.Card Check Neutrality was a policy proposal during the Obama administration first proposed when Barack Obama was campaigning. This particular proposal would prevent employers from responding in any way to a union organizing drive in their workplace. Instead if 50% +1 of employees voted to have a union, the employer would be obligated to begin collective bargaining with the new employee representatives.
As an HR Director during this timeframe, this idea was of particular concern. Usually, once you know cards are being distributed in your workplace, the management team puts a specific union avoidance plan into action. It explains the employers position on collective bargaining and unionization. There are already significant limits on what an employer can and can not say during this period. But the proposed legislation would eliminate their ability to say anything at all.
Through the Back Door
This legislation never became a reality. Until today. A significant number of employers who decide to take a loan from the Treasury Department under the stimulus program will be subject to this requirement. According to Bloomberg Law:
Companies with between 500 and 10,000 employees applying for a direct loan from the Treasury Department would be required to “make a good-faith certification that the recipient will remain neutral in any union organizing effort for the term of the loan.” New loans for businesses affected by the pandemic are available for up to five years under the bill (H.R. 748) pending in the House and expected to be signed by President Donald Trump this week.
It is not clear in the reading of the bill whether these numbers refer to domestic or global employment numbers. However, if it refers to US based employment only, I have worked for multiple public Fortune 500 and private companies that would fall into this employment range. This is especially true in manufacturing which is not generally as labor intensive as the service industry.
Adding Insult to Injury
The loan process through Treasury is set up to become public information. This, combined with the neutrality provision is a union organizers dream. They will know what employers in what industries are required by the legislation to remain neutral if they begin the process of organizing. They will have up to the five year term of the loans to engage in this activity.
Further, with employment becoming an increasing concern for many in the near term, the promises a union will float are job security and layoff provisions. Granted, none of these promises will necessarily become reality. A union can ask for anything. An employer is under no obligation to agree. However, the union can leverage the potential ask to attract workers to their cause. The unions will also be able to target higher wage industries where the dues they collect are often a percentage of a worker’s wage rather than a flat amount.
Employers located in Union Shop states are at particular risk. To maximize income, unions prefer that employees are required to join the union upon hire. This maximizes the amount of dues they can collect. Worker’s in Right to Work states have the option to join and are subject to all of the union contract provisions. However, they are not required to become dues paying members.
Democrats are interested in helping unions build density and collect dues. The vast majority of union politcal contributions go to Democrats. They believe the endorsements from these organizations will bring them votes from the union members. This is despite the fact policies proposed by Democrats, such a green energy, individual and corporate tax increases and single payer healthcare actually hurt union workers.
What to Do
The best option would be for a company in this segment to remain financially healthy enough that a loan with this condition is not required to maintain operations. If you don’t need it, don’t take it.
However, if you need to take a loan, I would strongly suggest consulting with a management side labor attorney. Find out what communications you can have with employees about this risk of organizing before you apply for the loan. These funds are supposed to assist companies with weathering the downward effects of the government mandated shutdown of normal economic activity. They should not leave employers with increased costs on the backside due to unionization.
Is It Constitutional?
Further, it may benefit employers to contact their industry of business associations with this concern. Under normal operations an employer is free to adopt a position of neutrality in union organizing and some do. However it is not clear that this suppression of speech can be mandated by the government. Under Citizen’s United, corporations were afforded broad free speech rights in relation to politics.
This landmark decision is just ten years old. It came after the most serious contemplation of card check neutrality legislation in President Obama’s first two years in office. How the decision would be applied to the government limiting the speech of a corporation regarding its own operations would seem to be an open question. And one that should be answered in light of this legislative move.