COLLECTIVE BARGAINING

COLLECTIVE BARGAINING

The process through which a LABOR UNION and an employer negotiate the scope of the employment relationship.

A collective bargaining agreement is the ultimate goal of the collective bargaining process.
Typically, the agreement establishes wages, hours, promotions, benefits, and other employment terms as well as procedures for handling disputes arising under it. Because the collective bargaining agreement cannot address every workplace issue that might arise in the future, unwritten customs and past practices, external law, and informal agreements are as important to the collective bargaining agreement as the written instrument itself.
Collective bargaining allows workers and
employers to reach voluntary agreement on a
wide range of topics. Even so, it is limited to
some extent by federal and state laws. A collec-
tive bargaining agreement cannot accomplish by
contract what the law prohibits. For example, a
union and an employer cannot use collective
bargaining to deprive employees of rights they
would otherwise enjoy under laws such as the
CIVIL RIGHTS statutes (Alexander v. Gardner-
Denver Co., 415 U.S. 36, 94 S. Ct. 1011, 39 L. Ed.
2d 147 [1974]). Collective bargaining also can-
not be used to waive rights or obligations that
laws impose on either party. For example, an
employer may not use collective bargaining to
reduce the level of safety standards it must fol-
low under the OCCUPATIONAL SAFETY AND
HEALTH ACT (29 U.S.C.A. §§ 651 et seq.). Fur-
thermore, the collective bargaining agreement is
not purely voluntary. One party’s failure to
reach agreement entitles the other to resort to
certain legal tactics, such as strikes and lockouts,
to apply economic pressure and force agree-
ment. Moreover, unlike commercial contracts
governed by state law, the collective bargaining
agreement is governed almost exclusively by fed-
eral LABOR LAW, which determines the issues
that require collective bargaining, the timing
and method of bargaining, and the consequences of a failure to bargain properly or to adhere to a collective bargaining agreement.
National Labor Relations Act
Congress passed the National Labor Relations
Act (NLRA) (29 U.S.C.A. §§ 151 et seq.) in
1935 to establish the right of workers to engage
in collective bargaining and other group activities
(§ 157). The NLRA also created the
NATIONAL LABOR RELATIONS BOARD (NLRB), a
federal agency authorized to enforce the right to
bargain collectively (§ 153). The NLRA has been
amended several times since 1935, most notably
in 1947, 1959, and 1974.
The NLRA governs labor relations for businesses
involved in interstate commerce only;
thus, it does not protect the collective bargaining
interests of all categories of workers. Several
classes of employers fall outside the NLRA,
including those working for the U.S. government
and its wholly owned corporations, states
and their political subdivisions, railroads, and
airlines. The NLRA also does not protect certain
types of workers, such as agricultural workers,
independent contractors, and supervisory and
managerial employees. But other federal and
state laws often provide protection for workers
not covered under the NLRA. For example, federal
government workers enjoy the right to bargain
collectively under the Civil Service Reform
Act of 1978, which is patterned largely after the
NLRA and enforced by the Federal Labor Relations
Authority. Railroads and airlines are generally
governed by the Railway Labor Act, the
predecessor to the NLRA. Plus many states have
adopted statutes similar to the NLRA that protect
the rights of state and local government
workers to bargain collectively.
Sections 8(a)(5) and 8(b)(3) of the NLRA
define the failure to engage in collective bargaining
as an unfair labor practice (29 U.S.C.A.
§ 158[a][5], [b][3]). The aggrieved party may
file an UNFAIR LABOR PRACTICE charge with the
NLRB, which has the authority to prevent or
halt the performance of unfair labor practices
(§ 160).

Law of Collective Bargaining
The law of collective bargaining encompasses
four basic points:
■ The employer may not refuse to bargain over
certain subjects with the employees’ representative,
provided that the employees’ representative
has majority support in the
bargaining unit.
■ Those certain subjects, called mandatory
subjects of bargaining, include wages, hours,
and other terms and conditions of employment.
■ The employer and the union are not
required to reach agreement but must bargain
in GOOD FAITH over mandatory subjects
of bargaining until they reach an
impasse.
■ While a valid collective bargaining agreement
is in effect, and while the parties are
bargaining but have not yet reached an
impasse, the employer may not unilaterally
change a term of employment that is a
mandatory subject of bargaining. But once
the parties have reached an impasse, the
employer may unilaterally implement its
proposed changes, provided that it had previously
offered the changes to the union for
consideration.

Exclusive Representation A majority of
the workers in a bargaining unit must designate
a representative with the sole or exclusive
right to represent them in negotiations with
the employer’s representative (29 U.S.C.A.
§ 159[a]). The employer is not required to bargain
with an unauthorized representative
(§ 158[a][5]). Once a valid representative has
been selected, even workers who do not belong
to the union are bound by the collective bargaining
agreement and cannot negotiate individual
contracts with the employer (J. I. Case
Co. v. NLRB, 321 U.S. 332, 64 S. Ct. 576, 88 L.
Ed. 762 [1944]). As a corollary, the employer
may not extend different terms to any workers
in the bargaining unit, even if those terms are
more favorable, unless the collective bargaining
agreement contemplates flexible terms (Emporium
Capwell Co. v. Western Addition Community Organization, 420 U.S. 50, 95 S. Ct. 977, 43
L. Ed. 2d 12 [1975]).

Once the NLRB certifies a union as the
exclusive bargaining agent, the union enjoys an
irrebuttable presumption of majority support
for one year (Fall River Dyeing & Finishing Corp.
v. NLRB, 482 U.S. 27, 107 S. Ct. 2225, 96 L. Ed.
2d 22 [1987]). During that year, the employer
may not refuse to bargain with the union on the
ground that the union does not represent a
majority of employees. After that year expires,
the employer may rebut the presumption that
the union represents a majority of employees by
showing either that the union in fact does not
enjoy majority support or that the employer has
a good faith doubt founded on sufficient objective
evidence that the union has lost majority
support (NLRB v. Curtin Matheson Scientific,
494 U.S. 775, 110 S. Ct. 1542, 108 L. Ed. 2d 801
[1990]). In cases where the employer doubts
that a union enjoys majority support, the
employer may “anticipatorily withdraw” recognition
of the union by insisting on a collective
bargaining agreement that will terminate with
the end of the certification year (Rock-Tenn Co.
v. NLRB, 69 F.3d 803 [7th Cir. 1995]).
Similarly, a successor employer may not simply
refuse to recognize the union for bargaining
purposes. Instead, courts have required successor
employers to recognize the incumbent union
if “substantial continuity” exists between both
employers (NLRB v. Burns Security Service, 406
U.S. 272, 92 S. Ct. 1571, 32 L. Ed. 2d 61 [1972]).
To determine whether there is substantial continuity,
courts will consider, among other factors,
whether both employers are engaged in the same
business, whether the employees perform substantially
similar tasks under both employers,
whether the customer base remains much the
same, and whether the successor employer continues
to use the same industrial or business
processes as its predecessor (Frye v. Specialty
Envelope, 10 F.3d 1221 [6th Cir. 1993]).
Mandatory Subjects of Bargaining
Although the parties need not bargain over
every conceivable topic, they must bargain in
good faith over mandatory subjects of bargaining,
which include wages, hours, and other
“terms and conditions of employment” (29
U.S.C.A. § 158[d]). Because these mandatory
subjects are very broad, courts over the years
have attempted to set standards for determining
whether a specific bargaining topic is mandatory.
Generally, terms and conditions of employment
encompass only issues that “settle an
aspect of the relationship between the employer
and the employees” (Allied Chemical & Alkali
Workers of America v. Pittsburgh Plate Glass Co.,
404 U.S. 157, 92 S. Ct. 383, 30 L. Ed. 2d 341
[1971]).

If one party wishes to bargain over a mandatory
subject, it is an unfair labor practice for the
other to refuse. Other topics are permissive subjects
of bargaining, and it may be an unfair labor
practice for a party to demand bargaining over
them (NLRB v.Wooster Division of Borg-Warner
Corp., 356 U.S. 342, 78 S. Ct. 718, 2 L. Ed. 2d 823
[1958]). Thus, although the parties must bargain
to an impasse over mandatory subjects of
bargaining before implementing unilateral
changes, they may change permissive subjects
unilaterally without bargaining and cannot be
forced to bargain over such changes.
Although most of the decisions an employer
makes will affect employees, not all are mandatory
subjects of bargaining. Some decisions,
such as advertising and product selection, bear
such an indirect relationship to and have such a
minimal effect on the employment relationship
that they are almost certainly only permissive
subjects of bargaining. Other decisions, such as
those regarding hiring, layoffs, and plant rules,
are so directly relevant to the employment relationship
that they are almost certainly mandatory
subjects of bargaining. Still other decisions
are not aimed at the employment relationship
but have a sizable effect on it and are thus difficult
to categorize as permissive or mandatory
bargaining subjects (First National Maintenance
Corp. v. NLRB, 452 U.S. 666, 101 S. Ct. 2573, 69
L. Ed. 2d 318 [1981] [citing Fibreboard Paper
Products v. NLRB, 379 U.S. 203, 85 S. Ct. 398, 13
L. Ed. 2d 233 (1964) [Stewart, J., concurring]).
The Supreme Court has attempted on several
occasions to define the scope of mandatory bargaining
for this third category of management
decisions.

In Fibreboard, the Supreme Court held that
under its three-part analysis, an employer’s decision
to subcontract out a portion of its operations
was a mandatory bargaining subject. First,
subcontracting falls within the literal meaning
of the NLRA phrase “terms and conditions of
employment.” Second, determining that subcontracting
is a mandatory bargaining subject
effectuates the purposes of the NLRA by “bringing
a problem of vital concern to labor and
management within the framework established by Congress as most conducive to industrial peace”—namely, collective bargaining. Third,
other employers in the same industry have
addressed contracting out in the bargaining
process, rather than leaving it to managerial discretion.
Justice POTTER STEWART added in his
concurrence that subjects that “lie at the core of
entrepreneurial control,” such as decisions about
“the commitment of investment capital and the
basic scope of the enterprise,” are not mandatory
subjects of bargaining.

In First National Maintenance, the Court
addressed whether an employer’s decision to
terminate certain operations entirely constituted
a mandatory subject of bargaining. The Court,
relying primarily on Justice Stewart’s concurrence
in Fibreboard, held that the decision to terminate
all operations at a particular site was an
economically motivated management decision
that was separate from the employment relationship,
even though it obviously affected job
security. The Court noted, however, that the
effects of the employer’s decision, such as severance
pay and benefits, were mandatory subjects
of bargaining under section 8(a)(5) of the
NLRA. Accordingly, under this Fibreboard-First
National Maintenance framework, most significant
economic decisions, such as plant shutdowns,
layoffs, and relocations, are not
mandatory subjects of bargaining, even though
the employer must engage in “effects bargaining”
as a result of them.

Duty to Bargain in Good Faith During the
bargaining process, the parties are not required
by law to reach agreement. They must, however,
bargain in good faith (29 U.S.C.A. § 158[d]).
Although good faith is a somewhat subjective
concept, courts will look to the entire circumstances
surrounding bargaining, including
behavior away from the bargaining table such as
pressure and threats (NLRB v. Billion Motors,
700 F.2d 454 [8th Cir. 1983]). Most authorities
agree that an absolute refusal to bargain constitutes
bad faith (Wooster).

Even so, one party’s insistence on a certain
contract term is not necessarily an unfair labor
practice. The NLRB and the courts that review
and enforce its orders are unwilling to substitute
their judgment for that of the parties and will
not judge the content of collective bargaining
agreements (NLRB v. American National Insurance
Co., 343 U.S. 395, 72 S. Ct. 824, 96 L. Ed.
1027 [1952]). In addition, the use of “economic
weapons” such as pressure tactics, picketing, and
strikes to force bargaining concessions is not
necessarily bad faith bargaining (NLRB v. Insurance
Agents’ International Union, 361 U.S. 477,
80 S. Ct. 419, 4 L. Ed. 2d 454 [1960]).
The refusal to comply with an information
request may constitute bad faith. For example, in
NLRB v. Truitt Manufacturing Co., 351 U.S. 149,
76 S. Ct. 753, 100 L. Ed. 1027 (1956), the
employer committed an unfair labor practice
when it refused to supply the union with information
supporting its claim that it could not
afford to pay a wage increase the union
demanded. Over the years, courts have clarified
that employers’ claims of an inability to pay
requested wage increases are conceptually distinct
from claims that wage increases will result
in a competitive disadvantage (United Steelworkers
of America v. NLRB, 983 F.2d 240 [D.C. Cir.
1993]).Accordingly, in Graphic Communications
International Union Local 508 v. NLRB, 977 F.2d
1168 (7th Cir. 1992), the court held that an
employer was not required to disclose financial
information unless it had asserted specifically
that it was unable to pay a requested wage
increase; an employer’s claim that a wage
increase would lead to competitive disadvantage
did not require it to disclose wage information.
However, a refusal to provide requested
information is not necessarily an unfair labor
practice. For example, in Detroit Edison Co. v.
NLRB, 440 U.S. 301, 99 S. Ct. 1123, 59 L. Ed. 2d
333 (1979), the Supreme Court held that an
employer’s refusal to provide a union with confidential
test results was not an unfair labor
practice, where the company would have violated
the right to privacy of the tested employees
by disclosing the results.
Unilateral Changes During the time a collective
bargaining agreement is in effect, the
employer may not change a working condition
that is a mandatory subject of bargaining, without
first bargaining with the union (29 U.S.C.A.
§ 158[d]). Even after the collective bargaining
agreement expires, the employer must maintain
the status quo and may not unilaterally change
mandatory subjects of bargaining, until the parties
have reached an impasse (Louisiana Dock
Co. v. NLRB, 909 F.2d 281 [7th Cir. 1990]). This
proscription against unilateral changes continues
even if the employer disputes that the union
is the exclusive representative (Livingston Pipe &
Tube v. NLRB, 987 F.2d 422 [7th Cir. 1993];
NLRB v. Parents & Friends of the Specialized Living
Center, 879 F.2d 1442 [7th Cir. 1989]). Once good faith negotiations between the parties
“exhaust the prospect of concluding agreement,”
the parties have reached an impasse, and implementing
unilateral changes in working conditions
does not constitute an unfair labor practice
(NLRB v. Plainville Ready Mix Concrete Co., 44
F.3d 1320 [6th Cir. 1995]; United Paperworkers
International Union v. NLRB, 981 F.2d 861 [6th
Cir. 1992]; Southwest Forest Industry v. NLRB,
841 F.2d 270 [9th Cir. 1988]).
A pre-impasse unilateral change to a mandatory
subject of bargaining generally constitutes
an unfair labor practice, even though employees
may regard the change as beneficial.According to
the Supreme Court, unilateral changes minimize
the influence of collective bargaining by giving
employees the impression that a union is unnecessary
to achieve agreement with the employer.
For example, in NLRB v. Katz, 369 U.S. 736, 82 S.
Ct. 1107, 8 L. Ed. 2d 230 (1962), the employer
unilaterally changed its sick leave policy and
increased its wage rates without first bargaining
over them with the union. The Court ruled that
the employer’s unilateral change undermined the
union’s ability to negotiate over sick leave, wages,
and other terms of employment.
One area of ongoing conflict between
unions and employers concerns when wage
increases constitute mandatory subjects of bargaining.
In Acme Die Casting v. NLRB, 26 F.3d
162 (D.C. Cir. 1994), the court of appeals analyzed
the employer’s historical practice of establishing
the frequency and size of wage increases
and determined that whether to grant a wage
increase was not an issue within the employer’s
discretion and could not be decided without
bargaining with the union (see also Daily News
of Los Angeles v. NLRB, 979 F.2d 1571 [D.C. Cir.
1992] [remanding to NLRB to determine
whether wage increases that are consistent in
terms of timing but discretionary in terms of
amount are considered mandatory subjects of
bargaining]).
One area of ongoing conflict between
unions and employers concerns when wage
increases constitute mandatory subjects of bargaining.
In Acme Die Casting v. NLRB, 26 F.3d
162 (D.C. Cir. 1994), the court of appeals analyzed
the employer’s historical practice of establishing
the frequency and size of wage increases,
and determined that whether to grant a wage
increase was not an issue within the employer’s
discretion and could not be decided without
bargaining with the union.

As of 2003, the U.S. Supreme Court had not resolved this issue of whether wage increases were mandatory subjects of collective bargaining, so the federal courts of appeals have developed rules of their own to govern this question. Where an employer does not exercise discretion in determining the timing or the amount of a wage increase, then the issue of wage increases is a mandatory subject for collective bargaining. NLRB v. Beverly Enter.-Mass., Inc., 174 F.3d 13 (1st Cir. 1999). Moreover, even if an employer exercises a certain amount of discretion in determining wage increase, such as an annual increase to cover the costs of living, this fact does not prevent the wage increase from becoming a mandatory subject if the company has a longstanding practice of granting such pay increases. NLRB v. Pepsi-Cola Bottling Co., No. 00-1969, 2001 WL 791645 (4th Cir. July 13, 2001).

Once the parties have reached an impasse,
the employer may implement unilateral changes
to mandatory bargaining subjects as long as it
has previously proposed those changes to the
union (NLRB v. Plainville Ready Mix Concrete
Co., 44 F.3d 1320 [6th Cir. 1995]; NLRB v. Emsing’s
Supermarket, 872 F.2d 1279 [7th Cir.
1989]).

FURTHER READINGS
Aidt, Toke, and Zafiris Tzannatos. 2002. Economic Effects in a
Global Environment.Washington, D.C.:World Book.
Bagchi, Aditi. 2003. “Unions and the Duty of Good Faith in
Employment Contracts.” Yale Law Journal 112 (May).

CROSS-REFERENCES
Employment Law; Good Faith; Picketing.