Can a Neutrality Agreement be an "Improper Payment" to a Union?

by Proskauer - Labor Relations

[author: Ronald Meisburg]

A recent U.S. Court of Appeals decision has opened the door for attacks on the legality of some neutrality agreements entered into between unions and employers.  In Mulhall v. UNITE HERE, Local 355 et al., __ F.3d __ , No. 11-10594 (11th Cir., January 18, 2012), a case backed by the National Right to Work Legal Defense Foundation, the court held that organizing assistance by an employer, of the type typically contained in a neutrality agreement, may violate the law if it was entered in order to improperly influence a union.  

For years unions have been urging – many times through the pressure of bitter corporate campaigns – that employers enter into neutrality agreements.  Under such an agreement, an employer agrees to remain neutral in any campaign to organize its employees.  Neutrality agreements may also require the employer to recognize the union as the representative of its employees on the basis of signed union cards or a union petition, rather than a secret ballot NLRB election; give the union information on the employer’s employees; grant the union access to company property in order to campaign and collect cards; and give similar advantages to the union.  In return, the union might agree to cease its corporate campaign and/or offer the employer assistance in some other aspect of its business (e.g., support for a regulatory decision desired by the employer). 

It has been argued that such agreements by employers constitute a “thing of value” which, when given to a union, violate section 302 of the Labor Management Relations Act, 29 U.S.C. §186.  In pertinent part, section 302 makes it unlawful 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. . . . [Emphasis added.] 

These previous attempts have been rejected. Adcock v. Freightliner LLC, 550 F.3d 369, 374 (4th Cir. 2008) and Hotel Employees & Restaurant Employees Union Local 57, 390 F.3d 206, 219 (3rd Cir. 2004).  

In Mulhall, the employer entered into a neutrality agreement – which included the employer’s obligation to provide information on and access to its employees – in return for the union’s promise to lend financial support to a casino gaming ballot initiative favored by the employer.  The union eventually expended over $100,000 supporting the ballot initiative.  

The court held that the neutrality agreement was a “thing of value” within the meaning of section 302, and that such agreements “can become illegal payments if used as valuable consideration in a scheme to corrupt a union or to extort a benefit from an employer.” (Slip op. at 8.)   The plaintiff alleged that the employer “bought” the union’s assistance in one area (the ballot initiative) in return for the payment of a thing of value (the neutrality agreement).  The court held that this was sufficient to make out a claim under section 302, and remanded the case to the federal district court to consider that claim and “determine the reason why the [union and the employer] agreed to cooperate with one another.” Slip op. at 9. 

It must be emphasized that the court in Mulhall did not suggest that neutrality agreements are generally illegal:  “As we see it, an employer’s decision to remain neutral or cooperate during an organizing campaign does not constitute a § 302 violation unless the assistance is an improper payment.”  Id.  However, the decision opens the door for the development of the law – at least in the 11th Circuit – on the question of under what circumstances a neutrality agreement may be an “improper payment”. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Proskauer - Labor Relations | Attorney Advertising

Written by:

Proskauer - Labor Relations

Proskauer - Labor Relations on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.