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Union Power

Sue Myrick, the Republican who North Carolina voters have returned to the House of Representatives six times since she was first elected in 1995, is, for obvious reasons, a strong believer in the ballot box. So much so that she had no hesitation in trotting out the American way as her reason for voting against The Employee Free Choice Act (EFCA) on March 1, when the House passed the legislation by a 241-185 vote.

"I was just re-elected to office by secret ballot," Myrick said soon after the vote. "How could I in good conscience turn around and vote for a bill that denied that same right to workers?"

It's precisely that perceived public distaste for allegedly running roughshod over a basic constitutional right that American business is counting on to eventually defeat the EFCA, which allows employees to form unions by signing cards authorizing union representation without holding an election. The bill, which amends the National Labor Relations Act (NLRA), also establishes stronger penalties for employers that violate employee rights during organizing efforts.

"EFCA is the most significant change to the NLRA since it was enacted more than 70 years ago," says Gavin Appleby, a partner at Littler Mendelson. "It will dramatically impact the legal landscape and the balance of power between labor and management."

Open Votes

Under the NLRA, any union seeking certification must submit to a federally supervised secret ballot process. The EFCA doesn't remove that right; rather, it establishes an alternative basis for certification known as a "card check," under which a union also can be certified if it convinces a majority of employees to sign union authorization cards. Under the current system, unions use card checks to demonstrate that they have sufficient support to justify a secret ballot election.

Critics such as James Walters, a partner at Fisher & Phillips, say that the EFCA drastically changes the balance of power between unions and management and that a card check is substantially more likely than an election to result in union representation.

"Just as the typical prosecutor can 'indict a ham sandwich,' the typical union organizer can get an employee to sign an authorization card, especially if the organizer has other union officials or pro-union employees with him," he says.

Appleby is of the same mind.

"Peer pressure and intimidation are effective tools in the card-check process," he says. "Where a secret ballot exists, employees are free to vote as they wish regardless of what they tell their peers about their intentions."

Critics also argue that the EFCA aggravates the shortcomings of the card-check process by allowing unions to campaign for certification without having to notify the employer.

"Employers in industries or geographic areas that are predominantly non-union, particularly smaller employers, may find that an organizing campaign takes them by surprise," Appleby says.

And if that occurs, employers may have insufficient time to give workers their side of the story.

"Free choice suggests an informed choice," says John Raudabaugh, a labor partner with Baker & McKenzie. "The EFCA effectively restricts the dissemination of information that makes a truly informed choice possible."

Contractual Obligations

However offensive the effective elimination of the secret ballot may be to the EFCA's critics, there are many who suggest the provisions forcing a first contract on the parties by way of binding arbitration are even more draconian.

Current law merely requires employers to bargain in good faith with unions: it doesn't require employers to agree to any of the terms a union demands.

"The union can resort to economic pressure such as a strike, but ultimately management still decides what it will pay and how it will run its business," Hankins says. "This would change if the EFCA becomes law."

Under the proposed legislation either party can insist upon mediation by the Federal Mediation and Conciliation Service if they do not agree on a contract within 90 days. If mediation does not succeed within 30 days, a panel of arbitrators can pick and choose from the terms of the parties' competing proposals and create a contract that both sides must comply with for two years.

"In other words, a company would have 120 days to make a deal with a new union, failing which an arbitrator who is not accountable to shareholders would decide such key items as wages, benefits, efficiency standards and other workplace issues," says Richard Hankins, a partner with Kilpatrick Stockton. "Companies are looking at the prospect of losing fiscal control over their enterprise."

Quite apart from the conceptual failings of binding arbitrations, the 120-day period may be unrealistic.

"Most first contracts take 6 to 12 months to negotiate," Appleby says. "In some cases, the union hasn't even made its initial offer in 120 days."

Under the EFCA, employers also lose the bargaining advantage that comes with the threat of decertification. Under current law, employees may apply to decertify a union if good-faith negotiations have not produced a first contract within a year.

"Instead, unions can wait out an employer that takes a hardball position because they know they're likely to get more from an arbitration," Appleby says.

Fortunately for corporations, the prospects for the EFCA are uncertain.

The Bush Veto

House Democrats put the EFCA on a fast track, pushing it through in less than a month. At press time Senator Ted Kennedy was set to introduce the bill in the Senate.

"The EFCA has enough votes to pass, but it may be subject to filibustering," Raudabaugh says.

Even if the Senate passes the bill, President Bush has made it clear he will veto it, and most observers believe there is insufficient support in Congress to override his veto. Still, the current battle may just be a preliminary round.

"The law's supporters are OK with a scenario that doesn't envisage passage of the bill in this Congress," Raudabaugh says. "They're mostly interested in just getting it up front and having the issues vetted so that it will move straight through on a fast track for a Democratic president to sign."

If and when that occurs, many companies that have grown complacent about union organizing efforts will have to cope with a re-energized labor movement.

"Less than 7.5 percent of the American workforce is unionized and even that tends to be concentrated in certain sectors such as transportation," Raudabaugh says. "That's why there are few tried-and-true labor lawyers."

And that's also why there may be a sharp learning curve for the many in-house attorneys unfamiliar with the vagaries of dealing with ambitious unions.

Contributor

Julius Melnitzer

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