How evolving right-to-work policy could impact your business

The labor movement has been in the news recently with lots of local and national action. Here’s a summary of what is happening, the potential impact, and what you should be thinking about in your day-do-day operations.

Right-to-work refers to state laws that prohibit union security agreements (or security clause) between employers and labor unions which require employees who are part of the bargaining unit to contribute to the costs of union representation. Right-to-work allows employees to pay, or not pay, union dues when they are members of the union. In a unionized workforce, membership in the union is assumed regardless of whether the employee actively participates with the union or not. It allows for membership, but does not require the employee to pay dues, and often releases the employer from being required to collect those dues, placing the burden on the union.

The overturning of right-to-work, which appears in part to be a done deal, will allow unions to enforce the payment of dues, and potentially negotiate with employers to require them to collect those dues.

While this may not directly impact a large portion of the workforce - unionized employees currently make up less than 11% of employees (circa 2022), and in Michigan clocks in at 14% - this “win” for unions will bolster their funding and will aid their efforts to strengthen their current organizing activities and increase activity in other areas.

For most employers, the goal remains the same:

In addition, if you are only adjusting individual wage rates annually (or less often), you may want to review your practices to ensure that you are not out of market and providing incentive to your staff to look elsewhere. Smaller increases more frequently more clearly ties performance (individual & organizational) to pay.

A prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers in a particular area. This is usually the union wage. State law can either require the use of prevailing wages when bidding for state and/or local government contracts or forbid it. In general, the implementation of a Prevailing Wage law can increase the cost of governmental projects, and often pushes costs up for private projects as well due to the expectation of similar compensation for similar work regardless of what kind of project it is.

Some argue that prevailing wages help to stabilize wage levels in an area, and during a time of high wage inflation (like today), the system can help slow down wages increases by acting as a bit of a brake due to the lag in developing the “prevailing wage” used in any given project.

Last year, Gov. Gretchen Whitmer issued an executive directive reinstating prevailing wage for projects bid out by the Department of Technology, Management and Budget. Her directive faced and survived a legal challenge. Unlike the legislation that passed the House, Whitmer's directive does not apply to state-funded construction projects bid out by local school districts.

What to do? If you are an organization that bids on state or local contracts, keep an eye out for new requirements as part of the standard bid packages if this legislation passes.

While high-profile organizing campaigns like Starbucks & Amazon get the headlines, overall union organizing activity is up across the board. With 71% of Americans approving of labor unions according to a Gallup Poll a handful of months ago (the highest level in more than 50 years), and with both union elections and successes rising across all sectors significantly over the last 18 months, employers need to be proactive whether they have a union in place at the present time or not.

The NLRB is an appointed board that interprets & enforces the National Labor Relations Act, and over time tend to swing from a labor to management bias during Republican administrations, and vice-versa during Democratic administrations. This swing usually takes some time due to the timing of resignations & appointments from the board – that swing is now complete, and the NLRB has been busy.

The NLRB and their rulemaking ability impact all employers, regardless of union status, and can make it easier or harder for unions to organize. Recently the board has been working to abolish one of the most longstanding features of union election campaigns: the employer meeting.

While some high-profile union campaigns are well-known from the outset to the employer targeted, many of them fly under the radar, with employees talking among themselves about possibly trying to form a union, obtaining the needed support, and more, over many months. The use of various social media tools has only made these easier as virtual discussions, meetings and other activities can now take place anytime 24/7.

The first time many employers learn about this effort is after sufficient support for the union has already been assembled and the Election Petition lands at the employer’s door. You are now playing catch-up as the union has enjoyed a long period of uninterrupted, one-sided, anti-employer/pro-union messaging.

Once the Election Petition arrives, employers commonly schedule meetings with their employees over the ensuing weeks to discuss the employment relationship, express opinions about the union, and talk about the full picture of what having a union would mean, often in conjunction with an attorney specializing in these situations. These discussions must take place carefully because employers are prohibited from threatening employees or retaliating against them based on their union activity, but meetings are still an important tool an employer can use to try and avoid a successful union vote.

For their part, unions have long labeled these meetings “captive audience” meetings because employees are often required to attend. Unions paint them in a negative light assuming employees don’t care to hear another message, or that it is somehow inappropriate for employers to voice their own perspective about the merits of having a union.

In environments where unions are always trying to make inroads, like those in manufacturing and service sectors, this may very well be the biggest and most contested labor-management relations legal issue in recent years.

The NLRB has also recently ruled that most confidentiality & non-disparagement clauses in severance agreements with front line employees are unlawful. Many believe this ruling will not survive the courts, but until that time it is the law of the land.

What to do? See the Right-to-work recommendations above, as they apply in any work environment generally, but especially in a work environment where the potential for union organizing is more prevalent. In fact, if the only reason you are meeting with employees is to counter an active organizing effort, it may already be too late.

For any future severance agreements, contact Axios HR for guidance and the proper documents to assist with your situation.