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U.S. Department of Labor Futurework
  Trends and Challenges for Work in the 21st Century
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What Do Nonunions Do?
What Should We Do About Them?

Daphne Gottlieb Taras, University of Calgary and Bruce E. Kaufman, Georgia State University
Task Force Working Paper #WP14
Prepared for the May 25-26, 1999, conference
“Symposium on Changing Employment Relations and New Institutions of Representation”

September 1, 1999

I. Introduction

We have completed a major anthology Nonunion Employee Representation (NY: ME Sharpe, 2000), which examines nonunion representation’s history, contemporary practice, and policy implications. In this paper we draw upon 32 chapters on all facets of the topic, both within the United States and among other countries, including Canada, Japan, Germany, Australia and the United Kingdom. We review the research findings, and offer our own conclusions about the desirability of changing American labor laws to permit employee representation to be practiced overtly by nonunion workers and by nonunion companies.

We begin with brief descriptions of both the American and Canadian contemporary public policy settings. The American situation is that the National Labor Relations Act (NLRA), through Sections 8(a)(2) and 2(5), places significant constraints on the structure and operation of employee representation committees in nonunion companies. In particular, the law makes it an unfair labor practice for a company to operate a dominated labor organization, where “dominated” means that the labor organization is in some way created, supported, or administered by management. The Act defines a “labor organization,” in turn, quite broadly to include any kind of employee representation group that deals with the employer over a term or condition of employment. Considerable debate has ensued in recent years whether these strictures in the NLRA impede employee collective voice and constrain the operation of legitimate, productivity-enhancing employee involvement programs in nonunion companies. This concern was heightened by the NLRB’s 1992 Electromation, Inc. decision that the company had violated the NLRA when it established five employee action committees to work with management on identifying and resolving sources of employee dissatisfaction with various aspects of pay and working conditions.

Critics of the NLRA (and, to a lesser degree, the Railway Labor Act) claim that its strictures inhibit the ability of American companies to form and operate employee involvement and participation programs in nonunion workplaces and thereby harm both national competitiveness and cooperative employer-employee relations. For several years running, a coalition of Republican and conservative Democrats in Congress have sought to enact legislation, popularly known as "the TEAM Act," which would weaken significantly the NLRA's Section 8(a)(2) restrictions on "dominated" labor organizations. TEAM Act legislation was passed by both houses of Congress in 1996, was vetoed by President Clinton, and was reintroduced by its Congressional supporters. The ongoing debate engendered by this proposed legislation, as well as that precipitated by the hearings and final report of the Clinton-appointed Commission on the Future of Worker-Management Relations (Dunlop Commission), have put the nonunion representation on the front burner of the American labor policy debate.

Proponents of the law claim Sections 2(5) and 8(a)(2) are crucial to protecting employee free choice in matters of union representation by preventing employers from manipulating and coercing workers through "sham" company unions. There also are those who agree that the NLRA treatment is problematic, but are gravely concerned that a movement to change the NLRA with respect to nonunion representation will merely allow management to lawfully employ new techniques to defeat unions. Another group would consider a change to the NLRA only if it was accompanied by more sweeping reform to the Act in ways which would facilitate an easier transition to unionization where it is desired by employees.

By contrast, Canadians are not engaged in a similar type of debate, and so we draw upon the Canadian statutory framework for comparative purposes. Canadian legislation, which observers would considered similar in most respects to the Wagner Act, diverged in its treatment of nonunion representation. Nonunion plans are legal in Canada provided they are not designed to thwart union organizing. In Table 1 below, we blended a variety of Canadian statutes to demonstrate the Canadian approach. At first glance, it appears that the Canadian treatment is quite similar to the American. In Canada, it also is an unfair labor practice for management to participate in, dominate, or interfere with a union. A union which has been influenced by management cannot be certified as a bona fide bargaining agent, and will not enjoy the protections of any collective bargaining statutes. Where Canada deviates from the Wagner Act is in the definition of a labor organization. A labor organization means a union, or at the very least, a collective entity whose purpose includes regulation of relations through collective bargaining. Management must not interfere with a union, but management may deal openly with groups of nonunion employees on any issue of concern, including the terms and conditions of employment. It is not an unfair labor practice to run a nonunion employee representation plan because Canadian labor boards do not have the reach given to the U.S. NLRB through Section 2(5). The critical distinction between Canada and the U.S. rests in the definitions sections of the statutes, and not in any departure from the Section 8(a)(2).

Table 1

Statutory Treatments of Nonunion Representation in the U.S. and Canada [Text Version]




National Labor Relations Act (Wagner Act, 1935)

Section 2(5). A labor organization is “any organization of any kind, or any agency or employee representation committee or plan in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.”

Section 8(a)(2). It is an unfair labor practice for an employer “To dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it.”

Railway Labor Act (1926)

Section 1.“Representatives” means only persons or entities “designated either by a carrier or group of carriers or by its or their employees to act for it or them.”

Section 2(2). Representatives for both management and labor “shall be designated by the respective parties and without interference, influence, or coercion by either party over the designation of representatives of the other; and neither party shall in any way interfere with, influence, or coerce the other in its choice of representatives.”

Section 3(4). It shall be unlawful for any carrier to interfere in any way with the organization of its employees, or to use the funds of the carrier in maintaining or assisting or contributing to any labor organization, labor representative, or other agency of collective bargaining.

Canadian Approach (blending 12 statutes: federal, public service, and 10 provincial labor codes) -- [information about each of these codes is found inAppendix 2 in this paper]

Definitions Sections: “Trade union”, “Bargaining agent”, “Union,” “Association of employees,” or “labor organization” means an entity that has as one of its purposes the regulation of relations between employers and employees through collective bargaining.

Unfair Labor Practice Sections: It is an unfair labor practice for any employer or employer representative to participate in or interfere with the formation or administration of a trade union, or representation of employees in a trade union.

Prohibitions against Certification Sections: Labor boards (or in Quebec, the commissioner-general) shall not certify a trade union if it is employer dominated.

This Canadian-American difference motivated an intensive investigation of nonunion employee representation (NER), including its contemporary features and public policy treatment. We found that there are some elements of NER on which there never will be consensus. These include whether nonunion employee representation plans (NERPs) are substitutes to unions, complements to unions, or make up a free-standing system of industrial relations occupying a different domain of activities. The impact of NER on union organizing remains speculative. These issues form the molten core of controversy that necessarily ensues when any group of industrial relations scholars and practitioners exchange their views on the desirability of nonunion representation.

There also are three major issues on which agreement virtually leaps off the page, regardless of the perspective of the authors. These include (1) that nonunion representation is not an easy human resource practice: it is costly and creates dynamics that make it difficult to manage. In instances where NERPs do indeed substitute for unions, they may well be more cumbersome and challenging than the vehicle they are meant to displace. (2) Enduring nonunion representation plans always match or exceed employment conditions in unionized firms. Senator Wagner’s view that they result in a “nibbling of the meanest man,” an inevitable deterioration of an industry’s wage contour, has no empirical support. (3) The contemporary American public policy debate is misdirected. The controversy over loosening Wagner Act restrictions has erroneously fixated around Section 8(a)(2), which details employer interference with labor organizations as an unfair labor practice. Section 8(a)(2) is not now, and never has been the problem. The opinion that we, and a majority of authors in our book espouse, is that Section 2(5) - the overly broad definition of a labor organization - is the crux of the perplexing American statutory treatment.

The next (second) part of this paper reviews the empirical findings on nonunion representation, and summarizes both the points of agreement and the reasons for the American controversy about legalizing nonunion representation.

Despite the Wagner Act’s ban on NERPs via Section 2(5) and Section 8(a)(2), nonunion plans have made significant inroads into the American industrial relations landscape. The third part of this paper demonstrates that a number of American employers -- perhaps about 20% of all nonunion employers, and about 50% of those nonunion employers implementing employee involvement and participation programs, if we were pressed to put a raw figure to our impressions and the available data -- are practicing forms of nonunion representation that are contrary to the express language of the NLRA.

The fourth, and final, section of this paper addresses the public policy changes that we recommend in order to allow for collective action by nonunion employees without further jeopardizing the low levels of unionization. It is noteworthy that neither Canada nor Japan banned nonunion representation. In the fourth section we draw upon the Canadian statutes for a different approach to the “Section 8(a)(2) dilemma” than has been previously proposed by American employer lobby groups (e.g. the TEAM Act). Because we have found from our research that nonunion systems operate best when they exist in the shadow of a viable union threat, we believe it is vital that any softening of the nonunion representation ban be accompanied by changes that increase the ability of workers to join bona fide unions.

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