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Virus Loans to Come With Union Neutrality Pledge for Companies (1)

March 26, 2020, 4:31 PMUpdated: March 26, 2020, 8:32 PM

Mid-size businesses seeking loans under new coronavirus stimulus legislation moving in Congress would have to agree not to oppose unions looking to organize their workers.

Companies with between 500 and 10,000 employees applying 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.” New loans for businesses affected by the pandemic are available for up to five years under the bill (H.R. 748) pending in the House and expected to be signed by President Donald Trump this week.

Companies 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. They would be banned from moving jobs offshore for the term of the loan and an additional two years after repayment.

Read the BGOV Bill Summary on the emergency funding measure (H.R. 748) by Adam Schank and Loren Duggan.

The measure would significantly expand unemployment assistance and similar benefits for gig workers, as well as tax breaks and direct payments for businesses. It follows a separate relief package (Public Law 116-127) enacted into law last week, which requires some businesses to provide paid sick and family leave to workers impacted by the pandemic.

The Senate passed the legislation on a 96-0 vote just before midnight Wednesday after days of negotiations between Senate Republicans and Democrats.

The legislation potentially gives unions a new target for future organizing drives and could boost labor membership, said Wilma Liebman, a Rutgers University professor who was the National Labor Relations Board’s Democratic chairwoman during the Obama administration.

“It can have an impact on a fair number of organizing campaigns,” she said.

Roughly 6% of private-sector companies are currently unionized, a near historic low.

It’s unclear what “remain neutral” includes under the legislation, however. Often, neutrality agreements in union organizing campaigns state an employer can’t tell workers why they might not want to unionize, hold “captive audience” meetings arguing against unionization, or otherwise block labor organizers from interacting with workers. Neutrality agreements also include card check provisions, which give unions the ability to win recognition if a majority of workers signs authorization cards.

The organizing protections under the bill may come at a needed time for labor. The only other period labor was able to boost the percent of Americans in unions over the last 36 years was from 2007-2008 when the economy was shedding jobs. In the wake of Covid-19 businesses, again, are cutting jobs at an unprecedented rate. Unemployment claims soared to nearly 3.3 million last week, according to reports Thursday morning.

A trade association representative who spoke on condition of anonymity, said the bill’s provision establishes a dangerous precedent for business.

“Ultimately, the impact of this language is limited in this bill but the precedent is horrible—more eyes will be looking to see if this is attached to future bills in any way.”

(Updated to include an additional comment.)

To contact the reporter on this story: Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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