Can’t It Be About Cannabis? Connecticut Seeds The Path To Unionization – Employment and HR – United States – Mondaq News Alerts

Connecticut recently legalized recreational marijuana use by
adults. The new law creates complex employment protections for
recreational marijuana users. The same legislation also includes
provisions that strongly encourage any cannabis-related employer
seeking to operate in Connecticut to permit the unionization of its
workforce.1

Connecticut is not alone in enacting legislation that mandates a
labor-friendly stance for companies that want to receive licenses
to operate cannabis-related businesses in the state. New York, New
Jersey and California, among others, have included similar
provisions in their cannabis-related laws that promote collective
bargaining and the recognition of labor organizations.
Notwithstanding this trend, federal law arguably pre-empts such
local regulations, which typically ignore the right of employees
under Section 7 of the National Labor Relations Act (NLRA) to
choose to join in or refrain from collective bargaining.
Right-to-work organizations have expressed their views about these conflicts,
but given recent changes in leadership at the National Labor
Relations Board (NLRB) and President Biden’s promise to be “the most pro-union president you’ve ever seen,”
employees and employers that want to overturn the mandates will
likely need to seek such relief from the courts.

Labor Peace Agreements

Section 102 of Connecticut’s legislation requires each
cannabis establishment, as a condition of licensing, to enter into
a labor peace agreement (LPA) with a bona fide labor
organization.2 The statute defines an LPA as an
agreement between a cannabis establishment and a union (1) under
which the owners and management of the cannabis establishment agree
they will not lock out employees and (2) that prohibits the labor
organization from engaging in picketing, work stoppages, or
boycotts against the cannabis establishment. Inherent in the LPA
requirement, of course, is that the employer must recognize a union
as the representative of its employees and engage in bargaining
with that union in order to reach an LPA-almost certainly as part
of a full collective bargaining agreement.

The legislation further requires that any LPA must include an
agreement of the parties that the exclusive remedy for any
violation of the agreement will be final and binding arbitration by
a neutral labor arbitrator. If an arbitrator finds that an
establishment failed to comply with an order issued by the
arbitrator to correct a failure to abide by the agreement, then the
State Department of Consumer Protection (DCP) must suspend
the establishment’s license upon receipt of a written copy of
this finding without pausing for further administrative proceedings
or a formal hearing.

To enforce an arbitration award or seek to lift a license
suspension, the bill allows the cannabis establishment or union to
bring a civil action in the superior court. The establishment’s
license will remain suspended until (1) the arbitrator or both
parties to the arbitration notify DCP that the establishment is in
compliance with the arbitration award; (2) both parties notify DCP
that they have satisfactorily resolved their dispute; (3) the
court, after a hearing, lifts the suspension; or (4) the court,
after a hearing, orders alternative remedies. Judicial remedies may
include ordering DCP to revoke the license or to appoint a receiver
to dispose of any cannabis inventory. With limited exceptions
(primarily for medical-use situations), the affected cannabis
establishment cannot sell, transport, or transfer cannabis to
another establishment, consumer or laboratory.

Project Labor Agreements

Section 103 also requires that construction or renovation of any
facility for operating a cannabis establishment for $5 million or
more must be subject to a project labor agreement (PLA) involving
all contractors, subcontractors and the cannabis
establishment.3 A PLA, under the legislation, means a
labor agreement that:

  • binds all contractors and subcontractors on the covered project
    to the PLA through the inclusion of specifications in all relevant
    solicitation provisions and contract documents;
  • allows all contractors and subcontractors to compete for
    contracts and subcontracts on the project regardless of whether
    they are otherwise parties to collective bargaining
    agreements;
  • establishes uniform terms and conditions of employment for all
    construction labor employed on the project;
  • guarantees against strikes, lockouts, and similar job
    disruptions;
  • sets mutually binding procedures for resolving labor disputes
    arising during the PLA; and
  • includes any other provisions as negotiated by the parties to
    promote successful delivery of the covered project.

A contractor, subcontractor, or employee
organization4 may enforce the PLA mandate or seek
remedies for noncompliance with a PLA by bringing a civil action in
the superior court. After holding a hearing, the court may order
penalties of up to $10,000 per day for each violation of the PLA by
the cannabis establishment.5

Potential Preemption under the National Labor Relations
Act

The legal doctrine of federal preemption is based upon the
Supremacy Clause-Article VI, Paragraph 2 of the U.S. Constitution.
It establishes that the Constitution and the laws of the United
States are the supreme law of the land. A state law that interferes
with congressional intent to regulate certain conduct exclusively
under federal law is said to be “preempted” and therefore
invalid. Numerous cases have established that it was the intent of
Congress when enacting the NLRA to preempt, for exclusively federal
regulation, the field of private-sector labor relations.

Two sections of Connecticut’s new law may be particularly
ripe for preemption challenges. Section 102 conditions license
approval for a cannabis establishment upon entry into an LPA with a
labor union that is actively seeking to represent cannabis workers
in the state. Section 103 requires a cannabis establishment to
enter into a PLA for all construction or renovation projects
(costing $5 million or greater) of any facility for the operation
of a cannabis establishment.

While the specific provisions of LPAs and PLAs may vary from
case to case, in practice these agreements compel an employer to
make concessions to a union and its organizing activities. Such
concessions can include recognizing the union by card check instead
of a secret ballot election, remaining neutral during the
organizing campaign, permitting union organizers access to the
workplace and providing employee contact information.
Connecticut’s law requires a negotiated LPA to contain an
agreement not to lock out employees in exchange for limits on
picketing, work stoppages and boycotts. Another major concession
demanded by the law is the requirement that the employer agree to
binding arbitration for resolution of disputes arising under an
LPA.

NLRA preemption has an extensive judicial history, including the
seminal decision Building & Construction Trades Council
(San Diego) v
. Garmon, 359 U.S. 236 (1959).
Garmon stands for the principle that potential (not
provably actual) conflict with the NLRA is sufficient to require
preemption of a state law. Subsequent cases identified exceptions,
such as where “compelling state interest” in a matter
could justify local regulation and where the NLRB chose to cede
jurisdiction to the states under its power to decline jurisdiction
over certain employees or disputes. Another exception may exist
where the state is acting as a market participant (as
opposed to a regulator) when requiring the use of LPAs and PLAs. If
the state is contracting for a public construction project, for
example, it is generally permissible to include such requirements.
When the state is acting as a regulator, however, the import of the
cases seems to be that enactments conflicting with the NLRA with
respect to private-sector labor relations may indeed be
preempted.

What’s Next?

Despite statutory language to the contrary, it is difficult to
avoid concluding that the PLA requirement will effectively prevent
non-union contractors from working on cannabis-related building
projects. A challenge to the PLA requirement on preemption grounds
could, therefore, potentially come from one or more non-union
contractors. Similarly, the mandate to enter into an LPA
effectively requires any cannabis-related business that wants a
license to recognize and bargain with a union regardless of whether
its employees have been given the opportunity to accept or reject
union representation. A challenge to the LPA requirement on
preemption grounds could therefore be pursued in court by one or
more cannabis businesses that seek to remain non-union.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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