October 24, 2008

The Employee Free Choice Act: “No Choice” for Employers and Employees

Holland & Knight Alert
Kenneth A. Jenero | Phillip M. Schreiber

Organized labor is now pushing for the most significant change to federal labor law in 70 years. If passed in its current form, the proposed Employee Free Choice Act (EFCA) will fundamentally change the union organizing process in the United States to the detriment of employers and employees alike. EFCA will substantially reduce the barriers to unionization by:

  • eliminating the employees’ right to decide whether they want to be represented by a union in a secret-ballot election
  • eliminating the pre-election campaign period during which employers typically communicate their position on unionization
  • enabling unions to guarantee that they will get a contract for employees, even without the employer’s agreement

As a result of these proposed changes, the frequency and success of union organizing activity is expected to increase dramatically. Employers who wish to remain union-free will have to find new and effective ways to combat this growing union threat.

The Fundamental Changes

If passed, EFCA will eliminate an employer’s right to insist on a secret-ballot election supervised by the National Labor Relations Board (NLRB) and instead allow a union to become the employees’ exclusive bargaining representative based solely upon the presentation of signed authorization cards from a majority of employees in the proposed bargaining unit. EFCA also will eliminate freedom of contract by providing that if an employer has not reached a first contract with a union within 120 days, a federal panel of arbitrators will impose a contract that will be binding for up to two years. In other words, arbitrators hired by the government could tell you how much you have to pay your employees, what benefits you must offer, and what rights you have to manage your workforce and business operations.

What the Elimination of the Secret-Ballot Election Will Mean to You

Currently, before being unionized, an employer can insist that a union win a majority of votes cast in a secret-ballot election run by the NLRB after a campaign in which the employer has the opportunity to present its views about unionization. EFCA effectively eliminates secret-ballot elections. If passed, this law will have two fundamental impacts on the organizing process and employers’ efforts to remain union-free:

  • First, employers will not have the warning of a union petition and the opportunity to communicate their position during a union election campaign. As such, an employer may not know that a union is seeking to organize its employees until the union has already secured representational status by obtaining authorization cards from a majority of the employees in the bargaining unit.
  • Second, employees will not have the protection of a secret-ballot election to express their choice. As a result, they may be subject to pressure and intimidation to sign union authorization cards by co-workers and union organizers.

What the New Arbitration Requirement Will Mean to You

The arbitration requirement will have an enormous impact on both the bargaining and the organizing processes. Currently, there is no time limit for union contract negotiations as long as an employer bargains in good faith. The 120-day period established by EFCA for completing contract negotiations is too short to reach an acceptable first contract. Unions will have no incentive to agree to a contract favorable to an employer, knowing they are likely to get more from the arbitrators. Employers will be faced with the lose-lose situation of agreeing to a bad contract or risking a contract that will be imposed by a panel of arbitrators who know nothing about their business.
The arbitration provision also will have a significant impact on the initial organizing process. Currently, one of an employer’s biggest union avoidance weapons is to inform employees that nothing requires the employer to agree to any union demands and that the union cannot guarantee it will get a contract, let alone one which includes improved wages and benefits. However, under EFCA, unions will be able to guarantee a contract with wages, benefits and other terms that are not dependent on the employer’s agreement and, in the union’s view, more likely to be “fair” to the employees. It also will be extremely difficult for employers credibly to assert, as they now do, that bargaining is a two-way street, which could result in the employees receiving less than they already have without a union.

What You Can Expect

There is a significant likelihood that EFCA will become law in some form in 2009. In 2007, EFCA passed the House by a substantial majority and likely would have been passed by the Senate if not for a filibuster. Labor groups view EFCA as their number one issue and have vowed to keep pushing for its passage. Given the projected Democratic gains in the 2008 elections, and labor’s continuing demands, Congress is likely to pass EFCA in early 2009. Barack Obama has vowed to sign EFCA as is, and many believe John McCain will agree to some form of EFCA.
Employers should expect to see an increase in union organizing activity even if EFCA does not pass. Unions are taking new steps to organize new industries and get new members. They are using the Internet and new technologies to contact and communicate with employees. They are using more educated and business-savvy organizers. And they are waging corporate campaigns – targeted, top-down efforts to force a company’s management to remain neutral in future organizing efforts and to recognize a union based on a
These techniques are working. Unions won nearly 60 percent of their representation elections in 2007, the highest percentage in years, and union representation rose by 311,000 jobs in 2007. The current economic conditions also make union organizing a continuing and expanding risk.

What You Can Do Now

Employers need to start dealing with these heightened new union organizing risks now. First, although we expect EFCA to pass, it is not the law yet. You can still petition your legislators to oppose EFCA. If it passes, you can petition the NLRB in an effort to obtain rules implementing EFCA that are more balanced and fair toward employers. The Holland & Knight Public Policy and Regulation Group can apply our extensive experience to representing your interests before the federal government. The group has in-depth knowledge of Capitol Hill and the Executive Branch, and is experienced in organizing policy coalitions and working with interest groups to advocate on your behalf to key decision makers in Washington, D.C. Our bipartisan and full-service team stands ready to work with you to develop a practical and strategic course of action in connection with EFCA. In addition, to combat the increased organizing risks with or without EFCA, every employer should consider implementing now the following proactive measures.

  • regularly and positively promote its union-free position at all levels of the organization
  • train its managers and supervisors on the union organizing process, the impact of EFCA, and the importance of early identification of warning signs of union activity
  • ensure that it has lawful employment policies in place that minimize its exposure to internal union organizing activity
  • analyze the current and evolving economic needs and concerns of the various segments of its workforce and ensure that its compensation, benefit and employment practices are meeting those needs and concerns
  • develop and implement a positive employee relations program (including active performance management, regular employee communications, prompt and effective complaint-resolution procedures, competitive wages and benefits, and fair and uniformly-applied disciplinary rules) designed to make a union unnecessary
  • analyze its organization to identify and address areas of vulnerability to union activity and take proactive measures designed to make it more difficult for a union to mount an effective organizing campaign
  • be ready to respond quickly and legally to any union organizing threat

Holland & Knight’s Labor Relations for Management Team is ready to help employers deal with the significant new union organizing risks EFCA will create.

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