Report Title:

Crosscheck Requirements; Labor Representation

Description:

Establishes labor representation procedures in developments in which the State or counties have an ongoing proprietary interest. (HB389 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

389

TWENTY-THIRD LEGISLATURE, 2005

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to labor.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"chapter

employee signature authorization

§ -1 Legislative findings and declarations. (a) In the course of managing real property that it owns, or in otherwise carrying out its functions in the public interest, the State and counties occasionally participate in real property development as a landlord, a proprietor, a lender, or a guarantor, facing the same risks and liabilities as other business entities participating in these ventures. For example, the State and counties sometimes invest or pledge their resources in real estate development projects as a landlord, a lender, or a guarantor, in which case the State or counties have an ongoing proprietary interest in that development, and, thus, have a direct interest in its performance.

(b) In these situations, the State and counties must make prudent business decisions, as does any private business entity, to ensure efficient and cost-effective management of their business concerns, and to maximize benefit and minimize risk. One of those risks is the possibility of labor-management conflict arising out of labor union organizing campaigns. This type of conflict can adversely affect the state's or a county's investment in real estate developments or other circumstances in which it has a proprietary business interest by causing delay in the completion of projects, or by reducing revenues or increasing costs of the project when they are completed.

(c) These risks are heightened in certain industries, such as the hotel and restaurant industry, because they are so closely related to tourism, which continues to be a mainstay of the State's economy. Labor strife in hotel or restaurant projects in which the State or a county is an investor or other economic participant can jeopardize the operation of related tourist and commercial facilities, as well as the State's national reputation as a tourist and convention destination.

To minimize that risk in circumstances where costly labor-management conflict has arisen in the past, the purpose of this chapter is to require that certain specified employers in development projects, as a condition of the State's or a county's economic involvement in a project, shall agree to nonconfrontational and expeditious procedures by which their workers can register their preference regarding union representation.

(d) A major potential source of labor-management conflict that threatens the economic interests of the State and counties as a participant in development projects is the possibility of economic action taken by labor unions against employers in those developments when labor unions seek to organize their workers over employer opposition to unionization. Experience of municipal and other investors has demonstrated that organizing drives pursuant to formal and adversarial union certification processes often deteriorate into protracted and acrimonious labor-management conflict. That conflict potentially can result in construction delays, work stoppages, picketing, strikes, and consumer boycotts or other forms of "corporate campaigns" that can generate negative publicity and reduced revenues that threaten the interests not only of the immediate target of these tactics, i.e., the employer, but of other investors in the development, and also the state's and counties' special interests identified in this section.

(e) These risks of potential labor-management conflict are particularly acute when labor unions seek to organize workers in certain industries in which labor relations may be contentious and result in protests, boycotts, and other activities which disrupt the business of that industry.

(f) In view of these concerns, the legislature deems it necessary to approach with great caution any economic participation in a development project if the State or a county retains a proprietary interest, either as a landlord, a lender, or a guarantor. The legislature finds such a cautious approach to be particularly appropriate given other possible factors present in these developments, such as the State's or a county's sometimes special proprietary interests or other special concerns identified in this section, or their complex financing schemes, the possible use of scarce land resources, as well as the dependence of these projects on public "good will" and the special vulnerability of these projects to consumer boycotts and other actions.

(g) One way to reduce the State's and counties' risks where they have a proprietary interest in a project is to require, as a condition of their investment or other economic participation, that employers operating in the project agree to a lawful, nonconfrontational alternative process for resolving a union organizing campaign. That alternative process is a so-called "crosscheck", also known as "card check", wherein employee preference regarding whether or not to be represented by a labor union to act as their exclusive collective bargaining representative is determined based on signed authorization cards. Private employers are authorized under existing federal law to agree voluntarily to use this procedure in lieu of National Labor Relations Board-supervised election procedures.

(h) The legislature finds that compliance with these procedures will help to reduce the possibility of labor-management conflict jeopardizing the State's or a county's proprietary interest in a development project. To ensure that crosscheck procedures are required only to the extent necessary to ensure the goal of minimizing labor-management conflict, an employer who agrees to these procedures and performs its obligations under a crosscheck agreement will be relieved of further obligation to abide by those procedures if a labor organization engages in economic action such as striking, picketing, or boycotting the employer in the course of an organizing drive and at a site covered by this chapter.

(i) The sole purpose of this chapter is to protect the State's and counties' proprietary interest in development projects covered by this chapter. This chapter is not enacted to favor any particular outcome in the determination of employer preference regarding union representation, nor to skew the procedures in such a determination to favor or hinder any party to such a determination. Likewise, this chapter is not intended to enact or express any generally applicable policy regarding labor-management relations, or to regulate those relations in any way, but is intended only to protect the State's and counties' proprietary interest in certain narrowly prescribed circumstances where the State or a county commits its economic resources and its related interests are put at risk by certain forms of labor-management conflict.

§ -2 Definitions. As used in this chapter, unless the context clearly requires otherwise:

"Collective bargaining agreement" means an agreement between an employer and a labor organization regarding wages, hours, and other terms and conditions of employment of the employer's employees. For purposes of this chapter, a collective bargaining agreement does not include a crosscheck agreement.

"Crosscheck agreement" means a written agreement between an employer and a labor organization providing a procedure for determining employee preference on the subject of whether to be represented by a labor organization for collective bargaining, and if so, by which labor organization to be represented, which provides, at a minimum, the following:

(1) Employee preference regarding union representation is determined by a crosscheck procedure conducted by a neutral third party in lieu of a formal election;

(2) All disputes over interpretation or application of the parties' crosscheck agreement, and over issues regarding how to carry out the crosscheck process or specific crosscheck procedures, shall be submitted to binding arbitration;

(3) The labor organization forbears from taking economic action against the employer at the worksite of an organizing drive covered by this chapter, and in relation to an organizing campaign only (not to the terms of a collective bargaining agreement), so long as the employer complies with the terms of the crosscheck agreement; and

(4) Language and procedures prohibiting the labor organization or the employer from coercing or intimidating employees, explicitly or implicitly, in selecting or not selecting a bargaining representative.

"Developer" means any person, corporation, association, general or limited partnership, limited liability company, joint venture, or other entity which does or which proposes to purchase, lease, develop, build, remodel, or otherwise establish a development project.

"Development project", "development", or "project" means any artificial change to real property that requires a grading or building permit as appropriate, including construction, reconstruction, demolition, expansion, enlargement, alteration, or erection of buildings or structures, in which the State or a county has a proprietary interest.

"Economic action" means concerted action initiated or conducted by a labor union or employees acting in concert therewith, to bring economic pressure to bear against an employer, as part of a campaign to organize employees or prospective employees of that employer, including such activities as striking, picketing, or boycotting. A lawsuit to enforce this chapter is not "economic action".

"Employer" means any developer, manager/operator, or subcontractor who employs individuals in a development project.

"Labor organization" means any organization of any kind, or any agency or employee representation committee or plan in which employees participate, and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.

"Manager/operator" means any person, corporation, association, limited or general partnership, joint venture, or other entity (including a developer) that operates or manages a facility in a development project, including a hotel or restaurant, or provides any material portion of the services provided by that facility in the project, whether by subcontract or state or county contract.

"Proprietary interest" means any nonregulatory arrangement or circumstance in which the financial or other nonregulatory interests of the State or a county in a development project could be adversely affected by labor-management conflict or consumer boycotts potentially resulting from a union organizing campaign, in the following circumstances:

(1) The State or county receives significant ongoing revenue, such as rent payments, under a lease of real property owned by the State or county for the development of a project, excluding government fees or tax or assessment revenues, or the like, except for tax revenues under the circumstances specified in paragraph (2);

(2) The State or county receives ongoing revenue from a project to pay debt service on bonds or loans provided by the State or county to assist the project, (including incremental tax revenues generated by the project, directly or indirectly, to pay debt service on bonds or to repay a loan by the State or county where the proceeds are used for development of that project); or

(3) The State or county has agreed to underwrite or guarantee the development or operation of a project, or loans related thereto.

In addition to the circumstances described in paragraphs (1) to (3), the State or county shall be deemed to have a proprietary interest in a project if the State or county determines or an interested party demonstrates prior to the effective date of the subcontract or state or county contract that there is a significant risk that the State's or a county's financial or other nonregulatory interest in a project could be adversely affected by labor-management conflict or consumer boycotts potentially resulting from a union organizing campaign, except that no circumstance or arrangement shall be considered "financial or non-regulatory" under this definition if it arises from the exercise of regulatory or police powers, such as taxation (except as provided in paragraph (2)), zoning, or the issuance of permits and licenses.

"State or county contract" means a lease, management agreement, service agreement, loan, bond, guarantee, or other similar agreement to which the State or a county is a party and in which the State or a county has a proprietary interest.

"Subcontract" means any lease, sublease, management agreement, or other similar agreement between a developer or a manager/operator and a subcontractor that contemplates or permits the subcontractor to operate or manage all or a portion of a project.

"Subcontractor" means any person, corporation, association, limited or general partnership, limited liability company, joint venture, or other entity that enters into a subcontract with a developer or manager/operator.

§ -3 Policy; requirements and procedures to minimize labor/management conflict when State or county has proprietary interest. (a) The State declares as a matter of general policy that when the State or a county retains or acquires a proprietary interest in a development project, it is essential for the protection of the State's or county's investment and business interests to require that employers operating a project agree to abide by crosscheck procedures for determining employee preference on the subject of labor union representation, as specified in this chapter.

(b) Pursuant to the policy stated in subsection (a), the following requirements are imposed, except no employer, developer, or manager/operator shall be responsible for obligations under this chapter if that person or entity is otherwise exempt from those obligations pursuant to section -4(b), or if the State or county does not have a proprietary interest in the project:

(1) An employer of employees working in a project shall:

(A) Enter into a crosscheck agreement, as specified in this chapter, with a labor organization that requests such an agreement for the purpose of seeking to represent those employees before executing the subcontract or state or county contract pursuant to which it will operate a project;

(B) If the parties are unable to agree to the terms of a crosscheck agreement within sixty days of the commencement of the negotiations, they shall enter into expedited binding arbitration in which the terms of a crosscheck agreement will be imposed by an arbitrator. In those proceedings, to be conducted by an experienced labor arbitrator selected as provided by the rules of the American Arbitration Association or equivalent organization, the arbitrator shall consider any model crosscheck agreement provided by the State or county and prevailing practices and the terms of crosscheck agreements in the same or similar industries, except that the crosscheck agreement shall include the mandatory terms identified in the definition of "crosscheck agreement" under section -2;

(C) Comply with the terms of that crosscheck agreement and this chapter; and

(D) Include in any subcontract which contemplates or permits a subcontractor to operate or manage a project, or to provide a service essential to the operation of the project, a provision requiring that subcontractor to comply with the requirements provided in this chapter. This subparagraph shall be a material and mandatory term of the subcontract, binding on all successors and assigns, and shall state (modified as necessary to accommodate particular circumstances):

"The State Legislature has enacted chapter       , Hawaii Revised Statutes, commencing at section -1, which law may apply to [Subcontractor]. Its terms are expressly incorporated by reference hereto. To the extent [Subcontractor] or its successors or assigns employs employees in [this facility] within the scope of that law, [Subcontractor] hereby agrees as a material condition of this [Subcontract] to enter into and abide by a crosscheck agreement with a labor organization or organizations seeking to represent [Subcontractor's] employees, if and as required by that chapter, and to otherwise fully comply with the requirements of that chapter. [Subcontractor] recognizes that, as required by that chapter, it must enter into a crosscheck agreement with a labor organization or organizations as specified by that chapter before executing this [Subcontract], and that being party to such a crosscheck agreement is a condition precedent of rights or obligations under this [Subcontract]."

Notwithstanding the requirements provided in subparagraphs (A) to (D), any employer who has in good faith fully complied with those requirements shall be excused from further compliance as to a labor organization which has taken economic action against that employer at that site in furtherance of a campaign to organize that employer's employees at that site for collective bargaining. This paragraph shall not be interpreted, however, to apply to economic action against an employer at other locations where that employer does business, or at any location for purposes other than organizing the employer's employees; nor shall economic action by one labor organization excuse an employer from the obligations of this chapter or a crosscheck agreement as to a different labor organization;

(2) Any developer or manager/operator of a project shall:

(A) To the extent it employs employees in a hotel or restaurant in a hotel or restaurant project, abide by the requirements stated in this subsection;

(B) Include the provision specified in paragraph (1)(D) in any subcontract, modified as necessary to accommodate the circumstances of that particular subcontract;

(C) Refrain from executing a subcontract by which an employer subject to paragraph (1) is authorized or permitted to operate a project until that employer has agreed to enter into any crosscheck agreement with a labor organization required by paragraph (1);

(D) Notify local labor councils and any employers that will operate a project that may be subject to the requirements of paragraph (1), as soon as the developer or manager/operator identifies that project or employer, but in no event later than twenty-one days before requiring an employer to sign a subcontract. This notification requirement applies only where the State's or county's proprietary interest is based on a lease, loan, or guarantee;

(E) Inform any prospective subcontractor that if the subcontractor acts as an employer subject to the requirements of paragraph (1), it must agree to enter into a crosscheck agreement pursuant to this chapter before it may execute the subcontract, and as a condition precedent to any rights or obligations under that document;

(F) Take reasonable steps to enforce the terms of any subcontract requiring compliance with this chapter. To the extent a developer or manager/operator is found to have intentionally aided, abetted, or encouraged a subcontractor's failure to comply with a provision or the terms of this chapter, either by action or inaction, that developer or manager/operator shall be jointly and severally liable for all damages awarded pursuant to section -5; and

(3) (A) Any state or county contract executed under the authority of any commission, department, authority, or officer of the State or county, which contemplates the use or operation of a development project shall include a provision requiring that any developer or manager/operator of a project pursuant to that state or county contract, and any employers operating in the project, agree to comply with the requirements imposed in paragraphs (1) and (2), as essential consideration for the State or county entering into the contract;

(B) To facilitate the requirements imposed by this section, the attorney general may provide a model recommended crosscheck agreement that includes the mandatory terms identified in the definition of "crosscheck agreement" in section -2 and that provides the maximum protection against labor-management conflict arising out of an organizing drive, and make the model recommended agreement available to parties required to enter into the agreement. The State or county may also prepare guidelines establishing standards and procedures related to this chapter. Notwithstanding this subparagraph regarding the preparation of a model crosscheck agreement or related guidelines, this chapter shall be self-executing and shall apply in all circumstances and to the extent provided in this chapter, in the absence of or regardless of a model crosscheck agreement or guidelines; and

(C) Any commission, department, authority, or officer of the State or county that issues a request for proposals, invitation to bid, or similar document regarding development of state or county property that could result in a proposal contemplating operation of a project after the effective date of this chapter shall include in that document a summary description of and reference to the policy and requirements of this chapter. Failure to include a description or reference to this chapter in a request for proposals or similar document shall not exempt any developer, manager/operator, or employer from the requirements of this chapter.

(c) The policy and obligations established in this section shall apply to particular developers, manager/operators, and employers whenever the State or county has a proprietary interest in a project, except as otherwise provided in this chapter. The determination whether or not the State or county has a proprietary interest in a project, and if so, whether an exemption applies under section -4(b), shall be made on a case-by-case basis by the attorney general on behalf of the State or the corporation counsel or county attorney on behalf of the county, by applying the standards and principles described in this chapter and any standards and principles provided in guidelines distributed pursuant to this chapter. Any party otherwise subject to the terms of this chapter because the State or county has a proprietary interest in a project, that claims an exemption from the terms of this chapter under section -4, shall have the burden of demonstrating that the basis for the exemption is clearly present.

§ -4 Scope and exemptions. (a) The requirements of this chapter apply only to the procedures for determining employee preference regarding whether to be represented by a labor organization for purposes of collective bargaining, or by which labor organization to be represented. This chapter does not apply to the process of collective bargaining in the event a labor organization has been recognized as the bargaining representative for employees of employers subject to this chapter. Nothing in this chapter requires an employer or other entity subject to this chapter to recognize a particular labor organization; nor does this chapter require that a collective bargaining agreement be entered into with any labor organization, or that an employer submit to arbitration regarding the terms of a collective bargaining agreement.

(b) The requirements of this chapter shall not apply to:

(1) Employers employing fewer than the equivalent of fifty full-time or part-time employees;

(2) Employers commencing operation in a project before the effective date of this chapter, or a project under any subcontract or state or county contract entered into before the effective date of this chapter (hereinafter, a "pre-existing agreement"). This exemption applies to an employer and to the employer's family for the duration of the pre-existing agreement, unless it is amended during its term resulting in a substantial amendment. This exemption shall apply beyond the expiration of the pre-existing agreement if it is renewed or extended without a change in ownership of the employer, and without changes resulting in a substantial amendment. For purposes of this exemption:

"Change in ownership" means a change in ownership, from the effective date of this chapter, of twenty-five per cent or more, unless the change is among members of the same family.

"Substantial amendment" to a pre-existing agreement means an amendment to or renewal or extension of a pre-existing agreement that provides for or permits a change in use within the scope of this chapter, or an increase in square footage, seating, or rooms of more than twenty-five per cent.

This chapter shall not be interpreted to impair the obligations of any pre-existing agreement to which the State or county is a party, unless the pre-existing agreement has been substantially amended after the effective date of this chapter;

(3) Any employer who is a signatory to a valid and binding collective bargaining agreement covering the terms and conditions of employment for its employees at that project, or who has entered into a crosscheck agreement with a labor organization regarding those employees, which provides at least equal protection from labor-management conflict as provided by the minimum terms provided in the definition of "crosscheck agreement" in section -2;

(4) Any project where the attorney general on behalf of the State, or the corporation counsel or county attorney on behalf of the county, determines that the risk to the State's or county's financial or other nonregulatory interest resulting from labor-management conflict is so minimal or speculative as not to warrant concern for the State's or county's proprietary interest;

(5) Any project where the developer, manager/operator, or employer, is an agency of the federal government or a statewide agency or entity ("public agency") and that public agency would prohibit application of this chapter; or

(6) Any project where the requirements of this chapter would violate or be inconsistent with the terms or conditions of a grant, subvention, or agreement with a public agency related to that project, or any related rules.

§ -5 Enforcement. (a) The requirement that employers enter into and comply with crosscheck agreements with labor organizations in the circumstances provided in this chapter, and the requirement that developers and manager/operators contractually obligate their successors, assigns, or subcontractors to be bound by the crosscheck agreement requirement, are deemed essential consideration for the State's or county's agreement to any state or county contract containing the crosscheck agreement requirement.

(b) The State or county shall investigate complaints that this chapter has been violated or that a crosscheck provision included in a state or county contract or subcontract pursuant to this chapter has been breached, and may take any action necessary to enforce compliance, including instituting a civil action for an injunction and specific performance.

(c) In the event the State or county brings a civil enforcement action for a violation of this chapter, any taxpayer or any person or association with a direct interest in compliance with this chapter may join in that enforcement action as a real party in interest. In the event the State or county declines to institute a civil enforcement action for a violation of this chapter, a taxpayer or directly interested person or association may bring a civil proceeding on its own behalf and on behalf of the State or county against that employer and seek all remedies available for a violation of this chapter and breach of a crosscheck agreement required by this chapter available under state law, including monetary, injunctive, and declaratory relief. In view of the difficulty of determining actual damages incurred by such a violation, liquidated damages may be awarded at the rate of $1,000 per day of violation, to be distributed equally between a private plaintiff, if any, and the general fund of the State or county, unless the liquidated damages award is found to be so excessive in relation to the violator's resources as to constitute a penalty.

(d) Any action challenging the applicability of this chapter to a particular employer may be brought only after first seeking an exemption pursuant to section -4, and shall be commenced within sixty days after notification that the exemption has been denied by the State or county.

(e) In no event shall the remedy for a breach of the terms of this chapter include termination of any such state or county contract or subcontract, nor shall any such breach defeat or render invalid or affect in any manner whatsoever the status or priority of the lien of any mortgage, deed of trust, or other security interest made for value and encumbering any property affected by the subcontract or state or county contract, including, without limitation, any leasehold estate or other interest in the property or improvements on the property."

SECTION 2. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 3. This Act shall take effect upon its approval.