A Gateway Into the South?: the Effect of the Uaw's Proposed Introduction of European-style Works Councils Into Collective Bargaining in the United States

• Publication year: 2016

A GATEWAY INTO THE SOUTH?: THE EFFECT OF THE UAW'S PROPOSED INTRODUCTION OF EUROPEAN-STYLE WORKS COUNCILS INTO COLLECTIVE BARGAINING IN THE UNITED STATES

Gregory Mark^*

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TABLE OF CONTENTS

I. INTRODUCTION ...............................................................................244

II. BACKGROUND .................................................................................247

A. Workplace Democratization: Works Councils in Germany.....247
B. The Illegality of Works Councils Under U.S. Labor Law........248
C The Attempt to Organize the Volkswagen Plant in Chattanooga.............................................................................249

III. ANALYSIS ........................................................................................252

A. UA W's Proposed Dual Model..................................................252
B. ACE's Proposed Committee Model..........................................254
C. Legality of Proposed Models....................................................255
D. Implications to the Auto Industry in the Southeast and Georgia.....................................................................................256

IV. CONCLUSION ...................................................................................257

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I. INTRODUCTION

Union membership in the United States is declining, and if the current trend continues, unionization will no longer be relevant in the U.S. workplace.¹ In 2015, the number of unionized wage and salary workers in the United States remained at a record low of 11.1%, or 14.8 million workers.² A wide discrepancy between the public and private sector existed as only 6.7% of workers in the private sector were unionized.³ However, just over fifty years ago, in 1954, nearly 35% of wage and salary workers in the United States were members of a union.⁴

Over time, low union participation may cause dramatic changes in the social and economic composition of the United States, especially for its middle class. The growth of union membership in the mid-twentieth century is considered to be an important contributing factor in the development of the American middle class after the Second World War.⁵ The decline of union membership has likely contributed to the shrinking of the middle class in recent years.⁶ Additionally, scholars often describe the right to unionize as a "fundamental human and civil right,"⁷ and the freedom to unionize is considered to be "among the best means of ensuring the protections of a free society."⁸ Supporters of unionization believe that when that freedom is taken for granted, "it is a civil right in peril."⁹

Opponents of unionization argue that unions lead to higher prices for consumers, undermine American competiveness with foreign industries, hinder the operation of a business with overly restrictive regulations, and, by compelling membership for certain positions, limit freedom in employment opportunities. There are currently twenty-eight states in the United States that are "Right to Work" states.¹⁰ In these states, a company that is

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unionized cannot compel employees to become members of the union or to pay union dues. These states protect employees from compulsory unionism by prohibiting union security agreements.¹¹ At present, every state in the Southeast, including Georgia, maintains a "Right to Work" statute.¹² As a result of these statutes, unions struggle to establish a significant presence in these states. In 2015, only 4% of employed workers in Georgia were members of unions, and only 5.1% of jobs were covered by a union or employee association contract.¹³

In 2014, the labor movement discovered a potential gateway into the Southeast through the foreign auto industry. In early 2014, the United Auto Workers Union (UAW) met with leadership at Volkswagen (VW) regarding the possibility of unionizing the workforce at its Chattanooga, Tennessee plant. The move would be unprecedented in the foreign auto industry in the United States. Although the "Big Three" U.S. automakers—General Motors, Ford, and Chrysler (FCA US)—are unionized, foreign automakers operating plants in the United States have thus far remained union-free.

If the UAW is successful in unionizing a major foreign auto company in a Southeast "Right to Work" state, it may be able to continue its success and increase the presence of unions in the Southeast.¹⁴ States that have a strong foreign industrial presence may see a surge in unionization rates among foreign-owned multinational companies. In recent years, Georgia has witnessed a sizeable growth of foreign investment in the state. Today, foreign investment by multinational corporations accounts for a substantial percentage of Georgia's economy.¹⁵ Among these foreign investors,

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Germany has the most facilities in Georgia, with 424 locations across the state.¹⁶ In light of the significant presence of multinational corporations, the potential agreement with the UAW and Volkswagen in Tennessee may lead to a push in the labor movement in Georgia.

The UAW has experienced some success in its initial negotiations with Volkswagen by introducing a plan to establish a European-style works council in the Chattanooga plant.¹⁷ In Germany, works councils are a major aspect of labor relations.¹⁸ By introducing a works council model into its bargaining agreement, the UAW has gained the attention of Volkswagen. A series of setbacks in the UAW's efforts have occurred, many of which stem from Tennessee's status as a "Right to Work" state that has, to date, been largely opposed to the presence of unions. Furthermore, company unions have been found to be illegal under U.S. labor law.¹⁹ Nevertheless, if the UAW is able to overcome the hurdles and manage to unionize the Chattanooga plant with a works council model, it may attempt to capitalize on that success and expand to other foreign-owned companies in the South, including those in Georgia.

This Note analyzes the proposed works council models at the Volkswagen Chattanooga plant. It discusses whether the proposed models are legal under current U.S. labor law and considers the implications of the introduction of works councils on the future of U.S. labor relations in the largely anti-union Southeast. The analysis concludes by considering employee co-determination in the workplace as a product of works councils and the likelihood of the establishment of collectively bargained works councils that are used to expand union membership in the union-resistant climate of Georgia and the Southeastern United States.

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II. BACKGROUND

A. Workplace Democratization: Works Councils in Germany

Unlike most law in Germany, which is codified into chapters by topic, German labor law is derived from several sources.²⁰ Despite efforts in recent years to codify German labor law, the task has not yet been successful.²¹ Instead, the law is a result of various national and international sources of labor law. On a national level, both the German Civil Code and German labor courts have developed provisions and established legal principles relating to German labor law.²² Internationally, Germany must follow directives of the European Union and its associated courts.²³ Germany is also a member of the Organisation for Economic Cooperation and Development (OECD) and the International Labour Organization (ILO).²⁴

Germany's Works Constitution Act of 1972 (WCA) provides for the creation of shop level employee groups known as works councils in individual workplaces.²⁵ German-style works councils may be defined as "institutionalized bodies for representative communication between a single employer . . . and the employees . . . of a single plant or enterprise."²⁶ Works councils are independent of a union and represent all workers of a plant regardless of union membership.²⁷ German works councils differ from unions in that they do not negotiate for wages and benefits, and they do not organize strikes when there is a dispute between employees and management.²⁸ German works councils are representative of the workforce at a specific company, not of an entire industry.²⁹ Today, works councils are mandatory and encompassing in Germany's private sector.³⁰ Because they are representative bodies involved in the determination of a company's

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direction, works councils serve to make employees stakeholders in their employers.³¹ Works councils coexist in Germany with industry-wide labor unions.³² These unions operate as centralized structures with headquarters that determine industry-wide strategies and policies that are implemented throughout Germany.³³

B. The Illegality of Works Councils Under U.S. Labor Law

The National Labor Relations Act (NLRA) was enacted in 1935 to protect the rights of both employees and employers.³⁴ Section 7 of the Act provides that "[e]mployees 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."³⁵ Section 8 of the Act addresses unfair labor practices. Specifically, Section 8(a)(2) provides that "[i]t shall be 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."³⁶ In applying the law, the National Labor Relations Board (NLRB) and the United States Supreme Court have determined that a "company union" is a form of domination that is prohibited by Section 8(a)(2).³⁷

Today, the controlling case regarding the formation of works councils in the United States is Electromation, Inc. v. N.L.R.B.³⁸ In Electromation, the employer established "employee action committees" to provide a method for employees to initiate proposals to develop bilateral solutions for issues in the workplace.³⁹ The employer was responsible...