Legislation to make it easier to unionize businesses is getting a warm and fuzzy reception from the Obama administration, but it’s driving small business groups and their unlikely ally — franchise organizations — to the boiling point.
The International Franchise Association (IFA), a leading trade group, has made defeat of the so-called union “card check” bill their top legislative priority. While many franchises are small businesses, franchisors like McDonald’s are major employers and often the nemesis of small, independently owned firms.
Franchisors have taken an acute interest in the bill because they believe unions are aiming directly at them. That’s because franchise businesses operate in more than 85 industries and employ more than 21 million workers — most of which are non-union. “Franchised businesses will be in the crosshairs if this legislation passes, because franchising is where the jobs are,” said David French, the IFA’s chief lobbyist.
Next to health care, the bill could be one of the biggest battles small business groups face in a Congress now dominated by Democrats, traditionally more sympathetic to labor unions. President Obama has already indicated he will sign the measure into law if Congress passes it.
At issue is the so-called “Employee Free Choice Act” (H.R. 1409/S. 560), introduced last week by U.S. Rep. George Miller, D-Calif., in the House and by Sens. Edward Kennedy, D-Mass., and Tom Harkin, D-Iowa, in the Senate. The House bill has 223 co-sponsors and the Senate measure has 40 co-sponsors.
Essentially, it would allow employees to choose between holding a secret election, or simply filling out an authorization (or “check”) card to decide if they want to unionize. Once a simple majority of employees agrees to form a union, the bill requires binding arbitration if no contract is reached within 120 days of the union’s certification. The bill would also impose dramatic new penalties on employers for violations of the National Labor Relations Act (NLRA).
Under current law, the company has the sole right to determine whether a secret ballot or check card is used for certification. Business owners overwhelmingly favor a secret ballot because they say it protects workers form intimidation by union organizers. Right now there also is no deadline for contract negotiations and no binding arbitration requirement.
Opponents note, so far, that the measure has 11 fewer House co-sponsors compared with 2007, when it was last introduced, and six fewer Senate co-sponsors. No Republican senators are currently signed on as co-sponsors. Nonetheless, the bill has a better than even chance of passing.
Because the measure easily cleared the House during the last congressional session, the real battle will take place in the Senate, where opponents have a chance to block the measure. The Senate allows filibusters, or endless debate, and 60 votes are needed to invoke “cloture,” which ends debate and clears the way for a floor vote.
Right now, Senate Democratic leaders say they are short of a cloture vote on the bill. It failed, 51-48, last time. But they are confident they can win the support they need and, ironically, they see small businesses as the key to their efforts. The plan is to exempt small firms from the legislation, effectively splitting the opposition.
The question is, what will constitute a “small business”? The National Labor Relations Board’s (NLRB) standards have been unchanged since 1959 and are “shockingly low,” according to the National Small Business Administration (NSBA).
Any non-retail firm that does $50,000 or more in business across state lines, or retail businesses with more than $500,000 in total annual volume are covered by the Board. On the other hand, the Small Business Administration defines any company with fewer than 500 employees or up to $34 million in annual sales as “small.”
So where the exemption will fall is anyone’s guess. But groups like the NSBA believe Big Labor is also targeting small firms. “The growing jurisdiction of NLRB over small businesses, coupled with [the bill’s] attempts to significantly reduce the employers’ role clearly indicates a new strategy by organized labor to target small employers,” it asserts.
For their part, union officials say the assertion is untrue. AFL-CIO special assistant to the president Stewart Acuff said in a recent interview with franchise Web site Blue MauMau that the principal targets are large corporations, especially those in cable television, telecommunications, manufacturing, transportation, distribution, and service sectors.
Union officials also note that employers now have the right to decertify a union if a majority of employees sign a check card. Employers are only required to use a secret ballot if 30 percent of employees request it.
While employers raise the specter of union intimidation, union officials say employer intimidation is just as serious. Union supporters have been known to be fired, threatened with termination, moved to different departments, or had their shifts changed. Right now there are no effective penalties against unethical employers, they note.
The decline of unions, they add, has led to 25 years of wage stagnation and eight years of falling pay, pushing the real median wage lower today than it was in the mid-’70s. In fact, unions argue that the bill will help small businesses because it will increase the spending power of the middle class.
But business groups say the measure will push families out of the middle class because employers will hire fewer workers. They cite a study released this month by the Law and Economics Consulting Group, a private Berkley, Calif., research firm. It states that the bill could lead to a 5 percent to 10 percent increase in unionization, which would trigger the loss of 2.3 million to 5.4 million jobs, and push the jobless rate up by as much as 3.5 percent.
One thing is certain: This measure will be one of the most hotly debated in Washington this year. The economy, however, should be the overriding concern. Will this help or hurt the nation’s effort to dig its way out of the recession? That’s the real question.