Protecting Employees from Quid Pro Quo Neutrality Arrangements

• Jurisdiction: United States,Federal
• Publication year: 2014
• Citation: Vol. 63 No. 6

Protecting Employees from Quid Pro Quo Neutrality Arrangements

Matthew Bowness

PROTECTING EMPLOYEES FROM QUID PRO QUO NEUTRALITY ARRANGEMENTS

Abstract

Throughout the past several decades, union density in the United States has declined dramatically. One of the primary causes of this decline is staunch opposition to unionization by employers throughout the country.

To unionize a group of employees, the union must win an election. Union elections are supervised by the NLRB. To get the NLRB to order an election, the union must first convince 30% of the employees to sign union authorization cards. Once the NLRB certifies that this requirement has been met, it orders that a secret ballot election be held. Typically, about two months pass between card certification and the actual election. During this time period, the union and the employer actively campaign for and against unionization.

To win the election, the union must convince more than 50% of the employees to vote for unionization. If the union successfully does so, it is certified as the exclusive bargaining representative of the employees. The union then begins negotiating the "first contract" between the employer and the employees, which dictates the terms of employment.

Employers typically prefer that their employees not join a union. Employers have developed several effective tactics for defeating attempts to unionize their employees. These tactics include (1) vehemently opposing unionization throughout the two-month campaign period and (2) taking advantage of some of the weaknesses of the NLRB union elections process to delay and ultimately derail the union campaign. These two tactics have been very effective, resulting in steadily decreasing union density.

In response to the trend of decreasing union density, unions have developed alternative means of unionizing new groups of employees without using the NLRB elections process. Specifically, unions have begun convincing employers to sign "neutrality agreements."

The typical neutrality agreement contains two primary provisions designed to help the union win the right to represent a group of employees. First, the agreement contains a provision obligating the employer to remain neutral to

[Page 1500]

unionization throughout the campaign period. Second, the agreement contains a card check provision. A card check provision has two parts. First, the employer waives its right to demand an NLRB-supervised secret ballot election. Second, the employer agrees to automatically recognize the union as the bargaining representative of its employees if a majority of those employees sign union authorization cards. These provisions are very effective at counteracting the employers' antiunion tactics. In fact, neutrality agreements with these two provisions are so effective that they can virtually guarantee that the union will be successful in unionizing a group of employees.

Because neutrality agreements can virtually guarantee unionization, employers typically will not sign one. There are, however, two ways to get an employer to sign a neutrality agreement. First, employers can be coerced. Employers can be coerced in many ways, including through the use of public opinion campaigns or as part of a settlement in litigation. Second, a union can bargain for a neutrality agreement. Employers will sign neutrality agreements if they are given something of great value in exchange. Bargained-for neutrality agreements are the focus of this Comment.

When bargaining for neutrality agreements, what might the union offer the employer? Recently, unions have begun trading substantive first-contract concessions, which are highly valuable to employers, for neutrality agreements. A union that has not been recognized as the bargaining representative for a group of employees meets with the employer before the two-month election campaign takes place. The union tells the employer that if it signs a neutrality agreement, the union will contractually agree in advance to certain provisions that the employer wants in its contract with its employees. Once the union wins the election, it honors the contractual promise it made and allows those provisions to become part of the first contract between the employer and its employees, whom the union now represents.

Essentially, the employer is able to ensure that if the union successfully unionizes its employees, the union will be contractually bound to act in the interests of the employer. Thus, the employer is able to mitigate, to some extent, the effects of unionization. Because this type of neutrality agreement creates the potential for corruption, many have argued that it should be barred by section 302 of the Labor and Management Relations Act, which is supposed to prevent corruption.

Third and Fourth Circuit decisions in 2004 and 2008 addressed this issue and held that neutrality agreements cannot violate section 302 of the LMRA

[Page 1501]

despite a variety of contrary arguments. However, in 2012, the Eleventh Circuit split with the Third and Fourth Circuits, holding that in some situations these agreements can violate section 302.

This Comment first discusses this circuit split and points out numerous problems with the arguments set forth in the Third and Fourth Circuit opinions. Then, this Comment argues that because of these problems, as well as the potential for corruption created by the Third and Fourth Circuit decisions, the Eleventh Circuit's decision is correct. Finally, this Comment proposes changes to the LMRA and the National Labor Relations Act that would serve as a solution to the problems created by neutrality agreements. These changes would also make the need for judicial review of future agreements under the Eleventh Circuit framework less necessary.

Introduction............................................................................................1502

I. Section 302 of the Labor and Management Relations Act . 1506
II. Neutrality Agreements and Collective Bargaining...........1507

A. Background.............................................................................. 1507
B. The Value of Neutrality Agreements......................................... 1508

1. Employer Intimidation and Antiunion Speech.................... 1509
2. First Contract ..................................................................... 1512

III. Perverse Incentives (Dana Corp.)..............................................1513
IV. The Split.........................................................................................1518

A. Third Circuit ............................................................................. 1518
B. Fourth Circuit ........................................................................... 1520
C. Eleventh Circuit ........................................................................ 1524

V. Argument.......................................................................................1526

A. Why the Eleventh Circuit Was Correct..................................... 1526
B. An Alternative Framework ....................................................... 1531

1. Structure ............................................................................. 1532
2. Enforcement ....................................................................... 1535
3. Benefits of proposed Changes ............................................ 1535

Conclusion................................................................................................1536

[Page 1502]

Introduction

The recent Eleventh Circuit decision in Mulhall v. UNITE HERE Local 355 has created a split between the Eleventh Circuit on one side and the Third and Fourth Circuits on the other.¹ At issue in the split is a dispute over the correct interpretation of section 302 of the Labor and Management Relations Act (LMRA). Subsection (a) of section 302 makes it unlawful for an employer to

pay, lend, or deliver, or agree 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.²

Section 302 also makes it illegal for a union or union representative "to request, demand, receive, or accept, or agree to receive or accept, any payment, loan, or delivery of any money or other thing of value prohibited by subsection (a)."³ The courts are split over whether organizing assistance given to a labor union by an employer in the form of a pre-recognition "neutrality agreement" constitutes a "thing of value" within the meaning of section 302.⁴

But what is a neutrality agreement? When a union wants to unionize a new group of employees, it must first convince at least 30% of the employees to sign authorization cards.⁵ If the union successfully does so, the union then submits the cards to the NLRB for certification.⁶ If the NLRB certifies that the union has secured cards from 30% of the employees, it orders that a secret ballot election be held where the employees vote on whether to unionize.⁷ Typically, about two months pass between the time the NLRB certifies the cards and the time that the election actually takes place.⁸ During these two months, the union and the employer actively campaign for or against unionization.⁹ At the election, if a majority of employees vote to unionize, then

[Page 1503]

the NLRB recognizes the union as the sole bargaining representative of the employees.¹⁰ The employer is then required by statute to bargain in good faith with the union to negotiate the "first contract" between the employees and the employer.¹¹ This employment contract determines the terms and conditions for all employees represented by the union.¹²

Neutrality agreements are a relatively new tool being used by unions to ensure their success in the union election process.¹³ Neutrality agreements are agreements between the union and the employer.¹⁴ They are...