Center for American Progress Action

Boeing-Machinists Deal Benefits Company, Workers, and NLRB Credibility

Boeing-Machinists Deal Benefits Company, Workers, and NLRB Credibility

Board Vindicated but Assaults May Continue

David Madland and Karla Walter conclude that a recent compromise between Boeing and its workers is good for all parties and discredits attacks on the National Labor Relations Board.

National Labor Relations Board General Counsel Lafe Solomon maintained throughout the investigation and hearings that the best possible outcome was a settlement between Boeing and its workers that led to the case’s withdrawal. (AP/Bruce Smith)
National Labor Relations Board General Counsel Lafe Solomon maintained throughout the investigation and hearings that the best possible outcome was a settlement between Boeing and its workers that led to the case’s withdrawal. (AP/Bruce Smith)

The tentative deal reached last week between The Boeing Company and the International Association of Machinists and Aerospace Workers, or IAM—and scheduled to be ratified today by rank-and-file workers—is a vindication for our nation’s labor law, which has been under significant attack.

The National Labor Relations Board—the government agency charged with protecting workers’ National Labor Relations Act rights to form unions and collectively bargain free from employer retaliation—made possible the deal that benefits both Boeing and its workers. The NLRB actively encouraged settlement in this case, and the framework of how the NLRB operates made possible a privately negotiated compromise between the two parties.

The critique of the NLRB—that it is an out-of-control agency killing jobs through overly aggressive enforcement of an unworkable law—is discredited in the face of this deal that preserves and creates tens of thousands of U.S. jobs.

These attacks have no merit but they show no signs of letting up and would have dire consequences if successful. Threats to the NLRB’s ability to enforce the law or to even do away with the agency entirely would leave American workers with few workplace protections and leave employers unaccountable when they trample on workers’ rights.

NLRB actions in the Boeing case

On April 20, 2011, the acting NLRB general counsel, Lafe Solomon, filed a complaint against Boeing over its decision to move an airline production line from a union facility in the state of Washington to a new facility in South Carolina after Boeing officials made public statements indicating they did so in retaliation against strikes in the Puget Sound region. None of the NLRB’s adjudicatory bodies has yet made a ruling on the case.

At the ongoing hearing before an administrative law judge to investigate the charges, both parties have an opportunity to present evidence and argue in favor of their position. But that judge has not even made a preliminary ruling, and the case has not proceeded to the full board. In short, the NLRB is still gathering facts to determine whether Boeing acted illegally.

The National Labor Relations Act prohibits retaliation against strikes, and the NLRB is warranted in investigating cases that may involve such retaliation. Strikes were mentioned as a factor in Boeing’s location decision by a senior Boeing official. He told The Seattle Times:

The overriding factor [in moving to South Carolina] was not the business climate. And it was not the wages we’re paying today. It was that we cannot afford to have a work stoppage, you know, every three years.

Compromise is embedded into the framework of how the NLRB operates even while investigating such claims of wrongdoing, so it’s not surprising that Boeing and its employees were able to reach a deal. When the NLRB investigators determine that there is reasonable cause to believe an employer or union has violated the NLRA, their first response is to encourage settlement or adjustments to remedy the violations. Only when settlement efforts fail do cases go before an administrative law judge. More than a third of all unfair labor practice cases closed in fiscal year 2009 were settled or adjusted before an NLRB administrative law judge reached a decision.

The Boeing case followed this pattern. Acting NLRB General Counsel Lafe Solomon maintained throughout the investigation and hearings that the best possible outcome was a settlement between the two parties that led to the case’s withdrawal.

The Boeing case is similar to lawsuits against large corporations before other types of American judicial bodies, where settlements occurred in part because of the possibility of a court ruling that would have imposed significant penalties. The country’s largest tobacco companies signed the largest civil settlement in American history (valued at $206 billion) with 46 states requiring the companies to make annual payments in perpetuity as reimbursement for past tobacco-related costs, such as Medicaid expenditures.

And 8 of the top 10 class-action lawsuits in the United States ended in settlements, according to a 2010 CNBC list that included high-profile lawsuits such as ENRON and WorldCom. These corporations would have been unlikely to pay out billions in settlement costs if they hadn’t feared that a judge or jury would have awarded the plaintiffs an even larger settlement.

The deal

The deal privately negotiated between Boeing and the IAM has been called a win for both labor and the company: Workers will receive wage and benefits increases, Boeing’s commitment to continue production of several existing lines in the Puget Sound region, and the guarantee of a new fuel-efficient production line in Renton, Washington.

In exchange, Boeing wins labor peace and the resolution of the NLRB complaint. If Boeing’s workers approve the contract, the union has indicated that it will drop its complaint against the company and consequently encourage the NLRB general counsel to suspend the complaint currently being heard by an administrative law judge. Under the deal, Boeing may also continue production in South Carolina.

This deal resembles the remedy proposed by the NLRB’s acting general counsel in the complaint he issued that would allow Boeing to operate the South Carolina plant but also required the company to maintain a second line at the unionized Washington facility.

Both the union and the company signaled that the agreement will strengthen labor management relations moving forward. “We believe the proposed extension is good for our members, it’s good for Boeing, it’s good for airline customers, and it’s good for communities,” Machinist Union spokeswoman Connie Kelliher told ABC News. “It secures a strong future here, provides top-notch pay and benefits, and really signals the start of a potential new relationship with Boeing.”

Boeing’s spokesman Tim Healy called the agreement “a starting point of a new relationship” with the machinists’ union.

The uproar

Critics pilloried the NLRB for investigating the merits of allegations that Boeing broke the law and encouraging settlement. Gov. Nikki Haley (R-SC) vilified the National Labor Relations Board as a “rogue agency” for taking action against Boeing. And Rep. Darrell Issa (R-CA) claimed that “NLRB’s action in the case against Boeing has the potential to create a job-killing precedent just as U.S. manufacturers are working toward economic recovery.”

These claims were just plain false from the beginning. The remedy proposed by the NLRB’s general counsel would have allowed Boeing to operate the South Carolina plant but also would have required the company to maintain a second line at the unionized Washington facility. And now the compromise deal preserves the jobs at the South Carolina plant and actually preserves and creates more jobs in Washington.

Really, the attacks against the NLRB actions in the Boeing case are just part of a larger effort to eviscerate the agency. They show no sign of slowing down.

Conservatives are waging a battle to do away with the NLRB’s ability to protect workers’ rights by trying to stall its investigation of Boeing, eliminate its enforcement power, and even shut down the agency entirely. If successful, these attacks would have enabled employers to face few repercussions for labor law violations.

House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) issued a subpoena for all internal documents related to the investigation—a move that interfered with the ongoing hearing—even though the NLRB had already released more than a thousand pages of documents on the case to Congress. This represented the first time since 1940 that the NLRB has been subjected to a congressional subpoena, according to acting NLRB general counsel Solomon.

The House of Representatives also passed a bill that would gut the NLRB’s enforcement power in cases where a company moves operations or eliminates work to punish workers that exercise their legally protected rights. Under the bill it would still be against the law to retaliate against workers but the NLRB would no longer have much power to do anything about it. Imagine if Congress passed a similar law that maintained that armed robbery was still illegal but banned the courts from jailing or otherwise punishing anyone that they found to have committed such a crime.

Finally, some congressional House leaders have threatened to do away entirely with the NLRB or cripple its ability to act. Rep. Issa threatened, “We could eliminate the NLRB or take the premise and statutorily change it.” Indeed, three-quarters of House Republicans voted to eliminate all funding for the NLRB this past spring, a move that would have prevented the enforcement of labor law for several months. The measure failed to pass the House but the majority recently released a budget bill, H.R. 3070, which would slash NLRB funding.

And Senate Republicans indicate they will be slow to confirm any new Democratic members nominated to the NLRB—even though the agency will be down to only two members by the end of the year due to term expirations. This maneuver plays upon a recent Supreme Court ruling that requires three board members to issue decisions.

The settlement is good for workers and Boeing despite the conservative outrage

The compromise deal between Boeing and the machinists’ union preserves jobs at the South Carolina plant and actually creates new jobs in Washington state. It’s a win for both workers and management. The deal was encouraged by the NLRB and the framework of our labor laws.

We will have to wait for the critics’ next move. Has the successful resolution of the Boeing complaint convinced them that the NLRB and workers’ rights aren’t job killers? We won’t hold our breath.

But given the vindication of the NLRB’s actions in the Boeing case, it will be even easier to demonstrate how off-base the critique of the agency is.

David Madland is Director and Karla Walter is a Senior Policy Analyst with the American Worker Project at American Progress.

The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.


David Madland

Senior Fellow; Senior Adviser, American Worker Project

Karla Walter

Senior Fellow, Inclusive Economy