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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Mandated Collective Bargaining Agreements.

Current Law

Under the current law, once a union is certified by the National Labor Relations Board (the “Board”) as the collective bargaining representative of the employees, the parties must meet “at reasonable times” to negotiate “in good faith” in order to reach agreement on a collective bargaining agreement. However, neither party is required to “agree to a proposal” or [make any] concession.” There is no time limit for reaching an agreement, and often the first agreement takes a number of months to complete.

When the parties are unable to agree, either party may resort to use of economic weapons like a strike or a lockout. In addition, if the parties reach true impasse–a situation like stalemate in chess, in which no movement is realistically possible–the employer may unilaterally implement its last offer.

Although there are flaws in this scheme, and it might benefit form somewhat firmer parameters, most employers and unions do reach agreement within a reasonable period of time.

EFCA Changes

The EFCA would bring a dramatic change to the process. First, the statute would require that the employer begin bargaining within ten days following a request from the union, unless the parties agree to extend the time. (Currently there is no such time limit.) The parties are then required to “meet and commence to bargain collectively” and “make every reasonable effort to conclude and sign a collective bargaining agreement.”

If the parties do not reach agreement within 90 days (or a longer time agreed to by the parties), either the union or the employer may notify the Federal Mediation and Conciliation Service (FMCS) of a dispute and request mediation. The FMCS must then “promptly” communicate with the parties and use its” best efforts,” to bring them to agreement through mediation and conciliation.

If, however, the parties are unsuccessful in reaching agreement within 30 days following the first request for mediation (a period which may be extended by mutual agreement), the FMCS must refer the dispute to an arbitration board. These arbitration boards are to be created pursuant to regulations to be promulgated by the FMCS. The arbitration panel will then render a decision settling the dispute and the decision will be binding upon the parties for a period of two years, unless amended during such period by written consent of the parties.

The Significance of the EFCA Changes

The EFCA would change the bargaining process for first contracts significantly. First, the statute imposes an unrealistically short time limit on the parties for negotiating a comprehensive collective bargaining agreement. An agreement can easily take six months or more, even when the parties are working diligently toward an agreement. Neither the union nor the employer can typically devote full time to the process. Wages, work rules, benefits, discipline and discharge, dispute resolution, seniority, promotions, and numerous other matters must be addressed and reduced to writing. Granted, the parties can agree to extend the time. However, it would be preferable to begin with a more reasonable period of time.

In contrast to the present rule where mediators need only be contacted when a work stoppage is in the offing, mediation is now imposed unless the parties can quickly craft an agreement. If mediation is not successful, a neutral third party–an arbitration board–will impose an agreement upon the parties. Although one may presume that the arbitration board will piece together an agreement from the parties’ proposals, as written the EFCA does not set out parameters for the arbitrators.

Unfortunately, there are employers who after being unionized do not bargain in good faith and they seek to undermine the process. In those circumstances, the proposed EFCA procedure or some variation on it makes sense. However, the proposed statute appears a bit too rigid for the more typical good faith negotiations.

The Employee Free Choice Act

The Employee Free Choice Act (EFCA), which is highly likely to be adopted in some form by the current Congress, is the most sweeping revision of the National Labor Relations Act (the “Act”) since the Labor Management Relations Act (Taft Hartley) of 1947. There were major amendments in 1959 and 1974, but none of those reached the very core of the Act–union organizing–in the way the EFCA does.

The proposed statute, which has now been introduced into both the House (HR 1409) and the Senate (S 560) with numerous sponsors, would make three major changes to the Act. In order to provide some background for readers not familiar with the Act, I will divde the discussion into three parts.

Part 1. Union Organizing By Card Check

Under current law, if a union wants to organize the employees of an employer, it distributes union authorization cards to the members of the proposed bargaining unit. These cards authorize the union to act as the exclusive bargaining representative of the employees. If the union presents cards from over 50% of the members of the proposed bargaining unit, the employer may recognize the union voluntarily. However, in almost every instance, the employer will insist that the union file a petition for an election to be administered by the National Labor Relations Board (NLRB). Unions can simply file petitions on their own with cards from merely 30% of the members, but they rarely do so as statistically they are unlikely to win an election unless they have 50% to 75% of the employees supporting the union at the time of the filing of the petition.

Once the petition is filed the appropriate bargaining unit is determined (by the NLRB when the parties do not agree or when the proposed unit is not “appropriate”) and an election is scheduled. Then the union and the employer launch into intensive campaigns. As a broad generalization (with myriad exceptions), employers have the upper hand in such campaigns as they have greater resources. There are consulting firms, for example, that specialize in helping companies defeat a union organizing drive. In addition, employers can have captive audience speeches on work time, whereas unions generally are limited to offsite meetings.

If the union receives a majority of the votes cast in the secret ballot election on election day, it wins. If not, the employer wins and the employer can be assured that there will be no more organizing attempts by the defeated union at least for another year.

If the union does prevail, the parties must negotiate “in good faith” to reach agreement on a contract. Although most parties do so successfully, some employers will seek to drag negotiations out long enough that support for the union wanes.

The Significance of the EFCA

The EFCA as proposed introduces a radical change. Under the legislation, once a union presents the NLRB with cards signed by a majority of the employees (50% plus 1) and the Board is satisfied that the cards are legitimate, then the Board must certify the union as the collective bargaining representative without an election. The EFCA is unlikely to be adopted in its current form, as there are many vocal opponents. However, it is highly likely to pass in some form. Whatever the final bill looks like, unions will have a much easier time of organizing employees.

Employers are not always aware of union organizing campaigns until they are well underway. Consequently, if a union is able to collect signed authorization cards from over 50% of the members of the proposed bargaining unit without the employer’s being aware of the campaign, an employer could be shocked to suddenly find a union on its doorstep.

There are rationale arguments both for and against this change. The one thing that is certain, however, is that the EFCA is sure to change the landscape for employers and unions for years to come.