By Reynolds, Larry
Management Review , Vol. 81, No. 1
An Old NLRB Rule Threatens Quality Circles
XYZ Inc., a large manufacturing company, had just instituted an employee-management quality program that won praise from almost everyone involved. The company was already reaping the benefits of the effort--from increased production to a boost in morale. There was just one small problem: The program was illegal. It turns out, employee-management cooperation groups and quality improvement programs, especially those at nonunionized companies, may be illegal under a 55-year-old unfair labor practices provision designed to protect a union's right to organize employees.
A recent joint survey by the U.S. General Accounting Office (GAO) and the University of Southern California found that 60 percent of Fortune 500 firms either have implemented or are experimenting with different types of employee involvement programs. These programs and similar ones in thousands of smaller corporations, however, may unknowingly violate a 1935 amendment to the National Labor Relations Act. Labor experts say that the amendment originally was designed to eliminate the widespread use of company-dominated "sham" unions employers created to compete with legitimate independent trade unions.
Concerned that labor law has not kept pace with today's workplace, business groups in late September petitioned the National Labor Relations Board (NLRB) to revise its half-century-old restrictions. "This decision could have a major impact on the future overall direction of employee relations," predicts Mike Madison, a Washington business consultant. "It could either speed up or put a brake on the spread of all kinds of labor-management cooperation efforts now being experimented with across the country."
When the National Labor Relations Act was first written, notes Washington labor lawyer and former NLRB member Don Zimmerman, Congress assumed that management and employees would be constant adversaries. Capito Hill continued to make the same assumption when it amended the act in 1935 to outlaw management-controlled sham unions. In turn, any employee group "that deals with employment conditions" and is "supported" by the employer, ranging from a quality circle to a plant's health and safety committee, can be a potentially illegal labor organization under current NLRB guidelines.
"We've already reached the worst-case scenario where almost any kind of employee involvement group that discusses workplace issues with management could be challenged under present NLRB policy," Zimmerman notes.
Jeff McGuiness of the business-backed Labor Policy Association, agrees: "Even in a unionized setting where both the company and the union want the program, one disgruntled employee could blow it out of the water simply by filing a grievance with the NLRB. …