Provided by: Judge Ruth B. Kraft



Are you familiar with neutrality agreements? A neutrality agreement is a signed memorandum of understanding between a labor union and an employer that management will not stand in the way of organizing its workers. In this context, the union goes straight to the top and interacts with management rather than organizing at the grassroots, worker level.

In the October, 2013 term, the United States Supreme Court will review the federal appeals court decision in Mulhall v. UNITE HERE Local 355. Mulhall concerns Section 302 of the Labor Management Relations Act (LMRA), the anti-bribery provision. Section 302 provides that it is unlawful for an employer to “pay, lend or deliver” anything of value to a labor union that seeks to represent its employees, and prohibits the labor union from receiving the same. The agreement in Mulhall set up ground rules for the union organizing campaign and included the employer’s promise to remain neutral in exchange for certain union promises. If the Supreme Court holds that such promises violate Section 302, the ability of labor unions to engage in top-down organizing will suffer a grievous blow and unions will be limited to taking it to the workers. In Mulhall, a casino company and the union entered into an agreement in which the company agreed to provide the union with employee information, allow the union access to company property for organizing purposes, remain neutral during the organizing effort and conduct a card check instead of a secret-ballot election to determine whether there was majority support for unionization. In return, Local 355 promised to refrain from striking, picketing, boycotting or undertaking economic pressure against the company and agreed to donate over $100,000 to a slot machine initiative or lobbying effort. An employee who did not want the company to be unionized sought to enjoin enforcement of the agreement on the basis that it delivered a thing of value to the union.

On two occasions, the district court dismissed the case, ruling that Mulhall lacked standing to sue and then, after he successfully appealed, then held that he had not stated a claim. The 11th Circuit Court of Appeals, in 2012, held that “organizing assistance can be a thing of value that, if demanded or given as a payment, could constitute a violation of Section 302”. This question has arisen in several circuit courts; the 2ndCircuit (NY and CT) has reached a similar conclusion but others, including the 3rd and 4th circuits, have held that neutrality agreements and promises typically made in them are not payment of a thing of value.

If the US Supreme Court rules in favor of the neutrality agreement, then, as employers, you can expect outreach by labor unions directly to management as an effective organizing strategy. On the other hand, if the Supreme Court rejects the neutrality agreement, barriers to unionization will be higher. This will be a much awaited decision and certainly something to consider if the union comes knocking at your door.



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Contact Jennifer at Jennifer@Kirschenbaumesq.com or at (516) 747-6700 x. 302.