The Employee Free Choice Act (EFCA) has drawn substantial criticism from employers who worry about the bill’s card-check and arbitration provisions. But the Obama administration has not given any indication that it will back away from its pro-union position. With the nomination of Democrat Hilda L. Solis as the new Secretary of Labor, there is even more support for the EFCA.
But not all Democrats are in favor of the EFCA. Reverend Al Sharpton described the effect of the EFCA as “coercion” and expressed concern about how the legislation would impact minority-owned small businesses. He was clear about his overall commitment to the right to organize but stated that the EFCA could go too far. National Review Online’s Peter Kirsanow has a great summary of why the position of EFCA-advocate Secretary of Labor nominee, Hilda Solis, is directly at odds with Sharpton’s. In short, Kirsanow argues that you must be a supporter of small and minority-owned businesses or of the Employee Free Choice Act–but you cannot be proponents of both.
Under the proposed EFCA, businesses would have 120 days to negotiate a collective bargaining agreement once the union has made a demand for bargaining. Failure to reach an agreed-upon CBA will divert power to an arbitrator, who becomes responsible for the contract. Negotiating any contract in 120 days is difficult. But a first contract, it can be near impossible. And if you are an employer without a sophisticated and experienced bargaining team already in place, the impossibility becomes even more likely. If nothing else, the negotiating “team” is likely to have multiple other business demands put on his or her time even though negotiating will necessarily take the top place on the list.
According to Kirsanow, the EFCA won’t make it impossible to successfully negotiate a first contract in 120 days but that one of the following two scenarios will occur:
1) In an effort to avoid arbitration, the small businessman without prior labor negotiating experience concedes to union demands that he would reject if he weren’t compelled to reach an agreement in 120 days (under current law, the parties aren’t required to reach agreement within a specific timeframe); or
2) The small businessman goes to arbitration. (Interest arbitration isn’t cheap. It can go on for months and the legal fees alone can be substantial). The arbitrator writes a “contract” that the businessman would never have agreed to if he’d had the opportunity to bargain with the union in the context of their respective economic leverages. The business is saddled with uncompetitive labor costs and restrictive contract terms after having expended tens of thousands in arbitration.
The hardship this law could impose on small businesses, which, given this economy, could be the final blow.