Neutrality Agreements: Will the NLRB Sanction Its Own Obsolescence?
NEUTRALITY AGREEMENTS:
WILL THE NLRB SANCTION ITS OWN
OBSOLESCENCE?
Presented To
AMERICAN BAR ASSOCIATION
ANNUAL MEETING
SECTION OF LABOR AND EMPLOYMENT LAW
NEW YORK, NEW YORK
JULY 10, 2000
By
Charles I. Cohen
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036
(202) 467 - 7710
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Neutrality Agreements: Will the NLRB Sanction Its Own Obsolescence?
Neutrality Agreements: Will The NLRB
Sanction Its Own Obsolescence?
by
Charles I. Cohen1
Introduction
This paper differs from those normally presented at American Bar Association meetings
of the Section in at least two respects. First, topics analyzed by the Committees usually relate to
developments occasioned by a recent case or series of cases that decide an issue of significance to the
labor-management community. In this instance, as will be shown below, there is very little law on the
subject or, as one Presidential candidate terms it, “there is no controlling legal authority.” Rather, the
subject of neutrality agreements has been occurring in a context largely free of National Labor Relations
Board (“NLRB”) input.
The second difference relates to the fact that a primary function of the NLRB is to
regulate organizing campaigns and the process of union recognition as the exclusive bargaining agent of
statutory employees. Yet the very subject of this paper relates to agreements which, in large measure,
remove the NLRB from the process, either because neutrality provisions mandate no employer
campaign against unionization or because the parties have agreed upon a non-Board mechanism for
monitoring union recognition. Indeed, some neutrality provisions go so far as to alter fundamental
1/
Charles I. Cohen is a Senior Partner in the Washington, D.C. office of Morgan, Lewis & Bockius
LLP. From March 1994 through August 1996, Mr. Cohen served as a Member of the National
Labor Relations Board.
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collective bargaining principles of the Labor-Management Relations Act (“the Act”) by providing for
interest arbitration of first contracts.
Therefore, unlike most papers presented, this one will largely be an explication of what
neutrality agreements are, their importance and prevalence, an analysis of the scant precedent, and an
assessment as to how the NLRB will likely react, when confronted with refusal to bargain allegations, to
various provisions.2
The term “neutrality agreements” is used in this paper as an umbrella to cover the many
and varied provisions described below. Neutrality agreements represent the national labor movement’s
attempt to jumpstart union organizing, reverse the steadily declining influence that unions hold among the
private workforce, and ensure union success. What separates this union initiative from previous efforts
is that many neutrality agreements contain built-in provisions designed to ensure union success in
organizing, including automatic recognition based on card checks and requirements that the neutrality
provisions would also apply to the corporate affiliates of the company that actually enters into the
neutrality agreement. In essence, neutrality agreements, although they take many forms and cover a
wide range of issues beyond neutrality, enable unions to utilize their considerable leverage at the
bargaining table with already represented employers to obtain organizing tools for use elsewhere.
Neutrality agreements have quickly become part of the contemporary labormanagement landscape and an issue of the highest priority to major national unions. The
Communications Workers of America has been a leading force in obtaining neutrality agreements in
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Neutrality agreements also raise potential NLRA Section 8(a)(2) issues concerning whether the
beneficiary union is being given unlawful assistance.
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their recent collective bargaining negotiations. Other national unions, including the International
Brotherhood of Electrical Workers, the Bakery, Confectionary and Tobacco Workers, the Hotel
Employees and Restaurant Employees, the United Steelworkers of America, the United Auto Workers,
and the IUE have also been successful in securing neutrality agreements in contracts. Fearing
debilitating strikes, corporate campaigns, and regulatory interference, many large employers in the steel,
health care, communications, hotel, and gaming industries have signed agreements with strong neutrality
language. The advantage to unions in obtaining neutrality agreements is apparent: they assist unions in
increasing membership without having to go through the lengthy, expensive, and ultimately unpredictable
process of the NLRB. Sophisticated neutrality agreements ease organizing at the signatory employer’s
corporate affiliates and business partners, which furthers union objectives to bind affiliated companies to
union contracts as a substitute for traditional union organizing and bargaining.
Neutrality agreements take many forms and differ significantly in complexity and level of
sophistication. To label a “neutrality agreement” as requiring only “neutrality” during an organizing
campaign, however, would fail to capture the high degree of complexity, breadth of coverage, or
potential degree of intrusiveness into a company’s operations that these agreements actually involve.
Simply put, neutrality agreements frequently go far beyond a company remaining “neutral” in the face of
an union organizing drive at one of its unorganized facilities or operations.
From a legal perspective, neutrality agreements are fully enforceable contracts. They
may be enforced in federal court under Section 301 of the Act, 29 U.S.C. Section 185, with the only
caveat being that a reviewing court will likely not enforce an agreement if representational issues are
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implicated. Courts will also enforce arbitration decisions rendered under a neutrality agreement
pursuant to their contractual authority.
From a practical perspective, the most important issue has been upper management’s
resolve in not agreeing to neutrality agreements in the face of enormous pressure. Assuming that
challenge is met, the most troublesome legal issues that arise pertain to the very negotiation of the
agreements, the key question being whether neutrality clauses are mandatory or permissive subjects of
bargaining. This, in turn, determines whether a union can insist to impasse over their negotiation and
lawfully strike in support of its position.
Just What Are Neutrality Agreements
1.
Under the “typical” neutrality agreement, employers must remain more than
“in neutral.” As mentioned, neutrality agreements take many forms and sizes. Simply put, neutrality
agreements go far beyond a company remaining neutral in the face of an union organizing drive at one of
its unorganized facilities or operations. “Typical” provisions of neutrality agreements require the
signatory company to not only maintain campaign neutrality, but also:
!
to agree to a “gag order” on communications to employees
about the union;
!
to extend preferential hiring rights at unorganized facilities;
!
to meet promptly with the union to discuss such issues as
appropriate unit, supervisory employees, and excluded
employees, etc.;
!
to provide the union an early list of the names and addresses of
the employees in the agreed-to unit;
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2.
!
to grant the union access to the facilities of the target employer
to distribute union literature and meet with employees;
!
to recognize the union based on an authorization card majority
(or some higher percentage), i.e., without an NLRB election;
!
to agree to start contract negotiations for the newly-organized
unit within a specified (and short) time frame and submit open
issues to binding interest arbitration if no agreement is reached
within 60 days;
!
to extend coverage of the neutrality agreement to “affiliates” of
the signatory company, defined as companies in which the
signatory has at least a 50% interest or exercises control; and
!
to agree not to create another entity in the same industry
without ensuring that it adopts the neutrality agreement.
Provisions of a neutrality agreement differ by degree of intrusiveness. The
elements of “typical” neutrality agreements fall across a wide continuum of “intrusiveness,” from those
that are moderately intrusive of an employer’s operations and the activities of the affected employees,
to those that significantly impact operations and activities. The less intrusive elements of a “typical”
neutrality agreement are the following:
!
access to the employer’s facilities by union organizers;
!
employee rosters once a union initiates a campaign; and
!
preferential hiring.
More intrusive provisions include:
!
gag orders on employer speech during campaigns; and
!
meeting promptly with the union to discuss appropriate unit,
supervisory and excluded employees, etc.
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The most intrusive provisions include:
!
card check recognition;
!
arbitration of first contacts;
!
extending coverage to corporate affiliates and business
opportunities such as joint ventures; and
!
extending coverage to entities at which the signatory employer
seeks to make a “material investment.”
Enforceability of Neutrality Agreements
As a threshold matter, reviewing courts have held that normal neutrality clauses, once
agreed to, are enforceable in federal court under Section 301 of the Act so long as doing so does not
implicate any representational issues. Hotel Employees, Restaurant Employees Union, Local 2 v.
Marriott Corp., 961 F.2d 1464, 1469 (9th Cir. 1992) (neutrality clause enforceable since it did not
require the district court to identify an appropriate bargaining unit or designate an exclusive bargaining
representative); Hotel & Restaurant Employees Union Local 217 v. J.P. Morgan Hotel, 996 F.2d 561
(2d Cir. 1993) (court has concurrent jurisdiction with NLRB in suit on neutrality agreement where
parties have reached private accord governing representation or where agreement contains a provision
for arbitration). The court in J.P. Morgan enforced an arbitrator’s ruling under a neutrality clause that
the union had obtained valid majority support among the company’s employees and that the
authorization cards were not obtained through union coercion.
The lesson of these cases for employers is clear -- once entered into, a court will likely
enforce the commitments made to the union in a neutrality agreement unless the issue implicates the
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NLRB’s representation processes or violates a statutory provision of the Act or the antitrust laws.
Moreover, given the emphasis placed on these agreements by unions, once entered-into, employers will
be hard-pressed to negotiate them out of new contracts.
The Mandatory/Permissive Dichotomy
An additional concern in considering the legal issues involved in the negotiation of
neutrality clauses is the distinction, alluded to above, between “mandatory” subjects of bargaining and
“permissive” subjects. This is so because mandatory subjects of bargaining may be insisted upon to a
point of impasse and strike; permissive subjects may not.
According to the U.S. Supreme Court, a mandatory subject involves only those issues
which settle an aspect of the relationship between the employer and its employees. Allied Chemical &
Alkali Workers of America, Local Union No. 1 v. Pittsburgh Plate Glass Co., Chemical Division, 404
U.S. 157 (1971). A permissive subject, on the other hand, involves a wide variety of other subjects
that do not deal with rates of pay, hours and terms and conditions of employment of the bargaining unit
employees. The parties are lawfully permitted to negotiate such provisions, but a party may insist to
impasse only with respect to mandatory subjects of bargaining. Insistence to impasse on a permissive
subject violates the statutory duty to engage in good faith bargaining. NLRB v. Wooster Division of
Borg-Warner Corp., 356 U.S. 342 (1958).
Mandatory subjects involve subjects that are specific to the employment relationship
between an employer and its unit employees. Matters involving employees and employers outside that
specific employment relationship, while not generally mandatory subjects, are not wholly excludable
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from the bargaining obligation, however. The Supreme Court has stated that the issue in such matters is
“not whether the third-party concern is antagonistic to or compatible with the interests of the
bargaining-unit employees, but whether it vitally affects the ‘terms and conditions’ of their employment.”
Pittsburgh Plate Glass Co., 404 U.S. at 179.
Whether or not a proposed neutrality clause is viewed as mandatory or permissive is of
obvious importance. The issues raised by neutrality clauses are largely ones of first impression, as there
is currently no NLRB decision directly pertaining to neutrality issues. Although the NLRB has not yet
voiced an opinion on the issue, the General Counsel of the NLRB has issued an Advice Memorandum
signaling what may be in store in the future.
The NLRB General Counsel’s Memorandum in Sahara Hotel is the Most Comprehensive
NLRB Analysis of Neutrality Agreements
On February 13, 1996, in Sahara Hotel and Casino, 28-CB-4349, the Division of
Advice, under General Counsel Feinstein, issued an Advice Memorandum addressing a neutrality
agreement which had four parts -- (1) a card check provision; (2) an employer speech provision; (3) an
access clause; and (4) a roster provision. He found that three of the four provisions (employer speech,
access and the roster provision) were nonmandatory subjects and that a complaint should issue alleging
that the union unlawfully insisted to impasse on these provisions.
Although determining that a complaint should issue under Section 8(b)(3), the General
Counsel took the unusual step of arguing against his own complaint by concluding that the Region
should argue that two provisions (access and the roster provision) are mandatory subjects and,
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therefore, the union’s insistence on such proposals was lawful. He acknowledged in making this
determination that, under current Board law, both clauses were “arguably permissive.” According to
the Advice Memorandum, these provisions were merely a method for implementing the contract’s
“after-acquired” clause, which the Board has concluded in the past is a mandatory subject of
bargaining.3 Accordingly, he concluded:
These provisions merely describe the mechanisms that the Union has
asked the Employer to agree to as a way of implementing the Kroger
clause. Thus, since the Union may lawfully insist to impasse on the
Kroger clause [including over card check recognition], the Union and
the Employer may bargain about, and the Union may lawfully insist to
impasse on the procedure to be used -- providing names and addresses
of unit employees and access to the facility where the employees are
located -- to facilitate the ultimate implementation of the Kroger clause.
Sahara Hotel Advice Memorandum at 14.
He dismissed, in advance, management’s counter-argument that the access and roster
clauses “are permissive because they are merely intended to help the Union organize the employees”
and, therefore, deal with the Union’s institutional interests and “settle[s] no term or condition of
employment.” He concluded that:
the same can be said of the Kroger clause itself, since it permits the
Union to tell employees, in the course of an organizing campaign, that
as soon as the Union has achieved majority status, the employees will
share in the already determined benefits of the existing collectivebargaining agreement and will not, unlike most employees in a newly
organized facility, have to await the completion of initial contract
3/
A lawful Kroger-type “after-acquired” clause provides for extension of the contract to new facilities
of the employer and absorption of the employees into the existing bargaining unit if a majority of
the employees at the new facility sign authorization cards in favor of the union. Houston Div. of the
Kroger Co. (Kroger II), 219 NLRB 388 (1975).
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negotiations to obtain new terms and conditions of employment. Since
Kroger clauses are deemed mandatory even though it could be similarly
argued that they facilitate union organizing, the argument that the roster
and access provisions are permissive because they aid union organizing
must also fail.
Sahara Hotel Advice Memorandum at 15.
On the other hand, the General Counsel did conclude that the union’s proposal to
curtail the employer’s free speech rights was permissive, finding support in long-established precedent
that one party may not insist to impasse on a waiver of the other party’s statutory rights. See, e.g.,
Metropolitan Edison Co. v. NLRB, 460 U.S. 693 (1983). On the significant issue of card check
recognition, the General Counsel concluded that this provision was privileged as a lawful Kroger-type
after-acquired clause. He did so without specifically addressing what some may perceive to be an
inconsistency -- that waiver of an employer’s statutory right “to demand a union victory in a Board
election before recognizing and bargaining with the union” is a mandatory subject in the context of
negotiating an after-acquired Kroger-type clause.
The unfair labor practice charge in Sahara was withdrawn following the sale of the hotel
to another operator. As neutrality proposals become even more prevalent, the full NLRB will need to
address these issues from a bargaining to impasse standpoint.
Given this paucity of precedent, I will take the hazardous step of analyzing each of the
clauses of a “typical” neutrality agreement with a view toward how the Board might well react when
faced with a case in which there was bargaining to impasse.
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1.
“Gag order” on employer communications. As General Counsel Feinstein
recognized in Sahara, one party’s demand for a waiver of the other party’s statutory rights is a
permissive subject of bargaining over which the party may not insist to impasse. See, e.g., Reichhold
Chemicals, Inc., 288 NLRB 69, 71-72 (1988); Magic Chef, Inc., 288 NLRB 2 (1988); American
Cyanimid Co. v. NLRB, 592 F.2d 356, 363-4 (7th Cir. 1979). Section 8(c) of the NLRA expressly
protects the employer’s “free speech right to communicate his views to his employees” regarding the
issue of union representation. NLRB v. Gissel Packing Co., Inc., 395 U.S. 575, 618 (1969). As with
other statutory rights, an employer may knowingly, willingly, and voluntarily curtail its Section 8(c)
protections. In fact, in currently negotiated clauses, employers have agreed to just such limitations.
But, unless waived, an employer should not be compelled to so agree. Of at least equal significance is
the fact that most neutrality clauses apply to out of unit employees, thereby rendering them
presumptively non-mandatory by virtue of the fact that they do not vitally affect the terms and
conditions of the unit employees. For both of these reasons, it is likely that the Board would find a
violation.
2.
Preferential hiring. A union may seek to obtain preferential hiring rights for
the signatory employer’s employees (particularly laid-off employees) at other facilities controlled by the
signatory. As a matter of law, it is an unfair labor practice under NLRA Section 8(a)(3) for an
employer to discriminate in hiring -- either favorably or negatively -- based upon membership in a labor
union. Under Section 8(b)(2), the union commits an unfair labor practice by demanding the inclusion of
such a clause in a contract.
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Nonetheless, the preferential hiring requirement found in many neutrality
agreements, while arguably a permissive subject of bargaining, is not likely to be found violative of the
NLRA. In most agreements of this type, the preference can be overcome when the employer finds
more qualified outside candidates or the applicant lacks the necessary qualifications for the position.
Most importantly, the preference does not usually bestow recognition on the union prior to the union
attaining majority status. Even in more extreme cases, no violation of the NLRA has been found. For
example, then General Counsel Rosemary Colleyer found in General Motors Corp., Saturn Corp., 7CB-6582, Advice Memorandum dated June 2, 1986, that the employer’s pre-hire recognition of the
UAW provided recognition only upon attainment of majority status and the employer and union had not
entered into a premature “functioning collective bargaining relationship.” A similar argument by a union
and a cooperating employer would probably prevail today.
3.
Providing employee names and addresses. These kinds of proposals under
current Board law are “arguably permissive” or non-mandatory. Employers have no independent
statutory obligation to provide unions seeking to organize its employees the names and addresses of the
targeted employees other than as required before an NLRB election. Excelsior Underwear, Inc., 156
NLRB 1236 (1966). Such a provision is also only permissive because it “settles no term or condition
of employment” of unit employees as does a mandatory subject. Rather, this provision merely serves to
further the union’s own institutional interests by facilitating the organizing of unorganized employees.
See, e.g., Borg-Warner, 356 U.S. at 350. Matters of internal concern only to the union do not
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encompass mandatory subjects of bargaining. Mid-State Reading Mix, 307 NLRB 809 (1992). It
therefore would appear that the better argument is that a violation should be found.
4.
Access to the employer’s facilities. As described by Advice Memorandum
in Sahara, such proposals are “arguably permissive.” The Supreme Court in Lechmere, Inc. v. NLRB,
502 U.S. 527 (1992), held that an employer may bar from its premises non-employee union organizers
“unless the union carries its ‘heavy’ burden of proof that no other reasonable means of communication
with the employees exist.” Sahara Hotel Advice Memorandum at 13, citing Lechmere. Waiver of such
a right is, of course, permissible. In the absence of such a waiver, a violation should be found.
5.
Recognition based on card check majority. The same type of analysis
applies here as with other waivers of an employer’s statutory right. (See above.) While arguably
permissive under present Board law, this type of proposal is extremely important to both employers and
unions. Based on Sahara, and if it is presented as part and parcel of a Kroger-type after-acquired
clause, it would likely be viewed as a mandatory subject over which a union could bargain to impasse.
But, if as in most cases, there is no after-acquired clause in the contract, logic would dictate that it is
non-mandatory.
6.
Binding interest arbitration if no agreement reached after a specified
period of negotiations. This kind of provision is clearly permissive because it does not settle any
term or condition of employment for the existing bargaining unit, only the newly-organized employees
who would typically be outside the bargaining unit. As stated above, the Supreme Court, in Allied
Chemical & Alkali Workers of America, Local Union No. 1 v. Pittsburgh Plate Glass Co., Chemical
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Division, 404 U.S. 157 (1971), defined a mandatory subject of bargaining as one that settles an aspect
of the relationship between the employer and its unit employees. Where, as here, the matter deals with
individuals outside that relationship, the touchstone is “not whether the third-party concern is
antagonistic to or compatible with the interests of bargaining-unit employees, but whether it vitally
affects the ‘terms and conditions’ of their employment.” Id. at 179. Where the interest arbitration
provision does not “vitally affect” the terms and conditions of bargaining unit employees, the better
argument is that such a provision is permissive in nature, not mandatory.
7.
Extending coverage of the neutrality agreement to company “affiliates”
and other entities, potentially including joint ventures. This type of provision is not normally
thought of as a neutrality agreement. But, as shown below, the relevance is present. This is potentially
the most controversial aspect of neutrality agreements and the most “intrusive” into a company’s
operations and business dealings. It gives rise to a potential violation of Section 8(e) of the NLRA and
creates a whole class of potential plaintiffs who would “cease doing business” with the signatory
company rather than agree to accept the terms of the neutrality agreement.4 If, as explained below,
these types of clauses are deemed mandatory, they may be regarded as ultimate neutrality clauses
because they not only ease the recognition process, but they actually sweep the employees into the
established collective bargaining unit by operation of law. In other words, if these clauses are
4/
Section 8(e) provides, in relevant part, that “[i]t shall be an unfair labor practice for any labor
organization and any employer to enter into any contract or agreement . . . to cease doing business
with any other person, and any contract or agreement entered into . . . containing such an
agreement shall be to such extent unenforceable and void . . . .” 29 U.S.C. § 158(e) (1999).
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mandatory and are applied to an employer’s other operations, then the many provisions discussed
above are merely mild provisions and not worth the debate on legality.
Prior to 1996, the law was relatively clear that “any attempt to impose a contract on
separate employers of employees in ‘work units far removed from the contractual unit’ is plainly
secondary and is unlawful under Section 8(e), absent proviso protection.” Carpenters Northeast Ohio
District Council (Alessio Corp.), 310 NLRB 1023 (1993). In order for a union to lawfully seek to
bargain to impasse over such a clause, it would need to demonstrate a single employer relationship
between the signatory employer and its non-unit affiliates, and under well established Board law,
majority ownership alone was insufficient to establish single employer status.
A dramatic sea-change occurred with the Board’s decision in Painters and Allied
Trades District Council No. 51 (Manganaro Corp.), 321 NLRB 158 (1996), Member Cohen
dissenting. In a departure from NLRB precedent, the Board articulated a very broad standard for
determining whether a union can bargain to impasse and strike to obtain a clause extending the contract
to other entities. Under this test, when there is a “substantial commonality or interrelationship of
management, control, or ownership” between the entities, the Board presumes that the signatory has
control over the assignment of work of the other entity, and for purposes of Sections 8(b)(4) and 8(e),
the entities are regarded as a single employer. While under previous Board precedent, ownership was
not sufficient to show right of control, under this broad standard, substantial commonality of ownership
is sufficient for a finding of right to control. At its core, the decision “converted” what had been
traditionally a non-mandatory subject of bargaining (under Alessio), i.e. committing parent and non-
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union companies to the agreement, to a mandatory subject of bargaining, a critically important
distinction should a bargaining impasse be reached.
In dissent, Member Cohen stressed the majority’s failure to adhere to Board precedent
holding that majority ownership is insufficient to establish single employer status. He argued that the
work preservation clause in Alessio had exactly the same “vice” as the present case of imposing the
terms of the collective bargaining agreement on entities that signatory employers do not control. Under
the majority’s version of “control,” Member Cohen said, virtually any participation by principals of a
signatory company in the operations of a nonunion dual shop, even without common ownership, would
constitute “control” and would trigger the work preservation clause.
Member Cohen argued that the Board’s decision overruled Alessio sub silentio. The
majority claimed it was not overruling Alessio, distinguishing Alessio based on a lack of demonstration
of common control. Yet the common control the majority found demonstrated in Manganaro is based
on ownership, a direct departure from Board precedent, including Alessio. Thus, the distinction by the
Board appears tenuous at best.
Under Manganaro, control will be presumed if there is a mere substantial commonality
or interrelationship of management, control, or ownership. The Board has dramatically lowered the
threshold for lawful work preservation clauses by articulating this new, broader standard for
distinguishing primary from secondary activity. Under this new regime, unions, depending on their
strength, will have much greater leeway to insist upon, and strike, to extend a collective bargaining
agreement, including a neutrality agreement, to an employer’s related entities. An employer challenging
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a Manganaro-type clause would be permitted, of course, to prove that it actually did not have the right
of control over the assignment of work at the other entity or joint venture. If that were proved, the
insistence on the clause would be unlawful.
But, the Board’s application of Manganaro has been uneven. See District Council Carpenters
(Manufacturing Woodworkers Ass’n), 326 NLRB No. 31 (1998) (Manganaro applied, Member
Hurtgen dissenting in part, but violation found based on joint venture clause); International Ass’n of
Bridge Structural and Ornamental Iron Workers (Southwestern Materials & Supply, Inc.), 328 NLRB
No. 142 (1999) (Alessio applied); and Local 520, IUOE (Massman Constr. Co.), 327 NLRB No.
208 (1999) (Alessio applied to joint venture clause). How the issues raised by these cases will
ultimately sort out as well as their effect, if any, on the legality of neutrality clauses is an open question.
Recent Board Holdings
Although, as mentioned, there is virtually no Board precedent dealing specifically with
neutrality agreements, two recent Board decisions should also be thrown into the mix and may be
instructive on aspects of future cases.
1.
United Food and Commercial Workers Locals 951, 7 and 1036 (Meijer,
Inc.), 329 NLRB No. 69 (1999). In Meijer, some employees who resigned from the union objected
to the use of their dues in support of organizing activities aimed at non-bargaining unit employees (the
so-called Beck objectors). The Board ruled, Member Brame dissenting, that expenses for organizing
activities are chargeable to objecting bargaining unit members. Meijer, 329 NLRB at *6. The Board
found organizing activities to be “<germane to the union’s role in collective-bargaining . . . [because
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they] “. . . may ultimately inure to the benefit of the members of the local union by virtue of their
membership.”’” Id. (quoting California Saw and Knife Works, 320 NLRB 224, 329 (1995), enf. sub
nom. IAMAW v. NLRB, 133 F.3d 1012 (7th Cir. 1998) (quoting Lehnert v. Ferris Faculty Ass’n,
500 U.S. 507, 524 (1991))). The Board stated that organizing activity is germane to collective
bargaining because even non-member bargaining-unit employees would benefit from the union’s
organization efforts, and as a result, “under [Communications Workers of America v.]Beck, [objecting
parties] may be charged their fair share of the union’s organizing expenses.” 329 NLRB at *9.5
The potential relevance of Meijer is that the Board could analogize to it when
confronted with the issue of whether neutrality clauses vitally affect the unit employees. Thus, the
holding in Meijer could be used to support an argument that neutrality clauses are mandatory because a
union would be stronger if it represented more of the employer’s employees and that such strength
would inure to the benefit of the unit employees. Such an expansive result would likely be met with
resistance in the courts of appeal.
2.
Lexington Health Care Group, LLC, 328 NLRB No. 124 (1999). This
case is unrelated to anything discussed above, but could provide an interesting twist. In Briggs Indiana
Corp., 63 NLRB 1270 (1945), the Board held that an agreement not to organize other employees of
an employer is enforceable. In some respects, this can be thought of as a “reverse neutrality
agreement.” But, the Board subsequently stated in Cessna Aircraft Co., 123 NLRB 855 (1959), that
5/
In Beck, the Supreme Court found that a union can only spend objecting, non-union-member
employee dues on issues “[]related to collective bargaining, contract administration, or grievance
adjustment.” Meijer, 329 NLRB, at *1 (citing 487 U.S. 735 (1988)).
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Neutrality Agreements: Will the NLRB Sanction Its Own Obsolescence?
the contract itself should contain the express promise not to represent certain of the employer’s
employees. In Lexington Health Care Group, the Board, Chairman Truesdale dissenting, “clarified”
Cessna and held that such a promise had to be express, but not necessarily in the contract.
The significance of these cases is that they can be used offensively by an employer
when it is confronted with a neutrality clause demand. Depending on the leverage of the employer, it
may resist the clause by countering that it will yield only if the union agrees not to organize certain other
of the employer’s employees. And, since that agreement, although express, need not be in the
collective bargaining agreement, it might be easier to obtain than would otherwise be the case.
Johnson Controls and Potential “Hot Cargo” Issues
As mentioned earlier, a “hot cargo” agreement is an agreement whereby an employer
agrees with a union to refrain from dealing with another company. This type of agreement is prohibited
under Section 8(e) of the Act. It seems clear that an agreement between a unionized employer and a
union which states that the employer will not accept component parts from any supplier who does not
have labor relations satisfactory to the union would constitute an illegal “hot cargo” agreement under
Section 8(e). It would also appear to be evident that a clause requiring suppliers to remain neutral in
the face of union organizing drives would similarly be deemed unlawful. However, that does not mean
that a union would not be desirous of such clauses.
This type of a situation occurred in dramatic fashion in 1997. At that time, Johnson
Controls, a supplier of seats to Ford Motor Company was involved in a labor dispute with the UAW
concerning rates of pay for its union-represented seat makers. Autos: Johnson Control Strike
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Continues as Ford Refuses Nonunion Parts, 20 DLR A-11 (BNA Publications), Jan. 30, 1997. Based
on this dispute, Ford informed Johnson Controls that “it would refuse to accept nonunion-made seats
until the dispute [wa]s resolved.” Id. Ford issued a letter of agreement in conjunction with the
September, 1996 master contract negotiation. Auto Workers: UAW Strike Against Seatmaker
Continues; Union Considers Walkout at Axle Supplier, 31 DLR A-5 (BNA Publications), Feb. 14,
1997 (emphasis added). In that letter, Ford “agreed that it [would] continue to tell its suppliers and the
business community of the positive aspects of its relationship with the UAW.” Andrew Sedgwick &
Mary Connelly, Suppliers Fear Price Squeeze From Ford-UAW Accord, Crain’s Det. Bus., Sept. 30,
1996, at 50. Ford ultimately resumed accepting seats made by Johnson Controls only after the union
members had ratified a contract with Johnson Controls. Autos: Workers At Two Johnson Controls
Plants End Strike, Ratify Three-Year Contracts, 36 DLR A-11 (BNA Publications), Feb. 24, 1997.
Conclusion
As can hopefully be seen from this paper, the various types of neutrality clauses present
a potential host of issues involving multiple unfair labor practice sections of the NLRA. Thus far, other
than analogizing from prior cases, there is precious little that can be characterized as precedent. As use
or potential use of neutrality agreements becomes even more prevalent, the Board and the courts will
be called upon to consider these high stakes issues. As for labor lawyers who will have a hand in
shaping these issues, I feel confident in predicting that there will be interesting times ahead.
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