Employer-union Organizing Assistance and Neutrality Agreements: Have We Overshot Congress's Landing and Upset a Fragile Balance

• Publication year: 2014

Employer-Union Organizing Assistance and Neutrality Agreements: Have We Overshot Congress's Landing and Upset a Fragile Balance

Robert Mollohan

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EMPLOYER-UNION ORGANIZING ASSISTANCE AND NEUTRALITY AGREEMENTS: HAVE WE OVERSHOT CONGRESS'S LANDING AND UPSET A FRAGILE BALANCE?

Robert J. Mollohan, Jr.^*

Table of Contents

Introduction.........................................................................886

I. Setting the Stage for Neutrality Agreements in American Labor Practice...............................................890

A. Unfair Labor Practices Under Taft-Hartley..............890
B. The Rise of Neutrality Agreements and Current National and Local Union Membership.....................892
C. Judicial Interpretation of a "Thing of Value"...........895

1. "Value" Set by Desire to Have the Thing............895
2. A Benefit to a Union Does Not Necessarily Constitute a "Thing of Value"..............................895

II. The Relationship Between Organizing Assistance and a Section 302 "Thing of Value"....................................897

A. Why Neutrality Agreements With Union Organizing Assistance Can Constitute a "Thing of Value"..........897

1. The Eleventh Circuit, the Value of Intangibles, and "Common Sense".................................................897
2. Deconstructing "Organizing Assistance": "Active" Versus "Passive" as the Key Factor....................899

B. Why Neutrality Agreements with Union Organizing Assistance Should Not Constitute a "Thing of Value"........................................................................902

1. Statutory Support for Upholding Employer-Union Contractual Agreements, Most Notably Within LMRA....................................................................902
2. Congress's Intent in Enacting Section 302..........905

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a. Construing "Thing of Value" With Reference to Preceding Textual Companion of "Money" in Statute's Text..................................................905
b. Lack of Mention in Statute and Legislative History............................................................906
c. Failure to Necessarily Corrupt a Union and to Necessarily Implicate Congress's Anti-Bribery and Extortion Purpose in Enacting Section 302..................................................................908

III. Coming Full Circle: Favoring Retaining Employer-Union Stability Over Less-Than-Threatening Policy Concerns.........................................................................909

A. Some Opposing Policy Considerations......................910

1. "Privatizing" Labor Law.....................................910
2. Coercion of Disenfranchised Employees to Join a Union....................................................................911

B. The Overriding Favorable Policy Consideration: Retaining Employer and Union Autonomy to Negotiate Union Organization and to Respect More Clearly-Established Outer Limits............................................913

Conclusion............................................................................915

Introduction

Since its inception, the Labor Management Relations Act (LMRA)¹ has been a divisive piece of legislation.² Generally, it made several important changes to the National Labor Relations Act (NLRA)³ and, in so doing, outlined a series of "unfair labor practices" that would be

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forbidden to unions.⁴ Section 302 of LMRA makes it unlawful for "any employer . . . to pay, lend, or deliver, any money or other thing of value . . . to any labor organization, or any officer or employee thereof, which represents, seeks to represent, or would admit to membership, any of the employees of such employer . . . ."⁵ Congress passed Section 302 with a predominant objective in mind—to prevent employers from compromising union officials' loyalty and union officials from unduly wresting financial concessions from employers.⁶

Over the past sixty-five years, courts have been tasked with interpreting this broad language to identify what constitutes a "thing of value" within the meaning of Section 302 in an extremely wide variety of circumstances.⁷ In recent decades, this issue has surfaced in several United States Courts of Appeal challenging the validity of

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certain employer-union organizing agreements, specifically those that provide for organizing assistance from an employer to a union.⁸ Courts tasked with determining whether these provisions constitute a "thing of value" to unions in violation of Section 302 of LMRA have followed varying rationales and reached different conclusions.⁹

Recently, in Mulhall v. Unite Here Local 355, an Eleventh Circuit panel interpreted "thing of value" in an illuminating but controversial way: it held that a neutrality agreement between an employer and a union that provided for organizing assistance from an employer to a union could constitute a "thing of value" in violation of Section 302 of the LMRA.¹⁰ This decision poses significant ramifications for employers and unions operating within the Eleventh Circuit's jurisdiction.¹¹ On the whole, it "potentially undermines the ability of an employer and a union to contract without risking a legal challenge from an individual employee," who simply may not wish to work at a

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place where employees are unionized, regardless of whether the individual employee opts out of representation.¹² Neither an employer nor a union may wish to risk the threat of a lawsuit to enjoin the agreements and penalties, as a Section 302 violation is an enumerated predicate "racketeering" activity in the RICO statute.¹³

Part I of this Note traces the enactment of the Taft-Hartley Act and briefly chronicles the rise in the use of neutrality agreements.¹⁴ Part I also addresses both sides of federal jurisprudence in the interpretation of what constitutes a "thing of value" within the meaning of Section 302 of LMRA, in the context of both employer-union organizing assistance and neutrality agreements.¹⁵ The development of this statutory inclusion, as well as recent judicial interpretation of this phrase, provides enormous insight into the Eleventh Circuit's recent decision, discussed in more detail in Part II.¹⁶ However, the rationale behind this decision has arguably imputed some sort of "intent requirement" into the statute, unsupported by its language and

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legislative history.¹⁷ It also does not serve the comprehensive judicial interest in "line-drawing and predictability" in statutory interpretation.¹⁸ After an analysis of arguments of both sides of this issue, Part III proposes that classifying these agreements as "things of value" does not serve Congress's purpose in enacting the statute, and that opposing policy considerations can be reconciled without following such a classification. Part III also highlights a potentially unworkable framework for interpreting all organizing agreements, past and future.¹⁹

I. Setting the Stage for Neutrality Agreements in American Labor Practice

A. Unfair Labor Practices Under Taft-Hartley

The Taft-Hartley Act came about as a result of almost immediate dissatisfactions with the previously-passed Wagner Act.²⁰ Generally, three major points underscore the arguments that changes to federal labor law were still warranted.²¹ First, organized labor had achieved a dominant power in industry, necessitating a balancing of organized labor's collective position with that of employers and individual employees.²² Second, unions had not necessarily developed a "sense of responsibility to industry and the public, or to individual employees and union members, correlative to their protected rights."²³ Third, labor organizations were not subject to the same or equivalent limitations and responsibilities as were employers.²⁴ In response to

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these widespread concerns, the Taft-Hartley Act added special prohibitions specifically aimed at preventing unfair labor practices and also applied the prohibitions to both union and employee conduct.²⁵

As it stands, however, LMRA expressly provides certain exceptions to Section 302's prohibition on an employer giving any "thing of value" to a union or its representatives.²⁶ An employer may only contribute financially to a union's operating account by deducting union dues from employee wages with express written consent from union representatives.²⁷

LMRA's prohibition on monetary transfers from employers to unions has not been an overly complex and problematic issue for parties, courts, and commenters to reckon with.²⁸ Similar "intangible" benefits have proven more difficult to evaluate, however, as a "thing of value" within the meaning of Section 302.²⁹ Several United States

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Court of Appeals cases have addressed forms of intangible benefits between employers and unions, including "benefits" in the form of organizing assistance in employer-union neutrality agreements.³⁰ Given the lack of statutory and regulatory guidance on "things of value" (with reference to intangible benefits),³¹ these courts have undertaken varying analyses, reached different conclusions, and set forth competing standards.³²

B. The Rise of Neutrality Agreements and Current National and Local Union Membership

Typically, non-unionized employees initiate the unionization process by contacting a local union.³³ Once a majority of the employees at an establishment have designated a particular union as their authorized bargaining representative, the union "ordinarily will request that the employer recognize the union and enter into a collective bargaining relationship."³⁴ At this point, the employer can simply grant this request, but more often than not, it declines in favor of exercising its right to demand a representation election.³⁵ During the

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so-called campaign period, employers give employees the management perspective of employees' union rights and the potential ramifications for agreeing to union representation.³⁶

Beginning in the late 1970s...