March 13, 2009

The Employee Free Choice Act

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

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
  • enabling unions to guarantee that they will get a contract for employees, even without the employer’s agreement

Recent events have raised some questions about whether EFCA will pass in its current form. But the likelihood of significant labor law reform coupled with increased organizing activity and success means union organizing risks will certainly increase. Employers that wish to remain union-free will have to find new and effective ways to combat these growing union organizing risks.

The Fundamental Changes

If passed in its current form, 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 an employer how much to pay the employees, what benefits must be offered, and what rights the employer has to manage its workforce and business operations. Think about what that could do to an annual budget!

What the Elimination of the Secret-Ballot Election Would Mean

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. 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 Would Mean

The arbitration requirement would 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 little incentive to agree to a contract favorable to the 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 an 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. But, 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 Can Be Expected

It is likely that EFCA or other significant labor law reform 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, labor is a giant step closer to achieving its goal. It is clear that a Democratic House supports passage of EFCA and President Obama has said he will sign EFCA in its current form.

Recently, there has been some evidence of increased opposition to EFCA in the Senate. Also, on February 25, 2009, a competing law, the Secret Ballot Protection Act, was introduced in Congress. The Secret Ballot Protection Act would prohibit a union from being recognized based solely on authorization cards, and would require a union to prevail in a secret ballot election. Although the Secret Ballot Protection Act is unlikely to pass, it may provide a basis for compromise to limit the EFCA’s scope.

Even if EFCA does not pass, employers still can expect to see a continued increase in union organizing activity. Congress may enact other measures that will assist unions in the organizing process, including reducing the period between the filing of a union petition and the election from the current six weeks down to two weeks or 10 days. Also, 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 agree to recognize a union based on a card-check.

These techniques are working. Unions won more than 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 for employers in all industries. All these risks are present even if EFCA does not pass.

What Can Be Done Now

Employers need to start dealing with these heightened union organizing risks now. Although we expect EFCA to pass, it is not the law yet. Legislators can be petitioned through industry groups to oppose EFCA or have it amended to lessen its impact. 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 is ready to work with you to develop a practical and strategic course of action in connection with EFCA. If EFCA passes, the NLRB could be petitioned in an effort to obtain rules implementing EFCA that are more balanced and fair toward employers.

Education is key. Polls indicate that a significant majority of respondents, including union members, favor the secret ballot. If the public actually understood what this bill would mean, it may pressure Congress. Even so union-supportive a politician as former Democratic presidential nominee George McGovern opposes the EFCA as undemocratic. Most Americans do not want to see the secret ballot eliminated from critical decisions such as unionization.

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 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

Ignoring this problem will not make it go away.

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