Could labor finally get its day?
The Workplace Democracy Act has yet to gain traction in Congress, but if passed it would shatter the employer-employee dynamic in Madison.
From the pages of In Business magazine.
For more than 25 years, Vermont Senator Bernie Sanders has been trying and failing to pass his Workplace Democracy Act (WDA), a proposed labor law that, among its different forms, would remove obstacles to employers making collective agreements, establish an impartial National Public Employment Relations Commission to support fair collective bargaining, require that pension plans are jointly managed by employee and employer representatives, change the definition of an “employee” to ensure every person who works for other people has labor rights, and repeal all “right-to-work” laws.
Sanders has introduced the bill in Congress no fewer than seven times, with the two most recent attempts — in 2015 and again this spring — co-sponsored by Congressman Mark Pocan, who has represented Wisconsin’s second congressional district, based around Madison, since 2013. U.S. Senator Tammy Baldwin, who held Pocan’s seat prior to 2013 when she successfully ran to replace Sen. Herb Kohl, is also a co-sponsor. The 2018 version of the bill includes provisions on misrepresenting employee status by employers and repealing right-to-work laws. It left out provisions on pension representation.
To be fair, unless the prevailing political winds in Washington, D.C. undergo a seismic shift in the next couple years, the latest attempt to pass the WDA will most certainly stall again. However, with prominent Wisconsin lawmakers now on board and leading the charge to pass the WDA, IB wondered what if? What if a more favorable Congress passed the WDA and the bill got signed into law by the president? And if enacted, how would local employers and workers be impacted?
Democracy in the eye of the beholder
When Pocan and Sanders announced the introduction of the latest version of the WDA on May 9, they touted the bill as legislation that would strengthen the middle class by restoring workers’ rights to bargain for better wages, benefits, and working conditions.
“Republicans like President Trump and Governor Walker continue to crack down on unions and push a special interest, corporate-driven agenda that makes it harder for middle class families to get ahead,” noted Pocan, who is also a member of the International Union of Painters and Allied Trades. “And while they stack the deck against the American worker, unions are fighting to expand economic opportunity and strengthen the middle class. The Workplace Democ-racy Act restores real bargaining rights to workers and repeals the right-to-work laws like those that Gov. Walker has used to undercut American workers.”
Those strong words were backed by Sanders, a long-time ally of the labor movement.
“We must no longer tolerate CEOs and managers who intimidate, threaten, or fire pro-union workers, who threaten to move plants to China if their workers vote in favor of a union, and who refuse to negotiate a first contract with workers who have voted to join unions,” Sanders said. “If we are serious about reducing income and wealth inequality and rebuilding the middle class, we have got to substantially increase the number of union jobs in this country.”
Pocan and Sanders firmly believe that unions lead to higher wages, better benefits, and a more secure retirement. They note that union workers earn 26 percent more, on average, than non-union workers. Union workers are also half as likely to be victims of health and safety violations or of wage theft, 18 percent more likely to have health coverage, and 23 percent more likely to have either an employer sponsored pension or 401(k).
In their view, the rights of workers to join together and bargain for better wages, benefits, and working conditions have been severely undermined. Sixty years ago, nearly a third of all workers belonged to a union. Today, that number has gone down to less than 11 percent. When workers become interested in forming unions, 75 percent of private-sector employers hire outside consultants to run anti-union campaigns, and an employee who engages in union organizing campaigns has a one in five chance of getting fired. With public support for unions at 61 percent, the highest in 15 years, virtually every major union in America has endorsed this legislation.
“Wisconsin has a proud tradition of respecting hard work and rewarding it by giving workers a strong voice,” said Baldwin. “This legislation will strengthen the economic security of working families and move Wisconsin’s tradition of supporting workers forward.”
According to a fact sheet provided by Pocan’s office, the WDA would:
- Allow for unions to organize through a majority sign-up process, allowing the National Labor Relations Board (NLRB) to certify a union if it receives the consent of the majority of eligible workers.
- Enact “first contract” provisions to ensure companies cannot prevent a union from forming by denying a first contract. Employers would be required to begin negotiating within 10 days of receiving a request from a new union. If no agreement is reached after 90 days of negotiation, the parties can request to enter a compulsory mediation process. If no first contract has been reached after 30 more days of mediation, the parties would have a contract settlement through binding arbitration.
- Eliminate the right-to-work laws by repealing Section 14(b) of the Taft Hartley Act, which has allowed 28 states to pass legislation eliminating the ability of unions to collect fair share fees from those who benefit from union contracts and activities, undermining the union’s representation of workers.
- Expand the definition of employer to ensure employers can no longer avoid responsibility and prevent workers from organizing by designating certain workers as independent contractors, supervisors, or through franchisee arrangements.
- Allow for secondary boycotts and picketing, reinstating a union’s freedom of speech to take action to pressure clients and suppliers of companies opposing unions.
- Expand and update the persuader rule. Companies would be required to disclose anti-union information they disseminate to workers, including funding third party anti-union consultants who would have to register and be law abiding. Whatever contact information (email, phone, mailing addresses) the employer uses will need to be shared with union organizers, and employers will be prohibited from forcing workers to attend campaign activities that are unrelated to the employee’s job duties.
To be sure, it’s a worker-friendly piece of legislation, at least according to Pocan, Baldwin, Sanders, and the rest of the WDA’s supporters.
Opponents, on the other hand, paint a different picture.
The U.S. Chamber of Commerce, which bills itself as the world’s largest business federation, focused on policies that create jobs and grow the economy, called the re-introduction of the WDA, “the ghost of labor reforms past.”
However, in a response to Pocan and Sanders on May 9, the U.S. Chamber stated its belief that the legislation is far more dangerous than the Employee Free Choice Act of 2009, a similar piece of legislation regarding pension fund management. “For example, it includes language that would codify in federal law a strict new definition of independent contractor imposed in California by the state Supreme Court. This stringent, three-factor test could make using independent contractors difficult, if not impossible, for many tech companies, gig economy firms, and startups.
“The Workplace Democracy Act would also repeal right-to-work in all states, thereby overriding laws passed by 28 states. It would also codify the NLRB’s joint employer ruling, putting any two companies with a contractual relationship in jeopardy of being jointly liable under the NLRA.”
Where advocates of the WDA argue that it will improve conditions for workers, opponents point to each of the provisions as harbingers of doom that will make doing business much more difficult, if not impossible, if it gets passed.
The arguments against the WDA, as stated by the U.S. Chamber, are:
- Unions could be certified based solely on signed cards instead of a secret ballot election — the infamous “card check” provision. The WDA also includes a binding arbitration provision that would force employers to accept contracts mandated by arbitrators.
- By repealing right-to-work laws, workers in all 50 states would have to pay union dues, whether they want to or not.
- It would codify the California Supreme Court’s Dynamex Decision, which articulated a three-part test for when a worker can be classified as an independent contractor. This decision could hit the tech sector, startups, and “gig” economy companies especially hard.
- It also codifies Browning-Ferris (BFI), which replaces a “direct control” standard for determining joint employer liability with an “indirect control” or “potential to control” test. Under this new standard, thousands of employers could face liability for workplaces they don’t manage and workers they don’t employ, which primarily affects franchisors.
- It gives unions a license to launch disruptive protests and pickets at businesses that have no involvement with unions.
- Employers would be prohibited from requiring employees to attend on-the-clock meetings where the employer can explain their position on unionization.
“This bill does nothing to protect freedom of choice, promote education, or provide privacy to employees making personal decisions about workplace rights,” says Callie Harman, director of labor and employment policy for the National Association of Manufacturers. “It would reclassify many independent contractors and entrepreneurs as employees — limiting an individual’s opportunity to have a more flexible work schedule and personal autonomy. The bill would also eliminate ‘secondary boycott’ protections, codify ambush elections, and undermine attorney-client confidentiality.”
Big changes for local employers
Whether the WDA is good or bad for labor and employment is clearly a matter of heated debate, but local employment law attorneys agree if the bill ever becomes law it will mean some serious changes for Madison businesses.
Assuming the bill survived challenges by the state, which could be fought on various grounds including state sovereignty under the 10th Amendment, the Workplace Democracy Act would impact certain elements of Wisconsin’s existing labor laws, notes Colin Good, senior counsel at Madison-based Hawks Quindel S.C.
“For instance, the WDA would abrogate Act 1 — the right-to-work law — by repealing the state’s right-to-work law. Similarly, the WDA would abrogate Act 10’s requirement that unions win, every year, support from a majority of employees in the bargaining unit, not just a majority of those voting in the certification election, through the use of ‘signed cards’ — often called a ‘card check.’”
The WDA would also change Wisconsin’s “economic realities test” in determining who is an employee versus an independent contractor. Wisconsin traditionally looks at six factors to determine whether an individual has sufficient economic independence to operate a business on his or her own, or is economically dependent on the employer to be an employee, Good explains. The WDA makes a lot more individuals employees by imposing stricter requirements for who is and is not an independent contractor.
“This would have a positive impact on people who work for ‘gig’ economy companies like Uber, which attempt to distance themselves from the people who provide services on their behalf,” says Good. “Employees have many more rights, such as coverage under the Family Medical Leave Act and the ability to bring suits for discrimination and retaliation, than independent contractors.”
The WDA would also broaden Wisconsin’s definition of what constitutes a “joint employer” for purposes of establishing liability. For instance, Wisconsin adopted the definition of “franchisor” found in the Code of Federal Regulations through the passage of 2015 Wisconsin Act 2013. Under that act, franchisors can be treated as an employer of its franchisee’s employees if the franchisor has agreed in writing to assume that role or the franchisor has been found by the applicable department or division of state government to have exercised a degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purposes of protecting the franchisor’s brand.
According to Good, it is important to note that, while repealing any right-to-work legislation and making it easier for employees to form unions, the WDA does not require that employees join unions or force employers to organize its workforce into unions. It would, however, make organizing and sustaining a union much easier.
“The impact of the WDA on Madison-area employers could be substantial,” says Good. “The WDA would [require] employers to take financial responsibility for their employees, instead of letting them languish as independent contractors. It would also impact employers, and franchisors specifically, by increasing their liability for lawsuits arising from discrimination or retaliation. It would also prevent employers from interfering with employees who wish to organize. It would potentially increase costs associated with running a business, but that is not a certainty.”
However, smaller employers are not likely to see much, if any, impact, as workers at small companies are less likely to unionize, notes Jessica M. Kramer, partner at Kramer, Elkins & Watt LLC in Madison. She adds though that it’s not just about the size of the employer, but about how it sets terms and conditions of employment and how flexible it is in being willing to listen to its employees’ concerns and wishes.
“Smaller employers, particularly newer ones, tend to be more open to including employees in the development of their policies and practices, as they may not have any other starting point,” explains Kramer. “Also, we are seeing an increase in employers wanting to give employees some ownership in the business, which can create a different dynamic altogether.
“As for larger employers, they may see more union-related activity and they may see their workers take more of an interest in such activity, particularly if there has been high turnover or unrest among their workers in recent years,” Kramer continues. “Employers who already have union members as employees or whose employees have been moving in the direction of organized labor may see things progress more quickly, particularly when a union contract is first being negotiated, as this legislation puts strict timelines on the contract negotiation and execution process and incorporates mediation and arbitration as a means to ensure the negotiation gets completed in time.”
Kramer says as a practical matter this means those employers will have to devote more time and attention to the collective bargaining process in a shorter period of time, which may mean having to make some adjustments to business operations and staffing.
“Employees wanting to organize or beginning to organize may benefit from the fast-tracked process, which is clearly the intent of the legislation,” states Kramer. “This would be most apparent in industries where there have been complaints of wage stagnation and workers have been asking for pay increases across the board, but have not been seeing them. Under current law, if a union is formed and workers sign on, it can take some time for the workers to see results in the form of increased pay or benefits.”
Good bristles at the notion opponents to the WDA have put forth that the legislation would make it nearly impossible for tech companies, gig economy firms, and startups to use independent contractors, not to mention that the act would give unions the license to intimidate employees.
“The WDA would not stifle innovation or the operations of the companies [above],” comments Good. “Instead, it would allow companies to finally take responsibility for the financial well-being of their employees, many of whom work without benefits, safe working conditions, or good wages. Any business model that is predicated on denying employee access to benefits, a safe environment, and sustaining wages, while potentially advantageous to the business from a fiscal perspective, is misguided, at best.”
As for claims that the WDA would allow unions to intimidate employees, Good says they are meritless. “Employees deserve the right to associate with whom they please and to organize into unions to promote wages, benefits, and safe working conditions. Those benefits alone should persuade employees to join unions, no intimidation necessary.”
Kramer has a slightly different take.
The factors laid out in this legislation to more clearly draw a line between the definition of “employee” and “independent contractor” are not much unlike the factors that already govern those classifications in Wisconsin under worker’s compensation (WC) and unemployment insurance (UI) laws, she says.
For example, to be an independent contractor under the Workplace Democracy Act, an individual must be “free from control and direction” as he or she performs the services (the work). “Direction and control are already some of the main factors in existing WC and UI laws,” notes Kramer. “It is likely that a large number of tech companies and other startups are already running afoul of one or more laws in classifying their consultants as independent contractors rather than employees. I have seen an increase, just with my clients, in audits by the Department of Workforce Development that zero in on this misclassification issue in an effort to collect past WC premiums and UI taxes, with penalties and interest added.”
However, Kramer notes a company may have more interest in keeping a person classified as an independent contractor for the purposes of union eligibility than it does for WC or UI purposes, as the formation of a union and individuals’ membership therein may have a longer-term and further reaching impact than whether a company has to pay a few hundred dollars a year in UI taxes on an employee.
“But to speak to whether this legislation would make it harder to use independent contractors: probably, at first,” Kramer admits. “Companies wishing to use independent contractors would need be mindful of the definition of independent contractor laid out in this law, and that may mean restructuring the relationship with its independent contractors and possibly changing what work is farmed out to independent contractors and what work is done in house.
“I don’t read the legislation as giving unions a ‘license’ to do anything,” Kramer adds. “However, would unions be able to be more relentless in their efforts to get workers organized? Probably. One facet of the proposal — that unions would once again be able to put pressure on third parties (for example, suppliers of a company) as part of their effort to expose the anti-union position of the company — could be seen as allowing unions to bully those third parties. If a supplier is big enough or has enough of a market share for a particular product, and it receives pressure from unions, it might, in turn, pressure its client company to pull back on its anti-union stance by threatening to pull its supply. That’s a gross oversimplification, but the idea is that unions would be able to increase their presence in ways they are currently prohibited from doing.”
On the flip side, Kramer argues, some might say that employers have too much freedom to intimidate now, and this proposal is an effort to curb that by requiring more transparency. “Any way you slice it, there will always be unions who want to organize workers and there will always be employers who want unions nowhere near their businesses. That much will not change; however, the dynamics of the relationships among these parties, as well as the workers involved, certainly would.”
Timeline of Wisconsin labor history
1847 — Milwaukee bricklayers form first known union in Wisconsin.
1848 — Carpenters call first strike in Wisconsin.
1867 — Knights of St. Crispin, a union of shoemakers, is founded in Milwaukee. It was the nation’s largest union until its demise during the Panic of 1873.
1886 — Bay View Tragedy: State militia members kill seven workers on peaceful march for establishing the eight-hour workday. It remains Wisconsin’s worst labor violence.
1893 — Wisconsin State Federation of Labor founded (predecessor of Wisconsin State AFL-CIO).
1897 — Formation of Socialist Party in Milwaukee, which helped to develop much of the progressive action in Milwaukee and the state of Wisconsin.
1898 — Citywide strike of woodworkers in Oshkosh from May 6 through Aug. 19 puts thousands of workers on strike against most major industrialists and civic leaders of city. One striker killed in a melee. Conspiracy charges placed on union leaders, but beaten back after dramatic trial led by famed defense attorney Clarence Darrow.
1905 — First Wisconsin civil service law passed.
1911 — Wisconsin passes nation’s first workers’ compensation law.
1931 — Davis-Bacon Act calls for prevailing wages on public projects; similar Wisconsin law is passed.
1932 — Wisconsin passes the first unemployment compensation law in the nation.
1935 — American Federation of State, County and Municipal Employees Union founded in Madison.
1936-1939 — Workers organize into unions after passage of Wagner Act; hundreds of thousands join, from Kenosha to Superior, making Wisconsin one of most heavily unionized states.
1937 — Wisconsin Employment Relations Act is approved, supporting the right to unionize, two years after the National Labor Relations Act is approved at the federal level.
1945 — Wisconsin is one of the first three states to bar employment discrimination on the basis of race, creed, national origin, or ancestry.
1946-1947 — A long strike at Allis-Chalmers Manufacturing Company in West Allis becomes a national symbol of the struggle for shop floor rights and the debate over the role of communism in unions.
1958 — Wisconsin State AFL-CIO created through merger of the State Federation of Labor and Wisconsin CIO.
1959 — Wisconsin allows local government workers to bargain collectively, becoming one of the first states to do so. Later, an amendment was added giving Wisconsin teachers the right to organize.
1963-1970 — Migrant farmworkers organize in Wisconsin, aided by widespread support of unions, AFL-CIO, church groups, and others.
1965 — Long strike by UAW at Kohler Company, begun in 1954, ends with union and company establishing peaceful relations.
1967 — Wisconsin state workers given bargaining rights, five years after federal workers were granted similar rights.
1974 — The Hortonville teachers strike occurs after 10 months of negotiations between the Hortonville Education Association and Hortonville school board grind to a halt. At the time, some teachers in the district had been teaching for over five years without a contract.
1993 — Wisconsin Family and Medical Leave Act takes effect.
2011 — Wisconsin law, under court challenge, bars most collective bargaining by most public unions, spurring massive protests at the Capitol and election recalls.
2015 — Wisconsin right-to-work law enacted.
Sources: Wisconsin Historical Society, Wisconsin Department of Workforce Development, AFL-CIO, Wisconsin Education Association Council, Bureau of Labor Statistics
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