Beware the Fine Print: Union Neutrality Requirement Hidden in COVID-19 Stimulus Legislation

The $2 trillion stimulus package that the House of Representatives approved on March 27—and President Trump is expected to sign—contains a provision that may provide a significant stimulus to labor unions.

One provision of the bill provides new loans to businesses affected by the pandemic.  Companies with 500 and 10,000 employees that apply for a direct loan from the Treasury Department would be required to “make a good-faith certification that the recipient will remain neutral in any union organizing effort for the term of the loan.” The legislation does not define “neutral” or provide guidance on what exactly is a “union organizing effort.”  Neutrality agreements involving union organizing attempts typically require the employer to refrain from urging its employees to oppose union representation.  Other neutrality agreements require employers to accept unionization of its employees without a secret ballot election.

Loan recipients would also be required to use loan proceeds to retain at least 90 percent of their workforce at full compensation and benefits until Sept. 30, 2020. In addition, these loan recipients would be banned from moving jobs offshore for the term of the loan plus an additional two years after repayment.

The legislation also places limits on compensation for officers and other employees of the organization.  An officer or employee whose total compensation exceeded $425,000 in calendar 2019 cannot receive any increase in compensation until 1 year after the loan is repaid.  Employees who received total compensation of $3,000,000 or more in calendar 2019, cannot receive total compensation greater than $3,000,000 plus 50% of any amount in excess of $3 million.