The Cold Facts Dealers Need to Know about Unions - Management
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The Cold Facts Dealers Need to Know about Unions

By Joanne Costin

Article Date: 09-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

Pending labor legislation calls for dealers to prepare for change.

New legislation supported by organized labor and most Democrats threatens to significantly change American labor law. “If passed, the Employee Free Choice Act (EFCA) will have a staggering impact on every company’s labor relations and employee relations program,” said Martin F. Payson, senior labor partner with Jackson Lewis, a leading labor law firm that provides counsel for the U.S. Chamber of Commerce. As proposed, EFCA would allow a card check campaign as one way for employees to decide if they want to be represented by a union. Currently, employees who sign authorization cards to demonstrate tentative union support can still vote against a union when they cast a private ballot in an election.On March 1, 2007, EFCA passed the House by a vote of 241 to 185. The law did not come to a vote in the Senate because it did not have enough votes to defeat a filibuster. “Everything hinges on what happens in the Senate,” said Payson. According to Christian A. Klein, AED’s vice president of government affairs, the bill currently has 47 Senate supporters. That’s four short of the number need to pass the Senate and 13 short of the number needed to break a Republican filibuster. With 23 of 33 Senate seats up for reelection belonging to Republicans, EFCA is more than just a possibility for businesses in 2009.“The Bush administration also has a long-standing veto threat against the bill,” Klein said. “If Obama wins the White House, that bulwark will be gone.” He is a cosponsor of EFCA and his presidential campaign Web site says that “Obama will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act.”Unions are putting their money behind the EFCA campaign with expected contributions of more than $300 million to Democratic candidates in 2008. They are threatening to withhold endorsements and back their opponents in primaries if legislators don’t commit to passing the law. As important as EFCA is to the long-term outlook for business, Payson believes that a slowing economy has kept the issue low on management’s priority list. And among voters, awareness of EFCA is virtually nonexistent.There are three important reasons why the U.S. Chamber of Commerce and AED oppose the EFCA. First of all, EFCA will do away with National Labor Relations Board (NLRB) supervised secret ballot elections. “It is far easier to sign a card than it is to win an election,” said Jim Ferber, attorney and co-chair of the National Labor Relations Practice at Littler Mendelson, a leading employment and labor law firm specializing in union avoidance. Opponents of EFCA view the elimination of secret ballot elections as a violation of a fundamental component of democracy. They believe the card check system will leave employees vulnerable to secret organizing, union intimidation and coercion.Secondly, EFCA would impose financial penalties on employers who violate the National Labor Relations Act in communicating with their employees. By holding up the prospect of a $20,000 fine for a single violation, unions hope to discourage management communication. Lastly, the law would impose mandatory first contract arbitration. Under EFCA parties will have 90 days from the date the union is certified, to reach an agreement. Upon request, a federal mediator will step in for an additional 30 days. If an agreement is still not reached, a federal arbitrator will dictate the terms of the contract. This is a dramatic contrast to the current law under which the government only requires that the two parties sit down and bargain in good faith. Proponents of the EFCA say the provisions of the new legislation will reduce the amount of time it takes for an election, make the process more transparent and would better gauge the wishes of employees. Evaluating Your Labor Situation
“While all employers should be concerned with EFCA, the small to medium-size employer should be most concerned,” said Payson. In a small business, the number of cards needed to organize a union could be gathered quickly, before an employer is even aware of an organizing effort. A larger organization would likely take much longer to organize, giving the employer more time to react.Even in Right to Work states, where employees have the right to decide for themselves if they want to join a union, EFCA will have an impact. Ferber believes many employers have been lulled into a false sense of security concerning labor unions because they have had very little experience with them in the past. Employers can take proactive steps to avoid union organization:
  • Recognize the immediate need to address the impact of EFCA on your business.
  • Conduct an audit of your activities to see where your organization may be vulnerable. What are your policies? What are your problem areas? Are you paying competitive wages? Have you had issues with discrimination or workers compensation?
  • Define your position on unionization before union organization begins. Decide in advance if you will resist or agree to union organizing efforts.
  • If you choose to remain union-free, write out your position on unions for owners and managers.
  • Communicate your position to employees before unionization starts. Be sure that employees understand what card signing means.
  • Train supervisors of their rights and responsibilities under current law and under EFCA. According to Payson, supervisors should forcefully and effectively communicate the employer’s position, while complying with the law and respecting employee rights.
  • Learn to recognize and respond to the early warning signs of union activities.
  • Review your solicitation and distribution rules to control union conduct on the premises.
Views from Unionized DealersWhen a business is union-organized, employers must find ways to make the relationship work. Dealers don’t have the option of moving to a nonunion location. We asked a few AED members about the impact of union labor on their business and how they address some of the challenges.Metrolift
Business Description: Sales and service of aerial lift and rough terrain forklifts
Market: Chicago Metro
Locations: 1
Employees: 50
In business for about 20 years, Metrolift, Inc. was unionized about 10 years ago through the efforts of Local 150 of the International Union of Operating Engineers, AFL-CIO. The union first targeted companies within the aerial lift industry with crane operations because the crane operators were already unionized under Local 150.“They started with those companies and organized their aerial operations under the banner of the crane operation,” said Steve Harrison, treasurer of Metrolift. And because the unions controlled the jobsites in Chicago, they successfully targeted one aerial lift company after another. If a company fought the unionization, they would [allegedly] harass their customers on their jobsites. Initially Metrolift felt the pain of higher wages. However, unionization had some benefits. “We were on a level playing field,” said Harrison. The union’s commitment was that they would unionize the entire industry. The end result was a stabilized wage rate, lower turnover, and a strong supply of good people to fill truck driver and mechanic positions.On the downside, unionization wreaks havoc on the salary structure of a company because a union truck driver earning overtime might be the highest paid employee on the payroll. “What do you pay your dispatcher?” asked Harrison. “What do you pay your service manager, when your highest [paid] employee is a truck driver? That is what has hurt us in managing our company more than anything else.”Loyalty is another challenge because along with unionization comes some loss of control over your family of employees.“You can no longer hire and fire, reward and punish people as you would under the old circumstances,” said Harrison. To offset this, Metrolift successfully negotiated a union contract without seniority. “We hope for that a little extra cost, it gives us comfort that we are managing the company instead of the union,” added Harrison. The contract enables Metrolift to lay off any worker without regard to seniority. Harrison believes that union or nonunion, all employees should be treated the same. “You don’t look at that person and think he’s in the union and he’s against you,” said Harrison. “He’s an employee of Metrolift, no different from any other employee. You want respect from him and you give him respect.” Harrison keeps close relationships with the top people at the union, preferring to learn what is going on himself, rather than hiring a lawyer to tell him what is going on. Having one location and one union makes this easier for his operation than it might be for another dealer. H.O. Penn Machinery
Business Description: Caterpillar dealer
Market: New York and Connecticut
Locations: 7
Employees: Over 400
“Unionization has worked to our advantage,” said John Bellardino, vice president of product support for H.O. Penn Machinery, a Caterpillar dealer serving New York and Connecticut.H.O. Penn has union employees in the shop, field service, and warehouse. It operates under four separate contracts with three local unions. The company’s nonadversarial relationship with the unions was demonstrated when H.O. Penn requested a change in work rules to allow the company to expand its business. The union agreed to the changes, viewing the business expansion as an opportunity to increase their membership.Unionization has also brought the benefits of low turnover and a good supply of mechanics. “We use the unions as a talent pool for hiring people for our shops,” said Bellardino. “Each union has its own internal training program that complements our own internal training program.”Bellardino stresses the importance of having union and nonunion employees follow the same H.O. Penn policies and procedures. And while they occasionally will have to deal with a grievance, Bellardino reports that they have always been able to resolve it. McCann Industries
Business Description: Construction Supplies/Case CE dealer
Market: Northern Illinois and Indiana
Locations: 9
Employees: 160
McCann Industries began in the construction supply business more than 40 years ago and in 1995 purchased three Case dealerships. McCann works with two unions: mechanics belong to the International Union of Operating Engineers, while the drivers and warehouse people are Teamsters. About two years after the company purchased the Case dealerships, Local Union 150 began efforts to organize all mechanics in a campaign called “Operation Wrench.” “We hired some people called salts,” said Dennis Kruepke, president and CEO of McCann. Salts are union members or employees who apply for and get a job with the company, while concealing their union membership. When the “salt” is hired, he or she usually tries to organize the other employees. “All of sudden our people weren’t as happy as they used to be,” said Kruepke. The company tried to fight the union, hiring nonunion labor during a nine-month strike. “We were naïve,” said Kruepke, “but we have since learned.” While the construction supply business had been primarily nonunion, McCann’s entry into the equipment business made it a target for unionization. After a difficult strike and losing business, the company finally settled. “On the plus side, the union has brought stability to the workforce. The unions help McCann Industries find people when they need them and also discourages ‘job hoppers.’” One of the challenges of unionization is the interpretation of company work rules. The employee manual has specific work rules as does the union contract. The contract takes precedence. “As a business, we want our employee manual to be as close as possible to our contract,” said Kruepke. As an example, both nonunion and union employees are drug tested after an accident – a policy that the union supports. In that regard, Kruepke thinks unions have helped them to clarify policies and procedures related to employee issues. “It’s important to get a clear and concise contract,” said Kruepke, “so that there are no misunderstandings about what the agreed upon work rules are.”Kruepke also cites communication as an important tool when working with unions. On disciplinary matters, the company keeps the union apprised of what they are doing. “If you keep them in the loop on those types of things, normally you are in a much better position,” he added.Kruepke finds negotiating contracts with the union to be both challenging and time consuming. They negotiate themselves, but have attorneys on call to review the contract or answer questions. They will typically start the process about three months before the current contract expires. The union’s goal is to keep the wages and benefit packages similar across types of businesses. And while Kruepke likes to control costs, he knows that if his wages are not competitive, he will lose people.
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