Legal Definitions - hot cargo clause

A hot cargo clause is a provision found within a collective bargaining agreement – a contract negotiated between an employer and a labor union – that attempts to prevent the employer from doing business with another company or person. Typically, such a clause would require the employer to stop or refuse to do business with a third-party company with whom the union has a labor dispute.

The primary purpose of a hot cargo clause is for a union to exert economic pressure on a third-party employer, often one with whom the union has a disagreement or is trying to organize. By forcing the primary employer to cease business relations, the union aims to indirectly boycott the third party.

Under U.S. labor law, specifically the National Labor Relations Act, hot cargo clauses are generally considered an illegal unfair labor practice. This means they are typically unenforceable and void. However, there are specific, limited exceptions, most notably for certain agreements within the construction and garment industries.

Here are some examples to illustrate how a hot cargo clause might apply:

• Example 1 (Generally Illegal): Imagine a union representing warehouse workers at "Global Logistics Inc." is trying to organize the drivers at "Speedy Delivery Co.," a trucking firm that Global Logistics frequently uses. The union might try to negotiate a clause in its collective bargaining agreement with Global Logistics stating that Global Logistics cannot contract with any trucking company whose drivers are not unionized or are involved in a labor dispute with the union. If Global Logistics agreed to this, it would be a hot cargo clause, aiming to pressure Speedy Delivery Co. by cutting off its business with Global Logistics.

  This illustrates a hot cargo clause because Global Logistics (the primary employer) is being asked to cease business with Speedy Delivery Co. (the third party) due to the union's dispute with Speedy Delivery Co. This type of clause is generally illegal.

• Example 2 (Generally Illegal): A union representing manufacturing employees at "Precision Parts Corp." has a dispute with "Raw Materials Supply Co." over working conditions. To support its dispute, the union might demand a clause in its contract with Precision Parts Corp. that prohibits Precision Parts from purchasing any materials from Raw Materials Supply Co. until the dispute is resolved. If Precision Parts agreed, this would be a hot cargo clause.

  This demonstrates a hot cargo clause as Precision Parts Corp. is being compelled to stop doing business with Raw Materials Supply Co. because of the union's issues with the supplier. This is typically an illegal provision.

• Example 3 (Potential Legal Exception - Construction Industry): "BuildRight Construction" has a collective bargaining agreement with a union representing its carpenters. This agreement includes a clause stating that BuildRight will only subcontract carpentry work on its construction sites to companies that employ unionized carpenters. This clause specifically applies to work performed at the construction site itself.

  This scenario represents a hot cargo clause because BuildRight is agreeing to restrict its business dealings (subcontracting) based on the union status of another company's employees. However, because it pertains to work performed at a construction site and is within the specific scope of the construction industry exception, this particular type of hot cargo clause might be legally permissible under certain conditions.