LaborRelations and the Litigation Explosion Labor Relations and the Litigation Explosion ROBERT J.\FLANAGAN Bibliothek der Wirtschafts- u. Sozialwissenschaftlichen Seminare und Institute Gottingen Inventarnummer 89/2,55 Seminar/Institut Signatur oats Ac 3600 pe The Brookings Institution | Washington, D.C: BoardofTrustees il ll THE BROOKINGS INSTITUTIONis an inde- Louis W. Cabot pendent organization devoted to nonpartisan Chairman i Mi research, education, and publication in eco- RViaclepChhaS.irSmaaun;l nomics, government, foreign policy, and the social Chairman,ExecutiveCommittee; sciences generally. Itsprincipalpurposesare toaid Chairman,DevelopmentCommittee in the development ofsound public policies and to Samuel H. Armacost J. David Barnes promote public understanding ofissues ofnational RexJ. Bates importance. FrankT. Cary TheInstitutionwasfoundedonDecember8, 1927, A. W. Clausen to merge the activities ofthe Institute for Govern- WilliamT. Coleman,Jr. Lloyd N. Cutler ment Research, founded in 1916, the Institute of Thomas R. Donahue Economics,foundedin 1922,andtheRobertBrook- Charles W. Duncan,Jr. ings Graduate School of Economics and Govern- WalterY. Elisha ment,founded in 1924. Robert F. Erburu RobertoC. Goizueta The Board of Trustees is responsible for the Robert D. Haas general administration ofthe Institution, while the Philip M. Hawley immediate direction of the policies, program, and Roy M. Huffington staff is vested in the President, assisted by an B. R. Inman Vernon E.Jordan,Jr. advisory committee of the officers and staff. The James A. Joseph by-laws ofthe Institution state: “‘It is the function JamesT. Lynn of the Trustees to make possible the conduct of Donald F. McHenry scientific research, and publication, underthe most Bruce K. MacLaury MaryPatterson McPherson favorable conditions, and to safeguard the inde- MacondaB. O’Connor pendenceofthe researchstaffinthe pursuitoftheir Donald S. Perkins studies and in the publication ofthe results ofsuch J. Woodward Redmond studies.Itisnotapartoftheirfunctiontodetermine, James D. RobinsonIII Robert V. Roosa control, or influence the conduct of particular in- Henry B. Schacht vestigationsortheconclusionsreached.” Howard R. Swearer The President bears final responsibility for the MorrisTanenbaum decision to publish a manuscript as a Brookings JamesD. Wolfensohn EzraK. Zilkha book. In reachinghisjudgmenton the competence, Copyright © 1987by CharlesJ. Zwick accuracy, and objectivity ofeach study, the Pres- THE BROOKINGSINSTITUTION HonoraryTrustees ident is advised by the director ofthe appropriate 1775 MassachusettsAvenue, N.W., Washington, D.C. 20036 Vincent M. Barnett, Jr. research program and weighs the viewsofa panel Barton M.Biggs of expert outside readers who report to him in Eugene R. Black LibraryofCongressCataloging-in-Publication data: RobertD. Calkins confidence on the quality ofthe work. Publication Flanagan, RobertJ. Edward W.Carter of a worksignifies that it is deemed a competent Bruce B. Dayton treatment worthy ofpublic consideration but does Laborrelationsandthe litigation explosion. Douglas Dillon not imply endorsement of conclusions or recom- Includes index. Huntington Harris mendations. I. 1T.itlLea.borlawsandlegislation—United States. ARongderrewW.HeHisekyenlsl TheInstitutionmaintainsitspositionofneutrality John E. Lockwood on issues ofpublic policy in order to safeguard the KF3319.F53 1987 344.73°01'0269 87-6404 William McC. Martin, Jr. intellectual freedom of the staff. Hence inter- ISBN 0-8157-2858-1 347.30410269 Robert S. McNamara pretations or conclusions in Brookings publica- ISBN 0-8157-2857-3 (pbk.) CAhrajralyesMiWll.erRobinson tions should be understood to be solely those of H. Chapman Rose the authors and should not be attributed to the Gerard C. Smith Institution, to its trustees, officers, or other staff Robert Brookings Smith D827 6:54: 3°24 SydneyStein, Jr. members, or to the organizations that support its Phyllis A. Wallace research. Foreword REGULATION of the procedural aspects of labor-managementrelations is more pervasive in the United States than in any other democratic nation. Under the National Labor Relations Act, workers have the right to join unions and bargain collectively, and both labor and managementare required to avoid statutorily defined unfair activities. Ironically, though the NLRA wasintended to assist the development of collective bargaining between labor and management, union mem- bership in the private sector has declined notably in recent years. Manyobserversargue that the regulatory structure set up to encourage collective bargaining now interferes with the rights that the act sought to guarantee and provides significant barriers to unionization. The numberofunfair labor practice charges has indeed grown rapidly since the mid-1950s, and there are many signs of increased resistance by employers to unionsand collective bargaining. This has led some labor leaders to propose deregulation oflabor-managementrelations—repeal of the National Labor Relations Act. In this study, Robert J. Flanagan analyzes the nature, causes, and consequencesofthe litigation explosion that has developed under the National Labor Relations Act. Hefinds that the growth ofunfair labor practice charges cannot be explained by a few key changes in legal doctrine, by the volume of regulated labor relations activity, or by general economic developments. Instead, he shows that labor and management have responded to the changing incentives to comply with and to enforce the NLRA.In particular, Flanagan finds that the sustained rise in the union-nonunion wage differential between 1969 and 1982 has had a more profound effect on union coverage of the work force than the growth of unfair labor practice charges. For that reason,althoughalternative policies might provide strongerguarantees of rights under the act, they are unlikely to reverse the decline in unionization. Robert J. Flanagan, whois associate professor of labor economics vii Vili LaborRelationsandthe Litigation Explosion at the Graduate School of Business, Stanford University, wrote this book while he was a visiting fellow at Brookings. Heis grateful to many persons and organizations for their assistance during the prep- Contents aration ofthis study. The Office of Statistical Services at the National Labor Relations Board provided much of the data analyzed in the study. Julius G. Getman, Bernard Meltzer, Myron Roomkin, and Paul Weileroffered valuable comments on the study,as did the participants in conferences and seminars at Stanford University, the University of 1. Labor Policy and Regulatory Litigation California at Berkeley, and the Trade Union Institute for Economic Research in Stockholm, Sweden. Patricia J. Regan at Brookings and 2. Federal Policy toward LaborRelations Lori Wilson at Stanford provided careful research assistance, and The National Labor Relations Act 8 Susan L. Woollen at Brookings and El Vera Fisher at Stanford typed Administration of the Act by the NLRB 1/2 several revisions of the manuscript. The manuscript was edited by Costs ofthe Regulatory Approach 22 AliceM.Carroll, anditsfactual content was verified by Almaz Zelleke. Regulation of the Labor Relations Process 23 Florence Robinson prepared the index. The Graduate School of 3. The Growth of Regulatory Litigation 24 Business, Stanford University, provided financial support for the Accelerated Growth of Unfair Labor Practice Charges 24 project. Unfair Labor Practices and LaborRelations Activity 29 The views presented here are those of the author and should not Shifts within Industries and Regions 43 be ascribed to the persons or organizations whose assistance is The Breadth ofChange 48 acknowledged above,or to the trustees, officers, or staff members of 4. NLRBRegulation and Labor Relations Outcomes 50 the Brookings Institution. The Outcome of Union Representation Elections 5/ BRUCE K. MACLAURY Negotiation of Labor Agreements 63 Overall Union Representation 66 President March 1987 Regulation, Labor Relations, and Unionization 71 Washington, D.C. 5. Compliance with the NLRA a The Compliance Process 73 The Compliance Game 77 Empirical Analysis ofCompliance and Enforcement 85 Why Do U.S. Employers Resist Unions? 97 Strategic Behavior and the VolumeofLitigation 99 6. Alternative Policies toward Labor Relations 102 Policy Alternatives under the Present Framework /04 Deregulation of Labor Relations //0 Appendix: The Compliance Calculus of an Employer 116 119 Index LaborRelations andthe Litigation Explosion x CHAPTER1 Tables 2-1. Average Median Days Elapsed in Processing Unfair LaborPractice Cases, 1963-65, 1973-75, and 1980-82 20 2-2. Budget Authority ofMajor Federal Regulatory Agencies, 1970 and 1983 Labor Policy and 3-1. Estimated Annual Growth in Charges of Unfair LaborPractices Filed, Various Periods, 1948-80 3-2. Remedial Actions Taken in Unfair Labor Practice Cases, Various Regulatory Litigation Years, 1948-80 3-3. Regressions of Charges of Unfair Labor Practices on Industrial Relations Activity and Economic Behavior in the United States, 1948-80 34 3-4. Regressions of Charges of Unfair Labor Practices on Industrial Relations Activity in Ontario, Canada, 1968-83 41 A HALF CENTURY has passed since Congress movedthe federal govern- 3-5. Effects ofChanges in the Distribution of Labor Relations Activity by Region and Industry on Charges Filed, 1960-70 and 1970-80 45 mentintotheregulationoflabor-managementrelationswiththeadoption 4-1. Regressions ofa Model ofUnion Representation 70 ofthe National Labor Relations Act (NLRA).! This statute, passed in 5-1. Indicators ofCompliance with the NLRA, 1948, 1970, and 1980 76 1935 and amendedin 1947 and 1959, established the rightofworkers to 5-2. Regressions of Unfair Labor Practice Charges by Unions against join unions and bargain collectively as a matter of public policy. It Employers, 1950-80 93 supported this right by providing a government-supervised election 5-3. Regressions ofUnfair Labor Practice Charges by Workers against procedure through whichemployeescouldselectaunionrepresentative Employers, 1950-80 96 andbyforbiddingcertain ‘‘unfairlaborpractices’’ thatwerebelievedto Figures inhibit the basic objectives of the act. The NLRAalso established a 3-1. Charges ofUnfair Labor Practices Filed with the NLRB, 1948-80 regulatory agency, the National Labor Relations Board (NLRB), to 3-2. ChargesofUnfairLaborPracticesand MeasuresofLaborRelations Activity, 1948-80 supervise representation elections and to investigate and adjudicate 3-3. Charges ofUnfairLaborPractices and Predictions Based on Three charges ofunfairlaborpractices. Models, 1965-80 When the NLRA waspassed, it was thought that unfair practices 3-4. Charges ofUnfair Labor Practices, Ontario, Canada, 1965-83 might wither away as unions and collective bargaining gained greater 4-1. Percent ofRepresentation Elections Won by Unions, 1948-80 acceptability and as the statute clarified the rules ofthe gamein labor- 5-1. Logarithmic Relation ofUnion to Nonunion Wage Rates, 1948-80 managementrelations. Instead,the sheervolumeofregulatorylitigation a8 Back Pay Awarded toIllegally Discharged Employees, 1948-80 hasbecomethemostsalientfeatureoflaborrelationspolicy.Thenumber -3. Average NumberofDays between Filing ofUnfair Labor Practice ofunfairlaborpractice chargesfiledbyunions, employers,andworkers Charge and NLRB Adjudication, 1950-80 hasdoubledeverydecadesincethemid-1950s,whilethevolumeoflabor relations activities subject to regulation—largely union representation elections and collective bargaining negotiations—has remainedstable. While thejurisdiction ofthe NLRA has expanded, compliancewiththe act has become a major problem.Yet, the growth ofregulatory activity under the U.S. approach to laborrelations policy has received little analytical attention despite its potentialconsequencesforthecollective 1. National Labor Relations Act, chap. 372, 49 Stat. 449(1935)(codifiedasamended at 29 USC 151-69 [1982 and supp. III 1986]). 2 LaborRelations andthe Litigation Explosion LaborPolicy and Regulatory Litigation 5 bargainingrightsofworkersandforunionrepresentation.In particular, to threaten serious harm to the public at large. The Landrum-Griffin remarkablylittle isknownaboutcomplianceandenforcementdecisions amendments marked a shift in emphasis from the regulation ofunion- madeunderthe NLRA. managementrelationstotheregulationoftheinternalaffairsofunions.3 This bookexaminesthe factors that have contributedto the increase The 1977 reforms that unions sought would have tightened certain in regulatory litigation and the consequences ofthe litigation explosion aspects of the administration of the NLRA and provided punitive for laborrelations. It provides an economic andstatistical analysis of damagesfor seriousviolationsoftheact. the effects ofregulatory rule making onlaborrelations behavior and on On the surface, the state oflaborrelations appears more placid than the regulatory process and hence differs from legal research into the in the late 1920s and 1930s. Muchofthe contentionin laborrelations, interpretation ofspecific doctrines and rules developed by the NLRB. however,has shifted from the streets and picketlines to the courts and It also discusses the implications of the analysis for the future of regulatory hearing rooms. Under the NLRA,union organizingis to an regulatorypolicy underthe NLRA. importantextentalegalprocesswithanintricatesetofrules(established Theeffect ofregulatory policyunderthe NLRAhas becomeincreas- overthe years by the NLRB)governingalmost everyaspectofconduct ingly controversial, because much has changed in American labor byunions and employersas they seektoinfluencehow workersvoteon relationssincethepassageoftheact. Intheearly 1930sAmerican unions thequestionofunionization.Onceaunionisestablished,workstoppages wereweakandtheyrepresentedasmallerfraction ofworkersthantheir can and do occurin supportofcollective bargaining demands. Regula- counterparts in Western Europe. The labor movement mainly repre- tionsimplementingalegaldutytobargainmayinfluenceboththeconduct sentedskilled-craftworkers—thehigh-wageeliteoftheblue-collarwork and substance of collective bargaining. Another set of regulations is force.Effortstoextendunionizationtounskilledandsemiskilledworkers directedatthefairnesswithwhichunionsrepresenttheirmembersunder in the large-scale, mass-production industries that accounted for an a collective bargaining agreement. The result has been a level of increasingly large proportion ofemployment were met by determined regulatory activity and litigiousness in labor relations that is without employerresistance thatoftenculminated in strikes and violence. parallel in the rest ofthe world.4 Overthe five decades that unions in the private sector have been With the growing litigiousness have come diverse criticisms of the covered by the NLRA their economic influence has grown and then law. Onegroupofcriticsfaults the NLRAforreducingcompetitionand declined, although union representation still remains well above the economic efficiency in labor markets byfacilitating the cartelization of levelsoftheearly 1930s.?Successfulorganizingbynewindustrial unions labor supply.> They argue that monopsony and other labor market extendedunionrepresentation tomanufacturing and otherindustries in imperfections that the organization ofworkers into unions is meant to the late 1930s and early 1940s. Public policy, initially one-sided inits counter are not prevalent enough to justify setting aside the pro- support of unionization, shifted against the interests of unions after competition thrust of the commonlaw treatment of labor unions and World War II with the passage of the Taft-Hartley Act (the Labor laborrelations. ManagementRelations Act, 1947) and the Landrum-Griffin Act (the Anothergroupofcriticsholdsthat thenational policyofencouraging Labor-ManagementReporting and Disclosure Act of 1959), as well as collective bargainingexpressed intheNLRAisnolongerfulfilledinthe with the failure ofa 1977 laborlaw reform bill favored by unions. The administrationoftheact. Unionsandsomeacademicobserversattribute Taft-Hartley amendments of the NLRAdefine several areas of union conduct as unfair labor practices, provide for the disestablishment of 3. The Landrum-Griffin Act includes afew amendments tothe NLRA,butits main unionsthroughdecertificationelections,andprovideemergencydispute thrust is the regulation ofinternal union affairs, which haslittle bearingon this study. 4. Thisappears tobe trueevenincomparisontoregulatorysystemsthatsharemany procedures thatcan be invoked whenmajorlabordisputes are believed features ofthe NLRA. See comparisons with Canada and Japan in chap.3. 5. Richard A. Epstein, “‘A Common Law for Labor Relations: A Critique of the 2. Since the mid-1960s, unionization among public sector employees has spread New Deal Labor Legislation,” Yale Law Journal, vol. 92 (July 1983), pp. 1357-1408; substantially. Laborrelations in the public sectorare regulated by a variety offederal, Richard A. Posner, ‘“‘Some Economics of Labor Law,” University ofChicago Law state, andlocallegislation not includedin this study. Review, vol. 51 (Fall 1984), pp. 988-1011. 4 Labor Relations andthe Litigation Explosion Labor Policy and Regulatory Litigation 5 muchofthedecline inthe unionization ofworkers in the private sector Chapter 2 reviews the general features and implications of labor to employerresistance and argue that the presentrules and procedures relationspolicy undertheNational LaborRelationsAct. Chapter3then oftheNLRBdomoretoprotecttherightsofemployersthantoguarantee develops the puzzle ofthe growing gap betweenthe levelofregulatory workers’righttoselectunionswithoutcoercion.®Theycontendthatthe activity and the level of labor relations activities that are subject to lawhasfallenshortofitsgoalsbecausetoomuchweighthasbeen given regulation. It compares the outcome of U.S. policy with outcomesin in its implementation to exactly those interests that proponents of the Canada and Japan, which havea similar approachto laborrelations commonlawwishtoprotect.’Proposalsforreformintheadministration policy. Chapter 4 evaluates the controversy regarding the effect of ofthe act range from speeding up case processing and imposing more NLRBregulations on laborrelations outcomes. Chapter5 analyzesthe stringent penalties for violations ofthe act to complete deregulation— influence of compliance and enforcement incentives on the growth of abolishingtheNURA—onthegroundsthattheactcurrentlyplacesmore unfairlabor practice charges. restrictionsonthetacticalfreedomofunions than employers.*® This study finds that the litigation explosion in labor relations has In addition, some academic observers have questioned whetherthe occurredin virtually all categories ofunfairlaborpracticeandtherefore Board’s rule making on substantive matters is necessary to attain the cannot be traced to the effects of one or two key decisions on legal objectives ofthe NLRA.In suggestingand demonstrating that some of doctrine by the NLRBorthe appellate courts. Moreover,shifts in the theregulatoryrules are directedat behaviorthat haslittle or no impact distributionoflaborrelationsactivityfromregionsandindustrieswhere ontheobjectivesoftheNLRA,thesecriticsoftenproposeatleastpartial resistance to unionsis low to sectors whereresistance is high explains deregulationoflaborrelations.?Theanalysesreportedinthisbookassist only part ofthe growth ofunfairlaborpracticecharges (chapter3). inevaluatingthemeritofthesealternative views and proposals. Instead, much of the growth ofregulatorylitigation appears to be a general behavioral response to changing incentives to comply with and 6. AFL-CIO Committee on the Evolution of Work, The Changing Situation of enforce compliance with the NLRA. Prominent among these is the Workers and Their Unions (Washington: AFL-CIO, 1985); Paul Weiler, ‘‘Promises to Keep: SecuringWorkers’ Rights to Self-Organization underthe NLRA”’ and ‘Striking growth ofthe difference betweenthe cost ofunionlaborandthe costof a New Balance: Freedom ofContract and the Prospects for Union Representation,” nonunionlaborduringthe 1970s,whichprovidedincentivestoemployers HarvardLawReview, vol. 96(June 1983),pp. 1769-1827, and vol. 98(December 1984), (who had moreto lose) to violate the act and to unions (who had more pp. 351-420; Richard B. Freeman and JamesL. Medoff, What Do Unions Do? (Basic to gain) to file charges challenging noncompliance with the act. The Books, 1984). 7. James B. Atleson, ValuesandAssumptions inAmerican LaborLaw (University influence of the Board on compliance and enforcementincentives is ofMassachusetts Press, 1983);PaulA. Levy, ed., ‘‘The Unidimensional Perspective of muted, becauseit is not permitted to issue punitive remedies. Indeed, the Reagan LaborBoard,” RutgersLawJournal, vol. 16 (Winter 1985), pp. 269-390. animportant lesson ofthe analysis ofthe complianceprocessunderthe 8. LaborLawReformActof1978, HearingbeforetheSenate Committee on Human Resources, 95 Cong. 2 sess. (Government Printing Office, 1978); testimony ofRichard NLRAis that the volume of regulatory litigation is often driven by L. Trumka,president ofthe United Mine Workers ofAmerica, in Oversight Hearings incentives that are beyond the influence of regulatory procedures. on the Subject “‘Has LaborLawFailed,”’ Joint Hearings before the Subcommittee on Regression analyses based on compliance incentives provide a better Labor-ManagementRelations of the House Committee on Education and Labor and the Manpower and Housing Subcommittee of the House Committee on Government explanation ofthegrowthofunfairlaborpracticechargesthananalyses Operations,98Cong.2sess.(GPO, 1984),pt. 1, pp.3-27;interviewwithLaneKirkland, based on the volumeoflaborrelations activity and general economic president ofthe AFL-CIO, in Cathy Trost and Leonard M. Apcear, “AFL-CIO Chief conditions. Nevertheless, some of the growth of charges over time Call9s.LDaebroerkLCca.wBsoka,‘“D‘eTahdeLReetgtuelra,t’i’o’nWoafllCaSmtpraeiegtnJToaucrntailc,sAiungRuesptre1s6e,nt19a8t4i.on Elections remains unexplainedbyanyofthesefactorsandmaybeassociatedwith Under the National Labor Relations Act,” Harvard Law Review, vol. 78 (November the gradual extensionofrights underthe law orshifts in the number of U19n6i4o),nRpepp.re3s8e-n1t4a1;tiJounlEilusectGi.onGse:tLmaawn,anSdteRpehaleintyB.(NGeowldYboerrkg:,RaunsdselJleaSnangeeFB.ounHdeartmiaonn,, employers whoapproachthe law strategically (chapter5). 1976); William T. Dickens, ‘‘The Effect of Company Campaigns on Certification The study also finds that the effects of NLRA regulation on labor Elections: La.wandRealityOnceAggaaiinn,,”Industtriail1andLabor RelatiionsRevileeww, vol. relationsandunionizationareoftenoverstated. Earlierstudies,although uneven,find that manyofthe rules developedby theNLRB maynotbe 6 LaborRelations and the Litigation Explosion needed to establish the right to concerted activity provided bytheact. CHAPTER 2 Yetmoststudiesfindthatdelaysinadjudicationreducethelikelihoodof aunionvictoryinarepresentationelectionand otherwise interfere with this right. Even rules that are neutral in their effect on the rightto concertedactivitymayproduceanindirect interference by contributing Federal Policy toward tocongestionanddelay. Whatevertheexactinfluenceofnoncompliance on collective bargaining rights, neither the overall volumeoflitigation Labor Relations norlitigation challenging suspected noncompliance by employersis a majorsource ofthe decline in unionization in the United States. This is so because unionization is the outcome of many factors, only some of which are influenced by regulation. During the 1970s, the increasing relative wage ofunion workers stimulated more profound adjustments intheuseofunionlabor(chapter4).Chapter6considerstheimplications TueGrowTHoflabor unionspresents nations with significantquestions ofthese findings for changesin national laborrelations policy ranging ofpublic policy. Shouldthegovernmentmandatecollectivebargaining? fromchangesinremediesandprocedureswithin the existing regulatory Should it otherwise assist in the process ofestablishing unions? What frameworktorepeal ofthe NLRA. limits, ifany, should be placed onthe use offorce, notably strikes and lockouts,incollectivebargaining?Suchquestionsaredifficulttoanswer because efforts by workers to improve their working conditions with collectiveas well as individual actionsinthelabormarketraiseconflicts between the right to take concerted action and freedom of contract, betweena systemofprivatecollectivebargainingandthepublicinterest in minimizing disruptions ofcommerce, and between majority rule and individualrights. Different countries have answeredthese questionsindifferentways, butthere appearto be twobroad approachestotheformulationoflabor relations policy. One is based on the principle ofconsensus, in which labor and managementdevelopa set ofgeneralrulesthatis to govern their conductin labor relations without governmentassistance. Proce- dural questions pertaining to how unionswill come to be recognized as representatives ofgroups ofworkers, theconductofcollectivebargain- ing, the termination of the collective bargaining agreement, and so on are determined by the parties to collective bargaining themselves. Scandinavian countries have taken this approach, often with the hope of forestalling direct government intervention in labor-management relations. Manyobserversbelievethatthepartiestocollectivebarg aining are more likely to bear responsibility for adhering to rules that they develop themselvesthantorules imposedbythird parties. The other approach to labor relations, based on the principle of majority rule, has guided public policy in the United States. Rules 7 8 LaborRelations andthe Litigation Explosion Federal Policy toward Labor Relations 9 pertainingtotheconductoflabor-managementrelationsare established organizingwere laborinjunctions, whichcould beusedtohalt strikesin bylegislationratherthanbynegotiationbetweenthepartiestocollective support of recognition or economic demands, and the enforcement of bargaining. Under majority rule the preferences of minority interest so-called yellow-dog contracts.* The Norris-LaGuardia Act of 1932 groupsreceivelittleattention.Ifminoritygroupsaresufficientlyopposed greatly circumscribed the use of injunctions in labor disputes and tolegislativerequirements,theymaytrytocircumventtheobjectivesof rendered yellow-dogcontracts unenforceable inthefederalcourts. the policy by taking advantage of loopholes in the law. The frequent Employers remainedfreetouseothermethodstoresistunionization, response to such efforts at evasion is more detailed rule making by however,andeffortstoorganizewerefrequentlyaccompaniedbystrikes legislativeoradministrativebodies. Thisinturnencouragesasearchfor and violence as employers used espionage, detectives, strikebreakers, newloopholesandmorerulemakingtoclose them. The result can bean armedguards, anddischargeofunionsupporterstothwartunions. Some extremelylitigiousregulatory system. employers adopted more sedate approaches, providing novel fringe benefits and sponsoring “‘“company unions’’—employeerepresentation organizationsfinanced and controlled by thecompany. The National Labor Relations Act Against this background, Congressclearly intended to reverse the pro-competition tilt of common law by encouraging the growth of With the passage of the National Labor Relations Act, the United collectivebargainingwiththepassageoftheNLRAin 1935.°Theconflict Statesadoptedthemajority-ruleapproachtolaborrelationspolicy.!The betweenthegeneral statementofnationalpolicy insupportofcollective NLRA nowconsists of the Wagner Act of 1935 (namedforits chief bargainingand the purported effectsofthe subsequentadministrationof sponsor) as amended by the Taft-Hartley Act of 1947 and certain thelaw haveinspired strongcriticism ofthe act and the NLRB. provisionsintheLandrum-GriffinActof1959. Itregulateslaborrelations To further its goal, Congress sought to reduce strike activity by prohibitingpracticesthatencouragestrikesoverunionrecognition.®The atthefederallevel. Beforepassage ofthe WagnerAct, uniongrowth had been slowerin act also expresses congressional concern that ‘‘inequality ofbargaining the United States than in other countries. By 1930, for example, 8.9 percent ofthe U.S. work force was unionized, while unions repre- DealLabor Legislation,’’ Yale LawJournal, vol. 92(July 1983), pp. 1357-1408;Richard sented 36.0 percent of the work force in Sweden, 33.7 percent in A. Posner, ‘‘Some Economics ofLabor Law,” UniversityofChicagoLawReview,vol. Germany, and 25.7 percentin Great Britain.2 It was generally believed 51 (Fall 1984), pp. 988-1011. thatthe main impediments tothe more rapid spread ofunions were the 4. The yellow-dog contract required employees to agree not tojoin a union as a condition of employment. Union organizers could therefore be held responsible for legalclimateandthetacticsofemployerresistance. breach ofcontract. Before the 1930s, labor unions andlabor relations outside of the 5. Section 1 of the act states: ‘The denial by employers ofthe right ofemployees railroad industrywereregulatedaccordingto the principles ofcommon toorganizeandtherefusalbyemployerstoaccepttheprocedureofcollectivebargaining law,whosecompetitiveorientationwasofteninimicaltothe interestsof lead to strikes and other forms of industrial strife or unrest, which have the intent or thenecessaryeffect ofburdeningorobstructingcommerce. . . . Experience hasproved unions.* By the twentiethcentury the main legal impedimentsto union that protection by law of the right of employees to organize and bargain collectively safeguards commerce. . . . It is hereby declared to be the policy ofthe United States 1. Labor-managementrelations arealsoinfluencedbythe Norris-LaGuardia Actof to. . . mitigate and eliminate these obstructions[to the free flow ofcommerce] tee by 1932, 47 Stat. 70, chap. 90 (1932), and, in the railroad and airline industries, by the encouraging the practice and procedure ofcollective bargaining and by protecting the Railway LaborAct of1926, 44 Stat. 577, chap. 347 (1926). These statutes have much exercise by workers of full freedom ofassociation, self-organization, and designation lessinfluenceonlaborrelationsthanthe NLRA. ofrepresentatives oftheir own choosing, for the purpose ofnegotiating the terms and 2. George Sayers BainandRobertPrice,Profiles ofUnion Growth:A Comparative Conditions of their employment or other mutual aid or protection.”’ 49 Stat. 449-50 StatisticalPortraitofEightCountries(Oxford: Basil Blackwell, 1980), p. 170. (1935). Budierpi ios Labor and the Law, 2d rev. ed. (Norton, 1961); Selig 6. The congressional intention was to remove ‘‘certain recognized sources of dan,deistoary of Trade Unionism in thee UnUinitedStates (Macmililllaen, 1922), chap: industrial strife’? and to encourage “‘practices fundamental to the friendly adjustment “A Common LawforLaborRelations: A Critique ofthe New ofindustrial disputes.’’ 49 Stat. 449 (1935).