There is a legal difference between a “Sweetheart Contract” and an “Interim Agreement.”
In an “Interim Agreement”, the Union may offer some signatory contractors an agreement that allows that contractor’s employees to work during a strike. Under this arrangement a member commits to retroactively complying with whatever agreement is eventually negotiated with the Association. While an Interim Agreement would be considered a kind of “Sweetheart Deal” it is not legally considered a “Sweetheart Contract.” However, these kinds of agreements can interfere with membership. A “Sweetheart Contract” is a contract made through collusion between management and labor representatives which contains terms beneficial to management and unfavorable to union workers. It is also referred to as a "Sweetheart Agreement". It is an agreement suiting some but not others arrived at secretly to benefit some at the expense of the rest, especially an industrial agreement between union and management representatives that is not in the workers’ best interest.
Sweetheart contracts were outlawed by the Federal Taft-Hartley Act and prohibited employers from establishing company-sponsored labor organizations. The term implies less favorable conditions of employment than could be obtained under a legitimate collective bargaining relationship.
In the context of NCGMA negotiations, it could be viewed as an agreement that provides some employers with contract terms less favorable to union members than the contract with Association contractors. However, such an agreement would not be a violation of the National Labor Relations Act absent evidence of corruption or other employer control of the union.
In order to prevent “Interim Agreements” from interfering with membership, the Association should consider the following:
- “Solidarity Agreement” prevents members from signing an Interim Agreement and imposes a substantial monetary penalty for doing so. A Solidarity Agreement is something the Association may want to consider either now or in the future.
Associations can also include a Most-Favored Nations (MFN) Provision in the CBA. This is a provision that the Union will provide the Association with copies of CBA’s with all other signatory employers within 10 days of receiving a written request from the Association. Even without a Most-Favored Nations clause, the Association can request copies of Agreements with its Association members, but an MFN gives the Association the greatest legal leverage.
NCGMA CBA language:
There is no language in the CBA regarding Interim Agreements as of March 1, 2020.
NCGMA Bylaw language regarding Interim Agreements:
NCGMA Bylaws (2.2.2 (g.)) - “ Each member of the Association recognizes and expressly agrees that it will not enter into, nor attempt to negotiate, any interim agreement with the Union, which agreement establishes terms and conditions of employment, pending the outcome of the negotiations between the Association and the Union. Each member recognizes and expressly agrees that such interim agreements would cause irreparable harm and fragmentation of the Association, and, therefore, each member hereby expressly and unequivocally waives any right which it may have under the National Labor Relations Act to negotiate or enter into such interim agreements.
If any member of the Association violates any of the promises or undertakings set forth in this Article, the Association may obtain injunctive relief from a court of competent jurisdiction. If the Association prevails in any such legal proceeding, the member against whom the injunction is entered shall pay the costs, expenses and reasonable attorneys' fees incurred by the Association in prosecuting such an action.
In addition to the right to obtain injunctive relief, the Association may submit to arbitration, in accordance with the applicable arbitration rules of JAMS (Judicial Arbitration and Mediation Services), any claim that it and/or the individual members of the Association have suffered damages as a result of the actions of the defaulting member. For this purpose, each member of the Association hereby assigns to the Association all rights to recover damages as a result of the actions of the defaulting member of the Association. The arbitrator shall have the authority to determine the amount of damages suffered by the Association and each member of the Association. If the defaulting member is ordered to pay damages to the Association and/or its individual members, the Association shall also recover its costs, expenses and reasonable attorneys' fees incurred in the arbitration proceeding.”