New Labor Law: How Top Nonunion Companies Manage Employees

 How NonUnion Employers Manage EmployeesThe National Labor Relations Board (NLRB), an independent agency of the U.S. government, continues to fiddle with labor law, including the latest changes on July 11th of this year. Interventions such as this actually burden employers of choice that want to remain union-free. The NLRB’s actions make it harder for fair employers to compete and succeed.

New Developments

This past July, the NLRB ruled on July 11th in Miller & Anderson that petitioners seeking to represent a bargaining unit no longer need to obtain employer consent even if that unit included both “solely and jointly employed employees.” (Joint employer status refers to employees that work for two or more separate entities.) This heaps a greater burden on unionized employers… and it ties the hands of employers trying to maintain a direct connection with their team members.

However, it probably shouldn’t come as a surprise. This is just the latest example of the NLRB’s growing power – even staunch union supporters lament that it has become more influential than grassroots advocates – and its determination to reel back what employment lawyers call “standard” management-rights legal standing for employers.

If employers seeking “management rights” sounds like businesses playing the victim, they are not. As far as management rights language in contracts goes, it simply maintains that the employer reserves the right to make certain standard changes to their own policy.

Again, the NLRB’s power-grabbing changes are not new: for example, in August of last year, CNN Money reported that the Board passed a ruling that “[made] it easier for unions to negotiate contracts with larger employers” including fast food chains. Business groups, according to CNN Money, responded that the decision would hamper economic growth; a Vice President of the U.S. Chamber of Commerce announced, “The NLRB’s actions today will subject employers to increased uncertainty, liability for workplaces that they don’t actually control and ramped-up pressure tactics to ease union organizing.” The NLRB has also shown more interest in nonunion employers. By broadly interpreting Section 7 of the National Labor Relations Act, the Board granted itself the power to rule on nonunion employers without concrete legal guidance. In December 2014, for example, the Board’s Purple Communications decision overturned decades of precedent and restricted all employers’ communications policies.

Changes to US Labor LawFreedom Helps Employers and Employees Prosper

Meanwhile, according to the Fiscal Times, union membership has fallen to a 100-year low. Young people consistently choose non-union jobs, perhaps to avoid paying union dues and enduring tenure-based reward systems. Perhaps millennials heed the intuition that unionized businesses must suppress wages of more productive workers (or maybe their parents told them).

Over 30 years ago, the Harvard Business Review conducted an intensive study of the economy’s top non-union companies and its findings should inform the NLRB’s change-making process today. The Review found several important commonalities between the top 26 companies that do business without unions. These included a strong sense of caring, employment security, lots of promotion and great pay and benefits. Executives of the companies studied expressed that the freedom to experiment with their own bargaining techniques made their businesses successful and employee-friendly. The NLRB should take note, and you can get the full study, here.

4 union free companiesThe Effects of Unions

More recently, The Heritage Foundation’s labor economics expert James Sherk writes that “while unions can sometimes achieve benefits for their members, they harm the overall economy.” He also illuminates that, in this economy, unions tend to achieve higher wages mainly for tenured members and not for new members while decreasing the total amount of jobs available.

Due to increased legal fees and complicated policy-change procedure, Heritage’s Sherk argues, “unionized businesses become less flexible and less competitive.” Hurting businesses does not help employees. It decreases their job opportunities and, potentially, their pay. If a given business does not generate enough revenue to merit a spending increase, it is obviously less able to provide pay raises or bonuses to valuable employees, and is obviously even less likely to hire new employees. Unionized companies earn lower profits that non-union companies, Sherk says, and they invest less. None of this is helpful for workers searching for jobs, nor is it helpful to businesses that want to foster an environment of motivated productivity.