Economy & Business

No Workplace Cooperation Allowed

Volkswagen assembly line in Chattanooga, Tenn., 2011. (Mark Elias/Getty)
When Volkswagen tried to give workers a voice in the management of its Tennesse plant, the government said: Not without a union.

Imagine that your employer wants you and your co-workers to have more input into key workplace decisions, such as work hours, benefits, and job security. It therefore decides to create a committee with elected employee representatives who will meet with management to address workplace concerns and vote on company policies. One would think the American system of free enterprise, free speech, and free association would welcome this committee.

But as the U.S. Chamber of Commerce explained in a report published last month, such arrangements are effectively prohibited under federal labor law. The 1935 Wagner Act forbids employees from collectively negotiating the terms of their employment with management unless they are represented by an independent trade union.

Volkswagen discovered this the hard way when it tried to create a non-union employee-participation program at its production plant in Chattanooga, Tenn., modeled after European “works councils” already in place at its German facilities. VW believed that providing employees with more say in company decisions would promote a collaborative culture and improve labor relations.

The company has not been rewarded for these efforts. Four years after the Chattanooga plant opened in 2011, VW finds itself no closer to having a works council. Instead, it is locked in a dispute over employee representation with the United Auto Workers labor union before the National Labor Relations Board — the federal agency that oversees the nation’s labor laws.

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How did this happen to a well-intentioned employer? In short, federal labor law provides managers and employees with deeply entrenched incentives to treat each other as adversaries rather than as colleagues committed to a common enterprise.

This adversarial model has its roots in the New Deal era, where progressives were concerned by the threat posed by “company unions” — management-controlled associations perceived as tools to prevent the industrial working class from organizing. In response, the Wagner Act gave unions unique federal protections, including the exclusive right to represent employees, the right to strike, and recourse to a federal agency to resolve disagreements between labor and management.

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Like many New Deal–era statutes, the Wagner Act has collected enough moss over time to merit review and reform. Today’s work force is more mobile, specialized, and highly skilled than it was in the industrial era, and global competition for low-cost labor is much more intense. Accordingly, labor unions have become less appealing to employees, due to their high costs and rigid, seniority-based work rules that discourage employee mobility (both upward and outward).

Hence, as a practical matter, the alternative in most workplaces to a “works council” or similar staff association is not a trade union. Rather, it is self-help or (perhaps more often) non-engagement. Despite this reality, the Wagner Act and its pro-union model continue to exert gravitational pull on the roughly 93 percent of private-sector workplaces that are non-union by discouraging experimentation with other forms of employee associations.

#share#Consider how these rules played out at Volkswagen, which operates in the heavily unionized automobile industry. When the UAW politely informed Volkswagen that it could not form a “works council” without union support, VW graciously invited the union to organize its employees as a means to its desired end. But, concerned that the costs of unionization would lead to loss of work, employees narrowly rejected the union following a heated and highly publicized election campaign in February 2014.

Undaunted, VW creatively altered its policies to provide employee groups with less than majority support certain informal rights to meet with management and discuss specific topics. (This, too, broke new ground, as the Wagner Act does not contemplate unions with mere plurality support.) The UAW embraced the chance to have a seat at the table in hopes of capturing enough converts to win a second vote.

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Meanwhile, employees who opposed the UAW’s growing influence formed their own separate association. But in order to legally compete with the UAW for the right to represent Chattanooga employees, this group (the American Council of Employees) felt obligated to file as a labor organization under federal and state law — effectively creating an anti-union union. UAW sympathizers have since attempted to delegitimize ACE as a “sham” union.

Federal labor law is fostering adversity between rent-seeking unions and management, mediated by a pro-union federal bureaucracy.

Faced with genuine competition, it was now the UAW’s turn to get creative. Enter the NLRB. Under President Obama, this agency has doubled down repeatedly on the adversarial model of labor relations. In its eagerness to prop up unions’ declining fortunes, the NLRB has jettisoned the traditional presumption that unions can only represent employees “wall to wall” in a single facility. Instead, the NLRB now allows unions to represent bargaining units consisting of small segments of an employer’s work force, such as the cosmetics and fragrance workers at a department store.

These “micro unions” drive a wedge between employees in a workplace, as people with similar job duties working in close proximity earn different salaries and operate under different work rules based on whether or not they are unionized. Unions hope to benefit from the resulting discord between employees and management.

Seizing on the “micro union” concept, the UAW petitioned the NLRB last month to hold an election consisting only of skilled-trade employees, which the UAW believes to be pro-union. (This sharp tactic revealed that the union is not, after all, committed to VW’s “works council” concept but is instead merely seeking a foothold at the company to further its campaign to unionize all Southern car-manufacturing plants.) Fearing a fractured workforce, Volkswagen opposed this new maneuver, but the NLRB predictably sided with the UAW and scheduled the “micro union” election for last week. The UAW won, capturing as new members a mere 160 or so of the plant’s 1,450 manufacturing employees.

#related#In the end, federal labor law is operating in Chattanooga the way it was designed to — by fostering adversity between rent-seeking unions and management, mediated by a pro-union federal bureaucracy. As a result, both the company and its employees have suffered.

It does not need to be this way. In a country that values free speech and free association, employees and management should not have to endure Rube Goldberg machinations to meet and resolve issues of critical concern to both parties. Rather, they should have the flexibility to experiment with alternatives to traditional high-cost trade unions. Modern staff associations bear little resemblance to old-school company unions, and Congress should act to exempt voluntary workplace associations from the Wagner Act’s prohibitions. (If it does not, courts should carefully scrutinize the serious First Amendment issues raised by excluding any such voluntary associations under current law.)

This change in policy will not in and of itself create the conditions necessary for a more collaborative workplace. But it would be a modest first step in that direction. Unfortunately, even this small step will have to await an administration that is less ideologically committed to the adversarial model of labor relations embraced by many unions and enshrined in current law.

— Thomas M. Johnson, Jr. is an attorney in Washington, D.C. His practice includes constitutional, labor and employment, and administrative law. The opinions expressed herein are his own.

 

Thomas M. Johnson Jr. — Thomas M. Johnson, Jr. is an attorney for the federal government in Washington, D.C.  The thoughts expressed herein are his own. He can be reached on Twitter at @TomMJohnsonJr.

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