Proposed Legislation Would Rein In a Left-Wing NLRB

by Peter Schaumber

Legislation recently introduced by Rep. Tim Scott (R., S.C.), the Protecting Jobs from Government Interference Act, is an apt congressional response to an agency that has lost any pretense of neutrality on the question of unionization and that is chilling business investment in the United States by trying to dictate to an American manufacturer where it can produce additional aircraft to meet surging world demand.

The proposed legislation does not change the law as to what is and what is not a violation under the National Labor Relations Act. It also leaves intact severe consequences the NLRB can order to remedy a violation and protect workers. If, for example, the employer relocates to a non-union facility solely to avoid its employees’ decision to unionize, what is known as the “runaway shop,” the board can order the employer to re-hire its former employees and pay their relocation expenses, award the employees back pay until they have found substantially equivalent work, and, depending on the circumstances, grant the union access to the new facility to assist it in organizing the employer’s new employees.

These are not insignificant remedies and they would cause any employer to think twice before violating the law.

The legislation, however, removes the board’s authority that it has abused in the Boeing case — its ability to order an employer to restore the status quo ante, the situation that existed before it transferred unit work or relocated to a new facility. Under current law, if an employer does either for legitimate economic reasons, the board will not find a violation if the employer is able to show that it would have made the same decision without regard to the presence of the union.

It is this decades-old law that the NLRB’s acting general counsel wants to ignore to achieve for Big Labor a long-sought-after goal: the power to control management’s capital allocation decisions—where a business can open, close, or move its operations. Organized labor knows that if it can prevent an employer like Boeing from even expanding its productive capacity to a new non-union facility in another state because one of its stated reasons for doing so was to avoid the economic consequences of union-encouraged strikes, organized labor will control some fundamental economic decisions of American business — not management. But business decisions such as transfers and relocations do not implicate “terms and conditions of employment” as that term was used by Congress in the NLRA. In our free-enterprise system, they “lie at the core of entrepreneurial control”; for that reason, and with limited exceptions, the Supreme Court has held that these decisions are beyond the board’s regulatory reach.

Unquestionably, the Boeing complaint has little merit. Consider the following: An employer can lawfully tell its employees that if they go out on strike it will hire permanent replacements without transforming the employer’s lawful decision to hire permanent replacements into an unlawful one. Similarly, an employer, such as Boeing, can truthfully explain that one of its reasons for opening a second production line in South Carolina was to avoid the economic consequences of future strikes without its statement transforming a perfectly lawful entrepreneurial decision into an unlawful one.

Craig Becker, who was recess-appointed to the board by President Obama after his nomination was filibustered by the Senate for views considered outside the mainstream, would understand this and the unprecedented reach of agency’s action. Although Becker has stated that the “mobility of capital . . . threatens to eviscerate labor’s collective legal rights,” he readily acknowledges that the courts have consistently held that “management’s asserted authority over its investment decisions and the organization of [its] enterprise” are “immune from popular control.”

The political contributions of organized labor to the Democratic party have caused many, but not all, Democrats to reactively support any position organized labor takes without regard to its merits. There is little likelihood that future Democrat appointees to the NLRB — hand-picked by organized labor to serve its interests — will be any less militant in their partisan support of Big Labor than those currently in control. Without regard to the outcome of the Boeing complaint, such union partisans will be undeterred and will try again. Perhaps next time, the agency will target an employer smaller than Boeing, one that lacks the financial resources to defend itself and, in so doing, the legitimate interests of American business.

— Peter Schaumber is a former chairman of the National Labor Relations Board.

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