CAN’T BUY ME LOVE: U.S. SUPREME COURT TO CONSIDER THE LEGALITY OF NEUTRALITY AGREEMENTS

With the U.S. Supreme Court’s recent flurry of activity in the employment arena on discrimination and retaliation, the Court’s decision to hear one particular labor case seems to have gotten lost in the hullabaloo.  And a ruckus, after all, is what one is bound to find whenever The Beatles are referenced.

In Mulhall v. UNITE HERE, Local 355, 667 F.3d 1211 (11th Cir.), the Supreme Court will decide if an employer and a union entering into a neutrality agreement is lawful. 

A neutrality agreement is a contract between an employer and a union regarding the scope of communication to employees the union is attempting to organize.  Such agreements run the gamut of prohibiting the employer from communicating with employees who are the target of union organizing, to a mutual agreement to not cast aspersions on the other party (i.e., the company and the union can’t say bad things about each other), to allowing the union equal access to communicate with the target employees.  Neutrality agreements can go hand-in-hand with a union’s corporate campaign directed at an employer.  

The agreement in Mulhall stated that the employer would:  (1) provide union representatives access to non-public work areas to organize employees during non-work hours; (2) provide the union with a list of all employees, their job classifications, departments and addresses; and (3) remain neutral during the union’s attempted organization of the employees.  

In exchange, the union agreed to financially support (to the tune of $100,000) a casino gaming ballot initiative in the employer’s favor, and refrain from picketing, striking, or using other economic weapons against the employer.  Mulhall, the plaintiff in the case, is an employee who objected to being unionized and initiated the legal action (via the National Right to Work Legal Foundation). 

Section 302 of the Labor Management Relations Act makes it unlawful for an employer “to pay, lend, or deliver…any money or other thing of value” to a union, and prohibits the union from receiving the same.  Mulhall argued that the promises conferred to and received by the union in the neutrality agreement constituted “a thing of value.” 

Mulhall’s Complaint was dismissed at the federal district court level but on appeal, the Eleventh Circuit Court of Appeals agreed with Mulhall.  While the 11th Circuit did not go so far as to say all neutrality agreements are unlawful, it felt that the evidence in the case at-hand – including the money spent by the union on the ballot initiative – left it a possibility that the promises by the employer could have been “things of value” under the circumstances, and therefore, remanded the case. 

In issuing its Opinion, the Eleventh Circuit parted ways with the Third and the Fourth Circuits, both of which have held that “assistance” is not a thing of value.  While not addressing neutrality agreements directly, the Second and Sixth Circuits have both concluded that “a thing of value” under Section 302 does not have to be monetary.  With this split amongst the Circuits, the U.S. Supreme Court has decided to address the issue.  

The ruling the Supreme Court will make on this question is significant because it may substantially impact a tool unions frequently resort to in organizing campaigns – particularly corporate-style, top-down, campaigns.  If unions end up no longer having the benefit of access and/or unencumbered messaging, union organizing will take a hit.  On the flip-side, however, should the U.S. Supreme Court give a narrow reading to “a thing of value,” unions may be emboldened and more aggressive in their pursuit and use of neutrality agreements.  Suffice it to say, unions are looking for any advantage they can get while in the throes of two-plus decades worth of declining union membership.

Todd Sarver focuses his practice on the representation of management in all aspects of labor and employment law. He has extensive experience representing employers in issues arising under the National Labor Relations Act, as well as in labor arbitrations, work stoppages, injunction proceedings, collective bargaining negotiations, corporate campaigns, unfair labor practice proceedings, labor litigation and bankruptcy proceedings.
 
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