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1 This Webcast Will Begin Shortly If you have any technical problems with the Webcast or the streaming audio, please contact us via at: Thank You! The In-House Counsel's Playbook: Assessing Corporate Vulnerability to New Union Organizing Tactics, Corporate Campaigns, and Two Labor Federations Wednesday, March 8, 2006 at 1:00 PM ET Association of Corporate Counsel

2 Presenters: Barbara Sellinger, Honeywell International, Inc. Michael J. Lotito, Partner, Jackson Lewis LLP Moderator: James Baine, General Attorney, Murphy Oil Corporation Page 4 State of Organized Labor Today Union Membership Rates % Rate (35%) 1960s s (7.8%)

3 Page 5 State of Organized Labor Today In 2005, the decline in union membership continued among wage and salary workers. Membership dropped to 12.4% from 12.5% in 2004 Most of the decline was in the private sector where membership fell from 7.9% of workers in 2004, to 7.8% in 2005 Page 6 State of Organized Labor Today A record 53 percent of non-union workers say they d join a union tomorrow if given the chance that s the highest percentage 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 you put that together with rising gasoline prices and declining wages and all the other things that are out there, if we didn t have unions, we d have to invent them this labor day. Professor Harley Shaiken, University of California, Berkeley September 5, New York Times

4 Page 7 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, the Laborers, the United Farm Workers and the Carpenters Union CTW wants more aggressive recruitment efforts and the ability to punish unions who fail to aggressively organize! Andrew Stern has had great success with an assertive and confrontational approach to organizing

5 Page 9 CTW Convention - Sept. 27, 2005 CTW 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 at 20 to 35 million dollars a year Placed a renewed emphasis on organizing and collective bargaining, but wants to continue traditional investments in politics! Convention delegates at the AFL-CIO convention solidly supported President John Sweeney's plan targeting $22.5 million to organizing

6 Page 11 Change to Win Seven 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 Win Major issues for employees today:! Layoffs / job security! Workloads! Wages and benefits / retirement security! Working hours / family time! Health care costs! Workers rights Source: Change to Win Federation

7 Page 13 Change to Win Focus on rebuilding labor strength through targeted industries and sectors 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 Source: Change to Win Federation Page 14 Corporate Campaigns A corporate campaign is a form of reputational warfare waged through broadsides, half truths, innuendo, and a staccato rhythm of castigation, litigation, legislation and regulation. It is fought in the press and on television, on the internet, in the halls of government, in the marketplace, on the trading floor, and in the boardroom. The corporate campaign is designed to appeal to an underlying distrust of big business. It is perhaps best understood as a morality play in which the union...defines standards of conduct that reflect its own interests, challenges the target company to meet these standards, and then portrays the company as a social outlaw when it proves unwilling or unable to do so. Manheim, Jarol B., Corporate Campaigns: Labor s Tactic of The Death of A Thousand Cuts. Labor Watch, January, 2002

8 Page 15 The New Union Strategy Corporate campaigns are used against:! Union-free employers targeted for organizing! Partially unionized employers! Unionized employers facing contract negotiations Unions profile and research employers to expose vulnerabilities and weaknesses, creating opportunities to communicate 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 neutrality agreements and voluntary recognition Elements 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

9 Page 17 Evolving Legal Landscape Federal 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 decertification petition following a voluntary union recognition for reasonable period of time! Under current Board law, an employee who suspects that the union lacked majority support at the time of recognition cannot obtain an NLRB election! An adverse decision would be a major blow to the union strategy of avoiding traditional NLRB election process through neutrality and card-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

10 Page 19 Maryland Legislation MD legislature passes law requiring employers with 10,000 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 the vote attract national attention.! Totaled more than contributions to state lawmakers in 2002 election cycle Day before the election MD s AFL-CIO chapter pledges not to endorse any lawmaker who did not support 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

11 Page 21 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

12 Page 23 Minimizing Risk Recommit to Issue-Free Workplace Educate/Inform Suppliers, Franchisees and Contractors Education! 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 consider sources of charitable revenue)! Religious and political leaders! Community organizations! Financing Agents

13 Page 25 Preemptive Communications Craft a message that is consistent with your mission and values! Define the institution before a union defines you! Compassionate concern for the employee/customer/patient/public! Financial stewardship and community service! Dignity, respect and fair treatment in the employment relationship! Openness and full disclosure Page 26 Preemptive Communications Incorporate your message into all communications Communicate your message to supervisors Communicate your message to applicants and employees Establish or renew religious and community ties Establish or renew ties to politicians

14 Page 27 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 system nationally and locally