The Supreme Court agreed earlier this week to consider whether the Labor-Management Relations Act’s prohibition on employers from providing a union with any "thing of value" extends to the promises an employer makes in a neutrality agreement. Section 302 of the Labor-Management Relations Act, the federal labor anti-bribery statute, makes it unlawful for an employer "to pay, lend, or deliver…any money or other thing of value" to a labor union that seeks to represent its employees, and prohibits the labor union from receiving the same. Neutrality agreements set ground rules for union organizing campaigns and typically include employer promises to remain neutral and recognize the union upon a showing of majority support (often with a card check) as well as to provide the union access to information and employees, and union promises to forego the rights to picket, boycott, or otherwise put pressure on the employer’s business. Accordingly, if the Supreme Court holds that such promises are unlawful under § 302, unions’ ability to engage in "top-down" organizing through corporate campaigns will suffer a serious blow.

The Third and Fourth Circuits have held that neutrality agreements and the promises typically included therein are not "payment" of "things of value" proscribed by § 302. However, in Mulhall v. Unite Here Local 355, 667 F.3d 1211 (11th Cir. 2012), the Eleventh Circuit disagreed and held that "organizing assistance can be a thing of value that, if demanded or given as payment, could constitute a violation of § 302."

In Mulhall, the employer and a labor union entered into an agreement where the employer promised to:

(1) provide union representatives access to non-public work premises to organize employees during non-work hours; (2) provide the union a list of employees, their job classifications, departments, and addresses; and (3) remain neutral to the unionization of employees.

In return, the union promised to lend substantial financial support to a ballot initiative favoring the employer and to refrain from picketing, boycotting, striking or undertaking other economic activity against the employer.

The Eleventh Circuit’s decision focused on what constitutes a "thing of value," and stated that it "must rely upon our common sense" to answer that question. As such, the Eleventh Circuit held that "intangible services, privileges, or concessions can be paid or operate as payment," and thus implicate the policy concerns in § 302:

It is too broad to hold that all neutrality and cooperation agreements are exempt from the prohibitions in § 302. Employers and unions may set ground rules for an organizing campaign, even if the employer and union benefit from the agreement. But innocuous ground 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.

How the Supreme Court resolves this circuit split will have serious ramifications for both employers and unions regarding how employees are unionized. If the Supreme Court agrees with the Third and Fourth Circuits, unions could be emboldened and would likely increase their use of corporate campaigns to secure neutrality agreements.

On the other hand, if the Supreme Court finds that the types of employer promises generally seen in neutrality agreements are considered unlawful payments under § 302, then unions’ ability to engage in "top down" organizing will be severely limited. While that will not spell the end of corporate campaigns, it will likely undermine their effectiveness and force unions to focus much more on traditional "grass roots" organizing strategies. One such strategy could be to ramp up efforts to exploit the Board’s decision in Specialty Healthcare, in which the Board signaled that it now believes that smaller units–such as units that consist of only one department or even one job classification–should be permitted. Under that scenario, unions would likely target an employer by first organizing a very small group of employees (i.e., a ‘micro union’) to gain access and market themselves to other groups of employees at that employer.

The case before the Supreme Court is Unite Here Local 355 v. Mulhall, Case No. 12-99. Please continue to monitor this blog as we will provide updates on any developments and their impact as they occur.