Employee Committee or Labor Union? A Recent NLRB Ruling Provides Companies with Hazy Guidelines for Setting Up Employee Committees

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The National Labor Relations Board--in its long-awaited and greatly anticipated ruling on employee "action committees"--has failed to deliver what many in business and legal circles had expected.

Last December the NLRB ruled in a 4-0 vote that employee committees formed at Electromation Inc., an Indiana electronics firm, were "labor organizations" that violated federal labor laws based on the employer's interference with and domination over the committees. Several experts in employment and labor law agreed, however, that the board members issued a narrowly defined ruling that does not provide any dear guidance for companies that have embraced the concept of employee participation and team-based work groups. Further action to define exactly when these types of employee committees run afoul of the National Labor Relations Act may end up in Congress.

"In my opinion, Electromation is a facts-specific case and will not influence other cases that do not fail within the factual scenario," said Julius M. Steiner, chairman of the Labor Relations and Employment Law Department at the Philadelphia-based law firm Obermayer Rebmann Maxwell and Hippel. Steiner recently spoke on the Electromation decision during the firm's law briefing attended by more than 40 representatives from area companies, many of whom expressed concern over how the ruling would affect employee participation programs already in place.

"Right now, we have quality service self-directed work teams that hire and fire, and conduct performance appraisals," said one insurance company executive at the briefing. "That is on hold for now."

Two key questions regarding employee participation programs are at the heart of the NLRB case: At what point does an employee committee lose its protection as a communication device and become a labor organization? What actions by an employer are considered to be domination or interference with employee committees?

Merry Christmas to All

The Electromation case dates back to late 1988 when the company, which employed about 200 nonunion workers at the time, took actions to cut expenses after suffering financial troubles. In addition to altering an existing employee attendance bonus policy, the company decided to distribute year-end lump sum payments to employees based on their length of service. Workers were told that the payments would be in lieu of a wage increase for 1989.

"These changes were announced at the employee Christmas party," Steiner noted.

Shortly into the new year, the company received a petition signed by 68 employees that expressed their displeasure with the changes. Electromation's president, John Howard, who also was chief operating officer for parent company American Electronic Components, then met with supervisors. At that meeting, management decided to meet directly with employees to discuss issues, such as wages, bonuses, attendance programs and leave policy. Employees were randomly selected to attend the initial meetings, and were chosen from two groups divided by high and low seniority.

As employee discontent at the meetings grew more obvious, Electromation's management decided to tackle the problems head-on and broke them down into five specific policy categories: absenteeism, smoking policies, communication network, pay progression and attendance bonus. One committee was formed to address each issue. The company posted sign-up sheets for what it called the employee "action committees," limiting the number of employees who could join each group to six. The company also decided that one or two managers would be on each committee. In addition, Electromation's employee benefits manager served as coordinator of each committee.

Steiner emphasized that Electromation's sign-up sheets explained the responsibilities and goals of each committee. However, no employees were involved in the drafting of those guidelines. Committee meetings also were already scheduled by the company on a weekly basis at an on-site conference room. …