Tag Archive for: neutrality

Midsized businesses applying for certain loan under the CARES Act should be aware that terms may include a union-neutrality obligation for the term of the loan

Companies employing 500-10,000 workers should be aware, when considering loans under the CARES Act that sec. 4003(c)(3)(D)(I)(X) will require, as a term of that loan, that they “remain neutral in any union organizing effort for the term of the loan.” That language (emphasis added) reads, as follows:

(D) Assistance for mid-sized businesses.–
(i) In general.–Without limiting the terms and
conditions of the programs and facilities that the
Secretary may otherwise provide financial assistance to
under subsection (b)(4), the Secretary shall endeavor to
seek the implementation of a program or facility described
in subsection (b)(4) that provides financing to banks and
other lenders that make direct loans to eligible businesses
including, to the extent practicable, nonprofit
organizations, with between 500 and 10,000 employees, with
such direct loans being subject to an annualized interest
rate that is not higher than 2 percent per annum. For the
first 6 months after any such direct loan is made, or for
such longer period as the Secretary may determine in his
discretion, no principal or interest shall be due and
payable. Any eligible borrower applying for a direct loan
under this program shall make a good-faith certification

(I) the uncertainty of economic conditions as of
the date of the application makes necessary the loan
request to support the ongoing operations of the
(II) the funds it receives will be used to retain
at least 90 percent of the recipient’s workforce, at
full compensation and benefits, until September 30,
(III) the recipient intends to restore not less
than 90 percent of the workforce of the recipient that
existed as of February 1, 2020, and to restore all
compensation and benefits to the workers of the
recipient no later than 4 months after the termination
date of the public health emergency declared by the
Secretary of Health and Human Services on January 31,
2020, under section 319 of the Public Health Services
Act (42 U.S.C. 247d) in response to COVID-19;
(IV) the recipient is an entity or business that is
domiciled in the United States with significant
operations and employees located in the United States;
(V) the recipient is not a debtor in a bankruptcy
(VI) the recipient is created or organized in the
United States or under the laws of the United States
and has significant operations in and a majority of its
employees based in the United States;
(VII) the recipient will not pay dividends with
respect to the common stock of the eligible business,
or repurchase an equity security that is listed on a
national securities exchange of the recipient or any
parent company of the recipient while the direct loan
is outstanding, except to the extent required under a
contractual obligation that is in effect as of the date
of enactment of this Act;
(VIII) the recipient will not outsource or offshore
jobs for the term of the loan and 2 years after
completing repayment of the loan;
(IX) the recipient will not abrogate existing
collective bargaining agreements for the term of the
loan and 2 years after completing repayment of the
loan; and
(X) that the recipient will remain neutral in any
                union organizing effort for the term of the loan.