Chapter 11 Labor Unions and Collective Bargainingcf.linnbenton.edu/bcs/bm/godwinm/upload/BA224_ch11.pdf · Laws Affecting Collective Bargaining: National Labor Relations Act Wagner

Chapter 11

Labor Unions and Labor Unions and

Collective Bargaining

Copyright © 2016 Pearson Education, Inc. 11-1

Why Unions Exist

• Industrial Revolution

• Change from largely family-owned

craft / agricultural businesses to large

industrial factoriesindustrial factories

• Profit motives of the factory owners

• Legislation that requires management

recognize unions (National Labor

Relations Act of 1935)11-2Copyright © 2016 Pearson Education, Inc.

Craft and Industrial Unions

• Craft union: Typically composed of

members of particular trade or skill

in specific locality (i.e., Carpenters

and Joiners) and Joiners)

• Industrial union: Consists of all

workers in particular plant or group

of plants (i.e., United Auto Workers)


Why Employees Join Unions

Dissatisfaction with management and

insecurity regarding:

�Compensation and employee benefits

�Job security concerns

�Attitude of management toward workers


Employee Benefits: Union and

Nonunion Settings

11-5Copyright © 2016 Pearson Education, Inc.

Union Structure

• Local union

• National (or international) union

• American Federation of Labor and • American Federation of Labor and

Congress of Industrial Organizations

(AFL-CIO)

• Change to Win Coalition


Local Union

• Basic element in structure of

American labor movement

• Deals with employer on day-to-day • Deals with employer on day-to-day

basis


National Union

• Composed of local unions, which it charters

�Local union, not individual worker, holds

membership in national union

• Service Employees International Union (SEIU) is • Service Employees International Union (SEIU) is

largest and fastest-growing national union (2.1

million members)

• International Brotherhood of Teamsters has

about 1.4 million members


American Federation of Labor and

Congress of Industrial Organizations (AFL-

CIO)

• Represents labor interests at highest level

• Does not engage in collective bargaining

• Financed by member of national unions• Financed by member of national unions

• Has little formal power or control

• Central U.S. trade union federation


Change to Win Coalition

• Union federation consisting of 7 unions that

broke from AFL-CIO

• Formally launched rival labor federation

representing about 6 million workers in 2005

• Led by Service Employees International Union • Led by Service Employees International Union

• Primary targets for organizing: Industries in

cleaning, health care, hotels and restaurants,

retailing, and transportation

• Goal: To unite 50 million workers


Prevalence of Unions

• Percent of all wage and salary

workers who are members of a union

is 11.3 percent

• Membership rate down from 20.1 • Membership rate down from 20.1

percent in 1983

• Unionization rates

�Private sector, 6.7 percent and declining

�Public sector, 35.3 percent and

declining 11-11Copyright © 2016 Pearson Education, Inc.

Reasons for Decline in

Unionization Rates

• Tactics to force union membership

now prohibited by law

• Disadvantaged groups (women, racial • Disadvantaged groups (women, racial

minorities) protected by government

regulation such as the Equal Pay Act

• Globalization pressure:

�Need for greater union flexibility

�Offshoring jobs11-12Copyright © 2016 Pearson Education, Inc.

Reasons for Decline in

Unionization Rates (Cont.)

• Lower unionization in right-to-work

states

• Public sector unionization under • Public sector unionization under

greater scrutiny by politicians


Union Growth Strategies -1 of 2-

• Strategically-located union members

• Pulling union through

• Political involvement

• Union salting

• Flooding community

11-14

Union Growth Strategies -2 of 2-

• Public awareness campaigns

• Building organizing funds

• Partnering with high schools

• Organizing younger workers

• Organizing through the card check

11-15

Strategically-Located

Union Members

• Importance of jobs held by union members

significantly affects union power

• Few strategically-located union members • Few strategically-located union members

may exert disproportionate amount of

leverage

• Truckers or dock workers can affect entire

country


Pulling the Union Through

• Put pressure on end user of

company’s product

• Example: Strike against four Johnson

Controls factories that make interior

parts for some of country’s best-

selling vehicles

� GM and Chrysler played active behind-

the-scenes role, pressuring JCI to settle

dispute


Political Involvement

• Political arm of AFL-CIO is Committee

on Political Education (COPE)

�Recommend and assist candidates who

will best serve its interestswill best serve its interests

• Friends in government put union in

stronger position

• Unions support candidates who

pledge to help pass pro-labor

legislationCopyright © 2016 Pearson Education, Inc. 11-18

Union Salting

• Union organizers apply for jobs at company

�Once hired, work to unionize

• US Supreme Court has ruled employers cannot discriminate against union salts


Flooding the Community

• Union inundates communities with

organizers to target particular

business

• Unions typically choose companies in

which nonunionized employees have

asked for help in organizing

• Target weak managers’ departments


Public Awareness Campaigns

• Maneuvers that do not coincide with

strike or organizing a campaign to

pressure employer

• Alternative to strikes because more • Alternative to strikes because more

employers are willing to replace

striking workers

• Employers have less recourse


Building Organizing Funds

• AFL-CIO asks affiliates to increase organizing funds

• May increase funding to organizing institute, which trains organizers institute, which trains organizers

• Launches advertising campaign to create wider public support


Organizing Younger Workers

• Major strategy now being pursued

by union organizers

• In the past, younger organizers • In the past, younger organizers

were sometimes considered

second-class citizens


Card Check

• Employees sign non-secret card of

support if they want unionization

• If majority of workforce signs a card,

union is formedunion is formed

• Expedited ways of polling workers on

union representation

• No secret-ballot election takes place

• Organizations decide to remain

neutralCopyright © 2016 Pearson Education, Inc. 11-24

Laws Affecting Collective Bargaining:

National Labor Relations Act

Wagner Act of 1935

• Created National Labor Relations

Board (NLRB)Board (NLRB)

�Establish procedures for holding

bargaining unit elections and

monitor elections

�Investigate complaints and prevent

unlawful acts and unfair practices 11-25

Unfair Labor Practices -1 of 2-

• Interfering with or restraining or coercing

employees in the exercise of their right to self-

organization

• Dominating or interfering in the affairs of a union

• Discriminating in regard to hire or tenure or any • Discriminating in regard to hire or tenure or any

condition of employment for the purpose of

encouraging or discouraging union membership


Unfair Labor Practices -2 of 2-

• Discriminating against or discharging an

employee who has filed charges or given

testimony under the act

• Refusing to bargain with chosen representatives • Refusing to bargain with chosen representatives

of employees


Labor Management Relations Act

Taft–Hartley Act of 1947

• Revised the National Labor Relations

ActAct

• Pendulum had begun to swing toward

more balanced position between

labor and management

• Extended concept of unfair labor

practices to unions 11-28Copyright © 2016 Pearson Education, Inc.

Bargaining Unit

Consists of employees recognized by

employer or certified by administrative

agency as appropriate for

representation by labor organization representation by labor organization

for purposes of collective bargaining


Steps for Forming a Bargaining Unit External Environment

Internal Environment

Signing of

Authorization

Cards

Petition

for

Election

Election

Campaign

Election

and

CertificationCards Election Certification


Signing Authorization Cards

• Document indicating employee wants

to be represented by labor

organization in collective bargaining

• Determines if there is sufficient

interest on part of employees to justify

unit

• Evidence of interest when at least

30% of employees sign authorization

cards11-31Copyright © 2016 Pearson Education, Inc.

Sample Authorization Card

11-32

Petition for Election

• After authorization cards signed, petition for

election made to regional NLRB office

• NLRB will ordinarily direct that election be

held within 30 daysheld within 30 days


Election Campaign

• Both union and management usually

promote causes actively

• Cannot threaten loss of jobs or • Cannot threaten loss of jobs or

benefits

• Cannot misstate important facts

• Illegal to incite racial or religious

prejudice


Election and Certification

• NLRB monitors secret-ballot election

• Board issues certification of results

to participantsto participants

• If majority of employees vote for

union, NLRB will certify


Collective Bargaining Defined

• Collective Bargaining: The process of

negotiation between union representatives and

representatives of management to agree on a

collective bargaining agreement or contract

• The NLRA specifies that both the employer and • The NLRA specifies that both the employer and

representatives of employees meet at

reasonable times to confer in good faith with

respect to wages, hours, and other terms related

to conditions of employment, or to negotiate an

agreement


Collective Bargaining Process

Bargaining Issues

Preparing for Negotiation

Negotiating the Agreement

EXTERNAL ENVIRONMENT

INTERNAL ENVIRONMENT

11-37

Reaching the Agreement

Negotiation Breakdowns?

Ratifying the Agreement

Administration of the Agreement

Overcoming BreakdownsYes

No

Categories of Bargaining Issues

1. Mandatory bargaining issues

�Wages, hours, etc.

2. Permissive bargaining issues2. Permissive bargaining issues

�May be raised but neither side may insist

that they be bargained over

3. Prohibited bargaining issues

�Statutorily outlawed


Bargaining Issues

Document that results from collective bargaining

process is a labor agreement or contract

� Recognition

� Management rights

� Union security

� Compensation and benefits

� Grievance procedure

� Employee security


Recognition

• Appears at the beginning of labor

agreement

• Identifies union that • Identifies union that

is recognized as bargaining

representative

• Describes bargaining unit (ie, whom

the union represents)


Management Rights

Section often (but not always) written

into labor agreement that spells out

rights of managementrights of management


Union Security

� Closed shop: Only union members

� Union shop: Employees must become members

� Maintenance of membership: Must continue

membership until termination of agreementmembership until termination of agreement

� Agency shop: Nonunion members pay dues

� Open shop: Equal terms for union members and

nonmembers

� Checkoff of Dues: Company agrees to withhold

union dues

11-42

Compensation and Benefits

� Wage rate schedule

� Overtime and premium pay

� Jury pay

� Layoff or severance pay

� Holidays

� Vacation

� Family care11-43

Grievance Procedure

• Grievance: Employee’s

dissatisfaction or perception of

personal injustice relating to

his or her employment his or her employment

• Grievance procedure: Steps by

which employees can voice

dissatisfaction with specific

management actions11-44Copyright © 2016 Pearson Education, Inc.

Employee Security

Seniority: Length of time employee

has been associated with a company,

division, department, or job


Job-Related Factors

Many rules governing employee

actions on job are included

• company work rules, standards, and• company work rules, standards, and

safety rules

• varies by company


Preparation for Negotiations

• Union continuously gathers

information about membership

needs to identify areas of

dissatisfactiondissatisfaction

�Union steward is normally in best

position to collect such data

• Management also prepares for

negotiations


Negotiating the Agreement

• Begins with each side presenting

initial demands

• Requires give and take• Requires give and take

• Each side does not expect to obtain

all demands presented


Example of Negotiating a

Wage Increase


Breakdowns in Negotiations

• Third party intervention

• Union strategies for overcoming

breakdownsbreakdowns

• Management strategies for

overcoming breakdowns


Third Party Intervention

• Mediation: Neutral party comes in

when impasse is reached

• Arbitration: Impartial third party

makes binding decision to settle makes binding decision to settle

dispute

�Sources of mediators and arbitrators:

Federal Mediation & Conciliation Service

and American Arbitration Association


Union Strategies for Overcoming

Negotiation Breakdowns: StrikesStrike: Union members refuse to work

to pressure management in

negotiations

• Strikes halt production, resulting in

lost customers and revenue lost customers and revenue

• Fewer strikes today

• Timing is important

• Unions prefer to strike only as last

resort 11-52Copyright © 2016 Pearson Education, Inc.

Union Strategies for Overcoming

Negotiation Breakdowns: Boycotts

• Union members agree to refuse to use or buy

firm’s products

�Example: Coors

�Effect often lasts much longer than �Effect often lasts much longer than

strike

�Shoppers change buying habits

• Secondary boycott: Union encourages third

parties to stop doing business with company

�Practice is illegal 11-53Copyright © 2016 Pearson Education, Inc.

Management Strategies for Overcoming

Negotiation Breakdowns: Lockout

• Lockout: Management keeps employees out

• Operate by placing management and nonunion

workers in striking workers’ jobs

• Effective when:• Effective when:

�Management dealing with weak union

�Union treasury is depleted

�Business has excess inventories


Management Strategies: Continue

Operations Without Striking Workers• Operate firm by placing management

and nonunion workers in striking

workers’ jobs

• Type of industry involved has • Type of industry involved has

considerable effect on impact of this

maneuver

• May live in plant and have food and

other necessities delivered to them


Reaching the Agreement

• Document that emerges from

collective bargaining process is a

“labor agreement” or “contract”

• Regulates relationship between • Regulates relationship between

employer and employees

• Essential but difficult task


Ratifying the Agreement

• May be more difficult for union

• Until approved by majority of union members, proposed agreement not finalfinal

• Approval process for management is easier


Administration of the Agreement

• Larger and perhaps more important

part of collective bargaining

• Seldom viewed by public• Seldom viewed by public

• Agreement establishes union-

management relationship for

duration of contract


Grievance Procedure in a

Union Environment

• Typically, well-defined

• Usually restricted to violations of

terms and conditions of agreement terms and conditions of agreement

• Multistep grievance procedure is

most common type


Union Decertification

• Essentially reverse of process that

employees must follow to be

recognized as official bargaining unit

• Employees have used decertification • Employees have used decertification

petitions with increasing frequency

and success


Decertification Procedure

Rules established by NLRB:

• At least 30% must petition for election

• Petition submitted 60–90 days prior to • Petition submitted 60–90 days prior to

expiration of current contract

• Decertification election scheduled

• If majority of votes against union,

employees will be union free


Collective Bargaining in the

Public Sector

• Executive Order 10988: Established basic

framework for collective bargaining in

federal government

• Title VII of Civil Service Reform Act of 1978 • Title VII of Civil Service Reform Act of 1978

regulates most of labor management

relations in federal service.

• Establishes Federal Labor Relations

Authority (FLRA) to bring public-sector

model in line with private sector11-62

Documents

Chapter 11 Labor Unions and Collective Bargainingcf.linnbenton.edu/bcs/bm/godwinm/upload/BA224_ch11.pdf · Laws Affecting Collective Bargaining: National Labor Relations Act Wagner