NLRB Changes Its Stance Towards Employer-Union Neutrality Agreements

The recently appointed Acting General Counsel of the National Labor Relations Board (the “NLRB” or the “Board”) has issued guidance that he will support pre-recognition neutrality agreements entered into between employers and unions, insofar as they are in accordance with the Obama Board’s decision in Dana Corp., 356 NLRB 256 (2010), affirmed sub nom. Montague v. NLRB, 698 F.3d 307 (6^th Cir. 2012). It can be anticipated that any permanent General Counsel appointed by President Biden and confirmed by the current Senate will share this view of employer neutrality agreements, which is clearly contrary to the legal hostility of the Trump-appointed and former General Counsel, Peter Robb, toward neutrality agreements.

In Dana Corp., a union represented employees at nine of an employer’s facilities and began an organizing campaign at an unorganized facility. 356 NLRB at 256. The employer and union entered into a “framework” agreement to govern their relationship during the union’s organizing effort and in the event that the employees chose to be represented by the union.  Id. at 256–57. The framework agreement specified that the employer would remain neutral towards its employees regarding organizing, and the employer would recognize and bargain with the union if a third-party card check showed that a majority of the employees supported representation by the union. Id. at 257. The union was entitled to this “card-check recognition” without the necessity of petitioning for and prevailing in an NLRB-conducted secret-ballot election. Additionally, the employer agreed to provide the union, pre-recognition, with a list of names and addresses of employees at the facility upon request, and to permit the union to meet with employees for organizing purposes in non-work areas. Id. Finally, the framework agreement prohibited strikes or lockouts until the parties agreed to a first collective bargaining agreement (“CBA”); committed the union and the employer to a CBA with a minimum duration of four years; made references to a health plan and other conditions of employment (see below for specific framework agreement terms); and, obligated the parties to arbitrate the final provisions of a CBA if they failed to reach an agreement within six months after beginning bargaining (“interest arbitration”). Id.

The NLRB’s then-General Counsel issued a complaint alleging that, by entering into the framework agreement, the employer had “rendered unlawful assistance” to the union in violation of Section 8(a)(2) of the National Labor Relations Act (“NLRA”), and the union had restrained and coerced employees in the exercise of their NLRA Section 7 right to refrain from supporting a union in violation of Section 8(b)(1)(A) of the NLRA. Id. at 258. Specifically, the General Counsel argued that negotiation with a union “over substantive terms and conditions of employment” was illegal per se if it occurred before the union attained majority support. Id. at 261. The General Counsel contended that such negotiations provided the union with a “privileged” status with respect to employees and amounted to an unlawful “fait accompli” of union recognition. Id.

The Obama Board’s decision in Dana Corp. dismissed the General Counsel’s complaint. The Board noted that “a certain amount of employer cooperation with the efforts of a union to organize” is lawful, and the determination as to whether cooperation is unlawful “is not susceptible to precise measurement. Each case must stand or fall on its own particular facts.” Id. at 259.

The Obama Board explained that, while an employer violates the NLRA “when it recognizes a minority union as the exclusive bargaining representative” of its employees, id. at 260, the Dana Corp. framework agreement became effective only if the union first proved its majority status through a third-party card check, id. at 261. The Board reasoned that “[n]othing in the [framework agreement], its context, or the parties’ conduct would reasonably have led employees to believe that recognition of the [union] was a foregone conclusion or, by the same token, that rejection of [union] representation by employees was futile.” Id. at 262. Further, it noted that an employer may lawfully “agree to remain neutral during an organizing campaign, may agree to voluntarily recognize [a] union upon proof of majority support, and may state its preference for unionization.” Id. Nonetheless, the Board added that negotiating a complete CBA prior to a union attaining majority support is unlawful. Id. at 261 fn. 15 (citing Wickes Corp., 197 NLRB 860 (1971), which had reaffirmed Majestic Weaving Co., 147 NLRB 859 (1964), enforcement denied, 355 F.2d 854 (2d Cir. 1966)).

Ten years after the Dana Corp. decision, the NLRB’s General Counsel during the Trump Administration, Peter Robb, authorized issuance of an unfair labor practice complaint against a Seattle hotel and union alleging that the hotel violated the NLRA by entering into a neutrality agreement with the union. The complaint included corresponding allegations against the union for accepting recognition from the hotel. Embassy Suites Management LLC, and, UNITEHERE! Local 8, NLRB Cases 19-CA-227623, and 19-CB-227622, complaint issued July 1, 2020. In substance, the Trump-appointed General Counsel sought to change Board law as stated in Dana Corp. to prohibit:

• An employer from permitting non-employee union organizers access to employer facilities or informing employees of the presence of union organizers.
• Allowing union solicitation of employees during working time.
• Providing a union with employee-contact information.
• Making statements of preference for a specific union.

Upon President Biden’s inauguration on January 20, 2021, he removed the Trump-appointed General Counsel and appointed Peter Sung Ohr as Acting General Counsel. On January 29, 2021, the NLRB’s Seattle Regional Director withdrew the complaint authorized by the Trump-appointed General Counsel and dismissed the charges pursuant to Ohr’s “prosecutorial discretion.” According to the Regional Director’s order, Acting General Counsel Ohr had concluded that the complaint did not state a violation of current Board law, citing Dana Corp. and two predecessor Board decisions.

As a result, and at present, neutrality agreements are lawful if in accordance with Dana Corp. standards. 

Discerning precisely what the Dana Corp. decision permits is difficult because the Board qualified its opinion: “We leave for another day the adoption of a general standard for regulating prerecognition negotiations between unions and employer[s].” 356 NLRB at 259. No subsequent Board decision has supplied that “standard.” However, Dana Corp. further noted that the terms in the framework agreement in that case were “general provisions” that were “limited” in scope, and insufficient to bar an election under the Board’s “contract bar doctrine” because they were not “substantial terms and conditions of employment . . . sufficient to stabilize the bargaining relationship. . . .” Id. at 262 and fn. 18. The Dana Corp. framework agreement was lawful because it “required substantial negotiations” in order to reach a complete CBA after recognition occurred. Id. at 262. In sum, it appears that a lawful framework agreement should not incorporate all terms, i.e., wages, benefits, hours of work, management rights, and other terms that are commonly found in a “complete” CBA.

Under Dana Corp., and a subsequent Advice Memorandum issued by the NLRB’s Office of the General Counsel applying the Dana Corp. decision, Unite Here Local 355 (Magic City Casino), 2011 WL 345272 (Jan. 21, 2011), it appears that an employer and a union may, in a neutrality agreement leading up to possible union recognition, provide that:

• The employer will remain neutral toward union representation of its employees.
• The employer will inform its employees that it has a constructive and positive relationship with the union.
• The employer will provide the union, upon request, with the employees’ names, job classifications, and contact information.
• The employer will permit union agents access to company premises to meet with employees on non-work time in non-work areas.
• A no-strike and no-lockout clause will be in effect prior to the recognition of the union.
• The employer and the union will not pursue unfair labor practice charges against the other arising from the neutrality agreement (this cannot and does not preclude employees from pursuing charges at the NLRB).

It is advisable for the neutrality agreement also to state clearly that the union will not be recognized by the employer unless and until the union’s majority status is confirmed, typically, by a third-party “card check” in the appropriate bargaining unit.

The Dana Corp. decision and the Magic City Casino guidance suggest that a bargaining-framework agreement may include the following concepts to guide the bargaining process:

• A health plan that reflects the reality of the industry, including employee premium sharing, deductibles, and out-of-pocket maximums.
• A minimum duration for the CBA.
• Application of the CBA to employer-affiliates, subsidiaries, successors, future facility owners, and contractors/franchise holders operating at the employer facility.
• Assignment of mandatory overtime after offering to qualified volunteers.
• “Minimum classifications” of employees.
• Team-based work schemes.
• Importance of employee attendance to achieve productivity and quality.
• In Dana Corp. the parties committed to the “Dana’s idea program,” which was not defined beyond “two ideas per person per month and 80% implementation”; “continuous improvement”; and “flexible compensation.”
• Interest arbitration to adjudicate unresolved, collective-bargaining issues.

As a reminder, the Dana Corp. decision recites both that it is unlawful under the NLRA for there to be “negotiation of a complete collective-bargaining agreement” before recognition, 356 NLRB at 261, and any agreement containing “substantial terms and conditions of employment” would be unlawful, id. at 262 fn. 18. It cannot be assured that the Biden Board will be more lenient with respect to bargaining-framework agreements and employer-neutrality agreements than the Obama Board in Dana Corp. (Notably, Dana Corp. was a 2-1 decision with one Board Member recused.) Accordingly, the more a framework agreement approaches a completed CBA, the more likely it is to violate the NLRA. Likewise, the fewer terms included in a framework agreement, the more likely it is to avoid unfair labor practice disputes at the NLRB.

Please let us know if you have any questions related to neutrality agreements or any other matter.

NOTICE: Material provided on this website has been prepared by Kauff McGuire & Margolis LLP solely for general informational purposes, and it is not intended to and does not constitute legal advice. Material provided on the website is not privileged and does not create an attorney-client relationship with the Firm or any of its lawyers.