Yellow Dog Contract

What is Yellow dog Contract

Yellow-dog contract, also known as a yellow-dog clause of a contract, is an agreement between an employer and an employee in which the employee agrees, as a condition of employment, not to be a member of a labor union.

Such contracts were regularly utilized by employers in the United States up until the 1930s to stop the establishment of unions, most frequently by allowing them to sue union organizers.

The term yellow-dog clause can also have a different meaning:

- Non-compete clauses within, or

- Appended to a non-disclosure agreement to prevent an employee from working for other employers in the same industry.

Example of Yellow Dog Contract

An example of a yellow dog contract can be found in a case that was heard by the Supreme Court of the United States in 1915, 12 years after the state of Kansas passed a law intended to encourage employees to unionize. The law barred employers from attaching conditions to their jobs that an employee must refuse to join a union or to cease participating in one, before working for their companies.

However, 12 years later, Coppage – an employer – added a clause to his employment contracts that forced employees to give up their right to join a labor union upon accepting employment.

In adding this “no joining” clause to his contracts, Coppage was violating the state law that prohibited any and all forms of anti-union contracts. This case is an example of yellow dog contracts being in violation of the Fourteenth Amendment – specifically the Amendment’s Due Process Clause.

The issue then became whether a state could prevent an employer from making employment with his company conditional upon the candidate’s status as a member of a union. Coppage was ultimately found guilty of violating Kansas state law, and a fine was levied upon him, with imprisonment being an alternative punishment.

Coppage appealed to the Supreme Court of the State of Kansas, and the judgment was affirmed. Coppage then pursued the case to the Supreme Court of the United States.

The Court ultimately reversed the lower courts’ decisions, holding that both parties to a contract have the right to terminate the employment “at will,” and for any reason. The employee is entitled to refuse the employment opportunity if he values his membership to a union over the position that is being offered to him.

The Court noted that a candidate’s decision to accept a position while abstaining from joining a union is not actually an infringement upon his freedoms. Both the employee and the employer are free to determine how their relationship will proceed if it will at all.

Said the Court:

“To ask a man to agree, in advance, to refrain from affiliation with the union while retaining a certain position of employment, is not to ask him to give up any part of his constitutional freedom. He is free to decline the employment on those terms, just as the employer may decline to offer employment on any other; for “It takes two to make a bargain.”

Having accepted employment on those terms, the man is still free to join the union when the period of employment expires; or, if employed at will, then at any time upon simply quitting the employment. And, if bound by his own agreement to refrain from joining during a stated period of employment, he is in no different situation from that which is necessarily incident to term contracts in general.

For constitutional freedom of contract does not mean that a party is to be as free after making a contract as before; he is not free to break it without accountability. Freedom of contract, from the very nature of the thing, can be enjoyed only by being exercised; and each particular exercise of it involves making an engagement which, if fulfilled, prevents for the time any inconsistent course of conduct.”

Also read: What is a Gag Clause?

And further:

“In the operation of its property it may employ such persons as are desirable, and discharge, without reason, those who are undesirable. It is at liberty to contract for the services of persons in any manner that is satisfactory to both. No legislative restrictions can be imposed upon the lawful exercise of these rights.”

This above case is an example of a yellow dog contract that was ultimately successful. Furthermore, The Norris-La Guardia Act of 1932 expressly declares any contract involving a yellow dog unenforceable in any court, according to federal law. The workers also have the freedom to organize unions without employer influence according to Section 7 of the National Labor Relations Act.

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