In a stinging defeat for organized labor, particularly in the South, Volkswagen workers in Chattanooga, Tennessee rejected representation by the United Auto Workers on February 14 by a vote of 712-626. Unions have long desired to organize workers in the South, especially to gain a footing in the South in the auto industry, particularly since their union membership in the industry had been decimated in Detroit. German auto companies in the South seem to offer the unions the best opportunity for organization, since German auto companies are almost exclusively union. Indeed, German labor laws require large companies to have worker councils at each job site to represent employees in discussions with management about work conditions. Volkswagen reportedly has some 103 production locations worldwide, and just three do not have such worker councils, one in Chattanooga, and two in China. German unions used their influence and Volkswagen apparently agreed to encourage UAW organization of its Chattanooga plant.

An interesting agreement was reached between Volkswagen and the UAW. Significantly, Volkswagen did not agree to a "card-check," in which the union would have been recognized if the union produced authorization cards signed by more than 50% of production workers. Volkswagen did agree not to oppose the union and indeed granted the union exclusive access to the plant to conduct meetings with workers to encourage them to vote for the union. Anti-union workers were denied similar access to speak to workers. Interestingly, a UAW official publicly stated regarding letting anti-union workers to campaign against the union inside the plant, "The company has no obligation to give them access." This comment is particularly interesting, inasmuch as unions have been clamoring for access to plants for organizational purposes for years, and yet did not support the right of non-union workers for the same access.

One of the issues in the campaign related to an argument that the "deal" between Volkswagen and the UAW was portrayed as "they had already negotiated a deal behind their backs." The "deal" included a provision that the parties agreed to "maintaining and where possible enhancing the cost advantages and other competitive advantages that [Volkswagen] enjoys relative to its competitors in the United States and North America." New hourly workers at Volkswagen start at $14.50 an hour, and rise to $19.50 over three years. In comparison, those at the "Big Three" unionized companies (General Motors, Ford and Chrysler) start at $15.78 and rise to $19.28. The "Big Three" have a two-tier pay system, in which only senior workers make big wages, and those workers have not gotten a raise since 2005. One worker opposed to the union stated, "What the UAW is offering, we can already do without them."

A well-known union publication announced before the election, "A win for United Auto Workers at Volkswagen looks likely today, as the UAW had previously gathered a majority of pro-union signatures and management has made its approval clear." After the election, the same union publication stated, "How could a union lose an unopposed campaign?"

The United Auto Workers, looking for someone to blame, is blaming state and local politicians and community groups. The union has filed election objections with the NLRB, contending that there was a "coordinated and widely-publicized coercive campaign" by politicians and community groups to deprive Volkswagen employees of their federally protected right to join a union "free of coercion, intimidation, threats and interference." The UAW particularly blames former Chattanooga mayor and current U.S. Senator Bob Corker, as well as Gov. Bill Haslam, for making statements indicating what UAW considered a threatened loss of state financial incentives and/or benefits to the workers should they select union representation. Senator Corker published an article in the March 4, 2014 Wall Street Journal, headed "Now the Auto Union Wants to Muzzle Public Officials." Senator Corker stated, "If the UAW came into our community, attracting suppliers and other prospective companies would be far more difficult. Additionally, there was a misconception about the future of a second Volkswagen line coming to Chattanooga. Since last June and through the election, the UAW tried to press the narrative that any future expansion of the plant would be contingent upon the UAW organizing the employees. To counter these purposely inaccurate assertions, and based on years of experience and relationships with the company, I sought to assure the workers that Chattanooga would be Volkswagen's first choice for the new SUV line even if they did not choose to have the UAW represent them."

In spite of this particular election loss, the UAW is likely to continue its effort to organize southern auto plants. There are at least four large auto plants in Tennessee, and others in South Carolina, Georgia, and Mississippi. Victory at Volkswagen in Chattanooga would have marked the first time the union has been able to organize a foreign-owned auto plant in a southern U.S. state. AFL-CIO President Richard Trumka announced after the vote, "We continue on. That was just round one."

Legality of Union-Management "Deals" Like at Volkswagen: The "neutrality agreement" negotiated between Volkswagen and the United Auto Workers in Chattanooga is not unusual. Unions have turned to such agreements as an easier and more effective way to organize. As an example, Hyatt Hotels and UNITE HERE recently negotiated such an agreement after a four-year campaign of workplace disruptions, rallies, pickets, short strikes and a global boycott of the brand by overseas unions. The most contentious issue is the union demand for neutrality for organizing campaigns. The agreement provides for card check at several unorganized Hyatts.

Recently such agreements have drawn legal attack and the Supreme Court was expected to issue a ruling this year in a case involving UNITE HERE and Hollywood Greyhound Track, Inc., doing business as Mardi Gras Gaming, in Hallandale Beach, Florida. In the negotiated agreement between management and the union, the union won access to the premises and other assistance in organizing, and in turn agreed to back a local ballot initiative to expand casino gambling, and to spend over $100,000.00 campaigning for it. A worker at the company got help from the National Right to Work Foundation, and sued the employer and union jointly, for violating a clause in the 1947 Taft-Hartley Act that says an employer cannot provide a union "thing of value." This prohibition was passed to prohibit employer "gifts" to a union, and was designed to prevent labor leaders from being bought out or self-dealing rather than promoting worker interests. The union argues that such deals do not meet the purposes of the federal prohibition, arguing that both employers and unions find such agreements help "avoid the hard feelings that come in many contested organizing campaigns and thereby create a good environment for collective bargaining." The Supreme Court justices asked the union attorney during argument why access to company premises and other assistance was not valuable to the union, and thus violative of the law. Later, the justices declined to rule on the case, leaving the issue unresolved. The circuit courts are in conflict on the issue, but judges on the Eleventh Circuit Court of Appeals voted 2-1 that "organizing assistance can be a thing of value" and thus prohibited by the Taft-Hartley provisions. A judge on another court felt otherwise, stating, "If the court were to find that participation in card-check agreements was illegal, it would have the effect of criminalizing all collective bargaining agreements."

This is an interesting issue for employers to follow, and actually has broader ramifications. An issue can come up when an employer pays union officials or stewards for job-related benefits or pay even though they seem to be working for the union rather than the employer. There is an exception for payments to unions under the law where the payments are "by reason of" service as employees or former employees, but bright-line rules are difficult to draw. For example, in a 2013 Seventh Circuit Court of Appeals ruling, the court found a Section 302(a) criminal prohibition against an employer's paying union officials full-time salaries while on a leave of absence, although it would have allowed such payments for fringe benefits. Titan Tire Corp. of Freeport, Inc. v. United Steelworkers of America, 197 LRRM 2401 (C.A. 7, Nov. 1, 2013).

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