THE UNION PUSH TO ORGANIZE DEALERSHIPS – AND PASS HARMFUL LEGISLATION
By Joe Gagnon, Fisher & Phillips LLP

Organized labor’s efforts to unionize auto dealerships continue unabated. Now federal legislative changes loom on the horizon which, if enacted, will significantly increase the number of successful unionization efforts. Regardless of whether these changes are implemented, dealerships should consider implementing an updated pre-campaign strategy designed to anticipate and adapt to labor’s evolving unionization efforts.

A Brief Review
During 2007 there were 41 petitions filed with the National Labor Relations Board to unionize dealerships across the country. Most unionization campaigns occurred in Illinois (16), followed by California (six), Missouri (five), Florida (four), Pennsylvania (two), and one each in Indiana, Michigan, Minnesota, New Jersey, New York, North Dakota, Ohio, and Washington. The vast majority of the petitions (32) were filed by the Machinists (IAM). Although the Teamsters had previously expressed an intention to abandon unionization attempts at dealerships, it accounted for 6 of the petitions filed.

The Employee Free Choice Act
Pending before Congress is the so-called Employee Free Choice Act (EFCA). If enacted, it will constitute one of the most significant changes to the National Labor Relations Act (NLRA) in over 60 years. As currently worded, the EFCA includes the following provisions:

• The traditional secret ballot system currently used to vote on unionization will be replaced with a “card check” system. Under the card check system, a union will be installed as a workers’ representative if a majority of the employees sign cards indicating they favor the union.

• If a newly certified union and management cannot agree upon a labor contract after 90 days, the parties will be forced into mandatory arbitration. An outside third party would set the terms and conditions of employment.

• The imposition of penalties for violating employees’ rights to organize a union would increase dramatically. Under EFCA, a fine of up to $20,000 per violation may be imposed for willful or repeated violation of employees’ rights in a union campaign or in bargaining for an initial contract.

 
The Fallout
If the EFCA becomes law, the most significant effect on auto dealerships will be increasingly successful union campaigns. Labor will be able to forego the election process in favor of a stealth campaign with the card check system. This will likely delay management’s notice of the union campaign, causing it to lose critical time in informing employees of the company’s position, the risks of unionization, and the benefits of remaining union free. Moreover, under the card check system, instead of a secret ballot system in which each employee can freely vote his or her conscience, unions can more easily exert pressure on employees to simply sign the card favoring the union.

With the mandatory arbitration provision, management will lose critical leverage in negotiating an initial contract with the newly-formed union. The union will have little incentive to accept what management offers and can instead hold out for the mandatory arbitration process. This could result in stalled negotiations, as unions resist management’s good faith offers and wait out the clock to force arbitration. Alternatively, management, in seeking to avoid costly arbitration, may accept union demands it otherwise would have rejected.

With the imposition of substantial penalties, management may be less willing to risk mounting opposition to a union campaign. This will create a chilling effect over management efforts to stay union-free, with the inevitable result that some union campaigns will succeed with little or no resistance. Moreover, bureaucracy and litigation will increase over claimed violations.

But will these Changes Occur, and if so, When?
With national elections trending Democrat and popular sentiment expressing less antipathy towards unions, more likely than not businesses, including auto dealerships, are likely to see some sort of change in either 2008 or early 2009.

The 2008 elections may grant nothing more than a one-year reprieve from passage of the EFCA. President Bush will likely veto the EFCA if it makes it to his desk. The Democrats know this, but may nevertheless push the EFCA through Congress in order to create a campaign issue. Depending on numerous political factors, a compromise is always possible.

This does not mean that dealerships should ignore this issue. The outcome of this year’s elections will profoundly affect whether the EFCA becomes law. If the Democrats retain control of Congress (which appears likely at this time) and regain the White House (which, although far from certain, is a distinct possibility), look for the EFCA to be among the first issues on the 2009 legislative agenda.

Even if the Republicans have the numbers to filibuster the EFCA, it is far from clear that they would spend their political capital on this issue. What might be more likely is a compromise. For example, the Republicans might agree not to filibuster the mandatory arbitration provision if, in exchange, the Democrats drop the card check system. Whatever compromise there might be, even a watered down EFCA will have profoundly adverse effects on auto dealerships and their ability to resist unionization campaigns.

Unionization efforts will continue while the EFCA is pending
Regardless of whether the EFCA becomes law, unionization attempts at auto dealerships will continue. Any dealership is a potential target. While past campaigns have focused primarily on service technicians, similar efforts have been directed at porters, parts counter employees, parts drivers, service advisors and salespersons.

What can dealerships do?
Before the law changes, now is the time to act. Auto dealerships can and should take preventive steps to prepare for and respond to a union campaign. Any effective pre-campaign strategy requires knowing what the law allows. For example, the National Labor Relations Board recently ruled that, in certain circumstances, employers may prohibit employees from using office email systems to spread information about certain union activities.
Even this pro-management ruling carries risks, however, since the ruling may be read to imply certain limitations. Accordingly, always check with counsel before embarking on any pre-campaign strategy.

For more information contact Todd Fredrickson at 303.218.3660 or tfredrickson@laborlawyers.com or contact the author directly at jgagnon@laborlawyers.com or 713.292.0150