While investment managers tend to exercise most voting rights in corporations, bought with pension, life insurance and mutual fund money, employees also exercise voice through collective bargaining rules in labor law. Increasingly, corporate law has converged with labor law. The United States is in a minority of Organisation for Economic Co-operation and Development countries that, as yet, has no law requiring employee voting rights in corporations, either in the general meeting or for representatives on the board of directors. On the other hand, the United States has the oldest voluntary codetermination statute for private corporations, in Massachusetts since 1919 passed under the Republican governor Calvin Coolidge, enabling manufacturing companies to have employee representatives on the board of directors, if corporate stockholders agreed. Also in 1919 both Procter & Gamble and the General Ice Delivery Company of Detroit had employee representation on boards. In the early 20th century, labor law theory split between those who advocated collective bargaining backed by strike action, those who advocated a greater role for binding arbitration, and proponents of codetermination as "industrial democracy". Today, these methods are seen as complements, not alternatives. A majority of countries in the Organisation for Economic Co-operation and Development have laws requiring direct participation rights. In 1994, the Dunlop Commission on the Future of Worker-Management Relations: Final Report examined law reform to improve collective labor relations, and suggested minor amendments to encourage worker involvement. Congressional division prevented federal reform, but labor unions and state legislatures have experimented.
Corporations are chartered under state law, the larger mostly in Delaware, but leave investors free to organize voting rights and board representation as they choose. Because of unequal bargaining power, but also historic caution of labor unions, shareholders monopolize voting rights in American corporations. From the 1970s employees and unions sought representation on company boards. This could happen through collective agreements, as it historically occurred in Germany or other countries, or through employees demanding further representation through employee stock ownership plans, but they aimed for a voice independent from capital risks that could not be diversified. Corporations where workers attempted to secure board representation included United Airlines, the General Tire and Rubber Company, and the Providence and Worcester Railroad. However, in 1974 the Securities and Exchange Commission, run by appointees of Richard Nixon, rejected that employees who held shares in AT&T were entitled to make proposals to include employee representatives on the board of directors. This position was eventually reversed expressly by the Dodd-Frank Act of 2010 §971, which subject to rules by the Securities and Exchange Commission entitles shareholders to put forward nominations for the board. Instead of pursuing board seats through shareholder resolutions, for example, the United Auto Workers successfully sought board representation by collective agreement at Chrysler in 1980, and the United SteelWorkers secured board representation in five corporations in 1993. However, it was clear that employee stock ownership plans were open to abuse, particularly after Enron collapsed in 2003. Workers had been enticed to invest an average of 62.5 percent of their retirement savings from 401(k) plans in Enron stock, against basic principles of prudent, diversified investment, and had no board representation. This meant, employees lost a majority of pension savings. For this reason, employees and unions have sought representation simply for investment of labor, without taking on undiversifiable capital risk.