When in Rome: the exercise of power by foreign multinational companies in the United States 1

Abstract

German

French

Multinational corporations exercise power in the United States by integrating themselves into the US economic and legal systems, not by interfering with them. Firms take advantage of the relatively deregulated labour market in the United States and its ‘at-will’ employment relations, compared with ‘just cause’ requirements elsewhere. Many multinational companies also adopt US management-style behaviour towards trade unions, notwithstanding their publicly declared support for global norms on workers’ freedom of association. They exploit US labour laws that violate international standards and interfere with trade union formation. Case studies examine several examples of this ‘when in Rome’ anti-union phenomenon. At the same time, some counter-examples of companies that adhere to ILO core standards are offered. The conclusion contains recommendations for securing multinational companies’ respect for workers’ freedom of association in the United States, including application of ILO core standards, UN Guiding Principles, OECD Guidelines and Global Framework Agreements.

Keywords

International labour standards freedom of association labour rights workers’ rights trade unions

Introduction

Multinational firms wield their power differently in the United States than in other countries. In advanced industrial economies such as those of the European Union, Canada, Japan, Korea and others, concern about US-based multinational companies often focuses on their push to export the ‘US model’ of a deregulated labour market. The fear is that US-based multinational corporations will undermine workplace protections and social safety nets (Mishel and Schmitt, 1995).

Even where conservative governments hold power – in Canada, Britain and Germany, for example (as of this writing) – prevailing sentiment is wary of the US ‘anti-social’ model. Trade unions and left-wing political forces sharply criticize conservative governments’ labour market reforms. But these reforms still leave their labour markets regulated by terms that would be considered ‘socialistic’ in the United States, where the political centre is far to the right of that in Europe.

In developing countries, concerns run in two directions depending on the host government’s political orientation. Governments of the left are wary of multinational companies’ interference in their domestic affairs and pressure on their social security systems. In contrast, governments of the right create an ‘investor-friendly climate’ by weakening labour laws and social protection systems to lure regime-shopping companies looking for lower costs and less regulation.

Foreign corporations do not exercise power the same way inside the United States. They do not seek to impose their economic weight against established labour laws and social security systems, parallel to the way that US corporations try to pressure foreign systems. Instead, most foreign firms take advantage of levers of power already granted to corporations in the US labour and employment law system. When in Rome, they do as the Romans do (Ambrose, 387 AD).

Foreign firms invest in the United States because of its huge industrial and consumer markets, productive workers, good transportation systems, access to capital, a functioning legal system that enforces property rights and commercial contracts, political stability, and other favourable institutional structures. But other features of the US system are equally alluring, such as a relatively deregulated employment law system and a labour law system that favours employers over trade unions.

Compared with other countries, the United States provides a hyper-flexible labour market for foreign corporations. In every other country in the world, including Anglo-Saxon countries with similar legal traditions, employers must demonstrate ‘just cause’ to dismiss an employee. But the prevailing doctrine in US law is the ‘at-will’ rule allowing employers to dismiss staff at any moment and for any reason – including ‘a good reason, a bad reason, or no reason at all’ – as long as it is not a reason prohibited by law (Arnow-Richman, 2011).

No law in the United States limits the power of companies to close workplaces, except for a modest 60 days’ advance notice which can easily be evaded by claims of sudden changes in business conditions. No law requires severance pay for dismissed workers based on their length of service. No law limits the amount of overtime work that employers can impose on workers. No law requires employers to provide vacation or holidays. No law requires employers to provide pension benefits or health insurance. No law requires a written contract of employment.

In practice, most established, successful firms, including foreign-based multinationals, provide one week of vacation after one year of employment, two weeks after two years, and three weeks after five or ten years, and grant seven or eight holidays to employees – all significantly fewer than vacations and holidays in other advanced industrial nations (Ray et al., 2013). They also provide health insurance and retirement programmes. However, the general trend among all firms that provide such benefits, including large US and foreign multinational companies, is to shift costs and risks to employees (CFO Research, 2013). For health insurance, employers are raising required employee premium contributions and deductibles (expenses that employees must pay before health insurance begins coverage) (Gould, 2012). For retirement, employers are eliminating defined benefit pension plans and substituting individual retirement accounts in which employees bear all the risk of market failures and fluctuations (Geisel, 2012).

In terms of workers’ organizing and collective bargaining rights, the United States is also the bastion of ‘union-free’ management philosophy (Richards, 2008). Instead of applying principles and practices of respect for trade union rights that they commonly apply at home, many foreign corporations adopt US management-style anti-unionism (Human Rights Watch, 2010).

Contrary to ILO core labour standards, US law allows employers permanently to replace workers who exercise the right to strike. It also allows employers to mount one-sided, aggressive workplace pressure campaigns against workers’ organizing efforts, marked by mandatory ‘captive-audience’ meetings and one-on-one supervisor-employee meetings scripted by anti-union consultants. Trade unions have no comparable opportunities at the workplace for employees to hear from union representatives or for pro-union workers to convey their views to fellow workers (ITUC, 2013).

Equally contrary to international standards, US law excludes millions of workers from labour law protection – farmworkers, household domestic workers, low-level supervisors, so-called ‘independent contractors’ who are actually dependent on a single employer for their livelihood, and many more. The ILO’s Committee on Freedom of Association has found further violations in the US labour law system because of weak and unavailable remedies for workers alongside unbalanced remedies favouring employers (Human Rights Watch, 2000).

In large part as a result of weaknesses in US law and practice, many US employers respond to workers’ organizing and bargaining efforts with aggressive campaigns of interference, intimidation, and coercion to break them. Such campaigns are commonplace among US companies that operate in a corporate culture imbued with strong anti-union beliefs and practices (Logan, 2006). Foreign-based firms often join their ranks (Human Rights Watch, 2010).

Many multinational corporations embrace the Universal Declaration of Human Rights and United Nations human rights covenants. They declare support for declarations and conventions of the International Labour Organization, industrial relations guidelines of the Organization for Economic Cooperation and Development, the UN Guiding Principles on Business and Human Rights, the Charter of Fundamental Rights of the European Union, and other international labour rights instruments.

Many multinational firms active on a global scale also adopt corporate social responsibility programmes and codes of conduct on workers’ rights. They join the United Nations Global Compact, the Global Reporting Initiative, Corporate Social Responsibility (CSR) Europe and CSR forums in their own countries. They say that they follow standards of the ‘guidance’ (expressly not requirements) of ISO 26000 on labour practices (Schömann, 2012). They deal forthrightly in their home countries with workers’ representatives in trade unions (European Commission, 2013). They engage with employee representatives in works councils where such bodies are allowed or required by law (Waddington, 2011).

In all these instruments and settings, workers’ freedom of association – the right to organize trade unions and to bargain collectively – is a centrepiece of human rights and corporate social responsibility pledges. Many multinational companies appear to hold a deep commitment to workers’ human rights through their publicly declared statements and promises, at home and in much of the world.

But many firms have a blind spot on workers’ freedom of association in their US operations. In a new version of US exceptionalism, foreign companies argue ‘the United States is different’ and mutate their labour relations policies into US management-style campaigns against workers’ organizing efforts. Some US lawyers advising foreign firms even go so far as to assert that they must conduct anti-union campaigns permitted under US law to comply with international law:

‘[I]t may be a violation of international law for employers to be limited in their right to freedom of expression and opinion. Many labor unions seek so-called “neutrality” agreements from employers. While styled as “neutrality,” they are more akin to agreements to remain silent in the face of efforts by unions to organize workers. By agreeing to remain silent, an employer effectively may deny workers information, opinions and ideas they have a right to receive under international law. Without such information, workers are left with an incomplete picture as they make their decision whether or not to affiliate with a labor union. Where this occurs, the right to freedom of association has effectively eliminated the right to freedom of expression, and that violates the principles of international law.’ (Marculewicz and Wilton, 2010)

But such anti-union campaigns are not required under US law; they are merely permitted. The fact that many US companies fiercely resist trade unions does not mean that foreign firms have to act in the same manner. Indeed, as discussed below, some do refrain from such conduct.

Foreign multinational companies have a choice. They can consistently apply international standards in their US facilities. However, instead of standing up for their stated commitments on workers’ freedom of association, many wield the power granted to them by the US labour and employment law system to exploit lower US standards in violation of international norms.

Case studies

Deutsche Telekom

When the German telecommunications giant Deutsche Telekom joined the UN Global Compact in 2000, it said ‘This voluntary commitment is based not only on the values of the Global Compact but on the internationally recognized conventions, guidelines and standards of the International Labour Organization (ILO) and the Organization for Economic Cooperation and Development (OECD)’ (Deutsche Telekom, 2007).

In the United States, Deutsche Telekom’s T-Mobile wireless telephone operation engaged in practices directly contrary to these international standards. T-Mobile management’s national handbook declared ‘We want to stay union-free’. Management routinely held mandatory captive-audience meetings at call centres around the country forcing workers to listen to anti-union speeches and watch anti-union films predicting dire consequences, including possible closures, if they formed a union.

T-Mobile management distributed a memorandum to managers across the country instructing them to campaign against union organization and telling them to report any cases of ‘employees engaging in group behavior’ and when ‘employees talk a lot about “rights”’ (T-Mobile, undated). In some locations, management instructed employees (not managers) to report ‘any union activity’ to human resources managers – in effect, to spy on co-workers (T-Mobile, 2008).

To help remain ‘union-free’, T-Mobile contracted a prominent labour relations consulting firm that specializes in breaking workers’ organizing efforts to prepare a guide and provide related management training. Specially prepared for T-Mobile, the firm’s 150-page guide declared at the outset, ‘Preserving the union free privilege is an honor’ (Adams, Nash, Haskell & Sheridan, 2003).

The guide goes on to say that T-Mobile should resist employees’ efforts to form unions to ‘protect them from themselves’. In short, it recommends that T-Mobile oppose workers’ freedom of association to protect its employees from each other, not honour the right as a legitimate act of self-organization to counter management’s superior power in the individual employment relationship.

The anti-union consulting firm’s manual for T-Mobile concluded, ‘The Price of Freedom is Constant Vigilance’ and referred cryptically to ‘Hiring the Union Free Employee’. This last was necessarily cryptic because saying more would likely implicate the consulting firm and T-Mobile in the unfair labour practice of discriminating against applicants because of their union activities, beliefs or sympathies. However, trade unionists know that employers have developed proxy interviewing techniques to identify potential union sympathizers, for example, asking, ‘What clubs do you belong to?’ to identify ‘joiners’ (Zickar, 2001).

T-Mobile’s interference with workers’ organizing rights in violation of international standards goes back more than a decade, and continues to the present time. Management’s actions have provoked new unfair labour practice charges resulting in multiple ‘WE WILL NOT… [act unlawfully]’ notice postings in workplaces.

Although these settlement agreements were based on findings by the National Labor Relations Board (NLRB) of ‘merit’ in the unfair labour practice charges after a thorough investigation, they normally contain a ‘non-admission’ clause allowing T-Mobile to claim that it did not break the law – it only settled the case to avoid the cost of litigation.

Here are examples of such unfair labour practice settlement agreements at locations around the United States. In each instance, the ‘WE WILL NOT’ header indicates that the company indeed did what it now promised not to repeat:

WE WILL NOT remove Union literature from the employee break room or other non-work areas.²

WE WILL NOT stop you from talking about unions during working time if we permit talk about other non-work topics during working time.³

WE WILL NOT stop you from distributing literature on non-working time and in non-work areas.⁴

WE WILL NOT interfere with your right to solicit for a union during non-work time on our premises.⁵

WE WILL NOT question you about your protected activities on behalf of a union (or the protected activities of others), or take actions that reasonably create the impression that your protected union activities are under observation.⁶

WE WILL NOT engage in surveillance of your activities on behalf of the CWA union.⁷

WE WILL NOT record the license plate numbers of vehicles parked outside our facility while you are engaged in activities in support of the CWA.⁸

These settlement notices appear months or often years after the events, after management has delayed legal proceedings and employees have already felt the pressure of management’s interference – pressure that is not overcome by a notice posted on a bulletin board, since management has already conveyed its hostility toward unions and had the desired effect of discouraging union formation.

In 2011 the Communications Workers of America supported a proposed merger between AT&T and T-Mobile because AT&T is one of the relatively few companies in the United States which pledges non-interference in workers’ organizing efforts. The union hoped that AT&T management would put a stop to T-Mobile’s anti-union practices and apply AT&T policy instead (de la Merced, 2013a). However, the US Department of Justice halted the proposed merger by bringing an antitrust action against it (de la Merced, 2012b). In the wake of the failed merger with AT&, T-Mobile bought the smaller MetroPCS cellphone firm (de la Merced, 2013c) and has continued its anti-union practices, according to the CWA (CWA, 2013).

In November 2013, the NLRB found merit in CWA charges that T-Mobile unlawfully dismissed one employee and disciplined another at the company’s Wichita, Kansas call centre because of their union activities. The Board ordered the case to go forward to trial before an administrative law judge.⁹

Sodexo

In 2003 the Paris-based international food services company Sodexo joined the UN Global Compact, committing itself under GC Principle 3 to uphold workers’ rights to freedom of association and collective bargaining. For its suppliers, Sodexo insists on compliance with ‘a formal code of conduct based on ILO (International Labour Organization) standards… including Freedom of Association’ (Sodexo, 2007). The company says, ‘Sodexo adheres to the principles of the Universal Declaration of Human Rights, of the Tripartite declaration of principles of the International Labour Organization concerning multinational enterprises and social policy, and of the United Nations Global Compact.’ (Sodexo, 2013)

Despite its claims of adherence to international standards on workers’ freedom of association, Sodexo repeatedly launched aggressive campaigns against employees’ efforts to form unions and bargain collectively in the United States. Some company campaign tactics are legal under US law, such as holding captive-audience meetings in which workers must sit through managers’ diatribes against trade unions, or requiring front-line supervisors to carry management’s anti-union message into one-on-one conversations with employees, or warning workers that they can be permanently replaced if they exercise the right to strike for improved wages and conditions.

In many instances, Sodexo crossed the line to unlawful anti-union behaviour through unfair labour practices that coerce employees in the exercise of organizing and bargaining rights. Employees at Sodexo’s commercial laundry facility in Phoenix began an organizing effort with the UNITE union in April 2003. They held meetings and lawfully distributed flyers and other information to each other. Volunteer employee leaders came forward to engage in such lawful activities. Workers signed cards joining the union and authorizing the union to bargain on their behalf.

Industrial laundry jobs involve hot, heavy, dangerous physical labour. Laundry workers face many potential hazards: toxic, caustic chemicals, heavy machinery, electricity, moving parts, heat, pinch points, wet floors, hazardous materials found in soiled linen and more. By 1 May, a majority of Sodexo’s workers had signed cards joining the union and authorizing UNITE to bargain on their behalf.

Sodexo management reacted forcefully to break the organizing drive. In an NLRB election held on 29 May 2003, 117 of 206 eligible employees voted against union representation. But this result came after a series of management attacks that undermined workers’ majority sentiment in favour of the union.

On 1 May, a group of workers who had ended their shift lawfully and peacefully demonstrated their support for the union, a classic act of ‘protected concerted activity’ under US labour law. Four workers briefly left their work stations to join the union demonstration. This is ‘protected concerted activity’ under US labour law, which prohibits employers from taking reprisals against workers because of such activity. When these workers sought to return to their jobs less than 15 minutes later, the manager told them they had lost their jobs because in those few minutes, he had hired replacement workers.

When workers continued asking to return to their jobs, Sodexo management wrote them a letter stating, ‘We write about the status of your position with Commercial Linen Exchange.… As you know, by the time you offered to return to work, the Company had hired another individual to fill your former position.’¹⁰ Several months later, the administrative judge presiding over the unfair labour practice charges of discriminatory discharge of these employees found:

When the four sorting employees left the sorting line at about 2:00 p.m., May 1, and joined the demonstration to protest working conditions and to signify their support of the Union, they were engaged in protected activity. When they returned to the plant and, without setting any conditions, told [the manager] they wanted to go back into work, they made unconditional offers to return to work.…

It is undisputed that within the same half hour they left their workstations, the sorting employees offered to return to work. The crucial question is whether they made their offers before or after Respondent found replacements for them.…

It is highly improbable, indeed logistically impossible, for [the manager] to have accomplished his asserted tasks and employed… new workers in so short a time.… I conclude therefore that Sodexo unlawfully refused to reinstate the four sorting employees to their former positions upon their unconditional request offers to return to work and discharged [them] in violation of Section 8(a)(3) and (1) of the Act.… By refusing to permit [the employees] to return to work after their unconditional offers to do so and by terminating them for engaging in a protected work stoppage, Sodexo refused to reinstate [them] and discharged them in violation of Section 8(a)(3) of the Act.¹¹

This favourable ruling for workers months after Sodexo’s violations came too late to undo the devastating effect of the unlawful firings on the workers’ organizing effort. In the last week of April, a majority of workers had signed union membership cards authorizing UNITE to represent them in collective bargaining. In the weeks that followed the 1 May firings, only four more signed cards, and the union failed to win a majority of votes in the 29 May NLRB election.

Destroying the union’s majority

Sodexo’s conduct was so destructive of employees’ organizing and bargaining rights that the judge imposed the extraordinary remedy called a ‘Gissel bargaining order’. This rarely-used remedy was devised by the US Supreme Court in a landmark 1969 decision condemning ‘unfair labor practices that… have a tendency to undermine majority support and impede the election process’. As such unfair labour practices make a fair election impossible, ‘employee sentiment once expressed through cards would… be better protected by a bargaining order’.¹²

The judge found that the 1 May firings had ‘pernicious’ effects on workers’ organizing rights:

Sodexo refused to return [the fired employees] to work and discharged them for engaging in a protected work stoppage during the course of a protected employee demonstration.…The discharge of visibly active union adherents has an especially pernicious effect on other employees. Awareness of Sodexo’s motivation in refusing employment was general, and many employees discussed with union representatives their concern over coworkers having been ‘fired’. The evidence thus establishes pervasive impact or dissemination of the unlawful conduct, and it is reasonable to infer the dramatic decline in employees’ signing authorization cards thereafter was an immediate consequence of Sodexo’s overt unfair labor practices.… In these circumstances, Sodexo’s unfair labor practices are unremedied, their consequences are ongoing, the possibility of erasing their effects is slight, and the holding of a fair election is improbable.

In April 2005 – nearly one year after the judge’s decision and two years after a majority of workers joined the union and requested bargaining – the NLRB approved a settlement agreement between Sodexo and UNITE.¹³ Under the agreement, Sodexo reinstated three employees and paid them nearly $8 000 in back pay. The fourth employee chose not to return to work and received $12 000 in back pay. Sodexo also agreed to have a neutral third party verify whether a majority of workers had voluntarily signed cards joining UNITE and authorizing the union to bargain on their behalf.¹⁴ On that basis, the third party determined that a majority of workers had chosen representation, and the company and union proceeded to reach a collective bargaining agreement.

Kongsberg Automotive

Kongsberg Automotive (KA) is a $1.5bn-revenue Norwegian manufacturing firm with 50 factories in 19 countries, including several facilities in the United States. Kongsberg Automotive stated its principles in a Code of Conduct adopted in December 2005, which says:

KA has based its principles on the OECD Guidelines for multinational enterprises, which give an extensive overview of rules to follow. Correspondingly, KA will promote the International Labour Organization (ILO) fundamental principles and rights at work. These principles and rights are the right to freedom of association and the elimination of child labour, forced labour and discrimination linked to employment.… KA shall and will always follow the law in the country in which it is operating. In some instances, the KA rules may be more comprehensive than the local law/rules, and if not in conflict with the law, the KA principles are valid (Kongsberg, 2008a).

Kongsberg Automotive also set out a template of ‘general purchasing conditions’ for all its suppliers. In Section 19, KA requires that ‘Supplier acknowledges the Directive of the UN Initiative Global Compact (Davos, 01/99) and the principles and rights set out and approved by the International Labour Organization in its “Declaration on fundamental principles and rights at work” (Geneva 06/98)’ (Kongsberg, 2008b).

Kongsberg Automotive’s behaviour at its factory in Van Wert, Ohio contradicted the company’s stated commitment to freedom of association and collective bargaining. In January 2008, KA bought the former Teleflex factory in Van Wert, a small city in rural western Ohio near the Indiana border. With over 300 workers, the plant was one of the largest local employers. The average wage of the hourly workforce was $15 per hour (Dougal, 2008). For many years and through successive collective bargaining agreements, most of them settled without conflict, workers had been represented by the United Steelworkers of America (USWA).

When the union sat down to bargain with their new owner, Kongsberg Automotive shocked them with demands for a ‘two-tier’ wage system in which new employees would be paid $9 per hour. Current employees would be ‘grandfathered’ at their current wage level, with no increases. Management also demanded cuts in pensions, health insurance and other benefits (Evans, 2008).

When their contract expired in early April 2008, workers offered to stay on the job and continue negotiating while a federal mediator helped the parties reach a settlement. KA rejected this offer and responded with a lock-out of all union-represented employees.¹⁵

Management shut the factory door on union workers but hired replacement workers to take on the jobs of locked out employees. US labour law allows employers to engage in such ‘offensive lock-outs’, as they are called – locking out union workers, then hiring replacements to force union capitulation to company demands. The ‘offensive lock-out’ was approved by the NLRB under the Reagan administration in the 1986 Harter Equipment decision.¹⁶

The Kongsberg Automotive case was a stark example of a foreign multinational company claiming to uphold high labour standards exploiting features of US labour law that are inconsistent with higher standards of practice at home. In Norway, as in Europe generally, when a company and a union reach the expiration date of a contract without a settlement, the contract continues in effect while the parties engage in a lengthy mediation process to achieve a peaceful accord.¹⁷

A prominent Norwegian and comparative labour law expert explained that in Norway, ‘[B]y virtue of statute law provisions a collective agreement has “continued effect”. It does not lapse on the expiry of its ordinary period of validity but remains in force as a binding contract with full effect until the expiry of the time limits ensuing from the rules on notice and mediation mentioned above.’ (Evju, 2008)

Hiring replacement workers to take the jobs of locked-out employees is also contrary to labour relations practice in Norway. As Professor Evju explained:

Hiring replacement workers did occur in the 1920s and early 1930s but not systematically or on a large scale. Since the compromise between the dominant private sector actors in 1935, such practices have virtually disappeared. The industrial relations ethos of the post war era, still forcefully alive, is that hiring of replacement workers is unacceptable, unethical and incompatible with essential industrial relations standards.¹⁸

The lock-out continued into late 2008 as the plant continued operating with replacement workers. For workers, the danger loomed that the lock-out would last for over one year and KA might move to get rid of the union altogether. The one-year cut-off was significant because US labour law permits employers to claim, after a year-long lock-out, that the union no longer enjoys majority support among active workers and to withdraw recognition on that basis.¹⁹

The dispute at Kongsberg Automotive’s Van Wert, Ohio facility never reached the one-year mark. Instead, after nine months, with workers still locked out and no progress in negotiations, KA announced in December 2008 that it was shutting the Van Wert plant and moving all production to Nuevo Laredo, Mexico.

The fact that some features of US labour law allow employers to violate workers’ rights under international human rights standards does not justify Kongsberg Automotive’s exploitation of ‘offensive lock-out’ and ‘hard bargaining’ doctrines incompatible with international standards and with practices in its home country. US law did not require KA to act in this fashion. It permits such anti-union tactics, but Kongsberg Automotive had the choice as to whether to take advantage of these features of US labour law or to act in accordance with its principles.

Kongsberg Automotive said that where its principles are more comprehensive than local legislation, and they do not conflict with local legislation, KA will apply its principles. Indeed, without violating US law, the company could have acted in a manner consistent with its promise to ‘promote the International Labour Organization (ILO) fundamental principles and rights at work’, and its invocation of the UN Global Compact in requirements for suppliers. Instead, Kongsberg Automotive’s choice to adopt US management-style anti-union strategies and tactics betrayed this promise and its claims of social responsibility and the values and guidelines of its Code of Conduct.

Gamma Holding

Gamma Holding is a Netherlands-based multinational manufacturer of textile products ranging from fashion textiles, sleepwear, and sailcloth to industrial textiles for conveyer belts, coated and composite products, roofing systems, filtering systems, bulletproof vests, and other uses. The company employs 7 000 workers in 42 countries, including in the United States.

‘People are the key to Gamma Holding's success’, the company said of its working environment (Gamma Holding undated a). In its Code of Conduct, the company declared, ‘Gamma Holding firmly believes that good business practice is based not only on economic and financial principles, but also on values such as a healthy social climate and a sound environmental policy’ (Gamma Holding undated b).

Gamma Holding’s code said, ‘Gamma Holding recognises the employees’ right to organize themselves to protect their collective and individual interests’. The company noted that it has signed the Code of Conduct of the Social Partners in the European Textile and Clothing Sector. Negotiated by textile companies and European trade unions in the sector, Article 1 of that code cited ‘freedom of association and the right to negotiate’ under ILO Conventions 87 and 98, stating: ‘The right for workers to form and join a trade union, as well as the right for employers to organize, are recognized. Employers and workers may negotiate freely and independently’ (European Union, undated).

In its 2007 Annual Report, Gamma Holding said that its human resources policies are ‘intended to ensure that the companies of Gamma Holding make a positive contribution to the societies in which they operate’ (Gamma Holding, 2007). Pointing to its code of conduct, the company said, ‘Important elements of this code of conduct include employees’ right to organize and the prohibition of any form of discrimination’ and that the company ‘applies these business principles not only in Europe, but also in all of the countries in which the group is active’.

The ‘human resources management’ section of Gamma Holding’s 2007 Annual Report ended cryptically with the statement, ‘At the end of April, Filtration Technology resolved the labour dispute at National Wire Fabric in the US state of Arkansas’.

What Gamma Holding did not say in its Annual Report was that the labour dispute in Arkansas was the longest strike in the history of that state, one marked by the company’s use of permanent replacement workers, bad-faith bargaining, and a myriad of unfair labour practice charges found to be meritorious by the NLRB.

National Wire Fabric (NWF) in Star City, Arkansas, was part of Gamma Holding’s Clear Edge Filtration division, which makes metallic and synthetic wires and fabrics for the building products, pulp and paper, and corrugator industries. Gamma Holding acquired the NWF facility in 2001. Local 1671 of the United Steelworkers union represented 56 hourly employees at the plant (Massey, 2006).

In July 2005, after months of negotiations on a new contract and despite intervention by the Federal Mediation and Conciliation Service, NWF workers exercised their right to strike. NWF management was demanding cuts in vacations and health insurance as well as contract ‘flexibility’ that would destroy seniority rights and other protections built up over years of negotiations (Massey, 2006).

Concessionary demands by management do not come within the scope of ILO Conventions 87 and 98. However, these international norms require good-faith bargaining and condemn the use of permanent replacement workers against lawful strikers. Gamma Holding violated both these international standards.

When members of the United Steelworkers exercised the right to strike, Gamma Holding’s NWF management hired permanent replacements to take their jobs. Explaining the move in a letter to union officials, Gamma Holding’s CEO said, ‘Once National Wire Fabric made the legal decision to continue its operations, the company, logically and legally, decided it would need to use permanent replacements’.²⁰ For almost two years, the company maintained production with permanent replacement workers despite the ILO’s decision that the use of permanent replacements violates workers’ freedom of association.²¹

In fact, the NLRB found that NWF and Gamma did violate US labour law by bargaining in bad faith. The union filed unfair labour practice charges against NWF in 2006 and 2007 alleging that management was bargaining in bad faith by trying to entice strikers to return to work with promises of supervisory positions. In January 2007, the NLRB found merit in the union’s charges of bad-faith bargaining. The Board issued a complaint and set the case for trial before an administrative law judge in May 2007.

In its complaint, the Board said that NWF management for several months between October 2005 and February 2006 repeatedly ‘bypassed the union and dealt directly with its employees by soliciting striking employees to cross the picket line and to return to work under new job titles and altered terms and conditions of employment’.²² In fact, no striking worker responded to the company’s unlawful offers and crossed the picket line.

The Board found that the employer’s actions amounted to refusal to bargain in good faith and that ‘the strike was converted to an unfair labour practice strike on February 28, 2006’.²³ As unfair labour practice strikers, union members had a right under US law to return to their jobs immediately upon offering to return to work under contract terms sought by the company – an ‘unconditional return’, in labour law parlance – and to resume bargaining, with management now under an obligation to cure its earlier bad-faith bargaining.

Upon issuance of the Board’s complaint, workers decided to end their strike. They offered to return to work unconditionally. However, management defied the NLRB’s findings, refused to reinstate the striking workers, and insisted that replacement workers stay on the job permanently (Gilchrist, 2008).

The strike at National Wire Fabric lasted nearly five more months until May 2007. At 22 months, it was the longest strike in the history of Arkansas (Linn, 2007). Despite the NLRB’s findings and in violation of international labour rights norms, NWF management kept in place throughout the dispute permanent replacements in the jobs of union members who had exercised the right to strike.

Finally, faced with growing potential liability as time passed and the trial before an administrative law judge drew near, management settled the dispute, offered reinstatement to all striking workers who still wanted to return to work, and reached a contract with the union. Only 12 of the original 56 strikers chose to return to work. The rest took early retirement and severance pay packages or moved to jobs with other employers (Gilchrist, 2008).

Nissan Motors

When it joined the UN Global Compact in 2004, Nissan committed itself to respect for the ILO’s core labour standards. But at its assembly plant in Canton, Mississippi, management has taken many steps to interfere with workers’ organizing efforts in violation of ILO standards.

Nissan built the factory 20 miles north of the state capital in Jackson in 2002 with almost $400m in subsidies from state taxpayers. The plant in Canton is the pride of state economic development officials. They insist that their multi-million dollar subsidies and tax breaks to Nissan are a net gain for Mississippi (Mattera and Tarczynska, 2013). Some 4 000 workers hold regular full-time jobs in the plant. After five years’ service, they reach the top pay level of $23.22 per hour. But working alongside them at half their pay are several hundred employees of temporary labour supply firms.

Nissan has used many tactics that violate ILO standards to interfere with Canton workers’ organizing efforts to form and join a local union of the United Auto Workers (UAW). For many employees, it started before they even entered the plant. Newly-hired employees were warned in training classes that Nissan is a non-union company and wants to stay non-union, putting workers immediately in fear that any union sympathy or activity will be viewed with hostility by management.

Nissan management stepped up its offensive against the UAW in late 2004-early 2005, after union representatives first came to Canton to meet with workers there. The company held a series of captive-audience meetings with speeches and films portraying unions as plant closers and job killers.

Nissan management’s anti-union campaigning sharply escalated in 2012 after Canton workers formed the ‘Committee for a Fair Election’ and began meeting with religious, political, student and community leaders seeking support for their organizing efforts. The company forced employees into a new round of captive-audience meetings suggesting that Nissan would not bring new product lines into the Canton plant if workers formed a union. Human resources managers took notes on workers’ reactions, further instilling fear as to whether employees who challenged management might suffer reprisals.

Both union organizers and anti-union consultants know that management’s most powerful tool for interfering with workers’ organizing efforts is to enlist employees’ direct supervisors to drill fear into them. As part of its 2012 anti-union offensive, management followed the captive meetings by having employees’ immediate supervisors hold one-on-one meetings with individual employees to malign the UAW and warn them away from getting involved with the union.

In September 2012 Nissan launched a new anti-union offensive in the Canton plant, this time targeting the hundreds of temporary workers who labour full-time in the plant but are employed by third-party labour supply agencies at half the pay of regular employees. Management held a series of captive-audience meetings with these precarious workers describing the UAW as plant closers and job destroyers who are only interested in collecting dues payments.

International labour standards call for access of trade union representatives to workplaces, with due respect for the rights of property and management, so that workers can hear from them about the union. But Nissan management prohibited UAW representatives’ access to the plant in non-work areas, or equal time for UAW spokespersons to present the union’s side inside the workplace (Mississippi NAACP, 2013).

Some positive developments

Some foreign companies have found their way to a respectful policy on workers’ trade union organizing in the United States. But it often requires workers’ building alliances and bringing public pressure to bear on management’s behaviour. One example involves First Group, Ltd., the UK’s largest private transport company, and its US subsidiary First Student, Inc.

First Group

Providing extensive railroad and bus transportation throughout Britain, First Group’s labour force is almost entirely union-represented. Both the company and the union maintain that their collective bargaining relationship is healthy and productive for both sides.

First Student is the largest private school bus transportation contractor in the United States, serving hundreds of local school districts who choose to contract out with private firms for student transportation between their homes and schools. First Student entered the US market in the late 1990s when it bought a US-based school bus contractor,

US management launched a typically aggressive anti-union campaign whenever school bus drivers and mechanics sought to form a trade union. US managers undertook such actions despite First Group’s public affirmations of support for international labour standards and its positive relationship with trade unions at home.

Based in Aberdeen, Scotland, First Group’s domestic workforce was represented by the Transport and General Workers Union (T&G). Under pressure from the T&G, First Group had adopted a corporate social responsibility policy that referenced international human and labour rights. Top company management made declarations at Annual General Meetings (AGMs – annual shareholders’ meetings) pledging full support for ILO core labour standards and ILO conventions on freedom of association.

But in the United States, First Student management failed to apply these principles. Instead, they launched aggressive, threat-filled anti-union campaigns wherever workers tried to organize, contrary to international standards and to UK management’s policy and often in violation of the NLRA.

The Teamsters union took the lead helping First Student workers in their organizing efforts. Working closely with the T&G, the Teamsters used the firm’s own proclaimed corporate responsibility statements to achieve an effective neutrality agreement that led to substantial union organizing gains.

A key part of the Teamster campaign to organize the bus drivers at First Student was to convince the parent company to honour its corporate responsibility policy in the United States. Working closely with the T&G, the Teamsters engaged in an extensive campaign that included meetings, public forums and other activities involving financial backers of the company, members of Parliament and others. The activities took place in both the United States and Britain and helped to focus attention on problems with First Student’s operations in the United States, including management’s failure to live up to the company’s corporate responsibility policy.

In an initial response to the campaign, First Group management promised to remain neutral in union organizing campaigns. When US management ignored the promised neutrality pledge, the Teamsters sponsored reports by academics documenting the aggressive anti-union campaign being waged at First Student facilities across the country, in clear violation of the neutrality pledge and in violation of international human rights standards.

These reports and other concerns were publicized in Britain and presented at the annual stockholder meeting of the parent company in Scotland by the Teamsters and the T&G. Throughout the multi-year campaign, the two unions closely cooperated to promote a wide range of activities, including initiating a parliamentary inquiry into First Student’s behaviour in the United States.

In 2008, First Student rectified its conduct. The company adopted a strong neutrality policy with an effective enforcement mechanism. Since then, more than 30 000 bus drivers in First Student locations around the United States have chosen union representation in secret-ballot elections conducted by the NLRB. In 2011 the company and the union negotiated a nationwide master collective agreement setting basic conditions of employment for all workers and guaranteeing freedom of association (Gray, 2011).

IKEA

In another example, US management at an IKEA supplier factory in Virginia first launched an aggressive anti-union campaign when the plant’s 300 workers tried to form a union in 2009. Management’s tactics included captive-audience meetings, one-on-one supervisor pressure sessions, and anti-union films and videos. Working with the BWI, UNI and IndustriALL global unions, along with Swedish unions, the workers and their Machinists union (IAM) built an international support alliance invoking ILO standards (Pfeifer, 2011).

Under the pressure of the global alliance and its demands for adherence to international labour standards, IKEA’s top leadership instructed its US management to halt the anti-union campaigning. In 2011, workers won an NLRB election by a 3–1 margin. In 2012, protected by the same application of international standards, hundreds more workers at three IKEA distribution centres in Maryland, New Jersey, and Georgia joined them, voting by a solid majority in NLRB elections in favour of IAM representation (Vail, 2012).

Faurecia

Faurecia is a French auto parts maker with over 40 000 employees in more than 30 countries around the world. In 2010–2012, the company doubled its presence in North America and reached 18 production sites in the United States. (Faurecia, 2013a)

Faurecia is a member of the UN Global Compact. In its 2013 ‘Communication on Progress’ to the UNGC, the company spoke positively of its social dialogue with workers’ representatives through its European Works Council (FEWC), and added, ‘The Group’s policy of active social dialogue, through the FEWC and other national employee consultation groups resulted in 316 agreements signed in 22 countries, including Brazil, Mexico, Tunisia and Argentina.’ (Faurecia, 2013b)

In October 2013, Faurecia management at the company’s Louisville, Kentucky plant adopted a policy of neutrality with respect to workers’ organizing efforts and said it would recognize the union upon a showing of majority support by workers’ signing cards authorizing the United Auto Workers to represent them in collective bargaining. A majority of employees signed cards, and the company and union moved swiftly into collective bargaining. Reflecting management’s balanced approach, a company statement said ‘While we prefer to work directly with our employees rather than through a third party, we respect the choice of our Louisville interior systems plant employees to be represented by the UAW. Faurecia will work with the UAW and the Louisville team to ensure the success of the plant, guided by the principles of the Faurecia Excellence System.’ (Gagnier, 2013)

Brylane/PPR

Creative use of the OECD Guidelines for Multinational Enterprises led to a successful outcome of the trade union UNITE’s campaign to help hundreds of warehouse employees at the US subsidiary of a French multinational company. Brylane, Inc. was the US distributor of the French firm Pinault-Printemps-Redoute (PPR), the parent company of Gucci and other famous brands (in 2013 PPR changed its name to Kering). When workers began their organizing effort, local managers launched a typical US management-style anti-union campaign with captive-audience meetings and one-on-one pressure from supervisors trained by anti-union consultants (ICFTU, 2003).

In July 2002, UNITE filed a complaint to the US National Contact Point (NCP) under the OECD Guidelines for Multinational Enterprises. Each OECD member country has its NCP to receive complaints from parties affected by corporate actions that allegedly violate the OECD Guidelines. It is a voluntary, ‘soft’ system that offers a venue for raising concerns about company behaviour. While the US NCP had no power to order Brylane to change its practices, the case provided a triggering mechanism for a wider international campaign.

On their side of the Atlantic, French and Dutch unions representing PPR workers in France and Holland filed counterpart complaints with the NCPs of those countries. The chairman of the OECD’s Trade Union Advisory Committee weighed in with a call for strong, prompt action by all governments to put a stop to the anti-union tactics of PPR’s US warehouse management.

The French and Dutch trade union actions did not stop with the OECD complaint. Along with NGO allies, they mounted demonstrations at PPR headquarters in Paris and at Gucci headquarters in Amsterdam protesting against Brylane’s interference with workers’ organizing at the Indiana warehouse. At the same time, French union leaders met privately with top PPR management urging a solution to the crisis at its US subsidiary.

The OECD complaint gave an international cast to what otherwise would have been a local labour dispute. The combined European pressure led to PPR instructing US managers to halt their anti-union campaign and agree to a ‘card check’ procedure for establishing majority representation status (CCC, 2003). A solid majority of workers quickly chose union representation (Kalinoski, 2003a). In May 2003, Brylane and UNITE reached agreement on a three-year contract providing a 9 per cent wage increase, substantial benefits improvements, and a strong health and safety committee (Kalinoski, 2003b).

Based on the Brylane victory, UNITE targeted Swedish retailing giant H&M for its next campaign to organize employees of a European multinational firm. Instead of filing a complaint, though, UNITE’s Swedish trade union allies met with management and laid on the table what a Brylane-style campaign would look like, including an OECD complaint using the Swedish government’s contact point. To avoid such a bitter exchange, H&M management agreed to respect its US employees’ organizing rights through a card-check/neutrality system similar to that agreed by PPR (Just-Style, 2004). H&M has maintained its neutrality policy toward workers’ organizing, and thousands of company employees in the United States have gained collective bargaining rights (Massey, 2009; Rosenkrantz, 2011).

Volkswagen

The most recent and perhaps most promising move by an important multinational company to apply its freedom of association principles in an US setting involves the Volkswagen factory in Chattanooga, Tennessee. Volkswagen opened the plant in 2011 and employs nearly 2 000 workers.

In 2002, Volkswagen signed a global framework agreement with the then-International Metalworkers Federation (now the global union IndustriALL). The company committed itself to respecting ILO core labour standards and conventions on freedom of association (IndustriALL, 2012).

At the Tennessee factory, Volkswagen management has indicated a willingness to implement a US version of the company’s European Works Council system. The company says:

Employee participation and co-determination rights for employee representatives are important success factors for the Volkswagen Group. Performance and participation provide the basis for job security and competitiveness. In 2012, existing declarations, including the Declaration on Social Rights and Industrial Relations at Volkswagen, and agreements such as the Charter on Labour Relations were substantially enhanced and expanded at Volkswagen. (Volkswagen, 2013)

Volkswagen and its employees created the works council system in 1992, predating European Union requirements (European Union, 1994). It is considered a model of a well-functioning employee participation system (European Foundation, 2008). But works councils’ activities are financially supported by employers, and US labour law prohibits employer financial support for organizations that represent workers, reflecting the widespread phenomenon of ‘company unions’ in the 1920s and 1930s designed to prevent genuine union formation (Kohler, 1986).

VW can only implement its works council system in tandem with trade union representation. A majority of employees have signed cards authorizing the United Auto Workers (UAW) to represent them, and Volkswagen is (at the time of writing) considering recognizing the union on the basis of the signed cards. However, the company has run into a firestorm of opposition from anti-union Tennessee politicians. Senator Robert Corker issued a statement saying that VW would be a ‘laughingstock’ if it accepted UAW representation (Schelzig, 2013). Tennessee governor William Haslam says that other firms will refuse to invest in the state if Volkswagen recognizes the UAW (Bennett, 2013). They are calling on Volkswagen to refuse to recognize the union on the basis of UAW membership cards and instead to require a secret-ballot election, which would create an opportunity for anti-union politicians and employer groups to launch an anti-union campaign even if Volkswagen does not join it (Elk, 2013).

Conclusion

Foreign multinational companies in the United States have power. States and communities are eager to lure their direct investments to build factories and create jobs. Some companies implement positive workplace policies that reflect their commitments to international labour standards at home and in most other countries where they do business. However, many multinational firms apply powers conceded to them by substandard US labour laws to interfere with workers’ freedom of association.

Foreign multinational companies can take several steps to rectify their violations of international labour standards in the United States and to prevent recurrence. For one, they can apply the UN Guiding Principles on Business and Human Rights’ call for ‘due diligence’ systems of continuous monitoring and evaluation of human rights practices, in this case regarding the freedom of association-related conduct of their US operations. Companies can also take strong affirmative action to communicate to their US managers and employees a commitment to international human rights standards on workers’ freedom of association in the United States and a pledge not to interfere with workers’ organizing efforts. Such action should be accompanied by internal management training and implementation systems to ensure that US managers understand and put into effect the company’s freedom of association policies.

The OECD’s Guidelines for Multinational Enterprises’ call for multinational firms to ‘respect the right of workers employed by the multinational enterprise to establish or join trade unions and representative organizations of their own choosing’ should be applied more vigorously by ‘National Contact Points’ (NCPs). These are the US State Department officials and their counterparts in home countries of multinational firms who receive complaints under the Guidelines and provide a mechanism for resolving disputes.

Some NCPs have vigorously and creatively applied their mandates to resolve disputes (IHRB, 2013). The trade union movement has had a mixed, but lately more hopeful analysis of NCPs’ application of the OECD Guidelines:

At their best, NCPs have provided a forum for problem-solving that has helped to strengthen trade union organizing and collective bargaining.… But all too often, NCPs have failed to meet their obligations under the Guidelines…The Guidelines were considerably strengthened in the 2011 Update, including by incorporating key elements of the UN’s work on business and human rights.… Overall, TUAC considers the OECD Guidelines today to be more fit-for-purpose and more relevant for workers around the world. (TUAC, 2013)

Outside the governmental and intergovernmental context, multinational companies and international trade unions should make more effective use of Global Framework Agreements (GFAs) in the United States. Like the Volkswagen GFA with IndustriALL, the nearly 100 GFAs now in force (most involving European-based firms) include ILO standards on freedom of association as an essential element of the agreement (Stevis and Fichter, 2012). Many companies see their GFA commitments as applying mainly in developing countries. But freedom of association is no less a right, and no less deserving of respect and enforcement, in the United States and other developed countries. (Rosado Marzán, 2013)

The main responsibility for halting violations of workers’ freedom of association in the United States rests with US stakeholders and institutions. To begin, the US Senate should take up ratification of ILO Conventions 87 and 98. They have languished in the Senate since being submitted by President Harry S Truman in 1949 – the longest-pending instruments on the treaty calendar of the Senate Foreign Relations Committee (Charnovitz, 2008).

But US workers, trade unionists and other labour advocates cannot expect ratification of Conventions 87 and 98 to solve the problems endemic to US labour law. They have to do the hard job of political organizing and mobilizing to win a Congress and White House sympathetic to workers’ concerns. Elections are just a start. It will take follow-up political action to win reforms that will bring US labour law into full compliance with ILO standards.

US labour rights advocates cannot just cry ‘human rights violations’ and expect Congress and courts to agree. Human rights frameworks and arguments do not fit easily into US policy discourse. US exceptionalism – the sentiment that the United States is a unique ‘new world’ with nothing to learn from the international community – is deeply rooted (Janis, 2012). Advocates must find ways to blend the human rights argument into frames that resonate among government officials, legislators, regulators, opinion leaders, interest groups, and even trade union and civil society groups who are unfamiliar with human rights discourse.

Calling foreign multinational companies to account for their violations of international labour standards is part of the new ‘frame-shaping’ movement by human rights advocates in the United States (Soohoo et al., 2009). Using ILO and other international labour rights instruments and mechanisms has become an important trade union strategy in many organizing and bargaining struggles in the United States.

Footnotes

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Notes

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