Wal-Mart Warns of Democratic Win

Wal-Mart Stores Inc. is mobilizing its store managers and department supervisors around
the country to warn that if Democrats win power in November, they'll
likely change federal law to make it easier for workers to unionize
companies -- including Wal-Mart.

In recent weeks, thousands of Wal-Mart store managers
and department heads have been summoned to mandatory meetings at which
the retailer stresses the downside for workers if stores were to be
unionized.

According to about a dozen Wal-Mart employees who
attended such meetings in seven states, Wal-Mart executives claim that
employees at unionized stores would have to pay hefty union dues while
getting nothing in return, and may have to go on strike without
compensation. Also, unionization could mean fewer jobs as labor costs
rise.

The actions by Wal-Mart -- the nation's largest
private employer -- reflect a growing concern among big business that a
reinvigorated labor movement could reverse years of declining union
membership. That could lead to higher payroll and health costs for
companies already being hurt by rising fuel and commodities costs and
the tough economic climate.

The Wal-Mart human-resources managers who run the
meetings don't specifically tell attendees how to vote in November's
election, but make it clear that voting for Democratic presidential
hopeful Sen. Barack Obama would be tantamount to inviting unions in,
according to Wal-Mart employees who attended gatherings in Maryland,
Missouri and other states.

"The meeting leader said, 'I am not telling you how to
vote, but if the Democrats win, this bill will pass and you won't have
a vote on whether you want a union,'" said a Wal-Mart customer-service
supervisor from Missouri. "I am not a stupid person. They were telling
me how to vote," she said.

"If anyone representing Wal-Mart gave the impression
we were telling associates how to vote, they were wrong and acting
without approval," said David Tovar, Wal-Mart spokesman. Mr. Tovar
acknowledged that the meetings were taking place for store managers and
supervisors nationwide.

Wal-Mart's worries center on a piece of legislation
known as the Employee Free Choice Act, which companies say would enable
unions to quickly add millions of new members. "We believe EFCA is a
bad bill and we have been on record as opposing it for some time," Mr.
Tovar said. "We feel educating our associates about the bill is the
right thing to do."

Other companies and groups are also making a case
against the legislation to workers. Laundry company Cintas Corp., which
has been fighting a multiyear organizing campaign by Unite Here,
relaunched a Web site July 14 called CintasVotes. The site instructs
visitors to take action by telling members of Congress to oppose the
legislation.

"We feel it's important that our employee partners
fully understand the implications that the Employee Free Choice Act
could have on their work environment and benefits," said Heather
Trainer, a Cintas spokeswoman.

Business-backed organizations are also running ads
aimed at building opposition to the bill, including the Coalition for a
Democratic Workplace, which counts several hundred industry
associations as members. Another group, the Employee Freedom Action
Committee, is run by former tobacco lobbyist Rick Berman. The groups,
which aren't affiliated with each other, say they have a total of $50
million in funding. Neither will disclose which companies or
individuals have provided funding.

The U.S. Chamber of Commerce has made defeat of the
legislation a top priority. In the past six months, it has flown state
and local Chamber members to Washington to lobby members of Congress.
On Thursday, the Chamber began airing a television ad in Minnesota and
plans to run ads in other states as part of a broader campaign.

The bill was crafted by labor as a response to more
aggressive opposition by companies to union-organizing activity. The
AFL-CIO and individual unions such as the United Food and Commercial
Workers have promised to make passage of the new labor law their No. 1
mission after the November election.

First introduced in 2003, the bill came to a vote last
year and sailed through the Democratic-controlled House of
Representatives, but was blocked by a filibuster in the Senate and
faced a veto threat by the White House. The bill was taken off the
floor, and its backers pledged to reintroduce it when they could get
more support.

The November election could bring that extra support
in Congress, as well as the White House if Sen. Obama is elected and
Democrats extend their control in the Senate. Sen. Obama co-sponsored
the legislation, which also is known as "card check," and has said
several times he would sign it into law if elected president. Sen. John
McCain, the likely Republican presidential nominee, opposes the
Employee Free Choice Act and voted against it last year.

Wal-Mart's labor-relations meetings are led by
human-resources managers who received training from Wal-Mart on the
implications of the Employee Free Choice Act.

Fine Legal Line

Wal-Mart may be walking a fine legal line by holding
meetings with its store department heads that link politics with a
strong antiunion message. Federal election rules permit companies to
advocate for specific political candidates to its executives,
stockholders and salaried managers, but not to hourly employees. While
store managers are on salary, department supervisors are hourly workers.

However, employers have fairly broad leeway to
disseminate information about candidates' voting records and positions
on issues, according to Jan Baran, a Washington attorney and expert on
election law.

Both supporters and opponents of the Employee Free
Choice Act believe it would simplify and speed labor's ability to
unionize companies. Currently, companies can demand a secret-ballot
election to determine union representation. Those elections often are
preceded by months of strident employer and union campaigns.

Under the proposed legislation, companies could no
longer have the right to insist on one secret ballot. Instead, the Free
Choice, or "card check," legislation would let unions form if more than
50% of workers simply sign a card saying they want to join. It is far
easier for unions to get workers to sign cards because the organizers
can approach workers repeatedly, over a period of weeks or months,
until the union garners enough support.

Employers argue that the card system could lead to
workers being pressured to sign by pro-union colleagues and organizers.
Unions counter that it shields workers from pressure from their
employers.

On June 30 the National Labor Relations Board ruled
that Wal-Mart illegally fired an employee in Kingman, Ariz., who
supported the UFCW and illegally threatened to freeze merit-pay
increases if employees voted for union representation. The decision
came eight years after the organizing campaign failed, and four years
after the case was originally heard.

"We've always maintained the termination was not
related to the union and that there was nothing unlawful about an
answer provided an associate about merit pay," said Mr. Tovar, the
Wal-Mart spokesman. "Following the decision, we were considering
offering reinstatement, but that is on hold, since the [union] appealed
the decision."

Unions consider the Employee Free Choice Act as vital
to the survival of the labor movement, which currently represents 7.5%
of private-sector workers, half the percentage it did 25 years ago. The
Service Employees International Union said the legislation would enable
it to organize a million workers a year, up from its current pace of
100,000 workers a year.

The Underdogs

The business-backed lobbying groups are running ads in
states where a win by a Democratic Senate candidate would boost support
for the legislation in the Senate, saying the loss of secret ballots
exposes workers to bullying labor bosses. In one, they use an actor
from the "Sopranos" TV series about mob life to hammer home their point.

Business groups say they're the underdogs since they
will be outspent by unions by a wide margin. Labor has pledged to spend
$300 million on the election and securing passage of the Employee Free
Choice Act, compared with under $100 million by business groups,
according to Steven Law, chief legal officer of the U.S. Chamber of
Commerce. The Chamber's strategy is to focus on the Senate, where labor
needs eight more supporters of the legislation to reach the 60 votes
needed to overcome a filibuster.

"This is a David-and-Goliath confrontation, but we
believe we'll have enough stones in the sling to knock this out," said
Mr. Law.

Wal-Mart is a powerful ally. Through almost all of its
48-year history, Wal-Mart has fought hard to keep unions out of its
stores, flying in labor-relations rapid-response teams from its
Bentonville, Ark., headquarters to any location where union activity
was building. The United Food and Commercial Workers was successful in
organizing only one group of Wal-Mart workers -- a small number of
butchers in East Texas in early 2000. Several weeks later, the company
phased out butchers in all of its stores and began stocking prepackaged
meat. When a store in Canada voted to unionize several years ago, the
company closed the store, saying it had been unprofitable for years.

Labor has fought back with a campaign to portray
Wal-Mart as treating its workers poorly. The UFCW helped employees file
a series of complaints about the company's overtime, health-care and
other policies with the National Labor Relations Board. Dozens of
class-action lawsuits were filed on behalf of workers, many of which
are still winding their way through the courts.

Wal-Mart has been trying to burnish its reputation by
improving its worker benefits and touting its commitment to the
environment. On the political front, it's hedging its bets, spreading
its financial contributions on both sides of the political divide.

Twelve years ago, 98% of Wal-Mart's political
donations went to Republicans. Now, as the Democrats seem poised to
gain control in Washington, 48% of its $2.2 million in political
contributions go to Democrats and 52% to Republicans, according to the
Center for Responsive Politics, a nonpartisan organization that tracks
political giving.

Write to Ann Zimmerman at ann.zimmerman@wsj.com and Kris Maher at kris.maher@wsj.com