The Employee Free Choice Act There Is Something In It For Everyone . . . To Be Worried About

Saturday, November 1, 2008 - 01:00

Michael J. Lebowich

Proskauer Rose LLP

These days, most companies are not concerned about their employees becoming organized by a labor union. With just a little over seven percent of the country's private sector workforce unionized and with organized labor failing to make strong gains in any industry over the past two decades (notwithstanding a few notable exceptions), there really has been nothing to worry about. That could all change if the next Congress passes the "Employee Free Choice Act"1("EFCA") - which will dramatically change what a union will need to do to become the representative of an employee group, alter the process for negotiating a new collective bargaining agreement, and add new penalties against employers found to violate federal labor laws.

What Is The Employee Free Choice Act?

Passed in 1935, as part of the New Deal, the National Labor Relations Act2("NLRA") governs the relationship between companies and unions. For nearly 75 years, the fundamental aspects of the law have remained unchanged:

• Employees have the right to choose to be represented by a labor organization;

• Employees and employers have the right to have the employees vote by a secret-ballot election overseen by the federal government to show that they truly want to be represented by the union;

• Once a union becomes the representative of a group of employees, the employer and the union must bargain in good faith to reach an agreement;

• Neither party is required to make any concession under any circumstances, and the government cannot impose an agreement on the parties.

The proposed law, which already passed the House of Representatives on March 1, 2007 by a vote of 241 to 185, and has the strong support of Democratic Presidential candidate Barack Obama, most Democratic senators and representatives, and more than a handful of Republican representatives as well, would dramatically alter these basic tenets that have defined our country's labor relations system.

The central feature of EFCA is the elimination of the need for a secret ballot election. Under the current system, in place since the NLRA was passed, the typical process for a labor organization to become the representative of a group of employees is for the union to file a "petition" with the National Labor Relations Board ("NLRB") with proof in the form of signature cards (called "union authorization cards"), that it represents at least 30 percentof the group it seeks to organize. Once a petition is filed, the NLRB schedules an election within about forty-five (45) days. During that time period, the employer has the legal right to explain its position on unionization to its employees and to make sure that its employees understand all of the legal and practical implications of having a union represent their interests.

If EFCA is passed in its current form, this process would disappear. Instead, all a union would have to do is submit signed authorization cards to the NLRB from a simple majority (50 percent +1) of the employees in question. It would then automatically become the legal bargaining representative of the employees.

While supporters of the Act claim it will allow more people who want to have union representation to organize, under the current system unions rarely seek an election with the NLRB unless they already have signed cards from at least a majority of the employees who will be eligible to vote in the election. Yet, unions lose 40 to 45 percent of all elections.3

Moreover, just over a year ago, the NLRB created a process where, if an employer voluntarily recognizes a union (which is lawful today if the union can show that it has cards from a majority of the employees), the employees can force a vote on the issue. And, according to the NLRB, since this process was put in place, there have been requests for elections in approximately 8 percentof all voluntary recognitions, and the union has lost about 30 percentof the elections that have been held after a voluntary recognition.

The critical changes to the NLRA do not stop with organizing. EFCA would, among other things, also:

• Require that negotiations for an initial contract commence within just 10 days after a request for bargaining is made. Under current law, there is no specific requirement concerning the commencement date of negotiations. The practical realities of preparing for and scheduling negotiations can result in it taking months, not days.

• Impose strict time frames on the pace of negotiations. It takes a significant amount of time to negotiate a first contract, because the talks must address a wide variety of topics (everything from wages and benefits to leave policies, grievance procedures and layoff procedures, just to name a few). EFCA, however, would require third-party mediation by the Federal Mediation and Conciliation Service if the parties can not reach an agreement after only 90 days of bargaining.

• If there is no agreement after 30 days of mediation, the parties must go to binding "interest arbitration," during which the terms of employment will be imposed by outsider arbitrators for a two-year period. While today it can often take more than a year for parties to agree on a contract, under the proposed law the ability to reach agreement will be taken away from the parties after just four (4) months.

• Significantly strengthen the NLRB's remedies for employer unfair labor practices. Under current law, the Board can award back pay to victims of illegal discrimination and issue cease and desist orders and other equitable relief with respect to bargaining violations. Under EFCA, in cases involving discharge or other discrimination against employees who are seeking union representation or attempting to negotiate a first contract, the Board could award double back pay as additional "liquidated damages" and, for the first time ever, the NLRB could impose civil penalties of up to $20,000 for violations of the NLRA if an employer willfully or repeatedly interferes with employee rights to unionize and/or bargain.

EFCA Will Affect All Non-Union Companies, Regardless Of Whether They Are A Traditional "Target" Of Unionization

EFCA will have a profound impact on all industries - both those that traditionally have a high labor union density and those that have, thus far, not been prone to successful organizing drives.

Consider the hotel industry, where the dominant union, UNITE-HERE, has been engaged in a long campaign to increase its strength across the country. While it has had great success organizing large hotels in large cities (such as in New York, Chicago, Las Vegas, and San Francisco), there remain large numbers of non-unionized hotel and other leisure industry employees in smaller boutique hotels in major cities and in all types of properties throughout the country. In fact, only 2.8 percentof the industry's workforce is currently organized.4Not surprisingly then, UNITE-HERE and the other unions in the Change to Win Coalition (including the Service Employees International Union and the International Brotherhood of Teamsters) are pushing hard for EFCA's passage in the next Congress.

Retail is another area which could see dramatic increases in unionization under EFCA. Today, while the job composition and compensation levels of retail employees might indicate a preference for unionization, and though unions make frequent attempts to organize in the industry, retail organizing drives have been generally unsuccessful once management has had an opportunity to present its position and explain the impact unionization will have on the workplace. Eliminating the secret ballot election and the period where employers can present the other side of the unionization story, then, is likely to result in significant increases in organized stores.

Of course, these are traditional targets of unionization. EFCA is likely to have much broader implications - extending to "white-collar" fields that have historically remained non-union. The financial services industry, for example, has little more than 1 percentof its workforce organized.5But, today with mass layoffs a daily feature in the business world and the financial crises creating uncertainty of historic proportions in the industry, many back office and support staff could easily find themselves subject to a union organizing drive. Under EFCA, of course, to gain representation all a union organizer would need to do is get employees to sign cards. In fact, a growth in white-collar unionization is exactly what EFCA supporters are looking for. As Vice-Presidential nominee Senator Joe Biden explained during the Senate's 2007 debate on EFCA:

It is time for a new social compact, a new social compact because of white-collar workers who never thought they needed a union, and who all of a sudden are finding out their companies are not so generous with them when they walk in and shut down a division and shut them out. I say to my colleagues, I believe American white-collar workers who never thought about the union movement are prepared to think about it now.6

In short, every industry, whether traditionally union or non-union, must be cognizant of the ramifications of EFCA should it be passed - a likely possibility with a Democratic Congress and a Democratic President.

What Can You Do To Prepare For EFCA?

With EFCA on the horizon, if any aspect of a company's workforce is not currently unionized, now is the time to take a proactive approach to the possibility of unionization. Among other things, companies should consider regularly reassessing the potential for unionization and promptly address any weaknesses in the area of wages, benefits, working conditions, and employee communications. They also should also train managers and supervisors now to be prepared for possible union organizing campaigns.

If EFCA is passed and the secret ballot election is lost, any company looking to reduce the risk that it will be organized will have to act as if it is constantly facing a union organizing campaign to ensure that managers, supervisors and employees all have a full understanding of the impact of unionization so that everyone is ready when the inevitable occurs - a union organizer starts looking for signatures on authorization cards. 1 H.R. 800; S. 1041 .

2 29 U.S.C. § 151, et seq.

3 National Labor Relations Board Election Report, Six Months Summary (April 2007 through September 2007); National Labor Relations Board Election Report, Six Months Summary (October 2007 through March 2008).

4 U.S. Bureau of Labor Statistics, Union Affiliation of Employed Wage and Salary Workers by Occupation and Industry.

5Id.

6 Senator Joe Biden, June 26, 2007.

Michael J. Lebowich is Co-Chair of the Labor Relations Practice Group and a Partner in the Labor Law Department of New York-based Proskauer Rose LLP. Associate Preston Strosnider assisted in the preparation of this article.

Please email the author at mlebowich@proskauer.com with questions about this article.