Benefits to being an employee of a company

Labor Relations

What do you believe are the benefits to being an employee of a company vs. A contractor? Which would you prefer to be? Why?

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The benefits of being an employee include the right to self-organization, to bargain collectively, or form a labor organization (Carrell & Heavrin, 2007). Employees have pre-determined work days and duties under the leadership and direction of the employer and are not required to incur costs or make investments in the work they produce. Typically, only general education and experience is required, with some employers paying for additional training and specializations. All income, Social Security and Medicare taxes that fall under the Federal Insurance Contributions Act (FICA) are handled by the employer (Strawson, 2003) For most employees, there are also employer contributions made to pensions and other retirement plans, health and disability insurance for self and family members, and unemployment compensation after a lay off or termination. Worker’s compensation is available in the event of a workplace injury and employees have the protection of workplace safety and anti-discrimination laws. There are also federal and state wage and hour laws.

An independent contractor sells professional services to the highest bidder. He or she has the flexibility to set his or her own hours and schedule and work independently for as many clients or companies as desired. The independent contractor can determine how to approach projects and has typically acquired very specialized skills, education or experience in an area (Strawson, 2003). All costs associated with performing the job are paid out of pocket, although independent contractors are generally entitled to deduct all reasonable business expenses from their reportable annual income. Working as an independent contractor requires paying self-employment taxes and being diligent with retirement planning and saving for emergencies or times of slow business. Unlike an employee, there are no set provisions for health insurances, workers or unemployment compensation, or overtime. The independent contractor is not protected by workplace safety and employment anti-discrimination laws and is not entitled to join or form a union.

In a tough economy and with soaring healthcare costs, I prefer the idea of being a benefits-eligible employee with protections under the law. As I continue in my career, I might be open to the flexibility of working as an independent contractor or consultant. The creative freedom and autonomy seem appealing, but only after achieving the experience and specialized skills necessary to build a solid client base. That would be critical to establishing a steady income and successful business.


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Strawson, A. (2003). Employee or independent contractor? CMA Management, 77(6), 45.

2. Compare and contrast the factors that might contribute to employee’s voting to decertify a union.

Unions only truly benefit workers when they are able to protect the wages of their members. When jobs become scarce, union workers are more appreciative of the employment protection clauses of collective bargaining agreements. Unions typically decertify when, for the individual members, the cost of membership is greater than its benefits. This is especially seen during times of recession, when unions are unable to protect employment security and members experience long layoffs (Carrell & Heavrin, 2007). Other factors that might contribute to a decertification are unionized employers developing working environments where employees question the need for continued union representation (Lewis, 1986). In addition, discontentment over two-tier wage settlements may play a role. Newly-hired, lower paid workers sometimes resent being placed in a second-class status. They may blame their union for a poor settlement.

Failures in leadership, high dues, or lack of initiative on the part of union leaders may be other reasons worker’s vote to decertify. Aggressive antiunion campaigns or a move to a traditionally nonunion geographic area can also lead to a decertification. (Carrell & Heavrin, 2007). If individual members of the union are finding they are still subject to adverse job actions, harassment by management or workplace discrimination they will be much less likely to support a union (Lewis, 1986). In addition, younger generations tend to view unions as outdated with aging leaders (Carrell & Heavrin, 2007). Unions today appear to have a declining public image.


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Jarrett, B. (2011). Decertification gives leverage, carries risk. USA Today.

Lewis, R. (1986). Union Decertification: A New Look at Management’s Role. Labor Law Journal, 37(2), 115-122.

3. Do you believe employee elections regulated by the NLRB are successful? Why or why not? Please explain your answer.

The National Labor Relations Act allows employees to decertify their union through a National Labor Relations Board conducted election that requires a petition signed by 30% of union members and an election with a majority vote to decertify. These are not always successful because a union may file an unfair labor charge against an employer where it is unsure it can win an election. These types of blocking charges delay the processing of the final petition in the hope that, in time, the union can reestablish its strength and win a majority vote. Another questionable issue has been the unnecessary and lengthy election process. When an election is contested, workers have waited an average of 124 days. Some elections have been delayed for more than a decade (Schmidt, 2011).

The National Labor Relations Board recently decided that the time leading up to union elections should be dramatically shortened. The period before elections has been reduced from a median time of 37 days to as little as ten days from the filing of an election petition. In addition, pre-election hearings are now set for 7 days after the petition is filed and require the employer to respond within this period to a pre-hearing questionnaire raising any legal issues or waive his right to do so (National Labor Relations Board [NLRB], 2011). These changes support unions because employers have so little time to respond. Other efforts to improve the effectiveness of the election process include allowing e-mail and other forms of electronic communication among the parties, faster submission of voter eligibility lists, and a single, post-election appeals process.


NLRB Okays ‘Quickie’ Union Elections. (2011). Human Events, 67(23), 4.

Schmidt, K. (2011) NLRB Election Procedure Broken. USA Today Magazine, 140(2795), 13-14.

4. Discuss the difference between an employer’s support of and domination of a union.

Employees have the right to bargain collectively with their employer and freely choose a bargaining agent. Supportive employers do not interfere with the selection of a bargaining agent. They also do not resort to intimidation, harassment, coercion or the firing of employees for exercising their right to form unions. Support or assistance can be negative or positive, however. For example, an employer can give aid to one of two competing unions which violates support and assistance provisions (Carrell & Heavrin, 2007).

Employers can exert unfair domination over a union by means of control or all out union avoidance. This may include undermining the right to participate by intimidating or terminating union organizers and supporters. This can also mean direct interference by enforcing broad “no solicitation” rules against union organizing activity. Other domination tactics include penalizing or excluding employees from the workplace who belong to or support the idea of collective representation or questioning employees about their union sympathies in an attempt to hinder the formation of a union.

Employers control key features of the workplace like scheduling, wage rates, layoffs, work assignments and promotions and terminations. Some resort to domination tactics such as manipulating working conditions, employment benefits and job satisfaction (National Labor Relations Board [NLRB], 2005). They can undermine employees’ right to collective representation and to choose a bargaining agent of their choice or destabilize or neutralize a bargaining agent that has already been chosen. They may also promise special benefits to employees to discourage their union support.


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

NLRB (2005b) “The National Labor Relations Board and You: Unfair Labor Practices” Retrieved May 16, 2012 from

5. Do you think negotiations in the public sector are more or less challenging than negotiations in the private sector? Why?

Public sector negotiations face more challenges because individual states are not covered by the National Labor Relations Act, and therefore, do not have the same rights as those in the private sector. Their rights depend on the state where they are located. Whether or not a public union has the right to strike, for example, depends on what has been negotiated with state governments, and the state laws that apply. For instance, in many states, teachers, police officers and fire fighters do not have the right to strike because they provide essential services that the private sector is unable to unwilling to offer. Even when they do strike, employers can threaten to fire them if they do not return to work (Carrell & Heavrin, 2007). For many private sector unions, the right to strike is protected by federal law.

Public sector unions can be very powerful politically because they have the ability to bargain collectively with government. However, they may be limited to negotiating specific items (Disalvo, 2010). For example, they may not be able to negotiate on pensions or health care benefits, if those are uniform for all state employees. Private sector unions’ contracts are negotiated strictly between the union and employers. Essentially, there are no limits on the topics that can be discussed, unless the union and the employers agree to exclude them. This means more interests can be negotiated.


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Disalvo, D. (2010). The Trouble with Public Sector Unions. National Affairs. Issue 5 Retrieved May 15, 2012 from

6. The right to strike is one of the rights made available to employees expressly provided by the National Labor Relations Act. Do you believe that striking against a company is a good way to promote collective bargaining? Why or why not?

During the 1940s to the 1970s, workers made significant gains in wages, pensions, and employer-paid health care through aggressive collective bargaining backed by powerful strikes. Unions who successfully halted production through a labor stoppage were able to serve a crippling economic blow to employers (Carrell & Heavrin, 2007). While some victories are still won using this method, collective negotiations are often made more hostile for all parties and lead to increased feelings of animosity. Striking can also spur reactions of employer repression. In a 1998 survey conducted by Cornell University’s Kate Bronfenbrenner, “employers threatened to close the plant in 57% of elections, discharged workers in 34%, and threatened to cut wages and benefits in 47% of elections.”

Since the legal protection of the strike weapon was first introduced, it has been so significantly limited by legal and practical barriers that strikes are rarely used today. The range of penalties that might be imposed on strikers and unions by employers, courts, and government has been broad. Thus, strikes prove to be a costly and risky endeavor. Major strikes have been responded to by martial law, criminal indictments, fines, and military action. Some strikers have been fired, and unions have been fined and held liable for damages. Union leaders have been arrested, jailed, and convicted of crimes for encouraging violence, sometimes with very little evidence of personal misconduct (Getman, 2003). However, without an effective right to strike, collective bargaining often becomes ineffectual. As pointed out by Carrell & Heavrin, “Economic weapons such as a strike are necessary to the collective bargaining process.”

Unions that resort to strike methods may face internal challenges as well. They must maintain solidarity and high morale among strikers. The strike will fail if disgruntled unionists return to work out of financial necessity or before a contract settlement is reached. Employers can also undermine union solidarity by offering a better deal to some workers than others. All of this hinders collective bargaining efforts. Today, in place of the full-scale strike, many unions have resorted to other tactics such as the corporate campaign and the one-day publicity strike.


Bronfenbrenner, K. (et. al). (1998). Organizing to Win: New Research on Union Strategies. Edited by Kate Bronfenbrenner, Sheldon Friedman, Richard W. Hurd, Rudolph Oswald, and Ronald L. Seeber. Ithaca: Cornell University Press.

Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Julius, G. (2003), The National Labor Relations Act: What Went Wrong; Can We Fix It? Retrieved May 15, 2012 from Boston College Law Review 125

7. Distinguish among mandatory, permissive, and illegal bargaining subjects. Give examples of each.

Mandatory bargaining subjects are those that directly impact wages, hours or working conditions. The Supreme Court refined the definition of mandatory bargaining subjects as those that “vitally affect” employees and must be negotiated in good faith (Carrell & Heavrin, 2007). It is not a requirement that parties reach an agreement, just that both parties have to engage in the bargaining process if it touches one of these vital areas. Paid training, work schedules, stock options, overtime, lunch breaks and paid time off are all examples of this type of bargaining subject.

Permissive subjects are those which parties may bargain over, but they are deemed non-mandatory and therefore not required. Both parties must agree for permissive subjects to be bargained (Carrell & Heavrin, 2007). If the employer brings an item such as retirement benefits, definitions of the bargaining unit itself or internal union matters forward, the union may engage in bargaining, but is in no way obligated to do so. The union does not have to make any concession or come to any agreement over a permissive issue. It may agree to discuss the matter, engage in full bargaining and reach agreement on the issue, or decline to talk about it all together, making it null and void. There are rules that must be adhered to in regards to permissive subjects. A strike would be an unprotected activity under law. Similarly, an employer carrying out a unilateral implementation would be considered illegal.

Finally, illegal subjects of bargaining are items that cannot be bargained over legally by either party. If an issue is deemed to violate a law it cannot be entered into a legal contract, despite the fact that both parties may agree. One example is discrimination against a legally recognized group of people.


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

8. Describe how interest-based bargaining is different from other techniques.

Interest-based bargaining is a newer bargaining method. It may offer parties more flexibility than traditional bargaining, not locking them into predetermined issues and bargaining positions. It takes a more collaborative approach that begins with understanding the problem and identifying the interests of both sides. In many instances, both sides find that their interests are mutual and they are taking differing approaches to addressing the same problem (Carrell & Heavrin, 2007). The goal is to find the middle-ground or “win-win” to satisfy a particular interest instead of ending negotiations with winners and losers. “Interest-based bargaining assumes that mutual gain is possible, that solutions which satisfy mutual interests are more durable, and that the parties should help each other achieve a positive result” (Estes, 1997).

In interest-based bargaining, the sharing of relevant information is critical for effective solutions; issues outweigh personalities; and the present and future outweigh the past (Carrell & Heavrin, 2007). When implemented effectively, this method can be successful, but should not be viewed as an across the board replacement for positional negotiating. However, the openness of this bargaining technique can decrease suspicion and distrust and improve relationships during the bargaining process. A highly skilled mediator or consulting group is often brought in to be unbiased assistants in reaching agreements on bargaining ground rules, issues to be negotiated and contingency plans for a transition to traditional bargaining if for some reason the process breaks down (Estes, 1997).


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Estes, M. (1997). Adversaries find common ground. Workforce, 76(3), 97.

9. Why do employees today place such a high priority on paid time off? Do you feel that companies are fair in their offerings for vacation/personal/sick time? Why or why not?

Paid time off (PTO) is an expectation of many employees today. Plans allow employees to accrue days off in a single account and spend them as they desire. Workers who are healthy and who have healthy families love PTOs because they can take some of the days that were formerly classified as sick days as vacation. Where unused sick days under a traditional plan are not typically carried over year to year, unused PTO days usually can be, even if subject to a cap on the total number of days accrued. Therefore, if an employee budgets for five sick days and only uses two this year, the remaining three would accrue for next year, and he would be free to use them as he sees fit. In addition, in most states, paid time off, like vacation time, has to be paid out when the employee leaves the employer (DiNovella, 2009). This is another plus for employees.

Many employers fold PTO into their disability benefits, allowing workers to carry over a sufficient number of days to get through the deductible period before short-term disability coverage begins (Carrell & Heavrin, 2007).. But examined another way, a month-long illness could ruin an employee’s plan for a two-week vacation by forcing him or her to use eight or more PTO days for sick time before short-term disability benefits can take effect. Since it is unclear how much time off will be required for sick days, school snow days, etc., it can be almost impossible to plan ahead. Some employers may also use the conversion to a PTO plan to charge the employee’s time-off account for personal appointments such as doctor visits.

Employers converting a traditional time-off plan to a PTO plan could also potentially deny employees the full sum of the previous accrual rates for vacation, personal and sick days. They limit the high cost of time off by shaving some days off the grand total. For example, a worker who received 15 vacation days, three personal days and six sick days under a traditional plan might receive only 20 paid days off under a PTO plan to cover all these contingencies (DiNovella, 2009).


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

DiNovella, E. (2009). Off on Vacation. Progressive, 73(7), 24-26.

10. Explain the difference between profit-sharing plans and COLAs. Do you believe profit-sharing plans or COLAs are more beneficial to employees? Defend your answer.

A profit-sharing plan is an IRA-based account in which an employer creates and contributes to retirement savings accounts for employees. It must comply with applicable Internal Revenue codes and the Department of Labor’s Employee Retirement Income Security Act of 1974 (ERISA), which is the federal law that sets minimum standards for operating voluntarily established tax qualified retirement plans. This protects individuals who participate in the plans. Employees do not make contributions to a profit sharing plan; rather, each employee receives a percentage of those profits based on the company’s earnings. A calculation called the comp-to-comp method can be used to help ensure that the profit sharing plan does not discriminate in favor of highly compensated employees (Morris, 2011).

Cost-of-Living-Adjustments, or COLAs, are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers. COLAs are closely tied to rates of inflation and deflation (Carrell & Heavrin, 2007). In estimating such costs, food, clothing, rent, fuel, lighting, and furnishings as well as expenses for communication, education, recreation, transportation, and medical services are generally included. Officials compare inflation in the third quarter of each year with the same prior-year period. If there is no increase, or if the rounded increase is zero, there is no COLA.

I believe that profit sharing plans are a great way to give employees a sense of ownership in the company and motivate employees to work hard to ensure there will be annual profits in the organization to share. Workers’ goals become aligned with the company’s goals, which are to maximize profits. However, given the current state of the economy and inflation rates, COLAs may prove to be a bit more beneficial to employees. Salary is not based on work ethic and personal contributions, so working hard when others don’t will not necessarily mean lesser pay for more work. Regardless of profits, COLAs keep the salary levels in step with the highs and lows of the economy. If a company is failing or in the red, profit sharing proves to be of less benefit to workers.


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Morris, H. (2011). Cost of Living Adjustment Goes Missing from Front Pages. Editor & Publisher, 144(12), 58.

11. During the past decade, employers and unions have moved away from the concept of Cost-of-Living Adjustments (COLAs) to Profit Sharing and Incentive style plans. Differentiate between the different styles of plans and defend or argue against the move to the new style plans.

The Cost-of-Living Adjustment (COLA) is an adjustment of wages or benefits designed to offset changes in the cost of living. It usually varies at a percentage at or near the average rate of inflation. In recent years, employers and labor unions have traded cost-of-living adjustment clauses for other forms of compensation. Some explanations for decreases in COLA coverage include reduced inflationary uncertainty than in years past, diminished union power, and structural shifts in the economy away from manufacturing (Heywood, 2005). The federal government in recent years has also tried to reduce COLAs in social security, but has met with tough resistance.

Profit sharing causes a worker’s earnings to depend on the productivity of his or her coworkers, and this dependence creates an incentive for the worker to increase the productivity of those coworkers. The move to more incentive-based plans has presented challenges. On one hand, it fosters cooperation among employees who clearly see how their collective efforts benefit the entire organization. However, individual workers, especially those who are less skilled, are very unlikely to change the course of a company’s profits, since it depends on a collective effort that goes far beyond that worker (Ragan et al., 2000). Their motivation may not be as high as other employees. Ultimately, this may result in fewer profits for the organization, which in turn equals fewer rewards for every employee. This can lead to peer-pressure and mutual monitoring among workers which often has negative effect on workplace harmony and morale. In addition, profit sharing benefits employees best in solid, high performing organizations. Even then, it is often set at the discretion of executive management and may be stated as an “up to” amount of percentage.


Heywood, J.S., Jirjahn, U., & Tsertsvadze, G. (2005). Getting along with Colleagues — Does Profit Sharing Help or Hurt?. Kyklos, 58(4), 557-573.

Ragan, James F., Jr., and Bernt Bratsberg. (2000). Un-COLA: Why Have Cost-of-Living Clauses Disappeared from Union Contracts and Will They Return? Southern Economic Journal 67, no. 2., 304 — 324.

12. Which negotiated benefits are most important to you? Draw up an ideal benefits package. Which items would you include? List in order of importance.

1. Medical/Dental/Vision Insurance (Any health related coverage for self and family).

2. Life insurance (Very important as I add loved ones to my life).

3. Disability Insurance (Both short- and long-term for the unexpected).

4. PTO or Sick/Personal (Negotiated for max available).

5. Holidays (Set and floating holidays preferred).

6. Tuition Assistance and Reimbursement (For self and dependents).

7. Wellness Programs/Reduced Health Club Membership

8. Flexible Benefits & Section 125 plans (Pre-tax savings for special expenses).

9. Profit-Sharing (Only if company is profitable).

10. Stock-Options or ESOPs (If company is relatively profitable)

11. Employee Assistance Programs (For times of stress or life changes).

12. Parking/Commuting Cost Reimbursements.

13. Expense Reimbursement (Particularly for work-related travel).

14. Business Travel Insurance

15. Child Care

16. Accidental Death Insurance (Excellent if offered, but would not buy additional coverage).

17. Telecommuting (Alternate work sites or working from home on occasion, ideally with employer providing office equipment).


Carrell, M.R., & Heavrin, C. (2007). Labor relations and collective bargaining: Cases, practice, and law (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Fleck, L.M. (2011). Just Caring: Defining a Basic Benefit Package. Journal of Medicine & Philosophy, 36(6), 589-611

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