Impact of Employee Free Choice Act on Workers’ Compensation Claims

The debate over the Employee Free Choice Act of 2009 (H.R. 1409) has largely overlooked the potentially significant effects of this legislation on the Workers’ Compensation arena.  The enhanced protections against unfair practices and majority signature provisions of the EFCA will inevitably facilitate increases in union membership nationally and in California. As an ancillary impact, Workers’ Compensation practitioners in California should expect to see an increase in the percentage of the workforce choosing to adopt alternative dispute resolution processes to supplement or replace the Workers’ Compensation process.

The EFCA is intended to protect unrepresented workers seeking to establish a union and secure collective bargaining rights by providing an equitable means for employees to be represented without intimidation from their employers and to establish their first collective bargaining agreement.  The EFCA will amend the National Labor Relations Act to provide for recognition of a bargaining agent without an election upon the filing of a recognition petition, signed by a majority of employees in an appropriate bargaining unit.  Under the enactment, employees’ ability to obtain representation without threats, retaliation or intimidation will be greatly enhanced by the establishment of enhanced penalties, including civil penalties, treble damages, and mandatory injunctions, against employers who violate the NLRA during the recognition process or negotiation of the first contract.

In reforming the recognition and negotiation process, the EFCA will also facilitate negotiated alternatives to the statutory Workers’ Compensation process and benefits under Cal. Labor Code Sections 3201.5 and 3201.7.  Under Section 3201.5, represented employees in the construction, construction maintenance, and related trades may enter into collective bargaining agreements wherein certain employment-related injury claims are resolved through the bargained alternative dispute resolution process.  In 2003, the Legislature enacted Section 3201.7, which permits employees not covered by Section 3201.5 to establish “labor management agreements” providing alternative dispute resolution (ADR) processes governing Workers’ Compensation disputes between employees, employers and insurance providers.

The union must petition to establish such a carve out, and parties must be certified as eligible. The statute permits negotiation of “any aspect of the delivery of medical benefits and the delivery of disability compensation,” including: an agreed upon list of medical providers and evaluators; a joint labor management safety committee; a light-duty, modified job, or return-to-work program; and a vocational rehabilitation or retraining program.  These agreements also supplement or replace existing procedures with mediation and arbitration, subject to reconsideration before the WCAB.  The arbitration findings have the same force and effect as that of a Workers’ Compensation administrative law judge.

As of 2007, only 16.7 percent of the California workforce availed themselves of representation by a union. Sholnn Freeman, Union Membership Up Slightly in 2007, Wash. Post January 26, 2008, at D02.  In heavily unionized trades, unions and employers increasingly utilize the ADR process.  For example, as of July 31, 2008, the United Food and Commercial Food Workers’ Union had negotiated eight (8) ADR agreements in California, typically providing for the establishment a labor-management health and safety committee, access to an expedited process including mediation and arbitration of disputed claims. Department of Industrial Relations, Division of Workers' Compensation - Carve-out programs, at http://www.dir.ca.gov/dwc/carveout.html.  As of July 31, 2008, nineteen (19) ADR agreements had been established in the construction trades and as of March 2, 2009, thirty-three (33) agreements had been enacted in the non-construction trades. Id.   In calendar year 2006 carve out programs covered over 55 million work hours and over $1.37 billion in payroll, and a total of 1,246 claims were filed.  Carrie Nevans, Carve-out Program: a Report of Activities for the Calendar Year 2006, at http://www.dir.ca.gov/dwc/carveout/CarveOutReport.pdf.

Upon enactment of the EFCA, Workers’ Compensation practitioners should expect significant increases in the unionization of California’s workforce and a corresponding increase in the number of California workers utilizing the carve out.  The enhanced remedies for bad faith bargaining and the creation of impasse resolution procedures culminating in mediation and arbitration of the initial contract will encourage good faith bargaining.  Similar impasse procedures governing the bargaining process for many local police and fire unions have historically motivated the parties to reach agreement without utilizing arbitration.  Workers’ Compensation Practitioners should familiarize themselves with applicable carve out procedures, as non-compliance may constitute a failure to exhaust administrative remedies and bar recovery.

David E. Mastagni is a senior labor attorney with the Mastagni, Holstedt, Amick, Miller & Johnsen law firm in Sacramento, California.  He is general counsel to multiple law enforcement and fire associations, while also focusing on employment and wage and hour litigation.  Mr. Holstedt is the managing partner of the Workers’ Compensation Department with the Mastagni, Holstedt, Amick, Miller & Johnsen law firm.