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Deflecting Union Activism

Instead of relying on traditional elections, unions are implementing innovative and aggressive "top-down" corporate campaigns aimed at increasing membership through external pressure. This increasing union activism requires new employer strategies.

Friday, February 1, 2008
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In 2008, if corporate America looks solely at union membership statistics combined with an increasing number of employer-friendly National Labor Relations Board decisions, some companies might conclude there is little reason to worry about unions.

The percentage of the U.S. workforce that is unionized is at its lowest point in 20 years.

However, organized labor has begun a steadfast march towards successful implementation of a new strategy for growth. This began mostly with the 2005 formation of Change to Win, a new labor federation made up of seven former AFL-CIO unions.

Today, the labor movement is utilizing a reinvigorated, employer-focused approach to organizing.

Instead of relying on traditional elections, unions are implementing innovative and aggressive "top down" corporate campaigns aimed at increasing membership through external pressure tactics including litigation, legislative initiatives, regulatory intervention, political tactics and public anti-company media campaigns.

In addition, unions are shifting dollars heavily toward organizing efforts. During its September 2007 convention, Change to Win announced that 75 percent of their $750 million budget would be used to fund organizing campaigns.

Union success is no longer based solely on persuading employees to vote for them, but rather on pressuring employers to agree to unionization.

Faced with an onslaught of union tactics designed to tarnish the employer's reputation, disrupt its operations, increase its costs, erode its customer base, create protracted litigation and otherwise destroy profitability, some employers may find that voluntarily recognizing the union or otherwise agreeing to remain neutral during a union drive is an attractive refuge.

However, many companies can and do fight back.

Employers can turn corporate campaign tactics back on the union by conducting "reverse" vulnerability audits to identify and exploit union weaknesses. Employers have also turned to litigation, raising various creative claims based on union-organizing tactics. Perhaps most importantly, employers can develop and implement strategies to head off corporate campaigns before they even begin.

What can an employer expect from "top-down" union campaign strategies? A few examples:

Litigation Pressure

The number of class-action lawsuits initiated on behalf of workers, but orchestrated by unions, is rapidly increasing.

Corporate campaign-related litigation has taken various forms, such as Fair Labor Standards Act collective actions, class-action litigation under the Employee Retirement Income Security Act and the Age Discrimination in Employment Act, antitrust litigation, securities litigation, challenges to plant relocations and closings under the Worker Adjustment and Retraining Notification Act or the National Labor Relations Act, and other union-sponsored legal action seeking to demonstrate a commitment to workers or attacking purported corporate excesses.

Corporate Pressure

By targeting key stakeholders in a company, such as employees, customers, clients, vendors, suppliers, creditors, institutional shareholders and boards of directors, the labor movement seeks to gain influence from the inside out.

Unions, as shareholders, may attempt to introduce proposals and resolutions designed to influence the election of union-friendly board members. Unions often contact companies that do business with an employer, urging them to place pressure on the company to help the union's cause.

Public Pressure

Unions wage war in the court of public opinion by attempting to elicit sympathy for workers and animosity toward the employer, often at well-known companies.

Union Web sites post news articles and press releases exposing the "greedy employer" as a "bad citizen of the community" by targeting issues such as wage rates for employees, disrespect for customers, product issues, pension mismanagement and corporate misdeeds.

Change to Win maintains an entire Web site devoted to its campaign to organize a major retailer, WakeUpWalMart.com.

Thanks to Internet technology, unions can present themselves as streamlined, well-run and efficient -- allowing them to shed the enduring image of labor unions as antiquated relics of a bygone era.

Unions have also engaged celebrity spokespersons to appear on behalf of targeted workers. For example, actor Ben Affleck recently attended a press conference with Boston Mayor Thomas Menino to endorse SEIU organizing efforts at Boston's teaching hospitals.

Strikes, Picketing and Civil Disobedience

The labor movement has expanded beyond traditional strikes and picketing by joining with community leaders, clergy and social-justice groups around a shared social or economic theme, such as poverty wages or lack of health-insurance coverage. The union may facilitate civil disobedience tactics, such as protests, hunger strikes and demonstrations. All of these activities are designed to maximize negative publicity and pressure on the targeted employer.

Political Pressure

Defeated in the Senate in 2007, the union-backed Employee Free Choice Act would have amended the National Labor Relations Act to: (1) require employers to recognize unions based on card checks alone; (2) impose mandatory mediation and arbitration in first contract negotiations; and (3) substantially increase penalties imposed on employers for labor-law violations during organizing campaigns and first-contract efforts.

Observers indicate the bill will likely make a comeback, particularly in light of the potential change in the composition of the legislature and a new president as a result of the 2008 elections.

Regulatory Pressure

By filing charges or "whistleblowing" claims with various regulatory agencies -- such as federal, state and local safety/health authorities, equal employment opportunity agencies, federal and state departments of labor and transportation, the Environmental Protection Agency, and the Food and Drug Administration -- labor organizations have defended workers while capitalizing on perceived safety, equal-employment, wage-hour and other workplace issues.

In addition, unions are actively petitioning for a changed NLRB rule that would require employers to recognize and bargain with a union that represents only a minority of their employees, if there is no union with majority status.

Unionized and partially unionized companies are feeling the effects of these targeted efforts as well. Competition among unions has increased as they individually vie for a decreasing number of organized workers. Raiding between competing unions is on the rise.

How can a company fight back? Employers are responding with both proactive and defensive strategic litigation approaches as well as other initiatives to reduce the corporate-campaign threat posed by the labor movement.

The first step in combating the "top-down" campaign is to develop a comprehensive strategic labor relations plan:

Prevent your company from becoming a target.

Each employer should develop an integrated labor-relations program that takes into account the emerging labor landscape.

An employer should assess its own corporate vulnerability and revise/implement "best practice" and "best response" programs that minimize the chance of becoming the subject of an extended union corporate campaign.

The employer should revisit its current labor-relations philosophy (whether the company is entirely unionized, union-free or somewhere in between) to determine what is appropriate in light of its current and future goals. A partially unionized employer should anticipate new union demands and negotiating goals as well as develop strategies to deal with tactics employed by the specific union, including a probable corporate campaign, work stoppages and living wage/health-insurance initiatives.

The following is a list of initiatives employers should undertake:

Optimize employee satisfaction.

Satisfied employees have less of a perceived need to join a union. Examining current employee attitudes and morale may help identify concerns that, if left unresolved, could escalate into significant issues in a corporate campaign.

Conduct a vulnerability assessment.

Know and correct company weaknesses. Ensure compliance with statutory and regulatory requirements. Understand potential bargaining units and adjust business operations and structure to address "community of interest" vulnerabilities. Conduct a review of company handbooks to ensure that policies are "state of the art" and lawful.

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Develop a response strategy.

Develop a strategy and related policy statements to deal with the following pressure points of a corporate campaign: political pressure/inquiries, media, labor pressure, client/customer inquiries, employee inquiries, shareholder/board pressure and vendor interventions. Understand and be able to articulate the basis for the company's labor/employee relations philosophy.

Prepare proactive and responsive communications.

Be prepared to authoritatively communicate with the board, all levels of management, employees, customers, the media, vendors, suppliers, lenders, political leaders and the general public.

Conduct management training.

Train in areas such as creating an issue-free environment, early recognition of employee unrest or union activity, ways to support employees' choice to remain union-free, lawful speech about unions, practical ways to comply with equal employment opportunity laws, wage-hour laws and best HR practices.

Conduct a "reverse" vulnerability assessment.

Analyze the union as an employer, a bargaining representative, a taxpayer, a shareholder, a trust-fund fiduciary and a plaintiff/defendant/respondent in a lawsuit or agency proceeding, and develop a counter-campaign, when necessary.

Consider litigation.

When unions go too far in corporate campaigns, creative litigation may be the appropriate response.

Potential claims against certain union conduct may include defamation, invasion of privacy, trade libel/injurious falsehood, intentional interference with contractual relations or prospective advantage, unfair competition, fraud/deceit, conspiracy, breach of fiduciary duties, civil RICO violations, malicious prosecution/abuse of process, and secondary boycott in violation of the National Labor Relations Act.

Employers are increasingly turning the litigation tables on organized labor. Tort actions claiming defamation, slander and libel are available to counter some of the "over the top" statements made by unions during corporate campaigns. Statements that damage a company's business character may be actionable.

For example, a union engaged in a labor dispute against a commercial laundry service sent a mass mailing to women of childbearing age in the community. The postcards suggested that a hospital and its affiliates failed to make certain that bed linens were free of "blood, feces, and harmful pathogens." A California state court awarded nearly $17.3 million in damages to the hospital for harm to its business and reputation.

In October 2007, Smithfield Foods filed a widely publicized lawsuit against the United Food and Commercial Workers Union under the federal RICO statute.

Smithfield claims it has been the target of a corporate campaign for several years and that the UFCW conspired to extort Smithfield's voluntary recognition of the union until it acquiesced or was run out of business.

In the same month, a defamation suit filed by Cintas Corp. was permitted to proceed to trial after the judge in the matter denied summary judgment to UNITE HERE, the defendant. Cintas claims that a press release published by the union contained false statements and caused Cintas' stock to drop, resulting in the loss of as much as $300 million in a matter of minutes.

In today's world, executives need to be vigilant to ensure their organizations continuously strive to be issue-free.

From a preventive labor-relations standpoint, companies must strive to be an "employer of choice." Most organizations develop positive human resource programs. However, even companies with "best practices" need to review their strategies and approaches on a regular basis in light of the changing labor landscape.

Corporate campaigns can have an impact on shareholder value, public reputation and many other key barometers of company success. Being proactive and preventive is important in navigating through increasing union activism.

Lynn C. Outwater is managing partner of Jackson Lewis's Pittsburgh office. She has been designated as a "Super Lawyer" in the Labor and Employment Law Practice Area in Pennsylvania for the last three years and currently serves on the SHRM Foundation Board of Directors. Outwater frequently lectures on labor and employment law topics for national and regional employer associations.

 

Denise R. Brossman joined Jackson Lewis as an associate in the Pittsburgh office in October 2007. Prior to that, she was an associate with Littler Mendelson in Pittsburgh, where she represented management exclusively in all aspects of labor and employment law.

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