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)
Copyright © 2016 Pearson Education, Inc. 11-3
Why Employees Join Unions
Dissatisfaction with management and
insecurity regarding:
�Compensation and employee benefits
�Job security concerns
�Attitude of management toward workers
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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
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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
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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
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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
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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
11-10Copyright © 2016 Pearson Education, Inc.
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
11-13Copyright © 2016 Pearson Education, Inc.
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
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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
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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
Copyright © 2016 Pearson Education, Inc. 11-19
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
Copyright © 2016 Pearson Education, Inc. 11-20
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
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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
Copyright © 2016 Pearson Education, Inc. 11-22
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
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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
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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
11-27Copyright © 2016 Pearson Education, Inc.
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
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Steps for Forming a Bargaining Unit External Environment
Internal Environment
Signing of
Authorization
Cards
Petition
for
Election
Election
Campaign
Election
and
CertificationCards Election Certification
11-30Copyright © 2016 Pearson Education, Inc.
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
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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
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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
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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
11-36Copyright © 2016 Pearson Education, Inc.
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
11-38Copyright © 2016 Pearson Education, Inc.
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
11-39Copyright © 2016 Pearson Education, Inc.
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)
11-40Copyright © 2016 Pearson Education, Inc.
Management Rights
Section often (but not always) written
into labor agreement that spells out
rights of managementrights of management
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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
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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
11-45Copyright © 2016 Pearson Education, Inc.
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
11-46Copyright © 2016 Pearson Education, Inc.
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
11-47Copyright © 2016 Pearson Education, Inc.
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
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Example of Negotiating a
Wage Increase
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Breakdowns in Negotiations
• Third party intervention
• Union strategies for overcoming
breakdownsbreakdowns
• Management strategies for
overcoming breakdowns
11-50Copyright © 2016 Pearson Education, Inc.
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
11-51Copyright © 2016 Pearson Education, Inc.
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
11-54Copyright © 2016 Pearson Education, Inc.
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
11-55Copyright © 2016 Pearson Education, Inc.
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
11-56Copyright © 2016 Pearson Education, Inc.
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
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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
11-58Copyright © 2016 Pearson Education, Inc.
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
11-59Copyright © 2016 Pearson Education, Inc.
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
11-60Copyright © 2016 Pearson Education, Inc.
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
11-61Copyright © 2016 Pearson Education, Inc.
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