The labor policy of the reagan-Bush era presents a paradox. On the one hand, it was an era of pure and simple anti-unionism, which began with President Reagan's dismissal of the air traffic controllers and ended with President Bush's promise to veto the striker-replacement bill before Congress. In that 12-year period, conservative federal courts and a conservative National Labor Relations Board effectively dismantled the New Deal collective bargaining system by reversing many of the legal doctrines that had empowered organized labor. Indeed, one could fairly characterize the 1980s and early 1990s as one of the most anti-labor periods in American history.
Yet while the collective bargaining system was being dismantled, workers were being granted individual rights to an unprecedented degree, usually by state legislatures and courts. These included the right not to be fired capriciously, not to be subject to drug or lie detector tests, not to be defamed in job references, to have one's privacy protected, to speak out publicly about employer wrongdoing, to be notified of plant closings, to be free of sexual harassment, as well as improved rights to be free of racial and sexual discrimination. And some of these rights are enforced with big ticket damage awards. In 1992, a Texas jury awarded $126 million to an employee who had been unfairly dismissed.
How can we explain the simultaneous explosion of individual employee rights and the demise of collective employee rights? Have state legislatures and courts become the new protectors of the American worker because federal agencies and courts defaulted? Where did the new individual employment rights come from? And what do they mean for the distribution of wealth and power in our society?
The new individual employment rights come from several sources. Some, such as protection for whistle-blowers and protection against lie detector tests, reflect a narrow libertarian view of worker rights, one that emphasizes worker privacy and autonomy. Others, such as plant closing measures, were initially advocated by labor and community groups at the state level who sought worker protection in the face of massive plant closings and a generally unsympathetic federal government. Broader rights against unjust dismissal were the product of judicial innovation in the common law, particularly in cases in which corporate executives, professionals, and middle managers lost their jobs due to corporate restructurings.
Whatever their origin, we need to ask whether this shift in the form of labor protection means that the collective bargaining system is fading into irrelevance. And, if so, will the new system of individual employment rights usher in a fairer and more humane workplace?
Seemingly, the emerging network of individual employment rights should complement and supplement the preexisting system of collective bargaining. Individual rights might enhance labor's strength by setting a floor above which unions could negotiate even stronger protections. Indeed, in Europe, individual employee rights are consistent with and supportive of collective action and employee organization.
But while external employment rights, in principle, could be benign or beneficial to organized labor, the rise of individual employment rights has not had that effect. Rather, such rights have undermined collective bargaining. Understanding how and why this is so elucidates the weaknesses of our particular system of collective bargaining and how it has weakened unions, as well as the frailty of the individual worker seeking redress in court.
As we shall see, the shift from federal to state employment regulation and from collective to individual employment rights has disempowered organized labor and hastened union decline, while failing to provide workers with alternative protections. The new rights are often illusory for blue- and pink-collar workers in practice--hard to enforce, and biased toward protecting middle and upper management employees. The existence of individual employment rights is ephemeral, vulnerable to repeal by the slightest conservative wind. The labor anthem, "Solidarity Forever," still has it right: "What force on earth is weaker than the feeble strength of one?"
The best way to understand the new individual employment rights is to ask what happens when a worker tries to exercise them. What happens, for example, to a worker who believes she has been fired unfairly and wants to sue under her state's unjust dismissal rights? The answer depends on whether the worker is a member of a union or not. Paradoxically, the worker stands a better chance of getting into court if there is no union. But for the nonunion worker there is a Catch-22: once in court she has scant hope of redress.
The right to file a lawsuit does not mean that one is actually filed, much less that it succeeds. For starters, few lawyers will take an unjust dismissal case on a contingency basis, particularly when the plaintiff is a blue-collar worker who does not hold out the prospect of a big damage recovery. And few workers who have lost their jobs have the resources to pay legal fees.
Moreover, a worker who does go to court faces many additional legal hurdles to establish liability and damages. For example, if her claim is based on breach of a promise of job security, she must establish that such a promise was made, either explicitly or implicitly, and that it induced "reasonable reliance." That means she has to show that she gave up employment possibilities elsewhere. If she succeeds in establishing an "enforceable promise," she has to show it was breached and that she suffered monetary damages as a result. This requires proving that had she not been fired in this instance, she would not have lost her job for some other lawful reason such as a layoff or a dismissal for cause at a later date. Further, under the common law exists a duty on the part of plaintiffs to "mitigate their damages." For a worker in an unjust dismissal case, this means that she has to actively seek another job, and the wages she actually earns or could have earned are subtracted from any lost earnings resulting from the wrongful firing. These, in any case, are likely to be relatively small, since there are no punitive damage awards and usually no award for pain and suffering in a breach of contract case.
All of these elements of proof are difficult to establish. But note that they are easier for professional or managerial employees, who can argue that they have unique skills that made it difficult for them to find alternative comparable employment and more likely that they had alternative employment opportunities earlier. For blue-collar workers whose skills are more general, such proof is difficult to make and hence any damage recovery will be small. Because of these myriad difficulties, the majority of employment related lawsuits are brought by managerial, professional, and executive employees. As Clyde Summers has documented in his 1992 University of Pennsylvania Law Review article, "Effective Remedies for Employment Rights: Preliminary Guidelines and Proposals," the overwhelming majority of those that succeed are brought by those at the upper levels of job and career hierarchies.
Despite the practical obstacles blue-collar workers encounter in trying to enforce individual employment rights, it is widely believed that such rights hold out a promise of job security. In part, no doubt, this perception comes from the wide publicity that the media have given to a few large awards. But this perception also comes from a basic sense of justice that most American workers have: Workers who are fired unjustly often find it incredible that they have no practical legal recourse.
While it is difficult for nonunion blue-collar workers to successfully assert an unjust dismissal right under state law, it is almost impossible for a unionized worker to do so. Under a doctrine known as Section 301 preemption, which refers to Section 301 of the Labor Management Relations Act of 1947, a unionized worker cannot exercise a state-created employment right if it overlaps with a collective bargaining agreement. In the past ten years, conservative courts have applied this doctrine with extraordinary reach, finding all kinds of lawsuits to be de facto efforts to enforce collective bargaining agreements.
In one such case, Jackson v. Liquid Carbonic Corp., a truck driver named George Jackson was fired after a drug test found traces of marijuana. The employee denied marijuana use and asked to be retested; the employer refused. Although Jackson was covered by a collective bargaining agreement, he sued in state court on the basis of a state privacy statute and a state constitutional right to privacy. The employer argued that the claim was preempted by the collective bargaining agreement, removed the case to federal court, and moved to dismiss the suit.
The federal court backed the employer. It interpreted the state law as not imposing an absolute prohibition on drug testing, but rather as calling for a "balancing test" in which the employee's right to privacy was to be balanced against the employer's legitimate interest in conducting the test. To establish the balance, the court considered whether employer-instituted drug testing was "reasonable." It then found in the union contract a boilerplate clause that gave management a right "to post reasonable rules and regulations from time to time." Although drug testing and its terms were not addressed in the contract, the court reasoned that this clause established a sufficient connection between the drug testing and the collective agreement to preempt the employee's claim.
In a survey of hundreds of similar Section 301 preemption cases decided over the past decade, I found an astonishingly simple pattern. When unionized workers attempted to exercise state employment rights, they were unable to do so. By virtue of the preemption rules, the courthouse door was closed.1
A great many of the recent developments in state employment law have been aimed at protecting workers from "wrongful discharge"--arbitrary firings. Unionized workers have been particularly disadvantaged in this area by the preemption rules, since claims by unionized workers that they have been unjustly dismissed are almost always preempted. Courts also routinely preempt claims of unlawful drug testing, of defamation by an employer's derogatory remarks, of unlawful search of a person or automobile, of mishandling health insurance, medical leave, or other medical obligations, and claims of a breach of promise to an employee who is in a bargaining unit. Indeed, very few cases brought by unionized workers survive dismissal for preemption, and those that do fall into a small number of narrow exceptions.
In a 1991 decision, Schlacter-Jones v. General Telephone of California, the federal Court of Appeals for the Ninth Circuit went so far as to propound a broad principle of preemption. It said, in a unionized workplace, all claims about working conditions that were within the scope of collective bargaining would be preempted. This suggestion, if adopted by other circuits, would automatically seal off most aspects of unionized workplaces from state employment regulation.
TELL IT TO THE ARBITRATOR
When a suit is preempted under Section 301, all claims for breach of a collective bargaining agreement must be decided in private arbitration rather than by a court, with effectively no right of judicial review. In arbitration, the arbitrator applies the terms of the collective bargaining agreement, not the state law which the worker sought to invoke. Thus the unionized worker whose suit is preempted is denied the substantive benefits of the state law, and judicial review as well.
Well, so what? What's wrong with a broad preemption doctrine that leaves unionized workers with their right to private arbitration? Is not arbitration an adequate substitute for litigation, maybe even a preferable one?
For one thing, arbitration does not provide the accountability of a public proceeding in a court or administrative agency. Rather, the use of private arbitration as the exclusive forum for deciding labor disputes for unionized workers means that those disputes are decided in an atomized and invisible manner, by a tribunal that is politically unaccountable.
Some arbitrators have adopted rules that offend the most elementary notions of due process. For example, there is a widely accepted doctrine that when it is a worker's word against a supervisor's, the arbitrator should not believe the worker because the worker has a motive to lie. Another almost universal arbitral principle is that when a worker is given an order that she believes violates her contractual rights, she must first obey the order and file a grievance afterwards. Failure to obey is considered insubordination and grounds for dismissal, even if the initial order seriously compromises the worker's health, safety, or dignity. Arbitrators increasingly apply the principle that an employer's business justification is sufficient to override explicit provisions of a collective bargaining agreement. For example, in numerous cases in the 1980s, arbitrators allowed employers to dismiss workers who were out sick, despite contractual protections to the contrary, solely on the grounds that absenteeism was costing the employer too much money.
In addition, the remedies from arbitration are far more limited than those available in court. In general, arbitrators believe that their power to award damages is limited to the immediate monetary loss attributable to the employer's contract violation. They will not award damages for losses that were secondary consequences of the initial breach, such as an automobile repossession of a worker who was fired unfairly and could not keep up her loan payments. Furthermore, arbitrators will not award punitive damages. As a result, arbitral awards are not large enough to fully compensate workers for their losses, nor to deter employers from breaching collective bargaining agreements.
In addition, arbitrators do not believe they have the power to award interim relief. That is, they will not order an employer to stop practices that threaten to harm a worker's health, to undermine her dignity, or to eliminate her job--even if the practice is a clear contract violation--until the case is fully presented and decided. Thus many arbitral awards come too late to provide any remedy at all.
And finally, in arbitration there is virtually no right of appeal.
By denying union members the benefits of statutory rights, the present system actually leaves them worse off, both by foreclosing substantive rights and leaving union members with an inferior mechanism of redress.
The broad preemption rule is not written into the labor statutes, but rather has evolved through recent judicial interpretation. However, there is a deep-seated reason why courts have interpreted preemption so expansively. Most judges subscribe to a particular model of collective bargaining that has dominated American labor relations thought since the 1950s. This model, which I call industrial pluralism, is contained in a simple yet powerful metaphor. It compares the unionized workplace to a self-sufficient, autonomous democracy. Industrial pluralists say that the unionized workplace has an executive, which is management; a legislature, which is collective bargaining; and a judiciary, which is private arbitration. Thus it has representative institutions of governance and checks and balances in the application of its internal laws--a perfect Montesquieu democracy. Industrial pluralism describes the workplace as a flourishing "mini-democracy" in which unions and employers maximize their joint preferences by private bargaining--a mini-democracy in the private realm.
Judges, deeply imbued with this vision and somewhat oblivious to the real imbalance of power in the workplace, believe that the procedures of the mini-democracy and the terms of the bargains the parties conclude are superior to any state-imposed employment terms or external procedures for enforcing those terms. In particular, they believe that the enforcement mechanism the parties set up--arbitration--is optimal and that it would only do harm for judicial processes to interfere. Industrial pluralists have urged the courts to adopt an attitude of extreme deference to arbitration, and a policy of shielding the workplace from external sources of law. Thus the legacy of industrial pluralism structures the legal landscape to force workers to choose between individual rights and collective rights. This legally imposed dilemma plays a role in union decline.
PROTECTING WORKERS BY WEAKENING UNIONS
The most important fact of labor relations today is the fact of accelerating union decline, most dramatically in the private sector. In the 1980s, for the first time since the early 1930s, the absolute number of union members declined--by 25 percent.
There are many theories of union decline, all partially correct but all incomplete. While intensified employer opposition, the changing demographic composition of the work force, and the shift from a manufacturing to a service-based economy have no doubt had a detrimental effect on union organizing, these factors do not explain why workers in the new sectors have not been more aggressive about unionizing. Given the fact that real wages have declined in the past 12 years, the failure of substantial numbers of workers to organize is a mystery that must be explained.
Theories that attribute union decline to the failure of unions to try to organize new types of workers are overly simplistic. To the extent that unions have made gains in recent years, the gains have been among women and minorities, in the service and white-collar sectors. Unions have been growing only among public sector employees, hospital workers, retail clerks, and other pink- and white-collar workers. Thus it is not true that unions have made no efforts toward those types of workers, nor is true that unions have had no appeal.
Surveys show that one of the most significant reasons for the particularly steep union decline between 1977 and 1984 was that workers did not perceive union membership to be an effective way to improve their wages, benefits, job security, and other working conditions.2 This finding suggests that the existing legal rules are an important source of union decline, for they constrain what unions can and cannot do.
Scores of legal rules shape and define the market power of unions. Some legal rules prevent unions from bargaining about issues like new technology or transfers of work to nonunion subsidiaries. Others restrict union market power by preventing secondary boycotts or permitting the use of permanent replacements during strikes. If unions are not allowed to win benefits and protections for their members that exceed those available to non-union workers, unions will continue to decline.
The trend in preemption of the individual employment rights of union members needs to be seen in the broader context of the general legal attack on unions. Over the past 12 years, the law has undermined unions in three other distinct, though reinforcing, ways. First, the rules governing union organizing have made it difficult for workers to organize in the first place. In the early 1980s, there were numerous reversals in the rules of union elections, rulings that relaxed restrictions against coercive employer campaign tactics. With the recent Supreme Court decision in Lechmere, which barred outside union organizers from leafletting even a publicly accessible parking lot, unions have virtually no access to unorganized workers. These changes make it almost impossible for organized labor to expand into new areas or even to retain its strongholds.
Second, the use of permanent strike replacements has increased, thereby diminishing the effectiveness of labor's traditional weapon. While the legal doctrine that permits employers to utilize permanent strike replacements has been around for 50 years, only after President Reagan fired 12,000 air traffic controllers did most private employers decide that they could also use that tactic to their advantage.
Third, many of the doctrines that bear on the ability of unions to affect strategic-level corporate decisions have changed. By reinterpreting the scope of mandatory bargaining, the secondary boycott rules, the successorship doctrine, and the definition of managerial employees who are excluded from collective bargaining, the courts and the National Labor Relations Board have effectively prevented unions from influencing important corporate decisions that affect jobs, decisions such as mergers, partial shutdowns, relocations, or other corporate transformations. As a result, in the face of the many plant shutdowns and mass lay-offs of the 1980s and early 1990s, unions were rendered helpless to prevent the losses or protect the workers involved. The broad preemption doctrine that evolved over the past decade is another instance of legal rule changes that have rendered unions ineffective. The preemption doctrine has created the perverse situation where unorganized workers now have, at least on paper, more employment rights than their unionized brothers and sisters.
As this account suggests, the enactment of numerous individual employee rights in the past decade has not compensated for what workers have lost in collective bargaining. On the contrary, the new rights have further weakened collective bargaining and disempowered workers individually and as a group. Without a strong union movement operating in the political arena, any such protections for individual employees can always be repealed or negated through judicial interpretation. Thus under a form of labor regulation that provides individual employment rights to the exclusion of collective rights, those individual rights have an inherent tendency to disappear.
There is, of course, no logical reason why legislatively created worker rights must come at the expense of collective bargaining. It is hard to argue that when Congress legislates, for example, statutory worker health and safety provisions, it intends to weaken unions. The same could be said of pension legislation, family leave policy, equal employment opportunity, and a host of other worker protections--of which unions are a key factor in enactment and enforcement.
It is possible to envision changes in our system of labor regulation such that workers are not forced to choose between a system of democratic governance in the workplace via collective bargaining and statutory rights as citizens. But this will require a broader set of reforms, not only in the area of Section 301 preemption but also in the nature of collective bargaining itself. Indeed, only when legal reforms restore the rights of unions to freely organize and to bargain collectively over a broader set of issues will unions regain the strength to represent employee interests adequately both in collective bargaining and in the enforcement of other statutory rights.
Such reforms could provide employees with participation, voice, and the other benefits of a collective representation, while at the same time enabling unionized workers to benefit from the individual workplace rights which the rest of society enjoys. Without reform, we risk a future work force that is disorganized, disempowered, and disenfranchised, union and nonunion alike.