Employee Free Choice Act Would Gut National Labor Relations Act

On March 1, 2007, the House voted 241-185 to approve H.R. 800, the Employee Free Choice Act. H.R. 800 would fundamentally change the National Labor Relations Act (NLRA) in four ways that are detrimental to employers, as follows:

• it eliminates employers’ and employees’ rights to demand a secret ballot election to determine whether employees desire to be unionized, and instead requires an employer to recognize and bargain with a union based solely on the presentation of authorization cards signed by majority of the employees
• it requires that an arbitrator impose a contract – including wages and benefits – on the employer if the employer and a new union have not reached a contract after 90 days of bargaining and 30 days of mediation for a first contract following certification of the union as the bargaining representative
• it mandates that the National Labor Relations Board seek a federal court injunction against an employer if there is reasonable cause to believe that the employer has discharged or discriminated against an employee because of his or her union activity
• it mandates payment of three times the amount of lost wages to employees discharged for union activity and provides for a penalty of $20,000 for each willful or repeated violation

Despite its passage in the House, H.R. 800 may never become law. It is likely to face substantial Republican opposition in the Senate, the president has vowed to veto the bill, and the margin of passage in the House, 241-185, is far less than the two-thirds majority required to override the veto.

Nonetheless, we provide this update to ensure that our clients are aware of this significant potential change in the law and have the opportunity to contact their senators to oppose it if they so desire.

H.R. 800 Eliminates Employee Free Choice

The NLRA grants employees the right to form or join a union in order to collectively bargain with their employers – and gives them the equal right to choose not to unionize. To be recognized by an employer, a union must demonstrate it has the support of a majority of the employees. To protect employees against duress, threats, or coercion by union organizers and/or co-workers, and to preserve their right to freely choose whether or not to unionize, the current process calls for a democratically-conducted secret ballot election, supervised by the National Labor Relations Board (NLRB). Both employers and employees currently can insist on such a secret ballot election before dealing with a union.

Both the U.S. Supreme Court and unions themselves have recognized that the secret ballot process is the fairest way to determine employee support for a union. As aptly stated by the Court, a secret ballot election is the “most satisfactory – indeed the preferred – method of ascertaining whether a union has majority support,” and an authorization “card-check” is “admittedly inferior to the election process.” NLRB v. Gissel Packing Co. 395 U.S. 575, 602 (1969). Indeed, when the question was whether an incumbent union would continue to represent a group of employees, the United Food and Commercial Workers, supported by the AFL-CIO, argued that “Board elections are the preferred means of establishing whether a union has the support of a majority of the employees in a bargaining unit.” Levitz Furniture Co. of the Pacific, 333 NLRB 717 (2001).

H.R. 800 eliminates employers’ and employees’ rights to demand a secret ballot election concerning unionization. Rather, an employer would be required to recognize and bargain with a union if the union demonstrates that more than 50 percent of the proposed union employees signed union authorization cards – cards on which an employee indicates support for a union. These cards normally are signed in the presence of union organizers or fellow employees without the safeguards preventing duress, coercion or threats to employees that the secret ballot election process provides. Not only does the proposed change eliminate crucial protections for employees, but it is also unnecessary. The NLRA currently allows employers and unions to agree to “card check” organizing, and many employers and unions do so.

We believe that these changes would be detrimental to both employers and their employees.

H.R. 800 Eliminates Freedom of Contract

H.R. 800 also would destroy a fundamental tenet of U.S. labor law: freedom of contract. For more than 70 years, the NLRA has not imposed specific wages and benefits on the parties, and it has also left the parties free to negotiate the language they want in their agreement without Government interference. This, like the secret ballot election, is a cornerstone of our industrial democracy. Indeed, the Supreme Court ruled in 1970 that “it was recognized from the beginning that agreement might in some cases be impossible, and it was never intended that the Government would in such cases step in, become a party to the negotiations and impose its own view of a desirable settlement.” H.R. 800 flatly contradicts that ruling. It mandates that if an employer cannot reach its first – and, therefore, the most important – agreement with a new union within 120 days, the contract – including wage and benefit provisions – will be imposed by an arbitration panel designated by the Federal Mediation and Conciliation Service. Thus, employers may be forced to abide by wage and benefit terms to which they would not agree and cannot sustain. Such interference with freedom of contract obviously impacts fundamental business decisions.

H.R. 800 Increases the Likelihood and Risk of Challenges to Employment Decisions

Current law prohibits employers from discharging employees because of their union activity, and requires them to pay lost wages to employees discharged for union activity. It also allows the NLRB to choose to seek a federal court injunction to stop NLRA violations if the NLRB can show that the employer’s conduct is causing harm that could not be remedied at the end of the NLRB’s process.

H.R. 800 mandates that the NLRB seek a federal court injunction if there is reasonable cause to believe that the employer has discharged or discriminated against an employee because of union activity, vastly increasing the risk employers face when making even legitimate non-discriminatory discipline decisions while union organizing is occurring. The increased damages proposed under H.R. 800 will merely increase these risks.

Again, H.R. 800 is unlikely to become law while President Bush is in office. You can bet, however, that unions will continue to push for changes such as these. Holland & Knight will continue to update clients on the status of this and other laws affecting employers and can help clients make their voices heard in connection with proposed employment laws.