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Labor Peace Agreements In The Cannabis Industry

By Marvin L. Weinberg

Given the decline in private sector union membership in the United States (currently 6.2%), it should not come as any great surprise that unions view the growth of the cannabis industry as a golden opportunity to reverse this downward trend. One union in particular, the United Food & Commercial Workers, boasts on its web site that it represents tens of thousands of cannabis workers who are employed  in growing and cultivating facilities,  manufacturing and processing facilities and in laboratories and dispensaries.

To a large extent, the UFCW and other unions are the beneficiaries of state imposed Labor Peace Agreements. It should be pointed out that Labor Peace Agreements are not unique to the cannabis industry. They have been around for some time in other industries such as for shipyard employees, communication workers and in the hotel industry. These agreements require employers and unions to waive certain rights which they have under federal law with respect to organizing employees and related activity.

For example, under the National Labor Relations Act (“NLRA”), an employer has the right to speak freely to its employees about the many negatives of belonging to a union so long as the employer does not threaten, coerce or make promises to employees not to join a union and in certain circumstances unions may  exert economic pressure against an employer which it is seeking to organize. Typically, a Labor Peace Agreement will have provisions requiring the employer to remain neutral during a union organizing drive and the union not to picket, encourage a work stoppage or engage in other economic action against the employer. Arguably, Labor Peace Agreements are preempted by the NLRA but thus far, there have not been any successful court challenges.

In California and to a limited extent New York, cannabis companies are required to enter into Labor Peace Agreements with unions in order to operate. In Illinois, as part of the license application process, cannabis companies receive extra points for agreeing to engage in fair employment practices which may include entering into a labor peace agreement. Sometimes, this can mean the difference between getting a highly coveted license or falling short.

So what’s the down side of a company entering into a Labor Peace or neutrality Agreement? The down side is significant if a company wishes to remain union- free. There is little doubt (and there are apparently statistics showing) that a large percentage of companies which sign these  agreements end up being union organized. This is in large part a result of the company giving up its right under federal law to speak out against unionization of its employees.

However, there are other reasons why companies end up being unionized after entering into a Labor Peace Agreement. For one thing, the legislation itself gives unions a significant advantage in its organizing efforts. For example, the Illinois law requires that companies seeking licenses not interfere with unions efforts to communicate with employees and attempt to organize. This includes a company having to provide a union access  at the business establishment to meet with employees . Also, unions typically seek company concessions in the agreement beyond what is required by state law such as securing employees’ personal home and email addresses and cell phone numbers.

Even more troubling are provisions requiring employers to recognize the union as the employees’ exclusive collective bargaining representative if a majority of employees sign union authorization cards. Under this scenario, if the union secures 51% or more signed authorization cards from employees in the bargaining unit, the union becomes the employees exclusive collective bargaining representative.

Authorization cards are not necessarily a good indication that employees support the union as sometimes, employees sign these cards as a result of peer pressure or coercion by a union representative. By agreeing to a card check, the company effectively gives up its right to have the employees vote in a secret ballot election conducted by the National Labor Relations Board.

Under the NLRA, employers are not required to enter into a collective bargaining agreement, all that is required is that the employer bargain in good faith.  Some unions have partially  side stepped the law  by including in their  labor peace agreements a clause stating that if a collective bargaining agreement cannot be reached 120 days after the union and company commence  bargaining, they agree to go to  interest arbitration. What this means is that all issues between the parties which remain unresolved after bargaining are to be resolved by an impartial arbitrator who is selected by the parties. This results in a company being forced to agree to a  collective bargaining agreement decided in large part by a third party.

For now, companies are signing labor peace agreements either because they have to in order to operate or it will assist them in securing a cannabis license. Obviously, under these circumstances it makes good business sense to sign them.

However, there are some things to keep in mind which may help companies discourage employees from turning to unions. This requires a thorough review of personnel practices so that they are fair and applied consistently. Also, wages and benefits need to be competitive and managers should be trained to properly handle employee issues.

If approached by a union to sign a Labor Peace Agreement, carefully vet the union as there may be a different union more appropriate for your work force. Also, carefully review the agreement which you are being asked to sign as it may include other corporate entities which are not covered by the cannabis law. Finally, seek experienced management labor relations counsel to assist you throughout this process.


Marvin WeinbergMarvin Weinberg

Marvin Weinberg

Marvin L. Weinberg is co-chair of the Labor Management Relations practice group and he’s also a member of the Cannabis Law practice group at Fox Rothschild LLP. He has extensive experience in employment litigation, collective bargaining negotiations, arbitrations, handling matters before the National Labor Relations Board and providing guidance to employers seeking to remain non- union. He can be reached at [email protected].

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