Debate: Controversial Employee Choice Act

To business groups, it represents a grave threat to management control and cost structures. Their fears were summed up by Tom Donohue, president and CEO of the U.S. Chamber of Commerce, who called it a union power grab that would expose workers to intimidation and “give government authorities the power to dictate wages, benefits, and other fundamental business operations.”

To organized labor, it’s a long overdue change designed to restore rights that were established in the National Labor Relations Act of 1935. Their voice is reflected in the frustration of David Newby, president of the Wisconsin State AFL-CIO. “The problem is that we’ve got well over half of the American workforce, about 60 million workers, that consistently say in polls that they would like to have a union and don’t have one,” Newby said. “We’ve only got about 12% of our workers who have unions, and the problem is the process, which has been corrupted over the years in order to give major advantages to anti-union employers – making it almost impossible to organize in the private sector.”

Not Getting into the Act

To the relief of business interests, the two most controversial elements of the Act have, for the time being, been defeated. One element was the so-called Card Check provision, where a union would represent everyone in a group if a majority of workers in the group sign a card distributed by an organizer. Opponents say this provision would remove the secret ballot in union elections. The other provision would have established a first contract mediation-arbitration process (called interest arbitration).

The Federal Mediation and Conciliation Service would be involved if there is a need to mediate a first-contract dispute, and disputes would go to binding arbitration if the FMCS is unable to forge an agreement within 30 days.

While a modified interest arbitration provision could be part of a new bill, both original provisions became a moot point when Pennsylvania Senator Arlen Specter, who was heavily lobbied by both labor and business groups, announced his opposition to them.

That effectively prevented proponents from gaining a filibuster-proof majority of 60 votes, but other provisions of the original bill still could become part of the National Labor Relations Act.

Dan Barker, a Melli Law, partner, believes faster union elections and significant penalties for labor law violations will survive: “I think we’re definitely going to see a bill going to a vote with those provisions.”

Laboring for Reform

In the original National Labor Relations Act, there were two ways that a union could be certified. One way was for 30% of the workers in a given company to go to the National Labor Relations Board, which was set up to enforce the nation’s labor laws, and ask for an election among all the workers in that particular firm.

The other way was for workers, either through petitions or cards, to organize through their employers. If they had a majority of workers who wanted to be represented by a union, the employer would – in the early days – recognize the union and bargain a contract, according to Newby. “What has happened since the early 1940s is that as a result of both legal and administrative rulings, the choice as to how – not only whether, but how – workers are going to organize has shifted from the workers to the corporations,” he stated.

Today, if workers approach management with signed cards that indicate a solid majority wants to form a union, Newby said management almost always will direct them to go to the National Labor Relations Board and have them schedule an election.

“That would be the so-called secret ballot elections being talked about today,” Newby said. “The problem is not the secret ballot, itself, but the fact that what that triggers is a delay in the process of workers expressing their own desire – usually of at least six weeks if there are no challenges or no glitches.

“If an employer really wants to string it out with various challenges to the National Labor Relations Board, they can delay an election for up to a year or even longer.”

Newby noted that there is a multi-billion-dollar industry, often linked with corporate law firms, that has developed very effective programs to convince workers that they should not vote for a union. It involves meetings that workers are required by the employer to attend because they are on company time – meetings at which management will show anti-union videos and give anti-union speeches, he said.

“You also have the situation where the employer is in complete control of the workplace, and part of what they do is to forbid workers from talking about a union during work time. But they can have their supervisors, one-on-one, talk to workers and say, ‘We don’t think a union is the best thing for this firm, and we strongly urge you to vote against it,’” he said. “People understand that the people they are talking to are the ones who are in charge of any raises, promotions, and so forth.”

In Newby’s view, the result is a very intimidating atmosphere in which workers are afraid to come out publicly in support of the union. In 25% of the cases in the private sector where there is an organizing drive, he said the employer will illegally fire at least one of the leading union organizers. “Even though it’s illegal, the shortest time that a person can be restored to their job is about a year,” he stated. “If the employer wants to go through the entire process, it takes about four years, and obviously by that time the intimidation and harassment has been very effective in stopping any kind of move toward a majority voting for a union.”

Under current law, if an employer terminates an employee for lawful unionizing activities, or any activity relating to an employee’s pro-union beliefs, the penalty is simply to pay back the employee for the work he or she missed. The Employee Free Choice Act would triple that penalty.

Short of termination, if an employer interferes with employee rights to organize, then the National Labor Relations board would be given the authority to penalize employers up to $20,000 per violation. Some violations, Barker noted, are things that are not necessarily intuitive to most employers. For example, one of the most common things he sees as an unwitting labor law violation is that many private employers have a policy in their employee manuals that prohibits workers from discussing salaries or pay amongst themselves. To prevent jealousy and other turbulence in the workplace, that policy makes sense to employers, but labor law is focused on collective activity. Part and parcel to that, he said, is the right to talk about compensation with co-workers.

While that has been illegal in the past, Barker said there has been no serious financial penalty for that kind of violation. “It’s that kind of thing that I think has the most dramatic impact on employers,” Barker said.

According to Barker, the lawful reasons an employee can be terminated are performance-based. No employer can fire a worker for protected union activity, or threaten to close down, or take away employee benefits for unionizing or promise to increase them for not unionizing, or “interrogate” workers about union activities, or make it appear to employees that they are being spied on for union activities. “We call that TIPS [threats, interrogation, promises, and spying],” Barker said. “Those are things employers can’t do.”

If employers avoid these things, they have wide latitude to talk to employees about the affects of unionization in other companies, Barker added. They can, for example, make lawful predictions about what impact the union’s contract demands would have on the employer’s business.

Business Threats?

In Barker’s view, the impact of the Card Check and the interest-arbitration provisions would have been devastating to business. He said the Card Check provision does not give businesses the “effective opportunity” to communicate to their employees what unionization really means, and the interest-arbitration provision could have meant government-imposed contracts. “That could result in a contract that an employer might not be able to live with, and that could make things very economically difficult for the employer,” Barker said.

Stating that Card Check is an equally valid way of determining whether a majority of workers want a union, Newby said there are no restrictions on employer communications beyond those in the current law. What labor wants, he asserted, is for workers to have the choice of whether they want a secret ballot, a National Labor Relations Board process, or a majority sign-up process.

Barker contends that under the interest-arbitration provision, many contractors in the construction industry that are perfectly happy with their current health and 401(k) plans might, if they become unionized, have to join a multi-employer health fund that unionized contractors participate in. If the employer is unsuccessful in bargaining with the union, they may have to go to an interest arbitration proceeding, and in that proceeding, the union may demand that the employer participate in a multi-employer health fund and a multi-employer pension fund. Since many construction contractors participate in those plans, it is possible that an arbitrator could order the employer to participate in them as well.

According to Barker, this can be problematic for two reasons: One, rates in those plans may be significantly increased for similar coverage; two, the plans have a significant withdrawal penalty. “That means if an employer ever stops participating in a pension plan that is under-funded, where the current plan money is not sufficient to pay the claims of vested participants, then the employer is assessed a withdrawal liability assessment,” Barker noted. “For some plans, those assessments can be in the millions of dollars.”

Newby said the benefits that union workers in the construction industry get are generally better than benefits of workers in non-union construction firms. “The funds that we are talking about here are jointly trusteed by labor and management representatives, so they are not simply union funds, they are jointly run by labor and management,” he said. “If a construction firm were organized, would that firm be required to participate? Probably so.

“Is it going to cost them more than it does now? That depends on what they are providing in terms of benefits, but we certainly have a very large union construction industry in Wisconsin that’s doing quite well and that can compete pretty effectively against non-union firms.”

Newby feels that it’s very unlikely that the government would be able to impose a contract that a business could not live with.

“We have interest arbitration in the public sector in Wisconsin and some other states; we’ve had it since the 1970s, and it has worked out extremely well,” he said.

"The track record is that the arbitrator rules for management about 50% and for the union about 50%.”

Newby emphasized that mediation-arbitration assures that workers will get a fair first contract. “It doesn’t go beyond the first contract.”

Silver Lining

In Barker’s view, one positive aspect of a weaker bill is that it could make employers pay closer attention to their legal opportunities. By simply informing employees of what unionizing means, Barker believes employers cansuccessfully win union-organizing campaigns.

“There are a number of employers who are not educated about how to lawfully respond to protected employee activity,” he stated.

“Employers should learn the law and learn how to lawfully deal with protected activity.”

At a minimum, Newby hopes the ultimate law protects workers’ rights to form a union. “I’m saying this from the perspective that workers need to have the bargaining power with their employers in order to improve their wages, and improve their working conditions and their benefits if we are to restore a middle class in this country,” he said. “And once again, improve the standard of living of working people and middle-class people, which we have not had for almost 30 years.”