Mastodon NLRB to permit “sweetheart” contracts

Monday, December 20, 2010

NLRB to permit “sweetheart” contracts

Imagine a union comes to you claiming to have signed authorization cards from a majority of your employees and offers you the following proposition. Instead of holding a secret ballot election, you recognize the union based on the signed cards. In exchange, the union will give you a sweetheart contract—a pre-negotiated contract with favorable terms and conditions. Here’s the catch. The contract has to contain a neutrality clause—a promise by the company to remain neutral in future organizing campaigns, forego secret ballot elections at any other facility, and recognize the union based upon a presentation of an authorization card majority at any other facility.

In Dana Corp. (10/6/10) [pdf], the NLRB sanctioned this practice as lawful under federal labor laws, and rejected a challenged by a group of anti-union employees that their employer had illegally colluded with the union:

The ultimate object of the National Labor Relations Act … is “industrial peace.” [I]t is well settled, consistent with those policies, that an employer may voluntarily recognize a union that has demonstrated majority support by means other than an election, including … authorization cards signed by a majority of the unit employees. Courts have endorsed voluntary recognition and deemed it “a favored element of national labor policy.” The Board should hesitate before creating new obstacles to voluntary recognition….

Categorically prohibiting pre-recognition negotiations over substantive issues would needlessly preclude unions and employers from confronting workplace challenges in a strategic manner that serves the employer’s needs, creates a more hospitable environment for collective bargaining, and—because no recognition is granted unless and until the union has majority support—still preserves employee free choice.

Just because you can agree to this “sweetheart” relationship with a union does not mean that you should. As the NLRB noted, “In practice, an employer’s willingness to voluntarily recognize a union may turn on the employer’s ability to predict the consequences of doing so.” An employer’s willingness to voluntarily recognize a union will also turn on its ability to predict the outcome of a secret ballot election. Currently, unions win 65.6% of secret ballot elections. Before you agree to take a union up on its voluntary recognition offer, you need to make an educated guess on whether your company falls within the one-out-of-three that wins a union election. If so, reject the union’s offer and opt for the election. Otherwise, you might be hedging your bets when you don’t have to.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or