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Employee Free Choice Act May Prompt Employers to Review Benefits

March 8, 2009
Related Topics: Benefit Design and Communication, Featured Article, Compensation
Despite economic pressures, some employers may want to increase their benefits offerings to discourage workers from organizing if proposed legislation that would make it easier to unionize workplaces becomes law, experts say.

The legislation, the Employee Free Choice Act, would substantially change existing law by allowing workers to organize when a majority signs cards opting to unionize. Currently, employers can insist on secret ballots being used before they must recognize a union.

While workers would still be able to use secret ballots, the ease of using the so-called card-check method would likely result in increased unionization, experts say.

In addition, if negotiations with a company stall, the measure allows federal arbitrators to impose wage, benefit and operating rules for the first two years of a contract period.

While several employer groups are lobbying against the proposal, which is expected to be introduced soon, benefits managers should prepare now as the legislation has a reasonable chance of being approved by Congress, experts say.

"This is a very big deal on [Capitol] Hill … and it is ultimately inevitable that the bill in some form will be introduced," says Paul Mallos, a Bethesda, Maryland-based principal in the Washington resource group of employee benefit consultant Mercer.

In 2007, an earlier version of the bill passed the House of Representatives by a wide margin, but failed to garner enough votes in the Senate to invoke cloture.

Bill Samuel, the AFL-CIO’s director of government affairs, based in Washington, says the measure has a better chance now as Democrats have increased their control of Congress and President Barack Obama supports the proposal.

The measure would increase the number of unions and help workers get better benefits and better pay, Samuel said.

"Human resource managers and benefit managers need to educate themselves about the statute" and consider getting help to develop "union avoidance strategies" now, says Laurence E. Stuart, an employer attorney with Legge, Farrow, Kimmitt, McGrath & Brown in Houston.

The best strategy employers can apply is to provide fair and equitable benefits, pay and working conditions to prevent worker dissatisfaction, sources say.

"If an employer is proactive and deals with those issues, it will avoid the situation where unionization occurs," says Bernie Ruesgen, Sports Authority Inc.’s group manager of human resources for the training and logistics units in Englewood, Colorado.

Specifically, benefit managers should "analyze the equity of benefits throughout their employee ranks" and externally to determine "if there is any inequity that might cause employees concern," says Brenda Cossette, human resource director for the city of Fergus Falls, Minnesota. For example, if a pay rate lags behind the market, it might leave the employer vulnerable to union inroads, she says.

Benefit managers also should seek to resolve any outstanding benefit-related issues that "might make employees think that management doesn’t care," like a limited wellness benefit or a high co-pay on prescription drugs, Cossette says.

"Employers need to turn their eyes inward and take a look [at operations] from an employee’s perspective," Mallos says.

Another strategy is for employers to keep full-time employees, with whom employers are likely to have established relationships, and cut temporary hires, Ruesgen says. There are a significant number of employers that recruit many of their full-time employees from previously temporary employees. "Temporary employees may get to vote if the employer sources their applicants for full time through temporary services."

The proposed measure also compresses the timetable for negotiations so that once a union is certified, it can demand that an employer begin negotiating within 10 days. If the union and employer can’t agree within 90 days, either party can request federal mediation. If no agreement is reached within 30 days with federal mediation, then binding arbitration will determine the terms of the agreement.

"We think that would impose unwanted workplace terms and conditions," says Michael Layman, manager of labor and employment policy at the Society for Human Resource Management in Alexandria, Virginia, which opposes the measure.

Imposition of any union contract reduces an employer’s flexibility to respond to challenging economic conditions, says Cossette of Fergus Falls. For example, an employer without unionized workers could pass on some or all of the increased costs of employees’ health insurance coverage by increasing workers’ co-payments at least annually; employers with a unionized workforce would have to wait to negotiate the co-payment until a typical multiyear contract expires.

Large companies might find themselves faced with different contracts for the same level of workers in different locations, says Richard A. Epstein, a law professor at the University of Chicago in an analysis paid for by bill opponents.

The measure also provides for significant penalties if employers willfully or repeatedly engage in unfair labor practices during union-organizing drives.

The AFL-CIO says such measures are needed to protect pro-union workers from employer tactics including mandatory anti-union meetings, "one-on-one pressure sessions," predictions of shutting down, endless delays and illegal firings, according to statements.

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