[Senate Report 104-259]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 389
104th Congress                                                   Report
                                 SENATE

 2d Session                                                     104-259
_______________________________________________________________________


 
           TEAMWORK FOR EMPLOYEES AND MANAGEMENT ACT OF 1995

                                _______


                  May 1, 1996.--Ordered to be printed

_______________________________________________________________________


   Mrs. Kassebaum, from the Committee on Labor and Human Resources, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 295]

    The Committee on Labor and Human Resources to which was 
referred the bill (S. 295) to permit labor management 
cooperative efforts that improve America's economic 
competitiveness to continue to thrive, and for other purposes, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Introduction.....................................................1
 II. Purpose and summary..............................................3
III. Background and need for legislation..............................3
 IV. Legislative history and committee action........................16
  V. Explanation of bill and committee views.........................19
 VI. Cost estimate...................................................23
VII. Regulatory impact statement.....................................23
VIII.Section-by-section analysis.....................................23

 IX. Minority views..................................................25
  X. Changes in existing law.........................................41

                            I. Introduction

    In his State of the Union address in 1996, President 
Clinton told the country: ``When companies and workers work as 
a team, they do better. And so does America.'' Unfortunately, 
our Federal labor law actually prohibits many forms of worker-
management teamwork.
    The Teamwork for Employees and Management (TEAM) Act, S. 
295, will promote greater employee involvement by removing the 
barriers created by Federal labor law. These barriers, largely 
found in section 8(a)(2) of the National Labor Relations Act 
(NLRA), were originally targeted at ``company'' unions but 
actually sweep much broader to ban many cooperative labor-
management efforts.
    This legislation, S. 295, signals a new era in employee 
relations. The bill recognizes, as President Clinton did in his 
national address, that the best workplaces for employees and 
the most productive workplaces for employers are ones where 
labor and management work together.
    The Senate has focused several of its legislative efforts 
on decentralizing decision making. In the employment arena, 
employee involvement increases local decision making and 
provides employees with a voice in how to structure the 
workplace. In workplaces where employee involvement programs 
have been implemented, employees are empowered to play a role 
in reaching decisions on many aspects of their employment.
    As this nation enters the 21st century, the committee 
believes it important that U.S. workplace policies reflect a 
new era of labor-management relations--one that fosters 
cooperation, not confrontation. Employees want to work with 
their employers to make their workplaces both more productive 
and more enjoyable.
    A recent study of employees' views in this area indicates 
that a majority of workers want a voice in their workplace. 
They also believe that their contribution would be effective 
only if management cooperates. When asked to choose between two 
types of organizations to represent them, workers chose, by a 
3-to-1 margin, one that would have no power but would have 
management cooperation over one with power but without 
management cooperation.\1\ Employee involvement gives workers 
the best of both worlds by offering both empowerment and 
cooperation.
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    \1\ ``Worker Representation and Participation Survey,'' Richard B. 
Freeman and Joel Rogers, Conducted by Princeton Survey Research 
Associates, December 1994.
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    The legality of employee involvement and labor-management 
cooperative efforts must be clarified. These human resource 
programs move domestic industry toward the high performance 
workplaces necessary to compete in the increasingly competitive 
global economy. The broad definitions in the NLRA were written 
for a different era of employer-employee relations and no 
longer make sense in today's workplace.
    The hierarchical model of the work force of the early 20th 
century, where each employee's and supervisor's job tasks were 
compartmentalized and performed in isolation, is not effective 
in the current globally competitive marketplace. Federal labor 
law must evolve to adjust to the modern reality of overlapping 
responsibilities and each employee having a sense of the whole 
production process. The TEAM Act accomplishes this evolution. 
For these reasons, the committee fully supports its enactment.

                        II. Purpose and Summary

    The purpose of S. 295, the Teamwork for Employees and 
Management (TEAM) Act of 1995, is to amend the National Labor 
Relations Act (NLRA) to protect legitimate employee involvement 
programs against governmental interference, to preserve 
existing protections against coercive employer practices, and 
to allow legitimate employee involvement programs, in which 
workers may discuss issues involving terms and conditions of 
employment, to continue to evolve and proliferate.
    The TEAM Act would clarify the legality of employee 
involvement programs by adding a proviso to section 8(a)(2) of 
the NLRA clarifying that an employer may establish, assist, 
maintain, or participate in any organization or entity of any 
kind, in which employees participate, to address matters of 
mutual interest--including, among others, issues of quality, 
productivity, and efficiency.
    The bill also specifies that such organizations may not 
have, claim, or seek authority to enter into or negotiate 
collective bargaining agreements or to amend existing 
collective bargaining agreements, nor may they claim or seek 
authority to act as the exclusive bargaining agent of 
employees. Senate bill 295 specifies that the proviso does not 
affect other protections within the NLRA, thereby ensuring that 
employee involvement cannot be used as a means to avoid 
collective bargaining obligations. The amendment to section 
8(a)(2) contained in the bill is designed to provide a safe 
harbor for cooperative labor-management efforts without 
weakening workers' ability to select independent union 
representation.

                III. Background and Need for Legislation

    In the wake of the Industrial Revolution, American business 
operated under the time-honored principle of the division of 
labor. This theory was based on the belief that ``when a 
workman spends every day on the same detail, the finished 
article is produced more easily, quickly, and economically.'' 
\2\ Indeed, for most of this century, the accepted American 
method of human resource management--named ``Taylorism'' after 
Frederick Taylor, a turn-of-the-century engineer and inventor--
has been top-down decision making aimed at minimizing ``brain 
work'' at the shop-floor level. Employees simply did as they 
were told by their supervisors, who also operated within 
confined parameters set by their superiors.
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    \2\ Alexis De Tocqueville, ``Democracy in America'' 555 (George 
Lawrence trans., Harper & Row 1988) (1848) (quoted in Michael L. 
Stokes, Note, ``Quality Circles or Company Unions? A Look at Employee 
Involvement After Electromation and Dupont,'' 55 Ohio St. L.J. 897, 901 
(1994)).
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    Decades ago, when market forces were relatively static with 
the United States in the dominant position, Taylorism ensured 
the continuity and conformity necessary for American companies 
to maintain their economic supremacy. The past 20 years, 
however, have witnessed a dramatic transformation in the 
fundamental nature of labor-management relations. This 
transformation is due primarily to foreign competition, rapid 
technological change, and other factors which have provided 
strong incentives for altering workplace relationships.
    By the late 1970s, manager began to view employees as a 
source of ideas for ``developing and applying new technology'' 
and ``improving existing methods and approaches to remain 
competitive.'' \3\ Rather than organizing workers to perform a 
single task, as had been the practice under division of labor, 
companies began instituting programs to involve employees more 
broadly in solving problems and making decisions which once 
were exclusively within the realm of management.\4\
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    \3\ Neil DeKoker, ``Labor Management Relations for Survival,'' in 
``Industrial Rel. Res. Ass'n Proc. of the 1985 Spring Meeting'' 576, 
576 (Barbara D. Dennis ed., 1985) (quoted in Stokes, supra note 2, at 
902).
    \4\ Stokes, supra note 2, at 903.
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    These programs, implemented in both union and nonunion 
workplaces, included quality circles, quality of work-life 
projects, and total quality management programs. By involving 
workers to varying degrees in most aspects of production, these 
programs frequently resulted in substantial productivity gains, 
as well as increased employee satisfaction

                     Forms of Employee Involvement

    Employee involvement comes in many forms. It is not a set 
``program,'' and therefore, it defies easy definition. Rather, 
employee involvement is a means by which work is organized 
within a company and, as such, a way for employees and 
employers to relate to one another within an organization.
    Because of this, there is no single dominant form of 
employee involvement. It usually includes some structure method 
for addressing workplace issues through discussions between 
employees and employer representatives. Indeed, two out of 
every three employee involvement structure do not even have a 
manual of procedure, thereby allowing the participants to 
design their structure to meet their changing needs.\5\
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    \5\ See Edward E. Lawler III, Gerald E. Ledford, and Susan A. 
Morhman, ``Employee Involvement in America: A Study of Contemporary 
Practice'' (American Productivity & Quality Center: Houston, TX), at 33 
(1989).
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    Although employee involvement programs come in infinite 
varieties, for discussion purposes they can be classified in 
general terms into several categories. Five of the most common 
forms of employee involvement include:

Joint labor-management committees

    In union settings, joint labor-management committees 
provide union and management leaders with a forum for ongoing 
discussion an cooperation outside the collective bargaining 
context. In nonunion settings, the committees are composed of 
employees (elected or volunteered) in addition to management 
officials.\6\ While some of these committees have a special 
focus, most are designed to address multiple issues at the 
department or plant level and often serve as an umbrella under 
which smaller employee involvement efforts operate.\7\
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    \6\ Edward E. Potter, ``Quality at Risk: Are Employee Participation 
Programs in Jeopardy?'' (Employment Policy Foundation: Washington, 
D.C.), at 19 (1991).
    \7\ Congress has established a grant program, currently funded at 
$1.5 million, to help selected labor-management committees carry out 
joint programs. This program is administered by the Federal Mediation 
and Conciliation Service.
    \8\ Potter, supra, note 6, at 21. Martin T. Moe, Note, 
``Participatory Workplace Decision making and the NLRA: Section 
8(a)(2), Electromation, and the Specter of the Company Union,'' 68 
N.Y.U. L.Rev. 1127, 1158 (1993).
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Quality circles

    Quality circles are small groups of employees that meet 
regularly on company time with the goal of improving quality 
and productivity within their own work areas. They typically 
are comprised of hourly employees and supervisors who receive 
special training in problem-solving techniques. Although 
quality circles usually lack authority to implement solutions 
without management approval, they provide workers with an 
invaluable opportunity to influence the manner in which their 
products are manufactured and designed.\8\
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    \9\ Moe, supra note 8, at 1158-59.
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Quality of work-life programs

    Quality of Work-Life (QWL) programs are also designed to 
improve productivity but focus primarily on improving worker 
satisfaction. Unlike quality circles, which focus directly on 
product improvement, QWL programs are intended to bring about 
fundamental changes in the relations between workers and 
managers and can include changing the decision-making, 
communication, and training dimensions within an organization. 
Joint labor-management committees are frequently used to 
coordinate and monitor QWL programs.\9\
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    \10\ Id.
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Self-directed work teams

    Self-directed work teams are groups of employees who are 
given control of some well-defined segment of production. Such 
teams are often responsible for their own support services and 
personnel decisions in addition to determining task assignments 
and production methods.\10\

Gainsharing

    Gainsharing is the generic term used for a variety of 
programs intended to address the problem of loss of sales and 
jobs caused by declining productivity. A common feature of 
these programs is the payment of bonuses to employees when 
productivity is increased. Gainsharing programs are often 
developed and administered by joint labor-management 
committees, which also serve as clearinghouses for employee 
suggestion for improving productivity.\11\
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    \11\ Moe, supra note 8, at 1160.
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    Again, the examples discussed above are intended to provide 
illustrations of the various ways in which employee involvement 
has been utilized in today's modern workplace. Many other forms 
are successfully utilized by both small and large employers.
    More important to this discussion, however, is the fact 
that employee involvement, regardless of its form, seeks as its 
fundamental goal to unlock the productive capabilities of 
American workers. And, while it may be argued that some 
similarities exist between modern employee involvement and the 
employer-dominated company unions of the 1930s, today's 
programs differ dramatically in intention, form, and effect 
from the organizations the National Labor Relations Act sought 
to abolish. Indeed, today's employee involvement programs 
``seek to engender labor-management cooperation and improve 
worker productivity and morale by granting employees greater 
involvement in the issues that most affect their work lives.'' 
\12\
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    \12\ Id
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               employee involvement enjoys broad support

    Notwithstanding the contentions of opponents of the TEAM 
Act, employee involvement enjoys wide-spread and ever-
increasing support among employees, employers, academics, and 
policy-makers.
    In testimony before the Senate Committee on Labor and Human 
Resources, Ms. Angie Cowan, an employee and team member at TRW 
in Cookeville, TN, described her company's use of employee 
involvement:

          The biggest difference between TRW, Cookeville and 
        other businesses and plants is our employee involvement 
        and communication. * * * We have team meetings whenever 
        needed to discuss team issues such as line rotation 
        schedules, changes of lunches and/or breaks, changes of 
        our delivery schedule, and safety or housekeeping 
        films. * * *
          The communication at TRW absolutely cannot be beat. 
        We know at any time, we can call anybody in the plant 
        without having to have a middle person. That is the 
        very best thing. * * *
          How many of you can say that you have got the best 
        boss in the world? I can. I really love my job.\13\
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    \13\ Hearing on S. 295, the Teamwork for Employees and Management 
(TEAM) Act before the Senate Committee on Labor and Human Resources, 
104th Cong., 1st Sess. at 11-12 (Feb. 9, 1995) (statement of Angie 
Cowan, rework coordinator at TRW).

    Ms. Cowan's colleague described to the committee the way in 
which she and her fellow employees responded to the use of 
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employee involvement:

          What employee involvement means to me is that we come 
        to work looking forward to starting our day and when we 
        go home, we feel good about what we've done because we 
        know we've had a direct influence on the decisions that 
        affect our work environment.\14\
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    \14\ Id. at 51.

    Another witness before the committee, Ms. Molly Dalman, a 
team member from the Donnelly Corp. in Holland, MI, described a 
similar experience of increased job satisfaction as well as 
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improved productivity:

          Our goal is to keep each other informed, to produce a 
        high-quality product in the most efficient manner. This 
        helps us to be competitive in the market.
          Teams have their biggest impact in their work areas. 
        I know my job, what I need to do and how to do it 
        better than my team leader or any engineer. Therefore, 
        I need to feel as if I have some control in my work 
        area, and by working in teams, I have that control.\15\
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    \15\ Hearing on S. 295, The Teamwork for Employees and Management 
(TEAM) Act Before the Senate Committee on Labor and Human Resources, 
104th Cong., 2d Sess. at 9 (Feb. 8, 1996) (statement of Molly Dalman, 
team member at Donnelly Corp., Holland, MI).

    Senior management has voiced similarly enthusiastic support 
for employee involvement. This sentiment was perhaps best 
reflected in the testimony of Richard Wellins, senior vice 
president for Development Dimensions International, Pittsburgh, 
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PA, before the Senate Committee on Labor and Human Resources:

          [T]eams and other forms of employee involvement have 
        had a tremendous impact on American competitiveness. On 
        manufacturing plant floors and in corporate offices 
        across the country, work teams are making employees and 
        their companies more productive than at any time in the 
        history of this country. Witness GE's cross-train teams 
        which increased productivity by 115 percent; teams at 
        Miller Brewing's new plant start-up improved 
        productivity by 30 percent; the 1,000 plus teams at 
        Texas Instruments, a Baldrige winner, who helped cut 
        product return rates from 3 to .03 percent; and Fisher 
        Rosemont, an Emerson Electric company, whose cycle time 
        was cut by 62 percent. These are just three of 
        literally hundreds of examples of teams in action.\16\
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    \16\ Hearing on S. 295, The Teamwork for Employees and Management 
(TEAM) Act Before the Senate Committee on Labor and Human Resources, 
104th Cong., 2d sess. at 22 (Feb. 8, 1996) (statement of Richard 
Wellins, DDI Inc., Pittsburgh, PA).

    Academics have also acknowledged the fundamental changes in 
labor-management relations over the last 20 years and are 
extremely supportive of the specific goals employee involvement 
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seeks to achieve. As noted by Professor Samuel Estreicher:

          Competitive pressures on U.S. firms from a variety of 
        sources--the emergence of international product 
        markets, deregulation of air and truck transport and 
        telecommunications, technological advances that reduce 
        the advantages of local firms, and capital market 
        forces that require enhancement of shareholder values--
        are undermining Taylorist conceptions of how best to 
        utilize front-line workers.\17\
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    \17\ Samuel Estreicher, ``Employee Involvement and the Company 
Union'' Prohibition: The Case for Partial Repeal of Section 8(a)(2) of 
the NLRA, 6 N.Y.U. L.Rev. 125, 135 (1994).

    With regard to employee involvement and its relationship to 
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the modern workplace, Professor Estreicher stated:

          Worker participation is a desirable goal whether or 
        not it increases the demand for independent 
        representation, as long [as] it does not prevent 
        workers from effectively choosing for themselves how 
        best to advance their interests in the workplace. 
        Because employee involvement programs can enhance 
        opportunities for worker participation and improve firm 
        performance without foreclosing other options, legal 
        restrictions should be lifted. (Emphasis added.) \18\
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    \18\ Id. at 158.

    Similar recognition of the important role played by 
employee involvement programs has also been voiced by any 
number of prominent public policy-makers. In its final report 
and recommendations, President Clinton's Commission on the 
Future of Worker-Management Relations acknowledged that 
``[e]mployee involvement programs have diverse forms, ranging 
from teams that deal with specific problems for short periods 
to groups that meet for more extended periods.'' \19\ Perhaps 
more importantly, the President's Commission concluded:
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    \19\ ``Commission on the Future of Worker-Management Relations: 
Report and Recommendations,'' Dep't. of Labor and Dep't. of Commerce, 
December 1994.

          On the basis of the evidence, the Commission believes 
        that it is in the national interest to promote 
        expansion of employee participation in a variety of 
        forms provided it does not impede employee choice of 
        whether or not to be represented by an independent 
        labor organization. At its best, employee involvement 
        makes industry more productive and improves the working 
        lives of employees. (Emphasis added.) \20\
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    \20\ Id.

    Similarly, Secretary of Labor, Robert B. Reich, has also 
noted the fundamental changes taking place in today's modern 
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workplace:

          High-performance workplaces are gradually replacing 
        the factories and offices where Americans used to work, 
        where decisions were made at the top and most employees 
        merely followed instruction. The old top-down workplace 
        doesn't work any more.\21\
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    \21\ Robert B. Reich, ``The `Pronoun Test' for Success,'' The 
Washington Post, July 28, 1993, at A19.

    In response to these changes, the Department of Labor 
issued a publication to American businesses that underscored 
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the benefits of employee involvement:

          Highly successful companies avoid program failure by 
        assembling employees into teams that perform entire 
        processes--like product assembly--rather than having a 
        worker repeat one task over and over. In many cases, 
        teams of workers have authority usually reserved for 
        managers: They hire and fire; they plan work flows and 
        design or adopt more efficient production methods; and 
        they ensure high levels of safety and health.\22\
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    \22\ See ``Road to High-Performance Workplaces: A Guide to Better 
Jobs and Better Business Results,'' U.S. Department of Labor, September 
1994.
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                       employee involvement works

    During the past 20 years, employee involvement has emerged 
as the most dramatic development in human resources management. 
One reason is that worker involvement has become a key method 
of improving American competitiveness.
    Evidence of the success--and corresponding proliferation--
of employee involvement can be found in a 1994 survey of 
employers performed at the request of the Commission on the 
Future of Worker-Management Relations. The survey found that 75 
percent of responding employers--large and small--had 
incorporated some means of employee involvement in their 
operations. Among larger employers--those with 5,000 or more 
employees--the percentage was even higher, at 96 percent.\23\ 
It is estimated that as many as 30,000 employers currently 
employ some form of employee involvement or participation.
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    \23\ ``The Nature and Extent of Employee Involvement in the 
American Workplace,'' survey conducted by Aerospace Industries 
Associates, Electronic Industries Association, Labor Policy 
Association, National Association of Manufacturers, and Organization 
Resources Counselors, Inc., Aug. 10, 1994.
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    The success of employee involvement can also be found in 
the views of American workers. A survey conducted by the 
Princeton Survey Research Associates found overwhelming support 
for employee involvement programs among workers, with 79 
percent of those who had participated in such programs 
reporting having ``personally benefitted'' from the process. 
Indeed, 76 percent of all workers surveyed believed that their 
companies would be more competitive if more decisions about 
production and operations were made by employees rather than 
managers.\24\
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    \24\ ``Worker Representation and Participation Survey,'' Richard B. 
Freeman and Joel Rogers, Conducted by Princeton Survey Research 
Associates, December 1994.
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    Clearly, employee involvement is more than just another 
passing fad in human resources management. Over the last 20 
years, it has evolved--along with the global economy--into a 
basic component of the modern workplace and a key to successful 
labor-management relations. As such, American industry must be 
allowed to use employee involvement in order to utilize more 
effectively its most valuable resource--the American worker.

      Electromation and Other Cases Signal Need for Clarification

    On December 16, 1992, the National Labor Relations Board 
(NLRB or Board) issued a decision in Electromation, Inc.,\25\ a 
case which many thought would clarify the legality \26\ of 
employee involvement programs. Electromation involved several 
employee participation committees within a small, nonunion 
company. Unrelated to any organizing effort,\27\ management 
created the employee teams in response to employee objections 
over several proposed changes in attendance and wage policies. 
The so-called ``action committees'' addressed the following 
workplace issues: (1) absenteeism, (2) no-smoking policy, (3) 
communication network, (4) pay progression for premium 
positions, and (5) attendance bonus program. The Board found 
that the company played the primary role in establishing the 
size, responsibilities, and goals of the committees and in 
setting the final membership and initial dates for meetings.
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    \25\ 309 N.L.R.B. No. 163 (1992).
    \26\ The two provisions of the NLRA most directly at issues in the 
debate over the legality of employee involvement programs were sections 
2(5) and 8(a)(2). 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.'' Section 8(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.''
    \27\ Although the Teamsters Union began an organizing drive shortly 
after the formation of the action committees, the NLRB determined that 
the company did not establish them to interfere with the employees' 
right to choose a union. In fact, the company disbanded the committees 
once it learned of the organizing efforts to avoid charges that it was 
tainting the election.
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    In order to determine whether the company committed an 
unfair labor practice, the Board first found that the action 
committees were ``labor organizations'' under the NLRA. The 
term ``labor organization'' was quite broad and encompassed 
``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.'' \28\ (Emphasis added.)
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    \28\ Section 2(5) of the NLRA.
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    Courts have added to the breadth of what constitutes a 
``labor organization'' by finding that the term ``dealing with 
employers'' was not limited to collective bargaining 
situations, but was a much broader concept.\29\ The Board found 
that ``dealing'' included bilateral communication between 
workers and supervisors within the employee involvement 
program. Working with this wide-ranging definition, the NLRB 
held that the action committees were ``labor organizations'' 
under the NLRA.
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    \29\ See National Labor Relations Board v. Cabot Carbon Co., 360 
.S. 203 (1959).
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    The Board then turned to the company's role in establishing 
and operating the action committees. Under section 8(a)(2) of 
the NLRA, it was 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.''
    In this context, the NLRB found the company had dominated 
the committees by establishing the size, responsibilities, and 
goals of the committees, and by selecting the final makeup and 
initial meeting dates for the committees. Accordingly, the 
Board held that the company had committed an unfair labor 
practice under Federal labor law. The decision was later 
affirmed by the Seventh Circuit Court of Appeals.\30\
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    \30\ Electromation, Inc. v. National Labor Relations Board, 33 F.3d 
1148 (7th Cir. 1994).
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    The need for clarification of the legality of employee 
involvement programs has since moved far beyond the specific 
facts of the Electromation decision. The breadth of the 
relevant provisions of the NLRA left employers and employees in 
a legal never-never land. Furthermore, since the Electromation 
decision, the NLRB has considered charges involving the 
employee involvement efforts of some of the leading companies 
in the country and has consistently questioned the legality of 
these efforts: \31\
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    \31\ Much has been made by opponents of S. 295 of the relatively 
small number of charges filed with the Board alleging a violation of 
section 8(a)(2). First, the NLRB process is wholly complaint-driven, 
and employees have a diminished incentive to challenge workplace 
structures which effectively meet their interest in having grater 
involvement in workplace decision making. In addition, the 
Electromation decision has had a chilling effect on legitimate employee 
involvement programs and on employers' plans to expand such programs.

          Donnelly Corp.: \32\ Named ``One of the 100 Best 
        Companies to Work for in America'' and recognized by 
        the U.S. Department of Labor (DOL) for its innovative 
        work system, the NRLB nevertheless issued a complaint 
        against Donnelly charging that its employee involvement 
        program violated section 8(a)(2). The irony was that 
        the genesis of the complaint was testimony that 
        Donnelly presented to DOL's Commission on the Future of 
        Worker-Management Relations (Dunlop Commission) on 
        ``Innovations in Worker-Management Relations.'' Dr. 
        Charles J. Morris, former editor of ``The Developing 
        Labor Law,'' heard the testimony, believed the Donnelly 
        system was a violation of section 8(a)(2), and filed 
        the initial charge.\33\
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    \32\ GR-7-CA-36843.
    \33\ Although this charge was eventually dismissed, a Donnely 
employee then amended and unrelated unfair labor practice charge she 
had filed to include the alleged section 8(a)(2) violation. A complaint 
was issued on this second charge and a hearing was scheduled.
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          Polaroid Corp.: \34\ Also cited as ``One of the Best 
        100 Companies to Work for In America,'' the Polaroid 
        Corp. has long had an institutional commitment to 
        employee involvement and has been a model for other 
        companies establishing cooperative efforts. Despite the 
        company's attempt in the early 1990's to reconstitute 
        its successful committees to comply with section 
        8(a)(2), the Board's general counsel issued a complaint 
        challenging the new program even though it removed all 
        decisionmaking authority from the employees.
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    \34\ 1-CA-29966.
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          EFCO Corp.: \35\ The EFCO Corp. first became involved 
        in employee involvement programs in the late 1970's 
        with the establishment of an employee stock ownership 
        plan (ESOP). The company then moved to utilize total 
        quality control techniques and an extensive employee 
        committee system. Four of the committees--employer 
        policy review, safety, employee suggestion, and 
        employee benefits--were challenged as violating section 
        8(a)(2) by the Carpenters' Union after an unsuccessful 
        organizing effort.\36\ Although acknowledging EFCO's 
        commitment to employee empowerment, the Administrative 
        Law Judge nevertheless found that the committees were 
        ``labor organizations'' and that the company had 
        illegally dominated them by forming the committees, 
        choosing initial members, participating in meetings, 
        and selecting topics for discussion.
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    \35\ 17-CA-16911 (Mar. 7, 1995).
    \36\ The Carpenters' Union attempted to organize EFCO employees in 
the summer of 1993. However, the union never filed a petition for an 
election with the NLRB.
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          Keeler Brass Automotive Group: \37\ A unanimous NLRB 
        ordered Keeler Brass Automotive Group to disband a 
        grievance committee established for several of its 
        plants. The Board, reversing the decision by the 
        Administrative Law Judge, found that Keeler Brass 
        unlawfully dominated the formation of the committee and 
        interfered with its administration. In a concurring 
        opinion, Chairman Gould concluded that the Committee 
        was not capable of independent action, despite the fact 
        that the committee was not created in response to union 
        organizing efforts or as a means to undercut 
        independent action by employees, participation on the 
        committee was voluntary and determined by election, and 
        employees were the only voting members of the 
        committee.
---------------------------------------------------------------------------
    \37\ 317 NLRB No. 161 (June 14, 1995).
---------------------------------------------------------------------------
    The Board's broad interpretation of the term ``labor 
organization,'' which includes many employee participation 
programs, and the strict limits on the role employers may play 
in such organizations make it very difficult for employee 
involvement programs to proceed successfully. Clearly, a 
legislative change must be made.

                Current NLRA Prohibitions Are Too Broad

    A brief look at the history of section 8(a)(2) demonstrates 
why the provision was originally crafted so broadly and why 
such breadth interferes with the preferred method of labor-
management organization in many U.S. firms today. In 1935, when 
Congress passed the NLRA, the so-called Wagner Act,\38\ 
employer-dominated (company) unions had become a focal point in 
the national debate over how to improve labor-management 
relations. The precursor to the NLRA, the National Industrial 
Recovery Act, passed in 1933, had temporarily given employees 
``the right to organize and bargain collectively through 
representatives of their own choosing.'' \39\ However, the 
Recovery Act proved to be of little value in ensuring those 
rights, in part because it left the subject of employer-
dominated unions largely unaddressed.
---------------------------------------------------------------------------
    \38\ Senator Robert Wagner was the prime sponsor of the bill which 
became the National Labor Relations Act (NLRA).
    \39\ National Industrial Recovery Act, 48 Stat. 195, 198 (1933) 
(the rights established by the Recovery Act had only temporary effect, 
because section 2 of the act contained a sunset provision).
---------------------------------------------------------------------------
    Under the Recovery Act, employers could use company unions 
as tools to avoid recognition of, and collective bargaining 
with, independently organized unions. Employers often refused 
to recognize independently formed unions on the grounds that 
employees were already represented, albeit by a company union. 
As a result, employers could establish and bargain exclusively 
with unions that were formed and operated largely at their 
direction.
    The Recovery Act permitted such abuses of company unions 
for various reasons. Primarily, the act contained inadequate 
enforcement mechanisms.\40\ Further, it did not specifically 
prohibit company unions, although the law prohibited employers 
from requiring employees to join a company union as a condition 
of employment.\41\ Lastly, the act granted employees the right 
to organize but did not specify ``the kind of organization, if 
any, with which employees should affiliate.'' \42\ Thus, 
consistent with the Recovery Act, an employer could appear to 
be ``recognizing and cooperating with organized labor'' while 
avoiding the dangers inherent in dealing with a union not 
subservient to the employer's interests.\43\
---------------------------------------------------------------------------
    \40\ Hardin, Patrick, ``The Developing Labor Law'' (3d ed. 1992), 
vol. 1 at 25-26.
    \41\ National Industrial Recovery Act, 48 Stat. 195, 198-99 (1933).
    \42\ I. Bernstein, ``Turbulent Years,'' at 38 (1970).
    \43\ Hardin, supra note 39, at 26.
---------------------------------------------------------------------------
    Recognizing the inadequacies of the Recovery Act, section 
8(a)(2) of the NLRA was specifically drafted to prevent 
employers from using company unions to avoid recognizing and 
collective bargaining with inadequately organized unions. 
Senator Robert Wagner, sponsor of the bill which became the 
NLRA, stated that ``[t]he greatest obstacles to collective 
bargaining are employer-dominated unions, which have multiplied 
with amazing rapidity since enactment of the recovery law.'' 
\44\
---------------------------------------------------------------------------
    \44\ 78 Cong. Rec. 3443 (1934) reprinted in 1 NLRB, ``Legislative 
History of the National Labor Relations Act,'' 1935, at 15 (1949).
---------------------------------------------------------------------------
    According to an article printed in the New York Times 
during debate over the NLRA, the number of employees in company 
unions had increased from 432,000 in 1932, before passage of 
the Recovery Act, to 1,164,000 just 1 year later.\45\ Over 69 
percent of the company unions in existence at that time had 
been formed in the brief period following passage of the 
Recovery Act.\46\ The magnitude of this problem following 
passage of the Recovery Act was evidenced by the fact that more 
than 70 percent of the disputes coming before the National 
Labor Board (precursor to the NLRB) before enactment of the 
NLRA concerned employers' refusal to deal with properly elected 
union representatives.\47\
---------------------------------------------------------------------------
    \45\ Wagner, Robert. ``Company Unions: A Vast Industrial Issue,'' 
the New York Times, Mar. 11, 1934.
    \46\ Id.
    \47\ Wagner, Robert. ``Company Unions: A Vast Industrial Issue,'' 
the New York Times, Mar. 11, 1934.
---------------------------------------------------------------------------
    Prior to passage of the NLRA then, employers used company 
unions as a tool to avoid collective bargaining with 
independently organized unions and to control the collective 
bargaining the did take place. Section 8(a)(2) of the NLRA was 
an important measure for ensuring that employers did not use 
company unions as an obstacle to genuine collective bargaining.
    However, the legislative history of the NLRA suggests that, 
while Congress strongly desired to eliminate barriers to 
genuine collective bargaining, it did not desire to ban all 
employer-employee organizations. Senator Wagner stated in a 
discussion regarding the advantages and disadvantages of 
company unions that:

        [t]he company union has improved personal relations, 
        group-welfare activities, and other matters which may 
        be handled on a local basis. But it has failed dismally 
        to standardize or improve wage levels, for the wage 
        question is one whose sweep embraces whole industries, 
        or States, or even the Nation.\48\
---------------------------------------------------------------------------
    \48\ Id.

    Senator Wagner further stated, regarding a bill containing 
provisions virtually identical to section 8(a)(2) of the NLRA, 
---------------------------------------------------------------------------
that it:

        [did] not prevent employers from setting up societies 
        or organizations to deal with problems of group 
        welfare, health, charity, recreation, insurance or 
        benefits. All of these functions can and should be 
        fulfilled by employer-employee organizations. But 
        employers should not dominate organizations which exist 
        for the purposes of collective bargaining in regard to 
        wages, hours, and other conditions of employment.\49\
---------------------------------------------------------------------------
    \49\ Hearings on S. 2926 before the Senate Committee on Education 
and Labor, 73d Cong., 2d sess. 9 (1934) (statement of Senator Wagner) 
reprinted in 1 NLRB, Legislative History of the National Labor 
Relations Act, 1935, at 39-40 (1949) (Emphasis added).

    Thus, at the outset of debate over the NLRA, Congress 
indicated its disapproval of employer-dominated organizations 
which existed for purposes of collective bargaining but did not 
signal its disapproval of all employer-employee organizations.
    Further debate over the proposed scope of section 8(a)(2) 
confirms that Congress did not desire to ban all employer-
employee organizations. Senator Wagner stated several times 
that ``[e]mployer-controlled organizations should be allowed to 
serve their proper function of supplementing trade unionism. * 
* *'' \50\
---------------------------------------------------------------------------
    \50\ 78 Cong. Rec. 3443 (1934) reprinted in 1 NLRB, ``Legislative 
History of the National Labor Relations Act,'' 1935, at 16 (1949); 
Wagner, Robert. ``Company Unions: A Vast Industrial Issue,'' The New 
York Times, Mar. 11, 1934.
---------------------------------------------------------------------------
    The Senate report on S. 2926, an earlier version of the 
NLRA containing provisions virtually identical to 8(a)(2), 
confirms this view. Regarding employers' use of company unions 
as an obstacle to collective bargaining, the report on the bill 
stated:

        [t]hese abuses do not seem to the committee so general 
        that the Government should forbid employers to indulge 
        in the normal relations and innocent communications 
        which are part of all friendly relations between 
        employer and employee. * * * The object of [prohibiting 
        employer-dominated unions] is to remove from the 
        industrial scene unfair pressure, not fair 
        discussion.\51\
---------------------------------------------------------------------------
    \51\ S. Rep. No. 1184, 73d Cong., 2d sess. (1934) reprinted in 1 
NLRB, ``Legislative History of the National Labor Relations Act,'' 
1935, at 1104 (1949).

    Senator Walsh, then Chairman of the Senate Committee on 
Education and Labor, concurred in this view. Commenting on S. 
2926, he stated that ``this * * * unfair labor practice seeks 
to remove from the industrial scene unfair pressure by the 
employer upon any labor organization that his workers may 
choose, yet leaves fair discussion unhampered.'' \52\
---------------------------------------------------------------------------
    \52\ 78 Cong. Rec. 10,559 (1934) reprinted in 1 NLRB, ``Legislative 
History of the National Labor Relations Act,'' 1935, at 1125 (1949).
---------------------------------------------------------------------------
    Thus, the NLRA's legislative history strongly suggests that 
Congress desired to prevent employers from using company unions 
as an obstacle to collective bargaining. At the same time, 
however, the act's sponsors sought to leave intact 
organizations intended to promote employer-employee 
communication and cooperation.
    The broad language of section 8(a)(2) does not seem 
consistent with a congressional intent to prohibit only 
employer-employee organizations which would inhibit recognition 
of, and collective bargaining with, independent unions. 
However, the Congress' experience with narrow interpretations 
by the courts of labor relations legislation prior to enactment 
of the NLRA may explain why the NLRA's sponsors drafted section 
8(a)(2) so broadly.
    Specifically, in the decades preceding enactment of the 
NLRA, Congress had passed various measures to allow the 
development of organized labor and to ensure the right to 
bargain collectively. These measures included the Erdman Act, 
enacted in 1898; sections of the Clayton Act; the Railway Labor 
Act; and the Norris-LaGuardia Act.\53\ Of these, the Clayton 
Act and the Norris-LaGuardia Act were broadest in their scope 
of coverage.\54\
---------------------------------------------------------------------------
    \53\ Hardin, supra note 39, at 12-24 (providing a historical 
background to the National Labor Relations Act).
    \54\ The Erdman Act and the Railway Labor Act were limited in scope 
to employees engaged in the operation of interstate trains. Hardin, 
supra note 39, at 14, 20.
---------------------------------------------------------------------------
    Congress designed sections 6 and 20 of the Clayton Act to 
prevent courts and employers from using the Sherman Act as a 
barrier to union activity and development. Under the Sherman 
Act, Federal courts were able to assert Federal question 
jurisdiction over labor disputes and frequently held that 
organized labor activities, by obstructing the flow of goods in 
interstate commerce, violated the act.\55\ Section 6 of the 
Clayton Act prevented the application of the Sherman Act to 
organized labor ``by providing that labor itself is not `an 
article of commerce.' '' \56\ The section also specified that 
labor organizations did not violate antitrust laws by 
``lawfully carrying out'' their ``legitimate objectives.'' \57\
---------------------------------------------------------------------------
    \55\ Hardin, supra note 39, at 9-10, 16.
    \56\ Hardin, supra, at 16.
    \57\ Id.
---------------------------------------------------------------------------
    Section 20 of the Clayton Act was designed to greatly 
restrict the ability of courts to issue injunctions against 
organized labor activity. The first paragraph of section 20 was 
intended to reduce the use of injunctions by requiring that 
there be no adequate remedy at law and actual or threatened 
injury before issuance of an injunction.\58\ The second 
paragraph of section 20 listed several labor activities and 
provided that ``none of [those] activities shall `be considered 
or held to be violations of any law of the United States,' '' 
and prohibited enjoining those activities even if the 
requirements of the first paragraph were met.\59\
---------------------------------------------------------------------------
    \58\ Although both of these requirements were historically present 
in equity, courts had largely disregarded them in labor-injunction 
practice prior to passage of the Clayton Act. Hardin, supra note 39, at 
16-17.
    \59\ Hardin, supra note 39, at 17.
---------------------------------------------------------------------------
    Thus, Congress attempted to permit organized labor to 
develop through language in the Clayton Act which specifically 
prohibited various types of interference with organized labor. 
Some of these attempts were thwarted, however.
    Despite the seemingly broad scope of sections 6 and 29 of 
the Clayton Act, the Supreme Court interpreted both sections 
very narrowly in Duplex Printing Press Co. v. Deering. The 
Court interpreted the first paragraph of section 20 as 
approving of existing labor-injunction practice rather than as 
imposing more stringent requirements for the issuance of 
injunctions against organized labor.\60\ Further, the Court 
interpreted the phrase ``between an employer and employees'' 
contained in the first paragraph as limiting application of 
both paragraphs to cases between an employer and its own 
employees.\61\ The Court interpreted the Clayton Act as having 
minimal impact on barriers to union development and activity, 
despite statutory language which would suggest otherwise.
---------------------------------------------------------------------------
    \60\ Duplex Printing Press Co. v. Deering, 254 U.S. 443 (1921) 
(construed in Hardin, Supra note 39, at 18).
    \61\ Id.
---------------------------------------------------------------------------
    Given the Court's narrow interpretation of the Clayton Act, 
an the failure of the Recovery Act to ensure the right to 
organize the bargain collectively it was not surprising that 
Congress drafted section 8(a)(2) of the NLRA broadly.\62\ Prior 
to the period in which the NLRA was enacted, courts often 
resisted efforts designed to permit the growth of organized 
labor and collective bargaining.\63\ Thus, to ensure employees 
the rights to organize and bargain collectively, Congress 
expansively crafted the prohibition in section 8(a)(2) of the 
NLRA.
---------------------------------------------------------------------------
    \62\ The definitional provisions in section 13 of the Norris-
LaGuardia Act were also drafted broadly, again demonstrating Congress's 
tendency toward drafting pro-labor acts broadly in this period. Hardin, 
supra note 39, at 23-24.
    \63\ Hardin, supra note 39, at ch. 1.
---------------------------------------------------------------------------
    As the previous discussion on employee involvement 
indicates, a broad-sweeping prohibition of all employer-
employee organizations no longer serves the interests of giving 
workers an effective voice in their workplace. Although the 
right to independent representation remains a fundamental 
principle of Federal labor law, nothing about modern employee 
involvement interferes with that right.
    Like all aspects of society, today's workplace is very 
different than it was 60 years ago. In 1935, organized labor 
was in its formational stages and was at the mercy of employers 
intent on derailing its development. They myriad labor 
protections on the books today--the Fair Labor Standards Act, 
the Occupational Safety and Health Act, the Worker Adjustment 
and Retraining Notification (WARN) Act and the Family and 
Medical Leave Act--are testimony to the tremendous influence 
and power of independent labor unions to protect working men 
and women.
    Likewise, working men and women have changed and so, 
consequently, have their needs in the workplace. The demands 
on, and skills required of, workers in todays information-based 
economy are very different than those prevalent in the 
manufacturing-driven economy of the early 20th century. The 
work force of today mirrors the demographic changes of the 
United States as a whole, and thus, the interests and values of 
workers are increasingly more diverse.
    The nature of work, for both employees and managers, has 
also evolved tremendously in 60 years from the perspective of 
both technological and organizational developments. Workplace 
structures that have the flexibility to meet the situational 
and differing needs of employees, while also addressing the 
productivity demands of employees, are at a premium in the 
modern working environment. While formal representation through 
an independent labor organization will remain the preferred 
form of organization in many workplaces, clearly, there must be 
a place in this Nation's labor laws for cooperative 
arrangements between employees and employers to address the 
challenges and demands of working in a globally competitive 
marketplace.

              IV. Legislative History and Committee Action

    On January 30, 1995, Senator Kassebaum, along with Senators 
Jeffords, Gregg, and Gorton, introduced the Teamwork for 
Employees and Management (TEAM) Act, S. 295.
    On February 9, 1995, the Senate Committee on Labor and 
Human Resources held a hearing (S. Hrg. 104-20) on the TEAM 
Act. The following individuals provided testimony:
          Don Skiba, Julie Smith, Johnny Albertson and Angie 
        Cowan of TRW Corporation, Cookeville, TN.
          Kevin King and Lori Garrett of Eastman Chemical, 
        Kingsport, TN.
          Chester McCammon of Universal Dynamics, Woodbridge, 
        VA.
          Harold Coxson of Coleman, Coxson, Panello, Fogleman & 
        Cowan, Washington, DC.
          David Silberman, Director of AFL-CIO Task Force on 
        Labor Law, Washington, DC.
          Berna Price, Electromation, Elkhart, IN.
    Additional statements or letters regarding S. 295 were also 
received and placed in the record.
    On February 8, 1996, the Senate Committee on Labor and 
Human Resources held a second hearing (S. Hrg. 104-386) on the 
TEAM Act. The following individuals provided testimony:
          Molly Dalman, Michael Klein, Anne Nagy and Bonny Topp 
        of Donnelly Corp., Holland, MI.
          Christopher Fuldner, president of EFCO Corp., Monett, 
        MO.
          Richard Wellins, senior vice president, Development 
        Dimensions International, Pittsburgh, PA.
          David Khorey, counsel to Donnelly Corp., Holland, MI.
          Jonathan Hiatt, general counsel to AFL-CIO, 
        Washington, DC.
          Alan Reuther, legislative director, United Auto 
        Workers, Washington, DC.
    Additional statements and letters on S. 295 were also 
received and placed in the record.
    On April 17, 1996, the Senate Committee on Labor and Human 
Resources met in executive session to consider S. 295. A quorum 
being present, the committee voted on the following amendments:
    Senator Kennedy offered an amendment requiring the NLRB to 
seek an injunction to reinstate workers discharged during 
organizing drives. The amendment was defeated.
        Yeas                          Nays
Kennedy                             Kassebaum
Pell                                Jeffords
Dodd                                Coats
Simon                               Gregg
Harkin                              Frist
Mikulski                            DeWine
Wellstone                           Ashcroft
                                    Gorton
                                    Faircloth

    Senator Kennedy offered an amendment to permit treble 
damages for unfair labor practices. The amendment was defeated.
        Yeas                          Nays
Kennedy                             Kassebaum
Pell                                Jeffords
Dodd                                Coats
Simon                               Gregg
Harkin                              Frist
Mikulski                            DeWine
Wellstone                           Ashcroft
                                    Gorton
                                    Faircloth

    Senator Kennedy offered an amendment requiring management 
to bargain over core management decisions. The amendment was 
defeated.
        Yeas                          Nays
Kennedy                             Kassebaum
Pell                                Jeffords
Dodd                                Coats
Simon                               Gregg
Harkin                              Frist
Mikulski                            DeWine
Wellstone                           Ashcroft
                                    Gorton
                                    Faircloth

    Senator Kennedy offered an amendment to change the 
definition of ``supervisor'' under the NLRA. The amendment was 
defeated.
        Yeas                          Nays
Kennedy                             Kassebaum
Pell                                Jeffords
Dodd                                Coats
Simon                               Gregg
Harkin                              Frist
Mikulski                            DeWine
Wellstone                           Ashcroft
                                    Gorton
                                    Faircloth

    Senator Kennedy offered an amendment to provide union 
organizers with access to the work site. The amendment was 
defeated.
        Yeas                          Nays
Kennedy                             Kassebaum
Pell                                Jeffords
Dodd                                Coats
Simon                               Gregg
Harkin                              Frist
Mikulski                            DeWine
Wellstone                           Ashcroft
                                    Gorton
                                    Faircloth

    Senator Simon offered an amendment to debar federal 
contractors that commit unfair labor practices. The amendment 
was defeated.
        Yeas                          Nays
Kennedy                             Kassebaum
Pell                                Jeffords
Dodd                                Coats
Simon                               Gregg
Harkin                              Frist
Mikulski                            DeWine
Wellstone                           Ashcroft
                                    Gorton
                                    Faircloth
    Senator Simon offered an amendment to require arbitration 
when the parties cannot agree to a first contract. The 
amendment was defeated.
        Yeas                          Nays
Kennedy                             Kassebaum
Pell                                Jeffords
Dodd                                Coats
Simon                               Gregg
Harkin                              Frist
Mikulski                            DeWine
Wellstone                           Ashcroft
                                    Gorton
                                    Faircloth

    The committee then voted to report S. 295 favorably.
        Yeas                          Nays
Kassebaum                           Kennedy
Jeffords                            Pell
Coats                               Dodd
Gregg                               Simon
Frist                               Harkin
DeWine                              Mikulski
Ashcroft                            Wellstone
Gorton
Faircloth

               V. Explanation of Bill and Committee Views

    The TEAM Act clarifies that it shall not constitute or be 
evidence of a violation of section 8(a)(2) of the NLRA for an 
employer to establish, assist, maintain, or participate in any 
organization or entity of any kind, in which employees 
participate, to address matters of mutual interest, including, 
but not limited to, issues of quality, productivity, and 
efficiency. This language creates a safe harbor in Federal 
labor law for a wide range of employee involvement initiatives. 
Supervisors and workers can discuss a myriad of issues that 
affect both the productive capacity of a company and the 
quality of work-life.
    Some of the matters of mutual interest which employee 
involvement structures address will unavoidably include 
discussions of conditions of work. The processes by which a 
company ``produces'' its product are inextricably linked to the 
terms and conditions of individuals' employment in those 
processes. Lawrence Gold, general counsel of the AFL-CIO, 
perhaps described this reality best when he argued before the 
NLRB:

          What is productivity? It's who does what, it's 
        whether ``A'' works certain hours, whether ``B'' gets 
        relief, whether a particular way of moving materials is 
        sound or unsound. People are affected by that, their 
        jobs and prerogatives, their seniority, their 
        vacations. All of that is the stuff of working life. 
        And to say that you can abstract productivity from 
        working conditions is something that I have a great 
        deal of difficulty with.\64\
---------------------------------------------------------------------------
    \64\ Transcript of Proceedings Before the National Labor Relations 
Board in Electromation, Inc. (Case No. 25-CA-19818) 61-62 (Sept. 5, 
1991).

    Indeed, if employee involvement programs were prohibited 
from discussing issues related to conditions of work, their 
effectiveness would be severely hampered. The phrase ``terms 
and conditions of employment'' includes issues ranging from 
grievance procedures, layoffs and recalls, discharge, 
workloads, vacations, holidays, sick leave, work rules, use of 
bulletin boards, change of payment from a weekly salary to an 
hourly rate, and employee physical examinations.\65\ Even if it 
were possible to limit employee involvement to issues unrelated 
to working conditions, doing so would limit their ability to be 
a forum for employees and managers to develop comprehensive 
strategies that contribute both to the economic well-being of 
the company and to the pecuniary and non-pecuniary satisfaction 
of the workforce.
---------------------------------------------------------------------------
    \65\ See Hardin, supra note 39, at 885-86.
---------------------------------------------------------------------------
    Despite the breadth of the language creating the safe 
harbor, the TEAM Act retains several important protections in 
section 8(a)(2). Importantly, the bill provides that employee 
involvement initiatives may not have, claim, or seek authority 
to be the exclusive bargaining representative of employees or 
to negotiate, enter into, or amend collective bargaining 
agreements. This is a very significant protection that 
distinguishes employee involvement programs from the company 
unions of yesteryear that section 8(a)(2) was designed to 
prohibit. Even after enactment of S. 295, such company unions 
would continue to be unlawful under section 8(a)(2).
    For example, in National Labor Relations Board v. Lane 
Cotton Mills,\66\ a violation of section 8(a)(2) was found 
where the employer established an in-house welfare association 
and refused to bargain with a Textile Workers Organizing 
Committee that had been elected by the employees. The 
employer's action in this case would not fall within the safe 
harbor created by the TEAM Act because management treated the 
welfare association as the exclusive bargaining representative, 
conduct specifically prohibited by S. 295.\67\ Similarly, in 
Solmica,\68\ a company president suggested to his employees 
that they could resolve their differences themselves, without a 
union. The employees agreed and eventually signed a collective 
bargaining agreement with the president. Again, this conduct 
would continue to be a violation of section 8(a)(2), as the 
TEAM Act would not permit employee involvement structures, no 
matter how formal or informal, to negotiate collective 
bargaining agreements.
---------------------------------------------------------------------------
    \66\ 111 F.2d 814 (5th Cir. 1940).
    \67\ See also, National Labor Relations Board v. Link-Belt Co., 61 
S. Ct. 358 (1941), American Tara Corp., 242 NLRB 1230 (1979).
    \68\ 199 NLRB 224 (1972).
---------------------------------------------------------------------------
    While opponents of the TEAM Act have argued that many of 
the 1930's ``company unions'' which prompted the enactment of 
section 8(a)(2) shared the beneficent characteristics of 
today's employee involvement structures, a 1937 Bureau of Labor 
Statistics study, entitled ``Characteristics of Company Unions, 
1935'' [hereinafter ``BLS Survey''] paints a substantially 
different picture. The study of 126 company unions found that 
64 percent of them had been formed in response to a strike or 
local union activity. The remainder had either been intended to 
improve plant morale (11.2 percent or to appease public opinion 
or respond to governmental encouragement of collective 
bargaining (24.8 percent).\69\
---------------------------------------------------------------------------
    \69\ BLS Survey at 84.
---------------------------------------------------------------------------
    Even if some of the characteristics of company unions were 
shared by today's employee involvement structures, there is a 
critical distinction. Unlike company unions, legitimate 
employee involvement programs do not pretend to serve the same 
purpose as an independent labor union, which acts as the 
exclusive representative of the employees for collective 
bargaining and handling of grievances.
    Unlike the employee involvement structures of today, 
company unions in the first half of this century were being 
advanced as exclusive alternatives to labor unions. And 
companies were refusing to bargain with duly chosen, 
independent labor unions in favor of company unions. However, 
as discussed previously, these company unions rarely possessed 
the essential characteristics of a genuine collective 
bargaining representative.
    Under S. 295, the decision to choose formal organization 
and to secure independent representation remains in the hands 
of the employees. Nothing in the TEAM Act interferes with that 
choice. The safe harbor created in S. 295, while arguably broad 
in terms of the types of employee involvement structures to 
which it applies, is quite narrow in terms of the scope of 
conduct related to such structures which is legitimized. The 
bill states that ``it shall not constitute or be evidence of an 
unfair labor practice under this paragraph for an employer'' to 
establish and participate in an employee involvement program. 
(Emphasis added.) Senate bill 295 also specifically provides in 
section 4 that ``nothing in this amendment made by section 3 
shall be construed as affecting employee rights and 
responsibilities under the National Labor Relations Act other 
than those contained in section 8(a)(2) of such Act.''
    Thus, the other protections in section 8(a) of the NLRA 
which prohibit employer conduct that interferes with the right 
of employees to choose independent representation freely remain 
in full force. If employee involvement programs do not prove to 
be an effective means for employees to have input into the 
production and management policies that affect them, those 
employees retain the right at all times to organize formally 
and seek union representation. Section 8(a)(1)--which makes it 
an unfair labor practice for employers to interfere with, 
restrain, or coerce employees in the exercise of their rights, 
guaranteed by section 7 of the NLRA, to organize and bargain 
collectively through representatives of their own choosing--
remains untouched by the TEAM Act.\70\ Employee involvement 
programs cannot be used to interfere with employees' ability to 
exercise freely section 7 rights.\71\
---------------------------------------------------------------------------
    \70\ Similarly, the TEAM Act does not alter the prohibition in 
section 8(a)(3) making it an unfair labor practice for an employer to 
discriminate against any employee on the basis of his or her membership 
in a labor organization.
    \71\ In Stone Forest Industries, Inc., 36-CA-6938 (Mar. 17, 1995), 
it was held that an employer's promise, the day before a union 
election, to establish a communications committee to deal with employee 
grievances was a violation of section 8(a)(1) because it was used as an 
inducement to persuade employees to vote against the union.
---------------------------------------------------------------------------
    In addition, S. 295 was not intended to alter an employer's 
obligation under section 8(a)(5) to bargain with the duly 
elected representatives of employees.\72\ Thus, it is 
absolutely clear that the safe harbor created in the TEAM Act 
for legitimate employee involvement programs does not immunize 
an employer from the prohibition against directly dealing with 
employees who are represented by a labor union. In fact, as a 
practical matter, if employers and employees in a unionized 
workplace want to initiate some type of employee involvement 
structure, the union essentially has veto power over the very 
establishment of such a structure.
---------------------------------------------------------------------------
    \72\ Senate bill 295 is not intended to overrule or alter the 
NLRB's decision in E.I. du Pont de Nemours & Co., 311 NLRB No. 88 
(1993).
---------------------------------------------------------------------------
    In sum, S. 295 creates a safe harbor in the NLRA for a 
broad range of employee involvement programs. These legitimate 
initiatives come in an infinite variety of organizational forms 
and deal with a broad spectrum of workplace issues.
    However, this safe harbor exists only for the purposes of 
section 8(a)(2) and protects the workers' right to choose 
independent representation at any time.
    The committee places a high priority on the enactment of S. 
295. The workplace of today is simply not the same as the 
workplace that was prevalent in the America of the 1930s when 
the National Labor Relations Act became law. This Nation must 
prosper in an increasingly competitive and information-driven 
economy where, at every level of a company, employees must have 
an understanding of, and a role in, the entire business 
operation.
    Employee involvement in the modern workplace has proven to 
be an effective strategy at increasing both the value that each 
employee brings to the production process and the job 
satisfaction that each employee derives from the workplace. For 
these reasons, the committee recommends that the Senate 
promptly pass S. 295.
    This Nation's labor law must be relevant to the employer-
employee relationships of the 21st century. The committee 
believes strongly that the TEAM Act is crucial to our Nation's 
competitiveness as well as our workers' sense of job 
satisfaction.
    Significantly, the committee believes that the bill poses 
no threat to the well-protected right of employees to select 
representatives of their own choosing to act as their exclusive 
bargaining agent. Even with the changes to the NLRA proposed in 
S. 295, an employee involvement program may not engage in 
collective bargaining nor may it act as the exclusive employee 
representative. The prohibitions in the NLRA outlawing 
interference with employees' attempts to form a union and 
preventing employers from avoiding bargaining obligations by 
directly dealing with employees remain unaffected by the TEAM 
Act.
    In sum, the TEAM Act permits supervisors and managers to 
confront and solve the myriad problems and issues that arise in 
a workplace. Without this important legislation, the committee 
believes the Nation would be idling a vast human resource that 
can yield untold dividends for the country.

                           VI. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 29, 1996.
Hon. Nancy Landon Kassebaum,
Chairman, Committee on Labor and Human Resources, U.S. Senate, 
        Washington, DC.
    Dear Madam Chairman: The Congressional Budget Office has 
reviewed S. 295, the Teamwork for Employees and Managers Act of 
1995, as ordered reported by the Committee on Labor and Human 
Resources on April 17, 1996. CBO estimates that enactment of S. 
295 would have no significant effect on the federal budget. 
Because S. 295 would not affect direct spending or receipts, 
pay-as-you-go procedures would not apply.
    S. 295 contains no mandates as defined by Public Law 104-4, 
and would impose no direct costs on state, local, or tribal 
governments.
    S. 295 would amend the National Labor Relations Act to 
permit an employer to participate in employee organizations for 
the purpose of addressing matters of mutual interest, so long 
as these organizations do not seek to negotiate collective 
bargaining agreements with the employer. The bill could affect 
the workload and costs of the National Labor Relations Board by 
increasing or decreasing investigations of employers' 
involvement in employee relations. We anticipate that such 
effects, if any, would not be significant.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact for federal cost 
implications is Christi Hawley. For state and local costs, the 
staff contact is John Patterson, and for private sector costs, 
the staff contact is Daniel Mont.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).

                    VII. Regulatory Impact Statement

    The committee has determined that there will be no increase 
in the regulatory burden imposed by this bill.

                   VIII. Section-By-Section Analysis

    Section 1 provides that the short title of the bill is the 
``Teamwork for Employees and Management Act of 1995.''
    Section 2 provides the findings and purposes of the 
legislation. Specifically, the findings by the Congress 
recognize the escalating demands of global competition, the 
resulting need for an enhanced role for employees in workplace 
decision making, the extensive use by firms of employee 
involvement techniques, the positive impact of and support for 
employee involvement, and the legal jeopardy for employers 
engaging in employee involvement.
    The purposes of the act are to protect legitimate employee 
involvement programs against governmental interference, to 
preserve existing protections against deceptive and coercive 
employer practices, and to allow legitimate employee 
involvement programs in which workers may discuss issues 
involving terms and conditions of employment to continue to 
evolve and proliferate.
    Section 3 amends section 8(a)(2) of the National Labor 
Relations Act (NLRA) to provide that it shall not constitute or 
be evidence of an unfair labor practice for an employer to 
establish, assist, maintain, or participate in any organization 
or entity of any kind, in which employees participate, to 
address matters of mutual interest, including, but not limited 
to, issues of quality, productivity and efficiency. The 
legislation also provides that such organizations or entities 
may not have, claim, or seek authority to negotiate or enter 
into collective bargaining agreements between an employer and 
any labor organizations.
    Section 4 provides that nothing in section 3 of the 
legislation shall affect employee rights and responsibilities 
under the NLRA other than those contained in section 8(a)(2) of 
the NLRA.
                           IX. MINORITY VIEWS

    Labor-management cooperation and employee involvement are 
critical to the future success of our economy. Any bill that 
promises to encourage them appears at first blush to be a good 
idea. But what S. 295 promises and what it delivers are two 
very different things.
    In 1993 and 1994, the Commission on the Future of Worker-
Management Relations (the Dunlop Commission), a bi-partisan 
group of labor relations experts from business, academia, and 
unions, conducted an intensive study of labor-management 
cooperation and employee participation. The Commission held 21 
public hearings and heard testimony from 411 witnesses, 
received and reviewed numerous reports and studies, and held 
further meetings and working parties in smaller groups. The 
Commission made one recommendation that is of particular 
relevance to S. 295:

          The law should continue to make it illegal to set up 
        or operate company-dominated forms of employee 
        representation. \1\
---------------------------------------------------------------------------
    \1\ Commission on the Future of Worker-Management Relations, 
``Report and Recommendations,'' p. xvii (December 1994).

    Yet now, after only two hearings, the Labor and Human 
Resources Committee has voted along party lines to report this 
bill, whose sole purpose is to make company-dominated forms of 
employee representation lawful. The committee's action is ill-
considered and unwise. It is destructive of rights fundamental 
to a democratic society and is inherently anti-union.
    The administration has pledged to veto S. 295, and we 
applaud that decision.
1. The National Labor Relations Act prohibits company-dominated labor 
        organizations because they are inherently destructive of 
        workplace democracy and true employee empowerment
    Section 8(a)(2) of the National Labor Relations Act is one 
of the core provisions of American labor law. By making 
employer domination of labor organizations illegal, section 
8(a)(2) ensures that all labor organizations will genuinely 
represent the employees they purport to represent, rather than 
the owners and managers with whom they deal over issues 
relating to the terms and conditions of employment, including 
wages and hours of work.
    The law has recognized for more than 60 years that it is 
profoundly anti-democratic to allow an employer to select the 
representative of his employees. It is also profoundly arrogant 
for this Committee or any employer to think that the employer 
should make that choice for the employees.
    If a labor organization, employee representation plan or 
committee is to be the genuine voice of the employees, its 
members must be selected by the employees and allowed to 
operate without outside interference. This principle of 
independence is so important that it is separately protected by 
the Landrum-Griffin Act, which makes employer financial 
assistance to a labor organization a violation of criminal law.
    Senator Robert Wagner, the author of the National Labor 
Relations Act (the Wagner Act), considered the prohibition of 
company-dominated labor organizations to be essential to the 
goals of the act, which include ``encouraging the practice and 
procedure of collective bargaining'' and ``protecting the 
exercise by workers of full freedom of association.'' When he 
introduced the bill that became the Wagner Act, Senator Wagner 
declared:

          Genuine collective bargaining is the only way to 
        attain equality of bargaining power. * * * The greatest 
        obstacles to collective bargaining are company-
        dominated unions, which have multiplied with amazing 
        rapidity. * * * [only] representatives who are not 
        subservient to the employer with whom they deal can act 
        freely in the interest of employees. * * *
          For these reasons, the very first step toward genuine 
        collective bargaining is the abolition of the company-
        dominated union as an agency for dealing with 
        grievances, labor disputes, wages, rules or hours of 
        employment.\2\
---------------------------------------------------------------------------
    \2\ 78 Cong. Rec. 3443 (1935).

    The majority goes to great lengths to argue that Senator 
Wagner and Congress did not have in mind employee 
representation plans that do not negotiate labor agreements or 
committees like those at the Donnelly Corporation or EFCO when 
they condemned ``company unions'' in 1935 and prohibited the 
domination of ``labor organizations.'' But in fact, they did 
have such plans in mind, since the overwhelming majority of 
company unions in 1935 never entered into any collective 
bargaining agreement. The evil that Senator Wagner addressed in 
1935 is the same one S. 295 would legalize today.
    In NLRB v. Cabot Carbon, 360 U.S. 203 (1959), the Supreme 
Court examined the legislative history of the Act's definition 
of ``labor organization'' and concluded definitively that 
Congress had not meant to limit it to organizations that 
engaged in collective bargaining. First, Congress explicitly 
considered and rejected in 1935 a proposal by the Secretary of 
Labor to limit the Wagner Act's definition of ``labor 
organization'' to organizations that bargain collectively.
    Second, during consideration of the Taft-Hartley Act in 
1947, Congress rejected a proposal very much like S. 295, which 
would have permitted an employer to form or maintain ``a 
committee of employees and discuss with it matters of mutual 
interest, including grievances, wages, hours of employment, and 
other working conditions, if the Board has not certified or if 
the employer has not recognized, a representative as their 
representative under section 9.'' \3\ Congress has consistently 
rejected the notion that company-dominated labor organizations 
are acceptable as long as they do not attempt to negotiate a 
contract.
---------------------------------------------------------------------------
    \3\ H.R. 3020, 80th Cong., 1st Sess., 26, reprinted in 1 LMRA Leg. 
Hist. at 537.
---------------------------------------------------------------------------
    No good purpose is served by allowing the employer to 
choose and dominate the employees' representative. Cooperation 
is not truly furthered, because the employer is not really 
dealing with the employees if he is dealing with his own hand-
picked ``representative.'' An employer does not need the 
pretense of a team or committee if he only wants to cooperate 
with himself.

2. Employer-formed teams, committees, and employee involvement plans 
        that do not deal with the subjects of collective bargaining 
        have always been legal. S. 295 is not needed to make them legal 
        and serves no legitimate purpose

    Under section 8(a)(2) of the NLRA, employers are free to 
communicate with their employees about the terms and conditions 
of employment. Section 8(c) specifically guarantees employers 
the right of free speech, and section 9(a) protects the right 
of employees to present their grievances individually or in 
groups and the right of the employer to respond and resolve 
those grievances. The NLRB has upheld the right of employers to 
establish suggestion boxes and to establish groups of employees 
for brainstorming and for sharing information. E.I. Dupont, 311 
NLRB No. 88 (1993).
    The NLRB's 1977 General Foods  decision, 231 NLRB 1232, 
made clear that employers have the right under section 8(a)(2) 
to set up production processes in which significant managerial 
responsibilities are delegated to employee work teams. In that 
case, employee teams, acting by consensus of their members, 
made job assignments to individual team members, assigned job 
rotations, and scheduled overtime among team members. As the 
NLRB took pains to emphasize in Electromation, 309 NLRB 990 
(1992), section 8(a)(2) does not proscribe employee involvement 
programs that deal with issues of productivity, efficiency and 
quality control. Where teams do not purport to represent other 
employees, they will not be considered labor organizations and 
will not run afoul of section 8(a)(2) even when they stray from 
issues of quality and productivity and enter a grey area on 
issues relating to wages, hours, and working conditions. NLRB 
v. Streamway Division of Scott & Fetzer Co., 111 LRRM 2673 (6th 
Cir. 1982).
    Finally, the NLRB and the courts have taken a common sense 
approach to section 8(a)(2) that ensures that companies will 
not violate the law if their employee involvement programs 
include isolated, occasional, or unintended instances of 
dealing with the subjects of collective bargaining. See Vons 
Grocery Co., 320 NLRB No. 5 (1995), Stoody Co., 320 NLRB No. 1 
(1995), and NLRB v. Peninsula General Hospital, 36 F. 3d 1262 
(4th Cir. 1994).
    The flexibility of the law is reflected in the fact that 
employee involvement plans are widespread in American industry 
and are gaining in popularity. As the Majority admits, 75 
percent of all employers surveyed by the Princeton Survey 
Research Associates in 1994, and 96 percent of large employers, 
already had employee involvement plans. By the Majority's own 
estimate, 30,000 employee involvement plans are already in 
operation. Section 8(a)(2) has not been an obstacle to this 
proliferation, and S. 295 is obviously unnecessary.

3. S. 295 would legitimize employer conduct that should remain unlawful

    The only decided cases the Majority has cited in support of 
its argument that section 8(a)(2) should be amended 
(Electromation, EFCO Corporation, and Keeler Brass) are cases 
that have nothing to do with quality circles, self-managed work 
teams, front-line efficiency, the introduction of new 
technology or work practices, or expanding employee decision-
making.
    As the NLRB wrote in Electromation:

          [T]his case presents a situation in which an employer 
        alters conditions of employment and, as a result, is 
        confronted with a workforce that is discontented with 
        its new employment environment. The employer responds 
        to that discontent by devising and imposing on the 
        employees an organized committee mechanism composed of 
        managers and employees instructed to ``represent'' 
        fellow employees. The purpose of the Action Committee 
        was, as the record demonstrates, not to enable 
        management and employees to cooperate to improve 
        ``quality'' or ``efficiency'', but to create in 
        employees the impression that their disagreements with 
        management had been resolved bilaterally. 309 NLRB at 
        182 (emphasis added).

    Far from being a legitimate cooperative effort on the part 
of management, the action committees at Electromation were 
nothing but a technique to manipulate the employees. As the 
Court of Appeals noted:

          [T]he company proposed and essentially imposed the 
        action committees upon its employees as the only 
        acceptable mechanism for resolution of their 
        acknowledged grievances. * * * Electromation 
        unilaterally selected the size, structure,and 
        procedural functioning of the committees; it decided 
        the number of committees and the topics to be addressed 
        by each * * * Also, as was pointed out during oral 
        argument, despite the fact that the employees were 
        seriously concerned about the lack of a wage increase, 
        no action committee was designated to consider this 
        specific issue. In this way, Electromation actually 
        controlled which issues received attention by the 
        committees and which did not.

    In EFCO, 17-CA-16911 (1995), the Administrative Law Judge 
(ALJ) found that the employee committees in question, which 
dealt with benefit issues relating to employee stock option 
plans and profit sharing, were different from those in 
Electromation only ``in form, not substance.'' (17-CA-16911 at 
28.) He found that EFCO's ;committees were established 
unilaterally by management, which chose the initial membership, 
participated in almost all of the meetings of the various 
committees, and selected some of the issues the committees 
dealt with.
    Furthermore, EFCO engaged in numerous activities that were 
destructive of the employees' right to form and join a union. 
The ALJ found that EFCO violated section 8(a)(1) of the NLRA by 
maintaining an invalid no-solicitation rule, creating the 
impression of surveillance, and soliciting grievances from 
employees.
    EFCO's employee committees did not empower workers. They 
were created or revived in the context of an organization drive 
by the United Brotherhood of Carpenters, which began organizing 
EFCO in 1991 and had assigned two additional organizers to the 
campaign as employees in 1992.
    EFCO's committees were delegated no real power, and EFCO 
reserved for itself the authority to decode which 
recommendations, suggestions, policies, safety rules, and 
employee benefits would be adopted. In particular, the safety 
committee had ``lapsed into inactivity'' for some three years 
until its reactivation during the organizing drive. The ALJ 
found that the safety committee was not taken seriously by the 
employees, that there was ``widespread disregard, even 
ridicule, of the safety committee's efforts to improve plant 
safety.''
    In Keeler Brass, 317 NLRB No. 161 (1995), the employee 
committee in question was established to handle employee 
grievances. The Board found that, rather than empowering 
employees to handle grievances free of company influence, the 
company dominated the committee by determining the committee's 
membership eligibility rules, approving candidates, conducting 
the election, counting the ballots, and soliciting employees to 
vote for particular committee members.
    Since the activities found violative of section 8(a)(2) in 
Electromation, EFCO and Keeler Brass had nothing to do with 
quality circles, self-managed work teams, increasing efficiency 
on the front-lines, improving the quality of a product or 
service, introducing new technology or work practices, or 
expanding employee decision-making, these cases do not support 
the majority's contention that section 8(a)(2) needs to be 
amended.
    The other two cases cited by the majority, Polaroid \4\ and 
Donnelly,\5\ have not yet been tried by an ALJ. Moreover, the 
Donnelly Equity Committee, by claiming to be the exclusive 
collective bargaining representative of workers at one of its 
plants, would still be illegal under S. 295. The bill expressly 
excludes committees which ``claim or seek authority to 
negotiate or enter into collective bargaining agreements.''
---------------------------------------------------------------------------
    \4\ 1-CA-29966.
    \5\ GR-7-CA-36843.
---------------------------------------------------------------------------
    Testimony provided to the committee by Alan Reuther, 
Legislative Director of the United Automobile, Aerospace, and 
Agricultural Implements Workers Union (UAW), recounted efforts 
by Donnelly to use its company-created Equity Committees to 
thwart organizing efforts by the UAW. In particular, Mr. 
Reuther testified that Donnelly had actively resisted the UAW's 
organizing drive, distributing anti-union literature to workers 
while trying to bolster the credibility of this Equity 
Committee by expanding worker representation and referring to 
the committee's work as a ``grievance resolution process.''
    According to Reuther, 70 percent of the employees signed 
authorization cards that designated the UAW as their 
representative and asked for a representation election. 
Donnelly then derailed the secret ballot union representation 
vote by prompting the ``Equity Committee'' to seek resolution 
of pending unfair labor practices prior to the vote.
    In short, the Equity Committees so vigorously defended by 
Donnelly are neither democratic not independent. Members are 
not elected by employees in a secret ballot, but appointed by 
supervisors or a public show of hands. Donnelly finances the 
activities of its committees and sets their agendas, and 
members have no authority to investigate grievances 
independently.
    The case law cited by the majority in support of the TEAM 
Act does not justify the sweeping changes to Sec. 8(a)(2) the 
majority has proposed. As Professor Charles Morris has written, 
Electromation is a case ``more significant for its hype than 
its type.'' \6\ The same might also be said of Electromation's 
successor cases.
---------------------------------------------------------------------------
    \6\ Morris, ``Deja Vu and 8(a)(2)--What's Really Being Chilled by 
Electromation?'' (Apr. 30, 1994).
---------------------------------------------------------------------------

4. The real purpose of S. 295 is to impede union organizing

    As Senator Wagner recognized, company-dominated labor 
organizations are a major obstacle to the development of real 
unions that represent employers vis a vis their employers and 
that can help them achieve improvements in their wages and 
working conditions.
    James Rundle, a researcher at Cornell University, has shown 
that employers that institute employee involvement plans after 
a union organizing campaign has begun are much likelier to 
defeat the union than employers who do not institute such 
plans. Other researchers, including Fiorito, Grenier, 
Bronfenbrenner, and Juravich, have also found profound negative 
effects on union organizing where employers institute such 
plans, especially where the plan or committee deals with the 
employer on pay or discusses the union organizing campaign.
    Not surprisingly, employers know about the effect of 
employee representation plans on union organizing, and union 
avoidance is an explicit purpose of many such plans. As Charles 
Morris reports in his law article, ``Deja Vu and (a)(2), What's 
Really being Chilled by Electromation,'' a study of employee 
representation plans published by the Harvard Business School 
Press in 1989 found that in every company studied, managers 
cited the plans as ``a valuable and proven defense against 
unionization.''
    Electromation is a perfect illustration of how company-
dominated employee committees impede union organizing, and how 
their disestablishment pursuant to section 8(a)(2) promotes 
employee empowerment by protecting the right of employees to 
form independent labor organizations. The International 
Brotherhood of Teamsters petitioned for an election in 1989, 
while the ``action committees'' were in operation. The company 
mounted a vigorous anti-union campaign and suspended the 
committees until after the election. The union lost the 
election. A second election was held after a National Labor 
Relations Board Administrative Law Judge found the action 
committees to be in violation of section 8(a)(2) and ordered 
them disbanded. The union won the election. Subsequently, after 
a decertification petition was filed, a third election was 
held, and the union won that vote, too.
    If the proponents of S. 295 had their way, the employees at 
Electromation would never have voted for a union. Today, the 
workers have a 3-year collective bargaining agreement that 
their union negotiated on their behalf.

5. S. 295 ignores the real impediments to employee involvement and 
        empowerment

    According to the majority report, the Electromation 
decision marked the beginning of the end of employee 
involvement, leaving employers in a ``legal never-never land.''
    There were only 87 cases in 1994 in which employers were 
required to disestablish employee participation committees. By 
contrast, there were 7,947 orders in 1994 requiring employers 
to reinstate employees they had unlawfully discharged, and 
8,559 orders for backpay.
    In fact, it is employees who are seeking empowerment 
through a union who are in a legal never-never land. Their 
right to free association and free choice about representation 
has not been protected, and tens of thousands of them have 
suffered at the hands of anti-union employers. If the committee 
were truly concerned about employee involvement it would 
strengthen the remedies for unlawful discharge and seek ways to 
deter employer violations--particularly during union organizing 
campaigns. The right to form a union is not effectively 
protected by remedies that may take 3 or more years to obtain, 
long after the representation election they were meant to 
affect has been lost.
    Employer violations of the rights of their employees to 
form and join a union have escalated dramatically over the 
years.
    The proportion of NLRB elections in which union supporters 
are discharged is five times greater now than in the late 
1950's. Union supporters are illegally fired in one out of four 
elections, according to the Dunlop Commission.
    The effect of this widespread, unlawful employer activity 
extends far beyond the individuals who lose their jobs and the 
means to support themselves and their families. Employees all 
across the Nation are afraid to seek union representation. The 
Dunlop Commission found that 79 percent of workers say it is 
likely that employees who seek union representation will lose 
their jobs.



6. Scholars overwhelmingly oppose the TEAM Act

    Dr. Hoyt Wheeler, the President of the Industrial Relations 
Research Association, recently wrote a letter that was signed 
by more than 400 professors of labor law and industrial 
relations and other neutral parties in the labor-management 
community. The letter states:

          The stated purposes of [S. 295]--promotion of 
        legitimate employee involvement and genuine worker-
        management co-operation--are vital to the national 
        interest. However, enactment of the TEAM Act would 
        frustrate the realization of these goals by encouraging 
        illegitimate forms of employee involvement and 
        discourage the legitimate expression of worker voice.
          For the past 60 years, it has been the policy of our 
        labor law to encourage collective bargaining by 
        protecting the right of workers to freely associate and 
        select representatives of their own choosing. A 
        cornerstone of that policy has been the prohibition, 
        contained in section 8(a)(2) of the National Labor 
        Relations Act, on employer domination of employee 
        organizations and employee representation plans. That 
        section was central to the NLRA and was enacted because 
        prior to the NLRA's enactment, employer control of 
        employee organizations and representation plans had 
        been used widely and effectively to impede workers from 
        organizing independent labor unions. The proposed TEAM 
        Act would negate the original purpose of section 
        8(a)(2) by permitting without limitation a revival of 
        the very practices against which section 8(a)(2) was 
        aimed. The legislation contains no safeguards to 
        guarantee that employer-created representation plans 
        function democratically and independently of the 
        employer. Nor is there anything in the bill which would 
        prevent employers from manipulating the employer-
        controlled organizations in order to thwart genuine 
        employee voice. As a result, we are persuaded that 
        passage of the TEAM Act would quickly lead to the 
        return of the kind of employer-dominated employee 
        organization and employee representation plans which 
        existed in the 1920's and 1930's. Employee involvement 
        and worker-management cooperation can and should be 
        fostered by means which do not further limit employees' 
        freedom of association. The proposed TEAM Act 
        represents a step backwards towards the discredited 
        approaches of the 1920's and 1930's and away from true 
        employee involvement and genuine worker-management co-
        operation. H.R. 743 and S. 295 should not be enacted 
        into law.

    In addition, Dr. John Dunlop, Chairman of the Commission on 
the Future of Worker-Management Relations and Secretary of 
Labor in the Ford administration, has said that the members of 
the Dunlop Commission--including three former Secretaries of 
Labor, a former Secretary of Commerce, the CEO of Xerox Corp., 
several prominent labor relations scholars, and a 
representative of the small business community--unanimously 
oppose enactment of the TEAM Act.

                         democratic amendments

    The majority claims that its primary objective in 
eliminating the protections of Sec. 9(a)(2) is to give more 
authority and autonomy to employees. However, the TEAM Act 
bolsters employer prerogatives without a commensurate 
enhancement of employee rights under the NLRA.
    At the TEAM Act Executive Session, Democrats offered a 
number of amendments designed to remedy some of the 
inequalities that presently inhere in the NLRA. These 
amendments would have provided employees with enhanced legal 
remedies for NLRA violations by an employer, debarred firms 
with a pattern and practice of NLRA violations from receiving 
Federal contracts, and preserved the NLRA protections of 
employees who accept decision-making authority. The committee 
rejected all of these amendments on party-line votes.

                           kennedy amendments

    Senator Kennedy offered two amendments to strengthen the 
remedies provided under the NLRA for unlawful discharges of 
employees during union organizing campaigns. The first would 
have amended section 10(1) of the NLRA to require the NLRB to 
give top priority to the investigation of charges that an 
employer has illegally discharged an employee during a union 
organizing campaign or during the negotiation of a first 
collective bargaining agreement. If the NLRB found reasonable 
cause to believe the charge was valid, it would be required to 
seek an injunction in federal court pending final adjudication 
of the charge. The second amendment would have amended section 
10(c) to provide for triple backpay and the award of attorney 
fees as the remedy for illegal discharges during union 
organizing drives or during the negotiation of a first 
collective bargaining agreement.
    Senator Kennedy offered an amendment to expand the range of 
issues subject to collective bargaining. One way to increase 
employee empowerment and equalize bargaining power is to ensure 
that critical subjects, such as the decision to close or 
relocate a plant or to subcontract bargaining unit work are not 
excluded from collective bargaining. No issue is more important 
to employees than the fundamental issue of whether they will 
have a job at all. The amendment would have amended section 9 
of the NLRA to make clear that employees can negotiate over all 
issues that significantly affect wages, hours, and terms and 
conditions of employment.
    Senator Kennedy offered an amendment to provide employees 
with as much access to union organizers and information about 
unions as they have to the employer's anti-union campaign. The 
amendment would have amended section 8 of the NLRA to make it 
an unfair labor practice for an employer to deny a non-employee 
union organizer access to the non-work areas of the employer's 
facility for the purpose of conferring with employees, if the 
union had filed a petition for representation with the NLRB. 
The amendment would also make it unlawful for an employer to 
deny a union the right to attend a meeting of employees called 
by the employer to discuss representation by a labor 
organization.
    Senator Kennedy also filed an amendment to preserve the 
status as employees protected by the NLRA of employees who 
collectively, as part of a work team or committee, take on some 
of the decision-making authority of managers. The amendment 
would also have amended the definition of ``supervisor'' in 
section 2 of the NLRA to exclude individuals whose only 
supervisory role is to direct the work of another employee, 
without having the power to hire, fire, discipline or discharge 
the employee.

                     simon nlra debarment amendment

    Senator Simon's NLRA debarment amendment would have allowed 
the Secretary of Labor to debar from Federal contracts firms 
that showed a clear pattern or practice of NLRA violations. The 
Federal government already enforces a number of statutes and 
executive orders that hold Federal contractors to high 
standards. For example, the Davis-Bacon Act requires Federal 
construction contractors to pay their workers the ``prevailing 
wage'' in their locality, and Executive Order 11246 requires 
Federal contractors to establish affirmative action policies in 
their workplaces. Yet there is no statute or executive order in 
place to require that Federal contractors abide by the NLRA.
    A recent GAO Report commissioned by Senator Simon showed 
that the Federal government is currently paying millions of 
contract dollars per year to companies that have demonstrated a 
clear pattern and practice of violating labor laws. The Report, 
entitled ``Worker Protection: Federal Contractors and 
Violations of Labor Law,'' showed that approximately 13 percent 
(or more than $23 billion) of FY 1993 Federal contracts went to 
80 firms that were found to have violated the NLRA in FY 1993-
94.
    Of the 80 cases decided by the NLRB involving Federal 
contractors, 44 firms interfered with their workers' right to 
organize, 45 firms refused to bargain collectively with their 
employees' representatives, and 33 firms discriminated against 
union supporters in hiring or conditions of employment.
    The GAO also identified 15 firms that were more serious 
violators, in that they had either been ordered by the NLRB to 
comply with a comprehensive remedy, taken actions affecting the 
job status of more than 20 workers, or had a history of labor 
law violations in the period preceding the time covered by the 
study. Among the third group, 3 of the 15 (Beverly Enterprises, 
Monfort of Colorado, and Overnite Transportation Co.) had 
received several adverse Board judgments.
    Senator Simon's amendment, the Federal Contractor Labor 
Relations Enforcement Act of 1995, would have addressed this 
problem by giving the Secretary of Labor the discretion to 
debar firms that show a ``clear pattern and practice'' of NLRA 
violations from receiving Federal contracts or extensions or 
modifications of Federal contracts for three years.
    The Simon amendment would also have given the Secretary 
discretion to reduce or remove a debarment order for a firm 
that demonstrates that it has complied with the rules that it 
had been found to have violated, that there has been a bona 
fide change of ownership, or that there has been fraud or 
misrepresentation by a charging party.
    Under the Simon amendment, the Secretary would have been 
allowed to define ``pattern and practice'' through the 
administrative rulemaking process. The Amendment would also 
have left to the Secretary rulemaking authority regarding the 
debarment of a parent company because of the actions of a 
subsidiary.
    The Simon amendment would have helped to ensure that 
employers who repeatedly disregard the rights of their workers 
under the NLRA would face serious economic consequences for 
their failure to abide by the law. It also would have promoted 
efficient and economical Federal procurement by removing 
Federal support for firms that unfairly underbid their 
competitors by ignoring the requirements of the NLRA.

               simon first contract arbitration amendment

    Senator Simon's Labor Relations First Contract Negotiations 
Act of 1996 would have required mediation of first contract 
negotiation disputes lasting longer than 60 days. Under the 
Amendment, If an employer and a new representative have not 
reached a collective bargaining agreement within 60 days of the 
representative's certification, both sides would be required to 
jointly select a mediator to help them reach an agreement (or 
have one appointed by the Federal Mediation and Conciliation 
Service). Either side would be entitled to request binding 
arbitration of any matter still in controversy 30 days after 
selecting the mediator.
    Approximately one-third of unions never get a first 
collective bargaining agreement following certification. 
Estimates of the union failure rate in the 1980s range from 20 
percent to 3 percent. Furthermore, many employers engage in bad 
faith ``surface'' bargaining with a newly-elected union 
representative. This illegal tactic significantly reduces the 
odds of employees securing an initial agreement from their 
employer.
    On the other hand, mediation of first contract terms leads 
to a first contract in approximately two-thirds of 
certifications. Of the 10,783 certification notices the Federal 
Mediation Conciliation Service (FMCS) received between 1986 and 
1993, 6,009 (56 percent) resulted in an initial agreement. An 
additional 4 percent did not need mediation. Submitting first 
contract disputes to mediation could significantly decrease the 
overall union failure rates.
    Arbitration could prevent many first contract strikes, 
which tend to last longer than contract renewal strikes handled 
by mediators (FMCS). First contract strikes last an average of 
45 days, and produce agreements only 54 percent of the time. 
Contract renewal strikes last an average of only 30 days and 
produce successful agreements 82 percent of the time.
    The Simon Labor Relations First Contract Negotiations Act 
would have assisted employees who have voted for union 
representation to obtain the benefits of a collective 
bargaining agreement with unnecessary and wasteful delay.

                               conclusion

    S. 295 proposes to undermine workplace democracy in a 
profound way. Employers would be free to create and control 
employee committees, even those designed to represent employees 
regarding the most basic, pocketbook issues of wages, 
retirements, and health benefits.
    The TEAM Act would allow employers to create a ``labor 
organization,'' while controlling virtually every aspect of its 
activity. The employer could select committee members, limit 
its agenda or discussions, stack the committee with management 
or company favorites, and even unilaterally terminate the 
committee for any reason.
    While the National labor Relations Act currently promotes 
and protects the creation of democratically elected, equal 
bargaining partners, S. 295 would authorize phony employee 
organizations that would sour good labor-management relations.
    Over the years, section 8(a)2 has endured for the same 
reason democratic governments endure: the precious right of 
self-representation allows each American to seek a prosperous 
and safe future. We dissent from this bill's gratuitous attack 
on the right of working men and women.

                                   Ted Kennedy.
                                   Barbara A. Mikulski.
                                   Claiborne Pell.
                                   Chris Dodd.
                                   Tom Harkin.
                                   Paul Wellstone.
                                   Paul Simon.
                       X. Changes in Existing Law

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

           TEAMWORK FOR EMPLOYEES AND MANAGEMENT ACT OF 1995

                      TITLE 29--UNITED STATES CODE

          * * * * * * *

SEC. 158. UNFAIR LABOR PRACTICES.

    (a) Unfair Labor Practices by Employer * * *
          * * * * * * *
          (2) to dominate or interfere with the formation or 
        administration of any labor organization or contribute 
        financial or other support to it: Provided, That 
        subject to rules and regulations made and published by 
        the Board pursuant to section 156 of this title, an 
        employer shall not be prohibited from permitting 
        employees to confer with him during working hours 
        without loss of time or pay[;]: Provided further, That 
        it shall not constitute or be evidence of an unfair 
        labor practice under this paragraph for an employer to 
        establish, assist, maintain or participate in any 
        organization or entity of any kind, in which employees 
        participate to address matters of mutual interest 
        (including issues of quality, productivity and 
        efficiency) and which does not have, claim or seek 
        authority to negotiate or enter into collective 
        bargaining agreements under this Act with the employer 
        or to amend existing collective bargaining agreements 
        between the employer and any labor organization;
          * * * * * * *

                                
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