The Boeing Company is trying to expand production and add manufacturing capacity, something most other companies can only dream about doing in this economy. Unfortunately, Boeing has hit a snag in its attempt to expand production of its Dreamliner airplane to a new facility in South Carolina. But it's not the economy that's hampering the opening of the new assembly line, it's the National Labor Relations Board (NLRB).
Under President Barack Obama, the NLRB has become markedly more pro-union and has been busily working to reverse longstanding rulings to favor unions. This is happening even as the number of private sector employees who are union members has continued to decline. Last year, 6.9 percent of private sector wage and salary workers were members of a union, down from 7.2 percent in 2009, according to the Bureau of Labor Statistics, which is part of the U.S. Department of Labor.
At the moment, both Boeing and the NLRB seem prepared to slug out their differences in hearings that could drag on for months. Employers should be paying attention to the dispute because it involves issues that could affect them.
The Boeing Battle
For Boeing, the beginning of the dispute stretches back several years. In 2009, the aviation giant realized its production line in Washington State couldn't handle the demand for its new Dreamliner plane. So, Boeing decided to open a second production plant in South Carolina. By early 2011, the facility was nearly finished, and Boeing had hired more than 1,000 new workers.
Then in April 2011, the NLRB charged that Boeing's decision to open a plant in South Carolina was illegal retaliation against the International Association of Machinists and Aerospace Workers. The production facility in the Seattle area has been beset by strikes by union members in ultimately every set of negotiations for each new contract, while the South Carolina facility is nonunion. One of the remedies sought by the NLRB is for Boeing to move production from South Carolina to a union facility in Washington.
However, Boeing wasn't looking to replace workers in Washington or trying to bust the union. In fact, Boeing had already ramped up production at the Seattle facility, even as it opened the South Carolina plant.
Boeing is vigorously fighting the NLRB. "This claim is legally frivolous and represents a radical departure from both NLRB and Supreme Court precedent," said Boeing Executive Vice President and General Counsel, J. Michael Luttig. "Boeing has every right under both federal law and its collective bargaining agreement to build additional U.S. production capacity outside of the Puget Sound region."
For its part, the NLRB claims Boeing chose the new location in a right-to-work state as a way to eliminate the chances of strikes by union workers. "A worker's right to strike is a fundamental right guaranteed by the National Labor Relations Act," NLRB Acting General Counsel, Lafe Solomon, said in a press release when the board announced the charges.
On May 9, Solomon released a statement arguing that the Boeing action is business as usual at the NLRB. "Contrary to certain public statements made in recent weeks, there is nothing remarkable or unprecedented about the complaint issued against the Boeing Company on April 20," he said. This is perhaps his single most alarming comment that other businesses should be mindful of.
So far, Boeing and the NLRB are still locked in a slow-moving hearing process. The administrative judge of that hearing denied Boeing's request to dismiss the lawsuit. However, in August, the Committee on Oversight & Government Reform issued a broad subpoena ordering the NLRB to turn over all documents related to the Boeing case. This was an unprecedented step, according to Solomon. "To the best of my knowledge, this is the first time since 1940 that the National Labor Relations Board has been the subject of a congressional subpoena," he said in a statement. "I am disappointed and surprised by this development."
The Fallout in DC
The subpoena is just one area where Congress is battling the White House and the NLRB over the Boeing case.
Senator Lindsey Graham (R-South Carolina) has been blunt in his criticism of the NLRB. "Right now Boeing is stuck in what amounts to a union-controlled NLRB Star Chamber whose sole purpose is to extract a pound of flesh from the company," said Graham in a statement following the administrative judge's decision to allow the case to proceed. "Eventually Boeing will break free from the union-dominated process and move to a truly independent court of law. It's there Boeing ultimately prevails over this frivolous NLRB complaint. . . . South Carolina earned the right to build these airplanes, and no unelected bureaucracy is going to take that away from us."
Graham is one of nineteen Republican senators who signed a letter to Obama vowing to block two of the president's nominations to the NLRB – one is Solomon's appointment as general counsel. The other is that of board member Craig Becker, who Obama granted a recess appointment last year. The Senate has yet to confirm Solomon and Becker. Becker, the former associate general counsel to both the Service Employees International Union and the AFL-CIO, is scheduled to step down at the end of the year.
Currently, there are two other board positions on the five-member board that are unfilled. The U.S. Supreme Court has ruled that a two-member NLRB board cannot issue decisions, so unless the Senate moves to confirm new board members, the NLRB will be effectively hamstrung once Becker's term ends at the end of this year.
According to the letter from the Republican senators, the suit against Boeing is "an attack on millions of workers in twenty-two right-to-work states as well as a government-led act of intimidation against American companies that should have the freedom to choose to build plants in right-to-work states. If the NLRB prevails, it will only encourage companies to make their investments in foreign nations, moving jobs and economic growth overseas."
Members of Congress also began to introduce legislation in response to the Boeing suit and other recent pro-union rulings from the NLRB. While the Protecting Jobs from Government Interference Act passed the House of Representatives in September, its odds of passage in the Democrat-controlled Senate are virtually nonexistent.
Steps to Take Now
While the NLRB's decision to go after Boeing is alarming, many employers may wonder how it, along with infighting in Washington, could affect them. In the current economy, and with a presidential election on the horizon, employers need to understand what's at stake in the increasingly pro-union environment.
- Be prepared for increasing union activity: As the economy continues to struggle, more workers may be tempted to join unions or to unionize workplaces that have been nonunion. The new NLRB rules will spur union leaders to aggressively start ramping up unionizing efforts and seek government help for those activities. If your business has a unionized workforce, be prepared for more recruiting efforts of any nonunion employees you may have. If you have traditionally been a nonunion company, you may find union organizers looking to attract new members among your employees.
- Be educated and prepared: Along with periodically checking the pulse of union interest in your workforce, you should proactively anticipate questions and inquiries about unions and unionizing efforts. When it comes to responding to potential union activities, you need to do everything by the book so that your responses are legal and correct. If a manager in a satellite office asks his employee about union activity or makes an antiunion comment using company e-mail, the consequences for the entire company could be far-reaching and serious. This is also a good time to review and update training materials. If you haven't offered formal training to your managers and supervisors regarding how to respond to unionizing activity, you should seriously consider instituting it now. You should also develop a clear reporting chain so workers and managers can quickly escalate questions and concerns. When developing training materials, be sure to consult with in-house counsel, outside attorneys, and the HR department to be sure that those materials are appropriate and relevant for your industry and employees.
- Be aware of regulatory and legislative changes: The NLRB has released a flurry of new rulings regarding unions and even nonunion worker rights. The next election cycle will also be heavily contested in some areas, and unions will again throw a lot of money into races that could impact your company directly. You need to understand exactly what's happening in your state and nationally so that you aren't caught off guard. Outside counsel can be a valuable source of information. Trade associations and other industry groups can often provide helpful legislative and regulatory updates.
Employers have their hands full right now, but they need to make the time to understand what's going on with the union companies like Boeing, the NLRB, and their own employees. Otherwise, employers could be unprepared for actions and activities that could have far-reaching implications for all their stakeholders.