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The Split in Organized Labor: What Does It Mean for Employers?

By Philip B. Rosen
  • July 27, 2005

Employers should expect aggressive organizing and bargaining from competing camps of labor unions, now that the Change to Win Coalition has established itself as a force separate from the AFL-CIO within the labor movement.

In what was to be a celebration of the 50th Anniversary of the merger between the AFL and CIO, long-simmering disagreements and declining membership reached a boiling point during the lead up to the AFL-CIO's convention in July, culminating in the announcement at the start by the Service Employees International Union and the International Brotherhood of Teamsters that they were leaving the AFL-CIO.  Other members of the new Change to Win Coalition (the powerful dissident faction that boycotted the AFL-CIO convention and has led the charge to change the direction of the labor movement), such as UNITE HERE and the United Food and Commercial Workers, also threatened to leave (the UFCW later announced its withdrawal).  Dramatic changes in the labor movement's organization and focus are occurring.  The focus is shifting to a heavy emphasis on results – new initiatives to increase union membership significantly and build worker bargaining power. 

What does it mean for employers?  There is an immediate impact – whether an organization is entirely unionized, entirely union-free or somewhere in between.  The widely reported dispute within organized labor – and the steady decline in the percentage of unionized workers – should not lull employers into thinking this is a death knell for unions.  In fact, the most likely results of the current rift will be an increase in union organizing activity and more aggressive bargaining during contract negotiations by both the AFL-CIO and the Change to Win Coalition. 

From a preventive standpoint, employers cannot afford to wait.  Review and revise corporate labor relations strategies and related programs now to reflect the changing times.  Corporate responsibility requires employers to insure that their house is in order.  It is not enough to simply be an "employer of choice" with excellent programs for your workers.  Organizations must work hard every day to insure that their programs and practices keep up with new developments.  More on preventive steps later in this update.

By way of background, the Change to Win Coalition was formed by some of the most powerful AFL-CIO affiliates – the SEIU, Teamsters, UNITE HERE, UFCW, Laborers and United Farm Workers – as well as the Carpenters (a non-affiliate).  At a news conference on July 25th (the opening day of the AFL-CIO convention), the SEIU and the Teamsters officially announced their withdrawal from the AFL-CIO.  The day after the convention ended, the UFCW announced it would sever ties with the AFL-CIO.  To date, UNITE HERE has not announced its departure, although it did boycott the convention.   

The departures from the AFL-CIO of the SEIU, the Teamsters, and the UFCW, coupled with the convention boycott by UNITE HERE, are some of the biggest steps by individual unions in the AFL-CIO's 50-year history.  Within the ranks, AFL-CIO President John Sweeney and AFL-CIO unions supporting him are highly critical of the Change to Win Coalition's actions, fearing that the defections will weaken the labor movement at a time when it most needs solidarity and strength. 

The financial stakes are high; the dissident unions have represented one-third of the AFL-CIO's dues-paying membership.  Based on the SEIU/Teamster/UFCW withdrawal alone, the AFL-CIO will lose approximately $26 million in annual revenue.  Moreover, the four unions boycotting the convention may not pay the more than $6 million in back dues they owe to the Federation.  These financial resources will now presumably be available to the withdrawing unions.  From an employer's perspective, the two competing groups each have significant resources, which now will be even more focused on their stated priority -- organizing more workers.      

There have been core disagreements among the warring factions about priorities and the allocation of resources, but both agree on the need to increase membership.  As the convention neared, each group discussed the importance of industry-wide organizing and bargaining, coordinated campaigns against employers and industries, and other aggressive approaches.  Indeed, the Coalition has been spearheading a fundamental change in union structure by consolidating unions along industry and sector lines for better focus and leverage in organizing and bargaining.  With an eye to funding the ambitious organizing strategy, the Coalition had proposed that half of all AFL-CIO dues paid by individual unions be rebated to unions with a strategic plan and commitment to organize their core industries. 

Meanwhile, the AFL-CIO passed a resolution authorizing the expenditure of more than $22 million in organizing funds for union locals and training for 100,000 union stewards.  AFL-CIO convention delegates also authorized holding a special meeting to discuss how to handle the defections, including the lost dues contributions from the two Coalition members that have withdrawn from the Federation so far. 

Whether organized labor reunites or breaks apart, the commitment from both the AFL-CIO and the Coalition is to organize current non-union workers and raise conditions for unionized employees.  It remains to be seen whether either or both groups can deliver on their programs.  However, assuming the rift remains, the Coalition and AFL-CIO unions will be competing for new members and aggressively seeking to produce significant results in negotiations to prove that their approach is better.  The competing unions will each target particular industries, regions and employers.  This initiative has already begun. 

Unions are now mounting "corporate campaigns"; seeking "neutrality" agreements; embracing new demographics; using websites, blogs and other new technology; linking political action and social movements to organizing; seeking coordinated contract expiration dates; and pushing for national/regional and industry-specific bargaining.  Employers must adjust to this new environment with approaches that work for both management and employees.

The frequency of corporate campaigns – which have been used with alarming results against employers in health care, telecommunications, hospitality, textile manufacturing, and other industries, and are widely considered to be among the most damaging and hard to defend – will rise.  Neutrality agreements waiving rights protected by the National Labor Relations Act (such as an employer's right to lawfully communicate with employees about the pros/cons of unionization and an employee's right to vote in a secret ballot election process) have become more prevalent.  Unions pressure employers -- through corporate campaigns and contract negotiations -- to agree to neutrality.  Even when employees are not interested in unionizing, a corporate campaign can be costly and damaging if not handled correctly.

With the possibility that employers will be targeted by two separate and determined entities, now is the time to assess corporate employer strategies and programs.  What is the labor relations approach that is right for the organization and its employees?  Do current policies and practices reflect that approach?  What changes are appropriate in light of anticipated issues?  Employers should (among other things):

  1. consider these new labor developments, their possible impact on the organization (whether it is unionized, union-free or somewhere in between), and the appropriate labor strategy for future labor relations (including union-free and/or bargaining approaches) in their company and industry;
  2. conduct a preventive audit to assess current human resources policies/practices in light of current legal and practical issues designed to uncover/correct any corporate vulnerabilities; and
  3. train management how lawfully to deal with union organizing (if union-free) and contract administration (if unionized). 

Strategies and "best practices" should be developed beforehand.  For example, once completed, the audit will provide an organization with a blueprint for developing a legal approach to preventing and defending a corporate or more traditional union organizing campaign.  It also can help an organization develop an integrated company-wide labor relations strategy that takes into account both unionized and union-free workers.  Similarly, where vulnerabilities are uncovered, now is the time to train managers and supervisors on the importance of remaining "issue free" and "union free."  Appropriate alternative dispute resolution mechanisms, workplace conduct policies, communications programs and more should be considered. 

With regard to training, it is critical that individuals in supervisory positions know  -- before an issue arises -- that management has free speech rights to communicate about corporate campaigns, the organization's philosophy on unionization, the reasons why most employees have not joined unions, "best practices" and other related information.   The management team must know how best to respond to a union request that the company sign a neutrality agreement.  Supervisors must know how to spot the early warning signs of union activity and how lawfully to respond to employee questions about union authorization cards, questions about the new initiatives by the AFL-CIO and Change to Win Coalition, its effect on them, and related topics.  Training should describe the elements of a corporate campaign, who and what are likely targets, and what the organization's strategy/approach should be.  The time is now for employers to create an "issue free" environment which is best for both management and employees – before the reinvigorated labor movement comes knocking. 

Jackson Lewis has been a leader in defending management rights since its inception in 1958.  Its foundation remains the counsel and representation of employers in developing and maintaining positive employment relations.

©2005 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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