The Worst Part of Card Check: Arbitration (Long)

All the focus about “card check” has been on the possibility of unionization without an election.  It makes a nice emotional appeal about taking away the precious secret ballot but it isn’t the worst part of the Employee Free Choice Act.  The worst part is what happens after an employer is unionized.

Here’s the way it works now: If a union wants to organize an employer it sends organizers in to contact employees.  Employers usually won’t let union organizers on the property – that’s why they have all those “No Soliciting” signs and do stuff like not let Salvation Army bell-ringers set up at the door.  So, the organizers have to haunt the streets, parking lots, and local diners and watering holes to try to find some employees who’ll organize inside for them.  Quite often those are people who already have discipline issues or some other beef with the employer.  By whatever means, the union manages to get at least 30% of the employees to sign a card saying they want to be represented by the union.  The union presents a petition for recognition and its cards to the local National Labor Relations Board office.  The NLRB verifies the cards and if the union really does have 30%, it notifies the employer that there is a sufficient petition for representation of all of Acme Enterprises’ non-supervisory, non-confidential employees or some such.  In this case the bargaining unit would be all non-supervisory, non-confidential employees.  Acme would object to the petition saying the bargaining unit was too broad and didn’t represent a community of interest.  That objection would be adjudicated as far as Acme had the money and interest in adjudicating it in order to narrow (or widen sometimes) the definition.  When adjudication was complete, the NLRB would order Acme to produce a list of all the employees in the job classifications in the proposed bargaining unit.  There would then be a process of disputing the names and even job classifications if the union felt some person was improperly classified.  Disputing the list can be done by either party, but it is more the employer’s game because time is the union’s enemy.  By the time it all sorts out, a year may have passed since the original petition.  Sometimes some of the organizers have been fired; usually because they were malcontents with performance problems, but sometimes just because they were organizers.  Then the NLRB sets an election which it supervises and which are usually scrupulously fair.  The union must get 50% + 1 of those voting and unions often lose these elections.  Time is the union’s enemy and the employers know it.  The employer does everything it lawfully, and sometimes not so lawfully, can to string it out.  The employer communicates with its employees about the prospects of unionization.  The employer can’t say, “if you vote to go union, we’re closing the plant,” but it can come pretty close and usually does.  In the year or year and a half since the first blush of union enthusiasm, there has been turnover, the employer might have fixed something that was causing the employees to be aggrieved, or even, the employer may have let it be known that unionization would cost people their jobs.  So, in the secrecy of the election, the employees choose not to go union.  Card check will eliminate much of the time issue and allow unions to get their recognition while whatever aggrieved the employees is still fresh and before the employer can react.  Be that as it may, people like me will still figure out ways to make getting a majority a daunting task, card check law or not.

So, lets go on to what happens if the union does win an election under current law.  Current law forces the employer to recognize the union as the exclusive representative of ALL the employees and imposes on the union and the employer the duty to bargain in good faith over wages, hours, and terms and conditions of employment.  Neither party is compelled to make a concession or to make an agreement.  While taking a firm, unmoveable position MAY give rise to an unfair labor practice finding, it is not a per se unfair labor practice.  The bargaining can go on for a very long time and the employer can do things to make it very, very difficult for the union to have a bargaining team at the table, to meet with its represented employees, etc. and to do so perfectly legally.  The union only has legal protection as the exclusive representative for one year from its date of certification.  All the employer has to do is make it take longer than that year for the union to get its first contract and the union faces loss of its majority status and potential de-certification as the exclusive representative.  And yes, employers do this stuff – all the time.  So do unions when they’re trying to raid another union’s jurisdiction.  Card check’s other provisions change all this and cause a profound change in the way collective bargaining works in the private sector.

Under EFCA, once the union is recognized, the parties have 120 days to reach an agreement.  If they don’t, then mediation through the Federal Mediation and Conciliation Service is mandatory.  If mediation fails to produce a labor agreement, the parties must submit to arbitration.  This sort of arbitration is called Interest Arbitration and is unheard of in the private sector.  The law leaves it up to USDOL to come up with regulations by which arbitrators will be selected.  Rights arbitration, or grievance arbitration, is well established in both the private and public sectors and there are many practicing arbitrators with rights experience, some of whom also do interest arbitration.  FMCS already credentials them and will assign them if the parties ask for an arbitrator for either a rights or interest dispute, but interest dispute occur almost entirely in the public sector and almost exclusively involve police, fire, jail, and hospital employees.

There is nothing in the EFCA that sets out the processes by which arbitrators will be selected, how hearings will be conducted, what the evidentiary rules are, or what the arbitrator’s decisional criteria will be.  My state’s interest arbitration law is similarly vague and our labor relations agency has never promulgated regulations.  Most interest arbitration briefs start with several pages on the authority of the arbitrator and several disputes over interest arbitration processes have been to the Alaska Supreme Court.  And there’s the big rub with interest arbitration in the private sector: When I did interest arbitration in the public sector, it was bad enough, but my Legislature had approval authority over the monetary terms of the agreement; the arbitrator couldn’t force terms and spending to pay for them unless the Legislature approved those terms and if the arbitrator did something we simply couldn’t accept, we could appeal his decision to the courts, albeit on limited grounds.  You don’t have that in the  private sector.

So, the parties can’t reach an agreement.  It is a given that the FMCS mediator will be very union friendly in a Democrat administration and friendlier than you’d like even in a Republican administration, so the employer is either going to get rolled by the mediator or mediation will fail and you’re set for arbitration.  Practice these days is that you’d ask the FMCS for a list of arbitrators and the parties would select one by agreement or by striking names until one is left.  I’ve worked a lot of FMCS lists and most of the arbitrators on those lists are a pig in a poke, few cases, fewer published even in the world of rights arbitration.  Fewer still will have done interest arbitrations.  Almost all the good arbitrators are in their sixties or older, many in their seventies and eighties and all are very hard to schedule, especially if you’re not in a big city.  Most were some sort of corporate general counsel, a government lawyer, law professor, judge or ALJ, or industrial relations professor.  Most of the not so good and younger arbitrators are either a lawyer with little experience who decided arbitration was a better living than hustling hours or they’re an ex union rep, especially ex-NEA reps, who has decided to hang out their own shingle.  You really don’t want to stake your company or even your government’s future on the decisions of these people with no possibility of review, and the state of the law is that review of an arbitrator’s decision is almost impossible.  The controlling authority is a series of cases from the ‘sixties called the Steelworkers’ Trilogy that set an impossibly high standard of deference to labor arbitrators.  I happen to think that compulsory arbitration under EFCA can be distinguished from voluntary rights arbitration under the NLRA, but that USSC decision is uncertain and many years away.  For the foreseeable future, the union and the employer are bound for at least two years to whatever the arbitrator says.

And that is scary in the private sector.  These days there is almost no rights arbitration in the private sector; grievances get resolved short of arbitration.  Interest arbitration is unheard of in the private sector except in professional sports, a very different game (sorry!).  So, all the rights arbitration experience is either in a few moribund legacy industries or in the public sector.  All the interest arbitration experience is in the public sector or in professional sports.  Yeah, those arbitrators are going to know a lot about your business!  There’s a dirty little whipsaw game that can be played between employers to make the labor costs spiral.  So, Acme Enterprises gets an arbitrated agreement with Widget Makers Local 1.  Local 1 is bargaining with Acme’s competitor, Superior Enterprises and makes a deal with Superior that if Superior will give them a taste more money, they won’t insist on the same work rules that Acme got.  Then next year, they whipsaw Acme up to Superior’s money, and whipsaw Superior up to Acme’s work rules.  That process ends when Acme and Superior go bankrupt or move off shore.   Labor costs will skyrocket and management flexibility will all but disappear.  If the public sector experience is repeated, and it likely will, employers will just get rolled in the early years and those that survive it will spend the rest of their days seeking concessions and fighting decertification battles.  Of course, if the employer does business with government or need permits and such, they won’t be able to do that concessions and decertification threat stuff.

In sum, in the public sector, if you’re inclined to act like a real employer, you can.  If an arbitrator gets out of hand, your legislature can refuse to pay for it or you can appeal the decision to the courts as a sovereign.  You can’t do either of those things with an untenable interest arbitrator’s award in the private sector.  You’re stuck with it for two years and there’s nothing you can do about it.