Connell Foley: JOHN K. BENNETT - Speech at 20th annual Lawbor Law Conference

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JOHN K. BENNETT - Speech at 20th Annual Labor Law Conference

Connell Foley LLP Partner JOHN K. BENNETT gave a speech at the 20 annual Labor Law Conference on November 13 at the Brunswick Hilton & Towers in East Brunswick, NJ. Mr. Bennett is a member of the firms labor and employment law practice group.

ARE UNIONS, COLLECTIVE BARGAINING AND/OR
THE NATIONAL LABOR RELATIONS BOARD STILL RELEVANT?
"YES, BUT . . ."
A MANAGEMENT PERSPECTIVE November 12, 1998

I. Introduction

In the last year, successful organizing campaigns, political victories, breakthrough contract settlements, and a flurry of decisions by a union-friendly majority among the members of the National Labor Relations Board ("NLRB") resulting in several important pro-union holdings, have increased at least the visibility of America's labor unions, which claim that they are enjoying a resurgence. But, despite union's more aggressive organizing efforts, union membership has continued to decline. And, despite labor unions' expenditure of tens of millions of dollars in recent political campaigns, labor's all-out efforts to return Congress to the control of labor-friendly Democrats were unsuccessful.

In the year since the Teamsters' strike of UPS, in the summer of 1997, the collective-bargaining process has resulted in more strikes and in deteriorating labor relations in the wake of difficult bargaining. The politicization of the NLRB under former Chairman Gould has alienated the Republican-controlled Congress and raised the profile of the Board, which is likely to continue to provoke reviewing federal courts of appeals to scrutinize Board decisions more closely than ever before, so as to identify Board members' policy preferences disguised as case adjudication.

These recent developments, together with the efforts of unions and management at various workplaces to explore alternative approaches to adversarial union-management relations, have given rise to the question posed by this portion of today's conference: whether unions, traditional collective-bargaining, and/or the NLRB are still relevant in today's labor relations. From a management perspective, one grounded in labor relations rather than union-avoidance, the answer is: "Yes, but . . ." Labor unions and the collective-bargaining process need to change in certain ways in order to make American workplaces more successful, which is the best job security of all. The NLRB needs to become more stable and consistent to established precedents, and less ideological against employers and less politically outspoken against Congress than it was under former Chairman Gould.

Just last week, U.S. Representative Pete Hoekstra (R.-Mich.), the Chairman of the House Education and Workforce Subcommittee on Oversight and Investigations, said in a labor conference in Washington, D.C., that American labor law does not work anymore for anyone. He stated that it does not enable American businesses, particularly in the high-tech industry, to be as successful or as competitive globally as they should be, and that our present labor laws do not work for labor unions either. Representative Hoekstra is chairing this Subcommittee that is undertaking an 18-month study of American labor laws, which is expected to include recommendations "to develop a positive agenda for legislative initiatives that would make the U.S. economy globally competitive in the year 2000 and beyond."¹

This paper and address will review some of the events of particular significance in American labor relations during the last year, within the parameters of the question presented to us today. It also will attempt to discuss, from a management perspective, some of the problems and concerns that give rise to the question which we have been asked to explore, namely, whether unions, collective-bargaining, and/or the NLRB are still relevant in American labor relations today and going forward.

II. Labor Unions

A. Labor's Recent Accomplishments

During the past year, the American labor movement and labor unions have made significant gains in certain visible areas, including:

According to AFL-CIO President John Sweeney, union members turned out at a record level for last week's political elections, on November 3, affecting the outcomes of several close races, including U.S. Senate races in Wisconsin, California, Illinois and Nevada where union-supported Democrats prevailed. Mr. Sweeney states that exit polls showed union-household voters turned out as 22% of all voters, which Mr. Sweeney attributes to the efforts of AFL-CIO unions to register half a million members and their family members to vote in these elections, and to hand out hundreds of thousands of pieces of literature at workplaces, identifying issues of importance to labor.

In the flurry of NLRB decisions issued before Chairman Gould's term ended in late August 1998, unions obtained several significant victories, including: The NLRB ruled in Detroit News and Detroit Free Press that the employer violated Section 8(a)(5) by unilaterally implementing proposals affecting editorial employees, and engaged in other unfair labor practices that caused a 1995 strike by more than 2,000 workers represented by six unions, and ordered the employer to reinstate all strikers who made unconditional offers to return to work, displacing replacements, and other make-whole relief, Detroit Newspaper Agency, 326 NLRB Nos. 64, 65 (Aug. 27, 1998). The Board issued a corporate-wide cease-and-desist order against a nursing home chain found to have engaged in numerous unfair labor practices over a ten-year period at 54 facilities in 18 states, due to the continuing involvement of its labor relations officials at the corporate and regional levels, Beverly Enterprises and SEIU, 326 NLRB Nos. 29, 30 (Aug. 21, 1998). The Board held that the use of mail ballots in a representation election is justified by an employer's "scattered" workforce at just four different job sites, located at distances no greater than 40 miles from each other, because there were not at least 15 eligible voters employed at any one site, Odebrecht Contractors of Florida, Inc., and IUOE Local 487, 326 NLRB No. 8 (Aug. 10, 1998)².

For the first time in a long time, unions reportedly are winning more than 50% of all representation elections, which success in turn has generated more organizational efforts and representation election petitions.

Unions continue to gain ground in the representation of public-sector employees, and building-services workers.

Unions have successfully targeted new areas for organizing, particularly in the ever-changing healthcare industry. In particular, doctors concerned that insurance companies and operators of HMOs are exerting too much influence over their healthcare decisions are moving towards labor unions to give them more collective clout. This effort gained ground here in New Jersey with the recent decision of the NLRB to allow UFCW Local 56 a full hearing on its petition to represent several hundred south Jersey physicians who have provider contracts with AmeriHealth Inc., which operates six HMOs in south Jersey, AmeriHealth Inc. and UFCW Local 56, 326 NLRB No. 55 (Aug. 27, 1998). The immediate issue will be whether the physicians are employees or independent contractors, which will require a determination of the extent to which the HMO operator "monitors and controls the provision of medical care to patients," which the Board acknowledged to be "an important issue of first impression." In addition, the SEIU has mobilized nurses upset over staffing levels at hospitals in the wake of mergers, down-sizing and out-sourcing. The SEIU represents approximately 650,000 healthcare workers, including about 100,000 nurses, and will use this safe-staffing campaign to bring public attention to the reduced nurse-to-patient staffing ratio, and to organize more nurses.

Unions' concerted opposition and substantial monetary contributions helped defeat California's Proposition 226, which would have required unions to obtain authorization before using members' dues for political purposes. The defeat of Proposition 226 reportedly has energized the labor movement throughout California.³

In short, labor unions are focusing their sights away from their traditional base of workers in the private-sector manufacturing industries, which are losing jobs, and toward alternative areas to organize, including service workers, high-tech employees, healthcare workers, public-sector workers, and other non-traditional workers as service-oriented industries have grown. Unions are also realizing that their efforts may be best spent in mobilizing their members in political elections to support labor-friendly candidates and issues of importance to labor. Unions deserve credit for putting their collective heads together and responding to the shifting U.S. economy from its manufacturing base to its service-oriented base, and for their growing political awareness, clout and mobilization efforts.⁴

B. Labor's Recent Setbacks

During the same past year, however, labor unions have continued to suffer significant setbacks as well, including:

Despite the fact that during the past year more than 2.8 million jobs were created, and AFL-CIO unions recruited 400,000 new members, labor unions actually lost at least that many existing members. Labor unions' share of the American workforce continued to drop during the past year, down to approximately 10% of the private-sector workforce and approximately 14% of the total American workforce, including the public sector.⁵

The ruling of federal officials that Teamsters' President Ron Carey illegally diverted more than $700,000 of union funds into his campaign coffers, barring him from seeking re-election, has perpetuated the perception that the Teamsters, and perhaps other unions as well, still have not cleaned up their own houses. The public perception of this kind of internal corruption gives anti-union forces fresh ammunition, and wipes out some of the positives achieved by unions during the past year.

The November elections resulted in a continuing Republican majority in both the U.S. Senate and House of Representatives, precluding the likelihood of any pro-labor reforms in federal labor laws.

The Teamsters' strike of UPS in the summer of 1997 does not look as good a year later, as it now appears workers actually may have lost ground on several issues.⁶

C. Unions As A Political Force

As the American labor movement is fortified by the results of elections in which it successfully has galvanized its memberships, unions will become even more of a political force. For example, in the upcoming Presidential election in the year 2000, every Democratic candidate will try to out-do the others in making labor unions his friends. The AFL-CIO remains the only coherent, opinion-mobilizing, fundraising source for the Democratic party, and the unions know it.⁷ In the 1996 election cycle, unions spent more than 30 million dollars in both "soft money" donations to help the Democratic party and donations to support labor-friendly candidates although the true total amounts vary in different reports.

Given labor's disenchantment with President Clinton, particularly over the North American Free Trade Agreement (NAFTA) of 1994 and the debacle in 1997 over President Clinton's attempts to obtain so-called "fast-track" authority from Congress for free-trade deals, Vice President Gore will feel the need to openly champion unionism and workers' rights as a building block of his presidential campaign. For example, Mr. Gore is likely to renew his call for legislation to deny federal-contracts business to companies that are found to have unlawfully interfered with representation elections or that have replaced striking workers. Mr. Gore's emphasis on union-friendly issues will be pushed even further by the likelihood that one of his rivals for the Democratic nomination may be House Minority Leader Richard Gephardt, who has always had a strong backing from labor.

III. Collective Bargaining

A strong economy, low unemployment and one of the tightest labor markets in a generation have given labor unions a position of some strength at the bargaining table. A shortage of skilled labor in a tight labor market puts experienced qualified workers at a premium. As a result, skilled workers feel more secure, and believe they have more bargaining power to demand higher wages, benefits and profit-sharing. In the past year, unions have been winning real wage-gains of about 3% per year at the bargaining table, and more profits are passing through to workers in the form of increased pensions, profit-sharing and stock options. Union-represented workers' wages remain one-third higher than non-union workers' pay.

In the past several months alone, there have been substantial contract settlements across the country, including:

In May 1998 AT&T and the CWA and IBEW reached agreement on a four-year contract that improved wages and pensions and includes an annual performance bonus plan directly linking union workers' incentives with AT&T's financial targets. For AT&T, the CWA and the IBEW, this was the earliest contract settlement and the longest new contract term ever negotiated. Under that agreement, according to the IBEW, wages will increase every six months, totaling 2.88% in the first year, 3.75% in the second year, 3.78% in the third year, and 3.85% in the final year. Pensions will increase up to 7%, with future additional increases for longer service employees.⁸

In August 1998, Bell-Atlantic and the CWA reached an agreement covering 73,000 workers in 13 eastern states and Washington, D.C. The agreement reflects Bell-Atlantic's drive to increase productivity, establishing a new system of profit-sharing that would give CWA members cash awards for reaching productivity goals set jointly by management and the union. According to the CWA, the new agreement provides for pay increases of 3.8% the first year and 4.0% the second year, and also raises pension benefits by up to 20%.⁹

However, unions also have found collective bargaining difficult in this global economy, in which international corporations are relocating work and reorganizing their workforces to be more competitive globally. In the wake of NAFTA and related free-trade initiatives, and given the increasing ability of American companies to get more labor and parts from abroad, companies are seriously considering relocating work to less-expensive shops, particularly across our borders and abroad. These developments have been seen most substantially in the automobile, electronics and apparel industries, among others.

As a result of this increasing global competition, unions need to work with companies in collective bargaining to try to figure out ways for it to make good economic and business sense for companies not to send well-paid union jobs to less expensive non-union shops across our borders and abroad. Unions have a responsibility to look at all the alternatives -- not just to say no and dig in their heels -- and to try to achieve these goals of efficiency and productivity together with the companies. One of the obvious ways for unions to do this is to be more receptive to the elimination of costly, outdated work rules and practices that have made these workplaces relatively inefficient and non-competitive over the years. In this respect, unions themselves share some of the blame for the migration of these manufacturing jobs. The heyday of the American mass-production manufacturing industries -- when unions set these restrictive work practices in stone -- is over, and it is not coming back. But, some unions still continue to insist on the perpetuation of those costly work rules and practices. Unions need to embrace, rather than fight, the changes brought on by inevitable automation and technological advances, and figure out ways to allow their workers to benefit from these changes.

Touching base with the question presented, collective-bargaining is, of course, still relevant and necessary. For unions, it is still the best way to achieve increased wages and benefits for their members, and to participate in the efforts of companies to make themselves more competitive, efficient and productive.

Collective-bargaining also is necessary for management. Collective-bargaining can significantly reduce the need for governmental intervention in businesses. For example, managing family leave, medical leave, and disability-related issues through collective-bargaining agreements and grievance procedures, rather than through administrative regulations, court actions and agency proceedings, is obviously more efficient for management. Collectively, parties to labor agreements can work out rules and provisions for such things as comp time, overtime, and other wage-and-hour issues that are far more mutually-acceptable than those which Congress might legislate or federal and state labor departments might impose. As aptly stated by Professor Clyde Summers, a friend of labor, "The path toward deregulation of employment is collective-bargaining."¹⁰

One of the more significant issues with which employers and unions will have to come to grips is the coverage of statutory claims under the grievance/arbitration provisions of the parties' collective bargaining agreements. For the past several years, with the explosion in employment-related litigation, there have been growing institutional concerns over the number of employment cases being litigated in state and federal courts and agencies. As the public debate over decreasing government spending continues, concerns about the costs of litigation before courts and administrative agencies will only increase, as will various methods of alternative dispute resolution. As one commentator recently has put it:

This defines the arbitral imperative in labor and employment law. So long as courts and agencies are the institutional actors making decisions about the role of arbitration in the workplace, arbitration will grow because it replaces litigation -- whether it costs more or less than litigation is of little matter since it moves the cost of justice from the public to the private sector.¹¹

Ready or not, this issue is coming to the fore. Just last month, on October 7, the United States Supreme Court heard oral argument in Wright v. Universal Maritime Service Corp., No. 97-889, a case out of the Fourth Circuit involving the issue whether employees covered by collective-bargaining agreements requiring the arbitration of "all disputes" are required to arbitrate their statutory employment-discrimination claims. Stated differently, Wright presents the question whether employees subject to the grievance/arbitration provisions of collective-bargaining agreements can be precluded from having courts decide their statutory employment-discrimination claims.

Longshoreman Cesar Wright sued an association of stevedoring companies in South Carolina under the Americans With Disabilities Act (ADA), 42 U.S.C. 12101 (1990), claiming he repeatedly was denied work by the companies because of his past history of injuries and disabilities, including a back injury which he previously had certified rendered him permanently and totally disabled. Wright sued in federal court under the ADA, without first having filed any grievance under the contractual arbitration procedure. The grievance and arbitration procedure under the applicable labor agreement broadly covered "all matters affecting wages, hours and other terms and conditions of employment," but did not specifically mention ADA claims or disability-based claims.

In July 1997, the Fourth Circuit affirmed the District Court's grant of summary judgment to the companies dismissing Wright's suit, relying on its prior decision in Austin v. Owens-Brockway Glass Container Corp., 78 F.3d 875 (4th Cir.), cert. den.,____U.S.____, 117 S. Ct. 432 (1996), that a collective-bargaining agreement providing for the arbitration of disputes was binding on a unit employee bringing a Title VII claim of sex discrimination. The Fourth Circuit in Wright rejected the plaintiff's argument that the arbitration provision did not cover his ADA claim because it did not specifically mention disability claims or ADA claims. The Fourth Circuit stated: "An employer need not provide a laundry list of potential disputes in order for them to be covered by an arbitration clause," citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (broad arbitration provision covering "any dispute, claim or controversy" compels arbitration of ADEA claim).

In his arguments before the U.S. Supreme Court, Wright relies on Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), contending that a labor agreement's arbitration provision applies only to disputes concerning the application or interpretation of the labor agreement, and not to a unit employee's individual statutory rights to bring discrimination claims. Wright also argues that unions cannot waive individual employees' substantive and procedural rights under federal anti-discrimination statutes. Wright further argues that the grievance/arbitration procedures of collective-bargaining agreements do not provide an adequate mechanism for vindicating individual rights under employment discrimination statutes.

Reports of the oral arguments before the Supreme Court in Wright suggest that several Justices questioned the advocates about the merits of adopting a rebuttable presumption against the inclusion of statutory discrimination claims in the grievance/arbitration provisions of labor agreements. The Justices' apparent thinking, at least as reflected by their questions, suggested that the rebuttable presumption could be overcome by the parties' contract language clearly specifying their intent to cover those types of claims in their grievance/arbitration procedures. The questions asked by some of the Justices suggested that the Court's 24-year old holding in Alexander v. Gardner-Denver may be "cut-back" somewhat, so that employees may in certain circumstances knowingly and voluntarily delegate to their unions (even prospectively) the right to enforce their statutory claims under a labor agreement's grievance/arbitration provisions. The nature of the questioning at the oral argument (if that even can be any reliable indicator) in Wright seem to suggest that the Court in Wright will not overrule Alexander v. Gardner-Denver, but rather is likely to take some middle-road approach, reaffirming a general rule that collective-bargaining agreements do not cover the arbitration of statutory discrimination claims unless the parties' language in their labor agreements clearly says that they do. That is, the Supreme Court in Wright may extend some of the principles of Gilmer v. Interstate/Johnson Lane to the arbitration of statutory claims under labor agreements, although not by overruling Alexander v. Gardner-Denver, but rather by providing for the arbitration of such claims if the parties clearly express in their contract language their intention to cover such claims under their grievance/arbitration procedures.

As a result, the parties to collective-bargaining relationships need to be ready to discuss and agree whether it is their intent to arbitrate such claims, and if so to discuss and agree on fair procedures for conducting such arbitrations. The arbitration of labor and employment-related claims under collective-bargaining agreements will be more acceptable to both parties if they can agree on procedures making the process fairer to employees, while bringing sufficient integrity and expertise to the adjudication of such claims to satisfy management.¹² As a result, parties to collective-bargaining agreements would do well to look to the work done by ADR associations and services that have revised their arbitration procedures so as to ensure greater due-process protocols.

The improvement of due-process protocols in arbitration should dispel some of the misplaced criticism of privately-promulgated arbitration procedures. The goal of such procedures should be litigation avoidance, not trying to rig the process to favor one side or the other. The parties need to make the collectively-bargained arbitration process more attractive to each other as well as to individual employees. As stated by Arbitrator George Nicolau, who has been very active in advancing greater due-process protocols, some of the tired and worn criticism of private arbitration procedures "fails to consider the fact that resort to time-consuming and expensive lawsuits or hopelessly clogged administrative agencies is hardly an acceptable alternative for most employees."¹³

Professor Sam Estreicher of NYU Law School, and Director of the NYU Center for Labor and Employment Law, has written a very thoughtful piece within the past year concerning the arbitration of statutory employment claims under private agreements. Professor Estreicher writes that the arbitration of labor and employment disputes: "offers the promise of a less expensive, more expeditious, less draining and divisive process, and yet still effective remedy . . . [i]f properly designed, private arbitration can complement public enforcement and, at the same time, satisfy the public-interest objectives of the various statutes governing the employment relationship."¹⁴ Professor Estreicher observes that although the arbitration of public-law disputes is not the same thing as the arbitration of contractual disputes, the public policies behind the enforcement of statutory laws can be met if "certain adjudicative quality standards" are established. These standards would include, but not be limited to: appointing competent arbitrators who know the laws in question; a fair method of cost-sharing to ensure affordable access to the procedures for all employees; a written award explaining the arbitrator's rationale for the result and for his or her disposition of the employee's statutory claims; and some limited judicial review sufficient to ensure that the result is consistent with applicable law.¹⁵

Unions should seriously consider the greater role for arbitration in resolving unit employees' statutory claims. In fact, some commentators have observed that unions should embrace such broader arbitration procedures as an organizing opportunity. Labor unions, like the SEIU, with such provisions in their collective-bargaining agreements, give themselves the opportunity to offer unrepresented employees not only representation, but also access to fairer, less-expensive procedures for resolution of their statutory claims, without having to resort to the courts and administrative agencies. This "may be just the foothold into organizing that unions now seek."¹⁶ As law professor Roberto Corrada has recently written:

[I]t would be a shame if [the AFL-CIO's] stance ultimately inhibits transforming employment arbitration for the betterment of workers. After all, there is some potential for arbitration to provide better access, and thus more overall justice, for more workers, particularly those who are in the lower-wage categories. Labor organizations are uniquely positioned to make a difference for non-union workers by providing information, and even representation, for workers who would use these processes. . . . [I]ndeed what better way of gaining access to employees and becoming educated about particular workplaces? A broad campaign to offer arbitral services, a labor union specialty, may restore worker confidence precisely where that restoration must take place.¹⁷

IV. The National Labor Relations Board

A. Recent Decisions

In the summer of 1998, the NLRB in Washington finally broke the log-jam of undecided pending unfair-practice matters that had been languishing before it for years in some cases. A few of the decisions that may be of some interest from a management perspective include:

Mail Ballots: The NLRB approved, in a 3-2 decision, the use of mail ballots for representation elections, in a case involving 20 dispatch employees working at eight facilities spread across 80 miles. San Diego Gas & Elec. and UFCW Local 1445, 325 NLRB No. 218 (July 21, 1998). The Board abandoned the standards set forth in its 1989 Casehandling Manual that mail ballots should not be used unless circumstances establish the "infeasibility" of a manual ballot election. In place of these standards, the Board identified situations that would "normally suggest the propriety of using mail ballots", including: (1) where eligible voters are scattered because of their job duties over a wide geographic area; (2) where eligible voters' work schedules vary significantly so that they are not present at a common location at common times; and (3) where there is a strike, lock-out or picketing in progress. The three-member Board majority stated that if any of these situations exists, a Regional Director should consider the desires of all the parties, the likely ability of voters to read and understand mail ballots, the availability of addresses for employees, and what constitutes the efficient use of Board resources. The Board majority directed that the NLRB Casehandling Manual be revised so as to reflect these new guidelines, and to delete the "infeasibility" standard. In a dissenting opinion, members Hurtgen and Brame expressed their opinion that the Board majority's movement toward greater use of mail ballots is contrary to established Board precedents of favoring manual elections conducted by Board agents as allowing for greater secrecy and integrity of the ballot.

Independent Contractors: The Board announced it will apply common-law agency principles to determine employee versus independent contractor status, adopted from Restatement (Second) of Agency, 220. The Board listed some of the factors to be considered as including:

(1) The extent of control the employer exercises over the individual's work duties;

(2) Whether the person employed is engaged in a distinct occupation or business;

(3) Whether the work of that occupation is usually performed under an employer's supervision;

(4) The skill required by the occupation;

(5) Whether the employer or the worker supplies the instrumentalities, tools and the workplace;

(6) The length of the relationship;

(7) Whether payment is made according to time spent or by the job;

(8) Whether the work is part of the employer's regular business;

(9) Whether the parties believe they are creating an employer-employee relationship; and

(10) Whether the principal is or is not in the business.

Dial-A-Mattress Operating Corp., 326 NLRB No. 75 (Aug. 27, 1998).

Applying these factors, the Board held that Dial-A-Mattress' owner/operators who used their own equipment and hired their own drivers and helpers to deliver the Company's products were independent contractors, because they:

(1) Had no guaranteed minimum compensation;

(2) Had the opportunity to make an entrepreneurial profit;

(3) Arranged their own training;

(4) Hired their own employees and had sole control over them, including setting their terms and conditions of employment;

(5) Owned and have complete control over their vehicles;

(6) Can decline orders without penalty; and

(7) Are not required to provide services on every company workday.

But, in a companion case, the Board reached a contrary conclusion, finding a trucking company's delivery drivers were employees rather than independent contractors. Roadway Package System Inc., 326 NLRB No. 72 (Aug. 27, 1998). The factors upon which the Board relied in finding Roadways delivery drivers to be employees included that they:

(1) Did not operate independent businesses;

(2) Performed functions essential to the employer's normal operations;

(3) Received company training;

(4) Did business in the employer's name with the employer's assistance and guidance;

(5) Constituted an integral part of the company's business and operated under the company's substantial control;

(6) Had no substantial proprietary interest beyond an investment in their trucks, which they could either lease or purchase; and

(7) Had no significant entrepreneurial opportunity for profit or loss.

Union Access: The Board held that a grocery store did not violate the Act by ejecting non-employee union organizers (as trespassers) from an in-store public snack bar and the front sidewalks which the employer was responsible for maintaining. Farmfresh Inc. and UFCW Local 400, 326 NLRB No. 81 (Aug. 27, 1998). In so ruling on the issue of union access, the Board overruled Montgomery Ward & Co., 288 NLRB 126 (1988), which had allowed non-employee union organizers to solicit peacefully in a food-service establishment located on the company's premises, as being inconsistent with the U.S. Supreme Court's subsequent decision in Lechmere Inc. v. NLRB, 502 U.S. 527 (1992).

Good-Faith Bargaining: The Board held that the employer did not violate 8(a)(5) by imposing a time limit for the union's ratification of its final contract proposals, by threatening to withdraw certain wage-and-benefit proposals unless the union met the ratification deadline, or by unilaterally implementing its final proposals. White Cap Inc., 325 NLRB No. 220 (July 24, 1998). This decision was quite divisive, as three Board members were involved, and each disagreed with the other and wrote separate opinions: Member Hurtgen for the majority, Chairman Gould with a concurrence, and Member Liebman in a dissent.

In another good-faith bargaining case, the Board held that the employer did not violate 8(a)(5) by implementing a less-favorable alternative bargaining proposal after the union membership had rejected the company's final offer, as the alternative was a bona fide proposal over which the company was willing to bargain. Telescope Casual Furniture Inc., 326 NLRB No. 60 (Aug. 27, 1998). The Board held that parties to bargaining are free to induce an agreement by the use of their own lawful devices for economic pressure, including so-called "regressive" bargaining.

B. Politics and Ideologies on the Board

In a labor law conference earlier this year, Board Member Hurtgen candidly revealed that "severe" ideological differences divided the then-five Board Members. With members Fox and Liebman as former union advocates, Chairman Gould as a pro-union academic, and Members Hurtgen and Brame as former management advocates, Member Hurtgen lamented that it was very difficult, if not impossible, for the Board to develop "a sound and consistent view."¹⁸ He observed that there had been so many "ideological swings" over such issues as what employer speech and conduct is permissible in union-organizing campaigns and elections, depending on the individual views of the then-present Board members, that it was "very difficult to devise standards and criteria that are not partisan."¹⁹

In addition, it is now fairly widely-recognized that former Chairman Gould brought his own pro-union views and policies on American labor law to his role as NLRB Chairman, despite his frequent protestations to the contrary. Chairman Gould also was viewed as being overly-adversarial with the Republican-controlled Congress, and overly-defensive of his personal ideologies. For example, Chairman Gould's gratuitous, adversarial, self-congratulatory speech before the California AFL-CIO at its July 1998 convention could not have done the agency any good with Congress or the federal courts that review NLRB decisions. Chairman Gould characterized Congress' inquiries into the Board's policies, even at public-funding time, as illegitimate "intrusion".²⁰ Chairman Gould also blamed the Board's backlog of cases in 1997 and the first half of 1998 on "political intimidation" of the Board by the Republican-controlled Congress, suggesting that Board members were reluctant to decide the cases before them for fear of criticism by Congress. At the same time he was making these obviously adversarial political and ideological criticisms, Chairman Gould offered his gratuitous denial of his critics' observations that it was him who had "politicized the Board." Chairman Gould tried to brush off those criticisms by attributing them to "Republican members of the Congress and some employer lobbyists on the anti-union fringe. . ."²¹

Fortunately, Chairman Gould's acerbic relationship with and criticism of Congress did not hurt the Board in its regional offices. Just a few weeks ago, on October 21, the Board fared well with Congress in its appropriations, receiving $9.8 million more for fiscal year 1999 than it had received the prior fiscal year. Congress appropriated $184.45 million to the NLRB, which was the full amount requested by the Clinton Administration for the Board's work. The discussion in the appropriation hearings, as well as the result itself, makes it clear that the increase in Congress' appropriations for the NLRB was a sign that the agency is recognized as doing a good job in its case-handling responsibilities at the regional level, and the expenses of its trials before administrative law judges. The appropriation is seen as a recognition by Congress of the NLRB's legitimate needs and services require in order to effectively handle the many cases brought under the National Labor Relations Act. Obviously, therefore, again touching base with our question presented, the NLRB is still both relevant and necessary to enforce the provisions of the Act.

However, what the politics and unabashed ideologies expressed by former Chairman Gould in his speeches and decisions has accomplished in the long-run is the greater scrutiny of the Board's decisions by reviewing federal courts. In a recent editorial, one commentator observed that Chairman Gould's "one major accomplishment" was that he has succeeded in drawing greater focus on the Board:

[I]n four years, Gould took an agency that has labored in obscurity for decades and suddenly thrust it into the spotlight. Never mind that he did this as much with his celebrated off-Board (some may say over-Board) antics as he did with agency actions. The point is that everyone suddenly started paying attention to what the Board does.²²

Of course, from a management perspective, greater scrutiny of the Board's decisions by the federal courts charged with the responsibility of reviewing those decisions is a positive development. Nowhere is this greater level of judicial scrutiny more apparent than in the Supreme Court's decision in Allentown Mack Sales & Service Inc. v. NLRB, 522 U.S.___, 139 L. Ed. 2d 797, 118 S. Ct. 818 (1998), in which the Court's majority severely criticized the Board's policy-making disguised as routine case adjudication.

In Allentown Mack, the Supreme Court held that the Board's finding that a successor employer lacked "objective reasonable doubt" about a union's continuing majority status, and therefore was not free to conduct an internal poll as to its employees' support of the union, was not supported by substantial evidence. The Supreme Court remanded the case with instructions to deny enforcement of the Board's order requiring the successor employer to bargain with the union, in a case where the District of Columbia Circuit had enforced the Board's bargaining order, 83 F.3d 1483 (1996). The Supreme Court held that while the Board's stated "objective reasonable doubt" standard for employer polling is, on its face, rational and consistent with the Act, the Board's manipulation of evidentiary standards in applying its test effectively "raised the bar for employee polling."

The Supreme Court in Allentown Mack held that employee polling should be allowed where it does not tend to coerce or restrain employees. The Court ruled that "[t]he Board's finding to the contrary rests on a refusal to credit probative circumstantial evidence [of the absence of employees' continuing support for the union], and on evidentiary standards [of what an employer must prove to show objective reasonable doubt], that go beyond the substantive standard the Board purports to apply." 139 L. Ed. 2d at 810-11. The Supreme Court stated: "Under the Board's enunciated test for polling, it is not the fact of disfavor that is at issue (the poll itself is meant to establish that) but rather the existence of a reasonable uncertainty on the part of the employer regarding that fact. Id. at 11-12. "Giving fair weight to Allentown's circumstantial evidence" of employees' non-support for the union, the Supreme Court held that a rational fact-finder would conclude "that Allentown had reasonable, good-faith grounds to doubt -- to be uncertain about -- the union's retention of majority support." Id. at 813 (emphasis in original).

Writing for the Court, Justice Scalia expressed the Court's exasperation with the Board's "policy-making through case adjudication" as follows:

The National Labor Relations Board, uniquely among federal administrative agencies, has chosen to promulgate virtually all the legal rules in its field through adjudication rather than rule-making. (citations omitted). But adjudication is subject to the requirement of reasoned decision-making as well. It is hard to imagine a more violent breach of that requirement than applying a rule of primary conduct or a standard of proof which is in fact different from the rule or standard formally announced. And the consistent repetition of that breach can hardly mend it.

Reasoned decision-making, in which the rule announced is the rule applied, promotes sound results, and unreasoned decision-making the opposite. The evil of a decision that applies a standard other than the one it enunciates spreads in both directions, preventing both consistent application of the law by subordinate agency personnel (notably administrative law judges), and effective review of the law by the courts.

Allentown Mack ___U.S.___, 139 L. Ed. 2d at 814-15. Justice Scalia continued:

If revision of the Board's standard of proof can be achieved thus subtly and obliquely, it becomes a much more complicated enterprise for a court of appeals to determine whether substantial evidence supports the conclusion that the required standard has or has not been met. It also becomes difficult for this Court to know, when certiorari is sought, whether the case involves the generally-applicable issue of the Board's adoption of an unusually high standard of proof, or rather just the issue of an allegedly mistaken evidentiary judgment in the particular case. An agency should not be able to impede judicial review, and indeed even political oversight, by disguising its policy-making as fact finding.

Id. at 16.

God bless Justice Scalia. This analysis of the Gould Board's disguising of policy agenda as case adjudication is right on the money. This scathing review by the Supreme Court obviously will invite management advocates to ask reviewing federal courts for more stringent review of Board decisions, and may be a harbinger that reviewing courts will be receptive to the argument that the Board is disguising its individual members' policy preferences as case adjudication.²³

Former Chairman Gould himself wrote in his end-of-term report: "A reliable baseline indicator of the impartiality of Board decisions is how well they fare upon appeal to the U.S. Courts of Appeals."²⁴ While Chairman Gould's report touted an overall enforcement rate of 80% or better, in a number of recent cases involving important subjects the Board has not fared so well with the federal courts of appeals. For example:

D.C. Circuit: Held a company president's speech to employees explaining the procedure for decertifying a union and informing employees that the company would be obligated to bargain with the union unless it was decertified, was not unlawful, disagreeing with a decision of the NLRB. Exxel/Atmos, Inc. v. NLRB, 147 F.3d. 972, Nos. 97-1417/1418 (D.C. Cir., June 26, 1998). The D.C. Circuit held that an employer's expression of its views, arguments or opinions is not an unfair labor practice if it contains no threat of reprisal or force, or any promise of benefit. The Court observed that the company merely informed employees of the decertification process, and did so only briefly and accurately, also promising not to take any action against employees based on their signing or not signing of the decertification petition.

Refused to enforce a Gissel bargaining order issued by the Board against a hotel that won a representation election but was found to have committed various unfair labor practices. Flamingo Hilton-Laughlin v. NLRB, 148 F.3d 1166, No. 97-1467 (D.C. Cir., July 31, 1998). The Circuit criticized the NLRB for ignoring substantial undisputed changes in the hotel's operations and personnel in the years since the election, and for focusing instead on the circumstances that existed when the unfair labor practices were committed years previously. The Circuit faulted the Board for failing to focus on three crucial factors that must be met for the issuance of Gissel bargaining orders: the passage of time since the unfair labor practices; the turnover of unit members; and changes in management. In remanding the matter, in a very disapproving tone, the Circuit Court admonished the Board that a Gissel bargaining order is "an extreme remedy" which may issue only if the Board finds substantial evidence establishing that, in light of the circumstances existing at the time of the order, the possibility of erasing the effects of past unfair labor practices and of insuring a fair rerun election by the use of traditional remedies is slight.

Denied enforcement of a Board order that Time Warner Cable recognize the CWA following a contested election, deciding that the Board's decision to disallow a potentially determinative vote (one ballot challenged by union in 14-to-13 vote by 28 eligible employees) was not based on substantial evidence. Time Warner Cable v. NLRB, ___F.3d___1998 WL 769876, No. 97-1524 (D.C. Cir., Nov. 6, 1998). The company had refused to bargain with the union, and the NLRB ordered the Company to bargain. However, the circuit court held that the challenged voter had a sufficient interest in the bargaining unit's conditions of employment to warrant his inclusion in the unit, in light of the facts that he began his unit work as a regular part-time employee before the eligibility period, and made a permanent return to the unit during the period leading up to the election, and therefore that his vote should have been counted, which would have caused the election to result in a tie instead of a union win.

Third Circuit: Held that LPN charge nurses who exercise their authority to discipline nursing aids and are authorized to resolve even minor disputes in the workplace are supervisors, not employees, and therefore are not eligible to be included in a collective-bargaining unit. Passavant Retirement & Health Center v. NLRB, 149 F.3d 243, Nos. 97-3311/3380 (3d Cir., July 24, 1998). The Third Circuit rejected the Board's ruling that these LPNs were not supervisors, disagreeing with the Board's conclusion that the resolution of minor workplace disputes does not rise to the level of the kind of adjustment of grievances performed by a supervisor. The Court held, contrary to the Board, that these LPNs did use their independent judgment and acted in the interests of the employer.

Fourth Circuit: Denied enforcement of Board order that a company which closed its transportation department in retaliation for union activity be required to restore the department. After the union won an election, the employer laid off the employees and out-sourced the work to an outside trucking company. Nonetheless, the Fourth Circuit held that under the circumstances, a restoration order would place an undue burden on the employer, creating undue financial hardship putting the company at substantial risk, and would be punitive rather than remedial. Coronet Foods Inc. v. NLRB, ___F.3d___, 1998 WL 736390 Nos. 97-1087 and 97-1247 (4th Cir., Oct. 22, 1998).

Sixth Circuit: Refused to enforce Board order that construction firm bargain over its subcontracting policies and individual subcontracting decisions, finding no evidence to support the Board's conclusion that the construction firm unilaterally changed its subcontracting practices after the union was certified. NLRB v. Wehr Constr., Inc., ___F.3d___, 1998 WL 739942, No. 96-5358 (6th Cir., Oct. 26, 1998). The Sixth Circuit utilized the balancing test of the Supreme Court in First National Maint. Corp. v. NLRB, 452 U.S. 666 (1981), and determined that requiring the employer to bargain over each individual contracting decision would "severely hamper" the contractor's ability to conduct its business, while having little or no benefit to the union employees.

Held a successor employer at an Ohio paper plant was not responsible for remedying the unfair labor practices committed by the previous owner. Peters v. NLRB, 153 F.3d 289, No. 96-6049 (6th Cir., Aug. 10, 1998). The Board held that the successor employer was not required to comply with the predecessor's collective-bargaining agreement, and was not obligated to bargain with the union before setting its own initial terms and conditions of employment, although the successor employer was required to bargain with the union after the union requested bargaining following the setting of the initial terms and conditions of employment. The Circuit rejected the Board's rulings that the successor employer was obligated to bargain with the union before it set the initial terms and conditions of employment, and was liable for remedying its predecessor's unfair labor practices under Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168 (1973).

Seventh Circuit: Determined LPNs at a Wisconsin nursing home are supervisors for purposes of the Act and therefore not eligible for unionizing. Accordingly, the court held the employer was not required to bargain with the UFCW and denied enforcement of a Board order requiring such bargaining. NLRB v. GranCare Inc., ___F.3d___, 1998 WL 560239, No. 97-3431 (7th Cir., Sept. 4, 1998). The Seventh Circuit held that the Board's decision on the supervisory status of the LPNs was owed "little deference," because the facts in the record showed the LPNs had authority to assign tasks to other employees, used their independent judgment in assigning those tasks, and otherwise controlled and directed the work of the nursing assistants. In the Seventh Circuit's view, the Board had failed to heed the U.S. Supreme Court's decision in NLRB v. Home Care & Retirement Corp. of America, 511 U.S. 571 (1994), which had stricken down the Board's "patient-care analysis."

Eighth Circuit: Ruled the Board erroneously approved a settlement agreement that, in modifying a union-security clause, left intact language requiring all employees to be members of the union. Bloom v. NLRB, 153 F.3d 844, No. 97-1582 (8th Cir., Aug. 7, 1998). The Eighth Circuit remanded the case to the Board with specific instructions to remove the offending union-security language and to insert provisions informing employees of their right either to retain or decline union membership, to pay only a fair-share agency fee if membership is declined, and to be free from retaliation. The Eighth Circuit criticized the Board for approving an agreement that seemed calculated to evade both the letter and the spirit of the U.S. Supreme Court's mandate in CWA v. Beck, 487 U.S. 735 (1988), as well as prior Eighth Circuit decisions remanding two previous settlement agreements to the Board to delete improper union-security provisions.

More clashes of labor law policies and ideologies between the Board and the reviewing federal courts seem likely. At the ABA annual meeting in Toronto in August 1998, Member Brame predicted that a fight is looming on the issue of employer speech in union-representation elections. Member Brame discussed the fact that the Board members had displayed such divergent views on employer-speech issues and employee no-distribution rules in its decision in Beverly Enterprises-Hawaii, Inc., 326 NLRB No. 37 (Aug. 26, 1998). Writing for the majority in that case, Members Fox and Liebman, joined by then-Chairman Gould, opined that an employer which allows supervisors to distribute materials about unionization in the workplace but prohibits employees from distributing materials in the same manner commits unlawful discrimination. However, this analysis seemed to be based on nothing more than a policy preference to eradicate "imbalance in opportunities for communication about unionization." However, this is not the applicable legal test. As Members Brame and Hurtgen pointed out in their dissent, an employer's valid rule against employee distribution is not rendered unlawful simply because the employer chooses to use its own premises to engage in its own distribution of materials. This divergence of opinion on the important issue of employer speech in the representation context suggests that in future cases Members Fox and Liebman will be advocating that employers' speech rights during a representational campaign be substantially limited, in an effort to force employers to remain effectively neutral during organizational campaigns.

Of course, for years pro-union forces have insisted that employer speech has been the primary factor accounting for most failed union elections, and have sought to change the law so as to restrict employer speech. ²⁵ Since the Republican-controlled Congress is not at all likely to change Section 8(c) of the Act or otherwise limit employer speech, some members of the Board may try to do so through the guise of adjudication of individual cases.²⁶ If so, the reviewing federal courts of appeals will be ready. For example, in Medeco Security Locks, Inc. v. NLRB, 142 F.3d 733 (4th Cir., May 4, 1998), the Fourth Circuit held that an employer's anti-union speech that did not violate Section 8(c) of the Act could not be used as evidence of union animus in discharging an employee, reversing a Board decision to the contrary. Federal courts should and will likely continue to scrutinize the Board's attempts to achieve through so-called adjudication what cannot be achieved through legislation or rule-making.

President Clinton recently has indicated his intent to nominate veteran NLRB official John C. Truesdale, a moderate Democrat, for the fifth seat on the Board, vacated by former Chairman Gould's departure on August 27, 1998. Mr. Truesdale has served previously as a Board member and in other high-level NLRB positions. He could bring much needed stability to the Board, and give the new Board members a bridge back to the settled principles that have governed Board decisions for many years. If Mr. Truesdale is successful in being confirmed, and in bringing this stabilizing influence to the Board, he may succeed in easing the presently-high level of scrutiny in federal appeals courts' review of Board decisions, and in Congress' oversight of funding for NLRB operations. This would be a positive development for the Board, which would restore some of the sense of continuity and stability that the present Board needs, particularly in the eyes of Congress and reviewing federal courts.

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1. Daily Labor Report (DLR), Number 216, November 9, 1998, pp. A-10, A-11.

2. In Odebrecht, the Board relied on the guidelines for mail balloting that it had established just three weeks earlier in San Diego Gas & Elec., 325 NLRB No. 218 (July 22, 1998), discussed later herein, supra, at 20.

3. A proposed federal bill, Senate 1663, would require unions to obtain permission from members before using their dues money for political campaign contributions, and unions are expected to spend and lobby heavily to defeat that measure as well.

4. Various web-site articles relating to some of these recent events are attached to this paper for the reader's interest.

5. "The Rising Falling Trade Unions," The Economist, Nov. 22, 1997; C. Summers, "Questioning the Unquestioned in Collective Labor Law," 47 Cath. Univ. L.Rev. 791, 810 & nn. 18, 19 (Spring 1998).

6. See L. Troy, "The UPS Strike: Labor Tilts at Windmills" Heritage Foundation Executive Summary No. 1165, March 20, 1998, a copy of which is attached hereto.

7. "The Left Rises From The Almost-Dead," The Economist, Sept. 6, 1997.

8. See IBEW Press Release, Monday May 11, 1998, a copy of which is attached to these materials.

9. See Website article, "U.S. Telephone Workers Union Ends Strike Against Bell-Atlantic", Aug. 12, 1998, a copy of which is attached to these materials.

10. C. Summers, "Questioning The Unquestioned In Collective Labor Law," 47 Cath.Univ.L.Rev. 791, 793 (Spring 1998).

11. R. Corrada, "The Arbitral Imperative in Labor and Employment Law," 47 Cath. Univ. L. Rev. 919, 931 (Spring 1998).

12. See R. Corrada, "The Arbitrable Imperative in Labor and Employment Law," 47 Cath. Univ. L.Rev. at 934-35.