By: Jennifer Weitz, Esq. and Ty Hyderally, Esq.
New Jersey is poised to pass legislation that would further improve the landscape for unionized employees. Both houses of the State Legislature recently passed bills requiring labor harmony agreements in retail and distribution center projects. The bills, A4630 and S577, will require the State, or any other public body, to include a labor harmony agreement as part of any contract it enters into as a contractor in connection with a retail or distribution project where the public body has a proprietary interest as a financier, investor, lessee, lessor, operator, or owner of the project or its property or facilities, if it provides financial assistance for the project or facilities, or as a receipt of revenues from the project or facilities of the project.
Such an agreement would apply for at least five years after the project begins operations, and would also apply to successor contractors who take the place of initial contractors during the time in which public bodies continue to have a proprietary interest in the project.
A labor harmony agreement is defined as an agreement between a contractor and a labor organization, which requires, for the duration of the agreement, that the labor organization and its members agree to refrain from picketing, work stoppages, boycotts, or other economic actions against the contractor.
The bills define a contractor as a business that enters into a contract to undertake a covered retail or distribution project, serve as the operator of any facility that is part of a covered project, or that provides services integral to project operations. A covered retail project means a project which includes one or more retail establishments or distribution centers, where at least one retail establishment will have more than 10 employees or at least one distribution center will have more than 20 employees, and in which the public body has a proprietary interest in the overall project or in a retail establishment or distribution center in the project.
The Legislative Findings note that these agreements further the State’s economic interests in the financial viability and competitiveness of such projects, by ensuring that these large types of projects will occur without the threat of any labor disputes that might add significant time and cost to the completion of these projects. Practically speaking, by making a labor harmony agreement a precondition to these types of projects, the New Jersey bill would give strong support to any signatory union. However, labor harmony agreements do not equate to mandatory unionization and do not impose a union contract.
The bills do not require a labor harmony contract where the public body determines that the proposed project would not be able to go forward if such an agreement is required. As well, a labor harmony agreement is not required with regard to the construction of the projects covered by the bills.
Labor harmony, or labor peace, agreements exist in various forms throughout the country, at both the state and local government level. For example, the New York and New Jersey medical cannabis industries incorporate labor harmony agreements, and New Jersey already requires labor harmony agreements in connection with hospitality projects. Earlier this year, New Jersey also signed into law a requirement for a labor harmony agreement covering employers with whom the State contracts for behavioral health and substance abuse services.
The bills have the support of the New Jersey chapters of the AFL-CIO and the RWDSU (Retail, Wholesale and Department Store Union), for giving union protections to workers who would be affected by the proposed law. Predictably, the NJBIA (New Jersey Business & Industry Association), the biggest business advocacy organization in the state, has objected to the bill on the grounds that it will increase costs for future owners or tenants of retail and distribution centers and limit the pool of contractors able to participate in these projects.
The bills passed the Senate and Assembly at the end of June, and are expected to be signed into law by Governor Murphy.
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