Legal Updates

The Employee Free Choice Act Is Down But Not Out

August 2009 by William E. Hannum III

The Employee Free Choice Act (“EFCA”) has been the subject of some heated debate and speculation in recent months, but don’t count it out. Momentum is building for Senate activity after the August recess, and this controversial labor legislation seems likely to pass – most likely in a revised form – as early as this fall. Some employers are expressing optimism that the “card check” provision may be dead and that increased attention on the “binding arbitration” provision may soon lead to dramatic changes to that aspect of the EFCA. Nonetheless, employers should expect that the labor law will change dramatically in the next 3-6 months, and that those changes will favor unions and make it easier for them to organize employees. Employers are well advised, then, to prepare now.

I. The EFCA As Originally Drafted

The purpose of the EFCA is to make it easier for unions to organize employees. The two key – and highly controversial – provisions are ”card check” and “binding arbitration”:

Card Check. In a feature known as “card check,” the National Labor Relations Board (“NLRB”) would be required to certify a union – without the secret-ballot election currently required by law – merely by showing that a majority of employees in the proposed bargaining unit signed authorization cards.
Mandatory Binding Arbitration. If a newly certified union and the employer failed to agree to a first contract after 90 days of bargaining, then a mediator from the federal government could be asked to mediate for 30 days. If this did not result in an agreement, then the federal government would appoint an arbitration panel to decide the terms of the contract for a two-year period.

The proposed EFCA would also dramatically increase employer penalties. If an employer were found to have engaged in unlawful conduct during a union organizing campaign or while negotiations for a first contract were under way, then the employer would be subject to triple back pay in discharge situations, civil fines of up to $20,000, and mandatory injunctions.

The EFCA has stalled in the Senate, primarily over concern about card check and binding arbitration, because all Republican senators and as many as 12 Democratic senators oppose the EFCA in its original form. Accordingly, even though Democrats enjoy a filibuster-proof 60-40 majority in the Senate, they are presently unable to prevent a filibuster.

II. Alternatives Under Consideration

The Democratic senators who support labor law reform, but who do not support the EFCA in its present form, have generated a lot of discussion about how dramatically the EFCA might be revised before it becomes law. Some of these Democratic Senators, including Senators Arlen Specter (D-Pa.) and Blanche Lincoln (D-Ark.), have been discussing ways to make the bill “filibuster proof” yet still appeal to organized labor.

The rumors and reports coming out of these discussions include a report that six Democratic senators agreed to drop the card-check provision. However, union leaders insist that card check is still on the table. In addition, Senator Tom Harkin (D-Iowa), the EFCA’s lead sponsor, has been quoted as saying, “There is no agreement on anything until there is an agreement on everything.”

Thus, it appears that any and all potential alternatives continue to be in play, including the original version of the EFCA and such alternatives as “quickie” elections and other potential dramatic changes in the law.

A. Alternatives To Card Check

A number of potential alternatives to card check have been raised in recent weeks, all of which would make it easier for unions to organize. Thus, even if one or more of the following ideas is included in the EFCA, employers need to remain active in efforts to deter union organizing if they want to remain union-free:

“Quickie” Elections. In this scenario, a union could demand an NLRB-supervised secret-ballot election on extremely short notice by producing authorization cards signed by 30% of the proposed bargaining unit. Notice periods of five, ten, and 15 days have been proposed. As representation elections are typically preceded by a 40-60 day campaign period under current law, this alternative would significantly impair an employer’s ability to communicate with employees prior to the election about its views on union representation.
Early Voting. This proposal would replace card check by permitting employees – at any time during a union organizing campaign – to submit their vote to the NLRB by a confidential mail-in procedure. Opponents of this proposal are concerned that unions would encourage employees to submit their votes as soon as possible, preferably before the employer is even aware of the organizing drive. This would deprive the employer of the opportunity to communicate with its employees about unionization and to respond to the union’s propaganda, one of the concerns that underlies opposition to card check.
Telephone And Internet Voting. Under this approach—which is typically taken by the National Mediation Board (“NMB”) in the railroad and airline industries—employees would be (a) given a confidential voter identification number approximately three weeks before the tally of votes, and (b) permitted to vote by telephone or internet at any time prior to the tally. This is of concern for employers under the NLRB’s jurisdiction for two reasons. First, the three-week period is much shorter than the 40-60 day period that generally precedes an NLRB-supervised election under current law. And second, the potential for early voting during the pre-tally period would impair the employer’s ability to convey its message to all eligible voters before they actually vote.
Equal Time – On Company Property. In this scenario, unions vying to represent the proposed bargaining unit would be given equal time to meet with employees on company property if the employer holds “captive audience” meetings. This would radically change the law, which presently recognizes an employer’s right not to permit third parties onto its private property, except in those rare situations when the union would otherwise not have reasonable access to the employees (e.g., in “company town” situations). Of additional concern to employers is whether this proposal might evolve to give unions an equal right to use an employer’s email system and/or other property or facilities, which would represent a dramatic shift in the present “balance of power.”

B. Alternatives To Binding Arbitration

Also under consideration are the following potential alternatives to the EFCA’s requirement for binding arbitration to resolve first contracts:

Last, Best Offer. In this scenario, if the parties reached an impasse in their negotiations for a first contract, then they would submit their respective last, best offers to a mediator or arbitrator of some kind. Further details, if formulated, have not been disclosed.
Remedy For Bad-Faith Bargaining. Another proposal believed to be under discussion would permit the NLRB to require the terms of a first contract to be determined through binding arbitration—but only upon finding that the employer had engaged in “bad faith” bargaining. This approach, however, could encourage unions to file bad-faith bargaining charges as a way to gain an advantage in negotiations and, as such, would likely make bargaining a much more litigious undertaking.
Miscellaneous Minor Adjustments. Also under discussion are various minor adjustments to the proposed mandate for binding arbitration, such as requiring negotiations regarding a first contract to begin within 20 days after a union is certified, and extending the mediation period that would precede binding arbitration from 30 days to 120 days.

C. Alternatives Proposed By Starbucks, Costco, And Whole Foods

Significantly, three high-profile companies that like to project a progressive image—Starbucks, Costco, and Whole Foods—have unveiled ideas for a potential compromise bill. While these companies oppose card check and mandatory binding arbitration, they have proposed the following:

Union Penalties. Keep the tougher penalties against employers for unlawful conduct during union organizing campaigns and initial contract negotiations, and also add corresponding tougher penalties for union violations.
More Liberal Decertification Elections. Make it easier for employers to call elections to try to decertify a union.
Short Pre-Election Period. Set a fixed, relatively short period in which a secret-ballot election must be held (although their proposal does not specify what the time period should be).
Equal Access. Give unions equal access to workers before elections, such as by allowing organizers to address workers on lunch breaks in the company cafeteria.

Interestingly, of these three companies, only Costco has a substantial component of employees who are unionized (about 20% of its hourly employees). Starbucks and Whole Foods have resisted most unionizing efforts.

III. Recommendations For Employers

While it is impossible to predict exactly what the EFCA will look like when it passes, it appears almost certain that some version of this legislation will eventually be enacted, potentially as early as this fall. Accordingly, employers should take the following steps immediately – if such steps are not already under way – to bolster their ability to prevent (or, as the case may be, to defeat) a union organizing campaign:

Evaluate compensation and benefits.
Conduct a wage and hour audit.
Audit worker classifications.
Evaluate senior executives, managers and front-line supervisors.
Conduct employee surveys and/or 360-degree reviews.
Audit workplace safety.
Audit and address any unresolved workplace complaints.
Provide training to managers to educate them on relevant topics.
Provide training to employees to educate them about unions and the EFCA.
Gather information about relevant unions.
Develop and implement a comprehensive communications plan.
Develop and implement policies restricting solicitation, distribution of literature, and access to the premises by non-employees to the extent permitted by law.

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We have developed a comprehensive human resources and management program in anticipation of the EFCA’s eventual passage, which we frequently tailor for corporate retreats, management retreats, and other training opportunities on-site at client locations.

Please feel free to contact us if you are interested in our EFCA program, or if you have any questions about the EFCA’s status or potential impact on your business.