BUS301 Study Guide

Unit 8: Labor Relations and Internal Employee Relations

8a. Define the concept of labor relations

  • Define labor relations.
  • Define labor unions.
  • Define collective bargaining.
  • Define union steward.
  • In addition to their focus on legislative changes, list four activities of a national union.
  • Describe three challenges the U.S. labor movement is experiencing.

Labor relations is how workers and managers of a company talk to, behave toward, and deal with each other. A labor union is when workers agree to band together to work toward common goals, such as to convince their employer to offer them better pay, benefits, or promotion rules.

Collective bargaining describes the negotiation process between a company and representatives of the union. Every local union has a union steward who represents union members' interests and is elected by their peers.

In 1935 the U.S. Congress passed the Wagner Act (the National Labor Relations Act), which changed how employers can respond to several aspects of unions.

According to the Wagner Act:

  1. Employers must allow freedom of association and organization and cannot interfere with, restrain, or coerce employees who form a union.
  2. Employers may not discriminate against employees who form or become part of a union or those who file charges against them.
  3. An employer must bargain collectively with union representation.

Review Labor Relations and Internal Employee RelationsWorking with Labor UnionsSuccessful Employee Communication10 Myths About Your Employee Manager RelationshipTrust in Manager-Employee Relationship, and Workplace Discrimination (Title VII) and the Supreme Court.


8b. Identify key laws and legislation with regard to labor relations that shape how human capital decisions should be made

  • Define the Railway Labor Act (RLA).
  • Define the Norris-LaGuardia Act (anti-injunction bill).
  • Define a yellow-dog contract.
  • Define the Wagner Act (National Labor Relations Act)
  • What is the responsibility of the National Relations Board (NLRB)?
  • Why was the Taft-Hartley Act introduced and passed in 1947?
  • What is a wildcat strike?
  • What is the purpose of the Landrum Griffin Act, also known as the Labor Management Reporting and Disclosure (LMRDA) Act?

The Railway Labor Act (RLA) was the first federal law guaranteeing workers' right to organize, join unions, and elect representatives without employer coercion or interference. Its goal was to ensure no disruption occurred in interstate commerce by encouraging employees and employers to use collective bargaining to apply alternate dispute resolution, arbitration, and mediation to resolve labor disputes. For major disputes over wages, benefits, and working conditions, the RLA created a three-member National Mediation Board, appointed by the president and confirmed by the Senate, with the power to mediate any dispute between carriers (railroads, airlines, and transportation companies) and their employees at the request of either party or upon the board's own motion.

The Norris-LaGuardia Act barred federal courts from issuing injunctions against nonviolent labor disputes and barred employers from interfering with workers joining a union. This act made yellow-dog contracts unenforceable in courts and established that employees were free to join unions without employer interference.

In 1935, the U.S. Congress passed the Wagner Act (the National Labor Relations Act), which changed how employers can respond to several aspects of unions. The National Labor Relations Board administers and handles complaints per the Wagner Act.

According to the Wagner Act:

  1. Employers must allow freedom of association and organization and cannot interfere with, restrain, or coerce employees who form a union.
  2. Employers may not discriminate against employees who form or become part of a union or file charges against them.
  3. An employer must bargain collectively with union representation.

In 1947, the U.S. Congress passed the Taft-Hartley Act to respond to an upsurge of worker strikes that took place during this time. While the Wagner Act oversaw unfair labor practices companies perpetrated, the Taft-Hartley act focused on unfair labor actions by unions. The Taft-Hartley Act outlawed strikes unions did not authorize, called wildcat strikes.

In 1959, the U.S. Congress passed the Landrum Griffin Act in response to charges of racketeering (crimes of coercion and extortion) and corruption by union leaders. The Act required unions to hold secret elections, submit their annual financial reports to the U.S. Department of Labor, and create standards governing a member's expulsion from a union.

Major Acts Regarding Unions at a Glance

Review Working with Labor Unions and American Labor History.


8c. Define the concept of internal employee relations

  • Define employee relations.
  • Explain the concepts of active listening and emotional intelligence.
  • Define and compare upward communication and downward communication.
  • Describe four types of communication styles (personality).
  • Describe three types of communicators. Which type is recommended for the workplace?
  • Explain how body language, which Americans may consider acceptable, may be offensive to someone who works in another country.
  • Describe two ways managers can promote and maintain trust in the workplace.
  • Describe two ways employees can promote and maintain trust in the workplace.
  • Compare task-oriented style managers to people-oriented style managers.
  • Compare participatory management style to a directing management style.
  • Describe an autocratic management style.
  • What is meant by a free-rein management style?
  • Describe the path goal theory for leadership.
  • Describe the situational leadership model.
  • Define the term ethics.
  • List four elements necessary to quantify an organization's ethics.
  • List three issues that deal with ethics in sales and marketing.
  • Describe ethical issues in production.
  • Describe ethical issues in finance.

The term employee relations is broad and encompasses virtually every aspect of employer-to-employee partnerships: from the hiring to exiting process. Many companies try to avoid the increased costs and operational inefficiencies they may experience when their employees unionize. Instead, companies usually benefit from paying careful attention to employee relations and creating programs that address pay, benefits, and other compensation issues.

Creating a productive working relationship requires opening avenues of communication, so employees and employers feel their concerns are being heard. Both sides should demonstrate they care about the other person, value what they have to say, and properly consider the other person's viewpoints.

Both sides should try to develop their active listening skills and emotional intelligence, which requires them to use their ability to empathize with others and try to understand what the other person means to convey beyond what they say with their spoken or written words.

Upward communication occurs when members of the lower levels of an organization (such as administration and support staff) communicate with the organization's upper echelons (such as management or leadership). These messages typically include recommendations for improvement, complaints about inefficiencies, and other grievances that need to be resolved.

Downward communication occurs from an organization's upper echelons to the lower levels, such as when a manager explains to an employee how to do a task, recommendations for improvement, or new rules and regulations that need to be followed.

Review these four primary workplace communication styles or personalities.

  1. Individuals who have an expresser communication style tend to express their interest and excitement, prefer challenges, and rely heavily on hunches and feelings.
  2. Individuals who have a driver communication style tend to be decisive and prefer to drive the conversation, so others adopt their ideas and recommendations.
  3. Individuals who have a relater communication style appreciate positive attention and want to be regarded warmly.
  4. Individuals who have an analytical communication style tend to ask a lot of questions and behave methodically. They do not like to be pressured to make decisions quickly and prefer to work in a structured environment.

Also, people tend to communicate based on three styles:

  1. A passive communicator tends to put the interests of others before their own.
  2. An aggressive communicator stands up for their own interests but may violate others' rights in the process.
  3. An assertive communicator respects and communicates the interests of others. This person tends to be direct, but others do not perceive them to be insulting or offensive. Many prefer to have an assertive communicator in the workplace because, while they exhibit self-esteem, they show respect for others and do not try to mislead them.

Body language describes non-verbal communication, such as facial expressions, eye contact, standing or sitting posture, and hand position. Body language can differ across cultures. For example, in some cultures, direct eye contact can be perceived to be aggressive. The OK sign (thumb and pointer finger put together to form a circle) conveys agreement in the United States but is considered offensive in Brazil, Germany, and Russia.

Employers can promote positive avenues of communication in several ways, such as by creating and maintaining an open-door policy, offering opportunities for respectful listening during meetings, and providing an anonymous tip or complaint hotline.

Establishing trust is the most important element of a successful manager-employee relationship. From a business perspective, trust is a necessary ingredient for creating and maintaining an environment that promotes continuous, on-time delivery and produces quality work that meets a client's business requirements. Employees are more apt to trust managers who promote fairness and consistency.

Employees can promote and maintain trust in the workplace by choosing tasks with the maximum chance of success and keeping their managers informed about their progress. Managers can promote and maintain trust by being honest about their goals and expectations, sharing information that will affect employees, and encouraging one-on-one conversations.

A manager with a task-oriented style is concerned about the technical aspects of the job. They want to ensure employees know what is expected and make sure they have the tools they need to complete the job.

A manager with a people-oriented style focuses on interpersonal relations and is most concerned about the employee's welfare. These managers tend to be friendly and trusting.

A manager with a participatory management style may focus on how their employees fit into the organization's bigger picture. They try to provide support and input where needed and focus on the individual's role as part of the project.

A manager with a directing management style is focused on getting the task done and may be an appropriate leader when deadlines are tight or in emergencies.

An autocratic manager is focused on completing a task. This individual uses their authority to decide, such as who will do what, how the project will proceed, and when deadlines need to be completed. Relationships are of secondary importance.

A free-rein manager gives employees total freedom to make decisions regarding how to complete assignments. This type of manager is removed from day-to-day activities but is typically available to help employees respond to any situation.

According to the path goal theory, a leader's role is to define goals and create pathways so employees can accomplish what they need to get done. If employees are satisfied with this leadership style, they will be motivated to complete these goals.

Ken Blanchard's situational leadership model explains how we can apply management styles to certain situations. A leader should determine the best management style and level of support each employee needs, based on their readiness and commitment.

Blanchard's Situational Leadership Model

Ethics is the branch of philosophy that involves systematizing, defending, and recommending what is considered right and wrong. We typically equate ethics with moral philosophy. Many believe that establishing an ethical corporate culture is the most critical component of creating an effective organization.

HRM should quantify four elements of workplace ethics:

  1. A written code of ethics and standards;
  2. Ethics training to executives, managers, and employees;
  3. Availability of advice on ethical situations, via lines of communication or offices that will provide guidance;
  4. Systems for confidential reporting.

Three ethical issues in sales and marketing include:

  1. Pricing practices;
  2. Promotional activities;
  3. Advertising practices.

Ethical issues in finance include fair trading practices, trading conditions, financial contracting, sales practices, consultancy services, tax payments, internal audits, external audits, and executive compensation.

Specific corporate ethical and legal abuses include: using creative accounting, earnings management, misleading financial analysis, insider trading, securities fraud, bribery, kickbacks, and facilitation payments.

Review What is Employee Relations?Communication Strategies, Trust in Manager-Employee RelationshipManagement StylesEthical Issues at an Organizational Level, and Building an Ethical Culture.


8d. Identify key laws and legislation with regard to internal employee relations that shape how human capital decisions should be made

  • Define wrongful termination.
  • What workplace laws are enforced by the Equal Employment Opportunity Commission (EEOC)?
  • What workplace laws are enforced by the U.S. Department of Labor?
  • Define affirmative action and how this policy impacts diversity in the workplace.

Businesses benefit from work contracts that are employment-at-will (EAW) because they provide their company with great freedom regarding employment. For example, an EAW contract allows companies to terminate an employee at any time without any reason, explanation, or warning. These contracts also allow employees to quit at any time for any reason – or no reason at all.

However, depending on the state where the business resides, the company that terminates an employee who has an EAW contract can run afoul of the law if any one of three conditions occurs:

  1. Public policy exception – if the termination violates their state's doctrine or statute;
  2. Implied contract exception – if the employer who terminates the employee had implied or indicated the person had job security; or
  3. Good faith and fair dealing exception – if the employer who terminates the employee treated them unfairly, such as firing them to avoid distributing commissions that were due, misleading them about promotions and pay increases, or taking extreme actions to try and force them to quit.

An employee could win a legal case against an employee for wrongful discharge (termination) if they can prove any one of these exceptions exists.

Title VII of the Civil Rights Act of 1964 makes it illegal for employers to discriminate against someone based on race, color, religion, national origin, or sex.

The Pregnancy Discrimination Act amended Title VII to make it illegal for employers to discriminate against a woman due to pregnancy, childbirth, or a medical condition related to pregnancy or childbirth.

The Equal Pay Act of 1963 (EPA) makes it illegal for employers to pay different wages to men and women if they perform equal work in the same workplace.

The Age Discrimination in Employment Act of 1967 (ADEA) makes it illegal for employers to discriminate against people aged 40 or older.

Title I of the American with Disabilities Act of 1990 (ADA) makes it illegal for employers to discriminate against a qualified person with a disability in the private sector and state and local governments.

Sections 102 and 103 of the Civil Rights Act of 1991 amend Title VII and the Americans with Disabilities Act to permit jury trials and compensatory and punitive damage awards in intentional discrimination cases.

Sections 501 and 505 of the Rehabilitation Act of 1973 make it illegal for the federal government to discriminate against a qualified person with a disability. The law also requires employers to reasonably accommodate the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee, unless doing so would impose an undue hardship on the operation of the employer's business.

The Genetic Information Nondiscrimination Act of 2008 (GINA) makes it illegal for employers to discriminate against employees or applicants because of genetic information.

Many of these rules and regulations are covered by other governmental agencies, including the U.S. Department of Labor, U.S. Department of Justice's Civil Rights Division, the U.S. Occupational Safety and Health Administration (OSHA), and the Social Security Administration.

Review Employee Rights, Laws Enforced by the EEOC, and Workplace Laws Not Enforced by the EEOC.


Unit 8 Vocabulary

  • Active listening
  • Affirmative action
  • Age Discrimination in Employment Act (ADEA)
  • Agency shop
  • American with Disabilities Act (ADA)
  • Arbitrator
  • Autocratic management style
  • Body language
  • Checkoff provision of a contract
  • Civil Rights Act
  • Closed shop
  • Collective bargaining
  • Communication style
  • Downward communication
  • Economic strike
  • Emotional intelligence
  • Employee relations
  • Equal Pay Act (EPA)
  • Ethics
  • Free-rein management style
  • Genetic Information Nondiscrimination Act (GINA)
  • Grievance procedure
  • Jurisdictional strikes
  • Labor Management Reporting and Disclosure Act (LMRDA)
  • Labor relations
  • Labor union
  • Landrum Griffin Act
  • Lockout
  • Mediator
  • Nonverbal language
  • Norris LaGuardia Act
  • Participatory management style
  • Passive-aggressive communicator
  • Path-goal theory of leadership
  • People-oriented style
  • Pregnancy Discrimination Act
  • Railway Labor Act
  • Rehabilitation Act
  • Right-to-work states
  • Situational leadership model
  • Taft-Hartley Act
  • Task-oriented style
  • Unfair labor practices strike
  • Union steward
  • Upward communication
  • U.S. Equal Employment Opportunity Commission (EEOC)
  • U.S. Department of Labor
  • Wagner Act (National Labor Relations Act)
  • Wildcat strike
  • Wrongful termination
  • Yellow dog contract