Executive Summary: As of July 1, 2018, the City of Chicago, as owner and operator of Chicago O’Hare International Airport and Chicago Midway International Airport (the “Airports”), will require that certain users of the Airports enter into a “labor peace agreement” with labor organizations as a condition of their license to provide services at the Airports. The requirement is the result of a recent amendment to Municipal Code Section 2-20-020 (the “2017 Ordinance”) which requires companies that provide baggage handling, passenger services, aircraft cleaning, and other similar services to airline carriers (“Service Providers”) to enter into these agreements in exchange for unions agreeing not to economically interfere with the Service Providers. While the stated purpose behind labor peace ordinances is to promote labor harmony and preclude actions that disrupt the provision of services to the public, they generally make it easier for unions to organize employees, which can have a significant impact on businesses subject to such ordinances.

Labor Peace Agreements: A labor peace agreement is an arrangement between an employer and a union in which one or both sides agree to waive certain rights with regard to union organizing and related activity. These agreements can be negotiated voluntarily, or as is the case here, can be imposed on employers by local ordinance. The essential purpose of labor peace ordinances is to apply economic pressure on employers to compel them to grant organizing concessions to unions in exchange for union promises not to strike, picket or otherwise disrupt an employer’s operations. Typical employer concessions can include allowing outside union organizers into the workplace, refraining from expressing negative opinions about a union and intervening in an organizing campaign, and recognizing a union based on signed cards rather than by the results of a secret ballot election. These are concessions employers otherwise would be unlikely to make.

Typically, labor peace agreements cover restaurants, airports, casinos, hotels, and other hospitality facilities. Labor peace ordinances now exist in at least 11 states; however, at least six states have taken steps to block labor peace ordinances and have passed legislation prohibiting local governments from implementing them.

San Francisco pioneered the use of labor peace ordinances in 1980. The labor peace ordinance in effect at the San Francisco airport states that it is “essential for the protection of the Airport Commission’s proprietary and financial interests” to have “Employers/Contractors and Labor Organizations agree to enter into and abide by Labor Peace/Card Check Agreements[.]” Under San Francisco Airport’s labor peace ordinance, an applicable employer must: provide the union with a complete list of its workers’ names, addresses and phone numbers; allow the union to refer its own preferred applicants for employment; and allow union organizers to enter the workplace for the purposes of discussing unionization when the employer seeks to hire workers.

Recent Amendment: The language of the 2017 Chicago Ordinance requires a Service Provider to enter into a labor peace agreement with “any organization of any kind” which exists for the purpose of dealing with Service Providers concerning “grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work…” (“Labor Organization”).

In the event the Service Provider and Labor Organization are unable to agree on a labor peace agreement within 60 days of the request, the Ordinance requires the parties to mediate, then arbitrate the language, causing the Service Providers to incur unnecessary expenses if they chose not to agree to the proposed language. The practical effect of the Ordinance will be that labor organizations will put pressure on the Service Providers to recognize them through a mere showing of interest instead of through a certified election and otherwise prevent them from intervening in a union campaign.

The Bottom Line: Essentially, the 2017 Ordinance provides an advantage to unions seeking to organize without implicating federal law (i.e. National Labor Relations Act or Railway Labor Act), by requiring a compromise to avoid potential labor unrest or negative public attention in exchange for granting labor unions significant organizing rights. In short, labor peace ordinances make it easier to organize employees, and as a result, employers must be aware that entering into a labor peace agreement may have significant effects on the business in the future.