Pennsylvania Labor and Employment Blog : Pennsylvania Labor and Employment Lawyer & Attorney : McNees Wallace & Nurick Law Firm : Human Resources, Workplace and Business Law : Harrisburg, Lancaster, Allentown, Lehigh

Senator Arlen Specter announced his opposition to the Employee Free Choice Act as currently proposed. His vote was critical to the Democrats efforts to invoke cloture under Senate rules and bring the bill to a vote that would almost certainly have gained a simple majority to pass. The Senator's comments on the Senate Floor acknowledge the importance of his vote:

In June 2007, the vote on the Employee Free Choice was virtually monolithic: 50 Senators, Democrats, voted for cloture and 48 Republicans against. I was the only Republican to vote for cloture. The prospects for the next cloture vote are virtually the same. No Democratic Senator has spoken out against cloture. Republican Senators are outspoken in favor of a filibuster. With the prospects of a Democratic win in Minnesota, yet uncertain, it appears that 59 Democrats will vote to proceed with 40 Republicans in opposition. If so, the decisive vote would be mine. In a highly polarized Senate, many decisive votes are left to a small group who are willing to listen, reject ideological dogmatism, disagree with the party line and make an independent judgment. It is an anguishing position, but we play the cards we are dealt.

The Senator's floor comments left open the possibility that he would support some other initiative to reform the unionization process and identified the following specific suggestions:

SOME SUGGESTED REVISIONS TO THE NATIONAL LABOR RELATIONS ACT

(1) Establishing a timetable:

(a) Require that an election must be held within 10 days of a filing of a joint petition from the employer and the union

(b) In the absence of a joint petition, require the NLRB to resolve issues on the bargaining unit and eligibility to vote within 14 days from the filing of the petition and the election 7 days thereafter. The Board may extend the time for the election to 14 additional days if the Board sets forth specifics on factual or legal issues of exceptional complexity justifying the extension.

(c) Challenges to the voting would have to be filed within 5 days with the Board having 15 days to resolve any disputes with an additional 10 days if they find issues of exceptional complexity.

(2) Adding unfair labor practices:

(a) an employer or union official visits to an employee at his/her home without prior consent for any purpose related to a representation campaign;

(b) an employer holds employees in a “captive audience” speech unless the union has equal time under identical circumstances;

(c) an employer or union engages in campaign related activities aimed at employees within 24 hours prior to an election.

(3) Authorizing the NLRB to impose treble back pay without reduction for mitigation when an employee is unlawfully fired

(4) Authorizing civil penalties up to $20,000 per violation on an NLRB finding of willful and repeated violations of employees’ statutory rights by an employer or union during an election campaign

(5) Require the parties to begin negotiations within 21 days after a union is certified. If there is no agreement after 120 days from the first meeting, either party may call for mediation by the Federal Mediation and Conciliation Service

(6) On a finding that a party is not negotiating in good faith, an order may be issued establishing a schedule for negotiation and imposing costs and attorney fees.

(7) Broaden the provisions for injunctive relief with reasonable attorneys’ fees on a finding that either party is not acting in good faith

(8) Require a dissent by a member of the Board to be completed 45 days after the majority opinion is filed;

(9) Establish a certiorari-type process where the Board would exercise discretion on reviewing challenges from decisions by an administrative law judge or regional director.

(10) If the Board does not grant review or fails to issue a decision within 180 days after receiving the record, the decision of the administrative judge or regional director would be final.

(11) Authorizing the award of reasonable attorneys’ fees on a finding of harassment, causing unnecessary delay or bad faith

(12) Modify the NLRA to give the court broader discretion to impose a Gissel order on a finding that the environment has deteriorated to the extent that a fair election is not possible.

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Employment Practices Liability Insurance (EPLI) can provide valuable protection; particularly,  given the predicted rise in employment related legal claims and enhanced government enforcement initiatives. Furthermore, EPLI remains a relative bargain in the continued “soft” insurance market and employers should consider adding or increasing insurance coverage to protect against employment claims. EPLI insurance is somewhat quirky and the following are some considerations when evaluating policies:

1.         Coverage: EPLI policies usually cover claims of wrongful discharge, workplace harassment and discrimination. Many offer a more comprehensive list of covered acts, including negligent hiring/supervision/evaluations, invasion of privacy, defamation and intentional infliction of emotional distress. Coverage typically applies to claims made by full time employees so as to exclude those by part-timers, temporary, seasonal and independent contractors. In comparing policies, look for one that has the most expansive coverage. 

2.         Exclusions: EPLI policies exclude many claims based on the statute that creates the legal right or the activity that gives rise to the claim. Exclusions apply to the Fair Labor Standards Acts; the National Labor Relations Act; the Worker Adjustment and Retraining Notification Act (WARN); the Consolidated Omnibus Budget Reconciliation Act (COBRA); the Employee Retirement Income Security Act (ERISA); the Occupational Safety and Health Act (OSHA); the costs associated with providing "reasonable accommodation" under the Americans with Disabilities Act (ADA); as well as claims arising out of downsizing, layoffs, workforce restructurings, plant closures or strikes. Punitive damages are always excluded. Carefully evaluate the excluded claims in light of your business practices. In the case of multi-state operations, be aware that some state laws create substantial employment rights that must also be evaluated under the policy language.

3.         Policy Limits and Deductibles: Policy limits and deductibles usually apply on a per claim and aggregate basis. For example, coverage may be limited to $250,000 for each separate claim with an overall aggregate cap of $1 million for all claims. Employers must formulate their insurance goals in setting the appropriate deductibles and limits. Some employers view EPLI insurance as catastrophic coverage and are willing to accept a high deductible that allows them to handle smaller claims themselves. However, other employers are looking for more blanket coverage.

4.         Defense Costs, Selection of Counsel and Settlement: Defense costs are usually included within the EPLI policy’s limits, which has good and bad points. Many times, the legal expense is the largest cost to an employer in dealing with merit less claims. However, including defense costs means that every dollar an employer spends defending a claim reduces the amount available for settlement or to pay a judgment. Since the existence of insurance coverage must be disclosed as part of discovery in most law suits, a plaintiff’s attorney will factor insurance coverage into his or her case evaluation. The defense cost feature may influence plaintiffs’ counsel to try to settle early, rather than force an employer to incur litigation costs that will only erode the insurance dollars available for potential settlement. Employment claims often have significant employee relations ramifications making settlement a particularly important issue. Insurers view employment claims the same as any other insurance matter by evaluating only the potential for liability and the amount of damages. The employer and insurer may be at odds over settling a case. EPLI policies address this stalemate by either giving the insurer the right to settle without the employer’s approval or, more frequently, giving an employer control over settlement, but adding a “hammer clause”. These clauses are designed to limit the insurer’s potential exposure if the policyholder passes up an opportunity to settle a claim recommended by the insurer. Hammer clauses provide that if there is an offer to settle a claim that the policyholder refuses accept, then the insurer will not be liable for a subsequent settlement or judgment in excess of a rejected settlement amount.  

5.         Policy Types and Insurance Company Notification: EPLI policies are typically written on a “claims made” basis meaning that the claim must be incurred during the coverage period and reported to the insurer during an extended reporting period. Employers who have already experience significant layoffs prior to the effective date of coverage will not have claims arising from those actions covered by new insurance; however, if an employer increases coverage, it may be able negotiate a retroactivity for the larger policy limits. Since employment actions may take years to turn into a claims, an employer may be left with no coverage if the policy is dropped or tail coverage isn’t purchased. Untimely notice to an insurance carrier can void coverage for and employment claim.

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The Department of Labor Published Model Cobra Notices implementing the provisions of the American Recovery and Reinvestment Act of 2009. 

Individuals eligible for the special COBRA election period described above also must receive a notice informing them of this opportunity. This notice must be provided within 60 days following February 17, 2009. Plan administrators must provide notice about the premium reduction to individuals who have a COBRA qualifying event during the period from September 1, 2008 through December 31, 2009. Plan administrators may provide notices separately or along with notices they provide following a COBRA qualifying event. This notice must go to all individuals, whether they have COBRA coverage or not, who had a qualifying event from September 1, 2008 through December 31, 2009.

Individuals involuntarily terminated from September 1, 2008 through February 16, 2009 who did not elect COBRA when it was first offered OR who did elect COBRA, but are no longer enrolled (for example because they were unable to continue paying the premium) have a new election opportunity. This election period begins on February 17, 2009 and ends 60 days after the plan provides the required notice. This special election period does not extend the period of COBRA continuation coverage beyond the original maximum period (generally 18 months from the employee's involuntary termination). COBRA coverage elected in this special election period begins with the first period of coverage beginning on or after February 17, 2009. This special election period opportunity does not apply to coverage sponsored by employers with less than 20 employees that is subject to State law.

UPDATE:  IRS Notice 2009-27 clarifies many issues related to implementation of the COBRA subsidy.

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On March 10, 2009, Representative George Miller introduced the Employee Free Choice Act of 2009 (H.R. 1409) The Bill has 222 cosponsors from the House of Representatives comprised of 435 members. The Bill has been referred to the House Committee on Education and Labor. You can keep track of its progress through an RSS Feed.

H.R 1409 is identical to H.R. 800 which passed in the House of Representatives by roll call vote last year. Last year's vote totals were 241 Ayes, 185 Nays, 8 Present/Not Voting. Last year H.R. 800 failed a cloture motion, preventing consideration of the bill, in the Senate by roll call vote. The totals were 51 Ayes, 48 Nays, 1 Present/Not Voting. Obviously, the political composition of Congress has dramatically changed since last year's votes.

The Text of the Bill is relatively brief but its impact is great. The Bill has three sections, streamlining union certification, facilitating initial collective bargaining agreements, and strengthening enforcement. Read the Bill so you can discuss it intelligently. Observe that there is no effective date for the legislation included in the Bill once it is passed by Congress.  However, well before the time it is enacted, employers should already have implemented a responsive strategy.

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Business downsizing, a poor job market, and increased government enforcement will dramatically increase employment discrimination lawsuits for the foreseeable future. We got a glimpse of this trend with the Equal Employment Opportunity Commission (EEOC) release of 2009 charge statistics noting a record number of discrimination claims filed last year. The EEOC report shows that 95,000 charges were filed, up 15%. The agency also reports financial recoveries of $376 million for victims of discrimination.

Charge activity for 2009 should rise exponentially. The economy shed 2.4 million jobs in the last 4 months mostly due to permanent layoffs. Job prospects are bleak with current unemployment at 8.1 %, the highest level in 25 years. The Obama Administration's budget increases spending on Department of Labor enforcement activities.

Employees have up to 300 days to bring a discrimination charge with the EEOC so many of the potential claims from recent layoffs haven't yet been filed. An employee's proclivity to sue an employer for discrimination is related in part to economics. In a good economy, employees find new jobs quickly and don't look back. While unemployed, economic and emotional factors may motivate employees to pursue litigation. Recent news reports describe the plight of many workers facing job loss and financial ruin.

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Executive Order 13502 is the first step to funneling a significant portion of the $787 billion in Stimulus Bill money to union workers. Executive Order 13502 promotes the use of Project Labor Agreements in large scale construction projects where the total cost to the federal government exceeds $25 million. Bush Administration Executive Orders prohibiting the use of project labor agreements have been revoked under the Obama Executive Order.

The term "project labor agreement" as used in this order means a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. 158(f).   Project Labor Agreements require all contractors, whether they are unionized or not, to subject themselves and their employees to unionization in order to work on a government-funded construction project. The terms of the union collective bargaining agreement are part of the public construction project's bid specifications.  In order to receive a contract, a contractor must sign the agreement and subject its employees union dues and work rules on the construction project.

E.O 13502 is currently discretionary allowing the executive agency to mandate the use of PLAs if it determines that a PLA will "advance the Federal Government's interest in achieving economy and efficiency in Federal procurement, producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters." However, E.O. 13502 requires the Department of Labor and OMB to make a recommendation about whether broader use of project labor agreements would help to promote the economical, efficient, and timely completion of such projects. The recommendation is due by early August, 2009 and is to cover both Federal construction projects those receiving Federal financial assistance.

The likely result of the DOL/OMB study will be the expanded requirements for project labor agreements to all federal and federally assisted construction contracts. Given the enormity of government spending on public works project under the current and future stimulus bills, project labor agreements are a huge boon for unions. Similar union preferences may also find their way in other aspects of federal contracting affecting trillions of dollars in government spending.

Nonunion employers, already facing enhanced unionization risks, must further prepare to impact of project labor agreements. Strategies in this area may include business restructuring through double breasting, training managers and adopting defensive policies and practices.

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The Employee Free Choice Act will reportedly be introduced in Congress on Monday, March 9, 2009 according to the National Association of Manufacturers blog called The ShopFloor.   Unions are mobilizing their membership for passage by targeting legislators with messages like the following one appearing on the Los Angeles County Federation of Labor, AFL-CIO:

On Monday, March 9th Congressman George Miller and Senator Ted Kennedy are expected to introduce the Employee Free Choice Act into the House of Representatives. 

This is the first step in the long fight to make the Employee Free Choice Act the law in this country. We have a lot of work to do, including convincing Senator Feinstein that the Employee Free Choice Act is good for workers, our communities and critical to rebuilding our economy because it opens the door for us to earn better wages, health care and retirement benefits by signing a card to join a union.

Meanwhile, President Obama reportedly told AFL-CIO leaders that EFCA will pass giving his backing to the bill according to a Wall Street Journal report.  One labor scholar has begun an EFCA Countdown, while acknowledging EFCA's passage may be a bloody fight.

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The Genetic Information Nondiscrimination Act of 2008 (GINA) was enacted to curtail the use of genetic history in employment-related areas. GINA includes two titles. Title I, which amends portions of the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code, addresses the use of genetic information in health insurance. Title II prohibits the use of genetic information in employment, prohibits the intentional acquisition of genetic information about applicants and employees, and imposes strict confidentiality requirements.

The law is effective November 21, 2009. The EEOC has begun its regulatory and information process with the issuance of EEOC's Questions & Answers on GINA and Proposed Regulations.

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Andy Stern, President of the Service Employees International Union (SEIU), was recently interviewed by USA Today where he predicted the passage of the Employee Free Choice Act (EFCA) by August. 

Unions have substantial political clout and this prediction should be respected. According to Department of Labor filings, the SEIU has almost 1.7 million members and spent $32.9 million on political activities and lobbying in 2007. The SEIU's 2008 report will likely show an increase in its political spending on the Presidential Election. Mr. Stern has also expressed his sentiments on organized labor's role in the election and its expectations in a Wall Street Journal Interview as follows:

"We just won an election. It's no secret." By "we," Andy Stern means "American workers." He also means Big Labor. Speaking on behalf of the fastest growing trade group in America, the Service Employees International Union -- and as one of labor's most powerful figures today -- Mr. Stern sets this simple bar for the Obama presidency: "I expect nothing less than what he said he was going to do, and we should hold him accountable."

Labor has its sights on EFCA and this pending legislation has enormous potential consequences for employers. Currently, employers cannot make significant workplace policy or other changes once a union files a petition for election. Under EFCA, there may not be an election, only a card check.  Employers may not be aware of organizing efforts or have insufficient time to react. Employers should be putting into place union avoidance programs before EFCA becomes law. Developing an action plan should include the following items:

• Assessing union eligibility of working supervisors under RESPECT Act.
• Educating supervisors on authorization cards and the Nuts and Bolts of EFCA.
• Adopting union-free policies on solicitation, bulletin boards, and use of e-mail.
• Initiating engagement surveys.

More information is contained in our prior posts as follows:

Nuts and Bolts of the Employee Free Choice Act (EFCA) and RESPECT

Bosses do not Deserve RESPECT

Why not Educate Employees on the Significance of Union Authorization Cards?

Employee Engagement Surveys may be Critical to Combating Union Organizing Efforts

NOW is the Time for Employers to Gear up for the Employee Free Choice Act (Unions Are)

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