Labor Pains

The nature of retail and the sheer size of its collective workforce continue to make the industry a tempting target for unions. But retailing has never been easy to organize. A constantly changing workforce not inclined to pay dues and dubious about organized labor’s ability to deliver higher pay, benefits and hours have worked against unions. And an economy with a barely discernible pulse has everyone worrying about jobs — a scenario that doesn’t work to labor’s advantage, either.

With membership in the private sector down to about 7 percent — 4.7 percent in retail — unions of every stripe are fighting for their lives. “I’m not sure they’re targeting retail specifically,” says David French, NRF senior vice president for government relations, “but that’s where a lot of the jobs are and unions are hungry to add workers to the rolls.”

Maintain vigilance
This makes it all the more urgent for retailers to get involved.

“It’s more important than ever to be active and vigilant … with respect to the regulatory and operational sides of the business,” says Philip Miscimarra, a partner in the employment and labor practice at Morgan, Lewis & Bockius and a senior fellow at the University of Pennsylvania’s Wharton Business School.

“It was significantly more difficult for unions to organize during the economic freefall in 2008 and 2009, when people just appreciated being employed when so many others weren’t,” Miscimarra says, but “expectations are changing. They may have jobs but the economy is preventing them from getting greater rewards. This may increase their receptivity to unions.”

Labor experts caution retailers not to be lulled into a false sense of security simply because a large percentage of the workforce consists of part-timers who, in the past, were difficult to organize.

“I recommend that employers put themselves in the position of the employee to see how they’re being treated,” says Keith Reed, senior counsel with the international law firm of Baker & McKenzie. “The majority of regular part-time employees, if they are being paid a competitive part-time wage … are thankful for the protection and are not likely going to risk [joining a] a union when they know they can be replaced or that the store could go out of business.

“The best policy is to treat employees fairly so they don’t get a union just to punish their employer,” Reed says.

Even if current part-timers are not interested in organizing, retail turnover is so high that employee sympathies can change rapidly. “The combination of a changing regulatory environment, increased aggressiveness by the unions and the size of many retail operations can make turnover union-friendly,” Miscimarra says.

Increased regulatory activity
Retailers should also be aware of the impact of strike alternatives, according to Jonathan Fritts, a partner in Morgan, Lewis & Bockius. In comments made before a House subcommittee in May, Fritts said unions “increasingly believe that the strike is an ineffective weapon of industrial warfare. A strike entails loss of pay for striking employees, which tends to have a mitigating effect on the duration of the labor dispute. … The target of the corporate campaign may not be the employer …. The union may engage in corporate campaign tactics against … customers, suppliers, lenders, creditors or investors as a means of creating secondary pressure against the employer.”

Actions taken by the National Labor Relations Board and the Department of Labor in advance of the 2012 elections could be just as impactful. “Because of the NLRB and DOL, we are now coming out of the valley of regulatory inactivity,” Miscimarra says. “We’re seeing much greater potential for significant change that warrants vigilance on the government relations front.”

Two of the biggest issues being considered by these agencies are so-called “quickie elections” and new regulations governing “persuader activities” that are designed to keep outside labor attorneys and consultants out of the game.

The NLRB proposal to speed up union voting — which it says was motivated by a desire to reduce pre-election litigation — could cut the amount of time between a union filing and an election to as little as 10 days from the current 42 days. The offshoot, according to many legal experts, is that employers will have a much narrower window for challenging a union election.

“The problem is that the unions can be planning a campaign for a year, talking to employees and building support,” French says. “Then all of a sudden they show up with signed cards and demand an election.”

“Expedited elections are a huge issue with employers, but the NLRB has the right to engage in rulemaking,” Reed says. “Some change will likely be made before the end of the year.”

A more serious matter is a proposed change to the Labor-Management Reporting and Disclosure Act of 1959 governing “persuaders,” third-party labor attorneys or consultants hired to help companies respond to union activity.

Since its enactment, the law has been narrowly interpreted to mean that as long as a consultant or attorney didn’t go out and meet with employees directly or put pressure on them, the activity wasn’t reportable. If they did, employers had to report within 30 days who the persuaders were, when the activity occurred, what was said and how much they were paid. Now, however, the Labor Department is arguing the law wasn’t interpreted correctly and that an outside attorney or consultant who merely meets with or advises a company is engaging in indirect persuasion that must be reported.

“Even worse, there are some courts that want law firms to report all labor and employment revenues if one of their labor attorneys engages in persuader activities,” says Reed. “That will cause a lot of law firms to review the extent to which they want to be involved in union campaign business.”

“The rules are very complicated, and reporting is being made the responsibility of the CEO, president or treasurer who will be required to sign the reports,” Miscimarra says. “The penalties for non-reporting or improper reporting can be very severe — including criminal penalties.