The nation's biggest health-care union and the California hospital industry are in talks on a deal that could allow the union to boost its ranks by thousands with the cooperation of management, according to documents reviewed by The Wall Street Journal.

As part of the continuing negotiations, the Service Employees International Union and the California Hospital Association also would jointly support a ballot initiative to increase Medicaid payments to hospitals by as much as $6 billion a year, the documents show.

The latest talks came after the SEIU threatened late last year to push ballot measures far less palatable to hospitalsincluding capping executive pay and limiting how much hospitals could charge consumers. Under a union proposal made to the association last week, the labor giant would withdraw support for those initiatives in exchange for hospitals providing SEIU access to employees during an organizing drive of tens of thousands of workers, the documents show.

The SEIU has been trying to negotiate an agreement for several years in which California hospitals agree to cooperate in part with an organization drive. So-called neutrality agreements are a common tactic in labor. In many such agreements, employers allow access to employees and stand aside during organizing. In turn, unions halt negative public campaigns or back political issues favored by employers.

Business groups say the deals violate labor laws, which prohibit employers from giving a "thing of value" to a union, and courts have been divided on the issue. The U.S. Supreme Court recently heard a challenge to the legality of such deals but dismissed it in December.