Publications: Labor board attacks Boeing work location

Any notion that today’s National Labor Relations Board (NLRB or board) will give a fair shake to employers was dispelled this past April 20.

The board’s acting general counsel that day issued a shocking complaint charging Chicago-based Boeing Co. with unlawfully transferring certain airline production and related supply operations to South Carolina, supposedly because Boeing’s Washington state unionized employees have in the past struck the company over labor contract disputes. Boeing Co., NLRB No. 19-CA- 32431. The complaint seeks to force Boeing to add a new line for the assembly of its 787 Dreamliner plane to its Washington facility.

Former NLRB Chairman Peter Schaumber has called the complaint unprecedented and even the New York Times in a recent article reported that the move “is highly unusual.”

The International Association of Machinists (IAM) has represented Boeing production and maintenance employees in Washington’s Puget Sound area and Portland, Ore., for decades. The IAM struck Boeing on multiple occasions over the years, most recently in 2005 and 2008. These strikes, like all strikes, were disruptive to Boeing’s business.

In October 2009, Boeing publicly announced that it intended to build a Dreamliner assembly line in South Carolina rather than in Puget Sound. President Barack Obama’s current chief of staff and Chicago native William Daley was on Boeing’s board of directors at the time. Boeing’s announcement came one month after employees at Boeing’s North Charleston, S.C., plant overwhelmingly decertified, or threw out, the IAM as their bargaining representative and shortly after the South Carolina legislature approved financial incentives for Boeing to expand in South Carolina.

South Carolina, unlike Washington state and Oregon, is a right-to-work state, which means South Carolina employees cannot be coerced into joining a union.

Construction of the South Carolina facility is nearly complete, at great expense to Boeing. Boeing has hired more than 1,000 new workers in South Carolina and expects to commence Dreamliner assembly by July of this year.

Boeing and the IAM had engaged in substantial negotiations about adding production capacity in Puget Sound, but those talks eventually collapsed. Boeing claims that since its October 2009 announcement regarding the South Carolina decision, however, it actually has expanded union represented jobs in the Northwest by about 2,000. It further insists that no Washington work is being “transferred” to South Carolina, as the NLRB contends and that the South Carolina facility will produce only “new work.”

The IAM, nevertheless, filed unfair labor practice charges against Boeing in March 2010. It then took the board’s acting general counsel some 13 months to bring his complaint.

The complaint alleges that in deciding to locate the Dreamliner production facility in South Carolina rather than Washington, Boeing violated Sections 8(a)(1) and (3) of the National Labor Relations Act (the Act). Section 8(a)(1) prohibits employers from interfering with, restraining or coercing employees in the exercise of their rights under the act (i.e., to join or not join unions, to strike or not to strike, etc.). Section 8(a)(3) makes it illegal for employers to discriminate against employees because of their membership in or affinity for any labor organization.

According to the complaint, Boeing officials made multiple comments between October 2009 and March 2010 that indicated that the decision to locate the Dreamliner work in South Carolina was linked to the company’s experience with past IAM work stoppages in Washington and desire to avoid strikes in the future. According to the acting general counsel, these comments, along with the location of the work in South Carolina, sent a coercive, unlawful message that Boeing, “would remove or had removed work from the Bargaining Unit because employees had struck.”

The complaint’s filing ignited a firestorm. Boeing’s Executive Vice President and General Counsel Michael Luttig, a former U.S. 4th Circuit Court of Appeals judge, called the complaint “legally frivolous” and “a radical departure from both NLRB and Supreme Court precedent.” Legislators, especially those from South Carolina, were less restrained in their assessment. U.S. Sen. Jim DeMint (R-S.C.) called the complaint “nothing more than a political favor for the unions who are supporting President Obama’s re-election campaign,” while South Carolina’s other senator, Republican Lindsay Graham, commented that, “left to their own devices, the NLRB would routinely punish right-to-work states that value and promote their pro-business climates.”

The state’s Republican governor, Nikki Haley, vowed that, “we absolutely will not allow them to bully our businesses or mess with our employees.”

Eight state attorneys general, primarily from right-to-work states, sent a strong letter of protest to the board. Republicans in Congress are pushing legislation to strengthen right-to-work laws in direct response to the Boeing complaint.

A hearing in the Boeing matter before an NLRB administrative law judge (ALJ) currently is scheduled for June 14 in Seattle, although that date most likely will be pushed. After the ALJ issues her or his recommended order, the board itself will review the matter. Given the board’s current makeup — recall that one member, Craig Becker, is a former high-ranking lawyer for the Service Employees International Union — it is little wonder that Boeing, per Luttig, expressed confidence that the acting general counsel’s theory ultimately will be rejected “by the federal courts,” where NLRB appeals are decided.

At stake is the ability of employers to make core business decisions, including the ability to locate or relocate work, free from bureaucratic interference.

Regardless of the case’s ultimate outcome, employers certainly must be forewarned that important issues like this ultimately must be decided in a forum that does not favor one side over the other, i.e., the federal courts.

Reprinted with permission from Chicago Daily Law Bulletin.