In the age-old debate about who has it better, employers or employees, it can often feel like employers have the upper hand in almost every situation, even if that’s not always the case. But where the organized labor movement has taken numerous hits over the past several decades as union enrollment has declined across the board and states have enacted so-called right-to-work laws, a renewed effort is underway to try to even the playing field.
Unfortunately, what’s intended to improve the ability for workers to unite and fight for better wages, benefits, and working conditions could do more harm than good, say employment law experts. It’s certainly going to be bad for all private-sector employers if the Protecting the Right to Organize (PRO) Act becomes law.
“Why [would it be] detrimental to business?” asks Michael Gotzler, an attorney with Littler in Madison. “Where do I start? The PRO Act would have significant implications for all private sector employers in the United States. Nonunion and unionized employers alike should understand the scope of its proposed changes, and the practical impact those changes would have on their relationship with employees, and their operations, should it ultimately become law.”
Our panel of employment law attorneys notes it’s rare for a piece of labor legislation this broad to come along and get close to becoming law.
“I have been practicing law for 32 years and in that time there has never been a piece of labor legislation this sweeping that has ever come close to passing,” says Doug Witte, an attorney with Boardman & Clark LLP. “This is not a simple amendment; it involves more than 50 changes, many of which are wholesale changes to certain provisions of the law that have been around for 60 or more years, and some provisions going back to when the Wagner Act was passed in 1935.”
Much of the labor law reforms that have occurred during the past 30-plus years have been as a result of actions by the National Labor Relations Board itself, either through case law or rule-making, explains Witte. As administrations have changed from Democrat to Republican and back again, the pendulum swing of those changes has become more pronounced.
“The pro-union PRO Act is arguably the largest modifier to the National Labor Relations Act since 1947 when the Taft-Hartley Act placed restrictions on union power,” says Leslie Elkins, a partner with the Madison firm of Kramer, Elkins & Watt LLC. “Other attempts have been made, such as when the Department of Labor attempted to redefine the definition of independent contractor to be more business friendly under Trump. However, the PRO Act would eliminate right-to-work laws that exist in 28 states and provide current independent contractors with rights to unionize, which is a huge change. I’m not aware of any other labor reform acts that would strike a comparison.”
One comparison to the PRO Act could come from as recently as 2007, when a Democratic-majority House passed the Employee Free Choice Act (EFCA), which included several of the same types of provisions contained in the PRO Act, though those proposed changes were far fewer in number and severity, suggests Gotzler.
“Although the Senate did not pass EFCA in that Congressional session, the 2008 election of Democrat and EFCA supporter Barack Obama as president and a Democratic majority in the Senate brought high optimism for passage,” Gotzler explains. “Yet even with the newly-elected President Obama promising he would sign EFCA if the Democratic-majority Senate passed it, the bill still failed to pass when several moderate Senate Democrats voiced concerns. Today, Senate Democrats have a much thinner majority than they did back in the EFCA days and a bill with considerably stronger and wider-ranging aspects. While it can be dangerous to draw too many conclusions from 2008–09, odds of the PRO Act passing seem much lower than the prognosticators gave EFCA’s passage.”
In fact, that could be the saving grace for employers this time around. While the PRO Act has already passed the House, and President Joe Biden backs it, the legislation likely faces the steepest of uphill battles in the Senate, where Democrats hold only the slimmest majority and many pundits predict the PRO Act will succumb to the filibuster.
Still, Elkins, Witte, and Gotzler agree the scope of the PRO Act, and more specifically the big push by organized labor, should put all employers on notice, regardless of whether or not it passes the Senate and crosses the president’s desk.
“Even though passage of the PRO Act seems very unlikely, employers still need to keep a close eye on many expected changes from the NLRB [National Labor Relations Board], particularly as the composition of its membership changes with President Biden getting to appoint members of his choosing as the terms of current Board members expire over the next year,” explains Gotzler. “More immediately, the prosecutorial arm of the NLRB, over which the president has considerably more control, has already made it clear that a new NLRA enforcement sheriff is in town. So, even without the PRO Act, there will be considerable change at the NLRB over the next three-plus years.”
Good for unions, bad for everyone else?
“The PRO Act would protect and empower workers to exercise our freedom to organize a bargain,” Richard Trumka, the president of the AFL-CIO, told NPR in a recent interview. “It’s a game changer. If you really want to correct inequality in this country — wages and wealth inequality, opportunity and inequality of power — passing the PRO Act is absolutely essential to doing that.”
Eliminating the wealth disparity seems like a worthwhile cause, and that’s what advocates of the PRO Act are pointing to for support.
“The labor movement claims that the current American economy is not working for most Americans,” says Witte. “It points to the inequality in household incomes between the working class and the wealthiest 1%. Labor claims the inequality is based in large part upon the demise of unions over the last 65 years and that policy choices have stripped workers of the power to join together and negotiate for decent wages, benefits, and working conditions. Labor would argue the PRO Act would restore fairness to the economy by strengthening the federal laws that protect workers’ right to join a union.”
According to Witte, labor argues the PRO Act protects the basic rights to join a union by (1) introducing meaningful, enforceable penalties for companies and executives that violate workers’ rights; (2) expanding workers’ collective bargaining rights and closing loopholes that corporations use to exploit workers; and (3) strengthening workers’ access to fair union elections and requiring corporations to respect the results.
From a labor perspective, a big argument in favor would be that the number of individuals eligible to join a union would increase, says Elkins. The PRO Act includes a revision to the NLRA definition of “employee” that would expand to include a large number of individuals currently considered independent contractors. Further, the provisions allowing union voting to be away from the employer’s premises as well as disallowing employers from hosting meetings to discuss the union are very pro-union.
“This would significantly increase the presence and strength of unions,” Elkins says. “With the increased membership of the unions, they would have more power to bargain on behalf of their workers. So, presumably, workers would have a better opportunity to negotiate more favorable working conditions, which would be a big gain for workers.”
The PRO Act would represent much more of a loss to employers than any kind of gain for workers, says Gotzler.
“As a group, workers are very diverse in their political viewpoints. On just one elemental issue, it’s quite clear for example that not all workers believe a union can properly represent them in the negotiation of their pay, benefits, and work conditions. So, while passage of the PRO Act would make union organizing considerably easier for unions, that doesn’t necessarily translate as a gain for workers.”
What’s in it?
The 56-page PRO Act may pale in comparison to the 906-page Affordable Care Act, but its brevity belies its potential impact. Elkins provides a brief summary of some of the key components of the Act:
- ABC test: One interesting component of the PRO Act is what is being referred to as the “ABC test” for determination as to whether a worker is an employee or an independent contractor under the NLRA. This test expands the definition of employee under the NLRA so that many independent contractors would now be considered employees, which would increase the number of workers able to join unions. The result could be a union that is comprised of independent contractors. Note, there is interest in the Biden Administration to use the ABC test in other areas of employment, labor, and tax law.
- Elimination of right-to-work laws: Currently, 28 states have right-to-work laws that prohibit a union from requiring employees to join or to pay dues to the union as a condition of employment. The PRO Act would allow unionized workplaces to require all workers to join and pay into the union, and a failure to pay could result in termination.
- Enforcement + damages + additional action: The PRO Act makes changes that allow the NLRB to actually enforce provisions of the NLRA. Additional damages would be available for aggrieved employees including back pay without any reduction, including any reduction based on the employee’s interim earnings or failure to earn interim earnings, front pay, consequential damages, and liquidated damages equal to double the total damage award as well as attorney’s fees and punitive damages. In addition, the PRO Act allows the NLRB to issue significant monetary penalties. For example, the NLRB can issue $50,000 per unfair labor practice under Section 8(a) of the NLRA, or double if a discharge or other serious harm occurs to an employee where an employer has a violation in the past five years, and such action is enforceable by civil action in federal court. Also, the Act allows the NLRB to enforce personal liability on corporate officers and directors who participate in violations of workers’ rights, including by establishing a policy that led to a violation or where the officer or director had actual or constructive knowledge of and the authority to prevent the violation but failed to do so. The PRO Act requires the NLRB to immediately seek an injunction to reinstate a worker terminated for exercising rights under the NLRA, and hold their job while their case is pending.
- Prohibition of mandatory arbitration agreements for class actions: In 2018, the Supreme Court found, in Epic Systems v. Lewis, that employers could prohibit employees from joining forces in a class-action suit through individual arbitration provisions in employment agreements, despite language in the NLRA to the contrary. The PRO Act would reverse this decision, prohibiting mandatory arbitration provisions for individuals, and thereby allowing aggrieved employees to join forces in a class-action suit against employers.
- Joint employer: The PRO Act Creates a “joint employer” standard that makes certain that employees have the right to collectively bargain with all companies that control their employment. The law in this regard has done a little bit of a back and forth in that a 2015 NLRB decision, Browning-Ferris, expanded the definition of joint employer to include entities that had reserved joint control over another entity’s employees. In 2020, the NLRB released a final rule reverted back to the pre-Browning-Ferris time period requiring substantial and direct control over another’s employees, and the rule finds that an employer is a joint employer only when the control is regular and has actual effect on the terms and conditions of employment and is exercised more often than on a de minimus basis.
- Bargaining via mediation and tripartite arbitration: The PRO Act places a strict 90-day timeline on unions and employers to negotiate and come to an understanding on the provisions of a collective bargaining agreement. A failure to come to an agreement in that timeline requires the parties to submit to mediation for a 30-day time period, and then binding tripartite arbitration where each party chooses a decision-maker and then a third agreed upon decision-maker is chosen. This timeline is significantly shorter than the historic several months to over a yearlong timeline for collective bargaining agreements.
- Employees can use employer business systems to organize: The PRO Act would allow employees to use employer systems to organize.
- Union election rule changes: The PRO Act also enacts changes to union election rules including that elections can take place at a location other than one controlled by the employer. Furthermore, employers will be prohibited from requiring their employees to spend time at long anti-union meetings, which is currently rather common.
- Front-line leaders: Currently, front-line leaders, often considered a “supervisor,” are considered part of management. The PRO Act redefines “supervisor” so that many front-line leaders cannot be considered part of management. This pulls many more workers under the cover of the NLRA.
- Post notices about the PRO Act: The PRO Act would require employers to post notices about the rights and protections afforded under the PRO Act.
Wisconsin impact
As the PRO Act is federal legislation, it would apply to almost all private sector employers. Because it is federal legislation, it would preempt any labor laws in Wisconsin that may conflict with it or where the federal law applies, says Witte. “Wisconsin employers would be in the same boat as other employers across the country.
“Wisconsin’s labor rules, which primarily apply to public sector employers and a few small private sector employers, would not be impacted,” Witte continues. “For example, Act 10, which greatly impacted public sector employees in Wisconsin, would not be affected.”
However, for Wisconsin employers and workers, the PRO Act would have broader consequences than in many other states, adds Gotzler. “Most significantly, the PRO Act would effectively invalidate Wisconsin’s right-to-work law, passed in 2015.”
What remains to be seen is if the Senate, like an employee group attempting to unionize, can get the votes necessary to make this an issue for Wisconsin employers.
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