Management Rights, Workers Wronged
“Management rights” clauses in collective bargaining agreements have tied the hands of workers and unions since the early 1950s.
This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the
March/April 2023 issue.
Subscribe Now
at a 30% discount.
Virtually every collective bargaining agreement in the United States contains a provision that is weakening the labor movement and impeding the urgent need to democratize the economy. Called the “management rights clause,” this provision gives management the power to make decisions about how to hire, fire, control the work process, and what to produce—without any input by workers or their unions.
Despite management rights clauses being found in nearly every collective bargaining agreement (CBA) today, labor organizers and scholars too often ignore them, and unions too often accept them, to the detriment of workplace democracy and worker-community control of production. Just as unions improve wages and working conditions, unionized workers demanding a say at work changes workplace dynamics across the economy, which impacts nonunionized workers alike. Unionized and nonunion workers alike suffer from the larger “management rights” discourse, accepted by large swaths of the Left and labor movement. The argument is that management, and not the workers themselves and the communities in which they are part, has the right to control the goods and services that are being produced (see sidebar on the history of management rights clauses). Management rights clauses, and the discourse around management’s prerogatives and the exclusive right to manage business affairs, has tied the hands of workers and unions in both asserting their power over the workplace and addressing the worst impacts of capitalism since the early 1950s.
This discourse, and the existence of these clauses, undermines any worker efforts at organizing—from workers forming a newly organized union or organizing for a democratic workplace and economy, to workers who are concerned about a just transition away from fossil fuels—which makes it critically important to confront the impact of management rights clauses. Most workers are implicitly aware, as theorist Elizabeth Anderson puts it in her recent book Private Government, that “most modern workplaces are private governments…a particular sort of government, under which its subjects are unfree.” The spread of the management rights clause in nearly every union contract means that almost all union contracts bar workers from attempting to make workplaces more democratic.
What is a Management Rights Clause?
Labor organizer Daniel Gross, co-author with Staughton Lynd of Labor Law for the Rank & Filer: Building Solidarity While Staying Clear of the Law, told us in an email interview, “Arguably, no contract provision is more emblematic of a kind of unionism where capital reigns as superior” than a management rights clause.
A management rights clause typically has language stating that, for example, the “company retains the exclusive right to manage the business” and that exercising that right “shall not be construed as a violation of the agreement,” according to David Strecker, author of Labor Law: A Basic Guide to the National Labor Relations Act. The exclusive right to manage applies to virtually all decisions about how to operate the business including scheduling, hiring, firing, promotions and discipline, what and how production occurs and where it is located, how to use property, and financial policies.
According to retired labor lawyer Robert Schwartz, author of No Contract, No Peace, the National Labor Relations Board’s (NLRB) policy is “that a management-rights clause does not displace the duty to bargain unless the clause clearly and unmistakably permits the employer to take unilateral action with respect to the ‘particular employment term’ the employer wants to change.” In other words, a management rights clause should not be a blanket claim to make any decisions other than those specifically enumerated in the CBA (such as that no unilateral changes to working conditions shall be made by management without negotiating it with the union). Nevertheless, employers have argued for a broader, open-ended interpretation based on the principle of “reserved rights” that gives them the power to act on anything not specifically precluded by the CBA.
Ironic Origins of the Management Rights Clause
From our preliminary research, we have traced the source of the management rights clause to the 1950s. In a 1956 speech to the National Academy of Arbitrators, United Steelworkers general counsel and later Supreme Court Justice Arthur J. Goldberg, accepted that “Not only does management have the general right to manage the business, but many agreements provide that management has the exclusive right to direct working forces and usually to lay off, recall, discharge, hire, etc.” The reason, he agreed with the employers, was “the fact that somebody must be boss; somebody has to run the plant.” Goldberg’s analysis was nearly identical to another speaker at the same conference, Bethlehem Steel Vice President James Phelps, who explained that “the job of management is to manage.” Goldberg’s speech was a response to a new development in labor law, the 1952 NLRB v. American National Insurance Co. Supreme Court case (see sidebar on this and other cases).
History of the Management Rights Clause
The management rights clause, along with its more famous cousin, the no-strike clause, has been ubiquitous since the 1980s but its beginnings are centuries old.
The origin of the clause can be traced to the British common law doctrine of the “divine right of kings,” the unchecked power of the king to act. With the transition to capitalism, this transformed into the right of the boss to act. This doctrine later found its way into U.S. labor relations as the “freedom of contract” principle. That principle emerged out of the 1886 U.S. Supreme Court Santa Clara County v. Southern Pacific Railroad Company ruling that transformed the 13th Amendment into a body of constitutional and statutory rights for corporations known as “corporate personhood.” Although the Supreme Court threw out the precedent of “freedom of contract” in the 1937 West Coast Hotel Company v. Parrish case, it was soon after replaced by the assertion of management’s right to control anything not explicitly denied to it in the collective bargaining agreement. This became justified under the principle of “reserve rights,” or management rights, lifted from the 10th Amendment reserve clause power of the states’ authority over anything not enumerated in the U.S. Constitution, treaties, statutes, or court rulings.
The Supreme Court ruled in the 1952 NLRB v. American National Insurance Co. case that the employer could demand the inclusion of a management rights clause to the point where bargaining breaks down and federal mediators and arbitrators are involved. This is what is technically called “bargaining until impasse,” or when management simply imposes the new conditions without it being an unfair labor practice.
Following the 1962 U.S. Supreme Court ruling on behalf of unions in NLRB v. Katz, “employers began to demand management rights clauses that waived the union’s right to bargain over a wide array of mid-contract changes.” Since the 1980s, the National Labor Relations Board (NLRB) and courts have upheld management’s authority to act unilaterally unless limited by the terms of a collective bargaining agreement.
Tragically for union workers, Goldberg accepted the assumption of management’s power over work and by doing so lost the argument that the union has the power to challenge management’s decisions over who controls work. “That challenge is made through the grievance procedure, not through rebellion,” Goldberg said. This is what Bob Repas calls in his union-side labor relations textbook Contract Administration: A Guide for Stewards and Local Officers the principle of “management acts, the union reacts,” presumably by filing a grievance.
We can be sure that Goldberg didn’t just make a mistake. He accepted the premise that in a capitalist economy the owner of capital controls, even dictates, the condition and terms of work. He was expressing a consensus of union leadership’s willingness to give up making demands over how we work in exchange for a larger piece of the pie, what is known as the “wage-productivity deal” famously made in the May 23, 1950 “Treaty of Detroit” between the United Auto Workers (UAW) and General Motors and mimicked by longshoremen and other unions. Unions have been losing the struggle to improve wages and working conditions ever since. Productivity continues to rise while wages have been flat for four decades.
How the Boss Limits Union Contracts and Workers’ Power
For the past 70 years, the management rights clause has had the effect of shifting the balance of power to the boss so that, according to Betty Justice in her labor relations textbook, Unions, Workers, and the Law, “a union has a right to joint determination only if it is strong enough to secure and preserve it in the collective bargaining process.” Unions that notice the clause are shocked to learn, as Schwartz explains, “Language they justifiably believed was innocuous or rhetorical has now been weaponized against them.” The management rights clause has allowed the bosses to set the stage for what and how workers bargain before they ever get to the table. This is why any worker who isn’t in a union, but would like to organize one, should pay close attention to the management rights clause.
Contrary to widespread belief, the issues and concerns a union can raise when bargaining a contract, what is called the “scope of bargaining,” is not determined during bargaining with the boss. It’s already been determined either by labor law or a management rights clause in an existing CBA.
The scope of bargaining was initially set by the 1935 National Labor Relations Act (NLRA), which reads in part, “to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.” Then, capital and the bosses fought back to limit the power workers gained with the NLRA; the 1947 Taft-Hartley Act, officially called the Labor Management Relations Act was capital’s victory. Taft-Hartley amended the NLRA, narrowing its scope further to “encourage employers and the representatives of their employees to reach and maintain agreements concerning rates of pay, hours, and working conditions.” These seven words, “rates of pay, hours, and working conditions,” already constrains what workers are allowed to bargain over. This has allowed the boss to limit workers’ ability to bargain over other concerns, to the detriment of unionized workers and the working class as a whole.
Since 1947, the clause has been used to prohibit the use of collective bargaining and strikes to assert workers’ power over work or democratize the economy. Almost from the start of legalized collective bargaining, the unions have been complicit in trading away this power.
Joe Burns, a union labor lawyer and author of several books, including Class Struggle Unionism, explained in a recent interview that issues of economic democracy “are basic questions and very central to unionism and class struggle.” This was not simply the result of Cold War anti-communism and conservative union leadership, as labor historians commonly claim. It is also the outcome of a fundamental alignment of interests between unions as what labor organizer and theorist Marty Glaberman described as a tool for disciplining and controlling workers. Just a decade after the passage of the NLRA, unions and the collective bargaining agreement were already tightly harnessed as instruments of capitalism.
Missing the Importance of Management Rights Clauses
Unions and the field of labor studies have almost entirely missed the importance of the management rights clause. In our review of 24 labor relations and law textbooks published since the 1950s, we found “management rights clause” and four other related terms mentioned on only a meager 179 of a total of 10,105 pages—or 1.8% of the pages. While one of these textbooks was specifically devoted to management rights, it only references management rights concepts on 48 of its 560 pages—or 8.6% of the pages. The major labor law textbooks being used to train academic labor experts and union staff are in consensus that management rights are nearly absolute. Take labor law professors Patrick Cihon and James Castagnera’s assertion in their book Employment & Labor Law that changing the organization of a business or altering the manufacturing process are “not mandatory subjects but rather were inherent management rights.” Management and the union are required to bargain over any mandatory subjects of bargaining raised by either side.
Employer-side labor lawyer David Strecker is even more blunt in his widely used textbook Labor Law: A Basic Guide to the National Labor Relations Act. “The truth of the matter is that unions have very little control over major corporate decisions that have an impact on workers’ lives, such as subcontracting, plant closures, layoffs, etc.” The bosses are unwilling to give up these powers and “under the law, they do not have to. Why should they?”
Consequences for the Workers’ Movement and the Planet
With only the right to bargain over wages, hours, and working conditions, unions have been stripped of their power to not only adequately protect their members but to address the systemic threats to nonunion workers, the entire working class, and humanity as a whole. As a result of the global havoc being wrought by capitalism, what happens at work can no longer be isolated or contained. For the past 70 years, management rights clauses have impeded unionized workers from preventing employers from closing plants and moving their jobs to regions with low wages, introducing “labor saving” technologies and automation that deskills workers, or having a say over what products and services they produce. Today, workers demanding a just transition away from planet-destroying fossil fuels are blocked by management’s right to simply say “no” and their unions going along with it.
In fall 2022, President Joe Biden and Congress killed the railroad workers’ nationwide strike, which would have been the first in 30 years. Attempting to link their work to the impacts of the supply chain on the planet, the inter-union Railroad Workers United endorsed a call for turning the railroads into a publicly owned utility.
However, each of the 12 unions in this sector are likely barred from bargaining over this transformation of transport to serve human needs rather than profit by management rights clauses in their collective bargaining agreements. Such a demand is also precluded by the 4th, 5th, and 14th Amendments of the U.S. Constitution that protect property from “takings” without “due process” or “just compensation,” a point co-author Robert Ovetz writes about in his new book, We the Elites: Why the U.S. Constitution Serves the Few.
We both teach labor studies at universities while also serving as paid union staff and rank-and-file local leadership. Having worked on several strikes and strike threats, we have been frequently told that management has the prerogative over certain issues over which we cannot bargain. For example, in bargaining a pay increase for faculty, our unions have almost entirely ignored demanding control over class sizes because it is assumed to be exclusively the authority of management. Never once was this traced back to the management rights clause, nor was there any discussion about removing it. Management rights are so widely accepted by unions that any issue that falls within the boundaries of management rights are presumed to be preemptively off limits.
In fact, few unions are willing to bargain, let alone strike, over management rights clauses. According to the most recent data available from the Federal Mediation and Conciliation Service, a federal agency that mediates strikes, management rights only accounted for 82 of the 2,172, or 3.8%, of the total number of issues.
The more management rights clauses have been embedded into our collective bargaining agreements, the less we have discussed them—and that has had a catastrophic impact on worker organizing, unions, and strikes. This also makes working conditions even worse for nonunion workers.
The Way Forward
There are two strategies for keeping out or removing the management rights clause from collective bargaining agreements. First, all workers bargaining their first contract should refuse to allow a management rights clause to be included, even when pressured by their parent union to trade it for dues deductions and a union rights clause. As former arbitrator, labor historian, and associate editor of Monthly Review magazine Michael Yates put it bluntly with us in an email interview, “the union should resist allowing such clauses to be in the contract.”
Second, for those of us who have a management rights clause in our collective bargaining agreement, it should be a top priority of bargaining to remove it. Although doing so might result in an unfair labor practice charge and a lock-out by management, the costs are outweighed by the restoration of workers’ ability to control their work and production so that management can no longer claim near-unilateral discretion and management’s prerogative.
Schwartz recommends that unions renegotiating their contracts not extend it so they can take action after it expires. An expired collective bargaining agreement frees the union from both a management rights and no-strike clause. At the same time, it obligates the employer to maintain the terms of the expired CBA and prevents any unilateral changes to working conditions without first bargaining with the union until federal mediators and arbitrators are involved. This shifts the power from the shopfloor and the workers themselves to union staff and attorneys.
This strategy gives the union leverage to negotiate over the removal of the management rights clause in its entirety. Because an expired CBA is advantageous for workers, contract extensions should be considered suspect and rejected. We need to test the viability of demanding the removal of management rights clauses, although they have already been included in the CBA, and insisting on bargaining over permissive subjects. Fighting over “matters that go to the heart of management (such as the price of the product, the location of plants, the technology used, and the like) are permissive subjects,” as Yates argues in an email interview, which means that the other party is not required to bargain over the issue when raised by the other side. While this is likely to result in the employer filing an “unfair labor practice charge” claiming the union is not bargaining in “good faith,” fighting the charge would force the NLRB and the courts to review the entirety of the management rights clause.
These strategies require a “different kind of unionism,” as Gross suggests in an email interview. This kind of unionism is:
one that envisions a horizon beyond the rule of capital and sees workers as the rightful force in the most important decisions facing the enterprise. Power over what products are produced and how; where and how company investments are made; truly reliable economic security; and a racial and gender justice lens at the heart of it all are some of their key motivations.
Confronting the management rights clause will require a significant shift in organizational strategy, as all those interviewed for this article contend. This will also require labor scholars to go beyond our preliminary research to challenge management’s prerogative claim by uncovering the origins of the management rights clause.
As capitalism is rapidly taking down the entire planet in ecocide, our greatest power to turn it around and get past capitalism lies in workers’ power at and over work. But for unionized workers to be able to wield that power, we will first need to assert that we have it. The management rights clause is among the most important barriers standing in our way.
Please consider supporting our work by donating or subscribing.
