While the Coronavirus Aid, Aid, and Economic Security Act (“CARES”) provides essential assistance to businesses in the United States, primarily through substantial loan facilities backed by government dollars, it has a serious disadvantage for non-union midsize businesses . The CARES Act specifically deals with the development of a loan program for medium-sized companies. However, in order to receive these loan options developed under the CARES Act, medium-sized companies must “remain neutral” with regard to trade union organizations during the term of the loan. This requirement makes non-union medium-sized employers an open target for union organizing efforts. Therefore, employers need to use this time to create a program that can proactively and legally reduce the risk to unionization by telling their employees why unions are not in the union’s best interests for themselves, their careers or their families .
Provisions of the CARES Act
Pursuant to Section 4003 (D) of the CARES Act, the Treasury Secretary seeks “the implementation of a program or facility” to enable lenders to provide direct credit to eligible companies, including medium-sized companies. The CARES law defines a “medium-sized company” as any company with 500 to 10,000 employees. The Treasury Department will publish information on the implementation of this medium-sized business loan program.
In addition to certain promises regarding the use of the loan funds, the CARES Act stipulates that medium-sized companies must present a “certificate of good faith” stating that they “remain neutral in all organizational efforts for the duration of the loan”. The term “stay neutral” is not defined in the CARES Act and the Treasury Department has not issued any guidance to clarify this phrase. What is certain, however, is that the CARES Act provides the necessary financial relief at the expense of a medium-sized employer’s waiver of freedom of expression that is otherwise protected under Section 8 (c) of the National Labor Relations Act (“NLRA”).
In general, employers and trade unions have certain rights under Section 8 (c) of the NLRA. These rights include the right to “express views, arguments, or opinions” provided there is no risk of reprisals, violence, or promises of benefit. In general this means that both trade unions and employers can share facts, opinions and experiences about trade unions with their workers. This protection enables employers to prevent misinformation and share facts that unions often downplay, including the cost to workers, the effects of strikes and the loss of a direct relationship with their employer. The purpose of Section 8 (c) protection is to enable employees to make informed decisions about union organization.
Possible meanings of “stay neutral”
In return for the necessary financial relief, the CARES Act requires the waiver of some or all of the employer’s freedom of speech under Section 8 (c). Although the definition of “stay neutral” is not clearly defined, typical neutrality agreements between unions and employers usually include:
- “Gag rules” prohibiting employers from commenting negatively on the union,
- Card reviews automatically identify the union representation once a threshold for union authorization cards has been recorded, and
- Requirements that the employer provide the union with personal information about employees. It is unclear whether this “stay neutral” demand prevents workers groups from emerging to fight union organizing efforts.
Neutrality agreements sometimes contained provisions that gave the employer limited protection, including the ability for the employer to explain legal rights, the secret voting process, collective bargaining and the positive benefits that non-union workers receive. The CARES Act gives the Minister of Finance the power to issue regulations and guidelines on the provisions of the CARES Act. Hopefully, guidelines will be published in the coming days on the level of “neutrality” required for medium-sized companies to receive the loan options provided for under the CARES Act.
Not only is it unclear what “stay neutral” means in the sense of the CARES Act, it is also not clear which decision-making authority will be responsible for interpreting and enforcing these requirements. In general, the National Labor Relations Board (“NLRB”) is responsible for enforcing and interpreting the NLRA and other labor laws and determining whether unfair labor practices occur. For the time being, the question remains whether the NLRB will be responsible for the application of these labor law provisions under the CARES Act or whether the judicial system will be the appropriate body to rule on these issues. Until the Minister of Finance clarifies these practical questions under the CARES Act, these provisions will ask more questions than answers.
These labor law provisions of the CARES Act show that unions are likely to step up their organizational efforts. Therefore, prudent employers who may be affected by the law should be proactive:
- Review of employee relationship programs, work rules and remuneration,
- Implement a communication plan that meets the legal requirements of the NLRA, and
- Create a plan of action for unions vulnerability under the prerogative of a lawyer or client.
The importance of acting quickly cannot be emphasized enough.
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