NLRB Approves Employer's Use of Employee Committees

Date: October 18, 2001

Setting a precedent for how companies can structure workplace labor-management committees without running afoul of labor laws, the National Labor Relations Board ruled that Crown Cork & Seal Company got it right.  Crown Cork & Seal Co., 334 NLRB No. 92, 7/20/01.

The NLRB ruled unanimously that the Philadelphia-based company’s use of seven employee committees at its Sugar Land, Texas, aluminum-can manufacturing plant doesn’t violate the National Labor Relations Act’s ban on company-sponsored unions. The committees decide and act on production, safety and other workplace issues. The ruling said the committees shouldn’t be classified as labor organizations because they act with “supervisory” authority, in other words, they make binding decisions.

An employee at the plant had filed a complaint with one of the NLRB’s regional offices, alleging the committees were equivalent to a company-sponsored union. These were banned in the 1930s when some companies set up sham unions to fend off organization campaigns by real unions. The regional office ruled in favor of the employee, but the decision was overturned by an administrative law judge in February of 1998. The Board upheld the judge’s position in its recent ruling.

Management executives hailed the ruling, and predicted it would open the door to more companies using employees in major workplace decisions. Labor officials were cautiously optimistic, too. Nancy Schiffer, associate general counsel for the AFL-CIO, said the case underscored organized labor’s position that labor-management cooperation can work, as long as employers really empower employees.

The ruling follows years of controversy and confusion, after many U.S. companies began adopting the Japanese management practice of involving employees in decision-making, starting in the 1980s. In the early 1990s, the NLRB ruled against a number of companies using such structures on the grounds that they didn’t give real decision-making authority to employees but required them to negotiate with employers as a union would. Congress passed legislation, dubbed the Team Act, in 1996 to permit teams of employees to work with management to address workplace issues in nonunion settings, but President Clinton vetoed the bill.