The Threat of EFCA

The Picket Line - potential consequence of EFCAWhile Congress and the Obama administration are preoccupied with the stimulus package, employers are becoming increasing concerned about legislation called the Employee Free Choice Act (“EFCA”).  While not currently the law, this legislation would transform labor relations in the United States to the detriment of employers. Anna Burger, Chairperson of Change to Win and Sec.-Treas. of Service Employees International Union has stated, “EFCA is more important than healthcare reform…EFCA will be the difference between incremental change and transformational change …. EFCA will increase SEIU membership by 1 million members annually.”  And Pres. Obama has stated that he will make it the law of the land.

EFCA would amend the National Labor Relations Act (“NLRA”) in three dramatic ways.  Currently, employees desiring union representation are subject to a secret ballot election, where they vote “yes” or “no” to be represented by an election.  EFCA would effectively eliminate the secret ballot election by requiring an employer to recognize and bargain with a union if the union presented “authorization cards” signed by 51% of its employees.  The amendment would also have the effect of depriving the employer of having time to communicate its position on the negative effects of unionization to employees during the campaign period leading up to the current ballot process.  Additionally, employees may be subject to pressure and coercive tactics by unions and fellow pro-union employees to sign authorization cards, because the secret ballot election will have been eliminated.

Second, once the union is recognized as the collective bargaining representative of employees, the employer would have to start bargaining with the union within 10 days.  This is an insufficient amount of time to formulate proposals and establish an employer bargaining committee.  If a contract is not reached within 90 days, the employer is required to go to mediation before the Federal Mediation and Conciliation Service for 30 days.  If no agreement is reached at that point, the employer is required to submit to binding interest arbitration before a neutral arbitrator who will determine the wages, benefits and other terms and conditions of employment of the employees for a 2 year union contract.  Besides the frightening proposition that a third party will decide the compensation and benefits of an employer’s employees, the legislation fails to address what standards the arbitrator shall use in making his award.  The legislation does not contemplate appeals from an arbitrator’s award.

This portion of EFCA is extremely troubling.  An arbitrator could place a healthy or struggling employer in a non-competitive or precarious financial position by granting significant increases in wages, benefits and other terms of competition.  The arbitrator would also have final say over pensions, hours of employment, subcontracting, severance, and discipline and discharge of employees.  While the statute contemplates that the arbitrator will decide what is in the first 2 year agreement, nothing in the statute prevents the arbitrator from requiring binding interest arbitration of successor agreements.

Finally, EFCA would significantly increase the penalties faced by employers who intentionally or inadvertently commit unfair labor practices.  Currently, employers are only required to pay backpay and provide reinstatement to employees discharged for union activity.  Other violations of the NLRA, such as unlawful interrogation or threats, are subject to a cease and desist order, and a requirement that the employer post a notice stating it will not violate the law again.   EFCA would require that the employer pay treble damages for unlawful discharges plus a civil penalty of up to $20,000, and civil penalties of up to $20,000 for all other unfair labor practices.

There are many questions left unanswered by EFCA.  For instance, how long will the authorization cards be valid?  What if an employee claims he signed a card involuntarily? How can a card be checked for forgery?  How can an employer challenge the appropriateness of the claimed bargaining unit?  What will be the standards for arbitration?

EFCA is not the law yet.  In 2007, EFCA passed through the Democratic controlled house by a vote of 241 to 185.  It was stopped by one vote in the Senate.  While Congress and the President are currently preoccupied with the stimulus package, on February 4, 2009, organized labor presented Congress with a petition signed by a million and a half employees supporting EFCA.   Rep. George Miller (Rep. Calif.) is expected to reintroduce EFCA in the “near future.”  While the House is firmly in Democratic control, the Senate may be able to get a filibuster proof majority.  It is also possible that there may be a bi-partisan compromise that may replace the card check provisions with “quickie” secret ballot elections, or remove the interest arbitration provisions.

What can be done to protect your company?  Contact your elected officials to let them know how you feel about this legislation.  Conduct a human resources audit to determine the health of your organization.  This includes reviewing policies and practices, and conducting employee satisfaction surveys.  Educate employees and managers about your union-free philosophy, the dangers involved in signing a union authorization card, and the negative consequences of unionization. And educate your managers about lawful and effective union avoidance techniques.   In the end, a smart employer will be prepared to run a permanent union-free campaign.

Mark A. Spognardi is a partner at the law firm of Arnstein & Lehr, LLC, in Chicago, Illinois, and exclusively represents management in labor relations and employment law matters.

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