Magazine March 23, 2009, Issue

Employee No Choice Act

The Democrats, the unions, and the workers they manipulate

There’s a good likelihood that sometime in the next few months we’ll see the most profound change in labor and employment law in more than 70 years: the Employee Free Choice Act (EFCA). 

For union leaders and their political supporters, EFCA promises to dramatically swell the ranks of organized employees — by hundreds of thousands, if not millions — within just the first few years. The added billions in union dues would resuscitate labor’s clout and create a mammoth ATM for union-friendly politicians and interest groups.

Business leaders, on the other hand, see EFCA as clearing a path toward greater unionization of their workforces. They fear being stripped of the ability to manage the direction of their enterprises. 

EFCA would change the National Labor Relations Act (NLRA) in several fundamental respects, but two are most important. One is EFCA’s card-check provision, which would eliminate employers’ right to insist that employees vote in secret-ballot elections when deciding whether to be represented by a union (rather than publicly signing cards, a process that makes it easy for union bosses to pressure workers). The other is the mandatory-arbitration provision, which requires that when an employer and a new union can’t agree on a contract within a set period of time, a government-appointed arbitrator steps in to make a binding decision — dictating employment terms to companies and their employees alike. Both changes should be opposed.

For decades, employees have generally become unionized in one of two ways. One is a secret-ballot election supervised by the National Labor Relations Board (NLRB). The other is voluntary employer recognition. 

Union agents often begin organizing employees several months before an election. They must secure signed authorization cards from at least 30 percent of employees for the NLRB to conduct an election. (In practice, unions often get 85 to 90 percent, as a cushion against the inevitable erosion of union support during the six weeks between the filing of an election petition and the election.) If more than 50 percent of the voting employees cast ballots in favor of the union, the NLRB will certify the union as the employees’ collective-bargaining representative.

Under EFCA, however, a union need only obtain signed authorization cards from more than 50 percent of the employees in the bargaining unit to be certified by the NLRB. The employer could no longer require an election, though the employees themselves could demand one. For all practical purposes, elections would cease.

EFCA supporters maintain that card check is imperative because employer abuses make secret-ballot elections unreliable barometers of union sentiment. Unions claim that employers routinely fire or suspend union supporters, threaten to close facilities, and employ procedural tactics to delay and/or win union elections. These abuses, they contend, are the reason for the steep decline in the percentage of organized private-sector employees — from 35 percent in 1954 to 23.6 percent in 1980 to just 7.6 percent today.

This argument is specious. Certainly there are rogue employers, but far fewer than when unions were at their peak. Indeed, the most recent NLRB data show that when unions bring unlawful-discharge cases before the Board, they prevail only 3 percent of the time — and that employers used procedural challenges to contest the results of only 1.1 percent of elections won by unions in fiscal year 2007. Furthermore, elections are being conducted more rapidly now than ever before, indicating that even if employers are trying to delay elections, they’re not having much success. Since 1980, the median number of days between the time a union petitions for an election and the election itself has fallen from 50 to 39. Unions won 54.3 percent of all elections in fiscal 2007, about the same as in 1974.

Other factors are far more responsible for the decline in unionization. One is that, over the last 30 years, many unions simply have not been organizing workers as aggressively as in the past. There were nearly five times more union elections in 1980 than in 2007. The AFL-CIO’s lack of emphasis on organizing prompted the 2005 departure from that organization of a number of major unions, including the Service Employees International Union, the United Food and Commercial Workers, and the Teamsters. Many unions that have publicly declared an emphasis on organizing continue to be successful. The SEIU, for example, won approximately 80 percent of the elections in which it participated in 2007 while also mounting aggressive card-check campaigns. 

Global competition, deregulation, and the decline of U.S. industries that have traditionally been union strongholds are also factors. But perhaps the most important is the proliferation of various employment laws over the last 30 years that have made much of what unions do redundant if not superfluous. The agencies that enforce the Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, the Family Medical Leave Act, the Equal Pay Act, etc. have intruded into areas that were once the sole province of unions. Why should an employee pay $500 a year in union dues for something that the government already does? 

EFCA supporters know this. Until recently, many of them didn’t seem to have a problem with secret-ballot elections. For example, in 2001 Rep. George Miller (D., Calif.), who introduced EFCA in the House in 2007, wrote a letter to Mexican officials following a labor dispute in that country, stating: “We feel that the private ballot is absolutely necessary in order to ensure that workers are not intimidated into voting for a union they may otherwise not choose.”

Joining Miller as signatories were Barney Frank (D., Mass.), Dennis Kucinich (D., Ohio), Bernie Sanders (I., Vt.), Zoe Lofgren (D., Calif.), and Barbara Lee (D., Calif.). Each supports EFCA. Similarly, in briefs filed before courts and the NLRB, unions that now support EFCA have consistently extolled the superiority and necessity of the secret ballot. EFCA itself conveniently preserves secret-ballot elections for those occasions on which employees seek to decertify (i.e., get rid of) a union.

If it’s clear that much of EFCA’s support doesn’t come from principle, one must ask if it comes from opportunism. It’s a very plausible explanation: Card check makes unionization so easy that any union organizer who cannot organize a workplace after EFCA should be drummed out of the labor movement for malpractice. This is because unions have mastered the art of using aggressive tactics to get union cards signed without the knowledge of employers.

A union typically begins organizing a workplace up to a year before filing an election petition with the NLRB, and in most cases manages to keep the employer oblivious. The organizers swamp employees with arguments extolling the merits of unionization. Union representatives court employees in homes, bars, and bowling alleys, promising better wages, benefits, and working conditions. Employees are often asked to sign cards in the presence of co-workers and union agents. Cards are sometimes even filled out by a union agent with the employee’s consent. The opportunities for pressure and coercion are manifold. And the odds of getting more than 50 percent of employees to sign cards are very high.

Although EFCA’s card-check provision has captured the most public attention, its mandatory-arbitration provision may be worse in the long run.

Under current law, once a union is certified, the employer and union are required to bargain in good faith to reach an agreement. The government plays no role. There are no time limits, and neither party may be compelled to agree to a given contract proposal. The NLRB becomes involved only when one party alleges that the other has committed an unfair labor practice, and even then the remedy for refusing to bargain is an NLRB order directing the offending party to negotiate. The NLRB does not have the authority to impose a substantive contract provision of its own design, or to compel a party to agree to the other side’s proposal.

But under EFCA, an employer would have to meet with a newly certified union within ten days of the union’s request for bargaining, and if no agreement were reached within 90 days, either party could request mediation by the Federal Mediation and Conciliation Service. If mediation went on for 30 days without producing an agreement, an arbitrator or arbitration panel would dictate a contract detailing hours, wages, and terms and conditions of employment. Neither party could reject the mandate, which would be binding for two years.

EFCA supporters contend that the mandatory-arbitration provision is necessary because employers frequently delay or drag out negotiations, sometimes for more than a year. By one questionable study they frequently cite, nearly half of new unions never get a first contract. This, they say, erodes support for the union among bargaining-unit members, sometimes resulting in the union’s decertification.

This argument ignores the fact that such employer conduct is already unlawful. But more important, it acknowledges neither the difficulties inherent in negotiating a first contract nor the dangers in abandoning the freedom-of-contract principles upon which our economic system is based.

Most experienced labor lawyers will tell you that during the first 120 days of negotiating an initial contract, the parties are still debating the shape of the bargaining table. Parties with no prior bargaining history must resolve a host of difficult issues such as wage rates, medical and retirement benefits, hours of work, subcontracting rights, and work assignments. Even for a relatively small work force, the result of this debate can run longer than 100 pages. Unrealistic employee expectations (raised by over-the-top union promises) can make the situation worse. 

Add the prospect of mandatory arbitration, which will reduce the union’s incentive to make concessions, and it becomes very likely that most first-contract negotiations will end up in arbitration. This has employers apoplectic. What if the arbitrator decides that an employer must increase wages beyond what competitors pay? What if the arbitrator requires the company to go into a multi-employer pension plan with massive potential withdrawal liability? Tough. It’s stuck for two years. And once things like this happen, they’re part of the baseline for future contracts.

Even if arbitrators perform their duties diligently and soberly, they can never make business decisions as well as business owners can. As former NLRB chairman Peter Hurtgen stated in his 2007 testimony on EFCA before the Senate Health, Education, Labor and Pensions Committee:

No outside agency, whether arbitration, courts, or government entity, has the skill, knowledge, or expertise to create a collective-bargaining agreement. If it is not a creature of the parties’ creation, it likely will fail of its purpose. The negotiation of a collective-bargaining agreement is the search for mutually resolving each side’s interests. It must be done with trade-offs and separate prioritizing. Only the parties can do that. There are no standards for arbitrators to apply. There is no skill set for arbitrators to use. Solomon is simply unavailable.

This year’s EFCA debate will be the biggest battle between business and labor in decades. The labor movement has been building toward this point for years: In March 2007, EFCA passed the House by a margin of 241–185, but secured only 51 votes of the 60 needed to invoke cloture in the Senate. EFCA proponents sensed an opportunity, and reportedly pumped hundreds of millions of dollars into the 2008 elections. Obama, who’d been a 2007 EFCA co-sponsor in the Senate, promised to sign the bill if it came across his desk in the White House.

Today EFCA proponents have an expanded Democratic majority in the House, 58 or 59 Democrats in the Senate, and no veto threat. Unions, realizing that the planets may not align for them again, vow to spend tens of millions more to get EFCA passed by summer.

If every Democrat votes for EFCA, just one or two cooperating Republicans in the Senate would guarantee its passage. But EFCA opponents are hopeful they can convince three or four Democratic senators from right-to-work states either to vote against the bill or to support amendments to blunt its impact. Polls show that even a majority of union members oppose elimination of secret ballots, so amendment, if not outright defeat, of EFCA is possible.

The two most probable amendments would substitute a “quickie” election — one conducted within, say, five days of the filing of an election petition — for card check and lengthen the 120-day bargaining period preceding mandatory arbitration. Neither of these amendments, however, would even remotely address employer concerns. “Quickie” elections, while preserving the secret ballot, would still tip the organizational scales heavily in favor of unions; when unions managed to keep their organizational efforts secret, employers would have only a few days in which to present their arguments. And a longer bargaining period may do little more than prolong the inevitable resort to arbitration.

Should EFCA pass in some form, court challenges await. Richard Epstein of the University of Chicago Law School has argued that awards under the mandatory-arbitration provision may violate the takings clause of the Fifth Amendment (“nor shall private property be taken for public use, without just compensation”). Certain New Deal–era Supreme Court decisions also suggest the mandatory-arbitration provision constitutes an unlawful delegation of legislative authority under Article 1, Section 1 (which gives all legislative authority to Congress, not to chosen arbitrators).

At the same time that business groups are furiously fighting EFCA’s enactment, individual employers across the country are making preparations in case the bill becomes law. Some employers have been training their work forces and implementing sophisticated, EFCA-specific union-avoidance measures for over a year. Employers in the health-care, hospitality, and retail sectors of the economy have concluded they are particularly vulnerable and are preparing accordingly. But the sheer scale of EFCA’s potential impact has rendered some employers catatonic.

In the end, EFCA’s impact will be felt most acutely by employees. The workplace regime that EFCA will create could have been concocted by Lewis Carroll. Since unions have an incentive to keep their efforts quiet, and since unions can declare victory once they hit 50 percent, an employee working second shift (when most other workers take first shift) might not even be aware that a union is organizing until the NLRB certifies it as his representative. Also, economically, unionization works much as minimum wage does — it drives up the cost of labor, forcing employers to lay off current workers and hire fewer new ones — and mandatory arbitration will sharply exaggerate this effect. If our employee’s new union and the company are not able to reach an agreement within 120 days, an arbitrator could write a “contract” requiring the company to deduct $45 a month in union dues from the employee’s paycheck and pay a 4 percent wage increase that it can’t afford. If the employee is at the bottom of the seniority list, he’s gone, and there’s nothing he or the employer can do about it.

Under EFCA, “choice” won’t be free.

– Mr. Kirsanow, a former member of the NLRB, is an attorney in Cleveland, Ohio.

Peter Kirsanow — Peter N. Kirsanow is an attorney and a member of the United States Commission on Civil Rights.

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