United States: EFCA: How President-Elect Obama Might Change Labor Management Relations

Will President-Elect Obama Sign The Employee Free Choice Act?

The just-ended political campaigns have familiarized many voters with the fact that some candidates have promised to support a bill called the "Employee Free Choice Act," and that the bill would take away the right of working people to vote in private about whether they want to be represented by a union. In Minnesota, the close Senate race between Republican Norm Coleman and Democrat Al Franken featured almost-daily Republican advertisements criticizing Franken for supporting EFCA. Even former Democratic Presidential Nominee George McGovern weighed in on the issue generally. To the surprise of many, he appeared in an advertisement speaking against the bill and criticizing organized labor for overreaching in trying to take away the right of working people to vote in private. While the focus of the political ads was on the fact that the bill would disenfranchise workers, there are many other provisions of the bill that have not been widely discussed that would dramatically change federal labor law.

This bill deserves your careful attention at this time because President-Elect Obama supported EFCA during the presidential campaign, particularly during the Democratic primaries.

A Brief Summary of EFCA's Legislative History

EFCA was introduced in the United States Congress in February 2007. Because President Bush was expected to veto it, it sailed through the House on a vote of 241 to 185, which was largely along party lines. It was then filibustered by Senate Republicans. On June 6, 2007, the Democratically controlled Senate moved for cloture -- a vote to end the Republican filibuster -- but failed to get the 60 votes needed. The billed then died in the Senate, but not on the campaign trail.

The Presidential and Senate Elections

President-Elect Obama has been a supporter of EFCA and, after the election, Democrats appear to have at least 57 seats in the Senate (including Independents Bernard Sanders of Vermont and Joseph Lieberman of Connecticut). If Republican Arlen Spector's votes for cloture (as he did in June of 2007), that would get the Democrats 58. Plus, it is still possible that Republicans could pick up more seats because of the runoff election in Georgia, the recount later this month in Minnesota, and the likelihood of special election in Alaska (to replace convicted Senator Ted Stevens). However, most political pundits think it is unlikely that Republicans will win more than one of those seats. So, as this article goes to print, EFCA is likely to either die in another filibuster or be substantially re-written by the next Congress. (Perhaps history will repeat itself: In 1977-78, the new Carter administration supported the "Labor Law Reform Bill." It, too, would have changed the election process dramatically and sharply enhanced remedies for violating federal labor laws. While it sailed through the House by a vote of 257 to 163, it was filibustered in the Senate where it died after a half dozen unsuccessful cloture votes.)

Although President-Elect Obama has said that he supports EFCA, he has never categorically said that he would sign it without changes. Many Democratic candidates for House and Senate seats across the country also said early on that that they were supporters of the bill. As the political campaigns ensued, EFCA was highlighted in dozens of television advertisements across the country. While few Americans may have known in 2007 (when the bill was introduced) what the Employee "Free Choice" Act would mean to them, many now understand that "free choice" is not necessarily what the bill is about. Yet most Americans still do not understand all of the other ramifications of this bill. Tuesday's election victory for President-Elect Obama makes it certain that Democrats will reintroduce EFCA in the 111^th Congress. So, now is the time to understand clearly what this bill would mean to labor-management relations in the United States.

How EFCA would Change the Law

EFCA would amend the National Labor Relations Act, 29 U.S.C. §§ 151, et seq. (the "Act" or "NLRA") in four important respects.

1. Disenfranchisement of Workers: First, as noted above and in numerous political campaign ads, EFCA would take away the right of workers to vote in a secret ballot election if a majority of them have signed "valid authorizations designating [the union] as their bargaining representative."

Since 1935, the NLRA has empowered the National Labor Relations Board (the "Board") to hold "an election by secret ballot" when (with limited exceptions) a union petitions the Board with evidence that a "substantial number of employees" wish to be represented by the union in collective bargaining. 29 U.S.C. § 159(c). The Act also empowers the Board to hold a "secret ballot" election whenever a substantial number of employees petition the Board to "decertify" the union. For more than 70 years, the Board has treated dated signatures (on appropriately worded authorization cards or petitions) by 30 percent or more of the employees in an appropriate bargaining unit to be a "sufficient showing of interest" to cause the Board to hold such an election. (Whether or not an employee signs such a card or petition, the employee has the right to vote for or against union representation in the secret ballot election. ) Most elections are held within 42 days, and 94 percent of all elections are held within 56 days, from when such petitions are filed. This 6 to 8 week period is typically referred to as the "critical period" because it is during this period of time that the union, the employer, and the employees engage in their own "political campaigns," each trying to persuade the employee voters about why they should vote for or against the union. What the employer and the union may say to employees is strictly regulated by the Board, and either party may file "objections to conduct affecting the election" if it feels that the "laboratory conditions" necessary for a fair and free vote have been compromised. This is, in general terms, the process that has been in place for 73 years and it works: unions have historically won about half of the elections, and that number has increased in recent years to more than 59 percent.

The labor movement's push for the passage of EFCA is premised on the unproven assertion that fair and free secret-ballot elections are impossible because employers allegedly threaten, coerce and intimidate employees into voting against union representation. Unions insist that filing election objections does not work because the process takes too long, and that the remedies are ineffectual. In fact, however, no objections are filed in more than 90 percent of the cases and, as indicated above, unions win almost 60 percent of the elections. While there are undoubtedly instances when employees may feel coerced into voting for one side or the other, it is hard to understand how taking away secret ballot elections will make employees less susceptible to threats and intimidation. Moreover, there is nothing in EFCA that addresses the threats, intimidation or coercion by unions (and their employee supporters) at the "point of sale" when they are trying to "persuade" an employee to sign a union authorization card.

EFCA says in Section 2 that:

"[W]henever a petition shall have been filed by [a union] alleging that a majority of employees in a unit appropriate for the purposes of collective bargaining wish to be represented by [the union], ...[i]f the Board finds that a majority of the employees ...has signed valid authorizations designating [the union] as their bargaining representative..., the Board shall not direct an election but shall certify the [union] as the representative...." (emphasis added).

The same section requires the Board to develop "model collective bargaining authorization language that may be used" for such signed authorizations, and "procedures to be used by the Board to establish the validity of signed authorizations...." (Presumably, "authorization cards" that are currently used by unions to petition the Board for an election or to request that an employer voluntarily recognize the union would not be permitted, but that is not entirely clear.) However, nothing in EFCA addresses what new rules, if any, the Board should adopt to assure that employees can decide without coercion whether to sign the new, binding authorization cards without coercion.

Nor does anything in EFCA permit employees who have become disenchanted with union representation to use the same expedient of signed cards to "decertify" the union without an election being held. It is unclear why a secret ballot election would still be necessary to protect employee free choice when the employees are soliciting one another to decertify the union they are unhappy with, but unnecessary to protect employee free choice when a union is trying to persuade employees to sign petitions in support of the union.

Most opponents of EFCA believe it is designed simply to make it easier for unions to become the exclusive bargaining representative for groups of employees that they secretly target. Nothing in the bill requires the union to notify the employer before it starts to solicit signatures from employees. And unions hope that they will be able to get a majority of the employees to sign binding union authorization cards before the employer (or employees who would oppose unionization) ever know that a card-signing campaign is afoot. If that happens, the employees will never hear the arguments against unionization before designating the union as their bargaining representative.

Because card signing will almost always take place under a veil of secrecy, employers who wish to remain union free will need to devise "constant-campaign strategies" that, at minimum, alert employees to the risk that signing a union card may mean giving up the right to hear a debate about the issues and vote in a secret-ballot election. Constant campaigning will be both expensive and time consuming, and employers who have not yet been targeted may eventually be perceived as "crying wolf."

2. EFCA May Compel a Costly Mediation and Arbitration Process That Will Not Necessarily Result in a Collective Bargaining Agreement. EFCA would require mediation and then arbitration of any bargaining "dispute" in first contract negotiations, and then bind the parties to the arbitration panel's "decision" that settles the dispute for a period of two years. Section 3 of the bill provides:

"Whenever collective bargaining is for the purpose of establishing an initial agreement following certification or recognition,...:

(1) Not later than 10 days after receiving a written request for collective bargaining [from the union], or within such further period as the parties agree upon, the parties shall meet and commence to bargain collectively and shall make every reasonable effort to conclude and sign a collective bargaining agreement.

(2) If after [90 days], or such additional period as the parties may agree upon, the parties have failed to reach an agreement, either party may notify the Federal Mediation and Conciliation Service ["FMCS"] of the existence of a dispute and request mediation.

(3) If after ...[30 days], the [FMCS] is not able to bring the parties to agreement by conciliation, the [FMCS] shall refer the dispute to an arbitration board established in accordance with such regulations as may be prescribed by the Service. The Arbitration panel shall render a decision settling the dispute and such decision shall be binding upon the parties for a period of two years, unless amended ...by written consent of the parties.

Setting aside the unreasonable speed with which this is all supposed to occur – most first contracts take more than a year to negotiate - there are no guidelines in the Act for what the arbitration panel would use to determine how to settle the dispute. In contrast, where interest arbitration has historically been used – whether by virtue of public-sector labor relations laws or private-sector, interest-arbitration agreements –the statutes or private agreements typically contain explicit constraints on the authority of the arbitrators or explicit guidelines that are based on things like available tax dollars in the public sector; the financial resources of the employer in the private sector; picking between the last offers made by the parties (what is sometime called "baseball arbitration"); limiting wages increases to what similarly-situated competitors are paying; or cost-of-living statistics or wage statistics published by the government. EFCA, however, gives arbitration panels no guidelines or constraints whatsoever. All EFCA says is that the panel "shall render a decision settling the dispute." (Undoubtedly, if EFCA is enacted, employer groups will argue that this unbridled delegation of authority to various private arbitration panels constitutes an unconstitutional delegation of congressional authority.)

Some observers have described the arbitration panel's role as imposing a two-year "contract." However, nothing in EFCA says anything about imposing "contractual" terms. It merely says that the arbitration panel shall render a "decision" settling the "dispute," and that the decision shall be binding for two years. It is entirely possible that the "dispute" referred for arbitration by the union – or by the employer – may involve discrete issues less encompassing than what is contained in most collective bargaining agreements.¹ For example, a union may simply refuse to budge on wages, health care, vacation and other hard economic issues, declare a "dispute" and take only those issues to arbitration, perhaps leaving resolution of other issues for a later date via further bargaining, the declaration of another "dispute," or by calling a strike (see discussion of no-strike clauses, below). There is nothing in EFCA suggesting that all disputes must be resolved at the same time or that bargaining is suspended pending the resolution of any given dispute. To the contrary, EFCA seems to contemplate that bargaining will continue after the panel renders its decision, stating that such panel decisions shall be binding for a period of two years, "unless amended during such period by written consent of the parties."

Moreover, while most management negotiators would consider a no-strike clause to be a necessary part of any binding collective bargaining agreement, EFCA does not clearly authorize arbitration panels to render decisions that impose no-strike clauses. This is because section 13 of the Act, 29 U.S.C. § 163, which is not amended by EFCA, states that, "Nothing in this Act, except as specifically provided for herein, shall be construed so as either to interfere with or impede or diminish in any way the right to strike, or to affect the limitations or qualifications on that right." Because EFCA envisions further bargaining after arbitration (see discussion above), many arbitration panels may be reluctant to take the strike threat away from unions in their post-dispute negotiations. While it is certainly possible that the Courts will eventually empower arbitration panels to include no-strike provisions in their decisions (for reasons akin to the Supreme Court's approval of injunctions of strikes where the parties have agreed to arbitrate the underling dispute – see Gateway Coal Co. v. Mine Workers, 414 U. S. 368 (1974)), it may take several years for the courts to reach that conclusion.

Conversely, union negotiators typically want a union-security clause in the contracts that they negotiate in non-right-to-work states. (Such clauses essentially require employees to join the union or pay an agency fee for the union's representation as a condition of continued employment.) But, EFCA's arbitration panels seemingly do not have authority to impose such provisions. Section 8(a)(3) of the Act, 29 U.S.C. § 158(a)(3), permits a union-security clause only if the clause is the product of an "agreement" between the employer and the union. The fact that Congress did not address no-strike and union-security clauses when it authorized arbitration panels to resolve "disputes" would seem to further indicate that the arbitration panel's decisions will not be tantamount to a collective bargaining agreement.

3. EFCA Will Change Bargaining for ANY first Contract. EFCA would dramatically change bargaining for ANY first contract; not just those that result from card check certifications. For example, an employer who purchases the assets of a business and hires the seller's employees to continue operations would be bound by these new "dispute" resolution rules, including mediation and arbitration. Section 3 of EFCA states that these new rules apply "Whenever collective bargaining is for the purpose of establishing an initial agreement following certification or recognition...."

Similarly, employers who voluntarily recognize a union pursuant to neutrality agreements that include card-check provisions would also find themselves bound by these new dispute resolution rules.

Finally, the very nature of the "obligation to bargain" may change when the parties are negotiating an initial contract. Section 3 of EFCA states that the employer's bargaining obligation shall be to "make every reasonable effort to conclude and sign a collective bargaining agreement." This is in contrast to 29 U.S.C. § 158(d), which currently states that the obligation to bargain in good faith only requires the employer and the union to "meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment...., but such obligation does compel either party to agree to a proposal or require the making of a concession...." We predict there will be years of litigation about the meaning of this amendment, but we think it is quite possible that the Board and the courts will conclude that Congress has required more than just good faith bargaining in this provision.

4. EFCA Dramatically Increases the Board's Remedial Powers. EFCA also explicitly enhances the Board's remedial powers in certain cases arising out of union organizing campaigns and first-contract negotiations. Section 4 of EFCA provides for (1) mandatory treble back pay in 8(a)(3) discrimination cases arising "while employees ...were seeking representation by a [union] or during the period after a [union] was recognized...until the first collective bargaining agreement was entered into...."; and (2) civil penalties of up to $20,000 per violation in any cases where the employer has "willfully or repeatedly commit[ed] any unfair labor practice within the meaning of subsections (a)(1) or (a)(3) of section 8 while employees of the employer are seeking representation by a [union] or during the period ...until the first collective bargaining contract is entered into...." Since 8(a)(1) charges often piggy back on 8(a)(5) refusal-to-bargain charges, an employer's failure to make "every reasonable effort to conclude and sign a collective bargaining agreement" – the new standard in first contract negotiations under EFCA – may expose the employer to monetary fines.

What Lies Ahead for Employers

To become law, EFCA must be re-introduced in the new 111^th Congress, pass both Houses, and then be signed by the President. It is hard to imagine that it will not be amended during that process, in large part because of the attention the political ads have drawn to the disenfranchisement provisions of the bill. If it is not substantially amended, it seems likely that, in the Senate, a Republican filibuster or threat of a filibuster will kill the bill. Any re-write that still disenfranchises workers would seem unlikely to garner the necessary votes to overcome a Republican filibuster. Moreover, it seems likely to us that many in Congress who supported EFCA in an election year -- while knowing that President Bush would veto it -- may be more guarded about their support in the next Congress.

If EFCA does become law, the Board will likely hold extensive rulemaking hearings about what authorization cards must say if they are to be used to disenfranchise workers. One would expect the Board to at least require that such cards state in bold font specific, precautionary warning that the worker is giving up his or her right to vote in a secret ballot election. Historically, the Board has very limited experience with rule making, and the process might well take several months, if not years.

While some employers have worried that union authorization cards that have already been signed could be used to demand card-check certification immediately upon enactment of EFCA, we think that would be contrary to the Congressional command that the Board establish by rule what such cards must say.

What Non-Union Employers Should Do

Lobbying. Obviously, employers should monitor the bill closely and aggressively lobby their congressional representatives. While organizations like the Chamber of Commerce are already involved, employers may also want to participate themselves by calling or writing their representatives or senators.

Training. Employers should consider training supervisors immediately if it appears that EFCA will be enacted by the next Congress. Union organizing activity is typically done in secret, and supervisors need to be alert to the signs of union organizing activity, need to know how EFCA would work, and need to understand how unionization could affect what they do on a daily basis.

Employers should also consider training employees about the implications of EFCA immediately if it is passed. Such training will, at minimum, include (1) advising employees that these new union cards are binding legal documents; and (2) cautioning employees that signing one of these cards means the employee loses (a) the right to hear the pros and cons of unionization, and (b) the right to vote in a secret ballot election. More comprehensive training should also be considered depending upon the employer's particular circumstances.

If you have questions about EFCA or what your organization may wish to do in response to this threat, please contact the author of this article or your principal contact at Faegre & Benson LLP.

Footnotes

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.