What is red, white and blue, one to two inches wide, and has created a bitter labor-management dispute at Dulles International Airport?

Answer: a union button and a matching pencil-clip.

Those two objects have been deemed offensive by an aviation firm that has banned its work force from wearing the logos of the 700,000-member International Association of Machinists.

"We think this whole thing is ridiculous," said union shop steward Monty Parsell. "They are making a big deal out of nothing." He said he has worn the union logo for the 11 years he has worked for Page Avjet Corp., a Rochester, N.Y.-based firm that sells and services corporate aircraft at 14 airports.

"If they came and asked us not to wear so many buttons, or to wear it in a particular spot, maybe it would have worked out," Parsell said. "But they just came down and said: 'No buttons. No pen clips. No nothing.' . . . And now we've got a problem. Morale is really down over this stuff."

Armed with complaints like that, the union took the issue to the National Labor Relations Board. In a ruling issued June 26, the agency found that Page's 1983 button ban violated labor law because it was an "overly broad rule that prohibits employes from wearing union insignia and union buttons."

The case is not over. Charles M. Abell, a Page executive, said yesterday that Page is redrafting its antibutton rule to comply with NLRB and court rulings, and intends to issue a modified ban against the wearing of union insignia.

"They have every right to wear the button. We just don't want them to wear it when they meet the public," said Abell. "It is the company desire to have them portray a good image on first impression. We want our company identification there, and we are not interested in having an employe's social organization advertised on that uniform."

The 60 uniformed employes who service and park aircraft would be allowed to wear IAM materials at times and places when they don't meet the public under the new rule, he said.

The case at Dulles is the latest of more than 40 years' worth of NLRB and court cases on the union button issue, with numerous decisions that have sought to balance a worker's right to freedom of expression and an employer's right to require uniforms and standards of appearance.

The Supreme Court in 1945 said that "The right of employes to wear union insignia at work has long been recognized as a reasonable and legitimate form of union activity and . . . curtailment of that right is clearly violative" of the National Labor Relations Act.

Subsequent court rulings have held that employers could ban buttons if there are "special circumstances" that justify curbing the worker's right. In cases involving Burger King Corp., Coca Cola Co., Howard Johnson Motor Lodge and other employers, the NLRB and the courts have upheld button bans, as long as they are justified by business-related needs of the company and are not enforced in a discriminatory or antiunion manner.

In the 1982 Burger King case, the NLRB had said the company acted illegally in making an employe remove a 1 1/2-inch union button. But the U.S. District Court overturned the NLRB and said "Burger King has attempted to project a clean, professional image" and derives "much of its recognition from its uniform public image."

In the Page Avjet case, NLRB administrative law judge Mary Ellen Benard ruled last October that "The right of employes to make known their union sympathies is a right protected" by law. She said the firm demonstrated "no special circumstances" to justify a "blanket prohibition."

Page Avjet had banned at all times the IAM's four different union insignia, ranging from a 3/4-inch-diameter pencil clip to a 2 3/4-inch button. The company appealed Benard's ruling, but a unanimous NLRB upheld it last week.

James Jewell, president of IAM District Lodge 141, said IAM members wear buttons at four aviation companies here, but have problems only at Page, because of what he calls an antiunion attitude.

Abell disputed that, saying that the button ban was part of a 1983 plan in which new blue uniforms were issued, along with rules aimed at improving image. "We wanted to improve morale with our uniforms," he said.