New Report by Legal Scholar Argues Card Check/Arbitration Proposal Is Unconstitutional

richard-epsteinThe Employee Free Choice Act (EFCA), as Union Corruption Update has argued on several occasions, is a misnamed piece of federal legislation. Under the guise of expanding a worker’s choice of whether or not to join a union, it would remove that choice, intimidating employers in the process. The proposal is based on unsound economics. But it’s likely also based on unsound constitutional law. That’s the view expressed in a new report authored by a major legal observer in public policy issues, the University of Chicago’s Richard Epstein (in photo). As congressional Democrats, with the full support of the Obama administration, are poised to repeal existing safeguards against unchecked union power, Epstein’s analysis is indispensable reading.

Epstein, a senior fellow at Stanford University’s Hoover Institution as well as a longtime faculty member at University of Chicago Law School, recently has come out with a monograph, “The Case against the Employee Free Choice Act,” released by a hotel industry-supported nonprofit group, the Alliance to Save Main Street Jobs. An abbreviated version appears in the current (Spring) issue of the Cato Institute quarterly, Regulation. He argues that the measure, which stalled last June in the face of a Republican filibuster, represents a dramatic departure from the principles of the National Labor Relations Act (NLRA, or the Wagner Act) rather than an extension of them. EFCA intrudes into the sanctity of employer-employee contracts, and to the clear benefit of unions in their organizing and collective bargaining. Where NLRA merely requires an employer to bargain in good faith, Epstein notes, EFCA would force the employer “to accept a result that could create a disadvantageous contract, including one that could lead to bankruptcy.”

This is not an unreasonable summation, given that the bill’s ulterior motive is to boost union membership. The Employee Free Choice Act, spearheaded by Sens. Edward Kennedy, D-Mass., and Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., has two main features. First, it requires an employer to recognize a union as a sole bargaining agent if its organizers at a given work site convince 50 percent of workers there to sign a card indicating their willingness to join. If the union meets that threshold – and organizers have time-tested high-pressure tactics to get there – the employer would not have recourse to request a National Labor Relations Board-supervised secret-ballot election to decide the matter. Second, it creates a compulsory arbitration process whose rapid-fire timetable would work to the union’s advantage. It would give the employer a scant 10 days to get ready for negotiations, and would provide for 90 days of bargaining followed by 30 days of mediation. If no agreement can be reached, a federal arbitration panel would resolve the impasse. This committee would face no time deadlines or duty to issue an opinion. What’s more, its decision would not be subject to appeal.

Richard Epstein sees EFCA as ushering in a third stage in the evolution of American labor law. The first stage was characterized by common law principles governing a free market. The second, which began with partial measures such as the Railway Labor Act (1926), the Norris-LaGuardia Act (1932) and the National Industrial Recovery Act (1933), and became fully realized with the National Labor Relations Act (1935), created the obligation to bargain in good faith, but left intact the right of each party to refuse acceptance of particular terms. Major modifications such as the Taft-Hartley Act (1947) and the Landrum-Griffin Act (1959) did not change the basic rules of the game. But EFCA would. In Epstein’s words, the measure would create “a lethal one-two punch.” Its combination of forced recognition of successful card checks and binding arbitration would make moot union democracy in this country.

EFCA is despotic, argues the author, because it makes hash of constitutional protections of free speech and due process. Its card-check section would impose a neutrality agreement on any employer whose workplace is the site of a card check campaign. Management, in other words, may not publicly communicate, verbally or in writing, opposition. Epstein writes: “I see no justification whatsoever for a system that silences both the employer and dissident workers in order to facilitate union organization drives that could easily result in trapping workers who have not had the opportunity to express their preferences.” Any number of Supreme Court First Amendment cases (e.g., Abood v. Detroit Board of Education, Ellis v. Railway Clerks, Communications Workers of America v. Beck, Airline Pilots v. Miller), he notes, protect dissident employees from having to contribute to the political activities of unions. Forcing workers to not only contribute dues but to accept a binding settlement with no opposing input is incompatible with the idea of freedom of association.

The forced-arbitration portion of EFCA is on even shakier ground, writes Epstein. The Federal Mediation and Conciliation Service would be granted virtually unlimited authority, and without review. Moreover, it would invite a highly politicized selection of arbitrators. NLRA, despite its flaws, at least allows dissenting participants the right of exit. Under EFCA, however, a labor organization has a right to engage in a taking, the equivalent of placing an enforceable lien on an employer’s assets. Epstein writes:

The current NLRA regime limits the right of an employer to walk away from negotiations with the union, but does not force it to accept any particular contract that it finds unacceptable…That level of employer self-protection is what saves the NLRA from constitutional invalidation on grounds of simple expropriation…In stark contrast, the EFCA, by imposing a mandatory first-contract arbitration scheme, forces the employer to accept a deal that is in no part of its making and, in so doing, to open its entire business (and trade secrets) to the union.

Union leaders appear far less interested in fealty to the Constitution than to ramping up membership. It’s understandable from their view. Back in the mid 50s, union members made up around 35 percent of the U.S. non-farm private-sector work force. In the last several years, however, the overall private-sector figure has been hovering around 7.5 percent. Labor officials believe that NLRA and the National Labor Relations Board are no longer capable of protecting a worker’s right to form or join a union. “The NLRB election process is broken,” declared AFL-CIO General Counsel Nancy Schiffer in House testimony in February 2007 in support of EFCA. “Only by relying on rhetoric and ignoring the reality of what workers face when they want a union for collective bargaining, can it be argued otherwise.” Yet in support of this position, she cites a highly suspect interpretation of an NLRB annual report indicating 31,358 workers received back pay due to employer denial of their rights. Employer retaliation against workers who organize or join a union has been illegal under NLRA for nearly 75 years. That employers on occasion break the law doesn’t require superseding it with a law that severely limits procedural and substantive freedom to employers and to workers not wishing to join a union.

Currently, the Employee Free Choice Act is at a political impasse. It takes a minimum of 60 votes to invoke cloture in a Senate debate – that is, to break a filibuster. The last showdown nearly a year ago was a highly divisive, strictly party-line affair. Every Democrat supported the measure; every Republican opposed it. There were enough Republicans to launch a successful filibuster a year ago. That might not be true this time around. Arlen Specter, D-Pa., announced his opposition this March, but since then has switched his party membership from the GOP to the Democrats. As a loyalty test, the Democrats may instruct him to change his vote. Even if he stands firm, the two Independents (Joe Lieberman and Bernie Sanders) support the bill. And if far-Leftist Al Franken, the apparent winner against incumbent Norm Coleman in last year’s disputed Minnesota U.S. Senate race, is seated, the Democrats would have enough votes to close off debate anyway.

If the measure for some reason doesn’t pass, Democrats are prepared to go with options somewhat less restrictive of the rights of employers and non-joining workers, but still preemptive of NLRA’s workplace democracy framework. Sen. Dianne Feinstein, D-Calif., for example, is pushing a proposal to allow workers to sign cards in lieu of organizer presence and mail them to the NLRB; majority approval would mean automatic union recognition. President Obama already has stated he will sign the EFCA. It’s ironic that for a dozen years prior to his election as a U.S. senator in 2004, Obama taught constitutional law at University of Chicago Law School. If he wants a real lesson in how to proceed with respect to the Employee Free Choice Act, he should give his former colleague, Richard Epstein, a call sometime soon. (Regulation, Spring 2009; other sources).