Alert December 17, 2008

A New Congress and President May Prompt Significant Pro Labor Amendments

The incoming United States Congress will consider enacting the Employee Free Choice Act (“EFCA”), which, as last proposed, would dramatically change key provisions of the National Labor Relations Act (“NLRA”) to the significant detriment of employers. The EFCA would make it much easier for unions to obtain bargaining representative certification, would expedite and reshape the collective bargaining process for initial contracts and would impose stricter penalties upon employers for willful or repeated unfair labor practices. The House of Representatives voted in favor of enacting the EFCA in March 2007 by a vote of 241-185, but the bill ultimately died in the Senate after a Republican-led filibuster. In 2009, however, the Democrats will hold a near-super majority in the Senate and the President-elect has voiced support for this pro-union legislation, so there is a reasonable possibility that the EFCA will be enacted in 2009.

The Proposed Modifications to the NLRA

The EFCA would significantly enhance organized labor’s ability to organize private sector employees and fundamentally change the nature of collective bargaining for an initial contract following a union’s certification as bargaining representative. The enactment of the EFCA would affect employers in three key ways:

1.  Elimination of Secret Ballot NLRB Elections to Determine Union Representation

Currently, when a union demands recognition as collective bargaining representative based on representation cards, employers may ignore the cards and instead demand a government-supervised secret ballot election to determine whether a majority of employees in an appropriate unit are in favor of union representation. The election process allows employers and unions to present their case against and in favor of unionization, so that employees can make an informed decision as to whether representation by a union is in their best interests.

The EFCA would require the National Labor Relations Board (“NLRB”) to certify a labor organization as bargaining representative whenever a majority of employees in an appropriate bargaining unit (employees who have a reasonable “community of interest,” including common terms and conditions of employment) sign authorization cards designating that labor organization as their representative. If the cards were found to be valid, the labor organization would be certified by the NLRB without holding an election.

Under the EFCA, a union with an undercover organizing campaign might be able to solicit enough employee signatures to obtain certification before an employer even knew that a campaign was underway. In these instances, employers would be deprived of the opportunity to present (and employees prevented from hearing) information and arguments as to why unionization might not be in the employees’ best interest. Furthermore, since employees would no longer have access to the security of a secret ballot protecting them from coercion, they would be vulnerable to pressure from union organizers and/or co-workers to sign authorization cards despite an ambivalence, or even an aversion, toward union representation. 

2.  First Contract Binding Arbitration in the Event of Impasse

The second significant change to the NLRA contemplated by the EFCA is that an employer or union engaged in negotiations over an initial collective bargaining contract would have the option to submit the dispute to binding arbitration in the event that the parties were unable to reach agreement on a labor contract within a fairly short time period. Currently, an employer has an obligation to bargain in good faith (i.e., show a genuine desire to reach agreement) with a union. So long as it satisfies that obligation, the employer need not make concessions or accept any specific union proposals. Employers do not violate their obligation to bargain in good faith simply by engaging in “hard bargaining.”  Currently, a union’s only realistic leverage is a strike, or threat of a strike. Under the EFCA, if the parties were unable to reach an agreement within 90 days from the date bargaining commenced, either side would be entitled to submit the dispute to mediation. If the parties were still unable to reach an agreement within 30 days from the date mediation was requested, the dispute would be referred to a panel of arbitrators selected by the government. The arbitration panel would then decide the provisions of the contract to govern the terms and conditions of employment for employees represented by the union for the next two years. There is no provision for appeal of an arbitrated contract that imposes economic terms that an employer may consider unduly onerous or unfair.

3.  Increased Penalties for Employers Violating the NLRA

The EFCA would impose significantly harsher penalties upon employers found to be in violation of the NLRA. Employers who discharge an employee in violation of the NLRA while union organizing activity or bargaining for an initial contract is taking place would be liable for treble back pay damages under the new law. The EFCA would also impose a civil penalty of up to $20,000 for each unfair labor practice willfully or repeatedly committed by an employer during such times, in addition to any make-whole remedy already available under the NLRA. The EFCA would not impose similar penalties upon unions found to have committed unfair labor practices.

Recommendations

If the EFCA is enacted, employers desiring to maintain union-free workplaces should promptly consider strategies for combating the kind of stealth unionization efforts that would be possible under the EFCA, including supervisor training, effective employee communication programs, and competitive compensation and benefits.

1.  Increased Vigilance and Supervisor Training

Employers should be on the lookout for any signs of an organizational campaign and be prepared to respond on short notice by initiating a lawful and effective campaign explaining the advantages of operating on a non-union basis. Supervisors and managers should receive advance training about how to recognize the telltale signs of a union organizing drive, and the ground rules under which employers may lawfully advocate a union-free workplace.

2.  Regularly Address Vulnerability to Unionization

Employers can take preemptive steps to avoid union organization by proactively addressing compensation, working conditions, employer-employee communications and conflict resolution procedures. Effectively communicating the generosity and competitiveness of compensation programs will make employees less susceptible to a labor organizer’s pitch that they have nothing to lose and much to gain from unionization. In addition, many union organizing campaigns are a reaction to poor communication and management by first-line supervisors. Taking steps to identify and improve the employee relations skills of supervisors now can pay off in avoiding unionization efforts later.

3.  Policy Update

Employers’ rights to restrict solicitation and distribution of literature by internal and external union organizers depend in part on the terms of employer policies and the permissibility of restrictions in those policies. Employers should ensure that their solicitation and distribution policies are up to date and that their other policies are consistent with their other steps to address unionization.

4.  Employee Education

Depending on the circumstances, it may be advisable for employers to educate employees about the downside of unionization, regardless of whether an actual organizational campaign has begun at the worksite. Employees should be made aware that once they sign an authorization card, they may not have another opportunity to weigh in on the issue of union representation.

Conclusion

If passed in its current form, the EFCA would greatly increase the vulnerability of employers to successful union organizing. In the event of union organization, the EFCA creates a significant risk that government appointed arbitrators will set terms and conditions of employment – including wages and benefits – without the employer’s agreement. Employers who believe that unionization of their workforce would be detrimental to their business should consider taking lawful early preventative action through supervisory training, compensation program assessment and effective communication measures.