Since President Obama’s National Labor Relations Board announced its prosecution of the Boeing Company last month, there has been much commentary around the topic and its possible effects. Some have stated that the attack on Boeing is an attack on Right-to-Work states (even though it applies to companies in all states), others have correctly stated that the NLRB wants to make unions an ‘equal partner’ in the running of business. Some also add that the NLRB’s actions will create further incentive for businesses to avoid union-heavy blue states as well as raise the possibility of sending more U.S. jobs overseas. What has not been addressed until now is just how the legal theories behind the NLRB’s dangerous prosecution of Boeing, if successful, could apply to companies without unions, as well.

It should be noted that, prior to laying this theory out for you, it was important to verify it as legally plausible first–informally, through friends in the legal community. While not universally in agreement, several attorneys who specialize in labor law verified that what you are about to read could eventually be what’s in store for the U.S. down the road—if the union-backed NLRB succeeds in its prosecution of Boeing.

How the NLRB’s Logic Could Open Pandora’s Box

The 1935 National Labor Relations Act (“the Act”) is a law that affects both unionized and union-free employees and employers. Written during the New Deal, the Act is intended to regulate the private-sector labor relations between employers and their employees with regard to unions and other protected rights—known as Section Seven Rights.

Sec. 7. [§ 157.] Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 8(a)(3) [section 158(a)(3) of this title].

As the “independent” agency charged with administering the Act, the NLRB has the ability to interpret as well as enforce, subject to appeals to the federal courts (including the Supreme Court).

Among the rights that are protected under the Act’s Section Seven Rights includes the rights to unionize (or not), to strike, to engage in concerted activity, and more.

When an employer (or union) is found to violate these rights, it is known as an Unfair Labor Practice and the NLRB has the ability to remedy unfair labor practices.

When an employer is alleged to violates employees’ Section Seven Rights, the charges often fall under the category of either Section 8(a)(1) or 8(a)(3) charges, which are as follows:

8(a)(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7;
8(a)(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization

These are the two NLRA sections that the NLRB’s Acting General Counsel, Lafe Solomon, is claiming that Boeing has violated:

The NLRB launched an investigation of the transfer of second line work in response to charges filed by the Machinists union and found reasonable cause to believe that Boeing had violated two sections of the National Labor Relations Act because its statements were coercive to employees and its actions were motivated by a desire to retaliate for past strikes and chill future strike activity.

In his complaint that Boeing violated the Act, Solomon is using the rationale ordinarily used in the context of employer speech during union election campaigns (not already-existing bargaining relationships):

On the 8(a)(1) charge:

The U.S. Supreme Court delineated the line between protected employer speech versus unlawful employer speech under the NLRA in NLRB v. Gissel Packing Corp., 395 US 575, 618 (1969).

In General Electric Company, 215 NLRB 520 (1974), the National Labor Relations Board applied the Gissel test to set aside an election because the employer, citing concerns about possible future strikes, stated that the plant’s nonunion status was a primary factor in choosing to locate a production line for a new motor there…

Notwithstanding the fact that the Machinists’ 2008 strike had cost Boeing $1.8 billion, Solomon’s transference of discussions with the union that included honest and sound business decision making and potential loss of  customers (like Virgin Airlines) to that of unlawful campaign threats borders on Orwellian.

Moreover, once it was clear that an agreement could not be reached and a business decision was made, Solomon turned that decision into a claim of retaliation:

On the 8(a)(3) charge:

An employer’s discouragement of its employees’ participation in a legitimate strike constitutes discouragement of union membership within the meaning of this section. This applies to employer conduct designed to retaliate against employees for having engaged in a strike in the past (Capehorn Industry, 336 NLRB 364 (2001) where the employer failed to reinstate strikers when there was no legitimate business justification for permanently subcontracting the work), as well as employer conduct designed to forestall employees from exercising their right to strike in the future (Century Air Freight, 284 NLRB 730 (1987) where employer permanently subcontracted unit work and discharged employees in order to forestall the exercise of their right to strike…

Here’s Where the Slope Gets Slippery

While many have assumed that the Boeing battle only applies to those companies with unions, there is a body of cases where the NLRB has found third-parties to have violated the National Labor Relations Act by actions affecting employees who are not their own.

As an example of a company having been found guilty of violating the rights of another company’s employees, in March, the NLRB issued a decision against New York, New York casino for having prohibited the off-duty employees of a contractor onto its property to handbill guests.

This begs the question: If the NLRB determines Boeing did violate the law and it is later affirmed through the Courts, will this new standard also apply to third-party companies?

For example:

• If a building owner seeks to contract janitorial services and one of the bidding companies has the SEIU (with a history of bad labor relations, including strikes), if the building owner chooses the non-union bidder, would the SEIU be able to file a charge against the building owner for retaliating against the SEIU members for having exercised their right to strike in the past? If so, would the remedy be a company being forced to use the unionized company (as well as payback pay to the number of SEIU members it did not use)?
• What about a mining company that chooses to enter into a long-term purchasing agreement with Komatsu over Caterpillar because of Caterpillar’s past history of UAW strikes? Would UAW members have grounds to file an unfair labor practice against the mining company? Would the NLRB order the mining company to order Caterpillar bulldozers?

• What about the bank that refuses to give a business loan to a company that “may” have a strike during its next round of union negotiations? Could the NLRB require a bank to loan money to unionized companies?

If Lafe Solomon’s logic in the prosecution of Boeing prevails, combined with the potential of third-party companies being found guilty of violating the rights of employees of another employer, the possibilities are endless and, as a result, so are the ramifications to the economy.

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“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.” Thomas Paine, December 23, 1776

Cross-posted.