NLRB's General Counsel Signals Major Shift in Neutrality Agreement Between Employers and Unions Seeking to Organize Their Employees

The General Counsel for the National Labor Relations Board (“Board” or “NLRB”) has signaled what may be a major resetting of the law on the Board’s position concerning the legality of so called neutrality agreements, in which employers make concessions and accommodations to labor unions seeking to organize and represent their employees.  This occurred with the General Counsel’s consideration of an appeal by the National Right to Work Legal Defense Foundation, Inc. (the “Fund”) of a dismissal of an unfair labor practice charge had filed  against United Here! Local 8 (“Union”) and Embassy Suites by Hilton, Seattle Downtown Pioneer Square (“Employer”) on behalf of an employee who did not wish to be represented by the Union after the Employer had entered into an agreement with the Union that enabled the Union to gain recognition of employees of the Employer without having to win a secret ballot representation election conducted by the Board.

Challenges to Neutrality Agreements

The original charges alleged that the Employer unlawfully assisted the Union in numerous ways during the Union’s 2018 organizing campaign.  The charges alleged that one such way the Employer unlawfully assisted the Union was by entering into a “neutrality agreement” with the Union.  Under the neutrality agreement the Employer agreed to provide the Union with employees’ contact information to assist it in organizing, something it was not obligated to do under the National Labor Relations Act (the “Act”) and to recognize the Union, without an election if the Union presented cards signed by a majority of the employees in the proposed bargaining unit indicating the employees wished to be represented by the Union. The Fund arty alleged that the neutrality agreement, and various other actions on the part of the Employer constituted unlawful assistance and support to the Union and constituted things of value.  The Fund further alleged that these actions Union being granted and subsequently accepting recognition by the Employer even though the Union lacked uncoerced majority support, in violation of the Act and that the actions of the Employer and the Union unlawfully interfered with the right of the Employer’s employees to decide whether or not they wished to be represented by the Union.

Following an investigation of the ULP charges, the Board’s Regional Director in Seattle found that the allegations lacked legal merit, explaining that current Board law finds that such neutrality agreements are lawful and enforceable and do not interfere with employees’ rights under the Act.  Following the Regional Director’s dismissal of the ULP charges, the Fund requested review of the Regional Director’s decision by the General Counsel in Washington.

What Happens Next

Upon review of the appeal, the General Counsel agreed in part with the Fund and concluded that it was the view of the Office of the General Counsel that portions of the charge had legal merit and that a complaint should issue so that the General Counsel could ultimately ask the Board to hold that such neutrality agreements violated the Act.   In his letter partially sustaining the Fund’s request for review, the General Counsel opined that in his view the Employer appeared to have violated the Act by entering into and maintaining a neutrality agreement with the Union, because the neutrality agreement provided the Union with far more than “ministerial aid” during the Union’s organizing campaign.  For the same reasons the General Counsel opined that the Union violated the Act by accepting such aid from the Employer. Accordingly, the case was remanded to the Regional Director of Region 19 for further action.  Absent a settlement, it is expected that the Regional Director will issue a complaint, against the Employer and the Union, alleging that the Employer provided and the Union accepted unlawful assistance and presumably seeking an order directing the Employer to withdraw its recognition of the Union unless and until the Union is certified in a Board-conducted secret ballot election. While the hearing will be heard before an NLRB administrative law judge who will be bound to follow existing Board precedents, it can be expected that the General Counsel will ultimately seek to have the five member Board in Washington consider the issue and adopt a new standard for determining whether a neutrality agreement is lawful or goes too far.

What This Means

The significance of the General Counsel’s decision to challenge the existing standards surrounding neutrality agreements conclusions revolve around the fact that in many areas and industries unions have been shunning the use of NLRB secret ballot elections when they seek to organize employees and instead attempting to pressure employers to enter into broad neutrality and card check agreements.  In many localities where unions are strong, cities and counties are also seeking as a condition of various tax incentives and other benefits to force employers to agree to neutrality agreements and labor peace agreements.

The General Counsel’s actions described above are a clear signal that the Office of the General Counsel will be taking the position that many, if not all, such agreements constitute a form of unlawful assistance and interference with the rights of employees under the Act. It cannot be overstated how significant the impact would be of such a reversal in the law.