The Supreme Court this week heard oral arguments regarding the Mulhall case which was not your run-of-the-mill issue in the area of labor disputes.  In fact, the focus was just the opposite of a dispute: agreements whereby unions and employers agreed to terms under which a union would be able to organize an employer’s employees.  They are known in the trade as “neutrality agreements.”  While some of these agreements have been found unlawful by both the NLRB and the courts, for the most part, so long as the parties follow the guidelines now long established for such agreements, they have historically been found lawful.

The twist to this proceeding is the allegation that such neutrality agreements violated Section 302 of the Labor Management Relations Act.  This is frankly a little known and little utilized provision of labor law which forbids employers to pay, lend or deliver any money or other thing of value to a labor organization.  In other words, it is an anti-bribery statute.

Frankly these agreements are quite common when you have a chain of operations in which the union already represents a number of the employer’s employees and, rather than face a corporate campaign, the employer agrees to certain ground rules to control the organizing environment.  In the case at hand, the employer allowed the union access to its employees and agreed to rules allowing employees to vote by using a card-check procedure, rather than by the secret ballot method normally utilized by the NLRB.  The key distinction in this agreement, however, was that the union also agreed to spend $100,000 to support a referendum that was favorable to the employer.  Accordingly, while most of the provisions set forth in the neutrality agreement were pretty boilerplate, the $100,000 support portion of the agreement was obviously something beyond the normal situation.

The Washington Post Mulhall has commented on the oral arguments, as well as others others.  Some believe that ancillary legal issues, such as standing, may get in the way of the Court actually issuing an opinion of any substance, but it would seem unlikely that the Court would have taken the matter up if they simply were going to rule on an issue of standing, which will have very little value in terms of clearing the path for future agreements of this nature.  In the interim, it will be wise to have any neutrality agreement be subject to review by appropriate labor counsel to insure Section 302 is not brought to bear, as it is not only a violation of that statute, but it also has criminal implications.