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Product Details
| ISBN-13: | 9780817949433 |
|---|---|
| Publisher: | Hoover Institution Press |
| Publication date: | 09/01/2013 |
| Series: | Hoover Institution Press Publication |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 196 |
| File size: | 2 MB |
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The Case Against the Employee Free Choice Act
By Richard A. Epstein
Hoover Institution Press
Copyright © 2009 Board of Trustees of the Leland Stanford Junior UniversityAll rights reserved.
ISBN: 978-0-8179-4943-3
CHAPTER 1
Card Checks Versus Secret Ballot Elections
Streamlining Union Certification?
Section 2 of the Employee Free Choice Act is described as "Streamlining Union Certification." That heading connotes an effort to fine-tune the current system in order to make it work more cheaply, quickly, and effectively. But this title belies the major changes that the section imposes, which would gut the entire system of union elections. The power of the union is, of course, inversely proportional to the ability of the employer to influence the outcome of the election. By increasing penalties for employer, but not union, ULPs, section 4 of the EFCA, "Strengthening Enforcement," tilts the scale in unions' favor, without any effective mechanism for remedying abuses associated with union authorization cards or petitions. These two provisions significantly alter all aspects of any union organization drive. In this chapter I compare current law position under the NLRA with the proposed change. My examination of the process leading to union certification or rejection begins with the preliminary efforts unions make to secure an advantageous outcome either through an election or card check under current law. In particular, I examine neutrality agreements and the issue of salted employees. I next turn to the conduct of an election campaign and a comparison of the secret ballot and the card check. Charges and countercharges of coercion and intimidation are thrown about with great abandon, and must be examined at every stage.
A Fatal Imbalance?
The bedrock issue is this: do the current rules contain some implicit bias against union organization? In order to assess this charge, it is necessary to look at all three phases of these elections: preliminary maneuvers, the actual election campaign, and the conduct of the election itself. In making this assessment, a note of diffidence is needed. The peculiar circumstances of union elections cannot be governed by rules that carry over from the political context without some adaptation to the distinctive context of worker elections under the NLRA. But it hardly follows from this proposition that NLRA union-representation elections are tainted when measured against some benchmark of political elections. Both types of election are, and must remain, flawed under any test that requires election outcomes to be a perfect reflection of voter preferences. The only workable questions ask what fixes could be made to improve the situation with respect to either the campaign or the election itself.
The source of this cautious assessment lies in large measure in one constant feature of all electoral contexts — the built-in asymmetry among the contending parties. In a political election, one asymmetry arises whenever one party is able to reap the advantages of incumbency, which allow its candidates to reach voters through legitimate government expenditures that lie outside campaign finance limitations.
The constant efforts of government regulators to create fund-raising or spending limits that cancel out these advantages necessarily fall short. Yet the Supreme Court has properly taken pains to indicate that the level of scrutiny given to these reforms cannot be so high as to preclude all forms of government regulation, even if incumbents keep their insider advantage against challengers.
The challenge to devise appropriate electoral safeguards is not confined to cases where one party is the incumbent. Various strategic imbalances also arise when two or more candidates vie for an office with no incumbent. In the 2004 presidential election, the contribution of the so-called 527 organizations, including the Swift Vets and POWs for Truth, had a powerful negative impact on the fortunes of John Kerry. And the decision of Barack Obama to forgo public money in the 2008 campaign generated a huge media advantage that manifested itself most clearly in the closing days of the election. More generally, massive contributions from political action committees organized by activist groups, including labor unions, can exert a profound effect on electoral outcomes. In the recent election, unions contributed $450 million to elect Democratic candidates, $85 million of which was contributed by the Service Employees International Union. The most candid appraisal about the purpose of these contributions comes from SEIU's Andy Stern, who was not just worried about who gets elected. Quite consciously, he said, SEIU put aside "an additional $10 million to get people unelected if need be." Stern explained, "We would like to make sure people appreciate that we take them at their word and when they don't live up to their word there should be consequences."
Quite simply, it is impossible to devise election rules that do not create advantages for one side or the other. In the course of any complex campaign, advantages run in both directions, from which it does not follow that any two sets of advantages necessarily cancel each other out. The same basic insight carries over to union elections, where the asymmetries are guaranteed by the fundamental difference in the position of the two major parties, and the closed environment in which campaigns take place. It is important to review the evidence to see the extent to which any charge of systematic unfairness accounts for the decline in union participation. The overall answer is that it is difficult to postulate any large employer advantage. Indeed, with the increase of collateral attacks that unions make on employers outside and prior to the election process, the organizing advantage has tilted in their favor. There is no evidence of any systematic shift in the rules governing campaigns or elections. Nor is there any evidence of administrative bias in the conduct of elections at the NLRB in either direction.
The Organization Campaign
Neutrality Agreements
The current union antipathy toward recognition elections has led union leaders to seek aggressively so-called neutrality agreements to negate what they regard as the inherently coercive nature of union elections. They defend these agreements as a way to counter the various tactics that employers reportedly use to resist unionization, including captive meetings, e-mail blasts, and supervisor persuasion which, according to EFCA proponents, pummel workers into voting against the union.
The terms of neutrality agreements vary from case to case, but the basic pattern in about two-thirds of the cases is that the employer agrees to waive the right to a representation election and to accept the outcome of a card-check campaign organized by the union. In the remainder of the agreements, some limitations on employer speech, from modest to severe, are accepted, but the card-check provision is rejected. Not all of these agreements require the union to agree to any similar restraints, but some do. These agreements have an uneasy status because they do not necessarily reflect the interests of employees who care about the election or about the opportunity to hear the other side. Many of these agreements are made in secret between unions and large employers. An example is the secret engagement involving Sodexho Inc. and Compass Group USA with the SEIU and Unite Here. The parties claimed that they needed secrecy for competitive reasons, and this may well have worked to the advantage of both sides, given the range of pressures that unions can bring against employers.
This claim should be greeted with suspicion. As a matter of general contract law, agreements that bind third parties without their consent are highly suspect, and these neutrality agreements as a class are not exempt from that criticism. Section 7 of the NLRA protects the rights of neither unions nor employers, but of employees — all employees. The goal is not to protect unionization as such. Rather, current law accepts the ability of employees to set up unions through card checks, but prefers union elections.
It is easy to see why labor unions would support card-check procedures. They improve the union's chances of gaining recognition, even if they limit the voices and remove the votes of dissenting workers. It is, of course, harder to see why employers who are opposed to unions would be willing to accept these provisions. In many cases, neutrality agreements result from persistent "corporate campaigns" waged by unions against employers, either in the absence of any bargaining relationship or where the union represents employees at some, but not all, company facilities. In these cases, paradoxically, it is often in the interest of unions to postpone the election in order to continue their pressure on the firm. Yet the current interpretation of the NLRA does not give the employer the option to force an election unless the union has clearly announced its willingness to go ahead with it. In other cases, the employer's decision may be simply bowing to the inevitable, a rational calculation to avoid greater loss. If a union is known to be in a strong position, the neutrality agreement spares the firm the costs of contesting an election while holding out some small hope that the union will not be able to gain a sufficient number of cards to force recognition or to win an election if one is still allowed. So the outcome could be chalked up to simple economic rationality.
Neutrality agreements do not always have the benevolent origins their supporters claim. Professor James Brudney, for example, points to other collateral advantages that unions can dangle before management in order to get it to sign neutrality agreements, including steering access to union conventions to hotels that accept these agreements. Unfortunately, when the carrot does not work, the stick is still available. There is enormous variation in the regulatory environment of firms covered by the NLRA. Employers, in some industries at least, are vulnerable to union pressure on other fronts. That point has not escaped Stern, the most dynamic leader in the labor movement, who put the point forward with frightening bluntness: "We like to say: We use the power of persuasion first. If it doesn't work, we try the persuasion of power." Stern may have no formal training in game theory, but he has an instinctive grasp of its central principles. The person who hears the initial persuasive pitch knows what to expect if he does not agree: a switch into second gear. The maxim shows that SEIU will not need to expend unnecessary labor so long as its second-stage threat is credible.
And it is. For example, SEIU has taken an active role as a vehement critic of all private equity firms. It recently urged the California Public Employees' Retirement System (CalPERS) against investing in certain companies that failed to meet labor standards acceptable to SEIU. Stern has also mounted an extensive political campaign that targets private equity firms, most notably Kohlberg Kravis Roberts & Co. and The Carlyle Group, which have resisted unionization efforts by SEIU, by portraying them as "buyout monsters" whose greed threatens the health and stability of the middle class. Clearly, these pressure tactics represent efforts to circumvent unit elections by engaging in conduct that verges on, or crosses the line of, defamation, knowing that lawsuits on this matter are either doomed to fail or only give the targeted firm another dose of unwanted publicity. Such tough organizing tactics have the great advantage that retaliation in kind is impossible. There is nothing that Kohlberg Kravis Roberts or The Carlyle Group could say about SEIU's Stern that has one-thousandth of the pop of the bitter denunciations that he can make against them.
The SEIU campaigns, moreover, are not limited to pressures against particular unions, but also cover efforts to force business groups to back off their opposition to EFCA itself. In February 2009, Anna Burger wrote a public letter to the Financial Services Roundtable urging it to back off from its opposition to EFCA and to expel any member companies that received Troubled Asset Relief Program (TARP) funds and that opposed the legislation. Copies of the letter were pointedly sent to the key Democratic members of Congress most intimately connected with the endless bailout negotiations, Representative Barney Frank of Massachusetts and Senator Chris Dodd of Connecticut. Burger wrote, "At a time when the industry must devote every effort to economic recovery, it is shameful that the Financial Services Roundtable makes lobbying against the right of workers to organize a legislative priority and, worse yet, is using taxpayer-financed TARP subsidies to do so." Ms. Burger is the international secretary-treasurer of SEIU, chairwoman of Change to Win, a labor coalition, and, most recently, a member of the President's Economic Recovery Advisory Board. Her words therefore carry much institutional weight, so that we should ponder the implications of this position. There are strong reasons to think that EFCA will have precisely the opposite effect of what its backers claim; it will shrink labor markets in both new and existing businesses. So what about an effort to expel from business or labor groups anyone who supports EFCA if they hope to receive TARP funds? The effort to use political muscle to redirect TARP funds takes a program that is already suffering from a lack of focus and direction and turns it into a political football, by invoking a strategy of exclusion that anyone can play. The effort to use selective funding to shape political debate is, moreover, just the type of viewpoint discrimination in the distribution of public funds that is routinely struck down as unconstitutional, on the ground that it represents a government effort to skew the political debate. If Congress could not vote TARP funds only to firms that contribute to the Democratic Party, it cannot direct them to firms that support deeply controversial positions.
Nor does the use of coercion — taken here in a narrow sense — stop with publicity campaigns. Litigation on collateral matters offers additional avenues through which to attack employers. One common union strategy is to file all sorts of lawsuits against employers for alleged violations of various labor statutes, the Fair Labor Standards Act, antidiscrimination laws, antitrust laws, and so forth in order to gain recognition as the bargaining agent or to obtain a neutrality agreement. Here again the complaints are costly to respond to even if their charges are unmerited. These lawsuits at least are expensive to file and they require the identification of real plaintiffs, which anonymous complaints do not.
A still more potent technique takes advantage of the cumbrous machinery of the administrative state. The employers regulated by the NLRA are a diverse lot. Some of them work in highly unregulated industries, where regulatory retaliation and threats are difficult to launch. But other businesses are far more vulnerable. Hospitals for obvious reasons are among the most heavily regulated industries of all. Many of these regulatory groups will conduct on-the-spot inspections in response to anonymous tips and complaints. It is not difficult for unions — especially SEIU — to lodge multiple regulatory complaints in order to impose on an employer the heavy costs of dealing with the disruption caused by these inspections, which can damage patient care and public confidence. The costs of bad publicity and compliance efforts are high even if, as is commonly the case, the complaints are eventually dismissed as groundless. On the other hand, the risk of liability or bad publicity to SEIU is negligible.
The increased reliance on these tactics is revealing in a more ominous sense. They indicate that SEIU and other unions do not think that they can persuade firms that they are better off with the unions than they are without them. These tactics are designed to alter the terms of trade. Now the SEIU strategy is to demonstrate to employers that they are better off with the union than they are suffering under the various tactics SEIU can impose unilaterally to undermine their ordinary operations. The social welfare implications of this alternative approach are profound. The voluntary acceptance of a union (especially in the absence of any duty to bargain) should in theory be treated as welfare-enhancing. When parties enter into ordinary business contracts it is strong evidence that they regard themselves as better off than before: why else go through the trouble? Acquiescence to a union in the face of these constant threats only shows that the firm is better off with the union than with the threats that induced it to cave in. It does not show that the union can improve the level of production of the firm so as to make the firm (or society) better off with the union than without it. Nor is there any reason to think that efforts to placate an aggressive union do anything to improve the welfare of the firm's workers.
(Continues...)
Excerpted from The Case Against the Employee Free Choice Act by Richard A. Epstein. Copyright © 2009 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of Hoover Institution Press.
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Table of Contents
Contents
PREFACE,INTRODUCTION: THE EFCA INITIATIVE,
CHAPTER 1: CARD CHECKS VERSUS SECRET BALLOT ELECTIONS,
CHAPTER 2: MANDATORY ARBITRATION OF TERMS AND RESTRICTIONS,
CHAPTER 3: THE SOCIAL CONSEQUENCES OF UNIONIZATION,
CHAPTER 4: CONSTITUTIONAL IMPLICATIONS,
CONCLUSION: WHAT SHOULD BE DONE?,
APPENDIX: THE EMPLOYEE FREE CHOICE ACT,
INDEX,
About the Author,