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New York City’s “Labor Peace” Executive Order Now Requires Employer Neutrality During Union Organizing at City-Financed Developments

September 8, 2016

An Executive Order recently issued by Mayor Bill de Blasio compels certain retail goods and food vendors, namely those who occupy space in New York City Development Projects and receive certain financial assistance from the City, to enter into a “Labor Peace Agreement” with any labor union seeking to represent the vendor’s employees.  The Labor Peace Agreement requires the vendor-employer “to maintain a neutral posture with respect to efforts” by the union to organize the vendor’s employees, and the union must agree not to strike and “to refrain from … other economic interference.”  The Executive Order applies to projects that are authorized and have financial assistance awarded on or after July 14, 2016.

Details of the Executive Order

The Order applies more specifically to projects that receive financial assistance from a New York City Economic Development Entity, such as the City’s Department of Housing Preservation and Development, and are (i) larger than 100,000 square feet for a commercial project, or (ii) larger than 100 units for a residential project.  Further, the affected vendor-employers are those employing 10 or more workers and occupying more than 15,000 square feet within the project.

At present, approximately ten states and the District of Columbia have either “labor peace” statutes or municipal ordinances similar to the recent New York City Order: Connecticut, New York, Pennsylvania, Maryland, Florida, Washington, Oregon, California, and Nevada.  In other states and localities, lawmakers are debating similar laws and ordinances.

Potential Legal Challenges

The legal status of these laws and potential conflict with, for example, the National Labor Relations Act, depend very much on the details of the particular enactment.  Under the theory that the government is no more than a purchaser of goods and services, like any other market participant, and may choose for itself – in its own “proprietary interest” – what company it will or will not patronize, the government may impose labor union-related obligations, e.g., that the vendor employ a union-represented workforce, on companies that directly supply goods or services to the government.  If, however, the government seeks to regulate the relations of labor unions with employers that are subject to the jurisdiction of the National Labor Relations Board, as nearly all in private industry are, the state or local regulation may be pre-empted by the supremacy of Federal law for employers subject to the National Labor Relations Act.  Building & Construction Trades Council vs. Associated Building Contractors of Massachusetts and Rhode Island, 507 U.S. 218 (1993).

Significance for Management

Mayor de Blasio’s Executive Order is designed to assist labor unions in the retail store and food industries in organizing within New York City.  This effort is premised on City financing of certain development projects, and applies only to a segment of the potential enterprises that may occupy the project space; it is not obviously addressed to vendors supplying goods or services directly to the City of New York as a purchaser in the market.  The lack of a direct connection to the City government’s procurement of goods and services for its own consumption may permit a successful attack on the Order as being pre-empted by the National Labor Relations Act.  E.g., Metropolitan Milwaukee Association of Commerce v. Milwaukee County, 431 F.3d 277 (7th Cir. 2005).  The likelihood of success of such an attack in the courts cannot be predicted with any degree of certainty, however, and the Executive Order is now in place and – for the present at least – applies to certain new projects financed by the City of New York.

Please contact us if you have any questions about the Labor Peace Executive Order or any other matters.