Last month, a United Auto Workers organizing drive to bring the workers at Volkswagen’s Chattanooga plant into the union went down to defeat. The vote was 53 to 47 percent against the UAW’s representation – and also to its dues and its politics, matters that might have been foremost in the minds of many opponents.
Whether the rebuke will prove to be the UAW’s Waterloo remains to be seen, but I think that there is one clear lesson we should draw from this. We have some lousy labor laws.
The prohibition against “company unions”
Much has been said about how the VW management wanted or was at least receptive to the UAW, but what VW really wanted was to establish a worker/management council similar to the ones at its German operations. Under American law, however, there was a problem – due to a 1992 decision by the federal agency that enforces our labor statutes, the National Labor Relations Board (NLRB), a non-union company may not set up any such council.
Why not? In a more or less free country, why can’t people who work together toward a common goal sit down and discuss ways of improving products, morale, safety, scheduling or anything else?
The reason is that the key federal statute, the National Labor Relations Act (NLRA), contains a provision, Section 8(a)(2), that was meant to prohibit “company unions.” Back in the 1930s, quite a few businesses had established such unions in hopes of heading off both legal action by the Roosevelt administration under the strongly pro-union National Industrial Recovery Act, and organization by militant independent unions.
The leaders of the labor movement, however, preferred that workers have to choose only between their own brand of unionism or none at all. As a favor to them, the NLRA was written to prevent a company from acting to “dominate or interfere with the formation of any labor organization or to contribute financial or other support to it.”
But how do we go from that prohibition against company unions to the illegality of having a worker/management council? We get there by the decision in the Electromation case. I will briefly summarize the facts, but my good friend Professor Charles Baird has a thorough discussion of the case and the issues it raises here.
A small Indiana electrical parts company, Electromation, Inc. was struggling in 1988 so the president called his employees together to talk about how to improve operations. Several committees were formed and their recommendations were discussed. Any worker was free to participate in any committee. There was no “representation” and no bargaining – just talking and some suggestions.
Soon afterward, the Teamsters began an organizing drive at Electromation. The NLRB conducted an election to see if a majority of the workers wanted Teamster representation and the vote went against the union. The Teamsters then filed what are called “unfair labor practice” charges against the company, arguing that the election was unfair because management had violated 8(a)(2) by having its worker committees. Holding those meetings was said to be “aiding a labor organization.”
Professor Baird writes, “To any disinterested observer, Electromation was a nonunion firm that was trying to undertake cordial, effective labor-management cooperation and comply with the NLRA.” Ah, but to the Teamsters, those committees were grounds for dragging the company into its brier patch of friendly federal regulators. First, an administrative law judge ruled in favor of the Teamsters, and when the case was appealed to the full NLRB, it also sided with the Teamsters and ordered a new election, which was won by the union.
The case thus establishes that worker/management councils or other forms of voluntary cooperation in a non-union firm violate the NLRA and will be grounds for complaint by a union seeking to organize the employees. Many scholars have argued that this is an absurd interpretation of the law, an overreach meant to assist unions grasping for ways to worm their way in.
Not only is the NLRB’s reading of Section 8(a)(2) strained, but that part of the law itself is indefensible. If we want to allow the freedom for companies and their employees to find the optimal ways of interacting for mutual benefit, we shouldn’t outlaw any form of cooperation.
By forcing labor-management relations into the light switch mode – either an adversarial union or nothing – the law gets in the way of the market’s discovery process. That’s how Big Labor wants it, but it’s bad law.
First lesson from Chattanooga: The law ought allow VW and all other companies to have whatever kind of cooperative worker organization they want to try, with or without a union. Section 8(a)(2) should be repealed.
Card checks and elections
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