Module 5: The Right to Organize and Form Unions 

At-will employment can create imbalances of power in the workplace.  Prior to labor reforms passed at the turn of the 20th century, employers often used this imbalance to exploit their employees.  Child labor, hazardous workplace conditions, on-the-job injury or disability and discriminatory treatment were commonplace in American workplaces.  Many employees had little recourse but to tolerate hazardous and abusive workplaces, as no social unemployment programs existed at that time.

The industrial revolution brought a huge number of new workers into the labor market, and, as a result, workplace exploitation became an increasingly significant issue in American society.  Legal systems in place in the late 1800s did little to regulate labor and workplace conditions. 

The possibility of forming labor unions to negotiate with management faced significant opposition from both private businesses and the government when they first started organizing, but decades of persistence led to the development of federal protections of the rights of employees to unionize and collectively bargain with employers.

While many laws guarantee equal employment opportunities, proper wage and overtime pay and workplace health and safety standards, these laws only bind employers to a minimum standard of conduct.  Any additional compensation or benefits that an employee earns are the product of private negotiation between the employee and employer.  Labor unions play an important role in the American workplace as mechanisms by which groups of employees seek to level the playing field in negotiations with employers.

Brief History of Organized Labor

Working conditions in the typical industrial revolution-era factory were deplorable.  Employees worked 14 to 16 hours per day up to six-and-a-half days per week.  Wages were low – driven down by the constant supply of new workers migrating to cities from farms – and women were typically paid less than half the wages earned by men.  Children as young as six worked in these factories and were paid about 10 percent of the wages earned by adult male employees.  Factory work was often dangerous and unhealthy, and workers who were injured on the job or fell ill were typically fired and replaced without any safety net.  The law offered almost no recourse to employees who were discriminated against or mistreated by their employers.

Labor unions began to form with the goal of using collective bargaining power to fight for workers’ rights.  After all, if a single employee refuses to work until wages and working conditions are improved, businesses hardly take notice; but if an entire workforce goes on strike, business activities would be disrupted, forcing the employer to negotiate.

Early attempts at organized labor strikes were met with opposition.  In 1877, a railroad workers’ strike shut down rail travel across the United States.  The federal government sided with the railroads and deployed federal troops to aid local police in suppressing the strike.  The strike ended in a bloody battle between workers and government forces sent to break the picket line, resulting in about 30 striking employees being killed and injuring about 100 more.

Nearly a decade later, the relationship between organized labor and the government had not improved.  On May 1, 1886, demonstrators gathered in Haymarket Square, Chicago, to support workers on strike at the time.  Police arrived to suppress the protestors, and a bomb was thrown at the peacekeeping officers.  The bomb exploded, killing seven police officers.  The police began to open fire on demonstrators, killing four protestors and injuring 70 more.  Sixty police officers were also injured in the fray, now referred to as the Haymarket Riot.  The Haymarket Riot attracted a great deal of attention and support for unions and workers’ rights, and has been cited as a reason for the establishment of May 1 as an international labor holiday.[i] Treatment of labor unions became a subject of increasing national focus as conflict between organized workers and law enforcement officials continued and, over time, federal laws were passed that protected the rights of organized workers.  

National Laws Authorizing Labor Unions

The first American law authorizing collective bargaining was the Railway Labor Act of 1926[ii] which provided the millions of employees of the railroad industry with a process that facilitated collective bargaining and avoided strikes or other disruptions in railway service.  The Act, which now applies to airlines as well, includes mandatory mediation or arbitration provisions requiring the parties to work together to find a mutually agreeable solution to a labor conflict. It also created a new federal agency, the National Mediation Board, to help travel unions bargain in a manner that is fair and non-disruptive.[iii]

The right to unionize and bargain collectively was also officially recognized in a small section of the National Industrial Recovery Act of 1933, which gave organized labor the right to negotiate collectively against their employers.[iv]  This law was overturned by the Supreme Court in 1935,[v] but the National Labor Relations Act was passed quickly thereafter to fill the gap in labor policy.

 National Labor Relations Act

             The National Labor Relations Act and its subsequent amendments protect both employees and employers in collective bargaining arrangements and encourages good labor and management practices that benefit workers, businesses, and the economy. The NLRA guarantees worker’s rights to organize trade unions without interference from their employer or the government and their rights to bargain as a collective and, if necessary, to go on strike.  The NLRA applies to all private employers and employees, except for certain agricultural workers, domestic employees, and workers covered by the Railway Labor Act.[vi] 

The Act prohibits certain “unfair labor practices,” including prohibitions against:

-       Interfering with an employee’s exercise of labor organization, association, or collective bargaining rights,

-       Attempting to influence labor union administration or financing,

-       Discriminating against current or prospective employees based on union affiliation,

-       Retaliating against employees who file charges or participate in an NLRA enforcement activity, and

-       Refusing to bargain collectively. Union representatives must be recognized for their authority to negotiate for the workforce. [vii]

The Act created the National Labor Relations Board to facilitate the development and management of labor unions and to ensure that private employers are not engaging in impermissible anti-union activity.  The NLRB may review complaints, conduct investigations, and issue penalties against employers who violate the Act. [viii] 

The Act has been altered by two major amendments, both of them restricting unions. They are:

1.    The Taft-Hartley Act of 1947 prohibits unions from demanding that employers discriminate against employees who fail to join the union. For example, as part of the collective bargaining process, the union cannot demand that union workers get higher wages than non-union workers at the same company. The law also prohibits the “secondary boycott,” in which unions in a dispute with one employer pressure the employer’s business associates into boycotting that employer.  Unions are also prohibited from charging excessive dues and from demanding that an employer pay for work not performed.[ix]

2.    The Labor-Management Reporting and Disclosure Act, also known as the “Landrum-Griffin Act” of 1959, imposed further restrictions on labor unions to address certain corrupt practices of some unions.

 State Labor Management Laws

Some states have enacted labor management laws similar to the National Labor Relations Act, but these laws are limited in scope due to the pre-emptive effect of federal labor regulations. The NLRA is quite broad, and states have little authority to regulate conduct already covered by the national law.  State law may, however, expand labor protections to employers and employees not covered by the federal law, such as agricultural workers or certain exempt small businesses.

Government Employees

An executive order signed by President John F. Kennedy in 1962 and, later, a 1978 federal statute called the Federal Service Labor-Management and Employee Relations Law gave federal employees unionization and collective bargaining rights.[x] Several states have also passed laws authorizing collective bargaining rights among state and municipal employees not already covered by the NRLA. 

Still, public employees do not have the same breadth of rights afforded to private employees. Public employees are generally prohibited from going on strike and many states do not allow closed shops in public agencies.  Otherwise, union formation, organization, and structure is largely consistent between public and private employee organizations.[xi]

 Labor Union Formation

The NLRA provides instructions for the formation of protected labor unions. It is important that unions be formed in a manner that complies with the Act to ensure that they receive federal protection. 

Unions are formed by a process that begins with a formal expression by employees that they wish to form a union.  If at least 30% of employees at a business vote for a union, they can formalize their intention by means of pledge cards or similar forms.  The cards are collected and submitted to the National Labor Relations Board, which then conducts an election.  If a majority of the workers who vote in the election choose union representation, the NLRB will certify the union as a collective bargaining agent.    Alternatively, an employer may voluntarily recognize a union without NRLB certification. 

Once a union is certified, the employer must recognize the union and negotiate employment conditions with the new organization.[xii]  Democratic voting is key to the union formation process. Workers decide to form a union as a collective, and each worker gets an equal say in the decision. [xiii]  

Labor Union Structure

Historically, as unions grew larger, they developed more professional administrations.  Labor unions now have complex administrations that manage full-time employees across the world, perform strategic planning and program evaluation, budget and invest funds, and engage in organizational practices common in large businesses.[xiv]

The Landrum-Griffin Act seeks to ensure fiscal responsibility, fairness, and democracy in labor unions. It requires financial disclosures and other administrative practices, creates standards for fair elections of union officials, and establishes safeguards for union assets by protecting union funds from mismanagement. The Office of Labor-Management Standards is responsible for the administration of the act.[xv]

Democratic ideals of equal representation, free association, and free speech are central to union management, as unions are meant to reflect the interests of their members and not just of their leadership.  Labor unions have also evolved to remain relevant and effective in a changing economy.  Unions have also had to develop new and creative approaches to collective bargaining and political action in an era of declining union membership.[xvi] 

Collective bargaining

Collective bargaining is an important tool in the negotiation of labor agreements.  Unions represent the collective interest of the employees, and therefore can more efficiently advocate for policies that benefit the workers as a group. [xvii] Unions are required, in fact, by Section 9 of the NLRA, to offer all employees the benefits of union representation. [xviii] 

The collective bargaining process of negotiation between the employer and the union ideally results in labor agreements that address a range of issues from wages, benefits, and working conditions to policies for new employees, raises, and overtime.  Labor agreements create rights and responsibilities for both employers and employees, and unionized workers often enjoy benefits not typically afforded to at-will employees.  For example, unions often negotiate “for-cause” termination clauses in employment agreements, which substantially curb employers’ legal rights to fire workers at will.  Collective bargaining agreements also typically include processes that employees can follow to file grievances, which may give workers rights to protest business policies that the employer could otherwise have implemented unilaterally, such as workplace conditions and employee benefits.[xix]

Labor unions have a demonstrated track record in securing higher wages for their members and other workers.  For example, collective bargaining played an important role in many cities’ decisions to pass laws requiring a $15 per hour minimum wage.  Through the “Fight for $15” campaign, the Service Employees International Union advocated for higher minimum wages for millions of workers employed in food, hospitality, and other service industries. Over the past five years, the “Fight for $15” campaign has led to the development of $15 minimum wage laws in 19 jurisdictions, including California and New York.[xx]

When collective bargaining fails, unions may strike, or employers may lock out unionized workers and stop work; both tactics are designed to incentivize prompt negotiation. Despite a decline, major work stoppages are common, with tens of thousands of workers going on strike each year. Work stoppages occur when collective bargaining breaks down over issues ranging from raises and hiring practices to worker healthcare coverage. Strikes and lockouts have been shown to be effective negotiating tools.  For example, after stopping work for 3 weeks, a union of professional carpenters in Chicago was able to induce management to agree to a nearly 10% increase in wages and benefits, up from the 3.25% initially offered by the employers. 

Union Membership

Unions have proven to be effective in negotiating higher compensation among all demographics, including groups that have faced historical wage discrimination.  Union members also have far higher rates of enrollment in employer-funded retirement plans than private employees; almost 90% eligibility for union members, compared with only about 60% of non-unionized workers.  Furthermore, 70% of union members receive retirement benefits from accounts funded entirely by their employers, while only 14% of non-union employees had access to these types of plans.[xxi] 

Despite a significant increase in the size of the overall labor force since 1983, union membership declined by nearly 3 million workers since that year.  Union membership has plummeted from over 20% of the overall workforce in the early 1980s to a mere 11% in 2015.[xxii]

This period of union decline has also been characterized by wage stagnation across the private sector, as the drop in labor union participation has caused a decrease in wages for non-union employees.  Studies show that a full-time private sector worker would earn about $2,700 more on average per year if union participation rates remained at pre-1980 levels, representing a total annual wage loss of $109 billion. Even non-union workers benefit from a strong union presence in their industries, as collective bargaining ultimately leads to upwards wage adjustment industry-wide.[xxiii]

Union Security Agreements and Right-to-Work Laws

Membership in unions can be optional for employees or a requirement of employment.  Union-security agreements are contracts in which an employer and a labor union articulate the degree to which employees may be compelled to join a union. 

Unions often argue that membership in the collective bargaining organization should be compulsory to avoid what is known as “the free rider problem.”  Because unions negotiate on behalf of employees as a collective, non-union members often benefit from these agreements without having to pay dues – thus receiving a “free ride.”  Security agreements ensure that workers pay their fair shares of the costs associated with running the union.  Union security agreements can vary substantially in terms and substance, but they all compel union participation in one way or another.

Forced associations required by security agreements have attracted a great deal of controversy and, in some cases, an outright ban. These laws, often called “right-to-work” laws, prohibit businesses and unions from compelling union membership. About half of the states have enacted right-to-work laws.  Opponents of these laws argue that compelling union membership is necessary to avoid the free-rider problem. Supporters, however, point out that union dues are not used only for collective bargaining purposes.  Unions often use member dues to support or oppose political candidates or policies, and many believe that workers should not be forced to pay dues to an organization that will advocate politically for things the employee may not support. 

 Labor Union Representation

The oldest continuously-operating labor union in the U.S. is the American Federation of Labor (“AFL”), founded in 1886.  The AFL merged with another large labor union, the Congress of Industrial Organizers (“CIO”) to form what is now known as the AFL-CIO.  The AFL-CIO is now comprised of 55 independent labor unions across the globe as a voluntary association of 12.5 million unionized workers.[xxiv] 

There are currently about 70 independent labor unions representing millions of employees in the industrial sector, building trades, transportation, professional or office work, public service, entertainment, and the service industry.[xxv]   Excluding public employees, five industries account for nearly all union members in the United States: construction, wholesale and retail trade, transportation and utilities, education and health services, and manufacturing.  Health and education service workers, including nurses, hospital administrators, teachers in private schools, and other educational professionals not employed by a state or local government, unionize more than any other private sector employees.  There are 1.9 million unionized health and education service providers, compared with 1.4 million union members in the manufacturing sector and 1.1 million unionized transportation and utilities workers.  Construction workers and employees in wholesale or retail trade are the fourth and fifth largest unionized groups, with about 900,000 union workers in each industry.  Union membership drops off substantially outside these industries.  Leisure and hospitality is the sixth largest unionized industry with just under 400,000 union members, and union participation by industry drops off from there.[xxvi]

 Conclusion

The labor union has been pivotal in the development of the employment rights that we have today, and these organizations continue to play a major part in the American workplace.  Despite declining membership, labor unions continue to be very active in the U.S. economy.  The dozens of active labor unions advocate for higher wages, better benefits, and more pleasant working conditions on behalf of millions of unionized employees.  Even though they do not pay union dues, non-union workers can receive benefits from labor union activity in their industries, and so facilitating labor union participation can be a positive move towards ensuring a more egalitarian system of at-will employment.