A Works Council in Chattanooga

Steve Greenhouse at the New York Times reports that Volkswagen and the United Auto Workers are negotiating a “German-style works council” for VW’s assembly plant in Chattanooga, Tennessee.  This is an important development for several reasons.  First, among the competing visions for the future of U.S. unionism, European-style works councils have long figured prominently.  Second, research suggests that a majority of U.S. workers wants a system of workplace representation that looks like a works council.  And, third, the UAW (among others) is heralding the VW talks as introducing a “new model of labor relations to the United States.”

We will devote more attention to the subject of works councils in future posts, but a few preliminary observations about the news from Tennessee are in order now.  One, and most important, “works council” can mean a lot of different things and we don’t yet know enough to know what the UAW and VW have in mind for the council at the Chattanooga plant. Joel Rogers and Wolfgang Streeck have a superb and highly accessible summary of the variable forms works councils can take.  They distinguish, for example, between what they call paternalistic councils (designed mainly to prevent unionization), consultative councils (intended to improve communication between management and workers and thus to enhance economic competitiveness), and representative councils (formed to “enable workers to assert distributional . . . interests”).   For anyone interested in the UAW-VW developments, the Rogers & Streeck chapter is a must-read.

Despite the variation, however, works councils in Germany have some consistent features.  As Stephen Befort describes, German works councils are entitled to “consult” with management on a range of topics.  Councils have a right to “receive information from, and exchange views with, management concerning the employer’s compliance with applicable laws and on general business matters.”  And, beyond consultation, German works councils have a right of co-determination on “social topics, such as work scheduling, safety measures, and the restructuring of jobs.”  But, and this is quite relevant, German works councils are prohibited from bargaining over wages, from striking, and from using “other types of economic action in support of its position.”

Next, however new a Chattanooga works council would be for U.S. industrial relations, current labor law requires that works councils be embedded in a structure of unionization.   That is, works councils in the U.S. must – at least under current law – function more as a supplement to unionization than as an alternative to unionization.  This legal requirement limits, for better or worse, works councils’ potential to reorder industrial-relations systems in the United States.  From the Times story: “VW officials said that a works council can be created at a company in the United States only with the cooperation of a labor union because it might otherwise be viewed as an illegal company-sponsored union.  That, the VW officials wrote, is why the company has started its dialogue with the U.A.W.”

The risk that VW officials have in mind is that a works council – established in a non-union workplace – would violate section 8(a)(2) of the NLRA.  That section makes it an unfair labor practice for an employer to “dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it.”  The VW position is likely correct: they can’t do this without a union.  And because it now looks like the unionization effort is going to succeed, the UAW-VW council will be perfectly legal.  Stay tuned.