What Multifamily Needs to Know about the Employee Free Choice Act

By Erika Schnitzer, Associate EditorWashington, D.C.—Union workers convened on Capital Hill yesterday to lobby for the passage of the Employee Free Choice Act (EFCA). Since taking office, President Obama has made his pro-labor stance clear with the signing of the equal-pay law, the establishment of a task force for middle-class families and his choice for Labor Secretary. With the campaign for the Act reignited and a top priority for labor unions, how will multi-housing be affected if it is passed?“The question is whether we are going to create enough impetus for on-site associates to unionize,” Terry Danner, CEO of Riverstone Residential, tells MHN. Some employers have been forced to cut pay and benefits because of the recession. “If that type of behavior continues—and I understand it’s driven by the economy of tough times—the backlash is going to be an employment base that is not exactly pleased with what we [the industry] have done,” says Danner.In its present form, the EFCA, which would amend the National Labor Relations Act (NLRA), would require an employer to recognize a union if a majority of employees sign authorization cards, without the privacy of a secret ballot election, designating the union as a bargaining representative. Because unions do not necessarily have to be formed at the corporate level, but can instead by formed at the site-level, the concern for the multifamily industry is the size of the workforce at individual properties and the ease with which union organizers can access a property, talk with employees and convince a majority—which in this case might only be a handful—to sign up, notes Cynthia Springer, partner at the law firm Baker Daniels, and who recently presented a session entitled, “EFCA—Why It’s Not Free and What You Can Do Now to Prepare for It,” at an NAA Board of Directors meeting. Even more troubling would be attempting to manage some sites that are unionized and others that are not, points out Danner. “If you had to construct a plan that exists for non-unionized labor only, the pool of participants is lower. Therefore, the economies and potential for everyone sharing  in those economies are lower.”In addition, “if you have employees who regularly transfer from one property to another or all of management is out of a central location, the employer has fewer opportunities to get its finger on the pulse and you could have a significant organizing effort out that you don’t know about at all,” asserts Charlie Edwards, counsel in Womble Carlyle Sandridge & Rice’s Multifamily Real Estate and Labor and Employment practice groups. He adds, “with the typical turnover that you have with personnel, it’s pretty easy for you to, all of a sudden, wind up with a cadre of pro-union employees in some location and have no idea that’s the way the wind was blowing.”Additionally, under the Act, collective bargaining negotiations must begin within 10 days of certification. If an employer and a union cannot reach an agreement on a first labor contract within 90 days, a federal mediator will be brought in. If an agreement was still not reached within 30 days, the dispute would be referred to outside arbitration, who would determine employees’ pay and benefits for a two-year period.The third major amendment that the EFCA would bring would be stronger penalties for employer violations during the organizing period. Penalties for unfair labor practice, in addition to back pay, would include fines up to $20,000 per violation and double the back pay.If the Act passes, a potential problem for management companies could be a loss of new business, points out Danner. “Payroll is such a large expense category on a property’s financial statement. I see owners who use third-party providers sitting there and saying, ‘well, OK, you came in and organized this management company; therefore, I will not hire this management company.’” While the U.S. House of Representatives approved the legislation in March 2007, it was not passed in the Senate due to a filibuster. Because it is not currently the Obama administration’s top priority, Springer believes the earliest the Act would be passed is this summer and implemented by the beginning of 2010. Danner, though opposed to the Act, believes, “we are going to inform enough people about it early enough so the impact can be minimized.”In addition to getting educated about the EFCA and its potential effects, there are a number of strategies employers should consider, including: •    Training supervisors and managers about their current rights and responsibilities and how they might change with union organization.•    Thinking strategically about what employers need to do to make their organization the kind that a union would not be interested in organizing. Consider implementing a multi-facility bargaining unit strategy, which would require unions to organize all properties instead of just some of them. •    Identifying who is a supervisor. The EFCA has a specific definition of a supervisor, so it is crucial to identify the supervisor, because they can be prohibited from organizing. •    Talking about what it means to sign a union card in your new employee orientation.