McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-2 CHAPTER FIVE LABOR LAW It is impossible to understand contemporary labor relations without an examination of labor law. U.S. labor law grants rights to workers, unions, and companies. U.S. labor law gives them responsibilities, and makes certain behaviors illegal. The major labor relations processes are therefore critically shaped by the specific provisions of labor law. A foundation for understanding these processes is studying labor law.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-3 LEARNING OBJECTIVES To understand….. How a legal system can be used to either promote or repress unionization. The major provisions of U.S. labor law and their underlying logic, rationale, especially with respect to the Wagner Act, Taft-Hartley- Act, and Landrum-Griffin Act. The role of the National Labor Relations Board and similar state agencies in U.S. labor relations. The similarities and differences between U.S. private and public sector law. The criticisms of U.S. labor law and possible directions for reform.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-4 The Law of Labor Relations The evolution of the legal system that pertains to unions and union activity represents a shift from common law to statutory law, and within statutory law from business law to labor law. Common law is a body of law that is based on customs, traditions of acceptable behavior, and judicial precedent stemming from English legal principles. Includes conspiracy, breach of contract, property rights, and the employment-at-will doctrine. Statutory law consists of laws enacted by legislatures, not judges. Business law (applies to businesses, such as antirust laws). Labor law (written explicitly for unions). Employment law (pertaining to the individual, not collective employment relationship).

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-5 THE COMMON LAW OF LABOR RELATIONS: CONSPIRACIES & INJUNCTIONS Early efforts by workers to collectively influence their wages and working conditions were governed by common law doctrines. The first permanent U.S. union was the Philadelphia shoemakers (1790). Also the first union convicted of being an illegal conspiracy- first application of the conspiracy doctrine in labor relations. By joining together and refusing to work unless their terms were met, the shoemakers were viewed as conspiring to harm the community. While individual attempts to influence wages and working conditions were acceptable expressions of individual freedom, collective actions by unions were viewed as illegal conspiracies that harmed the community through higher prices and unemployment.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-6 THE COMMON LAW OF LABOR RELATIONS: CONSPIRACIES & INJUNCTIONS In Commonwealth v. Hunt (1842) the Massachusetts Supreme Court ruled that while some union activity might be conspiratorial and therefore illegal, unions are not per se unlawful conspiracies. This landmark decision marked the beginning of the end for the application of the conspiracy doctrine to labor relations. Starting in the 1880s, common law doctrine applied to labor relations was dominated by the use of injunctions -- court ordered restraints on action to prevent harm or damage to someone else. Injunctions contributed towards breaking strikes in many ways In the 1900s, labor injunctions were also applied to yellow dog contracts (a promise by a worker not to join or support a union).

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-7 THE COMMON LAW OF LABOR RELATIONS: CONSPIRACIES & INJUNCTIONS Labor unions despised the widespread use of labor injunctions Temporary restraining orders were often issued by judges without a full hearing. Although injunctions are intended to maintain the status quo, a temporary injunction often ended a strike through fear, confusion, negative publicity, and draining union resources. Judges appeared biased -- when company’s right to conduct business was threatened by the actions of either a union or another business, injunctions were much more likely against labor than another business. In other words, property rights dominated labor rights.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-8 Court Ordered Injunctions INSERT BOX 5.3

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-9 THE BUSINESS LAW OF LABOR RELATIONS: UNIONS AS CORPORATIONS Between 1890 and 1932 business law was applied to union activities in ways that were unfavorable to labor. Sherman Antitrust Act (1890) outlawed monopolies and prevented the accompanying negative and social effects. Sherman Antitrust Act does not explicitly include or exclude unions. Supreme Court ruled in Danbury Hatters case that the union boycott violated the act, a later ruling held individual union members responsible for damages. Given that the neoclassical economics school of thought views labor unions as monopolistic, the ruling is not surprising.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-10 THE BUSINESS LAW OF LABOR RELATIONS: UNIONS AS CORPORATIONS Clayton Act (1914) gave unions legal right to exist, but – to labor’s disappointment – it did not unambiguously exempt unions from antitrust laws. Definition of picketing under Clayton Act made it easier for employers to obtain injunctions. Most important development in this era is the emergence of the legal view that unions are legitimate but need to be controlled. Business law was transforming unions and corporations from voluntary associations into legally sanctioned organizations with corresponding rights and obligations in a pluralistic society.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-11 KEEPING COURS OUT OF LABOR RELATIONS: NORRIS-LAGUARDIA ACT Norris-LaGuardia Act (1932) marks the start of the labor law era in labor relations by trying to remove courts from labor relations. Ends the criminal conspiracy doctrine of labor unions Forbids federal courts from issuing injunctions that interfere with: Strikes & payment of strike benefits Publicizing a dispute (as long as it is not fraudulent) Peaceful picketing Workers joining unions (made yellow dog contracts unenforceable) Marks the end of the business law eras in labor relations by exempting labor unions from the Sherman Act

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-12 PRELUDES TO A NATIONAL POLICY: NATIONAL INDUSTRIAL RECOVERY ACT & RAILWAY LABOR ACT Great Depression caused widespread unemployment, poverty, homelessness and hunger. Roosevelt promised a “New Deal” for America. The New Deal was based on the industrial relations school of thought, not neoclassical economics. The Norris-LaGuardia Act was passed before Roosevelt took office in 1932: Was a passive, not active, approach to labor relations. Did not actively protect or promote union activity. Did little to combat the employers’ open shop tactics.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-13 PRELUDES TO A NATIONAL POLICY National Industrial Recovery Act (NIRA) passed in 1933: Contained public works program to create jobs. Industries required to create codes of fair competition. Including workers’ right to organize and bargain collectively. Created National Labor Board, chaired by Senator Robert Wagner. Board used to settle labor disputes, but had no enforcement power. NIRA and National Labor Board were ineffective in achieving industrial peace (recall massive 1934 recognition strikes). Supreme Court ruled NIRA unconstitutional (1935) because of its broad regulation of economic activity.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-14 PRELUDES TO A NATIONAL POLICY The Railway Labor Act (1926) Culmination of attempts dating back to 1888 to achieve industrial peace in the railroad industry because of its critical importance for the economy. Protects rights of employees to form unions. Provides for government mediation of labor disputes. Strengthened in 1934 by outlawing company unions and providing for government-run elections to determine if workers want a union. Airlines added in 1936 and still is in effect today.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-15 SOLVING LABOR PROBLEMS: THE WAGNER ACT After the NIRA was ruled unconstitutional, President Roosevelt endorsed Wagner’s efforts to improve the NIRA The Wagner Act, or National Labor Relations Act (NLRA), 1935 Builds upon previous legislative attempts to promote and protect workers ability to unionize. Remains the centerpiece of today’s private sector U.S. labor law.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-16 SOLVING LABOR PROBLEMS: THE WAGNER ACT Rooted in the industrial relations school of thought, the Wagner Act protects union activity to strike a balance between efficiency, equity and voice: Efficiency: increasing the purchasing power of workers, reducing disruptive strike activity, and largely maintaining employer’s property rights. Equity: achieving fair employment conditions and protections against exploitations. Voice: providing democracy in the workplace.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-17 THE INTELLECTUAL FOUNDATIONS OF THE WAGNER ACT The Wagner Act (1935) is based on the fundamental assumptions of the industrial relations school of thought: Labor is more than a commodity, Labor and management are not economic or legal equals (in other words, there is an imbalance of bargaining power), There is at least some conflict of interest between workers and employers that cannot be resolved by unitarist management policies, but this is pluralist employment relationship conflict, not class-based or societal conflict, and Employee voice is important.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-18 THE CENTRAL PROVISIONS OF THE WAGNER ACT Sections 3-6: Creates the National Labor Relations Board (NLRB) to resolve representation questions and adjudicate unfair labor practices. Section 7: Guarantees employees the right to form unions, bargain collectively, and engage in other concerted activities for mutual aid and protection Section 8: Defines five employer unfair labor practices. Section 9: Establishes exclusive representation for unions that have majority support and grants them rights of collective bargaining over wages, hours of employment, and other conditions of employment. Empowers the NLRB to define appropriate bargaining units and to determine majority support via a secret ballot election or other suitable means.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-19 EXAMPLES OF EMPLOYER UNFAIR LABOR PRACTICES Section 8(a)(1): interference, restraint, or coercion that undermines section 7. Section 8(a)(2): domination of a labor organization (company union ban.) Section 8(a)(3): discrimination on the basis of union support. Section 8(a)(4): discrimination to encourage or discourage union membership Section 8(a)(5): refusal to bargain with a certified union

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-20 SOLVING LABOR PROBLEMS: THE WAGNER ACT National Labor Relations Board (NLRB): Conducts representation elections. Adjudicates unfair labor practices. NLRB has two parts: General Counsel’s office that conducts representation elections and investigates and prosecutes unfair labor practices. Five-member board of presidential appointees that hears and decides cases.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-21 IS THE WAGNER ACT CONSTITUTIONAL? Encouraged by a misinformation campaign, many believed that the Wagner Act was unconstitutional Lack of Congressional authority to regulation labor relations. Labor relations is not part of interstate commerce. Violating the Constitution’s fifth amendment by depriving companies and individuals of their liberty and property rights without due process. In a landmark ruling (NLRB v. Jones and Laughlin Steel Corp., 1937), the Supreme Court upheld the constitutionality of the Wagner Act.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-22 SOLVING LABOR PROBLEMS: THE WAGNER ACT It is critical to remember that the NLRA is rooted in the industrial relations school’s principle beliefs: From the neoclassical economics perspective, the NLRA provides socially-harmful protection of monopoly labor. From the HRM perspective, the NLRA provides unnecessary support of adversarial third parties. From the critical industrial relations perspective, the NLRA is an imperfect attempt to empower labor.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-23 REBALANCING THE SYSTEM: THE TAFT-HARTLEY ACT The Wagner act sought to equalize the balance of power between labor and employer by restraining the employers’ ability to repress unionization. However, by 1946 many believed that the Wagner Act had overcorrected the problem—the pendulum had swung too far towards labor. Pressures for reforming (or discarding) the Wagner Act boiled over with the Great Strike Wave of In 1947, Congress passed the Taft-Hartley Act, also known as the Labor Management Relations Act, to amend the NLRA.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-24 REBALANCING THE SYSTEM: THE TAFT-HARTLEY ACT Restrictions on union activities Union unfair labor practices by labor Prohibits unions from engaging in secondary boycotts, and other forms of strikes and picketing. Outlawed closed shop. Enhanced rights of individuals. Allows states to pass right-to-work laws. Allow individuals to refrain from concerted activities. Added a desertification process.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-25 REBALANCING THE SYSTEM: THE TAFT-HARTLEY ACT Explicit rights of employers. Free speech rights Revised dispute resolution procedures. National Emergency Strike procedures Created the Federal Conciliation and Mediation Service (FMCS).

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-26 FIGHTING UNION CORRUPTION: THE LANDRUM- GRIFFIN ACT In response to perceived widespread union corruption and lack of internal union democracy, Congress passed the Landrum-Griffin Act (1959). Act also known as Labor Management Reporting Act (LMRA). Created a Bill of Rights for union members with free speech and voting rights Sought to prevent union corruption through financial disclosure requirements, election standards, and various limitations Also some small amendments to the NLRA Further restricts secondary boycotts Outlaws hot cargo agreements

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-27 EXTENSIONS TO GOVERNMENT EMPLOYEES: PUBLIC SECTOR LAW The NLRA excludes government workers so public sector labor law has 51 separate jurisdictions. Federal sector: protections date back to 1962 and were codified with the passage of the Civil Service Reform Act (1978). “the NLRA framework without the right to strike” State and local sector: laws started with Wisconsin in 1959 Where present, “the NLRA framework usually without the right to strike” Union membership in the public sector has increased from less than 1 million in 1960 to over 7 million in 2000.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-28 CIVIL SERVICE REFORM ACT INSET BOX 5.19

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-29 FOUR TYPES OF PUBLIC SECTOR LAW INSERT BOX 5.20

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-30 LABOR LAW IN PRACTICE: NLRB DECISIONS AND REFORM There are two components that comprise today’s labor laws: Statutes - U.S. labor laws written in 1935 and Accumulated case law - Developed through NLRB and decisions and precedents. Many NLRB and court decisions are so important that they have become part of everyday labor relations jargon: Weingarten Rights, Wright Line Test. NLRB case law enables the law to: Accommodate new situations that were not present in 1935 and Balance property right s and labor rights in a changing environment.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-31 LABOR LAW IN PRACTICE: NLRB DECISIONS AND REFORM Current NLRB framework for adjudicating U.S. labor law is not without critics: Major Political influences on NLRB decisions. NLRB lacks sufficient remedial power (punitive damages). The NLRA has also been called into questions. Unions favor: Expanding coverage to supervisors. Streamlining the certification process. Banning use of permanent strike replacements. Some favor replacing the NLRA Others argue that the assumptions of the NLRA, especially the sharp divide between labor and management, no longer matches the 21 st century workplace.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-32 POSTCRIPT: THE RISE OF EMPLOYMENT LAW Labor law focuses on workers’ collective actions After the 1960s, private sector law received little attention by lawmakers, while employment law exploded Employment law focuses individual employment rights. First, social insurance (workers comp, unemployment insurance, social security) and protective employment standards (minimum wage, maximum hours and child labor restraints) in the 1930s Second, restrictions on employment-at-will starting in the 1960s

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-33 POSTCRIPT: THE RISE OF EMPLOYMENT LAW Consistent with the Civil Rights movement, many of the post-1960 employment laws target discriminatory employment practices. Equal Pay Act (1963) Civil Right Act 1964) Age Discrimination in Employment Act (1967) Americans With Disabilities Act (1990) Civil Rights Act (1991) Other employment laws provide or mandated employment conditions beyond wages the FLSA: OSHA (1970); ERISA (1974); WARN, (1989); FMLA, (1993).

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C5-34 POSTCRIPT: THE RISE OF EMPLOYMENT LAW Does employment law provide nonunion workers with sufficient levels of equity and voice? By some accounts, employment law has rendered unions obsolete by providing basic protections. The rise of employment law may therefore underlie the long-term decline in labor density. On the other hand, some observers feel that the exceptions to the employment at-will doctrine are limited and do not amount to broad protections against unfair dismissal for nonunion workers. Whether this narrowness of employment law is evaluated as sufficient for the 21 st century employment relationship (as in the neoclassical economics and human resources management schools of thought) or not (as in the industrial relation and critical industrial relations schools of thought) has important ramifications for the future of labor unions.