particularly if
few or no previous problems have arisen from the contract language. Similarly, these
officials cannot possibly anticipate all the unique situations in which the negotiated
terms of the labor agreement may apply. Consequently, union and management negotia-
tors often gloss over the unimportant provisions, leaving potential interpretational pro-
blems to those who must live with and administer the labor agreement on a daily basis.

In the crane operator example, local union officials could contend that the crane
operator did work out of classification a clear violation of Section 1(c). Management,
on the other hand, could contend that the needed holiday work was within the scope of
a crane operator s job and point out the impracticality of paying an employee an amount
equal to 12 hours pay simply to pick up debris around the workplace. Another manage-
ment contention could be that minor housekeeping chores are performed by all employ-
ees; therefore, the crane operator did not work out of classification on the day in
question. Hence, Article III, Management Rights, would prevail in this situation. Even
further, management could claim that the crane breakdown created an emergency
situation.

2. To Draw Attention to a Problem in the Plant
Some grievances do not protest violation of the labor agreement; instead, they stress that
management has obligations beyond the scope of the labor agreement. Most grievances

CHAPTER 10 Contract Administration 503

over alleged safety hazards fall into this category because labor agreements may not spec-
ify management s detailed obligations in this area. The employee might file a grievance
to communicate concern to management over a safety issue. In our example, the griev-
ance over holiday scheduling might have been filed not over receiving payment for the
senior janitor in the classification but to give union officers a forum in which to stress
the inadequate number of maintenance employees for equipment repair.

Unions often draw attention to a problem in the hopes of setting the stage for future
labor agreement negotiations. A common union tactic is to file several grievances over a
particular issue to buttress and document union demands during negotiation of the sub-
sequent labor agreement. For example, labor unions, adhering to a job-protection philos-
ophy, do not want supervisors performing bargaining unit work because these activities
could reduce overtime opportunities or even result in employees being laid off. In the
course of the workday, supervisors may perform several tasks that could be classified as
bargaining unit work. Employees file grievances whenever the supervisor engages in this
practice, no matter how minor that physical activity may be (e.g., changing a light bulb).
Armed with several grievances, in formal contract negotiations the union can dramatize
its concern that (1) performance of bargaining unit work by supervisors is a widespread
problem and (2) a contractual provision restricting supervisors from performing bargain-
ing unit work would save the company time and money by hiring additional mainte-
nance employees.

3. To Make the Grievant and Union Feel Important
In nonunion settings, the authority of managerial policies and actions often goes unchal-
lenged. However, the grievance procedure permits and encourages an employee to pro-
test an alleged wrong committed by management officials. Some employees raise their
perceived organizational status by calling their organizational superiors on the carpet to
explain their actions. Such grievances are often filed against a supervisor who flaunts
authority unnecessarily, to protest the supervisor s personality as well as actions.

Similarly, some union officials wish to emphasize their importance through griev-
ance involvement. Those falling into this category use grievances and contract adminis-
tration problems to advance to high political office in the union. One study found a
positive relationship between encouragement of grievances and union rivalry as mea-
sured by closeness of vote in the most recent union election: As incumbent union lea-
ders contend with challengers for member support, they may seek to use the grievance
process to extend support for themselves. 7 Grievances in these cases provide a forum
where the union steward can demonstrate his or her verbal and intellectual capabilities
to other management and union officials. Other union officials might wish to strengthen
the union as an institution through the grievance procedure. Here, the importance of the
union (not of the union official) is stressed, that is, the union is safeguarding its mem-
bers from management s arbitrary and capricious actions.

On some occasions, employees have a genuine belief that their supervisor is mis-
treating them in work assignments and pay raises. These employees want an opportunity
to explain their feelings and vent their frustrations. They are able to voice their feelings
to managers higher than their own. Therefore, the grievance procedure provides thera-
peutic value to the frustrated employee. If employees are not allowed to be heard, the
beliefs of mistreatment will escalate.

4. To Get Something for Nothing
Some managers believe that a few employees file grievances to receive pay related to their
skill in formulating and writing grievances instead of their work efforts. The janitor in

504 PART 3 Administering the Labor Agreement

our crane operator example might not have been inclined to file a grievance at the time the
work was denied. Indeed, he may have had previously scheduled holiday plans and may
have refused to work if management had made the initial offer. However, assuming the
janitor s classification paid $12 an hour, the janitor might have felt that time and one-
half for eight hours ($144) was worth the effort to file a grievance. The payment could be
particularly attractive to an individual who did not have to alter holiday plans to obtain it.

Employees filing grievances for this reason find opportunities in the area of overtime
administration. A common labor agreement provision requires management to equalize
overtime opportunity among qualified bargaining unit employees desiring overtime. In
addition, management is often contractually required to pay the employee for the over-
time worked by another employee if an administrative error was made. For example,
assume the following list represents the names of employees in the electrician s classifica-
tion who signed the daily overtime list, thereby volunteering to work overtime if the
assignment occurs after the completion of their normal work shift.

The figure to the right of the employee s name represents the number of overtime hours
worked by the employee to date and also includes any overtime assignments not accepted by
the employee for example, if Jones chooses not to work an eight-hour overtime assignment
eventually worked by Grant, both employees are charged the eight hours. If an overtime
assignment for electricians is needed on the day in question, the supervisor checks the overtime
list and determines that Simms is lowest in overtime hours. Consequently, the supervisor
would give Simms the first opportunity to accept or turn down the overtime assignment.

Suppose, however, that Simms desires to receive the overtime payment without hav-
ing to work the overtime assignment. Simms could accomplish this by actively avoiding
or hiding from the supervisor at the end of his or her shift when overtime assignments
are determined. Confronted with an overtime emergency, the supervisor has to offer the
assignment to Grant, the employee next lowest in overtime. The next day, Simms could
file a grievance on the administrative error seeking to be paid the equivalent of Grant s
overtime assignment for no corresponding work effort. Needless to say, this reason for
filing a grievance draws management s ire, particularly because some employees appear
to make a contest out of acquiring grievance freebies, or payment for time not worked.

There are other reasons employees file grievances. Motives are as varied and complex
as the employees personalities and life experiences. Uncovering the motive behind a griev-
ance may be helpful to management. However, it must be stressed that management must
process the grievance even if it feels the employee s motives are illegitimate or improper.

Significance of Employee Grievances
Unresolved employee grievances can significantly affect both nonunion and unionized
firms. In some cases, unsettled employee grievances have prompted successful union-
organizing drives. Managers in nonunion firms might adopt some sort of grievance pro-
cedure to minimize discrimination suits, enhance employee input into organizational

Name of Employee
Number of Overtime Hours Worked
(and/or Refused since January 1)

A. Jones 89 hours

T. Grant 76 hours

B. Simms 43 hours

CHAPTER 10 Contract Administration 505

decision making, and minimize or eliminate the employee s desire to join a union. These
ADR procedures are gaining favor in organizations today because they are less costly and
more effective decision-making processes for both management and employees. How-
ever, since most nonunion grievance procedures do not enable the employee to have
representation or to have his or her grievance decided by a third-party neutral, there is
speculation about the fairness of these nonunion grievance procedures and whether they
provide adequate due process protections.8 (Other forms of dispute resolution in non-
union settings are covered later in this chapter.)

In unionized firms, employees often have unique concerns that are neither
addressed in collective bargaining nor explicitly covered in the labor agreement. Union
officials therefore demonstrate their intent to represent members particular job interests
against perceived arbitrary managerial actions through the use of the grievance proce-
dure. A union not demonstrating its interest in union members through an effective
grievance procedure runs the risk of lawsuits (discussed later in this chapter under
Fair Representation ) or membership dissatisfaction with union leaders, which, in

turn, can result in members voting leaders out of office or even decertifying the union.
Employee grievances and the grievance procedure can offer an organization two

advantages, namely, conflict institutionalization and open upward communication. Employ-
ees who attempt to resolve grievances at an organization, having no grievance procedure,
might participate in various job actions, such as sabotage, wildcat strikes, and job slow-
downs, to solve the problem; or they might quit their jobs. Indeed, one study of New
York state public school teachers under the age of 55 found that individuals with strong
grievance procedures9 in their labor agreements were less likely to quit than those working
under weaker grievance procedures. All these outcomes are costly to management, partic-
ularly when recruiting and training costs of employee replacements are considered.10

A grievance procedure, however, institutionalizes conflict. It recognizes that dis-
agreements between employees, management, and the union are inevitable and provides
an orderly, consistent approach for resolving differences. Grievances and related proce-
dures represent a major upward communication forum for employee voice, whereby an
individual has an opportunity to offer input into management s decision making and to
discuss, even appeal, adverse employment actions.

Some think that grievances might assume even more significance because other
employee voice mechanisms are eroding as management, facing increased foreign and
domestic competition, has become preoccupied with plant closings and large layoffs.
Furthermore, many employees, while theoretically able to do so, are unwilling to pursue
adverse job actions because of excessive costs and time delays.11

In one study, nearly half of the employees believed that the grievance procedure pro-
tected them against management s arbitrary decisions and actions; however, these
employees did not express a favorable opinion of the grievance procedure itself. Com-
plaints included grievances that were not settled in a timely fashion; that if they filed a
grievance, they would be exposed to management s reprisals; that the outcome of the
grievance procedure was not fair and equitable; that the grievance procedure was not
the best way to win one s case; and that once management made up its mind, it wasn t
open to change. Surprisingly, 57.3 percent of employees chose not to file a grievance,
even when they were in a position where they would have been able to do so.12

Preparation for Grievance Processing
During the grievance procedure, the grieving party, typically the union, must persuade
management that one or more of the provisions of the collective bargaining agreement
has been breached. If management disagrees, management will attempt to persuade the

506 PART 3 Administering the Labor Agreement

union that management has complied with the provisions of the collective bargaining
agreement. For example, if the agreement states that overtime will be assigned to the
most senior employee who is available, the union will file a grievance when a more-
junior employee is assigned overtime first. In response, management may claim that the
more-senior employees were not available. On the other hand, if management is con-
vinced that the union s grievance has merit, then management will probably attempt to
reach a settlement of the grievance. As an example, the collective bargaining agreement
provides that call-in assignments be offered first to the most senior employee. When a
call-in assignment occurs, the supervisor calls the most senior employee at home,
receives no answer, and then leaves a message on the answering machine. The supervisor
then calls the second most senior employee and offers an early call-in assignment at dou-
ble pay. When the most senior employee reports to work at the regular time, he observes
that the second most senior employee is already working. The most senior employee files
a grievance and claims that he was home and the phone did not ring. An examination of
the telephone records shows that the supervisor had called an incorrect number and left
the message on another person s answering machine. Under this discovery, management
indicates its willingness to pay the grievant for the hours worked at the double time rate.

In processing a grievance, each party should approach the grievance just as if the
grievance would be proceeding to arbitration. Every step in the grievance procedure
prior to arbitration provides the parties an opportunity to negotiate a grievance settle-
ment. There are several steps in building a persuasive case during the various meetings
during the grievance procedure and in preparation for arbitration in the event the griev-
ance is appealed to arbitration.13 Exhibit 10.3 provides guidance in preparing for griev-
ance meetings and for arbitration in the event the grievance is appealed to arbitration.

Exhibit 10.3
Preparation for Grievance
Procedure Meetings (and for
Arbitration Hearing)

Step 1: Gather Evidence
Since testimony of witnesses is the principal type of evidence, the investigator
should identify persons on both sides of the grievance and interview all persons
whose statements are relevant to the grievance. Often, the collective bargaining
agreement contains a provision requiring cooperation in developing the facts
and contentions in order to increase the possibility that a resolution can be
achieved at the initial steps of the grievance procedure. If relevant documents and
other forms of physical evidence are not voluntarily offered, a written request with
an explanation of why the documents are relevant should be mailed by registered
mail. If the request is not honored, the arbitrator may draw adverse inferences
about the withheld evidence in the event the grievance proceeds to arbitration.

Step 2: Determine the Facts and Substantiate Them
From the statements taken and evidence gathered, you should determine what
facts the evidence establishes. Because the statements from witnesses will over-
lap, you should collate the statements in the following manner: (1) create a sepa-
rate cover page for each fact established; (2) separate your witnesses statements
into the facts they address, noting the name of the witness on each; and (3)
append the statement portions to the related fact cover pages.

Step 3: Assess the Facts for Credibility, Accuracy, Reliability, and Consistency
As you add factual claims, add your observation and conclusions about credibility,
accuracy, and reliability furnished by each witness. Then compare each statement
for consistency.

(Continued)

CHAPTER 10 Contract Administration 507

In preparation for grievance processing, the union may make a request for information
from the company to assist the union in its role as representative of bargaining unit employ-
ees. Under the Management Labor Relations Act, the employer is required to provide infor-
mation to the union, upon the union s request, that the employer has or can reasonably
obtain, provided that the information requested is relevant and useful to the union in the
processing of the grievance. If the employer refuses to supply such information to the union,
the employer will be committing an unfair labor practice and the union may file an unfair
labor practice charge against the employer and obtain the relevant and useful information
through the National Labor Relations Board (NLRB) procedures (see Chapters 3 and 6).
Examples of information that the union may request are listed in Exhibit 10.4.

Steps in the Grievance Procedure

The procedure for resolving employee grievances is specified in approximately 97 percent
of existing labor agreements. However, the procedures are as varied as the labor

Step 4: Frame Your Arguments
The facts are obtained from the evidence and are what is objectively proven. Argu-
ments are the way in which the facts show that the collective bargaining agree-
ment has or has not been breached and are reasons why those facts should affect
the outcome of the grievance. For example, it is a fact that an employee had a sat-
isfactory work record with the employer for 25 years; it is an argument that the
employee s long-term record of satisfactory performance should mitigate the sever-
ity of any discipline imposed by the employer. Create a separate cover sheet for
each argument and support each argument with a factual basis.

Steps 5 and 6: Seek Coherence, Consistency, and Credibility
Organize your arguments into a logical sequence. Then make sure these arguments
are coherent, consistent, and credible. For example, there is a contradiction when
the union argues that the employee was defending himself if the union had earlier
argued that the employee had been provoked.

Step 7: Prepare Witnesses Scripts
After a grievance meeting has been set up, outline the questions you will ask each
witness. These questions will serve two purposes. (1) Establish the facts you will
ask unambiguous questions to which you already know the answer. If the answer
is evasive, you should restate the question. If the answer is different from previous
answers, you should remind the witness of an earlier statement. For example,
Mr. Jones, didn t you tell me when I previously asked you this very question .

(2) Impeach the credibility of the witness by showing inconsistencies with previous
statements, indicating prior acts of dishonesty or untruthfulness, and asking
detailed questions about testimony you believe to be perjurious. Witnesses have
difficulty lying extemporaneously; liars are forced to remember details about previ-
ous lies instead of the truth that actually happened.

Step 8: Prepare Admissibility Challenges and Defenses
The fundamental rule is that evidence that is not reliable and not relevant should
not be considered. Be prepared to argue that hearsay evidence should not prove
the truth of the matter asserted. For example, hearsay would be what one witness
heard another person say. The other person would not be available to be cross-
examined, and cross-examination is an important due process right.

SOURCE: Mark I. Lurie, The 8 Essential Steps in Grievance Processing, Dispute Resolution Journal, 54 (November 1999), pp. 81 86.

Exhibit 10.3
(Continued)

508 PART 3 Administering the Labor Agreement

agreements themselves. Although no one grievance procedure is applicable to all labor
management relationships (21 percent of surveyed grievance procedures have two steps,
and 51 percent have three steps), a four-step procedure illustrated in Exhibit 10.5 and
discussed here is found in 19 percent of these relationships.

First Step of Grievance Procedure
The first step of the typical grievance procedure consists of two phases. First, the employee
(with or without the union steward) discusses the alleged grievance with his or her first-line
supervisor. Actually, the employee can file a grievance without any union endorsement. If
agreement is not reached, then a written grievance is filed by the grievant or the union
steward acting on the grievant s behalf. Placing the grievance down in writing has some
value: (1) there is a written record and (2) it increases the likelihood that the employee
and/or union is serious about the grievance. The supervisor then answers the employee s
grievance in writing. Time limits for filing a grievance and managerial response exist in
69 percent and 63 percent, respectively, of grievance procedures. If management or the
union does not follow the time limits, the grievance might be challenged by either party as
not meeting the procedural requirements in the labor agreement.14 If the union does not
meet the time requirements, the grievance would be non-grievable. If management does
not respond in a timely manner, the union usually may appeal to the next step.

The purpose of the discussion is to resolve the grievance as early and as informally
as possible. The union does not want to delay any remedy, particularly back pay owed its
members or reinstatement. Management does not wish to incur any unnecessary con-
tinuing liability if back pay is owed an employee who is suspended or discharged and
remains unemployed until the grievance is eventually resolved. The union simply wants
the employee back at work.

Exhibit 10.4
Examples of Information
the Union May Request

Accident records

Attendance records

Bargaining notes

Company memos

Contracts

Correspondence

Disciplinary records

Equipment specifications

Job evaluations

Health and safety studies

Inspection records

Insurance policies

Interview notes

Job assignment records

Job descriptions

Videotapes

Material safety data sheets

Names of witnesses

Notes to file

Information details

Payroll records

Performance reviews

Personnel files

Photographs

Reports and studies

Salary records

Security guard records

Seniority lists

Supervisor s notes

Time study records

Training manuals

SOURCE: http://www.ranknfile-ue.org/stwd_nlr.html

CHAPTER 10 Contract Administration 509

Employee
(with or without
union steward)
files the grievance
within the
required time
limits

Meeting to
discuss grievance
within 15 days

Unresolved

The grievance is reduced to
writing within five days and
presented to management

Management answers in
writing in five days

If management’s answer is
not accepted, the union has
five days to appeal to Step 2

First-line supervisor

Resolved

Addition of
international union
representative

Meeting to
discuss grievance

Unresolved

Management answers
in writing in 15 days

If management’s answer is
not accepted, the union has
30 days to appeal

The parties decide to use
grievance mediation

Resolution through a third-party
neutral arbitrator

Resolution through a third-party
neutral arbitrator

Addition of company
labor relations manager
and general plant
management official

Addition of union
grievance committee
(President, Vice President,
Shop Steward)

Meeting to
discuss grievance

Unresolved

Management answers
in writing in ten days

If management’s answer is
not accepted, the union has
ten days to appeal

Addition of plant labor
relations representative

Resolved

Resolved

Exhibit 10.5
Example of a Typical
Grievance Procedure

510 PART 3 Administering the Labor Agreement

In some cases, the oral discussion is pro forma the employee initiates this step with a
written grievance on the assumption that no amount of discussion will change his or her
mind. For example, the immediate supervisor may have made the decision that led to the
grievance and has no plans to change the decision. As is true with the next two steps of the
grievance procedure, if the employee accepts management s answer to the written griev-
ance, then the grievance is considered resolved and subsequent steps are unnecessary.

Second Step of Grievance Procedure
In addition to the individuals in the first-step grievance meeting, the union grievance
committee members and management s labor relations representative are brought in to
discuss the supervisor s first-step grievance answer. These individuals are aware of
administrative precedent throughout the entire facility; their main role is to determine
whether the grievance should be resolved at this stage on the basis of this precedent.

For example, Employee A files a grievance protesting management s unilateral
action in reducing wash-up time in her work area. The union grievance committee
might be aware, however, that (1) the contract does not have a provision pertaining to
wash-up time and (2) employees in other departments do not receive any time before the
end of the shift to clean their hands. Therefore, the union grievance committee would
probably encourage the grievant to accept the reduction in wash-up time rather than
risk losing the privilege entirely in subsequent steps of the grievance procedure.

On another issue for example, an employee working out of his or her normal work
classification and demanding an upgrade in pay for the time worked the labor relations
representative might reverse the supervisor s first-step answer to avoid sending the griev-
ance to the third step, where it might affect employees with similar work experiences in
other departments. The second-step written grievance answer is furnished by the com-
pany s labor relations representative, and any decision at this point applies only to the
particular work department, not the entire facility.

Third Step of Grievance Procedure
The third-step meeting involves the same individuals as the second step but also includes
the labor relations manager and other management officials (such as general supervisor,
superintendent, or assistant plant manager), members of the union s grievance commit-
tee, and the union s international union representative (see Chapter 4). These individuals
are added because the grievance answer at this level could affect plantwide, even compa-
nywide, operations, and both management and union representatives wish to obtain as
much input as possible before making the decision.

During the third-step meeting, the union discusses the grievance and its related
rationale; management mostly listens and does not attempt to resolve the grievance dur-
ing this meeting. Management s answer will be provided after discussions within man-
agement s team and before the time limits have expired. The third-step grievance
answer is usually written by the labor relations manager because the decision probably
will have plantwide, or companywide implications and applications. This step offers
union officials several advantages:

It provides new union stewards who sit in on the meeting with free training many
labor agreements require paid time off for grievance meetings.
It impresses the grievant that many union officials back his or her interests.

This step can also serve a therapeutic function for the grievant, who simply wishes
to express concern to many levels of management officials. Perhaps the most important

CHAPTER 10 Contract Administration 511

function of the third-step meeting is the inclusion of additional union and management
officials who are not personally involved in the cause of the grievance and can assess its
merits with relative objectivity.

Fourth Step of Grievance Procedure: Alternative Dispute
Resolution (ADR)
As the fourth step, some parties have negotiated the inclusion of an ADR provision
which provides for the assistance of a neutral third party. (Arbitration is discussed in
more detail in Chapter 11.)

A rate of 88 percent of American businesses report using mediation and 79 percent
report using arbitration rather than litigation to resolve disputes. Despite the high use,
there is a significant disconnect between the business use rate of ADR and ADR educa-
tion in U.S. colleges of business. Just over one half of the U.S. colleges of business have
an ADR course present in their curriculum; none require an ADR course for all business
majors; only 4 percent of the management majors are required to take a course in ADR
(less than a quarter of human resource management/labor relations majors).15

Grievance Mediation
Grievance mediation is a formal step in the grievance procedure (before arbitration)
designed to resolve grievances without the use of arbitration. Grievance mediation has
several advantages over arbitration in the resolution of grievances.

Grievance mediation typically yields a voluntary agreement which is more satisfac-
tory to both parties than arbitration, where only one party wins. Mediators encourage
the parties to compromise their initial positions. For example, a union representative in
a mediation session could trade the union s demand that a discharged employee receive
reinstatement with all back pay from the time of his termination in exchange for rein-
statement without back pay. The employer may have considered the avoidance of back
pay as a high priority item due to the high costs and the reinstatement as a low priority
item because the employee had a reasonably good performance record prior to his termi-
nation. The settlement could result in a voluntary agreement which all parties can accept.

Grievance mediation is faster, less costly, and more informal than arbitration. In
addition, it has the potential for long-term benefits. In mediation, the average time
between the request for mediation and a final resolution is 43.5 days; in arbitration, the
average completion time is 473 days. In arbitration, it usually takes one day for hearing
each grievance; in mediation, several grievances can be addressed in a single day. In
mediation, there is no need for written transcripts, posthearing briefs, or written deci-
sions. The average amount paid to the mediator is $672 per case; the average paid to
the arbitrator is nearly five times as much. In mediation, the union and management
representatives proceed without attorneys and participate in a facilitative process wherein
each party has an opportunity to tell its story. The parties learn to develop communica-
tion skills and realize an understanding of the other side s position.

This understanding may be carried over to attempts to resolve future grievances. In
fact, some of the residual effects of grievance mediation are improved relationships
between the union and the company, better understanding of the needs and concerns
of the other side, and a greater cooperative atmosphere, which creates an environment
for mutual problem solving.16

The greatest asset of a grievance mediator in a labor management setting is his or
her ability to quickly find acceptance among the parties, offer conduits for discussion
and debate, and establish pathways to achieving a resolution of the grievance. The goal
is to achieve a resolution without damaging the ongoing relationship between the parties.

512 PART 3 Administering the Labor Agreement

The grievance mediator essentially serves as a change agent for the parties. They fluctu-
ate between and among different styles, placing problems in fresh perspective. The prob-
lem categories consist of relationships, values, interests, and bureaucratic. It is
understood that not all problems are relationship-oriented, but we all know that some
problems exist because the parties just don t share the same values; for example, work
ethic, sense of mission, and others. Then there are interests that we share and interests
that we oppose and those that don t matter. The fourth category is bureaucratic or rule
and policies that deal with structure, reporting, rules and regulations, span of control,
and how we manage work.17

Exhibit 10.6 demonstrates the difference between a grievance arbitration hearing
and a grievance mediation session, both designed to involve a third-party neutral in
reaching resolution of a grievance.

Different Approaches by Grievance Mediators
Mediators take different approaches in assisting the parties in reaching a settlement of
their differences. There are three categories of approaches; however, their distinctions
are not watertight, and the same mediator may shift from one type of approach to
another during the same proceedings. Each of these approaches may be successful in dif-
ferent environments because the specific approach used by the mediator is highly depen-
dent on the attitudes of the opposing parties.

The first approach is transformation or collaborative mediation. Here, the mediator
tries to get the parties to discover their own separate and mutual resources and to under-
stand the other party s point of view. This approach serves as a good starting point from
which to move on, if necessary, to the other approaches to mediation. In the second
approach, evaluative mediation, the mediator does not attempt to come up with a spe-
cific solution but concentrates on showing the respective strengths and weaknesses of
each party s position. The mediator usually holds separate meetings with the parties in
order to fully understand their positions. Then, effort is devoted to keeping the parties
together, talking and listening, and moving toward a resolution.

The third approach is directive or results-oriented mediation. Here, the goal is to
bring the parties to a certain agreement that the mediator believes is appropriate and
achievable. The mediator first sits down with both parties who talk to the mediator
directly, not to each other, with the agitated party going first. The ground rules require
that no personal attacks be made, and no interruptions are allowed from the listener.
Caucuses are allowed from time to time to cool tempers, to permit confidential commu-
nications with the mediator, and to move the negotiations toward closure. In addition,
the mediator will probably spend time meeting separately with the opposing parties in
an effort to help each party understand the other s position.18

When one considers the success record of grievance mediation and also that only
4 percent of collective bargaining agreements contain mediation as a step in the griev-
ance procedure,19 the question is: Why isn t mediation more widespread? One reason is
that only a small fraction of all grievances filed are ever taken to arbitration (usually
fewer than 20 percent and often as few as 2 percent). In addition, the majority of grie-
vances that are appealed to arbitration are not arbitrated but are resolved prior to an
arbitrator s decision. Therefore, most parties have inadequate motivation to change
their grievance resolution practice to incorporate mediation. A second reason is that
mediation is a fragile process because it cannot guarantee resolved grievances, and the
parties may still have to proceed to arbitration. In fact, the success of mediation depends
upon the continued existence of arbitration as the next step in the grievance procedure.
A third reason that grievance mediation is not more widespread is that management is

CHAPTER 10 Contract Administration 513

reluctant to accept it. Management appears to be the giving party, and the union has an
opportunity to get something from the employer in return for resolving the grievance
and avoiding arbitration. In most cases, the union is the party that files the grievance and
is the party seeking a change in management s decision. For example, the union files a
grievance when an employee is discharged, is not promoted, or does not receive a merit
pay increase. Any compromise by the company to seek a settlement would be a change
from management s initial decision. A final reason may be the self-interests of the arbi-
tration advocates and arbitrators. Resolution of grievances through mediation infringes
on the livelihoods of everyone who earns part or all of their professional income and
status by arbitrating grievances. The vast bulk of the cost of arbitration is income to the
advocates of each party to arbitration, and this income is lost if grievances are success-
fully mediated and not arbitrated.20

Successful grievance mediation depends upon two key features. The first is the ability
of the mediator. The experienced mediator will be able to point out the strengths and
weaknesses of each party s position. Usually, there will be sidebar or caucus discussions
with each party separately. If the parties do not reach a settlement, the mediator then pro-
vides an advisory opinion of the likely outcome if the grievance were appealed to arbitra-
tion. In other words, the mediator provides a peek-a-boo look at the likely outcome of
an arbitrator s decision. The act itself creates substantial pressure on the party with the
weaker position to reach a settlement in order to avoid the costs of losing in arbitration.

A second key feature for success is the motivation of the parties who have adopted
the process. In cases where the parties are sufficiently motivated to try to improve their
grievance resolution record, they tend to succeed because they have already decided to
resolve differences on their own. Thus, it may be more accurate to view mediation as

Exhibit 10.6
Grievance Arbitration vs.
Grievance Mediation Scenarios

Grievance Arbitration: A hearing is scheduled eight months after the grievance was
filed. The participants in the hearing are typically the grievant, the arbitrator, a court
reporter, the union team (attorney, staff representative, local union officials, and wit-
nesses to be called by the union), and the company team (attorney, human
resource manager, line supervisor involved, and witnesses to be called by the com-
pany). During the hearing, witnesses are sworn, examined, and cross-examined,
and documents are submitted as evidence. Both attorneys make frequent objec-
tions, which are usually denied by the arbitrator. The hearing lasts from four to six
hours; the court reporter may take two weeks to prepare a transcript; the two attor-
neys may take 30 days to prepare and submit written posthearing briefs; and the
arbitrator will generally prepare a written decision in 30 days.

Grievance Mediation: A grievance mediation conference is set up about three
months after the grievance was filed. In attendance are the mediator, representa-
tives of the union, and the company (no attorneys and no court reporter). Each side
provides a narrative description of the grievance, which summarizes its views of
the facts and arguments supporting its position. Each group goes to separate
rooms, and the mediator visits both rooms to discuss the strengths and weak-
nesses of their respective positions. In three hours, the parties agree on how the
grievance should be resolved. After a break for lunch, the process is repeated with
another grievance and another set of representatives. The mediator does not write
up any decision. If no settlement is reached, the mediator advises the parties of
the possible outcome of the grievance if it should proceed to arbitration. Then, the
parties attempt once again to resolve the grievance.

SOURCE: Peter Feuille, Grievance Mediation, in Employment Dispute Resolution and Worker Rights in the Changing Workplace,
Adrienne E. Eaton and Jeffrey H. Keene (eds.) (Champaign, IL: IRRA, 1999), pp. 187 188. Reprinted by permission.

514 PART 3 Administering the Labor Agreement

a proxy for the positive grievance resolution attitudes held by the adopters than as a pro-
cedure that possesses some intricate ability to resolve grievances in a more cooperative
manner than arbitration. 21

The success of mediators has stimulated interest in adopting workplace ADR poli-
cies in other employment settings. Certainly the high number of employee complaints
to government enforcement agencies, such as the Equal Employment Opportunity Com-
mission (EEOC), has motivated many employers. The EEOC has jurisdiction over com-
plaints of employment discrimination under the Civil Rights Act of 1991, the American
with Disabilities Act, and the Age Discrimination in Employment Act. In 2014, the num-
ber of employment discrimination charges filed with the EEOC was 88,728. In addition,
tens of thousands of charges over workplace disputes are filed with other federal, state,
and local agencies each year. ADR has been introduced as a way of diverting these dis-
putes from the courts and regulatory systems to an internal dispute resolution procedure.
Additional stimulus has been provided by U.S. Supreme Court decisions that have
upheld the validity of employment contracts that require employees to submit their dis-
crimination claims to arbitration22 (to be covered in Chapter 11).

The EEOC reported 10,431 mediations in 2014 with 7,846 resolutions (76.7 percent),
a savings of $145 million and approvals of over 90 percent by employers and the charg-
ing employees.23

A comprehensive assessment of the participants in the mediation program revealed
that the participants had a positive experience with the procedure, the information pro-
vided, and the mediators. An overwhelming majority believed that mediation was fair,
and they felt that they had a full opportunity to present their views. In addition, an over-
whelming majority indicated that they would be willing to participate in the mediation
program again if they were a party to an EEOC charge.24

As an example, the Americans with Disabilities Act encourages ADR for resolving
ADA claims. The mediator may help the parties reconcile their differences in making
reasonable accommodation for the employee with a disability. Types of reasonable
accommodation may include one or more of the following: acquiring equipment, modi-
fying equipment, making architectural changes, modifying the work environment, pro-
viding services, introducing flexible hours, restructuring jobs by assigning marginal
functions to another employee, or reassigning the employee to a vacant position.

In reaching a reasonable accommodation, the employer is excused if its action would
result in an undue hardship or if placement of a person with a disability may put that
employee s or other employees health and safety at risk. The mediator may help the par-
ties in resolving their different views regarding the employer s financial capabilities, dis-
ruption to its business, nature and duration of the risks involved, potential severity of
harm to the employee and others, or likelihood that harm will occur.

The U.S. Postal Service has over a decade of successful experience in transformation
mediation and has the largest employment mediation program in the world. The medi-
ation program is called REDRESS (which stands for Resolving Employment Disputes
Reach Equitable Solutions Swiftly).25

Administrative Complexities of Processing Grievances
All grievance procedures even though they may vary in terms of steps, time limits for
the processing of each step, and participants represent a progression of the initial griev-
ance to higher level management and union officials for consideration. These procedures
can raise several administrative complexities (see the Labor Relations in Action box on
page 517) and often appear inflexible. However, they also serve as the arena for the
dynamic social relationships and interactions among management and union officials.

CHAPTER 10 Contract Administration 515

Other Forms of ADR
While arbitration and mediation are the most common forms of ADR, the parties have
the flexibility to design ADR approaches to meet their needs. Other forms more likely
to exist in nonunion organizations include (1) open-door policies, (2) ombudsperson,
(3) peer review systems, and (4) early neutral evaluation. The fairness of these proce-
dures is determined by their distributive justice, procedural justice, and interactional
justice. Distributive justice deals with the fairness of the decision. If employees believe
that the process is inequitable, it could lead to decreased production, increased turn-
over, lower morale, and so on. If an employee is innocent of charges against him and
the charges are dismissed, the perceived distributive justice will be high. Procedural jus-
tice refers to the fairness of the process by which decisions are rendered. If the
employee has adequate notice of any charges and is given an opportunity to respond
to any charges, procedural justice is higher. Also, if the decision maker is impartial
and independent from management, the perceived procedural justice is higher. Interac-
tional justice refers to the fairness of interpersonal interactions between individuals
involved in process and the adequacy of communications. For example, if the interper-
sonal communication is honest and the employee is treated with respect, had his or her
day in court , and received the rightful decision, the perceived interactional justice

will be higher.26

The open-door policy invites workers with complaints to raise them with their
immediate supervisor. If not satisfied with the result, the employee may appeal to
upper level managers. These policies have been around for some time and are common
in large companies. The biggest deficiency with these policies is the reluctance of workers
to use them due in part to their belief that there may be retaliation.

Nonunion mediation is a process in which a neutral person attempts to facilitate an
agreement that resolves the dispute over alleged treatment and/or misconduct. Nonunion
mediation has recently come into fairly widespread use and is often used with one or
more of the other processes. Nonunion mediation has few disadvantages and can at
times produce results which are satisfactory to both the employee and management.

An ombudsperson program involves the appointment of an employee within the
company to serve the role of consulting with employees who have problems and advo-
cating on their behalf. The usefulness of the program depends upon the amount of inde-
pendence that the ombudsperson has from management. There is difficulty for the
ombudsperson to provide assistance to the employee with problems because, like other
employees, the ombudsperson is dependent upon management to provide adequate
resources to solve problems.

Peer reviews involve the appointment of a committee composed of a majority of
rank-and-file employees, usually with some managers, who are led by a human resources
staff person as the facilitator. An aggrieved employee may file a complaint with the peer
review committee. Usually the committee has authority to make final and binding deci-
sions on grievances. If the peer review committee merely makes a recommendation to
management, it could legally be considered a labor organization under the National
Labor Relation Act (NLRA), and its continued existence could be a violation of the
(NLRA) (see Chapter 5 for more thorough coverage of this topic). If deemed to be a
labor organization by the NLRB, the only consequence to the company for this illegal
act is a NLRB directive to abandon the peer review committee and to establish another
system which would comply with the law.

Employment arbitration is a dispute resolution system which is unilaterally estab-
lished by the employer to resolve employee grievances and complaints (this system will
be covered in Chapter 11).

516 PART 3 Administering the Labor Agreement

Peer reviews and employment arbitration are frequently offered as a substitute for
unions and courts because they furnish the employee with a result which binds the
employer and the employee. However, they do not necessarily provide a high likelihood
of a favorable result for the employee. In peer reviews committee members are selected,
trained, and operated by management, and the degree to which the committee members
are actually independent is questionable. In fact, peer reviews may be abolished if they
do not meet management s expectations. With employment arbitration, the arbitrator is
selected and paid by the employer; therefore, there are frequent accusations about the
arbitrator s independence and objectivity.27

Early neutral evaluation is a process in which a neutral party is chosen jointly by the
employee and the company to conduct an informal hearing at which the parties present
their evidence and arguments. The purpose of the hearing is to narrow the issues and
help the parties better understand the strengths and weaknesses of their positions. The
neutral evaluator then renders a nonbinding, advisory opinion on the merits of the case.
Assessment of early neutral evaluations shows no discernible effect on the amount of
time needed to dispose of the case, litigation costs, and the parties views of fairness or
satisfaction with case management. In addition, the parties may be hesitant to reveal their
real positions because either one or both may believe the case will end up in trial.28

Grievance Resolution: Relationships and Flexibility

A wide variety of activities, tactics, and relationships occur between the most frequently
involved union and management participants: the union steward and the first-line
supervisor.29

LABOR RELATIONS IN ACTION
Tough Contract Administration Questions

The grievance procedure usually involves multiple steps
and related participants and time limits for filing,
answering, and appealing grievances. Union and man-
agement officials, and sometimes arbitrators, often
have to resolve complex administrative issues during
the process; these are reflected in the following
questions:

(1) Can management interrupt and order back to work
employees who are also union officials investigat-
ing a grievance?

(2) Does an employer have the right to charge the
union a fee for processing requested information
pertaining to a grievance?

(3) Can employees be discharged for secretly taping a
grievance meeting?

(4) Do outside union representatives have the right to
visit the facility to investigate a grievance?

(5) Is a grievance legitimate if it is filed or appealed
by someone not affected by the grievance? By a
group of employees? By a union official over the
original grievant s objections? By someone who
states the grievance orally but not in writing?

(6) Do clear time limits between grievance steps mean
that a grievance cannot be processed if the union
exceeds these limits? Must the employer accept to
the grievance if it exceeds these limits?

(7) Does the initial time limit in which a grievance may
be filed start from the day of the incident or the
date of the grievant s knowledge/discovery?

(8) Does management have to pay union officials for all
of the time spent investigating and processing grie-
vances during company work hours?

(9) Can the effective date of management s grievance
adjustment (e.g., paying for an overtime administra-
tive error) precede the date the grievance was filed?

(10) Can an employer file a grievance against the union
even if the labor agreement does not specifically
refer to this action?

The answer to all of these questions is it depends
upon A specific yes or no answer at a particular
facility depends upon the formal (labor agreement lan-
guage and/or memorandums or understanding) and
informal (past practices) arrangements between union
and management officials.

517

Codified Relationships
Codified relationships stress the rights and privileges of union stewards and first-line
supervisors established through the labor agreement and various union and management
publications. These publications urge the steward and first-line supervisor to treat each
other as organizational equals in grievance resolution and to realize that both benefit
from resolving grievances at their level instead of involving higher level officials.30

Supervisors and union stewards may be aware of normative philosophies and codes
but often do not take them into account when interacting. For example, the AFL-CIO
Manual for Shop Stewards strongly urges union stewards to present their grievances
directly to the first-line supervisor in the first step of the grievance procedure.

It is important to observe the steps in the grievance procedure, even if the foreman
has limited authority. Leapfrogging to a higher step may have undesirable effects. The
lower level of management will resent this and will be more difficult to deal with the
next time, or the company may seek to get the grievance thrown out because the proper
steps were not followed.31

Yet many first-line supervisors maintain that they are often completely bypassed by
the union steward in the grievance process. Indeed, the steward can also bypass the
involved employee by filing a grievance in the name of the union. This bypass capabil-
ity given to the union steward is not given to management.32

Just as some union stewards do not adhere to codified relationships, many first-line
supervisors do not implement another codified relationship aspect: treating the union
stewards as organizational equals in the grievance process. It is often difficult for a
first-line supervisor, accustomed to giving daily work orders to an employee who is also
the union steward, to turn around in a grievance meeting and consider the union stew-
ard as a peer. Some first-line supervisors can accept this situation; others have problems:

This guy, Walker (union steward) here, doesn t realize that the gang is kidding him.
They haven t got anything to kick about. All the stuff he is bringing up is old stuff.
We ve gone over it before with the other representatives. The other representative
was sick of the job and gave it up. So the gang decided to elect this squirt because
nobody else wanted the job. This fellow doesn t know anything about the department.
He s only been there three months. He s only a kid and doesn t know what it s all
about. I haven t got time to rehash this all over again . He s not qualified to talk
about anything that happens in my department, and I haven t got time to waste
with him. He brings up all this stuff and nonsense just so he can be a big shot.33

Codified relationships also suggest that first-line supervisors should have authority for
resolving grievances at the first step of the procedure to give the employee a prompt
response. Resolution of a grievance at the first step can also help prevent the plant-wide
precedents that are established in the third step. However, other management officials,
who prefer to be kept informed on employee grievances, often instruct the supervisors to
inform the labor relations representative of the situation before taking any action. Indeed,
one study found that 27 percent of 800 first-line supervisors believed that higher level man-
agers sharply limited their authority to settle grievances informally or at the first step.34

Power Relationships

Conflicting power relationships develop in situations where the supervisor and union
stewards pursue differing interests or goals. This situation has sometimes characterized
shop-floor relationships in the steel industry:

518 PART 3 Administering the Labor Agreement

The local unions became highly politicized; any leader who made peaceful overtures to
the company was promptly denounced as a sell-out artist. Union officials and super-
visors conducted daily warfare over such matters as discipline, job assignment, and
the handling of worker grievances. It was as though each side had to prove itself, day
after day, that it had the capacity to hurt the other.35

Power relationships typically begin when both steward and supervisor are encour-
aged by their superiors to be attentive to problems in the department. The supervisor is
encouraged to discover problems before they become grievances, whereas the steward is
encouraged to talk to the potential grievant before that employee talks to the supervisor.
Competition for the employee s attention might become particularly intense, as one
research study found that stewards and supervisors are equally successful in communi-
cating with employees.36

Another type of power relationship results from the union steward knowing the
labor agreement better than the supervisor. Many union stewards are long-term employ-
ees who have been involved in numerous grievance meetings and may have received
training in contract administration. A new supervisor may be a recent college graduate
who is having his or her first taste of an industrial setting. In addition, union stewards
can concentrate on particular provisions of the labor agreement and their application to
the shop. The supervisor, on the other hand, has major responsibilities for production
scheduling, meeting departmental quality and quantity standards, participating in cost-
reduction programs, and so on, which reduce the amount of time available for grievance
and labor agreement analyses.

Intimidation is another power relationship strategy that can be employed by both
the union steward and the supervisor. In some situations, the union steward anticipates
that the supervisor is vulnerable when he or she receives an excessive number of
grievances the supervisor will be concerned with how higher level managers will react
to this apparent inability to resolve labor relations problems. Even though the grievances
might not be valid, some management officials might hold the following opinion:

A supervisor who is the subject of grievances creates red flags for us. We expect super-
visors to be able to handle most employee relations issues, and if they can t, then we
question whether or not they have a future with us. I know that grievances are some-
times filed with no justification whatsoever, but on the whole a supervisor who avoids
formal grievances looks a lot better to management than a supervisor who s tying up
his and our time in grievance hearings.37

Consequently, a union steward can use the threat of additional grievances (bogus or
real) to persuade the supervisor to concede to the grievance in question or to alter the
supervisor s overall approach to labor relations. The practice is explained by a union
official:

A short time ago we had a lot of trouble with a certain foreman . He was making
them toe the line no quitting early, work from whistle to whistle, no sitting down,
no horseplay, this and that. I told the committeeman there, You do the same thing.
Every time he does any work, even if he picks up a box, write a grievance . The
first thing you know grievances started mounting finally had a pile like that.

Things got so bad this foreman was removed from the department. He was
moved to our department and it s his last chance. If he doesn t do good in this depart-
ment, out he goes. So I went to the guy and told him, It s your last chance here and
you know it. You cooperate with us and we ll cooperate with you. If you don t we ll
put the screws on you and out you go. Things are working out pretty good so far.38

CHAPTER 10 Contract Administration 519

Intimidation tactics are not always one-sided; a clever supervisor can make indus-
trial life difficult for the union steward, probably without incurring an unfair labor prac-
tice charge. For example, many job classifications have a wide variety of work
assignments, with some of these assignments being less desirable than others. A supervi-
sor could assign undesirable work assignments to the union steward, who would have
little recourse as long as they were within his or her job classification. The supervisor
could also undermine the steward s formal position in the union by (1) restricting the
amount of freedom and time for the steward to investigate the grievance and (2) refusing
to resolve any grievance in the first step when the union steward is present with the
grievant. These tactics are usually successful only if the union steward is inexperienced.
Regardless of the success of such actions, a grievance relationship governed by power
and intimidation tactics distorts the primary purpose of contract administration: rational
decision making.

Empathetic Relationships
Empathetic relationships occur between individuals when each is aware of the other s
position and is guided by an understanding appreciation. An example of this apprecia-
tion comes from a union steward s comment:

You can t have industrial relations without giving and taking on both sides. You ll
always win more cases by getting along with supervision than by being tough. You ve
got to swap and make trades . Sometimes I have to talk like hell to explain some of
the deals I make with them and sometimes I keep what I m doing to myself if I see a
chance to get something good later on. The thing some grievers never get through their
heads is that a lot of bosses are on the spot themselves. If you go a little easy on them
when they re on the pan, by God you make friends they ll stand by you sometime
when you re back of the eight ball. Sometimes when I have a rotten grievance, I ll take
the case up to the supe [superintendent] and let him know I won t push it hard.39

Empathetic relationships are aided when the first-line supervisor and the union
steward realize that they both occupy marginal positions within their own organizations.
For example, one study found that first-line supervisors can have a rather loose identifi-
cation with upper management. This might be due to several factors, including transient
upper and middle management and reconsideration of the supervisor s original decision
by other management officials.40

Union stewards have also experienced this situation in contract administration. On
one hand, constituents expect their union steward to actively press every grievance
because they think that the union should be attentive to their needs. Consequently, it is
difficult for the steward to accept the supervisor s first-step rejection of the grievance,
even if he or she thinks the supervisor is correct. On the other hand, union officials
receiving the grievance in subsequent steps of the grievance procedure may tend to
view the union steward as either ignorant of the labor agreement or gutless, wanting
them to pursue frivolous grievances instead of accepting defeat.

Flexible Consideration in Processing Employee Grievances
The preceding varieties of interpersonal relationships reveal how individual objectives,
strategies, and personalities force the contractual procedure to be more flexible in prac-
tice. This real-world consideration negates the theoretical principle that each grievance
be considered on its individual merits. The grievant wishes to receive an answer unco-
lored by any political or tactical concerns, but the union must consider political influence

520 PART 3 Administering the Labor Agreement

and overall strategy in its determination of which grievances will be filed and pursued.
Not all grievances are clear-cut issues; in fact, many involve confusing or opposing inter-
pretations of the labor agreement. In these cases, management has two options: Decide
the grievance in the employee s favor or refuse, knowing that the union will appeal the
grievance to arbitration. The latter alternative is not always attractive, particularly if
management realizes that there is little contractual guidance in the issue (as in the exam-
ple of the holiday scheduling of a crane operator) and insufficient past practice or prece-
dent to support the decision. Contract administration has many gray areas that are open
to interpretation. This uncertainty is compounded when the parties solicit a neutral party
to resolve the issue in binding arbitration. Also, the arbitrator s decision might refute
management s action in terms that further erode management s discretion in future mat-
ters. The arbitrator s decision will be binding on the parties and can be changed only
through negotiations. For example, the contract may not address how overtime is
assigned. Unions also tend to use arbitration only as a last resort because such cases
can drain the union s treasury.

In these instances, flexibility may be possible with the addition of an informal
third-and-one-half step in the grievance procedure. This will not be specified in the
labor agreement but occurs after management s final third-step decision and before
the third-party neutral hears the grievance. During the third-and-one-half step meet-
ings, management and union representatives meet to discuss several grievances which
are scheduled for arbitration. During the discussions, they might trade a grievance
requesting one-day pay upgrades for five employees who allegedly worked in a higher
job classification for a grievance on management performing bargaining unit work filed
against an unpopular first-line supervisor, which would give one union member a two-
hour overtime payment as a remedy. Swapping grievances can lead to fast resolution of
minor complaints that would perhaps cost more to arbitrate than it would be worth to
either side. Usually the grievances involved in the negotiated package are settled with-
out prejudice, which mean they are settled without precedent to either party s position
in future related issues. These settlements will not be binding in any future delibera-
tions between the parties. However, settlement of the grievances preserves manage-
ment s discretion on these issues and the union s right to file future related
grievances. The union has to be careful because swapping grievances that are clearly
meritorious may constitute a violation of the union s duty of fair representation (cov-
ered later in this chapter).

Opponents of this practice contend that valid employee grievances are bargained
away for an expedient settlement. Grievance trading in the third-and-one-half step can
also discourage first-line supervisors from actively trying to resolve grievances if they
believe their efforts will be overturned in a mass grievance settlement. For example, the
following remarks were made by a foreman who had sent an employee home for
repeated tardiness. The employee filed a grievance with the foreman s supervisor, who
sent the employee back on the job.

I went over to O Brien s [the superintendent s office] to find out why he had overruled
me. He handed me a line of salve about having to do it. Said, It was a small item
after all and that he might want a big favor from the union sometime in the
future. He said, We have to trade back and forth. Sometimes we give in; sometimes
they give in. That s why we never have any big trouble! Then he said he might have
to reverse some of my decisions again sometime, but if he did, not to get sore about it,
because he wouldn t mean no offense by it. Well damn that noise! If O Brien wants to
make me look like a fool every time I make a decision, why by God, he can make all

CHAPTER 10 Contract Administration 521

the decisions. You know two can play that game. I can give the boys [workers] every
damn thing he can give them. Then when they come up with a big one that I know
well he can t give them, I ll tell em to take it up to him.41

As a result of management using the third-and-one-half step in the grievance proce-
dure, unions might be encouraged to file more grievances in the belief that they can
obtain more from a trade involving 50 fabricated grievances than they can from five
legitimate ones. Furthermore, settlements without prejudice can result in more grie-
vances of the same sort because the issues are not considered jointly resolved by manage-
ment or union officials.

Advocates of settlements short of arbitration believe that this process merely repre-
sents another legitimate cooperative effort between labor and management officials in
efficiently dealing with day-to-day administrative problems. These individuals indicate
that the union s and management s organizational self-interests require considerations
and possible use of the third-and-one-half step grievance trading session. Opponents
state that the third-and-one-half step hinders the union s fair representation obligation,
discussed in the next section.

The Union s Duty of Fair Representation

Thus far, grievance procedures have been discussed from the perspectives of the union,
management, and employee participants. As is true with most labor relations activities,
grievance resolution can be strongly influenced by a fourth participant: the government.
As noted in Chapter 5, the union is the exclusive bargaining agent for all employees in
the appropriate bargaining unit, and the union has the legal duty to fairly represent all
the bargaining unit employees, union members and nonunion members alike, in both
contract negotiation and administration. This section focuses on the extent of the union s
duty, particularly when some of the bargaining unit employees believe the union has
acted in an unsatisfactory manner.42

Fair representation issues are difficult to resolve. On the one hand, some individual
freedom must be sacrificed if the union wishes to effectively represent its members.
However, the individual members right to dissent must also be protected, and all
employees represented must be safe from negligent or corrupt union representatives. The
Labor-Management Relations Act (LMRA) adds to the complexity of the issues because
it does not contain any explicit provisions obligating the union to represent fairly all bar-
gaining unit employees. Therefore, jurisdictional disputes over fair representation issues
have occurred between the governmental participants, more specifically the NLRB and
the courts.

The NLRB had for many years claimed that it alone had jurisdiction to determine
fair representation issues because related unfair labor practices came under its statutory
jurisdiction. However, the Supreme Court has indicated that district courts also have
jurisdiction over such claims because the fair representation obligation is a fundamental
part of federal labor relations policy and precedes the NLRB s statutory role in such
cases.43 A subsequent Supreme Court decision indicated that employees who claim
breach of fair representation are also entitled to a jury trial if monetary losses (back
pay) are claimed.44

Related court decisions have addressed the following question: How far must the
union go in representing employees whose interests or claims could potentially disrupt
union goals and policies? The importance of this question is magnified when we consider
that many decisions help some members while hurting others. Under the collective

522 PART 3 Administering the Labor Agreement

bargaining agreement, there are competitive rights involving subjects like promotions,
transfers, and layoffs. If there is one vacancy, only one employee can be promoted.
Those not promoted may believe that they have grievances.

Union actions pertaining to seniority (such as merging seniority rosters and calcu-
lating seniority credits for employees returning from leave) will hurt some bargaining
unit members while helping others. As an example, after the terrorist attack on the
New York World Trade Center on September 11, 2001, US Airways was forced to lay
off many employees due to lack of business. The union agreed to a modified layoff plan
that allowed US Airways to retain fewer senior employees at the Charlotte, North
Carolina, hub while laying off more senior employees who were assigned to the smaller
air stations that were closed. Fifteen long-term passenger service employees sued the
union and company. The court ruled that the anguish caused by the layoffs was not the
result of the company and the union acting in bad faith, but by the tragic events of
September 11. The court believed that the company and the union took reasonable mea-
sures amidst difficult and trying times.45

Not surprisingly, two Supreme Court cases involving fair representation concerned
the seniority issue.46 These decisions indicated that although a bargaining unit employee
has no absolute right to take his or her grievance to arbitration, the union satisfies its fair
representation obligation in collective bargaining and grievance processing if it considers
the interests of all members and takes its ultimate position honestly, in good faith, and
without hostility or arbitrary discrimination.

These rather broad guidelines were also applied in a landmark Supreme Court deci-
sion, Vaca v. Sipes, which considered the union s fair representation obligation in the
grievance procedure. A bargaining unit employee claimed that the union arbitrarily,
capriciously, and without just or reasonable reason or cause refused to take his griev-
ance to arbitration. The employee, who had long-term high blood pressure, returned to
work after a sick leave and was judged by the company s doctor as being unfit for reem-
ployment. The employee s personal physician, as well as a second doctor, indicated that
the employee was fit for work; therefore, the employee asked the union to seek his rein-
statement through the grievance procedure. The grievance was processed; however, the
union, in attempting to strengthen its case before going to arbitration, sent the employee
to a third doctor. The third doctor did not support the employee s position; therefore,
the union refused to take the employee s case to arbitration.

The Supreme Court decided that the union, in this case, acted in good faith and was
neither arbitrary nor discriminatory. It also indicated (in this and in another case) the
following:47

The employee has the burden of proof of establishing that the union breached its
fair representation obligation.
Fair representation does not require the union to take every grievance to arbitration
because this would create an intolerable expense for the union and management and
would destroy the effectiveness of the lower steps in the grievance procedure.
Courts should examine only the union s fair representation obligation, not the mer-
its of the case.

In the event that a union is found guilty of breaching its duty of fair representation
(actions are arbitrary, discriminatory, and/or in bad faith), the costs to the union may
become expensive. In one case, the remedy assessed against the union was payment of
the grievant s attorney fees, the costs of litigation, and back pay to the grievant from
the date the grievant was dismissed to the date the grievant was either able to find
employment or should have been employed in a substantially comparable job.48 In

CHAPTER 10 Contract Administration 523

another case, the Court of Appeals in the District of Columbia upheld a ruling of the
NLRB that allowed an employee to proceed with his grievance and directed the union
to pay the grievant for his own lawyer to represent him.49

The U.S. Supreme Court decided that any judicial examination of a union s perfor-
mance must be highly deferential, giving wide latitude to union officials in the per-
formance of their duties. A breach of fair representation has to be so far outside a wide
range of reasonableness that it is wholly irrational or arbitrary. Moreover, a union s
decision is not irrational simply because it turns out in retrospect to have been a bad
settlement.50

Fair representation poses two difficult questions to the union and the employer. First,
what specific types of conduct constitute violation of the fair representation duty? As previ-
ously noted, the Supreme Court has given only broad guidelines ( arbitrary, bad faith,
dishonest, etc.). Sometimes these guidelines can be rather easily applied; for example, a

union refusing to process grievances of any Black, female, or nonunion employees is clearly
guilty of a violation.51 Other cases can become more complicated. The union, while not
needing to take every grievance to arbitration, has an obligation to consider the merits of
the grievance and effectively use the grievance procedure. In some cases, the courts have
determined that union s perfunctory conduct (simply going through the motions) consti-
tutes a breach of fair representation. Related actions include the following:

Providing inadequate defense of the grievant at an arbitration hearing.
Delaying grievance processing until the time limits in the grievance procedure have
expired.
Failing to inform the grievant that the union accepted a different remedy than that
asked for by the grievant.
Failing to keep members informed about an arbitration award that affects members
seniority rights.52

Yet some courts have suggested that negligence or honest mistakes alone will not
constitute a lack of fair representation because union members always have the option of
voting in new officers or even a new union to better represent them.

In an attempt to reduce the number of fair representation suits from members,
unions include the subject of the duty of fair representation in their union steward train-
ing programs. While the exact content of these training programs may differ, unions
focus on the Seven Golden Rules on the Union s Duty of Fair Representation provided
in Exhibit 10.7.

A second question concerns employer and union liability if the union fails to fairly
represent a bargaining unit employee who has been discharged. Employees currently can
sue the union as well as the employer for breach of the labor agreement, including fair
representation under Section 301 of the LMRA.

Exhibit 10.7
Seven Golden Rules
on the Union s Duty of
Fair Representation

1. Consider all grievances solely on their merits.
2. Investigate each grievance promptly and vigorously.
3. Do not miss time limits.
4. Keep records.
5. Keep the grievant informed.
6. Have a valid reason for any action.
7. If the grievance lacks merit, drop it.

SOURCE: http://www.umass.edu/usa/dutyfairrep.htm.

524 PART 3 Administering the Labor Agreement

Assume, for example, that an employee is discharged and then later establishes that
the union breached its duty of fair representation and the employee was unjustly dis-
charged. According to the Supreme Court, both the employer and the union can be lia-
ble. Bowen, an employee for the postal service, was discharged for an altercation with
another employee, and he filed a grievance. Bowen sued both the union and the
employer in the district court. His evidence at trial indicated that the responsible union
officer, at each step of the grievance procedure, had recommended pursuing the griev-
ance but that the national office, for no apparent reason, had refused to take the matter
to arbitration. The jury found that the postal service had discharged Bowen wrongfully
and that the union had breached its fair representation obligation.

The Supreme Court found that both the employer and the union contributed to this
wrongful discharge. The employer, of course, made the initial wrong termination deci-
sion and therefore owed Bowen reinstatement with some of his back wages. However,
the Court also agreed that the union owed Bowen a portion of his lost wages because
he could not have proceeded to arbitration independently of the union and if the
union had arbitrated his grievance, he would have been reinstated. Thus, the employer
was responsible for the back wages from the termination date to the approximate date
an arbitrator would have ordered reinstatement if the union had fairly represented the
grievant and the case had been submitted to arbitration. The union was responsible for
losses beyond that date. (See Exhibit 10.8 for determining the union s and the company s
proportional liability.)

In the absence of damages apportionment where the fault of both parties contributes
to the employee s injury, incentives to comply with the grievance procedure will be
diminished. Indeed, imposing total liability solely on the employer could well affect the
willingness of employers to agree to arbitration clauses as they are customarily written.53

Bowen has controversial implications for a labor management relationship. Man-
agers believe that they should not be held accountable for a union s errors, particularly

Exhibit 10.8
Determination of the Union s and Company s Proportional Liability

Employee
is

terminated
by

company

Employee
files

grievance

Union
investigates
the incident

and
processes

the
grievance

Union
decides
not to
appeal

the
grievance

to
arbitration

Grievant
sues the

union and
company

Jury
trial

Jury
decides

the
grievant

is
innocent

and entitled
to

reinstatement
and

backpay

Grievant
is

reinstated
and paid
backpay

Union
responsibility

The arbitrator
would have ruled
in favor of the
grievant if the
union had fulfilled
its duty of fair
representationCompany

responsibility

CHAPTER 10 Contract Administration 525

because management is legally prohibited from dealing in the internal affairs of the
union. However, it can easily be argued that the union would not have violated the law
in the first place if the company had not wrongfully discharged the employee. There is
also the possibility that this decision would encourage the union to take more marginal
grievances to arbitration to avoid any possible breach of fair representation and related
financial liability. In other words, the union may believe that it is less expensive to take
the case to arbitration than to defend against a breach of contract suit before a jury. Even
if the union loses in arbitration, the costs will be less than defending the union s actions
in court.

Summary
Employee grievances and grievance administration
extend collective bargaining by giving dynamic mean-
ing to the negotiated terms of the labor agreement. A
grievance is typically defined as any employee s con-
cern over a perceived violation of the labor agreement
that is submitted to the grievance procedure for
resolution.

An employee might file a grievance for a variety
reasons, such as to protest a contract violation, to draw
attention to a problem in the plant, to get something
for nothing, or to feel more important. Regardless of
the reasons for filing grievances, management must
process them through the grievance procedure speci-
fied in the labor agreement (legalistic approach).

Although no one grievance procedure applies to all
labor management relationships, two important
aspects of a typical grievance procedure are inclusion
of higher level management and union personnel and,
particularly in the private sector, binding arbitration by
a third-party neutral. Grievance procedures typically
offer an organization two major advantages: conflict
institutionalization and open upward communication.
However, the grievance procedure as actually carried
out involves a variety of behavioral dimensions, includ-
ing social relationships (codified, power, and empa-
thetic) enacted among the grievance participants in

resolving the grievance according to appropriate con-
tractual provisions. The variety of personalities and
motives of the participants suggest that a flexible, prag-
matic approach in grievance resolution may be best.

Grievance mediation, a form of ADR procedure,
was discussed and compared to grievance arbitration,
another ADR procedure. The advantages of grievance
mediation, such as costs, informality, skills develop-
ment, and others, were explained. However, despite
these advantages, grievance mediation remains less fre-
quently used than arbitration. The reasons for its less
frequent use and the various approaches used were
explained. As a result of its success, mediation is
being used successfully by the EEOC to resolve
employment discrimination disputes. Other forms of
ADR open-door policies, ombudsperson, peer review
systems, and early neutral evaluation were also
presented.

Unions have a legal obligation to fairly represent
bargaining unit employees in the grievance procedure.
Although unions are not legally required to take each
grievance to arbitration, they must consider and pro-
cess grievances in an effective, good faith manner. Legal
and financial consequences to the union and the
employer can arise when the union violates its duty
of fair representation.

Key Terms
grievance, p. 499
employee voice, p. 506
Arbitration, p. 512
Grievance mediation, p. 512
mediation, p. 512

directive or results-oriented
mediation, p. 513

transformation mediation, p. 515
open-door policies, p. 516
ombudsperson, p. 516
peer review systems, p. 516

Early neutral evaluation, p. 517
Codified relationships, p. 518
power relationships, p. 518
Empathetic relationships, p. 520
third-and-one-half step, p. 521
fair representation obligation, p. 522

526 PART 3 Administering the Labor Agreement

Discussion Questions

1. A thin line differentiates employee grievances and
employee complaints. Discuss the problems
involved in defining a grievance, indicating why a
broad definition of employee grievances is both
confusing and necessary.

2. Discuss two reasons grievances might be filed,
furnishing examples of these reasons other than
those found in the text.

3. Why does a typical grievance procedure have so
many steps when the employee is either right or
wrong and a one- or two-step procedure would

save time and money? In your answer, discuss the
various functions, opportunities, and problems
each of the grievance steps can offer.

4. Why is it difficult for union and management
officials to resolve each grievance on its own
merits?

5. Briefly discuss the broad judicial guidelines con-
cerning unions fair representation obligations to
members. Also discuss the reasoning behind these
obligations, furnishing some appropriate
examples.

Exploring the Web

Grievance Procedures

1. Grievance Procedures
For advice on investigating grievances, filing grie-
vances, processing grievances, duty of fair representa-
tion, winning past practices grievances, deciding
whether or not to appeal grievances to arbitration,
mid-contract bargaining changes, go to: http://www.
ueunion.org and search for grievance procedure.

2. Successful Grievance Mediation
REDRESS-US Postal Service (http://www.USPS.
com/redress/employees) is an award-winning EEO
mediation program which provides fast, fair, neu-
tral, and informed attention to traditional EEO
counseling. It is a voluntary process wherein the
parties may develop their own resolution with the
assistance a grievance mediator.
Federal Mediation and Conciliation Service
(http://www.fmcs.gov) offers grievance mediation

assistance with a third-party neutral. This Web site
provides the following information: (1) when the
FMCS mediation should be used, (2) FMCS training
availability, (3) how to request grievance mediation,
and (4) FMCS Guidelines for grievance mediation.

3. Union s Duty of Fair Representation
As the exclusive bargaining representative for all bar-
gaining unit employees, a union has the legal duty to
represent all bargaining unit employees, regardless of
union membership. Most labor unions have Web sites
which provide guidance to their members regarding
the unions duty of fair representation. Some of them
are: United Electrical Radio and Machine Workers of
America (http://www.ueunion.org)
Communication Workers of America (http://www.
cwa-union.org)
Teamsters (http://www.teamsters.org/content/duty-
fair-representation)

References
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2. Antone Aboud, Conducting a Fair Investiga-
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3. Brian S. Klass and Angelo S. DeNisi, Manage-
ment Reactions to Employee Dissent: The Impact
of Grievance Activity on Performance Ratings,

CHAPTER 10 Contract Administration 527

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4. Robert E. Allen and Timothy J. Keaveny, Factors
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6. Chalmer E. Labig, Jr., and I. B. Helburn, Union
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7. Douglas M. McCabe, Corporate Nonunion
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August 1990, pp. 551 557. See also Mark J.
Keppler, Nonunion Grievance Procedures:
Union Avoidance Technique or Union Organiz-
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8. Donna Maria Blancero, Robert G. DelCampo,
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9. Richard B. Freeman and James L. Medoff, What Do
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10. Richard B. Peterson, Organizational Governance
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11. Renaud Paquet and Sylvain Dufour, Toward a
Better Understanding of Grievance Procedure in
the Public Service: A Canadian Example, Journal
of Collective Negotiations in the Public Sector,
28(2), 1999, pp. 103 107.

12. For a fine research framework for grievances, see
Michael E. Gordon and Sandra J. Miller, Grie-
vances: A Review of Research and Practice, Per-
sonnel Psychology, 37, Spring 1984, pp. 117 146.
See also David Lewin, Empirical Measures of
Grievance Procedure Effectiveness, Labor Law

Journal, 35, September 1984, pp. 491 496;
Thomas R. Knight, Feedback and Grievance
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Review, 39, July 1986, pp. 487 501; Casey
Ichiowski, The Effects of Grievance Activity on
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mels, Yonatan Reshef, and Kay Stratton-Devine,
The Roles of Supervisors, Employees and

Stewards in Grievance Initiation, Industrial and
Labor Relations Review, 45, October 1991,
pp. 15 30; Jeanette A. Davy, Greg Steward, and
Joe Anderson, Formalization of Grievance Pro-
cedures: A Multifirm and Industry Study, Jour-
nal of Labor Research, 13, Summer 1992, pp. 307
316; Richard P. Chaykowski, George A. Slotsve,
and J. S. Butler, Simultaneous Analysis of
Grievance Activity and Outcome Decisions,
Industrial and Labor Relations Review, 45, July
1992, pp. 724 737; Peter Capelli and Keith
Chauvin, A Test of an Efficiency Model of
Grievance Activity, Industrial and Labor Rela-
tions Review, 45, October 1991, pp. 3 14; Morris
M. Kleiner, Gerald Nickelsburg, and Adam
Pilarski, Monitoring, Grievances, and Plant Per-
formance, Industrial Relations, 34, April 1995,
pp. 169 190.

13. Mark I. Lurie, The 8 Essential Steps in Grievance
Processing, Dispute Resolution Journal, 54,
November 1999, pp. 81 86.

14. Basic Patterns in Union Contracts (Washington,
D.C.: Bureau of National Affairs, 1995), pp. 33 39.

15. David B. Stephens, Robert Stephens, and John
Kohl, U.S. Business Colleges Still Lag in Teach-
ing ADR; Dispute Resolution Journal, May/June
2013, pp. 23 28. For an example of a course
curriculum in ADR, see: Peter Geoffrey Bowen,
Teaching ADR to Undergraduate Business

Students , Dispute Resolution Journal, August/
October 2012, pp. 78 82.

16. Stephen B. Goldberg, How Interest-based
Grievance Mediation Performs Over the Long
Term, Dispute Resolution Journal, 60(4), 2004
2005, pp. 8 14; See also Helen Elkiss, Alterna-
tives to Arbitration: Are Unions Ready for
Change? Labor Law Journal, 48, November 1997,
pp. 675 690.

528 PART 3 Administering the Labor Agreement

17. Gary Hattal, Labor Mediator as Internal Change
Agent , Proceedings of the 62nd Annual Meeting of
the Labor and Employment Relations Association,
2010, pp. 167 169.

18. Theodore J. St. Antoine, Introduction: What
ADR Means Today, in How ADR Works
(Washington, D.C.: Bureau of National Affairs,
2002), pp. 4 5.

19. Nels Nelson and A. Meshquat Uddin, Arbitra-
tors as Mediators, Labor Law Journal, 46, April
1995, p. 205.

20. Peter Feuille, Grievance Mediation, in Employ-
ment Dispute Resolution and Worker Rights in the
Changing Workplace, ed. Adrienne E. Eaton and
Jeffrey H. Keene (Champaign, IL: IRRA, 1999),
pp. 197 205.

21. Fueille, Grievance Mediation, pp. 197 198.
22. Richard E. Dibble, Alternative Dispute Resolu-

tion in Employment: Recent Developments,
Journal of Collective Negotiations in the Public
Sector, 29(3), 2000, pp. 247 248.

23. http://www.eeoc.gov.mediation
24. E. Patrick McDermott, Anita Jose, Ruth Obar,

Mollie Bowers, and Brain Polkinghorn, Has the
EEOC Hit a Home Run? An Evaluation of the
Equal Employment Opportunity Commission
Mediation Program from the Participants Per-
spective, in Advances in Industrial and Labor
Relations, ed. David Lewin and Bruce Kaufman
(Amsterdam: JAI, 2002), pp. 2 34; http://www.
eeoc.gov.

25. Lisa Bloomgreen Bingham, Cynthia J. Hallberlin,
and Denise A. Walker, Mediation of Discrimi-
nation Complaints at the USPS: Purpose Drives
Practice, paper presented at the Annual Meeting
of the National Academy of Arbitrators 2007.

26. Donna Maria Blancero, Robert G. DelCampo, and
George F. Marrow, Industrial Relations, 49(4)
(October 2010) pp. 524 543; Mark Harcourt,
Helen Lam and Maureen Hannay, Employment
at will versus Just Cause: Applying the Due Pro-
cess Model of Procedural Justice, Labor Law
Journal, 64, 2013, p. 67 79.

27. Hoyt Wheeler, Unions and Workplace Justice,
Proceedings of the 61st Annual Meeting (Cham-
paign, IL: Labor and Employment Relations
Association, 2009), pp. 125 128.

28. Laura J. Cooper, Dennis R. Nolan, and Richard A.
Bales, ADR in the Workplace (St. Paul, MN: West
Group, 2000), pp. 659 672.

29. Judith L. Catlett and Edwin L. Brown, Union
Leaders Perceptions of the Grievance Process,
Labor Studies Journal, 15, Spring 1990, p. 61.

30. See, for example, Ralph Arthur Johnson, Griev-
ance Negotiation: An Analysis of Factors Popu-
larly Associated with Success, Labor Studies
Journal, 9, Winter 1985, pp. 271 279.

31. AFL-CIO Manual for Shop Stewards (n.p., n.d.), p. 37.
32. William D. Todor and Dan R. Dalton, Union

Steward: A Little Known Actor with a Very Big
Part, Industrial Management, 25, September/
October 1983, pp. 7 11.

33. Paul Pigors, The Old Line Foreman, in Orga-
nizational Behavior, ed. Austin Grimshaw and
John Hennessey, Jr. (New York: McGraw-Hill,
1960), p. 98.

34. Michael E. Gordon and Roger L. Bowlby, Pro-
positions about Grievance Settlements: Finally,
Consultation with Grievants, Personnel Psychol-
ogy, 41, Spring 1988, p. 120. Another study also
found that a high proportion of local union lea-
ders believe that first-line supervisors have no
authority to resolve grievances. See Catlett and
Brown, p. 59.

35. John P. Hoerr, And the Wolf Finally Came
(Pittsburgh: The University of Pittsburgh Press,
1988), p. 22.

36. P. Christopher Earley, Supervisors and Stewards
and Sources of Contextual Information in Goal
Setting: A Comparison of the United States with
England, Journal of Applied Psychology, 71,
February 1986, pp. 111 117. See also Mick
Marchington and Roger Armstrong, Typologies
of Union Stewards, Industrial Relations Journal
(Autumn 1983), p. 44.

37. David Lewin and Richard B. Peterson, The Mod-
ern Grievance Procedure in the United States
(New York: Quorum Books, 1988), p. 195.

38. Delbert C. Miller and William Forum, Industrial
Sociology (2nd ed.) (New York: Harper & Row,
1964), pp. 401 402.

39. Melville Dalton, Unofficial Union-management
Relations, American Sociological Review, 15,
October 1950, p. 613.

40. Marc G. Singer and Peter A. Veglahn, Corre-
lates of Supervisor-steward Relations, Labor
Studies Journal, 10, Spring 1985, pp. 46 55. For
a study and related methodology revealing an
empathetic relationship, see Brian Bemmels,
The Determinants of Grievance Initiation,

CHAPTER 10 Contract Administration 529

Industrial and Labor Relations Review, 47,
January 1994, pp. 293, 300.

41. Melville Dalton, The Role of Supervision, in
Industrial Conflict, ed. Arthur Kornhauser, Robert
Dubin, and Arthur Ross (New York: McGraw-
Hill, 1958), pp. 183 184.

42. For related legal violations (unfair labor prac-
tices), see Paul A. Brinker, Labor Union Coer-
cion: The Misuse of the Grievance Procedure,
Journal of Labor Research, 5, Winter 1984,
pp. 93 102.

43. Arthur Hamilton and Peter A. Veglahn, Juris-
diction in Duty of Fair Representation Cases,
Labor Law Journal, 41, September 1990, p. 668.
See also Martin H. Malin, The Supreme Court
and the Duty of Fair Representation, Harvard
Civil Rights: Civil Liberties Law Review, 27,
February 1992, p. 127.

44. Decision of Supreme Court in Teamsters Local
391 v. Terry, Bureau of National Affairs Inc.,
Daily Labor Report, March 21, 1990, pp. D1 D11.
An appeals court decision interpreting a subse-
quent Supreme Court decision indicates the
employee has a six-month period to sue starting
from when he or she should have reasonably
known about the union s alleged breach of duty.
Court Affirms That Fair Representation Claim

over Abandoned Grievance Was Untimely Filed,
Bureau of National Affairs Inc., Daily Labor
Report, August 6, 1990, p. A1.

45. Peter Geier, The Daily Record, Baltimore Mary-
land, January 5, 2004, p. 1. Ford Motor Co. v.
Huffman et al., 345 U.S. 320 (1953); and Hum-
phrey v. Moore, 375 U.S. 335 (1964).

46. For examples of judicial decisions that have
upheld and rejected unions fair representation
actions along these lines, see Court Immunizes
Union Failure to Pursue Grievance, Bureau of
National Affairs Inc., Daily Labor Report, March
9, 1994, p. A1; and Court Finds UFCW Breached
Duty, but Vacates Fee Award, Bureau of
National Affairs Inc., Daily Labor Report, May 27,
1993, p. A4.

47. Vaca v. Sipes, 386 U.S. 191 (1967); Amalgamated
Association of Street, Electric, Railway and Motor
Coach Employees of America v. Wilson p. Lock-
ridge, 403 U.S. 294 (1971).

48. Union Must Pay Damages for Its Arbitrary
Mishandling of Grievances, National Public
Employment Reporter, July 5, 2001, p. 1.

49. Unions under Scrutiny, California Employment
Law Letter, May 13, 2002, p. 1.

50. Air Line Pilots Association, International v.
Joseph E. O Neill et al., Bureau of National
Affairs Inc., The United States Law Week, March
19, 1991, pp. 4175 4180.

51. For an example of a relatively straightforward
breach of fair representation, see Hines v. Anchor
Motor Freight Inc., 424 U.S. 554 (1976).

52. Union Failure to Publicize Award Held Fair
Representation Breach, Bureau of National
Affairs, Daily Labor Report, August 13,
1984, p. 1.

53. T. Charles McKinney, Fair Representation of
Employees in Unionized Firms: A Newer Direc-
tive from the Supreme Court, Labor Law Jour-
nal, 35, November 1984, pp. 693 700.

530 PART 3 Administering the Labor Agreement

CA
SE

ST
UD

Y

10
-1 Are These Grievances Arbitrable?

Background
Manchester T & E is a company which produces

propane cylinders. The International Workers repre-
sents the bargaining unit employees at the Blue Ridge,
Georgia plant.

Grievance No. 27-97 which is subject of this arbi-
tration was filed on December 18, 2007, on behalf of
Bob Boyce. Mr. Goode wrote:

Nature of Complaint:

The Union contends that on 12/16/07 the Company
violated Article VII not to exclude any other Arti-
cles or Sections pertaining to the contract.

To satisfy this grievance the Union will accept
that Bob Boyce be placed back to work with all pay
that he has lost which would be all straight pay and
overtime pay.

On December 22, 2007, Mr. Sam Smallwood, per-
sonnel manager, denied the grievance.

Grievance No. 27-97 was appealed to the third
step, and Mr. Smallwood denied the grievance on Jan-
uary 13, 2008.

The union appealed Grievance No. 27-97 to the
third step, and Mr. Smallwood denied the grievance
on January 13, 2008.

On January 21, 2008, Mr. Goode wrote the follow-
ing note:

The Union wishes that Grievance number 27-97 be
appealed to Arbitration.

On March 25, 2008, Mr. George H. Mason, busi-
ness representative, wrote the following letter to Mr.
Smallwood.

The Company s answer to the above mentioned
grievance(s) has been deemed unsatisfactory to the
Union. Pursuant to Article V, Section 5, of the cur-
rent Collective Agreement, the Union will proceed
to arbitration.

Issue

Is Grievance No. 27-97 arbitrable? That is, can the
arbitrator consider the Grievance on its merits? Or is
an arbitrator precluded from hearing the case in this
instance because of alleged procedural irregularities?

Relevant Provisions of the Collective Bargain-
ing Agreement

Article V: Grievance Procedure and Arbitration

Section 2. Time Limits. If an appeal is not made in
the prescribed time limit following the company s
answer at any step of the foregoing procedure, the
grievance shall be considered settled on the basis of
the company s answer, and not subject to further
action of any kind. If the company does not answer
the grievance in accordance with the foregoing pro-
cedure, the grievance shall be settled on the basis of
the union s request in said grievance.

The time limits for presentation, answer, and
appeal on a grievance at any step are absolute and
binding upon both parties, unless such time limits
are extended by mutual agreement.

Section 5. Arbitration. If the director of human
resources written answer in Step 3 is deemed unsat-
isfactory, the union may elect to submit the griev-
ance to arbitration. A grievance not settled in Step 3
must be appealed to arbitration by written notice to
the director of human resources, or his representa-
tive. Such notice shall be mailed by certified mail,
return receipt requested, and must be postmarked
no later than ten (10) normal working days after
the date of the 3 answer.

Both parties shall have the opportunity to pres-
ent evidence and to argue that grievance orally and/
or in writing. The arbitrator shall make a written
decision and award, in accordance with the evi-
dence, which shall not alter, add to, or subtract
from the terms of this agreement. The arbitrator
shall have no power to substitute his discretion for
that of the company in any matter where the com-
pany has not expressly contracted away its right
allowing an arbitrator to exercise such discretion.
Such written decision shall be binding upon the
company, the union, and the aggrieved employee.

Positions of the Parties
The Company

The company argued that, under the terms of this
agreement, the union may proceed to arbitration when
it is dissatisfied with the company s resolution of a

CHAPTER 10 Contract Administration 531

grievance in its Step 3 answer. As a prerequisite, the
union must provide the company with timely and
proper notice of its intent to proceed to arbitration.
To be considered timely and proper, the notice must
comply with the simple and straightforward provisions
set forth in Article V, Section 5, of the agreement. Arti-
cle V, Section 5, provides: A grievance not settled in
Step 3 must be appealed to arbitration by written notice
to the Director of Human Resources, or his representa-
tive. Such notice shall be mailed by Certified Mail,
Return Receipt Requested, and must be postmarked
no later than ten (10) normal working days after the
date of the Step 3 Answer. The straightforward lan-
guage clearly and unambiguously states that a notice
of intent to arbitrate must meet three requirements.
First, the notice must be in writing. Second, it must
be delivered to the company personally within ten days
of the Step 3 answer. In addition, Article V, Section 5,
states that time limits are absolute and binding upon
both parties unless extended by mutual agreement.

The company claimed that the union is seeking to
persuade the arbitrator that the company should be
forced to arbitrate Grievance No. 27-97 despite the
union s failure to provide the company with timely
and proper notice of its intent to arbitrate this
Grievance. Mr. George Mason provided the company
with written notice; however, this notice was clearly
untimely, because it was well beyond ten working
days after the company s Step 3 denial.

Since the union failed to provide timely notice of
its intent to arbitrate the grievances at issue, the union
has attempted to characterize a handwritten note from
its chief steward Goode to the company s representa-
tive, Sam Smallwood, as a request for an extension of
the time limits. The union s attempt to characterize a
handwritten note as a request for an extension of time
for Grievance No. 27-97 is wholly without merit.

The union has failed to either request arbitration
in accordance with the mutually agreed upon terms of
the agreement or to obtain a mutually agreed upon
extension of the time. Therefore, this grievance is not
procedurally arbitrable. The express terms of Article 5,
Section 2, state that, as a result of the union s failure to
appeal the company s Step 3 answers to arbitration
within the prescribed time limit, the grievance[s]
shall be considered settled on the basis of the com-
pany s answer[s], and not subject to further action of
any kind. According to this straightforward contrac-
tual language, this grievance was rendered settled on
the basis of the company s Step 3 answer.

The company never explicitly or implicitly agreed to
extend the time limits on this grievance. In response to
the union s untimely request, the company immediately
raised the timeliness issue. The company has insisted on
strict compliance with procedural requirements through-
out its bargaining relationship with the union and has
never waived compliance with the procedural provisions
of the grievance and arbitration process, even when the
result was detrimental to the company.

The company reviewed its version of the facts. On
December 16, 2007, the company discharged Bob
Boyce for fighting in the plant. On December 18,
2007, a timely grievance was filed. On December 22,
2007, Mr. Smallwood issued step 2 denial on the griev-
ance. The grievance proceeded to the Step 3 of the
grievance procedure on January 13, 2008, and the com-
pany denied the grievance on this same date.

On January 21, 2008, Mr. Goode, submitted a
handwritten note to Mr. Smallwood, which stated:
The Union wishes that Grievance numbers 22-97, 23-

97, 24-97, 25-97 be put on hold until the next 3rd Step
meeting, and that Grievance number 27-97 be appealed
to arbitration. Mr. Smallwood interpreted the note
exactly as it was written. Grievance Nos. 22-97, 23-97,
24-97, and 25-97 were put on hold. Mr. Goode s note,
however, was not treated by the company as a formal
demand for the arbitration of Grievance Nos. 27-97
because it was clearly not provided in accordance with
the agreement. Mr. Smallwood expected the union to
follow up with a formal request.

Mr. George Mason, the union s business represen-
tative, eventually provided the company with a formal
written request, as required by the agreement. How-
ever, this request was postmarked March 25, 2008,
many weeks beyond the time requirements set out in
Article V, Section 5, which expressly requires the union
to make a formal demand for arbitration within ten
working days after the company s Step 3 denial. The
company s Step 3 denials were issued on January 13,
2008, and the union s formal request for arbitration
was received on March 26, 2008, well over two months
later. Upon receipt of the union s untimely request, the
company immediately responded by letter to
Mr. Mason and denied the union s request for the arbi-
tration of Grievance No. 27-97 as untimely and not in
compliance with the agreement.

The company stated that it has maintained a long-
standing policy of requiring strict compliance with time
limitations of the grievance procedure throughout the
bargaining relationship with the union. The evidence

532 PART 3 Administering the Labor Agreement

established this practice and illustrated that the com-
pany has uniformly denied untimely requests for arbi-
tration and has enforced contractual time limits even
when detrimental to its own position.

The company claimed that it uniformly honors
timely requests for arbitration. The evidence established
that in the past the union has consistently provided its
requests for arbitration in a timely manner. In response
to the union s timely requests, the company has com-
plied in good faith with the agreement and proceeded to
arbitration. When the union complies with the time lim-
itations set forth in the contract, the company upholds
its part of the bargain and proceeds to arbitration.

The company argued that the agreement does not
permit the arbitrator to modify the contract. Therefore,
the arbitrator should enforce the contract in accordance
with its plain and unambiguous language. Article V, Sec-
tion 5, specifically states that the arbitrator shall not alter,
add to, or subtract from the terms of this agreement. This
is the intent of the parties as expressed by clear contractual
language, which governs resolution of contract disputes
rather than the preference of the arbitrator.

In this case, the contract clearly sets forth the pro-
cedural requirements for requesting arbitration. The evi-
dence firmly established that the union failed to request
arbitration of Grievance No. 27-97 in accordance with
these clear and unambiguous requirements.

The company concluded:
Based on the reasons set forth above, grievance

No. 27-97 is not procedurally arbitrable and should be
denied.

The Union:
The union stated that on or about December 11,

2007, the company terminated the employment of Bob
Boyce, and the union filed grievances on his behalf.
This grievance was appealed through the grievance
procedure, and the company s final answer, dated Jan-
uary 13, 2008, was no violation, grievance denied.
Subsequent to the company s final grievance answer,
the company took the position that the grievance had
become untimely and therefore not arbitrable.

The union presented testimony and documenta-
tion by the local lodge chief Steward, Mr. Ralph
Goode. Mr. Goode has worked for the company for
17 years and has been chief steward of the local
union for six of those years. Mr. Sam Smallwood, per-
sonnel manager, is Mr. Goode s counterpart in man-
agement. Mr. Goode pointed out that both the union
and the company from time to time have reasons for

extending the grievance time limits, and Mr. Goode
presented to Mr. Smallwood a document extending
the time limits on Grievance No. 27-97.

The union claimed that the company did not object
to the above mentioned document s request. Mr. Goode
recalled that neither party has ever rejected the other s
request for time extensions. At the time of this arbitra-
tion, there were seven grievances with time deferrals and
the oldest was 11 months. The union deferred the time
limits of Grievance No. 27-97 because the parties were
in contract negotiations. On some occasions, issues
could be resolved around those negotiations meetings
without formal proposals being made. However, the
union and company could not resolve Grievances No.
27-97 in negotiations, and the union sent a letter to
the company appealing the grievances to arbitration.

The union argued that Article V, Section (2), Griev-
ance Procedure and Arbitration, provides that the par-
ties through mutual agreement may extend the time
limits of grievances in process. For the past six years
the parties have honored each other s request to defer
time limits. Mr. Goode testified that he requested time
limit deferrals on all grievances mentioned in his corre-
spondence of January 21, 2008, and that the company
did not object to his request. During the contract nego-
tiations, the company and the union were attempting to
resolve Grievance No. 27-97. The union argued: It flies
in the face of reason that the company would discuss a
grievance during negotiations and then later decide the
grievance was untimely. When the company and the
union exhausted their attempts to resolve Grievance
No. 27-97, during their bargaining sessions, the union
properly appealed the grievance to arbitration.

The union concluded:
For all the foregoing reasons, the union requests

that Grievances No. 27-97 be ruled arbitrable and the
company be directed to arbitration.

Questions
1. Assess the union s argument that the parties in the

past have agreed to extend time limits.
2. Should the arbitrator be influenced by any evidence

over the reasons for the termination of those two
employees?

3. What are the company s best evidence and
arguments?

4. What are the union s best evidence and arguments?
5. You be the arbitrator. How will you rule? Are these

grievances arbitrable?

CHAPTER 10 Contract Administration 533

CA
SE

ST
UD

Y

10
-2 Should the Union Represent Slick Willie Owens?

Slick Willie Owens had always claimed himself to be
independent, believing that he never had to rely on
anyone else to help him. Willie started out with the
Walleye Productions plant in Walleye, Florida as a
laborer 14 years ago and worked his way to a fork lift
operator and then to shipping clerk. Back in 2008 dur-
ing the economic recession, Walleye laid off about one
third of its employees; the supervisors selected employ-
ees who would not be laid off. There were many com-
plaints among the more senior employees that the
company did not give consideration to their long ser-
vice with the company, instead, the supervisors
retained the ones they believed to be the hardest work-
ers, many of whom were the youngest, even some who
had just been hired.

In 2009, the word got around that Walleye execu-
tives had made a secret trip to Mexico to investigate
having some of the manufacturing done in Mexico.
Of course, this information outraged many of the
employees who had worked for the company for
many years. Soon afterwards, some of the more senior
employees talked about contacting a union. They con-
tacted the International Union Representative of the
Industrial Union Workers (IUW) who represented
employees at another plant in Walleye. The Interna-
tional Union Representative called for a meeting at
the union lodge and about 40 Walleye employees
showed up and signed union authorization cards.
Two weeks later the IUW had 150 signatures on the
union authorization cards.

The IUW requested to be recognized, but the com-
pany denied recognition. The IUW then filed for a
representation election with the NLRB. During the
campaign in the late 2011 and early 2012, Slick Willie
continued to claim his independence, that he had made
it this far without any union, and that he didn t need
the union now. During the campaign when Willie was
approached by co-workers in the shipping department
who supported the union, Willie told them: Even if
the union gets in, I don t have to join. The union still
has to represent me. I get everything you guys get, and
I don t have to pay them one red dime.

After a lively organizing campaign, the employees
voted by 174 to 144 to be represented by the IUW.
Afterwards, the IUW was successful in negotiating a

three-year contract in the fall of 2012. The IUW and
Walleye Productions developed a fairly productive,
cooperative relationship from the beginning. Both par-
ties have acted professionally in dealing with each
other. The company maintained its policy of going
strictly by the rules. The company agreed to the
grievance-arbitration procedure and that discipline
must be for just cause. The IUW accepted the com-
pany s right to formulate reasonable rules for employee
behavior. One of these formulated rules for employee
behavior was: Being under the influence of illegal
drugs and alcohol during working hours will be cause
for immediate termination.

On January 1, 2015, Slick Willie attended a New
Year s party to watch the football bowl games. Willie
was surrounded by his old buddies who were drinking
beer and smoking a little marijuana. Willie knew that he
had to report to work the following day but yielded to
the temptation when he was offered a smoke. Since he
had been drinking a little too much, Willie smoked a
little too much. Knowing Walleye had a random testing
policy, Willie believed that his chances of being tested
were slim. Willie was wrong. Willie was selected to be
tested and Willie tested positive. The results were con-
firmed and Willie was terminated by the end of the day.

Willie filed a grievance and claimed that the smok-
ing of marijuana was a single incident, that it was his
first offense, and that he was a long-term employee
with a good service record of 14 years. The company s
position was that the rules were reasonable, clear, and
communicated to all employees. Willie had tested pos-
itive and the company s position was that it could not
make an exception for Willie because the company
would without doubt be faced with similar situations
later and not applying the rule now would have an
effect of nullifying the rule.

Willie went to the union to represent him. Willie
claimed that the union had a duty to represent all bar-
gaining unit employees and he held a job within the
bargaining unit. At the next membership meeting,
there was a backlash among the membership to repre-
senting Willie because they remembered what Willie
had said during the organizing campaign and that he
has never joined the union. The members claimed that
here is a guy who spoke out against the union, never

534 PART 3 Administering the Labor Agreement

joined the union, and never paid a red dime to sup-
port the union. Now Willie wants the membership to
pay the union s attorney to represent him in arbitration
and pay the union s share of the arbitration, a total
amount which could rise to as much as $5,000.

A discussion took place at the meeting and the
following proposal was made by a member: The
union would represent Willie in the grievance proce-
dure and arbitration and Willie would pay for his
representation costs, for example, the legal fees, the
union s share of the arbitration costs. The union posi-
tion was that this proposal as adopted would meet its
legal duty of representing Willie. The membership
voted approval without a negative vote.

Questions
1. What are Willie s arguments which would require

the union to represent him without Willie paying
any money?

2. What are the union members argument which
would require Willie to pay for the costs of repre-
senting him?

3. Is this adopted proposal fair to Willie? To members
of the union?

4. If the union refuses to represent Willie and pay for
the union s attorney and its share of the arbitration
costs and then Willie files a charge against the union
with the NLRB, how will the NLRB rule?

5. If you were a member of the union, how would you
have voted on the proposal? Why?

6. If you are a member of management and learn
about Willie s position and the union s position,
what would you do?

CHAPTER 10 Contract Administration 535

.g

CLASSROOM EXERCISE

10.1
Arbitration Scenario

On Thursday, March 4, 2004, Juan Carlos, age 43, was on sick leave at his home. He went out-
side to feed his horses and noticed a pickup truck driving toward him. As the pickup came
closer, Juan noticed that the driver was Billy Bob Jones, a former boyfriend of his ex-wife.

Billy Bob pulled up to Juan and the two of them had an exchange of words. This
exchange led to Juan pulling out a pistol and shooting Billy Bob, who was taken to the
hospital. Billy Bob was admitted and later released. A warrant for the arrest of Juan
Carlos was issued by the Magistrate of the County District Court on March 5, 2004.
Juan was arrested on March 5, 2004, made bail, and was released.

On Monday, March 8, Juan reported to work at the social service organization
where he had worked for eight years. He asked for a meeting with his supervisor, Alice
Smith, and department head, Larry Tate. Juan told them that he was involved in an
altercation with Billy Bob Jones who had driven to his home, threatened to kill him,
and grabbed his arm with his left hand from the driver s side of his pickup while the
motor was still running. When Billy Bob leaned to his right and reached down toward
his car seat, Juan feared for his life and shot Jones in self-defense. He told them that he
was later arrested. After the meeting, Juan returned to his desk and continued his job of
interviewing citizens who visited his office to apply for public assistance. On the follow-
ing day, Suzie Cue, a fellow employee, told Mr. Tate that she had read an article in the
local newspaper that Juan had shot Billy Bob Jones and had been arrested. Suzie told
Mr. Tate that she was frightened having Juan in the same office. Mr. Tate knew that
he had a potentially serious situation and he needed to investigate the situation. Mr. Tate
first checked the Collective Bargaining Agreement. The relevant language is as follows:

Management may discipline employees for just cause.
The Agency may suspend an employee indefinitely if there is reasonable cause to

believe that the employee has committed a crime for which a sentence of imprison-
ment could be imposed.

On March 10, 2004, Tate decided to propose to suspend Carlos indefinitely, and
Carlos was placed on administrative leave. After approval from his division head, Tate
wrote a letter captioned Decision to Suspend Indefinitely to Carlos. Upon receipt,
Carlos began serving an indefinite suspension. On March 11, 2004, Carlos filed a griev-
ance and also filed a charge of race and age discrimination with the EEOC.

Management s preparation and decisions are only as good as its investigation. You
be the investigator. What information will you seek? What actions will you take to
obtain this needed information?

536

CHAPTER 11

Labor and Employment Arbitration

YOU HAVE WORKED hard and spent a good deal of money on
your college education. You have made good grades and are
looking for a job in order to advance your career goals. You rec-
ognize that jobs are hard to find for a new college graduate.

You were an excellent student with many campus activities,
but you have had a difficult time finding a suitable job. Finally,
you were offered a job with a good salary and benefits, with
good career potential. You received the offer via letter. Attached
to the letter is the following statement: As a condition of
employment, I agree to resolve any and all of my employment
discrimination claims through the company s arbitration proce-
dure. I waive all of my legal rights to file any employment dis-
crimination claim with the Equal Employment Opportunity
Commission and/or any other governmental agency.

Questions
1. Will you sign the attached agreement?

2. What are your legal rights?

537

This chapter covers (1) traditional grievance labor arbitration, which involves the dispute-resolution procedures stemming from the last step in the grievance procedure and
(2) employment arbitration, which is initiated by the employer. The traditional labor arbi-
tration procedures are negotiated between the employer and the union, the representative of
bargaining unit employees. Employment arbitration is promulgated by the employer to
resolve statutory claims, including employment discrimination, and disputes over applica-
tion of company personnel policies, such as a denied employee promotion under an
employer handbook or policy manual. These two arbitration procedures are covered sepa-
rately because, although they have some commonalities, they are distinctly different.

The first difference is the presence of the union in the traditional labor arbitration
procedure. The union s role is to represent all bargaining unit employees, and the union
and the company bilaterally negotiate an arbitration procedure that will best reflect both
the interests of the employees covered under the collective bargaining agreement and the
interests of the employer. Under this procedure, the parties generally have equal bargaining
power. Under employment arbitration, the employer unilaterally designs the procedures
and determines that disputes related to employment subjects will be resolved in arbitration.
Under this procedure, the employer has the dominant power.

A second difference is the qualifications and selection of the arbitrators who hear the
disputes. Arbitrators used in negotiated grievance arbitration have considerable experience
and expertise in labor and employment matters and are selected mutually by the parties,
who research their background, education, experience, and other factors before making the
selection. In employer-promulgated employment arbitration, arbitrators may be selected
only by the employer from lists of commercial arbitrators or from lists developed solely
by the employer. In fact, some employers refuse to use arbitrators who have experience
in the labor relations arena because employers believe that these arbitrators are likely to
use the same standards as used in labor management arbitration, such as an employer
having the burden of proof in a discharge case.

A third difference lies in the framework for decision making. Under a collective bar-
gaining agreement, arbitration involves issues that arise over the interpretation and appli-
cation of the labor agreement. Therefore, the labor agreement is negotiated by the union
and company and establishes the framework ( four corners of the agreement ) for the
arbitrator s decision. Under employment arbitration, the decision of the arbitrator involves
interpretation and application of company-developed personnel policy or a public law.1

Development of Labor Arbitration

Labor arbitration first occurred in the United States in 1865, but it was used rarely before
World War II, when it was used by the War Labor Board. In many cases prior to the
war, employee grievances were resolved through sheer economic strength. For instance,
a union desiring resolution of a particular grievance often needed to mobilize the entire
workforce in a strike against the employer a difficult task before the company would
attempt to resolve the grievance. In the early years, union and management officials were
legally free to ignore the arbitrator s decision if they did not agree with it.

Other factors limiting the early growth of arbitration were the relatively few union-
ized facilities and the vague language found in labor agreements, which gave little con-
tractual guidance for the arbitrator s decision. Consequently, the early arbitration process
combined elements of mediation and humanitarianism in an effort to reach a consensus
decision, one that would be accepted by both parties to a grievance. The arbitrator under
these circumstances had to draw on diplomatic and persuasive abilities to convince the
parties that the decision should be accepted.

538 PART 3 Administering the Labor Agreement

Labor arbitration s popularity increased during World War II, when President
Franklin Roosevelt s Executive Order 9017 provided for final resolution of disputes
interrupting work that contributed to the war effort. Essential features of this order
included a no-strike, no-lockout agreement and a National War Labor Board
(NWLB) composed of four management representatives, four union representatives,
and four representatives of the public all presidential appointees. The Board was to
encourage collective bargaining and, if necessary, resolve disputes over application of
the terms of the agreements.

The advent of World War II encouraged the role of labor arbitration in several ways.
Many union and management officials realized that uninterrupted wartime production
was essential and that grievance resolution was more effectively accomplished through
arbitration than through strikes. The NWLB urged labor and management officials to
resolve their own disputes and encouraged the parties to carefully define the arbitrator s
jurisdiction in the labor agreement. Thus, the Board gave any negotiated restrictions full
force when deciding cases and denied arbitration where it was reasonably clear that the
arbitration clause meant to exclude a subject from arbitral review. It further defined
grievance arbitration as a quasi-judicial process, thereby limiting a decision solely to the
evidence presented at the hearing.

Results of the NWLB s activities further popularized and enriched the arbitration
process, as the Board resolved some 20,000 disputes during its tenure. In addition,
these efforts served as a training ground for many arbitrators who were able to
apply their newly acquired skills to the arbitration process throughout the United States
after the war.

Although the use of arbitration increased during World War II, the role and author-
ity of arbitrators were far from resolved.2 Both parties in a labor dispute still remained
legally free to ignore the arbitrator s award. In 1957, however, the U.S. Supreme Court
declared in its Lincoln Mills decision that an aggrieved party could legally bring suit
against a party that refused to arbitrate a labor dispute for violation of the labor agree-
ment, under Section 301 of the Labor Management Relations Act. Thus, grievance pro-
cedures including arbitration could be subjected to judicial review, although much
confusion remained over the court s role in these activities.

Either party could refuse to submit the grievance to arbitration if the labor agree-
ment did not directly address the issue in question. Some state statutes that made the
agreement to arbitrate enforceable resulted in attempts to persuade the court to compel
arbitration of various issues. Some courts then became involved in assessing the merits of
a particular grievance and whether the grievance should be arbitrated in the first place.
These actions, of course, contradicted the belief that arbitrators alone should rule on the
merits of the grievance. Confusion resulted when either labor or management represen-
tatives played the courts against the arbitrators in their attempts to obtain favorable
decisions.

In 1960, the Supreme Court clarified and strengthened the arbitrator s role with
three decisions commonly referred to as the Steelworkers Trilogy. These decisions can
be summarized as follows:

The arbitrator, not the courts, determines the merits of a grievance. The courts have
no business weighing the merits of a grievance.3

Arbitrators have far more expertise than judges in interpreting the common law of
the shop (contract language negotiated by the parties and, experiences and past
practices at a particular facility), which is fundamental to resolving grievances in a
manner consistent with the continuing labor management relationship.4

Arbitrators have great latitude in fashioning a decision and its remedy.5

CHAPTER 11 Labor and Employment Arbitration 539

The arbitrator was endorsed as most qualified to fashion a resolution of a grievance
as long as the arbitration decision is based on the essence of the labor agreement.

In summary, the Steelworkers Trilogy greatly enhanced the authority and prestige of
the arbitrator in interpreting the terms of the labor agreement and deciding the merits of
a particular grievance. However, the Supreme Court reaffirmed its position that the
courts should determine whether a grievance should be submitted to arbitration. For
example, the company may refuse to arbitrate on the basis of its contention that the
labor agreement excludes certain subjects from the arbitration procedure, such as wage
rates, pensions, and so on.6 Other related decisions are presented in the next section.

The Supreme Court has determined that the obligation to arbitrate a grievance can-
not be nullified by a successor employer7 or by the termination of a labor agreement.
Management representatives in this latter situation argued that arbitration is a feature
of the contract that ceases to exist when a contract terminates; therefore, a grievance can-
not be processed to arbitration if the labor agreement is no longer in effect. Conse-
quently, management representatives thought that the issue of severance pay was not
subject to arbitration because the labor agreement had expired and management had
decided to permanently close its operations. However, the Supreme Court indicated
that arbitration was still be appropriate because employee rights that arose during the
life of the labor agreement were continuing rights.8 Therefore, management had an obli-
gation to honor a union s request for arbitration after the labor contract expired only if
the dispute either arose before the contract expired or concerned a right that accrued or
vested under the agreement. 9

Another issue resolved by the Supreme Court concerns how far the courts are will-
ing to go in enforcing the role of an arbitrator. More specifically, what happens when
one party is willing to arbitrate a grievance while the other party prefers to use the strike
or lockout to resolve a dispute? As previously mentioned, a strike was a plausible alter-
native in resolving a grievance in the early years of arbitration. Also, the Trilogy did not
specifically consider this alternative in its conclusions.

The award enforceability issue was brought before the courts in 1969 when a union
protested a work assignment given to nonbargaining unit employees. The union expressed
its concern by striking even though the labor agreement contained a provision for arbitrat-
ing disputes over the terms of the agreement. Management officials stressed that the union
should use the contractually specified arbitration procedure and be enjoined or prevented
from striking the employer, and the Supreme Court agreed.10

Elements of a Typical Arbitration Proceeding

The Supreme Court, by encouraging the use of arbitration, contended that this essen-
tially private system of self-government is best suited to meet the unique needs of the
parties at a particular facility. This means the particular arbitration procedures are essen-
tially determined by the parties themselves, not a government agency. The parties them-
selves determine the framework for their arbitrations. For example, the number of
participants (even arbitrators) can vary; also, the location of the hearing might be at the
plant conference room, a hotel room, or a courtroom. Some considerations and proce-
dures are acceptable for most arbitration hearings. According to one study, only 16 per-
cent of the grievances filed in the first step of the grievance procedure are eventually
decided by arbitrators.11

Elements of a typical arbitration proceeding include the selection of the arbitrator,
the prehearing activities, the arbitration hearing, and the arbitrator s decision.

540 PART 3 Administering the Labor Agreement

Selection and Characteristics of Arbitrators
When union and management are unable to resolve their differences and need assistance
in the selection of an arbitrator(s), the process typically begins with a request from the
parties to an agency for a list of potential arbitrators. Parties make approximately 30,000
requests per year for lists of arbitrators from which they make their selection. Unions
and management rely primarily on three sources for lists of arbitrators. One source is
the Federal Mediation and Conciliation Service (FMCS), an independent federal agency
that provides computer-generated lists of arbitrators through its Office of Arbitration
Services (OAS) in Washington, D.C. About 43 percent of the requests for arbitrator
lists are made to the FMCS. Its activity is limited to providing lists of arbitrators and
biographical data on each arbitrator, informing arbitrators of the parties selection, and
following up to ensure that the selected arbitrator renders a timely decision. For these
services, the FMCS charges each party $30 per case for an online request and $50 per
case for request by mail or fax. Each arbitrator pays $150 per year to remain on the
FMCS roster, and periodically the FMCS reviews its roster of arbitrators and excludes
arbitrators who are rarely selected.

The parties will negotiate the specific procedure for selecting arbitrators and may
include the procedure in the collective bargaining agreement. A common selection pro-
cedure is the striking method. For example, from a list of five potential arbitrators, one
party will strike (mark through the name of the arbitrator so as to exclude) one arbitra-
tor (likely their least desirable arbitrator) and then the other party will strike one arbitra-
tor (likely the least desirable arbitrator from those remaining). The parties will continue
to strike until there is one arbitrator remaining; the remaining arbitrator will be the one
selected (an arbitrator acceptable to both parties). The arbitrator is then informed of his
or her selection. Of course, if this procedure does not yield a selection, the parties may
request another list or may ask the FMCS to make a direct appointment.

The second major source is the American Arbitration Association (AAA), a private,
nonprofit organization that supplies hand-selected lists of arbitrators from regional cen-
ters. About 38 percent of requests for arbitrator lists are made to the AAA. After selec-
tion, the AAA provides additional services, including establishing the location of the
hearings, exchanging posthearing briefs, and forwarding the decision to the parties. The
AAA offers a different range of services for which it charges from $175 to $350; the AAA
charges each arbitrator a $450 maintenance fee per year to remain on its list. Like the
FMCS, the AAA conducts a periodic review of its list to make sure that the arbitrators
are considered acceptable to the parties. If an arbitrator is rarely selected, the arbitrator is
not considered acceptable and is taken off the AAA roster.

The selection procedure used in AAA cases is called the striking and ranking proce-
dure. Here, each party will strike the names of arbitrators who are not acceptable and
then will rank (1 for most preferred, 2 for second most preferred, etc.) the remaining
arbitrators. The arbitrator selected will be the one who receives the highest rank among
those remaining. As under the FMCS procedure, if this procedure does not yield an arbi-
trator acceptable to both parties, then the parties may request another list or ask the
AAA to make a direct appointment.

The third major source is the 26 state and local agencies located primarily in the
northern and western states. The number of arbitrators on the agencies lists range
from 270 with the New York Employment Relations Board to 15 with the North
Carolina Department of Labor. About 18 percent of requests for arbitrator lists are
made to these agencies. The number of requests per agency ranges from fewer than
50 to more than 300 per year, with 54 percent of the requests occurring in New York
and New Jersey. The operational arrangements vary widely also. Some agencies provide

CHAPTER 11 Labor and Employment Arbitration 541

lists of arbitrators to unions and management in both the private and public sector; some
only to the public sector. Half of the agencies send out arbitrator lists on a random selec-
tion basis; half use a modified random, rotational, or discretionary system. Most agencies
restrict membership on their arbitrator roster to state residents and residents of contigu-
ous states. The Massachusetts Board of Conciliation and Arbitration, the New York State
Employment Relations Board, the Washington Employment Relations Commission, and
the Wisconsin Employment Relations Commission provide staff members to serve as
grievance arbitrators at no cost to the parties, and the New York State Employment Rela-
tions Board has a roster of pro bono arbitrators who are seeking to gain experience as
labor arbitrators. Under the state agencies, there are numerous and varied selection
procedures.12

First, the parties must decide the number of arbitrators needed to resolve a grievance.
The most common method (approximately 82 percent of arbitration provisions) is for
a single impartial arbitrator selected by management and union officials to be solely respon-
sible for the decision, with no help from other individuals in formulating the written deci-
sion. In about 11 percent of cases, the labor agreement specifies a three-member (tripartite)
arbitration board, with management and the union each selecting a member and the two
parties selecting the third impartial member. (The remaining agreements specify various
numbers of arbitrators.) Most decisions are made by this impartial arbitrator because the
other two members of the panel are influenced by their respective management and union
constituents, although the impartial arbitrator does consult with the other members.
In either case, the arbitrator s decision is final and binding.

Seventy-four percent of labor agreements specify an ad hoc arbitrator, meaning that
the arbitrator will be selected on an ad hoc, or case-by-case, basis. Union and manage-
ment representatives choose an arbitrator for a specific grievance but may select other
arbitrators for subsequent grievances arising during the life of the labor agreement. Par-
ticularly in the case of an established collective bargaining relationship, management and
the union often reach an informal agreement on the appropriate arbitrator for a particu-
lar grievance. However, if they cannot agree, they usually obtain a list of arbitrators
names (a panel) from either the FMCS or the AAA (as described previously).

Five percent of labor agreements (21 percent do not specify) in the United States
provide for a permanent arbitrator or umpire to resolve all disputes during the life of
the labor agreement. Also in 5 percent of the agreements, there is a fixed list of arbitra-
tors who serve on a rotating basis.13 Usually, large companies or industries in which a
large number of arbitration hearings are anticipated use permanent arbitrators. Presum-
ably, a permanent arbitrator can better allocate and schedule time to meet the grievance
load of the union and employer so that settlements can be reached more promptly. This
type of selection arrangement also allows the permanent arbitrator to become more
knowledgeable of the complex and unique terms of the parties labor agreement and
the organization s operations.

Assume, for example, that an arbitrator is hearing a grievance in the railroad indus-
try for the first time. How long would it take for the arbitrator to accurately interpret the
meaning of the following witness s testimony?

At 3 P.M. Mott Haven Yard was a busy place. A crew of gandy dancers tamped
methodically on a frong near the switching lead. L.S. 3 was all made up and ready
to be doubled over. She had forty-six hog racks on the head end and sixty-five empty
reefers on the hind end. Her crew were all new men on the run. Mike Madigan, the
hog head, had just been set up. Bill Blanchard, the fire-boy, was a boomer who had
recently hired out. Jack Lewis, the brains of the outfit, had been a no bill since he was
fired out of the Snakes for violating Rule G. Brady Holms, the flagman, used to

542 PART 3 Administering the Labor Agreement

work the high iron in a monkey suit, and J.B. Wells was a stu brakeman, right off
the street. Over the hump lead, the yard rats were riding em in the clear and typing
em down. The east side switcher was kicking loaded hoppers around, despite the vio-
lent washouts of the yardmixer who had discovered a hot box. Two Malleys were on
the plug and three more were at the coal pocket. Our train, Number B.D. 5, was all
ready to pull out.14

The use of a permanent arbitrator saves time and expense because the parties do not
have to repeatedly explain the meaning of site-specific terms in the arbitration hearing or
show the work location. Greater consistency and predictability are attained where one
arbitrator applies the same decision-making criteria to all of the arbitrated grievances.
Consistent decisions guide the union and management officials in their day-to-day
administration of the labor agreement and should enable the parties to better predict
the arbitrator s subsequent decisions on similar issues, perhaps decreasing the number
of frivolous grievances referred to arbitration as the parties become more certain of the
arbitrator s reasoning.

For unions and companies having few arbitration hearings, ad hoc arbitrators offer
the advantage of flexibility. Although permanent arbitrators usually are appointed by the
parties for a specified period, either side can discontinue the appointment if it views the
permanent arbitrator s decisions with disfavor. There is no obligation to retain the ad
hoc arbitrator in future grievances if either side is displeased with the arbitrator s
decisions.

Because some ad hoc arbitrators may specialize in particular categories of grievances,
such as job classification or wage incentives, they could be better informed than a per-
manent arbitrator on such issues. Permanent arbitrators may be more familiar with the
parties but may have seldom encountered a particular issue in their arbitration experi-
ence. Because both types of arbitrators have comparative advantages and disadvantages,
management and union officials will design the selection method that best meets their
needs.

According to one survey, arbitrators are likely to be males over 50 years of age with
more than 14 years of experience in arbitration and a law degree or a graduate degree.15

(See Exhibit 11.1 for a profile of members of the National Academy of Arbitrators [NAA].)

Exhibit 11.1
Profile of Members of the
National Academy of
Arbitration and Arbitration
Data (462 responses from
600 members)

Age (average) 63

Years of arbitration 26

Percent of income earned by arbitration 76

Years as member at NAA 16

Education: Masters 12.6%

Law Degree 61.4%

Doctorate 22.6%

Number of arbitration cases per year 55

Number of cases mediated per year (50.8% mediated no cases) 5

Accepted and completed cases in nonunion employment arbitration 45.9%

SOURCE: Michel Picher, Ronald Seeber, and David B. Lipsky, The Arbitration Profession in Transition (Ithaca, NY: Cornell/PERC
Institute of Conflict Resolution, 2000), pp. 11 28; updated from http://www.fmcs.gov (accessed January 9, 2004).

CHAPTER 11 Labor and Employment Arbitration 543

Arbitrators characteristics can be significant for at least two reasons. First, union and
management officials select an arbitrator who possesses certain characteristics that might,
according to one study, include name recognition, reputation for integrity, and a specific
geographical location. Other studies found that employers tend to prefer arbitrators with
training in economics, whereas union and management officials who have law degrees
prefer arbitrators who also have law degrees.16

Second, there is at least the possibility that certain background characteristics might
influence arbitrators decisions. However, research has not established a strong relation-
ship between arbitrators age, experience, or education and decision outcomes17 (e.g.,
upholding or denying the grievance).

Researchers have sought to identify the basis on which arbitrators make decisions.
Some researchers have claimed influences such as bias, intuition, self-interest, values,
beliefs, and attitudes. Others have identified management rights and efficiency, clear con-
tract language, past practice, fairness, effect on the worker, negotiating history, prior
awards, briefs, testimony, seniority, performance record, prior disciplinary record, and
prior absence history of the grievants. A recent study of 133 arbitrators who read an
abbreviated version of the transcript of the arbitration hearing concluded that arbitrator
biographical characteristics such as age, education, experience, or status as a full-time
arbitrator do not have a significant effect on arbitrators decisions. Instead, arbitrators
engage in a highly structured process of fact-finding where they consider competing
claims by the opposing parties and determine the extent to which they accept the various
assertions made. Arbitrators weigh both the contested and uncontested facts to assess the
relevance of the presented facts to determine the outcome.18

Although grievance arbitration is typically considered an objective proceeding in
which an impartial neutral hears testimony, receives evidence from the employer and
union representatives, and then makes a decision based solely on the facts, questions of
acceptability often intrude on the process. Because arbitrators are selected by the parties,
some believe that the arbitrators decisions are occasionally influenced by their concern
over being selected to arbitrate future cases. If and when one of the parties believes that
the arbitrator is concerned about continued acceptability, that party may select the arbitra-
tor because of the belief that the arbitrator may owe them a favorable decision, thereby
contaminating the process. This concern is the reason that the NAA inserted into the
Code of Professional Responsibility for Arbitrators of Labor Management Disputes the fol-
lowing passage: An arbitrator must be as ready to rule for one party as for the other on
each issue, either in a single case or in a group of cases. Compromise by an arbitrator for
the sake of attempting to achieve personal acceptability is unprofessional. 19

Decision to Arbitrate
If the parties are unable to settle the grievance by the time it reaches the last step in the
grievance procedure, one or both parties must decide whether to appeal to arbitration.
Each party must evaluate the strengths and weaknesses of its own position as well as
the position of the opposite party. The union considers the likelihood of prevailing, the
costs of arbitration, and the effect of a win or loss on the bargaining unit. For instance,
in a discharge case the union will review the documents provided and the probable testi-
mony of witnesses to determine whether the employer would be likely to prove the ele-
ments of just cause. In a theft case, if an employee leaves the shop with a small tool that
she forgot was in her pocket, the employer must prove that the employer knowingly
removed the tool and intended to keep it.

The union bears the burden of establishing the grievant s credibility when she claims
that the removal was an oversight, not a theft. When the union concedes that the

544 PART 3 Administering the Labor Agreement

employer will be able to prove the charge that would justify discharge, the union must
then evaluate whether it can meet its burden of proving other defenses, such as the
employer violated procedural rights (no posted rules), mitigating circumstances (long-
term employee with good work record), or disparate treatment (other employees have
taken tools and not been terminated).

Each side must pick its battles carefully. For example, suppose the union knows that
the employer has several witnesses available who will testify that they saw a short-term
employee drinking on the job, and the employer has terminated every employee who has
been charged with violating the rule banning drinking on the job; the union may decide
not to expend resources taking this case to arbitration. Union leaders feel it would be futile
to persuade an arbitrator to consider mitigating circumstances and disparate treatment.20

The real goal in arbitration is to achieve the result as expeditiously as possible, as
economically as possible and with as little harm to the continuing relationship between
the parties as possible . Unlike many arbitrations (like medical malpractice and dis-
crimination claims by a former employee), in which the parties will never see each
other again, in the collective bargaining context, the parties are partners to a continuing
relationship. Prevailing on the current grievance at the cost of undermining future dealings
between the parties is at best a partial victory. 21

Prehearing Activities
Prior to the arbitration hearing, both parties need to take several steps to prepare for
the hearing. Among these steps are the meeting with witnesses, contacting the opposing
representative, preparation and arrangements of exhibits for evidence and exploring set-
tlement alternatives. (See Labor Relations in Action on page 548.)

On occasion, the parties may decide to write a prehearing brief which highlights the
issues and positions of the parties before the arbitrator arrives at the hearing. The briefs
alert the arbitrator to the matters he or she will face at the hearing. These optional briefs,
although uncommon, vary in length from a one-page letter to an extensively footnoted
document. Most of the time the parties prefer to wait and introduce the subject matter of
the arbitration to the arbitrator in the opening statements at the beginning of the hearing.

The prehearing brief might backfire for the presenting party, which is subject to
challenges on the assumed facts and inconsistencies that may surface in the witnesses
testimonies. On the other hand, prehearing briefs can be viewed as keeping the parties
honest they tend to approach their contentions thoroughly and are forced to adhere
to them during the arbitration proceedings.

Perhaps most arbitrators would agree to the value of prehearing stipulations joint
union management statements as to the issues involved and certain applicable grievance
facts. This saves time in the arbitration hearing, for neither party feels obligated to repeat

what the other has either previously said or agreed to in principle. In addition, through the
process of working together to stipulate the issues and facts, the parties may be able to
resolve the dispute without arbitration. If briefs or stipulations are not agreed to before
the hearing, the parties will have to present their version of the facts at the hearing.

The Arbitration Hearing
Held on a date convenient to the parties and arbitrator, the arbitration hearing typically
varies in length from a few hours to several days, with the typical length being one day.
Union and management officials who were involved in the grievance procedure (e.g., the
international union representative and the labor relations manager) or their attorneys
will likely present their versions of the arbitration case at the hearing. They will present

CHAPTER 11 Labor and Employment Arbitration 545

opening statements, question witnesses, present evidence, and make oral closing argu-
ments or write posthearing briefs.

Variations also occur in the extent to which courtroom procedures and behaviors are
used or required during the hearing. There are two perspectives on the arbitration process:
(1) informal quasi-litigation (legalistic approach) designed to resolve a dispute between
parties and (2) part of the ongoing collective bargaining process designed to facilitate con-
flict resolution (problem-solving approach). Those adopting the legalistic approach argue
that a more formal and orderly proceeding improves the process. Frequently, however,
the advocates view arbitration as an adversarial procedure and adopt tactics to win the
decision without considering that the parties have to live with each other after the decision.
From the second perspective, arbitration is viewed as serving more purposes than simply
resolving disputes. For example, arbitration may be therapeutic, having a cathartic value
by allowing a grievant to openly air a complaint against a management decision. The belief
is that if complaints are left unresolved, these complaints will become more serious and the
employee will become counterproductive. The negotiators of the collective bargaining
agreement are not able to anticipate and address every possible future scenario in the rela-
tionship between the employer and the union. To do so would unnecessarily lengthen the
negotiations and add significantly to the length of the collective bargaining agreement.
Such actions would make the negotiations more complex and even jeopardize the possibil-
ity of reaching an agreement. A comparison of example behaviors of the legalistic vs. the
problem-solving approaches is shown in Exhibit 11.2.

At the typical arbitration hearing, the one of the first order of business is the intro-
duction of joint exhibits. These exhibits usually include a copy of the relevant collective

Exhibit 11.2
Behavioral Examples of
Legalistic versus Problem-
Solving Approaches

Legalistic Approach

Drafting the statement of the issue is in such a way that there is a definite winner
and a definite loser.

Looking for restrictions on the arbitrator s authority to hear issues not expressly
stated in the written grievance.

Insisting on a specific level of proof at the beginning of the hearing (preponderance
of evidence, clear and convincing evidence, or beyond a reasonable doubt).

Harsh and aggressive (eat em alive) cross-examining in an attempt to destroy
witness credibility. Objecting to any form of hearsay evidence.

Noting for the record objections to certain types of evidence when the arbitrator
has allowed the evidence to be introduced.

Acknowledging that the parties have a mutual obligation to bring out all relevant
facts.

Citing custom and/or practice of the parties.
Arguing that the arbitrator should interpret provisions of the collective bargaining

agreement in such a way that it will be reasonable and equitable to both parties.
Stipulating certain facts where the parties have no dispute.
Asking questions that call for a narrative answer; for example, asking the witness

to tell the story about what happened in her own words.
Asking only a few nonthreatening questions on cross-examination.
Exhibiting friendly and dignified behavior toward the opposite party.

SOURCE: Adapted from Richard A. Posthuma and Maris Stella Swift, Legalistic vs. Facilitative Approaches to Arbitration:
Strengths and Weaknesses, Labor Law Journal, 52 (Fall 2001), pp. 181 182.

Problem-Solving Approach

546 PART 3 Administering the Labor Agreement

bargaining agreement, which contains the provision(s) one of the parties (usually the
union) alleges has been violated, a copy of the grievance and the written responses to
the grievance, and any stipulated facts that are not in contention.

Then the arbitrator will ask the parties whether they have agreed to the wording of
the issue to be addressed. If the parties cannot agree on the wording of the issue, they
may request that the arbitrator frame the issue after hearing the evidence presented at
the hearing. The issue is usually written in a one-sentence question to be answered by
the arbitrator s award.22 Consider, for example, a typical discharge case: Did the com-
pany terminate Betty Brooks for just cause? If not, what is the remedy? Also consider a
typical nondiscipline case: Did the company violate the agreement when it failed to pro-
mote Martha Butler, the most senior employee? If so, what is the remedy?

The major part of the hearing is devoted to the presentation of (1) the opening
statements in which each party s spokesperson states what he or she plans to prove
and highlights the major issues and background of the case; (2) examination and
cross-examination of union and management witnesses, (3) introduction of exhibits
to support union and management positions (e.g., pictures of a job site, warning letters,
performance ratings); and (4) oral closing statements by the union and management
representatives, or the parties may agree to file a posthearing brief. In 46 percent of
cases, the parties agree to have a transcript of the hearing so that there is a written
record of it. This written record may be desired for the convenience of the parties, for
use in an appeal, and in the event the grievant has also filed an employment discrimi-
nation charge.

The posthearing brief is a written summation of (1) the facts of the case, (2) the
relevant contract language, (3) the arguments to support a position, (4) counterargu-
ments to the opposing party s position, and (5) the requested decision from the arbitra-
tor. The FMCS reports that in 80 percent of cases, posthearing briefs are filed.23 The use
of an attorney increases the likelihood that posthearing briefs will be filed.24 A written
posthearing brief can be helpful when the arbitration case is very technical or compli-
cated or includes statistical data that are difficult to explain in an oral argument.25 In
many cases, however, a posthearing brief is unnecessary if the parties have prepared
and presented their cases well during the hearing.

One experienced arbitrator estimated that more than 95 percent of posthearing
briefs make no difference in the arbitrator s decision. The results would have been
exactly the same if the parties had relied upon oral summaries at the close of the hear-
ings. Unfortunately, use of briefs in arbitration has increased, and the average time taken
to submit briefs is 40 days. Usually it takes two weeks to prepare a transcript and about
four weeks before the briefs are submitted. An emergency or disruption in schedules can
postpone the brief another few weeks or so. Then when the arbitrator finally sits down to
begin work on the decision, his or her recollection of the hearing may be stale. Reviewing
testimony and evidence about eight weeks after the hearing means the decision will take
more time, which adds to the arbitrator s time. This increase in the arbitrator s cost is
added to the costs of the transcript and the outside counsel s fee for preparing the brief.
Thus, submission of briefs erodes two of the advantages of arbitration over traditional
litigation: speed and economy.26

This summary of arbitration proceedings does not do justice to the considerable
effort and drama involved in preparing and presenting an arbitration case. The Labor
Relations in Action on page 548 suggests better preparation methods for an arbitration
hearing.

Mental effort, verbal skills, and tensions continue to be applied after the hearing
begins. Assume, for example, that you are a labor relations manager charged with

CHAPTER 11 Labor and Employment Arbitration 547

proving an employee deserved discharge for smoking marijuana on company premises.
Consider the following:

How do you prove the employee actually smoked the marijuana when the evidence
was destroyed and it is the employee s word against a supervisor s observations?
Can the supervisor convince the arbitrator that he or she had sufficient training to
recognize the shape and smell of the object in a dimly lit location?
How do you reconcile that an employee appeared to be under the influence of an
illegal substance but then tested negative on a drug screen test?
Should you call the employee s co-workers as witnesses? What happens to their
relationship if the grievant is returned to work?
Will your witnesses testimony be strengthened or broken under cross-examination?
How long can the supervisor remain calm under cross-examination?
What if the arbitrator gives little weight to the circumstantial evidence presented by
the company and a great deal of weight to the grievant s previous long and exem-
plary work record with the company?
Will the union introduce a surprise contention or witness not previously discussed in the
grievance proceedings (e.g., that the grievant s discharge was due to the racial bias of the
supervisor or the result of a long-running dispute between the employee and supervisor)?

Management and union representatives often enter arbitration hearings emotionally
charged and uncertain. Experienced representatives are usually skillful in establishing their
respective positions to the arbitrator s satisfaction and challenging their opponent s case by
exploiting the opponent s weaknesses. The arbitrator must be skillful in keeping the hearing
orderly while at the same time recording all of the testimony and evidence presented.

One arbitrator has noted the following paradox: The union and management offi-
cials own the arbitration hearing, but the arbitrator is the presiding officer of the hearing.
Union and management officials wrote the labor agreement and they hired the arbitra-
tor. Therefore, arbitrators should not act like a judge, be arrogant, or talk too much.

Let the parties do the talking, work out the problems. You will be surprised how many
knotty issues will be resolved during the hearing if you just ask the other side to

LABOR RELATIONS IN ACTION
Improving Preparation for Arbitration Hearings

Telephone the arbitrator upon his or her selection, explore
mutually acceptable dates, and schedule the hearing.

At the outset, inform the arbitrator that a bench
decision is required or a written decision in less than
30 days is required or there is a loser pays provision.

Contact the opposing counsel and attempt to reach
an agreement on the issue to be decided by the arbitra-
tor, stipulation of facts, stipulations on documents, and
exchange of witness lists.

Explore settlements with opposing counsel to
avoid arbitration.

Prepare a detailed, well-organized opening state-
ment. Because the arbitrator arrives at the hearing
knowing nothing or little about the case, simply wrap
your arm around the arbitrator and lead him or her along
the path you want the arbitrator to follow.

Prepare your witnesses. Possible instructions are:
Tell the truth. Just answer the question. If you don t
understand a question, ask for clarification. Don t look
to the advocate for help. Wait until the complete ques-
tion is asked. Try to quote, not paraphrase. Be prepared
for the old chestnut: Have you discussed your testi-
mony with anyone?

Before the hearing, make enough copies of your
exhibits. Number the pages. Staple the pages. Have a
glossary for uncommon words and phrases. Have
enough pens and paper to allow for communication
instead of whispering.

Source: Matthew M. Franckiewicz, How to Win Your Arbitration Case before the
Hearing Even Starts, Labor Law Journal, 60(3) (Fall 2009), pp. 115 120. © CCH
Incorporated, Wolters Kluwer Law & Business. All Rights Reserved. Reprinted with
permission from Labor Law Journal.

548

respond, and then ask the original side to add something, and so on. By the time they
have killed off each other s contrariness, the problem has disappeared.

Do not try to take their procedure away from them. Give it back whenever they
try to abdicate or place the burden of procedure on you. For example, it is an old ploy
for one party or the other to say, Mr. or Ms. Arbitrator, do you want us to put in
some evidence on this subject? This can put you into a trap. If your answer is no,
then it is your fault when they lose the case because you excluded crucial evidence. If
you say yes, then you are implying that the subject is important. Tell them it is up to
them. Remind them that this is an adversary proceeding to elicit information and that
it is their obligation to select whatever information they think is important.27

Comparison of Arbitration and Judicial Proceedings

The arbitration proceedings share some similarities with judicial proceedings, but their
differences are profound. Many arbitration hearings differ from courtroom proceedings
in that testimony of witnesses is not always taken under oath and transcripts of the pro-
ceedings are not always taken. Arbitrators may subpoena witnesses at the request of one
of the parties. This is particularly true if management requests the subpoena to protect
bargaining unit employee witnesses whose testimony is used to support management s
position. This way other employees realize the employee was required to testify because
he or she was under subpoena. If the arbitrator issues a subpoena for witnesses and
documents and it is not complied with, the arbitrator may make an adverse inference.

Both unions and companies have universally agreed that arbitration in the labor
management settings has advantages over litigation. These advantages are highlighted in
Exhibit 11.3. The most significant difference between arbitration and judicial proceedings
is the arbitrator s reliance on common law of the shop principles in the resolution of
disputes. Arbitrators, unlike judges, are selected by the parties to the dispute. Arbitrators

Exhibit 11.3
Advantages of Labor
Arbitration over Litigation

1. The parties themselves can potentially save money and time because there
are fewer legal procedures, less discovery, and fewer appeals. Also, the par-
ties are able to select the arbitrator and set up the hearing instead of waiting
for the court to schedule a hearing. The parties can also require a decision by
the arbitrator in 30 to 60 days.

2. Parties select an arbitrator who has expertise in labor management relations
as opposed to a judge assigned to the case who may or may not have any
experience in labor management relations.

3. Arbitration is a system of self-government in which the parties design the
rules and procedures: how the arbitrator is selected, how many arbitrators,
the authority of the arbitrator, and the like.

4. The parties negotiate and agree to the terms of their collective bargaining
agreement to meet their needs as opposed to a law enacted by a legislative
body to apply to the general population.

5. Labor arbitration is a private process between the union and the company as
opposed to a public tribunal with a public record; the arbitrator s decision may
be published only with the consent of both parties.

SOURCE: Adapted from Frank Elkouri and Edna Elkouri How Arbitration Works (5th ed.), Marlin M. Volz and Edward P. Goggin,
co-editors, (Washington, D.C.: Bureau of National Affairs, 1985), pp. 10 15.

CHAPTER 11 Labor and Employment Arbitration 549

are responsible for interpreting contract provisions that were negotiated and written by
the parties to cover wages, hours, and conditions of employment for an identified group
of employees and to rule on any proven past practice which is observed by the parties
but not written in the parties agreements. Each of the over 150,000 separate labor agree-
ments in the United States is different even though the subjects are similar. Judges, on
the other hand, are not selected by the parties and are responsible for interpreting laws
that were enacted by state and federal legislatures and that cover those individuals iden-
tified in the specific law.

The arbitrator has the responsibility to resolve a dispute in a manner that the parties
can live with. Unlike judicial decisions in lower courts, the arbitrator s decision is usually
final and not subject to further appeals. Consequently, arbitrators must be concerned with
the subsequent effects of their decisions on union management relationships. A judge has
no such allegiance to the particular parties. The major responsibility of a judge is to adhere
to the statute in question, to adhere to established courtroom and legal procedures, and to
comply with precedent which has resulted from previous applicable cases.

The common law of the shop perspective often narrows the scope of arbitral deci-
sion to interpreting the labor agreement language and identifying the intent of the par-
ties and any past practices of the union and management officials at a particular
location. The arbitrator uses these elements to convey to the union and management
participants that their grievance is being resolved in terms of shop floor realities.

The distinction between judicial reasoning and common law of the shop principles
can be shown through the following example. Assume that an employee has been dis-
charged at company A for drinking alcohol on the job. After an arbitral decision uphold-
ing the discharge has been reached, an employee at company B is also discharged for
drinking alcohol on the job. Strict adherence to judicial principles would uphold the sec-
ond employee s discharge for drinking on the job. More specifically, the judicial principle
of stare decisis (letting the decision at company A stand in company B s situation) would
probably disregard the differences in work environments of the two companies.

However, the common law of the shop principles governing arbitration could lead the
arbitrator to render a different decision at company B from that reached at company A.
For example, supervisors at company B may have been condoning this behavior, and
other employees at this company may have been caught drinking on the job without
being discharged for the infraction. Consequently, the arbitrator recognizes the two com-
panies are independent with potentially unique circumstances and therefore they deserve
mutually exclusive decisions.

Evidence in Arbitration vs. in Judicial Proceedings
Although the best evidence is direct evidence, for example, company records identified
by witness and direct testimony by an eye witness, it is also important to note that arbi-
trators are much more liberal than the courts in the types of evidence permitted at the
hearing. For example, lie detector tests (polygraphs) may be allowed by some arbitrators
under certain conditions (having the administrator of the polygraph present for cross-
examination or the opposing party does not object), although their use and weight in
the arbitrator s decision remains controversial.28 Usually arbitrators give this evidence lit-
tle weight unless the obtained information is corroborated by supporting evidence. The
rationale for liberal admission of evidence is that the parties are seeking a solution to
their perceived unique problem. In addition, some arbitrators maintain that arbitration
performs a therapeutic function, that the parties are entitled to air their grievances
regardless of the eventual decision. Arbitrators may allow aggrieved employees to digress
from the pertinent subject or tell it like it is in front of higher level union and

550 PART 3 Administering the Labor Agreement

management officials to serve this function. Also, unlike a member of a jury, an experi-
enced arbitrator does not need the protection of a judge to determine the weight to give
to evidence and witness testimony.

Even though both parties are usually familiar with the evidence that each side plans
to introduce at the arbitration hearing, occasionally new evidence found later or possibly
withheld may be introduced by one or both parties in the arbitration hearing. The arbi-
trator may accept or reject this new evidence, depending on the weight attached to the
following, and sometimes conflicting, considerations: (1) the arbitrator s desire to learn
all of the pertinent facts surrounding the grievance, (2) the need to protect the integrity
of the prearbitral grievance machinery, that is, each side has in possession all the evi-
dence to be presented to the arbitrator, and (3) general concepts of fairness.29 Because
union and management officials are entitled to have all relevant evidence presented at
the hearing, the arbitrator will offer the opposing party additional time to review and
respond to any new evidence or even grant a continuance in the hearing.

Offers of compromise settlements before the hearing are not accepted as evidence by
arbitrators. For example, in a discharge case, management officials with no major weak-
ness in their original position might compromise their third-step discharge decision
before arbitration by offering the grievant reinstatement with no back pay. A union
could try to use this evidence to indicate to the arbitrator that management admitted
wrongdoing by revising its original decision. Since arbitrators maintain that the parties
should make every effort to resolve their disputes internally before going to arbitration,
an offer of settlement between the parties is viewed by the arbitrator as a genuine
attempt to accommodate differences and save costs of going to arbitration, not an admis-
sion of guilt. Therefore, offers of settlements are not admissible as evidence.

Hearsay (secondhand) testimony might be accepted by arbitrators.30 For example,
Joe S. was told by Mary B. that she saw Jim M. stealing hammers and nails from the
company supply room. Hearsay evidence is typically given little or no weight unless it
is corroborated by other credible testimony. But it may be accepted for what it s
worth. Business records are usually accepted as an exception to the hearsay rule. Since
doctors are difficult to have as witnesses due to their busy schedules, documented medi-
cal records are also an exception to the hearsay rule.

Arbitrators vary in the weight they give to medical evidence. When a doctor testifies
and is subject to cross-examination, greater weight generally given to the doctor who tes-
tifies than to one who only provides records. Often doctors offer conflicting testimony.
Consider, for example, an employee s doctor testifies that the employee s previous back
injury does not disqualify her from her present job. Management then uses the employ-
ee s own doctor to counter the testimony. Now, the arbitrator has to decide which doc-
tor s testimony is most convincing. Exhibit 11.4 provides the results of two studies of

Exhibit 11.4
Survey of Arbitrators
Consideration of
Medical Opinions

1975 Study 1987 Study

1. Use specialist over nonspecialist NA 77 (26%)

2. Use report that indicates most intensive
examination

90 (51%) 133 (45%)

3. Use report that indicates most intimate
knowledge of work performed

34 (19%) 79 (27%)

SOURCE: Daniel F. Jennings and A. Dale Allen, Jr., Arbitration and Medical Evidence: A Longitudinal Analysis, Labor Law
Journal (June 1994), p. 352. Reprinted by permission of Daniel F. Jennings.

CHAPTER 11 Labor and Employment Arbitration 551

arbitrators use of medical evidence. Arbitrators are now more likely to rely on specia-
lists opinions, give greater weight to the most recent medical analysis and place greater
value on an analysis from the doctor who has knowledge of the specific job.

Arbitration in the Railway and Airline Industries
Unlike other industries in which grievance arbitration stems from the collective bargain-
ing agreement, the foundation for grievance arbitration in the railway and airline indus-
tries is the Railway Labor Act. Disputes between parties in the railway industry over the
interpretation and application of an existing collective bargaining agreement are referred
to as minor disputes. Disputes between parties over the negotiation of the collective bar-
gaining agreement are referred to as major disputes. Minor disputes may not be the basis
for a work stoppage (strike).

Since 1934, the National Railroad Adjustment Board, which is made up of four divi-
sions, handles grievances from the specific railroad crafts. Each division is composed of
an equal number of management and union representatives. In the event of a deadlock,
these representatives are empowered to appoint a neutral referee who will be compen-
sated by the National Mediation Board (NMB) from government funds. The arbitration
hearing is not a de novo (from the beginning); rather it is appellant in nature. The record
is confined to arguments and evidence presented during the grievance process.

Since 1966, other arbitration boards have been authorized. Special Boards of Adjust-
ment and Public Law Boards are composed of representatives of carriers and unions.
Also, tripartite boards with neutrals are selected by the parties or appointed from the
National Mediation Board. These hearings are also appellant only, and the neutrals are
paid by the NMB from government funds.

In the airline industry, the parties have used System Boards of Adjustment. These
boards include representatives of airlines and unions with a neutral arbitrator who is
selected and paid by the parties. Hearings are de novo (complete hearings) in nature
before the System Board, with the neutral arbitrator presiding.31

The Arbitrator s Decision

After the arbitration hearing the arbitrator will render a decision (usually within 30 to 60
days). Arbitrators approach writing a labor arbitration decision in different ways. One is
the classic approach which includes the following:

1. Names of union and management representatives involved in the case, along with
others who gave testimony (e.g., employees or expert witnesses) on a title page

2. Background of the case
3. A statement of the issue(s) and a statement of the facts surrounding the grievance
4. Pertinent provisions of the labor agreement
5. A summary of the union and management positions
6. An analysis of the evidence and arguments in relation to the contract language
7. The arbitrator s decision (grievance upheld, grievance denied, or a decision between

union and management positions) and reasons for the decision

Another common approach is a narrative story-telling approach wherein the arbi-
trator follows the sequence of events and explains what happened in the story and
what should have happened (the arbitrator s decision). As one labor arbitrator said,

Words are readily available to convey simple ideas. But transforming more complex
ideas into persuasive written text is quite another level of achievement. This requires

552 PART 3 Administering the Labor Agreement

the arbitrator to use the exact words in a precise order thus creating a unique
expression, one that is inapplicable to any other situation, and exemplifies the wonder
and diversity of the English language.32

Few prospective guidelines govern the form and content of the arbitrator s decision.
However, the arbitrator should demonstrate through the decision a thorough under-
standing of all the facts and contentions raised in the arbitration hearing. Although arbi-
trators should address each argument and the evidence presented by both parties, some
arbitrators address their decisions to the losing party because the winners do not have to
be convinced they are right.

The necessity of the arbitrator s analysis has been the subject of considerable contro-
versy. While a few union and management officials may look only at the arbitrator s final
decision to see who won or lost, most read the decision to obtain principles and
guidelines for future actions and to assess the arbitrator s interpretative abilities.

The arbitrator s decision should explain to the parties how the grievance was
resolved and why. Ideally, an analysis convinces the losing party that its arguments
were heard, that the system used to decide the case is a fair one, and that the result
makes sense. 33 An arbitrator s decision should explain the relative weight given to the
parties evidence and contentions and should indicate in clear language the benefits to
which the parties are entitled and the obligations that are imposed on them. Thus, the
arbitrator s decision should educate the parties (including other union and management
officials, who often select an arbitrator after researching his or her published decisions)
within the context of the common law of the shop and established arbitration principles.

In some cases, the arbitrator s analysis is even more important than the decision. Con-
sider, for example, that the union grieves management s overtime assignment of work nor-
mally performed in Job Classification A, a senior machinist on Saturday, to an employee in
Job Classification C, a machinist apprentice. The union seeks a remedy of eight hours at
overtime rate of pay for the appropriate employee in Job Classification A, the senior
machinist, on the basis that the company s violation of the contract had deprived a Job
Classification A employee, the senior machinist, of this overtime opportunity. However,
the arbitrator denies the grievance and stresses the following in his decision: The various
job classifications are for pay purposes only and overtime provisions do not restrict man-
agement s prerogative to assign work across different job classifications. This statement
significantly harms the union in related matters, particularly if the language was not
expressly stated in the labor agreement. Now the union will have a difficult time in griev-
ing other overtime assignments, even though the previously mentioned decision pertained
to one specific situation. In the next negotiations, most likely, the union will attempt to
change the contract language on overtime assignment.

In other situations, the arbitrator s gratuitous advice in the decision may harm one
or both of the parties. There is often a thin line between advising management and
union practitioners on more effective and humane ways to run the operation. Thus, the
arbitrator should focus on the contract language, the evidence, and the arguments of the
parties. In a nutshell, the arbitrator should do no harm.

Decision-Making Guidelines Used by Arbitrators
The arbitration decision is a deliberative process that requires on average about 2.4 days
of the arbitrator s time to study the evidence and prepare a written decision.34 The arbi-
trator s decision is particularly important to the parties because nearly all labor arbitra-
tion decisions issued in the private sector are final and binding. In fact, less than
1 percent of arbitration decisions are appealed to the courts. Of those decisions that are

CHAPTER 11 Labor and Employment Arbitration 553

appealed, less than one-third are overturned by the courts. Thus, it appears that the
lower courts are complying with the U.S. Supreme Court s directive that the lower courts
should refrain from reviewing the merits of arbitrators rulings and should overturn an
arbitrator s decision only when the arbitrator s decision is not based on the essence of
the collective bargaining agreement.35

Although arbitrators do not follow precise or identical methods in making decisions,
one study indicated that individual arbitrators have been consistent in the importance
they assign to various decision-making criteria over the years.36 The following generally
accepted guidelines have been developed and serve as focal points, subject to interpreta-
tion, consideration, and application by arbitrators in resolving grievances.

Burden of Proof, Witness Credibility, and Cross-Examination
When the union files a grievance claiming that management violated the spirit or letter
of the labor agreement, the union is the charging party and has the burden of proof to
convince the arbitrator that management did not comply with the agreement. A major
exception occurs in employee discipline and discharge cases, in which management is
the charging party and has the burden of proof in establishing that its actions were cor-
rect. The discharged employee is presumed to be innocent until the company proves the
employee is guilty of a rule violation.

The burden of proof is typically approached through evidence (discussed earlier in
this chapter) and testimony from credible witnesses. Witness credibility is often assessed
through rather subjective behaviors, such as talking softly or hesitantly, looking down-
ward, or giving long, evasive answers to questions. Witnesses are also subjected to
cross-examination by the opposite party, which attempts to establish that the witness
was not credible due to inconsistency in testimony, lack of familiarity with the facts, bias,
or having some other self-serving motive behind his or her testimony. A cross-examiner
must avoid a major potential problem: namely, reinforcing the witness s testimony. This
avoidance is easier said than done, as evidenced in Exhibit 11.5, which illustrates incorrect
cross-examination after two direct questions.

As noted earlier, participants general characteristics (e.g., age and gender of the
grievant or arbitrator) do not have a strong correlation with an arbitrator s decision.
Arbitrators are, however, influenced by witnesses credibility, which includes perceived
mental attitudes of the grievance participants. A rambling, disjointed presentation by a
witness or a union or management representative, or a grievant who comes across as
insolent or sneaky, will likely receive a strong, negative arbitral evaluation that might
not be offset by other decision-making criteria.37

Clear and Unambiguous Language
One of the fundamental rules contract interpretation as used in labor arbitration is that
when the contract language is clear and unambiguous, the arbitrator must apply the lan-
guage as it is written. The problem with this rule is that if the parties have appealed to arbi-
tration, one or both do not believe the contract language is clear and unambiguous. As
demonstrated in the Labor Relations in Action on page 556 feature that discusses payment
for jury duty leave, the negotiators of the collective bargaining agreement did not anticipate
the specific dispute that arose, or they would have addressed the issue at the bargaining
table. There is always great potential for differences in contract interpretation, and there
are several reasons for each party to take the position that the contract language is ambigu-
ous. One reason is that the parties may allow less than explicit language to be included in
the collective bargaining agreement when they are close to reaching a final agreement and
are working under pressure of a deadline. The negotiators may agree to ambiguous contract

554 PART 3 Administering the Labor Agreement

language because that is the only language on which they can agree, they want to save the
rest of the agreement, and they don t want to have a strike or lockout over an issue that
may not be significant. A second reason may occur during negotiations when the negotia-
tors choose ambiguous language to memorialize their understanding. Each employer and
each union negotiator independently knows what he or she has agreed to, but he or she
did not express his or her understanding in clear and concise contract language. A third
reason is that the negotiators may have carried on complex negotiations over a long period
of time, perhaps several weeks, and simply forgot about inconsistencies in different provi-
sions of the agreement, which may address the same issue.38

Adherence to common law of the shop principles stresses that the major function of
the arbitrator is the interpretation of the labor agreement s provisions. Indeed, many
arbitrators adhere at least in part to the parole evidence rule, which in its classic form
holds that evidence, oral or otherwise, should not be admitted for the purpose of chang-
ing or contradicting written language contained in the labor agreement. Consider, for
example, the following labor agreement provision: Notice of a promotional opening
shall be posted for five working days. Even though five working days is clearer than
five days, a dispute could arise if the contract specified working days and the Satur-

day in question was a regularly unscheduled day on which certain employees were called
in for emergency overtime. One of the parties might successfully argue before the arbi-
trator that the term working day is clear and applies to days on which work is performed
and that this precludes any evidence that Saturday was unscheduled and never

Exhibit 11.5
Transcript from an Arbitration
Hearing Reflecting Poor
Cross-Examination

(Direct questions of employee witness by a union spokesperson)

Q: How did your supervisor sexually harass you?
A: He mooned me.
Q: Describe the circumstances to the arbitrator.
A: I was working overtime and as far as I knew we were the only ones left in the

laundry. As I was counting the inventory, the door to a broom closet opened,
and there was this man s bare butt sticking out at me with his pants down
around his ankles.

(Subsequent cross-examination of employee witness by a management
spokesperson)

Q: Was the area near the broom closet well lighted? A: No, it was rather dim.
Q: Was the broom closet well lit?
A: No, the light in the closet wasn t even lit.
Q: Was there a mirror that you could clearly see the face of the man?
A: No, I never saw his face when it happened. He stepped back into the closet, and
I went and punched out right away.
Q: (Triumphantly) How then can you be sure that the bare fanny belonged to your

supervisor?
A: Because of the tattoo.
Q: I ve come this far so I might as well ask: what is the significance of the tattoo?
A: Well he was always bragging to us women about his tattoo, describing it and

offering to show it to us. Of course, none of us ever took him up on it but there
it was just as he had pictured it. (Whereupon the grievant proceeded to
describe in some detail the tattoo that had been so prominently displayed.)

SOURCE: John J. Flagler, A Few Modest Proposals for Improving Conduct of the Hearing, in Arbitration 1990: New Perspectives on Old
Issues, Proceedings of the Forty-third Annual Meeting, National Academy of Arbitrators, Gladys W. Gruenberg (ed.) (Washington, D.C.:
Bureau of National Affairs, Inc., 1991), p. 55.

CHAPTER 11 Labor and Employment Arbitration 555

contemplated as a working day. Rationale for this rule is that the parties have spent
many hours in negotiating standardized employment conditions; thus, disregarding
negotiated terms would damage stable labor management relationships and communi-
cate to the parties that there is little or no point in reducing contract terms to writing.

A problem remains when the labor agreement language is ambiguous because it nor-
mally cannot prescribe all essential rules or guidelines for day-to-day administration of
labor relations. Also, many labor agreement terms, such as reasonable, make every effort,
minor repairs, and maintain the work environment as safely as possible, might have
resolved negotiation impasses but still pose interpretive problems in contract administra-
tion and arbitration.

Some contract provisions that appear clear on the surface can cause differences of
opinion among union and management officials as well as arbitrators. Consider the fol-
lowing three examples and related questions39:

Example 1: The company will provide required safety clothing. Does the company
have to pay for safety clothing or merely make it available for employees to purchase?
Example 2: An employee must work the scheduled day before and after the holiday to
receive holiday pay. What happens when the employee works three hours the day
before the holiday, goes home because of sickness, and works the full eight hours the
day after the holiday?

Example 3: Management will distribute overtime as equally as possible. Does a
supervisor making overtime request calls to employees homes stop making such calls
until contact is made with an employee whose telephone is busy or goes unanswered?
Has the company met its obligation if the supervisor calls, leaves a message on the senior
employee s answering machine, and then offers overtime to the next senior employee?

Arbitrators prefer to approach the ambiguity problem initially in terms of the com-
plete labor agreement and to construe ambiguous language or provisions of the labor

LABOR RELATIONS IN ACTION
Example of Contract Language Ambiguity

Contract Language: Any employee who is required to
serve on jury duty who is unavoidably detained from his/
her assigned shift shall be paid for the shift in question.

Facts: Employer operates 24 hours, 7 days a week.
Employee is a 3rd shift operator who works from

10:30 P.M. to 6:30 A.M.
Employee is required to report for jury duty on

Tuesday at 9:00 A.M.
Employee reports at the required time and serves

jury duty until 5:00 P.M.
Employee did not report for Monday evening shift

prior to jury duty and did not report to work for the Tues-
day evening shift.

Company does not pay the employee for either shift;
the employee files a grievance seeking pay for both shifts.

Arguments:
The company argued that the employee could have

served jury duty and still worked both shifts. As an alter-
native, employee could have missed one shift of work

and been paid for this one shift. The employer argues
that unavoidably detained from the employee s
assigned shift requires the employee to work the
shift prior to jury service and the shift after jury service
unless the jury service conflicts with the latter shift. The
employer contends that unavoidably detained means
something not in the employee s control. Therefore,

when the employee was released from jury duty in time
to travel to work, the employee had no option except to
return to work. If the employee did not work, the
employee does not get paid.

The union argued that the company s position is
neither reasonable nor practical. The union claimed
that when the negotiators of the collective bargaining
agreement used the word detained, they meant that
an employee cannot cover both the assigned shifts
and jury duty in a single day.

Source: Adapted from John B. LaRocco, Ambiguities in Labor Contracts: Where Do
They Come From? Dispute Resolution Journal, 59(1) (February April 2004), pp. 38 41.

556

agreement so as to be compatible with the language in other provisions of the agreement.
Thus, the contract should be viewed as a whole, not in isolated parts, and any interpre-
tation that would nullify another provision of the contract should be avoided. When
ambiguity remains, the arbitrator must seek guidance from sources outside the language
in the labor agreement.

Intent of the Parties
Another useful guideline, the intent of the parties, refers to what union and manage-
ment officials had in mind when they (1) negotiated the labor agreement or (2)
engaged in an action that resulted in a particular grievance. Intent of the parties may
be proven by transcripts or notes taken at the negotiations table. Intent may be dem-
onstrated by one of the parties that brings in written proposals submitted with expla-
nations at the negotiations. For example, a demonstration with a calendar on how
overtime will be equalized over a monthly schedule may prove convincing to an arbi-
trator. Intent is entirely subjective; however, arbitrators consider observable behavioral
manifestations of the intent to determine what a reasonable person would conclude
from that behavior. For example, consider the previously cited holiday pay situation.
To demonstrate that it intended for holiday pay to be given only to those individuals
who worked a full eight hours the day before and the day after the holiday, manage-
ment might supply the arbitrator with notes on various proposals and counterpropo-
sals made during labor agreement negotiations to prove what they intended the
contract language to mean. Arbitrators are strongly influenced by this evidence of
intent because they are reluctant to award a benefit that could not be obtained at the
bargaining table.

An example of an action s intent considered in a grievance might occur when an
employee is caught in the act of preparing to take tools from company property. The
supervisor approaches the employee, stating the following:

You and I both know you were caught in the act of stealing. You have two options.
You can file a grievance which will be denied in arbitration and the discharge on your
record will make it difficult for you to find a job elsewhere. Or you can sign this res-
ignation slip, quit, and we won t tell any other companies about the stealing incident.

The employee hastily signs the slip and leaves the company premises. However, the
next day the employee returns and informs management that she wants to work because
she never really quit. If the company refuses the employee s request and a grievance is
filed, the arbitrator would have to determine the grievant s and management s intent.
Observable behaviors of an employee s intent to quit are cleaning out the locker, saying
good-bye to colleagues, and asking management for the wages earned for that week. An
employee usually resigns only after giving the decision careful thought and consideration.
Because none of these behaviors were operative in this case, the arbitrator will have to
assess management s intent in this action. Possibly, the supervisor was simply trying to
do the employee a favor by letting her off the hook. However, management may have
given the employee the alternative of quitting to avoid subsequent arbitration of the dis-
charge and the risk of the discharge decision being overturned. The latter intent is
viewed by arbitrators as being a constructive discharge.

Under this principle, the arbitrator would view the termination of employment as
being subject to the employee discipline provisions of the labor agreement. These provi-
sions usually call for union representation and a written notice of the reasons for the
termination at the time of the employee s discharge. Because these procedures were not
followed, many arbitrators would reinstate the grievant with full back pay. On the other

CHAPTER 11 Labor and Employment Arbitration 557

hand, the company may decide to terminate the employee for stealing or wait to see
whether the employee files a grievance over the question of her resignation.

Past Practice
When the contract language is not clear or there is an absence of contract language, the
parties attempt to prove an identifiable past practice. The principle of past practice refers
to a specific and identical action that has been frequently employed over a number of years
to the recognition and acceptance of both parties.40 This decision-making criterion demon-
strates to the arbitrator how the parties have actually applied the labor agreement.

Because established contractual provisions place restrictions on managerial discretion,
management attempts to avoid further reductions on supervisory decision making by press-
ing for a zipper clause to be included in the labor agreement, similar to the following:

This zipper clause does not guarantee that management will not add to its contrac-
tual restrictions by repeatedly handling a situation in a similar manner. For example,
after many years of management s practice of unilaterally giving employees a Thanksgiv-
ing turkey, such a gift might become a binding, implied term of the labor agreement.
Furthermore, management will likely have to negotiate a labor agreement provision to
the contrary (even if the current labor agreement is silent on the subject) if it wishes to
discontinue the gift in subsequent years.

In addition to interpreting ambiguous language or resolving problems not covered
in the agreement, on rare occasions, past practices may even alter clear and convincing
contractual provisions. At one company, it had been a practice for many years to require
clerks to perform cleanup operations at the end of their workday and to pay them no
extra money for up to 10 minutes work, 15 minutes straight time for 11 to 15 minutes
work, and time and one-half for work of more than 15 minutes in duration. There was
clear contractual language specifying that work in excess of eight hours per day would be
computed at time and one-half overtime premium. The union eventually filed a griev-
ance stating that clear contractual language compelled overtime payment for any amount
of daily work exceeding eight hours. However, the arbitrator maintained that past prac-
tice was more significant than the express terms of the labor agreement in this case.

The written contract is, of course, the strongest kind of evidence of what the parties
willed, intended, or agreed upon. An arbitrator will not ordinarily look beyond its
unambiguous language. Where, however, as here, the parties have unmistakably dem-
onstrated how they themselves have read and regarded the meaning and force of the
language, and where the meaning varies from its normal intendment, the arbitrator
should not, indeed, cannot close his eyes to this demonstration.41

Article XXVIII: Other Agreements

Section 2. The parties do hereby terminate all prior agreements heretofore
entered into between representatives of the company and the
unions (including all past understandings, practices, and arbitration
rulings) pertaining to rates of pay, hours of work, and conditions of
employment other than those stipulated in this agreement
between the parties.*

*This provision on past practice was taken from Walter E. Baer, Practice and Precedent in Labor Relations (Lexington, MA:
Lexington Books, 1972), p. 8.

558 PART 3 Administering the Labor Agreement

Past practice, although influential, is not interpreted the same by all arbitrators. For
example, it is difficult to determine in a consistent fashion how long or how frequently
an action must be continued before it becomes a binding past practice. Sometimes the
nature of the issue further complicates the past practice criterion. Consider a situation in
which management wants to unilaterally change a clear past practice of employee smok-
ing at work. Some arbitrators have indicated that management could not unilaterally
change this past practice, particularly if no specific evidence was presented to show that
smoking adversely affected efficiency or productivity. However, some arbitrators have
ruled that management may establish a no-smoking rule, thereby disregarding past prac-
tice because recent research has proven that smoking is detrimental to employees health.42

Previous Labor Arbitration Decisions
Also used as guidelines are previous arbitration decisions when they could bolster either
party s position in the arbitration case. Similarly, the arbitrator may cite previous deci-
sions to refute the parties contentions or to support the arbitral opinion. Arbitrators
accord greater weight to prior arbitration decisions if the issue is the same and particu-
larly, if the facts and contractual language are the same under the same labor agreement.
Of course, few prior arbitration decisions meet these requirements because the parties
would be extremely reluctant to arbitrate the same issue a second time, given the first
arbitrator s decision. However, previous arbitrator decisions may be useful for providing
principles that may be used to bolster one party s position.

Arbitrators are far less likely to be influenced by decisions concerning different labor agree-
ments by different parties at other facilities because, as arbitrators, they recognize the common
law uniqueness and autonomy of a particular operation. In fact, arbitrators may give little weight
to the admission of prior arbitration decisions into a current arbitration hearing.

Unwillingness to present a case solely on its own merits may come to be interpreted as
a sign of weakness. Also it may be considered that citation of prior arbitration awards
indicates either a lack of confidence in the judgment of an arbitrator or a belief that
he may be swayed by irrelevant considerations. An attempt to induce an arbitrator to
follow some alleged precedent may come to be recognized as at least bad etiquette.43

Numerous factors influence the success of the parties in arbitration cases, including
the burden of proof, the types of issues, and legal representation. The evidence suggests
that management prevails more often in contract interpretation cases, and unions prevail
more often in disciplinary cases. Because the employer has the burden of proof in disci-
plinary and discharge cases and the union has the burden of proof in contract interpre-
tation and application cases, apparently the party having the burden of proof does not
prevail in most arbitration decisions. Evidence also indicates that legal representation
has a positive influence on the outcome of the arbitrator s decision. Furthermore,
research has discovered that certain unions prevail more often than other unions. These
unions include the Ladies Garment Workers; the Retail and Wholesale Clerks; the
American Federation of State, County, and Municipal Employees; and the Operating
Engineers. Possible explanations include that the union s duty to fairly represent all bar-
gaining unit employees and the democratic nature of unions in determining which cases
to take to arbitration may cause some unions to take some grievances to arbitration
when they have little chance of prevailing in the decision.44

Arbitrators are likely to consider factors in combination rather than in isolation
from one another. For example, arbitrators follow a combination of certain principles,
such as efficiency, economy, and good faith, in interpreting contract language concerning
employer s decision to move bargaining work to other employees within a plant. In

CHAPTER 11 Labor and Employment Arbitration 559

discipline cases, arbitrator rulings against management repeatedly mention the employ-
ee s work history factors together with procedural irregularities. Even in workplace vio-
lence cases, arbitrators will look beyond the presence of violence itself and consider other
factors, such as an unblemished disciplinary record, the grievant s length of service, prov-
ocation, and so on.45

As a guide to the arbitration process and decisions, the Labor Relations in Action on
page 561 presents several tenets of labor arbitration.

Current Issues Affecting Arbitration

There are several legal and procedural issues affecting labor/employment arbitration today.

Legal Jurisdiction
As previously noted, the Steelworkers Trilogy and other judicial decisions clarified and
enhanced arbitrators roles in resolving employee grievances. Yet arbitration decisions can
sometimes involve various government agencies and the courts, which might be concerned
with specific aspects of a grievance. Consider, for example, a case in which a 55-year-old Afri-
can American union steward is discharged for insubordination. A grievance is filed and pro-
ceeds to arbitration under the terms of the labor agreement. However, the employee claims
that the discharge was prompted by racial and/or age discrimination or discrimination against
a union steward. Conceivably, the discharge grievance could claim the attention of a number
of persons an arbitrator and officials from the Equal Employment Opportunity Commission
(EEOC) and the National Labor Relations Board (NLRB). The problem involves untangling
the various jurisdictional squabbles that could arise over this one grievance.

Labor Arbitration and the Equal Employment Opportunity
Commission
The passage of the 1964 Civil Rights Act (amended by the Equal Employment Opportunity
Act of 1972), subsequent judicial decisions, and the passage of the 1991 Civil Rights Act
have emphasized that management s well-meant intentions are not sufficient to preclude a
charge of racial discrimination. Indeed, in administering this aspect of public law, the EEOC
holds that employers must actively devise and implement employment procedures that
remove present and possible residual effects of past discrimination. Hiring, promotion,
and discipline procedures may be carefully scrutinized by the EEOC to protect employees
from discriminatory practices when and if a charge of employment discrimination is filed.
In a unionized facility, arbitrators also often assume a related decision-making role, particu-
larly in grievances protesting discipline of an employee and other employment matters,
such as promotions, transfers, pay, and so on. This situation poses at least two questions:

1. Should management, the union, and the employee turn to the arbitrator, the EEOC,
or both in resolving a minority employee s grievance?

2. How do the courts and the EEOC view the arbitrator s decision in terms of Title VII
of the 1964 Civil Rights Act?

The first question was answered by the Supreme Court in its 1974 Alexander v. Gardner-
Denver Company decision. The Court contended that the arbitrator s expertise pertains to
labor agreement interpretation and not to resolving federal civil rights laws. Moreover,

The fact-finding process in arbitration usually is not equivalent to judicial fact-
finding. The record of the arbitration proceedings is not as complete; the usual rules

560 PART 3 Administering the Labor Agreement

of evidence do not apply; and rights and procedures common to civil trials, such as
discovery, compulsory process, cross-examination, and testimony under oath, are
often severely limited or unavailable.46

Consequently, a minority employee is almost encouraged to pursue both the arbitration
process and appropriate judicial procedures.

LABOR RELATIONS IN ACTION
Tenets of Labor Arbitration

1. Arbitrators don t know as much as the parties think
we do. The advocates may use terms such as LSM
machine, Form 19, LWOP, and so on, daily. Arbitra-
tors must ask about terms the parties may use on a
daily basis. When arbitrators get back to their office,
they can t ask questions.

2. Arbitrators should not pursue new subjects. If the
parties don t want to introduce certain evidence,
there is a reason. Arbitrators should not initiate
new arguments or pry into new evidence.

3. With the use of the striking method of selecting
arbitrators, the selected arbitrator is usually not
the first choice of either party. However, the
selected arbitrator is acceptable to both parties.

4. After the decision, only half of the parties (the win-
ning side) will believe the arbitrator was competent;
the other half will wonder how in the world the arbi-
trator ever qualified to be listed on the roster of
AAA, FMCS, or NMB.

5. When in doubt about disclosure, the arbitrator must
disclose connections with one or more of the par-
ties involved which would affect his objectivity or
give the appearance of affecting his objectivity.

6. Making credibility determinations is always the
hardest part of an arbitrator s job. All arbitrators
know the rules for credibility determinations, but
making credibility determinations is still the hardest
part of an arbitrator s job.

7. Arbitrators should always be careful about what
they write in their decisions. Negative comments
about supervisors may affect relationships with
employees. Negative comments about employees
may affect their future on the present job or the
possibility of future employment. They should not
demean or ridicule the grievant and other wit-
nesses. Other company officials and union mem-
bers have access to the written decision.
Arbitrators should not write that a witness is inar-
ticulate or he is a bald-face liar. Arbitrators
should focus on which witness had greater credibil-
ity and reasons why.

8. Arbitrators should respect the grievant and the pro-
cess. Advocates may have been in arbitration

hundreds, maybe thousands of times. It may be the
grievant s first time at an arbitration hearing and it may
be his last. If it is a discharge hearing, it is one of the
most important days in the grievant s life.

9. Arbitrators should do no harm. Arbitrators are the
invited guests they are the presiding officer of
the arbitration hearing. Collective bargaining is the
parties process. Arbitration is part of the continuing
process of collective bargaining. The parties still
have to live with each other after the arbitrator ren-
ders the decision.

10. Arbitrators should not forget the therapeutic value
of arbitration. It is the grievant s day in court. Some-
times the grievant may simply want to get some-
thing off his or her chest. The grievant should be
allowed a little leeway.

11. Arbitrators are not consultants. Don t say: The par-
ties are advised to . Arbitrators are employed to
make decisions. Arbitrators must rule within the
essence of the contract language.

12. Arbitrators should treat every decision as it is his or
her first and last : first, because the arbitrator will
work hard to make sure the decision is correct; and
last, because the arbitrator will be independent
because the arbitrator will not worry about being
selected again.

13. Arbitration is much more complicated than it was 35
years ago. Now arbitrators may need to ask the par-
ties about the procedures before the hearing: (1)
loser pays, (2) grievant without union representation,
(3) grievant with his own attorney, and so on. There
are also new technologies on the job and off the job:
e-mail, Facebook, twitter, texted messages, and so
on. There are more two- and three-day hearings,
more transcripts and briefs, and longer detailed con-
tracts (some parties even have interpretative man-
uals for the contract language and then disagree on
the meaning of their interpretations). There are more
hearings about use of illegal drugs and various forms
of drug tests.

Source: Based on a presentation by William H. Holley, Jr. at the FMCS Mid-West
Symposium in Chicago, November 19, 2010.

561

Some predicted that the Gardner-Denver decision would create havoc as every discrimi-
nation grievance lost in arbitration would be overturned by the appropriate government
agency or the courts. Yet research does not support this prediction. One study found that a
grievance reviewed by the EEOC or related agencies only stood a one in six chance of being
reversed. Also, the chances of a trial court overturning a discrimination grievance heard by
an arbitrator are slim, 6.8 percent according to one study and 10 percent according to
another.47 Apparently the courts believe that arbitrators are adequately covering the legal
considerations of discrimination in their decisions.

In the Wright decision in 1998, Ceasar Wright injured his right heel and back, sought
permanent disability, and ultimately settled for $250,000. Three years later he asked to be
returned to work through the union hiring hall, and he presented his doctor s approval.
Wright worked for nine days for four different companies, and none complained about his
performance. However, when the employers realized that Wright had already settled a claim
for permanent disability, they informed the union that they would no longer accept Wright
for employment because a person certified as permanently disabled was not qualified to
perform longshore work under the collective bargaining agreement. The union asserted
that the employers had misapplied the collective bargaining agreement and suggested that
the American with Disabilities Act (ADA) entitled Wright to return to work if he could per-
form the duties of the job. The union contended that refusal of employment to Wright by
the companies violated the collective bargaining agreement. When Wright contacted the
union, the union advised him to file a civil suit under ADA, and Wright did so.

As their defense, the companies asserted that Wright had not exhausted his reme-
dies under the collective bargaining agreement. The Fourth Circuit Court of Appeals
concluded that the language of the general arbitration clause in the collective bargaining
agreement was sufficiently broad to encompass a statutory claim arising under ADA.48

However, the U.S. Supreme Court disagreed and decided that the contract language did
not contain a clear and unmistakable waiver of the covered employees rights to a judi-
cial forum for federal claims of employment discrimination. 49 Therefore, Wright was
allowed to proceed with his civil suit under ADA.

The Supreme Court s Gilmer decision, discussed later in this chapter, might enable arbi-
trators, instead of the EEOC and the courts, to resolve a discrimination grievance filed under
the terms of a collective bargaining agreement. Thus far this has not happened. The EEOC,
while encouraging use of alternative dispute-resolution techniques, including arbitration, to
resolve discrimination claims, has not yet waived its involvement in the issue. Moreover,
Congress, in the passage of the 1991 Civil Rights Act, reinforced Gardner-Denver s rationale
for judicial oversight in unionized settings.50

Then in 2009 the Supreme Court in a 5 4 decision (14 Penn Plaza LLC v. Pyett)
provided a positive analysis of current day labor and employment arbitration and ruled
that a provision in the collective bargaining agreement which clearly and unmistakably
requires union members to arbitrate claims arising under a federal anti-discrimination
statute is enforceable and represents a waiver of union members rights to pursue statu-
tory claims in federal courts. Since the Alexander v. Gardner-Denver Co. decision had
been the prevailing doctrine for 35 years, the Supreme Court essentially reversed this
35-year-old doctrine if the clause in the collective bargaining agreement specifically iden-
tifies the equal employment laws which the arbitrator is to consider.51

Now unions, companies, and labor arbitrators may find themselves involved in arbitrat-
ing statutory rights of employees. (See Exhibit 11.6 for excerpts of the Supreme Court s deci-
sion favoring arbitration of statutory rights.) Note that arbitration of equal employment
opportunity issues is not mandated for all workplaces: It becomes mandatory only if both
the union and management agree to make it mandatory and expressly state this in the

562 PART 3 Administering the Labor Agreement

collective bargaining agreement. Further, if workers are unhappy with such a clause, they can
vote to refuse to rafity the contract, or subsequently, elect different union leaders who will
seek to remove the clause in future contract negotiations.

Arbitration between unions and management has long been recognized as an effec-
tive means to enforce contractual rights that are created by the collective bargaining
agreement. Although collective bargaining agreements frequently include a general non-
discrimination clause such as The employer may not discriminate against an employee
or group of employees, labor arbitrators have shied away from addressing statutory
issues and have limited themselves to enforcing only the language in the collective
bargaining agreement. On the other hand, if the parties agree to specifically ask the arbi-
trator to address statutory issues, the arbitrator will do so.

Unions, employers and bargaining unit employees may prefer to take advantage of
arbitration s informal, quick, and expert solution to their dispute. There are several advan-
tages to employees. First, the union would provide an advocate to the employee at no addi-
tional costs (this advantage is available through the payment of dues from members).
Thus, lower wage employees with claims involving a small sum of money will have their
day in court (attorneys usually will not accept a case unless there is sufficient money
involved to justify their efforts). Second, losing the right to go to court only means the
avoidance of a forum in which employees prevail in only 12 percent of the cases.

Exhibit 11.6
Excerpts of the Supreme
Court s Decision Favoring
Arbitration of Statutory Rights

Supreme Court Justice Clarence Thomas wrote:

We hold that a collective bargaining agreement that clearly and unmistakably requires
union members to arbitrate ADEA claims is enforceable as a matter of federal law .

Justice Thomas explained:

The decision to fashion a CBA to require arbitration of employment-
discrimination claims is no different from the many other decisions made by
parties in designing grievance machinery .

As in any contractual negotiation, a union may agree to the inclusion of an arbi-
tration provision in a collective bargaining agreement in return for other conces-
sions from the employer .

Nothing in the law suggests a distinction between the status of arbitration
agreements signed by an individual employee and those agreed to by a union
representative. This Court has required only that an agreement to arbitrate stat-
utory antidiscrimination claims be explicitly stated in the collective bargaining
agreement .

We recognize that apart from their narrow holdings, the Gardner-Denver line of
cases included broad dicta that was highly critical of the use of arbitration for the
vindication of statutory antidiscrimination rights. That skepticism, however, rested
on a misconceived view of arbitration that this Court has since abandoned .

the Court has recognized that arbitral tribunals are readily capable of han-
dling the factual and legal complexities of antitrust claims, notwithstanding the
absence of judicial instruction and supervision and that there is no reason to
assume at the outset that arbitrators will not follow the law . An arbitrator s
capacity to resolve complex questions of facts and law extends with equal
force to discrimination claims brought under ADEA . At bottom, objections
centered on the nature of arbitration do not offer a credible basis for discredit-
ing the choice of that forum to resolve statutory antidiscrimination claims.

SOURCE: Excerpts from 14 Penn Plaza v. Pyett (2009), St. Ct., 1451 1461 (2009).

CHAPTER 11 Labor and Employment Arbitration 563

Although there may be additional costs, training, and time invested by the union,
arbitration does present potential advantages to the parties. First, the union may make the
inclusion of these arbitration clauses a prime organizing tool. Protection from discrimina-
tion and representation in statutory cases without out-of-pocket legal fees are attractive
offerings which can be made by unions. Second, having a policy favoring arbitration of
statutory claims might result in a reduction in the intensity of employers opposition to
union organizing. For employers, arbitration would be cheaper than litigation, the employer
would not be subject to unpredictable juries, and the arbitration process would be a private
matter (with no negative publicity).

Despite a reluctance of unions and employers to include an arbitration clause that
provides for arbitrating statutory rights in their collective bargaining agreements, at
least one union, the Service Employees International Union, has already begun to include
these arbitration clauses in their contracts. Only time will tell whether other unions and
companies will follow their lead.52

Labor Arbitration and the National Labor Relations Board
Perhaps the most frequent supplements to arbitral decisions have come from the NLRB
because the grievant could have been discharged for reasons pertaining to provisions of
the labor agreement that are similar to laws, such as engaging in union activities on the
job or acting overly aggressive in the capacity of a union official. Section 10(a) of the
National Labor Relations Act provides that the NLRB is empowered to prevent any
person from engaging in any unfair labor practice (listed in Section 8) affecting com-
merce. This power shall not be affected by any other means of adjustment or prevention
that has been or may be established by agreement, law, or otherwise.

Although it has the power, the NLRB does not ignore arbitration decisions covering
unfair labor practice issues. In fact, the NLRB often withholds its jurisdictional determi-
nation and investigation pending the arbitrator s decision. In 1955, the NLRB s deferral
to arbitration policy was formulated in the Spielberg Manufacturing Company case. In
that case, the Board honored an arbitration award that denied reinstatement to certain
employees guilty of strike misconduct. Resulting deferral guidelines stressed that the
arbitration proceedings must be fair and regular, there must be adequate notice and
representation, the arbitrator must address the issue of the alleged unfair labor practice,
and all parties must agree to be bound by the arbitration decision.53 However, the Board
would disregard the arbitrator s award if it was ambiguous or if the Board found that
pertinent evidence had not been presented in the arbitration proceeding.

The NLRB s deferral to arbitration policy was enhanced in the Collyer case, in which
the NLRB administrative law judge found that the company had committed an unfair
labor practice when it made certain unilateral changes in wages and working condi-
tions.54 The company maintained that the issues should be resolved through existing
arbitration proceedings instead of the NLRB. The Board in essence agreed with the com-
pany s position. While reserving the right to investigate the merits of the issue, the Board
maintained the following:

1. Related disputes can be better resolved through the special skills and experiences of
the arbitrators.

2. The objectives of the National Labor Relations Act, industrial peace and stability, can
be significantly realized through adherence to arbitration procedures established in
the labor agreement.

Under Collyer, the employee was obligated to use the arbitration procedure before
the NLRB would review the merits of the employee s unfair labor practice case.55

564 PART 3 Administering the Labor Agreement

The NLRB s subsequent Olin Corporation and United Technologies decisions established
additional guidelines that made it even more likely that the NLRB would defer to arbitration
decisions. Under Olin, the unfair labor practice does not have to be specifically considered in
the arbitration hearing. The NLRB will still defer to an arbitrator s award if the contractual
and unfair labor practice issues were factually parallel and the facts relevant to resolving the
unfair labor practice were presented generally to the arbitrator. 56

Under this deferral policy, there is potential for abuse by either the union or the com-
pany. The arbitrator makes his or her decision based on the facts that the parties voluntarily
choose to present at the arbitration hearing. Either of the parties could purposely withhold
evidence and deny the arbitrator the full record for the purposes of undermining the NLRB s
deferral to the arbitrator s decision. Such an incomplete record would preserve for one of the
parties a second bite at the apple, and the arbitrator would be hard-pressed to produce a
decision based on the record equivalent to the kind of record developed at an NLRB hearing.57

On December 15, 2014, the Board modified its deferral to arbitration policy. After a
request for reconsideration from the General Counsel, the Board concluded that the
then-existing deferral policy did not adequately balance the protection of employee rights
under the Act and the national policy of encouraging arbitration of disputes arising over
the interpretation or application of the collective bargaining agreement. The new policy
provides that (1) the burden of proving that deferral is appropriate is properly placed on
the party urging deferral, (2) deferral is appropriate only when the arbitrator has been
explicitly authorized to decide the statutory issue, and (3) such authorization is given
either in the collective bargaining agreement or by agreement of both parties in writing
the particular case. The modified standard requires that the proponent of deferral dem-
onstrate that the parties presented the statutory issue to the arbitrator, and that the arbi-
trator considered the statutory issue in the decision.58

One research effort found that only about half of the arbitrators cited related exter-
nal law in their decisions when at least one of the parties had filed an unfair labor prac-
tice charge with the NLRB. It also found that most of these arbitrators who cited external
law only briefly addressed the relevant external law. The study urged that, at a minimum,
arbitrators and union and management officials should be aware that they may provide
the grievant his or her only opportunity to litigate a statutory claim; therefore, an
explicit, informed choice should be made on whether to argue, discuss, and explore stat-
utory issues in the arbitration forum or to reject the discussion of such issues as inappro-
priate to the arbitration process.59 Thus, it appears that the Supreme Court has
recognized the ability of arbitrators to interpret the labor agreement provisions and has
even encouraged parties to arbitrate the issue before proceeding to the NLRB.

In 2012, the NLRB ruled that an employer violates Section 8(a)(1) of the National Labor
Relations Act when it requires employees covered by the Act to sign an arbitration agreement
as a condition of employment that precludes them from filing joint, class, or collective claims
that address their wages, hours, or other working conditions against their employer in any
forum, arbitral or judicial. The NLRB ruled that such agreements unlawfully restrict employees
Section 7 right to engage in concerted activities for mutual aid and protection. Then, in Decem-
ber, 2013, the Firth Circuit Court of Appeals refused to enforce the Board ruling. As a result, it
appears that the NLRB s ruling will be eventually decided by the U.S. Supreme Court.60

Labor Arbitration, the Courts, and Public Policy: The Misco Decision
Federal courts can occasionally become involved when union or management officials request
consideration of arbitration matters, particularly when a case heard by an arbitrator involves
public policy considerations. The Supreme Court approached this situation in its Misco deci-
sion. Misco fired an employee who operated a slitter rewinder, which cuts rolling coils of

CHAPTER 11 Labor and Employment Arbitration 565

paper, for allegedly smoking marijuana on company property. The grievant was arrested in his
car in the company s parking lot. Police found a lit marijuana cigarette in the front ashtray of
the car, and a subsequent police search of the car revealed marijuana residue.

The arbitrator reinstated the grievant because the evidence did not establish that the
grievant smoked or even possessed marijuana on the company s premises. The arbitrator
noted the grievant had been in the backseat of the car. The arbitrator also refused to
consider the police report as evidence and ruled that the case must be limited to what
the employer knew at the time of the firing. Management appealed the arbitrator s deci-
sion to the courts, claiming that bringing the employee back would violate public
policy operating dangerous equipment under the influence of drugs.

In Misco, the Court restated a principle established in an earlier decision (W.R.
Grace). It said that a court may not enforce a collective bargaining agreement that is
contrary to public policy. However, the Court noted that the public policy must be
explicit, well defined and dominant, and ascertained by reference to the laws and

legal precedents and not from general considerations of supposed public interests. The
Supreme Court upheld the arbitrator s decision because none of these prerequisites
were examined by the lower courts and would not likely be found in this situation.61

Misco, therefore, reinforced the wide latitude given to arbitrators decision-making
authority by the Steelworkers Trilogy. It will probably reduce the number of instances
in which the courts second-guess the arbitrator s award on public policy grounds.
However, the public policy exception, although made narrow by Misco, still exists. An
employer does not have to honor an arbitration decision that would require a violation
of law (e.g., reinstating a bus driver who lacks a driver s license).62

Sexual harassment represents a controversial public policy issue that has been subse-
quently interpreted by arbitrators and judicial officials. The courts can have very differ-
ent interpretations of this situation. For example, one federal district court vacated an
arbitrator s award that reinstated an employee who allegedly harassed a female customer.
The judge found that the arbitrator s decision contained some disturbing comments
that evidenced bias against the employee and insensitivity toward the customer accuser.63

Another federal court refused to set aside an arbitration decision that reinstated an
employee who, during a phone conversation, put down the receiver, approached a co-
worker from behind, and grabbed her breasts. He then picked up the phone and said,
Yup, they re real. The court commented, While we do not condone [the employee s]

behavior, it was within the purview of the collective bargaining agreement and public
policy for the arbitrator to order his reinstatement. 64

Of course, harassment victims have won numerous cases in arbitration; further, in
some male-dominated brokerage firms that require arbitration of individual disputes,
women have joined together to file class action discrimination lawsuits.65

LABOR RELATIONS IN ACTION
National Football League v. National Football League

Players Association (Tom Brady)

In the words of Federal District Judge Richard M. Berman,
U.S.D.J., New York, September 3, 2015.

The court is fully aware of the deference afforded
to arbitral decisions, but, nevertheless, concludes that
the Award (by Commissioner Goodell as arbitrator to
uphold Tom Brady s four game suspension) should be
vacated. The Award is premised upon several significant
deficiencies, including

(A) inadequate notice to Brady of both his potential
discipline (four-game suspension) and his alleged
misconduct;

(B) denial of the opportunity for Brady to examine one
of two lead investigators, namely NFL Executive
Vice President and General Counsel Jeff Pash; and

(C) denial of equal access to investigative files, including
witness interviews notes.

566

As was learned in the highly-publicized Tom Brady s four game suspension, a fed-
eral district judge will overturn an arbitrator s decision (NFL Commissioner Roger
Goodell appointed himself as arbitrator which was allowed under the collective bargain-
ing agreement) when the judge concludes that the arbitration procedure was not fair (See
the Labor Relations in Action on page 567).

Appraising Labor Arbitration s Effectiveness
Although the courts have praised the effectiveness of arbitration, some critical assess-
ments have come from participants union and management officials and even some
arbitrators (see the Labor Relations in Action feature for some related insights).

Arbitrators seldom, if ever, know why they were not chosen for a subsequent griev-
ance. Little information is available concerning why the parties continually return to
some arbitrators but not to others. Exhibit 11.7 approaches this void by grouping criti-
cisms that several union and management practitioners have leveled at arbitrators. These
criticisms apply to two general areas: arbitrators capabilities and ethics, and the potential
procedural problems in the arbitration process.

Arbitrators Capabilities and Ethics
Some contend arbitrators might compromise their decisions to minimize or avoid dis-
pleasure from one or both of the parties or even to ensure possible selection in future
arbitration cases. The following are examples of compromise decisions, such as rein-
stating a discharged grievant without awarding any back pay.66

In some instances, union and management representatives believe that the arbitrator
owes them one because of their support (financial and otherwise). One arbitrator, who

expressed surprise to officials at being selected to replace another prominent arbitrator,
was given the following reason regarding why the previous arbitrator was fired:

I ll tell you why we fired him. The last case he had ended here at about 4:00. Mr. _____
expressed considerable concern since he had to make a plane for New York and was

LABOR RELATIONS IN ACTION
Things They Never Told Me before I Became an Arbitrator

The difficulty of setting up a hearing date when
union and company representatives have such
busy schedules.
How easy it is to read finished cases;how difficultit
is to write one from the beginning.
The need to know about admission of evidence and
reasons for sustaining and overruling objections at
a hearing and making quick decisions about the rel-
evance of evidence.
How physically tiring it is to fly or drive to and from
some of the hearing sites.
How unglamorous travel and hotels can be when all
airports look alike and you are not even sure where
you are.
How mature and conscientious some parties can
be in trying to do what is right, while some par-
ties enter the hearing armed for combat and con-
frontation and only wanting to win.

How much money, time, and effort could be saved
if the parties prepared better and attempted to
resolve their differences before arbitration.
The role of the cancellation fee in making sure the par-
ties are serious about going forth to arbitration. (If there
is no cost of canceling, one of the parties can abuse
the arbitration process by canceling at a late date.)
How one party will hold out for a compromise set-
tlement until right before the hearing. When no set-
tlement is forthcoming and their case is weak, the
party will drop the grievance.
How important the fee is to the parties it cannot
be too low because the parties think the arbitrator
is not good enough to serve; it cannot be too high
because the arbitrator is priced out of a job.

Source: From an experienced, somewhat weary arbitrator who enjoys relaxing in
anonymity.

567

running late. I assured him that he would have no problem. I carried his bags to his car,
drove in excess of all the speed limits, went through back roads, even proceeded through
changing traffic lights. After a hectic ride and at considerable risk, I got him to the air-
port just in time to make the plane. I parked my car in a no parking zone. I even carried
his bags to the gate. After all this, you know, that [deleted] ruled against me.67

Yet other participants or students of arbitration maintain that the arbitrator s
indebtedness to the parties is a necessary ingredient of dispute resolution. The arbitrator
owes allegiance to both union and management, thereby providing a well-formulated
decision. Four organizations, the NAA, the FMCS, the AAA, and the NMB, have
adopted the following Code of Professional Responsibilities which guides arbitrator s
behaviors:

An arbitrator, deciding that he or she does not have the technical competence to
deal with the issue under consideration, is expected to withdraw from the case.
Issues commonly included in this category are incentive systems, job evaluation
plans, and pension and insurance programs.
An arbitrator is not to make an award public without the consent of the parties.
Before an arbitrator s appointment, the parties should be made aware of the arbi-
trator s fees for the hearing, study time, travel time, postponement or cancelation,
office overhead expenses, and any work of paid assistants.
If either party requests the arbitrator to visit the workplace, the arbitrator should
comply.
An arbitrator should not consider a posthearing brief that has not been given to the
other party.
If the arbitrator knows any of the parties or has any private issue in the organiza-
tion, he or she must make disclosure of any potential conflict of interest before the
hearing.

Exhibit 11.7
Summary of Criticisms Union
and Management Practitioners
Have toward Arbitrators

1. Fails to treat all parties with respect (e.g., has offensive personal traits, tends
to apply his or her feelings of fairness or justice as opposed to applying
the parties intent, regularly exceeds his or her authority).

2. Cannot control the hearing properly (e.g., cannot rule on objections, is too
legalistic or not legalistic enough, cannot stop gratuitous hostile exchanges or
rambling or redundant testimony).

3. Awards are either too brief or too long, unclear, take a long time, emphasize
compromise, evidence poor reasoning or writing skills, or fail to give parties
direction on language issues.

4. Either too much experience with management or the union or insufficient
experience with labor relations as a neutral or with the jobs and industry in
question.

5. Decides cases on grounds other than those presented at the hearing (e.g.,
fails to consider precedents, is too academic, fails to pay sufficient attention
at hearing, reviews evidence not presented in hearing, discusses cases with
uninvolved parties before decision being issued, does not address all facts or
issues).

6. Too expensive (e.g., generally unavailable in a reasonable time frame, thereby
increasing potential back-pay liability; cancellation policy is unreasonable).

SOURCE: Adapted from Thomas L. Watkins, Assessing Arbitrator Competence: A Preliminary Regional Survey, Arbitration Journal,
47 (June 1992), p. 43.

568 PART 3 Administering the Labor Agreement

Other critics of arbitrators have focused on the quality of the arbitrator s decision.
This may happen if the arbitrator s written opinion and award do not address specifics
arguments raised at the hearing or if they do not reflect the original understandings of
one or both parties regarding the nature or scope of the grievance. However, some
arbitral decisions reflect legal considerations as much or more than union and manage-
ment concerns expressed at the hearing. This potential overlawyering problem of
arbitration decisions might be due to the large amount of legislation at the local,
state, and federal levels that might pertain to the grievance, or the preferences of
union and management officials and possibly the arbitrator68 to minimize subsequent
judicial reviews by considering related laws at the hearing and in the decision.

Management and union representatives might also obtain poor arbitration awards
under the garbage in, garbage out theory. Because the arbitrator s decision is based on the
merits of the grievance, a sloppy grievance formulation and presentation might result in a
relatively lackluster arbitral decision. Sometimes, union and management officials present
an arbitrator with poorly conceived grievances that should have been resolved before going
to arbitration. Some grievances are often prompted by political considerations the union
or management officials take the grievance to arbitration to show support for their union
stewards or first-line supervisors, even though they know them to be wrong. Arbitration in
this sense serves as a buck-passing device; the errant union steward or supervisor is appar-
ently given support but, in reality, is provided an education through the arbitrator s deci-
sion. Sometimes unions take cases to arbitration as a form of on the job training. Leaders
really don t expect to win such cases, but reason that this is a way to give an inexperienced
union steward some experience presenting arguments in front of an arbitrator.

One almost inescapable concern arises from the finality of the arbitrator s award.
Although the Supreme Court has encouraged single-person resolution of an industrial dis-
pute, opponents of this practice suggest that an arbitrator has more authority than a judge,
whose decisions may be overturned through judicial appeal. Many problems would result
if arbitration awards were subjected to an appeals procedure. Any such procedure would
be time consuming and expensive, thus taking away two major benefits of arbitration.

Procedural Problems
The two general categories of procedural problems are time delay and expense of the
arbitration proceedings. The FMCS reports that the average length of time between the
filing of a grievance and an arbitrator s award is 399 days.69 However, the parties them-
selves must share part of the blame because the average time between the filing of the
Grievance and the request for a panel from the FMCS is 132 days. Delay in arbitration
is a concern of union and company advocates, especially in discharge cases. The dis-
charged employee is likely to be unemployed after the discharge and faces an uncertain
future. The employer probably has to fill the vacant position and faces the possibility of
back-pay liability. Because it is a universally accepted principle that discharge decisions
should be based on the facts known at the time of the decision and the passage of time
does not alter the facts of the case, the length of time since the discharge should not
affect the arbitrator s decision. However, research of arbitrators decisions in discharge
cases reveals that the longer the delay between an employee s discharge and the arbitra-
tor s decision, the less likely the grievant will be reinstated.70

Although delay is harmful to employees, to the arbitration process, and to union
management relationships, a number of reasons have been identified as causes for this delay:

Shortage of acceptable arbitrators coupled with the reluctance of the parties to take a
risk on a new or inexperienced arbitrator

CHAPTER 11 Labor and Employment Arbitration 569

Prearbitration activities, such as the steps in the grievance procedure and accom-
modating the schedules of busy advocates and arbitrators for the hearing
Time after the hearing, which includes waiting on the preparation of the transcript
of the hearing and any posthearing submissions by the parties, such as posthearing
briefs; time taken by the arbitrator to review the evidence and arguments and to
prepare the written decision

Although discharge cases are handled more expeditiously than nondischarge cases at
every stage of the process, except for arbitrator selection, the parties have the power to
address the causes of delay and are capable of moving more quickly because it is in their
mutual interests to do so.71

One criticism directed at arbitrators is that they sometimes split their decisions in
discharge cases; that is, they reinstate the grievant but without back pay. Split decisions
are not uncommon in discipline and discharge cases because arbitrators generally exer-
cise the right to modify a penalty when the penalty is found to be too severe based on
the facts of the case or there are mitigating factors, such as the grievant is a long-term
employee, the supervisor is partly at fault, or the employee has good work record. The
arbitrator may conclude that the employee s misconduct warranted some penalty, but
short of removal from the job. The parties themselves have the power to avoid penalty
modification by the arbitrator simply by negotiating language that directs the arbitrator
either to uphold the penalty imposed by management or to sustain the grievance and
return the grievant to the job with back pay no split decision. One study of such con-
tract language in the telecommunication industry showed that the grievant was more
often reinstated with full back pay when the arbitrator could not modify the penalty
than under the traditional contract language when the arbitrator is allowed to modify
the penalty. Thus, if the arbitrator has no authority to modify the penalty, the arbitrator
must be convinced that the penalty of removal is appropriate and that is a heavy burden
of proof for management.72

Expenses to the parties are associated with arbitration. The FMCS reports that arbi-
trators average per diem rate of $1,188, when applied to the arbitrator s average hearing
time (1.05 days), travel time (0.63 days), and study time (2.39 days), plus average
expenses ($395.09), resulted in an average charge of $4,911.86 for an arbitrated griev-
ance.73 Although most labor agreements provide for the sharing of arbitration expenses
between union and management organizations, each party can incur additional expenses,
such as fees for the parties attorneys, which usually exceed the arbitrator s fee; wage pay-
ments to plant employees who take part in the proceedings; and stenographic transcrip-
tion costs, if a written record of the hearing is requested.

Arbitral fees have increased over the years, which is understandable in view of infla-
tion. In many cases, however, management and union officials bring added expenses on
themselves when the parties require the arbitrator to review transcripts of the hearing,
prior arbitration awards, testimony of superfluous witnesses, and prehearing and post-
hearing briefs. The parties may also insist on expensive frills, such as renting a hotel
suite for a neutral arbitration site, that do not materially affect the quality of a decision.

Time delay is another problem directed at arbitration. The statistics from the FMCS
show that the parties themselves and arbitrators must share the blame for extending the
length of time for resolving disputes via arbitration. As shown in Exhibit 11.8, it takes
the parties over 130 days between the time the grievance is filed and one of the parties,
usually the union, contacts the FMCS for a panel of arbitrators. Of course, this period of
time involves setting up meetings for the parties to be engaged in the various steps of the
grievance procedure and attempts to resolve the grievance without going to arbitration.
The increase in time for the arbitrator to render a decision is probably the result of

570 PART 3 Administering the Labor Agreement

continued use of busy more experienced arbitrators and the reluctance of the parties to
use newer arbitrators who could render more timely decisions.

Expedited Arbitration Procedures. Some union and management officials have reduced
expenses by expediting ( speeding up ) the arbitration procedures before, during, or after
arbitration hearings. Prehearing suggestions include (1) appointing a panel of arbitrators
for the length of the contract rather than working through a new list of arbitrators
each time an arbitration is scheduled and (2) appointing a permanent umpire for a
specific amount of time (e.g., one year or the life of the agreement). Hearings may be
expedited by substituting tape recordings for transcripts. Posthearing expedition includes
(1) setting a deadline for the decision to be returned to the parties or having the arbitra-
tor render a bench decision at the end of the hearing, (2) reducing or eliminating the
number of references for the arbitrator to research, (3) limiting the number of witnesses,
(4) limiting the time allowed to present one s case, and (5) setting a maximum on the
length of the arbitrator s decision or establishing the maximum amount to be paid for
the decision ahead of the hearing.74

Other possibilities also exist for streamlining the arbitration process. For example, some
grievances solely concern interpretations of the labor agreement. Unlike discipline cases,
these grievances do not personally involve employee grievants and thus do not entail related
therapeutic or political considerations. Perhaps, these grievances could be argued on paper
without the necessity of a hearing and related expenses.75 Some parties have considered
arbitration via video conferencing with the parties and the arbitrator at different locations.

The use of expedited or experimental approaches illustrates two fundamental issues
concerning arbitration:

1. This process, although not perfect, appears to offer great advantages over alternative
methods of grievance resolution, such as sudden strike activity.

2. Union and management officials created the arbitration process and are charged
with controlling it in accordance with their jointly determined needs. They must
monitor the process as well as their related actions and attitudes to ensure a rela-
tively inexpensive, efficient, and objective means of dispute resolution.

Employment Arbitration
Employers have initiated, promulgated, and used employment arbitration in situations
such as the following:

Employment discrimination claims in union or nonunion firms (instead of using the
courts)

Exhibit 11.8
Average Length of Time
between Actions (in days)

Responsible Party(ies) 2013 2007

Grievance Filed and Panel Request from FMCS 132.46 136.26

Appointment of Arbitrator and Hearing 171.87 125.16

Date of Hearing and Filing of Post-hearing Briefs 58.01 57.87

Panel Request and Arbitrator Decision 333.12 –

Receipt of Briefs by Arbitrator and Decision 37.20 21.94

Total: 399.4 341.23

SOURCE: http://www.fmcs.gov/.

CHAPTER 11 Labor and Employment Arbitration 571

Employee grievances in nonunion firms over application of the company personnel
policies (instead of using unilateral management decision making)

Of the types of cases heard by employment arbitrators, 65 percent involved violation
of an employment contract, 56 percent violation of law, and 59 percent violation of a
company policy. Obviously, these are not mutually exclusive categories, as many claims
involve multiple types of alleged violations.76

It has been reported that 62 percent of large corporations had used employment
arbitration. The number of employees who have signed employment arbitration con-
tracts had grown to over six million.77

See the Labor Relations in Action box (on p. 575) for a summary of how employ-
ment arbitration differs from arbitration found in labor agreements.

The use of arbitration to resolve employment discrimination suits was enhanced in
1991 by the Supreme Court in Gilmer v. Interstate Johnson Lane Corp (500 U.S. 20,
1991). A securities representative – Gilmer – signed an employment application (Form
U-4, known as the Uniform Application for Securities Industry Registration or Transfer.
By signing this form, which is common in the securities industry, the applicant agreed to
arbitrate any dispute, claim, or controversy with his employer. After being terminated at
age 62, Gilmer filed an age discrimination complaint with the EEOC and subsequently in
federal court. The Supreme Court agreed with Gilmer s employer that arbitration, not
the courts, was both the agreed-on and proper dispute resolution forum that did not
counter the legislative history of the Age Discrimination in Employment Act.78 A subse-
quent Supreme Court decision seemed to recognize arbitration as a proper resolution of
other employment discrimination claims in the securities industry and possibly other
industries as well.79

Although the Supreme Court s Gilmer decision appeared to be inconsistent with its
previous decision in Alexander v. Gardner-Denver Company, the Gilmer decision did not
involve union management relations.

In a 2001 case, Circuit City Stores v. Adams, the U.S. Supreme Court reconfirmed its
position that there was a strong federal policy that supported arbitration and ruled that
the Federal Arbitration Act applied to all contracts of employment except those applica-
ble to employees working in transportation. The Court stated that arbitration was a
desirable and workable forum for resolving employment disputes, including those under
federal discrimination laws. In this case, Adams had signed an employment application
form to settle any and all previously unasserted claims, disputes, or controversies arising
out of or relating to my application or candidacy for employment (see Exhibit 11.9).
Then, in 2002, the Court clarified the role of the EEOC in cases where an employee had
been required, as a condition of employment, to sign an agreement to arbitrate all
employment discrimination claims. The Court ruled that the EEOC was not bound by
an arbitration agreement because the EEOC had not been a party to such agreement.
Therefore, the EEOC may go to court on a worker s behalf even though the employee
had previously been required to sign an agreement to arbitrate all employment discrimi-
nation claims.80

In 2002, the U.S. Supreme Court held in EEOC v. Waffle House, Inc. (534 U.S. 754)
that an employee s agreement to arbitrate did not preclude the EEOC from suing the
employer on behalf of the employee in order to enforce the Equal Employment Oppor-
tunity Act and attempt to recover judicial-specific relief, which may include back pay,
reinstatement, and/or monetary damages.81 Since these decisions, lower courts have
enforced the majority of contested arbitration agreements, but they still are willing to
deny enforcement of arbitration agreements which the courts believe are unfair to
employees.82

572 PART 3 Administering the Labor Agreement

Arbitral Dilemma
The EEOC s policy is that mandatory arbitration systems imposed as a condition of
employment are fundamentally inconsistent with U.S. civil rights laws. However, the
EEOC is on record in support of alternative dispute resolution (ADR), which includes
arbitration and mediation that resolves employment discrimination in a fair and credible
manner if entered into voluntarily or after the dispute arises. In other words, the EEOC s
position is that claimants have a legal right to decide whether to pursue a judicial forum
or voluntarily choose to resolve their claim through arbitration.83

Where a union exists and when there is an overlap between the language in a collec-
tive bargaining agreement and provisions in a law, the question arises as to what the
parties and the neutral arbitrator should do. The conclusions drawn after analyzing
court cases are as follows:

1. When the contract language and provisions of the Labor Management Relations Act apply
(covered in Chapter 3), the statutory and contractual issues should be addressed, the arbi-
trator must write the award to confirm that the statutory provisions were addressed, and
the arbitrator s decision must not be repugnant to provisions of the statute.

2. When the collective bargaining agreement does not address any statute, arbitrators should
decide the case based on the merits of the case and the contract language, not the law.

3. When the collective bargaining agreement contains principles found in the statute
without any specific reference to the statute (e.g., there shall be no discrimination
against employees), the principles incorporated in the statute may enter into the
arbitrator s award.

4. When the statute is explicitly included in the collective bargaining agreement (e.g.,
this agreement must comply with provisions of the ADA) and instructs the arbitra-
tor to apply the statute, the arbitrator should render his or her decision consistent
with the statute.84

Several studies have shown that the typical rank-and-file employee with only a job and
a small amount of money at stake finds it difficult to obtain an attorney who will accept an
employment discrimination claim and take it to court. The time and effort necessary are
not worth it to an experienced attorney who is probably operating on a contingency fee
arrangement. Attorneys often prefer to represent professional or managerial employees
who have the potential for a large payoff. As a result, only 1 in 20 discrimination claimants
secure an attorney as counsel.

These studies also reveal rather startling results in the event the employee plaintiffs
with job discrimination claims are actually able to reach court. These employees do not
fare as well in court as do employees who take their cases to arbitration. In fact, claimants
who take their cases to arbitration have won 55 to 63 percent of the time, while less than

Exhibit 11.9
An Employment Application
Form under Mandatory
Employment Arbitration.

I agree that I will settle any and all previously unasserted claims, disputes, or con-
troversies arising out of or relating to my application or candidacy for employment,
employment, and/or cessation of employment with XYZ Company, exclusively by
final and binding arbitration before a neutral arbitrator. By way of example only,
such claims include claims under federal, state, and local statutory or common law,
such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act
of 1964, as amended, including the amendments of the Civil Rights Act of 1991,
the ADA, the law of contracts and the law of tort.

SOURCE: Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001).

CHAPTER 11 Labor and Employment Arbitration 573

20 percent of the claimants have prevailed in court. While claimants may obtain larger
recoveries from a jury in court than in arbitration, for most employees without large finan-
cial claims, arbitration may be the superior option. As one legal expert concluded:

It gets them back to work sooner, more often, with less cost, and without the psycho-
logical pain of court litigation.

In cases where the union represents the employees, unions have not been convinced
that they should agree with the employers in making arbitration of discrimination
claims the exclusive means of resolving such discrimination claims. Because unions
have political characteristics wherein officers must stand for elections and many clai-
mants are not yet aware (or satisfied) that, despite the statistics, they may fare better
in arbitration than in court, there has not been a movement toward unions showing
an interest in representing the bargaining unit employees with employment discrimina-
tion claims in arbitration. Employers who prefer arbitration have a selling task to per-
form to the skeptical employees as well as the union representatives. The employers must
convince employees and union representatives that they are pressing for arbitration, not
because they believe they will win more often, but that, win or lose, arbitration is less
costly, less time consuming, and less disruptive than court litigation.85

Critique of Mandatory Employment Arbitration. Supporters of mandatory employ-
ment arbitration argue that arbitration is less expensive and more informal than the
court system. Supporters also point out that arbitrators are significantly more predictable
than juries, who may render extraordinary monetary verdicts. Employers like mandatory
employment arbitration because arbitration is a private process, which means that the
hearings are private and the arbitrator s decisions are not made a public record.

Researchers have found that while the court system from the outside appears to be
the fairest way to adjudicate alleged mistreatment by employers, in reality the court sys-
tem does not serve employees well. Plaintiff lawyers take only 5 percent of employment
discrimination complaints, only 3 percent of those accepted ever go to trial and result in
a verdict, and federal courts of appeal reverse 44 percent of appealed cases that had been
won by employees in lower court.86

The most controversial element of employment arbitration is that it is mandated by
the employer as a condition of employment at the time of hire or after employment, but
before there is a dispute. Predispute employment arbitration confronts job applicants
with the choice of agreeing to arbitration with a chance of being hired on a new job or
confronts current employees with agreeing to arbitration in order to continue their
employment. There typically is no bargaining, and the job applicant or the current
employees are required to agree to arbitration on a take-it-or-leave-it basis.87

Walter Gershenfeld, former president of the NAA, pointed out several additional
deficiencies of a typical nonunion employment arbitration procedure: (1) Many employ-
ment arbitrators also serve as advocates in other cases. This means that there is a ques-
tion of whether these employment arbitrators are truly neutral, a core ingredient of a fair
and impartial arbitration. In traditional labor management arbitration, the arbitrator
must be neutral. (2) In discipline and discharge cases in employment arbitration, the
employee has the burden of proof. In traditional labor management arbitration,
the employer has the burden of proof in discipline and discharge cases. In other words,
the employer must prove that the employee is guilty of the charges made against him or
her and the employee is considered not guilty until proven guilty. (3) The grievant has a
limited right to appeal the arbitrator s decision in employment arbitration. In the tradi-
tional labor management arbitration, the grievant must prove that the arbitrator s

574 PART 3 Administering the Labor Agreement

LABOR RELATIONS IN ACTION
How Employment Arbitration Differs from

Arbitration Found in Labor Agreements

1. What are the conditions under which the arbitration
system is devised? If the arbitration system is
established to avoid a union, then many acceptable,
well-qualified arbitrators will refuse to serve. If the
employer designs a system for the purpose of pro-
viding a fair and equitable mechanism for employ-
ees to resolve their grievances by an independent
neutral party, qualified arbitrators will be willing to
serve. Under a collective bargaining agreement, the
union and company have negotiated and designed
the arbitration procedure that best fits their pur-
poses. In other words, the parties design a system
of self-governance for resolving conflicts. In
employment arbitration, the arbitration procedure
is designed unilaterally by the employer.

2. What subjects will be covered under the employ-
ment arbitration system, and will employees be
required to waive their statutory rights, such as
employment discrimination on the basis of race,
gender, age, national origin, disability, and so on?
If the employees are required to waive their statu-
tory rights as a condition of employment, the arbi-
tration decision may not stand a court review.
Under a collective bargaining agreement, arbitration
involves contract interpretation and application of
provisions negotiated and agreed to by the parties.
Various federal agencies have different policies on
deferral to arbitration.

3. How are the arbitrators selected? How long are they
retained? If the arbitrators are selected only by the
employer and serve at the pleasure of the employer,
then a perception may persist that the arbitrator is
loyal to the employer and can be terminated if a deci-
sion unfavorable toward the employer is rendered.
Under a collective bargaining agreement, the arbitra-
tors are selected and retained by a procedure negoti-
ated and agreed on by the union and company. To
avoid problems and misperceptions, selections may
be made through independent agencies such as the
American Arbitration Association and the Federal
Mediation and Conciliation Service.

4. What are the employee s due process rights, if
any? Employment arbitration systems contain no
guarantees of due process; however, under collec-
tive bargaining agreements, arbitrators recognize
these important employee rights that include:

Right to counsel by a union representative
Right to face one s accusers
Right to information to prepare for the arbitration
hearing

Right to notice of hearing
Right to a copy of written charges against the
employee

5. Who pays the arbitrator? Under employment arbitra-
tion procedures, the employer typically pays the arbi-
trator. The concern is that the arbitrator might show
loyalty to the party who pays the fee. Under most
collective bargaining agreements, the union and the
company jointly decide the method by which the arbi-
trator will be paid. Usually, the two parties share the
costs; however, on a few occasions, the union and
company negotiate the method whereby the loser
pays. To avoid the perception of bias in favor of the
payer of the fee, one organization designed a system
whereby each employee pays a monthly fee to sup-
port an arbitration system; the arbitrator, then, is paid
jointly by the employer and from employee fees.

6. How final is the arbitrator s decision? Under
employment arbitration, the arbitrator s decision is
final if the employer wants the decision to be final.
Although overturning the arbitrator s decision
would be bad policy unless fully justified, no legal
basis exists for prohibiting the employer from tak-
ing such action. Under collective bargaining agree-
ments, the arbitrator s decision will stand in nearly
all cases, except in those limited cases where the
arbitrator s decision is inconsistent with public pol-
icy, the arbitrator is incompetent, or the arbitrator
has personal ties with one of the parties.

7. How are employees who file grievances protected?
Under the employment arbitration system,
employee protection survives as long as the
employer allows the system to survive. Under the
collective bargaining agreement, employees who
file grievances are protected under the grievance
and arbitration procedure, which lasts as long as
the collective bargaining agreement lasts.

8. What issues are arbitrated under the arbitration sys-
tems? Under the employment arbitration system,
the employer decides the issues that may be
grieved and arbitrated. Under the collective bargain-
ing agreement, the union and company jointly
decide; this usually includes conflicts over interpre-
tation and application of provisions of the collective
bargaining agreement.

9. What authority do arbitrators have to grant remedies?
Under employment arbitration, the employer deter-
mines the extent of the arbitrator s authority. How-
ever, when there are statutory issues involved, such
as gender discrimination, sexual harassment charges,

575

decision was in manifest disregard to the collective bargaining agreement, the law, or
public policy. In employment arbitration, the grievant who claims employment discrimi-
nation may take the case to arbitration, file a claim with an administrative agency, such
as the EEOC, and/or sue in court, simultaneously or sequentially. This is based on the
EEOC s position toward mandatory arbitration and the Waffle House ruling discussed
earlier. Consequently, the grievant in employment arbitration has more than one bite
at the apple. 88

Mandatory employment arbitration procedures have given rise to major criticisms.
The Board of Governors of the NAA adopted a position that contains due process pro-
tections under employment arbitration agreements. The Board s position is that an
employment arbitration agreement which requires arbitration of an employee s claim
arising under any law shall be enforceable only if it is adequate to vindicate the pur-
pose of the law.

Adequacy in this context requires:

Employees be able to have representation of their choosing
Access to prehearing discovery
Reasonable accommodation on the time and location of a hearing

Adequacy also requires arbitrators:

To be selected from organizations of neutrals unless there is a postdispute agreement
to do otherwise
To disclose any connection with employers or any conflict of interest
To have authority to determine the existence of any class claims
To have authority to award any relief available under applicable law
To provide a written decision which sets out the facts, resolves any material factual
dispute, and draws such legal conclusion required by applying the same standards as
the courts

The Court s Observation of Arbitral Deficiencies. Even the U.S. Courts have observed
possible deficiencies in the mandatory employment arbitration process:

The lack of legal expertise of some arbitrators to analyze complex statutes
Due process limitations with respect to discovery, examination of witnesses, remedies,
compiling an official record of the hearing, and so on
Insufficient communication of the reasoning behind the arbitrator s decision

As a result of criticism, court decisions, and the Due Process Protocol for arbitration
and mediation of statutory claims designed by the Task Force on ADR (representatives
of the most influential employment law and arbitration organizations),89 several princi-
ples that provide a guide to procedural fairness have emerged (see Exhibit 11.10).

and so on, remedial authority may include awarding
attorney fees, punitive and compensatory damages,
interest on back pay, and so on in other words,
issues normally decided by a jury. Under a collective
bargaining agreement, back pay, reinstatement, and

make whole remedies are common. Interest may
be paid where the parties have agreed to such pay-
ments. In the federal sector, arbitrators have authority
to award attorney fees and interest on back-pay
awards.

576

One circuit court judge has already addressed one of the controversial issues under
mandatory employment arbitration procedures: the payment of the arbitrator s fee. Chief
Judge Harry T. Edwards, a distinguished scholar and a former labor arbitrator, addressed
this issue in one of his decisions. Judge Edwards wrote that the judicial system is supported
by government through taxes paid by citizens. Litigants do not pay judges who hear their
cases, but private arbitrators do not work for free. Judge Edwards required the employer to
pay the arbitrator s fee based on the fact that the employee had been forced by a condition
of employment to give up his or her right to pursue his or her statutory claims in court.
Therefore, Judge Edwards reasoned, a beneficiary of a federal statute (the claimant) would
not have been required to pay a judge in a judicial forum and therefore should not be
required to pay an arbitrator to decide the merits of his or her claim.90

Repeat Players. In the absence of a union, the employment arbitration process is usu-
ally skewed against employees, particularly those who are not represented. When an
employer is a repeat participant in the arbitration process, the employer has a distinct
advantage over the employee who is not likely to be involved in arbitration more than

Exhibit 11.10
Guidelines to Procedural
Fairness in Arbitrating
Statutory Discrimination
Claims

Parties knowingly and voluntarily agree to submit their claim to arbitration.

Arbitration agreement contains specific language with sufficient notice that signing
the agreement represents an agreement to arbitrate all statutory employment dis-
crimination claims (with inclusion of a representative list of employment discrimina-
tion statutes for illustrative purposes).

Prehearing consultation addresses formulation of issues, production of evidence,
witnesses lists, discovery, and application of rules of evidence.

Due process procedures provide that the employee has a right of representation of
his or her choosing, adequate discovery of access to all information relevant to the
employee claim, arbitrator authority to subpoena relevant information upon a specific
request by one of the parties, and a reasonably timely hearing.

Impartial and competent arbitrator possesses personal qualities of honesty and
integrity and discloses any prior association that might represent a potential conflict.

Joint selection of the arbitrator allows each party to have adequate information
about the potential arbitrators organizational associations, biographical data, pub-
lished case decisions, copies of recent decisions, and so on to avoid the advantage
to the repeat player in the arbitration process.

Written opinions and awards that would include the issues decided, the findings of
facts, conclusions of law, materials supplied by the parties, and information such as
relevant decisions of courts and administrative agencies cited by the parties demon-
strate the arbitrator s reasoning in reaching the decisions, the remedies sought, and
the remedies decided.

Publication of the decisions with the consent of the prevailing party serves as a
deterrent to future similar discriminatory acts.

Payment of the costs of arbitration is shared by the parties to ensure impartiality
and is based on the employee s ability to pay and the relevant necessity of incurred
expenses for adequate presentation of the employee s case.

SOURCE: Roger Wolters and William H. Holley, Jr., Arbitration of Statutory Employment Discrimination Claims in a Nonunion
Environment: A Guide to Procedural Fairness, Employee Responsibilities and Rights Journal, 12 (3) (2000), pp. 174 175. With kind
permission from Springer Science and Business Media.

CHAPTER 11 Labor and Employment Arbitration 577

once or twice in a lifetime. First, if the employer selects the arbitrator and pays the arbi-
trator for his or her services, the arbitrator may feel the pressure to rule in favor of the
employer in order to be selected in future cases. For all practical purposes, the employer
and the arbitrator are the repeat players. Second, in the selection of the arbitrator, even
when both parties participate in the selection, unrepresented employees have little infor-
mation on which to base their selection. Even when an employee has legal counsel, the
attorney may or may not have access to useful information about the arbitrator. In com-
parison to a unionized setting, nearly all international unions and the American Federa-
tion of Labor Congress of Industrial Organizations (AFL-CIO) have research staff who
can obtain evaluative information about arbitrators that would be useful in selection.
Third, repeat player employers have certain strategic advantages because they have an
institutional memory. Employers can keep records about the disposition of prior cases of
the arbitrator; the unrepresented employee has no comparable resource. Because the
union has a continuous relationship with the employer through the collective bargaining
agreement, the union gains an institutional memory and becomes a repeat player in
the arbitration process.91

Supporters of Mandatory Employment Arbitration. Although many scholars and
professional groups like the NAA, and governmental agencies, like the EEOC, have con-
demned mandatory arbitration arrangements, Theodore J. St. Antoine, the former presi-
dent of the National Academy of Arbitrators, believes that mandatory arbitration may be
a blessing in disguise . As a practical matter, mandatory arbitration may offer persons
with small monetary claims a better opportunity to secure a remedy than a traditional
legal action. The EEOC is not the answer because it is underfunded and too overloaded
with work to try anything other than major cases.

St. Antoine argues that arbitration is private, cheaper, faster, and more informal
than court litigation which is a public forum. As a result, lawyers are more willing to
assist a client in an arbitration proceeding when they would not be willing to devote
the time and effort to prepare a federal court appearance. Further, without a lawyer,
employees may make a reasonable presentation on their own or with the assistance of a
fellow employee in a much less intimidating atmosphere of arbitration. St. Antoine fur-
ther argues that if the claimant sues in court, there is no reason to believe that they
would be better off than in arbitration. In fact, employees actually prevail more often in
arbitration than in court. As expected, successful plaintiffs obtain larger awards from
judges and juries, but as a group recover more in arbitration.92

In response to the repeat player effect, which leads to the repeat arbitrator effect,
supporters of mandatory employment arbitration believe that the repeat player effect
theory is based on the belief that a repeat player (the employer) chooses the same arbi-
trator in several arbitration cases and therefore builds a relationship with the arbitrator,
causing the arbitrator to rule in the repeat player s (the employer) favor. The research
found no support for this theory. In the 200 cases studied, there were only two cases
involving a second meeting between the same arbitrator and employer. On the employee
side, it may also be argued that attorneys for grievants may become repeat players as
more plaintiff attorneys accept employment arbitration assignments and as the number
of employment arbitration cases grow.

Public Policy Implications for the Future
A Comparison of Decisions by Employment Arbitrators, Labor Arbitrators, and
Jurors in Employment Termination Cases. In a study of 225 employment arbitrators,
200 labor arbitrators, and 112 jurors from a federal district court, the arbitrators and for-
mer jurors were asked to participate in a fairly extensive decision-making exercise that

578 PART 3 Administering the Labor Agreement

included 32 different case scenarios where an employee was challenging termination.
Exhibit 11.11 highlights some of the significant differences between employment arbitra-
tors, labor arbitrators, and jurors. Employment arbitrators, who usually have a manage-
ment background, are usually selected solely by the employer and are less likely to rule in
favor of the terminated employee. The employee has the burden of proof, which means
that the employee must prove there was a violation of a company rule or policy that was
written by the company. In addition, the employment arbitrator is not likely to consider
mitigating circumstances, such as long service with the company, a good work record,
and so on. Because the employer pays the arbitrator to serve and is selected by the
employer, some critics of employment arbitration would say that the employment arbi-
trator has allegiance to the employer.

In comparison, the burden of proof in discharge cases in labor arbitration rests with
the employer. The general principle is that a person is innocent until proven guilty. Since
the labor arbitrator is selected and paid by both parties, the labor arbitrator must have a
reputation of neutrality or he or she will not be selected by both parties. In addition, the
labor arbitrator may find an employee guilty of wrongdoing, but due to a good work
record of considerable years may reduce the penalty from a termination to a disciplinary
suspension without pay. Since the burden of proof rests with the employer and a labor
arbitrator considers mitigating circumstances, the employee is more likely to receive a
favorable decision from the labor arbitrator.

In between, in a jury trial, the employee has the burden to prove that the employer
violated the employer s rules or policies. However, since jurors will consider mitigating cir-
cumstances, they are more likely to render a favorable decision for the employee than an
employment arbitrator would. Since jurors serve as a public service, they are not concerned
about acceptability and receive only a small fee for their time and reimbursement for their
expenses.93

Exhibit 11.11
Differences between
Employment Arbitration,
Labor Arbitration, and Jurors
Involving an Employee
Discharge

Employment
Arbitration

Labor
Arbitration Jurors

1. Burden of proof Employee Employer Employee

2. Acceptability Employer selects Union and
employer

None

3. Professional
background

Management more
than likely

Neutral Public service

4. Consider
mitigating
circumstances

Not likely Yes Yes

5. Decision Less likely employ-
ee will receive
a favorable
decision

More likely to
receive favor-
able decision
when repre-
sented by a
union

More likely to
receive favorable
decision than by
an employment
arbitrator

6. Who pays the
arbitrator

Usually the
employer

Usually the union
and employer
pay equally

Taxpayers, a small
fee for jury duty
and expenses

SOURCE: Brian S. Klass, Douglas Mahony, and Hoyt N. Wheeler, Decision-making about Workplace Disputes: A Policy Capturing
Study of Employment Arbitrators, Labor Arbitrators and Jurors, Industrial Relations, 45 (12) (2006), pp. 68 95.

CHAPTER 11 Labor and Employment Arbitration 579

Summary
The arbitration process was little used during the period
from 1865 to World War II; however, during World
War II, the NWLB encouraged its widespread use.
Although the increased reliance on arbitration continued
after World War II, a major problem of enforcing the
arbitrator s decision remained. Either party could refuse
to abide by the arbitrator s decision, with uncertain con-
sequences from the courts. This problem was initially
approached in the Lincoln Mills decision, which pro-
vided a judicial avenue for enforcement, and the Steel-
workers Trilogy, three cases that established the
superiority of the arbitration process over the courts in
resolving industrial grievances. Subsequent Supreme
Court decisions have indicated that termination of the
labor agreement does not eliminate the possibility of
arbitration, and injunctive relief might be granted
when one party refuses to arbitrate according to griev-
ance procedures established in the labor agreement.

Before the arbitration hearing, arbitrators must be
selected on either an ad hoc or permanent basis. Each of
these selection techniques has unique advantages depend-
ing on the particular circumstances. The same can be said
of prehearing and posthearing briefs. Other elements of
an arbitration hearing include the grievance issue, presen-
tation of witnesses for testimony and cross-examination,
and presentation of separate and joint exhibits.

The hearing scene is a dramatic one; union and
management officials display their skills in attempting
to convince the arbitrator that their positions are cor-
rect. The arbitration hearing shares many similarities
with a judicial trial but differs in several ways. Perhaps
the most significant differences are the informality of
arbitration and the arbitrator s reliance on the common
law of the shop.

Arbitrators consider the relevant provisions of the
labor agreement, the intent of the parties, past practice

and, to a much lesser extent, prior arbitration awards in
arriving at their decisions. Because arbitration proce-
dures differ in some respects from those used in a
courtroom, various jurisdictional disputes can occur
over interpretations of contract provisions by arbitra-
tors and the legal interpretation of federal policy. For
example, a discharge case decided by the arbitrator
could be subsequently considered by the EEOC or the
NLRB.

Some criticisms directed toward arbitration pertain
to the arbitrator s capability and ethics and potential
procedural problems in the arbitration process. Certain
arbitral problems, such as expense, time lag, and exces-
sive formality, may be due to union and management
preferences rather than any characteristics inherent in
the arbitration process. Management and union offi-
cials could reduce some of these problems by using
expedited arbitration, new arbitrators, and grievance
mediation.

Employment arbitration, which is used primarily
with employees not represented by unions, was dis-
cussed. With favorable rulings from the U.S. Supreme
Court, a growing number of employers have imple-
mented mandatory employment arbitration for new
hires as well as current employees. This type of arbitra-
tion requires an employee, as a condition of employ-
ment, to sign an agreement that requires all future
employment disputes be resolved in arbitration. Views
of supporters and critics of mandatory employment
arbitration were presented. Attempts to rectify these
deficiencies, such as guides to procedural fairness,
were presented. Anticipated problems for the future
of mandatory employment arbitration were also
addressed, and a comparison of decisions of employ-
ment arbitrators, labor arbitrators, and jurors were
provided.

Key Terms
National War Labor Board (NWLB),

p. 539
Steelworkers Trilogy, p. 539
ad hoc arbitrator, p. 542

permanent arbitrator, p. 542
arbitration hearing, p. 545
common law of the shop, p. 549
parole evidence rule, p. 555

intent of the parties, p. 557
past practice, p. 558
employment arbitration, p. 571

580 PART 3 Administering the Labor Agreement

Discussion Questions

1. How did World War II and the National War
Labor Board greatly expand the use of arbitration?

2. The Steelworkers Trilogy greatly enhanced the
arbitrator s authority when compared with previ-
ous years, yet it did not give the arbitrator final
jurisdiction over certain issues. Discuss the pre-
ceding statement in terms of the specific features
of these judicial decisions; also consider current
jurisdictional issues arbitrators face in terms of
government agencies.

3. Discuss the similarities and differences between
arbitration and judicial hearings with particular
emphasis on the common law of the shop,
admission of evidence, and the role of the arbi-
trator vs. that of the judge.

4. Why are arbitrators decisions usually lengthy
when one sentence could indicate who was right
and wrong? Your discussion of this question
should include the purposes of arbitration and its
advantages, as well as disadvantages of an exten-
sive arbitrator decision.

5. Discuss two decision-making guidelines used by
arbitrators, furnishing specific examples (not
mentioned in the text) of how these guidelines
apply.

6. Cite and defend three specific methods you would
use to make the typical arbitration procedure
more effective. Also indicate the advantages and
disadvantages of your suggestions.

7. Discuss the following: The refusal to use grievance
mediation as a step prior to arbitration illustrates
the stubbornness of many union and management
officials.

8. After reviewing Exhibit 11.11, would you rather
work as an employee in an environment of labor
arbitration or employment arbitration? Why?
Why not?

9. Do you believe that labor unions should use the
benefits of labor arbitration as part of the union s
strategy to recruit new members? Give your
reasons.

Exploring the Web

Labor and Employment Arbitration

1. American Arbitration Association (AAA) (http://
www.adr.org/).
AAA is a private organization which has a long his-
tory and experience in ADR. AAA provides services
(for a fee) to individuals and organizations who
wish to resolve disputes out of court. Its Web site
provides information on case administration, case
filing, qualifications for an AAA neutral, AAA
Rules and Procedures for employment and labor
arbitration and training courses for neutrals and
advocates.

2. National Academy of Arbitrators (NAA) (http://
www.naarb.org).
The NAA is a not for profit honorary and profes-
sional organization of approximately 650 labor and
employment arbitrators in the United States and
Canada. Its Web site provides information on offi-
cers and committees, the constitution and by-laws,
Code of Professional Responsibility and Advisory

Opinions, Policies and Guidelines on Employment
Arbitrators, history of arbitration (which includes
past presidential interviews which contain valuable
insights on the development of labor arbitration in
the United States), copies of amicus briefs filed
with the U.S. Supreme Court, membership require-
ments, research and education, notice of future
meetings, and a retrievable database of Annual Pro-
ceedings (at no charge), the best sources of labor
arbitration authority in the United States and
Canada.

3. Office of Arbitration Services (OAS) of the Federal
Mediation and Conciliation Service (FMCS) (http://
www.fmcs.gov).
The OAS provides arbitration panels and lists to
labor and management customers. The OAS main-
tains an arbitration roster of approximately 1,400
qualified arbitrators. During FY 2014, the OAS pro-
cessed 13,300 requests for arbitrator panels and
arbitration; arbitrators on the FMCS roster heard
and decided 2,100 labor arbitration cases. The

CHAPTER 11 Labor and Employment Arbitration 581

Web site provides information on FMCS rules and
policies, how to request an arbitrator panel, how to
become an FMCS arbitrator, and arbitrator statistics

which includes awards by state, arbitrator per diem
rates, average cost of arbitration, issues, and panel
requests by state.

References
1. Cynthia F. Cohen and Theresa Domagalski, The

Effects of Mandatory Arbitration of Employment
Discrimination Claims: Perceptions of Justice and
Suggestions for Change, Employee Responsibili-
ties and Rights Journal, 11(1), 1998, pp. 27 40.

2. For a detailed historical perspective of labor
arbitration, see Dennis R. Nolan and Roger I.
Abrams, American Labor Arbitration: The Early
Years, University of Florida Law Review, 35,
Summer 1983, pp. 373 421.

3. United Steelworkers of America v. American
Manufacturing Company; 363 U.S. 566 567
(1960).

4. United Steelworkers of America v. Warrior and
Gulf Navigation Company, 363 U.S. 582 (1960).

5. United Steelworkers of America v. Enterprise
Wheel and Car Corporation, 363 U.S. 598 (1960).

6. AT&T Technologies Inc. v. Communications
Workers of America, The United States Law
Week, April 8, 1986, p. 4341.

7. The case is John Wiley and Sons v. Livingston
(1964), discussed in Ralph S. Berger, The Col-
lective Bargaining Agreement in Bankruptcy:
Does the Duty to Arbitrate Survive? Labor Law
Journal, 35, November 1984, pp. 385 393.

8. Nolde Brothers Inc. v. Local No. 358, Bakery and
Confectionary Workers Union AFL-CIO, 430 U.S.
254 (1977). See also Irving M. Geslewitz, Case
Law Development Since Nolde Brothers: When
Must Post-contract Disputes Be Arbitrated?
Labor Law Journal, 35, April 1984, pp. 225 238.

9. Paul F. Hodapp, The U.S. Supreme Court Rules
on Duty to Arbitrate Post-contract Grievances,
Labor Law Journal, 42, December 1991,
pp. 827 829.

10. The Boys Market Inc. v. Retail Clerk s Union,
Local 770, 398 U.S. 249, 250, 252 253 (1970). It
should be noted that injunctive relief applies only
when one party refuses to arbitrate issues that are
subject to grievance procedures specified in the
labor agreement. For additional details, see
Buffalo Forge Company v. United Steelworkers
of America, 428 U.S. 397 (1970).

11. Jeanette A. Davy and George W. Bohlander,
Recent Findings and Practices in Grievance

Arbitration Procedures, Labor Law Journal, 43,
March 1992, p. 187.

12. Nels E. Nelson and Walter J. Gershenfeld, The
Appointment of Grievance Arbitrators by State
and Local Agencies, Labor Law Journal, 52,
Winter 2001, pp. 258 267.

13. Bureau of National Affairs Inc., Basic Patterns in
Union Contracts (Washington, D.C.: Bureau of
National Affairs, 1995), p. 38.

14. Delbert C. Miller and William Form, Industrial
Sociology (2nd ed.) (New York: Harper & Row,
1964), p. 264.

15. Daniel F. Jennings and A. Dale Allen, Jr., Labor
Arbitration Costs and Case Loads: A Longitudinal
Analysis, Labor Law Journal, 41, February 1990,
pp. 80 88.

16. David E. Bloom and Christopher L. Cavanagh,
An Analysis of the Selection of Arbitrators,

American Economic Review, 86, June 1986,
pp. 408 422; Arthur Eliot Berkeley and Susan
Rawson Zacur, So You Want to Be an Arbitrator:
Update of a Guide to the Perplexed, Labor Law
Journal, 41, March 1990, pp. 170 174. For a
thorough analysis of arbitrators backgrounds,
experiences, and preferences, see Mario
F. Bognanno and Charles J. Coleman, Labor
Arbitration in America (New York: Praeger, 1992).

17. Clarence R. Deitsch and David A. Dilts, An
Analysis of Arbitrator Characteristics and Their
Effects on Decision Making in Discharge Cases,
Labor Law Journal, 40, February 1989, pp. 112
116; Brian Bemmels, Gender Effects in Griev-
ance Arbitration, Industrial Relations, 29, Fall
1990, pp. 513 525; Stephen M. Crow and James
W. Logan, Arbitrators Characteristics and
Decision-Making Records, Gender of Arbitrators
and Grievants, and the Presence of Legal Counsel
as Predictors of Arbitral Outcomes, Employee
Responsibilities and Rights Journal, 7, 1994,
pp. 169 185; Kenneth W. Thornicroft, Gender
Effects in Grievance Arbitration Revisited,

582 PART 3 Administering the Labor Agreement

Labor Studies Journal, 19, Winter 1995,
pp. 35 44.

18. Nels E. Nelson and Sung Min Kim, A Model of
Arbitral Decision Making: Facts, Weights, and
Decision Elements, Industrial Relations, 47(2),
2008, pp. 266 283.

19. Michael Marmo, Acceptability as a Factor in
Grievance Arbitration, Labor Law Journal, 50,
Summer 1999, pp. 97 102.

20. Bonnie G. Bogue and Katherine J. Thomson,
Pocket Guide to Just Cause: Discipline and Dis-
charge Arbitration, Berkeley, CA: California Pub-
lic Employee relations Program, Institute for
Research on Labor and Employment, University
of California, 2010, pp. 48 49.

21. Matthew M. Franckiewicz, How to Win Your
Arbitration Case Before the Hearing Even Starts,
Labor Law Journal, 60(3), 2009, pp. 115 120.

22. For an excellent discussion on arbitrability s
dimensions and implications, see Mark M.
Grossman, The Question of Arbitrability (Ithaca,
NY: ILR Press, 1984).

23. http://www.fmcs.gov
24. Clarence R. Deitsch and David A. Dilts, Factors

Affecting Pre-arbitral Settlement of Rights Dis-
putes: Predicting the Method of Rights Dispute
Resolution, Journal of Labor Research, 12, Win-
ter 1986, p. 76; Richard A. Posthuma and Maris
Stella Swift, Legalistic vs. Facilitative Approaches
to Arbitration: Strengths and Weaknesses, Labor
Law Journal, 52, Fall 2001, pp. 173 184.

25. For guidelines pertaining to an effective manage-
ment or union posthearing brief, see Douglas E.
Ray, On Writing the Posthearing Arbitration
Brief, Arbitration Journal, 47, December 1992,
pp. 58 60.

26. Matthew M. Franckiewicz, Dispute Resolution
Journal, February 1999, http://www.findarticles.
com.

27. Ronald W. Haughton, Running the Hearing, in
Arbitration in Practice, ed. Arnold M. Zack
(Ithaca, NY: ILR Press, 1984), p. 37.

28. See, for example, James B. Dworkin and Michael
M. Harris, Polygraph Tests: What Labor Arbi-
trators Need to Know, Arbitration Journal, 41,
March 1986, pp. 23 33; Kimberly Janisch-
Ramsey, Polygraphs: The Search for Truth in
Arbitration Proceedings, Arbitration Journal, 41,
March 1986, pp. 34 41; Herman A. Theeke and
Tina M. Theeke, The Truth About Arbitrators

Treatment of Polygraph Tests, Arbitration Jour-
nal, 42, December 1987, pp. 23 32; Marvin F.
Hill, Jr. and Anthony Sinicropi, Evidence in
Arbitration (2nd ed.) (Washington, D.C.: Bureau
of National Affairs, 1987).

29. Frank Elkouri and Edna Asper Elkouri, How
Arbitration Works (4th ed.) (Washington, D.C.:
Bureau of National Affairs, 1985), p. 302.

30. Barry Simon, Grievance Arbitration under the
Railway Labor Act, personal correspondence,
February 11, 2009.

31. See, for example, Cynthia L. Gramm and Patricia
A. Greenfield, Arbitral Standards in Medical
Screening Grievances, Employee Responsibilities
and Rights Journal, 3(3), 1990, pp. 169 184.

32. Herbert L. Marx, Jr., Who Are Labor Arbitration
Opinions Written For? And Other Musing About
Award Writing, Dispute Resolution Journal,
59(2), 2004, pp. 22 23.

33. Steven Starck, Arbitration Decision Writing:
Why Arbitrators Err, Arbitration Journal, 38,
June 1983, pp. 30 33. See also David Elliot,
When the Hearing Is Over: Writing Arbitral

Awards in Plain Language, Arbitration Journal,
46, December 1991, p. 53.

34. http://www.fmcs.gov.
35. Michael H. LeRoy and Peter Feuille, Private

Justice and Public Policy: Whose Voice Prevails in
Arbitration? Proceedings of the 54th Annual
Meeting of the Industrial Relations Research
Association (Champaign, IL: IRRA, 2002),
pp. 219 221.

36. Daniel F. Jennings and A. Dale Allen, Jr., How
Arbitrators View the Process of Labor Arbitra-
tion: A Longitudinal Analysis, Labor Law Jour-
nal, 44, Winter 1993, p. 44.

37. Stephen M. Crow and James Logan, A Tentative
Decision-Making Model of the Strong and Weak
Forces at Labor Arbitration, Journal of Collective
Negotiations in the Public Sector, 24(2), 1995,
pp. 111 120.

38. John B. LaRocco, Ambiguities in Labor Con-
tracts: Where Do They Come From? Dispute
Resolution Journal, 59(1), 2004, pp. 38 41.

39. The first two examples are from Allan J. Harrison,
Preparing and Presenting Your Arbitration Case:
A Manual for Union and Management Represen-
tatives (Washington, D.C.: Bureau of National
Affairs, 1979), pp. 23 24. The third example is
suggested by Thomas R. Knight, Arbitration and

CHAPTER 11 Labor and Employment Arbitration 583

Contract Interpretation: Common Law v. Strict
Construction, Labor Law Journal, 34, November
1983, pp. 714 726.

40. For arbitration examples of these dimensions of
past practice, see Arthur Dobbelaere, Williams H.
Leahy, and Jack Reardon, The Effect of Past
Practice on the Arbitration of Labor Disputes,
Arbitration Journal, 40, December 1985,
pp. 27 43.

41. Ibid., p. 38.
42. Donald J. Petersen, No Smoking! The Arbitra-

tion of Smoking Restriction Policies, Dispute
Resolution Journal, 50, January 1995, pp. 45 50.

43. William H. McPherson, Should Labor Arbitra-
tors Play Follow the Leader? Arbitration Journal,
4, 1949, p. 170.

44. David Dilts, Mark Crouch, and Mashaalah
Rahnama-Moghadam, Effectiveness in Griev-
ance Arbitration: Are There Differences in
Unions? Journal of Collective Negotiations in the
Public Sector, 26(4), 1997, pp. 333 338.

45. Rafael Gely and Timothy D. Chandler, Exploring
the Lumpiness of Grievance Arbitration
Decision Making, Journal of Collective
Negotiations in the Public Sector, Vol. 32, No. 4,
2010, pp. 287 304.

46. Harrell Alexander, Sr. v. Gardner-Denver Com-
pany, 415 U.S. 60 (1974).

47. Michelle Hoyman and Lamont E. Stallworth,
The Arbitration of Discrimination Grievances in

the Aftermath of Gardner-Denver, Arbitration
Journal, 39, September 1984, p. 55; Karen Elwell
and Peter Feuille, Arbitration Awards and
Gardner-Denver Lawsuits: One Bite or Two?
Industrial Relations, 23, Spring 1984, p. 295;
Aubrey R. Fowler, Jr., Arbitration, the Trilogy,
and Industrial Rights: Developments Since Alex-
ander v. Gardner-Denver, Labor Law Journal, 36,
March 1985, pp. 173 182. See also Elaine Gale
Wrong, Arbitrators Awards in Cases Involving
Discrimination, Labor Law Journal, 39, July
1988, pp. 411 417.

48. George M. Sullivan, Alexander v. Gardner-
Denver: Staggered but Still Standing, Labor Law
Journal, 50, March 1999, pp. 43 45. For a com-
prehensive analysis, see Donald J. Petersen and
Harvey R. Boller, Arbitral Responses to the
Changing External Law of Discrimination, Labor
Law Journal, 49, December 1998, pp. 1241 1253;
Harvey R. Boller and Donald J. Petersen,

Mandatory Arbitration Clauses, Dispute Reso-
lution Journal, 54, February 1999, pp. 56 58.

49. Wright v. Universal Maritime Service Corp., 119 S.
Ct. 391 (1998).

50. Stephen L. Hayford, The Coming Third Era of
Labor Arbitration, Arbitration Journal, 48, Sep-
tember 1993, p. 17. See also Martha S. Weisel,
The Tension between Statutory Rights and

Binding Arbitration, Labor Law Journal, 42, July
1991, pp. 766 772.

51. David P. Twomey, Tithe Supreme Court s 14
Penn Plaza, LLC v. Pyett Decision: Impact and
Fairness Considerations for Collective Bargain-
ing, Labor Law Journal, 61(2), 2010, pp. 55 66.

52. Hoyt N. Wheeler, Unions and the Arbitration of
Statutory Rights, Perspectives on Work, 14(1/2),
2010, pp. 26 28.

53. Spielberg Manufacturing Company, 112 NLRB
1080 (1955). See John C. Truesdale, NLRB
Deferral to Arbitration: Still Alive and Kicking,
http://www.NLRB.gov/press/.

54. Collyer Insulated Wire and Local Union 1098,
International Brotherhood of Electrical Workers,
192 NLRB 150 (August 20, 1977).

55. Curtis L. Mack and Ira P. Bernstein, NLRB
Deferral to the Arbitration Process: The Arbitra-
tor s Demanding Role, Arbitration Journal, 40,
September 1985, pp. 33 43. For a related research
effort, see Benjamin W. Wolkinson, The Impact
of the Collyer Policy on Deferral: An Empirical
Study, Industrial and Labor Relations Review, 38,
April 1985, pp. 377 391.

56. Pat Greenfield, The NLRB s Deferral to Arbitra-
tion before and after Olin: An Empirical Analy-
sis, Industrial and Labor Relations Review, 42(1),
1988, pp. 34 49. See also Remarks of NLRB
Chairman Gould on Deferral to Arbitration,
Bureau of National Affairs Inc., Daily Labor
Report, June 16, 1994, pp. E1 E3.

57. James L. Ferree, National Labor Relations Board
Deferral to Arbitration, Dispute Resolution Jour-
nal, 52, Summer 1997, pp. 31 35.

58. Babcock & Wilcox Construction Co., Inc. and
Coletta Kim Bennett, 361 NLRB No. 132,
December 15, 2014; 2015 Skills Enhancement
Workshop, National Academy of Arbitrators,
October 23, 2015, NLRB faculty.

59. Patricia A. Greenfield, How Do Arbitrators Treat
External Law? Industrial and Labor Relations
Review, 45, July 1992, p. 695.

584 PART 3 Administering the Labor Agreement

60. D.R. Horton, Inc. and Michael Cuda, 357 NLRB
No. 184, January 2, 2012.

61. Decision of Supreme Court in Paperworkers v.
Misco, Inc., Bureau of National Affairs, Daily
Labor Report, December 1, 1987, pp. D1 D5. See
also Bernard F. Ashe, Arbitration Finality and
the Public-Policy Exception, Dispute Resolution
Journal, 47, September 1994, pp. 22 28, 87 89.

62. Practitioners Assess Impact of Court Decisions
Bolstering Finality of Labor Arbitration Awards,
Bureau of National Affairs, Daily Labor Report,
December 14, 1987, p. A1. For additional con-
sideration of public policy intertwined with arbi-
tration decisions in drug testing, see Lorynn A.
Cone, Public Policies against Drug Use: Paper-
workers v. Misco Inc., Labor Law Journal, 40,
April 1989, pp. 243 247. See also Bernard D.
Meltzer, After the Labor Arbitration Award: The
Public Policy Defense, Industrial Relations Law
Journal, 10(2), 1988, pp. 241 251; Robert F.
Wayland, Elvis C. Stephens, and Geralyn
McClure, Misco: Its Impact on Arbitration
Awards, Labor Law Journal, 39, December 1988,
pp. 813 819; Arthur Hamilton and Peter A.
Veglahn, Public Policy Exceptions to Arbitration
Awards, Labor Law Journal, 42, June 1991,
pp. 366 370.

63. Court Vacates Reinstatement of Employee
Charged with Sexual Abuse of Customer, Bureau
of National Affairs, Daily Labor Report, March 29,
1991, pp. A4 A5. See also Reinstatement of
Sexual Harasser Overturned as Public Policy
Violation, Bureau of National Affairs, Inc., Daily
Labor Report, October 22, 1990, pp. A8 A9.

64. Accused Sex Harasser Gains Reinstatement,
Bureau of National Affairs, Daily Labor Report,
April 10, 1992, pp. A1, A2. See also Thomas J.
Piskorski, Reinstatement of the Sexual Harasser:
The Conflict between Federal Labor Law and
Title VII, Employee Relations Law Journal, 18,
Spring 1993, pp. 617 623; Christie L. Roszkowski
and Robert F. Wayland, Arbitration Review: Is
the Public Policy against Sexual Harassment Suf-
ficient Cause for Vacating an Arbitration
Award? Labor Law Journal, 44, November 1993,
pp. 707 717.

65. Margaret A. Jacobs, Men s Club: Riding Crop
and Slurs: How Wall Street Dealt with a Sex Bias
Case, Wall Street Journal, June 9, 1994, pp. A4,
A6; Barbara Presley Noble, Attacking

Compulsory Arbitration, New York Times, Jan-
uary 15, 1995, p. F21; Reinstatement of Alleged
Sexual Harassers Does Not Violate Public Policy,
Forum Told, Bureau of National Affairs, Daily
Labor Report, January 10, 1994, pp. A10, A11.

66. Richard Mittenthal, Self-Interest: Arbitration s
Unmentionable Consideration, Dispute Resolu-
tion Journal, 47, March 1994, pp. 70 72.

67. Harry J. Dworkin, How Arbitrators Decide
Cases, Labor Law Journal, 25, April 1974, p. 203.

68. Arbitrator Traces Growing Legalism as Pro-
ceedings Are Modeled on Courts, Bureau of
National Affairs, Daily Labor Report, June 3,
1991, p. A6; James Oldham, Arbitration and
Relentless Legalization in the Workplace, in
Arbitration 1990: New Perspectives on Old Issues,
ed. Gladys W. Gruenberg, Proceedings at the
Forty-third Annual Meeting, National Academy
of Arbitrators (Washington, D.C.: Bureau of
National Affairs, 1991), pp. 23 40.

69. http://www.fmcs.gov/.
70. Nels E. Nelson and A. N. M. Meshquat Uddin,

The Impact of Delay on Arbitrators Decisions in
Discharge Cases, Labor Studies Journal, 23,
Summer 1998, pp. 3 19.

71. Allen Ponak, Wifred Zerbe, Sarah Rose, and
Corliss Olson, Using Even History Analysis to
Model Delaying Grievance Arbitration, Indus-
trial and Labor Relations Review, 50, October
1996, pp. 105 110.

72. Linda S. Byars, Limiting an Arbitrator s Reme-
dial Power, Labor Law Journal, 48, January 1997,
pp. 29 33.

73. http://www.fmcs.gov.
74. Nancy Kauffman, The Idea of Expedited Arbi-

tration Two Decades Later, Arbitration Journal,
46, September 1991, p. 35.

75. Dennis R. Nolan and Roger I. Abrams, The
Future of Labor Arbitration, Labor Law Journal,
37, July 1986, pp. 441 442.

76. Richard N. Block and Hoyt Wheeler, Employ-
ment Arbitration, Labor Arbitration, and Arbi-
trators, Report to the National Academy of
Arbitrators Board of Governors, May 4, 2009.

77. Elizabeth Hill, AAA Employment Arbitration: A
Fair Forum at Low Cost, Dispute Resolution
Journal, 59(2), 2003, pp. 9 15.

78. Thomas J. Piskorski and David B. Ross, Private
Arbitration as the Exclusive Means of Resolving
Employment-Related Disputes, Employee

CHAPTER 11 Labor and Employment Arbitration 585

Relations Law Journal, 19, Autumn 1993, p. 206;
Loren K. Allison and Eric H. J. Stahlhut, Arbi-
tration and the ADA: A Budding Partnership,
Arbitration Journal, 48, September 1993, pp.
53 60.

79. Helen LeVan, Decisional Model for Predicting
Outcomes of Arbitrated Sexual Harassment Dis-
putes, Labor Law Journal, 44, April 1993, p. 231.
See also Robert A. Shearer, The Impact of
Employment Arbitration Agreements in Sex Dis-
crimination Claims: The Trend toward Nonjudi-
cial Resolution, Employee Relations Law Journal,
18, Winter 1992 1993, pp. 479 488; Stuart L.
Bass, Recent Court Decisions Expand Role of
Arbitration in Harassment and Other Title VII
Cases, Labor Law Journal, 43, December 1992,
pp. 772 779; Stuart H. Bompey and Michael P.
Pappas, Is There a Better Way? Compulsory
Arbitration of Employment Discrimination
Claims after Gilmer, Employee Relations Law
Journal, 19, Winter 1993 1994, pp. 197 216;
Evan J. Spelfogel, New Trends in the Arbitration
of Employment Disputes, Arbitration Journal,
48, March 1993, pp. 6 15.

80. Patricia Thomas Bittel, Arbitration: Is This
Where We Were Headed? Labor Law Journal,
53, Fall 2002, pp. 130 131. See also Circuit City
Stores, Inc. v. Adams, 532 U.S. 143 (2001); EEOC
v. Waffle House, Inc., 534 U.S. 279 (2002).

81. Ibid.
82. Michael H. Leroy and Peter Feuille, Short Cir-

cuiting Circuit City? Judicial Enforcement of
Mandatory Employment Arbitration, in Pro-
ceedings of the 55th Annual Meeting of the
Industrial Relations Research Association
(Champaign, IL: Industrial Relations Research
Association, 2003), pp. 281.

83. Ellen J. Vargyas, Verdict on Mandatory Binding
Arbitration in Employment, Dispute Resolution
Journal, 52, Fall 1997, pp. 10 14.

84. Charles J. Coleman and Jose A. Vazquez, Man-
datory Arbitration of Statutory Issues under Col-
lective Bargaining: Austin and Its Progeny, Labor
Law Journal, 48, December 1998, pp. 703 723. See
also Charles J. Coleman, Invited Paper: Mandatory
Arbitration of Statutory Issues: Austin, Wright, and
the Future, in Arbitration 1998: The Changing
World of Dispute Resolution;Proceedings of the 51st
Annual Meeting of the National Academy of

Arbitrators, ed. Steven Briggs and Jay E. Grenig
(Washington, D.C.: Bureau of National Affairs,
Inc., 1999), pp. 134 159.

85. Theodore J. St. Antoine, Mandatory Arbitration:
Something Old, Something New, Perspectives on
Work, 7(2), 2004, pp. 21 22.

86. Michael H. Leroy and Peter Feuille, Short Cir-
cuiting Circuit City? Judicial Enforcement of
Mandatory Employment Arbitration, in Pro-
ceedings of the 55th Annual Meeting of the
Industrial Relations Research Association (Cham-
paign, IL: Industrial Relations Research Associa-
tion, 2003), pp. 27 278.

87. Hoyt N. Wheeler, Brian S. Klaas, and Douglas M.
Mahoney, Workplace Justice without Unions
(Kalamazoo, MI: W. E. Upjohn Institute for
Employment Research, 2004), p. 16.

88. Walter J. Gershenfeld, Due Process in Employ-
ment Arbitration: Differential Coverage Is Not
Due Process, in Proceedings of the 57th Annual
Meeting, ed. Adrienne E. Easton, (Champaign, IL:
Labor and Employment Relations Association,
2005), pp. 259 269.

89. Lisa B. Bingham, Emerging Due Process Con-
cerns in Employment Arbitration: A Look at
Actual Cases, Labor Law Journal, 46, February
1996, pp. 108 120; Marjorie L. Icenogle and
Robert A. Shearer, Emerging Due Process Stan-
dards in Arbitration of Employment Discrimina-
tion Disputes: New Challenges for Employers,
Labor Law Journal, 48, February 1998, p. 84.

90. Morton H. Orenstein, Mandatory Arbitration:
Alive and Well or Withering on the Vine?
Dispute Resolution Journal, 54, August 1999,
p. 86.

91. Lisa B. Bingham, Employment Arbitration: Dif-
ferences between Repeat Player and Nonrepeat
Payer Outcomes, Proceedings of the 49th Annual
Meeting of the Industrial Relations Research
Association (Madison, WI: IRRA, 1997),
pp. 201 207.

92. Theordore J. St. Antoine, Mandatory Arbitra-
tion: Bane or Boon? http://writ.news.findlaw.
com/commentary/20000815_stantoine.html.

93. Brian S. Klaas, Douglas Mahony, and Hoyt N.
Wheeler, Decision-Making about Workplace
Disputes: A Policy Capturing Study of Employ-
ment Arbitrators, Labor Arbitrators and Jurors,
Industrial Relations, 45, 2006, pp. 68 95.

586 PART 3 Administering the Labor Agreement

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Whether the Employer Violated the Contract by
Implementing Fleet Operation Changes on or about
June 18, 2014? If so, What Is the Appropriate Remedy?

Background

S & L Group produces and sells baking products. The
United Drivers represents the truck drivers. The parties
have a collective bargaining agreement effective from
March 18, 2014 until March 20, 2018.

This matter of arbitration has as its origin the fol-
lowing Grievance filed by Aaron Presley on June 30,
2014:

On June 18, 2014, the Employer unilaterally put
into effect changes in the driver s wages, hours
and working conditions by adopting what the
Employer described as Fleet Operational Changes .
The operational changes will be implementing on
June 18, 2014 are:

Top end speed on the tractors will be set at 65 MPH
Drivers will be required to pick up their tractors at
the facility at the time of dispatch and upon com-
pletion of the trips for the week, the tractors will be
returned to the plant and drivers clock out.
The driver dispatch documents will include a set of
trip route documents. The drivers will be expected
to travel the routes as directed in the documents.
Any variance will need to be communicated to the
dispatcher.
All trips will be monitored. Following the comple-
tion of the set of deliveries, the dispatcher will print
the data collected and attach it to the documents
the drivers submit to the dispatch office.

The Employer has refused to bargain with the Union
over these changes as required under the National
Labor Relations Act and the Recognition provision
of the collective bargaining agreement. Article 1 of
the collective bargaining agreement requires that all
conditions of employment relating to wages, hours of
work, and overtime differentials shall be maintained
at not less than the highest standards of the Com-
pany in effect at the signing of the Agreement. The
changes made by the Employer have adversely
impacted the drivers wages and hours of work in
violation of Article 34. Article 5 of the Agreement

gives the Employer the right to make certain changes
with respect to the drivers working conditions; how-
ever, it is prohibited from doing so where the changes
are used for the purpose of discriminating against
any employee or otherwise in violation of the specific
terms of this Agreement. These changes violate past
practice and result in a substantial reduction in pay
of the drivers and have an adverse impact on their
hours of work in violation of Articles 1, 13, 26, 32,
and 34 of the Agreement.

The remedy requested:

Rescind all of the changes made on June 18, 2014
and revert back to the conditions that existed prior
to that date. Make all bargaining unit members
whole because of the violations of the collective bar-
gaining agreement.

The Company response was:

The Company denies that it has violated the agree-
ment therefore the grievance is denied. If you do not
agree with this decision, the appropriate Company
representative will be happy to meet with you, in
accordance with our collective bargaining agree-
ment, to discuss the matter.

The Union appealed the Grievance to arbitration.

Relevant Provisions of the Agreement

Article 5: Management Rights
The management of the Company and direction of
the truck drivers, including but not limited to the
maintenance of discipline and efficiency of employees;
to use common carriers and/or casual drivers as the
Company deems best to meet the customer require-
ments and delivery needs in situations where no full-
time drivers are physically and legally available to
complete the work at the required time; provided
that such will not be used for the purpose of discrim-
ination against any employee or be otherwise in viola-
tion of the specific terms enumerated in this
Agreement. All rights that the Company has had
in the past and those which are inherent in the

CHAPTER 11 Labor and Employment Arbitration 587

Company, except as modified by applicable Federal
and State laws and the terms of this Agreement, are
retained solely by the Company.

Article 13: Responsibilities of the Parties
Each of the parties hereto acknowledges the rights and
responsibilities under this Agreement. The Union recog-
nizes the obligation imposed upon it as the exclusive
bargaining agent of the employees, and realizes that in
order to provide maximum opportunities for good
working conditions and good wages, the Company
must operate efficiently and at the lowest possible cost
consistent with fair working conditions. The Union
agrees to cooperate with the Company with attaining a
fair days work on the part of its members in the intro-
duction of new methods; and promotion of efficiency; in
eliminating waste; in conserving materials, supplies, and
equipment; in improving the quality of workmanship; in
preventing accidents; discouraging absenteeism and
strengthening good will and mutual respect between
the Company, the Employees, and the Union.

Article 18: Arbitration
Section 2: The arbitrator shall not have the power to
add to, subtract from, or modify any of the terms of
this contract. The decision of the arbitrator shall be
final and binding upon parties and shall be rendered
within thirty (30) days following the hearing.

Article 34: Maintenance of Standards
The Company agrees that all conditions of employ-
ment relating to wages, hours of work, and overtime
differentials shall be maintained at not less than the
highest standards of the Company in effect at the time
of the signing of this Agreement and the conditions of
employment shall be improved wherever specific pro-
visions for improvement are made elsewhere in this
Agreement.

Appendix A
This appendix inclusive of Change in Dispatch Loca-
tion letter dated February 24, 2014 as a Letter of
Understanding.

2014 2015 2016
$ $ $

Mileage Year 1 Year 2 Year 3
Single Man $0.3935 $0.4015 $0.4090 Per Mile
Double
Man

$0.4885 $0.4965 $0.5040 Per Mile

Positions of the Parties
The Union:
The Union stated that it has represented the drivers of
the College Park plant since 1973. A number of differ-
ent employers have owned this plant during this period
of time and have been signatory to collective bargain-
ing agreements. United Drivers have delivered the
product produced at the plant during the entire period
of time that the Union has been the drivers represen-
tative. There were approximately 28 drivers in the unit.
The evidence shows that all but one of the drivers who
works in the unit are over the road drivers, and they
are primarily paid based on mileage (approximately 90
percent of the drivers pay is based on mileage). The
methods of compensation for the drivers are set out in
Appendix A of the Agreement.

In the past, the drivers have been permitted to take
whatever route they chose to their destinations. Up
until the current negotiations, the Company has not
specified or prescribed routes for the unit drivers. Up
until these negotiations, the only restriction with
respect to the speed the drivers were permitted to
drive their trucks was that they could not exceed the
posted speed limit for the area in which they were driv-
ing and/or 70 miles per hour.

The Union and Management began negotiations for
a new Collective Bargaining Agreement shortly after the
initial contract expiration date. At the bargaining session
on January 13, 2013, Jim McBride, Chief Negotiator for
S & L, advised the Union that S & L had adopted the
Smart Way Program that the Company was going to put
in place for the unit drivers and the facility and that
Larry Tate would explain the program. Larry Tate,
who is in charge of Transportation for the facility,
advised the Union negotiators that under the Employer s
Smart Way Program, the maximum speed limit the dri-
vers would be permitted to drive was 65 miles per hour.
He also said that S & L was studying and considering a
62 mile per hour speed limit.

Tate stated that the drivers would no longer be
permitted to carry their trucks home and that S & L
would be using the PC miler 18 computer program to
calculate the drivers pay. Tate stated that S & L would
distribute routes per PC miler 18 and drivers would be
paid based on the mileage specified by PC miler 18 and
not hub miles or actual miles driven. Tate stated that, if
the drivers had a situation in which they needed to
deviate from the prescribed route, they would be
required to contact the dispatcher for approval of any
change in routing. Tate advised the Union that S & L

588 PART 3 Administering the Labor Agreement

would be giving the Union in writing all of the fleet
operation changes in the near future and the changes
would go into effect on June 11, 2014.

After a break, the S & L negotiators returned to the
table and stated that the Company had decided not to
tie driver pay to the PC miler 18 as previously stated.
The Union was advised that the drivers would continue
to be paid by hub miles or actual miles driven. S & L
negotiators stated that S & L would be putting gover-
nors on the trucks that would actually turn the trucks
down to a maximum speed of 65 miles per hour and
that was the speed that the driver could not exceed.

The Union asked the S & L negotiators questions
and gave suggestions as to how the top end speed issue
could be dealt with. S & L Negotiator Jim McBride told
the Union that Employer would listen to the Union s
suggestions; however, S & L would not bargain over the
issue of the maximum speed of the vehicles. According
to McBride, the subject of the speed of the vehicles was
not a mandatory subject of bargaining and S & L would
not bargain over this issue.

The Union negotiators advised the S & L negotia-
tors that they would give the Company written propo-
sals on the proposed fleet operations changes and S & L
Negotiator McBride restated that S & L would not bar-
gain over these issues.

On May 20, 2014, Assistant Business Agent Wil-
liam Ikerd received an e-mail from Larry Tate outlining
the operational changes that the Company was imple-
menting. The implementation date was moved back to
June 18, 2014.

That e-mail outlined the changes in the fleet oper-
ational changes (listed above in the Grievance).

On May 24, 2014, William Ikerd sent a letter
wherein he responded to Tate s May 20 e-mail and
the statements made by the S & L negotiators in bar-
gaining. In this communication, Garmon reiterated the
Union s position that the maximum speed was a man-
datory subject of bargaining.

On June 4, 2014, the Union gave S & L a written
proposal wherein the Union objected to the proposed
changes. The Union advised the S & L negotiators that
reducing the maximum speed of the vehicles had the
effect of reducing the drivers pay by 8 percent. Local
President Ray Brown explained that, under the
announced new operations changes, it would take the
drivers more time to make the same amount of money.
He explained that, because DOT rules limited the num-
ber of hours that the drivers can drive each day, the
limitation placed on their speed had an adverse impact

on the earnings of the drivers. Brown argued to the
Employer that reducing the speed from 70, which is
the speed limit on most interstate highways to 65, is a
8 percent cut in pay and would cost the drivers a fur-
ther reduction in pay when they were unable to return
to the plant in time to get their next day s dispatch due
to DOT hours of operations rules. The S & L negotia-
tors only response to the Union s arguments and pro-
posals on the reduction in the top end speed was that
they would not bargain over the speed limit issue. The
Union claimed on June 18, 2014 S & L put in place all
the changes outlined in Tate s May 20, 2014 e-mail.

The Union argued that the evidence shows that the
primary portion (approximately 90%) of the drivers
work time is spent driving. A substantial part of the
drivers work time is spent in driving on highways
where the maximum lawful speed limit is 70 miles
per hour. The maximum speed that these over-
the-road drivers can operate their trucks has a direct
and substantial impact on these drivers hours of work
and their entire working experience.

Under the newly revised rules, drivers spend four
additional hours per week at work due to the increased
driving time associated with S & L s implementation of
the 65 mile per hour maximum and/or top end speed.

On the date on which this collective bargaining
agreement was signed, the maximum speed authorized
for the drivers was 70 miles per hour or the posted
speed limit. Accordingly, the Maintenance of Standards
provision mandates and explicitly requires S & L to
maintain the 70 miles per hour top end speed subject
to the posted speed limit of the driving areas involved.
This condition of employment was in effect at the time
of the execution of this agreement. S & L violated the
Maintenance of Standards provision and the contract
by decreasing the top end speed to 65 miles per hour
and the Company is continuing to violate the contract
to this date.

S & L asserted that the Management Rights provi-
sion of the contract supersedes the Maintenance of
Standards provision as to the top end speed issue and
S & L has the right under the Management Rights pro-
vision to decrease the maximum speed of the vehicles.
According to the Employer s position, the speed of the
vehicles has an impact on such issues as efficiency,
safety, and cost savings. Under the Employer s position,
these types of matters are within its exclusive province
of the Employer. The problem with this argument is
that the Management Rights provision of the contract
has the following proviso:

CHAPTER 11 Labor and Employment Arbitration 589

provided that such will not be used for the purpose
of discrimination against any employee or other-
wise in violation of the specific terms enumerated
in this Agreement.
The reduction in the top end speed violated an

express provision of this contact, the Maintenance of
Standards provision. The Maintenance of Standards pro-
vision trumps the Management Rights provision with
respect to this dispute, not the reverse. The Management
Rights provision restricts the employer s right to reduce
the top end speed by stating the Company shall endeavor
to make the maximum use of its full-time employees. S &
L is not making the maximum use of its full-time drivers
if it limits their mileage and then turns around and gives
part of their work to subcontractors.

Article 13 of the contract was cited by the Com-
pany as one of the bases for S & L s reduction in the
top end speed. There is the statement in that provision
of the contract that the Company must operate effi-
ciently and at the lowest possible cost. That language
is conditioned on the phrase consistent with fair
working conditions. The Union submits that S & L s
unilateral action in changing the top end speed during
the term of the contract and refusing to bargain over
this issue is not consistent with that commitment. It is
not fair working conditions for the Employer to impose
unilaterally a working condition on the drivers that
causes a significant increase in their work hours with-
out some type of increase in pay; time is money. The
drivers time certainly has some value. The drivers have
had their time at work and driving time increased with
no increase in their compensation.

The Union submitted that the clear and explicit
language of the collective bargaining agreement, specif-
ically the Maintenance of Standards provision, prohi-
bits S & L from decreasing the top end speed of the
trucks during the life of the contract. By making this
change, S & L violated the contract and continues to
violate the contract at the present time.

As remedy, the Union contends that the Arbitrator
should order S & L to increase the top end vehicle
speed to 70 miles per hour or the posted speed limit
consistent with the conditions that existed at the time
of the execution of the contract. The Union asks the
Arbitrator to award pay to the drivers for the added
time that they have had to spend driving due to the
increase in their hours of work.

The Union argued that S & L has clearly saved
money due to the lowering of the top end speed and
S & L saved this money by violating the Maintenance

of Standards provision of the contract. The Union con-
tends S & L should not benefit from its violation of the
contract, and the Arbitrator should order S & L to pay
the drivers for their increased work time based on the
formula specified above.

The Company:
The Company stated that while the changes con-

tains four specific operational changes, the Union chal-
lenged only the program s setting of the top end speed
on Company trucks at 65 miles per hour.

The Company stated that the current Agreement was
effective from March 18, 2014 through March 20, 2018.

The Company stated that, as early as January or
February 2014, Tate discussed the possibility of a
change to the top end speed of the Company s trucks
with the entire transportation group. Tate specifically
discussed a potential change in the top end speed with
Union Steward Presley. During these discussions, Tate
noted that a reduction in the top end speed could yield
cost savings with respect to safety, fuel consumption,
and insurance costs. Following these discussions, Tate
surveyed other major carriers in the transportation
industry. Each of these outfits confirmed that they
were utilizing a top end speed between 60 and 65
miles per hour. None of these units, by contrast, was
utilizing a top end speed in excess of 65 miles.

Tate reviewed a publication of the Transportation
Research Board. This study, known as the Commercial
Truck and Bus Safety Synthesis Program, concluded
that safety, fuel efficiency, and insurance costs improve
dramatically where trucks are set up with a top end
speed of 65 miles per hour.

The Company for some time has been engaged in
a corporate-wide initiative to reduce carbon emissions
associated with its overall operations. This initiative is
not limited to transportation operations but, rather,
applies to all aspects of the Company s operations.
With respect to transportation specifically, the Com-
pany attempted to comply with governmental Smart-
Way Standards which limits the top end speed of
trucks to 65 miles per hour.

The Company holds all common carriers operating
out of the Company s plant to SmartWay standards,
including the 65 mile per hour limitations. As Tate
explained, the Company eliminates common carriers
who fail to comply with SmartWay guidelines.

On May 13, 2014, Company spokespersons
McBride and Tate informed the Union that the Com-
pany intended to implement various operational
changes at the facility. The operational changes

590 PART 3 Administering the Labor Agreement

included reducing the top speed on the truck governors
from 70 miles per hour to 65 miles per hour. During
this meeting, the Company specifically informed the
Union of the rationale for the change in the top end
speed. Therefore, the Company noted that the reduc-
tion in top end speed sought to improve fuel efficiency,
safety and insurance costs. The Company noted that
the 65 mile per hour standard already applied to all
common carriers operating out of plant.

On May 20, 2014, the Company forwarded the
Union a written summary of the operational changes.
The summary noted that the operational changes
would take effect on June 18, 2014.

On May 24, 2014, the Union forwarded a letter to
the Company opposing the change in the top end
speed for Company trucks. The Union s letter con-
tended that the Company s institution of the change
constituted an unlawful refusal to bargain.

The Union raised the top end speed issue during a
June 4, 2014 bargaining session. During that meeting,
the Union offered a counterproposal which the max-
imum speed of the trucks at the lawful speed for the
area traveled. The Company responded to the Union s
proposal by reiterating that the operational changes
already were permissible under existing contract
language.

The Company instituted the 65 mile per hour lim-
itation on June 18, 2014. Following the change, the
Company completed a fuel consumption study cover-
ing all drivers. The study reveals that the aggregate
miles per gallon for the fleet ranged from 5.46 to 5.98
for the six months immediately preceding institution of
the 65 mile per hour standard. For the three months
following the change, the aggregate miles per gallon
ranged from 6.50 to 6.60. The fuel efficiency improve-
ment related to the 65 mile per hour standard is very
substantial. The 65 miles per hour standard had little,
if any, impact on the earnings of the drivers. A driver s
workday includes duties and functions other than

time behind the wheel. The drivers make deliveries to
Company facilities and customers and, for this reason,
the drivers workday includes wait time associated with
deliveries. Approximately 40 percent of the driving
time completed by drivers involves roads with speed
limits well under 65 miles per hour.

The drivers actually experienced a slight wage
increase in average weekly earnings following the insti-
tution of the 65 miles per hour standard. During the 15
weeks immediately preceding the change, the drivers
averaged weekly earnings of $1,356. In the 15 weeks

following the implementation of the 65 miles per
hour limitation, average weekly earnings increased
one dollar ($1) to $1,357. The Grievance alleged a sub-
stantial reduction in pay and an adverse impact on
hours of work associated with the miles per hour
limitation.

The Company argued that the Union has not met
its burden of proof. The Union has the burden of prov-
ing that the Company violated the Agreement. This
burden requires the moving party to prove by a pre-
ponderance of the evidence that the contract was brea-
ched. This burden of proof really means that the party
which has the burden must produce more evidence
than the party which does not have the burden.
There exists a strong presumption of contract compli-
ance that the grieving party must overcome before it
can prevail. The Company claimed that the Collective
Bargaining Agreement clearly and unambiguously jus-
tifies the Company s actions.

The Company instituted the 65 miles per hour
standard to achieve cost savings associated with fuel
consumption and safety. The Company did so only
after a thorough review of industry standards. The 65
miles per hour standard comports with government
and environmental guidelines that the Company
strictly imposes on both itself and third party common
carriers with which it does business. The 65 miles per
hour limitation clearly must be deemed an efficiency
standard related to delivery methods and fuel conser-
vation. On each of these fronts, the Company clearly
retains the contractual right to institute operational
changes.

First, Article 5: Management Rights provision
clearly reserves to the Company all rights related to
the efficiency of employees. The 65 miles per hour
change directly and clearly relates to the efficiencies
and delivery schedules/methods covered by the Man-
agement Rights clause.

Second, Article 13 s Responsibilities of the Parties
clause speaks directly to issues of efficiency and
conservation. The clause compels the Union to
cooperate with the promotion of efficiency and

the conserve[ation] of materials. It is undisputed
that the 65 miles per hour operational change yielded
very substantial savings related to fuel conservation.

These efficiencies are the very sort of new methods
covered by Article 13.

The Company argued that the Union s reliance on
Article 34 s maintenance of standards provisions is
misplaced. The operational change instituted by the

CHAPTER 11 Labor and Employment Arbitration 591

Company clearly was driven by efficiency and conser-
vation concerns. Nevertheless, the Union s arguments
attempted to recast the 65 miles per hour standard as a
wage reduction or hours increase. The Union s

position fails.
Article 34 s Maintenance of Standards provision

does not foreclose all Company actions related to any
arguable condition of employment. Article 34 states
that only employment conditions specifically related
to wages, hours of work, and overtime differentials
shall be maintained.

A driver s delivery schedule includes, and always
has included, both drive time and wait/delivery time.
The allotted drive time scheduling estimate never
exceeds 57 miles per hour, even on an interstate high-
way. For these reasons, the 65 miles per hour standard
has not had, and does not have, any impact whatsoever
on drivers wages. Absent such an impact, the Union s
reliance on Article 34 fails.

The problem with the Union s position is that
Article 34 does not speak to driving time. Article 34
requires a correlation with all hours of workwhether
spent driving or not. As Tate explained, the 65 miles
per hour standard has no impact whatsoever on a dri-
ver s total hours of work or the workday. Clearly,
there has been no impact on the drivers hours of
work, as required by Article 34. At most, any impact
has been limited to the driver s hours of driving.

The Union contends that a driver could exceed the
DOT s 11 hour maximum for permissible driving time
as a result of the 65 miles per hour limitation. This

argument ignores Company scheduling protocols,
wait time, refueling time, and a host of other realities
applicable to the drivers employment. The Union s
position fails because there is absolutely no evidence
that any driver exceeded the 11 hour limitation as a
result of the Company s actions.

The Company concluded:

The 65 miles per hour limitation falls squarely
within the Company s clear, existing contractual
rights. The change had no impact on wages or
hours of work. However, the action clearly had
and continues to have a positive impact on effi-
ciency safety and costs.

Therefore, based on the foregoing facts, argu-
ments and authorities, the Company respectfully
submits that the grievance lacks merit, and should
be dismissed in its entirety.

Questions
1. What is the appropriate level of proof?
2. Which party bears the burden of proof?
3. Could this matter be subject matter under the

jurisdiction of the NLRB?
4. Should the arbitrator consider the Company s

attempt to bargain over the reduction to 65 miles
per hour?

5. You be the arbitrator and decide the outcome. Give
your reasoning.

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Issue: Did the Company Violate the Collective
Bargaining Agreement When It Reduced the Hours of
Full-Time Employees to Less than 35 Hours per Week
as This Action Relates to the NLRB Charge?

Background

Roe Services, Inc. is a federal government contractor
for food services. The Government Employees Union
(GEU) represents the food service and custodial or
maintenance employees. GEU has represented the
food service employees over at the course of more
than 25 years through a series of federal contractors.
The GEU and Roe Services signed a Collective

Bargaining Agreement for the period October 12,
2012 to September 30, 2016.

The Grievance in this matter was Company is con-
verting all fulltime employees to part time.

Mr. Bob Pain, President, GEU, wrote the following
letter to Mr. Joe Roe, President, Roe Services, Inc.:

The Company informed the Union that on Septem-
ber 1, 2015 it will put up a new schedule that

592 PART 3 Administering the Labor Agreement

contains only part time schedules with the exception
of the Shop Steward s position which will remain
fulltime. I was going to wait until you posted this
schedule to file the grievance but I have chosen to
file the grievance in advance of your illegal action in
an attempt to sway you away from such drastic
action. You bid your government contract with full-
time employees and their benefit packages in your
direct labor cost, you bridged the then existing col-
lective bargaining agreement with fulltime employ-
ees, you even negotiated a new CBA less than one
year ago with fulltime employees in it so why are
you now choosing to convert the fulltime employees
to part-time? The CBA clearly defines fulltime and
part-time employees with the clear and unambigu-
ous position that the workforce is made up of both
types of employees. Part-time employees serve two
basic purposes; one is to backfill and replace full-
time employees who are out on various types of
absences and two, they fill in on the weekends and
shifts of less than 3 hours. Because of the operating
hours of the various galleys and the need to pro-
vided 365 day service the Union has put up with
the use of part-time employees in an effort to get
along with the Company and in an understanding
of what the customer s wants and needs are. This
tolerance will diminish greatly if Company is deter-
mined the follow through on this illegal action.

Article 6 Management rights states that the
Company has the right to establish new jobs, abol-
ish or change existing jobs, increase or decrease the
number of jobs. . . whereas jobs are those that exist
in the CBA currently or new job classifications
negotiated between the Union and the Company
at some point in the future. The Company does
not have the right to change an employee s classifi-
cation of fulltime to part-time at will. There is a
CBA in place that defines clearly how those types
of actions are to take place. In fact, many sections
of the CBA are written specifically for that very
purpose. A job is not a classification but a specific
set of parameters, scope of work, to be performed by
the two types of employees classified by the CBA as
fulltime or part-time. Article 12, Section 2 defines
the two classifications.

Article 29 Part-Time employees states in Sec-
tion 2 that Part-time employees will have a senior-
ity system within the part-time group. The seniority
will be based on the part-time seniority date. By
converting the fulltime employees to part-time you

will be making those who hold the most seniority
employees with the least seniority. That loss of
seniority will affect them in shift bids, overtime,
extra time, and vacation preference. These employ-
ees have worked here for more than twenty years
and most have been in longer than twenty-five
years working for wages you and I would not. The
loss of medical benefits will be devastating. If you
then decide a RIF (reduction in force) is needed
these will be the first employees to go but I am
sure you already know that.

Article 14 Sections 1 and 2 state the work week
shall consist of five work days of eights hours

each. That means the work week for the employee
will be 40 hours per week. There can be no other
interpretation of that language. You may have day
and night shifts but the CBA clearly shows that the
work day will be eight hours five days a week. You
have been in violation of that article for some time.
It also states that the hours may be adjusted as
agreed on by the parties. We certainly do not
agree with this change and this grievance is notice
that we do not agree with any change from eight
hours a day five days a week.

The Company has no rights that can be found
in the CBA to take this extreme action and the
Union must demand that the Company cease its
intentions to do so. These actions in and of them-
selves clearly constitutes an Unfair Labor Practice.

The Company is in violation of the National
Labor Relations Act and the CBA under Articles 6
12, 14 and those other articles as may apply.

The Union demands are: Cease and desist from
committing an Unfair Labor Practice and violating
the CBA mainly Article 6, 12, 14 and those other
articles as may apply.

Mr. Roe responded:

We agree that Article 6 of our CBA clearly states
that it is the Company s right to establish new jobs,
abolish or change existing jobs, increase or decrease
the number of jobs and employees to schedule
and assign work to be performed . We do not
agree with your statement that this Article does
not give the Company the unilateral right to change
an employee s classification from full-time to part-
time. We believe that the management rights stated
above, agreed to by the Union in prior CBA s as
well as the current one, clearly gives us this right
as part of our right to schedule and assign work.

CHAPTER 11 Labor and Employment Arbitration 593

We agree that the CBA recognizes two job classifi-
cations for seniority and other purposes, full-time
and part-time, at Article 12, Section 2, Article 18,
and Article 29.

Pursuant to these Articles, we plan to publish a
proposed schedule on or about September 1, 2015
that would go into effect on October 1, 2015.
Under this proposed schedule, there would be no
positions that would regularly work more than 35
hours in a given week, so all employees would be
considered part-time pursuant to Article 18, Section
1. This would allow employees to bid on the shifts as
per our prior practice under Article 9, Section 4.
Since current full-time employees would be bidding
on shifts defined as part-time in the contract, we
would agree to allow full-time employees to have
the right to bump any part-time employee in his/
her classification and take the part-time position,
similar to the procedure set out for reductions of
force in Article 12, Section 3. Under this procedure,
the current Grievant, has second seniority in the
work force, and accordingly she will be offered the
second choice of shift lead schedules in the Septem-
ber shift bid. By going to part-time scheduling, we
hope to avoid any reductions of force under Article
12, Section 3.

We do not agree that Article 14 limits the scope
of our management right in Article 6 to schedule
and assign work. Article 14 only states that the
workweek shall consist of seven days from Sunday
to Saturday. Only the regular weekly work sched-
ule is described as five workdays of eight hours each
and that does not limit the ability to change the
work schedule under Article 6. This is supported
by Article 14, Section 6, which states that Changes
in hours or assignments to shifts may be made
whenever necessary.

While we are aware that this schedule change
may adversely impact the seven current full-time
employees to some extent, we must deny this griev-
ance at Step Two, and decline to agree to your
demand that we cease and desist from publishing
the proposed schedule. That does not mean that
we are unwilling to discuss the effects of this
change.

As you are aware, under Article 24, alleged vio-
lations of Article 6 are not considered grievances. We
believe that your grievance involves a dispute over
the scope of Article 6. While we are willing to arbi-
trate this question within the current procedures of

Article 25, we expressly do not waive any rights
under Article 6 by proceeding to arbitrate, and we
reserve the right to assert at the arbitration that your
demand we cease and desist from proceeding with
the planned change would itself be a violation of
our rights under Article 6.

On October 28, 2015, the Union filed the following
unfair labor practice charge:

On or about July 29, 2015, the Employer announced
its decision to convert full-time employees to part-
time employees, without prior notice or affording
the Union an opportunity to bargain, regarding
the decision or the effects of this decision, which
relates to wages, hours, and other terms and condi-
tions of employment.

On or about October 1, 2015, the Employer
unilaterally implemented its decision to convert all
full-time employees to part-time employees, without
prior notice or affording the Union an opportunity
to bargain, regarding the decision or the effects of
this decision, which relates to wages, hours, and
other terms and conditions of employment.

On November 26, 2015, the Regional Director of
the National Labor Relations Board wrote the following
to the Company and Union:

The Region has carefully considered the charge
alleging that Roe Services, Inc. violated the National
Labor Relations Act. As explained below, I have
decided that further proceedings on the charge
should be handled in accordance with the deferral
policy of the National Labor Relations Board as set
forth in Collyer Insulated Wire, 192 NLRB 837
(1971), and United Technologies Corp., 268 NLRB
557 (1984). This letter explains that deferral policy,
the reasons for my decision to defer further proces-
sing of the charge, and the Charging Party s right to
appeal my decision.

The Grievance was appealed to arbitration.

Relevant Provisions of the Collective Bargaining
Agreement

Article 6 Management Rights
The management of the Company and the direction of
its working forces including, but not limited to, the
rights to determine whether to establish new jobs, abol-
ish or change existing jobs, increase or decrease the

594 PART 3 Administering the Labor Agreement

number of jobs and employees, change materials, pro-
cesses, products, equipment, and operations, shall be
vested exclusively in the Company. Subject to the pro-
visions of this Agreement, the Company shall have the
right to schedule and assign work to be performed and
the right to hire and rehire employees, discipline or
discharge for any cause not in violation of this Agree-
ment, transfer or layoff of employees because of lack of
work other legitimate reasons. The Company reserves
and retains in full and completely any and all manage-
ment rights, prerogatives and privileges except only as
specifically limited by this Agreement, or by applicable
federal, state and local laws.

Article 12 Seniority
Section 2: Seniority shall commence with the date of
employment on the payroll of the Company under
this Agreement in any classification hereunder. For
seniority, there are two classes, full-time and part-
time. If more than one person has the same seniority
date, the person with the highest last four digits of their
social security number will be senior.

Section 3: If a reduction in force is necessary, the
junior employees in the classification performing the
type of work being reduced shall be laid off. If a full
time employee is laid off due to a reduction in force,
that employee will have the right to bump the junior
part-time employee in his or her classification and take
the part-time position. The full-time employee will
have recall rights to full-time for one year following
his or her reduction to part-time status. If the full-
time employee does not desire a part-time position,
he or she will have recall/rehire rights in accordance
with Section 4.

Section 4: Seniority rights of an employee, who, on
the date they are laid off, had less than one (1) year of
service under this Agreement, shall terminate with no
recall/rehire rights. Seniority rights of an employee,
who, on the date of their layoff, has one (1) year or
more of service under this Agreement, shall be placed
on a recall list, based on seniority, for the next twelve
(12) months.

Section 5: Recall after a layoff shall be in accor-
dance with the seniority of the employees laid off to
the extent that they are qualified. The Company shall
send a notice of rehiring by certified mail to the last
known address on file, and if the employee fails to
report to work within ten (10) calendar days after reg-
istry date of recall letter, he or she shall lose all senior-
ity rights .

Section 7: Before any new employee is hired in any
labor classification, employees of that same employer
covered by this Agreement shall be given an opportu-
nity to qualify for such job openings in accordance
with their seniority. All job openings in all labor clas-
sifications shall be posted conspicuously for five (5)
days. (Reposting after sixty (60) calendar days if not
filled.) Any employee wishing to fill a job opening
shall notify the Company in writing within the pre-
scribed time limits listed above. The senior qualified
employee shall be awarded the opening. This clause
will be administered by each Company, which is
party hereto, and this clause is only effective as to an
employee s particular employer.

Article 14 Working Week
Section 1: The work week shall consist of seven (7) days
beginning immediately after 0001 on Sunday and end-
ing at 2400 hours the following Saturday. The regular
weekly work schedule shall consist of five (5) workdays
of eight (8) hours each, exclusive meal periods, in the
work week. Employees shall be paid twice monthly.
Hours of shift other than eight (8) may be adjusted as
agreed upon between the parties. In the event a dispute
arises concerning the length of the workday as it relates
to lunch periods, the Company may implement its
requirement if agreement cannot be reached and the
Union is free to bring the issue forth under the griev-
ance procedure.

Section 2: The normal work week shall consist of
seven (7) days beginning after 0001 on Sunday and
ending at 2400 hours the following Saturday. The reg-
ular weekly work schedule shall consist of five (5) work
days of eight (8) hours each, exclusive of meal periods,
in his or her work week. Pay periods shall begin on a
specific day and employees shall be paid twice monthly.

Section 3: Fulltime employees will be given a per-
manent schedule that includes two (2) consecutive days
off as dictated by the Navy Contract while part-time
employees will be flexible as contemplated in Article
29 of this agreement. Whenever possible, Company
agrees to give part time employees two (2) consecutive
days off each week. Additionally, the work week will be
scheduled so that the most senior part time employee is
scheduled for hours that are equal to, or more than, all
part time employees with less seniority.

Section 4: Where employees are required to main-
tain continuous operation of departments or assign-
ments, days off may be fixed or rotated consistent
with the requirements of the service. The Company

CHAPTER 11 Labor and Employment Arbitration 595

will make every reasonable effort to arrange work sche-
dules so that a maximum number of employees will be
off duty on Saturdays and Sundays consistent with
operational requirements.

Section 5: All time worked in continuous tour of
duty, including overtime, shall be considered as work
performed on the workday within which the tour of
duty is started.

Section 6: Changes in hours or assignments to
shifts may be made whenever necessary. Except in
emergency, five (5) days notice shall be given in
advance of such changes.

Section 7: In the establishment or changing of the
starting time for the commencement of shifts, the
Company will consider among other items, the desires
of the employees involved .

Section 9: Any full-time employee hereunder who
is required to report for a regular tour of duty without
being given at least seven and one-half (7½) hours off
after the completion of the previous regularly sched-
uled tour of duty, including overtime shall be paid at
the applicable overtime rate for all time worked during
the second regular tour of duty.

Article 18 Welfare Package
Section 1: Health and Welfare: The Company agrees to
pay for each of its fulltime employees One Thousand
Dollars ($1000.00) per month for a welfare package effec-
tive October 1, 2012. Payment will be made to the Union
Health and Welfare Plan located in Baltimore, MD as
agreed. Fulltime employees for the purpose of this article
are defined as employees who are regularly scheduled to
work thirty-five (35) hours or more per week. All other
employees are considered part-time employees. The
Union will make payments from this welfare package as
follows in subparagraph (a):

(a) From this amount the Union will pay for hospi-
tal, dental, vision, Life, AD&D, and short-term disability.

Section 2: Pension: The Company agrees to pay
$0.50 per hour worked for each of its fulltime employ-
ees to the Union Retirement and Severance Trust Fund
located in Baltimore, MD.

Section 3: Management of Funds: The Health Plan
and the Retirement Fund are currently managed by
Benefits Administration Corporation (BAC) located in
Baltimore, MD. Payments are to be made directly to
BAC and the plans will be subject to the Board of Trus-
tees and governed by the Employees Retirement
Income Security Act commonly known as ERISA.

Article 29 Part-Time Employees
Section 1: All articles of this agreement shall apply to
part-time employees except Articles 18, Section 1 and 2
or as otherwise restricted by this Article 29. In case of
conflict, Article 29 shall prevail.

Section 2: Part-time employees will have a senior-
ity system within the part-time employee group. The
seniority system will be based on the part-time senior-
ity date.

Section 3: A part-time employee will enjoy the
same displaced rights, reduction-in-force procedure
applicable to full-time employees. Any employee
bumping can only do so laterally or downward, must
be qualified for the job he or she is bumping into, and
must be senior by his or her part-time seniority date
to the person bumped. Part-time employees terminated
because of a RIF and who have ten years or more of
continuous service will be entitled to severance pay of
two weeks at twenty-five (25) hours per week.

Section 4: Part-time employees who obtain a full-
time job with the Company will have a new seniority
date assigned which will coincide with their change in
status .

Section 7: Part-time employees are those personnel
who have been hired for a work schedule of less than
35 hours per week .

Section 11: The Company will pay all part-time
employees the prevailing Health & Welfare rate of $
2.56 as specified in the current Department of Labor
Determination for Camden County. Part-time employ-
ees will receive pro-rated vacation, with the pro-rated
amount based on actual number of hours worked.
Part-time employees will be credited with the pro-
rated vacation hours annually on the employee s
anniversary.

Questions
1. What is meant by the Unfair Labor Practice charge

being deferred to arbitration? Is the arbitrator s
decision final and binding?

2. What influence do you believe the enactment of the
Affordable Care Act had on the Company s actions?

3. Take the position of the Company and lay out its
arguments.

4. Take the position of the Union and lay out its
arguments.

5. Now, be the arbitrator and decide the outcome.

596 PART 3 Administering the Labor Agreement

CA
SE

ST
UD

Y

11
-3 Should Employee Be Penalized for On-the-Job Injury?

Background

The origin of this matter of arbitration is the following
grievance filed on January 15, 2015:

On 4-25-14 due to circumstances beyond my con-
trol I (Bob Boyce) was involved in a job-related
accident leading to an injury. Negligence and disre-
gard for safety by Management created an unsafe
work environment. Information on defective equip-
ment was not given to employees by Management.
Therefore hazards remained when injury occurred.
Only then did Management respond to correct
problems.

I was denied work due to restrictions from
M.D. I am filing for 26 weeks employee contribu-
tions to his medical insurance and adjustment to
my vacation checks. Compensation for others has
been given in the past.

In a letter dated March 20, 2015, the company
responded:

This regards Grievance filed by Bob Boyce who has
requested to be reimbursed for the 26 weeks of
employee contributions to medical coverage and
adjustment for vacation pay during his recent
absence due to an injury. The Grievant feels that
since the injury was beyond his control, he should
be compensated for all losses.

As a practice, the company does not require an
employee who is out of work (regardless of reason) to
keep contributing to their portion of the medical cov-
erage during their absence. After the employee
returns, he is required to catch up the back pay-
ments over a period of time. In the following year,
vacation pay is calculated on the basis of total wages
earned for the 52 weeks period preceding the vaca-
tion eligibility period (anniversary date). If the Griev-
ant was out of work (regardless of the reason) his
total wages would of course be less than normal.

The company has made only a couple of excep-
tions to the policy relative to the medical contribu-
tions in the past: two occasions when employees did
not return to work from an injury and/or accident.
Both of these cases were under extenuating circum-
stances, not as in the present case. The Grievant

argued that, since he was not at fault in his inci-
dent, he should be granted the same consideration
as the previous cases. I do not think it will be pro-
ductive to get into the practice of having to argue
facts of each case as to who was at fault in the
accident before granting the special request. Simi-
larly, the Workers Compensation program is also
a no fault system where the company is responsi-
ble for paying for the claims regardless of who is at
fault. Therefore, I am not inclined to start a differ-
ent practice at this time.

The Grievant is also arguing that, since the
accident was not his fault , he should be compen-
sated for the loss of earnings that would have oth-
erwise been considered in calculating his vacation
pay for the following year. This would establish a
completely new practice to administer in the future.

As I review the current Labor Agreement, I
cannot find a provision that obligates the company
to reimburse the grievant for either of his requests.
The actions of the previous cases were above and
beyond our contractual obligations and should not
be construed as a precedent for other cases.

Based on the reasoning previously cited, I must
deny the grievance.

Issue

Whether the collective bargaining agreement between
the parties obligates the employer to pay for the
employee s contribution for medical coverage during
the time he was on workers compensation leave and
to adjust the employee s vacation pay to credit him for
time he was out on leave.

If so, what is the remedy?

Relevant Provisions of the Agreement

Article 15: Vacation
Employees will become eligible for vacations with pay
on the following basis:

1. Eligibility, time lost as a result of a work related
injury will be counted for the purpose of determin-
ing 1,040 hours of work during the fifty-two (52)
week period prior to each eligibility date.

CHAPTER 11 Labor and Employment Arbitration 597

2. Continuous Service
For the purpose of computing vacation eligibility:

(a) Time lost as a direct result of illness or accident
shall not constitute a break in continuous ser-
vice for twelve (12) months of such time lost.

(b) Absences due to leave of absences which do
not exceed three (3) months shall not consti-
tute a break in continuous service. However,
that period of absence from this cause in
excess of one (1) month shall not be counted
in computing continuous service for vacation,
and an employee s anniversary date will be
changed accordingly.

(c) Termination of seniority as provided for in
Article 7, Section III(e), shall constitute a
complete break of continuous service and no
past service shall be credited in the event of re-
employment.

3. Vacation Pay
(a) Employees will qualify for six (6) weeks of

vacation on the twenty-fifth (25th) anniversary
of the date from which their employment is
continuous provided the employee has com-
pleted at least 1,040 hours of work during the
year immediately preceding such eligibility
date. In such instances, vacation pay will be an
amount equal to twelve (12) percent of the
employee s total wages earned by the employee
during the calendar year immediately preced-
ing the year of his current eligibility date or 240
times his permanent hourly rate as of the date
he became eligible, whichever is greater.

(b) Employees separated from the payroll and
who have previously qualified for at least the
first week of vacation shall receive pro rata
vacation pay for unused vacation at the rate of
three and one-half (3½) times their regular
hourly rate per week of eligible vacation, for
each month of continuous service since the
last vacation eligibility date.

(c) Vacation payment will not be made earlier
than the week immediately prior to the vaca-
tion period.

4. Vacation Period
(a) In a vacation,

one (1) week is defined as seven (7) consecutive
days;
two (2) weeks as fourteen (14) consecutive days;

three (3) weeks as twenty-one (21) consecutive
days;
four (4) weeks as twenty-eight (28) consecutive
days;
five (5) weeks as thirty-five (35) consecutive
days;
six (6) weeks as forty-two (42) consecutive
days;

(b) The anniversary date of employment or the
date if changed under two of this article, each
year shall be the date upon which an individual
employee becomes eligible for this vacation.
Vacations must be taken during the twelve (12)
months period following the date on which the
employee has qualified. Vacation periods are
not cumulative and are not transferable.

(c) The company will schedule the vacation period
for each employee as well as generally admin-
ister the vacation plan. Employees may schedule
one week of their vacation one day at a time.
Insofar as is practicable, consideration will be
given to individual employee preference in
scheduling vacations on the basis of mill
seniority, provided the request is made prior to
March 1 each year.

(d) The company may, at its option, elect to shut the
mill for a one (1) or two (2) week period and
require the vacation for which any employee is
qualified to be taken. The company will sincerely
try to give as much notice as possible to
employees, should the above decision be made.

Article 19: Health & Safety
The company will earnestly continue its efforts on
behalf of the health, sanitation, and safety of employees
during the hours of their employment. The company
and the union agree to cooperate in achieving this. The
union will cooperate in encouraging compliance with
the rules regarding health, safety, and sanitation.

The company will continue in effect the Group
Insurance Program and Retirement Plan during the
life of this Agreement.

Positions of the Parties
The Union
The union stated that Boyce is an exemplary employee
with 27 years of service at American Newsprint Corpo-
ration. On April 25, 2014, Boyce was injured on the job
when an automatic door malfunctioned. Issues with the

598 PART 3 Administering the Labor Agreement

door had been reported to management on numerous
occasions and management has been negligent about
repairing the door. Therefore, management is at fault
for entire situation and should be held responsible.
The injuries cost Boyce six months of work, which
resulted in lost income in wages as a result of Work-
ers Compensation, and those lost wages adversely
affected the calculation of vacation pay for the next
year. This is no way to treat a long-term employee
with an excellent work record. Boyce has been harmed
for doing his job.

The union closed:

For the foregoing reasons, the union requests that
the grievance be sustained and the Grievant, Boyce
be made whole for his losses.

The Company
The company s maintenance department as well as
department supervision tried on several occasions to cor-
rect the defect in the door and were unable to do so.

The company communicated to all employees and
alerted them to stand clear of the door and to be on
alert. The company was eventually able to resolve the
issue with some electrical modifications to the door.

The grievant argued at step 2 and step 3 of the
grievance procedure that past practice was the basis
for his complaint. The union failed to show that a
past practice existed for either of Boyce s request, that
is, reimbursement of insurance contribution during his
absence or a pay adjustment for vacation.

Ms. Joyce Rambo confirmed that she had always
required reimbursement of employee contributions to
medical insurance upon return to work and that she

has never made an adjustment to the vacation provi-
sions as argued by Boyce. Ms. Rambo confirmed that
Boyce s case was handled in the same manner and with
the same consideration as similar cases in the past. Two
employees mentioned by Boyce never returned to work
after their absences for the deductions to be made.
Additionally, Rambo confirmed that she has never
made vacation adjustments, as stated by the grievant
in the step 2 grievance. The consistency in administer-
ing this policy has never been made on the basis of who
was at fault in the accident.

The company argued that this is a case in which
the union is trying to seek through arbitration what it
has not obtained in negotiations. The union failed to
show that the CBA contains language that would
require the company to pay Boyce. Therefore, the arbi-
trator should not give the union something in this arbi-
tration that it did not obtain in negotiations. The
company has held several negotiations since the insur-
ance contribution requirement was introduced, and
this request has never been introduced. The union is
in effect asking the arbitrator to add an additional ben-
efit to the labor agreement, which bypasses the negoti-
ation process and is beyond what the law requires.

The company requested that the arbitrator uphold
the company s position in this matter.

Questions
1. What is the rule on the use of a past practice?
2. Has the union established a past practice?
3. Does the contract language support the union

position?
4. How should the arbitrator rule? Why?

CHAPTER 11 Labor and Employment Arbitration 599

CHAPTER 12

Employee Discipline

YOU ARE A first-year supervisor in a manufacturing plant. You
supervise a group of employees who play cards during their
lunch break for recreation and for a break from their monoto-
nous routine work. They use matchsticks instead of money as
their wager. The word around the plant is that they convert the
match sticks to money after work to divide the winnings, but
you have no proof that this is happening. Also, you are aware
that staff members in the front office have football pools every
week during the fall and declare a winner every Monday morn-
ing. They also put their predictions on the Super Bowl and
World Series with a $5 bill in a glass bowl. After the results
are known, they declare a winner and give all the money to
the winner. These employees do not report to you; they work
for a different supervisor who is frequently out of the office
on business travel. Office staff seldom, if ever, enter the
manufacturing plant.

Rules against gambling on the job are posted all over the
plant. You were informed about the principles of employee dis-
cipline during your orientation and supervisory management
training program. You learned that the rules must be reasonable
and posted and that any disciplinary action must be applied
consistently.

Questions
1. Do the plant employees and front office employees operate

under the same rules?

2. Should you discipline one or more employees to set an
example for violating the no-gambling rule?

3. Do you have proof of a rule violation?

4. Are there other alternatives? What should you do? Why?

600

An entire chapter of this text is devoted to employee discipline, an important unionmanagement issue, for the following reasons:
It is the most commonly heard grievance in arbitration.
It is approached consistently by arbitrators, who typically rely on established principles
to make their determinations.1

It is the most likely to involve readers of this book, who are likely to discipline
employees in their careers in unionized as well as nonunionized settings and have
that action challenged by a union, employees, government agencies such as the
Equal Employment Opportunity Commission (EEOC), or in a suit by an employee.

Employee discipline is approached in this chapter by discussing its significance over
time and its various elements, thereby enabling the reader to apply principles discussed
in Chapter 11 to this issue.

The Changing Significance of Industrial Discipline

Employee discipline represents both organizational conditions and managerial actions.
Organizational conditions can lead employees to form a disciplined work group that is
largely self-regulated and willingly accepts management s directions and behavioral stan-
dards. Managerial actions are taken against an employee who has violated organizational
rules.2 Employee discipline has changed over time.

Historical Overview of Employer Disciplinary Policies
During the eighteenth and nineteenth centuries, the employer exercised unrestricted
discretion in directing the workforce.

In 1884, a judge in the State of Tennessee wrote the following:

All may dismiss their employees at will, be they many or few, for good cause, for no
cause, or even for cause morally wrong, without being thereby guilty of legal wrong.3

This judge s statement laid the foundation for the common law, employment-at-will
doctrine.

Although the employment-at-will doctrine is over 130 years old, the doctrine was
confirmed by a California court in 2000 when it wrote:

An employer may terminate its employees at will, for any or no reason the
employer may act peremptorily, arbitrarily, or inconsistently, without providing spe-
cific protections such as prior warning, fair procedures, objective evaluation, or prefer-
ential reassignment The mere existence of an employment relationship affords no
expectation, protectable by law, that employment will continue, or will end only on
certain conditions, unless the parties have actually adopted such terms.4

Employee discipline in the early days was sometimes harsh. Employees, who were
verbally insolent to employers, could have their tongues burned with a hot iron or be
subjected to public humiliation (e.g., a public whipping in the town square).

By the 1930s, management s total discretion to discipline employees was chal-
lenged on pragmatic and legal grounds. Frederick Taylor s theory of scientific man-
agement stressed the financial waste that occurred when employees were discharged
in an arbitrary or capricious manner. According to Taylor, management had an obli-
gation to determine and obtain desired employee work behavior and to correct,
rather than discharge, the employee who deviated from managerial standards. Taylor

CHAPTER 12 Employee Discipline 601

argued that managers bore some responsibility for poor employee performance and
advocated training employees and offering financial incentives for improved perfor-
mance; other writers also noted that high turnover hampered organizational
efficiency.

The employment-at-will system is most lacking in procedural justice which focuses
on the fairness of the decision methods and procedures. Employees have several reasons
for wanting fairness. First, fairness involves empowering the employees to have some
control over decisions. Second, fair treatment indicates to the employees that the organi-
zations value their worth.5

The Wagner Act of 1935 helped shape management s disciplinary policies. A pri-
mary feature of this legislation was the prohibition of discriminatory discipline of
employees because of their union activities or membership. The National Labor Relations
Board (NLRB) was created, in part, for enforcement purposes. Management often had to
defend disciplinary actions against charges filed with this agency, with a potential rem-
edy being reinstatement with back pay. This was the first time that management could
be legally held accountable for employee discipline, a situation that encouraged further
development of employee disciplinary principles and policies.6 The NLRB also affected
organizational discipline procedures indirectly when it ruled that discipline and griev-
ance procedures were mandatory issues for collective bargaining. As a result of this
NLRB decision, nearly all existing collective bargaining agreements now have both a pro-
vision regulating employee discipline and a grievance procedure that makes possible the
submission of discipline issues to arbitration. As a result, managerial policies on
employee discipline were greatly influenced by the growth and development of labor
arbitration. Under nearly every collective bargaining agreement, arbitrators have three
broad powers on discipline:

1. To determine what constitutes just cause for discipline
2. To establish standards of proof and evidence
3. To review and modify or eliminate the penalty imposed by management when

warranted

Arbitrators have long held that management has the right to direct the workforce
and manage its operations efficiently. Indeed, inefficient operations harm both the
employer and employees because higher costs and subsequent reduced profits can result
in employee layoffs. Discipline can improve efficiency by accomplishing the following
interrelated purposes:

To set an example of appropriate behavior. For example, management impresses on
its employees the seriousness of being absent by giving an absent employee a three-
day suspension.
To transmit rules of the organization. As illustrated in the preceding purpose, man-
agement has transmitted a rule of the organization absences will not be accepted.
To promote efficient production. Discipline those employees who either cannot or
will not meet production standards.
To maintain respect for the supervisor. In a sense, discipline shows the employee who
has supervisory authority. A supervisor who does not discipline insubordinate
employees weakens managerial authority.
To correct an employee s behavior. Indicate what is expected, how the employee
can improve, and what negative consequences might result in the future if the
behavior does not change. The assumption here is that most employees have good
intentions and will improve if management will simply show them the error of
their ways.

602 PART 3 Administering the Labor Agreement

Discipline can accomplish all these purposes, but arbitrators must be convinced that
management based its action on correction, which is discipline s main purpose.
Because discharge is a terminal rather than a corrective action, it is appropriate only
when all other attempts at correction have failed or the nature of the offense is so
heinous, such as theft, attacking a supervisor, and so on, as to make lesser forms of dis-
cipline inappropriate.7

Employment-at-Will Doctrine and Wrongful Discharge
Consideration for Nonunion Employees
In 2014, the number of union members in the workforce was 14.6 million, or 11.1 percent of
the workforce, and unions represented another 1.6 million workers who were not members.
In other words, today more than 88 percent of the U.S. workforce or 116 million workers are
not afforded the protection of a union contract or a collectively bargained grievance-
arbitration procedure. Most of these nonrepresented employees are employment-at-will
employees and may be discharged at will.8 However, there are exceptions to the
employment-at-will doctrine.

Under the public policy exception to the employment-at-will doctrine, an employee is
wrongfully discharged if the discharge is inconsistent with an explicit, well-established
public policy of the state. As an example, an employer cannot discharge an employee
for filing a workers compensation claim after being injured on the job or refusing to
break a law at the direction of the employer. (Forty-three states have made one or
more public policy exceptions to the employment-at-will doctrine. Not all states recog-
nize the same number or type of public policy exceptions.)

The implied contract exception to the employment-at-will doctrine occurs when an
employer and employee form an implied contract, even though there is no express, writ-
ten instrument regarding the employment relationship. For example, an employer makes
oral or written representations, e.g. in the employer s employee handbook, to employees
about job security or procedures that will be followed before adverse actions (discharges)
are taken. These representations may create an employment contract. (Forty-two states
have recognized the implied contract exception to the employment-at-will doctrine.)

The covenant-of-good-faith and fair dealing exception to the employment-at-will doc-
trine means that employer personnel decisions are subject to the just cause standard,
prohibiting terminations made in bad faith or motivated by malice. (Twenty states have
recognized the covenant-of-good-faith and fair dealing exception to the employment-
at-will doctrine.9) See Exhibit 12.1 for the listing of states that have exceptions to the
employment-at-will doctrine.

A RAND Corp. study has found that employers overestimate the potential costs of a
wrongful discharge suit and incur indirect costs that are 100 times higher when they
attempt to avoid these suits. These indirect costs occur when employers do not terminate
employees who perform poorly, establish complex and more costly hiring and decision-
making processes, or use severance payments to deter wrongful termination claims.10

In 1987, Montana became the first (and still the only) state to have passed legislation
(Wrongful Discharge from Employment Act) that adopted a good cause standard for
discharge of employees with contracts of an unspecified duration. Under the act, a dis-
charge is wrongful only if (1) the discharge is in retaliation for the employee s refusal to
violate a public policy or reporting a violation of public policy, (2) the discharge is not
for good cause and the employee had completed his or her probationary period, or
(3) the employer violated an expressed provision of its own written personnel policy.
Under the Montana Act, if a discharged employee makes a valid offer to arbitrate and
the employer accepts, the arbitrator s decision will be final and binding and there is no

CHAPTER 12 Employee Discipline 603

Exhibit 12.1
Recognition of Employment-
at-Will Exceptions, by State State

Public-Policy
Exception

Implied-Contract
Exception

Covenant of Good
Faith and Fair Dealing

Total 43 42 20

Alabama No Yes Yes

Alaska Yes Yes Yes

Arizona Yes Yes Yes

Arkansas Yes Yes Yes

California Yes Yes Yes

Colorado Yes Yes No

Connecticut Yes Yes Yes

Delaware No No Yes

District of Columbia Yes Yes No

Florida No No No

Georgia No No No

Hawaii Yes Yes No

Idaho Yes Yes Yes

Illinois Yes Yes Yes

Indiana Yes No Yes

Iowa Yes Yes No

Kansas Yes Yes No

Kentucky Yes Yes No

Louisiana No No Yes

Maine No Yes No

Maryland No Yes No

Massachusetts Yes Yes Yes

Michigan Yes Yes Yes

Minnesota Yes Yes No

Mississippi Yes Yes No

Missouri Yes No No

Montana Yes Yes No

Nebraska Yes Yes No

Nevada Yes Yes Yes

New Hampshire Yes Yes Yes

New Jersey Yes Yes Yes

New Mexico Yes Yes No

New York No Yes No

North Carolina Yes No No

North Dakota Yes Yes No

Ohio Yes Yes No

Oklahoma Yes Yes Yes

Oregon Yes Yes No

(Continued)

604 PART 3 Administering the Labor Agreement

right for the employee to bring a lawsuit. If the employee prevails, the arbitrator will issue
an appropriate remedy and the employer must pay the arbitrator s fee and all costs associ-
ated with the arbitration. Due to Montana having less than a million employees in its
workforce, broad application of the results cannot be applied across the United States.11

In an address to the National Academy of Arbitrators (NAA), former president of
that organization, George Nicolau, noted that more than one million employees are dis-
charged in the United States annually without the right to appeal the discharge decision.
Nicolau called for a National Unfair Dismissal Statute which would provide protection
against unfair dismissal to those employees who have worked for an employer (with 15
or more employees) for a period of one year. Nicolau believed that a one-year period
should provide ample time for the employer to assess the performance of an employee
and determine the needs of the company. After one year of continuous employment, a
covered employee would have protection against an unfair dismissal by an employer.12

This proposed statute would be similar to those unfair dismissal laws which currently
exist with many European countries.

Present-Day Significance of Employee Discipline
Disciplinary systems are designed to discourage problematic behavior and to quickly cor-
rect problems when they occur. The first-line supervisor is usually the first person to
become involved in disciplinary action. The first-line supervisor usually conducts the ini-
tial investigation of the facts surrounding the employee s misconduct. Furthermore, it is

Exhibit 12.1
(Continued)

State
Public-Policy

Exception
Implied-Contract

Exception
Covenant of Good

Faith and Fair Dealing

Pennsylvania Yes Yes Yes

Rhode Island No No No

South Carolina Yes Yes Yes

South Dakota Yes Yes No

Tennessee Yes No No

Texas Yes Yes No

Utah Yes Yes No

Vermont Yes Yes Yes

Virginia Yes Yes No

Washington Yes Yes No

West Virginia Yes Yes No

Wisconsin Yes Yes No

Wyoming Yes Yes Yes

SOURCE: Charles J. Muhl, The Employment-at-will Doctrine: Three Major Exceptions, Monthly Labor Review, 124 (January
2001), pp. 3 11; David J. Walsh and Joshua L. Schwarz, State Common Law Wrongful Discharge Doctrines: Updates,
Refinement, and Rationales, American Business Law Journal, 33 (Summer 1996), pp. 645 690; David Autor, Outsourcing at
Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment, Journal of Labor Economics, 21(1) (2003), pp.
1 42. Employment at-will Exceptions by State: April 2008, National Conference of State Legislatures, http://www.ncsl.org;
Kenneth G. Dau-Schmidt and Timothy A. Haley, Governance of the Workplace: The Contemporary Regime of Individual Con-
tract, Comparative Labor Law and Policy Journal (Winter 2007), p. 313. Nadjia Limani, Note, Righting Wrongful Discharge: A
Recommendation for the New York Judiciary to Adopt a Public Policy Exception to the Employment-At-Will Doctrine, Cardoza
Public Law Policy and Ethics Journal (Fall 2006).

CHAPTER 12 Employee Discipline 605

usually the first-line supervisor who recommends disciplinary action or has the authority
to take disciplinary action. Because certain employee rights must be protected, employers
may decide to have an oversight of the supervisor s decisions to discipline and require
higher level approval before disciplinary action is taken. Therefore, it is possible to intro-
duce some level of restriction on supervisors to protect employee rights without
adversely affecting supervisors belief in the effectiveness of the disciplinary system.13

Management, union officials, and employees at unionized firms are strongly affected
by disciplinary actions and arbitrators decisions concerning disciplinary actions. (See the
Labor Relations in Action feature box above for potential disciplinary situations that
have occurred on an automobile assembly line.) An arbitrator typically has two options
in a case involving a discharged employee. The arbitrator can (1) uphold management s
discharge decision or (2) reinstate the employee with some or all back pay for wages lost
and restore the employee s accumulated seniority as a result of the employee s inappro-
priate discharge.

In a study of 1,432 arbitrator discharge decisions by 74 arbitrators, the researchers
found that arbitrators sustained the employer s discharge in 52.4 percent of the cases and
upheld the grievance in only 19.8 percent. Other decisions include reinstatement without
back pay in 17.4 percent and reinstatement with partial back pay in 10.4 percent.14

When an arbitrator overturns management s termination, the arbitrator s decision is
advertised by other employees and the union when the reinstated employee is brought
back to the shop floor. Reinstatement of the employee with back pay represents a

LABOR RELATIONS IN ACTION
Disciplinary Possibilities on the Assembly Line

The following excerpts are taken from Rivethead
(New York: Warner Books, 1992), written by Ben
Hamper concerning his work experiences on an auto-
mobile manufacturing line. These situations reflect
vivid, real-world employees behaviors that manage-
ment attempted to correct through disciplinary actions.
Unions could claim management s response to each of
these actions was inappropriate by filing a grievance
that might, in time, be resolved by an arbitrator. The
first five considerations involve employees Hamper
knew on the line; the remainder of the events were per-
petrated by Hamper and co-workers.

Roy captured a tiny mouse at work and built a
home for the rodent. He took care of the mouse
until one lunch break, when he claimed it was
mocking his job performance. He then grabbed
the mouse by the tail, took a brazing torch, and
incinerated his little buddy at arm s length.

Lightnin had no known job assignment but would
spend each workday in the men s washroom lean-
ing up against the last urinal wall, asleep.
Jack hated the company and thought manage-
ment was out to get him. One night he claimed
that the company purposefully robbed him by not

returning cigarettes for cash he placed into a
vending machine. He then took a sledgehammer
(which he labeled the Better Business Bureau )
and beat the vending machine to a glass and
metallic pulp.
Franklin was a man who took real pleasure in beat-
ing up other employees. He snuck up on one
employee who refused to give him an extra pair
of safety gloves and smashed him over the head
with a door latch. The employee received a dozen
stitches in his head, and Franklin received a 30-day
suspension.
Louie peddled half pints of Canadian Club and Black
Velvet at the workplace, delivering the alcohol to
the customer s work station.

Mr. Hamper also admitted to drinking rather sub-
stantially at work. His regular intake included a forty
ouncer at first break, another one at lunch, then a
pint or two of whiskey for the last part of the shift.

He and another employee also doubled up on the
job, where one employee would perform both jobs,
allowing the other employee to sleep in a hiding place.
This practice basically gave each employee a four-hour
nap during the work shift.

606

financial loss to management, and supervisory authority may also be reduced. It is rare
for a supervisor who experiences the return of a disciplined employee to his work group
with a large back pay check to pursue subsequent disciplinary action with as much vigor
and initiative.15

Subsequent Discipline. In another study involving 85 employers and a total of just
over 2,000 arbitration cases over termination, of the 767 employees who were terminated
and later offered reinstatement, nearly all accepted reinstatement; only 1 percent agreed
to a monetary buyout. After one year from their reinstatement, only 10 percent had been
terminated again and 4 percent had quit their jobs. The vast majority (86 percent)
remained on the job, and more than half of these employees had better disciplinary
records than before their terminations. Interestingly, of the 1,303 cases in which the dis-
charge decision was upheld by the arbitrators, only 12 employees (less than 1 percent)
who did not prevail in their arbitration filed a duty of fair representation (DFR) suit
against the union. As a result, it may be concluded that discharged employees were sat-
isfied with their unions representation in the arbitration hearing.

Within these same 85 employers, there were 1,113 suspension arbitrations (five
days or more). Arbitrators upheld 72 percent of the suspensions. The employers
reported that the disciplinary records of these employees were the same or better after
the arbitration than before. Only 25 percent of the employers reported that arbitration
had a negative effect on workplace relationships. In general terms, the negative effect
was expressed as low morale. More specific comments included: co-workers became
angry with each other, company witnesses were harassed, reinstated employees were
bitter against the company, and overturning the disciplinary action undermined the
supervisor s authority.16

Subsequent Performance. Although there is also no guarantee that the reinstated
employee will perform well when returned to the job, two studies have found that 51 to
62 percent of the reinstated employees performed their work in a below-average capacity,
with a majority having subsequent disciplinary problems.17 Also, the seniority of the dis-
charged employee (often considered an influential mitigating circumstance by arbitrators)
was insignificant in predicting the employee s performance after reinstatement.18 Of course,
it is possible that many of these were below-average employees before the discharge; it may
have been that, in some companies, marginal performance was a contributing factor in
managers deciding to pursue employee discipline. If so, then below-average performance
after reinstatement merely reflected such employees returning to their normal work levels.

Tensions Among Managers. Arbitral reversal of management decisions can also cre-
ate tensions between different levels of management officials. As noted in Chapter 1,
management participants in the labor relations process do not constitute a unified
group. The first-line supervisor is usually the most involved in employee discipline, hav-
ing typically trained the employee; created past practices in the department that might
influence the arbitrator s decision; and witnessed, reported, and in some cases, partici-
pated in the events resulting in discipline. The supervisor also is the management official
who directly administers discipline to employees.

Other management officials, such as labor relations representatives, monitor these
activities to make sure that supervisory actions are consistent with company policy,
reversing them if they are not, to avoid adverse arbitration decisions. This reversal can
cause tensions, as indicated in the following remarks of a first-line supervisor:

I had this one troublemaker. He was a solid goldbricker. He couldn t cut the buck on
any job. I tried everything, but he was lazy and he was a loudmouth. I caught him in
the toilet after being away from his machine for over an hour. I told him he was
through and to go upstairs and pick up his check . Do you know what those college

CHAPTER 12 Employee Discipline 607

boys in personnel did? He gives them some bull about being sick and weakly and the
next day he is sitting on a bench in the department next to mine. He says to me,
Well, wise guy you don t count for nothin around here. Every time I see you, I m

going to call you Mr. Nothin. 19

Enhanced Union Reputation. What management loses in arbitration hearings
appears to be the union s gain. Most if not all union members believe the union should
be responsive to problems arising from their day-to-day working conditions that remain
after the formal labor agreement has been negotiated. There is no more dramatic exam-
ple of union concern for its members than saving an employee s job. Almost every
union newspaper contains at least one article per issue that describes (along with appro-
priate pictures of union representatives, the grievant, and the back pay check) how the
union successfully defended an employee against an unjust act of management. A repre-
sentative article from one union newspaper proclaimed in bold headlines, Worker Wins
$5,895 in Back Pay when Fired for Opening Beer Can. 20

Effects on the Disciplined Employee. A disciplinary action carries the most signifi-
cance for the affected employee. Discharge has been viewed by unions as economic capi-
tal punishment, for it deprives the employee of currently earning a livelihood and at the
same time (with the discharge on his or her work record) makes it difficult to find future
employment elsewhere. Any form of discipline represents an embarrassment to indivi-
duals who do not like being told they are wrong and have to explain their unpaid
removal from work to their friends and family.

Elements of the Just Cause Principle in Employee Discipline

As in other managerial decisions, there are important elements in employee discipline.

Discipline for Just Cause and Discipline s Legitimate Purpose
To have a productive workforce, management must insist that there be order in the
workplace. In reaching this goal, management develops work rules with respect to
employee conduct and includes some form of discipline, up to discharge, for misconduct.
Unions accept these rules; however, unions insist that a disciplinary system be fair in
principle and in application. Management and unions agree to a verbal formula that
would require management to show a valid reason (cause) for imposing discipline and
to show that the penalty imposed was appropriate (just), given the nature of the offense
and the surrounding circumstances, including the employee s years of service and
employee s disciplinary history. In the application of this language, if the parties disagree
with the amount of discipline, the union or the employee files a grievance. If not
resolved, the grievance may be appealed to a third-party arbitrator (neutrals) who will
be asked to determine not only the propriety of a given disciplinary action, but also the
standards of conduct that employers may require, and how far, and in what manner, the
employer may regulate employees lives.21

Just cause is not defined in nearly all collective bargaining agreements. The parties
instead have left this task of defining just cause to the arbitrators. The most widely rec-
ognized and accepted definition was proposed over 50 years ago by Arbitrator Carroll
Daugherty in his seven tests. The tests are phrased in terms of seven questions and
are presented as a framework (Elements of Discipline in Exhibit 12.2) for deciding
whether or not just cause exists for upholding or overturning a discharge by an
employer.22 These elements are not to be used as a formula and mechanically applied

608 PART 3 Administering the Labor Agreement

to every case. Strict application of the elements has been rejected by established arbitra-
tors. In reality, only a few arbitrators will set aside a disciplinary action if the employer
failed to satisfy only one of the seven tests because not all of the seven elements are
relevant to every case and not all are equally important in all situations. In using the
seven tests as a guide, arbitrators typically (1) review the facts on which the disciplin-

ary action was based and how the employer determined these facts and (2) assessment of
whether the level of discipline was justified.23

As part of the seven tests definition, arbitrators include three major compo-
nents in defining just cause : (1) industrial due process, (2) industrial equal protec-
tion, and (3) individualized treatment. Industrial due process means that employers
are expected to conduct a timely, full, and fair investigation where all evidence is con-
sidered before imposing discipline. Due process deficiencies include the lack of evi-
dence to justify the discipline, no prior investigation or lack thereof by the employer
before making the discipline and/or lack of notice of the alleged violation. Industrial

Exhibit 12.2
Elements of Discipline for
Just Cause Terminations

If the answer is no to one or more of the following questions, the employer s
case for termination is seriously weakened.

1. Notice. Did the employer give to the employee forewarning or foreknowledge
of the possible or probable consequences of the employee s disciplinary
conduct?

2. Reasonable rule or order. Was the employer s rule or managerial order reason-
ably related to (a) orderly, efficient, and safe operation of the employer s busi-
ness and (b) performance that the employer might properly expect of the
employee?

3. Investigation. Did the employer, before administering the discipline to the
employee, make an effort to discover whether the employee did in fact violate
or disobey a rule or order of management?

4. Fair investigation. Was the employer s investigation conducted in a fair and
objective manner?

5. Proof. At the investigation, did the decision maker possess substantial evidence
or proof that the employee was guilty as charged?

6. Equal treatment. Has the employer applied its rules, orders, and penalties even-
handedly and without discrimination to all employees?

7. Penalty. Was the degree of discipline administered by the employer in a particu-
lar case reasonably related to the seriousness of the employee s proven
offense?

If the answers to the questions above are YES, then additional questions are
considered in determining the degree of penalty:

1. Are there any due process procedural violations of the employee s rights, such
as failure to give notice of charges, not allowing the employee to face his or her
accusers, or lack of counsel?

2. Are there any mitigating circumstances, such as a record of long-term service
with the employer or fault on the part of management which may result in a pen-
alty less than termination, such as reinstatement without back pay?

SOURCE: Adapted from Enterprise Wire Co. and Enterprise Independent Union, 46 LA 359, 1996 (Carroll R. Daugherty). See also Adolph
M. Koven and Susan L. Smith, Just Cause: The Seven Tests, revised by Donald F. Farwell (Washington, D.C.: Bureau of National Affairs,
1992); Jack Dunsford, Arbitral Discretion: The Tests for Just Cause, Proceedings of the 42nd Annual Meeting of the National Acad-
emy of Arbitrators (Washington, D.C.: Bureau of National Affairs), 1989. See also Adolph M. Koven and Susan Smith, Just Cause: The
Seven Test (3rd ed.) by Kenneth May (Washington, D.C.: Bureau of National Affairs, Inc., 2006).

CHAPTER 12 Employee Discipline 609

equal protection refers to comparisons with prior similar instances of disciplinary
actions. Industrial equal protection requires the employer to act even-handedly and
in a nondisciplinary manner when enforcing its disciplinary rules. It requires that
the degree of discipline be in proportion to the alleged violation. Individualized treat-
ment simply means that the arbitrators consider such factors as the employee s prior
discipline, job performance record, length of seniority, and work history in their deci-
sions. For example, suppose that a truck driver with numerous speeding violations
was discharged after suffering his third work-related vehicle accident in five years,
and all three accidents were determined by the police to be his fault. Further suppose
that after the second accident, the company had paid to send the driver for additional
driving training. The arbitrator might consider these individualized treatment facts
in deciding whether the employee could be rehabilitated as a truck driver or
whether dismissal was appropriate.24 Arbitrator Harry Platt might have said it best
when he wrote:

It is ordinarily the function of an Arbitrator in interpreting a contract provision
which requires sufficient cause as a condition precedent to discharge not only to
determine whether the employee involved is guilty of wrongdoing but also to safe-
guard the interests of the discharged employee by making reasonably sure that the
causes for discharge were just and equitable and such as would appeal to reasonable
and fair-minded persons as warranting discharge. To be sure, no standards exist to
aid an Arbitrator in finding a conclusive answer to such a question and, therefore,
perhaps the best he can do is to decide what a reasonable man, mindful of the habits
and customs of industrial life and of the standards of justice and fair dealing preva-
lent in the community, ought to have done under similar circumstances and in that
light to decide whether the conduct of the discharged employee was defensible and the
disciplinary penalty just.25

Collective bargaining agreements usually do not include a disciplinary structure
that calls for specific penalties for specific offenses. Such arrangements have limited
feasibility in today s complex workplace. Employee misconduct, such as insubordina-
tion, fighting, stealing, and so on, takes many forms, and the circumstances surround-
ing an act of misconduct have a multitude of variations, such as provocation,
horseplay, and so on. In addition, each wrongdoer has his or her own explanations
for behavior, experience, and work history. Unions tend to resist a Table of Penalties,
such as shown in Exhibit 12.3, because they believe such prescriptions are overly strict
and inflexible. Unions prefer that consideration be given to fairness and equity at the
workplace. On the other hand, management prefers consistency in approach and seeks
to preserve a large measure of discretion in determining the penalty in any given case.
Since management s goal is usually not achieved in bargaining, management usually
establishes rules of conduct unilaterally under its management s rights clause and
describes each prohibited offense and the corresponding penalty to be assessed for
committing each separate offense.26

Degree of Proof in Disciplinary Cases: Nature of the Evidence
and Witness Credibility
An overriding consideration in discipline and discharge cases is management s burden of
proof to establish that the employee committed an infraction of one or more of the com-
pany s rule(s). Such proof is easier to establish in situations having objectively measured
indicators (e.g., absenteeism and related attendance records) than those that do not (e.g.,
insubordination).27

610 PART 3 Administering the Labor Agreement

Subjective standards can also apply to other employee infractions. For example, one
arbitrator contends that a major difference exists between nodding off (eyes closed,
head nodding lower and lower, jerking up, and then nodding again) and sleeping on
the job, because the former condition, if successfully fought by the person, would lead
to completely restored wakefulness. 28

Arbitrators use three levels of proof. The most often used level of proof by arbitra-
tors is preponderance of evidence, wherein testimony and evidence must be adequate
to overcome opposing presumptions and evidence. This level of proof is normally used
in disputes over interpretation and application of contract language which do not deal
with discipline, such as overtime assignments, promotions, and so on. The second,
clear and convincing evidence, is shown where the truth of the facts asserted is highly
probable. This level of proof is used most commonly in disciplinary matters that are
noncriminal in nature, such as excessive absences, unacceptable performance, and so
on. The third, beyond a reasonable doubt, represents a higher degree of proof, which
some arbitrators use in criminal nature, such as selling illegal drugs on company
property or stealing, that can more adversely affect the grievant s chances of finding
subsequent employment or even lead to incarceration. Some arbitrators believe that
this level of proof is extraordinarily high and should not be used in arbitration because
the level of proof used in NLRB and unemployment insurance cases do not require
proof beyond a reasonable doubt.29

In recent years, the use (or misuse) of e-mail, social media, and the Internet for non-
business purposes has led to employee discipline. Misuse of e-mail or the Internet has
been placed into three categories: (1) minor personal use, which the employer permits
or ignores, (2) use without permission or improper use, which warrants discipline, and
(3) serious misuse, which the employer believes warrants discharge. Misuse requires that
the employer promulgate company rules about the use of e-mail and/or Internet, to

Exhibit 12.3
Table of Penalties Offense (Cause of Action) First Offense Second Offense Third Offense

1. Tardiness less than
one hour

Reprimand 1-day suspension 3-day
suspension

2. Unauthorized absence Reprimand 14-day suspension Discharge
3. Sleeping on duty Reprimand 14-day suspension Discharge
4. Gambling during

working hours
Reprimand 5-day suspension Discharge

5. Working while intoxicated Discharge
6. Use or possession

of illegal drugs
Discharge

7. Selling or transfer of
illegal drugs

Discharge

8. Theft Discharge
9. Discourteous conduct Reprimand 14-day suspension Discharge

10. Failure to observe
safety rules

Reprimand 14-day suspension Discharge

11. Falsifying company
records and documents
for personal gain

Discharge

12. Failure to report accident Reprimand 14-day suspension Discharge

SOURCE: Taken as examples from various company rules and collective bargaining agreements.

CHAPTER 12 Employee Discipline 611

communicate the rules, and to enforce the rules evenly and consistently. The question of
whether a particular e-mail message warrants discipline depends on the nature of the
message, magnitude of the distribution, the effect on the employer, and the employee s
intent in sending the message. The charge of misuse is more serious when the employee
sends e-mails than when the employee receives the e-mail message, and when the
employee seeks out material on the Internet, such as pornographic materials.30 (See
Labor in Action: Employee Discipline and Social Media). P. 14A 14C

Labor Relations in Action: Employee Discipline and Social Media
In discipline cases involving social media, arbitrators focus on whether the substance
of the message violates an employer policy or infringes on some legitimate employer
interest. In one case involving an employee of the state of Ohio, he posted a Facebook
message: OK, we got Bin laden let s go get Kadish (the governor) next who s
with me. The Grievant was fired for making a threat against the governor; the union
argued that the message was not truly a threat, but merely a call to vote Kadish out of
office. The arbitrator ruled the words were not merely a joke, the Facebook page
identified the employee as a public employee and the facility where he worked. The
arbitrator concluded that the totality of evidence brought discredit to the employer
and some discipline was warranted. The employee was reinstated without back pay or
benefits.

Another issue involving social media and employee discipline is the means by which
the employer obtains information. In relations to information posted on social media, such
as Facebook, Twitter, Instagram, and so on, Once it is out there the person posting it has
little or no control over where it goes or who sees it. On the other hand, unions will argue
that breaking into an employee s locker is no different from breaking into a person s Face-
book account without access to it and such information should not be used to justify the
employee s discipline. The locker is usually on the employer s premises whereas, unless the
employee is using an employer owned computer and on company time, many Facebook
posts are made on personal computers off duty which raises the nexus (the relationship
between the off duty conduct and employment policies) questions.

Arbitrators tend to look at the message, rather than the medium because a threat is a
threat whether it is made sitting at a bar after work or on a Facebook page sitting at home
after work. If there is a threat that is considered serious and potentially dangerous, it is a
threat and is punishable. In a case involving a flight attendant, he posted the following critical
remarks about scheduling: Better make it home at a decent hour tomorrow otherwise sched-
uling better watch their back. I need a drink That s it, scheduling is dead; they are all f
dead. Thanks for drafting me a holes. The union argued that there was no credible threat
because the employee was just venting his frustration over scheduling and never intended to
take any action. Further, the Facebook settings were private so only his friends could see the
posts; the general public could not. Even though someone got these messages somehow, the
flight attendant s action should not result in termination. The employer argued that the word
dead meant more than mere venting even though no individual was mentioned. Therefore,

one must assume that he meant the entire scheduling department. The arbitrator ruled that
the employer had a policy that required employees to act respectfully and not to adversely
reflect on the company and its employees. The arbitrator ruled that the grievant passed on
his private thoughts about the airline and its scheduling department to his friends, many
of whom were employees. By doing so, the arbitrator concluded that the grievant lost any
reasonable expectation of privacy and upheld the termination.

Electronic communications have great potential for harm. The messages are sent
instantaneously and can go to thousands very quickly. If the intent of putting the

612 PART 3 Administering the Labor Agreement

message on social media is to broadcast the message to a wide, potentially anonymous
audience, the issue becomes the medium as well as the message. While the message is
the most important factor, the questions are: What does it say? What was the intent?
What was the real harm? What is the potential harm? The professionals in labor rela-
tions will have to deal with many issues, such as how the information was obtained,
what it says, whether there is a nexus between the posts and work, whether there is a
legitimate expectation of privacy, and so on. Jeffrey Jacobs, Social Media and Discipline
Cases We re All Attitter Over It, Program Materials, National Academy of Arbitrators,
FEC, 2014, pp. 1 15.

Another problem can occur when management uncovers the evidence while using
search-and-seizure techniques. Few arbitrators deny the employer s right to impose, as
a condition of employment, an inspection of the employee s clothes and packages on
entering and leaving the plant. However, a problem arises when company officials search
an employee s locker or, in some cases, home, with or without the employee s permis-
sion. Many arbitrators (and the Supreme Court in Dennis O Conner v. Magno Ortega,
480 U.S. 709 (1987)) permit evidence obtained without the employee s knowledge if it
is from company property, even if the property (such as a locker or tool chest) is
momentarily under the control of the employee. On the other hand, few, if any, arbitra-
tors believe evidence should be accepted if management obtained the evidence by forc-
ibly breaking into the employee s personal property, even if the property is located on
company premises.

Witness credibility. Arbitrators often have to assess witnesses testimony in a disci-
pline case. These individuals are deemed credible if they had neither motive for an
incorrect version (e.g., personal bias against the grievant) nor physical infirmity (e.g.,
poor hearing).31 Yet one arbitrator notes:

It is simply impossible to tell by observation if someone is lying under oath. You
cannot tell by looking at and listening to the person. A trial judge in Chicago once
compiled a list of tests to see if a witness is telling the truth: does he perspire; lick his
lips; fidget in his seat; is he shifty-eyed? From my experience as an arbitrator, I can
tell you that shifty-eyed people often tell the truth, while most honest-looking people
will lead you by the nose right down the primrose path.32

Documented and credible evidence is necessary to bolster the company s decision to
discipline/discharge an employee.

Effect of Work Rules on Discipline
Management s right to establish and administer work rules is generally acknowledged as
fundamental to efficient plant operations. Yet, managerial administration of work rules
also assumes some fundamental responsibilities and obligations that, if not followed,
may affect management s disciplinary efforts.

A first question that arises is, What happens if management has no rule governing
the alleged offense committed by the employee? Such an event is not uncommon
because employers cannot possibly anticipate the endless variety of employee misbeha-
viors. Arbitrators, for example, have upheld the discharges of employees who have
done the following:

Watched a fire develop and destroy a portion of a company over a lengthy period
without notifying the company33

Called management officials in the early morning hours to belch over the
telephone34

CHAPTER 12 Employee Discipline 613

Urinated on the floor of a delivery truck even though there were restroom facilities
nearby
Streaked (ran naked) through a portion of an airport35

Needless to say, management had no previously established work rules covering
these specific behaviors. Arbitrators have also upheld management s right to discipline
employees for those offenses that are commonly regarded as unwritten laws
prohibitions against stealing or striking a supervisor, for example.

In most disciplinary situations, particularly those cases that are somewhat com-
mon in industry (poor performance, absenteeism, insubordination, and so forth),
management is on weak grounds with the arbitrator when it has not established
work rules. Furthermore, written work rules must be reasonable, clear, and state the
consequences of their violation. Reasonable rules are related to the orderly, efficient,
and safe operation of the employer s business and the performance that the employer
might properly expect of an employee. Unions will contend a rule is unreasonable if it
is unrelated to business operations or outweighed by the employee s personal rights on
and off the job.

Determining a rule s reasonableness can be complicated. For example, some arbitra-
tors view a unilateral rule prohibiting smoking as reasonable, particularly if manage-
ment presents evidence that nonsmoking employees can be harmed by being exposed
to secondhand smoke. However, other arbitrators regard a no-smoking rule to be unrea-
sonable, particularly if a clear past practice has permitted this activity.36 The reasonable-
ness of an industrial work rule can vary according to industrial or company differences.
A unilateral ban on moonlighting (working a second shift with another employer) is
regarded as reasonable in the utility industry, which often needs emergency work per-
formed during off shifts. Other industries not having emergency-related concerns might
have a difficult time establishing the reasonableness of this rule.37 Rule reasonableness
can also vary within an industrial production facility. For example, an employer might
reasonably require a long-haired employee working in the cafeteria to wear a hair net
(for sanitary reasons); it would be unreasonable to request the same compliance if the
employee worked in the shipping department.

Complications regarding rule reasonableness can occur when an employee is disci-
plined for off-the-job conduct. At first glance, this infraction would not appear to be job
related; however, discipline would be appropriate if management establishes that it
adversely affected the employer (e.g., damaged its reputation or standing in the commu-
nity or had a negative effect on other employees performance caused by their fear of
working beside the individual who had shot another person). In other words, manage-
ment must establish that there is a nexus (connection) between the off-the-job behav-
ior and the employee s job performance, the employer s business, and/or other
employee s performance.38

The clarity of a work rule is also an important issue in corrective discipline because
employees cannot adequately perform or correct behavior if they do not know what is
expected. Management officials can create a problem when they discipline employees
for infractions of a vague or confusing work rule, such as discharge for gambling on
company premises or falsifying an employment application. These rules may, at first
glance, appear clear and conclusive; however, their vagueness becomes apparent to any
first-time supervisor who tries to enforce them. Gambling poses a managerial problem,
particularly if employees are disciplined for participating in a card game on company
premises while a management representative is sponsoring a World Series pool with
hourly employee participants. Also, does gambling occur when employees are playing
cards during their unpaid lunch break for matches or a numerical score that

614 PART 3 Administering the Labor Agreement

management (perhaps correctly) assumes will be converted into cash payments once the
employees are off the company premises?

In another example of a vague work rule, does omitting application information
constitute falsification ? Some arbitrators would say yes, particularly if the omissions
are numerous and job related. Other arbitrators maintain that falsification must involve
a definite response and might not uphold the discharge, much less discipline, of an
employee if management did not promptly seek an explanation for any blank application
items on the initial employment.39 Another complication occurs if the falsification is dis-
covered several years after the employee was hired and the employee has proven over
those years to have been a productive, contributing employee.

The existence of work rules carries the implicit, if not explicit, obligation for man-
agement to inform its employees of the rules and the consequences of their violation.
Sometimes an employee disciplined for violating a rule contends that he or she was
unaware of the work rules. Management then usually has the difficult task of proving
otherwise. Some arbitrators have even suggested that a card signed by an employee indi-
cating he or she had read the rules is insufficient because it is signed in haste as part of
the employee s orientation, and the signed card does not indicate that management has
explained each rule to the employee or allowed time for questions. Many times manage-
ment indicates in rules or warnings that an employee s continued misconduct could be
subject to dismissal. However, arbitrators regard this term as carrying the potential for

lesser penalties such as written warnings or suspensions.
Finally, management must administer the rules consistently for those employees

who violate the rules under similar circumstances. Management will likely have its disci-
plinary action reduced or eliminated by the arbitrator if the union establishes that the
employer was inconsistent or lax in enforcing the rule for the same misconduct on pre-
vious occasions or gave different penalties to employees who were involved in the mis-
conduct.40 Problems can also occur if management did not take different circumstances
into account. In one case management stressed its consistent antihorseplay approach by
indicating that it had discharged not only the grievant in the current situation but also
another employee who engaged in horseplay in the past. The arbitrator overturned man-
agement s action, however, noting that the horseplay committed in this case (a grocery
store employee jumped from a second-story window onto the top of a display case, dam-
aging it) was far less serious than in the previous situation, where another employee
placed razor blades in a doughnut.41

In assessing the degree of consistency, arbitrators place particular emphasis on past
practice, which refers to the customary way similar disciplinary offenses are handled and
penalized. Some organizations seek to impose consistent discipline by including a price
list in the labor agreement, which lists specific rules and furnishes uniform penalties for
single or repeated violations (refer to Exhibit 12.3). This form of rule making has advan-
tages: (1) the employee is clearly informed of the specific rules and consequences of vio-
lations, (2) the standardized penalties suggest consistent disciplinary action is
implemented, and (3) if agreed to by the union, the price list assumes more legitimacy
than a unilateral work rule posted by management. However, some individuals contend
that the price list represents a mechanical imposition of discipline that runs counter to
the corrective philosophy because it does not consider each case on its own merits. Say,
for example, management finds two employees fighting one a short-term employee, the
other a long-term employee with a fine work record. According to the price-list
approach, management is obligated to discharge both employees, yet it is likely that the
arbitrator will reinstate the long-term employee who has an excellent performance record
and who would typically respond to corrective measures to retain job seniority credits.

CHAPTER 12 Employee Discipline 615

Progressive Discipline
Progressive discipline refers to increasingly severe penalties corresponding to repeated
identical offenses committed by an employee. The focus of progressive discipline is on
correction in at least two ways: (1) by impressing on the employee the seriousness of
repeated rule infractions and (2) by providing the employee with opportunities to correct
his or her behavior before applying the ultimate penalty of discharge. Management may
be required to give an oral warning, a written warning, and at least one suspension
before discharging an employee for repeatedly committing a similar offense, such as fail-
ure to wear safety equipment, poor attendance, or ineffective performance. An exception
to progressive discipline occurs when the nature of the offense is so heinous (stealing,
striking a supervisor, setting fire to company property) as to make corrective discipline
inappropriate.

An oral warning (or reprimand) represents an informal effort to correct and
improve the employee s work performance. The informality of this oral warning is for
corrective purposes; however, the oral warning can be prejudicial to the employee if it
is entered as evidence in arbitration hearings. This disciplinary action, however, is subject
to the following employee defenses: (1) the employee might have thought the supervi-
sor s remarks were instructional and been unaware of the disciplinary aspects or conse-
quences of the warning, and (2) an oral warning given in private can lead to conflicting
testimony the employee can state that the supervisor never gave an oral warning. For
these reasons, the supervisors are often instructed to make a record of the oral warning
and document the discussion with the employee. Because of its relative harmlessness, the
union seldom contests this form of discipline.

A written warning, the next step in progressive discipline, is a more serious matter
because it summarizes the previous oral warnings to correct the employee s behaviors
and is entered in the employee s work record file. More official than an oral warning, it
brings disciplinary actions into focus by warning the employee of consequences of future
rule violation.

If the written warning is not successful in correcting the employee s adverse
behavior, a suspension will be the next step. A suspension is a disciplinary layoff with-
out pay given by management to impress on the employee the seriousness of the
offense. Although oral and written reprimands might also achieve this purpose, they
do not involve a financial penalty to the employee. A suspension serves as an example
of the economic consequences associated with discharge and at the same time indi-
cates that management is willing to retain the employee if he or she will comply with
directives and change errant ways. Management initially imposes a mild suspension
(one to three days) and will then impose a suspension greater than ten days for a
repeated offense. Arbitrators are reluctant to reduce the suspensions unless it can be
shown that other employees were given lesser penalties for identical offenses under
similar circumstances.

Some companies now require an employee to take a day off, with pay, a time out ,
to think about his or her employment situation and to determine whether he or she is
willing to return to work and commit to being a productive worker.

Discharge, unlike suspension or warnings, is not a corrective measure because it
means the employee is permanently removed from the company. As mentioned earlier,
arbitrators have attached tremendous significance to the effects of discharge on the
employee, regarding it as a last resort to be used when all other corrective attempts
have failed and the employee totally lacks usefulness to the firm. Unions label discharge
as capital punishment because of the adverse consequences to the employee and his or
her future employment.

616 PART 3 Administering the Labor Agreement

Many labor agreements contain a statute of limitations. Some unions have been able
to negotiate clauses that erase earlier disciplinary actions after a certain period of time
(e.g., first disciplinary action is erased if no other incident occurs in three years). For
example, it would be difficult to discharge an employee who has previously received
two suspensions for failing to report an absence to management if the worker has
worked for a fairly long time (say, three to five years) before committing a similar
offense. Management is usually not obligated to return to the first step, that is, an oral
warning; however, discharge is not warranted the employee s offense-free period indi-
cates that corrective measures did have some effect and should be tried again before ter-
minating the employee.

Last Chance Agreements
When an employee is threatened with a termination, the union and employer may
decide on an interim measure in the form of a last chance agreement. With a last
chance agreement, the employee has another chance to improve his or her performance
or conduct in order to keep his or her job. The employer is able to retain an employee
who has the potential for being a productive employee. These last chance agreements are
most common in cases when the employee has been threatened with discharge for poor
attendance, inadequate performance, or violation of drug or alcohol rules. The agree-
ments typically specifies standards for improved conduct that the employee must satisfy
during the time period of the agreement, such as passing random drug tests or no unap-
proved absences for one year. The agreement usually makes termination mandatory if
the employee fails to meet any one of the prescribed requirements contained therein,
although the employee retains the right to appeal. Under most last chance agreements,
the arbitrator has limited authority.The Company has to prove that the employee vio-
lated any one of the requirements contained in the last chance agreement.42 (See
Exhibit 12.4.)

When and if an employee is discharged for violating a last chance agreement and a
grievance is filed on the employee s behalf, the employer has only to prove (1) that the
alleged offense occurred in violation of the last change agreement and (2) that there was
no reasonable basis for the occurrence. Therefore, the burden of proving just cause for
the discharge is not required. In fact, arbitrators sustain the employer s decision to ter-
minate the grievant s employment in nearly three fourths of such cases. Arbitrators tend
to recognize their discretion is limited by the terms of the last chance agreement which
was fairly negotiated and signed by the employer, the union, and the employee.43

One study in one plant over a 15-year period revealed that the use of last chance
agreements was effective in a majority of cases. Most employees who signed last chance
agreements and who were returned to work became effective, rule-abiding employees, at
least in the short term. Because the discharged employee is costly to replace and there is
no guarantee that the replacement will be equal in performance to the rescued employee,
the last chance agreement strategy appears to be justifiable to the employee, the
employer, and the union.44

Disciplinary Penalty and Mitigating Circumstances
If an employer s disciplinary action is appealed to arbitration, the arbitrators will deter-
mine whether management was reasonable in assigning a particular disciplinary penalty
for an employee found guilty of an infraction.

In making their determinations, arbitrators use several arbitral principles that have
been developed over the years for considering management s discharge decisions (see the
Labor Relations in Action feature on pg. 621 for examples of typical cases). Arbitrators

CHAPTER 12 Employee Discipline 617

often consider mitigating circumstances (factors), which might cause a reduction in
management s assigned penalty (e.g., from a discharge to a suspension). Consider these
examples:

1. Management contributed to a problem and must therefore assume part of the responsi-
bility for the wrongdoing. Examples include management providing the employee with
faulty tools and equipment and subsequently disciplining the employee for low produc-
tion output or a management representative provoking the employee into committing
physical or verbal abuse.

2. The circumstances of the case were so unusual as to give great doubt that it will
occur again, particularly if management uses corrective techniques instead of
discharge.

3. The employee s behavior is related to fulfilling his or her duties as a union officer.
4. Personal factors (such as marital, financial, or substance abuse problems) caused a

stressed or troubled employee to perform the disciplinary incident (e.g.,

Exhibit 12.4
Last Chance Agreement An investigation has concluded that Mr. Sam Bolden failed to follow the Lockout/

Tag Out procedure (locking all moving parts) while performing his job as B Opera-
tor in the Utilities Department on May 4, 2014. The investigation into the incident
revealed that his failure to adhere to the procedure was an unsafe behavior and
placed himself and other employees at risk. This behavior is undesirable, unaccept-
able, cannot and will not be tolerated. Accordingly, in an effort to correct this unde-
sirable behavior, Mr. Bolden, the Union and the Company have agreed to the
following terms and conditions of employment as outlined in this Last Chance
Agreement:

1. Mr. Bolden agrees to follow and comply with all Lockout/Tag Out procedures
and all Company policies when performing his job duties for the remainder of
his employment. Failure to do so will constitute immediate termination of his
employment.

2. Mr. Bolden will be on probation for a period of twelve months beginning from
the date of this agreement. Should he violate any Mill Rules/Policies or have
poor job performance, attendance, or neglect of duties, he will be subject to
immediate termination.

3. Mr. Bolden agrees to faithfully follow these conditions of employment and all
other Mill rules, orders, and standards of conduct and he and the Union further
agree that if Mr. Bolden violates this agreement such violation will constitute
just cause for termination of employment.

4. All lost time will be considered suspension without pay as disciplinary action in
addition to this last chance agreement. This agreement shall be final and binding
on all parties with no other relief or entitlement. This agreement is made without
precedent or prejudice to any other agreement or grievance settlement. This
agreement confers no additional rights to Mr. Bolden beyond what the current
Labor Agreement provides.

Employee Signature:
Date:
Company Representative Signature:
Date:
Union Representative Signature:
Date:

618 PART 3 Administering the Labor Agreement

absenteeism, poor work performance, or insubordination). Therefore, the employee
will not continue these infractions once his or her personal problems are identified
and resolved.

5. The employee has a long-term good work record.45

Each of these mitigating factors will now be considered further.
Management might contribute to the problem by its work procedures or manage-

rial actions. For example, suppose management has provided the employee with faulty
tools and equipment and subsequently disciplines the employee for low production
output. An arbitrator might reduce the penalty if a manager provokes an employee
into committing physical or verbal abuse. Management contributes to a disciplinary
infraction by condoning, either openly or tacitly, offenses committed in the shop.
Related examples include supervisors observing employees engaged in horseplay with-
out attempting to stop the situation and subsequently disciplining employees for the
action, and supervisors encouraging employees to violate quality standards in the
name of production efficiency.

Another mitigating circumstance occurs when unusual events occur. For example,
an employee has been repeatedly warned and suspended for failure to report his
absence to management when he is unable to work a production shift; at the last sus-
pension the grievant was informed that another infraction would result in discharge.
One month after suspension, the employee again failed to report his absence to man-
agement and was discharged when he reported to work the following morning. The
employee contended (and added evidence in the form of a doctor s slip) that his wife
became suddenly and seriously ill and that his concern for his wife, coupled with no
telephone in the apartment, resulted in his failure to report his absence in advance to
management. Here, management has followed all the principles of progressive disci-
pline; however, the employee s discharge might be set aside if the arbitrator concludes
that the circumstances were so unusual as to give management no reason to think it
will happen again in the future.

Arbitrators often consider the mitigating effects of the grievant s role as a union offi-
cer. Compared with other employees, union officials usually have special rights and pri-
vileges, particularly when conducting union business. Many arbitrators consider the
union steward and supervisor as organizational equals in discussions of union matters.
Arbitrators therefore give the union steward leeway if harsh words are exchanged in
these grievance meetings, whereas other employees might be successfully charged with
insubordination for identical actions.

Union officers also have greater responsibilities that correspond to their rights.
For example, arbitrators and the NLRB have upheld more serious disciplinary action
for union officers who failed to prevent a wildcat strike than for employees who actu-
ally participated in the strike, if the union officers knew in advance of the strike and
failed to stop it. This differential penalty implies that union officers should be more
knowledgeable about contractual prohibition against a wildcat strike and thus
should uphold their contractual obligation to maintain uninterrupted production dur-
ing the term of the labor agreement when there is a no-strike clause in the labor
agreement.

The most complicated and controversial mitigating circumstances are found with
troubled employees. Many management officials contend that arbitrators exceed their
authority to interpret the labor agreement in these discipline cases and instead assume
the roles of clergymen, psychiatrists, and medical doctors in indicating that management
has an obligation to nurture these employees, even though this is not required by the

CHAPTER 12 Employee Discipline 619

contract language. One arbitrator acknowledged that he and some of his peers have
addressed one troubled employee issue, alcohol abuse, with little medical or scientific
foundation:

Curiously, published arbitral decisions involving alcohol abuse rarely distinguish
between social drinking, heavy drinking, and alcoholism distinctions that are crucial
in the mental health field. Moreover, although hundreds of arbitration decisions have
adopted the popular view that alcoholism is a disease that involves loss of control
over drinking, I am unaware of any decisions (including my own) that express an
understanding of what arbitrators actually mean when they call alcoholism a
disease. Even in the literature of arbitration, there is little recognition of whether

alcoholism is a medical disease, a social disorder, or some complex combination, and
whether it has a natural progression and a unitary etiology.46

Finally, arbitrators generally believe that an employee with long and loyal service to
the employer has earned some credit in consideration of his discipline and further that a
long-term employee has more to lose than a short-term employee. Simultaneously, arbi-
trators consider the quality of the employee s work record, including both job perfor-
mance and active disciplinary actions on file. Arbitrators have reversed the employer s
disciplinary action because of failure to provide due process standards in 15 percent of
disciplinary cases. Due process and procedural errors committed by employers include
failure to follow progressive disciplinary procedures, failure to adhere to contractual
notice requirements, denial of representation rights, excessive delay in imposing penalty,
and failure to provide a formal charge of wrongdoing.47

Enforcement of the remedy
When there is a possible disagreement between the parties over the remedy, arbitrators
may be asked to retain jurisdiction over the administration of the remedy. For example,
when there is a dispute over the amount of back pay due a reinstated employee, the arbi-
trator may be asked to determine the amount due. To be fair and to ensure that the
monetary remedy is not perceived as a windfall, arbitrators will be asked to reduce
the back pay by the amount of interim wages the employee earned on another job and/
or the amount of unemployment compensation received during the discharge period. In
addition, the arbitrator may be asked to reduce the amount of back pay because the
grievant did not look for work or did not accept an equivalent job offer during the dis-
charge period to mitigate the back pay amount.48

Possible Collision between Discharge Decisions and Public Policy
As a general rule in arbitration of disciplinary cases, the parties depend on the
finality of the arbitrator s decision. If the employer proves just cause for its disci-
plinary action, the arbitrator upholds the employer s disciplinary action. If the
employer fails to prove just cause, the employee is returned to the workplace with
an appropriate make-whole remedy. In disciplinary cases involving just cause deter-
minations on sexual harassment charges, the finality of the arbitrator s decision
becomes more complicated. After an alleged sexual harasser is discharged and files
a grievance, he or she is subject to the traditional application of the just cause prin-
ciples whereby the grievant would be entitled to a due process hearing with the pre-
sumption of innocence. Furthermore, the arbitrator may consider the severity of the
conduct, the employee s work and discipline record, length of service, potential for
rehabilitation, proper investigation of the matter, and mitigating circumstances.

620 PART 3 Administering the Labor Agreement

LABOR RELATIONS IN ACTION
Examples of Employee Misconduct and Mitigating

Factors to Consider in Employee Discipline

Abusive behavior (a form of insubordination) occurs
when an employee directs profanity, epithets, or verbal
abuse toward a supervisor. Employees defenses have
included (1) no intent of hostility or anger, (2) provoca-
tion from the supervisor, and (3) words used were
shop talk, which are frequently used in the depart-

ment.a

Aggression toward supervisors includes verbal and
physical abuse by subordinates that demean supervi-
sors, undermine their authority, induce fear, and cause
injuries. Reasons for setting aside employer-imposed
discipline are severity of the infraction; provocation by
the supervisor; the grievant s status, such as mental
condition; employee s work history and seniority; lack
of convincing evidence that the disciplinable offense
occurred; and breach of contractual or due process
requirements.b

Alcohol-related discipline occurs when an employee
consumes alcohol on the job, possesses alcohol on the
job, or reports to work under the influence of alcohol.
Issues may involve whether there exists a reasonable
suspicion that the employee was under the influence of
alcohol, the employee refused to submit to an alcohol
test, the employee failed the alcohol test, the employee
was found drinking on the job or possessed alcohol on
the job, or consumed alcohol off the job and then
reported to work under the influence of alcohol. Another
consideration may be the existence of a last chance
agreement that contains conditions with which the
employee must comply in order to continue employ-
ment, such as testing for drugs or alcohol without warn-
ing, participation in a rehabilitation program, and so on.c

Drug-testing issues include whether the drug-testing
program was in place; whether the drug testing was
random or resulted from reasonable cause (e.g., smelling
marijuana smoke, accident or irratic behavior); whether
there was a clear and legitimate basis for requiring drug
tests; whether the drug program and its procedures were
fair, consistent, accurate, and accommodated employ-
ee s privacy rights; whether the drug test resulted from
a random test under a last chance agreement; whether
the drug test occurred during a fitness-for-duty examina-
tion prior to a return to work or a random drug test;
whether the failure to pass the test was the first offense
or repetitive; whether the employer held a safety-
sensitive job designated by the Department of Transpor-
tation, Federal Aviation Administration, or the Federal
Railroad Administration.

Falsification of employmentd application occurs
when an applicant writes incorrect information on an

application for employment. Arbitrators consider a four-
part test: Was the misrepresentation willful? Was it
material to the decision to hire? Was it material to the
employer at the time of discharge? Did the employer act
promptly and in good faith when it discovered the mis-
representation? Mitigating circumstances include the
following: The employee did not understand the ques-
tion or made an honest mistake; lack of connection
(nexus) between the answer given and the employee s
ability to perform the job; the employee had worked
successfully over a long period of time; and the
employer did not act promptly when the misrepresenta-
tion was discovered.e

Fighting on the job occurs when one employee
physically attacks another employee on the job. Prohibi-
tions against fighting in the workplace are considered a
legitimate employer interest because employers are
obligated to provide employees with a safe working
environment. Reasons for modification of penalties
include the following: Employee was provoked by
another employee, employee was a victim of another
employee s violent act, penalty was too severe given
the nature of the fight, management in some way con-
tributed to the problem that caused the fight, or the
grievant had a long-term service record without disci-
pline.f

Incarceration occurs when an employee is placed in
jail or prison and is unable to report to work. Factors
considered in evaluating the amount of discipline are
contract language that includes the term failure to per-
form service, whether the employee is entitled to some
form of leave of absence, the length and reason for the
incarceration, whether the employee advised manage-
ment of his continued unavailability and intent to return
to work (if no communication, can the absence and fail-
ure to communicate be interpreted as a job abandon-
ment ?), and whether there was a no-fault attendance
control program or last chance agreement. Mitigating
factors include the employee s good work record, the
employee s length of employment, the nature of the
offense charged, and the impact on the employer s
operations.g

Insubordination is the refusal of an employee to fol-
low a direct order given by a supervisor. The employee
is to obey now and grieve later. There are several quali-
fications: The employee s act must be knowing, willing,
and deliberate; the order must be explicit and clearly
given so that the employee understands its meaning
and intent; the order must be work-related and reason-
able; the order must be given by someone with

621

However, courts may vacate an arbitrator s decision if the decision contravenes a
significant public policy. Therefore, a court may vacate an arbitrator s decision if
the court finds that the discharged employee had engaged in illegal sexual harass-
ment activities on the job.49 Similar public policy considerations may apply to dis-
charges related to child molestation and other criminal activity, or, conversely, legal
protections for whistleblowers.

appropriate authority; the employee must be made
aware of the consequences of failure to follow the
supervisor s direct order. An employee is not obligated
to follow an order that threatens the employee s health
or safety or to engage in illegal or immoral behavior.h

Refusal to work overtime occurs when an
employee is scheduled to work overtime or the
employee is required to work overtime because of skill
requirements, emergencies, short-term labor demands,
or interdependencies of operations and then the
employee refuses to work. Penalties may be reduced
or overturned for several reasons, including no warning
of the consequences of the overtime refusal, the order
to work overtime was not clearly given, lack of proper
advance notice, failure to apply progressive discipline,
no previous discipline, or the employee offered a rea-
sonable excuse for not working overtime.i

Sabotage is the willful destruction of company
equipment, machinery, or property by an employee
who has motive or opportunity to commit the act.
Because sabotage is a criminal act, the burden of
proof is usually beyond preponderance of the evidence.
These cases may involve direct evidence (an eyewit-
ness account) or circumstantial evidence. As an exam-
ple of circumstantial evidence, a foreman sees an
employee with a hose in one hand and a knife in the
other. The foreman then observes that the hose is cut.
The foreman did not see the employee cut the hose,
but circumstantial evidence leads the foreman to the
conclusion that the employee cut the hose.j

Sexual harassment misconduct occurs when one
employee creates a hostile work environment for
another employee or employees. Arbitrators evaluate
the degree to which the alleged misconduct is severe
or pervasive, and the degree of discipline follows the
elements of discipline for just causek in Exhibit 12.2 on
pg. 609.

Striker misconduct occurs when violence is
directed toward strikebreakers or when strikers cause
damage to nonstrikers property or the employer s prop-
erty. Factors that may modify the penalty include the

following: The employee s actions were not exception-
ally vicious or willfully malicious; the grievant engaged in
a single incident, not multiple incidents of physical vio-
lence; no damage was done to the employer employee
relationship; there was provocation to cause the mis-
conduct; disparate or discriminatory treatment had
occurred; and the employee has a long service or good
work record.l

Tardiness occurs when an employee is late for
work, is not ready for work at the starting time, or is
not at his or her work station at the scheduled starting
time. Factors considered in determining the degree of
discipline are the definition of tardiness, the number of
tardies and the period of time over which the tardies
occurred, and the appropriateness of the penalty under
the circumstances.m

aStanley J. Schwartz, Insubordination: A Cardinal Sin in the Workplace, Labor Law
Journal, 48 (December 1993), pp. 756 770.
bMargaret A. Lucero and Robert E. Allen, Aggression against Supervisors, Dispute
Resolution Journal, 53 (February 1998), pp. 57 63.
cDonald J. Petersen, Arbitration of Alcohol Cases, Journal of Collective Negotiations
in the Public Sector, 29 (3) (2000), pp. 175 193.
dCarrie G. Donald and John Ralston, Company Labor Awards in Drug-testing Cases
Involving Public and Private Sector Employers, Dispute Resolution Journal, 64 (1)
(2009), pp. 72 80.
eDonald J. Petersen, Trends in Arbitrating Falsification of Employment Application
Forms, Arbitration Journal, 47 (September 1992), pp. 36 37.
fMargaret A. Lucero and Robert E. Allen, Fighting on the Job: Analysis of Recent
Arbitration Decisions, Dispute Resolution Journal, 5 (August 1998), pp. 51 57.
gWilliam J. Walsh, Is Incarceration a Good Enough Excuse for Missing Work? A Sur-
vey of Arbitration Decisions, Journal of Collective Negotiations in the Public Sector,
32 (2) (2008), pp. 117 131.
hNorman Brand (ed.), Discipline and Discharge in Arbitration (Washington, D.C.: Bureau
of National Affairs, 1998), pp. 156 161.
iDonald J. Petersen, Arbitration of Employee Refusal to Work Overtime, Dispute Res-
olution Journal, 52 (January 1997), pp. 21 27.
jDonald J. Petersen and Harvey R. Boler, The Arbitration of Sabotage Cases,
Employee Relations Law Journal, 30 (Winter 2004), pp. 52 64.
kMollie H. Bowers, W. Sue Reddick, and E. Patrick McDermott, Just Cause in the
Arbitration of Sexual Harassment Cases, Dispute Resolution Journal, 55 (November
2000/January 2001), pp. 40 85.
lDonald J. Petersen, Arbitrating Cases of Employee Misconduct in Work Stoppages,
Dispute Resolution Journal, 5 (February 1998), pp. 44 52.
mDonald J. Petersen, The Arbitration of Tardiness Cases, Journal of Collective Nego-
tiations in the Public Sector, 29 (2000), pp. 167 174

622

Due Process
Due process has both substantive and procedural aspects. Substantive due process
focuses on the purpose or rationale of the work rules to ensure that an employee has
not been arbitrarily disciplined or discharged. This aspect is reflected in the previously
discussed purposes and elements of discipline.

Procedural aspects of due process are usually covered in labor agreements and
include the following:

The existence of a procedure that has rules, is known, is predictable, and is not
arbitrary
Rules are applicable and administered equitably to all employees
Includes the right to be represented, the right to present evidence and rebut charges,
the right to know the charges, and the right to relevant information concerning the
charges
The right to a fair and impartial fact-finding process and hearing
To be free from retaliation
The right to as much privacy and confidentiality as is practicable50

Other due process requirements which may be written in the labor agreement
include the following:

The discipline process will follow certain time limits specified in the labor agree-
ment. For example, if there is no discipline for three years, the disciplinary record
will be cleared.
The employee will be entitled to union representation, if requested, prior to
discipline being administered and will be given an opportunity to respond (defend
himself or herself).
The employee will be notified of the specific offense in writing.

Another element of due process, written notice, has caused some problems for man-
agement and is a major reason for the involvement of labor relations representatives in
the discipline process. For example, if an employee gets into a heated argument with a
supervisor, refuses to work an assignment, and shouts an obscenity at the supervisor, the
foreman could discipline the employee for directing obscene and profane language
toward a management representative. Once the charges are in writing, management
may be required to convince an arbitrator that this charge warrants discipline, a task
that is not easy if the arbitrator concludes that obscene language is regarded as common
shop talk at the location. In this instance, management would have been wiser to have
disciplined the employee for a more serious offense: Insubordination: refusal to follow
supervisory orders. Since management can seldom change the offense once it is in writ-
ing and handed to the grievant, a member of the industrial relations department is usu-
ally present for consultation or direction before the charges are reduced to writing.

Another related element of due process is double jeopardy punishing an employee
twice for the same offense. This doctrine most commonly comes into play when man-
agement assigns an employee a more severe penalty after the one has been originally
given. The rationale against double jeopardy is that management is held to any decision
that purports to be final; therefore, it is important that it act only after ascertaining all
relevant facts and determining the magnitude of the offense. Management can avoid the
problem of double jeopardy if it makes clear to the grievant that the action taken in the
first instance is tentative, pending further investigation by higher company officials. Usu-
ally, this takes the form of an indefinite suspension that, pending a subsequent investiga-
tion, can be converted to discharge.

CHAPTER 12 Employee Discipline 623

A final element of due process involves record-keeping of concern is the keeping of
secret records on a particular employee. Most arbitrators maintain that keeping secret
records is worse than keeping no records at all. Arbitrators may conclude that the
employee has been singled out for discipline. Moreover, the employee is uninformed
of any deficiencies.

One arbitrator notes three alternative positions that the arbitrator can take on pro-
cedural or due process irregularities: (1) [T]hat unless there is strict compliance with
the procedural requirements, the whole action will be nullified; (2) that the require-
ments are of significance only where the employee can show that he has been preju-
diced by failure to comply therewith; or (3) that the requirements are important, and
that any failure to comply will be penalized, but that the action taken is not necessarily
rendered null and void.51 Arbitrators tend to favor the third alternative, reasoning that
management should suffer the consequences of its errors, but not to the point of exon-
erating an employee who is guilty of a serious offense (particularly if it has not preju-
diced the employee s case).

Due Process and the Weingarten Decision
The due process procedure also involves union representation which has been
addressed in NLRB decisions and by the Supreme Court in its Weingarten decision.
This decision will be discussed in detail because it illustrates the model of the labor
relations process presented in Chapter 1 (see Exhibit 1.2) and because it illustrates
the impact of the fourth participant, the government, on labor management
relations.

The Weingarten decision pertained to an employee who was believed to have
paid only a fraction of the price of food she took out of the store. During the inter-
view with management representatives she repeatedly asked for a union representa-
tive to be present but was denied. In her emotional state, she admitted that over a
period of time she had taken free lunches (totaling approximately $160) from the
store, something a management official and other employees had also done. Manage-
ment subsequently found her version of the incident to be supported. Although she
was not disciplined for her actions, she reported to her union representatives that
she had requested union representation and it had been denied. The union filed an
unfair labor practice. The NLRB decided that management committed an unfair
labor practice, violating Section 8(a)(1) of the National Labor Relations Act (men-
tioned in Chapter 3), by denying the employee union representation. The NLRB
ruled that union representation must be given to the employee at an employee s
request when the employee reasonably believes an investigation could result in disci-
plinary action. However, the employer has no legal requirement to bargain with any
union representative who attends the interview.

The NLRB s Weingarten decision was appealed through the courts and, eventually,
upheld by the Supreme Court. The Court s rationale for this decision was in part based
on the union official s potential contribution to the disciplinary investigation:

A single employee confronted by an employer investigating whether certain conduct
deserves discipline may be too fearful or inarticulate to relate accurately the incident
being investigated, or too ignorant to raise extenuating factors. A knowledgeable
union representative could assist the employer by eliciting favorable facts, and save
the employer production time by getting to the bottom of the incident occasioning
the interview. Certainly [the union representative s] presence need not transform the
interview into an adversary contest.52

624 PART 3 Administering the Labor Agreement

Earlier arbitrator decisions formed the foundation for the Supreme Court s opinions
on an employee s right to union representation. Justice Brennan observed that even
where such a right is not explicitly provided in the agreement a well-established current
of arbitral authority sustains the right of union representation at investigatory inter-
views, which the employee reasonably believes may result in disciplinary action against
him. 53

The Supreme Court ruled that an employee has the legal right to have a union rep-
resentative present during an investigatory interview if the employee has reason to
believe that the investigation will result in disciplinary action. The Court and NLRB
have adopted the several principles which are highlighted in Exhibit 12.5.

The Weingarten decision also refuted the company s contention that union repre-
sentation is necessary only after the company has made its disciplinary decision. The
Supreme Court ruled that this practice would diminish the value of union representa-
tion, thereby making it increasingly difficult for the employee to vindicate himself or
herself in the subsequent grievance proceedings. NLRB cases indicate that an
employee who is discharged for just cause will not be reinstated solely because the
employer violated his or her Weingarten rights. This means that if the employer has
obtained evidence from sources other than from the illegal interview, the employee s
discharge that the employee has violated a company rule will be upheld on those
grounds54.

Exhibit 12.5
Application of Weingarten
Rights

1. The employee s right to union representation stems from Section 7 of the Labor
Management Relations Act, which allows the employee to engage in concerted
activities for mutual aid and protection.

2. The right can be exercised only if the employee chooses to request representa-
tion; the employer is not obligated to inform the employee of his or her legal
right to union representation.

3. The employee must reasonably believe that disciplinary action could follow
before requesting the presence of a union representative.

4. If the employee refuses to go through the interview, the request for representa-
tion having been denied, the employer may continue the investigation without
the input of the employee.

5. The employer is not obligated to bargain with the employee s union representa-
tive during the interview.

6. If the employer denies the employee his or her right to union representation after
the employee makes a legitimate request and continues the investigatory inter-
view, the interview is considered an illegal interview, and any information gained
by the employer during the interview, even a confession to a misdeed such as
theft, will not be allowed in a subsequent procedure, such as arbitration. Not to
be confused, such rulings do not prove that the employee is innocent of the
alleged crime; simply, the employer must prove the employee s guilt with some
other evidence. For example, another employee may be willing to come forward
as a witness to the employee s theft.

7. Weingarten rights do not apply if management had already decided to impose
discipline and the purpose of the meeting with the employee is for management
to communicate the disciplinary decision.

SOURCE: Neal Orkin and Miriam Heise, Weingarten through the Looking Glass, Labor Law Journal, 48 (March 1997), pp. 157 159.
# 1994, 1997, & 2000, CCH Incorporated. All Rights Reserved. Reprinted with permission from Labor Law Journal.

CHAPTER 12 Employee Discipline 625

Union s Communication with Members on Weingarten Rights
Unions continually attempt to inform their members of their Weingarten rights. Not
only are these rights important to the individual member who needs representation
by an experienced union representative, but the exercise of these rights play an impor-
tant part in the union s role of representing members. For example, one union provides
wallet-sized cards for members to carry with them (see Exhibit 12.6, The Weingarten
Card: Don t Leave Home without It!). The AFSCME have developed an Awareness
Quiz on Weingarten rights on its Web page to better educate its members (see
Exhibit 12.7 for the Web site address of the interactive Awareness Quiz and see how
you score).

The NLRB has a history of extending and then rescinding the rights of unrepre-
sented employees to have a co-employee present during an investigatory interview that
he or she reasonably believes could result in disciplinary action. On July 10, 2000, the
NLRB decided that Weingarten rights should be extended to employees in nonunion
workplaces to afford them the right to have a co-worker present at an investigatory
interview that the employee reasonably believes could result in disciplinary action.55

Then, in 2004, the NLRB (with a majority of the Board appointed by President George
W. Bush) flip-flopped again and returned to the 1985 position, meaning that currently
unrepresented employees do not have the same rights of representation under the U.S.
Supreme Court s Weingarten decision as are guaranteed employees who are represented
by a union.56 Exhibit 12.8 shows how the NLRB has changed its position on unrepre-
sented employee Weingarten rights since 1982. Since presidents appoint members of
the Board, the NLRB s policy could change again.

During the years in which Weingarten rights were extended to nonunion employ-
ees, several interesting issues were raised. First, there is a question of whether the rules
developed by decisions of the NLRB since the Supreme Court s 1975 Weingarten deci-
sion will be applied to nonunion settings. For example, an employee in a unionized
setting does not have the right to union representation when the sole purpose of a
meeting called by a management official is to communicate a previously determined
disciplinary action.

Second, there is a question of who will serve as a witness. Although the decision that
extended Weingarten rights to nonunion employees refers only to a co-worker as an
observer, questions that may be raised are as follows: May an employee bring in his or
her attorney to witness a disciplinary meeting? May the employee call in another super-
visor? What if the employee wants to bring in a co-worker who is under investigation for
the same wrongdoing? What happens if the employee calls for a co-worker who is not
readily available, for example, is on layoff or vacation.

Third, there is a question of the role of the witness in a nonunion setting. In a
unionized setting, a union representative may ask questions for clarification and consult
with the employee. If there is an emotional confrontation, the union representative will

Exhibit 12.6
The Weingarten Card:
Don t Leave Home without It!

If this discussion could in any way lead to my being disciplined or terminated, or
affect my personal working conditions, I request that my UE steward or union offi-
cer be present at the meeting. Without representation, I choose not to answer any
questions.

(This is my right under a Supreme Court decision called Weingarten.)

SOURCE: http://www.ranknfile-ue.org/stwd_wei.html.

626 PART 3 Administering the Labor Agreement

try to defuse it. In a unionized setting, the union representative possesses knowledge of
the grievance procedure and past practices of the parties and will be able to articulate the
common law of the shop with the employer. A co-worker witness no doubt will not

have such knowledge and expertise. In fact, a co-worker may be reluctant to serve as a
witness because he or she may fear retribution from the employer, and the co-worker is
left unprotected because there is no union or collective bargaining agreement that pro-
vides protection.

Fourth, there is a question concerning the employer s actions when an employee
asserts Weingarten rights and requests a co-worker as a witness. One choice for the
employer is simply to grant the request; this may be appropriate when the co-
worker s presence may be beneficial to the investigation. A second choice is to discon-
tinue the interview and continue the investigation without an interview with the

Exhibit 12.7
A Quiz on Weingarten Rights
Interactive Exercise

Note: Weingarten Rights may be based in law, the contract or employer rules. To
determine if you are protected by Weingarten Rights, check with your local steward
or union staff.

The answers to this quiz are based in principles established by the U.S.
Supreme Court and the National Labor Relations Board.

Always check before you act!

True False

1. ______ Like Miranda rights (where the police officer must tell the suspect
you have the right to remain silent, etc., ), the supervisor must inform the

employee of his/her Weingarten rights ( you have a right to have a union
steward present ).

2. ______ When an employee requests that a steward be present, the supervi-
sor can select which steward is called in.

3. ______ If an employee requests a particular steward, and that steward is on
sick leave or vacation, the supervisor must postpone an investigative interview
until the steward returns to work.

4. ______ Upon arrival at the meeting, the steward has the right to meet privately
with the employee before questioning begins.

5. ______ If a supervisor denies a request for a steward, the employee must still
continue to answer the supervisor s questions.

6. ______ If a steward is called in by a supervisor and believes discipline may
result, the steward may request the presence of another steward.

7. When an employee requests the presence of a steward at an investigative
meeting, the supervisor may:
a. Grant the request and wait for the steward to arrive
b. Deny the request and immediately end the meeting
c. Give the employee the choice of ending the meeting or continuing without

union representation
8. While at the meeting the steward may:

a. Ask the supervisor the purpose of the meeting
b. Only be a silent witness at the meeting
c. Ask the supervisor to clarify a confusing question
d. Not take notes

SOURCE: http://www.afscme543.com/quiz_2.htm

CHAPTER 12 Employee Discipline 627

suspected employee. If the employer rejects the employee s request for a co-worker
representative and continues the interview, the interview would be considered an ille-
gal interview and no information learned in the interview could be used to support
the disciplinary action. However, the employer may discipline the employee on facts
found through means other than the interviews. Moreover, if the employee is consid-
ered an at-will employee, the employee may be disciplined for any reason or no rea-
son and probably will not have access to a grievance procedure or other forms of
protection.57

A fifth dilemma for the employer is the pay for the co-worker representative. In a
unionized setting, the collective bargaining agreement usually addresses whether union
officials will be paid for time spent on union representational activities and at what
rate. In a nonunion setting, since there is no collective bargaining agreement, the
employer may attempt to avoid the issue by scheduling interviews after hours. Then,
the employer may contend that the co-worker is not entitled to any pay because the
employer did not ask the co-worker to attend the interview. The co-worker represen-
tative s appearance at the interview was at the request of the employee being
investigated.58

Exhibit 12.8
Evolving NLRB Policy on
Employee Weingarten Rights

1975 The U.S. Supreme Court held that a unionized employee has the right to
union representation at an investigatory interview when the employee reason-
ably believes that the investigatory interview could lead to disciplinary action.
NLRB v. J. Weingarten, Inc., 420 U.S. 251.

1982 The Board held that unrepresented employees had Weingarten rights
because Section 7 of the National Labor Relations Act gives employees the right to
engage in protected concerted activities for mutual aid and protection. Materials
Research Corp., 262 NLRB 1010.

1985 The Board reversed itself and held that unrepresented employees did not
have Weingarten rights because such rights stem from the union s right to represent
employees and Weingarten rights extend to employees only when there is an exclu-
sive bargaining representative (union). Sears Roebuck & Co., 274 NLRB 230.

1985 Weingarten rights are not applicable to nonunion settings. E. I. DuPont De
Neumours & Co., 289 NLRB 627 (DuPont III).

2000 2001 The Board reversed itself again and held that unrepresented employ-
ees had Weingarten rights. Employees are afforded the right to have a co-worker
present at an investigatory interview when the employee reasonably believes the
investigatory interview could lead to disciplinary action. Epilepsy Foundation of
Northeast Ohio v. NLRB, 331 NLRB 92, upheld by the U.S. Circuit Court of
Appeals, No. 00-1332 (November 2, 2001) 2001 U.S. App. LEXIS 23722 (D.C. Cir.
2001).

2004 For the fourth time, the NLRB changed its position. In IBM Corp., 341 NLRB
148 (June 9, 2004), the Board ruled that rights afforded to unionized workers by the
U.S. Supreme Court s decision in NLRB v.J. Weingarten, Inc., 420 U.S. 251 (1975)
are not extended to unrepresented employees.

SOURCE: Michael J. Soltis and Alexandra M. Gross, Weingarten Redux: An Employer s Manual, Labor Law Journal, 51 (Winter
2000), pp. 179 180; James F. Morgan, James M. Owens, and Glenn M. Gomes, Union Rules Intrude upon the Nonunion Domain:
Workplace Investigations and the NLRB, Employee Responsibilities and Rights Journal, 14 (March 2002), p. 36; Weingarten Rights,
Labor Law and Due Process, Center for Labor Relations and Research, Pearl City, Hawaii, University of Hawaii, West Oahu, http://
www.homepages.uhwo.hawaii.edu/clear/wein.html, pp. 1 2.

628 PART 3 Administering the Labor Agreement

Summary
In many respects, employee discipline represents the
most significant day-to-day issue in administering the
labor agreement. For union and management, adminis-
tration of discipline is a key factor related to control and
production; the supervisor and the affected employee are
even more directly and personally affected.

Management had a unilateral right to discharge or
discipline employees until the 1930s, although psycho-
logical reform and efficiency movements in the early
1900s urged management to critically examine its dis-
ciplinary policies. Some managers realized that an
employee represented an investment that could be
unnecessarily lost because of whimsical disciplinary
actions. These individuals realized that they had an
obligation to provide employees with clear work rules
and proper training that would minimize the number
of discipline problems and lead to increased productiv-
ity. The establishment of the NLRB further refined
employers disciplinary policies, as employees dis-
charged for union activities could be reinstated to
their jobs with back pay.

Discipline in unionized settings must be for just
cause, a concept consisting of several dimensions.
Management has the burden of proof to establish
that an employee committed an infraction. Although
discipline can accomplish several purposes for the
organization, management may have to prove that
its actions were taken to correct an employee s behav-
ior. Correction suggests that an employee must be
aware of work rules that are clear in their content,
as well as consequences for their infraction. The
work rules must also be reasonable that is, related
to the job and consistently applied to all employees
under similar circumstances.

Discipline s corrective emphasis also suggests
progressive penalties be given to an employee for
repeating a similar offense. Progressive discipline
impresses on the employee the seriousness of
repeated rule infractions while giving the employee
additional opportunities to correct work behavior.
Unless the infraction is heinous, such as stealing
property, management usually has to give an
employee an oral warning for the first offense, then
a written warning and suspension for subsequent,
similar offenses. Discharge is a last resort, used only
when all other attempts at correction have failed or
the nature of the offense is so unacceptable as to
make corrective efforts inappropriate.

Management must also establish that the penalty
fits the crime and that it considered all possible miti-
gating circumstances before imposing discipline. Man-
agement must also provide the employee with due
process in the disciplinary procedure; that is, it must
ensure that the appropriate contractual provisions are
upheld. The employee usually has the right to union
representation and the right to be notified of the
offense in writing.

The U.S. Supreme Court has ruled that an
employee has the legal right, a Weingarten right, to
have a union representative present during an inves-
tigatory interview if the employee reasonably believes
that the investigation could result in disciplinary
action and the employee requests union representa-
tion. Since this decision, the NLRB has provided
additional guidance to the parties. Unions have
attempted to inform their members on how to use
their Weingarten rights.

Key Terms
just cause, p. 602
discharge, p. 603
wrongfully discharged, p. 603
preponderance of evidence, p. 611
clear and convincing evidence, p. 611

beyond a reasonable doubt, p. 611
price list, p. 615
Progressive discipline, p. 616
oral warning, p. 616
written warning, p. 616

suspension, p. 616
last chance agreement, p. 617
mitigating circumstances (factors),

p. 618
due process, p. 623

CHAPTER 12 Employee Discipline 629

Discussion Questions

1. Why is discipline the most significant issue for
union and management? Describe how this sig-
nificance has shifted over time.

2. One union newspaper indicated how it saved an
employee s job. The employee was in the
mechanic s classification and was discharged for
refusing to comply with management s sudden,
unilateral rule that mechanics must perform jan-
itorial duties. Given this sketchy situation, discuss
the many possible reasons for the disciplinary
action, indicating why the arbitrator might not
have been convinced that management s disci-
pline was for a legitimate purpose. (You are free
to make and state assumptions in your answer.)

3. Explain in some detail the difficulties manage-
ment would have in administering the following
work rule in accordance with the disciplinary
principles established in the chapter: Any
employee reporting to work under the influence
of alcohol will be subject to discharge.

4. Indicate the comparative advantages and
disadvantages of a table of penalties (see Exhibit
12.3 on pg. 611) in the labor agreement versus a
one-sentence contractual provision indicating
management has the right to discipline or dis-

charge an employee for cause.
5. Although not subject to judicial scrutiny, evidence

in an arbitration hearing still has its complexities.
Discuss related considerations that could be
involved in an arbitration hearing involving an
employee who was discharged for smoking mari-
juana on the job.

6. Assume you are in charge of establishing a train-
ing program for supervisors in administering
discipline. Based on the supervisor s potential role
in the disciplinary process, formulate and discuss
three major principles you would stress in this
session.

Exploring the Web

1. Supervisor Checklist for Employee Discipline
Prior to taking disciplinary action, supervisors are
given a checklist of questions on the following
subjects:

Work performance problem
Behavior problem
Investigation
Supervisor s responsibility
The employee
Appropriate correction action

(http://www.hra.iupui.edu/content/doclib)
(Also see: http://www.nctraining.ncgov.com/disci-
pline/supervisors.)

2. Progressive Discipline
A supervisor s guide to the basic elements of a
sound progressive disciplinary system (http://www.
cmich.edu/x9684.xml). This guide includes steps,
principles, check- lists, forms, sample letters, and
termination letters.

3. Wrongful Discharge, Employer Exposure, and
Types of Damages
Go to http://employment/find/law.com/employment/
employment-employee-job-(loss) and find out the
Ten Things to Think About: Wrongful Discharge.

Also, click on Wrongful Termination Claims for
advice to a person who believes he or she has been
wrongfully terminated from his or her job.

4. Due Process Protocol
A due process protocol for mediation and arbitra-
tion of statutory discipline arising out of the
employment relationship can be found at http://
naarb.org/protocol.asp.; naarb.org/media.asp

5. Just Cause and Due Process
For views of labor arbitration authorities go to:
http://www.naarb.org/proceedings/index/asp. Type
in just cause or due process or another labor arbi-
tration subject in which you may be interested and
want to know more about.

630 PART 3 Administering the Labor Agreement

References
1. Ahmad R. Karim, Why Arbitrators Sustain Dis-

charge Penalties, Labor Law Journal, 45, June
1994, pp. 374 378; Stephen M. Crow, Elvis C.
Stephens, and Walton H. Sharp, A New
Approach to Decision-making Research in Labor
Arbitration Using Alcohol and Drug Disciplinary
Cases, Labor Studies Journal, 17, Fall 1992,
pp. 3 18.

2. For consideration of other, more informal disci-
plinary actions taken by management, see Bruce
Fortado, Informal Supervisory Social Control
Strategies, Journal of Management Studies, 31,
March 1994, pp. 251 275.

3. Payne v. Western & Atlantic Railroad Co., 81
Tenn. 507, 519 520, 1884 WL 469 at 6 (Sep. term
1884).

4. Guz v. Bechtel National Inc. 24, Cal. 4th 317, 8
P. 3d 1089, 100 Cal. Rptr. 2nd 352.

5. Mark Harcourt, Helen Lam and Maureen Han-
nay, Employment at will versus Just Cause:
Applying the Due Process Model of Procedural
Justice, Labor Law Journal, 2013, pp. 67 79;
E. Allan Lind, Fairness Heuristic Theory: Justice
Judgments as Pivotal Cognitions in Organiza-
tional Relations, in Jerald Greenberg and Russell
Cropanzano (Eds.) Advances in Organizational
Justice (Stanford, CA: Stanford University Press,
2001), pp. 56-88.

6. For an example of how the NLRB can alter an
organization s decision policies, see Marcia A.
Graham, Obscenity and Profanity at Work,
Employee Relations Law Journal, 11, Spring 1986,
pp. 662 677.

7. For more thorough explanations of this exhibit,
see Donald S. McPherson, The Evolving Concept
of Just Cause: Carroll R. Daugherty and the
Requirement of Disciplinary Due Process, Labor
Law Journal, 38, July 1987, pp. 387 403; Adolph
M. Koven and Susan L. Smith, Just Cause: The
Seven Tests (San Francisco: Kendall/Hunt, 1985).

8. Richard E. Dibble, Alternative Dispute Resolu-
tion in Employment: Recent Developments,
Journal of Collective Negotiations in the Public
Sector, 29, 2000, pp. 245 257.

9. Marvin J. Levine, The Erosion of the
Employment-at-will Doctrine: Recent Develop-
ments, Labor Law Journal, 45, February 1994,

pp. 79 89. See also William H. Holley, Jr., and
Roger S. Wolters, An Employment-at-will Vul-
nerability Audit, Personnel Journal, 66, April
1987, pp. 130 138; William H. Holley, Jr. and
Roger S. Wolters, Labor Relations: An Experien-
tial and Case Approach (Hinsdale, IL: Dryden
Press, 1988), pp. 33 35. See also Giles Trudeau,
Is Reinstatement a Remedy Suitable to At-will

Employees? Industrial Relations, 30, Spring 1991,
pp. 302 315; Jay E. Grenig, Dismissal of
Employees in the United States, International
Labor Review, 130, 1991, pp. 569 581; Marcia P.
Miceli, Janet P. Near, and Charles R. Schwenk,
Who Blows the Whistle and Why? Industrial

and Labor Relations Review, 45, October 1991,
pp. 113 130; Lisa B. Bingham, Employee Free
Speech and Wrongful Discharge, Labor Law
Journal, 45, July 1994, pp. 387 400; Melissa S.
Baucus and Terry Morehead Dworkin, Wrongful
Firing in Violation of Public Policy: Who Gets
Fired and Why, Employee Responsibilities and
Rights Journal, 7, 1994, pp. 191 206; Charles J.
Muhl, The Employment-at-will Doctrine: Three
Major Exceptions, Monthly Labor Review, 124,
January 2001, pp. 3 11.

10. RAND Corp. Study Links Job Losses to States
Wrongful Termination Rules, Bureau of
National Affairs, Daily Labor Report, July 23,
1992, p. A2. For somewhat similar conclusions
reached by another survey, see Wrongful-
discharge Claims Increasing, Management Asso-
ciation Survey Finds, Bureau of National Affairs,
Daily Labor Report, February 6, 1990, pp. A8, A9.

11. Bradley T. Ewing, Charles M. North, and Beck A.
Taylor, The Employment Effects of a Good
Cause Discharge Standard in Montana, Indus-
trial and Labor Relations Review, 59, October
2005, pp. 17 33.

12. George Nicolau, Is It Time for a National Unfair
Dismissal Statute? Paper presented at the Annual
Meeting of the National Academy of Arbitrators,
May 27, 2006, pp. 2 9.

13. Brian S. Klaas, Thomas W. Gainey, and Gregory
G. Dell Omo, The Determinants of Disciplinary
System Effectiveness: A Line-management Per-
spective, Industrial Relations, 8, October 1999,
pp. 542 550.

CHAPTER 12 Employee Discipline 631

14. Mario F. Bognanno, Jonathan E. Booth, Thonas J.
Norman, Laura J. Cooper, and Stephen F. Befort,
The Conventional Wisdom of Discharge Arbi-

tration Outcomes and Remedies Fact or Fiction,
Cardozo Journal of Conflict Resolution, 16, 2014,
p. 169.

15. See Kenneth M. Jennings, Barbara Sheffield,
and Roger S. Wolters, The Arbitration of
Discharge Cases: A Forty Year Perspective,
Labor Law Journal, 38, January 1987, p. 35.
See also Ahmad Karim and Thomas H. Stone,
An Empirical Examination of Arbitrator

Decisions in Reversal and Reduction Discharge
Hearings, Labor Studies Journal, 13, Spring
1988, p. 47; Thomas R. Knight, The Impact
of Arbitration on the Administration of
Disciplinary Policies, Arbitration Journal, 39,
March 1984, pp. 43 56.

16. Stephen B. Goldberg, What Happens after the
Arbitrator s Award? Paper presented at the
Annual Meeting of the National Academy of
Arbitrators, May 25, 2006, pp. 7-7 7-10.

17. Arthur Anthony Malinowski, An Empirical
Analysis of Discharge Cases and the Work His-
tory of Employees Reinstated by Labor Arbitra-
tors, Arbitration Journal, 36, March 1981, p. 39;
William E. Simkin, Some Results of Reinstate-
ment by Arbitration, Arbitration Journal, 41,
September 1986, p. 56.

18. Chalmer E. Labig, Jr., I. B. Helburn, and Robert C.
Rodgers, Discipline, History, Seniority, and
Reason for Discharge as Predictors of Post- rein-
statement Job Performance, Arbitration Journal,
40, September 1985, p. 49. For additional con-
siderations of this relationship, see Robert C.
Rodgers, I. B. Helburn, and John E. Hunter,
The Relationship of Seniority to Job Performance

Following Reinstatement, Academy of Manage-
ment Journal, 29, March 1986, pp. 101 114;
I. B. Helburn, Seniority and Postreinstatement
Performance, in Proceedings of the Forty-Third
Annual Meeting, National Academy of Arbitra-
tors, ed. Gladys W. Gruenberg (Washington,
D.C.: Bureau of National Affairs, 1991),
pp. 141 149.

19. D. C. Miller, Supervisor: Evolution of a Forgot-
ten Role, in Supervisory Leadership and Produc-
tivity, ed. Floyd Mann, George Homans, and
Delbert Miller (San Francisco: Chandler, 1965),
p. 113.

20. Oil, Chemical, and Atomic, Union News, July
1970, p. 9.

21. Richard Mittenthal and W. David Vaughn,
Working at the Margins of Just Cause : The

Never-ending Dispute over Arbitral Discretion on
the Discharge Penalty, paper presented at the
Annual Meeting of the National Academy of
Arbitrators, May 25, 2006, pp. 3-9 3-35; Clarence
R. Deitsch, Seniority Clauses: an End Run
Around Just Cause? Dispute Resolution Journal,
60, November 2005 January 2006, pp. 31 34.

22. Mario F. Bognanno, Jonathan E. Booth, Thomas
J. Norman, Laura J. Cooper, and Stephen F.
Befort, The Conventional Wisdom of Discharge
Arbitration Outcomes and Remedies Fact or Fic-
tion, Cardozo Journal of Conflict Resolution, 16,
2014, pp. 157 158.

23. Hoosier Panel Co., Inc., 61 LA 983 (M. Volz,
1973). Marvin Hill, Jr. and Diana Beck,
Some Thoughts on Just Cause and Group

Discipline, Arbitration Journal, 41, June 1986,
pp. 60 62.

24. Rafael Gely and Timothy D. Chandler, Exploring
the Lumpiness of Grievance Arbitration Deci-
sion Making, Journal of Collective Negotiations in
the Public Sector, 32(4), 2010, pp. 287 304.

25. Riley Stoker Corp., 7 LA 767 (Platt, 1947).
26. Richard Mittenthal and W. David Vaughn,

Working at the Margins of Just Cause : The
Never-ending Dispute Over Arbitral Discretion
on the Discharge Penalty, Paper presented at the
Annual Meeting of the National Academy of
Arbitrators, May 25, 2006, pp. 3 11.

27. David A. Dilts, Ahmad Karim, and Mashalah
Kahnama Moghadam, The Arbitration of Disci-
plinary Matters: Do Objective Standards Make a
Difference in Proof? Labor Law Journal, 42,
October 1991, pp. 708 712.

28. Arthur Eliot Berkeley, Asleep at the Wheel: How
Arbitrators View Sleeping on the Job, Arbitra-
tion Journal, 46, June 1991, p. 48.

29. Randall M. Kelly, The Burden of Proof in
Criminal Offenses of Moral Turpitude Cases,
Arbitration Journal, 46, December 1991,
pp. 45 48.

30. Ayelet Ellie Lichtash, Inappropriate Use of E-
mail and the Internet in the Workplace: The
Arbitration Picture, Dispute Resolution Journal,
59, February/March, 2004, pp. 26 37.

632 PART 3 Administering the Labor Agreement

31. Laura Davis, Discipline and Decisions: A Study
of Arbitration Cases Dealing with Employee Dis-
courtesy, Labor Law Journal, 46, February 1995,
p. 84.

32. Edgar A. Jones, Jr., Selected Problems of Procedure
and Evidence, in Arbitration in Practice, ed. Arnold
M. Zack (Ithaca, NY: ILR Press, 1984), p. 62.

33. Buick Youngstown Company, 41 LA 570 753
(H. Dworkin, 1963).

34. Ibid.
35. Terry L. Leap and Michael D. Crino, How to

Deal with Bizarre Behavior, Harvard Business
Review (May/June 1986), pp. 18 25. This article
also furnishes eight criteria for management in
determining whether discharge for previously
unconsidered disciplinary infractions is
justified.

36. Donald J. Petersen, No Smoking! Dispute
Resolution Journal, 50, January 1995, p. 48.

37. For additional consideration of the moonlight-
ing employee, see Muhammad Jamal, Moon-
lighting Myths, Personnel Journal, 67, May 1988,
pp. 48 53.

38. Robert A. Kearney, Arbitral Practice and Pur-
pose in Employee Off-duty Misconduct Cases,
Notre Dame Law Review, 69, 1993, pp. 135 156;
Janie L. Miller, David B. Balkin, and Robert Allen,
Employer Restrictions on Employees Legal Off-

duty Conduct, Labor Law Journal, 44, April
1993, pp. 209 219.

39. Donald J. Petersen, Trends in Arbitrating Falsi-
fication of Employment Application Forms,
Arbitration Journal, 47, September 1992,
pp. 32 33.

40. Gregory G. Dell Omo and James E. Jones, Jr.,
Disparate Treatment in Labor Arbitration: An

Empirical Analysis, Labor Law Journal, 41,
November 1990, pp. 739 750.

41. Lisa Davis and Ken Jennings, Employee Horse-
play and Likely Managerial Overreaction, Labor
Law Journal, 40, April 1989, pp. 248 256; George
T. Roumell, Jr., Hamady Brothers, Inc., 59 LA
1097, AAA Case No. 54 30 0563 72; October 20,
1972.

42. Bonnie G. Bogue and Katherine J. Thomson,
Pocket Guide to Just Cause: Discipline and Dis-
charge Arbitration (Berkeley, CA: California
Public Employee Relations Program, Institute for
Research on Labor and Employment, University
of California, 2010), p. 47.

43. Mario F. Bognanno, Jonathan E. Booth, Thomas
J. Norman, Laura J. Cooper, and Stephen F.
Befort, The Conventional Wisdom of Discharge
Arbitration Outcomes and Remedies Fact or Fic-
tion, Cardozo Journal of Conflict Resolution, 16,
2014, p. 161.

44. Peter A. Bamberger and Linda H. Donahue,
Employee Discharge and Reinstatement: Moral

Hazards and the Mixed Consequences of Last
Chance Agreements, Industrial and Labor Rela-
tions Review, 53, October 1999, pp. 3 19.

45. Mario F. Bognanno, Jonathan E. Booth, Thomas
J. Norman, Laura J. Cooper, and Stephen F.
Befort, The Conventional Wisdom of Discharge
Arbitration Outcomes and Remedies Fact or Fic-
tion, Cardozo Journal of Conflict Resolution, 16,
2014, pp. 163 164.

46. Tim Bornstein, Getting to the Bottom of the
Issue: How Arbitrators View Alcohol Abuse,
Arbitration Journal, 44, December 1989, pp. 47. 44.

47. George W. Bohlander and Donna Blancero, A
Study of Reverse Determinants in Discipline and
Discharge Arbitration Awards: The Impact of Just
Cause Standards, Labor Studies Journal, 21,
February 1996, pp. 3 10.

48. Mario F. Bognanno, Jonathan E. Booth, Thomas
J. Norman, Laura J. Cooper, and Stephen F.
Befort, The Conventional Wisdom of Discharge
Arbitration Outcomes and Remedies Fact or Fic-
tion, Cardozo Journal of Conflict Resolution, 16,
2014, p. 161.

49. John B. LaRocco, Just Cause Collides with Public
Policy in Sexual Harassment Arbitrations,
Proceedings of the 49th Annual Meeting of the
Industrial Relations Research Association
(Madison, WI: IRRA, 1997), pp. 211 216.

50. Hoyt N. Wheeler, Brian S. Klass, and Douglas M.
Mahoney, Workplace Justice without Unions
(Kalamazoo, MI: W. E. Upjohn Institute for
Employment Research, 2004), p. 7; NLRB v. J.
Weingarten, Inc., 420 U.S. 262, 1974. See also
M. J. Fox, Louis V. Baldovin, Jr., and Thomas
R. Fox, The Weingarten Doctrine, Arbitration
Journal, 40, June 1985, pp. 45 54. The Weingar-
ten decision has also been held by an appeals
court to be applicable in at least some federal
sector situations. See Court Permits Union
Representation at Meetings with DOD Investiga-
tors, Bureau of National Affairs, Daily Labor
Report, September 7, 1988, p. A1.

CHAPTER 12 Employee Discipline 633

51. R. W. Fleming, The Labor Arbitration Process
(Champaign: University of Illinois Press, 1965),
p. 139.

52. Hoyt Wheeler, Brian S. Klass, and Douglas
Mahoney, op.cit.

53. Ibid.
54. See: Ralphs Grocery Company and United Food

and Commercial Workers Union, Local 324, 361
NLRB No. 9 (2014).

55. Epilepsy Foundation of NE Ohio and Borgs and
Hassan, 331 NLRB 92, July 10, 2000.

56. Clarence R. Deitsch, David A. Dilts, and Francice
Guice, Weingarten Rights in the Non-union

Workplace: A Merry-go-round of NLRB Deci-
sions, Dispute Resolution Journal, 61, May July
2006, pp. 46 49.

57. Ann C. Hodges, Courtney Mueller Coke, and
Robert R. Trumble, Weingarten in the
Nonunion Workplace: Looking in the Funhouse
Mirror, Labor Law Journal, 54, Summer 2002,
pp. 94 95.

58. James F. Morgan, James M. Owens, and Glenn M.
Gomes, Union Rules Intrude Upon the Non-
union Domain: Workplace Investigations and the
NLRB, Employee Responsibilities and Rights
Journal, 14, March 2000, pp. 36 39.

634 PART 3 Administering the Labor Agreement

CA
SE

ST
UD

Y

12
-1 Issue: Was Mr. Babcock s Termination for Just

Cause? If Not, What Is the Remedy?

Background

Golden Coin Casino Biloxi, MS and the United Servers
have a Collective Bargaining Agreement. The origin of
this matter of arbitration is an incident which occurred
on December 6, 2014.

On Thursday 12/6/14 at approximately 7 P.M. two
guests (two females) came into Buffet and asked Odel Mar-
tin, Assistant Manager to speak with Babcock (food server)
and when Odel was doing rounds in dining room observed
one of the females with a plate eating in Babcock s section.
When Babcock was asked about ticket he didn t have a
reply. After viewing video tapes of the meal, it was deter-
mined that the meals were not paid for.

Why this is important?
This is a violation of Collective Bargaining Agree-

ment 6.02. Cause for Discharge Willful Misconduct
Dishonesty Babcock had guests in his section that he
served who did not pay for meal.
Consequence of behavior:

Separation of Employment
On December 17, 2014, Union Steward Pamela

Smith filed the following Grievance:
Describe briefly the issue/problem:

Wrongful termination.
What section(s) of the contract does this violate:

Article 6, 6.1 Just Cause
What action/adjustment does the grievant want:

To be made whole.

In a letter dated January 24, 2015, Nat Miller,
Golden Coin s Labor Relations Manager, provided the
Company s Third Step Grievance Response. Mr. Miller
wrote:

Mr. Babcock admitted to serving a guest without
proper payment being made for a meal which was
partially consumed by the guest on Thursday,
December 6, 2014. By his own admission, Mr. Bab-
cock invited the guest to dine at the Buffet with
payment to be made personally by Mr. Babcock.
The evidence reveals that Mr. Babcock did indeed
tender his personal debit card to Cashier, Inez John-
son, who was momentarily occupied with other
guests and Ms. Johnson requested that Mr. Babcock
wait as she tended to the other guests.

Mr. Babcock retreated to his duties, instructing
Ms. Johnson to keep the card and advising that he
would return later. Upon return to his assigned sec-
tion, Mr. Babcock observed that one of his guests
had decided to leave abruptly prior to completing
her meal. He then returned to the Cashier stand
to retrieve his debit card. According to Mr. Babcock,
he then advised the Cashier that his guest had
changed her mind about eating and he requested
return of his debit card.

In his voluntary statement which Mr. Babcock
submitted on or about December 17, 2014, he
recounted all of the above facts. However, it was
not until the 3rd step hearing that he made it
clear that he insisted on a non-charge for the
meal based on his understanding of Buffet
operations.

Odel Martin testified that on December 6, 2014
at approximately 7:00 P.M., she was approached at
the Host stand by two female employees of the
Funny Bones Comedy Club who requested to
speak with Babcock for a moment. Mrs. Martin
granted permission and the two ladies proceeded
past the Host station and into the main dining
area of the Buffet. After remaining at the Host sta-
tion for several minutes, Mrs. Martin next pro-
ceeded to the main dining area in the course of
her normal duties as Assistant Manager. She imme-
diately observed that Babcock had placed utensils,
beverages and napkins on a table where the two
ladies were seated. Mrs. Martin continued to
observe as one of the ladies left out of the restaurant
and the other headed toward the buffet line to pre-
pare a plate for consumption.

Mrs. Martin approached Babcock to advise
that the ladies had not tendered payment for the
meals and inquired as to why they were being
seated without a receipt. Babcock did not respond
and continued about his duties. Mrs. Martin then
went to the Funny Bones Comedy Club to discuss
the matter with the manager on duty, Sue Reeves.
Ms. Reeves advised that she had not given permis-
sion for the employees to leave their work area dur-
ing working hours and considered them to be
missing in action. Mrs. Martin learned that the

CHAPTER 12 Employee Discipline 635

names of the Funny Bones employees are Lois
Smith and Jane Byrd. Equipped with this informa-
tion, Mrs. Martin returned to the Buffet.

Mrs. Martin conferred with Tom Hansen, Buffet
Manager, about the events involving Babcock and
his guests and on December 7, 2014, Babcock was
suspended pending investigation. The matter was
then referred to investigations. Babcock reported to
investigations on December 12, 2014 and was inter-
viewed by Lead Investigator, Sid McLeod. Babcock
submitted a voluntary statement later.

Conclusion of the Investigation
The crucial facts in this case are clear, uncon-

tested and indisputable. On December 6, 2014, Bab-
cock seated two acquaintances, Smith and Byrd in
the Casino Buffet at approximately 7:00 P.M. Bab-
cock invited both Smith and Byrd to dine at his
expense and one of the two ladies declined. He
then invited the acquaintance who accepted his
invitation to proceed to the buffet station to prepare
her plate. Babcock was approached by Assistant
Buffer Manager, Odel Martin, who inquired about
payment of the meals. Babcock did not respond.

Babcock approached the cashiering station and
left his debit card for Cashier, Inez Johnson, and
returned to his section. While it was unknown at
the time of his termination, Babcock admitted that
he advised Cashier, Inez Johnson that his guest
decided against eating and Babcock insisted that
no charges be assessed against his debit card.

Babcock admitted that he was the only Server
for the guest and he bussed the table when his guest
left the area abruptly without fully completing the
meal. At no point did Babcock seek approval from
any member of management to confirm the non-
charge although he had full knowledge that his
guest did indeed fill a plate from the Buffet line.

Babcock is keenly aware of operating procedures
for the venue. As a Food Server he fully understands
that one of the major responsibilities is to ensure that
prior to taking any beverage orders, he is to observe
for evidence of payment by the guest. He fully under-
stands the universal operating tenet of buffets pay
first, eat later. In cases involving customer satisfac-
tion issues, management should be notified immedi-
ately to address any problems/concerns. Babcock
made no attempt to notify management of any prob-
lem and sought no approval of a non-charge.

The Grievance was appealed to arbitration.

Relevant Provisions of the Collective Bargaining
Agreement

Article 6: Discharge
6.01. Just Cause

No employee shall be disciplined or discharged
except for Just Cause. Disciplinary actions shall be
progressive and corrective in nature. Disciplinary
notices shall include at a minimum; a documented
coaching, a written warning, a final warning, and dis-
charge. The parties agree that progressive discipline
normally requires, prior to suspension or discharge,
that an employee be given an opportunity to correct
the deficiency through advance notice, additional train-
ing or adequate time to correct the deficiency. Notwith-
standing the above, certain conduct as set forth in
6.02(a) will result in immediate discharge without
resort to progressive discipline.

6.02. Cause for Discharge.
(a) No regular employee, after having completed

the probationary period as defined under Article 10,
shall be discharged except for just cause.

Article 22: Management Rights
22.01. Management Rights

(a) The management of the Employer shall have
the exclusive right to manage and operate the
Employer, including all of its operations, activities,
and the direction of the work force, with the right to
hire; or to suspend, discipline or discharge for just
cause .

22.03. Rules and Regulations
The Employer shall have the right to establish,

amend, modify and post Rules governing and
regulating the conduct of employees. Employees
failure to abide by said Rules will constitute grounds
for discipline consistent with the terms of this
Agreement.

Relevant Provisions of the Employee Handbook

What Golden Coin Casino Expects From You
Rules of the Road
Conduct Standards: Out of respect for our guests

and each other, you are expected to maintain certain
behavior and performance standards. The following list
provides examples of behavior that can result in disci-
plinary action; it is not intended to be an exhaustive
list. You are expected to use good judgment at all
times in behaving appropriately at work.

636 PART 3 Administering the Labor Agreement

Although the violations noted below may result in
immediate Separation of Employment or immediate
Final Written Warning upon first offense, less severe
offenses are viewed cumulatively and will normally be
handled on a four-step basis of progressive discipline:

First Step Document Coaching
Second Step Written Warning
Third Step Final Written Warning
Fourth Step Separation of Employment

Discipline will be separated into three categories:
Attendance, Performance/Policy, and Variances (money-
handling).

Management may, based on the severity and the spe-
cific facts of the incident, accelerate the disciplinary pro-
cess to include any of the four steps up to and including
immediate Separation of Employment. Also, violations of
more than one Conduct Standard in a single act will result
in increased or multiple disciplinary steps up to and
including immediate Separation of Employment. Investi-
gative suspension may be used to suspend an employee
while an investigation is conducted. The following list is
not all-inclusive and may be revised periodically .

3. Employees will be honest and forthcoming in all
communication, verbal and written; this includes any
Company documents, communication, and participation
in investigations. Employees will not knowingly make
false statements or omit pertinent information, particu-
larly regarding investigations or reports. Employees must
report any known acts or plans of dishonesty .

6. Employees will not participate in theft, misappro-
priation, misuse or willful destruction of a co-worker s,
guest s or Company property, or unauthorized removal
of such, including lost and found items; this includes
removing items from Company dumpsters or any
other property disposal facility and includes unautho-
rized removal of food and beverages .

16. Employees will obey all Company rules,
department policies and procedures, supervisor s
instructions, regulations and/or statutes of local, state
and federal governmental agencies including those pre-
scribed by the Mississippi Gaming Commission.
Employees will follow all posted, stated or commonly
known rules, policies, and procedures.

Positions of the Parties

The Employer:
The Employer stated that, on December 15, 2014,

Babcock was terminated from his employment as a

server at Golden Coin. The Employer claimed that
the essential facts that led to Mr. Babcock s termination
are straight-forward.

On December 6, 2014, Mr. Babcock was working
his part-time, evening shift as a server in the Golden
Coin. All servers are required to greet guests who come
into their assigned area and to take very specific,
required steps to ensure that guests are seated, served
their requested beverages and directed to buffet food
areas to begin their buffet meals. Before any of that
happens, servers must insure that guests have physical
proof they have paid for their buffet meals. This
required step is that every guest must have a receipt
or ticket before he or she can be seated and served.
The requirement that a receipt be produced is man-
dated in step-by-step instructions included in a buffet
training manual called The Sequence of Service.

The buffet provides several separate serving lines
and a wide variety of food in an all-you-can-eat setting.
In order to prevent individuals who have not paid from
getting free meals in the buffet, the Employer con-
stantly monitors and enforces the Sequence of Service
guidelines. From the moment that customers approach
the buffet reception area until the point when a server
confirms that his or her customers have paid for the
right to be seated and eat in the buffet, the Sequence of
Service mandates required steps to be followed by all
employees.

On December 6, 2014, two women came to the
buffet and asked if they could visit with Babcock. It
was learned that the two, Jane Byrd and Lois Smith,
were employees of the Funny Bones night club, located
directly across from the entrance to the buffet. The
women first asked a cashier in the buffet reception
area if they could go inside the buffet to say hello
to Babcock. They asked Assistant Buffet Manager,
Odel Martin, if it was okay to go see Babcock. The
women pointedly told the cashier that they were not
going to eat.

Once they walked inside the buffet service area,
another waiter directed the two women to Babcock s
section. Assistant Manager Martin observed Babcock
as he greeted the women, sat them at one of his tables,
got iced tea drinks for them and invited them to go to
the buffet lines to eat. Ms. Martin did not see a written
receipt on the women s table. It did not appear that
Babcock asked either woman for a receipt, to verify
they had properly paid the $21.95 per guest price for
a buffet meal.

CHAPTER 12 Employee Discipline 637

Ms. Martin continued to observe as one of the
women proceeded to the buffet lines to fill her plate
with food, returned to her table, and began to eat.
Assistant Manager Martin tried to question Babcock
about why the women did not appear to have a buffet
receipt; but Babcock refused to answer her questions
and walked away from her.

After receiving a drink from Babcock, Ms. Byrd
left the buffet. However, Ms. Smith remained in the
buffet for approximately 15 minutes and continued to
eat after her co-worker had left. Babcock consistently
claimed that he did not know either woman prior to
the December 6 encounter nor had he ever served them
before.

After Ms. Martin tried to question Babcock, she
called the Buffet Manager, Tom Hansen, to ask if it
was possible that some arrangement had been worked
out to permit Funny Bones employees to eat in the
buffet without showing paper receipts Mr. Hansen
was not aware of any reasons why Funny Bones
employees would be allowed to eat in the buffet. He
instructed Ms. Martin to speak with someone in
Funny Bones management. Ms. Martin met with a
Funny Bones Manager who said she had no idea why
her employees were at the buffet. Ms. Martin returned
to the buffet a few minutes later and observed that Ms.
Smith was still at a table in Babcock s section and still
eating. Ms. Smith was observed exiting the buffet at
7:15 P.M.

It appeared to Ms. Martin that Babcock had per-
mitted one Funny Bones employee Ms. Smith to eat in
the buffet without paying for the meal and had also
served Ms. Byrd a drink without getting payment for
it. After Ms. Martin called Mr. Hansen, they agreed
that Babcock s actions appeared to be a potentially seri-
ous violation of required procedures.

Babcock refused to write a statement, but told the
managers that he had attempted to pay for one
woman s meal and had left his debit card with a
cashier.

Babcock was suspended on December 7, 2014.
The Employer explained that there are a number

of unrefuted facts that underpin the Employer s deci-
sions on Babcock s guilt. First, Babcock has consistently
claimed that he did not know either Funny Bones
employee when they came into the buffet and asked
for him by name. When Babcock met the strangers,
he never questioned how they knew him or why they
came into the buffet, asking for him by his name.
Instead, he immediately greeted them, sat them at

one of his assigned tables, invited them to eat, and
offered to pay the buffet tabs for two strangers. Smith
remained in the buffet for approximately fifteen min-
utes and was observed eating from her plate of food
before 7:05 P.M. and after 7:11 P.M.

Babcock misled Mr. Hansen and Ms. Martin when
he claimed he had done nothing wrong because he had
attempted to pay for one strangers meal. While video

surveillance does show that Babcock took his debit card
to a cashier, supposedly to pay for a buffet meal, Bab-
cock failed to mention that he retrieved his card and
instructed a cashier that it not be charged. His change
of mind occurred only four minutes later. Babcock
does not deny that he told a cashier he did not want
his debit card charged because the woman (Ms. Smith)
had changed her mind and did not eat.

The evidence showed that Ms. Smith did, indeed,
fix herself a plate of food, began to eat, and continued

to eat the buffet food. Babcock s claim that she changed
her mind and did not eat is simply not true. Ms. Smith
provided a written statement wherein she admitted eat-
ing from the plate of food that Babcock offered to pay
for. Babcock admitted that he did not stay and watch
Ms. Smith so he did not know if she ate or not. He had
no reason to refuse to pay for the food that Ms. Smith
consumed. Certainly there is no dispute that payment
for Ms. Smith s buffet meal was never received by the
Employer.

Babcock continued to claim that he has done noth-
ing wrong, and throughout the process, he has never
offered an apology or to pay for the meal.

Babcock s claim of innocence does not change the
fact that Ms. Smith was provided with a free buffet
meal because Babcock was dishonest when he told a
cashier the woman did not eat. The CBA clearly
lists dishonestly and willful misconduct as violations
which call for a penalty of termination. The Handbook
rules, agreed to by the Union, call for termination in
such situations.

The Employer argued that, if individuals tell a
cashier they want to eat at the buffet, they are required
to first pay. Once they pay, they are handed a paper
receipt before they can be seated. Without a paper
receipt, no one is allowed to eat in the buffet. Obvi-
ously, neither Funny Bones employee was asked to
present a receipt to Ms. Martin because they had
already told Ms. Johnson they were not going to eat.
Ms. Johnson testified that she followed standard proto-
col and directed the women to the hostess stand,
located at the entryway to the buffet serving areas.

638 PART 3 Administering the Labor Agreement

When the women approached Assistant Manager Mar-
tin, they asked if it was okay to go see Babcock. Ms.
Martin testified that it is not unusual for people to stop
to say hello to buffet employees so she told the
women they could proceed into the buffet area to see
Babcock. Ms. Martin did not escort the women into the
buffet to meet Babcock.

The Employer claimed that Babcock s violation is
not that he offered to pay for meals for total strangers.
His offense is that he refused to pay for a buffet meal
that he served and agreed to pay for. Babcock did
deliver his debit card to a cashier at 7:04 P.M. However,
at 7:08 P.M., he went to retrieve his card and to instruct
the cashier not to charge him. At that point, he lied to
the cashier because he told her that his guest had
changed her mind and had left and did not eat.

Another excuse attempted by the Union is that
Ms. Smith only ate a small portion ( a bite ) of food.
However, Ms. Martin testified that she watched Ms.
Smith eating before she left the buffet area between
7:04 and 7:05 P.M. and again, when she returned to
the buffet at 7:11 P.M. At 7:11 P.M. Ms. Martin said,
Ms. Smith was still at the table and still eating. Ms.
Martin s testimony is consistent with the surveillance
timeline which also directly refutes Babcock s story.
Babcock testified that, when he returned to Ms. Smith s
table, he saw she was gone, he rushed back to the
cashier to retrieve his debit card because he claimed:
because she didn t eat. The timeline shows that Bab-

cock returned to the cashier at 7:08 P.M., even though
Ms. Smith did not leave the buffet until 7:15 P.M.

The amount of food that Ms. Smith consumed is
not relevant. The way the buffet works is simple. A
guest pays one price to be entitled to a wide variety
of food offerings. Once the established amount is paid
and a guest is given access to the available food choices,
it does not matter if he or she makes multiple trips to
the food line, or if he or she takes a few bites of food
and decides to eat nothing else.

The Employer concluded:

On December 6, 2014, Mr. Babcock invited two
complete strangers to sit at one his assigned tables in
the Golden Coin Buffet. He admittedly greeted them,
asked them if they wanted to take a meal on the buffet
line and then offered to pay for their meals. He began
the process of serving the two strangers without doing
what he absolutely knew he was required to do to
ensure that they had paid for their meals before they
were permitted to stay and eat.

Mr. Babcock further violated terms of Golden
Coin s rules and procedures, as well as the CBA,
when he refused to allow his debit card to be charged
for, at least, the one meal that was served to a guest in
his section.

It is respectfully requested that Mr. Babcock s
grievance be denied. Whether Mr. Babcock actually
knew the women before December 6 or not is not rele-
vant. He violated a known and reasonable rule that all
servers must comply with. He tried to get away with
doing something he knew he should not and, just like
other employees before him, his violations resulted in
loss of his job.

The Union:
The Union stated that Babcock has been employed at
the Golden Coin since 2001. In 2005, he began working
as a server at Golden Coin buffet. On December 6,
2014, Babcock was working as a server on the buffet
when his Assistant Manager, Odel Martin, brought two
women through the hostess section to Babcock.
Although Martin was the Assistant Manager, she was
working as a hostess on this day. According to Martin,
the two women who were Funny Bones employees
asked to speak to Babcock. Martin was aware the
women did not have tickets to the buffet, but escorted
them into the seating area anyhow. Martin did not give
any instructions to Babcock or comment about the
women except to say they had asked for him. Babcock
greeted the women and asked them if they would like
to eat. One of the women agreed to eat and the other
declined. Babcock told the woman who wanted to eat
to go fix her plate and he would pay for her meal. Bab-
cock left the women to give his debit card to the cashier
in the buffet. After giving his card to the cashier and
asking her to charge him for one meal without his dis-
count, Babcock returned to work and brought drinks to
his guests. When Babcock returned to the Funny Bones
employees table to bring them drinks, he discovered
the woman who was not eating had left.

Martin saw one of the Funny Bones employee get-
ting a plate of food and proceeded to contact her man-
ager, Tom Hansen, about the situation. Apparently,
Martin was unaware whether the Funny Bones employ-
ees were allowed to eat for free at the buffet. Martin
contacted Hansen to find out. Hansen was unaware if
the women were allowed to eat for free. For some rea-
son neither Hansen nor Martin deemed it appropriate
to ask the women directly if they had paid or were
entitled to free food. Martin and Hansen did not

CHAPTER 12 Employee Discipline 639

know Babcock had proffered his debit card to pay for
the meal. Martin was instructed by Hansen to speak to
the Funny Bones Manager and ascertain whether the
women were allowed to eat for free.

As a result of Martin speaking to the Funny Bones
Manager, the two women were called back to work and
left the buffet abruptly. Babcock went back to check on
the women and discovered that they were both gone
and what looked like an uneaten plate of food was
left on the table. The woman did not tell Babcock
why she was leaving, or even that she was leaving.
When Babcock discovered that the woman was gone,
he looked for Martin to request his money be credited
back to his card. Martin was nowhere to be found so
Babcock went to cashier and requested the charge be
credited back to his card. The cashier informed him
that no charge had been made to his card. Babcock let
the matter drop. He thought that he no longer needed to
speak to Martin because he did not need her to autho-
rize a replacement of money to his card. Babcock fin-
ished his shift and left work with no concerns.

The next morning Babcock was called to the office
and was informed that he was accused of bringing two
people into the buffet without them paying. His imme-
diate response was to tell Management to look at the
surveillance video because he did not bring the women
in and he did attempt to pay. He was sent home.

The Union argued that the termination of Babcock
was contrary to the Collective Bargaining Agreement.
There was no just cause for his termination. He was
effectively terminated from his long-term employment
at the Golden Coin for allegedly inviting and allowing
one woman to eat for free in the buffet and then lying
about the incident. The Collective Bargaining Agree-
ment requires that no employee shall be disciplined
or discharged except for just cause. Disciplinary
actions shall be progressive and corrective in nature.
The only exception to the progressive nature of the
discipline occurs when an employee is dishonest, dis-
plays willful misconduct and assorted other breaches in
acceptable behavior, which are listed in Section 6.02(a)
of the Collective Bargaining Agreement. Babcock was
not dishonest nor did he exhibit willful misconduct or
any other act listed under Section 6.02(a).

The Union claimed that Babcock did not bring or
invite the women into the buffet area.

Babcock s supervisor, Odel Martin, allowed the
women into the buffet without a ticket. Martin sent
the women back to Babcock and knew they had not

paid for food. Martin breached the standard and stated
rules of procedure by allowing persons without a ticket
into the buffet eating area. The host is responsible for
ensuring guests have paid for their meal and present
their ticket prior to being allowed into the buffet area.
Martin was asked during the hearing:

Q: Isn t it against the rules to let them through
without paying?

A: We have guests who come into the restaurant a
lot just to observe the food before they make decisions to
pay.

Q: Okay. But you knew they weren t going to
observe the food. They told you they wanted to talk to
someone.

A: Yes.

Martin did not do her job, but instead brought the
two Funny Bones employees to Babcock when she
knew they did not have a ticket. Martin explained
that she actually thought the Funny Bones employees
might have been entitled to eat for free due to some
agreement between the two venues. Martin admitted
to seeing the one Funny Bones employee filling a
plate at the buffet, but did not approach the employee
and question her about payment. It appears that Mar-
tin fully expected the women to eat, but perhaps
became nervous about her participation in the event.

Babcock offered to buy the employee s meal and
intended to do so. Babcock is originally from Senegal,
a country in West Africa. Babcock s cultural heritage
has direct bearing of the events in question and there-
fore a brief foray into Senegalese culture is warranted.
The culture of Senegal is very different from Western
culture. Hospitality and kindness toward others are key
attributes in Senegal. Extensive and lengthy greetings
are expected and foul language is not tolerated in pub-
lic. People usually resort to communication or dia-
logue to diffuse hostility and aggressiveness.
Hospitality is given such importance in Senegalese cul-
ture that it is widely considered to be part of the
national identity.

When there is an understanding of Babcock s cul-
ture and his heritage, it is very understandable why
Babcock would offer to pay for the meal of another
employee who greeted him and specifically asked for
him by name, even when he did not have a friendship
with the employee. Babcock offered to pay for the
Funny Bones employee s meal in an act of hospitality;
something of the upmost importance to the Senegalese.

640 PART 3 Administering the Labor Agreement

Babcock stated that it meant a lot to him when people
came to say hello and ask how he was doing.

It is clear that Babcock presented his debit card to
the cashier and requested that one meal be paid for.
Martin believed Babcock had no intention of paying
for the food of the employee. The problem arose for
Babcock when the woman left unexpectedly and
abruptly and he could not find Martin to discuss the
matter with her. Babcock did not pay for the meal
because he believed, based on past practice of the buf-
fet, that the woman would not be charged since she
essentially did not eat. It was not unusual for customers
to be refunded money for the buffet when the food was
not eaten for one reason or another.

Babcock came back to the Funny Bones employees
table to find both employees gone. The plate of food was
on the table and none appeared to be eaten. When Bab-
cock saw the woman had left without eating, he did not
know why. The reason the woman had left the buffet so
abruptly was due to the fact that Martin spoke to the
Funny Bones employees supervisor and their supervisor
mandated their immediate return to Funny Bones.

The Union concluded that Babcock was termi-
nated in violation of the Collective Bargaining Agree-
ment and the grievance should be upheld and Babcock
should be made whole in every way.

Questions
1. Apply the elements of employee discipline to this

arbitration. Determine whether these elements are
helpful in making the decision.

2. Evaluate whether or not Babcock s heritage makes a
difference in the outcome.

3. What were Babcock s intentions in giving the credit
card to the cashier? Was it part of the scheme to
avoid paying for the meal?

4. The burden of proof rests with the Company. Did
the Company prove that Babcock violated the CBA
and Company policies? If so, what should be the
penalty? If not, what should be the appropriate
remedy?

CA
SE

ST
UD

Y

12
-2 Falsification of Application

Issue: Did the Company have just cause to terminate
James Kane for falsifying employment records? If
not, what shall be the appropriate remedy?

Background

The Company is a world-class integrated Pulp and
Paper Mill which has approximately 1,050 hourly and
salaried employees. The Grievant, James Kane, was
employed on March 10, 2014 as a Reserve on No. 34
Paper Machine.

This arbitration stems from the following letter
from Sam Gill, Human Resources Generalist, dated
August 21, 2014, to James D. Kane, the Grievant.

Your employment is being terminated effective
immediately. The reason for your termination is
falsification of Company records, specifically failure
to disclose all medical information on the New
Employee Health History form provided to you
during your pre-employment medical assessment.
The information that you failed to disclose was

important not only to the initial determination of
the most appropriate job assignment from a safety
perspective, but also critical to ensure you received
the most appropriate medical treatment in the event
of an on-the-job medical emergency similar to the
one you experienced. In fact, the medical personnel
have indicated that they would have handled a pre-
vious medical situation differently had they been
aware of the information you omitted from the
pre-employment medical history. On the form dated
3/1/2014 you answered No to Section B: In the
past 5 years have you ever been told that you had
one of the following health problems, or have you
been provided medical treatment for: (16) Liver,
stomach, bowel disease and (26) Kidney or bladder
disease.

The form that you signed includes the following
statement:

I certify that all statement and answers pro-
vided by me are true, complete and correct to the
best of my knowledge. I understand and agree that

CHAPTER 12 Employee Discipline 641

my employment and continued employment is con-
ditioned upon full disclosure of all information
requested. I understand and agree that any false,
incomplete or incorrect statement or answer made
by me shall be considered sufficient cause for denial
of employment or discharge.

You read and signed the form certifying accu-
racy of the medical information.

The Company never takes the termination of
an employee lightly. Our decision to terminate
your employment was reached after careful and
thorough consideration and discussion of all aspects
of our investigation of this matter.

The Union filed the following Grievance:

Specific Provision(s) of Contract Violated:
All applicable
Statement of Grievance:
Wrongful termination.
Action Requested:
Return to work with all seniority and benefits

restored. Make whole.

In a letter dated October 27, 2014, Jack Fuller,
HR Manager, wrote to Kevin Jackson, Union Repre-
sentative:

Mr. James Kane was terminated on August 20,
2014. The reason given for Mr. Kane s termination
was falsification of Company records, specifically
failure to disclose all medical information on the
New Employee Health History form provided

during his pre-employment medical assessment. A
copy of the termination letter is attached and is
herewith incorporated into this third step griev-
ance answer.

During the third step grievance meeting it was
the contention of the Union that Mr. Kane did not
have knowledge of the specific health problems and/
or medical treatment for the specific health pro-
blems at the time that he completed the New
Employee Health History form.

Following the third step meeting, we have
again reviewed in detail the medical records
released to the Company by Mr. Kane. The Com-
pany remains convinced that he did, in fact, have
knowledge of the medical conditions which should
have been disclosed on the New Employee Health
History form.

Having again reviewed the factual circum-
stances of this case, the Company has concluded

that Mr. Kane s termination should stand. This
grievance must, therefore, be denied.

The Grievance was appealed to arbitration.

Relevant Provisions of the Labor Agreement

Section XXXIII

Management Rights
The Union agrees that unless specifically abridged by
this Agreement, the Company shall be vested solely
with all the rights it had prior to the signing of this
Agreement, including the management of the business,
the direction of the working force, the right to hire,
plan, direct and control all plant operations; the right
to promote, demote, layoff, assign or transfer, disci-
pline, or discharge for just cause.

Positions of the Parties
The Company:

Mr. James Kane was employed on March 10, 2014
as a Reserve on No. 34 Paper Machine. On June 21,
2014, he w6as working the 6:00 P.M. to 6:00 A.M.
shift when he experienced symptoms of heat stress.
He was brought to the Mill Medical Department by
his supervisor and was evaluated by the on-duty Mill
nurse, Doris Kates, RN, who completed a required
written evaluation of the Grievant. Treatment for heat
stress and dehydration was begun. Kane was kept in
Medical Department through the night with the nurses
who checked the progress of his recovery. The Mill
Medical Director, Dr. Wayne G. Stanwich, was called
and was apprised of the Grievant s condition. Dr. Stan-
wich in turn provided direction for his treatment.

By morning on June 22, 2014, Kane had recovered
sufficiently well to be allowed to go home. Based on the
notes of the Nurse Practitioner, Max Smith, Patient
states he s feeling a lot better. The nurse felt the heat
exhaustion problem was resolved. Kane was given
instructions to follow for the coming days and was
told to follow up on June 25, 2014, before returning
to work and to contact the Medical Department if he
had further problems. After June 22, 2014, he saw his
personal doctor, Dr. Vadik and was hospitalized. He
was released from the hospital on June 26, 2014 and
returned to work on June 29, 2014.

Since his hospitalization was related to the illness
he experienced at work, the Mill Medical Department
requested records from the hospital, and based on
that information requested records from his personal
doctor. Once these records were reviewed by the Mill

642 PART 3 Administering the Labor Agreement

Medical Director Dr. Stanwich, he discovered medical
conditions the Grievant had not disclosed on the New
Employee Health History Form. Based on his conclu-
sion that (1) The Grievant knew of his problems on
March 1, 2014, and (2) He failed to acknowledge his
problems when completing the New Employee Health
History Form, Dr. Stanwich directed that this informa-
tion be communicated to the Mill HR Manager.

A subsequent investigation led to the Grievant s
termination on August 20, 2014. The Union contended
that the Grievant did not have knowledge of the spe-
cific health problems at the time he completed the New
Employee Health History Form.

The Company argued the Grievant knowingly fal-
sified a part of the application process for which he was
subsequently terminated. There is a statement on the
New Employee Health History Form that states:

I certify that all statements and answers provided
by me are true, complete, and correct to the best of
my knowledge. I understand and agree that my
employment and continued employment is condi-
tioned upon full disclosure of all information
requested.I understand and agree that any false,
incomplete or incorrect statement or answer made
by me shall be considered sufficient cause for denial
of employment or discharge.

The Grievant signed the above on 3/1/2014.
Previous to the above statement is the health pro-

blems, or have you been provided Medical treatment
for, Mr. Kane circled NO to the following questions:
16 Liver, Stomach, Bowel Disease and 26 Kid-

ney or Bladder Disease.
The Company introduced 18 Exhibits of notes

from the Grievant s personal physician, Dr. Condale,
which referenced the medical problems; fatty liver
and chronic renal insufficiency. Several of the exhi-
bits were explicit in that the Grievant was advised by
his doctor of his problems. All of these were during the
period December 24, 2008 February 25, 2014, all
within five years of the date of the New Employee
Health History Form and all relating to conditions
which the Grievant failed to acknowledge on the
form. It is quite clear from Dr. Stanwich s testimony
and the exhibits that the Grievant knew on March 1,
2014 that he had these problems, yet he answered
NO on the form.

The Grievant s explanation for answering NO to
these questions was that questions 16 and 26 asked
about disease and that he did not have either of these

diseases. It should be noted that the form has at the
top of the form: Ask for help if you do not understand
a question. The dictionary definition Disease is: A
condition of the living animal or plant body or of one
of its parts that impairs the performance of a vital
function. The Grievant was given tests on a number
of occasions to evaluate the function of his liver. Fur-
ther, Dr. Stanwich, testified that Renal Function Dis-
order means: That means there s an abnormality in
his kidney function. Dr. Stanwich was asked if, in his
opinion, the Grievant was advised about the renal func-
tion disorder. Dr. Stanwich s answer: According to
what is written here, yes.

On a number of occasions, the Grievant was
advised to discontinue use of alcohol and to increase
water intake. These actions were in response to alco-
holic fatty liver and acute renal insufficiency. It
should also be noted that Dr. Condale made reference
to Diffuse Liver Disease. Not only are the conditions
diseases, but the Grievant was treated for them and

was advised of these conditions.
The Grievant explained the reason for answering

NO on the form was that he did not know he had the
conditions, that is, chronic renal insufficiency and fatty
liver. Clearly, the Grievant knew on March 1, 2014
about his condition and he was being treated for the
conditions. He should have acknowledged these condi-
tions during his preemployment processing; however,
he did not even ask questions. It is important to note
that the Grievant was terminated for falsification of the
New Employee Health History Form not the events
of June 21, 2014 through June 25, 2014.

The Company believes the Grievant falsified an
employment form on March 1, 2014 and has since
offered nothing to explain his action. There is nothing
to mitigate the Company s decision to terminate his
employment based on the New Employee Health His-
tory Form. In light of all of the above, the Company
clearly had just cause to terminate the Grievant.

The Company concluded:

The Grievant was employed on 3/10/14 and experi-
enced heat stress and dehydration while at work on
6/21/14. He was treated by the Mill Medical
Department for these conditions, and subsequently
went home the morning following the incident. He
subsequently went to his own doctor who admitted
him to the hospital. As a result of the hospitaliza-
tion the Mill Medical Department requested his
medical records, and a review of these records by

CHAPTER 12 Employee Discipline 643

the Mill Medical Director led to discovery of Medi-
cal conditions which he had not acknowledged
when he completed a New Employee Health History
Form prior to his employment. These discrepancies
were then investigated, and based on the statements
on the form relating to accuracy and completeness
of information provided; he was terminated on
8/20/14. The statements on the form are clear as
to the person completing the form attesting to the
accuracy and completeness of the information pro-
vided, and the consequences of false, incomplete, or
inaccurate information is likewise clear and under-
standable. The Grievant signed the form on 3/1/14.
The evidence is overwhelming that the Grievant had
knowledge of the relevant health conditions, had
been advised by his doctor of the conditions on a
number of occasions, but he chose to answer NO
on the form. The Company believes the Grievant s
knowingly violated the provision of the New
Employee Health History Form, the penalty for
which is termination. The Company s decision to
terminate the Grievant was based solely on his vio-
lation of the conditions on the New Employee
Health History Form, and the absolute need to
maintain the integrity of the employment process.
This need has been and is recognized by arbitrators
in deciding numerous similar cases. At no time has
it been suggested that the Company s actions were
arbitrary and capricious. The Company therefore
respectfully requests that this grievance be denied,
the integrity of the employment process be preserved
and the termination stand.

The Union:
The Union filed a grievance on behalf of James

Kane s unjust termination. The Company denied the
Grievance in its final answer dated August 23, 2014,
and stated that it had reviewed in detail the medical
records released to the Company by Mr. Kane. The
Company remains convinced that he did, in fact, have
knowledge of the medical conditions which should
have been disclosed on the New Employee Health
History form. The Company has concluded that
Mr. Kane s termination should stand. This grievance
must, therefore, be denied.

Mr. James Kane was employed at the Company on
three different occasions. Kane was laid off, due to lack of
work on the two prior occasions. Kane s length of layoff
status required him to be rehired due to the seniority on
recall provisions in the contract. Mr. Kane s employment

records are without blemish until his unjust termination
on August 20, 2014. Mr. Kane had applied for employ-
ment and been rehired multiple times with the Company
and was always forthcoming in his application process
and screening procedures. On March 1, 2014 was no dif-
ferent. During this rehire, Kane was asked to complete a
New Employee Health History which he did. The ques-
tionnaire asked multiple health questions with lines for
explanation to answers given. The questionnaire provided
space to reveal all prescribed medications currently being
taken. Kane identified all of his known medical issues and
the medications he was taking at the time. Kane truthfully
admitted tobacco use, knowing that the Company did not
test for tobacco. Mr. Kane was forthcoming with all
answers to this questionnaire. Mr. Kane signed and
dated the form s last page which certified the accuracy
of the information with no reservations. On the question-
naire, Kane indicated that he suffered from Diabetes,
High Blood Pressure, Cholesterol, and Anxiety and also
listed the medications for each known ailment and the
amounts prescribed for his condition.

On June 21, 2014, Kane was working as a sixth
hand on the winder. The job was extremely demanding
due to the speed of the process and the sheer number
of paper rolls being produced. The temperature in the
facility was in excess of 100 degrees. Due to the heat
and overexertion to the job task, Kane began to cramp
in his shoulders and back. Kane became dizzy and
reported to the on-site medical facility. Kane was trea-
ted by the nurse on call. Kane s clothing was loosened
and he was given squincher sports drink and allowed to
rest. After a couple of hours in the medical department,
Kane informed his nurse that he couldn t catch my
breath. The nurse called Dr. Stanwich. When Kane
returned, he said, if they had to give me an IV, it
would be a recordable incident, and it was left at that.
She never gave me an IV. Just kept feeding me
Squincher or Gatorade.

Kane saw a nurse practitioner the morning before
he left the facility and was told to go home and rest and
continue hydration. He was told he would be suscepti-
ble to similar episodes in the following days. Kane s
condition worsened and he was hospitalized on June
24, 2014. Kane was admitted for dehydration and was
treated by Dr. Vadik, his Doctor of Internal Medicine.
Kane received aggressive IV fluid rehydration during
these days of inpatient care.

Upon Kane s return to work June 29, 2014, he was
informed to report through the Company s medical
facility. Kane met with Supervisor Frank Nix and

644 PART 3 Administering the Labor Agreement

completed an Incident Investigation Report. The report
briefly describes the incident root causes, analysis, and
corrective action(s) as prepared by the Company.

Kane was instructed to report to the nurse s station
and was instructed to go into a room. The nurse dialed
Curtis Smith, Nurse Practitioner. Kane was handed the
phone. Kane testified that Mr. Smith said You don t
know what kind of mess you have caused by not coming
through medical. Why didn t you come through medical
instead of going to your physician? Smith said, You ve
thrown a monkey wrench in this. We re going to have to
go back with workman s comp. Kane felt somewhat
threatened by the message and feared retaliation.

Kane testified that he felt he was inadequately trea-
ted in the medical facility due to a corporate safety
initiative. He felt that he did not receive IV fluids to
rehydrate his system because the Company would have
to report the treatment and that would be a recordable
injury. Kane worked the rest of the week which con-
sisted of Tuesday, Wednesday and Thursday night. On
his break on Friday morning, Kane received a call from
Jack Fuller around 11:00 A.M. telling him not to report
back to work pending an investigation. Kane hand
delivered 92 pages of medical records on July 22,
2014. These records were from Doctors Condale and
Vadik. Kane signed a Release of Medical Information
to be sent to Liberty Health Care, the contracted medi-
cal providers for the Company, on July 29, 2014.

The Company advised Kane that his employment
was being terminated effective immediately. The reason
was falsification of Company records, specifically fail-
ure to disclose all medical information on the New
Employee Health History. The Company stated that
the information that Kane failed to disclose during his
preemployment medical assessment was important not
only to the initial determination of the most appropri-
ate job assignment from a safety perspective, but also
critical to ensure he received the most appropriate
medical treatment in the event of an on-the-job medi-
cal emergency similar to the one he experienced. In
fact, the medical personnel have indicated that they
would have handled his medical situation differently
had they been aware of the information Kane omitted
from the preemployment medical history.

On October 10, 2014, Kane presented two separate
letters written by Dr. Vadik, M.D. who specializes in
internal medicine. These letters described the condition
of Kane and Dr. Vadik gave his expert medical opinion
that refuted the Company s position that Kane had

Chronic Renal Insufficiency and stated he is perfectly
fit to return to work.

The Union argued that the evidence makes several
things clear. Kane was forthcoming in all his state-
ments and answered all questions truthfully. Kane
never tried to hide any condition known to him at
the time of his preemployment New Employee Health
History. Kane filled out this form to best of his knowl-
edge, as truthfully as a person untrained in medical
terminology could possibly comprehend. Kane was
being treated for Diabetes, High Blood Pressure, Cho-
lesterol, and Anxiety. Kane listed all medications pre-
scribed for the treatment of these illnesses. Kane was
forthcoming and admitted using tobacco products in
Section A: listing the brand of snuff he uses Copenha-
gen. Kane said multiple times that he was never told
that he had liver, stomach, bowel, kidney or bladder
disease. Kane testified I would sign it again today
just like it is. He signed the Certification of Accuracy
of Medical Information and Authorization to Obtain
Additional Medical Information from which included
all he knew was wrong with him.

The Company brought several claims about a fatty
liver condition. Kane freely admitted he was diagnosed
with a fatty liver. Kane testified numerous times that his
doctor told him the fatty liver was reversible with proper
lifestyle choices. He testified that he did not consider fatty
liver a disease. Kane thought, as a regular person, not a
trained medical practitioner, that fatty liver was reversible
with lifestyle modification and he was never told he had a
liver disease. When asked if the form had said that in the
past five years, you have been told or you had one of the
following health problems or you have been provided
medical treatment for, or if this question said kidney or
bladder problems, what would your answer have been?
Kane testified Yes. He testified if the word disease
had not been affixed to either of these, he would have
answered the questions differently.

Kane repeatedly testified he was aware of the kidney
test. Also, he received routine eye and feet examinations,
all due to his diagnoses of diabetes. The records prove
Kane regularly visited his physicians and was aware of
his diabetes and complications of the disease.

The Union argued that the Company had com-
plete access to Kane s health records and performed
tests prior to his employment. The conditions as por-
trayed by the Company would not have returned nor-
mal under the blood and urine screens provided in
early March.

CHAPTER 12 Employee Discipline 645

The statement that the Company would have han-
dled his medical situation differently is perplexing. The
Company was aware Kane was a diabetic yet only checked
his blood sugar twice the night Kane suffered heat exhaus-
tion. The first glucose blood check was high at 212,
around 9:00 P.M. The last check was at 6:00 A.M. the
following morning. The Union asked why there were
only two checks of glucose levels on a diabetic who during
the night experienced trouble breathing? Dr. Stanwich
testified that, if he had known the renal insufficiency,
we would have been more apt to send him to the hospi-

tal, rather than orally re-hydrate him. The Union argued
that diabetes affects the kidneys, and medical protocol for
diabetics are more stringent.

Dr. Stanwich testified diabetes can affect the kid-
neys or renal system. Dr. Stanwich also testified he had
been notified by the nurse that Kane was a diabetic
during the call he received the night of the heat exhaus-
tion. Dr. Stanwich testified he could have ordered
Kane, IV therapy. In regard to the termination letter
statement The medical personnel have indicated that
they would have handled your medical situation differ-
ently had they been aware of the information you omit-
ted from the pre-employment medical history. The
Union asked: How? The Company knew of the dia-
betes and potential complications from that illness.

When asked about the fatty liver, Dr. Stanwich
testified that the word disease was not mentioned, but
it says he was advised of fatty liver. The word disease
was not used. The reason is simple; Kane was never
told he had a disease. Curtis Smith penned the letter
to Mr. Fuller on July 23, 2014. He stated, that Kane
answered No to Section B: In the past 5 years have
you ever been told that you have one of following
health problems, or have you been provided Medical
Treatment for: (16.) Liver, stomach, bowel Disease
and (26) Kidney or bladder disease. Kane was never
told of any disease, other than diabetes.

The Union concluded:

in this case, the Company had the burden of
proof, to show by preponderance of the evidence,
that they had just cause to terminate Kane s
employment. The Company provided medical docu-
ments that were hand delivered by Kane. The Com-
pany brought multiple witnesses who were trained
professionally as doctors, to give interpretation to
other doctor s notes, and results. Kane testified
truthfully to all questions, and also provided two
letters provided by Dr. Joshua Vadik, M.D. Internal
Medicine, to provide insight into his condition.

the Union feels Kane was unjustly termi-
nated for an incident that happened on the night
of June 21, 2014, that would blemish the safety
record of the mill. Kane is a common man, not a
medical professional whose dialogue consists of
medical terminology. He stated from the beginning
he was a diabetic, and that was the only Disease he
suffered from. The Union believes it made a clear
case to show what happened in this matter.

the Union respectfully asks that the griev-
ance be sustained, that Kane be returned to employ-
ment, and made whole for all lost wages and
benefits.

Questions
1. Should Kane receive credit for his previous years of

employment with the Company?
2. Compare the weight to be given the Company doc-

tor to that of Kane s personal doctor.
3. What level of proof should be used in this decision?
4. Now you decide. Did the Company have just cause to

terminate James Kane? If so, why? If not, why not?

646 PART 3 Administering the Labor Agreement

PART4
Applying the Labor Relations
Process to Different Labor
Relations Systems

Part 4 presents the opportunity to apply the
previous chapters discussions of the labor
relations process to various labor relations
situations. Collective bargaining in the pub-
lic sector at all governmental levels is dis-
cussed, and a discussion of foreign labor
relations systems is presented for compari-
son purposes.

Chapter 13
Labor Relations in the Public Sector

Chapter 14
Labor Relations in Multinational Corporations and in Other Countries

649

CHAPTER 13

Labor Relations in the Public Sector

YOU HAVE BEEN reading about the economic crisis in the pub-
lic sector. Nearly every state and most municipalities have
experienced shortfalls in their expected revenues. Because
state legislation and city ordinances require balanced budgets,
it has been necessary to reduce services and this means fewer
employees. You are an elementary school teacher and have
never been a member of a union. You realize that your state
law allows for employee unions in your city; however, there
has been interest by other teachers only in recent months.
You have been approached by some other teachers in your
school to become involved in their efforts to have a union rep-
resent the teachers. You know that wages, pensions, and
health care are not subjects for bargaining because these sub-
jects are covered under state law.

Questions
1. What can the union do for these teachers?

2. Why should you be interested in joining a union?

650

Significance of Public-Sector Labor Relations

The field of public-sector labor relations has developed from a time when public employ-
ees were required to lobby their respective legislators for favorable employment terms to
one in which bona fide collective bargaining occurs. Public-sector labor relations has
moved from an earlier period characterized by rapid union growth, management s
inability to react to collective bargaining, and a fear of strikes to a period characterized
by slower union growth.1 With many state legislatures and the U.S. Congress interested
in reducing government costs, management strategies such as downsizing and privatiza-
tion of public services have caused many public employees to become more concerned
about their job security and welfare.2 Therefore, union leaders are showing increased
attention to public employees concerns in these areas (see the Labor Relations in Action
feature on page 656).

Over the years, the public sector has become an increasingly important part of the
collective bargaining environment in the United States. There is a higher percentage of
public-sector employees who are members of unions than there are private-sector
employees. In 2014, only 6.6 percent (7.4 million) of private-sector workers were union
members, and 7.4 percent (8.2 million) were represented by unions. In comparison, 35.7
percent (7.2 million) of public-sector employees were union members, and 39.2 percent
(7.9 million) were represented by unions.

Within the public sector, local governments have the highest union membership
rate, at 41.9 percent. This group includes employees in heavily unionized occupations
such as teachers, police officers, and firefighters. The percentage of state government
employees who were union members was 29.8 percent, and the percentage of federal
employees who were union members was 27.5 percent.3

There are also major differences in public-sector union membership based on geog-
raphy. Public-sector union membership is much greater in the Northeast, North, and
West than in the South and Midwest. For example, public-sector union membership is
over 60 percent in New York, Rhode Island, Hawaii, and New Jersey as compared with
less than 10 percent in Mississippi, North Carolina, and South Carolina.4

Exhibit 13.1 presents a listing of some national unions representing public-sector employ-
ees. By far, the National Education Association (NEA) is the largest union that represents pub-
lic employees with nearly 3.0 million members, primarily teachers. The NEA is followed by the
American Federation of Teachers (AFT) (1.6 million) and the American Federation of State,
County, and Municipal Employees (AFSCME), with 1.3 million members.

Some national unions (e.g., United Auto Workers, International Association of
Machinists) that predominantly represent private-sector employees have diversified
their organizing efforts in recent years to attract public-sector employees. The Service
Employees International Union (SEIU) now represents over 600,000 public-sector
employees in the United States, Canada, and Puerto Rico.5

The so-called free rider issue mentioned in the discussion of private-sector union
security issues in Chapter 4 is an important factor affecting union membership among
federal employees.6 Under the Civil Service Reform Act (CSRA) of 1978 and the Postal
Reorganization Act, union security clauses, such as a union or agency shop, are prohib-
ited. Overall, 7.4 million public-sector employees are union members who pay dues to be
represented by unions, but nearly 800,000 are not union members who are represented
by unions but still do not pay union dues. These nonpaying employees must be repre-
sented in collective bargaining, grievance administration, and arbitration by the unions.7

Because the so-called free riders receive benefits at no cost to them, there is not a signifi-
cant incentive to join and pay dues.

CHAPTER 13 Labor Relations in the Public Sector 651

The American Federation of Government Employees (AFGE) is the largest union
representing federal government employees. Although its membership is 306,338, the
AFGE is legally required to represent about 600,000 federal government employees and
negotiates over 300 collective bargaining agreements. In other words, about one-half of
the federal government employees who are represented by the AFGE do not pay dues;
therefore, half of those who are members pay dues to provide representational services
(bargaining, grievance handling, arbitration, etc.) for the other half (see Chapter 4 for a
discussion of union security issues). As a result, the U.S. federal government is the
nation s largest open shop employer.8

Labor Legislation in the Public Sector
The presence of a strong public-sector bargaining law may be influenced by the general
public s attitude toward collective bargaining, the degree of public-sector employers
opposition to unions, and the degree to which state legislators are viewed as being
more liberal, among other factors.9 Favorable legislation protecting employees right
to bargain, regulating unfair labor practices, and establishing impasse procedures to
resolve both interests and rights-type labor disputes is a significant factor encouraging
the growth of public-sector bargaining within a state.10

As shown in Exhibit 13.2, 37 states have passed legislation that allows collective bar-
gaining for some public-sector employees, which usually includes police and fire, state,
education, and municipal employees. Alabama, Arizona, Arkansas, Colorado, Louisiana,
Maryland, and Mississippi have no legislation that allows these types of public employees
to participate in collective bargaining. Georgia, North Carolina, South Carolina, Texas,
and Virginia ban collective bargaining rights for public-sector employees.

Although the content of agreements may vary, the bargaining laws usually include
wages, hours, and other terms or conditions of employment; this is similar to the scope

Exhibit 13.1
Some Unions Representing
Public Employees

Union

Number of
Public Employee

Members

American Federation of Government Employees (AFGE) 306,338

American Federation of State, County, and Municipal Employ-
ees (AFSCME)

1,337,126

American Federation of Teachers (AFT) 1,597,140

American Postal Workers Union (APWU) 238,627

Fraternal Order of Police (FOP) 325,000

International Association of Firefighters (IAFF) 296,931

National Air Traffic Controllers Association (NATCA) 16,378

National Association of Letter Carriers (NALC) 270,203

National Education Association (NEA) 2,963,121

National Federation of Federal Employees (NFFE, IAM) 7,553

National Rural Letter Carriers Association (NRLCA) 101,636

National Treasury Employees Union (NTEU) 79,588

SOURCE: LM-2 Reports by U.S. Labor Unions, https://olms.dol-esa.gov/query/getOrgQry.do

652 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

of bargaining under the National Labor Relations Act in the private sector (see Exhibit 13.3).
However, a majority of the states have some statutory limitations on the scope of collective
bargaining, such as limitations guaranteeing management rights. Another important element
of labor legislation is unfair labor practices. Although this type of legislation varies from state
to state, most states have legislation defining unfair labor practices for some or all public
employers that are similar to the types of discrimination banned under the private
sector LMRA (e.g., bad-faith bargaining, threats or reprisals for engaging in concerted and
protected activity).

Twelve states allow union recognition via card checks (see Chapter 5) for at least
some of their employees. The effects of these card check laws are higher union represen-
tation for the bargaining unit employees covered in the legislation. The results of higher
union representation via card checks is similar to the findings in the private sector.11

Thirteen states permit public-sector strikes by some groups of public employees either
by statutory law or by judicial decision.12 These states are Alaska, California, Colorado,
Hawaii, Idaho, Illinois, Louisiana, Minnesota, Montana, Ohio, Oregon, Pennsylvania, and
Vermont. For example, in California, the state supreme court ruled that strikes by public
employees other than police officers or firefighters were not illegal as long as they did not
represent a substantial or imminent threat to the public s health or safety.13 Most states
prohibit public employee strikes and may authorize a variety of potential sanctions for
illegal strike activity varying from injunctions to dismissals, jail sentences, substantial
fines, and loss of union recognition. Decreasing use of the strike as a bargaining tactic
has occurred in recent years in the public sector, similar to the trend in the private sector.
Unionized public-sector employees in states that grant a legal right to strike are only
slightly more likely to be involved in strikes compared with employees in states that ban
public employee strikes. Educators are the employee group most likely to participate in
strikes, and strikes in education are more likely to occur in five states (California, Illinois,
Michigan, Ohio, and Pennsylvania).14

Exhibit 13.2
States That Allow Collective
Bargaining for Public-Sector
Employees, Primarily
Firefighters, Police, and
Teachers.

Alaska Maine North Dakota

Arizona Maryland New York

California Massachusetts Ohio

Connecticut Michigan Oregon

Delaware Minnesota Pennsylvania

Florida Missouri Rhode Island

Hawaii Montana South Dakota

Idaho Nebraska Utah

Illinois Nevada Vermont

Indiana New Hampshire Washington

Iowa New Jersey Wisconsin

Kansas New Mexico Wyoming

SOURCES: Bureau of National Affairs, Public-Sector Bargaining: State Comparison Chart, in Collective Bargaining Negotiating
and Contracts, May 18, 2000, pp. 8:2901 2952; updated by State Labor Laws, BNA Labor Relations Reporter, Washington,
D.C., 2007; Marick F. Masters, Robert R. Albright, and Ray Gibney, The State of Public Sector Unionism: Challenges and Oppor-
tunities, Employee Responsibilities and Rights Journal, Published online, May 29, 2010; Richard B. Freeman and Eunice S. Han,
Public Sector Unionism Without Collective Bargaining, AEA Meetings, January 6, 2012, San Diego.

CHAPTER 13 Labor Relations in the Public Sector 653

In states that allow some public employee groups to strike, certain employees, such
as police officers, firefighters, hospital employees, and correctional employees, are usually
prohibited from striking under any circumstances. Services of these employees are often
deemed to be critical to citizens health and safety. Police officers, firefighters, and tea-
chers are the public employee groups most likely to be offered an alternative dispute res-
olution procedure to the strike, such as mediation, fact-finding, or interest arbitration
(discussed later in this chapter).

Most federal employees bargaining rights are governed by Title VII of the CSRA.
One group of federal workers, U.S. Postal Service employees, are the only public employ-
ees covered under the private-sector Labor Management Relations Act (LMRA) as speci-
fied in the Postal Reorganization Act of 1970.15 Unlike other employees covered under
the LMRA, postal workers have no legal right to strike but are granted access to final and
binding interest arbitration as a means of resolving bargaining disputes.

Current Challenges to Collective Bargaining Rights of Public Unions
With large budget deficits and higher pension and health care costs, some state and local
officials are complaining that their outlays for retiree health benefits are rising by 20 per-
cent a year. The Pew Center on the States estimated that there is $555 billion in

Exhibit 13.3
Provisions in a
Collective-Bargaining
Agreement between Teachers
and Boards of Education

A management rights clause is designed to clarify and protect the rights of the
employer and to limit the authority of an arbitrator. Such a clause would include the
right to supervise all operations; determine the size of the workforce; introduce
new methods, programs, or procedures; hire and discharge employees for just
cause; and maintain an orderly, effective, and efficient operation.

A grievance procedure is a step-by-step sequence of steps for resolving allega-
tions of violations of the provisions of the collective bargaining agreement.

A no strike and no lockout provision is included to guarantee continued opera-
tion for the life of the agreement. Some agreements provide for discipline of
employees who participate in a work stoppage in violation of the no strike clause
and penalties to the union that encourages a work stoppage.

A zipper clause stipulates that the written agreement is the complete and full
contract between the parties and that neither party is required to bargain over
other items during the term of the agreement.

Maintenance of standards incorporates a school district s current and past prac-
tices, such as teaching hours, relief periods, leaves of absence, extra compensation
for work outside regular teaching hours, and so on.

A reduction-in-force provision provides the criteria used in layoffs. Usually
seniority in a certified field is used in layoff and recall, and some agreements pro-
vide for bumping rights.

A wages and benefits provision addresses wage increases, such as across-
the-board increases, step increases, cost-of-living increases based on the Con-
sumer Price Index, and merit increases. Benefits would include insurance (life,
health, and dental), pension, sick leave, personal days, funeral leave, holidays, and
so on.

Other issues include grievance arbitration, teacher evaluation, class size, school
calendar, and so on.

SOURCE: Fred C. Lunenburg, Collective Bargaining in the Public Schools: Issues, Tactics, and New Strategies, Journal of Collective
Negotiations in the Public Sector, 29 (4) (2000), p. 259.

654 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

unfunded liabilities to finance retiree health coverage, with New Jersey having the largest
amount ($68.9 billion) and California second with $62.5 billion. In 14 states, the state
pays 100 percent of the health benefits for public employee retirees. Overall, state and
local government employees pay 11 percent of the cost of individual medical plans as
compared to 20 percent for private-sector employees. State and local government
employees pay 27 percent of the cost of family plans as compared to 30 percent for
private-sector employees.16

The shortfalls for pension obligations are estimated to be as high as $1 trillion. By
far, the reason for the shortfall is the stock market plunge between 2007 and 2009. In
fact, if pension funds had earned a return equal to the interest rate on 30-year Treasury
bonds during the 2007 2009 time period, the pension assets would have been more than
$850 billion greater. Another $80 billion of the shortfall is due to the failure of states to
contribute to the pension funds.17

Many political leaders and finance experts argue that much of basis for municipal
and state finance is jury rigged (unions support political leaders who in turn reward
public employees with better pension benefits and job security). In 2000, with a budget
surplus, union leaders were successful in persuading the New Jersey legislature to cut five
years off of the retirement age of firefighters and police officers. In the following year
and still with a budget surplus, legislators gave retirees a 9 percent increase in their
retirement income.

A recent Pew Center on the States report indicated a shortage of $1 trillion on a
$3.35 obligation in pension, health care, and other retirement benefits states have prom-
ised current and retired employees. The Stanford Institute for Economic Policy Research
reported a shortfall of $452.2 billion in California s three major public-sector pension
plans. Although politicians like to blame public-sector unions for much of the deficits
in public sector, most of the pension benefits and rules are established through state
laws and regulations, not collective bargaining. Since 2010, 41 states have enacted legis-
lative changes in the pension plans. Eighteen have increased employee contributions to
the pension plan; twelve have reduced the automatic cost of living adjustments to bene-
fits. Although the amounts of the pension gap vary by state, every state government will
face challenges to meet their pension obligations.

Politicians like to blame public-sector unions, collective bargaining rights, and highly
paid public employees as the cause of state budget deficits. However, researchers have
found that there is no significant correlation between public-sector bargaining rights
and state deficit levels. In 2012, states that allow public-sector collective bargaining had
an average of 14 percent budget deficit; states that banned public-sector collective bar-
gaining had an average budget deficit of 16.5 percent. The state of Texas that has essen-
tially no collective bargaining in the public sector had the largest budget deficit in the
United States; Nevada that has no collective bargaining in the public sector had one of the
largest; North Carolina that outlaws public-sector collective bargaining had a 20 percent
budget deficit. In contrast, some states that allow public-sector collective bargaining have
smaller than average deficits: Wisconsin 12.8 percent; Ohio 11 percent; Iowa 3.5 percent.18

Since labor costs are the largest percentage of public service costs, there is a natural tension
between administrators and employees and their unions. Governors and legislators look for
ways to reduce the influence and power public-sector unions have gained over the years.19

Fourteen states have taken legislative steps on reducing the influence of public-sector unions
in their respective states. (See Labor Relations in Action on Page of 656.)

Wisconsin, the state that received the most national attention recently, was the first
state to give public employees the right to bargain collectively. Governor Scott Walker, a
Republican, obtained sweeping changes in the Wisconsin law that governs public-sector

CHAPTER 13 Labor Relations in the Public Sector 655

labor relations, from a state legislature that is also controlled by Republicans. With the
state of Wisconsin facing a $100 million shortage in its budget, in 2011, Governor
Walker proposed and the Wisconsin legislature passed the following:

Collective bargaining for most state and local government employees (firefighters
and State Patrol employees were not included) is limited to wages only (health cov-
erage, vacations, and other benefits would not be negotiable).
State government employees would contribute 5.8 percent of their pay to pensions.
State government employees would pay at least 12.6 percent of health care pre-
miums (most pay 6 percent now).
The state would stop collecting union dues from employees paychecks.
Public-sector union members would have the right not to pay dues.
There would be a secret ballot election annually for every public-sector union to
determine whether a majority of total number of workers still wanted the union.
(Interestingly, in 2010, Wisconsin Governor Walker received votes of only 25.8 per-
cent of the total registered voters.)

LABOR RELATIONS IN ACTION
States That Have Passed Laws Limiting Representational Rights for

Public Sector Employees Since 2010

Alabama: Made it a crime to arrange for public
employee payments by salary deductions to political
action committees.

Idaho: Curtailed teachers collective bargaining
rights, eliminated seniority protections during layoffs,
and replaced tenure track contracts for new teachers
with renewable agreements for one or two years.

Illinois: Amended the Educational Labor Relation Act
that made the length of the school day and school years
permissible subjects of bargaining, instead of mandatory
subjects and authorized the appointed school board in
Chicago to lengthen the school day unilaterally.

Indiana: Limited the scope of bargaining and substi-
tuted fact finding for arbitration.

Massachusetts: Created a new method for local gov-
ernment to change their health insurance for employees.

Michigan: Allowed the governor to appoint an
emergency manager for local governments experienc-

ing a financial emergency ; the emergency manager
could reject, modify, or terminate any terms of a collec-
tive bargaining agreement.

Nebraska: Made changes to the rules governing
the interest arbitration run by the Nebraska Commission
of Industrial Relations. These changes are designed to
produce lower compensation awards.

Nevada: Reduced the number of public employee
supervisors eligible to engage in collective bargaining
and mandated clauses in labor agreements that would
reopen the agreement during fiscal emergencies.

New Hampshire: Eliminated the requirement that
the terms of a collective bargaining agreement would

automatically continue if an impasse is not resolved at
the time of the expiration of such agreement.

New Jersey: Made significant cutbacks in pension
and health benefits and placed restrictions on interest
arbitrators.

Ohio: Enacted Senate Bill No. 5 that would have
eliminated collective bargaining rights for certain
employees and eliminated the right to strike. Created a
system of nonbinding mediation and fact-finding
wherein either party could reject the fact-finder s recom-
mendations and the legislative body would select from
the last best offers submitted by the parties. (Senate Bill
No. 5 was overturned in a state referendum.)

Oklahoma: Repealed a 2004 law that required cities
with a population of 35,000 and over to engage in col-
lective bargaining with unions.

Tennessee: Eliminated collective bargaining for
public school teachers and replaced it with collabora-
tive conferencing wherein local boards and teachers
meet and discuss matters relating to terms of employ-
ment, except wages, benefits and grievance
procedures

Wisconsin: Enacted the Budget Repair Act that is
covered in the text.

SOURCES: Martin H. Malin, Sifting Through the Wreckage of the Tsunami That Hit
Public Sector Collective Bargaining (2012), http://scholarship.kent.law.itt.edu/facschol/
744; Joseph E. Slater, Public Sector Labor in the Age of Obama, Indiana Law Journal,
89 (Winter 2012), 189 211; Jon O. Shimabukuro, Collective Bargaining and Employees
in the Public Sector, Cornell University, ILR School, [email protected], 3-30-2011;
Joseph Slater, The Strangely Unsettled State of Public-Sector in the Past Thirty
Years, Hofstra Labor and Employment Law Journal, 30(2), Article 10, pp. 511 541.

656

New collective bargaining agreements would be negotiated every year.
Pay raises would be limited to the consumer price index unless the public approved
a greater raise in a voter referendum.

When this proposed legislation was proposed, over 100,000 public employees dem-
onstrated against Walker s proposals and Wisconsin Senate Democrats left the state for
about two weeks to prevent a vote on the proposed legislation (due to lack of quorum).20

Governors in Ohio and Indiana followed Governor Walker in attempting to
severely restrict or eliminate public-sector collective bargaining; however, Ohio s
legislation was overturned in a statewide referendum. Governors in California, New
York, and Michigan have sought to reduce the state budget deficit by using public
pressure and threats of layoffs to persuade public-sector unions to make far-reaching
concessions.21

The end results of these changes have been half a million jobs lost in the public sec-
tor since 2007. This reduction has hurt black adults worse than other groups because one
in five black adult workers is employed in the public sector. In addition, many of the
new hires are only part-timers who are paid no benefits. Still supporters of curbs on col-
lective bargaining power of government employees say all of these measures were aimed
at improved efficiency and taxpayer savings.22

Federal-Sector Labor Relations Legislation

Prior to the 1880s, if a candidate was elected as U.S. president, he was free to appoint
people to virtually any federal office based on their loyalty to his candidacy or political
party. This partronage system (also called the spoils system ) was criticized because the
person who was appointed to a job was not necessarily qualified to do the work. In 1881,
Congress established the federal civil service system, patterned after the British and Chi-
nese systems. The civil service system, as subsequently modified and expanded, required
that new hires meet minimum qualifications for most federal jobs. The civil service sys-
tem also created a set of human resource policies designed to insure that workers were
treated fairly and protected from unfair dismissal. In the 1960s, when federal workers
were first allowed to unionize by presidential executive order, it rapidly became apparent
that harmonizing civil service procedures and union-negotiated procedures (e.g., griev-
ance procedures) warranted additional legislation by the CSRA, which was passed in
1978. Although the CSRA regulates labor relations for most federal employees, the
CSRA retained many provisions of previous executive orders, the following discussion
centers on the provisions of Title VII, Federal Service Labor Management Relations.
The CSRA is applied within a framework of federal personnel rules and policies affecting
merit system principles, civil service functions, performance appraisals, staffing, merit
pay, senior executive service, and adverse employment actions such as discipline or
discharge.

The CSRA established the Federal Labor Relations Authority (FLRA), an indepen-
dent, neutral agency that administers the federal labor relations program and investigates
unfair labor practices. The FLRA oversees the creation of bargaining units, supervises
representation elections, conducts hearings and resolves complaints of unfair labor prac-
tices, hears appeals regarding arbitrator awards, and assists federal agencies in dealing
with labor relations issues. It is headed by a chairperson and two members, appointed
on a bipartisan basis for five-year terms. The FLRA s structure provides for a general
counsel whose office prosecutes unfair labor practice charges and exercises such powers
as the FLRA may prescribe.

CHAPTER 13 Labor Relations in the Public Sector 657

LABOR RELATIONS IN ACTION
Privatization of the Public Sector

Privatization of public-sector services or transfer of gov-
ernmental services to the private sector has received
much attention over the last two decades. This focus
is due largely to perceived cost differences between
public- and private-sector service delivery. However, an
important consideration is the role of public employee
unions in the privatization process as an interest group
and as political actors in blocking the privatization
efforts.

A hallmark of the conservative agenda begun in the
Reagan administration in the 1980s was the initiative to
reduce the scope and size of government. This initiative
was manifested in the call for privatization of services for-
merly provided exclusively by government agencies. Pri-
vatization has come in many forms: contracting out or
outsourcing of support services, such as janitorial or main-
tenance services; vouchers for use in education; and man-
agement contracts to operate organizations such as
airports and prisons. Needless to say, public-sector unions
have strongly opposed privatization and feel threatened
with the loss of jobs to private-sector employees. In addi-
tion, privatization has already caused a reduction in the per-
centage of a union membership in hospitals, bus and
urban transit, sanitary services, and education.a

One consideration in the decision regarding
whether to privatize is the differing labor laws that cover
private- and public-sector employees. Collective bargain-
ing rights for employees in the private sector are cov-
ered primarily under the Labor Management Relations
Act (LMRA); employees of interstate carriers in the rail-
road and airline industries are covered under the Rail-
way Labor Act (RLA). Collective bargaining rights for
state and local public employees are covered under var-
ious local ordinances and state laws; and federal gov-
ernment employees are covered under the CSRA.
When government services are contracted to private
firms, employees performing such services are covered
under different statutes. This means that in some
states in which no laws are in place to protect public
employees right to bargain, employees of the private
contractor will be covered. Also, in some states where a
public-sector labor laws provide bargaining rights to
public employees, the employees of firms contracting
government services now have to seek union repre-
sentation through the procedures of the LMRA or the
Railway Labor Act (RLA), whichever is applicable.

Of course when the state, or any public entity, con-
tracts work out to the private sector, the contractor is a
private employer subject to the rules and policies of the
National Labor Relations Board. In Illinois, AFSCME in
particular has been successful in organizing the private
contractors.

Most municipalities in the suburbs of Chicago have
contracted out garbage collection to private haulers,
such as Waste Management. The employees of most
of these private haulers are now represented by the
Teamsters and are part of a multi-employer bargaining
unit. Several years ago, the Teamsters and the multi-
employer association reached impasse in negotiations
and the union struck. As the trash piled up in the Chi-
cago suburbs, citizens complained that something
should be done to enjoin the strike. Under the LMRA,
the employees had a right to strike and the Norris
LaGuardia Act barred any injunction action. To get an
injunction under LMRA, the city would have been
required to prove that the strike affected an entire indus-
try or substantial part thereof and imperiled national
health and safely. If those suburbs had continued to
have performed the work by their employees, the strike
might have been enjoinable under the Illinois Public
Labor Relations Act, which allows for an injunction if a
strike poses a clear and present danger to public health
and safety (it need not affect an entire industry or sub-
stantial part thereof) and imperils national health and
safety. In most states, public employees have no right
to strike in any event. (Illinois is one of the small minor-
ity of states that recognize public employees right to
strike.) Those who advocate weakening public
employee bargaining rights to make it easier to contract
out to the private sector should be careful because they
might get that which they wish for. b

Another issue in privatization is that a different
employer takes over the responsibilities for the con-
tracted public service, and this employer is responsible
to the contracting agency for the performance of the
public service, not directly to the citizens. The private
employer takes over the publicly owned buildings and
equipment either by renting or purchasing them or, in
regard to small contracts, provides equipment and build-
ing space already owned but charges overhead costs to
the public employer.c Although the advantages of privat-
ization should be similar for the same type of public ser-
vice whether currently provided by a unionized or
unrepresented (nonunion) public workforce, the type of
relationship between the union and city management is
a significant factor. If the union management relation-
ship is cooperative, the probability of the city contracting
out services currently performed by union-represented
employees is lower than in a nonunion city. On the
other hand, the probability of a city considering privatiza-
tion when a bargaining relationship is adversarial is
higher than in a nonunion city.d

Another interesting dilemma is the difference in
employees right to strike. In most public-sector

658

A second agency, the Federal Service Impasse Panel (FSIP), provides assistance in
resolving negotiation impasses. The role of the FSIP is to resolve bargaining impasses
between federal agencies and unions in the federal government that arise over the nego-
tiation of terms and conditions of employment. The FSIP is composed of a chairperson,
and at least six other members who are appointed by the president for five-year terms,
are familiar with federal government operations, and are knowledgeable about labor
management relations.

The FSIP has jurisdiction over 71 federal departments and agencies representing
1.8 million federal employees. The FSIP appoints an executive director, who is responsible
for the day-to-day operations. Although the Federal Mediation and Conciliation
Service (FMCS), the federal agency established in 1947 by the LMRA, is required to assist
the parties in resolving negotiation impasses, either party may request that the FSIP con-
sider the matter or pursue binding arbitration. The panel must investigate the impasse and
recommend a procedure for resolution or assist the parties through whatever means
necessary, including fact-finding and recommendations. If these actions fail, the FSIP
may conduct a formal interest arbitration hearing and take legal action to settle the
dispute.23

The CSRA created the Merit System Protection Board (MSPB) which is an inde-
pendent quasi-judicial agency. The MSPB hears appeals from federal employees who
allege violation of their employment rights. A federal employee may chose to appeal to
the MSPB or appeal through the grievance procedure but not both.

jurisdictions, the right to strike has been eliminated or
limited. If services previously performed by public
employees were afterwards contracted to a private
employer covered by the LMRA or the RLA, employees
now performing such services would have a legal right
to strike under those statutes.e

In addition to attacking collective bargaining and public
employee unions, several states have attempted to resolve
their large revenue shortfalls with privatization of govern-
ment services. New Jersey Governor Chris Christie issued
an executive order that created a privatization task force to
focus on replacing government services with private com-
panies. Other states, Virginia, Maryland, Arizona, Kansas,
Oregon, Illinois, South Carolina, and Pennsylvania, followed
suit and created privatization commissions. An organization
called the American Legislative Exchange Council (ALEC),
which was founded in 1973 and supported by conservative
foundations and corporations, has drafted nearly 1,000
pieces of model legislation to be used by states that may
be interested in replacing government services with private
contractors. ALEC s chief legislative goals are to impede
union s ability to engage in effective political action by wag-
ing a multi-front attack on public-sector collective bargain-
ing rights, dues deductions, paycheck deductions for
political action and right-to-work legislation.f

In recent years, more public employee unions have
been accepting the challenge of demonstrating that
they can compete successfully with private-sector
employers that offer similar services (see foonote f).
Phoenix, Arizona; Indianapolis, Indiana; Charlotte, North
Carolina; and Philadelphia, Pennsylvania are examples
of communities in which public employee unions have
demonstrated their ability to deliver more cost-effective,
higher-quality, and more effective public services than
competing private-sector firms.g

aTerry Thomason and John F. Burton, Jr., Unionization Trends and Labor Management
Cooperation in the Public Sector, Going Public: The Role of Labor Management Rela-
tions in Delivering Quality Government Services, eds. Jonathan Brock and David B.
Lipsky (Champaign, Ill.: Industrial Relations Research Association, 2003), pp. 94 100.
bTimothy D. Chandler and Peter Feuille, Municipal Unions and Privatization, Public
Administration Review, 51 (January/February 1991), pp. 15 22.
cDavid A. Dilts, Privatization of the Public Sector: De Facto Standardization of Labor-
Law, Journal of Collective Negotiations in the Public-sector, 24 (1) (1995), pp. 37 47.
dChandler and Feuille, 1994.
eRobert Hebdon, Contracting Out in New York State: The Story the Lauder Report
Chose Not to Tell! Labor Studies Journal, 20 (Spring 1995), pp. 3 10.
fEllen Dannin, Privatizing Government Services in the Era of ALEC and the Great
Recession, Dannin.Final DOCX, July 12, 2012, pp. 503.
gLawrence L. Martin, Public Private Competition: A Public Employee Alternative to
Privatization, Review of Public Personnel Administration, 19 (Winter 1999), pp. 59 70;
See also Richard W. Hurd and Sharon Pinnock, Public-Sector Unions: Will They Thrive
or Struggle to Survive? Journal of Labor Research, 25 (2) (2004), pp. 211 221.

659

Appropriate Bargaining Units and Union Recognition
in the Federal Sector
An appropriate bargaining unit for exclusive union representation purposes may be
established on an agency, plant, installation, function, or other basis to ensure a clear
and identifiable community of interests among employees and to promote effective fed-
eral agency operations. The criteria used for determining the extent to which employees
in different federal jobs share a sufficient community of interests are similar to those
used by the National Labor Relations Board (NLRB) in the private sector. These include
comparing jobs to identify common duties and skills, similar working conditions, com-
mon supervision, degree of work interdependence, and physical proximity of the jobs.
No single factor determines the decision, but rather an evaluation is made based on a
preponderance of the evidence. Similarly, certain positions are generally excluded from
the bargaining unit, such as confidential employees, management and supervisory per-
sonnel, human resource management employees, and professionals, unless they vote in
favor of inclusion. About 60 percent of all eligible employees are represented by various
labor organizations in over 2,000 bargaining units, and nearly 60 percent are covered by
labor agreements.24 A federal agency accords exclusive recognition to a labor union if
the union has been selected as the employee representative in a secret ballot election by a
majority of the employees in the appropriate unit who cast valid ballots.

Negotiable Subjects in the Federal Sector
In the federal sector, the agency and the exclusively recognized union have a duty to
meet at reasonable times and confer in good faith with respect to mandatory subjects of
collective bargaining, such as certain personnel policies and practices and working con-
ditions, to the extent that appropriate laws and regulations allow such negotiations. The
parties may voluntarily agree to bargain over certain permissible subjects, but the CSRA
does not require negotiation over such subjects one party can legally refuse to negotiate
these issues. Permissive subjects include numbers, types, and grades of positions assigned
to any organizational unit, work project, or tour of duty; technology of the workplace;
and methods and means of performing the work. Subjects prohibited from negotiations
include wages (except for certain blue-collar employees) and the following management
rights:

To determine the mission, budget, organization, number of employees, and internal
security practices
To hire, assign, direct, lay off, and retain employees in accordance with applicable
law
To suspend, remove, reduce in grade or pay, or take other disciplinary action
To assign work, subcontract, and select employees for promotion from properly
ranked and certified candidates and other appropriate sources
To take whatever actions may be necessary to carry out the agency s mission during
emergencies

(In 1996, as part of the Department of Transportation appropriations, Congress
directed the Federal Aviation Administration (FAA) to negotiate labor management
relations reform, which provided for salary negotiations with the air traffic controllers
union.)

Why are wages prohibited from collective bargaining? They are prohibited because
Congress has passed several laws in various years (e.g. 1962, 1970, and 1990) providing
that the executive branch shall pay salaries to federal employees that are comparable to

660 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

the average salaries earned in comparable jobs in the private sector. These laws also out-
lined the procedures and types of formulae to be used for making these wage determina-
tion. If wages are structured using a predetermined formula, then logically there is no
need to negotiate them.

Although the CSRA limits the scope of negotiable subjects, the parties have ample
opportunity to negotiate many issues, as illustrated in Exhibit 13.4. The fact that man-
agement and the union are required to bargain in good faith does not mean that the
parties must reach an agreement on these issues; they must make a good-faith intent to
do so.

Under the CSRA, the FSIP is responsible for resolving interest disputes that result in
an impasse during negotiations. If mediation or fact-finding fails to resolve the dispute,
the FSIP may use arbitration to render a final and binding decision to resolve the interest
dispute. Management s position tends to prevail in 58 percent of disputes resolved
through arbitration conducted by the FSIP, a higher management win rate than typically
prevails under state and local interest arbitration procedures (see the related discussion
later in this chapter).25

Unfair Labor Practices in the Federal Sector
The CSRA specifies unfair labor practices to protect the rights of individual employees,
labor organizations, and federal agencies. Employee grievances over matters concerning
adverse action, position classification, and equal employment opportunity are covered by
other laws, statutes, or agency rules and cannot be filed as an unfair labor practice charge
under the CSRA.

The CSRA prohibits unfair labor practices similar to those prohibited under previ-
ous executive orders and the LMRA. For example, prohibited management activities
include restraining and coercing employees in the exercise of their rights; encouraging
or discouraging union membership; sponsoring, controlling, or assisting a labor organi-
zation; disciplining union members who file complaints; and refusing to recognize or
negotiate with a designated labor organization. The CSRA prohibits unions from inter-
fering with, restraining, or coercing employees in the exercise of their rights; attempting
to induce agency management to coerce employees; impeding or hindering an employ-
ee s work performance; calling for or engaging in job actions (e.g., work slowdown or
strike); and discriminating against employees or refusing to consult, confer, or negotiate

Exhibit 13.4
Subjects That Could Be
Included in a Master Labor
Agreement in the Federal
Sector

Union recognition Sick leave

Official time Health and safety

Discipline and counseling Contracting out

Grievance procedure and arbitration Child care services

Dues withholding Call-back, standby, and on-call duty

Employee performance Workers compensation

Merit promotion Performance appraisal

Training Hazard and environmental pay

Equal employment opportunity Reduction-in-force

Travel time and pay Position classifications

Annual leave

CHAPTER 13 Labor Relations in the Public Sector 661

with the appropriate federal agency. Unfair labor practice remedies available to the FLRA
include the issuance of a cease-and-desist order and/or an appropriate make-whole type
of remedy, such as requiring that an employee be reinstated with back pay.

The CSRA makes it an unfair labor practice to refuse or fail to cooperate in impasse
procedures and decisions. The FLRA has authority to revoke recognition of a union that
commits an unfair labor practice or encourages a strike or slowdown. The FLRA can also
require the parties to renegotiate a labor agreement in accordance with an FLRA decision
and seek a temporary restraining order to halt suspected unlawful conduct while an
unfair labor practice case is pending.

Grievance Procedures and Arbitration in the Federal Sector
The CSRA requires that all negotiated agreements in the federal sector include a griev-
ance procedure with binding arbitration as its final step. A grievance is broadly defined
to include any complaint by an employer, labor organization, or agency relating to
employment with an agency and any claimed violation, misinterpretation, or misapplica-
tion of any law, rule, or regulation affecting conditions of employment. Certain issues are
exempt from the grievance procedure, such as employee appointment, certification, job
classification, removal for national security reasons or political activities, issues concern-
ing retirement, and life and health insurance. However, the scope of grievance procedure
coverage has been extended considerably. In fact, all matters within the allowable limits
of the CSRA are within the scope of any grievance procedure negotiated by the parties,
unless the parties have specifically agreed to exclude certain matters from coverage.
Thus, unlike private-sector negotiations, which often focus on union efforts to expand
the scope of grievance subjects, federal-sector negotiators often focus on management
proposals to remove specific items from the scope of grievable subjects. Negotiated griev-
ance procedures serve as the exclusive forum for bargaining unit employees in most
cases; however, in cases of adverse employment action (e.g., suspension, reduction in
grade, or discharge for poor performance), the employee may choose either the negoti-
ated grievance procedure or an applicable statutory procedure, but not both. Depending
on the nature of the employee s grievance claim, the employee might receive a hearing
before the FLRA, the Equal Employment Opportunity Commission (EEOC), Merit
Systems Protection Board (an independent agency established to hear federal employee
grievances under CSRA), or a federal court.26 See the Labor Relations in Action feature
on p. 663 for more on this topic.

Labor Management Forums in the Federal Government
On December 29, 2009, President Obama issued Executive Order 13522, Creating Labor
Management Forums to Improve Delivery of Government Services. Similar to President
Clinton s executive order in 1993 that established labor management partnerships, Execu-
tive Order 15322 mandated the creation of forums throughout the federal service to involve
unions in making decisions to improve productivity and save money. The executive order
recognized that labor s involvement provides an essential source of frontline ideas and
information about the realities of delivering government services to the American people
and that cooperative forums promote satisfactory labor relations and improve the produc-
tivity and effectiveness of the federal government. The executive order created the National
Council of Federal Labor Management Relations, which is composed of the director of the
Office of Personnel Management (OPM), the deputy director of the Office of Management
and Budget (OMB), seven union presidents, nine managers, and one neutral.

Agencies and departments of the federal government are required to submit for
review and approval plans on implementing these forums by the council, and they are

662 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

required to allow employees and their union representatives to have predecisional
involvement in all workplace matters to the fullest extent practicable without regard to
whether those matters are negotiable subjects for bargaining. Section 5 of the executive
order protects existing collective bargaining agreements, the authority of agency and
department heads, and the functions of the director of OMB. The Federal Labor Rela-
tions Authority and the Federal Mediation and Conciliation Service offers two-day joint
training programs that are attended by management and union representatives together
from the same agency. The purpose of the training is to learn the fundamentals of estab-
lishing and maintaining an effective labor management forum to meet the goals of the
executive order that include consensus decision making and facilitation.27

Based on nearly 20 years of experience in various sorts of labor management coop-
eration efforts in the federal sector, several factors have been identified as barriers to the
success of these efforts. They include distrust, lack of accountability, an us versus
them mentality, turnover on the management and union sides, lack of commitment,

and the role of labor management specialists who attempt to create a barrier between
top and line management. Likewise, keys to success have been identified. They include
commitment of top management and union leaders to the process, a proper amount of
training in interest-based problem solving, pursuit of cooperative labor management
relations in the collective bargaining process, recognition of the legitimacy of both
parties goals, and a measurable focus on solving problems in a predecisional fashion.28

Homeland Security Act
In 2002, the Homeland Security Act (HSA) was enacted. This act transferred several
existing agencies into the Department of Homeland Security (DHS), which would oper-
ate along four functional lines: border and transportation security; emergency

LABOR RELATIONS IN ACTION
Arbitration under the Federal Service Labor management Relations Statute

Statutory Requirements: All collective bargaining
agreements must provide procedures for the settle-
ment of grievances; only an agency or union represen-
tative may invoke arbitration; the grievance procedure
must be fair and simple and provide for expeditious
processing.

Subjects Excluded from Arbitration: Prohibited polit-
ical matters, retirement, life insurance, health insurance,
national security issues, examinations, certification,
appointments, and classification of positions.

Grievances: The scope of grievances that may
include not only alleged violations of the collective bar-
gaining agreement, but also laws, rules, and regulations
affecting conditions of employment.

Unacceptable Performance and Serious Adverse
Actions: Employees may choose an appeal to the Mer-
its System Protection Board (MSPB) or file a grievance.
Arbitrators must apply standards used by the MSPB.

Discrimination Claims under the Civil Rights Act:
Employees may file a grievance or file a complaint
under the agency s EEO process. Employees are not

precluded from requesting EEOC review of the arbitra-
tor s award, and they also retain the right to file a civil
action in an appropriate district court.

Filing Exceptions to the Arbitrator s Award: Within
30 days after the arbitrator s award, either party may file
an exception to the arbitrator s award under the follow-
ing grounds: The award is contrary to the law or federal
regulation; the subject of the grievance is precluded by
law (examples given previously); the arbitrator s deci-
sion is not drawn from the essence of the collective
bargaining agreement ; the arbitrator is biased and/or
denied a fair hearing; or the decision is inconsistent
with public policy.

Remedies: An arbitrator may award back pay under
the Back Pay Act when he or she finds (1) an unjustified
or unwarranted personnel action and (2) that action
directly resulted in the withdrawal of pay, allowances,
or differentials.

SOURCE: Guide to Arbitration under the Federal Service Labor Management Relations
Statute, Update October 8, 2010, http://www.flra.gov.

663

preparedness and response; chemical, biological, radiological, and nuclear countermea-
sures; and information analysis and infrastructure protection. The total workforce of
the DHS is over 200,000 federal government employees. From a labor management rela-
tions standpoint, over 40,000 of these employees were members of pre-existing bargain-
ing units. These included 24,000 employees within the Immigration and Naturalization
Service (Justice Department); 12,000 in the Customs Service (Treasury Department);
3,500 in the Coast Guard (Department of Transportation); and 2,500 in Animal and
Plant Health Service (Department of Agriculture). The provision that makes labor
unions nervous is Section 730, which states:

Notwithstanding any other provision of this title, the Secretary of Homeland Security
may, in regulations prescribed jointly with the Director of the Office of Personnel
Management, establish, and from time to time adjust, a human resources manage-
ment system for some or all of the organizational units of the Department of Home-
land Security, which shall be flexible, contemporary, and grounded in the public
employment principles of merit and fitness.

Under the CSRA, the president has authority to exempt from coverage any group of
federal employees for national security purposes. Under the Homeland Security Act, the
president may waive employee and union rights granted under the CSRA if such appli-
cation would have a substantial adverse impact on the ability of the department to pro-
tect homeland security and/or the agency, subdivision, or unit s mission and
responsibilities are materially changed and a majority of the affected employees are
assigned intelligence, counterintelligence, or investigative work directly related to terror-
ism investigation as their primary duty.29

As part of the National Defense Authorization Act, Congress authorized the Depart-
ment of Defense (DoD) to create a new personnel system. DoD created the National
Security Personnel System (NSPS), which covers 700,000 employees, which is 40 percent
of the federal government civil service workforce. The NSPS includes changes in such
personnel matters as pay for performance, performance appraisals, training, promotion,
pay classifications, labor relations, and employee appeals.

The DHS established a new Human Resource Management System (the Transporta-
tion Security Administration (TSA) was not included), which included occupational clus-
ters, pay bands, pay ranges, and pay for performance. DHS created a Homeland Security
Labor Relations Board but also issued regulations in labor relations, which included
expanded management rights, limited bargaining on the impact of management s
actions, prohibited bargaining on procedures, established the burden of proof to a single
preponderance of evidence standard, and permitted arbitrators to mitigate discipline

only when the penalty was wholly without justification. The DHS reserved for itself
the right to declare any part of any collective bargaining agreement null and void
by issuing directives or taking whatever actions may be necessary to carry out DHS s
mission.30

On November 16, 2010, the Federal Labor Relations Authority issued a decision that
called for an election among Transportation Security Officers (TSOs) within the TSA to
determine whether a majority of officers wished to have exclusive union. More than
13,000 TSOs were already paying dues to one or more labor unions, but the unions
could provide only personal representation, not collective bargaining representation. On
February 2, 2011, after a complete assessment of the impact collective bargaining could
have on the safety and security of the traveling public, TSA Administrator Pistole deter-
mined to allow the representation election to move forward and laid out specific terms
for limited and clearly defined bargaining within the framework consistent with TSA s

664 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

security mission if the TSOs chose union representation. The two unions competed for
the authority to represent the TSOs: the American Federation of Government Employees
and the National Treasury Union. On April 20, 2011, 85 percent of the 44,000 plus TSO
employees voted in favor of union representation. On June 23, 2011, it was announced
that a majority had chosen the American Federation of Government Employees to rep-
resent them.

With this election, the labor movement secured one of its most important victories
of recent years in a high profile area of the public sector. Then in 2012, the TSA and the
AFGE negotiated and agreed to a collective bargaining agreement. Among the subjects
included, the new agreement revises the performance pay system, institutes policies for
dress codes, provides for shift scheduling, includes uniform allowances, allows for vaca-
tion time and contains a grievance procedure31

Labor Relations in the U.S. Postal Service

The Postal Reorganization Act (PRA) signed by President Nixon on August 12, 1970,
fulfilled the desires of the postal unions to have their labor management relations pro-
grams established by statute. Under previous presidential executive orders authorizing
bargaining by federal workers, the Post Office Department never fully accepted collec-
tive bargaining, even though it was the largest single employer in the United States and
had the largest proportion of employees belonging to unions. Another interesting note
is that the legislation placing postal employees under the private-sector LMRA was
proposed by President Nixon and adopted by Congress to resolve an illegal strike
by postal workers a far different approach than that used by President Reagan
during a similar illegal strike by air traffic controllers in 1981 wherein all strikers
were terminated.32

The PRA created the U.S. Postal Service (USPS) as an independent entity within the
executive branch of the federal government. The office of postmaster general, previously
a position in the cabinet, was made independent of Congress and the president. The
postmaster general was selected by an 11-member board of governors. Under the PRA,
wages, hours, benefits, and other terms and conditions of employment are mandatory
bargaining subjects to be determined through collective bargaining. Grievance and arbi-
tration procedures are also subject to negotiations. The NLRB supervises representation
elections and prosecutes unfair labor practices. Although the right to strike was denied
postal employees, a fact-finding and binding interest arbitration procedure was made
available if a bargaining impasse persisted longer than 180 days after bargaining began.
Since the PRA was passed, contracts have been negotiated without any major disruption
in the delivery of postal services.

The parties have often relied on the arbitration provisions of the PRA to resolve one
or more bargaining issues. The Postal Service and one or more of the postal unions have
submitted their unresolved issues to arbitration seven times since 1978.33

With revenues of $67.8 billion and over half a million employees, the U.S. Postal
Service is an important American business. With the volume of first class mail declining
by 18 percent since 2008 (down to 64.0 billion pieces) due to people paying bills online,
e-mailing instead of writing and sending first class letters, etc., but with 4.0 billion
packages delivered (up 8.0 percent the Postal Service experienced a record $25.4 billion in
losses from 2007 to 2011.34 The U.S. Postal Service continued the process of closing as
many as 3,700 post offices on top of the 491 it closed in 2010. With the closing of post
offices, there will also be a reduction in the number of employees, down 33 percent since
1999. Not only will these closings mean that many citizens, especially the elderly, will be

CHAPTER 13 Labor Relations in the Public Sector 665

inconvenienced but those employees who once almost had total job security will be directly
affected.35

Similarities between Private- and Public-Sector Bargaining

Although differences are found between private and public-sector labor relations, simi-
larities also exist. First, many participants in public-sector bargaining are trained and
gain their experience in the private sector. Labor relations practitioners in the public sec-
tor tend to rely on the private-sector approach to labor relations with appropriate modi-
fication as needed. State and local bargaining statutes often use NLRB criteria for
appropriate bargaining units, subjects for collective bargaining, use of labor injunctions,
and standards for arbitration. Some unions, such as the SEIU and the Teamsters that
represent a significant number of public employees, have much experience in private-
sector labor relations. Other unions (such as the National Education Association; the
American Federation of Teachers; the American Federation of State, County, and Munic-
ipal Employees; and civil service employee groups) often hire professional staff members
with private-sector labor relations experience.36

A second similarity is the reason employees form and join unions. Public employees,
like their private-sector counterparts, form and join unions when they are not satisfied
with one or more terms or conditions of employment, including their work, supervision,
and promotional opportunities; have a favorable attitude toward unions as institutions;
and believe that unionization will be instrumental in yielding positive outcomes.37 In
fact, public employees tend to hold more favorable attitudes toward union representation
than do private-sector workers and perceive public managers as less hostile toward
unionization than with their private-sector counterparts.38

A third similarity is that the collective bargaining settlements are often influenced by
the personalities of the negotiators and their abilities to increase their bargaining power
relative to the other party (the bargaining power model was discussed in Chapter 6). To
reiterate briefly, each party increases bargaining power over the opponent by either
increasing the cost to the opponent of disagreeing or reducing the cost to the opponent
of agreeing. Public opinion represents a most significant cost item in public-sector labor
relations both union and government officials often structure their tactics in a manner
intended to gain public support for their position, which places pressure on the other
party to concede negotiation items. However, public opinion and political support can
be a double-edged sword in the bargaining process. Unions in the public sector can use
at least three general tactics to increase management s cost of disagreeing with the
union s position.39 The first technique is a union threat to blow the whistle on ques-
tionable practices unless the government agency agrees with the desired settlement.
Examples include threatening to release information on the unpublicized practice of
dumping raw sewage in a river or on the dollar amount of government officials liquor
bills which are paid by the taxpayers. A second tactic of increasing management s cost of
disagreeing is more direct, that is, the union s threat of withdrawing political support.40

Since public employees vote at a higher rate than other individuals, a threat to withhold
candidate endorsements or campaign support, both manpower and financial, increases
pressure on elected officials and influencing bargaining outcomes. Of course, the success
of this tactic depends on the number of union members and the ability of the union to
mobilize a cohesive voting bloc.

The third tactic is the union s use of various job action techniques to raise manage-
ment s cost of disagreeing. Strikes by public employees have occurred often despite legal
sanctions. Even though they are illegal, these actions take place under the assumption

666 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

that most public-sector strikes have eventually been resolved without fines or other sanc-
tions. Some other job actions that have been used are also outside the law or proscribed
by the job requirements (e.g., government employees in New York raising the toll
bridges at rush hour when walking off the job), whereas others are marginally outside
the law or job requirements (e.g.,, all public employees calling in to say they are too
sick to work blue flu ).41

From the union standpoint, a most promising job action is working within the law
while placing pressure on management to resolve the dispute. Job slowdowns fall mar-
ginally into this category because most public-sector labor agreements give manage-
ment the right to discipline employees for poor performance. Yet, there is a thin line
between a job slowdown and malicious obedience (also called work-to-rule) by which
the employees follow the agency s rules to the letter. For example, a fingerprint techni-
cian is charged with verifying an individual s address during his criminal booking. This
could be done by simply telephoning the individual s purported residence. However, a
more time consuming but accurate verification method would be for the fingerprint
technician to personally visit the individual s residence. Needless to say, the home
visit approach would create an assignment backlog. Other public employees can also
use bureaucratic rules to their advantage. For example, tollbooth employees could
check paper currency serial numbers against a list of counterfeit bills, or postal workers
could check each item to ensure a proper ZIP code. Malicious obedience has the tacti-
cal advantage of cutting back on the delivery of public services. More importantly,
employees continue to receive wages under this tactic while being relatively immune
from disciplinary actions.

Public-sector unions can also reduce the management s cost of agreeing with the
union by campaigning for referendums to fund the negotiated labor settlement or elimi-
nating some of their initial proposals.42 Public employee unions can also push for cer-
tain issues that contribute significantly to their economic well-being at little cost to the
political incumbents. Employee pensions usually fall into this category because they can
be increased without immediate cost implications; the bulk of pension costs would be
incurred under some future politician s budget.

Management can reduce its political cost of agreeing on wages by publicizing a
rather low across-the-board settlement along with general improvements in the pay
step plan. This plan usually gives progressive salary increases to each job classification.
For example, an employee in a particular classification might receive a 5 percent wage
increase after three years service in that classification. Management can improve the
employee s situation by either raising the percentage increase or reducing the number
of service years needed to qualify for a step wage increase. However, it is difficult to
determine and report the precise cost of these changes. Most news media presentations
are limited to specific reports on the average wage gain of public employees and ignore
the more detailed cost implications of a modified pay step plan.

Like in the private sector, there is the continuing controversy over nonunion
employees obligation to pay for their representational rights. Public-sector employees
not joining unions may be required to pay for representational services provided by the
union (collective bargaining, grievance handling, arbitration, etc.) but not for non-
collective bargaining activities (such as political action committees, lobbying, or public
relations activities).43 The nonmember has the burden of objecting to inappropriate
expenditures of his or her agency or fair-share fee, but the union must provide written
notice to nonmembers of their right to raise objections and provide sufficiently detailed
information about the nature of dues expenditures to permit the nonmember to make a
reasonable determination whether to challenge a particular expenditure as chargeable.

CHAPTER 13 Labor Relations in the Public Sector 667

In 2007, the U.S. Supreme Court ruled in Davenport et al. v. Washington Education
Association that the First Amendment prohibits public-sector unions from using nonmem-
ber fees collected under an agency shop agreement for purposes not germane (such as the
union s political agenda) to the union s collective bargaining duties. The Court further
ruled that unions must have procedures to obtain the nonmembers affirmative authoriza-
tion (opt-in) before using their fees for election-related purposes.44 In January of 2016, the
U.S. Supreme court heard a case which challenged the legality of the agency shop.

In summary, public-sector collective bargaining has some similarities to the process
found in the private sector. In both situations, the parties are trying to increase their bar-
gaining power relative to the other party s by increasing the other party s cost of dis-
agreeing with their party s position or by reducing the other party s cost of agreeing
with their party s position. There are several differences between public and private-
sector bargaining processes; however, once these differences are acknowledged and
understood, one can better appreciate the public sector as it fits into the overall frame-
work of labor management relations in the United States. Moreover, skills learned in
private-sector labor relations are easily transferred to the public sector.

Differences between Private-Sector and Public-Sector Bargaining

An understanding of public-sector labor relations requires recognition of some of the
differences as well as the similarities between the public and private sectors.

The Market Economy Does Not Operate in the Public Sector
One difference between the public and private sectors can be explained in terms of the
economic system and the market economy. Unlike the private sector, many public ser-
vices (such as public education, welfare services, and police and fire protection) are pro-
vided to citizens at little or no additional cost (beyond taxes). The cost of such services is
spread across many individuals rather than expecting each customer to pay the entire
cost of the services used or available for use. The market economy therefore does not
operate in the public sector and cannot act as a constraint on union and management
negotiators.

Moreover, monopolistic conditions often exist in the public sector, and public orga-
nizations often control the services rendered or the products offered. For example, the
police and fire departments are the primary organizations that provide certain types of
security protection. Public education has little real competition from the private sector,
and even that is usually among only more affluent families. Thus, products and services
provided by the government cannot be readily substituted if they become more costly.

The lack of substitute goods or services distinguishes public-sector collective bar-
gaining from related activities in the private sector and adds to the critical nature of pub-
lic services. For example, citizens usually take sanitation services for granted; yet a strike
by city garbage collectors would be regarded as a public crisis because there is no imme-
diate alternative means for garbage disposal. The lack of substitute services also elimi-
nates one of management s strike costs: loss of business to a competitor. In fact, some
union leaders contend that municipal leaders use a strike to their advantage by transfer-
ring payroll savings resulting from a strike to other government budgetary accounts.

The relatively vague aspects of particular public service institutions may make pro-
ductivity bargaining difficult. Clear and precise productivity measures are a necessary
first step in productivity bargaining (although many private-sector companies have
these figures and do not engage in productivity bargaining). Most public-sector

668 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

bargaining parties do not have specific productivity measures at their disposal and could
not engage in productivity bargaining even if they desired this approach. Many public
services are provided regardless of customer use. Police officers and bus drivers can legit-
imately contend that they should not be financially punished for nonuse of their services;
their salaries should not be a direct function of the number of crimes detected or drivers
ticketed respectively, if the service is available for all. Hence, much of the public-sector
wage determination process is based on a comparison of similar jobs in the public and
private sectors rather than on employee performance records. Because the market does
not act as a significant moderator in the public sector, budgetary limitations, public atti-
tudes, and administrative discretion must operate to successfully maintain order, equity,
and balance in collective bargaining relationships.45

The Relationship between the Budget and Public-Sector
Bargaining Processes
The budget tends to play a more conspicuous role in public-sector collective bargaining
than in private-sector bargaining. In recent years, public employers have been under
severe budget constraints, necessitating an increased emphasis on cost reduction. To the
extent taxpayers are unwilling to approve revenue increases through the political process,
cost reductions must come from curtailing public services or finding more cost-efficient
ways of providing public services at current levels. Public employers have experienced
increased pressure to emulate changes in labor relations practices occurring in the pri-
vate sector by privatizing (i.e., outsourcing or subcontracting) some public services,
broadening job classifications and multiskilled job descriptions, using more part-time or
contingent employees, paying for performance, adopting flexible and alternative work
schedules, reducing supervision and encouraging employee involvement and empower-
ment, decentralizing and streamlining bureaucratic operating structures and methods,
and increasing labor management cooperation.46

Most municipal budgets are published in advance before public hearings and subse-
quent adoption. Although many citizens ignore public hearings, key taxpayers, such as
local companies, pay close attention to the budget in terms of its implication for
increased property or business taxes. The anticipated salaries for public employees are
recorded as separate line items on the budget, something not done in the private sector.
Thus, the opportunity exists for concerned taxpayers to pressure city officials in the
hopes of keeping the budget and subsequent taxes at a minimum.

The specific influence of the budget on the public-sector bargaining process remains
uncertain. Some suggest that a great deal of flexibility exists in the budget bargaining
relationship in terms of budget padding, transfer of funds among line items, and supple-
mental or amended budgets that can often be filed after the final approval date.47

Union negotiators major concerns pertain to securing benefits for their members; it
is up to management to find sufficient funds for an equitably negotiated settlement.
Thus, there is little union management agreement over the budget s significance in con-
tract negotiations. Few, if any, public-sector collective bargaining agreements have provi-
sions specifying the role the budget will assume in the collective bargaining process.

Employee Rights and Obligations
Another way that public employment differs from private employment is that public
employees have some legal rights and obligations that private employees do not. Numer-
ous laws and executive orders pertain only to public employees. Public employees polit-
ical activities, personal appearance, place of residence, and off-the-job behavior are

CHAPTER 13 Labor Relations in the Public Sector 669

regulated more closely than most private-sector workers. For example, public employees
in particularly sensitive jobs and those whose misdeeds are most susceptible to adverse
publicity, such as teachers, police officers, and firefighters, are held to a higher conduct
standard than most other employees.48 Because citizens pay the taxes that pay public
employees salaries, employers have to be careful of the image employees project.

Although freedom of speech and association are constitutional rights, there are lim-
its to their exercise by public employees. The Supreme Court has identified several rea-
sons for which these rights may be limited, including the need to maintain discipline and
harmony in the workforce, the need for confidentiality, and the need to ensure that the
proper performance of duties is not impeded.49 However, public employers cannot give
priority to efficient work operation over an employee s First Amendment right to expres-
sion about a matter of public concern.

Within the public sector in many states, merit-based civil service employment systems
rather than collective bargaining agreements supersede employment-at-will laws. Before
collective bargaining was authorized by statute, most public-sector entities adopted merit
systems that covered all but the highest-level employees who are appointed and serve at
the pleasure of the governor, mayor, or similar executive or who are elected to their posi-
tions. Merit systems protect employees from political influence and corruption in hiring,
pay, job classification as well as discipline and discharge. When a public employer adopts
a merit system, it must provide a merit-based reason for discipline and discharge. In addi-
tion, an appeal process that allows disciplined employees to challenge the disciplinary
action before an independent personnel board or commission is included. Although the
standard for review of the sufficiency of the employer s cause for discipline or discharge
in a merit system may vary from the just cause standard that is applied under a collective
bargaining agreement, in many instances, the elements of discipline (see Chapter 12) are
quite similar, for example, progressive discipline.

A major difference between an appeal process under a merit system and a negoti-
ated grievance procedure is that the disciplined employee may decide to appeal to a per-
sonnel board or commission, with the employer bearing the cost of the proceedings.
Under a collective bargaining agreement, the parties usually share the costs. Moreover,
in some jurisdictions, employees have the option either to appeal to the public personnel
board or to file a grievance under the negotiated grievance procedure, but not both.50

Generally, the courts have not attempted to substitute their judgment for that of exec-
utive branch officials about whether an individual public employee should be dismissed.
Rather, courts have sought to establish guidelines for the constitutional treatment of public
employees in adverse action cases, such as a discharge. Procedural due process requires the
right of notice of the proposed government action; the reasons for the action; the opportu-
nity to respond; the right to a hearing before an impartial official; and the rights to legal
counsel, to confront accusers, and to cross-examine and subpoena witnesses.

In Board of Regents v. Roth (1972) the Supreme Court delineated the following
grounds on which a public employee whose employment has been terminated could
assert the right to procedural due process:51

Where an employee had a property right to the job
Where the termination harmed the individual s reputation and/or adversely affected
his or her future employability
Where termination was in retaliation for an exercise of a protected constitutional
activity, such as the freedom of speech or freedom of assembly

In the case of Cleveland Board of Education v. Loudermill (1985), the Supreme Court
held that before tenured public employees can be fired, they must be informed of the

670 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

charges against them and be given an opportunity to respond.52 Tenured employees
due process rights under the U.S. Constitution include written or oral notice of the
charges against them, an explanation of the employer s evidence, and an opportunity to
rebut the evidence.

Collective Bargaining Structures and
Decision-Making Processes

The bargaining structure within municipal governments is decentralized, and with few
exceptions, negotiations are conducted on a single-employer basis. The bargaining unit
coverage extends only as far as the municipal jurisdiction, and municipal officials are
reluctant to relinquish their political autonomy and decision-making authority. The city
manager or the chief administrative officer of the municipality will often serve as chief
negotiator, with the assistance of the personnel director or an attorney retained by the
city.53 An increased level of political activity by public employees, increased level of
strike activity, and occurrence of prior job actions by organized public employees are fac-
tors that increase the likelihood that a labor relations specialist will be included on the
negotiations team. If the negotiation activities become complex, the city is more likely to
employ a labor relations professional as the chief negotiator.54

Defining the appropriate bargaining unit in the public sector is more difficult than
in the private sector. In the private sector, legislation and related enforcement agencies
provide direction for determining an appropriate bargaining unit. For example, plant
guards in the private sector are required to be in separate bargaining units, and super-
visors are not eligible for membership in a bargaining unit. The public sector, especially
at the state and local levels, experiences many different combinations of appropriate bar-
gaining units. Depending on the particular applicable state law or administrative deter-
mination, public-sector supervisors may be prohibited from joining unions, in some
jurisdictions, they may be in the same bargaining units as other employees in other jur-
isdictions, or they can join unions in separate bargaining units.55

Of the differences between public- and private-sector labor relations, one of the
potentially most important, but often ignored, is the unionization of supervisors and
other managers. While private-sector supervisors and managers lack representational
rights under the Labor Management Relations Act, public-sector supervisors and
other lower to midlevel managers have the right to engage in collective bargaining in
more than a dozen states, including the most highly populated states. There have been
questions about the loyalty, identity, and organizational commitment of public-sector
supervisory unions, and the logic for exclusion is rooted in the need of the employer
to have the undivided loyalty of supervisors and other managerial employees. However,
research has identified little negative effect from the unionization of supervisors.
Potential problems seem to arise with the highest-level supervisors on issues concern-
ing strikes and discipline, especially when supervisors are in the same bargaining
units as employees. Based on research in New Jersey, supervisors can both receive
representation in their role as employees and act on the job in a managerial capacity.
In other words, supervisors can wear two hats ; they are loyal to the mission of the
agency and act as supervisors to further the mission of the agency while they are also
union members.56

Another organizational difference applies to the chief negotiator in the public sector,
who often lacks authority to reach a final and binding agreement with the union on
behalf of the public organization. The sovereignty doctrine makes it difficult to delegate

CHAPTER 13 Labor Relations in the Public Sector 671

decision-making authority to specific administrative officials. Many elected officials still
refuse to give up their legislative authority to make final decisions on matters that they
believe are important to effective government operations because they feel responsible
directly to the electorate. Elected officials do not want appointed negotiators to bind
them to wage settlements and other provisions of collective bargaining agreements that
they believe are unworkable.57 For example, unionized schoolteachers might encounter a
variety of managers in collective negotiations the school principal, the superintendent
of schools, the school board, and possibly state education officials. The problem of deter-
mining who speaks for management can negatively affect the negotiation process in
two ways:

1. Management negotiators at the bargaining table can defer to other management offi-
cials in the bargaining process. Union officers are often shuffled off to a variety of
government officials in collective bargaining on the premise that another individual
has specific authority for a particular issue or a portion of available funds. Often,
political rivalries prompt certain government officials to either intervene or pass the
buck in the hopes of looking good at another official s expense. This situation can
result in a more confusing collective bargaining relationship than is typically found
in the private sector. In some cases, it can almost entirely prevent serious collective
bargaining efforts between management and union negotiators.

2. The unwillingness of some government agencies to delegate sufficient authority to a
labor relations representative can result in a lack of labor relations understanding on
management s side of the negotiation table. In some cases, taxpayers are affected if
unions take advantage of the inexperienced management negotiators. Perhaps in
other cases a public strike could have been avoided if the parties had adopted a
more realistic understanding of the collective bargaining process.58

Research has shown that when the chief negotiator holds a higher-level position in
the organizational structure, the parties are less likely to reach an impasse. This is the
result of the chief negotiator from a higher-level position having greater authority to
make crucial decisions during the negotiations, thereby simplifying the process. Where
outside consultants serve as chief negotiators, public-sector unions are more likely to
make end runs to higher-level government officials whom the union negotiators per-
ceive as having greater authority to make binding decisions in the negotiations. Such
activity occurs away from the bargaining table and makes the negotiations between the
parties at the bargaining table more difficult. In reference to the bargaining strategies
covered in Chapter 6, chief negotiators who use the mutual gain bargaining strategy
decrease the likelihood of an impasse, and negotiators who use a distributive strategy
increase the likelihood of a bargaining impasse. In reference to impasse procedures cov-
ered in Chapter 9, prior use of arbitration increases the likelihood of a bargaining
impasse.59

Negotiable Issues and Bargaining Tactics
Exemption by statute of many traditional collective bargaining subjects (particularly at
the federal level) limits the ability of both unions and managers to resolve some disputes
through the bargaining process. Under the CSRA, most compensation issues affecting
federal budgets are excluded from the scope of mandatory bargaining subjects (except
for postal workers and air traffic controllers). In many states operating under merit sys-
tem rules and regulations, related subjects such as promotion, pension plans, and layoff
procedures cannot be negotiated.60 Merit or civil service systems establishing rules for
governing terms and conditions of employment existed before the passage of state laws

672 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

authorizing collective bargaining as a procedure for determining work rules affecting
public employees. This situation sometimes can lead to conflicts over which system
should take precedent in deciding the outcome of disputes over the determination or
application of particular work rules. Legislators should clearly address this potential
dilemma when drafting public-sector bargaining laws to minimize conflicts over whether
collective bargaining or civil service procedures should take precedent.61

Some public-sector bargaining relationships attempt to get around statutory limita-
tions on bargaining subjects by removing such discussions from the formal bargaining
process. One study found that some public-sector labor agreement provisions are not
actually negotiated between the parties, whereas other decisions are jointly determined
but not included in the formal labor agreement.62

Public-sector bargaining tactics also differ from those in the private sector. Negotia-
tions in the private sector stem from a bilateral relationship management and union
representatives negotiate the terms of the labor agreement with little involvement from
outside groups. Multilateral bargaining is a term used, particularly at the state and
local levels, to describe the involvement of multiple parties in the collective bargaining
process.63 For example, elected (e.g., mayor, city council member) and administrative
(e.g., city manager, police chief) officials may share decision-making responsibility over
some issues on the employer side. Various community interest groups (e.g., taxpayer,
minority, environmentalist, business) perceive themselves as stakeholders potentially
affected by the outcomes of negotiations and may also seek to actively influence the bar-
gaining process by bringing pressure on either the employer or union(s) to approve
acceptable bargaining terms. The outcomes of the negotiating process may affect the
need for additional revenues (e.g., taxes) to fund improved employment terms or the
quantity or quality of public services provided citizens.

The ability to impose political costs or rewards on a bargaining party often becomes
as important in determining public-sector bargaining outcomes as the ability to impose
or minimize economic costs affects bargaining power in the private sector. Thus, public-
sector negotiations often become an exercise in politics who one knows and what one
can do to help or hurt a government official s political career. Public unions have dem-
onstrated an ability to use multilateral bargaining and political pressure to increase eco-
nomic gains and job security for their members.64

Public-sector unions often have opportunities to engage in end-run bargaining
before, during, or after negotiations. End-run bargaining involves a union making a
direct appeal to a legislative body or government official who has the final decision-
making authority rather than dealing exclusively with the designated management nego-
tiator present at the bargaining table. For example, one mayor made concessions to a
police association in return for its endorsement in the gubernatorial primary. The
mayor changed the regular police work schedule from five days on and two off to four
days on and two off (increasing the annual days off by 17), guaranteed two patrol offi-
cers in every car, and agreed that 50 percent plus 1 of the patrol cars in each police dis-
trict would be on the street during night hours.65 Because public-sector unions are often
politically potent, elected officials are generally more receptive to this end-run tactic than
a private-sector corporation president or majority stockholders of a corporation might
be. In fact, such attempts by a union to bypass the designated management negotiators
of a private-sector organization would probably result in the employer filing an NLRB
unfair labor practice claiming of refusal to bargain in good faith.

Occasionally, the media aids a party s use of the end-run tactic by allowing manage-
ment and union negotiators to present their positions through the press rather than to
the other party at the bargaining table. Public-sector bargaining usually receives more

CHAPTER 13 Labor Relations in the Public Sector 673

press coverage than similar activities in the private sector because more information is
typically furnished to the media by the bargaining parties, and the eventual settlement
has a more direct impact on the government s constituents. Use of the end-run tactic
can harm the collective bargaining process, as evidenced by a union leader s account of
one contract negotiation between New York City and its uniformed forces:

All of this [bargaining issues] should have been brought to the bargaining table. It
would have given both labor and management a chance to work out of these very dif-
ficult trouble spots. But, almost nothing was done at the table; instead both sides
took to the television, advertising, and the loud and dramatic press releases.

Experts know the best way to insure trouble is to bring collective bargaining
into the public arena. Instead of labor and management representatives talking to
each other, they will talk to the public and to their principals only. Invariably, the
wrong things will be said.

Management will talk of the irresponsibly high demands of the workers, and
about how services will have to be cut back or taxes raised. The labor leader now
has to talk tough. The strike threat becomes almost obligatory, because he is now put
in an impossible squeeze. When the union leader goes public he first must talk to the
people he represents, and retain their confidence. Understandably, the public responds
not to the facts of the situation but to the militant rhetoric. Everybody loses in the
process, a process that has little or nothing to do with collective bargaining.66

The media plays an important role in determining the priority issues, providing
information about bargaining issues, and helping the public formulate its attitudes
toward the negotiating parties. The local media is highly influential because many times
it is the primary source of information for the general public. Because voters cannot
directly observe union and management interactions, they rely on the media, which itself
has biases. These biases include personal beliefs, ideologies and prejudices, budgetary and
technological constraints, and a tendency to deal with problems stereotypically.

During negotiations, both parties try to manipulate the media because the negotia-
tion outcomes are often shaped as much by people s perceptions of what is reasonable or
necessary as they are by the factual merits of a bargaining position. In fact, sometimes
the parties jointly manipulate the media to their own advantage. The union may blame
city officials for its members receiving less than the wage increase they demanded; city
officials in turn blame the union for a tax increase needed to pay for a wage increase
that was given.67

Accompanying the growth of collective bargaining in the public sector have been
efforts to open up the bargaining process to citizen observation and participation
through the enactment of so-called sunshine laws. The rationale for this approach is
that citizens can provide more input into how tax dollars are spent by their involvement,
and openness reduces public distrust of the bargaining process. Although every state has
some form of sunshine law, 25 states require labor negotiations to be conducted in the
open, and 12 states even require that the strategy sessions in preparation for labor nego-
tiations be open.68 The open approach to public-sector bargaining differs widely from
the private sector in that a private enterprise s owners (stockholders) are excluded from
collective bargaining sessions.

Negotiators often seek to avoid bargaining in the sunshine because it becomes
more difficult to make necessary trade-offs amongst bargaining priorities and terms
when every constituent affected by those trade-offs can observe the deliberations. Nego-
tiators may spend too much time posturing for the benefit of key constituents in the

674 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

public audience, thereby prolonging the amount of time required to get down to the par-
ties bottom-line bargaining interests and positions. On the positive side, one study
found the presence of sunshine laws to have no significant effect on bargaining outcomes
in police officer and firefighter negotiations.69

Grievance Administration
The public sector has widely accepted the grievance procedure with binding arbitration
as the mechanism for resolving conflicts over the interpretation and application of the
collective bargaining agreement. Although most grievance procedures are multistep,
unlike in the private sector, most grievances are not settled at the first step. Instead,
grievance disputes tend to be settled at the second or third step. Some evidence indicates
that where there are fewer steps in public-sector grievance procedures, grievances are
resolved more quickly. Once a grievance is appealed to arbitration, the parties make a
significant effort to resolve the grievances before the formal arbitration hearing. At an
arbitration hearing, labor and management representatives are most likely to present
their own case rather than rely upon an outside attorney to represent their party, as is
common in the private sector.70

Similar to the private sector, legalism is creeping into the arbitration process in the
public sector. Increased legalism means greater use of attorneys, post hearing briefs, writ-
ten transcripts, and over-adherence to formal rules of order. Although grievance arbitra-
tion (as well as conciliation, mediation, and fact-finding) initially was intended to avoid
legalism, the process of arbitration appears to be evolving as part of the problem rather
than part of the solution. In addition, labor and management initially viewed the infor-
mality of the arbitration process as the primary reason for its effectiveness; however, the
increase in formality has caused a decline in the willingness of the parties to use arbitra-
tion as an alternative dispute resolution process.71

The types of grievance subjects arbitrated in the public sector do not vary signifi-
cantly from the private-sector experience, and in both sectors, discipline and discharge
cases constitute the largest single category of grievance disputes.72 Public-sector union
stewards may be less likely to file a written grievance if a cooperative bargaining relation-
ship exists, which provides and encourages informal methods of resolving employment
disputes.73 A number of alternative dispute resolution methods are being encouraged
on the federal, state, and local levels to ensure fair and cost-effective resolution of
employee grievances. Among techniques being used are mediation, peer-review panels
comprised of employees or employees and managers, and arbitration.74 Grievance medi-
ation programs typically report dispute settlement rates in the 75 to 90 percent range,
and arbitration may reduce attorney fees and settlement costs by 20 percent.75

The Right-to-Strike Controversy
The right to strike, considered by many a vital instrument for successful collective bar-
gaining, is usually prohibited by statute in the public sector.76 Even though public
employee strikes are illegal in most states, there appears to be no research evidence to
support the proposition that the presence of a statutory strike ban significantly reduces
the occurrence of public employee strike activity.77

The basic argument given for legislative prohibition of strikes is that the services
provided by public organizations are essential to the general welfare of the citizens.
Work stoppages or refusals to work would adversely affect the delivery of such vital ser-
vices and create disorder in the community. As is true with many industrial relations
concepts, the words essential services are subject to many diverse interpretations. Some

CHAPTER 13 Labor Relations in the Public Sector 675

maintain that all public services are essential, whereas others suggest that many public
employee classifications (such as clerks, mechanics, and librarians) are no more essential
than their counterparts in the private sector who are granted a right to strike. Police offi-
cers and firefighters are almost always viewed as crucial for public safety; however, at
least one police strike saw no increase in the area s crime rate. One political official,
believing that criminals fear irate citizens more than they fear the police, commented,
Hoodlums have no rights without police protection. Shop owners will use their

shotguns. 78

The right to strike in the public sector has other debatable dimensions. Some would
prohibit public-sector strikes because they would place too much power in the hands of a
union relative to taxpayers. Also, unions would unnecessarily benefit at the expense of
other groups that are dependent on government revenues but do not have a right to
strike or participate in power ploys with public officials.79

Some commenters contend that the right to strike in the public sector is not essen-
tial to collective bargaining because public-sector unions are already influential interest
groups and effectively use their lobbying and political support techniques to obtain col-
lective bargaining goals. One research study found that successful bargaining gains in the
public sector occur when unions either: (1) threat to strike (despite its illegality) or (2)
intertwine themselves closely with their employers by exchanging political support for
improved wages and benefits.80

Regardless of the arguments for or against the right to strike or statutory penalties
imposed for illegal strike activity, significant strikes have occurred in the public sector.
When illegal strike activity occurs or management permanently replaces lawful strikers,
strike settlements may be delayed as union representatives seek to negotiate terms grant-
ing all strikers or discharged employees amnesty or reinstatement to their former jobs.
Unions may also seek to have management waive or negate (with back-to-work bonuses)
the fines that many jurisdictions impose for illegally striking. Although there would gen-
erally be no legal obligation for a public employer to bargain over or grant such a union
proposal, public or political pressure to end the strike may cause a public employer to
voluntarily agree to such a proposal.81

Discipline of Public-Sector Employees
Although private-sector employees may be disciplined or discharged for off-duty mis-
conduct, employers in the public sector have a heightened sensitivity about off-duty mis-
conduct of their employees, especially public school teachers, firefighters, and police
officers. As a general rule, in both the private and public sectors, the employees retain
the right to conduct their private lives as they see fit without the interference of their
employer, and the employer has just cause to discipline employees only if there is a
nexus (connection) between the off-duty conduct and the employment. However, it is
well established that off-duty conduct of public employees is subject to closer employer
scrutiny, and discipline is more likely than for similar conduct in the private sector.
Police officers are held to a more rigid standard of conduct since they are sworn, uni-
formed, and armed employees. Firefighters are frequently disciplined for unbecoming
off-duty conduct. School teachers who are certified professionals have important respon-
sibilities for nurturing the community s youth and serving as role models for their stu-
dents. Publicized criminal convictions for such illegal activities as drug use and selling
drugs by school teachers will likely lead to termination of employment. In the private
sector, the employer may discipline the employee but will be required to prove that the
off-duty conduct had harmed productivity, adversely affected the business, and/or other
employees refused to work with the convicted employee. In addition, employees in the

676 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

private sector may be employed under a collective bargaining agreement that requires
entry to a rehabilitation program for a first offense.82

Within the federal sector, the Merit Systems Protection Board has formulated the
so-called Douglas Factors that should be considered in deciding disciplinary punishment
of federal employees. (See above the Labor Relations in Action feature.)

Interest Dispute Impasse-Resolution Procedures
in the Public Sector
Because legislation usually prohibits public employees from striking or requires participa-
tion in impasse-resolution procedures before striking, these procedures play an important
role in resolving interest disputes over what the terms and conditions of employment will
be in the public sector. Because multiple laws exist that govern labor relations in different
governmental jurisdictions, many different impasse-resolution procedures may be man-
dated or encouraged. These procedures normally involve a third-party neutral, who assists
the parties in reaching an agreement without interrupting services or endangering the
public interest (see the discussion of mediation, fact-finding, and interest arbitration
in Chapter 9).

Legislation for public-sector impasse-resolution procedures vary from state to state.
Impasse-resolution procedures may combine mediation, fact-finding, and conventional
or final-offer arbitration.83 For example, Connecticut has mediation, fact-finding, and
arbitration for state employees; fact-finding and arbitration for municipal employees;
and mediation and fact-finding for teachers. On the other hand, 15 states have no
legislation on impasse resolution procedures. Mediation is a legislatively mandated
mechanism in public-sector bargaining in most states, followed by fact-finding.84

Nearly one half of the states provide for interest arbitration for firefighters and police.85

LABOR RELATIONS IN ACTION
Douglas Factors in Deciding Disciplinary Punishment of Federal Employees

1. The nature and seriousness of the offense, and its
relation to the employee s duties, position and
responsibilities, including whether the offense was
intentional or technical or inadvertent, or was commit-
ted maliciously or for gain, or was frequently repeated

2. The employee s job level and type of employment,
including supervisory or fiduciary role, contacts with
the public, and prominence of the position

3. The employee s past disciplinary record
4. The employee s past work record, including length

of service, performance on the job, ability to get
along with fellow workers, and dependability

5. The effect of the offense upon the employee s abil-
ity to perform at a satisfactory level and its effect
upon supervisors confidence in the employee s
ability to perform assigned duties

6. Consistency of the penalty with those imposed on
other employees for the same or similar offense

7. The consistency of the penalty with any applicable
agency table of penalties

8. The notoriety of the offense or impact upon the
reputation of the agency

9. The clarity with which the employee was on notice
of any rules that were violated in committing the
offense, or had been warned about the conduct in
question

10. Potential for the employee s rehabilitation
11. Mitigating circumstances surrounding the offense

such as unusual job tensions, personality problems,
mental impairment, harassment, or bad faith, mal-
ice or provocation on the part of others involved in
the matter

12. The adequacy and effectiveness of alternative sanc-
tions to deter such conduct in the future by the
employee or others

Only those Douglas Factors relevant to each case need
be considered.

SOURCE: Douglas v. Veterans Administration, M.S.P.R. 280 (at 305-6), 1981 MSPB
Lexis 886 (at *38-9).

677

In all, 24 states have legislation that provides for interest arbitration special masters, or
fact-finding for some employees (see Exhibit 13.5).86

Mediation
Mediation involves a third-party neutral who has no binding authority to decide a dis-
pute but assists the parties efforts to reach a voluntary agreement. Of the impasse-
resolution procedures used in the public sector, mediation is the least intrusive and is
little more than an adjunct to the negotiation process.87 Mediation is probably the
most used and least studied dispute resolution procedure. This is because the mediation
process is relatively informal and unstructured, reflecting the personal style of the medi-
ator, the preferences of the union and employer representatives, and the intensity of the
dispute. 88 The key ingredient for mediator effectiveness is experience, with related
mediator training and knowledge. Effective mediators need tenacity for example, not
taking no for an answer and they need to take an active role in the process by such
actions as pressuring the parties with successive proposals for compromise rather than
simply relaying messages back and forth to the parties.89

Mediation tends to be more successful when the parties are unsure of themselves
or have personality conflicts. Mediation is generally less effective when followed by
fact-finding, but more effective when followed immediately by arbitration.90

Fact-Finding and Arbitration of Interest Disputes
Fact-finding and arbitration are separate impasse-resolution procedures; however,
they are discussed and assessed jointly because of their many similarities. Both
involve a third-party neutral who conducts a quasi-judicial hearing to assess union s
and management s collective bargaining positions on issues in dispute. Those neu-
trals who are generally accepted to serve as fact-finders or arbitrators are likely to
have much labor relations experience, as evidenced by their membership in the
National Academy of Arbitrators, and are more likely than not to be attorneys
trained in the evidentiary process.91

Fact-finders have multiple roles in the impasse-resolution process. A fact-finder
must interpret data and other information presented and recommend settlement posi-
tions to the parties, and in some jurisdictions, to the legislators.92 Fact-finding is

Exhibit 13.5
States with Legislation for
Interest Arbitration Covering
Some Public Employees

Alaska Massachusetts New Mexico Vermont

Colorado Michigan New York** Washington

Connecticut Minnesota Ohio** Wisconsin**

Delaware Montana Oklahoma

Hawaii Nebraska* Oregon

Iowa Nevada Pennsylvania

Maine New Jersey Rhode Island

*Special Master
**Fact-Finding

SOURCE: Committee Report of the Public Employment Disputes Settlement Committee of the National Academy of Arbitrators,
May 9, 2007, Joyce M. Najita, Chair Updated by Amy Moor Gaylord and Franczek Radelet, P.C., Interest Arbitration Pros, cons,
and How Tos, ABA 2010 Annual Meeting, San Francisco, CA, August 5 10, 2010.

678 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

intended to encourage a voluntary settlement by the parties by providing an objective
assessment of the dispute from a credible and neutral third party. However, the fact-
finder s recommendations are not binding on the bargaining parties.

Unlike mediation or fact-finding, arbitration entails a binding decision by a third-
party neutral who settles the negotiation impasse. The degree of flexibility an arbitrator
has in resolving the bargaining dispute depends on the procedure adopted by the parties
or mandated by applicable law. Conventional arbitration permits the arbitrator to decide
the most appropriate outcome based on the evidence presented. The arbitrator s discre-
tion is more restricted under a final-offer arbitration (FOA) procedure, which typically
has two variations. Total package selection FOA requires the arbitrator to choose either
the union s or employer s final offer covering all disputed issues. Issue-by-issue FOA still
requires the arbitrator to select either the union s or employer s final offer, but on an
issue-by-issue basis. In both cases, FOA means the arbitrator will select only one party s
final offer; there is no compromise or splitting the difference.93

The theory is that if the arbitrator will be selecting the most reasonable position of
one of the parties, the parties positions would converge. As the date of the hearing
approaches, theoretically the positions will converge and a settlement will be reached.

Fact-finding and arbitration are successful in resolving impasses because these pro-
cedures provide deadlines for the parties to resolve their differences, provide fresh
knowledgeable perspectives, and give negotiators political cover because negotiators
can blame the neutral for the eventual settlement. Politicians sometimes criticize fact-
finders or arbitrators, calling them outsiders or limousine liberals who have no
accountability to taxpayers they make the decisions and then leave town. Fact-finding
also provides a proposed solution that the parties can then accept without appearing
weak; even if they do not accept it, the proposal forms the basis for discussion and mod-
ification. The mere possibility that these procedures might be used to determine negotia-
tion outcomes is intended to pressure the negotiators to resolve their differences
voluntarily for fear that the third-party neutral might not understand or agree with
their bargaining proposals.

These techniques can also carry some disadvantages. For example, the fact-finder s
recommendation and arbitrator s decision may lead to settlement terms but may not
resolve the genuine union management differences underlying the interest dispute.
These techniques might cause the parties to cement their respective positions during
negotiations because negotiators believe they can get a better deal from the arbitrator
or more favorable recommendations from the fact-finder. Instead of earnestly attempt-
ing to resolve differences during negotiations, negotiators focus their time and
thoughts on preparing for the fact-finder or arbitrator, thus producing a so-called
chilling effect on the bargaining process. Rather than being viewed as a risk to be
avoided, fact-finding or arbitration simply becomes another bargaining strategy. If
either party believes that it could get a better settlement from an arbitrator than
from negotiation, an incentive exists to maintain excessive demands in hopes that the
arbitrator may split the difference and make a favorable award. When one side acts
in such a manner, the other side has no realistic choice but to respond similarly, wid-
ening the gap between the parties and chilling the prospects for reaching a voluntary
settlement.94

Nearly all public-sector laws have established criteria for arbitrator decision making
on wages and benefits. The most common are:

Wage rates of comparable employees
Changes in costs of living
Comparable benefits such as insurance, pensions, and so on

CHAPTER 13 Labor Relations in the Public Sector 679

Comparisons of peculiarities such as hazards of employment; physical, mental, and
educational qualifications; job training; and skills involved
Employer s ability to pay
Interest and welfare of the public

Some statutes require that the arbitrator give emphasis to the employer s ability to
pay. For example, in today s economic climate, questions arise about financial distress
of the government employer, consequences of the arbitrator s decision in terms of an
increase in public expenses, tax increases versus employee layoffs, reduction in services,
postponement of building projects, compliance with federal mandates, and so on.
When no criteria are included in the statute, arbitrators tend to give comparability
the greatest weight. The comparability criteria can become complex when the arbitra-
tor has to consider corporation tax schedules, population shifts, and multiple economic
indices.

When the advocates make their presentations to the arbitrator(s), they should first
present evidence that meets the applicable statutory criteria in the relevant jurisdiction.
Second, they should try to make it as easy as possible for the arbitrator(s) to understand
and incorporate their evidence into the final decision. To accomplish a satisfactory result,
advocates frequently use charts, graphs, and compilations of numbers in a manner that
can be easily understood and analyzed.

After the arbitrator renders the decision, it is common for the decision to be
reviewed by the courts. In fact, many public-sector statutes require the arbitrator(s)
to specifically address the criteria in their decisions. Failure to do so may result in the
decision being overturned by a judge.95

Research into this aspect of interest arbitration has produced mixed results. Analysis
of arbitral decisions involving police impasses revealed that some management officials
are reluctant to reveal their final offer before arbitration because they fear that the arbi-
trator will use management s final offer as a starting point in his or her decisions.96 Yet
this concern appears less relevant in a study of several arbitration awards in firefighters
interest disputes, for which the majority of arbitrators took an intermediate or compro-
mise stance on negotiation issues, such as wages and clothing allowances, but did
not compromise on other issues, selecting either management s or the union s final
position.97

Another concern about public-sector interest arbitration is that the mere existence of
impasse-resolution procedures could create a so-called narcotic effect. Once the parties
start using fact-finding or interest arbitration procedures, they may become increasingly
reliant on them in subsequent negotiations. Research studies find that this frequently
expressed concern is not warranted, and the narcotic effect tends to dissipate over time
in subsequent contract negotiations.98

Effectiveness of Fact-Finding and Arbitration of Interest Disputes
Many variables influence the bargaining process and outcomes. In a study of 97 fire-
fighter and 326 police bargaining units in the state of New York between 1995 and
2007, researchers concluded:

The New York State police and firefighter arbitration has performed well over the
30-year history.
Strikes have been avoided.
The reliance on arbitration to decide impasses has declined considerably.
Only a small number of bargaining units have developed a dependence on arbitra-
tion (no narcotic effect).

680 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

In recent years, there is no evidence that the availability of arbitration has had a
chilling effect on negotiations, although studies during the 1970s and 1980s showed
a chilling effect.
The use of arbitration has not led to an escalation of wages above those wage levels
negotiated by police officers and firefighters in other states that do not have legisla-
tion making arbitration available to resolve negotiations impasses
The use of tripartite arbitration panels and use of clearly defined decision-making
criteria have avoided bad or unworkable arbitrator awards.99

Assessing fact-finding is particularly difficult. Its effectiveness does not hinge on the
fact-finder s ability; the fact-finder is presented facts by the parties in hopes that he or
she will agree with their respective positions. The success of such a procedure is based
on the assumption that the fact-finder s report will structure public opinion, which will
in turn place pressure on the parties to resolve their differences in accord with published
recommendations. Thus far, no concrete evidence shows that public pressure has notice-
ably affected public-sector management and union officials. The views of the participants
themselves appear to be divided, with time delays and disagreement over the weight
attached by the fact-finder to factors, such as wage comparability being among the criti-
cisms voiced.100

In general, participants, as well as analysts, appear to be satisfied with interest arbi-
tration procedures used in the public sector. Compulsory arbitration of interest disputes
does reduce the occurrence of public-sector strikes.101 Voluntary settlement rates of
interest disputes tend to be highest when the parties have a legal right to strike (94.7
percent of cases), followed by the availability of FOA issue-by-issue selection (87 per-
cent), FOA total package selection (84.1 percent), and conventional arbitration (75.7 per-
cent).102 Compulsory interest arbitration also appears to have a small positive effect on
wage and benefit improvements for affected employees.

Interest arbitrators view their role in the arbitral process as continuing the existing
nature of the parties relationship, which has stemmed from the bilateral process of
negotiations. Arbitrators believe that any major deviations from this relationship must
come from the parties, not the arbitrator.103 In wage disputes using FOA, evidence sug-
gests that arbitrators are heavily influenced by wage settlements in comparable units of
government. As a result, national unions discourage their local union affiliates from set-
tling for a wage less than the targeted statewide settlement terms.104

Even though some management officials may fear arbitration, arbitrators have not
stripped them of their rights and authority. Interest arbitration settlements have not
proven to be significantly different from outcomes reached through voluntary negotia-
tions under similar circumstances. The public, in general, has accepted the use of alter-
native dispute resolution procedures to avoid public-sector strikes, and most
significantly, arbitration has been increasingly adopted as an impasse-resolution proce-
dure throughout the public sector.105

A derivative of FOA, called Night Baseball Arbitration, has been proposed.106

(See Chapter 9)

Referendum
One final impasse-resolution procedure that is sometimes used to resolve public-sector
interest disputes is to submit unresolved issues to a taxpayer referendum or vote. The
following item, for example, might be placed on a ballot: Do you approve of granting
a wage increase of X cents per hour to our police officers at an estimated additional
annual cost to property taxpayers of $Y million? 107 In 2011, Wisconsin legislature

CHAPTER 13 Labor Relations in the Public Sector 681

passed a law that included a provision that any pay raise to state employees would be
limited to the consumer price index unless the public approved the greater raise in a vote
referendum.

One advantage of the referendum procedure is to avoid having an outsider (fact-
finder or arbitrator) determine the cost of a negotiated settlement. Citizens often com-
plain less if the union s settlement is achieved in a democratic manner. Similarly, a
union s integrity is at stake if it refuses to abide by the will of the public. Yet this pro-
cedure could turn collective bargaining into a public relations campaign directed at a
body of individuals (citizens) largely unfamiliar with labor relations complexities. This
procedure has no precedent in private-sector labor relations because no practical com-
pany would agree to submit labor agreement proposals to stockholders or consumers for
approval.

Referendum, or direct submission to the electorate for final and binding settlement
of interest disputes, has been used in several Texas cities. Employees have won over two-
thirds of the elections that involved civil service and bonus issues, but lost 56.6 percent
when the issue was pay parity, such as raising the firefighter pay scale to the level of the
police.108 Use of a referendum has the potential advantage of motivating citizens to take
an active interest in the matter of public employment.109 However, in cities where the
referendum method has been used, the assessment of this approach has not been favor-
able. The electorate has little understanding of the law and the issues, and it is highly
susceptible to propaganda campaigns by both parties.110

In conclusion, there are many varieties and combinations of public impasse-
resolution procedures. Yet, the objectives remain the same: to avoid strikes, to minimize
dependence on outsiders, to maximize good-faith bargaining between the parties, to pro-
tect the public interest, and to build labor management commitment to accountability
and mutual problem solving.

Conclusions on Public-Sector Labor Relations

There is a stereotype that government employees are overpaid.
The most convincing evidence from authorities reveals that state and local govern-
ment employees are not overpaid. In fact, their research shows that public-sector
employees are somewhat under-compensated about five percent when compared to
their private-sector counterparts. When compared in accordance with the various
skill groups, lower skilled, less educated public sector employees have significant
wage and total compensation advantages over their private-sector counterparts;
however, the higher-skilled, more educated public-sector employees have significant
wage and total compensation disadvantages relative to their private-sector
counterparts.111

Health care cost increases are equally problematic and challenging in the private and
public sectors. Retiree health care costs are a more serious problem in the public
sector because many private-sector firms have already cut back on these benefits or
shifted a higher portion of the costs of retiree health care to employees and retirees.
The specific levels of costs and the options for addressing them require state-specific
fact gathering and offer an opportunity for public employers and public employee
unions to pursue statewide and/or coalition bargaining as others have done in
response to past state- and municipal-level financial crises.
Public-sector pension funding shortfalls vary considerably across states. The princi-
pal cause of such pension underfunding is the investment losses that occurred dur-
ing the recent recession. A secondary cause is the failure of some governments to

682 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

make annual payments to cover the normal costs of pensions. This secondary
cause can be addressed by requiring governments to make promised annual pension
fund payments. Public employers and employee unions also need to address and,
where appropriate, reform certain pension-design and administrative features, such
as those that increase pension benefits based on an employee s final years or year of
service. There are risks that putative short-term savings in pension costs achieved by
shifting to 401(k) and other defined-contribution plans covering public employees
risk will impose additional, hidden costs on the public and are based on faulty
assessment of the reasons for the public-sector pension shortfall.
Dispute resolution procedures (i.e., mediation, fact-finding, and arbitration) vari-
ously included in public-sector collective bargaining laws have worked well in terms
of reducing the incidence of public employee strikes and achieving equitable out-
comes. In certain instances, however, the time required to reach arbitrated settle-
ments of public-sector labor disputes has increased to the point where it imposes
hardships on employees and excessive uncertainty on public employers and citizens.
Consideration should therefore be given to setting time limits on arbitration deci-
sions or otherwise reforming the arbitration process.
The rate of reliance on arbitration has declined from between 10 and 30 percent in
the early years of public-sector bargaining to below 10 percent in states allowing
interest arbitration.
Evidence and examples drawn from the public and private sectors show that collec-
tive bargaining and workplace innovations based on a mutual-interest, joint
problem-solving approach can produce positive outcomes for employers, employees,
customers, and citizens, especially during fiscal crisis. Adopting, sustaining and dif-
fusing such innovations require vigorous advocacy by and support from leadership
champions; policy makers can be such champions.
Wages of police and firefighters covered by arbitration statutes are not significantly
different from those in states in which arbitration is not allowed (mediation and/or
fact-finding are allowed) and wage growth for police and firefighters in states that
allow for arbitration do not differ from wage growth in those states without arbi-
tration. Arbitrators tend to be very conservative and follow the norms and standards
established by the parties. On the negative side, the time required to complete
negotiations when arbitration is invoked has risen over the years.
Unions have responded positively to financial crises. Unions in New York City
agreed to multiyear wage freezes, fringe benefits givebacks, productivity enhance-
ments, and deferrals and cuts to help avoid bankruptcy. In San Francisco, major
pension reforms were negotiated. In Boston, unions agreed to major givebacks in
health care and pension plans. In the state of Connecticut, benefit and education
reform were agreed to in return for employment security guarantees. In multiple
states, school administrators and local teacher unions focused on school improve-
ment, student achievement, and teacher quality.112

Labor relations experts do not predict that, despite severe pressures, public-sector
labor relations will be transformed as the private sector in the United States. The
economic pressures, international competition, and noneconomic pressures, a
growing, more sophisticated nonunion sector, which induced fundamental change in
the private sector have not occurred in the public sector given the inherent local and
service nature of public sector.113

There are four primary factors that have the potential to produce pressures on public-
sector labor relations: (1) public attitudes toward public-sector unions and collective

CHAPTER 13 Labor Relations in the Public Sector 683

bargaining. As yet, there are no signs of widespread support for the elimination of public
employee union rights, except in selected areas; (2) there are no signs of significant
declines in revenue available to governments, which could seriously affect public-sector
employees; (3) the condition of public pensions could influence public attitudes toward
public-sector unions and public-sector collective bargaining when and if there is evidence
the pension liabilities and public-sector collective bargaining are linked; and (4) concern
about the quality of education and the role of teacher unions in meeting the challenges
of cost savings, quality improvements, and resistance to change.114

Challenges and Opportunities for Public-Sector Unions
Although the public-sector union density has been above 35 percent for over 20 years,
public-sector unions must be conscious of the external and internal influences that
could affect their strength and stability. Public-sector unions are presented with many
challenges and opportunities.

Privatizing of public services. Political candidates and elected officials who advocate
privatization usually argue for cost savings; however, beneath the surface, they are
attempting to do away with jobs held by union members. Unions will have to chal-
lenge these approaches and promote the value of public services reaching out to
political leaders who embrace that appeal.
Extending bargaining rights by law, executive order, or municipal ordinance to the
dozen-plus states that do not have legislation that grants rights to public employees
to join unions and to bargain collectively. Although over the last few years there
have been bills in Congress to establish minimum standards to extend employee
rights to join unions and to bargain collectively for all state and local government
employees, no law has been passed. Thus, unions must continue their political
efforts at every level.
Unionizing the unrepresented professionals who make over one-third of government
jobs. Organizing campaigns will increasingly rely on the Internet and Web-based
technologies because nearly all of the professional employees have computers at their
workstations. In addition, unions will need to experiment with alternative forms of
representation, such as associate memberships, minority unions, and legal assistance.
Moving beyond the traditional adversarial approaches. Because public-sector
employees and managers share a common commitment to serve the public, they
want to secure and defend the missions of their agencies. Their common ground
creates opportunities for interest-based bargaining, labor management partnerships,
self-directed work teams, labor management commitments, and full partnerships.
Seeking new approaches and subjects for bargaining. Unions and management must
become innovative in their negotiations. The parties might negotiate evergreen
contracts, which have no fixed expiration date so the parties are allowed to modify
their collective bargaining agreements at any time in order to keep pace with tech-
nological changes and conditions. Subjects such as quality of work life, family and
work life, and telecommuting create opportunities to address the contemporary
working lives of employees.
Recruiting a new cadre of leaders. At all levels of unions, those experienced leaders
who helped build their organizations in the 1960s and 1970s are reaching retirement
age. Unions will have to devote more attention to leadership training and manage-
ment skills in the context of union values. Unions will need a more diverse set of

684 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

leaders who will reflect a membership that is diverse occupationally, ethnically, and
chronologically.
Public employee unions challenges will be both economic and political. Govern-
ments at all levels are experiencing large deficits, which will limit opportunities for
future growth in public employment. States resort to layoffs to trim their budgets.
Within these limits, all government entities will have to find ways to fund their
obligated health care and pension costs. The ability of public employee unions to
protect and expand employment through political influence will depend on voting
numbers and lobbying efforts, which are mainly dependent on the efforts and vol-
untary donations from the rank-and-file members.
At the federal level, labor management relations in the nonpostal sector took a
sharp 180-degree turn during the administration of President George W. Bush.
Soon after taking office, President Bush rescinded the Labor Management Partner-
ships established by President Clinton. President Bush s Director of Transportation
Security Administration stripped employees of their collective bargaining rights, and
President Bush removed employees of the Bureau of Alcohol, Tobacco, Firearms,
and Explosives from protection under the CSRA. President Obama created
Labor Management Relations Forums that required labor and management to
work together prior to decisions. The Federal Labor Relations Authority and
Transportation Security Administration have allowed TSA employees to choose to
be represented by a union for limited collective bargaining purposes. The challenge
is whether both management and labor can make these efforts successful.115

Summary
Public employee unions over the past 50 years have
grown to represent a majority of employees in educa-
tion, police, and fire protection in state and local gov-
ernments and a significant proportion of workers in
the federal sector. Public employers and employees
are under pressure to deliver an increasing variety of
public services in the most cost-efficient and timely
manner possible. Concepts familiar to private-sector
labor relations over the past 20 years, such as down-
sizing, cost reduction, outsourcing, and productivity
improvement, have made their way into the bargaining
reality of public-sector labor relations as well.

Most states have one or more comprehensive laws
regulating state and local public-sector labor relations.
Such legislation typically specifies the administrative
setup, union recognition procedure, bargaining rights,
impasse procedures, unfair labor practices, and strike
provisions applicable to covered employees. Facing
budget deficits and serious shortfalls in meeting pen-
sion and health care costs obligations, states and
municipalities are looking for ways to meet their obli-
gations, including reducing or eliminating public-sector
employees bargaining rights.

The CSRA of 1978 regulates federal employee
labor relations. The administrative structure under the
CSRA includes the Federal Labor Relations Authority,
the General Counsel, and the Federal Service Impasse
Panel. Within this framework, the parties attempt to
negotiate and administer labor agreements covering
mandatory and permissible bargaining subjects. Also
available for assistance are the Federal Mediation and
Conciliation Service, labor arbitrators, and fact-finders
who provide important dispute resolution services for
the parties.

Public- and private-sector labor relations differ in
several ways: (1) by its very nature, public service dif-
fers from private-sector services economically and in its
demand characteristics; (2) the effect of the budget on
bargaining processes differs; (3) the bargaining struc-
ture differs, affecting decision-making processes;
(4) negotiable issues and bargaining tactics differ; and (5)
the right to strike is usually prohibited by law. Public- and
private-sector similarities include the role of personalities
and skills of negotiators and the interplay of bargaining
power model variables, such as public opinion, political
support, and various forms of job actions.

CHAPTER 13 Labor Relations in the Public Sector 685

Since 2001, Congress has passed a series of laws that
have affected labor management relations in the federal
sector. In 2001, the Aviation and Transportation Act
created the Transportation Security Administration
(TSA), which federalized airport screeners and gave the
TSA the same personnel flexibilities afforded the Federal
Aviation Administration. In 1996 as part of the Depart-
ment of Transportation appropriations, Congress had
directed the FAA to negotiate labor management rela-
tions reform, which provided for salary negotiations
with the air traffic controllers union. In 2011, the Fed-
eral Labor Relations Authority and Transportation Secu-
rity Administration decided to allow TSA employees to
choose whether they want to be represented by a union
for limited collective bargaining purposes. In 2011, the
TSA employers chose the AFGE.

Impasse-resolution procedures are often estab-
lished as a substitute for public employees lack of
a legal right to strike and include mediation, fact-
finding, arbitration, and various combinations of
these. Such terms as chilling effect and narcotic effect
have become common in assessing the effectiveness
of these procedures. Public employee unions do
appear to have had a positive impact on raising
wage and benefit levels for public employees and in
garnering a larger proportion of public-sector bud-
gets to address employee interests. Although public-
sector union membership growth rates are likely to
moderate in future years, public employee unions
will continue to play an important role in determin-
ing labor relations policy and outcomes in the public
sector.

Key Terms
Federal Labor Relations Authority

(FLRA), p. 657
Federal Service Impasse Panel (FSIP),

p. 659
Merit System Protection Board

(MSPB), p. 659

exclusive recognition, p. 660
work-to-rule, p. 667
sovereignty doctrine, p. 671
Multilateral bargaining, p. 673
end-run bargaining, p. 673
sunshine laws, p. 674

mediation, p. 677
fact-finding, p. 677
interest arbitration, p. 677
chilling effect, p. 679
narcotic effect, p. 680

Discussion Questions

1. Think of a public organization with which you are
familiar. Explain how it differs from a private
company in terms of the following:

a. Nature of its service
b. Relationship between its budget and col-

lective bargaining processes
c. Bargaining structure and decision-making

processes
d. Negotiable issues and bargaining tactics
e. The right to strike

2. Using the same public organization as in question
1, discuss the similarities between collective bar-
gaining in this organization and a typical negoti-
ation between a private company and its union.

3. Explain why some states do and other states do
not have a public-sector bargaining law or laws
that cover some public employees but not others.

4. Describe the different types of impasse-
resolution procedures used in the public

sector, and discuss the relative effectiveness of
each.

5. What are the advantages of Night Baseball arbi-
tration over conventional interest arbitration and
FOA arbitration?

6. What are some possible advantages or disadvantages
of expanding the scope of bargaining in the federal
sector to include issues such as wages and benefits?

7. Why does the federal government have multiple
labor management relations models?

8. Should public employees have the same right to
strike as private-sector employees are granted
under the Labor Management Relations Act?
Why or why not?

9. Should all public employees have a right to submit
interest disputes to final and binding arbitration
in exchange for giving up the right to engage in
legal strike activity? Why or why not?

686 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Exploring the Web

Labor Relations in the Public Sector

1. Association of Labor Relations Agencies (ALRA).
Check out the Web site http://www.alra.org/. Read the
newsletter, the ALRA Advisor, for the latest in current
activities of neutrals in the United States and Canada.

2. Federal-Sector Labor Relations Legislation. The
Federal Labor Relations Authority is an independent
agency responsible for administering the labor
management relations program for federal nonpos-
tal employees. Go to the Web site of the Authority
and find the section that describes the purpose of
the Federal Service Impasses Panel. Who are the
members of the panel? Look for FLRA decisions.

3. Labor Relations and Teachers. The Education Pol-
icy Institute in Washington, D.C., provides links to
information on teacher unions. What are some of
the differences between the National Education
Association (NEA) and the American Federation
of Teachers (AFT)?

4. Bureau of Labor Statistics on Work Stoppages in
the Public Sector. The BLS reports major work
stoppages, which include worker-initiated strikes
and lockouts by their employers involving 1,000
workers or more. What percentage of the total work
stoppages in 2010 occurred in the public sector?

References
1. David Lewin, Peter Feuille, and Thomas Kochan,

Public-Sector Labor Relations: An Analysis and
Readings (2nd ed.) (Glen Ridge, NJ: Thomas
Horton & Daughters, 1988), pp. 1 5.

2. Dale Belman, Morley Gunderson, and Douglas
Hyatt, Public-Sector Employment Relations
in Transition, in Public-Sector Employment,
ed. D. Belman, M. Gunderson, and D. Hyatt
(Madison, WI: Industrial Relations Research
Association, 1996), pp. 1 9.

3. Martin H. Malin, The Paradox of Public-Sector
Labor Law, Indiana Law Journal, 4(4), 2009,
p. 1369 at http://www.bls.gov/news.release/
union2.nro.htm.

4. Terry Thomason and John F. Burton, Jr.,
Unionization Trends and Labor Management

Cooperation in the Public Sector, in Going
Public: The Role of Labor Management Relations
in Delivering Quality Government Services,
ed. Jonathan Brock and David B. Lipsky
(Champaign, IL: Industrial Relations Research
Association, 2003), pp. 69 83.

5. Service Employees International Union,
SEIU s Public Service Employees, 2002, pp.

1 2 at http://www.sein.org/public_employee/
abtpubemp.html.

6. James L. Stern, Unionism in the Public Sector,
in Public-Sector Bargaining, 2nd edn. Benjamin
Aaron, Joyce M. Najita, and James L. Stern

(Washington, D.C.: The Bureau of National
Affairs, 1988), pp. 66 67; Marick F. Masters and
Robert S. Atkin, Reforming Federal Sector Labor
Relations: Recommendations of President Clin-
ton s National Partnership Council, Labor Law
Journal, 45, June 1994, pp. 353 354.

7. http://www.bls.gov/news.release/union2.t03.htm.
8. James T. Bennett and Marick F. Masters, The

Future of Public-Sector Labor Management
Relations, Journal of Labor Research, 24, Fall
2003, pp. 537 538.

9. Heejoon Park, State Legislation of Public-Sector
Collective Bargaining: An Event History Analy-
sis, in Proceedings of the Fiftieth Annual Meeting,
Industrial Relations Research Association
(Madison, WI: Industrial Relations Research
Association, 1998), pp. 23 32; Susan Schwochau,
Interest Group Tactics and Public-Sector Labor

Relations Policy, Journal of Labor Research, 15,
Fall 1994, pp. 331 354.

10. Jeffrey S. Zax and Casey Ichniowski, Bargaining
Laws and Unionization in the Local Public Sec-
tor, Industrial and Labor Relations Review, 43,
April 1990, pp. 447 463; Greg Hundley, Who
Joins Unions in the Public Sector? The Effect of
Individual Characteristics and the Law, Journal
of Labor Research, 9, Fall 1988, pp. 301 306;
Richard B. Freeman and Casey Ichniowski,
Introduction: The Public-Sector Look of

CHAPTER 13 Labor Relations in the Public Sector 687

American Unionism, in When Public-Sector
Workers Unionize, ed. by Richard B. Freeman and
Casey Ichniowski (Chicago: The University of
Chicago Press, 1988), p. 3.

11. Timothy D. Chandler and Rafael Gely, Card
Check Laws and Public-Sector Union Member-
ship in the States, Labor Studies Journal, 6(4),
2011, pp. 445 457.

12. John Lund and Cheryl L. Maranto, Public-Sector
Labor Law: An Update, in Public-Sector
Employment in a Time of Transition, ed. Dale
Belman, Morley Gunderson, and Douglas Hyatt
(Madison, WI.: Industrial Relations Research
Association, 1996), p. 48.

13. County Sanitation District No. 2 of L.A. County v.
L.A. County Employees Association, 699 P.2d 835
(1985); Raymond L. Hogler, Public-Sector Strikes:
Employee Rights, Union Responsibilities, and
Employer Prerogatives (Alexandria, VA: Interna-
tional Personnel Management Association, 1988),
pp. 5 6.

14. Robert Hebdon, Public-Sector Dispute Resolu-
tion in Transition, in Public-Sector Employment
in a Time of Transition, ed. Dale Belman, Morley
Gunderson, and Douglas Hyatt (Madison, WI:
Industrial Relations Research Association, 1996),
pp. 87 92.

15. Charles J. Coleman, Federal Sector Labor Rela-
tions: A Reevaluation of Policies, Journal of
Collective Negotiations in the Public-Sector, 16,
1987, pp. 37 52.

16. Steven Greenhouse, States Aim Ax at Health
Cost of Retirement, New York Times, February
13, 2011, pp. A1 and A3.

17. Dean Baker, The Origins and Severity of the Public
Pension Crisis, (Washington, D.C.: Center for
Economic Policy Research, February 2011),
pp. 1 10.

18. Joseph E. Slater, Public Sector Labor in the Age
of Obama, Indiana Law Journal, 89(1) (Winter
2012), pp. 190 229. Also, see, Joseph E. Slater,
The Assault on Public Sector Collective Bargaining:
Real Harms and Imaginary Benefits, Washington,
D.C.: American Constitution Society for Law and
Policy, June 2011, pp. 1 18; Also, see, Raymond
Hogler and Christine Henle, The Attack on
Public Sector Unions in the United States: How
Regional Culture Influences Legal Policy, Labor
Law Journal, 62 (Fall 2011), pp. 136 144.

19. A Look at States Facing Budget Deficits in 2015,
http://www.cultistate.com/insider/2015; U.S.
Public Pension Gap Widened to Nearly $1 Tril-
lion in FY 12 , http://www.reuters.com/article/
2014/04/01usa-pensions-pew.

20. Monica Davey and Steven Greenhouse, Wisconsin
May Take an Ax to State Workers Benefits and
Their Unions, New York Times, http://www.
nytimes.com/2011/02/12/us/12unions.html.

21. Steven Greenhouse, A Watershed Moment for
Public-Sector Unions, New York Times, February
19, 2011, p. A12.

22. Patricia Cohen, Public-Sector Jobs Vanish, and
Blacks Take Blow. The New York Times, May 25,
2015, p. A1 and B5.

23. George W. Bohlander, The Federal Service
Impasse Panel: A Ten-Year Review and Analysis,
Journal of Collective Negotiations in the Public
Sector, 24, 1995, pp. 194 195.

24. Ibid.
25. Charles G. Smith, Winning and Losing in Federal

Sector Dispute Resolution, Public Personnel
Management, 23, Summer 1994, pp. 301 319.

26. Peter Feuille, Unionism in the Public Sector: The
Joy of Protected Markets, Journal of Labor
Research, 12, Fall 1991, pp. 351 353; and Jill
Kriesky, Trends in Dispute Resolution in the
Public Sector, in Employment Dispute Resolution
and Worker Rights in a Changing Workplace, ed.
by Adrienne E. Eaton and Jeffrey H. Keefe
(Champaign, IL: Industrial Relations Research
Association, 1999), pp. 249 250.

27. Marick F. Masters, Robert Albright, and Ray
Gibney, Linking Labor-Management Relations to
Improved Agency Performance, Public Manager,
Spring 2010, pp. 69 71 at http://www.thepublic
manager.org/docs_articles/current/Vol39,2010/Vol39,
Issue01/Vol39N1_ LinkingLaborManagement_
MastersAlbright Gibney.pdf.

28. Marick F. Masters, Christina Sickles Merchant,
and Robert Tobias, Engaging Federal Employees
through Their Union Representatives to
Improve Agency Performance, February 2, 2010,
pp. 17 31 at http://www.american.edu/spa/key/
upload/white-paper.

29. Marick F. Masters and Robert R Albright,
Labor Relations in the Department of Homeland

Security: Competing and Perspectives and Future
Possibilities, Labor Law Journal 54, 2003, pp. 66 83.

688 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

30. http://www.cpms.osd.mil/nsps/lr.html; www.opm.
opm.gov. See: Douglas A. Brook and Cynthia L.
King, Civil Service Reform as National Security: The
Homeland Security Act of 2002, Public Adminis-
tration Review, 67, May June 2007, pp. 399 407.

31. http://www.thenewsamerican.com/usnews/
politics.

32. Richard W. Hurd and Jill K. Kriesky with reply by
Herbert R Northrup, The Rise and Demise of
PATCO, Industrial and Labor Relations Review
40, October 1986, pp. 115 127; Herbert R.
Northrup, The Rise and Demise of PATCO,
Industrial and Labor Relations Review, 37,
January 1984, pp. 167 184.

33. http://www.apwu.org/; http://www.nalca.org/;
http://www.npmhu.org; http://www.nlrca.org/.

34. Kevin R. Kosar, The U.S. Postal Service s
Financial Condition: Overview and Issues for
Congress, Congressional Research Service,
January 27, 2012, pp. 1 10; David Leonard,
It s Amazon s World: The USPS Just Delivers

It, Bloomberg Businessweek, July 30, 2015, p. 27.
35. Jennifer Levitz, Postal Service Eyes Closing

Thousands of Post Offices , Wall Street Journal,
p. A-1, A-14.

36. Tim Bornstein, Legacies of Local Government
Collective Bargaining in the 1970s, Labor Law
Journal, 31, March 1980, pp. 165 173.

37. Jack Fiorito and Lee P. Stepina, Explaining the
Unionism Gap: Public-Private-Sector Differences in
Preferences for Unionization, Journal of Labor
Research, 17, Summer 1996, pp. 463 478; Kate
Bronfenbrenner and Tom Juravich, Union Organiz-
ing in the Public Sector (Ithaca, NY: Cornell Uni-
versity Press, 1995); Lee A. Graf, Masoud Hemmasi,
Kenneth E. Newgreen, and Warren R. Nielsen,
Profiles of Those Who Support Collective Bargain-

ing in Institutions of Higher Learning and Why: An
Empirical Examination, Journal of Collective
Negotiations in the Public Sector, 23, 1994, p. 155.

38. Richard Freeman, Through Public-Sector Eyes:
Employee Attitudes toward Public-Sector Labor
Relations in the U.S., in Public-Sector Employ-
ment in a Time of Transition, ed. Dale Belman,
Morley Gunderson, and Douglas Hyatt (Madison,
WI: Industrial Relations Research Association,
1996), pp. 71 73.

39. These techniques were formulated in various
discussions with Paul Gerhart of Case Western
Reserve University.

40. Kevin M. O Brien, Compensation, Employment,
and the Political Activity of Public Employee
Unions, Journal of Labor Research, 13, Spring
1992, pp. 189 203; Michael Marmo, Public
Employee Unions: The Political Imperative,
Journal of Collective Negotiations in the Public
Sector, 4, 1975, p. 371.

41. Paul D. Staudohar, Quasi-strikes by Public
Employees, Journal of Collective Negotiations in
the Public-Sector, 3, Fall 1974, pp. 363 371.

42. Richard B. Freeman and Casey Ichniowski,
Introduction: The Public-Sector Look of Ameri-

can Unionism, in When Public-Sector Workers
Unionize, ed. Richard B. Freeman and Casey
Ichniowski (Chicago: The University of Chicago
Press, 1988), pp. 1 13.

43. John Lund and Cheryl L. Maranto, Public-Sector
Law: An Update, pp. 39 47.

44. http://www.lawmemo.com/sct/WEA/.
45. Michael Moskow, J. J. Loewenberg, and E. C.

Koziara, Collective Bargaining in Public
Employment (New York: Random House, 1970),
pp. 14 18; H. H. Wellington and R K Winter,
Jr., Structuring Collective Bargaining in Public
Employment, Yale Law Journal, 79, April 1970,
pp. 806 822.

46. Dale Belman, Morley Gunderson, and Douglas
Hyatt, Public-Sector Employment Relations in
Transition, in Public-Sector Employment in a
Time of Transition, ed. by D. Belman, M. Gun-
derson, and D. Hyatt (Madison, WI: Industrial
Relations Research Association, 1996), pp. 4 5.

47. Milton Derber, Ken Jennings, Ian McAndrew,
and Martin Wagner, Bargaining and Budget-
Making in Illinois Public Institutions, Industrial
and Labor Relations Review, 27, October 1973,
pp. 49 62; Kenneth M. Jennings, J. A. Smith,
and Earle C. Traynham, Jr., Budgetary Influences
on Bargaining in Mass Transit, Journal of
Collective Negotiations in the Public Sector, 6,
1977, pp. 333 339.

48. Michael Marmo, Public Employees: On-the-Job
Discipline for Off-the-Job Behavior, Arbitration
Journal, 40, June 1985, p. 23; Marvin Hill, Jr.,
and Donald Dawson, Discharge for Off-Duty
Misconduct in the Private and Public Sectors,
Arbitration Journal, 40, June 1985, pp. 24 33.

49. Kevin A. Banasik, Government Regulation of
Federal Employee Speech: United States v.
National Treasury Employees Union, 115 S.Ct.

CHAPTER 13 Labor Relations in the Public Sector 689

1003 (1993), Harvard Journal of Law and Public
Policy, 19, Fall 1995, pp. 200 209; David H.
Rosenbloom, Public Personnel Administration
and the Constitution: An Emergent Approach,
Public Administration Review, 35, February 1975,
pp. 52 59.

50. Bonnie G Bogue and Katherine J. Thomson,
Pocket Guide to Just Cause: Discipline and Dis
charge Arbitration (Berkeley, CA California
Public Employees Relations Program, Institute for
Research on Labor and Employment, University
of California, 2010), pp. 4 7.

51. Board of Regents v. Roth, 408 U.S. 564 (1972);
Perry v. Sindermann, 408 U.S. 593 (1972).

52. Cleveland Board of Education v. Loudermill, 470
U.S. 532 (1985).

53. Timothy D. Chandler and Timothy A. Judge,
Management Chief Negotiators, Bargaining

Strategies, and the Likelihood of Impasse in
Public-Sector Collective Bargaining, American
Review of Public Administration, 28, June 1998,
pp. 146 166.

54. Rafael Gely and Timothy D. Chandler,
Determinants of Management s Organizational

Structure in the Public Sector, Journal of Labor
Research, 14, Fall 1993, pp. 381 397.

55. Stephen L. Hayford, An Empirical Investigation
of the Public-Sector Supervisory Bargaining
Rights Issue, Labor Law Journal, 26, October
1975, pp. 641 652; Alan Balfour, Rights of Col-
lective Representation for Public-Sector Supervi-
sors, Journal of Collective Negotiations in the
Public Sector, 4, 1975, pp. 257 265; William H.
Holley, Jr., J. Boyd Scebra, and William Rector,
Perceptions of the Role of the Principal in Pro-

fessional Negotiations, Journal of Collective
Negotiations in the Public Sector, 5, 1976,
pp. 361 369.

56. Adrienne E. Eaton and Paula B. Voos, Wearing
Two Hats: The Unionization of Public-Sector
Supervisors, Going Public: The Role of Labor-
Management Relations in Delivering Quality
Government Services, ed. Jonathan Brock and
David B. Lipsky (Champaign, IL: Industrial
Relations Research Association, 2003),
pp. 295 309.

57. Louis V. Imundo, Jr., The Federal Government
Sovereignty and Its Effect on Labor-Management
Relations, Labor Law Journal, 26, March 1975,
pp. 145 152.

58. Milton Derber, Management Organization for
Collective Bargaining in the Public Sector, in
Public-Sector Bargaining, ed. Benjamin Aaron,
Joseph Grodin, and James Stern (Washington,
D.C.: Bureau of National Affairs, 1978),
pp. 80 117.

59. Timothy D. Chandler and Timothy A. Judge,
Management Chief Negotiators, Bargaining

Strategies, and the Likelihood of Impasse in
Public-Sector Collective Bargaining, Annual
Review of Public Administration, 28, June 1998,
pp. 160 161.

60. I. B. Helburn and N. B. Bennett, Public
Employee Bargaining and the Merit Principle,
Labor Law Journal, 23, October 1972, p. 619; I. B.
Helburn, The Scope of Bargaining in Public-
Sector Negotiations: Sovereignty Reviewed,
Journal of Collective Negotiations in the Public
Sector, 3, Spring 1974, pp. 147 166.

61. Richard C. Williams, Resolution of the Civil
Service-collective Bargaining Dilemma, Ameri-
can Review of Public Administration, 24, June
1994, pp. 149 160.

62. Paul F. Gerhart, The Scope of Bargaining in
Local Government Negotiations, Labor Law
Journal, 20, August 1969, pp. 545 552.

63. Marjorie Sarbaugh-Thompson, Bargaining over
Education Policy: Who Represents the Commu-
nity? Journal of Collective Negotiations in the
Public Sector, 26, 1997, pp. 223 245; Thomas A.
Kochan, A Theory of Multilateral Collective
Bargaining in City Governments, Industrial
and Labor Relations Review, 27, July 1974,
pp. 525 542.

64. Marick F. Masters, AFSCME as a Political
Union, Journal of Labor Research, 19, Spring
1998, pp. 313 349; Marick F. Masters and Robert
S. Atkin, Financial and Political Resources of Nine
Major Public-Sector Unions in the 1980s, Journal
of Labor Research, 17, Winter 1996, pp. 183 198;
Rafael Gely and Timothy D. Chandler, Protective
Service Unions Political Activities and
Departmental Expenditures, Journal of Labor
Research, 16, Spring 1995, pp. 171 185; Robert G.
Valletta, The Impact of Unionism on Municipal
Expenditures and Revenues, Indus trial and Labor
Relations Review, 42, April 1989, pp. 430 442.

65. Peter Feuille, Police Labor Relations and Multi-
lateralism, Journal of Collective Negotiations in
the Public Sector, 3, Summer 1974, p. 216.

690 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

66. Victor Gotbaum, Collective Bargaining and the
Union Leader, pp. 83 84.

67. Michael Marmo, Public Employee Collective
Bargaining: A Mass-Mediated Process, Journal of
Collective Negotiations in the Public Sector, 13,
1984, pp. 291 307.

68. Characteristics of Sunshine Laws in the 50
States, Chronicle of Higher Education, October
10, 1984, p. 18.

69. Kevin M. O Brien, The Impact of Sunshine Laws
on Police and Firefighter Bargaining Outcomes,
Applied Financial Economics, 5, December 1995,
pp. 425 432.

70. George W. Bohlander, Public-Sector Grievance
Arbitration: Structure and Administration,
Journal of Collective Negotiations in the Public
Sector, 21, 1992, pp. 282 283; Greg Stewart and
Jeanette A. Davy, An Empirical Examination of
Grievance Resolution and Filing Rates in the
Public and Private Sectors, Journal of Collective
Negotiations in the Public Sector, 21, 1992,
pp. 331 334.

71. Barry M. Rubin and Richard S. Rubin, Creeping
Legalism in Public-Sector Grievance Arbitration:
A National Perspective, Journal of Collective
Negotiation in the Public Sector, 30, 2003, pp. 3 12.

72. Debra J. Mesch and Olga Shamayeva, Arbitration
in Practice: A Profile of Public-Sector Arbitration
Cases, Public Personnel Management, 25, Spring
1996, pp. 119 132.

73. Michael J. Duane, To Grieve or Not to Grieve:
Why Reduce It to Writing? Public Personnel
Management, 20, Spring 1991, pp. 83 88.

74. Jill Kriesky, Trends in Dispute Resolution in the
Public Sector, in Employment Dispute Resolution
and Worker Rights in the Changing Workplace,
pp. 251 254.

75. Joseph I. Goldstein and Martin F. Payson, Alter-
nate Dispute Resolution of Employment Matters in
the Public Sector, Spectrum: The Journal of State
Government, 68, Fall 1995, pp. 36 42.

76. Michael H. Cimini, 1982 97 State and Local
Government Work Stoppages and Their Legal
Background, Compensation and Working Con-
ditions, 3, Fall 1998, pp. 32 34; John Lund and
Cheryl L. Maranto, Public-Sector Labor Law: An
Update, in Public-Sector Employment in a Time
of Transition, p. 30.

77. Dane M. Partridge, The Effect of Public Policy
on Strike Activity in the Public Sector, Journal of

Collective Negotiations in the Public Sector, 19,
1990, pp. 87 94; Robert E. Doherty, Trends in
Strikes and Interest Arbitration in the Public
Sector, Labor Law Journal, 37, August 1986,
pp. 473 475; Craig Olson, Strikes, Strike Penal
ties, and Arbitration in Six States, Industrial and
Labor Relations Review, 39, July 1986, p. 539.

78. Crime Rate Is Same Despite Police Strike,
Miami Herald, July 20, 1975, p. 15-A.

79. Paul D. Staudohar, Reappraisal of the Right to
Strike in California, Journal of Collective Nego-
tiations in the Public Sector, 15, 1986, p. 91.

80. Theodore Kheel, Resolving Deadlocks without
Banning Strikes, Monthly Labor Review, 91,
July 1969, pp. 62 63.

81. Michael H. Cimini, 1982-97 State and Local
Government Work Stoppages and Their Legal
Background, p. 34.

82. William Walsh and Sheila Vicars-Duncan,
Disciplining Public School Employees for Off-

Duty (Mis)conduct: A View for Arbitration
Decisions, Journal of Collective Negotiations in
the Public Sector, 30, 2005, pp. 329 336; Helen
LeVan, Arbitration of Discipline in the Public
Sector: Case Characteristics and Party Behavior
Predicting Case Outcomes, Journal of Collective
Bargaining Negotiations in the Public Sector,
31(3), 2007, pp. 199 212.

83. U.S. Department of Labor, Labor-Management
Services Administration, Summary of Public-
Sector Labor Relations Policies: 1976 (Washing
ton, D.C.: Government Printing Office, 1976),
pp. 1 126.

84. Mark D. Karper, Fact Finding in Public
Employment: Promise or Illusion, Revisited,
Journal of Collective Negotiations in the Public
Sector, 23, 1994, pp. 288 296.

85. John Lund and Cheryl L. Marnto, Public-Sector
Labor Law: An Update, in Public-Sector
Employment in a Time of Transition, 31(48),
pp. 50 54.

86. Committee Report of the Public Employment
Disputes Settlement Committee of the National
Academy of Arbitrators, May 9, 2007, Joyce M.
Najita, Chair. Updated by Amy Moor Gaylord
and Franczek Radelet, P.C., Interest Arbitra-
tionPros, Cons, and How Tos, ABA 2010 Annual
Meeting, San Francisco, CA, August 5 10, 2010.

87. David A. Dilts, Ahmad Karm, and Ali Rassuli,
Mediation in the Public Sector: Toward a

CHAPTER 13 Labor Relations in the Public Sector 691

Paradigm of Negotiations and Dispute Resolu-
tion, Journal of Collective Negotiations in the
Public Sector, 19, 1990, pp. 49 50.

88. David Lewin, Peter Feuille, Thomas A. Kochan,
and John T. Delaney, Public-Sector Labor Rela-
tions: Analysis and Readings (Lexington, MA:
D.C. Heath, 1988), pp. 334 335.

89. Steven Briggs and Daniel J. Koys, An Empirical
Investigation of Public-Sector Mediator Effec-
tiveness, Journal of Collective Negotiations in the
Public Sector, 19, 1990, pp. 121 126.

90. Thomas A. Kochan, Dynamics of Dispute
Resolution in the Public Sector, in Public-Sector
Bar gaining, ed. B. Aaron, J. R Grodin, and J. L.
Stern (Washington, D.C: Bureau of National
Affairs, 1979), pp. 150 190; Thomas P. Gilroy
and Anthony Sinicropi, Impasse Resolution in
Public Employment: A Current Assessment,
Industrial and Labor Relations Review, 25, July
1972, pp. 500 501.

91. Stanley W. Elsea, David Dilts, and Lawrence J.
Haber, Fact-Finders and Arbitrators in Iowa: Are
They the Same Neutrals? Journal of Collective
Negotiations in the Public Sector, 19, 1990,
pp. 61 81.

92. Debra J. Mesch, A Union-Management Cooper-
ative Program Gone Wrong: Some Unintended
Consequences of a Fact-Finding Program, Jour-
nal of Applied Behavioral Science, 30, March 1994,
pp. 43 62; Kenneth M. Jennings, Steve K. Paul
son, and Steven A. Williamson, Fact-Finding in
Perspective, Government Union Review, 8, Sum-
mer 1987, pp. 54 70; Nels Nelson, Fact-finders
View the Fact-finding Process, Journal of Col-
lective Negotiations in the Public Sector, 19, 1990,
pp. 141 149.

93. For an excellent review of the distinctive nature of
arbitration in the public sector, see Helen LaVan,
Arbitration in the Public Sector: A Current Per-

spective, Journal of Collective Negotiations in the
Public Sector, 19, 1990, pp. 153 163.

94. Lewin, Feuille, and Kochan, Public-Sector Labor
Relations, p. 229; Frederic C. Champlin and
Mario F. Bognanno, Time Spent Processing
Interest Arbitration Cases: The Minnesota Expe-
rience, Journal of Collective Negotiations in the
Public Sector, 14, 1985, pp. 53 64; Charles M.
Rehmus, Public Employees: A Survey of Some
Critical Problems on the Frontier of Collective

Bargaining, Labor Law Journal, 27, September
1976, pp. 588 599.

95. F. Donald O Brien and Nancy Peace, Interest
Arbitration: Some Timely Thoughts, Perspectives
on Work, 14(1/2), 2010 2011, p 30 32.

96. Craig E. Overton and Max S. Wortman,
Compulsory Arbitration: A Strike Alternative

for Police? Arbitration Journal, 28, March 1974,
p. 40.

97. Hoyt N. Wheeler, Is Compromise the Rule in
Fire Fighter Arbitration? Arbitration Journal, 29,
September 1974, pp. 176 185.

98. James R Chelius and Marian M. Extejt, The
Narcotic Effect of Impasse Resolution Proce-
dures, Industrial and Labor Relations Review, 38,
July 1985, pp. 629 637; Marian M. Extejt and
James R Chelius, The Behavioral Impact of
Impasse Resolution Procedures, Review of Public
Personnel Administration, 5, Spring 1985,
pp. 46 47.

99. Thomas Kochan, David B. Lipsky, Mary Newhart,
and Alan Benson, The Long Haul Effects of
Interest Arbitration: The Case of New York State
Taylor Law, Industrial and Labor Relations
Review, 14(4), 2010, pp. 565 583.

100. Hebdon, Public-Sector Dispute Resolution in
Transition, pp. 102 103.

101. Morley Gunderson, Robert Hebdon, and Douglas
Hyatt, Collective Bargaining in the Public Sector:
Comment, American Economic Review, 86,
March 1996, pp. 315 326.

102. Hebdon, Public-Sector Dispute Resolution in
Transition, pp. 110 112; Michael A. Zigarelli,
Dispute Resolution Mechanisms and Teacher

Bargaining Outcomes, Journal of Labor Research,
17, Winter 1996, pp. 135 148.

103. Richard A. Turpin, An Analysis of Public-Sector
Interest Arbitrators Assessments of Wage Compa-
rability, Journal of Collective Negotiations in the
Public Sector, 27, 1998, pp. 45 51; Richard A.
Turpin, Factors Considered by Public-Sector
Interest Arbitrators in Assessing Ability to Pay,
Journal of Collective Negotiations in the Public Sec-
tor, 26, 1997, pp. 1 7; Gregory G Dell omo, Wage
Disputes in Interest Arbitration: Arbitrators Weigh
the Criteria, Arbitration Journal, 44, June 1989,
pp. 4 8; Susan Schwochau and Peter Feuille,
Interest Arbitrators and Their Decision Behavior,

Industrial Relations, 27, Winter 1988, pp. 37 55.

692 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

104. Craig A. Olson and Paul Jarley, Arbitration
Decisions in Wisconsin Teacher Wage Disputes,
Industrial and Labor Relations Review, 44, April
1991, p. 546.

105. Karl O. Magnusen and Patricia A. Renovitch,
Dispute Resolution in Florida s Public Sector:

Insight into Impasse, Journal of Collective Nego-
tiations in the Public Sector, 18, 1989, pp. 241
252; J. Joseph Loewenberg, Compulsory Arbi-
tration in the United States, in Compulsory
Arbitration, ed. J. J. Loewenberg et al. (Lexington,
MA: D.C. Heath, 1976), p. 166; Hoyt N. Wheeler,
An Analysis of Fire Fighter Strikes, Labor Law

Journal, 26, January 1975, pp. 17 20.
106. William H. Ross, Should Night Baseball Arbi-

tration Be Used in Lieu of Public-Sector Strikes?
Psychological Considerations and Suggestions for
Research, Journal of Collective Negotiations in
the Public Sector, 31(1), 2006, pp. 45 47.

107. J. H. Foegen, Public-Sector Strike-prevention: Let
the Taxpayer Decide, Journal of Collective Nego-
tiations in the Public Sector, 3, Summer 1974, p. 223.

108. I. B. Helburn and J. L. Matthews, The Referen-
dum as an Alternative to Bargaining, Journal of
Collective Negotiations in the Public Sector, 9,
1980, pp. 93 105.

109. Raymond L. Hogler and Curt Kriksciun,
Impasse Resolution in Public Sector Collective

Negotiations: A Proposed Procedure, Industrial
Relations Law Journal, 6, 1984, pp. 481 510.

110. Donald T. Barnum and I. B. Helburn, Influence
the Electorate Experience with Referenda on

Public Employee Bargaining, Industrial and
Labor Relations Review, 35, April 1982,
pp. 330 342.

111. David Lewin, Jeffrey H. Keefe, and Thomas
Kochan, The New Debate about Unionism and
Collective Bargaining in U.S., State and Local
Governments, Industrial & Labor Relations
Review, 65 (October 2012), pp. 749 761.

112. David Lewin, Thomas Kochan, Joel Cutcher-
Gershenfeld, Teresa Ghilarducci, Harry Katz,
Jeff Keefe, Daniel J. B. Mitchell., Craig Olson,
Saul Rubinstein, and Christian Weller,
Getting It Right: Empirical Evidence and

Policy Implications from Research on Public-
Sector Unionism and Collective Bargaining,
March 16, 2011, pp. 29 30, http://www.
employmentpolicy.org/ topic/402/research/
getting-it-right.

113. David Lewin, Jeffrey H. Keefe, and Thomas
Kochan, The New Debate about Unionism and
Collective Bargaining in U.S. Senate and Local
Governments, Industrial & Labor Relations
Review, 65 (October 2012), pp. 749 761.

114. Harry Katz, U.S. Public Sector Labor
Relations in the Midst of a Transformation,
Industrial & Labor Relations Review, 66,
October 2013, p. 1031.

115. Marick F. Masters, Robert R Albright, and Ray
Gibney, The State of Public Sector Unionism:
Challenges and Opportunities, Employee
Responsibilities and Rights Journal, Published
online, May 29, 2010.

CHAPTER 13 Labor Relations in the Public Sector 693

CA
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13
-1 Unions Representing Public Employees

In Anywhere, United States, an incident that received
national attention occurred. In a gated neighborhood
that had experienced recent frequent crimes, a neigh-
borhood watch group was formed to provide night
watch on traffic in the neighborhood. Late one night,
two teenagers were walking through the neighborhood
and Citizen A who was on watch that night and armed
with a pistol observed two teenagers and stopped them.
Citizen A asked the teenagers what they were doing in
the neighborhood. One teenager who was quite large
for his age answered: It s a free country; this is the
direct path to my house; I will walk wherever I want to
walk. Citizen A responded: This is a private property
and you are not welcome here. The larger teenager
reached in his pocket. Citizen A later told police that
he thought the teenager was reaching for a weapon and
he fired his pistol. A neighbor who heard the shot
called 911 and an emergency medic unit was dis-
patched. Upon arrival, the teenager was declared
dead. Needless to say, the incident drew much atten-
tion locally, even national. Group leaders wanted
Citizen A to be arrested and put in jail. The local police
began to conduct their investigations. Citizen claimed
self-defense and relied on the state s law of Stay Your
Ground .

The local media began writing articles for the
newspapers and the television stations began interviews
with interested parties. The incident became the topic
of discussion within the community. Captain Fire-
fighter, a 15-year veteran of the fire department,
became interested in the subject and, during his off-
hours, posted the following on his Facebook page:

I and my coworkers could rewrite an entire book
on whether our urban youths are victims of profiling or
products of their failed, pathetic, welfare dependent
parents.

Once Captain Firefighter posted this message and
the message went viral. Many group leaders called for
Captain Firefighter s termination. After an investiga-
tion into the matter, the Fire Chief concluded that Cap-
tain Firefighter had hurt the public s trust in the fire
department and decided to suspend Caption Firefighter
for two weeks. When the mayor heard of the two-week
suspension, he was upset. The mayor thought that a
two-week suspension was an insufficient penalty for

Captain Firefighter s offense. Instead of a suspension,
the mayor decided to demote Captain Firefighter to a
regular firefighter, two ranks below captain.

Upon being notified of his demotion, Captain Fire-
fighter immediately filed a grievance Article IV (b) of
the collective bargaining agreement that stated:

The Fire Chief will make all disciplinary decisions.

The Union s Position:

The Firefighters union argued that Captain Firefighter
had the constitutional right to express himself even
though the city administration did not like his message.
Captain Firefighter testified at the hearing: I am a pri-
vate citizen and have the same right to freely express
myself on any subject that anyone else does. Impor-
tantly, Captain Firefighter did not violate the city s
social media policy and he did not identify himself as
a city employee or a captain within the fire department.
Moreover, the city is not in the business of regulating
employee s speech on an employee s own time, even if
others find it offensive.

The union argued that Captain Firefighter had an
impeccable record with no discipline for 15 years.

The union also argued that even though the mayor
held a higher officer than the fire chief the collective
bargaining agreement authorizes only the fire chief to
make disciplinary decisions. In addition, the union
argued that the disciplinary action was excessive and
not progressive.

The union claimed that the publicity given by the
news media to this case has caused the city to over-
react and the city administration has tried to appease
the loudest voices. This matter is simply a case where
internal labor relations principles should prevail and
the city has not proven that disciplinary action should
have been taken. Therefore, the grievance should be
sustained, Captain Firefighter should be returned to
his caption position, and he should be made whole
for any loss of benefits, pay, or seniority.

The City s Position:
The city argued that Captain Firefighter had embar-
rassed the city and had betrayed the public s trust
with the fire department. The city argued that, unless

694 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

it took more serious action than a mere suspension, the
citizens of the city would not have confidence in and
support the city s administration. With all the attention
now focused on this matter, the city was forced to take
more dramatic discipline than a mere two-week sus-
pension. The city argued that there is an important
principle here: the penalty should fit the crime. The
two-week suspension does not fit the offense commit-
ted by Captain Firefighter.

The position of captain is second highest position
in the fire department, just below the chief. Captain
Firefighter has now lost the respect of this fellow fire-
fighters and citizens. Allowing Captain Firefighter to
remain in the captain position would essentially make
him nonfunctional. Moreover, the city called it to the
attention of the arbitrator that Captain Firefighter had
never recanted his message and never apologized for
his actions. Further, the city called to the attention of
the arbitrator that the mayor is ultimately responsible

for running the city, not the fire chief. Therefore, the
mayor s decision should prevail and the grievance
should be denied.

Questions
1. Which party has the burden of proof?
2. Which level of proof should be used by the

arbitrator?
3. Is this matter a contract administration case or a

disciplinary case? Which party should go first at the
hearing?

4. Should progressive discipline have been used in this
matter? Why? Why not?

5. Which side has the best arguments?
6. How should the arbitrator decide? Give your

reasons.

CA
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13
-2 Discharge for Off-Duty Conduct

On March 4, 2011, Mr. Charles Lee was removed from
the Postal Service. The Notice of Removal stated:

You pled guilty to Count 1 of the information
charging you with a violation of Title 18 USC
§ 371, Conspiracy to Commit an Offense or to
Defraud the United States.

In an August 9, 2010 plea agreement that you
signed, you engaged in a conspiracy to acquire financ-
ing for two quadruplex homes located at 8416 and 8418
Camden Street, Miami, Florida. You lacked the neces-
sary financial assets to qualify for these loans. The ele-
ments of the conspiracy follow:

You employed the service of Paldo Corporation to
purchase the quadruplexes for $100,000.00 each.
You signed contracts in which you agreed to pur-
chase the same properties from Paldo for
$169,000.00 each. As part of the conspiracy, false
data were provided to an appraiser to justify the
inflated sales prices for the properties, and in reli-
ance of the fraudulent information, a lending
institution extended loans in amounts substan-
tially in excess of the true values of these
properties.

In order to qualify for the mortgage financing,
you submitted two mortgage loan applications. In
each application, you falsely stated you had made a
$19,000.00 down payment to Paldo Corporation. In
reality, you had agreed with Bert Muscat, Realtor, to
accept a rebate on your down payment in the
amount of $19,000.00 from his commission. This
was accomplished through an exchange of checks.
The purported down payment was thus a sham trans-
action. The net effect of this scheme was that you were
able to purchase this property with no money down
on your part. You received an additional $10,000.00
rebate after the closing, thereby reducing the actual
purchase price of the properties. You agreed with the
loan broker and others not to disclose any of this
rebate scheme to the financial institution.

In addition, you also failed to disclose on the
loan application, two other mortgage loans on
which you were obligated.

Your plea of guilty to Count 1 of the informa-
tion was accepted by the United States District
Court for the Southern District of Florida on Sep-
tember 21, 2010, and you were adjudged guilty. On
December 3, 2010, U.S. District Judge William S.

CHAPTER 13 Labor Relations in the Public Sector 695

Casta sentenced you to serve six months house
arrest, two years probation and ordered you to
make restitution in the amount of $136,398.64 to
the lending institution you had defrauded.

Section 2635.101(a) of the Standards of Ethical
Conduct for Employees of the Executive Branch states,
in pertinent part:

Public service is a public trust. Each employee has a
responsibility to the United States Government and
its citizens to place loyalty to the Constitution, laws
and ethical principles above private gain.

Section 661.53 of the Employee and Labor Rela-
tions Manual states:

Unacceptable Conduct. No employee will engage in
criminal, dishonest, notoriously disgraceful or
immoral conduct, or other conduct prejudicial to
the Postal Service. Conviction of a violation of any
criminal statute may be grounds for disciplinary
action by the Postal Service, in addition to any
other penalty by or pursuant to statute.

Your misconduct of conspiring to defraud the
United States is in direct conflict with the basic obliga-
tions of public service. As a postal employee, you hold
a position that requires honesty and trustworthiness.

You have the right to file a grievance within four-
teen (14) days of your receipt of this notice of removal.

On March 16, 2011, a step 1 meeting was held and
the following written grievance was filed:

Background: On March 4, 2011, Mr. Lee received
written notification that he would be removed
from the Postal Service for violation of the stan-
dards of ethical conduct and unacceptable con-
duct. He pled guilty to violation of Title 18
U.S.C. 371, Conspiring to Commit an Offense or
Defraud the United States.

Management s Position: Mr. Lee was removed
from the Postal Service for his unacceptable con-
duct. He had an obligation as a postal employee
to demonstrate honesty and trustworthiness. He
broke this trust when he pled guilty to defrauding
the United States.

Union s Position: Management did not show
just cause when it issued a notice of removal to
Mr. Lee. Further, Management currently employ
another employee, Scotty Hall, a convicted felon
and has not remove him and other similar-
situated employees.

The grievance was denied and was appealed. The
step 2 grievance was completed by David Tover, union
steward, who stated:

Violation: Including but not limited to National
(Art. & Sect.) 16.1, 16.6, 16.7, 19.

Other Grounds: ELM 661.53, previous arbitra-
tion cases.

Facts and Union Contentions: Date, Time &
Location: 5 Feb. 94, GMF Miami, Fla.

What Happened: Grievant was issued Notice of
Removal dated March 4, 2010. Reason for removal
was cited as: you pled guilty to Count 1 of the infor-
mation, charging you with a violation of Title 18,
U.S.C. & 371, Conspiracy to Commit an Offense or
to Defraud the United States. Grievant and Union
contend that removal is without just cause.

Corrective Action Requested: That Grievant be
returned to his job immediately and that he be
made whole in all respects.

Mr. R. H. Gooche, Manager of Distribution Opera-
tions (MDO), Tour 3, provided management s step 2
answer. He wrote:

On March 16, 2011, a Step 2 meeting was held to
discuss the subject grievance.

Union Position: Union Contends:
1. The removal is without just cause.
2. Grievant did not knowingly commit a criminal offense.
3. Grievant was misled and he trusted other people,

and therefore unwittingly became involved in a
wrongful act.

4. The Postal Service has not presented any nexus between
the grievant s workplace and the criminal activity.

5. During the investigative interview, management
stated that conviction of a felony is a removable
offense. However there is no provision to automat-
ically remove an employee from the postal service
based simply on the fact that they have been con-
victed of a felony.

6. The Postal Service infers that being convicted of a
criminal offense automatically means that an
employee is no longer loyal and trustworthy and
destroys the faith and trust in him by the U.S.
Postal Service and public.

Management responded to each of the union s
contentions:

1. The grievant was removed from the Postal Service
for his unacceptable conduct. He had an obligation
as a postal employee to demonstrate honesty and

696 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

trustworthiness. He broke this trust when he pled
guilty to defrauding the United States.

2. The grievant voluntarily pled guilty. Case No. 93-
234-CR-T-15 (A) Plea Agreement Page 6, Para-
graph 5. Second element for the crime: That the
defendant willingly became a member of such con-
spiracy. Page 9, paragraph 13 states that the grievant
will plead guilty because he is in fact guilty of the
charge contained in Count One of the Information.

3. The grievant was part of a conspiracy to defraud
financial institutions using the U.S. Mails. Apprai-
sal on all properties was inflated, which resulted in
the subject receiving kickbacks from the original
mortgage company holding the mortgage. The
grievant was involved in a wrongful act for three
years. It is reasonable to believe that the grievant
had enough knowledge of the conspiracy to know
what he was doing was illegal.

4. The grievant and two others conspired in a scheme
to defraud financial institutions using the U.S. Mails.

5. The grievant conspired in a scheme to defraud
financial institutions using the U.S. Mails. By doing
so he violated his obligation as a Postal Employee to
demonstrate honesty and trustworthiness. However
he was not automatically removed. An investigation
into the grievant s conduct was conducted. An inves-
tigative interview was held by the grievant s supervi-
sor, William Smith, resulting in the grievant being
placed in an off-duty status. The grievant was
removed from the Postal Service on March 4, 2011.
All actions taken were after a complete investigation,
hardly an automatic removal.

6. The grievant was found guilty of a crime for which
a sentence of imprisonment can be imposed. The
grievant pled guilty to Conspiracy to Defraud the
United States. A complete investigation of all facts
was conducted; the facts of this case bring into
question the loyalty and trustworthiness of the
grievant. The grievant conspired to defraud finan-
cial institutions using the U.S. Mails, compromis-
ing the faith and trust in him by the Postal Service.

Based on the facts the grievant was properly
removed from the Postal Service.

The grievance is denied.
The grievance was appealed to arbitration.

Issue

Was the removal of Charles Lee for just cause?
If not, what shall be the proper remedy?

Article 16

Relevant Provisions of the Employee and Labor
Relations Manual

661.11 This Code of Ethical Conduct is designed to
instruct and guide employees entering the Postal Ser-
vice, and to remind all employees of the conduct
expected and required of them in performing their offi-
cial duties and in their general conduct.

661.3 Standards of Conduct
Employees must avoid any action, whether or not

specifically prohibited by this Code, which might result
in or create the appearance of:

Using Postal Service office for private gain.
Giving preferential treatment to any person.
Impeding Postal Service efficiency or economy.
Losing complete independence or impartiality.
Making a Postal Service decision outside official

channels.
Affecting adversely the confidence of the public in

the integrity of the Postal Service.
Unacceptable Conduct. No employee will engage

in criminal, dishonest, notoriously disgraceful or
immoral conduct, or other conduct prejudicial to the
Postal Service. Conviction of a violation of any criminal
statute may be grounds for disciplinary action by the
Postal Service, in addition to any other penalty by or
pursuant to statute.

Positions of the Parties

Management:
Management stated that it is a fact that Mr. Lee pled
guilty to conspiracy to defraud the United States and
therefore the Postal Service does not have to prove that
he was guilty. Management claimed that Mr. Lee violated
that standard of ethical conduct, that the Postal Service
and the public had lost trust in Mr. Lee as a postal
employee, and he was not loyal to the Constitution and
the laws of the United States. Therefore, his actions were
in violation of several provisions of the Employee and
Labor Relations Manual, and there was an obvious
nexus between his crime and his employment.

Management argued that the burden is on the
union to prove that there was disparate treatment of
Mr. Lee. There was no disparate treatment of Mr. Lee
because Ms. Edwards, the other postal employee named
by the union as a comparison, was not similarly situ-
ated, was not in the same department, was not in the
bargaining unit, did not plead guilty, and was not
found guilty. In the other comparison case, the union

CHAPTER 13 Labor Relations in the Public Sector 697

failed in its effort to show disparate treatment by
addressing Scotty Hall s employment because his case
was a hiring decision, not a removal decision. More-
over, Mr. Hall s civil rights had been restored prior to
the date of his employment by the Postal Service.

Mr. Lee was afforded the same opportunity as
other employees who were judged guilty, that is, either
to resign or to be removed. Mr. Lee chose not to resign;
therefore, he was removed from the Postal Service.
Management argued that even though the investigation
mentioned that Mr. Lee was involved in a conspiracy to
defraud the financial institution using the U.S. Mails as
a reason for his removal, the union is not justified in
using this information to support its claim.

Management explained that it considered the
investigation, the plea of guilty, and the seriousness of
the crime. Management conducted its own investiga-
tion and gave Mr. Lee an opportunity to present his
side of the case. After its investigation, management
found no merit to Mr. Lee s explanation and concluded
that the removal was justified.

Management argued that the postal employees
knew that Mr. Lee had been convicted of a crime. Man-
agement stated: our employees knew. It doesn t
take a rocket scientist to figure it out. Everyone was
aware. Management submitted a decision by an
appeals referee of the Florida Department of Labor
and Employment Security concerning Mr. Lee s claim
for unemployment compensation. Management noted
the following excerpt:

Consideration was given to the claimant s contention
that he was treated more harshly than other postal
employees who were involved in the same criminal
activity. In support of that position, the claimant
provided information that another postal employee
was not disciplined. Further information provided
by the claimant including that adjudication was
withheld by the court on the other employee. Since
the legal disposition was different in that case, the
employer s failure to discipline with the same degree
of severity is not viewed as disparate treatment. The
claimant s contention is rejected.

At the hearing, the parties agreed that there is a
possibility that the claimant will be reinstated in his
job. The notice of removal, however, specifically ter-
minated the claimant from his position and is
viewed as a discharge. The discharge was for miscon-
duct connected with the work and the claimant was
properly disqualified from receiving benefits.

The Postal Service stated that postal employees
must be honest and reliable and have good character.
Mr. Lee s actions were willful and deliberate and were
against the interests of the U.S. government of which
the Postal Service is a part. Guidelines for Postal
employees are published in the Employee and Labor
Relations Manual to guide employee behavior.

Management responded to the union s claim that
Mr. Lee was an ideal, long-term employee with no
record of discipline. Management questioned this claim
because no evidence was presented. Mr. Lee was a
good employee and the decision to remove Mr. Lee

was difficult. However, management felt compelled
to take removal action. His actions were no different
from theft, and Mr. Lee had stolen money from the
same institution that employed him. Management
then asked: If he will steal, how can we trust him?
He will have many opportunities to steal.

Management objected to the introduction, any
consideration, and any comparison to Ms. Edwards
employment. The union did not mention any compar-
ison between Mr. Lee and Ms. Edwards in the proces-
sing of Mr. Lee s grievance. Therefore, the union was
estopped from arguing any comparison at the hearing
when disparate treatment had not been mentioned
earlier.

Management concluded that a finding that Mr. Lee
was removed from the Postal Service for just cause and
that his grievance should be denied.

The Union

The union argued that the Postal Service made its deci-
sion to remove Mr. Lee solely on the basis of his con-
viction. The union claimed that the Postal Service failed
to establish any connection (nexus) between the crime
and Mr. Lee s ability to perform as a productive
employee. The Postal Service must show a nexus
between the crime and the efficiency of the Postal Ser-
vice and how the Postal Service was adversely affected,
and management failed to do so. The Postal Service
claimed that the public trust was broken, but there
was no evidence that anyone in the public knew of
Mr. Lee s conviction. In fact, there was no evidence
that any other employees complained about working
with Mr. Lee.

The union presented numerous arbitration deci-
sions to show that a postal employee may not be
removed from employment based solely on the com-
mitment of a crime. The first arbitrator wrote: As

698 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

many arbitrators have recognized, the Postal Service,
among other things, must establish a nexus between
the employees conduct and the employment relation-
ship. It must seek to determine, for example, whether
the occurrences of the off-duty misconduct has
destroyed the basis for continued employment because
of adverse impacts on the efficiency, operations, prop-
erty or personnel of the Postal Service. To put it
another way, the Postal Service must show some
harm to it, to the public, or to fellow employees if the
employee continues his employment.

In a second arbitration case, the grievant was
charged with murder and later found guilty of first
degree manslaughter. The grievant shot his wife in
the head with a 32-caliber pistol. The arbitrator wrote
in his decision that, The Grievant s conviction of
first degree manslaughter, his sentencing and his
subsequent placement on probation did not involve an
on-the-job action. Neither did it involve a job related
matter with an adverse impact on employee or public
relations, efficiency, etc., or pose a threat to Postal
operations, property or personnel.

In a third case, the grievant was charged with
aggravated sexual assault and criminal sexual conduct.
The grievant pled guilty to one count of criminal sexual
conduct. The arbitrator interpreted the CSRA, 5 U.S.C.
2302(b)(10), as prohibiting the termination of a Postal
Service employee for off-duty misconduct absent a
showing that such conduct would affect the efficiency
of the service. The Court held that this requirement of
a nexus cannot be satisfied by unsupported general
assertions or internal regulations prohibiting certain
kinds of immoral or disgraceful conduct period.
The arbitrator wrote: The Court read the CSRA as
an expression of congressional intent with respect to
termination for off-duty misconduct. Clearly, an arbi-
trator operating under a just cause standard in a Postal
Service contract should give great weight to such clearly
expressed Congressional intent.

In the fourth case, the grievant was charged with
knowingly receiving child pornography through the
mails, a violation of 18 U.S.C. 2252(a)(2). The grievant
was found guilty of knowingly receiving child pornog-
raphy through the mails and was sentenced to a ten
year suspended sentence, five-year probation, and a
fine of $50. The arbitrator wrote: Under this contract,
employees may only be discharged or disciplined for
just cause. Arbitrators and courts have interpreted
this requirement and similar statutory standards, as
prohibiting the discharge of a Postal Service employee

for off duty, off-premises, misconduct unrelated to the
employee s job. In such cases, the Postal Service must
show that the retention of the employee will have some
adverse impact on the employee relationship. This
principle has often been interpreted as requiring a
showing of a nexus between the off-duty misconduct
and the ability of the employee to function in his
job.

In a fifth case, the arbitrator wrote: Ms. Nichole s
conviction on charges associated with her fraudulent
application for housing subsidy funds is unrelated to
her employment. Her conduct was not prejudicial to
the Postal Service. (661.53 E&LM). There is no show-
ing of an adverse impact on the employer or its
employees. For these reasons this removal is not for
just cause.

In a sixth case, the arbitrator wrote in his opinion:
The weight of arbitral authority requires that a nexus

be shown before an employee may be discharged for
off-duty, off-premises misconduct. See, for example,
Elkouri and Elkouri, How Arbitration Works, Seventh
Edition, page 15 11 and cases cited.

The union argued that Mr. Lee was an excellent
employee for 13 years with the Postal Service. During
these 13 years, Mr. Lee had no discipline issues and
continued to perform effectively for several months
even after his conviction. Since the Postal Service was
not adversely affected during this time, the return of
Mr. Lee to his former job had not and would not
adversely affect the performance and efficiency of the
Postal Service. Management claimed that its trust of
Mr. Lee was broken, but offered no evidence.

The union claimed that the Postal Service failed to
take any action against another employee who was
charged with the same crime and who continues to
be employed as a postal employee. Other employees
who were involved in the scheme were offered to
resign or told they would be fired. However, no evi-
dence was presented.

In regard to the charge and conviction, the union
contended that the management incorrectly used the
postal inspector s memos wherein Management indi-
cated that Mr. Lee had conspired to defraud financial
institutions using the U.S. Mails. The fact is Mr. Lee
was not charged with misuse of the U.S. Mails. The
Postal Service falsely charged him and this charge con-
taminated the cause for removal.

The union addressed two arguments made by
management: (1) unemployment compensation claim
and (2) knowledge about continued employment of

CHAPTER 13 Labor Relations in the Public Sector 699

Ms. Edwards. First, the unemployment compensation
decision referred to misconduct connected with
work, and the arbitrator is not bound by this decision.
Unemployment compensation is another forum with
different rules. Second, the union did not find out
that Ms. Edwards s employment had been continued
even though she was involved in the same financial
scheme as Mr. Lee and that she had been charged
with the same crime until after Mr. Lee had filed an
EEO claim, just before the date of the arbitration hear-
ing. During the processing of this EEO claim, the griev-
ant and the union were made aware of the fact that Ms.
Edwards remained on the payrolls as a postal
employee.

The union contended that the burden of proof
rests with the Postal Service and it has failed to prove
just cause for the removal of Mr. Lee. As a result, the
union requested that Mr. Lee be returned to his former
position, that his back pay and benefits including over-
time and interest be restored, and that all references to
this removal be expunged.

Questions
1. What are the rules for discharge for off-duty

conduct?
2. Explain the term nexus as used in labor arbitration.
3. Does equal treatment have any bearing on the out-

come of this decision?
4. What is the rule concerning use of the employer s

submission of the unemployment compensation
claim in the labor arbitration proceedings?

5. How much weight should be given to Mr. Lee s job
performance after his conviction but before his
termination?

6. Should the arbitrator consider the union s submis-
sion of evidence of the continued employment of
Ms. Edwards and Mr. Hall? Give your reasoning.

7. How much weight should be given to previous
arbitrators decisions? Explain.

8. What will the arbitrator decide? Why?

700 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

CHAPTER 14

Labor Relations in Multinational Corporations
and in Other Countries

IN PREPARING FOR your first job after graduation, you need to
go shopping and buy some clothes to wear to work. Nearly all
of your clothes now are fine for attending class, but they don t
look very professional. Since you have accumulated a fairly siz-
able student loan debt, you have to be careful with your spend-
ing and you are looking very hard for bargains, but all of the best
prices for clothes are those which are manufactured in places
like China, Thailand, Vietnam, and Guatemala.

In your studies, you have learned about the low wages, long
hours, and unfavorable working conditions for workers in those
countries and don t want to support these types of conditions
of employment. You also want to support American workers
and manufacturers by keeping your money in America, but
you will end up paying more for your clothes.

Questions
1. What should you do?

2. When you buy these imported goods, are you actually sup-
porting the foreign workers or the companies?

3. Are you supporting the low wages, long hours, and unfavor-
able working conditions in those countries?

701

With the development of a global economy, movement in Eastern Europe and Chinatoward greater political democracy and market-oriented economies, and increased
trade between countries, the study of labor relations within multinational corporations
(MNCs) and foreign countries becomes imperative to today s student. This chapter
begins with a general discussion of the operations of MNCs in a global economy and
unions approaches and problems in dealing with MNCs. Concerns about globalization
and free trade are addressed and principal characteristics of the labor relations systems
of the major trading partners of the United States are also presented.

Multinational Corporations and Transnational Collective Bargaining

The growing interdependency among nations and the activities of MNCs have become
important facets of economic life. Although MNCs have existed for more than 150
years, their numbers and share of world output have expanded their importance and vis-
ibility in recent years.

MNCs in the United States are enormous in size. Worldwide employment by U.S.
MNCs is 34.5 million workers. Foreign-owned MNCs employ 5.6 million workers in
the United States. The annual sales revenue of Wal-Mart in 2014 ($476.2 billion) was
greater than the gross national product (GNP) of each of the following countries:
Austria, Iran, Israel, and South Africa. The annual revenues of ExxonMobil ($390.25
billion) in 2014 were greater than the GNP of Greece, Chile, Finland, Ireland, Portugal,
and New Zealand. In fact, of the 30 largest MNCs in the world, 13 have their home
offices located in the United States, and nine of these are heavily unionized (AT&T,
Chevron, Phillips 66, ExxonMobil, Ford, General Electric, McKesson, General Motors,
and Valero).1

Total employment among U.S. parent companies abroad was 22.9 million; employ-
ment among U.S. affiliates of foreign companies was 5.6 million. Spending by U.S. firms
or U.S. direct investments abroad in 2012 was $388 billion. The cumulative amount of
book value is $4.4 trillion. Europe accounts for over half of all U.S. direct investments.2

Investments in the Netherlands (14.5 percent of the total) and the United Kingdom
(13 percent) followed by Canada (7.8 percent) and Luxemburg (8.6 percent).3

Value added by majority-owned affiliates of foreign companies totaled $736.4 billion
in 2011 and these MNCs employed 5.6 million. The countries are Canada, France, Ger-
many, the Netherlands, Switzerland, the United Kingdom, and Japan accounted for
three-fourths of the total. The United Kingdom (18.9 percent) was the largest investing
country, followed by Germany (12.1 percent) and Japan (9.4 percent).4

Exchange rates have a great deal to do with the trade between countries and produc-
tion within a specific country. The importance of fluctuating exchange rates is reflected
in Exhibit 14.1, which shows the indexes of hourly compensation costs for production
workers in manufacturing for 29 countries during periods from 1980 to 2012. In 2012,
hourly compensation costs for manufacturing production workers in Belgium, Germany,
Denmark, Norway, and Switzerland were 28 to 78 percent higher than those in the
United States. Compensation costs were 88 percent of the U.S. figure in the United King-
dom, 134 percent in Australia, 75 percent in Spain, 42 percent in Korea, 27 percent in
Taiwan, and 23 percent in Mexico.

In 1980 Japan s hourly compensation cost (hourly pay plus benefits) was 57 percent
of that of the United States; however, it increased to 87 percent by 1990 and then to
99 percent by 2012. In Germany in 1980, the cost was 25 percent higher than the United
States; but by 1990 it had risen to 44 percent higher than U.S. compensation costs and
then fell to 28 percent higher by 2012.5

702 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Operating in different countries creates opportunities for MNCs to bypass protective
tariffs by making parts in one country and assembling the final product in another. For
example, an automaker may make 90 percent of its parts in Japan, do the assembly work
in the United States, and ship products from the United States as U.S. exports. With Jap-
anese automakers locating in the United States, such issues provide challenges in trade
between countries.6

MNCs in the United States prefer to locate production facilities in foreign countries
that have a decentralized bargaining structure, like that in the United States. Labor rela-
tions features like union density and strike intensity do not appear to be nearly as impor-
tant. The most important reason behind decisions related to locating production facilities
is the national resources of the particular country.7

MNCs have the capacity to force concessions from unions by threatening to shift
production to another country and essentially pit one group of employees against
another. One automaker that operated a plant in Ohio sought to introduce new technol-
ogy; the union resisted because the membership would lose jobs. The company then took
a number of the union leaders to a new plant in Juarez, Mexico just across the border
from El Paso showed them the technologies used in the plant, and said: It is your
choice. Either you concede what we are asking in terms of bargaining or the work that
you do in Ohio will be transferred to Juarez. If you think this is an idle threat, this is the
plant. This is the production process. 8

MNCs do not deploy consistent employee relations policies in the various countries
in which they operate. In 2011, Wal-Mart purchased 51 percent of the South African
retail chain store Massmart. Massmart operates about 290 stores in 14 African countries.
Upon announcement, South African labor groups claimed that Wal-Mart was anti-union
in the United States. In response, Wal-Mart said it will respect present labor contracts
and is committed to working with South African unions.9

The American Rights at Work Education Fund has alleged that T-Mobile USA* and
its parent company German telecommunications giant Deutsche Telekom operate under
two standards: (1) respect workers rights in Germany and (2) interfere with employees
rights to organize and bargain in the United States.10

Some MNCs pursue policies of divide and rule. For example, they inform workers
in one country that they cannot have the improved employment conditions they seek
because they are less productive than its employees in another country. Other MNCs
embrace the accepted employee relations philosophy and approach of their own country
but apply totally opposite policies in another country. Unions have responded by
exchanging information about employment practices in their country with employees of
the same MNCs that operate in other countries.

International links between trade unions are not new. One international organiza-
tion, the Global Union Federation (previously known as the International Trade Secre-
tariats), has operated for almost 100 years. There are currently 11 autonomous Global
Union Federations of which Union Network International with 140 million members in
900 unions on every continent is the largest. Other Global Union Federations include the
Education International, the International Transport Workers Federation, the Public Ser-
vices International, and the International Metal Workers Federation. Currently, none of
the federations have authority to enforce their instructions against affiliated unions; how-
ever, they can share information in pursuit of common objectives.11

*In 2011, T-Mobile USA was purchased by AT&T, which has a labor relations reputation that is highly
regarded.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 703

Exhibit 14.1
Indexes of Hourly Compensation Costs for Production Workers in Manufacturing for 31 Countries or Areas, 1980 2012

Index (United States = 100)

Country or Area

Percentage
of Workforce
in Unions 1980 1990 2005 2012

Compensation
Costs in 2012
U.S. Dollars

United States 10.8 100 100 100 100 35.67

Canada 27.2 92 107 101 103 36.59

Brazil 35.4 14 17 17 31 11.20

Mexico 13.6 30 12 11 23 6.36

Australia 17.0 82 88 105 134 47.68

Israel 32.8 39 57 53 56 20.14

Japan 17.8 57 87 92 99 35.34

Korea 9.9 0 28 57 58 20.71

New Zealand 19.4 54 56 63 69 24.77

Singapore 14.5 15 22 32 68 24.16

Taiwan 34.9 10 27 27 27 9.46

Austria 27.4 87 114 124 116 41.58

Czech Republic 13.4 26 34 11.95

Belgium 55.0 134 127 130 162 52.19

Denmark 66.8 111 126 150 140 48.47

Finland 68.6 84 139 135 119 42.60

France 7.7 91 103 104 112 39.81

Germany 17.7 125 144 140 128 45.79

Ireland 29.6 60 79 96 107 38.17

Italy 36.9 81 119 89 96 34.18

Netherlands 17.6 123 125 135 111 39.62

Norway 53.5 119 147 166 178 63.36

Poland 12.5 19 23 8.25

Portugal 20.5 21 24 31 34 12.10

Spain 17.5 61 78 75 75 26.83

Sweden 67.7 127 141 121 140 49.80

Switzerland 16.2 113 139 129 162 57.79

United Kingdom 25.4 76 84 109 88 31.23

Note: Dash indicates data not available.

SOURCE: International Labor Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing, August 9, 2013; U.S. Department of Labor, Bureau
of International Labor Affairs, Trade Union Density, http://www.bls.gov/fls; http://www.stats.oecd.org/.

704 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Organized labor in the United States has been critical of the effect of U.S. MNCs on
employment and labor relations for the following reasons:

Their foreign investments deplete capital resources needed for domestic investment
and undermine economic growth and new job creation at home.
They export U.S. technology to exploit low-cost foreign labor, depriving American
employees of their rightful share of the rewards of technology.
They substitute imports from their affiliates in low-wage countries for American-
made goods, thereby undermining the American wage standard, depressing eco-
nomic conditions at home, and decreasing employment and payrolls.
They displace U.S. exports with foreign-produced goods from their foreign affiliates,
thereby adversely affecting the U.S. trade balance.12

Foreign MNCs have grown rapidly and installed facilities in the United States.
Unions have often viewed these MNCs with suspicion, but the management and employ-
ment practices tend to be more similar to those of home-based firms. The labor relations
activities and decisions tend to be locally determined and highly decentralized. American
unions have found that organizing foreign-based MNCs has been just as difficult as orga-
nizing U.S.-based companies. In addition, the management of the various plants of
foreign-based MNCs uses essentially the same tactics to keep unions out of U.S. plants.
These tactics include use of lawyers and management consultants, positive human
resources (HR) management, consultation with employees on decisions, delays allowed
under National Labor Relations Board (NLRB) procedures, and local politicians making
statements to support the company. Unions use the same organizing tactics, with the
addition of negative publicity directed toward the foreign owners and appeals to Ameri-
can patriotism. With these counteractive tactics, the results of representation elections
have not been significantly different from other NLRB elections approximately 50 per-
cent wins for the unions. Whenever American unions have contact with foreign-based
unions, these contacts are generally of the information-sharing nature.13

Unions in particular have difficulty dealing with MNCs for the following reasons:
1. If a strike occurs, the union cannot shut down the flow of financial resources to the

struck plant. Operations of the MNCs in other countries continue to function and
generate profits, which may relieve management of much pressure in negotiations
and reduce the costs of the strike.

2. MNCs have an internal source of products from facilities in several countries and use
this position as leverage to bargain down wages, benefits, and other conditions of
employment (called whipsawing the union). If a strike occurs at one facility, the
MNCs increase production at other units, destroying the potency of the strike.
Many specific examples of whipsawing can be identified. General Motors (GM) was
able to expand the work week from 37.5 hours to 40 hours by convincing the union
in Germany that it had to increase hours to retain competitiveness. GM has consid-
ered increasing its auto production in Brazil and Mexico as part of its wage conces-
sion demands, and when Canadian unions resisted wage concessions, GM
considered shifting production back to the United States.

3. MNCs with complex tiers of management do not delegate authority to local manage-
ment to make labor relations decisions, thereby complicating the negotiation process
because unions do not know who is in charge.14 Empirical evidence indicates that
most unions have not encountered different behavior between domestic and
foreign-owned MNCs, but there seems to be a wider variation in behavior among
the MNCs than among single-nation corporations in terms of grievance settlement
before arbitration, amount of local autonomy in negotiations, and difficulty in

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 705

negotiating the first agreement.15 However, because budget and investment decisions
are made at the home office, local negotiations are certainly affected.

4. MNCs shift profits to different facilities, manipulate prices on internal transactions,
and change marketing emphasis, confusing the unions in negotiations when they
seek the facts necessary to address and resolve collective bargaining issues. Further,
different national laws have different financial disclosure requirements.

Because U.S. unions are accustomed to bargaining on ability to pay and are entitled
to wage and financial information that allows them to conduct informed negotiations,
they are frustrated when MNCs furnish only information that is required by law. Infor-
mation about MNCs locating plants in foreign countries and operating data on these
plants may be refused by the MNCs with the approval of the NLRB.16

Union Approaches to Multinational Bargaining
and Employer Reactions

A primary motivator for American and foreign-based unions to seek transnational bar-
gaining and to standardize labor conditions among the MNCs is to lessen competition
from lower wage areas and to protect their own standards in other words, to take
wages out of competition. To combat the power of the MNCs and to seek objectives
that are mutually beneficial to the unions and their members, union leaders have tried
two main approaches: (1) collective bargaining and (2) legislative enactment. Through
collective bargaining, unions either have attempted to bargain directly with the MNCs
or coordinate their bargaining activities with unions in other countries by sharing infor-
mation and supporting one another s activities.

Various groups, such as the International Labor Organization (ILO) and the Organi-
zation for Economic Cooperation and Development (OECD) have established codes of
conduct for MNCs (see the Labor Relations in Action feature on page 707). However,
labor standards remain predominately under national laws. To be effective, these labor
standards need to be incorporated into national laws. The fact remains that countries
are empowered to find violations of labor laws only within their own jurisdiction and
consequently have no influence on the decisions made by MNCs when they operate in
another country. Without legislation, compliance often depends on public campaigns
against the MNCs for alleged violations of human and labor rights at their overseas
subsidiaries. One successful campaign caused Nike to improve the working conditions
at their foreign subsidiaries.17

Recognizing that colleges and universities spend billions a year on logo clothing, stu-
dent groups, consumer groups, and unions have pressured universities to require that
their brand name products only be produced and sold by firms that adhere to the ILO
conventions.

In the past few years, the number of global agreements (International Framework
Agreements (IFA)) signed by MNCs has increased. These agreements between MNCs
and international trade union organizations commit the companies to observing stan-
dards and principles throughout their worldwide operations (codes of conduct). These
principles generally relate to various aspects of worker rights, employment, and other
areas of corporate social responsibility. By 2015, there were 113 global agreements in
place. Although the number is small, the companies involved include some of the world s
largest, most high-profile and internationalized MNCs. For example, Fiat Chrysler
employs 370,000 worldwide; Volkswagen employs 320,000; French retailer Carrefour
employs 300,000; and Danish business services organization ISS employs 250,000. In

706 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

total, the 30 companies including General Motors Europe that have signed the global
agreements employ around 2.5 million people.18 Other IFAs include Ford, Siemens,
BMW, Volkswagen, Electrolux, Club Med, Bosch, and IKEA.19

Unions, as well as some governments, have asserted that collective bargaining on a
national basis has considerable limitations in facing MNCs. This assertion is based on
the belief that MNCs have adopted global strategies, so a union acting alone within one
nation cannot effectively respond. Likewise, some governments are uneasy about the fact
that MNCs cannot easily be made accountable to any one country s economic and social
policies. Moreover, there has been persistent fear that if a union or government in one
country acted without the support of unions or governments in other countries, it would
risk transfer of operations by the MNC to a more hospitable nation.20

The creation of the European Union has led to a resurgence of interests in prospects
of transnational collective bargaining. However, initiatives have primarily taken the form
of joint consultation and adherence to labor rights principles at a transnational level
rather than true collective bargaining.

The aim of European trade unions is to achieve European-level collective bargaining.
Despite the long-recognized hurdles, there have been positive steps toward this end.
First, the European Trade Union Confederation (ETUC) has become an effective voice
for trade unions in the political arena and has the potential to become the spokesperson

LABOR RELATIONS IN ACTION
Core Labor Standards

The core labor standards are fundamental principles that
protect basic human rights in the workforce. The inter-
national community, largely through the International
Labor Organization (ILO) a United Nations agency
bringing together representatives of governments,
employers, and workers has developed a consensus
with respect to the definition of the core labor stan-
dards. As stated in the ILO Declaration on Fundamental
Principles and Rights at Work (1998) the core labor stan-
dards aim to: (1) eliminate all forms of forced or compul-
sory labor, (2) effectively abolish child labor, (3) eliminate
discrimination in respect of employment and occupa-
tion, and (4) ensure the freedom of association and the
right to collective bargaining.

Specific definitions of these principles are spelled out
in eight ILO core labor standard conventions, also known
as the fundamental human rights conventions. These are:

Elimination of forced and compulsory labor
(Conventions 29 and 105). Where forced labor is
all work or service which is exacted from any per-

son under the menace of any penalty and for which
the said person has not offered himself voluntarily.
Abolition of child labor (Conventions 138 and
182). Aside from violating children s basic human
rights, sending children to work rather than to
school perpetuates poverty and compromises eco-
nomic growth. Each signatory, regardless of level of

economic development, agrees to design and
implement a course of action, effectively monitor
implementation and apply appropriate sanctions.
Elimination of discrimination in respect of
employment and occupation (Conventions 100
and 111) is central to achieving greater social jus-
tice while also promoting development through a
more efficient allocation of resources. Discrimina-
tion includes any distinction, exclusion or prefer-
ence made on the basis of race, colour, sex,
religion, political opinion, national extraction or
social origin, which has the effect of nullifying or
impairing equality of opportunity or treatment in
employment or occupation
Freedom of association and collective bargain-
ing (Conventions 87 and 98). The right for workers
and employers to freely create and participate in
organizations to promote and protect their interests
is a fundamental principle behind the ILO s work.
Signatories must give workers and employees the
right freely to establish and join organizations of
their choice, without any type of prior authorization.
Signatories further agree to establish mechanisms
to ensure the right to organize and to encourage the
practice of negotiating between employers and
workers organizations.

SOURCE: http://www.ilo.org/declaration/principles/freedomofassociation

707

for European trade unions in collective bargaining. Second, new bilateral agreements
between trade unions in two countries grant reciprocal memberships to members in
both unions and provide for cooperation between these unions in exchanging informa-
tion, developing closer coordination with respect to European works councils,
(labor management forums where MNCs operating in multiple European countries
share information with their unions) harmonization of pay demands, and training. Third,
cross-national coordination of collective bargaining strategies is taking place. Trade unions
are agreeing on a common bargaining strategy and exchange of information. Trade unions
in Germany, Netherlands, Belgium, and Luxembourg agreed to make pay demands reflect
inflation and productivity gains and agreed to bargain on reducing the hours of work. The
ETUC has established bargaining committees comprised of officials from European-level
federations who are responsible for collective bargaining. The intent is to achieve some
consistency in collective bargaining across national boundaries.21

One of the promising developments for transnational collective bargaining is occur-
ring in Europe under the European Company Statute under the European Union (EU).
Under this legislation, companies that operate in more than one EU member country
can work under the umbrella of a single legal framework, thereby reducing the internal
costs of operating in several countries. Not only is this an attempt to develop an appro-
priate corporate governance but to develop well-developed and well-functioning indus-
trial relations, which gives workers a significant influence over company decisions.22

Most MNCs generally consider transnational labor relations a distant prospect and
one that will not be lightly entertained by management. Part of management s opposition
stems from the unions potential for shutting down production internationally. Further-
more, transnational bargaining would introduce a tri-level structure of bargaining that
would include multinational negotiations, followed by national, industry-wide bargaining
(common in some European countries), and then local negotiations. This additional level
would increase the complexity of negotiations, as well as companies vulnerability to
strikes at the international level without a comparable reduction in vulnerability at the
national and local levels.

In some cases, countries themselves are now encouraging investments by MNCs by
using taxation policies, building limitations, requirements for local partners, the possibility
of nationalization and expropriation of facilities, and the risks of political uncertainties to
deter MNC investments. Less-developed countries seek additional investments by MNCs for
economic stimulus to the countries development, income, and other employment programs.
MNCs find these countries attractive because of the low-wage structure, tax incentives, little
regulation and political guarantees. Such advantages are particularly appealing to the MNC
that must operate in a very competitive product market. However, when unions press via
transnational bargaining for improved wages, benefits, and working conditions all socially
desirable goals for the populace they become a force running counter to the short-run
national economic goals of the country. The economic boost MNCs can give a developing
nation will not occur if firms fail to locate there. MNCs might well decide to avoid countries
with the high wages and benefits that transnational bargaining has instituted.23

Obstacles for Unions in Bargaining with Multinational Corporations
American and foreign unions face formidable tasks in their efforts to arrange transnational
bargaining because they must be successful in mediating and balancing the conflicting
interests of different groups encompassed by the MNCs employees, labor leaders, compa-
nies, and governments. In fact, unions themselves provide some of the more important
obstacles to transnational bargaining; however, these obstacles are not insurmountable.
Only when these obstacles are overcome can attention be turned to external factors.

708 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Differences in Labor Relations Laws
Legal systems for labor relations vary widely among countries. There are different meth-
ods for determining union representation, different union jurisdictions and structure,
and differences in the scope of bargaining.24

Absence of a Central Authority
Unions lack strong, centralized decision-making authority on transnational affairs, and
most national union leaders are reluctant to allow a transnational body to make deci-
sions that affect their unions and members.

Cultural Differences
Cultures differ in numerous ways, including individualism-collectivism, common
responses to powel, and indulgence-restraint; unions, like other institutions, reflect
scuch cultural tendencies. Among complicating factors are differences in ideological and
religious beliefs several, for example, free trade unions and socialist- or communist-
linked unions. Such differences have made joint undertakings between unions in the
free world and elsewhere almost impossible.

Lack of Coordination of Activities
Unions have not been very successful in coordinating their transnational bargaining, boycott,
and strike activities. An excellent example occurred in the last major rubber strike of Good-
year, Uniroyal, B. F. Goodrich, and Firestone. Each had extensive overseas operations. Sup-
port for the U.S. strikers came from the International Federation of Chemical, Energy,
Mining, and General Workers Unions (ICEM), which has affiliates in Europe, North Amer-
ica, and Japan. The ICEM Rubber Division approved a ban on overtime by employees of
nonstruck companies and a system of monitoring and preventing shipments to the United
States. At the end of the strike the longest rubber strike in U.S. history the ICEM claimed
that its efforts had had a significant effect on the bargaining outcome; however, the facts
seemed to contradict this claim. Researchers could not identify a single instance of interfer-
ence with tire shipments from Europe, Japan, or North America during the U.S. rubber
workers strike. In fact, they found that imports jumped substantially in anticipation of the
strike and never fell below the prestrike level. Furthermore, even Canadian imports were
significantly increased during the strike, reversing what had occurred several years before,
when U.S. rubber workers refused to support a strike by Canadian rubber workers.25

Differing National Priorities
The economic, social, legal, and political differences among countries serve as yet
another obstacle to transnational bargaining. Few, if any, countries would subvert their
national needs to the interest of developing an international system of labor relations.

Employer Resistance
Employer resistance is less obvious than other obstacles at this time, mostly because of
the inability of the unions to overcome the other hurdles that they face. Once the initial
hurdles are overcome, employers opinions and attitudes concerning transnational collec-
tive bargaining will no doubt emerge, but in the meantime, MNCs may sit idly by until
the unions are able to eliminate the initial hurdles.

Effects of Unions on Multinational Corporations
Research has indicated that unions have had little direct effect on investment and pro-
duction allocation policies of MNCs in European countries. However, a recent study

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 709

reported evidence that industrial relations systems affected the foreign direct investments
by private companies in New Zealand and Great Britain. When the industrial relations
systems of those two countries became less restrictive, the foreign direct investments
were greater than in neighboring countries. The MNCs tend to be somewhat sensitive
to the industrial relations climate and prefer to invest where management has a greater
amount of leeway in allocating labor and reducing employee voice at work.26

MNCs rarely have been able to afford to switch production to other countries as a
bargaining or union intimidation tactic because of the costs involved. MNCs no doubt
would shift production to another country in cases where a labor dispute stops produc-
tion and the move is economically and practically possible. However, such decisions are
considerably limited because companies must have the necessary excess production
capacity available, and management must expect the labor dispute to last sufficiently
long enough to justify a shift in production before it would be feasible.

Overall, little evidence exists of substantial negative effects of MNCs on labor rela-
tions in countries in which they operate. MNCs usually offer prevailing or superior wage
standards and provide comparable working conditions for several reasons. The strengths
of unions in the respective countries, the highly integrated and institutionalized nature of
labor relations systems, and the socioeconomic and political climates of the countries
have clearly constrained the potential for direct adverse effect.27

Conclusions and Predictions on Transnational Bargaining
Systematic investigations of transnational collective bargaining reveal that it does not yet
exist broadly in any realistic form and is not likely to occur in the immediate future.
MNCs are generally opposed to it, and trade unions are not of a single mind on its desir-
ability. Although there have been several cases of information exchange between multi-
national unions and a few instances of union management agreements, only in the
unique U.S. Canadian and European Union environments do many transnational activi-
ties occur.

There has been no identifiable trend toward transnational collective bargaining by
companies and unions in the United States, Europe, or Japan. Some believe that no effec-
tive transnational collective bargaining will occur in the near future. However, others
believe that such collective bargaining is inevitable. If it occurs, it will probably develop
first in the European Union, North America, or Central America and deal initially with
general topics such as employment protection, investment policies, and codes of fair
practices, before broadening into other bargaining topics.

Globalization and Concerns about Free Trade

In 1947, the General Agreement on Tariffs and Trade (GATT), a multilateral agreement
which regulates international trade, was signed by 23 countries (now 123). Its purpose
was to reduce tariffs and trade barriers on a reciprocal and mutually advantageous basis.

The net effect of free trade globalization has been gains to consumers in lower
prices, greater efficiency in the overall economy, and reduced poverty in developing
nations. However, the distribution of the net benefits of free trade and globalization has
been uneven. American jobs have been lost in major industries, such as the automobile,
steel, textile, footwear, and consumer electronics, whereas jobs in the aircraft, computers,
entertainment, and finance industries have increased.

There is concern in the United States, the European Union, and Australia that Ire-
land, South Africa, Russia, and India (where there are two million college graduates per

710 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

year and 80 percent of the college graduates in India speak English) may do for the ser-
vice sector what China has already done for manufacturing. (Japan has similar concerns
about northern China, where Japanese is spoken.) In the near future, competition will
come from Malaysia and the Philippines, where there are 300,000 college graduates
each year who speak English. Also, any product can be manufactured in China less
expensively than in the richer, high-wage countries. Now, it is just a matter of time
before any service that can be electronically transmitted will be produced in India more
cheaply. Cheaper communications allow companies to move back-office tasks such as
data entry, call centers, and payroll processing to poorer countries, such as India, which
has three huge advantages for companies: a large pool of well-educated young workers,
low wages, and the use of the English language.28

One of the free trade agreements signed by the United States with our major trading
countries is the North American Free Trade Agreement (NAFTA). This agreement
removed most barriers to trade and investments between these three countries. Many of
the tariffs were eliminated immediately, and the others were phased out. Under NAFTA,
three countries became a single, giant, integrated market of over 450 million people with
a combined GNP of $19.2 trillion.

The United States has signed other free trade agreements, with countries such as
Australia, Chile, South Korea, and the Dominican Republic/Central America. These
agreements are similar to NAFTA whereby tariffs on trade with the United States are
eliminated. In addition, discussions began on a Free Trade Area of the Americas that
would cover 34 North, Central, and South America countries, extend trade agreements
similar to those under NAFTA, and cover a population of over 800 million.29

In 2015, Congress passed the Trans-Pacific Partnership that gives the U.S. president
fast-track authority over trade deal negotiations with 11 Pacific Rim countries that

have a combined GNP of $28 trillion, about 40 percent of the world s GNP.
The promises of NAFTA included creation of new and better jobs, rising incomes,

and economic growth acceleration to underdeveloped countries in Central America.
Whereas there would be environmental challenges, extra resources would be made avail-
able to address those challenges. Economists have attempted to identify the effects of
NAFTA on the economies of the United States, Canada, and Mexico. There has been
expansion in trade and foreign investment; in fact, U.S. exports to and imports from
Canada and Mexico now account for about one-third of U.S. trade (up from one-fourth
in 1990). However, there has been a contraction in manufacturing employment in the
United States and economic stagnation in Mexico.

In fact, Mexico wages remain low relative to U.S. manufacturing wages (see Exhibit 14.1).
In Mexico, productivity rates have improved; however, real wages have risen only
slightly. In several areas of the agricultural sector, there has been a near disaster for
most farmers, who have to compete with America s government-subsidized products,
such as corn. Up to 90 percent of the heads of families in some communities now
spend at least six months per year working in the United States and Canada
where they earn in four months the amount they would earn in Mexico in an entire
year. Mexican producers of horticultural products, fresh vegetables, and fresh fruits
have nearly doubled their exports to the United States. Sadly, successive Mexican gov-
ernments have failed to deal with structural problems of corruption, poor education,
red tape, crumbling infrastructure, lack of credit, and an inadequate tax base.30

Since the 1990s, over 600,000 Mexican farm jobs have been lost due to lower import
barriers for beans, apples, grapes, and other crops. In 2010, tariffs on imported corn were
eliminated, and loss of jobs increased. These job losses in agriculture have fueled migra-
tion into urban areas, where 80 percent of the population now resides. Migration to the

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 711

cities is much faster than the rate of new job creation. Investments encouraged by
NAFTA have produced 300,000 jobs, mostly in the northern cities. However, since a mil-
lion people enter the labor force each year in Mexico, there is an annual deficit of
700,000 jobs. As a result, 40 percent of the labor force about 12 million workers do
not have stable employment. Most of them work in the informal sector as street vendors,
maids, and short-term workers jobs that provide no social security protections. As a
result, the loss of rural jobs in Mexico has swelled the ranks of undocumented Mexican
workers in the United States.

While the value of exports was ten times greater than in 1990, the total compensa-
tion of these workers in Mexico is 23 percent of what similar workers in the United
States earn. Factories continue to use outdated equipment and inefficient work systems,
and technological improvements have been concentrated in the export-oriented plants
owned by global corporations, particularly in the electronics and automobile industries.
Managers realize that they must adapt to new work arrangements and improve the skills
of their employees; however, only a few companies, usually foreign-owned, have intro-
duced quality control methods and workplace systems that promote efficiency or provide
formal training for employees. Until changes are implemented, Mexican workers will see
few gains from free trade.31

Along the border with the United States, the number of maquiladoras plants (assem-
bly plants for export using imported parts and components) rose to 3,655 during the first
seven years after NAFTA was enacted in 1993. However since 2000, more than 850 have
shut down, and employment is down more than 20 percent from its peak of 1.3 million.
Companies are being courted by China, Malaysia, India, and Southeast Asian countries
with tax incentives, low wages, worker training, and access to the latest technology.32

There have been a loss of manufacturing jobs from the United States and Canada to
Mexico, but most of these jobs were low-skilled manufacturing jobs. There has also been
increased competition from low-wage countries, which has adversely affected Mexico.
The end result is that NAFTA did not achieve as much as the politicians promised, nor
as much negative effect as the critics claimed.33

North American Agreement on Labor Cooperation (NAALC)
The NAFTA provided several side agreements that were designed to protect employees
and the environment. The North American Agreement on Labor Cooperation (NAALC),
one of the two side agreements, commits the United States, Canada, and Mexico to
improve working conditions and living standards as NAFTA continues to promote
increased trade. Its objectives are to be furthered by intergovernmental cooperation and
by a procedure established to resolve complaints based on a monitoring system and a
series of steps to resolve unsettled disputes (up to arbitration). In the last ten years,
eight complaints have been filed against Mexico for its failure to enforce its labor laws.
One is currently under review and these others were denied for review. Complaints
included infringements on the right to freedom of association, charges of employment
discrimination, and occupational health and safety violations.34

Thus far, the NAALC has failed because the three countries disagree on its aims.
Canada and Mexico consider the NAALC a way to achieve greater intergovernmental
cooperation; the United States focuses on the dispute resolution mechanisms. As a result,
limited success has been achieved on either front because the parties seldom engage in
active cooperation and are reluctant to use the conflict-resolution mechanisms.35 Perhaps
another reason that the NAALC has not been successful is that some lawmakers in these
countries are concerned that these sorts of agreements violate their respective national

712 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

sovereignties and allow unelected transnational organizations to fashion domestic labor
regulations.

The NAALC has also fallen far short of the expectations of Canadian and U.S. labor
organizations. First, it does not offer remedies to workers whose legal rights have been
violated. Second, it is procedurally difficult to sanction NAFTA governments that fail to
enforce their own labor laws and violate the NAALC s 11 labor principles (see Exhibit
14.2). Whereas arbitration offers sanctions, the procedures are cumbersome, and only
occupational safety and health, child labor, and minimum wage issues may be arbitrated.
Core labor rights of freedom of association, bargaining collectively, and striking are not
subjects for arbitration. So far, no arbitration panel has been called into service.
Although the NAALC has not met expectations, it has provided an important education
and research role. Trade unions have publicized abuses for all to see and have brought
together cross-border coalitions among unions that would have otherwise not been
formed. Four complaints were brought to an equitable resolution after widespread nega-
tive publicity or threat of negative publicity. The conclusion of one study is:

The labor law side agreement is withering as an effective labor law enforcement and
MNC compliance strategy. To sustain as an institution designed in part to motivate
labor law enforcement and business compliance with labor policy, the remedy and
penalty aspects of the NAALC will need to be revisited.36

Jon Hiatt, formerly with the AFL-CIO, concluded that the case history of NAALC
has indicated that even when workers win, they still lose. He concluded that no work-
ers have been reinstated in any NAALC cases, there have been no concrete remedies
ordered, and no financial sanctions imposed. In fact, he concluded that corporate or gov-
ernment behavior has changed very little as a result of any cases brought under the
NAALC. Hiatt recommends several specific actions:

The NAALC, instead of being a side agreement, should be made a part of NAFTA,
which does not address worker rights.
All 11 principles of worker rights covered by NAALC (see Exhibit 14.2) should be
subject to final and binding dispute resolution and to possible sanctions.
The NAALC should address the need to raise a country s labor standards where
inadequate, not just the obligation to adhere to a country s existing laws.
The time frame for dispute resolution should be shortened.
Where a dispute involves an allegation that a company has violated the law, that
company should be required to participate in the hearing.37

Exhibit 14.2
Eleven Principles of the
North American Agreement
on Labor Cooperation

1. Freedom of association and protection of the right to organize
2. Right to bargain collectively
3. Right to strike
4. Prohibition of forced labor
5. Labor protection for children and young persons
6. Minimum employment standards, such as minimum wages and overtime pay
7. Elimination of employment discrimination
8. Equal pay for women and men
9. Prevention of occupational injuries and illnesses

10. Compensation in cases of occupational injuries and illnesses
11. Protection of migrant workers

SOURCE: http://www.mac.doc.gov/nafta/3006.htm (December 15, 2003).

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 713

Another assessment of the NAALC found five general trends. First, most of the
alleged violations of the NAALC side agreements have involved lack of or improper
enforcement of labor laws in Mexico. Second, labor unions and human rights groups in
one of the NAFTA countries are more likely to file the complaint in their own country
against another country. Third, most of the complaints allege violations of workers
rights to organize labor unions in Mexico, where independent unions have tried to orga-
nize workers. Fourth, the submission process has resulted only in conferences, seminars,
and public reports. While these are not effective remedies, employers desire to avoid
public attention has facilitated resolution in those cases where the submissions were vol-
untarily withdrawn. Fifth, the dispute resolution procedure has provided a platform for
those parties who want to raise concerns about the enforcement procedures in the
NAFTA member countries.38

Unions in Other Countries

With the growing interdependency among nations, major improvements in communica-
tion and travel between countries, and the increasing role of MNCs, learning more about
labor relations systems in other countries in the world is imperative. Books have been
written about many of the specific topics in this chapter, so no attempt is made to pres-
ent detailed descriptions or analyses of labor relations systems in the countries men-
tioned. This section presents unique and interesting features of a variety of countries
with the hope of encouraging readers to pursue more thorough investigation further.
The chapter s coverage ranges from the developing countries of Central and South
America to the countries nearest our borders Mexico and Canada to the major trad-
ing partners of the United States, such as Australia, China, Japan, and the Western Euro-
pean countries. The extent of discussion of each country s labor relations system is
determined by its proximity to the United States; its trade, economic, and political rela-
tionships with the United States; and its uniqueness among the world s labor relations
systems.

Many U.S. residents tend to view the rest of the world in terms of their own pat-
terns of living. The fact is that virtually no country has a labor relations system like
ours, and none are the same. One example of the differences between countries is the
degree of employee protection against termination without cause. In the United States,
only 20 percent of employees have such protection. In other words, the majority
of American employees can be terminated from their employment without any justifi-
cation unless termination is a violation of a contractual agreement, such as a collective
bargaining agreement or a law, such as a discrimination law. As shown in Exhibit 14.3,
50 percent of Canadian employees are protected, and 90 percent of employees in Aus-
tralia and the United Kingdom are protected. In Belgium, France, Germany, Italy, and
Spain, 100 percent of employees are protected against termination without cause. As
discussed in Chapter 12, there are basic principles for terminating employees for
cause.39

Canada has several major departures from typical U.S. labor relations practices.
Unions of Europe have much closer ties to political parties; Japanese unions are orga-
nized on the enterprise level; and Central American unions are split along ideological
lines. By contrast, the U.S. labor relations system is based on majority rule, exclusive
representation for bargaining agents, and political independence. Exhibit 14.4 presents
an overview of distinguishing features of foreign labor relations systems; the following
discussion briefly explains these systems.

714 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Another distinguishing feature between labor relations in the United States and that
of other countries of the world is the percentage of employees who are union members.
Exhibit 14.5 shows that the United States is listed among the least unionized countries,
such as France and Spain. Denmark, Finland, and Sweden are among the most unionized
countries, with more than 65 percent of the workforce being unionized.40

Canada
The relationship between the United States and Canada is probably the closest and most
extensive of any in the world. The staggering volume of trade is $1.8 billion a day in
goods and services, about 300,000 U.S. and Canadian citizens cross the border every
day, and 28,814 trucks cross daily. Since the North America Free Trade Agreement,
trade has increased over 270 percent.41

Canada s labor relations system is affected by a number of variables: foreign influ-
ences, climate, labor relations laws within provinces, natural resources, and two major
linguistic and cultural groups. Its economy is subject to cyclical fluctuations resulting
from harsh winters, seasonality of its industries, and foreign influences (mostly the
United States). In addition, Canada s geographical spread, labor laws within the pro-
vinces, and regional concentration of resources and production have led to decentralized
and fragmented collective bargaining. The penetration of U.S. corporations into Canada
have had a significant effect on Canadian labor relations because many major corporate
decisions still are made in the United States.42 Of the four largest labor unions in

100

80

60

40

20

0

Be
lg
iu
m

Fr
an

ce

Ge
rm

an
y

Ita
ly

Sp
ain

Au
str

ali
a

Un
ite

d
Ki

ng
do

m

Ca
na

da

Un
ite

d
St

at
es

Exhibit 14.3
Percentage of the Labor
Force That Is Protected
against Termination
without Cause

SOURCES: Hoyt N. Wheeler and Jaques Rojot, General Comments, in Workplace Justice: Employment Obligation in International
Perspective (Columbia, SC: University of South Carolina Press, 1992), pp. 368 369. See also Anthony Forsyth, Protection against Economic
Dismissals: Australian Law Compared with Five Other CEOD Countries, Journal of Industrial Relations, 51 (2009), pp. 723 730.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 715

Canada, three are in the public sector. Half of the largest 16 unions have their headquar-
ters in the United States. The Canadian Autoworkers and the Canadian Paperworkers
are two of the largest unions and were formerly affiliated with U.S.-based unions.

Although the public-sector unions continue to represent 71 percent of public
employees, private-sector unions have begun to recruit members outside their traditional
jurisdictions to offset their decline in membership. The Steelworkers now represent many
hotel and restaurant employees, and the Canadian Autoworkers represent fishermen on
the East Coast of Canada. In addition, some significant mergers have taken place, such as
the Canadian Retail, Wholesale Union (formerly part of a U.S. union) with the Canadian
Autoworkers.43

In 1956, union membership in Canada and the United States was about one-third of
the labor force. Union membership in Canada has remained at about the same strength,
whereas the United States has faced serious membership erosion. The union density of
27.2 percent is about two and one-half times the union membership percentage in the
United States.

The differences between the membership success of Canadian unions and U.S.
unions can be attributed to several interrelated factors: favorable Canadian labor laws
and court decisions, more aggressive union organizing, less employer opposition, and
supportive public policy. Favorable labor laws contribute to union organizing and suc-
cess. Canadian legal restrictions on employer opposition to unions also contribute to a
higher union density.

Exhibit 14.4
Overview of Distinguishing
Features of U.S. and Foreign
Labor Relations Systems

United States
Exclusive bargaining representation
Majority rule
Political independence

Canada
Influence by unions and companies

from United States
Two major linguistic and cultural groups
Decentralized and fragmented collec-

tive bargaining
Legal influence within provinces

Central and South America
Wide variation in the degree of

sophistication in labor relations
systems

Close connection between trade
unions and political parties

Voluminous labor codes and govern-
ment regulations that cover wages
and terms of employment

Negotiations predominantly at plant
level only

Western Europe
Exclusive bargaining representation

nonexistent
Much negotiation between employer

association and union confederation
with individual bargaining under the
resulting agreement

Many fringe benefits established by law
Worker participation mandated in many

countries

Japan
Labor management consultation/

teamwork
Lifetime employment in large firms
Enterprise unions
Wage system with much weight on

seniority
Higher status of human resource

department

Australia
Decentralized bargaining
Nonunion bargaining
Unfair dismissal law

Eastern Europe
Little collective bargaining
No labor agreements

716 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

The union certification procedures vary among the provinces in Canada. In New-
foundland, Nova Scotia, and Ontario, mandatory elections ( quick votes ) are held
within 5 business days of the application date ( as soon as possible in Alberta). In Man-
itoba and British Columbia, the card check procedure is required (since 2002 in British
Columbia; since 2000 in Manitoba). Mandatory certification elections reduced the union
certification success rates by about 9 percent. In British Columbia, when mandatory elec-
tions were in effect prior to 2002, the union certification success rate declined by 20 per-
cent in the private sector, but there was no difference between mandatory elections and
the card check procedure in the public sector.44

Three decisions of the Supreme Court of Canada reflect Canadian s recognition of
international standards in interpreting the freedom of association provisions in the

Finland

Sweden

Belgium

Denmark

Norway

Ireland

Austria

Portugal

Italy

New Zealand

Switzerland

Germany

United Kingdom

Canada

Greece

Netherlands

Australia

Mexico

Japan

United States

Spain

France

68.3

51.9

67.6

53.3

32.3

28.9

20.4

20.8

18.3

19.1

27.1

27.1

24.0

18.9

20.0

18.2

11.9

14.3

7.7

67.5

33.4

18.6

0 20 40
Union density 2000–2010 (percent)

60 80 100

Exhibit 14.5
Comparison of Worldwide
Union Density 2014

SOURCE: http://www.stats.oecd/org/Index.aspx?DataSetCode=UN_DEN

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 717

Charter of Rights and Freedoms enshrined in the Canadian constitution. First, in 2007,
the Supreme Court of Canada decided that collective bargaining was protected under the
freedom of association provision of the Canadian Constitution s Charter of Rights and
Freedoms. Second, the high court held that the exclusion of agricultural workers from
coverage under the Ontario Labor Relations Act contravened the constitutional guaran-
tee of freedom of association. Third, the Court invalidated a law passed in British
Columbia pertaining to health care, which would have overridden provisions in collective
bargaining agreement concerning layoffs and bumping rights. The Court ruled that this
law to eliminate important provisions in collective bargaining agreements without engag-
ing in good faith bargaining and consultation interfered with freedom of association.45

Differences exist between the United States and Canada in their respective public
sectors. All public employees in Canada are covered by collective bargaining laws that
provide finality and strikes are permitted except for essential services employees who
are primarily regulated by interest arbitration. With such favorable legislation, 71 percent
of public-sector employees in Canada are union members, twice that of the United
States. There was a significant difference in the provincial governments reaction to the
budget shortfalls and recession in 2008 to 2010. Instead of blaming the public-sector
employees and their unions and passing laws to limit collective bargaining rights, as in
Wisconsin and Ohio, the parties were by and large able to negotiate wage restraints with-
out modifying public-sector employee rights.46

In Canada, nonunion representation at the workplace is neither banned nor encour-
aged. As a result, a representative group of employees without any formal certification can
legally negotiate with their nonunion employer over formal conditions of employment
including wages and benefits. In the United States, a series of decision and interpretations
Section 8(2) of the National Labor Relations Act by the NLRB has limited the scope of
representation of nonunion employees. However, like in the United States, nonunion
representation reduces the demand for unionization and serves as a substitution for
union representation, a traditional union avoidance strategy used in the United States.47

In some provinces, there is arbitration available for the first contract. Analysis of the
use of first contract arbitration across Canada reveals that there is no evidence that the
parties have relied on arbitration to settle their differences. In fact, it appears that the
presence of first contract arbitration provides an incentive for the parties to reach an
agreement on their own without resorting to work stoppages or arbitration. Since first
contract arbitration is limited to first contracts only, there is no possibility that the par-
ties could become dependent on interest arbitration to resolve future disputes (no nar-
cotic effect). The end result is that the concern that first contract arbitration would
undermine the collective bargaining process has no support. Instead, first contract arbi-
tration supports and encourages collective bargaining.48

Other factors that contribute to greater Canadian union density are:

Canadian unions have exhibited greater activity in recruiting new members and
have assigned a higher priority to organizing than in the United States.
Some provinces have laws, granting greater job protection for striking workers;
limiting the use of replacement workers during strikes and lockouts.
Some Canadian labor boards in the provinces have greater remedial powers, for
example, a board may certify the union without a vote or it might order a first
collective bargaining agreement.
Employer campaigning activities during union representation attempts are more
restrictive, for example, more restrictions on the content of employer captive
audience speeches.

718 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

There is no such thing as a right-to-work law in Canada; in fact, 7 of 11 provinces
in Canada have made the agency shop (see Chapter 4) the statutory minimum.49

The scope of bargaining is greater because the distinction between mandatory and
voluntary subjects for collective bargaining has never been adopted in Canada.
Therefore, all subjects except those that are illegal may be negotiated.

With regard to labor/employment grievance arbitration, there are commonalities
(arbitration proceedings, court deference to the arbitrator s decision, arbitrators selected
by the parties) with the manner in which arbitration is conducted in the United States
and Canada; however, there are significant differences.

1. In the United States, grievance arbitration is considered a matter of private contract
between the parties; in Canada, arbitration is considered as having both public and
private elements.

2. In the United States, individuals other than the parties may attend the hearing only
with permission of the parties; in Canada, the issue of whether the hearings are con-
ducted publicly is decided by the arbitrators.

3. In the United States, the arbitrator s decision will not be published without the consent
of the parties; in Canada, arbitration decisions are required by law to be filed with the
government, to be accessible to the public, and to be reported to law publishers.

4. In Canada, arbitrators have exclusive jurisdiction to decide matters relating to
employment-related legislation such as discrimination issues; in the United States,
employees who alleged legal violations, such as employment discrimination based
on race, gender, age, or disability, still may proceed through the administrative and
court system.

5. In Canada, arbitrators can consider and apply external statues in the deliberations; in
the United States, arbitrators as a general rule do not consider external statutes
unless there is a clear direction from the parties or the contract.50

In 1991 the Supreme Court of Canada rendered a ruling opposite to the Beck deci-
sion in the United States (see Chapter 4). Unions can use membership dues for activities
not directly related to collective bargaining, including political contributions. If the deci-
sion had gone the other way, unions would have seen their political activities thwarted
by lack of funds and a restriction on their support for the New Democratic Party
(NDP).51

Mexico, Central America, and South America
Collective bargaining in Central and South America is less extensive and sophisticated
than corresponding activities in the United States; however, the number of labor agree-
ments has been increasing. A higher percentage of employees are covered by labor agree-
ments in Mexico, Venezuela, and Argentina than in the United States. The extent of
development of collective bargaining may be illustrated in three categories:

1. The advanced group, as exemplified in parts of Mexico and Argentina.
2. A much larger middle group in which bargaining ranges from advanced collective

bargaining with larger firms to very simple or no bargaining in smaller firms, as in
Chile and Brazil.

3. A large third group in which collective bargaining is not widespread, as in Costa
Rica, Ecuador, and Nicaragua.

Labor unions in Central America are relatively weak, especially in the private sector.
They usually do not represent workers in the informal labor market where most people

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 719

work. Where they exist, the unions lobby the inspection agencies to focus on their own
sectors rather than pressing for more aggressive enforcement overall.

Political parties in Central and South America on the left of the political spectrum
are more likely to introduce pro-labor legislation when they are in power to satisfy their
constituents and left-oriented governments are more likely to increase enforcement of
labor regulations.52

Mexico is the second largest trading partner of the United States and has the twelfth
largest economy in the world. Seventy-nine percent of Mexico s exports are shipped to
the United States and 50 percent of its imports are from the United States. Of the total
foreign investments in Mexico, about 50 percent is from the United States, whereas only
0.56 percent of the total foreign investments in the United States are from Mexico.53

In Mexico, trade unions remain extremely weak due to the complex legal and
administrative controls that regulate wages, contract negotiations, strikes, and union rec-
ognition. The labor courts in Mexico have significant decision-making powers over
union representation, registration of unions and the legality of strikes. Official unions
support the government s strategy of keeping wages low as a basis for its international
comparative advantage. Thus, the institutional constraints prevent any significant power
to extend workers and their unions.54

Mexico has paid a high price for its stability in terms of corruption and lack of dem-
ocratic processes due to seven decades (ended in 2000) of one-party rule by the Institu-
tional Revolutionary Party (PRI). However, Mexico is a model of stability when
compared to many Latin American countries. Union membership in Mexico declined
from over 30 percent in 1984 to 13.6 percent in 2012. However, because of the variety
of unions in Mexico, sometimes it is difficult to determine whether a worker is really a
union member. Confounding the determination of the number of union members is the
presence of company unions (ghost unions) which negotiate protection contracts with
employers, whereby the union collects dues from workers but protects the company from
organizational campaigns by independent unions. By allowing the less intrusive ghost
unions to organize, the company is not subject to organizing campaigns from legitimate
unions. The Mexican laws allow ghost unions to be recognized almost immediately;
independent unions may be required to wait up to 10 years.

Most unions are in confederations that have traditionally been in alliance with the
Institutional Revolutionary Party (PRI). The largest is the Confederation of Mexican
Workers (CTM), which claims 5.5 million members. The Revolutionary Workers and
Peasants Confederation claims between two and four million. Teachers are the most
heavily unionized at 65 percent, and the dominant teachers union is the National
Union of Education Workers, which is affiliated with the independent Democratic Fed-
eration of Unions of Public Servants.55

The traditional labor union central bodies have long sacrificed freedom of action to
gain political influence and position. However, the importance of political influence to
workers has declined as the economy has decentralized and privatized. Today, unions
must obtain more for workers through enterprise collective bargaining and less through
influence with the government. Faced with NAFTA and international competition,
unions and employers are finding it increasingly necessary to work together to improve
productivity, competitiveness, and quality if companies and jobs are to survive and prof-
its and wages are to increase.

Mexico has undergone profound changes over the last 40 years. It has changed from
a closed, import substitution economy to become part of the open market economy. It
has joined the OECD and entered into the NAFTA. Mexico has experienced a dramatic
political change from a system dominated by the Institutional Revolutionary Party (PRI)

720 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

for more than 70 years with strong worker and peasant sectors and featuring leftist,
nationalist, and often anti-American rhetoric, to a more multiparty, democratic system
with a closer relationship with the United States.

Of the 51 million in the economically active population, less than 50 percent are
employed in the formal sector. These jobs are covered by social security and related pro-
grams funded through employer and smaller worker contributions (medical care, small
pensions, IRA-like compulsory retirement savings plan, and a housing loan fund). The
formal sector workers also receive profit sharing. Another 30 percent of the economically
active population works in tiny enterprises in the semiformal sector, where few are cov-
ered by social security. The remaining are marginally underemployed or self-employed in
the informal sector.

Mexico has comprehensive, progressive labor laws; however, there are major
enforcement deficiencies. Its constitution and laws provide extensive rights and protec-
tions for labor and favor union organization. Mexico has ratified 78 International Labor
Organization (ILO) Conventions, and 68 are currently in force. The legal protections for
union organization also can unintentionally protect and facilitate racketeering, sweet-
heart protection contracts, and undemocratic practices within unions. These practices
have been fairly widespread, but not universal. The CTM has recognized the need to
address corrupt practices and has agreed to promote changes that would lead to the
elimination of protection contracts. Nevertheless, such contracts are with respected busi-
nesses, and more than 50 percent of all labor contracts contain sweetheart protection
clauses.56

One of the most important developments in the last century has been the Mexican
Supreme Court s decision on May 11, 1999, which recognized the legitimacy of indepen-
dent unions that were not affiliated with the CTM. This decision allows employee groups
of 20 or more the right to form unions on their own. To obtain protection under the law
and to conduct collective bargaining, the unions are required to register with the Secre-
tary of Labor and Social Welfare. However, the government has been willing to deny
some new union registrations, and this denial has become a weapon to be used to pre-
vent the more activist independent unions from representing workers. In addition, labor
laws in Mexico permit exclusion clauses, which allow for restrictions on hiring (essen-
tially a closed shop [see Chapter 4] that requires potential employees to become mem-
bers with CTM-affiliated unions before they can be employed).57

The Mexican Constitution and the Federal Labor Law guarantee the right to strike;
however, a six to ten days notice is required, followed by government mediation. If a
strike is ruled nonexistent or illicit, employees must remain at work, return to work
within 24 hours, or face dismissal. If the strike is ruled legal, the company must shut
down totally, management may not enter the premises until the strike is over and striker
replacements may not be hired. In the administration of these laws, unions have accused
government authorities of stretching the legal requirements to rule that strikes are non-
existent or illicit so that they can prevent potentially damaging strikes.

Under Mexican law, closed shops are allowed in collective bargaining agreements, as
are exclusion clauses, which allow union leaders to veto new hires and force the firing of
anyone the union expels. Under Mexican law, several mandatory benefits and protec-
tions are provided. Work shifts are eight hours for the day shift, seven hours for the
night shift, and seven and one-half hours for a mixed shift. The work week is 48 hours
with a full day of rest. Workers are paid double for overtime and triple for more than
nine hours. Overtime is voluntary and often refused. A Christmas bonus equal to at
least two weeks wages must be paid to employees in December of each year. Mexican
workers are guaranteed seven holidays per year and are paid double time for work on

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 721

holidays. Employees are entitled to six working days of paid vacation after one year of
service, with more days added as the years of service increase. Employees are entitled to
a vacation bonus equal to 25 percent of the weekly salary. Employees are also entitled to
severance pay when termination is without just cause ; however, this money is usually
paid any way rather than the employer trying to prove just cause to the labor board.58

The Conciliation and Arbitration (JCA) boards help workers and employers resolve
labor disputes. If an employer violates a worker s rights, the worker can file a claim with
the local or federal JCA. Also, if the employer fails to comply with the collective bargain-
ing agreement, the union can file a claim with the local JCA.59

Under Mexico s constitution, workers are entitled to participate in the profits of the
enterprise. Employees participate in the profits at a percentage rate fixed by the National
Committee for Workers Profit-Sharing in Enterprises. This committee is required to con-
sider the general condition of the Mexican economy, the promotion of industrial develop-
ment, the right to obtain reasonable interest on capital, and the necessity of reinvestment
of capital. Fifty percent of the profit shared is distributed equally among employees in
accordance with the number of days worked during the year. The remaining 50 percent
is distributed among eligible workers in proportion to the earnings for the year.60

The opening of the Mexican markets to NAFTA and international trade, the deval-
uation of the peso, plant closings, and corporate downsizing to become more competitive
have created an economic challenge for the entire country. Free collective bargaining in
the last few years has been limited voluntarily and replaced by annual national pacts
negotiated by the government, the major trade unions, and employers with the major
goal of controlling inflation. Many efforts have been made by employers, unions, and
the government to create greater flexibility and labor management cooperation to
improve productivity, quality, and employee remuneration.61

Since NAFTA was enacted, there have been numerous alliances and exchanges
between Mexican, U.S., and Canadian unions. AFL-CIO officials have agreed to
exchange visits of union officials and labor lawyers. The United Auto Workers and
Canadian Auto Workers have conducted safety and health training in Mexico. The Steel-
workers have provided financial assistance to Mexican unions to assist their organizing
efforts. There have been worker-to-worker exchanges that help to erase stereotypes of
both U.S. and Mexican workers by providing workers on both sides with opportunities
to cross the borders and tour plants, attend union meetings, work on organizing drives,
and walk picket lines. As an example, union organizers from Mexico went to Milwaukee
to meet with Mexican workers to speak of their own experience in telling them that the
U.S.-based United Electrical Workers was a democratic union, unlike some unions
(ghost unions) in Mexico.62

Beginning in the later 1980s, most countries in Central and South America reformed
their regulations of labor relations. In 1988, after two decades of military dictatorship,
the Brazilian government reinstated collective labor rights and expanded unionization
rights to public employees. Four countries Chile, El Salvador, Nicaragua, and
Panama reduced the number of workers required to form a union. On average, 20
workers are needed to form a union in the region. Countries eased their strike regula-
tions. The Dominican Republic, Nicaragua, and Peru now require a simple majority of
workers in a work center to call a strike. Argentina and Peru gave unions the legal
right to obtain financial information from the employer to facilitate collective bargaining.
Guatemala simplified the procedures for forming unions and increased employer fines
for violating labor laws.

Although laws have been passed to enable union organizing, the number of union
members has declined. As well, although requirements for calling strikes have eased,

722 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

fewer strikes have occurred throughout Central and South America. In some countries,
strikes are rare. For example, in Costa Rica, there have been only two legal strikes in the
last 60 years. Another problem is the lack of adequate enforcement and the failure to
fund the enforcement agencies. For example, in Bolivia, there are only 18 workplace
inspectors in La Paz, a city with over one million people. In Brazil, three million worker
complaints lingered in the labor courts in 2003, and some cases took five to ten years to
resolve.63

With the outsourcing of manufacturing jobs to Central America, primarily from the
United States, it is theorized that manufacturing workers would achieve greater economic
benefits through higher wages and improved working conditions and this economic
growth would enhance union-organizing power. To the contrary, MNCs have restruc-
tured their operations by increasing their outsourcing or subcontracting of parts of the
production process to independent rival firms located in developing regions, thereby
forcing small firms to compete for a limited number of contracts and putting pressure
to lower costs and remain nonunion.64

Negotiations between unions and employers in Central and South America take
place primarily at the plant level. Only Argentina, Venezuela, and Mexico have wide-
spread industry-wide bargaining. The principal reason for this arrangement is that legis-
lation in the various countries typically does not require employers to bargain except at
the plant level.

In the more industrialized countries of the world, people interpret labor
management relations to mean the wide range of relationships between employers and
employees. However, people of Central American countries tend to define labor relations
in terms of the voluminous labor codes and government regulations.

Labor relations vary widely among the countries in Central America, but they have
one common feature: a close connection between trade unions and political parties. For
example, in Mexico, unions constitute a large section of a political party and therefore
are assigned a quota of candidates on the party s ticket for office. Thus, unions have
some assurance of having a voice in the party s program and on its council. Some unions
have been very effective in gaining relatively high wages for members. For example, the
electrical workers in Mexico earn two to three times more than the urban working
class.65 Likewise, unions have been criticized because they have made gains for their
own members while neglecting the interests of the great mass of people, including the
peasants, who are terribly poor.

Labor agreements vary in content both within countries and among countries. In
Argentina, labor agreements include provisions that set forth in some detail the employ-
ment conditions and establish a highly developed shop steward system to administer
grievances and ensure that employers abide by the agreements. In Chile, labor agree-
ments are more general, but they do establish certain minimum rules and include a
grievance mechanism to enforce the agreement. In Brazil, where unions have struggled
since 1945 to have a greater say in determining employment rules and conditions for
their members, they have achieved more through labor legislation than by engaging in
collective bargaining.

In Central American countries, political parties maintain close ties with unions for
their support, votes, and influence. Likewise, trade unions depend on the politicians for
laws to protect their members, to legalize their organizations, and to regulate their rela-
tions with employers. On the other hand, political parties have appealed to organized
labor to favor their own policies, and in some cases, they have accommodated organized
labor in hopes that it will remain satisfied and continue to support the existing economic
and political system.66

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 723

The United States has signed a free trade agreement, the Dominican Republic
Central America Free Trade Agreement (DR CAFTA), with the countries of Costa
Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. Eighty
percent of U.S. exports of consumer and industrial goods from Central America and the
Dominican Republic will become duty free immediately with the remaining tariffs
phased out over ten years. U.S. exports that will benefit are information technology, agri-
culture, construction equipment, paper, pharmaceuticals, and medical and scientific
equipment. Tariffs on U.S. autos and auto parts will be phased out within five years.
DR CAFTA addresses worker rights protections with a three-part strategy intended to
ensure effective enforcement of domestic laws, establish a cooperative program to
improve labor laws and enforcement, and build the capacity of Central America and
the Dominican Republic to monitor and enforce labor rights.67

Cuba
Although not a major trading partner of the United States, Cuba, which is the largest
island nation in the Caribbean Sea, is on the brink of social, economic, and political
change. For years, Cuba received about $6 billion in annual subsidies from abroad,
including the Soviet Union and Venezuela. With the economic decline of the former
Soviet Union and Venezuela, China remains Cuba s major external supporter. Cuba is
the largest island in the Caribbean Sea and its shore is 93 miles from the United States.
During the presidency of Raul Castro, Cuba has been slowly moving toward more privat-
ization of its economy although the government plays the major role in its direction. As
example, in 1982, only 8 percent of the workforce worked in the private economy, today
22 percent works in the private economy. Tourists find out very quickly that a black
market exists in Cuba wherein taxi drivers, tour guides, hotel employees, and others wel-
come cash especially U.S. dollars.

On April 14, 2015, President Obama announced that the United States had taken
Cuba off the list on countries that support terrorism. This act was welcomed by the
Cuban government and the two countries negotiated the avenue to reinstating formal
diplomatic relations. The United States eliminated many of the restrictions on travel to
Cuba and 600,000 U.S. citizens are projected to visit Cuba each year.68

Obtaining a true picture of labor relations in Cuba is presently difficult because of
the absence of a free press. Propagandists from the government describe a free and inde-
pendent trade union that promotes the interests of the government and the Cuban peo-
ple. From the opposite site is a description that trade unions are subservient to the
government and has a role of enforcing the government s policies. See the Labor Rela-
tions in Action on page 725. In fact, it appears that the further one looks back, the
more accurate the picture becomes.

For Cuba to be successful, trade unions in Cuba must become part of the system and
contribute to it. However, currently there are no independent and autonomous trade
unions. In fact, independent trade unions are prohibited by law, and the law does not pro-
vide for the right to form unions, the right of collective bargaining, or the right to strike.

In 2011, Cuban Premier Raul Castro (who replaced Fidel Castro in 2008) announced
a plan to gradually cut as many as one million jobs from the public sector, 20 percent of
Cuba s workforce. Some experts view this move as a step toward transformation of
Cuba s communist economic model to a more market-oriented one. It is predicted that
over the next five years, several hundred thousand workers will move from the public to
the private sector. This government plan has failed to provoke any protest or criticism
from the Workers Central Union of Cuba (CTC). To the contrary, the CTC helps imple-
ment the cuts, which will generate widespread insecurity and anxiety. Salvador Valdes

724 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Mesa, the CTC s chief, was appointed by the ruling Communist party rather than being
selected by union members as is the norm for independent unions. The laid-off workers
can seek compensation for one month s salary for every ten years on the job.69

As countries in Eastern Europe have moved toward more democratic and pluralistic
economies, so shall Cuba in time. The future choices will then be the various forms of
labor participation programs, such as work councils, employee collectives, and greater
reliance on collective bargaining at the enterprise level. Unions have become the primary
means by which workers are represented. Unions represent a broader segment than their
membership; they represent retired pensioners, the unemployed, and other interest
groups. Unions in Eastern Europe have become political partners within the framework
of tripartite arrangements (government, labor, and management). Whether these
approaches are suitable for Cuba s transition is open for debate. What is certain is that
the economic globalization trend will continue, posing the question as to what extent
Cuba will participate in that process.

Western Europe
In Western Europe, union density is significantly greater than in the United States, with
the exception of France. Of the largest countries, the range is from less than 10 percent
in France to over 60 percent in Denmark, Finland, and Sweden. Unions have been able
to use this membership strength to accumulate political influence at the national level.
Furthermore, they have been able to coordinate their efforts with large, well-established
labor parties in government to achieve their goals.

LABOR RELATIONS IN ACTION
Two Views of Trade Unions in Cuba

On the Web page http://www.cuba-solidarity.org.uk/, it
shows that there are 17 different national unions with
workers organized by industrial sectors. A federation of
these unions is the Central de Trabajadores de Cuba
(CTC) is organized and meets every five years to dis-
cuss and propose plans to improve the economic and
social conditions of workers in Cuba. The CTC is fully
involved in the legislative process and government pol-
icy making and every employment law and regulation
are discussed and must be approved by the trade
unions. Membership in trade unions is voluntary and
independent of the Communist party and state. There
are few disputes between unions and management
because conflicts are resolved through negotiations
and collective bargaining. Every month, an assembly of
workers meets and reviews production plans and dis-
cusses problems with the administrators of their
workplaces.

On the web page, http://www.globalsecurity.org/
wmd/library/news.cuba/4889.htm, a quite contrasting
point of view is presented. Here, it is described that,
when Fidel Castro took power in 1959, he promised to
fulfill labor s goals. His regime sought to bring the CTC

under the control of the Communists. Over time, Cas-
tro purged the CTC leadership and replaced them with
his supporters. By 1981, the CTC was under the con-
trol of the Communist party and many labor laws and
provisions of collective bargaining agreements were
made null and void. In other words, the trade unions
became instruments of the Castro regime. Today, the
Communist party selects the leaders of the CTC and
the CTC s principal responsibility is to ensure that the
government s production goals are met. The CTC does
not promote worker rights, observe the existing labor
laws, or protect the right to strike. The CTC is under
the control of the state and Communist party,
which also manages the enterprises for which the
laborers are employed. The Cuban government prohi-
bits independent unions and none are recognized.
Workers who engage in union activities face govern-
ment harassment and possible prosecution. The Inter-
national Labor Organization, a highly respected
international organization, has found violations of con-
ventions on employment discrimination and employ-
ees rights to unionize and to engage in collective
bargaining.

725

As in the United States, union membership in Western Europe as a percentage of
the labor force has declined. Nationwide and industry-wide bargaining is less fre-
quent, and employers are winning more concessions for efficient work rules and
wages. Also, as in the United States, unions are trying to sign up new members in
growing industries, such as leisure and finance, where technological change has fueled
worries about job security.70 Unions have achieved significantly greater worker partic-
ipation in the operation of the firm many times through legislative mandate and
sometimes through management reaction to wildcat strikes and worker dissatisfaction.
In addition, public opinion in these countries strongly supports the idea that worker
participation enhances production, fosters harmony, and enriches the workers
personally.

The labor relations system in Western Europe can be contrasted with that of the
United States in a number of ways.71

1. In the United States, unions are selected by the majority of the appropriate bargain-
ing unit and certified as the exclusive bargaining representative, whereas in Western
Europe, exclusive representation is not a common concept.

2. In the United States, the exclusive bargaining representative has a monopoly over all
employee bargaining, and the employer is required to bargain only with the legally
certified union. In Western Europe, the employer often bargains with a number of
unions in addition to worker councils elected by the employees.

3. In Western Europe, negotiations take place between representatives of employer
associations and those representing a confederation of unions; in the United States,
this type of bargaining arrangement is adopted only in a few industries, primarily
construction.

4. In North America, the focus of union management interaction is the shop floor,
whereas in Europe, bargaining at national levels is the major focus of most unions.72

5. More fringe benefits are established by law in Western Europe than in the United
States; therefore, trade unions have found that they can obtain benefits more quickly
through the political process and have tied themselves more closely to political
parties.

6. Western European countries have a greater commitment to employee training. For
example, German firms spend twice as much on this activity as U.S. firms, or nearly
17 times as much per apprentice. In Germany, two-thirds of all young adults enter
apprenticeship training programs. In contrast, 57 percent of high school graduates in
the United States enroll in postsecondary education, and the majority drop out
before graduation.
The apprentice signs a formal contract with the firm and receives a predetermined

wage rate, which is a fraction of the regular rate over the entire training period. The
duration of the apprenticeship is typically 2 to 3.5 years, during which the apprentice
spends two days of the working week in vocational school and the rest of the week at
the firm learning how to become a skilled worker. At the end of the training the appren-
tice takes an external exam and the degree is recognized by employers throughout
Germany.73

One major reason for the disparity in support for employee training between
Germany and the United States is the role of unions and employer associations. German
companies band together in employer associations to negotiate with unions over wages
and other personnel matters, such as training. Because unions are stronger in Germany,
the labor agreements require investments in training, and collective bargaining provides
the mechanism for collecting union dues and fees. This approach is similar to the

726 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

high-quality apprenticeship programs financed by contracts between craft unions and
employer associations in the U.S. construction industry.74

European Union
By 1992 the economies of 12 countries in Western Europe (Belgium, Denmark,
Germany, Greece, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain,
and the United Kingdom) were joined together as the European Union (see Exhibit
14.6). In 1995, Austria, Finland, and Sweden joined the EU. By 2007, the EU had a
membership of 28 countries with a combined population of over 507 million (7 percent

Exhibit 14.6
The European Union

Iceland

Joined in 1995

Original Members

Members in 2004

Admitted in 2007

Sweden

Norway
Finland

Russia

Belarus

Latvia

Estonia

LithuaniaKalingrad

Slovakia

Moldovia

UkraineCzech
Rep.

Poland

Austria
Hungary

RomaniaRomania

Bosnia-
Herzegovena

Montenegro

BulgariaBulgaria

Romania

Bulgaria

Macedonia

Sicily
Cyprus

TurkeyTurkeyTurkey

Greece

Albania

Italy
Slovenia

France

Luxembourg

Denmark

Netherlands
Belgium

Great Britain

Ireland

Portugal

Spain

Switzerland

Germany

Croatia

Serbia

N. Ireland

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 727

of the world s population) and an economy of over $18 trillion, the largest in the world
(see Exhibit 14.6).

The EU s goal is the gradual elimination of economic barriers among member coun-
tries and removal of restrictions on the movement of goods, capital, and labor across
national borders. The EU constitution includes employment and social issues (see
Exhibit 14.7 for the employment-related issues).

The Charter of Fundamental Social Rights (called the Social Charter) was approved
by all EU countries except Great Britain. This arrangement establishes certain standards
for working conditions throughout the EU so that some countries cannot attract industry
merely because their pay and working conditions are below those of other countries. The
charter stipulates statements of principles on fundamental rights that include freedom of
association and encourages collective bargaining; vocational training; equal treatment for
men and women; health and safety; child protection; and rights of information, consul-
tation, and participation for workers.75

Critics of the Social Charter have argued that the EU has returned Western Europe
to a re-regulation phase that will raise labor costs, inhibit employment growth, and dis-
proportionately affect the poorer employees. Critics contend the end result of mandated
benefits in the Social Charter will lead to higher costs and an erosion of their external
competitive position.76

Companies have experienced the effects of the EU, which could include increased
mobility of employees among operations in the various countries, more recruiting from
overseas, more active monitoring of pay and benefits developments in other countries,
and increased language training, as well as a premium placed on language skills. These
areas and others will provide much opportunity for trade unions to be involved at the
bargaining table.

At the EU level the European Works Council (EWC) Directive was adopted in 1995
to provide a legal right for workers and their representatives to be consulted and
informed about MNCs operating in more than one country. Any MNC employing

Exhibit 14.7
Employment-Related Elements
of the Charter of Fundamental
Rights

Prohibition of slavery and forced labor
Protection of personal data
Freedom of assembly and association, including trade union matters
Freedom to choose an occupation and the right to engage in work
Equality in employment matters including prohibition against employment discrimi-

nation based on sex, race, color, ethnic or social origin, nationality, genetic fea-
tures, language, religion, disability, age, or sexual orientation

Information and consultation
Right of collective bargaining and action
Right of access to placement services
Unjustified dismissal
Fair and just working conditions, including health, safety, and dignity
Child labor and protection
Family and professional life, including protection against dismissal connected to

maternity and the right to paid maternity leave and parental leave following birth
or adoption of a child

Social security and assistance in cases such as maternity, illness, industrial
accidents, dependency or old age, and loss of employment

SOURCE: European Union: 2003 (Washington, D.C.: U.S. Printing Office, 2003), pp. 17 19.

728 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

more than 1,000 workers in the European Economic Area (EEA includes the EU coun-
tries plus Norway, Iceland, and Liechtenstein) and with 150 workers in at least two
member states have to establish a procedure for informing and consulting employees
when the workers asked for it. The European Trade Union Institute estimates that 2400
MNCs are covered by the directive. By 2012, 1,214 MNCs had negotiated voluntary
agreements. Although these agreements are indeed transnational, their effect on worker
representation, unions, economic performance, and labor markets has yet to be
determined.77

Under the Works Constitution Act, the staff in every firm with five or more
employees has the right to elect a works council. Despite the right to establish works
councils, only 10 percent of the firms with five or more employees in the private sector
have a works council. However, the probability of having a works council rises in direct
proportion with the size of the firm with well over 40 percent of all employees working
for a firm with a works council. The elected members of the works council are exempt
from their regular duties without pay cuts during the council activities. The members of
the works council may formally object to hiring and firing decisions taken by manage-
ment in the event that social criteria, such as age, tenure, financial obligations, and dis-
ability, are not respected. Work councils also monitor safety standards and are
responsible for implementing and monitoring collective bargaining agreements at the
plant level.

Trade unions support the works council system, and many of the works council
members are also members of unions. In fact, collective bargaining agreements amplify
the effectiveness of the works council voice at the workplace in several ways. Works
councils can draw on the information obtained by the union during collective bargain-
ing. Collective bargaining reduces the potential conflicts between the works council and
the management of the firm because several sensitive issues, such as wages, working
time, and safety, have already been resolved in collective bargaining. As a result, collec-
tive bargaining may improve the cooperation between the works council and manage-
ment. Also collective bargaining reduces the burden for a works council to deal with
several issues, such as wage negotiations, safety issues, which are addressed in collective
bargaining agreements.78

Each of these EWCs meets at least once a year to discuss the firm s changes, its
business environment, employment issues, and future plans. Senior managers present
information to employee representatives who are asked to respond, and consultation
takes place over corporate decisions that affect workers in more than one country.
Most EWCs allow employee representatives to hold their own meetings before and
after the main sessions, and some EWCs are developing new forms of communication
between the annual events. Although EWC activities are separate from trade union
activities and European trade unions are not actively involved, the EWC provides a
mechanism for promulgating industrial relations policy initiatives across national
boundaries and implementing new regulatory measures in industrial relations within
the European Union.79

The European Works Council provided an avenue for trade unions that dealt with
General Motors Europe (GME) during the early 2000s. When GME was deciding to
close some plants and shift production during the economic recession and GME
attempted to whipsaw (pit one group of employees and their unions against another
group of employees and their union) by threatening to close plants and shift production
unless the unions granted bargaining concessions, the EWC provided a mechanism for
the unions in multiple countries to coordinate their efforts to save jobs and postpone
wage cuts.80

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 729

The euro, the common currency of the EU, replaced the separate national currencies
in 2002. The single EU currency (currently adopted by 19 of the 28 member countries)
has encouraged the formation of a single European economy as the corollary of a single
European market. A single currency was expected to make European markets for goods
and services more integrated and efficient. Therefore, European firms needed to become
more integrated and efficient to compete against each other and foreign competitors,
who were attracted to the EU as the internal barriers disappeared. A wave of consolida-
tions that were expected among businesses had already begun in banking, retailing, and
manufacturing. The mergers and consolidations evoked cost-cutting and major layoffs.
Unions and governments had to become attentive to the problems that coincided with
these events.81

In Western Europe, aggressive opposition to bargaining is relatively uncommon;
therefore, many countries do not have specific legislation that addresses these subjects.
However statutory or constitution provisions on freedom of association in some coun-
tries are interpreted as entailing the right to bargain.82

Great Britain
Like membership in trade unions in other countries, the number of union members in
Great Britain has declined since their overall peak in 1980 of over 13 million members
and 56 percent of the workforce. The decline in membership to 25.4 percent of the
workforce after 1980 can be attributed to industrial change, particularly manufacturing,
and government policies established particularly during the term of Prime Minister
Margaret Thatcher. In recent years, there have been promising signs of a resurgence,
due to the passage of the Employment Relations Act (ERA) of 1999 and the recent
growth in trade union recognition, particularly in professional unions (teachers, nurses,
and doctors). Continued success will depend on unions abilities in identifying, mentor-
ing, and developing new representatives who can provide a trusting relationship between
the members and their respective unions.83

Membership in unions in Great Britain s public sector (about 70 percent) is greater
than the private sector (about 20 percent). The Trade Union Congress (TUC) continues
to be the largest labor organization, and the TUC has 11 unions with each having over
100,000 members. Two other unions with over 100,000 members, the British Medical
Association (doctors) and the Royal College of Nurses (nurses), are not in the TUC.84

In Great Britain, unions gain legal recognition in companies with more than 20
employees if (1) the union wins a majority support in a secret ballot where at least 40
percent of the eligible voters actually vote or (2) 50 percent plus 1 of the eligible workers
in the bargaining unit are union members.85

After Britain introduced its new union recognition law, one U.S. union avoidance
consultant firm notified employers in Britain of its 65 years of assisting employers on
how to stay union free. In fact, one U.S.-based firm promoted itself as having a success-
ful record in Canada, Mexico, South America, the United Kingdom, Belgium, France,
and Germany.

Labor agreements are negotiated by a large number of multiunion multiemployer
negotiating committees. The United Kingdom has nearly 600 labor unions, over three
times the number in the United States, and a single manufacturing firm typically negoti-
ates with about seven unions. One of the most important negotiations involves the Engi-
neering Employers Federation, representing 5,000 companies, and the Confederation of
Shipbuilding and Engineering Unions, representing 34 unions and over two million
employees. This general agreement sets forth guidelines that establish the floor for addi-
tional bargaining at the plants. Labor agreements are negotiated and administered at the

730 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

plant level; however, they are not enforceable by law, and grievances are not subject to
private arbitration.

Shop stewards are volunteers who serve without pay. Unlike their U.S. counterparts,
they cannot be removed by union executives. Often, shop stewards accumulate much
authority and influence at the plant and have more control over local union affairs
than any national union official. Steward councils composed of union stewards from var-
ious unions and work councils representing members of the various departments are
important in the labor relations system.

Labor agreements at the plant level are often negotiated by representatives of the
national union, steward councils, and work councils. These agreements usually have no
fixed term and include letters of understanding, minutes of meetings, and oral under-
standings. Although there is no legal obligation to negotiate, unions have gained exten-
sive power and control over jobs by refusing to work with any employer whom they find
in bad standing and maintaining strict membership discipline.

An explosion of contingent pay plans, such as profit sharing, employee stock owner-
ship, and merit pay has occurred. This era of deregulation included new industrial rela-
tions legislation being passed every two years, with changes affecting these areas. The
responsibility for industrial relations was placed at the company level, and any collective
bargaining agreement would cover only a single firm.86

The act encourages voluntary settlement of recognition claims. The ERA provides
individual worker protections against unfair dismissal and protections for supporting
union recognition. After the Central Arbitration Committee (CAC) grants recognition,
the employer must bargain over pay, hours, and holidays but may bargain over other
issues as they wish. The act also introduced new protections from dismissal of striking
workers and established an Employment Appeal Tribunal procedure for unfair employee
dismissals. Since its passage, the parties to CAC cases expressed satisfaction with the
procedures.87

Germany
The German model of labor management relations rests upon three pillars: (1) central-
ized industry-level collective bargaining, (2) work councils, and (3) company-level code-
termination committees. The central wage agreements are designed to take wages out of
competition and the works councils are designed to facilitate implementation of the mas-
ter labor agreements and represent workers interests at the workplace. Collective bar-
gaining in Germany occurs between trade unions and employer confederations at the
industry and regional levels. With the exception of Volkswagen, which negotiates its
own collective bargaining agreements with their unions, collective bargaining over
wages and conditions of employment (job classification, working time, and working con-
ditions) occurs formally outside the plant. Strikes and lockouts are among the lowest in
the world.

The role of the works councils in Germany was determined by the Works Constitu-
tion Act of 1952 (amended in 2001). Under this law, works councils are set up in any
establishment with at least five permanent employees after a petition is filed by a small
group of workers or a trade union representing the workers. While mandatory, they are
not automatic. In fact, works councils are found in only 10 percent of German establish-
ments in the private sector. However, their presence rises sharply with plant size, and the
number of employees covered considerably exceeds their frequency. Members of the
works councils are elected by secret ballot for a four-year term and represent all workers,
not just union members. While works councils are formally independent of unions, as a
practical matter, the ties are usually close because three of the five works councilors are

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 731

union members. Typically, works councilors assist in recruiting union members at the
workplace and are considered pillars of union security.

Works councils at the workplace in Germany focus on production issues and indi-
vidual grievances and are charged with the implementation of the collective bargaining
agreements. Works councils may negotiate plant agreements with local management on
matters that are not covered by the collective bargaining agreements. Works councils
have actively participated in the fixing of wages above the formal wage schedule set
under the collective bargaining agreements and have negotiated provisions for special
bonuses and allowances at the plant.

The law provides works councils with rights to information and consultation on
subjects such as manpower planning, change in work processes, working environment,
and job content. There is a set of rules on codetermination or joint-management rights
on so-called social matters, which include subjects such as working hours, principles of
remuneration, holidays, health, and safety. The works councils also have consent rights
on hiring and firing decisions.

Work councils in Germany contribute positively toward family friendly work prac-
tices, such as on-site child care, flexible working hours, and leaves to meet family obliga-
tions, and are especially effective when there is a collective bargaining agreement and
where there are female representatives on the work councils.88

In Germany, there is also a system of codetermination at the company level wherein
representatives of employees sit on the company s supervisory boards. Although
Germany is the world s second biggest exporters of goods and this system of codetermi-
nation has held up moderately well in Germany, this system has not been exported suc-
cessfully to any other country. Currently, nearly 700 companies in Germany operate
under this system. The supervisory boards have four functions:

Approves the appointment of management board members
Monitors the management board that has to inform the board members of the
business policy and corporate planning on an annual basis and of business opera-
tions more regular basis
Can codetermine business operation requiring approval
Scrutinize the annual accounts of the company

Various laws stipulate different shares of seats that are assigned to employee repre-
sentatives on supervisory boards: full party codetermination for the coal and steel indus-
try with equal numbers of shareholders and employee members and one neutral
member, almost equal representation for corporations having more than 2000 employees
with election of the chair and vice-chair by two-thirds vote (if no one gains enough
votes, the shareholders elect the chair and vice-chair), and one-third representation in
companies between 500 and 2000 employees. It should not go unmentioned that the
laws that provided for these arrangements generated fierce employer opposition.89

With the dual system of industrial relations in Germany, unions have enjoyed stable
membership levels for many years; however, membership levels changed after the fall of
the Berlin wall and subsequent unification of Germany. Union membership has declined
from 19.1 percent of the workforce to 17.7. In eastern Germany, the decline was even
more dramatic where the membership started at almost 100 percent. Currently, unions
are attempting to gain the assistance of works councils in recruiting new union members.
Thus far, unions have been able to count on works councils in membership recruitment,
especially in large companies.90

The major federation is the German Federation of Trade Unions, which includes
eight major unions representing 80 percent of all union members. These unions bargain

732 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

at the industry and regional levels, with the manufacturing union taking the lead and
setting the wage standard for others to follow. For example, IG Metal, the German
metalworkers union, represents 2.4 million metalworkers and is the dominant wage
trend setter in national bargaining. Interestingly, Eastern German manufacturers, which
are still adjusting to a competitive market economy, are allowed to enter into hardship
agreements that exempt them for a period of time from the industry wage standard.
Companies seeking these agreements must prove they are close to bankruptcy and must
demonstrate a strategy for economic recovery by opening their books to scrutiny.91

Central and Eastern Europe Former Soviet Bloc Countries
Trade unions represent workers all over the region; however, their major role in many
countries has been to exert political pressure. For instance, solidarity in Poland, the orig-
inal independent union in Eastern Europe, has 2.5 million members and has played a
major role in the breakup of the Soviet bloc. Trade unions in Czechoslovakia led the rev-
olution, and then members voted out the old leadership and democratized the union
movement. The unions wanted the country to be divided along Czech and Slovak ethnic
lines, thereby creating the Czech Republic and Slovakia. In the former Soviet Union, the
trade union movement has been in a state of rapid flux; however, coal miners have
maintained their relative strength throughout the developments.92

Some countries in the former Soviet bloc are enjoying success in attracting new
industries. Offering lower wages and lower manufacturing costs, businesses primarily
from Western Europe are investing in central Europe particularly. The transition to a
market economy has been slow and judged not yet successful. Factories do not have the
funds to upgrade their plants, buy products from one another, or make payrolls. Faced
with massive restructuring and operational inefficiencies that have been allowed to
develop over the years, unemployment remains high.93

The transfer of labor institutions from Western Europe to Central and Eastern
Europe has been slowly progressing. Although Central and Eastern Europe represent
around 5 percent of Germany s foreign investments, the Czech Republic (tenth) and
Poland (fifth) are among the ten most attractive locations for Germany s direct investors.
Germany has become the leading direct investor in Hungary and the Czech Republic,
where it competes with the United States and France for the leading position. However,
there is no evidence that these German companies are exporting the German model of
labor relations to Eastern European countries. Instead, the German companies have
adapted to the host country s institutions and environment and transferred only those
labor relations practices, such as heavy emphasis on vocational training, long-term
employment commitment, and consensual work organizations, which are acceptable in
the host country.94

The cultures, traditions, and beliefs of West Germans have been slowly introduced
in East Germany. Works councils have been introduced in Hungary, and German labor
legislation has been introduced in Slovenia. The nature of collective bargaining varies
widely from merely endorsing legislation for consultation only to regulation of conflict.
Collective agreements on pay appear to be widespread in the unionized sectors; however,
employers refuse to negotiate on any other issues. Hungary and the Czech Republic have
had the most employment deregulation and workplace change, but unions exercise few
controls over employment contracts and working hours.

Collective bargaining varies across countries and companies. These differences in
collective bargaining are determined in part by the dissimilarities in legislation, nation-
ally inherited legacies, and the progress made toward economic reform. In Eastern
European countries such as Romania, there is a trend toward decentralization of

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 733

bargaining, thereby establishing terms and conditions of employment at the company
level with more authority delegated to managers and union officials at that level. Also,
the strike as a power source for the union is a new phenomenon.95

In Russia, where the market economy is still in its infancy, lawmakers adopted a
labor code that would present a reassuring face to millions of workers whose cultural
and psychological environment was thrown into disarray by the collapse of the Soviet
system. The new labor code marked a further step in Russia s process of legislative and
institutional reform in the field of labor relations. While the new code stops short of
making a clean break with the past, it reflects a radical departure from the former Soviet
system. Under the Soviet system, the purpose of a collective bargaining agreement was to
spell out in writing the mutual obligations of management and workers in the execution
of the production plans, introduction of new equipment, raising labor productivity,
improvement in quality standards, lowering production costs, strengthening production
and labor discipline, and training of supervisory personnel.

Under the new code, there is greater flexibility given to the parties with guaranteed
protections provided to workers (safety and health, minimum wages, etc.). The new code
covers contracts of employment, dismissal rules and procedures, and dispute resolution
procedures. The parties decide the appropriate level for collective bargaining; they may
choose to bargain at the enterprise, regional, industry, or federal level. The parties to col-
lective bargaining have chosen enterprise bargaining far more frequently. Bargaining
procedures, schedules, and duration of the labor agreements are decided by the parties.
Under the new code, unions have the right to strike, but only after a long detailed pro-
cedure of attempts at mediation and advanced notice. In addition, strikes in the public
services industries and in industries that would pose a threat to the country are prohib-
ited. During strikes, the freedom to work by nonstrikers must be guaranteed.96

Japan
Japan s labor relations system has five distinguishing characteristics: labor management
consultation and teamwork, lifetime employment in large companies, seniority-based
wage system, enterprise or company unions, and a higher status for the HR department.

Collective bargaining takes place at the enterprise levels, and umbrella organizations
may coordinate the negotiations. In most unionized enterprises, there are elaborate joint
consultation mechanisms in which union representatives participate. Joint consultation is
considered a means of information sharing, but most labor issues are also discussed at
these consultation meetings. Since the same people (top managers and union officials)
attend both the consultation meetings and negotiating meetings, the line between collec-
tive bargaining and consultation becomes blurred.97 Management and employees com-
municate considerably more in Japan than in most other countries. Ninety percent of
all Japanese companies have some sort of labor management consultation. The flow of
information is extensive. As examples, management reports to employees on the com-
pany s financial status, its problems, its expectations and plans, and on contemplated
technological innovations before they occur. All aspects of employment, training, disci-
pline, working conditions, and employee benefits are open for examination. Joint consul-
tation includes subjects that a U.S. manager would classify as management
prerogatives.98 Research has shown that when Japanese firms increase their information
sharing with employee unions, the negotiations are shorter and easier, unions tend to
demand and accept lower wage increases,99 and profitability and productivity are
improved.100

Teamwork and consensus building are a cultural heritage in Japan. Japanese
employees feel comfortable with this approach, and both sides stress sharing of goals,

734 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

responsibilities, and rewards. The communication links are through the normal channels
at work, such as meetings, newsletters and bulletins, labor unions, and labor
management councils.101

Lifetime employment, a standard in Japan since the 1950s when employers agreed to
this arrangement to quell labor unrest, has been applied to regular employees of large
employers (500 or more employees), which make up about one-third of the nonagricul-
tural workforce. These regular employees are hired after completing high school or col-
lege, with the expectation that they will be retained by the company until they reach the
mandatory retirement age of 60. Legal, written contracts are nonexistent; however, unac-
ceptable behavior may lead to a suggested voluntary resignation or a hidden discharge.
Lifetime employment has encouraged employers to invest in training these long-term
employees and has led to responsiveness by employees not only to participate in training
but to willingly accept innovation and technological advancement, knowing that they will
not be adversely affected by a layoff.102

When Japanese companies locate a plant in the United States, they most likely do
not adopt the lifetime employment concept. Although over half of the Japanese plants
have explicit no-layoff policies, only 5 percent of their plants located in the United
States have a similar policy. The Japanese plants use temporary workers as a buffer to
enhance employment security for their core workforce, whereas the U.S. counterparts
use layoffs to adjust to a shortfall in demand for workers. For example, auto parts plants
typically lay off employees for one month when retooling is required to meet new cus-
tomer specifications. In Japan, companies tolerate periods of substantial underemploy-
ment to avoid layoffs. In fact, some Japanese companies donate their employees to
perform community service during temporary slowdowns.103

Collective bargaining revolves around pay levels, particularly during the Spring
Wage Round, which used to be an important national event. The decline in union den-
sity and the sluggish economy have caused the annual Shunto (spring wage offensive by
Japan s unions) to decline in importance, and the focus of wage bargaining has shifted
toward bargaining at the enterprise level. The Shunto functions as a type of pattern bar-
gaining, whereby one union is selected to negotiate a new wage level with its employer;
the agreement that they reach is copied by the other unions within a union
confederation.

Mostly due to the recession in the first decade of the twenty first century, Japanese
firms have restricted recruitment of regular career employees. At the same time, the
employment of atypical workers (part-time, temporary, and fixed-term) and outsourcing
have increased.104

Those Japanese workers who are able to obtain employment in a long-term employ-
ment relationship, most in large corporations, enjoy relatively higher wages than those
outside the practice who experience lower wages and unstable employment.105

The wage system in Japan has several distinguishing characteristics:

1. Salaries are paid monthly, even if the employee has been absent (with justification)
from work.

2. Wage differentials are small between regular line employees and staff personnel, all
of whom are members of the same union.

3. Wage distinctions exist between amounts earned for one s work (e.g., efficiency out-
put) and amounts earned for just being an employee (e.g., allowances for housing,
transportation, and dependents).

4. Wages are accepted as permanent and last for the employee s entire career, including
a minimum annual increase and a lump sum at retirement.106

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 735

Length of service and age are more highly correlated with wages in Japan than in
other industrially developed countries. For example, between the ages of 40 and 50,
Japanese workers wages are 67 percent greater than those of 21- to 24-year-old employ-
ees, whereas in the United States, older employees wages average only 23 percent more
than those of younger workers. The smaller difference in income levels between man-
agers and workers than in other countries contributes to the sense of unity among
employees. Wage increases and promotions are primarily governed by the employee s
age and the length of service in the company. The seniority-based wage system serves
as a means of guaranteeing stability of employment throughout employees careers
within the company and is closely connected to the lifetime employment concept. In
addition to wages, employees are provided fringe benefits that enable them to enjoy
recreation and leisure activities, such as athletic competition, employee excursions, and
so on. Employees have access to facilities for hobbies, including sports, reading, and
board games. Companies offer special allowances for company-owned housing, dormito-
ries for single workers, and various health and welfare benefits. Workers in smaller com-
panies (who make up 60 percent of the total workforce) do not receive the same benefits
or job security as those who are employed in the larger companies.107

Pay of CEOs is generally linked to employees pay. Top executives in large Japanese
firms earn on average 11 times the average annual earnings of employees. The average
earnings of CEOs in the United States are over 200 times the average of employees.108

Enterprise unionism implies at least three practices: (1) employees of a single firm
organize their own union and include all employees, except managers and temporary
employees; (2) there is no segregation based on employees occupation classification or
job categories; and (3) collective bargaining takes place at the firm level, which leads to
a decentralized bargaining structure in Japan. Thus, in Japan, the enterprise unions have
functioned both as labor unions for gaining higher wages and improving working condi-
tions in negotiations with management and also as the employee representative bodies,
which promote participation and cooperation with management.109 Thus, the individual
employee identifies more closely with the company than does the typical employee in
many Western countries.

The enterprise unions are affiliated at the national level and have national organiza-
tions in the textile, electricity, shipbuilding, automobile, steel, appliance, and chemical
industries, which hold conferences to discuss industrial policies. National organizations
do not discuss such topics as wages, working conditions, and other employment policies.
These topics are discussed within the enterprise union. At the national level, industrial
problems are discussed in a more general context, and issues such as economic growth,
employment forecasts, retirement ages, and improved communications are addressed.110

Previous studies have pointed to Japanese unions lack of bargaining power that has
resulted from negotiations at the enterprise level; however, unions have experienced
strong bargaining power against deteriorating work conditions during economic stagna-
tion. Research shows that unions in Japan have contributed toward an increase in the
average wage and a compression of wage distributions among workers.

Most enterprise unions within the same industry have joined industrial federations
of unions, and there are more than 100 such federations. These federations belong to
national centers, of which Rengo (Japan Trade Union Confederation) is the largest with
6.6 million members. The major function of the industrial federations is coordinating the
activities of the member enterprise unions with the goal of improving wages and working
conditions and dealing with problems common to the entire industry.111

In Japan, the HR department has a higher status in corporations than in the United
States. The HR department is in charge of rotating managers around the company and

736 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

identifying people for senior positions. Managers view HR as a beneficial position
because it is a place to network with other managers and is a good springboard for top
corporate positions. HR is linked to corporate governance indirectly by grooming people
for the board of directors, which is comprised of management insiders. On the board,
the HR executive voices employee concerns to other executives and serves as the advo-
cate for career employees in strategic decision-making. In the last 40 to 50 years in the
United States, the powerhouse function has been finance, not HR.112

In comparison to the United States (see Chapter 5), it is relatively easy for a group
of workers to establish a trade union. The Japanese Trade Union Law requires neither
majority support for certification nor the recognition of exclusive bargaining rights.
Instead, under the Trade Union Law, when a group of workers wishes to form a so-
called statutorily qualified union and receive legal protection under the law, an appli-
cation is filed with the Labor Commission. The Commission then conducts a qualifica-
tion examination with rules set forth by the Labor Commission. When the group of
workers is qualified as a union, the employer is required by law to engage in collective
bargaining even though the union represents only a very small number of workers. In
practice, prior to filing with the Labor Commission, union organizers usually visit the
employers and obtain their consent. This consent is important because many workers
will not want to join a union that is opposed by their employer. Unlike in the United
States, it is rare that an employer will engage in activities that are regarded as active
union opposition or suppression.113

In 1975, union membership was 34 percent of the workforce. In 2014, it was 18.1
percent of the workforce. There were wide variations among industries and sectors: 44
percent in civil services, 59 percent in public utilities, and 11 percent in retail and whole-
sale trades (1 percent in businesses with less than 99 employees, but 47.5 percent in busi-
nesses with more than 1,000 employees). The reasons for this decline in union
membership are shifts toward service jobs and an increase in the number of part-time,
seasonal, temporary, fixed-term, and female workers.114

The nonregular workers make up 35 percent of the workforce in Japan and more
than half of these workers are part-time. The existence of such a high percentage of non-
regular workers has brought a challenge to companies and labor unions. Their working
conditions are poorer than the regular workers and their productivity is lower. Previ-
ously, nonregular workers have been excluded from union membership, but now, labor
unions have decided that they must unionize the nonregular in order to maintain their
influence in the workplace.115

In the final analysis, Japanese employers and unions eventually will have to face
many critical issues that may cause a break with the traditional labor relations system.
Due to the economic recession in Japan during the 1990s and 2000s (referred to as the
Two Lost Decades in Japan), there is evidence of a long-term transformation in the
seniority-based wage system and lifetime employment of core employees. However,
such structural changes in the Japanese employment system will take years to manifest
themselves. Many firms are attempting to replace regular full-time employees on indefi-
nite contracts with other types of workers (part-time, contract, etc.) in order to cut their
fixed labor costs. Thus, the percentage of core workers who are covered by the tradi-
tional Japanese employment system is gradually decreasing. The older workers no longer
enjoy the same wage increases as in the past. However, due to their guaranteed jobs and
the difficulty of finding comparable jobs elsewhere, they remain with the same firms.
Unlike the older workers, the young, highly educated do not have the same incentive to
commit to the implicit contract of the traditional Japanese employment system.116 These
issues include early retirement, lifetime employment, higher unemployment, elimination

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 737

of automatic pay increases and promotions, introduction of labor-saving devices, union
emphasis on job security rather than wage hikes, decline of employee loyalty to the firm,
and Japan s declining competitiveness with rapidly developing countries such as Brazil,
China, South Korea, Singapore, and Taiwan.117

South Korea
The United States and South Korea signed the Republic of Korea United States
Free Trade Agreement (KORUS FTA), which eliminated 95 percent of each nation s
tariffs on goods. The treaty was renegotiated in 2010 to grant U.S. car makers greater
access to Korean markets. This renegotiated treaty was supported by the United Auto-
workers 118

South Korea is the world s tenth largest economy and the United States s seventh
largest goods-trading partner, with two-way goods trade of over $80 billion. KORUS
FTA also incorporates provisions to safeguard workers rights and provides environmen-
tal protections that are consistent with internationally recognized standards.119

South Korea has a tripartite labor relations system in which the Ministry of Labor
serves as the governmental agency that formulates labor relations policy and implements
and enforces labor relations laws, including child labor, forced labor, employment equal-
ity, wages, hours of work, and safety and health. The government continues to receive
criticism of its policies concerning freedom of association and the right to organize
because the government refuses to register new trade unions in the public sector and
arrests and imprisons trade unionists who participate in strikes.

The other parties, trade union federations and employer organizations, represent
their constituents concerning labor relations matters by giving advice and guidance and
serving on government advisory commissions. The Korean Employers Federation (KEF)
serves as an umbrella organization representing 13 regional employers associations, 30
trade associations, and about 4,000 enterprises. The KEF claims industrial peace and
national economic development as its primary objectives and advocates its members
interests to the government and legislative bodies. In addition, the KEF provides advice
to its members on labor laws and industrial relations matters.

The 6,150 unions in South Korea, with a membership of 1.6 million, may be orga-
nized by company, by occupation, by region, or by industry. While the majority of
unions in South Korea are enterprise-based, there are 44 industrial federations and two
national federations: the Federation of Korean Trade Unions (FKTU) and the South
Korea Confederation of Trade Unions (KCTU). The FKTU is the largest labor organiza-
tion in South Korea and represents nearly one million workers in 3,408 unions. The
KCTU now represents about 600,000 workers in 16 industrial federations.

South Korea is governed by numerous labor laws. The South Korean constitution
guarantees freedom of association, the right to bargain collectively, and the right to col-
lective action. However, strikes are prohibited in government agencies, state-owned
enterprises, and defense industry companies. A majority of union members must vote
in favor of striking by direct, secret, and unsigned balloting, and the union must report
the planned strike in advance and in writing to the appropriate government agencies.

Labor relations are governed by five separate laws. The most comprehensive is the
Trade Union and Labor Relations Adjustment Act (TULRAA), which among other pro-
visions protects workers from dismissal for organizing and joining unions and for partic-
ipating in union activities. A worker may seek relief for any such unfair labor practice by
filing a complaint with the Labor Relations Commission (LRC) or by bringing a civil suit
against the employer. Employers who are found guilty of an unfair labor practice can be
required to reinstate the worker and provide back pay.

738 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

The South Korean labor law (TULRAA) does not provide a list of subjects for collec-
tive bargaining, but court precedents have classified bargaining subjects into three catego-
ries: (1) mandatory, (2) permissible, and (3) illegal. Mandatory subjects include working
conditions, wages, hours, holidays, leaves, safety, and health. Management cannot refuse
to bargain without cause, and such refusal without cause becomes an unfair labor practice.
If an impasse is reached, the union may request the LRC to mediate. If mediation is not
successful, the union may strike. Permissible subjects include union activities, prior deduc-
tion of union dues, and full-time union officials. Here, the union may request to bargain
and management may refuse. Such refusal does not constitute an unfair labor practice. If
negotiations come to a deadlock on a permissible issue, the union cannot resort to media-
tion or strike. Illegal subjects include abolishment of legal retirement pay, subsidy to a
union, or subjects that infringe on essential parts of management rights. Having an illegal
subject in the collective bargaining agreement is prohibited.120

Individual and collective labor disputes are adjudicated and mediated or arbitrated by
the LRC, which operates at the regional and national levels. As a general rule, collective
bargaining in Korea takes place at the enterprise level; however, unions are attempting to
transition to greater centralization of bargaining (industrial unions) despite heavy
employer resistance. For example, this transition has been more successful with the Korea
Health and Medical Workers than other unions because the health care industry does not
receive as much pressure from global competition.121 A union may delegate negotiation
responsibility to the trade union federation with which it is affiliated. Collective bargaining
usually covers wages, hours of work, workers welfare, and other employment conditions.
The collective bargaining agreements are valid for up to two years; however, if a new
agreement is not concluded by the expiration date of a current agreement even though
the parties are engaged in negotiations, the existing agreement will remain in effect for
another three months. Negotiations may extend to trade union activities during working
hours and issues concerning full-time union officers. Within 15 days following completion
of negotiations, the collective bargaining agreement must be submitted to the appropriate
government agencies. If any provision of the agreement is determined to be unlawful, the
parties may be ordered to amend the unlawful provision(s).122

Employee dismissals are covered under the Labor Standards Act (LSA), which sets
out basic requirements for justifiable dismissal. A justifiable reason is one that makes it
impossible for an employee to maintain the employment relationship. Specific reasons
include failure to follow instructions, unauthorized leave, early leaving, poor perfor-
mance, physical or verbal violence, criminal offenses off the job, violation of company
safety rules, and so on. The employer must give an advance notice of 30 days before dis-
missal and must give the worker a notification of the reason for the dismissal in writing
(e-mails and texted messages are not valid means of notification).123

In 2014, the International Trade Union Confederation assigned Korea one of its
lowest ratings among 139 countries in terms of worker rights, unfair labor practices,
and protection from anti-union discrimination. South Korea s labor ministry rejected
the report and claimed the report wasn t objective because it only used information sub-
mitted by local labor unions.124

Australia
Until 1996, the Australian labor relations system was characterized by industry-wide or
companywide awards, which were negotiated by company, union, and sometimes gov-
ernment officials and then submitted to the federal Australia Industrial Relations Com-
mission (AIRC) for ratification or resolution of differences. Such awards established
minimum wages and working conditions for specific categories of workers and are the

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 739

approximate equivalent of an American collective bargaining agreement. For example, if
a union claimed a wage for one class of worker, such as a metal machinist, an award for
a wage increase would apply to all machinists in the same class throughout Australia.
This mechanism led to rampant wage-push inflation in the 1970s as unions fought to
protect the value of workers real wages. In the 1980s, the government restricted wage
claims and price increases by companies.125

The Workplace Relations Act of 1996 (WRA) was passed. The WRA introduced
individual contracts called Australian Workplace Agreements (AWAs) to enhance
choice by placing individual and collective agreements on an equal footing. Absent

was any mechanism for union recognition or good faith bargaining. As a result, the
absence of statutory protection against coercion or inducement allowed employers to
pressure or compel employees into signing AWAs. Union rights, including rights to
workplace entry, were curtailed. While a right to strike was legislated for the first time,
the practical effect was to limit the circumstances under which unions could take indus-
trial action. For the first time, employers had the right to lockout employees, including
AWA lockouts that are used to induce employees to sign individual agreements.

In 2005, the WRA of 1996 was amended by the Work Choice Act of 2005. The
Work Choices reform represented a fundamental revolution in the Australian industrial
relations system. Although the government emphasizes that the new laws were designed
to increase choices to employers and employees, the main beneficiaries of the reform
were employers. Employers were able to access a wide range of industrial agreements.
In addition to the AWAs, employers could choose to negotiate union or nonunion col-
lective agreements or union or employer Greenfield agreements, which enable an
employer to unilaterally determine the terms and conditions of employment that bind
all future employees of a new work site for a period of up to 12 months. The employer
may simply elect not to bargain with their employees and remain within the law, pro-
vided the conditions they offered met the minimum standards established by the new
Fair Pay and Conditions Standard. Further, wage rates of employees covered by awards
were not increased until their wage rate fell below the minimum wage set by the new
Australian Fair Pay Commission. Employees who were left on awards, over time, became
dependent on the minimum set by the Australian Fair Pay and Conditions Standard
unless they were able to negotiate a collective agreement or an individual contract or
accept an AWA that might be offered by their employer.

The Work Choices dramatically recast the role of the AIRC by all but removing its
compulsory arbitral power. Instead of the parties going to the AIRC to resolve their dis-
putes, the parties were required to agree on a dispute resolution procedure of their own.
The government s Workplace Relations Minister could also declare an end to a bargain-
ing period on a wide range of grounds, thereby rendering any industrial action, such as a
strike, illegal. Under Work Choices reform, terminated employees rights to bring an
action for unfair dismissal were severely restricted. Employees of corporations with
fewer than 100 employees had no right to bring action. Larger employers were protected
from the risk of an unfair dismissal claim when they could establish that at least one of
the grounds for dismissal was a genuine operational reason. 126

In 2007, two pieces of legislation were passed: (1) the Workplace Relations Amend-
ment (Transition to Forward with Fairness) Act of 2008 and (2) the Forward with Fair-
ness Act (FWFA). The first act removed the option of entering any new AWAs, which
were individual contracts between employers and employees. These AWAs were used
extensively by employers to de-unionize workplaces. This legislation allowed existing
AWAs to carry on indefinitely and established a temporary option for employers already
using AWAs.

740 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

The FWFA also created national employment standards that included maximum
weekly hours of work of 38 hours, requests for flexible working arrangements, parental
leave, leave for personal care, community service, long service, public holidays, notice of
termination, redundancy pay, and fair work information statement. The FWFA created a
new national regulator, Fair Work Australia (FWA) which assumed the functions of the
former Australian Industrial Relations Commission. The FWA s role is to settle indus-
trial disputes, set minimum wages, and regulate the awards system.

The FWA continued the process of modernizing the award system. Award modern-
ization process included writing submissions, producing responses to draft of awards,
and lobbying government. The final awards would take into consideration the special cir-
cumstances of member businesses (whose costs would be increased) or the particular
needs of the employees engaged in an occupation or industry (who may be disadvan-
taged). The FWA would administer the good faith bargaining requirements, such as
the requirement to attend and participate in meetings, disclose relevant information in
a timely fashion, respond and give genuine consideration to bargaining proposals, and
recognize the other bargaining party.

Protection from unfair treatment is provided to employees upon completion of 6
months of employment in businesses employing more than 15 employees and upon
completion of 12 months for employees of smaller business (15 or fewer employees). In
addition, there is a range of workplace rights protection against punitive or discrimina-
tory treatment.127

In 2009, the Fair Work Act was passed. This act established an independent umpire,
the Fair Work Commission (FWC) to oversee the new workplace relations. The FWC
has the power to vary awards, make minimum wage orders, approve agreements, deter-
mine unfair dismissal claims, make order on such matters as good faith bargaining and
industrial action (strikes and lockouts), and help employees and employers resolve dis-
putes at the workplace. The act created an inspectorate headed by the Fair Work
Ombudsman, which created a court to hear matters that arise under the new WRA.128

Tony Abbott was elected Prime Minister in 2013 with heavy support from the Busi-
ness community. As expected and as characterized by Australia s approach to labor rela-
tions, Abbott created several formal review commissions, the Heydon Royal Commission
into Trade Union Governance and Corruption, Australian Law Reform Commission,
and Productivity Commission. As one scholar has written:

Australian IR continues to also be an ongoing tussle between Employers/employer
associations and employees/unions to control what happens in the workplace and
influence more favorably the outcome for their respective group. While pluralist theory
guides us to understand that this is normal due to differing interest, one might observe
that this conflict has become somewhat ritualized and is not resulting in the resolu-
tion of many of the real problems needing to be addressed.129

China
Before China opened to the rest of the world and engaged in reform, labor relations in
China were unusual. Labor relations essentially involved relations between the employee
and the government. The premier of the State Council was the only boss, and the only
authoritative labor relationship was formed between the central government and the
workers. This abnormal arrangement has come to an end in the last two decades. How-
ever, the Chinese employment system is more complex now than it was in the late 1970s.
Population is 1.4 billion, four times that of the United States. There are many types of
employers: state-owned enterprises, state units, collective units, private and individually

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 741

owned enterprises, and foreign-owned enterprises. The government is not involved in
hiring among the collective units and private enterprises, and the state-owned enterprises
now have more autonomy in employment decisions. Although employment remains
rather stable, employers treat staffing levels more flexibly than in the past. For example,
employers terminated their relationship with 1.4 million workers in one year, and these
workers had no right to appeal their employment decisions.130

In 1990, China produced 3 percent of the global manufacturing output; in 2015, it
produces 25 percent. China now produces 89 percent of world s air conditioners; 70 per-
cent of the mobile phones and 60 percent of the shoes.131 Average pay in China is $270
per month, less than a quarter of the pay in the United States. With rising wages in
China, companies are looking for alternatives sites for manufacturing, such as Thailand,
Indonesia, and others, and poorer provinces within China. Chinese manufacturers are
also adding robots in record number. In fact, Chinese manufacturers purchased 20 per-
cent of all robots produced in the world in 2013.132

By the end of 2008, unions in China had organized 86 percent of the Fortune 500
companies operating in China. The Chinese union movement had grown from 87 mil-
lion to 212 million. Since independent unions are banned in China, this meant that
branches of the All-China Federation of Trade Unions (ACFTU) were present not so
much to protect worker rights, but to strengthen the Chinese Communist Party social
control. In southern China, there are a few grassroots unions emerging in the region
that may show signs of more independence in the unions.133

The AFCTU was founded in 1925, five years after the founding of the Communist
Party of China (CPC). The ACFTU is the largest trade union in the world with well over
230 million members across 1.8 million union branches. The ACFTU that has been
known as a top-down organization and has been criticized that the top leaders are out
of touch with the membership and are behaving like bureaucrats .134 When the CPC
took over, trade unions were one of the three Leninist Mass Party organizations, but they
were not given any bargaining status at the national or enterprise level. In the 1950s, the
trade union movement helped the CPC bring industry under state control. In the early
1960s, the AFCTU sought and achieved a short-lived institutional upgrade; however, the
Cultural Revolution in 1965 brought about a purge of the AFCTU and its disbandment.
In 1978, with the removal of the Maoist regime and the launching of the modernization
of China with a goal of quadrupling China s GNP by 2000, coupled with ownership,
enterprise management, and distribution era in wealth, trade unions were once again
reconstituted to play a more appropriate role.

Trade unions in China have been dominated by welfarism and played a role in
surveillance and control of the workers rather than serving as a political representative
of the working class. Trade unions were viewed more as a caretaker of workers that
channeled their grievance to higher authorities. In China, the CPC controlled the unions
and dictated the unions programs. The CPC held absolute control of the union, and the
union leaders remained answerable only to the heads of state, not the working popula-
tion. In 1992, the National People s Congress passed amendments to the Trade Union
Law in which unions were given consultative status, collective bargaining power. Trade
unions were given the task of supporting the state s economic program.135

In 2001, a new trade union law was passed and set up a national system of tripartite
consultation. By 2010, the ACFTU issued official documents that called for the establish-
ment of a collective consultation system in all firm. By September of 2010, 1.4 million
collective contracts covering 185 million workers in 2.4 million firms had been signed.
The contracts signed often followed the model contract provided by the Communist
Party state through the ACFTU, which is shown in Exhibit 14.8. The role of these

742 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

collective consultation contracts was not to negotiate the terms and conditions of
employment between the employer and employees, but to monitor the enforcement of
and implementation of labor regulations. Although far from the establishment of a sys-
tem of collective bargaining, these collective contracts served as a means for securing a
harmonious labor relations. 136

Between January 2011 and January 2015, nearly 2,900 strikes and protests have
occurred nationwide in China. In 2010, workers at a Honda auto transmission plant
near Guangzhou struck for 17 days. Also in 2014, tens of thousands walked off their
jobs at the Taiwanese-owned Yue Yuen shoe factory complex, the maker of global
brands like Nike and Reebok. In 2014, the People s Congress of Guangdong in South
China passed a groundbreaking law, Regulations on Collective Contracts for Enter-
prises, which set up rules to establish more democratic forms of union representation
and a genuine system of collective bargaining. Under the new regulations, if at least 50
percent of the workers support a demand for collective bargaining, the employer has to
respond to their proposals in 30 days. These regulations also provide for democratic elec-
tion of employee bargaining committee members, require employers to give employee
representatives time off their jobs to participate in negotiations and prohibit manage-
ment retaliation against these representatives. Although these regulations are limited to
the shop floor and to one province, they mark a major step forward.

There have been pressures to pass legislation at the national level; however, the only
national labor law passed was the one to regulate employment contracts and resolve
individual worker disputes. The Chinese government remains hostile to any independent

Exhibit 14.8
A Model Collective
Contract Table of Contents

Chapter One General Principles

Chapter Two Payment for Labor

Chapter Three Working Hours

Chapter Four Labor Contract Management

Chapter Five Leaves and Holidays

Chapter Six Labor Safety and Health

Chapter Seven Insurance and Welfare

Chapter Eight Special Protection of Female Workers and Underage Workers

Chapter Nine Professional Skill Training

Chapter Ten Rules and Regulations, Award and Punishment

Chapter Eleven Settlement of Labor Disputes

Chapter Twelve Alteration, Cancellation, Termination, and Renewal of the
Collective Contract

Chapter Thirteen Settlement of the Disputes in the Course of Contract
Execution

Chapter Fourteen Supervision and Inspection of the Collective Contract

Chapter Fifteen The Collective Contract Period

Chapter Sixteen Supplementary Articles

SOURCE: http://english.acftu.org/template/10002/file.jsp?cid=77&aid=403.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 743

labor organization or to any challenges to its authority. Local enforcement of laws vary
greatly around China and there is still no national law to enable real collective bargain-
ing or to protect or prohibit the right to strike, leaving strikes among the few ways work-
ers can express their collective grievances to management, local governments, or union
officials.137

The Chinese economic system has evolved from a centrally planned economy to a
guided market economy open to foreign investments. Under the centrally planned econ-
omy, employees were assigned to state-owned enterprises that guaranteed lifetime
employment and a wide range of benefits, including housing and education. Wage levels
were set centrally, and the Communist Party served in a supervisory capacity in the fac-
tory. Changes in employment relations began to align with an emerging market econ-
omy; that is, enterprises attempted to become more competitive, and firms with foreign
investments were allowed to operate without undue state interference. Centralized job
allocation and state guarantees of lifetime employment were relaxed, and firms no longer
were required to provide social welfare benefits. Employment laws required that new
workers be hired on fixed-term contracts, but the terms could not exceed four years. In
addition, employers were authorized to dismiss employees under certain circumstances,
such as stealing. The authority of factory managers was increased, and pay linked to per-
formance was introduced. New regulations allowed factory managers to lay off surplus
workers through voluntary resignations but required the firms to try to find work for
these employees and/or train them for new jobs. Meanwhile, the government still did
not allow independent unions or any form of collective action in industrial disputes.
State-controlled trade unions continued to exist at the enterprise, industry, and regional
levels. A dispute settlement law that applied to a broad range of issues was passed, and
arbitration tribunals have been established. Individual disputes accounted for 93 percent
of the disputes, and work stoppages were likely to come in the form of spontaneous
actions in the outlying provinces, which are less subject to control from Beijing and
foreign-owned enterprises.

In China, the formal system of laws and regulations is supplemented by local interpre-
tation and is unevenly enforced. For example, it is easier for workers in some provinces to
obtain and extend work permits than others. Also, the working hours differ; in several dis-
tricts of the Guangdong province, firms are able to extend working hours beyond the 60
hours per week maximum by seeking permission (which is rarely denied) from the local
government labor authority. Throughout China, local officials sacrifice enforcement of
labor standards to attract investment and to generate additional jobs. There has been
increased labor unrest and a growing number of labor disputes, which are usually sponta-
neous actions and have more frequently occurred in the outlying provinces.138

There are two contrasting narratives on the effect of investments of MNCs on Chi-
na s labor practices. On the one hand, it has been argued that MNCs transfer their best
labor practices to China and therefore the labor practices in China are quite similar to
those at home. On the other hand, there is a growing body of research that shows that
foreign MNCs are exploiting China s weak and unprotected workforce, particularly the
migrant rural workers. As a result, the ACFTU has been forced to take a more proac-
tive stance toward foreign MNCs. This stance has resulted from the growing number of
employees of foreign MNCs, the decline in the number of state-owned enterprises, and
the limited, but growing, trend of independent union organizing outside of the
ACFTU. Currently, the ACFTU still has to perform a dual function: an instrument of
the state and a labor organization that represents its members.

There are three fundamental developments that will shape labor relations within for-
eign MNCs in China. First, the ACFTU will have to continue to engage in grassroots

744 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

organizing to counter management opposition to trade unions. The most publicized has
been Wal-Mart, which refused to recognize a union until the ACFTU was able to obtain
the signatures of at least 25 workers at each Wal-Mart store. By September 2006, all 62
Wal-Mart stores in China were unionized (unlike Wal-Mart stores in the United States).
Second, there is a growing trend within ACFTU for direct election of trade union leaders
at the workplace levels. Although the direct election is still a contested issue, there is
much experimentation going on among union members who are employed by foreign
MNCs. Third, within the new labor arbitration system, which includes 3,000 arbitration
committees, the ACFTU representatives have become more involved at the workplace
levels. The ACFTU officials are more likely to confront managers in order to protect
workers rights.139

Cheap labor in China has been the foundation of the so-called China miracle.
There is a floating population of about 130 million migrant workers whose average
take-home pay is $197 per month, one-twentieth the average monthly wage in the
United States. However, this $197 is 17 percent higher than the 2009 wage. The export-
ing factories that are clustered on the China coast are growing short of workers and the
workers have grown short on patience. The courts in China handled more than 280,000
labor disputes in 2008. In the Guangdong province alone, there were 36 strikes between
May 25 and July 12, 2010, a space of 48 days. In the past, goon squads from the
government-controlled trade unions roughed up the strikers. However, in 2010, strength-
ened by the new 2008 labor law, there were no midnight knocks at the door. Some
explain that the police are far less likely to intervene in a labor dispute when the workers
are striking against a company owned by a foreign company than one that is state-
owned. It appears that the government is allowing wages to increase in order to support
additional consumer spending and to continue growth in the economy.

These increases in labor costs will have consequences in the United States. Presently,
it is estimated that trade with China has added $1,000 a year in purchasing power to
every American household through cheaper goods. On the other side, a 20 percent rise
in Chinese consumption would potentially lead to an extra $25 billion in American
exports and the creation of over 200,000 jobs in America. Now attention is turning to
Vietnam where the pay is one-third that of China s and foreign direct investment has
quadrupled since 2000. For example, in July 2010, Hoya, a Japanese optical glass maker,
announced a $145 million factory near Hanoi, and Intel is due to open a $1 billion plant
that will assemble and test silicon chips in Vietnam.140

After years of working 12-hour days, six days a week on monotonous assembly lines,
China s workers began to push back in May of 2010. Remarkably, a strike at the Honda
transmission factory in Foshan by nearly 2,000 workers suddenly and unexpectedly
turned into a symbol of China s struggle with income inequality and soaring property
prices. Even more remarkable, Chinese authorities allowed the strike to occur. One
striker reported that he had read on the Internet of considerably higher wages at other
factories in China and expected Honda to match them. The strikers focused on higher
wages, the factory s air-conditioning not being cool enough, and the unfairness of having
to rise from their dormitories as early as 5:30 A.M. for a 7 A.M. shift. Workers at the
plant earned around $150 monthly and gained a 24 percent pay increase. They already
received free lodging in rooms that sleep four to six in bunk beds, free lunches, and sub-
sidized breakfasts.

In June 2010, a strike occurred in Southern China at a Honda auto parts plant; how-
ever, the strike collapsed when Honda began hiring striker replacements. All but half a
dozen strikers returned, and Honda raised wages and benefits, but not as much as the
workers had demanded. Strikes also occurred or were threatened in other locations and

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 745

caused the local government of Shenzhen, a major manufacturing city, to announce a 10
percent wage increase for all workers, private and government.141

In the Western world, labor and management enter negotiations, which typically
lead to collective bargaining agreements. In China, autocratic management, nepotism,
and unprofessional, undisciplined management techniques have dominated the work-
place. Managers have viewed their firms as their personal kingdoms, and paternalism
has led workers to expect a certain level of economic and noneconomic support from
their employers. Unity of labor management interests has usually been more important
than personal disagreements. While there has been significant change in China since
1988, China is a long way from embracing Western-style employment relations, strong
unions, and collective bargaining. China remains constrained by its cultural and political
history and by a large supply of low-wage workers. Moreover, its labor relations system
does not appear likely to demonstrate major changes for many years.142

One assessment from labor relations expert Arnold Zack, a past president of the
National Academy of Arbitrators, is:

Worker exploitation is an ongoing problem, unpaid wages and overtime remains a
rampant problem, and the workers are denied the full measure of right to form their
own unions. And to engage in collective bargaining, the prevailing standards in the
industrialized world. Workers in both Chinese owned factories and those owned by
investors from abroad continue to protest over issues of wages, termination, insurance,
and work injury

The recent Mediation and Arbitration law, while appealing in title, bears little
resemblance to similar entitled laws in the western world where mediation and arbi-
tration gain their vitality as procedures for adversaries to resolve their disputes. In
China the absence of any legal organization of grassroots workers raises issue as to
the usefulness of the terms themselves. With the ACFTC empowered by the party
and government to be present in public and private enterprises, funded by a tax on
the employer and often headed by a designee of the employer, worker participation is
lacking. While in all western countries the workers representatives, the trade union,
seeks to protect, advance and champion the interests of its members and indeed to
represent the workers in mediation and arbitration, the ACFTU has no such role 143

Summary
MNCs and transnational collective bargaining are
becoming increasingly important topics of labor rela-
tions. Although MNCs continue to grow in sales vol-
ume, capital investments, and economic influence,
they have also aroused trade unions in various coun-
tries to combine their energies, skills, and power in an
effort to negotiate on an equal footing. Thus far, little
success has been achieved because of legal, political,
social, economic, and organizational obstacles. How-
ever, it is obvious that transnational collective bar-
gaining could have a tremendous impact on the
world s economy if the obstacles can be eliminated.
Time will tell whether unions will be able to over-
come the obstacles.

With the growing interdependency among nations,
it is imperative that students who study labor relations
learn more about labor relations systems throughout the
world. This chapter highlights the main features of the
labor relations systems of the major trading partners of
the United States. Unions in Canada have expressed con-
cern over the United States s economically dominant role
in North America and its influence on the internal affairs
of that country. Canada s system features two major lin-
guistic and cultural groups and highly decentralized col-
lective bargaining activities that are governed by
provincial law. Mexico, the other partner with Canada
and the United States in the NAFTA, has fairly well-
developed labor laws but has major deficiencies in their

746 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

administration and enforcement. The effects of NAFTA
on jobs and trade unions were discussed.

Cuba, the largest Caribbean island, has a labor
relations system that has suffered under the Castro
regime but is showing signs of change. Labor relations
vary widely among the countries in Central and South
America, but they have one common feature: a close
connection between trade unions and political parties.

Unionization in most of Western Europe is signifi-
cantly greater than in the United States, and there is wide
implementation of codetermination and employee partici-
pation policies. By 2007, 28 countries in Europe with a mar-
ket of 507 million consumers had joined together to form
the European Union, which provides for greater deregula-
tion and a decrease in trade and travel barriers between
member countries. The formation of the EU increases the
need to learn more about the labor relations system in each
of these countries and will probably bring these countries
closer together. In the past, the labor movements in many
Eastern European countries were dominated by the Soviet
Union. The countries of the former Soviet bloc are now
trying to adjust to a market economy.

Unique features of the Japanese system include
labor management consultations, teamwork, a lifetime
employment policy at the largest firms, a wage system
primarily based on seniority, enterprise unions, and
higher status accorded to HR managers. However,
international money exchange rate fluctuations and
recession could quickly alter these special union
management relationships of the Japanese system.

Korean labor relations have developed rapidly
from a strike-ridden system in 1987 to more successful
collective bargaining. With high economic growth
rates, Korea still has problems of discrimination against
women and employment of child labor.

The Australian system has evolved from a highly
centralized system in which unions had much power to
a pro-employer, more decentralized system. With the
2013 election, change will continue.

The chapter ends with a description of the Chinese
labor relations system, which has experienced rapid
change in recent years.

Key Terms
multinational corporations (MNCs),

p. 702
whipsawing, p. 705

European works councils, p. 708
North American Free Trade Agreement

(NAFTA), p. 711

wage system, p. 735
Enterprise unionism, p. 736
awards system, p. 741

Discussion Questions

1. Although the United States shares a common
border with Canada, its labor relations system is
affected by a number of variables that do not
greatly affect the United States. Enumerate and
explain these variables.

2. Explain why labor unions in many Central
American countries have developed more slowly
than those in the United States.

3. Western Europe seems to be uniquely involved
with various forms of worker participation.
Explain why these worker participation systems
have developed so fully there instead of elsewhere.

4. What are five special features of the Japanese
system? Why haven t these features been widely
adopted in the United States?

5. Although multinational corporations seem to be
growing in size and influence, what must occur
before transnational collective bargaining can be
effectively carried out?

6. Which features of Canada s labor relations system
would you transfer to the United States? Why?

7. Assess the continuing transformation of the Aus-
tralian labor relations system.

8. Give your assessment of the requirements for
Cuba to develop a free, independent trade union.
Is it essential for a free society?

9. Assess the strategy of Wal-Mart in China, where
the company has recognized unions in all 62
stores, to its strategy in the United States, which is
to combat any type of union representation.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 747

Exploring the Web

Labor Relations in Multinational Corporations
and in Other Countries

1. The International Labor Organization. The Inter-
national Labor Organization (ILO) has established
labor standards for 150 countries represented by
the organization. Locate the Web site for the ILO,
and comment on how these standards are created
and how they are used. What is the Declaration of
Philadelphia? www.ilo.org/. Locate the section on
National Labor Law Profiles, select a country, and
read the section on collective bargaining for that
country.

2. Foreign Labor Trends. Search the Foreign Labor
Statistics home page of the Bureau of Labor Statis-
tics to find the following information: www.bls.org/.
Hourly compensation costs in U.S. dollars for pro-
duction workers in manufacturing in 2005 for the
United States, France, Canada, Mexico, and Ireland.
How does the employment rate in Canada compare
with the rate in the United States in July 2007?
Using LABORSTA Internet, the service from the
ILO Bureau of Statistics, compare statistics on

strikes and lockouts in 2006 for two countries of
your choice.

3. Guidelines for Multinational Corporations. The
Guidelines for Multinational Enterprises established
the OECD and presented on the OECD Web site
are recommendations addressed by governments to
multinational enterprises. The guidelines provide vol-
untary standards for responsible business conduct in a
variety of areas, including employment and industrial
relations. Locate OECD Guidelines: Useful for
Workers Rights? on the Clean Clothes Web site.
How do unions go about filing a complaint against
companies that are in violation of the guidelines?

4. Multinational Labor Organizations. Search for the
history and mission statements for the following
organizations:
International Federation of Airline Pilots Associa-
tion (IFALPA) www.ifalpa.org/
International Metalworkers Federation (IMF) www
.infmetal.org/
International Federation of Chemical, Energy, Mine,
and General Workers (ICEM) www.icem.org/

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748 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

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CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 749

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47. Michele Campolieti, Rafael Gomez, and Morley
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48. Susan T. Johnson, First Contract Arbitration:
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Role of Delay in Union Organizing: Empirical
Evidence from Canada, Industrial and Labor

750 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

Relations Review, 61(1), 2007, pp. 32 58; Chris
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50. Daphne G. Taras, Explaining Canadian American
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51. Jeffrey Sack, Collective Agreement Arbitration in
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52. Lucas Ronconi, Globalization, Domestic Institu-
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53. Christian Levesque, Graciela Bensusan, Gregor
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54. Ibid., p. 192.
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59. Mexico (Washington, D.C.: U.S. Department of
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73. Ben Kriechel, Samuel Muehlemann, Harold
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April 2014, pp. 199 221.

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 751

74. Roy J. Adams, Industrial Relations in Europe
and North America: Some Contemporary
Themes, European Journal of Industrial Rela-
tions, 1, 1995, p. 50; Margaret Hilton, Shared
Training: Learning from Germany, Monthly
Labor Review, 114, March 1991, pp. 33 35;
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78. Ben Kriechel, Samuel Muehlemann, Harold Pfie-
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pp. 199 221.

79. Trevor Bain and Kim Hester, Similarities and
Differences in a Sample of European Works
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80. Ian Greer and Marco Hauptmeier, Identity
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81. Paul Marginson, The Eurocompany and Euro
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82. A Work in Progress: A Survey of Europe,
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83. Richard Saundry and Gemma Wibberly, Con-
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pp. 281 299.

84. John Logan, Union Recognition and Collective
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85. Paul Willman and Alex Bryson, Union Organi-
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86. J. R. Shackleton, Britain s Labor Market under
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87. David Metcalf, Prime Minister Blair s New Labor
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88. For an excellent review of the development of
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Labor Movement in Decline, Industrial and
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89. John T. Addison and Claus Schnabel, Worker
Directors: A German Product that Did Not
Export?, Industrial Relations, 50(2), April 2011,
pp. 354 372.

90. John S. Heywood and Uwe Jirjahn, Family
Friendly Practices and Worker Representation in
Germany, Industrial Relations, 48(1), 2009,
pp. 121 145.

91. Martin Behrens, Still Married after All These
Years: Union Organizing and the Role of Works
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trial and Labor Relations Review, 62(3), 2009,
pp. 275 292.

92. John T. Addison, Claus Schnabel, and Joachim
Wagner, Te (Parlous) State of German Unions,
Journal of Labor Research, 28, Winter 2007,
pp. 3 16.

93. World Labor Report 1992 (Geneva: International
Labor Office, 1992), p. 57.

94. Peter Galuszka, Toss another Match into the
Russian Tinderbox: Labor, Business Week,
June 6, 1994, p. 51.

95. Katharina Bluhm, Exporting or Abandoning the
German Model ?: Labor Policies of German
Manufacturing Firms in Central Europe, Euro-
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pp. 153 168.

752 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

96. Aurora Trif, Collective Bargaining in Eastern
Europe: Case Study Evidence from Romania,
European Journal of Industrial Relations, 13, July
2007, pp. 236 254.

97. Arturo Bronstein, The New Labor Law of the
Russian Federation, International Labor Review,
133, 2005, pp. 291 318. See also Simon Clarke,
The State of the Russian Unions, Journal of

Labor Research, 28, Spring 2007, pp. 275 299.
98. Hiromasa Suzuki, Employment Relations in

Japan: Recent Changes under Global Competition
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99. Joseph Krislov, How Does the Japanese Indus-
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40, June 1989, pp. 338 344.

100. Motohiro Morishima, Information Sharing and
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101. Motohiro Morishima, Information Sharing and
Firm Performance in Japan, Industrial Relations,
30, Winter 1991, pp. 37 57.

102. Kiyoshi Kawahito, Labor Relations in the Japa-
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103. Katsumi Yakabe, Labor Relations in Japan
(Tokyo: International Society for Educational
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and Ryuji Komatsu, Post-war Labor Movements
in Japan, in The International Labor Movement
in Transition, eds. Adolph Strumthal and James
G. Scoville (Urbana, IL: University of Illinois
Press, 1973), pp. 122 148; Tadashi A. Hanami,
The Multinational Corporation and Japanese

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104. Peter B. Doeringer, Christine Evans-Klock, and
David G. Terkla, Hybrids or Hodgepodge?
Workplace Practices of Japanese and Domestic
Startups in the United States, Industrial and
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pp. 171 177.

105. Hiromasa Suzuki, Employment Relations in
Japan: Recent Changes under Global Competition
and Recession , Journal of Industrial Relations,
52, 2010, pp. 390 396.

106. Satoshi Shimizutani and Izumi Yokoyama,
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Survived? Developments since the 1990s. Indus-
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pp. 313 323.

107. Krislov, How Does the Japanese System Differ?
Labor Law Journal, 40, June 1989, p. 340.

108. JIM: Japan Information Network, at: http://www
.jinpapn.org/access/employ/index.html (January
4, 2004).

109. Hiromasa Suzuki, Employment Relations in
Japan: Recent Changes under Global Competition
and Recession, Journal of Industrial Relations,
52, 2010, pp. 390 401.

110. Tsuyoshi Tsuru and Motohiro Morishima,
Nonunion Employee Representation in Japan,

Journal of Labor Research, 20, Winter 1999,
pp. 94 96.

111. Glenn Halm and Clinton R. Shiels, Damage
Control: Yen Appreciation and the Japanese
Labor Market, Monthly Labor Review, 111,
November 1988, pp. 3 5.

112. Hiromasa Suzuki, Employment Relations in
Japan: Recent Changes under Global Competition
and Recession, Journal of Industrial Relations,
52, 2010, pp. 392 395.

113. Sanford M. Jacoby, Emily M. Nason, and Kazuro
Saguchi, The Role of the Senior HR Executive in
Japan and the United States: Employment Rela-
tions, Corporate Governance, and Values,
Industrial Relations, 44, April 2005, pp. 207 241.

114. Tsuyoshi Tsuru and Motohiro Morishima,
Nonunion Employee Representation in Japan,

Journal of Labor Research, 20, Winter 1999,
pp. 94 96.

115. Hak-Soo Oh, The Unionization of Part-time
workers in Japan, Journal of Industrial Relations,
54, 2012, pp. 510 520.

116. Junya Hamaaki, Masahiro Hori, Saeko Maeda,
and Keiko Murata, Changes in the Japanese
Employment System in the Two Lost Decades,
Industrial & Labor Relations Review, 65, October
2012, pp. 810 820.

117. Hiromi Hara and Daiji Kawaguchi, The Union
Wage Effect in Japan, Industrial Relations, 47(4),
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Japan s Traditions, Business Week, April 20,
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118. Drawn primarily from Mario F. Bognanno,
Korea s Industrial Relations at the Turning Point
(Seoul: Korea Development Institute, 1988),
pp. 4 90; Mario F. Bognanno, John W. Budd, and

CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries 753

Young-Myon Lee, Institutional Turmoil and Strike
Activity in Korea, Journal of Industrial Relations,
36, September 1994, pp. 360 367; Korea (Washing-
ton, D.C.: U.S. Department of Labor, Bureau of
International Labor Affairs, 1998), pp. 8 9; Mario F.
Bognanno, Michael L. Bognanno, and Young-Myon
Lee, Incomplete Information and Conversion to a
No Work No Pay Strike Policy: Their Effects on
Wage Settlements and Strikes in Korea, Working
Paper, July 1998, p. 1.

119. http://www.koreanlaborlaw.com/.
120. http://www.koreanlaborlaw.com/.
121. Joohee Lee, Between Fragmentation and Cen-

tralization: South Korea Industrial Relations in
Transition, British Journal of Industrial Rela-
tions, 49(4), December 2011, 767 791; Byong-
Hoon Lee and Sanghoon Yi, Organizational
Transformation Towards Industry Unionism in
South Korea, Journal of Industrial Relations,
54, 2012, pp. 476 491.

122. Korea, (Washington, D.C.: U.S. Government
Printing Office, 2003), pp. 1 19.

123. http://www.koreanlaborlaw.com/.
124. Jeyup S. Kwaak, Labor Group Ranks South

Korea among World s Worst for Workers, Korea
Realtime, June 15, 2014, pp. 1 4.

125. Australia, (Washington, D.C.: U.S. Printing
Office, 2003), pp. 3 7.

126. C. Jeffrey Waddoups, Trade Union Decline and
Union Wage Effects in Australia, Industrial
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127. Richard Hall, The Work Choices Revolution in
Australia: Recent Legislative Reforms and Their
Consequences, Work on Perspectives, 11, Sum-
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128. The Fair Work Act An Overview, Australia
Government, 2015.

129. Patricia Todd, Introduction: Australian Indus-
trial Relations in 2014, Journal of Industrial
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Todd, Introduction: Australian Industrial
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130. Jihi Xia, Reforming China s Systems of Employ-
ment and Labor Relations, Perspectives on
Work,7, Winter 2004, pp. 28 30.

131. Made in China? The Economist, March 14,
2015, p. 16.

132. A Tightening Grip The Economist, March 14,
2015, p. 69.

133. Mingwei Liu, Union Organizing in China: A
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134. Ying Zhu, Malcolm Warner, and Tongquinp
Feng, Employment Relations with Chinese
Characteristics : The Role of Trade Unions in
China, International Labour Review, 150, 2011.

135. Stephen Frenkel and Sarosh Kuruvilla, Logic of
Action, Globalization, and Changing Employ-
ment Relations in China, India, Malaysia, and the
Philippines, Industrial and Labor Relations
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136. Xianghong (Shirley) Wang Huihua Nie, The
Impact of Collective Wage Agreements in China:
A Firm-Level Study, Proceedings of the 64th
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2012, pp. 92 101.

137. Chris Rhomberg, A Turning Point for Chinese
Workers? http://inthesetimes.com/article/17759/
a-turning-point-for-chinese-workers, 4-2-15.

138. Trini Wing-Yue Leung, Trade Unions and Labor
Relations under Market Socialism in China,
Industrial Relations between Command and
Market: A Comparative Analysis of Eastern Eur-
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Thompson, and Franz Traxler (New York: Nova
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139. Stephen Frenkel and Sarosh Kuruvilla, Logics of
Action, Globalization, and Changing Employ-
ment Relations in China, India, Malaysia, and
Philippines, Industrial and Labor Relations
Review(in press), pp. 26 30.

140. Christain Levesque and Hao Hu, Multinationals
and Employment Relations in China, Perspec-
tives on Work, 11, Summer 2007, pp. 13 15.

141. The Rising Power of the Chinese Worker,
Economist, July 31, 2010, p. 9; The Next China,
Economist, July 31, 2010, pp. 48 49.

142. Trevor Bain and Chyi-Herng Chang, Revisiting
China and Taiwan, Perspectives on Work, 7,
Winter 2004, pp. 34 35.

143. Arnold M. Zack, A Potential Roadmap toward
Workplace Fairness in China, paper presented
to Council of Foreign Relations, November 11,
2008.

754 PART 4 Applying the Labor Relations Process to Different Labor Relations Systems

.g

CLASSROOM EXERCISE

14.1
Mobile Factory

You are the owner of a small North Carolina factory that makes T-shirts for interna-
tional distribution. You have observed that your sales have declined by about 10 percent
for each of the last three years. You believe that the reason is that you are being under-
priced by your international competitors even though your market is in the United
States, and your competitors are required to pay transportation costs from their factories
in other countries to the United States.

You have been reading several articles about exchange rates and the weakening of
the dollar in comparison with many foreign currencies and believe you have come up
with a unique solution to your problem. You have surveyed your 50 employees and
found that most of them are single and love to travel. Therefore, you have decided to
purchase a ship and transfer your machinery and office equipment to the ship. Since
you pay employees and sell your goods based on where you dock your ship, you have
considerable flexibility in the country in which you conduct business. When the
exchange rates change, you will simply move to another location where the exchange
rates are more favorable. As an example, in 2011, the 100 U.S. dollars were trading for
about 70 euros; in 2016, 100 U.S. dollars would trade for 92.0 euros. That means that
U.S. manufacturers were much more competitive internationally in 2011 than in 2002,
when the U.S. dollar was stronger internationally.

You have to decide where in the world you would like to dock your ship in order to
take advantage of the exchange rates and wage rates of the country where you dock.

Questions

1. Evaluate the exchange rates and wages shown in Exhibit 14.1, and decide where you
should dock your ship for local production.

2. Review the index of wage rates of 1980, 1990, 2005, and 2012 and determine whether
the strategy and decision in 2011 would be the same as in the previous years.

755

APPENDIX A

Collective Bargaining
Negotiations Exercise

Learning Objectives

1. To gain an understanding of negotiation preparations, actual negotiations, and assessment of negotia-
tions outcomes.

2. To develop an appreciation for problems that arise from interpersonal and teamwork interactions in
contract negotiations.

3. To familiarize participants with the mechanics of bargaining negotiations and compromise on issues in
collective bargaining and with the difficulty of writing provisions to the satisfaction of both parties.

4. To gain an appreciation for the practical application of bargaining theories to negotiations.

General Rules of the Negotiations Exercise

1. Team members are not to discuss the confidential details of the exercise with anyone except their
assigned team members.

2. Each team member will be assigned a negotiating team role by either the instructor or the team s chief
negotiator. Team members must follow the instructions of their respective team leaders. Alternatively, if
permitted by the instructor, teams may elect their own chief negotiator and assign their members to spe-
cific negotiating team roles.

3. The negotiations must take place within the framework of the present company and union relation-
ship. Creativity in offering proposals and the use of various bargaining tactics is encouraged, but a
realistic and pragmatic approach is recommended.

4. Data, materials, and information (financial and otherwise) used for establishing initial demand positions
for bargaining items and to support arguments on behalf of follow-on proposals must be based only on
information contained in the overall scenario and within the portion of the bargaining scenario furn-
ished separately by the instructor to each team. The details of the scenario, economic and industry pro-
jections, and estimates of company activities contained therein, while realistic in the portrayal of the
relationship between a particular employer and its union, are to be taken at face value. The simulation
scenario is intended as a scripted encounter between the union and management teams.

5. Each team may have as many meetings outside class as are needed and desirable.

Instructions to the Participants

1. Each participant will be assigned to either the management team or the union team. Once team roles are
assigned, the teams will meet to establish ground rules for subsequent bargaining meetings. The teams
will jointly complete the Ground Rules form. Chief negotiators for both teams will sign the form and
provide a copy of the form to the instructor.

2. Violation of the ground rules will serve as the basis for the filing of an unfair labor practice (ULP)
charge. Teams are to use the ULP form to file a charge. The instructor will serve as the administrative
judge in determining the merits of filed charges and has the discretion to reduce grade credit for the
simulation exercise if a filed charge is found to have merit.

3. The chief negotiators will call meetings for their respective teams to begin preparation of their respective
initial demand proposals and to anticipate the other team s bargaining positions and proposals. Each

756

team is to determine its overall bargaining strategy and specific goals. Major issues for negotiations may
include:
a. Union security, dues check-off, union shop
b. Wages, job classes, wage premiums
c. Management s rights
d. Hours of work
e. Promotions and layoff (the use of seniority)
f. Workforce reduction
g. Grievance and arbitration procedures
h. Pension plans
i. Supplemental unemployment benefits
j. Vacations, holidays, personal and sick leaves, and other time-not-worked issues
k. Other issues as assigned and/or allowed by the instructor

4. Each team must complete the Initial Bargaining Demands form and provide a copy of the form to the
instructor before the demands are presented to the opposing team.

5. At the first joint team bargaining meeting, the teams will exchange written copies of their demands.
Each team must be prepared to respond to the opposing team s requests for clarification of the terms
and conditions of its specific demands. The union will present its proposals and explain the need for
each proposal. Then management will present its proposals and/or counterproposals and justify each
proposal.

6. After the initial demand proposals are exchanged, teams will meet to negotiate the new agreement at
times specified by the instructor or as mutually agreed to by the teams. The instructor will specify time
and date limits for the duration of negotiations.

7. Each team will maintain written records of its progress on bargaining items during the term of the nego-
tiations. In preparatory and caucus meetings, each team is expected to consider the terms of the expired
agreement, to review opposing team proposals, and to prepare counterproposals in a timely manner. If
requested, the written records are to be submitted to the instructor at the completion of negotiations for
assessment if requested.

8. At the completion of negotiations, the teams will jointly prepare a presentation of the projected annual
costs of the new agreement. If assigned by the instructor, the teams will also submit a signed written col-
lective bargaining agreement to the instructor.

9. Additional instructions and coaching may be provided to the participants by the instructor.

Other Sources of Materials for Bargaining Preparations

Government publications: U.S. Department of Labor, Bureau of Labor Statistics, Area Wage Surveys,
Employment and Earnings, Handbook of Labor Statistics, Monthly Labor Review, Characteristics of
Major Collective Bargaining Agreements.
U.S. Department of Commerce, U.S. Industrial Outlook (published every year).
Binder services of Bureau of National Affairs, Inc. (BNA) and Commerce Clearing House. Especially
helpful is the BNA Collective Bargaining Negotiations and Contracts.
Business publications: Business Week and The Wall Street Journal.
Professional labor relations journals: Dispute Resolution Journal, Employee Relations Law Journal, Indus-
trial and Labor Relations Review, Industrial Relations, Berkeley Journal of Employment and Labor Law,
Journal of Collective Negotiations in the Public Sector, Labor Law Journal, and Monthly Labor Review.
Proceedings: Industrial Relations Research Association, Labor Law Developments, National Academy of
Arbitrators, and NYU Conference on Labor.
Labor agreements between other companies and labor unions (as available).

APPENDIX A Collective Bargaining Negotiations Exercise 757

Collective Bargaining Negotiation
Scenario: Harper Container Company
and the United Chemical and
Plastics Workers Union

Scenario Background

Although small in size relative to its competitors, Harper Container Company (HCC) is recognized as a tech-
nology leader in the specialty plastics container market. HCC s only manufacturing plant is located in a
medium-sized city that has experienced long-term declines in both its heavy industrial base and its population
as many area firms moved production operations to lower-cost locations both nationally and overseas. HCC
survived the downturn only to face increased competition as foreign firms began to expand its product mar-
ket segment. Local economic conditions have improved recently with the relocation of two large service-
industry firms to the city that significantly reduced the area s unemployment and forced local firms to com-
pete for available workers. HCC is regarded as a progressive employer concerned with the welfare of its
employees. Many employees have spent their entire working lives at HCC and expect to continue there until
retirement.

United Chemical and Plastics Workers (UCPW) Local 14 represents all of the 200 labor employees at
HCC. There are 15 unorganized office staff employees. The amicable relationship between HCC and the
UCPW has now become strained due to union pressure for wage and benefit increases as economic condi-
tions have changed since the last contract was signed three years ago.

The previous collective bargaining agreement expired two months ago; the parties have agreed to continue
operating under the old contract on a day-by-day basis. The company and the union are both concerned that
a new contract be agreed to as quickly as possible.

General Industry and Economic Information Available
to Both Bargaining Parties

For the specialty plastics industry, average industry-wide wages have increased 4% each year for the past three
years while HCC wages increased by only 2% (across-the-board) each year for the same period under the
now-expired contract. Future industry-wide wage increases are forecast to average 5% per year for the next
three years. Increases in the Consumer Price Index for the next three years are forecast to range from 2.5 to
4% (the expected three-year average is 3.0%).

Per-hour shift differentials are 15 cents for the evening shift and 25 cents for the night shift. There are 50
non-monetary grievances pending for settlement. Turnover of labor employees at HCC averages 5% per year.

Beginning the Bargaining Simulation

Your instructor will provide additional bargaining item information and activity forms to both the manage-
ment and the union bargaining teams to facilitate the development of their initial bargaining demands. The
information provided separately to the teams is confidential and should not be shared with anyone who is
not a member of that team.

758 APPENDIX A Collective Bargaining Negotiations Exercise

Author Index

A
Abbott, Lewis F., 338
Abbott, Tony, 741
Abboud, Joseph, 389
Aboud, Antone, 499
Adams, S., 338
Aiken, Linda H., 283
Albright, Robert R., 653
Allen, A. Dale, Jr., 551
Allen, Robert E., 622
Anderson, Jervis, 61
Appelbaum, Eileen, 343
Arnold, Edwin, 240
Auch, Mary Jane, 67
Autor, David, 605
Avendaño, Ana, 26

B
B.F. Goodrich, 709
Baer, Walter E., 558
Baird, Marian, 419
Banks, Don, 455
Barone, Michael, 28
Basile, K.C., 419
Batterman, Bob, 452
Beaver, Michael S., 142
Beck, Dave, 98
Bell, Jarrett, 455
Bellace, Janice, 112
Berman, Richard M., 566
Bernstein, Aaron, 142
Berthelsen, Richard, 452
Black, M.C., 419
Blake, Fay M., 68
Boardman, Mark, 405
Boetticher, Helen, 162
Boler, Harvey R., 622
Bonney, Joseph, 308
Boulware, Lemuel, 298
Bowers, Mollie H., 622
Bowman, John S., 343
Boyle, Kevin, 61
Brady, Tom, 454, 566
Brand, Norman, 622
Brees, Drew, 454
Breiding, M.J., 419
Brock, Jonathan, 659
Bronfenbrenner, Kate, 208
Brown, Maury, 455
Brown, Scott, 233
Bulajewski, Mike, 405
Bullard, Arthur, 67
Burton, John F., Jr., 659
Bush, George W., 179, 474, 626, 685
Bynum, Cornelius L., 61

C
Campbell, James P., 390
Cantwell, Robert, 67
Cappelli, Peter, 343
Card, David, 343
Carlson, Joe, 283
Carnegie, Andrew, 50
Carter, Jimmy, 473
Castro, Fidel, 724, 725
Castro, Raul, 724
Chamberlain, Neil W., 287
Chandler, Timothy D., 659
Chen, J., 419
Christie, Chris, 659
Cimiotti, Jeannie P., 283
Clain, Suzanne, 338
Clarke, Sean P., 283
Clinton, Bill, 662, 685
Cohen, George H., 453
Cohn, Alain, 343
Coleman, Louis, 67
Coleman, Lynn A., 67
Conroy, Jack, 67
Corker, Bob, 216

D
Dannin, Ellen, 659
Dau-Schmidt, Kenneth G., 605
Daugherty, Carroll R., 608, 609
Davis, Nate, 455
de Vries, Heather F., 419
Debs, Eugene, 60 63
DePillis, Lydia, 216
Devinatz, Victor, 338
Dilts, David A., 659
Dolin, Kenneth, 112
Donald, Carrie G., 622
Doty, David, 454
Dubinsky, David, 72
Dunlop, John, 7
Dunsford, Jack, 609

E
Eaton, Adrienne E., 514
Eidelson, Josh, 405
Eisenhower, Dwight D., 78
Elkouri, Edna, 549
Elkouri, Frank, 549

F
Farrell, Mary Cronk, 67
Farwell, Donald F., 609
Fast, Howard, 67

Fehr, Ernst, 343
Fernandez, Jose, 338
Feuille, Peter, 514, 659
Fine, Cory R., 240
Fine, Janice R., 26
Fishman, Charles, 343
Flagler, John J., 555
Flynn, Linda, 283
Forsyth, Anthony, 715
Franckiewicz, Matthew M., 548
Freedman, Audrey, 76, 151
Freeman, Richard B., 207, 338, 653
Frick, Henry Clay, 59

G
Garland, Hamlin, 67
Gates, Alice B., 26
Gaylord, Amy Moor, 678
Gebre, Tefere, 169
Gibney, Ray, 149, 653
Gilfillan, Lauren, 67
Glasmeier, Amy K., 338
Goggin, Edward P., 549
Gomes, Glenn M., 628
Gompers, Samuel, 49, 50, 55, 56 59
Goodell, Roger, 452
Gould, Jay, 54
Green, William, 71, 77
Gresham, George, 419
Grey, Zane, 67
Gross, Alexandra M., 628
Gross, James, 112
Grossman, Robert J., 26, 28
Gruenberg, Gladys W., 555

H
Haddix, Margaret P., 67
Haley, Timothy A., 605
Hall, P., 338
Hamper, Ben, 606
Han, Eunice S., 653
Hapke, Laura, 68
Haslam, Bill, 216
Hathaway, Jeanne, 419
Haywood, William Big Bill, 63 65
Hebdon, Robert, 659
Heise, Miriam, 625
Henry, Mary Kay, 29
Herrmann, Benedikt, 343
Hester, Kim, 240
Hiatt, Jon, 713
Hiatt, Jonathan, 26
Hillman, Sidney, 72
Hoffa, James P., 74, 78, 176
Hoffa, Jimmy, 98

759

Hoffer-Gittell, Jody, 343
Hogler, Raymond L., 142
Holley, William H., Jr., 561, 577
Holman, Thomas, 338
Horrow, Rick, 455
Hunt, Joseph, 391
Hurd, Richard W., 149, 659

J
Jacobs, Jeffrey, 613
Jacobs, K., 338
Jennings, Daniel F., 551
Jones, Jerry, 452
Juravich, Tom, 208

K
Kaufman, Bruce E., 338, 457
Keene, Jeffrey H., 514
Kemske, Floyd, 67
Kennedy, John F., 51
Kennedy, Ted, 233
Kessler, Jeffrey, 452
King, Martin Luther, Jr., 51, 61
Klass, Brian S., 579
Kochan, Thomas, 343
Koven, Adolph M., 609
Kraft, Robert, 452
Kuhn, James W., 287

L
LaRocco, John B., 556
Lawler, Edward E., III, 330
Lawson, Andrew, 67
Leahy, Sean, 455
Leana, Carrie, 343
Lewin, David, 457
Lewis, John L., 50, 71 72, 73, 77, 161
Limani, Nadjia, 605
Lincoln, Abraham, 471
Lipsky, David B., 543, 659
Luce, S., 338
Lucero, Margaret A., 622
Lunenburg, Fred C., 654
Lurie, Mark I., 508
Lynott, Jerry, 283

M
MacNeil, Michael, 343
Madoff, Bernie, 175
Maher, Kris, 28
Mahony, Douglas, 579
Malin, Martin H., 656
Manning, Peyton, 454
Mara, Wellington, 452
Martin, James E., 343
Martin, Lawrence L., 659
Masters, Marick F., 149, 653
May, Kenneth, 609
Mayer, Gerald, 232
McCabe, Donald, 413
McCardell, Roy L., 67

McClellan, John, 98
McDermott, E. Patrick, 622
McDonough, Paul S., 220
McFerran, Ludo, 419
McKenney, Ruth, 67
McKersie, Robert B., 285, 292
McMenamin, Peter, 283
Meany, George, 50 51, 78
Meisburg, Ronald, 305 306
Mello, Jeffrey A., 240
Menendez, Cammie Chaumont, 419
Merrick, M.T., 419
Merwin, Samuel, 67
Mihelich, Max, 26
Mihoces, Gary, 455
Mitchell, Olivia S., 457
Mongelluzzo, Bill, 308
Morgan, James F., 628
Muhl, Charles J., 605
Murray, Phillip, 77
Murray, S., 419

N
Naduris-Weissman, Eli, 26
Najita, Joyce M., 678
Nelson, Susan Richard, 454
Neumark, D., 338
Newall, Ian, 275
Newell, Arthur, 67
Nixon, Richard, 665

O
Obama, Barack, 112, 179, 180, 662, 685, 724
Orkin, Neal, 625
Owens, James M., 628

P
Pash, Jeff, 452
Pepper, John V., 338
Perez, Norah A., 67
Perkins, Frances, 50
Petersen, Donald J., 622
Peterson, Melanie M., 343
Pfeffer, Jeffrey, 414
Phelps, Elizabeth Stuart, 67
Picher, Michel, 543
Pinkerton, Allan, 67
Pinnock, Sharon, 659
Pistole, John S., 664
Platt, Harry, 610
Posthuma, Richard A., 546
Powderly, Terence, 52 56, 58 59
Powell, A., 419
Pullman, George, 60 63

R
Radelet, Franczek, 678
Ralston, John, 622
Randolph, Phillip, 61
Reagan, Ronald, 665
Reddick, W. Sue, 622
Reich, M., 338

Reuther, Walter, 50 51, 78
Richardson, Jerry, 452
Rogers, Joel, 207
Rojot, Jaques, 715
Roosevelt, Franklin D., 94, 471
Rothman, Emily F., 419

S
Sanford, Kathleen D., 283
Schelzig, Erik, 216
Schneider, Frédéric, 343
Schocket, Eric, 68
Schwartz, Stanley J., 622
Schwarz, Joshua L., 605
Scott, Clyde, 240
Scott, Leroy, 67
Seago, Jean Ann, 283
Seeber, Ronald, 543
Shanker, Albert, 23 24
Sherer, Peter D., 343, 457
Shimabukuro, Jon O., 656
Shuler, Elizabeth, 169
Sinclair, Upton, 67
Slater, Joseph E., 656
Sloane, Douglas M., 283
Smith, DeMaurice, 455
Smith, Herbert L., 283
Smith, S.G., 419
Smith, Susan L., 609
Solomon, Mark, 308
Soltis, Michael J., 628
Spetz, Joanne, 283
Springer, Dan, 338
Steinbeck, John, 67
Stephens, Uriah S., 52
Stern, Andrew, 28
Stevens, Carl, 440
Stevens, M., 419
Stidsen, Andrea, 419
Summers, Clyde W., 231
Swatek, Karia, 455
Swift, Maris Stella, 546

T
Tagliabue, Paul, 452
Taylor, Frederick, 601
Thatcher, Margaret, 730
Thomason, Terry, 659
Tobin, Dan, 161
Tomer, John, 414
Trotter, Jim, 455
Truman, Harry S., 471
Trumka, Richard, 169

U
Upshaw, Gene, 452
Uyen Vu, 28

V
Vlasic, Bill, 343
Volz, Marlin M., 549

760 Author Index

W
Wagner, K.C., 419
Walcott, Quentin, 419
Walker, Scott, 655 657
Walsh, David J., 605
Walsh, William J., 622
Walters, M.I., 419
Walton, Richard E., 285, 292
Watkins, Thomas L., 568
Watson, Bo, 216

Webb, Beatrice, 168
Webb, Sidney, 168
Weber, K., 67
Weiss, Andrew, 343
Wheeler, Hoyt N., 579, 715
Williams, Ryan, 26
Wilson, Woodrow, 471
Wolters, Roger, 577
Woodyard, Chris, 402
Wright, Harold B., 67
Wright, Ingrid, 419

Y
Yates, Diane, 419
Yelowitz, Aaron, 338

Z
Zack, Arnold, 746
Zagenczyk, Tom, 149

Author Index 761

Subject Index

A
Abbott, Tony, 741
Abboud, Joseph, 389
ABI/INFORM Global, 21
ABI/ INFORM Trade & Industry, 21
Ability to pay, 344 345
Absorptions, 166
ABU. See Appropriate bargaining unit (ABU)
Abusive behavior, 621
Accommodation or labor-management

cooperation, 143 145
Acquired immune deficiency syndrome (AIDS), 8
Action Needed to Improve Case-Processing Time at

Headquarters, 113
ADA. See Americans with Disabilities Act (ADA)
ADEA. See Age Discrimination in Employment

Act (ADEA)
Ad hoc arbitrator, 542
Administration

grievance, 675
of unions, 163

Administrative determinations, seniority in,
410 412

Administrative Law Judge (ALJ), 108
Affiliation, 138
Affirmative action, 110
AFL-CIO. See American Federation of

Labor-Congress of Industrial Organizations
(AFL-CIO)

AFL-CIO Manual for Shop Stewards, 518
Age Discrimination in Employment Act (ADEA),

51, 120, 358
Agency shop, 179 181
Agency shop clause, 97
Aggression, toward supervisors, 621
Agile Manifesto, 405

Agreement, lock-in, 270
AIM (Associate ILGWU Members), 168
Airline Deregulation Act, 117
Airline industries, arbitration in, 552
Air Line Pilots Association, 148
Alcatel-Lucent, 16
Alcohol-related discipline, 621
Alexander v. Gardner-Denver Company, 560, 562,

572
Alienation theory, 198 199
All-China Federation of Trade Unions (ACFTU),

742, 744 745
Allegheny Ludlum Corporation, 103
Allentown Mack Sales & Service v. NLRB, 101
Alliance for Employee Growth and Development,

Inc., 16
Alliance of Technology Workers, 405
Alternative dispute resolution (ADR),

512 513
early neutral evaluation, 516, 517
employment arbitration, 516
nonunion mediation, 516
ombudsperson, 516

open-door policies, 516
peer review systems, 516

Amalgamated Transit Union, 443
Amalgamations, 166
American Arbitration Association (AAA), 442,

541
American Axle & Manufacturing (AAM), 390
American Banker, 21
American Bar Association, 442
American Federation of Government Employees

(AFGE), 652, 665
American Federation of Labor (AFL), 44, 169

merger with CIO, 77 78
organization of, 58 59
origin and goals of, 56 58
strategies and tactics of, 58

American Federation of Labor-Congress of
Industrial Organizations (AFL-CIO), 145,
154, 168 175, 713, 722

associate membership program, 171
Building and Construction Trades Department,

171
Committee on Political Education (COPE),

165, 173
employee training, 414 415
established in, 169
Ethical Practices Committee, 176
Gulf Coast Revitalization Program, 24
Internal Dispute Plan, 171
job for union members, 17
Labor Education and Training Center, 414 415
local central bodies, 171
local department councils, 171
mission statement, 146
organizational structure, 169 174
organization chart of, 170
safety and health law, 417
services, 169
Union Label and Service Trades Department, 171
Union Summer program, 173
use of information technology by, 174 175
Working America program, 173

American Federation of State, County, and
Municipal Employees (AFSCME), 160, 165,
559, 651, 652, 666

American Federation of Teachers (AFT), 148, 160,
400, 651, 652, 666

American labor law, 45
American Legislative Exchange Council (ALEC),

659
American Management Association, 392, 413
American Nurses Association, 167
American Physicians and Dentists, 167
American Plan, 68
American Postal Workers Union (APWU), 174,

652
American Railway Union (ARU), 50, 62
American Rights at Work Education Fund, 703
Americans with Disabilities Act (ADA), 15, 29,

51, 119, 412, 420, 562

American Telephone & Telegraph (AT&T), 16,
24, 336

Anatomy of a Lie, 235
And Women Must Weep, 235
Anti-union behavior

unintended consequences of, 212
Anti-union sentiment, 70 71
Apollo Alliance, 402
Appropriate bargaining unit (ABU), 271 274

multiple employer and, 272 274
single employer and, 271 272

Arbitral deficiencies
court s observation of, 576 577

Arbitral dilemma, 573 578
court s observation of arbitral deficiencies,

576 577
critique of mandatory employment arbitration,

574 576
repeat players, 577 578
supporters of mandatory employment arbitra-

tion, 578
Arbitrate, decision to, 544 545
Arbitration

appraising effectiveness, 567 569
binding, 13
current issues affecting, 560 579
double final-offer, 448 449
employment, 571 578
and the Equal Employment Opportunity

Commission, 560 564
examining prior, 278
in federal sector, 662
of interest disputes, 678 680
and judicial proceedings, 549 552
vs. judicial proceedings, 550 552
legal jurisdiction, 560
Misco decision, 565 567
and the National Labor Relations Board,

564 565
night baseball, 449

procedural problems, 569 571
public policy implications for the future,

578 579
in the railway and airline industries, 552
tri-offer, 448

Arbitration hearing, 545 549
Arbitration-mediation (arb-med), 447 448
Arbitration procedures, expedited, 571
Arbitration proceeding

arbitration hearing, 545 549
decision to arbitrate, 544 545
elements of a typical, 540 549
prehearing activities, 545
selection and characteristics of arbitrators,

541 544
Arbitrators, 402

burden of proof, 554
capabilities and ethics, 567 569
cross-examination, 554
decision-making guidelines used by, 553 558

762

decision of, 552 560
defined, 13
selection and characteristics of, 541 544
witness credibility, 554

Arbitrator s decision, 552 560
decision-making guidelines used by arbitrators,

553 558
past practice, 558 559
previous labor arbitration decisions, 559 560

Arizona Supreme Court, 49
Armour and Company, 76
ARU. See American Railway Union (ARU)
Associate membership program, 171
Association for Conflict Resolution, 442
Association for Working Women, 168
AT&T. See American Telephone & Telegraph

(AT&T)
Attitudinal structuring, 292
Auciello Iron Works, Inc. v. NLRB, 101
Australia

collective bargaining in, 739 741
unions in, 739 741

Australia Industrial Relations Commission
(AIRC), 739

Australian Fair Pay Commission, 740
Australian Industrial Relations Commission, 741
Australian Law Reform Commission, 741
Australian Workplace Agreements (AWAs), 740
Automation, 388
Automation Fund Agreement, 76
Automotive News, 21
Auto Workers (UAW), 145
Avaya, 16
Awards system, 741

B
Back Pay Act, 663
Bad faith bargaining, 299 300
Bakery, Confectionery, and Tobacco Workers,

138, 148
Bankruptcy Act, 119
Bankruptcy proceedings, collective bargaining

under, 303 304
Bankruptcy Reform Act, 304
Bargaining. See also specific types

bad faith, 299 300
centralized, 272
collective, ethical and legal considerations,

293 309
concession, 76
coordinated, 270
council, 273
decentralized, 15
distributive, 285
effects, 297, 389
goals for registered nurses, 282 283
good faith, 295
interest, 286
interest-based, 285 286
intraorganizational, 292 293
and mediators, 441
mid-term, 296
mutual gain, 285
over managerial rights, 300 303
pattern, 268 269

strategies and tactics, 286 287
surface, 299
win-win, 285

Bargaining actions, specific, 297 298
Bargaining caucus, 287
Bargaining impasse, good faith, 297
Bargain in good faith

legal duty to, 295
remedies to violations of duty to, 304 306

Bargaining power equations, factors affecting, 290
Bargaining power model, 287 290

complexities associated with, 291 292
Bargaining range, 279 281

defined, 279
multi-issue example, 280 281
one-issue example, 279 280

Bargaining strategy, whip-saw, 269 270
Bargaining subjects

illegal, 295
mandatory, 295 296
types, 295 297
voluntary, 297

Bargaining unit, 270 274
Bavarian Motor Works (BMW), 17, 707
Behavior

collective bargaining, 285 293
voting, 306 308

BellSouth, 174
Benefit rights, 407
Best Buy, 20
Beverly Enterprises-Minnesota, Inc. d/b/a Golden

Crest Healthcare Center and United
Steelworkers of America, 101

Beyond a reasonable doubt, 611
B.F. Goodrich, 73, 709
Bilateral process, 15
Bildisco decision, 304
Bituminous Coal Commission, 66
Blacklisted, 68 69
BNA. See Bureau of National Affairs (BNA)
The Board. See National Labor Relations Board

(NLRB)
Board of Regents v. Roth, 670
Boeing Company, 396 397, 400
Bosch, 707
Boston Medical Center Corp., 103
Boulware, Lemuel, 298
Boulwarism, 143, 298 299
Boycotts, 15, 466 471
British Journal of Industrial Relations, 21
British Medical Association (doctors), 730
Brotherhood of Electrical Workers v. NLRB, 102
Brotherhood of Sleeping Car Porters, 61
Brown, Scott, 233
Brown University, 103
Budget, private-sector bargaining and, 669
Budget Repair Act, 656
Build momentum, 292
Bumping rights, 408
Burden of proof, 554
Bureau of Alcohol, Tobacco, Firearms, and

Explosives, 685
Bureau of National Affairs (BNA), 21, 278
Bush, George W., 179, 626, 685
Business agent, 156
Business ally, 467

Business Periodicals Index, 21
Business Week, 21
Byrnes Act of 1936, 73

C
California Nurses Association/National Nurses

Organizing Committee, 282
Call-in pay, 356
Campbell, James P., 390
Canada

Charter of Rights and Freedoms, 718
collective bargaining in, 715 719
unions in, 715 719

Canadian Auto Workers, 716, 722
Canadian Constitution

Charter of Rights and Freedoms, 718
Canadian Paperworkers, 716
Canadian Retail, Wholesale Union, 716
Capitalist economic system, 13
Card Check Procedure, 212
Carnegie Steel Works, 59 60
Carrefour, 706
Cash balance plan, 361
Castro, Fidel, 724, 725
Castro, Raul, 724
Caterpillar, 23
Cease-and-desist order, 110, 305
Cell manufacturing, 416
Central and Eastern Europe

collective bargaining in, 733 734
unions in, 733 734

Central Arbitration Committee (CAC), 731
Central de Trabajadores de Cuba (CTC). See

Workers
Central Union of Cuba (CTC)

Centralized bargaining, 272
Cents-per-hour cost, 283
Champion International, 415
Change to Win labor federation, 52, 78
Charging Party, 108
Charter of Fundamental Social Rights (Social

Charter), 728
Charter of Rights and Freedoms, 718
Chevron, 702
Chevron U.S.A. Inc. v. Echazabal, 420
Chicago Tribune, 56, 60
Child-care assistance, 363
Chilling effect, 444, 679
China

average pay in, 742
collective bargaining in, 741 746
National People s Congress, 742
Regulations on Collective Contracts for

Enterprises, 743
State Council, 741
unions in, 741 746

China miracle, 745
Chinese Communist Party, 742
Christian Coalition, 165
Christie, Chris, 659
Chrysler, LLC, 164, 269
Chrysler Corporation, 294, 414
CIO. See Congress of Industrial Organizations

(CIO)

Subject Index 763

Circuit City Stores v. Adams, 572
Civil conspiracy doctrine, 47
Civil Rights Act, 12, 51, 61, 560
Civil Rights Act of 1964, 120
Civil Rights Act of 1991, 120
Civil Service Reform Act (CSRA), 51, 651, 657

Title VII of, 654
Clayton Antitrust Act, 48 49, 93
Clear and convincing evidence, 611
Clear and unambiguous language, 554 557
Cleveland Board of Education v. Loudermill, 671
Cliff vesting schedule, 361

Clinton, Bill, 662, 685
Closed shop, 97, 178
Closed shop union security clause, 96
Club Med, 707
Code of conduct, 442
Code of Professional Responsibility for

Arbitrators of Labor Management Disputes,
442, 544

Codified businesslike strategy, 143
Codified relationships, 518
COLA. See Cost-of-living adjustment (COLA)
Collective bargaining. See also Bargaining

Australia, 739 741
under bankruptcy proceedings, 303 304
bargaining unit, 270 274
behavior, 285 293
Central and Eastern Europe, 733 734
centralized, 272
China, 741 746
Cuba, 724 725
defined, 267 268
employee groups, 268
ethical and legal considerations, 293 309
European Union, 727 730
Former Soviet Bloc countries, 733 734
Germany, 731 733
Great Britain, 730 731
issues after World War II, 75 77
Japan, 734 738
and job security, 396
Korea, 738 739
labor relations system, 14
leapfrogging, 270
mandatory, 271
Mexico, 719 724
nonmandatory, 271
pattern bargaining, 268 269
South America, 719 724
structures, 268 270
Western Europe, 725 727
whipsaw bargaining strategy, 269 270
work scheduling, 404 406

Collective bargaining structures, and decision-
making processes, 671 685

Columbia University, 10
Commerce Clearing House (CCH), 21, 278
Commercial Motor Vehicles Act, 455
Commission of unfair labor practices, 300
Committee for Industrial Organization, 50
Common law, 45 46
Common law of the shop, 549
Common situs picketing, 468 470
Commonwealth v. Hunt, 46, 47, 50
Communications Workers of America (CWA),

16, 145, 146 147, 155, 160, 163, 167, 405

employee training, 414
Communications Workers v. Beck, 178
Communist Party of China (CPC), 742, 744
Communist society, 63
Company organization, for labor relations

activities, 149 151
Company strategic planning, 136 137
Company unions (ghost unions), 69, 720

Compensation work rules, 8
Competition in the product market, 328
Competitive job rights, 407
Comprehensive Crime Control Act, 177
Compressed workweek, 406
Computer programming, 405
Concerted activity, 107 108
Concerted and protected activity, 107
Concession bargaining, 76
Conciliation and Arbitration (JCA) boards, 722
Confederation of Mexican Workers (CTM),

720
Confederation of Shipbuilding and Engineering

Unions, 730
Conference boards, 167
Congressional Office of Technology Assessment

(OTA), 418
Congress of Industrial Organizations (CIO), 44,

50, 71, 169
leadership, 72
merger with AFL, 77 78
rise of, 71 72

Consent election, 219
Consumer price index (CPI), 349
Contingency union shop, 181
Contract

negotiations, 5 6, 452 455
provisions, 333 336
psychological, 394 395
ratification process, 306, 307 308
reasons for rejection of tentative, 308 309
sweetheart, 70
yellow-dog, 47, 50

Contract bar doctrine, 225
Contract language

employment terms and conditions, 393
wage rates, 333 336
wording, 277 278

Contractual violation, protesting, 503
Contract zone, 279
Convention, 160 161
Conventional interest arbitration (CA), 443 444

criticisms of, 444 446
Coordinated bargaining, 270
Cordwainers Trial of 1806, 342
Corning Inc., 336, 413
Cost, cents-per-hour, 283
Costing contract proposals, 283 285
Cost of living, 348 349
Cost-of-living adjustment (COLA), 349 350
Council bargaining, 273
Craft unions, 155
Criminal conspiracy doctrine, 46, 47
Criminal syndicalism laws, 65
Croft Metals, Inc. and International Brotherhood

of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers
and Helpers, 101

Cross-examination, 554

Cuba
collective bargaining in, 724 725
unions in, 724 725

Cultural Revolution, 742
CWA. See Communications Workers of America

(CWA)

D
Daily Labor Report, 22
Daimler AG (Mercedes), 17
Daimler Chrysler, 706
Dallas Times Herald, 398
Dana Corporation, 104
Danbury Hatters case, 48
Daugherty, Carroll, 608
Davenport et al. v. Washington Education

Association, 668
Decentralized authority, 59
Decision-making processes, collective bargaining

structures and, 671 685
Deferred wage increase, 349, 350 351
Defined benefit pension plan, 358
Defined contribution pension plan, 358, 360
Degree of labor intensiveness, 273, 328
Degree of proof in disciplinary cases, 610 612
Delegate system, 160
Delta Airlines, 401
Democracy, leadership and, 161 162
Democratic Federation of Unions of Public

Servants, 720
Dennis O Conner v. Magno Ortega, 613
Department of Defense (DoD), 664
Department of Homeland Security (DHS),

663 664
Homeland Security Labor Relations Board, 664

Department of Transportation, 621
Deregulation legislation, 117
Deskilling, 392
Detroit Free Press, 21
Deutsche Telekom, 703
Differential features of work, job evaluation and

wage spread, 338 351
Dilatory tactics, 299
Directed elections, 219
Directive or results-oriented mediation, 513
Discharge decisions, and public policy, 620 622
Disciplinary penalty and mitigating

circumstances, 617 620
Discipline

changing significance of industrial, 601 608
effect of work rules on, 613 615
elements of the just cause principle in

employee, 608 628
for just cause and it s legitimate purpose,

608 610
present-day significance of employee, 605 608
progressive, 616 617
of public-sector employees, 676 677

Discouraged workers, 15 16
Distributive bargaining, 285, 288
Distributive justice, 412, 516
Domestic violence, 419
Dominican Republic Central America Free Trade

Agreement (DR CAFTA), 724
Dotted-line relationships, 151
Double-breasting, 140

764 Subject Index

Double final-offer arbitration (DFOA), 448 449
Douglas Factors, 677
Dow-Jones, 168
Downsizing, 397 399
Drug-testing, 621
Dual loyalty, 12
Due process, 623 628

double jeopardy, 623
elements of, 623 624
procedural aspects of, 623
record-keeping, 624
requirements of, 623
and the Weingarten decision, 624 625
written notice, 623

Dues, fees, and distribution of funds,
165 166

Dues checkoff, 182
Dues check off system, 165
Dun & Bradstreet, 399
Dunlop, John, 7
DuPont Company, 168, 297

E
Early neutral evaluation, 516, 517
Early retirement options, 361
Eastman Chemicals, 139
Ebola virus, 8
EBSCO, 21
Economic and legal information, 278 279
Economic capital punishment, 608
Economic goals, short term, 80
Economic strike, 451
Economy

state of, 14 15
structural changes in, 27 28

Editor & Publisher, 21
Education

and KOL, 54
tuition aid, 363

Educational Labor Relation Action, 656
Education International, 703
EEOC v. Waffle House, Inc., 572
Effects bargaining, 297, 389
Efficiency, effects of unions on, 347 348
Eight-hour workday movement, 55 56
Election investigation and hearing, 219 220
Elective deferrals, 361
Electrolux, 707
Electromation, 141
Electronic communications, 612 613
Electronic-monitoring workplace, 393
E-mail, 236 237
Emergency situation, 404
Emotional intelligence, 440
Empathetic relationships, 520
Employee assistance plan (EAP), 363
Employee associations, 168
Employee benefit

family and child-care benefits, 362
health benefits, 352 353
health care cost containment, 353 354
income maintenance, 354 355
insurance, 352 353
other benefits, 363
pay for time not worked, 357
pension, 358 361

premium pay, 355 356
types of compensation, 352

Employee discipline
degree of proof in disciplinary cases,

610 612
disciplinary penalty and mitigating circum-

stances, 617 620
discipline for just cause and discipline s legiti-

mate purpose, 608 610
due process, 623 629
effect of work rules on, 613 615
elements of the just cause principle in, 608 628
employment-at-will doctrine, 603 605
enforcement of the remedy, 620
historical overview of policies, 601 603
last chance agreements, 617
nature of the evidence and witness credibility,

610 612
possible collision between discharge decisions

and public policy, 620 622
present-day significance of, 605 608
progressive discipline, 616 617
and social media, 612 613
wrongful discharge, 603 605

Employee empowerment, 144
Employee Free Choice Act, 230 233, 306
Employee grievances

to draw attention to a problem in the plant,
503 504

flexible consideration in processing, 520 522
to get something for nothing, 504 505
to make the grievant and union feel important,

504
preparation for processing, 506 508
to protest a contractual violation, 503
reasons for, 502 505
significance of, 505 506

Employee groups, 268
Employee involvement (EI), 333, 416
Employee misconduct, 610
Employee participation programs, 141
Employee picketing rights, 466
Employee Relations, 21
Employee representation plan, 69
Employee Retirement and Income Security Act

(ERISA), 15, 29, 51, 118, 361
Employees

activities of the union in organizing, 205 209
attitudes, 74
coverage under LMRA, 104 107
defined, 101 102
backgrounds and needs, 200 201
discipline of public-sector, 676 677
employment-at-will doctrine and wrongful

discharge
consideration for nonunion, 603 605

organizing professional, 203 205
polling or questioning, 234
rights and obligations, 669 671
solicitation by, on company property, 235
value added by, 328
voting for and against unions, 201 203
wrongful discharge of, 603 605

Employee stock option plan (ESOP), 17, 359
Employee training, 412 415
Employee voice, 506
Employer costs per hour, 352

Employer disciplinary policies, 601 603
Employer resistance, 709
Employers

coverage under LMRA, 104 107
criticisms of the Wagner Act, 96
duties of, 230
new, 303
opposition to unionization, 97
opposition to unions by, 68 70
secondary, 466
successor, 303
and technological change, 388 389

Employment falsification, 621
Employment Appeal Tribunal, 731
Employment arbitration, 516, 571 578

supporters of mandatory, 578
Employment-at-will (EAW) doctrine, 45 46,

603 605
Employment discrimination laws, 120
Employment Relations Act (ERA), 730
End-run bargaining, 673
Engineering Employers Federation, 730
English common law, 45
Enron, 175
Enterprise unionism, 736
Epilepsy Foundation of Northeast Ohio v. NLRB,

103
Equal Employment Opportunity Act, 29
Equal Employment Opportunity Commission

(EEOC), 601, 662
labor arbitration and, 560 564

Equal Pay Act, 51, 120
ERISA. See Employee Retirement and Income

Security Act (ERISA)
Ernst & Young, 415
Espionage Act of 1917, 65
Ethics of arbitrators, 567 569
European Company Statute, 708
European Economic Area (EEA), 729
European Harmonized Index of Consumer Prices

(HICP), 349
European Trade Union Confederation (ETUC),

707 708
European Trade Union Institute, 729
European Union (EU), 349, 707, 710, 727

Charter of Fundamental Social Rights (Social
Charter), 728

collective bargaining in, 727 730
European Company Statute, 708
European Works Council (EWC) Directive, 728
goal of, 728
unions in, 727 730

European Works Council, 729
European Works Council (EWC) Directive, 728
European works councils, 708
Evaluative mediation, 441, 513
Evidence in arbitration vs. in judicial proceedings,

550 552
Excelsior rule, 225
Exclusive bargaining representative, 230
Executive Order 10988, 51
Executive Order 11246, 120
Executive Order 11375, 120
Executive Order 13201, 179
Executive Order 13496, 179
Executive Order 13522, 662
Expedited arbitration procedures, 571

Subject Index 765

Experience, 440
Experimental work, 404
Exxon, 168
ExxonMobil, 702

F
Facebook, 236, 612
Face-saving, 440
Fact-finding, 442, 677

and arbitration of interest disputes, 678 680
effectiveness of, 680 681

Fair Labor Association, 22
Fair Labor Standards Act (FLSA), 50, 51, 70, 121,

337, 356, 406
Fair Pay and Conditions Standard, Australia, 740
Fair representation obligation, 522
Fair Work Act, 741
Fair Work Australia (FWA), 741
Fair Work Commission (FWC), 741
Fair Work Ombudsman, 741
Falsification of employment, 621
Family and child-care benefits, 362
Family and Medical Leave Act (FMLA), 15, 52,

121, 362
Featherbedding, 395
Federal Aviation Administration (FAA), 621, 660
Federal Bureau of Investigation, 65
Federal Election Campaign Act of 1971, 173
Federal Express, 141
Federal Labor Relations Authority (FLRA), 657,

663, 664, 685
Federal Mediation and Conciliation Service

(FMCS), 12, 92, 439, 541, 659, 663
Federal Railroad Administration, 621
Federal Reserve Board, 14 15
Federal sector

appropriate bargaining units and union recog-
nition in, 660

grievance procedures and arbitration in, 662
Labor Management Forums in, 662 663
negotiable subjects in, 660 661
unfair labor practices in, 661 662

Federal-sector labor relations legislation, 657 665
Federal Service Impasse Panel (FSIP), 657 659, 661
Federation of Korean Trade Unions (FKTA), 738
FedEx, 222, 224
Fibreboard Corp. v. NLRB, 401
Fifth Amendment to the Constitution, 45, 49
Films, showing during election campaigns,

235 236
Final-offer arbitration (FOA), 679
Final-offer issue-by-issue (FOIBI), 445 446
Final-offer total package (FOTP), 445 446
Financial core union member, 178
Financial market, 17
Firestone, 73, 709
First Amendment to the Constitution, 45, 668,

670
Flextime, 406
FLSA. See Fair Labor Standards Act (FLSA)
Forbes, 21
Ford Motor Company, 16, 164, 269, 334, 336, 402,

414, 702, 707
Former Soviet Bloc countries

collective bargaining in, 733 734
unions in, 733 734

Fortune, 21
Forum shopping, 111
Forward with Fairness Act (FWFA), 740 741
401(k) plan, 358 359
14 Penn Plaza LLC v. Pyett, 103, 562
Fourteenth Amendment to the Constitution, 45,

49
Fraternal Order of Police (FOP), 652
Free enterprise (capitalist) economic system, 13
Free trade

globalization and concerns about, 710 714
North American Agreement on Labor Cooper-

ation (NAALC), 712 714
North American Free Trade Agreement

(NAFTA) and, 711 712
Full union membership, 178

G
Gain sharing plan, 334
Gale, 21
GE Appliance and Lighting, 390
Gebre, Tefere, 169
General Agreement on Tariffs and Trade (GATT),

710
General Counsel, 100
General Electric (GE), 71, 143, 298 299, 353, 390,

415, 702
General Electric doctrine, 469 470
General Motors (GM), 73, 76, 164, 182, 269, 336,

414, 702, 705
Lansing Grand River Assembly plant, 144

General Motors Europe (GME), 707, 729
General Motors Skills Centers, 16
General strike, 458
General unions, 155
George Meany Center for Labor Studies, 164, 173,

414
German Federation of Trade Unions, 732
Germany

collective bargaining in, 731 733
unions in, 731 733

Giant Food LLC, 462
Gilmer v. Interstate Johnson Lane Corp., 572
Globalization

and concerns about free trade, 710 714
General Agreement on Tariffs and Trade

(GATT) and, 710
North American Agreement on Labor

Cooperation (NAALC), 712 714
North American Free Trade Agreement

(NAFTA) and, 711 712
Global Positioning Satellite (GPS) signals, 10
Global positioning systems (GPSs), 392
Global Union Federation, 703. See also

International Trade Secretariats
Golden Crest Healthcare Center, 221
Good faith bargaining, 295
Good faith bargaining impasse, 297
Goodyear, 73, 709
Government, 12
Graded vesting schedule, 361

Great Britain
Central Arbitration Committee (CAC), 731
collective bargaining in, 730 731
Employment Appeal Tribunal, 731
unions in, 730 731

Great Depression, 94
Great Northern Railroad, 62
Greenfield agreements, 740

Grievance administration, 675
Grievance arbitration, 514
Grievance mediation, 512 513, 514
Grievance mediators, 513 515
Grievance procedure, 654

administrative complexities of, 515
alternative dispute resolution (ADR), 512 513
codified relationships, 518
different approaches by grievance mediators,

513 515
first step of, 509 511
fourth step of, 512 513
other forms of ADR, 516 517
second step of, 511
steps in, 508 518
third step of, 511 512

Grievance processing
preparation for, 506 508
steps in, 508 518

Grievance resolution, 517 518
Grievances

definition, 499
incorrect and correct grievance forms, 500
reasons for, 502 505
significance, 499 502
sources, 499 502

Gulf Coast Revitalization Program, 24

H
H1N1 flu, 8
Hamper, Ben, 606
Handbilling rights, 471
Harley-Davidson Motor Company, 144, 271, 336,

415
Harris Poll, 23
Harvard Business Review, 21
Haymarket Riot, 49, 55 56
Health care cost containment, 353 354
Health Care Hustle Web site, 24
Health maintenance organization (HMO), 354
HealthSouth, 175
Henry, Mary Kay, 29
Heritage Foundation, 165
Hershey Company, 353, 355
Heydon Royal Commission into Trade Union

Governance
and Corruption, 741

Hiatt, Jon, 713
High deductible health care plans (HDHCP),

354
High-performance work organization (HPWO),

390
partnership principles, 391

High-performance work systems (HPWS), 414
Hoffa, James P., 176
Hoffman Plastic Compounds, Inc. v. NLRB, 101
Holiday pay, 357
Holly Farms Corp. v. NLRB, 102
Home computer, 363
Homeland Security Act (HSA), 663 665
Homeland Security Labor Relations Board, 664
Homestead Incident, 59 60
Homestead strike, 49, 50

766 Subject Index

Honda, 743, 745
Hot cargo agreement, 468
Hotel and Restaurant Employees Union, 410
Hotel Employees and Restaurant Employees

(HERE), 155, 166 167
Hughes, Richard, 307
The Human Equation (Pfeffer), 414
Human Rights Watch, 137
Hurricane Katrina, 24
Hurricane Rita, 24
H.W. Wilson Company, 21

I
Iacocca, Lee, 294
IAM. See International Association of Machinists

and Aerospace Workers (IAM)
IBEW. See International Brotherhood of Electrical

Workers (IBEW)
IBM, 139, 405
IBM Corporation, 103
ICEM Rubber Division, 709
Idiosyncratic deals, 13
IG Metal, 733
IKEA, 707
ILA. See International Longshoremen s

Association (ILA)
Illegal bargaining subject, 295
Illegal strike, 451
ILO. See International Labor Organization (ILO)
ILO Declaration on Fundamental Principles and

Rights at Work, 707
ILWU. See International Longshore Worker s

Union (ILWU)
Immigration and Naturalization Service (Justice

Department), 664
Impasse-resolution procedures involving third-

party neutral, 439 447
Imposing unreasonable conditions, 299
Improshare plan, 335
Inability to pay, 298
Incarceration, 621
Income maintenance, 354 355
Independent unions, 167 168
Individualized treatment, 610
Industrial discipline, changing significance of,

601 608
Industrial Economy, 52 53
Industrial equal protection, 609 610
Industrial & Labor Relations Review (ILR Review),

21
Industrial Relations Systems (Dunlop), 7
Industrial Revolution, 137
Industrial spies, 68
Industrial unionism, 71 72
Industrial unions, 155

local craft and, 155 157
Industrial wage differentials, 327 329
Industrial Workers of the World (IWW), 44, 49,

50, 63 65
Industry-wide bargaining. See Centralized

bargaining
Information

economic, 278 279
legal, 278 279

Informational justice, 412
Informational picketing, 466, 470

Information technology, 174 175
Instagram, 612
Institutional Revolutionary Party (PRI), 720
Instructional situations, 404
Insubordination, 621 622
Insurance, health, 352 353
Intel Corporation, 24
Intent of the parties, 557 558
Interactional justice, 516
Interboro doctrine, 107
Interest arbitration, 442 446, 677

conventional, 443 446
procedures, 447 449
traditional, 446 447

Interest bargaining, 286
Interest-based bargaining, 285 286
Interest disputes, 6, 268

fact-finding and arbitration of, 678 680
Intermediate organizational units, 167
International Association of Firefighters (IAFF),

652
International Association of Machinists and

Aerospace
Workers (IAM), 160, 271, 390, 396, 651

International Brotherhood of Electrical Workers
(IBEW), 16, 160, 169, 390, 404

International Brotherhood of Teamsters (IBT), 74,
78, 160, 167

International Federation of Chemical, Energy,
Mining, and General Workers Unions
(ICEM), 709

International forces, 19 20
International Framework Agreements (IFA), 706
International Labor Organization (ILO), 20, 706,

707, 725
International Labor Organization (ILO)

Conventions, 721
International Ladies Garment Workers Union,

168
International Longshoremen s Association (ILA),

306, 346
International Longshore Worker s Union

(ILWU), 396
International Metal Workers Federation, 703
International Monetary Fund, 20
International trade, 20
International Trade Secretariats, 703. See also

Global Union Federation
International Trade Union Confederation, 739
International Transport Workers Federation, 703
International union, 159 161
International union representative, 157
Internet, 236 237
Interpersonal justice, 412
Interstate Commerce Commission, 117
Intraorganizational bargaining, 292 293
ISS, 706
Issue-by-issue FOA, 679

J
Jacobs, Jeffrey, 613
Japan

collective bargaining in, 734 738
enterprise unionism, 736
Labor Commission, 737
lifetime employment, 735

seniority-based wage system in, 736
Shunto, 735
Two Lost Decades, 737
unions in, 734 738
wage system in, 735

Japanese Trade Union Law, 737
Job analysis, 330
Job characteristics, 156
Job description, 330
Job evaluation

within an organization, 329 330
defined, 329
occupational wage differentials, 329 338
unions on, 331
wage spread, 338 351

Job factors, 329
Job posting, 409 410
Job protection, 388 393
Job security, 393 412

and the changing psychological contract,
394 395

goals, 80
need for, 199
work rules, 395 397

Job sharing, 410
Job specification, 330
Jobs within the organization, evaluating,

329 330
Job Training Partnership Act (JTPA), 119
Johnson Controls, Inc., 420
Johnson Controls decision, 420
Joint councils, 167
Journal of Collective Negotiations, 21
Journal of Labor Economics, 21
Journal of Labor Research, 21
JTPA. See Job Training Partnership Act

(JTPA)
Judicial proceedings, arbitration and,

549 552
Jurisdictional disputes, 403
Jurisdictional strike, 456
Jurisdiction and work assignments,

403 404
Just cause, 602

Just-in-time (JIT) inventory control,
416

K
Kaiser Steel, 76
Kennedy, Ted, 233
Knights of Labor (KOL), 44, 49

failure and demise, 54 55
goals and organization of the, 52 53
strategies to accomplish goals, 53 54

Korea
collective bargaining in, 738 739
Labor Relations Commission (LRC),

738
Labor Standards Act (LSA), 739
unions in, 738 739

Korea Confederation of Trade Unions (KCTU),
738

Korea Health and Medical Workers, 739
Korean Employers Federation (KEF),

738
Korean War, 75

Subject Index 767

L
Labor agreement, 155

administration, 6
negotiating, 6
negotiation, 266 267
wage adjustments, 349 350

Labor and Employment Law Resource Center
online, 22

Labor arbitration
appraising effectiveness, 567 569
courts and, 565 567
development of, 538 540
and the Equal Employment Opportunity

Commission, 560 564
Misco decision, 565 567
and the National Labor Relations Board,

564 567
procedural problems, 569 571
public policy and, 565 567

Labor arbitration decisions, 559 560
Labor costs as percentage of total costs,

328
Laborer International Union of North America, 160
Labor History, 21
Labor injunction, 47
Labor intensiveness, degree of, 328
Labor Law Journal, 21
Labor law reforms, 305 306
Labor laws, framework of, 15
Labor Leadership Institute, 414
Labor legislation, in public sector, 652 654
Labor management forums, in the federal

government, 662 663
Labor Management Relations Act (LMRA), 29,

92, 182, 307, 327, 439, 625, 653, 654,
658 659, 671

assessment of, 112 114
changes under, 96 98
employee coverage under, 104 107
employer coverage under, 104 107
employer opposition to unionization, 97
fact finding, 442
featherbedding, 395
good faith bargaining, 304
jurisdictional disputes, 403
labor relations characteristics, 15
managers and unionization, 98
plant closures, 397
right to file a lawsuit, 97 98
vs. RLA, 115 116
strikes, 449, 473
unfair labor practices, 467
unfair labor practices by unions, 96 97
Worker Centers, 25

Labor-management relationships, early legal
developments, 45 46

Labor Management Reporting and Disclosure Act
(LMRDA), 15, 25, 51, 92, 98

Labor market, 16
LaborNet, 174
Labor productivity, 345
Labor Racketeering Amendments, 177
Labor relations

additional laws affecting, 118
basic assumptions, 13 24
characteristics, 15

company organization for, 149 151
focal point, 6 10
online databases, 21 22
research, 21 22
in the U.S. Postal Service, 665 666

Labor Relations Commission (LRC), 738
Labor relations law(s)

origin of, 91 92
other related, 121

Labor relations legislation, federal-sector, 657 665
Labor relations process

arbitrator, 13
contract negotiations, 5 6
defined, 5
elements, 6 13
government, 12
management consultants, 11
managers, 10 11
mediators, 12
participants in, 10 13
phases in, 5 6
public opinion, 22 24
third-party neutrals, 12
union representatives, 11

Labor Standards Act (LSA), 739
LaborTech.net, 174
LabourStart, 174
Ladies Garment Workers; the Retail and

Wholesale Clerks, 559
Laidlaw-Fleetwood doctrine, 464
Landrum Griffin Act. See Labor Management

Reporting
and Disclosure Act (LMRDA)

Language, clear and unambiguous, 554 557
Last chance agreements, 617
Layoffs, 408
Leadership

and democracy, 161 162
roles, 156 157

Lead ULP case, 110
Lean manufacturing system, 389

Leapfrogging, 270
Lee Lumber and Building Material Corp., 103
Legal environment, 29
Legal jurisdiction, 560
Legal strike, 451
Leninist Mass Party organizations, 742
Levitz Furniture Company of the Pacific, Inc., 101
Lewis, John L., 71 72, 161
LexisNexis, 21
Life Insurance Agents, 167
Lifetime employment, 735
Lilly Ledbetter Fair Pay Act of (FPA), 29, 52, 120
Linking issues, 287
Little Steel Formula, 74
Living Wage ordinances, 337 338

LMRA. See Labor Management Relations Act
(LMRA)

Local 400, 462
Local craft and industrial unions, 155 157

differing job characteristics, 156
differing leadership roles, 156 157
differing scope of the labor agreement, 155
differing skills, 155 156

Local union, 154
functions of the meeting, 159
government and operation of, 157 159

organizational chart for, 154
participation in meetings, 158
services to and control of, 164 165

Lockheed Martin Corporation, 353
Lock-in agreement, 270
Lockout, 15. See also Strike

defined, 450
and National Basketball Association (NBA),

450
and National Football League owners (NFL),

452 455
replacement workers during, 450 451

Loewe & Co., 48
Loewe v. Lawlor, 48
Long-form management s rights clause, 301
Long-Range Sharing Plan, 76
Longshore Workers Coalition (LWC), 307
Los Angeles Times, 21
Lucent Technologies, 415
Lump-sum pay adjustments, 351

M
Mackay Radio & Telegraph decision, 463
Madoff, Bernie, 175
Magna Charta, 49
Majority rule, 15
Make-whole remedy, 305
Malicious obedience, 667. See also Work-to-rule
Management

agreement and disagreement costs, factors
affecting, 291

considerations and negotiation teams, 276
practices, changes in, 29
rights and responsibilities, 6
unions, goals and strategies, 135 149
wage determination, 336 338

Management consultants, 11
Management rights, 300 303
Management rights clause, 654

long-form, 301
short-form, 301

Managerial and professional organizations, 168
Managers, 10 11

tensions among, 607
Mandatory bargaining subjects, 295
Mandatory employment arbitration, 578

critique of, 574 576
supporters of, 578

Maquiladoras plants, 712
Market economy, public sector and, 668 669
Massachusetts Board of Conciliation and

Arbitration, 542
Massachusetts Nurses Association, 282
Massachusetts Supreme Court, 50
Massmart, 703
Master labor agreement, 164
Matching concessions, 287
Matching contributions, 361
Maxwell House, 336
McDonalds, USA, LLC, 221
McKesson, 702
Mechanization and Modernization Agreement, 76
Mediation, 439 442, 512, 677, 678

directive or results-oriented, 513
evaluative, 513
nonunion, 516

768 Subject Index

personal characteristics, 439 440
transformation, 515
transformation or collaborative, 513

Mediation-arbitration (med-arb), 446 447
Mediators, 12

activities that promote agreement, 440 442
personal characteristics of, 439 440

Meetings
functions of, 159
participation in, 158

Meisburg, Ronald, 305 306
Merged product doctrine, 471
Mergers of national unions, 166 167
Merit, 108
Merit System Protection Board (MSPB), 659, 662,

663, 677
Mesa, Salvador Valdes, 724 725
Methods of Trade Unionism (Webb and Webb),

168
Me-Too clause, 344
Mexican Supreme Court, 721
Mexico

collective bargaining in, 719 724
National Committee for Workers

Profit-Sharing in Enterprises, 722
unions in, 719 724

Microsoft, 405
Mid-term bargaining, 296
Mine Safety and Health Act, 455
Mitigating circumstances (factors), 618
Modern Healthcare, 21
Mohawk Valley Formula, 69
Montana Family Union, 168
Moore Dry Dock doctrine, 468 469
Motor Carrier Act, 117
Multi-employer bargaining units, 272 274
Multilateral bargaining, 673
Multinational corporations

with complex tiers of management, 705 706
conclusions and predictions on transnational

bargaining, 710
cultural differences, 709
differences in labor relations laws, 709
differing national priorities, 709
effects of unions on, 709 710
internal source of products, 705
obstacles for unions in bargaining with, 708 709
shifting profits to different facilities, 706
strikes and, 705
and transnational collective bargaining, 702 706

Municipal budgets, 669
Mutual gain bargaining, 285, 289
MV Transportation, 102
MySpace, 236

N
Narcotic effect, 444 445
National Academy of Arbitrators (NAA), 442,

543, 605, 678
National Air Traffic Controllers Association

(NATCA), 652
National Association of Letter Carriers (NALC),

652
National Basketball Association (NBA), 450
National Bureau of Economic Research, 15
National Civic Federation (NCF), 58

National Committee for Workers Profit-Sharing
in Enterprises, 722

National Compensation Survey (NCS), 332
National Council of Federal Labor Management

Relations, 662
National Defense Authorization Act, 664
National Education Association (NEA), 160, 166,

167, 651, 652, 666
National Emergency Dispute resolution

procedures, 471 475
National emergency strikes, 471
National Federation of Federal Employees (NFFE,

IAM), 652
National Football League owners (NFL), 452 455
National Football League Players Association

(NFLPA), 440
National Football League Team Owners, 440
National Industrial Recovery Act (NRA), 70, 94 95
National Labor Board (NLB), 94
National labor organizations, 49
National Labor Relations Act (NLRA), 50, 72,

73 74, 179, 187, 236, 624, 653, 718
employer criticisms of, 96
Section 7 rights, 95
Section 8(a)(2) of, 141, 142
Supreme Court challenge, 96
unfair labor practices by employers, 95 96

National Labor Relations Board (NLRB), 92, 140,
179, 602, 658, 660, 705

administration, 112 114
assessment of the LMRA, 112 114
background, 99
concerted activity, 107 108
directive, 216 217
good faith bargaining duty, 304
jurisdiction, 104 107
jurisdictional disputes, 403 404
jurisdictional standards, 105
labor arbitration and, 564 567
lock-in agreement, 270
management consultants, 11
multi-employer bargaining, 273
Olin Corporation and, 565
plant closures, 397
protected employee activity, 107 108
responsibilities of, 100
secret ballot election, 218 229
totality of conduct doctrine, 298
unfair labor practice procedure, 108 110
unfair labor practice remedies, 110 112
United Technologies decision, 565

National Labor Relations Board Union, 167
National Mediation Board (NMB), 92, 225, 442,

472, 552
National Nurses United (NNU), 282
National People s Congress, 742
National Railroad Adjustment Board (NRAB), 92,

115, 552
National Right to Work Committee, 165, 185
National Right to Work Legal Defense

Foundation, 185
National Rural Letter Carriers Association

(NRLCA), 652
National Science Board, 415
National Security Personnel System (NSPS), 664
National Treasury Employees Union (NTEU),

406, 652

National Treasury Union, 665
National Unfair Dismissal Statute, 605
National Union of Education Workers, 720
National unions, 159 161

mergers of, 166 167
National War Labor Board (NWLB), 539
NBA. See National Basketball Association (NBA)
NCF. See National Civic Federation (NCF)
NCS. See National Compensation Survey (NCS)
Near total boycott, 470
Nebraska Commission of Industrial Relations, 656
Negotiating team, selection of, 274 276

management considerations, 276
number of negotiators, 276
personality characteristics, 274 276
union considerations, 276

Negotiation
labor agreement, 266 267
preparation activities, 274 285

Negotiators
management, bargaining range of, 279
number of, 276
personality factors of, 274 276

Neutrality agreement, 212
Newall, Ian, 275
New Democratic Party (NDP), 719
New employer, 303
New Process Steel, L.P. v. NLRB, 99
Newspaper Guild, 163
New union strategies, 237 238
New York City Taxi Workers Alliance

(NYTWA), 25
New York State Employment Relations

Board, 542
New York Times, 22
New York University, 103
NFL. See National Football League owners (NFL)
NFLPA. See National Football League Players

Association (NFLPA)
Nicolau, George, 605
Night baseball arbitration, 449, 681
Nike, 706, 743
NLRA. See National Labor Relations Act

(NLRA)
NLRB. See National Labor Relations Board

(NLRB)
NLRB secret ballot election, 218 229

appropriate bargaining unit, 220 224
election, 225 229
election investigation and hearing, 219 220
eligibility of voters, 224
filing a petition for the election, 219
names and addresses (Excelsior rule), 225

pre-NLRB-election union campaigns, 218 219
untimely petitions, 224 225

NLRB v. Kentucky River Community Care, Inc., 101
NLRB v. Town & Country, 102
NLRB v. Weingarten, 103
NMB. See National Mediation Board (NMB)
NNU. See National Nurses United (NNU)
Noel Canning v. NLRB, 99
Nonmanagerial employees, 11
Nonunion companies strategies, 137 142

double-breasting, 140
positive human resource management, 139 140
union avoidance, 139
union substitution, 141 142

Subject Index 769

Nonunion employees
employment-at-will doctrine, 603 605
wrongful discharge consideration for, 603 605

Nonunion mediation, 516
Nonverbal cues, 286 287
Norris-La Guardia Act, 15, 50, 92, 93 94, 658
North America Free Trade Agreement, 715
North American Agreement on Labor

Cooperation (NAALC), 712 714
North American Free Trade Agreement

(NAFTA), 19, 52, 711 712
Northrup-Grumman Corporation, 141
No-smoking rules, 10
NRA. See National Industrial Recovery Act

(NRA)
NRAB. See National Railroad Adjustment Board

(NRAB)

O
Oakwood Care Center, 102
Oakwood Healthcare, Inc. and United Auto

Workers of America, 101, 107
Obama, Barack, 179, 662, 685, 724
Objective evidence, 286
Occupational Health and Safety Act, 51, 455
Occupational Pay Relatives (OPR) survey, 332
Occupational Safety and Health Act (OSHA), 15,

29, 121, 416 420
Occupational Safety and Health Administration,

416 417
Occupational wage differentials, job evaluation

and wage surveys, 329 338
OCLC (FirstSearch), 21
Office and Professional Employees International

Union (OPEIU), 155
Office of Management and Budget (OMB), 662
Office of Personnel Management (OPM), 662
Offshoring, 399
OFS Optical Fiber, 16
Ombudsperson, 516
One Big Union, 53
Ontario Labor Relations Act, 718
Open-door policies, 516
Open shop, 97
Open-shop movement, 68
Oral warning, 616
Organizational justice, 412
Organizational politics, 276
Organization for Economic Cooperation and

Development (OECD), 706
Organizations

managerial, 168
professional, 168

OSHA. See Occupational Safety and Health Act
(OSHA)

Outsourcing, 399 403
Overtime premium pay rates, 355 356

P
Pacific Maritime Association, 307, 396
Package proposals, 28
Packinghouse Workers and Meat Cutters

unions, 76
Parole evidence rule, 555
Partial lockout, 102

Partial strikes, 458
Past practice, 558 559
Paternalism, 69
Patient Protection and Affordable Care Act, 353, 363
Pattern bargaining, 268 269
Pay

ability to, 344 345
call-in, 356
holiday, 357
inability to, 298
premium, 355
reporting, 356
skill-based, 336
for time not worked, 357
unwillingness to, 298
vacation, 357

Pearl Harbor bombing, 74
Peer review systems, 516
Pennsylvania State University, 169
Pension Benefit Guaranty Corporation (PBGC),

118, 360
Pension Protection Act of 2006 (PPA), 360
Pension(s), 358 361
Permanent arbitrator, 542
Personal characteristics, of mediators, 439 440
Personnel changes

and job security, 393 412
role of seniority in, 406 410

Persuasive arguments, 286
Petition for certiorari, 111 112
Pew Center on the States, 654 655
Pfeffer, Jeffrey, 414
Phillips 66, 702
Picketing, 15, 466 471

common situs, 468 470
between the headlights, 469
informational, 466, 470
product, 470 471

Pistole, John S., 664
Plant closures, 397 399
Platt, Harry, 610
Political action, 53
Politics, and unions, 79
Positive human resource management,

139 140
Positive human resources management, 139
Positive reinforcement, 287
Postal Reorganization Act (PRA), 106, 651, 654, 665
Post written and electronic notices, 305
Post written notices, 110
Power relationships, 518 522

empathetic relationships, 520
flexible consideration in processing employee

grievances, 520 522
Preemption doctrine, 92
Preferential recall list, 464
Preferential treatment clause, 182
Preferred provider organization (PPO), 354
Prehearing activities, 545
Prehearing stipulations, 545
Premium pay, 355 356
Pre-NLRB-election union campaigns, 218 219
Prepaid legal service plans, 363
Preponderance of evidence, 611
Presidential-appointed emergency boards (PEB),

114 115
Previous labor arbitration decisions, 559 560

Primary employer, 449
Private- and public-sector bargaining

budget and, 669
differences between, 668 671
similarities between, 666 668

Privatization
of public-sector services, 658 659
of public services, 684

Procedural justice, 412, 516
Procter & Gamble, 168
Producer and consumer cooperatives, 54
Production standards

defined, 332
and wage incentives, 332 336

Productivity, 345 348
effect of unions on, 347 348
sharing, problems with, 347

Productivity Commission, 741
Product market competition, 328
Product or service market, 16 17
Product picketing rights, 470 471
Professional Air Traffic Controllers Union

(PATCO), 51
Professional employees, 203 205
Professional Engineering Association, 167
Professional staff members of unions,

163 164
Profit-sharing plans, 334
Progressive discipline, 616 617
Project Labor Agreements (PLAs), 337

Proposal determination and assessment,
276 277

Proposals
contract language, 277 278
costing contract, 283 285
economic and legal information, 278 279
formulating, 277 279
package, 28
prior arbitration decisions, 278

ProQuest, 21
Protected employee activity, 107 108
Protecting America s Workers (PAW) Act, 417
Protest strikes, 458
Psychological contract, 394 395
Public Labor Relations Act, 187
Public opinion, 22 24
Public policy, discharge decisions and, 620 622
Public sector

interest dispute impasse-resolution procedures
in, 677 678

labor legislation in, 652 654
market economy and, 668 669

Public-sector employees discipline, 676 677
Public-sector labor relations

conclusions on, 682 684
significance of, 651 657

Public-sector services, privatization of, 658 659
Public-sector unions

challenges and opportunities for, 684 685
current challenges to collective bargaining

rights of, 654 657
Public Services International, 703
Public Works Alliance, 24
Publix, 139
Pullman Palace Car Company, 50, 61
Pullman Strike, 49, 60 63
Pure and simple unionism, 57 58

770 Subject Index

Q
Qualifications, 408 409

R
Racketeer Influenced and Corrupt Organizations

Act (RICO), 51, 120
Radio Frequency Identification (RFID) chips, 18,

397
Railroad Safety Act, 455
Railway industries, arbitration in, 552
Railway Labor Act (RLA), 15, 50, 61, 68, 472 473,

658 659
assessment of, 116 117
enactment of, 114
vs. LMRA, 115 116
major dispute under, 114
minor dispute under, 115
promising developments regarding, 117 118

Rainbow PUSH Coalition, 24
Reagan, Ronald, 665
Reasonable accommodation, 412
Recognition strikes, 68
Red Scare, 65
Reebok, 743
Referendum, 681 682
Regulations on Collective Contracts for

Enterprises, China, 743
Relational mediation, 441 442
Relationship management, 144
Relationships

dotted-line, 151
empathetic, 520
and flexibility, 517 518
power, 518 522

Rengo (Japan Trade Union Confederation), 736
Replacement workers

during lockouts, 450 451
during strikes, 450 451

Reporting pay, 356
Representation election campaign

campaign doctrines and NLRB policies,
233 234

distribution of union literature and solicitation
by employees on company property, 235

new union strategies, 237 238
polling or questioning employees, 234
showing films during election campaigns,

235 236
24-hour rule, 234
use of e-mail, Internet, and social media,

236 237
Republic of Korea United States Free Trade

Agreement (KORUS FTA), 738
Reservation price, 279
Reserved rights doctrine, 301
Reserve gate doctrine, 469
Resistance point, 279
Respondent, 108
Retail, Wholesale Department Store Union

(RWDSU), 155
Revolutionary Workers and Peasants

Confederation, 720
RICO. See Racketeer Influenced and Corrupt

Organizations Act (RICO)
Rights disputes, 6

Right-to-strike controversy, 675 676
Right-to-work laws, 97

arguments for, 185 186
arguments for abolishing, 186 187
controversy and effects, 182 185

Rivethead (Hamper), 606
Roll-up factor, 283
Routine ULP case, 110
Royal College of Nurses (nurses), 730
Rubber & Plastics Industry Conference, 167
Rucker plan, 335

S
Sabotage, 622
Safety and health, 416 420
Safeway Inc., 462
Scanlon, Joseph, 335
Scanlon plan, 335
Scarcity consciousness theory, 199
Science, Technology, Engineering, and Math

( STEM ), 413
Scientific management, 601
Scrip, 69
Seattle General Strike of 1919, 66
Secondary employer, 466
Secondary strikes, 466 471
Secret Ballot Protection Act, 230
Sedition Act of 1918, 65
Sedition laws, 65
SEIU. See Service Employees International Union

(SEIU)
Self-managed work teams, 415
Semi-autonomous work team, 415
Senate Bill No. 5, 656
Seniority, 406 410

defined, 406
and job postings, 409 410
and layoffs, 408
purpose of, 407
and qualifications, 408 409
types of, 407

Serious strike misconduct, 465
Service Employees International Union (SEIU),

16, 24, 78,
148, 149, 160, 166, 167, 168, 400, 651

Settlement range, 279
Severance pay, 354, 355
Sexual harassment misconduct, 622
Shanghai Aviation, 400
Shanker, Albert, 23 24
Sherman Antitrust Act, 47 49, 50
Sherman Anti-Trust Act, 453
Shift differentials, 356
Shop steward, 157
Short-form management s rights clause, 301
Shuler, Elizabeth, 169
Shunto (spring wage offensive by Japan s unions),

735
Siemens, 707
Sit-down strike, 73
Skill-based pay (SBP), 336
Skill pay differential, 340
Smithfield Packing Company, 138
Socialism, 63
Social media, 236 237

employee discipline and, 612 613

Social Security Act, 121
South America

collective bargaining in, 719 724
unions in, 719 724

Southern Bakeries, LLC, 138
South Pacific Tuna Act, 417
Sovereignty doctrine, 671
Spillover effect, 364
Spoils system, 657

Stanford Institute for Economic Policy Research,
655

St. Antoine, Theodore J., 578
State and local administrative agencies, 92
Steelworkers Trilogy, 539 540
Stevens, Carl, 440
Steward councils, 731
St. John s Health Systems v. NLRB, 102
Strike. See also Lockout

defined, 449
experiences, 459 463
general, 458
illegal, 451
jurisdictional, 456
and KOL, 54
legal, 451
partial, 458
preparation, 459 463
protest, 458
reasons for, 456 458
recognition, 68
reinstatement rights of economic, 463 465
replacement workers during, 450 451
secondary, 466 471
serious strike misconduct, 465
sit-down, 73
strategic purposes of, 458 459
sympathy, 456
types of, 451 456
wildcat, 451
work stoppages due to, 457

Striker misconduct, 622
Striking method, 541
Struck work, 467
Subcontracting, 399 403
Successor employer, 303
Successorship clause, 303
Sunshine laws, 674
Supermarket News, 21
Superseniority, 408, 465
Supervisor, defined, 106
Supplemental unemployment benefit plan (SUB),

354, 355
Supreme Court of Canada, 717 718, 719
Surface bargaining, 299
Suspension, 616
Sweetheart contract, 70
Sympathy strike, 456
Sympathy striker, 467
System Boards of Adjustment, 552

T
Taft Hartley Act, 50, 75, 78, 96 98. See also Labor

Management Relations Act (LMRA)
Tardiness, 622
Target, 20
Target point, 279

Subject Index 771

Taylor, Frederick, 601
Technological change

benefits, 391 392
defined, 388
and job protection, 388 393
negative effects of, 392 393
work rules, 17 18

Technology, 17 19
Telephone Electronic Voting (TEV), 115
Temporary Workers of America, 405
Tenacity, 439
Terrorism, 724
Texaco, 168
Texas Instruments, 139
Thatcher, Margaret, 730
Third-and-one-half step, 521
Third-party neutrals, 12
T-Mobile USA, 703
Tobin, Dan, 161
Total costs, labor costs as percentage of, 328
Totality of conduct doctrine, 298 300
Totality of conduct doctrine, 233
Total quality management (TQM), 333
Trade conferences, 167
Trade Union and Labor Relations Adjustment Act

(TULRAA), 738 739
Trade Union Congress (TUC), 730
Transformation mediation, 515
Transformation or collaborative mediation,

513
Transformative mediation, 441 442
Transnational collective bargaining

conclusions and predictions on, 710
multinational corporations and, 702 706

Trans-Pacific Partnership, 711
Transportation subsidy, 363
Tri-offer arbitration, 448
Trumka, Richard, 169
24-hour rule, 234
Twitter, 612
Two-Tier Wage plan, 340 341

example, 342 343
Tyco International, 175

U
UAW Local 652, 144
UFCW. See United Food and Commercial

Workers (UFCW)
UHU. See United Hatters of North America

(UHU)
ULP. See Unfair labor practices (ULP)
Unconditional request for reinstatement, 451
Unemployment rates, 14 15
Unfair labor practices (ULP)

commission of, 300
lead case, 110
and National Labor Relations Act, 95 96
procedure of NLRB, 108 110
reinstatement rights of, 463 465
remedies, 110 112
routine case, 110
strike, 451

Uniformed Services Employment and
Reemployment Rights Act (USERRA), 121

Uniform Guidelines on Employment Selection
Procedures, 409

Unilateral changes in conditions, 300
Union affiliation, 138
Union avoidance, 139
Union-avoidance strategy, 139
Unionbook, 174
Union Cities program, 171
Union density, 24
Union governance and structure, 151 175

administration, 163
American Federation of Labor and Congress of

Industrial Organizations (AFL-CIO),
168 169

dues, fees, and distribution of funds, 165 166
employee associations, 168
government and operation of the local union,

157 159
independent unions, 167 168
intermediate organizational units, 167
leadership and democracy, 161 162
local craft and industrial unions, differences

between, 155 157
local union, 154
mergers of national unions, 166 167
national or international union, 159 161
organizational structure, 169 174
professional staff members, 163 164
profile of union leaders, 162 163
services to and control of locals, 164 165
use of information technology by unions,

174 175
Union hiring hall, 181
Union instrumentality, 203
Unionization

employers opposition to, 97
and managers, 98

Unionized companies strategies, 142 145
accommodation or labor-management

cooperation, 143 145
codified businesslike strategy, 143

Union leaders, profile of, 162 163
Union literature, 235
Union Network International, 703
Union Privilege Benefit Program, 171
Union Privilege program, 175
Union representatives, 6, 11
Unions

absence of a central authority, 709
activities of, in organizing employees, 205 209
activities of the company in union organizing,

209 211
administration, 163
after election loss by, 230
after the election, 229 230
agency shop, 179 181
alienation theory and, 198 199
American Federation of Labor and Congress of

Industrial Organizations (AFL-CIO),
168 169

application of antitrust legislation to, 47 49
approaches to multinational bargaining and

employer
reactions, 706 710

in Australia, 739 741
bargaining range, 279
and bargaining with multinational corpora-

tions, 708 709
campaign doctrines and NLRB policies, 233 234

in Canada, 715 719
in Central America, 719 724
in Central and Eastern Europe, 733 734
challenge of organizing the diverse workforce,

203
in China, 741 746
and the civil rights movement, 61
closed shop, 178
communication with members on Weingarten

rights, 626 628
company strategic planning and, 136 137
conclusions and predictions on transnational

bargaining, 710
conduct of the representation election cam-

paign, 233 238
consensus among, 79 80
considerations and negotiation teams, 276
contingency union shop, 181
convention, 160 161
corruption and the Landrum Griffin Act,

175 177
cost of living, 348 349
in Cuba, 724 725
cultural differences, 709
current challenges to collective bargaining

rights of, 654 657
determination of proportional liability, 525
differences between local craft and industrial,

155 157
differences in labor relations laws, 709
differing national priorities, 709
disagreement and agreement costs, factors

affecting, 290 291
distribution of union literature and solicitation

by employees on company property, 235
and domestic violence, 419
dues, fees, and distribution of funds, 165 166
dues checkoff, 182
duties of the exclusive bargaining agent and

employer, 230
duty of fair representation, 522 526
effect on efficiency, 347 348
effect on productivity, 347 348
effects on multinational corporations, 709 710
effects on wages and benefits, 363 364
employee associations, 168
employees backgrounds and needs, 200 201
employer monitoring activities, 393
employer resistance, 709
in European Union, 727 730
formation of, 198 233
in former Soviet Bloc countries, 733 734
in Germany, 731 733
governance and structure, 151 175
government and operation of the local, 157 159
in Great Britain, 730 731
independent, 167 168
influences on employees votes for and against,

201 203
intermediate organizational units, 167
international, 159 161
in Japan, 734 738
on job evaluation, 331
in Korea, 738 739
labor relations process, 11
lack of coordination of activities, 709
leadership and democracy, 161 162

772 Subject Index

legal right to form, 5
local, 154
local union, 154
management goals and strategies, 135 149
membership, 24 29
mergers of national, 166 167
methods for organizing, 212 230
in Mexico, 719 724
national, 159 161
national or international, 159 161
new strategies, 237 238
NLRB directive, 216 217
NLRB secret ballot election, 218 229
nonunion companies strategies, 137 142
organizational chart for a local, 154
organizing professional employees, 203 205
in other countries, 714 746
and politics, 79
polling or questioning employees, 234
preferential treatment clause, 182
professional staff members, 163 164
profile of union leaders, 162 163
proposed mandatory secret ballot elections

versus Employee Free Choice Act (EFCA),
230 233

public approval, 24
recent U.S. Supreme Court decisions, 187
recognition in the federal sector, 660
relevancy, 28
removing a labor, 238 242
right-to-work laws, 182 185
scarcity consciousness theory and, 199
security, 177 187
services to and control of locals, 164 165
showing films during election campaigns,

235 236
in South America, 719 724
strategic planning, 145 149
and strikes, 459
and technological change, 388 389
24-hour rule, 234
unintended consequences of anti-union behav-

ior, 212
union hiring hall, 181
unionized companies strategies, 142 145
union shop, 178 179
use of e-mail, Internet, and social media,

236 237
use of information technology by, 174 175
voluntary recognition, 212 216
and wage determination, 336 338
in Western Europe, 725 727
Wheeler model of union formation, 199 200
work and job conditions, 198 200
and Worker Centers, 25 26

Union salts, 102
Union security, 177 187

agency shop, 179 181
closed shop, 178
contingency union shop, 181
dues checkoff, 182
preferential treatment clause, 182
provisions, 178
recent U.S. Supreme Court decision, 187
right-to-work laws, 182 187
union hiring hall, 181
union shop, 178 179

Union security clause, 177
Union security provisions, 178
Union shop, 178 179

vs. closed shop, 97
contingency, 181

Union shop union security clause, 97
Union strategic planning, 145 149
Union substitution, 141 142
Union Summer program, 173
Union-suppression strategy, 137
Uniroyal, 709
UNITE, 166 167

employee training, 414
United Auto Workers (UAW), 16, 76, 160, 182,

216,
268 269, 651, 722, 738

and Caterpillar, 23
Community Action Program (CAP), 165
employee training, 414
outsourcing, 399 400
pattern bargaining, 268 269
subcontracting, 399 400
two-tier wage plans, 341

United Brotherhood of Carpenters (UBC), 149
United Electrical Workers, 722
United Farm Workers of America, 78
United Food and Commercial Workers (UFCW),

19, 78, 138, 155, 160, 167, 174, 462
United Hatters of North America (UHU), 48
United Mine Workers (UMW), 74

Coal Miners Political Committee (COMPAC),
165

United Mine Workers Union, 71
United Parcel Service (UPS), 222, 224, 455
United Rubber Workers, 73, 167
United States Maritime Alliance, Ltd., 306, 307
United Steel, Paper and Forestry, Rubber

Manufacturing, Energy, Allied Industrial &
Service Workers International Union
(USW), 271

United Steelworkers of America (USWA), 76, 145,
148, 155,
160, 163, 167

employee training, 414
United Steelworkers v. Warrior and Gulf

Navigation
Company, 301 303

Unrepresented professionals, unionizing of, 684
Untimely petitions, 224 225
Unwillingness to pay, 298
USA Today, 21
U.S. Bureau of Labor Statistics, 357
U.S. Centers of Excellence for Design and

Manufacture of Refrigeration Products, 390
U.S. common law, 45
U.S. Congress, 136, 176, 306, 651, 657
U.S. Constitution, 45, 159
U.S. Department of Labor (USDOL), 50, 92, 159,

176, 332, 414
U.S. Departments of Commerce and Labor, 278
USDOL. See U.S. Department of Labor (USDOL)
USERRA. See Uniformed Services Employment

and Reemployment Rights Act (USERRA)
U.S. Food and Drug Administration, 406
U.S. Labor Department, 363

Bureau of Labor Statistics, 349
U.S. labor relations

characteristics, 15
economy, 14 19
international forces, 19 20

U.S. Postal Service (USPS), 443, 654, 665
labor relations in, 665 666

U.S. Steel, 66
U.S. Supreme Court, 165, 178, 180 181, 668, 670

affirmative action, 411
bankruptcy, 304
labor relations cases, 101 104
management s rights, 301
multi-employer bargaining, 274
and NLRA, 96
reasonable accommodation, 412

U.S. Travel Association, 357
U.S. Treasury, 20
Utility, 280

V
Vacation pay, 357
Valero, 702
Value added, by employees, 328
Vegelahn v. Guntner, 47
Vesting, 361
Vietnam Era Veteran Readjustment Assistance

Act, 121
Vietnam War, 121
Villanova University, 169
VJ Day, 75
Vocational Rehabilitation Act, 120
Volkswagen, 23, 216, 706, 707, 731
Voluntary bargaining subjects, 297
Voluntary recognition, 212 216
Voters, eligibility of, 224
Voting behavior, 306 308
V technique, 70

W
Wage comparability, 343 344

across organizations, 343 344
defined, 343
within organizations, 344

Wage determination, arguments used by
management
and union officials, 336 338

Wage differential, 338 351
Wage re-opener, 349
Wages

adjustments, during labor agreement, 349 351
defined, 327
differentials, industrial, 327 329
incentives and production standards, 332 336
increase, deferred, 350 351
one-issue example, 279 280
reopener clause, 351
unions effect on, 363 364

Wage spread, 338 351
Wage structure, firms comparison, 331 332
Wage survey, occupational wage differentials and,

329 338
Wage system in Japan, 735
Wagner Act of 1935, 602
WakeUpWalMart.com, 24
Walker, Scott, 655 657
Wall Street Journal, 21

Subject Index 773

Wal-Mart, 20, 137, 297, 702, 703, 745
WalMartWatch.com, 24
Walt Disney, 171
Walton and McKersie s four bargaining processes,

285
WARN. See Worker Adjustment and Retraining

Notification Act (WARN)
Warning

oral, 616
written, 616

Washington Employment Relations Commission,
542

Washington Post, 21
Washtech. See Alliance of Technology Workers
Webb, Beatrice, 168
Webb, Sidney, 168
Weingarten decision, 624 625
Weingarten Rights, 103, 626 628
Weirton Steel, 168
Wellness programs, 363
Western Europe

collective bargaining in, 725 727
unions in, 725 727

Westinghouse, 390
WestLaw Next, 21
Wheeler model of union formation,

199 200
Whipsaw bargaining strategy, 269 270
Whipsawing, 705
Wildcat strike, 451
Wilson Business Abstracts, 21
Win-win bargaining, 285, 289
Wisconsin Employment Relations Commission, 542

Web site, 22

Witness credibility, 554
nature of the evidence and, 610 612

Work and Job conditions, 198 200
alienation theory, 198 199
scarcity consciousness theory, 199
Wheeler model of union formation, 199 200

Work assignments and jurisdiction,
403 404

Work Choice Act of 2005, 740
Worker Adjustment and Retraining Notification

Act (WARN), 51, 119, 397 399
Worker Centers, 24

and unions, 25 26
Workers Central Union of Cuba (CTC), 724
Workforce, union s challenge of organizing the

diverse, 203
Working America, 24, 173
Work jurisdiction clause, example, 403
Workplace Relations Act of 1996 (WRA), 740
Workplace Relations Amendment, 740
Work restructuring, 415 416
Work rules

AIDS, 8
compensation, 8
constraints affecting administration of, 14
defined, 7
examples, 9
interpretation, 8
technological change, 17 18

Work scheduling, 404 406
Works Constitution Act, 729, 731
Work sharing, 355, 410
Work slowdown, 458
Work-to-rule, 667. See also Malicious obedience

Work transfer, 399 403
WorldCom, 175
World Trade Organization, 20
World War I

anti-union sentiment, 70 71
CIO leadership, 72
employees attitudes, 74
industrial unionism, 71 72
National Labor Relations Act (NLRA),

73 74
opposition from employers, 68 70
rise of the CIO, 71 72
sit-down strike, 73
union organizing after, 66 68

World War II
AFL and CIO merger, 77 78
aspects of organized labor unchanged since, 79
Change to Win federation, 78
collective bargaining issues, 75 77
developments in organized labor since, 75
organization of different employees in private

and public sector, 77
Written warning, 616
Wrongful discharge of employees, 603 605

Y
Yellow-dog contract, 47, 50
YouTube, 236

Z
Zack, Arnold, 746
Zenith, 168

774 Subject Index

  • 1-400
  • 401-792
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