Viewpoint -- The Employee Free Choice Act: Protecting Your Manufacturing Business

March 1, 2009
This legislation would transform labor relations in the U.S. to the detriment of employers in the manufacturing industry.

While Congress and the Obama administration are preoccupied with economic recovery, employers are becoming increasing concerned about legislation called the Employee Free Choice Act (EFCA). While not currently the law, this legislation would transform labor relations in the United States to the detriment of employers in the manufacturing industry. Anna Burger, Chair of the Change to Win Coalition and Secretary-Treasurer of the Service Employees International Union (SEIU) has stated, "EFCA is more important than healthcare reform... [It] will be the difference between incremental change and transformational change .... EFCA will increase SEIU membership by 1 million members annually." And President Obama has stated that he will make it the law of the land.

EFCA would amend the National Labor Relations Act (NLRA) in three dramatic ways. Currently, employees desiring union representation are subject to a secret ballot election, where they vote "yes" or "no" to be represented by an election. EFCA would effectively eliminate the secret ballot election by requiring an employer to recognize and bargain with a union if the union presented "authorization cards" signed by 51% of its employees. The amendment would also have the effect of depriving the employer of having time to communicate its position on the negative effects of unionization to employees during the campaign period leading up to the current ballot process. Additionally, without a secret ballot, employees may be subject to pressure and coercive tactics by unions and fellow pro-union employees to sign authorization cards.

Second, once the union is recognized as the collective bargaining representative of employees, the employer would have to start bargaining with the union within 10 days. This is an insufficient amount of time to formulate proposals and establish an employer bargaining committee. If a contract is not reached within 90 days, the employer is required to go to mediation before the Federal Mediation and Conciliation Service for 30 days. If no agreement is reached at that point, the employer must submit to binding interest arbitration before a neutral arbitrator who will determine the wages, benefits and other terms and conditions of employment of the employees for a two year union contract. Besides the frightening proposition that a third party will decide the compensation and benefits of an employer's employees, the legislation fails to address what standards the arbitrator shall use in making his award. The legislation does not contemplate appeals from an arbitrator's award.

This portion of EFCA is extremely troubling. An arbitrator could place a healthy or struggling employer in a non-competitive or precarious financial position by granting significant increases in wages, benefits and other terms of competition. The arbitrator would also have final say over pensions, hours of employment, subcontracting, severance, and discipline and discharge of employees. While the statute contemplates that the arbitrator will decide what is in the first two year agreement, nothing in the statute prevents the arbitrator from requiring binding interest arbitration of successor agreements.

Finally, EFCA would significantly increase the penalties faced by employers who intentionally or inadvertently commit unfair labor practices. Currently, employers are only required to pay backpay and provide reinstatement to employees discharged for union activity. Other violations of the NLRA, such as unlawful interrogation or threats, are subject to a cease and desist order, and a requirement that the employer post a notice stating it will not violate the law again. EFCA would require that the employer pay treble damages for unlawful discharges plus a civil penalty of up to $20,000, and civil penalties of up to $20,000 for all other unfair labor practices.

There are many questions left unanswered by EFCA. For instance, how long will the authorization cards be valid? What if an employee claims he signed a card involuntarily? How can a card be checked for forgery? How can an employer challenge the appropriateness of the claimed bargaining unit? What will be the standards for arbitration?

EFCA is not the law yet. In 2007, EFCA passed through the Democratic controlled house by a vote of 241 to 185. It was stopped by one vote in the Senate. While Congress and the President are currently preoccupied with economic recovery, on February 4, 2009, organized labor presented Congress with a petition signed by a million and a half employees supporting EFCA. It is rumored that Rep. George Miller (Rep. Calif.) will reintroduce EFCA in the "near future," while other commentators have indicated that the legislation will originate in the Senate. While the House is firmly in Democratic control, the Senate may be able to get a filibuster proof majority. It is also possible that there may be a bi-partisan compromise that may replace the card check provisions with "quickie" secret ballot elections, or remove the interest arbitration provisions.

Employers in the manufacturing sector have several options if they are concerned about the implications of EFCA becoming law.

  • Employers should act as if they are involved in an ongoing union election campaign.
  • Conduct a human resources audit to determine the health of your organization. This includes reviewing policies and practices, and conducting employee satisfaction surveys.
  • Show employers they don't need a third party. Develop positive employee relations through challenging work, competitive pay and benefits and advancement opportunities. Communicate clearly with employees about company performance and changes.
  • Identify early warning signs of union activity and respond quickly and legally to any union organizing threat.
  • Train supervisors to communicate the employer's message and regarding effective management and employee relations techniques.
  • Don't: threaten, interrogate or make promises to employees or spy on union activities.
  • Contact your elected officials to let them know how you feel about this legislation.

Mark A. Spognardi is a partner at the law firm of Arnstein & Lehr LLP in Chicago, Illinois, and exclusively represents management in labor relations and employment law matters.

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