All Commentary
Friday, May 1, 1998

Salt Without Savor

Unions Have Special Privileges and Immunities

Suppose that Microsoft hired people to pose as ordinary job applicants at Netscape. When hired by Netscape, their mission would be to disrupt and sabotage production, file as many complaints as possible against Netscape alleging noncompliance with workplace regulations imposed by the Occupational Safety and Health Act (OSHA), the National Labor Relations Act (NLRA), the Family and Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA), and any other applicable regulations. Their goal would be to drive Netscape out of business or, failing that, to cripple the ability of Netscape to compete with Microsoft. If the antitrust people at the Department of Justice think that Microsoft should pay a $1 million per-day penalty for merely integrating its Internet Explorer web browser with Windows, they or the people at the Justice Department would probably try to send Bill Gates to jail for such espionage.

Again, suppose that the Nissan Motor Company plant in Tennessee hired people to infiltrate the United Auto Workers (UAW) union local. Their job would be to spy on all union activity and try to foment dissension and strife throughout the rank-and-file union members. Their goal would be to shut the union local down or, failing that, to make it impossible for the union to gain representation privileges at Nissan (which it has been trying to get for years). The National Labor Relations Board (NLRB) would be outraged. It would move swiftly to convict Nissan of unfair labor practices and impose the most severe sanctions the law permits.

Union Privilege

Finally, suppose that the UAW hired people to pose as regular job applicants at Nissan. Their job would be identical to that of the hypothetical Microsoft agents. They would try to damage the firm as much as possible through disruptions and acts of sabotage. They would try to impose as many legal costs on the firm as possible by alleging OSHA, NLRA, FMLA, and FLSA violations. Their goal would be to force Nissan to capitulate to unionization or, failing that, to drive Nissan out of business in the United States. The NLRB and the U.S. Supreme Court would . . . approve! When it comes to unions, there is no equality under law. Rather, different legal principles apply to unions. They have special privileges and immunities not available to most other economic organizations. The Fourteenth Amendment to the Constitution insists on “equal protection of the laws.” Congress and the Supreme Court have said, “Except for unions.”

In the 1995 Town & Country Electric case, the Supreme Court ruled that people paid by unions to become employees in order to subvert the firms that hire them—“salts” in the jargon of labor relations—must be considered “employees” under the NLRA. That means that firms cannot discriminate against salts in hiring and firing. They must ignore that the salts are paid by unions and intend to act solely in the unions’ interest and to the detriment of the firms. Since salts are hired by and act as agents of unions, the court decision in effect gives unions the status of employees under the NLRA. That is contrary to the original understanding of the NLRA, which was that unions could organize and represent employees, who were working in the interest of employers.

If a firm fires or refuses to hire a person because he is a salt, or even fails to promote that person, it is guilty of an unfair labor practice. Defending against such a charge is very expensive. For example, from 1994 through 1997 Corey Delta Constructors in Benicia, California, had to pay more than $200,000 a year to defend itself against charges connected with a salting campaign by the AFL-CIO’s Construction Organizing Membership Education Training (COMET) program. In the end, Corey Delta was driven off a major construction project in the San Francisco Bay area merely because it was, and remains, a union-free firm.

The Roots of Salting

The COMET program was undertaken by the AFL-CIO in 1993 in response to the declining market share of unionized labor in the construction industry. In 1983 the unions’ market share was 30 percent. In 1993 it was 20 percent, and by 1996 it was 19 percent.

Union organizing in the construction industry is a special case. Most workers in that industry are employed by different companies from project to project. In 1959, the NLRA was amended to permit employers to enter “prehire” agreements with unions under which firms would agree to hire only unionized labor. Workers in other industries are at least permitted to vote on union representation, but construction workers were unionized from the top down. Under the prehire agreements, workers were told if they didn’t accept union representation, without a vote, they couldn’t work. In 1987, the NLRB ruled in the Deklewa case that when a prehire agreement expires the contractor returns to a union-free status unless a majority of continuing workers vote to be represented by the union. (The NLRB was not as union-friendly as it is now.) Under Deklewa, construction unions no longer had the advantage of top-down organizing. Instead, they had to persuade workers to vote in favor of unionization just as unions in most industries must do.

In the 1992 Lechmere case the U.S. Supreme Court complicated the organizing efforts of all unions by ruling that employers did not have to give job-site access to union organizers who are not employees. This is particularly burdensome to construction unions because the job sites constantly change.

In an act of political entrepreneurship, the construction unions reverted to salting. The Lechmere decision restricts only union organizers not employed by firms. The obvious way around the decision is to have union-paid organizers become employees. The principle of equal protection under law would not countenance such subversion, but in the Town & Country Electric decision the Supreme Court allowed unions to subvert union-free employers with impunity.

Since that case was decided as a matter of statutory interpretation, not constitutional law, Congress can overrule the Court by amending the NLRA. The Truth in Employment Act, which is under consideration in both houses of Congress, would do just that. However, there is little chance that it could survive a filibuster in the Senate and no chance that it could survive a presidential veto. Rectification of this injustice will have to wait until the 21st Century.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.