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II. Employee Involvement

1. Introduction

The Commission's Fact Finding Report noted (pp. 29-61) that a variety of employee participation processes and committees have been established in America's workplaces. Many larger firms report using some form of employee participation in their organizations. Information received by the Commission since the Report confirms the diffusion of employee involvement. Fifty-two percent of employees in the Workplace Representation and Participation Survey reported that some form of employee participation program operates in their workplace and 31 percent indicate that they participate in an employee involvement program.

Employee involvement programs have diverse forms, ranging from teams that deal with specific problems for short periods to groups that meet for more extended periods. Many employers and union leaders testified before the Commission that the programs enhance productivity, though their effectiveness surely differs in different settings. Thirty- two percent of workers involved in these programs view them as very effective while 55 percent view them as somewhateffective. Seventy-nine percent report that the programs have given them greater say in their jobs. By a two-to-one majority, employees at workplaces without employee involvement programs say they would like a program of this sort at their workplace.

On the basis of the evidence, the Commission believes that it is in the national interest to promote expansion of employee participation in a variety of forms provided it does not impede employee choice of whether or not to be represented by an independent labor organization. At its best, employee involvement makes industry more productive and improves the working lives of employees.

The evidence presented also shows that as practiced today some employee participation programs may be in violation of Section 8(a)(2) of the NLRA. The problem is that some programs designed to improve productivity and quality also end up discussing interrelated issues of working conditions and of how to share the gains produced by employee involvement. A related problem is that some programs blur the traditional distinction between supervisors or managers and workers, raising questions about the coverage of employees under the NLRA. Indicative of the extent of this blurring of traditional boss/worker lines, in the Workplace Representation and Participation Survey 35 percent of workers said they perform some supervisory duties as an official part of their job.

In view of the role of employee involvement plans in American industry, the Commission supports some clarification of Section 8(a)(2) so that employee involvement programs~such as those relating to production, quality, safety and health, training or voluntary dispute resolution~are legal as long as they do not allow for a rebirth of the company unions the section was designed to outlaw. We want workers and managers participating in these programs to be able to do so effectively, with gains for both, without skirting or breaking the law.

In light of the increased supervisory and managerial role of employees in American industry, the Commission also supports reducing the exclusion of supervisors and managers from the coverage and protection of the NLRA. We want to guarantee that workers engaged in collective bargaining or considering unionization do not lose the protection of the law for their union activity because of their involvement in supervisory or managerial activities.

These considerations motivate the recommendations in this section.

2. Recommendation

1. Facilitate the Growth of Employee Involvement

The Commission recommends that nonunion employee participation programs should not be unlawful simply because they involve discussion of terms and conditions of work or compensation where such discussion is incidental to the broad purposes of these programs.

We believe that programs of the types referrred to above, which are proliferating in the U.S. today, do not violate the basic purposes of Section 8(a)(2). Therefore we recommend that Congress clarify Section 8(a)(2) and that the NLRB interpret it in such a way that employee participation programs operating in this fashion are legal.

The Commission is concerned that in encouraging employee participation in nonunion settings, it does not adversely affect employees' ability to select union representation, if they so desire.

Thus, the Commission reaffirms the basic principle thatemployer-sponsored programs should not substitute for independent unions. Employee participation programs are a means for employees to be involved in some workplace issues. They are not a form of independent representation for employees, and thus should not be legally permitted to deal with the full scope of issues normally covered by collective bargaining. <Footnote: The law should continue to prohibit commmittees like the one Polaroid Corp. disbanded in June, l992 after the Labor Department suggested that it was -labor organization.- Such joint groups are representative in character and count among their primary functions handling employee grievances and advising senior management about pay, work rules and benefits. They so well beyond incidental involvement in issues traditionally reserved to independent labor organizations. See Fact Finding Report, pp. 42, 60> .

2. Continue to Ban Company Unions

The law should continue to prohibit companies from setting up company dominated labor organizations. It should be an unfair labor practice under NLRA Section 8(a)(1) for an employer to establish a new participation program or to use or manipulate an existing one with the purpose of frustrating employee efforts to obtain independent representation.

We believe this recommendation is consistent with current law.<Footnote: See NLRB v. Exchange Parts Co., 375 U.S. 405 (1964).>

Employees involved in employee participation committees or processes should have the same protections in law from retaliation for expressing their opinions on workplace issues as workers involved in union activity under the NLRA. They should have the right to communicate their views to employers or co-workers and be able to seek outside expertise on issues, if they so desire. The Commission believes that current law provides protection against reprisals for such -concerted activities for the purpose of ... mutual aid or protection-, as the NLRA calls it.<Footnote: See NLRB v. Washington Aluminum Co., 370 U.S. 9 (1962).> But to the extent that doubts exist about its scope, the Commission believes this protection should cover a worker's activities related to an employee participation program.

Employee involvement systems are somewhat more frequent under collective bargaining than in other settings. In the Workplace Representation and Participation Survey, 33 percent of unionized employees reported that they were involved in a participation program, compared to 28 percent of nonunion employees. In its Fact Finding phase, the Commission heard testimony that employee participation is most effective in a union setting when union and management work together as joint partners. All who testified agreed that it is important for union and management representatives to continue to work together in this fashion to extend the scope, coverage, and effectiveness of employee participation in the future.

In view of this experience, in organized workplaces it is important that employers not be permitted tobypass collective bargaining representatives to institute employee involvement committees or processes. Issues normally dealt with in collective bargaining should not be discussed in employee involvement programs without the consent of the elected labor organization. The Commission recommends that it should be an unfair labor practice under NLRA Section 8(a)(1) for an employer to bypass the union or to introduce or manipulate an employee participation program to subvert the collective bargaining process. We believe this recommendation is consistent with current law.

The recommendations clarifying Section 8(a)(2), the distinction between employee involvement programs and unions, the protections afforded workers in participation programs, and the functions of these programs compared to unions will by themselves improve the climate for these programs to proliferate. The safeguards against company- dominated unions under Section 8(a)(2), and the recommendations obtained in Section III for reducing conflict and delay in establishing unions where employees so desire should mutually reinforce one another, so that the law eases the creation of employee involvement programs without harming employee freedom to unionize. This balance is essential.

3. Reduce the Scope of the Supervisory and Managerial Exclusions

Congress should simplify and restrict the supervisory and managerial employee exclusions of the NLRA to ensure that the vast numbers of professionals and other workers who wish to participate in decision-making at work are not stripped of their right to do so through collective bargaining if they so choose.

Each of the two exclusions embodies a core principle that must be preserved. Employees whose primary function is to carry out the employer's labor relations policy by hiring, firing, and disciplining employees are clearly supervisors and should continue to be excluded from the Act. Employees near the top of the firm's managerial structure who have substantial, individual discretion to set major company policy and whose primary function is to develop such policy are clearly managerial employees and should also continue to be excluded.

These two principles should be incorporated into a single, simplified -managerial employee- definition that includes statutory supervisors and managers but not (1) members of work teams and joint committees to whom managerial and/or personnel decision-making authority is delegated or (2) professionals and para-professionals who direct their less skilled co-workers.

One aspect of employee involvement is the diffusion of supervisory and managerial decision-making power throughout the workforce. Both work teams and joint committees often decide matters traditionally left to full-time supervisors or managers. The Commission believes that this development should be encouraged.

Unfortunately, the labor law has not accommodated this change in the real world of work. The law continues to draw rigid distinctions between supervisors and managers on the one hand, and -employees- covered by the NLRA on the other. Supreme Court jurisprudence has contributed to this problem.<Footnote: See NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974); NLRB v. Yeshiva University, 444 U.S. 672 (1980); NLRB v. Health Care & Retirement Corp. of America, 114 S.Ct. 1778 (1994).>

The Court created the managerial employee exclusion, which is not found in the Act itself, and applied it not only to senior managers but also to buyers of parts and materials. <Footnote: NLRB v. Bell Aerospace Co., 416 U.S. 267 (l974> Then, in NLRB v. Yeshiva University, <Footnote: 44 U.S. 672, (l980)> the Court greatly expanded the scope of this managerial employee exclusion by holding that the faculty of Yeshiva University could not be an appropriate bargaining unit because the professors (or at least the bulk of them who participated in faculty decisions) were all managers. Since, like many university and college faculties, they voted on matters such as curriculum, class size, and academic standards, the professors exercised -authority which in any other context unquestionably would be manageri- al.- <Footnote:444 U.S. at 686.> The case means that rank and file employees who participate in work teams or joint committees can lose their right to form an independent union. Indeed, the NLRB interpreted Yeshiva so as to strip union members of their collective bargaining rights ~ and their union~ because they negotiated an employee participation agreement with their employer. <Footnote:College of Osteopathic Medicine & Surgery, 265 N.L.R.B. 295 (1982).>

More recently, in NLRB v. Health Care & Retirement Corp. of America, <Footnote:__ U.S. __, 114 S.Ct. 1778 (1994).> the Supreme Court expanded the statute's supervisory employee exclusion. The Court effectively read out of the Act a requirement that, in order to be deemed a supervisor, an employee must carry out one of several functions -in the interest of the employer.- The NLRB had used the statute's in the interest of the employer- test to separate out workers who direct others based on superior skill, experience and the like from true supervisors ~ those whose main function is to direct the work of others (or hire, fire, and so forth) for the employer. The Court declared that all -acts within the scope of employment or on the authorized business of the employer are in the interest of the employer.- <Footnote: 114 S.Ct. at 1782.> In practice, this could mean that any employee who responsibly directs co-workers is a supervisor denied protection of the labor law.

The Health Care case could adversely affect professionals in particular. Congress has specified that professionals are to enjoy the protections of the NLRA. Yet, as Judge Richard Posner has pointed out, -most professionals have some supervisory responsibilities in the sense of directing another's work ~ the lawyer his secretary, the teacher his teacher's aide, the doctor his nurses, the registered nurse her nurse's aide, and so on..- <Footnote:NLRB v. Res-Care, Inc., 705 F.2d 1461, 1465 (7th Cir. 1983).> In the Supreme Court's view, incidental direction of co-workers would appear to make one a -supervisor- who lacks collective bargaining rights. As Justice Ginsburg noted in dissent, - [i]f any person who may use independent judgment to assign tasks to others or direct their work is a supervisor, then few professionals employed by organizations subject to the Act will receive its protections.-<Footnote:114 U.S. at 1792-93.>

These Supreme Court cases fail to take into account the degree to which supervisory and managerial tasks have been diffused throughout the workforce in many American firms. As a result of the Court's interpretations, thousands of rank-and-file employees have lost or may lose their collective bargaining rights. The Commission believes the law can and should accommodate the desires of professionals and other employees to participate at work ~ whether they desire to do so via independent representation or otherwise. <Footnote: The Commission also advocates relaxing the restrictions placed on the ability of plant guards to participate in collective bargaining by Section 9(b)(3) of the NLRA, which precludes guards or a local union of guards from affiliating -directly or indirectly with an organization which admits to membership ... employees other than guards.- While separate bargaining units and locals are appropriate, preventing affiliation with an established international union or federation of unions is an unnecessary limitation.

Another problem is that the scope of the -guard- definition has grown in NLRB jurisprudence over the years, to the point that elevator operators, concierges, and doormen are often held to be guards.>

4. Authorize Pre-hire Agreements

When an employer wants to move or open new operations, it should be allowed to negotiate a contract with a union interested in representing those who will work at the new operations, as long as the negotiations are conducted at arm's length. The employer should be allowed to recognize the union. In order to ensure that the employees covered under the new agreement support it, the union should be required to demonstrate majority support by the end of the first year of the new operations, or else the agreement and the union's status as representative would expire at that time. The parties would be allowed to verify the union's majority status either by card check or representation election. The agreement should not serve as a contract bar.

Section 8(a)(2) continues to serve the vital function of precluding -sweetheart- deals between employers and unions that do not represent a majority of employees. Such deals frustrate employee free choice by taking out of workers' hands the decision about whether to have independent representation. The policy of generally disallowing employer recognition and support of non-majority unions remains valid.

However, the Commission is concerned that this policy may operate in an unduly mechanical way. The problem is that the rule against employer support of non-majority unions limits the ability of an employer and a union to cooperate when the employer plans to move or open new operations. The occasion of new or relocated operations often presents an opportunity for innovative cooperation between employers and unions around issues of work organization, employee compensation and productive efficiency.

Such agreements not only improve labor-management relations, they also help all of us by facilitating the diffusion of high-performance work techniques. In addition, advance negotiations can increase rather than decrease the quality of employee choice about collective bargaining. In effect, a pre-negotiated contract between the employer and an independent union gives the employees an opportunity to try out the union's representation before voting on whether to accept or reject it.

Unfortunately, this kind of cooperative advance planning is severely restricted by Section 8(a)(2). The NLRB has interpreted the measure as prohibiting employer recognition of a union as part of prospective bargaining in most circumstances. What is more, the Board's interpretation forbids advance negotiation of contract terms altogether~even without recognition~if the employer and union have no previous relationship.<Footnote: Majestic Weaving Co. of N.Y., 147 N.L.R.B. 859 (1964).> We urge the Board to reconsider its approach here, and we recommend that Congress address this issue as part of its next effort to reform our labor laws.

5. Conclusion

Employee participation will have to expand to more workplaces if the American economy is to be competitive at high standards of living in the 21st century. Participation must also expand to include more workers and a broader array of issues if it is to meet the expectations and address the vital concerns of the nation's work force. The recommendations presented in this section could modernize labor law to encourage continued innovation in employee participation.

While the proposals in this Section and those that follow are needed in their own right, they are also closely interrelated. This is because the increased flexibility for employee participation proposed here poses both new risks and new opportunities for workers and employers. The risks of reducing employee opportunity to choose independent representation are addressed by the changes presented in Section III. The increased flexibility for employee participation should be accompanied by corresponding changes in the law needed to ensure that workers have ready access to independent representation and collective bargaining. Expanding the issues open to employee participation also opens possibilities for greater experimentation with employee involvement in alternative dispute resolution and self-governance processes on issues now subject to -command and control- regulation and court litigation. We turn, then, to these issues.

Statement of Douglas A. Fraser

Section 8(a)(2) stands as a bulwark against forms of representation which are inherently illegitimate because they deny workers the right to a voice through the independent representatives of their own choosing and put the employer on -both sides of the table,- to quote Senator Wagner's words from l935.* Thus, I place great importance on the fact that the Commission has not proposed any wholesale revision or exemption to Section 8(a)(2).

Nonetheless, I cannot join the majority's recommendation that -Congress clarify Section 8(a)(2)- by somehow providing that -employee participation programs should not be unlawful simply because they involve discussion of terms and conditions of work or compensation where such discussion is incidental to the broad purposes of these program.-

The prudent course would be to allow the administrative and judicial processes to address the issue of -incidental discussion- in the first instance. If problems were to develop~if, in fact, the law in practice were shown to substantially interfere with the kind of incidental discussions the majority seeks to protect ~ Congress could then take up the subject against a far clearer legal and factual background.

In dissenting from the recommendation to amend Section 8(a)(2), I wish to make clear that I do not minimize the value of encouraging -employee participation- and -labor- management cooperation.- But to my mind, the kind of - participation- and -cooperation- that should be encouraged is democratic participation and cooperation between equals. I agree with Peter Pestillo, the Executive Vice President of Ford Motor Company, that -A strong alliance requires two strong members. There should be no quibbling about that.- And I likewise agree with Morton Bahr, the President of the Communication Workers of America, that:

to effectively participate in workplace decision-making, front-line workers must first have their own organizations, educated leadership, and significant resources in order to have the confidence and preparation to participate as equals and without fear. {Sept. l5, l993 Tr. at 63}

Because I am deeply committed to the principal of work place democracy, I cannot join in any statement that proclaims that you can have fully effective worker management cooperation programs without having a truly equal partnership based upon workers having an independent voice. I must therefore dissent.

Dissenting Opinion of Douglas A. Fraser (January 3, 1995)

Section 8(a)(2) stands as a bulwark against forms of representation which are inherently illegitimate because they deny workers the right to a voice through the independent representatives of their own choosing and put the employer on -both sides of the table,- to quote Senator Wagner's words from l935.* Thus, I cannot join in the majority's recommendation that "Congress clarify Section 8(a)(2)" by somehow providing that "employee participation programs should not be unlawful simply because they involve discussion of terms and conditions of work or compensation where such discussion is incidental to the broad purposes of these programs."

Given the legal and factual uncertainties that exist as to the scope of 8(a)(2), and the danger that any statutorily- created exception would be an invitation to abuse, at the very least the prudent course would be to allow the administrative and judicial processes to address the issue of "incidental discussion" in the first instance. If problems were to develop -- if, in fact, the law in practice were shown to substantially interfere with incidental discussions of terms of employment -- Congress could then take up the subject against a far clearer legal and factual background.

In no event, should employer-dominated employee representation plans be permitted merely because they are limited to dealing with specified subjects such as safety and health or training. Employer-dominated representation is undemocratic regardless of the particular subjects with which the employer-controlled representative deals.

In dissenting from the recommendation to amend Section 8(a)(2), I wish to make clear that I do not minimize the value of encouraging -employee participation- and -labor-management cooperation.- But to my mind, the kind of - participation- and -cooperation- that should be encouraged is democratic participation and cooperation between equals. I agree with Peter Pestillo, the Executive Vice President of Ford Motor Company, that -A strong alliance requires two strong members. There should be no quibbling about that.- And I likewise agree with Morton Bahr, the President of the Communication Workers of America, that:

to effectively participate in workplace decision-making, front-line workers must first have their own organizations, educated leadership, and significant resources in order to have the confidence and preparation to participate as equals and without fear. [Sept. l5, l993 tr. at 63]

Because I am deeply committed to the principal of work place democracy, I cannot join in any statement that proclaims that you can have fully effective worker management cooperation programs without having a truly equal partnership based upon workers having an independent voice. I must therefore dissent.

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