Boeing Complaint: Unprecedented Attempt To Expand NLRB Authority Over Economic Activity

Tuesday, May 31, 2011 - 01:00

At a town hall meeting on May 11, the President urged America's employers to "step up" and start hiring more workers. Perhaps that statement should have been amended to clarify that this hiring should take place in particular locations and among particular workers.

This is the message being sent by the National Labor Relations Board's (NLRB) April 20 complaint against The Boeing Company. In this complaint, the NLRB's acting General Counsel, Lafe Solomon, is essentially telling an employer where, when and how to produce its products.

The background facts of the case are straightforward. In 2009, Boeing decided to open a new production line in South Carolina for its 787 Dreamliner. This decision was made after extensive negotiations with the International Association of Machinists (IAM), the union that represents many of Boeing's workers at its existing facilities in Washington state. Significantly, the new line in South Carolina will not displace any existing work from Washington - seven aircraft per month will still be built on the West Coast while the new facility will build three.

The IAM subsequently filed a charge with the NLRB, claiming that Boeing's decision was intended to retaliate against union workers for past strikes and to "chill" future strike activity. Solomon obliged the IAM by issuing a complaint under Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (NLRA). The thrust of his complaint is that Boeing's decision to create new jobs in South Carolina was motivated by anti-union animus, and therefore illegal.

Solomon appears serenely confident in his allegation. Yet even The New York Times opined that his theory "may be a difficult case to prove." This might be something of an understatement.

Solomon's assertion of a retaliatory motive seems based solely on his selective interpretation of comments made by Boeing officials that strikes were a factor in their decision. However, unnoted in the complaint, Boeing has also said that financial incentives from the state, supply chain considerations, and geographic diversity played a critical role. In any event, in American Ship Building Co. v. NLRB , the Supreme Court ruled that mitigating the impact of strikes is a legitimate business interest. Moreover, Boeing has hired 2,000 new workers at its unionized Washington facilities, not exactly compelling evidence of "retaliation" against the IAM. In fact, Solomon has said that the NLRB is not pursuing a 10(j) injunction because there has been no adverse impact to workers in Washington state on which to base it.

An examination of the NLRB's "fact sheet" on the Boeing case reveals additional weaknesses. For example, in justifying the 8(a)(1) charge, the sheet states: "[T]he Board has repeatedly held that an employer violates section 8(a)(1) by threatening that employees will lose their jobs if they join a strike, or by predicting a loss of business and jobs because of unionization or strike disruptions without any factual basis." In this case, Boeing did not threaten workers with losing their jobs, or a loss of business because of unionization. The facility in South Carolina will be performing new work. No loss of business or work in Washington has occurred, and as mentioned above, far from taking away work, Boeing has hired 2,000 additional employees in the state.

In justifying the 8(a)(3) charge, the NLRB cites four cases on its fact sheet, none of which seem to have relevance to the Boeing complaint. In Capehorn Industry , the employer failed to reinstate strikers when there was no legitimate business interest for permanently subcontracting work. No employee at Boeing has lost work, so reinstatement is not at issue. In Century Air Freight , an employer permanently subcontracted work and discharged employees to forestall a strike. Again, no Boeing employee has lost work as a result of the decision to open a new line in South Carolina. In Westpac Electric , the employer "isolated" employees in retaliation for previous and anticipated future strikes - conduct that is not alleged in the Boeing complaint. Finally, in National Fabricators , potential strikers were targeted for layoffs. Once again, no one at Boeing has been laid off, let alone been "targeted."

Given what is widely perceived as its weak foundation, the issuance of the complaint caused considerable controversy. But it is the requested remedy that has raised a firestorm of criticism. Solomon is demanding that Boeing take its new 787 production line out of South Carolina and move that work to Washington, where presumably a new factory would have to be built. This despite the fact that Boeing has already spent more than $1 billion on construction in South Carolina and is employing 1,000 workers there with thousands more to follow. Solomon has blithely stated that "there is nothing remarkable or unprecedented" about this case. However, as Boeing points out, "The Board has never ordered an employer to construct a new factory where one never existed and where no existing employees have been harmed."

Solomon argues that his goal is simply "to enforce the National Labor Relations Act." Others have hinted at different motives. South Carolina is a right-to-work state; Washington requires compulsory unionization. The workforce at the South Carolina facility is non-union while that in Washington is represented by the IAM. And of course, Washington is a blue state and South Carolina a red one.

Politics aside, the Boeing complaint represents an unprecedented attempt to expand the NLRB's authority over economic activity. It sets a new standard for the types of employer conduct the Board seeks to regulate and the remedies it will request. While Solomon's case may be found lacking in the courts, it could still tie up Boeing in litigation for years and force the company to spend considerable sums. Such an ordeal may deter other employers from making perfectly legal - but disfavored - decisions for fear that Solomon and the unions will subject them to similar treatment. The desire to "chill" future employer conduct is, perhaps, the real motivation at work here.

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