Viewpoint -- The Employee Free Choice Act: Is Your Company Prepared for It?

Aug. 27, 2008
The prospect of mandatory arbitration of first agreements is possibly the most alarming of the many changes that EFCA would make.

There is widespread belief that the Employee Free Choice Act -- quite possibly the most significant amendment of the National Labor Relations Act since its enactment nearly 75 years ago -- will be passed in some form in 2009, particularly if the Democratic nominee for President moves into the White House next January. Unions are definitely celebrating this Labor Day. (The House of Representatives passed EFCA (H.R. 800) by a vote of 241 to 185 on March 1, 2007. The Senate version (S. 1041) was introduced on March 30, but was pulled three months later on June 26, 2007, after a motion to invoke cloture and end a filibuster narrowly failed.)

Many have predicted that EFCA, the union movement's number one priority, would increase representation in the private sector -- presently at an all-time low of around 7% of the workforce -- to levels that have not been seen for decades. EFCA would do this by permitting the National Labor Relations Board to certify unions based solely on signed "authorization cards." Employers no longer would have the unqualified right to an NLRB-supervised election to determine bargaining obligations. That democratic process has been a hallmark of American labor relations.

There is no shortage of reasons why employers should be concerned about EFCA and doing all they can to meet the challenges that it presents. Most importantly, EFCA would virtually eliminate the secret-ballot election as the NLRB's preferred method of deciding questions concerning union representation. Under current law, when a union demands recognition the employer may insist that its employees have an opportunity to vote on the subject. If the employer declines to recognize the union voluntarily, as most do, the union typically files a petition with the NLRB and an election is held around six weeks later (assuming that no legal issues require a pre-election hearing). During the critical period leading up to that vote, the employer has an opportunity to communicate with its employees concerning the many good reasons why union representation is not in their best interest. For most companies, that opportunity to campaign is the difference between winning and losing.

Manufacturing is an area where organized labor may have the most to gain from EFCA. According to election statistics made available by the NLRB, the union win rate in that sector for the period 2003 to 2007 was the next-to-lowest of all sectors tracked -- wholesale being the lowest -- at only 45.5%. That is almost 15% lower than the overall average win rate of just under 60%. And, with the exception of the service sector, more election petitions were filed with the NLRB for manufacturing units than any other area. This tells us that the unions are adept at getting authorization cards signed by production and maintenance employees, but not nearly so good at holding on to their majority and winning elections. It also means that if EFCA had been in effect, the unions that successfully organized 787 new manufacturing shops from 2003 to 2007 would have picked up another 944! (Unions rarely request the NLRB to hold an election without cards signed by well over 50% of the employees.)

Under EFCA, if a union files a petition with authorization cards signed by a majority of the workers, the NLRB would certify it as their exclusive representative and bargaining would be required. Except for the most vigilant of employers, the opportunity pre-petition to communicate with employees concerning the risks and disadvantages of collective bargaining will be lost given the below-the-radar organizing by most unions. Once cards are signed, the employer's fate is sealed.

At this time, it is unclear what safeguards, if any, will be implemented to ensure that the Board does not certify a union based on signatures that have been solicited through fraud or coercion, a not-uncommon occurrence. The secret-ballot election has been the NLRB's way of neutralizing the effect of such improper organizing tactics, by giving employees the chance to mark a ballot in the privacy of a voting booth, whether or not they previously signed a card for the union.

EFCA also would make radical changes to the collective bargaining process that follows certification. First, it would require that negotiations for an initial contract begin within 10 days after a request for bargaining is made. Second, it would require mediation by the Federal Mediation and Conciliation Service if after 90 days the employer and union are unable to reach agreement. Third, if after 30 days of mediation the parties remain unable to agree, the terms of the initial contract would be determined by an arbitration board appointed by the FMCS, rather than being left to the economic forces normally at play in collective bargaining. The resulting "agreement" would be binding for two years.The prospect of mandatory arbitration of first agreements is possibly the most alarming of the many changes that EFCA would make.

In addition, EFCA would significantly strengthen the NLRB's enforcement authority. Injunctive relief would be mandatory for many employers unfair labor practices occurring during the organizing process and while first contract negotiations are under way. It also would provide for treble back pay awards for employees discharged in reprisal for their union activity, as well as civil penalties of up to $20,000 per violation.

The take-away from all this is obvious. A proactive approach to positive employee relations is absolutely essential. Among other things, employers should consider the following:

  • Adopt and communicate a basic philosophy on unions in employee handbooks, stressing the value of direct dealing between employer and employees.
  • Implement a lawful no-solicitation rule if one does not already exist.
  • Assume vulnerability to unionization and promptly address any identified weaknesses in the area of wages and benefits before a union appears on the scene.
  • Train supervisors and managers to be vigilant for signs of unionization and instill a sense of urgency about the importance of maintaining the company's union-free status.
  • Inform supervisors and managers about unions so that they are ready and able to answer employee questions.
  • Prepare management and employees for card-signing "blitzes" so that the union never achieves the majority necessary for NLRB certification; and
  • Analyze the scope and composition of potential bargaining units, recognizing that the larger the unit, the more difficult it is for a union to attain majority status.

EFCA poses some unquestionable challenges to employers. The time to start dealing with those challenges is now! Labor is not waiting to mobilize and neither should management. A wait and see approach is a luxury that no company can afford. The risks of delaying are simply too great.

Peter D. Conrad is a partner in the Labor and Employment Law Department at New York-based Proskauer Rose LLP. Proskauer Rose, founded in 1875, is an international law firm providing a wide variety of legal services to clients worldwide. Proskauer's nearly 175 Labor and Employment lawyers address the most complex and challenging labor and employment law issues faced by employers.

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