In last month's edition of The Metropolitan Corporate Counsel , we discussed the proposed provisions of the Employee Free Choice Act ("EFCA") (H.R. 1409, 111th Cong.; S.560, 111th Cong.), which would amend the National Labor Relations Act ("NLRA") in several significant respects. This month, we discuss the political climate surrounding the EFCA and various proposed alternatives. In addition, we discuss steps employers may take in anticipation of enactment of one or more of the proposed legislative changes.
The EFCA was re-introduced in both the House of Representatives and the Senate on March 10, 2009. Proponents of the EFCA, including labor unions and some economists, tout the bill as a necessary element of the economic stimulus required to protect jobs and stem the rising wave of unemployment in the U.S. But many dispute the wisdom of the EFCA, arguing that by effectively eliminating the secret-ballot option,1Congress will mark open season for unions to intimidate and coerce workers to join them. Moreover, critics fear that employees who realize they were bullied or tricked into joining a union will have no way to decertify the union, as the employer will have been forced into a binding, two year contract after only 120 days. While proponents of the bill argue that the interest arbitration provision of the EFCA would facilitate collaborative and speedy bargaining between unions and management, businesses are opposed to government appointed arbitrators (with potentially little to no experience in the employer's industry) mandating the terms and conditions of their workers' employment. Some economists also worry that instead of protecting or creating jobs, the bill would have the opposite effect, increasing unemployment by driving out of business small employers unable to support unionization. Interest groups on both sides of the issue have already expended millions of dollars to garner support for their respective positions. Such expenditures are expected to continue until the House and Senate come to a vote on the bill.
Both President Obama and Vice President Biden have expressed unwavering support for the EFCA, most recently, in their remarks made earlier this year to AFL-CIO leaders gathered in Miami. The legislation is expected to sail through the House of Representatives, where, in 2007, it passed by a vote of 241-185, with 13 Republicans voting in its favor. The Democratic leadership in the House, which gained 21 seats after the 2008 election, has reportedly agreed to delay a vote on the EFCA until the Senate has acted. It is clear that the real debate will be waged on the Senate floor, where in 2007 the EFCA fell 9 votes short of the 60 needed to survive a GOP filibuster.
Following the 2008 elections, when the Democrats gained eight seats in the Senate (totaling 58 seats, with one seat in Minnesota still undecided but likely going to Democrat Al Franken, an outspoken supporter of the bill), the EFCA was originally predicted to garner enough votes to overcome a filibuster and pass. But recently, many issues have arisen that could complicate matters. Several business-oriented Democrats who voted for cloture in 2007 have stated that they may change their position on the EFCA, which one Democrat labeled as divisive and distracting during the current economic crisis.
The most significant development to date occurred on March 24, 2009, when Senator Arlen Specter formally announced his opposition to the bill. Senator Specter is the only Republican Senator who voted for cloture on the EFCA in 2007 and was viewed by many as the key vote needed to end debate on the current version of the controversial bill. Senator Specter's announcement surprised many because he was one of only three Republican Senators who voted in favor of President Obama's stimulus plan earlier this year. In a speech on the Senate floor, Senator Specter cited economic conditions as the primary reason for his opposition to the EFCA, noting that "[t]he problems of the recession make this a particularly bad time to enact Employees [sic] Free Choice legislation." However, Senator Specter does favor reforming current labor practices and stated in his floor speech that he would be willing to reconsider the EFCA after the economy improves if other efforts at labor reform are unsuccessful.
Supporters of the EFCA then were dealt another setback when Democratic Senator Dianne Feinstein, who co-sponsored the EFCA in 2007, issued a public statement urging a compromise on the bill because of the current economy. Several other Democratic Senators reportedly share this sentiment and are not fully supportive of the bill as written - Thomas Carper of Delaware, Mark Pryor of Arkansas, Ben Nelson of Colorado, and Kent Conrad of North Dakota. On April 6, 2009, Blanche Lincoln, a Democratic Senator from Wal-Mart's home state of Arkansas, whose name was often mentioned among the list of Democrats suspected of softening in their support for the Act, made her position clear by unequivocally stating that she would not support the bill moving forward in its current form.
In addition to its waning number of supporters, the EFCA could come to the floor without the vote of an ardent supporter. Senator Ted Kennedy, who sponsored the 2007 bill and is the Chair of the Senate Committee on Health, Education, Labor and Pensions, has had well-publicized health problems and may not be well enough to participate in a cloture vote. Add to this the fact that some Senators in 2007 may have considered an affirmative vote on EFCA a "free pass" to gain favor among certain constituents - aware that then President Bush would veto the bill - and it is looking less and less likely that the EFCA will come to a vote this year unless compromises are made.
Since the EFCA's failed 2007 run through the Senate, Congressional Republicans have not sat by idly waiting for the bill's reintroduction. On February 25, 2009, Representative John Kline introduced the "Secret Ballot Protection Act," H.R. 1176, 111th Cong. On the same day, Senator Jim DeMint introduced the "Secret Ballot Protection Act of 2009," S. 478, 111th Cong. Both bills are preemptive measures targeted directly at the EFCA with the stated purpose of "amend[ing] the National Labor Relations Act to ensure the right of employees to a secret-ballot election conducted by the National Labor Relations Board." The proposed legislation seeks to protect the secret ballot election by making it an unfair labor practice for an employer to recognize or bargain with a union that has not been certified through a secret ballot election and for a union to attempt to cause an employer to recognize or bargain with such a union. Unfortunately, the Secret Ballot Protection Act confirms that Congressional Republicans have, like much of the media, focused primarily on the EFCA's card check provision, while paying much less attention to the equally, if not more, troublesome mandatory interest arbitration requirements.
Democrats have also introduced more moderate legislation to compete with the EFCA. On March 5, 2009, at a time during which there was intense focus on the impending re-introduction of the EFCA, Democratic Representative Joe Sestak introduced the National Labor Relations Modernization Act ("NLRMA") (H.R. 1355, 111th Cong.). The NLMRA offers several alternatives to the EFCA. First, rather than eliminating secret ballot elections, it would require that, during an election campaign, an employer notify the union about any opposition activities in which it intends to engage, such as holding meetings, making announcements, displaying signs, or distributing literature to employees. Second, during the campaign, an employer would be required to provide the union with equal access to the workplace to engage in the same type of activity. Next, the NLRMA would limit the mandatory arbitration requirement to employers with 20 or more employees, would extend the parties' time to negotiate freely from 90 days to 120 days, and would extend the subsequent mediation period from 30 days to 120 days. Finally, a first agreement achieved through arbitration under the NLRMA would be binding for 18 months, rather than the 2 years required under the EFCA. The NLRMA had no co-sponsors, and it remains to be seen whether Democrats who are wavering in their support for the EFCA will consider this new bill as a viable compromise.
Recently, faced with ongoing, heated debate surrounding the proposed EFCA, Senate Democrats have been rumored to be working on a compromise requiring the use of dual-purpose cards that would offer employees the option of immediately authorizing a union to represent them or requesting the conduct by the National Labor Relations Board ("NLRB") of a secret ballot election.
Several state legislatures also are considering measures spawned by the EFCA. The legislatures in Florida, Georgia, Missouri, South Carolina and Utah are each considering some form of an amendment to their state constitutions that would guarantee the right to secret ballot elections. Other states, including Hawaii, are considering their own state versions of the EFCA. These state legislative initiatives are generally recognized as attention-grabbing maneuvers intended to spark a dialogue about the secret-ballot procedures. Any state efforts to regulate NLRB representation procedures likely would be preempted by the NLRA.
Other Proposed Compromises
With support for the current version of the EFCA diminishing, alternative proposals are garnering more attention from both sides. Some union leaders are beginning to acknowledge that changes are needed. On the heels of Senator Specter's announcement that he would not support the EFCA in its current form, the political director of the AFL-CIO was quoted by the Wall Street Journal as stating that it would be "unusual" if the EFCA was passed as it was introduced. And on March 19, 2009, Senator Evan Bayh of Indiana announced that he and a group of 12-15 moderate Democrats have formed a committee that will act together on fiscal legislation. This committee, if successful, would have significant influence over Senate matters and could be instrumental in formulating revisions to the EFCA.
Most notably, while certain compromises, like the Secret Ballot Protection Act, continue to focus primarily on the EFCA's card check provision, businesses are waking up to the dangers of compulsory binding interest arbitration. On an earnings call with investors in late February, FedEx General Counsel decried the arbitration provision as "not just bad for FedEx - it's bad for business as a whole," particularly because arbitrators have no responsibility to employees, to management, or to the shareholders of a company.
Alternative proposals that have already been suggested include the following:
• The "Third Way." In late March, three major retailers - Starbucks, Costco and Whole Foods - proposed an EFCA alternative that would, among other things, retain secret ballot elections, not require arbitration, provide unions with greater access to meet with workers, seek to quicken the election process, and expedite enforcement of and provide stricter penalties for serious labor law violations.
• Senator Specter's proposals. Among other things, Senator Specter supports a faster election process (with an election occurring in some circumstances as early as 10 days after a petition is filed), broader definitions of unfair labor practices for unions and employers, greater penalties for employers engaging in unfair labor practices, and mediation after 120 days of bargaining (but not compulsory arbitration).
• 70-50-30 . Another compromise, known as the "70-50-30" proposal, would permit unions collecting signed authorization cards from 70% of the employees in a proposed bargaining unit to be certified as the employees' exclusive collective bargaining representative without a secret ballot election. NLRB certification of unions collecting authorization cards from 50 percent of the proposed bargaining unit would still require the union to win a NLRB conducted secret ballot election. However, the election would be held within 10 to 15 days of the filing of a petition. Unions collecting authorization cards from 30 percent of the proposed bargaining unit would be permitted to conduct employee meetings on the employer's premises during the pre-election campaign period in support of their efforts to win an NLRB conducted secret ballot election.
Advice For Employers
Employers have cause to be concerned about the proposals to make sweeping changes to the labor laws that have been in place for the past 70 years. Employers would be well advised to take preemptive and proactive measures to prepare for such changes.
• Develop a plan . Designate a team to monitor developments in the legislative process, provide updates to management, and develop a written response plan.
• Review and revise policies now . Review any policies, handbooks, or manuals that deal with issues of labor relations to ensure compliance. Consider promulgating anti-solicitation/ anti-distribution rules. Be vigilant to ensure that policies and those enforcing such policies treat employees fairly and respectfully. Ensure that lines of communication with rank and file employees remain open and that managers are responsive to employee concerns. Establish and maintain a positive working environment.
• Train supervisors, middle managers and senior executives . Educate supervisors, managers and senior executives about labor laws and penalties, as well as the true costs of union membership (initiation fees, dues, assessments, fines) and the effects of union rules on the workplace. Train supervisors to recognize subtle signs of union organizing: employees meeting secretively in groups in parking lots or break rooms; a sudden increase in questions regarding employee rights and grievance procedures; and/or a surge in workplace complaints.
• Train employees . Educate employees regarding card check procedures and elections, and the risk of signing anything without fully understanding the purpose of what they are signing. Although the common method for obtaining employee authorizations is by using a "card," there is no required form of authorization. Educate employees about why a union is an unnecessary third party in the employer-employee relationship. Stress the positive aspects of the workplace and the terms and conditions of employment.
• Develop a plan for arbitration . If compelled to arbitrate within only four months of a union certification, an employer will need to be in position to best present its case to the arbitrator. Develop a plan now, including identifying those persons who will be responsible for the arbitration, identifying the terms and conditions of employment that will likely be contested in arbitration and the evidence that will be presented to support the employer's position.
While there remains considerable uncertainty about whether the EFCA will pass, and if so, in what form, employers must be ready to act if and when the labor law landscape that has existed unchanged for 70 years shifts beneath their feet. 1 Technically, under the EFCA, employers could still resort to the secret ballot process, but only in circumstances in which the union petitions the NLRB with authorizations from more than 30 but less than 50 percent of the employees in a proposed bargaining unit.
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.