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Market Basket And America's Outdated Labor Law

The recent Market Basket dispute demonstrates that America's labor law is in dire need of reform. Pictured: Market Basket employees hold signs and wave to passing supporters outside the supermarket in Haverhill, Mass., Monday, Aug. 18, 2014. (Elise Amendola/AP)closemore
The recent Market Basket dispute demonstrates that America's labor law is in dire need of reform. Pictured: Market Basket employees hold signs and wave to passing supporters outside the supermarket in Haverhill, Mass., Monday, Aug. 18, 2014. (Elise Amendola/AP)

The recent Market Basket dispute did more to demonstrate how outmoded and inadequate America’s labor law is than any scholarly paper or government study commission could ever do.

The law is supposed to both protect workers who speak out against unfair conditions and provide an avenue for collective bargaining. But these courageous employees had the good sense to ignore all the prevailing legal doctrines and constraints. In doing so they might just have shown us what changes are needed to realize the objectives of American labor policy in the modern workplace.

The National Labor Relations Act was passed in 1935 to end uncontrolled workplace conflict by promoting collective bargaining. In that era there was a reasonably clear division of labor between workers and managers.

...these courageous employees had the good sense to ignore all the prevailing legal doctrines and constraints.

If a majority of non-supervisory workers voted to form a union for the purposes of collective bargaining, the employer had an obligation to negotiate, but only over a specified set of issues — wages, hours and working conditions.

Business strategies affecting pricing, customer service, investments and corporate governance were excluded as what came to be known as “managerial prerogatives.”

But workers could only get a union if a majority of workers in a bargaining unit voted to form one. If only 49.9 percent voted to form a union, no one gets one and the employer keeps full control and has no obligation to deal with any form of collective employee voice.

Now look at how these doctrines were challenged by Market Basket employees.

First, all employees, from high level executives, to warehouse workers joined together to protest, not for higher wages,  but in support of their fired CEO and fear that the business model — low prices achieved through high productivity, quality service and good jobs — was being abandoned. No separate bargaining units here. And no separation of workers and managers — the managers led the walkout.

Second, these workers understood it was the decisions of the board of directors and owners to change the business model to extract more cash from the business that in turn would likely lead to lower employee incomes and harsher working conditions. They went right at the heart of the matter. No respect for mandatory and/or non-mandatory issues of negotiations here.

Third, these employees, especially the managers, took these actions at enormous risk. Supervisors and managers who participated in this action are excluded from the law and could be fired at will. Seven of them were summarily dismissed. Non-supervisory workers had to be treated a bit more carefully. They were protected if their protest involved wages, hours and working conditions, but not for demanding reinstatement of their CEO. To avoid litigation over this point, skillful lawyers advised the new CEOs not to fire them for exercising their right to engage in collective protests but for “abandoning” their jobs.

Fourth, no request for recognition to management or the government preceded the spontaneous collective action. Asking for a government run election would have taken years and, if management resisted, likely have failed in the end. These employees used social media to organize their coalition without asking their employer for permission to do so or requesting government intervention.

Fifth, and perhaps most importantly, these employees had no on-going channel within the firm to voice their objections before the board took the actions that triggered the dispute. Their only recourse was a highly public confrontation that imposed severe costs on the business, disrupted and inconvenienced customers, and threatened loss of their jobs.

What could be done to update labor law to fit the modern workplace? If employees at Market Basket, and all other firms for that matter, had a more collaborative advisory body in place before these actions were taken, who had the right to information about the decisions that shape employment practices, they could have pointed out the likely consequence of taking those actions and perhaps deterred the board of directors from making what turned out to be a disastrous mistake.

Just as the public rallied in support of Market Basket employees, the broad American public will need to get behind this set of reforms.

Having an enterprise wide council (in Germany and some other European countries they call these “works councils”) in place would have offered a collaborative forum to discuss important issues before a final decision is made by the board or senior management. This type of council would work in the U.S. as a complement to, not a substitute for collective bargaining rights and processes. To make it viable, it would have to be combined with legal reforms that fix the glaring flaws in the union organizing process that now allow employers to flaunt worker efforts to gain access to collective bargaining. The needed reforms are well known — simplify the rules and reduce delays in union elections, stiffen penalties for violating the law, and provide for arbitration if the parties cannot reach a negotiated agreement within a reasonable amount of time.

Taken together this simple package would update labor law to fit today’s workplace, provide a more cooperative option for gaining a voice at work, and strengthen rights to form a more traditional union-management relationship in settings where employers resist cooperating with and engaging their workforce.

All that is missing is the political will to make this happen. Just as the public rallied in support of Market Basket employees, the broad American public will need to get behind this set of reforms. Let’s go for it.

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Thomas A. Kochan Cognoscenti contributor
Thomas Kochan is the George Maverick Bunker Professor of Management and co-director of the Institute for Work & Employment Research at MIT’s Sloan School of Management.

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