March 3, 2009

This is our second monthly installment highlighting matters of concern for employers attributable to the convergence of political, legislative and economic events. This alert focuses on the Employee Free Choice Act ("EFCA").

Overview

President Obama sponsored earlier versions of EFCA, which were killed in the Senate. Virtually every pundit predicts the passage of EFCA before the end of this year.

The purpose of this alert is to identify the most likely components of an enacted EFCA, their impact and the steps which an employer should consider in anticipation of such legislation.

Historical Components Of Efca

The three cornerstones of EFCA have been: (1) making union organizing quicker and easier for unions; (2) enhanced sanctions against employers who violate the National Labor Relations Act ("NLRA") during organizing, and; (3) the prospects of an arbitrator-imposed contract on employers following some minimal period of bargaining for an initial contract.

(1) Making organizing quick and easy for unions
Every version of EFCA has endeavored to supplant the secret ballot election process with recognition of a union based upon a union's demonstration of support from a bare majority of employees in a unit appropriate for bargaining. Union support would be manifest by signed union authorization cards. Once a bare majority of cards is obtained, and presented to the National Labor Relations Board ("NLRB"), the NLRB will certify the union as the employees' representative. An employer would be bound to negotiate with the union.

Of all EFCA components, this is most likely of passage.

(2) Enhanced Penalties for Violations of the NLRA During Organizing
Presently, violations of the NLRA are remedied by "make whole" action and notice posting. In the most serious cases, or for repeat offenders, the NLRB may seek injunctive relief in court.

Prior versions of EFCA have sought to impose both remedial and punitive damages. In the most recent iteration of EFCA an employer would be liable for treble damages (three times back pay) for terminating an employee for supporting union organizing.

While some form of enhanced penalty is likely, passage is less troubling as the majority of elections have not historically been accompanied by the actions which would give rise to said penalties.

(3) Arbitrator Imposed Contracts
The latest version of EFCA provided for mediation after ninety (90) days of bargaining for an initial contract and arbitration after thirty (30) days of mediation. An arbitrator could determine the terms and conditions for a two-year contract term. Either party could seek mediation or arbitration.

This is least likely to be included in the final bill as a constitutional challenge is probable.

Current Action To Protect Against Efca
Although some time frame between EFCA passage and implementation is likely, there are concrete and relatively inexpensive steps which should now be undertaken. They include:

• Creation Of A Smart Program
• Supervisory Training
• Employee Training And Communications
• Card Revocation Programs
• Creating The Correct "Bargaining Units"
• Auditing Policies/Procedures

• Smart is an acronym for Swift Management Action Response Team. Under EFCA, an employer, assuming it discovers the existence of union organizing (card signing), will have little or no time to marshal resources, human and otherwise. Unless the employer has a fully functional SMART program which it can activate, it will be unable to timely and successfully respond to the organizing. To be sure, even with a SMART program the employer will face an uphill battle in obtaining information about the particular union involved. However, the existence of a trained cadre of management personnel, prepared general messaging and the ability to get additional pertinent information on short notice will enable a company to make a legal, concerted and effective counter to the union campaign.
• Supervisory Training of all management personnel is critical. All supervisors must have a minimal understanding of the negotiation process; strikes; the costs of union membership, and, the company's views/experiences about and with unions. They must know how to lawfully exercise their free speech rights, and they must be able to recognize the early warning signs of union organizing. Those Supervisors and Managers in the SMART program will have enhanced skills.

Similarly, the root causes of union organizing must be taught to all management staff. Management must avoid the typical pitfalls and counsel those managers who perpetrate such an unenviable environment.

• Employee Training should be undertaken now. Such training should minimally alert employees not to sign a union card without obtaining requisite information, including discussion with management, to make an informed judgment as to whether they want a union. Under EFCA, signing a card and having a union may be inseparable. Absent a reasonably informed employee base prior to the advent of organizing, an employer may be powerless to lawfully prevent union certification.
• A Card Revocation program should be created. As EFCA most likely will command certification of a union based on signed cards, an employer's communication should not only encourage employees not to sign but should lawfully encourage employees to assert their right to revoke a card previously signed. Where organizing is undisclosed until a filing for certification with the NLRB is made, card revocation may be wholly unavailing. However, organizing is generally disclosed; often before a majority of employees have signed cards. The number of employees signing cards before disclosure should be inversely related to the extent of prior employer communications with employees - those employers who discuss unions before the advent of organizing are more likely to learn of the organizing, and to react, than those employers who have not previously communicated with their employees.
  
  Under prevailing law, an employer may acquaint an employee with his/her right to revoke a signed card but may not do much more. Providing postage, copying or other facilities to effectuate revocation is typically held to be unlawful employer assistance. Whether the advent of EFCA, or the heightened importance of cards, will change this rule is at best questionable. Modifying handbooks to include statements regarding the right to revoke a card, how to revoke and an example of a revocation notice are all worthy of consideration. Bulletin board notices addressing revocation are also possible. We strongly encourage you to speak with counsel prior to embracing any strategy or action plan designed to acquaint employees with their revocation rights or with the mechanics of doing so.
• Creating the appropriate Bargaining Units must be considered as part of an employer's program to limit the impact of EFCA.
  
  There are steps an employer may take to define the unit. For instance, if an employer believed it would be successful in defeating a union if all employees participated it would serve the employer's interest to establish environmental facts supportive of an overall unit finding. For example, if all employees were subject to the same working conditions and wages/benefits or if there was regular interaction and interchange among all employees, an overall unit could be the appropriate unit. Transfers among positions and requiring all employees to be cross-trained would also further an overall unit. Advance planning could frustrate organizing in any but the designed units.
• Auditing Policies/Procedures to ascertain competitiveness and legality are critical regardless of EFCA. As many organizing drives have been spurred by the existence of unfair or unlawful pay or personnel practices, self examination and vulnerability assessment are essential. Moreover, the avalanche of litigation regarding personnel and payroll practices, over the past few years, virtually demands employer attention.

Employment policies and practices should be reviewed and record retention established. Recognition that articulated policies are not necessarily restrictive, may be modified from time to time and provide a viable defense to many employment suits all suggest that employee handbooks should be crafted and updated. Personnel files should be examined to ascertain whether employee skills, performance, disciplinary history and merit are reflective of the views of the managers. Where skill and ability determine order of layoff, accurate personnel files are a requisite. Wage-hour complaints are growing exponentially. Only an audit of pay practices can reveal potential overtime violations or improper designation of employees as salary exempt. Certain industries (e.g., restaurants and construction) are presently among those regularly investigated by departments of labor.

Conclusion
EFCA will undoubtedly place employers at risk of unionization to an unheard of degree. Although large companies with 50 or more workers are the most likely targets, the NLRA makes employers with two or more employees potentially subject to its provisions. An irate employee in a small business may be sufficient impetus for organizing. Where the environment is larger but lacks the fundamentals of sound management policies and practices and lacks a SMART program, organizing will not be difficult. EFCA is a threat to every employer's union-free status. Those who prepare their workplace will be less vulnerable.