How David Beats Goliath and Why Young HR Types Should Seek to Be "Socially Horrifying"...
When CEOs Order Plastic Surgery for Non-Employees (on the Company Dime)...

Lies, Damn Lies and the EFCA - The Stink of Compulsory Arbitration...

Most of the time I've spent talking about the Employee Free Choice Act (EFCA) has been dedicated to the concept of card check.  Today, let's talk about another poisonous, yet less obvious, portion of the EFCA - compulsory arbitration.

Compulsory arbitration as outlined in the EFCA would mean that if the company and union couldn't agreeSopranos_outside_7a_h2 to contract after card check certified the union, a federal arbitrator would come in and make the determinations regarding the specifics of the union contract.  Under current law, companies have the right to stay at the bargaining table as long as they need to as long as they are bargaining in good faith. 

The spin from the pro-EFCA crowd is that companies simply stall at the bargaining table as a method to delay good faith bargaining and to negotiate favorable terms from the union.  The reality is that there's always a balance, and the union often stalls as well to get the best terms possible.

More on the balance that exists at the table and why compulsory arbitration is a bad idea from George McGovern at the WSJ (Democrat, former senator from South Dakota and the 1972 Democratic presidential candidate):

"In a contract negotiation, each party typically perceives the other as too demanding. But no one loses their right to contract willingly or suffers being forced to agree to anything. Employees can strike if they feel that they have been dealt with unfairly, but it is a costly option. Employers are free to reject labor demands they find to be too difficult to accept, but running a business without experienced employees is itself difficult. Both sides have an incentive to press their demands, but they also have compelling reasons not to press their demands too far. EFCA would disrupt that balance by enabling government-appointed lawyers to decide what they believe is fair or reasonable.

A federally appointed arbitrator cannot be expected to understand the nuances specific to each business dispute, the competitive market position of the business, or the plethora of other factors unique to each case. Yet fundamental decisions on wages and benefit costs, rules for promotions, or even rules for exiting an unprofitable line of business could fall to federal arbitrators under EFCA.

Many labor contracts can run over 100 pages with their requirements of each party. Compulsory arbitration is, in one sense, government dictating to employees what they will win or lose in the deal, with no opportunity to approve the "agreement." Why should employees pay union dues to get such a contract?

My perspective on the so-called Employee Free Choice Act is informed by life experience. After leaving the Senate in 1981, I spent some time running a hotel. It was an eye-opening introduction to something most business operators are all-too familiar with -- the difficulty of controlling costs and setting prices in a weak economy. Despite my trust in government, I would have been alarmed by an outsider taking control of basic management decisions that determine success or failure in a business where I had invested my life savings.

"Despite my trust in government, I would have been alarmed by an outsider taking control of basic management decisions that determine success or failure in a business where I had invested my life savings".

Enough said...


Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)