Employee Relations. Cecelia Fanelli

Transcription

1 VOL. 34, NO. 3 WINTER 2008 Employee Relations L A W J O U R N A L The Employee Free Choice Act: What Hotel Owners and Managers Need to Know About Legislation That Could Alter Labor Relations in the Hotel Industry Cecelia Fanelli The author explains the implications for hotel owners and managers of the proposed Employee Free Choice Act which, if adopted, could alter the balance of labor relations in the hotel industry. If it becomes law next year, the Employee Free Choice Act (EFCA) could permanently change the way that unionization campaigns are waged in the United States and alter the balance of labor relations in the hotel industry. By permitting unionization through the collection of signed union cards, rather than through a National Labor Relations Board (NLRB)-supervised election, the EFCA would make it easier for unions to gain certification than under current law. It would also require employers to negotiate with newly certified unions immediately and mandate binding arbitration if an initial collective bargaining agreement is not reached within a specified time. Penalties on employers found to have discriminated against employees for engaging in pro-union activities would also increase. Hotel owners and managers should be aware of the implications of this important piece of legislation. Cecelia L. Fanelli heads Stroock & Stroock & Lavan LLP s Hospitality Industry Practice Group, representing owners, investors, managers, lenders, and franchisors and franchisees. Jonathan D. Twombly, an attorney with the firm, assisted Ms. Fanelli in the preparation of this article. Ms. Fanelli can be reached at cfanelli@stroock.com.

2 THREE MAJOR FEATURES OF THE EFCA FOR UNFAIR LABOR PRACTICES DURING UNIONIZATION DRIVES Each of the EFCA s three main features card check, mandatory arbitration, and enhanced penalties for employers have the potential to alter in significant ways how labor relations are conducted in the hotel industry. Card Check and the Potential Demise of Secret Ballot Elections To obtain certification as the exclusive collective bargaining representative of a group of employees, the National Labor Relations Act (NLRA) requires that a union first file a petition with the NLRB supported by proof, often in the form of authorization cards, that at least 30 percent of the employees in the proposed bargaining unit support the union. If the NLRB is satisfied with the proof, the NLRB supervises a secret ballot election by the employees. If the union wins a majority of the votes cast in the election, the NRLB certifies it as the bargaining unit s exclusive representative, and the employer must bargain with the union over wages, benefits, etc. While not eliminating NRLB elections as a means of obtaining certification, the EFCA would alter the terrain by permitting unions to skip the election step under certain circumstances. Under the EFCA, if the NLRB found that a majority of the employees in a unit appropriate for bargaining has signed valid authorizations designating the individual or labor organization specified in the petition as their bargaining representative... the Board shall not direct an election but shall certify the individual or labor organization as the [employee s exclusive bargaining] representative The EFCA directs the NLRB to develop procedures for the validation of the employees signed authorization cards. Thus, if an NLRB-conducted card check concluded that a union has presented valid authorization cards from a majority of the proposed bargaining unit, the union would be certified without the step of an election. This feature of the EFCA undoubtedly would make certification easier for unions. Hotels belonging to large chains or hotel associations (typically in major cities) that already have neutrality agreements with hotel unions that permit card-check in place of a formal election might not experience a drastic change from current practices. However, passage of the EFCA could result in the application of the card-check procedure to small chains and independent operators who previously had flown beneath the unions radars, as well as hotels operating in traditionally non-union parts of the United States. Owners and operators who have previously had little or no interaction with unions may need to rethink their unionization strategies. Vol. 34, No. 3, Winter Employee Relations Law Journal

3 Mandatory Arbitration Another feature of the proposed legislation is mandatory arbitration when an employer and a newly certified union cannot agree on an initial labor agreement. Currently, the NLRA only requires an employer to bargain with a certified union at reasonable times and places and in good faith. Nothing requires the parties to reach an agreement within a certain time frame, or at all. The EFCA, however, would bring about a significant change in the law in this area as well. Under the bill, an employer must commence bargaining with a newly certified union within ten days after receiving a written request to engage in bargaining. 2 If the parties have not reached a labor agreement within 90 days of the commencement of bargaining, either party may submit the dispute to the Federal Mediation and Conciliation Service. 3 If mediation does not result in an agreement within 30 days after the request for mediation is made, the dispute is submitted to arbitration, and the arbitrator s decision will be binding on the parties for a period of two years. 4 This procedure will have the practical effect of making an initial collective bargaining agreement inevitable within the first few months after a new union is certified through a cardcheck process. Moreover, that bargaining agreement could be the result of an arbitrator s decision rather than collective bargaining. Enhanced Penalties During Unionization Drives The EFCA s final feature increases the penalties on employers found to have discriminated against or to have discharged employees based on their support for unionization. Penalties under the bill would include back pay plus 2 times that amount as liquidated damages. 5 In addition, employers found to have willfully or repeatedly violated the statute would be liable for a civil penalty of up to $20,000 for each separate violation. 6 If the bill becomes law, hotel employers will need to assess how they respond to union organization drives and ensure that they do not cross the line from legal opposition activities to unfair labor practices. A WORD ON VOLUNTARY CARD-CHECK NEUTRALITY AGREEMENTS Even if the EFCA does not become law, many chains and hotel associations have voluntarily become parties to so-called neutrality agreements. The usual rationale for signing a neutrality agreement with a union is to buy labor peace for the hotel, owner, or operator. 7 Typically, such agreements provide for a card-check procedure in place of a traditional NLRB-supervised election. They also generally require an arbitrator to oversee the card-check, as well as any employment grievances that may arise. However, under a neutrality agreement, the union gains an added advantage that it would not enjoy even under the Employee Relations Law Journal 3 Vol. 34, No. 3, Winter 2008

4 proposed EFCA: the employer must remain neutral during a card collection drive. In other words, the employer may not engage in lawful union avoidance activities to try to prevent a majority of employees from signing authorization cards and invoking the card-check procedure in the first place. One study concludes that unionization campaigns under neutrality agreements are successful nearly 80 percent of the time, while campaigns that rely on NLRB-supervised secret ballot elections have a success rate of less than 50 percent, 8 leading scholars to comment that neutrality agreements radically change the landscape of union organizing. 9 Given the advantages of neutrality agreements in fostering unionization, it is not surprising that hotel unions have increasingly made neutrality agreements a major part of their overall strategy in recent years. THE PRACTICAL IMPLICATIONS OF NEUTRALITY AGREEMENTS An owner who has not signed a neutrality agreement can still become bound by its provisions under certain circumstances. For example, when the operator has signed such an agreement, a non-signing owner can sometimes be bound through the owner s agency relationship. Indeed, even where the owner has stripped the operator of the authority to bind the owner to such an agreement, the owner could still be bound by the operator s apparent authority in markets in which the custom and practice holds that an operator can bind an owner to such an agreement. In such cases, a third party ( i.e., the union) has the right to assume that the agent possesses the requisite authority to bind the owner in the absence of information that should reasonably lead the third party to question whether reliance on the usual custom and practice is appropriate, such as the owner s communication directly to the union that the operator has no authority to bind the owner to a neutrality agreement. 10 An owner could also be bound to a neutrality agreement if the owner and operator are deemed to be joint employers. Under New York law, a non-signatory to a collective bargaining agreement can be required to submit a labor dispute to an arbitrator if the non-signatory is determined to be a joint employer with a signatory to the agreement. Whether or not a non-signatory is a joint employer will depend on a court s analysis of whether or not the non-signatory exercises control in five areas: 1. Hiring and firing of employees; 2. Employee discipline; 3. Pay, insurance, and record-keeping; 4. Supervision of employees; and 5. Participation in the collective bargaining process. Vol. 34, No. 3, Winter Employee Relations Law Journal

5 The exercise of control in all five areas is not necessary for a finding of joint employment. 11 Thus, before purchasing an existing hotel or executing a management agreement with an operator, a hotel owner should determine whether unionization of the hotel s employees suits its goals and interests. Hotel owners should conduct thorough due diligence of the union obligations of any hotel they purchase and any operator or franchisor with whom they decide to do business, in order to learn what obligations they might incur and how these obligations could affect the hotel s bottom line. An owner who does not wish to be bound to a neutrality agreement or collective bargaining agreement should insist on express language in the management agreement prohibiting the operator from negotiating or entering such agreements without the owner s written consent. Realistically, however, chains and non-branded management companies may not agree to such contractual terms, particularly where they are concerned about maintaining their relationships with the hotel unions. In conclusion, enactment of the EFCA could dramatically alter the way that hotel owners and operators deal with unions. Yet, whether or not the EFCA becomes law in the next term of Congress, card-check and neutrality have become permanent features on the hotel labor relations landscape because hotel unions are increasingly making them part of the price for labor peace. Owners must decide for themselves whether the price is worth it. If an owner decides that the cost is too steep, it should protect itself through thorough due diligence regarding a hotel or manager s union obligations and express contractual language in the management agreement imposing definite limits on a manager s ability to enter into a neutrality or collective bargaining agreement on behalf of or affecting the hotel. Likewise, management companies should assess the language of management agreements to ensure that their union relationships are evident. NOTES 1. H.R. 800 EH, 2(a)(6). 2. H.R. 800 EH, Id. 4. Id. 5. H.R. 800 EH, Id. 7. It has been observed that [p]erhaps the greatest bargaining chip that unions have to offer an employer in exchange for neutrality is labor peace. David Sherwyn and Zev J. Eigen, Card-checks and Neutrality Agreements: How Unions Staged a Comeback in 2006, Cornell Hospitality Report, vol. 7, no. 6 (April 2007), p. 10. Employee Relations Law Journal 5 Vol. 34, No. 3, Winter 2008

6 8. Easton and Kriesky, Union Organizing under Neutrality and Card Check Agreements, 55 Industrial & Labor Relations Review, 42 (Oct. 2001). 9. Sherwyn and Eigen, p See Property Advisory Grp., Inc. v. Bevona, 718 F. Supp. 209 (S.D.N.Y. 1989). 11. See Longstreet Assocs., L.P. v. Bevona, 16 F. Supp. 2d 290, 296 (S.D.N.Y. 1998). Reprinted from Employee Relations Law Journal Winter 2008, Volume 34, Number 3, pages 72-76, with permission from Aspen Publishers, Inc., Wolters Kluwer Law & Business, New York, NY, , Vol. 34, No. 3, Winter Employee Relations Law Journal