Boeing Versus the NLRB

"Wherever the real power in a Government lies, there is the danger of oppression." — James Madison

This week Congressional Republicans are scheduled to hold hearings over a brazen assault on private industry by President Obama’s labor union committee, the National Labor Relations Board (NLRB). The NLRB, which is controlled by Democrats, filed a lawsuit attempting to prevent Boeing from building its new line of planes in Right-to-Work South Carolina that would have created 1,000 new manufacturing jobs in one of the states hardest hit by the Obama Economy. With national unemployment ticking up to 9.1 percent and long term joblessness at record levels, one might think President Obama would jump at the opportunity to boost job creation before an election that will be a referendum on his handling of the economy. Not so. Unfortunately when it comes to Barack Obama and his union bosses, not all jobs are created equal.

This is the latest example of executive overreach from an Administration that has been flexing its regulatory enforcement muscles in an effort to benefit labor unions allies which form the core of Obama’s reelection effort. At the heart of the matter are federal Right-to-Work laws, which allow states like South Carolina to ban the practice of forcing workers to join and support a union as a condition of being hired. And with such a key Democrat political constituency in decline and lukewarm enthusiasm coming from labor leaders, this Administration has made Right-to-Work a top political target ahead of what is guaranteed to be a very tough campaign for the President.

While that strategy may curry favor with the liberal base, the Administration’s actions against Boeing are setting a dangerous precedent that is causing additional uncertainty for businesses looking to expand and grow while the economy remains in a fragile state. Moreover, the lawsuit is another example of overreach by this Administration which has in essence told an iconic American company how to run its business and has intimidated its corporate officers. These bullying tactics will only further stifle job creation and could even force some companies overseas. Even Washington State’s (the state where the Administration is seeking to have the planes be built) top newspapers say the NLRB’s actions have crossed the line. With the American manufacturing sector shedding 5,000 jobs in May, this latest assault on American job creators could not have come at worse time.

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 National Labor Relations Act (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):

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?

• Or, what about the company that orders a fleet of vehicles from Nissan or Toyota that are manufactured in non-union factories in the United States rather than from General Motors fearing a strike will hamper delivery and quality of the vehicles?

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.

It is nothing short of hypocritical for President Obama to travel the country telling businesses to start “betting on American workers” while his Administration squashes thousands of good paying American jobs solely for political reasons. Sadly, this stunt is par for the course for the Obama Administration and the latest in a long line of White House policies specifically designed to benefit Democrat special interests. Democrats understand that President Obama doesn’t stand a chance winning a second term without energizing Big Labor, so they are circling the wagons and doling out political favors without any regard to the economic consequences.

The White House has become so focused on the next election that even job creation has been reduced to a political calculation. If this is the kind of economic leadership the President plans on continuing for a second term, there is little question that the American people will deny him the opportunity.