2010 Issue #17                                                                               September

An article from the Company’s point of view concerning Bargaining:

Practical Concerns In Negotiating A Contract

            Prior to selecting a bargaining strategy, an employer must identify its goals.  Is it important to obtain more favorable economic terms, less restrictive contract language, or both?  An employer must also determine if it has the proper person sitting at the bargaining table on its behalf.  Is it time to introduce a new face as the company spokesperson to show the union that times are changing?  Below are ten considerations that every employer must assess before it sits down to bargain.

            1.         Closely review the non-economic terms of the labor agreement.  A review of judicial and administrative rulings will help determine if there is a need to negotiate for changes in the contract language.  Contractual provisions may have been modified or even nullified by the courts or the National Labor Relations Board (NLRB).

            2.         Obtain the input of operating managers and line supervisors as to how they administer the labor agreement.  Inquire about contractual provisions that hinder efficient operations. Often the best insights on the company’s bargaining position come from the front lines.

            3.         Schedule important deadlines. There may be adverse consequences for inaction on a number of important matters.  For example, if the company is party to an agreement that was negotiated by a multi-employer bargaining group (i.e., association), the company must determine before the beginning of negotiations whether to negotiate as part of the group or as an individual employer.

            4.         Assess the level of support for the union among the workforce by speaking with the line supervisors.  Knowing whether employees will support a union and its proposals at the bargaining table will help assess what an employer needs to propose to reach a contract.

            5.         Construct a financial model that computes the specific cost components. This step is essential so negotiators can accurately report the cost associated with the company’s and union’s proposals. This action is vital in determining the priority of any bargaining goals and objectives.

            6.         Anticipate bargaining issues regarding fringe benefits and alternatives.  Plans should be reviewed as to coverage, usage and anticipated cost increases.  Investigate the financial status of any Taft-Hartley plans to which contributions are made, as well as the amount of vested unfunded liabilities.  Review the rights and obligations of the company as well as plan trustees in constructing the company’s position in the upcoming negotiations.

            7.         Know your adversary.  Use contacts in the “labor arena” to learn about the union and its officers.  Is the local union supported by the International union?  Are the current officers up for re-election in the near term?  Is there strife among the officers, more than one of which may be sitting at the bargaining table?  This information may help identify any intra-union pressures weighing on a union negotiator that may facilitate or hinder attempts to reach a deal.

            8.         Determine if the union is negotiating other contracts in the industry at the same time because the results of those negotiations could affect the company’s negotiations.

            9.         Assess the bargaining strengths and weaknesses of the union and the company.

            10.       Engage in contingency planning.  In the event differences cannot be resolved, strike contingency planning is a vital adjunct to the issues that must be considered before bargaining begins.  Contingency planning includes all aspects of ensuring that the operations continue in the event of a work stoppage.

Proper contingency planning is essential to any bargaining strategy.  The paramount question before employers is how far are they willing to “push the envelope” to achieve more favorable contract terms.  One bargaining strategy, “implementation after impasse,” is discussed below.

The Duty to Bargain

            Upon expiration of a collective bargaining agreement, an employer is required by the National Labor Relations Act (“NLRA”) to “meet at reasonable times and to confer in good faith” with the bargaining representative for its employees “with respect to wages, hours, and other terms and conditions of employment.”  This is known as an employer’s duty to bargain.  A violation of an employer’s duty to bargain may result in an unfair labor practice charge being filed at the NLRB. 

            The NLRA does not, however, mandate that either party agree to a proposal or make a concession.  Therefore, once the parties make it clear that they remain firm on issues of importance to them, such as wages or benefits, and refuse to accept anything other than their position, an impasse in bargaining is reached.  Generally, once impasse has been reached on one or more mandatory subjects of bargaining, an employer may unilaterally implement its pre-impasse proposals. 

The Existence Of An Impasse

Before an employer actually implements its pre-impasse proposals, it must be sure that an impasse does indeed exist.  An impasse is defined in the law as the point at which further discussions would be futile.  Designating a situation as futile is by no means an empty philosophical exercise; it is a fact-laden legal determination that has spawned countless NLRB and court decisions.  Here are some of the factors that are likely to be an important part of the debate:

            ●          bargaining history of the parties;

            ●          good faith of the parties, which may include:  the presence of delaying tactics, unreasonable bargaining demands, efforts to bypass the union, failure to designate an agent, arbitrary scheduling of meetings and whether the employer has withdrawn already agreed-upon provisions;

            ●          length of negotiations, although no set number of meetings are required;

            ●          importance of issues on which the parties are deadlocked;

            ●          belief of the parties as to whether impasse exists;

            ●          rejection of a final offer by the rank-and-file union membership;

            ●          union’s rejection of proposals without presentation of counterproposal or requesting more time to negotiate;

            ●          union’s refusal to recommend a final offer to the rank-and-file for ratification;

            ●          union’s withdrawal from negotiations without attempting to schedule more meetings; and

            ●          whether reasonable time existed for the union to review information supplied to it by the employer and analyze its impact on counteroffers.

Employers who wish to keep open the “impasse and implementation” strategy must establish a track record of choosing their words carefully.  If a party indicates that its position on one issue is flexible and can be traded off for other concessions, there may be no impasse.  Moreover, if the last meeting resulted in settlement of some issues or significant movement by either party, it is unlikely that an impasse can be proved.

The Impact Of A Bargaining Impasse

            Once a genuine impasse has been reached, the duty to bargain becomes dormant, but is not terminated.  The employer need not meet with the union after impasse is reached if the union continues to offer the same proposals which led to the impasse.  While negotiations are deadlocked at impasse, unilateral changes are lawful provided the collective bargaining agreement at issue has expired and the unilateral changes are reasonably encompassed by the employer’s pre-impasse proposals.  Note that the NLRB has carved out an exception to the “implementation after impasse” strategy for discretionary wage proposals.  See e.g. McClatchy Newspapers, 321 NLRB 1386 (1996), enfd. in relevant part 131 F.3d 1026 (D.C. Cir. 1997), cert. denied mem. 524 U.S. 937 (1998)).

            Impasse, however, is only a temporary deadlock, and exists until a change in circumstances indicates that an agreement may be possible.  Impasse may be broken through either a change in mind or the application of economic force (i.e., a strike).  Implementation after impasse is viewed by the NLRB as a method of breaking impasse, and the parties remain obligated to attempt to negotiate an agreement in good faith.  The implementation after impasse strategy is not intended to be used to act unilaterally and destroy the collective bargaining process.

The Implementation After Impasse Strategy

            Generally, once an employer believes that the parties are at an impasse, it will present its last, best and final offer to the union.  An employer should elicit from the union whether or not it will recommend the final offer to the rank-and-file for ratification.  A refusal by the union to recommend the final offer is further evidence of an impasse.  Then, if the final offer is voted and rejected by the rank-and-file, there is additional evidence of an impasse.  Once it is clear that an impasse has been reached, an employer can exercise its legal right to declare an impasse and implement its pre-impasse offer.

            There are numerous post-implementation scenarios.  If the union reconsiders its position and accepts the final offer, the parties have a contract.  If the union continues to reject the final offer, it can follow its internal procedures, if any exist, to authorize a strike.  If a strike is not authorized, employees will continue to work under the implemented terms, but no contract will be in effect.  If a strike is authorized, employees who decide to cross the picket line will work under the implemented terms.  An employer can also exercise its legal right to continue to operate with replacement workers. 

            One advantage of the “implementation after impasse” strategy is to control the timing of events.  Generally speaking, implementation of a final offer will “force” a strike and strikes lead to contracts (albeit after days, weeks or months of economic distress on both sides).  Moreover, the existence of an economic “give back” or concession in the implemented offer will serve the dual purpose of increasing the likelihood of a strike and reducing an employer’s labor costs while operating post-implementation. 

            Implementation does not, however, guarantee an immediate strike.  The union may delay striking until a busier time for the business so as to have a greater economic impact on the employer, which, in actuality, will transfer the control of the timing to the union. 

Conclusion

      Employers need to be keenly aware that the implementation after impasse strategy has potential legal exposure.  Implementation of any proposal following impasse, if no true impasse exists, will subject an employer to liability, including a possible status quo ante order.  Thus, an employer must always consider the legal ramifications of declaring an impasse before implementation. With proper planning, however, the strategy can be an effective tool in managing the collective bargaining process.

Alan I. Model, Esq., is a principal in the law firm of Grotta, Glassman & Hoffman, P.A., which represents management exclusively in labor, employment, business immigration and employee benefits law and related litigation. The firm has offices in New York, New Jersey, San Francisco and Los Angeles.  His direct line is (973) 994-7537 and his email address is modela@gghlaw.com.                       http://www.lawmemo.com/articles/hardball.htm