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Tuesday, November 12, 2013

Employer Neutrality Agreements in Court

Another union-related case to be heard by SCOTUS this term—Mulhall v. UNITE-HERE (a union)—directly confronts “neutrality” agreements between employers and unions seeking to organize their employees. Unions routinely violate employers’ and employees’ rights to freedom of association (FOA); neutrality agreements are a prime example. 

A neutrality agreement is one in which the employer promises the union that it will not resist the union’s efforts to capture dues-payers among its employees. In return, the union typically promises that it will refrain from damaging the employer’s reputational capital during the organizing campaign. This looks like extortion: If you do not surrender your employees to us, we, together with complicit community organizers including benighted clergy, will wreck your reputation. Saul Alinsky would be proud.

In Mulhall, the union bribed the employer (a gambling casino) to consent to the neutrality agreement by spending $100,000 in support of a ballot measure designed to increase casino gambling. In addition, UNITE promised that if it was successful in organizing the casino’s employees it would “refrain from picketing, boycotting, striking, or undertaking other economic activity” against the casino. In other words, the union promised not to undertake common union actions in alleged pursuit of improved terms and conditions of employment for employees. It just wanted more dues-payers.

The Mulhall case does not involve an examination of the Constitution’s guarantee of freedom of association. When it upheld the constitutionality of the National Labor Relations Act (NLRA) in 1937, SCOTUS demonstrated that it didn’t care about FOA for workers and employers. I suspect today’s Court doesn’t either. 

Mulhall involves the Court’s interpretation of Section 302 of the NLRA (as amended in 1947), which makes it illegal for

any employer . . . to pay, lend, or deliver, any money or other thing of value

 . . . to any labor organization, or any officer or employee thereof, which

represents, seeks to represent, or would admit to membership, any of the

employees of such employer . . . . 

The question before the Court is whether the neutrality agreement is a “thing of value” to the union. It would seem to be. After all, the union was willing to spend $100,000 to support the casino gambling ballot initiative to get the neutrality agreement. In addition, the union was willing to promise never to strike or boycott the employer after it began to collect dues from the casino’s employees.

If the Court decides in favor of Martin Mulhall, who does not want to be represented by UNITE-HERE, neutrality agreements—or at least this neutrality agreement—will be struck down. That would be a partial victory in support of workers’ freedom of association. We who subscribe to the freedom philosophy must take our victories, even partial ones, whenever we can get them.

Why This Matters

I have argued at length, with specific reference to the Teamsters union, that unions are the principal enemy of employees’ FOA. Employer neutrality agreements are one example. 

FOA is a fundamental human right. This means that, by virtue of their human nature, all people are entitled to FOA and its free exercise. Every person, without exception, all the time, must be able to exercise FOA without impairing its exercise by any other person. 

Suppose Jim offers to associate with Jack. If Jack accepts the offer, a free association between them begins. They both will have exercised their FOA. If Jack declines Jim’s offer there can be no free association between them; yet, here too, both will have exercised their FOA. FOA for everyone logically requires that everyone have the right to decline offers to associate. If Jim, or any third party (such as a union or government) acting on Jim’s behalf, forces Jack to associate with Jim, Jack’s FOA would be violated. Jim’s FOA would be in direct conflict with Jack’s FOA. Such force would convert FOA from a human right into a privilege for Jim alone. 

In sum, your freedom of association means you have a right to associate with anyone you choose if, and only if, he or she consents to associate with you.

Under the NLRA individual workers are not free to decide for themselves whether a union will negotiate on their behalf with their employers. When a union bargains on your behalf you are in an association with that union. If you do not want the union to bargain for you, but it does, by force of law, it is a forced association. 

The NLRA stipulates that you must submit to union representation whenever a majority of your colleagues on the job votes in favor of union representation. Of course, you can always quit; but if you are a willing worker employed by a willing employer at mutually agreeable terms, a government that forces you to associate with a union as a condition of continuing that employment violates both your and your employer’s FOA. Under the Constitution, winner-take-all majority voting is appropriate only in inherently governmental functions. In private affairs, individual consent is supposed to rule.

Mandatory submission to the will of a majority in private affairs is bad enough, but neutrality agreements make it worse. If workers are to have any modicum of free choice when they are forced into unwanted representation elections, they must be able to hear both sides of the unionization debate so they can cast an informed vote. Unions will vigorously present the arguments in favor of unionization. Usually, employers will vigorously present the counterarguments. When an employer is suborned by a union to remain neutral in an election in which both she and her employees are forced to be involved, the effect is to surrender her employees to the tender mercies of self-interested union bosses—that is, the effect is further to impair her employees’ FOA.

Of course, employers have a right freely to decide to remain neutral in representation elections even though, under the law, the effect of doing so is to impair workers’ FOA. It is not the employers who abrogate workers’ FOA. It is the fault of the NLRA that an employer’s choice to be neutral conflicts with workers’ FOA. If participation, by workers and employers, in representation elections were voluntary, workers would have no need to hear both sides of the forced unionization debate because they would not be forced to accept winner-take-all outcomes. Workers and employers each have different preferences with regard to unionization. Absent the coercion of the NLRA, they each can work out their own trade-offs and form free associations on their own terms.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.