Japanese-Style Labor Relations: Agenda Items Under the "New Labor Relations"

Labor Law Issues Facing Multinational and Japanese Companies Operating in the United States and United States Companies Using Japanese-Style Labor Relations: Agenda Items Under the "New Labor Relations" by Ronald C. Brown" 1. INTRODUCTION ....................................... 262 II. JAPANESE AND MULTINATIONAL COMPANIES OPERATING IN THE UNITED STATES ...................................... 264 A. Nature and Type of Investments and Relationship to Trade D eficit ......................................... 264 B. Emerging Styles of Management and Labor Relations: Understanding the "New Labor Relations" .............. 267 1. Dominant Characteristics of Japanese Personnel Management Practices ......................... 267 a. Collectivism ............................ 268 b. Job Flexibility .......................... 270 c. Conflict Avoidance ....................... 271 d. The "Three Pillars" of Japanese Industrial Relations .............................. 272 2. Adjustments of Managerial and Employment Practices of Japanese Companies in the United States ....... 276 3. Resulting Adaptations by United States and Japanese- United States Joint Venture Companies ........... 278 *Copyright is retained by the author. This article originally appeared in a more comprehensive form under the same title for use in a United States-Japan labor law conference held March 1986 in Honolulu, Hawaii. "Professor of Law, William S. Richardson School of Law, University of Hawaii. B.S. 1965, University of Toledo; J.D. 1968, University of Toledo; LL.M. 1970, University of Michigan. University of Hawaii Law Review / Vol. 8:261 III. APPLICABILITY OF UNITED STATES LABOR LAWS TO JAPANESE AND MULTINATIONAL COMPANIES UNDER FCN TREATIES .......... 280 A. Determining "Corporate Nationality" of the Subsidiary . 281 B. Liability of Parent and Availability of Defenses ......... 285 IV. DEVELOPING LEGAL AND PRACTICAL EMPLOYMENT LAW ISSUES .. 288 A. Equal Employment Opportunity .................... 288 1. Developing Agenda Items ...................... 288 2. Determining Violations ........................ 291 3. Availability of Defenses ........................ 299 a. BFOQ Defense ......................... 299 b. Business Necessity Defense ................ 303 B. Labor-Management Relations ....................... 305 1. Developing Agenda Items: Japan in the United States 305 2. Current Legal Implications of Replacing "Conflict" with "Cooperation" in the Employment Relationship. 308 a. "Supervisors" and "Managerial" Employees ... 308 b. Joint Employer-Employee "Committees...... 310 (1) Labor Organization ................. 312 (2) Employer Domination, Interference, or Support .......................... 313 (3) By-Passing the Exclusive Representative . 316 c. Unionization and Bargaining Obligations ..... 317 (1) Unionization ...................... 317 (2) Bargaining Obligations .............. 319 d. Dispute Settlement ...................... 321 C. W rongful Discharge .............................. 322 1. United States-Japan Comparisons ................ 323 2. Current Legal Developments .................... 325 a. Contract Theories ........................ 326 b. Tort Theories ........................... 328 c. Rem edies .............................. 330 d. D efenses ............................... 330 V . CONCLUSION ........................................ 336 I. INTRODUCTION One of the largest obstacles Japanese companies face when they advance to a foreign market and set up their branches is that of personnel management. There is a remarkable difference between the image of labor and current labor practices in the United States and that in Japan. As a result, therefore, labor practices upon which the so-called Japanese-style management depends cannot be easily applied ar they are without problems. 1986 / NEW LABOR RELATIONS Therefore, Japanese companies have to select the essential elements of Japa- nese-style management which they want to maintain, transplant them onto American soil, and aim to adapt them to the local situation." Labor relations in the United States have undergone dramatic changes in recent years with the emphasis on efficiency and competitiveness, the establish- ment of more non-unionized work places, the phenomenon of declining union membership, and the emergence of alternative forms to collective bargaining.' These changes have been fueled by the increased presence of foreign competitors whose less expensive imports may displace not only American products but also American businesses and their workers. Conversely, these foreign businesses, particularly Japanese companies, are creating new job opportunities for Ameri- can workers by their direct investments in the United States. Japanese companies also are attempting to implement many of their traditional management and industrial relations policies in their United States ventures. These events present challenges of great significance to both American and Japanese companies. American industries must meet foreign competition by changing traditional management and labor relations approaches' or face the possibility of extinction or, at least, a lesser share of the market. Japanese companies operating in the United States must adapt their traditional management and labor relations practices to comply with applicable United States labor laws. The Japanese to date, however, have been reluctant to change the essential elements of such practices. This article identifies the legal issues generated as a result of attempts by American and Japanese companies to adjust to changing management and labor relations in the United States. Japanese companies often discover to their dis- may that American unions perceive their management styles emphasizing employee cooperation and loyalty as anti-union and women view their use of male nationals in many key managerial positions as exclusionary and discriminatory. 1 Y. Kuwahara, Foreign Investment and Labor-Problems Involved in Japan's Direct Invest- ment in the United States 15 (Aug. 1985) (unpublished manuscript available with author) [here- inafter cited as Japan's Direct Investment] (emphasis added). ' See Farber, The Extent of Unionization in the United States, in CHALLENGE AND CHOICES FACING AMERICAN LABOR 15, 16-22 (T. Kochan ed. 1985). Secretary of Labor William Brock recently emphasized the increasingly dose relationship between international trade and domestic labor policies and the need to seek appropriate accommodations: "Our ability to compete in world markets suffers when confrontation rather than cooperation becomes the preferred approach to labor-management relations. Fortunately, the trend now seems to be going in the other direc- tion." DAILY LAB. REP. (BNA), Oct. 23, 1985, at F-3. ' The automobile industry's labor agreements at General Motors-Toyota and General Motors' new Saturn Project are recent examples of changing labor and management relations in the United States. These approaches are of general use outside that industry as well. See infra text accompanying notes 83-91. University of Hawaii Law Review / Vol. 8:261 When Japanese companies resort reluctantly to American-style dismissals, they find that resulting damages under an unjust dismissal lawsuit may cause liability unimaginable under the Japanese legal system. These not atypical situations, combined with traditional Japanese reluctance to seek early legal advice from their attorneys, create legal issues that more often should be resolved by accom- modation of Japanese management and labor practices with applicable United States labor law requirements rather than by confrontational litigation.' Section II, by way of background, examines the nature and type of Japanese business ventures in the United States and the emerging Japanese styles of managing the operations and labor relations of both Japanese and American companies, and the resulting adaptations of these practices by United States companies. In Section III this article will focus on the applicability of American labor laws to Japanese and multinational companies. Section IV will identify and analyze in some detail the many emerging substantive labor law issues faced by Japanese companies operating in the United States and by American companies using Japanese-style labor relations. These issues indude equal employment opportunity laws, especially Title VII of the Civil Rights Act of 1964, the National Labor Relations Act, and developing case law dealing with unjust termination. II. JAPANESE AND MULTINATIONAL COMPANIES OPERATING IN THE UNITED STATES A. Nature and Type of Investments and Relationship to Trade Deficit Japan and the United States would have much to lose if the amount of Japanese direct investment in the United States or the amount of trade between Japan and the United States were substantially curtailed by legislative prohibi- tions. While net capital inflows of all foreign direct investment into the United States totalled nearly $10 billion in 1983,8 about $2 to $2.5 billion is esti- mated to have been invested by Japanese companies alone.6 United States trade " Although commentators have written about various aspects of this subject area, none has sought to integrate comprehensively the "new industrial relations" practices of Japanese and American companies with United States labor laws by identifying and discussing the emerging legal "agenda items." 5 INT'L TRADE ADMIN., U.S. DEP'T OF COMMERCE, INTERNATIONAL ECONOMIC INDICATORS 55 (June 1984). * Japan's Direct Investment, supra note 1, at 2 (estimate

Load more