Reference no: EM131455373

Question: Electromation v. National Labor Relations Board 35 F.3d 1148 (7th Cir. 1993)

A nonunion company negotiated with its workers to resolve labor issues through "employee participation" or "employee-management" focus groups rather than a union. The court held that these committees constituted labor organizations and were dominated by the employer, thus constituting an unfair labor practice.

Will, J.

At the time of the events which gave rise to this suit, Electromation's approximately 200 employees, most of whom were women, were not represented by any labor organization. To minimize the financial losses it was experiencing at the time, the company in late 1988 decided to cut expenses by revising its employee attendance policy and replacing the 1989 scheduled wage increases with lump sum payments based on the length of each employee's service at the company. In January 1989, the company received a handwritten request signed by 68 employees expressing their dissatisfaction with and requesting reconsideration of the revised attendance bonus/wage policy. After meeting with the company's supervisors, the company President, John Howard, decided to meet directly with employees to discuss their concerns. Accordingly, on January 11, 1989, the company met with eight employees-three randomly selected high-seniority employees, three randomly selected low-seniority employees, and two additional employees who had requested that they be included-to discuss a number of matters, including wages, bonuses, incentive pay, tardiness, attendance programs, and bereavement and sick leave policy, all normal collective bargaining issues. Following this meeting, Howard met again with the supervisors and concluded that management had "possibly made a mistake in judgment in December in deciding what we ought to do" . . . [and] "that the better course of action would be to involve the employees in coming up with solutions to these issues."

The company determined that "action committees" would be an appropriate way to involve employees in the process. Accordingly, on January 18, 1989, the company met again with the same eight employees and proposed the creation of action committees to "meet and try to come up with ways to resolve these problems; and that if they came up with solutions that we believed were within budget concerns and they generally felt would be acceptable to the employees, that we would implement these suggestions or proposals." At the employees' suggestion, Howard agreed that, rather than having a random selection of employee committee members, signup sheets for each action committee would be posted. On the next day, the company posted a memorandum to all employees announcing the formation of the following five action committees: (1) Absenteeism/Infractions; (2) No Smoking Policy; (3) Communication Network; (4) Pay Progression for Premium Positions; and (5) Attendance Bonus Program. Sign-up sheets were also posted at this time. On February 13, 1989, the International Brotherhood of Teamsters, Local Union No. 1049 (the "union") demanded recognition from the company. Until then, the company was unaware that any organizing efforts had occurred at the plant. In late February, Howard informed Employee Benefits Manager Loretta Dickey of the union's demand for recognition. Upon the advice of counsel, Dickey announced at the next meeting of each committee that, due to the union demand, the company could no longer participate in the committees, but that the employee members could continue to meet if they so desired. Finally, on March 15, 1989, Howard formally announced to the employees that "due to the union's campaign, the Company would be unable to participate in the [committee] meetings and could not continue to work with the committees until after the [union] election."

The union election took place on March 31, 1989; the employees voted 95 to 82 against union representation. On April 24, 1989, a regional director of the National Labor Relations Board (Board) issued a complaint alleging that Electromation had violated the Act by refusing to meet. Section 2(5) of the Act defines a labor organization as: any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work. Under this statutory definition, the action committees would constitute labor organizations if: (1) the Electromation employees participated in the committees; (2) the committees existed, at least in part, for the purpose of "dealing with" the employer; and (3) these dealings concerned "grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work." With respect to the first factor, there is no question that the Electromation employees participated in the action committees.

Turning to the second factor, which is the most seriously contested on appeal, the Board found that the activities of the action committees constituted "dealing with" the employer. We agree with the Board that the action committees can be differentiated only in the specific subject matter with which each dealt. Each committee had an identical relationship to the company: the purpose, structure, and administration of each committee was essentially the same. We note, in addition, that even if the committees are considered individually, there exists substantial evidence that each was formed and existed for the purpose of "dealing with" the company. It is in fact the shared similarities among the committee structures which compels unitary treatment of them for the purposes of the issues raised in this appeal. Given the Supreme Court's holding that "dealing with" includes conduct much broader than collective bargaining, the Board did not err in determining that the Electromation action committees constituted labor organizations within the meaning of Sections 2(5) and 8(a)(2) of the Act. Finally, with respect to the third factor, the subject matter of that dealing-for example, the treatment of employee absenteeism and employee bonuses-obviously concerned conditions of employment.

The purpose of the action committees was not limited to the improvement of company efficiency or product quality, but rather that they were designed to function and in fact functioned in an essentially representative capacity. Accordingly, given the statute's traditionally broad construction, there is substantial evidence to support the Board's finding that the action committees constituted labor organizations. Section 8(a)(2) declares that it shall be an unfair labor practice for an employer: to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it: Provided, that subject to rules and regulations made and published by the Board pursuant to Section 6, an employer shall not be prohibited from permitting employees to confer with him during working hours without loss of time or pay. Section 8(a)(1) provides that it shall be an unfair labor practice for an employer: to interfere with, restrain or coerce employees in the exercise of the rights guaranteed in section 157 of this title. Section 7 in turn provides that: [e]mployees shall have the right to self-organization, to form, to join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any and all such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title. Electromation argues that the Board's ruling in this case implies that an employer violates Section 8(a)(2) whenever it proposes a structure whereby the employees and employer "cooperate," or meet together to discuss topics of mutual concern. The company thus asserts that the Board may find a violation of Section 8(a)(2) only where it finds that the employer has actually undermined the free and independent choice of the employees

The company played a pivotal role in establishing both the framework and the agenda for the action committees. Electromation unilaterally selected the size, structure, and procedural functioning of the committees; it decided the number of committees and the topic(s) to be addressed by each. The company unilaterally drafted the action committees' purposes and goal statements, which identified from the start the focus of each committee's work. Also, despite the fact that the employees were seriously concerned about the lack of a wage increase, no action committee was designated to consider this specific issue. In this way, Electromation actually controlled which issues received attention by the committees and which did not. Although the company acceded to the employees' request that volunteers form the committees, it unilaterally determined how many could serve on each committee, decided that an employee could serve on only one committee at a time, and determined which committee certain employees would serve on, thus exercising significant control over the employees' participation and voice at the committee meetings.

Also, although it never became a significant issue because so few employees signed up for the committees, the initial sign up sheets indicated that the employer would decide which six employees would be chosen as committee members where more than six expressed interest in a particular committee. Ultimately, the company limited membership to five and determined the five to serve. Also, the company designated management representatives to serve on the committees. Employee Benefits Manager Dickey was assigned to coordinate and serve on all committees. In the case of the Attendance Bonus Program Committee, the management representative-Controller Mazur- reviewed employee proposals, determined whether they were economically feasible, and further decided whether they would be presented to higher management. This role of the management committee members effectively put the employer on both sides of the bargaining table, an avowed proscription of the Act. Finally, the company paid the employees for their time spent on committee activities, provided meeting space, and furnished all necessary supplies for the committees' activities. While such financial support is clearly not a violation of Section 8(a)(2) by itself, in the totality of the circumstances in this case such support may reasonably be characterized to be in furtherance of the company's domination of the action committees. We therefore conclude that there is substantial evidence to support the Board's finding of unlawful employer domination and interference in violation of Section 8(a)(2) and (1). NLRB ORDER ENFORCED.

1. Did the employer seem to intentionally violate the law? Explain.

2. What do you think would motivate an employer to prefer to deal directly with an employee participation group rather than a union?

3. Do you think it's harmful to put the employer on "both sides of the bargaining table"? Explain the pros and cons.