Collective Bargaining FAQs

Frequently Asked Questions Concerning the Collective Bargaining Process

Question:
What duration should we be looking for in our next collective bargaining agreement?

Answer:
Again, there is no right answer for all situations. The conventional wisdom is that during tough economic times, the contractors may have greater leverage in securing favorable terms during contract negotiations, and therefore, may be successful in negotiating an agreement that they would benefit from having in place for a number of years. Further, anyone who has been part of a negotiating committee can attest to the fact that contract negotiations can be time-consuming, and difficult, and that from that perspective alone, a longer term agreement is desirable. With a number of pension plans now in financial distress, in some cases, a multi-year agreement may be beneficial, because it may “lock in” current pension contribution rates.

On the other hand, because of the extreme volatility of the current economy, both parties may be reluctant to commit to a long term agreement, as it is simply not possible to predict the business and competitive climate for a period longer than a year. There is no question that some areas that negotiated multi-year agreements in early 2008 now view their contract terms as being completely out of step with current market conditions.

Like so many things, there is no one right answer. However, very careful consideration should be given to the ideal length of a collective bargaining agreement from the contractor’s perspective, and, whether such an agreement can successfully be negotiated in a time of such economic uncertainty. Obviously, a short term agreement with very favorable terms that may readily be negotiated is preferable to a long term agreement that may only be reached with a good possibility of a strike.

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Question:
We think our local union will propose 9(a) recognition language. What should we consider in formulating our response?

Answer:
Contractors that have only an 8(f) bargaining relationship with their union are not under any legal obligation to negotiate a new collective bargaining agreement upon contract expiration. Therefore, they can theoretically walk away from that relationship. Even if they choose to negotiate a new agreement, many of the traditional rules concerning good faith bargaining do not apply. In some areas, contractors have concluded that the legal ability to walk away from the relationship provides them with additional leverage at the table, and for that reason, 8(f) status should be preserved. However, it is important to keep several things in mind in assessing the relative merits of Section 8(f) and 9(a) relationships. Contractors must understand that if they decline the union’s request for 9(a) recognition language, the union has the absolute right to file a petition for an election with the National Labor Relations Board, with or without the contractor’s consent. In most cases, it is a foregone conclusion that the union will win the election, and attain 9(a) status in that manner. Forcing the union to do so may accomplish little except damaging the bargaining relationship.

Secondly, while a contractor to an 8(f) relationship can theoretically walkaway at contract expiration, if the contractor has been contributing to an underfunded multiemployer pension plan, it will likely be subject to withdrawal liability. Laws governing pension plans provide that if a contractor contributed to an underfunded multiemployer pension plan, and no longer is obligated to contribute to that plan, it will be subject to withdrawal liability if it continues to perform work in the same geographic area covered by the collective bargaining agreement. In some cases, that liability can be very substantial. As a consequence, the notion of ending the bargaining relationship at contract expiration may be highly impractical from a financial standpoint.

Finally, it should also be recognized that a Section 9(a) collective bargaining relationship can be useful to both parties in fending off representation attempts by rival labor organizations. An 8(f) collective bargaining agreement will not bar a petition for an election by a rival labor organization, whereas a Section 9(a) collective bargaining agreement will for a term of up to three years. Therefore, a Section 9(a) relationship provides both parties with a measure of stability. Otherwise, there is the potential that a rival labor organization may attempt to replace the existing collective bargaining representative, and if successful, demand to negotiate an entirely new collective bargaining agreement. Obviously, such a possibility is very undesirable if the contractor is in the midst of performing a substantial amount of work that it has bid under the economic terms set forth in the previous labor agreement.

A more thorough analysis of the relative advantages and disadvantages of Section 8(f) and Section 9(a) collective bargaining relationships has been posted on the National FCA website. The overall advantages resulted in 9(a) recognition language being incorporated within the Model Collective Bargaining Agreement for the Finishing Industries.

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Question:
What role should legal counsel play in contract negotiations?

Answer:
Because a number of legal issues typically arise in any contract negotiations, it is extremely important that the contractor’s labor committee have, as a resource, capable labor counsel. Counsel can assist the contractors in formulating a lawful bargaining strategy, and will be able to offer guidance on the issues that typically arise in negotiations such as legal issues relating to pension law compliance, legal restraints on proposed contract language, and strike contingency planning.

However, in the construction industry, it is atypical for an attorney to actually serve as a spokesperson during contract negotiations. The conventional wisdom is that the local union will more likely deal openly and effectively with a stakeholder in the industry, which generally means a contractor. Nonetheless, even in such a context, labor counsel can serve a valuable role as a resource, in terms of keeping contractors headed in the right direction from a strategic and legal standpoint.

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Question:
We are about to enter contract negotiations. What is the prevailing wisdom on whether the contractors should have only one spokesperson at the bargaining table, or, whether others may participate?

Answer:
While this is an important strategic issue, first off, it is important to understand that there is not one correct answer. Some areas have a single spokesperson at the bargaining table, with that spokesperson being the only individual that will speak on behalf of the contractors during negotiations. Advocates of this approach suggest that it is easier to maintain control over the bargaining process with only a single spokesperson, particularly with respect to controlling comments from other members of the committee that are problematic from either a legal, or strategic perspective.

Critics of such an approach argue that it creates an artificial situation, and does not utilize the talents of other members of the negotiating team. A strong argument may be made that you should consider having a principal spokesperson during negotiations, while allowing other members of the bargaining committee to supplement the efforts of the principal spokesperson when appropriate.

Our industry consists of many facets – drywall finishing, industrial painting, glazing, and floor covering. Your labor committee may have representatives of each of those facets of the industry, and they may be able to speak with a higher level of credibility on issues that affect their market niche. Furthermore, from a strategic standpoint, it is desirable for the contractors to establish momentum early in contract negotiations, and to maintain that momentum during every bargaining session. It is far easier to do this when all of the members of the management labor committee, on a pre-determined basis, are able to advocate for the Association at the bargaining table, rather than leaving everything to a single spokesperson.

Obviously, this does not mean that everyone should feel free to blurt out whatever is on their mind during bargaining sessions. All members of the negotiating team must have a thorough understanding of the key legal issues that are applicable during contract negotiations, and must also be able to communicate effectively from a strategic standpoint. The contractor negotiating committee should meet at least an hour before the start of each formal negotiating session to determine what should be accomplished at the upcoming bargaining session, and to carefully allocate the role that each individual member the committee will play during that session.

The stakes in contract negotiations are extremely high, and for that reason, it is very important that each negotiating session be preceded by sufficient planning to insure that the session will be a step towards attaining a workable agreement.

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Question:
Who has the legal authority to appoint union stewards? Is there any contract language that should be considered by contractors concerning the appointment of the steward?

Answer:

Under the National Labor Relations Act, the union generally has the right to designate a union steward of the union’s choice. For those areas with Section 9(a) bargaining relationships, a contract proposal giving the contractor the right to approve, or disapprove, the designation of an individual as a steward would be considered a “permissive” item of negotiations. That means that, while the union may choose to bargain over such a proposal if it wishes to, it is under no legal obligation to do so. That also means that a contractor that is party to a Section 9(a) relationship may not insist upon such a proposal to the point of impasse.

Although the designation of who will serve as a union steward is a permissive item of negotiations, related issues, such as time off for union business, or a super-seniority provision for union stewards, are mandatory topics of bargaining. That means that both parties to a Section 9(a) relationship have a legal duty to discuss and consider such proposals, and that contractors can be more insistent on such language during negotiations.

Article XXV of the Model Collective Bargaining Agreement for the Finishing Industries addresses the issue of stewards, and reflects several considerations important to contractors. While it gives the union the right to designate a steward, it also offers protections to the contractor. For example, the individual designated by the union must be a working steward, and must be selected from among the employees already working on the job site.

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Question:
Are we obligated to bargain over a dues check-off provisions? Are there any other issues presented by having check-off language in the agreement?

Answer:

A dues check-off provision is one that obligates the contractor to deduct union dues from the employees paycheck upon authorization of the employee, and to transmit the amounts deducted to the union. For those contractors that have a Section 9(a) collective bargaining relationship with the union, a proposal for a dues check-off is a mandatory topic of bargaining. That means that both parties would have a legal obligation to discuss such a provision, if it is proposed.

In terms of whether dues check-off language is advisable, there is no question that such a provision makes life much easier for the local union. In the absence of such a provision, union members must still pay union dues. However, without a check-off provision, the local union must collect those dues from each individual member. It should also be noted that in those areas with an equality fund, in most cases, such a market recovery device is actually funded through a union dues check-off provision. Thus, such a provision can offer benefits to both sides.

A dues check-off provision is straightforward in its operation, however, a cautionary note is in order.

Even though the collective bargaining agreement has a check-off provision, that does not mean that the contractor may automatically deduct union dues from the paychecks of employees. Under federal law, such a deduction may only be made if the employee has first voluntarily authorized the deduction in writing. If the employee refuses to authorize such a deduction, the employer cannot legally deduct union dues from that individual’s wages, no matter what the language of the contract says. However, such an employee would generally remain obligated to pay dues directly to the union, if the contract has a union security provision.

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Question:
Should our Labor Agreement contain a “most favored nations” provision?

Answer:

The typical “most favored nations” provision states that if the union grants more favorable contract terms to a different contractor, the signatory contractor with such a provision may adopt the more favorable term.

Such a contract provision is useful, in that it maintains a level playing field for all signatory contractors in the geographic area.

However, it is critical to understand that the actual operation of such a provision, and the rights given to the signatory contractor, will depend entirely upon the specific language of the most favored nations provision. Even if you have such a provision in your collective bargaining agreement, it should be carefully reviewed prior to your next negotiations, to ensure that it gives contractors the necessary level of protection.

The possibility of the Employee Free Choice Act (EFCA) becoming law makes such a provision even more important. Under EFCA, if a newly organized employer and the union cannot agree upon terms for a first collective bargaining agreement, the issue is submitted to binding arbitration before a neutral arbitrator. Nothing in EFCA would prohibit the arbitrator from granting the newly organized contractor terms that are more favorable than what is in the industry agreement for the local area.

Unfortunately, many current most favored nations provisions do not address that possibility, as they are arguably triggered only if the union, and not an arbitrator, grants more favorable terms during contract negotiations.

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