Business Week, August 28, 2008, Thursday

Business Week

August 28, 2008, Thursday

Business Week

A Law That Could Give Labor Some Brawn

If the Democrats take over in Washington, a bill is likely to pass that would allow workers to unionize if a simple majority sign authorization cards

by Moira Herbst

Almost two years ago, Cathy Curran voted to join the International Brotherhood of Teamsters. A driver for Fed­Ex Home Delivery, Curran says she felt management was ignoring workers' concerns about long shifts and unexplained deductions from paychecks, and she sought to form a union to gain leverage. In October 2006 a majority of workers at her Wilmington (Mass.) terminal voted to join the union. But even though the U.S. National Labor Relations Board certified the election and told FedEx to bargain, Curran is still not a Teamster: Fed­Ex (FDX) won't recognize the union and is appealing the certification in federal court. "FedEx refused to bargain because these workers are contractors, not employees," company spokesman Maury Lane says. "It's not against the law to work for yourself, which is why more than 10 million Americans pursue that work lifestyle every day."

For FedEx and other companies, such a situation would change under the proposed Employee Free Choice Act (EFCA), a bill being pushed by labor groups. It would allow workers to skip the lengthy process of an NLRB election and unionize if a simple majority sign authorization cards. The system, dubbed "card check," also calls for unresolved conflicts to be adjudicated by a federal mediator who would issue binding arbitration if the sides can't reach an agreement. The bill boosts penalties for illegal acts by employers during union drives, which would cause them to tread more carefully when talking to employees.

"France in the U.S."
Home Depot (HD) co-founder Bernie Marcus says he is shocked at how little business leaders know about EFCA. "This bill is going to create France in the U.S.," Marcus said on July 22 on CNBC. Home Depot spokesman Ron DeFeo says the retailer plans to educate salaried managers about the bill in the fall. This being an election year, the legislation has become the central issue in the tussle between labor and business. Will American unions retool and grow, or continue their long decline toward oblivion? As the economy has shed manufacturing jobs and embraced a more service-intensive, contract-labor model, unions' ranks have dwindled. Today, just 7.5% of private sector workers belong to unions.

Plenty of companies would like to keep it that way. They see in card check a path toward more unions and expensive new contracts. The bill also mandates binding arbitration within 120 days of a card-check union action. Additionally, employers found to have unlawfully fired pro-union employees would be fined three times the amount of the back pay owed the workers. Current penalties are minimal. Michael J. Lotito, a labor attorney at Jackson Lewis, says certain industries in a "sweet spot" for organizing, such as health care, hospitality, and retail, need to pay special attention to the bill. Experts say EFCA may be the unions' only chance to reverse course.

Unions—which are expected to spend $300 million on efforts to elect Democrats—are battling employer-backed lobbying groups such as the Center for Union Facts and Coalition for a Democratic Workplace. Some companies have taken their advocacy a step further by reaching out to employees. The Wall Street Journal reported in July that Wal-Mart Stores (WMT) is warning managers that if Democrats win in November, union gains could mean fewer jobs because of higher labor costs. In response, union groups have filed a complaint against Wal-Mart with the Federal Election Commission. The retailer denies any wrongdoing.

Worker Coercion is the Norm
For union advocates, EFCA is the No. 1 legislative priority because they say the current union election system favors employers. Employers have access to workers on the job while unions can only contact them off-site. According to research conducted by the University of Illinois at Chicago, 91% of employers require employees to attend one-on-one anti-union meetings with their supervisors during union organizing drives. It also found that when faced with organizing efforts, 30% of employers fire pro-union workers, 49% threaten to close the worksite, and 51% of employers coerce workers into opposing unions with bribery or favoritism.

Other academic studies support these findings. Kate Bronfenbrenner, director of labor studies education at Cornell University, says employer intimidation to discourage unionization is the norm rather than the exception. "One thing that stands out in the research is how routine this all is," she says. "These elections haven't been free or fair in the 20 years I have studied them. During an organizing drive, the workplace is a totally coercive environment; workers are not making a free choice."

Research shows that fear of employer retaliation is one of the main reasons workers don't join a union, so EFCA's protections could clear the way for more union wins. "There are always eulogies about the labor movement," says Clete Daniel, a Cornell University history professor. "But while it's been battered, the idea of workplace democracy has not been drained of its last ounce of vitality."

Herbst is a reporter for BusinessWeek.com in New York.