Putting A Damper On That Old Team Spirit

In the 1980s, hundreds of U.S. companies reorganized around teams of workers to tap their employees' knowledge. Motorola, Cummins Engine, Ford, and LTV, among others, found that letting workers make key decisions--not just follow a boss's orders--spurred productivity and quality. Now, an unsettling question has arisen in a case the National Labor Relations Board (NLRB) will soon decide: Do teams violate federal labor law? This has big business as steamed up as it has been in years over an NLRB issue.

The case involves a small electrical parts maker in Elkhart, Ind., called Electromation Inc. In late 1988, after a year of heavy losses, management skipped wage hikes for its 200 workers. When employees objected, the company set up committees--each with up to six hourly workers and one or two managers--to deal with problems such as absenteeism and pay scales for skilled workers. Soon after, the Teamsters began an organizing drive at the company--and filed an NLRB objection to the committees. In 1990, an NLRB judge ruled that Electromation had violated the Wagner Act--the National Labor Relations Act of 1935.

Employers have been floored by the judge's ruling, which will only apply to other companies if affirmed by the full board. Electromation's committees were the same as those at many companies. So if the former are illegal, the latter likely are, too. "One of Motorola's basic principles is participative management, which has grown into a focus on teams," says Motorola general counsel Richard H. Weise Sr. "We're concerned about any encroachment on one of our basic quality" approaches.

PAPER TIGERS. The issue is a dilemma for the NLRB. The Wagner Act seems to prohibit many team activities (table). But that wasn't its intent. Rather, it was meant to keep companies from setting up sham unions that undercut legitimate ones, a common 1930s maneuver. Business argues that the law doesn't allow for the recent growth in cooperative labor-management relations and therefore shouldn't apply.

Some of management's fears may be overblown. Even the AFL-CIO says the law doesn't prohibit problem-solving teams, a common type (table). The reason: Those teams usually deal only with their own jobs, not with those of other workers, as Electromation's did.

But what of teams that have a broader impact? Labor's position is simple: Management can suggest that employees set them up. But it should not form or direct them--unless workers agree. "Having management on both sides is what the law is designed to prevent," says Larry Gold, the AFL-CIO's general counsel.

If his view prevails, unionized companies probably wouldn't be hurt, since many unions already have approved of teams. But nonunion companies could suffer. Unions could file NLRB complaints over teams during organizing drives. And management might have to choose between facing this legal challenge or inviting in the union.

In fact, unions may emerge with a stronger hand no matter what the NLRB decides. For instance, in a brief filed with the board, the U.S. Chamber of Commerce suggests a new standard that looks at an employer's intent in forming teams. The idea, which has been suggested in rulings by the Sixth Circuit Court of Appeals, is that the NLRB would only come down on companies that set up teams mainly to manipulate employees or oppose a union.

Arnold E. Perl, a Memphis lawyer who wrote the Chamber's brief, argues that this would meet labor's objections. He concedes, however, that it could have unintended consequences. For instance, if a union mounted an organizing drive, a company would have to make sure that it didn't oppose the union at team meetings. Otherwise, a judge might find that the company's intent in running its teams was suspect.

Even most business groups don't expect the NLRB to outlaw teams. Instead, it might suggest guidelines for when they're O. K. Either way, the board's decision is likely to be appealed to the U.S. Supreme Court. And companies with teams may go on worrying for years.

      There are several types of teams. Here are three of the most common
      Usually 5 to 12 volunteers who meet a few hours a week to discuss ways of 
      improving quality, efficiency, and work environment. They don't implement the 
      May design and introduce work reforms or new technology, or meet with suppliers 
      and customers. In union shops, labor and management collaborate at all levels
      From 5 to 15 workers who learn all production tasks and rotate from job to job. 
      Teams do managerial duties such as schedule work and order materials
      The National Labor Relations Act of 1935 seems to forbid many work teams:
        --`It shall be an unfair labor practice for an employer to dominate or 
      interfere with the formation of any labor organization or contribute financial 
      support to it'
        --A `labor organization' is 'any organization of any kind, or any employee 
      representation committee which exists for the purpose of dealing with employers 
      concerning grievances, wages, hours of employment, or conditions of work'
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