n
^ EXAMINING THE ISSUES SURROUNDING THE NA-
TIONAL UBOR RELATIONS BOARD'S RUL&
MAKING CONCERNING SINGLE LOCATION BAR-
GAINING UNITS IN REPRESENTATION CASES
Y 4. SM 1 : 104-65
Exanining the Issues Surrounding th. ..
HEARING
BEFORE THE
SUBCOMMITTEE ON REGULATION AND PAPERWORK
OF THE
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
WASHINGTON, DC, MARCH 7. 1996
Printed for the use of the Committee on Small Business
Serial No. 104-65
^UG 1 9 ,996
U.S. GOVERNMENT PRINTING ^ — ^.... wi7ri'«.' * *pnf
WASHINGTON : 1996 ^ —
For sale by the U.S. Government Printing Office
Superintendent of Document.s, Congiessional Sales Office, Washington, DC 20402
ISBN 0-16-052828-3
^ EXAMINING THE ISSUES SURROUNDING THE NA-
TIONAL LABOR RELATIONS BOARD'S RULE-
MAKING CONCERNING SINGLE LOCATION BAR-
GAINING UNITS IN REPRESENTATION CASES
Y 4, SH 1 : 104-65
Exanining the Issues Surrounding th. ..
HEAKING
BEFORE THE
SUBCOMMITTEE ON REGULATION AND PAPERWORK
OF THE
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
WASHINGTON, DC, MARCH 7, 1996
Printed for the use of the Committee on Small Business
Serial No. 104-:^5
U.S. GOVERNMENT IHIIIIIIH ll|l|i|llli „ „^ - tiC/JfPPnyf^ Hp^*
WASHINGTON : 1996 "'"
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office. Washington, DC 20402
ISBN 0-16-052828-3
COMMITTEE ON SMALL BUSINESS
JAN MEYERS. Kansas, Chair
JOEL HEFLEY, Colorado
WILLIAM H. ZELIFF, Jr., New Hampshire
JAMES M. TALENT, Missouri
DONALD A. MANZULLO, Illinois
PETER G. TORKILDSEN, Massachusetts
ROSCOE G. BARTLETT, Maryland
LINDA SMITH, Washington
FRANK A. LOBIONDO, New Jersey
ZACH WAMP, Tennessee
SUE W. KELLY, New York
DICK CHRYSLER, Michigan
JAMES B. LONGLEY, JR., Maine
WALTER B. JONES, Jr., North Carolina
MATT SALMON, Arizona
VAN HILLEARY, Tennessee
MARK E. SOUDER, Indiana
SAM BROWNBACK, Kansas
STEVEN J. CHABOT, Ohio
SUE MYRICK, North Carolina
DAVID FUNDERBURK, North Carolina
JACK METCALF, Washington
STEVEN C. LaTOURETTE, Ohio
JOHN J. LaFALCE, New York
IKE SKELTON. Missouri
NORMAN SISISKY, Virginia
FLOYD H. FI.AKE, New York
GLENN POSHARD, Illinois
EVA M. CLAYTON, North Carolina
MARTIN T. MEEHAN, Massachusetts
NYDIA M. VELAZQUEZ, New York
CLEO FIELDS, Louisiana
EARL F. HILLIARD, Alabama
DOUGLAS "PETE" PETERSON, Florida
BENNIE G. THOMPSON, Mississippi
KEN BENTSEN, Texas
WILLIAM P. LUTHER, Minnesota
JOHN ELIAS BALDACCI. Maine
Jenifer Loon, Staff Director
Jeanne M. Roslanowick, Minority Staff Director
Subcommittee on Regulation and Paperwork
JAMES M. TALENT, Missouri, Chairman
FRANK A. LoBIONDO, New Jersey
ZACH WAMP, Tennessee
SUE W. KELLY, New York
JAMES B. LONGLEY, JR., Maine
WALTER B. JONES, JR., North Carolina
VAN HILLEARY, Tennessee
MARK E. SOUDER. Indiana
Michael J. McLaughlin, Subcommittee Staff Director
NYDIA M. VELAZQUEZ, New York
IKE SKELTON, Missouri
DOUGLAS "PETE" PETERSON, Florida
KEN BENTSEN. Texas
WILLIAM P. LUTHER, Minnesota
ai)
CONTENTS
Page
Hearing held on March 7, 1996 1
WITNESSES
Thursday, March 7, 1996
Coleman, James, general counsel, National Council of Chain Restaurants 31
Coxson, Harold P., American Bankers Association 37
Ford, Peter J., United Food & Commercial Workers International Union,
AFI^CIO 44
Gould, William B., IV, Chairman of the National Labor Relations Board 3
Kekuna, Haunani Sue Lin, K&I Management/The Coffee Beanery 34
Mack, Curtis L., Esq., Mack, Williams, Haygood & McLean 41
Magnan, Rock, vice president-operations, Uon-Way Transportation Services ... 36
Shaw, JoAnn M., University of Chicago Hospitals 40
APPENDIX
Prepared statements:
Coleman, James 55
Coxson, Harold P 67
Ford, Peter J 85
Gould, William B., IV 95
Kekuna, Haunani Sue Lin 105
Mack, Curtis L., Esq 110
Magnan, Rock 116
Shaw, Joann M 122
Additional Material
American Nurses Association, Washington, DC, prepared statement 126
Gk)uld, William B., IV, Chairman of the National Labor Relations Board,
letter to Chairman Talent responding to questions asked during the
hearing 128
Labor Policy Association, Inc., Washington, DC, fact sheet 151
National Association of Chain Drug Stores, prepared statement 153
National Association of Chain Drug Stores, statement submitted on be-
half of, by the firm of Jackson, Lewis, Schnitzler & Krupman,
Woodbury, NY 156
The Jan Companies, Cranston, RI, letter 183
United Food & Commercial Workers International Union, AFL-CIO &
CLC, Washington, DC, letter 185
(III)
EXAMINING THE ISSUES SURROUNDING THE
NATIONAL LABOR RELATIONS BOARD'S
RULEMAKING CONCERNING SINGLE LOCA-
TION BARGAINING UNITS IN REPRESENTA-
TION CASES
THURSDAY, MARCH 7, 1996
House of Representatives,
Subcommittee on Regulation and Paperwork,
Committee on Small Business,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:15 a.m., in
room B363, Raybum House Office Building, Hon. James Talent,
(chairman of the Subcommittee) presiding.
Chairman Talent. This hearing has been called to consider a
proposed National Labor Relations Board rule regarding the size of
bargaining units. It is a proposed rule with potentially great sig-
nificance for small businesses and the jobs of their employees.
Under our system of labor laws, when a union seeks to represent
a group of employees, the employees have the opportunity in an
election to decide whether they wish to be represented by that
union. Before the election can be held, it is necessary to determine
what the size and shape of the bargaining unit will be, so that we
know which employees will be entitled to vote and whom the union
will represent if it wins.
Of course, many employers, especially in the retail business, but
in other businesses as well, operate more than one facihty. Typi-
cally, for example, there are a number of department stores or
chain restaurants operated by an employer in a metropolitan area.
When a union seeks to represent the employees of such an oper-
ation, the board must decide whether to permit a representation
election in one facility alone, or to require a unit of more than one
facility. The board must decide whether the facilities are autono-
mous enough to constitute separate bargaining units, or whether
the facilities are operated in such a way that as the board put it
in 1968, 'The day-to-day interests of employees in the particular
store have merged with those of employees in other stores," such
that the facilities should be thought of as one operation.
This decision requires a balancing. On the one hand, too large a
unit may be difficult for a union to organize and represent because
it may contain employees with interests that are too dissimilar,
employees whom the board would say do not have an adequate
community of interest.
(1)
On the other hand, too small a unit may balkanize an enterprise
in a way that destabilizes collective bargaining and frustrates both
employer and employee. If a single employer owns, for example, 10
or 15 restaurants in a metropolitan area and each one were a sin-
gle facility unit, you could have collective bargaining going on with
10 or 15 different units at different times in the course of a year.
For at least 30 years the board has struck this balance in the fol-
lowing way. The union has the initial advantage. It may seek an
election in either a single- or multiimit facility.
If the union asks for an election in a single facility, that choice
is respected unless the board finds that a single store unit would
be unworkable or what the board calls inappropriate.
In deciding that question, the board considers several factors,
among them whether the facilities are functionally integrated, that
is, whether they work closely together in producing goods and serv-
ices and whether labor relations are controlled centrally and apply
uniformly to all facilities, as opposed to having personnel decisions
made store by store.
Now the board is proposing to change by rulemaking this 30
years of precedent. The board is proposing a new four-factor test
to determine whether a single-facility unit is appropriate.
The proposed rule would say that a single-facility unit will be
conclusively presumed to be appropriate unless another facility is
located within 1 mile, no supervisor is present at the facility, there
are fewer than 15 employees at the facility, or 10 percent of em-
ployees at the facility have been temporarily transferred 10 percent
of the time.
These factors have never been considered determinative by the
board under either Democratic or Republican administrations. In
fact, in the form in which the board is now considering them, these
factors have not even been material.
For example, while the board has considered geographic proxim-
ity, there has never been a suggestion that a 1-mile limit is some-
how magically or conclusively determinative. In addition, under the
new rule the board will no longer consider at least two factors,
which in the past it has often held determinative in finding against
a single-facility unit the integration of operations among facilities
and centralized control of labor relations.
The practical effect of the new rule will be to make a single-facil-
ity unit conclusively appropriate in a large number of cases where
in the past the board would have required a larger unit.
What is particularly disturbing to me is that the board is propos-
ing this new rule while suggesting that it is not making any sub-
stantive change in the law. The board claims that the new rule is
designed purely to advance efficiency and convenience for itself and
litigants.
But there is no empirical evidence, and in fact the board admits,
that it has no empirical evidence, that this has been a particularly
inefficient or inconvenient part of its caseload. The NLRB, subject
to the statutes passed by Congress, is the primary expositor of the
National Labor Relations Act.
The board may change its past precedents, and in fact often has
done so, provided that it has a reasonable basis for the new deci-
sion. There may be a good reason for changing the law in the area
of single- and multi -facility units. But no one can determine that
unless the board admits at least that it is trying to change the law
and gives the public and the small business community its reasons
for doing so.
I have called this hearing to look into these issues. Chairman
Gould of the NLRB is here today to disabuse me and the Sub-
committee of the notions I have expressed in this opening state-
ment. We'll call on him first.
Actually, I was going to ask Ms. Velazquez to go first. But since
she isn't here, we'll go right to Chairman Gould. I want to say first
of all, welcome him here and thank him for working with the Sub-
committee. We have had to postpone this on several occasions, in
part because of acts of God. The snowstorm at one time made
things very difficult to get together. I appreciate him cooperating
with us.
Mr. Gould, please go right ahead. This is William Gould, a distin-
guished former professor of labor law and now the Chairman of the
National Labor Relations Board.
Please go right ahead.
TESTIMONY OF WILLIAM B. GOULD, IV, CHAIRMAN OF THE
NATIONAL LABOR RELATIONS BOARD
Mr. Gould. Thank you, Mr. Chairman. I want to thank you for
inviting me to appear here today and I have prepared a written
statement that I don't intend to go through. I don't know that I can
keep to 5 minutes. I thank you for allowing me to go beyond 5 min-
utes.
I'll try to keep as close as I can to it, and I'd just ask and I imag-
ine that my written statement will be made a part of the record.
Chairman Talent. We'll be happv to make it part of the record.
Mr. Gould. Thank you, sir. I am here primarily, although I want
to make a few points to — both to respond to your questions and to
hear from you. Of course, here as we have been attempting to do
through the commentary process from interested parties.
I do want to preliminarily state, Mr. Chairman, that I believe
some of the opening — a number of the opening comments that you
made are in error.
The factors that we have referred to are in fact in board deci-
sions, approximately 10 or so, not simply as you stated functional
integration and centralized control but also common skills func-
tions and working conditions, permanent transfers, bargaining his-
tory, as well as temporary employee interchange, geographical sep-
aration, local autonomy, minimum unit size.
So there are a wide variety of factors that we have considered.
Mr. Chairman, if you look at my written statement, you'll see that
the point that I make, and I make here again to you here with all
respect, sir, is that contrary to your statement, we are not making
new law with this rule.
If you look at the factors that you refer to, functional integration,
if you look at the actual cases that we have decided, we do, when
we decide cases looking to functional integration, use the very cri-
teria that are involved in this rule, specifically, geographical sepa-
ration, employee interchange, and local autonomy.
Those are the factors that we look at in connection with func-
tional integration. Centralization. We look at the issue of local au-
tonomy and how much responsibility is possessed at the local level.
That is the focus of this rule, because through the requirement in
the proposed rule that a statutory supervisor within the meaning
of Section 2, Subsection 11 be present for a substantial period of
time, we are again looking at the issue of local autonomy.
The one change that we've made in the proposed rule, Mr. Chair-
man, is that we are being for the first time precise, so that people
will be — so that the average person, the lay person as well as the
lawyer can know in our system what their rights and obligations
are.
The present system, as I'll speak to later, is sadly lacking in this
regard. Because what we do is, we refer to many criteria that we
have never relied upon in our actual decisions, or rarely relied
upon. Then we use some things like functional integration, which
gives the appearance of looking to something other than inter-
changed geographical separation and local autonomy.
In fact, we are looking to those very considerations. So, what
we're trying to do here is to be efficient. Now, Mr. Chairman, we
have been engaged in this rulemaking process involving this par-
ticular matter for a substantial period of time, almost 2 years now,
beginning on June 2, 1994, when we promulgated our advance no-
tice of rulemaking.
We have, subsequent to that advance notice of rulemaking, after
receiving 41 comments, we issued our proposed rule in the fall of
1995, in September 1995. It has, the period for comment under the
proposed rule, been extended three times and that period expires
on March 15.
Again, I would as I have in the past, and in my correspondence
with you, Mr. Chairman, invite all interested parties to comment.
There is still more than a week left. The proposed rule is just that:
A proposed rule.
We are seeking to learn from all interested members of the pub-
lic, including yourself, Mr. Chairman, as to what their views are.
I want to emphasize the tentative nature of our conclusions in this
proposed rule.
We want to learn more about the practical problems that union
and industry and employers and employees face. As you know, Mr.
Chairman, we — this is not our first experience with rulemaking.
We fashioned a rule relating to units in acute health care which
was approved by the U.S. Supreme Court. Our authority to engage
in rulemaking was approved by the Court in 1991.
We received, just as we have received this time, many comments.
We received in acute health care 1,800 comments and we re-
sponded to those comments. We changed — my predecessors
changed aspects of the position that they had taken previously in
the final rule that was enunciated.
The results of our involvement in acute health care are very en-
couraging, very encouraging in the sense that we have — we have
virtually eliminated litigation about units in acute health care.
Most of our units, the overwhelming number, approximately during
the past year 62 out of 89, didn't even go to a hearing. They were
resolved because of the clarity of our rule on the basis of an agree-
ment.
I should say, Mr. Chairman, because so much comment has been
made about union organizing, that a couple of things about that at
the outset. It's interesting to me that, so far as we are aware in
acute health care, union organizing, at least in terms of using our
processes, has diminished, notwithstanding the more expeditious
rule that we fashion.
This rule is not directed to union organizing. There is no empiri-
cal evidence whatsoever that stands for the proposition that unions
will organize more or use our processes more if this rule goes into
effect.
There is no empirical evidence that says unions will be more suc-
cessful in organizing employees if our rule goes into effect. Our rule
is concerned with other matters. I want to address that, because
I think that looking at the written comments, that's something
you're going to hear about again and again.
Now, let me just say preliminarily, Mr. Chairman, as I have said
to you in our private conversations, that I have alluded to in our
correspondence, the conversation that we had on December 7 and
the exchange of correspondence we had thereafter, that I don't feel
entirely comfortable appearing before you today because of the ten-
tative nature of our process and also because we are involved at
this point in a deliberative process.
I think one of the points that I made to you when we met on De-
cember 7 was that — and I know this seems to astound Members of
the legislative branch from time to time — we have absolutely no
contact with the executive branch of the U.S. Government in con-
nection with our rulemaking, as well as in connection with our ad-
judication responsibility.
My view is that that is as it should be, and that is the wav we'll
always be as long as I am chairman of this Agency. Now let me
try to address some of the points that I have referred to in my
statement.
First, the point has been made that hearings should be held. Im-
partial observers who have looked at this issue state that the hear-
ings that were utilized in acute health care were — and also I might
say in the Beck rulemaking process were procedural overkill and
procedural overkill at a great expense to this Agency, which is op-
erating, as you know, Mr. Chairman, in a period of austerity for
all agencies in our U.S. Government.
The second point I'd like to make here is that, as I've said ear-
lier, our approach to this matter is not new. The board has for dec-
ades, more than 3 decades, followed the precise approach that we
employ here today in our proposed rule.
I don't like to admit this to many members of the staff, but I do,
as you can tell, Mr. Chairman, from my gray hair, go back a num-
ber of years in this labor law field. One of my first jobs was work-
ing for Chairman Frank McCullough, who was President Kennedy's
appointee as chairman of the board.
When I served with Chairman McCullough, we handed down
some of the first decisions in this area, which established a single-
unit presumption. We followed — that single-unit presumption re-
sults in a single unit being, so far as we can determine over more
than 3 decades provided in more than 70 percent of the cases es-
tabhshed.
The figure is as low as 70 percent, I believe, because in the early
1980's, the mid 1980's, there were many aberrations in the work-
ings of our Agency. One of them was an attempt to, in terms of ap-
plying the single presumption rule, to move away from it.
The single presumption rule is appropriate because in a country
like ours which is noted for its decentralization, v^'hat we did in the
early 1960's was to really — and what I hope we will do during my
term in office, is to do something that really makes sense, that mir-
rors the way in which most people operate in American industry.
Our system is a relatively, when one compares it with other
countries, decentralized system. This doesn't mean that a single
unit should always be provided for under adjudication. As you
know, our rule provides a basis for departure from a single unit it-
self.
Now, let me just address one other issue that is addressed in a
number of the comments. It is said particularly by some of the
franchise people, the retail people, that whatever Mr. Gould is pro-
posing for — whatever the board is proposing for industry generally,
it doesn't make sense for us in our industry.
That's precisely the kind of thing that we want to hear, we want
to know why it is that particular industries don't fit within a gen-
eral pattern. I want to say two things about this.
First, in the rulemaking process in acute health care, we changed
our rules so that it didn't cover particular employers that the pro-
posed rule had initially covered. Certain categories of employers
were excluded from the rule. Perhaps they should be here because
of the idiosyncratic nature of some industry.
That's something we want to know about. The other point that
I would like to make to you is that the comments that we received
at the advanced notice of rulemaking stage, which began almost 2
years ago, when we focused upon particular industries where we
nad a great deal of litigation about single versus multiple locations,
the comments were, "Don't isolate particular industries."
We tried to isolate retail, trucking and manufacturing. So, what
we did was in response to those comments applied a general rule
which isolates only — which excludes only at this particular point
public utilities, construction and crews on the vessels on the seas.
So, we were responding to that. We were also concerned about
litigation, over who fits within one industry as opposed to another.
Sometimes we can't resolve the potential for litigation.
We have said in connection with acute health care, and I see that
this point is made in one of the comments, that maybe we can't de-
fine what is a location in acute health care. The point is made that
this will increase the number of units in acute health care by sub-
stantial numbers.
If so, we would like to know more about this so that we can de-
vise a more intelligent, well-informed rule than what we have pro-
posed. In any event, the point I want to make is, Mr. Chairman,
that regardless of what rule we finally wind up with, there will al-
ways be a right to a hearing under our statute.
The board said in the Angelica case in 1985 that there is always
a statutory right to a hearing, regardless of whether we engage in
rulemaking or not. So, the employer that maintains that they don't
fit within the rule, the employer that maintains that there are ex-
traordinary circumstances which make the rule inapplicable to that
party can come forward and say that.
But the final point I would like to conclude on, Mr. Chairman,
is this. What we are trying to do in this era of limited resources
in the public sector is to do our job more efficiently, to eliminate
unnecessary, wasteful litigation, and to speak clearly with a rule
that the average person, the lay person as well as the lawyer.
There is no reason for a lawyer to have to get involved in this.
I know that many of my colleagues will be concerned about that
statement. But before our Agency there is no requirement that a
lawyer be involved in the proceeding, Mr. Chairman.
We want to speak clearly in a way which lay people, as well as
lawyers, can understand. We're not doing that now because of the
vagueness of the criteria that we use, the inherent vagueness of
the criteria that we use, doing the same job that we're proposing
that we do through the rule.
The fact that, although we allude to many criteria, we don't use
most of it. Some of our cases involve as much as 2,000 pages of
transcript testimony, hundreds of exhibits. We settled this issue in
the early 1960's. I come back after I worked with chairman
McCullough in the early 1960's more than 30 years later as Chair-
man of the board myself, and I see these same number of cases
coming back to us.
I might say that the testimony that you have about the number
of cases that is coming before us is extremely misleading because