With certain exceptions, it is unlawful for a union to enter into an agreement, express or implied, with an employer whereby the employer agrees to cease or refrain from handling, using, selling, transporting, or otherwise dealing in the products of another employer.
Section 8(e) of the Act provides that "[i]t shall be an unfair labor practice for any labor organization and any employer to enter into any contract or agreement, express or implied, whereby such employer ceases or refrains or agrees to cease or refrain from handling, using, selling, transporting or otherwise dealing in any of the products of any other employer, or cease doing business with any other person," subject to two provisos, discussed below.
- This prohibition, enacted in 1959, complements Section 8(b)(4), enacted 12 years earlier. Section 8(b)(4) makes it unlawful for unions to engage in certain kinds of conduct with an object of forcing or requiring an employer to cease doing business with another employer. Section 8(e) ensures that unions and employers cannot accomplish by agreement what Section 8(b)(4) outlaws unions from accomplishing by compulsion. With two exceptions, discussed below, Section 8(e) makes it unlawful for a union and employer to enter into an agreement in which the employer agrees to cease doing business with another employer. (Section 8(b)(4)(A), enacted in its present form at the same time as Section 8(e), closes a final loophole by prohibiting unions from forcing an employer to enter into an agreement to cease doing business with another employer.)
- Section 8(e) makes it unlawful to "enter into" certain kinds of agreements. For Section 8(e) purposes, an agreement is entered into when it is executed, and also every time it is reaffirmed or enforced.
- As interpreted by the Supreme Court, Section 8(e) outlaws agreements that come within the scope of its terms and have a secondary objective. If a contract clause has a primary objective of benefiting the contracting employer's own employees - such as by preserving work they customarily perform or recapturing work they used to perform - it is lawful even if it appears to be condemned by the literal terms of Section 8(e). The work in question must be "fairly claimable" by unit employees. Where the objective of an 8(e)-defective clause is not to preserve unit work but to acquire work that unit empIoyees have never performed and thus cannot fairly claim, Section 8(e) is violated.
- The enforcement of a work-preservation agreement may raise an issue under Section 8(b)(4)(B). Suppose union U and employer S have a lawful work-preservation agreement. C, a general contractor, subcontracts certain work to S, and the terms of the subcontract require S to perform the work in a way that will breach S's work-preservation agreement with U. U strikes S in protest. The Section 8(b)(4)(B) determination depends on whether C or S has the right to control the disputed work. If C controls that work, the strike has a secondary objective of pressuring C and is unlawful. If, however, S took the lead in contracting away the disputed work, it is not an unoffending employer entitled to the protection of Section 8(b)(4)(B). (S will not be found to have contracted away the disputed work merely because it did not try hard enough to preserve it.)
- "Picket-line" clauses that permit employees to refuse to cross picket lines in support of lawful primary strikes are lawful. But picket-line clauses worded so broadly as to permit employees to refuse to cross picket lines in support of secondary boycotts violate Section 8(e). Thus, for example, a clause permitting employees to refuse to cross any picket line would be unlawful.
- "Struck-work" clauses in which an employer agrees, in essence, not to become an ally of a struck employer do not violate Section 8(e). (For more on the "ally doctrine", see the 8(b)(4) section, above.) Thus, for example, a clause providing that employees will not be required to handle work "farmed out" from a struck employer, while making clear that it does not apply to work the employer has customarily performed for such employer, would be lawful.
- Outside of the construction and garment manufacturing industries, union-signatory subcontracting clauses violate Section 8(e). Union-standards subcontracting clauses do not violate Section 8(e). Thus, a clause requiring the employer to subcontract work only to employers that have collective-bargaining agreements would be unlawful. But a clause requiring the employer to subcontract work only to employers that observe union-equivalent wages, hours, and benefits would not.
- The first or "construction industry" proviso to Section 8(e) exempts from its prohibition agreements in the construction industry relating to the contracting or subcontracting of work to be done at a construction site. Under the second proviso, Section 8(e) does not apply to certain agreements in the garment manufacturing industry.
- In Woelke & Romero Framing v. NLRB, 456 U.S. 645 (1982), the Supreme Court held that the construction industry proviso "shelters union signatory subcontracting clauses that are sought or negotiated in the context of a collective bargaining relationship." Thus, a union and general contractor that have a bargaining relationship (under either Section 9(a) or 8(f)) may enter into an agreement requiring the general contractor to subcontract construction-site work to union-signatory subcontractors. In the absence of a collective-bargaining relationship, however, such an agreement is outside the shelter of the construction industry proviso.
- A union may strike or picket to obtain a union-signatory subcontracting clause lawful under Woelke & Romero. Doing so to enforce such a clause, however, is unlawful. (A union may not strike to obtain a union-signatory subcontracting clause that permits employees to strike to enforce the clause.)
- Under the second or "garment industry" proviso, Section 8(e) does not apply to certain agreements in the garment manufacturing industry. The purpose of the "garment industry" proviso is to protect agreements that prevent subcontracting "parts of an integrated process of production in the apparel and clothing industry" to sweatshops.