The Hotel Industry's Summer of 2006

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The Hotel Industry’s Summer of 2006

A Watershed Moment for America’s Labor Unions?

by DAVID SHERWYN, ZEV EIGEN, and PAUL WAGNER

Neutrality agreements allow labor unions to organize ach May for the past five years, employment workers in hotels and other industries without the lawyers representing hotels and other hospital- trouble of a secret-ballot election. UNITE HERE, E ity companies attend the Center for Hospitality which represents hotel employees in several major Research’s (CHR’s) annual Labor and Employment markets, attempted in summer 2006 to extend its Law Roundtable. The Legal Roundtable, jointly spon- reach into the industry via neutrality agreements. The sored by the CHR, Cornell University’s School of union contracts expired in several markets, which Industrial and Labor Relations, and Cornell Law meant that the hotel chains were faced with the pos- sibility of labor strife in their major cities. In exchange School, is held each year at Cornell’s School of Hotel for labor peace, the chains agreed to a moderate Administration. In both 2005 and 2006, one of the extension of organizing by neutrality agreement, but Legal Roundtable’s topics was union negotiations in the not to the extent that the union might have wished. hotel industry. As the reader may be aware, the union negotiations in summer 2006 were among the most Keywords: neutrality; card check; elections; important negotiations in recent memory. The purpose unions; labor peace; negotiations of this article is to explain, by drawing in part on insights of Roundtable participants, how the summer of

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2006 was set up to be a watershed time careers. Since union dues are composed of for the union movement, what the issues a percentage of employee pay (excluding were, and how the union sought to exert its tips) and because union members who power. benefit the most are those who stay at the same job for long periods of time, hotel The State of the Labor jobs did not fit the traditional union model. Instead, the union movement focused on Movement and the Merger “heavy labor.”4 of UNITE HERE With the days of American dominance Once strong, union membership is in in manufacturing long gone, unions turned decline in the United States. In the years to industries that cannot be relocated or following World War II, the economy outsourced overseas. Today, the hospitality boomed and the labor movement attained industry is now not only a focus but could its peak of national power. Unions orga- be the holy grail for the labor movement. nized more than half of the workforce in That said, the labor movement faced a prob- manufacturing.1 At its height in the mid- lem of adequate resources in its prospec- 1950s, organized labor represented about tive plan to organize hotel employees. 35 percent of the United States’s work- One of the chief hotel unions, Hotel force.2 That percentage has declined steadily Employees and Restaurant Employees since that time, sinking to 13.7 percent in (HERE), had a core membership in the 2005. Indeed, only 7.8 percent of the private hotel industry. Moreover, the union had a workforce is now unionized; the approxi- capable, dynamic, and progressive leader, mate level just before the New Deal.3 A John Wilhelm. But HERE lacked suffi- large reason for the decline in private sec- cient monetary resources. Meanwhile, tor union membership is the decline of UNITE, the successor union of the heavy manufacturing in the United States. International Ladies’ Garment Workers’ As these industries moved out of the coun- Union (ILGWU) and the Amalgamated try, union jobs simply disappeared (and Clothing and Textile Workers Union many others moved out of the country). (ACTWU), also had a bright, dynamic One industry that has not disappeared leader, Bruce Raynor. In addition, because or relocated, however, is the hotel indus- it owned the Amalgamated Bank of New try. During the height of union organizing York, it had substantial resources. The just before and after World War II, most of problem for UNITE was declining mem- the great hotels in large American cities bership as U.S.-based apparel and textile were organized. Even though many of manufacturing continued to decline. these hotels have changed ownership and On July 8, 2004, UNITE and HERE operators, there remains a strong union pres- merged to create UNITE HERE, with the ence in such cities as Boston, Chicago, following goal: “Organizing the unorga- Los Angeles, New York, San Francisco, nized in our industries is the top priority and Washington, D.C. Despite this pres- for UNITE HERE. Over 50 percent of ence, hotels were not the focus of labor the new union’s national budget will go organizers for many years. This was the toward organizing.”5 UNITE HERE does case because hotel employees are typically not, however, wish to organize in what not highly paid, often work for tips, and one might consider the old-fashioned way, are mobile—failing to stay in bargaining- which was through elections monitored unit positions for the duration of their by the National Labor Relations Board

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(NLRB). Instead, the union wishes to do in the service sector what we did in increase its membership via far less costly manufacturing 70 years ago: transform neutrality agreements and card checks. To low-wage work into decent jobs that give understand the distinction, both types of people the opportunity to make it into the union organizing are explained below. middle class.” As we said, these unions seek to accomplish this goal via nontradi- “Unite to Win” Organizing tional organizing methods, using card Strategy checks and neutrality agreements, which we UNITE HERE is one of a group of describe below. Indeed, at a recent Change national labor organizations that are to Win convention held in Las Vegas, engaging in a novel attempt to shift strate- attended by more than two thousand union gic gears, in particular with respect to organizers, the organization announced an organizing. In addition to UNITE HERE, organizing campaign in thirty-five cities. those unions are the Service Employees Operating under the slogan “Make Work International Union (SEIU), the Inter- Pay,” the drive aims to form cooperative national Brotherhood of Teamsters, the cross-union efforts to organize workers in Carpenters, the United Farm Workers, the target cities. One of the primary com- the Laborers International Union, and the ponents of the Make Work Pay campaign United Food and Commercial Workers is a national campaign led by UNITE (UFCW). As stated on the Change to Win HERE to organize workers at a large U.S. Web site, which is the seven unions’ col- hotel chain, including distributing leaflets lective electronic effort, the central objec- at the company’s hotels and sponsoring tive of Change to Win is “to unite the more rallies in many cities. than 50 million American workers who work in industries that cannot be out- Traditional Organizing Drives sourced or shipped overseas into strong The “old-fashioned” method of orga- unions that can win them a place in the nizing aims at building support for a ballot American middle class—where their jobs among employees at a particular establish- provide good wages, good health care, ment or company. Sometimes, unions send good pensions, and a voice on the job.”6 their members to apply for jobs with non- The goal is for the Change to Win unions union employers the unions wish to orga- to integrate their organizing programs and nize. Once hired, these “Trojan horse” to launch large-scale organizing cam- workers set about organizing the other paigns, earmarking at least 50 percent of employees. This method, referred to as collective resources for organizing drives “salting,” has been the subject of a U.S. across the country (Unite to Win is UNITE Supreme Court case in which the Court HERE’s name for its part in Change to held that an employer could not terminate Win). Part of the organizing strategy a “salter” simply because the real reason involves labor coalition building with the the employee joined the company was to intent of bypassing traditional organizing organize it.7 Another traditional method drives in favor of applying political and for organizing is to find existing employ- economic pressure on employers to orga- ees who are willing to “sell” the union to nize employees. As John Wilhelm explains their coworkers. Last, organizers may enter on the Change to Win Web site, “What the property and hand out authorization workers in this industry need, what the cards or set up picket lines at the prop- country needs is a permanent campaign to erty’s entrances and exits.

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The National Labor Relations Act to convince employees to vote against the (NLRA) sets forth the laws regulating this union by raising issues with the lawful form of employee organization.8 Under intent of informing employees of their those rules, before any labor organization rights and the consequences of voting in can be certified as the exclusive bargaining favor of the union.11 According to several representative for any group of employees, Roundtable labor lawyers, one of the key the employees in that group, constituted as strategies in this regard is to examine what a bargaining unit, vote for or against union the union is selling and explain to the representation in a secret ballot election employees the ways in which the costs monitored by the NLRB. In most cases, would outweigh the benefits. These the NLRB seeks to schedule such an elec- Roundtable participants suggest that one tion approximately four weeks after the problem for the unions is that organized union initiates the process by filing a rep- labor does not always have much to sell. resentation petition. The time period may For example, one lawyer discussed a be extended if the employer contests the union organizing drive in which the union bargaining unit or if other related issues represented to employees that it would arise. Regardless, the four-week period demand that the employer implement the provides both the union and the employer union’s health insurance plan if it were an opportunity to present their positions to elected. The union extolled the fact that it the employees. would insist that the employer pay 100 Under the NLRB rules, a union may percent of the cost of the plan, as opposed request the secret ballot election only if a to the current plan under which the minimum of 30 percent of the employees employees paid a portion of the cost. The in a prospective bargaining unit have employer held a meeting in which it com- signed authorization cards. As a practical pared the two plans. While the union plan matter, however, most national unions will was fully paid, the coverage was clearly so not file a petition unless at least 60 percent inferior that the employees concluded that of the employees have signed cards.9 To they were better off with the employer’s prevail in the election, the union needs a plan and voted against the union. Employers simple majority only of those who actually contend that this insurance issue is a typi- vote, rather than a majority of those who cal example of the current state of union would be represented in the bargaining unit. organizing: at first the union pitch sounds Both sides are free to “campaign” prior great, but after close examination the to the election. Indeed, the period between employees do not want to buy what the the time the petition is filed and the election union is selling. This is why, employers is held is often referred to as the “critical argue, companies are able to defeat the period.” During that time, employers may union in elections.12 not threaten, interrogate, make promises Not surprisingly, unions present a dif- to, or engage in surveillance of employees. ferent view of campaigns. Union advo- In addition, employers may not solicit griev- cates claim that during most campaigns ances or confer benefits. If the employer employers illegally threaten, intimidate, violates these rules, the NLRB may either and terminate employees who favor the order the election to be rerun or issue a union. According to a 2005 report by the bargaining order.10 University of Illinois at Chicago’s Center Employers may, however, engage in for Urban Economic Development, when numerous legitimate campaign activities faced with organizing drives, 30 percent of

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employers fire prounion workers, 49 per- requires the employer to recognize the cent threaten to close a worksite if the union if a majority of the bargaining-unit union prevails, and 51 percent coerce work- employees sign authorization cards. Under ers into opposing unions with bribery or a card-check agreement, the employees do favoritism.13 Unions point to the numerous not vote for the union in a secret ballot unfair labor practice charges filed against election monitored by the NLRB. Instead, employers as well as anecdotal evidence the employer recognizes the union if it of outrageous employer behavior. presents the company with the requisite While the above arguments need to be number of signed authorization cards. presented, they may be moot. UNITE HERE no longer wishes to organize under The Effect of Neutrality the traditional NLRB election rules. In Agreements fact, as one HERE organizer stated, “We Neutrality agreements change the land- 14 will never go to an NLRB election again.” scape of union organizing. A study by Instead, as part of the above-described Unite Eaton and Kriesky conducted in the late to Win coalition, UNITE HERE’s strategy 1990s examined 170 campaigns where the is to organize using card-check neutrality employer and the union agreed to neutral- agreements. ity with a card-check provision. With the aid of such agreements, unions prevailed Neutrality Agreements 78.2 percent of the time.19 Comparing this Although neutrality agreements come result to the 46 percent union success rate in several forms, the common denomina- in contested NLRB elections, the authors tor for all is that employers agree to stay concluded that while neutrality arrange- neutral with regard to the union’s attempt ments improve a union’s chances, the to organize the workforce.15 Some agree- results are not nearly as stark as those in ments simply state that the employer will the public sector where unions won 85 remain neutral with no other language, while percent of secret-ballot elections in 1995. other agreements contain more specific We believe that the authors dismissed provisions.16 For example, under UNITE their results too quickly. We say this because HERE’s standard agreement employers of unions’ policy of petitioning for an elec- pledge that they “will not communicate tion only when they are certain of having opposition” to the union’s efforts.17 more than 50 percent support of the unit’s Neutrality agreements commonly pro- members. This implies that in the 54 per- vide the union with access to employees cent of the elections that unions lost, the in the form of a list of their names and unions went into the election with major- addresses (and, sometimes, telephone ity support, but did not get all of those numbers), as well as permission to come votes. This means that if there had been a onto company property during work hours card check instead of a ballot, those unions for the purpose of collecting signed autho- would likely have been recognized. rization cards. This differs from the guide- The following example contrasts the lines set up by the NLRB and the courts, effectiveness of neutrality agreements for under which an employer has no obligation organizing with that of contested elec- to provide the union with access and may tions. Say that a union is targeting workers actually be prohibited from doing so.18 at two hundred different employers. One Finally, most neutrality agreements also hundred of the employers sign a neutrality include a “card-check” provision, which agreement with a card check, while the

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other one hundred do not do so. Applying Why, then, would an employer ever Eaton and Kriesky’s results for this example, accede to a neutrality agreement in the the union would organize seventy-eight of first place? As we explain next, the answer the “neutral” employers. The union then is external factors. attempts to organize the other one hundred employers using secret ballots instead of Why Sign? neutrality agreements. Of these one hun- The short answer to the question of why dred companies, the employees in twenty sign is that an employer will sign a neu- companies do not want a union. Because trality agreement when the employer fewer than 50 percent of those employees believes the agreement is in its best inter- sign authorization cards, the union walks ests. Employers or observers who believe away. The union gets more than 50 percent that unionization is never in the employer’s of the employees to sign cards at the best interest might be puzzled by this argu- remaining eighty companies. Note that ment, but we have identified situations under a card-check agreement, the matter when signing is in the employer’s best inter- would end there and all eighty of these est. First, some municipalities have insti- companies would be unionized. Because tuted labor-peace agreements that required there is an election, however, the employer neutrality if employers want to obtain build- tells its story (or intimidates the employ- ing permits or even operate.20 Second, in ees) during the campaign period. Again the hotel industry it is not unheard of for a applying Eaton and Kriesky’s percentages, union to buy a hotel and make a neutrality the union prevails in thirty-seven elections agreement a condition for any operator wish- (46 percent of the elections). A casual ing to manage the property. Third, some- reading of this example would conclude times unions can help an employer staff a that neutrality with a card check yielded a property. Finally, an employer might sign 78 percent union recognition and election a neutrality agreement because the union yielded just under a 50 percent union suc- is selling something that the employer cess rate. That conclusion, however, omits wishes to buy. For example, in Las Vegas, the effects of the twenty cases where the at least one HR director contends he could union did not even attempt an election. have never opened on time without the Thus, the result when employers declined help of HERE. Similarly, Southern Bell a neutrality agreement and insisted on Corporation (SBC) signed a nationwide elections was just under 40 percent union neutrality agreement with the communica- success, given that twenty companies are tions workers in exchange for that union’s not in the election data set. What this agreement to lobby on behalf of SBC with means for managers is that when there is regard to potential antitrust violations. enough employee interest to warrant an Indeed, unions can offer the important election, (1) the company’s chances of gift of labor peace. To sell peace, though, becoming unionized are less than 50 per- a union needs the ability to cause labor cent under the NLRB’s election proce- strife. In the past several years, UNITE dures, but (2) a unionized bargaining unit HERE has forged a strategy that will allow is nearly guaranteed under a neutrality it to wage war against the hotel industry agreement with a card-check provision. and thereby afford it the opportunity to We are certain that employers are aware peddle peace. The union had the ability to of the logic found in the above example. start this war in summer 2006.

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The Summer of 2006 sounds fine in principle, we wonder which Most unionized hotels in the major corporate executives will be able to nego- cities in the United States and Canada are tiate in seven places at once. If the union part of employers’ associations that bar- seeks to negotiate with the corporate gain as a group. The contract that emerges director of labor relations, it seems that from these negotiations is referred to as an having seven simultaneous negotiations area agreement and covers all the proper- would make it impossible to have that per- ties in the association. In addition, many son at the table. Moreover, Wilhelm can- properties in the vicinity that are not part not believe that CEOs or COOs will come of the multiemployer group sign what are to the table because CEOs and COOs typ- referred to as “me-too agreements.” These ically hire experts in labor relations to agreements simply mean that these prop- negotiate on their companies’ behalf. By erties that are not part of the employer the same token, the union’s negotiators are group will be bound by the terms of the experts in negotiations. area agreement. In the past, the union Another problem with this reasoning agreed to contracts in various major cities involves the question of what party should that expired in different years. Because negotiate with the unions. The corporate HERE represented properties in all the executives to whom Wilhelm refers work major cities, it would take too many for hotel operators, who are often not the resources to negotiate on several fronts at hotel’s owners. If the owner is the negoti- the same time. When the hotels, on the ating party, then national bargaining other hand, were independently owned makes no sense. If the operator negotiates, and operated, there was no advantage or the owner is in an awkward position. disadvantage to negotiating separately Given that national bargaining seems to each year. As hotels came to be operated be logistically difficult, we need to exam- by large chains, the companies encoun- ine why the union worked so hard to get tered the same issue as the union— the contracts to expire at the same time. namely, it was too cumbersome to juggle Roundtable participants suggested that simultaneous negotiations in several cities. the answer comes back to labor peace, For the most recent set of negotiations, labor war, and UNITE HERE’s priorities. however, UNITE HERE changed its strat- Wilhelm’s observation that the sixty-year- egy and sought to have the contracts in old bargaining structure “doesn’t work any a number of large cities expire simul- more” makes sense. The development of taneously. In the past several years, UNITE large chains has seriously hampered the HERE has either insisted on short contracts union’s ability to cause labor strife in any or refused to agree to any new contract to given city. If New York is on strike and its ensure that in summer 2006 contracts would hotels lose conventions as a consequence, be open in Boston, Chicago, Honolulu, Los the New York properties can rebook their Angeles, New York, San Francisco, and conventions in other properties managed Toronto. by the same brand in another city. This According to John Wilhelm, the reason practice would be no consolation to the for UNITE HERE’s altered strategy was owner in the short run, but that New York the change in the industry.21 Rather than owner knows that eventually New York deal piecemeal with local management, will win the rebooked conventions when the union wants to negotiate with corpo- the pressure is on in another city. Thus, rate executives. While this argument while the sixty-year-old structure does not

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work for UNITE HERE, it works well Given UNITE HERE’s focus on orga- enough for the hotels. Indeed, this struc- nizing and the fact that UNITE HERE ture put the union at a serious disadvan- does not wish to organize with NLRB tage. Next, we consider whether the new elections, one could see that the union’s structure simply levels the playing field or goal was to convince the hotel chains to will give the union a substantial bargain- sign nationwide neutrality agreements. ing advantage. In that regard, Roundtable Since neutrality agreements are merely participants explained what the UNITE permissive subjects of bargaining (as HERE wants and what it can do. opposed to mandatory subjects), UNITE With the expiration of numerous con- HERE could not have insisted that the tracts, UNITE HERE’s strategy became hotels discuss this form of organizing at clear: it would conduct corporate campaigns. the bargaining table. The law does allow the Instead of negotiating with one market’s union, however, to package neutrality with employer association, UNITE HERE would scaled-back demands for wage and benefit negotiate with operators controlling prop- increases. Thus, hotels were faced with an erties throughout the country. For example, option: buy peace or face labor unrest. UNITE HERE exercised its contractual This complex decision was made more right to exclude a specific operator from complicated by the sometimes competing employer associations by excluding Hilton interests of the hotel operators and the hotel from the multiemployer bargaining associ- owners. Not only that, but the interests of ations in each of the seven cities. This short-term real estate investor owners differ separation caused turbulence among the from those who are planning to hold the operators. Hilton was forced to negotiate hotel over the long term. Roundtable partic- on its own, while the employer associa- ipants did not know whether the operator tions were left to decide whether to wait to could sign a neutrality agreement that see what would come out of the Hilton bound several properties held by different negotiations or to try to cut a deal before owners because the contracts are unclear UNITE HERE’s Hilton negotiations got and the law unsettled. Our subsequent messy. Meantime, the union could call or research revealed no definitive answer to threaten to call strikes against Hilton in all this question. Thus, the hotels negotiated seven cities—or even on several operators. during summer 2006 without really know- If the union was restive in several markets, ing the answer to questions that are vital to the chains could not redirect conventions their rights and responsibilities. This uncer- to other, presumably peaceful cities tainty was, however, a classic double-edged because the union could disrupt operations sword. The union could insist that the oper- wherever the conventions went. Moreover, ators agree to neutrality at properties that the operators could not bring in members they manage even though those hotels did of management from other cities to do not have owners in common, while man- hourly work because all the hotels were agement could argue it could not make such preparing for a strike. None of this is to a commitment. Management’s refusal to say that the union wanted to call strikes. expand neutrality to the chain’s nonunion Indeed, the union’s ability to wage war properties would not, however, end the dis- allowed it to sell peace—at a price. In this cussion. Because unions have the right to case, the price went beyond the traditional engage in recognition-related picketing at bargaining subjects of wages, hours, and the nonunion properties, the union could work rules. pull those owners into the negotiations—if

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only to rid themselves of pickets. Seeing value and thus violated Section 302.23 In the strength of the union strategy, manage- that case, a union official who represented ment looked to the courts and the govern- a bargaining unit at a Hyatt property in ment for help. Management hoped that Florida requested that an Atlanta Hyatt either the legislature or the courts would provide the official with a room rate that outlaw neutrality. At least for summer was just more than half of Hyatt’s corpo- 2006, such relief was not forthcoming. rate rate. The court found that the room rate reduction was a “thing of value” and that the requested favor violated Section 302. Neutrality Agreements the Similarly, in U.S. v. Boffa, the court Subject of Court Scrutiny found that an employer unlawfully pro- The argument against neutrality agree- vided a thing of value when it provided a ments can be couched as one that supports union official with the use of a car without an employee’s right either to be a part of a charge for a four-month period.24 This labor organization or to abstain from such seemingly broad definition of “thing of membership (guaranteed under Section 7 value” in Section 302 is consistent with of the NLRA). Management lawyers note the judicial interpretation of the same term the irony when unions, whose purpose, in when it is found in other statutes.25 part, is to empower employees, publicly Based on these cases, one could argue decry a secret ballot (democratic) election that a neutrality agreement constitutes a process in favor of a “backroom deal” that thing of value. Indeed, neutrality agree- results in recognition. Interestingly, a ments almost always require the employer poll conducted by Zogby International in to provide at least four things that could be June 2004 of 704 randomly chosen union characterized by the courts as things of members living in the United States revealed value. To review, those things are (1) that 66 percent of those polled disagreed access to the hotel’s premises so the union that it should be legal for a company and a can speak to the employees, (2) a list of union to sign a neutrality agreement.22 employees (often with addresses), (3) a Perhaps, then, it is not surprising that a card-check provision, and (4) exclusivity group of antiunion employees brought a to one union. If any of those benefits con- recent lawsuit against their employer and stitute a thing of value, the typical neutral- a union alleging that the neutrality agree- ity agreement would violate Section 302 ment the two had signed violated Section of the LMRA.26 302 of the LMRA. Section 302 prohibits Armed with these arguments, the unions and employers from giving each employees of Heartland Industries in Ohio other a “thing of value” to avoid the situa- sought to have a neutrality agreement tion of unions and employers exchanging signed by their employer declared unlaw- favors so that their loyalty would be to each ful. These employees did not, however, other at the expense of the employees. prevail. In Patterson v. Heartland Industrial While there is limited case law on what Partners, LLP, the Northern District Court the term “thing of value” means under in Ohio, relying on the Third Circuit’s rea- Section 302, it seems that the term covers soning in Hotel Employees Local 57 v. Sage fairly minor matters. In U.S. v. Schiffman, Hospitality, ruled that the neutrality agree- for instance, the question before the court ment was not a “thing of value” under was whether the union’s request for a Section 302 and accordingly granted the reduced room rate constituted a thing of defendants’ summary judgment motion to

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dismiss the action.27 The agreement at issue imposed on employers for NLRA violations in that case provided that the employer during organizing campaigns. would cooperate with the union during its Had either of these bills been enacted, organizing campaign by providing the the campaign of summer 2006 would have union with employee names and addresses been moot. Moreover, either bill would and access to the workplace and by pledg- radically change the union organizing ing not to speak negatively about the landscape in this country. As of this writ- union. The agreement also described the ing, neither bill had been made into law, terms of a first contract in the event that and we believe that neither bill will be the union’s campaign was successful.28 made into law in the near future. The Patterson case does not end the legal We see no hope for the labor-backed bill debate over neutrality agreements, and because the composition of Congress is there is a chance that with the current even more conservative than when Bill NLRB (made up of a majority of George W. Clinton, who was elected with strong labor Bush appointees) or the conservative- support, attempted to reward labor interests leaning Supreme Court could, in fact, make for their support. Unions wanted Congress neutrality agreements unlawful in the to overturn the 1938 case McKay Radio, future. While it is impossible to predict that which allowed employers to permanently long-term viability of neutrality agree- replace strikers.31 Clinton could not find the ments, the Roundtable participants all support to pass this legislation. agreed that it was unlikely that there would Given the Republican power in be any legal impediments to UNITE Washington, the Secret Ballot Protection HERE’s neutrality plans during summer Act seems to be in a better position to 2006. become law than the competing union bill. Still, we believe its passage is unlikely. Competing Pending Federal With President Bush contending with low Legislation on Card-Check approval ratings, the war in Iraq, tax Recognition reform, social security reform, and the midterm elections, it seems unlikely that Two bills currently pending before either he or the Republican leadership will Congress propose directly opposite treat- push for a bill that will benefit a relatively ment of card-check recognition. In an effort small percentage of their base while giv- to end check-offs, the Secret Ballot ing the Democrats’ strongest ally a rally- Protection Act mandates an NLRB-super- ing cry for the upcoming elections. What vised secret ballot election in all union this means is that unless the courts become organizing campaigns.29 A competing bill involved, the issue of neutrality will con- championed by the AFL-CIO, the Employee tinue to be resolved at the bargaining table Free Choice Act, would require the board to for the immediate future. certify a union as the bargaining representative through a card-check process.30 The lat- ter proposed act also provides for mandatory Conclusion mediation and arbitration should the union The summer of 2006 was watershedfor and employer not agree on terms of a first unions and management. It was UNITE collective bargaining agreement within one HERE’s opportunity to implement its hundred days of the card-check recognition. new Unite to Win strategy. It was also the The bill further seeks to increase penalties hotel operators’ chance to continue to push

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unions into further decline. At the time of Endnotes this writing, Hilton had settled nationwide, New York settled, and some operators in 1. B. E. Kaufman, The Origins and Evolution of Chicago have settled. The other cities the Field of Industrial Relations in the United States (Ithaca, NY: ILR Press, 1993). were still negotiating. Based on our initial 2. Ibid., 46. readings, the union did achieve many of its 3. B. T. Hirsch and A. D. Macpherson, Union goals. The hotels and the union agreed to Membership and Coverage Database from card check neutrality for new properties the Current Population Survey, 2004, updated and for a limited number of existing prop- at www.unionstats.com/, where Hirsch and Macpherson’s updated statistics may be found; erties. For those not covered, it is business see also www.bls.gov/news.release/union2.t03 as usual. Alternatively, managers of cov- .htm. ered properties must adjust to a new 4. Ibid. Overall, employment in U.S. manufactur- world. The key to avoiding unionization ing industries fell by 1.8 million jobs between for covered properties will be analysis and January 1997 and December 2001, but a dispro- communication. Unions will be allowed portionate share of those lost jobs were concen- trated among unions, which lost nearly 10 on property, and recognition can happen as percent of their manufacturing sector member- soon as enough check-off cards are signed, ship in that five-year period. The decline of the often without time for the employees or American manufacturing is reflected in the the employer to digest the issues. To avoid union membership statistics. this prospect, managers of covered proper- 5. www.unitehere.org/. 6. www.changetowin.org/. ties need to make sure that their wages and 7. N.L.R.B. v. Town & Country Elec. Inc., 516 U.S. benefits are similar to or better than those 85 (1995). of unionized hotels. While this may be 8. See www.nlrb.gov/nlrb/legal/manuals/rules/act.asp expensive, it will be less costly than facing for the full text of the National Labor Relations the work rules of an area agreement. Act (NLRA). Second, management must ensure that 9. Interview with Richard Hurd, professor of labor relations, Cornell University School of Industrial morale does not dip so low that employees and Labor Relations, June 28, 2001. This esti- will buy the unions’ promise of voice and mate is conservative based on conversations empowerment. Strong human resources with union officials. Some assert that the per- practices, where decisions are deemed fair centage of employees the union considers sup- and transparent, are the best way to keep porters (based on authorization card signatures) is between 75 and 90 percent. morale high. Competitive wages and fair 10. A bargaining order is a National Labor Relations employment practices are vital, but not Board (NLRB) mandate requiring a company to sufficient, unless these ideals are commu- “cease and desist from their unfair labor prac- nicated to the employees. The employees tices, to offer reinstatement and back pay to the need to know that their wages are as good employees who had been discriminatorily dis- as that of unionized hotels. Fair decisions charged, to bargain with the union on request, and to post the appropriate notices.” National can be deemed unfair if their basis is not Labor Relations Board v. Gissel Packing Co., communicated. Covered employees must 395 U.S. 575, 585 (1969). work with communications experts to 11. Employers typically raise some or all of the fol- make sure that employees are informed of, lowing issues, based in part on advice from and understand, the benefits that the counsel and from their unique circumstances, and industry and employee demographics: employer provides before the union begins its organizing. If this does not happen, • whether unions can “guarantee” increased unionization could be a given. pay, benefits, or anything else;

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• how collective bargaining really works; injunction granted July 9, 2001. Where the city • what it costs to be a union member in established a labor peace rule that required any terms of dues and initiation fees, where employer that leased, subleased, contracted, that money goes, how it is used, and by or subcontracted with the San Francisco whom; International Airport to agree to a card-check • whether the union’s leaders are trustworthy authorization procedure with any union that ini- and capable; tiated a representation request. The union had to • the employer’s record of responsiveness register with the airport director also. to employee issues; and 21. www.changetowin.org/. • the fact that employees will be paying 22. See www.mackinac.org/article.aspx?ID=6806. someone to do what they may have been The actual text of the question at issue is as fol- able to do (represent themselves) for free. lows: “Some companies and union organizers want to make a special agreement to unionize 12. Surveys of union organizers and employees who the workers if at least half of the workers sign have been through NLRB election campaigns their names on cards saying they want a union, seem to confirm this trend at least indirectly. For rather than letting all the workers vote in a example, see American Rights at Work survey secret-ballot election overseen by the govern- (2006), www.americanrightsatwork.org/press/press ment. Do you agree or disagree that it should be .cfm?pressReleaseID=33. legal for a company and union organizers to 13. Ibid. make this special agreement to bypass the nor- 14. Michael Hughlett, “Hotel Worker’s Union in St. mal secret-ballot process to determine whether Paul Minn., Plans New Tack in Organizing,” to unionize the workers?” Twenty-six percent of Hotel Online, www.hotel-online.com/neo/news/ those polled agreed with the statement and 8 2001_June_22/k.SPH.993243589.html, June 20, percent were not sure. 2001 (quoting Jaye Rykunyk, head of Hotel 23. 552 F.2d 1124 (5th Cir. 1977). Employees and Restaurant Employees [HERE] 24. 688 F.2d 919, 936 (3rd Cir. 1982). Local 17). 25. Title 18 Section 201, Bribery of Public Officials 15. While most agreements define neutrality, the and Witnesses (8 U.S.C. 201), defines two definitions vary widely. HERE agreements pro- crimes, bribery and illegal gratuity. hibit the employer from communicating any 26. In unrelated holdings, the courts have found the opposition to the union. Less typical definitions following to be things of value: promises of future declare that management will make an affirma- employment, shares of stock with no commercial tive statement to their employees that it wel- value, and the companionship of one’s spouse or comes their choice of a representative. See significant other during an overseas trip. Adrienne E. Eaton and Jill Kriesky, “Union 27. Patterson v. Heartland Industrial Partners, Organizing under Neutrality and Card Check LLP, 225 FRD 204 (ND Ohio 2004); Hotel Agreements,” Industrial and Labor Relations Employees Local 57 v. Sage Hospitality, 3rd Cir. Review (October 2001): pp. 8–9. 299 F. Supp 2d 461 (2004). 16. Agreements may state that (1) the employer will 28. The Court cited the Third Circuit’s reasoning in not attack or demean the union; (2) the employer Hotel Employees Local 57 v Sage Hospital- will not refer to the union as a third party; (3) ity, 3rd Cir. 299 F. Supp 2d 461 (2004), which it the parties will strive to create a campaign free found persuasive: “The agreement here involves of fear, hostility, and coercion; (4) the parties no payment, loan, or delivery of anything. The will campaign in a positive manner; (5) the par- fact that a Neutrality Agreement—like any other ties will keep their statements procompany or labor arbitration agreement—benefits both par- prounion; and (6) the employer will not state ties with efficiency and cost saving does not that it is corporate policy to avoid unionization. transform it into a payment or delivery of some See Eaton and Kriesky, “Union Organizing,” 9. benefit. Furthermore, any benefit to the union 17. Ibid., 8. inherent in a more efficient resolution of recog- 18. Lechmere, Inc. v. NLRB, 502 U.S. 527 (1992). nition disputes does not constitute a thing of See also Phelps Dodge Corp., 177 NLRB 531 value within the meaning of the statute.” (1969). 29. S. 1173, H.R. 874, introduced by Senator Jim 19. Eaton and Kriesky, “Union Organizing,” 15. DeMint (SC) along with five Senate cosponsors, 20. See Aeroground, Inc. v. City and County of and by Representative Charles Norwood (GA) San Francisco, N.D. Cal., No. C-01-1628VRW, and ninety-one House cosponsors.

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30. S. 842, H.R. 1696, introduced by Senator have to terminate the replacements in favor of Edward Kennedy (MA) and 42 Senate cospon- returning strikers after settlement. The threat, sors, and Representative George Miller (CA) and the reality of permanent replacements, hurts and 215 House cosponsors. unions in negotiations and in organizing. 31. Under McKay Radio, an employer who hired replacements to work during a strike does not

David Sherwyn, J.D., is an associate professor of law at the Cornell University School of Hotel Administration ([email protected]). Zev Eigen, J.D., is a Ph.D. candidate at the Sloan School of Business at the Massachusetts Institute of Technology ([email protected]). Paul Wagner, J.D., a partner at the law firm of Stokes & Murphy, is an adjunct professor of law at the Cornell University School of Hotel Administration.

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