Since the 1970s, the political and economic influence of labor unions has progressively diminished as the number of American workers who belong to unions has decreased. Today, the percentage of private sector workers that belongs to labor unions is less than 8 percent of the total non-governmental workforce. This erosion of membership and political influence has not gone unnoticed by the labor movement. Despite the relatively unfavorable political climate and a Republican majority on the National Labor Relations Board ("NLRB"), labor unions have significantly increased their efforts to organize unrepresented workers across all industries in recent years. However, the organizing successes achieved have been more than offset by devastating job losses in the unionized manufacturing sector which historically has been the primary membership base of the U.S. labor movement.
A. The Employee Free Choice Act
The legislative solution devised by the labor movement to reverse the steady decline in union membership is the Employee Free Choice Act ("EFCA"), a substantial revision to the National Labor Relations Act ("NLRA") to promote organizing through a mandatory card check process. The proposed bill will eliminate secret ballot elections except in those rare circumstances when the petitioning labor union requests an election. In the vast majority of cases, the petitioning union will be certified as the bargaining representative if a majority of the employees sign authorization cards designating the union as their bargaining representative. Unlike secret ballot elections, however, there are no procedural safeguards to ensure that union authorization cards are not obtained through coercion, deception or other inappropriate means.
Devoid of any details regarding the new card check process, the proposed EFCA leaves to the NLRB the responsibility for establishing new rules for compulsory card check recognition.In particular, the proposed bill prescribes that the NLRB will "develop guidelines and procedures for the designation by employees of a bargaining representative." These putative "guidelines and procedures" will include the form of the authorization card and procedures for determining the validity of the signatures on the authorization cards. Significantly, the proposed bill is silent about such significant matters as how long an authorization card will be deemed valid or whether an employee can revoke his authorization card. Further, the proposed bill provides no details regarding how the NLRB will assure that authorization cards are not obtained through unlawful means.
The EFCA would also provide unprecedented penalties against employers who violate the NLRA during union organizing drives or first contract negotiations. Specifically, the EFCA would provide civil fines of up to $20,000 per violation for unfair labor practices committed during union organizing drives. The EFCA would also provide for treble back pay, increasing the amount an employer is required to pay when it discharges or discriminates against employees during organizing campaigns. Finally, the EFCA would provide that the NLRB must seek a federal court injunction against an employer when there is reasonable cause to believe the employer discriminated against employees, threatened to discharge employees, or engaged in conduct that interfered with employee rights during an organizing drive or first contract negotiation. Significantly, the enhanced remedies and monetary penalties provided by the EFCA can be imposed only against employers. Thus, unions that commit even egregious unfair labor practices during organizing efforts will be subject only to the traditional NLRB posting requirements and make whole remedies - not treble damages and fines.
Perhaps the most revolutionary and troubling aspect to the proposed legislation is the provision for mandatory first-contract mediation and interest arbitration. Pursuant to the EFCA, if an employer and a newly certified union fail to reach an agreement on their first contract within 90 days, either party can refer the dispute to the Federal Mediation and Conciliation Service ("FMCS") for mediation. If the mediator is unable to get the parties to agree after 30 days of mediation, the open contract terms would be submitted to mandatory interest arbitration, with the contract terms binding for two years. Thus, rather than the current system under which the government has no authority to impose contract terms on private parties, the proposed EFCA would empower federal arbitrators to impose contract terms on employers for up to two years regardless of the impact on the employer or its employees. Further, unlike interest arbitration in the public sector or even in Canada, the proposed bill does not prohibit unions from engaging in a work stoppage before, during or after the interest arbitration process.
Notwithstanding the potential adverse impact of labor agreements forced on employers through mandatory interest arbitration, the proposed EFCA provides no guidance regarding the procedures and legal standards that will apply to this novel process. Instead, the bill dictates that the FMCS will promulgate "regulations" for the interest arbitration process. Remarkably, the bill provides no substantive legal standard for the interest arbitrator. Further, the proposed law imposes no apparent limits on an interest arbitrator's discretion to impose contract terms. The bill also leaves open the question as to whether an interest arbitrator will be permitted to order any party to waive statutory rights (such as the right to strike) or order compulsory union membership (union security). All of these important issues are left up to the judgment of the FMCS - a mediation agency with virtually no history or experience in adjudicating interest arbitration disputes.
B. Management Strategies To Prepare For The EFCA
Although President Barack Obama has been vocal in his support for the EFCA, the proposed bill has many flaws and will be aggressively opposed by employer groups in the Congress. Thus, there is no certainty that the EFCA in its current form will become law. Whether the current form of the EFCA is enacted, however, employers can be confident that the new administration will bring significant changes to the make-up of the current two-member NLRB and the processes utilized by the agency to administer the Act. As a result, the employer community should begin planning for a changing legal regime that tips the balance in favor of labor unions and a concomitant surge in union organizing.
In the past, employers could successfully oppose an organizing drive - even after a union obtained authorization cards from employees - by running an aggressive anti-union campaign prior to the NLRB election. Under the EFCA as proposed, employers will no longer have such opportunities. Even if the EFCA does not pass in its current form, however, any future changes in the law designed to facilitate organizing will almost certainly seek to reduce or eliminate the opportunity for employers to run such anti-union campaigns. Thus, any strategy for avoiding unionization in the future cannot await the appearance of a labor union on the scene but must be proactive. In other words, to be successful, employers must build union resistance in their workforce prior to the advent of any union organizing activities.
Know the Rules - To prepare for future union organizing activities, employers must understand the legal rules that apply to the union representation process. A threshold issue in any union organizing situation is identifying the employees who are subject to being organized. As a general rule, managers and supervisors are not considered employees under federal labor laws and have no legal right to organize. However, the Board's analysis of who is an employee and who is a supervisor is a highly fact-dependent inquiry, and is subject to change as the membership of the Board changes. Identifying eligible voters is critical because employers can require that managers and supervisors help promote employer objectives, including lawful opposition to unionism. Moreover, employers can commit unfair labor practices if their managers and supervisors are involved in circulating union authorization cards or attending union meetings.
A related issue that must be considered is the scope and breadth of the employee group or "bargaining unit" subject to being organized. As presently drafted, the proposed EFCA does not change existing rules concerning appropriate bargaining units. The NLRB's unit analysis is highly fact-specific and focuses on the common interests of employees and the operational interrelationship of work functions and locations. Understanding the risk of union organizing necessarily requires an understanding of the scope of potential bargaining units that are subject to being organized.
Employers must understand the parameters of what constitutes permissible opposition to union organizing. In other words, employers must understand the legal "do's" and "don'ts" when it comes to opposing unionization. Unfortunately, the Board's rules with respect to these activities are complex, inconsistent and constantly in flux. Further, the scope of prohibited conduct goes beyond mere campaigning. It is important that any employer preparing for union organizing activities understand these rules and design a comprehensive strategy that complies with applicable law. This is especially true since the proposed EFCA will heighten the penalties for violating these rules.
Circle the Wagons - Planning and organization are essential elements in opposing unionization of an employer's workforce. Unions have a playbook that they utilize in planning and executing an organizing campaign. Employers should have a similar plan to resist unionization. In order to develop an effective program, managers and supervisors at all levels must be trained in effective union avoidance techniques and encouraged to communicate the employer's views to employees on a regular and on-going basis.
Adopting, communicating and enforcing fair employment policies and practices must be a mandatory element of any successful strategy. An employer that violates employment laws (such as anti-discrimination or wage/hour statutes) or treats employees unfairly substantially increases its risk of organizing. Employers should audit their employment policies and practices to be certain that they are lawful and consistently enforced. By maintaining and enforcing lawful work rules and company policies, and consistently enforcing those rules, an employer reduces its risk of union organizing.
Another important step is to implement and enforce lawful and effective hiring practices and standards. An employer can significantly mitigate the risk of union organizing by adhering to good hiring practices, conducting thorough background checks and maintaining competitive wage and benefit packages. Importantly, the best defense against union organizing is to hire high-quality employees.
Spread the Word - Once the employer has mobilized and educated its management team, the employer must effectively disseminate its union-free message to the workforce. In order to do so employers should develop and implement comprehensive communication programs to keep employees informed about business conditions, industry trends and operational performance. Employers should make every effort to have a partnership with employees such that workers at all levels are invested in the success of the business.
In conjunction with such communications, employers should emphasize that their operations are union-free and that the direct and open relationships between management and employees is a competitive advantage for the business. Additionally, managers and supervisors must be prepared to articulate the employer's views that the union is not a good idea for the employees or the company and to inform employees about the legal impact of signing a union authorization card. An effective communications program should outline a multi-faceted approach to deliver the core messages through newsletters and other print media, e-mail distribution, bulletin boards and closed circuit television and employee meetings.
There is little doubt that the labor movement believes that the election of their candidate, Barack Obama, presents a tremendous opportunity to turn the tide in the 30-year decline in union density in the United States. Organized labor provided vast amounts of money and personnel to support the Obama campaign with the expectation that a Democratic administration would be sympathetic to the cause of declining unionism. Having assisted with Mr. Obama's historic election victory, it is highly likely that the EFCA will be reintroduced in the new Congress and aggressively championed by organized labor. However, even if the EFCA does not pass, some form of labor law reform legislation is likely to be enacted. Moreover, the new administration will almost certainly usher in a more union-friendly NLRB. Consequently, employers should plan now for a surge in union organizing activities and develop strategies to respond to a revitalized labor movement.
Brian West Easley is a labor and employment Partner in the Chicago office of international law firm Jones Day.