Can A Neutrality Agreement Be An 'Improper Payment' To A Union?

A recent U.S. Court of Appeals decision has opened the door for attacks on the legality of some neutrality agreements entered into between unions and employers. In Mulhall v. UNITE HERE, Local 355 et al., __ F.3d __ , No. 11-10594 (11th Cir., January 18, 2012), the court held that organizing assistance by an employer, of the type typically contained in a neutrality agreement, may violate the law if it was entered in order to improperly influence a union.

For years unions have been urging – many times through the pressure of bitter corporate campaigns – that employers enter into neutrality agreements. Under such an agreement, an employer agrees to remain neutral in any campaign to organize its employees. Neutrality agreements may also require the employer to recognize the union as the representative of its employees on the basis of signed union cards or a union petition, rather than a secret ballot NLRB election; give the union information on the employer's employees; grant the union access to company property in order to campaign and collect cards; and give similar advantages to the union. In return, the union might agree to cease its corporate campaign and/or offer the employer assistance in some other aspect of its business (e.g., support for a regulatory decision desired by the employer).

It has been argued that such agreements by employers constitute a "thing of value" which, when given to a union, violate section 302 of the Labor Management Relations Act, 29 U.S.C. §186. In pertinent part, section 302 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. . . . [Emphasis added.]

These previous attempts have been rejected. Adcock v. Freightliner LLC, 550 F.3d 369, 374 (4th Cir. 2008) and Hotel Employees & Restaurant Employees Union Local 57, 390 F.3d 206, 219 (3rd Cir. 2004).

In Mulhall, the employer entered into a neutrality agreement – which included the employer's obligation to provide...