‘Neutrality Agreements’ Dodge a Bullet
January 13, 2014 by Christopher Hammer
Unions dodged a potentially lethal bullet when the U.S. Supreme Court recently decided, after hearing oral argument, not to issue a ruling in a case calling into question the legality of union-employer neutrality agreements. This important ruling on a key private sector labor law principle is summarized here by the California law firm of Beeson, Tayer and Bodine (BT&B).
In Unite Here Local 355 v. Mulhall, the U.S. Supreme Court initially agreed to consider whether neutrality agreements violate the anti-bribery provisions of the Labor Management Relations Act (LMRA). Section 302 of the LMRA bars employers from providing a “thing of value” to unions and union officials. An affirmative ruling by the Supreme Court would have potentially banned the labor law practice of neutrality agreements and robbed unions of an important organizing tool.
The Mulhall case was brought by an employee of a casino and dog track in Florida. The neutrality agreement in question provided that the employer would remain neutral, and give the union access (for organizing purposes) to nonpublic areas of the employer’s premises and a list of employees’ names and contact information. In exchange, the union agreed to spend $100,000 to support an effort to pass a law that would legalize slot machines, legislation that would benefit the employer’s business. Mulhall argued that the promises the company gave the union were “things of value,” and therefore violated LMRA Section 302.
Before reaching the Supreme Court, the 11th Circuit Court of Appeals decided that the agreement gave the union “things of value”, but qualified its decision to permit neutrality agreements generally. The 11th Circuit said that an employer’s promise to “pay” these benefits in return for something of value from the union violates the LMRA only if the employer intends to use the payment to “corrupt” the union. Similarly, the Court held a union’s request that an employer make such a payment violates the Act only if the union intends to “extort” the benefit from the employer. The 11th Circuit’s decision is notable because it runs contrary to the opinion of two other circuit courts, which held that similar promises by an employer are not prohibited by the LMRA in any way at all. The complexities of rulings and consideration of intent of neutrality agreements makes it critical that unions understand labor law and work with attorneys that specialize in private sector labor law.
After hearing oral arguments, the Supreme Court abruptly decided not to issue a ruling and let the 11th Circuit’s decision stand. As a result, the law concerning neutrality agreements remains unchanged within California and most other states. That is, except within the 11th Circuit (Alabama, Florida, and Georgia), neutrality agreements are not currently at risk of being declared illegal. Within the 11th Circuit, neutrality agreements present a problem when they are part of a larger “scheme to corrupt a union or extort a benefit from an employer.” Therefore, even within the 11th Circuit, there is no reason for unions or employers to worry about entering into an organizing agreement, so long as the agreement is not part of a broader corrupt scheme.
In short, neutrality agreements remain a lawful tool for union organizing. However, union officials should take caution and consult with an experienced labor attorney such as those at BT&B before entering into these types of agreements. With over 75 years understanding and defending union and employee rights, we keep up to date on rulings and hope you will visit our legal blog to learn more.
The material on this website is provided by Beeson, Tayer & Bodine for informational purposes only and does not constitute legal advice. Readers should consult with their own legal counsel before acting on any of the information presented. Some of the articles are updated periodically, and are marked with the date of the last update. Again, readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.
