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Publication

February 21, 2007Client Alert

Labor Law May Undergo Its Most Significant Change in Decades: The Impact of the "Employee Free Choice Act"

What Is The “Employee Free Choice Act”

On February 5, 2007, H.R. 800, which is paradoxically named the “Employee Free Choice Act,” was reintroduced in the U.S. House of Representatives as a proposed amendment to the federal law governing labor relations, the National Labor Relations Act. Passage of this bill into law could have adverse consequences on non-union employers throughout the United States and would be the most significant change to the National Labor Relations Act in decades. In short, passage of the Employee Free Choice Act would: (1) make it easier for unions to organize employees by allowing them to circumvent the “secret ballot” election process conducted by the National Labor Relations Board (“Board”); (2) significantly reduce employer bargaining power by giving arbitrators authority to set the terms for first-time contracts; and (3) impose significantly harsher monetary penalties on employers that commit unfair labor practices during union organizing campaigns or negotiations for a first contract.

The Employee Free Choice Act was introduced in Congress first in 2003 and again in 2005, but failed to advance in both instances. Now, with the Democratic controlled Congress, the bill was predictably reintroduced as H.R. 800 and currently has 233 co-sponsors in the House of Representatives. In Wisconsin, 5 of the 8 U.S. Representatives are co-sponsors of the bill, with support divided down party lines. In Illinois, 10 of the 19 U.S. Representatives are co-sponsors with support similarly divided down party lines. The bill passed the House Education and Labor Committee on February 14th by a vote of 26-19. The full House will likely vote on the bill within the coming months.

The Current Law

In its current form, the National Labor Relations Act generally provides that an employer is not required to recognize a union as the bargaining representative of its employees unless the union receives support by a majority of employees that vote in a “secret ballot” election. Such election is typically conducted by the Board after a 42-day campaign period. During the campaign period, which begins after a petition for election is filed and the employer is made aware of the union’s organizing efforts, both the employer and the labor organization have the opportunity to provide employees with information about union representation such that employees can make an informed decision on whether to vote for or against union representation. A Board representative oversees the election process to ensure that on election day employees are able to cast their votes away from the potential coercive power of the union. With the passage of the Employee Free Choice Act, however, this would change.

The Effect Of H.R. 800

The Effect on Union Certification

In its current form H.R. 800 eliminates an employer’s right to demand a secret ballot election and requires the Board to certify a union when more than 50% of the workers in a representational unit sign an authorization card designating the union as their bargaining representative. The current language provides:

If the Board finds that a majority of the employees in a unit appropriate for bargaining has signed valid authorizations . . . the Board shall not direct an election but shall certify the individual or labor organization as the representative described in subsection (a).

This change could be detrimental to both employees and employers. In many instances union card signing goes unnoticed by an employer, preventing it from responding to a union’s organizing drive with information of its own, as it would have the opportunity to do during the campaign period preceding a secret ballot election. The impact of this on employees should not be overlooked as employees lose out on the opportunity to receive facts on both sides of the issue. H.R. 800 also takes away an employee’s right to decide anonymously and in private whether or not to vote for the union. Through card signing, union organizers and fellow employees would know whether a co-worker supported the union. This, in turn, could result in a breeding ground for coercive behavior and fear of retaliation that could potentially make an employee more likely to sign an authorization card. In essence, an employee’s informed “free choice” could be transformed into an uninformed “coerced choice.”

The Effect on Initial Collective Bargaining

H.R. 800 would also change the way that first contracts are negotiated in the event a union is certified as the employees’ representative. The current language provides that if the employer and union are not able to reach an agreement on the terms of a contract within 90 days from when bargaining is commenced, either party may request mediation through the Federal Mediation and Conciliation Service. If within 30 days after mediation is requested the parties still have not agreed upon a first contract, the dispute must be referred to an arbitration board. The arbitration board will be required to render a decision settling the dispute and setting the initial contract terms. The arbitration board’s decision will be binding on the parties for a period of 2 years unless amended during that period by agreement between the parties. This process greatly reduces an employer’s bargaining power during negotiations and will likely prevent an employer from taking a firm stance on certain terms and conditions of employment that it deems most important. This process could also result in the union inflating its contract proposals (especially in regard to wages and other economic proposals) knowing that the arbitration board is likely to settle on a compromise somewhere between the employer’s and union’s proposals.

The Effect on Potential Liability

Finally, H.R. 800 also provides for significantly heavier penalties against employers that commit unfair labor practices during any period in which unions are attempting to organize employees or during negotiations for a first contract. In an effort to strengthen enforcement, H.R. 800: (1) increases the amount for which an employer may be liable for discharging or discriminating against an employee during the relevant period to back pay plus 2 times that amount as liquidated damages; (2) provides for civil fines of up to $20,000 per violation against employers found to have willfully or repeatedly violated employees’ rights during the relevant period; and (3) requires the Board to seek a federal court injunction whenever there is reasonable cause to believe an employer has committed an unfair labor practice during the relevant period.

Conclusion

If the Employee Free Choice Act is passed it will have a significant impact on the future of labor relations and will require employers to take a much more proactive approach to union avoidance. The legislation is clearly meant to tilt the playing field in favor of unions and would adversely impact an employee’s free choice to join or not to join a union. Although the U.S. Labor Secretary has indicated the current administration’s opposition to the legislation, its passage is the number one priority of organized labor for 2007 and, as it currently stands, the bill appears to have significant support in both the House and Senate.

If you have any questions on the Employee Free Choice Act or other labor and employment issues, please contact Amy D. Hartwig at 414.271.6560, or adhartwig@michaelbest.com.

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