The American labor movement, encouraged by the protections guaranteed under Section 7(a) of the National Industrial Recovery Act (NIRA), undertook a wave of organizing not seen in almost two decades.
[3] Although the NLB's mandate was vague, its procedures undefined and its enforcement powers nonexistent, Sen. Wagner—who had been one of the primary authors of the NIRA—was determined to make the board work along the self-policing lines previously announced by Gen. Johnson.
Holding representation elections, much less establishing bargaining units or determining majority status, was not even considered by the Board.
Unions responded by holding strikes, demanding to be recognized as the organization of the workers' choosing and immediate negotiations.
[5] The NLB quickly settled on a strategy of suggesting elections as a way of determining majority status and breaking a collective bargaining deadlock.
The NLB's opportunity came when the Full-Fashioned Hosiery Workers Union launched an organizing drive in the summer of 1933 in the silk stocking mills around Reading, Pennsylvania.
Known as the "Reading Formula," the settlement consisted of four parts: (1) That the union call off the strike; (2) That all employees be rehired immediately, without retaliation; (3) That the NLB hold elections in which the workers would vote by secret ballot for their own representatives, and that both parties would negotiate a collective bargaining agreement covering wages, hours and working conditions; and (4) That in the event of any disagreement on any matter, the parties would submit the dispute to the NLB for binding arbitration.
The NLB relied on enforcement of its orders through the NRA (which only had the power to remove so-called Blue Eagle industrial code approval from a manufacturer) or prosecution by the U.S. Department of Justice.
In July 1933, the Weirton Steel Company held a private election rather than submit to one ran and monitored by the NLB.
[8] To strengthen the NLB's powers vis-a-vis employers, President Roosevelt issued Executive Order 6511 on December 16, 1933.
The order also authorized the Board to "settle by mediation, conciliation or arbitration all controversies between employers and employees which tend to impede the purpose of the National Industrial Recovery Act.
The order gave the Board explicit power to authorize, upon a showing by a substantial number of employees, representational elections to determine majority status.
The order appeared to give the winning organization exclusive representation for employees in the bargaining unit, but this interpretation was widely contested.
[10] Worse, Roosevelt made the off-hand public comment that the government was seeking to check the growth of company unions.
Denver Tramway was a major turning point in American labor law because it established the rule of exclusive representation.
On March 25, 1934, Roosevelt announced a settlement that provided for proportional, rather than exclusive, representation—thus giving the company unions equal footing with the Auto Workers.
[14] Senator Wagner, convinced by the fall of 1933 that the NLB needed replacement, began work on legislation which would establish a new statutory regime for labor relations in the United States.
Congress needed to adjourn and return home to campaign for the fall elections, and the bill promised a lengthy fight.
The resolution authorized the president to create one or more new labor boards to enforce Section 7(a) by conducting investigations, subpoenaing evidence and witnesses, holding elections and issuing orders.
The Board's decision in Denver Tramway laid the basis as well for the NLRB's concept of mature collective bargaining relations.
Under this doctrine, the NLRB has emphasized and de-emphasized various aspects of the NLRA over time, weighing different parts of the law more heavily depending on the longevity of the collective bargaining relationship between the employer and union.
Other Board decisions, such as Bee Bus Line Company (decided May 10, 1934) and Eagle Rubber Company (decided May 17, 1934), laid down the stipulation that a properly conducted, government-monitored representational election required good-faith bargaining, and that collective bargaining must precede the decision to strike.
The doctrines laid down by the NLB continue to reverberate in 2006, as the NLRB wrestles with the implications of card check and voluntary recognition.