Editor's Note: This article, the interview on the facing page and the other articles and interviews in this Special Section supply information about pending legislative issues about which senior management should be informed so that they can communicate with their legislators - who as their representatives appreciate being informed in advance by their constituents about pending legislation that is harmful to their businesses.
In January 2009, it looked as though passage of the Employee Free Choice Act (EFCA), or Card Check, was a sure thing. A new president had been elected and pledged to sign the bill into law. Democrats held an expanded House majority and a nearly filibuster-proof majority in the U.S. Senate. Unions launched a roughly $5 million advertising blitz just to put the icing on the cake. But a strange thing happened on the way to the party. No bill was introduced to vote on, let alone sign into law.
In fact, EFCA was not even introduced until March, and when it was finally rolled out, it had fewer co-sponsors than in 2007. The House quickly punted on the issue, refusing to take a vote until after the Senate took action. And a vacant seat in Minnesota notwithstanding, backers of the bill soon realized they lacked the votes to overcome a certain filibuster.
So why did a bill that seemed to have so much momentum behind it falter? Part of the answer is a groundswell of grassroots opposition from small business owners, other employers and the public. Another reason is the fact that the bill isn't really needed-unions already win 67 percent of secret ballot elections and added 420,000 new members last year. But in addition, Members realized this was no longer a "free" vote. In 2007, everyone knew President Bush would veto the measure, so supporting EFCA seemed of little importance. But with the new political dynamic, many Members decided it would be best to avoid imposing this sweeping change to labor law on their constituents.
It's easy to see why Members have backed away once one reads the text of EFCA, the provisions of which were covered in a previous article http://www. metrocorpcounsel.com/pdf/2009/April/29.pdf.
The Secret Ballot Issue
Now that EFCA supporters have fallen short of the necessary 60 votes, talk has turned to compromise. A group of five or six democrats, in particular newly-minted democrat Arlen Specter, have been meeting to discuss the outlines of a new bill. So what might this entail?
One suggestion by Senator Dianne Feinstein (D-CA) would replace secret ballot elections with mail-in ballots. Presumably the National Labor Relations Board would send ballots to workers' homes. They could then fill these out and mail them back. But mail-in ballots only move the threat of intimidation from the parking lot to the living room. Unions already visit workers at home during unionizing campaigns - now that home visit would be accompanied by a push to fill out a binding signature card.
An idea rapidly gaining traction in compromise talks is "quickie elections." This proposal would retain secret ballot elections, but require them to be held within a very short time period after the union files the petition for an election (suggestions range from 5-21 days). Even if this maintains the use of the secret ballot, the intent of a very short election period is to prevent employers from having an opportunity to communicate with their workers about unionizing. The union, by contrast, will have talked to workers during the entire time they have been seeking signature cards. To put this in terms a Senator might understand, this would be akin to having someone campaign in your home state for months, unbeknownst to you, and calling for an election when they have reached maximum support. Once that call for an election was filed, you would have just a few days to launch your own campaign before election day. No Member of Congress would call that a fair election.
Mail-in ballots or quickie elections could be combined with another idea gaining steam: union access. This could take one of two forms. The first would require employers to open their doors to union organizers and allow them into break rooms, lunch rooms and any other area workers congregate. Even unions with no realistic prospect of winning an election would be allowed to roam a workplace for weeks or months. This, of course, would be inherently disruptive to the operations of a business - the very antithesis of a core purpose of the National Labor Relations Act.
A second option would require any employer who held a meeting with workers to discuss unionizing to give the union equal time. Advocates of this idea have in mind a high school civics class-style debate between the parties. But anyone who knows labor law understands that employers have strict limits on what they can say during organizing campaigns. Unions, by contrast, are allowed to promise virtually anything to workers. These differing standards mean that no debate could possibly be fair and even-handed.
The Binding Interest Arbitration Issue
The binding interest arbitration provisions of EFCA are, to the unions, more important than any alteration to the current secret ballot system. While they may be willing to give ground on abolishing the private vote, on interest arbitration they have drawn a line in the sand. But recognizing the inherent flaws of this section of the bill, there has been some talk in Congress of potential compromise on this front as well.
One suggestion offered is to simply extend the timeline before an arbitrator can intervene from 120 days to something like 180 days. This is purely a cosmetic change. It would still undermine collective bargaining by eliminating the incentive to compromise; still allow for an employer to be stuck with a contract incompatible with their cost structure and business model; still allow for unprecedented government intervention in free collective bargaining; and still deny workers the ability to vote on their own contract. Just as with the 120 day threshold, an arbitrary 180 day threshold says nothing about the state of negotiations at that point.This threshold does not in any way suggest that either party is bargaining in bad faith, or that negotiations are at an impasse such that a third party must be brought in.
Another potential compromise is baseball-style arbitration, where both sides would submit a final best offer and the arbitrator would select whichever one he or she deems best. While this would prevent the arbitrator from writing the entire contract from scratch, it would still allow a government arbitrator to dictate fundamental business decisions to an employer. It would still prevent workers from voting on a contract. Finally, it would allow a union or an employer to slip in numerous proposals unrelated to central elements of collective bargaining, elements that today are merely "permissive" subjects of bargaining.
One grave, but as yet unpublicized, flaw of first contract arbitration that neither compromise would address is the fact that an arbitrator would have the authority to force companies into union pension funds that are careening towards insolvency - putting substantial new liabilities onto their balance sheets. Under pension law, an individual business owner could even be stuck paying benefits to individuals who never worked for his or her company. This alarming consequence of EFCA has escaped public attention, but it could easily destroy many employers, particularly small businesses, and the jobs those employers provide.
How bad are union pension fund finances? The Sheet Metal Workers National Pension Fund, for example, is funded at only 39 percent, meaning it has the equivalent of 39 cents on hand to pay a promised $1.00 of benefits. The Plumbers and Pipefitters National Pension Fund is funded at just 54 percent. The United Food and Commercial Workers International Union Pension Plan for Employees is just over 68 percent funded. And the Service Employees International Union recently reported that one of its largest pension plans is in "critical" status because it won't have enough money to pay promised benefits.
A possible outcome of the compromise talks is a bill that includes quickie elections, a heavy-handed approach to interest arbitration, and a penalty regime that looks very similar to the existing version of EFCA. Such a bill would represent little change from what's currently on offer, and could be dubbed Card Check "lite." Whether or not such a bill could generate 60 votes is open to question. Whether the crowded Senate schedule would allow time for such a divisive bill is an even greater question. And given the public's hostility towards EFCA, there may not be much appetite for it in an election year should the issue roll into 2010. But Senator Tom Harkin (D-IA) has pledged to force a vote on a compromise, if possible, or the original bill, if necessary. Suffice to say, this issue is far from over.