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U.S. Chamber of Commerce

Battle Royale Over EFCA, Part I

by Rob Kellogg on January 21, 2009

This is the first installment in a three-part series on the Employee Free Choice Act (EFCA). The second installment will be published next Wednesday on Global Investment Watch.

Progressives, Be Prepared!

capitol building picture 300x133 Battle Royale Over EFCA, Part I

One of the looming political battles facing the 111th Congress and the 44th President will pivot around the Employee Free Choice Act, or EFCA. The proposed bill, as currently crafted, would amend the National Labor Relations Act in three main ways:

  1. Strengthen penalties for companies that illegally coerce or intimidate employees in an effort to prevent them from forming a union;
  2. Bring in a neutral third party to settle a contract when a company and a newly certified union cannot agree on a contract after three months;
  3. Establish majority sign-up, meaning that if a majority of the employees sign union authorization cards, validated by the National Labor Relations Board (NLRB), a company must recognize the union.

Anti-EFCA forces are now hard at work throwing millions of dollars in opposition of the legislation. These groups include: the U.S. Chamber of Commerce, Save Our Secret Ballot, Coalition for a Democratic Workplace, Americans for Job Security, the National Right to Work Committee, The Business Roundtable, Employee Freedom Action Committee, Freedom Watch, Texas Public Policy Foundation, Workforce Fairness Institute, and Center for Union Facts. Their goal is simple: intimidate moderate red state Democrats and blue state Republicans into voting against EFCA. Tons of money is being spent by unions to make sure this does not happen.

A number of politicians on both sides of the aisle have already lined up for and against the legislation. Many others are still undecided. It will be those “swing” votes in both the House and Senate which will likely determine the fate of EFCA (note: we’ll break down the possible votes next week). Elected officials in both chambers, but especially those newly elected Congressmen and Senators who have yet to cast previous EFCA-votes, will be taking the temperature of their constituency base over the next few weeks, as they should do with any major vote. The only problem with doing this in the case of EFCA is that many Americans have fallen prey to the incredible amount of anti-union rhetoric and misinformation about the proposed legislation.

Progressives need to know where they stand on this issue and be prepared to make the case for a more democratic workplace. So which side are you on?

Here are six points to counter the big business propaganda and intimidation machine:

  • The business community is spending hundreds of millions dollars of their shareholder money to perpetuate misleading and false statements about EFCA. This is being done while the financial crisis – in large part created by corporate mismanagement and greed – has eroded trillions of dollars of wealth from pension funds and individual 401k plans.
  • One of biggest myths pushed by the Chamber of Commerce and other corporate interests is that it would “do away with secret ballot elections.” The fact is that the EFCA does nothing to take away the right to a secret ballot election. If workers want to hold an election, they would still have that right to do so. EFCA would simply put that decision in the hands of workers and not the employer.
  • Corporate interests repeatedly claim that allowing workers to sign cards when choosing to form a union will lead to union intimidation. Yet several academic studies have looked into this and there is simply no evidence to support this claim.
  • The real reason Corporate America is fighting this legislation is because the bill toughens penalties against employers who violate their workers’ rights.
  • Most CEOs don’t want to give workers the freedom to decide for themselves whether to join together for a voice at work. This is not surprising when you consider that CEOs are now paying themselves over 300 times more than the average worker. It’s plain and simple that corporate CEOs don’t want workers to share in the prosperity they helped create.

85307 main2 150x150 Battle Royale Over EFCA, Part I

  • Wal-Mart CEO Lee Scott summed up the position of Corporate America best when he remarked on October 28, 2008: “We like driving the car and we’re not going to give the steering wheel to anyone but us.” Corporate CEOs like Lee Scott are driving this “car” (the economy) off a cliff.

Here are six points to persuade people why they should be telling their elected officials to support EFCA:

  • Many reporters, lawmakers, and pundits continue to call the legislation “card check”- missing the fundamental democratic principles behind the legislation.
  • EFCA provides a non-governmental solution to help create an economy that works for everyone. It simply says that when a majority of workers in a workplace choose to form a union, they are free to do so.
  • Under current NLRB law, even after a majority of workers in a workplace sign cards saying they want to form a union, their employer can legally refuse to honor workers’ majority decision, demand an election and then hire high priced law firms and consultants to delay the election process for several months and even years.
  • In the current company-dominated system, workers who ask for a union election don’t get a chance to vote in 4 out of 10 cases. If given a free and fair chance, surveys consistently show that many more employees would choose union representation.
  • Economic success occurs when rising wages spur consumer spending. New research makes a solid case that passage of EFCA would deliver a “stimulus” package by raising wages that would help get our economy back on track and grow the middle class.
  • The Employee Free Choice Act would help employees secure a contract with their employer in a reasonable period of time, providing both sides with access to mediation and arbitration when an agreement cannot be reached.

So that the next time you stare down a skeptical colleague at the water cooler on this issue be ready with the “6 & 6″ above so you can convert one more believer to the ranks of the politically enlightened.

Good luck out there!

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Cheerleader-in-Chief for Corporate America

by Rob Kellogg on November 20, 2008

staff donohue 150x150 Cheerleader in Chief for Corporate America Last month, important news came out of the U.S. Department of Labor (DOL) which was overshadowed by presidential election coverage. The news involved two agency “interpretive bulletins” issued on October 17 intended to revise previous guidance for ERISA funds in two important areas; investing in economically targeted investments (Bulletin 94-1) and the exercise of shareholder rights, including proxy voting (Bulletin 94-2). However, instead of providing clarification these bulletins stirred a hornet’s nest of activity among pro-business groups (applauding the move) and shareholder advocates (deriding the rulings). While likely viewed as arcane by many outside financial regulatory circles, this announcement is important for two reasons.

The first is that proxy voting is the main method shareholders have to weigh in on the governance of public companies they own. The proxy vote at annual meetings allows pension funds and other investors to vote against the re-election of directors if there are excessive pay practices, possible conflicts of interest on the board of directors or shady accounting practices. So any change as to how pension trustees and other fiduciaries might interpret their responsibility as it relates to voting proxies is an important public policy matter in corporate America.

The second reason these recent DOL rulings are important is that these changes would seem to reflect the strong lobbying efforts by the Chamber of Commerce and other right-wing business groups. Since the Enron meltdown, the U.S. Chamber of Commerce has been on the defensive in trying to counterbalance – some would say rather unsuccessfully – the substantial progress made by investor advocates over the past few years. As a result of these efforts, today corporate executives and directors at public companies are now held to much higher standards of ethics and responsibility which has undoubtedly made corporate boards more accountable to investors and, therefore, more effective in the context of the broader economy. Clearly, the pro-business community and its cheerleader-in-chief Tom Donohue, the Chamber’s CEO since 1997, are hellbent on reversing this progress. It shouldn’t be a surprise that Mr. Donohue serves on the boards at Union Pacific and Sunrise Senior Living, two companies with their share of corporate governance problems.

According to insiders familiar with the matter, officials at the DOL are asserting that the new bulletins are primarily intended to clarify previously established interpretations. If this was indeed the goal, then the agency appears to have missed the mark. The jury is still out as to whether this guidance will dramatically alter the landscape for corporate governance activists in the coming proxy season and beyond. For example, the DOL does cite as an example a proposal requiring corporate directors or officers to disclose their political contributions. So while this new guidance may not impact traditional corporate governance resolutions, it could have an indirect influence on how fiduciaries vote on more “socially directed” items that appear on ballot.

Many are rightfully questioning the DOL’s motive in adopting these interpretive bulletins at the end of an outgoing Administration. Once Obama takes office in the new year, expect investors to seek an official clarification of the new rules. Depending of the outcome of that process, some institutional investors could even mount a legal challenge to reverse the recent rulings.

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