Can an Employee Resource Group (ERG) Lead to Labor Issues? - American Society of Employers - Anthony Kaylin

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Can an Employee Resource Group (ERG) Lead to Labor Issues?

employee resources groups or ERGsAffinity Groups, Employee Resource Groups (ERGs), and the like are hallmarks of diversity programs.  Specifically, ERGs could consist of a variety of identities from African American, Hispanic, disabled, women, LGBTQ, and more.  90% of Fortune 500 companies have been reported to have at least one.  Those who participate in ERGs believe they help move the needle with equality and inclusion in their workplaces.  

Offering such groups brings a number of attractive benefits for employers, said Marian Zapata-Rossa, a partner at management-side Snell & Wilmer LLP whose practice includes advising employers on operating affinity groups.  "They're great to promote diversity within organizations, to raise cultural awareness, inclusivity. They're really helpful for the purpose of recruiting and attracting top talent among diverse pools. There's such a tremendous value in these groups," Zapata-Rossa said.

Yet, although no litigation by the NLRB has arisen on this, ERGS could run afoul of the National Labor Relations Act (NLRA) which makes it an unfair labor practice for employers to run "labor organizations."  Specifically, section 8(a)(2) of the NLRA makes it an unfair labor practice for an employer “to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it.” Section 2(5) defines a “labor organization” as “any organization of any kind . . . in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances . . . or conditions of work.”

An NLRB case in 1992 called Electromation Inc. raised this issue.  Electromation looked at whether the company violated the NLRA by launching and maintaining joint management-employee groups called "action committees" to resolve workers' concerns with certain policies. The Board held that  when ERGs discuss employment conditions as opposed to diversity topics, it could be considered small pods of "unions" or employee concerted efforts.

More recently, the NLRB ruled that T-Mobile violated the Electromation case by setting up a worker feedback program while in the course of a union drive.

So how would the creation of the ERG violate the NLRB?  First, any ERG formed generally has to be “officially” recognized by the organization.  The employer would provide meeting space, navigate pay and time-off issues for participating, and possibly provide funding for the ERGs to operate and host events.

Second, do ERGs “deal with” employers in a manner sufficient to qualify as “labor organizations?” Many ERGs bring up issues of employment and could be a “safe” place to discuss workplace issues the members are experiencing.   From these internal discussions, ERGs would bring proposals to the employer, and they would engage in a bilateral exchange of proposals “coupled with real or apparent consideration from management.”  For example, some ERGs have found that they have made internal changes to the management policies from gender equality to parental leave to vacation benefits.  The ERG would rise to the level of a labor organization.

However, if the ERG functions only as a social and networking space, then it would not rise to the level of a “labor organization.”

The lines are starting to blue and could now end up in the NLRB’s radar because of white collar organizing. 

Diversity and HR professionals shouldn’t ignore this possible consequence of forming ERGs even though it hasn’t been in the sights of the NLRB.  "It's something they should certainly be cognizant of, because there probably are ways to structure these committees to get around the risk and still have them," said Daniel Johns, a Cozen O'Connor member who advises employers on labor issues. "The employer creates it, the employer staffs the committee, the employer then essentially says, 'Hey do you want this,' [and the workers say], 'No we want this,' … then it looks like you created a union to bargain over terms and conditions of employment," Johns said.


Source:  Law360 1/13/23, FairyGodBoss 7/27/22, Onlabor 3/22/20, Forbes 11/13/17


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