Enactment Of The Employee Free Choice Act Will Reshape The Labor Landscape - Part I

Tuesday, March 31, 2009 - 00:00

Part II of this article, appearing in the May issue of The Metropolitan Corporate Counsel, will discuss the current political climate surrounding this legislation, other competing legislation, and measures to take by employers if the legislation is enacted.

Sweeping change in the workplace may be on the horizon if the Employee Free Choice Act ("EFCA") (H.R. 1409, 111th Cong.; S. 560, 111th Cong.) is enacted. The EFCA would amend the National Labor Relations Act ("NLRA") and make it dramatically easier for labor unions to organize employees by circumventing secret ballot elections and obtaining representative certification through a largely unregulated union authorization card check procedure. In addition, the EFCA would enable labor unions more readily to impose their will in collective bargaining for a first contract following certification by requiring binding arbitration if, after 120 days, an employer and the newly certified union fail to come to terms on an initial collective bargaining agreement. Finally, the EFCA would impose significantly increased penalties on employers who unlawfully discharge their employees as a result of their union organizing activities.

Passage of the EFCA is a top priority of organized labor, which views the EFCA as a means of stemming the tide of labor's steadily declining membership and political influence. Since 1983, unions have watched their representation of employees in the private sector fall from approximately 20 percent to approximately 7.6 percent today. This sharp decline in union representation is a result of numerous factors, including technological advances, transformation of the U.S. economy from an industrial economy to a white collar, services-based economy, global competition and enactment of a broad array of federal, state and local statutes protecting employees in the workplace, without the need for union representation. Unions, however, attribute their decline to employer tactics permitted under existing laws that serve to delay the National Labor Relations Board ("NLRB") secret ballot election process and the negotiation process leading to a first collective bargaining agreement. Unions also charge that employers routinely terminate union supporters during union organizing drives. They argue that such discharges chill support for unions, and while contrary to existing law, tougher penalties are required in order to deter such violations.

Proposed Changes Under The EFCA

Card Checks Instead of Secret Ballot Elections

Under current law, if an employer refuses to recognize a union voluntarily as the exclusive collective bargaining representative of its employees, a union or employer may petition the NLRB to conduct a secret ballot election. The NLRB will order an election pursuant to a union petition where at least 30 percent of the workers in a proposed bargaining unit have authorized the union, in writing, to represent them. Although the required authorizations are commonly in the form of a card indicating an employee's desire to be represented by the union, there is no required form of union authorization.

Employers often refuse a union's request for voluntary recognition. The union's request for recognition is typically accompanied by the union's offer to furnish an employer with authorization cards signed by a majority of the employer's employees. However, because of uncertainty about the validity of the employees' signatures and the unknown circumstances in which they were obtained, such voluntary recognition is rare. An employer's refusal to recognize a union via a "card check" procedure provides a buffer against potential union misrepresentations, intimidation and other forms of coercion, including peer pressure to sign a union authorization card against an employee's will. Further, an employer's insistence on a secret-ballot election provides an employer with an opportunity to communicate with its employees during a pre-election campaign period about its views of the merits of the union's efforts to organize and the best interests of the business and employees. Enactment of the EFCA would change this entire process.

Under the EFCA, if a union presents the NLRB with signatures obtained from a majority of an employer's workers, the NLRB "shall not direct an election but shall certify the individual or labor organization as the representative." This mandate would severely limit an employer's ability to communicate with employees about the desirability of union representation before a collective bargaining relationship is established. In fact, under the EFCA, a union may obtain authorization cards from a majority of an employer's employees before the employer is even aware of any union organizing efforts. Under such circumstances, there would be very little an employer could do to counter misstatements by the union and other inappropriate tactics to obtain surreptitiously union authorization cards.

Mandatory Binding Arbitration To Impose First Contract

While the demise of the secret ballot election under the EFCA has attracted the most media attention, the legislation contains another equally, if not more dramatic, change to the current labor law framework. Under the EFCA, absent the completion of agreement between an employer and a newly certified union after only 120 days of bargaining, the terms and conditions of employment for the newly represented employees will be set by a government-appointed arbitrator in a mandatory binding arbitration. Thus, following a brief and unrealistic time frame within which to reach agreement on a first contract that will set the tone for years to come, a government-appointed arbitrator, who may be entirely unfamiliar with an employer's business or industry, will impose the terms that will be binding on the parties for a legislatively required minimum period of two years.

Specifically, under the EFCA, an employer and a union would be required to begin collective bargaining within 10 days after the NLRB certifies the union as the employees' exclusive bargaining representative. If the employer and the union fail to reach an agreement within 90 days, they are given 30 days within which to mediate and reach voluntary agreement under the auspices of the Federal Mediation and Conciliation Service ("FMCS"). If, after mediation, the employer and the union still have not reached an agreement, the FMCS would be required to refer the dispute to an arbitration board to settle the parties' disagreement. The arbitration board's decision would be final and binding on the parties for a period of two years. The EFCA does not establish any standards by which the mandatory arbitration will be conducted or the decision imposed. Such uncertainty will apply enormous pressure on employers to work out an agreement with the union, rather than risk the uncertain result of a collective bargaining agreement imposed by a government-appointed arbitrator.

The collective bargaining process proposed under the EFCA is a radical departure from current law, under which neither party is required to agree to specific terms and the government may not impose specific terms.

Increased Penalties For Unfair Labor Practices

Adding another arrow to organized labor's organizing quiver, the EFCA would triple the back pay damages that could be imposed for presently unlawful terminations as a result of union activity, when such terminations take place during the union's organizing campaign or during the period in which a first collective bargaining agreement is being negotiated. In addition, a new civil penalty of $20,000 may be imposed for each "willful" violation.

Lawrence J. Baer is Counsel and Daniel J. Venditti and Briana M. Bunn are Associates in Weil, Gotshal & Manges' Litigation department and members of the Employment Litigation Practice Group, representing employers in all aspects of labor and employment law.

Please email the authors at lawrence.baer@weil.com, daniel.venditti@weil.com or briana.bunn@weil.com with questions about this article.