1. Copyright: © 2009 Jackson Lewis LLP Preparing for the Employee Free Choice Act (“EFCA”) GREATER VALLEY FORGE HUMAN RESOURCES ASSOCIATION GOVERNMENTAL AND LEGISLATIVE COMMITTEE MAY 19, 2009 Maria L. Petrillo Brian P. Kirby Jackson Lewis LLP Brian P. Kirby Law Offices James A. Geier Michael Giantomaso Human Capital Consulting Aker Philadelphia Partners LLC Shipyard

2. Today’s Program The Perfect Storm Economy The resurgent labor movement Politics The National Labor Relations Act Today Organizing process Free speech rights/restrictions “Make Whole” Unfair Labor Practice Remedies The Employee Free Choice Act (“EFCA”) Revised Organizing Process: No Election or Election Campaign Enhanced Unfair Labor Practice Penalties for Employers Collective Bargaining Timeframes and Mandatory Arbitration Winners and Losers Steps to Prepare for EFCA 2

3. The Perfect Storm The Economy Market down Job insecurity up “State of the Unions” Steady decline in membership Fewer NLRB supervised elections “Change To Win” breaks from AFL-CIO (2006) Political Environment President Barack Obama Larger democratic majority in Senate Labor’s contributions and expectations 3

4. “State of the Unions” Percentage of Unionized U.S. Workforce – Private Sector 4

5. THE NATIONAL LABOR RELATIONS ACT TODAY

6. National Labor Relations Act (NLRA) Today Current “Road to Unionization” Union solicitation of support (via signed cards) Petition for election filed with NLRB (30% or more required; unions normally won’t file unless 50 - 75%) Employer communications under Section 8(c) Secret-ballot election Good faith negotiations OrganizingPetitionElection Post Election Campaign Free Speech 6

7. National Labor Relations Act (NLRA) Today Union Certification Can occur voluntarily through “card check recognition” (majority required) 7

8. The National Labor Relations Act (NLRA) Today Union Certification (cont’d) NLRB-supervised secret ballot election is the norm “Card check recognition” optional/rare; employee challenge can force election 8

9. National Labor Relations Act (NLRA) Today Union Certification (Cont’d) National Labor Relations Board supervised secret ballot election – private vote 9

10. 10 Employer Free Speech Rights Under NLRA Today Section 8(c) “The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic or visual form, shall not constitute or be evidence of an unfair labor practice…” ---- National Labor Relations Act

11. 11 Free Speech Rights Under NLRA YOU MAY SHARE: F acts O pinions E xamples/ E xperiences Okay to initiate conversation Not in management office

12. 12 Company action that is unlawful And a Few Limitations: TT hreats I I nterrogation P P romises/bribes S S pying/surveillance

13. National Labor Relations Act (NLRA) Today Employer Penalties For Unlawful Discharge Designed to restore status quo Notice posting Reinstatement with Back Pay No Fines Injunction 13

14. National Labor Relations Act (NLRA) Today Collective Bargaining Mutual obligation to bargain in good faith No obligation to agree; sometimes no contract No time deadlines for “good faith” negotiations; can be protracted Unit employees have right to vote upon and ratify negotiated contract terms 14

15. EFCA: What is it? How does it change things?

16. OrganizingPetitionElection Bargaining Mediation Arbitration National Labor Relations Act (NLRA) After EFCA

17. Certification WITHOUT Election! NLRB is precluded from holding election if union requests certification upon achieving card majority No “pre-election” educational process No assurance that all employees participate Risk of pressure tactics and misrepresentations by organizers 17

18. National Labor Relations Act Under EFCA Employer Penalties For Unlawful Discharge Notice posting Reinstatement Treble back pay $20,000.00 Fines for willful/repeated unfair labor practices until negotiation of first contract No corresponding fines for union unfair labor practices 18

19. National Labor Relations Act (NLRA) After EFCA FIRST CONTRACT NEGOTIATIONS 10 days to commence bargaining; 90 days to reach agreement on all terms 30 days of mandated mediation; reduced incentive for union negotiators to adopt reasonable positions Arbitration – third party government appointed arbitrator has power to impose contract terms for two years Little or no risk of strike gives leverage to union Where contract terms imposed, unit employees lose right to vote upon and ratify agreement 19

20. Winners and Losers in an EFCA World 20 Practical Effects Of EFCA

21. Unions would win... Millions of new members Increased financial resources Effective elimination of secret ballot elections and lawful employer communications in opposition Leverage to offer less reasonable contract demands Guaranteed initial contracts Intimidation of supervision via remedial processes 21

22. Practical Effects Of EFCA Employees could lose... Secret ballot election, freedom from intimidation Ability to consider complete information before making decision to unionize Opportunity to participate in decision (employees not approached to sign cards left out) Ratification vote on contracts Chance to decertify the union for at least 24 months (and only through secret ballot election) Option/right to strike for better contract terms 22

23. Practical Effects Of EFCA Employers... Lose ability to communicate fully and effectively with employees about union in timely manner Expect unreasonable/excessive contract demands by union; Lose leverage in initial negotiations Face arbitrator-imposed labor costs and standards regardless of unique business circumstances Add union/cards as an ongoing business “agenda item” Anticipate increase in unfair labor practice charges, and greater difficulty preventing/defending them 23

24. Likely Organizing Tactics Increased use of “salts” (union plants) First-time organizing of small and medium-sized employers Increased filing of unfair labor practice charges Organizing Incentive Programs Practical Effects Of EFCA

25. Organizing incentive program… $5.00 per authorization card obtained during the organizing campaign, paid to the person obtaining the authorization card $10.00 per authorization card at the successful conclusion of a card check or the successful conclusion of an NLRB election… Practical Effects Of EFCA

26. Summary Effective elimination of secret ballot elections Increased union coercion and employee peer pressure to get signed cards Employer difficulty in effectively communicating position on unionization Less reasonable union contract demands Big increases in union market share, financial resources and political influence 26

27. EFCA Status Report: Where Does It Stand Now? 27 Practical Effects Of EFCA

28. Status of EFCA 28 STATUS “Change is finally having a President…who will make the Employee Free Choice Act the law of the land.” --- Barack Obama 3/09: Obama and Biden both commit to support EFCA passage at AFL-CIO Convention 5/09: Obama calls for reform to make it easier to join unions

29. In 2007, passed House by vote of 241 – 185 Senate cloture vote failed 51-48 (need 60) (Specter voted with Democrats) 2009: 8 likely supporters of EFCA have replaced Senators who opposed EFCA in the 111 th Congress EFCA Introduced March 10, 2009 following Obama and Biden speeches pledging EFCA support to AFL-CIO H.R. 1409 (Rep. Miller, D-CA) S.C. 560 (Sen. Harkin, D-IA) 29 Status of EFCA

30. EFCA – POLITICAL STATUS The 111 th Congress (2009-10) House passage assured but Senate support a problem. Some prior supporters not willing to sponsor EFCA or vote for cloture Mobilization of business lobbying groups Polls strongly against “card check” Concerns re impact on weak economy “Bigger fish to fry” 30

31. EFCA – POLITICAL STATUS The 111 th Congress (2009-10) March 5, 2009: Rep. Sestak (D-PA) introduces compromise bill: National Labor Relations Modernization Act. Retains secret ballot election April 8, 2009: Sen. Blanche Lincoln (D-Ark) announces inability to support EFCA in present form. “Nail in EFCA coffin.” Or is it? 31

32. EFCA – POLITICAL STATUS The “Specter” of EFCA – April 28, 2009: Sen. Arlen Specter becomes a Democrat and declares continued opposition to EFCA in present form. Relies upon promises of Sen. Reid (D-NV) to retain seniority on committees in making switch. Likely seating of Al Franken (D-MN) gives Democrats potential 60-seat, filibuster-proof majority. 32

33. EFCA – POLITICAL STATUS The “Specter” of EFCA (cont’d): May 5, 2009: Specter is stripped of seniority. Now most junior Democrat on 4 out of 5 committees on which he serves. Gives Democrats tremendous leverage. Specter must go along with party leaders to regain seniority after 2010 elections -Seating of Franken could provide 60 votes needed to pass EFCA in present form. May 14, 2009: Obama says he wants to correct the “monkey business” affecting union organizing 33

34. The Myths Behind EFCA MYTHREALITY Employers coerce employees to vote “No” Employer violations occur in 2% of election cases Unions can’t win elections under the current system Unions won 59% of NLRB elections in 2007 Labor Board conducted elections take too long 94% of NLRB elections held within 56 days A card check is best way to gauge employee support The secret ballot is universally validated by federal courts Employers have unlimited access to employees Unions get employee names/addresses within seven days Pre-election proceedings are contentious Election agreements reached in 85% of cases 34

35. Union Win Rates in Representation Elections »2000 – 53% »2001 – 55% »2002 – 57% »2003 – 58% »2004 – 59% »2005 – 61.4% »2006 – 61.5% »2007 – 59% »2008 – 66% as of June 30, 2008 35

36. EFCA Action Plan What to Consider Now? 36

37. 6 Legal Steps to Insulate Your Business Legal Musts! Create a union-free philosophy statement / issue-free philosophy statement Identify your supervisors Train your supervisors on lawful communications with employees Conduct a bargaining unit analysis Lock down your facility to minimize union access Educate all employees about EFCA and the risks of signing a union authorization card 37

38. Who is a Supervisor under the NLRA? Section 2(11) of the NLRA defines the term supervisor: The term "supervisor" means any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with [these activities] the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment. 38

39. 12 Steps to Neutralize EFCA Step 1 Understand the various components of the Employee Free Choice Act (EFCA) and its likelihood of passage Step 2 Advise your senior management on EFCA and its possible impact on your organization Step 3 Identify your organization’s business strategy, mission and values and plan to communicate this to employees

40. 12 Steps to Neutralize EFCA Step 4 Evaluate your organization’s human resources or “people strategy” Step 5 Review your employee policies and procedures for legal compliance and enhancing communication Step 6 Analyze your compensation systems and processes

41. 12 Steps to Neutralize EFCA Step 7Coach and advise supervisors and managers on improving communication and being better leaders Step 8 Teach all employees about the importance of annual performance reviews Step 9 Take the pulse of your employee population

42. 12 Steps to Neutralize EFCA Step 10 Hire, retain and develop the “right people” Step 11 Insure all employees understand their job responsibilities and accountabilities Step 12 Communicate, Communicate, Communicate

43. EFCA Timetable Passage once expected by spring or early summer 2009 Compromise bill is being drafted now Projected debate and passage-perhaps fall 2009 43

44. Therefore… Employers need to very seriously consider taking action now in the time available before EFCA, in some form, becomes law. 44

45. Questions? 45

46. Our Presenters Maria L. Petrillo, EsquireBrian P. Kirby, Esquire Jackson Lewis LLPAttorney at Law Three Parkway171 W. Lancaster Avenue 1601 Cherry Street, Ste 1350Suite 100 Philadelphia, PA 19102 Paoli, PA 19301 Tel: (267) 319-7806Tel (610) 578-9050 petrillom@jacksonlewis.combpkirby@earthlink.net Jim GeierMichael Giantomaso President and FounderVice President, Human Capital ConsultingHuman Resources Partners LLCAker Philadelphia Shipyard Three Neshaminy Interplex2100 Kittyhawk Avenue Suite 301Philadelphia, PA 19112 Trevose, PA 19053 Tel: (215) 244-8110Tel: (215) 875-2615 Jim.geier@hcpartners.commike.giantomaso@phillyshipyard.com 46 Copyright: © 2009 Jackson Lewis LLP Reproduction in whole or in part by any means whatsoever is strictly prohibited without the advance written permission of Jackson Lewis. | This document is for informational purposes only and not intended as legal advice. | This information may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome.