“Labor Peace” Via Executive Order

  • August 17, 2016

Executive Order by NYC Mayor De Blasio May Signal Growing Trendlabor preace

It is always a cause for concern when regional government engages in partnerships with NGO groups, such as labor organizations, to limit employers access to their legal rights. A growing trend in labor relations is the establishment of “Labor Peace Agreements”. Essentially, these compacts block businesses who don’t sign on from bidding on city contracts, or from even leasing space in a development, where the developer has signed on to an LPA.
So, what is a “Labor Peace” Agreement?

A Labor Peace Agreement, or Labor Preemption agreement is a neutrality agreement the employer engages in with a labor union, not currently representing the employers labor pool. In essence, the employer agrees not to resist efforts by the union to organize employees and institute union representation. The employer agrees to:

  • Waive some first amendment rights to speak out, or comment negatively on the union.
  • Allow union access to employer’s premises.
  • Educate employees to union’s existence and provide contact information.
  • The union provides a prohibition against labor strikes or interference with business operations.
  • Make card checks for union recognition permissible.

Essentially, the unions want to organize without working their way in. Through LPAs they not only cut their own key to the door of business, but ensure that they will be the ones steering the conversation and setting the tone.

Labor peace agreements arise when a local government asserts a “proprietary interest” in a particular facility or development project, usually as the result of financial assistance to a private sector employer, and requires firms doing business at this location to sign a specific agreement with a labor union. –
Report from the US Chamber of Commerce

The alliance begins at city hall

LPAs are being supported and encouraged through city government, with the object of minimizing harmful side effects of potentially tumultuous labor negotiations. The city may require that companies wanting to engage in new city business sign on. Many cities have agreed, due to union political pressures, and it can affect a lot of business.

  • Rezoning and variances can be held up for those that don’t sign.
  • The ability to even bid on city contracts can be suspended.
  • New construction and building permits are often not approved for non-signers.

Cities have a lot of control over who does what business within their limits. The pressure of city hall can be irresistible to businesses without the capital to wait, or fight for their rights to participate. In effect, cities may be choosing ease and convenience at the expense of healthy competition, innovation and even cost savings on major projects.

So, what do they hope to achieve?

The unions sell LPAs as a way to forego the unpleasantness that often ensues when unions step in and organize labor. Cities, competing for new business and business expansion, recognize the bad press that can prevent or hamper new development. By enforcing a Labor Preemption, the city buys the unions agreement to organize peacefully.

  • Targets often include large development projects, such as airports that may have additional development attached
  • The incentive to prevent delays, cost overruns and messy bad publicity provides the leverage needed to convince city leaders to enforce the LPA.
  • The unions see this as an effective way to use their past actions as a guarantee against taking the difficult road of walkouts and strikes to be able to organize labor.

With both sides playing against the middle, business owners that have no intention of unionizing are caught in a trap. The investment to move to a new city is often too high, and there is no guarantee, except in states that have enacted LPA bans, that the same problem won’t follow them. This can mean being faced with impossible choices and little way out.

What does the future hold?

LPAs have been in existence since the first one was established in 1938, but recent court cases have ruled in their favor, making them a more effective tool. Recently, there has been a spike in Labor Preemption activities, with nearly half of the US having been targeted for the passage of LPAs. The states of Louisiana, Georgia and Tennessee have instituted bans on Labor Peace Agreements.

  • Even businesses with no intention of serving the public sector can be at risk, as cities like Pittsburg have moved to expand the power of their LPAs to include many businesses who do not directly contract with the city.
  • As labor unions continue to shrink, due to regulatory inclusion of many benefits they offer in standard non-union contracts, and the growth of sectors such as the gig economy and freelance workers LPAs may become a more common tactic.
  • With more cities and states capitulating to union demands, pressure will increase in some regions to adopt LPAs to maintain competitiveness.

From the perspective of the Chamber, the meager benefits, including reductions in labor disruption, supplies, and a ready workforce, are being exchanged to assuage the threat of tough union tactics to force organized labor. In short, the benefits do not seem to outweigh the heavy costs in terms of free speech, the loss of employer flexibility and the layers of bureaucracy and cost that come with unionization.

What’s the Legal View?

According to Michael J. Lotito, a shareholder at the law firm Littler Mendelson, “these pieces of legislation are usually instigated by unions who have difficulty organizing and signed by politicians who need labor support. That is the case here. The Mayor is in trouble and unions need members. The legality of these efforts are suspect based on whether the government agency is a market participant or a market regulator, terms of art developed by the courts to see if the legislation is pre empted under the NLRA.

Unions and politicians have become creative in avoiding successful legal challenges. This legislation has significant problems in that it deals not just with the developers but also the tenants. We will have to see if the legislation is challenged in court. Unions have shown they cannot organize mostly because employees do not see the value proposition in union membership as we approach 2020. The people who are labor allies depend on labor support of all kinds. The Mayor of New York, who is deeply unpopular, may be confronting a primary challenge. So the unions and the politicians conspire in the name of labor peace to force people to join unions against their will. But since we have become a nation of messenging instead of a nation of facts, the conspiracy often works to the benefit of the elected politicians who force those who voted for them to join the union under neutrality agreements without a vote at all. And that is hypocrisy at its finest.”