Labor’s Loophole

By not constituting themselves as labor unions, worker centers are able to avoid many legal requirements, including the responsibility to ensure majority support and the duty of fair representation contained in the NLRA. They also dodge the transparency and governance regulations established under the Labor-Management Reporting and Disclosure Act (LMRDA).

Labor Organizations under the National Labor Relations Act

The National Labor Relations Act (NLRA) sets the rules for union bargaining, union organizing, and union industrial actions (strikes and other work disruptions).

A recent article in the legal journal of the Federalist Society outlines the NLRA criteria defining a “labor organization,” and argues that workers centers should be classified as labor organizations under the NLRA. The authors write, “Section 2(5) of the NLRA defines ‘labor organization’ as ‘any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, in dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.’” If a group satisfies those criteria, it is a labor organization governed by the NLRA.

The National Labor Relations Board (NLRB) has advised that it will consider the notion of “dealing with” the critical question about worker centers. Naduris-Weissman explains the “dealing with” test:

NLRB case law has held that “dealing with” only occurs if there is a “bilateral mechanism” involving proposals from the labor organization that are considered by management, where this mechanism “entails a pattern or practice” over time, rather than “isolated instances in which the group makes ad hoc proposals to management.”

The Federalist Society authors argue that worker centers should generally qualify as labor organizations. Worker centers are certainly organizations—most are incorporated as 501(c) nonprofit corporations. In many centers, NLRA-regulated employees participate and even agitate on labor disputes. Those that meet the criteria should be subject to the regulations imposed on labor organizations. Thus far, the Board has not found that worker centers satisfy the “dealing with” test.

Labor Organizations under the Labor-Management Reporting and Disclosure Act

The Labor-Management Reporting and Disclosure Act (LMRDA) regulates how unions are operated and what financial information unions must disclose to their members and the federal government. It contains a different definition of a “labor organization” than the NLRA, and which the Federalist Society authors note is deliberately broader than the NLRA definition. They cite the LMRDA definition as:

Any organization engaged in an industry affecting commerce and includes any organization of any kind, any agency, or employee representation committee, group, association, or plan so engaged in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours, or other terms or conditions of employment, and any conference, general committee, joint or system board, or joint council so engaged which is subordinate to a national or international labor organization, other than a State or local central body.

The authors argue that worker centers are typically labor organizations under the LMRDA and therefore subject to its reporting requirements and internal governance standards.

Employee Rights Threatened by Worker Centers

What is a "Minority Union"?

"Alt Labor"


NLRA Restrictions

  • Cannot picket an employer for a period over thirty days with a “recognitional” or “organizational” goal unless the organization files a petition for representation.
  • Cannot picket or otherwise pressure a third-party group about working conditions that are not under its legal control (e.g. picketing a building owner for the working conditions of its subcontractor).
  • Cannot favor members in certain kinds of hiring halls.
  • Organization owes a duty to fairly represent any workers in bargaining unit (members or not) if the organization becomes the exclusive bargaining representative.
  • Cannot receive funds or loans from employers.

LMRDA Restrictions

  • Must file detailed annual financial reports with Department of Labor as well as constitution and bylaws.
  • Officers have fiduciary duty to members over organization’s money and property.
  • Must guarantee certain rights of members, including the ability to run for office and participate in internal affairs, to obtain certain information about the labor organization, and to receive due process before any kind of discipline by the labor organization.
  • Officers have fiduciary duty to members over organization’s money and property.
  • Bonding insurance requirements for organization employees.
  • Must hold elections on a regular schedule.

* Source: Eli Naduris-Weissman, Worker Center Strategy Guide on Traditional Labor Law.

A former legal fellow for the Service Employees International Union (SEIU), Eli Naduris-Weissman, outlines the regulations that worker centers avoid by not being labor unions.