Remarks by Sen. Orrin G. Hatch before the U.S. Chamber of Commerce - "Labor Law Reform – Yesterday v. Today"

Date: May 2, 2007
Location: Washington, DC
Issues: Labor Unions

Remarks by Sen. Orrin G. Hatch before the U.S. Chamber of Commerce
"Labor Law Reform - Yesterday v. Today"

It's good to be back speaking to the U.S. Chamber's Labor Relations Committee. This morning I want to talk with you about the horribly-misnamed Employee Free Choice Act.

Well, here we go again. Many of you have heard Yogi Berra's expression: "It's like déjà vu all over again." I feel a little bit like that today when talking about the so-called Employee Free Choice Act since it is all too reminiscent of another bill you and I fought against, and stopped, back in 1977 and 1978, the Labor Law Reform Act. We thought back then that organized labor had a lot of nerve calling that bill a "reform" bill, but it is nothing like the nerve they have today in naming this bill employee free choice.

Maybe we should get the Federal Trade Commission to investigate organized labor's mislabeling of the bill because it certainly does not have anything to do with employee free choice. In fact, this bill limits employees' free choice and is all about giving union leaders tremendous new powers over employees.

I am sure that, in the coming weeks, the Senate will have a full and robust debate over the merits of the so-called Employee Free Choice Act. But, as we kick off the debate over whether or not to deny private ballots to workers deciding whether or not to unionize, it is my hope that we will be able to at least hold fast and true to the facts.

And there should be full debate on these facts. There is ample evidence to indicate that we should be wary of amending the National Labor Relations Act in a way that would upset the balance in national labor policy between labor and management, and employer and employee. We must not rely on slogans, anecdotal stories, and questionable secretly-commissioned and selective statistics about alleged unfair labor practices.

In many ways, what's past is prologue.

It was 30 years ago as a freshman senator when I was 98th in seniority that I was asked to lead the filibuster on what was then called the Labor Law Reform Bill. The bill was organized labor's number one legislative priority, just as the so-called Employee Free Choice Act is today. The bill came up in a heavily Democrat-controlled Congress and with a Democrat in the White House who had committed to signing the bill.

No one thought we could stop the bill. It was certainly the most monumental effort by organized labor since the 1935 Wagner Act - which they passed under F.D.R. - and the 1947 Taft-Hartley Act, which they failed to defeat by sustaining Truman's veto.

The Labor Law Reform Bill passed the House on October 6, 1977 by a vote of 257-163, with 33 Republicans supporting it. That was after extensive House hearings.

I note, by contrast, that the current so-called Employee Free Choice Act was passed within only one month of introduction and with only a single day of hearings by a vote of 241-185 with only 13 Republicans supporting the bill - so that's a better vote than we had in 1977.

Back then, in 1977 when the bill went to the Senate there were 62 Democrats and 38 Republicans, and the filibuster rule had just been changed to require only 60 votes for cloture to shut off debate, compared with the previous rule requiring 67 votes for cloture.

Back then, Jimmy Carter was in the White House and was sworn to sign the bill. In fact, his Administration had a big hand in drafting the final House bill, rejecting the AFL-CIO's draft bill which contained radical provisions such as card-check certification—too radical even for the Democratic Carter Administration to accept.

Well, of course today in 2007, the margin in the Senate between Republicans and Democrats is a little closer than it was in 1977, although today there really are no conservative Southern Democrats such as we had back then. In fact, our problem back then was holding the Northern Republicans: for example, the ranking Republican on the then Senate Labor and Human Resources Committee, Jake Javits of New York, was the original cosponsor of the Labor Law Reform Bill.

A brief reminder about the 1977-78 Labor Law Reform Bill is appropriate today, since today's so-called Employee Free Choice Act has the same commitment from organized labor - in fact it is their highest priority, the same objectives, similar provisions, perhaps similar union strategies, and hopefully the same outcome as that bill: we stopped the bill in the senate after a 19-day, 6-cloture vote filibuster.

Today's bill would guarantee successful union organizing in order to increase organized labor's declining percentage of union membership as a percentage of the private sector workforce. It would do so by putting union organizers in control of the timing of the representation process through exclusive use of card-check certification. And, it would remove the protections of an NLRB-protected private ballot.

The unions' incentive to increase union membership at all costs is even greater today. In 1976, unions represented 24.5 percent of the private sector workforce; today that number is 7.4 percent.

Back then, the Labor Law Reform Bill would have increased union organizing success by mandating quickie union elections which was a secret ballot election held within 15 days after a union petition was filed with the NLRB. That would have allowed union organizers to spring union elections on employers, effectively preventing employers from exercising their free speech rights guaranteed under the National Labor Relations Act to express their views lawfully - free of threats and intimidation - on union representation. More importantly, it would have denied workers the opportunity to make a fully informed choice.

Even the liberal labor correspondent for the New York Times, Abe Raskin, termed the bill "push-button unionism." I wonder what he might call today's bill — certainly not employee free choice.

Back then, we thought the quickie election provision was bad. Today's so-called Employee Free Choice Act would increase union membership not by quickie secret ballot elections, but by no secret ballot elections at all.

Instead, today's bill would replace secret ballot elections with card check certification. That is, the NLRB would certify a union as the exclusive bargaining representative through a forced card-check procedure, where union organizers pressure a majority of employees to sign union authorization cards. Once the union were certified by the NLRB, the existing "certification bar" doctrine would prevent the employees from challenging the union through an NLRB decertification or deauthorization election, thus again denying the employees a secret ballot vote for the certification year.

The inherent unreliability of union authorization cards is well known. Recently, for example, the NLRB forced the Service Employees' International Union Local 49 -- one of Oregon's most active labor groups -- to suspend many of its organizing efforts for six months, as part of a legal settlement with a Portland worker who accused the union of violating labor laws.

Local 49 had used a card-check agreement last fall to organize a group of 32 janitors working at silicon-wafer maker Siltronic Inc. in Portland as employees of Somers Building Maintenance. Ryan Canney, an employee of Somers, filed a complaint with the National Labor Relations Board alleging that the union relied on out-of-date cards and deceived and coerced employees into supporting unionization. And even further, last July, the union agreed to dissolve a recently organized bargaining unit at Kaiser Permanente to settle a similar complaint.

I'll tell you how bad card-check certification is. It was too radical for the Carter Administration.

Back in 1976 when the AFL-CIO drafted the Labor Law Reform Bill and presented it to the Carter Administration so that the bill could be introduced as the Administration's bill the unions proposed card check certification. The AFL-CIO proposed the same provision that is now in the so-called Employee Free Choice Act. But guess what? Even with total Democrat control in Congress and the White House, the Carter Administration rejected card check certification because it would unfairly deny workers a secret ballot election.

That's right: In 1976, denial of secret ballot elections was too radical for the Carter Administration to be included in the Labor Law Reform Bill. So the bill that was introduced, H.R. 77, did not contain card-check certification, but instead quickie elections.

I guess today there is no one in the Democratic leadership to give the leaders of organized labor a reality check that it's not good national labor policy and not good public policy to deny workers a secret ballot election. The polls certainly reflect that denying secret ballots in union representation elections is opposed overwhelmingly by the American public, including even by union members.

It is important to note that the bill has been cosponsored by the Democrats' leading presidential candidates: Sen. Clinton and Sen. Obama - who even endorsed it in one of his books, and by former Sen. Edwards. Given the campaign contributions from organized labor that should come as no great surprise.

In fact, it is also no surprise to me that Senator Kennedy is the Senate sponsor of this act. In preparing for our discussion this morning, I ran a quick review of the Senior Senator from Massachusetts' campaign donations and found that, surprise - surprise, nearly one-third of his direct financial contributions come from - the union movement. And this, of course, doesn't account for the millions of dollars that the unions give to the Democrats each year in get out the vote efforts and other in-kind campaign activities.

But I want to devote the balance of my remarks this morning focusing on a particularly pernicious provision of the bill: compulsory binding arbitration of initial union contracts.

What's most extraordinary about the so-called Employee Free Choice Act is that it would guarantee first union contracts.

Let me tell you, this provision is as bad as, if not worse than, card-check certification. I think i have opened a few eyes among my colleagues as to just how bad compulsory binding interest arbitration of first union contracts would be for this country. Perhaps they didn't understand it before because they were not familiar with labor law.

The so-called Employee Free Choice Act would guarantee union contracts where the government through a federally-appointed arbitrator would impose the wages, terms, and conditions of employment for two years if the parties fail to agree after 90 days of bargaining and 30 days of mediation.

Specifically, under the bill an employer must begin bargaining within 10 days of the union's demand. And, if the union and the employer cannot reach an agreement within 90 days, the contract terms must be submitted to the Federal Mediation and Conciliation Service (FMCS) for a 30-day period of mediation.

If FMCS is unable to mediate an agreement between the parties, then it must refer the initial contract to an FMCS arbitration panel with the authority to issue a decision that is binding on the employer and union for a two-year period.

Added to current law, the effect would be to deny employees the opportunity to approve, or ratify, the terms of the contact. And, they would be prevented by the National Labor Relations Board's "contract bar" doctrine from initiating a private ballot decertification election challenging the union's continuing majority status for the two year term of the contract.

Again, you should know how this provision differs from the 1977-78 Labor Law Reform Bill. Back then, the unions made the same complaints that there were delays in bargaining first contracts, and that employers failed to bargain in good faith so that the parties never executed an initial collective bargaining agreement. But back then the AFL-CIO did not have the nerve to propose compulsory arbitration.

Instead, the 1977-78 Labor Law Reform Bill proposed a so-called make whole remedy for such situations. If an employer were found by the National Labor Relations Board to have violated the act by failing to bargain in good faith, the remedy would be the imposition of wages equal to the Bureau of Labor Statistics wage index for large manufacturers for the period of the employer's failure to bargain. In short, it was a penalty against an employer, imposed only after adjudication by the NLRB that the employer had violated the act, and the penalty was limited to wage terms and only for the period of time the employer was in violation.

That provision was bad enough. But listen to what is now being proposed in this year's bill.

The so-called Employee Free Choice Act would require the federal government, through an arbitration panel named by the FMCS, to dictate the wages, benefits, and other terms and conditions of employment that private sector workers must receive, and private employers must provide, when a union and an employer cannot agree on a first contract after 90 days of collective bargaining and 30 days of mediation. After that, a federally-appointed arbitrator would impose the wages, benefits, and other terms and conditions for two years.

In other words, unlike the Labor Law Reform Bill, today's proposal would not simply impose wage terms as a make whole remedy for an employer's adjudicated violation of bad faith bargaining. Instead, the so-called Employee Free Choice Act would impose the entire contract -all terms and conditions of employment, such as wages, benefits, work rules, etc. -without any finding of an employer violation, but simply because the parties could not agree after 120 days of bargaining and mediation. In fact, under the so-called Employee Free Choice Act, unlike the 1977 bill, the employer need not have engaged in any misconduct, but simply that the first contract took longer than120 days to negotiate.

It is interesting to note that the so-called Employee Free Choice Act is silent on several key points of binding arbitration that would surely become very real and very harmful as a result of the bill being injected into current labor law. As I see it, these consequences are:

First, because the initial union contract imposed by the federal government through compulsory arbitration is binding on the parties, the employees who are subject to the government's imposed wages, benefits, and other terms and conditions of employment will have no right to a ratification vote to approve or reject the contract as they would under current law if the contract were freely negotiated without government interference. In other words, it doesn't matter what the employees think or want, the federal government has spoken and the contract is binding for two years like it or not.

Second, and of course, because the government-imposed contract is binding on the parties, the employees will not be allowed to strike for the duration of the contract. They may even lose their right to strike to enforce their contract demands.

And finally, since the government-imposed contract would be binding for two years, under the contract bar doctrine neither the employer nor the employees would be permitted to challenge the union's continuing majority status through an NLRB-supervised private ballot decertification or deauthorization election for the term of the contract. This will lead to an additional two-year denial of the right of workers to a private ballot election to express their views on the union.

To summarize, under compulsory binding interest arbitration, workers would be disenfranchised, losing their right to approve the contract which would govern their wages, benefits, and other terms and conditions of employment. And, they would lose their right to a private ballot election if they were dissatisfied with the union.

There's nothing free about the choices workers would have under the compulsory, binding interest arbitration of first contracts in the so-called Employee Free Choice Act.

What's more, there is no free collective bargaining under compulsory binding first contract interest arbitration. Even the most basic law school textbook, Elkouri's How Arbitration Works, teaches that: "compulsory arbitration is the antithesis of free collective bargaining."

The basic Elkouri text lists several reasons against compulsory arbitration: "Broadly stated, that: first, it is incompatible with free collective bargaining; second, it will not produce satisfactory solutions to disputes; third, it may involve great enforcement problems, and fourth, it will have damaging effects on the economic structure."

Elkouri further summarizes the arguments against compulsory arbitration as follows: "Compulsory arbitration means governmental - politically influenced - determination of wages and will inevitably lead to governmental regulation of prices, production, and profits; it threatens not only free collective bargaining, but also the free market and enterprise system."

Let me say one more time and more simply just so everyone understands how radical this provision really is. It's the federal government through a federally-appointed arbitrator dictating economic terms of private-sector employment.

It mandates that after a short period of bargaining --just 90 days -- between a union and an employer for an initial contract, the federal government will first step in to mediate for 30 days, and then the federal government through a federally-appointed arbitrator will set private sector wages, benefits and terms of employment binding for two years . . . enough time to ruin a company financially, or force it to relocate in order to compete.

Compulsory arbitration, as well as card-check certification, would be especially harmful for small businesses. Can you imagine a small business forced to bargain with a powerful union following certification, and having to reach an agreement with the union's experienced negotiators within 90 days before having the federal government step in for mediation and binding arbitration?

What does compulsory, binding arbitration have to do with anyone's free choice? I have heard that this provision has not met with universal support among unions. After all, it takes negotiations out of their hands. They will be assured a first contract, but on what terms?

Proponents of the bill will point to the fact that first contracts sometimes take a long time to negotiate, and in some instances the parties bargain to impasse giving employers the right to implement their final terms and the union the right to strike to enforce their contract demands.

But why is that? Many times it's because the unions have over-promised during the organizing process and then cannot convince the employer to agree to those terms. Also, by definition first contract negotiations involve parties who are bargaining together for the first time, and it takes longer as a result. Other times, the parties are truly at "impasse" on a particular issue.

Of course, the so-called Employee Free Choice Act removes the labor law concept of impasse. Under the proposed legislation, impasse is, in effect, defined as 90 days of bargaining, regardless of whether the parties actually are at impasse.

There is another extremely troubling question about the bill's compulsory interest arbitration provision. What is the scope of the government's authority, through a federally-appointed arbitrator, to set wages, benefits, and other terms and conditions of employment?

For example, I ask you, since nowhere does the bill clarify the issue, would the arbitrator have the authority to place an employer in a multiemployer pension plan? The union may be seeking that, and the employer may disagree, especially if the plan is under funded and at risk. Could the arbitrator force the employer to agree?

What about a contract provision not to contract out, or subcontract work? . . . Or not to open a new facility without applying the terms of the union contract? . . . Or to guarantee certain benefits? . . . And on and on.

For those unfamiliar with labor law, that is the distinction between grievance arbitration and interest arbitration.

In grievance arbitration the answers are to be found within the four corners of the pre-existing contract . . . The arbitrator's job is interpreting and applying what the parties have agreed to.

Interest arbitration, on the other hand, is an arbitrator's judgment, imposed on the parties in the absence of a contract, as to what in his opinion the parties should have agreed to or would have agreed to absent arbitration. Such determinations imposed on the parties will be affected by the arbitrator's own economic or social theories, often without the benefit or understanding of practical, competitive economic forces. It is for that reason that most employers shudder at the thought of an outside government arbitrator with the power of the company's economic life and death in the balance.

Workers should be justifiably concerned as well that they will lose control over the wages, benefits, and other terms and conditions of employment. Those terms will be imposed and binding for two years, without the workers ever having an opportunity to vote on approving those terms as they would if the contract were negotiated between the employer and the union.

Collective bargaining is not perfect and not all parties enter into negotiations in good faith, but the best private sector labor-management contracts are those that are negotiated through collective bargaining without outside assistance -- especially from the federal government.

I haven't even touched on the other provisions in this bill - which are equally bad. Let me again say to all who are listening in the most clear and unequivocal way that I can, there is absolutely no provision in the so-called Employee Free Choice Act that is acceptable.

Those on the other side of this debate have advanced - with fervor - several misleading arguments about the so-called Employee Free Choice Act. Let me just take a few more minutes to explore these fabrications.

As I said at the beginning of my remarks this morning - I look forward to the debate on the facts of this legislation. We should debate. Let each side be passionate. And of course we will disagree. But let us be respectful. Most importantly, let's make sure that this is an honest debate.

As we enter this debate we should not be fooled by the misinformation from the other side:

They claim that employers coerce employees to vote no on unionization . . . The truth is that in less than two percent of cases is it found that an employer has inappropriately interfered in a union organizing election.

They claim that under the current system unions are not able to win. . . The truth is that unions won 62% of the National Labor Relations Board elections in 2005 - the last year where a complete set of statistics exists.

They claim that the use of a card-check system is the best, most reliable and fair way of judging employees' true intentions of unionizing . . .The truth is that the use of a card-check system is an inherently unreliable indicator of an employee's true sentiments which lead me to a few other truths on their misleading reliability claim . . .The truth is that the card acquisition process is unregulated, meaning there is no check on potential undue influence when gathering cards; The truth is that we have found that intimidation, coercion, and pressure tactics can be - and usually are - used to obtain signatures; the truth is that often, bounties and financial incentives are paid to union organizers to obtain signatures on cards; the truth is that intentional deception and misrepresentation are often used by unions when obtaining cards; and the truth is that employees are often induced to sign cards by promises of higher pay, better benefits, and waivers of fees - of course the same employees are not made aware of the potential risks and costs of unionization.

And finally, they claim that American workers want to form unions using a card check system. . . The truth is that according to a recent poll 79% of Americans oppose the elimination of private ballots when voting in union organizing elections.

In closing, many of you know that President Bush has issued a Statement of Administration Policy that he would veto the so-called Employee Free Choice Act if it reached his desk. That should not make any of us complacent.

Even if a veto were necessary, Senate passage of the so-called Employee Free Choice Act would put members on record in future congresses as being against private ballot elections for workers in union representation decisions and in support of government-imposed wages, benefits, and other terms and conditions of employment through union contracts, where workers themselves will be denied a ratification vote. Is that where we want to be a year or two from now?

I, for one, do not think that we as a nation should head in that direction. We in the United States must resist any attempt to force unionization on the American workforce.

Republican Leader McConnell, Senator Enzi and I are drawing a line in the sand against the so-called Employee Free Choice Act, but we need your help in winning the war of public opinion, so we're that much stronger the next time liberals try to ramrod this down the American people's throat.

We need to get our friends on talk radio covering this. We need to convince the mainstream media what a bad idea this is. We need bloggers to ensure that every time this bill is talked about, the other side's deceptive arguments don't go unchecked. We need to support politicians who are on the right side of this issue. We need to persuade workers that union bosses are not looking out for their best interests, but for their own.

So, this year, we need to defeat the horribly misnamed so-called Employee Free Choice Act in a way to ensure that it will not be reintroduced in the next Congress. You'll excuse me from borrowing a line from The Godfather, but union bosses have made us all an offer we can refuse. And with your help that is exactly what we are going to do!

Thank you again for the invitation to speak.