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The Employee Free Choice Act: Radical Change to U.S. Labor Policy

The 2008 Presidential election has finally drawn to a conclusion. The race was dominated by hot-button issues such as the war in Iraq, energy policy, health care reform, and, in the latter stages, the economy. While these issues are of immediate and critical import to our nation, labor policy is also a critical issue, particularly as the health of the economy hangs in the balance. President-elect Barack Obama promised during his campaign that, if elected, he would ensure the passage of the Employee Free Choice Act (EFCA), an historic bill that would dramatically change the way unions organize employees, and reshape the very foundations upon which our labor policy has been premised for nearly a century.

The EFCA would amend the National Labor Relations Act (NLRA) in three significant respects. Specifically, the legislation would: (1) replace the longstanding secret ballot election process with a procedure known as “card check;” (2) require “interest arbitration” to set the terms and conditions of employment following successful card check campaigns; and (3) provide for unprecedented “monetary penalties” for repeat violations of the NLRA.

Elimination of the Secret Ballot Election

More American workers belong to unions in 2008 than at any point in history. However, since the 1980’s, the percentage of workers represented by labor organizations has decreased from about 20% in 1983, to about 12% in 2007. Elimination of the secret ballot election process will no doubt reverse this trend by introducing an authorization card-check procedure as the method for selecting a collective bargaining representative.

Authorization cards are nothing new in labor law. In fact, authorization cards play an important role in the current secret ballot election process. During the initial stage of an organizing campaign, unions solicit authorization cards from employees. Currently, a union is entitled to a secret ballot election once it obtains authorization cards from 30% of a particular unit of employees.

Under the secret ballot election process, employers and unions alike engage in campaigning before the actual vote. Generally, there is a 30 to 45 day period during which joint campaigning takes place. The National Labor Relations Board (NLRB) strictly monitors employer communications during this period, and requires “laboratory conditions” during the pre-election period. The “laboratory conditions” concept ensures that employees make informed decisions without coercive interference. Thus, the secret ballot election process ensures that election results accurately capture employees’ free choice at the time of the election. If passed, the EFCA will eliminate the secret ballot election altogether, including the concept of “laboratory conditions.” Supporters of the EFCA proclaim the card-check procedure would “level the playing field for workers.” In actual fact, unions prevail in more than 60% of secret ballot elections. Statistically, the playing field is already level – if not tilted in favor of labor organizations.

The untold implications of eliminating the secret ballot election are many, and are derived from the protections crafted under the NLRA over the last half-century. Most importantly, employees will be denied access to the normal pre-election debate that shapes informed decision-making, and employers will lose the opportunity to present an alternative point of view.

This radical change will also erode employees’ free choice. Importantly, there are currently no restrictions in the EFCA on the time period during which labor organizations can collect authorization cards. A union that collects a single card each week from a workforce totaling 200 employees could potentially acquire cards from the majority of the workforce over the course of two long years.

Obviously, employees’ opinions, attitudes, and preferences may change and vary over time. The secret ballot election accounts for these changes by measuring the preferences of the workforce on the day of the vote. Conversely, authorization cards may not reflect an employee’s opinion on the date a union demands card check representation rights, especially when the card signing occurs long before the union’s card check recognition.

The secret ballot election also permits employees to make an anonymous decision, in a private voting booth, free from intimidation. Conversely, under a card-check system, employees are exposed to peer pressure, misleading predictions, and in a worst case scenario, strong arm tactics. Typically, employees are invited to a local restaurant, tavern, or to the union’s local hall before being asked to sign an authorization card. Union representatives often provide free food and beverages. Sometimes, employees are asked to sign a authorization card under the watchful eye of union organizers, or pro-union co-workers.

Imagine just for a moment being asked to publicly declare support or opposition to a Presidential candidate during the convention being conducted by the candidate’s political party. The EFCA provides the same potential for strikingly undemocratic results.

Mandatory Interest Arbitration

Under the NLRA, employers and unions are required to bargain in good faith in an effort to reach an agreement. The good faith obligation does not require either party to make concessions. Rather, the relative economic power of the parties is permitted to govern negotiations, and the possibility of poor labor relations, a strike, or lockout, motivates the parties to reach agreement.

The EFCA will not eliminate the requirement that employers and unions bargain in good faith, but it will dramatically change the governing rules during the initial round of collective bargaining. In its current form, the EFCA requires employers and unions to begin negotiations ten days after a union has been certified. If negotiations are not completed after 90 days of bargaining, the parties will automatically be referred to non-binding mediation. If no agreement is reached after 30 days in the mediation process, the parties will automatically be referred to binding interest arbitration. During binding interest arbitration, the arbitrator sets the parties’ terms and conditions of employment for the subsequent two years.

Collective bargaining, especially during first contract negotiations, is an intricate and complex procedure. Employers and unions rarely complete this process within the 90 day timetable required by the EFCA. Consequently, under the EFCA, the majority of initial contracts will likely be crafted by arbitrators. This likelihood is further increased because arbitration will remove the threat of a strike to help resolve stalled negotiations. Employers and unions alike are highly motivated to reach agreement and avoid the threat of a work stoppage. Conversely, there is less motivation for union negotiators to compromise when they can likely extract some gains without the possibility of a work stoppage from an arbitrator

The notion that a third party arbitrator, unrelated to the employment relationship, will be empowered to impose terms and conditions of employment runs counter to the stated purpose of the NLRA: to promote the collective negotiation of the terms and conditions of employment. Additionally, the requirement that employers submit to terms and conditions of employment determined by a third party runs painfully counter to free market principles, the very same principles upon which the NLRA was created and enforced. Should the EFCA become law, immediate and fierce challenges from employers are likely.

Introduction of Monetary Penalties

The Board and the courts have long recognized and appreciated the remedial nature of the NLRA. The primary goal of proceedings alleging violations of the NLRA is to restore the status quo – to return the parties to the position they would have occupied had the violation not occurred. Introduction of punitive monetary penalties will radically alter this fundamental premise.

For example, the EFCA imposes a $20,000 civil penalty for certain unfair labor practices. Any labor law or labor relations practitioner knows the NLRA is sometimes counter-intuitive. Innocent violations sometimes occur, such as asking employees why they are supporting an organizing drive, or choosing to attend organizing meeting at a local tavern. The EFCA would potentially impose monetary penalties for violations by low-level supervisors who are not familiar with the intricacies of the NLRA.

Additionally, the punitive monetary provisions of the EFCA apply also to statements made during collective bargaining. Employers who fail to use skilled negotiators, well-versed in the principles of labor law, might very well expose themselves to monetary penalties from unwitting remarks at the bargaining table.

The boundaries of the EFCA’s punitive provisions are by no means clear, and the cumulative effect of the EFCA is by no means certain. It is clear that we have not seen the prospect of this type of radical change in labor law since Congress understandably rejected the proposed ban on hiring permanent replacements during a strike. With the passage of the EFCA now a near certainty, proactive employers must immediately begin developing a strategic plan to avoid the most serious results possible under the EFCA, and to lawfully and effectively confront union organization drives in the workplace.