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Wednesday, August 19, 2009

EFCA and Compromise

As proposed, the Employee Free Choice Act (EFCA) would 1) replace secret-ballot union representation elections with card-check certification of unions as exclusive (monopoly) bargaining agents for workers in their workplaces; 2) impose compulsory-interest arbitration on employers who do not agree to a first union contract within 130 days; and 3) increase penalties on alleged unfair labor practices by employers. Union bosses assert that EFCA is necessary because employers routinely break the law during prolonged representation elections, especially by firing pro-union workers.

Passage by the House is certain, but it may not pass the Senate in its present form. As we will see, compromises that have been suggested are just as indefensible as EFCA itself.

Legal scholar Richard A. Epstein has laid out a convincing case against the first two provisions in a new Hoover Institution book. Under card check, a union would become the monopoly representative of all nonmanagerial workers in an enterprise if 50 percent plus one of those workers signed a card (or other piece of paper or petition) indicating their support for such representation. Signatures would be collected by union organizers who would likely remind any dissenters that the union knows where they and their families live. Under the current National Labor Relations Act (NLRA), signatures collected on authorization cards are used as the basis on which secret ballot elections are called. Workers can avoid union intimidation by signing cards and then voting against the union on the secret ballot. Because of this unions now hesitate to request an election unless they get somewhere near 70 percent of the targeted workers to sign.

No Escape

Workers would have no such escape under the EFCA. Epstein writes that the NLRA was widely accepted because its infringement of individual workers’ common-law freedom of contract was thought to be adequately offset by democratic protections for workers–the very protections that EFCA would eliminate: the secret ballot and a ratification vote on collective-bargaining contracts. Therefore, he argues, EFCA may not withstand constitutional scrutiny.

EFCA provides that a firm must begin bargaining with a union for a first contract within ten days of a card-check certification. Bargaining then goes on for up to 90 days. If no agreement is reached, the dispute goes into mediation for 30 days. If they still don’t agree, the dispute is turned over to an arbitration panel that has the power to impose a two-year “contract” on both parties. The terms set by the arbitration panel would not be subject to judicial review or worker ratification.

The NLRA now imposes a duty on both parties to bargain in good faith over wages, hours, and other terms and conditions of employment. But they are not forced to come to an agreement. They each can exit the bargaining process and bear the consequences (strikes and lockouts). EFCA would eliminate the exit option. In ordinary contract law bargaining must be voluntary.  No one has a duty to bargain with anyone. Epstein says the duty to bargain in good faith was widely accepted because the exit option was preserved for both parties. This is another reason why the EFCA may not withstand constitutional scrutiny.

The NLRA also regulates employer speech during election campaigns. Employers cannot threaten to punish workers for voting for unionization, and they cannot offer to reward workers who vote against unionization; but they can point out the possible hazards of becoming union-impaired. EFCA would prohibit employer speech altogether. Epstein likens the distinction between regulating and prohibiting employer speech to the distinction in takings law between regulating the use of private property and government occupation of private property. Actual occupation of private property is subject to strict constitutional scrutiny, and so, too, may be the prohibition of employer free speech.

In the mid-1950s over one-third of private-sector workers were unionized. In 2008 only 7.6 percent were. Unions say their decline is due to weaknesses in the NLRA, which permit employers to thwart attempts to unionize. However, according to NLRB data illegal firings of union supporters occur in only 2.7 percent of representation elections. Moreover, unions won 56.8 percent of elections in 2000–2008. In 2008 they won 63 percent. If employers had as much power over elections as unions say, unions wouldn’t do nearly as well. Nor does it seem that employers try to wear workers down with prolonged campaigns. The average election campaign is less than six weeks.

Unions are losing members because the number of elections held each year and the number of workers involved in the elections are declining. Fewer and fewer workers are interested in unions. Union decline has nothing to do with employer misbehavior during elections. Union election wins add fewer newly unionized workers than the number of workers they lose due to the contraction of already union-impaired firms.

Senate Support

Although there are 60 Democrats in the U.S. Senate, several of them have said they will not support EFCA as currently written. Some congressional supporters, and the union bosses they serve, have suggested compromises to get 60 votes to avoid a filibuster. All would eliminate card check, shorten election campaigns, increase penalties on unfair labor practices, and impose “equal access” rules to force employers to allow union organizers on company property during work times and to grant unions the same amount of time to argue for unionization as employers use to argue against unionization. The CEOs of Costco, Starbucks, and Whole Foods have endorsed a compromise that includes all of the above and drops compulsory arbitration.

Mandating a uniform, short election campaign arbitrarily restricts the ability of employers to make their case against unionization. Increasing employer penalties for unfair practices further inhibits free speech because it is not clear what speech would be considered unfair. Whatever the degree of risk aversion among employers, they would choose to speak less.

Equal-access rules are especially problematic. For government to coerce employers to stand by while union organizers invade their property with the sole intent of imposing harms on them during time they have paid for seems to be an obvious government occupation of private property. Therefore it should be subject to strict constitutional scrutiny under the Fifth Amendment. Unions already have extraordinary access to workers during election campaigns. Employers are forced to supply unions with the names and addresses of all workers within seven days of the notice of an election. Union organizers may make unlimited visits to workers’ homes, contact workers by phone as often as they wish, and, unlike employers, make any promises they want to workers in pursuit of votes for unionization. The unions’ problem is not lack of access to workers; it is lack of any service that workers want to buy.

The biggest problem with any EFCA compromise is what, during the New Deal, came to be known as the camel’s-nose-under-the-tent strategy: First get what you can and then gradually grab the rest. Since President Obama seems determined to repeat and amplify the mistakes of Roosevelt, the only safe strategy against EFCA is to kill it outright.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.