News & Information

LABOR & EMPLOYMENT LAW — 05/12/09

Most companies believe EFCA will negatively impact business, study shows

Eighty-five percent of companies are concerned about the impact of the pending Employee Free Choice Act (EFCA), and 89 percent believe EFCA will increase their companies' vulnerability to unions, according to a recent study. Yet only 16 percent are projecting the labor costs associated with unionization, the study found. Global consulting firm Hay Group issued the report based on a survey of 178 companies.

"Companies recognize that if the Employee Free Choice Act passes it will have an impact on their business, but few are being proactive and strategically preparing for the increased labor costs," said Richard Fine, a senior consultant at Hay Group. "Instead, we're seeing companies take a wait-and-see approach. It's as if they see the rain coming, but aren't getting out their umbrella."

The study also found that nearly 60 percent of respondents expect some form of EFCA to pass. While the majority of respondents are not projecting labor costs, 64 percent are already taking some actions regarding EFCA: 64 percent of those that are taking action plan to add or are considering adding or increasing supervisor management and training programs. Another 47 percent are planning or considering improvements to unit climate and engagement.

Other key findings from Hay Group's Employee Free Choice Act Survey:

• More than 80 percent of respondents said executives at their organization are concerned about EFCA;

• Approximately 90 percent of respondents indicated the amount of HR time and resources spent on union avoidance would increase if EFCA passes. Of those, half thought HR time and resources spent on union avoidance would increase by 10-24 percent;

• Nearly 35 percent of respondents expect EFCA to increase employee pay at their organization;

• Approximately 16 percent of respondents indicated that they have projected the costs associated with a union joining their organization. The majority of those respondents believe total labor costs will increase by more than 10 percent, and many believe it will increase by more than 25 percent.

• More than 70 percent of respondents rated their current work climate with hourly employees as positive or very positive, however, only 35 percent of respondents administer employee opinion surveys to address union avoidance and vulnerability.

"Ultimately, whether or not an organization becomes unionized comes down to management," added Fine. "The most effective way to avoid organized labor is to create and sustain a strong employee value proposition, embodied by trust, open communication and employee engagement. Employers should be taking the time now to ensure their employees are engaged to avoid a dramatic increase in labor costs later."

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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