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NLRB RULING COULD ULTIMATELY FORCE CORPORATIONS TO RESTRUCTURE EMPLOYEE INVOLVEMENT AND QUALITY CIRCLE PROGRAMS

 WASHINGTON, Dec. 21 /PRNewswire/ -- Following years of anticipation, the National Labor Relations Board (NLRB) has ruled that an employee participation program at Electromation, Inc., a midwest electrical components manufacturer, was illegal under The National Labor Relations Act, it was announced today.
 This decision can seriously impact "quality circles" and other worker cooperation programs in general, according to employment attorneys at Reed Smith Shaw & McClay. Employee participation programs are designed to promote labor-management cooperation and greater employee participation in workplace matters.
 Although the NLRB's Dec. 16 decision ruled that the particular program in the Electromation case was illegal, it does not automatically mean that employee participation programs in all companies must be discontinued or modified materially. But careful review and planning of such programs should be undertaken to assure their legality.
 "Quality circles and similar employee involvement programs will survive, although changes in how they operate may have to be made, said David S. Fortney, a partner in the Philadelphia office of Reed Smith and former chief counsel for the U.S. Department of Labor. Fortney added that "An employer should make sure that any employee involvement program, no matter how popular or successful, meets the legal requirements."
 The Electromation case was originally a relatively minor dispute involving a small manufacturer in the midst of a local Teamsters union organizing campaign. The case focused on whether employee action committees set up to address several workplace issues were illegal under the National Labor Relations Act.
 But as the case proceeded through the administrative law system, it gained notoriety and attracted widespread interest. Many believed that the outcome could outlaw all employee participation programs established by so many U.S. companies over the last 20 years. The NLRB's decision in Electromation stressed that the violations were based on the particular facts of that case.
 "The legality of cooperative circles is not clear cut under the National Labor Relations Act," said Fortney. The act, passed in 1935, when employee involvement was largely nonexistent, is based on a philosophy of adversarial labor relations. The act prohibits employers from "dominat(ing) or "interfer(ing)" with the formation or functioning of a "labor organization." Under the law, the NLRB determines whether an employee participation committee is a "labor organization" as defined in the act and whether management unlawfully "dominates" or "interferes" with the employee committee. "The application of these legal requirements turns on an intense review of the facts and over half a century of judicial decisions," Fortney observed.
 In addition to the Electromation case, there have been similar cases involving employee committees at major corporations. In one significant decision, an NLRB administrative judge ordered Du Pont to disband seven workplace teams judged to be illegal at one of its plants.
 "The NLRB is telling U.S. corporations to take a hard look at their employee participation programs and, if necessary, to make changes if they want them to be legal," said Fortney. "Because committees and groups vary in form and function from company to company, it is difficult to provide meaningful general guidelines on how they should operate. Instead, each situation must be examined individually," Fortney stated. The NLRB only rules on the specific cases that come before it.
 "I expect employee participation programs to continue to play an important role in the efforts by U.S. corporations to become more efficient, improve quality and improve workplace moral," Fortney said. It is estimated that 80 percent of U.S. companies have set up some sort of employee participation programs. This trend is widely touted as the solution to the cost, quality and productivity problems said to be plaguing American industry, and is increasingly important in helping American-based companies compete and survive globally.
 Fortney also observed that the NLRB's decision raises interesting policy issues regarding the role of labor-management cooperation and employee involvement programs. The United States Department of Labor, which is independent of the NLRB and traditionally serves as the president's policy advisor on labor-management issues, has long advocated joint efforts on the part of workers and employers. Legislative proposals were introduced in Congress last year addressing these issues in a variety of contexts -- ranging from the direct amendment of the NLRA to permit the operation of quality circles to amending the Occupational Safety and Health Act by mandating the creation of health and safety committees at all employer worksites with more than 11 employees.
 "We can expect the policy debate on the role and the legal requirements for employee involvement committees to be renewed with vigor and at an early date, based on the Electromation decision. It will be interesting to observe how the Clinton Administration, Congress and the employer and employee interests grapple with the issues of whether to respond to the Electromation decision by updating the laws to address the current labor-management environment and the challenges faced in the workplace today," Fortney stated.
 Finally, Fortney stated that one point is clear: "The Electromation decision teaches that employers must examine their employee involvement programs closely and regularly to assure compliance with the law."
 -0- 12/21/92
 /EDITORS: For additional information and comment on the NLRB's decision in the Electromation case and its effect on corporate employee participation programs, contact one of the following Reed Smith labor and employment attorneys:
 -- In Philadelphia: David S. Fortney, 215-851-8108;
 -- In Washington/McLean, Va.: Michael F. Marino, 703-734-4606;
 -- In Pittsburgh: Eugene K. Connors, 412-288-3375; and
 -- In Harrisburg, Pa.: Mark Fontana, 717-234-5988./
 /CONTACT: John Hanna of Maddigan Communications, 412-391-9360, for Reed Smith Shaw & McClay; or David S. Fortney of Reed Smith Shaw & McClay, 215-851-8108/


CO: Reed Smith Shaw & McClay; National Labor Relations Board ST: Pennsylvania, District of Columbia IN: SU:

CD-JS -- PG007 -- 0142 12/21/92 12:36 EST
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