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The In-House Counsel's Playbook:

Wednesday, March 8, 2006 at 1:00 PM ET

Association of Corporate Counsel

www.acca.com

Assessing Corporate Vulnerability to New Union OrganizingAssessing Corporate Vulnerability to New Union Organizing

Tactics, Corporate Campaigns, and Two Labor FederationsTactics, Corporate Campaigns, and Two Labor Federations

Presenters:

Moderator:

Barbara Sellinger, Honeywell International, Inc.Michael J. Lotito, Partner, Jackson Lewis LLP

James Baine, General Attorney, Murphy Oil Corporation

Page 4

State of Organized Labor Today

1935

1960s1955

(35%)

2005

(7.8%)

0

10

20

30

40

50

60

1935 1955 1960s 2005

% R

ate

Union Membership Rates

State of Organized Labor Today

In 2005, the decline in union membership continued

among wage and salary workers. Membershipdropped to 12.4% from 12.5% in 2004

Most of the decline was in the private sector wheremembership fell from 7.9% of workers in 2004, to7.8% in 2005

Page 6

State of Organized Labor Today“A record 53 percent of non-union workers say they’d join aunion tomorrow if given the chance – that’s the highestpercentage in 20 years . . . It is our job to reach out to them.”

AFL-CIO President John Sweeney

Labor Day, September 5, 2005

“When you read the polls about worker anxiety . . . And youput that together with rising gasoline prices and decliningwages and all the other things that are out there, if we didn’thave unions, we’d have to invent them this labor day.”

Professor Harley Shaiken, University of California, Berkeley

September 5, 2005 - New York Times

Fighting Unions on Two Fronts

AFL-CIO

Change to Win

Page 8

Change to Win (“CTW”)

Made up of seven unions:

! SEIU, Teamsters, UNITE HERE, UFCW, theLaborers, the United Farm Workers and theCarpenters Union

CTW wants more aggressive recruitment efforts andthe ability to punish unions who fail to aggressivelyorganize! Andrew Stern has had great success with an

assertive and confrontational approach toorganizing

CTW Convention - Sept. 27, 2005CTW to devote 75% of its budget to ORGANIZING -- a far greater %

than the AFL-CIO

CTW member unions plan to spend $750 million annually on

ORGANIZING

GOAL: Starting campaigns by the end of the year to add 500,000 new

members

“Strategic, smart organizing is our core principle...uniting workers by

industry, not one shop at a time, but whole companies all the time...”

- Anna Burger, CTW Chairwoman

Page 10

AFL-CIO

Lost 4.6 million members and an estimated at20 to 35 million dollars a year

Placed a renewed emphasis on organizing andcollective bargaining, but wants to continuetraditional investments in politics! Convention delegates at the AFL-CIO

convention solidly supported President JohnSweeney's plan targeting $22.5 million toorganizing

Change to WinSeven major unions:! Teamsters

! Laborers

! Carpenters

! UNITE HERE

! Food and Commercial Workers

! Farm Workers

! SEIU

CTW combines 3 of the 4 largest former AFL-CIO affiliates with some

six million total employees.

Source: Change to Win Federation

Page 12

Change to WinMajor issues for employees today:

! Layoffs / job security

! Workloads

! Wages and benefits / retirement security

! Working hours / family time

! Health care costs

! Workers rights


Change to WinFocus on rebuilding labor strength through targeted industries andsectors with primarily nonunion jobs:

! Retail 18 million nonunion / 1 million union

! Services 14.5 million nonunion / 500,000 union

! Health care 9 million nonunion / 1 million union

! Finance/Insurance 7 million nonunion / 500,000 union

! Construction 6.3 million nonunion / 1.2 million union


Page 14

Corporate Campaigns“ A corporate campaign is a form of reputational warfare wagedthrough broadsides, half truths, innuendo, and a staccato rhythm ofcastigation, litigation, legislation and regulation. It is fought in thepress and on television, on the internet, in the halls of government, inthe marketplace, on the trading floor, and in the boardroom.

The corporate campaign is designed to appeal to an underlyingdistrust of big business. It is perhaps best understood as a moralityplay in which the union. . .defines standards of conduct that reflect its own interests,challenges the target company to meet these standards, and thenportrays the company as a social outlaw when it proves unwilling orunable to do so.”

Manheim, Jarol B., “Corporate Campaigns: Labor’s Tactic of The ‘Death of A ThousandCuts.’” Labor Watch, January, 2002

The New Union StrategyCorporate campaigns are used against:! Union-free employers targeted for organizing

! Partially unionized employers

! Unionized employers facing contract negotiations

Unions “profile and research” employers to exposevulnerabilities and weaknesses, creating opportunities tocommunicate the union message! Financial records

! Property records

! OSHA citations

! Environmental enforcement actions

! Title VII litigation

! Executive Compensation

Page 16

The Goal . . .Avoid NLRB elections and force employers into neutralityagreements and voluntary recognitionElements of Neutrality! Protected Communications! Scope of Neutrality Agreements! Process Defined! Card Check

According to the AFL-CIO, unions enlist approximately! 150,000 to 200,000 new members a year through card

checks! 70,000 new members a year through federal elections

Evolving Legal LandscapeFederal Legislation! Employee Free Choice Act (D)

! Secret Ballot Protection Act (R)

Dana/Metaldyne, 341 NLRB No. 150 (2004)! Board grants review to reevaluate "voluntary-recognition bar"

doctrine, which prevents the Board from processing a decertificationpetition following a voluntary union recognition for reasonableperiod of time

! Under current Board law, an employee who suspects that the unionlacked majority support at the time of recognition cannot obtain anNLRB election

! An adverse decision would be a major blow to the union strategy ofavoiding traditional NLRB election process through neutrality andcard-check agreements

Page 18

Tactics

Class-action litigation

Relentless media attack

Initiating targeted legislation at state and local level

Joining with community and faith-based groups

Enlisting support of politicians, religious leaders,actors, etc.

Online organizing

International Cooperation

Maryland LegislationMD legislature passes law requiring employers with10,000 or more employees in the state to spend 8%of payroll on healthcare.Contributions by SEIU and UFCW (more than$36,000) to state lawmakers in the weeks before thevote attract national attention.! Totaled more than contributions to state lawmakers in

2002 election cycle

Day before the election MD’s AFL-CIO chapterpledges not to endorse any lawmaker who did notsupport the legislation.

Page 20

Involve Senior Managers and

Boards of Directors

Inform

Ask and obtain support

Prepare them for personal attacks

Prepare them for corporate campaign

Vulnerability Assessment

Internal Concerns Include …

! Wages and benefits

! Healthcare and retirement plans

! Safety and working conditions

! Workload and stress

! Dispute resolution procedures

! Job security and “at will” employment

Page 22

Vulnerability Assessment

The Softer Issues …

! Employee morale

! Leadership credibility

! Supervisors and employee treatment

! Bilateral communications

! Input and shared decision-making

! Employee recognition and appreciation

Minimizing Risk

Recommit to Issue-Free WorkplaceEducate/Inform Suppliers, Franchisees andContractorsEducation! Corporate philosophy! Employer of choice! Solicitation/distribution rules! Early warning signs! Demands for recognition! Training for management, human resources and

other “administrative” employees

Page 24

Preemptive Communications

Identify all “stakeholders”

! Customers

! Shareholders

! Suppliers/contractors

! Charitable outlets (if non-profit company then considersources of charitable revenue)

! Religious and political leaders

! Community organizations

! Financing Agents

Preemptive CommunicationsCraft a message that is consistent with your missionand values

! Define the institution before a union defines you

! Compassionate concern for theemployee/customer/patient/public

! Financial stewardship and community service

! Dignity, respect and fair treatment in the employmentrelationship

! Openness and full disclosure

Page 26

Preemptive Communications

Incorporate your message into all communications

Communicate your message to supervisors

Communicate your message to applicants andemployees

Establish or renew religious and community ties

Establish or renew ties to politicians

Defuse the Money Issue

Clear communication of charitable contributions

Ongoing communication of community events

Defend the investment of “profits”

Position the institution’s finances and executive pay

in the context of the market

Promote education about the health care systemnationally and locally

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