2. Labor Relations
Chapter 12

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Learning Objectives
Explain the role of labor unions and contrast the perspectives of employees and employers on the issue of unionization
Identify the three most important pieces of labor relations legislation enacted in the 20th century
Explain how unions are structured and describe the organizing process
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Learning Objectives
Describe the collective bargaining process
Explain the procedures for addressing employee grievances and arbitrating disputes
Characterize the ongoing conflict over union organizing efforts
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5. The Role of Labor Unions
Labor Relations
The relationship between organized labor and management (in its role as the representative of company ownership)
Labor Unions
Organizations that represent employees in negotiations with management
Perhaps nothing represents the potential for stress in the stakeholder model more than labor relations, the relationship between organized labor and business owners. Although they work toward common goals in most cases, managers and employees face an inherent conflict over resources: Company owners and managers want to minimize the costs of operating the business, whereas employees want to maximize salaries and ensure good benefits and safe, pleasant working conditions.
If employees believe they are not being treated fairly and can’t get their needs met by negotiating individually with management, they may have the option of joining labor unions, organizations that seek to protect employee interests by negotiating with employers for better wages and benefits, improved working conditions, and increased job security.
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6. STUDY: Unionization: Employee’s Perspective
Higher compensation
Greater benefits
Influence over hiring, promotions, and layoffs
Working conditions and workplace safety
Formal processes for employee grievances, discipline, and other matters
Solidarity and recognition
The most fundamental appeal of unionization is strength in numbers, giving workers the opportunity to negotiate on a more equal footing with management (who represent company ownership). With this negotiating power, union members and supporters point to a number of ways workers benefit from union membership
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7. Unionization: Management’s Perspective
Work Rules
A common element of labor contracts that specifies such things as the tasks certain employees are required to do or are forbidden to do
Management concerns regarding unions include flexibility and productivity. Union contracts often include work rules, or job rules, that specify such things as the tasks certain employees are required to do or are forbidden to do. For instance, management might be prevented from having employees cross-trained on a variety of tasks and machines to allow production supervisors more flexibility in responding to changes in product demand, without increasing headcount.
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Major Pieces of Labor Relations Legislation
Exhibit 12.2
Most major labor legislation was enacted in the 1930s and 1940s. Subsequent legislation usually amends and clarifies earlier laws.
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9. Unionization in Historical Perspective
National Labor Relations Act
Legislation passed in 1935 that established labor relations policies and procedures for most sectors of private industry; commonly known as the Wagner Act
In 1935, Congress passed the National Labor Relations Act, also known as the Wagner Act. This landmark legislation established labor relations policies and procedures for most sectors of private industry (railroad and airline unions are addressed separately by the Railway Labor Act), and its provisions remain a topic of ongoing controversy.
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10. Unionization in Historical Perspective
Labor-Management Relations Act
Legislation passed in 1947 that addressed many concerns raised by business owners and shifted the balance of power again
Commonly known as the Taft -Hartley Act
Congress eventually passed the Labor-Management Relations Act of 1947, also known as the Taft-Hartley Act. This legislation addressed many concerns raised by business owners and shifted the balance of power again.
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11. Unionization in Historical Perspective
Labor-Management Reporting and Disclosure Act
Legislation passed in 1959 designed to ensure democratic processes and financial accountability within unions
Commonly known as the Landrum-Griffith Act
Congressional inquiries into financial fraud by union leaders, meanwhile, led to passage of the Labor-Management Reporting and Disclosure Act of 1959, commonly known as the Landrum-Griffin Act. The overall intent of this act is to ensure democratic processes and financial accountability within unions, including freedom of speech for union members, the right to secret ballot elections of union leadership, and financial transparency in the use of union funds.
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12. The Organizing Process
Union Security
Measures that protect a union’s right to represent workers
Union Shop
A unionized workplace in which employees are required to maintain union membership
When a union negotiates a contract, it usually tries to obtain some degree of union security, which consists of measures that protect the union’s right to represent workers. The most extreme form is a closed shop, in which an employer can hire only union members; Taft-Hartley outlawed closed shops. In a union shop, employees don’t have to be members when they are hired, but they must join the union within a specified period of time.
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13. The Organizing Process
Right-to-Work Laws
State laws that prohibit union and agency shops – The law prevents unions in that state from requiring workers to pay dues in exchange for the union's representation
One of the most important changes brought about by the Taft-Hartley Act was allowing individual states to pass laws prohibiting union and agency shops. In the years following the enactment of Taft-Hartley, 22 states have passed such right-to-work laws (see Exhibit 12.3). These laws remain a strong point of contention between union supporters and opponents.
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Right-to-Work States
Exhibit 12.3
Twenty-two states currently have some form of right-to-work laws. (Indiana is also a right-to-work state, but only for school employees.)
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Types of Unions
Craft Unions
Offer membership to workers with a specific craft or skill, such as carpentry, masonry, or electrical work
Industrial Unions
Seek to represent all workers at a given employer or location, regardless of profession or skill level
Unions are of two basic types, with different implications for organizing employees and interacting with management. Craft unions offer membership to workers with a specific craft or skill, such as carpentry, masonry, or electrical work. In some instances, craft unions negotiate contracts for certain categories of work at a single employer. In others, particularly in the building trades, these unions often negotiate with a number of employers in a given geographic area. As employees move from one project to another, they remain covered by the same contract.
In contrast to craft unions, industrial unions seek to represent all workers at a given employer or location, regardless of profession or skill level. Rather than belonging to asingle union for their entire careers as with craft unions, workers usually join an industrial union because they are required to when they work at a union shop, and they often leave the union if they leave a particular job.
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16. How Unions Are Structured
Locals
Local unions that represent employees in a specific geographic area or facility
National Union
A nationwide organization composed of many local unions that represent employees in specific locations
Many unions are organized at local, national, and international levels. Locals, or local unions, represent employees in a specific geographic area or facility. Members are informally known as the rank-and-file. Each department or facility also elects a shop steward, who works in the facility as a regular employee and serves as a liaison with supervisors whenever problems arise.
A national union is a nationwide organization composed of many local unions that represent employees in specific locations. International unions, such as the Service Employees International Union (SEIU), have members in more than one country. A national union is responsible for such activities as organizing in new areas or industries, negotiating industrywide contracts, assisting locals with negotiations, administering benefits, lobbying Congress, and lending assistance in the event of a strike.
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17. Union Organizing Drives
Authorization Cards
Cards signed by employees to indicate interest in having a union represent them
Certification Election
A secret-ballot election overseen by the NLRB to determine whether a union gains the right to represent a group of employees
After an initial expression of interest, the union forms an organizing committee and launches its strategy for securing the right to represent those employees, employees who wish to have the union represent them sign authorization cards, and company management usually tries to persuade employees that unionization would not be in their best interest.
If the employer doesn’t voluntarily accept the union, employees or the union can petition the NLRB to conduct a secret-ballot certification election. The NLRB usually requires verification that at least 30 percent of the employees in an appropriate bargaining unit are interested in union membership before it will proceed with an election.
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18. Union Organizing Drives
Decertification
An employee vote to take away a union’s right to represent them
Sometimes employees become dissatisfied with their union and no longer wish to be represented by it. When this happens, the union members can take a decertification vote to take away the union’s right to represent them. If the majority votes for decertification, the union is removed as the bargaining agent.
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The Union Organizing Process
Exhibit 12.4
This diagram offers a simplified view of the steps a labor union takes when organizing a group of employees and becoming certified to represent them in negotiations with management. The certification election is necessary only if management is unwilling to recognize the union.
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20. The Collective Bargaining Process
A negotiation between union and management negotiators to forge the human resources policies that will apply to all employees covered by a contract
Collective Bargaining Agreements (CBAs)
Contracts that result from collective bargaining
After a union has been recognized as the exclusive bargaining agent for a group of employees, its main job is to negotiate employment contracts with management. In a process known as collective bargaining, union and management negotiators work together to forge the human resources policies that will apply to all employees covered by the contract. Collective bargaining agreements (CBAs), the contracts that result from this process, are always a compromise between the desires of union members and those of management. The union pushes for the best possible deal for its members, and management tries to negotiate agreements that are best for the company (and the shareholders, if a corporation is publicly held).
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21. The Collective Bargaining Process
Exhibit 12.5
Contract negotiations go through the four basic steps shown here.
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22. Negotiating an Agreement
Mediation
Use of an impartial third party to help resolve bargaining impasses
Arbitration
A decision process in which an impartial referee listens to both sides and then makes a judgment by accepting one side’s view
If negotiations reach an impasse, outside help may be needed. The most common alternative is mediation—bringing in an impartial third party to study the situation, explore new options, improve communication, and make recommendations for resolution of the differences. The Taft-Hartley Act established the Federal Mediation and Conciliation Service (FMCS), to provide free mediation services during labor contract disputes.
When a legally binding settlement is needed, the negotiators may submit to arbitration—a process in which an impartial referee listens to both sides and then makes a judgment by accepting one side’s view. In compulsory arbitration, the parties are required by a government agency to submit to arbitration; in voluntary arbitration, the parties agree on their own to use arbitration to settle their differences.
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When Negotiations Break Down: Labor and Management Options
Exhibit 12.6
When negotiations between labor and management reach an impasse, each side has several options at its disposal for putting pressure on the other.
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Labor Options
Strike
A temporary work stoppage aimed at forcing management to accept union demands
Boycott
A pressure action by union members and sympathizers who refuse to buy or handle the product of a target company
The most powerful weapon that organized labor can use is the strike, a temporary work stoppage aimed at forcing management to accept union demands. The basic idea behind a strike is that, in the long run, it will cost more in lost revenue to resist union demands than to give in. An essential part of any strike is picketing, in which union members positioned at entrances to company premises display signs and pass out leaflets, trying to persuade non-striking employees to join them and to persuade customers and others to stop doing business with the company. Strikes are high-profile events, but they are actually quite rare.
Boycott. A less direct union weapon than the strike is the boycott, in which union members and sympathizers refuse to buy or handle the product of a target company. Millions of union members form an enormous bloc of purchasing power, which may be able to pressure management into making concessions.
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Labor Options (cont.)
Injunction
A court order that requires one side in a dispute to refrain from or engage in a particular action
An injunction is a court order that requires one side in a dispute to refrain from engaging in a particular action. The NLRB has the authority to ask federal courts to issue injunctions aimed at halting unfair labor practices while a dispute is moving through the board’s resolution process.
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Management’s Options
Strikebreakers
Nonunion workers hired to do the jobs of striking workers
Lockout
A decision by management to prevent union employees from entering the workplace
used to pressure the union to accept a contract proposal
Strikebreakers. When union members walk off their jobs, management can legally replace them with strikebreakers, nonunion workers hired to do the jobs of striking workers. (union members refer to them as “scabs”)
The U.S. Supreme Court has upheld the use of lockouts, in which management prevents union employees from entering the workplace, in order to pressure the union to accept a contract proposal. A lockout is management’s counterpart to a strike. It is a preemptive measure designed to force a union to accede to management’s demands. Lockouts are legal only if the union and management have come to an impasse in negotiations and the employer is defending a legitimate bargaining position.
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27. Grievance, Discipline, and Arbitration Procedures
Unfair labor practices
Unlawful acts made by either unions or management
Grievance
A formal complaint against an employer
By employers:
• Threatening employees with termination or cuts in benefits if they vote for a union or engage in any other activity protected by the Wagner Act or other laws
• Threatening to close a facility if employees vote for union representation
• Interrogating employees about union sympathies or activities in ways that could “interfere with, restrain, or coerce” employees trying to exercise their legal rights
• Responding to organizing campaigns by offering wage or benefit improvements as a way to thwart unionization efforts
• Punishing employees for unionization activity by transferring them, giving them more difficult work assignments, or terminating them
By unions:
• Attempting to scare employees into supporting the union by telling them they will lose their jobs otherwise
• Refusing to process grievance claims made by employees who have criticized union officials
• Attempting to get an employee fired for not complying with a union shop agreement when the employee has paid or offered to pay an initiation fee and monthly dues
• Discriminating against employees or giving preferential treatment in union hiring halls (facilities where members of craft unions receive job assignments) because of race or union activities
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28. Grievance, Discipline, and Arbitration Procedures
Progressive Discipline
An escalating process of discipline that gives employees several opportunities to correct performance problems before being terminated
A collective bargaining agreement also outlines procedures for disciplining employees who violate either the terms of the agreement or company policies. For minor offenses, an escalating process known as progressive discipline usually starts with an oral warning for the first offense, followed by a written warning, then another written warning and suspension without pay, and then finally termination after the fourth offense.
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The Future of Labor
Declining Membership
union membership in the U.S. is now less than 12 percent,
half of those members work in public-sector jobs, not in business
Do more U.S. workers want to be represented by unions?
Survey results vary
From a peak of more than one-third of the private-sector workforce in the 1950s, union membership in the United States is now less than 12 percent, and half of those members work in public-sector jobs, not in business. Clearly, some employees who are not now in unions would like to be in one, but just how many is not clear.
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