Labor Logic

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John D. Finerty, Jr.

In 2000, Milwaukee County passed a Labor Peace ordinance, ostensibly for the purpose of preventing labor disputes at businesses that contract with the county. By eliminating labor disputes, the argument went, the county would prevent service interruptions. When the county threatened to cancel the contracts of some vendors that did not comply with the ordinance, the business community, represented by the Metropolitan Milwaukee Association of Commerce, sued.

In MMAC v. Milwaukee County, Case No. 05-1531 (7th Cir. Dec. 5, 2005) the Seventh Circuit Court of Appeals held Milwaukee County’s Labor Peace ordinance was pre-empted by the National Labor Relations Act. The ordinance limited an employer’s conduct during a union organizing campaign, even though the same conduct was permissible under federal labor law. It was precisely that conflict with federal law that doomed the ordinance.

Background

Chapter 31 of the Milwaukee County ordinances required that any employer that contracts with Milwaukee County must provide, upon request, union representatives with the names, addresses and telephone numbers of its employees who devote any significant time to working on county projects. The employer must also promise to make no false statements to employees about the union and not to hold “captive audience” meetings with employees to oppose the union organizing drive. Unions, in turn, would agree to no “economic action” against an employer that complied with the ordinance.

According to the county, these restrictions on employers during union organizing campaigns were necessary to allow employees to express their choice freely. By doing so, the county would reduce the instances of strike or other work stoppages that could interfere with service to the county and its constituents. However, the court found the county’s ordinance would actually increase instances of labor disputes rather than reduce them.

Legal Rules

Two competing legal rules were at issue in this case. On one hand, the National Labor Relations Act preempts any state or local laws that attempt to regulate labor relations between unions and employers covered by the Act. Simply stated, where Congress has expressed its intent to regulate the field, or decided not to regulate (i.e. reserved for “market freedom”), state and local governments are prohibited from interfering.

On the other hand, when state and local governments act as market participants, purchasing goods and services, it may set the terms of its dealings with private enterprises to reduce the cost or increase the quality of those services. In other words, the state has the same interest as any other open market buyer of services and may set the term of its purchase without offending the NLRA. See Bldg. & Constr. Trades Council v. Associated Builders & Contractors of Massachusetts, 507 U.S. 218, 231-33 (1993) (the Boston Harbor case).

Analysis

In the case of Milwaukee County, the ordinance applied too broadly in the court’s view to avoid a conflict with the NLRA. When a union seeks to represent employees who do work on the employer’s contracts with the county, the labor peace ordinance is triggered. The court found, however, a “spillover effect” on the contractors’ non-county contracts and other employees. In some companies, it would be impossible to segregate county work from non-county work or employees who work on county contract from those who do not.

Thus, the ordinance provision that prohibits captive audience meetings with employee would preclude the employer from conducting such meetings during a union organizing campaign for some of its employees but not others; it may be impossible to make such a distinction.

The court also emphasized that the labor peace ordinance, and corresponding agreements, are likely to increase work stoppages rather than decrease them. The ordinance was calculated to result in more private employers being organized; more organizing campaigns result in greater risk of work stoppages — not necessarily at the organizing phase, but later, when the union is pressing for a collective bargaining agreement or complaining of unfair labor practices. The court noted it would have been more effective to simply preclude unionization among county contractors if avoiding work stoppages was the true motivation behind the ordinance.

The court also pointed out that county ordinances do not require no strike clauses in collective bargaining agreements. In other words, even if an employer’s employees are represented by a union, and there is a collective bargaining agreement in place, there is no guarantee that a work stoppage could not interrupt services to the county. The court pointed out it would be more efficient to address service interruptions in the employer’s contract with the county than to require cooperation with the union during an organizing campaign.

For more information on this case, contract John D. Finerty, Jr. at Michael Best & Friedrich LLP at (414) 225-8269 or on the internet at [email protected].