Unionisation & CARES Act Hush Money Loans
In the chaos of a global health pandemic and what some economists call the great repression, Americans have shown incredible solidarity in the battle against the coronavirus (“COVID-19”). Across the country, citizens are social distancing and staying at home as businesses close their doors and redeploy resources to meet emerging demands. However, this collective American commitment has come at a high economic cost. Millions of Americans suddenly find themselves unemployed or unable to work as previously successful businesses plunge into financial despair. Sadly, rather than joining the collective effort, unions have used desperation to gain unprecedented benefits, suppress employers’ rights and deprive employees of their full freedom of choice – namely that the unions were able to obtain a single sentence in the CARES law which obliges employers to remain silent and to pledge not to oppose the unionization of their employees in order to obtain the loans necessary to maintain these jobs and save their businesses.
After almost a week of wrangling, Congress adopted the CARES ACT stimulus
Reeling from shelter-in-place, isolation orders and mandatory closures, American businesses and citizens will soon receive much-needed relief. After stagnating in Congress for nearly a week, on Friday, March 27, President Trump enacted the law Coronavirus Aid Relief Economic Security Act (“CARES Act”), a historic stimulus package that will provide a wide range of essential financial aid to American workers, families and businesses facing the extraordinary challenges of the COVID-19 crisis. (For a broader analysis of the CARES law see here).
This bill is unprecedented both in its momentous scale and in its overwhelming bipartisan support. At a time when most acts of Congress seem to divide directly into party lines, CARES. The law was passed unanimously in the Senate and near-unanimously in the House of Representatives, and President Trump proclaimed it into law the same day. This raises an important question, however. Why, if the bill had such support among Democrats and Republicans, did it take nearly a week to reach the President’s office when each delayed day was another day when uncertainty made havoc in economic markets and have Americans gone without critical relief?
The answer is disappointingly simple. It was politics as usual as lawmakers vied for benefits for their major political contributors. One of the political demands that delayed the bill and ultimately made its way into signed law was a Democrat-backed union neutrality mandate. Tucked away on a single line in the middle of the several hundred page law, this provision significantly modifies the basic rights of employers and employees under the National Labor Relations Act (“NLRA”) and could have seismic repercussions. for businesses that have no choice but to submit to this condition in order to guarantee an economic lifeline during the coronavirus pandemic.
What is “neutrality”?
Simply put, “neutrality” is a waiver of an employer’s legally protected free speech rights. Under the NLRA, unions and employers enjoy federally protected free speech rights. For employers, these rights, known as 8 (c) rights, allow an employer to share facts, opinions and experiences about unions with their employees. These rights are essential tools during organizing campaigns, necessary for employers to fight disinformation and educate employees on the realities of organizing, especially unions often downplay or ignore, such as the cost to employees. the investment of union dues, the impact of strikes on employees and the workplace, the loss of a direct relationship with their employer and the fact that employees can, and often lose, their wages and benefits in union negotiations.
Hearing both points of view allows employees to make informed and free choices about whether or not they want to be represented by a union. “Neutrality”, however, destroys this crucial balance of perspectives by requiring employers to remain impartial and silent about unions, while unions remain free to give their unilateral point of view to employees. It is of course not surprising, then, that the ultimate consequence of “neutrality” is that it is much easier for unions to organize employees.
The neutrality mandate of the CARES law (Hush Money)
Although the CARES Act offers several types of loans and other financial aids, including Paycheck Protection Program loans (for small businesses with up to 500 employees and nonprofit organizations), loans in economic disaster (for small businesses with up to 500 employees, only owners, independent contractors and nonprofits), emergency relief loans (for airlines, businesses critical to sustaining security and credit facilities established by the Federal Reserve) and various tax credits – probably the most basic part of the assistance program is Act’s Midsize Business Loan Program. Under the CARES Act, loans to medium-sized businesses, medium-sized businesses (those with 500-10,000 employees) can obtain a loan with an annualized interest rate not exceeding 2%, and without no interest or principal payments for six months, in order to maintain at least 90 percent of the company’s workforce, with full pay and benefits, until September 30, 2020.
One of the “compromise” amendments that Democratic lawmakers may have demanded was union demands that, as a condition of any midsize business loan, the borrowing employer must make a “good faith certification” that he “will remain neutral in any union organizing effort for the duration of the loan.
In other words, if a medium-sized business needs a loan to deal with its temporary closure, shelter-in-place orders, new compulsory paid holidays, or the loss of income resulting from other economic impacts of COVID-19, it must agree to relinquish its free speech rights and accept a targeted union disinformation campaign to organize its employees. Notably, while hopefully COVID-19 will be a crisis in the near term, this unprecedented disruption of the labor-management balance will silence employers for the duration of their loan and, if employees are misled by unionizing, the impact is generally permanent given the restrictions and difficulties the NLRA places on decertifications.
In addition, it is still unclear who will determine when a violation occurs and what the consequences will be. Some may argue that a violation is an unfair labor practice that should be adjudicated by the National Labor Relations Board with any remedies arising from the Board. However, since Section 8 (c) of the NLRA specifically protects the right of employers to not remaining neutral, the Commission would likely not have the competence to hear such complaints in the absence of new legislation. That said, other potential consequences outside of board processes could be even more impactful and range from mid-term appeal of the remaining loan balance, to a detrimental change in loan terms, to financial penalties and / or loss of tax benefits. Questions remain as to who would decide that an actual violation has occurred and when such sanctions are warranted and whether unions would have third party rights to enforce them.
Although the CARES Act is silent on these questions, regulations that will inform the answers to these questions could be published. The CARES Act gives the Secretary of the Treasury the power to promulgate regulations to enforce the provisions of the CARES Act, and these regulations could shed light on the real consequences of violating the neutrality mandate and who will judge violations. Notably, this authority is not limited in time and theoretically, a different Treasury secretary in a different presidential administration could modify or create new regulations which have important consequences.
Unions have already started pushing to take advantage of hidden money neutrality – what should employers expect
For companies for whom these loans are a vital lifeline during the coronavirus pandemic, the union neutrality mandate in the CARES Act amounts to a forced waiver of federally protected free speech rights from employers who will give employers. unions a significant advantage in organizing campaigns. Legally mandated union neutrality inevitably leads to an increase in organizing campaigns, and since these loans will be in the public domain, unions will have a literal roadmap on which to target employers. Thus, employers who obtain these loans should be fully prepared to deal with organizing campaigns. In fact, the loans are not even available yet, some employers are reporting that unions are not waiting to exploit this political advantage and have already started to learn about the employer’s intention to obtain a CARES Act loan and to increase the mandate of union neutrality.
Clearly, in these troubled times, employers need to take the necessary steps, including applying for CARES loans, to maintain their financial solvency and ensure their ability to maintain their employees’ jobs and payroll – they need to do so knowing. that their silence is part of the cost.
© 2021 Epstein Becker & Green, PC All rights reserved.Revue nationale de droit, volume X, number 90