In American slang, a yellow dog contract is a contract between an employee and an employer in which the employee agrees not to join a union. This is viewed as a term of employment; if the employee joins or organizes a union, he or she can be fired. In the United States, this practice is now illegal, but it was once quite common, used as a tool to force people to give up their right to organize in exchange for job security. Labor organizers vigorously protested the practice of drafting yellow dog contracts as conditions of employment, and as a result, the practice was banned in 1932 under the Norris-LaGuardia Act.
The yellow dog contract began to appear in the late 1800s, when employers grew increasingly concerned about the power of labor unions, and the influence of unionization on American workplaces. Many prospective employees were willing to sign yellow dog contracts to get jobs, and to ensure that their jobs would be safe, and employers used this to effectively shut the union out of their workplaces. People referred to such contracts as “yellow dogs” to reference the idea that employees who signed such contracts were “worth little more than a yellow dog.”
Labor unions naturally vigorously opposed the yellow dog contract, arguing that it inhibited employee freedoms and made it substantially harder for unions to advance workplace protections. Employers suggested that employees had the choice to not sign such contracts, although the unions felt that a high degree of coercion was involved, since employees would often not be hired without signing a yellow dog contract. For people in stressed financial positions, very little actual choice was involved when faced with a yellow dog contract.
The labor unions ultimately succeeded in overthrowing the practice in 1932, and the freedom to organize and join a union was enforced in 1935 with the Wagner Act, putting a definite end to the yellow dog contract. With the freedom to organize, labor unions became much stronger, lobbying hard for their members to ensure that American workers had safe working conditions and fair wages.
Some people use the term “yellow dog contract” to refer to the non-disclosure agreements signed by many people when they enter jobs which deal with sensitive information. A no-compete agreement may also be referred to as a yellow dog contract in some circles. Both of these types of agreements are common in many industries.