November 19, 2008

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'Employee Free Choice Act' Closer to Becoming a Reality After Obama Victory

With Barack Obama headed for the White House and Democrats in firm control of Congress, the battle between management and labor is heating up over the deceptively named Employee Free Choice Act (EFCA, H.R. 800). Unions spent hundreds of millions of dollars to help elect Democrats in the November 4 election and secure passage of legislation that would boost their declining membership, and now "expect quick political payback" said Tom Donohue, chief executive officer of the U.S. Chamber of Commerce.

The passage of this Act would cause the most sweeping changes in labor relations since the passage of the National Labor Relations Act (NLRA). The EFCA would (i) result in a union being certified as exclusive bargaining representative without a secret-ballot election if a majority of workers in an appropriate unit sign authorization cards; (ii) require mediation and binding arbitration if the parties cannot reach an agreement within potentially as little as 120 days; and (iii) dramatically increase penalties for employer, but not union, violations of the NLRA during union organization efforts or contract negotiations. Even George McGovern, an admittedly pro-labor Democrat, has criticized the EFCA as running counter to the ideals that lie at the core of the labor movement and urged his friends and his Party not to strip the American workers of their right to a secret ballot election.

Throughout his campaign, Obama promised a more union-friendly administration if elected, saying, "This election is our chance to finally have a president who doesn't choke saying the word 'union.' . . . It's not just that this administration hasn't been fighting for you - they've actually tried to stop you from fighting for yourselves. This is the most anti-labor administration in our memory. They don't believe in unions. They don't believe in organizing. They've packed the Labor Relations board with their corporate buddies. But we are here to say it's not the Department of Management, it's the Department of Labor, and we're here to take it back." In his 2006 political memoir, The Audacity of Hope, he further explained, "I owe those unions . . . When their leaders call, I do my best to call them back right away. I don't consider this corrupting in any way." It is fair to predict that Obama will nominate pro-labor individuals to fill the three currently open seats on the National Labor Relations Board.

Obama is not only a supporter of the EFCA, but was an original co-sponsor of the card-check bill. Although the bill was introduced in both the 108th and 109th Congress, the first floor vote it received was after its most recent introduction in the 110th Congress in early February 2007. On March 1, 2007, the House passed the bill by a vote of 241-185, in largely party-line votes with Democrats in favor and Republicans opposed. However, the bill failed in the Senate due to a Republican filibuster. At that time, Democrats had only 51 votes in favor of card check. Senator Arlen Specter of Pennsylvania was the sole Republican defector.

Because composition of the Senate is crucial to the fate of the EFCA, businesses can take comfort in one key development: Democrats have failed to win enough Senate seats to reach the 60-vote margin needed to cut off debate and force votes on controversial legislation. 57 seats now appear to be in Democratic hands. Since the Democrats did not achieve a filibuster-proof Senate majority, the bill may not move unless a unified majority can again get Specter and two more Republicans to support the legislation.

Although a push for passage of the EFCA in early 2009 has been predicted, business groups are hoping that the economic downturn might delay consideration of the bill. John Engler, President of the National Association of Manufacturers, has expressed his hopes that Obama and Congress will refrain from pushing the legislation until the economy recovers, noting that polls suggest that most Americans oppose the legislation because it would end a worker's right to a secret-ballot election on union representation. If Obama chooses not to wait before pushing the Democratic agenda, the Chamber and other business groups have vowed to fight the legislation vigorously.

About the only point labor and management do agree on is that the passage of the bill could trigger the largest unionization drive since the NLRA. To illustrate, experts point out that when the state of Illinois passed a mandatory card check law in 2003, it witnessed a dramatic increase in union density. Similarly, in Canadian provinces with mandatory card check laws, approximately 32% of workers belong to a union, whereas only about 7% of American private sector workers today belong to a union.

If you have questions regarding the EFCA and how your business may be impacted, or any other aspect of labor relations, please contact our labor and employment practice group. If you would like to receive this by email, please contact Paul Ward at