NLRB Expands Lawful Use of Employee Participation Committees
December 7, 2001
S. Richard "Dick" Pincus- Chicago
In an effort to improve productivity and eliminate wasteful management and
supervisory hierarchy, many employers have established joint employee-management
committees to deal with a variety of workplace issues. Unfortunately, many of
these committees have been found to be employer-dominated labor organizations in
violation of federal labor law. In a recent decision, however, the National
Labor Relations Board enhanced employers' ability to lawfully use such
committees. The Board ruled that where the committees exercise managerial
authority, they are not illegal employer-dominated unions. Crown Cork &
Seal Company, 334 NLRB No. 92 (July 20, 2001).
The National Labor Relations Act makes it an unfair labor practice for an
employer to dominate or support "any labor organization." The Act
defines a labor organization as: "any organization of any kind, or any
agency or employee representative 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."
In Electromation, Inc., 309 NLRB 990 (1992), enf'd., 35 F.3d 1148 (7th Cir.
1994), the Board held that "action committees" consisting of volunteer
employee and management representatives were labor organizations because the
representatives on the committee discussed and sought to resolve matters
concerning working conditions. As such, the committee was "dealing with the
employer" via a "bilateral mechanism involving proposals from the
employee committee concerning the subjects listed in [the Act] § 2(5), coupled
with real or apparent consideration of those proposals by management."
Following Electromation, the Board in E. I. DuPont de Nemours found a safety and
fitness committee to be unlawful where management determined the committee
composition, and where the management representatives on the committee could
veto decisions made by the committee members.
Recently, however, the Board unanimously agreed that an employer's creation
and use of four production teams and three other employee-participation
committees did not violate federal law where the committees exercised functions
normally delegated to managers or supervisors. In Crown Cork and Seal Company,
the employer implemented a system of employment management known as the
"Socio-Tech System." The purpose of the system was to delegate to
employees authority to operate the plant through participation on various
standing and temporary teams and committees. At the heart of the system were
four self-managed work groups made up of 33 members. One member of each group, a
member of management, was designated as the team leader. The four production
teams were delegated authority to make decisions on a variety of workplace
issues, including production, quality, training, attendance, safety and
maintenance. In addition, the teams were authorized to administer discipline
short of suspension or discharge. The teams also had authority over safety
matters, including the investigation of accidents and the power to correct
safety-related problems.
The company created three additional committees above the production teams:
the Organizational Review Board, which had the responsibility for monitoring
plant policies to assure that they were administered consistently among the four
teams; an Advancement Certification Board, which had the authority to administer
the company's performance program; and a Safety Committee, which had the
authority to review production team accident reports and consider the best
methods to insure a safe workplace. Each committee had authority to make
recommendations to the plant manager for final decisions.
All of these committees were alleged to be "labor organizations"
that "dealt with" the employer concerning terms and conditions of
employment. Since they were created and dominated by management, they were
alleged to be in violation of the Act.
A unanimous Board distinguished these committees from those found to be
unlawful in Electromation. Unlike the committees in Electromation, where
decisions were reached through proposals by employees to management
representatives on the committee through a process of "dealing," the
Board here found that the committees were delegated "managerial
authority" to effectively operate the plant within certain limited
parameters. As the Board noted, "the Socio-Tech System represents a
significant variation on the traditional plant organizational structure where
authority is delegated to descending levels of managers who make decisions on an
individual basis. Under the Socio-Tech System, authority is delegated to
descending levels of committees which make decisions by consensus." But as
in the traditional system, the Board found that the authority being exercised by
the Company's committees was unquestionably managerial. They were, in effect,
exercising the authority that a front-line supervisor normally exercises in the
traditional plant setting. The Board also noted that the fact that the authority
was not "absolute" did not necessarily mean that they were
"dealing" with management when their recommendations were passed
upward to the plant manager. As in the traditional setting, the Board noted that
supervisory authority is seldom final or absolute. Rather, first-line
supervisors typically make recommendations to their superiors. Merely forwarding
a recommendation for review by a higher level authority did not constitute
"dealing" within the meaning of § 2(5) of the Act.
Although this decision may not be a wholesale departure from the Board's
Electromation ruling, it can be seen as a pragmatic endorsement of the
self-management committee format that has become a popular model in the modern
industrial setting. It also illustrates that when properly established,
employers can create and maintain self-governing employee-management committee
structures that will still be lawful under federal labor law. Because the law
concerning employer-employee committees is complex and changing, employers
should seek legal advice before implementing such committees.
For more information, contact Richard Pincus at 1-888-688-8500 or via e-mail
at rpincus@hklaw.com.