Workers and employers should have the freedom to collaborate and design new forms of worker organizations.


Among its other manifest flaws, the system of American unionism established under the National Labor Relations Act of 1935 is intrinsically adversarial. This, more than anything else, is the reason why nearly all employers consider unions a nuisance: What manager wants a third-party, which they cannot play any role in selecting, standing between them and the people who make the business run? Even worse, a wide range of employee participation and co-governance methods are either illegal or suspect under current labor law. Workers and employers should have much greater freedom to come up with mutually agreeable, voluntary, and beneficial forms of organization.

The heart of the problem, as I see it, lies in section 8(a)(2) of the National Labor Relations Act of 1935 (the Wagner Act) which makes it illegal “to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it”1National Labor Relations Act, 29 U.S. Code § 158(a)(2) (1934). as well as most of the provisions in section 302 of The Labor Management Relations Act of 1947 (The Taft-Hartley Act) which makes it illegal for employers to “pay, lend, or deliver, or agree to pay, lend, or deliver, any money or other thing of value” to unions (with some exceptions).2Labor Management Relations Act, 29 U.S. Code § 141-197 (1947). In short, I’d make nearly any voluntary employee involvement or union business structure legal so long as it does not engage in full-scope, binding collective bargaining. Such a system—a much more expansive version of the Teamwork for Employee and Managers Act (TEAM)3Teamwork for Employees and Managers Act (TEAM Act), H.R. 743, 114th Congress (1995). that passed both houses of Congress in 1996 and fell to President Bill Clinton’s veto4Clay Chandler, “Bill on Employee Teamwork Vetoed,” The Washington Post (July 31, 1996).—could offer labor organizations a new business model while giving workers new choices and employers a reason to want a form of organized labor in many workplaces. People on the right should like this proposal because it allows greater entrepreneurial creativity and offers hope for new civil society forms; those on the left should support it because it offers hope for organized labor through a new business model, as well as a path toward more democratic workplaces.

“Workers and employers should have much greater freedom to come up with mutually agreeable, voluntary, and beneficial forms of organization.”

Let’s begin with the almost-successful proposal from about 25 years ago that did part of what I’m proposing. The TEAM Act’s specific allowances to let non-union organizations, including those largely set up by employers, “[to] address matters of mutual interest, including, but not limited to, issues of quality, productivity, efficiency, and safety and health” outside of collective bargaining agreements would be a good start with obvious benefits for employers and employees alike. After all, most large employers have some sort of employee involvement program and nearly all, at least rhetorically, recognize the value of an engaged, involved workforce.5Chiradeep BasuMallick, “10 Employee Engagement Statistics That Will Set the Tone for 2020,” HR Technologist(January 3, 2020). As early 20th-century labor leader and MIT faculty member Joe Scanlon pointed out, line workers have enormous practical knowledge that can improve the productivity and finances of nearly any enterprise.6Paul Davis and Larry C. Spears, Why Scanlon Matters: Understanding Epic Leadership Principles, The Scanlon Foundation (2009).

Indeed, simply implementing the TEAM Act as written would allow for the formation of health and safety committees with power to make binding decisions. Such committees had a brief flowering in the 1980s and early 1990s but were relegated to a mere advisory role after the National Labor Relations Board’s 1992 Electromation decision (and subsequent rulings) made it clear that nearly all formal employee involvement, engagement, and co-management activities outside of a union were either illegal or dubious.7Electromation, Inc. 309 NRLB No. 163 (December 16, 1992). This also led to a near-death of formal quality circles and other product enhancement efforts in thousands of workplaces. While some employers and workers skirt or just flat-out ignore Electromation and its progeny, the decision still did enormous damage. Without 8(a)(2), works councils elected by the entire workforce and able to work with management on a range of issues would also become legal under U.S. law. They are common but informal in the United Kingdom8“Workplace Representation (United Kingdom),” and more-or-less mandatory in large enterprises in Germany,9George Tyler, “The Codetermination Difference,” The American Prospect (January 10, 2019). but banned in the United States for non-collective bargaining employees because of the strictures of 8(a)(2). Employers have a lot to gain from this arrangement as would individual workers who could enjoy more participation in their workplaces.

In this context, it is reasonable to question what unions as organizations have to gain from this arrangement. After all, they successfully fought the TEAM Act the first time around because they perceived, correctly, that allowing non-union structures would diminish their currently unique legal role as worker representatives.

“In short, I’d make nearly any voluntary employee involvement or union business structure legal so long as it does not engage in full-scope, binding collective bargaining.”

That’s why I propose to offer unions something as well: a change to the law should also eliminate the current prohibitions on financial agreements between employers and unions contained in section 302 as well as 8(a)(2). Unions might partner with non-collective bargaining employers to take part in multiemployer benefit plans (a.k.a. Taft-Hartley plans) or serve as benefit consultants. A wide range of other forms of cooperation might be possible. For example, unions should be allowed to get financial support from an employer to advocate for mutually beneficial political changes or provide training in whatever context they could agree on. Most importantly, unions could—and I suspect would—run many employee involvement structures within firms or even approach firms with proposals to enhance employee engagement. A union, for example, might try to work with some of its best shop stewards to advise management on employee relations generally or hire such individuals directly to serve as ombudsman in non-collective bargaining environments. Furthermore, unions should be able to negotiate contracts that benefit themselves as organizations rather than simply relying on members for dues, even within collective bargaining contexts. Unions should also be allowed to acquire as much stock as they want in the enterprises they organize even if management doesn’t like it.

Getting rid of section 302 would also remove a potential, lurking threat to the labor peace agreements that have contributed to the success of many recent organizing drives. In 2012, the Supreme Court asked for briefs and heard oral arguments for Unite Here Local 355 v. Mulhall which could have decided the question as to whether labor peace agreements were “things of value” under section 302.10Unite Here Local 355 v. Mulhall, 571 U.S. 83 (2013). While the court eventually dismissed the case on the basis that it shouldn’t have granted cert in the first place, the threat still exists. Without 302, labor peace agreements would clearly be legal.

In partnership with employers, unions and workers should also have the ability to play a greater role in benefits selection and administration. While collective bargaining that binds all employees to wage standards but forbids them from negotiating on their own should be reserved for a democratic process with independent parties, some limited forms of collective bargaining could make sense for tax-advantaged benefits even in a company union or works council setting. Current law requires almost all sizeable employers to provide most tax-advantaged health11“Employer Shared Responsibility Provisions,” Internal Revenue Service. and retirement12“401(k) Plan Overview,” Internal Revenue Service. benefits to almost all employees on an equal basis and penalizes them in various ways if too few (or the “wrong” parts) of their workforce take advantage of these benefits. While well-intentioned on equity grounds, the growth of non-discrimination testing puts most workers, even very well-paid ones, in a worst-of-all-worlds situation: they can’t negotiate for better benefits than their co-workers and these employers can’t give the collective workforce a formal voice in setting the benefits absent a collective bargaining agreement.

The obvious solution here is to allow for limited “benefits only” collective bargaining under a wide range of situations: employers and labor organizations should be allowed to set up elected employee committees with the ability to design and implement any type of benefit plan that is subject to non-discrimination testing or an employer mandate. Unions, likewise, should be able to organize for collective bargaining agreements that cover only these types of benefits. (This last step would almost certainly require additional legal changes beyond the scope of what I’m proposing here.) Finally, unions unleashed from current legal strictures should be allowed, and even encouraged, to experiment with entirely new business models. If conservatives—when in power—continue trying to declare worker centers to be unions (something I think they shouldn’t do13Eli Lehrer, “How the Trump Administration Should Help Nontraditional Labor Organizations,” National Review(November 7, 2019).) then such centers should similarly be allowed to form explicit alliances with employers.14“Worker Center That Challenged Target Declared to be a Union by OLMS,” CUE (November 22, 2019).

“Unbundled unions” which engage in politics but not collective bargaining might best be piloted in the context of employers that see them as beneficial to their business interests.15Benjamin I. Sachs, “The Unbundled Union: Politics Without Collective Bargaining,” The Yale Law Journal 123 (1) (October 2013). Indeed, decreased managerial opposition is one of the reasons why these political unions might be more successful than current counterparts in the private sector. I might go further: It stands to reason that at least some employers might actively like, want, and even sponsor such organizations. This isn’t everything you want—although existing legal precedents might offer people involved in such organizations some level of protection even if employer-authorized political unions clashed with these same employers16John Novosel v. Nationwide Insurance Company, 721 F.2d 894 (3d Cir. 1983)—but it would provide a way to test the idea.

All of this, of course, leaves out the question of how to prevent corruption in these entities. Pervasive corruption is one of the greatest downfalls of the modern union movement and many of the company unions that 8(a)(2) banned were also corrupt. While some explicit company structures such as the Employee Representation Plan that John D. Rockefeller Jr. established did achieve a measure of employee involvement (although even it had problems), there’s no doubt that the worst structures were deeply unjust to workers.17Christopher J. Schreck”The Employee Representation Plan,” Colorado Fuel and Iron.

As such, the law should establish safeguards. The most obvious being: the prohibition on employer “domination” of a union that engages in full collective bargaining should be retained under any revision to 8(a)(2) or section 302, and less-independent employee involvement structures should have carefully circumscribed powers. For example, even when they are largely company-run or funded, non-union organizations that have binding authority to decide on benefits or working conditions should be subject to democratic, externally overseen secret ballot elections for officers and people elected internally to oversee benefit plans, and should have the same legal fiduciary responsibilities as those who oversee Taft-Hartley Plans. If unions as organizations receive payments under collective bargaining agreements, these should be calculated as a percentage (perhaps capped by law) of wage increase or future gainsharing payments made to rank-and-file union members. If a company runs a works council or other structure with elected officers, the ability to vote and participate in it shouldn’t be contingent on payment of dues, and it should be illegal to make adverse, job-related decisions about workers for otherwise lawful participation in these structures. Finally, existing and, if needed, new civil rights protections related to race, gender, sexual orientation, and other protected characteristics should be enforced with regard to participation in these organizations.

“Freeing employers and labor organizations alike from the strictures of section 8(a)(2) and section 302 would allow for new cooperative arrangements that, in time, could meaningfully restore power and authority to American organized labor.”

I won’t pretend that the radical changes in labor organizations’ business practices that I’m proposing here would be good for most existing unions or entirely amenable to those on the left. Without a unique monopoly on employee representation, some now small or shrinking unions will have to close or merge. Given a range of new business models, some of the most successful entities might well be startups created by people currently outside of the labor movement.

With interests more closely aligned with those of major employers, furthermore, it’s easy to see how many new organizations might even reconsider certain aspects of the progressive agenda that so much of organized labor seems to have embraced. Indeed, this seems highly likely. One reason the labor movement has shifted so far left is simply that its strength in “blue” states means that it often reflects the attitudes of workers in those states rather than workers nationally. Labor structures more acceptable to employers would likely attract more members in “red” states and moderate the movement as a whole.

In addition, labor organizations that took advantage of the new environment could reap huge advantages. Workplaces like fast food restaurants that are essentially impossible to organize under current labor law because of very high turnover would suddenly become a realistic place for cooperative agreements of a different sort. Skilled workers reluctant—with good reason in my judgment—to sign up for the all-or-nothing nature of current collective bargaining might find advantages playing a role in works councils, limited purpose, or employer-sponsored organizations. Finally, unions with real political muscle might find themselves in demand as allies of various business interests. Freeing employers and labor organizations alike from the strictures of section 8(a)(2) and section 302 would allow for new cooperative arrangements that, in time, could meaningfully restore power and authority to American organized labor.

Eli Lehrer
Eli Lehrer is president and co-founder of the R Street Institute.
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