New Report Exposes Local Government ‘Labor Peace’ Agreements

Union officials often are best prepared for war when invoking the specter of “peace.” A new report from the U.S. Chamber of Commerce, “Labor Peace Agreements: Local Government as Union Advocate,” explains why these agreements are the result of union pressure, subtle or otherwise. In such cases, a city, county or state government, having asserted a “proprietary interest” in existing or planned commercial facilities such as hotels or a sports arena, passes an ordinance requiring that a union and/or employer forgo certain rights protected by federal labor law. On the surface, these measures promote a level playing field. In practice, they are political gifts to unions. Currently, 11 states impose, or allow locally, such mandates. In response, at least three states have banned their use.

Unions, at bottom, are business organizations. And their business is increasing the bargaining power of workers within a given firm, industry or jurisdiction. Through expanding membership and dues revenues, they are in a better position to raise pay and benefits. Part of this process involves getting state and local governments to pass laws favorable to their interests. Among them as of late are “labor peace” ordinances in which a union promises an employer that it will not conduct picket, strike, boycott or some other disruption so long as the employer makes certain concessions. Such laws, at first glance, appear the result of voluntary compromise. Beneath the surface, they are anything but that. The union, backed up by a government entity, holds the cards. The union withdraws a threat to employer operations so long as the employer promises to advance union interests. The 16-page Chamber of Commerce report explains: “Labor peace agreements can cover a number of different topics, but their fundamental purpose is to compel an employer to grant organizing concessions to a union, concessions they otherwise would be unlikely to make.” Therein the rub lies. The union agrees to refrain from acts of hostility such as strikes and pickets, but only insofar as the employer says “yes” to demands it otherwise would find objectionable. And even the union’s “concessions” may have a time limit.

For all intents and purposes, labor peace agreements are union shakedowns. And government officials, whether enthusiastically or dutifully, are complicit. Most commonly, localities apply labor peace agreements to downtown revitalization projects or long-term strategies in which a hotel, casino, arena or stadium serves as an economic development anchor. Under such scenarios, union officials take advantage of the eagerness of public officials to get a project off the ground. As a bonus, they engage in institution-building, arresting the decades-long decline of union membership as a share of the U.S. work force.

Labor peace agreements should be distinguished from project labor agreements (PLAs), which are authorized by the National Labor Relations Act. Under a PLA, a contractor agrees to hire only union workers for a particular aspect of a public works project or for the project as a whole. They also differ from neutrality agreements, though the latter type arrangement may be subsumed under a labor peace agreement. Under “peace” agreements, which are not authorized by the NLRA, a union, an employer, or both, agree to waive certain federally-protected rights in order to avoid future labor disruptions. And the terms may cover a broad set of issues. While such an agreement may be negotiated voluntarily, typically it is a general- or special-purpose local government that imposes it upon contractors or employers as an expression of “proprietary interest.” That is, if a government entity provides financial assistance to a project in the form of a grant, contract or low-interest loan, that entity is on stringer legal ground to extract a promise from the developer/facility operator to do things that work to the benefit of a union. It’s a can’t lose situation for unions: Government has become their organizing partner.

San Francisco more than three decades ago proved to be ground zero for labor peace agreements. In 1980, the San Francisco Redevelopment Agency forced the Marriott Corporation to sign an commitment in conjunction with its proposal to build a hotel on a City-owned parcel. This agreement included neutrality and card check provisions intended to facilitate union organizing. Almost two decades later, in 1998, the City of San Francisco passed a “labor peace” ordinance applicable to contractors and subcontractors of hotel and restaurant projects where the City had a proprietary interest. Under the ordinance, any covered hotel or restaurant must sign a card check agreement with any union requesting one. Even if a particular facility does not receive direct City support, by virtue of its location in a mixed-use redevelopment zone it is subject to the ordinance anyway. The San Francisco Airport Commission has created a similar set of requirements for employers doing business at San Francisco International Airport.

Other cities since have enacted labor peace ordinances. The Baltimore, Pittsburgh and Washington, D.C. laws, as the Chamber of Commerce monograph notes, while not necessarily as explicit as those in San Francisco, exact demands upon project sponsors to satisfy local unions. The Baltimore ordinance spells out not less than five circumstances in which the City has a proprietary interest: 1) the City derives revenue from property leasing; 2) the City derives revenue from a project through borrowing from the City; 3) at least part of a project’s operating revenues are used to service debt on City bonds; 4) project loans are underwritten or guaranteed by the City; and 5) the City has an ongoing economic or non-regulatory interest dependent on the financial success of the project. Pittsburgh’s ordinance states that employers, including subcontractors, “shall be or become signatory to valid collective bargaining agreements” with any labor organization seeking to represent its employees “as a condition precedent to its contract with the City of Pittsburgh.” This actually goes beyond the San Francisco ordinances, which at least require worker support. The Washington, D.C. law stipulates that any contract related to a hotel project must include a labor peace agreement signed by an employer and any union that represents, or reasonably might represent, workers there.

The state governments of Maryland and New York also have passed laws designed to achieve the illusion of peace. In Maryland, an applicant for a license to operate a video lottery terminal must have “entered into a labor peace agreement with each labor union that is actively engaged in representing or attempting to represent video lottery and hospitality industry workers in the state.” In return, the union will refrain from “picketing, work stoppages, boycotts and any other economic interference” within the first five years after the license is granted. The New York State law applies to any hotel or convention center employing more than 15 people in which a state agency asserts a proprietary interest. As with Maryland, a union agrees for five years not to disrupt employer operations.

All of this amounts to coercion – “an offer an employer can’t refuse,” to put it in Mobspeak. And compliance isn’t cheap. Developers/facility operators, once having paid the toll, pass it on to users. They go along, if reluctantly, because they want to get a green light for their operation. Three states thankfully have acted to prevent this practice. Louisiana (2001), Georgia (2013) and Tennessee (2013) each have enacted statewide bans on labor peace ordinances. Less directly, two dozen states have dampened the possibility for such agreements by passing Right to Work laws over the decades, most recently, Michigan. These laws protect private-sector employees from being terminated from their jobs as a result of “security” clauses inserted into union-driven contracts. When workers have the freedom to opt out of membership, unions are in less of a position to control a local labor market. One hopes that more legislatures will become aware that “labor peace” ordinances are less about keeping the peace than about keeping unions satisfied.


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