United States Department of Labor

	Trends and Challenges for Work in the 21st Century

The potential and pitfalls of alternative forms of workforce representation …

NERP Fundamentals: Forms, Functions, and Features
Policy, Principles, and Potential

Since the New Deal, the traditional avenue for providing employee voice has been the labor union, whose primary purpose is to regulate relations through collective bargaining agreements. Indeed, the National Labor Relations Act (NLRA) itself places significant constraints on the structure and operation of employee representation within companies that are not unionized, limiting the scope of emerging nonunion committees and groups formed to represent the interests of workers. Some critics of the Act believe that its restrictions adversely affect national competitiveness and the potential for activities such as formalized employee participation to promote positive employment relations.

As union density has decreased, however, new organizations both within and beyond the firm have emerged to fill the gap, finding creative ways to meet workers’ needs. And, as some firms have found value in employee involvement and participation, enterprise level committees and councils have been formed to represent worker perspectives. These employer based labor organizations— often incorrectly called “company unions”—are considered by many to violate the NLRA, which considers any organization that addresses the terms or conditions of employment but that is created, supported, or administered by management to constitute an unfair labor practice.

Not surprisingly, alternative mechanisms of employee voice have sparked considerable debate among a range of constituencies, with much of the controversy focused on employer based labor organizations. In particular, unions often view these worker organizations as “shams” that lead to coercion and manipulation, as well as direct threats that compete with union organizing. On the other hand, management tends to view such bodies as being supportive of increased productivity but not necessarily of employee interests.

Three high profile policy events promise to further intensify the debate. In 1992, the National Labor Relations Board (NLRB) decided that one company had violated the NLRA by establishing five employee action committees to work with management on identifying and resolving sources of employee dissatisfaction around pay and working conditions. In Congress, a coalition of Republicans and Democrats have introduced legislation, the “TEAM Act,” that would reduce many of the barriers for nonunion companies to establish employer based labor organizations. Finally, the Commission on the Future of Worker-Management Relations, often referred to as the Dunlop Commission, has recommended a slight relaxing of the NLRA’s rules while retaining the ban on company unions.

To help frame a discussion of this ongoing debate around alternative models of representation— particularly enterprise-based organizations— Daphne Gottlieb Taras of the University of Calgary and Bruce E. Kaufman of Georgia State University presented their work on trends in nonunion employee representation plans (NERPs) in the United States. In Kaufman’s estimation, “There are two sides to this equation. Employees want more avenues for voice and participation, and I believe employers want a similar mechanism, just structured in a different way. There is an opportunity here—though it is a politically difficult one—to bring labor and management together on these issues in a way that does accomplish both employer and employee goals.”

NERP Fundamentals: Forms, Functions, and Features
Taras and Kaufman surveyed over 40 case studies of firms that maintained NERPs, which they define as an individual or entity that represents employees in a committee, council, or team, that regularly meets to discuss workplace issues with company management, and that is established, financed, and operated by the employer. Although many of these functions might be considered as violations of the NLRA, their potential illegality has not limited their growth in U.S. workplaces. “Regardless of the Wagner Act’s constraint against nonunion representation,” said Taras, “about 20 percent of American workers are employed in companies that have formal NERPs in their workplaces. Many may be unwittingly using them in ways that may infringe on the law.” In addition to their legal ambiguity, controversy surrounds the ultimate place of these organizations in the labor movement and the labor market. “Overall, we found elements on which consensus may never be reached,” said Kaufman. “These include whether NERPs are substitutes for or complements to unions, or whether they constitute a free standing system of industrial relations governing a different range of activities.” However, Taras and Kaufman have identified three key issues on which most constituencies, regardless of their perspective, can agree:

1. Nonunion representation does not make the HR function easier.
Taras likened these organizations to a “pet bear” for employers—this form of representation is not only costly, it creates dynamics that make HR practices difficult to manage. “When NERPs do substitute for unions,” said Kaufman, “they may well be more cumbersome and challenging than the vehicle they are meant to displace.”

2. Enduring NERPs always match or exceed employment conditions in unionized firms.“Unlike Senator Wagner’s argument that nonunion forms of representation result in competitive forces that drive down worker salaries and compensation packages to the lowest possible denominator,” explained Taras, “we actually found no empirical evidence to justify the position.” Instead, employees at these workplaces tend to unionize quickly when conditions erode, so it is in the interest of management to honor workers’ demands—for example, to pay at or above union wage rates.

3. The contemporary public policy debate over the loosening of the Wagner Act is misdirected. According to Taras and Kaufman, arguments focus tightly—and erroneously—on employer interference with labor organizations as an unfair labor practice, when the crux of the problem is the overly broad definition of a labor organization itself, as espoused in the statute.

What forms do mechanisms for nonunion employee representation actually take within firms? Taras and Kaufman reported that, in most cases, the process of classifying these organizations is not clear cut. In practice, differences often represent fine distinctions—between participation systems characterized by direct employee involvement and representation systems in which workers indirectly channel concerns through employee delegates to management; between online (production related) versus off-line (working and employment conditions) topics; and between formal versus informal systems. In general, employee groups tackle topics that range from integrative issues such as productivity and quality control to distributive issues such as wages, benefits, and the handling of grievances. Despite considerable variation in the form and function of NERPs, Taras and Kaufman identified several characteristics that they hold in common:

NERPs allow employee input in decision-making, but management retains decision-making authority. NERPs rarely yield permanent or even temporary authority to employees, who may influence decision-making but cannot directly make decisions. “Any ‘rights’ are almost always delegated by management, which retains the ability to abrogate employee independent authority at any time,” said Kaufman.

NERPs are poorly configured for bargaining. Because they are management dominated and financed, these labor organizations have no real bargaining power for redressing employee concerns around distributive issues, particularly when a labor management dispute cannot easily be resolved.

NERPs can promote fair treatment in the workplace,but they keep disputes within the firm. These mechanisms can help firms develop and maintain a policy of fair and equitable treatment among employees. For example, many NERPs offer avenues for pursuing justice within the enterprise and for the disposition of complaints. However, most disallow workers the opportunity to seek counsel or take grievances to third party neutrals outside the firm.

NERPs are well configured for communication and collaboration.Although a dominant and explicit theme in the function of these organizations is to provide employee input—particularly in matters involving work processes—opportunities for providing a broader employee voice is most often incidental.

Employees ...tend to unionize quickly when conditions erode,so it is in the interest of management to honor workers ’demands — for example,to pay at or above union wage rates.

NERPs are used by companies to support high performance practices rather than to address employment issues or societal concerns.Taras and Kaufman found that NERPs are used more as mechanisms to implement strategic HR management models that further the goals of the firm. The rhetoric speaks of “worksite voice” and “win win solutions” but never of job security, social values, or the role of the employer as a provider of a safety net.

NERPs are usually only one element in a cluster of progressive HR practices.“They are a signal step in the evolution of management from a commodity model of labor toward a more humane, strategic, and participative model,” said Kaufman. “In fact, if their purpose is to expose and resolve grievances, communicate ideas, fine tune corporate policies to suit employees, and investigate the relationship between productivity and employment conditions in the absence of bargaining, then NERPs have unique advantages over traditional unions.”

Ironically, NERPs work best in the presence of a strong labor movement.“In the short haul, bad companies use them during union organizing threats, and when the campaign is over the NERP dissipates,” said Taras, “But in the long haul, the union threat is very vital to managing a good nonunion representation plan.” Such a union threat keeps management vigilant and provides employees with the power of a persuasive bargaining chip. In fact, Kaufman and Taras cited one study that quantifies the relationship: the higher the union membership in an industry, the more likely the penetration of NERPs in that industry.

Policy, Principles, and Potential

Much of the narrow debate around nonunion employee representation will be settled in the legislative arena, in the battle over the passing of amendments to existing labor laws. But, beyond their own beliefs about the details of such legislative efforts, participants at the symposium could agree on a few fundamental principles that should continue to guide the development of broader policies:

Employers must not be allowed to interfere with workers ’choices around organizing.The discussion around nonunion representation continually draws a double edged sword: on the one hand, these organizations can be useful and responsive to worker needs and even to employers’ bottom lines; but, on the other, they can be abused by employers or used as a tactic to forestall union organizing. According to Kochan, what pushes the effort in either direction is the issue of worker power. “There is a difference between how these groups can be used as complements when workers really have a right to choose, as opposed to deterring other forms of representation when workers are weak,” he said. Any policy discussion, therefore, has to address these new organizations in the context of the presence or absence of worker power—and with the assurance that worker choice is given top priority.

Arguments must try to avoid the union/nonunion split. Although employers may initially use NERPs to avoid unionization, the issue is not whether traditional forms should be abandoned and new forms promoted, but how effectively the two forms can build on each other’s efforts to strengthen worker voice and improve working conditions. Focusing solely on this false dichotomy limits the debate to legislation, while broadly focusing on workplace change and bringing these organizations into the discussion should result in a broader array of changes in labor policy.

Policymaking must be stretched beyond legislation to the support of local efforts. As more local, community based coalitions and organizations emerge with the capacity to effectively represent workers and address workplace concerns, the notion of policymaking can be extended beyond labor law to efforts around rebuilding institutions at the local level and providing the resources and authority necessary to address workplace issues. “There is also a lot of room for developing the capacity of labor organizations within and beyond the firm and tying those efforts to the new roles being filled by unions,” said Kochan.