As debate rages over the reintroduction of the Employee Free Choice Act, labor and employer groups clamor for political support for or against what many are calling the most dramatic changes to labor law and the 1935 National Labor Relations Act in three-quarters of a century. The mere promise of change to the secret ballot elections and bargaining process has employers and their supporters up in arms. They argue that if made law, EFCA could quake the capitalist foundation of businesses across the country.

"If EFCA is passed," says Jonathan Kane, chairman of the Labor and Employment Group at Pennsylvania based Pepper Hamilton LLP, "it will change labor relations dramatically, making it extraordinarily easy for unions to organize in traditional sectors and in many other sectors of the service economy."

The bill was reintroduced to the Democrat-heavy 111th Congress on March 10 by Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) with 39 Senate cosponsors and 222 House cosponsors, 18 fewer than in the 110th Congress when it was first introduced. Despite the lessened support and intense controversy, the bill's passing in some form appears imminent to most experts, with many expecting President Obama's signature before the year is out.

Over the years, union membership has declined sharply; only 7.5% of the private sector currently is unionized. However, in her study, "An Empirical Assessment of the Employee Free Choice Act: The Economic Implications," Dr. Anne Layne-Farrar of global advisory consulting firm LECG estimates that if EFCA becomes law, unions will absorb 4.1 million new members.

Union membership is expected to rise no matter if the bill is passed or not, but as many employer groups argue, EFCA will do nothing for job creation nor act in employees' best interests. For every three percentage points gained in union membership, there would follow a one percentage point increase in the unemployment rate, with job creation predicted to fall by approximately 1.5 million jobs the next year, finds Layne-Farrar. This means that if the percentage of private-sector union membership rises by 5% to 10%, as some have forecasted, then unemployment would increase by 2.3 million to 5.4 million, or by a rate of 1.5% to 3.5%, in the following year.

Layne-Farrar's research is based on over 22 years of history of 10 Canadian provinces that adopted card check and mandatory arbitration legislation, a source of contention for some labor leaders who feel a Canadian study does not translate to the United States. Instead, they point to a study by John DiNardo, a professor of economics at the University of Michigan, which concludes the impact of unionization on employer survival is close to zero.

Nevertheless, employers see the legislation as a divisive proposal that could potentially destroy them in an already callous economy.

Getting prepared

Experts recommend that employers be proactive about preparing for EFCA's passage by recognizing that the union sells a service and to manage their workforce with that mindset.

Begin with a massive external audit of all policies and practices, closely examining and surveying employees about compensation, management training, communications systems and problem-solving procedures. Once a union comes on the scene, employers must be very careful about what they say, but until that day comes they can try to resolve issues by conversing with employees.

"It's a good time to sit with your people and find out what's on their minds, because if employees feel they can freely talk to you, you'll not only avoid unions—whatever the law may be—but you'll also avoid employees feeling that they are treated unfairly or that they are unheard, which bring lawsuits of all kinds. [You'll also] avoid turnover and a demoralized workplace, because you'll hear what's on their minds and can take steps to deal with it," affirms Richard Block, an employment lawyer from Mintz Levin LLC, headquartered in Boston.

Jonathan Kane, a partner in the Philadelphia and Berwyn, Pa., offices of Pepper Hamilton LLP and chairman of its labor and employment group, believes it's a misstep to begin an anti-EFCA communications campaign that might drum up unintended support for a union. First, employers should get a sense of how healthy the workplace climate is with audits, polls and focus groups. He also recommends taking more creative actions to identify and solve the problems in the workplace. Meetings with upper management—without supervisors—will help build trust, as will "walk in my shoes" campaigns where, for example, an executive works behind the counter or in the assembly line to gain immediate knowledge of employee concerns.

Cooperative or collaborative committees comprised of management and employees also can promote positive employee relations. Kane states that, in his experience, the committees are an effective harbinger: "Unions so strongly oppose them because, if used well, continually and legally, the committees can eliminate the unions' element of surprise, as the committees serve as an excellent early-warning system that will alert the company of employee unrest."

Once employee complaints have been addressed, employers may begin educating workers about the advantages and drawbacks of forming a union, advises Kane. Others recommend being up front with the no-union policy by printing the company philosophy and reasons for not desiring a union in the employee handbook and addressing the topic during new hire orientation. Speaking with employees face-to-face or via Web seminars is strongly recommended, as are home mailings on the subject so that spouses also are informed about a union's effect on the workplace.

No one wants to spend money on a communications campaign until they know whether EFCA passes, but a union-free culture is best preserved by prematurely enlisting the full support of managers and encouraging a positive employee relationship to serve as a bedrock foundation against unions.

Arnold Perl, a partner with Ford & Harrison LLP, underlined this point when he spoke directly to HR managers: "You must be at the forefront of advising senior management on the threats posed by EFCA, or any compromise version, and assist in developing effective countermeasures to protect the company's interest."

"The time to act is now," emphasizes Dave Radelet, a partner with Franczek Radelet & Rose P.C. in Chicago, "and taking these actions is going to be good for your business whether or not EFCA passes."

The following dissects the changes EFCA will make to the NLRA:

Card check

Currently, for a union to be certified by the National Labor Relations Board, the union must present a petition supported by at least 30% of the employees, represented by authorization cards. The employer then has the right to request a secret-ballot election, conducted by NLRB, to determine whether a majority of the workforce wants to bargain collectively.

However, under EFCA, unions will be able to form through a simple majority by collecting 50%-plus-one union authorization cards. Employers would not be able to request a secret ballot as the proposal now stands. For this reason, employer supporters worry that without secret ballots unions will be able to use peer pressure and intimidation to get the votes needed from the workforce.

Stewart Acuff, director of organizing at AFL-CIO, disagrees. "It's absolute nonsense; it's making up a problem to hide a very real problem," asserts Acuff. "In the whole history of the National Labor Relations Act there have been 42 proven cases of union intimidation; that's one every two years. Just last year 31,000 workers were retaliated against for exercising legally protected union activities, and every year for the last 20 years more than 20,000 workers a year have been illegally retaliated against for exercising supposedly protected union activity. So we have a crisis of intimidation in the workplace ... but it is intimidation by the boss against the workers."

When asked whether ending the ballot system would be undemocratic, he insists that an end to secret ballots would not be a hindrance on employee privacy, but rather the end of the "anti-union terror campaign." Employees have no say in what employer collectives their employer belongs, argues Acuff, so why should employers be permitted a campaign to discourage employee collective groups before an election?

Douglas R. Sullenberger, a partner in Fisher & Phillips LLP's Atlanta office, sees it another way. He foresees employers becoming ambushed by a blitz card campaign that leaves the company in the dark and with no time to defend themselves.

A great majority of those interviewed believe the card-check provision would not pass as is, with some forecasting a compromise with a quickie election between five to 25 days after NLRB has received the cards. Others believe that a card check super-majority of 55% to 75% may be required in order to declare a union certified with either no option for the employer to request a secret ballot election or with a quickie election.

Whatever the final details [of EFCA], Mike Asensio, head of the labor relations practice team and partner with Ohio-based law firm Baker Hostetler, recommends maintaining positive employee relations and having a union prevention plan in place at all times. He suggests training managers so they know what to do once cards appear in the workplace and can communicate effectively and comfortably to employees the benefits of not having a union.

Employers need to demonstrate the value of an open-door policy so that employees can deal directly with the employer on workplace issues. Managers should also be able to explain the dangers of signing a binding union-authorization card.

Mandatory interest arbitration

There currently is no provision for mandatory interest arbitration, but under EFCA, if an employer and union fail to negotiate a contract after 90 days, either has the option to request mediation from the Federal Mediation and Conciliation Service.

If after an additional 30 days no progress has been made, either party may call in a government-appointed arbitrator to dictate a two-year binding contract.

"The difficulty with the interest arbitration is that it turns on its ear the process that's been in place for settling collective bargaining issues between the employer and union for 75 years," explains Asensio.

"The reality is that the bargaining won't be done in good faith by either side because there will be posturing in getting ready for arbitration.

"Ultimately, the issues aren't going to be decided through bargaining because you're going to submit them to an arbitrator and it will behoove the union in almost every instance to go to arbitration, otherwise they're going to be accused of leaving money on the table."

The greatest employer fear is that the binding arbitrator would place a company in a multiemployer plan against their will, thereby making them subject to significant liability and possibly suffocating their ability to succeed. Asensio also expects to see many more strikes if EFCA passes.

Although employers and their supporters call this aspect of the bill "insidious," Acuff sees it as a necessary prod to keep employers honest.

"Arbitration is not in the bill because we want to go to arbitration," he explains. "It's because you have to find a way to incentivize employers to negotiate in good faith. Depending on which study you look at, 30% to 40% of certified unions don't get a first contract when there exists no time limit; with mandatory arbitration, this blank slate will more times than not be scripted by a third party."

Perl retorts: "For someone to come in who knows nothing about the company or industry [and impose decisions on wages, benefits and terms of employment] is dangerous [for the employer] and for employees as well, because if you make a company less competitive, you jeopardize jobs."

As an alternative, he suggests removing all arbitration and instead enforcing a form of compulsory mediation led by the National Mediations and Conciliation Service as a potential compromise.

In a post-EFCA world, employers will have to argue to the arbitrator that their requests are based upon a business need.

With this in mind, Asensio recommends that non-union employers establish a track record now to justify the business need for issues such as subcontracting.

If an employer can point to a practice of subcontracting, for example, it will help prove business need before an arbitrator if the employer is arguing that it needs to reserve the right to subcontract in its collective bargaining agreement.

Penalties

As NLRA stands, violators are required to post a cease-and-desist notice to employees for 60 consecutive days, and the NLRB can provide other remedies, including injunctive relief and even bargaining orders.

Also, if an employee is terminated due to his involvement with or support of a union, an employer will be ordered to reinstate that employee and make him whole, paying him back pay minus any interim earnings.

If EFCA passes in its present form, employers also will be required to pay $20,000 in penalties for each violation that occurred during a union organizing campaign. Additionally, unlawfully terminated employees will not just be made whole but will be awarded treble damages, thereby increasing an employers' liability threefold, says Perl.

"If EFCA was proposed with only these more severe penalties for violations, it wouldn't have been met with such widespread opposition from the business community as it has under the proposed legislation."

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The Great Debate

Download a special extended two-part "Five Minutes With..." to hear two industry experts on both sides of the EFCA debate discuss the pros and cons of the legislation. Find the audio at ebn.podhoster.com.