Major Changes Coming to the NLRA?–EFCA:New Strong Penalties for Employers

June 24, 2009

New Penalties, Damages, and Injunctive Relief.

The two provisions of the proposed Employee Free Choice Act (EFCA) that have received the most press are the provision mandating recognition of unions that establish majority status based solely on authorization cards and the potential for collective bargaining agreements imposed by a third party arbitrator. However, there is a third equally important component of this proposed legislation which would for the first time impose real economic penalties on employers who interfere with employees’ attempts to unionize.

Current Law

As explained in a previous post, under current law a union wishing to organize a bargaining unit of employees generally begins by soliciting employees to sign authorization cards. These cards authorize the union to act as the exclusive bargaining representative of the employees. Once the union has cards from at least 30% of the employees, it may petition the NLRB for a representation election (although unions rarely file petitions absent cards from well over 50% of the employees). However, even if the union has cards from 100% of the employees, the employer has the right to insist that an election be held.

Once the election petition is filed, both the union and the employer begin an intense campaign, with the union lauding the benefits of union representation and the employer seeking to convince employees that unionization is not in their best interest. Under the National Labor Relations Act, in theory the election is to be held under “laboratory conditions” with a number of rules to protect the employees’ right to organize. However, in practice, these campaigns can become reminiscent of the “dirty tricks” of Watergate.

Many, perhaps most, employers will campaign within the parameters of the Act. Those employers may oppose unionization, but they will campaign within the limits of the regulatory scheme There are some employers, however, who are not satisfied to operate within the bounds of the Act. There are legendary stories of employers such as a large textile manufacturer in the south who have been ruthless in their opposition to unions resulting in years of litigation..

These less scrupulous employers are quite willing to discharge employees who seek to unionize. Such a discharge is a clear violation of the Act, as the statute expressly prohibits discrimination based upon union activity. However, by the time an employee’s unfair labor practice charge against the employer travels through the process of investigation, hearing by an administrative law judge, review by the National Labor Relations Board, and possibly a proceeding before a federal circuit court, years have passed and the discharged employee has moved on to a new job.

The only remedy under current law is back pay, and that back pay will be reduced by wages the employee has received in the interim. Consequently, if an employee seeking to organize a union is fired and quickly obtains another job at comparable or higher wages, the employer has no exposure to any penalty for its unlawful act. Although the Board has the right to seek injunctive relief pending its processing of an unfair labor practice charge when it deems such relief appropriate, the authority is used in a very limited fashion.

The EFCA Changes

The EFCA authorizes the Board to impose damages upon an employer who interferes with the right of employees to unionize. In addition, the new statute would require the Board to seek injunctive relief to stop such interference.

The statute, as currently proposed, would provide three cumulative remedies whenever an employer during the course of a union organization campaign or during the period after the union has been recognized when the parties are negotiating their first collective bargaining agreement (1) discharges or discriminates against an employee or threatens to discharge or otherwise discriminate against an employee because of the employee’s union activities; or (2) engages in any other unfair labor practices that “significantly” interfere with, restrain, or coerce employees in the exercise of their rights under the Act.

First, if a charge is filed alleging such violations, the Board must give the highest priority to investigating the charge. If the Board concludes the charge has merit and that a complaint should be issued, the agency is required to seek injunctive relief in federal court.

Second, if the employer discharges employees because of their union activities, the employees will be awarded, in addition to the back pay actually lost, liquidated damages equal to twice the amount of back pay awarded.

Finally, if an employer “willfully” or “repeatedly” commits unfair labor practices in violation of Section 8(a)(1) and/or 8(a)(3) of the Act, during the relevant period, the employer will be “subject to” a penalty of $20,000 for each violation.

Analysis of the Changes

Conceptually, the “teeth” provided by the EFCA with regard to penalties is long overdue. The National Labor Relations Act was passed in 1935 to assure workers the right to unionize. The initial statute was lopsided in providing rights to employees and limiting actions by employers, but providing no sanctions for unions. The amendments to the Act in 1947 under the Labor Management Relations Act (Taft-Hartley) brought more balance to the statute by adding limits to union activity. However, employers and unions were always free to take a “so what” approach, because the only penalty exacted by the National Labor Relations Board was the requirement to post a notice of the infraction and a promise to refrain from continuing the unfair labor practice. Employers had a risk of usually moderate back pay liability as well.

Union density in the private sector has fallen from approximately 35% in the 1950’s to less than 10% today. Unfortunately, when employees seek to unionize, far too often they face the risk of discharge by their employer. The EFCA would impose economic sanctions for such unlawful discharge that are hopefully high enough to make employers less willing to violate the statute to defeat the union.

Although employers who wrongfully interfere with employees’ right to organize in blatant disregard of the Act should be subject to real sanctions, the EFCA scheme has at least two problems. First, these wayward employers are “subject to” penalties of $20,000 per violation. It is uncertain whether the penalties are mandatory or discretionary. If the penalties are discretionary, what are the criteria to be followed in imposing them? .

Similarly, the statute would impose liability for anything an employer does “willfully or repeatedly” during the organizing period and the period following during which the first contract is negotiated which “interferes with, restrains, or coerces” employees in the exercise of their right to organize under the Act. This language is taken from Section 8(a)(1) of the Act. Virtually every unfair labor practice by an employer violates 8(a)(1)–everything from a supervisor interrogating employees about their support of or opposition to the union to engaging in surveillance of union activity. Determining when acts are willful and when not may be difficult, since many violations occur at the hands of first line supervisors who may willfully interrogate an employee, for example, without the knowledge of top management.

If the EFCA is to operate fairly to both unions and employers, the Board should draw on its 74 years of experience with the Act to provide regulatory guidelines to all parties. Historically the Board has declined to use its regulatory authority and has essentially regulated through its decisions. The EFCA should provide impetus for the Board to draw on its experience and resources to give all parties clear notice of the governing rules for union organizing campaigns. Such regulations should not be subject to modification every time the Board membership changes. Sadly, in recent years, some fundamental rules have changed regularly with the change in political tides and Board membership.


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