Business Leaders Say Employers Need to Prepare for Proposed Labor Law

Business leaders say a proposed labor bill designed to amend the National Labor Relations Act will change the landscape of the American workplace and rewrite labor laws that have been in place for nearly seven decades if the legislation passes next year. And while the outcome of the legislation is still unknown, business leaders say the time to prepare is now.

The Employee Free Choice Act, backed by presidential candidate Sen. Barack Obama (D-Ill.) and other Democrats, would change the way workers unionize. Some business leaders say the legislation is likely to come up quickly after the first of the year—especially if Democrats are in the majority after the election. For that reason, business leaders say, HR professionals, managers, and business owners need to take steps now to prepare for the possibility that the legislation will pass into law next year.

“It could radically rewrite current labor laws in this country,” said Marc Freedman, director of labor law policy at the U.S. Chamber of Commerce. The AFL-CIO argues that the legislation is needed to restore rights to the average worker, contending that workers essentially have lost the freedom to form unions and bargain collectively. The legislation would help workers negotiate for better work conditions and terms, AFL-CIO officials say.

Also known as card-check legislation, the Employee Free Choice Act would require employers to recognize a union if a majority of workers signed cards in favor of organizing. And while the bill would not technically eliminate secret-ballot elections, business groups say it is unlikely that unions and workers would utilize them in the union-forming process if the bill passes. Under existing law, an employer can demand a secret-ballot election if more than 30 percent of workers favor unionization.

The legislation also would have a big impact on small- and medium-sized businesses, Freedman said. Right now, it is not cost effective for unions to try to organize where small businesses are concerned, but the Employee Free Choice Act would change that since so few resources would be required to unionize a workplace. The only requirement would be the signature of a majority of workers saying they want to organize.

Based on the way the law is written, Freedman said, here's how the Employee Free Choice Act would work during union organization efforts:

• Union organizers would talk to employees, and workers in favor of a union would then sign a card in support of organizing. Under the proposed legislation, such union organizing drives could take place without an employer's knowledge.
• The legislation does not provide a time limit for collecting the authorization cards. So the union could conceivably hold onto union support cards for one or more years. Then, once union organizers received the support of 50 percent of the workers plus one, they would contact the National Labor Relations Board (NLRB) and submit the authorization cards. According to the legislation, a secret-ballot election is prohibited once union organizers present the proper number of authorization cards to form a bargaining unit.
• Under the proposed legislation, there is no size threshold for employers. So it is possible that an employer with as few as 10 employees could receive notification from the NLRB, saying that it must recognize the union as a bargaining agent for its employees.
• After the union has presented enough cards to the NLRB to be recognized, it is up to the company and the union to collectively bargain to the first contract. Under the proposed legislation, the union and the company would have 90 days to hammer out an agreement. At the conclusion of 90 days, the contract then would be submitted to a federal mediator. Currently, there is no federally mandated time frame in which a union and employer must reach agreement on a contract.
• If no headway is made with the federal mediation and conciliation service after 30 days, the contract dispute would then go to binding arbitration.
• After a total of 120 days from the start of contract negotiations, the binding arbitrator would review the contract and then dictate the terms to the union and employer. The contract then would be binding for two years, unless both parties agree to extend that time frame. Under current law, employees can decide that they do not want union representation after two years, but there is no such provision in the proposed legislation.

• The NLRB must seek a federal court injunction against an employer if there is reasonable cause to believe that an employer has interfered in any way with employees who are trying to organize a union (e.g. threatening to discharge or discriminate against employees). The courts would be authorized to grant temporary restraining orders or other injunctive relief.
• An employer would have to pay three times the amount of an employee's back pay if an employee is discriminated against or discharged during a union-organizing campaign or first contract drive.
• Employers would have to pay civil fines of up to $20,000 per violation for violating employees' rights during a union-organizing campaign or first contract drive.

The Society for Human Resource Management (SHRM) and the U.S. Chamber of Commerce both oppose the Employee Free Choice Act on several fronts. Both disagree with the fact that contract negotiations could go into binding arbitration within a relatively short period of time. After only 120 days, a governmental agency could be dictating workplace policies to businesses, Freedman said.

SHRM and the U.S. Chamber of Commerce also disagree with the card-check method, which they believe would basically eliminate the secret ballot system. The card-check method would instead require employees to publicly state their preference for a union, potentially opening them up to hostility and pressure in the workplace. Nowhere in the process do employees have the opportunity to state that they do not want a union, Freedman said. And in addition to losing the opportunity to vote in a secret-ballot election, employees also would lose the right to vote on ratification of a first contract under the proposed legislation.

Many employers and HR professionals in Right to Work states, as well as those who do not have unions right now, may be overlooking the potential impact of this bill on their businesses, said Michael Layman, manager of labor and employment for the Society for Human Resource Management (SHRM). The bill is intended to go after employers who do not have unions right now, he said.

And the results of the legislation—particularly in this economic climate—could have a chilling effect on business, representatives from the U.S. Chamber of Commerce and the Society for Human Resource Management (SHRM) say.

The overall potential impact on employers and workplace policies “is a huge unknown,” Layman said.

So what can employers do now? Mike Burns, executive vice president of the American Society of Employers (ASE) in Southfield, and Joe DeSantis, ASE's director of communications, have a few suggestions:

• Read up on the law. The average HR generalist in a non-union environment is not necessarily going to know about the ins and outs of unionization. Employers and HR professionals need to familiarize themselves with the legislation and stay on top of any developments related to it.
• Make sure supervisors are well trained. It is important that supervisors know how to effectively communicate with and listen to employees. Employers need to make sure that managers are treating workers well and not playing favorites. If employees are treated right, there is less likelihood that workers will feel the need to unionize.
• Review benefits and pay. Are you offering competitive wages and benefits to employees? It may be worthwhile to review what you are offering to your workers and make any needed adjustments in your overall compensation strategy.
• Educate employees. It might be a good idea to educate workers on the new legislation. In particular, it is important that employees understand that with the card-check method, a signature is not just showing interest in forming a union—it's a vote.

While employers should already be doing these things, it's not a bad idea to review your current workplace practices and policies anyway, Burns said.

“Companies should be getting prepared now,” DeSantis said.

There is no guarantee that any employer will be invulnerable to the impact of this legislation if it passes, he said. So employers “should work off the premise that it's going to pass.”

Written by Jenny Cromie, certified human resources specialist (CHRS)