Chapter 14: Understanding Labor Relations and Collective Bargaining
Chapter 14:
Understanding Labor Relations and Collective Bargaining
Learning Outcomes
After reading this chapter, students should be able to:
1. Explain the reasons that workers join unions.
2. Discuss the effects of the Wagner and the Taft–Hartley Acts on labor–management
relations.
3. Outline additional important laws and executive orders affecting labor–management
relations.
4. Outline the steps in the union-organizing process.
5. Describe the collective-bargaining process.
6. Explain important factors in contract administration.
7. List important current issues facing unions.
8. Explain how the role of unions differs in a global environment.
Chapter Overview
Support for unions and employee rights to collective bargaining has traditionally been divided
along political party lines. The chapter opener outlines some political criticism and support and
explores American’s opinions of unions and legislation that restricts their activities. Student
questions examine their own experiences and opinions.
The chapter discusses why workers join unions, summarizes the major laws affecting
labor-management relations, and describes the organizing process. A section on collective
bargaining outlines how contracts are negotiated and what happens during impasses. Current
critical issues and aspects of international labor relations are also included.
Additional features of this chapter:
Exhibits
14 – 1: Union Membership by Industry Classification (Selected)
14 – 2: States with Right to Work Laws
14 – 3: Union Organizing Process
14 – 4: The Collective-Bargaining Process
14 – 5: A Sample Grievance Procedure
14 – 6: Trends in Union Membership
14 – 7: Unionization Around the World
Boxed Features
These features are located within the text and address current issues in HRM within the context
of the relevant learning objectives. They are short and thought provoking with thought questions
at the end providing a great opportunity to provide a break in class lecture to check student
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Chapter 14: Understanding Labor Relations and Collective Bargaining
understanding. Questions may be posed to students individually, in small groups, as quick
cooperative learning assignments or as large group discussions.
Diversity Topics – Unions and EEO on page 311 describes the various EEO labor laws
that affect unions in the areas of collective bargaining, membership, member disabilities,
and member retirement.
Ethical Issues in HRM – A Different Type of Wildcat Strike page 314 explains the
efforts of the Northwestern University Wildcat Varsity football team to earn the right to
join a union.
Tips For Success – What Managers Need to Know to Keep Out of Trouble page 317
gives suggestions for ways that managers can stay out of legal trouble when they suspect
employees are beginning the unionizing process.
Ethical Issues in HRM – Pressure Tactics page 320 explains how both unions and
employers manipulate circumstances to gain an advantage in the collective bargaining
process.
Contemporary Connection – Union Split Creates “Change To Win” on page 324
explores how unions have repositioned themselves to gain membership, particularly in
the service sector.
Making Concepts Relevant in Your Classroom
In addition to the activities provided in the lecture notes, these suggested activities help students
apply chapter 14 concepts:
Ask students whether they anticipate joining (or have already joined) a union. Discuss
the pros, cons and class perceptions of what it is like to work in a unionized environment.
Invite an officer of a local or campus union to speak to your class. Or, invite a faculty
member who specializes in labor relations, labor law or labor economics to speak about
current issues and trends.
Chapter Outline And Lecture Suggestions
Introduction Slide 3
The right to form and join unions was hard-fought and radically changed the way we
work in America.
The process of forming unions and collective-bargaining has evolved through laws and
court cases ever since.
Why Employees Join Unions Slide 4 – 5
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Chapter 14: Understanding Labor Relations and Collective Bargaining
Learning Outcome 1: Explain the reasons that workers join unions.
A union is an organization of workers, acting collectively, seeking to promote and protect
its mutual interests through collective bargaining.
Only about 12% of the private sector work force in the U.S. is unionized.
Higher Wages and Benefits Slide 6 – 7
The power and strength of numbers sometimes help unions obtain higher wages
and benefit packages for their members than employees can negotiate
individually.
Greater Job Security
Collective bargaining contracts limit management’s ability to arbitrarily hire,
promote, or fire.
Influence Over Work Rules
Unions represent workers and define channels for complaints and concerns
(grievance and arbitration processes).
Dissatisfaction with Management
A common factor as to why employees join a union is the behavior of
management, especially the first line supervisor.
Compulsory Membership Slide 8 – 11
Union security arrangements ensure union membership and income to the
union.
Union shops require that all employees hired into positions covered under the
collective-bargaining agreement must join the union.
Twenty-two states have right to work laws which prohibits agreements that
require employees to join a union as a condition of employment.
Agency shops require nonunion employees to pay an amount equal to union
fees and dues.
Supreme Court rulings and state laws require that these dues not be used for
political lobbying.
Open shops allow union membership to be totally voluntary.
Workers who join have a maintenance of membership clause that require
union membership for the duration of the contract.
Dues check off provisions require employers to withhold union dues from
members’ paychecks and to send these monies to the union.
Class Activity: Exhibit 14 – 1: Union Membership by Industry Classification on page
307 clearly illustrates the difference in union strength in a number of industries. If
students know a union member, ask if any of these categories apply.
Class Activity: Exhibit 14 – 2: States with Right to Work Laws on page 309
differentiates between states with laws that allow workers a choice whether to join a
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Chapter 14: Understanding Labor Relations and Collective Bargaining
union or not. They’re pretty evenly divided, but Right-to-Work laws are not equally
strong in every state. Have students guess which side the state in which you reside falls
on. Check the map and discuss the implications.
Laws That Created the Legal Framework for Unions Slide 12
Learning Outcome 2: Discuss the effects of the Wagner and the Taft–Hartley Acts on
labor–management relations.
Two major laws outline the rights and responsibilities for employee unions and
employers.
The Wagner Act
Also known as the National Labor Relations Act is a basic bill of rights for
unions.
Guarantees right to organize, bargain collectively, strike, and pursue activities
supporting their objectives.
National Labor Relations Board (NLRB) determines bargaining units, conducts
elections, and prevents or corrects unfair labor practices.
The Board has only remedial and no punitive powers.
Unfair labor practices include:
Interfering with an employee’s rights to join a union and to bargain
collectively.
Interfering with the formation or administration of any labor organization.
Discharging or discriminating against any employee who filed or gave
testimony under the act.
Refusing to bargain collectively with representatives chosen by the
employees.
The Taft-Hartley Act Slide 13
Also known as the Labor-Management Relations Act.
Specified unfair union labor practices including:
Coercing employees to join the union
Discriminating against an employee refused union membership.
Refusing to bargain collectively.
Engaging in illegal strikes and boycotts.
Charging excessive or discriminatory fees under shop contracts.
Obtaining compensation for services not performed.
Prohibited closed shops, secondary boycotts, and gave the president power to
issue a cooling-off period.
Created Federal Mediation and Conciliation Service (FMCS) to help labor and
management settle disputes.
Diversity Topics – Unions and EEO page 311 explains how equal employment laws
apply to unions.
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Chapter 14: Understanding Labor Relations and Collective Bargaining
Other Laws Affecting Labor-Management Relations Slide 15
Learning Outcome 3: Outline additional important laws and executive orders affecting
labor–management relations.
The Wagner and Taft-Hartley Acts are clearly the most important laws establishing the
rights of unions and employers, but several other laws and Executive Orders are
important in the evolution of labor relations.
The Railway Labor Act of 1926.
Gave workers in the transportation industry the right to bargain
collectively and allowed congressional and presidential intercession in the
event of an impasse.
FedEx is subject to this act because it was established as an airline,
making strikes much less likely than competitor UPS which was
established as a trucking company and is subject to the National Labor
Relations Act.
Landrum-Griffin Act of 1959 Slide 16
Also known as the Labor and Management Reporting and Disclosure Act.
Made union officials accountable for funds, elections and other business
and representational matters.
Required annual filing of information by unions and by individuals
employed by unions.
Required that all members be allowed to vote by secret ballot.
Executive Orders 10988 and 11491 Slide 17
Permitted federal employees to join unions and established the Federal
Labor Relations Council (FLRC).
Racketeer Influenced and Corrupt Organizations Act (RICO) of 1970:
Prohibits payment and loans in the form of bribery, kickbacks or extortion.
Used to oust labor officials with organized crime ties.
Civil Service Reform Act of 1978 Slide 18
Established the Federal Labor Relations Authority (FLRA) to carry out the
major functions originally performed by the FLRC.
Contains many provisions similar to the Wagner Act with two exceptions:
Wages and benefits are set by Congress and are not negotiable.
Prohibits negotiations over union security arrangements.
Class Activity: Ethical Issues in HRM – A Different Type of Wildcat Strike page 314
Do college athletes qualify as employees? If so, do they have the right to join a union? If
so, what might they put into a collective bargaining agreement? Ethical questions
examine the reasoning of the players and some sticky issues that could result if they are
successful. Students may have opinions on the topic. Ask if other groups would qualify
such as adjunct or part-time faculty or graduate students.
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Chapter 14: Understanding Labor Relations and Collective Bargaining
Unionizing Employees Slide 19
Learning Outcome 4: Outline the steps in the union-organizing process.
The process of forming a union is highly regulated and widely misunderstood.
Exhibit 14 – 3: Union-Organizing Process page 314 illustrates the steps that employees
must go through to certify a union.
Preparation Slide 20
Unions often contact employees of employers who may be a target.
Employees who are unhappy may initiate contact with union.
Either way, employers are rarely surprised by the Authorization Card Campaign
when it begins.
Signs to look for:
Increase in complaints or questions about policies.
Employee gatherings with an unusual mix of people.
Former employees or strangers hanging out at entrances or parking lots to
talk with employees.
Appearance of union literature in the workplace or parking lot.
Appearance of union advertisements on local media.
Authorization Card Campaign Slide 21
Employees contact a union about representation.
Unions provide educational and promotional information in a variety of ways
including a strong social media presence.
Employees wishing to have union representation sign authorization cards.
If 30 percent of employees who are potential members sign a card, an
election must be held.
Unions prefer 50 percent or more of workers sign cards to assure a
successful election.
Class Activity: Show students some of the social media presence of unions such as the
AFL-CIO, Teamsters, AFSCME on YouTube, Facebook, Twitter and Instagram among
others.
Petition the NLRB
If enough authorization cards are submitted, the union approaches the employer
for recognition. The employer may:
Voluntarily recognize union, a rare occurrence.
Refuse recognition, in which case the union petitions the NLRB
The NLRB
Verifies authorization cards.
Determines make up of bargaining unit.
Employer must submit a list of employees.
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Chapter 14: Understanding Labor Relations and Collective Bargaining
Supervisors are excluded, so management often tries to identify as many
employees as supervisors as possible.
NLRB Election Slide 22 – 23
Representation Certification (RC) election is held by secret ballot.
Unfair Labor Practices
Employers are prevented from taking many different actions that
discourage employees from exercising their right. The acronym TIPS
helps employers remember what they may not do:
Threaten – layoffs or closures.
Interrogate – employees to determine who union supporters are.
Promise – something in exchange for defeating the union.
Spy – on workers.
Employers may truthfully explain why they oppose the union.
Certification Slide 24
NLRB certifies union as bargaining unit of a majority of employees vote for
certification.
Members may conduct a representative decertification (RD) to remove union as a
representative, but it’s rare.
Management may also request a decertification election (RM), but that’s even
more rare.
Most contracts bar any decertification during the term of a contract.
Tips for Success: What Managers Need to Know to Stay Out of Trouble on page 317
Students often misunderstand what employers can and cannot do or say. This short
feature presents several very practical tips for employers to avoid legal trouble. Questions
explore student feelings about how they would feel if employees sought union
representation.
Collective Bargaining Slide 25 – 26
Learning Outcome 5: Describe the collective-bargaining process.
Collective bargaining is the negotiation, administration, and interpretation of a written
agreement between two parties, at least one of which represents a group that is acting
collectively, and covers a specific period of time.
Negotiating the Agreement Slide 27
Contracts must be acceptable to management, union representatives and union
membership.
Four issues appear consistently in all labor contracts. (The first three are
mandated by the Wagner Act)
Wages
Hours
Terms and conditions of employment
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Chapter 14: Understanding Labor Relations and Collective Bargaining
Grievance procedure
Negotiators for employers may be: Slide 28
Law firms
Consultants
HRM Department Industrial Relations
Negotiators for unions may be:
Officers of local union
Representative of international/national union
Preparing to Negotiate Slide 29
Preparation may begin as soon as current contract is agreed upon, but
typically starts 6 months to a year before contract expires.
Fact gathering includes:
Internal information:
Grievance and accident records
Employee performance reports
Overtime expenses
Data on transfers, turnover and absenteeism
Survey of union members for their preferences
External information:
Economic information
Recent agreements of other unions or employers.
Labor and unemployment information.
Negotiating at the Bargaining Table
Each side usually begins by publicly demanding more than they are
willing to accept.
More realistic assessments and compromises take place behind closed
doors.
After oral agreement, a written contract is submitted to the union for
ratification.
Exhibit 14 – 4 The Collective Bargaining Process Page 318 illustrates the steps
taken to reach agreement.
Failure to Reach Agreement Slide 30
Strikes versus Lockouts
Economic strikes occur when labor and management cannot reach
agreement before the current contract expires and union leadership
instructs its members not to work.
Wildcat strikes are unauthorized and illegal strikes that occur because
of worker dissatisfaction during an existing contract.
Lockouts occur when organizations deny unionized workers access to
their jobs during an impasse.
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Chapter 14: Understanding Labor Relations and Collective Bargaining
Impasse-Resolution Techniques Slide 31 -32
Used when labor and management cannot reach agreement.
Conciliation and mediation involve a third party (Federal Mediation
and Conciliation Service) to either keep negotiations going or make
non-binding settlement recommendations.
Fact-finding involves a neutral third-party who conducts a hearing
and recommends a non-binding settlement.
Interest arbitration involves a panel of one neutral, one management
and one union representative who hear testimony and render a decision
to settle a contract negotiation dispute.
oIt is used primarily in public-sector bargaining.
oDecision is binding only if there is unanimous agreement.
Class Activity: Ethical Issues in HRM – Pressure Tactics page 320 Both employers and
unions try to gain an advantage in the negotiation process. Whether it involves
influencing public opinion, causing financial problems or bringing in replacement
workers, it often works. But is it ethical? Ethical questions examine the ethics of legally
protecting or restricting replacement workers.
Contract Administration Slide 33
Learning Outcome 6: Explain important factors in contract administration.
Contract administration involves four stages:
Communicating Contract Provisions Slide 34
Provide information to all union members and managers.
Clearly explain contract language to all parties.
Implementing and Interpreting the Contract
Consistent application of provisions prevents uncertainty and suspicion.
Management rights are defined and explained.
Hire
Promote
Transfer
Discipline
Discharge
Determine work methods
Assign work
Define, classify and eliminate jobs
Reduce staff, relocate or close.
Grievance Process Slide 35 – 36
Formal process for resolving disagreements.
Grievance Procedures are outlined in the contract.
Typical grievance procedure involves:
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Chapter 14: Understanding Labor Relations and Collective Bargaining
1. Employee attempts to resolve the grievance with the union steward and
the supervisor.
2. Individuals from the organization’s industrial relations department and the
chief union steward usually get involved.
3. Complaint passes to the facility’s manager, who typically discusses it with
the union grievance committee.
4. Organization senior management and a representative from the national
union get involved.
5. Arbitration—called grievance (rights) arbitration.
Exhibit 14 – 5 A Sample Grievance Procedure page 322 illustrates the grievance
process in flowchart format.
Monitoring activities during the contract period to keep track of how effective the
current contract is and any need for changes.
Critical Issues for Unions Today Slide 37 – 38
Learning Outcome 7: List important current issues facing unions.
Union Membership: Where Have the Members Gone?
Union membership in the U.S. reached a high of 36% in the early 1940s, but there
has been a steady decline since then.
Reasons include: Growing middle-class; diminished financial resources of
unions; anti-union pressures resulting from increased competitiveness; layoffs of
large numbers of union workers; hiring of replacement workers for strikers.
Unions are changing some of their organizing tactics and may currently be
gaining public support. They also are placing more emphasis on the service
sector.
Labor-Management Cooperation Slide 39
Some unions recognize that they can gain more by cooperating with management
rather than fighting.
The Electromation Inc. case illustrates the potential legal difficulties of
cooperative efforts: The NLRB ruled that employee committees were an unfair
labor practice.
Employee involvement programs are legal if management does not dominate the
program; employees choose members, issues to deal with, and members can meet
apart from management.
Public-Sector Unionization Slide 40
Membership of government workers in unions has increased to nearly 36%
Public sector labor relations differ from private sector labor relations, in that,
there may be more restrictions on what is negotiable and a legislative body must
approve any negotiated contract.
Sunshine laws in some states mandate that labor-management negotiations be
open to the public.
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Chapter 14: Understanding Labor Relations and Collective Bargaining
Contemporary Connection: Union Split Creates “Change to Win” page 324 Focuses
on union emphasis on gaining membership from service workers. Questions ask students
about the possibility of a resurgence in union membership.
Exhibit 14-6 Trends in Union Membership page 323 illustrates the decline of union
membership.
International Labor Relations Slide 41
Learning Outcome 8: Explain how the role of unions differs in a global environment.
Labor relations practices, and the percent of workers unionized, differ in every country.
Unions outside of the United States have long histories and were primarily based on
“class struggle” which resulted in labor as a political party.
The governments of each country have their own view of its role in labor relations, so the
multinational corporate industrial relations office must be familiar with the separate laws
of each.
Differing Perspectives Toward Labor Relations
Countries differ in their labor relations histories, government involvement, and
public acceptance of labor unions.
The labor relations function for international companies is more likely to be
centralized with the parent company when domestic sales are larger than those
overseas.
The European Union Slide 42 – 43
Brings together a dozen or more labor relations systems which are being
integrated as part of the effort to unify Europe and facilitate trade.
Countries wishing to do business in Europe must keep up with changing labor
legislation, such as that being agreed upon concerning workers’ rights.
Exhibit 14 – 7 Unionization Around the World page 325 contrasts union membership in
countries worldwide.
HRM Workshop
The HRM Workshop includes several different types of activities requiring students to apply
chapter concepts aligned with the learning objectives. Suggested answers are provided.
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