The Employee Free Choice Act: It's Worse Than You Think

The Employee Free Choice Act already has generated a great deal of resistance from concerned citizens who see it as inviting abuse by union officials. The bill, which passed the House of Representatives last year before failing on a cloture vote in the Senate, has the support of President Barack Obama and is expected to be debated soon in Congress. EFCA is an extremely controversial rewrite of the nation’s labor relations law. While union officials are almost unanimous in support of the bill, more than one poll has shown that union members themselves are opposed to the card-check procedure that is considered the heart of EFCA.

But if anything, EFCA is even worse than a lot of people realize. EFCA is a noxious stew that would reward the worst instincts of union officials. The unions that would benefit most under EFCA would be those that are most comfortable with the use of deception and intimidation in organizing and that are most prone to make unrealistic demands at the bargaining table. Over the longer term, EFCA might well make labor relations even more contentious as employers take pre-emptive action to ward off organizing drives.

EFCA’s Three Bad Changes

The misnamed Employee Free Choice Act would make three changes to federal labor law:

  1. Penalties would be strengthened for certain unfair labor practices committed by employers during the course of a union organizing drive. This might make some sense if employers were especially prone to violate labor law during organizing drives, as union officials claim. But the evidence for this is weak, consisting largely of assertions by union organizers and misunderstood statistics.
  2. EFCA would change the procedure for certifying a union, enshrining the deservedly notorious “card-check” process. The basic principle behind much of the National Labor Relations Act is that an employer is required to negotiate with a union that has the support of a majority of workers in any bargaining unit. Under the current rules, if there is a dispute over whether a union has that support, the question is decided by a secret-ballot vote. But under EFCA, a union would be established as worker representative after persuading a bare majority of workers to sign authorization cards.
  3. Finally, EFCA would establish a binding arbitration procedure for the initial contract after a union is certified. If negotiations on that critical first contract do not result in an agreement within a few months, either the union or the employer could call for mediation and arbitration by the federal government. An arbitrator appointed by the federal government would be in a position to impose terms that either employees or employer — or both — might find objectionable, but neither would be able to reject. Workers, in particular, would have no chance to ratify or reject an arbitrator’s ruling.

Binding Arbitration Perils

The state of Michigan has decades of experience with binding arbitration. When negotiations between local governments and unions representing police officers or firefighters break down, state law calls for an arbitration panel to resolve the impasse. Binding arbitration in Michigan is a clumsy, expensive and time-consuming practice. A typical arbitration panel takes close to 15 months to issue a ruling. Once that is done, there is no process of review to correct an arbitrator’s mistake. The consequences are high: In the late 1970s, a recklessly generous arbitrator’s award threw the city of Detroit’s budget out of balance, a decision that ultimately led to large-scale layoffs in the police force and contributed to the breakdown of the economy in that unhappy town.

Unions argue that binding arbitration is needed because many newly installed unions are unable to secure contracts, but this is a fallacy. Under the Labor Relations Act’s standard of good-faith bargaining, neither side is forced to make any particular concession, but each side must show that it is willing to reach an agreement. As a practical matter, if a union simply wants a contract it should be able to secure one by accepting the employer’s terms. Binding arbitration isn’t about ensuring that negotiations lead to contracts. Its purpose is to force employers to make concessions.

Card-Check Fraud

Card-check and binding arbitration are each problematic, but in combination they interact in ways that make EFCA particularly toxic. To understand how dangerous the combination of card-check and binding arbitration is, imagine a world with card-check by itself. The primary effect of card-check would be to have unions certified in workplaces where union support is weaker than it often is currently. Cards are extremely unreliable indicators of worker support for a union. There is no process in place to verify that a signature is not the result of confusion, deception or even intimidation. Workers have testified under oath at congressional hearings that unions have resorted to a wide range of tactics — from awarding prizes to making misleading statements, and issuing threats of physical harm or workplace retaliation — in order to secure signatures. It is widely understood that most unions will not even pursue a secret-ballot vote without first having signed cards from two-thirds of employees. Even then, there’s no guarantee of success. Under EFCA they would be guaranteed success after securing signed cards from little more than half the workforce.

This would trigger an obligation for the targeted employer to bargain with that union, something that many employers look forward to with trepidation. But with card-check alone there would be a silver lining — that union would still be a weak one, with a tenuous hold at best on the support of the workforce. While an employer would still want to avoid a strike, both union and employer would enter collective bargaining knowing that if negotiations reached an impasse the union probably would find it difficult to follow through on a strike threat. Furthermore, workers have the freedom to petition for decertification and remove the union if its support is particularly weak. While it is unlikely that this end-game would be reached very often, the knowledge of what might happen if talks break down would affect negotiations from the get-go. Employers would be in a position to make fewer concessions and unions would be more modest in their demands.

But with binding arbitration in place, actual union support among the workforce becomes irrelevant because the end-game is entirely different. In order to gain concessions from an obstinate employer, a union does not need to persuade workers to join a strike. It merely needs to persuade an arbitrator to include concessions in his or her ruling. There is no incentive for a union established under EFCA to avoid making unrealistic demands, because the worst that can happen is a government arbitrator shoots them down.

Decertifying Unions Almost Impossible

Meanwhile, the filing of a petition to decertify a union would likely be barred for several years. Currently the National Labor Relations Board allows an employer to recognize a union voluntarily after a card-check. (Voluntary recognition without a vote is allowed, but not required, under the current law.) But there’s a catch: Under the board’s recent Metaldyne decision, employees can circulate their own petition and force an immediate vote. The Metaldyne decision is bound to be reversed by a new NLRB during Barack Obama’s term in office. Still, without EFCA’s binding arbitration rules, workers would have the ability to decertify an unwanted union if a contract were not in place within a year.

If binding arbitration is in effect, an NLRB with a majority of Obama appointees would be almost certain to rule that both the arbitration process and the arbitrator’s ruling itself serve to bar the filing of a decertification petition. This likely would mean that workers would find themselves unable to remove a union for better than a year as the arbitration process works itself out, then for the two years covered by the ruling itself — even if that union’s supposed support, as indicated by the original signed cards, was largely the product of deception or intimidation and a majority of workers are actively opposed to union representation.

Most states do not have right-to-work laws, so workers can be forced to either join a union outright or pay an agency fee in lieu of regular union dues. In those states, unions would have a direct financial incentive to exploit EFCA’s card-check and arbitration rules as much as possible. Arbitrators would be likely to follow the practices of the majority of unionized workplaces and include an agency fee requirement wherever the law allows it. Regardless of its strength or weakness among workers, a union could expect dues and agency fees from all bargaining unit members if it could collect enough signed cards.

As a further consequence of all this, EFCA would be likely to make employers more aggressive, not less, about opposing unions. Under the current law, employers know that, as long as they avoid blatantly unfair labor practices, they will be in a position to wait until they know that a union is actively attempting to recruit its workforce before they have to argue against unionization. If worse comes to worst, they can call for a secret-ballot vote and make their case in the run-up to that.

Unions understandably resent the delay in waiting for a vote and the possibility for dishonest campaigning and retribution against union supporters that this process creates. But there is an upside to having this election process in place: Most employers do not actively campaign against union representation until they see overt indications that a union is actively attempting to organize its workforce. They have the luxury of time.

Under EFCA, that luxury likely would be gone. The legal requirements of union recognition take effect as soon as a union presents the necessary signed cards. Unions are under no obligation to notify anyone prior to that. But employers would still have the freedom to speak to their workers, and employers’ motivation to avoid having a union in the workplace would be even stronger. If nothing else, many employers would want to advise their employees of the changes in the law and the new implications of signing a union authorization card. As a consequence, under EFCA employers would be likely to disseminate anti-union messages sooner rather than later.

Radical Unions Helped

In short, EFCA is a witches’ brew of easily subverted procedures and perverse incentives. Those unions that would benefit most from the combination of card-check and binding arbitration are the most radical and aggressive unions, those with the least concern for the men and women they represent and those that are most prone to make unreasonable demands at the bargaining table

Our labor market probably could function with card-check certification or with binding arbitration on first contracts. Either of the two alone would present problems, but the combination of the two would make a mockery of our national labor law, in which employers are supposed to negotiate in good faith with unions that have the support of a majority of workers they represent. Under EFCA, negotiations would be replaced by arbitration and worker support would be largely irrelevant. This is not the ingredient list for harmonious labor relations. It is a recipe for more bitter fights between unions and employers, with workers themselves greatly weakened.