Contractors and subcontractors sharing a construction site with an employer engaged in a labor dispute with a union have long struggled to maintain their neutrality in the matter, hoping their employees do not become embroiled in the dispute. Congress has recognized the right of such neutral employers (and their employees) to be free from union coercion in such situations, as illustrated by the National Labor Relations Act prohibition against so-called "secondary activity" (e.g., union picketing a neutral employer for the purpose of instigating a work stoppage to compel the employer to cease doing business with the primary employer in the labor dispute).

Long ago, the Board ruled that, at a common access construction site, a primary employer engaged in a labor dispute with a union can be separated from neutral employers with the use of "reserve gates." Insofar as the employees of the primary employer are separate from the employees of the neutral employers, picket-line activity must be limited to the primary employer gate. This system ensures the free flow of commerce by permitting neutral employers and employees to avoid "crossing" a picket line to attend work. If picketing strays from a validly established reserve gate, it is presumed to be unlawfully motivated. Sailors Union (Moore Dry Dock), 92 NLRB 547 (1950).

The very reasoning behind these rules is being attacked by the NLRB. Last September, the Board found in Carpenters Local 1506 (Eliason & Knuth of Arizona, Inc.), 355 NLRB No. 159 (2010), that large, 20-foot banners declaring "shame" on a employer neutral to a labor dispute "lacked the element of confrontation . . . central to our concept of picketing." Because the NLRB found that the giant banners were not picketing, it concluded in Eliason & Knuth that the conduct was permitted under the Act. That decision established the illogical premise that two individuals walking in a five-foot circle with 8-1/2" x 11" signs on sticks is more coercive than a 20 x 4 foot banner with enormous lettering declaring "shame" on a neutral employer.

On February 3, 2011, in Southwest Reg'l Council of Carpenters (New Star Gen. Contractors, Inc.), 356 NLRB No. 88 (2011), the Board made matters worse for construction employers by determining that these giant banners could be placed anywhere on private common-access construction sites without "coercing" neutral employers or employees. In addition to reiterating its prior holding that the giant banners did not constitute "picketing," the NLRB held that the banners could not be considered an unlawful "signal" to employees to withhold service at a private, common-access construction site.

In New Star, the Board explicitly found that the banners did not have to be maintained only at the reserve gate, but could be lawfully present at other gates. While the Board denied holding that such banners could never be a "signal" (picket) to employees to withhold service, it held that absent other evidence indicating an unlawful inducement or encouragement to engage in a work stoppage, the banners did not violate the law.

Under this decision, unions will undoubtedly argue that they are permitted to erect giant banners at any gate of a private construction site. Such union conduct will break a reserve gate system, in an attempt to cause a "shut down" of work for all employers/employees.

We continue to advise clients to utilize reserve gates in these circumstances, and we are hopeful the courts will directly address the NLRB's ruling or reject it in a Section 303 action for damages.