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Cleared of ULP charges, Volkswagen, UAW gear up for union election featuring first-ever “works council” model

February 4th, 2014  |  Lisa Milam

By Lisa Milam-Perez, J.D.

Some 3,200 workers at Volkswagen’s Chattanooga, Tennessee, plant will vote in an NLRB-conducted election next week to decide whether to be represented by the United Auto Workers (UAW). The NLRB scheduled the election for February 12-14 after a stipulated election agreement was reached between Volkswagen Group of America (VWGA) and the union.

The organizing drive at Volkswagen has attracted considerable attention because the auto workers, who manufacture the company’s Volkswagen Passat, will decide whether to move ahead with a European-style “works council” representational model—the first of its kind in the United States. But the union’s collaboration with the German automaker has not been without controversy.

Works council model. Local works councils, comprised of employee-elected members, negotiate with an employer on issues such as plant rules, discharge, work hours, and vacation scheduling. They also have authority to request information and address employee grievances. German law mandates the existence of such works councils as a means of promoting employee co-determination of the business, and it also mandates representation of works council members on corporate boards. Accordingly, Volkswagen’s parent company, Volkswagen Aktiengesellschaft Group (VWAG), has a works council in its German operation. It also has a global works council comprised of representatives from each of its production facilities’ local works councils. Members of the global works council serve on VWAG’s supervisory board. (In contrast to the works councils, German unions negotiate CBAs with multi-employer associations or on an industry-wide basis. These negotiations generally establish only minimum wages and other terms and conditions. Union reps may attend all works council and department meetings in an advisory capacity.)

Last August, the UAW confirmed that officials of Volkswagen Group, the Volkswagen Global Works Council, and the UAW met in Wolfsburg, Germany, to continue a series of meetings focused on “the appropriate paths, consistent with American law, for arriving at both Volkswagen recognition of UAW representation at its Chattanooga facility and establishment of a German-style works council.” In September 2013, the union obtained authorization cards from a majority of workers at the plant. The authorization card included language stating that the workers “commend and embrace the Volkswagen philosophy of co-determination,” and went on to state: “We believe that the best way to actively participate in our company and to contribute to VW’s continued success is to achieve representation as our colleagues have at the other 61 Volkswagen facilities across the globe.”

Currently, the Chattanooga plant is the only major Volkswagen assembly facility without labor representation, according to the UAW. With a works council, the plant would have a seat at the parent company’s global works council, the union said in a recent press release. “Ultimately, such a labor relations model would give workers an integral role in co-managing the company and providing input on workplace improvements that would contribute to the success of the company and the workers.”

The collaborative approach with VWGA (VWAG’s U.S. subsidiary) would be “based on the principles of co-determination,” according to the union. “Volkswagen is known globally for its system of cooperation with unions and works councils,” said UAW President Bob King, noting the union wanted to partner with the company and a works council “to set a new standard in the U.S. for innovative labor-management relations that benefits the company, the entire workforce, shareholders and the community.” The union has launched a website describing the works council model in detail.

ULP allegations. The problem, as the National Right to Work Foundation (NRTW) saw it, is that Volkswagen was improperly touting its works council model and strong-arming the Chattanooga workers into accepting it. Moreover, NRTW alleged, the company was providing unlawful assistance to the UAW in order to secure its vision of European-style labor-management collaboration in Tennessee. The organization filed unfair labor practice charges against the employer and the union on behalf of employees who opposed such representation.

Several Volkswagen workers at the Chattanooga plant alleged that statements by German company officials were unlawfully coercive. According to media reports, VWAG officials said that for any expanded production to be considered in Chattanooga, the plant must adopt a works council that would force workers to accept representation by the UAW. By threatening to condition future work on whether employees select the union and by providing unlawful assistance to the UAW, the company violated the NLRA, the charges contended. Other workers charged that the UAW misled and coerced them into forfeiting their rights during the earlier card-check drive. They alleged the union unlawfully demanded recognition from Volkswagen without a valid showing of majority support. The cases were submitted to the NLRB’s Division of Advice for consideration and, in two advice memoranda released in January, the Division recommended the charges be dismissed.

Charges against Volkswagen. Last November, Volkswagen hosted a meeting with several German labor officials sitting on VWAG’s works council. Those officials endorsed the UAW. Moreover, according to a trade magazine, a member of VWAG management, in a meeting of VWAG executives, said he was confident a works council plan would work in the U.S., that VWAG executives intended to release a works council plan and, if their proposal won the support of the managing board, formal negotiations with a labor organization would be imminent. He also was quoted saying that Volkswagen wanted a works council and that the “UAW would be a natural partner.”

Volkswagen also hosted three management representatives on the work council who came to encourage the Chattanooga employees to participate in the global works council, according to the charges, but U.S. law required them to elect a union before that could happen. Finally, Volkswagen allegedly cooperated with the union’s distribution of a booklet entitled “Co-determining the Future.”

Citing Sec. 8(c) of the Act, which grants employers the right to express their opinions on unionization so long as they are not accompanied by threats of reprisal or promises of a benefit, the Division of Advice noted that Volkswagen was free to state its preference for the union—or for a works council. “There is nothing unlawful about such statements of preference for unionization in general, or the Union in particular. All of these statements—urging union representation and/or a works council system, and those saying that the Union would be a ‘natural partner,’ that direct communication between workers’ representatives globally is ‘essential to guarantee good working conditions,’ or that the law requires a labor organization before employees could form a works council,” were lawful.

Moreover, the Division pointed out, “It is well settled that a certain amount of employer ‘cooperation’ with the efforts of a union to organize is lawful,” adding, “these actions were well within the range of lawful cooperation with the Union and its organizing efforts.” Taking a “totality of circumstances” approach to its analysis, the Division concluded Volkswagen’s conduct as a whole would not tend to inhibit workers in their free choice of a bargaining representative. That was particularly true given that VWGA also stated repeatedly that the decision on unionization, and on forming a works council, was “entirely up to its employees,” a message the company “emphatically reiterated” at the November meeting itself and in two subsequent employee newsletters. Further, as the charging parties’ witnesses conceded, Volkswagen’s supervisors and managers have been neutral with regard to the unionization effort. Thus, there was no evidence that the company inhibited employees’ free choice regarding a bargaining representative.

German officials’ statements. There were two possible violations, the Division observed, based on allusions to expanding the Chattanooga facility to manufacture another vehicle there if the works council were established. One was an alleged statement by a German company official that VWAG would only agree to an extension of the site once “it is clear how to proceed with the employees’ representatives in the United States.” The other: a reported statement by the head of the global works council that “we know how important that (second) vehicle is for Chattanooga” and that “in the interests of our U.S. colleagues, we’re open to such an allocation of an order.” These statements could be understood “to condition future expansion of the Chattanooga facility on the employees’ representational status,” and arguably would violate the Act—had they been made by an employer that was subject to its coverage. But VWGA could not be held responsible for the statements of German union representatives who are members of VWAG’s supervisory board. Although a wholly owned subsidiary, VWGA is a separate corporation from VWAG, operates independently, and sets its own employment policies. While there has been consultation and cooperation between the entities, there are no other indicia of single employer status, the Division concluded.

Moreover, the NLRA does not apply beyond the geographic boundaries of the United States, and its reach is limited to locations in which the U.S. has sovereignty or some measure of legislative control. Also, the speakers were not acting as agents of VWGA when they made the statements at issue. They had no apparent authority, and after the statements were made, VWGA “clearly and effectively disavowed any message indicating that future expansion of the Chattanooga facility might be conditioned on the employees’ representational status.”

Charges against UAW. The union faced accusations that it made misrepresentations while soliciting authorization cards from Volkswagen workers; specifically, that a signature on the authorization card meant the employee was approving a secret-ballot election to be held. The UAW also allegedly relied on ambiguous or outdated authorization cards signed more than a year before the union claimed majority status. Finally, the union was accused of telling workers who had revoked authorization cards, and sought their return, that they’d have to contact the UAW office and meet with a union representative, who would destroy the cards in their presence. But the union did not violate the Act in its solicitation or handling of authorization cards, as there was no evidence indicating any unlawful restraint or coercion, the Division advised.

“None of these claims include any factual assertions that would indicate that any of the Union’s conduct in the solicitation of cards would itself constitute unlawful restraint or coercion,” according to the Advice Memorandum. “Nonetheless, the charges allege that the Union’s alleged misrepresentations and solicitation of authorization cards was itself unlawful.” The Division disagreed, concluding that the UAW did not violate the Act merely by claiming majority status and demanding recognition, regardless of whether it had made a valid showing of majority support. Nor did the union violate the Act in its solicitation or handling of authorization cards, given the lack of evidence indicating any unlawful restraint or coercion.

Acting on the recommendation of the Division of Advice, the Board, in turn, recently dismissed the charges against both Volkswagen and the UAW.

NRTW seeks inquiry. Last week, NRTW staff attorneys (led by former NLRB Member John Raudabaugh) requested an official inquiry into the NLRB’s conduct in adjudicating the Volkswagen workers’ charges. It has asked the Board’s inspector general to investigate the agency’s conduct in processing the unfair labor practice allegations and the instructions by the Division of Advice to dismiss the charges. Foundation attorneys have filed a Freedom of Information Act request with the NLRB seeking full disclosure regarding the agency’s handling of the case and its contacts with UAW agents.

Chief among the NRTW’s complaints is that NLRB staff released the advice memoranda to members of the press in Tennessee but not to NRTW attorneys—who only received the memos from a reporter. “Such memos are rarely, if ever, released to anyone in open cases,” according to NRTW. An email from the NLRB Atlanta region, accidentally forwarded to NRTW attorneys, reflects that the Board regional director questioned the propriety of releasing the memos to the media, contrary to longstanding NLRB practice, NRTW said. “Foundation attorneys are concerned that the NLRB’s hurried public release of memos favorable to VW and the UAW calls into question the agency’s impartiality in the workers’ cases.” They also say the NLRB’s actions undermined the organization’s ability to advise its clients before it became publicly known that the Board would dismiss their cases.

Election scheduled. News of the “rapid-fire” UAW election was met with a prompt response from NRTW President Marx Mix. He issued a statement Monday, February 3, noting the organization was “pleased that despite constant calls by UAW officials to be recognized as the workers’ monopoly bargaining representative via card check recognition, Volkswagen workers will instead be given a chance to vote on the matter in a secret-ballot election. A secret-ballot election is what Foundation-assisted workers were asking for all along,” Mix said.

Still, he cited concerns over “the existence of backroom deals cut between Volkswagen and UAW officials giving union organizers preferential access to the workers leading up to the election.” NRTW asked the company to give equal time to those workers opposing the union, and “to release any agreements it has signed regarding what would happen if the UAW union takes monopoly bargaining power over the workplace, including agreements to impose a so-called works council on the employees.” Said Mix: “VW workers should be given all the facts before the election so that they can make an informed choice, and we will oppose efforts to stampede them or tilt the playing field.”

At any rate, with charges of campaign misconduct cleared, the election is slated to proceed on February 12. The UAW’s King said the works council model is in line with the union’s existing partnerships with domestic auto companies and is in keeping with “its vision of the 21st century union.” Come next week, the union will find out whether the Chattanooga workers share that vision.