A Valuable Ruling on Labor Agreements | U.S. Chamber of Commerce

A Valuable Ruling on Labor Agreements


A ruling last month by the Eleventh Circuit Court of Appeals could call into question the longstanding union tactic of pressuring employers to provide assistance to organizing campaigns, such as signing card check and neutrality agreements, and giving unions access to the workplace.  Employers who resist this pressure are often subjected to a corporate campaign designed to disrupt business so sufficiently that the employer ultimately gives in to union demands.  The Eleventh Circuit’s new ruling calls into question just how far unions may go to achieve their objectives before running afoul of the law.

The present case involved the Mardi Gras casino and racetrack in Florida, which was the object of an organizing campaign by UNITE HERE Local 335.  As usual, the union wanted unfettered access to employees and the employer’s agreement to remain neutral on the issue of unionization so that Local 335 would have a better chance of winning a representation election.  In this situation, the employer agreed to provide union representatives access to employees outside of work hours in non-public parts of the casino, as well as a list of all employees, including their job classifications, departments, and addresses.  It also signed a neutrality agreement.  In exchange for this assistance, the union agreed to not to picket, boycott, or strike against Mardi Gras.  More importantly, the union also agreed to spend over $100,000 to support a casino gaming ballot initiative that Mardi Gras wanted.

An employee, who did not wish to be pushed into a union, objected to this arrangement and filed a lawsuit alleging that these considerations amounted to a “thing of value” under the National Labor Relations Act (NLRA).  Section 302 of the NLRA prohibits employers from paying, lending, or delivering “any money or other thing of value” to a union that represents or seeks to represent the employer’s employees and likewise prohibits unions from demanding or accepting these things.  A district court dismissed the employee’s complaint, ruling that the employee failed to state a claim because the concessions from Mardis Gras to the union could not be considered a payment of things of value proscribed by the law.  

However the Eleventh Circuit, concluding that “it seems apparent that organizing assistance can be a thing of value,” found that negotiated organizing rules “can become illegal payments if used as valuable consideration in a scheme to corrupt a union or to extort a benefit from an employer.”  Pointing to the $100,000 that UNITE HERE was willing to spend on the ballot initiative in exchange for organizing assistance, the court determined that there was sufficient evidence that the employer’s concessions might be a “valuable consideration” worthy of further examination and ordered the lower court to reconsider the issue. 

The Eleventh Circuit quoted a case from the Ninth Circuit explaining that “the dominant purpose of §302 is to prevent employers from tampering with the loyalty of union officials and to prevent union officials from extorting tribute from employers.”  Turner v. Local Union No. 302, Int’l Bhd. of Teamsters, 604 F.2d 1219, 1227 (9th Cir. 1979).  Given the apparent value that organizing assistance might have, the Eleventh Circuit found that “it is too broad to hold that all neutrality and cooperation agreements are exempt from the prohibitions in §302.”  Instead, the court reasoned that these agreements would be §302 violations if they constituted an improper payment.

That, in turn, leads to the question of what constitutes an improper payment.  As described by the Ninth Circuit, the law seeks to prevent unions from “extorting tribute from employers.”  Tribute, in the form of concessions that go beyond what is required by the law, is precisely what corporate campaigns are designed to obtain when their object is neutrality, card check and other organizing assistance. 

As former Service Employees International Union (SEIU) president Andy Stern put it:  "We like to say: We use the power of persuasion first.  If it doesn't work, we try the persuasion of power.” A good example of this type of “persuasion of power” involved the United Food and Commercial Workers (UFCW), which launched a scorched-earth attack on Bashas’, a grocery chain in the desert southwest that refused to accede to the union’s demands for automatic recognition of the union without a vote by employees.  The UFCW allegedly spread false and defamatory information about the company, which triggered a lawsuit in 2007, but the dispute persisted, draining the company’s resources and ultimately leading to Bashas’ filing for bankruptcy in 2009, after which the company and the UFCW finally reached a settlement. 

Many similarly aggressive corporate campaigns have been waged over similar issues, and the Eleventh Circuit’s decision will pave the way for a legal examination of whether various forms of organizing assistance demanded by unions actually do constitute a “thing of value” covered under the NLRA.  If courts start to follow the logic of the Eleventh Circuit, unions may find their demands for employer acquiescence lead not to a successful organizing campaign, but to legal sanctions.