Employee Resource Groups Can Advance Workplace Equality. Should They Be Illegal?

Published March 22nd, 2020 - 03.22.2037

Nearly sixty years after the enactment of Title VII, discrimination still pervades the American workplace. White men continue to dominate the ranks of company management. To address (or to give the appearance of addressing) their lackluster workplace diversity, companies have increasingly turned to employee resource groups (ERGs), internal organizations that serve to connect and support workers with shared identities and backgrounds. Classic examples include groups for women, racial and ethnic minorities, people with disabilities, veterans, and LGBTQ+ workers. Ninety percent of Fortune 500 companies have at least one, and some workers report that ERGs have measurably helped advance equality and inclusion in their workplaces. Perhaps it is surprising, then, that they could also violate labor law.

In the early twentieth century, employers regularly established company-controlled employee organizations to forestall the formation of independent unions. Under pressure from organized labor, Congress banned these so-called “company unions” when it passed the National Labor Relations Act (NLRA) in 1935. Yet the language of the law sweeps broadly enough to outlaw a wide variety of organizations in which employees participate. Section 8(a)(2) of the NLRA 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.” Section 2(5) defines a “labor organization” as “any organization of any kind . . . in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances . . . or conditions of work.”

At least some ERGs likely violate 8(a)(2). First, employers almost always dominate or interfere with ERGs’ formation and administration. Even when workers call for their creation, they are still formally established and recognized by employers. In many cases, companies also provide material support, like meeting space, funding, and time off for employees to participate. The next question is whether ERGs “deal[] with” employers in a manner sufficient to qualify as “labor organizations.” In order to meet the “dealing with” requirement, the ERG and the employer must engage in a bilateral exchange of proposals “coupled with real or apparent consideration from management.” The bilateral exchange must also entail a “pattern or practice” extending “over time.” Some ERGs function simply as social and networking spaces, and so fall short of this definition. But increasingly ERGs are crossing the line into advocacy and even bargaining. A survey of women in women-focused ERGs found that 70 percent believed that their groups had actually been effective in changing workplace policies. 55 percent said their ERGs had been successful in improving parental leave and 53 percent said they had won more generous vacation benefits.

It is doubtful that ERGs were created with the purpose of keeping workplaces union-free. For the most part, ERGs have formed in white-collar industries where labor organizing has historically been a far-off threat. But 8(a)(2) does not inquire into employer motive. Instead, it targets anything that merely looks like a company union out of fear that it could inhibit unionization. If that legislative judgment holds water, there is reason for advocates to be concerned. That’s because labor unions are ultimately better equipped than ERGs to advance workplace equality. Unions afford workers more bargaining power, so the policies they win are likely to be more protective. Workers in unions also have greater odds of accessing the protections their unions secure. As I have written about in the context of LGBTQ rights, unions can pursue violations through an independent, third-party grievance procedure inaccessible to ERGs, and workers are also more likely to come forward with complaints since the union can safeguard them from retaliation.

So far, unions have left ERGs unchallenged, but circumstances may be changing. A wave of white-collar unionization in industries such as digital media and tech is bringing unions into more traditional ERG territory. While the labor and civil rights movements have long been intertwined, unions are also increasingly centering workplace equality issues in their organizing campaigns and bargaining efforts, fighting for issues like improved sexual harassment procedures and inclusive hiring policies. For more and more unions, ERGs look increasingly like direct competition.

If unions are better equipped to support minority and marginalized workers, the question of whether ERGs should remain illegal comes down to whether they are actually more likely to frustrate or to facilitate the process of unionization. While empirical evidence is lacking, there are strong reasons in support of each theory.

ERGs can potentially frustrate unionization in several ways. First, because ERGs can help workers achieve some voice at the company, they might partially satisfy workers’ urge to unionize and thus hinder their willingness to fight for one. Alternatively, if workers find that their ERGs are ineffective, they may come to believe that collective action is fruitless and eschew unionization even if they desire it. Finally, ERGs might discourage unionization by leading workers to believe that their interests are aligned with those of management. This is especially true in the context of ERGs, since companies often use diversity and inclusion efforts to further their bottom line.

On the other hand, ERGs can potentially facilitate unionization. By joining effective ERGs, workers can become practiced in organizing and advocacy. Their experience of success within ERGs may lead them to seek even greater gains through unionization. By joining ineffective ERGs, workers might come to view company-controlled mechanisms for worker voice as impotent and to push for unionization instead.

Anecdotal evidence points in both directions. Take the example of Google’s two LGBTQ+ ERGs, Gayglers and Trans at Google. Three of the leading activists in Google’s recent worker movements – Laurence Berland, Sophie Waldman, and Rebecca Rivers – experienced their first taste of organizing at the company working through their ERGs to advocate for issues like same-sex partner benefits. Those successful efforts inspired them to keep organizing outside the ERG structure. So far, however, those efforts have fallen short of unionization. That path has eluded organizers because Google employees overall feel they are treated well, perhaps in part because ERGs are so prominent.

In my view, the ultimate consideration is whether unions offer a realistic alternative. Union density in the private sector has reached a low of 6.2 percent. While unionization would undoubtedly benefit the remaining 93.8 percent of workers, the odds of winning recognition and securing a contract under the current labor law regime are treacherously slim. Undoubtedly, the goal should be to ensure that unionization becomes a realistic alternative for all workers by adopting reforms such as Clean Slate for Worker Power. But until that happens, half a loaf in the form of an ERG may be better for non-union employees than nothing at all.

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