Act. If subsection 101 (e) is retained, the problems of enforcing the reporting sections of this title will be tremendous, for the only penalties the title prescribes for nonfiling or false filing are criminal. This means that the Government would have to obtain indictments against each recalcitrant union official and would then be under the burden of proving willful misconduct beyond a reasonable doubt. Union members, on the other hand, would not have the incentive they do today for making sure that their leaders comply with the filing requirements, because the labor organization itself would not be under any disability for either willful or inadvertent failure to conform to the law. Recognizing the importance of providing an incentive for cleaning house, section 210 of the Kearns bill and section 107 of the Barden bill deny National Labor Relations Board relief to unions not conforming to the filing requirements. Union spokesmen contend that provisions which penalize noncompliance by denying the offending union tax immunity ad access to the National Labor Relations Board are unfair because an entire union is punished for the guilt of possibly a single officer. This overlooks the fact that such a union possesses power of its own to correct the situation. Both the Kearns and Barden bills contain provisions lifting the disqualification when the union comes into compliance.

REGULATION OF EMPLOYERS

We come now to the question of reporting and expenditures by employers. In testifying before this committee, Mr. Meany contended that employer groups are opposed to "any kind of reporting of financial disbursements in the labor relations field." So far as the national chamber is concerned these charges are false. We do not defend the use of labor consultant firms to bribe powerful union leaders in order to obtain collusive contracts or the use of labor spies or dummy committees to discourage employees from joining legitimate unions. Consequently we have no objection to the reporting requirements of the Kearns bill or to the provisions which make even the indirect bribery of union officers a crime.

We do object strenuoulsy, however, to the provisions contained in sections 103 and 112 of the McGovern bill.

According to Senator Kennedy, his counterpart of the McGovern bill has as one of its objects restriction of any future collusion between employers and unions "with no more loans from employer groups, no more attacks on rival unions through middlemen like Nathan Shefferman, and no more secrecy shrouding the use of union funds to bail out a collaborating employer." It appears that sections 103 and 112 are the provisions the Senator had in mind for accomplishing this stated objective. Unfortunately, however, section 103 goes far beyond the elimination of such abuses. It requires employers to report not only the kind of conflict-of-interest expenditures about which union officials are required to file statements under section 102, but also compels employers to report in great detail money spent on purely legitimate activity in the personnel and labor relations fields.

Because of the juxtaposition of section 103, relating to employer reports, with sections 101 and 102, a casual perusal of the bill might lead one to assume that the reports and information to be filed by labor organizations, employers, and labor relations consultants would be similar. The reports it requires of labor organizations are, for the most part, of a kind that corporations have had to file or publish under a multitude of State or Federal laws for many years. A digest of such laws is filed as an appendix to this statement. employers are not only required to file further and different reports if they say or do anything that might influence or affect employees in the rights granted them under section 7 of the National Labor Relations Act, but are also made subject to criminal penalties for engaging in conduct which is not even an unfair labor practice under the Wagner Act.

But

The committee will observe that section 103 compels every employer who hires a labor relations consultant-incidentally, this term is nowhere definedto persuade employees with regard to their right or the manner of exercising their right to organize and bargain collectively, or who undertake to supply information with respect to the activities of employees or a labor organization, to report the money he pays such consultant as well as any expenditure in excess of $2,500 the company itself makes for either of these purposes. Labor relations consultants retained for this purpose must file similar annual reports disclosing not only the receipt of such moneys, but also any payments received from other employers, even though they do not fall into this category.

This is the section which prompted the house of delegates of the American Bar Association, to express concern with its import upon the attorney-client privilege. Nevertheless Mr. Meany has seen fit to defend it, although the committee will note the absence of any provisions in the bill requiring union lawyers to file reports or make any disclosures.

The breadth of this section is tremendous, for the right to organize and bargain collectively and the manner of exercising it covers a wide range of matters, including not only the right to join or abstain from joining a particular union but the right to participate or stay away from a Labor Board election, to accept or reject an employer's offer, to strike or to engage in any concerted activity. Almost anything an employer does that has any impact at all upon his employees may be said to have some persuasive effect upon the matter of exercising such rights. If an employer sends a letter in an organizing campaign drawing the attention of employees to certain revelations before congressional committees concerning that particular union or its organizers, he may be said to be "persuading" his employees. Similarly, if he hires consultants whose duties are to maintain harmonious relations, or if he sponsors employee athletic groups, picnics, clinics, health centers, or other facilities, he is spending money which may indirectly persuade employees that the conditions of employment he is proposing are fair and should be accepted.

No prudent company in contract negotiations or in wage reopenings would be well advised to sit down at the bargaining table without investigating the wage demands, or the contracts the labor organization on the other side of the table has proposed or signed with other employers. Yet the use of a labor relations consultant or the expenditure of money to obtain such information must be reported under section 103 as now written.

We are aware that section 103 as drawn is considerably less drastic and unfair than was its counterpart in last year's Kennedy-Ives bill. For example, clauses have been inserted excluding wage adjustments or fringe benefits or the cost of publication of house organs or regularly published company newsletters from the category of reportable expenditures. But obviously these exemptions are much too narrow to cover other equally legitimate activities, examples of which we have cited.

We earnestly submit that even in their amended form, sections 103 and 112 are completely unfair to employers of good will and high ethical standards because they place such drastic restrictions upon the right of free speech preserved both to labor and to management by the terms of 8(c) of the TaftHartley Act.

In our opinion, the correct approach to the elimination of shady practices by employers and consultants of the middleman type is not to add more exemp tions to section 103 but rather to limit the activities which should be disclosed to those that are improper, irrespective of whether such conduct is engaged in by an outside firm or by the company's own industrial relations department. If this approach is adopted, there is no need for attempting to catalog all the desirable exemptions. The activities which should be reported are those having as their objective (a) affecting employee opinion by persons or committees pretending to be acting for the workers but who are in reality company agents, or (b) the acquisition of confidential information by resort to labor espionage. Section 112, which amends the criminal provisions of section 302(a) of the Taft-Hartley Act, is also excessive and unfair in its present form. We refer to subparagraph (3) which makes it a criminal offense to make any expenditure. including the type we have mentioned as being ethical and legitimate, to any employees for the purpose of influencing employees in the exercise of the right to organize and bargain. Paradoxically, the language of this subsection is broader in some respects-note the words "directly or indirectly to influence❞— than section 103. Such a provision has no place in the criminal code. Nor is there any justification under the excuse of "two-sidedness" for requiring any employer reports of the details of employer expenditures in connection with organizing drives or attempted strike settlements, when there is no corresponding provision despite Mr. Meany's representations to you, in the union reporting sections requiring labor officials to disclose how much they are spending for attempting to organize particular companies or to instigate, subsidize, or prolong strikes and boycotts.

CODES OF ETHICAL PRACTICES

We question the value of including in a labor-management reform bill a provision with regard to codes of eithical practices. The proposal in the KennedyMcGovern bill would amount to a Government recommendation that labor unions and employers adopt such codes.

We envison a cumbersome tripartite advisory committee to promote the adoption of such codes which would serve little useful purpose and would be an unnecessary expense to the taxpayers.

Many associations take no part in collective bargaining activities, but have objectives of a very different nature. Some of them have an organization structure which would hardly lend itself to placing the obligation of ethical practices codes on their members. For example, many associations exist for the purpose of research only, or the development of new markets, or the promotion of new products. Yet if the Government should enter the business of promoting these codes such associations might unfairly be under suspicion if they failed to adopt one.

TAFT-HARTLEY AMENDMENTS

The Kennedy-McGovern bill in title VI proposes amendments to the TaftHartley Act that are highly controversial. Some of the other bills similarly propose such amendments. Not only are these amendments controversial, but they have no direct relation to reform in racketeering and dishonestly in management-labor relations. For this reason the proposal to include them in legislation on the subject confuses the issue and undermines efforts to obtain sound reform.

NLRB jurisdiction

Section 601 of the Kennedy-McGovern bill would require the National Labor Relations Board to "assert jurisdiction over all labor disputes arising under the National Labor Relations Act, as amended," with the proviso that cession agreements may be effected with State agencies unless the State law is inconsistent with the corresponding provisions of the Federal act.

It would require an optimist indeed to believe that jurisdiction over any substantial number of cases will be ceded. Experience with cession under the present law shows that it simply doesn't take place.

The proposal in section 601, therefore, will mean in practical effect that the Board will be required to handle all cases to which the act can apply.

The section has no direct relationship to the problems of corruption and racketeering. We submit, accordingly, that it does not properly belong in a bill directed to the correction of such abuses and should be deleted.

Apart from the irrelevance of the section to the purpose of the bill, we suggest that it is the wrong approach to the very serious problem of NLRB caseload and the interwoven problem of Federal-State authority.

The NLRB recently had over 4,000 undecided unfair labor practice proceedings on its docket. It requires about 2 years to process the typical unfair labor practice case from the time the charge is filed until the Board finally issues its decision.

The proposed solution in section 601 would, we believe, make the problem worse. A tremendous additional load would be placed on the Board. Its size is hard to forcast, but we know that well over 4 million business establishments in the Nation fall within the so-called no man's land. Many cases involving these establishments would be slight in their impact and essentially local in character. Yet NLRB machinery would be cluttered with them. Increased appropriations and staff would help little, if any, because the Board members themselves, like members of a court, must handle the cases. Theirs is the ultimate responsibility for rendering final decisions.

We agree with former Board Chairman Guy Farmer who said in 1953, "Uncle Sam's long arm has reached out to assert itself over too many labor-management situations which ought to be resolved closer to their origin."

The administration bill in its section 502 has the merit of doing away with the "no man's land." It would do little, however, to relieve the tremendous delay and confusion which arise from extreme concentration of cases in the NLRB.

38488-59-pt. 1-21

The appropriate solution to the problem would be to give the States concurrent jurisdiction over labor dispute matters except where there is a direct and positive conflict between Federal law and State law. The language in section 3 of the Barden bill (H.R. 4474) would achieve these objectives.

Building and construction trade unions

Section 603 of the Kennedy-McGovern bill permits an employer primary engaged in the building and construction industry to enter into agreements with labor organizations despite the fact that the union's majority status has not been established. The section would, among other provisions, permit the contract to require union membership 7 days after employment.

While it has long been urged that the building and construction industry might require some specialized legislation to meet its problem, this proposal is a move in the wrong direction. If a purpose is to promote democracy in unions the proposal would do the opposite.

Senator McClellan in June 1958 stated that this provision is a retrogressica for democracy of unions since it would deny construction industry workers the right to have any say about union representation.

The Kennedy-McGovern bill, moreover, would validate agreements between employers and unions in the building and construction industry whereby unions would receive preferred treatment by always being notified of job vacancies Also validated would be agreements by which the parties would give preference in hiring to employees with agreed training or experience qualifications or to those having greatest length of service with the employer.

These provisions in the Kennedy-McGovern bill are controversial because of the control made possible for unions over the hiring process in building and construction. They could undermine the right to work laws in States which have adopted them.

The sections dealing with this subject have no proper place in the proposed legislation.

Right of replaced strikers to vote

Section 604 of the Kennedy-McGovern bill and section 507 of the administration bill would make it possible for the NLRB to allow economic strikers to vote in an election even though their jobs have been filled by others in the course of a lawful strike.

This provision has no relationship to the problem of racketeering and dishonesty. It should be deleted, moreover, because it establishes a wrong principle.

The problem arises because section 9 (c) (3) of the Taft-Hartley Act provides that employees on strike who are not entitled to reinstatement shall not be eligible to vote.

The proposed amendment, however, would leave the NLRB free to permit economic strikers to vote in representation elections even though not entitled to reinstatement.

In the case of an economic striker, the employer clearly has the legal right to recruit replacements. The Supreme Court decided as early as 1938 in N.L.R.B v. MacKay Radio (304 U.S. 333), that employers have this right. Denial of this right would mean that the employer would have virtually no chance to maintain operations and save himself from, at times, irreparable damage during a strike for which he might be entirely blameless.

To allow the economic striker to vote breaks down the job status the replac ments have acquired. Their right to these jobs should be protected if the employer's act of hiring them is to have any meaning. When, under these circumstances, the replacements are faced with the question of a vote on repre sentation, shall the strikers who have forfeited their jobs also be allowed to vote? If so, we face the absurd situation of 100 persons voting for or against a union to represent employees in 50 jobs. A preponderant majority of the replacement employees could be overruled by the combined votes of those no longer on the job and a very small minority of the replacements.

The Matter of Columbia Pictures (16 L.R.R.M. 128; 17 L.R.R.M. 103) which was a pre-Taft-Hartley case, precipitated the exclusion of voting rights for enx nomic strikers. There, the replacements had their own majority union and since, pursuant to the then Board rule, both economic strikers and replacement employees could vote, the result was the election of the union which did not represent a single person on the employer's working force.

When an employee goes out on strike for economic reasons, he realizes, or should realize, that he is placing his job in jeopardy; that his job may be taken permanently by someone else. If this occurs, he loses any right to reinstatement. Yet he would be accorded a vote under the Kennedy-McGovern bill. The administration bill would similarly have this effect.

We oppose any change that would allow permanently replaced economic strikers to vote.

"Supervisor" definition

Proposals to amend the definition of "supervisor" as set forth in section 2(11) of the National Labor Relations Act, as amended, are made. Proponents contend that they are going to clarify this language. What they apparently overlook is that 11 years ago the Congress approved the present language which has been construed by the National Labor Relations Board, tested in the courts, and today is found in thousands of collective-bargaining agreements. Congress, at that time, after years of management-labor trouble over the status of supervisors, excluded all of them from the act's coverage.

Under the Kennedy-McGovern bill, the definition would be narrowed so that large numbers of employees who in fact exercise supervisory authority would be denied such status and be insulated from management. Finding the proper place to draw the line between management personnel and other employees was admittedly a difficult one. However, there is no evidence that the present language, as understood after 11 years of experience with it, is either an unfair definition or an unworkable one.

To modify the language as proposed at this point would cause confusion, set up brandnew standards for supervisory personnel, and interfere with the functions of management. We recommend that the proposed labor reform legislation make no change in definition of the term "supervisor."

CONCLUSION

The national chamber strongly favors legislation that will end racketeering and corruption in the management-labor field and assure democratic practices and control of unions by their members.

The Kennedy-McGovern bill fails to accomplish these objectives. It does nothing to relieve the pressures of secondary boycotts and organizational picketing to compel employers to deal with unions which are not the choice of their employees. It utterly fails to protect the rights of union members regarding internal union affairs because it does not prescribe minimum requirements for insertion in the constitutions and bylaws of labor organizations. In title VI, moreover, it proposes controversial changes in the Taft-Hartley Act that have nothing whatever to do with racketeering and corruption. Part of these proposals would be retrogressive as to the democratic rights of union members. The Kearns bill is much superior to the Kennedy-McGovern bill in these respects, but it, too, fails to provide the needed reforms in a full and adequate way. It also proposes some controversial amendments to the Taft-Hartley Act that have no proper place in a management-labor reform bill.

The proposed legislation that most completely and effectively would accomplish the needed reforms are the combined Barden bills. It guarantees democracy for union members by prescribing sound and complete minimum standards for union constitutions and bylaws. Its reporting requirements are sound. It protects wage earners from union racketeers and tyrants who would ignore democracy and force their dictates upon unwilling employees through use of the secondary boycott and organizational picketing.

The proposed legislation in the combined Barden bills points the way toward the reforms that are imperative if we are to ban the evils and abuses of which the McClellan committee hearings have made our country aware.

APPENDIX

DISCLOSURE OF CORPORATE AFFAIRS

Aside from voluntary disclosures by many leading corporations to their shareholders and through their trade associations to the general public, there are mandatory or quasi-mandatory reporting requirements under State and Federal laws or under contractural agreements.