backAMERI.talk January,  2009

Labor law reform legislation pending in the U.S. Congress would make union organizing easier.  If enacted, foreign-owned OEMs and parts suppliers currently operating without unions will face intense union organizing.  The United Autoworkers’ Union will launch organizing campaigns taking advantage of the liberalized rules.  Companies need to prepare now to defend against new union organizing initiatives.

Originally introduced in the U.S. House of Representatives and U.S. Senate in 2003, the proposed Employee Free Choice Act (“EFCA”) will revolutionize U.S. labor law by making union organizing less cumbersome, punishing employer unfair labor practices more severely, and guaranteeing first contracts.  As a result, organized labor’s decline in private sector density from 34 percent in 1953 to 7.5 percent on 2007 will be reversed, labor costs will rise, and employers’ operating flexibilities will be restricted.

EFCA would effectively replace the 1935 National Labor Relations Act’s secret ballot election process with card-check recognition, an intrusive and confrontational method of soliciting employee approval for union representation.  Under current law a union may solicit signatures from a minimum 30 percent of employees within an appropriate unit and request a government supervised secret ballot election.  A majority of votes cast determines the outcome.  EFCA would circumvent the secret ballot process by requiring employers to recognize a union whenever it provides proof of employee majority support. 

EFCA would also increase penalties for employer unfair labor practices occurring during the card signing organizing and subsequent contract negotiations.  While current remedies include back pay, injunctive relief, and bargaining orders, EFCA would mandate treble back pay, $20,000 civil penalties and priority injunctive relief.

The most significant change to current law would be EFCA’s radical approach to first contract bargaining following a union’s demonstration of card majority support.  For 73 years, U.S. labor law has required “good faith” bargaining but no forced concessions or compulsory agreement.  EFCA would contort the process by reducing the likelihood of voluntary agreement while imposing terms through binding interest arbitration.  Whereas existing law requires the parties to attempt to reach agreement, if the costs outweigh the perceived benefits, resort to economic warfare – strike and/or lockout – is lawful.  EFCA would tilt the process to favor unions, guarantee a first contract, and assist in institutionalizing the union’s presence by mandating a two-year first contract term. 

As proposed, EFCA effectively eliminates good-faith collective bargaining and mandates interest arbitration and imposed terms.  Whether by secret ballot election victory and certification or by card-check recognition, the parties would have 10 days to commence bargaining, 90 days to reach an agreement or undergo mediation.  If no agreement is facilitated within 30 days, a contract will be fashioned through interest arbitration with a two year binding term unless the parties mutually agree otherwise.  Under this approach, unions could benefit either by leveraging an employer’s fear of imposed terms or by simply asking for extremes and taking a chance that the arbitration panel will approve.

EFCA fails to articulate how arbitrators will be chosen, what information must be reviewed, whether the affected employees will have the right to vote on the final terms or to strike, and whether the employer may subsequently abrogate the contract if the economic costs incurred result in unprofitability.

EFCA passed the House but was defeated by a Senate filibuster and, if passed, would have faced a Presidential veto.  November 4, 2008 may change things dramatically.  It is openly discussed that in addition to EFCA, organized labor’s agenda also includes additional amendments to the National Labor Relations Act:
·  redefining and limiting the “independent contractor” exemption;
·  redefining and limiting the “supervisor” exemption;
·  repealing the protected employee right to not engage in union activities;
·  repealing prohibitions on secondary boycotts, picketing and strikes;
·  repealing employer free speech effectively rendering employers neutral;
·  repealing “right-to-work” laws;
·  prohibit an employer’s use of permanent economic strike replacements;
·  permit pre-recognition bargaining;
·  mandate secret ballot elections be conducted within 5 to 14 days rather than the current 42 days following filing of an election petition to make employer counter-campaigning ineffective;
·  require equal access to unions to counter employer “captive-audience” meetings.

Beyond changes to traditional labor law, organized labor also seeks:
·  restrictions on employment pre-dispute agreements;
·  lengthening the Worker Adjustment and Retraining Notification Act notice from 60 to 90 days;
·  amending the Fair Labor Standards Act to provide liquidated damages and civil penalties;
·  ratification of International Labor Organization Conventions Nos. 87 and 98 regarding freedom of association and protection of the rights to organize and collectively bargain.

Actions Companies Should Take Now to Prepare for Upcoming Changes in U.S. Labor Law

In preparation for EFCA’s likely enactment, use the remaining, limited time wisely. 
·  Consider the least union dense locations for new investment or expansion;
·  Audit employee morale and concerns;
·  Promote open communications and dialogue at all levels;
·  Review and make robust dispute resolution processes;
·  Train management and supervisors regarding EFCA and Best Practices;
·  Review HR policies, employee handbooks, and new employee orientation;
·  Audit the current demarcation between supervision and unit employees and consider alternatives should the law change;
·  Initiate “Appropriate Unit Analysis” to anticipate likely union targets and maximize largest unit outcomes to protect against smaller, easier to organize units and multiple unions.

To contact John Raudabaugh, please click here.

Source: Baker & McKenzie - GAI

Archived Webinar: "Employee Free Choice Act and the Impact on the U.S. Automotive Industry".  For more information or to attend, please click here.

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