Af\ \ S. Hrg. 104-511
\M SMAU BUSINESS AND EMPLOYEE INVOLVEMENT:
THE TEAM ACT PROPOSAL
Y4,SM 1/2; S. HRG. 104-511
Snail Dusiness aad Enplogee Involve.
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES SENATE
ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
APRIL 18, 1996
^^P2 3l9ss
Printed for the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
25-136 cc WASHINGTON : 1996
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington. DC 20402
ISBN 0-16-052985-9
Af\ \ S. Hrg. 104-511
\V) SMALL BUSINESS AND EMPLOYEE INVOLVEMENT:
THE TEAM ACT PROPOSAL
Y4.SM 1/2: S. HRG. 104-511
Snail Dusiness and Enplogee Involve.
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES SENATE
ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
APRIL 18, 1996
'^^OlJinjfjy
SEP 2 3
^93S
Printed for the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
25-436 cc WASHINGTON : 1996
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office. Washington. DC 20402
ISBN 0-16-052985-9
■'"■<Ju#
COMMITTEE ON SMALL BUSINESS
CHRISTOPHER S. BOND, Missouri, Chairman
LABRY PRESSLER, South Dakota DALE BUMPERS, Arkansas
CONRAD BURNS, Montana SAM NUNN, Georgia
PAUL COVERDELL, Georgia CARL LEVIN, Michigan
DIRK KEMPTHORNE, Idaho TOM HARKIN, Iowa
ROBERT F. BENNETT, Utah JOHN F. KERRY, Massachusetts
KAY BAILEY HUTCHISON, Texas JOSEPH I. LIEBERMAN, Connecticut
JOHN WARNER, Virginia PAUL D. WELLSTONE, Minnesota
WILLIAM H. FRIST, Tennessee HOWELL HEFLIN, Alabama
OLYMPLA J. SNOWE, Maine FRANK R. LAUTENBERG, New Jersey
Louis Taylor, Staff Director and Chief Counsel
John W. Ball III, Democratic Staff Director
CONTENTS
Opening Statements
Page
Bond, The Honorable Christopher S., Chairman, Committee on Small Busi-
ness, and a United States Senator from Missouri 1
Warner, The Honorable John, a United States Senator from Virginia 3
Bumpers, The Honorable Dale, Ranking Member, and a United States Sen-
ator from Arkansas 20
Bums, The Honorable Conrad., a United States Senator from Montana 22
Levin, The Honorable Carl, a United States Senator from Michigan 75
Witness Testimony
Budinger, William D., chairman and chief executive officer, Rodel, Inc., New-
ark, Delaware, on behalf of the National Association of Manufacturers,
Washington, D.C 9
McCammon, Chester "Mac", team leader, mechanical assembly department.
Universal Dynamics, Inc., Woodbridge, Virginia 23
Pascoe, Harold "Skip" L., Jr., executive officer of manufacturing and distribu-
tion, SunSoft Corporation, Albuquerque, New Mexico 27
Gooch, Donna C, director of human resources, Sunsoft Corporation, Albu-
querque, New Mexico 34
Rampe, Dennis, president. Precision Litho, San Diego, California, on behalf
of Printing Industries of America, Inc., Alexandria, Virginia 40
Hermstadt, Owen E., legislative counsel. International Association of Machin-
ists and Aerospace Workers, Upper Marlboro, Maryland 54
Rundle, James R., senior extension associate, The School of Industrial and
Labor Relations, Cornell University, Ithaca, New York 62
King, G. Roger, partner, Jones, Day, Reavis & Pogue, Columbus, Ohio, on
behadf of the Society for Human Resource Management, Alexandria, Vir-
ginia 78
Potter, Edward E., president, Employment Policy Foundation, Washington,
D.C 92
Alphabetical Listing and Appendix Material Submitted
Bond, The Honorable Christopher S.
Opening statement 1
Budinger, William D.
Testimony 9
Prepared statement and attachment 13
Bumpers, The Honorable Dale
Prepared statement 20
Bums, The Honorable Conrad
Prepared statement 22
Gooch, Donna C.
Testimony 34
Prepared statement 36
Hermstadt, Owen E.
Testimony 54
Prepared statement 57
Letter of response to post-hearing questions posed by Senator Levin 117
King, G. Roger
Testimony 78
King, G. Roger — Continued
Prepared statement 81
Letter of response to post-hearing questions posed by Senator Levin 119
Levin, The Honorable Carl
Opening statement 75
Letter from Secretary of Labor Robert B. Reich to Senator Nancy Kasse-
baum 76
Post-hearing questions posed to Owen E. Herrnstadt and subsequent
letter of response 116
Post-hearing questions posed to G. Roger King and subsequent letter
of response 118
Post-hearing questions posed to Edward E. Potter and subsequent letter
of response 121
Post-hearing questions posed to James R. Rundle and subsequent letter
of response 127
McCammon, Chester "Mac"
Testimony 23
Prepared statement 25
Pascoe, Harold "Skip" L.
Testimony 27
Prepared statement 30
Potter, Edward E.
Testimony 92
Prepared statement and attachments 95
Letter of response to post-hearing questions posed by Senator Levin 122
Rampe, Dennis
Testimony 40
Prepared statement and attachment 43
Rundle, James R.
Testimony 62
Prepared statement 65
Letter of response to post-hearing questions posed by Senator Levin 128
Warner, The Honorable John
Opening statement 3
Prepared statement 6
Comments for the Record
Associated Builders and Contractors, Inc., Washington, D.C., statement 130
Campbell, M. H., senior vice president and group general manager of human
resources, BHP Copper, Tucson, Arizona, letter and attachments 131
Banner, Dan, vice president. Federal Government Relations, National Federa-
tion of Independent Business, Washington, D.C., letter 139
SMALL BUSINESS AND EMPLOYEE
INVOLVEMENT: THE TEAM ACT PROPOSAL
THURSDAY, APRIL 18, 1996
United States Senate,
Committee on Small Business,
Washington, D.C.
The Committee met, pursuant to notice, at 9:35 a.m., in room
SR-428A, Russell Senate Office Building, the Honorable John War-
ner presiding.
Present: Senators Bond, Burns, Warner, Bumpers, and Levin.
OPENING STATEMENT OF THE HONORABLE CHRISTOPHER S.
BOND, CHAIRMAN, COMMITTEE ON SMALL BUSINESS, AND A
UNITED STATES SENATOR FROM MISSOURI
Chairman BOND. Good morning, ladies and gentlemen. We are
going to proceed. Senator Bumpers has suggested we go ahead.
This hearing today, before the Small Business Committee on the
employee involvement in small business, the TEAM Act, is going
to be chaired by my good friend and colleague. Senator John War-
ner. Senator Warner has been a leader in the employee involve-
ment issue and I appreciate having someone with his expertise act
as Chairman today. Unfortunately, I have several unavoidable
scheduling conflicts.
I am pursuing the increased deductibility for self-employed peo-
ple for health insurance on the Senate floor in the health insurance
reform debate today, and it is very important. I also have a news
conference or two that I have to crash this morning. So I will not
be able to stay for the statements and the opening testimony.
I would state for the record that the Labor Committee had a
markup of the TEAM Act yesterday. The fmal vote on reporting it
out was 9 to 7. I think it is very important for small businesses
that we understand the impact of the TEAM Act on small business
before the bill goes to the floor. That is why we are holding this
hearing today.
The reality of the modern workplace for businesses of all sizes is
that workers are being given more power. Management likes em-
ployee involvement because it increases productivity, improves
safety and creates a skilled work force. Employees like to work in
teams, because it gives them a voice, both in their working condi-
tions and the quality of goods and services they produce.
I recently read an interview with John Calipari, the coach of the
University of Massachusetts basketball team. When asked how he
had maintained the team's momentum throughout the season.
Coach Calipari said that he allowed his players to make their own
(1)
decisions about days off, practices, and weight-lifting schedules. To
quote Coach Calipari, "If you're going to be special, you have to em-
power the team."
Now I wish I could have quoted Coach Norm Stewart of the Mis-
souri Tigers, or perhaps even the Virginia Wahoos, but that was
not to be the case this year. But the point is still important, em-
ployee involvement pays off, both for workers and for employers.
The National Labor Relations Act currently gives employees and
managers two options: employee involvement through unions, or no
involvement at all. This means that the 90 percent of American
workers who are not unionized, including those who have explicitly
rejected unions, are not allowed to have a substantive voice in the
workplace. The managers of these employees are not permitted to
tap into an important resource, worker participation that can make
a big difference in terms of quality, productivity, and efficiency.
Employee involvement has special implications for small busi-
ness. Small businesses, by definition, have to use employees in a
variety of ways because the small business owner has to delegate
many duties. In a small business, the line between manager and
employee is less distinct than it would be in a large business. For
example, the owner of a small manufacturing plant may ask em-
ployees from several divisions to get together and work out em-
ployee schedules that the owner will review, because the plant does
not have the resources to have a full-time scheduler. By allowing
employees to do their own scheduling, however, the employer has
violated section 8(a)(2) of the National Labor Relations Act. That
is crazy.
The TEAM Act is also important to small businesses because
small employers cannot afford to consult a labor law expert each
time they want to try something new. The NLRB has decided about
20 employee involvement cases in the past 3 years. Unless the
small business owner reads and understands each case, he or she
cannot know which employee teams are legal and which are not.
No small business owner in America wants to risk an expensive
confrontation with the NLRB. And no small business owner wants
to invest his time and resources in an employee involvement sys-
tem that will have to be dismantled if the union or the NLRB gets
wind of it. The TEAM Act will provide much needed certainty for
small businesses and their employees.
I have got to tell you a story. We had one interested potential
witness who was going to come for today's hearing. She was coming
up from Missouri but she decided not to testify because the compa-
ny's lawyer told her that if she came up and told her story, she
would be admitting to violating the law, and that she could be
prosecuted by the NLRB.
Senator Warner. In addition to the company itself, maybe, Mr.
Chairman. That possibility occurred as we were compiling the wit-
ness list. A number of witnesses felt that they could not come be-
cause they would put in jeopardy their employees.
Chairman BOND. That is correct. She is the human resources di-
rector at a company where 90 percent of the employees are women.
The employee teams are used in a variety of ways. For example,
management and employees worked together on a team to resolve
a problem with ergonomic injuries. The company has been able to
reduce its worker's compensation rates from $350,000 to $50,000
through the employee involvement.
I am sorry that the current state of the law deters her from being
here today because that practice which saved the injuries, and inci-
dentally saved $300,000 a year, is potentially in violation of the
National Labor Relations Act. I think her story would have illus-
trated the importance of allowing small businesses to form informal
partnerships with their employees.
Small business owners want to work closely with their employ-
ees, who often have been there from the inception of the small
business as it has grown and prospered. Small businesses need the
flexibility to involve their employees in every facet of the business
in order to compete with large businesses and globally.
For all these reasons, it is my pleasure to cosponsor and add my
strong support to the TEAM Act. The removal of legal impediments
to employee involvement is an important step that Congress must
take for small businesses in this country.
With that, I am very pleased to turn over the gavel to you, Mr.
Chairman.
Senator Warner. Thank you, Mr. Chairman.
If I could just propose one or two things before going into my
opening statement. The vote yesterday of 9 to 7 in the Labor Com-
mittee was along party lines, am I not correct on that?
Chairman Bond. I believe it was.
Senator Warner. It did check out that way. That is regrettable,
which indicates that this issue, which affects so many small busi-
nesses, is at its inception divided along partisan lines. Second, the
jurisdiction of this Committee over the issue is because we gen-
erally have the jurisdiction of companies below 500 employees, and
they are affected just as severely as some of the large companies.
I thank you very much, Mr. Chairman, for this opportunity. I
will proceed to have an opening statement and then we will go to
our first panel. I thank you for the leadership that you have given
on this issue.
Chairman Bond. Thank you, sir. Thank you for taking over.
OPENING STATEMENT OF THE HONORABLE JOHN WARNER, A
UNITED STATES SENATOR FROM VIRGINIA
Senator Warner. We, in the Republican conference, discussed
this issue yesterday and it is totally supported by our membership.
I believe that we have an issue before this country which must be
addressed here on the floor of the Senate. Senator Bond and I, to-
gether with Senator Kassebaum, will do everjrthing we can to bring
it up at the earliest possible opportunity.
Most people would be shocked to learn, as they follow this hear-
ing and other testimony, that current labor law makes it illegal for
employees to discuss matters such as safety, basic safety in the
work environment, the level of productivity, and work schedules
with their managers. Section 8(a)(2) of the National Labor Rela-
tions Act unfortunately does just that.
In my recollection, that is a provision that was put on in the
1930s. So you can see, it is outdated, completely outdated in today's
labor field and management field. And really outdated as America
begins to address its competitive role in the one-world market.
4
Every company in the United States, in some way, is affected by
the one-world market. Yet, we are back in the days of the 1930s,
when essentially this Nation was practically isolationist.
Through its broad definitions of company dominated unions and
terms and conditions of employment, the NLRA casts a cloud of il-
legality on all types of organized employee participation in today's
workplace. The cloud must be lifted, and it is the duty of the Re-
publican leadership that will get it done.
This is no time for our Government, through increasingly com-
mon enforcement cases brought by the National Labor Relations
Board, to make it harder to create competitive and safe workplaces.
The Clinton Administration and others have recognized that em-
ployee participation in unionized workplaces have brought enor-
mous gains in productivity and safety. It is time that the 90 per-
cent of non-governed employees who have chosen not to unionize,
be given similar rights and opportunities.
I would like to make a point about the unions. This bill, in no
way, affects the ability of workers to unionize and places no new
legal requirements on those trying to organize a union effort. In
this vein, I am happy that one of our witnesses, Mac McCammon
of Universal Dynamics of Woodb ridge, Virginia, can speak to the
issue of unionization. I understand that Mr. McCammon has been
part of several unionized workplaces during his career and believes
that unions are necessary in many employment situations. I share
personally in that view, that unions have played a very valuable
role and continue to play a valuable role. But this particular law
results in a very unfair situation to many companies.
Now as to why the TEAM Act is a small business issue, I would
like to make these points. First, most small businesses are too
small to have a classification like manager and employee. All em-
ployees have to act and think like managers. I want to repeat that.
In many small businesses, the employees have to act and think like
managers because it is a team effort, from that employee on the
bottom rung to those on the top rung.
Second, small businesses cannot afford to hire labor attorneys to
analyze every employee-manager interaction.
Third, the expenses of contesting an NLRB action is far too great
a threat to many small businesses to even think about risking their
financial future by starting employee team programs.
I cannot let this statement conclude without reflecting on one im-
portant point. A number of small businesses, and I mentioned this
earlier, contacted the Committee and expressed interest in testify-
ing before the Committee about the TEAM Act and their experi-
ences with employee involvement programs. Some of these compa-
nies have representatives here today.
A number of others, representing a variety of businesses and
States are not here and the explanation is as follows: these compa-
nies were concerned, even scared in some instances, to publicly
identify themselves as using employee involvement teams and to
risk becoming a target of a lawsuit the costs of which could literally
break the company.
We thus will be denied the opportunity to hear their stories, sto-
ries which demonstrate the value of employee ideas and manage-
merit's needs and desire to rely on the imagination and hard work
of every single worker in that company environment.
I will place the balance of my statement in the record and we
will now proceed to panel No. 1.
[The prepared statement of Senator Warner follows:]
PREPARED STATEMENT OF SENATOR JOHN WARNER
COMMITTEE ON SMALL BUSINESS
APRIL 18, 1996
I thank the Chairman, Senator Bond, for his kind words, and for his invitation to chair
today's hearing on the Employee Involvement and the TEAM Act. I have been very
supportive of his efforts at the Committee on Small Business. His willingness to hold a
hearing on this bill, which is pending in the Committee on Labor and Human Resources,
shows his commitment to doing what is necessary to free small business from antiquated
government interference and allow them to do what they do best: provide superior products
and services to Americans and overseas and in the process, create millions of new jobs.
As Senator Bond mentioned, the Labor Committee is in the process of marking up the
TEAM Act. I know that the TEAM Act is strongly supported by the Republican leadership
and I hope that we will be able to build a bipartisan coalition in support of the bill. I hope
this hearing will demonstrate that employee involvement in the workplace - which this bill
would encourage - is not just a big business issue. Every small business in this country must
work twice as hard to stay competitive with overseas competition and large American
companies. Only by fully utilizing the ideas and skills of its employees can this happen.
Moreover, this bill is pro-employee. All of us know that a job is more satisfying
when you have input into your day-to-day responsibilities and help improve the product or
service you help create. This bill provides that opportunity. In addition, more and more
employees receive profit-sharing or bonuses based on the financial performance of their
company - they have a direct stake in improving the productivity of their business. Lastly, it
is an obvious truth that all measures that improve safety should be of foremost priority.
Most people would be shocked to learn that current labor law makes it illegal for
employees to discuss matters such as safety, productivity, and work schedules with
management. Section 8(a)(2) of the National Labor Relations Act, unfortunately, does just
that. Through its broad definitions of "company-dominated unions" and "terms and conditions
of employment," the NLRA casts a cloud of illegality on all types of organized employee
participation in the workplace.
This cloud must be lifted. This is no time for our government, through increasingly
common enforcement cases brought by the National Labor Relations Board, to make it harder
to create competitive and safe workplaces. The Clinton Administration and others have
recognized that employee participation in unionized workplaces have brought enormous gains
in productivity and safety. It is time that the 90% of non-government employees who have
chosen not to unionize be given similar rights and opportunities.
I'd like to make another point about unions. This bill in no way affects the ability of
workers to unionize and places no new legal requirements on those trying to organize a union
effort. In this vein, I am happy that one of our witnesses, Mac McCammon, of Universal
Dynamics in Woodbridge, Virginia, can speak to the issue of unionization. I understand that
Mr. McCammon has been part of several unionized workplaces during his career and believes
that unions are necessary in many employment situations. His support of the TEAM Act to
assist nonunionized companies and employees in no way conflicts with support of a right to
unionize.
Now as to why the TEAM ACT is a small business issue, I would like make a couple
points. First, most small businesses are too small to have classifications like manager and
employee - all employees have to act and think like managers and all managers have to act
and think like employees. Second, small businesses cannot afford to hire labor attorneys to
analyze every employee-manager interaction. Third, the expense of contesting a NLRB action
is too great a threat to many small businesses to even think about risking their financial future
by starting employee team programs.
I cannot let my opening statement conclude without reflecting on one more important
point. A number of small businesses were contacted or expressed interest in testifying before
this committee about the TEAM Act and their experiences with employee involvement
programs. Some of these companies have representatives here today. A number of others,
representing a variety of businesses and states, are not here and let me explain why. These
companies are scared to publicly identify themselves as pushing employee involvement teams
and risk becoming a target of the NLRB. We thus will be denied the opportunity to hear
their stories, stories which demonstrate the value of employee's ideas and management's need
and desire to rely on the imagination and hard work of their workers.
For instance, two companies from Georgia, a printing company with 25 employees and
a minority-owned firm specializing in personal care products, were enthusiast about testifying
about their quality and safety teams. After talking to their attorneys, these companies decided
not to testify because they could not afford to tangle with the NLUB. Another company with
a nonunionized affiliate in Washington D.C. could not provide the same safety precautions to
these employees as those given to a unionized affiliate: they were also reluctant to bring their
story forward. None of these companies has ever had any problems with unions or the
NLRB. I think that the fact that these small businesses were afraid to tell us about how they
have or would empower their employees and improve quality, productivity and safety is a
clear indication that the current law must change.
Thus it pleases me greatly to introduce our first panel of witnesses whose convictions
about the TEAM Act has led them to take the time and effort to come to Washington to
testify.
We have with us Mr. Bill Budinger, the Chairman and CEO of Rodel, Inc., a
Delaware manufacturing company. In addition, he was a delegate to the White House
Conference on Small Business and was recently named Delaware Small Businessman of the
Year.
Next on the panel is Mr. McCammon, as I mentioned, who is a team leader at
Universal Dynamics, in Woodbridge, Virginia. I am grateful to have a Virginia citizen here
to represent how important this issue is to Virginia businesses and employees.
Third on the first panel are Donna Gooch and Harold "Skip" Pascoe of Sunsoft
Corporation in Albuquerque, New Mexico. Sunsoft is a specialty manufacturer of contact
lens, and Ms. Gooch is the Director of Human Resources while Mr. Pascoe is the Executive
Officer of Manufacturing and Distribution.
The final witness is Dermis Rampe, President of Precision Litho, Inc., a commercial
printer in Vista, California. Mr. Rampe is here on behalf of the Printing Industries of
America.
The second panel will consist of four experts with a variety of viewpoints on the need
for and effect of the TEAM Act.
I would like to encourage all of our witnesses to feel free to make suggestions as to
how to improve this legislation and as to how we might get this important bill signed into
law.
In conclusion, I am a strong supporter of the TEAM Act and I look forward to the
witnesses' comments and suggestions during today's hearing.
Senator Warner. We will have Mr. William Budinger, chairman
and chief executive officer, Rodel, Inc., Newark, Delaware on behalf
of the National Association of Manufacturers, Washington, DC;
Mr. Chester "Mac" McCammon, team leader. Mechanical Assembly
Department, Universal Dynamics, Woodbridge, Virginia; Ms.
Donna Gooch, director of human resources, Sunsoft Corporation,
Albuquerque, New Mexico; Mr. Dennis Rampe, president. Precision
Litho, Inc., Vista California, on behalf of Printing Industries of
America, Alexandria, Virginia. And Mr. Skip Pascoe, executive offi-
cer of Manufacturing and Distribution, Sunsoft Corporation. We
thank you very much.
I know many of you have had to take a substantial amount of
time and preparation to prepare for this hearing, but I do hope
that you feel it is rewarding to speak, not only for your own con-
stituency, but for workers all across the United States of America.
They are listening and they are reposing in you their trust and
confidence to give the Congress and the Senate the best advice you
can as to how to proceed to remedy this situation.
STATEMENT OF WILLIAM D. BUDINGER, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, RODEL, INC., NEWARK, DELA-
WARE, ON BEHALF OF NATIONAL ASSOCIATION OF MANU-
FACTURERS, WASHINGTON, D.C.
Mr. Budinger. Thank you, Mr. Chairman. I am Bill Budinger,
chairman of Rodel, Inc., a manufacturer in Newark, Delaware. I
should probably start out by saying that my attorneys have rec-
ommended that I not be here today.
Senator Warner. If I might say, all of your statements in their
entirety will be placed in the record, and please feel free to move
about your statement as you wish to make emphasis on certain
points, but it will all be in the record. That is a very important
point you make, Mr. Budinger.
Mr. Budinger. I am here today to represent the nearly 14,000
members of the National Association of Manufacturers, 10,000 of
whom are small businesses as was mine until a few months ago.
After decades of retreat, the international competitiveness of
American industry has turned around. American made goods are
now turning up again in stores around the world and even we
small businesses are finding that we can compete successfully out-
side of our borders.
As a delegate to the White House Conference on Small Business
last year, I was delighted to discover that the delegates reversed
their previous isolationism and this time voted overwhelmingly to
support the importance of foreign trade to small businesses.
Senator Warner. That is the one-world market that I mentioned
earlier.
Mr. Budinger. Exactly. And we really love that market. It is a
tremendous opportunity for us. We are anxious to compete in it.
The challenge is, what we are talking about here today, is that the
thing that enables us to compete in that market is in danger of
being stopped dead in its tracks.
I will start by just talking about my company a little bit and giv-
ing you an example of how teamwork works for us. We manufac-
ture materials that are used to make microchips in the electronics
10
industry. About 3^2 years ago we recognized that we had a crisis.
Our health care costs had been cUmbing at the rate of 20 percent
a year and at that current rate of cUmb, they would exceed our
total payroll in about 6 more years.
So we handled that problem the way we handle most of those
problems. We called together a group of volunteers, a team of peo-
ple from all walks of the company. The team spent 9 months and
interviewed many of the other employees. They interviewed other
companies. They interviewed health care providers.
They came up with a whole new approach for us to health care,
namely a wellness program. So we abandoned our traditional
health care program and went with the wellness program that the
team had put together. That not only turned around our health
care costs, it has actually saved us money. Our health care costs
are now 20 percent lower than they were when that team was
formed.
Senator Warner. And the idea originated with the workers?
Mr. BUDINGER. It did. It was an interactive origination. It would
be hard to say or to point to a particular person and say there is
the inventor of this concept. It was one of those things that just
happens as ideas are put on the table and then they get pummeled
around.
In our company each month we hold a company-wide meeting
where everybody comes. It is a little bit like a board meeting. We
talk about the financial results; how we did last month. We talk
about the problems that face us, the competitive problems. We
work from there into solutions. Many of those solutions come from
teams that are formed at those company meetings, people who say,
"I would like to work on that."
We even tackle outside threats that way. For example, a new
competitive threat. We will throw it out to the whole company and
people on the production line will get involved in formulating or
helping to formulate a strategy to deal with the new competitive
threat.
We were not always a team-based company. Before 1980 we were
a conventional, command and control, top down company. The way
that I had learned in school that a company ought to be. We
changed because we had to change, because our market changed.
The customers that we sold to, who make silicon wafers; in the
1980s their world was a disaster. It turned upside down. All but
one small company in America either got bought out by a foreign
company, moved offshore or went bankrupt. By the end of the
1980s, we had no American customers left.
We were forced to learn, in order to stay alive, how to compete
abroad. It was that very severe wakeup call that really got us to
appreciate why we needed to get everybody in the company in-
volved. We recognized that our old traditional way of doing it,
where management had all the great ideas and workers just car-
ried them out, would not cut it.
One of the rewards of involving all our people has been that
today our company competes successfully overseas for the business
of foreign companies. We compete successfully with foreign com-
petitors who are drinking buddies with our potential foreign cus-
11
tomers. In order for our products to sell in that market, our quality
has to be
Senator Warner. That market being Asia, Europe, where?
Mr. BUDINGER. Primarily Asia.
Senator Warner. Where there are very few unions. My under-
standing is that they have a heavy involvement of interaction with
employees; is that correct?
Mr. BUDINGER. That is exactly correct.
Senator Warner. Which means you are going head-to-head with
the fastest growing market in the world for the United States, on
a non-competitive basis, as it relates to the absence of your free
ability to have this interaction; would that be correct?
Mr. BUDINGER. That would be correct. The only way we can com-
pete in that market is to engage all of our people because it is only
when all of our people — what we have learned is that it is only
when all of our people are engaged in the decisionmaking of our
company that the quality of our product is high enough to compete
abroad.
If I can just blow a trumpet here for a second, I would like to
say that that teamwork concept and that collaborative workplace
has resulted in a product or a series of products that do, in fact,
compete so successfully abroad that even in quality-conscious
Japan, we sell more of our product than all of our competitors com-
bined and every Japanese microchip is made with at least one of
our products, made in America.
The reason we can say that is because of the teamwork and sole-
ly because of the teamwork. If we did not have teamwork, there is
no way that we could compete.
I wonder if I might comment on just a couple of specific things.
When I first learned about this problem, I did not believe it. It was
so absurd that I thought it was something somebody had dreamed
up for some political purpose, frankly. But when I got into it and
when I consulted our attorneys and people who knew more about
this business, I was absolutely astonished that, in fact, it does ap-
pear that companies who work the way we do may not be legal,
that we may be in violation.
I even tried to talk to labor representatives to find out what their
perspective on this was, one of the things that kept coming back
is "Hey, there is no problem." We do not need the TEAM Act. There
is no problem with your teams, as long as they do not discuss con-
ditions of work.
Well, from the perspective of a manufacturer, "conditions of
work" are the most important subject for collaboration and team-
work.
Senator Warner. That takes off the table many of the issues,
doesn't it?
Mr. Budinger. It takes off the table the most important issues.
For example, last week we had a crisis in production. Our main
production line was shut down. We could not produce good product.
Every time we turned it on, junk came out, and we could not figure
out why. Our business level is such that we could not afford to
close down that production line: we needed those products to keep
customers from shutting down their lines.
12
So we called together all of the people involved, everybody, and
we sat down for brainstorming sessions. None of us knew what the
problem was. It turned out it was a supplier who had shipped us
some bad raw material that we did not catch. But it took us several
days to find the trouble, and we found it only because everybody
involved got involved, including some people who were in other
parts of the company in production who came over to give fresh
eyesight to the problem.
We solved that problem in a couple of days time. The crews read-
justed their own schedules to make up for the lost production time.
It all happened seamlessly and it happened with a minimum of in-
convenience — particularly to the production people involved. They
could still keep most of their personal schedules that they had al-
ready planned and still make up the needed production time. It
was a wonderful opportunity to see how teamwork works.
But all of that was about conditions of work. Who does what
when. So that an5^hing that is done, if an3d;hing is done, to the
TEAM Act so that it can be passed — and we desperately need it to
be passed — we should not exclude conditions of work. We have got
to be free to work on conditions of work with our people. That is
critically important.
[The prepared statement and attachment of Mr. Budinger fol-
low:]
13
WILLIAM D. BUDINGER
CHAIRMAN & CEO
RODEL, INC. /THE NATIONAL ASSOCIATION OF MANUFACTURERS
Mr. Chairman and Members of the Committee, I am Bill Budinger, of Rodel, Inc., based
in Newark, Delaware. Thank you for giving me this opportunity to appear before you today on
the subject of the TEAM Act. I am representing the nearly 14,000 members of the National
Association of Manufacturers ~ 10,000 of whom are small businesses.
My testimony focuses on the rationale for enacting the TEAM Act, which I believe is
essential if American companies can continue to compete and prosper in the world economy.
I will summarize my statement and ask that the full statement be made a part of the record.
After decades of retreat, the international competitiveness of American industry has
turned around. American-made goods are again turning up in stores around the world. Even
our small businesses are learning how to compete abroad. At the White House Conference on
Small Business, newly confident delegates reversed their earlier isolationism and voted
overwhelmingly to participate in international trade. Now this wonderful and essential revival
is in danger of being stopped dead in its tracks.
Twenty-seven years ago, 1 founded a company that today manufactures polishing pads
and slurries that are used by the electronics industry to make microchips, LCD screens and
memory-storage devices. I would like to share with you the story of my company and how we
became part of the American manufacturing revival. It is a story of teamwork and employee
involvement.
Rodel's Experience With Teams
Three-and-a-half years ago, my company faced a crisis. Our health care costs had been
climbing at the rate of 20 percent per year and had grown to where they were consuming almost
8 percent of our total revenues. If the trend continued, in six years our health care costs would
exceed our total payroll.
We tackled the problem the way we now tackle most problems. A team of people from
all walks of the company volunteered to find a better way. Several production people, a
researcher, a scheduler and a human resources professional banded together and began
interviewing other employees, their families, health care professionals and other companies.
After nine months of work, they came up with a new idea for a wellness program to replace our
traditional medical plan.
We installed the wellness program and discovered that it measurably improved the well-
being of our people. At our latest annual health fair, we found that we were thinner, fitter,
healthier and smoke less on average than we did three years ago. We catch most health
14
problems before they become serious. The result of the new approach is that our health care
costs have actually declined almost 20 percent ~ without cutting back on care.
Each month, we hold a company-wide general meeting. It is a bit like a giant board
meeting or a New England town meeting. We examine the financial results of the previous
month, talk about our current problems and discuss plans for the rest of the year. Everybody
gets into the act. It would be hard to attach conventional labels like "management" or "worker"
to the participants. Problems are solved not by direction from above, but by groups of the
people most concerned. The health care team, for example, is one of the dozens of teams that
formed to tackle a problem and then disband. External issues are handled the same way. An
environmental problem or a new competitive threat will give rise to a cross-company team for
developing a response strategy.
We were not always a team-based company. Before 1980, we were a conventional
company, structured in the old-fashioned way. Management did most of the thinking and policy
was dictated from the top. We changed because our market changed - it was a matter of
survival. The decade of the 1980's was a disaster for our American customers. Those
customers made the silicon wafers that are the starting material for semiconductors and, during
the 80's, 90 percent of them went bankrupt, got bought out by foreign companies, or moved
offshore.
By the end of the decade, we had almost no American customers left. Worse, we saw
the emergence of strong foreign competitors ~ competitors who often had special relationships
with the foreign companies who had bought out or killed our customers. It was clear to us that
if we were going to survive, we would have to learn how to compete with our foreign
competitors so effectively that foreign companies would prefer to buy our American-made
products.
We concluded that our only hope was to abandon our traditional management model and
invent a completely different form of enterprise. We decided to make stakeholders out of
everybody in the company and to turn our bosses and supervisors into leaders and coaches.
Management perks ~ even assigned parking places - disappeared.
The transition has not been easy and the journey is by no means complete, but the
rewards are already evident. Teamwork and collaborative decision making have allowed us to
achieve something that is generally thought to be impossible for a small American company.
We have successfully captured a foreign market. Particularly in our industry, offshore
competition is fierce, and foreign companies prefer to buy locally-made products. In order to
sell in that overseas market, our American-made products must have quality that is vastly
superior to locally-made alternatives. That level of quality is only obtainable when everyone in
the company cares and is committed to its success. Such caring and commitment do not come
from a company that divides its managers and workers into adversarial camps. Nor does it
come as a result of policies dictated from the head office. The quality in our products is the
direct result of the enthusiastic and dedicated spirit generated by our workers' broad participation
15
in company decisions. They apply their best ideas with a sense of initiative and responsibility;
the result is the finest quality in the world. Even quality-obsessed Japanese electronics
companies choose our materials over their locally-made options. In fact, our American-made
quality is so high that there isn't a semiconductor made anywhere in the world that was not made
with at least one of our products.
National Labor Relations Board Response
Now our attorneys are telling us this all may have to end. The work we have done to
create a team-based, participatory company might be illegal. So today, instead of talking about
the success story of a small American enterprise, I am here to talk about an almost unbelievable
threat to the very thing that made our success possible.
The threat comes from recent rulings of the NLRB, which suggest that genuine dialogue
between a company's leadership and its employees is a violation of the Wagner Act. We can
appreciate that 60 years ago when the act was written, the industrial workplace was divided and
adversarial. Workers needed government help to counter the power of the industrial barons.
But alot has changed in 60 years. When the Wagner Act was written, foreign trade and foreign
competitors were much less important than they are today. Sixty years ago industry was still
in love with the Taylor model of management: Workers were hired from the neck down.
Today, companies that cling to that old adversarial workplace are dying. They cannot get good
workers and they cannot produce world-class quality.
Almost everyone seems to agree that modem team-based workplaces are a vast
improvement over the old. The only disagreement seems to be whether the present law is
genuinely hostile to such partnerships and, if so, whether the TEAM bill is the right remedy.
I would like to make a few comments on each of those questions.
The TEAM Act is the Right Approach
1. Is the present law hostile to team-based management? The Wagner Act
specifically prohibits employer-initiated or subsidized "collaboration" with workers. Section
8(a)(2) of the act provides that it shall be an unfair labor practice for an employer "to dominate
or interfere with the formation or administration of any labor organization or contribute financial
or other support to it." Section 2(5) defines a labor organization as 'any organization of any
kind, or any agency or employee representation committee or plan, in which employees
participate and which exists for the purpose in whole or in part, of dealing with employers
concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions
of work. "
In its 1992 Electromation decision, the NLRB found the law was violated because the
company had set up "a bilateral process involving employees and management to reach bilateral
solutions on the basis of employee-initiated proposals." In its 1995 Dillon Stores decision, the
NLRB rules that "conditions of work" include health and safety, a gym, a day care center,
16
insurance, rewards for efficiency and productivity, work assignments, compensation, work rules,
job descriptions, use of bulletin boards, workloads, scheduling, changes in machinery, discipline,
hiring, and promotions.
Under the law, management may dictate on any of these issues, but management may not
include groups of non-management employees in making decision about "conditions of work."
Yet it is these very conditions of work - who should do what and when - that are at the heart
of the dialogue in an empowered workplace. Does anybody still believe that a manager sitting
in his office does a better job of making good policy on working conditions than a group pulled
together from all levels of the company?
We have here the classic irony: A government program achieves the opposition of its
intention. A law intended to create labor harmony and better working conditions is threatening
those progressive companies who have done just that.
Given what our attorneys tell us about the wording of the law and the recent history of
NLRB decisions, it is hard to escape concluding that the law does indeed pose a threat to labor-
management partnerships. Even NLRB member John Raudabaugh wrote in the Electromation
decision: "If EPPs (employee participation plans) are to be lawful, [the National Labor
Relations Act] will have to be changed legislatively. " It is clear the law must be changed ~ if
only to remove the chilling cloud of ambiguity. Teams must be legal and they must be allowed
to deal with any subject ~ especially conditions of work.
2. Is the TEAM bill the proper remedy? Those who oppose the TEAM Act seem
to fear that it will reopen the door to sham unions and bring back the sweat shops of 75 years
ago. I think such fears overlook how much has changed since the Wagner Act was written.
Workers today tend to be better educated and far more mobile. Information on good jobs travels
at the speed of light. If my company adopted an abusive management style, we would lose all
our employees before the next payday. Similarly, the nature of competition has changed. The
competitive pressure from offshore is no longer just low wages - it is the superb quality that
comes from those committed foreign workforces. American companies that do not have
similarly committed workforces cannot compete. It is today's market, therefore, that is the best
deterrent to the abuses of the past. Indeed, there are companies today sacrificing employee
loyalty on the altar of short-term shareholder value. I think those companies will find it
increasingly difficult to remain competitive.
Certainly, no one wants to reopen opportunities for worker exploitation. Some have
thought the TEAM bill could be modified to make it less worrisome to its opponents. If so, it
is critically important that any such modification should not result in the government telling
entrepreneurs how they should run or structure their business or how they must go about
deciding company policies. America's entrepreneurs must be free to innovate and experiment
- not only in technology, but also in the form and style of enterprise. We should not outlaw
17
freedom to innovate because someone mighi use that freedom to cause harm. If harm arises,
it can be dealt with when it occurs and specifically ~ making sure not to throw out the good
with the bad.
Conclusion
An America equipped to compete in the 21st century will have to be different from the
America of the 1930's. The world is changing so quickly, American enterprise must be free to
change with it - even better, we must be free to lead it. We cannot do that if we are shackled
by laws that lock us into the past. Attached is a letter from one of our employees that illustrates
why teams are such an integral part of today's successful companies.
To allow America to move forward, all of America's labor laws need a thorough re-
examination, but the Wagner Act is one that needs immediate attention.
18
Bill,
A request was made to forward letters to you concerning a law that prohibits us, the people of Rodel, Inc.
from helping to make decisions with the company about things that concern us, the people of Rodel. Inc.
and /or any other company in this country. This is my response. Sandy Correll
It is my opinion that a company that is hot a team is in trouble. In today's day and age it is nice to
work for a company that knows who you are and listens to you as a person. There are to many companies
that the employees are just numbers on a timecard. When you have a voice in the company it is a stronger
company. This means that there are more people looking out for the welfare of the company. For some of
these people work is their life. It means more to them to be an integral part of the company than to be just a
number on a time card. The people take more ownership and responsibility in the company. The people
are proud to be a part of the company, not just work for the company.
The company that I used to work for before I came to Rodel, Inc. closed it's doors at the local
Delaware location. We the employees felt that it was coming, because of what we saw as the company
wasting way to much money. They built a new facility that was five times the size of the old one and spent
millions of dollars doing this. Getting us a new bigger location was nice but it cost us our jobs less than a
year later. I believed in what I saw, and I was lucky to have been given the opportunity to move on
and get a job at Rodel, Inc. Some of the people that I worked with there still have not found jobs to this
day. When they built the new bigger facility in Delaware they also built others in other states as well as
closed some of the old ones in other states. We felt that this was to much all at once.
We were not given a voice in this or even an ear. The nice new building now stands empty.
They cannot even rent it out. They wasted millions of dollars. They never even asked our opinion.
Over 200 people lost their jobs just at this location, for the state of Delaware and the surrounding states
that hurts.
We, the employees of any company need to be able to speak out and be heard. We need to be
able to make a difference. Don't we have the right to participate actively in our livelihood. We are not
just a bunch of mindless sheep to be told what to do, with no voice or choice just because you say so, by a
law that is twice as old as I am. Give us the right to be heard. Give us the chance to make a difference.
Give us a choice of our future. Give us the chance to make the company we work for (who ever it is) a
sucessful place where we want to work, not a place where we have to work to pay the bills and feed our
families, not a place where we dread going every day.
Please change or dismiss this law for the good of the working class people who have to live by it.
Sandy Correll
^Qft^^^''^ X C^o^^zi/^
m
Senator Warner. Your message is very clear and I thank you.
We have now been joined by the distinguished ranking member
of the Committee, the former Chairman of the Committee. Senator
Bumpers, would you like to have some opening remarks?
Senator Bumpers. Mr. Chairman, I will insert my opening state-
ment in the record and save a little time.
[The prepared statement of Senator Bumpers follows:]
20
PREPARED STATEMENT OF SENATOR DALE BUMPERS
RANKING MEMBER
COMMITTEE ON SMALL BUSINESS
APRIL 18, 1996
I commend the Chairman and Senator Warner and their staffers for the work they have
done in setting up this hearing. I appreciate the opportunity to learn more about the Team
Act and its potential impact on American workers and small workplaces.
I have seen teams at work in Arkansas and have been impressed with the results of
cooperation and open communication between managers and front line workers. It is
gratifying to watch those who once operated under the old top down methods exchanging
ideas on increasing production, improving safety, and rewarding exemplary employees.
An increasing number of blue collar workers for the first time in their working lives
are enjoying the opportunity to share their knowledge and their experience with their bosses,
and the boost to their morale is evident. Having little or no control over how to do a job has
been listed as a leading cause of worker stress, and any company that taps into its employees'
full potential is far more likely to succeed.
I fully understand that this measure is troubling for organized labor. There probably
are employers who would exploit the employee involvement setup in order to discourage their
workers from entering into collective bargaining agreements. But any manager who does not
see his employees as vital assets isn't as likely to succeed in the global economy as those who
use every means of encouraging workers to use their heads as well as their hands and backs.
Any manager who deliberately violates our labor laws and exploits his workers will never
have their full confidence and loyalty. This is a sure fire recipe for labor unrest with or
without a union.
I am anxious to study the testimony our witnesses will submit. Our labor
organizations have worked tirelessly over the years to rid the American workplace of child
labor, 12-hour days, and safety and health conditions that today's workers carmot imagine. If,
as some argue, this measure as currently drafted would effectively block employees' rights to
bargain collectively, it should be modified. It is in the best interest of every citizen of this
land to make sure our companies are as productive as possible. If they are not, our standing
in tomorrow's economy could suffer.
Once again, 1 appreciate the opportimity to learn more about this legislation and its
consequences for small companies.
21
Senator Warner. We now have the Senator from Montana.
Senator Burns. If the Senator from Arkansas can do that, the
Montana Senator can do the same.
[The prepared statement of Senator Burns follows:]
22
PREPARED STATEMENT OF SENATOR CONRAD BURNS
SENATE COMMITTEE ON SMALL BUSINESS
APRIL 18, 1996
Mr. Chairman, I am pleased to be here today because, as a co-sponsor of this
legislation, I think this bill is very important to small businesses. It's important to all
business but, with 98% of Montana's businesses considered small, those are the folks Em
hearing from.
Many of the businesses that have contacted me were in shock. They had no idea that
the committees they'd formed with their employees were in violation of the law. As far as
they were concerned, they were just good business practice. The committees kept the
employees involved in operations and improved customer satisfaction.
Let me give you an example. 1 won't use the name of the company, since I
understand many small businesses are afraid of incurring the discipline of the government.
But one company, with diversified interests, has formed a committee on safety -- safety not
only of employees who work with a variety of equipment but of the thousands of visitors who
use their facilities every day. This committee gives the employees ownership of their
surroundings and results in a safer workplace for everyone.
This same company also has a committee on Customer Satisfaction. The employees
survey the facilities periodically and decide on changes in decorations, improvements in the
surroundings, how to make the area more customer friendly. ..basically how to draw business
in and keep it. Once again, this is not only a good business practice, it is a way to keep the
employees energized about their work conditions. How can this possibly be against the law?
Yet, if the National Labor Relations Board learned about these employee involvement
teams, according to the law, they could penalize the employer. That doesn't even make sense.
Now, 1 know that the government is famous for not making sense ~ and that is what
our regulatory reform efforts are about — but here is one specific place we can make a
difference. By passing this bill, the Teamwork for Employees and Management Act. without
any taxpayers dollars, without any new volumes of paperwork, we can let business get back to
business without fear of the heavy hand of government coming down on them.
By simply amending the National Labor Relations Act, we can allow teamwork to
continue, and allow businesses to form teams to safeguard working conditions, improve
productivity and efficiency, and boost the quality of their products. This doesn't just benefit
the employer and the employee, it helps our economy.
Mr. Chairman, this provision of the law may have served it's purposes 60 years ago.
but it is not necessary today. Small businesses need all the help they can get to survive in
today's competitive market and being flexible is vital to that success. Small business owners
need the input, the advice, the cooperation, and the labor of their employees. To prohibit that
involvement is to squash innovation and prosperity.
1 strongly support this legislation, Mr. Chairman, and 1 am glad to hear that the Labor
Committee held a mark-up of this bill yesterday. 1 hope we can bring this to the floor
quickly and relieve the stress on our small businesses around the nation who have learned of
their allegedly "illegal" business practices. Let's get the government off their backs once
again, and let business do what they do best.... create jobs and produce high quality goods and
services for the world to enjoy.
23
Senator WARNER. We will proceed with the witnesses. Mr.
McCammon.
STATEMENT OF CHESTER "MAC" McCAMMON, TEAM LEADER,
MECHANICAL ASSEMBLY DEPARTMENT, UNIVERSAL DYNAM-
ICS, INC., WOODBRIDGE, VIRGINIA
Mr. McCammon. My name is Chester McCammon. I am a mem-
ber and team leader of a self-directed team at Universal Dynamics
Corporation in Woodbridge, Virginia, where I have been employed
for 4 years and have been a team leader for a little over a year.
I appreciate your invitation to appear before the Committee to
share some of my thoughts on the importance of employee involve-
ment and management-worker cooperation.
For your information, I have been a member of five different
union locals in the industrial and marine sectors, including Boiler-
makers and Teamsters, in companies that range in size from 10
employees to 1,000 employees. In addition, I operated a small busi-
ness of my own for 7 years.
I believe in the right of employee choice as strongly as I believe
in employee involvement. This is the fourth time I have come to
Washington to talk about a worker's view of employee involvement.
I would like to see interpretations of the law changed to allow
a wider range of employee participation in the management proc-
ess. In addition to those changes, the law should institute a pro-
gram that would encourage and reward businesses for their efforts
to promote greater employee participation involvement in the man-
agement process. The Government's posture should be one of edu-
cation not enforcement. This philosophy has served us very well as
we have adopted it at Universal Dynamics.
Currently and in the past — and before I get into this section, I
would like to make one statement. The president of Universal Dy-
namics, Don Rainville, has the same fears of legal action as the
rest of the people. However, I have been allowed to come here,
write a totally uncensored statement, and say what I think is im-
portant to this Committee.
Senator Warner. And we thank you.
Senator BURNS. Mr. Chairman, if I may?
Senator Warner. Yes.
Senator Burns. Mr. McCammon, you may have already said this,
is that plant a union plant?
Mr. McCammon. No, sir, it's not, however it was approached
prior to my being employed there and a vote was taken and we are
currently still non-union.
Currently and in the past, we gave and received instruction, both
one-to-one and in classes, on total quality control, just-in-time man-
ufacturing, focus factory, safety and currently ISO 9000 Quality
Systems. We have adopted a system of self-directed teams and in-
ternal vendor/customer concepts between teams and individuals.
To reinforce this new system, we no longer limit teams or team
members access to other departments or individuals who may in
any way help to solve problems, implement improvements to prod-
uct, production, work environment, and safety. As an example: if
a product requires an engineering change, the team member brings
it to his team leader. They discuss the action necessary and who
24
would best represent the problem and present the desired solution
to the appropriate person in the department. Together they decide
the best solution for all concerned, agree on a course of action, and
carry it out.
This system of action and reinforcement is reinforced and man-
aged again through our green sheet and red sheet system resolving
non-conformances and implementing continuous improvement. In-
corporated in the program is a limited reward system to encourage
participation without it becoming the main motivation for partici-
pation. The red and green sheet system has been in place for about
5 years and we still average around 200 of these sheets per month
and we only have a little over 200 employees.
In the past, if an idea had merit and implementation could have
a negative impact on production or personnel a group of employees
comprised of mostly non-management personnel, called a steering
committee, would decide if a panel should be formed and from
which departments it would be selected. The panel would be
formed, present its ideas on how to implement the new program or
system with the least negative impact. Past panels have dealt with
things such as lunch breaks, uniform programs, bonus programs,
and medical insurance.
As a result of the attention being paid to section 8(a)(2) of the
National Labor Relations Act, the current law and its interpreta-
tion, this portion of our employee involvement program had to be
abandoned. Now my fellow workers and I are no longer allowed to
be involved in the process that will ultimately decide the outcome
of these and other issues that may negatively impact the quality
of our lives in the workplace and at home.
In conclusion, I would like to say that since the last time I testi-
fied concerning my views on the TEAM Act, my position has not
changed. The question is not whether but when will the NLRB and
Congress recognize what is happening on the shop floor. The oppor-
tunity for employees and employers to work cooperatively as the
TEAM Act will provide is essential to each party and to the Nation.
Thank you.
[The prepared statement of Mr. McCammon follows:]
25
Testimony of Chester McCammon, Team Leader, Mechanical Assembly Department
Universal Dynamics. Inc., Woodbridge, Virginia
Committee on Small Business
April 18, 1996
Senator Warner and members of the Committee, my name is Chester McCammon. I
am a member and team leader of a self-directed team at Universal Dynamics Corporation in
Woodbridge. Virginia, where I have been employed for four years and have been a team
leader over a year.
I appreciate your invitation to appear before the Committee to share some thoughts on
the importance of employee involvement worker-management cooperation on behalf of my
fellow workers at Universal Dynamics. We thank you for introducing S. 295, the Teamwork
for Employees and Management (TEAM) Act, that would make it clear such activities are
permitted.
For your information, I have been a member of five union locals in the industrial and
marine sectors, including the Boilermakers and Teamsters, in companies that ranged in size
from ten to more than a 1,000 employees. In addition. I operated a small business for seven
years. I believe in the right of employee choice as strongly as I believe in employee
involvement.
This is the fourth time Eve come to Washington to talk about a worker's view of
employee involvement. Last August, 1 joined Don Rainville, president of Universal Dynamics
and a member of the National Association of Manufacturers' s Board of Directors, to testify on
this issue before the Dunlop Commission. Following that a fellow worker and I took part in a
press conference when the TEAM Act was introduced. And I testified at the last Senate
hearing for the TEAM Act in 1995.
Through interaction with fellow workers, I have noticed a growing desire in them to
participate in the decision-making process at work. This is accompanied by a growing
frustration, because the opportunity to do so simply does not seem to exist under current laws
and their interpretation.
Most workers don't know this and believe management is intentionally preventing their
participation. This misconception is combined with the belief that dictatorial line management
is the standard. Further, no matter how benevolent the dictators, workers believe as soon as
sufficient pressure is exerted, managers will regress to the use of whip-cracking and coercion.
These are only some of the circumstances that are responsible for the "us-them" attitude found
in many American workplaces.
If this attitude is to be changed, management must make the first move. After
reviewing portions of the National Labor Relations Act, 1 have come to believe that current
interpretation of labor laws hinder management groups that are genuinely trying to bring
about positive changes in their labor management relationships. At the same time, this gives
others an excuse not to even try to change.
I would like to see interpretation of the law that would allow a wider range of
employee participation in the management process, and that would allow management to make
26
the first move toward changing management-labor relationships so that they are based on
trust, respect and cooperation.
In addition to these changes to the law, a program should be instituted that encourages
and rewards businesses for their efforts to promote greater employee participation and
involvement in the management process. The Government's posture should be one of
education not enforcement. This philosophy has served us very well as we have adopted it at
Universal Dynamics.
Currently and in the past we give and receive instruction both one on one and in class
on total quality control, just in time manufacturing, focus factory, safety and most currently
I.S.O. 9000 Quality System.
Through the formation of self directed teams and adoption of the international
vendor/customer concept between teams and individuals. To reinforce the new systems we no
longer limit teams or team members access to our department or individual who in any way
help to solve the problem to implement improvement to product, production, work
environment and safety.
As an example: If a product requires an engineering change the team member brings it
to his team leader and they discuss what action is necessary and who will best present the
problem and desired solution to the appropriate person and department. Together they decide
the best solution for all concerned, agree to a course of action and carry it out. This system
of action is reinforced and managed through the use of our red and green sheet program for
resolving nonconformance and implementing continuous improvement. Incorporated in the
program is a limited reward system to encourage participation as the main motivation. Red &
green sheet system has been in place for about 5 years and we still average about 200 sheets
per month.
In the past if an idea had merit implementing it could have negative impact on
production personnel a group of employees comprised of mostly non-management personnel
called the steering committee would decide if a panel would be formed and from what
departments. The panel should present ideas on how to implement the new program or
system with least negative impact. Past panels dealt with things such as lunch breaks,
uniform program, bonus program and medical insurance. As a result of the attention being
paid to Section 8(a)(2) of National Labor Relations Act, the current law and their
interpretation of this portion of our employee involvement program had to be abandoned and
now my fellow employees and I are NO longer allowed to be involved in the process that will
ultimately decide the outcome of these and other issues that may have a negative impact on
the quality of our lives in the work place and at home.
In conclusion, I'd like to say that since the last time I testified concerning my views
on the TEAM Act, my position has not changed. The question is not whether, but when will
the NLRB and the Congress recognize what's happening on the shop floor. The opportunity
for employers and employees to work cooperatively, as the TEAM Act would provide, is
essential to each party and the Nation.
Thank you
Senator Warner. Ms. Gooch.
Ms. Gooch. I would ask that Skip Pascoe go before myself. He
is going to talk a little bit about strategic plans and it would make
my testimony more meaningful to speak after him.
Senator Warner. Thank you very much.
STATEMENT OF HAROLD "SKIP" L. PASCOE JR., EXECUTIVE
OFFICER OF MANUFACTURING AND DISTRIBUTION,
SUNSOFT CORPORATION, ALBUQUERQUE, NEW MEXICO
Mr. Pascoe. Good morning, Mr. Chairman, Committee members.
My name is Harold L. Pascoe Jr. I am the executive officer for
Manufacturing and Distribution for the SunSoft Corporation in Al-
buquerque, New Mexico.
The SunSoft Corporation is a small entrepreneurial medical de-
vice manufacturer that has a 15-year history, and a very successful
reputation of competing in a very dynamic marketplace which is
dominated by much larger corporations such as Ciba-Geigy, B&L
and Wesley-Jesson.
Some of our successes have been fueled in the recent years by
the formation of teams using employee involvement with our man-
agement and employee staffs.
Senator Warner. Could you describe where your markets are?
Mr. Pascoe. We are a soft contact lens manufacturing company.
We provide specialty products for the correction of astigmatism and
presbyopia. We are classified as a class HI medical device manufac-
turer and are required to operate under extremely stringent regula-
tions
Senator Bumpers. Do you know who you are indebted to for the
fact that that is now a class H instead of a class HI?
Mr. Pascoe. Our extended wear products still remain in the
class HI device category. Although our daily wear products have in-
deed been moved to the Class H category for medical devices.
Senator Bumpers. I am the one that got FDA to change that.
Mr. Pascoe. We certainly appreciate that. Senator. Thank you
very much.
Senator Bumpers. It took years to do it. I have a contact lens
manufacturer in my State.
Senator Warner. Back to the markets, are you in the world mar-
ket or primarily domestic?
Mr. Pascoe. We are primarily in the domestic market at this
point in time, although we have strategic objectives to expand our
markets internationally. We are presently attempting to acquire
ISO certification.
Senator Warner. But are some of your competitors shipping into
the United States from abroad?
Mr. Pascoe. No, not to my knowledge. Our primary competitors,
as I stated, are Bausch & Lomb, Ciba-Geigy and Wesley-Jesson
within our domestic market. Approximately 90 to 95 percent of our
sales are still within the domestic market.
One of the reasons we have been so successful in competing with
these larger corporations which possess larger resources for person-
nel management, process improvements and training is that we
have been actively participating in teams of an informal and, until
just recently a more formalized basis, for the last 10 years. We
28
have adopted world-class manufacturing techniques within our
plant which have formed teams versus departments for processing.
Our employees have been very instrumental in identifying, rec-
ommending, and even implementing process improvements and
changes.
We feel that without employee involvement we certainly would
not be ranked as the fifth largest contact lens company with re-
spect to patient fits on an annuallized basis. In fact, if we were to
strictly classify ourselves with respect to the product we produce as
a customer manufacturer, we are the largest custom specialty soft
lens manufacturer in the Nation today.
We employ approximately 300 employees full-time and we have
$25 million in gross sales annually. Yet, we successfully compete
with companies 100 times our size.
When I first heard of this law, which was last week, we felt that
an 11th hour scramble to offer our testimony in support of the
Teamwork for Employees and Management Act was necessary as
I could not believe our teams were illegal. We did not contact our
attorneys, however, because we felt it was important that we offer
our testimony regardless of our potential liability. We cannot go
backwards at this point in time with respect to our formation of
employee involved teams.
I also find it very difficult to believe that a law of this nature
is running side-by-side with the regulatory requirements that we
are mandated to meet, in terms of compliance, by the Food and
Drug Administration. The Food and Drug Administration's Good
Manufacturing Practices mandate that we comply with the regula-
tions set forth for class III medical devices. In essence, these regu-
lations address employee awareness, training, and control of qual-
ity systems.
The most current working draft of the Good Manufacturing Prac-
tices put out as recently as July 1995, state, and I quote:
It is crucial to the success of the quaUty system for the manufacturer to ensure
that the responsibihty, authority, and organizational freedom, or independence, is
provided to those who initiate action to prevent nonconformities, identify and docu-
ment quality problems, initiate, recommend, provide, and verify solutions to quality
problems, and direct or control further processing, delivery or installation of non-
conforming product.
This, from our perspective, means every employee in our com-
pany.
It seems to me we are caught between a rock and a hard spot.
We have very limited resources for the training of our employees.
We have limited resources for the improvement of process controls.
But we still have the obligation to understand and implement the
regulations which require us to maintain or compliance in the eyes
of the Food and Drug Administration.
I can testify before this Committee that in the past, prior to our
forming more formal teams with employee involvement, that we
had a less than glowing standing with the Food and Drug Adminis-
tration. Primarily we had problems with nonconformance to process
controls, nonconformance to operation procedures, and a general
lack of the employees understanding on what quality systems do to
provide the safety and effectiveness of our products with respect to
our customers.
29
Since we have been actively involved in these teams, there is a
higher level of awareness of these compliance requirements. Our
employees identify and initiate corrective action, in our operational
procedures and the type of training that we are implementing to
help them understand our quality systems better. And I can attest
that we would not have achieved some of these compliance require-
ments if we did not utilize employee involved teams.
As I stated earlier, we are actively pursuing ISO certification.
One of the primary areas of assessment a notified body looks for
upon performing the inspection of our quality systems is that they
want to ensure we have a corporate-wide awareness, down to each
employee, of what our quality systems are, and what they do and
how our corporate strategies are supported by these quality sys-
tems in the pursuit of international markets.
We cannot successfully achieve ISO certification if we do not
have employee involved teams that we can disseminate appropriate
information to, or rely on feedback and improvements of our qual-
ity systems. If we do not enter the international market, our mar-
kets are limited. We are destined to compete domestically in ever-
shrinking markets. The leadership in corporate America today ac-
knowledges the strength in involving the work force in company de-
cisions. A "Buy in" mentality is created that optimizes time, efforts,
and resources. Section 8(a)(2) of the NLRA restricts this strength.
Therefore, we would urge you in support of Senate bill 295.
Thank you.
[The prepared statement of Mr. Pascoe follows:]
25-436 - 96 - 2
30
Statement of:
Harold "Skip" L Pascoe
Before the:
US Senate Small Business Committee
Date: April 18,1996
l^h. Chairman and Distinguished Committee Members. My name is Harold L. Pascoe Jr and I
serve as the Executive Officer of Manufacturing and Distnbution for the Sunsoft Corporation in
Albuquerque, New Mexico. I am submitting this testimony in support of SB 295, The Teamwork
for Employees and Management Act of 1995.
SUNSOFT CORPORATION
As the Executive Officer for Manufacturing and Distnbution I have the
responsibility for the manufacture and distnbution for all Sunsoft products
The Sunsoft Corporation is a medical device manufacturer employing
approximately 300 full time employees with annual gross sales of approximately 25
million in the domestic market Our company specializes m the manufacture of
specialty custom soft contact lenses for visual correction of astigmatism and presbyopia.
We have four products approved for market by the FDA and are aggressively
pursuing ISO certification to expand our markets mtemationally Over our fifteen year
history we have developed a reputation within our industry as a company known for it's
product quality and customer service.
THE COMPETTTVE CHALLENGES OF S\L\LL BUSINESSES IN LARGE
INDUSTRIES
Our success has been fueled in recent years by the results of the unified efforts of our
employees and management involved with interactive teams. Employee involvement is used
extensively in our business and has been instrumental in positioning our company as a leader
in the market for custom products Our industry is extremely dynamic and our competitors.
31
such as Bausch and Lomb, Ciba and other industry leaders are company's that control these
dvTiamics with larger resources for personnel management, training and process improvements.
To remain competitive we have used recommendations from employee involved groups to
enhance our processing capabilities, develop efficient work schedules and provide more
effective training which has allowed us to nval these market leaders No one can contest that the
obvious advantages to employee involved teams is the health of a company's bottom line
which provides jobs through expansion and secure futures for its employees But to
Sunsot\ and other small medical device manufacturers there is another equally important
reason for the existence of these employee/management relationships in that they
ensure we have the ability to comply with the vanous state and federal regulations that
all manufacturers are faced with. One of the most important being the FDA
FEDERAL REGULATIONS FOR DEVICE MANUFACTURERS
As a medical device manufacturer it is imperative that we adhere to the
regulatory standards mandated by the Food and Drug Administration. Our products are
manufactured under the Good N-Ianufactunng Practices (GMP's) for class HI medical
devices Employee involvement in the preparation, training and approval process for
operational procedures, internal audits, collection and maintenance of device
manufacturing documents is cntical to the operation of our facility within the guidelines
set forth by the FDA The working draft of the Current Good Manufacturing Practice
(CGMP) final rule, published in July of 1995, states that it is " crucial to the success of the
quality system for the manufacturer to ensure that the responsibility, authonty, and
organizational freedom (or independence) is provided to those who initiate action to
prevent noncomformilies. identify and document quality problems, initiate, recommend
provide, and venfy solutions to quality problems, and direct or control further processing,
delivery, or installation of nonconforming product" With limited
32
funds for outsourcing these needs our team environment has proved to be one of the most
valuable tools we possess to ensure the safety and effectiveness of our products.
ACHIEVING COMPLLAJNCE THROUGH EMPLOYEE EWOLVEMExNT
We have relied heavily on the input of our employee involved teams to provide us
with the capability to train, update and initiate action on the issues that are cntical to
maintaining compliance with federal regulations Employees have discovered discrepancies in
cntical documents and processes, recommended and effected change and in a sense provided a
greater level of compliance for Sunsoft which has resulted in safer and more effective products
shipped to our customers. Our company has a responsibility to both the FDA and the consumer
to provide products that meet the highest standards of manufacturing Employee involved teams
provide the means for our businesses to ensure these standards are understood and met by every
employee within our organization. The results of employee involvement is that Sunsoft currently
remains in good standmg with the FDA and continues to provide the quality of products and
services expected by It's customers m the face of increasing regulation.
EXPANSION INTO INTERNATIONAL MARKETS
Of strategic importance to us is the ability to compete in the international
markets. ISO (International Standards Organization) certification is a means by which
company's can obtain clearance to sell their products throughout the European Community
(EC) All company's desiring to export their products to the EC must obtain this certification by
June of 1998. The certification process entails an audit of a company's quality systems by an
independent auditing firm (Notified Body) who after an extensive "on site" inspection finds the
company in compliance with ISO standards and submits the company's application to the
"Competent Authonty" . much alike a ministry of health. In addition to venfying the
effectiveness of these quality systems, the requirements for ISO certification include a corporate
33
wide awareness of the quality systems and the strategic plans a company has developed for their
international expansion. This awareness is interpreted the same as existing GMP's and meant to
include every employee within the company Providing an environment where labor shares the
nsks and rewards in the pursuit of international growth is the only means of assuring the
success of small businesses obtaining the certification. The interaction of labor and management
elevates the enthusiasm of the entire workforce and taps the motivation and creativity of every
employee Employee's participation in the development and improvement of these quality
systems equates to more successful audits thus successful exports to European communities To
become international competitors that can effectively respond to the needs of our global
customers we must encourage the contnbutions of all employees within our organizations ISO
certification places a great deal of emphasis on employee training and their knowledge and
understanding of company goals and quality .systems. Training that uses employee feedback as a
means to better serve the company's and employee's needs is just good common sense and a wise
utilization of limited personnel budgets.
CONCLUSION
Small business success depends on being able to utilize our most valuable asset,
the collective wisdom, enthusiasm and synergy's of our employee and management
relationships VVe can only succeed through the natural process of people working together
for a common goal. The current law restricts the ability for any business to provide growth in its
employees, its markets, and subsequently the communities it supports through economic
development The Teamwork for Employees and ivlanagement Act liberates us from the archaic
statutes required dunng times long since vanished from US. induslnes. For businesses both
small and large across this country 1 would urge your support in the passing of SB 295 .
Respectfully ,
Harold "Skip" L. Pascoe Jr
Executive Officer Nlanutactunng and Distnbution
34
Senator WARNER. Thank you very much.
Ms. Gooch.
STATEMENT OF DONNA C. GOOCH, DIRECTOR OF HUMAN RE-
SOURCES, SUNSOFT CORPORATION, ALBUQUERQUE, NEW
MEXICO
Ms. GooCH. My name is Donna Gooch. I am the Human Re-
sources director for Sunsoft Corporation. I have been with Sunsoft
for approximately 2 years now. I was part of the management team
trying to formaHze the teaming process and employee involvement
process over the last 2 years.
Senator Warner. What is your specific title and portfolio in the
management team?
Senator Bumpers. She's the director of human resources.
Senator Warner. Director of Human Resources.
Ms. GooCH. Yes, sir. As I indicated, I've been with Sunsoft for
2 years. My objective today is to share with you some of the experi-
ences that I have had with teams at Sunsoft.
The first strategy that we implemented was, again, the for-
malization of production teams. In that, we relied on the managers
to communicate with the employees certain strategic issues and
ask the employees input for the implementation of solutions.
Some of the examples that I bring forward today involved, for ex-
ample, a shift change. Sunsoft was in the fortunate situation of
having sales exceed the production capabilities. With that, our fa-
cilities were limited and getting FDA approved facilities is very dif-
ficult. So what we embarked upon was expanding our shifts. We
thought about 24-hour shifts. We had some prior experiences with
night shifts that did not turn out very well, but we were prepared
to take a look at that.
In introducing this to the teams, all the employees came up with
a schedule solution very different from what we thought they
would want. We examined our competitors and got their success
stories with certain schedules and what the employees wanted was
very different than what they thought they would have desired.
With that came a whole host of problems, day care issues, poten-
tial turnover because what they were proposing was 7-day work
weeks that involved 12-hours shifts. They were concerned about ex-
perienced people leaving. They were concerned about potential inju-
ries on the job because of fatigue. In producing the lens, they use
a lot of very fine laboratory equipment such as microscopes and
calibration equipment, so it is very fine manual dexterity, which
puts a lot of trauma on the wrist.
And with their introduction of these problems we also asked for
their solutions. We were able, through the collaboration of every-
body, employees and management, to come up with solutions that,
to my knowledge, I cannot think of an easier transition into a 7-
day work week. And we did it in a matter of 2 months. With that
we were able to keep up with the sales demands and the produc-
tion quotas which they, again, helped set.
There is one success story of how the teams worked together.
Another one would be surrounding compliance issues as de-
scribed. Training had become an issue because we had to add 20
percent more staff in converting to a 7-day shift. With that, we re-
35
quired or asked the employees to develop training programs with
us. And with that we created mentorships and partnerships for
training programs. Again, very successful in trying to meet the
FDA requirements.
Now we are embarking upon the ISO requirements. With that,
again, we are asking for collaboration so we can fulfill that certifi-
cation so we can compete in the international marketplace.
My final example surround committees, specifically safety com-
mittees. Again, I indicated when we went to a condensed work
week, it was required that the employees work longer hours and
they thought of the ideas of combining training with safety to cre-
ate job rotation so people were not working a microscope, for exam-
ple, 12 hours a day. Again, very successful.
They also recommended perhaps incentive programs surrounding
the sharing of proficiencies. Specifically we worked in collaboration
with the employees to develop what we call a multiskill program.
Essentially, the more an employee learns in job functions, the high-
er earning potential they have.
So in working in collaboration with the employees, we were able
not only to fulfill a workman's comp issue perhaps, preventing inju-
ries in the workplace, we were also being able to fulfill a safety re-
quirement as well by the job shares.
The final example I have for you today is in rewards. There was
a development of a recognition committee and with that, to seek
employees input on how we meaningfully recognize outstanding
achievements. Again, it is so different than sometimes what you
would think would make employees feel really good about their op-
portunities and how they perform their jobs. I feel very confident
when we recognize employees on a quarterly basis that we are
really creating a meaningful structure that helps promote longevity
in the workplace, as well as higher earning potential for those who
want to succeed at Sunsoft.
In closing, if you will allow me the liberty of a personal example,
I assume most of us have been raised by parents. I can remember
growing up, it was very difficult for my mom to tell me what to do,
and she used to get so frustrated with me because it was like I al-
ways did what my mom told me to do. My daughter will be 13 on
Saturday. She has come to me with some of the strangest ques-
tions. She would like to dye her hair primary colors that I consider
unnatural. She would like to discuss tattoos and piercing body
parts that are different than the earlobe.
I am really trying hard to understand her desires. I want to draw
the correlation to how management philosophy has changed. The
times of telling employees what to do is long past. Personnel has
now changed to human resources. And now management practices
have to change. You cannot tell people what to do anymore. That
is not what our culture is about.
You have to listen to what people want. You have to try to un-
derstand what they need. And you have to ask their recommenda-
tions for implementing win-win solutions. That is how come I am,
and I think most human resources professionals, and certainly
small businesses, are in favor of this TEAM Act. I would ask for
your support as well.
[The prepared statement of Ms. Gooch follows:]
36
Statement of:
Donna C. Gooch
Before the:
U.S. Senate Small Business Committee
Date: April 18, 1996
Mr. Chairman and Distinguished Committee Members, My name is Donna C. Gooch and I serve as the
Human Resources Director for SunSoft Corporation in Albuquerque, New Mexico. I am submitting this
testimony in support of SB 295, The Teamwork for Employees and Management Act of 1995.
SUNSOFT CORPORATION
As Director of Human Resources, I am responsible for the equitable administration of labor
relations issues and benefit programs, including the development of directed and self-directed work teams.
SunSoft Corporation utilizes Employee Involvement as a resource to maintain a working
environment that is profitable, productive and contributory to both the personal and professional well being
of every staff member. The collaborative effort of employees and management has enabled Sunsoft to take
on the challenge of global expansion in an industry primarily made up of substantially larger companies.
SunSoft's success is based on our ability to change rapidly in a dynamic marketplace; employee
involvement has allowed Sunsoft the organizational structure necessary to remain competitive. The
following are examples of the successes Sunsoft has experienced as a company, by using the abilities of
management and employees combined, as a means of resolving issues in the workplace through team-based
employee involvement.
EMPLOYEE INVOLVEMENT: TERMS AND CONDITIONS OF EMPLOYMENT
Last year, market demand for our products became greater than the production capacities within
the existing facilities and organization. Management's short-term solution was to work longer hours
Monday through Friday (occasionally weekends) in an effort to meet sales demands. The long-term
solution was to convert the operation into a 7-day work week, perhaps a 24 hour operation. The issues
37
were brought to the employee manufacturing teams with proposed management solutions. Through
employee involvement we were able to implement a condensed work week schedule. We developed two (2)
da\1ime shifts. Each shift works three and one half (3 'A) days: two (12-hour days), one (10-hour day) and
one (6-hour day). Potential obstacles that would prevent successful implementation were discussed by the
teams. Our teams discussed such issues as: daycare, reducing turnover, development of job-share,
training, breaks and work schedules. Every employee contributed to the development and implementation
of the condensed workweek strategy, with the obstacles being addressed with solutions developed by our
teams. The final result was a smooth transition into a 7-day work week with all objectives being fulfilled
within a timefirame to meet market demands. Without the usage of employee input, SunSoft would have
implemented a shift change that would not have been conducive to the employee's personal schedule needs.
TTierefore, substantial labor turnover would have been incurred and the shift change objectives would not
have been realized.
SELF-DIRECTED WORK TEAMS
The Employee Involvement manufecturing teams work in a collaborative effort with management
to resolve production issues. Although self-directed work teams are in their infancy, they are learning to
examine statistical information on each fabrication area's performance in order to better understand
product cost, compliance issues and to strategies on potential solutions. Product quality, target versus
\ields and rejection rates are some of the variables that the teams examine to gauge their overall
performance and team progress. Employer and employee teams devise strategies, implementation plans
and commit the realistic resources necessary to fully realize the desired results. Training and compliance
have been recently ear-marked as the one leading factor to improve team performance, thereby, supporting
the company's objective of international expansion. Through the utilization of directed and self-directed
work teams, we have successfiilly enhanced the team's abilities to individually problem solve. We have
38
also challenged one another to transition the antiquated manufacturing process into the new technology that
our industry requires.
COMMITTEE INVOLVEMENT: SAFETY
SunSoft has developed several employer and employee committees that meet on a regular basis to
address workplace issues. The Safety Committee was developed in an efifort to bring safety awareness into
the workplace. This committee performs safety audits, completes accident investigations, conducts safety
training in an effort to prevent future injuries. Every employee in the plant plays a role in assuring the
safest working environment possible.
Since the origination of the Safety Committee, more preventive measures have been taken than at
any other time in our history. The committee minutes are posted throughout the organization and discussed
in team meetings where solutions are presented. As we have converted to a condensed workweek, the 12-
hour shifts have brought on ergonomic issues in the manu&cturing area. The employees assisted in the
development of a multi-skill program that enables employees to learn other manufacturing job fimctions
that allow for job rotation to reduce repetitive motion trauma. Being able to assemble management and
employees toward working to the common goal of a safe work environment reduced accidents and injuries.
These incidences would have potentially resulted in loss of wages, potential loss of future earnings and
possible disabilities, not to mention increased business costs such as workers' compensation.
EMPLOYEE INVOLVEMENT: RECOGNITION
In addition, a reward program was developed to motivate employees to obtain the education and
training necessary to demonstrate proficiencies in many different job skills. In short, the more positions the
employees master, the higher earning potential they have while allowing management increased flexibility.
The Employee Recognition Committee was developed to allow employees to reward and honor
their peers. This committee is composed of management and employees with the objective of developing
recognition programs that are meaningful to the employees. An example of such a program is the
39
Employee of the Quarter" where peers nomiaate their co-workers in an effort to recognize outstanding
achievements. The selection of the 'Employee of the Quarter" is determined by this committee made up of
management and employees. This committee is also responsible for the quarterly events that honors each
team member's contribution to another successful quarter. Each of the quarterly events varies depending
on employee input, but always recognizes outstanding contributions of all selected honored team members.
When recognizing outstanding performance utilizing employer and employee involvement, the message is
more legitimate and meaningful because the employees work hand and glove with one another each day.
Together we have been able to pinpoint those top performers who represent the profile of a successful
employee. The TEAM Act supports the relationships necessary to continue programs that reinforce the
learning process as a life-long tool for success.
IT'S THE PEOPLE THAT MATTER
SunSoft's greatest asset is its people. The collaborative efiforts of employer and employee teams
have allowed us all to experience personal and professional growth. There are numerous examples of how
team-based employee involvement has allowed all employees to develop a work environment that
encourages personal excellence. The people closest to the job have the best solutions. Because of this, it
is no longer an acceptable management practice to have your managers tell the employees what to do. This
outdated philosophy represents a management style that is no longer successful and does not cultivate a
working environment that is meaningful for today's workforce.
Speaking on behalf of other Human Resources professionals serving a non-union working
environment, vote in favor of The Teamwork for Employees and Management Act. This act would
legalize the utilization of modem management practices allowing small business to become more
competitive. I would ask for your support in passing SB 295.
Respectfijlly,
Donna Gooch
Human Resources Director
40
Senator Warner. That was a brilliant dissertation.
Senator Bumpers. Ms. Gooch, that is one of the best statements
I have heard since I have been in the Senate both as a mother and
as a director of human resources.
Senator Burns. I would even accept that as a father.
Senator Warner. I would like to ask unanimous consent that the
record of this Committee be kept open until after you handle this
situation and that you report back to the Committee. I would not
want to have a gap in this record.
Senator Burns. I will accept a collect call from you when you get
that resolved with your daughter.
Senator Warner. That is a dramatic point you make about
human resources did not exist when this law went on the books.
As I tried to stress in my opening statement, this is a changed
workplace from the time this law went on the books.
Ms. GooCH. And people are very different, as well.
Senator Warner. Yes. My one question, though, to both of you,
again trying to look at your competitive field, are your principal do-
mestic competitors unionized? Bausch & Lomb?
Mr. Pascoe. It is my understanding that some of our competitors
have some unionized forces within their factories.
Senator Warner. Thank you. Now Mr. Rampe.
STATEMENT OF DENNIS RAMPE, PRESIDENT, PRECISION
LITHO, SAN DIEGO, CALIFORNIA, ON BEHALF OF PRINTING
INDUSTRIES OF AMERICA, INC., ALEXANDRIA, VIRGINIA
Mr. Rampe. We happen to print washable tattoos, so if you need
any help, let me know.
Ms. GooCH. She has those.
Mr. Rampe. My name is Dennis Rampe. I am president, some-
times janitor and sometimes truck driver of Precision Litho, which
is located in San Diego. It is a commercial printing company. I am
also testifying on behalf of the Printing Industries of America,
which represents 14,000 companies and about 150,000 employees.
On a broader basis, the printing industry has about 1 million em-
ployees with 44,000 firms generating about $100 billion in reve-
nues. And yet, the average size of our printing companies are prob-
ably around 15 employees, so it is the true definition of small busi-
ness.
I founded Precision Litho in June 198 1 with the dream of creat-
ing a company that was focused on meeting or beating the cus-
tomer's expectations. From 1981 through 1988 Precision grew from
5 to 60 employees, generating over $8 million in annual revenues.
As the company grew, it became difficult to manage the rapid
changes that were occurring in the organization and the resulting
employee turmoil that was resulting from the rapid increase in vol-
umes that we were getting.
It became real apparent to me that I needed to develop my entre-
preneurial management style beyond the level that I was at at that
point in time, and that I needed to look to my employees for the
solutions to some of the problems which we had. The only question
I had was how was I going to get that information from the em-
ployees into my office. I do believe that my employees know both
41
the business problems and solutions long before I am even aware
that something is amiss.
The key to getting that information is to provide a safe environ-
ment that they can participate in the problem-solving process and
also see change occur that was a direct result of their involvement
in the process.
Precision's teams were intended to be a tool to improve quality,
safety, efficiency, and job satisfaction. I fully dedicated our com-
pany to making teams an integral part of the operations. To get the
team concept underway, as a small company we spent over
$250,000 in training processes to teach us how to create teams and
generate the information that we needed.
I would like to provide, which I believe is part of the record, to
the Committee a copy of Precision's Vision Statement and Core
Values which is really the road map and the foundation which we
gave the teams and gave our employees. Each one of our employees
is asked to read that agreement and understand it, and they use
that as a road map to empower them to make decisions on the line
without having to go through the hierarchy.
From 1988 to 1991 we assembled teams of employees to deal
with issues ranging from safety to quality to spoilage. These teams
were made up of volunteer employees from all departments that
worked together without management to develop processes and
procedures addressing the issues of concern. In the dynamic busi-
ness environment which we operate in today, it requires that ev-
erybody be rowing the boat in the same direction. The use of em-
ployee teams facilitates the belief that we can accomplish a lot
more working together than as any one individual. It is my view
that if there is better communication, accuracy, coordination of
jobs, and efficiency improves.
Printing is a highly labor intensive industry. Every job is custom
and requires exact and precise information going from department
to department. Through the teams the various departments of the
company became more sensitive to the pressures that each one was
facing, and all of the departments began working better together
to determine where the problems occurred and how they can be
corrected.
While each of the teams had specific goals in mind, the underly-
ing premise behind Precision's team concept was better commu-
nication. Employees want to do a good job, but they are not mind
readers. Employees and management have to work together to
solve problems and enhance productivity. It was my view that
teams would improve trust and mutual respect, resulting in greater
job satisfaction, better service to our customers, and success for the
company.
Unfortunately, I had read an article put out by the San Diego
Employers Association advising me that we could be held legally
liable under the National Labor Relations Act for our team plans.
I did not implement teams in order to avoid an organizing attempt.
In fact, the union organization was the farthest thing from my
mind. I felt we were doing the right thing by committing our com-
pany to cooperate at all levels as a means to achieve success for
employees to company and, most important, our customers.
42
Rather than instantly dismantle the team concept, we gradually
let it die of its own accord by holding meetings less frequently and
putting less emphasis on the teams. There has to be a commitment
from the top for the team concept to work.
Despite trying to maintain some employee problem-solving out-
side the team framework, de-emphasizing the teams has had the
expected result. Communications are not as free as they once were.
When we ask employees for comments and suggestions, they most
likely will tell you what you want to hear, not the right answer.
When we ask employees to participate, there is a tendency to not
give an open line of communication to the people that can make de-
cisions.
It is my view that without a regular ability to build trust
through teams, the confidence between the employees and manage-
ment is a difficult thing to keep going. Mr. Chairman and members
of the Committee, I am here today to ask that Congress pass S. 295
so that companies like mine can continue in that teamwork proc-
ess, of building trust between management and employees, that ul-
timately extrapolates to a happy customer.
[The prepared statement and attachment of Mr. Rampe follow:]
43
(^1 Printin g Industries of America , Inc.
Statement of
Dennis Rampe, President
Precision Litho, San Diego, California
Mr Chairman, members of the Committee, thanJc you for the opportunity to testify on S 295, the
Teamworic for Employees and Management Act. I am Dennis Rampe, President of Precision Litho, a
commercial printing company in the San Diego, California area. I am also testifying on behalf of the Printing
Industries of America, which represents 14,000 printers across the country My company. Precision Litho
currently has about 100 employees and grosses about $17 million annually.
I founded Precision Litho in June of 1981 with the dream of creating a company that was focused
entirely on meeting or beating the customer's expectations. In the early 1980's, most printing firms stressed
their expertise on traditional craftsmanship skills that had dominated the industry for years and had little
regard for meeting and anticipating the needs of the customer.
From 198 1 through 1988, Precision grew from five to sixty employees, generating over $8,000,000 in
annual revenues. As the company grew, it became difficult to manage the rapid changes that were occurring
in the organization and the resulting employee turmoil caused by trying to assirrtilate those changes It became
apparent to me that I needed to develop my management skills beyond my own level of experience The
obvious resource for some of the solutions seemed to be my own employees. The only question was how to
get the information fi'om the employees to my office -- enter the team concept.
I believe my employees know both the business problems and solutions long before I'm even aware
something is amiss The key is providing a safe environment for them to participate in the problem solving
process and the opportunity of seeing change occur that was a direct result of their involvement.
Precision's teams were intended to be the tool to improve quality, safety, efficiency, and job
satisfaction I fijlly dedicated our company to making teams an integral part of our operations To get the
team concept underway, I spent about a quarter of a million dollars on training to implement work place
teams This was a great deal of money for a company as small as Precision Litho, but I felt that over time, the
44
program would reap greater benefits than our initial outlays I would like to provide to the committee a copy
of Precision's Vision Statement and Core Values that were the basis of our team concept.
From 1988 to 1991, we assembled teams of employees to deal with issues ranging fi-om safety to
quality control to spoilage These teams were made up of volunteer employees from all departments that
worked together, without management, to develop processes and procedures addressing the issues of
concern. The dynamic business environment in which we operate today requires everyone to be rowing the
boat in the same direction. The use of employee teams facilitates the belief that we can accomplish much
more working together than we can as individuals.
It is my view that if there is better communication, accuracy, coordination of jobs, and efficiency
improves. Printing is a highly labor intensive industry. Typically, the process starts with sales personnel
working with the customer to determine the parameters for the job. Then it goes to customer service which is
responsible for inside overview of the job. Next, the design team works on design and layout including
determining what type of paper, ink, print, and art should be used Next, press time must be scheduled, and
the job completed Finally, the job is trimmed, bound, packaged, and delivered While these steps vary
depending on the type and size of the printing company, it should be obvious that coordination is paramount
in providing good customer service. Through teams, the various departments of any company become more
sensitive to the pressures others are facing, and all departments work better together to determine where
problems occur and how they can be corrected.
Our safety committee, for example, focused on keeping up to date on safety requirements and finding
appropriate methods to integrate safer equipment and processes in the plant. Typical examples of issues for
the safety committee included chemical handling and layout of the facility to ensure the safest possible
practices. The printing industry is changing rapidly; the committee was an excellent way to ensure that we
were handling materials and inks properly, and that employees were following proper safety and health
procedures
45
While each of the committees had specific goals in mind, the underlying premise behind Precision's
team concept was better communication Generally, employees want to do a good job, but they are not mind-
readers Employees and management must work together to solve problems and enhance productivity It was
my view that teams would improve trust and mutual respect, resulting in greater job satisfaction, better
service to our customers, and success for the company.
Unfortunately, all of that changed when I realized that we could be held legally liable under the
National Labor Relations Act I did not implement teams in order to avoid an organizing attempt In fact,
union organizing was the farthest thing from my mind I thought we were doing the right thing by committing
Precision to cooperation at all levels as a means to achieve success for employees, the company, and our
customers.
Rather than instantly dismantle the team concept, we gradually let it die of its own accord by holding
meetings less fi-equently and putting less emphasis on teams I wanted to maintain as much employee
involvement in decisions and problem solving as I could However, there has to be a commitment fi-om the
top for the team concept to work.
Despite trying to maintain some employee problem solving outside of the team framework,
deemphasizing teams has had the expected result Communications are not as free as they once were When
we ask for employee comments and suggestions, it seems as if there is a hesitancy to offer input, which should
be no surpnse since employees haven't had an opportunity to build the types of ties that developed with the
teams It is my view that without the regular ability to build trust and confidence between employees and
management, there is a natural reticence to speak out for change.
Mr. Chairman, members of the committee, I am here today to ask that Congress pass S 295 so that
companies like mine can fully implement teams in the work place From my own experience, I can state
unequivocally that where teams exist, everyone wins — employees, the business, and customers. While, it
takes commitment and involvement on the part of management and employees to make teams successful,
we're willing to do our part if Congress gives us the tools to do so.
Again, I appreciate the opportunity to testify, and I'll be happy to answer any questions
46
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47
Senator Warner. I thank you very much, it is a valuable con-
tribution and an excellent overall contribution by the panel.
Gentlemen, I am going to remain throughout the hearing. Can
I accommodate either of you to let you lead off the questions?
Senator BURNS. I have just a couple of questions. Until we got
involved in this thing, I was surprised to understand the law. I
guess I have been out of compliance, too, Mr. Budinger, but what
we are trying to do when we passed the Regulatory Flexibility Law
for small business, we are trying to send a message through either
the Small Business Administration or through the different agen-
cies that have to do with regulatory compliance such as OSHA and
EPA. Instead of going into the American commerce community
with the idea of find and fine, to be an advocate for American com-
merce and to work with employers and employees alike to strength-
en the workplace and to bring a new attitude toward employee and
employer relationships.
I was interested in Ms. Gooch's comments. I have a daughter
that graduates medical school next spring, but it didn't keep her
from putting a lizard on her big toe. So it goes beyond 13-years-
old, so just expect that.
But I am wondering why anyone or anybody would oppose the
team concept in a small business where it takes everybody pulling
in the same direction and working on the same end of the wagon
to make it go. Who opposes this?
Senator Warner. Stick around for the next panel. There is a
basis for opposition, but if any of these witnesses wish to address
the question, feel free?
Senator Burns. Does anyone want to respond to that? That is
the only thing that I — ^yes, sir.
Mr. Budinger. I am not sure that this is exactly the response,
but the National Federation of Independent Business, which is
600,000 small businesses, conducted a survey of the membership in
February of this year
Senator Warner. Let me interrupt. My analysis is that institu-
tion is solidly behind that effort. Let us make that clear up front.
Mr. Budinger. Yes, sir. 88 percent of the members voted in favor
of employee involvement.
Senator Bumpers. Mr. Chairman, I apologize. I am also ranking
on Agriculture Appropriations, which is having a hearing this
morning, and I am going to have to leave, but I just want to make
a couple of comments.
No. 1, the first time I ever heard of a team concept was in an
industry in my home State and one of the things that I thoroughly
enjoyed about my years in politics and one of the things I take ad-
vantage of every opportunity is to go through plants. I like to see
developing technology. I like to see what kind of housekeeping. I
can tell you something, you can tell a lot about how productive a
plant is and whether they are making money or not and how well
they are doing just by housekeeping. That is one of the first things
I look for.
But the first time I saw the team concept, I was told that that
company had watched the Japanese do the team concept. That is
where they got the idea. And that was early on.
48
Now I have read this bill and it probably could stand some clean-
ing up. Nobody wants to antagonize labor, nobody wants to pass a
bill that is anti-labor. I am not going to vote for anything that I
feel is anti-labor, nor is Senator Warner or Senator Burns. And
perhaps this language can be cleaned up to address some of their
concerns.
But the idea of limiting the ability of an industry who is in a
global economy and trying to compete, improve efficiencies, and
production and so on, trying to limit that because of some per-
ceived — what shall I say — fright over alienating labor on this, I
would like for labor to sit down with the authors of this bill, the
people on this Committee and the Labor Committee. This thing
passed out of the Committee yesterday, the Labor Committee, on
a purely partisan vote and that is really sort of unfortunate.
As I say, if there is something in here that really antagonizes
them and it is a legitimate antagonization, then we ought to try
to address that. But the team concept in places like Eastman
Kodak in my State works extremely well. It has improved produc-
tivity.
Your testimony today, Ms. Gooch especially, you did not say it
but really one of the things I am conscious of because I have a
daughter and two daughters-in-law, and I am telling you anybody
that does not understand the unique problems that women, and
particularly mothers, have in the workplace, just is not paying at-
tention.
These teams can often take care of things, and help take care of
child care problems that people have. And maybe even the times
they come to work and go home. When I practiced law in the town
of Charleston, Arkansas, population 1,000 — and you are being ad-
dressed right now by the entire South Franklin County Bar Asso-
ciation — I had one secretary. That was the extent of my personnel
problems. I practiced alone.
But she had a daughter in school. She came at 7:30 a.m., when
she dropped her child off, and she went home at 3:30 p.m. when
her child got off. Now that is just a small town solution to a mam-
moth national problem.
I guess in closing, Mr. Chairman, I just want to say that this
whole thing makes such eminent good sense. But let me ask you,
Mr. McCammon, you are a team leader?
Mr. McCammon. Yes, sir.
Senator Bumpers. Who appointed you?
Mr. McCammon. I was appointed by the management of Univer-
sal Dynamics. Originally I am a welder. I am a production welder
and a fabricator, and I am now the team leader of mechanical as-
sembly.
Now after I arrived at the team, it was my responsibility to go
ahead and integrate myself into the team. One of the things that
we stressed in our communications is that the work teams at work
are the same as personal and family relationships and they require
the same maintenance and upkeep. By approaching it with that at-
titude, we have had the greatest success.
Senator Bumpers. In your opinion, would it eliminate some of
the fears and concerns that labor has if teams were chosen? First
of all, I have no quarrel with an area of productivity, a team rep-
49
resenting a particular area of productivity or some other legitimate
area of concern.
Senator Warner. Safety.
Senator Bumpers. Safety, productivity, efficiency, housekeeping.
Mr. McCammon. Understand, gentlemen, that one of the greatest
things about employee participation is it is like water. It is going
to find its own level at each individual company. At our company,
we actually zoomed right past a lot of levels and went straight to
self-directed teams.
Now we have our open door policy, as I mentioned earlier. If I
do not like something that has happened, or the lowest ranking
person as an apprentice on my crew does not like something or has
a concern, he can go directly to the president of our company,
knock on his door, and if the gentleman has time he will talk to
him right then, and they will discuss the problem.
Likewise, if it concerns engineering, drafting or some other seg-
ment of the company, he can go directly to them. He does not have
to seek my permission and I do not grill them or question them
when they come back because I know that they are out doing their
job. And this particular attitude, and self-directed teams, when I
was — believe me — working at the shipyard was totally unheard of,
and you did not do this.
One of the important things about changing the law is it creates
an air of honesty that does not exist now. In other words, section
8(a)(2) not only hinders those people that want to make a change,
but it also acts as a shield for those that do not want to make a
change at all. They use it for an excuse.
Most of the reactions that I get from people at work are, when
I tell them about 8(a)(2) and what it represents, is they go what?
Senator Bumpers. Have you ever belonged to a union?
Mr. McCammon. I belonged to Boilermakers Union out of
Pascagoula, Mississippi, and I was a union steward. I had an excel-
lent record of signing people up, as many as 40 or 50 a year. We
had more than 9,000 metal tradesworkers at that shipyard at the
time.
Senator Bumpers. Let me ask you this, if you know the answer
to this. Perhaps Ms. Gooch, I should direct this to you, as you may
or may not know the answer. Mr. Budinger, you may know the an-
swer. In companies like Chrysler, Ford, and General Motors, for ex-
ample, where they use the team concept but it is usually done
through the union, and they have been using this team concept for
a long time, is that — incidentally, I might say that that is a pretty
good recommendation for the team concept.
Mr. McCammon. It certainly is.
Senator Bumpers. What you get down to, though, is the question
of who runs the team. Why would it not be better, and the question
I started to ask you a moment ago, would it not alleviate the con-
cerns of labor, for example, if management had some discretion
about the area the team was going to operate in. In other words,
if you have — you know, a lot of companies, a lot of industrial
plants, have a particular area where they do one function, another
area does another function, and that is usually the way they set
the teams up.
50
Why would it not be better to establish the team and let the
team pick the team leader?
Mr. McCammon. ok, in reality, regardless of what the company
is, and the reason why this should be left open and they should be
allowed to seek their own level, is even though I was appointed,
this last month I did something unheard of and took a month's va-
cation and I turned the team over to my assistant team leader. And
when I arrived back, everything ran very smoothly. They hardly
noticed I was gone, which gets a little scary sometimes.
Senator Bumpers. You ought to be in politics.
Mr. McCammon. However, the most important thing was when
I asked them that since they had felt the responsibility and did the
job if they would like to take more responsibility or if they would
like to do anymore to run the team, just to let me know and I
would be glad to relinquish that to them, because sometimes it is
nice to just go turn nuts and bolts for a change.
So what we have, on our team, is our team members decide what
I do. The team is the customer, I am the vendor. I supply them and
I service them. And if you establish a self-directed team and you
teach your team leaders this attitude, it is not necessary to have
somebody vote them in or pick somebody to be a team leader be-
cause sometimes personally, and myself I am just as bad, I do not
make the right decision because there is too much personal influ-
ence involved or personality problems. So sometimes it is important
that management may make that decision.
However, the teams are allowed, through communications with
management, to make adjustments in the team if necessary.
Senator Bumpers. Mr. Chairman, you have been very generous
with the time.
Mr. McCammon. I would like to mention one thing about the
union teams. Having been a union member and now currently I am
in a non-union atmosphere, and I choose to be there, and the only
reason is there are individuals who enjoy and like having people
represent them and negotiate for them. The thing that I particu-
larly find pleasing about where I am at is that I like to negotiate
for myself and I like to represent myself.
Right now, the way the law is written, I have to join a union to
get that representation. And if I choose not to, I do not have the
capability to do that anjmnore. I think that I should have the capa-
bility to represent myself and negotiate for myself. Thank you.
Senator Warner. If I might say, before you depart my good
friend, you and I have worked on many, many issues together here
in the tJ.S. Senate and I commit to you now to try and work, if it
is possible, to reach a common solution on this legislation. You
have a reputation in the Senate of doing just that.
It was very encouraging, your comments here this morning, both
to the witnesses and your general comments about this legislation,
because I detect clearly, in your own mind, a need for some reform
in this area. And the recognition that this was enacted in the 1930s
and is totally outdated in today's environment, which was so mag-
nificently portrayed by Ms. Gooch.
Senator Bumpers. Mr. Chairman, let me assure the next panel,
as I am not going to be able to stay, I will read their testimony
very carefully because I know they have a viewpoint and I want
51
that viewpoint to be expressed. I want to study it and I want to
see if we can take both viewpoints.
Senator Waener. To work together, surely, with the Chairman
of this Committee and with the Labor Committee. I am glad to
take an active role in that.
Mr. McCammon. May I interrupt for just one moment, please?
Any time that you would like to come over to Woodbridge, Virginia,
and tour our plant, come right ahead. We will be glad to show you
around.
Senator Bumpers. We have teams and plants all over my State
and they vote there. They do not vote for me in Virginia. I appre-
ciate the invitation, Mr. McCammon.
Senator Warner. Thank you. I like to defer to my colleagues
here because they have a series of other commitments this morning
and I wanted to dedicate my entire morning to this very important
hearing, so I deferred to them.
Mr. McCammon, while you were talking, tell us a little bit about
the growth in your company, and the extent that you feel that that
growth is attributable to the team concept.
Mr. McCammon. When I first came to work, our gross sales for
the year — and we have a company meeting every quarter and up
goes the gross sales, up goes whether you made your goal or not
regardless of department. We were operating in the area of about
$1.1 million to $1.2 million gross. Over the last 4 years, by intro-
ducing just-in-time manufacturing and the formation of teams, we
have increased that to our goal last year was $2,2 million and we
achieved that goal.
So yes, there has been a tremendous growth. We increased our
business, I believe, by almost 40 percent. We have increased our
number of employees. We have expanded departments. The great-
est asset, though, is in the cross-training. We do a lot more cross-
training now so that we can be much more efficient where it is nec-
essary.
I am sure that if — we are an international company. We are
owned by Mann & Hummel now. We participate in the European
market and in the Asian market right now. I am sure if Donald
Rainville was here, he would have a lot more statistics but he
would back up the fact that the team and employee participation
system that we have brought into play — and a lot of credit goes to
what we call our green sheet system and the open access that we
have — has been at least 95 percent responsible for a lot of the in-
creases in our capabilities to produce products without having to
expand the work force tremendously or expand the facility tremen-
dously.
Senator Warner. Thank you. You said you wish someone was
here. I am going to see if it is possible that we could get the video-
tape of this hearing to provide each of you, so you can take it back
and show it to the employees, as to how well you represented their
interest. I am going to ask the Committee staff to look into that.
Ms. Gooch, expensive and painful injuries in the workplace. Has
this team effort helped to contribute to reduce that problem?
Ms. Gooch. Definitely. It is very hard to sit here and project
costs about going to the 7-day work shift, and if you are familiar
with repetitive trauma, it occurs over time and is very expensive.
52
more in rehab and time off from work than the actual injury itself
It creates a great deal of pain throughout a lifetime if not mon-
itored.
From their involvement, they really helped pinpoint the issue be-
fore we went to the 12-hour operation. They definitely came up
with training solutions and alternatives that were economical for
us. So if you asked me how many thousands of dollars did you
save, that would be hard for me to guess because the teams worked
so effectively, we were so proactive, that we have not occurred
those injuries.
Senator Warner. That is very fortunate.
Mr. Rampe, it is my understanding that you decided at some
point that you could no longer use the teams; is that correct?
Mr. Rampe. Correct.
Senator Warner. What was the impact, in your judgment, on the
company's business?
Mr. Rampe. We still use a lot of the management styles, profes-
sional management styles, that we learned during that term. I
guess we get the job done. I would kind of equate it to shaving with
a dull razor as opposed to a sharp razor. You get the job done, but
there is a little more pain in the process.
As we have grown, which our volume has continued to grow in
the 20 to 30 percent per year basis, you just have more problems
with getting resolutions to issues of hours. Our mod rates for our
workers comp rates have gone up since we have not employed the
team processes. There are a lot of little communication issues and
our organization, what we lacked was interdepartment communica-
tion and problem-solving and the teams gave us that interdepart-
ment information that allowed the jobs to flow through in the just-
in-time process, where we are doing jobs anywhere from 2 to 5
days.
We are now beginning to see, in our company, where some of our
customers were buying printing offshore in either Japan or in Asia,
we are now starting to print brochures, catalogs, spec sheets for
Japanese companies that are being printed in our shop and
shipped back to Japan. I view that as a tremendous opportunity for
small business, as long as we keep ahead of that curve. I think the
teams are a great way to keep ahead of that production process.
Senator Warner. What would be the financial and competitive
impact if a company like Precision Litho were to be the focus of an
NLRB inquiry?
Mr. Rampe. Back at that point in time, we could not afford — we
would be out of business. We do not have a legal staff We would
just be out of business, and the risks were not worth the benefits,
in my view, having all my eggs in one basket as a small, family
business.
Senator Warner. Well, that is pretty clear.
Mr. Budinger, you talked in your testimony about modifications
to the TEAM Act and the importance of maintaining flexibility for
employees to provide input into the workplace. Do you have any
suggestions on changes that could be made to move the legislation
we have before us?
Mr. Budinger. Well, I happen to be a Democrat, and in talking
to some of my
53
Senator Warner. Well, I think we see now a little daylight com-
ing into this partisanship here with the remarks that Senator
Bumpers — I have known him and worked with him. We have
teamed up on a number of things.
Mr. BUDINGER. I hope so. I noticed that an awful lot of the Demo-
crats, even elected Democrats, that I talked to are very, very sym-
pathetic to the TEAM Act. Their concern seems to be that they feel
they need to demonstrate that the bill is not a union-busting bill
and that it will not revive the opportunities for sham unions to be
reinstituted. Those of us in the workplace think that that is pretty
unlikely for market reasons, but they feel that something needs to
be in the bill to sort of pay homage to that.
One of the suggestions that comes up repeatedly is a notice pro-
vision. The suggestion is that the bill could contain a requirement
that anyone who would use the bill as protection would have to
place a notice on their bulletin board that indicates that employees
still have the right, in spite of the teams, still have the right to be
represented by a union if they wish.
I would have no objection to doing something like that.
Senator Warner. Mr. Pascoe, I think one of the best ways that
workers and the American public can view this problem is in the
relationship of the time that this law was put on the books: 1938.
In that timeframe, America was not on the high tech edge and
indeed, at the advent of World War II we were way behind. You
need only look at the equipment that the U.S. military had at the
outbreak of World War II on Pearl Harbor Day, when we had
broomsticks and mock tanks and the like.
Today we are on the cutting edge of high tech. I am proud that
Virginia is one of the fastest growing regions for high tech in Amer-
ica. It is so different. And the high tech employee, with no dis-
respect to the employee of the 1930s, but he or she is a different
person; am I not correct?
Mr. Pascoe. That is correct.
Senator Warner. Do you not try and stimulate their thought
processes and their intelligence and every other way, to learn from
them and their experiences. This is unlike the assembly line
worker in the 1930s or the heavy industrial plants which were the
dominant industry in America at the time this went on the books.
Mr. Pascoe. One of the challenges that we face, as any business
owner small or large, is the fact that the working adult population
acquires most of their reeducation in the work environment. As we
move to more high tech equipment, or a greater emphasis on high
technology, the first place they are going to look for that education
is in the work environment.
The most effective means that we can provide that training is so-
liciting from the employees, what skills they feel are needed to ac-
quire. We cannot only mandate what they are required to know,
but we need to solicit their input on what best suits their needs
to understand the technology of today.
I feel the burden has been placed on the small business or any
business', shoulders to educate their work force from within their
business. I see this as one of the major challenges we face in be-
coming more competitive. When it comes to a small business, the
54
only resources we can apply from a cost effectiveness perspective
are the resources we have within our companies.
Senator Warner. I thank this panel very much. I have other
questions but we must move on in this area. It has been a superb
series of testimony by each of you and I thank you very, very much.
We will now have the next panel. We have with us Mr. Potter,
president. Employment Policy Foundation; Mr. Roger King, partner
in Jones, Day, a nationally known law firm on behalf of the Society
for Human Resource Management; Mr. Rundle, senior extension
associate at Cornell University; and Mr. Owen Herrnstadt, Legisla-
tive Counsel, International Association of Machinists.
I think in fairness, I would like to start with Mr. Herrnstadt fol-
lowed by Mr. Rundle, if you are prepared and ready to go. I noticed
out of the comer of my eye that you paid careful attention and took
a lot of notes.
STATEMENT OF OWEN E. HERRNSTADT, LEGISLATIVE COUN-
SEL, INTERNATIONAL ASSOCIATION OF MACHINISTS AND
AEROSPACE WORKERS, UPPER MARLBORO, MARYLAND
Mr. Herrnstadt. My name is Owen Herrnstadt and I am Legis-
lative Counsel for the International Association of Machinists and
Aerospace Workers.
On behalf of the lAM, I want to thank you for the opportunity
to participate in this morning's hearing. The I AM, with over half
a million members, represents employees who work in a variety of
industries, including aerospace manufacturing, transportation,
shipbuilding and repair, defense, and woodworking.
Senator Warner. Of course, this Committee is focusing primarily
on industrial plants with 500 or less employees. Undoubtedly, that
embraces a number of your members, does it not? Could you give
us a statistic?
Mr. Herrnstadt. I do not have a precise statistic for you at this
time. Senator, but I can supply you with one. Rest assured, many
of the bargaining units that we do represent are located at facilities
of certainly less than 500 employees.
Senator Warner. I think it is important to put that in the
record. Thank you very much.
[In further response, Mr. Herrnstadt submitted the following:]
As I explained during the hearing, the LAM represents thousands of workers who
are employed by small businesses. In fact, our Research Department estimates that
over 80 percent of our collective bargaining agreements are with employers who em-
ploy less than 500 employees.
Mr. Herrnstadt. The lAM has been fighting for legitimate and
effective employee involvement in the workplace for years. We
know that in order for such programs to succeed, management
must respect their workers and their workers democratically se-
lected representatives. We also know that employers must acknowl-
edge and accept the concept of collective bargaining. One way to
achieve real employee involvement is to strengthen our Nation's
labor laws, which were meant to protect workers' rights.
Sadly, Congress is contemplating to do just the opposite. As you
mentioned. Senator, just yesterday the Labor and Human Re-
sources Committee passed out of Committee S. 295, the so-called
Teamwork for Employees and Management Act.
55
The TEAM Act has little to do with enhancing workplace co-
operation and everything to do with eviscerating the National
Labor Relations Act's prohibition against company control over
labor organizations, referred to as section 8(a)(2), also known as
the heart and soul of the Act. Without the protection section 8(a)(2)
provides, employers will once again be permitted to utilize the de-
ceptive practice of creating decoy labor organizations to prevent
workers from forming their own unions.
Before the NLRA went into effect, these decoys were forced on
employees who had little or no say about how fellow employees
were selected to represent them. They were used to control the is-
sues considered by employee involvement committees, let alone the
final disposition of the issues. Management also retained the power
to dissolve the entire program at its discretion.
Some proponents of legislation, which would eliminate the prohi-
bition of company unions, wrongly claim that because times have
changed since the Act was passed in the 1930s the purpose of sec-
tion 8(a)(2) no longer exists. We heard this argument from the first
panel.
The need to ensure that workers' voices are heard through par-
ticipation in independent labor organizations and not muted by
company dominated labor organizations is more important than
ever. Indeed, thousands of unfair labor practice charges are filed
every year. In 1994, more than 26,000 violations were alleged
against employers. A majority of these charges involved illegal dis-
charges and other forms of discrimination against employees.
While thousands of unfair labor practices occur every year over
employers discriminating against workers who attempt to assert
their rights under the National Labor Relations Act, relatively few
cases have been filed regarding section 8(a)(2). Given these statis-
tics, congressional focus should be on taking action to strengthen,
not weaken, workers' rights.
As in the days before the Act was passed, the creation of com-
pany dominated labor organizations is one method that employers
are currently using to usurp workers' desires to form their own or-
ganizations.
Two cases serve as good examples of how employers are still
using company dominated unions intentionally or unintentionally
to thwart workers' opportunities for independent labor organiza-
tions, Electromation and EFCO. Ironically, these cases are still
cited by some representatives of the business community for the
proposition that today's employee participation programs are dif-
ferent from the programs of yesterday. Evidently, for many critics
of section 8(a)(2), the deceptive practices of yesterday have become
today's model employee participation programs.
Critics also wrongly claim that the current law as written and
interpreted by the NLRB sets up a barrier to innovative forms of
employee-management cooperation. Their sweeping statements
raise questions about their possible interpretations of the law. For
example, one critic has claimed that current law has instructed
them to "slam the door on our employees and to tell them they can-
not participate in decisions about their economic future." Another
described section 8(a)(2) as somehow promoting "suspicion, hatred,
and adversarial relationships."
56
Given these highly alarmist and questionable interpretations, it
is not all that surprising that some small business owners may be
concerned about the legality of their employee participation pro-
grams. Unfortunately, this cloud of uncertainty over the application
of section 8(a)(2) may be created by those who would like to remove
the protections of 8(a)(2) from the law, not the law itself.
Current law does not impede or chill efforts at legitimate labor
management cooperation. On the contrary, it fosters participation
by giving workers an opportunity to have the real voice at the
workplace that some so-called advocates of employee participation
programs claim is necessary for today's business to meet the chal-
lenges of the future.
Section 8(a)(2)'s prohibition against company dominated unions
is as important as ever. To remove the prohibition for the purpose
of fostering labor management cooperation is misguided. How can
you have real cooperation when one party can dominate and control
the other? If an employee cannot freely decide who his or her rep-
resentative is, how will they be able to freely voice their ideas on
making the company more competitive?
As a cornerstone upon which other workers' rights of the NLRA
rest, the prohibition provided under section 8(a)(2) must not be re-
moved. Without it, nothing will prevent companies from creating
their own organizations as a scheme to chill workers' desires to
form their own unions.
As I listened to the first panel, I also wrote a few comments
which hopefully will clarify some of the issues that were raised.
First, with regards to the clarity of the law. The NLRB has re-
cently issued several decisions in this area. It is our position the
law was clear before. It certainly is clear now.
Second, the overwhelming fear that was indicated by the first
panel that the NLRB will somehow swoop down on thousands of
unsuspecting companies and find them in violation of section
8(a)(2) is unfounded. In the purposes and findings of S. 295 itself,
it is claimed that there are over 30,000 employee involvement pro-
grams going on in this country today. I cannot vouch for those sta-
tistics, but at the same time that thousands of these programs are
in effect, the 1994 annual report of the NLRB states, that there
were only 11 formal board decisions rendered on section 8(a)(2)
that year. Given this low number, it does not seem to me that the
threat is all that great.
The third issue deals with if an 8(a)(2) violation is found. In most
cases, the remedy is merely disestablishment of the Committee and
the posting of a notice. We are not talking about things like puni-
tive damages here. We are only talking about a remedy of make
whole relief.
Another issue deals with how we have to gear up for a global
market economy. It seems to us, at the lAM at least, that that
means that workers need to have a more important voice in the
workplace, as downsizing takes place, as plant closings, and
outsourcing increasingly occur. It seems like if employees are to be
truly involved in the workplace, their powers should be not weak-
ened, particularly at this important juncture. Thank you.
[The prepared statement of Mr. Herrnstadt follows:]
57
STATEMENT OF OWEN E. HERRNSTADT
LEGISLATIVE COUNSEL
INTERNATIONAL ASSOCL\TION OF MACHINISTS
AND AEROSPACE WORKERS
BEFORE THE UNITED STATES SENATE COMMITTEE
ON SMALL BUSINESS
HEARING ON EMPLOYEE INVOLVEMENT
APRIL 18, 1996
Mr. Chairman and Members of the Committee:
On behalf of the International Association of Machinists and Aerospace Workers (lAM), I
want to thank you for the opportunity to participate in this morning's hearing The I AM with
over half a million members represents employees who work in a variety of industries, including,
aerospace, manufacturing, transportation, ship building and repair, defense, and woodworking.
The lAM has been fighting for legitimate and effective employee involvement in the
workplace for years We know that in order for such programs to succeed, management must
respect their workers and their workers democratically selected representatives. We also know
that employers must acknowledge and accept the concept of collective bargaining. One way to
achieve real employee involvement is to strengthen our Nation's labor laws which were meant to
protect workers rights Sadly, Congress is contemplating to do just the opposite as it begins
consideration of S 295, the so-called Teamwork for Employees and Management ("TEAM') Act.
The TEAM Act has little to do with enhancing workplace cooperation and enabling
companies to increase productivity and everything to do with eviscerating the National Labor
Relations Act's prohibition against company control over labor organizations, referred to as
Section 8(a)(2) Without the protection Section 8(a)(2) provides, employers will once again be
permitted to utilize the deceptive practice of creating "decoy" labor organizations to prevent their
workers fi"om forming their own unions.
Before the NLRA went into eflFect, these decoys were forced on employees who had little
or no say about how fellow employees were selected to represent them. They were used to
control the issues considered by employee involvement committees, let alone the final disposition
of the issues Management also retained the power to dissolve the entire program at its
discretion
S.295 would make it possible for management to once again use this deceptive practice
returning us to the days when employer dominated labor organizations were widespread and bred
worker dissatisfaction, fiiistration, and hostility - the true barriers of effective employee
involvement.
58
After rejecting attempts to greatly modify Section 8(aX2) in the 1930's and 1940's, Congress
is now revisiting the merits of the NLRA's prohibition against company-dominated labor
organizations.' The arguments for removing the prohibition are similar to those that were made
before.
Proponents of legislation which would eliminate the prohibition of company unions wrongly
claim that because times have changed since the Act was passed in the 1930's, the purpose of
Section 8(a)(2) no longer exists.
The need to ensure that workers' voices are heard through participation in independent labor
organizations and not muted by company-dominated labor organizations is more important than
ever. While technology has undergone a great transformation and markets have expanded to the
world, many employers' relationships with their employees could stand considerable
improvement. Although there are situations where management and labor relationships are based
on legitimate cooperation by each party taking a seat at the collective bargaining table to discuss
matters of mutual interest, there are also far too many situations where workers' rights are being
violated with impunity.
Indeed, thousands of unfair labor practice charges are filed every year. In 1994, more than
26,000 violations were alleged against employers.^ A majority of these charges involved illegal
discharges and other forms of discrimination against employees. This explains why the amount of
back pay recovered by discriminates remains so high ~ over $79 million was levied against NLRA
violators in 1994.' While thousands of unfair labor practices occur every year over employers
discriminating against workers who attempt to assert their rights under the NLRA, relatively few
cases have been filed regarding Section 8(a)(2). Given these statistics, Congressional focus should
be on taking action to strengthen not weaken workers rights
Nor is S. 295 needed to make US. companies more competitive. Plenty of profitable
companies have real and legitimate employee involvement programs that do not run afoul of the
law. They do not need an exemption from Section 8(a)(2) to successfiiUy compete in the global
economy.
'On September 27, 1995, the US. House of Representatives passed the TEAM Work for
Employees and Management Act of 1995, H.R. 743. The US. Senate Labor and Human
Resources Committee was scheduled to consider a comparable bill S.295, yesterday.
^Annual Report of the National Labor Relations Board, 1994, p. 6.
'Annual Report of the National Labor Relations Board, 1994, p. 14.
59
The fact that U.S. industry competes in a globa] market may actually make labor relations
more stressful.* As employers desperately attempt to compete with companies based in other
countries that have much lower living standards and, of course, the lower labor costs that
accompany such poor conditions, employers in this country are less likely to give employees more
of a real voice in the workplace. The fact that more and more of today's corporations have little
allegiance to the community only underscores the need to strengthen laws that protect real
employee involvement in the workplace, not remove protections like the prohibition against
company-dominated unions
As in the days before the Act was passed, the creation of company-dominated labor
organizations is one method that employers are currently using to usurp workers desires to form
their own organizations
Two cases serve as good examples of how employers are still using company-dominated
unions to thwart workers' opportunities for independent labor organizations: Electromation ' and
EFCQ * Ironically, these cases are constantly cited by some representatives of the business
community for the proposition that today's employee participation programs are different from
the programs of yesterday. Evidently, for many critics of Section 8(a)(2), the deceptive practices
of yesterday have become today's model employee participation programs.
Critics also wrongly claim that the current law as written and interpreted by the NLRB sets
up a barrier to innovative forms of employee-management cooperation. Their sweeping
statements raise questions about their possible interpretations of the law. For example, one critic
claimed that current law has instructed them "to slam the door on our employees and to tell them
they can not participate in decisions about their economic future"' Another described Section
8(a)(2) as somehow promoting " suspicion, hatred, and adversarial relationships".'
Given these highly alarmist and questionable interpretations, it is not all that surprising that
some small business owners are concerned about the legality of their employee participation
programs Unfortunately, the "cloud of uncertainty" over the application of Section 8(a)(2) may
*See U.S. House of Representatives, Committee on Economic and Educational
Opportunities, Subcommittee on Employer-Employee Relations, Hearing on Removing
Impediments to Employee Participation/ Electromation , 2/8/95.
' Electromation- 309 NLRB 990 (1992), affiL, 35 F2d 1 MS (7th Cir. 1994).
*EECQ, Case No. 17-CA-16911, AUD #23-95, 3/7/95.
^U.S. Senate, Committee on Labor and Human Resources, Hearing on S.295, 2/9/96.
*U.S House of Representatives, Committee on Economic and Educational Opportunities,
Hearing on TEAM, 5/1 1/95.
60
have been created by those who want to remove the protections of Section 8(a)(2) from the law—
not the law itself
Current law does not impede or "chill" efforts at legitimate labor management cooperation.
On the contrary, it fosters participation by giving workers an opportunity to have the real voice at
the workplace that some so-called advocates of employee participation programs claim is
necessary for today's business' to meet the challenges of the future. Af^er all, real employee
involvement is one that is independent and free from employer domination or interference.
Conclusion
Questions that are being asked about the necessity of Section 8(a)(2) today are practically the
same questions that were asked over sixty years ago when the Act was initially debated. They are
also the same questions that were asked when the Act was amended in the 1940s. The answers to
them are still the same.
Section 8(a)(2)'s prohibition against company-dominated unions is as important as ever. To
remove this prohibition for the purpose of fostering labor management cooperation is misguided.
How can you have real cooperation when one party can dominate and control the other?
If an employee cannot freely decide who his or her representative is, how will they be able to
freely voice their ideas on making their company more competitive?
As a cornerstone upon which other workers' rights of the NLRA rest, the prohibition
provided under Section 8(a)(2) must not be removed Without it, nothing will prevent companies
from creating their own labor organizations as a scheme to "chill" workers desires to form their
own unions For anyone who believes that democracy in the workplace should continue to be the
goal of our national labor policy. Section 8(a)(2) is one barrier that must not be torn down.
'See, Hearing on S.295.
61
Senator Warner. I would just like to have a little dialog with
you for a moment, because you are obviously a very knowledgeable
person in this field.
You saw the reaction of my colleague, Senator Bumpers, to this
testimony. I have worked with him here these many years in the
Senate. He makes clear that he does not want, in any way, to in-
jure the ability of organized labor to do its mission, an important
mission, in this country.
But yet, I was struck by his candid reaction to this testimony,
particularly in the change of environment between 1938 and 1996.
I do not get that same flavor of feeling after listening carefully to
your testimony. Do you not think that when this law was put on
the books we had a certain industrial base and a certain worth
ethic and ordering of the workplace that is no longer there? Par-
ticularly in the high tech industries that we talked about today?
Mr. Herrnstadt. Certainly, Senator, times have very much
changed. Technology has transformed this country greatly since the
1930s. I do not think anybody would dispute that.
There also have been many, many innovative employee involve-
ment programs that have occurred. There are companies that have
employee involvement programs that do not violate the law. Those
are companies that do not need S. 295 to increase their productiv-
ity, to make themselves more competitive.
The real issue here is whether or not workers will be given more
power to engage in collective bargaining which, in itself, is a highly
sophisticated form of cooperation. For labor and management to sit
at a table and exchange ideas on wages, hours, and working condi-
tions is truly one of the most sophisticated forms of cooperation.
This concept was recognized in the 1930s and is a concept that is
as important today as it was back then.
Senator Warner. Let us take one thing that is clearly under-
standable; safety issues. Do you think that this is an area in which
there could be some relief?
Mr. Herrnstadt. I think safety is, obviously, an extremely im-
portant area, in terms of a condition of employment. That is why
it is so important that employees who engage in dealing with an
employer over safety issues have a real voice that is one, but that
is not totally dominated by what a company has to say over safety
issues. Real power, a real voice, and real independent representa-
tion to raise issues over these very important ideas.
S. 295 would give employer's the ability to select which employ-
ees would serve on safety committees, decide what safety issues are
at stake, and to decide what and how those issues are to be re-
solved. If the company does not like the way the Committee deals
with it, the company can dissolve it. That is the true danger of S.
295.
Senator Warner. In the past 2 weeks, I have traveled exten-
sively in my State, as I am sure most here in the Senate have
done. But I concentrated on industrial facilities and other areas of
manufacturing and agriculture where I have had some direct in-
volvement to try and preserve the jobs we have in our State and
largely preserve it in the face of this growing global economy and
world competition.
25-436 - 96 - 3
62
Much of the world, particularly the Asian economies, does not
have the inhibition that we are trying to remove by this very bill
that is before this Committee this morning. I just think that if we
are going to enable our economic base to compete globally, we have
got to have a framework of laws that will likewise compete glob-
ally. Do you have any thought of the global market that has
changed considerably since 1938?
Mr. Herrnstadt. Absolutely and I think that is another reason
why we have to be very careful about weakening workers' rights
when they deal with an employer on these important decisions and
make sure that employees have independent representation on
these very, very highly technical issues.
In the 1930s, when Senator Wagner was speaking about the Act,
he emphasized how important it was for an employee to have an
independent representative, somebody who is not subservient and
beholden to the employer, to raise important issues dealing with
wages, hours, and/or working conditions. Just like an employer can
go out and hire a lawyer, a CPA, an accountant, or other people
to help them with their situations as well.
Senator Warner. On your last point, hiring those employees is
a cost to the company and these companies are struggling, particu-
larly in the small business area. They do not have quite the cash
to go out and hire all these folks. That is the difficulty. I will re-
turn to your line of testimony and we will have Mr. Rundle now.
STATEMENT OF JAMES R. RUNDLE, SENIOR EXTENSION ASSO-
CIATE, THE SCHOOL OF INDUSTRIAL AND LABOR RELA-
TIONS, CORNELL UNIVERSITY, ITHACA, NEW YORK
Mr. Rundle. Thank you. My name is Jim Rundle. I am with the
School of Industrial and Labor Relations at Cornell University. I
would like to thank the Chairman and the members of this Com-
mittee for the opportunity to address the TEAM Act and the evi-
dence which bears upon it.
A few years ago I became intrigued by a contradiction between
media accounts of the Electromation case and the actual facts of
that case. It was portrayed as an example of an antiquated law
interfering with the efforts of American business to meet foreign
competition and enable their employees to contribute their best to
the firm. But this turned out to be hype that had nothing to do
with the actual facts of the case.
So I wondered, why did not employers make an issue out of other
cases that might give more credence to their claims? So I examined
every single case from 1972 to 1993, when I did the study, in which
the National Labor Relations Board had actually disestablished an
employee involvement committee. What I found was that the Na-
tional Labor Relations Board had 58 cases of that nature. In 53 of
those cases — I want to repeat this — in 53 out of the 58 cases, the
employers had also violated workers' rights in other ways.
So the same employers who were asking employees please give
us your input were also found guilty of illegally interrogating em-
ployees who wanted to organize a union, firing union supporters,
illegally threatening to shut down the facility, illegal surveillance,
illegally soliciting grievances, making promises, and granting im-
provements to gain votes in a union election.
63
Furthermore, not one of the 58 cases contained any evidence that
the committees in question had actually been involved in improving
the productivity, quality of the product or service, or that the em-
powered employees in any way constituted the new forms of worker
organizations considered to be so important.
The TEAM Act would allow employers to meet with hand-picked
employee representatives and to engage in what would amount to
bargaining in all but name. It is a contradiction for proponents of
the TEAM Act to claim they want to empower employees when
their proposal for doing so would enable employers to dictate the
entire structure of interaction not only between the employees and
management, but between the employees themselves.
The Senators know that the rules of participation and decision-
making are very important. They know that how they become rep-
resentatives of certain groups are very important. But you also
know you cannot be fired for attempting to exert legitimate influ-
ence.
Potential for manipulating a non-union employee organization
controlled by the employer is enormous. The Senators should not
allow employers to impose upon employees systems of representa-
tion and vulnerabilities to manipulation that you know, from your
own understanding process, to be pernicious.
Congress has also established democratic rules that must be fol-
lowed by labor organizations under the Landrum-Griffm Act. The
definition of a labor organization, under the Landrum-Griffin Act,
is the same in the definition in the National Labor Relations Act.
So any that are suspect under section 8(a)(2) must also meet these
democracy requirements.
So how many employee involvement programs would meet them?
And if they do not, then if the TEAM Act passes, employee involve-
ment committees could still be challenged under the Landrum-Grif-
fin Act. So what is next?
Will employer organizations pushing for the TEAM Act then de-
mand that you pass a new law amending Landrum-Griffin? And if
so, what will that law say? That when employees create their own
organizations the Federal Government will require them to be
democratic but when employers create organizations for the em-
ployees they will not be required? That would be an astonishing
double standard, and it clearly reveals the road down which TEAM
Act proponents are leading you.
In a Cornell Law School symposium on the legal status of em-
ployee involvement programs in 1994, the attorney representing
Electromation on appeal asked what is the employer supposed to
do if employees come to him with complaints, just ignore them? I
told them, well the employer could simply say do you have any rep-
resentatives? We would be happy to meet with them. He thanked
me and told me it was a good idea.
Employees do not have to have a union in order to form an orga-
nization and meet with an employer. This is an important point.
It is not just two choices, union or no union. If employers were to
respect the need of employees to meet by themselves and to run
their own organizations, which is surely the only way that it is
truly empowering, and to be free of threats, then they will find that
64
they can work with employees in a constructive way and they will
not run afoul of the law because they will not be dominating them.
Additionally, and particularly relevant for small business, there
is no legal problem if employers meet with a committee of the
whole — we heard an example of that from Mr. Budinger — that is,
all of the employees, so it is clear that the committee does not rep-
resent anyone and is only a forum for getting the views and in-
volvement of employees as individuals.
Proponents of the TEAM Act bear a heavy burden of proof when
they claim that the law is needed for competitiveness or employee
empowerment, that adequate protections for workers and union
rights would still exist under this law, that it would not be abused
to thwart unions or union organizing. It is important to insist on
evidence for these claims.
My studies showed that they failed to meet even the minimal re-
quirements for such proof and that if the TEAM Act is passed we
can expect a devastating impact on the rights of workers and labor
unions. Thank you.
[The prepared statement of Mr. Rundle follows:]
65
JAMES R. RUNDLE, SENIOR EXTENSION ASSOCIATE, THE SCHOOL OF
INDUSTRIAL AND LABOR RELATIONS, CORNELL UNIVERSITY
TESTIMONY BEFORE THE SENATE COMMITTEE ON SMALL BUSINESS
ON S.295, THE TEAMWORK FOR EMPLOYEES AND MANAGERS ACT
April 18, 1996
I would like to thank the Chairman and Members of this Committee for this
opportunity to address the TEAM Act and the evidence which bears upon it.
I deliver education and training programs to union leaders and members in
central New York State, and I research issues which pertain to labor. A few years ago
a group of newspaper articles on the Electromation case caught my attention because
of the claims they made about the importance of the case. Headlines and stories
from all around the country were full of apocalyptic warnings: "Firms fear NLRB as
hurdle in global race," "Putting a damper on that old team spirit," "Setback for
Labor-Management Teamwork Efforts," "A wedge in the workplace," "Remove the
cloud over teamwork," "Quality circle busters," "Industrial Age rules bog down
modern economy."
These stories asserted that the Electromation case demonstrated that section
8(a)(2) of National Labor Relations Act was an outdated impediment to modern
employee involvement programs. According to the papers, and a panoply of
lobbyists and attorneys, the competitiveness of American firms was threatened by a
law that had been designed to ban the company unions of the 1930s, but was now
having the irrational consequence of striking down new progressive and efficient
methods of management that empowered employees to apply more of their
potential to the success of their employer. I became intrigued by an obvious
contradiction between what actually happened at Electromation and this
extravagant portrayal.
Electromation proves that the law works, not that it doesn't work
The clamor over Electromation was created without the slightest basis in the
facts of the case. Electromation's committees I'ealt only with mundane terms and
conditions of employment. Neither the employer nor the numerous amici filing
briefs in the case ever argued that the committees were teams or quality circles or
were formed with any intention of improving efficiency or product quality. The
committees did not even exist until a third of the employees signed a petition
protesting changes in working conditions. Then the employer called a meeting of a
66
select group of employees, mostly people who had not signed the petition, and set
up five committees. The entire structure of employee representation was decided by
the employer, not by the employees whom the committees would "represent." This
is what section 8(a)(2) rightly forbids, but ./hich the Team Act would allow . That
these simple facts have been so obscured can only be the result of what Charles
Morris (1992) suggested was a deliberate "campaign of disinformation" by employer
organizations such as the National Association of Manufacturers, the Labor Policy
Association, the Chamber of Commerce, and others.
The only thing remarkable about Electromation, besides the media hype, is
that the use of labor law by the employees and the Teamsters union was a stunning
success. Perhaps this explains why the case was so upsetting to employer
organizations. The Teamsters filed an 8(a)(2) charge after losing a certification
election. A judge found that the employer had established and dominated
committees that were functioning as labor organizations, and ordered them to be
disestablished. Then, as part of an effort to settle the case, a second election was held
which the union won. Thus, as a direct consequence of acting on their section
8(a)(2) rights, the employees gained a labor organization under their own control,
and used it to win enforceable rights. This is exactly what the law was intended to
do when it was written 60 years ago, and the case proves that the law is just as
important now as it was then.
The purpose of section 8(a)(2)
The independence of workers' organizations is central to the purpose of the
National Labor Relations Act (1935). Secti a 7 gives workers a right to "self-
organization" and "to bargain collectively through representatives of their own
choosing" (emphasis added). Section 8(a)(2) was intended to safeguard this
independence, and therefore it concerns the heart of the Act.
The need for section 8(a)(2) became clear in attempts to enforce section 7(a) of
the earlier National Industrial Recovery Act (1933). The N.LR.A. established a right
to organize and bargain collectively, but it did not distinguish company unions from
independent unions. The result was that employers organized "Employee
Representation Plans" (ERPs) much faster than workers organized unions,
prompting Senator Wagner to state, "...the very first step toward genuine collective
bargaining is the abolition of the employer dominated union..." In fact, the new
National Labor Relations Board did root out many ERPs in its early years. This was
important to the success of union organizing in the 1930s, and probably for many
years afterward, because employers were effectively discouraged from using ERPs as
a strategy to thv/art organizing.
67
Proponents of the Team Act claim that the use of such employer-dominated
organizations to thwart organizing is long outdated, but my research shows that that
claim is false. More than nine times out of ten, employers that have been found by
the NLRB to have illegal employee committees under section 8(a)(2) also violated
workers rights in other ways. I have also found evidence that employers are
actually returning to company unions as an unti-union device under the guise of
"employee involvement." Furthermore, section 8(a)(2) is an important means of
preventing unionized employers from creating rival organizations and using them
to undermine existing unions. Proponents of the Team Act claim that existing
unions are adequately protected by other sections of the National Labor Relations
Act, but that claim is also false.
Is there evidence that supports altering section 8(a)(2)?
Since Electromation is a case that actually undermines arguments that
section 8(a)(2) needs changing, I wondered why employer organizations did not
make an issue out of other cases that might give more credence to their claim that
section 8(a)(2) is a problem. Employee involvement programs, and the debate over
their status under section 8(a)(2), have been around for well over 20 years. If they
constitute a new kind of organization that truly empowers employees and also
improves the competitiveness of employers, and if they were not being used to
thwart unions in the manner of the old ERPs, and if such organizations were really
illegal under section 8(a)(2), then we would expect that this would be reflected in the
record of NLRB cases. Surprisingly, despite all the debate over employee
involvement and the ban on company unions, no comprehensive examination of
the cases had ever been done.
Altering a section of the National Labor Relations Act that was conceived as
central to the Act's purpose should not be contemplated on the basis of media hype,
testimonials by at-will employees selected by management, and unexamined
complaints by management attorneys. If complaints made by management about
section 8(a)(2) are valid, then the cases should show that the NLRB has struck down
employee involvement programs whose primary function was to improve quality
or productivity, and that the programs empowered employees with actual decision-
making authority, not just an opportunity to make suggestions. We should not see
in these cases evidence that the employer had attempted to thwart the employee's
efforts to organize themselves, or to undermine an existing union. We should see
no evidence that the committees were only formed because the employees started
organizing themselves.
68
If such cases exist, it does not immediately follow that the Team Act should
become law. The Team Act would sweep away the very foundation of the National
Labor Relations Act and give employers the ability to dictate the rules governing the
employees' own representatives. Furthermore, it would be devastating to
employees who want a union or who have a union. If, however, such cases do not
exist, then proponents of the Team Act have not even met the very first criterion
for validating their claims.
In order to evaluate the cases, I examined every case from 1972 until 1993 in
which the NLRB had struck down an employee committee under section 8(a)(2) to
see what the committees did, whether the committees were established or revived
in response to union organizing campaigns, \,l-.-'her the committees had been used
to bypass an existing union, and whether the employer had engaged in any other
actions that violated employees' rights to organize and choose their own
representatives.
Are employer concerns about section 8(a)(2) validated by the case record?
During the entire 22 year period, the Board ordered disestablished employee
committees only 58 times (Table 2), or an average of fewer than three per year. In 53
of these cases, the employer also violated employee rights in other ways. The same
employers who were asking employees for their input through committees were
found guilty of illegally interrogating employees who wanted to organize a union,
firing union supporters, illegally threatening to shut down the facility, illegal
surveillance, and illegally soliciting grievances, making promises, and granting
improvements to gain votes. In one of the five remaining cases, charges of
discriminatory discharge were settled by reinstatement {North American Van), and
in two others the committee was formed during an organizing campaign (Table 1).
That leaves two cases in 22 years in which no other violations were found,
and the committee disestablished had not been created in response to a union
or ganizing campaign.
The two cases remaining are Electromation, in which the committees had
nothing to do with quality, productivity, or empowerment, and Alta Bates, a 1976
case. In that case, a union was present, yet every issue taken up by the committee
was an ordinary grievance of the type unions handle every day (with the possible
exception of a request for a suggestion box). In every other case where a union was
present and a committee was disestablished, the Board found that the employer was
refusing to bargain with the union which the employees had chosen for themselves.
Not one of the 58 cases contained any evidence that the committee in
question had been involved in improving productivity, quality, or that they
empowered the employees, or in any way constituted new forms of work
69
organization.
All of this leaves us with a simple, stark conclusion: There is absolutely no
evidence that the NLRB has ever, in the past 22 years, disestablished a committee of
the type employers say they must have to be competitive. Furthermore, in the
overwhelming majority of these cases, the employer was found guilty of trying to
thwart its employees' efforts to organize their own form of representation.
Since the time of this study, there have, of course, been additional cases.
Nothing in the recent decisions changes these conclusions. For example, in Carney
Morris (313 NLRB 101) the section 8(a)(2) violation was accompanied by illegal
threats, discharge of union supporters, and a "physical assault on a discriminatorily
laid off employee carried out by the owner and president" of the firm. Reno Hilton
(319 NLRB No. 140) likewise included many other violations. In Peninsula
Hospital (312 NLRB No. 582), Webcore Packaging (319 NLRB No. 142), and Dillon
Stores (319 NLRB No. 149) no other violations were found, but the employee
organizations focused primarily or even exclusively on grievances and working
conditions, and it is absolutely clear that they did not represent anything resembling
a new form of work organization of the type that employers say has rendered section
8(a)(2) outdated.
Testimonials from hand-picked employees are not valid evidence
Employers have brought forward employees to testify to the accomplishments
and rewards of their employee involvement committees in order to persuade
members of Congress that section 8(a)(2) threatens an effective and empowering
form of employee organization. These testimonials are useless for deciding this
issue. Two illustrations from previous testimony prove the point: The TRW
employees, who testified to the Senate Committee on Labor and Human Resources
on February 9, 1995, spoke at length about the accomplishments of their committees,
but they were apparently unaware that virtually everything they described was
perfectly legal under the existing law (as far as I could judge from their testimony).
The Donnelly employees, however, who testified on February 8, 1996 before
the Senate Committee on Labor and Human Resources, revealed much that would
appear to violate the law, and undoubtedly gained much sympathy for their desire
to continue serving on the company committees that they described. But these
employees had neglected to mention that mon than 70% of their co-workers had
signed cards authorizing the UAW to represent them, partly because of
undemocratic and manipulative practices in the committee system that the
Donnelly Corporation had refused to rectify (testimony of Alan Reuther, UAW,
same hearing). Furthermore, the company had used one of the committees in a
legal maneuver to stall an NLRB representation election, thereby frustrating the
70
will of those who wanted to choose their representative organization through a
secret ballot election. Donnelly's attorney, David E. Khorey, found it "difficult to
comprehend why Donnelly would even be subject to litigation," and worried that
"the chilling effect this fact has on other eraployers who may seek to empower their
employees is obvious..." (testimony at the same hearing). Let us hope so. The
behavior of the Donnelly Corporation is exactly the kind that section 8(a)(2) is
supposed to chill.
If the Senators want to understand the impact of the law, there is no
substitute for examining the record of the law as a whole, in actual practice, as I have
described above on the basis of my research.
Do employers use employee involvement programs to thwart union organizing?
Section 8(a)(2) was regarded as the key to enforcing the right to organize when
the National Labor Relations Act was passed because employers had found that
"Employee Representation Plans" were so effective in dividing employees and
defeating organizing efforts. Proponents of the Team Act claim that there is no
longer a need for such protection because employers don't engage in such practices
now. Is this true, or are employee involvement programs sometimes used as a way
to defeat union organizing efforts?
My research of the case law (hereafter referred to as the "NLRB study")
revealed many examples in which employers had combined the use of illegal
employee committees with aggressive anti-union campaigns, but it was limited by
the small number of charges filed. I have recently conducted a new study (hereafter
referred to as the "organizing study") basr ' on interviews with the lead organizers
in 196 organizing campaigns that took place in 1994 (publication is pending). I
found that organizers had encountered employee involvement programs in 32% of
all campaigns. This is more than a 400% increase over a figure of 7% found in a
similar study just eight years earlier (Bronfenbrenner, 1993). Organizers reported in
more than 40% of these cases that the programs had been started after the organizing
campaign began, and another quarter had not started until employees had begun
voicing the discontent that led to the campaign (as in the Electromation case). I also
asked which campaign tactics employers had used in each campaign and found that
employers who had employee involvement committees ran more aggressive anti-
union campaigns than other employers. In both my organizing study and in the
earlier one, the use of employee involvement programs decreased the likelihood
that a union would win in a certification election by more than 20% when
controlling for other factors. The rhetoric of employee involvement is about
"empowerment" and "voice," but the employers that used this rhetoric were more
likely to use bribes and special favors to win votes, to send a barrage of anti-union
n
literature to workers' homes, and to discharge union activists.
This is consistent with the results of my NLRB study. Where the NLRB had
disestablished employee committees during an organizing campaign, the employer
had also illegally discharged union supporters in an astounding 30% of the cases.
The disturbing implication of my research is that many employers are returning to
company unions as an anti-union device under the guise of "employee
involvement." This practice is currently advocated by some prominent
management attorneys (see references).
The Team Act would devastate existing unions
Some advocates of the Team Act claim that it would not have any impact on
existing unions because section 8(a)(5) would still require employers to bargain only
with the union; if an employer tried to bypass the union by setting up an employee
committee and dealt with it instead, the union could file charges under section
8(a)(5), and the employer would have to undo any changes it had agreed to through
the committee.
This claim, that the Team Act would not affect existing unions, is utterly
disingenuous. In DiiPovt, the union had tried to get a new shop for a welder
whose shop was unsafe. The company refused, but set up its own safety committee,
bypassing the union. The committee then recommended a new welding shop, and
the employer consented. Under the Team Act, what is the union supposed to do,
file a charge against the provision of the new welding shop? The union couldn't
even win such a char;^e because the employer would have provided what the union
wanted. This means that for some temporary concessions, an employer could win
the employees over to its own committees and completely undermine the union,
after which it would have an employee organizati-^n under its complete control.
This point cannot be emphasized too strongly: under the Team Act, employers
could devastate existing unions. It is tantamount to repealing the entire National
Labor Relations Act.
ConcIusions--the Team Act is anti-democratic
The Team Act would allow employers to meet with hand-picked employee
representatives and to engage in what would amount to bargaining in all but name.
It is a contradiction for proponents of the Team Act to claim that they want to
"empower" employees when their proposal for doing so would enable employers to
dictate the entire structure of interaction, not only between employees and
management, but among the employees themselves. This does not empower
anyone but the employer.
The Senators know that the rules of participation and decision-making are
important. They know that the rules by which they become representatives of
72
certain groups of people are important. They know that who makes those rules is
important. But they also know that they cannot be fired if they attempt to exert
legitimate influence. Non-union employees, who do not have the protection of a
union contract, are extremely vulnerable. The potential for manipulating a non-
union employee organization that is controlled by the employer is enormous. The
Senators should not allow employers to impose upon employees systems of
representation and vulnerabilities to manipulation that you know, from your own
understanding of process, to be pernicious.
Congress has also established democratic rules that must be followed by labor
organizations in the Landrum-Griffin Act. Among these are that the leaders of a
labor organization must be elected directly by the people they represent, that their
constituents must have opportunities to address them without fear of reprisal, and
that elections and election campaigns must be conducted through fair processes.
The definition of "labor organization" under Landrum-Griffin is the same as the
definition in the National Labor Relations Act, so any that are suspect under section
8(a)(2) must also meet these democracy requirements. How many employee
involvement programs would meet them? And if they do not, then if the Team
Act passes, employee involvement committees could still be challenged under the
Landrum-Griffin Act.
So what is next? Will the employer organizations pushing the Team Act
then demand that you pass a new law amending Landrum-Griffin? And if so, what
will that law say-that when employees create their own organizations the federal
government will require them to be democratic, but when employers create
organizations for employees they won't? That is exactly what David E. Khorey
suggested in his testimony before the Senate Committee on Labor and Human
Resources (February 8, 1996). This would be an astonishing double standard, and it
clearly reveals the road down which Team Act proponents are leading you.
Employers will argue that they do not seek for their employee organizations
the "exclusive representation" status granted to certified unions, and that employees
therefore remain free to choose another organization if they don't like the one
created by the employer. But this is a not true when the employer has the ability to
control the organization and fire dissenters. The whole history leading up to the
enactment of the National Labor Relations Act shows that section 8(a)(2) was
included because employer-dominaijd labor organizations deny employees freedom
to choose an organization under their own control.
In a Cornell Law School Symposium on the legal status of employee
involvement programs (April 29. 1994), the attorney representing Electromation Inc.
on appeal to tha Circuit Courts, Brian J. Martin, asked, "What is an employer
supposed to da if employees come to him vvitl^ complaints? Just ignore them?" I
73
responded that the employer could simply say, "Do you have any representatives?
We would be happy to speak with them." He thanked me and told me it was a good
idea. Employees do not have to have a union in order to form an organization and
meet with the employer. If employers were to respect the need of employees to
meet by themselves and to run their own organizations, which is surely the only
way that is truly empowering, and to be free of threats, then they will find that they
can work with their employees in a constructive way. And they will not run afoul
of the law because they will not be dominating them.
Additionally, and particularly relevant for small business, there is no legal
problem if employers meet with a "committee of the whole," that is, all of the
employees, so that it is clear that the committee does not represent anyone, and is
only a forum for getting the views and involvement of employees as individuals.
Proponents of the Team Act bear a heavy burden of proof when they claim
.aat the law is needed for competitiveness or employee empowerment, that
adequate protections for workers and union rights would still exist, that it would
not be abused to thwart unions or union organizing. It is important to insist on real
evidence for these claims. My studies show that they have failed to meet even
minimal requirements for such proof, and that if the Team Act is passed, we can
expect a devastating impact on the rights of workers and labor unions.
References:
Cabot, Stephen J. (1993) "Scary new union activism. ..how to fight it and win".
Boardroom Reports, vol.22, pp. 5-6.
Morris, Charles J. (1992), "National Labor Policy: Worker Participation and the Role
of the NLRB", presented Feb. 6, 1992 at the 1992 Southern California Labor and
Employment Law Symposium, reprinted in the Daily Labor Reports No. 43, E-1.
Bronfenbrenner, Kate. 1993. "Seeds of Resurgence: Successful Union Strategies for
Winning Certification Elections and First Contracts in the 1980's and
Beyond." Ph.D. diss., Cornell University.
DiMaria, Alfred T. 1994. "The Risks of Establishing or Maintaining an Unlawful
EPC." Management Report, April, 3-4.
Rundle, James R. 1994. "The Debate Over the Ban on Employer-Dominated Labor
Organizations: What Is the Evidence?" in Sheldon Friedman, Richard Hurd,
Rudy Oswald and Ronald Seeber, eds.. Restoring the Promise of American
Labor Law. Ithaca N.Y.: ILR Press, 161-176.
74
Senator Warner. Do you conduct classes?
Mr. RuNDLE. Yes.
Senator Warner. The first panel spoke in layman's language.
What is the reaction of your students when they hear about this
law, which was enacted in 1938, and here they are about to go into
the work force, let us say, in 1998. That is quite a differential of
time, 60 years. What is their reaction? You are on the cutting edge
of the young work force today.
Mr. RuNDLE. Senator, I should make it clear that my role is in
what we call our extension division of the school and my job is to
work with labor unions. We have a diverse group of faculty. Some
work with management, some work with labor unions. We have a
very large and very active group that works with both coopera-
tively. I work with many labor unions that have very active team
programs and engage in them in a cooperative way.
Their reaction to all of this is that the TEAM Act is absolutely
critical because they believe their own programs would be jeopard-
ized by the TEAM Act.
Senator Warner. What programs? What is the jeopardy in their
mind?
Mr. RuNDLE. The jeopardy is that if the TEAM Act were to pass,
the employer could bypass the systems that have been negotiated
between union and management. If they have negotiated them ob-
viously they still need to keep them, but the employer could still
set up a different kind of system, which is exactly what happened
in the duPont case.
For example, the union in duPont was representing a welder.
The welder had an unsafe welding shop. So the welder asked the
union can you speak to the employer on my behalf and get me a
better shop? The union tried to do that and was turned down.
Later on, the employer set up its own safety committee, estab-
lished by itself, and that safety committee recommended that the
welder get a new shop. Well, that undermines the union's role in
the workplace because obviously for some concessions, even tem-
porary concessions, the employer could send a very strong message
to the workers that if you want to get something done, come to the
employee involvement committee, not to the union.
What good would it do? Some people have said well, there are
still adequate protections left in the law. What good would it do for
a union to file a section 8(a)(5) charge, bad faith bargaining, for by-
passing the union when the company gave them what they
wanted? They would not even win the charge, but they would be
effectively undermined.
That is what the people I speak with are concerned about.
Senator Warner. You also said that in all of the 8(a)(2) cases
that you know of the employer has had bad motives and committed
other violations of the NLRA; is that correct?
Mr. RuNDLE. No, Senator, not quite. Very close to it.
Senator Warner. But basically.
Mr. Rundle. Yes.
Senator Warner. I will accept that modification to my question.
Since employers with bad motives are always caught violating the
other parts of NLRA, why do we need section 8(a)(2)?
75
Mr. RUNDLE. Section 8(a)(2) has a more powerful remedy than
many other sections of the Act. It states that the employer must
actually shut down the committee if it is dominated. That was very
effective in the Electromation case, which ironically has been cited
by employers. As a consequence of acting on their section 8(a)(2)
rights, employees were able to win another election for a union,
which they won. Now they have a vehicle through which they can
effectively participate with the employer.
Senator Warner. The Chair is going to ask that we take about
a 3-minute recess, and then I will turn to Mr. King and Mr. Potter,
and then back to more questions.
[Recess.]
Senator Warner. We will now resume. I am very pleased that
Senator Levin has joined us. Senator Levin, I must review briefly.
The two of us came to the Senate together and we have worked
side-by-side on the Senate Armed Services Committee these several
years and currently I am Chairman of the Subcommittee and he
is the ranking member of the Subcommittee. A few years ago, he
was Chairman and I was ranking. But we have always worked in
a very bipartisan way on solutions in national defense, and I am
delighted that he has joined us here on this.
Senator Levin. Thank you, Mr. Chairman.
Senator Warner. Would you like to make an opening statement?
OPENING STATEMENT OF THE HONORABLE CARL LEVIN,
A UNITED STATES SENATOR FROM MICHIGAN
Senator Levin. Just briefly to say that this is a subject of great
complexity in which I am very, very much interested. I would like
to try to see if we cannot get greater partnership between manage-
ment and labor, but we want to do it in a way which does not un-
dermine the traditional protections for employees which we have
had on our laws. I am interested as to what the witnesses are
going to say as to how we can accomplish one without jeopardizing
the other, so I am happy to join with you today.
I would like to make part of the record, if it has not already been
made part of the record, a letter from Secretary Reich to Senator
Kassebaum.
Senator Warner. Without objection, it will be admitted into this
record.
[The information referred to follows:]
76
U.S. DEPARTMENT OF LABOR
SECRETARY OF L>BOR
WASHINGTON. D.C.
APR (61906
The Honorable Nancy Landon Kassebaum
Chairman
Committee on Labor
and Human Resources
United States Senate
Washington, D.C. 20510
Dear Chairman Kassebaxrm:
We understand that your Committee may consider S. 295, the
"Teamwork for Employees and Managers Act," on Wednesday, April
17. This bill would amend section 8(a)(2) of the National Labor
Relations Act (NLRA) to broadly expand employers' abilities to
establish employee involvement programs. I am writing to
emphasize the Administration's opposition to S. 295, and to urge
yo\ir Committee to not order the bill reported.
Section 8(a)(2) of the NLRA states that it is an unfair
labor practice for an employer to dominate or interfere with the
forraacion or administration of any labor organization. This
provision protects employees from the practice of unscrupulous
employers creating company, or sham, unions. Although S. 295
does not state an intent to repeal the protection provided by
section 8(a)(2), S. 295 would undermine employee protections in
at least two key ways. First, the bill would permit employers to
establish company unions. Second, it would permit employers, in
situations where the employees have spoken through a democratic
election to be represented by a union, to establish an
alternative, company dominated organization. Neither of these
outcomes is permissible under current law nor should they be
endorsed in legislation. Either one would be sufficient to cause
me to recommend that the President veto S. 29!5 or other
legislation that permits employers to unilaterally set up
employee involvement programs.
The Administration supports workplace flexibility and high-
performance workplace practices that promote cooperative labor-
management relations, but has concerns about the impact of the
TEAM bill. Current interpretations of the law permit the
creation of employee involvement programs that explore issues of
quality, productivity, and efficiency.
It should be noted that the National Labor Relations Board
has recently decided five cases involving employee involvement
programs. In two of the five cases the Board found that the
cooperative group at issue did not violate section 8(a)(2). The
other three present classic cases supporting the concerns voiced
above. Moreover, it appears that several more cases are pending
before the Board which concern the relevant issue.
For the foregoing reasons, the Administration opposes the
enactment of S. 295. If S. 295 were presented to the President,
I would recommend that he veto the bill.
The Office of Management and Budget advises that there is no
objection to the submission of this report from the standpoint of
the Administration's program.
SiptfCtrely,
(s^ltW)^.Sl^
Robert B. Rexch
77
Senator WARNER. The previous panel testimony was, in the judg-
ment of Senator Bumpers and myself, a very important contribu-
tion to this issue. I think it might be helpful, Mr. Herrnstadt, if
you would summarize your testimony in a minute and, Mr. Rundle,
summarize yours and then we will go to the other two witnesses,
so that my colleague has a complete flavor of this panel.
Mr. Herrnstadt. Sure, Senator, I would be glad to.
In brief summary, it is our position — I am with the International
Association of Machinists, Senator — that section 8(a)(2) is part of
the heart and soul of the National Labor Relations Act. It is the
part of the Act that prohibits companies from dominating labor or-
ganizations, as you well know.
S. 295 would gut section 8(a)(2) from the law. This provision of
the law is key to providing workers with real rights, real rights
where they can have their voices heard in the workplace. If we are
talking about real employee involvement, then employees should be
able to elect their own representatives to independent organiza-
tions. They should be able to help determine what issues those or-
ganizations deal with and so forth as explained in my written testi-
mony. Unfortunately, S. 295 would end up weakening workers'
rights.
I also pointed out that there are thousands and thousands of un-
fair labor practice charges that are filed every year in this country
against employers for violations under the Act. At the same time,
there are relatively very few cases dealing with section 8(a)(2).
Given that, it seems to me that we should be talking about
strengthening workers' rights at this time, certainly not weakening
them. This is even more important as we face the challenges of a
global market economy where employees need more say in the
workplace, not less.
Senator Warner. Thank you. Mr. Rundle.
Mr. Rundle. Thank you, Senator.
My name is Jim Rundle, and I am with Cornell University. I did
a research study of all the cases of the National Labor Relations
Board in which the Board had disestablished employee involvement
committees. I found that in none of the cases were these commit-
tees actually of the progressive new type of management style that
employers say they have to have to be competitive. They are not
total quality management systems. They are not autonomous
teams or so forth.
But in addition, what was very disturbing about these cases is
that the overwhelming majority showed that the same employers
who said they wanted employee involvement were also violating
employees' right in many other ways, in more than 9 out of 10 of
those cases.
I would also like to point out that the first panel was not a panel,
as I understand it, of employers who have actually been found to
violate section 8(a)(2) of the National Labor Relations Act. I think
it would be valuable to have a panel of employers who had actually
violated the law. Then we could look at what happened in those
cases where we know that they actually had committed violations.
Senator Warner. I think that is a good capsule, and starting
point for the Senator, and he can probe more deeply in his question
period. Mr. King, we will now proceed with you.
25-436 - 96 - 4
78
STATEMENT OF G. ROGER KING, PARTNER, JONES, DAY,
REAVIS & POGUE, COLUMBUS, OHIO, ON BEHALF OF THE SO-
CIETY FOR HUMAN RESOURCE MANAGEMENT, ALEXANDRIA,
VIRGINIA
Mr. King. Thank you, Mr. Chairman. My name is Roger King
and I am with the law firm of Jones, Day, Reavis & Pogue.
Senator WARNER. There was a Cockley in the name at one time,
when I was in the law business.
Mr. King. Yes, Senator Warner, that is absolutely correct.
Senator Warner. The famous law firm and you are across the
breadth of the eastern part of America and the central part, are
you not?
Mr. King. Yes, you are right, Senator. We have offices through-
out the United States and indeed, throughout the world.
I am here today, however, in my capacity as a member of the Na-
tional Employee Relations Committee of SHRM, Society for Human
Resource Management. SHRM, as this Committee is well aware, is
one of the largest human resource committees and societies in the
world, with over 70,000 members, both professional and student
members, and many, many employers of various sizes. Many of
those members are indeed small businesses. That is one of the
main reasons we are here today. SHRM would like to thank the
Committee for permitting it to express its views.
SHRM is in favor of the TEAM Act. We want to make sure that
is absolutely clear. Before I proceed with the reasons why SHRM
is of that opinion, I would like to just make a personal aside. I was
a professional staff counsel to the Senate Labor Committee many
years ago. Senator Robert Taft was my mentor and my direct em-
ployer.
It is ironic to me that employer representatives are here today
testifying for the passage of the TEAM Act and for greater em-
ployee participation and cooperation in the workplace, but yet
union representatives are testifying against such employee partici-
pation, unless it is under the banner of a collective bargaining
agreement.
This law does nothing to remove collective bargaining from our
laws, from our society, or from involvement in the employer-em-
ployee arena.
Senator Warner. And that is a key point, because that was the
intent of the drafters. In your judgment, they fulfilled that intent?
Mr. King. Absolutely, Senator, and I would like to talk a bit
about the statute as it presently exists and the TEAM Act as its
being proposed. And by the way, SHRM is delighted that the Sen-
ate Labor Committee did report out favorably S. 295. SHRM is
very hopeful that the Senate leadership will put that bill on its leg-
islative calendar and consider it on the Senate floor either this
week or in ensuing weeks.
Senator Warner. We discussed it actively in a leadership meet-
ing yesterday, and I will come back to you on that precise issue
where you differ on that point. I would like to have your views on
the record.
Mr. King. Just to follow up. Senator, the apparent suggestion to
oppose the TEAM Act that is being made is that Government must
look over the shoulder of employees each and every hour they are
79
in the workplace to make sure somehow their rights and their abil-
ity to function in the workplace is not going to be impeded. Fur-
ther, such arguments suggest all employee rights will be in danger
unless employees work under a collective bargaining agreement.
Collective bargaining agreements certainly make sense in certain
workplaces. But I think that suggestion, that the worker today
needs big brother, big Government, watching over everything that
goes on, simply is outdated.
I would suggest perhaps really the heart and soul of the opposi-
tion of the union movement to the TEAM Act is one of economics.
They need more members and unfortunately for them, they have
not changed with the changes we have seen in the workplace since
the 1930s. Employees today are sophisticated, intelligent. They ask
questions. They want to be involved.
S. 295 will permit them to be involved.
Let me turn to the TEAM Act as proposed, as it relates to the
current statute that we have in front of us. First, I want to dis-
abuse anyone of the opinion or notion that this is a union-busting
statute. Nothing could be further from the truth.
Indeed, section 8(a)(2) as amended by S. 295 specifically does not
interfere with any type of collective bargaining. It has a particular
proviso in it that guarantees the continuation of collective bargain-
ing agreements. So that ought to be noted at the very outset.
But let us turn to the key provisions of the NLRA that were en-
acted in the 1930s. It is a bifurcated legal analysis, and pardon me
for being just a bit legal for a moment. When one looks at this area
of the law, you have to ask two questions. First of all, is the com-
mittee in question or the employee committee participation group
in question, a labor organization as defined by section 2(5) of the
National Labor Relations Act. That definition is in my testimony
at page 4.
When I used to draft legislation and I was directed to take a
broad coverage approach, I would use language similar to what is
in section 2(5) of the Act. Indeed, today virtually any organization
of any kind in the employer arena can be defined as a labor organi-
zation. Section 2(5) is extremely broad. The bill we have in front
of us does not change that at all. Section 2(5) stays as is. So vir-
tually any employee participation committee can be captured under
section 2(5).
The second part of the analysis is, however, whether the em-
ployer is somehow impermissibly dominating or controlling this
labor organization. Senate bill 295 only speaks to section 8(a)(2),
the second part of the legal analysis. I think we should turn to it.
All that this provision does, Senate bill 295, is to permit an em-
ployer to establish, assist, maintain or participate in a cooperative
environment with its employees. The rest of section 8(a)(2) remains
intact. It is not being gutted. It is not being repealed. It is not
being changed one iota. And to suggest otherwise simply is a
misreading of where we are.
Indeed, it is the position of SHRM, and myself as a labor lawyer,
that S. 295 is an extremely modest proposal. This debate is like
many we have seen for years on Capitol Hill, where anything that
is proposed is attacked on an extreme basis, with opponents hoping
that sponsors will either pull it back all together, or water it down.
80
This is an extremely, and I want to underline this, extremely
modest proposal that does not interfere in any way, shape, or form
with the provisions of the National Labor Relations Act.
Further, it was suggested by one of my fellow panelists that the
law in this area is clear. I can assure you it is not clear. It is any-
thing but clear. Unfortunately, small employers are having to seek
clarity of this law through National Labor Relations Board charges,
through consultations with attorneys, and through the Courts of
Appeal. It can be extremely expensive for employers to obtain such
clarification.
But even if there are not considerable numbers of cases going
forward, the threat of such litigation in and of itself is significant.
The threat of the National Labor Relations regional office coming
in to your place of business and investigating is expensive, time
consuming. It is not what we need.
Furthermore, with respect to the statute, we have concurring
opinions as to how section 8(a)(2) should be applied by both Repub-
lican and Democrat nominees to the National Labor Relations
Board. The Secretary of Labor, the current chair of the National
Labor Relations Board, and the academic community generally
support greater employee participation and a change in this area
of the law.
The Dunlap Commission clearly came out in favor of a change in
the law of this area to permit greater employee participation.
Let us also turn to the point of whether we have violators out
there in the employer community, if they have employee involve-
ment committees. I am sure my fellow panelists did not mean to
suggest or want to suggest simply because you have an employee
participation committee in place that you are going to violate other
sections of the National Labor Relations Act. The cases Mr. Rundle
cited involved other areas of the law. Those other areas of the law,
other provisions of the National Labor Relations Act, will not be
changed one iota by S. 295. If indeed an employer is out of line,
the National Labor Relations Board should pursue that employer.
There are ample provisions in the NLRA for the NLRB to pursue
violations.
Section 8(a)(2) is not at the heart of this Act. Section 7 is the
heart of the National Labor Relations Act. Every union attorney I
know would agree with that statement.
Finally, it was suggested by a previous participant that this is
an area that we need to bring some good common sense. I would
certainly endorse that. Put aside the law. Put aside all the finality
that we try to get with any law. We need to bring some encourage-
ment to employers and employees to get together, to be more com-
petitive, and to work out their problems, and ultimately to have a
better workplace.
In closing. Senator, SHRM would strongly encourage the support
of this Committee and its members for Senate bill 295. Thank you.
[The prepared statement of Mr. King follows:]
81
SOCIETY FOR
RESOl RCE
M A N A r, E M f: NT
TESTIMONY OF G. ROGER KING, ESQ.
JONES, DAY, REAVIS & POGUE
Mr. Chairman and Members of the Committee: My name is Roger King. I am a partner at
Jones, Day, Reavis & Pogue, a full service law firm with offices nationwide. I also serve as a
member of the National Employee Relations Committee for the Society for Human Resource
Management (SHRM) and am appearing today on the Society's behalf
SHRM, the leading voice of the human resource profession, represents the interests of more than
70,000 professional and student members from around the world. Fifty seven percent of SHRM
members are from companies with fewer than one thousand employees. The Society provides its
members with education and information services, conferences and seminars, government and
media presentation and publications that equip human resource professionals for their roles as
leaders and decision makers within their organizations. SHRM is also a founding member and
Secretariat of the World Federation of Personnel Management Association (WFPMA) which
links human resource associations in 55 nations.
As human resource professionals, SHRM's membership recognizes the importance of employer-
employee relations in today's competitive markets and strongly supports the enactment of the
Teamwork for Employees and Management Act ("TEAM Act"). SHRM believes that employees
and employers should be permitted wide legal latitude to initiate formal and informal cooperative
ventures in the workplace, including various approaches for problem-solving, communication
enhancement programs, productivity improvement plans and other similar work related
programs. Such initiatives reflect the practicalities of the workplace, incorporate the inherent
problem-solving advantages to employees and employers as a result of such initiatives, and
permit employees and employers of this country to be competitive in the world marketplace.
SHRM believes that the TEAM Act will legalize and legitimize such initiatives by removing the
artificial legal barriers constructed by the Board and the courts under Section 8(a)(2) of the
National Labor Relations Act to the development and use of cooperative employer-employee
approaches. In addition, SHRM believes that the enactment of the TEAM Act will bring clarity
to an area of federal labor law which has become both imprudently interpreted and inconsistently
applied and will reflect a more reasoned federal labor policy designed to encourage, rather than
hinder, operational efficiencies and marketplace competitiveness. Finally, SHRM believes that
the TEAM Act will bring greater predictability of the law in this area and will reduce
unnecessary litigation expenses to both employers (particularly small business) and the
government.
82
INTRODUCTION
Employee-employer communication committees, participative management groups, quality
circles and similar devices have in the recent past become a common feature of American
businesses, large and small. Employers often view employee-employer communication and
employee involvement in company decision-making as means of enhancing competitiveness
through increased creativity and productivity. Correspondingly, employees frequently welcome
the opportunity for increased participation and communication with management as a means to
greater job satisfaction and enhanced career development.
Despite the benefits flowing to both management and labor, employee participation committees
and other similar entities are vulnerable to legal challenge under provisions of the National Labor
Relations Act ("NLRA" or "Act"). The core provisions of the Act were drafted in the first half
of this century during an era of pronounced labor-management tension. Thus, in accordance with
Congress' then-existing emphasis on ensuring the independence of labor and a level playing field
in collective bargaining, the Act outlaws company-controlled unions. It is this proscription that
poses a legal challenge to the recent movement towards employee participation committees.
Section 8(a)(2) of the Act, 29 U. S. C. § 158(a)(2), makes it an unfair labor practice for an
employer "to dominate or interfere with the formation or administration of any labor
organization or contribute financial or other support to it[.]" 29 U.S.C. § 158(a)(2). Section 2(5)
of the Act defines a "labor organization" as:
any organization of any kind, or any agency or employee
representation committee or plan, in which employees
participate and which exists for the purpose, in whole or in
part, of dealing with employees concerning grievances,
labor disputes, wages, rates of pay, hours of employment,
or conditions of work.
29 U.S.C. § 152 (5). As interpreted by the National Labor Relations Board ("NLRB" or
"Board") and widely enforced by the federal courts, these provisions limit opportunities for
employers and employees to resolve workplace problems through team-based employee
involvement structures. In essence, the Board and the courts have held that such devices may
constitute labor organizations dominated or interfered with by management and, hence, be
unlawfiil under Section 8(a)(2).
In light of the ever-increasing utilization of employer-employee team-based programs, and in
response to these decisions of the Board and the courts. Congress is considering a bill to amend
Section 8(a)(2) of the NLRA. SHRM is extremely pleased that H.R. 243, Teamwork for
Employees and Managers Act, has already passed the House of Representatives. We strongly
urge the Senate to pass S. 295, its version of the legislation at the earliest opportunity. If
enacted, the TEAM Act would bring American labor policy, at least in part, into harmony with
83
the realities of the American workplace by expressly permitting cooperative employer-employee
committees and similar workplace management structures.
II.
DISCUSSION
A. An Historical Perspective.
For most of this century, the accepted American approach to human resource management was a
method known as "Taylorism." See "TEAM Act Would Deregulate Workplace Cooperation,"
Labor Policy Association, p. 3 (1995). Named for Frederick Taylor, a tum-of-the-century
engineer, Taylorism advocates top-down decision-making aimed at minimizing employee
participation on the shop floor. Taylorism is a management system that expects employees to
operate blindly within the confined parameters unilaterally set by their supervisors. It was
widely believed for a very long time in this country that such a system was needed to ensure the
continuity and conformity necessary to enable American companies to maintain world economic
superiority. Id.
The Taylorism management method, however, contributed to the creation of intolerable working
conditions and inequities for the American worker. As a result of this and other factors,
employees began to initiate union organizing activities. In response, employers who vehemently
opposed these organizing attempts employed several tactics to defeat the unions. By the early
1930's, one of the most effective and common tactics used by employers was the sham "company
union." These "unions" pretended to collectively bargain, but were actually dominated by the
whims of management. Id Nonetheless, under the guise of collectively bargaining for their
employees' interests, these "company unions" were often able to influence imduly the judgement
of their employees and successfully derail legitimate, independent union organization attempts.
See "Fact Finding Report," Commission on the Future of Worker-Management Relations
(Dunlop Commission), p. 53 (May 1994).
In 1935, in this volatile labor environment defined by extremely adversarial employment
relationships. Congress enacted the NLRA. Section 8(a)(2) was included by Congress, in part, to
prohibit the establishment or continuation of employer-sponsored and dominated unions. Such
organizations were perceived as a ver>' real threat to the exercise of employees" Section 7 rights
in the 1930's, and Section 8(a) (2) became an effective weapon against their proliferation.
Over the next several years. Section 8(a)(2) of the NLRA was used effectively to prevent the
creation of company-dominated unions. By the end of World War II, Section 8(a)(2) had
essentially eliminated the threat of "company unions" that had developed prior to the enactment
of the NLRA. Id. Because "company unions" were no longer a threat. Section 8(a)(2) was
primarily used for the next 35 years to bar employers from recognizing minority unions and to
require a company to remain neutral when dealing with two unions seeking to represent its
employees. It was not until the late-1970's and early 1980's that several new legal controversies
arose challenging the original intent and contemporary relevance of Section 8(a)(2). Since then,
although the Board and the courts have always ultimately upheld Section 8(a)(2). they have
repeatedlv questioned whether the concept that supported the creation of Section 8(a)(2) in 1935
84
is simply outdated and incompatible with the cooperative relations that are prevalent-indeed.
essential— in today's modem economic and human resource environment.
B. Current Case Law Under Section 8(a) (21
1. General legal concepts.
In the late 1970's and early 1980's, as a global competition increased, many American companies
began implementing numerous new management initiatives by involving employees in
workplace decision-making. Indeed, as noted in other testimony before this Committee, many
small businesses have taken the lead in this area. In large measure, such programs were a
common sense response to both the ever-increasing inroads made in U.S. industry by foreign
firms and an increasing desire to improve workplace productivity. However, as many employers
have discovered through costly litigation over these issues, such common sense initiatives are
often subject to challenge under America's current labor policy.
The general legal concepts governing employee involvement initiatives under the NLRA are
summarized as follows. First, it must be determined whether an employee participation
committee is a "labor organization" for the purposes of the NLRA. Pursuant to Section 2(5) of
the NLRA, for an employee participation committee to be a labor organization:
(1) employees must participate in the committee: (2) one of the committee's purposes must be to
"deal with" the employer; and (3) the "dealing with" must concern grievances, labor disputes,
wages, rates of pay, hours of employment or conditions of work. Merely making proposals or
recommendations to the employer that the employer can accept or reject is sufficient to constitute
a committee's "dealing with" the employer under Section 2(5). NLRB v. Cabot Carbon Co. .
360 U.S. 203 (1959). A determination of what is a labor organization under the Act is fact-
specific and must be made on a case-by-case basis. Electromation Inc. v. NLRB . 35 F.3d 1 148
(7th Cir. 1994).
The NLRB has consistently held that employee committees that deal with the employer
concerning bargainable issues or that otherwise serve in a "representational" function are labor
organizations under Section 2(5) of the Act. Employee committees that exist, at least in part, to
deal with employers concerning grievances or conditions of work are deemed to be labor
organizations. Camvac Int'l. Inc . 288 N.L.R.B. 816, 846 (1988), modified, 302 N.L.R.B.
No. 100 (1991). And, employee committees have been deemed labor organizations when they
act in a representative capacity to present and discuss complaints over conditions of employment
with employers. Uarco. Inc.. 286 N.L.R.B. 816. 846 (1987). See also Ona Corp. . 285 N.L.R.B.
400,405-06(1987).
Second, it must be determined whether the committee is being dominated by the employer. Even
assuming that an employee committee is a "labor organization" within the meaning of Section
2(5). the Act only forbids employer domination of or interference with such organizations. Thus,
in the absence of unlawful domination or interference, an employer's formation of or interaction
with an employee committee should not be found to violate Section 8(a)(2).
Unfortunately, the Board and the courts have not been consistent with respect to the appropriate
85
test to apply in determining unlawful domination or interference. The Board seeks to determine
whether the employer's conduct creates the potential for domination or control. See
Northeastern University . 235 N.L.R.B. 858(1 978). enf. denied in part . 60 1 F.2d 1 208 ( I st Cir.
1979). On the other hand, some courts ask whether the employer's assistance actually (as
opposed to potentially) deprives employees of their freedom of choice. This, the subjective view
of the employees is examined. See NLRB v. Homemaker Shops, inc .. 724 F.2d 535. 545 (6th
Cir. 1984V NI.RB v. Northeastern Univ. . 601 F.2d 1208. 1213-14 (1st Cir. 1979).'
2. The Electromation and duPont decisions.
The topic of the legality of employee participation programs under Section 8(a)(2) returned to the
national legal agenda with the decisions of the Board in Electromation. Inc. . 309 N.L.R.B. 990
(1992). alTd, 35F.3d 1148 (7th Cir. 1 994). and E. 1. duPont de Nemours & Co. . 3 1 1 N.L.R.B.
893(1993).
a. Electromation
On December 16. 1992, the NLRB issued its widely anticipated decision in Electromation . a case
in which employers hoped the Board would reconstrue the Act to more widely accommodate
employee participation committee, at least in the context of a nonunionized workforce.
However, due to the failure of Board members to agree on key issues, the Board failed to
enunciate a new or comprehensive standard for employee participation committees. Instead, the
Board narrowly applied existing law to the particular facts of the case, holding that
Electromation "s "Action Committees" were "labor organizations" that had been unlawfully
dominated by the employer. The decision, therefore, sends an unwelcome signal: employers
must move cautiously in connection with employee participation plans because the Board will
continue to scrutinize the legality of such committees based on 1930's era conceptions of labor-
management relations.
Applying the language of Section 8(a)(2) in determining the first issue-whether the action
committees were "labor organizations"-the Board in Electromation held that an employee
committee is a labor organization if
(1) employees participate:
' The employer's motive in establishing the committee may also be a factor, especially if the
employer is motivated by anti-union animus. Although the Supreme Court has twice held that it is not a
defense to a Section 8(a)(2) violation that the employer had a good motive in establishing or assisting an
employee committee, see Garment Workers v. NLRB (Bernhard-Altman Texas Corp.), 366 U.S. 73 1
(1961); NLRB v. Newport News Shipbuilding & Dry Dock Co. . 308 U.S. 241 (1939), some circuit courts
have noted the presence or absence of anti-union animus as a factor bearing on the ultimate issue of
whether there has been an 8(a)(2) violation. See e^, Hertzka & Knowles v. NLRB , 503 H.2d 625, 629
(9th Cir. 1974), cert , denied , 423 U.S. 875 (1975^ Utrad Corp. v. NLRB , 454 F.2d 520, 522 (7th Cir.
1971); NLRB v. Streamway Div. of Scott & Fetzer Co ., 691 F.2d 288, 295 (6th Cir. 1982). The Sixth
Circuit even suggests that this is the key factor. See Airstream. Inc. V. NLRB . 877 F.2d 1 29 1 . 1 296 (6th
Cir. 1989).
86
(2) the committee exists, at least in part, for the purpose of "dealing with" employers;
(3) the committee's activities or dealings concern "conditions of work" or grievances,
labor disputes, wages, rates of pay, or hours of employment; and
(4) the committee represents employees.
Applying this standard to the facts, the Board first noted that there was no dispute that
Electromation employees were members of the committees and participated on the committees.
Second, with respect to the "dealing with" requirement, the Board referred to the long-
established standard for construing this phrase as set forth by the Supreme Court in Cabot
Carbon . Applying the Court's broad construction of the phrase "dealing with," the Board
determined that Electromation 's "Action Committees" were created in response to employee
disaffection concerning certain unilateral changes in conditions of work by the employer.
Employees on the committees met with their management counterparts to try to resolve
disagreement over these changes. The Board characterized this "creation of a bilateral process
involving employees and management in order to reach bilateral solutions on basis of employee-
initiated proposals" to be the essence of "dealing with" within the meaning of Section 2(5).
Third, the Board concluded that the subject matter of that "dealing," which included policies on
employee absenteeism and remuneration via bonuses or other monetary incentives, concerned
conditions of employment.
Finally, the Board held that the employee-members of the Action Committees acted on behalf of
other employees. The Board reasoned that committee members were to talk "back and forth"
with fellow employee for the purpose of "getting ideas from other employees regarding the
subjects of their committees for the purpose of reaching solutions that would satisfy the
employees as a whole."
With respect to the second step of the analysis—whether Electromation unlawfully dominated or
interfered with these committees—the Electromation Board held that employer domination exists
under Section 8(a)(2) when:
(1) the labor organization is the creation of management;
(2) its structure and function are essentially determined by management; and
(3) its continued existence depends on the fiat of management.
The Board noted, however, that "when the formulation and structure of the organization is
determined by employees, domination is not established, even if the employer has the potential
ability to influence the structure or effectiveness of the organization." The Board also
emphasized that evidence of anti-union animus by the employer is not necessary to a finding of
unlawfiil domination or interference. While this first prong of the test, considering whether the
committee is a labor organization, necessarily involves the question of the "purpose" of the
dealing between employer and committee, purpose is distinct from motive. "Purpose is a matter
of what the organization is set up to do, and that may be shown by what the organization actually
does."
Applying these standards to the facts at hand, the Board found that Electromation 's committees
87
were creation of management because the employer initiated the formation of the Action
Committees. Although employee reaction was "not positive," the employees were confronted
with a •'Hobson's choice" of accepting the institution of unilateral changes by management or
acceding to the committee framework.
The Board also ruled that the employer defined the structure of the committees by drafting their
written purposes and goals. In doing so, the Board reasoned, Flectromation defined and limited
the subject matter to be covered by the committee. The Board also found that Electromation
appointed management representatives to the committees determined the number of members
that would compose a committee and mandated that an employee could serve on only one
committee.
Finally, the Board ruled that Electromation unlawfully supported the committees, particularly by
permitting employees to carry out committee functions on paid time.
Despite the unanimity of the Board's holding, three Board members set forth separate concurring
opinions. Each opinion emphasized the fact that employee committees could be found lawful
under different factual settings. Member Oviatt indicated that if the committee did not act in a
representative capacity, it would be outside the definition of a labor organization and the same
would be true if it simply provided ideas or suggestions to the employer.
Member Devaney concurred by noting that this case did not present a "quality circle" approach
or represent the type of program which gives emphasis on effective employer-employee
communication. This former Board Member would have allowed committees to be established
for the purpose of fostering better communication over such matters as "productivity and
efficiency problems in the workplace."
Finally, former Member Raudabaugh's concurrence proposed a new four-part test to determine
the legality of such committees. Under this test, the Board would examine: ( I) the extent of the
employer's involvement in the structure and operation of the committees; (2) whether the
employees perceive the program as a substitute for collective bargaining; (3) whether employees
have been assured of their Section 7 rights to be represented by a labor organization; and (4) the
employer's motives in establishing the program. This test brings into question the issue of
motive, a matter the Supreme Court has held is not relevant for purposes of Section 8(a)(2).
b. The Seventh Circuit decision .
The company appealed the Board's decision to the Seventh Circuit Court of Appeals, which
affirmed the Board's findings in all respects. The Court first concluded that the "action
committees" constituted labor organizations under Section 2(5). Rejecting the Company's
argument that the Board should have considered each committee individually, the court pointed
to multiple factors to conclude that the committees were interrelated. The court also emphasized
Congress's very broad statutory definition of "labor organization," which the Supreme Court has
held is not limited to organizations existing for the purpose of "bargaining with employers."
NLRB b. Cabot Carbon Co. . 360 U.S. 203 (1959). Given this broad definition, the Seventh
88
Circuit concluded that the Board did not err in holding that Electromation 's action committees
constituted labor organizations.
The court next concluded that Electromation violated Sections 8(a)(2) and (1) of the Act. The
Company's primary argument with respect to the 8(a)(2) violation was that the Board should
have interpreted that section from the employees" view, rather than the employer's action. In
other words, Electromation argued that the Board may only find a Section 8(a)(2) violation when
the employer's conduct actually had the effect of interfering with the employees' rights under the
Act. According to the Seventh Circuit, however, the Board considered the totality of
Electromation' s conduct and correctly concluded that the Company dominated the employees by
defining the committee structures and subject matters, appointing a manager to coordinate and
monitor the committee meetings, including management representatives on each committee, and
authorizing those representatives to review and decide whether to reject employee committee
member proposals before they were presented to company management.
The Seventh Circuit further concluded that there existed substantial evidence to support the
Board's factual findings. The court emphasized the Company's role in initiating and defining the
committees, including their membership, in controlling which issues received attention from the
committees and in providing both pay for time spent in committee meetings and the facilities and
supplies for those meetings. Viewed together, these factors convinced the court that
Electromation had dominated the action committees in violation of Sections 8(a)(2) and (1).
c. The duPont decision .
The Board again addressed Section 8(a)(2) issues, this time in the context of a unionized
workplace, in E. I. duPont de Nemours & Co. . 311 N.L.R.B. 893 (1993). In that case, the
employer had formed a number of safety and fitness committees in which subjects such as safety,
safety incentive awards and employee fitness and recreational areas were addressed by the
employee and management members. The employer essentially determined the composition of
each committee and set the agenda for each meeting. Decision-making was by committees.
Significantly, the employees' collective bargaining representative had attempted to bargain over
many of the issues that the committees eventually addressed but was essentially rebuffed.
Further, the union was not involved in formation or administration of the committees.
The Board found that duPont had violated Sections 8(a)(2) and 8(a)(5) through its actions. With
respect to the 8(a)(2) violations, the Board found that the committees met the definition of
statutory labor organizations under Section 2(5) in that they were organizations in which
employees participated, the organization existed in part for the purpose of dealing with the
employer, and the committees dealt with terms and conditions of employment. On the question
of "dealing," the Board defined this term as broader than the concept of bargaining which entails
compromise. Rather, dealing also includes a bilateral mechanism between two parties that
entails a pattern or pracfice in which a group of employees makes proposals to management,
management responds to the proposals by word or deed, and compromise is not required. Given
that test, the duPont committees were clearly "dealing" with the employer. The Board further
found that duPont had dominated the formation and/or administration of the committees.
The Board also described various ways in which such committees could be organized so as not to
be found to be dealing. On the one hand, if the group is merely engaged in brainstorming for the
purpose of developing "a whole host of ideas" (as opposed to proposals) from which
management simply gleans ideas, there is no dealing. Likewise, a committee that merely "shares
information" but does not make proposals is not engaged in dealing. Indeed, the Board found
that duPont's quarterly safety meetings and "safety pauses." in which employees were
encouraged to discuss their personal experiences with safety issues, but in which discussions of
bargainable issues were expressly avoided, did not constitute "dealing."
On the other hand, a committee which has the power to make decisions for itself (as opposed to
making proposals) without management vote, or by majority vote with minority management
participation, would not be dealing." Thus, under duPont . employee committees must either not
be empowered at all. or be completely empowered, to avoid a finding of dealing.
3. Other recent Section 8(a)(2) decisions .
More recently, in NLRB v. Peninsula General Hospital Medical Center . 36 F.3d 1262 (4th Cir.
1994), the Fourth Circuit set aside a Board order and held that an employee organization known
as the Nursing Services Organization ("NSO") was not a "labor organization" within the
meaning of Section 2(5). The NSO had existed since at least 1968 and served as a forum for
nurses to discuss and consider practice issues and as a forum for continuing nursing education.
Membership in the NSO included the hospital's Vice-President of Nursing, who is a registered
nurse and who had been a member of the NSO throughout her employment with the hospital.
In late 1989 and early 1990, the committee reorganized and began to take a more active role,
including a "job action" in 1990 to register complaints about various work-related issues. The
NSO also appointed two members, neither of whom was a supervisor or manager, to give
quarterly reports to the hospital's board of trustees. The Vice-President reported to the NSO that
the hospital announced that it would take steps to remedy the nurses' concerns. Soon after, the
union filed an unfair labor practice charge alleging violations of Sections 8(a)( 1 ) and (a) (2). The
administrative law judge concluded that the NSO was a "labor organization" and that the hospital
had violated Sections 8(a)(1) and (a)(2). Applying the principles set forth in Electromation . the
Board affirmed. Peninsula General Hospital . 3 1 2 N.L.R.B. 582 ( 1 993).
The sole issue before the Fourth Circuit on appeal was whether the Board erred in determining
that the NSO was a "labor organization" within the meaning of Section 2(5). The court began by
gleaning a summary of key principles from the Supreme Court's opinion in Cabot Carbon . The
court emphasized that: (1 ) employer communication with employees, even concerning working
conditions, does not necessarily mean that the employer is "dealing with" its employees; (2)
there must exist a pattern or practice of employee proposals and correlative employer responses
over time before an employer may be deemed as "dealing"; (3) isolated instances of employee
proposals and employer responses do not lead to "dealing"; and (4) management may sometimes
gather information from employees regarding working conditions and even act on that
90
information without "dealing with" the employees. Additionally, the court repeatedly pointed to
the Board's characterization of "dealing with" as a "bilateral mechanism" in Electromation .
Based on these principles, the court concluded that the NSO was not a "labor organization." The
court rejected the Board's allegation that the purpose of the NSO had changed in 1989, thereafter
existing to "deal with" the hospital. In the court's view, there was insufficient evidence of a
"pattern or practice" that would fall within the Board's "bilateral mechanism" analysis.
Subsequent decisions of the Board indicate the continued instability and incongruity of the law
with respect to these issues. In virtually every recent decision interpreting Section 8(a)(2) in the
context of employer-employee committees and cooperative management approaches, one or
more Board members have issued separate opinions or footnotes advocating varying
interpretations of Sections 2(50 and 8(a)(2). See , e. g. . Ma gen Medical Clinic. Inc ..
314 N.L.R.B. 1082 (1994) (members Devaney and Cohen issuing separate footnoted statements);
Prime Time Shuttle Int'l. Inc .. 314 N.L.R.B. 838 (1994) (Member Cohen issuing separate
statement in footnote); Gamey Morris. Inc. . 313 N.L.R.B. 101 (1993) (Members Devaney and
Raudabaugh issuing separate statements reflecting positions set forth in Electromation ): Reno
Hilton Resorts . 319 N.L.R.B. No. 140 (1995) (Member Browning issuing separate opinion);
Webcor Packaging. Inc. . 319 N.L.R.B. No. 142 (1995) (Chairman Gould issuing separate
footnote regarding Section 8(a)(2)); Vons Grocery Co. . 320 N.L.R.B. No. 5 (1995) (separate
statements of Chairman Gould-questioning continuing validity of duPont -and Member Cohen).
Further, in a recent concurring opinion, NLRB Chairman Gould has acknowledged the extremely
limited place for "legitimate cooperation" between employers and employees under current
Board interpretations of Section 8(a)(2). Keeler Brass Automotive Group . 317 N.L.R.B. 1110
(1995).
Ill
THE TEAM ACT
It is clear from the opinion in Electromation and subsequent cases that the NLRB's interpretation
of Section 8(a)(2) does not comport with the realities of the modem American workplace.
Indeed, Chairman Gould, both in his public statements and his writings, has expressed his
support for
the movement toward cooperation and democracy in the
work place .... This movement is a major advance in
labor relations because it its best form, it attempts nothing
less than to transform the relationship between employer
and employees from one of adversaries locked in
unalterable opposition to one of partners with different but
mutual interests who can cooperate with one another. Such
a transformation is necessary for the achievement of true
democracy in the workplace.
Keeler Brass . 317 N.L.R.B. 1110 (Chairman Gould, concurring). Such is precisely the objective.
91
and will plainly be the legal effect, of the TEAM Act.
As currently drafted, the TEAM Act would amend Section 8(a)(2) to allow employers "to
establish, assist, maintain or participate in" organizations in which employees participate to
address matters of mutual interest. Under the TEAM Act, however, such organizations will only
be exempt from Section 8(a)(2) as long as they do not "have, claim or seek authority" to
negotiate, enter into or amend collective bargaining agreements. In other words, the bill leaves
intact the prohibition against "sham" employer-dominated unions that hold themselves out to
employees as collective bargaining agents-the very concern which Section 8(a)(2) was expressly
designed to remedy. Thus, the TEAM Act will accomplish the goal of bringing the NLRA into
harmony with the realities of a globally competitive marketplace, while simultaneously
preserving the public policy goal it was enacted to implement.
IV.
CONCLUSION
Creating a labor policy that is consistent with the needs of American business is critical if the
United States is to have the ability to truly compete in a worldwide market. The TEAM Act, by
allowing companies to develop participatory management structures which will afford employees
greater involvement in corporate management and problem-solving, while simultaneously
preserving the legitimate goal of prohibiting company-dominated "sham" unions,
will greatly serve to help accomplish this goal. Accordingly, SHRM supports the passage of the
TEAM Act by Congress. SHRM appreciates the opportunity to appear before you today, and we
stand ready to assist you in any way we can as you continue your review of Teamwork for
Management and Employees Act.
92
Senator Warner. Your final comment would be to characterize
and embrace the testimony of the first panel. Am I correct in that?
Mr. King. Absolutely.
Senator Warner. In other words, the world has changed since
1938 and the 60 years that just about has elapsed, and it is time
that the inflexibility of the law be changed.
Mr. King. I do not think there is any question about it. When
you read section 8(a)(2) and section 2(5) you cannot help, as a mat-
ter of common sense — ^you do not have to be a lawyer — to come
away with the conclusion that this statute makes no sense in to-
day's climate. Under the NLRA, any organization of any kind can
be found to be a labor organization, and according to the NLRB's
own decisions, if employers pay employees to attend meetings, fur-
nish them conference rooms, consider grievances, or listen to em-
ployee proposals, a violation of our national labor laws can occur.
That is not reality today. It is good common sense to have that
dialog, and hopefully the union movement will see that reality.
Senator Warner. I participated in the hearing before the Senate
Labor Committee on this issue and I sort of used a very basic
theme to underline my concern about the problems in industry,
team management and labor today. That is, the suggestion box has
become an integral part of just about every workplace, whether it
is in the private sector or, indeed, in the public sector today. In a
sense, this law recognizes that we go one step further beyond the
suggestion box and let the folks that drop in the suggestions sit
around a table and make them orally rather than write them out
and put them in the box. Is that an oversimplification?
Mr. King. Not at all. It permits that process to evolve to intel-
ligent, constructive communication. I might add, in a union or non-
union environment. There have been problems in the union envi-
ronment. I would agree with my fellow panelists on that point. We
need to make sure, to the extent we can, that our laws encourage,
whether it be in a union environment or a non-union environment,
that type of followup from the suggestion box to face-to-face good,
old-fashioned common sense problem solving and cooperation.
Senator Warner. I thank you, Mr. King.
Now, Mr. Potter.
STATEMENT OF EDWARD E. POTTER, PRESIDENT,
EMPLOYMENT POLICY FOUNDATION, WASHINGTON, D.C.
Mr. Potter. Thank you. Chairman. I am here as president of the
Employment Policy Foundation and I want to talk about this issue
in a different context than we have talked about it so far. I want
to talk about it in terms of what it means in terms of economic
growth in this country, and what it means in terms of basic pocket-
book issues for the average worker today.
In the first panel we heard what I thought was very powerful
testimony regarding the positive benefits over a range of issues
that are crucial not only for the competitiveness of a particular
company, but also in terms of the interest of employees themselves.
Economic research shows that on an average basis that the produc-
tivity gains resulting from employee involvement average about 18
to 25 percent. There are studies that show that where companies
93
use very sophisticated forms of employee involvement that produc-
tivity gain can be as high as 50 to 100 percent.
In addition, where employee involvement has been tied to incen-
tive reward systems, particularly gain-sharing plans, there is an
additional productivity gain showed by research of 3 to 26 percent.
This is what you see in the workplace. This what you see in terms
of making companies more competitive.
Right now you can read every day in the paper an expression of
dissatisfaction with the size and level of economic growth in this
country and a real concern over the slowly rising state of real
wages in this country. Frankly, Senator, there are only three ways
that we can achieve greater economic growth and greater economic
well-being for people in this country. They involve increased capital
formation, technology policy, and improving worker productivity.
Our view is that the most immediate way that you can deal with
the question of economic growth is to work on the question of
worker productivity. Leaving aside for another hearing discussion
of training and education of workers and raising skills in that way,
the only other way that you can go about doing this is in terms of
a broad range and variety of employee involvement in workplace
decisionmaking, which includes in some instances, terms and con-
ditions of employment.
Between the 1980s and the 1990s there was a jump in the pro-
ductivity growth rate in this country. It was Vioths of a percent.
The principal thing that was happening in the workplace, if you
were to distinguish the 1980s from the 1990s, was the increased
use of employee participation systems of all kinds. We did a
study — there are three figures at the end of my testimony. The first
chart shows what were the contributing factors to increasing the
productivity growth rate in this country.
Essentially, the contribution based on greater worker experience
was one part. Another part is the increase in the overall level of
education of workers as measured by the number of workers with
high school diplomas. Believe it or not, actually capital formation
is a drag on productivity growth because based on a measure of
amount of capital per employee it actually is less in the 1990s than
it is in the 1980s.
What you are left over with is a category called change in work-
place organization processes, which the main change that has oc-
curred between the 1980s and 1990s is employee involvement. It is
our view that 70 percent of the growth of productivity in this coun-
try can be attributed to a broad range of employee involvement sys-
tems.
Now why is this important? If we can go now to the next chart.
Productivity growth is important to the individual workers because
without productivity growth there cannot be growth in real wages.
Senator Warner. Or job security.
Mr. Potter. Or job security.
Senator Warner. Which is the No. 1 issue today.
Mr. Potter. Absolutely. If you look at output per hour over a pe-
riod of time beginning in the late 1950s to the present time there
is essentially a one-to-one relationship between the productivity of
worker, the value of the goods that they produce, and how much
workers themselves are paid.
94
Now if we go to the last chart, the last chart shows us a couple
of things. The dotted line at the bottom of the chart represents two
things. It is the wage path that workers would have if we were on
a productivity growth rate of the 1980s. It also reflects the growth
path of our economy. The light blue line reflects the growth path
in the 1990s, reflecting the 70 percent contribution of employee in-
volvement. Then the top blue line is the growth path if you have
more sophisticated use of employee involvement and you tie that
with incentive reward systems.
Let us put this in some concrete terms that we can all under-
stand. If you look at this over a 20-year period, given the current
level and sophistication of use and employee involvement for the
median-wage worker today who makes $23,310 not including bene-
fits, over a 20-year period that worker will make $17,000 more
than they would without employee involvement. And if you take
into account greater sophistication in use, you are talking about po-
tential wage gains of $26,000 over a 20-year period.
So in conclusion, Mr. Chairman, it is clear to us that if we are
concerned about economic growth in this country, if we are con-
cerned about growing the real wages of the worker today, then you
have to be for employee involvement in the workplace. Thank you.
Chairman.
[The prepared statement and attachments of Mr. Potter follow:]
95
Employment Policy Foundation
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Testimony of
Edward E. Potter
President, Employment Policy Foundation
before the
Senate Small Business Committee
April 18, 1996
Increasing productivity is fundamentally important to increasing economic growth, real
wages, and the competitiveness of American business. Employee involvement in workplace
decisionmaking has a central role to play in improving productivity and economic growth.
Documented productivity gains from employee involvement for companies average 18 to 25
percent, and 70 percent of the increase in the national productivity growth rate between the
1980s and 1990s can be attributed to the increased use of employee involvement systems.
Without productivity improvement, there carmot be real wage gains and a rising
standard of living for working Americans, Worker compensation rises at the rate at which the
productivity rate increases. At present levels of sophistication and use, employee involvement
could add about 2.84 to 5.75 percent to total productivity and wage growth over the next 10
to 20 years. With greater sophistication and use, and removal of legal barriers to their use.
the wage and productivity gains could be as high as 4.84 to 8.74 percent in 10 and 20 years.
Employee involvement could increase an average employee's cumulative take-home pay by as
much as $26,000 over a period of 20 years. This is more than a year's pay for the median-
wage worker today.
Opposing changes in the National Labor Relations Act and the Fair Labor Standards
Act to remove the legal cloud over employee involvement amounts to being against "giving
American workers a raise." The future standard of living of working Americans depends on
unleashing the full potential of employee involvement as part of an overall economic growth
strategy for this nation.
96
Employment Policy Foundation
Suiie 1200 1013 riltcfiiili sireci, N\v Washington, ix; jixxn (:>02i 7K9 8(>M"> r<i\ (J02) 78>) K()K4
Statement of Edward E. Potter
President, Employment Policy Foundation
Senate Small Business Committee
April 18, 1996
I am Edward E. Potter, president of the Employment Policy Foundation. EPF is a
research and education foundation established in 1983 whose purpose is to provide
policymakers and the public with the highest-quality economic analysis and commentary on
U.S. employment policies affecting the competitive goals of American industry and the people
it employs. Through policy analysis and economic studies, we seek to encourage an
employment policy framework that will facilitate economic growth, increasing productivity,
job creation, job security, and a rising standard of living for a growing population. I
appreciate the Senate Small Business Committee's invitation to appear before you to discuss
the real wage and productivity consequences of employee involvement that are described in a
recent Foundation policy paper — Estimating the Potential Productivity and Real Wage Effects
of Employee Involvement.
The competitive realities of the world today are vastly different than they were for the
nineteenth and most of this century. Until the 1960s, where a nation stood economically and
the standard of living of its people depended largely on the abundance of natural resources,
and the availability of adequate capital and labor within its borders. Where production took
place was tied to these factors. At its birth, this country had the good fortune to be well-
endowed with nattiral resources, which made it rich. Being well-off during the 19th and 20th
centuries allowed us as a nation to save more, invest in more plant and equipment, educate
our labor force and, as a consequence, allowed us to have high productivity and pay.
The importance of these factors as a comparative advantage for the United States as a
nation, and its people, began to dissipate in the 1960s with the diffusion of technology,
instantaneous telecommunications, rapid and relatively inexpensive intercontinental
transportation, and catching up on the educational front by our competitors. Today, natural
resources endowments matter mainly in the developing world, and technology, capital, and
trained workers are readily-available to many countries. No longer do U.S. industry and its
employees effectively have a monopoly position in both domestic and international markets as
was the case at the end of World War II, when the United States was the only major
industrial power whose industrial base was not destroyed by World War II.
Although in recent years many countries have been closing the productivity gap with
this country, overall the U.S. labor force remains the most productive in the world. However,
being competitive today means stressing quality, investing heavily in process technologies,
effectively managing production processes, improving time to market, and adapting quickly to
changes in customer preferences. This is the path to a competitive, high-wage economy.
m
This is quite a different environment than the one that existed for much of this century when
the daily tasks of woricers could be precisely defined day in and day out. In today's rapidly
changing competitive environment, driven by new technology and rapid flow of information,
there are no longer lengthy periods of time without technical adjustment that equalize rates of
return on capital and wages among competitors.
Right now in this country, we are dissatisfied with the rate of economic growth and
the implications that slow economic growth has on real wages and living standards. Between
1960 and 1973. the U.S. economy grew at an average annual rate of 4.2 percent, almost twice
as fast as the 2.3 percent rate that the Clinton Administration is forecasting for the next seven
years. Much of the economic growth of the 1 960s was the result of the workforce growing at
around 2 percent, mostly due to the increased participation of women, and increases in
productivity growth of 2.9 percent annually. Recent productivity growth is at one half the
1960s level. With workforce participation rates at historically high levels, especially among
women, and baby boomers firmly in their working years, it is unlikely that future economic
growth will come from workforce growth. Between 1995 and 2002, the U.S. workforce will
grow at only a 1.1 percent rate.
So where will economic growth, American competitiveness, and rising living standards
come from in the foreseeable future? The best hope lies in achieving higher worker
productivity. Leaving aside the issues of raising the level of education and skills of American
workers, which is the subject of another hearing (and regardless of the policy prescription will
take a long period of time before economy-side effects are felt), increasing worker
productivity must come largely from more effective organization of production.
Increasing productivity is fundamentally important to increasing economic growth,
worker wages, and the competitiveness of American business. Drawing on the work on U.S.
productivity by Edward Denison, the 1995 Economic Report of the President suggests at least
three measurable factors that contribute to productivity growth. They are: (1) labor
composition (experience and education), (2) capital intensity, and (3) research and
development (R&D). According to the President's Economic Report, the remaining change in
productivity, after accounting for the impact of these other measurable factors, is largely the
result of "redesign of production processes". Denison's seminal work on productivity defines
this fourth factor — the redesign of production processes as including advances in technical
knowledge and improvements in workplace organization. In the decade of the 1980s the
primary organizational change that occurred was management innovation included in the
broadest definition of employee involvement.
Since the late 1970s, companies increasingly have recognized the need to take
advantage of the knowledge, skills, and abilities of all their employees and involve them in
workplace decisioiunaking. Increasingly, in high-performance workplaces, old-style, top-down
hierarchical management is being replaced by cooperative employee involvement
organizations ranging from suggestion boxes to committees to self-directed work teams.
98
Employee involvement systems were relatively scarce in 1980. but by the early 1990s they
were broadly in use. By 1994, some form of employee involvement had been adopted by 68
percent of large corporations and by 60 percent of small companies in America.
Our review of the employee involvement literature shows that study after stud>
documents the productivity-enhancing role of employee involvement in workplace settings. A
number of studies show companies experiencing average gains of 1 8 to 25 percent, with some
studies showing considerably higher gains. These gains reflect only the direct productivit>
effects of employee involvement. Employee involvement also produces improvements in
quality, turnover rate, and time to market. In addition, research evidence shows that
connecting incentive reward systems, such as employee ownership plans, profitsharing, and
gainsharing plans, generate additional productivity increases of 3 to 26 percent over and above
the gains from employee involvement alone.
In the current economic expansion, economists have noted the rise in the national
productivity growth in the 1990s compared to the 1980s. In fact, the average annual increase
in productivity for the early 1980s and 1990s was 1.5 percent and 1.9 percent respectively, an
increase of 0.4 percent per year in the recent period. As the following discussion and
attached Figure 1, summarizing our economic research shows, we believe that employee
involvement has been responsible for 70 percent of this improvement in the national
productivity growth rate.
Edward Denison's empirical findings allow us to adjust the overall 0.4 percent annual
change in the productivity growth rate for the effects of the four determining factors discussed
earlier: (1) labor force composition; (2) capital intensity; (3) research and development; and
(4) improved production processes. Examining historical data on productivity growth over
several decades, Denison found that 34 percent of the growth comes from the labor input
(except education); 13 percent from the increase in the level of worker education, 17 percent
comes from services provided by capital, and 6 percent comes from R&D. Using Denison" s
estimates in conjunction with our findings on the direction of change in the quality of the
workforce (positive), capital intensity (negative), and R&D (neutral) in our study Estimating
the Potential Productivity and Real Wage Effects of Employee Involvement, we find that 0.28
percent of the 0.4 percent increase between the 1980s and 1990s can be attributed to
employee involvement.
Figure 2 shows that the historical correlation between productivity growth (the value
of the goods and services produced) and real compensation (wages and benefits) is virtually
identical. That is, there is a virtual one-to-one relationship between gains in productivity and
increases in real compensation.
99
As shown by Figure 3, at its current rate of use and sophistication, employee
involvement could increase economic growth by improving total productivity growth and real
wages by 2.84 percent in 10 years and 5.75 percent in 20 years. The dotted line shows where
productivity growth and wages would be without the positive impact of workplace employee
involvement. With increased use and sophistication, and tying employee involvement to
incenti\e reward systems, these total economic gains could be as high as 4.28 percent in 10
years and 8.74 percent in 20 years.
The consequences of the national productivity boost from employee involvement
would be startling. Not onh would our economy grow more rapidly, but the median wage
worker who today makes $23,310 (excluding benefits) would take home a cumulative $17,000
to $26,000 more over a 20-year period than he or she would without the positive impact of
employee involvement on pay. Another way of looking at it is: the productivity gains
resulting from employee involvement could add over $2707 a year to the paycheck of an
employee by the year 2015, who otherwise would earn only $31,440 annually.
Using the political rhetoric of the day, it would be fair to say: "Anyone who is against
reforming our employment laws to take advantage of the economic gains of employee
involvement is against giving American workers a raise." Frankly, it is hard to understand
why anyone would be against correcting problems in two 1930s laws — the National Labor
Relations Act and the Fair Labor Standards Act — that create obstacles to workers having a
direct say in how work will be done in the workplace where they work, and to connecting
worker pay with productivity gains at the work unit level. Removing these impediments in
the law offers the prospect of more pay, more job security, and more competitive companies.
The American working public clearly wants these changes. A December 1994 national
survey by Princeton Research Associates shows that 63 percent of workers want more
influence in workplace decisions; 76 percent believe their companies would be more
competitive if employees were involved in production and operating decisions; and 79 percent
believe employee involvement improves product and service quality.
As we approach the 21st century, it is clear that the workplace is central to the
economic future of this coimtry — for workers and businesses alike. No longer can the United
States or any other nation dominate domestic and international markets based on natural
resource advantage. For developed economies, comparative advantage comes from working
better and managing smarter. In today's global market economy, what happens in the
workplace is of critical importance. Removing the legal cloud over employee involvement
and unleashing its full potential are pivotal strategies to increasing this nation's economic
growth rate, raising real wages, and improving the standard of living for all Americans.
100
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103
Senator Warner. Thank you very much.
Mr. Herrnstadt, I suggested that you prepare to talk about the
position taken by Mr. King, and that is, the objective of this law
was not to get into the heart of the negotiations between manage-
ment and labor. Would you like to give your rebuttal to that so that
it is side-by-side in the record?
Mr. Herrnstadt. Thank you, Senator. First, let me say so that
everyone is clear on this, section 7 is also very important to the
Act. Among other things it allows section 7 rights to survive. They
go hand in hand, which is why section 8(a)(2) has been called a
thread that keeps the whole woven fabric of the Act together.
Section 8(a)(2) protects not only employees before they join a
union but also after they join a union. The idea was that before
they join a union, workers are the most vulnerable. That is why it
is so important that employers do not dominate the organizations
that they form. S. 295 would take away this right. Although years
have passed since the Act was enacted, 60 years does not justify
taking away workers' rights. That is common sense.
The second point I would like to make is a reference that my fel-
low panelist made that labor's opposition to 295 is a way to keep
union membership somehow strong. These are arguments that
were made in the 1930s when the Act was passed. For example,
a gentleman named James Emery testified on behalf of a business
association and made the same type of argument. Congress rejected
that argument then and they should reject it now. The issue is over
employees freedom to choose their own independent representa-
tives.
Last, I would like to just make one final point, if I may. Senator.
That has to do with the clarification of the law. I only received Mr.
King's testimony this morning and I just very quickly reviewed it.
I noted that on page 11 he had a line about how one or more board
members have issued separate opinions or footnotes advocating
various interpretations of the law. The first case he cites, which is
the only one I have been able to look at is a case called Magen
Medical Clinic.
I found Member Cohen's separate footnote which he referred to,
and let me read it to you. It states:
Member Cohen finds it unnecessary to pass on the judge's conclusion that the re-
spondent interfered with the administration of the Committee. Given the extent of
interference with the formation of the Committee, Member Cohen finds that this
violation is sufficient to support the remedial order.
That is pretty clear. He found a violation of the law.
Thank you.
Senator Warner. I will consult with the Chairman but it would
be my request to him that this record remain open for a week with-
in which time all witnesses may supplement the record. I think it
is very important, now that you have had the opportunity to hear
one another, that you be given the freedom to comment, because
this record is going to be very important as this Committee further
deliberates the issue and, indeed, when we go to the floor.
Now, Mr. King, let us talk about a small business. Take a small
real estate office. Say one major owner and perhaps 8 or 10, in
many instances, women who are working full- or part-time, and
104
some men, of course. What should they do? Are they absolutely cov-
ered under this law? It seems to me they are.
Mr. King. Yes, they are, Senator.
Senator Warner. What can they do? Often times there are only
maybe three rooms in this real estate office; the manager's room
or the owner's room, and the conference room, and a sales room
with a series of desks. And they are all in there interacting all day
long. Technically, they are in violation I suppose.
Mr. King. They may very well be. A very recent decision of the
National Labor Relations Board, Keeler Brass Automotive was de-
cided in July 1995. Let me just quote from it in part. "We further
find that the respondent" — here the employer — "unlawfully contrib-
uted support to the employee committee. In particular, committee
meetings were scheduled biweekly in a company conference room.
The employer supplied necessary materials, including secretarial
and clerical assistance." That was part of the reasoning behind the
National Labor Relations Board decision in that case to find a vio-
lation of the act.
With respect to the clarity issue, there is not clarity in this area
as to how the law is applied. That is my point. Let me just read
further from this same decision. This is a three member decision
of the current National Labor Relations Board; same decision. "We
recognize that the difference between unlawful assistance and un-
lawful domination is often one of degree and that the line of demar-
cation between permissible cooperation and unlawful support,
domination, or interference is sometimes difficult to draw." That is
the current NLRB speaking.
I can assure this Committee there is not clarity as to how section
8(a)(2) is applied. It is quite unfortunate. Small businesses, pursu-
ant to your example, have a very difficult time unwinding this.
Large businesses have a difficult time.
Senator Warner. Say a firm of 20 individuals, what sort of legal
fees would they have to pay to defend one of these cases?
Mr. King. That is a sensitive subject. Senator.
Senator Warner. It is one on which you are an expert.
[Laughter.]
Mr. King. I have clients constantly, as do all lawyers in this
country, noting concerns about legal fees. It is a problem in our so-
ciety. It is a problem of doing business, particularly for small busi-
ness. Legal fees can be extremely expensive. When the National
Labor Relations Board with its resources and its various regional
offices, and the unions with its resources, its staff, its attorneys,
pursue an employer it can be devastating financially to a small- or
medium-size business.
But put aside the cost for a moment of legal fees. We also have
the opportunity cost that is lost. The key management decisions
that could be made to better market the product, to expand em-
plojmient opportunities, to secure job opportunities in the future,
those get set aside while we argue about whether section 8(a)(2) of
the National Labor Relations Act has been violated because some-
one furnished a conference room to some employees so they could
talk to their employer.
That is nonsense. I will talk common sense all day in this stat-
ute, but it is not here, I can assure you. We are not undermining
105
the basic protections in this statute because it still will be illegal
for an employer to dominate, interfere, to manipulate labor organi-
zations.
Senator Warner. I hoped to get some sort of a fee range out of
you. Can you give us
Mr. King. It certainly could be well in excess of $100 an hour for
advice in this area.
Senator Warner. In all probability.
Mr. King. In all probability, even small- and medium-size law
firms. Certainly, well in excess of $100 an hour, and that does not
take into account the time that the employer representatives would
spend in assisting.
Senator Warner. The Senate recently dealt with another very
important subject, product liability, in which again small business
is desperately at risk. I remember one witness said, every day I go
to my plant — this was an owner with a small business of 50 indi-
viduals — I am one lawsuit away from closing the doors due to a
product liability case because they are operating on a very fine
profit margin. And if they have to start shelling out $10,000,
1 15,000, $20,000 in lawyer's fees and then in the case of product
liability, be faced with punitive damages: Gone, the business; gone
are the jobs.
America was built on risk-takers. But it seems to me that we are
imposing a tremendous burden on today's contemporary risk-tak-
ers. What has happened is that the people, as I understand this
case, have just taken the law into their own hands in ignoring this
section and gone about it just hoping that they are not going to be
hit. I want to turn to my colleague here. Do you want to just wrap
up?
Mr. King. Senator, may I just make one comment? It is pertinent
to what you just said. I have had clients — and I am certainly not
going to waive attorney-client privilege here, but I have clients that
have come to me and we have discussed this area of the law, both
small- and large- and medium-size businesses. And they have con-
cluded that for a variety of reasons they are not going to expand,
or indeed, initiate or help initiate employee participation commit-
tees because they simply do not want the legal hassle, the legal
baggage, if you will, that may attend to such initiatives, and that
is unfortunate.
Senator Warner. Senator Levin.
Senator Levin. First let me read you part of the letter from the
Secretary of Labor and ask you to comment on that. This is to Sen-
ator Kassebaum dated April 16. We understand that your Commit-
tee, and this is the Labor Committee, of course, may consider S.
295, the TEAM Act on Wednesday, April 17, and then it goes on
to describe the act. I am writing to emphasize the administration's
opposition to S. 295 and to urge your Committee to not order the
bill reported.
Section 8(a)(2) of the NLRA states that it is an unfair labor prac-
tice for an employer to dominate or interfere with the formation or
administration of any labor organization. This provision protects
employees from the practice of unscrupulous employers creating
company or sham unions. Although S. 295 does not state an intent
to repeal the protection provided by section 8(a)(2), S. 295 would
106
undermine employee protections in at least two ways. First, the bill
would permit employers to establish company unions.
Second, it would permit employers in situations where the em-
ployees have spoken through a democratic election to be rep-
resented by a union, to establish an alternative company-domi-
nated organization. Neither of these outcomes is permissible under
current law, nor should they be endorsed in legislation. Either one
would be sufficient to cause me to recommend that the President
veto S. 295 or other legislation that permits employers to unilater-
ally set up employee involvement programs.
The administration supports workplace flexibility and high per-
formance workplace practices that promote cooperative labor-man-
agement relations, but has concerns about the impact of the TEAM
bill. Current interpretations of the law — now this is the Secretary
of Labor speaking — permit the creation of employee involvement
programs that explore issues of quality, productivity, and effi-
ciency.
It should be noted that the National Labor Relations Board has
recently decided five cases involving employee involvement pro-
grams. In two of the five cases, the Board found that the coopera-
tive group at issue did not violate section 8(a)(2). The other three
present classic cases supporting the concerns voiced above. More-
over, it appears that several more cases are pending before the
Board which concern the relevant issue.
For the foregoing reasons, the administration opposes the enact-
ment of S. 295, and if it were presented to the President I would
recommend he veto the bill. Then there is a reference which is ir-
relevant, to the 0MB.
First, it appears as though the employee involvement program is
not directly the issue. I think everybody supports — put it this way,
I surely support employee involvement programs. So that is not di-
rectly the question. The question is, what currently is in effect in-
hibits those which should not inhibit, if anything? Is there any cur-
rent rulings or laws which improperly inhibit employee involve-
ment programs? That is what I want to focus on.
First of all, let me start with a company which has a union. I
want to start with that one. I think all of the folks we had this
morning, and I may be wrong, were employers that did not have
unions. Does anyone know if that is accurate or not?
Senator Warner. That is correct.
Senator Levin. So all of the people we had this morning testify-
ing do not have a union in their place of employment.
Senator Warner. That is correct.
Senator Levin. Which is, it seems to me to begin with, a dif-
ferent situation or could be a different situation than if you do have
a union. I want to start with the other situation where you do have
a union. The union has a collective bargaining agreement with the
company, and under that agreement explicitly there is some kind
of an employee involvement program, call it a quality circle. It is
referred to right in the collective bargaining agreement.
Under this bill, the way I read it, the company could set up an-
other quality circle, providing that quality circle did not seek to
enter into collective bargaining agreements with the employer, or
to amend the collective bargaining agreements. So you could have
107
an agreement between a union and an employer which says that
we are going to have a quality circle. It is a signed agreement be-
tween the two explaining the way it is going to be set up. Then this
language, however, seems to say that the employer can come along
and set up an alternative to that.
Now that would seem to me to be a very significant change in
current law. Is that the intention of this bill? Where you have a
quality circle that is created by a union contract with an employer,
that an employer ought to be able to come along now and then par-
ticipate in, establish, assist — to use the words of the bill — an orga-
nization in which employees participate to address matters of qual-
ity, productivity, and efficiency separate from that quality circle
which has been part of the negotiated contract? Let me start with
you, Mr. King.
Mr. King. Thank you. Senator Levin. That is a very perceptive
question. Today, without any change in the law at all, the hypo-
thetical that you just presented can and does occur. That is to say,
we have a collective bargaining agreement in place, an employee
participation committee, quality circle, what have you, in place as
a result of the collective bargaining agreement, and then the em-
ployer also through initiatives of its employees or on its own has
another committee. That is perfectly fine if the employer does not
attempt to use the committee it helped create to undermine the
union, to circumvent the union, or somehow weaken the first com-
mittee you mentioned.
Senator Levin. So we have specific situations where you have
two quality circles, one created by contract and the other one cre-
ated without the consent of the union by the employer. This situa-
tion exists currently.
Mr. King. Yes, that can occur.
Senator Levin. It does occur?
Mr. King. Yes, can and does occur. If the employer is out of line,
section 8(a)(5) of the act is available for the labor organization in
question to file a charge and to argue, employer, you are trying to
undermine the status we have as the exclusive bargaining rep-
resentative. That also does occur. That is the duPont case.
Senator Levin. Do you have any comment on that, anyone else
on the panel?
Mr. Rundle. Yes, I would like to comment. I am surprised by the
statement that the employer may under existing law, when there
is a union in place with a contract in place, set up an alternative
quality committee. That can only be if that committee is not deal-
ing with terms and conditions of employment. So if that is the case,
then it also implies that employers may do it in non-union situa-
tions, which is what the employers have argued they cannot do.
The fact is that under section 8(a)(2) in the duPont case, the em-
ployer did set up a safety committee without agreeing to it with the
union, and through that committee agreed to provide a welder
whose welding shop was unsafe with a new welding shop. The
union had asked for that before and had been unable to get it. The
National Labor Relations Board ruled that this was a violation of
section 8(a)(2) and forced the committee to be disbanded.
That is very, very important because simply filing a bad faith
bargaining charge and saying that the employer was trying to cir-
108
cumvent the union and engaged in a unilateral change does not do
the union any good. It cannot even win a charge of unilateral
change in this case because the employer granted a change that
was exactly what the union wanted.
They can charge them with bad faith bargaining. The remedy for
bad faith bargaining is, go back and bargain in good faith. The
remedy under section 8(a)(2) is shut down the committee. It is an
extremely important right for unions.
Senator Levin. Does anybody else want to comment on that
question?
[No response.]
Senator Levin. Now let us take a situation where there is no
union. Take a small employer; the real estate office is fme. A cou-
ple employees at that office want to talk about the terms and con-
ditions of employment with the employer. You are saying, I gather,
Mr. King and Mr. Potter, that under current law employees are
prohibited or may be prohibited from talking about productivity at
that real estate office? This is a non-union office.
Mr. King. Yes, Senator. The way it happens is, it is just not an
intellectual discussion on productivity. How much are we going to
get paid for this increased productivity? Is there a premium for
working after 5 p.m.? Do we get certain time off? What is our leave
time if we achieve certain objectives? That is the problem with this
discussion.
Senator Levin. Now let me go to anyone else who wants to com-
ment. We have got that real estate shop.
" Mr. Herrnstadt. If we are talking
Senator LEVIN. There is no union.
Mr. Herrnstadt. Right. If we are talking simply about produc-
tivity, quality, I am a bit confused if management is now saying
that those are mandatory subjects of bargaining where they have
argued over several years that those were not mandatory subjects
of bargaining. Keep in mind also that even though
Senator Levin. I do not want to get to the label on it yet. I want
to just find out, can employees raise, initiate a discussion with the
employer. For instance, with the real estate employer about pro-
ductivity?
Mr. Herrnstadt. Of course.
Senator Levin. A couple of employees sit down and say to that
employer, if we could split our shifts, if we could have one person
here at 8 o'clock and leave at 5 o'clock, another person start at 10
o'clock and leave at 7 o'clock, we are all going to be better off and
we will cover the phones. Is there anything wrong with that under
current law?
Mr. RuNDLE. No.
Senator LEVIN. Now, if the employer initiated the conversation,
and said, I think if we split our shift here — the way I just de-
scribed — we would be more efficient. Remember, there is no union
involved here at all. Is there something in the current law which
prohibits or might prohibit an employer from raising a productivity
issue at that real estate office the way I described it?
Mr. RuNDLE. No.
109
Mr. King. Senator, it depends on how far the discussion goes,
and what the dialog is, and whether the proposal is back and forth.
Line-drawing in this area is part of our problem.
Senator Levin. Could an employer say, I think that if you folks
can work out something where one of you comes in at 8 o'clock and
leaves at 4 o'clock, the other half come in at 10 o'clock and leave
at 6 o'clock, we are going to have better coverage and we are all
going to have more sales in this office. That is the conversation. Is
there something in the current law which would prohibit that or
might prohibit that?
Mr. King. I would hope not. Senator.
Senator Levin. I would hope not, too, but might it?
Mr. King. If that is it, if there is nothing more, if that is the hy-
pothetical and nothing more, it would be very difficult I believe for
the National Labor Relations Board to establish a violation.
Senator Levin. So now take me down the road. Where do you
think it becomes a gray area?
Mr. King. I wish I knew.
Senator Levin. Your testimony is there is a gray area. So I want
you to take me down the road in that real estate office because that
was the conversation we had. There is something going on in that
real estate office which arguably could be argued should not go on.
We are talking about a non-union situation, I keep emphasizing. So
give me a situation that might be prohibited that you think should
not be.
Mr. King. I will be happy to. Let me just say one other thing be-
fore I get down that road. With respect to unionized employer situ-
ations, the House bill, as this Committee knows and as the Senator
is aware, did have an amendment attached to it that would make
the TEAM Act only applicable to non-union settings. The TEAM co-
alition, which SHRM is a part of, certainly can and will support
such an amendment if that would help move this legislation along.
That speaks to your first hypothetical.
Now moving down the road
Senator LEVIN. Does that change in the bill before us, too?
Mr. Herrnstadt. No.
Senator Levin. Has that change been made in the bill before us?
Mr. King. No. As I understand it, the bill that was passed out
of the Senate Labor Committee did not contain that provision.
Senator Levin. Now let us get to my hypothetical.
Mr. King. Right. We are moving down the road from just the one
conversation. Then that employee talks to two or three other fellow
employees, and not only is our hours of work example going to
change but maybe we ought to add some other changes: break
times. Maybe we also want to have some understanding about
scheduling with the employer as to who works weekends because
this is a real estate office and we need to talk to clients on Satur-
days and Sundays.
So two or three of the employees get together and then they ap-
proach management and say, we would like to talk about these
three or four areas we have identified. And the employer says,
maybe we should talk. Do you have any proposals? Maybe we could
consider those in the conference room next door tomorrow after-
noon. It is the employer's conference room. The employer supplies
25-436 - 96 - 5
110
coffee, clerical assistance by way of notetaking or whatever else is
needed to transcribe the discussions between the parties.
Then we are into a situation where we have people dealing with
one another — and that is a key phrase, as my fellow panelists have
pointed out, under the law. Then we are into this gray area where
this 20-person real estate office has probably created a section 2(5)
labor organization and may or may not be illegally dominating it,
depending on
Senator Levin. When you say they created it, they helped to cre-
ate it?
Mr. King. It came about.
Senator Levin. Participated in the creation of it?
Mr. King. Could be.
Senator Levin. Contributed to it?
Mr. King. Yes.
Senator Levin. That is enough?
Mr. King. Could be.
Senator Levin. Could be enough?
Mr. King. Could be enough.
Senator Levin. Let me go to the other panelists. Could that be
enough and should it be enough?
Mr. RUNDLE. In Washington Aluminum, two employees ap-
proached the employer and said that the place was too cold for
them to work effectively. They wound up getting, I believe it was
fired from their jobs, and they invoked their rights under section
7 which says, workers have a right to self-organization, to bargain
through representatives of their own choosing. They were self-orga-
nizing and dealing with the employer. It was perfectly legal. It was
not a section 8(a)(2) violation for the employer to deal with those
employees. The key is that the employer did not dominate them in
their method of organization.
So as I said earlier when you were out of the room, I once asked
the lawyer representing Electromation in the appeals decision, once
said, what am I to do if employees approach me and say that they
have got a problem? Am I supposed to just ignore them? I said,
why don't you just say, do you have any representatives? I would
be happy to meet with them. He said that sounded like a good idea.
So if the employer is not dominating the group the employer may
deal with it.
Another thing if you are talking about a small office
Senator Levin. Can I interrupt you right there?
Mr. Rundle. Yes.
Senator Levin. Do you have a disagreement with that?
Mr. King. I think that is an oversimplistic interpretation of the
law and does not comport with NLRB chairman Gould's analysis
in a recent case of similar facts, if you will.
Senator Levin. What case?
Mr. King. That is the case I referred to earlier, the Keeler Brass
Company case. In a concurring opinion, he goes at great length
wrestling with this area. I must give him credit. I think he is really
trying to be intellectually honest with this area of the law. And he
goes back and forth; it is not just because the employer initiated
the employee committee in question that there is a violation. May
or may not be. And he tries to go through different analysis. He
Ill
talks about financial support. He talks about other types of sup-
port.
So it is difficult, and that is really what we are wrestling with
here. You cannot make a simplistic analysis.
Senator Levin. I interrupted you. You were
Mr. RUNDLE. Yes, in reference to that, in the Magen Medical case
what happened was the employer had a very heavy involvement in
the formation of the committee, but then completely abandoned the
role, said, you folks figure out your own bylaws, you set up your
own committee and so forth. What the National Labor Relations
Board said was that the employer had illegally assisted the com-
mittee in its formation and the committee could be made legal by
simply having a vote to see if the employees wanted that commit-
tee to represent them, then the committee would be a legitimate
organization.
I would like to also point out that in a firm of 20 employees,
there are much, much larger firms that have found it very effec-
tive — as a matter of fact, I believe we heard an example this morn-
ing — to talk to the employees as a large group, to solicit opinions
and ideas from a large group. So it is absolutely clear that you
have not selected and favored a group of employees to represent
other employees and that that is perfectly legal.
Furthermore, we also heard an example this morning of self-
managed work teams, and there has been at least one case in
which self-managed work teams have been declared legal because
the employer was not dominating them. The employees were mak-
ing the decisions themselves.
Senator Levin. I am going to ask each of you this question. You
may have addressed it in your written testimony, in which case you
can just make reference to that. I would like to know whether or
not you support the creation of employee involvement programs —
let me start over. I want to read you a line from the Secretary of
Labor's letter. Current interpretations of the law permit the cre-
ation of employee involvement programs that explore issues of
quality, productivity, and efficiency. That is what the Secretary of
Labor says.
I will start with Mr. Potter. I am sure this sounds obvious given
your testimony, but the second half of it is not. Do you support the
creation of employee involvement programs that explore issues of
quality, productivity, and efficiency, and under what conditions?
Can you capsulize the answer to that question? I know the first
half is yes, but is it an unconditional yes or is it limited to certain
conditions?
Mr. Potter. I guess the starting point for my view of it is that
you cannot look at this in terms of there is only one way to do it.
They emerge in a whole range of circumstances. A lot of it has to
do with just simply the history and culture of the company. There
was testimony in the first panel how they started literally at the
suggestion box stage but leapt almost immediately to self-directed
work teams. They found that that was very viable.
Senator Levin. Is yours an unqualified yes?
Mr. Potter. No, it is not an unqualified yes in the sense that
I think there are some legitimate concerns that relate to the inter-
est of unions in terms of their interest being jeopardized both in
112
an organizing sense and in terms of the union environment itself
where they may have a collective bargaining agreement.
But as a practical matter, you have a dynamic economic situa-
tion. You have got things that employees know that will cause
them to initiate a set of actions that might lead to one of these sys-
tems. You also have circumstances, economic and financial cir-
cumstances, competitive and technological, that the employer may
know that causes them to initiate this. Most of the research that
I have seen that have come out of the Center for Effective Organi-
zations, Edward Lawler's group out at the University of Southern
California indicate that in order 90 percent of the instances these
things are initiated by employers because of some competitive
need.
While the driving force of it may in fact involve something that
is not terms and conditions of employment, eventually you get to
it because you get into issues of scheduling and hours of work. So
the question is, do you create something that interferes with the
free exchange of information?
This is where I think my view of what is going on now is partly
an issue of structure. On the one side you have got unions — and
they can correct me if I am wrong, but they essentially believe that
the best structure is to do this kind of thing where you have the
unions so you have the collective voice. On the other hand, you
have another point of view that says, yes, that is legitimate but
there are a whole range of other circumstances in 90 percent of the
private sector. So that is the box.
Senator Levin. I know I am forcing you to kind of boil down
these answers and they are much more complicated. But still I
would like to give each of you a chance to answer the question in
your own way. I will not repeat the question, Mr. King, unless you
want me to. Would you like me to repeat it?
Mr. King. As I instruct witnesses, I always like to have the ques-
tion before
Senator Levin. My question is, do you support the creation of
employee involvement programs that explore issues of quality, pro-
ductivity, and efficiency, and if so, under what conditions? If the
answer is yes, is it an unqualified yes?
Mr. King. Yes, to the first part of the question, Senator. And the
answer on behalf of SHRM to the second part would be that SHRM
fully endorses Senator Kassebaum's proposal on S. 295. We think
it is a thoughtful compromise to a difficult and unclear area.
Senator Levin. Thank you. Mr. Rundle?
Mr. Rundle. Yes, I believe that there are ways in which it can
be done that are valuable and effective. I believe there are exam-
ples in which that has been proven. The research on this shows
that the most effective employee involvement programs are those
that exist in unionized situations. As a matter of fact, one very
prominent study showed that the only measurable productivity
gains came in unionized situation.
As a matter of fact, in many non-union situations productivity
went down with employee involvement, apparently because it was
not being done very effectively because there was not a collective
voice for the employees and a feeling of security that the union pro-
113
vides. So the time that was spent in meetings was down time that
was not productive to the organization. So it is a qualified yes.
Mr. Herrnstadt. Senator, I will direct you in my statement
where I began by saying that we fought for a greater say in the
workplace for many years. Employee involvement programs, pro-
ductivity, quality and efficiency are certainly part of those issues.
Other issues that we fought for involving having a real voice are
issues like outsourcing, subcontracting, plant closing issues.
Your question, however, only addresses the first part of the issue,
as you know. The first part is whether or not there is an employee
involvement program. The second issue is one that we have been
talking about this morning
Senator Levin. Do you support the creation of those, and if so,
under what conditions?
Mr. Herrnstadt. This gets to that point. Senator. That is,
through the concept of collective bargaining you have a mechanism
whereby employee involvement programs will not be dominated.
There is some sort of defense mechanism. Even where there is not
collective bargaining, employees must have protection under the
law — a protection from not being dominated by the company. For
example, the company does not decide which employees are rep-
resentatives on those committees.
But let me just — there is an issue here before and that is, the
employers already have the right to communicate to their employ-
ees about issues like productivity, quality, and efficiency. Thank
you.
Senator Levin. Thank you.
Senator Warner. Senator Levin, do you have any concluding re-
marks?
Senator Levin. I would like to submit, if I can find the time to
do it, to the panel three or four or five examples of situations in
various companies, hypothetical situations probably. I would like
your reaction to specific situations as to whether you think it is ap-
propriate or inappropriate for the employees and the employer to
get together in quality circumstances. So I am going to try to actu-
ally — you have kept the record open a week and that would be
plenty. If I can do it in a week
Senator Warner. We will keep it open 2 weeks.
Senator LEVIN. We will try to get it to you in a week, if we can
devise them, so that you can give us your application of the prin-
ciple. Everybody supports employee involvement in one form of an-
other; everybody here. Some are more conditional than others, but
everybody supports it under circumstances. The question is, under
what conditions and protections for the employees from being domi-
nated or whatever the other protections are.
So, in order to try and see if we cannot isolate some of the dif-
ferences better, I would like to try to come up with three or four
hypothetical situations where we can apply the different prin-
ciples — because there are obviously differences in the panelists —
but apply them to some specific situations. I will try to do that in
a week.
Senator Warner. Thank you very much. Senator. I thank this
panel and again express my appreciation to the earlier panel. It
has been a very constructive and informative hearing.
114
The Committee stands in recess to the call of the chair.
[Whereupon, at 12:38 p.m., the Committee was adjourned.]
115
APPENDIX MATERIAL SUBMITTED
116
Post-hearing questions posed by Senator Carl Levin
to Owen E. Hermstadt, Legislative Counsel, International Association of Machinists and
Aerospace Workers, Upper Marlboro, Maryland
Hearing on "Small Business and Employee Involvement: The TEAM Act Proposal"
April 18, 1996
In Vons Grocery , the NLRB ruled that the "Quality Circle Group" (QCG) organized
by the employer was legal under the National Labor Relations Act. In Stoodv Co. , the
NLRB found that a Handbook Committee created by the employer to solicit employee
comments on the company handbook was legal under the NLRA. The NLRB
explicitly found that the Committee "did not exist, even in part, for such a purpose
[dealing with the employees regarding terms and conditions of work]." The Board
went on to say that they support "an interpretation of the Act which would not
discourage such programs." Why aren't organizations like QCG and the Handbook
Committee sufficient to protect the legitimate operational needs of workers and
employers, without amending the NLRA?
Please give some examples of specific activities between employers and employees
that you believe are not permitted under current law, but which should be permitted.
A letter of response from Owen E. Herrnstadt follows
117
International
Association of
Machinists £md
Aerospace Workers
9000 Machlnisis Place
Upper Marlboro. Maryland 20772-2687
Area Code 301
967-4500
Of FICE Of THE INTERNATIONAL PRESIDENT
GL-2 - Legislative
May 20, 1996
Re: U.S. Senate Small Business Committee
Hearing on S.295 (April 18, 1996)
The Honorable Senator Carl Levin
United States Senate
459 Russell Senate Office Building
Washington, DC. 20510-2202
Dear Senator:
I am writing m response to your letter of May 3, 1996 regarding the above-referenced
matter. Your specific questions demonstrate that current law already permits real employee
invoK'ement in the workplace. Indeed, the National Labor Relations Board cases you cite
demonstrate that contrary to what some critics have alleged, the law in this area is not a trap for
the unwary
As 1 mentioned in my testimony before the Small Business Committee, S. 295, the so-
called TEAM Act, is not only unnecessary, it would also weaken workers' rights by permitting
employers to control what kind of labor organizations they form as well as how those
organizations fiinction This runs counter to every notion of democracy and would rip the heart
and soul out of the National Labor Relations Act
Thank you for the opportimity to fiuther elaborate on our position regarding our
vehement opposition to S.295.
Respectfully,
Owen E. Hermstadt
Legislative Counsel
OEH/smc
cc: Kourpias
Buffenbarger
Michalski
118
Post-hearing questions posed by Senator Carl Levin
to G. Roger King, Partner, Jones, Day, Reavis & Pogue, Columbus, Ohio
Hearing on "Small Business and Employee Involvement: The TEAM Act Proposal''
April 18, 1996
In Vons Grocery , the NLRB ruled that the "Quality Circle Group" (QCG) organized
by the employer was legal under the National Labor Relations Act. In Stoodv Co. . the
NLRB found that a Handbook Committee created by the employer to solicit employee
comments on the company handbook was legal under the NLRA. The NLRB
explicitly found that the Committee "did not exist, even in part, for such a purpose
[dealing with the employees regarding terms and conditions of work]." The Board
went on to say that they support "an interpretation of the Act which would not
discourage such programs." Why aren't organizations like QCG and the Handbook
Committee sufficient to protect the legitimate operational needs of workers and
employers, without amending the NLRA?
2. Please give some examples of specific activities between employers and employees
that you believe are not permitted under current law, but which should be permitted.
A letter of response from G. Roger King follows
119
sill iJ.I 1 t c.K
M \N Al.t Ml S I
June 17. 1996
The Honorable Carl Levin
United States Senate
Washington, DC 20510
Dear Senator Levin:
Thank you for the opportunity to respond to your concerns about the TEAM legislation.
The responses to your questions are as follows:
Q. Why aren '/ organizations like QfualityJ CfircleJ G[roiipJ and the Handbook
Committee sufficient to protect the legitimate operational needs of workers and
employers, without amending the NLRA ?
A. Organizations such as QCG and the Handbook Committee may be sufficient to
protect the legitimate needs of workers and employers. Unfortunately, many of
these types of employee participation committees have been found to be "labor
organizations" as defined under Section 2(5) of the National Labor Relations Act
(NLRA) and such "labor organizations" have been found by the National Labor
Relations Board (NLRB) to have been impermissibly dominated and controlled
based on technical legal reasons under Section 8(a)(2) of the NLRA. For
example, the NLRB stated in Stoody Company , a case the Senator cited, that
"[d]rawing the line between a lawful employee participation program and a
statutory labor organiziition . . . [is] not [always] ... a simple matter because it
may he difficult to separate such issues as operations and efficiency from those
concerning the subject listed in the statutory definition of labor organization."
320 N.L.R.B. No. L 1 1 (1995) (emphasis added).
i>
The TEAM legislation is not necessitated by the fact that the employee
paficipation program docs not sufficiently protect the legitimate operational
needs of employers and workers; the impetus for the legislation, and the reason
employers and employees alike strongly favor it. lies in the difficulty of
determining which issues are legal to discuss in an employee involvement setting
120
and which are illegal.
As mentioned in the testimony, the inquiry of whether an employee involvement
program violates the NLRA is a two-step process. First, a determination must be
made as to whether the employee committee is a "labor organization" within the
definition of § 2(5) of the Act. In NLRB v. Cabot Carbon Company , the Supreme
Court listed three factors which render a committee a labor organization: (1)
employees must participate in the committee; (2) one of the committee's purposes
must be to "deal with" the employer; and (3) the "dealing with" must concern
grievances, labor disputes, wages, rates of pay, hours of employment or
conditions of work. 360 U.S. 203 (1959). If the committee is found to be a labor
organization, then it must be determined whether the employer unlawfully
dominated or interfered with it. 29 U.S.C. § 158(a)(2).
In both Stoody Company and Vons Grocery Company , the NLRB found that the
QCG and the Handbook Committee were dealing with their respective employers,
but explicitly held the committees were not violative of § 8(a)(2) of the NLRA
because of the absence of a "pattern and practice" of behavior sufficient to meet
the "dealing with" requirement. Stoodv Co. . 320 N.L.R.B. No. 1, 6-17; Vons
Grocery Co. , 320 N.L.R.B. 4-9 (1995). However, if another meeting had been
held between the parties or another communication exchanged, the NLRB could
very well have found that Section 8(a)(2) had been violated. Further, you are very
insightful to focus on the subject matters dealt with by the committees. As the
NLRB Chairman Gould and Members Cohen and Truesdale stated in Stoody
Company , it is often very difficult to separate operational from nonoperational
issues. The situation is made more unfortunate when lawsuits are filed for
management or employee errors in judgement. As evident in Stoody Company ,
employers can be sued even where it is the employee members of the committee
who broached the issues and breached the boundaries of what is permissible to
discuss under the under the Act. 320 N.L.R.B. at 7 ("[ejmployee members of the
Committee went beyond the discussion of inconsistencies between the handbook
and current practice by raising concerns and making proposals about such matters
as notification for vacation time").
The TEAM Act will bring greater predictability of the law in this area and will
reduce unnecessary litigation expenses to both employers and the government.
For this reason, we urge you to actively support the TEAM Act.
Q. Please give some examples of specific activities between employers and
employees that you believe are nol permitted under current law, but which should
be permitted
A. The confusion and difficulty of ascertaining permissible subject matters are
evident in the attached chart entitled "What's Legal, What's Illegal For Employee
Teams to Discuss." The chart is the product of the TEAM Work for America
Initiative, a broad-based coalition of which SHRM is an active member.
I hope that I have addressed your questions. Please let me know if I can be of'additional service
as you continue to address this and other humai^esource related issues before the Committee.
Very truly yours.
?^r K)ng
Partner
Jones, Day, Reavis & Pogue
121
Post-hearing questions posed by Senator Carl Levin
to Edward E. Potter. President, Employment Policy Foundation, Washington, D.C.
Hearing on '"Small Business and Employee Involvement: The TEAM Act Proposal"
April' 18, 1996
In Vons Grocery , the NLRB ruled that the "Quality Circle Group" (QCG) organized
by the employer was legal under the National Labor Relations Act. In Stoody Co. . the
NLRB found that a Handbook Committee created by the employer to solicit employee
comments on the company handbook was legal under the NLRA. The NLRB
explicitly found that the Committee "did not exist, even in part, for such a purpose
[dealing with the employees regarding terms and conditions of work]." The Board
went on to say that they support "an interpretation of the Act which would not
discourage such programs." Why aren't organizations like QCG and the Handbook
Committee sufficient to protect the legitimate operational needs of workers and
employers, without amending the NLRA?
Please give some examples of specific activities between employers and employees
that you believe are not permitted under current law, but which should be permitted.
A letter of response from Edward E. Potter follows
122
Employment Policy Foundation
Mav 15. 1996
The Honorable
Carl Levin
United States Senate
SR-459 Russell Senate Office Building
Washington, DC 20510-2202
Dear Senator Levin:
Thank you for your letter of May 3, 1996, seeking my response to your questions
regarding the legality of employee involvement structures under the National Labor Relations
Act.
Recent Case Law
Your first question involved the recent rulings by the NLRB in Stoody Co., 320 NLRB
No. 1 (1995), and Vons Grocery Co., 320 NLRB No. 5 (1995). Although the employers in
these cases were not found to have violated the law, a close examination of the circumstances
demonstrates why employers with sophisticated employee involvement workplaces can draw
little comfort from these decisions.
In Stoody, the company's general manager announced the formation of a "Handbook
Committee" consisting of volunteers from throughout its workforce. The committee was to
"gather information about different areas in the [company's employee] handbook that were
inconsistent with our current practices, that were obsolete, or that were misunderstood by
employees so we could get them cleared up as soon as possible." The committee was
specifically instructed to confine its efforts to information gathering and not to discuss any
actual changes in policy.
At the Handbook Committee's first meeting several employee members went beyond
mere information gathering by raising concerns about such matters as notification for vacation
time and offering proposals about different policies for addressing such issues. The manager
in charge of the meeting did not attempt to cut off these discussions, and after the committee
had met for an hour, it ultimately agreed that the company's policy on vacation notification
time should be changed. When the general manager learned of the Committee's action, he
immediately reiterated the instruction that the Committee was only an "information gathering"
body and was not to discuss changes in workplace policies. The committee never met again
and was disbanded after the United Auto Workers, which had been trying to organize
Stoody' s employees at the time, filed an unfair labor practice charge with the NLRB alleging
that the company's conduct in connection with the Handbook Committee violated Section
8(a)(2).
12a
On December 18. 1995, the National Labor Relations Board (NLRB) ruled that Stoody
did not violate Section 8(a)(2), holding that "isolated instances" of discussions of working
conditions did not con%ert an otherwise legal committee into an illegal labor organization.
If anything, Sloody merely reasserts what critics of the current law have repeatedly
stressed — that an employer's actions are perfectly legal as long as the employees are given no
real influence over workplace policies. Clearly, had the employer allowed the discussions to
continue and actually implemented any of the employees' proposals, a violation would have
been found.
As you have noted, the Board did discuss its desire to avoid discouraging employee
involvement programs. However, when the Board's discussion is read in its entirety it does
not so much demonstrate flexibility on the part of the Board as it reveals a recognition by the
Board of the law's current muddled state:
Drawing a line between a lawful employee participation program and a statutory labor
organization may not be a simple matter because it may be difficult to separate such
issues as operations and efficiency from those concerning the subjects listed in the
statutory definition of labor organization. If parties are burdened with the prosp ect
that any deviation, however temporary, isolated, or unintended, from the discussion of
a certain subject, will change a lawful employee participation committee into an
unlawfully dominated labor organization, they may reasonably be reluctant to engage
in employee participation programs. 320 NLRB No. 1, slip op. at 3 (1995).
Unlike Stoody, Vans Grocery involved a union setting. The employer had established
a Quality Control Group (QCG), which, over time, included all of the company's truck
drivers. These drivers were covered by a collective bargaining agreement between the
company and Teamsters Local 63.
For nearly three years, the QCG was able to limit itself to operational problems that
the union did not view as encroaching upon collective bargaining issues. However, at a
meeting in the summer of 1992, the QCG discussed and prepared proposals regarding a dress
code and an accident point system. The proposal was eventually referred to collective
bargaining with the union. The dress code was ultimately implemented but the accident point
system was never agreed upon. Meanwhile, later meetings of the QCG included a union
steward and the union was assured that there would be no further discussions of collective
bargaining agreements.
124
As with Stoody, the NLRB ruled that the QCG's consideration of the dress code and
accident point system had been an "isolated instance" of an illegal discussion. The fact that
the maitter had been immediately referred to collective bargaining and that the company had
worked with the union to avoid further encroachments was noted by the Board in ruling in the
employer's favor.
That Vons Grocery arose in a union setting is a fact that cannot be ignored. The
company was able to follow through on its employees' suggestions by referring the issue to
the collective bargaining process. Had the same facts arisen in a nonunion setting, the
employees' proposals would have had to have been dropped to avoid a violation of Section
8(a)(2).
The clear message to employers from Stoody and Vons Grocery is that, outside of the
collective bargaining process, any discussions of workplace issues between the employer and
employee teams should be limited to a brief period of time and should not produce any actual
policy changes.
Meanwhile, it should not be overlooked that, even though both Stoody and Vons
Grocery ultimately won before the Board, it took them three years and considerable legal
expenses to prevail.
Examples of Illegal Teams
You also asked for examples of employee involvement teams that would be illegal -
under current law. I will provide you with three examples involving issues that are
commonly raised in today's workplace settings.
Flexible Scheduling — The manager of a 24-hour grocery store receives numerous
complaints from employees throughout the store about problems they are having juggling their
daily schedules with family and personal needs. Until then, the manager had been in charge
of ensuring that the schedules kept all areas of the store covered around the clock. She
decides it would be better to let the employees themselves resolve the matter. She asks for
one employee from each part of the store (bakery, meat, check-out, etc.) to sit on a scheduling
committee with her to design a flexible scheduling system that lets employees juggle work
and family needs while ensuring that the store is adequately staffed at all times. The manager
wants to serve on the committee herself to ensure that there is minimal impact on the store's
overtime costs.
125
Each department is allowed to determine its own method for designating its
representative. In some departments, only one employee is interested. In others, no employee
is interested, so they use a lottery to designate an employee to serve. In those departments
where more than one employee is interested, the employees vote. The committee meets five
times over a three-week period and a system is developed that allows some employees to
work 10-hours a day for four days a week while other employees work nine days in a row
and have five days off at a time. Other employees continue to work traditional 40-hour
weeks. Meanwhile, overtime costs remain about the same. It is decided that the committee
will continue to meet at least every three months to monitor the situation.
The flexible scheduling committee is a clear violation of Section 8(a)(2). It is a "labor
organization" since it is composed of a group of employees and management who deal with
each other to address scheduling, which is a "condition of work" under the National Labor
Relations Act. American Oil Co.. 238 NLRB 294 (1978), enforced, 602 F.2d 184 (8th Cir.).
The fact that management initiated the committee, decided initially upon its structure,
provided the materials needed for the committee to operate, and paid the committee members
for time spent on committee business would unquestionably constitute domination,
interference and contribution of support to the labor organization under current interpretations
of Section 8(a)(2).
Upgrading of Machinery — A printing company decides to upgrade an existing book
press in a way that links it to a previously separate bindery line. This will involve substantial
changes in the way employees do their work and will undoubtedly result in consolidation of
what were previously two separate processes. Rather than dictate these changes to the
workforce, the company decides to establish a planning committee composed of the plant
manager, the plant's three foremen, the two most senior employees on the line, and any other
employees who wish to volunteer to be on the committee. Two major tasks of the committee
include designing a training program for learning how to operate the new machinery and
developing job descriptions and responsibilities for each of the employees who will be
working on the line. In addition, the company asks the committee to de\elop a scheduling
and compensation plan that will ensure that there are no layoffs resulting from the changes.
The committee meets throughout the six month period in which the new machinery is
installed. It proves highly successful except that it is unable to preserve every single job.
Thus, the committee works closely with the human resources department and the company's
attorneys to develop an early retirement incentive package that three senior employees take
advantage of
The committee's purpose having been achieved, it is disbanded.
126
The planning committee is a violation of Section 8(a)(2). It is a "labor organization"
since it is composed of a group of employees and management who deal with each other to
address numerous "conditions of work," including training, job descriptions, compensation,
scheduling and retirement benefits. The fact that management initiated and terminated the
committee, designed its structure, provided the materials needed for the committee to operate,
and paid the committee members for time spent on committee business would unquestionably
constitute domination, interference and contribution of support to the labor organization under
current interpretations of Section 8(a)(2).
Health and Safety — A small appliance manufacturer in Minnesota learns that it is
required under Minnesota law to have a health and safety committee. The law generally
requires employers with more than 25 employees to have a safety committee in which
employees participate, subject to a fine of $7,000 for failure to have such a committee.
The company decides that the most effective way to operate the committee is to ensure
that the committee members are knowledgeable about the health and safety requirements the
company must comply with. Thus, it asks for volunteers to serve on the committee but
requires that every committee member must first pass an OSHA-approved training course.
With the exception of the plant manager, the committee is composed entirely of line
employees. The plant manager's role is to ensure that the committee's decisions are kept
within budget. Otherwise, the committee is given complete autonomy. The selection of
future members is left to the committee, except management continues the requirement that
they graduate from the OSHA-approved training course.
The health and safety committee would be a violation of Section 8(a)(2) of the NLRA^
It is a "labor organization" since it is composed of a group of employees and management
who deal with each other to address health and safety, which is a "condition of work" under
the National Labor Relations Act. E.I. du Pont de Nemours c5: Co., 31 1 NLRB 893 (1993).
Management's initiation of the committee and designation of the requirements for
serving on the committee, as well as providing the materials needed for the committee to
operate, and paying the committee members for time spent on committee business would
constitute domination, interference and contribution of support to the labor organization under
current interpretations of Section 8(a)(2). The fact that the committee was formed to comply
with Minnesota law would not constitute a defense. NLRB Advice Memorandum, Goody's
Family Clothing, 21 AMR (LRP) f 31018 (Sep. 21, 1993).
Conclusion
These are but three examples of the myriad structures and purposes of employee
involvement teams and commigees. While Stoody and Vans Grocery indicate that, under
certain narrow circumstances, qgaplpyers may be able to operate within the law, these
examples are much closer to the kinds of sophisticated employee involvement culttires that
today's employers are embracing.
I appreciate the opporttinity to respond to your questions.
Sincerely yours,
Edward E. Potter
President
12T
Post-hearing questions posed by Senator Carl Levin
to James R. Rundle, Senior Extension Associate, I he School of Industrial and Labor Relations,
Cornell University, Ithaca. New York
Hearing on "Small Business and Employee Involvement: The TEAM Act Proposal"
April' 18, 1996
In Vons Grocery , the NLRB ruled that the "Quality Circle Group" (QCG) organized
by the employer was legal under the National Labor Relations Act. In Stoodv Co. , the
NLRB found that a Handbook Committee created by the employer to solicit employee
comments on the company handbook was legal under the NLRA. The NLRB
explicitly found that the Committee "did not exist, even in part, for such a purpose
[dealing with the employees regarding terms and conditions of work]." The Board
went on to say that they support "an interpretation of the Act which would not
discourage such programs." Why aren't organizations like QCG and the Handbook
Committee sufficient to protect the legitimate operational needs of workers and
employers, without amending the NLRA?
Please give some examples of specific activities between employers and employees
that you believe are not permitted under current law, but which should be permitted.
A letter of response from James R. Rundle follows
128
CORNELL
UNIVERSITY
School of Industrial and Labor Relations
The Honorable Carl Levin
United States Senate
Washington, DC. 20510-2202 June 10. 1996
Dear Senator Levin:
I'his regards the letter you sent following the testimony to the Senate Small Business
Committee in which I took part. The two questions which you submitted to Potter and King are
not amenable to comment by me, except to reiterate my view, based on published, widely cited
research that has never been refuted by other scholars or by employer organizations, that the record
of section 8(a)(2) in actual practice shows that there is no legitimate need to change the law, and
that the changes proposed in the TEAM Act would further the illegitimate aims of some employers.
The range of legal activities in employee involvement programs goes well beyond that
represented by Vons Grocery and Stoody . Also, whether an activity is legal or not under current
law depends on circumstances. The only meaningful response I could give would be to the
answers given by Potter and King rather than to the questions themselves.
What I found so striking about the testimony before the Senate Small Business Committee
is that none of the employers that were called to tesify had actually been found to have violated the
law. If there is a genuine problem with the existing law, employer organizations should bring
forward employers who have violated the law. I think the reason they do not do so is that
exposing actual violators to scrutiny would ruin the case for the TEAM Act. From my study of the
case law under section 8(a)(2) I believe that the behaviors of those employers actually found to
have violated the law are behaviors that any reasonable person would condemn. Additionally, they
are not behavoirs that improve the quality of product or efficiency of their firms. Since there is no
evidence that the existing law hurts competitiveness, there is no basis for the argument that
changing the law would improve competitiveness. Thank you for the opportunity to offer these
remarks.
Sincerely.
Jim Rundle
129
COMMENTS FOR THE RECORD
130
UK
STATEMENT OF ASSOCIATED BUILDERS AND
CONTRACTORS
BEFORE THE SENATE SMALL BUSINESS COMMITTEE
THURSDAY, APRIL 18
Associated Builders and Contractors and its 18,000 member companies strongly support the
"Teamwork for Employees and Management (TEAM) Act," S. 295, to clarify that cooperative
programs in the workplace are not illegal under the National Labor Relations Act, thereby reversing
the Electromation decision. S. 295 was marked up in the Senate Labor and Human Resources
Committee on April 17. The Electromation decision undermines a very positive and important
development in United States labor-management relations ~ labor-management cooperative
programs.
ABC is concerned that the legality of employee involvement (EI) structures, such as safety
committees, quality circles and self-managed work teams, has been threatened by the Electromation
decision of December, 1992. The case, which stems from a prohibition enacted as part of the 1935
National Labor Relations Act, in section 8(a)(2) prohibits employer "domination, interference or
support" of a "labor organization," i.e. "company unions." Long after the demise of company unions,
American employers began responding to international competition by establishing EI structures
which give employee teams far greater decision-making authority in the workplace.
The TEAM Act would protect legitimate EI structures and allow them to continue to evolve and
proliferate. These cooperative programs, sometimes called quality circles, labor-management quality
teams, or employee involvement teams, share the objective of improving communication, morale,
productivity and product quality by giving workers a direct voice in decision making.
S. 295 would retain the prohibition in Section 8(aX2) against "sham" company unions, while allowing
employers to give their employees a voice in workplace matters through some mechanism other than
collective bargaining. Currently, these EI structures are vulnerable to a charge being filed with the
NLRB by a union attempting to organize the company, a disgruntled employee, or anyone else under
^e Electromation decision.
The TEAM Act is basic and necessary legislation which would allow for improved labor-management
relations, increased productivity, and better quality of life for employees.
1300 North Seventeenth Street ■ Rosslyn, Virginia 22209 ■ (703) 812-2000
131
^BHP
BHP Copper
April 17, 1996
The Honorable Christopher (Kit) Bond
Chairman, Committee on Small Business
United States Senate
428 S Russell Senate Office Building
Washington, DC 20510
Dear Mr Chairman:
At the request of the United Steelworkers of America, a union which represents some of
our employees, we have decided not to offer personal testimony in favor of the Team Act.
We have agreed not to testify, not because we do not fully support the Team Act and the
need and right of every American workplace to be productive and competitive, but
because of our respect for the Union-Management Partnership we have forged with the
unionized segment of our workforce - a partnership that has attracted national attention
(see enclosed materials)
We believe the vast majority of employers use a team approach because it results in
increased productivity, employee job satisfaction, and enhanced employment security.
Creating and sustaining effective teams in the workplace takes a commitment beyond
union avoidance Nevertheless, we do not want our union partners to be criticized for
their progressive approach with us because of our testimony regarding this Act.
Again, we support the Act and believe it should become law. We have successflilly used
teamwork in both union and non-union workplaces. Teamwork is about people and work.
It is about good productivity, competitiveness, employment security and good pay.
If the only thing a union can offer to American workers is opposition to work systems that
benefit American workers, it is time that American unions seek to reinvent themselves in
the workplace BHP Copper has offered to work with the United Steelworkers and other
unions to accomplish just that.
Sincerely,
^. /V- 6' ^A^^
M. H Campbell
Senior Vice President and
Group General Manager, Human Resources
BHP Copper Inc. 7400 North Oracle Road Suite 200 Tucson Arizona 85704
Teleptione (520) 575-5600
BHP Copper Is a Business Group of Trie Broken Hill Proprietary Company Limited
132
Darian Rich
Manager, Human Resources
BHP Copper - Robinson Operations
MR. CHAIRMAN AND DISTINGUISHED MEMBERS OF THE COMMITTEE: My name is
Darian Rich. I am the Manager of Human Resources for BHP Copper - Robinson Operations
formerly known as Magma Nevada Mining Company. I have been employed in the Human
Resources field for 14 years. I am joined today by David Fairfield and Tim Juvera of our
Robinson Operations and Bob Simington of our Headquarters in Tucson, AZ.
We are grateful for the committee's efforts to encourage employee involvement and the
legislation needed to eliminate legal impediments to the continuation and growth of employee
involvement. That legislation is the "Teamwork for Employees and Management (TEAM) Act",
S.295. BHP Copper and its employees support this legislation.
Our goal in BHP Copper is to create a goal directed, performance based organizational culture.
Teams or work processes that promote collaboration and problem solving have had profound
effects on our production levels and cost of production. Our presence today is to proclaim the
success of our employee involvement efforts within both union and non-union settings. At
today's hearing, there have been or will be extensive written and verbal testimony regarding the
Team Act. We are not legal scholars but practitioners of processes that have at their core the
strengthening of America's production base and the quality of our working environment.
Without the Team Act, we believe our successful employee involvement programs are at risk,
and we are concerned.
My personal experience with employee involvement started with General Motors during the
1980's. The competitive environment in the auto industry was becoming unforgiving towards
inefficient production, which created costly, lower quality products. The attempt to create
collaborative working agreements whereby men and women focused on continuous improvement
efforts, safety, and ergonomic work-station design resulted in unique working relationships at
Pontiac and Cadillac Motor Car Divisions to name only a few. The receipt of the Malcom
Baldrige Quality Award in 1992 by Cadillac could not have occurred without the participative
design of work systems, employee education and leadership development by both union and
management personnel.
In 1992, 1 joined Magma Copper Co. in Tucson, AZ which had just successfully negotiated a 15
year labor agreement in an industry not known for labor/management harmony. I help design
human resource systems that are integrated to technical processes, which support the strategic
intent of the Company. The end result is the joint optimization of people, processes and
practices. The hallmark to Magma's success has been the involvement of hundreds of employees
in teams that create Corporate & Divisional vision statements, operating values and strategic goal
areas. These goal areas are profitability/cost, environment, safety, education,
compensation/employment security, teamwork and technology. The Magma program has
received praise from Labor Secretary Robert Reich, Representative Richard Gepherdt, as well as
recognition from a multitude of businesses and public service and academia entities including the
Harvard Business Review. You will hear shortly from Bob Simington who will describe the
financial results of the use of teams.
133
The opportunity to expand employee collaboration, which commenced in Arizona, came with the
start-up of a 450 employee open pit copper mining operation in Ely, Nevada in 1995. This
community of 5,000 had been severely economically depressed since 1978, upon cessation of
previous mining activity. In order to employ local applicants with expanded basic workplace
skills and interpersonal communication competencies. Magma Nevada Mining Company in
partnership with state and local employment and training agencies collaborated in pre-
employment training to prepare candidates for the application and assessment process. The
success of this effort was recognized by the Mountain Plains Adult Education Association as a
model for new workplace literacy involving team skills for the Department of Labor's Workforce
2000 project. You will hear shortly from David Fairfield and Tim Juvera of how this
collaborative approach benefits the employees and the operations.
Employees have 32 hours of team skills orientation geared towards communicating with others,
valuing differences, working in teams, participating in meetings, handling conflict, building trust,
and reaching agreement in teams. Three hundred and sixty three (363) of four hundred and ten
(410) employees participated in a Three Day Launch activity that produced alignment to our
Divisional Vision Statement and Values. During the Launch seventy five (75) projects were
identified for completion as critical for a successful commencement of operations. Since the
Launch in late January, our productivity has increased 35.6%. -v^
Our strategic Team Design and Implementation Process creates partnership agreements between
four (4) rotating twelve (12) hour work crews (Process Business Units) and the remaining
salaried maintenance support and general administrative areas. Each PBU employs forty five
(45) employees (process team members) who are responsible for all mining, milling and
maintenance functions for a particular shift. The PBUs and salaried support areas develop natural
work teams to take on additional tasks such as housekeeping, production scheduling, cross-
functional training and evaluating team members' performance, once production and technical
proficiencies are maintained. Team members may volunteer to take on a communication role for
twelve (12) months around these task areas on a particular team. The essence of our team
activity is communications. We share information on a real-time basis to promote problem
solving.
To be successfijl, employee involvement requires continued monitoring of management practices
and the organizations effectiveness in implementing work involvement initiatives. Paramount to
any degree of success, every employee must have a good understanding of how the company's
mission and goals impacts them. Employees are rewarded for teamwork, as well as individual
effort and achievement and are encouraged to try new approaches to make improvements.
Tremendous amounts of training and communication are required to create an organizational
environment with these characteristics. Last year the Robinson Operations expended 1 1% of
total paid hours worked to training and development. To date in 1996, 22% of paid hours
worked have gone towards technical and interpersonal training. This reflects our serious
investment in employee training and development.
Now you will hear from Bob Simington who will describe how teamwork turned around a
financially troubled company. Then, David Fairfield and Tim Juvera will describe teamwork as
practiced in both union and non-union workplaces.
134
Bob Simington
Internal Consultant
BHP Copper - North America
Mr. Chairman, my name is Bob Simington and I am a Corporate Internal Consultant for
Organizational Development at BHP Copper. I am here today representing BHP Copper and our
interests in passage of the TEAM Act.
Prior to January of this year, when we were purchased by The Broken Hill Proprietary Company
Limited (BHP) of Australia, we were a Tucson, Arizona based company doing business as
Magma Copper Company. It is our high involvement and team effort established by Magma
Copper Company that I would like to address with you today.
In 1987, Magma was spun-off from Newmont Mining Company. As a company, we had many
new hurtles to overcome. One of the most significant challenges was competing in a very
competitive global economy —a competitive marketplace where the price we sell our copper for
is not set by us, but is set by world economic forces on the London LME exchange and the
COMEX exchange in the United States
As a relatively small mining company , we were no match in competing with the world's largest
mining producers. In 1989 our cost to produce copper was approximately $.80 per pound-
making us one of the highest cost copper producers in the world. Magma had to increase
production and reduce costs as quickly as possible in order to bring net cost of production to a
competitive $.50 per pound range. Our very survival as a company was at stake.
In discovering ways in which we could accomplish this goal, we brought together members of
the unions and of management. Both Union and Management jointly chose the strategy of
creating a high involvement organization-one that uses teams, empowerment and smart risk
taking to accomplish its goals. This was a decision that has had a profound impact on our
business results and the employees of BHP Copper Company. These cooperative efforts have
been in effect for five years and I'd like to show you some of the results.
For example. Chart 1 illustrates the dramatic changes in costs and productivity as we embraced
our new union/management culture. From 1988 to the end of 1994, Magma increased production
by 78% and reduced costs by 26% ($.20 per pound). The production and cost improvements
were not driven by major capital/technological enhancements. The improvements were
generated by the creafive, innovative union / management workforce and its teams. Magma
tapped the best resource it had in the company-the hard working and dedicated American
worker. Being familiar with the work process, employees were able to develop more cost-
effective ways to do their work. Their suggestions were used to improve work processes creating
greater efficiencies and reducing costs.
Our cost to produce copper has been improving every year. By 1994-5 we were producing
copper in the $.60 per pound range. Additionally, in 1989 our stock rested in the $5 range. By
the time we were purchased by BHP this year, the stock had demonstrated steady growth until it
reached the final tendered price of $28 per share. We did well by our employees and our
shareholders.
135
With Magma's financial success we were not only able to compete in and survive the challenge
of global competition, we were able to share our success with our employees. We did this
through a variable pay system called gainsharing. Gainsharing is our way of rewarding our
workforce for their efforts at reducing cost and providing ideas for process improvement. As you
can see from Chart 2, Magma has paid out almost $31,000,000 to three thousand (3,000)
employees at its San Manuel workforce from 1990 to 1995. Employees are not only improving
work processes, they are being rewarded for their efforts by sharing in the company's gains.
High involvement and teamwork literally turned this company around. Our people, both union
and management, contributed to this effort. Since 1987, we have moved from a survival mode,
as a medium sized, high cost copper producer to a competitive and successful organization.
Companies from throughout the world have visited and studied our team based approach. Many
congressional leaders, and foreign union and management dignitaries, continue to visit and learn
about our unique union/management culture.
The team approach at Magma's union locations in Arizona is also used at its non-union locations
(i.e. Robinson). We intend to copy an excellent working partnership. Whether it is a union or
non-union environment, teams produce better results in the form of bigger paychecks for all the
employees and better returns to our shareholders. However, we are seriously concerned that
these programs are threatened and at risk. Consequently, we support the principles of employee
involvement for all work environments, union and non-union, that are offered by the Team Act.
Now, I would like to introduce David Fairfield, who through 18 years in the mining industry has
seen a variety of efforts at team-based operations.
$0.75
$0 70
$0 55
$0 60
Chart 1
136
1988-1994 Productivity/Costs
N ^
'X
■--_
^-^
'
/
-^
\.
V
^x \,
1 1 1 1 1 1
525
450
1988 1989 1990 1991 1992 1993 1994
Net cash cost per pound --Productivity
San Manuel Mining Operations
Gainshare/Profit Share
(OOO's)
Chart 2
1992 1993 1994 1995
Galnshare/Pront Share Payout
Years
137
David Fairfield
Technician IX - Mine Operations
BHP Copper - Robinson Operations
MR. CHAIRMAN AND DISTINGUISHED MEMBERS OF THE COMMITTEE: My name is
David Fairfield. I am a Lead Technician in the lubrication area at BHP Copper - Robinson
Operations. I have been in mining 18 years.
I got my first experience with Employee Involvement Teams in 1991 when I worked at Magma
Copper, Pinto Valley Division in Arizona. My previous work experience was dull and empty.
But when Employee Involvement started I saw an opportunity to work along with both my
supervisor and co-workers instead of just "doing my own thing" or what I was told to do. The
first few attempts were tentative and there were many breakdowns. As people grasped the ideas
and the philosophy and "got it" that they really had input, then their experience and knowledge
was put to use. The attitude of "us and them" gradually began to change. There were setbacks,
to be sure. When times were rough and things were not going well, the natural behavior was to
return to the old way of being. I enjoyed even this, because out of frustration came new ideas.
In 1994, 1 became aware of an opportunity in Ely, NV at a start-up of a copper mine. I was at the
top of the pay grade where I was and this new mine provided an opportunity for me to grow both
in my career, as well as personally.
When 1 was transferred it was emphasized that this was to be a team-based organization as the
other Magma mines had done since the early 1990's. When we started, it was apparent that this
organization meant it.
From the beginning, team decision was encouraged with emphasis on safety. Guidelines were
given and we were encouraged to make decisions on how jobs were to be done. If we failed, we
learned to do it right and if we succeeded, how to do it better. The maintenance people I work
with have a lot of experience and it is a valuable resource. There have been times when our
process bogs dowTi. We have a diverse workforce where most people have not had the training
or chance to work in this type of team environment before. It is not necessarily comfortable. It
is stressed that we not only have authority to make decisions, but are also responsible for them as
well. As we grow (together) and become more confident in our abilities, I see a workforce that
can accomplish and exceed their goals.
Now, let me introduce Tim Juvera who has worked in both union and non-union teams in
Arizona and Nevada.
BOSTON PUBLIC LIBRARY
138
3 9999 06349 914 7
Tim Juvera
Group Leader - Mill Operations
BHP Copper - Robinson Operations
MR. CHAIRMAN AND DISTINGUISHED MEMBERS OF THE COMMITTEE: My name is
Tim Juvera. I am a Group Leader (front line supervisor) for BHP Copper - Robinson Operations.
I have worked for Magma Copper (now BHP) for 10 years, nine of which I was in San Manuel,
AZ as a union team member.
I am here today to talk to you about teams and what they provide to all employees everywhere. I
worked for Magma before the inception of teams, through the creation of our team concept as a
union member and during the past nine months at Robinson as a team leader. The reason I came
to Robinson was to create and further the team roles we developed at San Manuel. I believe very
strongly in the team concept and have seen it work and improve lives in both a unionized setting
and non-union setting. These teams provide all team members an opportunity to reach their full
potential and contribute to their company's success.
What stands out the most for me personally, is that all teams have the opportunity to participate
with management in process improvement, safety, production, and administrative issues. Issues
are dealt with at the time of occurrence and specific resolutions are produced. This opens the
lines of communication between all members of the workforce for the purpose of responding to
the needs of the company.
The team concept creates trust, integrity, commitment, and mutual agreement between
management and labor and employee to employee. The enactment of the TEAM act would allow
these things to continue and evolve further. However, if these things are determined to be illegal
at BHP Copper - Robinson Operations it would be terrible. Robinson is very committed to our
success and would work within whatever constraints permitted rather than allow what we worked
so hard to create to fail. I hope that this is resolved with the enactment of the TEAM act, but if it
goes the other way, we will not allow our commitment to our team concept to fail.
On behalf of all four members of the Robinson Operations Team here today, we thank you for
the opportunity to testify at this hearing.
139
April 24, 19%
The Honorable Kit Bond
Chairman
Committee on Small Business
United States Senate
Washington, D.C. 20510
Dear Chairman Bond;
On behalf of the more than 600,000 small business owner members of the National
Federation of Independent Business (NFEB), 1 want to submit the following letter to the hearing
record on S.295, the Teamwork for Employees and Managers Act (TEAM Act), held on April 18,
1996..
TEAM Act greatly affects our members. In fact, results of a recent survey indicate that 88
percent of NFIB members believe employers should be permitted to deal with groups of
employees regarding work conditions without union representation.
The small business workplace epitomizes cooperation. Small business owners typically
work side-by-side with their employees each and every day. These same small business owners
look to their employees for input and involvement in decisions that effect their small business.
Unfortunately, some employees in small businesses are limited in their involvement in
collectively offering suggestions to small business owners regarding such issues as health, safety
and training needs. This occurs because current law states that it is illegal for employers and
employees to work together to resolve workplace issues that involve terms and conditions of
employment by using committees or teams that fall within the definition of a "labor organization,"
unless those employees are represented by a union.
The TEAM Act rectifies this situation and provides a bridge for employee involvement.
The legislation amends section 8(a)(2) of the National Labor Relations Act and permits teams
composed of employees and employers to address terms and conditions of employment in non-
union settings. Under the bill, teams would be allowed to discuss such issues as scheduling, work
assignments, health and safety issues, and training, all of which are illegal under current law.
600 Maryland Ave S.W.. Suite 700 • Wishington. tX 20024 . 202 554 9000 ■ Fax 202 554 04%
The Uuardian oj Small Business for Fifty Years
140
The TEAM Act is a common sense bill that addresses the realities of the small business
workplace. It is based on the premise that the law enacted in 1935 does not reflect the current
cooperative workplace of the 1990's. Nor does it reflect the fact that 90 percent of all businesses
in the country have less than 20 employees.
We look forward to working with you on this important legislation.
Sincerely,
)an Danner'
Vice President
Federal Governmental Relations
o
25-436 (144)
ISBN 0-16-052985-9
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60"529856
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