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Fighting Back Against Union Corporate Campaigns

March 11, 2010
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Related Topics: Labor Relations, Featured Article
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No company wants to endure a corporate campaign, that increasingly common union organizing tool. Corporate campaigns make use of a number of tactics—including negative press releases, Web sites with negative information about the company and complaints filed against the company with government agencies—to pressure employers into accepting union recognition or to push the company into entering into a neutrality/card-check agreement. Corporate campaigns can severely damage the company's reputation, disillusion customers and inhibit a company’s ability to do business. Planning ahead before a campaign starts and using that preparation to quickly respond to a corporate campaign are essential to minimize the impact. Before that discussion, though, let me set the stage for why these campaigns are so much in evidence today.

The decline in union membership
Union participation in the U.S. has declined dramatically in the last 30 years. Once, more than 25 percent of private-sector employees belonged to unions. That declined to 7.6 percent in 2008. One reason for the decrease in unionization is unions’ inability to organize workers through traditional means. The success rate for unions in elections supervised by the National Labor Relations Board is less than 50 percent. Many, if not most, union campaigns never gain the support needed for filing an election petition. To counteract the loss of membership, unions are turning to alternative organization strategies.

Political efforts to halt the decline
Unions are actively involved in lobbying for changes to the NLRB-supervised union certification process. Labor advocates argue that the current NLRB election structure does not adequately protect employees’ rights and offers unfair advantages to employers. Once a union files an election petition, four to seven weeks or more typically elapse before the election is conducted. During this time, employers have unfettered access to the employees for campaigning and providing employees with negative information about unions. The union, meanwhile, can only access employees outside of work hours.

Additionally, unions contend the penalties for unfair labor practices by employers during the campaigns are ineffective, and investigations into charges cause further delays, which benefit the employer. The Employee Free Choice Act and related litigation seek to modify the process to improve unions’ success rate in campaigns.

Neutrality agreements
As unions seek to overcome these barriers to organizing, they have increasingly relied on neutrality agreements and card-check arrangements. Many businesses have fought hard against these strategies. The past 10 years, nevertheless, have seen the rise of neutrality agreements between unions and employers.

Neutrality agreements include varied provisions but usually at a minimum provide that the employer will make no negative statements about the union, will provide no facts about unionization to employees unless in response to a specific question and will provide the union with contact information for all the employees.

Neutrality agreements often contain provisions granting unions on-site access to employees for campaign purposes and card-check provisions, which provide for the employer’s voluntary recognition of the union upon an appropriate showing of support. The National Labor Relations Act permits optional voluntary recognition by employers, upon the presentation of signed authorization cards by at least a majority of the employees in the appropriate bargaining unit.

Some employers agree to neutrality agreements because they believe having unionized employees will benefit their market position or help them obtain business from particular customers who may be more inclined to do business with a unionized company. Others sign the agreements to avoid the cost of an expensive union campaign or possible litigation over unfair labor-practice charges. However, companies that oppose unionization are unlikely to voluntarily enter into a neutrality agreement.

Corporate campaigns
In order to get neutrality agreements, card-check agreement and other concessions, unions utilize corporate campaigns. In corporate campaigns, a union or unions put pressure on the employer by providing negative information about the company to the media, stockholders, government agencies and companies that do business with the employer. Pressure is also brought to bear on community, political, ethnic, religious and cultural figures. The goal of the corporate campaign is to so damage the image of the company that it is forced to decide between meeting the union's demands or face going out of business or losing market position.

Unions use a variety of tactics, including:

• Filing complaints or charges with government entities (such as safety, health, environmental and tax agencies)

• Creating Web sites to publicly criticize the employer

• Directly contacting customers, stockholders and credit sources

• Issuing (true or false) negative press releases about the company

• Organizing boycotts of the products or services

• Publicly picketing the employer’s facilities or the homes of officers, directors or stakeholders

• Engaging in public smear campaigns against executives or other stakeholders

Prior to the commencement of the campaign, the union (or its paid consultant companies) will thoroughly research the company, its stakeholders and its position in the national and international marketplace to find weak points to exploit in the campaign. Campaigns can be open-ended and continue until they reach their desired goal. For example, Wal-Mart has been defending itself against union corporate campaigns for many years.

Corporate campaigns can be suffocating endeavors for an unprepared employer. Companies that already have exposed vulnerabilities, such as ongoing employment litigation, safety or environmental investigations, or negative press, are the easiest targets. The media is often the union’s facilitator for the campaign, so a negative public relations perception can help incite a corporate campaign.

The employer’s first goal must be to end the campaign or diminish its impact. The response to a campaign, in part, depends on the employer’s objectives. If the employer is willing to enter into a neutrality agreement, how can it offer incentives or pressure the union into ceasing the campaign? If the employer is not amenable to a neutrality agreement, it must respond aggressively to the allegations and take countermeasures against the union to make the cost of the corporate campaign to the union too great to endure.

Preventive measures
An employer can prepare for a corporate campaign by analyzing its personnel, market position, community relationships and reputation. The following areas are essential:

Public relations: Active management of the company’s public image before a campaign begins can limit the campaign’s effectiveness. The company should be involved in work to benefit the communities in which it operates and should publicize these efforts to create positive media coverage. It should make efforts to create positive relationships with the political and religious leaders in its communities. Companies can foster strong relationships by involving themselves with civic groups, sponsoring charitable and community events and inviting leaders to visit the work sites, stores or offices.

Trained and effective personnel: Employers should maintain a sufficient number of human resources, safety, financial and public relations personnel to satisfy the needs of its workforce. Officials should recognize the warning signs of a union or corporate campaign so that the company can quickly and effectively respond. No employer can prevent the filing of frivolous complaints with government agencies, but a well-prepared and well-managed organization will be able to limit and control the investigation.

Policies, procedures and practices: An organization’s pay, benefits, employment policies and procedures, and other practices should regularly be evaluated for their competitiveness with other union and nonunion employers in the industry. Opinion surveys and frequent communication between employees and management can help identify areas of vulnerability.

Responding to a corporate campaign
Once a campaign has begun, the employer must accede to the demands or defend itself against the allegations and launch counteractive measures against the union. The employer’s options include:

1) Negotiation: The easiest way to end a corporate campaign is to negotiate a neutrality agreement. If the union is applying pressure to force adoption of particular provisions, the employer can offer a different structure to the negotiations:

• Make the union’s abandonment of the corporate campaign a condition of continued negotiation.

• Consider an outside source as a mediator to the dispute.

• Consider an option if you, as an employer are amenable to neutrality but opposed to a card-check agreement. Agree to a secret-ballot election conducted outside the presence of the National Labor Relations Board upon a majority card showing. If the union obtains sufficient votes in the election, the employer will voluntarily recognize the union.

2) Counter-campaign: A counter-campaign is necessary to combat any false or misleading information that the union disseminates. The counter-campaign should target employees, the media and those who have been influenced by the union’s campaign. The employer should plan a measured response to the union’s corporate campaign, keeping in mind that the union has likely expended significant resources in researching and planning the campaign.

Favorable relationships with media outlets and local leaders are a helpful starting point for the employer’s response. The initial harm caused by an effective corporate campaign cannot be undone by a weak or unpublicized response by the company. Advertising and media consultants may be needed to thwart the effects of the campaign.

3) Litigation: Employers have had mixed success opposing corporate campaigns with litigation. This is an undeveloped area of law, but success is more likely where the union has provided patently false statements to third parties regarding the employer’s products or services that are likely to cause substantial harm to the company.

For example, Sutter Health hospitals filed a defamation claim against the UNITE HERE union and obtained a $17 million verdict after the union, during its corporate campaign, mailed notices to customers and potential customers saying that the hospital’s linens contained “blood, feces, and harmful pathogens.”

On the other hand, a New York district court dismissed Racketeer Influenced and Corrupt Organization Act and trademark infringement claims that Cintas brought against UNITE HERE. Cintas alleged that the union carried out negative, untrue and unlawful attacks against Cintas during a six-year corporate campaign. The state court claims for defamation, extortion and unfair business practices remain pending in Ohio state court. The Cintas RICO complaint lacked the specific, patently defamatory statements of the Sutter Health case.

Likewise, a Florida district court in early 2009 dismissed a RICO complaint brought by Wackenhut Corp. against the Service Employees International Union. The company claimed that the union pressured Wackenhut to enter a neutrality agreement by making false statements to third parties.

A Smithfield Foods RICO and extortion complaint against the United Food & Commercial Workers union survived a motion to dismiss but, after extensive nationwide discovery, was settled on the eve of trial. Smithfield agreed to a representation election at its facility slightly over a month after settlement was reached under a specified code of conduct for the company. The union won the election and now represents Smithfield employees.

Even unsuccessful litigation can serve as an effective countermeasure against a union corporate campaign. Defending against complex defamation and extortion lawsuits can be costly, but it can provide publicity of the company’s position regarding the union’s untrue harassing attacks. Furthermore, when the union has made maliciously false statements that have had a demonstrably negative effect on market value or customer demand, litigation may provide recovery for revenue or value lost because of the campaign.

Workforce Management Online, March 2010 -- Register Now!

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