An advice memorandum just released by the National Labor Relations Board General Counsel’s office could be the beginning of the end for “Scabby the Rat,” “Corporate Fat Cat,” and similar oversized balloons often employed by unions to exert pressure on neutral employers as part of secondary picketing actions. The Board’s counsel recommended in a May 14 release that the NLRB reverse several Obama-era decisions that permitted the use of such balloons, as well as the erection of stationary banners, as lawful non-picketing secondary activity under the National Labor Relations Act (NLRA). If the current Board follows the recommendation contained in the advice memo, businesses will have a valuable tool to help them with such union confrontations.

Quick History: Board Implements Narrow Standard

The NLRA prohibits unions from threatening, coercing, or restraining others from doing business with a neutral employer when their actual dispute is with some other business who happens to be associated with that secondary (neutral) employer. The most common way in which this might arise is if a union has a concern with a subcontractor on a job site and takes some action that interferes with the business of the general contractor or business owner – such as traditional picketing, or even “signal” picketing (actions that send a signal to the neutral employer’s workers that they should cease working or observe the picket line).

This seems like an easy test to apply, but there has been considerable debate about what constitutes “threats, coercion, or restraint.” Most agree that any picketing urging a boycott of a neutral employer violates the Act, while handbilling (simply handing out material trying to persuade people from doing business with the target) is acceptable activity.

In 2010 and 2011, the NLRB—then comprised of a majority of Democratic appointees—issued a series of decisions that restricted the circumstances under which it will find a union to have engaged in threatening, coercive, or restraining behavior. Specifically, the Board concluded:

• Stationary bannering is permissible. In one case, the Board permitted a union to post agents holding large banners proclaiming “labor dispute” and “shame on [the employer]” in front of a neutral business, concluding that such conduct was not “picketing.” Instead, the Board said that the carrying of picket signs and “persistent patrolling” were necessary predicates to establish a violation of the Act. Moreover, it concluded, stationary bannering is allowable because it does not block ingress or egress to the neutral business.
• Large, inflatable rat balloons are often allowable. In another case, the Board said that a union’s use of a massive “Scabby the Rat” balloon near a neutral business was acceptable because it was neither picketing nor coercive. The union had set up the rat balloon about 100 feet from the business’ front door, which the Board concluded was a “significant distance,” and the union representatives nearby did not physically or verbally accost those frequenting the business.

Current Situation: Labor Dispute Involved Both Bannering And Balloons

Fast forward to late 2018. Summit Design + Build, a general contractor, was overseeing a project in downtown Chicago that involved Edge Electric, an electrical subcontractor. The IBEW union had a primary labor dispute with Edge Electric over an allegation that it failed to pay area standard wages and benefits.

The union erected a large yellow banner at Summit’s job site entrance that read: “LABOR DISPUTE: SHAME SHAME,” and also included Summit’s name. Moreover, about 15 feet away, the union set up a large, inflatable “Corporate Fat Cat” balloon. It was about 10-15 feet tall, dressed in a corporate suit with a cigar planted in its mouth, and it clutched a construction worker by the neck in a stranglehold. At least two other subcontractors refused to enter the premises and perform work for Summit as a result of the labor dispute. Notably, the union also admitted that although it did not have a labor dispute with Summit, its actions were targeting Summit as the general contractor.

The matter ended up before the NLRB after the neutral general contractor raised the issue with the agency. Before determining how to proceed with the conflict, the local Board Region submitted the matter to the General Counsel’s office for advice. In an advice memo dated December 20, 2018 (but just released to the public on May 14), the General Counsel’s office urged the Board to overturn the Obama-era cases and conclude that the union’s activity violated the NLRA.

Advice Memo Recommended Revisiting Scabby The Rat And Corporate Fat Cat

The advice memo concluded that the union’s activity was tantamount to unlawful secondary picketing and urged the Board to issue a complaint charging the union with a violation of the Act. It contended that large banners and inflatables at the entrances of neutral businesses seek to dissuade the public from entering through illegal “coercive” conduct rather than permissible “persuasive” communication.

It pointed out that the inflatable balloon was “intimidating” and the banner was “misleading,” and that each of them was the “functional equivalent of a picket sign.” They each created a “symbolic, confrontational barrier” to anyone seeking to enter the site, it said, and actually worked to dissuade at least two subcontractors from performing their work. “The Region should emphasize,” the advice memo concluded, “that any member of the public needing to transact business at the site would—upon encountering a large, frightening cat gripping a worker by the neck, and a large banner proclaiming “LABOR DISPUTE: SHAME SHAME”—most likely stay away from the construction site due to a desire to avoid confrontation, rather than because of the strength of the Union’s message or to engage with the Union agents in an effort to understand their grievances.”

What Does This Mean For Employers?

This is a positive step for employers as it signals that the Board may be on the verge of restoring balance between unions and businesses when it comes to labor disputes—but it is simply a step forward. The law has not changed as a result of this advice memo. You should still be aware that the precedent set by the Obama-era Board when it comes to these issues remains firmly in place.

According to the NLRB’s docket, this specific case is not ripe for further action because an informal settlement was reached by the parties in February 2019; this means that we will not see the Board act with respect to this particular conflict. However, if and when another dispute arises involving Scabby the Rat, Corporate Fat Cat, or misleading stationary banners, we know that the General Counsel’s office will recommend that the Board revisit the prior precedent and establish a more balanced standard which takes employers’ interests into account.

Even with this recommendation, there is no assurance that the Board majority will agree with the General Counsel’s office and adopt such a new standard. However, given the fact that the newly constituted Board has made strides in the past year in restoring that balance (see here, and here, and here) there is hope that a positive ruling could be on the horizon.