Labor battle looms in Congress

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(Fortune Small Business) -- During the past 20 years, Bob Cook's employees have twice considered forming a union. Cook, who owns Cook Paper Recycling in Kansas City, Mo., says union organizers invited his workers to a tavern both times. Over free beers, the employees enthusiastically signed union cards, but when it came time for the secret ballot - a second step that employers can insist on - they voted the idea down.

"The secret ballot is essential," says Cook. "It removes fear of intimidation."

That second step may disappear this year, leaving business owners more vulnerable to unionization and the higher labor costs that go with it. The Employee Free Choice Act, which is headed for Congress, would automatically grant union certification once a majority of employees have signed union cards. It would also stiffen penalties for employers who discriminate against union members and organizers, and mandate binding arbitration when a collective bargaining agreement cannot be reached within 120 days. The bill died in the Senate two years ago but is expected to pass this time around.

Critics call the act a bailout for unions, whose private sector membership has declined from 11.2% in 1993 to 7.5% today. Brad Close, public policy director for the National Federation of Independent Business (NFIB), says many of his members are outraged.

"A lot of them are struggling to stay in business," he says. "This bill threatens their survival."

Some entrepreneurs argue that the law would mainly affect large corporations. John Rose, a former NFIB member who recently shuttered his bakery in Santa Rosa, Calif., points out that the bill doesn't supersede the existing rules of the National Labor Relations Board, which certifies unions only at businesses with more than $500,000 in retail revenues.

"Mom-and-pops have very little union activity," he says. "When I owned my bakery, I was in my kitchen, baking bread with my employees. I knew if they were dissatisfied, and I responded."