103D CONGRESS 1st Session SENATE WORKPLACE FAIRNESS ACT REPORT 103-110 JULY 27 (legislative day, JUNE 30), 1993.-Ordered to be printed Mr. KENNEDY, from the Committee on Labor and Human REPORT together with MINORITY VIEWS [To accompany S. 55] The Committee on Labor and Human Resources, to which was referred the bill (S. 55) to amend the National Labor Relations Act to prevent discrimination based on participation in labor disputes, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass. Fifty-five years ago, the Supreme Court upheld the National Labor Relations Board's decision that the Mackay Radio Company had violated the National Labor Relations Act by discriminating against strike leaders when it rehired employees after a failed strike. But in an almost off-hand way, the Court went on to say that the company was free under the NLRA to hire permanent replacements during the strike, and to refuse to reinstate strikers at the strike's end out of preference for retaining those replacements. NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333, 345 46 (1938). That statement created a troubling anomaly in our Federal labor law that seriously threatens workers' rights: employees cannot be disciplined or discharged for engaging in a strike, but they can be "permanently replaced." For decades, employers who sought to operate during a strike very seldom followed the Court's suggestion regarding the use of permanent replacements. These employers recognized that hiring permanent replacements would destabilize their workplaces, damage productivity, and destroy the positive relationships with employees and the community that may have taken years to foster. Moreover, they found the alternatives (operating with supervisory personnel or temporary replacements, stockpiling inventory, or transferring or subcontracting work) to be both workable and preferable. In the last decade, however, employers have significantly increased their use or threatened use of permanent replacements. By permitting permanent replacement of striking employees, the Mackay Radio doctrine undermines the collective bargaining process as a whole. Employees are discouraged from organizing to begin with; the right to strike may be exercised only at a substantial risk of losing one's job; and, if employees do opt to strike, the presence of permanent replacements often turns a limited dispute into a broader, more contentious, and far more protracted struggle. S. 55 would allow employers full use of the legitimate economic weapons at their disposal as part of the collective bargaining process. But it would preclude the use of permanent replacements, in order to protect the principal economic weapon of labor and, more important, to protect the collective bargaining process itself. Notably, employers in the nations that are our chief international competitors operate successfully today under rules like those S. 55 would establish. In sum, the committee finds that the increasing use of permanent replacements destabilizes labor-management relations and reduces collective bargaining to collective begging. For employees, the right to strike-at the very core of the NLRA's protections has become a hollow promise. This legislation represents the best means of restoring a fair balance between employers and workers. II. BACKGROUND A. THE NATIONAL LABOR RELATIONS ACT AND MACKAY RADIO For more than half a century, the National Labor Relations Act (NLRA) has been the principal Federal law governing labor-management relations in this country. At the core of the Act is Congress's intent to promote collective bargaining as the preferred method of resolving labor-management disputes and preserving 1 1 1 economic stability in the private sector. To that end, the Act encourages the use of certain peaceful self-help options as each side seeks to achieve its economic objectives. Congress has viewed the resolution of economic differences through "controlled conflict" in the collective bargaining arena not only as the best solution for labor and management but also as the solution best serving the public's interest in long-term labor-management cooperation and in the free flow of commerce. The NLRA promises workers that they shall have the right, without fear of employer discipline or discharge, to join unions, to bargain collectively, and-if no agreement can be reached-to participate in peaceful concerted activity to further their bargaining goals. See 29 U.S.C. 157, 158(a) (1) and (3), 163. The ultimate form of such peaceful concerted activity is the economic strike.1 It is the primary method for resolving disputes when a union and an employer are unable to agree on the terms of a contract. Moreover, the possibility of a strike is often the primary force driving both sides to settle their contractual disagreement. Employees contemplating a strike face the often dire prospect of lost wages and benefits for the duration of their walkout. Employers must cope with the possible loss of revenues over the same time period. These economic risks, of comparable magnitude, have tended to produce a desire for compromise among all parties. The Act expressly recognizes the central importance of the right to strike. Section 7 establishes the employees' right to engage in concerted activities for mutual aid or protection, which includes the right to withhold their labor when all other means of settlement have failed. And section 13 provides that "[n]othing in this Act * shall be construed so as either to interfere with or impede or diminish in any way the right to strike. ***" In short, Congress from the outset made clear that the right to strike is critical in providing the balance that makes the bargaining process work. The Act also expressly recognizes that for employee rights to be meaningful, employees must be protected from employer-imposed sanctions for their exercise of these rights. Thus, section 8(a)(1) broadly prohibits employers from taking actions that "interfere with, restrain, or coerce employees in the exercise of" their section 7 rights. Section 8(a)(3) specifically prohibits employers from "discrimination in regard to hire or tenure of employment or any term or condition of employment" on the basis of employee union-related activities. Notwithstanding these protections promised to striking workers, the Supreme Court, in one of its earliest decisions interpreting the NLRA, imposed a significant limit on the right to engage in an economic strike. In NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333 (1938), the Court stated that an employer's "right to protect and continue his business" justified the hiring of permanent replacements for employees who were on economic strike. Under federal law there are two kinds of lawful strikes. Economic strikes include all lawful strikes other than strikes to protest illegal employer conduct. In general, they are called to seek improvements, or avoid reductions, in wages, hours, or other terms or conditions of employment. By contrast, strike activity that is caused or prolonged by an employer's unfair labor practice is known as an unfair labor practice strike. Unfair labor practice strikers have the right to request and secure reinstatement, and may not be permanently replaced. the legislation reported out by the Committee does not affect the law regarding unfair labor practice strikes. The actual dispute in the Mackay Radio case did not involve any "right" to hire permanent replacements at all. Rather, it involved an unfair labor practice charge that the employer had discriminated against active union supporters when deciding which former strikers should be reinstated to vacant positions. The Supreme Court ruled for the Board and against the employer on that issue. But in doing so, the Court stated in dicta that an employer had the right to fill the places left vacant by strikers, in order to "protect and continue his business," and the employer could treat those replacements as permanent employees so as to displace workers who had participated in the strike. Although not part of its holding in Mackay Radio, the Court's pronouncement on permanent replacements has been treated as settled doctrine ever since. An employer has an absolute right, in the event of an economic strike, to hire replacements on a permanent basis, thereby eliminating the jobs of striking workers. This policy has a number of adverse consequences. It effectively allows employers to punish workers who exercise their lawful right to strike. It subverts the processes through which workers make uncoerced choices regarding union representation and through which unions negotiate collective bargaining agreements. It encourages employers to reject cooperative labor-management relations and instead force confrontations with their employees in hopes of eliminating their union. And it tips an already skewed balance of power in labor relations even more in favor of management. Recongizing the potential of the Mackay Radio doctrine to undermine both the right to strike and the collective bargaining process, labor law scholars have been persistent and vocal in questioning the decision. William B. Gould, Stanford Law School's Charles A. Beardsley Professor of Law, has related: Every year when I teach my students about the rules relating to the strike weapon in Labor Law I, I always explain the practical significance of engaging in protected activity. I point out to them that the practical significance is that the employee is immunized from employer self-help instituted against [workers] in the form of discipline or discharge for engaging in the conduct of question. But then I tell them that despite the fact that workers cannot be discharged or disciplined for engaging in a strike, they can be permanently replaced. Either this produces nervous laughter or expressions of puzzlement-and well it should! W.B. Gould, The Permanent Replacement of Strikers, A Speech for the U.S. Department of Labor Symposium on Vital Issues and New Directions in Labor Management Relations (March 17, 1988, at 89). Professor Paul Weiler of the Harvard Law School has put the point this way in testimony before the Senate Subcommittee on Labor: For the last several decades, labor law classes around the country have annually broken out in laughter at the thought that lawyers and judges would draw such a spurious distinction between discharging and permanently replacing an employee in his job. But to ordinary workers, this legal distinction is no joke at all. The employee may "Prohibiting Discrimination Against Economic Strikers," S. Hrg. 102-71, 102d Cong., 1st Sess., 88-89 (1991). Over the years, an overwhelming majority of commentators have criticized Mackay Radio as illogical, unjust, and unsupported by the language and purpose of the Act. See, e.g., Weiler, Striking A New Balance: Freedom of Contract and the Prospects for Union Representation, 98 Harv. L. Rev. 351, 387-391 (1984); Klare, Judicial Deradicalization of the Wagner Act and the Origins of Modern Legal Consciousness, 62 Minn. L. Rev. 265, 301-02 (1978); Gillespie, The Mackay Radio Doctrine and the Myth of Business Necessity, 50 Tex L. Rev. 782 (1972); Schatzki, Some Observations and Suggestions Concerning a Misnomer-"Protected" Concerted Activities, 47 Tex. L. Rev. 578, 383 (1969); Getman, The Protection of Economic Pressure by Section 7 of the NLRA, 115 U. Pa. L. Rev. 1195, 1203-04 (1967); Note, Replacement of Workers During Strikes, 75 Yale L.J. 630 (1966); Boudin, The Rights of Strikers, 35 Ill. L. Rev. 817, 830-32 (1941). B. MINIMAL IMPACT OF PERMANENT REPLACEMENT DOCTRINE BEFORE 1980 The Mackay Radio doctrine from its inception has been viewed as incompatible with basic rights and values of Federal labor law. Yet despite widespread criticism of the decision, it is only recently that Congress has made a serious effort to address the issue of permanent replacements. The committee concludes that there is a sound basis for the new attention being devoted to this issue. The Mackay Radio decision for its first 40 years was largely an aberration with few practical consequences. But in the years since 1980, it has become a significant practical problem that now warrants legislative action. 1. Supreme Court Decisions Related to Mackay Radio Prior to 1980 In the four decades following Mackay Radio, the Supreme Court reaffirmed its decision on stare decisis grounds. The Court never re-examined the validity of its original conclusion in terms of the relevant statutory language or legislative history. At the same time, the Court elsewhere recognized that the NLRA does restrict employer economic weapons that disfavor returning strikers in relation to those who work during a strike, precisely because such weapons interfere with the protected right to strike by, in effect, punishing strikers. This led to results that cannot be reconciled |