Many labor unions by-pass the traditional NLRB election process in organizing.  Instead, unions will approach an employer and ask if the employer will agree to recognize the union if the union obtains a majority of signed union authorization cards — i.e. “card check.”   The union will also ask that the employer sign a “neutrality agreement” during the organizing process which forbids the employer from participating in the organizing process.   Failing to sign these agreements can sometimes lead to brutal corporate campaign tactics from unions — just look at the way that Wal-Mart was demonized by labor unions in the press.   Of course, many employers have felt like they are between a rock and a hard place — sign the card check/neutrality agreement and hand over their employees or don’t sign and you are in store for a PR battering.  It’s a Catch-22.

Recently, the 11th Circuit handed down a major decision in Munhall v. UNITE HERE that might make this whole scheme illegal.   Munhall involved the classic card check/neutrality agreement described above.   But in this instance, an employee claimed that it actually violated federal labor law — namely the prohibition in LMRA Section 302 which prevents an employer from giving a “thing of value” to a labor union.

So the main question confronting the Court was — is a “neutrality agreement” a thing of value?  In a 2-1 decision, the 11th Circuit held that such agreements could be things of value.  The majority found that while not all neutrality agreements violate Section 302, “innocuous ground rules can become illegal payments if used as valuable consideration in a scheme to . . . exort a benefit from an employer.”

Translated into plain english: Yes, asking an employer to sign a neutrality agreement is illegal if it is used to extort the employer.

The case is even more important because the Third and Fourth Circuits have reached the opposite conclusion in recent cases.   This whole issue seems ripe for a Supreme Court battle.

Signing a card check/neutrality agreement might make sense for some employers.  But even those employers that agree to such arrangements often have a bad taste afterwards.   The 11th Circuit decision takes a step towards preventing employers from even being placed in this unfair box to start.