February 12, 2015 11:12 AM
The ongoing logjam at ports on the West Coast could cost American retailers around $7 billion this year, according to the consultancy Kurt Salmon. That’s a lot of money, and huge disruption to the nation’s economy. Of course, it’s impossible to prevent disruptions, including large ones, from ever happening. The problem is that this one was not only easily foreseen, but preventable.
The recent shutdown, and continuing backlog, has followed a similar pattern as past West Coast port shutdowns. That’s because labor at the ports functions as a cartel that can disrupt commercial shipping easily.
Shippers must negotiate with the union as a group, through a trade group called the Pacific Maritime Association (PMA). The union, International Longshore and Warehouse Union (ILWU), represents dockworkers at ports all down the West Coast. (Unionized port workers on the East and Gulf coasts are represented by the International Longshoremen’s Association.)
Like railroads and airlines, maritime shipping is a network industry vital to commerce. However, while labor relations at railroads and airlines are covered under the Railway Labor Act (RLA), which was designed to avoid major disruptions to commerce, ports are covered by the National Labor Relations Act (NLRA), which enables disruptions that the RLA doesn’t allow.
“Railroad crews cannot decide to stop working on the tracks, and airline crews cannot withhold fuel from planes,” explains Diana Furchtgott-Roth of the Manhattan Institute. “But [port] workers can simply not show up for shifts in Los Angeles and Oakland in order to hold out for higher wages.”
A clear solution would be for Congress to shift jurisdiction of ports from the NLRA to the RLA, much as it extended the RLA’s jurisdiction to airlines in 1936, 10 years after the original Act’s 1926 passage.
American Action Forum President Douglas Holtz-Eakin explains:
A cornerstone of the RLA is that its purpose, as stated in the statute, is to “avoid any interruption of commerce” while providing for “the prompt and orderly settlement of all disputes” that arise in labor matters. Labor contracts under the RLA do not expire. Instead, they become “amendable” and remain in force until a new agreement is reached.
If negotiations are not productive, then federal mediation is required before either unions or employers can engage in “self help” like slowdowns, strikes or lockouts. The National Mediation Board, which oversees the process, says that 99% of all of its mediation cases since 1980 have been handled without interruption.
February 10, 2015 9:56 AM
Congress established the National Labor Relations Board as a body made up of neutral arbiters to represent the public in labor disputes. Under the Obama administration, the Board has strayed from its required impartiality to issue rules and decisions that outright favor labor unions over workers and employers.
An example of the Board unfairly administering national labor policy to advance the interests of labor unions is the implementation of its “ambush election” rule.
Specifically, the amendments to union election procedures significantly favor unions by limiting debate and time workers have to learn about the pros and cons of union representation. It does so by shortening the time frame between the filing of a petition and the date on which the election is conducted to as little as 11 days from a median of 38 days.
Another component of the rule, which inappropriately benefits special interests and jeopardizes worker privacy, compels employers to hand over employees’ private information—cell phone, email address, and work schedule—to union organizers.
As I note in the Competitive Enterprise Institute’s agenda for Congress, “Government should not have the power to force employers to disclose workers’ contact information to a special-interest group for any cause. That [ambush election] rule would almost certainly expose workers—who would not have the choice of opting out of union organizers’ obtaining their information—to harassment, intimidation, and much higher risk of identity theft.”
December 23, 2014 12:21 PM
By issuing complaints against McDonald’s on December 19, 2014, the National Labor Relations Board gave unions a boost and further riled business groups. On July 29, 2014, the National Labor Relations Board’s (NLRB’s) Office of the General Counsel had set the labor and employment world on fire by authorizing these complaints, which needed Friday’s Board approval to move forward.
In essence, the Board itself has now preliminarily determined that the franchisor McDonald’s is a joint employer with McDonald’s franchisees and thus is liable for the actions of the franchisees, beyond just the opinion of the NLRB General Counsel.
In a press call, the International Franchise Association joined the U.S. Chamber of Commerce, National Restaurant Association, and National Retail Federation to address last Friday’s issuance of complaints against McDonald’s.
Robert Cresanti, Executive Vice President of Government Relations and Public Policy for the International Franchise Association explained that holding franchisors liable for the actions of their franchisees, as the NLRB General Counsel has proposed in an amicus brief, would move the franchise system toward large, corporate-owned outlets and away from independently owned operations.
On the call, Cresanti pointed out two important, real-world impacts such a decision would entail: 1) Minorities would be disproportionately disadvantaged as minority ownership is notably higher among franchise businesses than non-franchise businesses, and 2) Job growth would be constrained as business resources are sapped and franchise expansion curtailed.
Glenn Spencer, Vice President of the Workforce Freedom Initiative at the U.S. Chamber of Commerce, discussed how the direction of the NLRB leaves businesses with an uncertain standard for compliance.
Angelo Amador, Vice President & Regulatory Counsel with National Restaurant Association, noted the breadth of the issue goes far beyond McDonald’s and even far beyond restaurants.
David French, Senior Vice President of Government Relations for the National Retail Federation talked of the retail industry’s concern about the NLRB’s action today.
Indeed, the NLRB General Counsel’s brief in the BFI case speaks directly to franchising, staffing/temp agencies, and contracting/subcontracting. All of these industries must be concerned with the NLRB’s march against McDonald’s.
November 24, 2014 9:45 AM
On December 16, Nancy Schiffer’s term on the National Labor Relations Board will end. Sharon Block was set to take her place but the Obama administration abruptly withdrew her nomination on November 12, 2014.
Lauren McFerran, formerly the chief labor counsel and deputy staff director of the Senate HELP Committee is the next nominee in line.
The NLRB has some very important cases before it including whether or not student athletes should be unionized, whether or not unions can use a company’s email to organize, and whether or not a union can get the private information of workers they are attempting to unionize. The most important case by far, however, is the joint employer case.
With the NLRB potentially reclassifying a decades-old joint employer rule to devastating and systemic impact on the economy, those familiar with the issue were eagerly waiting to hear McFerran’s position. Would she support NLRB General Counsel Richard Griffin’s authorization of complaints against McDonald’s, thus blurring any meaningful distinction between franchisee and franchisor and classifying most business relationships as joint employer relationships?
The short answer is that no one knows. The only indication McFerran gave about her beliefs in the Senate HELP Committee hearing was when she described herself as “pro act,” meaning that she was trained not to desire a specific outcome but only to look at the facts and try to give the right answer. Besides that, McFerran didn’t give us much to go on besides saying vaguely positive things about how her role, if confirmed to the NLRB, would be to solve real problems for real people and reach across the aisle.
When Sens. Lamar Alexander (R-Tenn.) and Richard Burr (R-N.C.) asked her directly about the joint employer controversy, she would only say that she could not give an opinion on the controversy since it would be one she would have a role in resolving if confirmed to the Board.
Sen. Alexander also asked McFerran if she thought it was appropriate for student athletes to be unionized, since they receive full scholarships that pay many of their living expenses. Again McFerran dodged the question by saying she could not give an opinion since the question was also one that would come before her if confirmed.
Sen. Burr, taking into consideration McFerran’s reservations about giving a decisive opinion on a case she would preside over, asked a more general question: “Are there any limitations to what the NLRB can do to determine how many people who don’t actually pay the check are in the chain of liability for joint employer?”
McFerran answered, “If the issue were to come before me as a Board member, all I can pledge to you is that I would consider it with a very open mind, I would look at the arguments presented to me in the case, I would review the record, I would consult with my colleagues, and I would review the issue with a completely open mind.”
Well, McFerran might be open-minded, but the bad news here is that if somebody wants to be confirmed to a position on the NLRB, all they have to do is say vaguely positive things.
November 19, 2014 1:06 PM
The left has a troubling Big Labor agenda that can only be accomplished by a pen-and-phone strategy to evade the U.S. Senate and House. The strategy centers largely upon the National Labor Relations Board (NLRB) that will need the key fifth board member to cast the deciding votes for the agenda.
With the December 16 expiration of Nancy Schiffer’s term on the NLRB, Big Labor is scrambling to see someone confirmed before then to take her place. Their surprise answer is to withdraw Sharon Block, who had already had her confirmation hearing, had passed in a bipartisan fashion out of committee, and had been placed on the Senate Executive Calendar for a vote.
Now President Obama and Big Labor have taken three steps back and on November 12 nominated Lauren McFarren, chief labor counsel and deputy staff director of the jurisdictional Senate Health, Education, Labor and Pensions Committee.
McFerran should not be slid through a committee hearing a mere week after she is nominated. Given the issues at hand, full advice and consent cannot be provided in such time.
Big Labor Agenda
What is on the Big Labor agenda?
Commercial concerns include whether franchises, staffing agencies, and contractors/subcontractors will suffer major changes to their businesses, as Big Labor’s allies attempt to make businesses joint employers and transform everyone into an employee of a big conglomerate that faces huge liabilities and expenses and is more easily unionized.
Privacy advocates are concerned by Big Labor attempts to obtain workers’ private information so that, in addition to knocking at the doors of their homes, unions can email, text, and instant message workers.
Property rights defenders are worried that Big Labor wants to use businesses’ email systems for their unionization purposes unrelated to the business.
Businesses large and small are disturbed at the NLRB concept that profane and insubordinate actions—cursing out and telling off bosses, even in front of customers—is to be considered protected organizing activity.
The NLRB wants to give unions the ability to put up anti-business posters in the business in plain view of the customers.
Employers have been alarmed at the NLRB push to have unions and bargaining units as small as two people—micro-unions—which creates massive administrative headaches.
The NLRB is attempting to speed up union elections to as few as 10 days from the request to unionize, thereby ambushing businesses that are left without time to discuss downsides.
These examples only begin to paint the picture of Big Labor’s problematic agenda.
November 3, 2014 8:59 AM
On July 29, 2014, the National Labor Relations Board’s Office of the General Counsel set the labor and employment world on fire by authorized complaints against McDonald’s, determining that the franchisor McDonald’s is a joint employer with McDonald’s franchisees and thus liable for the actions of the franchisees.
Were franchisors typically held liable for the actions of their franchisees, as the NLRB General Counsel has proposed in an amicus brief, the franchise system as we know it would implode.
With October now past, it has been over three months. Yet, despite the General Counsel’s determination, no formal complaint has been filed by the full National Labor Relations Board (NLRB) against franchisor McDonald’s as a joint employer.
This lack of action from the Board comes as something of a surprise, given the time and high-profile attention paid to the matter and given that the norm is for the Board to follow the advice of General Counsel Richard Griffin, himself a former Board Member.
September 15, 2014 10:56 AM
That was the question at the center of a September 9 House Health, Employment, Labor, and Pensions Subcommittee hearing, which was held in response to the National Labor Relations Board’s (NLRB) July 29 decision declaring McDonald’s to be a “joint employer” with all of its local franchisees across the country.
Subcommittee Chairman Rep. Phil Roe (R-Md.) warned that the decision would diminish business opportunities for Americans by destroying the franchisee model that allows entrepreneurial people to use an established brand name to start a business instead of starting on their own from scratch.
The first witness, Catherine Monson, CEO of a franchise who has been in the business for 30 years, warned that the NLRB decision would impact many lines of business in addition to hotels and restaurants, including accounting and home improvement services. Monson said that, “I have seen franchising allow people to achieve the American dream of business ownership.” She expressed strong disagreement with the ruling, because franchisees pay their own taxes and hire, fire, manage, schedule, and train their own employees. The franchisor sets overarching standards to protect the brand name but has no input on franchisees’ labor relations.
But if franchisors were required to have direct input over labor relations, they would be liable for any charges of unfair labor practices. The potential for significant legal costs would force franchisors to enhance their oversight of the franchisee. Monson said this enhanced oversight would reduce franchisees’ autonomy, thus effectively ending the franchisee system. When asked about the costs to franchisees from this decision, Monson said there would have to be “cuts.”
Jagruti Panwala, a first generation immigrant from India and a franchisee, said that she would not have started her own business without the franchise system. Panwala said that franchising helped her business grow by attracting new customers and that, “Ultimately, franchising appealed to us because we still controlled our own business and simply paid fees for the use of a brand name.” Panwala, who employs roughly 200 people at a hotel, said that the impact of a decision forcing her franchisor to be involved in labor relations would hurt morale of her employees, some of whom have worked for her for over a decade. She described the potential restructuring of the franchise system as “devastating” to her business and said that it would make her an employee of the parent company instead of a business owner.
August 28, 2014 11:00 AM
A federal judge in Pittsburgh has reprimanded the National Labor Relations Board for its heavy-handed and questionable treatment of University of Pittsburgh Medical Center (UPMC) in a labor dispute between the healthcare giant and the SEIU.
A UPMC hospital is undergoing a two-part trial over SEIU’s allegations that the company committed unfair labor practices. The first case involves the charge that UPMC management conducted interrogations and surveillance of organizing activity and made implied threats of discipline and arrest. NLRB judges have not yet issued a ruling for that case. The second case involves SEIU’s claim that UPMC is one entity, and therefore vulnerable to unionization, which the UPMC denies because it claims that each hospital is its own entity.
U.S. District Judge Arthur J. Schwab weighed in and said,
The Court does not see how these requests have any legitimate relationship or relevance to the underlying alleged unfair labor practices; instead, the requests seek highly confidential and proprietary information (except for a few public documents); the requests have no proportionality to the underlying charges; and, the requests seek information that a union would not be entitled to receive as part of a normal organization effort.
Judge Schwab also said,
Indeed, the scope and nature of the requests, coupled with the NLRB’s efforts to obtain said documents for, and on behalf of the SEIU, arguably moves the NLRB from its investigatory function and enforcer of federal labor law, to serving as the litigation arm of the union, and a co-participant in the ongoing organization effort of the union…
In the end Judge Schwab unfortunately decided to let the NLRB get away with the excessive barrage of subpoenas.
If the NLRB is indeed stepping out of its investigatory function and acting as air support for the SEIU’s organizing effort of UPMC, it would not be the first time the federal bureaucracy has played favorites under President Obama’s watch.
July 28, 2014 9:55 AM
Coauthored with Alex Bolt.
President Barack Obama spuriously claimed, "These so-called right-to-work [RTW] laws, they don't have anything to do with economics," when he futilely attempted to thwart Michigan’s enactment of a right-to-work law.
A new study by the Competitive Enterprise Institute demolishes Obama’s spurious claim by showing how RTW laws, which free workers from a mandate to join a union in order to be employed, benefit states. RTW laws produce better income, population, and job growth than in forced-unionism states.
July 21, 2014 12:17 PM
Sadly, but unsurprisingly, it appears that former Secretary of Labor Hilda Solis may have violated the Hatch Act—which prohibits federal employees from engaging in political activity while on duty—by soliciting funds for President Obama’s reelection campaign during work hours.
The House Oversight Committee, chaired by Rep. Darell Issa (R-Calif.), broke the story when it released a voicemail of Solis calling a Department of Labor subordinate “off the record” to get help for Obama’s 2012 campaign. The release of the voicemail came as a result of a larger investigation into the Obama administration’s political activity during the 2012 election cycle.