NLRB Upholds Neutrality Agreement That Included The “Framework” Of A Labor Agreement

In Dana Corp., 356 NLRB No. 49 (Dec. 6, 2010), the National Labor Relations Board (“Board”) ruled that employers and unions lawfully can agree, in a neutrality agreement, that if the union obtains recognition, the parties will be bound by a “framework” of future terms and conditions of employment. Traditionally, neutrality agreements simply provided that the employer would not oppose the union’s efforts to organize the employees and the employer would accept something short of a Board election, such as a card check, as proof that the union represented a majority of the employees. Anything more generally was viewed as providing unlawful assistance to a union or unlawfully recognizing a union that represented only a minority of the employee. The decision in Dana, however, now sanctions more than simply agreeing upon how a union can organize a group of employees, but the exact parameters of what can be agreed upon remains uncertain.

In Dana, the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America ("UAW") represented more than 2,000 Dana Corporation workers but did not represent any of the 305 employees at Dana's St. Johns, Michigan plant. Dana and the UAW eventually signed a neutrality agreement for the St. Johns' plant in which Dana agreed to recognize and bargain with the UAW without an election if a majority of employees signed union authorization cards; however, the agreement went beyond the process by which the union could gain recognition and included substantive provisions that would "inform future bargaining" on particular topics. In particular, the agreement specified that any collective bargaining agreement would (1) further the effort to contain health care costs, (2) have a duration of four years, (3) recognize "flexible compensation," (4) allow mandatory overtime, and (5)incorporate the employer's "idea program". The agreement also limited the union's right to strike and provided for interest arbitration for the resolution of any dispute over the contents of the agreement.

Three Dana employees filed charges with the Board alleging Dana and the UAW violated the National Labor Relations Act (“Act”) by entering into the agreement because it amounted to unlawful assistance to the UAW. The General Counsel of the Board agreed and issued a complaint. The General Counsel relied on Board precedent holding that an employer may not reach a collective bargaining agreement with a union before the union can demonstrate that it represents a majority of the employees because such pre-recognition bargaining interferes with employee free choice and puts the union in a "privileged" status and amounts to "tacit recognition" of a union without majority status.

Nonetheless, in Dana, the Board held that the agreement was not unlawful because the provisions did not amount to a full collective bargaining agreement. Instead, the Board characterized the provisions as nothing more than a framework for future collective bargaining. In reaching this conclusion, the Board noted that the agreement expressly stated that Dana did not recognize the union, contained a lawful mechanism for determining whether the union had majority status and had no immediate impact on the employees' terms and conditions of employment because it contemplated further bargaining. 

The impact of the Board’s decision in Dana is difficult to discern. The Board made it clear that it was not sanctioning full-blown collective bargaining agreements as part of neutrality agreements. To the contrary, the Board emphasized that, in its view, Dana only agreed to a “framework” for future bargaining and that it (the Board) would leave the legality of neutrality agreements with other types of substantive terms for another day. Therefore, employers and unions hoping to be able to link a neutrality agreement with a pre-determined collective bargaining must await further action by the Board.   Moreover, if a union and an employer agree on “framework” terms similar to those in Dana, it is not clear what rights the employer will have obtained because, by definition, the arrangement contemplates further bargaining.

Organized labor is seeking new ways to organize employees. By using neutrality agreements with substantive terms and conditions of employment, unions can actually organize companies before organizing the employees. Certain employers may find this approach attractive because it would enable the employer to help predict the cost of a potential collective bargaining agreement and may reduce the risk of a strike; however, because of uncertainties concerning how much can be agreed to in advance and the need for future bargaining, the only certainty may be a represented workforce.