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U.S. Labor Law
Tuesday, June 19
Beijing 2007
National Labor Relations Act (NLRA):
Section 7 Rights
To organize and select representative
(or not)
 To collectively bargain through
representative
 To engage in concerted activity for
mutual aid and protection

Labor Law Enforcement
Mechanisms
 NLRB:
Five-member administrative
board
Oversees representation matters
– Hears and decides unfair labor
practice claims
 Arbitration: Contract violations
(grievances)
–
Employer Unfair Labor Practices
8(a)(1): Interference with Section 7
rights
 8(a)(2): Employer domination of union
 8(a)(3): Discriminatory treatment for
employee support of union
 8(a)(5) Failure to bargain in good faith

Two Ways to Obtain Union
Representation
Voluntary recognition by employer
following demand by union with
majority support
 Affirmative secret ballot vote by a
majority of employees in a unit sought
to be represented

Enterprise Level Representation
Unlike some countries, unions in the
U.S. do not bargain on a regional or
national basis
 Instead, the NLRA authorizes
representation of similarly situated
employees at a plant level

Bernhard-Altmann
At the time that the parties in this case
executed a collective bargaining
agreement, a majority of employees in
the unit wanted union representation
 Why was this found to be insufficient by
the Supreme Court to justify the
employer’s voluntary recognition of the
union?

U.S. Union Representation
The NLRA authorizes selection of an
exclusive union representative only with
majority support, preferably by an
election
 Most countries do not have elections,
but simply require employers to bargain
with unions with some support
 Which approach is preferable?

Asserted Problems of U.S.
Representational system
Employers lawfully may campaign
against union representation so long as
no threats or coercion
 But, studies show that 1 in 4 active
union supporters are fired in organizing
campaigns
 Slow and weak NLRB remedies

NLRA Remedies
Reinstatement
 Back pay
 But no punitive or compensatory
damages

Decline in Union Density
 1954
34.7%
 1970:
24.7%
 1990:
16.1%
 2006:
12.0%
Total: 16 million members
Question
The percentage of unionized workers
has steadily declined over the past 30
years. What factors likely are
contributing to this decline?
 Is the decline likely to continue?
 How does the decline affect the legal
contours of nonunion employment?

Causes of union decline
Global product and labor market
competition
 Changing workforce composition
 Increase in contingent workers
 Employer opposition/NLRA
weaknesses

Growth of Statutory Employment Law
Anti-Discrimination statutes
 Occupational Safety & Health Act
OSHA)
 Fair Labor Standards Act (FLSA)
 Family & Medical Leave Act (FMLA)
 Employee Retirement & Income
Security Act (ERISA)

Employee Free Choice Act
The House of Representatives has
passed this bill which would require
employers to bargain with a union that
demonstrates majority support through
signed authorization cards (without an
election)
 Would this be a good or bad idea?

Consultative Bodies
The NLRA bans employer support of
non-union organizations that deal with
terms and conditions of employment
 The NLRB has interpreted 8(a)(2) to
prohibit an employer’s establishment of
consultative committees that discuss
employment terms
 Is this good or bad policy?

Duty to Bargain

Both employers and unions have a duty
to bargain in good faith concerning
terms and conditions of employment
–
–

Must bargain: Er-Ee relation issues
Need not bargain: Er business issues
An employer that unilaterally changes
employment terms without bargaining
commits an ULP
Protected Concerted Activity
Strikes
 Peaceful picketing
 Concerted refusal to perform
dangerous work (even if no union)
 Discussion of work issues on a blog so
long as employer product not defamed

Employer Responses to Concerted
Acts
Employer cannot fire employees for
engaging in concerted acts
 But, employer can hire temporary or
permanent replacement workers

–
–
When strike over, employer need not
bump permanent replacements
Strikers have right to reinstatement only as
positions open up
Policy Question
What is the likely impact of the
permanent replacement rule on
employment policy?
 Is there a better way to balance the
competing interests of labor and
management in this context?

Labor Law – Job security

Substantive standard in collective
bargaining agreements: no discharge
or discipline without “just cause.”
–
–

Notion of progressive discipline
Notion of industrial due process
Procedural process:
–
–
Grievance procedure
Binding arbitration
Just Cause
Conduct that interferes with
management’s legitimate expectations.
 May encompass:

–
–
–
–
Misconduct
Poor performance
Lack of work
Violation of reasonable work rules
Arbitration: Pro’s
Fair standard
 Parties can define “just cause”
 Fast and informal
 Low transaction costs

Arbitration: Con’s
Less due process
 Arbitrator tendency to “split the baby”

German Labor Law
Friday, June 22
Beijing 2007
EU Role
Collective Bargaining: Not included
within area of EU competence
 Consultation: EU may legislate in this
arena subject to qualified voting
approval

German Sources of Law
Constitution: Protects “right to form
associations to safeguard and improve
working and economic conditions”
 Statute: Collective Bargaining
Agreements Law of 1969
 Enforcement: Through labor courts

Union Density
20% of workforce are union members
 43% of workforce covered by collective
bargaining agreements
 Majority of employees subject to
substantive terms of agreements via
extension

Two-tiered System
Collective bargaining generally takes
place on a regional basis among
industries through union and employer
associations
 Consultation through works councils
occurs at the enterprise and/or plant
level

Union Representation Rights
If one worker in plant is a union
member, the employer is obligated to
recognize that union as the
representative of all employees
 If more than one union has
membership, DGB confederation
mediates representation status

Policy Questions
What are the likely policy implications
of this rule?
 What are the pros and cons of this rule
as compared to the U.S. approach?

Contract Types
Framework Agreements: Ongoing
agreement covering non wage terms
such as hours, vacation, safety, and
termination
 Wage Agreements: Time-specific
agreement covering wage and salary
adjustments

Contract Application
Contracts technically fix terms of
employment only for union members
 But employers generally apply contract
terms to all employees

Contract Extension

Government may extend CBA terms to
others if:
–
–
–

Social partners consent
At least 50% of employees are within the
occupational or geographic scope of
agreement
Deemed to be in the public interest
May also extend CBAs in construction
industry even without consent
Policy Questions
What are the likely policy implications
of this rule?
 What are the pros and cons of this rule
as compared to the U.S. approach?

Concerted Activity
Statutory silence on topic
 Courts interpret constitution to protect
right to strike in support of collective
bargaining position
 Employer may engage in defensive
lockout, but not offensive lockout

Lockouts
Offensive lockout: Apply pressure on
union in support of bargaining position
by denying temporary access to work
 Defensive lockout: Apply pressure on
union engaged in a partial strike by
denying work access to some
additional non-strikers

Additional Limitations on Employers
Defensive lockouts must be
proportional to size of strike (e.g., if
strike < 25%, then lockout may not
exceed total of 25% out of work)
 Employer may not hire either
permanent or temporary replacement
workers during a strike

Policy Questions
Why ban offensive lockouts? Aren’t
they = to a strike?
 How do the German rules of conflict
likely impact the outcome of collective
bargaining?

Works Councils
Elected representative bodies at plant
or enterprise level with consultative
authority
 Employees have right to establish at
any workplace with 5 or more
employees
 No right to strike

Right to Information and
Consultation
Employer must consult with respect to
anticipated workforce expansion,
contraction, or reorganization
 Works council has right to information
and comment on

–
–
Employee termination
Employer compliance with legal rules
Information and Veto Right
With respect to the hiring, deployment,
and transfer of employees
 Employer may challenge an works
council veto before a labor court

Codetermination Rights
Employer may not alter work hours,
vacation policies, or safety rules without
consent of works council
 Employer must negotiate a social plan
with works council to address adverse
collective actions such as plant closings
and mass layoffs
 Impasses subject to binding arbitration

Relationship to Collective Agreement



Compensation matters governed by
agreement, not works council
Works council can enhance employee rights
but cannot undo more protective agreement
provisions absent agreement waiver
But works council has right to
codetermination unless agreement leaves no
room for discretion
Two-tiered System
Collective bargaining generally takes
place on a regional basis among
industries through union and employer
associations
 Consultation through works councils
occurs at the enterprise and/or plant
level

Policy Questions
What are the advantages of this twotiered system? The disadvantages?
 Does the existence of works councils
bolster or undercut the realm of
collective bargaining?
 Could a works council system be
imported to the U.S.?

European Union Directives
European Works Council Directive:
Requires elected works councils for
large multi-national businesses
 General Framework Directive:
Requires employers with more than 50
employees to establish mechanisms for
employee consultation

Chinese Trade Union Law
Monday, June 25
Beijing 2007
PRC Trade Union Law
Article 3: All workers have the right to
participate in and form trade union
organizations
 Article 10: A basic trade union
committee shall be set up in in an
enterprise having 25 or more union
members

Collective Contracts
Labor Law Art. 33: Union may
negotiate collective contract with
enterprise
 Art. 35: Collective contract is binding
on enterprise and workforce; terms may
not be reduced by individual contracts

Collective Contracts
2004 study reports that collective
contracts generally contain few
substantive provisions, but provide
means for collective enforcement
 Labor Law Art. 84: Unions may enforce
contracts through arbitration/court
systems

Labor Law: Union Consultation
Rights
Employer must give 30 days notice and
consult prior to making lay-offs (27)
 Union has right to express opinion as to
terminations (30)
 Right to consult on health & safety (52)
 Right to monitor employer compliance
with legal obligations (88)

Strikes
Right to Strike Omitted from 1982
Constitution
 LL Art 56: Permits employees to refuse
to perform unreasonably dangerous
tasks
 TUL Art. 27: Union obligated to assist
enterprise in resuming production

Trade Union Issues
All China Federation of Trade Unions
(ACFTU) owes multiple loyalties
 Low rate of unionization in private
enterprises
 ACFTU is sole permissible union
representative

ACFTU Responsibilities
(TUL Art. 4 & 6)
Fundamental responsibility to protect
workers’ legitimate rights and interests
 Obligation to respect the legitimate
interests and rights of private investors
and to assist economic development
 Obligation to adhere to the socialist
road

ILO Conventions

Neither China nor the U.S. have ratified
two basic conventions recognizing right
of workers to:
–
–
Form and join independent trade unions,
and
Engage in collective bargaining free of
government and employer interference
ACFTU Membership
1995:
1999:
2003:
104 million
87 million
134 million
Prevalence of Union Membership
High Union Membership: Urban
SOEs
 Low Union Membership: FIEs and
domestic private enterprises

Economic Liberalization Results In

More
–
–

Economic growth
Employment in FIEs
Less
–
–
–
Economic and social stability
Union membership
CCP influence in workplace
Push for Greater Unionization
2001 amendments to Trade Union Law
 Increased pressure on FIEs to
recognize and bargain with ACFTU
(Walmart)
 2006 ACFTU Plan calls for unionizing
70% of FIEs over next two years
 Pending Labor Contract amendments

Draft Labor Contract Amendments
First draft issued Spring 2006
 Open comment and consultative
process
 More than 190,000 comments
submitted
 Third draft now under consideration –
Standing Committee enactment likely

Labor Reform Proposals
1)Requires employment contracts for all
workers; minimum terms implied by law or
collective agreement if no written contract
2) Reduce length of probationary periods
3) Limit continuous casual employment;
employee with contract renewed on 2
consecutive occasions entitled to indefinite
contract duration
Labor Reform Proposals
4) Regulates labor staffing firms and treats as
joint employer
5) But, part-time workers who average less
than 24 hours/week may be hired without
contract and on at-will basis
6) Employer required to enter into collective
contract with union, or if not yet in existence,
with representative of employees with
assistance of regional union body
Labor Reform Proposals
7) Employer must consult with union before
adopting or changing policies that have a
“direct bearing” on matters of interest to
employees
8) Limits amount of damages an employer may
claim for training costs
9) Employer failure to pay wages as stipulated
subject to 50% additional penalty
FIE Opposition
“Two steps backward”
 FIEs suggest that more burdensome
rules may dampen foreign investment
 Intense lobbying campaign

–
–
Am Cham actively opposes and proposes
alternatives
American unions actively support
A Delicate Balance
Stem social unrest by enhancing
employee protection
 Avoid disincentives for continued FIE
economic participation
 Enhance government influence while
lessening Western influence in FIE
workplaces

Union Obstacles in a Global Economy
Capital mobility reduces union
bargaining power
 Contingent workers are difficult to
organize
 Global competition spurs regulatory
“race to the bottom”

Reform Impact
Amendments run counter to “race to
the bottom” trend
 Practical impact depends upon
enforcement

Burgaighis Critique
Push for increased union role is not
aimed at undercutting FIE
entrepreneurial authority
 Instead, increased ACFTU presence
serves to increase governmental
influence and control

Special Economic Zones

Foreign investment laboratories
–
–
–


Entice investment
Experiment in market economy and relaxed rules
Limit Western influence
Relatively successful in terms of assisting
growth of economic development
Relatively unsuccessful in terms of
encouraging domestic enterprises