04 August 2008

Colorado Law v. Wal-Mart

Are Wal-Mart's days in Colorado numbered?

Wal-Mart Stores Inc., the world's largest retailer, denied a report Friday that it had pressured employees to vote against Democrats in November because of worries that a bill the party supports would make it easier for workers to unionize.

The measure, called the Employee Free Choice Act, would allow labor organizations to unionize workplaces without secret ballot elections. It was co-sponsored by Barack Obama, the presumed Democratic presidential candidate, and opposed by John McCain, the presumed Republican nominee.

A report in The Wall Street Journal said the Bentonville, Ark.-based discounter — which has rigorously resisted being unionized — had held mandatory meetings with store managers and department supervisors in recent weeks to warn that if Democrats take power in November, they would likely push through the bill, which the company says would hurt workers.

Wal-Mart spokesman Dave Tovar told The Associated Press that the company did discuss the bill with its employees, including what it sees as the negative impact, and noted that the company's stand on the legislation is no secret.

"We believe the Employee Free Choice Act is a bad bill and we have been on the record as opposed to it," he said.

But he said the company wasn't advocating that its employees vote against backers of the legislation. . . . "We regularly educate our associates on issues which impact our company, and this is an example of that." . . .

Wal-Mart may also be on thin ice as federal election rules allow businesses to push for specific political candidates to shareholders, executives and salaried managers, while prohibiting such actions for hourly workers, which typically include department supervisors.

The Wall Street Journal cited about a dozen unidentified Wal-Mart employees who had attended such meetings in seven states as saying they were told that employees at unionized shops would have to pay big union dues while not receiving any benefits in return.

Furthermore, workers said they were told that unionization would mean job losses as costs rise, according to the report. The report said the Wal-Mart human resource managers who held the meetings didn't specifically tell the employees how to vote, but made it clear that a Obama victory would mean unionization.

The conduct Wal-Mart has admitted to engaging in, or for which there seems to be abundant proof, may not have violated federal law. But, it may well have violated Colorado law, and the consequence for violations of the Colorado law are nothing less than the corporate death penalty in the state.

Under Colorado law, statements "intended or calculated to influence the political opinions or actions of" employees are grounds for revocation of the privilege of doing business in the state, even if the application of the statement to a particular candidate is merely implied. Colorado law also makes no distinction between management, on one hand, and rank and file workers, on the other, unlike federal law.

The Colorado law says:

(1) It is unlawful for any employer, whether corporation, association, company, firm or person, or any officer or agent of such employer: . . .

(d) Within ninety days of any election provided by law, to put up or otherwise exhibit in his factory, workshop, mine, mill, boardinghouse, office, or other establishment or place where his employees may be working or be present in the course of such employment any handbill, notice, or placard containing any threat, notice of information that, if any particular ticket or candidate is elected, work in his place or establishment will cease in whole or in part, or his establishment will be closed, or the wages of his workmen will be reduced or containing other threats, express or implied, intended or calculated to influence the political opinions or actions of his employees.

(2) Each offense mentioned in subsection (1) of this section is a misdemeanor, and upon conviction thereof, the offender shall be punished as provided in section 1-13-111 [Ed. $1000 and/or 1 year in jail]. In addition thereto, any corporation violating this section shall forfeit its charter and right to do business in this state.

Section 1-13-719, Colorado Revised Statute (in the pertinent part).

The First Amendment imposes strict strutiny on legal efforts to regulate political speech, but the Colorado law in question does not prohibit corporations from expressing their views. Instead, it imposes time, place and manner restrictions on how that is done (i.e. through political action committees, not direct coercive communications with employees). Generally, reasonable time, place and manner restrictions are upheld, particularly in the labor union context, where the National Labor Relations Act imposes detailed time, place and manner restrictions on management and employee speech about unionization issues already.

Presumably, both the Colorado attorney general, and the District Attorney in any district with a Wal-Mart whose managers held such meetings would have standing to prosecute this apparent election law violation.


Unknown said...

Interesting discussion, but why didn't you address the merits of the proposal to allow unionization without a secret ballot?

Andrew Oh-Willeke said...

Becaue that isn't what my post is about. One the merits, the Colorado ballot measures on unionization votes are deceptive and bad policy, and while the legislation proposed in Congress is basicall good legislation (points I may explain in a later post).

Also, state law is a poor tool for regulating private sector union activity given the federal law dominance of the field.

Anonymous said...

Would this law also extend to ballot issues before the voters?

I ask because the CEO at my company has recently sent out an email to all employees urging them to vote against 4 union-friendly amendments. The email is quite lengthy (2 pages long) and explicitly asks that "you can see why the above initiatives will harm our workplace if passed."

It seems like a rather ham-handed way to influence an election, but I wonder whether the wording of the law might extend to such items as ballot measures.