The arrival of President-elect Obama and a democratic congress in 2009 presents a unique moment in history for labor and employment law reform.  The Obama administration is expected to support a variety of new labor and employment initiatives that will have profound consequences for American employers.   The centerpiece of the incoming administration’s labor reforms will likely be the Employee Free Choice Act (“EFCA”).  The EFCA will be the most monumental piece of legislation impacting the American workplace, perhaps since the enactment of the National Labor Relations Act (“NLRA”) in 1935.  In its current form, the EFCA will make it extremely difficult for employers who do not take immediate, sustained and effective action now to remain union free.  It will result in the creation of a whole new government bureaucracy, and it could result in large segments of the workforce that have not historically been infiltrated by unions to become predominated by unions.

The EFCA is a top priority for organized labor in 2009.  Previously sponsored by President–elect Obama and Vice President-elect Biden, it was passed by the House of Representatives in March 2007.  While the EFCA had enough votes to pass the Senate, there were not enough votes to break a Republican led filibuster.  Given the outcome of the recent U.S. presidential election, and with democrats gaining seats in both the House and Senate, lawmakers will almost certainly pursue the EFCA for future enactment.

In its current form, the EFCA will amend the NLRA by adding certain provisions that do the exact opposite of what the EFCA’s title implies.  Namely, the EFCA will undermine employee free choice and pose other onerous burdens on employers.

Potential Changes to Current Labor Law

Specifically, the EFCA, as currently drafted, will result in three major changes to longstanding labor law and policy:

I.  Elimination of Secret Ballot Elections

Today, a union that wants to organize a group of employees must typically convince at least 30% of such group to sign union authorization cards and then petition the National Labor Relations Board (“NLRB”) to conduct a secret ballot election.  The voters in such election – eligible employees of the targeted group – are required to enter a private voting booth, indicate whether or not they want a union to represent them on a paper ballot and deposit the ballot in a sealed ballot box.  To ensure the sanctity of the balloting process, the election is conducted under the supervision of NLRB agents.  Supervisors and other employer representatives are not allowed near the polling place and may not observe the polling.  Electioneering is also not allowed near the polling place.

The EFCA would amend Section 9 of the NLRA to provide that if a union secures authorization cards from a majority of employees in a unit appropriate for bargaining, the union must be certified as the exclusive collective-bargaining representative of the employees.  Employers would no longer be able to insist on a secret-ballot election conducted by the NLRB.  The employees who either signed authorization cards under duress or lack of understanding or who did not sign authorization cards would not be able to decide for themselves whether they want to be represented by a union.

This radical change in the law will make it exponentially easier for unions to organize employers’ workforces.  Currently, unions generally do not even file petitions for an election before they have an overwhelming majority of signed authorization cards.  Elections are conducted within 42 days of the date the petition is filed.  Even under these circumstances, employers win about half of all union elections.  In other words, once employees hear both the benefits and detriments to union representation in a campaign that is deemed fair and noncoercive by the NLRB, employees, including employees who previously signed union authorization cards, more often than not vote against union representation.  The EFCA will substitute the ability of employees to make uncoerced decisions in the privacy of a closed election booth, for authorization cards that are often signed by employees who lack essential information and are under extreme duress from other employees and outside union organizers.

II.  Binding Arbitration Could Determine Terms and Conditions of Employment

Under current law, if employees vote for union representation, the NLRA requires that the union and the employer negotiate in good faith to reach an agreement on the terms and conditions of a labor agreement.  It is solely up to the parties to decide the terms and conditions of such agreement.  The parties may voluntarily seek the assistance of a mediator from the Federal Mediation and Conciliation Service to assist them in reaching an agreement.

The EFCA would amend Section 8 of the NLRA to provide that if an employer and a union are unable to reach agreement on the terms of an initial collective bargaining agreement after 90 days of bargaining, the matter will be referred to federal mediation for 30 days.  If the parties are unable to reach an agreement after 30 days of mediation, the matter will be referred to binding arbitration.  An arbitration board then has the authority to set the terms of the collective bargaining agreement and to bind the employer and the union to such agreement for two years.  In other words. the entire concept of collaborative bargaining will change to bargaining by litigation.  One can easily imagine that instead of the current give and take of the bargaining process, both sides will be incented to develop their case for litigation before an arbitration board.

III.  Increased Penalties for Unfair Labor Practices

The NLRA currently provides that employees who are terminated for organizing activities are entitled to backpay and reinstatement.  Employers who engage in other unlawful activities are subject to orders to cease such activities.  If the unlawful conduct is egregious enough, an employer may be subject to a bargaining order – which means the employer is required to recognize and bargain with the union, even though the employer may have won the election.

The EFCA would amend Sections 10 and 12 of the NLRA to provide penalties as follows:  (1) if an employer is found to have discriminated against an employee for union organizing or  other union-related activity before an initial collective bargaining agreement is signed, the employee is entitled to treble damages, in other words, the amount of backpay times three; and (2) employers would be subject to civil penalties in an amount up to $20,000.00 for each unfair labor practice that the employer “willfully or repeatedly” committed during union organizing or other union-related activity.

Union Avoidance in Anticipation of the Employee Free Choice Act Era

In light of Congress’ probable reintroduction of the EFCA in January 2009 and the new administration’s support of such legislation, employers must begin to prepare now for the EFCA’s potential passage and the effect that the EFCA will have on the workplace.  The EFCA will dramatically shift the balance of power to unions in whatever form it ultimately takes.

Employers should consider taking the following steps immediately:

1. Educate employees about the significance of signing a union authorization card under the EFCA;

2. Train supervisors on how to legally identify union organizing activity and on how to appropriately respond;

3. Improve communications with employees to make sure employees feel like they are part of the team;

4. Monitor industry-standard wages and benefits to make sure the company remains competitive;

5. Develop and implement strategies that are designed to make sure employees are aware of the company’s position on unionization; and

6. Review employment policies to make sure they comply with all current laws.

Political Response

Given the magnitude of the EFCA, the best result for employers may be accomplished on the political front.  The bill died in a Senate filibuster in 2007.  The ultimate make-up of the Senate in 2009 will be crucial to whether the bill can survive another filibuster.

In the meantime, concerned persons should write their Senators and Representatives to express their concerns with the EFCA.

Sheppard Mullin Response Team

Sheppard Mullin has also organized the following rapid response team across California and in New York and Washington D.C. to respond immediately to questions and concerns about the EFCA and its effects.  All members of the team are experienced labor lawyers with decades of cumulative experience with union organizing, negotiations and the NLRB:

Office Contact Telephone No. Email Address
Los Angeles Doug Hart (213) 617-5497
Orange County Ryan McCortney (714) 424-2830
Del Mar John Collins (858) 720-8923
San Diego David Chidlaw (619) 338-6614
Santa Barbara Jeffrey Dinkin (805) 879-1828
San Francisco/Silicon Valley Deborah Martin (415) 774-2937
New York Jonathan Stoler (212) 332-3857
Washington D.C. Sheldon Kline (202) 772-5378