The Employee Freedom of Choice Act

Tilting the Playing Field

Over the years, as union membership has declined ' currently 7.4% of the nation's private sector work force down from 35% in the 1950s ' organized labor has solicited political support for a new system that tilts the playing field. The labor movement's goal is multi-faceted. Under the first prong, an employer would be obligated to recognize and bargain with a union as its employees' representative based solely on signed union authorization cards. Under the second prong, mandatory mediation and arbitration would be imposed during first contract negotiations. The final prong provides for increased penalties for unfair labor practices, including treble back-pay damages and civil penalties, to dissuade employers from alleged systemic unlawful acts that impede the organizing process.

The Employee Free Choice Act

After years of lobbying, the Employee Free Choice Act was introduced in 2003, but did not advance. Similar legislation was proposed again in 2005, co-sponsored by Sen. Edward Kennedy (D-MA) and Rep. George Miller (D-CA). While it did not pass either the House or Senate, it attracted widespread notice by gaining the support of 44 Senators and 215 Representatives (only three short of the 218 House votes required for passage). Predictably, in early February 2007, with the new Democratic Congress now in power, Rep. Miller, in his role as Chairman of the House Education and Labor Committee, reintroduced this proposed legislation (H.R. 800) containing all three items on the labor movement's wish list.

Employees

If enacted, the Act would deprive employees of the chance to make a considered choice on union representation by practically eliminating an employer's right to require a Government-conducted secret ballot election. Rather, the NLRB would be required to certify a union when a majority of workers sign authorization cards designating the union as their bargaining representative, a process known as 'card-check.' This is a problem for employers, however, because unions usually conduct their card-signing drives unannounced and secretively, without the knowledge of employers.

Employers

The mandatory arbitration and mediation provisions are similarly unappetizing for employers. Such provisions, if enacted, could result in an arbitrator imposing uncompetitive wages and benefits on the employer after 120 days of bargaining. This change in bargaining principles could unnecessarily impact the economy. Imposed wage rates would necessarily result in increased prices for goods and services. Such a requirement is virtually unprecedented in the private sector except for war time and other emergency controls.

Increased Penalties

The increased penalties for unfair labor practices are similarly problematic from the employer's perspective. The NLRA grants employers the right to communicate with employees regarding their views as to unionization. Despite union claims to the contrary, NLRB statistics indicate employers act within their rights 98% of the time. Regardless, H.R. 800 contains treble back-pay provisions and civil fines of up to $20,000 per violation to be imposed on employers who act improperly during organizing campaigns or first election drives. Such penalties are unwarranted and inappropriate. They likely will have a chilling effect on an employer's right of free speech.

Where It Stands

The legislation moved through the House with remarkable speed in February 2007. Only days after its reintroduction in mid-February, the Act cleared the House Education and Labor Committee by a 26-19 vote along party lines. As expected, the clearly conflicting views of the two sides were evident during the committee hearings in which the focus was the first prong of the legislation. Proponents of the bill testified as to personal experiences in which emp- loyers allegedly made it uncomfortable and difficult for workers during the pre-election period. Opponents of the bill testified as to the alleged coercive tactics used by union organizers to induce their employees to sign authorization cards, an act that
could commit employees to union representation under the proposed legislation.

The following statement included in the National Association of Man-ufacturers' letter to the Committee best sums up the opposition view: '[the bill would] overhaul more than 70 years of well-established labor law by stripping away employees' rights to federally supervised, secret ballot elections during union organizing.' Shortly after the Committee's vote, on March 1, the House passed H.R. 800 with 241 members voting in favor of the bill and 185 opposing.

While Senate Health, Education, Labor and Pensions Committee Chairman Kennedy is expected to propose similar legislation in the next few weeks, enactment of the legislation in its entirety during this Congressional term is unpredictable. As of this writing, there are no Republican co-sponsors of the bill in the Senate. A filibuster is contemplated.

Bush Administration's View

Further weighing against enactment this term is the administration's strong opposition. For example, Vice President Dick Cheney stated the administration will 'defend [the rights of workers] to vote yes or no by secret ballot and their right to fair bargaining. [The Employee Free Choice Act] violates these principles.' The White House even issued a formal rebuke of the measure: 'H.R. 800 would strip workers of the fundamental democratic right to a supervised private ballot election, interfere with the ability of workers and employers to bargain freely and come to agreement over working terms and conditions, and impose penalties for unfair labor practices only on employers ' and not on union organizers ' who intimidate workers.'

A Compromise?

However, it is possible that a modified form of H.R. 800, focusing solely on prongs two and three of the legislation, may be introduced in the Senate as suggested or as a compromise. Employers that oppose this legislation must ensure that their voices are heard. The newly formed Coalition for a Democratic Workplace, a group representing more than 300 state and local employer groups, has already commenced strong lobbying efforts in opposition to all aspects of H.R. 800.

Further, even if none of the current provisions are enacted this term, all employers should take notice. There is a significant likelihood that in 2009 the law, including the card-check provisions, could be enacted due to a combination of increased Congressional support and a new administration. Accordingly, businesses should consider implementing preventive measures to protect their union-free status if unions are accorded this powerful new organizing tool. Measures to consider include educating employees and fostering a union-free culture, training supervisors to recognize and react to early signs of organizing, modifying workplace policies to maximize employer rights when faced with union activity, and even conducting a full scale review of the organization's vulnerability to organizing. Simply put, each employer would be wise to take appropriate action to ensure that it is never obligated to recognize and bargain with a union before having a meaningful chance to communicate its union-free beliefs to its people.

Each organization should review its orientation process, personnel documents and other communication methods with two goals in mind: 1) explaining to employees the benefits of union-free status and the company's belief that a union's entanglement in the operations of the business is irrelevant due to its proactive policies; and 2) educating employees on its position regarding unions. Currently, even if an employer is unaware of union organizing, the employer has a period of time after the filing of the election petition to communicate these points to employees. Under H.R. 800, once 50% of the employees sign union authorization cards, the bargaining obligation attaches. Employers should take steps to ensure that employees understand the meaning and implications of signing a card before secretive organizing begins. Proceeding on the assumption that a union will not educate employees on any of the negative aspects of unionization, such as union dues, obligations imposed by union constitutions, the risks of the collective bargaining process and the possibility and reality of strikes, this effort entails imparting such knowledge to employees lawfully, respectfully, and accurately.

Management Training

Integral to this employee education goal is management training. A supervisor cannot convincingly communicate the employer's position as to unionization and the risks of unionization unless he or she understands the underpinnings of the employer's position. Further, even with the best communication strategies, organizing is possible. Supervisors should be trained to recognize and react to the early-warning signs of organizing. Employers should be ready to implement an educational strategy at the first sign of union organizing activity. Of course, as always, employers should consider all aspects of general management training as, in general, positive supervisor-employee relations builds trust and militates against successful union efforts. A vital companion to this management training strategy is the identification of 'supervisors,' who, if properly trained, can be persuasive advocates of an employer's union-free strategy. These 'supervisors' are statutorily exempted from supporting a union since they are management representatives.

Employers' Rights

Various employer policies, if drafted properly, can maximize an employer's rights when handling a union organizing campaign. Solicitation and distribution policies should prohibit all third party solicitation on employer premises and limit employee solicitation and distribution consistent with the NLRA. Similarly, employers should modify other policies, such as electronic communications policies, off-duty access policies and even confidentiality policies, to maximize employer rights. For example, employers should ensure electronic communication policies prohibit chain e-mails of any type. In this regard, employers also should consider adding 'issue-free' policy statements to published personnel policies, or enhancing existing policy statements, to reinforce the company's union-free position to employees.

Additionally, depending on the size of the organization and its susceptibility to organizing, an employer may wish to consider a full-scale vulnerability audit. This audit could reveal issues ranging from weaknesses in management-employee communication to legal violations that union organizers could highlight as part of an organizing campaign. It also often provides a strong avenue for first-line supervisors, those with the most knowledge of employee sentiments, to communicate their suggestions for improvements to policies and practices.

The prevailing view of the business community is that all aspects of H.R. 800 would improperly and unjustifiably alter the current system of labor relations in the United States. Organized labor would obtain distinct advantages to achieve its goal of 'organizing the unorganized.' While passage of such legislation in its entirety in 2007 is unlikely, partial enactment is a possibility and by 2009, the political winds may further shift. One sure thing is that organized labor will not rest on its laurels after this term's passage of the legislation by the House. A best practice for all employers is to support business groups and organizations opposed to the legislation and review their current labor relations policies and practices and implement measures to put the organization in the best position to maintain union-free status if the Employee Free Choice Act becomes law. All corporate counsel need to add to their agenda concerns raised by the Employee Free Choice Act in their role of risk assessor to their organization.

Michael J. Lotito is a partner in the San Francisco office of Jackson Lewis. Richard I. Greenberg is a partner in the firm's New York office.

The Employee Freedom of Choice Act would drastically change the private sector labor relations system that has been in effect since Congress enacted the National Labor Relations Act in 1935. Currently, the preferred method that requires an employer to recognize a labor organization as its employees' representative is through a secret ballot election supervised by the National Labor Relations
Board ('NLRB'). Further, prior to any election, an employer generally has a four- to six-week pre-election period to communicate to employees its position as to unionization. Additionally, even if a union prevails in an election, both sides are required to bargain in good faith without necessity of agreement to a proposal or the making of a concession.

For years, unions have complained that the election process is flawed and deprives employees of free choice in the selection of their bargaining representatives. Unions claim that employers unduly delay the scheduling of an election and use the pre-election period to threaten and intimidate employees, causing them to vote against unionization. Unions also argue that permitting an employer to engage in bargaining without direct government oversight frustrates their ability to achieve gains for their members.

Conversely, employers argue that union assertions of systemic employer abuse of the current system are hyperbole. They assert that the best method of protecting employees from intimidation and ensure that they have true freedom of choice is through NLRB-supervised secret ballot elections conducted after employees are provided with all information necessary to make a reasoned decision. Similarly, employers argue that even if there is a bargaining representative, they should not be subject to direct government oversight of negotiations, which is contrary to the free-market system.

Tilting the Playing Field

Over the years, as union membership has declined ' currently 7.4% of the nation's private sector work force down from 35% in the 1950s ' organized labor has solicited political support for a new system that tilts the playing field. The labor movement's goal is multi-faceted. Under the first prong, an employer would be obligated to recognize and bargain with a union as its employees' representative based solely on signed union authorization cards. Under the second prong, mandatory mediation and arbitration would be imposed during first contract negotiations. The final prong provides for increased penalties for unfair labor practices, including treble back-pay damages and civil penalties, to dissuade employers from alleged systemic unlawful acts that impede the organizing process.

The Employee Free Choice Act

After years of lobbying, the Employee Free Choice Act was introduced in 2003, but did not advance. Similar legislation was proposed again in 2005, co-sponsored by Sen. Edward Kennedy (D-MA) and Rep. George Miller (D-CA). While it did not pass either the House or Senate, it attracted widespread notice by gaining the support of 44 Senators and 215 Representatives (only three short of the 218 House votes required for passage). Predictably, in early February 2007, with the new Democratic Congress now in power, Rep. Miller, in his role as Chairman of the House Education and Labor Committee, reintroduced this proposed legislation (H.R. 800) containing all three items on the labor movement's wish list.

Employees

If enacted, the Act would deprive employees of the chance to make a considered choice on union representation by practically eliminating an employer's right to require a Government-conducted secret ballot election. Rather, the NLRB would be required to certify a union when a majority of workers sign authorization cards designating the union as their bargaining representative, a process known as 'card-check.' This is a problem for employers, however, because unions usually conduct their card-signing drives unannounced and secretively, without the knowledge of employers.

Employers

The mandatory arbitration and mediation provisions are similarly unappetizing for employers. Such provisions, if enacted, could result in an arbitrator imposing uncompetitive wages and benefits on the employer after 120 days of bargaining. This change in bargaining principles could unnecessarily impact the economy. Imposed wage rates would necessarily result in increased prices for goods and services. Such a requirement is virtually unprecedented in the private sector except for war time and other emergency controls.

Increased Penalties

The increased penalties for unfair labor practices are similarly problematic from the employer's perspective. The NLRA grants employers the right to communicate with employees regarding their views as to unionization. Despite union claims to the contrary, NLRB statistics indicate employers act within their rights 98% of the time. Regardless, H.R. 800 contains treble back-pay provisions and civil fines of up to $20,000 per violation to be imposed on employers who act improperly during organizing campaigns or first election drives. Such penalties are unwarranted and inappropriate. They likely will have a chilling effect on an employer's right of free speech.

Where It Stands

The legislation moved through the House with remarkable speed in February 2007. Only days after its reintroduction in mid-February, the Act cleared the House Education and Labor Committee by a 26-19 vote along party lines. As expected, the clearly conflicting views of the two sides were evident during the committee hearings in which the focus was the first prong of the legislation. Proponents of the bill testified as to personal experiences in which emp- loyers allegedly made it uncomfortable and difficult for workers during the pre-election period. Opponents of the bill testified as to the alleged coercive tactics used by union organizers to induce their employees to sign authorization cards, an act that
could commit employees to union representation under the proposed legislation.

The following statement included in the National Association of Man-ufacturers' letter to the Committee best sums up the opposition view: '[the bill would] overhaul more than 70 years of well-established labor law by stripping away employees' rights to federally supervised, secret ballot elections during union organizing.' Shortly after the Committee's vote, on March 1, the House passed H.R. 800 with 241 members voting in favor of the bill and 185 opposing.

While Senate Health, Education, Labor and Pensions Committee Chairman Kennedy is expected to propose similar legislation in the next few weeks, enactment of the legislation in its entirety during this Congressional term is unpredictable. As of this writing, there are no Republican co-sponsors of the bill in the Senate. A filibuster is contemplated.

Bush Administration's View

Further weighing against enactment this term is the administration's strong opposition. For example, Vice President Dick Cheney stated the administration will 'defend [the rights of workers] to vote yes or no by secret ballot and their right to fair bargaining. [The Employee Free Choice Act] violates these principles.' The White House even issued a formal rebuke of the measure: 'H.R. 800 would strip workers of the fundamental democratic right to a supervised private ballot election, interfere with the ability of workers and employers to bargain freely and come to agreement over working terms and conditions, and impose penalties for unfair labor practices only on employers ' and not on union organizers ' who intimidate workers.'

A Compromise?

However, it is possible that a modified form of H.R. 800, focusing solely on prongs two and three of the legislation, may be introduced in the Senate as suggested or as a compromise. Employers that oppose this legislation must ensure that their voices are heard. The newly formed Coalition for a Democratic Workplace, a group representing more than 300 state and local employer groups, has already commenced strong lobbying efforts in opposition to all aspects of H.R. 800.

Further, even if none of the current provisions are enacted this term, all employers should take notice. There is a significant likelihood that in 2009 the law, including the card-check provisions, could be enacted due to a combination of increased Congressional support and a new administration. Accordingly, businesses should consider implementing preventive measures to protect their union-free status if unions are accorded this powerful new organizing tool. Measures to consider include educating employees and fostering a union-free culture, training supervisors to recognize and react to early signs of organizing, modifying workplace policies to maximize employer rights when faced with union activity, and even conducting a full scale review of the organization's vulnerability to organizing. Simply put, each employer would be wise to take appropriate action to ensure that it is never obligated to recognize and bargain with a union before having a meaningful chance to communicate its union-free beliefs to its people.

Each organization should review its orientation process, personnel documents and other communication methods with two goals in mind: 1) explaining to employees the benefits of union-free status and the company's belief that a union's entanglement in the operations of the business is irrelevant due to its proactive policies; and 2) educating employees on its position regarding unions. Currently, even if an employer is unaware of union organizing, the employer has a period of time after the filing of the election petition to communicate these points to employees. Under H.R. 800, once 50% of the employees sign union authorization cards, the bargaining obligation attaches. Employers should take steps to ensure that employees understand the meaning and implications of signing a card before secretive organizing begins. Proceeding on the assumption that a union will not educate employees on any of the negative aspects of unionization, such as union dues, obligations imposed by union constitutions, the risks of the collective bargaining process and the possibility and reality of strikes, this effort entails imparting such knowledge to employees lawfully, respectfully, and accurately.

Management Training

Integral to this employee education goal is management training. A supervisor cannot convincingly communicate the employer's position as to unionization and the risks of unionization unless he or she understands the underpinnings of the employer's position. Further, even with the best communication strategies, organizing is possible. Supervisors should be trained to recognize and react to the early-warning signs of organizing. Employers should be ready to implement an educational strategy at the first sign of union organizing activity. Of course, as always, employers should consider all aspects of general management training as, in general, positive supervisor-employee relations builds trust and militates against successful union efforts. A vital companion to this management training strategy is the identification of 'supervisors,' who, if properly trained, can be persuasive advocates of an employer's union-free strategy. These 'supervisors' are statutorily exempted from supporting a union since they are management representatives.

Employers' Rights

Various employer policies, if drafted properly, can maximize an employer's rights when handling a union organizing campaign. Solicitation and distribution policies should prohibit all third party solicitation on employer premises and limit employee solicitation and distribution consistent with the NLRA. Similarly, employers should modify other policies, such as electronic communications policies, off-duty access policies and even confidentiality policies, to maximize employer rights. For example, employers should ensure electronic communication policies prohibit chain e-mails of any type. In this regard, employers also should consider adding 'issue-free' policy statements to published personnel policies, or enhancing existing policy statements, to reinforce the company's union-free position to employees.

Additionally, depending on the size of the organization and its susceptibility to organizing, an employer may wish to consider a full-scale vulnerability audit. This audit could reveal issues ranging from weaknesses in management-employee communication to legal violations that union organizers could highlight as part of an organizing campaign. It also often provides a strong avenue for first-line supervisors, those with the most knowledge of employee sentiments, to communicate their suggestions for improvements to policies and practices.

The prevailing view of the business community is that all aspects of H.R. 800 would improperly and unjustifiably alter the current system of labor relations in the United States. Organized labor would obtain distinct advantages to achieve its goal of 'organizing the unorganized.' While passage of such legislation in its entirety in 2007 is unlikely, partial enactment is a possibility and by 2009, the political winds may further shift. One sure thing is that organized labor will not rest on its laurels after this term's passage of the legislation by the House. A best practice for all employers is to support business groups and organizations opposed to the legislation and review their current labor relations policies and practices and implement measures to put the organization in the best position to maintain union-free status if the Employee Free Choice Act becomes law. All corporate counsel need to add to their agenda concerns raised by the Employee Free Choice Act in their role of risk assessor to their organization.

Michael J. Lotito is a partner in the San Francisco office of Jackson Lewis. Richard I. Greenberg is a partner in the firm's New York office.