April 29, 2009 / 5:39 PM / 10 years ago

Now playing: The Employee Free Choice Act

— Deborah Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com —

By Deborah L. Cohen

CHICAGO (Reuters.com) - It sounds like something out of a movie: Labor unions looking for payback from a president they helped elect squaring off against big business interests with deep pockets hoping to thwart a possible law they say would hamper their businesses.

Both sides have staged aggressive publicity campaigns to win public support. While the ending has yet to be written, small businesses have hitched their wagons to their larger corporate brethren, arguing that the proposed legislation would tilt the collective bargaining scale unfavorably toward organized labor.

Here’s what all the fuss is about: On March 10, a bill called The Employee Free Choice Act (EFCA ) was introduced to both the House and Senate. The bill eliminates the veto power employers hold over the card-signing method of obtaining majority votes needed to unionize a work place. Since the Taft-Hartley Act of 1947, employers have had the right to call for a private ballot vote.

“They look at this bill and it makes their blood boil,” says Brad Close, vice-president of public policy for the National Federation of Independent Business (NFIB) in Washington, which represents 350,000 closely held businesses across the country. “Our members look at this in terms of survival - they want to be independent and free to run their business.”

Supporters of the legislation argue that installing more job protections for the struggling middle class, which has born the brunt of the recession, will help jump-start the economy with increased consumer spending and economic stability.

The Service Employee International Union (SEIU), comprised of workers in the hospitality industry, estimates that EFCA’s passage would be tantamount to a mini economic stimulus package pumping $49 billion a year into the economy.

Some prominent economists are in the same camp. “We’ve had an economy where a lot of the growth went to a disproportionately small share of families,” says Lawrence Mishel, president of the Economic Policy Institute, a nonpartisan Washington-based research group. “The president has said that we need to go from ‘borrow and spend’ to ‘save and invest.’ I think we need to go to ‘earn and spend.’”

Mishel has co-authored a statement in support of EFCA that garnered the support of 40 other prominent economists, including three Nobel Laureates. They argue that in recent decades most bargaining power has resided with management.

“The Employee Free Choice Act is not a panacea, but it would restore some balance to our labor markets,” they wrote. “As economists, we believe this is a critically important step in rebuilding our economy and strengthening our democracy by enhancing the voice of working people in the workplace.”


Small- to mid-sized firms, which lack big-company resources such as in-house legal and human resource teams, are adamantly opposed to the proposed changes, according to the associations that represent them. They fear their businesses will be pressured by high costs associated with collective bargaining, especially now as they cope with the recession.

The NFIB has joined several prominent Washington business trade groups in opposing the bills, including the U.S. Chamber of Commerce, the National Restaurant Association, and the International Franchise Association, among others. Most have significant small business representation among their membership.

“Unions will pursue opportunities wherever there are workers,” says David French, vice president of government relations for the International Franchise Association. “As the economy continues changing from manufacturing toward services, I think it’s inevitable that unions will seek out smaller and smaller groups of workers.”

Sen. Ted Kennedy of Massachusetts and Rep. George Miller of California - both Democrats - introduced the latest EFCA bills, which are a reincarnation of legislation brought forward in 2007 under the administration of President George W. Bush. Both bills have been referred to committees.

Under the EFCA, if employers and the union fail to reach terms of a first contract within 120 days of bargaining, a government-appointed arbitrator could be brought in to set the terms of the first two-year contract. In addition, the legislation would treble damages for employers found guilty of firing union supporters or breaking other labor laws.


While backers believe the legislation would eliminate employers’ ability to stall the negotiation process, opponents contend that the legislation eliminates debate and would rush the union certification process through without giving an employer the chance to make its position known to workers. They add that the mandatory arbitration would give outsiders with potentially limited knowledge of a specific industry power to set unrealistic terms.

“Employers’ have a free speech First Amendment right to speak out and share their views on labor unions. The Supreme Court has recognized that,” says Eugene Scalia, co-chair of the labor employment practice group at the law firm Gibson Dunn & Crutcher LLP, and former solicitor of labor under President George W. Bush. Scalia testified in March at a Senate hearing on the legislation.

“Employees would be signing these voting cards in circumstances that could be very intimidating without hearing both sides of the story,” he says.

Both President Barack Obama and Vice President Joe Biden were co-sponsors of prior versions of the legislation when they served as senators. The president, who was strongly supported by unions during his campaign, has indicated that he would sign the legislation if it passed by Congress.

On Tuesday, Senator Arlen Specter, a Republican from Pennsylvania who recently withdrew his support for EFCA, announced that he would switch to the Democrat party. He told reporters he still remains opposed to the legislation.

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