Just ahead: Small business dysfunction

A Bad Deal For Employees

As bad as the misnamed Employee Free Choice Act (EFCA) is for large employers, it is a far worse threat to small businesses. Under current law, organizing small employers is not very cost effective - small employers are rarely worth the effort and expense given the number of new members the union will get. Under the EFCA, that equation is totally transformed. A small employer (let’s think in terms of less than 50 employees) can be targeted with only a few organizers meaning that many employers who were previously below the unions’ radar will now be directly in their cross-hairs.

The prospect of becoming an involuntarily union company should be particularly frightening to small employers as they tend to operate differently than large employers. Their relationship with their employees is usually quite different and much more personal. Similarly, employees in small businesses understand better how the business operates and the pressures it is under.

The EFCA threatens to undermine all of this by raising the very real possibility of a union interjecting itself between these employers and their employees. If a union comes in, the small business person WILL lose control of how the business is run. In the union company environment, no longer would employers be able to communicate directly with their employees, on a personal basis. They would have to go through the shop steward and union leadership. In some industries like construction, they would even lose control over who they have as employees, as the union would provide the employees according to their priorities such as seniority or how much they favored that particular contractor.

If the EFCA is enacted, an employer could think they are doing right by their employees and go home on a Friday night thinking things are fine. When they open up on Monday morning, they can find out they now have a union they did not even know had targeted them. Getting a majority of signatures—for a 25 employee company that’s only 13—can happen over a weekend.

Once the union has the number of required employees to be recognized, the problems are only just beginning. The next step is to bargain for the first contract. This is a daunting, and chilling process, especially for a small business who has no experience with a union. It will also be expensive, beyond the terms of the agreement, as retaining competent legal counsel is all but required.

As if the card check provision of the EFCA were not enough, the bill also contains a provision which totally stacks the deck against the employer during these negotiations. If a contract is not agreed to in 120 days (not a long time in the context of first contract negotiations), the matter is submitted to binding arbitration.

In this environment, the employer will always lose; it’s only a question of by how much. The union will come in using the promises they gave the employees to get their signatures as their demands i.e., higher wages, greater benefits, more job security (read: less ability of the employer to use employees as they deem appropriate). The employer will respond with what they can give. The arbitrator will likely seek to find the middle ground. Wherever that is, it will be more than the employer can provide and the union has lost nothing as they have "no skin in the game." So favorable is the binding arbitration process to the union position that union negotiators should be expected to drag out the process intentionally to get the matter into arbitration.

Not only is the binding arbitration a horrendous provision for employers, it is also a bad deal for employees. When the arbitrator comes up with the contract, it is imposed on the company for a minimum of three years without employee approval or further review. Under normal contract negotiations, employees have the opportunity to ratify the contract. Under the EFCA, there would be no ratification by employees, so this provision represents the second vote employees would lose under the EFCA.

The Employee Free Choice Act may represent the surest way to put small businesses out of business, leaving those employees free to choose their next job.


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