The National Labor Relations Act (NLRA): Union Representation Procedures and Dispute Resolution
Released: 2013-12-11T00:00:00

The National Labor Relations Act of 1935 (NLRA), as amended, gives private sector workers the right to join or form a labor union and to bargain collectively over wages, hours, and other conditions of employment. The act also requires employers to bargain in good faith with a union chosen by a majority of employees. The NLRA is administered and enforced by the National Labor Relations Board (NLRB).

This report begins with a brief overview of the NLRA. It then describes the basic procedures that employees and employers must follow during a unionizing campaign. The report describes different types of mediation and arbitration that can be used to resolve bargaining disputes. The report describes the jurisdictional standards that an employer must meet before the NLRB will exert jurisdiction over a question of union representation (e.g., for a small business). Finally, the report discusses some potential effects of changing union certification procedures.

The National Labor Relations Act

The NLRA, as amended, provides the basic framework governing labor-management relations in the private sector. The act begins by stating that the purpose of the law is to improve the bargaining power of workers:

The inequality of bargaining power between employees ... and employers ... substantially burdens and affects the flow of commerce, and tends to aggravate recurrent business depressions by depressing wage rates and the purchasing power of wage earners ... and by preventing the stabilization of competitive wage rates and working conditions within and between industries....

It is hereby declared to be the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining....

The NLRA gives workers the right to join or form a labor union and to bargain collectively over wages, hours, and other conditions of employment. Under the act, workers also have the right not to join a union. The act requires an employer to bargain in good faith with a union chosen by a majority of employees. To protect the rights of employers and workers, the act defines certain activities as unfair labor practices.

The NLRA does not apply to railroads or airlines, federal, state, or local governments, agricultural workers, family domestic workers, supervisors, independent contractors, and others. The definition of "employee" in the NLRA does not exclude unauthorized workers. Thus, unauthorized workers can engage in union activities.

National Labor Relations Board (NLRB)

The NLRB, which administers and enforces the NLRA, is an independent federal agency that consists of a five-member board and a General Counsel. The board resolves objections and challenges to secret ballot elections, decides questions about the composition of bargaining units, and hears appeals of unfair labor practices. The General Counsel's office conducts secret ballot elections, investigates complaints of unfair labor practices, and supervises the NLRB's regional and other field offices.

Bargaining Units

A bargaining unit is a group of employees represented, or seeking representation, by a union. A bargaining unit is generally determined on the basis of a "community of interest" of the employees involved. Employees who have the same or similar interests with respect to wages, hours, and other working conditions may be grouped together into a bargaining unit. A bargaining unit may include the employees of one employer, one establishment, or one occupation or craft. A bargaining unit may include both professional and nonprofessional employees, provided a majority of professional employees vote to be members of the unit. Guards cannot be included in the same bargaining unit as other employees. A union and employer may agree on the appropriate bargaining unit. If not, the issue is settled by the NLRB.

Specialty Healthcare and Rehabilitation Center of Mobile

In August 2011, the board reviewed a case in which an employer argued that the group of employees petitioning to be represented by a union was not an appropriate bargaining unit. In this case, certified nursing assistants (CNAs) at the Specialty Healthcare and Rehabilitation Center of Mobile, AL, petitioned to be represented by the United Steelworkers (USW). The NLRB Regional Director found that the petitioned-for unit of CNAs was an appropriate bargaining unit. However, the employer requested a review of the decision, contending that the appropriate bargaining unit should include all other nonprofessional service and maintenance employees.

The duties of the CNAs at the healthcare center typically consist of assisting residents with day-to-day functions such as dressing, grooming, and bathing. The CNAs also help move residents throughout the facility, accompany them to appointments outside the center, record vital signs, and monitor daily intake of food and liquids. The CNAs wear nursing uniforms, are directly supervised by licensed practical nurses, are part of the facility's nursing department, and work one of three eight-hour shifts. The CNAs are required to obtain and maintain certification from the state of Alabama.

The employer argued that other employees should be included with the CNAs in the bargaining unit. The other employees include resident activity assistants who design and lead resident activities, a staffing coordinator who prepares work schedules for employees, a maintenance assistant who is responsible for building upkeep, a medical records clerk who maintains residents' medical records, and cooks. These employees have similar educational requirements as the CNAs (e.g., a high school degree). The CNAs and service and maintenance employees also receive annual evaluations under the same system, are eligible for pay raises based on their evaluations, and are eligible for the same benefits, such as health and life insurance. Unlike the CNAs, the other employees are not part of the nursing department and are not required to work one of three eight-hour shifts.

The board voted in favor (3-1) of the CNAs, determining that the CNAs' petitioned-for bargaining unit was appropriate. The board agreed with the Regional Director's original conclusion that the CNAs shared a community of interest because of their "[d]istinct training, certification, supervision, uniforms, pay rates, work assignments, shifts, and work areas." The board also concluded that the employer had not shown that the CNAs shared an "overwhelming community of interest" with the other service and maintenance employees.

Organizing Campaign Rules

Campaign rules differ for employers, employees, and union organizers. Rules also differ for soliciting union support (e.g., expressing support for a union or handing out authorization cards ) and for distributing union literature. Because of exceptions to the basic rules, the rules that apply to a specific union organizing campaign may differ from the general rules described here.

Employers

Employers may campaign against unionization. Employers may require employees to attend meetings during work hours where management can give its position on unionization. These meetings are called "captive audience" meetings. Employers cannot hold a captive audience meeting during the 24-hour period before an election. Supervisors can give employees written information (including memos and letters) and hold individual meetings with employees.

Employees

During work hours, employees can campaign for union support from their coworkers in both work and nonwork areas (e.g., a coffee room or the company parking lot). But employees can only campaign on their own time (e.g., at lunchtime or during breaks). If an employer does not allow the distribution of literature in work areas, employees may only distribute union literature in nonwork areas. If an employer allows the distribution of other kinds of literature in work areas, employees may also distribute union literature in those areas.

An employer may prevent employees from using the employer's e-mail for union activities (e.g., organizing and bargaining), provided the employer does not allow employees to use their work e-mail to solicit support for other causes or organizations. Conversely, if an employer allows employees to use their work e-mail to solicit support for other causes or organizations, employees may also use their work e-mail for union activities.

Union Organizers

In general, union organizers cannot conduct an organizing campaign on company property. A union cannot reply to an employer's captive audience speech if the union has other means of reaching employees. Nonemployee union organizers may be allowed in the workplace if the site is inaccessible (e.g., a logging camp or remote hotel) or if the employer allows nonemployees to solicit on company property. Union organizers may meet with employees on union property. They may hand out literature or solicit support on public property (e.g., on public sidewalks outside of a business. Organizers may also contact employees at home by phone or mail or may visit employees at home. Under a neutrality agreement (described later in this report), an employer may allow organizers onto company property.

Unfair Labor Practices

To protect the rights of both employees and employers, the NLRA defines certain activities as unfair labor practices.

Employers

Although employers have the right to campaign against unionization, they cannot interfere with, restrain, or coerce employees in their right to form or join a union. An employer cannot threaten employees with the loss of their jobs or benefits if they vote for a union or join a union. An employer cannot threaten to close a plant should employees choose to be represented by a union. An employer cannot raise wages to discourage workers from joining or forming a union. An employer cannot discriminate against employees with respect to the conditions of employment (e.g., fire, demote, or give unfavorable work assignments) because of union activities. An employer must bargain in good faith with respect to wages, hours, and other working conditions.

Unions

Employees have the right to organize and bargain collectively. But a union cannot restrain or coerce employees to join or not join a union. A union cannot threaten employees with the loss of their jobs if they do not support unionization. A union cannot cause an employer to discriminate against employees with respect to the conditions of employment. A union must bargain in good faith with respect to wages, hours, and other working conditions. A union cannot boycott or strike an employer that is a customer of or supplier to an employer that the union is trying to organize.

An unfair labor practice may be filed by an employee, employer, labor union, or any other person. After an unfair labor practice charge is filed, regional staff of the NLRB investigate to determine whether there is reason to believe that the act has been violated. If no violation is found, the charge is dismissed or withdrawn. If a charge has merit, the regional director first seeks a voluntary settlement. If this effort fails, the case is heard by an NLRB administrative law judge. Decisions by administrative law judges can be appealed to the five-member board.

Remedies

The NLRA attempts to prevent and remedy unfair labor practices. The purpose of the act is not to punish employers, unions, or individuals who commit unfair labor practices. The act allows the NLRB to issue cease-and-desist orders to stop unfair labor practices and to order remedies for violations of unfair labor practices. If an employer improperly fires an employee for engaging in union activities, the employer may be required to reinstate the employee (to their prior or equivalent job) with back pay. If a union causes a worker to be fired, the union may be responsible for the worker's back pay.

In FY2011, $60.5 million in backpay or reimbursement of fees, dues, and fines was awarded. Backpay can be awarded to workers who were fired, demoted, denied work, or were otherwise discriminated against for union activities. Estimates of the number of workers who are illegally fired for union activities range from 1,000 to 3,000 a year, with more firings in the 1980s than in later years. In a study of 400 NLRB election campaigns conducted in 1998 and 1999, Kate Bronfenbrenner concluded that workers are fired for union activities in 25% of union campaigns.

Figure 1 shows the trend in the number of unfair labor practice charges filed from FY1970 to FY2012. During this period, the number of charges filed peaked at 44,063 in FY1980. The number stood at 21,629 in FY2012. In FY2012, 36.4% of the unfair labor practice charges filed were found to have merit.

Union Certification and Recognition

Section 9(a) of NLRA states that a union may be "designated or selected for the purposes of collective bargaining by the majority of the employees" (emphasis added). Currently, there are three ways for employees to join or form a union. First, a union that is selected by a majority of employees in an election conducted by the NLRB is certified as the bargaining representative of employees in the bargaining unit. Second, an employer may voluntarily recognize a union if a majority of employees in a bargaining unit have signed authorization cards. Finally, the NLRB may order an employer to recognize and bargain with a union if a majority of employees have signed authorization cards and the employer has engaged in unfair labor practices that make a fair election unlikely.

A union must be certified through a secret ballot election or recognized by an employer before collective bargaining can begin. As discussed below under "Certification," a union that is certified as the result of a secret ballot election has certain advantages over a union that is recognized by an employer without an election.

Secret Ballot Elections

The NLRB conducts a secret ballot election when a petition is filed requesting one. A petition can be filed by a union, worker, or employer. Employees or a union may petition the NLRB for an election if at least 30% of employees have signed authorization cards. An employer may request an election if a union has claimed to represent a majority of its employees and has asked to bargain with the employer (and the union itself has not requested an election). An employer is not required to give a reason for requesting an election. If a majority of employees voting (i.e., not a majority of employees in the bargaining unit) in an NLRB-conducted election choose to be represented by a union, the union is certified by the NLRB as the employees' bargaining representative. The NLRA does not provide a timetable for holding an election. Certification of a union by the NLRB does not require that a union and employer reach an initial contract agreement.

After a petition is filed requesting an election, the employer and union may agree on the time and place for the election and on the composition of the bargaining unit. If an agreement is not reached between the employer and union, a hearing may be held in the regional office of the NLRB. The regional director may then direct that an election be held. The regional director's decision may be appealed to the board.

In a secret ballot election, employees choose whether to be represented by a labor union. If an election has more than one union on the ballot and no choice receives a majority of the vote, the two unions with the most votes face each other in a runoff election.

The right of an individual to vote in an NLRB election may be challenged by either the employer or union. If the number of challenged ballots could affect the outcome of an election, the regional director determines whether the ballots should be counted. Either the employer or union may file objections to an election, claiming that the election or the conduct of one of the parties did not meet NLRB standards. A regional director's decision on challenges or objections may be appealed to the board.

A union and employer may also agree to a secret ballot election conducted by a third party, such as an arbitrator, clergyman, or mediation board.

The NLRB also conducts secret ballot elections to decertify a union that has previously been certified or recognized. A decertification petition may be filed by employees or a union acting on behalf of employees. A decertification petition must be signed by at least 30% of the employees in the bargaining unit represented by the union. Under what is called a "certification bar," a union that is certified after winning a secret ballot election is protected for a year from a decertification petition and from an election petition filed by another union. A secret ballot election is required for decertification.

NLRB Changes in Representation Procedures

In June 2011, the NLRB published a Notice of Proposed Rulemaking (NPRM) in which it proposed a number of changes to current procedures for filing a petition requesting union representation, determining whether there is a question of union representation, conducting secret ballot elections, and resolving challenges and objections. On December 22, 2011, the NLRB issued a final rule that made selected changes to current representation procedures. The changes took effect on April 30, 2012. But, in response to a May 14, 2012 decision by the U.S. District Court for the District of Columbia, the NLRB suspended implementation of the changes.

The December 22, 2011, final rule gave hearing officers the discretion to limit pre-election hearings to matters "relevant to the existence of a question of representation." According to the NLRB, current regulations give parties the right to present evidence at pre-election hearings that are not related to the question of representation. The rule also gave hearing officers the discretion to limit the filing and subject matter of legal briefs filed after a pre-election hearing.

The December 22, 2011, rule consolidated pre-election and post-election requests for review of decisions by regional directors. Currently, requests for review of pre-election decisions are filed before the election, while requests for review of post-election issues are filed after the election. Under the new rule, pre- and post-election requests for review will be filed after an election.

Although the December 22, 2011, rule consolidated pre-election and post-election requests for review, a party could request special permission for review of pre-election decisions. Under the final rule, the board would have granted special permission to appeal pre-election rulings by hearing officers or regional directors only in "extraordinary circumstances where it appears that the issue will otherwise evade review." According to the NLRB, current regulations do not provide a standard for the board to grant special permission for review.

Currently, a regional director normally does not schedule an election until 25 days after the direction of an election. In part, the 25-day waiting period is intended to allow the board to consider requests for review of pre-election decisions. The December 22, 2011 rule eliminated the 25-day waiting period.

Finally, under the December 22, 2011, rule, requests for review by the board of decisions by regional directors on challenges and objections to elections would have been discretionary. Currently, under a stipulated election agreement board review of post-election disputes is mandatory. (In a stipulated election, the employer and union agree to an election, but either party may request board review of a regional director's or hearing officer's post-election decisions. )

Number of NLRB Elections

Table 1 shows the number of secret ballot elections conducted by the NLRB from FY1994 to FY2010 (the most recent figures available). In FY2010, the NLRB conducted 1,823 elections. Unions won 62.3% of these elections, which was up from 46.6% in FY1994.

In most elections conducted by the NLRB, the employer and union agree on the composition of the bargaining unit and on the time and place for an election. In FY2010, 89.3% of elections were based on consent or stipulated agreements between the two parties.

Although the NLRA does not provide a specific timetable for holding an election, most elections are held within two months of the filing of a petition. In FY2012, 93.9% of initial representation elections were conducted within 56 days of filing a petition. The median time to proceed to an election from the filing of a petition was 38 days.

In FY2011, post-election objections and/or challenges were filed in 115 cases. For objections and/or challenges that resulted in an investigative hearing (45 of 115) in FY2011, it took a median of 62 days to issue a decision or supplemental report; for those decisions and/or challenges that could be resolved without a hearing (70 of 115), it took a median of 21 days to issue a decision or supplemental report.

First Contract Agreements Following Certification

The NLRB does not collect data on how long it takes for a union and employer to reach a first contract agreement after a union wins an NLRB election. Nor does the NLRB collect data on whether the parties reach a first contract agreement. However, a recent study estimated that, within two years of winning an NLRB election, a contract had not been reached in over two-fifths of cases. This is a higher percentage than found in estimates published in previous studies. Estimates from several studies are shown in Table 2 .

Voluntary Card Check Recognition

The NLRA does not require secret ballot elections. An employer may voluntarily recognize a union when presented with authorization cards signed by a majority of employees in a bargaining unit ("card check"). An employer may also enter into a card check agreement with a union before union organizers begin to collect signatures. A card check agreement between a union and employer may require the union to collect signatures from more than a majority (sometimes called a supermajority) of bargaining unit employees. A neutral third party often checks, or validates, signatures on authorization cards. A collective bargaining contract may include a card check arrangement for unorganized (including new) branches, stores, or divisions of a company.

Under voluntary recognition, employees have 45 days to file a decertification petition or an election petition requesting representation by another union. After 45 days, an election petition cannot be filed for "a reasonable period of time." (See the section on " NLRB Review of Voluntary Recognition " later in this report.)

Neutrality Agreements

A card check arrangement may be combined with a neutrality agreement. Not all neutrality agreements are the same. However, in general, under a neutrality agreement an employer agrees to remain neutral during a union organizing campaign. The employer may agree not to attack or criticize the union, while the union may agree not to attack or criticize the employer. The agreement may allow managers to answer questions or provide factual information to employees. A neutrality agreement may give a union access to company property to meet with employees and distribute literature. An employer may also agree to give the union a list of employee names and addresses. A neutrality agreement may cover organizing drives at new branches of a company.

Corporate Campaigns

To gain an agreement from an employer for a card check campaign—possibly combined with a neutrality agreement—unions sometimes engage in "corporate campaigns." A corporate campaign may include a call for consumers to boycott the employer; rallies and picketing; a public relations campaign (e.g., press releases, Internet postings, news conferences, or newspaper and television ads); charges that the employer has violated labor or other laws; public support from political, civic, and religious leaders; and other strategies.

Bargaining Orders

The final way that a union may be recognized by an employer is through a bargaining order. The NLRB may order an employer to recognize and bargain with a union if a majority of employees have signed authorization cards and the employer has committed unfair labor practices that make it unlikely that a fair election can be held. A bargaining order may be issued without conducting a secret ballot election. An election may also be set aside because of employer unfair labor practices before the election.

According to Feldacker, "[h]ard and fast rules are not possible in determining the situations in which the Board will issue a bargaining order. Each case is based on the specific facts of the employer's violations." Bargaining orders may be appealed to the U.S. Court of Appeals and to the U.S. Supreme Court.

Certification Versus Recognition

A union that wins a secret ballot election is certified by the NLRB as the bargaining representative of employees in that bargaining unit. Voluntary recognition or a bargaining order do not result in certification by the NLRB. The Taft-Hartley Act of 1947 (P.L. 80-101) eliminated certification through any method other than an election conducted by the NLRB.

Certification gives a union certain advantages. For instance, a union that is certified after winning a secret ballot election is protected for a year from a decertification petition and from an election petition requesting representation by another union (the "certification bar"). Under voluntary card check recognition, employees have 45 days to file a decertification petition or an election petition requesting to be represented by a different union (the "recognition bar").

The duration of an employer's duty to bargain also depends on whether a union has been certified by the board or has been recognized voluntarily by the employer. If a union wins an NLRB election (or under a bargaining order), the employer is required to bargain in good faith for a year. Under voluntary card check recognition, the employer is required to bargain with the union for "a reasonable period of time."

Withdrawal of Recognition

Under certain circumstances, an employer may withdraw recognition of a union before a contract agreement has been reached. After one year, if an employer and a certified union have not reached a contract agreement, the employer may withdraw recognition of the union if both parties have engaged in good faith bargaining and the employer doubts, on the basis of objective information (e.g., a petition signed by a majority of employees and given to the employer), that a majority of employees no longer support the union. Under a voluntary recognition, if no contract agreement has been reached after a reasonable period of time, an employer may withdraw recognition if the employer has reasonable doubt on the basis of objective information that a majority of employees support the union.

Joy Silk Doctrine

Before the Taft-Hartley Act of 1947, only a union or employee could request a secret ballot election. Section 9(c) of the Taft-Hartley Act gave employers the right to request an election. Soon after Taft-Hartley was enacted, a U.S. Appeals court ruled that an employer's right to request an election was limited to instances where the employer had "good faith" doubt that the union was supported by a majority of employees. An employer had good faith doubt if he believed that signatures on authorization cards were obtained through misrepresentation or coercion. An employer who did not have good faith doubt that the union was supported by a majority of employees was required to recognize the union or face a bargaining order for refusing to bargain with a union chosen by a majority of employees. This approach was known as the "Joy Silk doctrine."

By 1969, the board said that it had abandoned the Joy Silk doctrine. Thereafter, if a majority of employees signed authorization cards, an employer could voluntarily recognize the union or could insist on an election, either by requesting the union to file an election petition or by filing a petition himself. In a 1974 ruling, the U.S. Supreme Court said that, if an employer insists on an election, the union must take the next step and file an election petition.

NLRB Review of Voluntary Recognition

In recent years, the NLRB has considered cases involving voluntary recognition.

The United Auto Workers (UAW) and the Dana and Metaldyne Corporations

In June 2004, the board voted 3-2 to review two cases where bargaining unit employees filed a decertification petition within weeks after the employer recognized a union under a card check agreement. In the first case, the United Auto Workers (UAW) and Metaldyne Corporation entered into a card check and neutrality agreement in September 2002. Metaldyne recognized the UAW as the bargaining representative of production and maintenance workers at its St. Marys, Pennsylvania plant in December 2003. In the second case, the UAW and Dana Corporation entered into a card check and neutrality agreement in August 2003. The company recognized the union at its Upper Sandusky, Ohio plant in December 2003.

In both the Dana and Metaldyne cases, the UAW and the employers entered into card check and neutrality agreements before signatures on authorization cards were collected. The signatures were validated by a neutral third party. In both cases, employees filed decertification petitions after the UAW was recognized by the employer, but before an agreement was reached on a contract. Regional NLRB directors dismissed both decertification petitions, saying that they were inconsistent with the board's "recognition bar" doctrine. Under this doctrine, following an employer's voluntary recognition of a union, employees or another union cannot file a petition for an election for a "reasonable period of time."

Employees at both Dana and Metaldyne Corporations petitioned the NLRB to review the dismissals. The employees were represented by the National Right to Work Legal Defense Foundation. The NLRB granted the request, saying that the issue was whether voluntary recognition should prevent employees from filing a decertification petition within a reasonable time in cases where an employer and union enter into a card check agreement.

In September 2007, the board issued a decision in both cases. The board said that, following a voluntary recognition, employees have 45 days to file a petition to decertify the union. Similarly, a rival union has 45 days to file an election petition. The petitions must be signed by at least 30% of bargaining unit employees. Employees must also receive notice of the voluntary recognition and their right to petition for a decertification or representation election. If a petition is not filed within 45 days of notice of the voluntary recognition, an election petition cannot be filed during the recognition bar period (i.e., for a reasonable period of time).

Lamons Gasket Company

On August 26, 2011, the board reversed its decision in the Dana and Metaldyne cases. In July 2003, Lamons Gasket and the United Steelworkers (USW) entered into a card check agreement. In November 2009, Lamons Gasket voluntarily recognized the USW as the sole representative of a unit of employees. Within 45 days following the voluntary recognition, a bargaining unit employee filed a petition for a decertification election, supported by authorization cards signed by at least 30% of employees. In a 3-1 decision, the board overruled the Dana and Metaldyne decisions and returned to the previously established rule that, following a voluntary recognition, an election petition is barred for a reasonable period of time. Additionally, the board defined a reasonable period of time as at least six months, but not more than a year, after the first bargaining session between the employer and union.

The board also stated that, in determining whether a reasonable period of time has passed after a voluntary recognition, it would follow standards used in its decision in Lee Lumber and Building Material Corporation.

Following the decision in Lamons Gasket, the Chairman of the House Committee on Education and the Workforce and the Chairman of the committee's Subcommittee on Health, Employment, Labor, and Pensions requested that the NLRB provide the committee with a list of cases in which an election petition was filed under the Dana decision and a list of cases that have been dismissed as a result of the decision in Lamons Gasket. The committee also requested a list of cases in which an election petition was filed under the Dana decision and an unfair labor practice charge was filed, a list of cases that have been dismissed as a result of the decision in Lamons Gasket and an unfair labor practice was filed, and the ballots in cases that were dismissed because of the decision in Lamons Gasket.

NLRB Review of Withdrawal of Recognition

Once a union and employer enter into a collective bargaining agreement, election petitions are subject to a "contract bar." A contract of up to three years bars an election petition for the duration of the contract. The election petition may be for a decertification election or for representation by another union.

In August 2007, the board issued a decision allowing an employer to withdraw recognition of a union after the third year of a longer-term contract. In January 1999, Shaw's Supermarkets entered into a five-year contract with the UFCW. After three years, a majority of employees signed a petition requesting a decertification election. Instead of going forward with a decertification election, Shaw's withdrew recognition of the union. The action was appealed to the NLRB.

Under current rules, neither the employer nor the incumbent union can initiate an election petition (requesting decertification or representation by another union) for the duration of a contract. Under a three-year "contract bar," employees or another union (but not the employer or existing union) can file an election petition after three years of a contract of more than three years. Thus, the General Counsel of the NLRB argued that Shaw's should not be allowed to withdraw recognition of the union during the term of the five-year contract. By a vote of 2-1 the board disagreed with the General Counsel. The majority members of the board concluded that Shaw's had acted properly when it withdrew recognition of the union. The majority said that the employer relied on evidence of a loss of majority support for the union (i.e., signatures of a majority of employees). The dissenting member said that the NLRB should have gone forward with a decertification election.

Collective Bargaining Disputes: Use of Mediation and Arbitration

Once a union is certified or recognized, the union and employer are not required to reach an initial contract agreement. When a union and employer cannot reach an agreement on a collective bargaining agreement, the dispute is called an impasse. An impasse may lead to a work stoppage. Workers may strike or the employer may lock out employees. Instead of resorting to a strike or lockout, a union and employer may use a neutral third party to help them reach a contract agreement. A neutral third party may be used to reach an agreement on either an initial or successor contract.

Mediation

When mediation is used to resolve a collective bargaining impasse, a mediator tries to help the union and employer reach an agreement. A mediator does not have the authority to impose a settlement on the parties. Instead, a mediator can help the two sides reach an agreement by defining the issues underlying the impasse, identifying alternative solutions, and suggesting areas where the parties can compromise.

Arbitration

In arbitration, the union and employer each present their positions to an arbitrator who decides how the issues will be resolved. Arbitration can take different forms. In grievance or "rights" arbitration, an arbitrator resolves disputes over the terms and conditions of an existing collective bargaining agreement. In contract or "interest" arbitration, an arbitrator determines the terms and conditions of an initial or successor contract.

Interest arbitration can take different forms: voluntary or compulsory, conventional or final-offer, and binding or nonbinding. In addition, in final-offer arbitration, the arbitrator may choose between the complete final offers of the employer and union (i.e., the entire package) or between the final offers from each side on each issue.

Voluntary versus compulsory . In voluntary interest arbitration, the union and employer agree to use arbitration to resolve a bargaining impasse. With compulsory arbitration, the law requires the parties to use arbitration. Conventional versus final-offer . In conventional arbitration, the arbitrator is free to decide on a final contract agreement. The settlement may be a compromise between each side's final offer, or the arbitrator may choose the final offer from either one of the parties. With final-offer arbitration, the arbitrator must choose either the union's or the employer's final offer. Package versus issue-by-issue arbitration . In final-offer arbitration, the arbitrator may be required to choose the complete final offer (i.e., package) of either the union or the employer. Alternatively, the arbitrator may be allowed to choose between the final offers from each side on each issue. Binding versus nonbinding . In binding arbitration, the arbitrator's decision is imposed on both parties. With nonbinding arbitration, the parties may choose to accept or reject the decision of the arbitrator.

The different forms of arbitration can be combined. For example, conventional arbitration may be voluntary or compulsory. Final-offer arbitration may be binding or nonbinding.

Med-Arb

Med-Arb combines the role of mediator and arbitrator. As a mediator, a neutral third party tries to facilitate an agreement. If the parties cannot reach a settlement, the neutral party becomes the arbitrator and decides on a settlement. With Med-Arb, a neutral party's recommendations for a settlement may become the settlement that is imposed. Knowing this, the parties may be more willing to negotiate an agreement.

Advantages and Disadvantages of Interest Arbitration in Resolving Bargaining Impasses

The use of interest arbitration to resolve bargaining impasses has occurred mainly in the public sector, where the right to strike is generally limited or prohibited. In the private sector, the legal right of employees to strike and of employers to lock out employees can encourage the parties to reach a contract agreement. Nevertheless, in the private sector, a union and employer may voluntarily agree to use interest arbitration to settle bargaining impasses.

The use of interest arbitration in contract negotiations may have both advantages and disadvantages. The main advantage is that it may deter or prevent a strike or lockout. The main disadvantages are that it may change negotiating behavior and may become the normal way to settle bargaining impasses.

Strike Impact

When a union and employer reach a bargaining impasse, they can resort to mediation or arbitration. But employers can also lock out employees or workers can go on strike. The main reason for using interest arbitration to resolve contract disputes is to avoid the use of strikes or lockouts. A strike over wages, hours, or working conditions is called an economic strike. Employers can permanently replace striking workers. Replaced workers can only be rehired when jobs become available. Thus, a strike can impose costs on both workers and employers.

"Chilling" Effect

An adverse effect of interest arbitration is that it may have a "chilling" effect on negotiations. The availability of interest arbitration to resolve bargaining impasses may affect the willingness of the two sides to engage in serious bargaining. If either side believes that it can gain a better settlement through arbitration than through negotiation, it may not bargain seriously. If the parties expect an arbitrator to split the difference between their final offers, they may take extreme positions during negotiations and be unwilling to compromise.

"Narcotic" Effect

A second adverse effect of interest arbitration is that it may have a "narcotic" effect on contract negotiations. Interest arbitration may become habit-forming. If negotiations over a contract end with binding arbitration, the parties may come to rely on it and not engage in serious negotiations on future contracts.

Possible Responses to the Chilling and Narcotic Effect of Arbitration

A common criticism of conventional arbitration is that it may prevent the parties from engaging in serious negotiations. Each side may take an extreme position and may not make the kinds of compromises needed for a negotiated settlement. One proposal for dealing with the chilling effect of conventional arbitration is to require final-offer arbitration. The argument for using final-offer arbitration is that, if an arbitrator is limited to selecting the last offer of either the union or employer, each side may be more willing to make an offer that it believes will be acceptable to the arbitrator. If both parties are more willing to compromise, they may also reach a contract settlement on their own.

Under final-offer arbitration, the arbitrator could be restricted to choosing between the complete final offer of either the union or employer. Alternatively, the arbitrator could be allowed to choose between the final offers of each party on each issue. The latter approach would give an arbitrator greater discretion in fashioning the terms of an agreement and may also encourage the parties to bargain and make concessions on each issue.

Small Business

The NLRA does not include a statutory exemption for small businesses. However, the NLRB does not certify bargaining units of only one employee. Nor does it assert jurisdiction over employers with annual revenues or sales below certain standards.

Size of Bargaining Unit

The board does not certify a bargaining unit that consists of only one employee. The principle of collective bargaining presupposes that there is more than one employee who wants to bargain collectively.

Jurisdictional Standards

The NLRB has statutory jurisdiction over employers whose operations affect interstate commerce. Thus, the board can certify the results of an election where the employer's operations affect commerce. However, in addition to this statutory requirement, the NLRB has established administrative standards that an employer must meet before the board will assert jurisdiction over a question of union representation. These jurisdictional standards are generally based on an employer's annual sales or gross revenue. For example, a retail business must have annual sales of at least $500,000 before the board will assert jurisdiction. Hotels and motels must have at least $500,000 in gross revenues. A nonretail business must have either $50,000 in annual direct or indirect sales to buyers in other states or make $50,000 in direct or indirect purchases from sellers in other states. Private colleges and symphony orchestras must have at least $1 million in annual revenue. These standards have been in effect since August 1, 1959.

The board's ability to establish jurisdictional standards was codified by the Labor-Management Reporting and Disclosure Act of 1959, which added Section 14(c)(1) to the NLRA (29 U.S.C. 164(c)(1)). In part, Section 14(c)(1) states:

The Board, in its discretion, may ... decline to assert jurisdiction over any labor dispute involving any class or category of employers, where, in the opinion of the Board, the effect of such labor dispute on commerce is not sufficiently substantial to warrant the exercise of its jurisdiction: Provided, That the Board shall not decline to assert jurisdiction over any labor dispute over which it would assert jurisdiction under the standards prevailing upon August 1, 1959.

In other words, the board must assert jurisdiction over a labor dispute where the employer meets the jurisdictional standards that were in effect on August 1, 1959 (provided the employer's operations affect commerce). But the board may decline to assert jurisdiction over a labor dispute that does not have a substantial effect on interstate commerce.

If the board does not assert jurisdiction over smaller employers, employees at these companies may be able to unionize through other means. An employer could voluntarily recognize a union if a majority of employees sign authorization cards or a secret ballot election could be supervised by a third party other than the NLRB. In addition, Section 14(c)(2) of the NLRA (29 U.S.C. 164(c)(2)) states, in part:

Nothing in this subchapter shall be deemed to prevent or bar any agency or the courts of any State or Territory ... from assuming and asserting jurisdiction over labor disputes over which the Board declines ... to assert jurisdiction.

A report by the Government Accountability Office (GAO) estimated that, in February 2001, because of the jurisdictional standards, 5 million employees of small employers do not have collective bargaining rights under the NLRA (excluding supervisors and managers who are excluded by statute from coverage under the NLRA). If more recent data were used, the 5 million estimate could be higher or lower today. Because the dollar amounts for the jurisdictional standards are not adjusted for inflation, employers who met the standards in 1959 would probably not meet them today. On the other hand, there are more businesses today, many of which would meet the standards.

Potential Effects of Changes in Union Certification Procedures

In recent Congresses, legislation has been introduced that, if enacted, would change current union certification procedures. Some proposals would require the NLRB to certify a union if a majority of employees signed authorization cards. Other legislation would require secret ballot selections. This section summarizes the most common arguments made in favor of requiring secret ballot elections and the most common arguments made in support of card check certification. These changes could affect the level of unionization in the United States. The section also reviews research on the effects of different union certification procedures on union success rates.

Supporters and opponents of card check certification sometimes use similar language to support of their positions. Employers argue that, under card check certification, employees may be pressured or coerced into signing authorization cards and that employees may only hear the union's point of view. On the other hand, unions argue that during an election campaign, employers may pressure or coerce employees into voting against a union. Proponents of secret ballot elections argue that unlike signing an authorization card, casting a secret ballot is private and confidential. Unions argue that during an election campaign, employers have greater access to employees (e.g., captive audience meetings and access to employees on company property). Unions argue that card check certification is less costly than a secret ballot election. But employers maintain that unionization may be more costly to employees, because union members must pay dues and higher union wages may result in fewer union jobs. (See Table 3 .)

Research Findings

Little research has been done comparing the effects of requiring card check certification versus the effects of requiring secret ballot elections. The research that exists, however, suggests that changes in union recognition procedures could affect the level of unionization in the United States. Research suggests that the union success rate is greater with card check certification than with secret ballots. Unions also undertake more unionization drives under card check certification. The union success rate under card check certification is greater when a card check campaign is combined with a neutrality agreement.

Evidence from Canada suggests that the union success rate is higher under automatic card check recognition than under secret ballots. In Canada, each of the 10 provinces has laws governing union recognition. In 1976, all 10 provinces allowed card check recognition. Beginning with Nova Scotia in 1977, five provinces currently require secret ballot elections. British Columbia changed from card check recognition to requiring secret ballot elections in 1984, repealed mandatory voting in 1993, and restored mandatory voting in 2001. Under mandatory voting a union must receive a majority of votes in a secret ballot election to be recognized as the bargaining agent. Under card check recognition, a union is automatically recognized if the number of employees who sign authorization cards meets a minimum threshold. In general, a union is automatically recognized if more than 50% to 65% of employees, depending on the province, sign authorization cards.

A study of the union success rate under mandatory voting and automatic card check recognition concluded that the union success rate in Canada is nine percentage points higher under card check recognition than under secret ballots. The study examined 171 union organizing campaigns between 1978 and 1996 in nine provinces.

In the province of British Columbia, union recognition based on card checks was allowed until 1984. From 1984 through 1992, union certification required a secret ballot election. Card checks were again allowed beginning in 1993. (As noted above, mandatory voting resumed in 2001.) The union success rate fell almost 19 percentage points (from 93.1% to 74.5%) after mandatory voting was adopted in 1984 and increased by about the same amount when card check recognition was reinstated in 1993. In addition, during the period when mandatory voting was in effect, there were about 50% fewer attempts to organize workers. After 1993, the number of union organizing drives did not return to their pre-1984 levels.

In the province of Ontario, card check recognition was allowed before 1995. Since November 1995, secret balloting is required. A study of 3,564 certification applications before and after the switch to secret ballots found that the certification rate was higher with the use of card checks. After the change to secret ballots, the union success rate fell from 72.7% to 64.3%. On the other hand, under secret balloting, larger bargaining units were organized. The average size of units certified under secret balloting was 63.1 workers, compared to an average of 36.3 employees under card check recognition. The average size of the bargaining units where organizing drives were held was also larger after secret balloting was initiated; 63.1 workers versus 39.7 workers under card check recognition. Under card check recognition, a union was certified if 55% of employees signed cards. Under secret balloting, elections are normally held within five working days after the date of an application. The study included both private and public sector employers, but excluded the construction industry.

A study based on unionization in Canada concluded that each one percentage point increase in unionization raised the short-term unemployment rate by 0.30 to 0.35 percentage points. The study was based in union membership data in the 10 Canadian provinces over the period from 1976 to 1997.

Evidence also suggests that card check recognition may be more successful under a neutrality agreement. A study of union organizing drives in the United States concluded that union success rates are higher when a card check agreement is combined with a neutrality agreement. The study examined 57 card check agreements involving 294 organizing drives. Unions had a success rate of 78.2% in drives where card check recognition was combined with a neutrality agreement and a 62.5% success rate in cases where there was only a card check agreement.

The union success rate may be higher under card check recognition because, in part, employers have less of an opportunity to campaign against unionization. Unions may initiate more organizing drives under card check recognition because a card check campaign costs less than a secret ballot election. A secret ballot election may take longer than a card check campaign and employer opposition may be greater (requiring a union to expend more resources). Unions may have a higher success rate when card check recognition is combined with a neutrality agreement because there may be less employer opposition to unionization under a neutrality agreement. (Some research has concluded that management opposition is a key factor affecting union success rates in NLRB conducted elections.)

Requiring card check certification if a majority of employees sign authorization cards may increase the union success rate. Whether or not requiring card check certification would reverse the decline in private sector unionization in the United States is not certain. Shrinking employment in unionized firms and decertifications may offset any increase in union membership due to requiring card check recognition. In addition, requiring card check recognition may increase employer opposition during the collection of authorization cards.

Public Opinion

According to an annual Gallup poll, Americans are generally supportive of unions. The latest poll, from August 2008, concluded that 59% of Americans approve, while 31% disapprove, of unions.

According to a March 2009 Gallup poll, 53% of Americans favor a law that would make it easier for labor unions to organize; 39% of those polled said they opposed such a law; and 8% said they had no opinion.

According to a poll from Rasmussen Reports, also from March 2009, 33% of respondents agreed that Congress should change the law to make it easier for workers to form or join a union; 40% disagreed and 27% were not sure. Sixty-one percent of respondents agreed when asked the following question: "Under current law, if enough workers express interest in forming a union, a secret ballot is held. Is it fair to require a secret ballot to determine if workers want to form a union?" Thirty-two percent of respondents agreed to the following question: "Some people believe that a secret ballot vote is not necessary and that a union should be formed whenever a majority of workers sign a card saying they want one. If a majority of a company's workers sign a card saying they want to form a union, is it fair to form a union without having a vote?" At the same time, 57% of respondents thought that it is "very difficult" or "somewhat difficult" to form a union.

Two other surveys provide information about secret ballot elections and card check recognition. According to a March 2006 survey conducted for the Center for Union Facts (a business group), 75% of 1,000 persons surveyed said that they believe that a secret ballot election is the most fair and democratic way for employees to decide whether or not to join a union. By contrast, 12% of respondents said that card check recognition is the most fair and democratic way to form a union. According to a 2005 survey conducted by American Rights at Work (a labor group), 22% of 430 workers who had gone through a union organizing campaign said that they experienced a "great deal" of pressure from management. By contrast, 6% of workers said that they experienced a great deal of union pressure. Among workers who signed authorization cards in the presence of a union organizer, 5% said that the presence of the organizer made them feel pressure to sign the cards.

Is There an Economic Rationale for Protecting the Rights of Workers to Organize and Bargain Collectively?

The NLRA gives private sector workers the right to organize and bargain collectively over wages, hours, and other working conditions. It also requires employers to bargain in good faith with a union chosen by a majority of employees. The act says that the purpose of the law is to improve the bargaining power of workers. This section considers whether there is an economic rationale for protecting the rights of workers to organize and bargain collectively.

Government Intervention in Labor Markets

Governments may intervene in labor markets for a number of reasons. One of these reasons is to improve competition. According to standard economic theory, competitive markets generally result in the most efficient allocation of resources, where resources consist of individuals with different skills, capital goods (i.e., buildings and equipment and associated technology), and natural resources. In turn, an efficient allocation of resources generally results in greater total output and consumer satisfaction.

In competitive labor markets workers are paid according to the value of their contribution to output. Under perfect competition, wages include compensation for unfavorable working conditions. The latter theory, called the "theory of compensating wage differentials," recognizes that individuals differ in their preferences or tolerance for different working conditions—such as health and safety conditions, hours worked, holidays and annual leave, and job security.

If labor markets do not fit the model of perfect competition, increasing the bargaining power of workers may raise wages, improve benefits (e.g., for health care and retirement), and improve working conditions to levels that would exist under competitive conditions. In labor markets where a firm is the only employer (called a monopsony) unionization could, within limits, increase both wages and employment.

On the other hand, increasing the bargaining power of employees in competitive labor markets may result in a misallocation of resources—and reduce total economic output and consumer satisfaction. In competitive labor markets, higher union wages may reduce employment for union workers below the levels that would exist in the absence of unionization. If unions lower employment in the unionized sector, they may increase the supply of workers to employers in the nonunion sector, lowering the relative wages of nonunion workers.

It is difficult, however, to determine the competitiveness of labor markets. First, identifying the appropriate labor market may be difficult. Labor markets can be local (e.g., for unskilled labor), regional, national, or international (e.g., for managerial and professional workers). Second, measuring the competitiveness of labor markets is difficult. Finally, labor markets may change over time because of demographic, economic, technological, or other changes.

Distribution of Earnings

A second reason governments may intervene in labor markets is to reduce earnings inequality. Competitive labor markets may allocate resources efficiently, but they may result in a distribution of earnings that some policymakers find unacceptable. Unionization may be a means of reducing earnings inequality. Some economists argue that, during a recession, greater earnings equality may increase aggregate demand and, therefore, reduce unemployment.

Collective Voice

Finally, some economists maintain that unions give workers a "voice" in the workplace. According to this argument, unions provide workers an additional way to communicate with management. For instance, instead of expressing their dissatisfaction with an employer by quitting, workers can use dispute resolution or formal grievance procedures to resolve issues relating to pay, working conditions, or other matters.

Conclusion

The economic impact of requiring card check certification or secret ballot elections may rest on the desired objectives of policymakers.

By bargaining collectively, unionized workers may obtain higher wages, improved benefits, and better working conditions than if each worker bargained individually. But, depending on how well labor markets fit the model of perfect competition, collective bargaining may improve or harm the allocation of resources (i.e., economic efficiency). If labor markets are competitive, increasing the bargaining power of workers may reduce economic output and consumer satisfaction, but may increase equality. On the other hand, if labor markets are not competitive, increasing the bargaining power of workers may improve the allocation of resources as well as increase equality.

By requiring card check certification, the number of organizing campaigns and the union success rate may increase. Conversely, by requiring secret ballot elections, the number of organizing drives and the union success rate may decline. Thus, compared with existing recognition procedures, requiring secret ballot elections may lower the level of unionization, whereas requiring card check certification may raise it. Accordingly, depending on the competitiveness of labor markets, requiring card check certification may either improve or harm economic efficiency. Similarly, requiring secret ballot elections may either improve or harm efficiency. If either change were enacted, it may be difficult, however, to predict or measure the size of the effects.

Regardless of the competitiveness of labor markets, requiring secret ballot elections may increase earnings inequality—if fewer workers are unionized. Requiring card check certification may reduce inequality—if more workers are unionized. Again, the size of the effects may be difficult to predict or measure.