Sweetheart Contract Law and Legal Definition

A sweetheart contract is a contract made through collusion between management and labor representatives which contains terms beneficial to management and unfavorable to union workers. It is also referred to as a "sweetheart agreement". It is an agreement suiting some but not others arrived at secretly to benefit some at the expense of the rest, especially an industrial agreement between union and management representatives that is not in the workers’ best interest.

Sweetheart contracts were outlawed by the federal Taft-Hartley Act and prohibited employers from establishing company-sponsored labor organizations. The term implies less favorable conditions of employment than could be obtained under a legitimate collective bargaining relationship.