Employers Must Pledge Union Neutrality to Receive CARES Act Loans

The Coronavirus Aid, Relief, and Economic Security Act (“CARES”) Act could have major labor ramifications for companies seeking economic relief. 

Under the CARES Act, companies with between 500 and 10,000 employees applying for a direct loan from the Treasury Department are required to “make a good-faith certification that the recipient will remain neutral in any organizing effort for the term of the loan.”

The CARES Act does not provide any additional information as to what constitutes “neutral” under its terms.  However, neutrality agreements in union organizing campaigns provide some guidance.  Such agreements are designed to limit communications between employers and their employees regarding union efforts by preventing employers from telling workers the drawbacks of a union at “captive audience” meetings before gathered employees.  These agreements often include card check provisions allowing unions to organize and win automatic recognition by presenting signed cards from a majority of employees rather than going through the standard secret ballot election. 

In addition to the neutrality agreement, the CARES Act requires that companies use proceeds from the loan to retain at least 90% of their workforce at full compensation and benefits until September 30, 2020.  The CARES Act also bans any employer that takes out a loan from moving jobs offshore not only for the loan’s term, plus also for an additional two years after repayment. 

Employers considering taking out a loan under this legislation should weigh these potential drawbacks and proceed with caution in determining whether to accept relief under the CARES Act.

Please contact your KDDK attorney or any of the following KDDK labor and employment law professionals for additional information and individualized guidance on this or any related topic.

Jake R. Fulcher
(812) 423-3183, ext. 2263
Mark A. McAnulty
(812) 423-3183, ext. 2233
Carrie Mount Roelle
(812) 423-3183, ext. 2286
Olivia G. Robinson
(812) 423-3183, ext. 2217
Nicholas J. Golding, Labor and Employment Law Attorney, KDDK
Nicholas J. Golding
(812) 423-3183, ext. 2216

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