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Solution Manual
Book Title
Business Law with UCC Applications 14th Edition
ISBN 13
978-0077733735

978-0077733735 Chapter 24 Lecture Notes

April 10, 2019
Chapter 24 - Labor Law
Chapter 24
Labor Law
I. Key Terms
Arbitration (p. 590) Labor union (p. 579)
Bargaining unit (p. 587) Right-to-work laws (p. 587)
Closed shop (p. 586) Secondary boycott (p. 588)
Constructive discharge (p. 586) Unfair labor practices (p. 584)
Featherbedding (p. 589) Union shop (p. 586)
Hot-cargo contract (p. 589)
II. Learning Objectives
1. Relate the historical context in which unions developed.
2. Outline the congressional–judicial tug-of-war in union history.
3. List the basic aims of labor unions.
4. Explain the nature of the 21st century crisis in labor law.
5. Identify the major provision of the Norris-LaGuardia Act.
6. Indicate the primary tenets of the Wagner Act.
7. List the functions of the Taft-Hartley Act.
8. Explain the provisions of the Landrum-Griffin Act.
9. Describe the jurisdiction of the National Labor Relations Board.
10. Identify the possible results of a complaint filed with the NLRB.
III. Major Concepts
24-1 Labor Law and the Economic Crisis
The first federal statute relating to labor was the Clayton Act, which attempted to prohibit
federal courts from forbidding activities such as picketing and strikes. The
Norris–LaGuardia Act specified acts, such as striking, picketing, and boycotting, that
were not subject to federal injunctions.
24-2 Major Federal Labor Legislation
The Wagner Act opened the door for the growth of labor unions. It set forth specific labor
practices that were prohibited for employers and unions, established procedures for
representative elections and collective bargaining, and created the NLRB. The Taft–
Hartley Act outlaws specific conduct by unions as unfair labor practices and provides for
an 80-day cooling off period in strikes that endanger national health or safety. The act
also provides a mediation and conciliation service to assist in the settlement of labor
disputes. The Landrum–Griffin Act provides a bill of rights for union members, requires
unions to report to the secretary of labor, and has added to the list of unfair labor
practices.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
24-3 The Collective Bargaining Process
The NLRB has exclusive jurisdiction to enforce labor–management relations laws with
investigative, regulatory, administrative, enforcement, and judgment powers. Any person,
union, or employer can file notice with the NLRB of an alleged unfair labor practice. If
the complaint has merit, a hearing is held before the NLRB. If the complaint is found to
be valid, an order may be issued restoring the parties to the state existing prior to the
unfair practice. Appeals of NLRB actions can be taken to the appropriate U.S. Circuit
Court of Appeals and then to the U.S. Supreme Court. The Federal Mediation and
Conciliation Service was formed to encourage labor and management to agree freely on
the settlement of their disputes. Its mediation role is to offer nonbinding suggestions for
settling the dispute, require the parties to negotiate, and force a vote by employees on
employers’ offers. In the public sector, the right to strike is restricted. The U.S. Code
states that “an individual may not accept or hold a position in the government
of the United States or the government of the District of Columbia if he participates in a
strike or asserts the right to strike against the government.”
IV. Outline
I. Labor Law and the Economic Crisis (24-1)
A. Introduction
1. A labor union is an organization that acts on behalf of all employees in negotiations
with the employer regarding the terms of employment.
2. Americans recognize the pros and cons of unions.
3. Keynesians push for government intervention into the economy while members of the
Austrian school argue that government intervention does more harm than good.
B. An Economic Tug-of-War
1. The history of union development in the United States provides us with a vivid
example of the give and take between two economic theories: (1) the Keynesian
strategy that approves of governmental control; and (2) the Austrian school that
supports a laissez-fair approach to the economy.
2. The Sherman Antitrust Act of 1890 was designed to break up anticompetitive trusts.
3. Congress passed the Clayton Act in 1914, another Keynesian-like tactic that forced
companies to cooperate with union organizers and thus helped keep people employed.
4. One of the goals of the Clayton Act was to hamper the federal courts’ ability to issue
injunctions to stop union activities.
5. The federal judicial system effectively destroyed the Clayton Act by creating two
criteria that allowed the courts to issue injunctions freely to stop labor activities.
a. Under the objectives test, a court could issue an injunction if it determined that
the goal or the objective of a strike was unlawful.
b. Under the second test, the courts could stop a strike if it was conducted in an
unlawful manner.
6. Congress reacted by passing a pro-Keynesian law, the Norris-LaGuardia Act in 1932.
a. The act prohibits the federal courts from issuing injunctions against
union-organized strikes.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
b. The act forbids the courts from using injunctions to stop picketing or boycotts
organized by unions.
C. The Goals of Labor Organization
1. Labor laws promoted the aims of labor unions but also helped prevent unions from
becoming too powerful.
2. Labor unions have several objectives in common including the following:
a. Creating seniority systems to protect workers’ jobs from arbitrary layoffs and
replacement with cheaper wage earners
b. Upgrading worker status through wage and fringe benefit increases
c. Sponsoring laws that improve social, economic, and political conditions for
workers
3. The Twenty-First Century Labor Crisis
a. Over the last few years, the battle over unions has started once again.
b. Governors and the state legislatures of several Midwestern states, notably
Wisconsin, Ohio, and Michigan, created and passed legislation designed to
eliminate the collective bargaining power of unions representing state workers.
II. Major Federal Labor Legislation (24-2)
A. The Wagner Act
1. The passage of the National Labor Relations Act in 1935 (known as the Wagner Act)
opened the door for the rapid growth of the union movement.
2. It expressly sets forth the unfair labor practices prohibited for both employers and
unions.
3. The Wagner Act gives workers the right to organize by allowing them to form, join,
or aid labor unions.
4. It establishes procedures for representative elections and for collective bargaining.
5. Under the act, after a union is elected, it has the exclusive right to bargain with
management.
6. The act also created the National Labor Relations Board (NLRB), which hears and
rules on charges that unfair labor practices have been committed by employers or by
unions.
7. Employee and Labor Organization – Defined?
a. The legislature in the Wagner Act went to great lengths to define the term “labor
organization.”
b. “Employee” was not so clearly defined by the Act, and courts have relied upon
the common law definition taken from the Restatement (Second) of Agency
Section 2(2) providing that “An employee is a person who performs services for
another under a contract of hire, subject to the others’ control or right to control
and in return for payment.”
8. Prohibited Activities: Unfair Labor Practices
a. Employers may not interfere with employees’ right to organize.
b. Employers may not dominate or interfere with the formation or administration of
any union.
c. Employers may not discriminate to encourage or discourage union membership.
d. Employers may not discharge employees for filing charges or providing
testimony.
e. Employers may not refuse to bargain collectively.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
f. An employer cannot interfere with employees when they are forming a union,
selecting their representatives, voting, striking, picketing, or engaging in any other
protected and legal acts.
g. An employer cannot form a company-run union for its employees.
h. It is an unfair labor practice to have a closed shop meaning a work site in which
the employer, by agreement, hires only union members in good standing.
i. It is usually lawful to have a provision allowing a union shop whereby nonunion
workers may be employed for a trial period after which the nonunion must join
the union or be discharged.
j. In relation to discrimination, a constructive discharge may be an unfair labor
practice.
k. The NLRB has no jurisdiction over religious schools.
l. The Wagner Act does not apply to most federal employees, and it does not apply
to state or local government employees.
A. The Taft-Hartley Act
1. The Labor-Management Relations Act of 1947, called the Taft-Hartley Act,
established a means to protect employers in collective bargaining and labor
organization matters.
2. The act prohibits union officials form using coercive or abusive tactics against its own
members.
3. A list of unfair labor activities that unions, as well as employers, were forbidden to
practice was added to those of the Wagner Act.
4. State right-to-work laws outlawing both closed shop and union shop clauses are
allowed.
a. All employees in the bargaining unit are benefited by the collective bargaining
agreement negotiated by the union, even if they have no paid union dues.
b. Nonunion employees lose all right to vote on union officers or collective
bargaining agreements.
5. Some members of Congress recently proposed limiting the power of the National
Labor Relations Board to pressure an employer into keeping his or her business
located in a particular state.
6. The act includes a free speech provision that allows employers to comment freely on
union-organizing activities so long as they do not threaten reprisal or promise some
benefit to employees.
7. The act states that it is an unfair labor practice for a labor union to try to coerce
employees to join the union, to block the employment of individuals who refuse to
support a union, or to encourage an employee to withdraw an unfair labor practice
charge.
8. Under the act, the union has a duty to represent all of its members on an equal basis.
9. The act prohibits a union from engaging in a secondary boycott.
10. The act gives the president special powers, including injunctive powers, to deal with
actual or threatened strikes that affect interstate commerce or that endanger the
nation’s health and safety.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
11. Under the act, unions cannot refuse to bargain collectively with an employer and prior
to the termination date of a collective bargaining contract must give notice to the
employer of an intention to strike.
12. Under the act it is an unfair labor practice for a labor union to require an employer to
keep unneeded employees, pay employees for not working, or assign more employees
to a given job than needed (featherbedding).
B. The Landrum-Griffin Act
1. The Labor Management Reporting and Disclosure Act of 1959, known as the
Landrum-Griffin Act, is a tough anticorruption law.
2. It was designed to clean up corruption and violence that had been uncovered in the
internal affairs of unions.
3. It requires all unions to adopt constitutions and bylaws and to register them with the
Secretary of Labor.
4. Unions are required to submit annual reports detailing assets, liabilities, receipts and
sources, payments to union members exceeding $10,000, loans to union members and
businesses, and other monies paid out.
5. A provision assures all union members of the opportunity to participate in the internal
affairs of their union.
6. It makes it an unlawful labor practice to become involved in a hot-cargo contract by
which an employer voluntarily agrees with a union not to handle, use, or deal in
nonunion-produced goods of another employer.
II. The Collective Bargaining Process (24-3)
A. The National Labor Relations Board
1. The NLRB is a governmental commission that has the exclusive jurisdiction to
enforce Taft-Hartley and related laws.
2. It has investigative, regulatory, administrative, enforcement, and judgmental powers.
3. Appeals from the NLRB go to the U.S. Court of Appeals and then to the U.S.
Supreme Court.
B. Unfair Labor Practice Procedure
1. A person, union, or employer can file notice with the NLRB of an alleged unfair labor
practice within six months after it occurs.
2. Unfair labor practices include not only those practices that occur between
management and the labor union, but also those between a union and its own
members.
3. If the charge has merit, a complaint is issued.
4. In the event that the complaint is found to be valid, a cease and desist order may be
issued, restoring the parties to the state that existed before the unfair practice began.
5. The Taft-Hartley Act encourages labor and management to agree freely on the
settlement of disputes; and to further voluntary agreement, Congress formed the
federal Mediation and Conciliation Service.
C. The Right to Strike in the Public Sector
1. In the public sector, the right to strike is restricted.
2. The U.S. Code states that “an individual may not accept or hold a position in the
government of the United States or the government of the District of Columbia if he
participates in a strike or asserts the right to strike against the government.”
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
3. The U.S. Supreme Court has affirmed the fact that there is no constitutional right to
strike against the federal government, and doing so is a crime.
V. Background Information
A. Cross-Cultural Notes
1. Even though union workers still earn more money, have better job security, and
receive better benefits than nonunion workers (except in the managerial and
professional sectors) union membership has declined steadily in most industrialized
nations since 1985. The greatest drop occurred in Central and Eastern Europe which
lost 7.8 million members over a ten year period. Nations that saw a rise in
membership were Chile, the Philippines, South Africa, South Korea, and Spain.
2. A 1791 French law that prohibited organization and strikes by workers’ coalitions was
based on the notion that the liberty of labor for the common good of society overruled
the liberty of association. The law forbade citizens belonging to the same profession
to “deliberate or make decisions on their supposed common rights.” Punishment for
violations of these laws included public whippings and imprisonment.
3. The International Labor Office (ILO) was established under Part XIII of the Treaty of
Versailles. Delegates to the ILO represent various participating nations’ employers
and workers. American delegates were not formally present at ILO conferences until
1934.
B. Historical Notes
1. Deunionization efforts in the United States in the 1920s helped increase profits for
corporations, spawning an increase in investments but not in consumption—a
circumstance that some economists believe to be a major cause of the Stock Market
Crash of 1929 and the subsequent Great Depression. Ironically, the Depression
ultimately led to a dramatic increase in labor union memberships in the 1930s.
Unionization got another boost with the passage of the National Industrial Recovery
Act, which granted workers the right to organize.
2. Historically, Presidents have intervened in labor disputes for three purposes: to
suppress physical violence, to compel continuation of production, and to mediate a
settlement. A presidential injunction to quell violence was enforced in 1834 when
Andrew Jackson called in federal troops to break up fighting between rival gangs of
laborers over jurisdiction rights on the Chesapeake & Ohio Canal. Abraham Lincoln
was the first President to enforce production when he ordered soldiers to load and
unload government ships at New York pier during an 1863 strike of longshoremen. In
1902, Theodore Roosevelt became the first President to use mediation to settle a
dispute when he summoned both parties in a mining strike to the White House and
induced them to accept binding arbitration by a presidential board.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
3. Peter J. McGuire, a carpenter and labor union leader, came up with the idea for
Labor Day. He proposed his idea to New York’s Central Labor Union in 1882. The
first Labor Day was held on September 5, 1882, in New York City. Ten thousand
workers marched in a parade from City Hall to Union Square. Later, the holiday was
moved to the first Monday in September. Congress made Labor Day a national
holiday in 1894. For more information see information from America’s Library at
http://www.americaslibrary.gov/jb/gilded/jb_gilded_labor_2.html.
C. State Variations
1. In addition to federal agencies, many states have their own state agencies addressing
labor issues.
2. Many states have right-to-work laws. Utah has a provision in its state code which
says, “the right of persons to work, whether in private employment or for the state, its
counties, cities, school districts, or other political subdivisions, shall not be denied or
abridged on account of membership or nonmembership in any labor union, labor
organization, or any other type of association; and further, that the right to live
includes the right to work. The exercise of the right to work must be protected and
maintained free from undue restraints and coercion.” Utah Code Ann. § 34-34-2.
D. Quotations
1. I shall always be a friend of labor, but in any conflict that arises between one
particular group, no matter who they may be, and the country as a whole, the welfare
of the country comes first.
— Harry S. Truman (1884–1972), President of the United States, 1945–1953
VI. Terms
1. The expression “yellow-dog contract” stems from the use of the word yellow to
describe someone who is mean or cowardly. The term referred to a type of contract
between an employer and an employee by which the employee agreed not to join a
union or to resign from the union if already a member. Such contracts were outlawed
by the Wagner Act.
2. The word boycott was coined during the Irish potato famine of the mid-1800s.
Because of crop failures, thousands of farming tenants were unable to pay their rents.
Most landlords accepted the partial payments that the tenants offered, but Lord Erne
ordered his agent, Captain Boycott, to collect the full amount from his tenants.
Boycott’s harsh treatment of the farmers induced them to organize and refuse to
gather crops or talk with him—in essence, to boycott him.
VII. Related Cases
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
1. Part of the indoctrination of new employees at the Florida Steel Corporation was to
show a videotape entitled “Look Out for the Cards,” which described wage increases
given to employees at both union and nonunion plants. The film also suggested that
employees who signed attendance roster cards at union meetings at one facility were
later forced to give testimony at governmental hearings. The NLRB ruled this
videotape an unfair labor practice and found Florida Steel in contempt. Florida Steel
Corp. v. NLRB, 648 F.2d 233 (5th Cir. 1981).
2. In Mulhall v. United Here Local 355, 667 F.3d 1211 (11th Cir. 1211), an employee
sued his employer, Mardi Gras Gaming, and local labor union seeking to enjoin
enforcement of a neutrality and cooperation agreement entered into between his
employer and the union. The employee claimed that the agreement and the
cooperation it involved violated the Labor Management Relations Act. The court
noted that, with limited exceptions, Section 301 of the Labor Management Relations
Act makes it illegal for an employer to give or for a union to receive any “thing of
value.” The agreement at issue contained several provisions including an agreement
that the employer would provide union representatives access to non-public work
premises for purposes of organizing employees and provide the union a list of
employees. In return, the union agreed to lend financial support to a ballot initiative
regarding casino gambling and, if recognized as the bargaining agent, to refrain from
certain activities such as picketing. The court ruled that the transaction between the
employer and union constituted a “think of value” and that the lower court erred in
dismissing the complaint.
VIII. Teaching Tips and Additional Resources
1. The federal Bureau of Labor Statistics provided a new release regarding union
statistics at http://www.bls.gov/news.release/union2.nr0.htm.
2. The Internet site of the National Labor Relations Board, with extensive information
regarding the agency and rights of employees, is at https://www.nlrb.gov/.
3. Information regarding the AFL-CIO, an umbrella federation for 56 unions
representing 12.5 million people, can be found at http://www.aflcio.org/.
4. An article from the National Education Association discussing teacher unionization is
available at http://www.nea.org/home/18469.htm.
5. A short video of President Ronald Reagan in regard to his decision to fire striking air
traffic controllers is available at
http://www.history.com/audio/reagan-fires-striking-air-traffic-controllers#reagan-fires
-striking-air-traffic-controllers.
6. Ask students to discuss whether they believe that shopping should preferably be done
with union companies in the U.S. An Internet site encouraging trade with union
companies is at http://www.unionlabel.org/.
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distribution without the prior written consent of McGraw-Hill Education.
Chapter 24 - Labor Law
7. Information regarding the Teamsters union is available at
http://www.teamster.org/international-brotherhood-teamsters.
8. The web site for the International Labour Organization (“ILO”) can be found at
http://www.ilo.org/global/about-the-ilo/lang--en/index.htm. The ILO is a United
Nations agency overseeing international labor standards.
9. Ask students to follow labor-management issues in the media and on the Internet, and
bring in clippings and news anecdotes to share with the class.
10. Emphasize that collective bargaining has gradually become firmly established as a
way of improving working conditions and industrial relations. Lead students in a
discussion of the pros and cons of collective bargaining.
11. To emphasize the difficulty encountered by early union organizers, have students
research governmental action and court decisions that outlawed union organization in
the first part of this century. Ask them to write a brief report of their findings.
12. Ask small groups of students to research labor-management relations in a particular
industry and present their information to the class in a panel discussion. Encourage
students to look at the history of industries such as mining, transportation, and sports.
13. Have students research the history of anti-union sentiment, reasons for the current
decline in union membership, and the effects of automation and globalization on the
future of unions. Ask them to write brief reports of their findings.
14. The U.S. Supreme Court has determined that federal courts may resolve labor
grievances unless specifically barred by a collective bargaining agreement (CBA). To
avoid the intrusion of federal courts in employment disputes, employers can
incorporate final, binding, and mandatory arbitration provisions in CBAs to allow
unions and individual employees to initiate arbitration.
15. Have students research strikes with a significant impact on the public such as those
involving teachers, police officers, or sanitation employees.
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distribution without the prior written consent of McGraw-Hill Education.

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