May 25, 2020

CARES ACT Relief for Mid-Size Businesses Comes with Important Union Related Conditions

Mid-sized businesses (defined as 500 to 10,000 employees) impacted by the Coronavirus may be able to obtain relief loans under the COVID-19 stimulus law, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), but only if non-union employers agree not to oppose the unionization of their workforce for the term of the loan, and if unionized employers agree not to “abrogate” existing collective bargaining agreements for the term of the loan and 2 years following loan repayment.

First, for the entire term of a Treasury Department loan, an employer must agree to “remain neutral in any union organizing effort.”  In other words, if a union comes knocking, those businesses cannot oppose unionization.  The bill does not define or elaborate on the concept of employer neutrality or how such obligations would be enforced (although future regulations may provide more detail).  Importantly, it does not require “card check” agreement – allowing an employer to insist on a secret ballot election at the National Labor Relations Board.

Second, for the entire term of the loan and 2 years following loan repayment, businesses must certify that they “will not abrogate existing collective bargaining agreements.”  The word “abrogate” is not defined in the statute, there has been no regulatory guidance to date as to its scope (or how it will be enforced) and it is not clear whether the statute imposes additional obligations beyond those that are imposed under the National Labor Relations Act.

© 2020 Proskauer Rose LLP.

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Joseph Baumgarten, Proskauer, breach of contract claims attorney, executive compensation disputes lawyer
Partner

Joseph Baumgarten is co-chair of the Labor & Employment Law Department, which was named by The American Lawyer as one of the top three U.S. practices, ranked Band 1 Nationwide by Chambers USA 2014 and was a recipient of the Chambers USA 2012 Award for Excellence. Joe has been widely recognized as a leading labor and employment lawyer by Chambers, US Legal 500, HR Executive Law Dragon and Best Lawyers. He was also named one of the 2013 BTI Client Service All-Stars, an elite group of attorneys nominated solely by...

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Michael J Lebowich, Labor, Employment, Attorney, Proskauer, Law Firm
Partner

Michael Lebowich is a Partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He also has significant experience in representation and unfair labor practice matters before the National Labor Relations Board.

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Jason Fox, Energy Finance Attorney, Bracewell law Firm
Senior Partner

Jason Fox has more than 25 years of experience as an energy finance lawyer. He focuses on the upstream sector and has advised on more than 100 Reserve Based Lending (RBL) financings as well as numerous other financings in the wider energy sector.

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Associate

Dominique Kilmartin is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Dominique graduated cum laude from Seton Hall University School of Law, where she was an editor of the Seton Hall Law Review. Dominique also worked as a student attorney at the Civil Litigation & Practice Clinic and as an intern for the Honorable Judge John Michael Vazquez of the United States District Court for the District of New Jersey. Upon graduation from law school, Dominique received the ABA/BNA Award for Excellence...

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