U.S. Labor Law

Tuesday, June 19Beijing 2007

National Labor Relations Act (NLRA): Section 7 Rights

To organize and select representative (or not)

To collectively bargain through representative

To engage in concerted activity for mutual aid and protection

Labor Law Enforcement Mechanisms

NLRB: Five-member administrative board – Oversees representation matters– Hears and decides unfair labor

practice claimsArbitration: Contract violations

(grievances)

Employer Unfair Labor Practices

8(a)(1): Interference with Section 7 rights

8(a)(2): Employer domination of union8(a)(3): Discriminatory treatment for

employee support of union8(a)(5) Failure to bargain in good faith

Two Ways to Obtain Union Representation

Voluntary recognition by employer following demand by union with majority support

Affirmative secret ballot vote by a majority of employees in a unit sought to be represented

Enterprise Level Representation

Unlike some countries, unions in the U.S. do not bargain on a regional or national basis

Instead, the NLRA authorizes representation of similarly situated employees at a plant level

Bernhard-Altmann

At the time that the parties in this case executed a collective bargaining agreement, a majority of employees in the unit wanted union representation

Why was this found to be insufficient by the Supreme Court to justify the employer’s voluntary recognition of the union?

U.S. Union Representation

The NLRA authorizes selection of an exclusive union representative only with majority support, preferably by an election

Most countries do not have elections, but simply require employers to bargain with unions with some support

Which approach is preferable?

Asserted Problems of U.S. Representational system

Employers lawfully may campaign against union representation so long as no threats or coercion

But, studies show that 1 in 4 active union supporters are fired in organizing campaigns

Slow and weak NLRB remedies

NLRA Remedies

ReinstatementBack payBut no punitive or compensatory

damages

Decline in Union Density

1954 34.7%1970: 24.7%1990: 16.1%2006: 12.0%

Total: 16 million members

Question

The percentage of unionized workers has steadily declined over the past 30 years. What factors likely are contributing to this decline?

Is the decline likely to continue?How does the decline affect the legal

contours of nonunion employment?

Causes of union decline

Global product and labor market competition

Changing workforce composition Increase in contingent workers Employer opposition/NLRA

weaknesses

Growth of Statutory Employment Law

Anti-Discrimination statutesOccupational Safety & Health Act

OSHA)Fair Labor Standards Act (FLSA)Family & Medical Leave Act (FMLA)Employee Retirement & Income

Security Act (ERISA)

Employee Free Choice Act

The House of Representatives has passed this bill which would require employers to bargain with a union that demonstrates majority support through signed authorization cards (without an election)

Would this be a good or bad idea?

Consultative Bodies

The NLRA bans employer support of non-union organizations that deal with terms and conditions of employment

The NLRB has interpreted 8(a)(2) to prohibit an employer’s establishment of consultative committees that discuss employment terms

Is this good or bad policy?

Duty to Bargain

Both employers and unions have a duty to bargain in good faith concerning terms and conditions of employment– Must bargain: Er-Ee relation issues– Need not bargain: Er business issues

An employer that unilaterally changes employment terms without bargaining commits an ULP

Protected Concerted Activity

StrikesPeaceful picketingConcerted refusal to perform

dangerous work (even if no union)Discussion of work issues on a blog so

long as employer product not defamed

Employer Responses to Concerted Acts

Employer cannot fire employees for engaging in concerted acts

But, employer can hire temporary or permanent replacement workers– When strike over, employer need not

bump permanent replacements– Strikers have right to reinstatement only as

positions open up

Policy Question

What is the likely impact of the permanent replacement rule on employment policy?

Is there a better way to balance the competing interests of labor and management in this context?

Labor Law – Job security

Substantive standard in collective bargaining agreements: no discharge or discipline without “just cause.”– Notion of progressive discipline– Notion of industrial due process

Procedural process:– Grievance procedure– Binding arbitration

Just Cause

Conduct that interferes with management’s legitimate expectations.

May encompass:– Misconduct– Poor performance– Lack of work– Violation of reasonable work rules

Arbitration: Pro’s

Fair standardParties can define “just cause”Fast and informalLow transaction costs

Arbitration: Con’s

Less due processArbitrator tendency to “split the baby”

German Labor Law

Friday, June 22Beijing 2007

EU Role

Collective Bargaining: Not included within area of EU competence

Consultation: EU may legislate in this arena subject to qualified voting approval

German Sources of Law

Constitution: Protects “right to form associations to safeguard and improve working and economic conditions”

Statute: Collective Bargaining Agreements Law of 1969

Enforcement: Through labor courts

Union Density

20% of workforce are union members43% of workforce covered by collective

bargaining agreementsMajority of employees subject to

substantive terms of agreements via extension

Two-tiered System

Collective bargaining generally takes place on a regional basis among industries through union and employer associations

Consultation through works councils occurs at the enterprise and/or plant level

Union Representation Rights

If one worker in plant is a union member, the employer is obligated to recognize that union as the representative of all employees

If more than one union has membership, DGB confederation mediates representation status

Policy Questions

What are the likely policy implications of this rule?

What are the pros and cons of this rule as compared to the U.S. approach?

Contract Types

Framework Agreements: Ongoing agreement covering non wage terms such as hours, vacation, safety, and termination

Wage Agreements: Time-specific agreement covering wage and salary adjustments

Contract Application

Contracts technically fix terms of employment only for union members

But employers generally apply contract terms to all employees

Contract Extension

Government may extend CBA terms to others if:– Social partners consent– At least 50% of employees are within the

occupational or geographic scope of agreement

– Deemed to be in the public interestMay also extend CBAs in construction

industry even without consent

Policy Questions

What are the likely policy implications of this rule?

What are the pros and cons of this rule as compared to the U.S. approach?

Concerted Activity

Statutory silence on topicCourts interpret constitution to protect

right to strike in support of collective bargaining position

Employer may engage in defensive lockout, but not offensive lockout

Lockouts

Offensive lockout: Apply pressure on union in support of bargaining position by denying temporary access to work

Defensive lockout: Apply pressure on union engaged in a partial strike by denying work access to some additional non-strikers

Additional Limitations on Employers

Defensive lockouts must be proportional to size of strike (e.g., if strike < 25%, then lockout may not exceed total of 25% out of work)

Employer may not hire either permanent or temporary replacement workers during a strike

Policy Questions

Why ban offensive lockouts? Aren’t they = to a strike?

How do the German rules of conflict likely impact the outcome of collective bargaining?

Works Councils

Elected representative bodies at plant or enterprise level with consultative authority

Employees have right to establish at any workplace with 5 or more employees

No right to strike

Right to Information and Consultation

Employer must consult with respect to anticipated workforce expansion, contraction, or reorganization

Works council has right to information and comment on – Employee termination– Employer compliance with legal rules

Information and Veto Right

With respect to the hiring, deployment, and transfer of employees

Employer may challenge an works council veto before a labor court

Codetermination Rights

Employer may not alter work hours, vacation policies, or safety rules without consent of works council

Employer must negotiate a social plan with works council to address adverse collective actions such as plant closings and mass layoffs

Impasses subject to binding arbitration

Relationship to Collective Agreement

Compensation matters governed by agreement, not works council

Works council can enhance employee rights but cannot undo more protective agreement provisions absent agreement waiver

But works council has right to codetermination unless agreement leaves no room for discretion

Two-tiered System

Collective bargaining generally takes place on a regional basis among industries through union and employer associations

Consultation through works councils occurs at the enterprise and/or plant level

Policy Questions

What are the advantages of this two-tiered system? The disadvantages?

Does the existence of works councils bolster or undercut the realm of collective bargaining?

Could a works council system be imported to the U.S.?

European Union Directives

European Works Council Directive: Requires elected works councils for large multi-national businesses

General Framework Directive: Requires employers with more than 50 employees to establish mechanisms for employee consultation

Chinese Trade Union Law

Monday, June 25Beijing 2007

PRC Trade Union Law

Article 3: All workers have the right to participate in and form trade union organizations

Article 10: A basic trade union committee shall be set up in in an enterprise having 25 or more union members

Collective Contracts

Labor Law Art. 33: Union may negotiate collective contract with enterprise

Art. 35: Collective contract is binding on enterprise and workforce; terms may not be reduced by individual contracts

Collective Contracts

2004 study reports that collective contracts generally contain few substantive provisions, but provide means for collective enforcement

Labor Law Art. 84: Unions may enforce contracts through arbitration/court systems

Labor Law: Union Consultation Rights

Employer must give 30 days notice and consult prior to making lay-offs (27)

Union has right to express opinion as to terminations (30)

Right to consult on health & safety (52)Right to monitor employer compliance

with legal obligations (88)

Strikes

Right to Strike Omitted from 1982 Constitution

LL Art 56: Permits employees to refuse to perform unreasonably dangerous tasks

TUL Art. 27: Union obligated to assist enterprise in resuming production

Trade Union Issues

All China Federation of Trade Unions (ACFTU) owes multiple loyalties

Low rate of unionization in private enterprises

ACFTU is sole permissible union representative

ACFTU Responsibilities (TUL Art. 4 & 6)

Fundamental responsibility to protect workers’ legitimate rights and interests

Obligation to respect the legitimate interests and rights of private investors and to assist economic development

Obligation to adhere to the socialist road

ILO Conventions

Neither China nor the U.S. have ratified two basic conventions recognizing right of workers to:– Form and join independent trade unions,

and – Engage in collective bargaining free of

government and employer interference

ACFTU Membership

1995: 104 million

1999: 87 million

2003: 134 million

Prevalence of Union Membership

High Union Membership: Urban SOEs

Low Union Membership: FIEs and domestic private enterprises

Economic Liberalization Results In

More – Economic growth– Employment in FIEs

Less– Economic and social stability– Union membership– CCP influence in workplace

Push for Greater Unionization

2001 amendments to Trade Union Law Increased pressure on FIEs to

recognize and bargain with ACFTU (Walmart)

2006 ACFTU Plan calls for unionizing 70% of FIEs over next two years

Pending Labor Contract amendments

Draft Labor Contract Amendments

First draft issued Spring 2006Open comment and consultative

processMore than 190,000 comments

submittedThird draft now under consideration –

Standing Committee enactment likely

Labor Reform Proposals

1)Requires employment contracts for all workers; minimum terms implied by law or collective agreement if no written contract

2) Reduce length of probationary periods

3) Limit continuous casual employment; employee with contract renewed on 2 consecutive occasions entitled to indefinite contract duration

Labor Reform Proposals

4) Regulates labor staffing firms and treats as joint employer

5) But, part-time workers who average less than 24 hours/week may be hired without contract and on at-will basis

6) Employer required to enter into collective contract with union, or if not yet in existence, with representative of employees with assistance of regional union body

Labor Reform Proposals

7) Employer must consult with union before adopting or changing policies that have a “direct bearing” on matters of interest to employees

8) Limits amount of damages an employer may claim for training costs

9) Employer failure to pay wages as stipulated subject to 50% additional penalty

FIE Opposition

“Two steps backward”FIEs suggest that more burdensome

rules may dampen foreign investment Intense lobbying campaign

– Am Cham actively opposes and proposes alternatives

– American unions actively support

A Delicate Balance

Stem social unrest by enhancing employee protection

Avoid disincentives for continued FIE economic participation

Enhance government influence while lessening Western influence in FIE workplaces

Union Obstacles in a Global Economy

Capital mobility reduces union bargaining power

Contingent workers are difficult to organize

Global competition spurs regulatory “race to the bottom”

Reform Impact

Amendments run counter to “race to the bottom” trend

Practical impact depends upon enforcement

Burgaighis Critique

Push for increased union role is not aimed at undercutting FIE entrepreneurial authority

Instead, increased ACFTU presence serves to increase governmental influence and control

Special Economic Zones

Foreign investment laboratories– Entice investment– Experiment in market economy and relaxed rules – Limit Western influence

Relatively successful in terms of assisting growth of economic development

Relatively unsuccessful in terms of encouraging domestic enterprises