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. Participants were paid for the time they spent on the committees, and the company supplied necessary materials to each group.
As it turned out, employee interest in the committees was scarce, the NLRB officials found, but the committees started meeting in late January and early February. At that point, notification for recognition from the Teamsters union threw a wrench into the committee arrangements. The company's counsel advised that management could no longer participate in the committee meetings due to the impending union election. Electromation also allowed committee members to decide if they wanted to continue meeting.
This is one area where Electromation erred, Steiner said. "Electromation should have disestablished the committees once the union petition was filed, but company attorneys had advised only that the Electromation management no longer be involved." Several of the committees chose to disband. The committee on attendance bonus policy, however, decided to write up a proposal it had previously discussed before disbanding. The committee originally developed one proposal after its first few meetings, but Electromarion's controller, who served on the committee, had deemed the proposal too costly to implement. The second proposal was never presented to the company president because of the union's petition for recognition.
The Teamsters, in turn, filed an unfair labor practice charge against Electromation, stating that the committees were labor organizations set up and dominated by the employer. The company countered that the action committees were only communication devices similar to other meetings between management and employees, and that no proposals ever were implemented as a result of the committees. Although the union eventually lost the election, it filed objections to the employer's conduct on the same basis. An administrative law judge agreed with the union that Electromation had violated the law. The judge then ordered that the committees be abolished. Attorneys for the company appealed the ruling to the NLRB.
"The NLRB asked for oral arguments in this case, which it rarely does; Steiner noted. "And that's what made this case so big."
The NLRB upheld the administrative law judge's opinion, stating the Electromation committees constituted labor organizations as defined under Section 2(5) of the National Labor Relations Act. According to the NLRB decision, "the term 'labor organization' refers to any kind of employee representation committee or plan in which employees participate and which exists for the purpose, either in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or conditions of work."
The board also agreed that Electromation's committees were dominated by the company. Although board members did not agree on when an employee participation program violates federal law, they all said that Electromarion's committees were definitely illegal. Despite the fact that the committee members were generally self-selected, the company had set up the system, defined the purpose and goals for each committee, and reserved the right to turn down any suggested solutions. In addition, the committees dealt with issues pertaining to grievances, wages, and hours and conditions of work.
NLRB Chairman James M. Stephens, in his written opinion, tried to offer some guidance for employers by defining the following areas in which employee committees would not violate the law:
* A committee formed only to communicate or brainstorm ideas, and such communication in no way is related to proposals developed by employees that the employer is considering.
* The committee formed to adjudicate employee issues, and the employer has no ability to reverse the committee's decisions.
* A committee formed to oversee an essentially managerial function, such as quality control or work process efficiency, as long as it does not take on issues concerning conditions or hours of work, wages or employee grievances.
The principal opinion from NLRB also noted that if a union had been involved in the start-up and administration of the committees, no violation of the law would have occurred.
Steiner, citing his personal opinion on the NLRB ruling, believed that preventing union organizing influenced Electromation's actions and the NLRB's subsequent ruling against the company. "I think union organizing began right after the Christmas party," Steiner said. "This is a small plant in a small town. Someone in management found out."
Although the NLRB decision specifically stated that Electromarion's committees were not the result of an anti-union move, Steiner said he believed that the chronology of events in relation to the union organizing showed otherwise. "It's not part of the decision, but it's a part of the fabric of the decision?'
Steiner also offered one final caution for employers: "If you have a poorly run employee communication program, that could open the door to union organizing:' He added that employee groups that constitute being labor organizations are by law allowed to affiliate with a union.
The Electromarion case appears destined for another round in court. Attorneys representing the company on December 28, 1992, filed an appeal with the 7th Circuit Court of Appeals. "We had hoped that the board would adopt a more flexible reading of the act to allow management to work directly with employees if the employees so choose," said attorney Kathleen Brickley in a statement. "We had further hoped that the board would provide management with practical guidance as to how to set up and maintain lawful joint participation committees in a nonunion setting?' Bill
Bob Smith is editor of HR Focus, published by the American Management Association.…