November 6, 2008

The Employee Free Choice Act: Are You Ready for the Change?

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

Several unions have focused their organizing efforts on health care industry employers in recent years. The Service Employees International Union (SEIU) and its affiliates have been particularly active in this area. In 2007, the SEIU launched a one-million-member health care union, with an annual budget of about $120 million and 4,000 organizers at its disposal, to sign up the 10 million unorganized non-supervisory health care workers in the United States. The SEIU’s organizing plans include drives targeted at national hospital and nursing home chains, Catholic institutions, investor-owned hospitals and nursing homes, and teaching hospitals. In March 2008, three SEIU locals representing 90,000 hospital, nursing home, home care and child workers in Illinois and Indiana consolidated to form a single union. More recently, the SEIU announced a national organizing strategy that includes integrated organizing plans in the union’s health care division, training for thousands of new organizers, and coordinated political action efforts.
In addition, labor unions across all industries and business sectors are pushing for passage of the Employee Free Choice Act (EFCA), which would fundamentally change the union organizing process in the United States to the detriment of employers and employees alike. If passed in its current form, EFCA would substantially reduce the barriers to unionization by:

  • using union authorization cards, instead of secret-ballot elections, to determine whether employees want to be represented by a union;
  • eliminating the pre-election campaign period during which employers typically communicate their position on unionization; and
  • 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. Health care employers who wish to remain union-free will have to find new and effective ways to combat this growing union threat.

The Fundamental Changes Under EFCA
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 on 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 set for initiating or concluding union contract negotiations. Indeed, there is no requirement that the employer agree to a contract at all, as long as it bargains with the union 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 that there is a reasonable chance they will be able to get more from the arbitrators. Therefore, 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, a major weapon in the employer’s union-avoidance arsenal is informing employees that the law does not require it to agree to any union demands and that the union cannot guarantee it will get a contract, let alone one with 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. It also will be much more difficult for employers credibly to assert, as they often do now, that because bargaining is a two-way street, the employees could end up receiving less than they previously had without a union. Absent compelling evidence of dire economic circumstances, arbitrators likely will be very reluctant to impose a contract with wages and benefits below those that the employer was providing before the employees secured union representation.

What You Can Expect
It is likely 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. With the new administration and Congress that soon will govern, labor is a giant step closer to achieving its goal. It is clear that a Democratic Congress supports passage of EFCA, and Barack Obama has vowed to sign EFCA in its current form.
Even in the unlikely event that EFCA does not pass, employers – particularly in the health care industry – still can expect to see a continued increase in union organizing activity. As noted above, the SEIU and other health care unions have devoted substantial sums of money and other resources to organizing health care employers in virtually every segment of the industry. These unions have beefed-up their organizing staffs with more educated and business-savvy organizers. They are using the Internet and new technologies to contact and communicate with employees. 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 card-check.
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. In June 2008, the SEIU crossed the two-million-member mark, in part due to its significantly expanded health care membership. Current economic conditions also make union organizing a continuing and expanding risk for employers in all industries, including health care.
We would expect EFCA to have particular impact on health care employers. The SEIU and other health care unions already have their organizing plans and budgets in place. EFCA will only serve to make it easier and less costly for these unions to successfully implement their plans. Certain health care providers may find it difficult to effectively advance a strong anti-union position consistent with their mission, core values and community image. Furthermore, health care employers lack the option of relocating or outsourcing their jobs to lower-cost, less union-saturated areas.

What You Can Do Now
Health care employers need to start dealing with these heightened new union organizing risks now. 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 its 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 the following proactive measures:

  • Regularly and positively promote your union-free position at all levels of the organization;
  • train your 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 you have lawful employment policies in place that minimize your exposure to internal union organizing activity;
  • analyze the current and evolving economic needs and concerns of the various segments of your workforce and ensure that your 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 your 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; and
  • 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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