Months after helping put Barack Obama in the White House, organized labor’s most important unions are sliding into vicious internecine warfare.

The strife has become so intense that the senior Democratic leadership is intervening. The Democrats, under pressure from labor to pass legislation that would make it much easier to unionize workplaces, fear the disputes will further erode support for the controversial issue; they also need union support to help secure popular backing for health-care reform. While the business lobby has so far been surprisingly successful at stalling the unionization bill, known as the Employee Free Choice Act (EFCA), it will have a tougher time getting its way on labor issues and on health care if the unions bring their quarreling to an end.

At the heart of the dispute is a three-way fight between the Service Employees International (SEIU), the country’s second-biggest union, and two factions of Unite Here, until recently one of the fastest-growing unions. The two leaders of Unite Here, Bruce Raynor and John Wilhelm, have fought bitterly over strategy and finances. On May 28, Raynor quit the union and joined 100,000 of his followers who had affiliated in March with the SEIU, which is commanded by Andrew L. Stern.

The much larger SEIU might now organize the same workers as Unite Here, and could claim a large share of the troubled union’s $400 million in assets. Wilhelm is fighting back. "The unified approach that the labor movement hoped for has been derailed by Andy Stern and SEIU," says Wilhelm. Stern vehemently disputes that notion. "I don’t think the labor movement has ever worked more closely on an issue than it has on EFCA," he says.

Epic struggles inside Big Labor are nothing new. But this fight–plus another clash involving a breakaway chapter of the SEIU in California–comes at a bad time for the Democratic leadership as it prepares for critical legislative efforts. Democratic senators met on June 3 to discuss possible compromises needed to pass EFCA, also known as card check. The U.S. Chamber of Commerce has done a highly effective job of stalling the legislation by pressuring moderate Democrats to withhold their support for the bill in its current form, since it would do away with secret ballots at union-organizing votes.

Most Democratic senators want to see a compromise that would keep the secret ballot but otherwise make it easier for unions to organize. Stern says he is open to approaches that would garner the 60 votes needed to overcome a potential filibuster, but Wilhelm accuses him of not consulting adequately with other unions.

GRASSROOTS SKILLS

The spectacle of union leaders quarreling openly about a bill they consider a top priority doesn’t help the Democrats. Says one party official close to top SEIU leaders: "They could use their money to organize politically instead of fighting other unions." The Democrats need the grassroots skills of the SEIU and other unions to push back against the Chamber’s shrewd recruitment of business owners to oppose the EFCA.

Prominent Democrats and other labor leaders are now getting involved. Sources say Senate Majority Leader Harry Reid met with top union officials to get them to settle their differences. And on May 28, American Federation of Teachers President Randi Weingarten sent a letter to Raynor and Wilhelm, telling them: "This conflict is causing collateral damage. …  The longer it continues, the less likely we are to enact a strong Employee Free Choice Act."

SEIU head Andrew Stern dismisses the idea that the infighting is derailing labor’s progress in Washington. It’s a sign of union strength, he argues, that discussions on card check continue. "No other bill could have withstood this kind of opposition and still survived," he says.

Still, labor supporters like Jamie Court, president of Consumer Watchdog, an advocacy group, are worried. "Any time you have labor fighting, it gives politicians an excuse to buy big business’ argument," he says. Stern ripostes that progress is still being made. Labor Secretary Hilda L. Solis and Health & Human Services head Kathleen Sebelius were both championed by the SEIU; White House political director Patrick Gaspard is an SEIU veteran. Obama’s appointments to the National Labor Relations Board are expected to vigilantly oversee efforts to form unions and bargain collectively.

The next challenge is health care. Labor groups have helped keep a government-funded insurance option–a key union goal–on the table. Union lobbyists have also so far fended off the idea of taxing health-care benefits to fund universal coverage. Some 500 full-time organizers from the SEIU are working to build grassroots support for the union version of health-care reform. Democrats hope a reunified labor movement will do even more.

Reshaping the NLRB

One way Obama can shift the power balance between labor and business is through regulatory appointments. The National Labor Relations Board oversees workers’ efforts to form unions and bargain collectively. In a client bulletin, law firm McKenna Long  &  Aldridge says two new additions to the NLRB will likely create a majority bloc "distinctly in favor of expanding the rights of unions and workers."

To read the bulletin, go to: http://bx.businessweek.com/labor-unions/reference/.

Additional reporting by Christopher Palmeri in Los Angeles, Moira Herbst in New York, and David Kiley in Detroit.