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Vesting Requirements—Participants in retirement plans must, by law, receive some benefits after
a reasonable length of employment. These plans must be adequately funded and must be insured
against possible failure. All full-time employees over 25 years of age, with more than one year of
work tenure are eligible to participate in employee benefit plans. Mandatory vesting is
established by the Act. Mandatory vesting means that an employee must become the sole owner
of his or her retirement proceeds at a certain point in time. This may be after 5 years of
employment, after 15 years of employment, or if the age plus the years of service of the
employee total 45 or more.
Add. Case: Hazen Paper v. Biggins (S. Ct., 1993)--In 1986, after nine-plus years of service,
and a few weeks before his pension was to vest, Biggins was fired. He claimed Hazen fired him
in order to avoid paying pension benefits that vested at 10 years. Biggins alleged that Hazen’s
actions violated the ADEA and ERISA. The lower courts held for Biggins on his claims.
Decision: The Court addressed if an employer violated the ADEA by acting on the basis of a
factor, such as an employee’s pension status or seniority, that may be correlated with age.
Employees do not suffer disparate treatment under the ADEA when the factor motivating the
Add. Info.: Bankruptcy does not eliminate ERISA pension obligations. As the 5th circuit noted
(In re ESCO v. Pritchard, 33 F.3d 509), liquidation of an employer does not eliminate the estate’s
responsibility to former employees; the trustee is responsible for carrying out the employer’s
obligations with regard to ERISA-qualified pension plans as best possible.
MAJOR LABOR RELATIONS ACTS—“Labor law” generally means the law regarding
unions; “employment law” is more expansive, regarding non-union employment issues. The
federal labor code is a composite of several statutes that, together, regulate labor-management
relations. These statutes include: the Norris-LaGuardia Act of 1932, the Wagner Act of 1935, the
Taft-Hartley Act of 1947, and the Landrum-Griffin Act of 1959. Union representation in the
private sector has shrunk to less than 10 percent of the workforce; public-sector representation
has been the growth area.
Norris-LaGuardia Act—Passed in 1932, this was the first major legislation regarding unions.
The goal was to provide workers with freedom of association, organization, and designation of
representation, in relation to negotiation of terms of employment. Before the Act, the federal
courts played an active, though inconsistent, role in labor-management relations. Some courts
used the Sherman Act to prohibit union activities such as strikes and boycotts (holding these
actions to be illegal restraints of trade).
Injunctions Prohibited—The Act forbids courts from issuing injunction in non-violent labor
disputes. Strikes, participation in a union and picketing may not be subject to an injunction. This
gave unions greater freedom to use economic force as a bargaining chip in negotiations with
employers. Also prohibited are efforts to get employees to sign yellow dog contracts, when
employees promise not to join a union.
Add. Info.: The 1982 S. Ct. case, Jacksonville Bulk Terminals, illustrates the broad reach of the
Act. Workers at a port refused to load ships bound for the USSR, in protest over the Soviet
invasion of Afghanistan. Shippers claimed the dispute was a foreign policy, not a labor, dispute
and so not protected by the Act. The Court held for the workers; the Act prohibits court
involvement in “any labor dispute.” Employers had to negotiate with the union. The procedures
under a collective bargaining agreement must be followed, even when the issue seems far
fetched.
The Wagner Act of 1935—Known as the Natl. Labor Relations Act (NLRA), the goal was to
provide employees with the right to organize, form and join unions, bargain collectively through
these unions, and unions, and engage in concerted activities to support their bargaining positions.
The Act created the National Labor Relations Board (NLRB) to monitor unfair labor practices.
Unfair labor practices are acts that impair the goals of the Act. Examples include: employer
interference with those rights guaranteed employees under the Act, employer-formed unions, and
discrimination by employers based on union membership or activity.
Add. Case: Electromation v. NLRB (7th Cir., 1994)--Electromation had 200 non-union
employees and was in financial trouble. The president met with 8 employees to discuss work
issues. The meeting was helpful, so the company set up committees staffed on a volunteer basis
to address: 1) absenteeism and infractions; 2) communications; 3) pay raises; and 4) attendance
bonus. Committees met on company timet. The Teamsters demanded recognition as the
bargaining agent for the employees. The company then stopped the committee meetings, but told
the employees they could meet if they so desired, but without management attendance. The
employees voted against union representation. The NLRB held that the company violated the
NLRA because the committees constituted labor organizations controlled by the company.
Electromation appealed.
Decision: Affirmed. Under the NLRA, the committees were labor organizations unlawfully
dominated by the employer. The committees were created in response to employee complaints;
The Taft-Hartley Act of 1947—Known as the Labor-Management Relations Act, this Act
represents a shift in federal policy from active encouragement of unionization to a greater
regulation of unionization. The Act specifies certain union activity that may be characterized as
unfair labor practices: coercion of employees, refusing to bargain in good faith, secondary
boycotts, charging excessive union dues and featherbedding (charging employers for work not
performed).
The Landrum-Griffin Act of 1959—Known as the Labor-Management Reporting and
Disclosure Act (LMRDA), this Act provides for more detailed regulation of the internal affair of
unions, to help protect union members from improper actions by union leaders.
Monitoring Leadership—Unions must provide reports of financial status to their members
detailing how union dues are spent. Betrayals of trust by union officials may lead to federal
penalties. Penalties were established to discourage employer wrongdoing, such as bribing union
officials.
Add. Case: U.S. v. DeFries (D.C. Cir., 1995)--Several union officials were indicted for crimes
relating to manipulation of union elections and for misuse of union offices. Court dismissed on
the grounds that the theft of ballots, and the interference with union members’ rights to the
honest conduct of union affairs, did not constitute significant deprivations of union property.
Decision: Reversed. Union ballots are property within the meaning of federal labor law and are
due protection from abuse. The fact that the ballots, as pieces of paper, have almost no value,
Union Member Bill of Rights— Landrum-Griffin includes a union member’s Bill of Rights for
more democratic procedures in union operations, for nominations and elections of officers, and
participation in union business. Dues and other fees are established by majority vote of members.
Discipline actions must follow certain procedural guidelines. This Act was involved in the 1989
case, Sheet Metal Workers’ International Assn. v. Lynn, in which a union leader was removed
from office after criticizing another union official. This removal in retaliation for remarks made
by the union leader violated his free speech rights, which are guaranteed by the Act.
Add. Case: Pope v. Office and Professional Employees Intl. Union (6th Cir., 1996)--After 28
years, Pope became a business representative for the OPEIU. He took care of business in Local
268. He learned that the union was run by a group that rigged elections, did not respond to
grievances, and had dubious finances. Pope raised these issues with the Local board and was
told to mind his business. He recruited some members to run for office and was a candidate. The
board changed the rules to say that no full-time employee of the union (Pope) could run for
office. Afraid of a member revolt, the Local board requested the international union put the
Local under trusteeship, so it sent a representative to run the Local. The trustee told Pope he
should not run for office. The union conducted a hearing into Pope’s “improper” activities. He
was told to resign or he would never get another job in the labor movement. He refused, was
fired, and sued the union, contending the trusteeship was improper. A jury awarded him
$100,000 in compensatory damages and $100,000 punitive damages. OPEIU appealed.
Decision: Affirmed. Evidence was that Pope was discharged by a deliberate attempt to suppress
dissent in violation of union membership rights. The LMRDA protects members whether they are
THE NATIONAL LABOR RELATIONS BOARD—The Board administers the NLRA. There
are five Board members appointed by the President, a General Counsel, administrative law
judges, and various regional personnel. The General Counsel oversees the investigation and
prosecution of unfair labor practice charges. The NLRB has jurisdiction over labor disputes that
affect interstate commerce. Local businesses are exempted, as are public sector employees,
managers, independent contractors, railroad and airline employees, domestic servants, and
agricultural employees, although many are covered by other, similar, statutes, such as the
Railway Labor Act.
Unfair Labor Practice Complaints—The NLRB handles over 50,000 cases a year, most
involving alleged unfair labor practices. Most charges are against employers. Cases are initiated
by private parties (not the government). Initially, charges are investigated through regional
offices. If an allegation has merit, a regional director files a complaint, which will be heard by an
administrative law judge. Most allegations are dismissed or settled. Most complaints that go
forward are settled in the pre-hearing stage.
Hearing Complaints—When an ALJ hears complaints, he or she issues a decision and order. The
order sets out the appropriate remedy or recommends the case be dismissed. An unsatisfied party
may file an exception to the decision. Exceptions are heard by a panel of three NLRB members,
or by all five members in important cases. No evidence or witnesses are presented, so exceptions
are treated as cases are treated by appellate courts. Objections to board decisions are taken to the
U.S. Court of Appeals. On rare occasions a case may be reviewed by the Supreme Court.
Pivotal Role of NLRB—The Supreme Court has noted that the NLRA gives the NLRB
substantial discretion; its findings are not to be reversed unless arbitrary, capricious, or
manifestly contrary to law; so the NLRB is powerful in labor law issues. Because the agency is
strong, as the political tide turns, the NLRB swings from “pro-management” (Reagan
administration) to “pro-union” (Clinton) to “pro-management” (Bush).
Remedies—When an unfair labor practice has occurred, the NLRB may impose a variety of
remedies, including reinstatement of dismissed workers, back wage payment, and an order for
the employer to bargain with the union.
Add. Info: Examples of Unfair Labor Cases: Tens of thousands of complaints are filed each
year; quite a few make it to the Courts of Appeals for review. Examples:
DC Circuit found it was unfair labor practice when employer exercised pervasive influence in
getting employee signatures for a union decertification petition--managers asked employees
(repeatedly) to sign the petition and threats were implied. (22 F.3d 1114)
3rd Circuit found it was unfair labor practice for employer to assert that a union no longer
represented its employees and to refuse to deal with the union. (36 F.3d 1240)
7th Circuit found it was unfair labor practice for employer to interfere with employees’ right to
consider union organization by threatening to close some operations and to fire some employees
and to grant some employees pay raises to head off unionization. (25 F.3d 473)
9th Circuit found it was unfair labor practice for employer to eavesdrop on conversations among
employees discussing unionization and to eject a union organizer from the premises when the
organizer was located in a place he was authorized to be. (71 F.3d 1434)
DC Circuit found it was unfair labor practice for employer to refuse to bargain with a union that
it had previously volunteered to recognize as the bargaining agent for the employees. (28 F.3d
1243)
UNIONIZATION—The NLRA protects workers who wish to unionize. The Board determines
when workers wish to be represented by a union. The Board also promulgates rules governing
unions and employers behavior, so that the rights of employee’s to self-organization can be
exercised effectively.
Unionization Process—Unionization begins when interested workers contact a union for
assistance, or when a union contacts workers to determine if there is interest in unionization. If
interest exists, the union organizes a drive to rally support and educate workers about the
function of a union.
Add. Case: Helmsley-Spear v. Fishman (Ct. App., NY, 2008)—Helmsley-Spear (HS) manages
the Empire State Building (ESB). It hired Copstat Security, a private security firm, to provide
security for ESB. A union tried to unionize Copstat employees. On 18 days over 3 months, union
members assembled outside the ESB and distributed leaflets while other members drummed on a
metal pot, tin can, or other container. HS and owners of nearby businesses brought a nuisance
suit against the union, seeking an order enjoining it from engaging in drumming or other
noise-making activities. The trial court granted plaintiffs’ request and issued a preliminary
injunction against the union finding that the noise caused stress and disrupted business. The
appeals court reversed, finding that the noise making was protected as a part of the leaflet
distribution and was allowed by the National Labor Relations Act (NLRA). That federal law
preempted suit for nuisance. Plaintiffs appealed.
Decision: Reversed. Under the NLRA, the federal courts have been careful to avoid interfering
with a state’s right to keep order within its borders. The states, similarly, respect the federal
Add. Case: NLRB v. Kentucky River Community Care (S. Ct., 2001)--A union petitioned the
NLRB to represent employees at a residential care facility. The facility objected to including RNs
in the proposed unit. The facility argued that the nurses are supervisors under the NLRA and,
therefore, excluded from inclusion. The NLRB held that the burden of proving that nurses are
supervisors was on the facility and that the facility had not demonstrated the nurses are
supervisors, so they were included in the bargaining unit. The facility appealed to the court of
appeals, which upheld the NLRB’s decision. The facility appealed to the Supreme Court.
Decision: Affirmed. The NLRA does not expressly allocate the burden of proving supervisory
status, but the NLRB has consistently placed the burden on the party claiming that an employee
Add. Case: Hartman Bros. Heating & Air v. NLRB (7th Cir., 2002)--Salting is when a union
inserts an organizer into a workforce, hoping the salt will be able to organize the workers. Salts
do not intend to stay with the company after the organizing effort. Starnes, a salt sent into a
heating and A/C company, was fired when the company discovered he was a salt. The union
complained to the NLRB, which ordered the company to stop discriminating against salts and
ordered Starnes reinstated with back pay. The company appealed, contending Starnes had
provided false information about his history on his job application, which should be grounds for
termination.
Decision: Affirmed. Under the National Labor Relations Act, an employer may not discriminate
against salts. The fact that Starnes lied about his background to get a job was not material so
Representation Elections—A union collects authorization cards requesting an election from 30%
or more of employees in a company before a representation election can be requested. The union
gives the cards to the NLRB, which determines if an election will take place. Before the election,
the union will lobby employees, telling them about the benefits of unionization. Management
may, within constraints, lobby employees to reject the union. A union will be selected as the
collective bargaining agent of a group of employees if a majority vote for the union. In recent
years unions have won fewer than 50% of representation elections.
Union Certification—NLRB agents supervise elections, and the board certifies the results. If
more than 50% of employees vote in favor of the union, it is certified as the exclusive bargaining
agent for all employees (even those who voted against the union). The union then must be
recognized by the employer. Employers or workers may call for new elections to decertify
unions. If more than 50% of employees vote to remove the union, it is decertified.
Add. Case: NLRB v. Gormac Custom Mftr. (6th Cir., 1999)--The NLRB declared the union a
winner of an election in which 19 votes were cast for it out of 45 eligible voters. The employer
refused to bargain, claiming the union engaged in unfair labor practices. Three hours before the
election, the union distributed a flyer listing the names of 31 employees who were committed to
voting for the union. But some employees were not committed. The NLRB held this flyer was not
relevant to the outcome of the election and certified the union. Employer appealed.
Decision: Reversed. The employer should have been granted a hearing on its objections to the
election so the issue of union misrepresentation could have been reviewed. The NLRB is charged
with upholding fundamentally fair procedures. It failed to do so here. When deception is
Add. Info: Employer Responses to Union Organizing: Employers may not interfere with the
rights of employees to organize, but employers may protect property and on-the-job
performance. Although the interests of employees in gaining access to union communications are
protected, courts will not permit union activists who are non-employees access to the property of
a company they are trying to unionize, without owner permission.
Add. Case: Lechmere v. NLRB (S. Ct., 1992)--The AFL-CIO wanted to unionize employees of
at a store. Organizers put handbills on cars in the employee parking lot. A manager told the
organizers to leave and removed the handbills. It happened twice more. Union organizers stood
at public entrances and passed out union materials. They copied license plate numbers of
employee vehicles, tracked down names and addresses through the DMV, and mailed material to
employees. The union filed a complaint against the store, alleging unfair labor practices. The
NLRB ruled that the union had the right to go into the parking lot. The Court of Appeals
affirmed. The store appealed.
Decision: Reversed. There are few exceptions to the rule that employers do not have to allow
union organizers on company property. The exception is when a plant’s location or employee
living quarters are such that employees are “beyond the reach of reasonable union efforts to
Add. Case: NLRB v. Aluminum Casting & Engineering (7th Cir., 2000)--Until 1988, the
workers at ACE were represented by a union. When no collective bargaining agreement was
reached, there was no union until 1994 when another union began an organizing drive. Attempts
to hold a certifying election have been subject to years of wrangling between the union and ACE.
The NLRB found ACE to have committed unfair labor practices and ordered ACE to take steps to
remedy the practices. ACE appealed.
Decision: Enforcement granted in part; remanded in part. The fact that ACE granted
across-the-board wage increases to try to fend-off unionization, but then said it could not afford
a raise due to the unionization threat was unfair labor practice. Employers cannot change their
wage increase practice in direct response to the threat of unionization. NLRB may order the
Add. Case: NLRB v. Town & Country Electric (S. Ct., 1995)--A non-union contractor was
hiring electricians. It refused to interview qualified applicants who where union members,
including applicants who were union organizers. The union filed unfair labor practice charge
with the NLRB, which determined that the applicants were “employees” covered by the NLRA,
even if they were paid union organizers.
Decision: The Supreme Court held (unanimously) that the workers were “employees” protected
by the NLRA, as the statute intends to cover job applicants. Even though some applicants were
Add. Info: Employer Communications: The NLRA restricts what employers may say during
union election campaigns. Employers may not threaten employees to dissuade them from voting
for the union. They may not promise employees benefits for rejecting unionization. Employers
may, however, make remarks based on credible economic estimates to the effect that unionization
may lead to a loss of profits and, therefore, a loss of jobs. Employers may not close a facility that
votes to unionize as a retaliatory measure. Plants may be closed if unionization leads to
unprofitability. For example, during a union representation campaign, an employer made
speeches and sent letter to employees stating that the union might make excessive demands on
the company. The employer said that companies forced to meet excessive demands sometimes
went out of business or were forced to reduce their labor force. The NLRB held these statements
were unfair labor practices because they represented threats of reprisals if unionization
occurred. Reversing, the court held than an employer’s prediction of adverse economic
consequences from unionization did not, without more, constitute an illegal threat of reprisal or
unfair labor practice. The employer was not coercing his employees by predicting that
unionization might lead to increased work loads and reduced job opportunities. The NLRB’s
request to censure the employer was rejected.
International Perspective: Labor Law in China
The PRC adopted three new labor laws in 2007. The Employment Contracts Law favors
long-term relationships. It is to provide greater security and requires severance pay and requires
“just cause” for termination. The focus of unions is to be on assisting workers in negotiations of
individual contracts, not collective bargaining. The Employment Promotion Law restricts
discrimination in employment based on ethnicity, gender, religion and disease. The Labor
Dispute Mediation and Arbitration Law gives greater authority to labor arbitrators to impose
binding decisions. The effectiveness of implementation remains to be seen.
Agency Shops—Agency shops, which are legal, are worksites were a majority of workers have
voted to be represented by a union. Non-union workers in agency shops pay agency fees, which
cover the costs of union-provided services. Agency fees are usually only a bit less than dues paid
by union members. These fees are not supposed be used to support certain political activities
unrelated to the union’s duties as a bargaining agent.
Political Action—Agency fees, which are usually about the same as union dues, are used to
support assorted political activities of unions. The Supreme Court has consistently stricken the
practice. In the 1986 Chicago Teachers Union case, the court stated four requirements for agency
fees. There must be: 1) an adequate explanation of the basis of the fees; 2) a reasonably prompt
explanation of the fee basis; 3) a reasonably prompt opportunity to challenge the amount of the
fee before an impartial decision maker; and 4) an escrow for the amounts reasonably in dispute
while challenges are ongoing. In the Beck case the court reiterated this point. The Supreme Court
has generally been ignored on this matter, except on a case-by-case basis.
Add. Case: Comm. Workers of America v. Beck (S. Ct., 1987)--AT&T employees were
represented by the CWA. Employees who were not union members paid agency fees equal to
union dues. Failure to pay fees was grounds for dismissal. Beck challenged the union’s use of
these fees for purposes other than to cover costs of collective bargaining. He challenged the use
of agency fees for political, social, and charitable activities. The district and appellate courts
found for Beck, who showed that only 21% of agency fees were spent on collective bargaining
matters. Most went for political action. The union appealed.
Decision: Affirmed. Taft-Hartley permits agency shops; non-union employees pay the cost of
union representation. The Act permits collection of union dues and agency fees from represented
employees. The Court rejected the argument that because Congress put few limits on the
Add. Case: Lehnert v. Ferris Faculty Assn. (S. Ct., 1991) Background: Ferris State College had
a collective bargaining agreement that contained agency shop provisions, with the Ferris
Faculty Association, an affiliate of the NEA. Some faculty members objected that they paid
agency fees equal to the union dues paid by members of the Faculty Association. Most of the fees
went to associations for use in political activities, and not for local collective bargaining costs.
Lehnert sued, alleging this use of his agency fees for political purposes was unconstitutional.
Decision: Non-union members may be charged agency fees that cover a pro rata share of the
costs of collective bargaining incurred by the state and national associations, even though these
costs are not directly related to the local bargaining unit that collects the fees. Fees may cover
expenditures by the national association for its programs and expenditures by the state
Right-to-Work Laws—The Taft-Hartley Act has a provision that allows states to pass
right-to-work laws. These laws prohibit agency shops in individual states. If employees are
represented by a union at a particular company, the union cannot force non-union members to
pay agency fees. This lowers the incentives of unions to unionize businesses in right-to-work
states. Twenty-one Southern and Western states have right-to-work laws.
Issue Spotter: Moves to Help Keep Unions Out
To stay within the NLRA, an employer cannot punish workers who seek to unionize. That is a
clear violation of their rights. However, the company has the right to prohibit union organizers or
materials from being on company property. It can forbid the distribution of union materials in
company mail boxes or e-mail accounts–so long as this is part of a consistent company policy to
keep company property free of non-company material. If the only thing prohibited is
union-related material, the company can be looking for trouble. So be consistent. The company
cannot state that it is completely opposed to unionization as that would be an implied threat
against the rights of workers to potentially engage in collective bargaining. Rather, if it looks like
employee interest is picking up in unionization, the company better come to understand what
specific issues are motivating the workers and begin to address that in a positive manner, rather
than alienating more workers with veiled threats.
COLLECTIVE BARGAINING—The process by which the employer and the union negotiate
a contract that sets forth the terms and conditions of employment for a specific period of time.
After negotiating a contract, the contract must be administered to insure its terms are met. This
on-going administration is part of the collective bargaining process.
Good Faith Bargaining—The NLRA requires parties to collective bargaining to negotiate in
good faith. This is a subjective standard that may be difficult to establish. Elements of good faith
include: meeting and presenting proposals, explaining bargaining positions, and listening to and
considering the proposals of others. The position of the Supreme Court is that, in the absence of
bad faith, it is best for the courts to stay out of the bargaining process. An example of bad faith
bargaining is in the 1962 case, NLRB v. Katz. An employer unilaterally changed the terms of a
labor contract it had with a union; such actions are bad faith and may lead to NLRB censure.
Add. Info: The general rules of collective bargaining include:
1) Both parties must bargain in good faith; they may not refuse to negotiate.
2) The time and place for bargaining must be reasonable.
3) Evidence of bargaining is asking substantive questions and carrying on a dialogue.
4) Employers must make proposals.
5) Employers must substantiate claims that wage demands cannot be met due to financial
problems.
6) Employers may not insist on bargaining over internal union discipline or to require a secret
ballot by union members to consider the company’s offer.
7) Until an impasse is reached, the expired contract remains in force; changes may not be made.
8) When a deal is reached, it is an unfair labor practice to refuse to sign the agreement.
Add. Case: Duffy Tool & Stamping v. NLRB (7th Cir., 2000)--A union won a certification
campaign and began collective bargaining. During more than a year of negotiations, the
employer proposed an attendance policy more strict than its previous policy. The union opposed
that. The employed declared an impasse and put the policy in effect and fired some workers for
being in violation of it. The NLRB held that while the parties were deadlocked, they were not at
an overall impasse so the employer could not make changes in its labor policies. The employer
appealed.
Decision: Affirmed. An employer cannot unilaterally implement a policy after declaring an
impasse in bargaining. The parties were deadlocked on various issues, but there was no overall
